Vijaya Bank expects NIM at 3% in current fiscal

Vijaya Bank is likely to close the current fiscal with a net interest margin of 2.85-3 percent despite the prevailing difficult economic environment, a top bank official said.

“We hope to post a net interest margin (NIM) of 2.85-3 percent in the current financial year,” said Ms Subhalakshmi Panse, Executive Director, Vijaya Bank.

She said the bank is relying on garnering Casa deposits and to shedding bulk deposits to increase NIM in the current quarter. Referring to growth in bad assets in the third quarter, Ms Panse said those NPAs were on account of the high interest rate regime which had resulted in slippages in some large accounts.

“Our bank has shifted to system-based recognition of NPAs from last March. So, whatever slippages are being seen these days, are due to the present high interest rate environment,” she said, adding the bank has restructured some of the loan accounts, which has resulted in higher provisioning requirements in the last quarter.

Gross non-performing assets (NPAs) of the bank increased to 2.98 percent in the quarter ended December against 2.54 percent in the previous quarter.

The bank posted an 18.4 percent drop in its net profit to Rs 124 crore in the third quarter of the current financial year as against Rs 152 crore reported a year ago.

Net interest income of the bank dropped by 11.7 percent to Rs 474 crore as against Rs 537 crore reported in the same period last year.

Vijaya Bank organises housing loan campaign in Hubli

Vijaya Bank Regional office in Hubli is organising a two-day housing loan special campaign on Saturday and Sunday at RACPC Center at Vijaya Bank, Vidyanagar Branch, Hubli (phone 0836-237485/ Mobile - 8904090903).

According to Regional manager Mr B.A. Tata, the main purpose of the mela is to attract more housing loan customers and the highlight of the campaign is offering lowest interest rate on housing loan, 50 per cent concession in processing charges, no pre-payment charges and loans will be sanctioned within three days.

Vijaya Bank revises rates on FCNR (B) deposits

Vijaya Bank has revised interest rates on FCNR (B) deposits with effect from February 1. The revised interest rates are as follows: For one year to less than two years period – £3.14 per cent, $2.35 per cent, €2.98 per cent, AU$6.13 per cent, CAD 3.12 per cent.

For two years to less than three years period - £2.49 per cent, $1.78 per cent, €2.42 per cent, AU$5.09 per cent, CAD 2.44 per cent.

For three years to less than four years period - £2.51 per cent, $1.87 per cent, €2.50 per cent, AU$5.13 per cent, CAD 2.50 per cent.

For four years to less than five years - £2.63 per cent, $2.06 per cent, €2.66 per cent, AU$5.37 per cent, CAD 2.61 per cent.

For five year period only - £2.75 per cent, $2.30 per cent, €2.85 per cent, AU$5.50 per cent, CAD 2.75 per cent.

Vijaya Bank sanctions Rs 500 cr for MSME

Vijaya Bank has accorded in-principle sanction of up to Rs 500 crore for the MSME (Micro, Small & Medium Enterprises) sector during 21 mela's across the country.

With a view to give thrust to the MSME sector, the bank is organising a two-day mela at Patancheru Industrial area. The event was inaugurated by Ms Shubhalakshmi Panse, Executive Director of the Bank today.

Speaking at the function she said Vijaya Bank was giving more than 28 per cent to MSMEs through special cells of the bank across the country. The sector is very important and growing in the country. It requires support from the banks.

Ms Shubhalakshmi said the bank wants to be an important player in the India growth story. With manufacturing, infra and services sector being key drivers for GDP growth, the bank feels MSME sector needs a push.

“We want the sector to treat our bank as Chief Financial Officer of the company so that we many nurture them financially from a nascent period”, she said.

To unlock the potential of the MSMEs and specially help women entrepreneurs and nurture them on their way to growing into bigger industries, banks can play an important role, the Vijaya Bank executive said.

The Regional Head of Vijaya Bank, Hyderabad, Mr Seetharama Shetty, gave the welcome address, while Mr S. Narsing Rao, President , SSI Industries Association of Medak and Mr B. Chandrasekhar, Director, MSME Development Institute, here addressed the gathering of entrepreneurs.

