Higher provisions towards bad loans reduced Bank of Baroda’s net profit by close to half. Net profit for the three-month period ended March, 2015 was at ₹598 crore as compared to ₹1,157 crore in the corresponding quarter last year.
“The economic environment of the country remains challenging and will continue for the next two quarters,” said Ranjan Dhawan, Managing Director and Chief Executive Officer, Bank of Baroda.
Net profit for the full year was down 25 per cent to ₹3,398 crore from ₹4,541 crore last year.
During the quarter, provisions towards bad debts spiked 134 per cent to ₹1,491 crore from ₹637 crore reported in the year-ago period. Fresh slippages in bad loans during the year stood at ₹8,039 crore with incremental restructuring more than doubling to ₹4,083 crore during the quarter.
Gross non-performing assets worsened to 3.72 per cent (as at March-end FY15) from the year-ago period at 2.94 per cent. It sequentially dropped from 3.89 per cent as on December-end FY15 too. Net NPAs improved to 1.89 per cent in Q4 FY15 from 2.11 per cent in Q3 FY15.
Credit growth Net interest income, the difference between interest earned and interest expended, grew marginally to ₹3,171 crore for the quarter, while other income declined a tad to ₹1,295 crore (from ₹1,326 crore in Q4 FY14).
Giving a cautious outlook, Dhawan said that credit growth is expected to remain low at 11-12 per cent, and deposit growth could be 14-15 per cent going forward. Total loan book grew 8 per cent driven by healthy growth in retail loans (14 per cent) and farm credit (32 per cent).
“There is not much demand on the corporate side except from some builders and commercial real estate. Therefore, as a cautious strategy, we will focus on retail this year and be careful on corporate loans,” Dhawan added, saying that he is expecting a number of foreign companies to invest in India which may help in future.
Bank of Baroda shares zoomed 17 per cent on account of improved asset quality helped by a stronger equity market to end at ₹169.65 a share over its previous close on BSE.