Chennai, Jan 31 (IANS) Private sector City Union Bank has initiated the process of coming out with a rights issue in six months’ time to beef up its net worth, said a top bank official.
“The bank’s board gave the sanction to initiate the process of appointing the merchant bankers to the proposed issue. The other activities include preparation of required documents, legal due diligence and others,” the bank’s MD and CEO N. Kamakodi told reporters here Tuesday.
According to him, the board has given permission to raise Rs.400 crore through rights issue but the actual quantum and the pricing will be decided later.
Kamakodi said the bank should have a net worth of around Rs.3,000 crore by 2015 going by its business plans.
The bank’s current net worth is Rs.1,218 crore and around Rs.1,000 crore additional net worth would come up through normal operations, Kamakodi said.
In 2009, the City Union Bank came out with a rights issue and raised Rs.48 crore. The rights issue was in the ratio of 1:4 — one share for every four shares held, Kamakodi said.
Meanwhile, the bank closed the third quarter of the current fiscal with a net profit of Rs.72.24 crore and a total income of Rs.489.33 crore up from Rs.57.70 crore and Rs.349.29 crore respectively posted during the corresponding period of previous fiscal.
Kamakodi said the bank’s total business at the end of Dec 31, 2011 stood at Rs.26,439 crore (deposits Rs.15,412 crore, advances Rs.11,027 crore) up from Rs.20,494 crore (deposits Rs.11,977 crore, advances Rs.8,517 crore) as on Dec 31, 2010.
According to him, the bank’s average cost of funds is 8.29 percent and the average yield on advances is 13.57 percent.
The net interest margin stood at 3.24 percent for the third quarter.
The gross non-performing asset (NPA) for the period Dec 31, 2011 stood at 1.18 percent and the net NPA at 0.51 percent.