BANKBARODA Q1 FY27 earnings call.

Guidance to track

• The bank targets 12-14% credit growth despite outperforming at 17.4% in Q1, citing geopolitical uncertainty as a reason to moderate expectations. Domestic advances guidance remains anchored at this range.
• Deposit growth guidance maintained at 10-12%, currently running at 13.8%. The bank is seeing reduced bulk deposit pricing post FCNR(B) scheme announcement and expects average cost of incremental deposits to be lower than Q4 FY26 levels.
• Net Interest Margin guidance of 2.75-2.95% maintained. Domestic NIM stands at 2.93%. Management expects incremental deposit repricing benefits from FCNR(B) and improved asset pricing (migration to MCLR) to arrest sequential NIM contraction.
• Excluding the Rs 5,680 Cr NMC settlement impact, Q1 adjusted ROA was 1.10%. Management expects ROA to remain above 1% for the remaining three quarters of FY27. Full-year ROA guidance will be provided after Q2.

Risks flagged

• The ECL migration will create a one-time 110bps RWA impact (~Rs 10,000 Cr absolute), of which Rs 2,500 Cr floating provision is available, leaving Rs 7,500-10,000 Cr to be absorbed or raised. Steady-state credit cost expected at 15-20bps incremental from ECL migration, up from current 0.29%. This could pressure ROA sustainability below 1% if not fully priced into loans.
• Management acknowledged that higher-than-guidance asset growth (16-17%) combined with elevated deposit costs creates NIM pressure. International operations run at ~1.4-1.5% NIM, dragging overall margins. The FCNR(B) self-leverage structure offers rupee deposits at ~6.4-6.5% cost, and management must deploy these funds profitably.
• Commission, exchange, and brokerage income declined ~47% YoY. Management admitted this reflects deliberate letting go of lower-yield business and pricing trade-offs in favor of overall yield optimization. This represents a structural earnings quality concern if not reversed.
• The bank intentionally de-grew its corporate loan book by 7% QoQ by shedding non-MCLR linked assets to protect margins. While this supports NIM, it raises questions about pipeline sustainability and competitive positioning if high-quality corporate demand returns, as Rs 4-5 billion FCNR(B) funds need deployment.

Key quotes

• I would request honestly request you to please have a relook on the numbers because these are not any count in any way any of the number has given any negative surprise the last quarter. It is one of the strongest performance growth we have in all this quarter.
• The ECL migration would be smooth seamless. The core income part is strong. In spite of this condition when you look into multiple banks the financial result, the NI growth is at 9.5%. We were able to optimize both in terms of the earning potential of the book and the expanded interest expended part.
• This is purely credit related. The net impact on the absolute is roughly around Rs 10,000 Cr. We are holding floating provision to the extent of Rs 2,500 Cr. So almost Rs 7,500-10,000 Cr we have to really give the impact on the capital and that is spread over the amortization period.
• We aim to get into the total flows of in excess of $4 to 5 billion ballpark figure of $5 billion which comprises of all three components FCNR(B), OFC(B) and ECB routes also.