MUMBAI: Bank of Baroda, one of India's leading public sector banks, announced its financial results for the third quarter of the fiscal year 2025-26 on Friday, showcasing a steady performance amid challenging market conditions. The bank reported a net profit of Rs 5,055 crore for the quarter ended December 2025, marking a 4.5% increase from Rs 4,837 crore in the same period a year earlier. This growth was primarily supported by a significant reduction in provisions, even as net interest margins faced ongoing pressure.
Key Financial Highlights
The bank's net interest income (NII) remained largely flat at Rs 11,800 crore, compared to Rs 11,786 crore in the corresponding quarter of the previous year. This stagnation was attributed to higher funding costs offsetting the growth in interest income. Specifically, total interest income saw a modest rise of 1.5% year-on-year to Rs 31,750 crore, while interest expenses increased by 2.4% to Rs 19,950 crore.
Revenue and Expense Dynamics
Other income provided a boost to overall revenues, climbing 5.9% to Rs 3,600 crore. Operating income increased by 1.4% to Rs 15,400 crore. However, operating expenses grew at a faster pace of 6.7% to Rs 8,024 crore, leading to a 3.7% decline in operating profit, which stood at Rs 7,377 crore.
Provisions and contingencies fell sharply by 26.2% year-on-year to Rs 799 crore, reflecting lower credit costs and improved asset quality. Tax provisions also declined by 12.7% to Rs 1,524 crore. The substantial reduction in provisioning more than compensated for the pressures on operating profitability, thereby aiding the bottom-line growth.
Balance Sheet and Asset Quality
On the balance sheet front, outstanding deposits rose by 10.3% year-on-year to Rs 15.47 lakh crore as of December 2025. Global advances grew robustly by 14.7% to Rs 13.45 lakh crore, driven primarily by the retail and international portfolios.
Asset quality continued to show improvement. Gross non-performing assets (NPAs) declined in absolute terms to Rs 27,399 crore from Rs 28,471 crore a year earlier. The gross NPA ratio improved to 2.04%, down from 2.43% in the year-ago quarter and 2.16% in the preceding quarter, indicating a positive trend in credit management.
Capital and Profitability Metrics
Capital adequacy strengthened, with the Common Equity Tier-1 (CET-1) ratio rising to 12.97% from 12.38% a year ago. Profitability ratios remained stable, with return on assets at 1.09% compared to 1.15% last year, and return on equity standing at 15.59%, down from 17.01% in the corresponding quarter of the previous year.
The cost of deposits edged down slightly to 4.99% from 5.08% a year ago, while the yield on advances moderated to 7.56% from 8.35%. This reflects ongoing margin compression in a highly competitive lending environment, which has been a key challenge for the banking sector.
Overall, Bank of Baroda's Q3 FY26 results demonstrate resilience with profit growth supported by lower provisions, despite headwinds from margin pressures and rising operating expenses. The improvement in asset quality and capital adequacy positions the bank well for future growth.
