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

 HSBC pegs Bank of Baroda's Q3FY21 net profit at Rs 164.1 crore, a staggering 90 per cent de-growth from September quarter's PAT of Rs 1,678.6 crore

Even as economic activity began to look up in the December quarter, Bank of Baroda (BoB) may not have been able to leverage on it, fear analysts. The lender, which is scheduled to report its December quarter results (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:
HSBC
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.

Nomura
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.

Read More