Bank of Baroda Q3 Results Review - Enough And More To Maintain As A Top Pick: Yes Securities

Yes Securities Report

Bank of Baroda was already well provided for wage hike and hence, there were no incremental provisions over above run rate:

Wage hike provisions for the quarter amounted to Rs 4.25 billion, which is essentially a normalized run rate provision. The assumption for wage hike has been 18% since June and the actual hike proved to be 17%. Wage hike provisions were higher by only Rs 0.65 billion due to catch-up on AS 15, which is the retiral and gratuity provision.

A rundown of bulk deposits kept cost of deposits in check and management reiterated NIM guidance:

Global net interest margin was at 3.1%, up 3 basis points QoQ but down -27 bps YoY, which is within guidance range. The rundown of bulk deposits has been NIM accretive since these deposits are particularly high cost in nature. The cost of deposits was up just 4 bps QoQ.

The tenure of the deposits is usually one year and hence, most of the deposit repricing is done. The yield on advances was up 8 bps QoQ and can still benefit from some marginal cost of funds based lending rate repricing and, also, from non-banking financial company book repricing. Management reiterated NIM guidance of 3.15% plus or minus 5 bps for FY24.

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