Bank of Baroda net profit rises 41%; declares 60% dividend

Ranjit Hira
28 May 2003

BoB's growth in income at 5.9 per cent was much higher than the growth in expenses, which was restricted to 0.1 per cent, resulting in a growth of 31.1 per cent in the operating profit, which rose to Rs 1716.63 crore. Its net profit grew at 41.6 per cent to Rs 772.78 crore.

The bank's strict control over costs saw the cost-income ratio fall from 54.42 per cent last year to 48.99 per cent in 2003. There was also an appreciable improvement in financial ratios: the ratio of profits after tax to average assets (1.05 per cent), the net interest margin (2.94 per cent), earnings per share (Rs 26.11) and the book value (Rs 139.36).

The bank's focused emphasis on treasury operations has helped in boosting profits and increasing income. BoB's international operations in 16 countries also did well and contributed 11 per cent to the operating profit and 13.2 per cent to the overall business during the financial year ended March 2003.

BoB's board has also cleared a proposal to return the capital to the extent of Rs 91.90 crore to the central government, which will reduce the government's stake in the bank from 67 per cent to 51 per cent. The bank's total business stood at Rs 1,01,714.45 crore as on 31 March 2003.

BoB's priority sector advances rose by 9.1 per cent to Rs 11,274.58 crore, forming 46.24 per cent of the net bank credit. This is far above the mandatory level of 40 per cent. Another highlight of the bank's performance was a reduction in the net NPA (non-performing assets) ratio to 3.72 per cent from the 4.98 per cent recorded in the previous year.

New initiatives
BoB now plans to position itself as a "universal financial services provider," offering more customer-oriented products and services. In the domestic market, for suitable customer segmentation, each of its 2,753 branches will be classified under one of four main 'lines of business' (LOBs): corporate financial services (CFS), business financial services (BFS), personal financial services (PFS) and Baroda rural (BR).