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BANK OF BARODA -Key takeaways
Outlook for credit growth remains stable (2-3% higher than industry average). Inaction
from government on policies can become an issue to maintain the current GDP growth.
The bank indicated that corporate CAPEX has picked up selectively as utilization rates are
higher. However, they are not as widespread as anticipated initially.
Margin outlook comfortable despite sharp rise in deposit rates as pricing power remains
comfortable. Continuous rise in lending yields to hurt SME more and bank would take a
call on margins/asset quality. CASA deposit mobilization trends are comfortable. Strength
is increasingly visible from the rural and semi urban branches and is able to leverage the
technology effectively to maximize the deposit mobilization from its branches, including
new ones being opened.
No near-term concern on asset quality. The bank is yet to completely recognize NPL
without manual intervention. However, in line with other banks, incomplete information,
remains the primary challenge in these small ticket loans rather than delay in payment.
Ancillaries to sectors like infrastructure, textiles, exports and commodities are doing well.
RBI’s recent regulation on the liability for retired employees to be charged in current
year’s profits would have limited impact as the bank has made higher provisions in
FY2010. The total liability (adjusted for provisions made in the previous year) has been
estimated at Rs 21 bn.
No near concern on capital adequacy. Unclear on timing of infusion for increasing GoI
stake in the bank to 58%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
BANK OF BARODA -Key takeaways
Outlook for credit growth remains stable (2-3% higher than industry average). Inaction
from government on policies can become an issue to maintain the current GDP growth.
The bank indicated that corporate CAPEX has picked up selectively as utilization rates are
higher. However, they are not as widespread as anticipated initially.
Margin outlook comfortable despite sharp rise in deposit rates as pricing power remains
comfortable. Continuous rise in lending yields to hurt SME more and bank would take a
call on margins/asset quality. CASA deposit mobilization trends are comfortable. Strength
is increasingly visible from the rural and semi urban branches and is able to leverage the
technology effectively to maximize the deposit mobilization from its branches, including
new ones being opened.
No near-term concern on asset quality. The bank is yet to completely recognize NPL
without manual intervention. However, in line with other banks, incomplete information,
remains the primary challenge in these small ticket loans rather than delay in payment.
Ancillaries to sectors like infrastructure, textiles, exports and commodities are doing well.
RBI’s recent regulation on the liability for retired employees to be charged in current
year’s profits would have limited impact as the bank has made higher provisions in
FY2010. The total liability (adjusted for provisions made in the previous year) has been
estimated at Rs 21 bn.
No near concern on capital adequacy. Unclear on timing of infusion for increasing GoI
stake in the bank to 58%.
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