Bank of Baroda’s net profit for the quarter ended March rose a measly 2.3% to Rs 4,886 crore from Rs 4,775 crore a year ago as it made provisioning for the bankrupt Go First and for pension liabilities.

During the quarter, the state-owned lender provided Rs 550 crore for the grounded airliner and Rs 400 crore for pension liabilities. As a result, provisioning for bad loans jumped to Rs 1,485 crore in the March 2024 quarter from Rs 320 crore in the year-ago period.

Bank of Baroda has now fully provided for the Go First account, with the overall coverage being at Rs 1,750 crore. 

The lender was making provisions on the aviation account for some time now. However, it decided to take full provisions in this quarter, including the one-third portion which enjoys government guarantee.

Bank of Baroda managing director and CEO Debadatta Chand told reporters that the bank will make efforts to fully recover the dues from the aviation account, without naming Go First as the airliner. Chand said it would only be an upside on the account from here on.

It may take up to two years for the recoveries to come in, depending on the legal outcomes, he added.

Chand also said one-third of the bank’s exposure is covered by government guarantees under the ELCG scheme. 

Apart from the Rs 1,750-crore aviation account, a Dubai-based hospitality account of Rs 500 crore also slipped as non-performing asset (NPA) during the quarter due to liquidity challenges being faced by the company. 

Assets Quality

The overall asset quality of the bank, however, improved, with gross non-performing asset (NPA) as a percentage of gross advances falling to 2.92%, from 3.79% in the year-ago period and 3.08% a quarter ago. 

Net NPA for the March quarter inched down to 0.68% compared to 0.89% a year ago and 0.7% a quarter ago.

The bank’s provision coverage ratio stood at 93.30% and capital adequacy ratio (CAR) improved to 16.31% from 16.24% as of March 2023.

On the impact of the RBI restriction on BoB World, Chand said the hit can be seen in challenges faced on the accretion of low-cost current and saving account deposits, while overall transaction volumes were down 10%.

Dividend

The board also recommended a dividend of Rs 7.60 per equity share for FY2023-24, subject to approvals. It has fixed 29 June to 5 July as book closure dates for its 28th AGM and dividend payment. Shareholders having shares on the cut-off date of 28 June will be eligible for the payout.

Interests earned and expended

Interests earned during the fiscal fourth quarter ended March 2024 stood at Rs 29,583 crore, up 14% from Rs 25,857 crore a year ago. 

Interests expended stood at Rs 17,791 crore, up from Rs 14,332 crore reported in Q4FY23.

Deposits

Total domestic deposits grew 7.7% to Rs 11.28 lakh crore for the quarter ended 31 March 2024, from Rs 10.47 lakh crore a year ago. 

Advances

The bank’s domestic loan book stood at Rs 8.98 lakh crore, up 12.9% from Rs 7.95 lakh crore a year ago.

Retail advances jumped 20.7% to Rs 2.15 lakh crore, recording a 20.7% growth in Q4FY24. 

International advances stood at Rs 1.92 lakh crore, up by 10.6%.

NII and NIM

The bank’s net interest income (NII) in Q4FY24 also increased 2.3% to Rs 11,793 crore from Rs 11,525 crore, YoY. 

Global net interest margin (NIM) improved by 17 basis points sequentially and stood at 3.27% in Q4FY24 from 3.10% in Q3FY24.

Chand refused to offer a NIM outlook for the current financial year.

Full Fiscal

For the full financial year, the bank's net profit jumped 26% to Rs 17,789 crore from Rs 14,110 crore in FY23. 

Total income grew to Rs 1,27,101 crore for the full year from Rs 99,614 crore in the preceding fiscal.

NII stood at Rs 44,722 crore in FY24, an 8.1% uptick over FY23. The operating profit for FY24 was reported at Rs 30,965 crore, a 15.3% yearly gain.

Interest earned stood at Rs 1,12,606 crore, compared to Rs 89,589 crore in FY23.

For FY24, the interests expended stood at Rs 67,884 crore, up from Rs 48,233 crore.

Guidance

Chand said the bank will target a credit growth of 12-14% and deposit growth of 10-12% in FY25.

The recovery target is Rs 10,000 crore, including Rs 2,500 crore it expects from the accounts being resolved through the bankruptcy process.