Bank of Baroda (BoB) announced disappointing financial results for the quarter ended March with a loss of Rs 3,230 crore, due to higher provisioning and a surge in bad loans. The bank, which is one of the largest public sector lenders, expects about Rs 3,000- 5,000 crore of incremental bad loans in the near term.
Declaring the fiscal fourth quarter and full fiscal year results on Friday, Bank of Baroda said it had posted a net profit of Rs 598 crore in the January-March quarter last year. The bank has drastically raised its provisioning to Rs 6,858 crore to cover stressed loans; the provisioning was Rs 1,817 crore last year.
For the full fiscal year, BoB’s loss totalled Rs 5,068 crore, against a net profit of Rs 3,912 crore a year-ago. The financial performance of BoB, along with other banks, is likely to send jitters across markets, and also push policymakers to speed up steps to address the rise in bad loans in Indian banks.
The bank’s dismal fiscal-year performance comes in the wake of investigations into allegations of forex fraud and illegal remittances totalling Rs 6,100 crore, which came to light in October last year. The incident also prompted the RBI to issue a circular to all banks to conduct an internal audit to check fraudulent forex deals.
BoB’s net interest income grew 23% to Rs 3,330 crore during the fourth quarter, compared to Rs 3,172 crore last year.
“We are hoping that NPAs (non-performing assets) have peaked…but regardless of that, we will be at Rs 45,000 crore of gross NPAs and as a prudent measure will provide for Rs 50,000 crore. We have a watchlist of Rs 15,000 crore, which is likely to go bad, but we also expect a recovery of Rs 10,000 crore,” BoB CEO PS Jayakumar said.
The bank will focus on recovery. “There is heightened sense among borrowers to come forward and make payments. We are getting into an environment where borrowers are asked to be responsible,” Jayakumar said.