Bank of Baroda net dips 22 per cent; scrip down 7.5 per cent

State-run Bank of Baroda today posted a 21.6 per cent dip in December quarter profit at Rs 1,011.62 crore, dented by a surge in bad assets.

The bank had posted a post-tax net of Rs 1,289.85 crore in the same quarter a year ago.

The Gross NPA ratio of the bank rose to 2.41 per cent as against 1.48 per cent in December 2011.

Attributing the surge in non-performing assets (NPAs) to economic stress, the bank's newly appointed chairman and managing director S S Mundhra said the increase in bad assets came from the wholesale banking, agriculture and manufacturing sectors.

To a specific question if the change in leadership has resulted in a cleaning of the book and hence the uptick in NPAs, he pointed out that he took charge as late as January 22 and added that the "composition of the book" was a prime reason.

The bank added Rs 1,567 crore to restructured assets portfolio during the quarter.

Mr Mundhra said that the situation on both the restructuring and NPAs is unlikely to improve in the next two or three quarters.

The bank's provisions towards taxation got reduced by 56.8 per cent to Rs 202.61 crore from the year ago's Rs 468.60 crore, helping protecting the bottomlines. He did not comment when asked if some shocks await the bank in the next quarter on this front.

Shares of the bank closed at Rs 802.10, down 7.5 per cent, on Bombay Stock Exchange.

The bank's core interest income was up by 7 per cent to Rs 2,841 crore, Mr Mundhra said, adding that lacklustre treasury operations caused a 26.9 per cent dip in other income at Rs 840.59 crore.

Its domestic net interest margin (NIM) was maintained at 3.08 per cent in spite of a relative uptick in the amount of the low cost current and savings account deposits at 32.22 per cent.

He said it will try to maintain the level on NIMs at 3 per cent in the future.

The bank's total capital adequacy stood at 12.66 per cent as on December 31, 2012, with the core tier-I at 9.33 per cent.

He said the government has agreed to infuse Rs 850 crore in the current fiscal year, which will take its total capital adequacy to over 14 per cent.

He expressed optimism that the bank's credit and deposit will grow at the industry average of 16 and 15 per cent, respectively during the fiscal year and would outgrow the industry in the next fiscal year.