Bank of Baroda(BoB) Q2 net profit falls 36%, misses estimates

Public sector lender Bank of Baroda's second quarter profit missed analyst expectations, falling 35.6 percent year-on-year to Rs 355.4 crore on higher provisions, but asset quality improved on sequential basis.

The bank had reported net profit of Rs 552.1 crore for September quarter last year. Profit, however, registered a 74.88 percent increase compared with previous quarter.

Net interest income during the quarter grew by 8.6 percent year-on-year to Rs 3,720.5 crore, which was ahead of estimates.

Bank of Baroda posted a 9.4 percent growth in advances, with domestic loan book growing 13.8 percent driven by retail loan growth of 25.49 percent. Net interest margin improved to 2.31 percent in Q2, from 2.12 percent in year-ago.

Asset quality improved in quarter ended September 2017. Gross non-performing assets as a percentage of gross advances were lower at 11.16 percent (against 11.40 percent in Q1FY18) and net NPAs also declined to 5.05 percent (5.17 percent).

In absolute terms, gross NPAs were at Rs 46,306.8 crore for the quarter (against Rs 46,172.8 crore in previous quarter) and net NPAs at Rs 19,572.6 crore (Rs 19,519.3 crore).

"Stressed assets / impaired assets also (gross non-performing assets and restructured standard assets) were flat on sequential basis," the bank said.

Profit for the quarter was estimated at Rs 459.3 crore and net interest income at Rs 3,519.6 crore, according to average of estimates of analysts polled by CNBC-TV18. Provisions for bad loans in Q2 increased nearly 30 percent to Rs 2,329.4 crore, from Rs 1,795.8 crore in year-ago, but fell 1.6 percent on sequential basis.

Provision coverage ratio of the bank improved to 67.18 percent for quarter ended September 2017, from 66.30 percent in previous quarter. The bank said other income (non-interest income) grew by 11.2 percent year-on-year to Rs 1,737 crore and operating profit rose by 13 percent to Rs 3,042 crore for July-September quarter. Operating income in Q2 was driven by growth in both in interest and fee income, it added.