Bank of Baroda vs Union Bank (2026): ROA, NIM, NPAs, Valuation & Which Is Better?
Same P/E. Very different P/B. That is the puzzle.
On August 28, 2026, Bank of Baroda and Union Bank of India both traded at roughly 6.9 times trailing earnings. Yet investors paid only about ₹0.74 for every ₹1 of Bank of Baroda book value and approximately ₹1.08 for every ₹1 of Union Bank book value.
The market is therefore not saying Union's earnings are dramatically cheaper.
It is saying each rupee of Union Bank equity deserves a materially higher valuation.
Why?
It cannot be explained by loan growth.
Bank of Baroda grows loans faster.
It cannot be explained by margin.
Bank of Baroda also has the wider domestic spread.
It cannot be explained by gross asset quality.
BoB has the lower GNPA.
The answer sits deeper in the economics:
cleaner current profitability, stronger capital, operating efficiency and the absence of a fresh legacy legal overhang.
The 1x book question
A bank deserves to trade above book when investors believe its equity can earn sustainably more than the required return on that equity.
Bank of Baroda vs Union Bank: Q1 FY2027 scoreboard
| Metric | Bank of Baroda | Union Bank of India | Current Reading |
|---|---|---|---|
| Reported standalone PAT | ₹1,278 Cr | ₹5,332 Cr | BoB distorted by exceptional settlement |
| Normalised earnings context | ~₹5,528 Cr excluding NMC settlement | ₹5,332 Cr reported | Similar recurring profit scale |
| PAT growth | Reported negative due settlement | +29.6% | Union reported |
| NII | ₹12,524 Cr | ₹10,037 Cr | BoB |
| NII growth | +9.5% | +10.2% | Essentially tied |
| Global deposits | ₹16.34 lakh Cr | ₹12.83 lakh Cr | BoB |
| Deposit growth | +13.8% | +3.5% | BoB |
| Quarter-on-quarter deposits | Positive | −1.8% | BoB |
| Global / gross advances | ₹14.17 lakh Cr | ~₹10.96 lakh Cr gross advances | BoB |
| Advance growth | +17.4% | +12.5% | BoB |
| CASA ratio | 37.72% domestic | 35.10% | BoB |
| NIM | 2.77% global / 2.93% domestic | 2.80% | BoB domestic |
| ROA | 0.25% reported / ~1.10% adjusted | 1.36% | Union |
| ROE | 3.89% reported / ~16.57% adjusted | 17.23% | Union slightly |
| GNPA | 1.99% | 2.65% | BoB |
| NNPA | 0.50% | 0.47% | Union slightly |
| Provision coverage | 93.28% | 95.05% | Union |
| Credit cost | 0.29% | 0.38% | BoB |
| Cost-to-income | Broader reported expense base affected by quarter-specific items | 45.34% | Union disclosed efficiency |
| Capital adequacy | 16.30% | 18.46% | Union |
| CET1 | 13.90% | 16.38% | Union |
| Credit-deposit ratio | 83.31% domestic | ~83.6% | Very similar |
| 28 Aug 2026 P/E | 6.88x | 6.86x | Essentially identical |
| 28 Aug 2026 P/B | 0.74x | 1.08x | BoB cheaper |
Bank of Baroda wins the growth comparison before valuation even begins
Advances grew 17.4% versus Union Bank around 12.5%.
Deposits grew 13.8% versus Union Bank only 3.5%.
This is not a small difference.
Bank of Baroda is expanding both sides of the balance sheet much faster.
It is also doing so without a major deterioration in headline asset quality.
BoB's loan growth is diversified rather than concentrated
Several major lending books are growing simultaneously.
- Retail.
- Mortgages.
- Vehicle finance.
- MSME.
- Agriculture.
- Corporate credit.
This makes the growth engine less dependent on one single cycle.
The downside is that underwriting quality must remain strong across several fast-growing books simultaneously.
Union Bank is growing more selectively
Management has emphasised quality and profitability rather than low-yield balance-sheet growth.
Gross advances grew around 12.5%.
