BoB gains 5% after reporting Q2 results; Check why the stock is in demand

BoB's net profit during the quarter under review rose 23.2 per cent Y-o-Y to Rs 5,238 crore

Bank of Baroda (BoB) shares gained 4.6 per cent on Monday (October 28) and registered an intraday high of Rs 250.55 per share on BSE. The stock rose after the public sector lender posted a rise in profit and net interest income (NII) for the second quarter (Q2FY25).

 

At around 9:48 AM, BoB shares were up 2.71 per cent at Rs 246 per share. In comparison, the BSE Sensex was up by 0.10 per cent at 79,484.85 at around the same time. The market capitalisation of the company at around the same time stood at Rs 1,27,215.51 crore. 

 

BoB’s net profit during the quarter under review rose 23.2 per cent year-on-year (Y-o-Y) to Rs 5,238 crore as compared to Rs 4,394.3 crore.

 

Sequentially, the Mumbai-based lender’s net profit rose 17.5 per cent from Rs 4,458 crore in June 2024 (Q1FY25). 

 

BoB’s net interest income (NII) expanded 7.33 per cent Y-o-Y to Rs 11,622 crore in Q2FY25 as against Rs 10,831 crore in the same quarter a year ago.

 

Additionally, the net interest margin (NIM) improved to 3.1 per cent in Q2FY25 compared to 3.07 per cent in Q2FY24.

 

However, sequentially, the NIM declined by eight basis points (bps) as against 3.18 per cent in Q1FY25.

 

The bank’s non-interest income rose 24.2 per cent Y-o-Y to Rs 5,181 crore. Of this, recovery from written-off accounts more than doubled to Rs 2,525 crore in Q2FY25 from Rs 1,231 crore in Q2FY24, according to the analyst presentation.

 

Meanwhile, the lender’s provisions for non-performing assets (NPAs) declined by 24.2 per cent at Rs 1,733 crore in Q2FY25 as against Rs 2,285 crore in Q2FY24.

 

The asset-quality profile improved with gross NPAs declining to 2.5 per cent in September 2024 from 3.32 per cent in September 2023.

 

Net NPAs declined from 0.76 per cent in September 2023 to 0.60 per cent in September 2024.

 

The management has retained the NIM guidance of 3.15 +\- 5 basis points (bps) for FY25 as it does not see much change in yield on advances.

 

Further, the bank is planning to accelerate growth in agriculture and micro, small, and medium enterprises to 12-14 per cent from 11-12 per cent. The corporate loan books are estimated to expand at about 10 per cent Y-o-Y.   

 

In the past one year, BoB shares have gained 21.6  per cent against Sensex's rise of 24.4 per cent.