Bank of Baroda share price target

Bank of Baroda Q2FY19 results Comment NII increased to Rs. 4492.54 Cr in Q2FY19 compared to Rs. 4381.08 Cr in Q1FY19. NII increased by 20.75% ( Rs. 772.01 Cr ) when compared with the same period last year.

We maintain a NEUTRAL rating on the stock with TP of Rs 126 (0.8x Sept-20E ABV of Rs 157) in spite of the strong near term operational performance. Healthy operating performance in 2Q was characterized by resurgent book growth, steady NIMs and CASA and higher fees & recoveries. Further, the dip in provisions (-17% QoQ), best in class PCR (~71%) and lower slippages (-21% QoQ) were promising yet deceptive as the bank utilized the RBI dispensation towards MSME accounts to retain assets worth ~Rs 14bn as standard.

ICICI Securities Ltd | Retail Equity Research The bank fared well on asset quality front with fresh slippage at | 2281 crore, lowest in seven quarters. Absolute GNPA declined marginally to | 55121 crore (including |534 crore impact of translation). GNPA ratio declined ~68 bps QoQ to 11.78%. Exposure in accounts under NCLT 1 list is | 3920 crore and NCLT 2 list is | 4227 crore as on Q2FY19. PCR is >65% in both lists. Exposure to NBFC is given at | 71961 crore (16.3% of net advance)....

Merger Overhang Remains A Key Concern; Maintain HOLD Bank of Baroda (BoB) has delivered a strong performance on asset quality front in 2QFY19, marked low fresh slippage of Rs22.8bn for seventh successive quarter. It's PCR including technically written-off accounts sequentially improved to 70.75%, which excluding technically written-off accounts stood at 61.79% in 2QFY19 vs. 69.11% and 59.94% in 1QFY19. The Bank's NII grew by 20.8% in 2QFY19 led by strong growth in loan book and relatively stable NIMs of 2.61%. Further, its core fee-based income remained strong ((+14.3% YoY and +12.3% QoQ) at Rs9.6bn. Domestic credit grew by 20.4% led by retail loans, which grew by 33.6% YoY. Within retail loans,...

18 September 2018 The government has chosen the three banks for the merger as they fit well into the strategy of Anchor Bank (Bank of Baroda) + Good Bank (Vijaya Bank) + Stressed Bank (Dena Bank). While both BOB and Vijaya Bank have reported an improvement in their earnings performance, Dena Bank is under the RBIs Prompt Corrective Action (PCA) framework and has been restrained from further lending. Dena Bank has a GNPA/NNPA ratio of 22.7%/11.0%, while Vijaya Bank has a significantly lower GNPA/NNPA ratio of 6.2%/4.1%. This compares with the 12.5%/5.4% GNPA/NNPA ratio for BOB. The merger of BOB, Vijaya Bank and Dena Bank will create the third largest lender in the country with an advances and deposits market share of 7.0% and 7.3%, respectively. While BOB already has a wide-spread network, Dena Bank and Vijaya Bank are more regional focused banks.

BOB's asset quality improved significantly as fresh slippages declined by 76% QoQ and 35% YoY. Notably, 85% of the slippages during the quarter were from the watchlist. While Gross nonperforming asset (NPA) ratio increased by 20 bps QoQ to 12.5%, Net NPA ratio declined by 9 bps QoQ to 5.4% as the bank improved its provision coverage ratio (PCR) by 190 bps QoQ to 69.1%. Notably, the watchlist of the bank now stands at Rs8,600cr (2.0% of the advances). Further, the bank has an exposure of Rs5,813cr and Rs3,843cr towards large NCLT accounts referred by RBI (List 1 + List 2) and has made provisions of 64.4% and 62.7%, respectively. We believe that a substantial proportion of the pain has been recognised. Hence, slippages are expected to moderate...

NII increased to Rs. 4381.08 Cr in Q1FY19 compared to Rs. 4002.26 Cr in Q4FY18. Bank of Baroda Q1FY19 results Comment

30 July 2018 BOB reported net profit of INR5.3b (highest in past six quarters) led by lower than expected credit cost. NII grew by 29% YoY on the back of 12% YoY loan growth and 14bp QoQ margin expansion to 2.65%. Total income grew 12% YoY which coupled with controlled opex enabled PPoP growth of 13% YoY at INR30b. Domestic advances grew at robust 19.8% YoY whereas global advances grew by 10% YoY. Domestic loan growth was driven by retail growth of 34% YoY (43% YoY growth in home loans) while domestic corporate portfolio also reported 23% YoY growth. Deposits growth was muted at 2% YoY while CASA ratio stood at 40.8% (Average daily CASA ratio stood at 39.34%). CET-1 ratio stood at 9.27% v/s 9.23% in 4QFY18.

ICICI Securities Ltd | Retail Equity Research PAT came in at | 528 crore vs. loss of ~| 3100 crore in Q4FY18. This was mainly led by strong NII growth of 28.7% YoY to | 4381 crore and lower credit cost of | 2166 crore. Such strong traction in NII was also due to interest reversals and, thus, may not sustain ahead Loans increased 9.77% YoY to | 414517 crore led by domestic loans, which increased 19.84% YoY to | 326400 crore. Contribution of overseas business came down to 20.89% from 22.33% last quarter...

Maintain BUY with a TP of Rs 185 (1.3x Mar-20 ABV of Rs 142). BOBs 1Q show rekindled our faith in its recovery story, ever so slightly. Though slippages (~Rs 47.3bn, 4.5% annu.) were relatively elevated, higher reductions (3x YoY) kept GNPAs under control. Lower provisioning (down ~18% YoY) and tight cost control (up merely 9% YoY) pushed net earnings to a 7-quarter high. The sustained uptick in margins (up 14bps QoQ to 2.65%) was heartening.