Merchant banking joint venture firm to be floated soonMay 23rd, 2008 - 7:44 pm ICT by admin
Chennai, May 23 (IANS) The Tamil Nadu-based private bank, City Union Bank Limited, and Hattan National Bank of Sri Lanka will jointly float a 50:50 merchant banking company soon, said a top official. “We have expertise in small and medium enterprises (SME) while Hattan National are experts in bringing in investors for SMEs and hence the partnership,” S. Balasubramanian, City Union Bank’s chairman told the media here Friday.
Executive Director N. Kamakodi said: “We have applied to Reserve Bank of India to start the new business. The equity capital of the proposed company will be Rs.50 million and will be headquartered in Chennai.”
According to him, City Union Bank’s clientele predominantly comprise of SME and the merchant banking outfit would be able to bring in overseas investors to fund them.
The bank will increase its branch network to 222 this fiscal by adding 44 more outlets.
Kamakodi said: “The focus is on opening new branches outside Tamil Nadu. The new branches will come up in Rajasthan, Uttar Pradesh, Punjab and other places.”
He said the bank is opening branches based on business potential and the needs of its current clients and certainly not to have just a presence outside Tamil Nadu.
Declaring the bank’s working results for FY08, Balasubramanian said: “The bank’s total business crossed Rs.110 billion (advances Rs.45.75 billion, deposits Rs.64.25 billion) as against the previous years figure of Rs.80.29 billion (advances Rs.33.29 billion, deposits Rs.47 billion).”
For the period under review, the bank’s total income stood at Rs.6.86 billion and the after tax profit Rs.1 billion as compared to the previous year’s figures of Rs.4.54 billion and Rs.718 million respectively.
The net interest expense during FY08 stood at Rs.3.96 billion while it was Rs.2.32 billion in FY07.
The bank’s capital adequacy ratio was 12.48 percent and the percentage of gross non performing asset (NPA) to gross advances stood at 1.81 percent while the percentage of net NPA to net advances is 0.98 per cent.
According to Balasubramanian, after declaring an interim dividend of 30 percent the board has recommended a final dividend of 20 percent taking the total to 50 percent for FY08.
On the bank’s needs for equity infusion, Kamakodi said the bank would need around Rs.3 billion over the next three years.
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