Bank of Baroda Q2 Results Preview: Net profit likely to rise 14% on the back of double-digit loan growth

State-run Bank of Baroda is scheduled to report its financial results for the July-September period (Q2 FY24) on Saturday, November 4.

Bank of Baroda is expected to register double-digit percentage growth in quarterly net profit. | Image: Reuters

Bank of Baroda—the country's second largest public sector lender by market value—is all set to report its quarterly financial results on Saturday, November 4. Analysts widely expect the PSU bank to register a decent set of earnings backed by double-digit growth in loans as well as deposits though it may take a mild hit on the margin front.

According to Zee Business research, Bank of Baroda is likely to report a standalone net profit of Rs 3,790 crore for the July-September period, which translates into a year-on-year increase of 14.4 per cent. The analysts estimate its quarterly net interest income (NII)—or the difference between interest earned and interest paid—to come in at Rs 10,950 crore, up 7.6 per cent compared with the year-ago period.

Analysts at brokerage Motilal Oswal Financial Services are more optimistic about growth in Bank of Baroda's top-line as well as bottom-line. They estimate the PSU lender's quarterly NII to grow 9.3 per cent on a year-on-year basis to Rs 11,118.3 crore and its net profit to expand 20.9 per cent to Rs 4,000 crore.

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Many analysts expect higher operational expenses to eat into Bank of Baroda's margin.

The state-run bank's global net interest margin (NIM), a key measure of profitability for lenders, is estimated to contract mildly to 3.2 per cent for the quarter ended September 2023, from 3.27 per cent three months ago, according to Zee Business research.

Zee Business analysts expect Bank of Baroda's asset quality to improve, with gross non-performing assets (GNPAs) seen decreasing by 21 basis points (bps) sequentially to 3.3 per cent of total loans. They peg the lender's net non-performing assets (NNPAs) to stand at 0.7 per cent of total loans for the September quarter, as against 0.78 per cent for the April-June period.

In a business update released last month, Bank of Baroda said its total business increased 15.9 per cent to Rs 22.75 lakh crore for the September quarter, with growth to the tune of 17.4 per cent in advances and 14.6 per cent in deposits. It also said its domestic retail advances increased 22.5 per cent to Rs 1.94 lakh crore.

Motilal Oswal Financial Services has six public and 12 private lenders in its banking coverage. It estimates the earnings growth for the 18 lenders to average 27 per cent for the full financial year 2023-24. Read more here

Meanwhile, State Bank of India, the country's largest lender by assets, is also slated to report its financial results on November 4. ALSO READ: SBI Q2 PAT estimated to rise 3% on marginal loan growth, higher expenses

How Bank of Baroda fared in the June quarter

For the fiscal first quarter, Bank of Baroda reported an 87.7 per cent year-on-year jump in net profit to Rs 4,070 crore with NII growth of 24.4 per cent to Rs 10,997 crore. Its NIM improved by 25 bps on a year-on-year basis to 3.27 per cent.

Zee Business analysts had pegged the state-run bank's net profit at Rs 4,320 crore and NII at Rs 11,670 crore for the April-June period.

Bank of Baroda shares: Past performance

The Bank of Baroda stock grew 12.3 per cent in the September quarter, better than a 2.4 per cent rise in the headline Nifty50 index and than a 0.4 per cent decline in the high-beta Nifty Bank gauge.

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