Vijaya Bank gains 600% treasury windfall

 Vijaya Bank earned Rs 141.14 crore profit from treasury operations during the first quarter ended June 30, 2013 (Q1) compared to Rs 19.77 crore in the first quarter of the previous fiscal.

The bank's CMD H S Upendra Kamath, disclosing the results at a press conference on Monday, said, “Increased treasury profits and continuous vigil on credit portfolio enabled the bank to post decent numbers.”

However, the gains were offset by the twin combination of rise in deposits and decline in advances due to which the Bangalore-based public sector lender recorded net profit growth of 19 per cent year-on-year (YoY) at Rs 132.46 crore, from Rs 111.36 crore in the year-ago period.

Net interest income went up 5.67 per cent in Q1 to Rs 481 crore, up from Rs 455 crore in the corresponding period last fiscal, but net interest margin declined to 2 per cent in Q1, from 2.14 per cent YoY.

Gross advances declined from Rs 70,514 crore as on March 31, 2013 to Rs 67,964 crore as on June 30, 2013, even as deposits went up from Rs 97,017 crore to Rs 1,05,369 crore as on June 30, 2013.

Commenting on the results, Vijaya Bank CMD H S Upendra Kamath said that credit offtake is just not happening in the corporate segment. “Frankly speaking, I see no credit growth prospects in the coming quarters in the corporate segment. No industrial capex is happening for quite some time, it's only refinance by and large.”

The bank, apparently taking advantage of the virtually nil demand for credit, shed bulk deposits so that it now stands at Rs 15,000 crore out of its total deposit base, or 14.28 per cent, down from 22.30 per cent as on March 31, 2013.

During the quarter under review, the bank saw fresh addition of non-performing assets (NPAs) of Rs 457 crore, while it restructured assets for Rs 243 crore. Total restructured loans stood at Rs 6,521 crore as on June 30, 2013, marginally up from Rs 6,278 crore as on March 31, 2013. The provision coverage ratio was 67.28 per cent. Net NPAs as a percentage of total advances was 1.45 per cent in Q1, down from 1.67 per cent YoY.

The bank's capital adequacy ratio as per Basel III norms stood at 10.56 per cent.

Kamath said that he would be approaching the government of India for capital infusion of Rs 700 crore this fiscal and an equal amount next fiscal.