Corporation Bank chairman and managing director RS Hugar said: "The bank will able to fully absorb the total impact of the new prudential measures on provisioning and capital adequacy ratio due to its intrinsic financial strength, quality of assets and prudent management." Hugar added that despite additional provisioning of Rs 20 crore, the bank will be able to meet an envisaged net profit of Rs 220 crore.

Corporation Bank's capital adequacy ratio, after assigning risk weights on government securities held by it, is expected to hover near 15 per cent at end-March '99 against the 9 per cent subscribed to by end-March 2000. The bank's networth is expected to touch Rs 1,000 crore.

Despitecompetitive pressure, Corporation Bank, has been able to maintain a spread of 3.4 per cent. The bank's cash-management services saw 680 corporates availing of the facility, up by 70 entities in the course of the fiscal so far. Non-interest income and business turnover in forex is expected to be at Rs 200 crore and Rs 49,000 crore at end-March '99, registering increases of 40 per cent and 32 per cent respectively.

"In the wake of thinning spreads, Corporation Bank is concentrating its focus on the non-performing asset (NPA) management, and stepping up non-interest income," Hugar said, adding: "An effective monitoring system to ensure that the incremental deliquency is the barest minimum and at the same time, the recover in the NPA portfolio, is maximum."

To supplement its spreads and sustain profits (half year 1998-99 at Rs 106.73, up by 25 per cent over the corresponding period in the previous fiscal), Corporation Bank is reviewing in funding costs and has embarked on special drives to increase low-costdeposits.

The bank's NPA stood at 2.7 per cent as on 30 September '98, down from the 2.9 per cent and 3.6 per cent at end-March '98 and end-March '97. "This is experted to touch a low of 2.5 per cent at the end of the current fiscal," Hugar said, "Which may be the lowest among public sector banks."

In a press release issued on Monday, the bank claimed that it had undertaken an account-wise review of its large borrowers, which revealed a very low exposure to recession-struck industries, and further that it had acheived a 92 per cent of the cash recovery target set for the first half of the current fiscal. Corporation Bank said that it was confident of effecting a cash recovery of over Rs 50 crore for the full year, which is 20 per cent higher than that of the previous fiscal.

INSIGHT
Step ahead of Reserve bank

Corporation Bank has always been a step ahead of the Reserve Bank of India so far as getting non-performing assets (NPAs) down is concerned. The bank's net NPAs were brought downto 2.77 per cent in the first half of the current fiscal, the lowest in the sector. Return on assets has been a high 1.9 per cent. During the last quarter, there has been some pressure on spreads, a result of the freedom allowed to corporates to shop around for differential rates on deposits. Provision coverage (provisions held/gross NPA) has declined from 78 per cent in FY1996 to 62 per cent in the first half of the current fiscal. The bank needs to address these factors. Otherwise, there is little reason why the bank should not get a higher discounting.