Business EconomyPosted at: Oct 30 2026 7:09PM


Bank of Baroda posts record Q2 profit of Rs 6,532 crore; expects H2 margin recovery

Mumbai, Oct 30 (UNI) Bank of Baroda has reported its highest-ever quarterly net profit of Rs 6,532 crore in the September quarter, but its first-half earnings declined 16.5 per cent year-on-year amid higher provisions, even as the lender expects margins and corporate credit growth to improve in the second half of the financial year.
The bank's net profit rose 35.8 per cent from the corresponding quarter last year, while operating profit surged 50.9 per cent to a record Rs 11,430 crore. However, net profit for the first half of FY27 stood at Rs 7,810 crore, against Rs 9,351 crore in the year-ago period.
The contrast between the strong quarterly performance and the decline in half-year earnings comes amid higher provisioning. The bank's provisions and contingencies for the first half rose to Rs 8,705 crore from Rs 3,199 crore a year earlier. Provisions in the September quarter alone stood at Rs 2,382 crore, against Rs 1,232 crore in Q2FY26.
Net interest income (NII) rose 9 per cent to Rs 13,026 crore during the quarter, while non-interest income jumped 95.8 per cent to Rs 6,881 crore, taking operating income up 28.7 per cent to Rs 19,907 crore.
The bank's global net interest margin (NIM), however, moderated to 2.74 per cent from 2.96 per cent a year ago, indicating continuing pressure on lending margins.
Addressing media, Managing Director and CEO Debadatta Chand said the bank expected NIM to improve in the third and fourth quarters, supported by the repricing of repo-linked loans and selective corporate advances at higher rates.
He said 38 per cent of the bank's loan book was linked to the repo rate and had been reset at higher rates following the increase effective October 5. Several loans priced below the marginal cost of funds-based lending rate (MCLR), including corporate advances, had also been repriced upwards.
Chand said the bank had consciously avoided aggressive lending at lower rates, which had affected growth in some corporate segments, but expected stronger credit expansion in the coming quarters.
The bank has a corporate credit pipeline of more than Rs 60,000 crore, comprising proposals under processing as well as those sanctioned or disposed of. Mid-corporate advances grew 26 per cent, while core non-PSU corporate advances recorded growth of around 12 per cent, he said.
The CEO said the bank expected to sustain operating profit of around Rs 7,700 crore per quarter, excluding the impact of a one-off item. He said the lender had been consistently posting operating profit of more than Rs 7,000 crore in recent quarters and expected to maintain that level.
Chand also said the bank had created floating provisions of Rs 2,500 crore specifically for the transition to the expected credit loss (ECL) framework. It had also used the improvement in quarterly profitability to make prudential provisions, including Rs 1,600 crore against the one-off benefit, rather than taking the entire amount into reported profitability.
The bank's asset quality continued to improve, with gross non-performing assets (GNPA) declining to 1.78 per cent from 2.16 per cent a year ago and net NPAs falling to 0.37 per cent from 0.57 per cent. The provision coverage ratio, including technical write-offs, stood at 94.65 per cent.
Global business grew 17.2 per cent to Rs 32.57 lakh crore, comprising deposits of Rs 17.45 lakh crore and advances of Rs 15.12 lakh crore. Global deposits rose 16.4 per cent, while advances increased 18.3 per cent.
The retail, agriculture and MSME (RAM) portfolio expanded 18 per cent and accounted for 64.2 per cent of domestic advances. Organic retail advances grew 18.6 per cent, agriculture loans 19 per cent and organic MSME advances 21.3 per cent.
Chand said the bank had built up liquidity to support credit expansion in December and March, aided by inflows under FCNR-B deposits.
On foreign currency deposits mobilised under the RBI's special swap window, he said nearly 70 per cent of the funds had been deployed through lending, allowing interest earned on advances to offset the interest payable on deposits.
The remaining exposure would be assessed for currency risk, with hedging considered when market conditions were favourable.
On operating efficiency, Chand said the cost-to-income ratio had fallen to around 42 per cent during the quarter, partly reflecting the one-off item. The bank aimed to keep the ratio below 50 per cent and aspired to bring it closer to 48 per cent through technology investments and improved branch productivity.
Responding to questions on the data leak incident, he said the bank had followed prescribed protocols, undertaken a forensic audit and reviewed and revamped its security architecture. It had engaged consultants and committed additional resources to strengthen cybersecurity.
Claiming that the actual customer impact was negligible, he said a large portion of the data cited in reports was either unusable or available in the public domain in a disaggregated form.
Chand said any benefit accruing to the bank from the proposed merchant discount rate (MDR) framework would be reinvested in technology and UPI infrastructure.
The bank has raised USD 1.1 billion through external commercial borrowings and has a mandate to raise up to USD 4 billion. However, it would consider further fundraising only when global pricing became attractive and funds could be deployed at a favourable spread, he said.
The bank's capital adequacy ratio stood at 16.61 per cent, with Common Equity Tier 1 (CET1) at 14.20 per cent.
Executive Director Lalit Tyagi said the bank had not yet financed any domestic acquisition but was in discussions on potential transactions, exploring opportunities independently and in partnership with Japanese lender Mizuho.
Chand said the impact of any reduction in insurance distribution commissions was expected to be limited given the bank's relatively smaller wealth and insurance distribution business.
He added that maintaining 99 per cent of the cash reserve ratio (CRR) on a daily basis would have an estimated liquidity impact of Rs 2,000-3,000 crore, which was not significant.
On the possible impact of El Nino on agricultural lending, he said the bank would assess the situation in consultation with state governments and State Level Bankers' Committees and take appropriate measures to protect affected borrowers.
UNI BDN
Tags: #Bank of Baroda posts record Q2 profit of Rs 6#532 crore; expects H2 margin recovery
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