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Informist, Thursday, May 7, 2026

By Shweta

NEW DELHI – Bank of Baroda's net profit is likely to decline on year for the March quarter due to higher provisions and a decline in other income, according to analysts tracking the state-owned bank. The bottom line would be impacted mainly due to weaker treasury performance and gradual build-up towards expected credit loss, Emkay Global Financial Services Ltd. said in its pre-earnings note.

"Expect fee income to remain healthy, while treasury gains to be modest amid a spike in bond yields," Motilal Oswal Financial Services Ltd. said in a pre-earnings note. Last month, the government 10-year bond yield surged amid global uncertainties and higher crude oil prices.

The bank is expected to post net profit of INR 48.02 billion for the March quarter, down 5% on year and on quarter, as per the average of estimates from 12 brokerages. The highest estimate for the bank's net profit is INR 52 billion by SMIFS Ltd. and the lowest is INR 37.90 billion by Prabhudas Lilladher Pvt. Ltd. The bank will announced its March quarter earnings on Friday.

The Vadodara-headquartered bank's net interest income is expected to grow more than 5% on year to INR 120.86 billion for the March quarter, according to the average of estimates. The bank had posted a net interest income of INR 118 billion for the December quarter. The highest estimate for the company's March quarter net interest income is INR 124 billion from SMIFS and the lowest is INR 116.5 billion from Prabhudas Lilladher.

The state-owned bank's net interest margin is expected to be 2.55-2.80% for the March quarter, according to the estimates from five brokerage firms. SMIFS expects the net interest margins to remain stable in the March quarter, reflecting the full impact of the 125-basis-point repo rate cut in 2025, supported by the net interest income growth. The lender had reported a net interest margin of 2.79% in the trailing quarter.

The provisions for the reporting quarter are likely to be INR 10.1 billion-INR 12.0 billion, higher sequentially but lower on year. The bank had made a provision of INR 15.52 billion a year ago and INR 7.99 billion in the previous quarter. Banks are expected to make higher provisions in the run-up to preparation for the Reserve Bank of India's new norms on provisions for expected credit loss, effective April 2027.

Bank of Baroda's asset quality is likely to remain steady for the quarter. Prabhudas Lilladher expects the bank's gross non-performing assets to improve by 15 basis points sequentially while credit costs may increase by 10 bps. The bank reported its gross non-performing assets at 2.04% and credit costs at 0.17% for the December quarter.

In 2025-26 (Apr-Mar), the bank's net profit is estimated at INR 193.6 billion, down over 1% from FY25, according to Motilal Oswal. Its net interest income is seen growing nearly 2% on year to INR 472.6 billion for FY26.

Earlier this month, Bank of Baroda had kept its marginal cost of funds-based lending rate unchanged across tenures. The bank's MCLR ranges from 7.80% to 8.70% for overnight to one-year tenures, as per the exchange filing. The Reserve Bank of India's norms require banks to review MCLR every month.

The bank's loans are likely to grow 13.3% on year and 3.4% sequentially amid healthy growth in the retail, agriculture, and micro, small, and medium enterprises segment and a slowdown overseas, Motilal Oswal said.

The bank's gross advances rose 16.2% on year to INR 14.30 trillion as of Mar. 31. Its domestic advances rose 14.6% on year to INR 11.69 trillion. Total deposits rose 12% on year to INR 16.49 trillion as on Mar. 31 and domestic deposits rose 12.8% on year to INR 14.01 trillion. The bank's global business rose 13.9% on year to INR 30.79 trillion as of Mar. 31.

Among key metrics, slippages for the quarter are expected to rise on year due to seasonality, according to YES Securities (India) Ltd. Deposit mobilisation strategy, net interest margin trajectory, comments on asset quality, and commentary for the FY27 outlook, especially amid geopolitical headwinds will be monitored during the March earnings announcement, brokerages said.

Shares of the bank have fallen nearly 4% since its December quarter earnings announcement. At 1216 IST, shares of the bank traded at INR 268.90 on the National Stock Exchange, down nearly 0.6% from the previous close.

Of the 17 brokerage reports on the bank available with Informist, 16 have a "buy" or equivalent recommendation on the stock with a target price of INR 334 per share. This is over 24% higher than the current share price. One brokerage has a 'hold' or equivalent recommendation with an average target price of INR 290 per share.

Following are the March quarter earnings estimates from 12 brokerages, in INR billion, for Bank of Baroda in ascending order of the net profit estimate:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

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