Mumbai: State-run lender Bank of Baroda (BoB) recorded a 28.4% increase in net profit in the second quarter of the FY24 at Rs 4,253 crore, compared to the same period last year.
During the quarter under review, the net interest income (NII) also saw growth, rising by 6.5% to Rs 10,831 crore, up from Rs 10,174 crore in the corresponding period of the previous year.
However, the bank's net interest margin (NIM) decreased to 3.07% in Q2 FY24, down from 3.33% in Q2 FY23.
The bank adjusted its NIM guidance for FY24 to 3.15% (with a possible fluctuation of five basis points) from the previous estimate of 3.3%.
This revision was attributed to changes in cost factors, specifically an increase in the cost of funds, as explained by Debadatta Chand, the managing director and chief executive officer, during a media briefing following the Q2 FY24 results.
The non-interest income, which encompasses fees, commissions, treasury income, and recoveries, surged to Rs 4,171 crore in Q2 FY24, compared to Rs 1,826 crore in the previous year.
BoB's provisions for non-performing assets (NPAs) and bad debt rose to Rs 2,285 crore in Q2, up from Rs 1,654 crore in the same period last year.
The bank's advances showed a year-on-year growth of 17.3%, reaching Rs 10.24 trillion in Q2 FY24.
In the same period, its retail loans expanded by 22.2% to Rs 1.93 trillion.
Within the retail book, the personal loan portfolio experienced a significant growth of 67.2% year-on-year, amounting to Rs 25,618 crore.
Chand emphasised that although there have been concerns in the system about the growth of unsecured loans, BoB's portfolio of personal loans remains stable with minimal stress.
However, as a precautionary measure, the bank plans to conduct a portfolio review and slightly reduce the pace of loan growth in the personal loans segment to around 30%.
The total deposits increased by 14.6% year-on-year, reaching Rs 12.49 trillion. At the end of September, the share of low-cost deposits (current account and savings account, or Casa) was 38.28%, slightly down from 39.57% the previous year.
The asset quality profile improved, with gross NPAs decreasing to 3.32% in September from 5.31% a year ago. One airline exposure (Go First) was identified as a non-performing asset (NPA) and a 100% provision was made for it. This account was already under stress and turned into an NPA in Q2.
Net NPAs decreased from 1.16% in September 2022 to 0.76% in September 2023.
The provision coverage ratio also improved, rising to 93.16% in September from 91.73% a year ago.
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