Dena Bank's net profit rose 15 per cent to Rs 155 crore in the quarter ended December 2010 against Rs 135 crore in the corresponding year ago period, aided by strong growth in net interest income.
While net interest income was up almost 65 per cent, non-interest income fell 5 per cent mainly due to lower profits from sale of investments. Profit from sale of investments was at Rs 14 crore against Rs 28 crore in the year ago period.
Provisions and contingencies rose substantially to Rs 161.22 crore (Rs 63.16 crore).
Mr D.L. Rawal, Chairman and Managing Director of the bank, said, “The challenge will be to manage credit growth in line with the availability of funds. Post the hike in policy rates by the RBI, banks will to realign rates of interest”.
No hike in deposit rates
Mr Rawal ruled out an immediate hike in deposit rates. On lending rates, he said the bank's asset liability committee will meet to take a call.
There could be some pressure on the asset quality in the fourth quarter, he said. “Some of the accounts are under pressure, as the payments they expected have not come in. The accounts are mainly in the textile and manufacturing sectors,” said Mr Rawal.
Credit growth
The bank is targeting a credit growth of 22 per cent and a deposit growth of 20 per cent by March end. He said the bank is cautious while lending to the diamond industry and to commercial real estate players. “We are only meeting the requirements of our existing customers,” he said.
The bank is awaiting a capital infusion of Rs 520 crore by the Government before the end of the fourth quarter.
Dena Bank's scrip ended at Rs 103.30 on the BSE on Thursday, down 2.87 per cent from the previous close of Rs 106.35.
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