The Hindu Business Line : BoB net marginally up; investment income dips

Bank of Baroda's net profit for the quarter ended June increased marginally by 4.07 per cent to touch Rs 163.32 crore (Rs 156.94 crore), due to decline in income on investments.

The bank plans to raise its lending and deposit rates by the first week of August.

"We have decided in principle to raise our prime lending rate, home loan and deposit rates due to the pressure on interest rates and high cost of funding," said Dr A.K. Khandelwal, Chairman and Managing Director.

Total income was Rs 2,297.62 crore (Rs 1,882.01 crore). Net interest income amounted to Rs 882.33 crore (Rs 758.7 crore), while other income rose to 277.52 crore (208.77 crore).

Income on investments fell to Rs 698.46 crore (Rs 750.57 crore). "The fall in treasury income impacted profit," Dr Khandelwal said.

The capital adequacy ratio rose to 12.43 per cent (11.99 per cent).

The proportion of net NPAs to total assets fell to 0.92 per cent (1.47 per cent).

The cost of deposits increased from 4.41 per cent to 4.24 per cent as a result of the bank raising deposit rates thrice in the last six months.

Total deposits increased by 23.09 per cent to Rs 99,778.4 crore (Rs 81,063.78 crore). The share of low cost deposits (current account and savings account) deposits increased to 38.52 per cent from 41.19 per cent.

Total advances increased by 37.48 per cent to Rs 61,379.67 crore (Rs 44,647.39 crore).

For 2006-07 the bank is targeting a growth of 25-30 per cent in credit and 18 per cent in deposits, Dr Khandelwal said.

The bank is also targeting 40-50 per cent growth in overseas business, which now accounts for 16 per cent of total business and 28 per cent of net profit.

"In the next three years we are going to 10 new countries. We plan to have four international hubs in the UAE, Hong Kong or Singapore in South-East Asia, Mauritius or South Africa in Africa, and the UK."

To meet its funding and growth, the bank is planning to raise Rs 1,000 crore of perpetual Tier-I and upper Tier-II capital. The headroom available for raising funds in foreign currency is $100 million.

Bank of Baroda is looking to set up a life insurance joint venture with a Japanese insurance company, Dr Khandelwal said.

The bank has also applied to the Reserve Bank of India for permission to merge its primary dealership with itself.

On Friday, the Bank of Baroda scrip closed at Rs 226.05 on the BSE, up 5.12 per cent over the previous close of Rs 215.05.

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