Comments
Higher provisioning towards depreciation in investments and standard assets moderated Bank of Baroda’s profitability in the April-June quarter.
Further, higher employee costs due to provisioning for pension, gratuity and likely wage revision also played a part in tempering the bottomline.
The public sector bank reported a marginal 2.5 per cent increase in net profit at Rs 1,168 crore, compared with Rs 1,139 crore in the year-ago period.
In the reporting quarter, net interest income (the difference between interest earned on loans and investments and interest paid on deposits) edged up to Rs 2,889 crore (Rs 2,798 crore in the year-ago period).
The bank recorded a 60 per cent jump in other income at Rs 1,231 crore (Rs 771 crore).
The bank set aside funds (provisioning) amounting to Rs 118 crore (Rs 76 crore in the year-ago quarter) towards depreciation in investments (mainly equity investments). It also made a provisioning of Rs 228 crore (Rs 3.34 crore) towards standard assets.
Employee costs rose 33 per cent at Rs 1,014 crore (Rs 761 crore).
Year-on-year total advances increased by 12.4 per cent to Rs 3,21,314 crore (Rs 2,85,313 crore) and total deposits by 22 per cent to Rs 4,67,026 crore (Rs 3,82,739 crore). The downturn in the economy impacted the bank’s asset quality. During the quarter, loans (domestic as well as overseas) aggregating Rs 1,971 crore turned bad. Further, the bank restructured loans aggregating Rs 2,000 crore.
Chairman and Managing Director S. S. Mundra said as demand for corporate loans remains tepid, the bank will focus on lending to agriculture, retail, and small and medium enterprises.
It will seek to contain deterioration in asset quality, step up recovery and upgrade its assets, he added.
Mundra expects up to Rs 3,000 crore worth of loans to come up for restructuring in the July-September quarter, mainly due to delays in projects going commercial and lack of statutory clearances.
Shares of Bank of Baroda closed at Rs 516.15, down 7.92 per cent, on the BSE.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.