Corporate credit, investments have picked up pace, says Bank of Baroda (BoB) Executive Director Murali Ramaswani

Update on the Indian Equity Market:
On Thursday, Sensex gained 115 pts and Nifty topped 12,250. The National Company Law Appellate Tribunal (NCLAT) on Wednesday reinstated Cyrus Mistry as chairman of Tata Sons, holding his removal in October 2016 as “illegal” and it is also aid that Tata Sons’ move to turn into a private company from a public limited was unlawful and ordered its reversal. 

Among the sectors, NIFTY AUTO was up by 1% and NIFTY IT by 0.6%. Among stocks, Yes Bank, TCS and Bharti Airtel shares were among the biggest gainers, gaining up to 7%.

Corporate credit, investments have picked up pace, says Bank of Baroda (BoB) Executive Director Murali Ramaswani

Key takeaways from the interview of Mr Murali Ramaswami, Executive Director, Bank of Baroda; dated 17^th December 2019:

• When asked about exposure to Essar Steel, Mr Ramaswami said that they had exposure to Essar Steel but did not make any money because it was cash outright sale.
• When asked about recovery Mr Ramaswami commented that recovery has been good. As of now, BoB has got about Rs 95,000 mn through National Company Law Tribunal (NCLT). Some have been approved, and some are under approval. Mr Ramaswami is expecting ~Rs 94,500 mn resolutions to happen in next 60 days.
• Mr Ramaswami stated that Slippages have come down. Normally slippages used to be ~Rs 60,000 mn but in 3QFY20E only Rs 40,000-45,000 mn is expected.
• The NPA scenario is improving as a lot of NCLT cases are getting resolved. As of Sept-19, Gross NPA (non-performing asset) ratio is at 10.25 and net NPA at 3.91. Mr Ramaswami expects GNPA to reach below 10 by Mar-20
• Mr Ramaswami commented on loan growth and mentioned that retail segment grew by 7-8% year to date, auto loan is growing at 22-23%, the home loan is growing at around 5-6% and education loan around 11% and other loans around 11-12%. MSME segment has witnessed marginal growth, agriculture grew by 2%.
• He further stated that corporate credit has picked up as far as Bank of Baroda is concerned. BoB has sanctioned about Rs 320 bn in the last one month out of which Rs 90 bn is already disbursed. In the next 15-20 days, another Rs 200 bn disbursement is expected.
• When asked about loan growth Mr Ramaswami stated that he expects loan growth to be ~5-6% in December-19 and if the same momentum continues ~11% growth in March-19.
• He mentioned that the Net Interest Margin (NIM) is at 2.7% domestic and 2.9% Gross. He expects NIM to be above 3% in 3QFY20E as saving bank account grew by 9-10% and bulk deposits are strong. Cost of deposits has come down from 5.14% to 4.46%. 

Consensus Estimate (Source: market screener website)

• The closing price of Bank of Baroda was ₹ 99/- as of 19-December-19. The consensus estimate for Book Value of Bank of Baroda is not available.