City Union Bank to raise Rs 1000 cr

Source:BS:TE Narasimhan / Chennai March 27, 2010, 0:13 IST

City Union Bank (CUB) is planning to raise around Rs 1,000 crore over the next three years to support its business target of Rs 50,000 crore by 2013-14.

“If the bank has to grow at the rate of 30 per cent, we have to increase our capital every three years. We would require Rs 1,000 crore incremental funds over the next three years to reach our business target,” said N Kamakodi, executive director, City Union Bank,

The bank would raise the money through rights issue, qualified institutional placement (QIP) or preferential allotments. In the last three years, it raised Rs 200 crore through rights issue and preferential allotments.

The Kumbakonam-based private bank had set a target of Rs 50,000 crore total business by 2013-14 of which deposits would include Rs 27,000 crore and advances Rs 23,000 crore. The bank is likely to close the current fiscal with a business of Rs 16,500-17,000 crore as compared with Rs 13,700 crore last year.

 To achieve the target, the bank would ramp up its branches. Currently, it has 222 branches and is planning to open another 62.

Of the new branches, 50 per cent will come up in Tamil Nadu, while 25 per cent in the other three southern states and the remaining across India. “Our focus will continue be South, especially Tamil Nadu, where for another 10 years we have space to grow,” said Kamakodi.

The bank recently opened branches in Madhya Pradesh, Rajasthan, Punjab and Uttar Pradesh.

This year, CUB is planning to open in Chhattisgarh and Orissa.

City Union Bank’s networth is around Rs 850 crore, which will be increased to Rs 1,000 crore by December 2010, said Kamakodi. The bank reported a net profit of Rs 122.13 crore for the year ended March 31, 2009, and is likely to close this fiscal with Rs 150-155 crore.

Kamakodi said gross non-performing asset (NPA) was around Rs 120 crore and net NPA around Rs 65 crore.