BANKBARODA - Bank of Baroda

📊 NSE: BANKBARODA 🏢 Banks - Public Sector 📅 Last Updated: 12/13/2025 19:02

💰 Financial Performance

Revenue Growth by Segment

Global Advances grew 11.9% YoY in Q2 FY26. Domestic Advances increased 11.5% and International Advances grew 13.8%. Within Domestic, Retail grew 17.6%, Agriculture 17.4%, and MSME 13.9%. Corporate loans saw muted growth of 3% YoY. Net Interest Income (NII) reached INR 13,127 Cr, a 3.9% YoY increase.

Geographic Revenue Split

Domestic operations contribute the majority of business with advances growing at 11.5% YoY, while International operations contribute a smaller but faster-growing portion at 13.8% YoY growth. International deposits grew by 7.2% compared to 9.7% for domestic deposits.

Profitability Margins

Net Interest Margin (NIM) improved to 2.96% globally (up 5 bps sequentially) and 3.10% domestically. Return on Assets (ROA) stands at 1.07% for Q2 FY26, and Return on Equity (ROE) is 15.37%. Net Profit for Q2 FY26 was INR 4,809 Cr, representing a 22% growth when excluding a one-off recovery from the previous year's base.

EBITDA Margin

Operating Profit for Q2 FY26 was INR 8,493 Cr, down 24.2% YoY due to a high base effect from a significant INR 900 Cr NCLT resolution in Q2 FY25. For H1 FY26, Operating Profit stood at INR 15,812 Cr.

Capital Expenditure

Not disclosed as a traditional CapEx figure; however, the bank maintains a strong capital profile with a Capital Adequacy Ratio (CRAR) of 17.61% and CET-I of 14.12% as of June 30, 2025, supporting future balance sheet expansion.

Credit Rating & Borrowing

The bank maintains a high credit rating due to 63.97% Government of India ownership. Cost of Deposits sequentially declined to 4.91% from 5.05%, driven by prudent liability management and a CASA ratio of 38.42%.

⚙️ Operational Drivers

Raw Materials

For banking, 'raw materials' are deposits: CASA (Current Account Savings Account) at 38.42% of total deposits and Term Deposits which grew 11.7% YoY.

Import Sources

Sourced primarily from the Indian domestic market (9.7% deposit growth) and international markets (7.2% deposit growth) through its global branch network.

Key Suppliers

Not applicable as a bank; primary 'suppliers' are retail and corporate depositors and the Reserve Bank of India for liquidity.

Capacity Expansion

Total Asset book stood at INR 17.46 lakh crore as of June 30, 2025. The bank is expanding its digital infrastructure through a new Section 8 company for a Digital Payments Intelligence Platform.

Raw Material Costs

Cost of Deposits is the primary 'raw material' cost, which stands at 4.91% as of Q2 FY26. Interest expended for FY25 was INR 75,783 Cr, up from INR 67,884 Cr in FY24.

Manufacturing Efficiency

Cost-to-Income ratio was 47.94% in FY25. The Credit-Deposit (CD) ratio stands at 85.26%, indicating high utilization of the deposit base for lending.

Logistics & Distribution

Distribution is handled through a network of domestic branches and three sponsored Regional Rural Banks (RRBs) which have an aggregate business of INR 1,86,088.63 Cr.

📈 Strategic Growth

Expected Growth Rate

11-13%

Growth Strategy

Growth will be driven by a focus on RAM (Retail, Agri, MSME) segments, which grew at 17.6%, 17.4%, and 13.9% respectively. The bank also targets a 10-11% recovery in Corporate growth in H2 FY26 through a strong pipeline of INR 25,000 Cr in proposals and a focus on Mid-Corporate clusters.

Products & Services

Retail loans (Home, Auto, Education, Personal, Mortgages), MSME loans, Corporate credit, Agriculture loans, and Insurance through IndiaFirst Life Insurance.

Brand Portfolio

Bank of Baroda, Baroda U.P. Bank, Baroda Rajasthan Kshetriya Gramin Bank, Baroda Gujarat Gramin Bank, IndiaFirst Life Insurance.

New Products/Services

Establishment of a Section 8 Company for a 'Digital Payments Intelligence Platform' to enhance digital transaction security and experience.

Market Expansion

Focus on Mid-Corporate Clusters in New Delhi, Chennai, Mumbai, and Kolkata. International expansion continues through subsidiaries in Botswana, Kenya, Uganda, and the UK.

Market Share & Ranking

Second largest Public Sector Bank (PSB) and fourth largest bank in the Indian financial system as of March 2025.

Strategic Alliances

Joint ventures include IndiaFirst Life Insurance (64.98% stake) and Baroda BNP Paribas Asset Management (50.10% stake).

🌍 External Factors

Industry Trends

The industry is seeing a shift toward retail consumption-driven credit. Bank of Baroda is positioning itself by growing its retail book at 17.6%, exceeding its total advance growth of 11.9%.

Competitive Landscape

Faces intense competition in the 'fine price' corporate segment, leading the bank to strategically hold back on low-margin corporate lending to protect NIM.

Competitive Moat

Moat is derived from its sovereign backing (63.97% GoI stake), which ensures a low cost of funds and a massive distribution network through RRBs and domestic branches.

Macro Economic Sensitivity

Highly sensitive to RBI monetary policy; a 25 bps reduction in the Repo Rate directly impacts the lending rate (BRLLR) for a large portion of the book.

Consumer Behavior

Increasing demand for digital payment security and retail credit (Personal loans grew 18.6%, Mortgages 19.8%).

Geopolitical Risks

Geopolitical scenarios are monitored as they may impact slippages (guided at 1-1.25%) and international business operations.

⚖️ Regulatory & Governance

Industry Regulations

Subject to RBI's ECL (Expected Credit Loss) framework; the bank has proactively made floating provisions of INR 400 Cr (totaling INR 1,000 Cr) to prepare for regulatory shifts.

Taxation Policy Impact

The bank provided INR 1,624 Cr for tax in Q2 FY26, with an effective tax rate of approximately 24.2% for the quarter.

⚠️ Risk Analysis

Key Uncertainties

Slippage guidance is maintained at 1-1.25% due to potential geopolitical headwinds. Corporate growth remains a key uncertainty, having grown only 3% YoY against a target of 10-11%.

Geographic Concentration Risk

Domestic advances represent the bulk of the portfolio (INR 9.38 lakh crore), with specific focus on Gujarat, UP, and Rajasthan through sponsored RRBs.