Bank of Baroda CEO Signals Margin Pressure, Deposit Costs Stabilize, and Future Fundraising Plans

Bank of Baroda’s Chief Executive Officer, Debadatta Chand, has indicated that margin pressure is expected to persist through the first two quarters of FY26, citing industry-wide cost dynamics. However, he reassured that the cost of deposits has peaked in the fourth quarter, suggesting a potential easing of financial strain in the coming months.  

Market Insights  
- Net interest margins have been under pressure due to rising funding costs, a trend observed across the banking sector.  
- The bank anticipates maintaining its net interest margin between 3 to 3.1 percent for the fiscal year, adjusting to evolving market conditions.  
- Deposit costs, which had been climbing, are now expected to stabilize, reducing the burden on profitability.  
- On corporate exposure, the CEO clarified that Bank of Baroda does not have significant exposure to Bhushan Steel and expects the Committee of Creditors to determine the final course of action regarding the company’s financial resolution.  
- The bank may explore fundraising through perpetual and infrastructure bonds at a later stage, aligning with long-term capital requirements.  
- Despite market fluctuations, the CEO stated that there is no immediate need to raise equity capital, indicating confidence in the bank’s current financial position.  
- A significant portion of the bank’s total loan book is repo-linked, reflecting its alignment with external benchmark rates and monetary policy adjustments.  

Industry analysts note that while margin compression remains a challenge, the stabilization of deposit costs and strategic fundraising plans could provide some relief. The bank’s focus on optimizing yield on advances and managing cost pressures will be key in navigating the upcoming quarters.  

Sources: Financial Express, NDTV Profit, CNBC-TV18, Economic Times, Business Standard, Bank of Baroda Official Statements

 

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