1. Bank of Baroda Q1 net tanks 23%, asset quality takes a hit

Bank of Baroda Q1 net tanks 23%, asset quality takes a hit

Public sector lender Bank of Baroda on Thursday reported net profit of Rs 1,052.15 crore for the three months ended June 2015...

By: | Mumbai | Published: July 31, 2015 12:15 AM

Public sector lender Bank of Baroda on Thursday reported net profit of Rs 1,052.15 crore for the three months ended June 2015 showing a decline of 22.76% from the same quarter last year. The bank’s profit was impacted by lower other income and increase in staff expenses.

“The whole of the last year or so, we have seen an increase in non-performing assets (NPA), and restructured books. Therefore, it’s not as if profit has declined only in this quarter rather it has been declining for the last 3 or 4 quarters,” Ranjan Dhawan, managing director and CEO, Bank of Baroda said.

Other income during the quarter declined by 6% to Rs 967.23 crore from Rs 1,024.54 crore during same quarter last year. Its trading profit fell by 30% to Rs 157 crore and staff expenses rose by 22% to Rs 1,345 crore from Rs 1,106 crore during the period. The bank’s total income stood at Rs 12,244 crore, an increase of 4.8% on a year-on-year (y-o-y) basis. Its net interest income, the difference between interest earned and interest paid for deposits, stood at Rs 3,459.6 crore in June quarter.

Gr8

The lender’s net interest margins (NIM) stood at 2.89% and was 13 basis points (bps) higher than the March quarter. Dhawan, said that the bank has hardly seen any growth in corporate loans and it would take another two quarters for credit to pick up.   It reported a credit growth of 6.9% y-o-y in Q1 FY16 and stood at Rs 4.08 lakh crore.

“Normally Bank of Baroda always seeks to grow 2-3% above what the industry is growing at. But the balance sheets we have examined have given us reasons to think before we extend credit,” Dhawan said adding that on a whole the bank would like to grow with the market.

“I think the government has said that credit will grow at about 13% and I would imagine we would like to grow at the same pace,” he explained.

Bank’s provisions stood at Rs 599.7 crore in the June quarter, as against R526.7 crore in the corresponding quarter of the previous year, reflecting a rise of 13.8%.

The bank’s asset quality deteriorated on a year-on-year basis Q1 FY16 with its gross NPA ratio rising 102 basis points (bps) to 4.13% of gross advances. Sequentially, gross NPA ratio rose 41 bps.

Bank of Baroda shares on the BSE stood at Rs 168.4 at the end of day’s trade, up 10.03% from its previous close.

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