Mumbai: Bank of Baroda reported a 24 per cent growth in standalone net profit mainly due to a 23 per cent increase in other income which includes fees and bad loan recoveries and helped by a fall in provisions as bad loans decreased year on year.
Net Profit of Rs 2,088 crore in the quarter ended September 2021 from Rs 1,679 crore a year earlier. Other income increased to Rs 3,579 crore from Rs 2910 crore last year.
The rise in other income made up for the tepid growth in net interest income (NII) which is the main income the bank earns by giving loans. NII increased 2 per cent to Rs 7566 crore largely as the cost of deposits fell to 3.52 per cent in September 2021 from 3.99 per cent a year ago and covered up for a 6 per cent fall in total interest earned.
A 2 per cent year-on-year fall in provisions also helped the bank’s bottom line. Provisions fell to Rs 2754 crore from Rs 2811 crore a year ago and was lower than the Rs 4005 crore reported in June 2021.
Gross NPA ratio improved to 8.11 per cent in September 2021 from 9.14 per cent a year ago.
CEO Sanjiv Chadha said the worst of slippages was over and asset quality trends will only become better.
“We had guided for credit costs of 1.5% to 2% with likely trends on the lower of the range as we are sticking to our guidance this year … credit costs have come down, recoveries have improved and margins have been steady,” Chadha said.
Recoveries increased to 3,246 crore including 1,246 crore from written-off accounts and higher than the total recoveries of 1,981 crore reported in the same quarter last year. As with other major banks, BoB was helped by a 877-crore recovery from DHFL.
Total loan book increased 2% to 7.34 lakh crore from 7.19 lakh crore a year earlier mainly due to a 10% rise in retail loans led by a 33% growth in personal loans and a 23% growth in auto loans. Corporate loan book remained flat after a 10% drop in the first quarter ended June.
Chadha said though the corporate growth has been tepid for more than a year, he expects some demand to come in the second half of the fiscal as sectors like cement, steel, green energy and electric vehicles expand capacities.
Retail mortgages make up 64% of the bank’s 1.35 lakh total retail loans with high growth businesses like personal loans making less than 5% of the book.
Chadha expects the bank’s loan growth to be close to double digits this year led by growth in retail loans and the bank will continue to grow the high-risk auto and personal loan businesses with caution using credit appraisals, and will have a preference for its own customers than outsiders.
Kotak Mahindra Bank on Wednesday said it has completed the acquisition of a nearly 10 per cent stake in KFin Technologies for around Rs 310 crore. In September, the bank had informed about subscribing to 1,67,25,100 equity shares in KFin Technologies Pvt Ltd for a consideration of approximately Rs 310 crore, translating into an equity shareholding of 9.98 per cent.
“We would like to inform you that the bank has completed the said transaction on November 10, 2021,” Kotak said in a regulatory filing.
General Atlantic-backed KFin Technologies is an investor and issuer serving platform that provides financial technology solutions across asset classes like mutual funds, alternatives, insurance, and pension.
It serves 25 mutual funds and has a 35 per cent share in equity assets under management.
Kotak stock closed at Rs 2,076.80 apiece on BSE, down 0.97 per cent from the previous close. PTI KPM BAL BAL
The global rating company provided a new grade of B2, a notch higher than its previous level B3.
The bank, which was once counted among top rated private sector lenders, remains in the high-yield category that has higher funding costs compared to lenders in the investment grade.
The rating company changed Yes Bank’s outlook to ‘positive’ from ‘stable’ earlier.
“Moody’s has upgraded Yes Bank’s issuer rating to B2 from B3 because its funding and liquidity have substantially improved in the past year, which have strengthened depositor and credit confidence in the bank,” it said late Tuesday.
It also promoted Yes Bank’s Baseline Credit Assessment (BCA) and Adjusted BCA to b3 from caa2, a two-notch improvement.
The outlook change reflected Moody’s expectations of further improvement to the bank’s credit profile, driven by a clean-up of legacy stressed assets and/or improvements to its capital and profitability.
“The rating action also reflects the fact that despite the significant economic challenges since the onset of the pandemic, Yes Bank’s asset quality has deteriorated only modestly while its capital has remained stable,” the rating agency said.
About one and a half years ago, Moody’s Investors Service downgraded Yes Bank’s rating following the Reserve Bank of India imposing a 30-day moratorium that prevented the lender from making payments to its creditors.
The bank had also gone through a management change with former co-founder Rana Kapoor now facing several legal charges.
Yes Bank’s deposits increased over 65% between 30 September 2021 and 31 March 2020, after Indian regulators rescued the bank. Its deposit quality has also improved; current and savings account and retail term deposits represent 45% of total funding as of 30 September 2021, compared with just 31% as of 31 March 2020.
