Moneycontrol BureauPublic sector lender Bank of Baroda's July-September quarter earnings disappointed street on Friday. Profit has seen a massive degrowth of 88.7 percent to Rs 124.48 crore during the quarter compared to Rs 1,104 crore in year-ago period, impacted by higher provisions on slippages.
Net interest income, the difference between interest earned and interest expended, declined 4.6 percent to Rs 3,244 crore from Rs 3,401 crore during same period. Advances growth for the quarter was 7.55 percent year-on-year.
Numbers were much below analysts' estimates. According to average of estimates of analysts polled by CNBC-TV18, profit was estimated at Rs 1,088.4 crore (down 1.4 percent) and net interest income at Rs 3,540 crore (up 4.1 percent) for the quarter.
Other income (non-interest income) grew by 15.4 percent year-on-year to Rs 1,144 crore while operating profit declined 2.7 percent to Rs 2,337 crore compared to year-ago period despite fall in employee cost.
Asset quality deteriorated during the quarter. Gross non-performing assets as a percentage of gross advances increased 143 basis points sequentially & 224 bps on yearly basis to 5.56 percent and net NPA rose 101 bps quarter-on-quarter & 134 bps yewar-on-year to 3.08 percent in quarter gone by.
In absolute terms, gross NPA was at Rs 23,710 crore, showing an increase of 37.3 percent on sequential basis and 81.6 percent on yearly basis. Net NPA too jumped 51 percent quarter-on-quarter and 91 percent year-on-year to Rs 12,798 crore in July-September quarter. The bank says slippages for the quarter stood at Rs 6,816 crore, increased significantly compared to Rs 1,685 crore in preceding quarter. It restructured loans assets worth Rs 22,930 crore during the quarter against Rs 25,541 crore in year-ago period.
Provisions for bad loans shot up 113 percent year-on-year to Rs 1,892 crore during the quarter and on sequential basis, that saw massive 215.3 percent increase.
Non-performing loan provisioning coverage ratio was 58.23 percent as of September 2015, falling drastically compared to 64.94 percent in June quarter.
Capital adequacy ratio (as per BASEL III norms) improved to 12.51 percent during the quarter compared to 11.98 percent in preceding quarter and 12.19 percent in year-ago period.
Tax expenses declined 21.9 percent to Rs 321 crore for the quarter against Rs 411 crore in same quarter last fiscal.
Reacting to the news, independent market expert Hemindra Hazari too says the new CEO and bad numbers go together. The top boss perhaps feels it is better to start on a cleaner slate. However, he adds that the economy is not responding too well and neither are companies, so banks which are a mirror image of the economy will reflect just that and it should be expected.
Prakash Diwan of prakashdiwan.in says it is very clearly a clean up act. Whatever shows on the price today will be the bottom for the stock.
At 09:32 hours IST, the scrip of Bank of Baroda was trading at Rs 151.25, down Rs 8.25, or 5.17 percent after falling as much as 10 percent in early trade on the BSE.
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