Asset quality weakened further in June quarter as gross non-performing assets (NPA) as a percentage of gross advances increased 116 basis points sequentially to 11.15 percent and net NPA rose 67 basis points to 5.73 percent.
Public sector lender Bank of Baroda said profit in April-June quarter plunged 59.7 percent year-on-year to Rs 423.6 crore, moving from a loss position in previous two quarters. It was dented by higher provisions, slow net interest income and tax expenses (against tax credit in year-ago period) but supported by higher other income and operating profit.
Net interest income declined 2.6 percent to Rs 3,371 crore from Rs 3,459.6 crore on yearly basis, impacted by lower loan growth
Advances during the quarter fell 11.2 percent to Rs 3.6 lakh crore while deposits slipped 5.2 percent to Rs 5.6 lakh crore compared with year-ago period.
"Total business was lower on account of planned and structured rundown of low yielding assets and high cost liabilities," the bank said, adding domestic CASA grew on an average by 12.79 percent YoY and 9.4 percent QoQ driven by savings bank deposit growth of 14.08 percent YoY and 9.85 percent QoQ.
Domestic net interest margin improved 10 basis points to 2.8 percent; and international net interest margin 6 basis points to 0.98 percent on sequential basis due to conscious rundown of certain unprofitable assets.
As of June 2016, the interational operations contributed 30.37 percent to the bank's total business.
Profit was estimated at Rs 458.7 crore and NII at Rs 3,126.6 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.
Non-interest income (other income) shot up 49.3 percent year-on-year to Rs 1,444.4 crore in the quarter ended June 2016, driven by improved trading gains.
Operating profit increased 21.2 percent to Rs 2,669.5 crore, the highest in last five quarters, driven by a 17.6 percent fall in employees expenses.
Asset quality weakened further in June quarter as gross non-performing assets (NPA) as a percentage of gross advances increased 116 basis points sequentially to 11.15 percent and net NPA rose 67 basis points to 5.73 percent, partly on account of the conscious reduction in the asset base during the year.
Total restructured standard assets were Rs 14,164 crore as of June 2016, the bank said, adding total stressed assets (gross NPA and restructured standard asset) were 14.83 percent of the gross advances.
On absolute basis, gross NPAs during the quarter increased 6.1 percent to Rs 42,992 crore and net NPAs jumped 7.1 percent to Rs 20,784 crore compared with preceding period, impacted by slippages that far ahead of estimates.
Bank of Baroda says fresh slippages for the quarter stood at Rs 5,527 crore against Rs 5,932 crore in preceding period. Analysts had estimated slippages at Rs 3,500 crore.
Provisions for bad loans remained at elevated level, rising 234 percent to Rs 2,004 crore during the quarter compared with Rs 600 crore in year-ago period, though fell sharply by 70.77 percent on sequential basis.
Provisions against NPAs/bad debts written off stood at Rs 1,986 crore, the bank said. Non-performing loan provisioning coverage ratio improved a bit to 60.17 percent in Q1 from 60.09 percent in preceding period.
Tax expenses during the quarter slipped 56 percent on yearly basis to Rs 241.8 crore in June quarter. The bank had a tax credit of Rs 1,055 crore in March quarter.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.