Vijaya Bank, on Wednesday, announced that its net profit for the second quarter (Q2) ended September 30, 2007 at Rs 105.25 crore was only 2.9 per cent higher than Rs 102.33 crore in Q2 last year. The total income at Rs 1051.26 crore in Q2, however, was 44 per cent higher than last year.  

The bank’s operating profit for Q2, was lower at Rs 144.55 crore as against Rs 159.84 crore it recorded in same period quarter previous fiscal. Vijaya Bank’s net profit for half year ended September 30, 2007 stood at Rs 216.60 crore as against Rs 174.96 crore recording growth of 23.80 per cent.

Higher deposit cost
Briefing reporters, Chairman & Managing Director Prakash P Mallya, attributed the dip in operating profits and flat growth in net profit to fall in credit growth and high cost of deposits, both of which, in turn, impacted net interest income and net interest margin.

While the bank’s cost of deposits rose to 7.19 per cent during the reporting quarter as against 5.40 per cent in previous same period quarter, net interest margin was down at 2.61 per cent.

Pressure on margins
The bank’s net interest income in Q2 was down at Rs 219 crore as against Rs 259 crore in Q2 last year. Likewise, net interest income was down at Rs 483 crore in first half (six months) of the current fiscal ended September 30, 2007 as against Rs 510 crore in the previous fiscal’s first half ended September 30, 2006. The bank’s total business during first half of reporting quarter was at Rs 68,980 crore, a growth of 33.73 per cent from Rs 51,581 crore in previous fiscal’s same quarter.

Likewise, total deposits of Vijaya Bank increased by 31.98 per cent during first half of current fiscal to Rs 42,169 crore as against Rs 31,952 crore in previous fiscal. The gross advances rose to Rs 26,811 crore an increase of 36.59 per cent from Rs 19,629 crore in the previous fiscal.