BoB reports net loss of Rs 1,047 crore due to one-time tax reversal of Rs 3,837 crore

The third-largest public sector lender, Bank of Baroda, on Saturday reported a net loss of Rs 1,047 crore in the March quarter (Q4FY21) due to one-time hit of Rs 3,837 crore taken by the lender on account of deferred tax asset (DTA) reversal. Excluding the impact of one- time hit, the bank would have reported profit after tax of Rs 2,267 crore in the March quarter, compared to Rs 507 crore net profit in Q4FY20.The profit before tax (PBT) of the lender remained at Rs 2,680 crore for the March quarter, compared to a loss of Rs 1,723 crore in the same period last year. Its operating profit increased 27% year-on-year (y-o-y) and 12% sequentially to Rs 5,591 crore. The bottom-line also got support from lower provisioning for stressed assets. Total provisions other than tax and contingencies declined 46% y-o-y to Rs 3,586 crore, but increased 4% sequentially. Overall, the net profit for the whole financial year (FY21) increased 52% to Rs 829 crore, compared to Rs 546 crore in FY20.

MD and CEO Sanjiv Chadha said there would be some stress on micro, small and medium enterprises (MSME), but it will be addressed by the restructuring window given by the regulator. The lender acknowledged that second Covid wave has further added to uncertainties and its impact will depend on various regulatory measures.

The bank’s net interest income (NII) increased 5% y-o-y to Rs 7,107 crore, but declined 8% sequentially on account of the waiver of compound interest in moratorium accounts. Last year, RBI had announced a six-month moratorium for all term-loan borrowers in the wake of Covid impact on borrowers. Supreme Court had directed lenders to waive compound interest of the borrowers during the moratorium period.

The domestic net interest margin (NIM) of the lender declined 23 basis points (bps) quarter-on-quarter (q-o-q) and 3 bps y-o-y to 2.73%.

The asset quality improved during the March quarter. Gross non-performing assets (NPAs) ratio of the lender improved 76 bps to 8.87%, compared to reported proforma gross NPAs of 9.63% in the previous quarter. Similarly, net NPAs ratio improved 27 bps to 3.09% from 3.36% in the December quarter. Lenders had reported NPAs on a proforma basis during the December quarter due to a standstill order from the apex court on declaring NPAs.

Advances grew 2% y-o-y and 1% q-o-q to Rs 7.51 lakh crore. Retail lending portfolio increased 14% y-o-y to Rs 1.2 lakh crore.

Deposits grew 2% y-o-y and 1% q-o-q to Rs 9.67 lakh crore. Domestic current account savings account (CASA) grew 16% y-o-y to Rs 3.68 lakh crore. The capital adequacy ratio (CAR) remained at 14.99% with CET1 ratio of 10.94% at the end of March 2021. The bank is planning to raise additional capital of Rs 5,000 crore. “ The board has approved raising of additional capital up to Rs. 5,000 crore comprising Rs 2000 cr of common equity capital by various modes including QIP, in suitable stages and Rs 3000 cr by way of additional tier I capital/tier II capital instruments,” the lender said.

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