Bank Of Baroda Q3 Net Up 75%; Exposure To Adani Group Well Below RBI Cap

Robust growth in net interest income (NII) and expansion in margins helped public sector lender Bank of Baroda report its highest-ever quarterly profit in the October–December quarter (Q3) of FY23.

Its net profit jumped 75.4 per cent year-on-year (YoY) to Rs 3,853 crore during this period from Rs 2,197 crore in the year-ago period.

The lender’s NII grew 26.5 per cent YoY to Rs 10,818 crore in Q3 on the back of healthy growth in advances. Net interest margin (NIM), a measure of profitability, stood at 3.37 per cent, up 4 basis points (bps) from the previous quarter, and 24 bps from the year-ago period.

The bank’s asset quality saw a sharp improvement, with gross non-performing assets (NPAs) dropping to 4.53 per cent in Q3, down 78 bps from the previous quarter, and net NPAs falling below the 1 per cent mark.

Sanjiv Chadha, managing director and chief executive officer of Bank of Baroda, said the downside that can come to the banks’ portfolio from the existing stock of loans was extremely limited.

Shares of the lender closed 6.20 per cent up at Rs 163.55 on the BSE.

The lender’s provisions have gone up sequentially by 48 per cent to Rs 2,404 crore but it is down 4 per cent YoY. The bank has a provision coverage ratio, with technical write-off, is around 92.34 per cent. Further, the slippage ratio declined to 1.05 per cent in Q3 from 1.68 per cent in the previous quarter.

The bank’s advances portfolio lender has grown by 19.7 per cent YoY to Rs 9.23 trillion, with domestic advances growing by 16.2 per cent YoY. While retail advances grew by 29.4 per cent YoY, the corporate book has witnessed 13.3 per cent YoY growth. Within the retail portfolio, most of the segments — auto, mortgage, education, and personal — have seen robust growth.

Interestingly, deposits of the lender have grown 17.5 per cent YoY to Rs 11.49 trillion, with domestic deposits growing by 14.5 per cent, and international deposits growing by 43.6 per cent during this period.

In line with the trend witnessed in other banks, the CASA ratio decreased to 41.63 per cent at the end of Q3FY23 from 44.28 per cent a year-ago as the interest rate on term deposits offered by the bank increased.

“Both deposits and advances have grown well for the bank. As far as advances are concerned, the industry has profited from the cyclical upturn. We have grown better than the market average. The challenge that we will always discuss is that there is an expanding gap between deposit and advances growth is less of an issue for us,” Chadha said.

“For us, in terms of order of importance, the most important is asset quality, then comes margin and then growth. But we still want to protect our market share by keeping the other two impacts,” he said.