Changing hues

PUBLIC ISSUE

3.18 41.09 46.44 27.24 Net asset value per share (Rs)**29.3517.2718.6913.2123.5827.03 Net NPA to net advances ratio (%)13.4718.3716.3111.839.407.85 Credit-deposit ratio (%)57.6055.1353.9154.8754.5652.92 Yield on advances (%)11.5810.689.9410.438.948.44 Yield on investments (%)***12.9812.0813.8013.0413.6610.44 Cost of deposits (%)8.087.747.236.655.785.09 Cost of funds (%)8.938.887.366.865.955.28 * Annualised
** Deferred VRS expenditure is not reduced from tier-1 capital for the calculation of net worth since RBI has permitted banks not to treat the same as intangible asset for calculation of capital adequacy ratio.
*** Including profit on sale of securities.
Note: Figures for H1 have been annualised wherever applicable.  However, the bank's complexion seems to be changing. Driven by strong treasury income over the past three years, it has reduced its NPAs from levels of 16.21 per cent in 2002. It is hopeful of reducing NPAs to about 5 per cent by the end of this fiscal.  Cash recoveries, too, have been improving. Profits have been much lower in H1, mainly due to lower treasury profits. Advances grew, but net interest income fell in Q2 compared to Q1. Operating profit was lower in Q2 than in Q1.  Interest expended as a percentage of interest earned rose to 63.3 per cent in Q2 from 61.9 per cent in Q1. There's some pressure on margins and the bank will have to grow advances to counter it. Hopefully, the Rs 216 crore that the bank is planning to raise will help it do that.  Currently, the bank seems to have a decent top management which should be able to steer it in the right direction. It is making progress on technology and working on training existing staff and adding more youngsters to drive its retail business.  Chairman AK Khandelwal is tipped to become the next chairman of Bank of Baroda (BoB) as the current chairman Shenoy is due for retirement soon. Khandelwal was executive directive of BoB before joining Dena Bank.  Meanwhile, there is talk about Dena Bank's merger with BoB. Both are western India-based banks. The fact that Khandelwal has spent time at both the banks as a top official should come handy in ensuring a smooth integration.  "People are speculating considering various aspects that go into a merger. But we have neither been approached by BoB nor have we approached them. While I see this as a good fit, I can't comment on how things would pan out in the future" says Khandelwal.  With the market price hovering around Rs 32, there could be a marginal upside if one subscribes to the public offer. But the stock will gain if the merger fructifies or the bank shows a spectacular turnaround.