MOSL: BANK OF BARODA (Buy)-Revenue in-line-lower provisions drive earnings
Bank of Baroda: Revenue in-line; lower provisions drive earnings
(BOB IN, Mkt Cap USD4b, CMP INR111, TP INR140, 26% Upside, Buy)
- BoB reported PAT of INR4.3b in 2QFY19, primarily led by NII growth of 20.7% to INR44.9b, fee income growth of 14.3%, and lower NPA provisions. PPoP grew by just 1.3% YoY to INR30.8b, majorly due to a 22% decline in other income to INR13.5b.
- Global NIM came in at 2.6% for 2QFY19, mainly supported by an improvement in international NIM to 1.7% (from 1.2% a year ago). International NIM improved as the low-yielding book of buyer’s credit and LCs has been running down and the same is getting replaced by high-yielding loans.
- Domestic loans grew by 20.4% YoY to INR3.4t, led by retail loans (+33.6% YoY). Within retail, home/auto loan growth was 39.8%/38.8% YoY. Total deposits grew by 4.1% to INR6.1t, taking the domestic CD ratio to 78%. Domestic CASA + Retail TD form 87.61% of total deposits.
- Fresh slippages came in at INR22.8b – the lowest level in past seven quarters, leading to annualized slippage ratio of 3.9%. GNPA/NNPA ratio fell 68bp/54bp QoQ to 11.78%/4.86%. Provision for NPAs at INR14.7b was at a nine-quarter low (credit cost 1.31%). PCR including technical w/off stood at 70.75%.
- Other highlights: (1) International NIM has improved as the low-yield portfolio has been running down. (2) Exposure to the infra group: Management is of the view that the exposure at the SPV level is performing well as it is project-specific. Holding company exposure is at risk.
Bank of Baroda is engaged in providing various services, such as personal banking, corporate banking, international banking, small and medium enterprise (SME) banking, rural banking, non-resident Indian (NRI) services and treasury services. The Bank's segments include Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations. The Bank offers personal banking services, such as deposits, loans, mobile banking and wealth management services; business banking services, such as Baroda Money Express, debit cards and collection services; corporate banking services, such as appraisal and merchant banking, and cash management and remittances; international banking services, such as export, import and trade finance, and correspondent banking; rural banking services, such as deposits, priority sector advances, financial inclusion and lockers, and treasury services, such as domestic and forex operations. The Bank operates a network of approximately 5,330 branches.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.