Huge wage cost drags Vijaya Bank Q4 net by 59%

Huge wage cost drags Vijaya Bank Q4 net by 59%

 Vijaya Bank Chairman & Managing Director H S Upendra Kamath (left) and Executive Director Shubhalakshmi Panse at a press conference in Bangalore on Thursday.KPNHowever, the bank’s net profit for fourth quarter ended March 31, 2011 took a massive hit of 58.57 per cent at Rs 54.23 crore as against Rs 130.92 crore in the same period of previous fiscal.

Briefing reporters, Chairman & Managing Director H S Upendra Kamath explained that this was due to additional provisioning of Rs 119 crore made for employee benefits due to second pension option as per RBI norm. As a result, during the fourth quarter, employee costs had ballooned by a whopping 135 per cent to Rs 387.08 crore as against Rs 163.61 crore. Interestingly, the profits dropped despite lower provisioning of Rs 86 crore (against Rs 160 crore) and a tax write-back of Rs 30 crore during the Q4 against a tax payment of Rs 23.38 crore in Q4 last year. According to Kamath the bank took to system mandated identification of NPAs and thereby clearing all the outstandings fully and during the current fiscal would focus wholly on robust recovery. 

The bank’s interest expenses during the fourth quarter was up 21.74 per cent at Rs 1,131 crore as against Rs 929 crore in the same quarter of previous fiscal. Kamath attributed this to the shortage of adequate liquidity in the system which increased interest rates on deposits between 100 basis points to 150 basis points.

However, for the full fiscal, the bank’s interest expense rose by a modest 3.86 per cent at Rs 3,897 crore as against Rs 3,752 crore in the previous fiscal.

The bank’s total income for fiscal ended March 31, 2011 clocked a modest 8.45 per cent growth at Rs 6,377.24 crore as against Rs 5,880.10 crore.

Bank’s net interest income during the fourth quarter was up 22.88 per cent at Rs 478 crore as against Rs 389 crore in the same quarter of previous fiscal. For the full year, the bank’s net interest income was up 34.35 per cent at Rs 1,946.78 crore as against Rs 1,449.07 crore in the last year’s fiscal.

The bank, which has clocked 18 per cent growth in its total business at Rs 1,22,470 crore during the entire fiscal aims to reach a business level of Rs 1,50,000 crore in fiscal 2011-12 with a year on year growth of about 22 per cent.