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Bank of Baroda (BoB), India's second-largest public sector bank, announced robust third-quarter (Q3) results, showcasing a notable increase in net profit and a significant reduction in non-performing assets (NPAs). The bank's standalone net profit for the quarter surged by 5.6%, reaching ₹4,837 crore, a considerable jump from the ₹4,579 crore recorded in the same period last year. This positive performance underscores BoB's strengthening financial position and its strategic initiatives aimed at improving asset quality and profitability. The increase in net profit was driven by a combination of factors, including growth in net interest income (NII) and improvements in the bank's overall asset quality. The growth in NII, a key indicator of a bank's lending profitability, indicates a healthy expansion of the bank's loan portfolio and its ability to manage interest rate risks effectively. Furthermore, the decline in NPAs, a crucial metric indicating the health of a bank's loan portfolio, is a particularly positive sign, showcasing the bank's proactive approach towards managing credit risk and recovering delinquent loans.
A deeper look into the financial figures reveals further positive trends. The bank's net interest income (NII) experienced a 2.8% year-on-year (YoY) growth, reaching ₹11,417 crore. While the global net interest margin (NIM) remained relatively stable at 2.94%, the cost of deposits increased slightly to 5.08%, reflecting the current interest rate environment. However, despite the rise in the cost of deposits, the bank's ability to manage its interest rate risk effectively contributed to the overall increase in profit. The bank also demonstrated its ability to manage risk through higher provisions and contingencies, which amounted to ₹1,082 crore, compared to ₹666 crore in the same period last year. This proactive approach to risk management is a key factor in the bank's ability to maintain financial stability. The decline in gross NPAs is particularly noteworthy. The gross NPA figure reduced by 11.9% YoY to ₹28,471 crore, while the gross NPA ratio improved to 2.43% from 3.08% in the year-ago period. This reflects the bank's success in recovering loans and minimizing new defaults. Similarly, net NPAs experienced a decline of 5.3%, reaching ₹6,825 crore compared to ₹7,208 crore a year ago. The net NPA ratio also showed improvement, falling to a low of 0.59% from 0.70% a year ago.
The growth in advances across various segments further solidified BoB's strong performance. Global advances witnessed an impressive 11.8% YoY increase, reaching ₹11,73,034 crore. Domestic advances followed a similar upward trend, with a growth of 11.9% to ₹9,64,869 crore. The bank's deposits also exhibited strong growth, with global deposits increasing by 11.8% YoY to ₹13,92,461 crore and domestic deposits growing by 9.2% to ₹11,65,874 crore. This robust growth in both advances and deposits indicates a strong customer base and the bank's ability to attract both lending and deposit business. A closer examination reveals that the bank’s retail advances showed exceptional growth, rising by 19.5% YoY. This increase was driven by strong growth across several key sectors. Auto loans witnessed a 21.1% increase, home loans grew by 16.6%, mortgage loans by 16.3%, and education loans by 16.9%, all indicating a robust demand in these retail segments. The growth in the agriculture loan portfolio was also noteworthy, increasing by 12.5% YoY to ₹1,51,050 crore. The gold loan portfolio, comprising both retail and agricultural loans, saw a substantial 29.1% YoY increase, reaching ₹58,172 crore. The MSME portfolio also demonstrated strong growth, increasing by 13.6% to ₹1,31,769 crore. While corporate advances registered a comparatively lower growth of 6.8% YoY, reaching ₹3,87,405 crore, this segment's performance still contributed positively to the overall growth of the bank.
The bank's consolidated net profit, which includes both standalone and subsidiary results, also reflected a positive trajectory, increasing by 9% YoY to ₹5,214 crore. This further underscores the bank's overall financial health and its ability to generate profits across its operations. The improved performance of BoB indicates a positive trend for the Indian banking sector. The bank's focus on improving asset quality, expanding retail lending, and managing risks effectively has resulted in improved profitability. The continued growth in both advances and deposits is a strong indicator of the bank’s ability to attract customers and capitalize on market opportunities. The bank's strategic initiatives in high-growth segments like auto, home, and education loans have played a crucial role in driving this growth. Furthermore, the bank's focus on managing its NPAs and improving its risk management strategies has significantly reduced its vulnerability to credit risks. These results serve as a positive indicator of the overall health and stability of the Indian banking system, demonstrating resilience and growth despite macroeconomic challenges.
Source: Bank of Baroda Q3 net profit rises 5.6% to ₹4,837 crore