The Hindu : Business : Syndicate Bank net drops 7 p.c.

Online edition of India's National Newspaper
Tuesday, May 10, 2005

Business

Business

Syndicate Bank net drops 7 p.c.

Special Correspondent

Announces 14 p.c. final dividend

BANGALORE: Higher outgo on staff salaries and provision on transferring government securities to the held to maturity (HTM) category have made a dent on the net profit of Syndicate Bank to the extent of 7.14 per cent for fiscal 2004-05.

The net profit dropped by Rs. 31 crores to Rs. 403 crores as compared to the previous fiscal, while the operating profit dipped by 5.69 per cent to Rs. 994 crores. The drop in net profit and operating profit is mainly attributed to the bank's decision to take a one-time hit of Rs. 382 crores on provision made on government securities transferred to the HTM category and a provision of Rs. 92 crores towards salary revision of employees.

"The dip was only marginal", Kantha Kumar, Chairman and Managing Director, said at a press conference here. "But for the two issues as well as lack of opportunities on treasury operations, our operating profit and net profit for the year would have been much higher," he said.

Despite the drop in profits, the bank has declared a final dividend of 14 per cent for the year. Together with the interim of 6 per cent paid in March this year, the total dividend for 2004-05 works out to 20 per cent.

BPO foray

Mr. Kumar said the bank was awaiting approval from the Securities and Exchange Board of India (SEBI) to go ahead with its proposed public issue of five crore shares of the face value of Rs. 50 crores. The bank has also unveiled plans to set up two subsidiaries during the current fiscal. It has already received Reserve Bank of India nod to set up a Rural Development Venture Capital Fund with an initial corpus of Rs. 12.50 croresto assist agri business, processed foods, biotech, information technology and non-conventional energy in rural areas. It has sought RBI's permission to enter the booming BPO (business process outsourcing) business."If necessary we will go in for a strategic tie-up for the BPO business and it will be headquartered in Manipal with a presence in Chennai, Bangalore and Delhi," Mr. Kumar said.

Global business of the bank grew by 15.15 per cent to Rs. 74,031 crores in 2004-05. Global deposits posted a growth of 8.71 per cent to Rs. 46,295 crores while global advances jumped by 27.79 per cent to Rs. 27,736 crores.

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