An overseas presence spanning 24 countries has consistently helped Bank of Baroda grow at higher rates than the overall banking industry in the past. In the latest quarter ending June, the bank’s loan growth slowed to 12 per cent, but was driven mainly by the overseas market. The quarter saw overseas advances grow by 18 per cent, contributing almost a third of the loan book.

Domestic loans however, grew by only 10 per cent. Within this, retail and small and medium enterprises (SMEs) drove growth. The bank’s strong presence among SMEs in Rajasthan, Uttar Pradesh and Uttarakhand continues to help it log a healthy growth rate in this segment.

For this fiscal, the management expects the bank to grow 1-2 percentage points above the industry average. However, tapering domestic loan growth may make this a tough task.

Like every other public sector bank, Bank of Baroda too, witnessed a surge in loan delinquencies during the quarter ending June. Additional slippages of Rs 1,960 crore and lower recoveries led to an increase in non-performing assets.

The stress in large industries, SMEs and agriculture segments continued to remain high. Restructured loans of Rs 2,000 crore during the quarter added to the bank’s stressed assets.

Prudently though, the bank has fully provided for its restructured assets instead of apportioning them over the next four quarters.

Shedding high-cost deposits worth Rs 22,363 crore helped reduce costs and offset some of the pressure on declining yields. The low-cost current account and savings account (CASA) constitutes a healthy 31 per cent of overall deposits.

While the next two to three quarters will continue to witness pressure on asset quality, Bank of Baroda still remains among the better capitalised public sector banks with Tier-I capital adequacy of 9.7 per cent.

At Rs 487 per share on the BSE, the stock trades at a comfortable 0.8 times one-year forward adjusted book value, lower than its historic average of 1.1 times.

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