Earnings Guidance
Bank of Baroda trims FY25 net interest margin guidance to 3.0-3.1%
This story was originally published at 20:49 IST on 30 January 2025
Register to read our real-time news.Informist, Thursday, Jan. 30, 2025
Please click here to read all liners published on this story
--Bank of Baroda MD: Continue to focus on garnering CASA deposits
--CONTEXT: Comments by Bank of Baroda's mgmt in post earnings media call
--Bank of Baroda MD: Aim to keep NIM in range of 3.00-3.10% FY25
--Bank of Baroda MD: Maintain FY25 guidance on deposit, credit growth
--Bank of Baroda MD: Comfortable at FY25 credit deposit ratio of 84%
--Bank of Baroda MD: See no reason for cost of deposits to inch up further
--Bank of Baroda MD: Comfortable with current level of microfinance exposure
--Bank of Baroda MD: No plan currently to raise capital via equity
MUMBAI – Bank of Baroda has lowered the guidance for net interest margin for 2024-25 (Apr-Mar) to the level of 3.00-3.10% "with a bias towards upward band", Managing Director and Chief Executive Officer Debadatta Chand said in a post-earnings media call on Thursday. The bank's global net interest margin for Apr-Dec shrank to 3.08% from 3.18% a year ago, owing to elevated cost of deposits. The bank earlier guided the margin to be in the range of 3.10-3.20% for FY25.
The bank announced earnings for the quarter ended December post-market hours earlier in the day, posting a 7.7% on-quarter slump in net profit to INR 48.37 billion. However, the net profit was up 5.6% on a yearly basis.
Regardless of the lower margin projections, the bank retained the earlier guidance for credit and deposit growth. The lender still sticks to the growth of 9-11% in deposits and 11-13% in advances, it said. The global advances of the bank saw an 11.8% on-year growth to INR 11.73 trillion, which is in line with guidance. Similarly, global deposits rose 11.8% on year to INR 13.92 trillion, slightly beating expectations.
Though the cost of deposits dragged down the margin for Oct-Dec, the bank does not expect it to inch up further. "There is durable liquidity injected into the system in terms of cash reserve ratio cut. There is (RBI) policy again which could be much watched in terms of the policy stance and particularly on the rate stance. So, in that scenario, I think it is fairly well-balanced in managing books in terms of maintaining margin," Chand said. The domestic cost of deposits increased to 5.20% for Oct-Dec from 5.16% a quarter ago and 5.00% a year ago.
As part of bringing down the cost of deposits, the bank will focus on garnering low-cost current account, savings account deposits rather than any other form of deposit, Chand said. The domestic current account, savings account ratio was down 101 basis points at 39.68% from 40.69% reported in the previous year.
As of Dec. 31, the bank's credit-deposit ratio was at 84.24%. The bank said it is comfortable with this level and is looking forward to "domestic CD operating between 80-82%, whereas global CD operate between 82-84%".
When asked about the microfinance stress, the lender said it is comfortable with the current level of exposure at INR 60 billion. According to Chand, the exposure to microfinance is less, and the bank mostly lends to institutions rated A and above.
The bank said it does not have any plan to raise funds through equity as of now and may evaluate it going ahead. On the debt side, the bank said there is some headroom available in terms of their announcement both on the infrastructure bonds and also tier-II bonds. So far in the current financial year, the bank has raised INR 150 billion through infrastructure bonds and INR 35 billion via tier-II bonds.
In order to enhance the information technology infrastructure, around 12-15% of its operating profit is allotted to technology expenditure, which Chand said, could take care of the bank's current requirements.
On Thursday, shares of the bank closed 0.1% lower at INR 222.30 on the National Stock Exchange. End
Reported by Christina Titus
Edited by Tanima Banerjee
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2025. All rights reserved.
To read more please subscribe
Share this Story:
