MUMBAI, 4th NOVEMBER, 2023 (GPN) : Public Sector Lender Bank of Baroda (BoB) on Saturday, November 4 reported 28.4 per cent rise in net profit on a year-on-year (y-o-y) basis to Rs 4,253 crore in the second quarter ended September (Q2 FY24).on the back of improved asset quality and healthy core income growth.

Its net interest income (NII) expanded by 6.5 per cent to Rs 10,831 crore in Q2 from Rs 10,174 crore in the same quarter a year ago.

The bank’s net interest margin (NIM) moderated to 3.07 per cent in Q2 FY24, compared with 3.33 per cent in Q2 FY23. Bank revised its guidance for NIMs for FY24 to 3.15 per cent (plus or minus five basis points) from earlier 3.3 per cent.

Commenting on the latest quarterly performance of the bank, Shri Debadatta Chand, Managing Director and Chief Executive Officer, Bank of Baroda, said “It was an excellent quarter marked by the bank’s highest-ever net profit at Rs 4,252.89 crore. The NII for H1FY24 climbed by 14.8% and is now INR 21,827 crore. Compared to Q2FY23, Non-Interest Income soared about two times to INR 4,171 crore, from INR 1,826 crore. For H1FY24, the non-interest income remains INR 7,493 crore, led by strong broad-based advances growth and healthy q-o-q margin expansion of 31bps to 3.33 per cent.The bank’s net interest margin (NIM) decreased to 3.07% in Q2 FY24, down from 3.33% in Q2 FY23.The bank adjusted its NIM guidance for FY24 to 3.15% (with a possible fluctuation of five basis points) from the previous estimate of 3.33%.This revision was attributed to changes in cost factors, specifically an increase in the cost of funds.Deposit growth was better than the industry. Domestic deposits had grown by 12.0% YoY to INR 10,74,114 crore. For the past five quarters, BOB has regularly produced ROA of above one per cent and ROE of about 20%. In Q2FY24, ROE was 19.74% and ROA was 1.14%.Gross Non-Performing Asset (GNPA) dropped by 26.8% YoY to INR 33,968 crore and that the Gross Non-Performing Asset (GPA) Ratio improved to 3.32% from 5.31% in Q2FY23.”

The revision in NIM guidance is due to a change in cost metrics (rise in cost of funds), said Debadatta Chand, managing director and chief executive officer BoB in a media call post Q2 FY24 results.

Non-interest income — comprising fees, commissions, treasury income, and recoveries — rose to Rs 4,171 crore in Q2 FY24 from Rs 1,826 crore a year ago.

The lender’s provisions for non-performing assets (NPAs) and bad debt rose to Rs 2,285 crore in Q2, from Rs 1,654 crore in the year-ago period.

Advances grew 17.3 per cent y-o-y to Rs 10.24 trillion in Q2 FY24. Its retail loans expanded by 22.2 per cent to Rs 1.93 trillion. Its personal loan portfolio, a component of the retail book, expanded by 67.2 per cent y-o-y to Rs 25,618 crore.

Total deposits increased by 14.6 per cent y-o-y to Rs 12.49 trillion. The share of low-cost deposits — current account and savings account (Casa) — was 38.28 per cent at the end of September, down from 39.57 per cent a year ago.

Global deposits grew 13.6 percent to Rs 10.90 lakh crore, of which domestic deposits stood at Rs 9.59 lakh crore (up 10.9 per cent y-o-y as of end September 2022).

The asset quality profile improved, with gross NPAs declining to 3.32 per cent in September from 5.31 per cent a year ago. It declared one airline exposure (Go First) as a non-performing asset (NPA) and made a 100 per cent provision. It was already a stressed account and turned NPA in Q2.

Net NPAs declined from 1.16 per cent in September 2022 to 0.76 per cent in September 2023. The provision coverage ratio improved to 93.16 per cent in September from 91.73 per cent a year ago.

BoB‘s fresh slippages for the quarter under review stood at Rs 3,479 crore (Rs 5,802 crore). Provisions towards bad loans were down 41 percent at Rs 1,628 crore.

