City Union Bank seeks to raise FII limit to 40%

CHENNAI: The board of City Union bank has sought to enhance the limit of foreign institutional investors (FIIs) from 35% to 40% subject to statutory approvals. The move comes in the backdrop of a successful qualified institutional placement (QIP) of Rs 350 crore in equity for which the shareholder's approval was received at their annual meeting last year.
"The issue was over subscribed 3.38 times aggregating to Rs 1,181.39 crore. Out of the Rs 1,181 crore of bids received, the FII interest was for Rs 766 crore and domestic institutional investors (DII) at Rs 415 crore. With our present FII investment ceiling at 35%, we could only allot Rs 115 crore to FIIs despite their huge demand worth Rs 766 crore and we allotted the balance Rs 235 crore to DIIs comprising mutual funds, insurance companies and PE (private equity) firms," N Kamakodi, MD & CEO, City Union Bank said.
The bank's net profit for the quarter ended June 30 rose 10.18% to Rs 99.49 crore as against Rs 90.29 crore during the same period in the previous year. "The growth in profit is because of a 7% growth in total business. Moving forward, we anticipate a 10-12% growth both in advances as well as deposits during the year," Kamakodi said.
Total deposits of the bank during the first increased 9.10% to Rs 22,383 crore as against Rs 20,516 crore during the same period in 2013. Total advances at the end of the first quarter rose 4.95% to Rs 16,153 crore as compared to Rs 15,388 crore during the same period last year.
Bad loans or gross non performing assets (NPAs) of the bank at the end of the first quarter ending June 30 stood at Rs 308 crore as against Rs 192 crore during the same period last year.
Net NPA during the same period stood at Rs 204 crore as against Rs 97 crore during the same period in 2013."The stress levels particularly in the manufacturing intensive sector; particularly steel continues. During this quarter three steel accounts totaling Rs 250 crore turned bad," Kamakodi said.
The bank plans to open 75 branches this year taking its tally to 500. Shares of the bank dropped 0.13% to Rs 74.3 on Wednesday at the BSE.