The Hindu Business Line : Vijaya Bank Q3 net surges 58 pc at Rs 92.73 cr

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Bangalore Jan. 27 Public sector Vijaya Bank reported a net profit of Rs 92.73 crore for the third quarter of the financial year 2006-07, a 58 per cent increase over the corresponding period of the previous year.

Briefing newspersons here on Saturday, the Vijaya Bank Chairman and Managing Director, Mr Prakash P. Mallya, said, "We have improved our profitability despite the increase in cost of working funds." The bank's operating profit for the year was Rs 172.23 crore, only marginally up from Rs 170.98 crore. The increase in net profit was largely on account of lower provisions for the current year. Provisions for the current year came down to Rs 53.54 crore, a Rs 20-crore reduction over the corresponding period of the previous year.

Besides, the bank has also changed its accounting method of amortisation of transfers to the held-to-maturity category from the available for sale category. The new standard, "constant yield method" has resulted in lower amortisation of Rs 34.87 crore. The new standard that conforms to US GAAP (Generally Accepted Accounting Practice) also contributed to the bank's bottom line.

Gross income for the third quarter was Rs 804.83 crore (Rs 668.36 crore). The improved income was largely due to an increase in interest income that rose to Rs 731.87 crore (Rs 594.26 crore). Interest on advances rose to Rs 459.07 crore (Rs 357.84 crore). During the period, the bank managed to contain its expenditure rise. Gross expenditure rose to Rs 632.60 crore (Rs 497.38 crore). Interest expenditure rose to Rs 466.89 crore (Rs 336.15 crore).

Mr Mallya said this was largely on account of the revision in deposit rates during the period. However, the bank managed to offset the impact of higher interest expenditure by higher lending rates that ensured a net interest margin of over 3 per cent. The bank also managed to push its gross non-performing assets ratio down to 2.51 per cent from 2.98 per cent. This was through cash recoveries of Rs 179.62 crore

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