Bank of Baroda’s net profit for the quarter ended December rose nearly 5% year-on-year to Rs 5,055 crore. Managing Director and CEO Debadatta Chand tells Kshipra Petkar and Christina Titus that he expects loan growth to exceed its 11–13% guidance in FY26, driven by a strong corporate credit pipeline and sustained momentum in retail and MSME lending. Excerpts:
You have maintained your loan growth guidance at 11–13%, but now with an upward bias. What is driving this optimism?
Typically, Q3 and Q4 are very productive quarters for credit growth. This quarter itself, our loan growth is 14.7%. Corporate credit, which was relatively muted in Q1 and Q2, picked up to 8.14% in Q3. We also have a strong pipeline of around Rs 75,000 crore — Rs 45,000 crore already sanctioned but not disbursed, and Rs 35,000 crore of proposals under evaluation.
This gives us confidence that we could exceed the upper end of our guidance.
Will this pipeline spill over into FY27?
This pipeline is primarily for FY26, especially the current and next quarters. For FY27, we will provide guidance after the annual results. However, the outlook remains positive. Liquidity conditions tightened after September 2023, which constrained growth, but we are now seeing strong latent demand.
Economic activity and the optimism reflected in the Economic Survey also suggest that the bank could achieve 14–15% growth going forward.
How sustainable is the recent demand, particularly after the GST rate cuts and the festive season?
GST cuts have boosted consumption, which supports retail growth and, in turn, feeds into corporate and investment demand. While it’s difficult to quantify the exact impact, we are confident that the demand impulse is strong and sustainable across segments.
What growth do you expect in the RAM (retail, agriculture, MSME) portfolio in Q4?
In Q3, RAM grew 17.5%, and we expect a similar pace in Q4. Retail continues to be a strong growth engine. Agriculture grew 19% this quarter, while MSME growth crossed 15%, supported by improved product offerings, cash-flow-based lending, and government support schemes.
Slippages in the micro, small and medium enterprises (MSME) segment have inched up. Is that a concern?
Our normalised quarterly slippages are around Rs 2,500–2,700 crore. While MSME slippages were marginally higher this quarter, retail and agriculture slippages were lower, and corporate slippages were nil. Overall asset quality trends remain benign, and we don’t see any major stress across portfolios.
Net interest margins (NIM) fell to 2.79% in Oct–Dec. Has it bottomed out?
Our nine-month NIM stands at 2.88%. The Q3 dip partly reflects the repo rate cut, and the full impact will be visible in Jan–Mar. We expect the full-year NIM to be within our guided range of 2.85–3%, with the Q4 exit NIM likely around 2.85–2.90%, depending on market conditions, especially wholesale funding costs.
Bulk deposits rose sharply. Is this a strategic shift?
No. Our strategy remains to reduce reliance on bulk deposits. However, given tight liquidity, we have selectively raised bulk funds, mainly through short-tenure certificates of deposit. We continue to prioritise low-cost retail deposits and CASA growth.
What is the status of listing your subsidiaries?
IndiaFirst Life Insurance is already on track for listing, subject to market conditions and regulatory approvals. For other subsidiaries, we are focused on scaling up their operations, after which listing decisions will be taken.
How is your international business performing?
International operations now account for about 16% of our global book, up from 12% four to five years ago. We aim to take this beyond 20% over the next few years, given better profitability and returns.