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BOB: Ends FY16 with losses and mounting bad loans - Views on News from Equitymaster
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BOB: Ends FY16 with losses and mounting bad loans
May 25, 2016

Bank of Baroda (BOB) declared the fourth quarter results of financial year 2015-2016 (4QFY16). While net interest income was up by 5% YoY, the company remained loss-making during the quarter. Here is our analysis of the results.

Performance summary
  • Net interest income (NII) increased by 5% YoY in 4QFY16, due to a slower rise in interest expense. For FY16, NII was down by 3.4% YoY.
  • Other income grew by 37% YoY in 4QFY16 on the back of jump in trading and treasury gains. For FY16, other income increased by 13.6% YoY.
  • Global NIMs remained flat at 2.2% in 4QFY16. For FY16, global NIMs contracted by 0.26% to 2.05% due to a slower decline in cost of deposits.
  • The cost-to- income ratio has risen to 50% in 4QFY16 and FY16 on account of a faster rise in employee costs.
  • The gross NPAs as a % of loans have gone up to 9.99% (FY16) from 3.72% (FY15) and the net NPAs have risen to 5.06% in FY16 from 1.89% in FY15.
  • The bank posted a loss of Rs 32.3 billion for a the second consecutive quarter in 4QFY16. For FY16, the bank's net loss stood at Rs 53.9 billion.
  • Capital adequacy ratio at 13.2% at the end of FY16 remained comfortable.

    Financial Performance Snapshot
    Rs (m) 4QFY15 4QFY16 Change FY15 FY16 Change
    Interest income 107,619 110,144 2.3% 429,636 440,613 -2.5%
    Interest expense 75,903 76,840 1.2% 297,763 313,214 5.2%
    Net Interest Income 31,717 33,304 5.0% 131,872 127,398 -3.4%
    Net interest margin (%) 2.2% 2.1% 2.3% 2.05%
    Other Income 12,955 17,747 37.0% 44,020 49,989 13.6%
    Other Expense 17,736 25,326 42.8% 76741.30 89,231 16.3%
    Provisions and contingencies 18,175 68,577 277.3% 44,945 155,137 245.2%
    Exceptional item* 0 0 0 0
    Profit before tax 8,760 -42,852 -589.2% 54,206 -66,981 -223.6%
    Tax 2,777 -10,551 -480.0% 20,222 -13,025 -164.4%
    Effective tax rate 30.3% 24.6% 30.3% 19.4%
    Profit after tax/ (loss) 5,983 -32,301 -639.8% 33,984 -53,955 -258.8%
    Net profit margin (%) 12.8% -29.3% 12.8% -12.6%
    No. of shares (m) 2310.4
    Book value per share (Rs)* 172.4
    P/BV (x) 0.8

    * (Book value as on 30th March 2016)

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