Bank of Baroda to report Q3FY24 results on Jan 31; Here's what to expect

Bank of Baroda news: Higher cost of deposits could put pressure on net interest margins, brokerages pointed out in their result preview report.

Bank of Baroda Q3FY24 preview: Public sector lender BoB, which is scheduled to report its October-to-December (Q3) results for financial year 2023-24 (FY24) on Wednesday, January 31, may clock subuded profitability on a quarterly basis owing to weak revenue growth.
 

Besides, higher cost of deposits could put pressure on net interest margins, brokerages pointed out in their result preview report. 
 

The stock is up 1.2 per cent so far in January 2024, as against a 0.4 per cent dip in the benchmark S&P BSE Sensex. 
 

Here's what key brokerages expect:
 

Motilal Oswal Financial Services

The brokerage expects Bank of Baroda's Q3FY24 net profit to stay flat  at Rs 4,220 crore as against Rs 4,253 crore quarter-on-quarter (Q-o-Q; Q2FY24). 
 

On a yearly basis, it would be around 9.4 per cent rise over PAT of Rs 3,853 crore clocked in Q3FY23. 
 

The net profit growth, the brokerage said, would be capped as the net interest income (NII) is expected to rise less than 3 per cent Y-o-Y and Q-o-Q to Rs 11,100 crore. NII was Rs 10,818.3 crore in Q3FY23 and Rs 10,830.7 crore in Q2FY24.
 

It expects operating profit to dip 7 per cent on year to Rs 7,630 crore.
 

Business-wise, it pencils in loan growth of 16 per cent Y-o-Y to Rs 10.33 trillion, while deposits are pegged at Rs 12.93 trillion, up 12.5 per cent. 

READ: Bajaj Finance slides 5% as mgt flags rural, B2C stress post Q3 results
 

Asset quality, it said, may improve with gross non-performing asset (GNPA) ratio pegged at 3.1 per cent vs 3.3 per cent Q-o-Q. NNPA is seen at 0.7 per cent vs 0.8 per cent Q-o-Q.
 

Prabhudas Lilladher

This brokerage has a more cautious outlook with PAT estimated at Rs 3,538 crore, down 8 per cent Y-o-Y and 17 per cent Q-o-Q.
 

Pre-provision operating profit (PPOP), too, is anticipated to decline 17 per cent Y-o-Y/14.6 per cent Q-o-Q to Rs 6,846.6 crore.

The same was Rs 8,232.1 crore in the corresponding quarter of the previous fiscal, and Rs 8,019.7 crore in Q2FY24.
 

NII is seen flat at Rs 10,816.3 crore. 
 

Elara Securities

Analysts at this brokerage see net profit rising 1.5 per cent over Q2FY24/8.7 per cent over Q3FY23 to Rs 4,188 crore. NII, meanwhile, is seen rising less than 1 per cent Y-o-Y/Q-o-Q to Rs 10,912 crore.
 

Kotak Institutional Equities

KIE expects operating profit to decline 11 per cent Y-o-Y to Rs 7,332 crore as there could be pressure on revenue growth. 
 

NII is seen rising 2 per cent Y-o-Y and Q-o-Q each to Rs 11,059 crore. Further, the brokerage is building NIM to decline 10bps Q-o-Q as it expects benefit of loan growth at 14 per cent Y-o-Y to be offset by rising cost of deposits.

READ: Bajaj Finance Q3 results: Consolidated net profit up 22% at Rs 3,639 cr
 

It sees PAT declining 6.3 per cent Q-o-Q/up 3.4 per cent Y-o-Y to Rs 3,983.3 crore.
 

On the asset quality front, it sees slippages at 1.5 per cent (Rs 4,000 crore) mostly driven from retail and SME. 
 

Key discussion on the sustainability of loan growth, deposit-related challenges, and NIM outlook in the near term would be eyed, it said.
 

Axis Securities

Amid 1.7 per cent Q-o-Q rise in NII (Rs 11,019 crore), but 5 per cent dip in other income (Rs 3,962 crore), the brokerage projects 5.2 per cent sequential slide in PPOP at Rs 7,605 crore. 
 

Accounting for 1.6 per cent Q-o-Q/11.5 per cent Y-o-Y decline in provisions (Rs 2,127 crore), the net profit is seen at Rs 3,976 crore. 
 

It expects advances growth to be healthy driven by retail book, but deposits growth could be muted Q-o-Q. Margins, too, are expected to witness marginal compression.
 

While fresh slippages will likely remain in control and asset quality improvement could continue, key monitorables, the brokerage said, would be asset quality outlook and loan book traction.