by Suman Gupta
| Key Highlights
· Bank of Baroda (BOB) reported a ~2x growth in profits for FY23 and declared it’s highest ever quarterly and annual net profit of INR 4,775 crore (+168% YoY) and INR 14,110 crore (+94% YoY) respectively. · As a result of this significant improvement in profitability the Bank’s Return on Assets (RoA) for FY23 improved by 43 bps YoY to 1.03% (FY23) ; RoA for Q4FY23 improves by 77 bps YoY to 1.34% · Similarly, Bank’s Return on Equity (RoE) for FY23 increases by 648 bps YoY to 18.34%; RoE for Q4FY23 stands 24.82%, up by 1321 bps YoY · This robust growth in profitability was supported by healthy Net Interest Income (NII) growth of 33.8% & 26.8% for Q4FY23 & FY23 respectively. · Sustained NII growth is attributable to growth in advances of 18.5% (YoY) coupled with traction in Net Interest Margins (NIM), which grew 16 bps QoQ / 45 bps YoY to end the quarter at 3.53% and 28 bps YoY for the full year FY23. · Strong growth in Income coupled with subdued increase in Opex has resulted in robust Operating profit growth of 43.3% YoY for Q4FY23 and 20% YoY for the financial year 2023. · The Bank has been able to effect a reduction in the Cost to Income ratio by 152 bps and reported a Cost to Income ratio of 47.72% for FY23. · BOB has witnessed significant improvement in its Asset quality with sharp reduction in GNPA by 282 bps YoY & 74 bps QoQ to 3.79%. Bank’s NNPA improved to 0.89% with a reduction of 83 bps YoY and 10 bps QoQ. · BOB’s Provision Coverage Ratio (PCR) remained healthy at 92.43% with TWO & at 77.19% without TWO. · This strong and sustainable improvement in asset quality has resulted in record low Credit Cost for the Bank at 0.14% for Q4FY23 & 0.53% for FY23. · BOB’s Global Advances registered a strong YoY growth of 18.5% in Q4FY23 led by robust retail loan book growth. Bank’s organic Retail Advances grew by 26.8%, driven by growth in high focus areas such as Auto Loan (24.4%), Home Loan (19.5%), Personal Loan (101.5%), Mortgage Loan (18.0%), Education Loan (21.8%). · Bank achieved a total business of INR 21,73,236 crore as of 31st March 2023, registering a growth of 16.6% YoY. · The Board of the Bank has recommended to declare a dividend of INR 5.5 per share, subject to requisite approval |
Profitability
- BOB reported a standalone Net Profit of INR 4,775 crore in Q4FY23 as against a profit of INR 1,779 crore in Q4FY22. It grew by 94% YoY and stands at INR 14,110 crore for FY23.
- Net Interest Income (NII) grew by 33.8% YoY to INR 11,525 crore in Q4FY23. NII registered a growth of 26.8% YoY for FY23 and stands at INR 41,355 crore.
- Global NIM stands at 3.53% in Q4FY23, increase of 45 bps YoY. NIM for FY23 stands at 3.31% against 3.03% for FY22.
- Domestic NIM stands at 3.65% in Q4FY23, increase of 51 bps YoY. NIM for FY23 stands at 3.42% against 3.09% for FY22.
- Yield on Advances increased to 8.47% in Q4FY23 as against 6.81% in Q4FY22.
- Cost of Deposits stands at 4.43% in Q4FY23 as against 3.53% in Q4FY22.
- Operating Income for Q4FY23 stands at INR 14,991 crore, increase of 34.6% YoY. It registered a growth of 16.5% YoY for FY23 and stands at INR 51,381 crore.
- Operating Profit for Q4FY23 stands at INR 8,073 crore, increase of 43.3% on a YoY basis. Operating Profit for FY23 stands at INR 26,864 crore up by 20% YoY.
- Cost to Income ratio reduced to 46.15% for Q4FY23 as against 49.39% for Q4FY22. It declined by 152 bps YoY and stands at 47.72% for FY23.
- Return on Assets (annualised) improved to 1.34% in Q4FY23 from 0.57% in Q4FY22. Return on Assets for FY23 stands at 1.03% up by 43 bps YoY.
- Return on Equity (annualised) for FY23 increased by 648 bps YoY to 18.34%.
- For the consolidated entity, Net Profit stood at INR 14,905 crore in FY23 as against INR 7,850 crore in FY22.
Asset Quality
- The Gross NPA of the Bank reduced by 32% YoY to INR 36,764 crore in Q4FY23 and Gross NPA Ratio improved to 3.79% in Q4FY23 from 6.61% in Q4FY22.
- The Net NPA Ratio of the Bank stands at a record low of 0.89% in Q4FY23 as compared with 1.72% in Q4FY22.
- The Provision Coverage Ratio of the Bank stood at 92.43% including TWO and 77.19% excluding TWO in Q4FY23.
- Slippage ratio declined to 1.02% for Q4FY23 as against 2.52% in Q4FY22. Slippage ratio for FY23 reduced by 54 bps and stands at 1.07%.
