SMC: Bank Of Baroda's Q4FY15 profits miss estimates

1. Financial Results
In Cr.
Particulars Qtr Ending Qtr Ending
Mar 15 Mar 14 Var. (%)
Interest Earned 10761.93 10288.59 5
Interest Expended 7590.26 7164.27 6
Net Interest Income 3171.67 3124.32 2
Other Income 1295.46 1326.26 -2
Net Total Income 4467.13 4450.58 0
Operating Expenses 1773.60 1871.03 -5
Operating Profits 2693.53 2579.55 4
Provisions & Contingencies 1817.50 1153.15 58
Exceptional Items 0.00 15.55 LP
Profit Before Tax 876.03 1410.85 -38
Provision for Tax 277.68 253.58 10
Net Profit 598.35 1157.27 -48
EPS (`) 2.70 26.87
Equity 443.56 430.68
Face Value 2.00 10
LP: Loss to Profit
Bank of Baroda
Bank of Baroda has reported lower-than-estimated profit for the quarter ended
March 2015. Bank of Baroda recorded 48% dip in the Net Profit to 598.35 crore in
the quarter ended March 2015. The narrowing of margins, higher provisions and tax rate
mainly contributed to the decline in net profit of the bank for Q4FY2015. The non-interest
income of the bank declined in Q4FY2015 because of moderate 5% fee based income growth
and sharp decline in recoveries in written off accounts.
On the other hand, the bank has surprised by improving the asset quality with sharply lower
than expected slippages of advances in Q4FY2015. Bank has improved domestic CASA ratio to
33% at end March 2015.
Asset quality improves: Bank has improved asset quality pressure with lower fresh slippages
of advances in Q4FY2015.
ŸFresh slippages of advances to sub-standard category dipped to 1359 crore in Q4FY2015
compared to `3042 crore in Q3FY2015.
ŸFresh restructuring of advances increased to 4083 crore in Q4FY15 from 1598 crore in
the previous quarter.
ŸOutstanding domestic restructured advance (standard) book increased to 23321 crore,
while overseas restructured advances book eased to 2486 at end of March 2015.
ŸOverall standard restructured advance book stood at 6% of advances at end March 2015
compared to 5.9% a quarter ago and 5.7% a year ago.
ŸStressed assets (NNPA and standard restructured advances) as % of total advances stood
at 7.9% at end of March 2015 compared to 8% a quarter ago and 7.2% a year ago.
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Current Price:
Price (`) 160.10
52 W H/L( ) 228.90/142.80
Mkt. Cap.( Cr) 35406.05
Latest Equity(Subscribed) 442.30
Latest Reserve (cons.) 38404.49
Latest EPS (cons.) -Unit Curr. 15.37
Latest P/E Ratio -cons 10.42
LatestBookvalue(cons.)-UnitCurr. 175.66
Latest P/BV - cons 0.91
Dividend Yield -% 2.62
Face Value 2.00
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VALUE PARAMETERS
`160.10
STOCK DATA
BSE Code 532134
NSE Symbol BANKBARODA
Reuters BOB.BO
Bloomberg BOB IN
SHARE HOLDING PATTERN (%)
Description as on % of Holding
31/03/2015
Foreign 16.96
Institutions 17.75
Govt Holding 0
Non Promoter Corp. Hold. 2.72
Promoters 57.53
Public & Others 5.04
May 18, 2015

2. 2
Business Highlights
Business growth eases: Global business of the bank grew at moderated pace of 8% yoy to
10,45,625 crore at end March 2015. The moderation in the business growth was driven by
deceleration in the overseas business growth to 8% at 3,39,477 crore, while the domestic
growth also eased to 8% at 7,06,148 crore at end March 2015.
Global deposits growth eased to 9% at 6,17,560 crore, while global advances growth
moderated to 8% at 4,28,065 crore at end March 2015.
Credit-deposit ratio of the bank eased to 69.3% at end March 2015 from 69.7% at end
December 2014.
