Mumbai, Feb. 4: State-run Bank of Baroda (BoB) today reported a 21.6 per cent dip in net profit for the December quarter on account of a surge in bad assets.
Net profit stood at Rs 1,011.62 crore for the third quarter compared with Rs 1,289.85 crore in the year-ago period. Analysts had estimated net profit to be around Rs 1,200 crore.
The poor numbers saw the BoB share tanking over 7 per cent on the bourses. The scrip settled at Rs 802.10 on the BSE, a drop of 7.50 per cent. On the NSE, the share fell 7.36 per cent to Rs 804. 15.
The Street was concerned by the surge in bad loans. Gross non-performing assets (NPAs) at BoB rose to Rs 7,321.45 crore against Rs 3,895.08 crore, a steep increase of 87 per cent. Of this, a little over Rs 4,490 crore came from fresh slips. The percentage of gross NPAs to total assets also rose to 2.41 per cent from 1.48 per cent last year.
Newly appointed chairman and managing director of the bank S. S. Mundhra attributed the surge in bad assets to economic stress.
In response to the speculation that the change in leadership has resulted in a cleaning up of the book and, hence, the uptick in NPAs, Mundhra pointed out that he had taken charge as late as January 22.
According to senior officials at the bank, sectors such as agriculture and manufacturing contributed the most to the increase in bad assets.
During the third quarter, the bank restructured accounts worth Rs 1,587 crore. Between April 2008 and September 2012, it restructured 89,050 accounts worth Rs 18,268 crore in its domestic operations. Of this, around 118 accounts (of Rs 1 crore & above) with an aggregate outstanding of Rs 2,496 crore slipped to NPA after restructuring. Most of them belonged to the SME segment.
The period saw provisions for bad loans rising to Rs 817.16 crore from Rs 508.92 crore in the same quarter of the preceding year.
Interest earnings increased 15.3 per cent to Rs 8,844.92 crore, whereas interest expenses rose 19.7 per cent to Rs 6,004.02 crore. Consequently, net interest income grew a modest 7 per cent to Rs 2,840.90 crore.
Rate cut by trio
Three banks — Oriental Bank of Commerce, Indian Bank and Citi — today reduced their lending rates by up to 0.3 per cent.
While Oriental Bank cut its base rate by 0.15 per cent to 10.25 per cent, Indian Bank reduced the lending rate by 0.30 per cent to 10.20 per cent. Foreign lender Citi has reduced its base rate by 0.25 per cent to 9.50 per cent.