- Credit cost for the Q4FY23 stands at 0.14% and 0.53% for the full year.
Capital Adequacy
- CRAR of the Bank stands at 16.24% in Mar’23. Tier-I stood at 13.99% (CET-1 at 12.24%, AT1 at 1.75%) and Tier-II stood at 2.25% as of Mar’23.
- The CRAR and CET-1 of consolidated entity stands at 16.73% and 12.83% respectively
- The Liquidity Coverage Ratio (LCR) consolidated stands at 135.4%.
Business Performance
- Global Advances of the Bank increased to INR 9,69,548 crore, +18.5% YoY.
- Domestic Advances of the Bank increased to INR 7,95,560 crore, +16.3% YoY.
- International advances grew by 6.3% sequentially in Q4FY23 stands at INR 1,73,988 crore.
- Global Deposits increased by 15.1% YoY to INR 12,03,688 crore.
- Domestic Deposits increased by 13% YoY to INR 10,47,375 crore in Mar’23.
- International Deposits grew by 31.4% on a YoY basis to INR 1,56,313 crore in Mar’23.
- Domestic CASA deposits registered a growth of 7.9% YoY and stands at INR 4,42,511 crore.
- Domestic Saving deposits grew by 7.6% on a YoY basis in Mar’23 and Domestic Current deposits registered a growth of 9.2% YoY.
- Organic Retail Advances grew by 26.8%, led by growth in high focus areas such as Auto Loan (24.4%), Home Loan (19.5%), Personal Loan (101.5%), Mortgage Loan (18%), Education Loan (21.8%) on a YoY basis.
- Agriculture loan portfolio grew by 13.2% YoY to INR 1,24,247 crore.
- Total Gold loan portfolio (including retail and agri.) stands at INR 38,251 crore, registering a growth of 30.5% on a YoY basis.
- Organic MSME portfolio grew by 11.7% YoY to INR 1,08,196 crore.
Financial result for Quarter ended 31st March 2023
| Particulars (INR crore) | Q4FY22 | Q3FY23 | Q4FY23 | YoY(%) | FY22 | FY23 | YoY(%) |
| Interest Income | 18,174 | 23,540 | 25,857 | 42.3 | 69,881 | 89,589 | 28.2 |
| Interest Expenses | 9,562 | 12,722 | 14,332 | 49.9 | 37,259 | 48,233 | 29.5 |
| Fee Income | 1,638 | 1,539 | 1,714 | 4.6 | 5,486 | 5,997 | 9.3 |
| Net Interest Income (NII) | 8,612 | 10,818 | 11,525 | 33.8 | 32,622 | 41,355 | 26.8 |
| Operating Income | 11,134 | 14,370 | 14,991 | 34.6 | 44,106 | 51,381 | 16.5 |
| Operating Expenses | 5,499 | 6,138 | 6,918 | 25.8 | 21,716 | 24,518 | 12.9 |
| Operating Profit | 5,635 | 8,232 | 8,073 | 43.3 | 22,389 | 26,864 | 20.0 |
| Total Provisions (other than tax) and contingencies | 3,736 | 2,404 | 1,421 | -62.0 | 13,002 | 7,137 | -45.1 |
| of which, Provision for NPA Bad Debts Written-off | 5,200 | 817 | 320 | -93.8 | 14,640 | 4,351 | -70.3 |
| Profit before Tax | 1,899 | 5,828 | 6,652 | — | 9,387 | 19,727 | — |
| Provision for Tax | 120 | 1,976 | 1,877 | — | 2,114 | 5,617 | — |
| Net Profit | 1,779 | 3,853 | 4,775 | — | 7,272 | 14,110 | 94.0 |
Business position
| Particulars (INR crore) | Mar 31 2022 | Dec 31, 2022 | Mar 31, 2023 | YoY (%) |
| Domestic deposits | 9,27,011 | 10,03,737 | 10,47,375 | 13.0 |
| Domestic CASA | 4,10,123 | 4,17,812 | 4,42,511 | 7.9 |
| Global deposits | 10,45,939 | 11,49,507 | 12,03,688 | 15.1 |
| Domestic advances | 6,84,153 | 7,60,249 | 7,95,560 | 16.3 |
| Of which, retail loan portfolio (Organic) | 1,40,399 | 1,66,861 | 1,78,037 | 26.8 |
| Global advances | 8,18,120 | 9,23,878 | 9,69,548 | 18.5 |
| NIM Global % | 3.08 | 3.37 | 3.53 | 45 bps |
Key Ratios
| Particulars | Q4FY22 | Q3FY23 | Q4FY23 |
| Return on Assets (%) | 0.57 | 1.13 | 1.34 |
| CRAR (%) | 15.68 | 14.93 | 16.24 |
| CET-1 (%) | 11.42 | 10.83 | 12.24 |
| Gross NPA (%) | 6.61 | 4.53 | 3.79 |
| Net NPA (%) | 1.72 | 0.99 | 0.89 |
| PCR (with TWO) (%) | 88.71 | 92.34 | 92.43 |
