Will Maintain Margin Guidance At 3-3.1%, Says Bank Of Baroda MD

State-owned lender Bank of Baroda will look at maintaining its net interest margin at 3-3.1%, lower than the previous guidance, Chief Executive Officer and Managing Director, Debadatta Chand, said in an interview with NDTV Profit.

"Our earlier guidance for margins was 3.1-3.2%, and now we are saying that due to cost dynamics on the deposit market, we will operate at 3-3.1%. My nine-month NIM is at 3.08%. There is a cost pressure for all players in the industry," Chand said.

In the quarter ended Dec. 31, 2024, the bank's NIM was at 2.94%, compared to 3.1% as of Sept. 30, 2024 — a drop of 16 basis points.

Bank of Baroda will focus on bringing down the cost of deposits and optimising yield on advances through higher return loans, Chand said. The bank is also bringing out more innovative products to push NIM higher.

The bank will look at growing its retail loan portfolio at the current run rate of 20% or higher, while exceeding the 11-13% overall credit growth guidance it had given for FY25. Agriculture and micro, small and medium enterprises will continue to grow faster than the rest of the book.

According to Chand, corporate credit growth has slowed, owing to higher cost of deposits. For the current financial year, corporate credit will grow at 10% year-on-year, he said.

"The area where we slightly moderated the growth is on the finely priced book, which are typically refinance or takeover transaction," Chand said, speaking on corporate loans.

The government bank will look to recover over Rs 10,000 crore worth bad loans, while maintaining slippages for the year at around Rs 8,000 crore.

The bank's asset quality position improved during the December quarter with gross non-performing asset ratio at 2.43%, down seven basis points quarter-on-quarter. Net NPA ratio remained flat at 0.59%. Credit cost, too, moderated 35 bps sequentially to 0.3%.

In terms of efficiency ratios, Bank of Baroda will look to maintain its return on assets at 1.15-1.2%, Chand said. In the third quarter, RoA moderated to 1.15%, compared with 1.3% in the September quarter. However, Chand said, the July-September quarter RoA was higher due to on-offs and that the ratio is now in its optimal range.