Bank of Baroda’s net profit for April-June rose around 2% on year due to sharp rise in other income which rose 87.9% on year to Rs 4,675 crore in the reporting quarter.
Net interest income (NII) dipped by 1.4% on year to Rs 11,435 crore in April-June and domestic net interest margin moderated to 3.06% in the reporting quarter from 3.16% a quarter ago. “NII and net interest margin (NIM) will continue to be under stress in Q2. However, the H2FY26 is expected to be positive. In the next quarter we aim to maintain margins between 2.85-3%,” Debadatta Chand, MD & CEO said in post earnings media call. Global NIM for the reporting quarter stood at 2.91% in Q1.
Loan growth
In terms of the bank’s balance sheet, domestic gross loans were up 12.4% on year and the domestic deposits rose 8.1% on year. For FY26, the bank has maintained its guidance on loan growth at 11-13% and deposit growth at 9-11%. The bank aims the cost of deposits to be below 5% in July-September. Domestic current account savings account (CASA) ratio stood at 39.33% as on June 30. Chand also said that they are focussing on building their co-lending book, which is currently less than Rs 2,000 crores.
Higher provisions limit profit growth
The rise in operating expenses and provisions limited the growth in profitability of the bank in the reporting quarter. Operating expenses of the bank rose 13.7% on year to Rs 7,873 crore in the quarter ended June. Provisions rose sharply by 94.6% on year to Rs 1,967 crore. On a sequential basis, the provisions rose nearly 27%.
The asset quality ratios inched up with gross non-performing asset (NPA) ratio at 2.28% as compared to 2.26% a quarter ago, and the net NPA ratio at 0.6% as against 0.58% a quarter ago. “A large account of Rs 500 crore slipped in the international book. It was restructured during Covid and was upgraded later. But it kept showing sickness and it is under resolution. We are hopeful that the resolution is completed in 210 days. The bank has made 40% provision on this account,” he said. He added that the account belonged to the manufacturing sector.