Shares of Bank of Baroda (BoB) are in focus today as the PSU bank is expected to log doubling of profits in the March quarter on a strong growth in net interest income (NII). Net interest margin (NIM) is expected to stay at 3.5 per cent.
Analysts expect earnings and business growth to see healthy traction, adding that opex trajectory, particularly employee costs, is a key focus area due to wage revision costs.
Read More: UIDAI solves biggest problem! Now verify email ID, phone number linked to Aadhaar; details here
Bank of Baroda is expected to report loan growth marginally higher than the industry trend, said ICICI Securities, as the brokerage pegs overall loan growth of 18 per cent YoY and 3 per cent sequentially.
“Overall deposits are expected to grow 13.9 per cent YoY at Rs 11.9 lakh crore while CASA ratio to be largely steady at 36 per cent. NII is estimated to grow 27.7 per cent YoY to Rs 11,000 crore. NIM are expected to inch up at 3.5 per cent. Provisions should decline YoY (up 7 per cent QoQ), resulting in 2 times jump in PAT at Rs 3,616 crore. CI is likely to increase to 46 per cent level,
mainly due to wage revision. Asset quality is expected to witness a marginal improvement QoQ with GNPA ratio declining 8-10 bps,” ICICI Securities said.
Motilal Oswal Securities expects BOB to report 142.40 per cent YoY rise in net profit at Rs 4,311 crore on a 32 per cent YoY jump in NII at Rs 11,390 crore. It sees gross NPAs at 4.2 per cent of advances against 4.5 per cent in December and 6.6 per cent in the year-ago quarter. The brokerage expects slippages to moderate and asset quality to improve further; credit cost likely to remain stable, it said while suggesting that traction in deposits, cost of deposits and margin trajectory to be key monitorables.
Kotak Institutional Equities sees Bank of Baroda’s profit surging 140 per cent YoY to Rs 4,261 crore on a 28 per cent YoY rise in net interest income at Rs 11,035 crore. Pre-provisioning operating profit is seen at Rs 7,969 crore, up 41 per cent YoY. Net interest margin is seen at 3.5 per cent.
Read More: Mutual Funds Vs Insurance: Which Debt Fund Should You Bet On For Higher Returns?
“We expect solid operating profits of 40 per cent YoY led by strong revenue growth and stable costs. We are building flat NIM for the quarter. We expect loan growth to be solid at 15 per cent YoY leading to nearly 30 per cent YoY NII growth. We expect slippages at 1.7 per cent and offset by a meaningful quantum from recoveries and upgrades from the retail and SME portfolio. We expect to hear commentary to be quite positive on asset quality. Key discussion would be the sustainability of loan growth, deposit related challenges and NIM outlook in the near term,” it said.
