Money & Banking

Vijaya Bank profit rises 22% on strong interest income growth

Bangalore | Updated on January 24, 2011 Published on January 24, 2011

BL25_VIJAYA_BANK

Backed by over 36 per cent growth in net interest income, Vijaya Bank's net profit for the third quarter of this fiscal grew 22 per cent to Rs 151.80 crore, compared with Rs 124.57 crore recorded during the corresponding quarter of last year. Its net interest income stood at Rs 536.32 crore (Rs 392.92 crore).

“The emphasis continues on core earnings, and we are focussing on profitability and efficiency. Going forward, this trend will continue,” said Mr Albert Tauro, Chairman and Managing Director, while announcing the results.

The net interest margin (NIM) has grown in a “consistent and continuous manner, and it's not a flash in the pan,” he added, pointing at the bank's NIM of 3.44 per cent. The bank has seen a reduction in cost of deposits to 5.77 per cent (5.94 per cent), though yield on advances has also come down to 10.32 per cent (10.36 per cent).

“Our growth is muted because we are driving it from advances. Consequent to the introduction of the base rate, which was slightly higher than other banks, our credit growth had slowed down. Wherever re-pricing was needed, we lost Rs 7,000 crore of advances. It took 3-4 months for us to recoup,” said Mr Tauro. The bank's credit growth is at 11 per cent year-on-year. However, he was hopeful that by the fiscal-end, the bank would be able to clock a 18-20 per cent growth in credit.

On the non-performing assets (NPA) front, its gross NPAs stood at 2.46 per cent (2.53 per cent), while net NPAs stood at 1.38 per cent (1.3 per cent). “NPAs are under check, and there are no challenges on the NPA front. Slippage management, recovery and upgradation are focus areas for us, and we will be able to track NPAs fully through the system by January-end,” he said. The bank is “quite comfortable about the outcome that we foresee and there won't be any nasty surprises,” he added. The bank hopes to contain gross NPAs to below two per cent and net NPAs below one per cent.

The bank's provision coverage ratio is 67.60 per cent, and Mr Tauro was hopeful of reaching the 70 per cent target by end-March. “We will need Rs 50 crore to reach 70 per cent,” he said. The bank has provided Rs 95 crore for second pension option, Rs 98 crore for NPAs, and Rs 60 crore for taxes.

Follow us on Telegram, Facebook, Twitter Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on January 24, 2011
This article is closed for comments.
Please Email the Editor