The second largest state-owned lender Bank of Baroda, which had a forced merger of two smaller peers during the quarter, Thursday reported a net income of Rs 710 crore for the three months to June period, driven by higher non-interest income and lower provisioning despite a spike in dud loans.
This is the first quarterly result of the bank after the forced amalgamation of Dena Bank and Vijaya Bank with it effective April 1.
Roiled by massive losses arising from higher credit cost the amalgamated entity had made a loss of Rs 49 crore, in the year-ago quarter, though the numbers are not comparable as the merger became effective only from this April.
On a consolidated level, the merged bank with many subsidiaries, has booked a net income of Rs 834 crore for the reporting quarter, the management said without offering income details from the subsidiaries.
Non-interest income grew 16.12 percent to Rs 641 crore from Rs 552 crore, and an operating profit of Rs 4,276 crore.
Higher profit comes despite a decline in the key profitability metric of net interest margin which slipped marginally to 2.62 percent from 2.69 percent.
However, managing director and chief executive officer PS Jayakumar told reporters that he expects domestic margin to improve to 3 percent and the international one to 2 percent in the current financial year.
The gross non-performing asset ratio worsened to 10.28, while net NPA stood at 3.95 percent.
Total provisions declined to Rs 3,566 crore from Rs 4,167 crore, while provisions for NPAs declined to Rs 3,168 crore from Rs 3,553 crore as it could arrest fresh slippages.But recovery slowed to Rs 203 crore from Rs 267 crore. "Recovery was a tad low. That's an area we need to work on and expect it to be much better in the second quarter," Jayakumar said, adding fresh slippages printed in at
Rs 5,583 crore.
One of largest accounts which slipped into NPA in the quarter was a road project SPV of the crippled IL&FS Group to which it had an exposure of Rs 430 crore, he said.
He also said the bank's total exposure to the stressed NBFC sector stood at Rs 4,200 crore.
On the rising delinquency levels in Mudra loans, he said 10 percent of its Rs 8,022 crore portfolio is bad loans as of the reporting quarter.
Its watch list of stressed accounts stood at Rs 16,500 crore, he said.The lender is looking at raise Rs 6,000 crore, which includes Rs 4,500 crore from tier 1 bonds and Rs 1,500 crore from employees stock purchase scheme in the near term, Jayakumar said, adding the bank is also looking to raise Rs
500-600 crore by selling real estate properties by December.
Guiding towards a loan growth of 15 percent for the current fiscal, he said "opportunity for growth remains. We stay with the broad forecast of 15 percent growth in advances but our focus now is towards looking at higher fee income and thereby looking at better return on equity."
The capital adequacy ratio stood at 11.50 percent and CET-1 at 8.49 percent.
Domestic deposits grew 8.87 percent to Rs 7,85,861 crore and advances 5.18 percent to Rs 5,33,054 crore.The BoB counter closed with a loss of 0.7 percent at Rs 109.55 on a day when the benchmark Sensex closed almost flat with a negative bias.