Bank of Baroda Q3: What to expect from the lender's Dec quarter result?

Bank of Baroda Q3 preview: Analysts said traction in deposits, margin trajectory, and update on appointment of new MD & CEO would be on investors' radar

Bank of Baroda (BoB) Q3 preview: Driven by healthy loan growth and margin expansion, analysts expect state-owned lender Bank of Baroda to see a robust earnings performance in the December quarter of FY23 (Q3FY23). However, they expect slippages to rise on a sequential basis.

The bank is scheduled to report its Q3FY23 results on Friday, February 3.

Amog key monitorables, analysts said traction in deposits, margin trajectory, and update on appointment of new MD & CEO would be on investors' radar.

Here's what leading brokerages factor-in for BoB's Q3 numbers:

Morgan Stanley

The brokerage expects loan growth to remain strong at 18 per cent YoY to Rs 8.66 trillion. Sequentially, it would be up by 3.5 per cent. Further, margins will remain broadly flat QoQ at 3.35 per cent as against 3.33% seen in Q2FY23 (which included lumpy interest income recovery).

"We expect cost growth of 12 per cent YoY, partly led by higher staff costs (9 per cent YoY/6 per cent QoQ) as we build in provision for the upcoming wage hike cycle from November 2022 onwards (i.e., for two months). Consequently, we expect core pre-provision operating profit (PPoP) of Rs 5,740 crore (up 36 per cent YoY)," it said.

Net profit is estimated at Rs 3,548.8 crore, up 62 per cent YoY and 7 per cent QoQ

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Nomura

Nomura expects PAT to rise approximately 72 per cent on year and 14 per cent sequentially, to Rs 3,773 crore, on the back of higher NII and fee income.

The brokerage has projected NII at Rs 10,603 crore, up 24 per cent YoY/4 per cent QoQ, while net interest margin (NIM) may expand to 3.39 per cent.

NIM was 3.13 per cent in Q3FY22, and 3.33 per cent in Q2FY23.

Loan growth will likely pick up to 17 per cent YoY with International loan book, and corporate growth to be in focus.

"We expect slippages to increase to 2.67 per cent. Operating expenses are expected to remain elevated on account of higher wage provisions due to a change in regulation," Nomura said.

Choice Equity Broking

It expects BoB to deliver strong profitability during the quarter on the back of healthy NII growth (Rs 10,059.7 crore, up 18 per cent YoY) and contained credit cost. The bank is expected to deliver net profit of Rs 3,532.4 crore during the quarter with a growth of 61 per cent YoY.

Gross non-performing assets (GNPA) is expected to decline to 5 per cent in Q3FY23. While advances book is expected to grow at 16 per cent YoY during the quarter at Rs 8.4 trillion.

Emkay Global

Healthy growth, and margins are expected to support profitability at Rs 3,120.3 crore. This would be higher by 2 per cent YoY, but down 6 per cent QoQ.

Slippages, it said, may remain flat QoQ, but better recoveries/write-offs could drive down NPAs.

Prabhudas Lilladher

The brokerage has baked in 26.6 per cent YoY improvement in NII at Rs 10,830.9 crore, up from Rs 8,552 crore last year. Sequentially, it would be a growth of 6.5 per cent from Rs 10,174.5 crore reported in Q2FY23.

PPOP is pegged at Rs 6,764.5 crore (up 23.4 per cent YoY/12.2 per cent QoQ), while net profit is seen at Rs 3,393 crore (54.4 per cent YoY/2.4 per cent QoQ).

It expects provision to rise 41.3 per cent sequentially to Rs 2,300 crore from Rs 1,627.5 crore. On a yearly basis, it would drop by 8 per cent from Rs 2,507 crore.