Bank of Baroda shares jump 4% post Q4 business update

The share price of Bank of Baroda (BoB) surged over 4% in intraday trade on Tuesday, a day after the public sector lender released its business update for the fourth quarter ended March 31, 2022. The PSU bank has reported double-digit growth in advances and deposits in Q4 FY23, indicating the lender’s earnings are likely to improve during the January-March quarter of the financial year 2022. The market sentiment was further lifted after global brokerages - Morgan Stanley, JP Morgan, and Citi - remained bullish on the banking heavyweight after BoB announced its fourth quarter business update.

JPMorgan has given an "overweight" rating to Bank of Baroda stock, with a price target of ₹220 a share. Morgan Stanley, too, has "overweight" rating and a target of ₹220, while Citi has given a "buy" rating with a target of ₹210 a share. 

Bank of Baroda shares opened 4.1% higher at ₹173 against the previous closing price of ₹166.2 on the BSE. During the session so far, the banking stock rallied 4.5% to hit an intraday high of ₹173.70, while the market capitalisation increased to ₹88,249 crore.

The BoB shares trade 12% lower than its 52-week high of ₹197.20 touched on December 9, 2022, while it has nearly doubled as compared to its 52-week low of ₹89.90 hit on June 20, 2022. The PSU bank stock has risen 42% in a year, 32% in the past six months, and 4% in a month. In the calendar year 2023, the counter has fallen over 8%.

In an exchange filing on Monday, BoB said that its total business crossed the ₹21 lakh crore milestone in FY23, aided by healthy growth in advances and deposits. The total business of the bank grew by 16.8% YoY to ₹21.77 lakh crore versus ₹18.65 lakh crore in Q4FY22.

The bank’s advances rose by 19% year-on-year (YoY) to ₹9.73 lakh crore for the March quarter of 2022 as compared to ₹8.18 lakh crore in Q4 FY22. The growth in advances was higher than the banking system's growth of around 15% for the financial year.

In a similar trend, the deposits expanded by 15.1% YoY to ₹12.04 lakh crore at the end of March 2023, from ₹10.46 lakh crore in the corresponding period last year. The domestic deposits, which constitutes 87% of total deposits, climbed 13% to ₹10.47 lakh crore from ₹9.27 lakh crore in the same period last year.

The exchange data showed that the bank's global gross advances rose 19% to ₹9.7 lakh crore from ₹8.18 lakh crore in the year ago period. The domestic advances jumped 16.9% YoY at ₹7.99 lakh crore versus ₹6.84 lakh in Q4FY22.

In a separate exchange filing on Monday, BoB said it has hiked its MCLR (marginal cost of funds-based lending rate) for one year by five basis points, effective April 12. MCLR is the minimum interest rate below that a bank or lender can offer. The state-owned bank raised the MCLR even after the RBI announced a status quo on the repo rate in its latest policy announcement on Friday.

The bank has revised one-year MCLR to 8.6% from the current 8.55%, while it has raised its overnight MCLR by five basis points to 7.95%. The lender, however, kept MCLR unchanged for six-month, three-month, and one-month periods.