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BoB clocks Rs 1.18 billion as Q3 net

Public sector's Bank of Baroda or BoB has posted a net profit of Rs 1.18 billion during the third quarter ended December 31, 1998. The net income for the period was Rs 13.39 billion.

The net profit for the nine-month period (April-December 1998) was Rs 3.46 billion. Operating profit for the quarter was Rs 2.51 billion.

The global deposits of BoB increased by 6.51 per cent to Rs 416.73 billion over March 1998. The cost of deposits declined to 7.46 per cent from 7.73 per cent in March 1998. According to BoB, the bank could reduce its average cost of deposits by offering the lowest rates in the banking industry. Net domestic advances rose by Rs 6 billion, while global credit reached Rs 201.68 billion.

A large shortfall in credit off-take was made good by the investments which rose by Rs 22.76 billion during the nine-month period. Income from treasury operations contributed to nearly 40 per cent of the bank's total income.

According to K Kannan, CMD of the bank, BoB recorded a lower business growth compared to the rest of the banking industry as it has adopted a ''conscious'' policy of consolidation rather than other factors.

Bank of Baroda is focussing on the accounts causing concern and which may turn potential non-performing assets as also gearing up the recovery machinery for upgradation of existing NPAs.

Although the actual NPAs will depend upon the general economic situation prevailing during the last quarter of the year, yet by focussing its attention on upgradation and recovery in coordination with other financial institutions, BoB hopes to maintain the net NPA ratio more or less at last year's level.

BoB has also made adequate provisions for the impending wage revision. The bank is also fully complying with AS-15 pertaining to the retirement benefits to its employees.

As regards the implementation of the recommendations of the Narasimham Committee II in respect of stricter asset classification and provisioning norms including provisions for standard advances, government-guaranteed advances and government securities, the bank has taken stock of the situation.

Kannan informed that due to the prudential provisioning policy adopted by the bank in the past, it is holding unmarked provisions which are sufficient to meet the entire additional provisions at one go.

However, whether to make these provisions in one stroke or phase it over the prescribed time frame, will be decided by the bank at the time of finalising the results for March 1999.

BoBb's position in respect of capital adequacy has been comfortable so far. However, in view of the increasing risk-weighted assets as also the need to contribute higher amounts to the capital of its subsidiaries, there is some pressure of this front.

BoB is considering to tap the debt market for raising subordinated debt of around Rs 5-6 billion to enable the bank to maintain its capital adequacy above 12 per cent.

UNI

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