Second largest PSU bank Bank of Baroda on Thursday said its net profit for the June quarter fell 59.74% from a year ago due to higher provisions and lower net interest income.
Net profit for the quarter was Rs.423.62 crore as compared to Rs.1,052.15 crore a year ago. According to a poll of 26 Bloomberg analysts, the bank was expected to post net profit of Rs.398.40 crore.
Net interest income (NII), or the core income a bank earns by giving loans, fell 2.56% to Rs.3,371.09 crore in the June quarter from Rs.3,459.62 crore last year.
Other income increased 49.33% to Rs.1,444.39 crore from Rs.967.23 crore in the same period last year. Net interest margin expanded sequentially to 2.8% from 2.7%.
The bank’s total deposits at the end of the first quarter stood at Rs 5.62 trillion, as compared with Rs 5.93 trillion. The bank reduced the level of high-cost deposits on its book, resulting in a fall in total deposits and a drop in the cost of domestic deposits. The cost of domestic deposits dropped to 6.21% as on 30 June, from 6.61% as on 31 March.
The state-owned lender was also able to increase the ratio of current account savings account (CASA) deposits to 33% of total deposits at the end of the first quarter, from 29.09% a year ago and 29.43% at the end of the fourth quarter of the last financial year.
Bank of Baroda’s total advances as on 30 June were at Rs3.62 trillion, down 11% from Rs4.08 trillion a year ago.
“The bank has undertaken a conscious rundown of certain unprofitable assets resulting in improvement in yield on advances as well as net interest margin (NIM),” the bank said in a statement.
NIM improved to 2.8% as on 30 June from 2.7% on a quarter-on-quarter basis. For the lender’s international operations, NIM improved to 0.98% from 0.92% at the end of the March quarter.
In December, the Reserve Bank of India (RBI) conducted an asset quality review across the banking sector, following which the banks were asked to recognize visibly stressed assets as non-performing assets (NPAs). The RBI also asked banks to make adequate provisions for stressed assets. This has hit the profitability of some banks.
Gross NPAs at Bank of Baroda rose 6.1% to Rs.42,991.68 crore at the end of the June quarter from Rs.40,521.04 crore in the March quarter. On a year-on-year basis, gross NPAs jumped 148.88% from Rs.17,273.95 crore. As a percentage of total loans, gross NPAs stood at 11.15% at the end of the June quarter as compared to 9.99% in the previous quarter and 4.13% in the year-ago quarter.
Provisions and contingencies fell 70.78% to Rs.2,004.07 crore in the quarter from Rs.6,857.66 crore a quarter ago. On year-on-year basis, provisions jumped 234.16% fromRs.599.74 crore. Net NPAs were at 5.73% in the June quarter compared to 5.06% in the previous quarter and 2.07% in the same quarter last year.
Bank of Baroda said that it has launched Project Navoday, a plan aimed at improving the bank’s business strategy, products and services, processes, digitization and capability enhancement of the work force.
“While this transformation exercise will be completed over a period of 18 months, the early benefits should start flowing from Q4 FY17,” the bank said in its statement.
.jpeg)
No comments:
Post a Comment