Bank Of Baroda

Lalit Tyagi, he's Executive Director. He looks after the corporate credit, international banking and treasury. Mr. Sanjay Mudaliar, he's Executive Director looking after the IT function and also the retail asset of the bank. Mr. Lal Singh, he's Executive Director. He looks after the priority sector, excluding retail asset, agri and MSME and also the recovery vertical. He also heads the HR function of the bank.

Mrs. Beena Vaheed, she's Executive Director looking after all compliance and control function and also the retail liability. Mr. IVL Sridhar, our new CFO, maybe you are interacting with him for the first time, he’s the CFO of the bank. So, with this, Mr. Sridhar, go ahead with your presentation.

Within the retail segment, we have seen smart growth across the portfolio with education loan growing by 15.4%, home loan at 16.5%, auto loan at 17.9% and mortgages at 18.6%. With regard to our personal loan book, we have moderated the growth as per the guidance given. The moderation is at 19.5%.

In terms of deposit growth, our total deposits have grown by 9.1% with international deposits growing by 14.8% and domestic by 8.1%. The domestic CASA deposits have grown by 5.5% and term deposits have registered a growth of 9.9% YOY. As of 30th June 2025, the Bank's credit deposit ratio stands at 84.08% and CASA ratio stands at 39.33%.

With regard to our profitability metrics, our operating profit for the quarter stands at 8,236 crores registering a YOY growth of 15%. Our net profit for Q1 FY26 stands at 4,541 crores registering a growth of 1.9% YOY. Return on assets remains above 1% and 1.03% in Q1 FY26. Return on equity stands at 15.05%.

Margins have been under pressure for the industry as a whole, as you know, given the repo rate cuts leading to immediate repricing of EBLR loans and lag in deposit repricing. Therefore, with regard to key ratios, our yield on advances stands at 8.09% for the quarter. Our cost of deposits for the quarter has sequentially reduced to 5.05% as against 5.12% in the previous quarter. In terms of net interest margin, there has been a reclassification of interest on income tax refund component and the historical NIMs have been normalized as per the revised reclassification for compatibility purpose. Our NIM for the first quarter of 2026 stands at 2.91%.

Regarding asset quality, our asset quality remains robust. Our GNPA has improved by 60 bps YOY and stands at 2.28%. Net NPA is below 1%, that is at 60 bps, 0.60%. Our provision coverage ratio including TWO is comfortable at 93.18%. Our slippage ratio per Q1 stands at 1.16%. Credit cost stands at a level of 0.55% for the quarter.

Coming to our SMA and collection efficiency, our CRILC SMA 1 and 2 as a percentage of our standard advances stands at 0.4% as of June ‘25. Our collection efficiency excluding agriculture remains robust at 98.9%.

Regarding the capital position, our capital position continues to be strong with CET-1 at 14.12%, Tier- 1 at 15.15% and CRAR at 17.61%. Our LCR remains healthy at approximately 119% as of June ‘25.

Adjusted for the profits of Q1 2026, capital adequacy would have been 18.04%. Thank you.

As you know that earlier also, we have said multiple times we pursue a very consistent, stable business model. And I think the quarterly results that we have presented, I mean the Q1 of this financial year also talks about sustainability, stability and also building on the fundamental strength of the bank.

The numbers that have been told, the advances growth has been very strong at 12.6% YoY. We have achieved the global advance at almost 12.07 lakhs crores as on June 2025. And within the advance growth, the retail is continuing at a very strong pace and it has been there for last many quarters.

We are growing retail at 17.5%. And the retail has reached a book of 2.61 lakh crores. As per retail, Agri and MSME earlier also we said, we said that we want to retailize the book more. And the growth in RAM is 18% on a YoY basis. That is a very strong growth as far as the numbers and the growth is concerned. And the RAM has also seen a sequential growth of 2% vis-à-vis March 2025.

The Agri loan as presented, the growth has been 16.2% for this quarter. And this is one of the highest growths we have on the Agri sector for the last many years now. This is in comparison to 9.1% of the same quarter of last year.

Another key focus for the bank within the RAM is also on the MSME. The MSME advances grew by 13.1% YoY as against 9.8% last year, I'm talking about June 2024. And within MSME, we're focusing on how do we again strengthen the key levers within the MSME lending piece. For that we're focusing on cash management services. We're focusing on relationship-based business within MSME. We're focusing on digital loan processing within the MSME. And also, a couple of government schemes, which is clearly a focus towards MSME. The bank is doing its best to have significant lending in those government schemes.

So, the outcome of all these efforts that I have said, the RAM has gone up to 62.7% to the overall book.

And look, two years back, this percentage was 57. So, in line with our concept of retailizing the book, it has worked well, and the percentage is significant, 62.7% as on today.

The only aspect within the advances book is the corporate loan book where the growth is 4.2%. And I'll just tell you a couple of points here with regard to the corporate book. What we have seen for this

quarter, particularly on the corporates having a strong cash flow position, there is a deleverage happening, that is one.

Secondly, many of the corporates are able to go to the bond market and ECB market to get cheaper funds, which is cheaper than the Bank's loan. So, because of that, I think the loan growth in the corporate segment has been slightly lower. But then there is a comparison, there is a seasonal factor here. If you look at the corporate loan book in June 2024, the growth was 2.5%. As compared to that, we are at 4.2%. In spite of the corporate book in June of 2.5%, the full year growth was almost 9%. So, we are hopeful that as far as corporate loan is concerned for the full year, we'll be in the range of 9 to 10%.

