Bank of Baroda FY26 Annual Earnings Summary

With 50bps repo rate cut in June, full impact on EBLR-linked loans will be felt in Q2, potentially pressuring NIM further.

A large international account slipped to NPA; resolution under CNC process may take 210 days, with 40% provision already made.

Analyst raised concern about rising slippages in personal loan and MSME; management acknowledged marginal increase but downplayed risk.

Analyst noted that ROA of 1.03% included substantial treasury gains; without them, maintaining 1% ROA may be challenging.

Treasury profit declined ~50% YoY due to bond yield movements, and further rate cuts could impact operating profit.

Implementation of ECL framework could increase credit cost by 20-25 bps on a steady-state basis, though management sees manageable impact.

With only 3% YoY corporate loan growth in H1, achieving 10-11% full-year guidance requires strong H2 pickup, which may be challenged by muted demand.

Repricing of corporate loans at lower rates and elevated wholesale funding costs could pressure NIMs, especially if deposit costs do not decline further.

Transition to ECL norms could impact CRAR by ~60bps over five years and increase recurring credit cost by ~18bps, though management considers it manageable.

Strong loan growth (15%) outpacing deposit growth (10%) may increase reliance on bulk deposits, potentially raising funding costs.

Management expects cost of deposits to remain elevated in Q1 FY27 due to tight liquidity, limiting NIM improvement.

Exposure of INR 50,000-60,000 crore in Middle East retail operations may face stress due to geopolitical tensions; management is watchful.