Centurion Bank of Punjab’s Net Profit for the quarter ended Sept 30, 2007 up 34% to Rs.416 million Net Advances increase 67%; Deposits increase 69%

Tuesday: Centurion Bank of Punjab, today announced an Operating profit for the quarter ended September 30, 2007 of Rs. 951 million; this demonstrates a healthy growth of 78% over the corresponding quarter last year. The net profit for the quarter at Rs. 416 million has shown an increase of 34% as compared to that in the corresponding quarter last year. The net profit for the quarter is after a negative impact of Rs. 23 million on account of the operations of the erstwhile Lord Krishna Bank which was merged with the Bank on August 29, 2007.
The bank has demonstrated strong growth along all its businesses. Advances grew by 67% and deposits by 69% over those at the same time last year. The bank continues to maintain a strong momentum in both earnings growth as well growth across all its core businesses, especially in the retail and SME sectors.

Significant growth along all businesses
The Bank’s net advances and deposits witnessed growth rates 67% and 69% over those in the corresponding quarter of the previous year. While this growth includes the impact of the merger with Lord Krishna Bank, the growth in the net advances and deposits of Centurion Bank of Punjab on a standalone basis was also a robust 58% and 54% respectively. The Bank’s advances towards the SME sector grew by 141% and retail advances grew by 55% over those at the end of the corresponding quarter last year, demonstrating the continuing momentum in these areas.
Within the Bank’s retail asset portfolio, Mortgages and Personal loans grew rapidly. As on September 30, 2007 mortgages formed the largest component of the Bank’s retail asset portfolio at Rs. 25,306 million constituting 28% of the Bank’s retail assets as compared to 22% last year, followed by personal loans at Rs. 18,925 million constituting 21% of the Bank’s retail asset portfolio as compared to 14% at the end of the corresponding quarter of the previous year. Two wheelers and commercial vehicle & construction equipment loans now form 33% of the bank’s retail asset portfolio as compared to 46% last year.

Profitability
The net profit for the Bank has grown sequentially by 26% over the previous quarter, and 34% over the corresponding quarter of the previous year. While the bank’s operating profit for the quarter grew by 78% over the corresponding quarter of the previous year. The Net Profit and the operating profit for the bank include a negative impact of Rs. 23 million and Rs. 97 million respectively on account of the loss in operations of the erstwhile Lord Krishna Bank, without which the reported earnings would have been higher.
For the quarter ended September 30, 2007 (Q2 FY2008), Net Interest Income increased by 25% over the previous quarter (Q1 FY2008) and by 35% over last year (Q2 FY2007) to Rs. 1,705 million. Net Interest Margin for the quarter ended September 30, 2007 (Q2 FY2008) was 3.5% (adjusted for HTM premia amortization as per the clarification issued by the RBI on July 11, 2007). Without this adjustment the NIM would have been 3.7% as compared to 3.6% in the previous quarter (Q1 FY2008). This has been despite the negative effects on the significantly lower NIMs of the erstwhile Lord Krishna Bank. The NIM for Centurion Bank of Punjab standalone was 4.1% as compared to 3.6% in the previous quarter (Q1 FY2008).
Non Interest Income for the quarter ended September 30, 2007 (Q2-FY2008) increased 78% to Rs. 1,570 million. 4% of the above non-interest income comes from the operations of the erstwhile Lord Krishna Bank. An increase in fees & commissions from wealth management, core banking, retail assets and foreign exchange businesses contributed to this growth. Fee income constitutes 48% of the Bank’s total income for the quarter. Trading income at Rs. 71 million for the quarter constituted 4.5% of the non-interest income.
The total income for the bank grew by 44% leading to an improvement in the bank’s cost to income ratio to 71% this quarter as compared to 75% in the corresponding quarter of the previous year. The cost income ratio for the bank excluding erstwhile Lord Krishna Bank was 68%.

Asset Quality
The ratio of the net Non-Performing Loans of the bank to net customer assets stood at 1.6% which is unchanged as compared to the end of the previous quarter (Q1 FY2008). The NPA provisioning continues to remain much higher than that stipulated by the Reserve Bank of India. During the quarter despite a challenging environment the NPAs of the bank have stabilized.

