Bank of Baroda to report Q1FY21 earnings today; here's what analysts expect

Shares of State-owned Bank of Baroda gained 1.5 per cent to quote at Rs 49.20 apiece in the intra-day trade on the BSE on Monday ahead of the bank's June quarter result, scheduled to be released later in the day. At close, the stock ended 0.83 per cent higher at Rs 48.85 per share, as against 142 points, or 0.32 per cent, gain in the benchmark S&P BSE Sensex. 

Analysts foresee the bank reporting sluggish business growth in Q1 on the back of Covid-19 induced nationwide lockdown. The bank's loan growth, they say, would remain flat on a sequential basis, rising only marginally courtesy loans extended under the Emergency Credit Line Guarantee Scheme (ECLGS). Besides, asset quality is seen stable due to the moratorium facility provided by the Reserve Bank of India. That apart, recovery trends and loan book under moratorium, which was 65 per cent untill March 31, would be watched. 

From its recent low of Rs 36 per share -- also its 52-week low -- hit on May 20, the stock price has surged 28 per cent till Friday on the BSE. In comparison, the bencmark S&P BSE Sensex has gained 23.4 per cent during the period, BSE data shows.

Here's what key brokerages expect:

ICICI Securities 

Analysts at the brokerage expect loan growth to dip to Rs 6.9 lakh crore, rising 1 per cent on a quarterly basis, supported by loans towards MSME sector due to the ECLGS scheme. "Incremental disbursements towards corporate & MSME is seen reducing margins though providing balance sheet growth ahead," they wrote in their results preview report, estimating the bank's net interest income (NII) at Rs 6,860 crore with net interest margin (NIMs) at 2.65 per cent. 

"Easing of the lockdown and streamlining of the moratorium opt in process may lead to a reduction in the moratorium book by 5-10 per cent from current levels of 65 per cent... On the back of standstill account classification, asset quality is expected to stay stable with GNPA at 9.67 per cent. Nationwide lockdown and Insolvency and Bankruptcy Code (IBC) suspension may delay the breather for the bank's substantial NCLT exposure," they noted.

Motilal Oswal Financial Services

The brokerage believes elevated credit costs and moderation in NII, at Rs 6,684.8 crore, could dent the bank's earnings in the quarter under review. The bank's NII in Q1FY20 was Rs 6,498.1 crore, while it was Rs 6,798.2 crore in Q4FY20.

Moreover, it expects the asset quality to remain under pressure for the recently concluded quarter. Gross NPA ratio is seen rising to 9.7 per cent from 9.4 per cent QoQ, while net NP ratio is peeged at 3.4 per cent, up from 3.1 per cent QoQ.

The lender's pre-tax profit is seen at Rs 717 crore, compared to a pre-tax loss of Rs 1,723.3 crore in the March quarter of FY20. In the year-ago period, the same was Rs 991.3 crore. With a tax expense of Rs 180.7 crore, MOFSL pegs net profit at Rs 536.3 crore. In the corresponding quarter of the previous fiscal, it had posted a profit of Rs 709.9 crore, while the same was Rs 506.6 crore in Q4FY20. 

Phillip Capital 

Analysts here estimate the bank to clock total revenue of Rs 8,988 crore, up around 7 per cent YoY from Rs 8,413.1 crore posted in Q1FY20. On a quarterly basis, this would be a 6.7 per cent decline from Rs 9,632.8 crore reported in Q4FY20. While they expect the bank to post NII of Rs 6,900, up 6 per cent YoY and 1 per cent QoQ, they believe margins could remain under pressure, at 2.7 per cent, due to cut in MCLR rate.

The estimate pre-provision profit at Rs 4,436.8 crore, clocking a growth of 4 per cent on a yearly basis from Rs 4,275.7 crore posted in Q1FY20. Sequentially, this would be a de-growth of 13.4 per cent from Rs 5,120.8 crore reported in the March quarter of FY20. Net profit is seen at Rs 477.6 crore.

"Advance growth to moderate due to system-wide slowdown in credit while provisions could decline QoQ as Q4 results had divergence related provision," they noted in a result expectations report.

Slippages are pegged at Rs 4,000 crore, down 40 per cent YoY from Rs 6,624 crore in Q1FY20, and 11 per cent QoQ from Rs 4,485 crore in Q4FY20.

Elara Capital

Analysts at Elara Capital see the profit growing 47 per cent QoQ to Rs 744.9 crore in the quarter under review, while revenue is seen slipping 1 per cent sequentially to Rs 6,730.2 crore.

They estimate the bank's loan book at Rs 683,219.5 crore, while deposits are pegged at Rs 974,364 crore. Consequently, NII is seen at Rs 6,730.2 crore, while interest margin is expected to come in at 2.7 per cent. 

Edelweiss Securities

The brokerage expects to see some volatiltiy in the asset quality, given the high proportion of book under moratorium. It would track the progress in the bank's merger with Dena Bank and Vijaya Bank, besides tracking recovery trends.

It pegs the net profit at Rs 421.8 crore, while pre-provision profit is seen at Rs 5,435.5 crore.