Bank of Baroda’s (BoB’s) net profit during the second quarter of 2024-25 (Q2FY25) rose 23.2 per cent year-on-year (Y-o-Y) to Rs 5,238 crore, backed by a rise in non-interest income and decline in provisions for stressed loans.
Sequentially, the Mumbai-based lender’s net profit rose 17.5 per cent from Rs 4,458 crore in June 2024 (Q1FY25).
Its stock closed 2.26 per cent lower at Rs 239.5 on the BSE on Friday.
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.
The net interest margin (NIM) improved to 3.10 per cent in Q2FY25 compared to 3.07 per cent in Q2FY24.
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Sequentially, the NIM declined by eight basis points (bps) as against 3.18 per cent in Q1Fy25.
Debadatta Chand, managing director and chief executive, said the deposit costs had peaked with prospects for moderation.
The bank does not see much change in yield on advances and is retaining the NIM guidance of 3.15 +\- five bps for FY25, Chand said in the post-result virtual media interaction.
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.
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 provision coverage ratio (PCR), including written-off accounts, stood at 93.61 per cent in September compared to 93.16 per cent a year ago.
Advances grew 11.6 per cent Y-o-Y to Rs 11.43 trillion in Q2FY25. Retail advances went up 19.9 per cent Y-o-Y to Rs 2.32 trillion in September 2024.
Chand said credit growth was estimated at 11-13 per cent with retail-segment expansion at more than 20 per cent in FY25.
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.
Deposits increased 9.1 per cent Y-o-Y to Rs 13.63 trillion. The share of low-cost deposits -- current account and saving account (Casa) – in the domestic business was almost flat at 39.84 per cent in September 2024 from 39.88 per cent a year ago.
The bank’s capital adequacy ratio stood at 16.26 per cent, with Tier-I at 14.18 per cent at the end of September 2024.
There are no plans for raising equity capital, given the strong common equity Tier-I base.
The bank has approval in place for raising Rs 7,500 crore in capital through debt instruments, Chand said.