Falling bond yields have boosted bank profits in the December 2008 quarter.
Buoyed by a surge in fees and treasury income, private sector lender, Yes Bank, today reported a 95.2 per cent rise in its net profit to Rs 105.8 crore for the three months ended December 2008.
In Kolkata, S K Goel, chairman and managing director, Uco Bank, announced an equally strong increase of 107.33 per cent in the bank’s net profit to Rs 171.63 crore. Goel attributed the better numbers to profits from trading in government securities.
The Chennai-based Indian Bank, however, posted a muted growth of just 14 per cent in its third quarter net profit to Rs 350 crore, lower than the 14.27 per cent it recorded in the September 2008 quarter.
Chairman and Managing Director M S Sundara Rajan said the bank would have performed better had it not slashed its interest rates to 13.25 per cent in November 2008 from the earlier 14 per cent, because deposit costs had risen sharply.
However, the bank’s net interest margin (NIM) improved slightly to 3.63 per cent from 3.52 per cent though the capital adequacy ratio dropped to 12.68 per cent compared with 13.51 per cent during the same period last year. Uco Bank’ s NIM for the period was 1.92 per cent, against 1.76 per cent in the same period last year.
Interestingly, Yes Bank’s net interest income for the December 2008 quarter fell marginally to Rs 120.4 crore from Rs 122.6 crore in the September 2008 quarter. The bank had disbursed loans of Rs 10,935 crore in Q3 as against Rs 11,515 crore in July-September 2008.
Chief Financial Officer Rajat Monga said the bank has deliberately moderated its growth on loan book in the third quarter, given the tight liquidity conditions. “Our loan book has shrunk by 4-5 per cent in the third quarter as against the second quarter, but the book has grown by 27.2 per cent on an year-on-year basis,” he pointed out.
Banks are using some of the gains to bring down non-performing loans. At Indian Bank, Sundara Rajan said, net NPAs dropped to 0.16 per cent from 0.21 per cent in the December 2007 quarter though in absolute terms they were up at Rs 80 crore compared with Rs 77 crore.
He added that in the fourth quarter, the bank will continue to focus on improving the recovery of loans — in Q3, the bank recovered Rs 30 crore. The bank’s gross NPAs dropped by 9 per cent to Rs 462 crore from Rs 510 crore in the corresponding period last year.
At UCO Bank too, gross NPAs at the end of December 2008, stood lower at 2.42 per cent, against 3.33 per cent at the end of December 2007. Net NPAs, meanwhile, have come down to Rs 1,171 crore or 2.37 per cent compared with Rs 771 crore or 1.28 per cent of net advances in the same period last fiscal.
At Yes Bank, however, gross non-performing assets (NPAs) rose to 0.44 per cent, or Rs 48 crore, as against nil in the same period last year. Monga said, “The NPAs increased on account of defaults in a single corporate account. We have made a specific loan loss provision of Rs 32 crore.”
