Bank of Baroda (BoB) has reported a dismal performance for the quarter ended June 2002. The bank's interest income and profits remained flat compared to the corresponding quarter in the previous year. Its operating margins also slipped steeply on account of increase in interest cost.
Income from operations
Net interest income
Operating Profit Margin (%)
Provisions and contingencies
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (m)
Diluted Earnings per share*
During the quarter, BoB's interest income from advances witnessed a 6% rise, as against a marginal 4% increase for FY02. This could be due to some revival in the bank's advances portfolio. Investment income too showed healthy growth of 15%. However, lower interest income from RBI and from call money markets depressed the bank's total interest income.
Interest on advances
Income from investments
Interest on balance with RBI
The bank's fee based income also grew at a slower pace, accounting for 11% of total income as against 14% for the full year ended March 2002. With volatile bond markets, the bank seem to have booked trading losses in its government securities investments. In FY02, the bank had already transferred Rs 2.2 bn to investment fluctuation reserve to cushion against any future losses due to adverse movement in interest rates. Decline in net interest income and lower other income resulted in an increase in cost to income ratio to 55% in 1QFY03 from 51% in 1QFY02.
Among other new developments, the bank has amalgamated Benaras State Bank Ltd.(BSBL) with effect from July 19, 2002. Consequently, the above results do not reflect data relating to business of BSBL. In the coming quarters, BoB's financial performance could get impacted as BSBL is a sick bank.
At the current market price of Rs 51, BoB is trading at a P/E of 2x 1QFY03 annualised earnings and price to book value ratio of 0.4x. The bank's lower valuations are the result of its decision to merge with BSBL. Also, relatively low level of computerization and subdued financial performance has trimmed its valuations.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407