NMC health settlement hits Bank of Baroda where it hurts more; Q1 net profit slumps 72%

State-owned Bank of Baroda (BoB) reported a 72 per cent year-on-year (Y-o-Y) drop in net profit to Rs 1,278 crore for the first quarter of financial year 2026-27 (Q1FY27).

This sharp decline follows a $600 million (approximately Rs 5,700 crore) out-of-court settlement with the joint administrators of UAE-based NMC Health Plc, NMC Healthcare Ltd, and NMC Holding Ltd.

The massive one-time cost was absorbed during the quarter to completely resolve all ongoing litigation linked to the healthcare company’s collapse.

Excluding the one-time hit, the bank’s net profit would have been Rs 5,528 crore in Q1.

The bank reported a net profit of Rs 5,616 crore in Q4FY26, up from Rs 4,541 crore a year earlier.

NMC health settlement details
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.

BoB has denied the allegations, and the settlement expressly states that the claims have been resolved without any admission of liability or wrongdoing.

“The settlement resolves all claims between the parties without any admission of liability or ongoing fees.

“The bank’s liability in these proceedings is limited to $600 million.

“The financial impact of the settlement has been fully absorbed and recognised in the profit and loss account for the quarter ended June 30,” said Debdatta Chand, managing director and chief executive officer (MD & CEO), BoB.

BoB’s financial performance and future plans
On the FCNR (B) scheme, Chand said the bank has mobilised about $700 million so far and expects to cross $1 billion by month-end.

It is targeting $4-5 billion in FCNR (B) deposits by September-end.

The state-owned lender is also planning to raise around $1 billion through a dollar bond issuance under the Reserve Bank of India’s (RBI’s) concessional swap window, but is waiting for an opportune time to tap the market and secure the best possible pricing.

BoB’s net interest income (NII) for the quarter was up 9.5 per cent Y-o-Y to Rs 12,524 crore, while its non-interest income fell 26 per cent 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 per cent in Q1FY27.

The bank’s NIM guidance is 2.75-2.95 per cent for FY27.

Its fresh slippages were slightly elevated in Q1FY27 at Rs 3,183 crore compared to the previous quarter.

Meanwhile, its total provisions in the quarter jumped to Rs 6,323 crore, compared to Rs 3,150 crore in Q4FY26, and Rs 1,967 crore in Q1FY26, mainly due to the Rs 5,680 crore settlement amount.

BoB’s asset quality deteriorated, with gross non-performing assets (NPAs) at 1.99 per cent at the end of Q1FY27, up 10 bps from the previous quarter.

Net NPA was up 5 bps during this period to 0.5 per cent.

The bank’s domestic advances were up 16 per cent Y-o-Y to Rs 11.50 trillion, with the retail book growing at 18.4 per cent Y-o-Y, agriculture at 18.7 per cent Y-o-Y, MSME at 20.3 per cent Y-o-Y, and the corporate book growing 15.3 per cent Y-o-Y.

The bank’s domestic deposits increased by 14.7 per cent Y-o-Y to Rs 13.81 trillion at the end of the June quarter.

Bank of India’s strong Q1 performance
State-owned Bank of India on Friday reported a 36.23 per cent 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 per cent Y-o-Y to Rs 6,833 crore from Rs 6,068 crore.

Net interest margin (NIM), however, moderated slightly to 2.52 per cent from 2.55 per cent a year earlier.

Non-interest income came in at Rs 2,579 crore, up 19.07 per cent Y-o-Y, driven by higher recovery in written-off accounts (up 89.13 per cent to Rs 609 crore).

Profit from exchange transactions was up 113.21 per cent to Rs 226 crore, even as profit from sale and revaluation of investments fell 49.51 per cent to Rs 414 crore.

Operating expenses were contained which rose only 3.22 per cent Y-o-Y to Rs 4,361 crore, with staff expenses up 8.64 per cent to Rs 2,603 crore, partly offset by lower insurance and miscellaneous expenses.

The cost-to-income ratio improved sharply to 46.33 per cent from 51.31 per cent a year earlier.

Asset Quality and Business Growth for BoI
On asset quality, gross non-performing asset (NPA) ratio improved to 1.81 per cent from 2.92 per cent and net NPA ratio eased to 0.51 per cent from 0.75 per cent.

The provision coverage ratio strengthened to 93.83 per cent from 92.94 per cent a year earlier.

The slippage ratio improved to 0.24 per cent from 0.33 per cent, while credit cost eased to 0.15 per cent from 0.17 per cent.

“This quarter our gross cash slippages have been somewhere around Rs 1,800 crore against which our gross cash recovery is somewhere around Rs 1,900 crore. So, whatever we have slipped in this quarter, we have recovered more than that,” said Rajneesh Karnatak, managing director (MD) of Bank of India.

On the business front, global advances grew 18.64 per cent Y-o-Y to Rs 7.98 trillion.

It was led by a 20.60 per cent rise in retail advances to Rs 1.66 trillion and a 19.75 per cent surge in retail, agriculture, MSME (RAM) advances to Rs 3.92 trillion, which now constitutes 58.30 per cent of gross domestic advances.

Total deposits rose 14.9 per cent to Rs 9.57 trillion, taking global business past Rs 17.55 trillion, a growth of 16.57 per cent.

Bank of India has set an FCNR(B) deposit mobilisation target of $1.2 billion, with over $200 million already raised, drawing traction from non –resident Indian (NRI) communities across geographies, including Canada, the US, the UK, Singapore, Hong Kong, Japan, and Africa.

The bank operates in 115 countries, including four in Africa.

These deposits, currently priced at around 6.5 per cent, are cheaper than bulk deposits since they don’t require cash reserve ratio (CRR)/statutory liquidity ratio (SLR) maintenance and carry a Reserve Bank of India (RBI)-managed swap, the bank said.

Bank of India expects the mobilisation to reduce its overall cost of deposits while substituting for costlier bulk deposits (around Rs 12,000-13,000-crore equivalent) to help fund credit growth.

The bank also plans to offer customers leverage against FCNR(B) deposits of up to nine times, marketed directly without third-party tie-ups.

The RBI timeline requires the FCNR(B) leverage component by September 30 and associated overseas borrowing is permitted until December 31.

Separately, under RBI guidelines for overseas funding, medium-term notes (MTNs), and related borrowing, the bank is targeting to raise approximately $2 billion by December 31, market conditions permitting.

“We are planning to have around $2 billion by December-end under the overseas borrowing and the MTN.

“That is the number we have targeted, depending on the market,” Karnatak added.

The bank’s capital adequacy ratio (CAR) improved to 18.69 per cent as of June 2026, up from 17.39 per cent a year earlier, with Common Equity Tier 1 (CET1) capital at 15.97 per cent.

The board has approved plans to raise up to Rs 7,500 crore in FY27 through additional Tier-I (Rs 2,500 crore) and Tier-II bonds (Rs 5,000 crore). Business Standard

Also read Bank of Baroda draws line under NMC fraud saga with $600 million.