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City Union Bank has initiated the process for its proposed rights issue, and has set up a subcommittee to look into the details and prepare the required documents to facilitate the issue. According to Mr N. Kamakodi, Managing Director and Chief Executive Officer of the bank, the bank's board has given the sanction to appoint the merchant bankers to the proposed issue.
Awaiting clearance
The bank has also secured permission to raise up to Rs 400 crore through the rights issue. “And once we get the necessary clearance from SEBI, we will take a call on the issue size and pricing,” he said.
According to him, the bank should have a net worth of around Rs 3,000 crore by 2015 given its business plans. The bank's current net worth is Rs 1,218 crore and around Rs 1,000 crore would come from its normal operations by then, said Mr Kamakodi.
The bank on Tuesday announced its third quarter results. It reported 25 per cent growth in net profit at Rs 72.24 crore for the quarter ended December 31, 2011, against Rs 57.70 crore in the comparable previous-year quarter. Operating profit moved up to Rs 105 crore during the quarter from Rs 90 crore in the previous year.
The bank's total business stood at Rs 26,439 crore at the end of the nine-month period, up from Rs 20,494 crore as on December 31, 2010. Mr Kamakodi said the bank's average cost of funds is 8.29 per cent and the average yield on advances is 13.57 per cent. Interest income was up 40 per cent at Rs 438.57 crore (Rs 312.97 crore).
NPA down
The bank has reported a drop in gross NPA (non-performing assets) to 1.17 per cent from 1.28 per cent in the year-ago period.
In absolute terms, at the end of the third quarter, gross NPA stands at Rs 129.16 crore. It was at Rs 124.79 crore in the previous sequential quarter. Net NPA stands at Rs 56.08 crore as on December 31, 2011, as against Rs 48 crore at the end of the previous financial year.
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