...Gross Profit Up 10% At Rs 442.6 Cr

Buoyed by higher profits from investments and forex transactions, Bank of Baroda has posted a gross profit of Rs 442.60 crore for the first half of 1997-98.

This represents a 10.3 per cent increase over the half yearly profits in 1996-97 when operating profit was Rs 404.96 crore.

In the first half of 1997-98, interest income was Rs 1994.98 crore, as against Rs 1912.81 crore in the corresponding period last year, reflecting a growth of only 4.28 per cent. This was principally on account of the decline in lending rates and the slow pick up in credit.

Announcing the results, K Kannan, chairman and managing director, Bank of Baroda, said that there has been an improvement in other income principally on account of better resource management and the decision to merge the domestic and forex treasury operations. This has translated into higher income from churning over the investments portfolio. Profits on sale of investments increased from Rs 11 crore in the first half of last year to Rs 38 crore this year.

During the corresponding period profit on exchange transactions has gone up from Rs 31 crore to Rs 53 crore. This has implied that other income has increased from Rs 195.98 crore to Rs 249.15 crore.

As on September 30 1997, the year on year growth in total advances was 13.24 per cent while the corresponding figures in case of deposits and advances were 13.24 per cent and 29.98 per cent respectively.

In the first half of this year total advances have increased from Rs 16,531.63 crore to Rs 17,285.89 crore, total deposits have moved up from Rs 32,156.78 crore to Rs 34,662.50 crore and total investments from Rs 10,927.17 crore to Rs 13,318.88 crore.

Outlining the reasons behind the increase in profits, Kannan listed three factors; integration of forex, money and investment desks, reduction in cost of funds by reduction in deposit rates, and aggressive drive for recovering non performing assets.

The bank has recovered non performing assets to the tune of Rs 170 crore in the current year. The intermediation ratio has declined from 1.70 in March 1997 to 1.67 in September. Kannan said that because of these factors the spreads were unaffected.

Looking into the future, he said that the bank would focus on retailing of credit. The system of maximum permissible bank finance will be replaced by an approach which would appraise each proposal qualitatively in addition to the quantitative aspects.

He said that the BIFR cases need to be streamlined and the debt recovery tribunal strengthened.