Bank Of Baroda’s Profit Misses Estimates, Operating Profit At 6-Month High
Net profit in the September quarter soared to Rs 552 crore from Rs 124.5 crore year-on-year.
Public sector lender Bank of Baroda posted a 343.5 percent jump in profit for the second quarter, but still missed street estimates by 10 percent.
Net profit in the September quarter soared to Rs 552 crore from Rs 124.5 crore in the corresponding quarter of the previous financial year, the bank said in a stock exchange filing. The consensus of analyst estimates tracked by Bloomberg stood at Rs 609.8 crore. A robust 36 percent rise in other income aided profit growth.
Net interest income in the second quarter increased 5.6 percent to Rs 3,426 crore from Rs 3,244.5 crore in the same quarter last year. The Bloomberg consensus of analyst estimates had pegged the figure at Rs 3,379 crore.
The bank’s operating profit rose 15.1 percent over last year to Rs 2,690 crore, the highest in the last six quarters.
Asset Quality Performance
Asset quality deteriorated during the quarter. Gross non-performing assets rose 20 basis points to 11.35 percent from 11.15 percent sequentially but remained stable in absolute terms at Rs 42,949.3 crore.
Net non-performing assets decreased to 5.46 percent from 5.73 percent during the quarter.
The bank has made provisions worth Rs 1,630.5 crore in the second quarter, 18.6 percent lower than the Rs 2,004.1 crore provisioned in the first quarter. The government-owned lender said it had made additional provisions of Rs 829 crore in the quarter on review of NPA advances portfolio.
Total restructured standard assets saw a nominal drop to Rs 13,860 crore. Total Stressed Assets (GNPA + Restructured Standard Assets) as a percentage of gross advances rose 20 basis points sequentially to 15.0 percent.
The bank has approved SDR proposals of Rs 2,370 crore during the quarter, it said in its filing.
Other Parameters
The bank’s loan book saw a de-growth of 14.6 percent over last year’s quarter on account of planned and structured rundown of assets and liabilities.
The key positive is the improvement in the provision coverage ratio which stood at 63.0 percent as compared to 58.2 percent last year.
FY17 will largely be tepid. They (the bank) will be very cautious in expanding their loan book and even if they do, they will do it very gradually across sectors. The stock seems fairly valued at least from the perspective of the next two quarters, so unless they show significant improvement or traction for the next couple of quarters, significant upgrade for Bank of Baroda will not come through.Mayuresh Joshi, Analyst, Angel Broking