South Indian Bank sees 50% growth in fee income

13 Dec 2011 Evaluate

Kerala-based mid-sized listed bank, South Indian Bank (SIB), is aiming at a 50 per cent growth in its fee income in the next two to three years to further supplement its net profit. In its September quarter results, the bank witnessed a higher-than estimated net profit on a sharp improvement of net interest margin, resulting in a net interest income at Rs 260 crore. The low fee income was primarily because of lack of aggressive corporate lending. The bank is opening six dedicated corporate banking facilities in major cities like Mumbai, New Delhi, Kolkata, Hyderabad, Chennai and Bangalore and is expecting corporate lending business of around Rs 1,000 crore from each of these branches, which will help it increase fee income like letters of credit and bank guarantees.

The bank is also looking at increasing its fee income by selling third-party products like insurance policies of life and general insurance companies and gold coins. Fee income for the financial year ended March 2011 was around 20 per cent of the total income. The bank has revised its growth targets and was now looking at a total business of Rs 1 lakh crore with 8,000 employees spread across 800 branches and ATMs by the end of March 2014. The bank, is awaiting the capital markets to improve to place a Rs 1,000-crore equity with qualified institutional investors. Currently it doesn’t see any urgency to raise funds as it is comfortable with the capital adequacy of nearly 14 per cent, which will be maintained even after achieving around 25 per cent growth in business and the profits earned during this financial year.

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