Bank of Baroda (BOB) saw a sharp decline in the size of the loans restructured in the April-June quarter compared with the same quarter in the previous financial year. The bank restructured accounts worth R771 crore in the quarter compared with R5,284 crore in the previous year. Chairman and managing director of BoB MD Mallya speaking to reporters on the sidelines of the bank’s quarterly results conference said that this trend is expected to continue going ahead as the pipeline of loans under recast looks small. Excerpts:
Are you satisfied with the 10% growth in profit numbers?
I think that under the given the current economic climate we have posted a good set of profit numbers. We have been helped by a strong net interest income (NII) growth of around 22%, thus showing our core operations remain healthy. In the previous quarter we had the benefit of write back of the income tax refund and the write back of the investment depreciation. This was not available this quarter. Also we believe in fully provisioning for non-performing accounts (NPAs) which has also had an impact on profits.
Are you concerned about the rise in the NPA numbers?
Our incremental delinquency ratio stood at 0.43% during the quarter which is consistent with the industrial slowdown and weak monsoons. The slippages have come from across verticals including retail, mid-corporate, SMEs etc. But these are not lumpy accounts, hence going forward we expect to substantially recover or upgrade them. Our recoveries in the quarter was strong standing at Rs 208 crore and upgradation was good too at Rs 135 crore. The first quarter typically sees larger slippages because of seasonality and cyclicity and we see this trend softening going ahead.
How does your loan recast book look?
We restructured loans worth Rs 771 crore in the quarter as compared to over Rs 5,000 crore in the same quarter of the previous year. Going ahead we expect this trend to continue with no major accounts coming up for restructuring. Therefore, in the current year, overall restructured portfolio incremental could be much less than what it was in the last year.
