Higher interest income boosts Bank of Baroda net 17%

Public sector lender Bank of Baroda posted a 17 per cent growth in net profit for the fourth quarter ended March 31, 2012 at Rs 1,518 crore (Rs 1,294 crore) on higher interest income and lower tax provisions. Net interest income (NII) during the quarter rose by a marginal 3 per cent to Rs 2,797 crore (Rs 2,714 crore) on higher provisions (excluding tax).

Provisions and contingencies increased by 43 per cent to Rs 844 crore while for the full year ended March 31, 2012 it rose to 92 per cent to Rs 2,555 crore.

However, tax provisions for the quarter were lower at – Rs 322 crore (minus Rs 322 crore) on receipt of refunds of about Rs 400 crore

The bank's net profit for the year rose 18 per cent to Rs 5,007 crore (Rs 4,242 crore). The NII was at Rs 10,317 crore. Other income — including fees, commissions, foreign exchange and treasury transactions — grew to Rs 898 crore (Rs 834 crore).

Net NPAs were at 0.54 per cent as on March 31, 2012.

“Net interest margins (NIMs) for the quarter fell to 3.44 per cent on migration from savings to term deposits,” Mr M.D. Mallya, Chairman and Managing Director, said. For the full year, the NIM was at 3.51 per cent.

The CASA (current and savings account) ratio dropped to 33 per cent on higher retail term deposits. The capital adequacy ratio as on March 31, 2012 was at 14.67 per cent as per Basel II norms with tier 1 capital at 10.83 per cent. Total restructured assets rose to Rs 8,500 crore, dominated by the aviation (Rs 2,400 crore) and power sectors and SMEs.

On the Basel III guidelines issued by the RBI, Mr Rajesh Mahajan, General Manager, Risk Management, said: “They are too stringent for the Indian banking system”.

The board also recommended a dividend of Rs 17 per share on a face value of Rs 10. The bank's share ended lower by 6 per cent at Rs 687.05 on the Bombay Stock Exchange.