Bank of Baroda profit rises 79% as provisions slide

BoB’s shares ended at Rs116.25 on the BSE on Friday, 0.81% lower than their previous close.

Bank of Baroda profit rises 79% as provisions slide
BoB’s shares ended at Rs116.25 on the BSE on Friday, 0.81% lower than their previous close.

Bank of Baroda (BoB) on Saturday reported a 79% year-on-year (y-o-y) jump in its net profit to Rs 2,168 crore for the quarter ended June as provisions fell 58% to Rs 1,685 crore.

Net interest income (NII) – the difference between interest earned and interest expended – stood at Rs 8,838 crore, up 12% y-o-y. Net interest margin (NIM) fell six basis points (bps) sequentially to 3.02%. The operating profit fell 19% y-o-y to Rs 4,528 crore. BoB has guided for a 10-bps improvement in NIM through the year. Gross advances grew 18% y-o-y to Rs 8.4 trillion at the end of June 2022. The current and savings account (CASA) ratio improved 97 bps y-o-y to 44.18% in Q1FY23. Deposits rose 11% y-o-y to Rs 10.33 trillion at the end of the June quarter.

Sanjiv Chadha, MD & CEO, BoB, said that the bank will try to grow its loan book in line with the industry or faster, with a focus on margins.

The gross non-performing asset (NPA) ratio at the end of June stood at 6.26%, down 35 bps sequentially. Net NPAs were at 1.58%, 14 bps lower than 1.72% at the end of the March quarter. Slippages during the quarter were to the tune of Rs 4,352 crore, while recoveries stood at Rs 1,740 crore and upgrades at Rs 859 crore. BoB wrote off loans worth Rs 3,013 crore. The bank expects to make recoveries worth Rs 13,000 crore in FY23, with Rs 1,200 crore coming from cases referred to the National Company Law Tribunal (NCLT).

Chadha said that the bank’s NPA ratios have been falling over the last eight quarters. “Our own view is that given the fact that the corporate credit cycle continues to improve – that’s a large part of our credit portfolio – we would expect gross and net NPAs to continue to trend downwards.

Similarly, we expect slippages to be between 1.5-2% and credit costs between 1.25-1.5%, hopefully towards the bottom of the range, if we are fortunate enough.” he said. BoB’s shares ended at Rs 116.25 on the BSE on Friday, 0.81% lower than their previous close.

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