Coming to the liability, again, this is something important we must take a note that liability deposit continues to be challenging, not only for us, but the entire banking system. But within that, we are focusing on how to strengthen our liability management by coming out with innovative products, improving the service standard, and also the digital penetration therein.

So, the current deposit growth, if you look at on the liability side, the growth is 8.1%, as against 6% of June last year. The growth in CASA is 5.5%, and the saving is at 5%. If you look at our saving growth for last many quarters, we are sustaining above 5%. And you must be comparing along with the industry growth. I'm talking about large peers. I think we're able to sustain a positive growth over and above the industry growth in the saving fund. And that's our key focus. And the CASA growth is 5.5%. Again, that is something you must be comparing with the system growth and able to slightly take a lead on that.

So, the outcome of this is that the CASA percentage is at 39.33%. And when you compare the CASA percentage, particularly with large peers, you can very well appreciate the fact that this is on the top quartile in terms of the percentage in CASA.

Earlier we said that on the deposit, we'll continue to work to reduce dependency on the bulk deposit.

This quarter also, we have reduced the bulk deposit to the action of 23,000 crores. So, we have done a bit of realignment on the liability.

So, I think if you look at the cost of deposit that is presented, that is at 5.05%, on the CASA percentage of 39.33%, and the saving growth at 5.5%, I think on the liability side, the bank has done pretty well in terms of managing the cost part of it. The bank's cost of deposit at 5.10% and going by the repricing nature for next quarter will be well below 5% as far as the cost of deposit is concerned.

Giving my comment on the asset quality, again, the asset quality as the CFO said continues to be robust, continues to be resilient, and continues to demonstrate the strong asset quality for the Bank.

The GNPA at 2.28% as against 2.88% of June last year. As compared to the sequentially vis-a-vis March, it is 2 bps above the March number, but I must tell you there are two factors which contributed. One is a factor where there is a denominator effect because there is a bit of the asset has gone down. So, there is a denominator effect here.

And secondly, as far as you compare with the slippage, that numbers that we have given, one large account in the international book that is what is presented also in the analyst presentation, a large

account which is roughly around 500 crores has slipped this year. Let me give a color to this particular account. This was a restructured account during COVID time. At the time of restructure, thereafter subsequently the account was upgraded. But then, the account continued to show a bit of sickness in terms of being SMA 1 or 2. And now, in that particular international territory, this account has gone to a program called CNC, that is a resolution plan. It is a secured loan. And there is a curative period of roughly around 120 plus 90 days, 210 days in that. So, we are hopeful for resolution within the 210 days. But in the meantime, we have classified this account as NPA out of the international book and made a 40% provision therein. Although we are hopeful of full recovery through resolution or otherwise, but then we have made a provision of 40% on this.

So, if you exclude this account, a couple of ratios--- let me again highlight on that. If you exclude this account, the slippage ratio will be at 0.99% as against 1.16%. And similarly, the credit cost would be at 0.47% as against 0.55%. So, if you look at these numbers, these are broadly aligned with the performance we had in the earlier quarter. This is only a one-off on the international account which has slipped. And we are hopeful for resolution as we go ahead as far as this particular account is concerned.

The bank on the income side, NII, as you know that all the banks because of the rate transition that happened in the entire market, banks have taken a cut in the NII. So, as we also, our NII - there was a degrowth of almost 1.4% whereas the operating profit has been very strong at 15% because of the substantial increase in the non-interest income and more precisely out of the treasury income. So, that has supported big time for us and the growth in operating profit is 15%, whereas Net Profit, the growth is 1.6%.

On the liability as I said, we have Cost of deposit of 5.05%, with a CASA of 39.33%, with a margin of 2.91%. That works out very well in terms of the liability management that the bank pursue. Our NIM is at 2.91%. Again, as you have a significant international book where the NIM is 1.75%, otherwise the domestic NIM is at 3.06%. We are above 3% in the domestic NIM itself. And if you compare vis-à-vis the reclassified NIM of that of March, which was at 2.98%, otherwise you declared 2.86% because of the same. Reclassification benefit it is at 2.98%. The cut in NIM for this quarter, I am talking about June over March, is only 7 bps. And you would have read a newspaper article sometime back, where the average cut in the margin that many of the banks which was presented in that article is almost 17 bps.

So, in terms of the liability management, in terms of the asset-liability management, I think the bank has done well in terms of able to maintain its margin. And that is something significant, I believe, while articulating before all of you.

Couple of other points I would like to say – The Digital, the bank is doing quite well. Our new app, bobइPay is doing quite well. The P-CBDC, which was announced sometime back, there is traction over there.

A couple of awards that earlier also we communicated that on the EASE Reform, which is one of the comprehensive performance metrics that all the banks, public sector banks. We ranked 2nd when it was announced sometime back. The bank would continue to focus on sustainability, the bank would continue to focus on the stable outlook. At the same time, I believe the liability management is one of the key cornerstones as far as the bank is concerned for this quarter. With this, I will end my initial talk and we will go for question and answer. Phiroza, over to you.

