Bob Net Jumps 33% To Rs 276cr

Bank of Baroda has posted a net profit of Rs 276 crore for fiscal 1996-97, up 33 per cent from the previous years Rs 208 crore. Its net worth increased by more than 50 per cent.

The bank also announced a maiden dividend of 26 per cent. The proposed dividend, including dividend tax, will absorb Rs 58 crore. The equity capital of the bank stood at Rs 254 crore as on March 31.

Announcing the results here yesterday, BoB chairman and managing director K Kannan said: Fiscal 1996-97 was a year of resource mobilisation for the bank. However, the bank is stuck with high-cost funds. Further, FY 1995-96 witnessed a slowdown in credit offtake and as a result the bank was not able to deploy all its resources. Its interest spread also came under pressure, dipping to 3.39 per cent compared with 3.84 per cent in the previous year.

 

The accretion of domestic deposits doubled from 2,167 crore in 1995-96 to Rs 4,264 crore in 1996-97. High-cost deposits like CDs were replaced by the more stable demand deposits. BoBs global deposits increased by over 10 per cent to Rs 32,157 crore during the period ended March 31 from Rs 28,370 crore in 1996.

On account of poor credit offtake, bank advances moved up marginally to Rs 16,532 crore from Rs 16,013 crore and investments increased to Rs 10,927 crore from Rs 9,621 crore. The returns on investments have increased despite the bank marking 80 per cent of the securities to market as against 50 per cent a year ago.

The bank also improved its return on assets to 0.78 per cent compared with 0.65 per a year ago. Its return on net worth also increased to 16.68 per cent from 11.80 per cent. As a result, the earnings per share has increased three-fold to Rs 10.87 from Rs 3.61, giving a price-earnings ratio of more than Rs 10.

The bank was able to augment its own funds to Rs 1,988 crore from Rs 1,731 crore.

The banks initial public offering in December enabled it to raise the capital adequacy ratio to 11.8 per cent from 11.2 per cent as against the stipulated level of eight per cent.

CRB owes Rs 2.5 cr

The CRB group has an outstanding of around Rs 2.5 crore with Bank of Baroda. However, the banks exposure to the group is against lease of assets worth Rs 8 crore and it has appointed a liquidating agent to recover its dues, BoB CMD K Kannan said here yesterday.

The bank has an overall exposure of around three per cent of its advances. Hence, any accounts going bad will not hamper the banks profitability. However, we are hopeful of recovering the CRB dues, Kannan said. Though the CRB scam has highlighted the immaturity of the banking system, it would not lead to a shake-out in the NBFC industry as the economy is a on learning curve trying to cope up with maturity and interest risks and asset liability mismatches, Kannan said.

These happenings are a certainty in the transition phase as the players are learning to cope with the new environment. Nevertheless, the NBFCs are important financial intermediaries and, hence, they should not be written off, he said. The CRB fiasco is likely to dampen the resource mobilisation of the non-banking finance sector. However, this will benefit the banks in the short run, Kannan said.