Bank of Baroda, a leading public sector bank registered a profit of 60.4 percent in the quarter ended September 30. This jump in profit is mainly attributed to its income from lending, treasury and fee based services.

The bank registered a net profit of Rs.634 crore in the July-September quarter up from Rs. 395 crore in the corresponding quarter the previous year.

Apart from higher income, lower provisions also aided the bank to increase its profit. Its provisions and contingencies dropped 36.1 percent to Rs. 116.33 crore. Despite this, BoB managed to maintain a loan loss coverage ratio of 79.29 percent of its total NPAs. RBI in its quarterly policy review held on 27 October has asked banks to increase provisioning requirements.

In May this year the bank lowered deposit rates by 0.25-0.75 percent. This helped in reducing the cost of funds.

There was an improvement in the bank's asset quality during the quarter with the gross non performing assets (NPAs), as a percentage of total lending declining to 1.30 percent from 1.62 percent in September last year. Net NPA dropped from 0.43 percent a year ago to 0.27 percent.

BoB's net interest margin (NIM) decreased slightly from 2.92 percent a year ago to 2.89 percent but was still higher than the industry average of 2.5 percent. NIMs of banks had started decreasing with sharp cuts in the policy rates by RBI.

According to the bank's managing director, M D Mallya, credit growth for bank is likely to be strong in the latter half of the fiscal.