Bank of Baroda’s NII growth for the quarter remained strong at 23% YoY led by an improvement in margins. The NIM on domestic operations expanded to 2.89% as against 2.57% in Q1FY10. Growth in non-interest income ex-treasury remained muted at ~3% YoY; however core fee income posted a strong growth of 25%. Treasury profits for the quarter totalled Rs 2bn.
Provisioning expenses came in lower than expected. We believe a reversal of MTM losses on overseas CLN exposure and lower provisions than anticipated contained these expenses. Gross NPAs declined sequentially while in absolute terms net NPAs increased slightly. The delinquency ratio for H1FY10 stood at 1.04% (annualised). This suggests the possibility of higher write-offs during the quarter, which in turn could explain the slight drop in coverage ratio to 79% versus 81.7% in Q1FY10