Despite a 40 per cent increase in interest income, Vijaya Bank’s net profit was down 18 per cent to Rs 124.26 crore during the third quarter of this fiscal.
“This quarter, our net profits, net interest income, net interest margin and non-performing assets have taken a dent. We have taken all possible steps to tackle these issues,” said Mr H.S. Upendra Kamath, Chairman and Managing Director, Vijaya Bank.
He explained that the bank “had to provide impairment in value of some accounts, and also prudentially write off some NPAs during the quarter”, which impacted the net profit.
The bank made provisions of Rs 111 crore towards NPAs and Rs 39 crore towards diminution in the value of certain borrowal accounts due to restructuring.
“There was a spike in non-performing assets due to slippage of three large accounts. However, this spike in NPAs is not broad-based,” said Mr Kamath.
According to him, there is an increase of Rs 280 crore over September 2011 accounted for largely by three accounts. But he added that the bank will be able to upgrade at least two of these three accounts in the fourth quarter.
“The quality of portfolio would be much better in Q4 because of the bank’s efforts to arrest further slippages and on recoveries,” said Mr Kamath. He explained that the net interest income was down 11 per cent because interest expenses of the bank went up, and “we had to reverse some of the interest in respect of those accounts we had restructured”.