India Ratings has affirmed Bank of Baroda’s (BOB) long-term ratings and assigned a new rating of ‘IND A1+’ to its Additional Certificates of Deposits (CDs). The affirmation reflects BOB’s high systemic importance to the Government of India (GoI) and its strong capital and liquidity buffers. While operational metrics show volatility, the bank maintains a strong franchise and better-than-average asset quality compared to peers.
Credit Rating Action Summary
India Ratings and Research (Ind-Ra) has announced an update on Bank of Baroda’s (BOB) debt instruments. The agency affirmed the Long-Term Issuer Rating and assigned a new rating of ‘IND A1+’ to the bank’s Additional Certificates of Deposits (CDs), confirming an Affirmed status for existing instruments like the Issuer Rating, Tier 2 Bonds, and Infrastructure Bonds, all maintaining a ‘Stable’ outlook.
Key Rating Drivers Emphasized
The ratings are strongly anchored by BOB’s high systemic importance to the Government of India, which holds a 63.97% stake as of December 2025, suggesting a high probability of support if needed. The bank also boasts a large pan-India and international franchise, ranking as the third-largest Public Sector Bank (PSB) by deposits.
Capital Strength and Asset Quality
BOB remains among the better-capitalised PSBs. In 9MFY26, the Common Equity Tier-I (CET-I) ratio stood at 12.45%. The agency expects capital buffers, coupled with improved operating profits, to support a targeted credit growth rate of 11%-13% year-over-year (yoy).
The Provision Coverage Ratio (PCR) offers comfort, maintained at 72.2% in 9MFY26. Gross non-performing assets (NPAs) stood at 2.04% and net NPAs at 0.57% at 9MFYE26. The bank continues to hold a high quality loan book, with 93% of standard domestic advances rated ‘A’ and above.
Liquidity and Operational Metrics
Liquidity is rated Superior, with a consolidated Liquidity Coverage Ratio (LCR) of 116% at end-3QFY26, well above the regulatory minimum of 100%.
A key monitorable is the decline in the low-cost liability franchise, with the global CASA deposit ratio falling to 36.57% in 9MFY26. While domestic deposits grew by 11.1% yoy overall, management must demonstrate a stable performance to counter this trend.
Rating Outlook and Sensitivities
The primary negative rating sensitivity relates to any dilution in the GoI’s support stance or a material drop in BOB’s systemic importance, potentially indicated by a loss of deposit franchise.
For the Additional Tier-1 (AT1) instruments, Ind-Ra notes that any perceived dilution in government support for hybrid instruments could lead to wider notching from the anchor ratings.
Instrument Rating Summary (Selected)
| Instrument Type | Size (INR Billion) | Rating/Outlook |
|---|---|---|
| Issuer Rating | – | IND AAA/Stable |
| Certificate of Deposits (New Assignment) | INR400 | IND A1+ (Assigned) |
| Basel III Tier 2 Bonds | INR111.23 | IND AAA/Stable |
| Infrastructure and Affordable Housing Bonds | INR310 | IND AAA/Stable |
Financial Highlights (FY24 vs. FY25)
The bank has shown steady improvement across key financial indicators:
- Total Assets grew from INR15,858 billion (FY24) to INR17,812 billion (FY25).
- Total Equity increased from INR1,122 billion (FY24) to INR1,369 billion (FY25).
- Return on Average Assets (ROAA) was 1.17% in FY24 and 1.16% in FY25, reflecting stable profitability.
- Capital Adequacy Ratio remained robust at 16.31% (FY24) and 17.19% (FY25).
Company Overview and Rating Scope
Bank of Baroda is positioned as the third-largest PSB by deposits in India, operating a domestic network of approximately 8,500 branches and serving about 188 million customers as of 9MFY26. The rating process applied comprehensive criteria covering financial analysis, systemic support, and Evaluating Corporate Governance standards.
Source: BSE
