Bank of Baroda Q3 net profit rises 75% to Rs 4,306 crore on core income growth, lower bad assets

State-owned Bank of Baroda on Friday reported a 74.76 per cent jump in its consolidated net profit at Rs 4,305.66 crore during the quarter ended December 2022, helped by improving asset quality and higher core income.

On a standalone basis, the lender's net profit jumped 75.4 per cent to Rs 3,853 crore.

Without naming the embattled Adani Group, the bank's managing director and chief executive Sanjiv Chadha told reporters that BoB's overall exposure to the ports-to-media conglomerate's entities is one-fourth of the single group exposures allowed under the Large Exposures Framework (LEF) but refused to share a number.

He said the overall exposure has declined as a percentage of the balance sheet in the last two years, and the bank does not have any asset quality concerns pertaining to it.

For the reporting quarter, the lender registered a 26.5 per cent rise in the core net interest income at Rs 10,818 crore, helped by a nearly 20 per cent growth in advances and a 0.24 per cent widening of net interest margin to 3.37 per cent.

Chadha said at a time when the banking system is undergoing a 'war for deposits', the lender was able to post a 17.5 per cent growth in the critical item on the liabilities side to fund the assets growth.

Despite deposit rate hikes becoming essential to garner the funds, Chadha exuded confidence that the lender will be able to sustain its NIMs (net interest margin) which have come better than its own expectations.

On the loan growth side, he said, the bank was able to notch up a higher number courtesy its focus on the "challenging" mortgage segment within retail, which grew 29.4 per cent, and also overcoming the tepid growth in corporate side by growing the book by over 13 per cent.

There was also a huge 150 per cent growth in the so far untapped unsecured loans like personal loans courtesy the deployment of digital alternatives.

The gross non-performing assets ratio declined to 4.53 per cent from 7.25 per cent in the year-ago period, on the back of a Rs 2,830 crore in fresh slippages. The cash recovery and upgrades at Rs 3,304 crore as against Rs 2,635 crore in the year-ago period helped trim the ratio.

The bank's overall capital adequacy ratio stood at 15.44 per cent with the core tier-1 at 11.45 per cent. Chadha said the bank is unlikely to go to capital markets for a fundraise.

Chadha said the fee income grew by a tepid 9.4 per cent for the reporting quarter, and attributed the same to slowdown in project finance loans where it earns a bulk of the fees.

The Bank of Baroda scrip closed 6.20 per cent up at Rs 163.65 a piece on the BSE, as against a gain of 1.52 per cent on the benchmark.