India’s Bank of Baroda to log 1% to 1.2% ROAA over next two years

Loan portfolio is strong, but its international business could temper its net interest margin.

India’s Bank of Baroda is forecasted to report a return on average assets (ROAA) of between 1% to 1.2% between 2026-2028, supported by its lending strategy.

The bank’s ROAA is lagging that of major private sector players, however, although it is comparable to several public sector banks, said S&P Global Ratings in a credit ratings report published on 1 March 2026.

Bank of Baroda’s focus on the higher-yielding retail, agriculture, and micro, small, and midsize enterprise-enterprises (RAM) segment will predominantly support its net interest margin (NIM), according to S&P.

However, this could be tempered by the thinner margins in international business. Bank of Baroda has one of the largest international footprints amongst Indian banks, it added.

“Bank of Baroda has a sizable franchise across India, in our view,” S&P said in the report, where it assigned Bank of Baroda a “bbb-” rating. “The bank is among the 10 largest players in India, with a meaningful market share of 5%-6% of loans and deposits in a fragmented industry.”

More than 80% of the bank’s loan exposure is in India. Its credit profile is underpinned by a well-established franchise, solid deposit base backed by high customer confidence given that it is a government-owned bank, and ample liquidity, S&P said.

Asset quality is expected to remain largely stable over the next two years, with S&P noting favorable operating conditions in India.

It should also be able to maintain its risk-adjusted capital ratio about 7% in the next 12-24 months, the ratings agency said.

“Additionally, the bank's adequate risk management, solid recoveries, and upgradation and write-offs of bad loans should keep the gross non-performing loan ratio largely on an improving trajectory over the next two years,” it added.