Easing Liquidity Conditions Will Add 1-2% To Bank Of Baroda's Loan Growth, Says MD

The recent measures by the Reserve Bank of India to ease liquidity conditions in the banking system will add about 1-2% to Bank of Baroda's loan growth in the current financial year, said Managing Director and Chief Executive Officer Debadatta Chand.

"With liquidity back in the market now, I think we can upsize our growth by 1-2% higher. It all depends on how liquidity pans out this year," Chand said at the post-earnings conference here in Mumbai.

For the quarter ended March, domestic gross advances of the bank grew 13.7% on the year to Rs 10.21 lakh crore and domestic deposits lagged behind at 9.3% on the year to Rs 12.42 lakh crore.

Although the bank does not see any stress in the personal loans and microfinance institutions space, it aims to grow the personal loan book in line with its retail loan book at around 20% on year and not more than that.

On corporate loans, Chand said that the bank aims to grow its corporate loan book by 10% year on year in the current financial year and sees strong demand from renewables, roads, services and infrastructure space.

The bank's retail loan book grew 19.4% on year to Rs 2.14 lakh crore in the quarter ended March, followed by agricultural loans at 14.2% and MSME at 14.2%. The corporate loan book grew 8.6% on the year to Rs 3.79 lakh crore.

Chand believes that the second half of the financial year would be better as compared to the first because of the liability structure aligning with the lower cost of deposits and repricing. He expects pressure on margins to persist in the first two quarters because of the repo rate cuts.

While he refrained from giving overall guidance, he expects to operate net interest margins of the bank around 3% and said that the bank will be better placed to provide guidance in June.

For the quarter ended March, the domestic NIM of the bank was at 2.86%, lower than 2.94% a quarter ago.

When asked if the bank would make extra provisions for its exposure towards beleaguered Bhushan Power and Steel Limited, Chand said that it is a judicial process and that the committee of creditors will take a call at the right time.