MUMBAI: The second largest public sector lender Bank of Baroda has reported an 8.2% on-year drop in net profit to Rs 4,809 crore, despite improved asset quality and the resultant sharp 47% drop in provisions along with stable net interest margin in the September quarter.
The city-based lender said this was primarily due to a massive 32% plunge in non-interest or fee income, which fell to Rs 3,515 crore from Rs 5,166 crore a year ago. This was the result of a sharper 36% on-year cut in treasury income which printed in at Rs 1,086 crore, crimping profitability.
As against this, the core net interest income saw a modest 2.7% growth at Rs 11,954 crore, while interest expenses jumped 4.9% to Rs 19,557 crore. As a result, net interest income rose 2.7% to Rs 11,954 crore and the key profitability metric net interest margin fell by 17 basis points to 3.27%, the management told reporters Friday in an earnings call. Non-interest income on the other hand tumbled 32% to Rs 3,515 crore, boosting total operating income to Rs 15,469 crore, though it was down 7.9%.
Total income also declined to Rs 35,026 crore in the quarter from Rs 35,445 crore in the same period of the previous fiscal, of which interest income improved to Rs 31,511 crore from Rs 30,278 crore.
The rise in deposit and borrowing costs outpaced the growth in lending yields, exerting pressure on margins despite steady loan growth, the bank said.
On the asset quality front, the bank reported an improvement, with the gross non-performing asset ratio easing to 2.16 from 2.50, and the net NPA ratio improving slightly to 0.57 from 0.60. Accordingly, this has resulted in the bad loans provisions declining sharply to the tune of 47.2% to Rs 1,232 crore from Rs 2,336 crore with the NPA-related provisions plunging by a steeper 49.1% in the second quarter of the last financial year, providing some support to the bottom line.
But the provision coverage ratio slipped to 93.21% from 93.61%. With regard to capital adequacy, the capital to risk-weighted assets ratio rose to 16.54 from 16.26.
The bank reported robust growth in deposits and credit in terms with total deposits rising 9.7% to Rs 12,71,992 crore, of which domestic Casa deposits were up 6.6% to Rs 4,88,660 crore. Due to strong credit demand and retail momentum, advances increased 11.5% to Rs 10,46,506 crore, while the retail loan portfolio climbed 17.6% to Rs 2,73,116 crore. Global advances rose 11.9% while domestic advances climbed 11.5% thanks to a notable 17.6% boost in retail loans.
The bank’s shares have made a sharp recovery in recent months, gaining 41.3% over eight months, rising from Rs 196 to Rs 278.40. During this period, the stock closed in positive territory for four out of eight months. Although it has staged a strong comeback, the stock still trades about 7% below its record high of Rs 299.70, touched in June 2024. On a year-to-date basis, the stock has gained 16%, and if the momentum sustains through year-end, it will mark its fifth consecutive year of positive returns.
