Bank Of Baroda

I am the MD and CEO of Bank of Baroda. I have been interacting with you for quite some time now. With me, Mr. Lalit Yagi. He is the Executive Director. He looks after the Corporate and Institutional Credit, the International Banking and Treasury. And with him again, we have Mr.

Sanjay Mudaliar. He is the Executive Director. He looks after IT, all IT platform, including the Retail asset of the bank. So, all our Housing Loan, everything is being looked upon by him. And with us again, Madam Beena Vaheed, she is Executive Director. She looks after many of the Compliance and Control functions, including the Operations department, the Risk Management and also the Retail Liability of the bank. And we have with us the CFO, Mr. I V L Sridhar. You would have interacted with him last time also. So, with this, Mr. Sridhar, can you just run through the presentation?

With regard to our quarterly profitability matrix, it is to be noted that in Q2 of FY25 the bank had a one-off recovery from written-off accounts, which has elevated the base. Our Operating Profit for the second quarter of FY26 stands at ₹7,576 crore. Our Net Profit for Q2 of FY26 stands at ₹4,809 crores. Without the one-off item of last year, the profit has grown by 22%. Return on Assets remains consistently above 1%, at 1.07%. Then Return on Equity stands at 15.37% for the quarter. For the half year of FY26, our Operating Profit stands at ₹15,812 crore. Our Net Profit for the half year stands at ₹9,351 crores. Return on Assets remains above 1%, 1.04%, for the half year. Return on Equity stands at 14.95% for the half year.

Regarding our margins, our key ratios, our Yield on Advances stands at 7.81% for the quarter and 7.95% for the half year. Banks' prudent Liabilities management has led to a sequential decline in the Cost of Deposits for the quarter, which stands at 4.91% as against 5.05% in the previous

quarter. With regard to our Net Interest Margin, it has sequentially improved by 5 bps to 2.96% for the quarter. It stands at 2.93% for the half year of FY26, first half of FY26. Now, we come to the asset quality which continues to remain robust. Our Gross NPA ratio has improved by 34 bps YoY and stands at 2.16%. Net NPA ratio is below 1%, at 0.57% , an improvement of 3 bps YoY. Our Provision Coverage Ratio including TWO is comfortable at 93.21%. Our Slippage Ratio for Q2 FY26 has reduced by 16 bps YoY and stands at 0.91%. Credit Cost remains low and stands at a level of 0.29% for Q2 FY2026. Actually, we have made a floating provision of ₹400 crores, excluding that, the Credit Cost will be below the published number. Coming to the SMA and collection efficiency.

Our CRILC SMA 1 and 2 as a percentage of our Standard Advances stands at 0.39% as of September’25. Our collection efficiency, excluding agriculture, remains robust at 98.6%.

Regarding the capital position, our capital position continues to be strong with CET-1 at 13.36%, Tier-1 at 14.15% and overall CRAR at 16.54%. Our LCR remains healthy at approximately 121% as of September’25. Adjusted for the profit of H1 FY2026, Capital Adequacy would have been 17.36%. Thank you.

My Corporate Loan book is more organic. So, that's something we focus more. I mean, the book is almost organic, the numbers that we have presented. At the same time, I mean, on the Core Corporate, we had a very strong growth whereas some of the refinance transactions at a very fine price. Again, earlier also we articulated as a policy. We are there in the market but we are slightly restrictive on the market.

So, with that, I think the growth of 3% to be compared in terms of the strategy, because the numbers are reflected in the NIM. We have one of the highest NIM in the sector. So, for that purpose, the Corporate Loan book to be looked into that particular view. And at the same time

for the full year, again, we continue to be at 10%-11% . That is what our guidance. In case on a sequential growth of the Corporate Loan book, even if the YoY is 3%, the sequential growth is almost at 8%. So, that talks about the momentum in the Corporate Loan growth book.

On the Deposit side, the growth is 9.3% in line with our guidance. At the same time, again, a couple of strategies that really worked for us and I’ll tell you why I'm saying so. We have been saying that we consistently on the dependency of the bulk want to contain or reduce it. And we declared on the Analyst the breakup of the Retail Term Deposit and the Bulk Deposit therein. So, that as a percentage of Total Deposit, you can very well, I mean, very well can see our statement of containing the growth of Bulk Deposit in the book.

