InvestorQ : Should I hold on to Bank of Baroda in my portfolio after the latest quarterly losses reported by the bank? I hold about 10,000 shares bought at lower levels.
Tisha Malhotra made post

Should I hold on to Bank of Baroda in my portfolio after the latest quarterly losses reported by the bank? I hold about 10,000 shares bought at lower levels.

Answer
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Moii Chavate answered.
8 months ago


Bank of Baroda reported a net loss of Rs.1,407 crore for December quarter on the back of higher provisions for bad assets. Interestingly, Bloomberg poll had predicted quarterly profits of Rs.683 crore. The bank’s provisions rose 54% to Rs.6,365 crore although gross bad loans as a percentage of advances fell 48 bps to 10.43%. Out of the additional loans worth Rs,10,387 crore turning bad, Rs.4,509 crore was owing to RBI’s divergence report pertaining to under-reporting of bad loans.

According to the senior management of BOB, fresh slippages originated in sectors like chemicals, power and NBFCs to the tune of Rs.7,000 crore overall. The net interest income (NII) increased by 9% to Rs.7,128 crore even as the net interest margin (NIM) improved by 18 bps to 2.8%. BOB also reported an exposure of Rs.4,100 crore to defunct telecom companies, which had been fully written off. With capital adequacy ratio at 13.48%, the bank appears to have seen additional pressure purely from the outcome of the merger even as the business growth at the bank has been largely under control. It still remains among the best PSU banks and can be held on.