TEXT: CRISIL P1+ on Corporation Bank CDs enhanced to 70 bln rupees
Thursday, Sep 4
.
MUMBAI - Following is the press release from CRISIL Ltd on
Corporation
Bank's debt programme:
.
Instruments Rating
Rs.70 Billion Certificates of Deposit Programme
(Enhanced from Rs.50 Billion) P1+
Lower Tier II Bonds Aggregating Rs.10 Billion AAA/Stable
(Reaffirmed)
Fixed Deposit Programme FAAA/Stable
(Reaffirmed)
.
CRISIL's ratings on Corporation Bank's debt instruments continue
to
reflect the bank's strong capitalisation level and healthy asset
quality. The
ratings also factor in the expectation of support from the bank's
majority
owner, the Government of India (GoI), in the event of distress. These
strengths are partially offset by Corporation Bank's limited size and
its
geographical concentration.
Corporation Bank had a high Tier I capital adequacy ratio of 10.1
per
cent as on June 30, 2008. Though the bank's absolute net worth is
moderate,
it had a comfortable net worth coverage for net non-performing assets
(NPAs)
at around 30 times as on March 31, 2008. The bank's gross NPAs stood
at 1.5
per cent as on March 31, 2008, which compares favourably with its
peers. GoI,
which currently holds a 57.17 per cent stake in Corporation Bank as
against
the minimum stipulated share of 51 per cent, is expected to support
the bank
in the event of distress.
However, Corporation Bank's balance sheet is relatively small as
compared
to the balance sheets of large public sector banks in India. In
addition, the
bank's operations are concentrated in India's western region, making
it
vulnerable to economic downturns in the region.
Corporation Bank's resource profile is adequate, and marked by an
average
deposit mix and cost of deposits which is comparable with its peers.
The
bank's cost of deposits stood at 6.4 per cent for 2007-08 (refers to
financial year, April 1 to March 31) as against 5.3 per cent for
2006-07, and
has remained at 6.4 per cent during the quarter ended June 30, 2008.
Corporation Bank's core profitability, as reflected in its net
profitability
margins (NPM), is estimated to have fallen to 1.1 per cent (based on
annual
average numbers) in 2007-08 from 1.5 per cent in 2006-07, as a result
of
increased borrowing costs over this period. The decline in interest
spreads,
due to the increase in the cost of borrowings, is expected to impact
the
bank's profitability margins over the near term.
Outlook:Stable
CRISIL believes that Corporation Bank's financial and business
profile
will remain comfortable over the medium term, supported by strong
capitalisation and high asset quality. CRISIL also expects that the
bank's
majority owner, GoI, will support the bank in the event of distress.
The
outlook could be revised to 'Negative' if there is a weakening in the
bank's
asset quality or earnings profile.
About the bank
Corporation Bank is a public sector bank based in southern India.
The
bank was founded in 1906 at Udipi, Karnataka, by a group of merchants,
educationists, lawyers, and insurance agents, and was nationalised in
1980
during the second round of bank nationalisation undertaken by GoI. The
bank
had a total deposit base of Rs.554.2 billion and advances of Rs.391.9
billion
as on March 31, 2008. It reported a profit after tax (PAT) of Rs.7.4
billion
for the year ended March 31, 2008, as against Rs.5.4 billion for the
previous
year. The bank reported total income (net of interest expense) and PAT
of
Rs.3.8 billion and Rs.1.84 billion, respectively, for the quarter
ended June
30, 2008, as against Rs.3.5 billion and Rs.1.77 billion, respectively,
for
the corresponding quarter of the previous year.
.
Rs = Rupees
FY = Financial year
End
--~--~---------~--~----~------------~-------~--~----~
You received this message because you are subscribed to the Google Groups
"Kences1" group.
To post to this group, send email to [email protected]
To unsubscribe from this group, send email to [EMAIL PROTECTED]
For more options, visit this group at
http://groups.google.com/group/kences1?hl=en
-~----------~----~----~----~------~----~------~--~---
