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Analyst Meet / AGM - Analyst Meet

Proposes to improve domestic NIM to 3.0% and ROA close to 1.0% in FY2015

Bank of Baroda

14-May-2014, 02:11
Bank of Baroda conducted an analyst meet on 13 May 2014 to discuss the financial results for the quarter ended March 2014 and prospects of the bank. S.S. Mundra CMD of the bank addressed the meet:
Highlights:

Bank has been consistently achieving guidance for last six quarters.
Bank's motto for FY2015 is RACE ahead meaning 'Retail leaning, Asset quality focus, Capacity building and Earning Augmentation'.
Bank has sold about Rs 671 crore of bad loans to Asset Reconstruction Companies (ARCs) in Q4FY2014. Of these loans, about Rs 374 crore were NPA loans, while other Rs 297 crore were from written of accounts. Bank was holding provision of Rs 417.62 crore for this Rs 671 crore of bad loans.
Bank has received valuation of Rs 522 crore for sales of Rs 671 crore of bad loans to ARCs. Of which, about 5% is received in cash, while rest is provided in terms of securities receipt. Bank has made provision of Rs 244 crore for securities receipts.
Bank's PCR improved consistently from 61.68% at end September 2013 to 62.22% at end December 2013 and 65.45% at end March 2014.
Bank restructured loans to the tune of Rs 1157 crore in Q4FY2014 and Rs 6397 crore FY2014.
As at end March 2014, the total restructured standard advances portfolio of the Bank's Domestic Operations stood at Rs 19208.82 crore and of Overseas Operations stood at Rs 3238 crore. The ratio of restructured standard advances to gross standard advances (excluding the NPAs) works out to 5.73%.
Restructured assets worth Rs 505 crore slipped into NPA during Q4FY2014 and Rs 2126 crore during FY2014 and Rs 5840 crore cumulatively so far. The Rate of Slippage into NPAs (from the restructured loan-book) so far is around 22.0%.
The restructuring pipeline stands at Rs 1300-1400 crore for Q1FY2015.
Bank has about 5% of advances in the SMA-2 Category. However, the bank expects the improving trends in fresh slippages to continue.
Bank has targeted the business growth of 18-19% for FY2015, while expects the core fee income to increase 20% in FY2015.
Bank has brought down the effective cost of borrowing for new as well as existing borrowers to give a boost to Retail/MSME businesses. It also strengthened its Retail/SME Loan Factory set up with marketing professionals. As at end March 2013, it had 45 retail & 52 SME loan factories operational across India.
Bank has strong capacities and do not expect any challenges in growing retail advance book for next 2-3 years.
Bank expects the effective tax rate at 18-19% for FY2015.
Bank has reduced high-cost deposit from Rs 24279 crore at end March 2013 to Rs 12700 crore at end March 2014 in the Bank's domestic business.
Bank has opened 601 new branches in its Domestic Operations and installed 3624 new ATMs and 5759 new POS machines (Point of Sale Machines) in FY2014. It also opened 45 e-Lobbies during this period to offer 24X7 basic banking operations.
During FY2015, the Bank proposes to open 400 new branches under its Branch Expansion Plan.
The Bank aspires to grow with cautious optimism and would concentrate on improving its domestic NIM to 3.0% through further rebalancing of loan-book; bringing the ROAA close to 1.0% by further improving the CASA share and improving the yield on advances on the back of likely improvement in economic prospects.