Even as economic activity began to look up in the December quarter, Bank of Baroda (BoB) may not have been able to leverage on it, fear analysts. The lender, which is scheduled to report its December quarter results (Q3FY21) on January 27, may report muted earnings on the back of moderate treasury gains, higher operating expenses, and elevated provisions. Picture at the bourses, however, is different. The stock price of the lender outran the benchmark Nifty50 and sectoral Nifty PSU Bank index, during the quarter under review, by surging 50 per cent on the NSE. In comparison, the Nifty and the PSU Bank index are up 24 per cent and 37 per cent, respectively, ACE Equity data show.
Sluggish loan growth, low other income, and delayed resolution of stressed assets maylead to a precarious financial position for public sector banks (PSBs) duringthe December quarter of FY21 (Q3FY21), caution analysts. We estimate weakness to continue in PSBs, barring State bank of India, impacted bysluggish loan growth, a higher proportion of MSME/SME loans, and delay in theresolution of stressed accounts, said analysts at Motilal Oswal FinancialServices (MOFSL) in a sector report. Those at Emkay Global, on the other hand, say that the Supreme Court s stay on NPA tagging remains an irritant in Q3, and may lead to optically elevated proforma slippages due to the spill-over from Q2FY21. That said, overall NPA formation, as well as restructuring proposals, are meaningfully lower than expected though one needs to be watchful of the tail-end risk, it added.