The bank has reduced its share of market funding, while its average liquidity coverage ratio (LCR)improved to 118% as of 30 September 2021 from 40% as of 31 March 2020.
Yes Bank’s asset quality remains weak and continues to pose risks to its profitability and capital, Moody’s said.
Yes Bank shares were a tad lower to close at Rs 13.03 on BSE Tuesday.
The Reserve Bank of India has set up a big data centre that can access data from banks’ systems, according to a report. The data centre will help prevent scams like PMC Bank, where data was masked by using dummy accounts. DHFL too had used a similar method to hide borrower accounts and stress.
The RBI is currently working with commercial banks and plans to extend it to urban cooperative banks.
The RBI plans to deploy more analytical functionalities on data from supervised entities to improve the overall functioning of the sector and improve data sanctity, the report said.
The expanded RBI data centre with new functionalities was to be completed in 2020 but was delayed due to Covid, which has now been completed and testing of system-to-system integration has been done with some banks.
PMC Bank scam
A total of 44 ‘borrowal accounts in the Punjab and Maharashtra Co-operative Bank, belonging to HDIL and its affiliates, had been ‘masked,’ with a view to hide these from the core banking system of the bank, the EOW has learnt.
Due to this, the loan default scam perpetrated in the bank over the years went unnoticed during successive audits.
Though access to the other accounts (saving, current or loan) was available to the employees of the bank as well as auditors, access to the aforesaid 44 accounts was masked by using special encrypted passwords.
The masking was done to hide the huge non-refunded personal loans allotted to HDIL promoters, Rakesh and Sarang Wadhwan. The outstanding borrowals in two personal accounts belonging to Rakesh and Sarang Wadhwan amounted to Rs 2008.62 crore and Rs 137.16 crore, respectively.
During the reporting quarter, Bank of Baroda’s global gross advances rose 2.10% on year to Rs 7.34 lakh crore. Retail loans, that accounted for Rs 1.23 lakh crore of total loans, grew 10.3% on year, while corporate loans amounting to 2.73 lakh crore grew 0.3%.
State-owned Bank of Baroda on Wednesday reported a 24.4% year-on-year rise in net profit for the quarter ended 30 September to `2,088 crore, backed by higher other income. The lender had reported a net profit of Rs 1,209 crore in the June quarter.
The lender’s other income, which includes fees from third party products, treasury income and others, rose 23% on year to Rs 3,579 crore. During the reporting quarter, Bank of Baroda’s global gross advances rose 2.10% on year to Rs 7.34 lakh crore. Retail loans, that accounted for Rs 1.23 lakh crore of total loans, grew 10.3% on year, while corporate loans amounting to 2.73 lakh crore grew 0.3%.
In a post earnings conference, managing director and chief executive officer Sanjiv Chadha said since big businesses are returning to normalcy and companies are starting to make maximum capacity utilisation, the outlook for corporate credit growth looks positive. Chadha said the bank’s credit growth will likely be in the range of 7 to10% in the current financial year, in line with the industry.
On the liabilities side, the bank’s total deposits stood at Rs 9.59 lakh crore as on September-end, higher 0.5% on year. Global low-cost current account and savings account (CASA) ratio stood at 41.70% as on September 30, higher than 36.71% a year ago.
As a result of sluggish loan growth, BoB’s net interest income—difference between interest earned and expended—grew 2.1% on year to Rs 7,566 crore in the reporting quarter. Global net interest margin, on the other hand, grew to 2.85% in the reporting quarter from 2.78% in the corresponding period a year ago. The lender’s asset quality improved in the reporting quarter with the gross non-performing assets (NPAs) falling to Rs 59,504 crore as on September-end from Rs 65,698 crore a year ago. The bank saw fresh slippages of Rs 5,223 crore in the reporting quarter.
In percentage terms, Bank of Baroda’s gross NPA ratio improved to 8.11% as on September-end from 9.14% last year. Net NPA ratio, however, rose 32 basis points on a yearly basis to 2.83% as on September 30.
The bank’s management stated that its total restructured loan book stood at Rs 20,500 crore as on September-end and that only 20% of these accounts were under the doubtful special mention account-1 and special mention account-2 category.
The provision coverage ratio, including technically written off accounts, stood at 83.42% as on September-end, lower than 85.35% a year ago. Further, the bank’s credit cost, as on September-end, stood at 1.46%. The bank has maintained 1.5%-2% credit cost guidance for the current financial year. Bank of Baroda’s capital adequacy ratio stood at 15.55%.
The company currently receives over 60% of its collections via digital mode where customers can pay via digital wallets or a company-generated hyperlink.
By Piyush Shukla
The Covid-19 pandemic has accelerated the pace of customer acquisition through digital channels by non-banking finance companies (NBFCs). Several non-bank lenders have focused on digital channels for loan applications and even the approval process, which helped with business continuity.
