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Goair, more pension provisions scupper Bank of Baroda numbers, logs in muted Q4 net

For the full financial year the bank’s net profit increased 26 percent to Rs 17,789 crore from Rs 14,110 crore in the preceding fiscal. Its total income increased to Rs 1,27,101 crore for the full year from Rs 99,614 crore in the preceding fiscal.

Screenshot 2024 05 11 104139MUMBAI: An additional Rs 550 crore provision for the bankrupt Goair along with another Rs 800 crore for pensions have scuppered the overall numbers of Bank of Baroda, which Friday reported a muted 2.3 percent growth in net income at Rs 4,886 crore for the March quarter.

For the full financial year the bank’s net profit increased 26 percent to Rs 17,789 crore from Rs 14,110 crore in the preceding fiscal. Its total income increased to Rs 1,27,101 crore for the full year from Rs 99,614 crore in the preceding fiscal.

The management led by chief executive Debadatta Chand told reporters that of the second largest state-run bank has now fully provided for the Goair account now taking the overall provisions to Rs 1,750 crore now (having already made Rs 1,200 crore earlier) but expressed confidence in “fully recovering the dues” claiming strong collaterals, even though the airline going by all indications is headed towards liquidation as no firm bids have come in so far apart from the fact that the regulator DGCA recently allowed lessors to take back their planes. That leaves only a land parcel in Thane as the only monetisable asset that the Wadias have. The land has a market value of around Rs 1,200 crore.

Chand also said one-third of the bank’s exposure is covered by government guarantees under the ELCG scheme. But having lost the planes now, what it can claim from this account is the moot point.

The bank was also hit by a Dubai based hospitality account of around Rs 500 crore which turned dud during the quarter, its chief financial officer Ian De Souza said.

Apart from these negative numbers, the overall asset quality of the bank improved during the quarter with gross non-performing assets (NPA) improving to 2.92 percent from 3.79 percent and net NPAs inching down to 0.68 percent from 0.89 percent a year ago, De Souza said.

As a result, provisions for bad loans and contingencies eased to Rs 1,302 crore from Rs 1,421 crore and the provision coverage ratio stood at 93.30. The capital adequacy ratio improved to 16.31 from 16.24 as of March 2023.

The net interest income, which is the money it earns from lending after paying the depositors inched up to Rs 11,793 crore from Rs 11,525 crore from last year. Also, the bank saw a compression in its net interest margin that fell to 3.18 percent from 3.31 percent last year. And Chand refused to offer a NIM outlook for the current year.

Total deposits rose to Rs 11.28 trillion, growing 7.7 percent yearly from Rs 10.47 trillion and advances grew by 12.9 percent from Rs 7.95 trillion to Rs 8.98 trillion, helping the bank cross the Rs 24 trillion balancesheet for the first time.

The bank refused to share sector loan details, especially the project loan books, also refused to share the annual IT spends except that it has been augmenting the same since the past few years and will continue to do so. This is significant as the bank was hit by an RBI ban six months ago for its poor It infra structure for its mobile app Bob World. The ban was lifted only this Wednesday.

The executive director Sanjay Mudaliar refused to quantify the impact of the ban on the revenue side, except admitting that Casa deposit collection was impacted to some extent.

Chand said the given its higher than needed RoE, the bank has enough capital and therefore not in a hurry to raise equity or debt capital this fiscal. On the Nainital Bank divestment he said the process is on and expressed the hope to complete the same at the earliest.

Total income rose to Rs 33,775 crore during the quarter as against Rs 29,323 crore in the same period last year.

The board recommended a dividend of Rs 7.60/share for the 2 Each Fully fiscal.

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