Bank of Baroda Q2 profit down 8 pc; eyes faster corporate loans disbursements

Mumbai, Oct 31 (PTI) State-run Bank of Baroda on Friday reported an 8 per cent decline in its net profit for the September quarter to Rs 4,809 crore, due to softer core income growth and a high base impact.

The public sector bank's core net interest income grew 2.7 per cent to Rs 11,954 crore on the back of a nearly 12 per cent growth in advances and a compression in the net interest margin to 2.96 per cent as against 3.11 per cent in the year-ago period.

Total income also declined to Rs 35,026 crore in the second quarter from Rs 35,445 crore in the same period of the previous fiscal.

Its managing director and chief executive Debadatta Chand told reporters that it was able to increase the NIMs from a sequential perspective from the 2.91 per cent 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 2.85-3 per cent, he added.

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

The corporate loan book grew by 3 per cent 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 Rs 40,000 crore yet to be disbursed and another Rs 25,000 crore under various stages of discussion, and exuded confidence about it meeting the 10-11 per cent corporate loan target.

He 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 per cent of the overall book. Without sharing a timeline, he said the bank aspires to take it up to 65 per cent.

From an asset quality perspective, the fresh slippages came down to Rs 2,669 crore from Rs 2,788 crore, and the micro, small and medium enterprises segment led with Rs 986 crore contribution to the number during the reporting quarter.

The gross non-performing assets ratio improved to 2.16 per cent at end-September from 2.28 per cent three months ago.

Overall provisions declined by 47 per cent to Rs 883 crore, driven by a halving in money set aside for bad debt, but the bank decided to keep an additional Rs 400 crore on standard assets as floating provisions keeping in mind the systemic transition to the expected credit loss (ECL) method.

Chand said the overall floating provision buffer has now gone up to Rs 1,000 crore, and added that in the run-up to the adoption of the new system from April 2027 whenever it gets the space. However, he did not specify the quantum of money required to be set aside or the bank's exact provisioning plans.

The non-interest income dipped 32 per cent on-year to Rs 3,515 crore, majorly on a high base. Chand said last year, it had a Rs 900 crore gain coming on account of recovery from a written-off account, which was non-existent in the reporting quarter.

The bank's auto loan disbursements have grown 25 per cent since the September 22 cut in GST, as vehicle sales go up, Chand said.

Overall capital adequacy for the lender stood at 16.54 per cent as on September 30, with the core tier-I at 13.36 per cent.

BoB shares closed 2.05 per cent up at Rs 278.30 apiece on the BSE on Friday, as against a 0.55 per cent correction on the benchmark Sensex. PTI AA MR