Lower tax provisions helped public sector lender Bank of Baroda to report a 17.3 per cent rise in net profit for the quarter ended March 31, at Rs 1,518 crore, from Rs 1,294 crore in the corresponding period a year earlier.
Operating profit rose 5.4 per cent to Rs 2,051 crore on the back of a seven per cent growth in net interest income. The bank got a tax refund of Rs 400 crore in the last quarter, compared with Rs 61 crore a year before; “this had a positive impact on our profits for the quarter”, said M D Mallya, chairman and managing director.
Net interest income or the difference between interest earned and paid out was Rs 2,797 crore, up seven per cent from Rs 2,614 crore over the year. Net interest income growth was limited due to the rising cost of deposits, up a little over 150 basis points during the quarter on a year on year basis, to 7.17 per cent.
The Mumbai-based lender reported total income growth of 25.8 per cent to Rs 9,016 crore.
Net non-performing assets (NPAs) were 0.54 per cent as on March 31. During the quarter under review, the lender restructured loans worth Rs 5,281 crore, taking total restructured assets to Rs 8,515 crore for the whole year. During 2010-11, total restructured assets were Rs 1,600 crore. Higher restructured assets in the quarter led to a significant increase in the standard asset provisioning, which shot up to Rs 189 crore from Rs 106 crore, while NPA provisions more than doubled to Rs 926 crore from Rs 424 crore in the same quarter a year before. As a result, total provisioning for the bank grew 91.9 per cent to Rs 2,555 crore during 2011-12.
“The restructuring assets were higher on account of a couple of major accounts, which are one-off cases. We have provided adequately for all the loans and our total loan loss coverage ratio stood at 80.05 per cent. Going forward, we think the situation will only improve from here and the quantum of restructured assets will come down,” Mallya added.
Net profit during 2011-12 was higher by 18 per cent to Rs 5,007 crore from Rs 4,242 crore a year before. The capital adequacy ratio as on March 31 was 14.7 per cent according to Basel-II norms, with Tier-1 capital at 10.8 per cent. “Our plan is to keep the capital adequacy ratio between 13 and 13.5 per cent,” Mallya added.
Advances of the state-run lender grew 25.7 per cent during 2011-12 to Rs 2.87 lakh crore and deposits were higher by 26 per cent to Rs 3.85 lakh crore. In the current financial year, the bank plans to grow its business (advances and deposits) by 19-20 per cent.
NIMs (net interest margins) grew at around three per cent globally and 3.5 per cent domestically for the financial year. “The bank’s current account and savings account share in domestic deposits, however, declined to 33.2 per cent in 2011-12 due to elevated levels of retail term deposit rates. Retail credit grew 10 per cent to Rs 35,670 crore during the fiscal,” the bank said.