South Indian Bank, the Thrissur (Kerala)-headquartered old generation private sector, has reported a 36 per cent increase in net profit at Rs 102 crore in the three-months ended December 31, 2011, against Rs 75 crore in the corresponding period last year.
Sequentially, the bank's advances increased by 7 per cent (or Rs 1,702 crore) in the October-December 2011 period to Rs 25,050 crore. Deposits nudged up 2 per cent (or Rs 796 crore) to Rs 33,834 crore in the reporting quarter.
Dr V. A. Joseph, Managing Director and CEO, said the bank will maintain net interest margin at 3 per cent in the current financial year.
The bank is gung-ho about lending against gold. Currently, the gold loan portfolio accounts for 28 per cent of the total advances portfolio.
“Lending against gold is a safe bet. We have set a cap of 30 per cent of total advances for gold loans,” said Dr Joseph.
To raise capital
SIB has drawn up plans to raise Rs 1,000 crore in the April-June 2012 period via the qualified institutional placement (QIP) route.
The capital-raising programme is for supporting the bank's goal of reaching a total business size of Rs 1-lakh crore (Rs 58,883 crore as at December-end 2011), 800 branches (675 now), 800 ATMs (614), and 8,000 employees (5,800) by 2014, said Dr Joseph.
The bank is targeting the April-June period to raise monies through the QIP route, as it expects the equity markets to stabilise by then.
QIP is the process of private placement of equity shares or securities convertible into equity shares by a listed company with Qualified Institutions Buyers (QIBs).
QIBs include scheduled commercial banks, insurance companies, multilateral and bilateral development finance institutions, mutual funds, and investors registered with the markets regulators such as foreign institutional investors and venture capital funds.
While SIB has shareholders approval to tap the equity markets, it also has headroom to mop up about Rs 500 crore by issuing subordinated debt.
Shareholding pattern
As on December-end 2011, foreign institutional investors were with biggest shareholder group, holding 42.25 per cent stake, followed by individuals (39.46 per cent), corporates (7.81 per cent), financial institutions and banks (6.60 per cent), and others (3.88 per cent).
The cap on FII investment in the bank is 49 per cent, said Mr K. S. Krishnan, CFO.
According to Dr Joseph, the bank is currently well capitalised and will not rush in with a QIP issue. “We will wait for the market environment to improve,” he said.
Due to increase in business, the bank's capital adequacy ratio has come down from 14.89 per cent (Tier I: 12.31 per cent and Tier II: 2.58 per cent) as at December-end 2010 to 12.03 per cent (Tier I: 9.61 per cent and Tier II: 2.42 per cent) as at December-end 2011.
Shares of SIB closed 1.77 per cent up on the BSE at Rs 23 per share on Monday, against the previous close of Rs 22.60