Bank of Baroda Q1 Profit Rises 6% on Loan Growth

Mumbai, Jul 31 (PTI) Bank of Baroda on Wednesday reported a 6.19 per cent growth in June quarter consolidated net profit at Rs 4,727.81 crore, as the state-run lender calibrated loan growth.

On a standalone basis, the public sector bank's net profit grew 9.5 per cent to Rs 4,458 crore.

Bank of Baroda said its core net interest income grew 5.5 per cent on the lower advances growth of 8.1 per cent and the net interest margin narrowing by 0.09 per cent to 3.18 per cent. The overall deposit growth came at 8.9 per cent.

Other income of the lender declined by 25 per cent to Rs 2,487 crore, especially because of the performance of the treasury operations which were down 74 per cent.

The bank's chief executive and managing director D Chand said it undertook a calibration exercise, wherein it decreased its reliance on bulk deposits and had to forego lending opportunities, especially on the corporate front.

He exuded confidence that the bank will be able to cover-up the June quarter's shortfall from Q2, and reaffirmed its overall deposit growth and credit growth guidance at 10-12 per cent and 12-14 per cent, respectively.

The bank will keep the net interest margin (NIM) in the 3.10-3.20 per cent range and efforts will be made to widen the key metric.

Without sharing a number, he said the bank has a healthy pipeline of loan proposals from sectors such as infrastructure, renewable and data centers.

In the June quarter, it had to decline well-rated corporate loan possibilities which resulted in the corporate loan growth getting restricted to 2.6 per cent.

Depositors should expect a moderation in rates in around a quarter, Chand said, adding that amid the easier liquidity, factors like rate cut expectations will drive it.

Retail grew at 20 per cent and led the overall loan growth for the bank, and the problematic personal loans segment grew at 39 per cent, which Chand described as a moderation, when compared to the 80 per cent growth in the past.

Even as the regulator continues to flag concerns on unsecured growth, Chand said there is no issue with the unsecured lending exposures for the bank.

When it comes to asset quality, the fresh slippages came at Rs 3,018 crore for the quarter, with retail showing a growth at Rs 842 crore. Chand said that the retail number is higher because of a single Rs 50 crore exposure, where the bank is confident of a recovery and also due to some seasonal factors.

The overall provisions for bad assets declined 25 per cent to Rs 1,269 crore, while the total provisions nearly halved to Rs 1,011 crore.

The gross non-performing assets ratio improved to 2.88 per cent as one June 30 from 2.92 per cent in March, and Chand said it is aiming for further improving it to 2.50 per cent but did not give a timeline for the same.

To a question on the impact of the draft guidelines on higher liquidity buffers, Chand said the liquidity coverage ratio stood at 138 per cent as on June 30, and he does not see an impact of more than 15 percentage points on the same.

The bank is in the process of divesting its stakes in insurer India First, where it plans to come out with an IPO in one and half years and also Nainital Bank, Chand said, without giving any timelines on the latter.

The bank will have to borrow up to Rs 7,500 crore because of the maturing AT-1 and tier-II bonds, Chand said.

The overall capital adequacy for the lender stood at 16.52 per cent as on June 30.

The Bank of Baroda scrip closed 0.94 per cent down at Rs 253.85 a piece on the BSE, as against gains of 0.35 per cent on the benchmark.