JOIN USBriefing reporters, Chairman & Managing Director Albert Tauro, attributed high growth in profit to sharp drop in interest expenditure to Rs 916.02 crore in Q2 this fiscal from Rs 973.34 crore last year.
Further, he said, the good show was also due to the improvement in net interest margin at 3.16 per cent in the reporting quarter from 2.39 per cent in the previous quarter. The bank’s return on assets of 0.81 per cent, he said, also reflects bank’s continuous improvement in its key financials. The improved margins, he said, were a result of higher yield on advances at 10.20 per cent (though lower than in previous quarter of 10.56 per cent) and lower cost of deposits which came down to 5.64 per cent from 6.52 per cent.
Likewise, he said, the bank through a conscious and strategic plan had shut its exposure to low yielding (5 per cent) short term loans of 32-90 days tenure, as also bill discounting on its Line of Credit which was around Rs 500-600 crore post-base rate regime. The bank, he said, also increased its BPLR by 25 bps. All these key steps, he said, help increase the bank’s yield on advances, thereby reducing the cost of deposits.
For the first half of current fiscal, operating profit saw growth of 37.50 per cent at Rs 610.11 crore and net profit Rs 317.78 crore, which showed an improvement of 26.20 per cent driven by 40.03 per cent growth in NII and NIM of 3.01 per cent which was at 2.36 per cent in the previous year’s first half.
The bank’s aggregate business stood at Rs 1,02,473 crore as on 30 September 2010, comprising of Rs 62,688 crore deposits and Rs 39,805 crore advances. The bank hopes to register a 20 per cent grow in business and clock aggregate business of Rs 1,26,000 crore during the fiscal and achieve minimum overall 35 per cent growth in NII and sustain its NIM at over 3 per cent. The bank’s other priority, he said, would be channelised into containing gross NPA with 2 per cent and net NPA within 1 per cent.