And, secondly, because of significant downward movement in rates in the bond market, I mean, typically these corporates are also able to raise funds at a cheaper rate. So, obviously, the dependency on the bank's loans is relatively low. So, these are the two factors which are impacting. But as I said, June last year we had a 2.5% YoY and the full year we had a 9%. I'm also thinking a similar corporate book outlook for the full year, where we can achieve almost 9%-10% growth.

We are focusing on multiple sectors, including NBFC. Yes, NBFC is slightly, if you look at the segmental data, there is a bit of degrowth that happened because we had some like the risk weight was one of the factors but now the demand is coming back into the banks and we are looking into all this proposal.

I think NBFC, again, there is a good upside available for us to grow in this NBFC exposure. And on the co-lending, yes, the bank is fully working with the co-lending.

And typically a full year will be at 9%-10%.

Coming to your second question on co-lending. Yes, the bank is quite prepared now to upsize its co- lending book. Initially, there are challenges in terms of the technical integration, couple of clarity on some of the aspect of accounting. Now, all these are clarified. The guidelines are clear on those. So, we are working on to increase our co-lending exposure vis-a-vis NBFC significantly from the current level.

But then I will give you full color of this account. Again, I’ll repeat what I said earlier.

So, as far as the account is concerned – It is a secured advance. The asset coverage is much more than 1. Secondly, we are hopeful for a resolution. It is a very good entity in terms of the local government stake over there in that entity. So, I think, there would be a clear resolution therein. But as a prudent measure, we have made 40% provision therein. So, on a 500 crore, we are holding 200 crore of provision. So, looking into the trajectory of the resolution happening post 210 days, I think we will be in a position to further. But then it is one off. And it was known to the bank that the account had sickness, so continuously used to monitor that.

I tell you one good point that at the time of COVID restructuring, the outstanding was almost at 80 million on Euro terms. And because of the repayment, the outstanding currently is 50 million. So, the account has a good vintage in terms of, I mean, paying the banks due. And we are hopeful we will recover the amount full.

The balance is only 300 crore. So, we will all watch the output of this resolution process, which is ending on 210 days. So, thereafter, we will take a call on that.

And, also, one more thing I wanted to understand from you was corporate is seeing a slowdown.

Overall, retail growth has seen a slowdown. Kind of wanted to understand, what sector are you focusing on the MSME segment? And, also, are there any concerns of over-leveraging percolating in the unsecured MSME business as well?

A couple of sectors which are doing well for us is a sector like CV & CME, supply chain finance, the TReDs, I mean, the platform. So, the core MSME growth is also there. So, the bank will be focusing.

And, again, on the regulation side, the MSME definition has changed now and that gives a huge opportunity for us to grow in MSME.

Secondly, the government has come up with a couple of new schemes on the MSME. One is a cashflow-based scheme, which is a smart OD that we have already rolled out to the market. Another is MCGS, which is a guarantee-scheme under which you can lend money. So, I think, the environment for lending to MSME is quite positive at this point of time. There are demands. We have leveraged our digital platform. We rolled out the digital platform. We rolled out almost 350 branches, which are MSME-focused branches. We are focusing on clusters on MSME. So, with all this, I think growing at around 17%-18% is possible for the bank. And we are expecting rather to upsize that. So, we are working strongly on the MSME, focusing key to the MSME.

Coming to the corporate growth, yes, there is a bit of degrowth that has happened in the sense of growth percentage. I have already told the reasons thereof. A bit of corporate deleveraging happening. Corporate is able to tap alternate sources at a cheaper rate than the bank's rate because the MCLR continues to be…Although, we have cut the MCLR but it would again moderate based on the deposit cost, which would be a lag time. So, that's happening.

In that scenario, if you look at Bank of Baroda’s growth in corporate 4.2%, it is aligned with almost all large peers' growth in the corporate sector. So, it is not that we are slightly lower. I mean, we are almost aligned with the system growth in the corporate sector. This, again, June is a slack season for corporate and also seasonal factors therein. So, overall, I don't think on the full year basis there would be any less growth in corporate as compared to the growth we had in last year.

Retail, again, my retail growth is almost 19.5%, 20% for many quarters. Normally, again, June is slightly lower as compared to the average growth on retail. But if you look at the retail growth in Bank of Baroda for last many quarters, we are almost 3%-4% higher than the system average on that. And the Housing growth, if you look at this quarter, it is at 16.5%, which is much better than the 14.5% last year, last quarter. So, the retail, the growth story continues to be strong. So, absolutely, there is no degrowth or no something which is a lower growth happening. We continue to work very strongly on the retail. I think, probably I answered. The sector in MSME, which we are focusing, the core MSME, CV & CME, supply chain finance and all those things giving us good outcome now.

I mean, I have seen all the banks have given a lower NII growth or a negative growth. Because this is what the transition happening because the cost of deposit will take a bit of more time to realign because those are all fixed cost.

At the same time, on the BRLLR, the benefit was passed on immediately. The full benefit was passed on immediately. So, considering that, I don’t think NII is something, it is aligning with the market scenario. And that is not a … but again, I will tell you that the next quarter again will be under pressure both on the margin front and also on the NII front.

Coming to the treasury income, yes, it has given an absolute dividend this quarter. This is on the backdrop of the market movement on the yield. Going forward, if the market movement persists like that, which slightly the yields have moved upward now, we can similarly give a good profit therein.

