Fitch Ratings has affirmed Bank of Baroda’s (BOB) Long-Term Issuer Default Ratings (IDRs) at ‘BBB-‘ with a Stable Outlook. Crucially, Fitch upgraded BOB’s Viability Rating (VR) to ‘bb’ from ‘bb-‘. This upgrade reflects improvements in BOB’s financial profile, including asset quality and capitalization, supported by an improving operating environment in India. The ratings for subsidiary BOB New Zealand were also affirmed.
Fitch Actions on Bank of Baroda Group
Fitch Ratings has taken several rating actions concerning Bank of Baroda (BOB) and its subsidiary, Bank of Baroda (New Zealand) Limited (BOB NZ), announced on February 25, 2026. BOB’s Long-Term Issuer Default Ratings (IDRs) have been affirmed at ‘BBB-‘, maintaining a Stable Outlook. This affirmation is linked to the high probability of extraordinary state support.
Viability Rating Enhancement
The most significant change is the upgrade of BOB’s Viability Rating (VR) to ‘bb’, up from the previous ‘bb-‘. This upward revision is fundamentally supported by measurable improvements across the bank’s financial standing:
- Asset Quality: The impaired-loan ratio is expected to stabilize around 2.0% through FY27, following a decrease to 2.0% in 9MFY26 (down from 2.3% in FY25).
- Capitalization: The Common Equity Tier 1 (CET1) ratio stood at 13.6% in 9MFY26 and is expected to settle above 13.0% in FY27.
- Profitability: The operating profit/risk-weighted asset ratio is expected to remain steady around 2.7% through FY27.
Operating Environment and Risk Profile
Fitch has revised the outlook on Indian banks’ Operating Environment (OE) score to positive from stable, citing enhanced regulation by the Reserve Bank of India. This positive OE outlook supports the potential for higher scores if sustained.
BOB’s risk profile score was also elevated to ‘bb’ from ‘bb-‘ due to improved underwriting standards, better loan diversification, and cleaner legacy bad loans. However, above-average loan growth in personal lending remains a noted risk area.
Subsidiary Rating Linkage
The ratings for BOB NZ’s IDRs are equalized with BOB’s, reflecting the strong expectation of shareholder support from the parent, especially given the binding legal guarantee provided to the New Zealand regulator. BOB NZ’s Long-Term IDR (xgs) was upgraded to BB(xgs).
Rating Action Summary
The following table summarizes the key rating changes:
| Entity/Debt | Current Rating | Prior Rating |
|---|---|---|
| Bank of Baroda LT IDR | BBB- (Stable Outlook) | BBB- (Stable Outlook) |
| Bank of Baroda Viability | bb (Upgrade) | bb- |
| Bank of Baroda LT IDR (xgs) | BB(xgs) (Upgrade) | BB-(xgs) |
Source: BSE
