Vijaya Bank has reported a net profit of Rs. 125 crore in the third quarter of 2009-10. The bank reported an operating profit of Rs. 125 crore in the year-ago period. Announcing the results, Chairman and Managing Director Albert Tauro said although non-performing assets “remain a matter for concern, there has been an improvement in the third quarter.”

The bank’s net interest margin was 2.80 per cent as compared to 2.38 per cent a year ago. Mr. Tauro said this was made possible by the 180 basis point reduction in the cost of deposits. He said the “strong performance” in the quarter was despite the “subdued earnings” from treasury operations because yields had hardened during the quarter. He said income from “core earnings” compensated for poor treasury yields.

The bank’s gross NPAs amounted to Rs. 995 crore at the end of December 2009, as compared to Rs. 648 crore in December 2008. Gross NPAs, as percentage of assets stood at 2.53 per cent in December 2009, against 1.77 per cent in the previous year. During the quarter, the bank made a provision of Rs. 113 crore towards loan extended to Spices Trading Corporation Ltd, a subsidiary of the State Trading Corporation. It had extended a loan of Rs. 274 crore to the company, of which it had recovered Rs. 34 crore, Shubalakshmi Panse, Executive Director, said. The bank has fully provided for expected losses on the account, she added.

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