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Bank of Baroda posts Rs 737 crore profit on higher treasury income

FE Bureau
Bank of Baroda, Vijaya Bank, Dena Bank, net interest income, gross NPA,  sale of investment, DHFL

Bank of Baroda on Friday reported a nearly 400% rise in its net profit to Rs 737 crore, compared with Rs 149 crore in the corresponding quarter last year. This increase was due to a boost in treasury gains and improved asset quality. Other incomes stood at Rs 1,571 crore, compared with Rs 605 crore in same quarter last year. The non-interest income increased 40.7% to Rs 2,824 crore. This included trading gains of Rs 942 crore due to sale of investment. The bank has amalgamated with itself Vijaya Bank and Dena Bank with effect from April 1, 2019.

The operating profit for the September quarter increased to Rs 5,336 crore, registering a growth of 23.2% Y-o-Y. This profitability came despite high provision coverage ratio of 77.88%, against 77.34% in the last quarter. The bank registered a 10% increase in net interest income (NII) to Rs 7,028 crore, compared with Rs 6,384 crore in the same quarter last year. There was also an increase in net interest margin (NIM) to 2.81% from 2.62%, led by an increase in domestic margins to 2.95% from 2.73% in the previous quarter.

SL Jain, executive director, said, "We wish NIM to be around 3% this quarter. In any case, it should not be below 2.9%." The cost-to-income ratio came in at 45.84%, compared with 48.39% in the same period last quarter. The asset quality of the bank remained stable in the quarter. The gross NPA stood at 10.25% as on September 30, 2019, against 10.28% last quarter. Similarly, net NPAs came down to 3.91%, compared to 3.95% in the previous quarter.

Jain said, "We expect net NPAs to come down to 3.5% till March. The bank has made provisioning of Rs 4,599 crore this quarter, compared to Rs 3,566 crore in the last quarter." Without taking name of DHFL, he said, "One housing finance company was part of fresh slippage this quarter." The total exposure to DHFL stands at Rs 1,800 crore.
The bank is working on realising revenue and cost synergies. The business strategy and processes of all the three amalgamating banks have been aligned. IT integration is in progress.