Bank of Baroda posted a 19.7 per cent rise in second-quarter net profit on Tuesday as the lender made lower provisions for bad loans amid strong growth in retail banking.
Net profit rose to Rs 425 crore ($57.73 million) in the quarter ended September 30 from Rs 355 crore a year earlier, the country's second-largest state-run lender by market capitalisation said in a statement.
Twelve analysts, on average, had expected a profit of Rs 572 crore, according to Refinitiv data.
Provisions for bad loans fell 16.6 per cent from a quarter earlier to Rs 1,467 crore. Gross bad loans as a percentage of total loans stood at 11.78 per cent at the end of September, compared with 12.46 per cent in the previous quarter, and 11.16 per cent last year.
The results come as Bank of Baroda prepares to merge with smaller rivals Dena Bank and Vijaya Bank, as the government attempts to tackle a pile of bad loans plaguing the banking sector and revive credit growth.
The merger plans, which have been approved by the banks' boards, have sparked some concerns, including that management may get distracted by the process. Such concerns have led to an almost 30 per cent drop in Bank of Baroda's market value so far in 2018.
Interest earned rose 12.3 per cent to Rs 12,080 crore, backed by a 20.4 per cent growth in loans.
Bank of Baroda shares closed 2.7 per cent higher on Tuesday before the results were announced.
($1 = Rs 73.6150)
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