Bank of Baroda, a public sector bank surprised the Dalal Street with a slew of positives in its September quarter earnings performance. Improvement in asset quality and net interest income aided the bank’s profit, which exceeded analysts’ expectations. Also, it’s loan growth increased 20.6% year-on-year in Q2FY23.
Following the results the revenues of the bank grew by 27% to INR 22,344 from the same quarter during the previous year. Similarly, the net profit grew by 55% year-on-year basis.
In an earnings call with analysts, the bank’s management said that it expects overall credit growth to be around 14-16% for FY23. According to Yes Securities Ltd, the bank’s management stated that BoB would grow at the industry level, which itself translates to an enhancement of growth guidance. Further, the bank’s focus remains on margin improvement and overall NIM is likely to be up by 10 basis points in FY23 versus FY22, added the management. One basis point is 0.01%.
According to the bank’s management, the upward repricing of loans will continue to outpace deposit cost for the bank for some time. Also, the bank would maintain discipline in terms of deposit rates repricing. Even so, in a rising interest rates scenario, movement in NIM and credit costs will be among the crucial monitorable, as competition for deposits gets intense among banks.