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Bank of Baroda (BoB) reported a 128 per cent jump in second quarter standalone net profit at ₹1,679 crore against ₹737 crore in the year-ago quarter.
A 34 per cent decline in provision towards bad loans in the reporting quarter at ₹2,277 crore (₹3,425 crore in the year-ago quarter) helped boost the bottomline.
Net interest income (the difference between interest earned and interest expended) was up 7 per cent year-on-year (y-o-y) to ₹7,508 crore (₹7,028 crore in the year-ago quarter).
Sanjiv Chadha, MD & CEO, said: “The improvement that we see in the bank’s performance seems to be sustainable based on two main pillars – the reduction in cost of deposits, which is powered by a very significant improvement in the ratio of CASA (current account, savings account) deposits; and robust growth in the retail book, which is something we hope will continue in the future.”
The BoB chief observed that loans sanctions and disbursements during the quarter rebounded to attain levels that were more than the corresponding quarter of last year.
Business growth
Domestic advances growth was up about 6 per cent year to ₹6,05,245 crore, powered by 17 per cent growth in retail advances (ex-pool purchases); 16.5 per cent growth in agriculture loans; 8 per cent growth in loans to micro, small and medium enterprises.
Corporate advances, however, declined ₹20,788 crore quarter on quarter (September vs June quarter). International gross advances were up about 3 per cent to ₹1,13,712 crore.
Domestic deposits moved up about 7 per cent yoy to ₹8,35,894 crore. Current account, savings account (CASA) deposits increased to 39.78 per cent of domestic deposits against 37.88 per cent in the year-ago period.
BoB expects to grow its deposits as well as advances by 7 per cent each in FY2021 .
“We are committed to making sure that our deposit growth and loan growth is in tandem.
“We are conscious that every rupee that we gather in deposits, which cannot be deployed fruitfully and profitably, is something which detracts from our margins. So, we have been disciplined in terms of deposit growth,” explained Chadha.
The BoB chief observed that reduction in cost of funds has been the main lever for improvement in Net Interest Margin (NIM). Global NIM improved to 2.86 per cent in Q2FY21 from 2.81 per cent in Q2FY20.
NPAs down
Gross non-performing assets (NPAs) declined to 9.14 per cent of gross advances as of September-end 2020 against 10.25 per cent as of September-end 2019.
Net NPAs improved to 2.51 per cent of net advances against 3.91 per cent.
Fresh slippages declined to ₹899 crore in the reporting quarter (₹2,740 crore in the preceding quarter)
Following the lifting of the pandemic-induced lockdown, recoveries from bad loans improved to ₹1,642 crore (₹554 crore in Q1 FY21). There was an upgradation of accounts aggregating ₹525 crore (₹264 crore). Write-offs rose to ₹2,553 crore (₹1,729 crore).
Chadha said: “There is some room for optimism on credit quality. The collection efficiency has rebounded sharply.
“So, as of now, our collection efficiency is of the order of 91 per cent as against 94 per cent last year….Even in the book that was under moratorium, the collection efficiency was as high as 87 per cent.”
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