Bank of Baroda Q3 preview: Analysts expect higher provisions to dent profit

Bank of Baroda Q3 results: Bank of Baroda is scheduled to report its Q3FY25 results on Thursday, January 30

Bank of Baroda Q3 results preview: Public sector bank (PSB), Bank of Baroda, is expected to report a weak set of results for the October-December (Q3) quarter of the current financial year 2024-25 (FY25).

 

According to analysts, subdued Other Income, along with a sharp uptick in provisions, on a year-on-year (Y-o-Y) basis may keep the profit flat annually. Some, however, expect the profit to tumble up to 18 per cent Y-o-Y.

Bank of Baroda Q3 results date, time

Bank of Baroda is scheduled to report its Q3FY25 results on Thursday, January 30.

 

"A meeting of Board of Directors of Bank of Baroda will be held on Thursday, January 30, 2025, at the Bank’s Corporate Office to consider and approve the Unaudited (Reviewed) Standalone and Consolidated Financial Results of the Bank, together with relevant segment reporting, for the quarter ended December 31, 2024," Bank of Baroda said in a stock exchange filing.

Bank of Baroda Q3 results expectations

 

Nomura

As per the Japan-based brokerage's estimates, Bank of Baroda may see a 2-per cent Y-o-Y decline in net profit at Rs 4,490 crore in Q3FY25 as against a profit of Rs 4,579 crore seen in Q3FY24.

 

On a quarter-on-quarter (Q-o-Q) basis, though, this would be a 14 per cent decline over Rs 5,238-crore profit reported in the September quarter of FY25 (Q2FY25).

 

Operationally, Nomura estimates Bank of Baroda's Q3 net interest income (NII) to rise 7 per cent Y-o-Y and 2 per cent Q-o-Q to Rs 11,830 crore, while reported pre-provision operating profit (PPOP) is seen climbing 10 per cent Y-o-Y but falling 18 per cent Q-o-Q to Rs 7,730 crore.

 

NII was Rs 11,101 crore in the December quarter last year and Rs 11,622 crore in the September quarter this financial year.

 

PPOP, on the other hand, was Rs 7,015 crore in Q3FY24 and Rs 9,477 crore in Q2FY25.

 

Lower treasury income and recoveries from written-off loans, Nomura said, may result in sequential decline in return on assets (RoA) to 1.1 per cent from 1.2 per cent Y-o-Y and 1.3 per cent Q-o-Q. Credit cost is expected to remain contained at ~0.6 per cent.

 

Citi Research

Citi estimates a slightly better operating performance by Bank of Baroda in Q3FY25. It estimates NII at Rs 12,183.9 crore, up 10 per cent Y-o-Y and 5 per cent Q-o-Q. Led by a 19 per cent Y-o-Y rise, but 35 per cent weaker Other Income on Q-o-Q basis, at Rs 3,354.6 crore, it sees Q3 PPOP at Rs 7,890.3 crore (up 12 per cent Y-o-Y/down 17 per cent Q-o-Q).

 

However, a 134-per cent Y-o-Y surge in Provisions may cap Q3 net profit growth at Rs 4,620.2 crore, up 1 per cent Y-o-Y/down 12 per cent Q-o-Q.

 

"Loan growth, post gathering pace in Q2, is likely to sustain momentum with 12 per cent Y-o-Y/3 per cent Q-o-Q rise to Rs 11.50 trillion. We expect deposit growth to be 11 per cent Y-o-Y/1.4 per cent Q-o-Q to Rs 13.82 trillion," Citi Research said.

 

It added: Bank of Baroda's reported net interest margins (NIMs) may continue to witness pressure and may fall below its guided range to 3.05 per cent due to competitive pricing in corporate lending and growth in retail skewed towards secured lending.

 

The management has guided for slippages of 1.0-1.25 per cent and targeted recoveries of Rs 10,000 crore in FY25. The research firm estimates credit cost to settle at 55-60bps.

 

"Core fee income is likely to sustain the traction. Recoveries are estimated at Rs 1,000 crore and treasury gains upwards of Rs 500 crore that will again support RoA at less than 1.1 per cent," Citi Research said.

 

Prabhudas Lilladher

On the downside, analysts at Prabhudas Lilladher see a sharp decline in Bank of Baroda Q3 profit due to a 3-fold rise in loan-loss provisions.

 

It anticipates profit to fall 18 per cent Y-o-Y and 28.4 per cent Q-o-Q to Rs 3,752.6 crore as Provisions are seen soaring 245.2 crore Y-o-Y/down 1.5 per cent Q-o-Q to Rs 2,300 crore in Q3FY25.

 

Provisions were Rs 666.3 crore in Q3FY24 and Rs 2,335.7 crore in Q2FY25.

 

It projects loans to improve to 11.49 trillion, up 12.2 per cent Y-o-Y/2.5 per cent Q-o-Q, leading to a mere 7.8 per cent Y-o-Y/3 per cent Q-o-Q increase in NII at Rs 11,967.2 crore.

 

That said, NIM is seen expanding 3 bps Q-o-Q to 3.07 per cent from 3.04 per cent.

 

The gross non-performing asset (GNPA) ratio is also expected to improve 77bps Y-o-Y and 19 bps Q-o-Q to 2.31 per cent in Q3FY25.

 

Mirae Asset Sharekhan

The brokerage said Loan and Deposit growth could come at par with the system. Key monitorable would be growth outlook and asset quality trends.

 

It projects Bank of Baroda Q3 net profit at Rs 4,158 crore, NII at Rs 11,889 crore, and PPOP at Rs 7,819 crore.

 

Motilal Oswal Financial Services

MOFSL, too, sees Bank of Baroda's Q3 profit slipping 4 per cent Y-o-Y to Rs 4,400 crore. It, however, sees NII rising 8.3 per cent Y-o-Y to Rs 12,030 crore and PPOP 12 per cent to Rs 7,870 crore.

 

The brokerage further projects loan growth to rise 12.3 per cent Y-o-Y to Rs 11.5 trillion, and deposit at 14 per cent to around Rs 14.20 trillion.

 

GNPA is seen at 2.4 per cent, NNPA at 0.6 per cent, and provision coverage ratio (PCR) at 76.5 per cent (up 2bps).