Bank of Baroda Q1FY24 results preview: State-owned Bank of Baroda (BoB) is set to report its June quarter (Q1) results for financial year 2023-24 (FY24) on Saturday, August 5.
Brokerages, however, remain divided on the quantum of net profit growth, on a year-on-year basis, as provisions and tax outgo may dent earnings.
During the corresponding quarter of the previous fiscal (Q1FY23), BoB’s net profit was Rs 2,168.1 crore, while it was Rs 4,775.3 crore in the March quarter of FY23.
Meanwhile, at the bourses, shares of the Mumbai-based lender have advanced 8 per cent so far this calendar year, as against 8.7 per cent gain in the benchmark S&P BSE Sensex.
Here’s what key brokerages expect from Bank of Baroda’s Q1FY24 results:
Nomura
The Japan-based brokerage expects BoB to report a 110 per cent YoY jump in net profit at Rs 4,540 crore in Q1FY24, on the back of 32 per cent yearly rise in net interest income (NII) at Rs 11,620 crore and 70 per cent jump in pre-provision profit at Rs 7,680 crore.
Sequentially, this would be a 5 per cent dip in PAT, 1 per cent growth in NII, and 5 per cent decline in PPoP.
It also expects net interest margin (NIM) to contract 3bps sequentially to 3.5 per cent.
Antique Stock Broking
This domestic brokerage expects PAT to soar 120 per cent YoY to Rs 4,780.1 crore, led by 33 per cent YoY rise in NII at Rs 11,743.9 crore.
NII was Rs 8,838.4 crore in Q1FY23, and Rs 11,524.9 crore in Q4FY23.
Motilal Oswal Financial Services
The brokerage expects BoB’s earnings and business growth to remain healthy in the June quarter. It bakes-in net profit growth at 91 per cent YoY to Rs 4,140 crore, with 28 per cent YoY rise in NII at Rs 11,310 crore and 57 per cent YoY rise in operating profit at Rs 7,090 crore.
The brokerage projects growth in personal loan book to remain robust, taking the total loan book to Rs 9.61 trillion vs Rs 7.9 trillion at the end of June last year, and Rs 9.4 trillion at the end of March 2023 quarter. This would be a 20.2 per cent YoY growth.
Deposits, too, are seen rising 18 per cent to Rs 12.27 trillion as against Rs 10.32 trillion in Q1Y23. Sequentially, deposits stood at Rs 12.03 trillion.
It said it expects asset quality to improve further with credit cost anticipated to remain in control.
Prabhudas Lilladher
The brokerage sees earnings to be impacted due to higher operating expenditure (opex) and provisions, even as loan growth momentum would sustain at 2.5 per cent QoQ.
Thus, it projects PAT at Rs 4,239.9 crore, up 95.6 per cent YoY/down 11.2 per cent QoQ. It forecasts NII to dip around 2 per cent sequentially/up 28 per cent YoY to Rs 11,336.8 crore.
Net interest margins (NIM), it said, could fall by 12bps QoQ to 3.41 per cent, while asset quality could further improve as healthy recoveries’ trend might sustain.
It pegs gross non-performing asset (GNPA) ratio at 3.53 per cent, down from 3.79 per cent in Q4FY23 and 6.26 per cent YoY.
That said, provisions may jump 6 per cent QoQ to Rs 1,500 crore, from Rs 1,420.7 crore set aside at the end of the March quarter. On a yearly basis, provisions may fall 11 per cent from Rs 1,684.8 crore.
Kotak Institutional Equities
This brokerage has the most cautious net profit estimate among brokerages. It expects PAT to tumble 24 per cent QoQ to Rs 3,619.4 crore on the back of a 32 per cent rise in provisions at Rs 1,875 crore.
It also expects NII to fall 2 per cent, and fee income to drop 36 per cent sequentially to Rs 11,305.8 crore and Rs 1,065.9 crore, respectively.
Thus, PPoP is seen falling 18 per cent QoQ to Rs 6,637.3 crore, and profit before tax 28.4 per cent to Rs 4,762.3 crore.
“We are building NIM to decline 10bps QoQ. We expect loan growth to be at 18 per cent YoY, leading to 30 per cent YoY NII growth,” the brokerage said.
It added: We expect slippages at 1.7 per cent (Rs 4,100 crore) but unlike the previous quarter, we should see lower upgrade/recovery. We expect to hear commentary to be quite positive on asset quality as seen in recent quarters. Key discussion would be the sustainability of loan growth, deposit-related challenges, and NIM outlook in the near-term.