Tag: Basel-III

Canara Bank raises Rs 1,500 crore via Basel-III compliant bond, BFSI News, ET BFSI

Banking & Finance

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New Delhi, State-owned Canara Bank on Thursday said it has raised Rs 1,500 crore by issuing Basel-III compliant bonds. “Our bank came out with issuance of Rs 1,500 crore of additional tier I bonds on 30th November 2021.

“The bank received total bid amount of Rs 4,699 crore, out of which full issuance of Rs 1,500 crore was accepted at 8.05 per cent,” Canara Bank said in a regulatory filing.

To comply with Basel-III capital regulations, banks globally need to improve and strengthen their capital planning processes.

These norms are being implemented to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks.

Shares of Canara Bank closed at Rs 207.10 apiece on BSE, up 0.15 per cent from the previous close.

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PSBs line up local AT-1 bonds issues, but private-sector lenders stay away, BFSI News, ET BFSI

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Public sector banks have started issuing AT-1 bonds in the domestic market more than a year after wriding down of such bonds of Yes Bank spooked the market

However, private sector banks are still keeping away and raising money via the instrument overseas, where interest rates are low.

At present, nearly three-four state-owned including SBI, Union Bank, Canara Bank and Bank of Baroda are looking to raise funds through AT-1 bonds.

In March this year, prodded by the Finance Ministry, the Securities and Exchange Board of India (Sebi) had relaxations in valuation norms. However, the main issues that AT1 bonds will continue to be treated as 100-year bonds stayed. The deemed residual maturity of Basel-III AT-1 bonds would be 10-year until March 31, 2022. Sebi said from April to September 2022, it would be valid at 20 years, and from October 2022 to March 2023, it would have a life span of 30 years. From April 2023, the residual maturity will be 100 years from the date of issuance of the bond.

In September SBI Rs 4,000 crore via additional Tier 1 bonds at a coupon rate of 7.72%, the first such issuance in the domestic market after Sebi issued new rules.

The plan

SBI is weighing options to raise money either through local additional tier-1 securities for the third time in this financial year or rupee-denominated ‘masala’ bonds for overseas investors. Bank of Baroda has approved the issuance of AT1 and AT11 bonds worth Rs3000 crore. Capital Raising Committee of our Bank has today approved the issuance of Basel III Compliant Additional Tier 1 (AT1) / Tier II Bonds for an aggregate total issue size of Rs3000cr in single or multiple tranches,” the bank said earlier this month.

What are AT1 bonds?

These are unsecured bonds which have perpetual tenure — or no maturity date. They have a call option, which can be used by the banks to buy these bonds back from investors. AT1 bonds are subordinate to all other debt and only senior to common equity. Mutual funds are among the largest investors in perpetual debt instruments, and hold over Rs 35,000 crore of the outstanding additional tier-I bond issuances of Rs 90,000 crore.

The mutual fund position

Mutual funds, which once used to buy heavily in AT1 bonds, are lukewarm about this asset class after the banking regulator last year ordered that these instruments be written off in Yes Bank’s state-sponsored bailout. Also, on March 10, Sebi had ordered mutual funds to cap ownership of bonds with special features at 10% of the assets of a scheme and value them as 100-year instruments from next month, potentially triggering a redemption wave. Later, the capital markets regulator eased valuation rules but with some riders after the finance ministry asked it to withdraw the directive to mutual funds.

The muted response by MFs had prompted the lenders to tap the overseas market.

Perpetual bond sales by banks have nearly halved to Rs 18,772 crore in FY21 from Rs 34,860 crore three years earlier.



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Canara Bank raises Rs 1,500 cr through bonds, BFSI News, ET BFSI

Banking & Finance

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New Delhi, State-owned Canara Bank on Monday said it has raised Rs 1,500 crore by issuing Basel-III compliant bonds. The bank has issued and allotted Basel-III compliant additional tier I bonds amounting to Rs 1,500 crore, Canara Bank said in a regulatory filing.

The bank said as many as 16 allottees have been issued the non-convertible, perpetual, taxable, subordinated bonds bearing a coupon of 8.40 per cent, it said.

Stock of Canara Bank closed 1.71 per cent up at Rs 201.95 on BSE. PTI KPM RUJ RUJ

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Federal Bank records highest ever operating profit, BFSI News, ET BFSI

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Federal Bank recently announced the Unaudited Financial Results for the quarter ended 30th June 2021. Its operating profit has grown 21.75% to reach Rs. 1135.18 Cr with net total income growing 15.90% to reach Rs.2068.58 Cr.

Gold loans have registered growth of 53.90% to reach Rs. 15764 Cr and retail advances have grown 15.15% to reach Rs.43599.03 Cr.

Shyam Srinivasan, Managing Director & CEO, Federal Bank said “The external environment continues to be challenging however we have managed to keep our operating momentum intact by delivering our highest ever operating profit, for the quarter. Our CASA ratio is at an all-time high and we continue to build a granular liability franchise with more than 90% of our deposits being retail in nature.”

The total business of the Bank reached Rs. 299158.36 Cr registering Y-o-Y growth of 8.30% as on 30th June 2021. Total Deposits reached Rs. 169393.30 Cr registering Y-o-Y growth of 9.33%. Net advances grew by 6.98% Y-o-Y to reach Rs. 129765.06 Cr as on 30th June 2021.