“Digital platforms not only enabled business continuity during the lockdown, but has also helped us process larger volumes with greater speed and efficiency. Our increased focus on online loan processing during the lockdown coupled with our quick response helped our services stay seamless and uninterrupted,” Renu Sud Karnad, managing director (MD) at Housing Development Finance Corp (HDFC), told FE.
Karnad said by September-end, HDFC received 89% of new loan applications through the digital channels, a substantial increase than below 20% pre-pandemic. The non-bank lender has witnessed 16.44% average traffic spike on its website post March 2020, while there has been a 35.58% hike in online generated leads. As on September 30, HDFC’s outstanding loan book, after sell down of loans, stood at Rs 5.21 lakh crore, up 10% year on year.
Mid-sized non-banking finance company Shriram City Union Finance is also focusing higher on digital means to increase loan and deposit business. The company currently receives over 60% of its collections via digital mode where customers can pay via digital wallets or a company-generated hyperlink.
Speaking to FE, Shriram City Union Finance MD and CEO YS Chakravarti said the NBFC’s fixed deposit programme, launched nine months earlier, has enabled it to garner Rs 20 crore of deposits every month consistently for the last three months. The NBFC is now targeting Rs 100 crore of deposits each month by the next year. The fixed deposit programme is a totally digital and paperless journey for the customer, Chakravarti said.
On the asset side, currently, Shriram City Union Finance is generating 20,000-22,000 loan applications online per month, which is significantly higher than than 2,000 applications received digitally before March 2020. Chakravarti said the company expects 25% of overall loan volume over the next 12-18 months to come from the digital mode.
The NBFC’s website presently witnesses more than 3 lakh clicks each month, over 10 times higher than 20,000-30,000 clicks it received before the pandemic hit India. As on September-end, Shriram City Union Finance’s total assets under management stood at Rs 30,425 crore, up 10.5% on year.“We are making in-roads on the digital front, with a focus on digitising the post disbursal service where we have automated a host of self-service features for our customers,” Chakravarti said.
To ensure social distancing and safe contact with customers during the pandemic, gold loan financier Muthoot Finance launched its ‘Loan @ Home’ mobile application in July 2020, and, to date, it recorded about 10,000 downloads. The NBFC’s gross loan assets under management, as on September-end, stood at Rs 55,146.8 crore, up 17% on year.
According to most non-banks, they are tailoring tech products according to customers’ needs and to reach newer geographies. “We integrated disruptive technologies such as Natural Language Processing (NLP) and Machine Learning (ML). This integration has enabled us in offering seamless services through our website chatbot by understanding and analysing user intent, effectively respond to user interaction and there by deliver an enhanced user experience,” Karnad said.
Further, HDFC also launched ‘HDFC Now’ – a completely digital top-up loan for existing customers and started offering content on its website in six regional languages, including Hindi, Marathi, Tamil, Telugu, Malayalam and Kannada. While digital lending enables faster disbursements, there are also concerns that need tackling to safeguards customers’ interest.
In a speech on October 22, Reserve Bank of India deputy governor M Rajeshwar Rao said, “We were and are inundated with the complaints of harsh recovery practices, breach of data privacy, increasing fraudulent transactions, cybercrime, excessive interest rates and harassment.”
He added that governance is more of a cultural issue than a regulatory issue. Therefore, NBFCs must create a culture of responsible governance where every employee feels responsible towards the customer, organisation and society. “Good governance is key to long-term resilience, efficiency and might I add, survival of the entities,” he said.
Moody’s Investors Service has upgraded Yes Bank’s ratings and changed its outlook to positive, reflecting its expectations of a further improvement in the lender’s credit profile due to clean-up of legacy stressed assets and improvements to its capital and profitability.
The rating agency has upgraded Yes Bank’s foreign currency issuer rating and long-term foreign and local currency bank deposit ratings to B2 from B3, it said on Wednesday.
Further, it has also upgraded Yes Bank’s Baseline Credit Assessment (BCA) and Adjusted BCA to B3 from Caa2 and has changed the outlook on the bank’s ratings where applicable to positive from stable.
Liquidity improves
“Moody’s has upgraded Yes Bank’s issuer rating to B2 from B3 because its funding and liquidity have substantially improved in the past year, which have strengthened depositor and credit confidence in the bank,” it said, adding that the rating action also reflects the fact that despite the significant economic challenges since the onset of the pandemic, Yes Bank’s asset quality has deteriorated only modestly while its capital has remained stable.
Asset quality remains weak
It, however, noted that the private sector lender’s asset quality remains weak and continues to pose risks to its profitability and capital.
