BoBs Net Up 75.4%, Beats Estimates

The bank beat estimates by a Bloomberg poll of analysts which had predicted a profit of ₹3,341 crore. Its provisions fell 4.1% year-on-year (y-o-y) to ₹2,404 crore. Of this, ₹817 crore was provisions for non-performing assets (NPAs) and bad loans written off, down 81% from the same period last year.

Its net interest income, the difference between interest earned and expended, stood at ₹10,818 crore in the December quarter, up 26.5% y-o-y. Its net interest margin, a key metric of profitability was at 3.37% as on 31 December, up 24 basis points (bps) from the year ago.

“It was important for BoB to start firing on all engines, and there were two challenges, if you go a year back," said Sanjiv Chadha, chief executive, Bank of Baroda. One, though a lot of segments were growing fast, home loans were not keeping pace. Two, as part of the bank’s deliberate strategy, corporate loan growth was a bit tepid, he added. “Now you will see growth in corporate loans is catching up, and every single segment is growing in double digits. When you look at retail segments, you will see transformation of balance sheet in progress," added Chadha.

The bank’s gross bad loan ratio, or total bad loans as a percentage of total advances, fell 272 bps y-o-y to 4.53%. After setting aside provisions, net NPA ratio declined 126 bps from the year-ago to reach 0.99%. Its advances grew 19.7% to ₹9.23 trillion, led by retail loan growth of 29.4%. Its total deposits grew 17.5% y-o-y to ₹11.5 trillion.

The bank’s capital adequacy ratio under Basel III norms stood at 14.93% as of 31 December, down 54 bps y-o-y.

On Friday, the bank’s shares gained 6.2% on BSE to close at ₹163.65.

“For us, in terms of order of importance, most important is asset quality, then comes margins, and then growth. But we still want to protect our market share by keeping the other two intact. The deposit growth is something that we anticipated is going to be slower to credit growth this year," he said.