State-run Bank of Baroda aims to recover bad loans worth Rs 13,000 crore in this financial year that began April 1, an executive director of the lender said on July 30.
“Our total NPA (non-performing assets) recovery target for FY23 is around Rs 13,000 crores and we are on track to achieve that; we already recovered Rs 3,200 crore in the first quarter (April-June),” Ajay Khurana told reporters at a conference call post April-June earnings.
Khurana elaborated that the bank is expecting recoveries worth Rs 1,200 from accounts under the bankruptcy court, or the National Company Law Tribunal (NCLT). The total NPA book to be shifted to the bad bank or National Asset Reconstruction Company Ltd (NARCL) is about Rs 3,000 crore, but the amount to be recovered is yet to be assessed, he said.
Also read: Bank of Baroda reports Q1FY23 earnings: Here are top five key highlights
Business outlook:
When asked about the guidance on the bank’s headline asset quality numbers for FY23, Managing Director and Chief Executive Officer Sanjiv Chadha said that the bank is seeing a “progressive decrease” in gross and net NPA ratios.
Given that the corporate credit cycle is improving, Chadha said that the bank’s gross and net NPA ratios will continue to trend downwards, without clarifying on the number. Slippages, on the other hand, should be in the range of 1.5 percent to 2 percent of the book for FY23, he added. Chadha also said he expects credit costs to be in the range of 1.25 to 1.5 percent in this financial year.
Bank of Baroda’s net NPA ratio declined to 1.58 percent as of June 30, from 1.72 percent in March 31. Gross NPA ratio fell to 6.26 percent in June, down from 6.61 percent in March and 8.86 percent in the same quarter of the previous financial year.
In terms of credit growth, Chadha said he expects the banking industry to grow in the range of 10 to 12 percent. “Our own ambition will be to grow at industry or better, while making sure that we continue to improve our margins. That’s where our guidance rests,” said Chadha.
Chadha also said that the bank stands by its guidance of improving its net interest margins (NIMs) by 10 bps through the year.
Q1 results:
Bank of Baroda on July 30 reported a massive 79.4 percent year-on-year growth in standalone profit at Rs 2,168 crore for the quarter ended June 2022, despite fall in other income and pre-provision operating profit. The significant decline in bad loans provisions aided the bottom line.
Net interest income during the June quarter grew by 12 percent to Rs 8,838.4 crore compared to year-ago period, with credit growth at 18 percent and 10.9 percent YoY increase in global deposits.
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The bank further said the net interest margin at 3.02 percent for the June quarter contracted 6 bps QoQ and 2 bps YoY.
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