Bank of Baroda has received favorable credit rating action from India Ratings and Research (Ind-Ra), which assigned the bank's additional Certificate of Deposits an 'IND A1+' rating while affirming all existing ratings. The rating agency's comprehensive assessment reflects the bank's strong market position and robust financial metrics.

Rating Details and Actions

India Ratings has taken multiple rating actions for Bank of Baroda's various debt instruments:

The rating actions demonstrate continued confidence in the bank's creditworthiness across its various funding instruments.

Key Rating Strengths

Bank of Baroda's ratings are anchored by several fundamental strengths that position it favorably within the public sector banking landscape:

Market Leadership and Systemic Importance: The bank maintains its position as the third-largest public sector bank by deposits and second-largest by net advances, with market shares of 6.5% and 6.6% respectively as of 9MFYE26. Its extensive domestic network comprises 8,500 branches, 11,563 ATMs and cash recyclers, serving approximately 188 million customers.

Strong Capitalization: Bank of Baroda demonstrates robust capital adequacy with a CET-I ratio of 12.45% in 9MFY26, tier-1 ratio of 13.10%, and total capital adequacy ratio of 15.29%. These capital buffers provide adequate support for the bank's targeted credit growth rate of 11%-13% year-on-year.

Superior Asset Quality Metrics: The bank maintains a high provision coverage ratio of 72.2% in 9MFY26, positioning it at the higher end of the public sector bank peer group. Gross NPAs and net NPAs stood at 2.04% and 0.57% respectively, showing improvement from previous periods.

Financial Performance Indicators

The bank's operational metrics reflect stable performance across key parameters:

The bank's return on assets is expected to be maintained at around 1.15% in FY26, consistent with recent performance levels.

Areas of Focus

While the ratings reflect overall strength, India Ratings identified the decline in low-cost liability franchise as a key area requiring attention. The bank's global CASA deposit ratio declined to 36.57% in 9MFY26 from 37.82% in FY25. However, domestic current account balances increased 15.1% year-on-year in 9MFY26, with savings account balances growing 7.4%, leading to 11.1% growth in overall domestic deposits.

Liquidity Assessment

India Ratings assessed Bank of Baroda's liquidity as "Superior," with the bank maintaining an overall funding gap of 9.7% in the cumulative one-year bucket as a percentage of total assets at end-3QFY26. The bank holds 12.0% of its total assets in balances with the Reserve Bank of India and government securities, with a comfortable average consolidated liquidity coverage ratio of 116% in 3QFY26.

Bank of Baroda has received new credit ratings from S&P Global Ratings, marking a significant development for the public sector bank. The rating agency assigned BBB long-term and A-2 short-term issuer credit ratings to the bank on February 27, 2026, with a stable outlook reflecting confidence in the institution's financial strength and government backing.

Rating Details and Government Support

The credit ratings are underpinned by S&P's assessment of a very high likelihood that the government of India would provide Bank of Baroda with timely and sufficient extraordinary support in the event of financial distress. This view is based on the bank's very important role as a public sector bank in promoting financial inclusion through increased access to deposits and lending, combined with very strong links to the government via majority ownership and control.

Financial Strengths and Market Position

Bank of Baroda maintains a sizable franchise across India, ranking among the 10 largest players with a meaningful market share of 5%-6% of loans and deposits in the fragmented banking industry. The bank's credit profile is supported by its well-established franchise, solid deposit base backed by high customer confidence owing to government ownership, and ample liquidity position.

S&P forecasts the bank's return on average assets (ROAA) at 1.00%-1.20% over the next two years, comparable to several public sector banks though lagging major private sector players. The bank's focus on the higher-yielding retail, agriculture, and micro, small, and midsize enterprise (RAM) segment will predominantly support its net interest margin, though this could be somewhat tempered by thinner margins in international business.

Capital and Growth Projections

The rating agency expects Bank of Baroda to maintain its risk-adjusted capital ratio above 7.00% over the next 12-24 months amid above-average credit growth. This will be mainly supported by steady internal capital generation. The board has approved an equity capital raising plan worth INR 85 billion via qualified institutional placement by fiscal 2028, which if executed would further bolster the bank's capitalization.

Asset Quality and Risk Management

S&P expects Bank of Baroda's asset quality to remain largely stable over the next two years amid favorable operating conditions in India. The bank's adequate risk management, solid recoveries, and upgradation and write-offs of bad loans should keep the gross nonperforming loan ratio largely on an improving trajectory. The rating agency estimates credit costs at 0.60%-0.70% of total loans over fiscals 2026-2028, with the bank maintaining a floating provision of about INR 10 billion towards expected credit loss provisioning.

Funding Profile and Liquidity Position

As a government-owned bank, Bank of Baroda benefits from higher depositor confidence, with its deposit base primarily composed of granular retail deposits and stable, relationship-driven public-sector and large corporate deposits. Current and savings account deposits contribute about 39.80% of the bank's total deposits, higher than several domestic peers. The bank's loan-to-deposit ratio stands at 86% as of end December 2025, moderately weaker than the industry average mainly due to higher loans in its international business.

Outlook and Rating Scenarios

The stable rating outlook reflects S&P's expectation that Bank of Baroda will continue to benefit from its established franchise and maintain adequate risk management over the next two years. The agency expects capitalization to remain supported by steady internal capital generation amid above-average credit growth and a solid funding and liquidity profile. Potential rating changes would primarily depend on changes to India's sovereign rating or material deterioration in the bank's risk management and asset quality.