BoB chief hopeful that NPA numbers will improve; bank reports 36% drop in profits
Mumbai: Bank of Baroda reported a 36 percent plunge in net profit in the September quarter as its provisions for loan losses surged and income from treasury fell, but the overall bad loans position eased and forecast better days ahead if the National Company Law Tribunals deliver on recovery from defaulters.
The state-run bank said it is on course to complete its transformational plan as it readjusts strategy under the leadership team from the private sector comprising chairman Ravi Venkatesan and chief executive P.S. Jayakumar.
“We are very satisfied with growth because it leads to diversification of our portfolio,” said P.S. Jayakumar, chief executive of Bank of Baroda. “We feel that the NPA ratios will improve here onwards. A lot depends upon how the NCLT cases pan out.”
Net profit for the quarter was at Rs. 355 crores, down from Rs. 552 crores a year earlier. But it matched the Bloomberg poll of analysts estimate.
But the surprise element was the fall in its gross bad loans. The share of bad loans to total loans fell to 11.1%, from 11.4 percent a year earlier. Post provisions or the net NPA, fell to 5.05% from 5.17%. Provisions for bad loans stood at Rs 1847 crores, up 13% from a year ago.
“The non-performing loans continues to remain challenge but this quarter has been steady and we are trying to maintain that,” said Jayakumar. “We don’t feel the necessity of capital to maintain ratios but we need growth capital.”
The bank has also improved the credit profile of its borrowers with the unrated forming 19 percent of borrowers, from 36% in fiscal 2016, an investor presentation showed.
Total stressed portfolio stood at 14% of the loan book. Net interest margin stood at 2.31% from 2.12% in same period a year ago.
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Via:: Economic Times – Stocks