Bank of Baroda conducted a conference call 10 May 2024 to discuss the financial results for the quarter ended March 2024. Devdutt Chand, MD&CEO of the bank addressed the call:

Highlights:

The bank has touched the business volumes of Rs 24 lakh crore and keeping its position at the second largest public sector bank.

The advances have increased in line with the guidance at 13% driven by the stronger retail, agriculture and MSME loan growth. The retail loan book has increased by 21% and agriculture and MSME book has increased by 12%.

Within retail, home loans increased by 15%, education 19% and auto loans 24%.

The bank has moderated personal loan growth to 50% from 100% last year.

The deposit growth is moderate against the guidance of 12% and it would be the focus area of the bank going forward. The Casa deposits have increased by 8% end March 2024.

The bank has continued to maintain RoA at above 1% for 7 straight quarters. The RoA stood at 1.25% in Q4 and 1.17% for FY2024. For the second straight year, the RoA is above 1%. RoE was robust at 19%.

The net interest margin was strong at 3.27% in Q4 and excluding the one off recovery it was at 3.15% in line with guidance.

The bank has reduced GNPA ratio below 3% and the NNPA ratio well below 1% at 0.68% end March 2024.

The provision coverage ratio is strong at 93.3%, while the slippage ratio was at the lower side of the guided range of 1.1-1.25%.

The fresh slippage of loans was under control in FY2024, despite one large slippage from the aviation segment of Rs 1700 crore and international slippage.

The credit cost was higher as the bank has created 100% provision for the aviation account as against the requirement of 20% provisions. The bank had provided Rs 1200 crore in Q3 and another Rs 500 crore in Q4 for aviation account.

The bank has also created floating provisions of Rs 200 crore. Excluding these provisions, the credit cost for FY2024 was similar to FY2023.

The SMA 1 & 2 loan book of the bank continued to trend down and stood at comfortable level of 0.15%.

The collection efficiency is a very robust at 98%.

The capital adequacy ratio has improved despite 65 bps impact of RBI guidelines on higher risk weights for personal loans and the NBFC exposure.

With regard to the aviation account, of which 1/3 guaranteed by the government and the bank is expecting full recovery in the account.

With regard to the new draft guidelines on provisioning for the project loans, the bank do not expect any major impact on the credit cost, while it can also pass on the impact to the customers.

The pool of technically written off accounts stand at Rs 46000 crore. The bank had recorded recoveries of Rs 5098 crore from written off accounts in FY2024 and it expect the recoveries to remain healthy in FY2025.

About 50% of the domestic loan book is linked to the MCLR.

Restructured loan book of the bank has declined to Rs 8148 crore end March 2024.

The bank created additional Rs 400 crore of provisions for the employee retirement benefit. Further, on account of decline in the bond yield, the bank had to create additional Rs 400 crore of provisions.

Guidance for FY 2025

The bank is targeting deposit growth of 10 to 12% with focus on Casa and retail term deposits.

The bank is targeting advances growth of 12 to 14% with focus on retail segment.

The net interest margin is expected to be at 3.15% (-/+5 bps).

The bank is raising the guidance for ROA from 1% to 1.1%.

The fresh slippage ratio is expected to be at 1-1.25%.

The credit cost is expected to be below 1% with the proportion of stressed advances reducing from 2.04% to 0.92%.

The bank expects a better asset quality trend going forward.

The bank aims to maintain CD ratio in the range of 80-82%.

The bank is targeting to reduce GNPA ratio to 2.5% and the NNPA ratio to 0.5% by end March 2025.