Date:20/09/2005 URL: http://www.thehindubusinessline.com/2005/09/20/stories/2005092002130600.htm

Back Federal Bank to pay 25 pc dividend

Our Bureau

Kochi Sept. 19

FEDERAL Bank has declared a 25-per cent dividend for 2004-05.

Addressing the 74th annual general meeting, Mr V. Venugopalan, Chairman, said Federal Bank aimed to balance the objectives of rewarding shareholders with cash dividends, while retaining capital to support future growth plans.

The capital base of the bank has grown from Rs 21.76 crore to Rs 65.60 crore as a result of the bonus issue at 2:1 declared last year. The 25-per cent dividend thus works out to 75 per cent on the pre-bonus capital base.

Even after providing for a one-time depreciation of Rs 69.97 crore towards SLR (statutory liquidity ratio) securities from the `available for sale' to `held-to-maturity' category, the bank could register a net profit of Rs 90.09 crore during last year. Its NPA as a percentage of advances declined to 2.21 per cent (2.89 per cent).

The bank's priority sector advances, which accounted for 40 per cent of the bank's net credit, grew by 28 per cent to Rs 3,193 crore (Rs 2,493 crore). The outstanding agricultural credit increased by 37 per cent to Rs 684 crore (Rs 500 crore), while advances to the small-scale sector grew by 19 per cent to Rs 861 crore (Rs 722 crore).

Federal Bank has become the first bank in the country to extend real time gross settlement for its customers across all its branches. During the year, the bank introduced electronic bills presentation and payment systems and also joined hands with the Indian Railway Catering and Tourism Corporation Ltd for providing customers with railway ticket reservation through the Internet.

Expansion of the retail asset portfolio, increase in fee-based income and intensive marketing are the integral elements of the growth plans for the current year. As part of its technology upgradation, the bank has taken up implementing core banking solutions through all its branches.

To meet the envisaged capital requirements, the bank has also initiated steps to raise additional capital through global depository receipts.