Bank of Baroda (BoB) on Wednesday reported a Rs 1,061-crore profit for the quarter ended December, against a net loss of Rs 1,407 crore a year ago, as provisions fell 45% year-on-year (y-o-y) to Rs 3,957 crore.
Net interest earnings (NII) – the distinction involving interest earned and interest expended – stood at Rs 7,749 crore, was up 9% y-o-y. The net interest margin (NIM) rose 11 basis points (bps) sequentially to 3.07%. The operating profit rose 12.8% y-o-y to Rs 5,591 crore.
The gross NPA ratio at the finish of December stood at 8.48%, down 66 bps sequentially. Net NPAs have been at 2.39%, 12 bps decrease than 2.51% at the finish of the September quarter.
BoB has produced contingent provisions of Rs 1,522 crore as a prudent measure. Total added provisions as on December 31 stood at Rs 1,891.5 crore. The provision coverage ratio (PCR) enhanced to 85.46% from 77.77% a year ago.
The management mentioned any worsening in the asset high quality is most likely to be led by the retail and MSME segments. Sanjiv Chadha, MD and CEO, mentioned more than the final two-3 months, there has been a sharp recovery and the major beneficiary of this recovery has been the corporate piece. The return of demand, income and pricing energy have accrued mostly to businesses and that adds resilience to the corporate book. Also, businesses have currently been by way of a phase of anxiety in current years. So, the ones that stay standing are more resilient and supply comfort to the bank.
“There will be stress in some parts of the book, but we have fair handle in terms of how much is there and what are the likely implications. But, in terms of the known-unknowns, things which have not fully played out yet that is where the MSME and retail are,” Chadha mentioned, adding, “Particularly, retail is the kind of book which was not being stress-tested. The kind of stress we are seeing now is something which is unprecedented, and therefore, it is likely that there may be some slippages which you cannot anticipate.”
It has turn into tougher to foresee or address retail anxiety, Chadha mentioned, mainly because a glance at the bank’s restructured book shows that 80% of it has come from corporates and the retail accounts for a pretty little figure. “Therefore, we have not been able to address whatever stress might be there at least through the restructuring mode – which means that either people will actually start paying up on time [or] there is a fair possibility that some stress will come through NPAs.”
At the similar time, BoB is not also worried about significant retail slippages mainly because unsecured retail loans constitute much less than 1% of its loan book. More than 70% of the retail book is produced up of residence loans.
Domestic advances grew 8.31% y-o-y to Rs 6.33 lakh crore at the finish of December. The existing and savings account (CASA) ratio enhanced 240 bps y-o-y to 41.2% in Q3FY21. Domestic deposits rose 6.74% y-o-y to Rs 8.35 lakh crore. The bank expects to clock a loan development of 7-8% in FY21 and raise Rs 2,000-4,000 crore by way of a certified institutional placement (QIP) in the existing quarter.
BoB’s shares ended up .07% at Rs 73.85 on the BSE.