/** Bank of Baroda FY26: Record profit, improving asset quality, and a watchful eye on margins */

Bank of Baroda FY26: Record profit with stronger asset quality

Bank of Baroda ended FY26 with its highest ever standalone profit, while continuing to grow the balance sheet at a healthy pace. Global business crossed Rs 30.78 lakh crore as of March 31, 2026, up 13.9% year on year. Global deposits rose to Rs 16,48,487 crore, up 12%, and global advances increased to Rs 14,29,879 crore, up 16.2%.

The bank’s profitability remained strong. FY26 standalone net profit was Rs 20,021 crore, up 2.2% year on year, while Q4FY26 profit rose 11.2% to Rs 5,616 crore. Return on assets stayed above 1% at 1.06% for the year and 1.15% for the quarter.

However, the year also highlighted the key trade-off the banking sector is dealing with: margin pressure amid sticky deposit pricing. The global net interest margin declined to 2.89% in FY26 from 3.08% in FY25, even though it improved sequentially in Q4.

FY26 operating performance: steady core, volatile treasury

Net interest income grew 2.5% year on year to Rs 47,682 crore. Non-interest income was largely flat for the year at Rs 15,757 crore, down marginally by 0.2%, but quarter-level movements were sharp. In Q4, treasury income fell to Rs 44 crore from Rs 1,559 crore in the year-ago quarter, driven by weaker revaluation of investments.

Cost efficiency improved in Q4, with operating expenses down 8.7% year on year and cost-to-income ratio improving to 44.9%. For the full year, operating expenses rose 4.4%, which kept operating profit broadly stable at Rs 32,259 crore.

Balance sheet momentum: RAM continues to lead growth

Bank of Baroda’s domestic deposit base grew 12.8% to Rs 14,01,290 crore. CASA deposits rose 9.8% to Rs 5,45,034 crore, while term deposits grew 14.8% to Rs 8,56,256 crore. Bulk deposits, including certificates of deposit, rose 25.6% to Rs 3,19,379 crore.

On the asset side, domestic gross advances grew 14.5% to Rs 11,69,458 crore. The bank continued to tilt towards RAM (retail, agriculture, MSME), with RAM share in gross domestic credit rising to 61.0% in March 2026 from 59.8% a year ago.

Retail organic advances grew 17.9% to Rs 3,02,598 crore. Within retail, gold loans (retail) nearly doubled year on year, while home loans grew 14.6% and auto loans grew 20.6%. Agriculture advances rose 20.7% to Rs 1,91,063 crore, and MSME advances increased 15.6% to Rs 1,59,786 crore.

Asset quality: headline ratios improve, buffers strengthened

The bank reported stronger asset quality through FY26. Gross NPA ratio improved to 1.89% from 2.26% a year ago, while net NPA ratio reduced to 0.45% from 0.58%. Provision coverage ratio including technical write-offs stood at 93.94%.

Slippages were stable, with FY26 slippage ratio at 0.72% (vs 0.78% in FY25). Credit cost for the year was 0.46%. In Q4, credit cost rose to 0.76%, but management attributed this primarily to a prudential floating provision of Rs 1,500 crore. The bank stated that credit cost excluding the floating provision would have been 0.32% for the quarter and 0.34% for the year.

The early warning indicators also improved. CRILC SMA1 and SMA2 (as a percentage of standard advances for accounts above Rs 5 crore) reduced to 0.18% as of March 2026 from 0.33% in March 2025.

Capital and guidance: growth outlook remains constructive

Capital adequacy ratio declined year on year to 15.82% as of March 31, 2026 (from 17.19% in March 2025), with CET-1 at 13.16%. Management cited a healthy quarterly average LCR (solo) of about 127%.

For FY27, management upgraded growth guidance. Loan growth guidance was raised to 12% to 14% (from 11% to 13%), and deposit growth guidance to 10% to 12% (from 9% to 11%). NIM guidance was maintained in a band of 2.75% to 2.95% for the full year, reflecting both asset-liability repricing dynamics and the expectation that deposit costs may remain sticky.

The bank also discussed fundraising plans: raising Rs 6,000 crore through AT-1 and Tier-2 instruments in FY27, and reiterated the earlier enabling plan to raise up to Rs 8,500 crore of equity capital through FY28.

Sustainability and digital: execution moves beyond core banking

The presentation placed meaningful weight on sustainability and digital transformation.

On sustainability, the bank reported mobilising Rs 1,899.12 crore of green deposits as of March 31, 2026, and stated that the entire proceeds were deployed into the renewable energy sector. It also raised Rs 10,000 crore through 7-year green infrastructure bonds on March 04, 2026, with the issue oversubscribed 3x.

On digital, the bank reported 20,057 digital touchpoints and said 97% of transactions are done digitally. Digital lending momentum was highlighted through a sharp increase in total digital sanctions in Q4FY26 to Rs 14,713 crore from Rs 6,048 crore in Q4FY25.

Closing takeaways

Bank of Baroda’s FY26 results underline a steady operating model: solid balance sheet growth, record profitability, and improving asset quality. The bank has also added prudential buffers through a floating provision while continuing to expand digital and sustainability-led initiatives.

The key debate for FY27 is the trajectory of margins. Management’s NIM guidance range and commentary on sticky deposit costs suggest that pricing discipline and repricing of assets will be central to sustaining returns, even as growth remains robust.