Higher provisioning drags BOI, IOB net down

PNB, Corp Bank and Vijaya Bank’s profits rise.

Weighed down by higher provisioning, two public sectors lenders — Bank of India (BOI) and Indian Overseas Bank (IOB) — today posted a drop of over 50 per cent in their net profits for the second quarter ended September 2009.

While Punjab National Bank (PNB), Corporation Bank and Vijaya Bank posted a rise in net profit on growth in earnings from interest and fee-income.

BOI’s net profit declined 57 per cent to Rs 323.34 crore. Its net interest income increased 3.37 per cent to Rs 1,409 crore in July-September 2009 from Rs 1,363 crore a year ago. But huge increase in the gross non-performing assets (NPAs) forced banks to make higher provisions of Rs 602.13 crore from Rs 286.75 crore. Its gross NPAs almost doubled to Rs 3,919.7 crore from Rs 1,978.12 crore a year ago.

The bank had provided Rs 470 crore towards bad loans in the second quarter as compared with Rs 80 crore in the second quarter of 2008-09.

Slippages during the quarter were to the tune of Rs 1,895 crore from its domestic operations because of which gross NPAs of the bank shot up to 2.61 per cent as on end September from 1.53 per cent recorded a year ago.

Chennai-based IOB posted a net profit of Rs 176.04 crore as compared to Rs 359.02 crore in Q2 of 2008-09 due to the absorption of deficit representing excess of liabilities over assets of its recent acquisition of Pune-based Sree Suvarna Bank. Bank had to absorb around one-third of the deficit of Rs 82.17 crore of Urban Cooperative Bank.

Delhi-based PNB posted a 31 per cent rise in its net profit at Rs 927 crore. Its total income rose to Rs 6,075 crore from Rs 5,313 crore in the year-ago period. PNB’s treasury income, which drove the profits, more than doubled from Rs 72 crore in the September quarter of 2008 to Rs 150 crore in the same period this year.

Mangalore-based Corporation Bank reported a 52.3 per cent rise in net profit to Rs 291.67 crore from Rs 191.51 crore in the year-ago quarter. The bottom line growth was mainly driven by a 24 per cent rise in net interest income to Rs 503.51 crore, on the back of a 21 per cent growth in advances.

Non-interest income also grew at a healthy pace, rising to Rs 302.80 crore in the quarter from Rs 174.38 crore.

Vijaya Bank reported a 36 per cent rise in its net profit at Rs 108.4 crore. The rise in net profit was mainly on account of a 35.3 per cent rise in its net interest income at Rs 364 core.