Dip in PAT, weak asset quality: What to track in Bank of Baroda’s Q3 result

Even as economic activity began to look up in the December quarter, (BoB) may not have been able to leverage on it, fear analysts. The lender, which is scheduled to report its December quarter (Q3FY21) on January 27, may report muted earnings on the back of moderate treasury gains, higher operating expenses, and elevated provisions.

Picture at the bourses, however, is different. The stock price of the lender outran the benchmark Nifty50 and sectoral Nifty PSU Bank index, during the quarter under review, by surging 50 per cent on the NSE. In comparison, the Nifty and the PSU Bank index are up 24 per cent and 37 per cent, respectively, ACE Equity data show.

Here’s what leading brokerages expect:


The global brokerage pegs the lender’s net profit at Rs 164.1 crore, a staggering 90 per cent de-growth from September quarter’s (Q2FY21’s) PAT of Rs 1,678.6 crore. In the year-ago quarter (Q3FY20), the lender had incurred a loss of Rs 1,407 crore.

Similarly, profit before tax (PBT) is expected to plunge by 91 per cent QoQ to Rs 219.4 crore from Rs 2,550.2 crore. The pre-tax loss was Rs 2,197 crore in Q3FY20.


Analysts here expect the core pre-provision profit (operating profit) to decline 7.3 per cent on a yearly basis, to Rs 5,201.3 crore, driven by continued weakness in fee income. It was Rs 4,958.5 crore in Q3FY20, and Rs 5,551.8 crore in Q2FY21. Net profit is pegged at Rs 1,141.9 crore.

“We expect loan growth to see some pick-up (2.8 per cent QoQ; 5.2 per cent YoY). With stable margins, we expect an 8.2 per cent yearly growth in net interest income (NII),” it said in its earnings preview report. The bank had reported a NII of Rs 7,129.1 crore in the year-ago quarter, while it was Rs 7,507.5 crore in the preceding quarter of the current fiscal.

That apart, it expects credit cost to remain elevated at 210bps due to higher moratorium book.

Emkay Global

This brokerage expects the lender to report a net loss of Rs 395.4 crore for the quarter under review, but a 9.6 per cent YoY improvement in operating profit at Rs 5,432.9 crore.

“Moderate treasury gains, rising opex and elevated provisions should keep earnings under pressure. Overall slippages and restructuring pool may be more moderate-than-expected. Further, there may not be any major corporate NPAs,” it said in a report.

Motilal Oswal Financial Services

MOFSL, too, expects the public sector lender to report a somber profit of Rs 211.3 crore on the back of elevate credit costs and moderation in NII. It projects a 0.4 per cent growth in NII at Rs 7,157.2 crore.

With a total income of Rs 10,082.1 crore and operating expenses of Rs 4,738.9 crore, the brokerage expects BoB’s operating profit to be around Rs 5,343.2 crore, up nearly 8 per cent on year.

The brokerage cautions investors on the lenders asset quality, which is expected to remain under pressure in Q3, and expects the rundown in international book to continue. The gross NPA ratio may likely jump to 10 per cent from 9 per cent QoQ, while NNPA ratio could grow to 3.1 per cent from 2.5 per cent.

Kotak Institutional Equities

The brokerage remains an exception and believes that the lender’s PAT may grow 16 per cent on year to Rs 1,949.1 crore.

“We expect the trend on strong recovery in earnings to continue in Q3FY21 largely led by lower provisions. We expect loan growth to be higher at around 11 per cent primarily on a low base performance. Operating profit growth (at 9.3 per cent YoY to Rs 5,421.5 crore) to be led by lower operating expenses growth,” it noted.

It sees a 64.3 per cent YoY and 15 per cent QoQ decline in provisions at Rs 2,555.1 crore during the quarter. Loan-loss provisions were Rs 7,155.4 crore in the previous-year quarter, and Rs 3,001.6 crore in Q2FY21.

“Focus would be on the commentary on the pipeline for restructured loans for the bank by Q4FY21 and the near-term impact, if any, on the small-ticket loan portfolio due to Covid-19,” it added.

Phillip Capital

While penciling-in a 6 per cent yearly improvement in NII at Rs 7,556.8 crore, the brokerage forecasts a 3.3 per cent YoY (14 per cent QoQ) slip in operating profit at Rs 4,792.5 crore. Moreover, it expects the lender’s PAT to decline by 49 per cent sequentially to Rs 853 crore.

However, on the upside, analysts here believe that resumption in loan growth may benefit the lender in terms of lower cost of fund, and leading to stable margins.

It expects slippages at Rs 4,500 crore during the quarter with GNPA at 9 per cent and NNPA at 2.4 per cent.

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