Bank of Baroda Q4 preview: PAT may soar up to 2x YoY on healthy loan growth

Bank of Baroda Q4FY23 results preview: Analysts expect Bank of Baroda's financial performance to weaken on a quarter-on-quarter (QoQ) basis, due to lower interest income

Bank of Baroda Q4FY23 preview: Government-run lender, Bank of Baroda, will report its March quarter (Q4) results for financial year 2022-23 (FY23) on Tuesday, May 16.

Analysts expect the bank's financial performance to weaken on a quarter-on-quarter (QoQ) basis, due to lower interest income. On a year-on-year (YoY) basis, however, profit after tax (PAT) may rise up to 140 per cent.

So far in the current calendar year, shares of BoB have slipped 3.5 per cent. By comparison, the Nifty50 index has risen 1.15 per cent, and the Nifty Bank index has added 1.87 per cent.

Here's what key brokerages expect:

Phillip Capital

The brokerage has pencilled-in 5 per cent increase in net interest income (NII) for Q4FY23, at Rs 11,353.9 crore, relative to Rs 10,818.3 crore seen in Q3FY23. On a yearly basis, though, it would be a 32 per cent jump from Rs 8,611.7 crore.

NII growth, the brokerage said, will be on the back of 5 per cent QoQ/20.3 per cent YoY rise in advances at Rs 935,216.4 crore.

The net profit, meanwhile, is seen surging 8 per cent QoQ/135 per cent YoY to Rs 4,173.3 crore. PAT was Rs 3,852.7 crore in Q3FY23 and Rs 1,778.8 crore in Q4FY22.

ICICI Securities

Bank of Baroda, it said, is expected to report loan growth marginally higher than the industry trend, at 18 per cent YoY and 3 per cent QoQ.

Deposits, meanwhile, are estimated to grow 14 per cent YoY at Rs 11.9 trillion, while CASA ratio could be steady at 36 per cent.

Therefore, the brokerage pegs NII Rs 11,000 crore, up nearly 28 per cent YoY/2 per cent QoQ. NIMs (net interest margins) may inch up at 3.5 per cent.

Moreover, lower provisions on an annual basis YoY (but up 7 per cent QoQ), could result in nearly a 2x jump in PAT at Rs 3,616 crore.

Asset quality is expected to witness a marginal improvement QoQ with gross non-performing asset (GNPA) ratio declining 8-10 bp.

Emkay Global

This brokerage has a slightly cautious estimate for net profit at Rs 3,054 crore, up 72 per cent YoY, but down 21 per cent QoQ, due to some moderation in margins and a pick-up in credit cost sequentially.

Operating profit, too, may see a sequential decline of 12.5 per cent to Rs 7,203.6 crore.

Slippages may increase from the lows of Q2, it warned.

Kotak Institutional Equities

The brokerage has baked in operating profit growth of 40 per cent YoY, to Rs 7,969 crore, led by strong revenue growth and stable costs.

While it is building flat NIM QoQ for Q4FY23, loan growth is expected to be at 15 per cent YoY leading to 28 per cent YoY growth in NII at Rs 11,035 crore.

The operating profit could, however, drop 3 per cent QoQ on the back of a 27 per cent and 22.2 per cent sequential decline in fee income and treasury income, respectively.

Net profit, the brokerage expects, could grow 140 per cent YoY to Rs 4,260.8 crore.

"We expect slippages at around 1.7 per cent (Rs 3,800 crore) and offset by a meaningful quantum from recoveries and upgrades from the retail and SME portfolio. We expect to hear commentary to be quite positive on asset quality. Key discussion would be the sustainability of loan growth, deposit related challenges and NIM outlook in the near term," it said.