Given the positive outlook, Moody’s could upgrade Yes Bank’s ratings if the bank’s asset quality and/or capital materially improve. However, the agency could downgrade the bank’s ratings and BCA if its capital deteriorates significantly because of a strain on its asset quality, or if its funding and liquidity deteriorate.
Aadhar Housing Finance and UCO Bank have entered into a co-lending agreement to offer home loans at competitive interest rates.
“The aim is to reach out to a large section of society to provide easy, convenient, and efficient home finance solutions to customers from the economically weaker, lower and middle-income groups,” they said in a statement on Wednesday.
Deo Shankar Tripathi, Managing Director and CEO, Aadhar Housing Finance said, “UCO Bank’s reach and trust in the market, coupled with our own network and digital, state-of-the-art IT infrastructure, improved control and underwriting functions, and increasing customer reach and distribution capability; will help provide efficient and economical home loan solutions to customers across geographies and socio-economic groups.”
Atul Kumar Goel, Managing Director and CEO, UCO Bank said Aadhar Housing Finance’s network of over 300 branches covering more than 12,000 locations will help the bank achieve the co-lending model’s objective of improving credit flow to unserved and underserved sectors of the economy.
Welcome to the refurbished site of the Reserve Bank of India.
The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.
With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.
The site can be accessed through most browsers and devices; it also meets accessibility standards.
Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.
Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.
The Pre-bid meeting for the captioned tender was conducted through Cisco-WebEx platform at 11.45 am on October 25, 2021 in the presence of officials concerned from Belapur Office. The meeting was attended by around 25 interested CA firms.
Officers from RBI, Belapur present in the meeting:
(i) Shri Rahul R Kamble, GM, HRMD
(ii) Shri Rakesh Kumar Verma, AGM, HRMD
(iii) Ms Shubhra Komal, AM, HRMD
2. Following a brief introduction by the Bank’s officials, various queries as raised by the interested firms, were heard, and clarified by the Bank. A summary of the same is as under:
Sr. No.
Doubts/ queries raised
Clarification/ answers provided
a.
What are the broad expectations of the Bank from Concurrent Auditors?
The Concurrent Auditor of Belapur Office are required to cater to the day-to-day needs in respect of Concurrent Audit viz. checking and verification of bills, financial transactions, tax calculations etc. as detailed in the tentative scope of work attached to the Tender document.
The said scope of work is subject to periodic revisions as per the evolving needs of the Bank.
b.
What is the required number of members in the CA team?
The CA firm has to deploy minimum prescribed complement of Staff (1 Chartered Accountant + 2 Skilled Staff + 1 Semi-skilled Staff). The skilled staff should have at least qualified in both the Groups of IPCC (Integrated Professional Competence Course) and the semi-skilled staff at least Group-I of IPCC and undergoing article training. The team should have working knowledge of computers/ systems.
All details are contained therein the Tender document.
c.
Whether the Bank if hiring the services of Concurrent Audit for the first time or whether it is a recurring activity?
The Concurrent Audit of the Bank is carried out on a daily basis i.e in concurrence with the day-to-day activities of the Office. The detailed scope of work is attached to the Tender document.
d.
What is the process of handover of activities from the outgoing CA team?
The CA firm, after the finalization of appointment, will be sensitized by the outgoing audit team in respect of the CA related activities. The detailed scope of work has already been provided in the Tender document. Further, if required, a training/awareness session will be organised for the new team shortly after the commencement of work.
e.
What is the tentative volume of work/ sample criteria?
The detailed scope of work (tentative) is attached to the Tender document.
f.
What would be the estimated man-days for the audit team?
The CA team (deployed as per the criteria mentioned at Point 2 above) must be physically present in the Office at all working days of the Bank. All related details are mentioned in the Tender document.
g.
Whether there is an approved checklist for the said audit?
The detailed scope of work (tentative) is attached to the Tender document. However, the said scope is subject to the periodic revisions by the Bank as per its evolving needs.
h.
When was the last Concurrent Audit done at the Office?
The Concurrent Audit of the Bank is carried out on a daily basis i.e in concurrence with the day-to-day activities of the Office. Audit reports, however, are submitted on a monthly basis.
The detailed scope of work is attached to the Tender document.
i.
Whether the Audit reports are to be rated?
No risk rating is involved in the Concurrent Audit reports. ‘Major’ exceptions/discrepancies, if any, found in the day-to-day functioning of the Office, are to be brought to the notice of Office-in-charge by the Auditors, immediately.
3. All interested participants were advised to read the tender document and the tentative scope of work in detail. They were advised to register on the MSTC portal, without which, bidding for the captioned tender is not possible.
4. All participants were advised to contact MSTC personnel for any technical issues with the registration or applying on the portal.
5. Above minutes may be treated as a part of the tender. All terms and conditions of the tender remain the same.
Financial Express is now on Telegram. 