BoB net up 88% on growth in retail loans, bank sets sights on higher fee income

economictimes.indiatimes.com:

Bank of Baroda (BoB) posted an increase in net profit riding on strong growth in retail loans and fee income even as new CEO Debadatta Chand set his sights on getting a larger share of corporate wallets this fiscal. Net profit increased to Rs 4,070 crore in the quarter ended June 2023 from Rs 2,168 crore a year ago, largely due to a 24% increase in net interest income (NII) supported by a brisk growth in retail loans, which grew by 25%. Fee income increased 18% year-on-year to Rs 1,507 crore in the quarter.

Net interest margin (NIM) increased 25 basis points year-on-year to 3.27%, largely as the bank benefited from an 182 basis point increase in yield on advances year-on-year. One basis point is 0.01 percentage point. «We expect to grow about 1 to 2 percentage points faster than the system this year with credit growth expected to be 14% to 15% and retail at 18% to 20%.

We expect NIM to be near 3.3% as increased automation will reduce costs,» said Chand, who took over as CEO in July. «In FY24, we will focus on fees and flows to get a larger share of company cash management and cash flows, which will lead to increased fee income through a sales led, relationship and engagement-based business model,» Chand added. Profits were higher despite a 16% increase in provisions year-on-year to Rs 1,946 crore as the bank set more money aside as a prudent measure.

Such excess provisions during the quarter totalled Rs 620 crore including a Rs 140 crore provision the bank took on the insolvent Go First Airlines account. Credit cost for the first quarter including prudential provisions stood at 0.70%. Chand said the bank is confident of maintaining credit costs below 1% this fiscal.