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Sticky deposit costs pressuring NIMs
View Risks →Bank of Baroda — Q4 FY26
Bank of Baroda reported a strong Q4 FY26 with net profit of INR 5,616 crore (+11.2% YoY), the highest ever quarterly profit.
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Bank of Baroda reported a strong Q4 FY26 with net profit of INR 5,616 crore (+11.2% YoY), the highest ever quarterly profit. Global business crossed INR 30.78 lakh crore (+13.9% YoY), driven by robust loan growth of 16.2% YoY. Domestic CASA ratio improved to 38.9%, and asset quality strengthened with GNPA at 1.89% (down 37bps YoY) and net NPA at 0.45%. The bank guided for loan growth of 12-14% and NIM in the 2.75-2.95% range for FY27, with credit cost below 0.60%. A one-time AS 15 mortality charge of INR 520 crore was absorbed. Key risks include sticky deposit costs and potential asset quality stress in the Middle East overseas book.
बैंक ऑफ बड़ौदा ने वित्त वर्ष 2025-26 की चौथी तिमाही में शानदार प्रदर्शन किया। इसका शुद्ध लाभ 5,616 करोड़ रुपये रहा, जो पिछले साल से 11.2% ज्यादा है और अब तक का सबसे बड़ा तिमाही लाभ है। बैंक का कुल कारोबार 30.78 लाख करोड़ रुपये पार कर गया, जो 13.9% की बढ़ोतरी दर्शाता है। यह मुख्य रूप से कर्ज में 16.2% की वृद्धि के कारण हुआ। बैंक की बचत और चालू खाता जमा (CASA) का अनुपात 38.9% हो गया है, जो सस्ती जमा का संकेत है। कर्ज की गुणवत्ता में सुधार हुआ है - फंसे कर्ज (GNPA) घटकर 1.89% और शुद्ध फंसे कर्ज (Net NPA) 0.45% रह गया। अगले वित्त वर्ष में बैंक 12-14% कर्ज वृद्धि और 2.75-2.95% का ब्याज मार्जिन (NIM) रखने की योजना बना रहा है। एक बार का 520 करोड़ रुपये का खर्च भी वहन किया गया। मुख्य जोखिमों में जमा पर ब्याज दरें और मिडिल ईस्ट में कर्ज की गुणवत्ता शामिल है।
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Read Transcript →Quarter Snapshot
Global Business Volume
INR 30.78 lakh crore
+13.9% YoY
Crossed milestone of INR 30 lakh crore, with global advances growing 16.2% YoY.
CASA Ratio
38.9%
+45bps QoQ
Improved sequentially due to focus on low-cost deposits; savings growth at 9.1% YoY.
Slippage Ratio
0.89%
-11bps YoY
Reduced YoY, reflecting improving asset quality; full-year slippage at 0.72%.
Credit Cost (excl. floating provision)
0.32%
-12bps YoY
Excluding INR 1,500 crore floating provision, credit cost improved; full-year at 0.34%.
What Changed vs Last Quarter
NEW
Loan growth guidance raised to 12-14% for FY27
Upsized from earlier 11-13% due to strong performance, subject to global headwinds not impacting India significantly.
NEW
NIM guidance of 2.75-2.95% for FY27
Conservative range accounting for sticky deposit costs and potential volatility in IT refunds.
NEW
Capital raise of INR 14,500 crore planned
Includes INR 8,500 crore equity (by FY28) and INR 6,000 crore AT1/Tier 2 (FY27), subject to market conditions.
UPDATED
Deposit growth guidance raised to 10-12% for FY27
Increased from 9-11% earlier, reflecting improved deposit mobilization.
DROPPED
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.
DROPPED
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
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.
NEW RISK
Sticky deposit costs pressuring NIMs
Management expects cost of deposits to remain elevated in Q1 FY27 due to tight liquidity, limiting NIM improvement.
NEW RISK
Middle East overseas book asset quality
Exposure of INR 50,000-60,000 crore in Middle East retail operations may face stress due to geopolitical tensions; management is watchful.
NEW RISK
ECL implementation impact uncertain
Management declined to quantify the impact of final ECL guidelines, though earlier draft suggested ~18bps credit cost increase.
NEW RISK
Volatility in IT refund income
Interest on IT refund, which contributes to NIM, is volatile and may not sustain at current levels, though management accounts for it in guidance.
RISK GONE
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.
RISK GONE
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.
RISK GONE
ECL transition impact on capital
Transition to ECL norms could impact CRAR by ~60bps over five years and increase recurring credit cost by ~18bps, though management considers it manageable.
RISK GONE
Bulk deposit reliance amid asset growth
Strong loan growth (15%) outpacing deposit growth (10%) may increase reliance on bulk deposits, potentially raising funding costs.
🤫 Topics management stopped discussing
Mentioned in Q1 FY25, Q2 FY25, Q2 FY26, Q3 FY25, Q3 FY26
Credit cost guidance revised from below 0.75% to below 0.60% for FY26, reflecting sustained low credit costs.
Mentioned in Q2 FY26, Q3 FY26
Transition to ECL norms could impact CRAR by ~60bps over five years and increase recurring credit cost by ~18bps, though management considers it manageable.
Mentioned in Q2 FY25, Q3 FY26
Repricing of corporate loans at lower rates and elevated wholesale funding costs could pressure NIMs, especially if deposit costs do not decline further.
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
Upsized from earlier 11-13% due to strong performance, subject to global headwinds not impacting India significantly.
Management expects cost of deposits to remain elevated in Q1 FY27 due to tight liquidity, limiting NIM improvement.
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