Bank of Baroda (BoB) reported a muted net profit (standalone) growth in the fourth quarter at ₹4,886 crore against ₹4,775 crore in the year-ago quarter. One-off provisions towards employee cost and an aviation sector account, and lower net interest income growth weighed on the bottomline in the reporting quarter.

The board of directors of the public sector bank recommended a dividend at ₹7.60 per equity share (face value ₹2 each fully paid up) for FY24.

Debadatta Chand, MD & CEO, BoB, emphasised that this is the fifth consecutive quarter that the bank has announced net profit in excess of ₹4,000 crore and the asset quality is much better as compared to last year. The total business (deposits plus advances) crossed the ₹24-lakh crore milestone.

Net interest income/NII (difference between interest earned and interest expended) nudged up 2.30 per cent yoy to ₹11,793 crore (₹11,525 crore in Q4FY23). Chand attributed the slow growth in NII to increased cost pressures on account of deposits.

Total non-interest income, comprising fee income (loan processing charges, miscellaneous fee income, etc), forex income, profit or loss on sale/revaluation of investments, etc, rose about 21 per cent to ₹4,191 crore (₹3,466 crore).

“We are focussing on fee and flow and this is showing traction in terms of non-interest income,” the BoB Chief said.

In FY25, Chand expects global deposits (domestic plus international) to grow 10-12 per cent (against 10.2 per cent in FY24). Further, global advances are seen growing 12-14 per cent (12.5 per cent).

Ian De Souza, CFO, said the one-off provision of ₹400 crore has come in the employee cost line and one-off accelerated provision of Rs 550 crore was for an aviation sector account.

Analysts say the bank made provision for the troubled Go First Airline. It has an exposure of ₹1,700 crore to this airline.

The BoB Chief said, in the last couple of quarters, the bank made provisions for the non-ECLGS (Emergency Credit Line Guarantee Scheme) component of the aviation sector account. But this quarter, it made provision for the ECLGS component (one-third of the total loan exposure) also. So, the account is full provided.

“This account is highly collateralised (includes land). So, along with the ECLGS cover, the recovery would be to the maximum extent. The legal/NCLT process is on. We can only expect upside from this account going forward,” Chand said.

Asset quality improves

Asset quality improved, with gross non-performing assets (NPAs) declining to 2.92 per cent of gross advances as at March-end 2024 against 3.08 per cent as at December-end 2023. NNPAs nudged lower to 0.68 per cent of net advances from 0.70 per cent.

Net interest margin declined to 3.45 per cent in the reporting quarter against 3.65 per cent in the year ago quarter.

As on March-end 2024, global advances increased by 12.5 per cent yoy to ₹10,90,506 crore. Global deposits were up 10.2 per cent to ₹13,26,958 crore.

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