bank of baroda news – IFSCCodeof.in

Bank of Baroda to raise up to Rs 2,000 cr via AT1 bonds today

November 23, 2021 root Personal Finance

[ad_1]

Read More/Less

Last week, Union Bank of India raised Rs 2,000 crore via AT1 bonds at an 8.70% coupon, and the issue has seen full subscription. All AT1 bonds were issued based on regulations amended by Sebi earlier this year.

Bank of Baroda, the country’s second-largest state-owned lender, is planning to raise Rs 2,000 crore through the issuance of Basel-III compliant Additional Tier-I (AT1) bonds on Wednesday.

The offer comprises a base issue of Rs 500 crore with a greenshoe option to retain oversubscription up to Rs 1,500 crore, according to the placement memorandum of the bank.

Funds raised will be utilised for regular business activities and are not meant for financing any particular project. “The bank undertakes that proceeds of the issue shall not be used for any purpose which may be in contravention of the regulations/ guidelines,” the bank said in a notice.

AT1 bonds are types of perpetual debt instruments that banks use to augment their core equity base and, thus, comply with Basel-III norms. The coupon on the AT1 bonds will be set during the bidding on Wednesday on the electronic bidding platform of the National Stock Exchange.

“We expect better coupons on our AT1 bonds compared to other banks which recently raised funds through these securities,” bank officials said.

Market participants expect rates between 7.95% and 8.05% on Bank of Baroda’s bonds. The deemed date of allotment and pay-in date on the bonds is November 26, while the minimum bid lot size is Rs 1 crore with a bid value step size of Rs 1 crore.

The bonds have been rated AA+ with a “stable” outlook by Crisil and Icra on November 17 and November 12, respectively. The bank has appointed IDBI Trusteeship Services and KFin Technologies as debenture trustee and registrar to the issue, respectively. The AT1 bonds have a call option after five years.

As per amended regulations, the residual maturity of the AT1 bonds is 10 years till March 31, 2022, and will be increased to 20 and 30 years over the subsequent six months. From April 2023, the maturity of these bonds will become 100 years from the maturity date.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

[ad_2]

CLICK HERE TO APPLY

Leave a comment bank of baroda, bank of baroda credit growth, bank of baroda loan, bank of baroda news, bank of baroda revenue

‘We believe liquidity scenario should change in next few months’

August 9, 2021 root Personal Finance

[ad_1]

Read More/Less

That was the one-off which I believe should now start changing, and we should be getting back to normal operations in terms of how people behave, given their credit scores.

Bank of Baroda’s (BoB) decision to consciously run down some low-margin loans resulted in its loan book shrinking in Q1FY22, MD & CEO Sanjiv Chadha tells Shritama Bose. While retail repayments have been hit by the second wave of Covid, many small borrowers have a good track record and will soon resume good credit behaviour, he adds. Excerpts:

Your loan book has shrunk in Q1FY22. What is the outlook for the full year?

We have held a view that we would want to grow in areas which give us a positive risk-return. Given the fact that there’s abundance of liquidity and pricing is under pressure on the corporate side, we have focused on growth on the retail side. It is risk-mitigated to the extent possible in these uncertain times. So, we have had reasonably good credit growth in those areas. Our organic retail growth is about 12%. Within that, we have had about 25% growth in car loans.

Gold loans have done very well for us; they have grown 35%. The only reason that growth was subdued in this quarter was that we allowed some cheaply-priced corporate loans to run off because we believe that the liquidity scenario should start changing over the next few months. There is an opportunity to price corporate loans in a slightly better manner as compared to what was possible in the last 12 months. In the areas where we want to grow, we have grown at a reasonably good pace.

Where do you see credit growth for the rest of the year?

We have pretty much run down the loans where the margins were low. With that base, we should see corporate growth happening on a net basis from the next quarter onwards. We are seeing a fair bit of activity, particularly in the roads sector, on the corporate side as also in terms of city gas projects and renewable energy. Brownfield expansion is something we are seeing. On the retail side, we have some strong franchises, which should continue to grow, especially now that lockdowns are getting lifted. Our own sense is that we should see growth of about 7-10% for the industry this year, and our growth should pretty much be in line.

Most slippages for you have come from the MSME, retail and agri books. Was it a problem of collections or is there financial distress?

It was a bit of both. There is no argument that the retail segment and the MSME segment have been affected by the second wave in particular. The MSME sector was anyway under stress for the last one year, but the retail sector, which had still got through the first wave because there was a moratorium, was pretty badly impacted by the second wave. A lot of personal finances got upset by the second wave because I think there was hardly a family where there weren’t any Covid-related expenses amongst our borrowers.

