CareEdge Assigns 'BBB+/Stable' Rating to Bank of Baroda Foreign Currency Notes

CareEdge Assigns 'BBB+/Stable' Rating to Bank of Baroda Foreign Currency Notes​

CareEdge Global Ratings has assigned a 'CareEdge BBB+/Stable' long-term foreign currency rating to various instruments issued by Bank of Baroda (BoB), reaffirming its commitment to institutional stability within the banking sector. The ratings reflect the bank’s strong sovereign backing, robust domestic position, and efforts in capital management.

In line with the assessment, CareEdge Global has assigned a 'BBB+/Stable' rating to BoB's USD 1 billion senior unsecured notes. Furthermore, it has reaffirmed the 'CareEdge BBB+/Stable' rating for its USD 4 billion global medium-term notes (GMTN) programme. The issuer rating for Bank of Baroda was also maintained at 'BBB+/Stable'.

The key details of the ratings are summarized below:

Sovereign Support and Systemic Importance​

A primary factor underpinning BoB's credit profile is the significant support from the Government of India (GoI). The GoI holds a ~64% stake in the bank as of March 31, 2026. This majority ownership, along with substantial board-level representation alongside the Reserve Bank of India (RBI), ensures high oversight and control, promoting institutional stability.

The rationale notes that BoB's systemic importance is underscored by its position as the second-largest public sector bank (PSB) in India, holding a 5.5% share in domestic advances. The GoI has demonstrated sustained support to PSBs through recapitalization packages and budgetary allocations, including a total capital infusion of Rs 124 billion between FY18 and FY20 into BoB.

Operational Strengths and Financial Standing​

BoB maintains a robust position in the domestic banking sector, supported by its large scale of operations and extensive distribution network. As of March 2026, the bank’s consolidated total assets stood at Rs 21,015 billion. It operates through more than 8,600 domestic branches and has over 9,500 ATMs, complementing its international presence across 15 countries via 80 overseas offices.

In terms of capitalization, BoB reported a capital adequacy ratio (CAR) of 15.8% and a core equity tier 1 (CET-I) ratio of 13.2% as of March 31, 2026. These ratios remain above the regulatory thresholds. The bank also exhibited strong funding and liquidity, with its deposit base growing by ~12% year-on-year to Rs 16,485 billion.

Asset Quality and Profitability Trends​

The review noted that while BoB's core credit profile remains healthy due to strong domestic market presence and comfortable capitalization, it faces challenges related to profitability and asset quality in select segments.

Despite steady improvement in asset quality across the institution, some vulnerabilities persist within the micro, small, and medium enterprises (MSMEs) and agricultural sectors. As of March 2026, gross non-performing assets (GNPA) were recorded at approximately 6.1% for MSMEs and 4.5% for agriculture.

However, BoB demonstrated significant improvements in its asset quality metrics over recent years. GNPA and net non-performing asset (NNPA) ratios improved to 1.9% and 0.4%, respectively, as of March 2026. The bank has also strengthened the credit profile of its corporate loan book, with the share of A and above rated exposures rising to 96% as of March 2026 from 78% in March 2022.

In terms of profitability, consolidated results for FY26 showed margin contraction due to faster repricing of advances at lower yields while deposit costs remained elevated. Nevertheless, the bank's resilience was demonstrated by a return on assets (RoA) sustaining at ~1.0% in FY26 and 1.2% in FY25.

Outlook​

CareEdge Global has assigned a stable outlook for BoB, reflecting its ongoing strategic importance within the PSB framework and the expectation of continued support from the GoI. The rating outlook is tied to CareEdge Global's outlook on India's sovereign rating.

BANKBARODA Stock Price Movement​

Bank of Baroda shares slipped 1.97% on Monday, closing at ₹272.80 after trading significantly lower from its previous day’s close. The stock registered a total traded volume of 13.1 million shares during the session.