Though FIIs pulled out around $ 135 million from the market during October following the US-64 scare, the FII holding in Corporation Bank came down marginally from 14.68 per cent to 14.48 per cent. Even in the months following the nuclear tests and the sanctions, the FIIs increased their investments in the bank. The FII holding which was around 11.31 per cent towards end-April, increased to 15.63 per cent by July 10.

This explains why the fall in the Corporation Bank scrip was not as steep as its peers. The scrip continued to trade above its offer price of Rs 85, while others like Bank of India and Bank of Baroda are trading at a steep discount to theiroffer price.

One of the key reasons for the FII banking appears to be the non-performing assets, which is among the lowest in the country's banking sector. During the first half of the current financial year, Corporation Bank's net NPA came down to 2.77 per cent from 2.93 per cent.

During the half year the bank had a delinquency of around Rs 31 crore. Of this, the bank recovered Rs 9.34 crore and wrote off Rs 0.33 crore. After making a provision of Rs 10.44 crore, the net NPA was 136.17 crore or 2.77 per cent to net bank credit.

The bank's net profit grew by 25.4 per cent to Rs 106.73 crore in the first half, while operating profit grew 14.8 per cent to Rs 146.13 crore. Though the bank's advances grew by 14.85 per cent or Rs 639 crore over the March 31, 1998 figure of Rs 4302 crore, its investments shot up by 37.48 per cent to Rs 5,711 crore. The bank had to deploy a substantial part of the incremental deposits of Rs 2,208 crore in investments, thanks to the relatively poor offtake in the first sixmonths.

According to a senior official, the bank has bagged five major accounts from blue chip companies worth Rs 500 crore. This is expected to be disbursed in the coming months, he added. Over the last five years (upto March 1998) the bank's loan assets grew at a compounded annual growth rate (CAGR) of 28.38 per cent from Rs 1234 crore to Rs 4303 crore. During 1997-98 the bank secured borrowal accounts of 30 top rated corporates, while in the current year so far another 25 corporate accounts have been added, said the official.

Non-interest income rose 45.8 per cent to Rs 89.6 crore, with substantial contributions coming from cash management and gold operations. The net income from gold and silver trading was Rs 11.04 crore, on a business volume of Rs 3,500 crore. The turnover in the cash management services segment was Rs 28,732 crore with a client-base of 674 as on September 30, 1998.

On an equity capital of Rs 119.98 crore, the annualised earnings per share Rs 17.79 based on first half resultscompared to Rs 13.91 for 1997-98. The book value has increased from Rs 70.75 to Rs 79.68 per share.