Having said that, this was more of a one-off, you might argue. While the MSME challenge is a little more, because for the last one year, MSMEs have been impacted by lockdowns and demand disruption, for the retail sector it is more of a one-off. Last year, very few people looked at restructuring. This year, people have been impacted, loans have been restructured, some have slipped, but at the same time, in July, there is a fair bit of pullback that’s happening. My own sense is that both for MSME and retail, the kind of slippages we saw in the last quarter was peak distress, and that should start diminishing over the next few quarters, while the improvement we have seen in the credit cycle for corporates should continue. So for us, credit costs have come down as compared to last year simply because the corporate improvement has offset the challenges in retail and MSME.

Have you felt the need to tighten credit filters in the small loan segments?

Not really, for the reason that we actually have had fairly robust filters. In retail, our underwriting is mostly for borrowers who have credit scores of 700+. Seventy percent are 725+. But, in the last few months, even if you are somebody who has never defaulted on a loan and you have a 725+ credit score, the kind of health expenditure that happened was totally out of character and out of context, as compared to what your past credit record was. That was the one-off which I believe should now start changing, and we should be getting back to normal operations in terms of how people behave, given their credit scores.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

[ad_2]

CLICK HERE TO APPLY

Leave a comment bank of baroda, bank of baroda balance sheet, bank of baroda credit growth, bank of baroda news, bank of baroda npas

Bank of Baroda to sell 46 NPA accounts to recover Rs 597 cr, BFSI News, ET BFSI

June 9, 2021 root Banking & Finance

[ad_1]

Read More/Less

NEW DELHI: State-owned Bank of Baroda will conduct an e-auction of as many as 46 NPA accounts later this month to recover dues of Rs 597.41 crore.

The lender, in a notification, said it intends to sell these NPA accounts to asset reconstruction companies (ARCs) / banks / NBFCs or other financial institutions (FIs) on 100 per cent cash basis, for which the e-auction will take place on June 21, 2021.

The major NPA accounts put up for sale include Meena Jewels Export & Meena Jewellers Export (Rs 60.76 crore); Crystal Cable Industries (Rs 57.49 crore); J R Foods Ltd (Rs 41.60 crore); Shree Raghuvanshi Fibres (Rs 27.38 crore); Kaneri Agro Industries (Rs 24.69 crore); Man Tubinox (Rs 24.28 crore) and Aryans Educational and Charitable Trust (Rs 20.79 crore).

The last date for submission of expression of interest is June 19, the bank said, adding the completion of due diligence will take place on the same day.

“E-bidding timings will be from 11.30 AM to 12.30 PM with unlimited extension of 5 minutes in case the amount is increased by the bidders. The incremental amount shall be in multiple of Rs 10 lakh,” Bank of Baroda said.

With respect to Chennai-based Rahima Leather Exports against which there is an outstanding of Rs 9.13 crore, Bank of Baroda said it has received an ECGC claim of Rs 1.18 crore.

This account will be retained by the bank and not be passed on to ARC/NBFC/bank/FIs, it said.

Bidder will also have to give an affidavit that they are “in no way connected to or acting on behalf of or in concert or on behalf of any of the accounts or its promoters, including promoter’s family”, as per the provisions of Insolvency and Bankruptcy Code (IBC), 2016, it said.

The bank said any ECGC/CGTMSE claim received or to be received in any of the accounts under the sale will be retained by it and will not be passed on to ARCs/ banks/ NBFCs/ FIs.

The Export Credit Guarantee Corporation (ECGC) is a government owned body which provides export credit insurance support to Indian exporters.

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a government owned trust which offers credit guarantee to financial institutions which give loans to the MSME sector.

[ad_2]

CLICK HERE TO APPLY

Leave a comment bank of baroda, bank of baroda news, Bank of Baroda share price, Bank of Baroda shares, Bank of Baroda Stock Price, IBC, npa

‘NPAs can decline due to cleaning up of balance sheet, improving credit cycle’: Interview | Sanjiv Chadha, MD and CEO of Bank of Baroda

June 1, 2021 root Banking & Finance

[ad_1]

Read More/Less

The stress in the corporate segment is well-contained, but margins are going to be under pressure.

By Ankur Mishra
Double-digit credit growth may be challenging for Bank of Baroda, according to Sanjiv Chadha, MD and CEO of the lender. Speaking with Ankur Mishra, Chadha said growth is likely to be impacted by the second wave of Covid-19. However, the lender is banking on a positive credit growth in the corporate segment in FY22, despite a muted showing in the March quarter. Edited excerpts:

What will be your strategy for FY22? Will you be cautious in lending in the current scenario?

