Bank of Baroda reports record Q3 loss of Rs3,342 cr as bad loans surge

Bank of Baroda, the country's second-largest state-run lender by assets, has reported the biggest-ever quarterly loss for any lender in the country of Rs3,342.04 crore, as bad loans at the bank increased sharply.

The loss for the fiscal third quarter ending 31 December compares with a profit of Rs333.98 crore for the comparable quarter of the previous year, BoB stated in a BSE filing.

The bank's total income declined to Rs11,726.95 crore in the quarter ended 31 December, from Rs11,808.34 crore in the year-ago quarter.

BoB said its provisions, including for loan losses, jumped more than five-fold from the year-ago period to Rs6,165 crore in the October-December 2015-16 quarter.

The bank's gross NPA ratio rose to 9.68 per cent from 3.85 per cent in the year-ago quarter, while net NPA ratio soared to 5.67 per cent from 2.11 per cent.

Gross NPAs more than doubled to Rs38,934 crore from Rs15,452 crore in the year-ago period. This led to a surge in provisioning, which shaved off the bottom-line. The overall provisions and contingencies stood at Rs6,164.55 crore as against Rs1,262.25 crore a year ago.

BoB said the loss could have been even heavier but for tax write-back of Rs1,118.37 crore.

The country's state-run lenders have all been reporting massive fall profits due to an asset quality review undertaken by Reserve Bank to clean-up balance-sheets in a way that they reflect the true picture.

Bank of Baroda's results come a day after State Bank of India, the nation's top lender by assets, reported its biggest fall in quarterly profit in nearly five years due to a jump in bad loan provisions.

State-run lenders, which together account for about 85 per cent of the sector's troubled assets, dominate India's banking sector with two thirds of the sector's assets.

Reserve Bank of India (RBI) has asked all lenders to treat some troubled accounts as non-performing even if an actual default has yet to happen and make adequate provisions.

The RBI's directions followed governor Raghuram Rajan's call for a clean-up of bank balance sheets by March 2017.