Result Review: Bank of Baroda
Result Review: Bank of Baroda
Driven by strong business growth, stable margins, sustained momentum in fee based income, robust treasury gains, and lower investment losses, Bank of Baroda posted a 172% growth in bottom line in Q4FY09.
Advances grew 34.9% y-o-y led by a 56.3% growth in the overseas loan book. This high growth in the overseas loan book was driven by exchange rate adjustments.
Growth in the retail was relatively lower at 16.5%. As of March 2009, overseas advances constituted 24% of overall advances. Large and mid-corporate constituted 32.5%, retail 17.9%, Agri 15.4% and micro and small constituted 8.8% of the domestic advances.
One of the reasons for the bank’s 43% NII growth in the quarter was a CASA growth of 20%. Share of domestic CASA was at 34.87%. Global NIM was at 2.91% while domestic NIM was at 3.21% for the quarter.
Core fee based income grew by 40% for the quarter. Treasury profits at Rs30 billion was higher by 272% for the quarter.. Recoveries were however lower by 27% on a y-o-y basis. Overall, Other income grew by 54% for the quarter.
Gross NPL declined to 1.3% from 1.8% in Q4FY08 while Net NPL was at 0.31%. Even in absolute terms, Gross NPAs declined sequentially from Rs19.2 billion to Rs18.4 billion.
Assets restructured during the year amounted to Rs26.6 billion while applications pending restructuring as on 31 March 09 amounted to Rs16 billion.
We expect credit growth for the bank to slow down to 19% in FY10E. We have factored in a 55% decline in treasury gains on account of which Other Income is expected to decline by 13.1%. We expect NII, operating profit and PAT to grow by 24.4%, 11.2% and 12% in FY10E.
We maintain BUY on the stock.
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