Corporation Bank Q2 net down 81 per cent

Our Banking Bureau
23 October 2004

Mumbai:CorporationBank''s net profit fellby 81 per cent to Rs27.39 crore for the quarter ended September 30, as against Rs144.93 crore in the year ago period.

K Cherian Varghese, chairman, Corporation Bank, ascribed the decline in profits, to lower returns from the sale of investments in the backdrop of hardening yields in the government securities. The bank''s trading profits fell to Rs39.42 crore from Rs118.82 crore.

For the six months ended September, the fall in the profit on sale of securities dipped to Rs54 crore (Rs177 crore). The bank had to also provide for depreciation to its investment portfolio to the extent of Rs227.62 crore.

The bank has shifted Rs4,932 crore of securities from the `available for sale'' category to `held to maturity'' (HTM) category and this resulted in charging additional depreciation of about Rs205 crore to the profit and loss accounts, Varghese said.

He said more than10 per cent of the bank''s investment portfolio - excluding the HTM category - is in the investment fluctuation reserve, as against the stipulated requirement of 5 per cent to be fulfilled by March 2006. Consequently, the bank will be in a far better position to withstand the volatility in the investment portfolio, he said.

Total income for the second quarter, was lower at Rs685.81 crore (Rs732.87 crore). This is inclusive of interest earned at Rs564.20 crore (Rs549.10 crore) and Other Income at Rs121.61 crore (Rs183.77 crore).