Bank of Baroda Q3 net profit flat at Rs 1,048 cr

Written by PTI | Mumbai | Updated: Feb 7 2014, 02:45am hrs
Bank of BarodaBank of Baroda today reported a near flat net profit for the December quarter at Rs 1,048 crore. Reuters
State-run Bank of Baroda today reported a near flat net profit for the December quarter at Rs 1,048 crore as a Rs 272-crore provision towards deferred tax liabilities on special reserves weighed.

The second largest lender had posted a net profit of Rs 1,011 crore in the corresponding period last fiscal.

Profit in the third quarter would have been 30 per cent higher if not for the tax provision, done in accordance with RBI guidelines, BoB Chairman and Managing Director S S Mundra said.

Net interest income grew 7.61 per cent to Rs 3,057.14 crore during the reporting quarter, while other income expanded 11 per cent to Rs 932.07 crore.

Due to an increase in provisions towards pensions and wage revisions, the city-based lender's staff expenses shot up by 32.27 per cent to Rs 1,055.71 crore, resulting in a dip in operating profit at Rs 2,197 crore.

The core net interest margin (NIM) dipped by 0.13 per cent to 2.95 per cent, but on a sequential basis, it showed an improvement from 2.85 per cent in the September quarter. The bank was able to maintain the share of the low cost current and saving account deposits at 32.27 per cent.

Mundra said the bank is targeting to increase the NIM to 3 per cent by March.

Even though gross non-performing assets ratio deteriorated to 3.32 per cent on an overall basis (4.07 per cent domestically), as against the 2.41 per cent in the year-ago period, Mundra painted an optimistic picture, saying now onwards there shall be an improvement in asset quality.

During Q3, the bank saw asset quality improving and witnessed fewer fresh slippages at Rs 1,553 crore as against Rs 1,863 crore YTD, while the fresh restructured assets also dropped to Rs 1,213 crore from Rs 1,637 crore.

Stating that it has a pipeline of up to Rs 2,000 crore of assets due for restructuring in the March quarter, the CMD said the dip in fresh stressed assets, coupled with increasing instances of write backs and upgrades, indicates an improvement in the overall situation.

During the reporting quarter, cash recovery stood at Rs 197 crore, while accounts worth Rs 299 crore got upgraded, the bank said.

The lender also witnessed a dip in overall provisions to Rs 761.87 crore as against Rs 1,029.31 crore in the same quarter last year, driven by a Rs 120-crore write-back of investment depreciation due to healthy equity markets and a Rs 102-crore benefit due to change in standard asset provisioning norms, Mundra said.

Seeking to dismiss speculation of pumping up the net profit by providing less, he said the marginal improvement in the provision coverage ratio at over 62 per cent.

Credit growth stood at 17 per cent, while the deposits expanded 21.5 per cent. Mundra said going forward, the bank will be able to notch up a credit growth ahead of the industry average.

The bank scrip shed 0.87 per cent to close at Rs 537.75 a piece on the BSE, whose 30-share benchmark Sensex gained 0.25 per cent today.