Let us say again, if you clearly analyze the reasons, like almost all the banks have given a good trading profit on treasury. Typically, a lot of OMOs happened where the banks are allowed to put their HTM investment over there. And there, there is a good upside over there. So, considering the OMO, in case it continues, then we will still have a good chance of again getting a good profit for this quarter. But before I do, Mr. Tyagi, would you like to supplement anything further on this?

So, what sort of outlook can you give on that for the next, for like July-September quarter?

But on a quarterly basis the growth has been slow. So, are we seeing some saturation in Agri loans as well as saturation in Kisan credit cards?

As far as recovery target, we give normally the slippage guidance and the credit cost and continue to hold the same slippage ratio of 1 to 1.25% and credit cost below 0.75%. At the same time, normally last time also we said we intend to, because the kitty is now less, but the recovery we want to exceed 10,000 crores as a benchmark number. And there we will be working on to achieve a 10,000-crore recovery for the full year.

Agri, the growth actually, the growth is 16% because of the Q1 last year was not that, I mean significant growth in Agri. It has picked up in Q2, Q3 and Q4. The momentum is continuing. So, even if it is not 16% going forward, but the growth continues to be somewhere upward of 14% on the Agri going forward. That is what our take on the matter. Thank you.

Falling CASA, yes, this is one rather I would take a note of efforts by Bank of Baroda to sustain CASA.

Not only the saving deposit that we are talking about, the CASA and the saving deposit for last many quarters we’re able to slightly do better than the system in that way. I am comparing about large peer banks for the purpose. So, we came out with multiple innovative products. We came out with a lot of digital offerings. We came out with bundling of products, services to, I mean, attract CASA. So, we will continue on that journey of attracting more CASA. But at the same time, let us also understand the scenario where on the preference of depositor to getting into other market is still continuing. Like, I mean, the depositor going from deposit market to let’s say capital market on that, that is still being there. So, in that scenario, we will try to optimize our CASA and I think that is a strength as on today in terms of the numbers that were given not only for this quarter, for last many quarters. So, we will be working strongly on the CASA percentage. And my CASA percentage is one of the top quartiles. So, that is what, I mean, tells the story with regard to the focus the bank is putting on CASA. Thank you.

And possibly in peer comparison, you would have looked that the MCLR book is one of the highest in the banking sector. So, the EBLR pass on is immediate, whereas MCLR already we have made one cut in MCLR. But as the cost of deposit moderates, we will keep working on reducing the MCLR. The second question was what on that?

more difficult. But if you look at the outcome of NIM in this quarter, I think we have done much better.

I mean, we are holding at 2.91% as compared to 2.98% of March 2025, the reclassified number. In that scenario, the cut is only 7 bps as compared to the industry, if I go by the reports that published, it is almost 17 bps, right. So, in terms of margin, we are quite particular on that. So, on an overall perspective, I think because H2 will be much better. So, we are looking at a guidance range of almost like 2.85% to maybe 3% can be a guidance range. But we will just see how it pans out, because again, our margin would be pressure in Q2. And then possibly if there is a revision required, we will do, but currently the outlook is to maintain between 2.85 to 3%.

And as of today, if you look at a pipeline, we have a huge pipeline in order. Almost like cases which are sanctioned, not disbursed is almost 30,000-35,000 crore. Cases we are under consideration is almost 25,000-30,000 crore. So, we are going to replicate the same way that we did last year in terms of the Q1 growth slightly lower, but subsequently upsizing the growth in Q2, Q3 and Q4. And typically looking at a scenario where the demands are coming strongly on the renewable side, the data center side, whether it is a road project side. There are multiple sectors where the demands are still very strong and I think we will be in a position to achieve 9-10% corporate growth for the full year. Mr.

Tyagi, anything you want to add on the growth number?

sustain over a long period of time and I mean, that is one. And there are two things which are important while looking into the account adequately covered as far as the exposure is concerned. On the exposure, if you look at the vintage of this exposure, it has gone down almost by 30 million in the last 2-3 years' time. So, we are quite hopeful of resolution, if not also getting the full recovery out of this account.

We will reply to all those queries. Thank you very much.

Bank of Baroda Analyst Meet for Quarter ended 30th June 2025 25th July 2025

Participating members from the Management Team of the Bank ➢ Mr. Debadatta Chand, Managing Director & CEO ➢ Mr. Lalit Tyagi, Executive Director ➢ Mr. Sanjay Vinayak Mudaliar, Executive Director ➢ Mr. Lal Singh, Executive Director ➢ Ms. Beena Vaheed, Executive Director ➢ Mr. I V L Sridhar, Chief Financial Officer (CFO)

We have with us today our MD & CEO, Shri Debadatta Chand and he is joined by the Bank's Executive Directors and our CFO. We will start with brief introductions and then a short presentation followed by opening remarks by Chand sir and then we will start with the Q&A session. Chand sir.

