Motilal Oswal's research report on Bank of Baroda
Bank of Baroda (BOB) reported a loss in 4QFY21, impacted by one-time DTA reversals, even as a pick-up in fee income and recovery from W/O accounts aided operating profit. NII growth was weak, affected by high interest reversals and interest on interest waiver, thereby impacting margin. On the business front, overall loan growth was flat QoQ, while Retail/Agri witnessed strong traction. - Collection efficiency improves to 93%, but remains lower v/s other peers. On the asset quality front, GNPA/NNPA ratio improved v/s pro forma GNPA/NNPA as of De’20. Total restructuring stood ~1.3% of advances (INR94b), while SMA-1/2 stood at 3.9% of loans. We remain watchful of the impact of the second COVID wave on asset quality and estimate credit cost to stay elevated at 2.1% for FY22E. Maintain Neutral.
Outlook
We estimate credit cost to stay elevated at 2.1% in FY22E. We maintain our Neutral stance with a revised TP of INR85/share (0.7x FY23E ABV).
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