The Hindu Business Line : Bank of Baroda Q3 net grows 52% at Rs 501 cr

Mumbai, Jan. 30 Bank of Baroda recorded an increase of 52 per cent in net profit at Rs 501 crore for the quarter ended December 31, 2007 against Rs 329 crore in the same quarter last year.

A strong growth in other income, aided by income from treasury, was the main reason for the growth in profits.

For the third quarter of 2007-08, net interest income grew moderately by 10 per cent to touch Rs 998 crore (Rs 908 crore). Other income saw a huge rise of 85 per cent to touch Rs 618 crore (Rs 334 crore).

Dr A. K. Khandelwal, Chairman and Managing Director, Bank of Baroda, said that while the bank saw good growth in credit and treasury income, there was pressure on Net Interest Income(NII) in the last quarter due to competitive pricing of deposit rates.

Cost of deposits increased to 5.6 per cent (4.61 per cent).

The major constituents of other income were treasury income which grew to Rs 194 crore (Rs 30 crore); recovery from written off assets —Rs 134 crore (Rs 55 crore); fees from commission and exchange — Rs 137 crore (Rs 126 crore); and exchange transactions Rs 63 crore (Rs 50 crore). Within treasury income, equities contributed Rs 94 crore (Rs 7 crore), due to the booming stock market in the third quarter.

Low cost deposits

The bank managed to maintain Net Interest Margin at 3 per cent (3.03 per cent). The share of low cost deposits (Current account and savings account) to total deposits came down to 37 per cent (40 per cent).

“Low cost deposits are going down for the entire banking industry, as money is going to mutual funds and the stock market. So, going ahead there will be pressure on banks in terms of cost of deposit,” Dr Khandelwal said.

Retail advances were at Rs 15,402 crore and from 20.4 per cent of total credit.

Capital adequacy ratio was 13.51 per cent (12.24 per cent).

The bank is likely to see credit growth of 20-25 per cent next year, if the economy maintains its current growth levels, Dr Khandelwal said.

Bank of Baroda is in the process of establishing offices in Canada, New Zealand, Mozambique, Shanghai, Qatar, Kenya and Russia. Out of the 10 planned overseas in this fiscal, seven have already been opened and the rest would be opened before March 2008.

More Stories on : Public Sector Banks | Financial Performance

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page