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Q1FY27 business performance – Credit traction remains healthy across peers

ICICIdirect Research 03 Jul 2026 DISCLAIMER

The Q1FY27 provisional business updates indicate healthy start to the fiscal year, with sequential credit growth at 1.5-4.5% across peers. While credit growth is driven by continued momentum in mid and small corporate and retail segment, recovery in disbursement to large corporate and gold loans remains primarily lever. Deposit mobilization, though lags credit off-take, but still remains better given Q1 seasonality.
Among PSU banks, Canara Bank, Bank of India and Indian Bank have reported robust business growth, with advances growing in the mid-to-high teens, along with sequential improvement even though Q1 historical is softer quarter in terms of business growth, supported by broad-based traction across RAM (retail, Agriculture and MSME) segments. Private and mid-sized banks have also maintained healthy loan momentum, although funding remains a key area of focus.
Further, going in Q1FY27 earnings, we expect treasury contribution likely to be strong QoQ, although commentary on MSME asset quality (due to West Asia crisis), traction on FCNR (B), ECLGS and margin impact remains to be key monitorable.

Q1FY27 provisional data (₹ crore)

Advances
(in ₹ crore)

YoY
(%)

QoQ
(%)

 

Deposits
(in ₹ crore)

YoY
(%)

QoQ
(%)

PSU Banks

              

Bank of Baroda

14,17,372

17.4%

0.9%

 

16,33,846

13.8%

-0.9%

Canara Bank

12,93,216

18.0%

4.5%

 

16,12,604

11.7%

2.8%

Bank of India

7,97,798

18.6%

3.4%

 

9,58,117

14.9%

3.3%

Indian Bank

6,85,000

13.9%

2.7%

 

8,43,000

13.3%

1.8%

Mid-banks

              

J&K Bank

1,30,576

25.5%

4.5%

 

1,73,420

16.8%

4.9%

South Indian Bank

1,04,366

17.0%

4.1%

 

1,25,786

11.4%

2.0%

CSB Bank

40,866

24.0%

1.3%

 

45,415

26.0%

2.6%

Bank of Baroda – NMC settlement – unexpected liability clouds near term outlook

  • As per the exchange filing, Bank of Baroda has entered into an out-of-court settlement with joint administrators of NMC Health PLC. Under the settlement, the bank will pay US$600 million (approximately ₹5,700 crore) through its Abu Dhabi branch, with the settlement expressly made without any admission of liability or wrongdoing.
  • This settlement comes as a surprise to the investors as such substantial quantum of liability was not envisaged. This settlement is expected to result in in a substantial impact on FY27 earnings (PAT in FY26 - ₹ 20,021 crore), with implication on capital ratios and return metrics. Impact of one-time settlement of payout is ascertained at ~3.5% of networth which is expected to translate in similar impact on valuation (as the stock is trading at ~0.85-0.9x current book value.
  • While the settlement removes a long-standing legal overhang, lack of prior signalling on potential financial impact may weigh on investor confidence in near term. In addition, sequential growth in recently announced quarterly business performance remains subdued (sequential de-growth of 1.5% in domestic advances and 1.4% in deposits). Thus, valuation could remain in a narrow band in near term.
View our research recommendation on Bank of Baroda Also explore more on Research page

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