OB reported a solid quarter, driven by two main factors: (1) a significant increase in core PPoP, attributed to a substantial recovery of Rs 25 billion from TWO, and (2) a notable improvement in asset quality, with a 38 basis point decline in GNPA to 2.5%, thanks to reduced net slippages and strong recoveries. Although NII/NIM and fee income were lower, they were balanced out by reduced operating expenses.

When adjusted for the TWO recovery, core PPoP was largely in line with expectations. Due to a tight deposit environment, the bank has lowered its loan/deposit growth guidance for FY25E by 1%, now forecasting growth of 11-13% for loans and 9-11% for deposits. NIM fell short of expectations due to the RBI’s penal interest circular and a decrease in overseas NIM linked to repricing. Given the positive recovery trends and increased write-offs, we have revised our GNPA estimates for FY26/27E downward but raised provisions by 3-5 basis points.

As a result, core PAT is expected to decrease by approximately 2%, while ABV is anticipated to rise by about 3.7%. The stock is currently valued at 0.9/0.8 times FY26/27 ABV, reflecting a 20% discount to SBI. We have adjusted our valuation multiple from 1.2x to 1.1x, but increased our target price from Rs 300 to Rs 315 as we roll forward to the September 2026 ABV. We maintain our ‘BUY’ recommendation.

 

Bank of Baroda Soars: Net Profit Jumps 23% to ₹5,238 Crore in Q2 Shares of Bank of Baroda surged by 4.6% today, reaching a peak of Rs 250.55 on the BSE after the bank announced a 23.2% increase in its standalone net profit, which rose to Rs 5,238 crore for the quarter ending September 2024, compared to Rs 4,253 crore in Q2FY24.

The bank’s net interest income (NII) also saw a year-on-year growth of 7.3%, totaling Rs 11,622 crore in Q2FY25. The substantial rise in quarterly profit after tax (PAT) was largely attributed to increases in both NII and non-interest income.

 

Bank of Baroda Soars: Net Profit Jumps 23% to ₹5,238 Crore in Q2 Bank of Baroda (BoB) reported a net profit of ₹5,238 crore for the second quarter of FY25, marking a 23.2% increase from ₹4,253 crore in the same quarter last year. The bank’s net interest income (NII) reached ₹11,622 crore, up 7.3% from ₹10,831 crore in Q2FY24. For the first half of FY25, NII rose to ₹23,222 crore, reflecting a 6.4% year-on-year increase from ₹21,827 crore.

The non-interest income soared by 24.2% to ₹5,181 crore in Q2FY25, compared to ₹4,171 crore a year earlier. This growth resulted in an operating profit of ₹9,477 crore, an 18.2% rise from ₹8,020 crore in Q2FY24.

In terms of asset quality, Bank of Baroda made notable improvements, with the Gross Non-Performing Assets (GNPA) ratio declining to 2.50% in Q2FY25 from 3.32% in Q2FY24. The Net Non-Performing Assets (NNPA) ratio also improved, decreasing to 0.60% from 0.76% the previous year. Additionally, the bank’s capital adequacy ratio strengthened to 16.26%, up from 15.30% in the same quarter last year.

Domestic deposits rose by 7.1% to ₹11,50,791 crore, while international deposits increased by 21.2% to ₹2,12,695 crore, bringing total global deposits to ₹13,63,486 crore, a 9.1% rise from ₹12,49,647 crore a year ago.

Bank of Baroda Soars: Net Profit Jumps 23% to ₹5,238 Crore in Q2 In terms of advances, retail advances grew by 19.9% to ₹2,32,311 crore, domestic gross advances increased by 12.5% to ₹9,38,883 crore, and international advances rose by 7.6% to ₹2,04,156 crore. Overall, global advances climbed to ₹11,43,039 crore, reflecting an 11.6% growth.

Separately, the bank raised ₹5,000 crore through a 10-year infrastructure bond issuance in September, marking its second issuance in two weeks following another ₹5,000 crore sale on August 26.

Commenting on the results, Debdatta Chand, MD & CEO of Bank of Baroda, stated, “This has been a strong quarter from a topline and bottomline point of view.” He highlighted that the bank’s Special Mention Account (SMA) book was at 0.47% of advances in Q2, indicating solid asset quality.

Chand noted that the competitive deposit market has driven the bank to innovate in product offerings for growth. He mentioned, “We are also trying to be ahead of the curve on digital and are spending significantly on IT capital expenditures.”

Looking forward, he expects deposit growth for FY25 to be in the range of 9-11%, lowered from the previous guidance of 10-11%. The bank aims to maintain its margin guidance at 3.15% ± 5 basis points for FY25, with a slippage ratio guidance of 1-1.25% for the fiscal year. Additionally, Chand indicated that the bank expects to keep credit costs below 0.75% for FY25, with retail advances projected to grow at around 20%.

On October 25, the bank’s shares closed down 2.26% at ₹239.50 on the BSE.