Company Update : Bank of Baroda Ltd By Motilal Oswal Financial Services Ltd
NII misses estimate | Other income aids earnings | Slippages increase QoQ
* BoB reported 4QFY25 PAT at INR50.5b (3% YoY growth, in line), though NII missed estimates and provisioning run-rate remained elevated.
* NII declined 6.6% YoY/ 3.5% QoQ to INR110.2b (5.5% miss). Domestic NIMs contracted 9bp QoQ to 3.02%, while global NIMs contracted 8bp QoQ to 2.86%.
* Other income stood better, up 24% YoY/38% QoQ to INR52.1b, led by healthy fee income and better treasury income, as well as higher recovery from written-off accounts. Thus, total revenues grew 1.5% YoY/ 6.9% QoQ to INR162.3b (in line).
* Opex grew 2.8% YoY/ 7.7% QoQ to INR80.97b (in line). PPoP, thus, stood flat YoY and 6.1% QoQ (3% miss to MOFSLe).
* On the business front, advances grew 5.1% QoQ (13.5% YoY), led by broadbased growth across all segments. Among the segments, retail loan grew 19.4% YoY/ 5.5% QoQ, while corporate book grew 8.6% YoY/ 6.4% QoQ. MSME loan grew 14.2% YoY/ 3.5% QoQ. Within Retail, Home/Auto grew 5.7% QoQ/3.7% QoQ, while PL grew faster at 21.3% YoY/5.2% QoQ.
* Deposits grew 10.9% YoY/ 5.7% QoQ, driven by faster growth in CASA deposits, which rose 6.4% YoY/ 7.3% QoQ. Within CASA, CA deposits saw robust growth at 14.9% YoY/ 19.3% QoQ, contributing to a 64bp QoQ increase in domestic CASA deposits, which rose to 39.97%.
* On the asset quality front, fresh slippages increased marginally to INR31.6b/1.1% of loans vs 0.9% in 3QFY25. However, healthy recoveries and accelerated write-offs led to improvement in asset quality ratios. The GNPA/NNPA ratio improved 17bp/1bp QoQ to 2.26%/0.58%, respectively. PCR declined to ~75% vs 76% in 3QFY25. SMA1 and 2 declined to 0.33% (vs 0.49% in 3QFY25). Collection efficiency (ex-Agri) stood at 98.5% as of Mar’25.
* Valuation and view:
We have downgraded the stock following the 3QFY25 results, based on limited earnings levers, elevated CD ratio, and increasing reliance on bulk deposits, which are placing pressure on margins and growth under check. We will review our estimates and TP after the analysts’ webinar/meet scheduled on 7th May’25 at 10:30 AM. The stock currently trades at 0.8x FY27E ABV. We maintain a Neutral rating on the stock with a TP of INR250 (0.9x FY27E ABV).
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