Earnings Outlook
Bank of Baroda's Oct-Dec PAT seen down 4.4% YoY, 16% QoQ
This story was originally published at 23:00 IST on 28 January 2025
Register to read our real-time news.Informist, Tuesday, Jan. 28, 2025
By Kshipra Petkar
MUMBAI – Bank of Baroda's net profit is expected to fall 4.4% on year to INR 43.79 billion for the quarter ended December, according to the average of estimates from 13 brokerages. Sequentially, the bottom line is seen falling by over 16%. The net profit for the bank is seen in the range of INR 37.53 billion-INR 49.83 billion. The bank will detail its results for Oct-Dec on Thursday.
"We expect flat operating profits while earnings to decline around 10% year-on-year as there would be pressure on revenue growth (slower loan growth, lower recovery from written-off loans, lower fee income and normalisation of provisions)," Kotak Institutional Equities said in its pre-earnings report.
Most analysts expect the net interest margins to remain steady on quarter. However, Elara Securities and Nirmal Bang expect margins to decline by 3-5 basis points on quarter. The net interest margin of the bank stood at 3.10% in Jul-Sept.
The net interest income of the bank is expected to rise 7.2% on year and 2.4% on quarter to INR 118.98 billion for Oct-Dec. "NII growth to broadly align with credit growth quarter-on-quarter," Axis Securities said in its pre-earnings report. In Jul-Sept, the net interest income of the bank stood at INR 116.22 billion. In the previous quarter, the bank said that they would focus on improving their non-interest income, the commentary on which will be in focus.
As per the provisional figures released by the bank, domestic advances were up 11.8% on year as on Dec. 31 and domestic deposits were up 9.2% on year. In the previous quarter, 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 and deposits to grow in the range of 9-11% compared to a previous guidance of 10-12%.
Provisions for the bank are also expected to be steady for the reporting quarter on a sequential basis. The bank's provisions for Jul-Sept stood at INR 23.36 billion. "We expect curtailed slippages (ex-of agri slippages), which with steady recovery and upgrade will likely help GNPLs (gross non-performing loans)," Elara Securities said in its pre-earnings report. Kotak Institutional Equities expects slippages to be driven by retail and small and medium enterprises.
Reports said that the asset quality of the bank is expected to improve in the reporting quarter on the back of improving recoveries. Emkay Global in its pre-earnings report said that the bank is expected to see better asset quality than peers as it does not have any exposure to Mahanagar Telephone Nigam Ltd and Rashtriya Ispat Nigam Ltd. The bank's gross NPA ratio stood at 2.50% as on Sept. 30 and the net NPA ratio stood at 0.60%.
Analysts remain watchful of the bank's commentary on outlook for loan growth, deposit-related challenges and net interest margins in the near term. Since the bank announced its earnings for Jul-Sept, its shares have fallen over 11%. On the National Stock Exchange, the shares of Bank of Baroda closed nearly 1% higher at INR 221.76 on Tuesday.
Following are the Oct-Dec earnings estimates for Bank of Baroda based on reports from 13 brokerage firms in descending order of the estimate of net profit:
| Brokerage Name | Net Interest Income (in INR million) | Net Profit (in INR million) |
| YES Securities (India) | 1,19,102.00 | 49,832.00 |
| Nuvama Wealth Management | 1,18,500.00 | 48,500.00 |
| Elara Securities (India) | 1,18,197.00 | 47,881.00 |
| Emkay Global Financial Services | 1,19,052.00 | 46,273.00 |
| Nirmal Bang Equities Pvt | 1,18,984.00 | 45,564.00 |
| Nomura Equity Research | 1,18,300.00 | 44,900.00 |
| Anand Rathi Share and Stock Brokers | 1,18,992.00 | 44,323.00 |
| Motilal Oswal Financial Services | 1,20,254.00 | 44,003.00 |
| Sharekhan | 1,18,890.00 | 41,580.00 |
| Axis Securities | 1,18,960.00 | 41,070.00 |
| Kotak Institutional Equities | 1,18,257.00 | 39,986.00 |
| JM Financial Institutional Securities | 1,19,618.00 | 37,839.00 |
| Prabhudas Lilladher | 1,19,672.00 | 37,526.00 |
| Average | 1,18,982.92 | 43,790.54 |
End
Edited by Deepshikha Bhardwaj
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