InvestorQ : Why do you think the net profits of Bank of Baroda doubled in the Dec-21 quarter?
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Why do you think the net profits of Bank of Baroda doubled in the Dec-21 quarter?

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3 months ago
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For the Dec-21 quarter, government owned Bank of Baroda reported 1.18% marginal increase in total revenues at Rs.22,073 crore on a yoy consolidated basis. On a sequential basis, the revenues of BOB were almost flat. In terms of key business verticals, BOB saw marginal growth in revenues from treasury operations and wholesale banking. However, there was a sharp fall in revenues from retail banking in Q3.

IN terms of the overall business volumes, the key domestic advances grew 3.36% yoy in Dec-21 quarter. Out of this the big boost came from retail advances which grew at a healthy 11.13%. On yoy basis, the CASA (current and savings accounts) ratio was 308 bps higher at 44.28%, largely indicative of lower cost of funds implied. Net interest income or NII for the quarter was up 14.38% yoy at Rs.8,552 crore showing good positive spread.

Bank of Baroda

Rs in Crore

Dec-21

Dec-20

YOY

Sep-21

QOQ

Total Income

₹ 22,073

₹ 21,816

1.18%

₹ 21,999

0.34%

Operating Profit

₹ 5,980

₹ 5,906

1.27%

₹ 5,832

2.54%

Net Profit

₹ 2,464

₹ 1,196

106.01%

₹ 2,168

13.65%

Diluted EPS

₹ 4.76

₹ 2.59

₹ 4.19

Operating Margins

27.09%

27.07%

26.51%

Net Margins

11.16%

5.48%

9.85%

Gross NPA Ratio

7.25%

8.48%

8.11%

Net NPA Ratio

2.25%

2.39%

2.83%

Return on Assets (Ann)

0.74%

0.37%

0.73%

Capital Adequacy

15.47%

12.93%

15.55%

Let us turn to the operations. For Dec-21 quarter, operating profits were up 1.27% at Rs.5,980 crore. The Net interest margins or NIM improved yoy by 36 bps at 3.13%. BOB reported sharp 525 bps improvement in ROE at 14.37%. Cost of deposits tapered to 3.5% while the yield on advances was robust at 6.92%, ensuring healthy spreads The all-important Cost to income ratio stood at 50.47% with OPM flat at 27.09% in Dec-21 quarter.

Then what boosted the bottom line leading to doubling of profits. PAT was up by 106% at Rs.2,464 crore. This was triggered by a 35% fall in provisions for loan losses in the quarter at Rs.2,688 crore. Gross NPAs fell to 7.25% although still too high by absolute standards. HPAT margins improved sharply from 5.48% to 11.16% on a yoy basis. Net NPAs indicate that most of the pain in terms of asset quality may be already provided for.

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