Bank of Baroda Faces Q1 Earnings Hit Despite $600M NMC Settlement as Litigation Ends

Bank of Baroda Faces Q1 Earnings Hit Despite $600M NMC Settlement as Litigation Ends​

Legal Dispute Concluded: BoB Reaches Out-of-Court Settlement with NMC​

Bank of Baroda (BoB) has concluded a protracted legal battle by agreeing to an out-of-court settlement valued at $600 million, which is equivalent to approximately Rs 5,700 crore. This agreement brings to a close the dispute involving the joint administrators of NMC Health PLC, NMC Healthcare Ltd and NMC Holding Ltd.

The lender's stock had seen volatility following the announcement. It closed in the previous session at Rs 259.85 after declining by 4.3 percent. The bank currently holds a market capitalization of about Rs 1.34 lakh crore.

Nomura Flags Potential Drag on Q1 Profitability​

Nomura has maintained its 'Neutral' rating on Bank of Baroda stock, setting a target price of Rs 300, which implies an upside exceeding 15 percent. The brokerage noted that while the settlement eliminates the uncertainty associated with prolonged litigation, it is likely to impact the bank's April-June quarter earnings.

The agreed settlement amount translates to approximately four percent of Bank of Baroda's net worth. Nomura suggested that because the provision for this settlement was unlikely to have been made earlier, it is expected to be recognized in the first quarter of FY27, consequently weighing on reported profitability.

Details of the NMC Settlement Agreement​

The exchange filing confirmed that the settlement covered proceedings before both the Abu Dhabi Global Market Court of First Instance and the High Court of Justice of England & Wales. The bank stated that all claims and causes of action between the involved parties have been resolved without any admission of liability or wrongdoing by BoB.

Bank of Baroda specified that its liability under the proceedings is strictly limited to the agreed settlement amount. Furthermore, it confirmed that the settlement funds were paid by the Abu Dhabi branch of the bank. The agreement aims to bring disputes to a close and avoid prolonged legal costs.

Strong Q4 Performance Provides Recent Buffer​

The current settlement follows a period where Bank of Baroda delivered better-than-expected performance for its January-March quarter. This strong showing was supported by healthy business growth and improving asset quality across the lender's portfolio.

BoB posted a net profit of Rs 5,615.7 crore for Q4 FY26, marking an increase of 11.3 percent from Rs 5,048 crore in the previous year. Net interest income (NII) also surged by 8.7 percent year-on-year, reaching Rs 12,493.7 crore from Rs 11,494 crore, exceeding market expectations.