MUMBAI - India's Bank of Baroda Ltd posted a 19.7 percent rise in second-quarter net profit on Tuesday as the lender made lower provisions for bad loans amid strong growth in retail banking.
Net profit rose to 4.25 billion Indian rupees ($57.73 million) in the quarter ended Sept. 30 from 3.55 billion rupees a year earlier, India's second-largest state-run lender by market capitalisation said in a statement.
Twelve analysts, on average, had expected a profit of 5.72 billion rupees, according to Refinitiv data.
Provisions for bad loans fell 16.6 percent from a quarter earlier to 14.67 billion rupees. Gross bad loans as a percentage of total loans stood at 11.78 percent at the end of September, compared with 12.46 percent in the previous quarter, and 11.16 percent last year.
The results come as Bank of Baroda prepares to merge with smaller rivals Dena Bank and Vijaya Bank, as the government attempts to tackle a pile of bad loans plaguing the banking sector and revive credit growth.
The merger plans, which have been approved by the banks' boards, have sparked some concerns, including that management may get distracted by the process. Such concerns have led to an almost 30 percent drop in Bank of Baroda's market value so far in 2018.
Interest earned rose 12.3 percent to 120.8 billion rupees, backed by a 20.4 percent growth in loans.
Bank of Baroda shares closed 2.7 percent higher on Tuesday before the results were announced.