Public sector lender Bank of Baroda posted a 17 per cent rise in net profit at ₹1,362 crore in the first quarter ending June 30, 2014. The profit was helped by growth in interest income and loans.

“Our profit growth was mainly on the back of interest income and efficient liability management that increased retail deposits and reduced high-cost deposits, thereby increasing the net interest margin (NIM) sequentially,” said SS Mundra, Chairman and Managing Director.

Net interest income, the difference between interest earned and expended, grew 15 per cent, while other income dropped 17 per cent, primarily due to a fall in trading gains, especially government bonds.

NIM declined to 2.35 per cent per cent from 2.41 per cent in the year-ago period. Sequentially, NIM improved from 2.29 per cent.

Bad loan provisioning Provisions set aside towards bad loans during the quarter increased 15 per cent to ₹772 crore, including provisions of ₹56 crore towards un-hedged foreign currency. Gross non-performing assets (NPA) increased to ₹12,087 crore as on June-end 2014 as compared to ₹11,876 crore last year. Gross NPA ratio as a percentage of total loans increased to 3.11 per cent.

Restructured assets increased by ₹986 crore during the quarter to ₹22,832 crore as at June-end. The bank expects about ₹1,000 crore assets to be further restructured in the second quarter this year, the chairman said.

“We expect our NIM to be at least 3 per cent in FY15 while deposit and credit growth to be 19-20 per cent,” Mundra added.

Mundra said his bank will require capital worth ₹6,000 crore during fiscal 2014-15.

The Bank of Baroda scrip closed at ₹866.10 a share, up 0.53 per cent over its previous close, on the BSE.

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