Board decides to raise up to Rs500 cr Tier 2 capital
THRISSUR: Kerala’s second largest bank, the South Indian Bank (SIB), has posted a much better net profit of Rs70.13 crore for the quarter ending September 30, 2018 compared with that of the immediate previous quarter ending June 30, 2018 and the similar quarter in the previous year – at Rs23.04 crore and Rs4.32 crore respectively.
The bank though has yet to prove that it is a ‘retail powerhouse’, has failed to get any fillip from its treasury and wholesale/corporate banking departments, which has been proved by the fact that they continued to disappoint the bank’s bottom line with losses.
The just concluded board meeting of the bank’s directors has decided to augment the capital by issue of Tier II Bonds not exceeding Rs500 crore in one or more tranches with or without green shoe option, subject to the approval of the shareholders and regulatory authorities.
The bank that generated an interest income of Rs1696.51 crore during the quarter compared with Rs1653.9 crore for the preceding quarter and Rs1536.20 crore for the same quarter last year, closed the quarter with an operating profit of Rs309.78 crore.
The provisions keep following the bank’s P&L persistently and the quarter under review also witnessed it to the extent of Rs204.68 crore, which certainly was far less than that of the same quarter last year at Rs460.27 crore.
The overhang of bad loans is likely to punish the bank in the coming periods also as the bank carries net non-performing assets (NPA) to the tune of Rs1784.72 crore in its book that works out 3.16 per cent of the bank’s asset.
The capital (tier 2) the bank is planning to raise will help boost the capital base of the bank, which is not that comfortable currently as manifested by the capital adequacy ratio (CAR) of 12.11 per cent.
The bank saw its assets grow marginally from Rs82,686 crore to Rs84,981 crore during the last one year.