Let me introduce the management team here, I am D. Chand, MD and CEO of Bank of Baroda. And with me, we have Mr. Lalit Tyagi, he’s the Executive Director, he looks after the corporate credit, international banking and treasury, as far as the bank's books are concerned. Mr. Sanjay Mudaliar, he’s the Executive Director, he looks after the IT function of the entire bank and also the retail assets apart from this he has multiple other departments. Mr. Lal Singh, he is Executive Director, he looks after the recovery, the priority sector and also more importantly, the HR function of the bank. And we have Madam Beena Vaheed, she looks after the compliance and control function and also the retail liability, which is very critical, at this point of time the retail liability of the bank. And we have the new CFO. Possibly, you are meeting him for the first time, Mr. IVL Sridhar. He has taken charge as the CFO and he is part of the management discussion today. So, with this, I mean, Mr. Sridhar, please go through the presentation. Then I'll have my opening remarks.

Our global advances have grown by 12.6% YOY, with domestic advances growing at 12.4% and international at 13.6%. Within the advances book, the bank has continued to focus on RAM advances.

Our organic retail book grew by 17.5%, agriculture at 16.2% and organic MSME at 13.1%. Corporate loans have grown by 4.2% YOY. Within the retail segment, we have seen a smart growth across the portfolio with education loan growing by 15.4%, home loan at 16.5%, auto loan at 17.9%, mortgage at 18.6%. With regard to our personal loan book, we have moderated the growth as per the guidance given at 19.5%.

In terms of deposit growth, our total deposits have grown by 9.1% with the international deposits growing by 14.8% and domestic by 8.1%. The domestic CASA deposits have grown by 5.5% and term deposits have reached a growth of 9.9% YOY. As of 30th June 2025, the bank's credit deposit ratio stands at 84.08% and CASA ratio stands at 39.33%.

With regard to our profitability metrics, our operating profit for the quarter stands at 8,236 crores, registering a YOY growth of 15%. Our net profit for the Q1 of FY26 stands at 4,541 crores, registering a growth of 1.9% YOY. Return on assets remains above 1% at 1.03% in Q1 of FY26. Return on equity stands at 15.05%.

Margins have been under pressure for the industry as a whole given the repo rate cuts leading to immediate repricing of EBLR linked loans and lag in deposit repricing. Therefore, with regard to our key ratios, our yield on advances stands at 8.09% for the quarter.

Our cost of deposits for the quarter have sequentially reduced to 5.05% as against 5.12% in the previous quarter. In terms of our net interest margin, there has been reclassification of interest on income tax refund and the historical NIMs have been normalized as per the revised reclassification for comparability. And our NIM for Q1 FY2026 stands at 2.91%.

Regarding asset quality, our asset quality remains robust. Our GNPA has improved by 60 bps YOY and stands at 2.28%. Net NPA is below 1% and that is at 0.6%. Our provision coverage ratio including TWO is comfortable at 93.18%. Our slippage ratio for Q1 FY2026 stands at 1.16%. Credit cost stands at a level of 0.55% for the quarter.

Coming to our SMA and collection efficiency, our CRILC SMA 1 and 2 as a percentage of our standard advances stands at 0.4% as of June ‘25. Our collection efficiency excluding agriculture remains robust at 98.9%.

In terms of our capital adequacy, our capital position continues to be strong with CET-1 at 14.12%, Tier 1 at 15.15% and CRAR at 17.61%. Our LCR remains healthy at approximately 119% as of June ‘25.

Adjusted for the profits of Q1 2026, the capital adequacy would have been 18.04%. Thank you.

So, let me tell again the bank’s business model as I told earlier, is to work on a sustainable and a consistent and a stable outlook model. And I think the performance that we have given for this quarter is perfectly aligning with our business model in terms of focusing on sustainable business, focusing only on the organic business at the same time adding to its fundamental strength. What I mean by fundamental strength is the book value, incremental book value that I am talking vis-a-vis quarter to quarter.

In terms of advance, the numbers are before you. On the advance book, the bank had very strong 12.6% growth. That is in this market, I think is one of the good growths we have. And the advance growth is propelled mainly by the RAM book which is growing almost at 18%. The retail continues to be strong. The MSME is growing at 13.1% and the Agri is one of the highest growths we had in last many quarters at 16%, in excess of 16%. I think RAM will continue to grow strong. The bank is focusing.

The corporate growth is at 4.2. You may say it is muted, but if I look into the entire industry outlook and the performance, this growth is aligned with the growth. I will give you a couple of data points on the corporate growth. We had a 2.5% YOY growth in June 2024. So, typically the beginning of the quarter we realign the book. We realign the book on the bulk deposit which has gone down by 23,000 crore and so has the corporate book. But let’s also admit couple of fundamental factors here in corporate book. There are corporates having strong cash flow position, they are deleveraging. So, the demand is not that much because there is a deleveraging happening on the corporate book. At the same time, good corporates are able to tap bond market at a cheaper rate.

On the BRLR has reacted, but the MCLR would take a bit of time because it is tagged with the cost of deposit moderation. So, they are able to raise at a cheaper, so then the demand from the bank's credit are less. But more because of a seasonal factor, I think the corporate growth is at 4.2%, but better than a couple of other banks. But still we want to upsize this as we had a 2.5% last quarter of last year, but the full year was almost 9%. So, we are thinking of almost growing a 9 to 10% for this year also on the corporate book.

Secondly, on the liability, I think that's something we need to really look into the cost matrix of the bank as on today. The bulk deposit has been reduced by 23,000 crores. The CASA growth of 5-5.5% both on the saving and CASA is consistent for last many quarters. And in case you are tracking the peer performance, I think we are able to take the lead on that. And that's the core strength.

