Vijaya Bank returns to profit

Driven by 54 per cent growth in net interest income, Vijaya Bank’s operating profit for the first quarter was Rs 209.77 crore compared to Rs 154.84 crore for the corresponding quarter of last year. Its profits got a major boost as the bank wrote back provisions and contingencies worth Rs 36.36 crore in June 2009 quarter. In the June 2008 quarter it had to provide for Rs 225.32 crore, mainly because of the mark-to-market losses on investments, leading to a big net loss in the quarter.

Vijaya Bank’s total income in the June quarter at Rs 1463.42 crore was 15 per cent higher than Rs 1270.08 crore in the June 2008 quarter. Briefing reporters, Chairman and MD Albert Tauro said: “Despite slackened business growth our Q1 core earnings have been very impressive. Our net interest income continued to feature progressive  improvement sequentially as well as on Q-o-Q basis, leading to a robust growth in operating profit.” The total income was helped by a trading income of Rs 72.28 Crore, driving other income up by 52 per cent to Rs 162.41 crore. Operating expenses recorded 69 per cent growth during the quarter due to additional provisioning of Rs 65 crore towards wage revision under the ongoing bipartite settlement and Rs 44.38 crore on account of superannuation benefits for employees.

STCL provision

Vijaya bank had a business of Rs 91,802 crore as at June 30, 2009, comprising deposits of Rs 54,895 crore and advances of Rs 36,907 crore. The bank has a loan exposure of Rs 268 crore to Spices Trading Corporation Ltd (STCL), which has lost Rs 1,250 crore due to steel scrap fraud.

According to Tauro, the bank has provided for Rs 20 crore on STCL account as per RBI guideline. The bank, however, netted a sum of Rs 213 crore of floating provision from gross non performing assets (NPA) in the June 2009 quarter.

It expects to reach a business level of Rs 1,10,000 crore in the current financial, with about 22 per cent jump over the last financial.