India’s second largest public sector lender, Bank of Baroda reported a 19 per cent year-on-year (yoy) increase in third-quarter standalone net profit at Rs. 4,579 crore, against Rs 3,853 crore in the year-ago quarter. The bank’s Net Interest Income (NII) grew by 2.6 per cent YoY to Rs 11,101 crore in Q3 FY24.
In the bank’s result presser, Debadatta Chand, MD & CEO, Bank of Baroda said that the bank has fairly comfortable numbers this quarter and the asset quality has also improved. He said that the bank’s NII growth has improved with respect to the last quarter and is also in line with the industry.
Bank of Baroda’s organic retail advances grew by 22 per cent, propelled by growth in high-focus areas such as Auto Loan (24.3 per cent), Home Loan (15.6 per cent), Personal Loan (60.8 per cent), Mortgage Loan (10.5 per cent), and Education Loan (18.3 per cent).
Elaborating on the de-growth in personal loans, Debadatta said that the bank’s personal loan book growth moderating to 60 per cent from 68 per cent previously was the bank’s strategy and would further continue.
“Our strategy was to moderate personal loan book, and this guidance will continue. We want to achieve 30-35 per cent growth in personal loan segment. Our quality of book is also good, as large part of the book is from our own customers, most of the personal loan customers are our own bank’s customers,” he asserted.
He also said that the bank has witnessed a fairly robust growth in corporate book and would continue similar guidance.
The bank’s treasury income has lowered with respect to the last quarter. Debadatta said that the treasury income has lowered compared to the last quarter because the bank has significant FRB book on its portfolio, that resulted to additional depreciation and changed delta.
During the December quarter FY24, the bank said that it made a contingent provision of Rs 50.49 crore in respect of investment in the Alternate Investment Fund (AIF) pursuant to RBI circular dated December 19, 2023.
BoB World App Ban expected to be removed
On October 2023, the Reserve Bank of India asked Bank of Baroda (BoB) to immediately suspend further onboarding of customers onto their mobile app ‘bob World’. This ban came right after RBI found material supervisory concerns while onboarding customers onto the app.
Debadatta Chand during the bank’s results call said that he hopes the ban to be lifted off soon when asked if he expects the mobile app ban to be removed by Q4 FY24.
He clarified that the bank has provided all required compliance to the regulator, and the regulated entity and RBI is in constant communication. He hopes the ban to be removed soon, so that the BoB World app can again onboard customers.
Bank of Baroda had earlier said that corrective measures were being taken to address the deficiencies.
“We have initiated further steps to plug any remaining gaps identified, and we will work closely with the RBI to address their concerns at the earliest to their satisfaction,” the bank had said.
What does the numbers suggest:
Public sector lender Bank of Baroda (BoB) on Wednesday posted a 19 per cent increase in profit at Rs 4,579 crore for third quarter ended December 2023. The bank had earned a net profit of Rs 3,853 crore in the same quarter a year ago.
The lender’s net interest income (NII) stood at Rs 11,101 crore. This represents a year-on-year (YoY) increase of 2.6 per cent, rising from Rs 10,818.3 crore. The Global Net Interest Margin (NIM) of the lender improved by 3 basis points sequentially, standing at 3.10 per cent in Q3 FY24, compared to 3.07 per cent in Q2 FY24.
Bank of Baroda displayed some improvement in asset quality, with Gross NPA (Non-Performing Assets) at 3.08 per cent as opposed to 3.32 per cent in the previous quarter. Net NPA also witnessed a decline, standing at 0.70 per cent, down from 0.76 per cent in the previous quarter.
The bank made provisions of Rs 666.3 crore, significantly lower than the Rs 2,404 crore reported YoY and Rs 2,160.6 crore in the previous quarter. The credit cost remained below 1 per cent, reporting 0.69 per cent for first 9 months of FY24 and 0.39 per cent for the quarter.
Capital Adequacy Ratio of the bank moderated to 14.72 per cent as against 14.93 per cent at the end of December 2022. The bank maintained a healthy liquidity coverage ratio at 133 per cent as of December 31, 2023.
Bank of Baroda stock jumped 4.38 per cent to Rs 247.70 on the BSE. During the day, it rallied 5.28 per cent to reach its 52-week high of Rs 249.85. At the NSE, it climbed 4.52 per cent to Rs 248.20.
