Bank of Baroda shows 10% rise in net profits

MUMBAI: Higher provision for bad loans impacted the performance of Bank of Baroda but at the same time lower tax outgo helped the bank show 10% rise in net profit at Rs 1139 crore for the first quarter of fiscal year 2012-13.

The provisions for bad loans rose six fold to Rs 789 crore but provisions for taxes fell 47% to Rs 208 crore during the quarter under review. Higher provision was on account of a sharp increase in gross bad loans from Rs 3425 crore in June 11 to Rs 5319 crore in June 12, up 55%. Post provision bad loans as a percent of net advances stood at 0.65%.

According to Rikesh Parikh, vice president -markets strategy and equities at Motilal Oswal Securities, "Bank of Baroda operational numbers were in line, however increase in Gross NPA by 20% disappointed.

We maintain neutral view on stock... going forward improvement in assets quality would be key trigger for rerating the stock." the bank has restructured Rs 771 crore loan in the first quarter against Rs 5284 crore in the preceeding quarter

The net interest income was up 21% to Rs 2798 crore while other income was 20% to rs 771 crore. The net interest margin - difference between interest earned and interest expand- shrunk from 2.87% to 2.73%.

Giving media presenation, bank's cheif economist Rupa Rege Nitsure said, " Credit growth is expected to be muted.. however the bank will try to grow at 1-1.5% over the banking industry." The bank's credit rose 23% and deposit was up 22% on a year on year basis.