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Bank of Baroda (BoB) on Thursday posted a net profit of Rs 1,048 crore in the December quarter, a marginal growth of 3.6% year-on-year. The bank attributed this to the creation of a deferred tax liability (DTL) of Rs 272.09 crore on its special reserve in the third quarter and charging it to its profit and loss account, as per an RBI directive.
It added that, in the absence of the revised guidelines, on a standalone basis, the bank would have shown a net profit of R1,320 crore, an increase of 30.5% y-o-y.
During the quarter under review, the bank's total income was boosted by strong gains in forex profits and was up 9.7% y-o-y at R10,623 crore. Its net interest income (NII) was R3,057 crore in the December quarter, a rise of 7.6% y-o-y.
The lender’s domestic net interest margin (NIM) was 2.95% and was up 25 bps from 2.7% in the September quarter. “Bank of Baroda would like to avoid aggression as the economy is still in the recovery mode, but will try to grow a tad higher than the industry average to protect its market share,” said Rupa Rege Nitsure, the bank’s chief economist.
According to a RBI projection, aggregate deposits would grow 14.0% and non-food credit 15.0% in the current financial year for the banking industry.
The bank cut its provisions towards bad loans and contingencies by 25.98% to R761.87 crore in Q3 as there was a sizable writeback on investment depreciation against the equity portfolio. Its NPA provisioning prior to the writeback was R845 crore in Q3.
“BoB’s core performance came in a shade above our expectations. The asset quality did deteriorate with GNPA/NNPA rising 9.5%/4.9% q-o-q, but the net addition to impaired assets remained lower than in the previous quarter, a positive in our view,” said Kotak Securities banking analyst Saday Sinha.
The asset quality of the bank also deteriorated as its NPAs rose 17 bps to 3.32% compared to 3.15% in the September quarter, and its net NPA ratio was up sequentially 2 bps in Q3.
“Our debt restructuring pipeline for the January-March quarter is R1,500-2,000 crore,” said BoB chairman and managing director SS Mundra.
Its total advances grew 17.8% to R3,52,446 crore and total deposits were up 21.5% to R5,03,772 crore on a y-o-y basis. On the BSE, the BoB scrip closed at R537.75, down 0.87%.