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Bank of Baroda Q4 result preview: Here is what leading brokerages expect

Weak credit score development, dragged by sluggish company mortgage off-take, coupled with muted working revenue and better slippages might dent the March quarter (Q4FY21) earnings of state-owned lender Bank of Baroda.

“Elevated credit cost and modest net interest income (NII) is expected to dent earnings. Besides, asset quality may also remain under pressure during the quarter under study,” wrote analysts at Motilal Oswal Financial Services in an earnings preview be aware.

At the bourses, BoB stock has outperformed through the interval below assessment, ACE Equity knowledge present. In three months to March 31, the stock of the state-owned financial institution moved up 20.5 per cent, as in comparison with the Nifty50 and Nifty Bank indices’ 5 per cent and 6.5 per cent acquire, respectively.

Movement in pressured belongings’ pool, progress on the merger entrance, and the administration’s outlook as regards development and recoveries as a result of second wave of Covid-19 will probably be keenly tracked by analysts.

Here’s what key brokerages see the financial institution’s Q4 report card:

HSBC

The analysis and brokerage home expects BoB’s working revenue to remain muted at Rs 5,000.4 crore in Q4FY21, down 2 per cent on a yearly foundation from Rs 5,120.8 crore reported in Q4FY20. On a sequential foundation, this is able to imply an 11 per cent reduce from Rs 5,590.6 crore reported within the December quarter of FY21.

However, moderation in credit score price and low base ought to drive the lender’s internet revenue development up 41 per cent year-on-year (YoY) to Rs 715.5 crore from Rs 506.6 crore. On a QoQ foundation, PAT might decline 33 per cent from Rs 1,061.1 crore.

Emkay Global

Opposite to HSBC’s estimates, Emkay initiatives an over 57 per cent sequential reduce within the internet revenue whereas the YoY contraction is pegged at 11 per cent. In absolute phrases, PAT is seen at Rs 450.5 crore through the quarter. That aside, the financial institution might proceed to report wholesome development in retail loans, however company mortgage e book might stay sluggish, it stated.

“Slippages in SME/Retail and mid-sized corporate book could remain high, but the bank should benefit from Bhushan Power resolution,” it added.

Motilal Oswal Financial Services

Maintaining an optimistic view relative to the earlier two brokerages, MOFSL expects BoB’s internet revenue to develop 82.6 per cent YoY to Rs 925 crore on the again of a pointy decline in provisions.

From Rs 6,844.1 crore put aside within the year-ago interval, the brokerage expects the lender to create provisions at Rs 4,684.6 crore in Q4FY21, down 31.5 per cent YoY. However, the identical can be up 18 per cent QoQ from Rs 3,956.7 crore earmarked in Q3FY21. It additionally expects the lender’s gross NPA ratio to rise by 104 bps (1.4 share factors) to 9.9 per cent from 8.5 per cent QoQ. NNPA is seen rising from 2.4 per cent to three.8 per cent QoQ.

Lastly, with a 5.7 per cent and 5.5 per cent YoY development in mortgage e book (at Rs 7.29 trillion) and deposits (at Rs 9.98 trillion), respectively, MOFSL initiatives a 16.1 per cent yearly enchancment in NII at Rs 7,890 crore. The similar was Rs 6,798.2 crore in Q4FY20 and Rs 7,748.7 crore in Q3FY21.

Kotak Institutional Equities

This brokerage sees BoB reporting solely a 7.1 per cent YoY development in NII, which might be a 6.1 per cent contraction sequentially, at Rs 7,279.8 crore owing to a 4 per cent development in credit score. Besides, it additionally sees weak working revenue development (1.2 per cent YoY, -7.3 per cent QoQ) at Rs 5,180.5 crore led by decrease treasury earnings and modest NII development. However, PAT is estimated at Rs 1,720.6 crore, up practically 238 per cent YoY and 62 per cent QoQ, as a consequence of an over 55 per cent YoY (32 per cent QoQ) decline in provisions at Rs 1,413.2 crore.

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