Bank of Baroda (BOB) reported a remarkable 2x growth in profits for the fiscal year 2023, marking a significant milestone for the bank. The financial institution declared its highest-ever quarterly and annual net profits, amounting to INR 4,775 crore (a 168 per cent YoY increase) and INR 14,110 crore (a notable 94 per cent YoY increase), respectively.
This remarkable increase in profitability has resulted in a significant improvement in the bank’s Return on Assets (RoA). The RoA climbed by 43 basis points (bps) year on year to 1.03 per cent in fiscal year 2023. Furthermore, the RoA for the fourth quarter of FY23 increased by 77 basis points year on year, reaching 1.34 per cent.
Bank of Baroda’s Return on Equity (RoE) increased significantly. The RoE for FY23 increased by 648 basis points year on year to 18.34 per cent, while the RoE for Q4FY23 increased by 1321 basis points year on year to 24.82 per cent.
Profitability increased rapidly, which was aided by an increase in Net Interest Income (NII). For Q4FY23 and FY23, the NII increased by 33.8 per cent and 26.8 per cent, respectively.
This sustained NII rise can be attributable to an 18.5 per cent YoY increase in advances, as well as improved Net Interest Margins (NIM). The NIM increased by 16 basis points QoQ and 45 basis points year on year, finishing the quarter at 3.53 per cent and 28 basis points year on year for FY23.
The bank’s profits increased significantly, while operational expenses increased moderately. As a result, the bank’s operating profit increased by 43.3 per cent year on year in Q4FY23 and by 20 per cent year on year in fiscal year 2023.
Furthermore, the bank successfully lowered the Cost to Income ratio by 152 basis points for FY23, posting a Cost to Income ratio of 47.72 per cent.
Bank of Baroda’s asset quality has improved significantly, with a steep fall in Gross Non-Performing Assets (GNPA) of 282 basis points (bps) YoY and 74 basis points (bps QoQ), resulting in a GNPA ratio of 3.79 per cent. The Net Non-Performing Assets (NNPA) ratio improved to 0.89 per cent, down 83 basis points year on year and 10 basis points quarter on quarter.
The provision coverage ratio (PCR) of the bank remained healthy, at 92.43 per cent with Technical/Non-Technical Write-Off (TWO) and 77.19 per cent without TWO.
This robust and continuous improvement in asset quality has resulted in a bank-record low credit cost of 0.14 per cent for Q4FY23 and 0.53 per cent for FY23.
Global Advances at Bank of Baroda increased by 18.5 per cent year on year in Q4FY23, owing to a strong retail loan book. Organic Retail Advances increased by 26.8 per cent at the bank, with noteworthy increases in key sectors such as Auto Loan (24.4 per cent), Home Loan (19.5 per cent), Personal Loan (101.5 per cent), Mortgage Loan (18.0 per cent), and Education Loan (21.8 per cent).
Bank of Baroda had a total business of INR 21,733 million as of March 31, 2023.
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