The bank's total income rose 23 per cent to Rs 1,049 crore as against Rs 853 crore in the fourth quarter of 2006-07.
Meanwhile, the bank said it was mulling a follow-on public offer to raise additional capital by diluting government stake, which is at 77 per cent now.
"We are thinking of a follow-on public offer or qualified institutional placement (QIP) in 2008-09. The size of the offer is yet to be worked out," said Chairman and Managing Director M D Mallya. The proceeds from stake sale will be utilised for fresh lending, Mallya added.
On the decline in net profit, Mallya said it was due to Rs 23 crore loss in equity and bond portfolio in the recent market turbulence. Besides, the bank has also made a provisioning of Rs 20 crore for employee benefits after implementation of new accounting standard AS15.
Mallya was optimistic that the bank would post 25 per cent growth in credit and profit in 2008-09. The total business (deposits and advances) was up by 25 per cent to Rs 71,556 crore as on March 31, 2008, as against Rs 57,382 crore a year ago.
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The bank's share price on Wednesday fell by 9.12 per cent to Rs 49.3 from the previous closing of Rs 54.25 on the Bombay Stock Exchange.