Bank of Baroda Q2 profit jumps 36% to Rs 6,532 crore on NSE stake sale - The

The bank earned Rs 1340 crore from the sale of its partial stake in NSE in September.The gains from the NSE stake together with a 48% jump in recovery from written off accounts made up for a 9% drop in fee base income during the year. A 9% increase in net interest income (NII) to Rs 13,026 crore also supported profits. Net interest margin dropped to 2.74% from 2.96% a year earlier.BoB however hiked provisions during the quarter as the bank decided to use the windfall gains from the NSE stake sale to buffer up its balance sheet.

A Rs 1300 crore prudential provision to deal with the expected credit loss (ECL) provision rules which are likely to kick off in April next year. The bank also added another Rs 300 crore contingency provisions to deal with volatilities in investments during the quarter.CEO Debadatta Chand said the bank has hiked its credit and deposit growth forecast for the year by a percentage point each noting the strong growth that the bank recorded in the first two quarters.

“We now expect credit growth to be between 13% to 15% for the current fiscal and deposit growth 11% to 13% for the current fiscal. Growth in the first half has been strong and with the business momentum we have in retail, MSMEs and corporate books we should do better in the busy season,” Chand said.Total loan book of the bank increased 18% year on year to Rs 15.12 lakh crore led by 40% growth in international advances mostly likely due to the leverage offered by the bank for FCNR (B) deposits.

Aggregate deposits increased 17% to Rs 14.83 lakh crore. The bank collected $8.08 billion of FCNR (B) deposits through the special scheme, 70% of which was from the leverage provided by the bank.Retail Advances grew 19% led by auto loans (28%) and mortgage loans (20%), while loans to MSME grew 21% year on year. Corporate loan growth was relatively slower at 6% but Chand said the bank has a pipeline of Rs 60,000 crores.