Bank of Baroda Expects Strong Sales and Earnings Growth in Q4FY24

Bank of Baroda expects strong Q1FY24 results with 3.2% sales growth and INR 70.60 EPS. The bank aims to reduce non-performing assets, with a target of INR 10,000 crore in recoveries and upgrades for FY24.

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Nitish Verma
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Bank of Baroda Expects Strong Sales and Earnings Growth in Q4FY24

Bank of Baroda Expects Strong Sales and Earnings Growth in Q4FY24

Bank of Baroda, one of India's leading public sector banks, is poised for a strong financial performance in the current quarter ending June 30, 2024. The bank is expected to report sales of INR 7.60 billion and earnings per share (EPS) of INR 70.60, representing a 3.20% sales growth compared to the same quarter last year.

Why this matters: The bank's performance has significant implications for the Indian economy, as a strong quarter could boost investor confidence and contribute to overall economic growth. Moreover, the bank's ability to reduce non-performing assets and improve its financial health could set a positive precedent for other public sector banks in the country.

The bank has set an ambitious target of INR 10,000 crore in recoveries and upgrades for the current financial year, aiming to further reduce its gross and net non-performing asset (NPA) ratios. In the fourth quarter of FY24, Bank of Baroda reported a 2.3% rise in net profit and recommended a dividend of INR 7.60 per equity share. The bank's gross NPAs moderated to 2.92%, while net NPAs declined to 0.68% in the same quarter.

For the full financial year FY24, Bank of Baroda's net profit increased by an impressive 26% year-over-year (YoY). However, analysts predict a marginal decline in net interest income (NII) for Q4FY24, with quarter-over-quarter (QoQ) net profit expected to drop around 4%. YoY net profit could also decline up to 8% due to soft loan growth.

In recent developments, the Reserve Bank of India (RBI) lifted the ban on Bank of Baroda's mobile app, BoB World, allowing the bank to onboard new customers as of May 9, 2024. This move comes after the RBI granted permission to the bank to resume onboarding new customers through its mobile application on May 8, 2024.

Despite the positive developments, shares of state-owned lenders, including Bank of Baroda, continued to fall for the second consecutive day on May 7, 2024, following the RBI's proposal for tighter rules on project financing. The central bank's move aims to address potential risks and ensure greater stability in the banking sector.

As Bank of Baroda gears up to report its financial results for the current quarter, investors and analysts will closely monitor the bank's performance, particularly in light of the expected sales growth and earnings per share. The bank's ability to maintain its recovery and upgrade targets, along with its efforts to reduce non-performing assets, will be key factors in determining its overall financial health and future prospects in the Indian banking industry.

Key Takeaways

  • Bank of Baroda expects 3.20% sales growth in Q1FY24, with EPS of INR 70.60.
  • Bank targets INR 10,000 crore in recoveries and upgrades for FY24.
  • Net profit rose 26% YoY in FY24, with gross NPAs at 2.92% and net NPAs at 0.68%.
  • RBI lifted ban on Bank of Baroda's mobile app, allowing new customer onboarding.
  • Shares fell despite positive developments, due to RBI's proposal for tighter project financing rules.