By Siddhi Nayak
MUMBAI (Reuters) – Bank of Baroda, India’s third largest state-run lender, reduced its credit and deposit growth guidance for the fiscal year 2024/2025 on Friday, citing greater competition for garnering funds.
Indian banks have been reporting double-digit percentage loan growth over the last few months, helped by healthy economic growth and urban consumption.
Banks have, however, been struggling to raise deposits at the same pace as many lenders offer higher returns.
Regulatory measures by the central bank to slow credit growth and a nudge to lenders to raise deposits has pushed banks that are unable to boost deposit growth to ease lending.
Bank of Baroda, which had earlier guided for overall credit and deposit growth of 12%-14% and 10%-12%, respectively, now expects to grow loans by 11%-13% and deposits by 9%-11%, according to CEO Debadatta Chand.
The bank’s domestic gross advances grew 12.5% in the July-September quarter while domestic deposits were up 7.1%. Its overseas advances and deposits grew 7.6% and 21.2%, respectively.
“Deposits are not growing because the savers’ money is going into capital markets. As we calibrate the loan growth guidance, we have brought down the deposit guidance as well since we are mindful of the margin guidance which we have,” the CEO told media.
Bank of Baroda seeks to maintain a net interest margin at around 3.10%-3.15% going forward, against 3.10% in the quarter ended Sept. 30, assuming the cost of deposits will be lower for the next two quarters, Chand said.
(Reporting by Siddhi Nayak; Editing by Mrigank Dhaniwala)
