On the back of an increase in net interest income (NII) by 54.2% for the quarter ended June 30, Bank of Baroda(BoB) posted a net profit of Rs 859 crore, higher by 25.4% compared with the corresponding period of last year.
The bank’s NII, which isthe difference between interest earned and interest expended, grew on a sequential basis too, to Rs 1858 crore from Rs 1,745 crore in January-March.
The bank’s net interest margin (NIM),which is NII as a percentage of average assets by the bank in a certain period, was also up at 2.9% globally from 2.37% last year and 3.43% domestically from 2.57% last year.
“Growth in NII was supported by growth in advances and reduced cost of deposits,” said M D Mallya, chairman and managing director, BoB. The bank witnessed a 30.7% growth in its total loan portfolio annually to Rs 1.85 lakh crore, while a 6% growth as compared to the previous quarter. Domestic advances grew 27% on year. Additional disbursements made in quarter under review stood at Rs 10,000 crore.
Cost of deposits fell to 5.09% from 6.16% last year, helping to improve margins. “We have reduced reliance on bulk deposits,” said Mallya. BoB shed Rs 7000-8000 crore of bulk deposits in April-June.
The bank has Rs 30,000-35,000 crore of sanctions in the pipeline. “Companies are going ahead with their expansion plans, they are coming up with proposals,” said Mallya. He said the bank does not have significant exposure to the aviation industry, currently under stress due to issues with repayment schedules. The bank has lent Rs 3,500 crore to the aviation sector, which includes long term and short-term loans.
“None of them have slipped into NPAs,” said Mallya. The Reserve Bank of India has asked bankers to form a consortium and approach it in order to seek restructuring of loans given to the aviation sector.
BoB’s net non-performing assets increased to 0.39% from 0.27% a year ago while gross NPAs stood at 1.41% as against 1.44% a year ago. Slippages during the quarter were at Rs 639 crore.
“We do not expect delinquencies to be higher, will sustain current levels of NPAs,” said Mallya. The bank’s provisioning coverage ratio is at 73% without technical write-offs.
The bank lent Rs 1,200 crore to telecom companies for the 3G auctions. The yield on advances were down to 9.79% from 10.1% last year.
Deposits grew 28% annually and by 5.7% on a sequential basis. The bank has no intention of raising deposit rates immediately. BoB’s capital adequacy ratiois at 13.25%. The bank’s Tier-I capital stood at 8.16%.
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