Bank of Baroda (BoB)’s net profit increased 9.5% year on year due to lower provisions even as loan growth slowed down and other income fell.
Net profit increased to Rs 4558 crore in the quarter ended June 2024 from Rs 4070 crore a year ago as provisions almost halved to Rs 1946 crore from Rs 1011 crore a year ago.
Total loan book of bank increased to 8% to Rs 10.71 lakh crore slower than the system growth of 15% as the bank slowed down on its corporate loans to protect margins. Corporate loan book grew just 2% to Rs 3.55 lakh crore.
“We have consiously allowed some finely priced corporate exposure to some institutions as part of the process to balance our assests and liabilities. But we still expect the growth to pick up with corporate loans growing at 10% to 12% this fiscal and overall advances increasing 12% to 14%,” CEO Debadatta Chand said.
Non-interest income fell sharply by 25% to Rs 2487 crore from Rs 3322 crore a year ago because fees from corporate banking shrunk and also as trading income fell to Rs 400 crore from Rs 164 crore a year earlier.
Chand however said that the bank continues to expect to maintain its net interest margin at 3.15% as cost of deposits are near peak. BoB reduced bulk deposits in its portfolio to Rs 2 lakh crore from Rs 2.24 lakh crore in March 2024.
NIM fell to 3.18% from 3.27% a year earlier largely due to a 38 basis points increase in cost of deposits year on year to 5.06%.
Asset quality however remained strong with gross NPA reducing to 2.88% in June 2024 from 3.51% a year ago despite an increase in slippages from the retail book.
Chand said he continues to expect the bank’s credit costs to be at 0.75% of total loans down from last year’s 1%.
