RISE IN INTEREST INCOME LIFTS BANK OF BARODA Q2 PROFIT 14%

Aided by a robust growth in net interest income, Bank of Baroda reported a 14 per cent increase in net profit at Rs 1,166 crore in the July-September 2011 quarter, against Rs 1,019 crore in the corresponding period last year.

The bank's net interest income (the difference between interest earned on advances and investments, and interest expenditure) rose 26 per cent to Rs 2,567 crore (Rs 2,038 crore in the year-ago period).

Despite being a challenging quarter in terms of maintaining margins, asset quality, and credit growth, the bank was able to report a good financial performance due to sagacious funds management, cost control and recoveries from written-off assets, said Mr M.D. Mallya, Chairman and Managing Director, Bank of Baroda.

This is the first quarter in the bank's history that its operating profit has crossed the Rs 2,000 crore mark (Rs 2,140 crore in Q2 of FY2012 Vs Rs 1,657 crore in Q2 of FY2011).

Domestic advances grew 19 per cent on year-on-year basis from Rs 1,41,732 crore as at September-end 2010 to Rs 1,69,034 crore as at September-end 2011. However, on a year-to-date basis (March-end 2011 Vs September-end 2011) the advances were a tad lower. As at March-end 2011, the advances were Rs 1,69,408 crore.

“The credit growth that we have seen in the current financial year so far is on account of earlier sanctions. Demand for project loans has dried up significantly,” said Dr Rupa Rege Nitsure, Chief Economist, BoB.

The economic slowdown and rising interest rates got reflected in the asset quality. Gross non-performing assets increased by 25 per cent to Rs 3,402 crore as at September-end 2011, against Rs 2,720 crore as at September-end 2010.

In the current quarter, the bank made a loan loss provision of Rs 298 crore (Rs 142 crore in the year-ago period).

The bank is expecting a capital infusion of Rs 775 crore from the government in the current financial year. This will take the government's stake in the bank to 58 per cent from 57 per cent now.

On revising the interest rate savings bank deposits, Mr Mallya said the bank was working out the modalities of the product to be launched.

In the half-year ended September 30, 2011, the bank posted a 17 per cent increase in net profit at Rs 2,199 crore (Rs 1,878 crore in the corresponding period last year).

SOURCE: http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article2586791.ece