Bank of Baroda will refocus growth in 2013-14. In the last few quarters, it concentrated on credit quality. The lender plans to grow its loans and deposits by 2 - 4 percent higher than the industry average in FY14.
State-owned Bank of Baroda (BoB) is expected to be back in growth trajectory in 2013-14 after resolving a majority of credit quality issues. Its fourth quarter net profit dropped 32 percent to Rs 1,029 crore on account of higher provisions. The lender had earlier indicated that it would primarily focus on containing bad loans.
"We had a complete focus on asset quality. In Q4, those were quite comprehensively addressed. Domestic non-performing assets would stabilize in quarter or two. Then, it will start improving. We will refocus on growth. In 2013-14, it would be the area of focus," S Mundra, chairman and managing director of the bank told reporters while announcing the quarterly numbers.
The bank plans to increase its share of current and savings account deposits (CASA) while ramping up retail term deposits. Both are cheap source of funds. During FY13, total deposits grew 23 percent y-o-y to Rs 4.74 lakh crore. CASA increased 16 percent to Rs 1.20 lakh crore or equivalent to more than 30 percent of total deposits.
On lending front, it is likely to rebalance the composition between corporate credit as well as retail-SME-agriculture credit. In view of economic downturn, share of credit in the latter segment will go up while proportionately bringing down percentage of corporate loans. Globally, loans expanded more than 14 percent to Rs 3.28 lakh crore during FY13.
The bank's net interest margin or the difference between interest earned and paid out, for the quarter ended March 31, 2013; globally stood at 2.51 percent as against 2.65 percent in October – December quarter and 2.96 percent in Jan – March quarter, 2011-12.
"NIMs are falling across the industry due to many factors like liquidity, economy and others. It is a reflection of industry. Our credit and deposit growth will be 2 - 4 percent higher than the industry. Our focus on credit quality will continue but we are now poised to grow," Mundra said replying to a query posted by moneycontrol.com.
The bank's outstanding restructured book stood at Rs 22,617 crore. During the quarter, it added Rs 2,843 crore as against an addition of Rs 5,280 crore in Q4, FY12. It has a pipeline of around Rs 2,500 crore restructured loans in April – June quarter, FY14.
"Domestic book slippages have fallen down from Rs 1,600 crore plus in preceding quarter to Rs 1,100 crore, so there is a significant reduction. As a result, gross non-performing asset (NPA) in domestic book has also come down from 3.27 to 2.87 percent," the chairman said.
Bank of Baroda shares fell nearly 2 percent on Monday to close the day's trading at Rs 690 on NSE.