Analyst Meet / AGM - Analyst Meet

12-Feb-2018, 11:27
Bank of Baroda conducted an analyst meet on 10 February 2018 to discuss the financial results for the quarter ended December 2017 and prospects of the bank. PS Jayakumar, MD&CEO of the bank addressed the meet:

Highlights:

. The bank is exhibited healthy core operating performance, while reporting 41% growth in its operating profit to Rs 3650 crore in the quarter ended December 2017, which is driven by both healthy growth in both interest income as well as fee income.

. The customer acquisition engineer of the bank continued to fire strongly, while recovering economic growth together contributed to the healthy cooperating performance of the bank.

. The bank has a strong customer base of 76 million end December 2017. Bank plans to extend tab based account opening to all branches, which would help to further accelerate customer acquisition. The bank has started cash management services, while also plans to launch a new business streams.

. The bank has exhibited sharp increase in its net interest margin by 41 bps to 2.72% in Q3FY2018, driven by reduction in cost of deposits & improvement in yield on advances. This includes impact (20bps) of exceptional item namely interest on Income Tax refund aggregating to Rs 326.47 crore. The bank has witnessed global as well as domestic decline in cost of deposits, while showed global as well as domestic improvement in loan yields.

. The bank has exhibited healthy improvement in CASA deposits ratio, while sustaining the post demonetization CASA level which is provided big benefit in terms of decline in the cost of funds.

. The bank has accelerated its loan growth to 16%, which is driven by a strong retail loan growth. The share of retail loans in the overall loan Book has increased to 22% end December 2017 from 19% end December 2016.

. On asset quality front, the bank has exhibited strong improvement in the share of A and above rated accounts to 50.4% from 29.3% a year ago.

. The bank has exhibited sharp increase in the fresh slippages of loans in the quarter ended December 2017. However, three large accounts contributed most of the slippages for the quarter. Telecom account contributed slippages of Rs 1800 crore, power sector Rs 500 Crore and infrastructure sector account served slippages of Rs 500 Crore in Q3FY2018.

. The bank remains on target to improve its provision coverage ratio to 70%. The bank expects to contain Net NPA ratio below 5%.

. The bank has posted healthy performance on a consolidated basis, which is reported once a year. The unaudited consolidated operating profit of the bank was healthy at Rs 4115 crore in Q3FY2018.

. The bank has witnessed higher provisions in the quarter ended December 2017, while most of which related to the increase in provision coverage ratio. The bank expects provisions to remain higher in Q4FY2018, as asset quality pressure is likely to continue for next couple of quarters. The bank is also required to make provisions of Rs 861 crore for NCLT related cases in Q4FY2018.

. The bank is yet to receive the report from RBI on its risk based supervision on divergence for FY2017.

. The bank has exceeded the loan target under Mudra scheme achieving 103% of the overall target. The bank has been top performer in the Atal Pension Yojana scheme.

. The bank has been investing in employees upgrading premises and technology. The bank has started making provision for employee wage revision at the rate of 10 to 15% or Rs 74 crore per month from November 2017.

. The SMA - 2 category loan book of the bank stood at Rs 14000 crore end December 2017.

. The banks watch list of stressed account has declined to Rs 9000 crore end December 2017 from Rs 11000 crore end September 2017.

. About 53% of the loan book has shifted to MCLR based lending rate system, while 10% of the loan book is on a fixed rate system.

. The bank has received an allocation of Rs 5375 crore of recap bonds from the government.

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