Bank of Baroda Q2 profit rises 35.8% as H1 profit falls 16.5%

Bank of Baroda reported Q2FY27 net profit of Rs 6,532 crore, up 35.8% from Q2FY26, as operating profit rose 50.9% to Rs 11,430 crore. However, the Bank’s H1FY27 net profit fell 16.5% to Rs 7,810 crore because other provisions totalled Rs 6,073 crore, including Rs 5,670 crore in Q1FY27.

Why did the Bank’s Q2FY27 profit rise?

The Bank’s Q2FY27 profit rose because operating income increased and total provisions were lower than in Q1FY27. Net interest income, or NII, rose 9.0% year on year to Rs 13,026 crore, while non-interest income increased 95.8% to Rs 6,881 crore. Operating profit consequently rose to Rs 11,430 crore from Rs 7,576 crore in Q2FY26, while total provisions were Rs 2,382 crore against Rs 6,323 crore in Q1FY27.

The largest quarterly change in income came from treasury operations. Treasury income was Rs 4,093 crore in Q2FY27, compared with Rs 893 crore in Q1FY27 and Rs 1,086 crore in Q2FY26. It included Rs 1,824 crore of trading gains from investment sales and Rs 1,907 crore from investment revaluation, while fee-based income declined 8.5% year on year to Rs 1,637 crore.

Why did the Bank’s H1FY27 profit fall?

The Bank’s H1FY27 net profit fell because the first quarter included Rs 5,670 crore of other provisions. Total provisions for H1FY27 reached Rs 8,705 crore, compared with Rs 3,199 crore in H1FY26, even as operating profit increased 23.7% to Rs 19,557 crore. Other provisions alone were Rs 6,073 crore for the half year, versus Rs 57 crore a year earlier, and profit before tax fell 14.0% to Rs 10,852 crore.

The timing of provisions explains the contrast between the half-year decline and the second-quarter recovery. Q1FY27 net profit was Rs 1,278 crore after total provisions of Rs 6,323 crore, while Q2FY27 net profit was Rs 6,532 crore after provisions of Rs 2,382 crore. In Q2FY27, provisions for non-performing assets and bad debts written off were Rs 1,935 crore, provisions for standard advances were Rs 424 crore, and other provisions were Rs 403 crore.

The Bank’s H1FY27 income expanded across its main lines despite the higher provision charge. Total interest income grew 9.1% to Rs 68,296 crore and interest expense increased 9.0% to Rs 42,745 crore, producing NII of Rs 25,551 crore, up 9.2%. Non-interest income rose 26.4% to Rs 10,351 crore, including a 50.6% increase in treasury income to Rs 4,986 crore, but total provisions increased by Rs 5,506 crore year on year.

How did the Bank’s margins and operating efficiency change?

The Bank’s global net interest margin narrowed to 2.74% in Q2FY27 from 2.96% in Q2FY26 and 2.77% in Q1FY27. Global yield on advances declined to 7.41% from 7.81% a year earlier, while global cost of deposits fell to 4.71% from 4.91%. The result was a 22-basis-point year-on-year reduction in the global margin.

The Bank’s domestic net interest margin was 2.89% in Q2FY27, down from 3.10% in Q2FY26, while its international margin declined to 1.49% from 1.81%. Domestic cost of deposits was 4.91% and international cost of deposits was 3.57% in Q2FY27. International yield on advances was 5.09%, below the domestic yield of 8.03%.

The Bank’s cost-to-income ratio declined despite higher operating expenses. Operating expenses increased 7.4% year on year to Rs 8,477 crore, including employee costs of Rs 4,583 crore, up 12.8%. Operating income increased 28.7% to Rs 19,907 crore, reducing the cost-to-income ratio to 42.58% from 51.02%; the H1FY27 ratio was 45.53%, compared with 49.93% in H1FY26.

What business and asset-quality changes accompanied earnings?

The Bank’s business expanded in the year to September 30, 2026. Global deposits grew 16.4% to Rs 17.45 lakh crore and global advances increased 18.3% to Rs 15.12 lakh crore, taking total business to Rs 32.58 lakh crore, up 17.2%. International advances rose 39.7% to Rs 3.25 lakh crore, faster than domestic gross advances, which grew 13.5% to Rs 11.88 lakh crore.

The Bank’s domestic credit growth was led by retail, agriculture and micro, small and medium enterprises, or MSME, lending. Organic retail advances increased 18.6% to Rs 3.24 lakh crore, agriculture advances rose 19.0% to Rs 2.02 lakh crore, and MSME advances increased 21.3% to Rs 1.75 lakh crore. Corporate advances grew 6.3% to Rs 4.26 lakh crore, while retail gold loans increased 66.6% to Rs 13,693 crore.

The Bank’s reported asset-quality ratios improved year on year at September 30, 2026. The gross non-performing asset ratio fell to 1.78% from 2.16%, and the net non-performing asset ratio declined to 0.37% from 0.57%. Capital adequacy was 16.61%, up 7 basis points from 16.54% a year earlier, while return on assets was 0.75% for H1FY27.

Conclusion

The Bank’s Q2FY27 result marked a recovery from Q1FY27, with Rs 6,532 crore of net profit supported by Rs 4,093 crore of treasury income, a 50.9% increase in operating profit and lower provisions than in the preceding quarter. For H1FY27, however, the Rs 6,073 crore other-provision charge outweighed growth in NII, operating profit and total business, leaving net profit at Rs 7,810 crore.

The next reported period will clarify whether total provisions remain closer to the Q2FY27 level of Rs 2,382 crore after the Q1FY27 spike of Rs 6,323 crore, an unresolved factor in the presentation. It will also show whether treasury income remains near Q2FY27’s Rs 4,093 crore as global advances, up 18.3%, continue to grow faster than global deposits, up 16.4%.