According to Hemindra Hazari of Nirmal Bang it was far worse than the expectations.
State-owned Bank of Baroda 's (BoB) today announced its fourth quarter numbers. It’s net profit tanked more than 32 percent year-on-year to Rs 1,029 crore. According to Hemindra Hazari of Nirmal Bang it was far worse than the expectations.
Some of the small ones did have a positive surprise like a Syndicate Bank. However, he believes that by and large the trend is that asset quality is a major issue. He expects asset quality in the coming quarters also to deteriorate.
Below is the verbatim transcript of his interview to CNBC-TV18
Q: What did you think of the Bank of Baroda asset quality?
A: It is far worse than what we had estimated because their restructured loans even exceed our FY14 estimates. So, their asset quality has deteriorated sharply. We had by and large expected deterioration in asset quality. We had a sell on Bank of Baroda, but all I would say that it is worse than our expectations.
Q: Did any of the PSU banks surprise you positively at all?
A: Some of the small ones did have a positive surprise like a Syndicate Bank. However, by and large the trend is that asset quality is a major issue. We expect asset quality in the coming quarters also to deteriorate.
All though some managements are indicating that the problems could be over by the Q4, as of this moment we do not share that view.
Q: Bank of Baroda itself what is your overall comment that you would be worried about asset quality- when do you think things can turn around going by the trajectory of the numbers?
A: Definitely, we are concerned with asset quality. I think the foreign loan growth of Bank of Baroda is particularly what has concerned us. We have seen tremendous growth under the previous leadership, on foreign loans.
We expect lot of these assets really to be of underlined domestic companies. We already know that the domestic companies have not been doing very well. So, I would expect further restructuring and further non performing assets (NPA) in Bank of Baroda overseas loan portfolio.
Q: Bank of India also releases any numbers today- any expectations or do you expect asset quality to be a problem there as well?
A: In all banks I would expect asset quality to be a concern. You are seeing that more visible in PSUs, Historically, we have not seen it in private sector which has always been surprising to me. Asset quality will deteriorate every where. If any bank, private sector or government which shows much better asset quality I would like to probe those accounts ever further.