Vijaya Bank plans to raise Rs 1, 000 crore capital in Q4

Lender plans to raise equal amounts through equity infusion from the government and through bonds

Government-owned Vijaya Bank plans to raise Rs 1,000 crore in this quarter, for capital adequacy norms and business growth. Of this, the Bengaluru-based lender expects the government to give Rs 500 crore as equity.  

The government has not infused equity in two years. The bank has presented five-year plans for capital requirements to the government, said Kishore Kumar Sansi, managing director and chief executive officer.

Another Rs 500 crore will be raised via tier-I and Basel-III-compliant bonds. It has already raised Rs 450 crore through tier-II bonds. The capital adequacy under Basel-III rules was 10.65 per cent at end-December, with the tier-I ratio at 7.8 per cent and tier-II at 2.85 per cent.

It had surprised on Friday by reporting 40.7 per cent growth in net profit at Rs 52.6 crore for the quarter ended December 2015. On Friday, its share price had closed 16 per cent higher at Rs 34.3 on the BSE exchange.

Sansi said reworking the liabilities profile, containing of non-performing loans and a push for recoveries contributed to the performance.

The emphasis has been on consolidating the balance sheet, reflected in growth of only two-odd per cent (year-on-year) in deposits to Rs 125,475 crore. Credit rose 13.3 per cent in 12 months to Rs 89,696 crore. The credit to deposit ratio went from 63 per cent to 71 per cent, Sansi said.

On controlling of bad loans, he said they’d categorised some assets as impaired loans in the previous quarter and made provisions. Gross slippages in the December quarter were Rs 730 crore. Upgradations were Rs 329 crore, resulting in net slippage of around Rs 400 crore.

The gross non-performing assets (NPAs) ratio as on end-December was 4.32 per cent, up from 2.92 per cent a year before. The net NPA ratio was 2.98 per cent, from 1.89 per cent. The provision coverage ratio was 58.07 per cent. The total of restructured assets was Rs 5,226 crore.

He said the bank was trying to contain stressed assets at the end-December level seen. An assessment was on and a clearer picture would emerge in 10 days.