Bank of Baroda (BOB IN) – Q2FY26 Result Update – Incremental asset mix in H2FY26 key to NIM – BUY
Published on 01 Nov 2025
BOB saw a steady quarter; while NII was 1.8% lower due to back-ended loan growth, reported NIM adjusted for IT refund was flat QoQ at ~2.85% which was a positive, given NIM was expected to fall. Bank is expecting a pick-up in credit accretion in H2FY26 led by corporate. We are watchful of NIM given corporate growth could be a drag on NIM. Asset quality continues to remain healthy that led to write-back in credit costs of Rs8.0bn which allowed the bank to create floating provision of Rs4bn (Rs10bn in H1FY26) so as to shift gradually towards ECL. Bank expects impact of 125/25bps on CRAR/credit cost due to ECL while positive impact due to risk weight circular could be 60bps. Floating provision as of Sep’25 was ~8bps. We keep multiple at 1.0x but raise TP to Rs300 from Rs270 as we roll forward to Sep’27 ABV. Retain ‘BUY’.