Domestic advances growth eases: Domestic advances growth moderated to 7% at
2,91,870 crore at end March 2015. Retail credit grew 14% yoy to 52,488 crore, while SME
credit rose 9% to 61,993 crore at end March 2015. Meanwhile, the agriculture credit galloped
32% to 37,403 crore at end March 2015. Credit to the weaker section increased 9% to 22810
crore.
Improves CASA ratio: Domestic deposits grew 9% yoy to 414278 crore, while overseas
deposits increased 7% to 203282 crore at end March 2015.
ŸCASA deposits of the bank increased 11% yoy to 162969 crore with 14% rise in domestic
CASA to 136752 crore, while overseas CASA deposits were steady at 26217 crore at end
March 2015.
ŸOverseas CASA ratio declined sequentially to 12.9%, while domestic CASA ratio improved
to 33% at end March 2015. Overall CASA ratio gained to 26.4% at end March 2015.
NIM eases: Bank has witnessed 03 bps qoq dip in NIM to 2.17% in Q4FY2015, driven by 16
bps qoq fall in domestic NIM to 2.76%. Meanwhile, the overseas NIM improved 03 bps qoq to
0.96% in Q4FY2015. Bank has witnessed sharp decline in yield on advances by 41 bps qoq to
7.68%, while cost of deposits was stable at 5.18% in Q4FY2015.
Investment book increased 5% yoy to 122320 crore at end March 2015. Total size of Bank's
Domestic Investment Book at end March 2015 stood at 116446 crore. Yield on the total
investment book declined 05 bps qoq to 7.89% in Q4FY2015.
ŸWithin the domestic investment book, the share of SLR securities in the total investment
book was 81.2%. The bank has 75% of SLR in HTM and 23.7% in AFS book at end of March
2015.
ŸThe percentage of SLR to NDTL was 24.4% down from 27.96% a quarter ago. Modified
duration of AFS book is 3.01 years and that of HTM was 5.42 years.
Network expansion: During the quarter, the bank has added 136 new domestic branches.
Bank has also installed new 721 ATMs during the quarter ended March 2015. The network of
branches was 5255 branches (including 65 overseas branches) at end of March 2015. ATM
count has improved to 8030 at end March 2015.
Book Value per share stood at 175.2 per share at end March 2015, while adjusted book value
(net of NNPA and 25% of restructured advances) stood at 109.7 per share at end March 2015.
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3. 3
Quarterly Performance
NII growth ease as NIM contracts: NII of the bank rose 2% to 3171.67 crore in the
quarter ended March 2015, showing moderation in the pace of growth from 7% in the previous
quarter. Interest income increased 5% to 10761.93 crore, while interest expenses rose 6% to
7590.26 crore in Q4FY2015.
Fee income growth moderates: The non-interest income of the bank declined 2% to
1295.46 crore in Q4FY2015. The recovery from written off accounts dipped 83% to 60.62
crore, while the profit on forex transaction declined 9% to 244.44 crore in Q4FY2015. Fee-
based income also rose at moderated pace of 5% to 630.04 crore, while the treasury income
more than quadrupled to 360.34 crore.
Net Total Income of the bank was flat at 4467.13 crore in the quarter ended March 2015.
Expense ratio improves: Operating expenses declined 6% to 1773.6 crore on the back of
11% fall in employee expenses to 928.24 crore, while the other operating expenses were flat
at 845.36 crore. The expense ratio declined 269 bps yoy to 39.7% in Q4FY2015.
The operating profit increased 4% to 2693.53 crore in Q4FY2015.
NPA provisions surges: The provisions and contingencies galloped 58% to 1817.5 crore
with 134% jump in the NPA provisions to 1491.4 crore and 64% spike in standard asset
provisions to 314.53 crore. However, the bank has written back 26.43 crore of other
provisions, while provisions related to depreciation of investments were lower at 37.9 crore in
Q4FY2015 against 293.4 crore Q4FY2014.
The surge in provisions led to 38% fall in the Profit before Tax to 876.03 crore in Q4FY2015.
Tax rate jumps: The effective tax rate jumped to 31.7% in Q4FY2015 from 17.8% in
Q4FY2014 leading to 10% increase in tax expenses to 277.68 crore in Q4FY2015
The Net Profit dipped 48% to 598.35 crore in the quarter ended March 2015.
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