Bank of Baroda Q4 results: Surge in bad loan provisions lead to Rs 1,047 cr loss

The bank said some of its customers may fall behind by a few installments due to the lockdown imposed by various states, but was hopeful that they would be able to bounce back. The Reserve Bank of India’s restructuring programme should help it contain the damage arising from the shrinkage in business activity, its chief executive said.

“Our prognosis is we should see a similar pattern this year as well, some customers may fall behind by one or two instalments but they would get regularised soon,” Sanjiv Chadha, chief executive told reporters in a call. “Fortunately the RBI has given us the recast tool so we can use it to address stress that could emanate from the retail and MSME sector.”

The net loss for the last quarter was contrary to analysts expectations of profits of Rs 1042 crore. The bank had reported a profit of Rs 506.6 crore in the same period last year. The government owned bank did not declare any dividend for the fiscal year gone by.

In its press statement the lender said the losses were due to reversal of deferred tax assets (DTA) after it moved to new tax structure.

Bank of Baroda’s net interest income or the difference between interest earned and interest expended increased 4.5% to Rs 7,107 crore for the March quarter versus Rs 6,798.2 crore in the year earlier period.

The bank saw improvement in its gross bad loan metrics on a year basis with the non performing asset ratio coming in at 8.87% as the end of March quarter against 9.40% a year earlier. Sequentially the ratio deteriorated as the lender had reported GNPA ratio of 8.48% in the December quarter.

“We expect further improvement in credit costs and slippage ratio, the bank is well positioned for sustained growth across all areas like the overall business, the quality of the book, profitability and strengthening capital position going forward,” said Chadha.

While overall provisions were down, those for bad loans rose nearly 44% to Rs 4593 crore for the quarter ended March against Rs 3191 crore a year ago. Fresh slippages were at Rs 11,656 crore against Rs 3050 crore a year ago.

Domestic advances grew at a tepid pace of 4.91% led by domestic organic retail and agriculture loans which grew by 14.35% and 13.22% respectively. Within retail loans, auto loans increased by 27.79% and personal loans grew at 27.21% on a year basis.

The lender said its board has approved raising of additional capital up to Rs 5,000 crore comprising of Rs 2,000 crore of Common Equity Capital by various modes including QIP and Rs 3000 crore by way of AT1 bonds.