Surge in loans, deposits lift Bank of Baroda net 25.4%

Momentum expected to continue; Rs 2,000-crore bond issue on the cards.

Robust loan growth, coupled with low interest expenditure, helped government-owned Bank of Baroda to report a 25.4 per cent rise in net profit to Rs 859.2 crore for the quarter ended June 30, as compared with Rs 685.4 crore in the same period last year.

Net interest income growth was 54.2 per cent to Rs 1,858 crore, on the back of a 30.7 per cent year-on-year growth in advances and 1.47 per cent increase in interest expenditure.

“Significant growth in advances and substantial reduction in cost of deposits has helped to post the growth in net profit,” said M D Mallya, chairman and managing director. The cost of funds came down to 5.09 per cent as compared to 6.16 per cent during the reporting period, while yield on advances declined to 9.79 per cent from 10.10 per cent.

As the result, the overall net interest margin (NIM) increased to 2.9 per cent from 2.4 per cent. NIM from domestic operations swelled 86 basis points (bps) to 3.4 per cent.

Mallya said the bank increased its market share in deposits by 30 bps and 21 bps in advances over the past year.

Non-interest income, however, declined 12.2 per cent to Rs 617 crore due to lower trading gains, as bond yields hardened. Trading gains in the first quarter of the current financial year was Rs 127.2 crore as compared to Rs 256.6 crore in the same period of the previous year.

Asset quality of the bank worsened marginally, with gross non-performing assets moving up from Rs 2,068.15 crore to Rs 2,657.4 crore. “The delinquency ratio is about 1.41 per cent, which is in line with our guidance, and we don’t expect the ratio to increase further,” Mallya said.

Going forward, the bank is looking at a 20 per cent growth in deposits and 22-24 per cent in advances. However, its chief economist, Rupa Rege-Nitsure, said the targets were conservative, keeping in mind the global uncertainties, and the projections may increase by two percentage points if the global situation improves.
 

MARCHING AHEAD PERFORMANCE IN QUARTER ENDED JUNE 30
	Bank of Baroda

Central Bank

Oriental Bank

Andhra Bank

10-Jun% Chg10-Jun% Chg10-Jun% Chg10-Jun% Chg Interest earned4,726.9617.23,410.8221.72,830.8217.71,865.0524.0 Other income617.24-12.2247.15-37.2214.72-45.2208.18-13.7 Total income5,344.2012.93,657.9714.53,045.548.92,073.2318.7 Interest expended2,868.971.52,292.363.01,773.58-7.61,128.806.2 NII1,857.9954.21,118.4693.81,057.24118.4736.2566.8 Net profit859.1625.4336.8126.2363.3141.1320.4125.1 % change over previous year;  Data compiled by BS Research Bureau                                                       Source : Capitaline

On whether the bank was looking at increasing its deposit rates, Mallya said, “We were never short of liquidity, evident from the fact that deposit growth was 28 per cent. There are no liquidity issues as far as we are concerned. However, we are tracking the liquidity situation very closely.”

During the first quarter review of annual monetary policy, the Reserve Bank of India had expressed concern over tepid deposit growth, which was lower than the central bank’s projected trajectory.

On fund raising, Mallya said they may raise Rs 2,000 crore by issuing bonds during this financial year. The capital adequacy ratio was 13.35 per cent at end-June, compared to the regulatory requirement of 9 per cent.

The share closed at Rs 734.25, up 2.5 per cent from its previous close on the Bombay Stock Exchange, while the Sensex was marginally up by 0.2 per cent.