State-run
Bank of Baroda reported a standalone net loss of Rs 1,047 crore in the quarter ended March 2021, as it shifted to a new tax regime.
The lender had reported a standalone profit-after-tax of Rs 507 crore in the year-ago period.
For the full year, net profit grew 52 per cent to Rs 829 crore from Rs 546 crore in FY20.
The bank booked a profit before tax (PBT) of Rs 2,680 crore during the quarter against a loss of Rs 1,723 crore in the year-ago period. PBT stood at Rs 5,556 crore for FY21 against a loss of Rs 1,802 crore in FY20.
“Given the fact that we had a PBT of Rs 5,556 crore (in FY21), we thought this is the right time to transit to a lower tax rate regime. But the movement to the new tax regime means we have to make a DTA (Deferred Tax Assets) adjustment, which was of the order of Rs 3,500 crore for the full year. Because of that, we are reporting an accounting loss of around Rs 1,000 crore in Q4 FY21.
“But for the DTA impact, we would have a profit after tax of Rs 2,200 crore in the last quarter,” the bank’s managing director and CEO, Sanjiv Chadha, told reporters.
Net interest income (NII) rose by 4.54 per cent to Rs 7,107 crore compared to Rs 6,798 crore a year ago.
Global net interest margin (NIM) improved to 2.72 per cent from 2.63 per cent in Q4 FY20 led by margin expansion in international business to 1.57 per cent in Q4 FY21.
Domestic NIM declined to 2.73 per cent as against 2.76 per cent in the fourth quarter of FY20.
Gross NPA ratio fell to 8.87 per cent as against 9.40 per cent and net NPA ratio to 3.09 per cent from 3.13 per cent.
Fresh slippages during the quarter stood at Rs 11,656 crore in the fourth quarter of FY21.
The lender’s slippage ratio declined to 2.71 per cent in FY21 from 2.97 per cent in FY20. Credit cost decreased to 1.68 per cent in FY21 from 2.35 per cent in FY20.
“Slippages will come down very significantly during the current year (FY22) despite the second wave. I would believe that we should be trending towards 2 per cent or lower in FY22,” Chadha said.
He expects credit costs to be in the range of 1.5-2 per cent in FY22.
Total provisions and contingencies declined 46.03 per cent to Rs 3,586 crore in the fourth quarter of FY21 from Rs 6,645 crore in the year-ago period.
Domestic advances increased by 4.91 per cent year-on-year led by domestic organic retail and agriculture loans which grew by 14.35 per cent and 13.22 per cent respectively.
Within retail loans, auto loans increased by 27.79 per cent year-on-year and personal loans grew at 27.21 per cent year-on-year.
Chadha said collection efficiency of the bank improved to 93 per cent during the March quarter. He expects some impact on collections during the April-June quarter of FY22.
He said despite the impact of the second wave, the bank’s corporate book is likely to remain strong.
“Last year, we were not confident about what would happen to the corporate sector. This time we can say with confidence that the second wave has largely left the large corporate businesses untouched. Even in terms of accounts which were relatively weaker and had got restructured, I do not believe we would need to revisit restructuring in most cases,” Chadha noted.
He, however, said the area of concern for the bank remains the MSME sector and to a lesser extent, the retail sector.
“What we have experienced is people, particularly in the retail segment, may fall back on some instalments but ultimately they pull through. Our assessment is that a very large percentage of our retail borrowers will pull through and, for a minority, we may need to do some kind of restructuring. But when it comes to MSME, the impact is larger and restructuring will also be larger,” he added.
Chadha expects a credit growth of 7-10 per cent in FY22 for the bank, if the economy witnesses a double-digit growth.
On capital raising plans for the current fiscal, he said a major portion of the funding requirement will get done through internal accruals.
The bank’s capital to risk (weighted) assets ratio (CRAR) stood at 14.99 per cent in FY21 against 13.30 per cent.
Speaking about the RBI’s announcement on an on-tap liquidity window of Rs 50,000 crore to support healthcare infrastructure, he said the lender has received a board approval on this and it is engaging with the companies.
The bank is targeting a 50 per cent growth in its loans to the healthcare sector.
“Our current exposure to the sector is Rs 7,000-8,000 crore. I would believe we should be looking at targeting a growth between Rs 3,000-5,000 crore there,” Chadha said.
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