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Better interest margins push Vijaya Bank Q1 profit up 13%

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Public sector Vijaya Bank has reported a 13.37 per cent rise in net profit to Rs 161.66 crore for the first quarter (Q1) ended June 30, on account of improved net interest margins. In 2015, during the corresponding period, the bank had reported a net profit of Rs 142.59 crore.

Its total income rose marginally to Rs 3,295.05 crore during the first quarter, as against Rs 3,289.05 crore in the year-ago period.

Despite all challenges that the banking industry is passing through, “we are very happy to announce that there is a steady growth not only in the business, but also in terms of all fundamental parameters bothin the net interest margin as also in the net interest income”, said Vijaya Bank‘s MD and CEO Kishore Sansi told mediapersons while commenting on the bank’s performance.

“The reason for increased net profit is the net interest margins have increased, there is more reliance on retail, we have shed our bulk deposits, we have increased our fee based income, we have increased our CD ratio — so all these factors put together have resulted in the increase in the operating profit also.”

Vijaya Bank‘s asset quality, meanwhile, worsened, as its gross non-performing assets (NPAs) rose to 7.31 per cent of the gross advances as of June, sharply up from 3.39 per cent a year ago.

The net NPAs or bad loans stood at 5.42 percent of the net advances at the end of June, almost double from 2.45 per cent a year ago.

The bank’s provisions (other than tax) and contingencies have risen to Rs 267.82 crore during the quarter, as against Rs 146.38 crore in the year-ago period.

Net interest income of the bank increased from Rs 662.23 crore for June 2015 quarter to Rs 782.64 crore for April-June period of 2016, registering a growth of 18.18 per cent.

Net Interest Margin improved by 41 bps to 2.54 per cent for June quarter against 2.13 per a year ago.

Sansi said the bank is optimistic on the forthcoming quarters. “The worst is behind us. Going forward, we are very upbeat about two things; recovery is going to improve, and fresh credit — both in MSME and corporate — is going to increase.”

Aiming for a sustainable growth, the bank aims to improve its net interest margin from 2.54 percent to at least 2.75 per cent in the forthcoming quarters, as Sansi said: “Our intention is also to contain the NPA to the current figure and in case recovery happens, these figures should come down over a period of time.”

Vijaya Bank‘s total number of branches as on June 30, 2016 was 1,868, and total number of ATMs at 1,680. Its total staff strength stood at 15,017.

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