Corporation Bank has posted a 25 per cent drop in its net profit at Rs 113.28 crore (Rs 1.13 billion) for the third quarter ended December 31, 2003 against Rs 151.81 crore (Rs 1.52 billion) in the same period of 2002-03 due to a drop in income from sale of securities.

The total income for the reporting quarter was also down to Rs 673.57 crore (Rs 6.73 billion) compared to Rs 693.14 crore (Rs 6.93 billion) in the same quarter last fiscal, bank's chairman and managing director K Cherian Varghese told reporters after the board meeting in Mumbai on Wednesday.

The growth in net profit and income was down due to drop in income from sale of securities. However, the core business, including lending, showed a 34 per cent growth, Varghese said.

The bank has provided higher amount for provisioning and contingencies at Rs 72.22 crore (Rs 722.2 million) in the Q3 of the current fiscal [Rs 43.55 crore (Rs 435.5 million) in Q3 of 2002-03], out of which Rs 63.75 crore (Rs 637.5 million) were provided for non-performing assets, he said.

For the nine months ended December 2003, the net profit and total income stood higher at Rs 384.64 crore (Rs 3.85 billion) [Rs 368.73 crore (Rs 3.69 billion)] and Rs 2,069.53 crore (Rs 20.69 billion) [Rs 1,977.34 crore (Rs 19.77 billion)], respectively, he added.

The total business of the bank in the nine months rose from Rs 30,668 crore (Rs 306.68 billion) as on December 31, 2002 to Rs 33,822 crore (Rs 338.22 billion) by the end of December 2003.

Deposits grew from Rs 20,458 crore (Rs 204.58 billion) to Rs 22,076 crore (Rs 220.76 billion) by December end while advances grew to Rs 11,746 crore (Rs 117.46 billion) [Rs 10,210 crore (Rs 102.10 billion)], he added.

Corporation Bank fixes BPLR at 10.5%

Corporation Bank has fixed benchmark prime lending rate at 10.5 per cent, one per cent less than the current PLR of 11.5 per cent and said it will shift the focus of lending from corporates to small business and retail segment.

The bank board has approved BPLR of 10.5 per cent and term loans would carry a premium of 0.50 per cent, Varghese said.

Asked if any benefit would be passed on to corporates and home loan segment, he said these two areas have benefited the most from drastic cut in rates due to competition and there was very little chance of change in their rates.

"In fact, corporates may have to pay up higher optimal rates as there has to be balanced distribution of interest burden among various stakeholders," he added.

Taking advantage of ample liquidity in the system, corporates have raised funds at sub-PLR rates, at times making transaction unremunerative for banks, he added.

As a consequence, the state-owned bank is now focusing its efforts on lending to small and medium sized units and retail segment, which provide better yields, the CMD said.

Out of net advances of Rs 11,746 crore (Rs 117.46 billion) as on December 31, 2003, Rs 3,600 crore (Rs 36 billion) were lent to retail including housing segment, he added.