At the mela top management representatives are available through out the day and in-principle clearance is given to MSME customers after discussions on one-to-one basis.

soma@thehindu.co.in

Vijaya Bank Q3 net down 18% despite rise in interest income

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”.

anju@thehindu.co.in

Government to interview executive directors for bank CMD post on January 12

MUMBAI: The appointments committee is slated to interview candidates for the CMD post at government owned banks on January 12. Earlier the interviews were fixed on January 4.

The appointment's committee includes D K Mittal, secretary, department of financial services and deputy governor of Reserve Bank of India Anand Sinha among others.

Ten executive directors of public sector banks will be considered for CMD post at six banks.

These candidates include S.S. Mundra from Union Bank of India, R V Iyer and Rajiv Dubey from Central Bank of India, Ashwini Kumar of Corporation Bank, Archana Bhargava from Canara Bank, V Kannan from Oriental bank of Commerce, Rajeev Rishi from Indian Bank, Rakesh Sethi from Punjab National Bank A K Datt of Dena Bank and Ms Subhalakshmi Panse of Vijaya Bank.

The candidates are being selected to fill vacancies in fiscal year 2012-13 in Bank of Baroda, Bank of India, Canara Bank, Dena Bank, Allahabad Bank and United Bank of India.

Sources from the industry say that on January 13 the appointments committee will interview 42 general managers for the executive directors post.

Source: EconomicTimes

Vijaya Bank offers concession in home loans' processing fee

NEW DELHI: The government-run Vijaya Bank is offering a 50 percent concession in the processing fee on home loans. Under the new scheme called "Home Utsav 2011" launched in Gurgaon Saturday, the bank has undertaken a number of steps to to boost its lending to the housing sector, a senior official said.

"Through this scheme, Vijaya Bank offers benefits such as 50 percent concession on the processing fee on the in-principle sanction of loans," said Harineesh Kumar, general manager of Vijaya Bank for the Delhi region.

"This is on the basis of documents submitted. There are a host of other benefits that buyers can look forward to in the two days of the mela," Kumar said.

The offer was valid for two days and closed Sunday evening.

Source: EconomicTimes

With restrictive regulations, banks do not have great ability to attract household savings: Vijaya Bank chief

From a bank's perspective, savings bank is an operative account, and banks need paraphernalia to manage the portfolio. If the savings bank portfolio is higher, the impact of the deregulated savings rate regime would be high, Mr H.S. Upendra Kamath, Chairman and Managing Director, Vijaya Bank, told Business Line.

Excerpts from the interview:

How is Vijaya Bank gearing up for the deregulated savings rate regime?

We are waiting and watching. From the point of view of depositors, we are happy that today they are in a position to get improved returns on their hard-earned savings. But from the bank's point of view, we should not forget that savings bank is an operative account.

So banks need paraphernalia to manage portfolio. A crude estimate can put the operating cost between 1.5 and 2 per cent. We have to weigh options — should I continue with all freebies or should I give this benefit to those in certain segments? Should there be a geographical basis for higher interest rates?

I feel, whatever differential interest rate is to be given, to start with, it has to be given above the cut-off of Rs 1 lakh. A cursory analysis in Vijaya Bank has shown that about 70 per cent of my deposits are over Rs 1 lakh amounting to about Rs 9,500 crore.

On that, if I offer 2 per cent higher interest, then the per annum impact on that is Rs 190 crore. This is one quarter's profit for the bank. For smaller banks, it is not so simple. But irrespective of the size of the bank, if the savings bank portfolio is higher, then the impact will also be high.

How do you plan to augment your non-interest income?

Treasury has not been contributing much in the first and second quarters. The only way I can augment this is by marketing third-party products — life and non-life insurance. We are extending the marketing of life products to 20 major centres across the country by December 31. We are also beginning marketing of mutual funds.

The second thing is, we are canvassing more and more export advances as these bring both treasury and fee-based incomes.

