Bank of Baroda (BOM:532134) Q1 2027 Earnings Call Highlights: Robust Growth Amidst One-Time ...

This article first appeared on GuruFocus .

Release Date: July 24, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

Positive Points

• Bank of Baroda ( BOM:532134 ) reported a strong global business growth of 15.4% year-over-year, with global advances growing by 17.4%.

• The bank's domestic advances grew by 16.1%, and international advances increased by 23.3%, indicating robust growth across regions.

• Retail loans showed significant growth, with auto loans increasing by 25.3% and home loans by 14.7% year-over-year.

• Asset quality remained strong, with the Gross NPA ratio improving by 29 basis points year-over-year to 1.99%, and the Net NPA ratio below 1% at 50 basis points.

• The bank's capital adequacy remains strong, with CET1 at 13.9% and CRAR at 16.30%, indicating a solid capital position.

Negative Points

• The bank faced a significant one-time impact due to a USD 600 million settlement related to a legacy litigation issue, which affected the net profit for the quarter.

• Net profit for Q1 FY 2027 was INR 1,278 crores, significantly lower than it would have been without the settlement impact.

• The bank's net interest margin stood at 2.77%, which is on the lower end of the guidance range of 2.75% to 2.95%.

• There was a decline in commission exchange brokerage fee income, which was down 47% year-over-year.

• The bank's operating expenses increased, partly due to higher staff costs, impacting overall profitability.

Q & A Highlights

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Q: Sir, even if you take out this out-of-court settlement, this onetime USD 600 million hit, if you see the quarterly result of June quarter, sir, most of these parameters, sir, we are little bit faltered because if you see the credit growth, the deposit growth, the business growth, I think after many, many quarters, it is down than the previous quarter. I mean the settlement may not be a reason for that. Having said that, even that asset quality you are saying is robust. In this quarter, you see it both our gross NPA and net NPA has gone up in absolute terms as well as in the percentage terms because there is no growth, even the percentage terms also, it is higher. Now CRAR comfortable because you have not done the credit. So laterally, CRAR will be usage comparable. But sir, on the whole I mean we are a little bit disappointed. We have taken the hit. We have agreed, okay, so it may be a very good judgment assessment for -- from the management point of view. But otherwise, if you look at the quarter, because the provisions also reduced to see that the profit is at least there INR 1,278 crores. And secondly, even if you add this to the settlement, I think some part of settlement amount was anticipated and provided for also in the past. So even otherwise also the profit would have not been even equal to the last quarter. So on some of these things, sir, can you, I mean, clarify that why we have not only muted but a negative growth in this quarter on many of these fronts? And then going forward, when we say 12% to 14% this credit growth, how do we then will plan to achieve that? And in fact, even the ECL provision, yes, it cannot be touched because 2,500 floating is now basically earmarked for ECL provisioning. So on that front, what are our plans to take care of the remaining amount of the ECL because the assessment must have been over by now only. And so I mean, it's a very broad study. I mean just we got the result late today. But if you can add something to it because the treasury has added the -- even that INR 1,270 crores is also because of the treasury income going up to almost INR 900 crores as compared to only INR 43 crores in the last quarter. So operational wise, this quarter overall seems to be a little dismal, a little disappointing to me personally. A: So I just tell you, I'm also slightly disappointed that I mean you have not read the numbers particularly. I'll just tell you why I'm saying so I'm disappointed. My credit growth for this quarter is 17.4%. My deposit growth is 13.8%, global and international is 14.5%. I mean domestic is 14.5%. These are possibly one of the strongest growth not only for the bank itself in all the quarters, but the strongest growth possible in the industry itself when I'm comparing with the large peers. So the asset quality, the CRLIC data, the SMA 1 and 2 more than INR 5 crores for the book as a whole, consisting of domestic and international. From 0.18, it has gone down to 0.07. The slippages have gone down. Treasury book of, I mean, almost INR 370,000 will have some treasury income and that treasury income is INR 893 crores, which is much less than the same quarter last year of INR 2,200 crores. So I think there is not a single parameter in the balance sheet on profitability other than the net profit, which has shown a decline trend or a lower growth or a lower profitability metrics. These are all very strong numbers. I would request -- honestly request you to please have a relook on the numbers because there are no count in any way, any of the number has given any negative vis-a-vis the last quarter. It is one of the strongest performance growth we have in all this quarter. In terms of profitability, look, we said earlier in one of the earlier conversion I was telling, we cannot make a provision on a settlement case for a specific provision or a litigation case. We buffer the balance sheet floating provision looking at the floating provision or buffer for the ECL impact. That's why the full impact of the settlement -- full impact has been given in this quarter. There is no earlier putting any provision which has helped in terms of negating the impact of the INR 5,680 crores that the impact on this quarter. On the ECL front, you said, right? The GMP and net NPA, if you compare June over June '25, there is a significant dip. Sequentially, it has gone up because of the denominator because the overall RWA has gone down because June is typically slightly lower than that of March. Secondly, if just look at one number therein, the write-off that we had in June 2025 was INR 2,200 crores. We have done a conservative write-off of INR 625 crores, and that's why I were looking at an absolute number of GNPA or NPA slightly high. And we're going for a similar write-off, the number would have been much, much lower. So I don't think any count -- slightly I'm disappointed rather in terms of my sincere request would be, please have a look, we'll be happy to further try to clarify all your doubts. The bank's financial strength position, balance sheet growth are one of the strongest as on June. Yes, this exceptional item impact has pulled down the net profit. But again, Q2, Q3, Q4, I'm expecting a ROA still above 1. Full year ROA guidance will adjust in the next quarter. But clearly, full year would be -- may not be exciting one, and we'll give guidance in the next quarter. I think the bank is doing well thankfully putting your confidence in the bank and analyzing the bank closely. I would happy to interact more with you just to clarify some of the doubts here.