Motilal Oswal stays 'neutral' on Bank of Baroda

Motilal Oswal has maintained its ‘Neutral’ rating on Bank of Baroda with a target price of Rs 850. BoB’s 3QFY13 PAT was down 22% yoy to Rs 10.1 billion (13% below est of Rs 11.6 billion) led by moderate loan growth (+15% yoy; domestic loan growth of 11% yoy), global NIMs decline of 6bp QoQ to 2.65% and provisions of Rs 10.3 billion (estimate of Rs 9.4 billion) due to higherthan-expected slippages.

Net slippages for 3QFY13 increased to Rs 18b v/s quarterly run-rate of Rs 11- 11.5billion in the past three quarters. During the quarter, BoB restructured loans of Rs 22 billion, compared to Rs 15.9 billion in 2QFY13.While overall GNPAs percentage stood at 2.4%, international GNPAs remained low at 0.73% (0.69%), implying GNPAs percentage in domestic book of 3.3%,compared to 2.6% a quarter ago. PCR, both calculated and including technical write-off, declined ~5% QoQ to 54% and 71%.