Precisely for that reason or the Liability management piece, our CASA is again at 38.42%, which is one of the best in the top quartile numbers that you can see in the industry. One of the big piece of this smart liability management, I would see the numbers that is presented before you.

The interest expenses growth this quarter is 4.9% and the growth of interest expenses vis-à-vis the last quarter, it was more than 9%. So, we are in a position to get a hold on this particular piece of interest expenses.

And, consequently, the Net Interest Income that you can see this quarter is a positive growth, which was a negative growth. And in the context of all these transmission of rate, the repricing of asset liability, this is very, very important. The bank has given or posted a growth in the Net Interest Income.

And, consequently, the Net Interest Margin for this quarter has seen an increase from the last quarter. This is important and significant from the context of normally the numbers we look into the bank's number, that the NIM, not only the domestic NIM has improved to 3.10%, the international has improved to 1.81%, the overall has improved from 2.91% to 2.96%. That's significant in this market because when you are comparing numbers in terms of the trajectory of interest rate that we talk about in the market.

And there are two other positive outcome of this because the ROA and the ROE, both the numbers for this quarter is better than the last quarter. So, in terms of the management of interest rate risk in the book, possibly things have worked out well for this quarter for us.

On the profitability front, as I said, the NII growth has been positive. And this is typically because of the management that we do on the asset liability. At the same time, we are looking at the Operating Profit, the CFO has clarified that the Q2 of the last year there was a significant one-off recovery out of the NCLT account and that had given some kind of a pre-tax benefit, roughly around ₹900 crore. So, in that way, these numbers are not comparable in terms of a growth. And in case you compare the Operating Profit of this quarter of ₹7,576 crore vis-à-vis the last quarter, then also there is a dip. The reason being, our last quarter was very good for the Treasury income.

The Treasury income in this quarter vis-à-vis last quarter has seen almost ₹1,000 crore less Treasury income.

So, this is a quarter which is a normalized quarter for us. So, there is no one-off in terms of non- interest income either from an NCLT recovery or Treasury income significantly improving the

profitability. So, it is a normalized profit and that I believe is a stronger number in terms of the ₹7,576 crore that we posted for this quarter.

I would also say that the Net Profit of ₹4,809 crore, I mean, comparing to the last quarter, because of the one-off there was a positive impact. So, rather there is a growth, as the CFO said, vis-à-vis Q2 of last year. But sequentially also, Net Profit this quarter has been better than the last quarter by almost 6%. So, we had a Net Profit of ₹4,541 crore even if the Treasury income was quite substantial last quarter; I am talking about Q1 of this financial year. But then the Net Profit for this quarter is better than the Net Profit of the last quarter that is Q1, the June quarter in spite of the fact that this we have seen in the light of a floating provision of ₹400 crore that we have made in the books. And we had a floating provision of ₹600 crore earlier, with this ₹400 crore our floating provision amount is ₹1,000 crore now. And in the light of the ECL that we are talking about, I think this is a prudent way to build up buffers for floating provision and we have created a floating provision of ₹400 crore this quarter. So, our Net Profit we are seeing in the context of the provisioning requirement as far as the floating provision is concerned.

On the Asset quality, touchwood, it is one of the best quarter we have. And I will tell you the numbers in terms of Asset quality. GNPA of 2.16%, better than the earlier years, earlier quarters, Net NPA of 0.57%, the Slippage Ratio of 0.91%, Credit Cost of 0.29%. I think these are the numbers which are not only better than the last quarter numbers, also better than the same quarter of last year. So, it has been a journey that we have been through for last 4-5 years, which is showing a consistent trend of improved asset quality and this quarter has been one of the best asset quality for us as far as the numbers are concerned.

I will give only a couple of data points, before I close. The fresh slippages of ₹2,669 crore, again, it is lower than the Q1 of this year and Q2 of last year, this number. The cash recovery, which is again better than the Q1 of this year and Q2 of last year. The upgradation, again, that is better than the Q1 of this year and the Q2 of last year. So, in terms of asset quality, I think we have one of the best quarters, consistent in terms of quarter-to-quarter journey and also year-to-year journey. And I think it is something the bank believes in a strong business model where asset quality is a key piece and I think that talks about that improvement that you are bringing in the underwriting process.

Having said so, the guidance on the, because we’ve given two guidance on the asset quality, one is a Slippage Ratio and another is a Credit Cost. The Slippage Ratio, we still keep it at 1-1.25% and the Credit Cost below 0.75%, which was the guidance given earlier also. Probable reason can be probable headwinds that we can see in the market because of geopolitical issue. So, we are providing push-on vis-à-vis the guidance. But always our intent to better on the guidance given particularly on the asset quality issue.

