Image Credit: The Financial Express
Bank of Baroda, a public sector bank, reported a loss of Rs 1,046.5 crore for the January to March 2021 quarter. This is in contrast to the same quarter in the previous year when the bank reported a profit of Rs 506.59 crore. The bank had to face losses despite falling provisions due to higher tax costs which hit the balance sheet. Tax costs stood at Rs 3726.07 crore for the quarter ending in March 2021 while it was Rs 2229.85 crore in the corresponding quarter of the previous fiscal year. After these unexpected numbers, that bank now plans to raise Rs 5000 crore by selling bonds and shares.
The numbers have missed the expectations of analysts as the net interest income (the difference between interest earned and interest given) was estimated to be Rs 7710.5 crore for the March quarter, according to a poll conducted by CNBC-TV18. Actual net interest income increased by 4.5% year-on-year(YOY) to Rs 7106.62 crore in the March quarter.
Provisions and contingencies were reduced by the bank to Rs. 3586.03 crore, a fall of 46 per cent YOY. The bank also managed to improve its asset quality as net NPA as a percentage of net advances fell to 3.1% in the March quarter as compared to 3.36% in the December 2020 quarter.
The non-interest income for the public sector bank stood at Rs. 4848.39 crore, a year-on-year increase of 71 %.
Talking of the financial year 2020-21, profit for the bank increased by 51.83 per cent to Rs. 829 crore as compared to the previous year. This was achieved due to the lowering of provisions. Net interest income for the year stood at Rs. 28809 crore, an increase of 4.95% over the previous fiscal year.
Facing a setback from the huge loss in this quarter, Bank of Baroda now plans to raise about 20 billion rupees by selling shares while the remaining 30 billion will come via the selling of bonds that qualify as capital. The bank had raised 45 billion rupees earlier in March from institutional investors to strengthen its capital ratios which were hit hard due to the Covid-19 pandemic.