Bank of Baroda Q1 Results Review - Earnings Inline; Other Income Offsets NII Miss: Motilal Oswal

Motilal Oswal Report

Bank of Baroda reported a mixed quarter as profit after tax jumped 88% YoY (inline) aided by higher other income while net interest margins declined 26 basis points QoQ.

Business growth was modest with loans growing 21% YoY (2% QoQ) while deposits rose 16% YoY (flat QoQ) .

BOB's asset quality improved as slippages remained in control, which resulted in gross/net non-performing asset ratio improving to 3.51%/0.78%. Special mention account 1/2 stands controlled at 29 bp of loans, while restructured book moderated to 1.3% of loans.

We largely maintain our earnings estimates and estimate FY25 return on asset/return on equity at 1.2%/16.9%.

We value the stock at Rs 240 (based on 1.1 times FY25E adjusted book value). We reiterate our 'Buy' rating on the stock.

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