Corporation Bank reported a net profit of Rs 192 crore for 1998-99. This was higher by 16 per cent over the previous year. The profit growth was dented to some extent by increased provisioning for wages (following the IBA settlement with the bank unions) and incremental provisions for standard assets and government guaranteed debts. But these figures were more or less anticipated and discounted. The surprise element was the accounting treatment adopted by the bank for certain items which served to push up the profit. One, the investment depreciation of Rs 17 crore that the bank suffered during the year was bridged fromthe investment fluctuation reserve and not charged to P&L, as it should have been. Second, the management changed the method of depreciation on fixed assets which pushed up the profit for the year by Rs 12.26 crore (of which Rs 2.21 crore pertains to the earlier years, while the balance is the impact in the current year). Without the benefit of the change in the method of accounting for depreciation there would have been a negative gross profit growth for the year. And without the credit taken from the investment fluctuation reserve there would have been a fall in the net profit for the year.

While accounting gimmicks are never taken very well by the stock market, another aspect that is being discounted is the bank's falling return on assets -- from the previous year's level of 1.8 per cent to the present 1.43 per cent, it represents falling profitability despite increases in liabilities. Bank analysts have been very critical of this approach of simply adding on deposits; which grew by 35 per cent lastyear, while the opportunity for the profitable deployment of the funds were limited, i.e incremental returns are lower. As such advances were higher by 46 per cent, while investments were higher by 30 per cent. The bank increased its balance sheet size by 34 per cent to Rs 15,000 crore.

Corporation Bank had been one of the more popular stocks since its listing, but of late it has been lagging the sensex as well as the other leading bank stocks.

Pfizer

With Pfizer's second quarter results due to be released on Tuesday there is very little speculative interest in that stock as also in the other pharma MNC stocks. The reason for this is not the company's expected performance rather the strong market interest in cyclical stocks, which has reduced the interest in pharma stocks.

In fact the performance as such is expected to be good and the trend of growth seen in the performance of Novartis and German Remedies is likely to continue in Pfizer as well. The only hitch in Pfizer's case is the possibility ofhaving to provide for additional excise amounting to Rs 7.1 crore. However, pharma analysts feel that this provision may not materialise as the company has a strong case, and has prefered an appeal. The topline growth expected from the second quarter is around 18 per cent with a growth in the bottomline of around 35 per cent.