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Informist, Friday, May 8, 2026

 

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--Bank of Baroda: Don't see cost of deposits going down soon
--CONTEXT: Bank of Baroda management's comments in post-earnings analyst call
--Bk of Baroda: See cost of deposits remain same as Q4 FY26 in Q1 FY27
--Bk of Baroda: Would like to grow higher on deposits
--Bk of Baroda: Sticking to INR 145 bln debt, equity fundraise by FY28 plan
--Bank of Baroda: Don't see impact from West Asia war on asset quality so far
--Bank of Baroda: May disburse over INR 120 bln under ECLGS 5.0

 

By Shweta and Priyasmita Dutta

 

NEW DELHI – Bank of Baroda is likely to disburse more than INR 120 billion of loans under the recently rolled out Emergency Credit Line Guarantee Scheme 5.0, the bank's management said. The bank's micro, small, and medium enterprise loans grew 15.6% on year to INR 1.60 trillion for the March quarter. "...I think 12,000 (INR 120 billion) plus would be the amount that will be resourcing to the ECLGS," Managing Director and Chief Executive Officer Debadatta Chand said in a post-earnings analyst conference call Friday.

 

On Tuesday, the Union Cabinet had approved INR 181 billion for the scheme, extending credit support to Indian businesses amid uncertainties related to the West Asia war. The scheme will help businesses, especially MSMEs and the airline sector, maintain their operations, protect jobs, and sustain supply chains. The government is aiming at a total additional credit flow of INR 2.55 trillion under the scheme. Bank of Baroda's expected INR-120-billion credit guarantee will come under this INR 2.55 trillion credit flow. 

 

The scheme will apply to all loans sanctioned till the end of 2026–27 (Apr-Mar) to help borrowers tide over any short-term liquidity mismatches in view of the West Asia crisis. Speaking further on the crisis, the bank said it does not see any impact in terms of asset quality as of now due to the war in West Asia, Chand said. "We do have exposure to the Middle East. We have a large retail operation over there and the outstanding can be in the range of around 50,000-60,000 (INR 500 billion–INR 600 billion) as of today, but that's again spread over multiple countries," they said. 

 

"...as of today, there is no concern with regard to asset quality, because these are corporates that have quite a strong balance sheet and our large percentage of exposure is local syndication," the management said. "So I don't see challenges as of today with regard to the global international book but yes, particularly with Middle East operations, you need to be slightly watchful for that part." 

 

The state-owned lender, which posted its financial results earlier in the day, reported a net profit of INR 56.16 billion for the March quarter, up over 11% on year as well as on quarter. This was the steepest on-year growth in the bank's bottom line in six quarters. On Friday, shares of the bank ended at INR 263.90 on the National Stock Exchange, down 2.4% from the previous close. The bank detailed its March quarter earnings after market hours.

 

Bank of Baroda's global advances rose 16.2% on year to INR 14.30 trillion as on Mar. 31. Global deposits grew 12% on year to INR 16.48 trillion by March-end. The domestic current account savings account ratio was 38.90% at the end of March, up 45 basis points from the previous quarter. The domestic current account savings account ratio was 39.97% a year ago.

 

According to Chand, the Vadodara-headquartered bank would like to augment the resource base and grow higher on deposits. In terms of resources, earlier in the day, the bank also announced that it would raise INR 60 billion through the issuance of Tier-I and Tier-II bonds. "Almost INR 14,500 crore (INR 145 billion) is the plan to raise capital, both from the equity and also on the Tier 1, Tier 2... We have taken a medium term plan of FY2028," Chand said. In FY26, the bank's board approved an equity fundraising plan of INR 85 billion by FY28.

 

For the March quarter, the lender's global cost of deposits was 4.78% and domestic cost of deposits was 5.0%. A quarter ago, the global cost of deposits was 4.75% and domestic cost of deposits was 4.99%. The cost-to-income ratio fell to 44.90% from 52.10% a quarter ago.

 

In the analyst call, Chand said the bank's cost of deposits in the June quarter is likely to remain at the same level as Jan-Mar. "...it will be elevated. In the March quarter, we saw a slight increase in the cost of deposits, and it is likely to continue for this quarter as well. Because we don't see it coming down anytime, at least for the next three months," he said.  End

 

Edited by Tanima Banerjee

 

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