South Indian Bank plans to raise Rs 1,000-cr capital this fiscal

South Indian Bank is all set to revive its capital raising plan. The Thrissur-headquartered bank had in July-August 2011 proposed to raise Rs 1,000-crore of capital by taking the QIP (Qualified Institutional Placement) route.

The plan was subsequently put on hold as the market conditions were not conducive.

It is now learnt that this proposal is being revived and the bank is planning to complete the process before the end of this fiscal.

At present, FII (foreign institutional investor) and NRI holdings in SIB are more than 48 per cent of the bank's capital, but slightly below the permissible 49 per cent limit.

It is learnt that the bank has appointed JP Morgan, JM Financial, SBI Capital Markets and Enam Securities as merchant bankers to its proposed capital issue.

The bank went for a QIP in 2007, when its business was around Rs 14,000 crore. The issue size then was Rs 326 crore.

Five years later in 2012, it has decided to raise capital to take care of its future requirement.

The issue is expected to improve the bank's capital adequacy ratio from around 14 per cent at present to 17-18 per cent, take care of its branch expansion plans and sustain its growth momentum.

lnr@thehindu.co.in

South Indian Bank Q3 net up 32%, eyes Rs 1,000 cr QIP

South Indian Bank has registered 32% jump in net profit at Rs 280 crore for the third quarter ended December 31 and plans to raise Rs 1,000-crore through qualified institutional placement (QIP).

"We have registered the highest-ever quarterly profit at Rs 279.70 crore and are looking at raising Rs 1,000 crore through QIP issue to fund our expansion plans over the next three-year period," South Indian Bank CEO and Managing Director VA Joseph said.

"Our capital-raising plan of course depends on the revival of market condition," Joseph said.

The bank's total business increased 27.49% to Rs 58,883 crore in Q3 FY12, over the same period last fiscal. The deposits have gone up by Rs 6,836 crore from Rs 26,998 crore to Rs 33,834 crore. The advances increased by 30.55% at Rs 25,050 crore in Q3 FY12.

The bank's CASA increased from Rs 6,045 crore in Q3 last fiscal to Rs 7,280 crore, up 20.43%.

SIB said it earned Rs 2,754 crore during the 9-month period, as against Rs 1,879 crore in the previous year, a growth of 46.61%.

The capital adequacy ratio of the bank stood at 12.03% (under BASEL II standards) against the regulatory requirement of 9%.

The robust growth in business, coupled with low NPA enabled the bank to attain the present level of performance, Joseph said.

Its gross non-performing asset (NPA) ratio improved from 1.33% to 0.94% sequentially, while the net NPA ratio changed little at 0.24% during the three months period.

The bank is looking at 25% growth in FY12 and plans to increase the number of branches to 700 and ATMs to 625 by fiscal-end.

Source: Business Standard

RBI nixes banks' subsidiary plans

Bank of India, South Indian Bank, Lakshmi Vilas Bank’s proposals rejected, to add to the earlier ones of ICICI Bank and Axis Bank.

The Reserve Bank of India (RBI) has rejected several banks’ proposals to launch wholly-owned subsidiaries, as the regulator did not find any merit in floating such arms.

Public sector lender Bank of India, which wanted to float a subsidiary to train human resources and recruit professionals, did not find favour with the regulator. State-run banks have to follow a uniform remuneration package, which is unattractive compared to their private sector counterparts. However, a bank could offer market related pay package for the employees that are hired by its subsidiary.

RBI, however, was not convinced by the idea.

FALLING FLAT
Banks	Subsidiary planned
Bank of India	Human resources
South Indian Bank	Gold loan
Lakshmi Vilas Bank	Housing loan
ICICI Bank	Infrastructure finance
Axis Bank	Infrastructure finance

Similarly, South Indian Bank wanted to open a subsidiary to exclusively offer gold loans. RBI has also nixed that plan, as a bank is allowed to offer gold loan directly through its branches and a subsidiary route is not required for this activity, the regulator felt.

"We had initially taken shareholders' approval to launch a gold loan subsidiary. The idea was to gold loans through this subsidiary in areas where we don't have a branch," said VA Joseph, managing director and chief executive officer of South Indian Bank.

The Thrissur based lender is a major player in the gold loan market and gold loans account for 20 per cent of its credit portfolio.

Another south India-based lender, Lakshmi Vilas Bank wanted to float an arm to sell home loans, again an activity which a bank is allowed to undertake through its branches. This proposal was also rejected by the regulator on similar grounds.

As a result, Lakshmi Vilas Bank scrapped its plans to set up a housing finance subsidiary. The bank’s housing loan portfolio is currently around 2.5 per cent of its total advances. Its credit portfolio was Rs 8,813 crore as of September 30, 2011.

“RBI is of the view that those businesses, which are possible through bank branches, should be done directly by the bank. There is no need to create a separate non-banking finance subsidiary for those businesses. Hence, for businesses like gold loan, housing finance, etc RBI is not keen to allow banks form a separate subsidiary,” said a top executive of a private sector bank.

