Bank of Baroda recorded 10.3 per cent growth in net profit at Rs 1,139 crore for the quarter ended June, owing to good growth in interest- and non-interest income. Net profit in the corresponding quarter of the previous year stood at Rs 1,033 crore.
However, provisioning for stressed assets rose 128.6 per cent to Rs 893.80 crore, reflecting a sharp slowdown in economic growth. Net interest income, or the difference between interest income and interest expenditure, rose 21.8 per cent to Rs 5,759.54 crore, compared with Rs 4,334.58 crore in the year-ago period.
Shares of the Mumbai-based public sector lender on Monday closed 3.54 per cent higher at Rs 672.60 on the Bombay Stock Exchange. Chairman and Managing Director M D Mallya said demand for credit in the quarter was lacklustre. Keeping with the moderation in loan growth and the rise in interest costs, the bank’s net interest margin fell to 2.73 per cent from 2.87 per cent a year ago.
|BANK OF BARODA
Quarter ended June, standalone
|(in Rs crore)
|Net interest income
|*change over YoY
Source: Capitaline Data compiled by BS Research Bureau
Total deposits rose 22.3 per cent to Rs 3,82,739 crore. The share of domestic low-cost current account and savings account deposits in total deposits stood at 32.23 per cent, while the share of bulk deposits was about 22 per cent, Mallya said. The bank’s domestic deposits shrunk 0.8 per cent to Rs 2,77,839 crore, compared with the outstanding deposits in March, as the bank shed some bulk liabilities.
The cost of deposits rose from 5.36 per cent in the year-ago period to 5.89 per cent in the quarter ended June.
Total advances increased 23 per cent to Rs 2,85,813 crore, while the yield on advances eased to 9.08 from 9.11 per cent. Domestic advances fell three per cent over the outstanding book at the end of March.
Typically, demand for credit is subdued in the first quarter.
The adverse economic environment had a pronounced effect on credit off-take, said Executive Director R K Bakshi.
The bank expects its loan book to grow 1-1.5 per cent more than the average industry growth this financial year.
Non-interest income, comprising fees and commissions, rose 20.3 per cent to Rs 770.80 crore.
On the increase in provisions, Mallya said the bank had set aside a higher amount for non-performing assets (NPAs) and the write-off for bad debt. This, he said, was a fall-out of the stretched business cycle. At the end of June, the provision coverage ratio was 79.02 per cent. Gross non-performing assets rose to Rs 5,319 crore from Rs 3,425 crore a year ago. The bank attributed the rise in NPAs to the slowdown in the industrial sector and the weak monsoon this year. The agriculture and small and medium enterprises accounted for a significant share of the slippages.
Bank of Baroda’s cumulative restructured loan book stood at Rs 15,547 crore, and it restructured assets worth Rs 771 in the quarter. Capital adequacy ratio, according to Basel-II norms, was 13.74 per cent at the end of June, while tier-I capital stood at 10.13 per cent.