Retail, agriculture and MSME remain important growth engines.
The bank has also been willing to reduce low-yielding exposures rather than maximise headline loan growth.
That partly explains why Union's asset growth looks slower while profitability metrics remain strong.
This is the first reason Union can trade at a higher book multiple
The market may prefer 12%-13% growth earning 1.36% ROA over 17% growth earning around 1.10% adjusted ROA.
Growth has value only when incremental assets create acceptable returns.
The most useful metric is therefore not loan growth alone.
It is incremental ROA on the new assets being added.
Bank of Baroda's NIM is wider
Domestic NIM is 2.93%.
Union Bank reported approximately 2.80%.
BoB therefore begins the profitability waterfall with a modest spread advantage.
BoB also has the stronger CASA ratio
37.72% versus Union Bank around 35.1%.
That means a greater share of BoB's domestic deposits sits in relatively low-cost current and savings accounts.
On paper, BoB should therefore have the stronger liability economics.
Union Bank's deposit story is more complicated than the 3.5% growth headline
The bank has deliberately been changing the quality of funding rather than simply maximising total deposits.
Management has reduced dependence on expensive bulk deposits while focusing on:
- CASA.
- Retail term deposits.
- FCNR funding.
- Alternative balance-sheet resources.
CASA ratio improved materially from the prior-year level even while total deposit growth remained weak.
Union Bank therefore traded quantity for quality
Total deposits grew only 3.5%.
But CASA ratio moved to approximately 35.1% from roughly 32.5% a year earlier.
Cost of deposits declined.
NIM improved sequentially.
This is an important distinction.
A bank can become more profitable while its total deposit number grows slowly if expensive liabilities are replaced by cheaper ones.
The trade-off has one obvious limit
Loans cannot keep growing materially faster than deposits forever.
Union Bank advances grew around 12.5%.
Deposits grew only 3.5%.
The credit-deposit ratio consequently moved into the mid-80s.
The bank will eventually need faster liability growth if credit continues compounding above the system.
Union is trying to solve that through higher-quality liabilities
The strategy is not simply "pay more for deposits."
Management has discussed:
- CASA mobilisation.
- Retail term deposits.
- FCNR(B) deposits.
- Selective overseas funding.
If those liabilities arrive at acceptable cost, NIM can remain resilient while the balance sheet expands.
ROA is the metric that currently changes the entire comparison
Union Bank: 1.36%.
Bank of Baroda adjusted: approximately 1.10%.
A 26-basis-point difference is meaningful in banking.
It means Union currently produces roughly ₹1.36 of annualised profit for every ₹100 of assets compared with approximately ₹1.10 at BoB after normalising the exceptional settlement.
Why does Union earn more ROA despite lower loan growth and slightly lower NIM?
Operating efficiency and provisioning are part of the answer.
Union Bank's cost-to-income ratio fell to approximately 45.34%.
Operating expenses actually declined year on year.
Operating profit increased almost 16%.
That is powerful operating leverage.
Union Bank's Q1 profit grew almost 30% while NII grew only 10%
This tells investors that the income statement improved below the NII line too.
The bank benefited from:
- Lower operating-cost intensity.
- Lower provisions.
- Improving asset quality.
- Better balance-sheet mix.
That combination pushed PAT to approximately ₹5,332 crore.
This earnings bridge is strong—but not endlessly repeatable
Operating expenses cannot fall every year while the bank keeps expanding.
Likewise, provisions cannot decline forever once credit cost is already low.
Union's next stage therefore needs more of the profit growth to come from:
- NII.
- Fees.
- Credit growth.
- Deposit repricing.
Bank of Baroda's earnings bridge is hidden by one giant exceptional charge
The NMC settlement is approximately ₹5,680 crore.
It is real money.
It is also not a recurring quarterly operating expense.
Management says PAT excluding the item would have been approximately ₹5,528 crore.
The correct way to analyse the NMC settlement is to keep two scoreboards
Historical shareholder value scoreboard:
Count the entire settlement.
Shareholders lost the economic value.
