REPORTS ROBUST PERFORMANCE; HIGHER THAN EXPECTED TOPLINE BEATS PAT ESTIMATES - BANK OF BARODA LATEST QUARTERLY RESULT

Bank of Baroda – Q3FY23 First Cut

(CMP - Rs 161, MCap- Rs 83517 crore)

Q3FY23 Earnings Summary

Net interest income was up 26.5% YoY and 6.3% QoQ to Rs 10818 crore; this was mainly driven by healthy credit growth and largely steady NIMs at 3.4% (up 4 bps QoQ). Other income jumped 41% YoY / 94.5% QoQ driven by treasury income (treasury gains almost doubled YoY; the bank reported treasury loss of Rs435 crore in Q2FY23). Recovery from technical written off accounts increased by 57.1% YoY and 34.5% QoQ to Rs811 crore

Opex was up 9.8% YoY at Rs 6138 crore; however due to high income levels, C/I ratio meaningfully declined to 42.7% vs 50.4% in Q3FY22 (49.7% Q2FY23). Provisions increased by 47.7% QoQ to Rs2404 crore, however, NPA provisions declined substantially by 51% QoQ. Credit cost declined to 0.37% vs 0.79% in Q2FY23. Bank reported highest quarterly net profit to Rs 3853 crore, up 75.4% YoY / 16.3% QoQ (ahead of our estimates)

Asset quality continued to show sequential improvement. GNPA and NNPA declined 78 bps and 17 bps QoQ to 4.53% and 0.99%, respectively. Slippages for the quarter were down to Rs 2172 crore (<1% annualised) vs Rs 3479 crore in Q2FY23, while recoveries and upgrades were at Rs1710 crore vs Rs 2047 crore in Q2FY23. SMA1&2 declined from 0.42% in Q2FY23 to 0.4% in Q3FY23. Collection efficiency (ex-agri) was steady at 98%

Overall global loan book (gross) growth was healthy at 19.7% YoY to Rs 9.23 lakh crore. Strong credit offtake was driven by 29% YoY rise in retail loans led by growth in Personal loan portfolio at 169.6%, Auto loan by 27.5%, Education loan by 24.1%, Home loan by 19.6% on a YoY basis. International loans (~18% of total book) also reported healthy growth of 39% YoY. Deposit book jumped 17.5% YoY, primarily led by 98.9% YoY growth in bulk deposits. Domestic deposits was up 14.5% YoY to Rs 10.0 lakh crore. Domestic CASA growth was at 7.6% YoY and its share to total domestic deposits was at 41.63%

View: The bank posted highest quarterly profit led by strong business growth and steady margins. Gradual improvement in asset quality and thereby credit cost boost earnings.

Impact: Positive