Bank of Baroda posts Q4 loss on higher provisions for bad loans

Mumbai: Bank of Baroda Friday reported a net loss in fiscal fourth quarter because rise in bad loans, as a fallout of central bank’s revised rules on stressed loan resolution, led to higher provisioning.

The state-owned bank’s net loss stood at Rs3,102 crore compared to a profit Rs154.72 crore in the year-ago period. Loss was higher than Rs28.03 crore estimated by a Bloomberg poll of 18 analysts.

Fresh slippages in March quarter rose to Rs11,765 crore as compared to Rs3,347 crore a year ago and Rs4,797 crore a quarter ago.

P.S. Jayakumar, managing director and chief executive officer, said that out of the total slippages in March quarter, Rs4,274 crore were because of the Reserve Bank of India’s 12 February circular. Here, the RBI withdrew host of restructuring schemes and has set 180-day deadline for resolution of stressed loans.

Total gross non-performing loans rose to Rs56,480 crore as the end of March from Rs42,719 crore a year ago.

Provisions during the quarter increased to Rs6,672 crore as against Rs2,623 crore in the year-ago quarter. In the October-December, the bank had set aside Rs3,426 crore in provisions.

Gross and net non-performing assets (NPAs), as a percentage of total advances, were at 12.26% and 5.49%, respectively, as on 31 March 2018.

Jayakumar said going ahead resolution of accounts, especially those referred for insolvency proceedings for National Company Law Tribunal (NCLT), through the current fiscal is expected to lead to fall in bad loans. The bank has currently identified stressed asset pool of around Rs10,000 crore.

Bank of Baroda has exposure of over Rs10,900 crore to accounts which are part of the first and second list of the RBI has referred for insolvency. The bank has over 55% provision against accounts in both lists.

Jayakumar also said that bank’s investment in distribution channel, training of staff in corporate loan specialisation, and focus on better-rated companies, will pave way for 15-20% loan growth on a consistent basis in the coming years.

Total advances grew nearly 13% year-on-year to Rs4.6 trillion as the end of March.