Centurion BoP’s Operating profit up 79% to Rs 908mn

RELATED NEWS Centurion BoP Q1 net profit up 14.9% at Rs 33.01 cr Centurion BoP Q1 net profit seen at Rs 39.7 cr: Citigroup Centurion BoP to raise Tier I Capital upto Rs 5bn Centurion Bank bullish on growing in Gangtok ALSO READ See latest News about Centurion Bank See previous management interviews See what other Experts & Brokerages are saying about Centurion Bank Centurion Bank BSE | NSE 01/01/70 Are Mutual Funds betting on Centurion Bank?

Centurion Bank of Punjab , today announced its results for the quarter ended June 30, 2007 (Q1-2008). Operating profit for the quarter at Rs. 908 million demonstrates a healthy growth of 79% over that in the corresponding quarter last year. Profit before tax grew 66% to Rs. 525 million. The net profit for the bank stood at Rs. 330 million for the quarter ended June 30, 2007 (Q1 - FY2008), This has shown a sequential increase of 18% as compared to that in the previous quarter and is up by 15% as compared to that in the corresponding quarter last year.  

 

The bank has demonstrated strong growth along all its businesses despite the fact that the first quarter of the fiscal year is traditionally slow for the off-take of banking and financial services. The growth in advances of 60%, and in deposits of 55% is substantially higher than that witnessed by the sector as a whole. The bank continues to maintain a strong momentum in both earnings growth as well growth across all its core businesses.

 

 

Highlights of the quarter ended June 30, 2007

All numbers in Rs. Millions except %

	Q1-2008	Q1-2007	Q-O-Q change
Operating Profit*	908	509	79%
Profit Before Tax	525	316	66%
Net Profit	330	287	15%
Net Advances	119,406	74,524	60%
Net Advances (Retail)	82,308	51,855	59%
Net Advances (Corp & SME)	37,098	22,669	64%
Deposits	160,994	103,721	55%
Capital Adequacy Ratio (%)	11.0%	12.6%	-
Balance Sheet Size	196,647	124,808	58%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* The operating profit figure for Q1-2007 has been recast as per the new norms put in place by the RBI. The figures for Q1 2008 & Q1 2007 are thus comparable.

 

 

Significant growth along all businesses

The Bank's advances towards the SME sector grew by 150% over those at the end of the corresponding quarter last year reiterating the importance of this segment as a rapidly scaling up, strong second growth engine for the Bank. Retail advances for the Bank continue to grow at a healthy rate of 59%. The bank continues its focus on retail lending and retail advances now form 69% of the Bank's total advances.

 

Within the Bank's retail asset portfolio, Mortgages and Personal loans grew rapidly at 134% and 154% respectively. As on June 30, 2007 mortgages formed the largest component of the Bank's retail asset portfolio at Rs. 22,679 million constituting 27% of the Bank's retail assets followed by personal loans at Rs. 17,244 million constituting 21% of the Bank's retail asset portfolio. Two wheeler loans, which was historically the largest retail asset class for the bank now forms 19% of the Bank's retail loans. Other components of the Bank's retail portfolio such as Commercial Vehicle & Construction Equipment loans continued to grow in line with the market.

 

Profitability

The operating profit and the profit before tax for the Bank demonstrated healthy growth rates of 79% and 66% respectively as compared to those in the same period last year. The net profit for the Bank has grown sequentially by 18% over that in the previous quarter, and 15% over that in the corresponding quarter of the previous year. The profit before tax for the Bank has grown faster than the net profit due to the fact that the bank is now subject to an effective tax rate of 35% as compared to 6% in the corresponding quarter of the previous year. For the quarter ended June 30, 2007 (Q1 FY2008), Net Interest Income increased by 17% to Rs. 1,445 million. Net Interest Margin for the quarter ended June 30, 2007 (Q1 FY2008) was a healthy 3.6% despite the discontinuation of interest payments on CRR.   

