India's Bank of Baroda expects margin pressure to persist for two more quarters
BENGALURU: India's Bank of Baroda expects margin pressure to continue through the second quarter of this fiscal, after a drop in fourth-quarter margins and core lending income sent its shares tumbling over 10% on Tuesday.
The company's net interest income, or the difference between interest earned on loans and paid on deposits, fell to 110.20 billion rupees ($1.31 billion) for the quarter ended March 31 from 117.93 billion rupees a year earlier. Its domestic net interest margin dropped to 3.02% from 3.45% earlier.
CEO Debadatta Chand said at a press conference that the state-owned lender anticipates margin pressure to persist for the first two quarters of this fiscal year, which started on April 1. He did not provide details.
Shares of Bank of Baroda, India's third-largest state-run lender by assets, fell more than 10% after the results. The stock was the biggest loser on the Nifty PSU bank index, which settled nearly 5% lower.
Indian lenders have grappled with tighter liquidity conditions for the last few quarters, forcing them to pay higher interest to attract customer deposits.
Bank of Baroda's interest paid on deposits jumped 10% compared to a 3.3% rise in interest earned on loans. Domestic cost of deposits jumped to 5.33% from 5.11% a year earlier.
The lender's cost of deposits peaked in the fourth quarter, CEO Chand said.
'These are weak results from Bank of Baroda, said Anand Dama, head of BFSI at Emkay Global Financial Services, with 'margins and slippages disappointing investors.'
Fresh slippages, or loans classified as bad for the first time, rose to 28.73 billion rupees during the quarter from 28.55 billion rupees a year earlier and 25.03 billion rupees in the previous quarter.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
an hour ago
- Business Recorder
Bearish bias to persist in India bonds as demand dampens post RBI policy
MUMBAI: Indian government bond yields could continue to witness a mild uptick in early deals on Wednesday, as investor appetite has taken a beating after the Reserve Bank of India (RBI) changed its monetary policy stance. The yield on the benchmark 10-year bond is expected to move between 6.27% and 6.33%, a trader at a private bank said, compared with the previous close of 6.2946%, which was the highest since May 9. The five-year 6.75% 2029 bond yield ended at 5.9513% in the previous session. Bond yields have been on a rising spree since Friday disappointed by the RBI's shift to 'neutral' stance, signalling limited scope for rate cuts, after it delivered an outsized 50-basis point reduction. 'We thought the market was showing signs of recovery in the aftermath of (the RBI) policy, but yesterday's state debt cutoffs spoiled the party and we are back in the bearish grip that should persist for today,' the trader said. Weak demand for state debt at an auction on Tuesday, pushed yields, which move inversely to prices, above the 7% handle for the first time in this financial year. India bond yields consolidate after previous week's sharp decline It weighed on the overall market sentiment, negating the gains in bond prices made earlier in the day due to value purchases. The central bank is likely to keep rates on hold for the rest of this fiscal year, according to a Reuters poll of economists. The mid- to long-term bond yields have risen despite the steepest cut in policy rates in five years, as traders have chosen to focus on the central bank's guidance that the easing cycle is over, with some favouring the shorter end of the curve.
Business Recorder
an hour ago
- Business Recorder
Indian rupee set for calm open amid yuan watch, two-sided flows
MUMBAI: The Indian rupee is expected to open little changed on Wednesday and hold a narrow range, as traders monitor the Chinese yuan for cues amid China-US trade developments and keep an eye on flows. The 1-month non-deliverable forward indicated an open in the 85.58-85.62 range, versus the close of 85.6025 in the previous session. The rupee's intraday range over the last two sessions has been limited to just about 20 paisa, underscoring how volatility has subsided. Interbank dealers have broadly pegged the near-term range on the dollar/rupee at 85.40–85.50 to 86.00–86.10. Mild bearish bias for Indian rupee on dollar strength; US-China talks eyed 'Within this range, which now seems increasingly entrenched, there is good two-way interest,' a currency trader at a private bank said. 'At the top end, exporters and speculators tend to step in, while at the bottom, corporates are active dollar buyers.' The rupee's 10-day daily realized volatility has fallen to around 3%, its lowest level in more than two months. It's not just the rupee—volatility across most Asian currencies has declined and now sits well below recent peaks. Receding concerns over a damaging trade war between the US and its major trading partners have helped temper volatility and boosted appetite for risk assets.
Business Recorder
2 hours ago
- Business Recorder
Indian benchmarks set to open higher on optimism over US trade talks with China, India
India's benchmark indexes are poised to open marginally higher on Wednesday, mirroring gains in other Asian markets on signs of progress in trade talks between the US and its key trading partners such as India and China. The Gift Nifty futures were trading at 25,183.50 as of 8:18 a.m. IST, indicating that the Nifty 50 will open above Tuesday's close of 25,104.25. Other Asian markets rose at the open, with the MSCI Asia ex-Japan index gaining 0.4%, following an agreement between the US and Chinese negotiators on a trade deal framework in London, pending approval by their leaders. Meanwhile, Indian and US officials made progress in bilateral trade talks in New Delhi, discussing key areas such as industrial goods, agriculture, tariff reductions and non-tariff barriers, according to Indian government sources. The Indian benchmarks closed flat on Tuesday, snapping a four-session gaining streak, as profit booking in financials offset gains driven by optimism around the US-China trade talks. Financials, IT stocks weigh on Indian equity benchmarks 'Consolidation seems like the current mood in Indian markets, but progress in global trade talks, improving liquidity and FPI interest can keep the bulls hopeful,' said Vikram Kasat, head of advisory of PL Capital. Foreign portfolio investors remained net buyers of Indian shares for the third straight session on Tuesday, purchasing stocks worth 23.02 billion rupees ($269 million). Domestic institutional investors were net buyers for the 16th straight session on Tuesday.
