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Bank of Baroda reports Rs 864 crore loss in Q1; 21% of book is under moratorium

Updated : August 11, 2020 10:12 AM IST

Net interest income during Q1FY21 rose 4.91 percent to Rs 6,816 crore from Rs 6,497 crore, YoY.

The bank's total loans under moratorium now stand at 21 percent for term loans.

Public sector lender Bank of Baroda reported Rs 864 crore loss for the quarter ending June, as provisions went up by 71 percent over last year. The bank had posted a profit of Rs 710 crore in the same quarter last year.

Net interest income during Q1FY21 rose 4.91 percent to Rs 6,816 crore from Rs 6,497 crore, YoY.

Global net interest margin (NIM) stood at 2.55 percent and domestic NIM at 2.63 percent compared with 2.62 percent and 2.73 percent, respectively, during the same period of the previous financial year.

The bank set aside Rs 5,628 crore in provisions for the first quarter of FY21 against Rs 3,285 crores in the same quarter last year. Of this, the bank made Rs 3,458 crores provision for its bad loans, and Rs 1,811 crore for its standard advances.

Moratorium and COVID-19 Impact

The bank had offered moratorium to all eligible customers in the first round with an “opt-out” option initially, but changed its policy during the quarter. Bank of Baroda said it is now offering an “opt-in” option to those who are eligible and wish to avail of the moratorium.

Around 21.4 percent of the bank’s term loan book is currently under moratorium, the management said in a concall with the media. Of this, 15.7 percent is by borrowers with over Rs 10 lakh loan outstanding who were given an option to opt-in during the quarter. The remaining 5.7 percent is by borrowers with less than Rs 10 lakh loans outstanding, who were given an option to opt-out.

“If we are to apply the two-installments received definition for the moratorium, it (book under moratorium) would further fall to 17 percent,” said the bank’s CEO Sanjiv Chadha.

The bank holds Rs 1,806 crores of provision buffer against any potential impact from COVID19, including an additional Rs 996 crores it provided during the quarter. Some key highlights from its quarterly performance below.

Asset Quality

The bank reported a marginal improvement in asset quality over the previous quarter. Gross Non-Performing Assets (NPAs) ratio for the June quarter stood at 9.39 percent versus 9.40 percent in Q4FY20. Its Net NPA ratio stood at 2.83 percent compared to 3.13 percent in the previous quarter.

The bank added Rs 3,002 crores of bad loans during the quarter, out of which fresh slippages stood at Rs 2,740 crores. The bank expects fresh additions to bad loans to remain muted for the rest of the year, its management said in a post-earning call with the media. The bulk of these slippages, over Rs 2100 crores were from its international book.

The bank has included all stressed accounts with over dues in its ‘watchlist’, which stood at Rs 13,000 crores as of June 30, 2020.

Advances & Deposits

Its domestic deposits grew by a mere 3.52 percent, and its total deposits by 4.35 percent over the previous year, and now stand at Rs 9.34 lakh crore. Its domestic CASA ratio stood at 39.49 percent and global CASA at 36.24 percent as of the June quarter.

The bank said this was because it wanted to align its deposit growth with the advances growth it anticipates. “Our interest rate cut matches with the best in the business,” said Sanjiv Chadha when asked why the bank is not seeking growth in deposits. “We want Credit-Deposit ratio at the optimum level, and we are looking at 7-8 percent growth in assets,” Chadha said, adding that the bank would grow deposits accordingly.

“Deposit growth has been muted because we adopted a calibrated approach…we want to get the best quality of deposits,” he said.

The bank’s domestic advances grew by 7.62 percent on an annual basis and its international gross advances grew 13.93 percent. Home loans grew by 10.6 percent, auto loans by 25.98 percent, education loans by 14.07 percent, corporate loans by 9.16 percent, and MSME by 3.09 percent over last year.

On Friday, the shares of Bank of Baroda ended 0.21 percent higher at Rs 48.55 on the BSE.

Read all earnings here.

Published : August 10, 2020 06:44 PM IST

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