The retail term deposit is growing almost at 8.1% and that also if you look at numbers, we are not growing on the bulk deposit. So, the meaning there where the focus continues to be on the stable deposit and for that, three data points I will tell which again you can talk about the liability management which the bank has done. The cost of deposit at 5.05%, this is one of the lowest in the industry, I am talking about large peers. The CASA at 39.33 %, this is one of the highest as far as the percentage in the entire peer of large peers.

At the same time, the margin, I will come to margin later, we are holding at 2.91%. And the margin vis-a-vis the last quarter from 2.98% it has gone down to 2.91%, only a cut of 7 bps. You would have read many articles which has come where the average cut in NIM for most of the banks is 17 bps. In the same scenario, I think the bank has done well in terms of managing liability and holding onto the NIM. Even if you don't take the reclassification which has been presented in this quarter, the last quarter the NIM was 2.86%. And if I don't take the income tax refund which has been classified as interest income this quarter, then still it would be 2.81%. The cut is almost the same like 6 or 7 bps.

So that's something very fundamentally talks about cost of deposit 5.05 %, the CASA at 39.33 %. At the same time, the margin holding at 2.91%, I think the narrative on the bank's liability is very strong.

And that's something the bank is focusing very clearly on that. I'll come to the profitability only one statement.

If you look at the net profit, the bank has been posting net profit of more than 4000 for last 10 quarters. That means we are at an elevated level of the profitability curve for many quarters now. We are the only bank to get into a ROA more than 1, that is in September 2022. So, I am at an elevated level. So, if you look at a percentage change, the percentage change may not work out very high.

Suppose I had a suboptimal profit last year, and then possibly I can think of a growth of 50% or 60%.

I'm at an elevated level of net profit and that's why the profit percentage is less, although the operating profit growth is very strong at 15%. So, I think profitability of the bank is clearly on a sustainable path. No doubt the NII has impacted because of the transition happening on the asset liability, as you know, and this is similar for all the banks. All the banks have taken some cut in the net interest income. So, I think on the profitability, strongly, the bank book is strongly having the earning potential, the profit potential is quite strong as far as the bank's book is concerned.

Lastly, cover only on the slippage side. The bank's slippage this quarter has been 3500 crores as compared to our normalized slippage of 2800 to 2900 crores. This is precisely for two reasons.

One is that there is a large international account which is presented in the analyst presentation also, that slipped to NPA this quarter. I'll come to give you a colour on that. Secondly, on the personal loan book, there is a marginal increase in the legacy, that's only 100 crores. So, barring these two, there is no impact and the asset quality is very stable. The GNPA is the best. The CRILC data shows that at 0.4%, SMA 1 and 2 is one of the best in the industry, if you look at the data and compare with other banks. At the same time, the collection efficiency at 98.9%, which is better than the last quarter. So, in that way, the asset quality story continues to be strong, robust and resilient.

I'll come to the international account, which again slipped into NPA this quarter. This account was restructured during COVID time. The account conduct then was good, so it was upgraded after one year, but it continued to have some kind of a weakness continuing in that either in the SMA 1 or 2.

And now in that international territory, the account has gone to a resolution process called CNC. So, it's all like a resolution process called the Credit National Crisis, wherein there is a resolution supposed to happen within 210 days, 120 days plus 90 days. And we'll get to know the outcome of this account

after 210 days in terms of resolution. But let me again give you a couple of factors here. The account is a secured advance, having a coverage much more than one. And if you look at the vintage of this account from a peak level of exposure of 80 million, it has gone down to almost like 50 million. So, there is a continuous reduction happening in the account. So, we do not see any challenge, although we have made a 40% provision as a prudential provision therein, but we do not see any challenge on this account and we think we can recover the amount in full. So broadly, I covered, I mean, the aspect that I wanted to say on the fundamental. On the NII front, it's a market phenomenon. It's happening across all banks because of the transition of the asset, because the deposit moderation would slightly take time. So, looking at the outcome of everything, the Q2 can continue to be a bit of, again, pressure on the margin and NII. But again, Q3 and Q4 would be much, much better in terms of what we have seen in Q1 and Q2.

So, with this, I thank all of you for joining on today's evening, and we'll open for question and answer now. Phiroza, over to you.

So, the fee income is still pretty soft at sub 10% YOY. Would you be able to share what's happening here and is there any possibility of acceleration from here onwards? Second, we have withheld kind of margin guidance, but clearly there has been some reclassification. So, would you be able to share how the margin trajectory looks like from 2.91% that we saw in the current quarter to the next few quarters? And lastly, in terms of the ROA, we did 1.03% ROA this quarter but that is after substantial amount of trading gains which may not incur in the coming quarters. So, suffice to say that meeting 1% ROA is only a possibility if the trading gains sustained but without that, the 1% ROA would be a tough target to achieve?

On the margin guidance, this is an income tax refund which has been accounted as per the regulatory clarification of the matter and all the banks have done that. And suppose you exclude the impact of this, the NIM would be 2.81% as compared to 2.91%, that we are showing. And this is in comparison to 2.86% that we declared in Q4. So, if you look at including or excluding, the cut is almost 6 to 7 bps.

And here the comparison I want to give you, if you look at multiple media articles there in, the average cut in the NIM based on the declared results of banks, it is almost average is 17 bps, whereas we are able to sustain at 6 to 7 bps cut in the NIM.

