State-owned lender Bank of Baroda (BoB) reported a 48% year-on-year decline in its consolidated net profit to INR 1,783 crore for the June quarter of FY27, primarily due to a one-time payout of about INR 5,680 crore related to an out-of-court settlement in the UAE-based NMC Group matter. 
The settlement payment was made through the bank's Abu Dhabi branch following an agreement with NMC Health PLC, NMC Healthcare Ltd, and NMC Holding Ltd. The dispute had been pending for several years across courts in Abu Dhabi as well as England and Wales and involved proceedings under the Abu Dhabi Global Market (ADGM), UK insolvency regulations and UAE civil law. 
Bank of Baroda's Managing Director and Chief Executive Officer Debadatta Chand said the settlement was a commercially prudent decision to bring an end to a complex and prolonged legal dispute. He added that the agreement was reached after developments in court proceedings and negotiations, while the parties have agreed to keep the settlement terms confidential. 
Chand clarified that the settlement payment does not amount to an admission of liability by the bank and said the agreement eliminates any future financial exposure arising from the matter. He also noted that the amount paid was substantially lower than the claims originally sought. 
The bank further said it did not utilise its INR 2,500 crore floating provision to fund the settlement. According to Chand, the provision is being preserved to absorb the estimated INR 12,500 crore impact that may arise when the bank transitions to the expected credit loss (ECL)-based accounting framework, which will require lenders to recognise credit losses earlier than the existing provisioning system. 
The NMC case dates back to the collapse of UAE-based healthcare operator NMC Health, which entered insolvency after allegations of undisclosed debt and financial irregularities surfaced. The matter resulted in legal proceedings involving several global lenders, including Indian banks with exposure to the group. Over the past few years, banks have been pursuing recoveries while also defending claims in multiple jurisdictions. 
Chand said the NMC episode has prompted Bank of Baroda to strengthen its underwriting standards, governance framework, risk management practices and compliance processes. He added that these improvements have supported the bank's international business, with its overseas loan book nearly tripling since 2021. 
Apart from the settlement, the bank outlined its plans to increase foreign currency inflows by mobilising up to USD 5 billion through the special windows announced for attracting overseas funds. The mobilisation plan includes up to USD 2 billion through Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, around USD 1.5 billion through external commercial borrowings and about USD 1 billion through dollar bonds. 
According to Chand, the bank has already mobilised USD 700 million through FCNR(B) deposits and expects the amount to reach nearly USD 1 billion by the end of the month. 
On the operational front, Bank of Baroda reported a 9.9% increase in net interest income to INR 12,524 crore, supported by more than 17% growth in advances. However, its global net interest margin (NIM) moderated to 2.77% from 2.91% a year earlier. 
The lender retained its FY27 guidance, expecting loan growth of 12-14% and NIM in the range of 2.75-2.95%. It also aims to increase the share of international advances to 20% of its overall loan portfolio over the next two years from the current 16% by expanding its presence in countries where India is signing free trade agreements. 
Chand said the bank is not revising its credit growth target upward despite healthy business momentum because of continuing geopolitical uncertainties and concerns over sustaining deposit growth. During the June quarter, deposits grew 13.8% year-on-year. 
On asset quality, fresh slippages declined to INR 3,422 crore from INR 3,686 crore in the corresponding period last year. However, the gross non-performing asset (GNPA) ratio increased marginally to 1.99% from 1.89% in the previous quarter. 
Overall provisions declined sharply to INR 643 crore during the quarter compared with INR 1,967 crore a year ago. 
The bank also said it has shareholder approval to raise up to INR 8,500 crore in core equity capital by FY28. Chand noted that the lender remains well-capitalised, with an overall capital adequacy ratio of 16.30%, and may raise up to INR 6,000 crore through Tier-2 bonds during the current financial year if required. 
Shares of Bank of Baroda ended the trading session 1.48% higher at INR 246.60 on the BSE, outperforming the benchmark index, which closed 0.43% lower. 
Source PTI