Kolkata: Net profit at state-owned more than doubled to Rs 452 crore in the June quarter as net interest margins climbed and total provisions declined.
Net profit was Rs 208 crore in the year-ago period.
Net interest margin, a key profitability parameter for banks, improved to 3.28% for the quarter under review against 3.08% in the year-ago period.
Managing director AS Rajeev expressed confidence about further improvement in economic activity with inflation probably peaking. He said he expects the bank to report a growth of 20% in advances this fiscal.
Operating profit showed muted growth at Rs 1,202 crore for the June quarter over the year-ago period’s Rs 1,107 crore, on account of a fall in income from treasury operations. A fall in provisions and contingencies at Rs 548 crore against Rs 753 crore helped the bank book a significantly higher net profit. The provision to cover bad loans however rose, leading to an improvement in the provision coverage ratio to 95% against 90.7% a year back.
The bank’s net interest income expanded a fifth to Rs 1,686 crore against Rs 1,406 crore in the year-ago quarter. Other income that includes income from treasury fell to Rs 317 crore against Rs 687 crore in the same period.
Gross advances jumped 27% year-on-year to Rs 1.41 lakh crore, largely buoyed by retail, agriculture and MSME lending.
Asset quality improved with the gross non-performing assets ratio falling to 3.74% against 3.94% a quarter back while net NPA was at 0.88% against 0.97%.
Its deposits grew 12.35% year-on-year to Rs 1.96 lakh crore. Rajeev said with low-cost current and savings account (CASA) ratio being at nearly 56%, the rise in term deposit rates won’t hurt the bank much.
Its capital adequacy ratio was at a robust 16%. Rajeev said the bank is not required to raise capital immediately but may consider raising about Rs 1,000 crore of equity in the third or fourth quarter if the market conditions were to support it. It is in the process of raising Rs 1,000 crore in tier-2 capital soon.
Investors showed buying interest at the lender’s counter, pushing its share price 3.1% higher to Rs 16.6 on the BSE.
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