ING Vysya Bank recorded a 53 per cent growth in net profit to Rs 115.4 crore during the second quarter of this fiscal on the back of higher net interest income and “healthy” asset quality, according to its chief financial officer.
The bank's profit after tax grew “despite margins being under pressure, thanks to reasonable momentum across businesses,” said Mr Jayant Mehrotra, CFO, ING Vysya Bank. “This quarter, there was significantly lower risk cost,” he added, pointing at lower provisioning towards non-performing assets (NPAs).
The direct correlation between interest rates and asset quality notwithstanding, “the asset quality continues to be healthy, and there are no areas of stress as of now,” he said. However, there will be some impact in the future, he added. “We will continue to be more cautious,” said Mr Mehrotra. The bank's provisioning was down 75 per cent during the quarter compared to last year.
‘Other income' down
Though the bank had write-off of Rs 9 crore, “we also made recoveries of Rs 9 crore, that helped us reduce our NPA levels,” said Mr Mehrotra. However, ‘other income' was down, “because of a one-off investment gain last year, despite core fee revenues going up this quarter. Otherwise, other income would have seen 15 per cent growth,” he added.
The bank maintained its net interest margins compared to last year at 3.35 per cent. “Given the current interest rate scenario, margins are challenging. There would be improvement going forward,” he explained. While the yield on advances stood at 11.3 per cent, cost of deposits was 6.8 per cent.
“On the margin, growing CASA (current account savings account) will be a challenge. But the acquisition phase is working well,” said Mr Mehrotra. The bank's CASA stood at 32.6 per cent.