Bank of Baroda Q3 Results Review - Lower Provisions Drive Earnings; Margins Improve 3 Bps: Motilal Oswal

Motilal Oswal Report

Bank of Baroda reported Q3 FY24 profit after tax of Rs 45.8 billion, up 19% YoY (9% beat), driven by lower provisions and a 3 basis points QoQ expansion in margins.

Other income declined 21% YoY to Rs 28.1 billion, affected by weak treasury income. Total income, thus, declined 3% YoY (6% miss).

Business growth was healthy, with loans growing 15% YoY (2.6% QoQ) and deposits increasing 8% YoY (flat QoQ). The CD ratio, thus, increased sharply to 82.2%, though liquidity coverage ratio remained comfortable at 133%.

Slippages improved to 0.95%. gross non-performing assets/net non-performing assets ratios, thus, improved by 24 basis points/6 bp QoQ to 3.1%/0.7%. PCR stood stable at 77.7%.

We increase our FY24 earnings estimate by 4.4% and estimate FY25 return of assets /return of equity of 1.2%/17.8%. We reiterate our 'Buy' rating on the stock.

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