IDBI Bank share rises 2.4%, Bank of Baroda plunges 9.9 % on loan woes

MUMBAI: IDBI Bank and Bank of Baroda posted contrasting results on Thursday leaving investors confused about the extent of the bad loan problem still plaguing the banking system.

Both banks posted higher year-on-year profit growth helped by tax write-backs and higher treasury income, but that is where the similarities end.

Credit growth was muted for Bank of Baroda and loan recovery figures fell far short of what analysts were expecting.

BoB was able to recover only Rs 1,081 crore, a weak start when you factor in their guidance of Rs 10,000 crore recovery for the full year. Gross and net non-performing assets were higher over the last year and the previous quarter, and profit growth and both deposits and advances growth fell. Profits were helped by trading income, lower interest expenses and the slightly higher interest it charges on loans than other banks.

BoB shares crashed 8.95 per cent to Rs 145.95 on Thursday as investors digested yet another quarter of disappointing earnings.

IDBI Bank, however, shone with a much improved performance. Profit grew 78.36 per cent to Rs 241 crore helped by a tax write-back, lower interest expenses and higher commission fees. Deposits and advances increased 5.26 per cent and 6.37 per cent, respectively, reflecting the bank’s attempts to improve its CASA ratio.

Net interest income rose 14.20 per cent toRs 1,706 crore. IDBI Bank shares rose 2.4 per cent toRs 68.35 on Thursday. Gross NPA rose 9.6per cent and net NPA 10.9per cent quarter on quarter.