Public sector Vijaya Bank has reported 13.4 per cent increase in net profit at Rs 161.66 crore for the first quarter ended June 30, 2016-17.
Bank had reported net profit of Rs 142.59 crore in the April-June quarter of the previous fiscal 2015-16.
Total earnings of the bank rose marginally to Rs 3,295.05 crore during the first quarter, as against Rs 3,289.05 in the year-ago period, Vijaya Bank said in a regulatory filing.
However, bank’s asset quality worsened, as its gross non- performing assets (NPAs) rose to 7.31 per cent of the gross advances as of June, sharply up from 3.39 per cent a year ago.
Likewise, net NPAs or bad loans stood at 5.42 per cent of the net advances at the end of June, almost double from 2.45 per cent year ago.
Consequently, provisions for bad loans and contingencies were raised significantly to Rs 267.82 crore, as against Rs 146.38 crore year ago.
Public sector banks are cleaning up their balance sheets as part of the Reserve Bank’s asset quality review (AQR) guidelines and are required to park a higher amount toward bad loans.
A higher allocation for bad loans is one of the main reasons behind most of the public sector banks reporting either losses or lower profits.
The bank stock was trading Rs 3.61 per cent higher at Rs 43.05 in the afternoon on BSE.