Bank of Baroda (BoB), one of the leading public sector lenders, reported on Monday a fall of 21.6% in net profit on year-on-year basis to Rs 10.12 billion for the quarter ended Dec. 31, 2012. Total income of the bank increased by 9.80% to Rs 96.86 billion for the quarter ended Dec. 31, 2012. The bank has made provision of Rs 10.29 billion, which was 24.96% higher than the same period last year.
Commenting on the numbers, Vijay Sarathi, analyst, Nomura said,"Bank of Baroda registered PAT of Rs 10.1 billion (down 21.6% y-y), 18.6% below our estimate of Rs 12.4 billion. We expect the bank's asset quality to remain under pressure for another few quarters. We are factoring in loan growth of 14.2% for FY13F and 18.7% for FY14F. We increase our TP with Reduce rating to Rs 765 from Rs 675 as we roll forward to FY14F ABV. BOB currently trades at 1x our FY14F ABV of Rs 817.9 and 6.4x our FY14F EPS of Rs 126.5. Our TP implies 0.9x FY14F ABV for an adjusted RoE of 16.5%. We are building in capital infusion from the government to the tune of Rs 8 billion in 4QFY13F.''
''Bank of Baroda's Q3FY13 results were weak on all key operating parameters. Asset quality was under pressure with GNPLs/restructuring at Rs 20 billion/ Rs 16 billion, while the near-term outlook on slippages/restructuring too remains subdued. NIMs declined by 8bps QoQ to 2.65%. NIM contraction coupled with lower other income pushed net income down 3% YoY. PAT declined by 21% YoY to Rs 10.2 billion due to higher provisions. We expect the stock to correct in the near term on a muted outlook and premium valuations vis-à-vis peers. Given this is first quarter after management change, we maintain BUY rating. We revise our FY13/14/15 earnings estimates by 7%/4%/6%,'' Siddharth Teli, Religare Institutional Research said.
Hatim Broachwala and Paresh Jain, Karvy Stock Broking, said,''Bank of Baroda's asset quality has continued to deteriorate with slippage at 2.7%, even surpassing last quarter's slippage of 2%. Gross NPA has deteriorated by 43bps sequentially 2.4%. At the CMP, the stock trades at 5.6x & 4.5x FY14E & FY15E earnings, and at 1.0x & 0.8x P/ABV FY14E & FY15E, respectively. We have downgraded our ABV estimate by 4% for FY14/15. Based on 10% discount to its historical mean valuation implying 0.9x P/ABV FY15E, we reiterate our ''Hold'' recommendation on Bank of Baroda (Q,N,C,F)* with target price of Rs 850.''
''Bank of Baroda's Q3FY13 PAT at Rs 10 billion, down 22% QoQ, came in much lower than estimates. Largely on back of 59% QoQ jump in provisions to Rs 10 billion-NPL (Rs 8 billion) and restructuring (Rs 0.8 billion) Slowdown at operating profitability level -NII (flat QoQ) largely led by 15bps QoQ decline in domestic margins to 3.08% and modest loan growth (up 2.4% QoQ). We believe that given its relatively better underwriting and monitoring standards vis-E0-vis PSU banks, the major overhang of management change now behind us and the expected economic recovery in FY14, should make the bank perform better. We maintain 'Buy'/Sector Performer,'' said analyst at Edelweiss Research.
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