Motilal Oswal's research report on Bank of Baroda
Bank of Baroda (BoB) reported a steady operating performance, but higher provisions affected its earnings adversely (20% miss) as the bank further strengthened its balance sheet. Business growth was strong with loans growing 6% QoQ. Asset quality improved even as fresh slippages rose to INR45.1b (Retail exposure of INR17b) with PCR increasing sharply to ~75%. Total SMA 1/2 (>INR50m) declined to 44bp of loans. Collection efficiency (ex-Agri) improved to 97% in Mar’22. We cut our FY23E earnings by 16% to factor in lower other income (due to rising bond yields).
Outlook
We estimate FY24 RoA/RoE at 0.9%/13.1% as we build in credit cost of 1.4%. Maintain BUY with a TP of INR135.
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