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Paul Noronha

Higher earnings: Mr M. D. Mallya (right), CMD, Bank of Baroda, and Mr V. Santhanaraman, Executive Director, at a press conference in Mumbai on Tuesday. The bank reported a net profit of Rs 276.44 crore for the fourth quarter ended March 31, 2008 against Rs 245.66 in the previous period.

Our Bureau

Mumbai, May 20 Despite slightly lower net interest income, Bank of Baroda managed to show a modest growth of 12 per cent in its net profit for the fourth quarter of 2007-08, thanks to high treasury income and robust recovery from bad assets.

The bank declared a dividend of 80 per cent or Rs 8 on shares having a face value of Rs 10, against 60 per cent last year.

For the quarter ended March 31, 2008, Bank of Baroda posted a net profit of Rs 276 crore, up 12 per cent from Rs 246 crore in the corresponding quarter last year.

Net interest income fell by 2 per cent and other incomes increased by 23 per cent.

Speaking to reporters Mr M.D. Mallya, Chairman and Managing Director, said the second half of the just ended fiscal was challenging for banks due to the hike in cash reserve ratio, high cost of deposits and deceleration in credit growth.

Cost of deposit increased to 6.33 per cent (5.3 per cent) and net interest margin fell to 2.73 per cent (3.2 per cent).

Treasury profit increased to Rs 82 crore (Rs 28 crore) and cash recovery from written off assets was Rs 113 crore (Rs 89 crore).

In the fourth quarter the bank also made a provision of Rs 50 crore for marked-to-market losses on account of its exposure to overseas Credit Linked Notes. This provision was made from the net profit of the bank’s overseas operations, said Mr Satish Gupta, Executive Director.

The net profit from overseas operations fell to Rs 75 crore (Rs 94 crore), on account of this. The bank’s total exposure to CLN was Rs 1,276 crore in 2007-08.

For the full year 2007-08, the bank had a net profit of Rs 1,436 crore, up 40 per cent from Rs 1,026 crore in the earlier year.

Net interest income increased by 10 per cent, while other income increased by 48 per cent.

The share of low cost CASA deposits (current account saving account) to total deposits was 36 per cent.

The bank is targeting CASA of 38 per cent next year, Mr Mallya said.

“Cross-selling of products should yield results next year because of the technology we have put in place and the retail loan factories we have set up. We will also deploy a sales force and marketing team which will help get incremental business this year,” he said.

The bank also made a provision of Rs 180 crore against its profits, which is the provisioning for employee benefits under AS 15 and also made a provision of Rs 100 crore for salary arrears.

The scrip closed at Rs 291.9, down 1.2 per cent, on the BSE from the previous close of Rs 295.45.

More Stories on : Financial Performance | Public Sector Banks

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