Bank of Baroda Q2 net profit jumps 24% to Rs 2,088 crore on higher recoveries, lower credit cost

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Updated: November 10, 2021 7:55 PM

However, the bank's total income during the July-September quarter of 2021-22, fell to Rs 20,270.74 crore, as against Rs 20,729.31 in the same period of 2020-21, Bank of Baroda said in a regulatory filing.

However, the net NPAs rose slightly to 2.83 per cent, from 2.51 per cent.However, the net NPAs rose slightly to 2.83 per cent, from 2.51 per cent.

State-owned Bank of Baroda on Wednesday reported a 24.39 per cent jump in its standalone profit after tax to Rs 2,088 crore for the quarter ended September 2021, helped by higher recoveries from written off accounts, lower credit costs and steady margins.

The lender had reported a standalone profit after tax of Rs 1,679 crore in the corresponding quarter of the previous financial year.

Explaining the reasons for higher profit, the bank’s Managing Director and CEO Sanjiv Chadha said, “The credit cost has been trending downward as compared to two or three years ago, which is a major component in terms of the improved profitability. There have been good recoveries in some written off accounts. Also, we have been able to keep our margins steady.”

Credit cost stood at 1.46 per cent during the quarter.

He said the bank had given guidance for credit cost to be in the 1.5-2 per cent range, and likely to trend towards the lower part of the range.

“We believe that is something which we still stand by, we should be able to deliver on that,” Chadha said.

The non-interest income grew 23 per cent to Rs 3,579 crore, from Rs 2,910 crore.

He said the bank has been disciplined in terms of deposits and this has resulted into the improvement in net interest income (NII).

NII grew 2.11 per cent to Rs 7,566 crore in Q2FY22 as against Rs 7,410 crore in Q2FY21.

Net interest margins (NIM) improved to 2.90 per cent in the quarter from 2.88 per cent in the same quarter of the previous fiscal.

Gross non-performing assets (GNPAs) improved to 8.11 per cent in Q2 FY22, from 9.14 per cent in Q2FY21. The net NPA ratio stood at 2.83 per cent as compared with 2.51 per cent.

The bank’s provision coverage ratio stood at 83.42 per cent.

Fresh slippages in the second quarter of FY22 stood at 5,223 crore. While the recoveries stood at Rs 1,966 crore, the bank upgraded Rs 2,106 crore of bad loans.

It recovered Rs 877 crore from the resolution of Dewan Housing Finance Ltd (DHFL).

Domestic advances grew 2.99 per cent to Rs 6,23,368 crore and deposits increased by 3.43 per cent to Rs 8,64,603 crore in September 2021.

Chadha expects loan growth to be in the range of 7-10 per cent this year. He also sees good growth opportunities in corporate loans.

The bank’s capital adequacy ratio (CRAR) improved to 15.55 per cent in September 2021 from 13.26 per cent in September 2020. Tier-I stood at 13.21 per cent and tier-II stood at 2.34 per cent as of September 2021.

He said the bank is well capitalised to fund growth in the current financial year and may not look at any equity fund raise. It might look at raising some capital through additional tier-1 bonds.

The bank’s scrip closed at Rs 100.65 apiece, down 5.36 per cent on the BSE.

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