Earlier, proposals from ICICI Bank and Axis Bank to float an infrastructure subsidiary also did not find favour with the regulator. In the last couple of years, RBI has given its permission to open subsidiaries to undertake those activities which a bank cannot do directly through its branches. These businesses include securities broking and insurance underwriting.

In addition, the regulator has also approved Bank of Baroda’s application to convert its credit card subsidiary into a joint venture by selling 51 per cent stake to the second largest bank of Spain, Banco Bilbao Vizcaya Argentaria.

Source: Business Standard

SIB M-Pay launched

Mr B. Sambamurthy, Director, IDRBT, the technical arm of the Reserve Bank of India, has launched South Indian Bank's mobile banking service — SIB M-Pay — on CBS platform, which enables fund transfer round-the-clock throughout the year.

The scheme facilitates the convenience of fund transfer to other banks even on holidays. The customer receives the money instantly to the account from anyone without sharing the account number. All transactions are followed by an instant SMS confirmation . All the facilities offered are without any additional charge.

Mr Gigo Joseph, CEO, Infopark, released the wallet size ‘User Guide' on SIB M-Pay by handing over a replica to Mr Abraham Thariyan, Executive Director, South Indian Bank.

Mr P. J. Jacob, DGM, DICT, South Indian Bank, welcomed the gathering and Mr A. Sony, AGM, Marketing, SIB, delivered the vote of thanks.

South Indian Bank, Federal Bank increase deposit rates

MUMBAI: Deregulation of interest rates on non resident term deposits has triggered an interest rate war among banks, with small banks like South Indian Bank and Federal Bank increasing deposit rates. Kerala headquartered Federal Bank on Monday hiked interest rates on one year non resident term deposit to 6.5% from 3.82%.

Thrissur based South Indian Bank also increased interest rates on non resident external term deposits across maturities to 6.75% from 3.82%. The revised interest rates will be applicable to fresh deposits and on renewal of deposits.

Their peers like IndusInd Bank, Dhanalaxmi Bank and Laxmi Vilas Bank could follow suit. The Reserve Bank of India on December 16 had deregulated interest rates offered on non resident external rupee and ordinary non resident deposits to attract flows.

The deregulation of interest rates has triggered the move. The hike in interest rates would be applicable for deposits opened for a period of one year only,'' said P C John executive director, Federal Bank. The hiked rate is applicable until the year end. Currently, the bank's non resident Indian deposit base stands at about Rs10,000 crore.

Interest rate on non resident external deposit is tax free and the interest is fully repatriable unlike the non resident ordinary account. This would encourage depositors to park excess funds in these accounts,'' said John.

The hike in interest rates analyst say would not have any impact on banks net interest margin and cost of funds. Banks currently offer about 9.75% interest on non resident ordinary accounts which is taxed and has limitations on repatriation unlike the non resident external account.

The deregulation will enable banks to substitute these high cost deposit with low cost deposits,'' said a banking analyst with a domestic brokerage.

We expect to maintain our net interest margin in the range of 3.7% to 3.75%,'' added John from Federal Bank.

Source: EconomicTimes

South Indian Bank to open corporate finance branches

South Indian Bank is planning to open exclusive corporate finance branches in metro cities to tap potential in corporate sector, according to its Managing Director and Chief Executive Officer, Dr V A Joseph.

Speaking to newspersons after inauguration of 15 branches in Andhra Pradesh here on Monday, Dr Joseph said the corporate finance branches would be opened in New Delhi, Mumbai, Bangalore, Chennai and Kolkata during next financial year.

“Our target is to generate at least Rs 1,000 crore business in each of these branches,'' he said.

Speaking earlier at a function to electronically inaugurate the branches, Dr Joseph said the 82-year-old bank would soon begin operations in Nagaland. “With this, we will be in 27 States and Union Territories making our bank a pan-India bank,'' he said.

To hire 1,000

Plans were afoot to recruit over 1,000 including professionals in engineering and chartered accountancy, he said.

Mr Amitabha Guha, Non-Executive Chairman, said the total number of branches would be increased from existing 675 to 700 before March 31, 2012.

The focus was on financial inclusion. “Out of 15 branches opened today, 11 are in the unbanked areas of Ranga Reddy district,'' Mr Guha added.

Mr E.S.L. Narasimhan, Governor of Andhra Pradesh, who formally inaugurated the braches, said there was a need to upgrade security features on electronic banking.

nagsridhu@thehindu.co.in

2 lakh savings accounts opened in Thiruvananthapuram

More than two lakh new savings bank accounts have been opened in Thiruvananthapuram district for crediting wages of workers under the Mahatma Gandhi National Rural Employment Guarantee Scheme.

Indian Overseas Bank, the Lead Bank, is monitoring the performance of banks to ensure that payments do not get delayed.

This was announced during the 2nd District-Level Review Committee on Banking held here on Tuesday.

