Higher operating expenses, including staff expenses, and lower non-interest income pulled down Bank of Baroda’s (BoB) net profit by 23 per cent in the first quarter ended June 30, 2015. Net profit in the reporting quarter was at ₹1,052 crore (₹1,362 crore in the year-ago period).
The public sector bank’s net interest income nudged up 4 per cent to ₹3,460 crore (₹3,328 crore). Non-interest income, comprising fee income, treasury income, and recovery in written off accounts, was down 5.60 per cent at ₹967 crore (₹1,025 crore).
Operating expenses rose 19 per cent year-on-year to ₹2,225 crore. Within the operating expenses, staff expenses were up 22 per cent to ₹1,345 crore.
Provisions (other than tax) and contingencies increased 14 per cent YoY to ₹600 crore.
NPAs increase YoY non-performing assets (NPAs) jumped 43 per cent to ₹17,274 crore. Fresh slippages were lower at ₹1,684 crore (₹1,881 crore).
The quantum of loans restructured was lower at ₹147 crore (₹986 crore).
In the reporting quarter, while demand for corporate credit was lacklustre, Ranjan Dhawan, MD and CEO, pointed out that there was good loan demand from the retail (16 per cent YoY growth), farm (26 per cent) and SME (7 per cent) segments.
Corporates in the steel, infrastructure and textiles sectors continue to experience stress, he said.
“I am tempted to say that the worst is over. But in the backdrop of weak corporate results and some uncertainty surrounding monsoon out-turn, all our corporates are not out of the woods…,” explained the BoB chief.
Pointing out that tackling NPAs is difficult (in the current economic climate), Dhawan, however, said he views NPAs not as a catastrophe but as reserves.
Meanwhile, BoB is planning to float a wholly-owned banking subsidiary to handle the 90 lakh Pradhan Mantri Jan Dhan Yojana accounts it has opened so far. It has moved the RBI for a licence, said Dhawan.
The proposed bank will be combination of a payments bank and a microfinance institution.
Shares of Bank of Baroda closed at ₹168.40, up 10.03 per cent, on the BSE.