Bank of Baroda Lower provisions drive profits:Emkay

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Bank of Baroda

Lower provisions drive profits

HOLD

CMP: Rs875                                        Target Price: Rs950

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n     BOB’s NII below our/street estimates at Rs22.9bn, PAT at Rs10.3bn in line driven by lower provisions . But, lower provisions jacked up net NPAs by 30% qoq

n     Balance sheet grew 3.2% sequentially; Deposits / loans were up 2.5%/1.6% qoq respectively. Margin compression came in at 58bps qoq to 2.9%

n     Asset quality deteriorates, albeit superior vis-à-vis peers; Slippages came in at Rs5.7bn (1% annualized). The bank has moved all its accounts to system based NPA recognition

n     Valuation at 1.4x/1.2x FY12E/FY13E ABV commensurate with 1.2% RoAs. Maintain HOLD rating on the stock with price target of Rs950