The third area is, we are slowly but gradually moving towards working capital limits. Today we are all focusing on term loans — for infrastructure, housing, industries, etc. We are trying to get cash credit, overdraft, bank guarantee and LC (letter of credit) relationships. These will bring in some amount of fee-based income.

Fourth, we are broad-basing borrowing customers. What happens in public sector banks is that in the anxiety to grow the balance-sheet, rather than widening, you are deepening. You are not bringing new customers.

For one PSU or one AAA-rated company, if today, you have an exposure of Rs 200 crore, in 12 months' time it becomes Rs 1,200 crore. These large corporates don't give you any fee-based income. There are hardly any processing charges, hardly any upfront fee. So we are trying to rebalance that portfolio which, without any great effort, will bring in higher fee.

Also, we have moved our application for increasing the number of branches nominated for both direct and indirect tax collections. But we have not received approvals so far. I get some amount of fees per collection. These efforts are however small drops in the ocean. They can make a change only over a period of time.

What kind of opportunities do mid-corporates provide?

It is a known fact that mid-corporates and small borrowers offer better yield to the bank. Large corporates have greater bargaining power and their ability to get concessions from bank is really high.

This is because they lead to bulk advances and have the potential to help banks grow their balance-sheets. Whatever interest concessions the system makes available to well managed and better-rated corporates, have to be made good by capturing other allied businesses. Fee-based business such as treasury, forex, remittances, payroll accounts and offering third-party products will bring better yields.

That is not the case with mid-corporates. For mid-corporates and small and medium units, the interest spreads are better and the ability to capture all other businesses is also high. And, therefore, there tends to be a rebalancing of portfolio depending on what your priorities are.

At our bank, the growing emphasis is on retail, mid-corps and SMEs. This is provided in our business theme for the current year itself, which is the year of retail.

What is your next step on the technology front?

Business analytics is something which all of us are talking about. But we are currently in a situation where a lot of extra costs are to be met and so IT spend is optional. Core banking is something we have already achieved. MIS also, we are almost there.

Though analytics is important over the long term, it need not be brought in immediately. IT progression will happen. But, as of now, we will improve upon things in CBS. And, of course, increasing the ATM population is something we have committed to. I would like to achieve a branch versus ATM ratio of 1:1. So we will do that.

Do banks need to expand their product offerings to get more household savings into the banking sector?

With the deposit structure that is there today and the restrictions in yield enhancements, banks are not well placed to do that. But one thing that we can do is perhaps wealth management. That also is not discretionary.

With restrictive regulations, we do not have great ability to attract household savings. Hence, a portion of that will definitely go elsewhere. If we are permitted to launch gold deposit schemes, we perhaps can attract more savings.

This was tried once in the past, but did not pick up, because gold in the Indian household is not fully accounted for. So it will not come to the formal channels. Hence there are challenges.

Savings bank is an operative account. So banks need paraphernalia to manage the portfolio. A crude estimate can put the operating cost between 1.5 and 2 per cent.

Government clears creation of new ED slot in public sector banks

KOLKATA: Large state-run lenders like Bank of Baroda and Punjab National Bank will get a third executive director (ED) on their board from next April, while smaller banks like Dena or United Bank will get their second ED.

The government has just cleared the Khandelwal Committee's recommendation to this end, two chief executives at state-run banks said. Banks with more than Rs 3 lakh crore business are considered as large entities.

The government has created the new slot in six large banks and said the third executive directors will be responsible for human resource development and technology.

Bank of India, Canara Bank, Central Bank of India and Union Bank of India are dubbed as large banks and will benefit from this move. This is in step with the director-HR position that exists in public sector undertakings like ONGC, Indian Oil, HPCL or BPCL.

"Creation of the ED position for HRD is an important step in the banking industry as this will help in bringing human resource development under board's direct attention," said AK Khandelwal, who headed the HR reform panel and submitted a series of recommendations in June 2010.

The government has also created a second executive director's position in five small banks having a business of less than Rs 1.5 lakh crore. Bank of Maharashtra, Dena Bank, Punjab & Sind Bank, United Bank of India and Vijaya Bank fall in this category and their second ED will also be responsible for HRD and technology. All these banks have one ED at their top deck at present.

