MUMBAI, November 16: Despite a depressed business atmosphere, Bank of Baroda is expected to record a gross profit of over Rs 420 crore in the first half of 1997-98. The bank had registered Rs 401 crore gross profit during the first half of 1996-97. The bank may also see a slight increase in non-performing assets (NPAs) during the first half due to the slowdown in industrial activity. The bank's NPAs as of March 31, 1997, were around 8.9 per cent of total assets.

Market sources say that at the anticipated level of profits, BoB will be second only to the State Bank of India.

The bank, which is expected to announce its first-half results on Monday (today) is not expected to come out with its net profit figures. It proposes to wait for the end of the year to figure out the provisioning needs and then announce the net profits.

SEBI norms call for the disclosures on net profits even with half-yearly results, but sources said that the Reserve Bank of India rules only call for annual provisioning.

Market sources say that the bank's total annual provisioning amount will be much less than the Rs 500 crore which it provided last year.

Despite the lowering of the lending rate twice during the first half, BoB is understood to have boosted its spread by 0.5 per cent from 3.4 per cent by realigning deposit rates and substantially increasing the non-fund based activities through treasury management.

For the first time the bank has also integrated its forex and money market operations during the first half.

The bank's advances during the period have gone up by five per cent (around Rs 600 crore) over March 1997 to reach Rs 17,000 crore. Apart from regular advances the bank's non-SLR credit is pegged around Rs 500 crore during the period. The bank has been able to deploy around Rs 250 crore of commercial paper at nine per cent. BoB's deposit base has gone up by 8-9 per cent (almost Rs 3,000 crore) over September 30, 1996. It had touched Rs 36,000 crore by the end of September 1997.

The bank, which has already brought 80 per cent of its securities portfolio under the current category, plans to raise this to 100 per cent by the end of this fiscal.

Thanks to lower interest rates this fiscal, the bank could book a substantial gain on its securities portfolio even after marking all its securities to market.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.