Unfortunately, we are in a similar position [to] the beginning of the last financial year … Growth is likely to get impacted and it may not be very high. Therefore, for us in terms of strategy, on the liability side we would want to do a similar thing. Last year, we were conscious that credit growth will not be very high. It makes sense to make sure that your deposit growth is aligned to credit growth … And also make sure that deposit growth is of good quality. We believe this year also credit growth is not going to be extraordinary. A double-digit credit growth may be challenging this year. The emphasis will again remain more on the retail segment. But if we are looking in terms of balance, my sense is that retail will still grow faster compared to corporate. The stress in the corporate segment is well-contained, but margins are going to be under pressure.

Although the corporate book has remained flat in the March quarter, you expect it do better in FY22. What gives you the confidence for this?

There are two reasons for corporate growth. One is how the working capital cycle has changed. Last year, due to reduced activity levels, working capital utilisation came down very significantly. This time, although the second wave may have impacted corporates to some degree, we are looking for a growth rate of 10% for the economy. This should be reflected in some time [in] inventory growth for corporates and better working capital utilisation. You are seeing capital investment going ahead, which is driven by the government package. The government has been very aggressive in pushing the road sector. So we are seeing a reasonable growth. Also, we have a very good corporate book. There is a tendency on the part of corporates to consolidate as far as banking relations are concerned, so we are benefiting from that.

Unlike other lenders, your deposit growth has been muted, mainly on account of de-growth in bulk deposits. What will the strategy be there? Do you believe rates are at the bottom?

We have pushed current account savings account (CASA) growth aggressively. Our retail term deposits grew about 3%, but our CASA grew by 16%, which has really helped our CASA ratio to move up to 43%. There is not much room for any aggressive rate reduction. But I do see that there is a significant room to leverage our franchise and the technology improvement. This can still have further improvement in the CASA ratio.

Your write-offs have doubled compared to last year. What has been the reason? And will the bank continue to be aggressive on that front?

The write-offs are very much a function of where your provisioning is, so all the banks have seen the provisioning ratios rising very significantly. The accounts where you are 100% provisioned and where prospects of recovery may not be very bright, it makes sense to clean up your balance sheet. Therefore, both on account of the improvement in credit cycle the possibility of cleaning the balance sheet, we should see gross NPAs and net NPAs trend downwards.

What is your outlook on the asset quality of the bank?

There is no doubt that challenges are there. The nature of the challenge would differ bank to bank on the books you have. So if we are sitting on a very large book of unsecured loans, I am sure the nature of challenges would be of one kind. On the other hand, if you look at the book composed of good quality corporates, and given the fact that the impact of the second wave on corporates has been limited and we are in the midst of a credit cycle as far as corporates are concerned when you actually see an improvement going ahead, the nature of the challenge is different. We believe that despite the second wave and particularly because the issues in the international book we had last year were one-time, our credit cost should continue to trend downwards, despite the challenges we have.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

[ad_2]

CLICK HERE TO APPLY

Leave a comment bank of baroda, bank of baroda news, bank of baroda npas number, bank of baroda revenue, npas bank of baroda, npas of private sector banks

Bank of Baroda document shows stress may be higher than foreseen

March 1, 2021 root Personal Finance

[ad_1]

Read More/Less

He added: “The kind of stress we are seeing now is something which is unprecedented and therefore it is likely there may be some slippages which you can’t anticipate.”

A placement document of Bank of Baroda (BoB), for an equity fundraise, shows the lender’s special mention accounts (SMA) ratio surged to 21.57% as on December 31, 2020, from 8% on March 31, 2020. This would suggest that lenders’ collection efficiencies do not adequately reflect the level of stress in the system.

To be fair, the BoB management has signalled that the restructuring scheme may have been unable to address stress in the retail and micro, small and medium enterprises (MSME) segments, and there may be pain ahead.

Bank of Baroda MD and CEO Sanjiv Chadha said in January, “In terms of the known unknowns, things which have not fully played out yet that is where the MSME and retail are…Particularly, retail is the kind of book which was not being stress-tested.”

He added: “The kind of stress we are seeing now is something which is unprecedented and therefore it is likely there may be some slippages which you can’t anticipate.”

The SMA ratio indicates the share of a bank’s loans that have been delinquent for between 1-90 days. BoB’s SMA-0 ratio, or accounts where repayments were delayed by 1-30 days, contributed to much of the surge, rising to 13.44% from 5.47% during the period under review. SMA-2 accounts, where the repayment delay ranges between 61 and 90 days, shot up to 5.52% from 1.41%.

