Corporation Bank aims to raise base rates by another 50bps

9001 Investors following Corporation Ban. Share this News with them.

0

Like this story, share it with millions of investors on M3

Corporation Bank aims to raise base rates by another 50bps

Ramnath Pradip, CMD of the bank, in an interview with CNBC-TV18, said the recent key policy rate hike by the Reserve Bank of India (RBI) has left us with no option but to pass on the costs to consumers. "We are looking to raise rates by approximately another 50 basis points (bps)."

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Business Lunch on CNBC-TV18 Watch the full show » ALSO READ See latest News about Corporation Ban See previous management interviews See what other Experts & Brokerages are saying about Corporation Ban Corporation Ban BSE | NSE 30/05/12 Are Mutual Funds betting on Corporation Ban?

Corporation Bank today reported a 5.29% (YoY) increase in net profit to Rs 351.45 crore for the first quarter ended June 30, 2011, as against Rs 333.78 crore last year.

During the same period, total income of the bank rose to Rs 3,266 crore from Rs 2,293 crore in the corresponding period last fiscal.

Ramnath Pradip, CMD of the bank, in an interview with CNBC-TV18, said the recent key policy rate hike by the Reserve Bank of India (RBI) has left us with no option but to pass on the costs to consumers. "We are looking to raise rates by approximately another 50 basis points (bps)."

Below is the verbatim transcript of his interview with Mitali Mukherjee. Also watch the accompanying video.

Q: Even though your cost of funds, yield on advances and non-performing loans have seen an improvement. So where really has the bottom-line been hit?

A: On account of the cost of deposit only, the bottom-line has taken a hit. Otherwise in all business parameter on the quarter-to-quarter basis, has been very good growth. Deposit has grown by 29%. Meanwhile, the advances have risen by 21% and CASA has moved up by almost 13%. The term deposit is also grown by 34%. So there is an overall business growth by 26%. So, only on account of the cost of the deposit the bottom-line is hit, which we are taking the corrective step. We have already launched the CASA campaign throughout the country. Hopefully, if I am able to get the substantial amount, then, it will bring back the cost of the deposits.

Q: Your margins too have depreciated on a quarter-on-quarter (QoQ) as well as on a year-on-year basis (YoY) to 2.1%, but you say that going forward you look at 3%, do you really see the margins under pressure especially after the rate hike that came about and how would you perhaps look at passing on the cost to the borrowers?

A: There is no alternative for me to not to pass on the cost as the RBI has hiked rates further by 50 basis points each. We have recently increased by 20 points. Probably, we have to take a call to increase another 50 basis point or maybe near about. I have no alternative except to pass on the cost. If we don't pass on the cost, naturally the yield will go up further, which will result into more yield and income side.