Public sector lender Bank of Baroda plans to raise capital up to Rs 7,500 crore through additional Tier 1 (AT1) and Tier 2 bonds to meet prudential regulator norms and support business growth. The Mumbai-based bank has kept options open to raise capital by issuing these debt instruments in the overseas market.
The board of directors considered and approved raising of additional capital up to Rs 7,500 crore through AT1 and Tier II bonds in suitable tranches up to March 31, 2025, and beyond if found expedient. The above capital will be raised when the market is conducive, BOB said in a filing with BSE. Its stock price rose by 1.35 per cent to Rs 273.7 per share at the close of trading on the exchange.
The Capital Adequacy Ratio (CAR) of the bank stood at 16.31 per cent with Common Equity Tier-1 ratio at 12.54 per cent at the end of March 2024. The additional Tier 1 capital was 1.53 per cent and Tier II at 2.24 per cent at the end of March 2024, according to the analysts’ presentation for FY24.
According to the bank’s annual report for FY24, it had raised additional Tier 1 capital of Rs 2,474 crore in FY23. The bank issued Tier 2 capital of Rs 5,000 crore.
BOB’s loan book grew by 12.5 per cent on a year-on-year (Y-o-Y) basis to Rs 10.9 trillion at the end of March 2024.
In June 2024, global rating agency Moody’s affirmed “Baa3” long-term local and foreign currency bank deposits rating for BOB. Its capitalisation will remain stable over the next 12-18 months amid high loan growth, the rating agency said.
The improving profitability will support capitalisation despite strong loan growth and higher risk weight requirements for unsecured lending. India’s strong operating environment will continue to support their credit fundamentals over the next 12-18 months, Moody’s added.
First Published: Jul 05 2024 | 7:48 PM IST
