Higher provisions towards bad loans tempered Bank of Baroda’s profit growth in the second quarter ended September 30.
In the reporting three-month period, the public sector bank clocked a 11.6 per cent increase in net profit at Rs 1,301 crore against Rs 1,166 crore in the year ago period.
Net interest income (difference between interest earned and expended) increased 11.5 per cent to Rs 2,862 crore (Rs 2,567 crore in the year-ago period). Other income, comprising core fee-based income, treasury income, income from foreign exchange transactions and recovery in written-off accounts, rose 13 per cent to Rs 828 crore (Rs 734 crore).
The challenging economic environment saw fresh accretion of Rs 1,339 crore to the bad loans portfolio and Rs 930 crore to the restructured assets portfolio during the quarter. However, net of recoveries and upgradation, the incremental addition to the bad loans portfolio was Rs 560 crore (in the July-September period).
As at September-end, gross non-performing assets (or bad loans) and restructured assets stood at Rs 5,879 crore and Rs 16,880 crore, respectively. Loans of companies facing certain external and internal factors are restructured by banks by extending loan repayment period and giving interest rate concession. In the reporting quarter, provisions towards bad loans jumped 137 per cent to Rs 707 crore (Rs 298 crore). M.D. Mallya, Chairman and Managing Director, Bank of Baroda, said that despite the economic deceleration, the bank has been a consistent performer when it comes to parameters such as growth, profitability and productivity over the last few years.
The bank, which crossed the key milestone of Rs 7 lakh crore in total business (deposits plus advances) in the reporting quarter, expects 19-20 per cent growth in deposits and advances, said Mallya.
BoB shares closed 1.71 per cent down at Rs 783.35 per share on the BSE on Monday.