Vijaya Bank net up 21.9% to Rs 161.46 crore in Q1

The Bank plans to raise Rs 600 capital under Tier-I and Rs 500 crore under Tier-II

Bangalore-based public sector lender Vijaya Bank on Monday reported a 21.89 per cent increase in net profit at Rs 161.46 crore for the quarter ended June 30, compared with Rs 132.46 crore in the corresponding quarter last financial year. The total income for the quarter increased to Rs 3,189.95 crore, against Rs 2,698.82 crore in the year-ago period, a growth of 18.19 per cent.

The rise in net profit is mainly on account of a 34.85 per cent reduction in provisions during the quarter.

V Kannan, chairman and managing director, said: “Actually, our provisions were Rs 205 crore, about Rs 7 crore more than Rs 198 crore provided in the first quarter last year. Because of the interest rate movement the treasury provision writeback has been to the extent of Rs 76 crore. That is why the net impact on provision has been Rs 129 crore. That is one of the significant contributors for net profit during the quarter.”

Its total provisions were lower by 34.85 per cent year-on-year to Rs 129 crore, compared with Rs 198 crore in the fist quarter of last financial year.

The operating profit during the first quarter declined 12.21 per cent to Rs 290 crore, compared with Rs 330 crore in the corresponding quarter last year.

The net interest income during the quarter grew 11.37 per cent to Rs 535.48 crore compared with Rs 480.84 crore a year ago. The cost of deposits went up to 8.07 per cent from 7.84 per cent and yield on advances rose to 11.26 per cent from 11.07 per cent. The net interest margin declined to 1.87 per cent from two per cent a year ago. The return on assets improved to 0.49 per cent from 0.48 per cent a year ago.

The asset quality remained an area of concern for the bank as its gross non-performing assets went up to Rs 2,069 crore from Rs 1,645 crore, showing an increase of 25.77 per cent. The gross NPA percentage rose to 2.68 per cent from 2.42 per cent in June last year. The net NPA percentage increased to 1.77 per cent from 1.45 per cent a year ago. The provision coverage ratio dipped to 63.75 per cent from 67.28 per cent.

Kannan said the Bank plans to raise Rs 600 crore to augment its Tier-I capital during the second quarter. "We have taken the shareholder approval for raising Tier-I capital through a QIP issue. We have approached the government of India and Reserve Bank of India for their approval, which is expected in the next 15 days. We will go to the market after that," Kannan said.

He said the Bank has also got large headroom for raising Tier-II capital and it plans to raise Rs 500 crore sometime during the second or early third quarter. "We expect the interest rates to soften in the coming days. We will hit the market with 10-year bond issue once the interest rates soften and it might happen towards the end of second quarter or early third quarter," the Chairman added.

Currently, the Bank's Tier-I capital stands at 8.14 per cent and Tier-II at 2.32 per cent as per the Basel-III norms. The CRAR is at 10.46 per cent.