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— G.R.N. Somashekar

Mr Prakash P Mallya, Chairman and Managing Director, Vijaya Bank, at a press conference in Bangalore on Saturday.

Our Bureau

Bangalore, July 26 A huge diminution in its investment portfolios, which included exposure to equity, government securities and mutual funds, has pushed the public sector Vijaya Bank into a net loss of Rs 76 crore for the first quarter of FY 2009, after the bank had to make a provision of Rs 190 crore towards depreciation of the mark-to-market instruments and other investments.

The bank, whose total business increased 32.94 per cent from Rs 64,477 crore to Rs 85,714 crore, however could not leverage the growth due to severe margins pressure and the impact of the capital market volatility eroding into profits. The bank had a net profit of Rs 111.35 crore during the first quarter of FY 2008.

“But for the additional provision, the bank’s net profit would have been Rs 114 crore, higher than the profit posted in the corresponding quarter last year. However, it is expected that the markets would turnaround with moderation in inflation and benchmark rates as a result of which subsequent quarters may feature improved financial results,” said Mr Prakash P. Mallya, Chairman and Managing Director of the bank.

Addressing a press conference on Saturday, Mr Mallya said of the total provision of Rs 190 crore, Rs 23 crore went to cover the losses in equity exposure, and the rest was accounted for Government securities and mutual fund investments.

Mr Mallya, who will step down as CMD on superannuation this month end, however sounded optimistic of Vijaya Bank bouncing back on its sound fundamentals. He said the bank’s total income grew 31 per cent at Rs 1,270.08 crore (Rs 966.75 crore) and its operating profit stood at Rs 154.84 crore (Rs 171.27 crore). Net interest income had fallen about half at 1.87 per cent from 3.1 per cent. The capital adequacy ratio also dipped year-on-year for the quarter to 10.47 per cent (11.21 per cent). However, sequentially it reflected 11 per cent growth, he added.

More Stories on : Financial Performance | Public Sector Banks

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