 "A pedestrian walks past a Bank of Baroda advertisement in Mumbai")
Bank of Baroda (BoB) plans to bring in a strategic advisor for its new managing director and chief executive, P S Jayakumar for its restructuring exercise and to improve profitability.
The move comes in the backdrop of a sharp dip in profits for the September quarter after the public sector lender made huge provisions for the stressed loans and fraud. BoB’s reputation has also taken a hit due to alleged irregularities in foreign exchange transactions at its Ashok Vihar branch in Delhi.
The strategic advisor would focus on developing business plans, as well as procedures for corporate restructuring and joint ventures, and coordinating with functional heads and stakeholders for improving of business and profitability.
The bank has already decided to hire an external accounting firm to look into the its know your customer norms in the backdrop of the alleged violation of anti-money laundering (AML) norms at the bank’s branch in Delhi.
With heavy provisions for bad loans and fraud, the bank’s net profit for the September 2015 quarter fell sharply by 88.7 per cent by to Rs 124 crore. BoB had posted a net profit of Rs 1,104 crore during July-September 2014.
Gross non-performing assets (NPAs) stood at 5.5 per cent (Rs 23,710 crore) in September 2015, against three per cent (Rs 13,057 crore) a year ago. Its restructured loan book stood at Rs 22,930 crore in September. Provision and contingencies rose to Rs 1,891 crore from Rs 888 crore in the year-ago period. This included provision of Rs 93 crore for one account declared a fraud. The total exposure to this account is Rs 374.5 crore.
Jayakumar, who came on board in October, has set immediate priorities. Two pertain to the asset book. First, managing non-performing assets and enhancing asset quality. Second, rebalancing the loan portfolio to diversify base and get more credit-valued customers (read those who give more bang for their money) on board.
The other two priorities are about human resources and technology. With 39 senior bankers set to retire over the next 18 months, the emphasis is to prepare a second line of leadership to ensure the transition is seamless. Attention will be given to revamping the technology platform to give a push for digital banking.
TRYING TO BRING IT ON TRACK
-
Jayakumar, who came on board in October, has set immediate priorities
-
Strategic advisor would focus on improving business and profitability
-
Bank has also decided to hire an external accounting firm to look into its KYC norms
-
Net profit in Q2 fell sharply by 88.7% at Rs 124.48 crore.
-
Managing NPAs, enhancing asset quality, and rebalancing loan portfolio are priorities set by the bank
- Trying to diversify its base and get more credit-valued customers on board
