Bank of Baroda Assigned 'CareEdge BBB+/Stable' Long-Term Foreign Currency Issuer Rating

CareEdge Global has assigned a 'CareEdge BBB+/Stable' long-term foreign currency issuer rating to Bank of Baroda (BoB). The rating agency also assigned the same rating to BoB’s USD 4 billion global medium-term notes (GMTN) programme.

BoB benefits from majority ownership by the Government of India (GoI), which holds approximately 64% stake as of March 31, 2026. The bank's systemic importance as the second-largest public sector bank (PSB) with a 5.5% share in domestic advances, high socio-political relevance, coupled with contagion risk, and strong public perception underscores the likelihood of strong, extraordinary sovereign support if required. The GoI's demonstrated history of capital infusion into PSBs, along with BoB’s role in policy transmission and financial inclusion, results in its credit profile being equated to that of the sovereign.

BoB’s core credit profile is healthy, demonstrated by a robust domestic market position, a sizeable overseas presence, comfortable capitalisation, and strong funding and liquidity. These strengths are partly offset by its average profitability and asset quality risks, particularly concentrated within the micro, small and medium enterprises (MSMEs) and agricultural segments.

The stable outlook for BoB, in line with the sovereign of India, reflects CareEdge Global’s expectation of continued support from the GoI and the bank’s ongoing strategic importance within the PSB framework. The rating outlook on BoB will move in tandem with CareEdge Global’s outlook on India’s sovereign rating.

As of March 31, 2026, the bank reported a capital adequacy ratio (CAR) of 15.8% and a core equity tier 1 (CET-I) ratio of 13.2%, both comfortably above regulatory thresholds. The bank’s deposit base grew approximately 12% year-on-year to Rs 16,485 billion as of March 2026. Its current account and savings account (CASA) ratio remains robust at 37.2%.

The bank’s asset quality, despite steady improvement, is exposed to vulnerabilities in select segments, particularly MSME and agriculture, which reported elevated gross non-performing assets (GNPA) of approximately 6.1% and 4.5%, respectively, as of March 2026. GNPA and net non-performing asset (NNPA) ratios improved to 1.9% and 0.4%, respectively, as of March 2026.

BoB’s consolidated profitability moderated in FY26, driven by pressure on margins and lower non-interest income. Net interest margins (NIMs) contracted due to the faster repricing of advances at lower yields, while deposit costs remained elevated, leading to subdued growth in net interest income and moderation in core operating profitability. The bank's return on assets (RoA) sustained at healthy levels of approximately 1.0% in FY26 and 1.2% in FY25.