 "Photo: Bloomberg")
Bank of Baroda Q4 results preview: Public sector lender, Bank of Baroda, may post a slight decline in net profit for the January-March quarter (Q4FY24) on the back of soft loan growth, according to analysts.
Bank of Baroda, which posted a net profit of Rs 4,775.3 crore in the corresponding quarter of the previous fiscal (Q4FY23), may report up to 8 per cent year-on-year (Y-o-Y) decline in Q4FY24 net profit at Rs 4,398 crore.
On a quarter-on-quarter (Q-o-Q) basis, this would be around 4 per cent decline from Rs 4,579.3-crore profit reported in the December quarter of FY24 (Q3FY24).
Bank of Baroda is scheduled to report its Q4FY24 results on Friday, May 10, 2024.
Here's what key brokerages expect from BoB's Q4 results:
Nomura
In-line with most estimates, the global brokerage expects Bank of Baroda's Q4FY24 net profit to fall 7 per cent Y-o-Y/3 per cent Q-o-Q to Rs 4,430 crore.
This would be on the back of muted operational performance, and higher provisions (sequentially).
The net interest income (NII) is pegged at Rs 11,360 crore, down 1 per cent Y-o-Y/up 2 per cent Q-o-Q. This is against an NII of Rs 11,520 crore in Q4FY23, and of Rs 11,100 crore in Q3FY24.
Provisions, meanwhile, may urge 51 per cent Q-o-Q to Rs 1,000 crore from Rs 670 crore set aside in Q3FY24. On a yearly basis, it would be a 29 per cent contraction from Rs 1,420 crore.
Prabhudas Lilladher
Analysts at Prabhudas Lilladher, too, expect Q4 net profit to fall 6.5 per cent Y-o-Y/2.4 per cent Q-o-Q to Rs 4,467.2 crore.
NII, the brokerage said, could inch up by 2.5 per cent Q-o-Q/down 1.3 per cent Y-o-Y to Rs 11,373.8 crore, while loan growth could come in at 3.9 per cent Q-o-Q.
Margins could fall to 3.06 per cent vs 3.16 per cent in Q3FY24, and 3.53 per cent in Q4FY23.
Operationally, the pre-provision profit (PPoP) could marginally increase by 1.5 per cent Q-o-Q/down 12 per cent Y-o-Y to Rs 7,119.4 crore.
PPoP was Rs 8,072.9 crore in Q4FY23, and Rs 7,015.1 crore in Q3FY24.
On the asset quality front, the brokerage said gross non-performing assets (GNPA) could fall by 21bps Q-o-Q to 2.87 per cent from 3.08 per cent, while credit costs could increase by 12bps Q-o-Q to 0.38 per cent.
Elara Securities
Elara Securities said softer loan growth, below peers, and softer deposit growth may hit Bank of Baroda's Q4 earnings.
It pegs the Q4FY24 loan book at Rs 10.65 trillion, up 13 per cent Y-o-Y/4 per cent Q-o-Q. Deposits, meanwhile, are seen at Rs 12.83 trillion, up 6.6 per cent Y-o-Y/3 per cent Q-o-Q.
"The bank has been providing for higher wage revisions; hence, we do not expect any major impact on opex. That apart, we do not see any major slippages, which will result in lower credit costs," Elara Securities said.
Among the key monitorables, the brokerage said investors should watch for management commentary on RoE (return in equity) trajectory, update on BOB World restrictions, and business momentum sustainability.
It pegs NII at Rs 11,224 crore, PPoP at Rs 7,413.5 crore, net profit at Rs 4,398 crore, and NIM at 2.9 per cent.
Nuvama Institutional Equities
Giving an outlier estimate, Nuvama Institutional Equities expects Bank of Baroda's Q4FY24 net profit to rise 5 per cent Y-o-Y/10 per cent Q-o-Q to Rs 5,019.9 crore.
Moreover, NII, including operating income, is seen growing 2 per cent Y-o-Y/9 per cent Q-o-Q to Rs 15,223.9 crore.
It estimates NIM to decline 2bp Q-o-Q, and sees loan and deposit growth at 3 per cent Q-o-Q respectively. Credit cost may rise by 8bps.
Kotak Institutional Equities
The brokerage expects operating profit to decline 18 per cent Y-o-Y as there would be pressure on revenue growth (NIM decline, lower recovery from written-off loans, and higher operating expenses).
"We expect NIM to decline 10 bps Q-o-Q. We see loan growth at 12 per cent Y-o-Y on slower growth in segments such as NBFC and unsecured loans. We are getting closer to the peak of NIM compression for the bank as the cost of funds is closer to the top of the current cycle," it said.
Kotak IE expects slippages at 1.5 per cent (Rs 4,000 crore), mostly driven by retail and SME. Key discussion would be the sustainability of loan growth, deposit-related challenges, and the near-term NIM outlook.
