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Bank of Baroda (BoB) has slipped into the red, reporting a standalone net loss of ₹864 crore in the first quarter ended June 30 due to a jump in provisions.
The public sector bank had reported a net profit of ₹710 crore in the year-ago quarter and ₹507 crore in the preceding quarter.
Sanjiv Chadha, MD and CEO, attributed the loss to additional heightened provisions of ₹1,811 crore made towards standard advances, including loans extended under the guaranteed emergency credit line.
The provision for standard assets in the reporting quarter also includes Covid-19 related provision of ₹996 crore.
Moratorium period
Chadha emphasised that the provision reserve built-up could get released over a period of time if the accounts continue to remain standard post the loan moratorium period.
Net interest income (difference between interest earned and interest expended) was up 5 per cent year-on-year (y-o-y) at ₹6,816 crore (₹6,497 crore in the year-ago quarter).
However, total non-interest income, comprising commission, exchange, brokerage, forex income, profit from sale of investments and recovery from technically written-off accounts, was down 5 per cent at ₹1,818 crore (₹1,916 crore).
Global advances were up about 9 per cent y-o-y to ₹7,36,547 crore. Within this, gross domestic and international advances growth was at about 8 per cent and 14 per cent, respectively.
The domestic advances growth came on the back of retail (excluding pool purchase) and corporate loan growth, which grew at about 13.50 per cent and 9 per cent, respectively. Agriculture advances were up about 10.50 per cent. MSME advance edged up 3 per cent.
Chadha said the quarter-on-quarter advances growth was almost flat under most loan categories.
Deposits were up 4 per cent y-o-y at ₹9,34,461 crore. Chadha said BoB is calibrating deposit growth to the expected advances growth.
The BoB chief observed that net interest margin, which came down to 2.55 per cent against 2.62 per cent in the year-ago quarter, continues to be under pressure.
Deposit and loan growth target
BoB has set a deposit and loan growth target of 7 to 8 per cent each in FY21.
Chadha underscored that the amount of term loans under moratorium to total loan book has come down from 65 per cent as of March-end 2020 to 21 per cent now.
The slippage ratio (fresh NPAs/standard advances at the beginning of the period) came down to 1.64 per cent against 3.56 per cent in the year-ago quarter.
Recovery was muted at ₹554 crore during the reporting quarter against ₹2,066 crore in the preceding quarter.
SL Jain, Executive Director, said the bank is eyeing recoveries aggregating ₹13,000 crore in FY21, including about ₹3,000 crore via the National Company Law Tribunal route; ₹2,500 crore through one-time settlement; and ₹1,500 crore via SARFAESI route.
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