Bank Of Baroda Q2 Results: Net Profit Rises 28% On Higher Other Income

Bank of Baroda's second quarter profit rose, beating analyst estimates, mainly on higher other income.

The lender's standalone net profit rose 28.3% to Rs 4,253 crore during the September quarter, according to an exchange filing on Saturday.

Analysts polled by Bloomberg estimated a net profit of Rs 4,000.88 crore.

Sequentially, the net profit rose 4.49%. Other income more than doubled (up 128%) year-on-year to Rs 4,171 crore.

The net interest income, or core income, rose 6.4% year-on-year to Rs 10,831 crore. The net interest margin fell 26 basis points quarter-on-quarter to 3.07%, from the previous 3.27%.

There is sharp pressure on cost of funds due to the prolonged pressure on liquidity, Chief Financial Officer Ian De Souza told reporters, in a post-results media call.

The bank doesn't expect liquidity to loosen up any time soon due to various regulatory and geopolitical factors, and this has also led to a compression in NIM, he added.

The lender's Managing Director and Chief Executive Officer Debadatta Chand revised the NIM guidance to 3.15% for this financial year, in the media call.

Credit cost for the bank stood at 0.92%, compared to 0.70% quarter-on-quarter.

Asset quality for the lender also improved with gross non-performing asset ratio falling 19 basis points to 3.32% quarter-on-quarter. Net NPA ratio also improved to 0.76% sequentially, compared to 0.78%.

Fresh slippages increased 76.7% quarter-on-quarter to Rs 4,331 crore. On a yearly basis, they increased 24.4%.

Of these, corporate slippages saw the sharpest rise, up 10 times quarter-on-quarter to Rs 1806 crore and agri slippages increased 29.1% quarter-on-quarter to Rs 483 crore. Retail slippages fell 21% sequentially to Rs 483 crore, and MSME slippages too, fell 22% to Rs 893 crore.

"The slippage ratio is due to one large aviation account," said Chand in the media call.

The bank has now created a full provision for the airline account, he added. However, it was difficult for the lender to determine if this account would go for liquidation.

Provisions for the quarter stood at Rs 2,161 crore, up 32.7% year-on-year.

Current account to savings account ratio stood at 39.88%, down 45 basis points quarter-on-quarter, from 40.33%.

The cost-to-income ratio for the quarter ended Sept. 30 stood at 46.54%, compared to 45.36% in Q1 FY24.

"We wish to bring our CASA ratio to 41%," Chand told reporters.

The lender's gross advances stood at 10.2 lakh crore, up 17.3% year-on-year. Of these, personal loans saw the maximum growth of 67.2% year-on-year to Rs 25,618 crore; followed by gold loans at Rs 3,049 crore, up 65.2% year-on-year; and auto loans at Rs 34,268 crore, up 21.1% year-on-year.

The bank expects its advance book to grow above industry levels, the CFO said. Of this, the corporate book's growth guidance was around 12%-13%.

The lender is also moderating its growth in the unsecured loan book, according to Chand.

Since there is a lot of talk in the market about potential stress, the bank would do a portfolio analysis before growing further in the segment.