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Margin compression from repricing of corporate loans
View Risks →Bank of Baroda — Q3 FY26
Bank of Baroda reported a solid Q3 FY26 with net profit of INR 5,055 crore (+4.5% YoY), driven by strong operational performance and benign asset quality.
bullish
high
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Bank of Baroda reported a solid Q3 FY26 with net profit of INR 5,055 crore (+4.5% YoY), driven by strong operational performance and benign asset quality. Global advances grew 14.7% YoY, with RAM (retail, agri, MSME) leading at 17-19%. Net interest margin (NIM) stood at 2.78% for the quarter, within the full-year guidance of 2.85-3%. Cost of deposits declined to 4.75% (global), reflecting prudent liability management. Asset quality remained robust with GNPA at 2.04% and credit cost at 0.17%. Management maintained guidance for advances growth of 11-13% (with upside), deposit growth of 9-11%, and ROA above 1%. Key risk: margin compression from repricing of corporate loans and elevated wholesale funding costs could pressure NIMs if deposit costs do not decline further.
बैंक ऑफ बड़ौदा ने तीसरी तिमाही में 5,055 करोड़ रुपये का शुद्ध लाभ कमाया, जो पिछले साल से 4.5% ज्यादा है। यह अच्छा प्रदर्शन बैंक के मजबूत कामकाज और कम खराब कर्ज के कारण हुआ। बैंक ने कुल कर्ज 14.7% बढ़ाया, जिसमें खुदरा, कृषि और छोटे व्यापारियों को दिए गए कर्ज में 17-19% की बढ़ोतरी रही। ब्याज आय और खर्च का अंतर (NIM) 2.78% रहा, जो बैंक के अनुमान के करीब है। जमा पर ब्याज दर घटकर 4.75% हो गई, जिससे बैंक को फायदा हुआ। खराब कर्ज सिर्फ 2.04% रहा और कर्ज वसूली की लागत बहुत कम 0.17% थी। बैंक ने आगे कर्ज 11-13% और जमा 9-11% बढ़ाने का लक्ष्य रखा है। मुनाफा 1% से ऊपर रहने की उम्मीद है। लेकिन सावधानी: कॉरपोरेट कर्ज की दरें घटने और जमा पर ब्याज ज्यादा रहने से NIM पर दबाव पड़ सकता है।
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Global Advances Growth
14.7%
+14.7% YoY
Global advances grew 14.7% year-over-year, driven by strong RAM growth of 17-19% and corporate growth of 8.1%.
Cost of Deposits (Global)
4.75%
-16bps QoQ
Global cost of deposits declined sequentially from 4.91% to 4.75%, reflecting prudent liability management and lower bulk deposit reliance.
Gross NPA Ratio
2.04%
-39bps YoY
Gross NPA ratio improved 39 basis points year-over-year to 2.04%, indicating sustained asset quality improvement.
Credit Cost
0.17%
-17bps YoY
Credit cost for Q3 FY26 was 0.17%, well below the revised guidance of below 0.60%, reflecting low slippages and strong recoveries.
What Changed vs Last Quarter
NEW
Advances growth guidance of 11-13% with upside
Management maintained advances growth guidance of 11-13% for FY26, with an upside to exceed 13% given current strong performance.
NEW
Deposit growth guidance of 9-11%
Management guided for deposit growth of 9-11% for FY26, with domestic deposits growing at 11.1% in Q3.
NEW
Credit cost guidance revised downward to below 0.60%
Credit cost guidance revised from below 0.75% to below 0.60% for FY26, reflecting sustained low credit costs.
UPDATED
NIM guidance of 2.85-3% for FY26
Full-year NIM guidance maintained at 2.85-3%, with Q3 NIM at 2.78% and expectation of Q4 exit above 2.85%.
DROPPED
Corporate loan growth of 10-11% in H2 FY26
Management expects corporate loan book to grow 10-11% in the second half, driven by strong pipelines and seasonal pickup.
DROPPED
Slippage ratio guidance of 1% to 1.25%
Management maintains slippage guidance at 1% to 1.25% for FY26, considering potential geopolitical headwinds.
DROPPED
Credit cost below 0.75% for FY26
Credit cost expected to remain below 0.75% for the full year, with current levels much lower.
NEW RISK
Margin compression from repricing of corporate loans
Repricing of corporate loans at lower rates and elevated wholesale funding costs could pressure NIMs, especially if deposit costs do not decline further.
NEW RISK
LCR decline due to treasury operations
LCR dropped to 116% from 120% due to sale of investments; while management expects to rebuild, any delay could impact liquidity comfort.
NEW RISK
Bulk deposit reliance amid asset growth
Strong loan growth (15%) outpacing deposit growth (10%) may increase reliance on bulk deposits, potentially raising funding costs.
RISK GONE
Treasury income volatility
Treasury profit declined ~50% YoY due to bond yield movements, and further rate cuts could impact operating profit.
RISK GONE
Corporate loan growth dependency on H2
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.
RISK GONE
MCLR repricing risk on NIM
Further MCLR cuts could compress NIM if deposit costs do not moderate proportionately, though management expects range-bound NIM.
🤫 Topics management stopped discussing
Mentioned in Q1 FY25, Q1 FY26, Q2 FY25, Q4 FY25
Management aims to grow corporate book at 9%-10% for the full year, despite muted Q1 growth of 4.2%.
Mentioned in Q1 FY25, Q3 FY25
Q2 had a one-off recovery of ~₹350 crore boosting interest income; its absence in Q3 contributed to margin decline.
Mentioned in Q1 FY26, Q4 FY25
With 50bps repo rate cut in June, full impact on EBLR-linked loans will be felt in Q2, potentially pressuring NIM further.
Fast read
Guidance and risk preview
Management maintained advances growth guidance of 11-13% for FY26, with an upside to exceed 13% given current strong performance.
Repricing of corporate loans at lower rates and elevated wholesale funding costs could pressure NIMs, especially if deposit costs do not decline fu...
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