India's second largest state-run lender, Bank of Baroda expects at least Rs 15,000 crore of recoveries from bad loans, while additional slippages to the non-performing asset (NPA) category is likely to ease as the bank enters into the new financial year as a merged entity.
"We don't see an increase in the net NPA number at all. We expect the recoveries to be higher than slippages," PS Jayakumar, MD & CEO, Bank of Baroda said after announcing the fourth quarter results on May 22.
He added that the additional slippages were expected to be lower than Rs 15,000 crore and the net NPA ratio for the merged entity is likely to be below 3 percent in 2019-20. Recoveries in 2018-19 were at Rs 7,939 crore.
On April 1, Bank of Baroda merged with Dena Bank and Vijaya Bank to form the country's fourth-largest lender and second largest state-run lender.
The Bank posted a net loss of Rs 991.37 crore in the fourth quarter, against a net loss of Rs 3,102.34 crore in the same period last year, on account of higher provisioning. The bank's net NPA ratio was at 3.33 percent, while as a merged entity, it was at 3.65 percent as on March 31, 2019.
The bank made total provisions of Rs 5,550 crore on bad loans in the January-March quarter, as compared to Rs 7,053 crore in the same period previous financial year. This includes provisioning of Rs 950 crore against Bhushan Power & Steel and Alok Industries. The bank's provisioning coverage ratio (PCR) including technical write-offs was at 78.68 percent in March 2019.
For the merged entity, Jayakumar said that the provisioning is 'reasonably conservative' across all three banks.
Total slippages in the fourth quarter amounted to Rs 3745 crore that included loans of Rs 2882 crore given to IL&FS. This is lower than slippages of Rs 12,569 crore in the same quarter previous financial year.
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