On the business front, let me again give a couple of…Tech and Digital is something key to the bank's business model. So, we keep on innovating, keep on investing, we keep on transforming on the digital processes so that we stay ahead of the curve in terms of Digital and IT.

Secondly, the customer service and service delivery is also a couple of key things, which again we are working very strongly. One of the key, you would have seen in the earlier communication, that we are trying to innovate the branch banking model, we are trying to reimagine the branch banking. And for that, we rolled out around 10 Phygital branches as on today. This is a unique concept. I am not going to say the details, the literature is available in the website. You can have a look with regard to the reimagining branch model the bank is trying to so that we can again give the best to the customer, coming to the branches and doing their banking transaction.

The recent RBI policy gives lot of, what you can say, work to get into a reform agenda which again, I think, can support our business big time going ahead.

The last thing I would add that the bank is very tuned to the ESG mandate, ESG policy. We have a ESG policy and recently we have made a BOB Forest, a new concept in the BKC area where 6,000 square feet of the has been made completely green with 100 of plants taken from Sahyadri range.

So, these were couple of qualitative comments I wanted to make. So, I think, with a strong growth which already covered, with NIM which has improved, the ROA which has improved, the ROE which has improved, the asset quality all parameters improved, I think the bank had a very strong quarter and, that is what I said at the beginning, we have yet another strong quarter for the bank.

With this, I conclude my initial remarks and then we will go for the question and answer. Phiroza, over to you.

The first person to raise their hand was Piyush Shukla of The Hindu Business Line. Piyush, if you can unmute yourself, please.

Have you seen a lot of footfall this quarter?

liability piece, we could improve that. There are two factors which are important here. I mean, the lowest point on the asset and liability, I think at the current rate scenario these are all done.

And the repricing of asset-liability did happen during the quarter. Maybe the impact of that, on the asset side particularly, has not seen the full quarter impact this quarter, maybe in the next quarter. Whereas deposits also there will be positive outcomes. So, what we feel for Q3, the NIM would be a range bound kind of a number. It will pick up in Q4. On a full year basis, we are still expecting the full year NIM would be somewhere between 2.85%-3%. That was the guidance I had given last time also.

there like what sort of component is there of private CapEx within that built up? Or is it much more to do with working capital?

Look, in the Core Corporate, the growth is quite strong coming out of private CapEx or the demand for increasing working capital on existing accounts. So, those are strong. The portfolio is where, again, we slightly get judicious is in fine price book. And there, actually the competition is very, very huge. So, in case we take a cut in the NIM, the growth can be much higher. So, in that way, there is no challenge in terms of growing the book, we have multiple options there. So, I believe that going forward, again, since we are holding our strategy intact because we think Q2 normal demand would come at a price point where I am comfortable with. So, that's why or otherwise we could have disbursed more in Q2 on that. So, on a demand basis, I think, there is enough demand and we're getting into a busy season. In terms of pipeline, we have almost ₹40,000 crore of sanctions which are yet to be disbursed. These are the sanctions given which are not disbursed. And like Mr. Tyagi said, there can be a spillover of the earlier quarter getting into this quarter because we have not disbursed those amount. Secondly, we have another ₹25,000 crores odd of proposals which are under process, not received. These are in some stage of process. So, I think, the pipeline is very strong for the bank to get into a growth of almost 10%- 11%.

Which segment of the book is where you see some headwinds? Is it playing out already into the SMA numbers? What were you really sort of looking at, Sir, then?

it was a restructured account in an international book putting ₹500 crore pressure both on the NPA amount and also on the restructure because restructure per Indian guidelines has to be treated as NPA for 1 year. So, in that way, we have a large international book, we have a large domestic book, right. So, a small amount of ₹500 crore can change. So, that is why we are holding the guidance at 0.75%. The geopolitical can be anything. There is no, I mean, identified or a watch list account in terms of any probable slippage. As on today, the book looks very good. On the slippage, the collection efficiency is much better. We declare your CRILC amount, right, the CRILC percentage, that also looks better at 0.39%. Internally, we know the overall book in terms of SMA 0,1, 2, this looks very good. So, absolutely, there is no concern in terms of any fresh slippage happening. But on a guidance basis, we keep it at a level because if you see at the Credit Cost, it is volatile. Sometimes it goes up to 0.6%, comes down to 0.29%. So, we are slightly conservative in terms of giving a guidance rather than any probable slippage that we expect going forward.

