Bangalore-based public sector lender Vijaya Bank today reported an all round decline in performance during the first quarter of the current financial year (2008-09) with the bottomline going into the red and a rise in net non-performing assets.
It posted a net loss of Rs 76.64 crore for the first quarter ended June 30 compared to a net profit of Rs 111.35 crore in the corresponding quarter of last financial year. The loss in net profit was mainly attributed to the mark-to-market provisioning of Rs 190 crore made on the investment portfolio covering government bonds, equity and equity linked mutual funds.
Prakash P Mallya, Chairman and Managing Director, Vijaya Bank said, "But for this additional provision, our net profit would have been Rs 114 crore, higher than the profit posted in the corresponding quarter last year. However, we expect that the markets would turn around with moderation in inflation and benchmark rates as a result of which subsequent quarters will give us improved financials."
The bank's total income went up by 27.4 per cent to Rs 1,270.08 crore during the quarter compared to the same quarter last year. The net interest margin of the bank shaprly declined to 1.87 per cent in the first quarter compared to 3.1 per cent in the same quarter last year. The interest income on advances recorded a 34 per cent growth quarter on quarter but the cost of deposits also rose to 7.16 per cent during the current quarter compared to 6.58 per cent in the first quarter of last year.
The Bank's capital adequacy ratio declined to 10.47 per cent compared to 11.21 per cent a year ago. The net non performing assets ratio went up to 0.68 per cent from 0.49 per cent in the same quarter last year. The Bank is looking at raising capital duringt the second quarter of the current year. "We have a headroom of Rs 3,500 crore under both tier-I and tier-II capital and have taken the board approval to raise Rs 500 crore by way of perpetual bonds. We are currently studying the market conditions and once the market improves, we will raise capital," Mallya told reporters.
He said the bank is well on its target of achieving Rs 100,000 crore business by March 2009 and also meet the Basel-II norms.