Bank of Baroda: Most up-to-date News Regarding Banking

Bank of Baroda (532134.IN) shares have fallen 17% during the last 8 weeks as investors fretted on the Indian lender’s soured loans. Nomura sees the dip like a good buying opportunity and contains upgraded the second biggest government-controlled bank from neutral to purchase.

One reason analyst Adarsh Parasrampuria likes this stock would be that the outlook for its pre-provision operating profit (PPOP) is superior to its rivals, due to expected improvements rolling around in its net interest margins. Nomura forecasts PPOP to grow within an average rate of roughly 13% between 2017-19.
Parasrampuria also likes the bob login provisioning as India’s central bank cracks down non-performing assets (NPA).
RBI’s recent directive to increase the provisioning for 12 large NPA cases led to uncertainty over near-term P&L provisioning, but BOB’s NPA coverage at 58% may be the highest in the corporate banks and provides comfort, in our opinion. Rating agency CRISIL recently indicated a 60% haircut because of these 12 large accounts, which has similarities to the 60% haircut assumption utilized to get to our adjusted book.
However, the analyst is involved about M&A risks given government moves to consolidate smaller public sector banks (PSU):
M&A risks have gone up, using the finance ministry indicating any merger of small PSU banks with larger ones. The world thinks BOB’s valuation at 1.0x FY17F book vs. 0.5-0.6x FY17F book for smaller PSUs factors in M&A-related provisioning risks.
Parasrampuria has a INR200 a share target price on Bank of Baroda, which means 26% upside. The state-owned lender trades at 10 x forward earnings and pays a modest 0.8% dividend yield.
Bank of Baroda (BoB) has a very good provision coverage ratio when compared with other public sector undertaking (PSU) banks. Their tier-I capital ratio can be significantly higher. Some other people are consolidating their balance sheet, BoB is referring to loan growth
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