Public sector lender Bank of Baroda (BoB) on Friday reported a net loss of ₹864 crores for the three months to June, owing to higher provisions for loans that are still standing. The bank's loss came as a surprise to the market as a Bloomberg poll of 12 analysts had predicted a profit of ₹514 crores. The bank had posted a net profit of ₹710 crores in the same period last year.
BoB's provisions rose 71% on a year-on-year (y-o-y) basis to ₹5,628 crores. Of this, the bank said ₹1,811 crore was towards standard accounts, including ₹996 crores for loans under moratorium where the asset classification benefit was granted. “Of the ₹1,811 crores, half is accounted for by the provisioning that has been done as per the RBI dispensation for assets that have not slipped on account of the moratorium. The other half of nearly ₹900 crore is on account of a government-guaranteed loan the bank has," said Sanjiv Chadha, chief executive, Bank of Baroda. The total amount due for this loan is ₹7,600 crore, of that about ₹5,600 crore is guaranteed by the government, said Chadha.
Its asset quality improved in the June quarter as net NPA ratio also declined 112 bps from the same period last year. The bank’s total loans under moratorium has declined to 21.4% at the end of the June quarter. This includes 5.74% of loans less than ₹1 million and 15.69% more than ₹1 million. Its net interest income, or the difference between the interest earned on loans and paid on deposits, increased 5% y-o-y to ₹6,816 crores in Q1 FY21. The bank's net interest margin (NIM), a measure of profitability, stood at 2.55%, down 8 bps from the sequential quarter.