In fiscal 1998, Bank of Baroda had posted a net profit of Rs 458.73 crore. The operating profit of the year was pegged at Rs 806.05 crore. In the first nine months of the current fiscal, the bank's operating profit was to the tune of Rs 451.36 crore.

The bank board met in Mumbai on Wednesday to take into account the unaudited results. A BoB release said that the bank has managed to bring down its cost of funds to 6.51 per cent from 6.86 per cent, thereby maintaining spreads at 3.24 per cent.

BoB will shortly tap the market with a Rs 500 crore to Rs 600 crore subordinated debt offering to boost its capital adequacy ratio to 12 per cent and grow its asset's portfolio.

Net domestic advances grew by Rs 600crore in the third quarter, bucking the negative trend at the end of previous quarter. Global credit rose to Rs 20,168 crore, up from the end-March '98 figure by Rs 365 crore or at a year-on-year (YoY) of 12.63 per cent. Advances for the period stood at Rs 41,673 crore, an increase of Rs 2,547 crore over end-March '98 or at a YoY of 14 per cent.

Income for the third quarter stood at Rs 1,339.69 crore (Rs 1,320.31 crore in the second quarter), expenditure at Rs 1,088.54 crore (1,088.98 crore) with operating profit at Rs 251.15 crore (Rs 231.33 crore) and provisions and contingencies at Rs 133 crore (Rs 129.62 crore).

Earning per share improved to Rs 15.60 at end-December '98 from Rs 13.04 at end-March '98.

Income stood at Rs 3,971.82 crore (Rs 4,714.20 crore), expenditure at Rs 3,230.46 crore (Rs 3,908.15 crore), operating profit at Rs 741.36 crore (Rs 806.05 crore) with provisions and contingencies at Rs 395 crore (347.32 crore).

The shortfall in credit growth was made good by investments whichincreased by Rs 2,276 crore, an increase of 17.1 per cent for the period with yield on investments up at 11.64 per cent from 11.53 per cent at end-March '98. Treasury operations were further consolidated and its contribution to total income increased to 39.72 per cent.

BoB has earmarked Rs 200 crore for technology upgradation for the networking of 850-and-odd metro and urban branches in a phased manner, and sees itself being Y2K-complaint by the end of this fiscal.

Insight

Return on assets trips

Bank of Baroda has chosen not to give comparative figures for the previous period. It has also ignored the need to give a break-up of interest income and other operating income as well as interest expended and other operating expenditure. The bank claims to have done well as its net profit has increased vis-a-vis the second quarter. Some of the banks have reported a fall in Q3 net profit vis-a-vis the earlier quarters but then BoB has not made additional provisions to meet the prudentialnorms on the line of the Narasimham panel recommendations, which has impacted Q3 profits of other banks. The return on assets, which is a measure of banks efficiency, has actually fallen marginally from 0.95 per cent to 0.92 per cent.