 

Non Interest Income for the quarter ended June 30, 2007 (Q1-FY2008) increased 64% to Rs. 1,418 million. An increase in fees & commissions from wealth management, core banking, retail assets and foreign exchange businesses contributed to this growth. Fee income constituted 50% of the Bank's total income for the quarter. Trading income at Rs. 19 million for the quarter constituted 1% of the non-interest income.

 

Operating expenses for quarter ended June 30, 2007 increased 23% over those in the corresponding quarter last year, this is in line with the growth that the Bank has witnessed. However the operating expenses this quarter have shown a decline of 6% over those in the previous quarter (Q4-FY2007) despite the impact of the yearly wage increments that came into effect this quarter (Q1-FY2008). The total income for the bank grew by 37% leading to an improvement in the bank's cost to income ratio to 68% this quarter as compared to 76% in the corresponding quarter of the previous year. As the bank increases its size and scale the efficiency of its operations continues to improve.

 

Asset Quality

The ratio of the net Non-Performing Loans of the bank to net customer assets stood at 1.6%. The corporate and SME portfolios remain healthy and have not witnessed any increase in net NPAs. The delinquencies in the Bank's Mortgage, Personal loan and CV/CE portfolios remain well under control. The Bank's two-wheeler portfolio has witnessed an increase in delinquencies in line with market conditions, we expect the two wheeler market to start stabilizing as we approach the festive season. The NPA provisioning continues to remain much higher than that stipulated by the Reserve Bank of India.  

 

Deposits

The deposits at Rs. 160,994 million grew 55% over those at the end of the corresponding period last year. This is well in excess of the growth demonstrated by the system as a whole. The cost of deposits for the quarter ended June 30, 2007 at 7.4% increased due to the changes in the interest rate environment. This however has shown some signs of easing and the interest rates for bulk deposits have gone down significantly since the beginning of June. The low cost deposits (CASA) for the Bank stood at 28%.

 

Capital Adequacy and Net Worth

The Bank's capital position remained healthy, total capital as a percentage of its risk weighted assets was 11.0% of which the Tier I capital adequacy ratio was 9.3% and the Tier II capital adequacy ratio was 1.7%. The net worth of the Bank at the end of the quarter (Q1-FY2008) was Rs. 14,040 million.

 

Book Value per share and Earnings per share

The Bank's book value per share increased to Rs. 8.96 and its EPS (non-annualized) was Rs. 0.21.

 

Capital Raising

During the quarter ended June 30, 2007 the Bank raised Rs. 1 billion through a private placement of debt qualifying as Upper Tier II capital. During the quarter the Board of the Bank passed an enabling resolution to raise Tier I capital upto Rs. 5.0 billion. This will be done through an issue of equity shares via a Qualified Institutional Placement (QIP) offering. This approval is subject to shareholder, regulatory and statutory approvals as applicable.

 

Merger with Lord Krishna Bank

The Board of directors of the Bank today extended the deadline for the merger with Lord Krishna Bank to October 31, 2007. The merger had been approved by the boards and the shareholders of both Banks and subsequently an application was made to the Reserve Bank of India ("RBI").  The RBI's approval is awaited.

 

The Banks have been given to understand that the RBI is awaiting judgment on a public interest litigation pending before the Kerala High Court. The tentative date for the final judgment has been posted for July 31, 2007. The decision of the RBI is expected after the Kerala High Court passes its judgment barring any other unforeseen delays. Consequently, the Banks have mutually agreed to extend the deadline by three months.

 

Network Expansion

The Bank continues to leverage its strong nationwide network of branches and asset finance division offices. The Bank currently operates through 279 branches across 147 locations in India, in addition the bank has 47 asset finance division offices in addition to a well entrenched network over and above the branches to carry out its lending operations.

 

Pension Fund Management

The Board of the Bank passed a resolution enabling the Bank to undertake the business of pension funds management. The bank will do this through the creation of a subsidiary for this purpose. This is subject to regulatory approvals including that of the Reserve Bank of India and others as applicable.

 

Sourced From: Vaishnavi Corporate Communications Pvt Ltd