BoB Q4 profit up 5 pc to Rs 5,415 cr, expects margin pressure to continue

Mumbai, May 6 (PTI) Bank of Baroda on Tuesday reported 5.59 per cent increase in March quarter consolidated net profit at Rs 5,415 crore, restricted by a decline in net interest margin.

On a standalone basis, the state-owned lender reported 3.3 per cent increase in net profit at Rs 5,048 crore for the quarter. Its net profit for FY25 rose 10 per cent to Rs 17,789 crore.

Despite an over 12 per cent loan growth, the core net interest income was down 6.6 per cent, largely because of a 0.25 per cent decline in NIM.

Challenges on the core income front led to some concerns among investors, and the Bank of Baroda stock tanked by over 10 per cent in reaction to the results which were declared during market hours.

Managing Director and chief executive Debadatta Chand said the market forces are pushing up cost of deposits due to which NIMs are suppressed and the number will rise as the deposits get repriced.

He said NIMs will be under pressure for the first half of fiscal FY26, and widen in the second half, and added that it will be the endeavour of the bank to maintain the number in or around 3 per cent level.

At present, 38 per cent of the bank's loanbook is linked to the external benchmark of repo rate and gets repriced with every policy rate cut by RBI, over 50 per cent are linked to the marginal cost of funding based lending rate.

A 24 per cent growth in the non-interest income at Rs 5,210 crore helped the bank post the profit growth during the quarter.

Similarly, a 13 per cent reduction in provisions for bad debts at Rs 1,297 crore helped in the profit growth.

Seeking to assuage investor concerns, Chand said this is one of the best quarters from an asset quality perspective for the bank with the fresh slippage inching up to Rs 2,873 crore from the year-ago period's Rs 2,855 crore, and added that the recoveries were also higher in FY25 as compared to the year-ago period.

Gross non-performing assets ratio improved to 2.26 per cent as of March 31, as against 2.43 per cent in December, and Chand said this is the lowest in 13 years.

The bank is seeking to grow its loan book by 11-13 per cent in the new fiscal, and Chand said that the liquidity moves by the central bank can increase the number by up to 2 percentage points. He said the bank is targeting to maintain deposit growth at 9 per cent.

It is targeting a 10 per cent growth in corporate advances but Chand conceded that pricing is a challenge on this. Housing and mortgage products book will grow 20 per cent, the unsecured personal loans by 20 per cent.

The bank is targeting to open 200 more branches in FY26, the same as it aimed in FY25, Chand said, adding that the spends on technology will also go up.

The overall capital adequacy of the bank stood at 17.19 per cent as of March 2025, and the core buffer was at 14.79 per cent.

The Bank of Baroda scrip tanked 10.27 per cent to Rs 223.65 apiece on the BSE, as against 0.19 per cent correction on the benchmark. PTI AA MR MR