Bank of Baroda's record quarter leans on a one-time stock exchange gain

Bank of Baroda earned ₹6,532 crore in the September 2026 quarter, 35.8% more than a year earlier, calculated from the filed results. The bank described it as its highest quarterly profit. A large part of that came from a single source: its stake in the National Stock Exchange. The bank sold some of its shares for a cash profit and marked up the value of the rest. Management said operating profit, the line before provisions and tax, was ₹11,430 crore, and ₹7,749 crore without the effect of the exchange shares.

A bank's dependable earnings come from the gap between what borrowers pay it and what it pays depositors. That line, net interest income, grew about 9% from a year earlier, management said. Gains on investments are booked elsewhere, in other income, and that is where the exchange money landed: other income nearly doubled from the same quarter a year earlier. It rose by more than pre-tax profit did, which means everything else in the income statement, taken together, contributed less pre-tax profit than a year before. Part of the reason is a choice the bank made with the gain, described below.

How large was the gain? The chief executive's two figures do not quite match. The gap between reported operating profit and the figure without the exchange shares is about ₹3,681 crore; later in the discussion he put the total effect at about ₹3,100 crore, part cash profit and part valuation. On management's own exclusion, operating profit grew in low single digits; on the later figure, by about a tenth, both calculated from the growth rate the bank reported. Either result sits much closer to the growth in net interest income than to the 50.9% rise in reported operating profit.

The bank did not let all of the gain flow to profit. It set aside about ₹1,600 crore of extra provisions, most of it against specific loans and the rest against swings in the value of its bonds and shares, noting that the valuation gain itself can move both ways. Management said the increase was a prudent cushion and not a sign that loans were going bad. Its credit cost, loan-loss provisions as a share of loans, was 0.55% for the quarter, inside its guidance of below 0.6%, and 0.18% without the extra provisions. The cushion is meant for India's coming expected-credit-loss rules, under which banks provide for losses they expect rather than only those already incurred. When it reported the previous quarter, the bank put the cost of that change at about ₹12,500 crore. Asked this time what its standard-asset provisions would be under the new rules, the chief financial officer said the framework no longer splits provisions between standard and bad loans, and that the bank would use the five-year transition it has been given; the chief executive said the bank computes the figure but for now reports provisions only for the loan book as a whole.

Seen over six months, the record looks different. In the quarter before, a one-time settlement in the NMC case pushed other income below zero. Add the two quarters together and first-half net profit was 16.5% lower than a year earlier, calculated from the filed results. One large gain followed one large loss.

Management also raised its loan growth guidance for the year to 13% to 15%, above the range it kept three months earlier, and lifted deposit guidance as well. Reported loans grew 18.3% from a year earlier, but that figure includes the effect of FCNR(B) deposits, foreign-currency deposits from non-resident Indians that the bank gathered in volume and that show up on both sides of its balance sheet. The chief executive said it had raised about $8.1 billion, more than the foreign-currency target it set three months earlier across three instruments. Excluding that money from both assets and liabilities, he put loan growth at 13.5%, inside the new range.

Much of the money has not yet been put to work. The bank says it is holding it as liquidity for the rest of the financial year. The chief executive said the funds could repay expensive bulk deposits if their rates stay high, or otherwise go into loans.