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Informist, Friday, Oct. 25, 2024

 

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--Bank of Baroda: Revising credit growth guidance to 11-13% vs 12-14% prev 
--Bank of Baroda: Revising deposit growth guidance to 9-11% vs 10-12% prev 
--Bank of Baroda: NIM guidance kept unchanged at 3.15%, 5 bps on either side 
--Bank of Baroda: Expect some moderation in deposit cost in Oct-Dec, Jan-Mar 
--Bk of Baroda: Focus more on growing mortgage, auto book than personal loans 
--Bank of Baroda: Don't have large microfin book, current levels comfortable 
--Bk of Baroda: Jul-Sept NIM dn QoQ as penal interest treated as penal charge 
--Bank of Baroda MD: Will optimise other income going forward 
--Bank of Baroda: Plan to increase retail loan book more than corporate 

 

By Ashna Mariam George and Kshipra Petkar

 

MUMBAI – Bank of Baroda Friday revised its credit and deposit growth guidance for 2024-25 (Apr-Mar), due to increased competitiveness in the deposit market, the bank's Managing Director and Chief Executive Officer Debadutta Chand said in a media call, post the announcement of financial results for the quarter ended September.  

 

The bank reduced its credit growth guidance for the financial year to a range of 11-13%, compared to its earlier guidance of 12-14% given earlier. For the remaining quarters, the bank expects its deposits to grow in the range of 9-11% compared to a previous guidance of 10-12%.

 

"If you look at the deposit growth - both in Q1 and Q2 - it has been lower than our guidance. Deposits are not growing because the savers' money is going into capital markets. As we calibrate the loan growth guidance, we have brought down the deposit guidance as well since we are mindful of the margin guidance which we have," Chand said. 

 

 

While talking about the moderation in the net interest margins on a sequential basis, Chand said, "...the shrinkage from 3.18% to 3.10% is because of the regulatory requirement of penal interest which has been converted to penal charges to comply with the regulatory guidelines."

 

The bank has kept the guidance for the margins for FY25 unchanged at 3.15%, with the possibility of a 5-basis-point swing on either side. "Why we have kept the margin guidance unchanged is because we still expect a bit of moderation to happen in the deposit cost in Q3 (Oct-Dec) and Q4 (Jan-Mar)," Chand said. "I think then if the system liquidity goes up significantly, possibly even if the rate stands to be the same, I think the cost of deposit for banks would go down."

So keeping the margin guidance the same, is a fair call to take at this point of time," he added.

 

Chand also said that they would focus on other non-interest income. "So going forward the focus also continues to be that other core element of non-interest income that is the commission exchange brokerage aspect and, we will try to optimise that going forward also," he said.

 

Retailising the loan book and reducing the corporate book will be the bank's priority in the near term. Within retail book, the bank plans to grow more in the mortgage and auto segment compared to the personal loan segment. As of Sept. 30, mortgage loans were up 13.2% to INR 198.41 billion and the auto loan book was up nearly 23% on year at INR 421.14 billion.

 

Since the previous quarter, the bank has sharply moderated its growth in the personal loan book from 39.2% a quarter ago to 25.2% in the quarter September.

 

On fund-raising, Chand said that the bank was very comfortable in terms of capital. "As far as the AT-1 (additional tier-I) and tier-II (bonds), we have announced to the market that we intend to raise 7,500 crores (INR 75 billion) this financial year. As of today, we have not raised anything. So any raise would be in the next two quarters. But on the core equity, no plan to raise any money this year."

 

As the banking sector grapples with the stress in the microfinance segment, Chand said that their book is not large enough and the bank is comfortable with the growth in this segment at this point in time.

 

Earlier Friday, the bank announced its financial results for the quarter ended September. The bank's net profit for the reporting quarter was INR 52.38 billion, up 23.2% on year, due to improvement in asset quality and net interest income. On the National Stock Exchange, the shares of the bank ended 2.1% lower at INR 239.52 on Friday. 

 

Edited by Akul Nishant Akhoury

 

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