MOSL: BANK OF BARODA (Buy)-Strong operational performance-stressed assets declining rapidly
Bank of Baroda: Strong operational performance; stressed assets declining rapidly
(BoB IN, Mkt Cap USD6.4b, CMP INR156, TP INR185, 19% Upside, Buy)
- BoB reported muted PAT of INR1.18b in 3QFY18 due to elevated provisioning expenses, even as revenue growth stood strong. NII stood at INR43.9b (+40% YoY), although other income declined 6% YoY, led by a 39% YoY decline in treasury gains. However, controlled opex (flat QoQ) enabled 41% YoY growth in PPoP to INR36.5b (much ahead of our estimate), leading to a 443bp improvement in the cost-income ratio to ~40%
- NII growth was led by (i) continued traction in loan growth, (ii) 135bp QoQ improvement in domestic CASA mix to 40.6%, (iii) slower growth of 8% YoY in low-margin international business, and (iv) improvement in asset mix, led by 33% YoY growth in retail loans. BOB further benefitted from interest on income tax refund amounting to INR3.3b, adjusting for which, global/domestic NIM expanded 21/29bp QoQ.
- Overall advances portfolio grew 14% YoY (domestic loan book up 16.4% YoY to INR2.9t), but deposit base fell 3% YoY/2% QoQ. CD ratio, thus, rose 326bp QoQ to 69.7%.
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.
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