Bank of Baroda’s net profit fell 72% to ₹1,278 crore in the June quarter due to a one-time ₹5,680 crore charge related to the NMC Group litigation settlement. While this exceptional loss heavily impacted the bottom line, the bank’s core business remains strong, with net interest income rising by 9.5%. Investors are tracking how this settlement affects capital buffers and long-term profitability.
Detailed Coverage
Bank of Baroda reported a 72% decline in net profit for the quarter ending June 30, 2026, as a major one-time legal settlement impacted its financial results. The bank recorded a profit of ₹1,278 crore, down from ₹4,541 crore during the same period last year. This sharp drop was primarily caused by a ₹5,680 crore exceptional charge recognized after settling a long-standing legal dispute with the administrators of the UAE-based NMC Group.
Impact of the NMC Group Settlement
The settlement, finalized on July 1, 2026, resolves litigation in Abu Dhabi and England regarding the collapse of the NMC Group. The insolvency of the firm was linked to alleged fraud by its former shareholders and management spanning from 2012 to 2020. By paying approximately $600 million, or ₹5,680 crore, the bank has effectively closed this chapter, allowing it to move past a significant source of uncertainty that has weighed on its balance sheet for years.
Core Banking Operations Remain Resilient
Despite the impact of the settlement, the bank’s core operations showed stability. Net interest income, which measures the difference between interest earned on loans and interest paid on deposits, grew by 9.5% to ₹12,524 crore. This performance suggests that the bank’s primary lending and deposit-gathering activities continue to see steady demand. The bank also reported an operating profit of ₹8,127 crore, which remained largely consistent with the ₹8,236 crore reported in the same quarter last year, excluding the effect of the exceptional legal provision.
Asset Quality and Growth Trends
Asset quality metrics showed a slight shift compared to the previous quarter. The gross non-performing asset ratio, which tracks the percentage of total loans that are overdue, rose to 1.99% from 1.89%. Similarly, the net NPA ratio increased to 0.50% from 0.45%. However, when viewed against the year-ago period, the bank’s asset quality has improved, as the GNPA stood at 2.28% and the net NPA at 0.60% in the previous year. The bank also maintained its growth momentum, with total deposits increasing by 13.8% to ₹16.34 lakh crore and global advances rising by 17.4% to ₹14.17 lakh crore.
Strategic Expansion of Fundraising Limits
To support future growth and international operations, the bank’s board has approved an increase in its overseas borrowing capabilities. The bank will retain its $4 billion Medium Term Note programme while introducing a $1 billion sub-limit specifically for Green and ESG bond issuances. Additionally, the limit for overseas syndicated and bilateral loan facilities has been doubled to $10 billion. Investors may track how these increased limits are utilized to fund future credit demand and maintain liquidity in the coming quarters.