Analyst Meet / AGM - Analyst Meet

30-Jul-2018, 09:49
Bank of Baroda conducted an analyst meet on 28 July 2018 to discuss the financial results for the quarter ended June 2018 and prospects of the bank. PS Jayakumar, MD&CEO of the bank addressed the meet:

Highlights:

• The bank has been posting consistent healthy growth in the operating profit. The operating profit in Q2FY2019 is driven by strong 17% growth in the core fee income, while consistent improvement in the margins has also contributed to the growth in the operating profit of the bank.
• The bank has posted strong double digit growth on various indicators in the domestic business, while domestic CASA deposit ratio sustained above 40% end June 2018.
• The bank has continued to reduce net NPA ratio in absolute terms as well as percentage terms in the quarter ended June 2018. The bank has further improved the provision coverage ratio to 69.1% end June 2018, while it aims to further improve provision coverage ratio, going forward.
• The bank has reduced Rs 15000 crore of bulk deposits in the quarter ended June 2017. The ratio of retail term deposits has increased to 82.3% end June 2018.
• The bank is witnessing consistent decline in cost of deposits.
• The Wealth Management Business is showing strong traction, which has posted healthy 29% growth in the fee income in Q1FY2019.
• The bank has exhibited strong growth in retail loan book, with strong traction across all retail loan products.
• The risk profile of the corporate credit portfolio has improved further, as the share of A and above rated accounts has increased to 63.3% of portfolio from 52.4% end March 2018.
• Similarly, the risk profile of the retail loan portfolio also improved further with customers of credit score above 725 increasing to 82% as against 63% last quarter.
• Exposure in accounts under NCLT 1 list is Rs 5813 cross and NCLT 2 list is Rs 3843 crore end June 2018. The provision coverage under NCLT 1 list is 64.4% and NCLT 2 list is 62.8%. The bank has made additional provisions of Rs 522 crore for NCLT accounts in Q1FY2019.
• The bank has reduced duration of its investment book over last two quarters, which has helped to contain its mark to market losses in investment book at lower level.
• The bank has witnessed about Rs 22000 crore decline in its international loan book on account of RBI disallowing LOUs, while its expected to further contribute further Rs 18000 crore decline in international loan mostly by September 2018.
• The bank has exhibited an improvement in the international margins to 1.49% in Q1FY2019, while it expects to sustain better margins in international loan book.
• The fresh slippages of loans has declined sharply to 12-quarter low level of Rs 2868 crore in Q1FY2018, of which about 85% came from watchlist accounts.
• The fresh slippages in the international loan book stood at Rs 638 crore, of which Rs 400 crore were on account of depreciation of Indian rupee.
• The gross NPA has declined in absolute terms, but the gross NPA ratio has increased marginally due to decline in loan book driven by dip in international loan book.
• The bank has made full provisions relating to employee gratuity provisions in Q1FY2019.
• The bank has strengthened its asset quality monitoring system, which has helped to significantly reduce the size of SMA-2 category loan book to 0. 94% end June 2018.
• The watch list account size has declined to Rs 8600 crore end June 2018. The bank also has Rs 2800 crore of non-fund exposure, which is under watchlist and carrying 35% provisions.
• The bank has exhibited sharp decline in credit cost, while it expects the credit cost to decline further going forward in rest of FY2019.
• The NPA recoveries has a contributed interest income of Rs 600 crore and Rs 240 crore at net profit level in Q1FY2019.
• The bank has conducted sale of NCLT related exposure amounting to Rs 900 crore in July 2018, while it is expecting another recoveries of Rs 1800 crore from NCLT accounts. The bank is also expecting normal recoveries of around Rs 1300 crore in Q2FY2018. Thus, the overall recoveries are expected to be around Rs 4000 crore in Q2FY2019.
• Within the NCLT exposure, the bank has two telecom accounts with exposure of Rs 3800 crore and bank has made provisions of 35%.
• The NPAs in the power sector stood at Rs 4000 crore, while the bank has made provisions of Rs 2000 crore.
• The provision coverage ratio in the international loan book stands at above 75% end June 2018.
• The bank is targeting loan growth of 15 to 20% for FY2019.

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