Bank of Baroda expects to maintain 15-20% loan growth going forward

30 Jan 2019

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It was a good third quarter for Bank of Baroda, with an improvement in its gross non-performing assets (NPAs) led by the highest ever write-off by the bank in any quarter.

Loan growth at 12.3 percent was highest in four quarters led by 21.1 percent domestic loan growth. The domestic loan growth has been more than 15.5 percent for five quarters in a row. Deposits at Rs 6.1 lakh crore were up 6.5 percent year-on-year and 0.6 percent quarter-on-quarter. The net interest margins (NIMs) at 2.69 percent were at four quarter high led by strong loan growth.

PS Jayakumar, MD and CEO, Bank of Baroda, in an interview with CNBC-TV18, said the lender would be able to maintain a 15-20 percent loan growth going ahead subject to macro-economic environment.

“Given the fact that we have the kind of investments in distribution, products, process, technology, etc ... we can continue to leverage on those investments," he said.

He is also confident of further improvement in the net interest margins as 30 percent of the book is international, which continues to see an uptick. While on the domestic side, he said as "we continue to increase the provision coverage ratio, the net NPA numbers keep falling".

Talking about merger with Dena Bank and Vijaya Bank, he said, “I would put it this way that in general the experience is that the revenue side synergies are much easier to accomplish than the cost side synergies. The cost to income ratio can be balanced by a more buoyant revenue.”

"All in all we would have fire power to make progress in the first 2-3 quarter ... once the businesses stabilise and we can show that merger is working out well, we can go to market and raise funds." “I expect stock to be rerated maybe in three quarters after merger and am fairly confident we will be able to pull this whole thing through,” he added.

About Bank of Baroda Bank of Baroda

(“The Bank”) established on 20th July 1908 is a State-owned banking and financial services organisation, headquartered in Vadodara (earlier known as Baroda) in Gujarat, India.

Bank of Baroda is India’s leading public sector bank with a strong domestic presence supported by self- service channels. The Bank’s distribution network includes 8,200+ branches, 10,000+ ATMs, 1,200+ self-service e-lobbies and 20,000 Business Correspondents. The Bank has a significant international presence with a network of 100 branches/offices of subsidiaries, spanning 20 countries. The Bank has wholly owned subsidiaries including BOB Financial Solutions Limited (erstwhile BOB Cards Ltd.), BOB Capital Markets and Baroda Asset Management India Ltd. Bank of Baroda also has joint ventures for life insurance viz. IndiaFirst Life Insurance Company Limited and India Infradebt Ltd., engaged in infrastructure financing. The Bank owns 98.57% in The Nainital Bank. The Bank has also sponsored three Regional Rural Banks namely Baroda Uttar Pradesh Gramin Bank, Baroda Rajasthan Gramin Bank and Baroda Gujarat Gramin Bank.

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