Source: EconomicTimes

Vijaya Bank expects weak credit growth in remaining fiscal

BANGALORE: Bangalore-based Vijaya Bank expects the last two quarters of the current financial year to be slow for loan growth as corporates and retail consumers postpone spending, hit by high interest rates, a top official said on Wednesday.

The lender, who has no exposure in the aviation sector including the beleagured Kingfisher Airlines, is cautious about lending to power, commercial real estate and textile sectors, H.S. Upendra Kamath, chairman and managing director told Reuters in an interview.

"Growth is stunted on all front. Industrial capex is not happening so there is no new funding demand. With inflation being high, disposable income of families is also being impacted. So consumption is being postponed," he said.

Source: EconomicTimes

Vijaya Bank conducts home loan mela in Mangalore

The regional office of Vijaya Bank in Mangalore conducted a home loan mela on October 29 and 30.

Quoting Mr Sudhakar Shetty M., Deputy General Manager of the bank, a bank release said here that through the housing loan mela, bank gave spot sanction based on income and offered a 50 per cent concession in processing charges.

Mr B. Ibrahim, Director of the bank and former Member of Parliament, inaugurated the mela, the release added.

SB account rate deregulation to push up banks' interest cost: Vijaya Bank CMD

Bangalore, Oct 25: Mr H.S. Upendra Kamath, Chairman and Managing Director, Vijaya Bank, told that the rate hike today was on expected lines, which the market has already factored in.

"It is too premature to say that whether we will transmit to customers and if at all, when as the RBI has asked banks to come out new product schemes on the savings bank front. Savings deregulation will result in some increase in interest cost to banks. So it is a different situation from the last RBI rate hike, and in my opinion, transmission might be required not unless interest cost on savings bank is compensated by pricing of transactions in the savings bank services like remittances etc."

Credit growth is already slowing down in the banking industry, and new sanctions also have substantially declined, he said. "However, many banks have announced festival offers which will ensure that the interest rate is low over the next two-three months. Because of festival rates, no slowdown is expected in the immediate future."

Vijaya Bank sheds Rs 2,000 cr of bulk deposit in Apr-Aug period

New Delhi: Bangalore-based public sector lender Vijaya Bank said it has retired around Rs 2,000 crore of bulk deposits in the first five months of the current fiscal to protect its net interest margin.

"We have shed around Rs 2,000 crore of bulk deposits in the first five months to protect our margin. This is part of our conscious effort to see that cost is contained," Vijaya Bank Executive Director Subhalakshmi Panse said.

We expect our net interest margin to be above 3 per cent during this fiscal, she added.

Banks are increasingly facing cost pressure due to high deposit rates. As high deposit rates impact net interest margin, many banks are shedding their high cost bulk deposits to protect margin.

Earlier, Bank of Maharashtra had also announced offloading its entire chunk of bulk deposits of Rs 9,000 crore by March, 2012 to control cost of deposits. Usually, banks have to pay higher rate of interest on bulk deposits than retail deposits.

Referring to credit growth, Panse said that the bank was witnessing a credit growth of around 18 per cent as of now.

She, however, said that deposit growth was little subdued during this period.

Vijaya Bank is also hopeful that asset quality will be maintained despite a hardening interest rate regime.

"Though our NPAs had increased in the first quarter of FY12 due to system monitoring of loans, we hope that asset quality will be maintained in the current fiscal," she said.

About possible base rate hike, Panse said that the bank would take a call in the last week of September whether to raise base rate in the aftermath of 25 basis points policy rate hike by the Reserve Bank of India.

Vijaya Bank registered a 58% decline in its net profit to Rs 72 crore for the first quarter ended June 30, 2011 against Rs 173.5 crore reported in the same period last year.

Total income of the bank increased to Rs 1,953 during the April-June quarter, up by 28.5 per cent from Rs 1,520 crore in the same period previous year.

Source: Financial Express