Bank of Baroda shares rally to 52-week high as lender maintains strong asset quality in Q2; here’s what management said

At 11:30 AM, the stock was trading at ₹290.30 apiece on NSE, gaining 4.27%.

The lender reported an 8% decline in its standalone net profit for the July to September quarter of FY26 at ₹4,809 crore as compared to ₹5,238 crore in the corresponding quarter last fiscal year.

The PSU bank’s net interest income (NII), however, rose 2.7% to ₹11,637 crore year-on-year (YoY) as against ₹11,954 crore in Q2 FY25. The lender’s gross non-performing assets (NPA) are at 2.50%, compared to 2.28% in the previous quarter. Net NPA for Q2 FY26 remained stable at 0.60%.

Bank of Baroda’s global net interest margin (NIM) for Q2 FY26 improved by 5 basis points (bps) sequentially to 2.96%, while for the first half (H1) of FY26, it stood at 2.93%.

The bank’s domestic NIM stood at 3.10% for the quarter, up 4 bps quarter-on-quarter, and at 3.08% for H1 FY26.

The bank maintained strong asset quality, with gross non-performing assets (NPA) at 2.50%, compared to 2.28% in the previous quarter. Net NPA for Q2 FY26 remained stable at 0.60%.

Bank of Baroda’s global net interest margin (NIM) for Q2 FY26 improved by 5 basis points (bps) sequentially to 2.96%, while for the first half (H1) of FY26, it stood at 2.93%.

The bank’s domestic NIM stood at 3.10% for the quarter, up 4 bps quarter-on-quarter, and at 3.08% for H1 FY26.

Bank of Baroda’s balance sheet remained robust, supported by a healthy provision coverage ratio (PCR) of 93.21% with technical write-offs (TWO) and 74.13% without TWO. The slippage ratio for Q2 FY26 declined by 16 basis points year-on-year and 25 basis points QoQ to 0.91% and stood at 0.90% for H1 FY26. Credit cost remained low at 0.29% for Q2 FY26 and 0.42% for the first half of the year.

The bank’s global advances grew 11.9% year-on-year, while domestic advances rose 11.5% in Q2 FY26, driven by strong growth in the retail loan portfolio.

Credit cost remained well below 0.75%, at 0.29% for Q2 FY26 and 0.42% for H1 FY26.

As of September 30, 2025, the lender’s domestic current account savings account (CASA) deposits grew 6.6% YoY to ₹488,660 crore, while international deposits rose 7.2% to ₹228,020 crore YoY. 

Operating expenses remained contained sequentially, standing at ₹7,893 crore for the quarter, up 7.7% year-on-year, and at ₹15,765 crore for H1 FY26.

Return on Assets (ROA) stayed consistently above 1%, at 1.07% for Q2 FY26 and 1.04% for H1 FY26. Return on Equity (ROE) stood at 15.37% for Q2 FY26, up 32 basis points quarter-on-quarter, and at 14.95% for the first half of FY26.

Here’s what management said

Its managing director and chief executive, Debadatta Chand, said that it was able to increase the NIMs from a sequential perspective from the 2.91% in the June quarter and added that the number will remain "range-bound" in Q3 and widen in Q4. The FY26 NIM will be between 2.85 and 3%, he added.

The bank is maintaining its FY26 credit growth target at 11-13%, he said, listing out ambitious plans to accelerate corporate lending in the second half of the fiscal year.

The corporate loan book grew by 3% in the reporting quarter, making it the second consecutive three-month period of a softer growth in the large-value advances. Chand attributed the softer growth to the demands of lower rates from the segment and added that the bank prioritised its NIMs.

The bank has a pipeline consisting of loan sanctions of ₹40,000 crore yet to be disbursed and another ₹25,000 crore under various stages of discussion and exuded confidence about it meeting the 10-11% corporate loan target.

Chand also hinted that the accelerated corporate loan growth in the second half will not come at the cost of NIMs.

Retail advances growth drove the overall loan growth in Q2, and Chand said the retail, agriculture and MSME segments now constitute 62% of the overall book. Without sharing a timeline, he said the bank aspires to take it up to 65%.