Bank of Baroda expects its loan growth to remain strong through FY27 after global advances expanded more than 17% in the first quarter, even as the lender remains watchful of geopolitical developments and the monsoon.
Speaking to NDTV Profit, the Managing Director and Chief Executive Officer Debadatta Chand said the bank would prefer to outperform its existing credit growth guidance of 12% to 14%. The lender could consider raising the guidance after assessing the second-quarter performance if the current momentum continues.
The comments come as investors track the bank's growth trajectory, margins and return ratios following an exceptional charge linked to the NMC litigation settlement.
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NMC Litigation Overhang Is Over
Chand said the settlement related to the NMC case is "full and final", covering proceedings in both the Abu Dhabi Global Market and the UK court.
The bank took a one-time charge of Rs 5,680 crore related to the NMC litigation settlement during the quarter. Despite the exceptional item, core operating performance remained strong, with net interest income rising 9.5% year-on-year.
For the second, third and fourth quarters, Bank of Baroda expects return on assets to remain above 1% and return on equity above 15%. The bank expects to provide greater clarity on its full-year return ratios after the next quarter.
Credit Growth Could Beat Guidance
Global advances grew 17.4% during the quarter, compared with 16.2% growth for FY26. That is comfortably ahead of the bank's FY27 guidance of 12% to 14%.
Chand, however, said the bank is not revising its full-year guidance yet as it continues to monitor geopolitical risks and the monsoon. If growth momentum remains strong after Q2, the lender could consider increasing its guidance.
Agri, MSME and retail loans are expected to grow 18% to 20%, while corporate loan growth is guided at 11% to 12% for the full year.
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Margins, Asset Quality Remain In Focus
The bank expects its net interest margin to remain within the guided range of 2.75% to 2.95%. Chand said there could also be some upside to margins as corporate loans see repricing and wholesale deposit costs moderate.
On asset quality, Chand said the bank is not seeing signs of emerging stress. Collection efficiency is above 99%, while SMA-1 and SMA-2 stood at 0.07, compared with 0.18 in March and 0.40 in June last year.
Going forward, the lender will closely monitor geopolitical developments and the monsoon. Chand said India's domestic demand remains strong and expects the economy to grow between 6.6% and 6.8%.
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