Vi­jaya Bank’s Q3 Net Zooms

The Economic Times - - Finance & Commodities -

Vi­jaya Bank’s profit surge comes in the back­drop of vis­i­ble strain in as­set qual­ity and con­cerns over de­clin­ing in­ter­est mar­gins. An­a­lysts be­lieve In­dian banks had ben­e­fited from higher net in­ter­est mar­gins over the past five years on in­creas­ing cor­po­rate de­mand for ex­pan­sion funds. With sur­plus cash in the bank­ing sys­tem af­ter the state-man­dated Novem­ber 8 cur­rency ex­change, in­ter­est mar­gins at lenders are now as much un­der in­vestor scan­ner as are bad loans. The Street wel­comed Vi­jaya Bank’s four­fold in­crease in the De­cem­ber quar­ter profit, with the stock gain­ing 20%, its high­est daily per­mis­si­ble limit.

At .₹ 577 crore, other in­come for the Ben­galuru-based bank in the De­cem­ber quar­ter al­most tre­bled from Rs 209 crore in the year-ago quar­ter, help­ing off­set a se­quen­tial in­crease of Rs100 crore in pro­vi­sion­ing for non-per­form­ing as­sets (NPAs). Net profit rose to .₹ 230 crore from .₹ 53 crore in the same quar­ter a year ago. The bank that had about .₹ 6,305 crore of gross NPAs in the quar­ter ended De­cem­ber, down se­quen­tially from .₹ 6,491 crore. As a per­cent­age of ad­vances, gross NPAs stood at 6.98% of ad­vances in Q3 , from 7.07% in the Septem­ber quar­ter. The bank had rec­og­nized 4.32% of its gross ad­vances as bad loans in the year-ago pe­riod. Pro­vi­sion for bad loans in­creased to .₹ 424.1 crore from .₹ 278.7 crore in the year­ago pe­riod.

“Post Vi­jaya Bank’s re­sult, stocks of mid-sized banks has risen on a rub-off ef­fect,” said Ravikant Bhat, AVP Re­search, IDBI Cap­i­tal Mar­kets. Shares of the bank, which has a mar­ket cap­i­tal­i­sa­tion of about .₹ 6,400 crore, ended at .₹ 64 on NSE.

Net in­ter­est in­come (in­ter­est earned mi­nus in­ter­est ex­pended) in­creased by 22.7% at .₹ 906 crore dur­ing quar­ter un­der re­view against .₹ 738 crore in the cor­re­spond­ing quar­ter of pre­vi­ous fis­cal.

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