Why do you think the net profits of Bank of Baroda doubled in the Dec-21 quarter?

For the Dec-21 quarter, government owned Bank of Baroda reported 1.18% marginal increase in total revenues at Rs.22,073 crore on a yoy consolidated basis. On a sequential basis, the revenues of BOB were almost flat. In terms of key business verticals, BOB saw marginal growth in revenues from treasury operations and wholesale banking. However, there was a sharp fall in revenues from retail banking in Q3.

IN terms of the overall business volumes, the key domestic advances grew 3.36% yoy in Dec-21 quarter. Out of this the big boost came from retail advances which grew at a healthy 11.13%. On yoy basis, the CASA (current and savings accounts) ratio was 308 bps higher at 44.28%, largely indicative of lower cost of funds implied. Net interest income or NII for the quarter was up 14.38% yoy at Rs.8,552 crore showing good positive spread.

Let us turn to the operations. For Dec-21 quarter, operating profits were up 1.27% at Rs.5,980 crore. The Net interest margins or NIM improved yoy by 36 bps at 3.13%. BOB reported sharp 525 bps improvement in ROE at 14.37%. Cost of deposits tapered to 3.5% while the yield on advances was robust at 6.92%, ensuring healthy spreads The all-important Cost to income ratio stood at 50.47% with OPM flat at 27.09% in Dec-21 quarter.

Then what boosted the bottom line leading to doubling of profits. PAT was up by 106% at Rs.2,464 crore. This was triggered by a 35% fall in provisions for loan losses in the quarter at Rs.2,688 crore. Gross NPAs fell to 7.25% although still too high by absolute standards. HPAT margins improved sharply from 5.48% to 11.16% on a yoy basis. Net NPAs indicate that most of the pain in terms of asset quality may be already provided for.