The Hindu Business Line : Bank of Baroda up 21% on healthy credit growth

Mumbai, Oct. 25 Bank of Baroda’s net profit increased by 21 per cent to touch Rs 395 crore for the quarter ended September 30, 2008 against Rs 327 crore in the same quarter last year on healthy credit growth. The growth in profits is also despite aggressive provisions against write downs in investments consequent to the global turmoil, said Mr M.D. Mallya, Chairman and Managing Director, Bank of Baroda.

Net Interest Margin was at 2.8 per cent, down from 2.95 last year. But it was higher than the first quarter of this fiscal, which was 2.77 per cent.

“We have been able to increase our NIM in domestic market, (which) shows that our efforts of reducing our dependence on bulk business are paying off,” Mr Mallya said.

The bank’s total advances increased by 32.44 per cent to Rs 1,19,475 crore (Rs 90,212 crore). Total deposits increased by 22.6 per cent to Rs 1,61,069 crore (Rs 1,31,373 crore).

The share of low-cost CASA deposits (current account savings account) to total deposits fell marginally to 35.85 per cent (37.47 per cent).

Profits from treasury fell to Rs 92 crore (Rs 126 crore).

“We need to improve the overall fee-based growth. In difficult circumstances, when profit from trading is falling, the fee-based income should help in shoring up the bottomline,” Mr Mallya said.

In the overseas operations the net profit for the quarter fell to Rs 39 crore (Rs 79 crore). The bank also made higher provisions of Rs 151 crore for the quarter and Rs 184.23 crore for the April-September period. Of this Rs 115 crore was provision for credit linked notes and $5 million for exposure to Lehman Brothers.

The overseas business could continue to grow at 25-30 per cent and going forward there could be some write-back of the provisioning, as the markets could improve, said officials from the bank.

Growth of 25 per cent in fiscal 2009 is achievable and the bank will meet its target of total business of Rs 3.1 core, from the current level of Rs 2.8 crore, said Mr Mallya.

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