It was a good third quarter for Bank of Baroda, with an improvement in its gross non-performing assets (NPAs) led by the highest ever write-off by the bank in any quarter.
Loan growth at 12.3 percent was highest in four quarters led by 21.1 percent domestic loan growth. The domestic loan growth has been more than 15.5 percent for five quarters in a row. Deposits at Rs 6.1 lakh crore were up 6.5 percent year-on-year and 0.6 percent quarter-on-quarter. The net interest margins (NIMs) at 2.69 percent were at four quarter high led by strong loan growth.
PS Jayakumar, MD and CEO, Bank of Baroda, in an interview with CNBC-TV18, said the lender would be able to maintain a 15-20 percent loan growth going ahead subject to macro-economic environment.
“Given the fact that we have the kind of investments in distribution, products, process, technology, etc ... we can continue to leverage on those investments," he said.
He is also confident of further improvement in the net interest margins as 30 percent of the book is international, which continues to see an uptick. While on the domestic side, he said as "we continue to increase the provision coverage ratio, the net NPA numbers keep falling".
Talking about merger with Dena Bank and Vijaya Bank, he said, “I would put it this way that in general the experience is that the revenue side synergies are much easier to accomplish than the cost side synergies. The cost to income ratio can be balanced by a more buoyant revenue.”
"All in all we would have fire power to make progress in the first 2-3 quarter ... once the businesses stabilise and we can show that merger is working out well, we can go to market and raise funds."
“I expect stock to be rerated maybe in three quarters after merger and am fairly confident we will be able to pull this whole thing through,” he added.