Forward earnings scoreboard:
Do not assume another ₹5,680 crore settlement occurs every quarter.
Normalise the operating earnings.
The market still has a legitimate reason to remember NMC
It is evidence of legacy international risk.
Even if the specific case is now settled, investors may ask:
- Are there other legacy exposures?
- Were international underwriting controls sufficiently strong?
- Can another exceptional legal issue surface?
That uncertainty can suppress the price paid for book value.
Union Bank has no equivalent fresh exceptional charge in Q1
Its ₹5,332 crore profit therefore looks cleaner on the face of the income statement.
This is the second major reason investors may be willing to pay above book for Union while discounting BoB.
Asset quality itself favours Bank of Baroda on gross NPA
BoB GNPA: 1.99%.
Union GNPA: 2.65%.
That is a meaningful difference.
Bank of Baroda has fewer recognised bad loans relative to its loan book.
Union Bank's bad-loan trajectory is improving faster than the absolute level suggests
GNPA declined from 3.52% a year earlier to 2.65%.
NNPA declined from 0.62% to 0.47%.
Provision coverage reached approximately 95.05%.
Union has therefore already provisioned heavily against the remaining recognised stress.
Net NPA is effectively tied
BoB: 0.50%.
Union: 0.47%.
At these levels, both banks have relatively little unprovided recognised stress left on the balance sheet.
The forward question is fresh slippage rather than old legacy stock.
Credit cost gives Bank of Baroda the current advantage
BoB: approximately 0.29%.
Union: approximately 0.38%.
Both numbers are low.
BoB currently sacrifices less of its operating income to new credit provisions.
Union's credit cost is still falling year on year
It declined from approximately 0.47% to 0.38%.
That helps explain the PAT acceleration.
The number is already low enough that future profit growth cannot rely indefinitely on further credit-cost compression.
Capital is Union Bank's clearest balance-sheet advantage
CRAR is approximately 18.46% and CET1 16.38%.
Bank of Baroda:
- CRAR: 16.30%.
- CET1: 13.90%.
Union therefore has materially more common-equity capital relative to risk-weighted assets.
Why does that matter when both are comfortably above regulatory minimums?
Because excess CET1 creates strategic freedom.
Union can use internally generated capital to:
- Grow assets.
- Absorb ECL transition.
- Take prudent provisions.
- Handle unexpected credit stress.
- Avoid dilutive equity issuance.
The market may be paying for that capital cushion through P/B
Union Bank trades around 1.08x book.
BoB trades around 0.74x.
Union's stronger CET1 and higher ROA make its book value look more resilient and more productive today.
But the valuation gap may now be too wide if BoB's settlement is truly isolated
The earnings multiples are almost identical.
BoB P/E: 6.88x.
Union P/E: 6.86x.
Yet Union costs about 46% more per rupee of book value.
This creates a natural relative-value question.
What must Bank of Baroda prove for the P/B discount to close?
- The NMC settlement was genuinely exceptional.
- No new legacy international liabilities emerge.
- Adjusted ROA remains above 1%.
- 17% loan growth does not raise slippages.
- Domestic NIM remains around 3%.
- CET1 continues improving through retained earnings.
What must Union Bank prove to justify staying above book?
- ROA remains around 1.3% or better.
- Deposit growth accelerates.
- CASA stays in the mid-30s or improves.
- NIM remains near or above 2.8%.
- Credit cost stays controlled.
- Cost-to-income remains structurally below 50%.
Union's deposit growth is the biggest weak point in the current quarter
3.5% year-on-year growth is far below 12.5% loan growth.
Deposits also declined sequentially.
The bank deliberately shed some expensive funding, which improves the quality interpretation.
But quality cannot permanently replace quantity.
Bank of Baroda's funding equation is healthier today
Deposits +13.8% against advances +17.4%.
The gap is far narrower.
CASA is also higher.
This makes BoB's current high-teens credit growth easier to fund organically.
Union Bank's stronger ROA means it can tolerate somewhat slower growth
A bank creating more profit from each existing asset does not need to chase maximum asset expansion.