Going forward the next quarter still be under pressure, but I think the deposit repricing is going to happen for the next quarter, almost 70 to 80% of that. So, the upside benefit going to see clearly in Q3 and Q4. So, on a full year basis, we are giving a guidance of 2.85 to 3%. But again, we'll just see after September anything we need to revisit on that because clearly, as all of us understand that this is a transition time, we need to factor all these factors, multiple factors are therein.

On the ROA of 1.03%, this is the 12th quarter we have posted ROA in excess of one. And you know there is a substantial treasury gain here, no doubt about it. And Treasury gain has come on two counts.

One is with regard to a lowering of yield and that typically of the AFS book, then you take advantage of the lower yield movement. And secondly, the RBI comes out with a lot of OMOs in between. Then out of the HTM you can offer those to the OMO. So, the OMO, possibly that things can continue and then possibly still giving a good upside on the trading profit. In spite of the fact that whatever says our full year guidance, when we say ROA it is always full year guidance, so even if there is pressure on the provisioning side taken a bit of prudential provisioning therein. So, a lot is there in the system to sustain the profitability at the level at which we are operating now. We have maintained in 12 quarters, so I think there will be no question to maintain next quarter also.

In terms of the cut in repo, yes, on the retail side, full benefit has been passed on. As far as MCLR is concerned, we have only announced one cut, but that would depend upon the cost moderation. The model is that once the cost moderates that we have to pass on. So, it will take its own time to get repriced.

Thirdly, external benchmark, obviously, because these are high-quality assets, so they have the opportunity in the bond market. So, there will be a lot of repricing happening on that count. So, this is a quarter we need to watch out that is something, but then repricing. But the cost moderation, again as you talked about at 5.05% cost of deposit, I would say one of the positive narrative in the entire bank with regard to the way we have maintained the cost of deposit at 5.05%. And even in the case where there is a, I mean, the duration normally of term deposit is almost one year. So almost 3-4 months have gone, 70% is going to reprice. So going by that, we are thinking on the cost of deposit, at least there will be a 15 to 17 bps moderation going forward by September. And that typically take care of the repricing that are going to happen on the asset side. So, that will be almost at a margin guidance, which we had given. But notwithstanding the fact that because a lot of uncertain elements are there, there will be a bit of pressure that continues at least for one quarter. And thereafter, there is a positive offset on the higher side.

In the SMA books, we have given only percentage and that is also a mix of 1 and 2. Can I know exactly the numbers of SMA 1 in this quarter and SMA 2? Because we have seen in the most of the banks, SMA 2 numbers have suddenly gone up. So, in your case, if it has gone up, then what is the explanation for that? So, since I don't have the number, I cannot ask exactly on that. Only the percentage is there.

Talking of the SMA, we only give as a percentage we are giving and if possible, then I will share the data, but I will just give color to the SMA 1 and 2. If you look at the percentage that we have given at 0.4%, it consists of three accounts which are the government entity, government guaranteed, but always move between SMA 1, 2 and then standard. So, this quarter there are two accounts still being there in the SMA, so slightly pushing the SMA percentage higher. If you exclude these three accounts, the SMA 1 and 2 CRILC book is at 0.10%. I mean, that if you look at, you are comparing also this CRILC data in terms of percentage, then 0.4% is one of the lowest if I compare large peers. So, in that way, the bank is quite confidently working on that in terms of percentage. But on the number side, I will let you know in case that is published, we have published earlier, and then we will inform you on the number.

Lal Singh sir, you want to add on this. Anything else you want to add on this?

And as of today, frankly, it is on a curative process, actually, there is a standstill condition. But as a prudent measure, because I mean, the domestic regulation talks about NPA, we have provided 40%.

Otherwise, on the international, you are not required because there is a standstill condition on that.

It is getting into a resolution process, but there is a curative process and there is a preventive protection therein.

Actually, we are trying for a very strong recovery mechanism itself. We are trying for multiple resolution process just to recover money. So, in terms of pipeline, I do not have much in terms of NARCL particularly. But there are a couple of accounts, which again, there are discussions going on.

But the fact of the matter is that the recovery target for the full year, that includes recovery and TWO, I think we will be exceeding the 10,000 that we have fixed internally to recover for the full year.

There is arbitration issue that is also going on the international market, where there is a strong

possibility of offset therein. So, there are multiple processes going on, but then land parcel is always time-consuming and we need to be patient on that.

So, just want to get that sense. So, this is very well reflected in terms of the standard asset provisioning, which is there at 320 odd crores instead of maybe despite our book running down by two and a half percent. So, ideally, there shouldn't have been any standard asset provisioning. There should have been the release. And what is this, maybe is this particularly towards any maybe…so, the standard asset provisioning --- what was the rationale for creating this?

So, like a couple of large accounts, which is again, I mean, gets into SMA 1, 2, again going back to standard, again going to SMA 1, 2. Even if the possibility of this account getting into NPA is less because of the vintage that you have seen in those accounts. There also we made a bit of provision, even if IRAC basis it may not be a requirement, but as a prudential measure, because the auditors would say that there is an inherent weakness which is continuing for a long time, you need to provide. So, these are the extra provisioning that we have made in the books, as far as the provisioning requirement is concerned. Otherwise, we are complying fully with IRAC norms. At the same time, if there is an auditor guidance on the matter then we comply to that.

