Mumbai, 25th October, 2024 – Bank of Baroda (BOB) has released its financial results for the second quarter and first half-year ending September 30, 2024, showcasing strong growth across various performance metrics. The bank’s noteworthy advancements in net profit, return on assets, operating income, and asset quality highlight a solid period of performance and strategic growth. Let’s delve into the detailed financial and operational insights from Q2 and H1 of FY2025.
Key Financial Highlights of Q2FY25
Substantial Rise in Net Profit
Bank of Baroda achieved a quarterly net profit of INR 5,238 crore, marking a 23.2% increase year-over-year (YoY) from INR 4,253 crore in Q2FY24. This impressive growth in profit demonstrates the bank’s ability to capitalize on operational efficiencies and prudent financial management. Furthermore, the net profit for H1FY25 surged by 16.5% YoY to INR 9,696 crore, up from INR 8,323 crore in H1FY24.
Robust Return on Assets (ROA) and Equity (ROE)
The bank consistently maintains its Return on Assets (ROA) above 1%, with an impressive ROA of 1.30% for Q2FY25 and 1.20% for H1FY25. Similarly, the Return on Equity (ROE) stood at 19.22% for Q2FY25 and 17.79% for H1FY25, underscoring the bank’s robust earning potential and efficiency in utilizing shareholder equity.
Operating Income and Cost Efficiency
Enhanced Operating Income and Profit Growth
In Q2FY25, operating income grew by 12% YoY, reaching INR 16,803 crore compared to INR 15,002 crore in Q2FY24. The strong income growth was primarily fueled by an impressive 24.2% YoY increase in non-interest income, which includes a significant uptick in trading gains (up by 86.6%) and recoveries (nearly doubled YoY).
The operating profit for Q2FY25 rose by 18.2% YoY to INR 9,477 crore, thanks to income growth and effective cost management. With a mere 4.9% increase in operating expenses (Opex), the bank’s Cost-to-Income ratio reduced by 294 basis points (bps) to 43.60%, further highlighting cost-efficiency gains.
Non-Interest Income Boost
The notable 24.2% YoY rise in non-interest income to INR 5,181 crore in Q2FY25 has been a crucial factor in BOB’s profitability. This increase resulted from strong trading gains and effective recovery strategies, which drove a robust non-interest income component.
Asset Quality and Provisions
Improvement in Asset Quality
Bank of Baroda’s asset quality improved considerably, with the Gross Non-Performing Assets (GNPA) ratio declining to 2.50% in Q2FY25, a significant 82 bps reduction YoY from 3.32%. Similarly, the Net NPA ratio decreased by 16 bps YoY to 0.60%. This improvement reflects BOB’s commitment to quality asset management and effective risk mitigation practices.
Healthy Provision Coverage Ratio (PCR)
BOB maintained a strong Provision Coverage Ratio (PCR) at 93.61%, including written-off accounts, and 76.31% without written-offs. This high PCR underscores the bank’s proactive approach in setting aside provisions against potential loan losses, further bolstering asset quality and balance sheet resilience.
Credit Costs Below 1%
The bank reported a credit cost of 0.65% for Q2FY25 and 0.55% for H1FY25, both remaining comfortably below the 1% mark. This low credit cost reinforces BOB’s robust loan portfolio quality and effective credit risk management.
Bank of Baroda’s Lending and Deposit Growth
Domestic and Global Advances Expansion
Bank of Baroda’s Global Advances grew by 11.6% YoY to INR 11,43,039 crore in Q2FY25, bolstered by an expanding domestic loan book and focused retail lending. Domestic Advances increased by 12.5% YoY to INR 9,38,883 crore, showcasing the bank’s strong domestic growth trajectory.
Retail Loan Book Growth Across Key Segments
The bank’s retail loan portfolio demonstrated remarkable growth, with organic retail advances expanding by 19.9% YoY. Growth across high-focus areas included:
- Auto Loans: Up by 22.9% YoY
- Home Loans: Increased by 16.2% YoY
- Mortgage Loans: Grew by 13.2% YoY
- Education Loans: Expanded by 17.2% YoY
Strong Deposit Growth
Bank of Baroda’s Global Deposits rose by 9.1% YoY to INR 13,63,486 crore. Within this, Domestic Deposits grew by 7.1% YoY to INR 11,50,791 crore, while International Deposits showed a robust 21.2% YoY increase, highlighting the bank’s expanding global footprint.
Profitability and Earnings Performance
Growth in Net Interest Income (NII) and Yield
BOB’s Net Interest Income (NII) grew by 7.3% YoY in Q2FY25, reaching INR 11,622 crore compared to INR 10,831 crore in Q2FY24. For H1FY25, NII recorded a 6.4% growth to INR 23,222 crore. The bank’s Global Net Interest Margin (NIM) stood at 3.10% in Q2FY25, a slight increase from 3.07% in Q2FY24.
In addition, the yield on advances improved to 8.48% in Q2FY25, reflecting the bank’s strategic pricing and lending initiatives. However, cost of deposits also rose to 5.12% in Q2FY25 from 4.92% in Q2FY24, signaling a balance between income generation and deposit cost management.
Operating Profit and Consolidated Net Profit
The bank’s operating profit increased significantly, reaching INR 9,477 crore in Q2FY25, up by 18.2% YoY. For the consolidated entity, Net Profit for Q2FY25 stood at INR 5,355 crore, highlighting strong performance across the board.
Capital Adequacy and Liquidity
Maintained Capital Ratios
Bank of Baroda’s Capital Adequacy Ratio (CRAR) stood at 16.26% as of September 2024, with Tier-I at 14.18% and Tier-II at 2.08%. On a consolidated basis, CRAR was 16.67%, with CET-1 at 13.17%, indicating a healthy capital buffer aligned with regulatory requirements.
High Liquidity Coverage Ratio (LCR)
The bank maintained a Liquidity Coverage Ratio (LCR) of approximately 123.7% on a consolidated basis, showcasing its strong liquidity position and capacity to meet short-term obligations without stress.
Key Takeaways from Bank of Baroda’s Q2FY25 Performance
Bank of Baroda’s financial results for Q2 and H1 of FY2025 demonstrate sustainable growth across profitability, asset quality, and capital adequacy. The bank’s strategic focus on growing its retail loan book, optimizing non-interest income sources, and maintaining a healthy balance sheet have positioned it as a formidable player in the financial sector. The reported growth in NII, non-interest income, and improved asset quality metrics underline BOB’s success in navigating market challenges while delivering value to stakeholders.
Bank of Baroda’s continued emphasis on cost control, asset quality management, and capital strengthening aligns with its broader mission to enhance customer satisfaction and shareholder returns. As the bank moves into the latter half of FY2025, its robust performance indicators serve as a testament to its strategic foresight and execution capabilities in a dynamic banking environment.
