Bank of Baroda (BoB) has revised its growth guidance upwards for both credit and deposits for the financial year ending March 2027, citing sustained strong performance across various segments. The public sector lender, India's second-largest, now anticipates loan growth between 13-15%, an increase from its earlier projection of 12-14%. Similarly, deposit growth is now expected to fall within the 11-13% range, up from the previously estimated 10-12%.
MD and CEO Debadatta Chand highlighted the exceptional growth seen in the June quarter, traditionally a slower period for the bank. When factoring in the impact of Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, advances surged by nearly 18% and deposits by 16.64%, leading to the natural recalibration of guidance.
Robust Second Quarter Financials
The bank reported a significant 36% year-on-year increase in standalone net profit for the July-September quarter, reaching Rs 6,532 crore, compared to Rs 4,809 crore in the same period last year. Net interest income (NII) also saw a healthy rise of 9% year-on-year, touching Rs 13,026 crore from Rs 11,954 crore.
Globally, BoB's deposits grew by 16.4% during the quarter, while global advances climbed 18.3%, underscoring the broad-based momentum. The bank's strong performance reflects a wider trend in the Indian banking sector, which has seen robust credit demand despite global economic uncertainties, partly due to increased working capital requirements and a shift from bond markets to bank lending as elevated bond yields make bank funding more attractive.
Strategic Utilization of FCNR(B) Deposits and Segmental Growth
Earlier in the year, the Reserve Bank of India (RBI) introduced a special concessional swap window for FCNR(B) deposits when the rupee faced pressure against the US dollar. Bank of Baroda successfully mobilised $8.08 billion through this initiative. Chand indicated that these funds would be strategically deployed in the third and fourth quarters, helping to reduce reliance on bulk deposits. Already, the bank observed a decline of approximately Rs 10,000 crore in bulk deposits by September.
Credit growth has been particularly strong across diverse segments:
- Retail and Agri loans: Sustained growth around 20%.
- MSME: Growth slightly above 20%, reaching 21.3% in the latest quarter.
- Core Corporate: Grew by nearly 12%.
- Mid-Corporate: Experienced a substantial 26% growth.
The bank also maintains a robust corporate pipeline, with approximately Rs 60,000 crore worth of applications actively being processed.
NMC Health Allegations Addressed
Amidst its strong financial reporting, Bank of Baroda has also been in the spotlight concerning a lawsuit filed by B.R. Shetty, founder of NMC Healthcare, seeking around $15 billion in damages. Shetty alleges that bank officials facilitated fund diversion and failed to act on money-laundering alerts. BoB's MD and CEO, Debadatta Chand, reiterated that these allegations remain untested and are sub judice in UAE courts. He affirmed that the bank's recovery actions against the principal individual would continue, declining further comment on the specifics of the lawsuit.