The total Savings Bank deposit registered a growth of 18.71% to reach Rs. 49018.24 Cr as on 30th June 2021. CASA Deposits of the Bank stood at Rs. 58958.79 Cr registering a Y-o-Y growth of 18.83%. NRE Deposits of the Bank reached Rs. 66018.73 Cr registering a Y-o-Y growth of 9.53% as on 30th June 2021. NRE SB grew to reach Rs. 20010.09 Cr registering a Y-o-Y growth of 14.92%.

The Operating Profit of the Bank as on 30th June 2021 stood at Rs. 1135.18 Cr up from Rs. 932.38 Cr. with total income reaching Rs.4005.86 Cr. Net Profit of the Bank for the quarter ended June 2021 stood at Rs. 367.29 Cr.

“Our relationship with the NR diaspora continues to blossom with our share in personal inward remittances increasing to 18.20%. We have also managed to keep asset quality in check with only a marginal uptick in GNPA and NNPA. Investors believe in our brand and its operational efficiency which was testified by a reputed investor like IFC with their decision to invest in the Bank to the tune of 4.99%” Shyam Srinivasan added.

Net Interest Income grew 9.41% on a Y-o-Y basis from Rs.1296.44 Cr to Rs.1418.43 Cr, other income grew by 33.13% to reach Rs.650.15 Cr, compared to Rs.488.37 Cr as on 30th June 2020. Net total income of the Bank grew 15.90% to reach Rs.2068.58 Cr.

Gross NPA of the Bank as at the end of the quarter stood at Rs. 4649.33 Cr, which as a percentage of Gross Advances comes to 3.50%. Net NPA as on 30th June 2021 stood at Rs.1593.24 Cr, and Net NPA as a percentage of Net Advances is at 1.23%. The Provision Coverage Ratio (including technical write-offs) was strengthened substantially and stood at 78.66%.

The Bank’s Net worth on a Y-o-Y basis increased from Rs.14922.82 Cr to Rs. 16488.53 Cr from 2020 to 2021. The Capital Adequacy Ratio (CRAR) of the Bank, computed as per Basel III guidelines stood at 14.64% as at the end of the quarter. Book Value per share increased to Rs. 82.60 from Rs. 74.85.

Some key ratios include the ROA & ROE of the Bank for the quarter which stood at 0.76% and 9.03% respectively. The Net Interest Margin as on 30th June 2021 stood at 3.15% and cost to income ratio of the Bank has been contained at 45.12% clocking a reduction of 264 bps Y-o-Y. The EPS of the Bank on an annualized basis stands at Rs 7.38.



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Bottomline back in black, IOB wants to be out of PCA, BFSI News, ET BFSI

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Chennai, With its bottomline back in black after a long time, the Indian Overseas Bank (IOB) has approached the Reserve Bank of India (RBI) seeking it be taken out of the Prompt Corrective Action (PCA) fold, a top official said.

Managing Director & CEO Partha Pratim Sengupta also said that the IOB plans to raise additional funds of about Rs 2,000 crore from a follow-on equity issue and Rs 1,000 crore by issue of bonds.

Addressing reporters, Sengupta said the bank has approached the RBI to be taken out of PCA as its financial metrics have turned good.

The bank also said it plans to come out of PCA by focusing on loan recovery, low cost deposits and less capital consuming advances.

The bank closed last fiscal with a net profit of Rs 831 crore as against a net loss of about Rs 8,527 crore.

The total income for the year ended March 31, 2021 stood at about Rs 22,525 crore as against about Rs 20,712 crore for FY20.

According to Sengupta, the income from treasury operations had beefed up the bank’s other income and the reduction in cost of funds contributed to the profitability.

In a regulatory filing, the IOB said its Board has approved the issue of 125 crore equity shares at an appropriate premium to the public by way of follow-on public offer/rights issue with or without participation of the government.

The Board also decided that the issue could also be to qualified institutional buyers, employee shareholders, and on preferential basis to insurers and mutual funds.

It also approved the issue of Basel III compliant tier II bonds up to Rs 1,000 crore in one or more tranches on private placement or public issue.

On March 31, 2021, the IOB had received Rs 4,100 crore as capital infusion by the government at an issue price of Rs.16.63 per equity share of Rs.10 each.

During the year under review, IOB’s total business stood at Rs 3,79,885 crore (deposits Rs 2,40,288 crore, advances Rs 1,39,597 crore) up from Rs 3,57,723 crore (deposits Rs 2,22,952 crore, advances Rs 1,34,771 crore).

The bank said it had recovered about Rs 6,831 crore from non-performing assets (NPA) accounts last fiscal.

The bank’s gross NPA (GNPA) reduced from 14.78 per cent as at March 31, 2020 to 11.69 per cent as at March 31, 2021.

The net NPA (NNPA) went down from 5.44 per cent, as at March 31, 2020, to 3.58 per cent as at March 31, 2021.

Sengupta said IOB is targeting GNPA of less than 10 per cent this fiscal.

According to him, the bank has identified about Rs 8,000 crore loan for restructuring and a cash recovery target of about Rs 4,600 crore.

Sengupta also said that the IOB had merged 53 branches last fiscal and one or two branches may be merged this year.



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Indian Bank raises Rs 2,000 cr by issuing bonds, BFSI News, ET BFSI

Banking & Finance

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State-owned Indian Bank on Wednesday said it has raised Rs 2,000 crore by issuing Basel-III compliant bonds.

The bank has raised tier-2 capital fund through private placement of Basel-III compliant tier-2 bonds, Indian Bank said in a regulatory filing.

The coupon on the bonds is 6.18 per cent per annum payable annually.

“The issuance/placement of said bonds has been completed by the bank through BSE-EBP (bond platform),” it added.

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