Canara bank, IDBI bank Ltd, Union bank of India ltd, Dena bank Ltd and Oriental bank of Commerce ltd registered increase in profits for the second quarter ended September 30. The surge in profits is mainly due to the non-interest income. Non-interest income includes banks' income from treasury, foreign exchange operations, recovery in written-off accounts and fee-based income.
Union bank of India based in Mumbai, reported a profit of 39.5 percent to Rs. 505 crore, aided by lower provisioning requirements on standard assets (assets that are serviced regularly) and a whopping 95 percent rise in non-interest income to Rs. 555 crore.
The most important factor that led to the increase in profits of the bank was its treasury portfolio, with profits on sale of investments rising to Rs 218 crore from a loss of 36 crore a year ago.
Total income of Union bank increased 20.78 percent to Rs 3,761 crore, while provisions declined 9.76 percent to Rs. 305 crore. The gross bad debts remained same as the previous year at 1.93 percent of total loans. The bank's Net Interest Margin (NIM), the difference between income from loans and cost of funds, improved from 2.28 percent to 2.34 percent.
M.V. Nair,Chairman and managing director, UBI said that its gross non-performing asset (NPA) ratio could decrease in the coming quarters to 2% of total loans because of pressure on restructured loans.
Another Mumbai-based bank, IDBI, posted a growth of 56 percent in its net profit to Rs254 crore. The bank's fee-based income increased 99 percent over the corresponding quarter, a year ago. Total income for the bank grew 42 percent to Rs.4,283 crore. Its net interest margin improved from 0.41 percent a year ago to 1.07 percent.
The bank raised its provisions to Rs. 383 crore in the quarter from Rs 122 crore the previous year. This was done to increase the cushion against decrease in the value of its investments and to provide for employee costs.
Dena Bank's net profit rose 21.20% to Rs124.64 crore with total income rising to Rs1,088.03 crore in the second quarter, compared with Rs913.84 crore in the year ago period. Non-interest income increased 47.02% to Rs125.28 crore.
Profit in case of Bangalore-based Canara bank grew 72% to Rs 910.52 crore. This growth can also be attributed to non-interest income, which rose 163% to Rs 893 crore.
The private banks also registered strong growth figures. Axis bank's net profit grew by 32 percent in the July-September quarter to Rs 531.64 crore, over the corresponding quarter the previous year. Recently, HDFC bank and IndusInd Bank have confirmed good results too.