Bank of Baroda announces single rate of interest for home loans - Angel Broking

Bank of Baroda did away with differential rates for home loan borrowers. Unlike its peer, for all home loans, irrespective of the tenor and amount of the loan, it will now charge 10.25%, which is its base rate.

As per the management, the move aims at increasing the average size of home loans, however, in our view, it is also a way to shore up their home loan book (4.9% of their overall advances, as of FY2013) and retail advances (around 11.6% of their overall advances, as of FY2013), which grew 13.5% yoy and 6.6% yoy, respectively in last fiscal, primarily due to its interest rate differential with SBI and other large private lenders. At CMP, it trades at 0.7x FY2015E ABV.

We recommend Buy rating on the stock, with a target price of Rs. 851.

Source : Equity Bulls

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