Date:22/10/2004 URL: http://www.thehindubusinessline.com/2004/10/22/stories/2004102202250800.htm

Back Corpn Bank Q2 net down 81 pc

Our Bureau

Mr K. Cherian Varghese(left), CMD, Corporation Bank, with Mr P.K. Gupta, Executive Director, at a press conference in Mumbai on Thursday. — Paul Noronha

Mumbai , Oct. 21

LOWER trading profits in the wake of hardening bond yields, and a substantial rise in provisioning, has led to an 81 per cent drop in the net profit of Corporation Bank Ltd, for the second quarter of the current fiscal. The net profit fell to Rs 27.39 crore for the quarter ended September 30, as against Rs 144.93 crore in the year ago period.

Mr K. Cherian Varghese, Chairman, Corporation Bank, ascribed the decline in profits, to lower returns from the sale of investments in the backdrop of hardening yields in the Government securities. The bank's trading profits fell to Rs 39.42 crore from Rs 118.82 crore.

For the six months ended September, the fall in the profit on sale of securities dipped to Rs 54 crore (Rs 177 crore). The bank had to also provide for depreciation to its investment portfolio to the extent of Rs 227.62 crore.

The bank has shifted Rs 4,932 crore of securities from the `Available for Sale' category to `Held to Maturity' category and this resulted in charging additional depreciation of about Rs 205 crore to the profit and loss accounts, Mr Varghese said.

He said more than10 per cent of the bank's investment portfolio - excluding the HTM category - is in the investment fluctuation reserve, as against the stipulated requirement of 5 per cent to be fulfilled by March 2006. Consequently, the bank will be in a far better position to withstand the volatility in the investment portfolio, he said.

Total income , for the second quarter, was lower at Rs 685.81 crore (Rs 732.87 crore). This is inclusive of interest earned at Rs 564.20 crore (Rs 549.10 crore) and Other Income at Rs 121.61 crore (Rs 183.77 crore).

Total expenditure of the bank was at Rs 445.15 crore (Rs 444.88 crore). This is inclusive of interest expended at Rs 564.20 crore (Rs 549.10 crore) and operating expenses at Rs 168.82 crore (Rs 142.85 crore).

Provisions and contingencies recorded a jump of 280 per cent at Rs 213.68 crore (Rs 56.27 crore). Provisions for non-performing assets were at Rs 7.86 crore (Rs 48.75 crore).

Gross NPAs were at Rs 743.10 crore (Rs 653.42 crore). Net NPAs were at Rs 265.34 crore (Rs 155.20 crore). For the half-year ended September 30, the bank posted a-51 per cent fall in net-profit at Rs 132.90 crore (Rs 271.36 crore).