IBEF: July 26, 2019
Public sector lender Bank of Baroda on Thursday said that its June quarter net profit for the merged entity stood at Rs. 710 crores (US$ 103 million), compared to a loss of Rs. 49 crores (US$ 7 million) in the same period last year on the back lower provisions.
On 1 April 2019, Bank of Baroda merged with two other state-owned banks, Dena Bank and Vijaya Bank. This is the first quarterly earnings report of the merged bank.
On a standalone basis, the bank had posted a net profit of Rs. 528 crores (US$ 0.075 billion) in Q1FY19.The bank's profit was lower than Rs. 857 crores (US$ 0.12 billion) estimated by a Bloomberg poll of 17 analysts.
Net interest income -- difference between interest earned on loans and that paid on deposits -- increased 2.61 per cent to Rs. 6,496 crores (US$ 0.92 billion) from Rs. 6,331 crores (US$ 0.90 billion) in the corresponding period last year.
Gross non-performing assets (NPAs), as a percentage of total advances, were at 10.28 per cent in the June quarter and net NPA ratio stood at 3.95 per cent in the June quarter.
The bank saw slippages to the tune of Rs. 5,583 crores (US$ 0.79 billion) in the first quarter of FY20. The largest account that slipped in the quarter was an IL&FS road asset of over Rs. 400 crores.
P.S. Jayakumar, managing director and chief executive, Bank of Baroda, said the slippages were reasonably consistent with industry levels. "Recovery has been a tad lower, even as some of it came through in July. It will be a much better Q2 from a recovery standpoint," said Jayakumar.
He added that the bank has a watchlist of Rs. 16,440 crores (US$ 2.35 billion) as of 30 June 2019, of which Rs. 10,700 were from Bank of Baroda standalone entity, Rs. 2,884 from erstwhile Dena Bank and Rs. 2,856 crores (US$ 0.40 billion) from Vijaya Bank.
Provisions during the quarter decreased 14.22 per cent year-on-year to Rs. 3,566 crores as against RS. 4,167 crores (US$ 0.59 billion) in the year-ago quarter.
The bank has signed 12 intercreditor agreements (ICA) with other lenders and has an exposure of Rs. 4,200 crores (0.60 billion) to stressed non-banking finance companies (NBFCs). However, it did not specify to how many non-banks these exposures were to.
The bank's capital adequacy ratio stood at Rs. 11.5 per cent and plans to raise Rs. 6,000 crores (US$ 0.85 billion) in the near term as growth capital.
The bank, Jayakumar said, has identified around 1,400 locations where there are more than one branch of the merged entity and the bank is working on a rationalisation plan for these.
On Thursday, shares of the bank lost 0.68 per cent to close at Rs. 109.55 apiece, while the benchmark Sensex index lost 0.04 per cent to close at 37,830.98 points.
Blurb: Bank of Baroda has reported a net profit for the merged entity of Rs 710 crore (US$ 103 million) at the end of the June quarter, compared to a loss of Rs 49 crore (US$ 7 million) in the same period last year.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.