And do we see any further stress which can come in over next two to three-odd quarters on the international or on the overseas exposure?

Retail is growing very strongly for the bank and so has the MSME - we picked up in last one year. If you look at the slippage, I mean, maybe on retail, if you look at the slippage vis-à-vis June, there may be a couple of 100 crores or 150 crores in addition. But if you look at the slippage ratio, because the denominator has also gone up, but the slippage ratio will be still contained. But personal loan, yes, there is bit of the legacy book has an incremental NPA going forward. But the book is not large enough, point one.

And secondly, in terms of slippage ratio, I do not think there is a concern because the retail slippage ratio as on June is below that of June last year. So, in that way, the denominator is also going up. So, it is part of a normal business in terms of where to maintain. So, both the GNPA of the retail products and MSME, the slippage ratio in the retail products and MSME, these are well within our threshold and maintaining the same level of outstanding as compared to the last year.

You know, a time series data would be helpful. And the second question is on margins which is at 2.91%. So, there are no other one-offs, right, in this margin that you have reported because the banks that we have seen reporting have seen higher decline in margins?

The story here, which again how it is compatible with all the numbers. When I am running Cost of deposit at 5.05%, a CASA ratio of 39.33%, I think the margin something strongly collaborate with all these numbers and that is what our strength in the current market vis-à-vis large peers in that space where we operate in terms of maintaining the margin. So, there is no other one-off.

Madan Sabnavis. So, our house view is that we are expecting further 25 bps cut. But the expectation is more towards the end of the calendar year rather than immediately. I mean, I am talking about we are not expecting any cut in the next policy but possibly can happen after September.

So, we believe that going forward U.S. Fed move as well as our own inflation trajectory and commentary on the liquidity will also play its own role.

These are high-quality assets, fine price has become further fine making it slightly challenging for us to hold on to those assets. But, again, we will try to work it on for this quarter.

On the RAM, I mean, I will give you a ballpark number. It is almost, I mean, the Repo is, I mean, it is almost 250 or 300, almost at 9.5 kind of a number we have a RAM yield on that.

Employee headcount, yes, we have a plan to hire almost 15,000 employees at different cadre, more on the operational and the relationship side in this year. Actually, it takes a time to onboard them and put them into the system but there is a good hiring plan. We are expanding laterally because there is a plan to open almost like we’ve opened more than 250 branches last year and another plan to open another 300 branches this year. So, we are literally expanding. So, in that scenario it is a, I mean, changes happening across in headcount, operating, I mean, the spend on the IT. And we are working on all the things, I mean, on a holistic basis.

How is the outlook there? And what kind of capacity have you built so far?

At the same time, as I said that the positive narrative of the bank is on the liability side. At a cost of deposit of 5.05%, with a CASA of 39.33%, with a margin of 2.91%, I think we are in a much better position to reprice deposit and get the benefit. A normal thumb rule as on today, actually asset side I cannot give you how much cut on asset, I mean, yield on asset would happen. But normal expectation, in case we are able to reprice the maturing deposit for September quarter, at least we are going to

get a benefit of around 15-17 bps reduction in the Cost of deposit and the Cost of fund. And that would be significant because deposit has a larger base.

So, I think in that scenario, we are almost able to possibly maintain on the margin guidance. Saying so, the margin would be under pressure. But on a full year, since we are very positive about the Q3 and Q4, on a full year guidance we are thinking somewhere around 2.85-3% we will be in a position to maintain on a full year basis. Saying that, Q2 can be something we need to watch it out. It can be under pressure but we are in a better position to nullify the impact on the asset repricing from the liability mix that we carry as on today.

So, by that time we will have a fair view with regard to the trajectory going forward. But we are working on this issue, yeah. And, otherwise, the NIM cut for the bank would have been very significant as compared to…You have seen the other banks NIM cut but we are still able to maintain. That’s what the liability management we run, right. So, that's what is our strength, I believe.

And still the overseas margins have gone up from 1.70 to 1.75. I mean, they should ideally fall more than the domestic margins, right, because they would have gone up even sharper. Is that a fair understanding?

down to almost like 1.70%. So, it has stabilized at that level. So, now, again, we are able to get some good deals slightly at a better off rate. So, in that way, it has moved marginally from 1.70 to 1.75%.

Otherwise, the NIM cut of the overseas already happened and that is from a peak level of 2.23% has gone down to 1.70 and now it has stabilized. I mean, I am not differentiating between 1.75% and 1.70%. Anything, Tyagi Sahab, you want to add on the overseas NIM?

And just on qualitatively, most of, I mean, the entire MSME should be secured, right. We don't do any unsecured MSME or you have some proportion which is unsecured MSME?

Secondly, couple of area where I would have seen a growth in MSME because we are focusing on CV & CME, that is one segment public sector banks were not very strong and now we as a bank are quite strong on that. Supply chain is also picking up. TReDs, there are good volumes happening now. So, core MSME, we are bundling along with the Cash Management System so that we understand the cashflow. But unsecured component is less. But then a couple of schemes were recently announced, unsecured OD, and that is based on the GST return. So, these are a couple of small scheme operating but not much. Lal Singh Sahab, anything you want to add on unsecured loan?