BoB net profit up 23%, revises down FY25 loan book target marginally

Mumbai: Bank of Baroda on Friday reported a 23.2 per cent growth in September quarter net at Rs 5,238 crore, but announced a marginal reduction in loan growth target for the fiscal year due to challenges on garnering deposits.

The state-run lender had reported a net profit of Rs 4,253 crore in the year-ago period, and Rs 4,458 crore in the quarter-ago period.

Its core net interest income grew 7.3 per cent to Rs 11,622 crore during the reporting quarter on a 11.6 per cent rise in global advances and a slight expansion in the net interest margin to 3.1 per cent.

Its chief executive and managing director Debadatta Chand said a 24 per cent growth in non-interest income to Rs 5,181 crore on the back of higher recoveries helped it post a higher profit growth.

Amid the war on deposits in the system, the bank could grow its overall base by 9.1 per cent during the quarter, which led Chand to announce a reduction in the overall targets for the fiscal year.

The bank is now targeting advances growth of 11-13 per cent, as against 12-14 per cent earlier, and deposit growth of 9-11 per cent as against 10-12 per cent guided for earlier, he said.

"Deposits are not growing because the savers' money is going into capital markets," Chand said, adding that the bank is holding on to the guidance on NIMs at 3.15 per cent which will mean that it is unlikely to join the rate war to get the liabilities.

Chand said the bank expects a moderation in the deposit costs in the second half of the fiscal, even if the RBI rate cut does not come because systemic liquidity conditions are getting easier.

Innovations like coming up with a bundled deposit offering have helped the bank, Chand said, adding that the recent appointment of former cricketer Sachin Tendulkar as the brand ambassador will also help.

On the loan growth front, retail assets grew 20 per cent, while corporate loan growth went up to over 10 per cent as against above 1 per cent in the Q1, Chand said, adding that the second half of the fiscal will see higher loan growth.

The bank has a strong pipeline of loans, which will help the overall corporate loan growth to come at levels higher than 10 per cent, Chand said, adding that the economic activity is robust.

Its gross non performing assets ratio improved to 2.50 per cent as against 3.32 per cent in the year-ago period. The fresh slippages came at Rs 2,788 crore, taking the H1 number to Rs 5,575 crore, Chand said, adding the stress is coming from retail, agriculture and small businesses.

The overall slippages will be contained within the target of Rs 10,000 crore for FY25, the MD said, adding it is also targeting to recover over Rs 12,000 crore in advances for the fiscal year.

It is yet to raise any resources from the bond market despite getting shareholder nod to raise up to Rs 7,500 crore in tir-I and tier-II instruments, Chand said, adding that it may look at issuances in H2.

The bank's overall capital adequacy ratio stood at 16.26 per cent and it has no plans of equity issuances, the management said.

The BoB scrip closed 2.26 per cent down at Rs 239.50 a piece on the BSE on Friday, as against a 0.83 per cent correction on the benchmark.