• Financial result for Quarter ended 30^th September 2023

Particulars (INR crore)	Q2FY23	Q1FY24	Q2FY24	YoY(%)	H1FY23	H1FY24	YoY(%)
Interest Income	21,254	26,556	27,862	31.1	40,192	54,417	35.4
Interest Expenses	11,080	15,559	17,031	53.7	21,179	32,590	53.9
Fee Income	1,515	1,507	1,996	31.7	2,793	3,503	25.4
Net Interest Income (NII)	10,174	10,997	10,831	6.5	19,013	21,827	14.8
Operating Income	12,000	14,319	15,002	25.0	22,020	29,320	33.2
Operating Expenses	5,969	6,495	6,982	17.0	11,462	13,477	17.6
Operating Profit	6,031	7,824	8,020	33.0	10,558	15,844	50.1
Total Provisions (other than tax) and contingencies	1,628	1,946	2,161	32.7	3,312	4,106	24.0
of which, Provision for NPA Bad Debts Written-off	1,654	1,693	2,285	38.1	3,214	3,978	23.8
Profit before Tax	4,403	5,878	5,859	33.1	7,246	11,737	62.0
Provision for Tax	1,090	1,807	1,606	47.3	1,765	3,414	93.4
Net Profit	3,313	4,070	4,253	28.4	5,482	8,323	51.8

• Business position

Particulars (INR crore)	Sep 30 2022	Jun 30 2023	Sep 30 2023	YoY (%)
Domestic deposits	9,58,967	10,50,306	10,74,114	12.0
Domestic CASA	4,10,151	4,23,600	4,28,320	4.4
Global deposits	10,90,172	11,99,908	12,49,647	14.6
Domestic advances	7,16,737	8,12,626	8,34,723	16.5
Of which, retail loan portfolio (Organic)	1,58,506	1,84,091	1,93,682	22.2
Global advances	8,73,496	9,90,988	10,24,501	17.3
NIM Global %	3.33	3.27	3.07	(26 bps)

•  Key Ratios

Particulars	Q2FY23	Q1FY24	Q2FY24
Return on Assets (%)	1.01	1.11	1.14
CRAR (%)	15.25	15.84	15.30
CET-1 (%)	10.95	11.94	11.57
Gross NPA (%)	5.31	3.51	3.32
Net NPA (%)	1.16	0.78	0.76
PCR (with TWO) (%)	91.73	93.23	93.16

Key Highlights

• Bank of Baroda (BOB) quarterly Net profit higher by 28.4% YoY at INR 4,253 crore in Q2FY24. Net Profit for H1FY24 grew by 51.8% to INR 8,323 crore.
• BOB has delivered ROA of more than 1% and ROE around 20%, consistently for last 5 quarters. ROA for Q2FY24 stands at 1.14% and ROE at 19.74%.
• The growth in profitability was supported by healthy Operating Income growth of 25% YoY in Q2FY24.
• Operating income growth was augmented by ~2x YoY growth in Non-Interest Income in Q2FY24.
• Non-Interest Income growth in Q2FY24 was driven by robust YoY growth in Fee Income (+31.7%), Trading Gains (+69.5%) and Recovery from TWO (~2x)
• Strong growth in Income coupled with subdued increase in Opex has resulted in robust Operating profit growth of 33% YoY for Q2FY24. Operating profit for H1FY24 higher by 50.1% YoY.
• The Bank has been able to effect a reduction in the Cost to Income ratio by 320 bps YoY to 46.54% for Q2FY24. Cost to Income ratio for H1FY24 is also declined by 608 bps YoY to 45.97%
• BOB has witnessed significant improvement in its Asset quality with reduction in GNPA by 199 bps YoY to 3.32%. Bank’s NNPA improved to 0.76%, a reduction of 40 bps YoY.
• BOB’s balance sheet remained robust with healthy Provision Coverage Ratio (PCR) of 93.16% with TWO & at 77.64% without TWO.
• Credit cost remains below 1% at 0.92% for Q2FY24.
• BOB’s Global Advances registered a strong YoY growth of 17.3% in Q2FY24 led by robust retail loan book growth. Bank’s organic Retail Advances grew by 22.2%, driven by growth in high focus areas such as Auto Loan (21.1%), Home Loan (16.1%), Personal Loan (67.2%), Mortgage Loan (13.3%), Education Loan (18.3%).
• Bank achieved a total business of INR 22,74,148 crore as of 30th Sep 2023, registering a growth of 15.8% YoY.

