Banking

Bank of Baroda Q3 turns around to net profit of Rs1,196cr on lower provisioning

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Bank of Baroda reported -4.60% fall yoy in total consolidated revenues in the Dec-20 quarter at Rs22,070.52cr. Surprisingly, in contrast to what most other banks saw, the treasury income actually fell yoy. However, income from retail banking was up sharply even as income from corporate banking fell in Dec-20 quarter.


For the Dec-20 quarter, the operating profits were up 21.96% at Rs6,410.30cr. This growth in operating profits was on account of sharply lower interest costs in line with falling rates and surplus liquidity in the system. As a result, operating margin or OPM expanded from a level of 22.72% in Dec-19 to 29.04% in Dec-20 quarter.


Profit after tax (PAT) for the Dec-20 quarter turned around to Rs.1,195.96cr in contrast to a loss of Rs1,219cr in the Dec-29 quarter. This sharp turnaround happened on the back of sharply lower provisioning in the Dec-20 quarter at Rs4,619cr compared to Rs7,234cr in the Dec-19 quarter. Consequently, the PAT margins turned around to 5.42% in Dec-20.


Financial highlights for Dec-20 compared yoy and sequentially















Bank of Baroda

Rs in Crore

Dec-20

Dec-19

YOY

Sep-20

QOQ

Total Income (Rs cr)

₹ 22,070.52

₹ 23,134.67

-4.60%

₹ 21,853.79

0.99%

Operating Profit (Rs cr)

₹ 6,410.30

₹ 5,255.91

21.96%

₹ 5,509.79

16.34%

Net Profit (Rs cr)

₹ 1,195.96

₹ -1,219.04

N.A.

₹ 1,771.21

-32.48%

Diluted EPS (Rs.)

₹ 2.59

₹ -3.20

₹ 3.83

Operating Margins

29.04%

22.72%

25.21%

Net Margins

5.42%

-5.27%

8.10%

Gross NPA Ratio

8.48%

10.43%

9.14%

Net NPA Ratio

2.39%

4.05%

2.51%

Return on Assets

0.37%

-0.52%

0.59%

Capital Adequacy

13.60%

13.98%

14.00%

 

Key takeaways from the Dec-20 quarter results


  • For the Dec-20 quarter, the domestic advances grew by 8.31% while the credit deposit ratio improved to 81.5% in the quarter. The share of CASA deposits in the total deposit mix improved by 240 bps at 41% in the quarter.

  • The gross NPAs have fallen by nearly 200 bps to 8.43% on a yoy basis but this is still high in absolute terms. However, if the COVID stress accounts are also considered, then the gross NPAs would be closer to 9.5%.

  • While the bank has seen ROA above 0.35%, it is still lower than the banking median of 0.5%. The capital adequacy is just about 13.6% and that is likely to put pressure on the bank’s ability to expand its asset book.

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