BoB's trust deficit

Summary: Bank of Baroda has delivered stronger asset quality, healthier returns and steady loan growth, yet its valuation continues to lag peers. This story explores why investors remain cautious and what the bank must prove before the market rewards it with a higher valuation.

Summary: Bank of Baroda has delivered stronger asset quality, healthier returns and steady loan growth, yet its valuation continues to lag peers. This story explores why investors remain cautious and what the bank must prove before the market rewards it with a higher valuation. At 0.9 times book value, Bank of Baroda (BoB) is like a batsman whose poor form has a long afterlife. Even after a few good seasons, the crowd still holds its breath, fearing the next loose shot. The stock is trading at a discount to other state-run banks even though bad loans have fallen, returns have improved and loan growth has remained healthy. So what gives? Investors may still be waiting to see whether today’s improvement can hold through a full cycle. For a public-sector bank with a history of corporate lending stress and complex overseas operations, trust may take time to rebuild. What has improved Gross NPAs fell from 6.6 per cent in FY22 to 1.9 per cent in FY26. Net NPAs, which measure bad loans after provisions, are down from 1.7 per cent to 0.5 per cent. Slippages, or fresh loans turning bad, have also declined. Provision coverage is healthy at 93 per cent. Growth has been reasonable too. Advances, loans in India and overseas, have grown by roughly 15 per cent annually over four years. De