Deposits
The deposits at Rs. 192,912 million grew 69% over those at the end of the corresponding period last year. The cost of deposits for the quarter ended September 30, 2007 was 7.5%. The low cost deposits (CASA) for the Bank grew by 26% over those at the end of the corresponding period of the previous year. The CASA ratio for the combined Bank was 25% while that for the erstwhile Lord Krishna Bank standalone was 17%.

Capital Adequacy and Net Worth
The Bank’s capital position remained healthy, total capital as a percentage of its risk weighted assets was 12.1% of which the Tier I capital adequacy ratio was 10.4% and the Tier II capital adequacy ratio was 1.6%. The net worth of the Bank at the end of the quarter (Q2-FY2008) was Rs. 18,952 million.

Book Value per share and Earnings per share
The Bank’s book value per share increased to Rs. 10.4 and its EPS (non-annualized for the quarter) was Rs. 0.25 on the expanded equity base post merger and post the issue of shares through the QIP.

Capital Raising.
During the quarter ended September 30, 2007 the Bank raised Rs. 5 billion through a Qualified Institutional offering. The Bank issued 122.7 million equity shares at a price of Rs. 40.75 / equity share.

Merger with Lord Krishna Bank
During the quarter the Reserve Bank of India accorded its approval to the impending merger of Lord Krishna Bank with Centurion Bank of Punjab. Accordingly the operations of both banks were merged on August 29, 2007 with effect from March 31, 2006.
The process of integration of the operations of both banks is well underway and is expected to be completed in all significant aspects by the end of the current financial year. As the integration of the erstwhile LKB is completed and the bank increases its size and scale the efficiency of its operations will continue to improve.
The Bank has adequately provided for the existing NPAs of erstwhile Lord Krishna Bank that were significantly higher than those of Centurion Bank of Punjab standalone. There have also been adequate provisions made for the tax and retirement liabilities of the erstwhile Lord Krishna Bank, across its balance sheet, future impairment of assets including physical assets and any other items that could impact the balance sheet of the combined Bank.
The merger with Lord Krishna Bank adds 124 branches and extension counters to the network of Centurion Bank of Punjab, giving the Bank an added physical dominance in the southern part of the country, and significantly increasing its network in the metros and Tier I cities across the country.
Post merger the Bank’s network comprises of 394 branches and extension counters across 180 locations in India, the bank has received 20 additional branch licenses from the RBI, these branches will be opened before the end of the financial year. In addition the bank has 47 asset finance division offices and a well entrenched on ground direct distribution network over and above the branches to carry out its lending operations.
About Centurion Bank of Punjab:

Centurion Bank of Punjab is one of the leading new generation private sector banks in India. The bank serves individual consumers, small and medium businesses and large corporations with a full range of financial products and services for investing, lending and advice on financial planning. The bank offers its customers an array of wealth management products such as mutual funds and life and general insurance and has established a leadership 'position'. The bank is also a strong player in foreign exchange services, personal loans, mortgages and agricultural loans. Additionally the bank offers a full suite of NRI banking products to overseas Indians.

On 29th August 2007, Centurion Bank of Punjab merged with Lord Krishna Bank (LKB), post obtaining all requisite statutory and regulatory approvals. This merger has further strengthened the geographical reach of the Bank in major towns and cities across the country, especially in the State of Kerala, in addition to its existing dominance in the northern part of the country. Centurion Bank of Punjab is planning to build upon the strong brand attributes of both banks in their respective geographies.

Centurion Bank of Punjab now operates on a strong nationwide franchise of 394 branches and 452 ATMs in 180 locations across the country, supported by employee base of over 7,500 employees. In addition to being listed on the major Indian stock exchanges, the Bank’s shares are also listed on the Luxembourg Stock Exchange.

For more information log on to www.centurionbop.co.in

For further information, please contact:

Pushkar Gupta
Centurion Bank of Punjab
Tel.: (022) 67540888
Radha Sajnani / Kirby Furtado / Supriya Sonde
Vaishnavi Corporate Communications
Tel.: (022) 6656 8787
Mobile: (0) 98214 35679 / 98216 74905 / 98670 35854
Email: rsajnani@vccpl.com / kirbyw@vccpl.com / ssonde@vccpl.com