State-run Bank of Baroda on Friday reported a 4.39 per cent increase in consolidated net profit for the December quarter at Rs 5,443 crore, helped by lower provisions as net interest margin compression held back core income growth.

On a standalone basis, its net profit grew to Rs 5,055 crore as against Rs 4,837 crore in the year-ago period.

The core net interest income grew by just 0.1 per cent to Rs 11,800 crore despite a nearly 15 per cent growth in advances, as a 0.25 per cent compression in the net interest margin at 2.79 per cent held back the number.

The bank’s managing director and chief executive, Debadatta Chand, told reporters that the bank will likely achieve the upper-end of the 11-13 per cent loan growth guidance for FY26 and may also exceed it, and is aiming to widen the Net Interest Margin (NIM) to 2.90 per cent by the fourth quarter of this fiscal year.

The non-interest income grew 6 per cent to Rs 3,600 crore during the reporting quarter.

The retail segment led the overall loan growth with a 17.4 per cent jump, including 12.8 per cent in education loans, 12 per cent in personal loans, 16 per cent in home loans and 17.4 per cent in auto loans.

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Chand said the corporate segment advances grew 8.1 per cent in the reporting quarter, and the bank is likely to exit FY26 with a 10 per cent increase in the segment’s advances.

It has a pipeline of Rs 75,000 crore of loans, which includes Rs 45,000 crore of sanctioned advances and over Rs 30,000 crore of loans in various stages of sanction, he added.

The total provisions declined by 26.2 per cent to Rs 799 crore during the quarter, which included a 36 per cent decline in provisions for bad loans at Rs 559 crore.

The fresh slippages came at Rs 2,676 crore, which was marginally higher than the Rs 2,669 crore in the quarter-ago period.

The deposit growth came at 10.3 per cent during the quarter, and Chand added that the bank will be mindful of the accretion in liabilities before deciding its loan growth.

On the capital adequacy front, the bank’s overall buffer stood at 15.29 per cent, including 12.45 per cent of core equity.

The BoB scrip closed 1.04 per cent down at Rs 299.35 a piece on the BSE on Friday.

Bank of Baroda witnessed an improvement in its asset quality. File 
| Photo Credit: Reuters

Bank of Baroda reported that its first-quarter standalone net profit grew 9.5% to ₹4,458 crore over the year-ago period, driven by lower credit cost.

The bank’s Net Interest Income (NII) grew 5% year-on-year (YoY) to ₹11,600 crore, the bank said in a filing. The Net Interest Margin (NIM) stood at 3.18% in Q1FY25, it added.

“We reported good net profit in the quarter. The focus in the quarter was on the liability management side. We protected the margins through liability management and we had control on the cost of deposits [sequentially],” said Debadatta Chand, MD & CEO, Bank of Baroda over a conference call.

The Return on Assets (ROA) during the quarter ended June 30, 2024, remained consistently above 1% for 8 quarters and stood at 1.13% for Q1FY25, he added.

NPA down, deposits up

The bank said it had witnessed an improvement in its asset quality with the reduction in GNPA by 63 bps YoY to 2.88% from 3.51%. The Gross NAP reduced by 11.4% YoY to ₹39,873 crore.

The bank’s Net NPA reduced by 9 bps YoY to 0.69% as against 0.78%.

The bank’s cost of deposits during the quarter increased by 38 bps to 5.06% as against 4.68% YoY. 

The bank’s provisions for the quarter reduced 48% to ₹1,011 crore. The credit cost remained below 1% at 0.47% for the quarter. The Provision Coverage Ratio (PCR) was 93.32%.

The bank’s advances registered a growth of 8.1% YoY led by robust retail loan book growth. Its organic retail advances grew 20.9%, driven by growth across segments such as auto loan (25.1%), home loan (14.7%), personal loan (39.2%), mortgage loan (11%) and education loan (18.8%).

The bank’s deposits grew 8.9% YoY to Rs 13,06,994 crore and global business grew 8.6% YoY and stood at Rs 23,78,675 crore as of 30 June 2024.
 

“Bank of Baroda will be allowed to onboard customers to its Bob World app only after rectifying certain deficiencies,” the RBI said on October 10, without giving any details about the issues.
| Photo Credit: Reuters

Shares of Bank of Baroda fell nearly 4% on October 11, a day after the Reserve Bank of India (RBI) stopped the State-run lender from adding customers to its mobile app citing “certain material supervisory concerns.”

Shares of the bank were last down 3.4% at 10.59 a.m. It was also the top drag in the Nifty public sector bank index, which was down 0.2%.

“Bank of Baroda will be allowed to onboard customers to its Bob World app only after rectifying certain deficiencies,” the RBI said on October 10, without giving any details about the issues.

“Expect the restriction on digital sourcing to hamper both asset and liability growth in the near term,” Macquarie analysts led by Suresh Ganapathy said in a note.

“In the first quarter, about 98% of savings and nearly 91% of the bank’s current accounts, along with a significant portion of retail loans, personal loans, home loans, auto loans and credit cards were sourced digitally,” Macquarie said.

Bob World app has 8.1 million daily transactions, while 43% of time deposits are obtained through the app, the bank had said in its quarterly presentation in August.

“(Going by previous instances) It may take more than a year for the RBI to give approval. So, in the interim, some business growth will get affected,” Macquarie added.

The RBI had previously placed restrictions on the country’s top private lender HDFC Bank’s digital operations for more than a year, before lifting curbs in March 2022.

Shares of Bank of Baroda have underperformed the PSU bank index for the year so far, rising 12% compared to nearly 20% in the index.