BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Dolat Capital Report
Bank of Baroda reported a good quarter with robust loan growth of 5.6% QoQ/21% YoY, sequential net interest margin expansion of 15 basis points to 3.5%, strong recovery from written off accounts and low credit costs aiding return on asset of 1.3% for the quarter.
Credit costs stood at 60 bps in Q4 despite Rs 5 billion made towards an airline exposure.
Asset quality continued to improve with over 70 bps sequential decline in to 3.8%, low slippages at 1.2%, moderation in restructured book to 1.8% of advances, and provision coverage ratio at 77%.
Bank of Baroda's management believes that expected credit loss provisions requirements should be absorbed within overall credit costs of guidance 1%.
Sharp decline in net non performing asset levels to sub 1%, moderation in special mention account levels, and limited corporate stress to aid credit costs of ~1-1.1% over FY24-25E. With 50% of loans linked to marginal cost of funds based lending rate, near term net interest margin outlook remains strong.
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