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Bank of Baroda plans to raise ₹7,500 crore through bond tranches and an additional ₹10,000 crore via long-term bonds.

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In Short:

Bank of Baroda plans to raise ₹7,500 crore through bonds to increase capital during the financial year 2024-25. The bank also aims to raise ₹10,000 crore for infrastructure and housing projects. Its shares closed higher after the announcement. The bank’s net interest income and capital adequacy ratio have also seen positive growth. Additionally, Vijay Dube has been elected as the shareholders’ director.


Bank of Baroda Plans to Raise Additional Capital of ₹7,500 Crore

Exciting news from Bank of Baroda! On Friday, June 5, the board of directors approved a plan to raise additional capital of ₹7,500 crore through Additional Tier 1 (AT1) and Tier 2 bonds.

Raising Capital in Segments

In a filing to BSE, the public sector lender revealed that the additional capital of ₹7,500 crore will be raised in segments during the financial year 2024-25. The Additional Tier 1 and Tier II bonds will have an interchangeability option in India and overseas, as per the exchange filing.

Market Conditions Matter

Bank of Baroda emphasized, “The above capital will be raised when the market is conducive,” showing a strategic approach to capital raising.

Funding Infrastructure and Affordable Housing

Aside from the additional capital, the bank also received approval to raise ₹10,000 crore through long-term bonds to finance infrastructure initiatives and affordable housing in single or multiple segments during the financial year 2024-25.

Positive Market Response

Following these announcements, Bank of Baroda shares closed 1.35 per cent higher at ₹273.70 after Friday’s trading session, compared to ₹270.05 on the previous day, indicating investor confidence in the bank’s strategies.

Financial Performance Highlights

The bank’s net interest income (NII) saw an 8.1 per cent increase to ₹44,722 crore for the year ended 2024, a significant growth from ₹41,355 crore in 2023. Additionally, the capital adequacy ratio (CAR) improved by 7 basis points to 16.31 per cent in 2024 from 16.24 per cent in 2023, reflecting the bank’s strong financial position.

New Director Appointment

Exciting news for Bank of Baroda as Vijay Dube has been elected as the shareholders’ director and is set to take office on July 9, as per the exchange filing.

Stable Credit Rating from Fitch Ratings

It’s also worth noting that Bank of Baroda has been rated “BBB-” with a stable outlook in terms of Long Term Issuer Default Rating from Fitch Ratings as of April 16, 2024, according to the credit rating agency.

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