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Bank of Baroda (BOB.BO)
Buy Equity Research
Above expectations, not as bad at it seems, retain Buy
NII a bit lower, other income high, uses tax refund for provisions
Bank of Baroda (BOB) reported 4QFY11 PAT of Rs12.9 bn (up 43% yoy) 15% ahead
of GSe on a tax refund income of Rs2.5bn and lower taxes for the quarter.
Highlights: (1) NII adjusted for tax refund at Rs23.6 bn, came 3% below as
calculated margins declined 11 bps qop offsetting advances which grew 31% yoy
(2) non interest income was 22% ahead of GSe driven by higher FX income,
trading gains, and fee income which grew by 21%, 12% ahead of GSe (3)
employee costs grew 86% yoy to Rs9.9bn (+39% ahead of GSe) as BOB made
significant portion of the Rs5.5bn provision for pension liability on behalf of retired
employees during the quarter (4) Total provisions were 89% higher than GSe as
loan loss provisions came in at double our estimates at Rs5.3 bn (0.9% of loans
including a floating provision of Rs3bn). The annualized 4Q slippage ratio was
higher at 1.5% (FY11: 1.1%), and restructured loans grew 11% qoq to Rs 67.1bn
(2.9% of loans). Gross NPLs grew 14% qoq (+31% yoy) while net NPLs grew 6%
qoq (+31% yoy).
We retain Buy, market over reacted
We are raising our PAT estimates for FY12 by 7.4% to reflect preponement
of pension liability, but reduce this for FY13 by 3.8% as the bank
will likely see margin pressure from the tightening rates, thus FY12-13E
EPS change by (0-10%) respectively. We introduce 2014 estimates. Our 12-
m CAMELOT-based TP of Rs 1,110 remains unchanged. Maintain our Buy
rating, given reasonable valuations (FY12 P/B: 1.6x) for relatively high ROE
(21%). Risks: MTM hit, macro headwinds.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bank of Baroda (BOB.BO)
Buy Equity Research
Above expectations, not as bad at it seems, retain Buy
NII a bit lower, other income high, uses tax refund for provisions
Bank of Baroda (BOB) reported 4QFY11 PAT of Rs12.9 bn (up 43% yoy) 15% ahead
of GSe on a tax refund income of Rs2.5bn and lower taxes for the quarter.
Highlights: (1) NII adjusted for tax refund at Rs23.6 bn, came 3% below as
calculated margins declined 11 bps qop offsetting advances which grew 31% yoy
(2) non interest income was 22% ahead of GSe driven by higher FX income,
trading gains, and fee income which grew by 21%, 12% ahead of GSe (3)
employee costs grew 86% yoy to Rs9.9bn (+39% ahead of GSe) as BOB made
significant portion of the Rs5.5bn provision for pension liability on behalf of retired
employees during the quarter (4) Total provisions were 89% higher than GSe as
loan loss provisions came in at double our estimates at Rs5.3 bn (0.9% of loans
including a floating provision of Rs3bn). The annualized 4Q slippage ratio was
higher at 1.5% (FY11: 1.1%), and restructured loans grew 11% qoq to Rs 67.1bn
(2.9% of loans). Gross NPLs grew 14% qoq (+31% yoy) while net NPLs grew 6%
qoq (+31% yoy).
We retain Buy, market over reacted
We are raising our PAT estimates for FY12 by 7.4% to reflect preponement
of pension liability, but reduce this for FY13 by 3.8% as the bank
will likely see margin pressure from the tightening rates, thus FY12-13E
EPS change by (0-10%) respectively. We introduce 2014 estimates. Our 12-
m CAMELOT-based TP of Rs 1,110 remains unchanged. Maintain our Buy
rating, given reasonable valuations (FY12 P/B: 1.6x) for relatively high ROE
(21%). Risks: MTM hit, macro headwinds.
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