After the reduction in the equity, the bank's EPS zoomed from just 64 paise for fiscal 1998 to Rs 4.11 for fiscal 1999. The 1999-earnings discount the offer price of Rs 10 by an attractive multiple of 2.43. The discounting is even lower than Times Bank's IPO at a price-earning multiple of Rs 3.69.

Times Bank's, a professionally run price sector bank, had received an overwhelming response from investors. The investors' stand was vindicated as the bank provided excellent returns on its listing on the bourses.

If there had been no equity reduction in Syndicate Bank, on a very high equity base of Rs 1289.59 crore, the EPS would have been much lower at Rs 1.74. And the P/E multiple would have been very high at 5.74. Nevertheless, there has been a marked improvement in the bank's performance for fiscal 1999. The window-dressing also helped the bank improve its bookvalue from Rs 11.72 to Rs 20.13. Hence, the offer price is at a 50 per cent discount to the book value. Syndicate Bank had turned around in fiscal 1996 by recording a net profit of Rs 20.17 crore against a net loss of Rs 91.79 crore for fiscal 1995. Since then, the bank has been improving its performance both in terms of income and net profit. Interest income rose from Rs 1367.92 crore in fiscal 1996 to Rs 2086.51 crore in 1999. However, till fiscal 1998, the growth in interest income was very slow.

In the following fiscal, interest income saw an impressive growth of 23.22 per cent. In tandem, net profit saw a sharp rise of 71.27 per cent from Rs 82.66crore to Rs 142.58 crore. Besides the jump in interest income, the sharp growth in net profit was aided by a 23.18 per cent jump in other income (mainly fee-based income) and a fall in the provisioning. The bank has been gradually reducing its high dependence on investments where the yield is lower than advances. Income from advances as a percentage of interest income improved from 40.92 per cent in 1994-95 to 52.19 per cent in 1999. Yield on advances improved from 10.26 per cent to 12.63 per cent which seems to be still low.

The bank has a low cost of borrowings at 7.69 per cent for fiscal 1999. This has also helped the bank keep its interest spread as a percentage of average working funds at 3.16 per cent for fiscal 1999. However, an area of concern is its large employee base. As a result, operating expense as percentage of average working funds is high 3.57. Gross profit per employee is just Rs 0.55 lakh and business per employee is low at Rs 88.83 lakh. The bank has 33,672 employees and has 1670 branches. Although the bank has been successfull in reducing its net NPAs from 13.27 per cent in fiscal 1995 to 3.93 per cent in fiscal 1999, the level of NPA is still high considering its small size of operation compared to other public sector banks. The bank is projecting a major improvement in its performance for fiscal 2000. Interest income is projected to rise by 22 per cent to Rs 2546 crore against Rs 2086 crore for fiscal 1999. Operating profit is expected to touch Rs 345 crore.

Net profit is projected to touch Rs 236, a growth of almost of 66 per cent over the last fiscal. On an expanded equity of Rs 471.96 crore, the EPS works out to Rs 5 for fiscal 2000. The future EPS discounts the offer price of Rs 10 by an attractive multiple of 2.