Bank of Baroda (BoB) recently shared its financial results for the first quarter of the financial year. The bank’s standalone net profit fell sharply by 72 per cent compared to the same time last year. The profit came in at ₹1,278 crore, which is much lower than the ₹4,541 crore it earned a year ago. This big drop is due to a one-time payment of $600 million (about ₹5,680 crore) to settle a legal case involving the NMC Group in the UAE.

The NMC Group was a healthcare company that collapsed in 2020 after investigators found hidden debts and signs of fraud. People managing the collapse claimed BoB’s UAE branches helped the company hide its debts. While BoB says it did nothing wrong, the bank decided to pay the settlement to end the long-running legal battle. MD & CEO Debadatta Chand said this move clears a "legacy overhang" (a long-standing old problem) and makes the bank’s balance sheet (a record of assets and liabilities) stronger for the future.

If we ignore this huge one-time payment, the bank’s performance was actually quite strong. Without the settlement cost, the net profit would have been ₹5,528 crore. The Net Interest Income (NII), which is the profit a bank makes from the difference between the interest it earns on loans and the interest it pays on deposits, grew by 9.5 per cent to reach ₹12,524 crore. This shows the core business of lending and borrowing is still healthy.

However, other areas saw some pressure. Other income, which includes fees and treasury profits (money made from trading bonds and stocks), fell by 26 per cent. Treasury income was lower because of market conditions, but the bank made up for some of this by selling Priority Sector Lending Certificates (PSLCs) for the first time. PSLCs are certificates banks buy and sell to meet the government’s target of lending to small farmers and businesses. The bank also recovered over ₹1,000 crore from old bad loans that were previously written off.

On the business side, Bank of Baroda is growing fast. Total deposits increased by 13.8 per cent, and total loans grew by 17.4 per cent. Within India, loans to small businesses (MSMEs), farmers, and retail customers grew by over 18 per cent. This shows that the bank is lending a lot of money to regular Indian citizens and small business owners. The bank’s Net Interest Margin (NIM), which measures how much profit the bank makes on its credit products, was 2.77 per cent.

Looking ahead, the bank is focusing on raising more money in foreign currency. Mr. Chand said they plan to raise $4-5 billion through various foreign schemes. This includes FCNR(B) deposits, which are special accounts for NRIs to keep money in foreign currency. So far, they have already raised $700 million. For the full year, the bank expects loans to grow between 14-16 per cent. For bank officers, this means the pressure to bring in new deposits and manage loan growth will continue, even as the bank clears its old international issues.