BoB Net Falls 52% on Surge in Provisions
Mumbai: Public sector lender Bank of Baroda (BoB) on Friday reported a 52% fall in quarterly net profit amid a surge in provisions against loans for which repayments are not happening on time, and no rise in income from its lending business.
The bank posted a net profit of .₹ 203.4 crore at the end of June against .₹ 423.6 crore last year.
“We are seeing high-quality credit on the corporate side, the retail book is growing in a healthy manner but some legacy issues are dragging down the book,” said PS Jayakumar, MD, Bank of Baroda. “The impact would have been lesser if some of the larger accounts got resolved.”
Provisioning increased 18% to .₹ 2,368 crore against .₹ 2,004 crore in the same period last year. The bank managed to check its bad loan growth, with net NPA falling marginally to 5.1% from 5.7% last year. However, its gross bad assets rose to 11.4% from 11.1% of the total assets deployed. In absolute terms, net NPA stood at .₹ 19,519 crore while gross NPA was at .₹ 46,172 crore. Its special mention account II category stood at .₹ 9,300 crore.
“I think the worst is over and we would be able to contain our gross NPAs within .₹ 50,000 crore," added Jayakumar. “But the NPA assets that we have got will take several years to get resolved. So, we need to keep working on them.”
The bank’s net interest margin or the measure of its profitability stood at 2.5% for the first quarter of this year. The bank also reported a less than 1% increase in net interest income or the difference between interest earned and interest expended of .₹ 3,405 crore versus .₹ 3,372 crore last year. The bank’s share of low cost deposits or deposits from current accounts and savings accounts increased to 38.7% of its total deposits from 33.8% last year.
The total advances deployed increased 4% to .₹ 3.7 lakh crore against .₹ 3.6 lakh crore in the same period last year. HIGHS & LOWS