State-owned Bank of Baroda on Friday reported a distinct profit after tax of Rs 1,779 crore for the quarter ended March 2022, helped by higher interest income and the fall in bad debts.
The lender had incurred a loss of Rs 1,047 crore in the year-ago period.
In the last financial year, the bank had a net profit of Rs 7,272 crore as against Rs 829 crore in 2020-21.
“It simply came to our notice then. Our thinking was that we should grow according to the market and also protect our margins because liquidity was plentiful and corporate debt was under pressure in terms of price.
Sanjeev Chadda, managing director and CEO of the bank, said, “We have increased our (global gross) loan book by about 8.9 percent year on year.
Towards liability, he said the bank wants to ensure that the growth of its deposits is consistent with the growth of assets so that there is no excessive liquidity interference.
“So while maintaining that discipline, we have been able to keep our CD (credit deposit) ratio at two percentage points higher at the end of the year than at the beginning of the year. In terms of deposits, the growth has come from the CASA ratio which has gone up to 44 per cent, ”he said.
Net interest income (NII) rose 21.2 per cent to Rs 8,612 crore in the fourth quarter of FY22 from Rs 7,107 crore in the year-ago period.
Net interest margin (NIM) stood at 3.08 percent in the fourth quarter, up 36 bps from the same quarter in FY21.
Net interest margin (NIM) has risen 32 basis points (bps) to 3.03 percent in 22 years.
Gross non-performing assets (NPAs) fell to Rs 54,059 crore in the last quarter from Rs 66,671 crore in the year-ago period.
Gross NPA ratio has increased from 8.87 percent to 6.61 percent.
The net NPA ratio has risen to 1.72 per cent from 3.09 per cent. Slippage for the year was 1.61 percent.
“We are pointing out that there is a secular tendency to improve the quality of corporate credit. This is something we’ve seen surviving over the past year despite the effects of COVID, and we hope it continues.
“So, it should mean that the slippage should come down further. We need to exercise more restraint when it comes to credit spending. For the last year, GNPA, net NPA has come down almost quarterly and we need to see further improvement this year as well, ”said Chada.
Fresh slips stood at Rs 4,514 crore in the reporting quarter. It recovered bad debts of Rs 2,136 crore in the quarter and upgraded NPAs to Rs 1,112 crore.
The provision coverage ratio stood at 88.71 per cent with technical right of account and 75.28 per cent in Q4FY22 excluding 2 accounts.
In the same quarter of the previous financial year, the total provision increased by 5.1 per cent to Rs 3,736 crore as compared to Rs 3,555 crore.
The provision for bad loans increased by 13.2 per cent to Rs 5,200 crore from Rs 4,593 crore.
The Capital to Risk (Weighted) Asset Ratio (CRAR) has increased from 14.99 per cent in March 2022 to 15.98 per cent in March 2022. Tier-1 stood at 13.49 per cent (general equity Tier-1 stood at 11.74 per cent, an additional 11.74 per cent, 1.75 per cent) and Tier-II stood at 2.49 per cent as of March 2022.
Lenders will look to raise Rs 2,000-2,500 crore this year by issuing additional Tier 1 bonds, Chada said.
The bank’s internal advances increased by 6.7 per cent to Rs 6,84,153 crore as on March 31, 2022, from Rs 6,41,076 crore as on March 31, 2021.
The personal loan portfolio grew by 108.1 per cent, led by a retail loan portfolio of 16.8 per cent, auto loans by 19.5 per cent and education loans by 16.7 per cent.
The agricultural credit portfolio grew by 10.3 per cent year-on-year to Rs 1,09,796 crore and the MSME portfolio grew by 5.4 per cent to Rs 96,863 crore.
As of March 31, 2022, corporate growth has increased by 3.1 percent to Rs 3,00,693 crore.
Chadda expects a healthy growth in the corporate loan book in the current financial year.
“We were committed to not narrowing our margins so we made sure we focused on areas where margins were good. I hope that as the RBI moves towards normalizing interest rates, it will be possible to keep both growth and margins intact. I hope the growth of corporate debt will be better this year, ”he said.
Lenders expect debt growth of 10-12 percent in fiscal year 2023, he said.
According to him, it could go for the listing of his life insurance joint venture – India First Life Insurance – where it has a 65 per cent stake in the current financial year.
The bank’s scrap ended 1.15 per cent lower at Rs 94.95 on the BSE.