Bank of Baroda may raise up to Rs 7,500 crore via AT1, Tier-II bonds

According to the bank's annual report for FY24, it had raised additional Tier 1 capital of Rs 2,474 crore in FY23. The bank issued Tier 2 capital of Rs 5,000 crore

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Public sector lender Bank of Baroda (BoB) plans to raise capital of up to Rs 7,500 crore through additional Tier-I (AT1) and Tier-II bonds to meet prudential regulator norms and support business growth.  The Mumbai-based bank has kept options open to raise capital by issuing these debt instruments in the overseas market.

The board of directors considered and approved raising of additional capital of up to Rs 7,500 crore through AT1 and Tier-II bonds in suitable tranches up to March 31, 2025 and beyond if found expedient. The above capital will be raised when market is conducive, it said in a filing with BSE. The bank’s stock price ended the day on the bourses rising 1.35 per cent to Rs 273.7 per share.

The capital adequacy ratio (CAR) of the bank stood at 16.31 per cent with common equity Tier-I ratio at 12.54 per cent at the end of March 2024. The additional Tier-I capital was 1.53 per cent and Tier-II at 2.24 per cent at the end of March 2024, according to analysts’ presentation for 2023-24.

According to BoB’s annual report for FY24, it had raised additional Tier-I capital of Rs 2,474 crore in FY23. It issued Tier-II capital of Rs 5,000 crore.

Its loan book grew by 12.5 per cent Y-o-Y to Rs 10.9 trillion at end of March 2024.

In June 2024 global rating agency Moody’s affirmed “Baa3” long term local and foreign currency bank deposits rating for BoB. 

Its capitalisation will remain stable over the next 12-18 months amid high loan growth, the rating agency had said.

The improving profitability will support capitalization despite strong loan growth and higher risk weight requirements for unsecured lending. India's strong operating environment will continue to support their credit fundamentals over the next 12-18 months, Moody’s added.