Bank of Baroda, country’s third-largest public sector bank, plans to raise Rs 2,000 crore during the year to fuel its expansion programme.

“In the first quarter, the bank has already raised bonds worth Rs 1,000 crore, and we have a headroom to raise another Rs 2,000 crore during the year. We have been managing our liabilities and assets very prudently, so we still have sufficient funds. But for our growth, there will be continuous requirements,” said MD Mallya, chairman and managing director of Bank of Baroda.

The bank reported a 25.4 per cent rise in net profit to Rs 859.16 crore for the first quarter of 2010-11. Core net interest income (NII), which rose by 54 per cent to Rs 1,857.99 crore during the quarter, boosted the bank’s profits. “NII growth came primarily from the management of liabilities.”

The bank’s interest expenses increased by just 1.5 per cent during the quarter, despite a higher interest outgo on savings deposits and higher cash reserve ratio requirements by the RBI. The bank’s total income grew 12.9 per cent to Rs 5,344.20 crore even though the non-interest income declined 12.2 per cent in the first quarter on account of lower trading gains of Rs 127.94 crore as against a profit of Rs 256.58 crore in the year-ago period.

The total business of the bank expanded by 29.3 per cent to Rs 4,40,262 crore at the end of the first quarter. Total deposits of the bank increased by 28.2 per cent to Rs 2,54,668 crore while total advances increased by 30.7 per cent to Rs 1,85,595 crore during the quarter. Current account and savings account (CASA) grew at 27.5 per cent and formed 35.23 per cent of the total deposits. During the quarter, the bank had Rs 643 crore of non-performing assets.