Bank Of Baroda’s Asset Quality Improves, Profit Misses Estimate

Bank of Baroda’s asset quality improved in the second quarter while provisions for bad loans declined nearly 15 percent.

Net profit fell 35.7 percent to Rs 355 crore in the September ended quarter as compared to the same quarter in the previous year, the lender said in an exchange filing. This was much lower than the Rs 414 estimated by analysts tracked by Bloomberg. Net interest income rose 8.6 percent to Rs 3,720 crore. This was higher than the Bloomberg consensus estimate of Rs 3,547 crore.

The public sector lender’s asset quality improved with gross bad loans, as a percentage of total assets, contracting to 11.16 percent from 11.40 percent on a quarter-on-quarter basis. Net non-performing assets improved to 5.05 percent from 5.46 percent. Provisions for bad loans also fell nearly 15 percent to Rs 1,847 crore on a sequential basis.

This includes a Rs 163 crore provisioning against accounts in first list of accounts admitted to the National Company Law Tribunal for insolvency proceedings, Papia Sengupta, executive director at Bank of Baroda said. The lender also has an exposure of Rs 4,274 crore to Reserve Bank of India’s second list of stressed accounts. The bank has already made provisions of Rs 1,473 crore against the second list and will need to set aside an additional Rs 800 crore, Sengupta added.

Other Highlights

• Total deposits grew at 26.7 percent, year-on-year.
• Net interest margin improved to 2.31 percent from 2.12 percent in the previous quarter.
• Capital adequacy ratio stood at 11.64 percent.
• Domestic loan growth grew 13.8 percent year-on-year led by 25.2 percent rise in retail loans.
• Home loans grew 34.11 percent.
• Cost of deposits fell by 20 basis points.