MUMBAI, January 30: Bank of Baroda's flow of resources upto January-end, including credit expansion and non-statutory liquidity ratio (SLR) investments, has touched Rs 3,000 crore, almost double the flow during 1996-97.The bank's PLR-related domestic credit is pegged at Rs 1,300 crore till January. With another disbursement of Rs 500 crore through commercial papers and Rs 432 crore through non-convertible debentures, the bank's business has expanded substantially, said sources.
The bank has deployed another Rs 400 crore through its overseas operation. "I think with another two months to go before the end of the fiscal, the bank will be in a comfortable position from the business point of view," said a top official of the bank, adding that the current market turmoil following the tight money policy by the Reserve bank of India will not affect the bank's balance sheet growth. Though the bank had mobilised around Rs 500 crore through 15 per cent convertible debentures (CD) last week, it has stoppedborrowing through the high cost CD. However, in view of the severe competition for resources, the bank is paying a higher rate in terms of the market to retain existing deposits.
With a deposit growth of Rs 5,700 crore (14.5 per cent growth over March 1997) till January, the bank does not need any more funds for its operation for the current fiscal. With the continuous monitoring of liquidity, the bank has been able to improve its spread during the second half.
The decline in income from traditional areas has been compensated by income generated through investments, resource management and treasury operation, sources said. The cost of deposits has gone down to 7.77 per cent from 7.92 per cent, while the cost of resources has reduced to 6.82 per cent from 7.15 per cent during the year. However, the yield on funds has also come down to 10.17 per cent from 10.54 per cent during the same period. The bank's yield on investments has grown to 11.97 per cent from 11.15 per cent. Speaking about the year-endperspective, officials said that though the non-performing assets (NPA) of the bank will grow marginally, in percentage terms it will contract as the credit portfolio has expanded substantially.
However, the bank's net profit may not grow proportionately with the operating profit during the year as the board might prefer to take off other financial parameters. The bank had recorded a net profit of 276.53 crore and had a gross profit of Rs 435 crore during the half year.
The possible adverse yield curve will not affect the bank much as it has already marked to market 80 per cent of its securities portfolio during 1996-97, said the sources. The bank which has declared a 26-per cent dividend last year despite low business, may increase its dividend this year.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
