BoB Reports 3% Profit Increase Despite Margin Decline, Stock Prices Drop 10%

Shares of a prominent bank experienced a sharp decline of nearly 11% following disappointing quarterly results for March. The stock price dropped 10.27%, closing at Rs 223.65 on the Bombay Stock Exchange (BSE). It fared even worse on the National Stock Exchange (NSE), where it plunged 10.90% to Rs 221.95.

Dividend Declaration

In light of the recent performance, the bank’s board has announced a final dividend of Rs 8.35 per share, with June 6 set as the record date for eligible shareholders. This move aims to reassure investors despite the unsettling earnings report.

Financial Highlights

The bank’s net interest income, which measures the difference between interest earned and interest paid, saw a modest increase of 6.6%, reaching Rs 11,020 crore, down from Rs 11,793 crore in the same quarter last year. Meanwhile, non-interest income witnessed a remarkable 24% surge, climbing to Rs 5,210 crore.

Net Interest Margin (NIM): The domestic net interest margin decreased to 3.02% in March 2025, a drop from 3.45% in March 2024.
Gross Advances: Domestic gross advances rose by 13.7%, totaling Rs 10.2 lakh crore, with retail advances increasing by 19%.
Deposits: Domestic deposits grew by 9.3% to Rs 12.42 lakh crore, while international deposits saw a 16% increase to Rs 2.29 lakh crore.

Expert Insights

Debadatta Chand, the managing director and CEO, addressed concerns regarding the pressure on margins during a post-earnings conference. He noted, “While competitive interest rates on deposits have affected margins, improvements in liquidity and a reduction in the policy repo rate are expected to create a favorable environment moving forward. Although we anticipate some pressure in the first two quarters, we expect margins to stabilize in the latter half of the year, with NIM projected to be around 3%.”

Asset Quality Improvement

Encouragingly, the bank’s asset quality showed signs of improvement as the gross non-performing assets (NPAs) ratio decreased to 2.26% in the March quarter, down from 2.92% the previous year. The net NPA also fell to 0.5%, compared to 0.68% at the same time last year.

This combination of financial metrics reflects both challenges and opportunities for the bank as it navigates a competitive landscape while aiming to restore investor confidence.