Bank of Baroda registers net profit of Rs 1,779 crore in March quarter

IPO of the bank's life insurance arm, IndiaFirst Life, likely this financial yr

State-run lender Bank of Baroda reported a net profit of Rs 1,779 crore for the Jan-March quarter of 2021-22 as compared to net loss of Rs 1,047 crore during the same period last year. The profit was mainly due to lower provision for tax, which was Rs 120 crore as compared with Rs 3,726 crore during the same period last year.

“In the last quarter of last year, we had transitioned into the new tax regime, and as a result, effective tax rate came down from 33 per cent to 25 per cent. That was the reason why tax provisions were lower,” Sanjiv Chadha, MD & CEO, Bank of Baroda, said.

“Also, there was an additional impact during the last quarter of FY21 because of the one-time deferred tax liability hit we took. Now, we are in a stable tax bracket with the lowest possible rate of 25 per cent,” Chadha told Business Standard.

The lender reported a healthy net income growth of 21.2 per cent on the back of almost 9 per cent increase in advances. The retail loan portfolio reported a growth of 16.8 per cent.

Non-interest income for the quarter fell 72.3 per cent to Rs 2,522 crore mainly due to fall in treasury income as yields on bonds surged during the period under review.

The net interest margin for the bank increased to 3.08 per cent for the fourth quarter from 2.72 per cent during the same period last year. Chadha said the bank was focussed on high-yielding assets and would like to sustain such margins.

Gross NPA of the bank came down to Rs 54,059 crore in Q4FY22 from Rs 66,671 crore a year ago and the gross NPA ratio improved to 6.61 per cent from 8.87 per cent.

Provisions for bad loans were higher at Rs 5,200 crore for the quarter as compared with Rs 4,593 crore. This is because the bank has made 100 per cent provision for a ‘retail chain’ and also made more than required provision for some other loans. The bank’s exposure to the ‘retail chain’ is Rs 1,700 crore.

Due to aggressive provisions, the bank’s provision coverage ratio improved to 75 per cent, excluding technical write-offs. Chadha indicated that the bank’s life insurance arm — IndiaFirst Life — might be goi­ng for an initial public offering in the current financial year.

“The company is doing well. It is the fastest growing life insurance company. We believe it is right for the company to list. In terms of timing, it depends on how markets are at that point of time. But we believe that there are chances that could happen this year,” Chadha said.