Bank of Baroda announced a net loss of Rs 864 crore for the quarter ended June of the current fiscal year.
The fall of the bank came as a shock to the market as the impact of the COVID-19 resulted. In the same quarter a year ago, the bank had reported a profit of Rs 710 crore.
Bank reports mentioned “On account of the provisioning on standard Rs 1,811 crore accounts, the bank posted a net loss of Rs 864 crore in Q1 FY21 and consolidated net loss was Rs 679 crore.”
Sanjiv Chadha, chief executive, Bank of Baroda stated “Of the ₹1,811 crore, half is accounted for by the provisioning that has been done as per the RBI dispensation for assets that have not slipped on account of the moratorium. The other half of nearly ₹900 crore is on account of a government-guaranteed loan the bank has.”
“Maybe a few weeks from now, once we have done a review of our accounts in light of the RBI instructions, we should be able to give you a better answer,” Sanjiv Chadha added.
The net Provisions and contingencies for the quarter soared from about Rs 3,285 crore a year earlier by 71.32 percent to around Rs 5,628 crore.
In June quarter 2020, the slippage ratio dropped to 1.64 per cent, relative to 3.56 per cent in June the year before.
Public sector loans increased by 8.6 per cent to 7.36 trillion year-on-year, driven by a 13.5 percent y-o-y increase in retail loans. Its total deposits increased by 4.3% to 9.34 trillion y-o-y.
Recovery may be impacted by a default on loan repayments in the second quarter, while efficiency could be hampered by an economic slowdown due to the Coronavirus pandemic in June and September.