The Thrissur-headquartered lender saw a 12% year-on-year rise in net interest income for the quarter but a fall in treasury earnings dragged down both operating and net profit growth. Operating profit was up 5% to Rs 157.4 crore.
Its net interest margin for the quarter was seen at a high of 5.6%, which managing director Pralay Mondal said is not sustainable as the bank plans to diversify into other lines of lending business from gold loans. At present, gold loans account for about 43% of the gross advances of Rs 1,7468 crore.
“We would like to have a full range of products… we are in the process of building the franchise through partnerships,” Mondal told ET after announcing the quarterly results. He attributed the almost flat profit numbers to higher treasury losses as well as the fact that the earnings through sale of priority sector lending certificates were nil as it did not sell anything last quarter.
The bank’s asset quality improved significantly with gross non-performing assets (NPAs) ratio falling to 1.65% at the end of September from 4.11% a year ago. Net NPA ratio fell to 0.57% from 2.63%. In absolute terms, gross NPAs were at Rs 291 crore, down from Rs 587 crore. The bank’s advances grew 24% year on year while deposits rose 10% to Rs 20,987 crore. “While our deposit growth was in line with the industry trend, we could outgrow the advance portfolio,” Mondal said.