Public sector lender Bank of Baroda (BoB) on Friday reported a net profit of ₹737 crore for the three months to September, almost five times higher than the same period last year on the back of higher other income.
The bank's profit was higher than ₹165.4 crore estimated by a Bloomberg poll of 19 analysts.
BoB's other income was buoyed by trading gains of ₹942 crore in the quarter, compared to ₹138 crore in the same period last year.
Its net interest income, or the difference between the interest earned on loans and paid on deposits, increased 10.09% to ₹7,028 crore in Q2 FY20. The bank's net interest margin (NIM), a measure of profitability, stood at 2.81%, up 19 basis points (bps) on a sequential basis.
On 1 April, 2019, Bank of Baroda merged with two other state-owned banks, Dena Bank and Vijaya Bank.
Gross non-performing assets (NPAs),as a percentage of total advances, were at 10.25% in the September quarter and net bad loan ratio was at 3.91%.
The bank saw slippages of ₹6,001 crore in the second quarter of FY20. These were primarily driven by a few chunky accounts, the bank's management told reporters on Friday.
"Loans to two non-banking financial companies (NBFCs), one textile and one plastic company have slipped in the quarter. The exposure to these two NBFCs is ₹2,000 crore" said S L Jain, executive director, Bank of Baroda.
Jain added that the bank's total real estate exposure is at ₹15,000 crore and exposure to troubled mortgage lender Dewan Housing Finance Corp Ltd (DHFL) is about ₹2,000 crore.
The bank reported provisions of ₹4,209 crore in the September quarter, up 6.9% year-on-year (Y-o-Y), of which ₹3,425 crore was for bad loans.
The public sector lender's domestic advances grew 2% Y-o-Y to ₹5.33 trillion, led by retail loan growth of 16.2% Y-o-Y. It's domestic deposits grew 4% Y-o-Y to ₹7.83 trillion.
"Our focus will be on retail loans and in the corporate segment, we will try to have 80% of our corporate loans in AAA and AA-rated companies," said Murali Ramaswami, executive director, Bank of Baroda
Following the end of PS Jayakumar's term last month, the bank does not have a chief executive.
It's capital adequacy ratio under Basel III norms stood at 12.98% at the end of the September quarter.
On Friday, shares of the bank lost 2.39% to close at ₹93.80 on the BSE, while the benchmark Sensex index lost 0.81% to close at 40,323.61 points.