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Vijaya Bank

Started off as a private bank it was nationalized in 1980

It started off in 1931 as a private bank, but was nationalized in 1980. Now, it is a public sector bank with 53.87 per cent interest in government’s hands.

The bank has reported a 36 per cent rise in net profit at Rs 108.4 crore for Q2FY2010 compared to the corresponding quarter last year. Its operating profit for the quarter also went up by 55.4 per cent to Rs 233.9 crore.

The hike in net profit was mainly on account of a 35.3 per cent rise in its net interest income. Its net interest margin improved from 2.07 per cent for Q2FY2009 to 2.49 per cent in Q2FY2010. While being late for Basel II norms its capital adequacy ratio (CAR) stood at 13.44 per cent. This is set to go up, since the government would be injecting Rs 700 crore as capital into it. The intent is to let banks like Vijaya to continue lending for infrastructure development to small- and medium-enterprises, and the rural economy, without any deterioration in balance sheet. Its non-performing assets (NPAs) have risen to 1.46 per cent in this quarter, from 0.74 per cent in Q2FY2009.

Though uptake in it by mutual funds is minimal, but the institutional category raised their holding in it from 14.88 per cent to 18.10 per cent between March, 2009 to September, 2009. With a dividend yield of 1.95 per cent, the stock is trading at an EPS of Rs 11.79. At current valuations, the stock is trading at a P/E of 5.83 which is 31.25 per cent below its 3-year median P/E of 7.83 and hence, is worth a second look.

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