Bank of Baroda’s Q1FY27 Net Profit Drops 72% Due to NMC Health Settlement, Bank of India Sees 36% Increase

Bank of Baroda’s Q1FY27 net profit drops 72% due to a one-time settlement with NMC Health Plc, while Bank of India reports a 36% increase in net profit driven by loan growth and improved asset quality.

Bank of Baroda’s Profit Dips on Settlement

State-owned Bank of Baroda reported a significant 72% drop in its Q1FY27 net profit to Rs 1,278 crore, primarily due to a $600 million one-time settlement with NMC Health Plc.

Excluding the one-time settlement, BoB’s net profit would have been Rs 5,528 crore for the quarter.

Key Details of the NMC Health Settlement

The litigation stemmed from the collapse of NMC Health, once the Gulf’s largest private healthcare provider, which entered administration in 2020 after billions of dollars of previously undisclosed debt came to light.

The joint administrators subsequently initiated proceedings in Abu Dhabi and England against NMC founder B R Shetty, former chief executive officer (CEO) Prasanth Manghat, and BoB under ADGM and UK insolvency laws, as well as UAE civil law.

Market Impact and Details

BoB’s net interest income (NII) for the quarter was up 9.5% Y-o-Y to Rs 12,524 crore, while its non-interest income fell 26% Y-o-Y to Rs 3,470 crore due to a drop in treasury income.
Its net interest margin (NIM) declined 12 basis points (bps) sequentially to 2.77% in Q1FY27.
BoB’s asset quality deteriorated, with gross non-performing assets (NPAs) at 1.99% at the end of Q1FY27, up 10 bps from the previous quarter.
The bank’s domestic advances were up 16% Y-o-Y to Rs 11.50 trillion, with the retail book growing at 18.4% Y-o-Y, agriculture at 18.7% Y-o-Y, MSME at 20.3% Y-o-Y, and the corporate book growing 15.3% Y-o-Y.

Bank of India’s Strong Q1 Performance

State-owned Bank of India reported a 36.23% year-on-year (Y-o-Y) rise in net profit at Rs 3,068 crore for the first quarter of FY27 from Rs 2,252 crore in the year-ago period, driven by healthy loan growth.
Net interest income (NII) for the quarter rose 12.61% Y-o-Y to Rs 6,833 crore from Rs 6,068 crore.
Net interest margin (NIM), however, moderated slightly to 2.52% from 2.55% a year earlier.

Key Takeaways

Bank of Baroda’s net profit plummeted 72% to Rs 1,278 crore in Q1FY27 due to a $600 million one-time settlement with NMC Health Plc.
Bank of India reported a 36.23% year-on-year increase in net profit to Rs 3,068 crore for Q1FY27, driven by robust loan growth.
Both banks are actively mobilising FCNR(B) deposits, with BoB targeting $4-5 billion by September-end and BoI aiming for $1.2 billion.

FAQs

What was the reason for Bank of Baroda’s Q1FY27 net profit drop?

The bank’s net profit dropped 72% due to a $600 million one-time settlement with NMC Health Plc.

How did Bank of India’s Q1FY27 performance compare to the previous year?

Bank of India reported a 36.23% year-on-year increase in net profit to Rs 3,068 crore for Q1FY27, driven by robust loan growth.

What are the FCNR(B) deposit mobilisation targets for Bank of Baroda and Bank of India?

BoB is targeting $4-5 billion by September-end, while BoI aims for $1.2 billion.

Conclusion

Bank of Baroda’s Q1FY27 net profit drop was largely due to a one-time settlement with NMC Health Plc, while Bank of India reported a strong 36% increase in net profit driven by loan growth and improved asset quality.

Both banks are actively mobilising FCNR(B) deposits to reduce their overall cost of deposits and fund credit growth.

Investors and analysts will be closely watching the banks’ future performance and the impact of the FCNR(B) deposit mobilisation on their financials.