Bank of Baroda (BoB) has announced plans to raise up to ₹8,500 crore after securing approval from its board during a meeting held on Thursday, February 13. The bank aims to generate these funds through Qualified Institutional Placement (QIP) or other suitable modes, subject to regulatory approvals.
In an exchange filing, the lender stated, “The Board of Directors of our Bank in its meeting held today i.e. 13.02.2025 has approved raising of capital up to ₹8,500 crores by way of common equity capital by various modes including QIP in suitable tranches up to March 2028 and beyond, as required.”
Q3 Performance and Brokerage Reactions
Following the announcement, global brokerage firms revised their target prices for the stock due to weak financial performance in the third quarter. Bank of Baroda’s net interest income (NII) fell short of expectations, registering a 2% sequential decline, mainly due to a drop in net interest margins (NIM).
Jefferies and HSBC have lowered their target price for BoB shares to ₹250 per share. However, Jefferies noted that the bank’s Q3 profit was higher than expected due to lower provisions.
Despite challenges, Bank of Baroda reported a 6% year-on-year increase in net profit for Q3 FY25, reaching ₹4,837 crore compared to ₹4,579 crore in the same quarter last year. The rise in profits was primarily driven by strong growth in non-interest income, even as loan growth remained slow and margins declined.
CEO’s Outlook on Growth and Margins
Bank of Baroda CEO Debadatta Chand shared insights on the bank’s financial outlook, stating that NIM for the fiscal year is expected to be between 3% and 3.10%. This is lower than the earlier estimate of 3.10-3.20% but is expected to improve compared to Q3 levels as deposit costs decline.
Chand also highlighted that the bank is closely monitoring its credit-to-deposit ratio, which currently stands at 84%, near the upper end of expectations. However, with deposit growth projected at 9-11% and advances expected to rise by 11-13%, the bank anticipates bringing this ratio closer to 80%.
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