JOIN USVijaya Bank Q2 net spurts 36 pc at Rs 108 crore
Following a much better interest spread, Vijaya Bank posted 36 per cent growth in net profit to Rs 108.43 crore for the quarter ended September 30, 2009 as against Rs 79.88 crore for the same quarter of the previous fiscal.
Even though total income of the bank went up only 3 per cent to Rs 1457.60 crore, the spurt in net was due to a significant gap between the yield on advances at 10.56 per cent and cost of deposits dipping by 108 bps to 6.52 per cent as against 7.60 per cent in the previous fiscal. As a result, the net interest margin of the bank showed a significant increase of 2.49 per cent for September 2009 quarter against 2.07 per cent for the same quarter last year.
Announcing the results, Vijaya Bank CMD Albert Tauro, said, “This is the fifth successive quarter in which we have clocked strong numbers in net interest income. Consistent growth in core income has been a key to the bank’s improved efficiency and profitability.”
Of course, in line with the industry trend, Vijaya Bank’s profit was boosted by a 14 per cent jump in treasury income to Rs 406.73 crore in the September 2009 quarter. The bank also benefited from the uptrend in the stock markets, showing a mark to market gain of Rs 25 crore. Profits would have been even higher but for the massive 40 per cent increase in the employee cost to Rs 160.75 crore in the September quarter.
Retail banking
Aggregate business of the bank at the September 2009 stood at Rs 95,878 crore, comprising of Rs 58,115 crore deposits and Rs 37,763 crore advances. The bank has shown a spurt of 13 per cent in the retail banking segment, from Rs 386.53 crore last year to 439.76 crore in the current year. However, the non-performing assets of the bank almost doubled at Rs 541.81 crore for the quarter under review, as against 268.42 crores in the same quarter of the previous fiscal. The main reason being the bank’s exposure to Spices Trading Corporation Ltd (STCL) that has turned bad. Vijaya Bank has provided for 50 per cent of the bad debt for STCL.
When asked if the bank needs to provide more to meet the RBI latest provisioning norm of 70 per cent, Tauro said, “Vijaya Bank has a system of technical write-off, which when added back to the reserves takes the bank’s provisions to 100 per cent. We are in talks with RBI, and there is no reason why we should not be sanctioned the same.”
Current account savings account (CASA) in absolute terms is 24 per cent and we hope to take it to 27 per cent by March 2010, he added.