MORE BRANCHES

Banks were told to open more branches in the rural and semi-urban areas and deliver more credit for the development of the district.

Delivering the inaugural address at the meeting, Mr A. Sampath, Member of Parliament, requested them to devise schemes for encouraging the saving habit among students.

The MP also urged bankers to increase the flow of credit to women.

PRIORITY SECTOR

Ms Indira Padmini, Chief Regional Manager, Indian Overseas Bank (IOB) and Convenor, Lead Bank, delivered the introductory address.

Mr P. Thomas, Assistant General Manager, Reserve Bank of India, and Mr K. T. Thrivicraman, District Development Officer, National Bank for Agriculture and Rural Development, reviewed the performance of banks in the district.

Mr V. R. Muralidhar, Lead District Manager, and Mr R. Gireesh Kumar, Senior Manager, Lead Bank, Deputy/Assistant General Managers of various Banks, officers of various Government Departments spoke on the occasion.

Meanwhile, the meeting was told that financial institutions in the district have disbursed Rs 1,006 crore under the three major sectors of priority sector against the target of Rs 5,393 crore in 2011-12, representing achievement of 19 per cent.

Under the agricultural sector, the disbursements amounted to Rs 611 crore against a target of Rs 2,176 crore, recording achievement of 28 per cent.

ABOVE AVERAGE

Under the services sector, the banks disbursed Rs 364 crore (Rs 2,865 crore) while in the non-farm sector, which includes industrial credit, the disbursement is Rs 31 crore.

Among those achieving more than the district average were IOB, Canara Bank, Syndicate Bank, Union Bank of India, Indian Bank, Catholic Syrian Bank, Bank of Baroda and Tamilnadu Mercantile Bank. State Bank of Travancore and South Indian Bank achieved 18 per cent of the target. The Thiruvananthapuram District Co-operative Bank and other cooperative banks together disbursed Rs 3,293.84 crore against a target of Rs 1,288.26 crore (26 per cent).

The performance of the Kerala State Cooperative Agricultural and Rural Development Bank was not ‘up to the mark', the meeting was told.

Bankers have been extending support in the implementation of the National Rural Employment Guarantee Scheme in the district, the meeting was told.

RSETI TRAINING

The Rural Self Employment Training Institute (RSETI) opened here by the IOB with the help of Central and State Governments has been training women for entrepreneurship and skill development free of cost, especially for those taking up self-employment ventures.

During this week, the RSETI will launch mobile phone repairing, autorickshaw and car driving courses for women.

Total bank deposits in the district stood at Rs 32,327 crore and advances at Rs 26,704 crore. The Credit-Deposit ratio for the district is 83 per cent (up from 75 in the preceding quarter).

South Indian Bank's Q2 net up 24.4% on robust biz, lower NPAs

For Kerala-headquartered South Indian Bank, the quarter-ended September 2011 proved to be a landmark period in more ways than one. The bank's net profit almost touched the Rs 95-crore mark for the first time in its history, said SIB's Chief Executive and Managing Director, Dr V. A. Joseph.

(The earlier high was Rs 82.4-crore profit clocked during the first quarter of the current fiscal.)

Besides achieving 24.4 per cent growth in net profit to reach Rs 94.95 crore during the just-ended quarter compared with Rs 76.30 cr in the corresponding quarter of the previous fiscal, the bank has also managed to keep its gross and net NPAs (non-performing assets) below the one per cent mark.

‘We've managed this at a time when most banks expect their NPAs to surge as compared to the earlier quarter,” the Chief Executive added.

The bank's gross NPA fell to 0.99 per cent (1.27 per cent) and net NPA, to 0.25 per cent (0.38 per cent).

During the second quarter, deposits grew at 32 per cent to Rs 33,038 crore (Rs 25,060 crore), and advances at 30 per cent to Rs 23,348 crore (Rs 18,029 crore)

The total business of the bank increased to Rs 56,386 crore, up 30.8 per cent and by Rs 13,297 crore year-on-year.

The CASA increased by Rs 1,059 crore from Rs 5,979 crore to Rs 7,038 crore, up 18 per cent.

“Robust growth in business coupled with low NPA has enabled SIB to achieve the present numbers, targets,” Dr Joseph reiterated.

The bank has maintained the Net Interest Margin (NIM) at 3 per cent, and improved the provision coverage from 71 per cent a year ago to 74.7 per cent at the end of the Q2 of 2011-12. The CAR (capital adequacy ratio) is at 13.48 per cent.

Though CAR is higher than the regulatory requirement, it has declined from 15.86 per cent registered at the end of the second quarter of the earlier fiscal.

“We are not looking to raise tier II capital immediately. We can manage without it this fiscal,” Dr Joseph said in reply to a query.

The bank is looking to increase its branch network to 700, and ATMs to 600 by the end of the current fiscal. It is targeting Rs 75,000-crore business by the end of the next fiscal.