Overview of Bank of Baroda Q2: Shares of Bank of Baroda fell 1.5% to 104.75 rupees each on BSE during Wednesday’s intraday trading ahead of the July-September quarterly results (T2FY22), expected later today.
As of 10:02 am, shares of the public lender were trading down 0.7% to 105.6 rupees per share, compared to a 0.6% decline in the BSE Sensex index. The BSE Bankex index, meanwhile, was down around 1%.
Analysts largely expect the lender’s second quarter performance to remain subdued amid limited loan portfolio expansion, high slippages and squeezing margins.
Movements in the stressed asset pool, management comments on collections, the restructuring pool, ECGLS lending behavior and credit demand will be key controls, they say.
Here are the predictions of the main brokers:
The Japan-based brokerage firm expects the lender’s loan portfolio to grow only 0.2% year-on-year to Rs 671,500 crore, from Rs 669,900 crore reported at T2FY21. Also sequentially, growth is set at 0.5% at Rs 668,400 crore.
“We take into account a 15 basis point margin contraction in QoQ to 2.89%, resulting in net interest income (NII) growth of 0.4% year-on-year (-4.5% QoQ ) at Rs 7,538.5 crore, ”the brokerage said in a report on expected results. .
NII was Rs 7,507.5 crore in the quarter of last year and Rs 7,819.7 crore in Q1FY22.
In addition, operating profit is expected to fall 10% yoy and around 13% qoq to Rs 4,987.8 crore.
“We expect operating profit before provision (PPOP) to decline by 12.6% quarter-on-quarter due to additional provisioning for an increase in family obligations, which could lead to increased overhead costs for employees. We are projecting a provisioning cost of 162bp, “he said.
This global brokerage has one of the most optimistic projections for the bank. The loan portfolio, for example, is pegged at Rs 688,400 crore, up 8% year-on-year and 2% QoQ.
It would also lead to NII growth of around 9% year-on-year and 3.3% sequentially to Rs 8,154 crore.
“Ultimately we expect net profit to increase 9% year on year and over 51% QoQ to Rs 1,831.5 crore, supported by stable operating profit of Rs 5,599, 2 crore, ”he said.
PAT was Rs 1,678.6 crore in the corresponding quarter of the previous fiscal year and Rs 1,208.6 crore in the first quarter of fiscal 21. Likewise, operating profit was Rs 5,551. 8 crore and Rs 5,707.4 crore in the respective quarters.
Analysts at the brokerage expect the lender’s net profit to fall 35% year-on-year (9.3% quarter-on-quarter) to Rs 1,096.7 crore, driven by higher provisions.
They forecast a 35.6% year-over-year increase in loan loss provisions to Rs 4,071 crore, from Rs 3,001.6 crore in T2FY21. Sequentially, however, that would be a drop of 1% from Rs 4,112 crore.
“Slippages should stay under control, but Agri / SME slippages need to be monitored,” they said in their earnings forecast report.
Motilal Oswal Financial Services
According to the brokerage’s expectations, high credit costs could keep earnings under pressure while the trajectory of operating expenses, given the increase in pension costs, will be observed.
That aside, slippages can also remain high, which keeps asset quality under pressure. In absolute terms, the gross non-performing assets (GNPA) ratio is set at 8.6% for the quarter, compared to 8.9% quarter-on-quarter and 9.1% year-on-year.
The NNPA, meanwhile, is estimated at 2.9% compared to 3% QoQ and 2.5% YoY.
Overall, net profit is expected to fall 42% year-on-year to Rs 980 crore while operating profit is expected to decline around 4% year-on-year to Rs 5,350 crore.
The brokerage expects overall growth to remain subdued; however, the cash recovery of Rs 320 crore from DHFL is expected to provide support income.
Slippages, he said, in the SME / Retail and Mid-corporate portfolio could remain high.