Bank of Baroda cuts NIM guidance after Q3 profit beat
The shares of Bank of Baroda (BoB) were trading at ₹213.30, down by ₹9.09 or 4.09 per cent on the NSE today at 3.05 pm. The shares reached its 52-weeks low today at ₹211.05.
BoB has revised its net interest margin (NIM) guidance downward for FY25 to 3-3.1 per cent following a 16 basis points quarter-on-quarter decline in Q3FY25 margins to 2.94 per cent. Despite this, the bank reported better-than-expected profits due to lower provisions.
The margin decline was partially attributed to the reclassification of penal interest as penal charges, impacting NIMs by 5-7 basis points in 9MFY25. The bank also pulled back growth in high-yielding personal loans amid rising asset quality concerns in this segment, though other retail secured portfolios remained stable.
BoB’s Special Mention Account (SMA1+SMA2) book showed a slight increase to 0.49 per cent from 0.47 per cent in September 2024. Management maintains its FY25 guidance for slippages at 1-1.2 per cent and expects credit costs to remain below 75 basis points.
In response to these developments, Axis Securities has maintained its “Buy” rating on the stock but reduced its target price to ₹280 from ₹310 per share. The brokerage values the bank at 1.0x September 2026 estimated adjusted book value, citing reasonable valuations despite near-term margin pressures. The firm has also adjusted its estimates, cutting NII projections by 2.4-2.6 per cent for FY25-27 while raising FY25 PAT estimates by 2.4 per cent.
