Recoveries fuel BoB net 13% to Rs 327 cr

Mumbai-based Bank of Baroda (BoB) has posted a 13.5 per cent rise in net profit for the second quarter of 2007-08 on the back of buoyant growth in income from treasury operations, recovery from written-off accounts and a rise in net interest income.

The bank's net profit for the September quarter stood at Rs 327.2 crore, up from Rs 288.4 crore a year earlier.

The bank's net interest income grew 16.7 per cent to Rs 1,886 crore for the quarter ended September 30, from Rs 1,616 crore a year earlier. Other income rose 41.1 per cent to Rs 454.1 crore for the quarter from Rs 321.7 crore a year earlier.

Treasury income went up 80 per cent to Rs 126 crore for the September quarter from Rs 70 crore a year earlier, while recoveries from written-off accounts rose 55 per cent to Rs 76 crore over the period. 
 

Rs crore	2006	2007	% chg
Interest earned	2185.92	2879.77	31.74
Other income	321.74	454.06	41.13
Expenditure	1891.96	2696.59	42.53
PBT	615.70	637.24	3.50
Net profit	288.36	327.19	13.47
CAR (%)	12.93	12.91
NPR (%)	13.19	11.36
Source: BSE

The bank's net interest margin improved marginally to 2.95 per cent for the September quarter from 2.92 per cent a year earlier, despite an 108 basis points rise in the cost of deposits to 5.51 per cent, even as yield on advances rose 149 basis points to 9.61 per cent over the period.

"The deposit rates are unsustainable. We might take a look at reviewing our deposit rates," said A K Khandelwal, chairman and managing director, Bank of Baroda.

Deposits rose 22 per cent to Rs 1,31,373 crore at the end of September from a year earlier, while advances grew 27.2 per cent to Rs 90,212 crore over the same period, with retail loans forming 20.6 per cent of the loan book.

The ratio of gross non-performing assets (NPAs) fell to 2.33 per cent from 3.44 per cent a year earlier, while the level of net NPAs came down to 0.55 per cent from 0.77 per cent a year earlier. The capital adequacy ratio (CAR) stood at 12.9 per cent at the end of the September quarter.

The bank plans to raise Rs 2,500-3,000 crore by the issue of perpetual bonds or upper tier-II bonds to support its business growth and meet Basel-II capital requirements.

During the quarter, the bank provided Rs 90 crore from its profits to meet its additional liability of Rs 901 crore on a proportionate basis according to the revised accounting standard 15 on employee retirement benefits.