This is the quality-versus-growth trade-off at the centre of the comparison.
Bank of Baroda has more absolute balance-sheet scale
Deposits are roughly ₹3.5 lakh crore larger.
Advances are roughly ₹3.2 lakh crore larger.
This creates more absolute NII and more distribution scale.
It also means each percentage point of growth requires considerably more incremental funding.
Union has become one of the most profitable repaired PSU-bank franchises
1.36% ROA is the number that changes the old narrative.
A PSU bank producing sustained 1.3%+ ROA, 17% ROE and sub-0.5% NNPA is economically very different from the Union Bank investors remember from the earlier NPA cycle.
Bank of Baroda's adjusted profitability is also far removed from the old PSU model
Adjusted ROA around 1.10% and ROE around 16.6% are healthy.
That is precisely why the 0.74x book valuation stands out.
The market is demanding a larger risk discount than current operating metrics alone would imply.
The risk maps are different
Bank of Baroda
- Legacy international legal risk.
- Fast asset growth creates future credit risk.
- NIM may compress.
- CET1 is lower than Union's.
- Current sub-0.3% credit cost may normalise.
Union Bank
- Deposit growth remains too slow.
- CD ratio keeps rising.
- Profit growth relies too heavily on lower costs/provisions.
- GNPA remains above BoB.
- Above-book valuation leaves less room for disappointment.
Bank of Baroda vs Union Bank: current conclusion
Bank of Baroda currently has the stronger growth-and-funding engine.
Loans grow faster.
Deposits grow much faster.
CASA is higher.
Domestic NIM is higher.
Gross NPA and credit cost are lower.
Union Bank currently has the cleaner capital-and-profitability engine.
ROA is higher.
ROE is slightly higher.
CET1 is materially stronger.
Cost-to-income is lower.
Bank of Baroda vs Union Bank FAQs
Which bank is larger?
Bank of Baroda, with approximately ₹16.34 lakh crore of global deposits versus Union Bank around ₹12.83 lakh crore.
Which is growing loans faster?
Bank of Baroda, at approximately 17.4% versus Union Bank around 12.5%.
Which is growing deposits faster?
Bank of Baroda by a wide margin: approximately 13.8% versus Union Bank at 3.5%.
Which has higher CASA?
Bank of Baroda at approximately 37.72% domestically versus Union Bank around 35.1%.
Which has higher NIM?
Bank of Baroda domestically at 2.93%, versus Union Bank around 2.80%.
Which has higher ROA?
Union Bank at 1.36%, versus Bank of Baroda around 1.10% after adjusting for the exceptional NMC settlement.
Which has better gross asset quality?
Bank of Baroda, with GNPA of 1.99% versus Union Bank at 2.65%.
Which has stronger capital?
Union Bank, particularly on CET1: 16.38% versus BoB at 13.90%.
Why is Bank of Baroda below book?
The discount likely reflects a combination of PSU ownership, legacy international risk, the recent NMC settlement and investor uncertainty over how durable current low credit costs will be.
Why is Union Bank above book?
Its current ROA, ROE, capital and operating-efficiency metrics are stronger, causing the market to place a higher value on each rupee of equity.
Where can investors compare them on Bull Run?
Use the Bank of Baroda stock page, Union Bank stock page and Public Sector Bank sector page.
Research sources
Disclaimer
This article is educational and informational only. Bank of Baroda's reported Q1 FY2027 PAT, ROA and ROE were materially affected by the exceptional NMC Group settlement. Adjusted numbers use management-disclosed figures to analyse recurring operating performance and do not remove the real historical cost to shareholders. Bank of Baroda and Union Bank disclose some metrics on different global, domestic and average-balance bases; those differences are labelled where material. Current credit costs are unusually low relative to historical PSU-bank cycles and may normalise. Market valuation multiples cited are late-August 2026 point-in-time observations. Nothing here recommends buying, selling or holding Bank of Baroda, Union Bank or any security. Bull Run is not a SEBI-registered Research Analyst or Investment Adviser.