Bank of Baroda is not alarmed by the ongoing saga surrounding the Adani Group.
The bank's exposure to the conglomerate is well below the prescribed limit for banks governing their exposure to big corporate borrowers, according to Sanjiv Chadha, managing director at Bank of Baroda.
The bank's exposure to the Adani Group is at 25% of the limit prescribed under the Reserve Bank of India's rules governing lenders' exposure to large borrowers. The rules dictate that the sum of all the exposure values of a bank to a group of connected counterparties must not be higher than 25% of the bank's available eligible capital base, that is, Tier-1 capital, at all times.
The bank's exposure to the group "has come down over the last three years," Chadha said during a press briefing for the bank's third quarter financial earnings on February 3. Back of the envelope math would peg Bank of Baroda's exposure to the Adani group at approximately Rs 5,500 crore.
About one-third of Bank of Baroda's exposure to the Adani Group is with regards to their joint ventures with public sector units or is secured by a guarantee from a public sector unit, Chadha said.
Bank of Baroda remains "completely reassured with the credit quality of the [Adani] group," Chadha said during the briefing. The bank has also not received any refinancing requests from the conglomerate, he added.
Chadha declined to indicate whether there are ongoing conversations between the bank and the Adani Group regarding the matter.
Net Profit Climbs 75%; Credit Cost At Record Low
Bank of Baroda's third-quarter net profit rose 75.4% year-on-year to Rs 3,853 crore, according to its exchange filing. Net profit was estimated at Rs 3,340 crore by analysts polled by Bloomberg.
The public sector lender's net interest income also grew by 26.5% year-on-year to Rs 10,818 crore.
Gross non-performing asset ratio for the bank improved by 272 basis points to 4.53% in Q3. Net NPA ratio also improved to 0.99% from 2.25% a year ago.
Total deposits for Bank of Baroda rose 17.5% from a year ago to Rs 11.49 lakh crore. Domestic CASA deposits grew by 7.6% year-on-year to Rs 4.17 lakh crore in the third quarter.
Bank of Baroda's credit costs for the quarter stood at a record low of 0.37%.
Disclaimer: Adani Enterprises is in the process of acquiring a 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