IN NUTSHELL –Financial result for Quarter ended 30^th September 2023

Profitability

• BOB reported a standalone Net Profit of INR 4,253 crore in Q2FY24 as against a profit of INR 3,313 crore in Q2FY23. Net Profit for H1FY24 stands at INR 8,323 crore (+51.8% YoY) as against INR 5,482 crore in H1FY23.
• Net Interest Income (NII) grew by 6.5% YoY to INR 10,831 crore in Q2FY24. NII for H1FY24 registered a growth of 14.8% and stands at INR 21,827 crore.
• Non-Interest Income grew ~2x to INR 4,171 crore in Q2FY24 as against INR 1,826 crore in Q2FY23. Non-Interest Income for H1FY24 stands at INR 7,493 crore.
• Global NIM stands at 3.07% in Q2FY24.
• Yield on Advances increased to 8.43% in Q2FY24 as against 7.22% in Q2FY23.
• Cost of Deposits increased to 4.92% in Q2FY24 as against 3.59% in Q2FY23.
• Operating Income for Q2FY24 stands at INR 15,002 crore, increase of 25% YoY. Operating Income for H1FY24 grew by 33.2%.
• Operating Profit for Q2FY24 stands at INR 8,020 crore, increase of 33% on a YoY basis. Operating Profit for H1FY24 increased by 50.1% to INR 15,844 crore.
• Cost to Income ratio reduced to 46.54% for Q2FY24 as against 49.74% for Q2FY23.
• Return on Assets (annualised) improved to 1.14% in Q2FY24 from 1.01% in Q2FY23.
• Return on Equity (annualised) for Q2FY24 increased by 18 bps YoY to 19.74%.
• For the consolidated entity, Net Profit stood at INR 4,394 crore in Q2FY24 as against INR 3,400 crore in Q2FY23.

Asset Quality

• The Gross NPA of the Bank reduced by 26.8% YoY to INR 33,968 crore in Q2FY24 and Gross NPA Ratio improved to 3.32% in Q2FY24 from 5.31% in Q2FY23.
• The Net NPA Ratio of the Bank stands at 0.76% in Q2FY24 as compared with 1.16% in Q2FY23.
• The Provision Coverage Ratio of the Bank stood at 93.16% including TWO and 77.64% excluding TWO in Q2FY24.
• Slippage ratio declined to 1.28% for H1FY24 as against 1.53% in H1FY23.
• Credit cost for the Q2FY24 stands at 0.92%.

Capital Adequacy

• CRAR of the Bank stands at 15.30 % in Sep’23. Tier-I stood at 13.19% (CET-1 at 11.57%, AT1 at 1.62%) and Tier-II stood at 2.11% as of Sep’23.
• The CRAR and CET-1 of consolidated entity stands at 15.74% and 12.11% respectively
• The Liquidity Coverage Ratio (LCR) consolidated stands at 132%.

Business Performance

• Global Advances of the Bank increased to INR 10,24,501 crore, +17.3% YoY.
• Domestic Advances of the Bank increased to INR 8,34,723 crore, +16.5% YoY.
• Global Deposits increased by 14.6% YoY to INR 12,49,647 crore.
• Domestic Deposits increased by 12.0% YoY to INR 10,74,114 crore in Sep’23.
• International Deposits grew by 33.8% on a YoY basis to INR 1,75,533 crore in Sep’23.
• Organic Retail Advances grew by 22.2%, led by growth in high focus areas such as Auto Loan (21.1%), Home Loan (16.1%), Personal Loan (67.2%), Mortgage Loan (13.3%), Education Loan (18.3%) on a YoY basis.
• Agriculture loan portfolio grew by 13.7% YoY to INR 1,30,694 crore.
• Total Gold loan portfolio (including retail and agri.) stands at INR 43,884 crore, registering a growth of 31.0% on a YoY basis.
• Organic MSME portfolio grew by 12.1% YoY to INR 1,13,512 crore.

Ends