Bank of Baroda’s recently released Q4 FY25 business update paints a picture of solid operational performance and sustained market traction. The bank reported an 11.44% year-on-year (YoY) growth in global business, which now stands at Rs 27.03 trillion as of March 31, 2025. This broad growth signals a revival in both lending appetite and depositor trust.
Growth in Advances - the key indicator of lending activity - surged 12.88% YoY to Rs 12.31 trillion globally, in this lender which has significant overseas operations. Even more impressive is the 13.70% growth in domestic advances, reaching Rs 10.21 trillion. Within that, retail lending saw a robust 19.38% YoY jump, climbing to Rs 2.56 trillion. This marks a confident return of consumers and small businesses to credit markets, and a vote of trust in BoB’s lending mechanisms.
On the liabilities side, global deposits grew 10.25% YoY, closing at Rs 14.72 trillion. Notably, domestic deposits rose 9.28% to Rs 12.42 trillion, reflecting depositor confidence in the bank’s strength and service quality. However, while bulk deposits surged, retail deposits lagged slightly at 9.7%, underlining an industry-wide challenge of mobilizing low-cost deposits.
Despite a conservative performance during the past few quarters, the BoB stock has also begun recovering, a trend that's resonating with improved fundamentals and rising investor optimism.
On the retail deposit side, BoB has been innovating with agility. Its new 444-Day ‘bob Square Drive Deposit Scheme’, unveiled recently is a retail-focused fixed deposit scheme tailored to today’s return-seeking yet cautious investors. The scheme’s unique tenure - 444 days -comes with tiered interest rates, like, 7.15% per annum for the general public, 7.65% p.a. for senior citizens, 7.75% p.a. for super senior citizens (80+ years), and up to 7.80% p.a. for non-callable deposits.
Investors can put in up to ₹3 crore, making this scheme attractive for both middle-class savers and high-net-worth individuals seeking assured returns. The move also comes in the wake of the bank discontinuing its earlier ‘bob Utsav Deposit Scheme’, signaling a strategic pivot towards targeted and time-bound deposit mobilization. The earlier scheme was also proving to be too costly for the bank.
The Square Drive scheme is available across digital platforms like the bob World app and traditional branch banking, underscoring BoB’s omnichannel approach.
In an era where policy responsiveness is a measure of operational agility, Bank of Baroda has shown it’s not lagging behind. Following the Reserve Bank of India’s recent 25 basis point repo rate cut - from 6.25% to 6.00% - BoB was among the first PSU banks to pass on its benefits to borrowers.
Within 24 hours of the RBI’s move, the bank reduced its external benchmark-linked lending rates, especially for Retail and MSME segments. This means faster policy transmission and tangible savings for individuals and small business owners.
The bank’s Overnight Marginal Cost of Funds-Based Lending Rate (MCLR) stands at 8.15%, and its One-Year MCLR remains at 9%, placing it among the more competitive lenders in the market.
In a statement announcing the move, the bank emphasized its commitment to affordable credit and financial inclusion, reflecting both commercial intent and public service ethos. As credit demand picks up, such proactive rate cuts are likely to cement customer loyalty and expand the borrower base.
Bank of Baroda’s recent performance hasn’t gone unnoticed. Noted global brokerage firm UBS recently upgraded BoB from ‘Neutral’ to ‘Buy’, setting a price target of Rs 290. The rationale being strong credit growth, stable asset quality, and undervalued stock pricing.
According to UBS, BoB’s valuation at 0.8x September 2026 price-to-book (P/BV) is near its five-year average, making it an attractive proposition for value-focused investors. UBS forecasts the bank’s Return on Assets (RoA) to hover around 0.9% and Return on Equity (RoE) to be around 13% for FY26–27, a solid trajectory in the public banking space.
What makes BoB stand out, according to UBS, is its high exposure to MCLR-linked loans, which tend to provide stability in interest income during a rate cut cycle. The bank’s loan-deposit ratio (LDR) at 83% and liquidity coverage ratio (LCR) at 130% offer ample headroom for further credit expansion without liquidity stress.
UBS has also trimmed its credit cost estimate for BoB by 20-25 basis points and revised upward its earnings forecasts by 8-15% for FY 26-27, citing improving MSME and retail loan performance.
While advances have grown significantly, BoB faces challenges similar to its peers in the PSU banking sector - mainly, retail deposit mobilization. In FY 25, bulk deposits grew by 14%, but retail deposits rose by only 9.7%. This has resulted in an incremental loan-deposit ratio (LDR) of 117%, higher than the overall FY25 LDR of 82%.
Such a scenario, if sustained, could raise funding costs in the long run and impact margins. But with interest rates expected to remain accommodative and new deposit schemes gaining traction, BoB is well-positioned to balance this out.
The upcoming FY25 results will be a critical litmus test. The surge in advances may translate to stronger fee income and net interest margins (NIMs). If this happens, it could spark a broader re-rating of the stock.
Bank of Baroda is scripting a turnaround story that combines financial prudence, retail innovation, policy responsiveness, and valuation comfort. After a few subdued quarters, the narrative is shifting in its favor.
The Q4 business update reflects underlying strength in its operations, and its ability to quickly adapt to policy changes like the RBI rate cut, giving it a competitive edge. With fresh deposit schemes and a strategic focus on retail and MSME segments, BoB is clearly gunning for profitable growth.
Brokerages like UBS recognizing this potential and upgrading their outlook adds credibility to the bullish case. As markets continue to digest the RBI’s recent dovish tone and as and when macroeconomic indicators stabilize, BoB may emerge as one of the top PSU banking stories going forward.
For a bank of its size and legacy, Bank of Baroda’s recent moves are anything but complacent. Whether it’s the fast-paced response to policy signals, the creative restructuring of deposit offerings, or the recognition from international brokerages, BoB is actively rewriting its growth playbook.
As India’s economy gears up for its next phase of growth, banks like BoB will play a pivotal role - not just as lenders, but as engines of financial innovation and inclusion. For investors and depositors alike, this may be the right moment to take a closer look at Bank of Baroda - not for what it has been, but for what it is becoming.
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