Bank of Baroda net profit rises 17% to Rs 1,362 crore

Healthy interest income helps the PSU bank beat market expectations

Beating market expectations, public sector lender Bank of Baroda reported a 16.6 per cent rise in net profit to Rs 1,362 crore for the financial year's first quarter, ended June, on healthy growth in net interest income (NII).

BoB had a net profit of Rs 1,168 crore in April-June 2013. The stock closed marginally higher (0.5 per cent) at Rs 866.10 on the BSE exchange.

Total income for the quarter rose nine per cent to Rs 11,682 crore. NII was up 15.2 per cent at Rs 3,328 crore, due to better loan pricing.

Chairman and Managing Director S S Mundra said besides improvement in yields on loans, better management of liabilities helped the good growth in NII. The bank continued to shed high cost and bulk deposits.

Saday Sinha, banking analyst, Kotak Securities, said: “Core performance came marginally ahead of our expectation.”

The domestic net interest margin improved to 2.94 per cent, from 2.84 per cent in April-June 2013. Other income fell 16.7 per cent to Rs 1,025 crore. Mundra said this fall was due to a dip in the trading gains because of a hardening in the yields of government securities.

Total advances rose 18.8 per cent to Rs 381,772 crore. Deposits grew 18.1 per cent to Rs 551,649 crore. The share of low cost liabilities — current accounts and savings accounts — were 31.3 per cent.

Gross non-performing assets were 3.11 per cent of the total as against 2.99 per cent in June 2013. The bank made an excess provision of Rs 330 crore for bad loans. This helped to improve its provision coverage ratio to 66.68 per cent. The extra provision has not been done foreseeing any asset quality trouble in the near future. Going forward, the bank expects some stability on asset quality, said Mundra.