Drop in core income restricts BoB net profit growth to 1.9 pc at Rs 4,541 cr in Q1

A de-growth in the core income led state-owned Bank of Baroda to register an 1.9 per cent growth in June quarter net profit at Rs 4,541 crore.

The bank had logged a net profit of Rs 4,458 crore in the year ago period.

Its managing director and chief executive Debadatta Chand told reporters that the second quarter of the fiscal year will also be challenging but things will get better in the second half of the fiscal.

In the reporting quarter, the bank's core net interest income dropped 1.4 per cent to Rs 11,435 crore, despite a nearly 13 per cent loan growth, but it was impacted by a 0.27 per cent narrowing in the net interest margin to 2.91 per cent.

An 88 per cent jump in the non-interest income at Rs 4,675 crore, helped by handsome treasury gains, was one of the key reasons the bank was able to post a net profit growth.

Chand said the bank's performance is in line with peers of the same size, who are reporting sluggish core income growth and falling back on treasury profit booking.

The bank's loan growth was led by a 19 per cent jump in retail advances, but corporate loan was down to 4 per cent.

Chand said seasonal factors, de-leveraging by strong companies and availability of cheaper funding alternatives either overseas or on other credit market instruments for large borrowers restricted the bank's corporate loan growth.

The bank is confident of accelerating corporate loan growth up to 10 per cent, Chand said, adding that it has sanctioned Rs 35,000 crore of loans, which are yet to be disbursed, and has a pipeline of another Rs 25-30,000 crore of loans under discussions.

A senior bank official said it has loan demand from renewable energy, data centres and public sector enterprises, which will drive up the corporate loan growth going ahead as the busy season kicks in.

There was a Rs 15,000 crore decline in exposures to non-bank lenders during the quarter, but Chand said it will recoup in the quarters ahead.

From an asset quality perspective, the gross non-performing asset ratio moved up by 0.02 per cent to 2.28 per cent on-quarter.

Chand explained that this was primarily because of a Rs 500-crore international exposure to a manufacturing entity facing difficulties since Covid period, and added that the bank has set aside Rs 200 crore of provisions against that.

The bank expects a full resolution on the secured account in the next 210 days, Chand said, declining to identify the entity.

Bank of Baroda's overall provisions were up 94 per cent to Rs 1,947 crore during the reporting quarter.

Chand said the bank is maintaining its guidance on credit and deposit growth for FY26, at 11-13 per cent, and 9-11 per cent, respectively.

It is also aiming to recover Rs 10,000 crore from the NPAs, he said.

Chand gave a range of 2.85 per cent to 3 per cent on the NIMs front.

At present, 35 per cent of the loan book is linked to external benchmark, which gets repriced with every repo rate cut inflicting an impact on the NIMs, while over 45 per cent is on marginal cost of funding based lending rate, he said.

Its overall capital adequacy stood at 18.29 per cent with the core buffer at 14.84 per cent.

The Bank of Baroda scrip closed 1.36 per cent down at Rs 243.45 apiece on the BSE on Friday, as against a 0.88 per cent decline in the benchmark.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)