Earlier, a high bounce rate on EMI transactions had raised an alarm about the degree of delinquencies in lenders’ retail books. The National Payments Corporation of India (NPCI) has not yet released this data point for January or thereafter after the bounce rate was found to be persistently high at around 40% for months at a stretch.

There have been concerns, too, about the 90%-plus collection efficiency numbers being reported by banks and non-bank lenders. Analysts are now questioning the wisdom of conflating collection efficiencies with asset quality.

On Monday, Kotak Institutional Equities (KIE) said in a report that the data gives further credence to its view that there is a difference between collection efficiency and probable slippages that could be reported by lenders. “Information asymmetry is quite high and it would be useful for banks to report SMA and 90+DPD (days past due) as it provides a better understanding of the stress,” the report said.

The regulator is not particularly sanguine about bad assets staying under control, either. Loan losses in the banking sector, as measured by the gross non performing asset (GNPA) ratio, could nearly double to 13.5% by September 2021 in a baseline scenario, and to as high as 14.8% in a severe-stress scenario resulting from the pandemic, the Reserve Bank of India (RBI) had said in the December 2020 edition of its financial stability report (FSR).

The ratio of accounts in the SMA-2 category of the private-sector non-financial wholesale segment rose to 7.2% as on November 30, 2020 from 1.7% on September 30, 2020, according to the FSR. The sharp rise in SMA-2 loans coincided with the Supreme Court’s stay on recognition of bad assets after August 31.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

[ad_2]

CLICK HERE TO APPLY

Leave a comment bank of baroda, bank of baroda balance sheet, bank of baroda losses, bank of baroda news

Bank of Baroda posts Rs 1,061-crore profit on lower provisions

January 27, 2021 root Personal Finance

[ad_1]

Read More/Less

At the same time, BoB is not too worried about major retail slippages because unsecured retail loans constitute less than 1% of its loan book. More than 70% of the retail book is made up of home loans.

Bank of Baroda (BoB) on Wednesday reported a Rs 1,061-crore profit for the quarter ended December, against a net loss of Rs 1,407 crore a year ago, as provisions fell 45% year-on-year (y-o-y) to Rs 3,957 crore.

Net interest income (NII) – the difference between interest earned and interest expended – stood at Rs 7,749 crore, was up 9% y-o-y. The net interest margin (NIM) rose 11 basis points (bps) sequentially to 3.07%. The operating profit rose 12.8% y-o-y to Rs 5,591 crore.

The gross NPA ratio at the end of December stood at 8.48%, down 66 bps sequentially. Net NPAs were at 2.39%, 12 bps lower than 2.51% at the end of the September quarter.

BoB has made contingent provisions of Rs 1,522 crore as a prudent measure. Total additional provisions as on December 31 stood at Rs 1,891.5 crore. The provision coverage ratio (PCR) improved to 85.46% from 77.77% a year ago.

The management said any worsening in the asset quality is likely to be led by the retail and MSME segments. Sanjiv Chadha, MD and CEO, said over the last two-three months, there has been a sharp recovery and the main beneficiary of this recovery has been the corporate piece. The return of demand, profits and pricing power have accrued mainly to companies and that adds resilience to the corporate book. Also, companies have already been through a phase of stress in recent years. So, the ones that remain standing are more resilient and offer comfort to the bank.

“There will be stress in some parts of the book, but we have fair handle in terms of how much is there and what are the likely implications. But, in terms of the known-unknowns, things which have not fully played out yet that is where the MSME and retail are,” Chadha said, adding, “Particularly, retail is the kind of book which was not being stress-tested. The kind of stress we are seeing now is something which is unprecedented, and therefore, it is likely that there may be some slippages which you cannot anticipate.”

It has become harder to foresee or address retail stress, Chadha said, because a glance at the bank’s restructured book shows that 80% of it has come from corporates and the retail accounts for a very small figure. “Therefore, we have not been able to address whatever stress might be there at least through the restructuring mode – which means that either people will actually start paying up on time [or] there is a fair possibility that some stress will come through NPAs.”

Domestic advances grew 8.31% y-o-y to Rs 6.33 lakh crore at the end of December. The current and savings account (CASA) ratio improved 240 bps y-o-y to 41.2% in Q3FY21. Domestic deposits rose 6.74% y-o-y to Rs 8.35 lakh crore. The bank expects to clock a loan growth of 7-8% in FY21 and raise Rs 2,000-4,000 crore through a qualified institutional placement (QIP) in the current quarter.

BoB’s shares ended up 0.07% at Rs 73.85 on the BSE.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

[ad_2]

CLICK HERE TO APPLY

2 Comments bank of baroda, bank of baroda loan spread, bank of baroda news, bank of baroda profit, bank of baroda profit news