Dubai: The slowing economy and high interest rates have hit Indian public sector banks (PSBs) hard with their asset quality taking a beating in the past two to three years. Bank of Baroda (BoB) has managed to keep its asset quality tight.
Though the bank’s non-performing assets (NPAs) saw a jump in the December quarter, the NPA ratio is still low among public-sector banks. Its delinquency ratio has fallen from 2.7 per cent in the March 2013 quarter to 1.8 per cent in the December quarter.
The bank, with a strong capital adequacy ratio of 13 per cent and a tier-one capital ratio of more than nine per cent, is keen on using its balance sheet strength to expand its international business while keeping pace with about 17 per cent projected domestic credit growth.
“At the moment we are strongly capitalised,” said S S Mundra, chairman and managing director of the bank. “But as the book size expands at an average of 18 per cent a year and the Basel III compliance kicks in, we too will be required to look for additional capital. But fortunately we have some time on our hand.”
The strong credit quality of BoB’s international loan book (27-30 per cent of total loans) supports its overall asset quality.
