Bank of Baroda Q4 Results 2025: PAT Rises 3%, Dividend at ₹8.35 – Is the Stock a Buy?

Bank of Baroda (BoB), one of India's leading public sector banks, announced its financial results for the fourth quarter of FY2025 on May 6. The bank reported a modest 3.3% year-on-year (YoY) increase in standalone net profit to ₹5,048 crore, up from ₹4,886 crore in the same quarter last year. (The Economic Times)

Despite the profit uptick, the bank's net interest income (NII) declined by 6.6% YoY to ₹11,020 crore, indicating pressure on core banking operations. However, BoB's board announced a dividend of ₹8.35 per share, the highest since its stock split, reflecting confidence in its financial stability. (mint, ET Now)

Key Financial Highlights

• Net Profit: ₹5,048 crore, up 3.3% YoY

• Net Interest Income (NII): ₹11,020 crore, down 6.6% YoY

• Non-Interest Income: ₹5,210 crore, up 24.3% YoY

• Dividend: ₹8.35 per share; record date set for June 6, 2025

• Gross NPA: ₹27,000 crore; Gross NPA ratio at 2.92%

• Net NPA: ₹6,994 crore; Net NPA ratio at 0.58% (The Economic Times, mint, Business News Today, MarketScreener)

Market Reaction

Following the earnings announcement, BoB's share price declined over 6%, trading at ₹233.28 per share. The market's response suggests investor concerns over the decline in NII and potential margin pressures.(Business News Today, mint)

Analyst Perspectives

Seema Srivastava, Senior Research Analyst at SMC Global Securities, noted that while BoB's loan growth remains healthy, the decline in NII and net interest margin (NIM) indicates spread pressure. However, she highlighted the improvement in asset quality as a positive sign. (mint)

Axis Securities projected a 1% YoY decline in NII to ₹11,679 crore and anticipated a marginal contraction in NIM, reflecting the challenges in maintaining profitability amidst changing interest rate dynamics. (mint)

Asset Quality and Provisions

BoB's asset quality showed improvement, with Gross NPA ratio reducing to 2.92% and Net NPA ratio to 0.58%. The bank's provisions for bad loans stood at ₹2,500 crore, indicating a proactive approach to managing credit risk.(Business News Today)

Loan and Deposit Growth

The bank reported a 13% YoY growth in advances and a 10% increase in deposits, surpassing industry averages. This growth underscores BoB's strong position in the lending market and its ability to attract deposits.

Dividend Payout

The declared dividend of ₹8.35 per share is the highest since BoB's stock split, signaling robust capital adequacy and a commitment to shareholder returns. Shareholders on record as of June 6, 2025, will be eligible for the dividend. (ET Now, mint)

Investment Outlook: Is BoB a Buy?

While BoB's Q4 results present a mixed picture, the bank's strong loan growth, improved asset quality, and generous dividend payout are encouraging. However, the decline in NII and potential margin pressures warrant caution.(mint)

Pros:

• Strong loan and deposit growth

• Improved asset quality

• Attractive dividend yield

Cons:

• Declining NII and NIM

• Market volatility impacting share price(ET Now)

Investors with a long-term horizon may find BoB's stock appealing, given its fundamentals and dividend yield. However, it's essential to monitor the bank's performance in managing interest margins and sustaining profitability in the upcoming quarters.(mint)