The 17 per cent profit growth recorded by Bank of Baroda (BoB) in the June quarter was aided by a healthy 15 per cent growth in net interest income.

This is the third consecutive quarter that the bank has been able to shore up its core interest income.

BoB has also been able to improve its asset quality over the last four quarters, with better recovery of bad loans and lower addition to restructured loans. It is among the few public sector banks to do so.

BoB’s incremental restructuring is down to ₹986 crore in the June quarter, from about ₹2,147 crore during the same period last year. Loan defaults too have been on a downtrend in 2013-14.

While the latest June quarter saw some increase in fresh slippages, higher upgradation of bad loan accounts and better recovery are positives.

The bank’s total stressed assets (bad loans plus restructured assets) are about 9 per cent of loans, lower than that of most public sector banks whose stressed assets exceed 11 per cent of loans.

For instance, Punjab National Bank, which declared its results last week, continued to witness stress on asset quality. As of June 2014, its stressed assets, at 15 per cent of loans, is one of the highest among public sector banks

Besides containing the pressure on asset quality, BoB has also been focussing on higher growth segments such as retail and small and medium enterprises (SME) to drive loan growth.

Primarily a corporate lender, the bank’s increasing focus on these higher growth segments has aided loan growth.

After a tepid 12 per cent growth in the June 2013 quarter, the bank’s loan growth has been gathering pace. In the latest June 2014 quarter, the loan book grew 18.8 per cent with retail (17 per cent growth) and SME (22 per cent) being the key drivers.

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