Bank of Baroda Q3 profit declines 68% on higher provisions, one-time tax liability

Bank of Baroda has posted a sharp decline of 68 per cent in net profit at Rs. 334 crore, in the October-December quarter of FY15 due to hike in provisions for bad loans, higher expenses and decline in margins.

The public sector lender had reported a net profit of Rs. 1,048 crore in the year-ago quarter.

“Provisions and contingencies (excluding tax provisions) of the bank increased by a significant 65.7% (y-o-y) during Q3FY15 to Rs. 1,262 crore (Rs 762 crore in Q3FY14) due to lumpy provisions against some structural non-performing loans,” the bank said in a statement.

Moreover, operating expenses, which increased 14 per cent, also weighed on the profits.

Net interest income

Net interest income increased 7.5 per cent to Rs. 3,286 crore in the third quarter ended December 2014 compared with Rs. 3,057 crore in the same quarter last year. Other income was up 17 per cent at Rs. 1,090 crore against Rs. 932 crore.

“The bank’s domestic net interest margin (NIM) also eased to 2.92 per cent in the quarter from 3.02 per cent in Q2, FY15 due to a near stagnant growth in non-food credit of the banking industry,” the bank said.

Post results, at 2.10 pm local time, the shares of Bank of Baroda were trading down by 11 per cent at Rs. 193.40 per share on the Bombay Stock Exchange.

Gross, net NPAs

Gross non performing assets (NPA) ratio as a percentage of total loans increased to 3.85 per cent as on December end 2014 from 3.32 per cent a year ago.

Net NPA ratio also worsened to 2.11 per cent from 1.88 per cent. Both gross and net NPA figures reflect the continued stress in economic environment and the ongoing structural issues.

Cash recovery (from NPA plus from the written off accounts) during April-December FY15 stood at the improved level of Rs. 1,205 crore (Rs 832 crore in April-December FY14), while the upgraded assets amounted to a better level of Rs. 1,120 crore (Rs 633 crore).


Source : Thehindubusinessline