And how much it would add to the book, I cannot give an estimate now. But then we think it is going to be positive over and above the guidance they are giving on the advance growth.

you compare, it is almost 26% higher. I mean, GST, I think, created the demand in the market.

And as on today, you would have seen my slippage. As I said, the fresh slippage this quarter is lower than that of the Q1 of this year and the Q2 of last year. That shows the sound asset quality the bank is having. And we are not seeing any stress in this particular asset book.

keep on floating. But what is the estimate as of now in this quarter that you have estimated that this much provision additionally you have to do it?

But there is no specific policy we have or specific guidance we can give you that how much we want to add to this buffer. But we are mindful that we need to increase this buffer.

However, on the debit cards and credit cards market share, you come second after State Bank of India. And if I compare the data between 2 years, last year you were at 10%, currently it is at 9% of the market share. The debit card market share has constantly been degrowing for some time.

However, credit card, you are one of the fastest, you are showing the fastest growth year-on- year. So, first, why is the debit card market share going down? And what are your aspirations in terms of credit card? Can we see you increasing the market share as you end the FY26? I'll move on to the next question after this one.

Suppose, somebody wants to change mobile number, somebody wants to change…there are multiple non-financial transactions happening through ATM and debit card. So, the usage is going up. Because somebody doesn't want to come to the branch, so through ATM can do some of the activity which he can do in the branch. So, in that way, my strong belief that debit card as a product would continue to be there in the Indian market and we as a bank has no plan to scale it down because the number of transaction, financial transaction has gone down because of the digital impact. But we are mindful of analyzing all this data. In case there is any change in strategy required, we'll take it at a later stage. But as on today, I don't think any rethink with regard to the issuer base or issue that we do in the debit card segment.

You've given your pipeline, you've mentioned your targets and how you're going to achieve them.

But this is more from an industry perspective, can we call Q2 a turning point for banks in terms of corporate that corporates are finally coming back to banks for the borrowing because the trend was muted for quite some time? A lot of banks have shown some increase sequentially. So, will Q2 be the turning point that going ahead corporates, the growth is going to be there? Is it going to be sustainable?

Thirdly, there are some of the sectors who are seeing demand coming up. Fourth, there are the borrowers who have availed working capital. Now, they are increasing their utilization going forward. So, all this, I think I a very positive with regard to the Corporate credit demand. And full year, basis 10%-11%....We had a 10%-11% growth last year also. And I think the nominal GDP at almost 10%-10.5%, all the banks will be in a position to slightly be ahead of the nominal GDP as far as the Corporate credit growth is concerned.

how did that pan out? Do you feel this can be done? And in general, what is the message from government or authorities? Thanks.

Bank of Baroda Analyst Meet for Quarter and Half year ended 30th September 2025 31st October 2025

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

Good evening, everyone and welcome to Bank of Baroda's Analyst Meet for our financial results for the quarter and half year ended 30th September 2025. Thank you all for joining us. We have with us today our MD and CEO, Dr. Debadatta Chand, and he's joined by the Bank's executive directors and our CFO. We will start with a brief presentation on the results followed by opening remarks by Dr. Chand and then we'll have the Q&A session. Dr. Chand, I would request you to begin.

Mr. Lalit Tyagi, he's the Executive Director. He looks after the corporate and institutional credit, the international banking and treasury for the Bank. Mr. Sanjay Mudaliar, he's the Executive Director. He looks after all IT function of the Bank and also the retail asset of the Bank which includes all the housing and all those loans we talk on the retail side. Madam Beena Vaheed, she's the Executive Director. She looks after all control and assurance function. More importantly the operations department, the risk management department and also with regard to the retail liability franchise of the Bank. Mr. I.V.L.

Sridhar, the CFO, he has been there also for I think a couple of interactions now. So, with this, Sridharji, over to you. Go ahead with your presentation.

Our global advances have grown by 11.9% YOY with domestic advances growing at 11.5% and international at 13.8%. Within the advances book, the Bank has continued to focus on RAM advances.

Our organic retail book grew by 17.6%, agriculture 17.4% and organic MSME grew by 13.9%. Corporate loans have grown by 3% YOY.

Within the retail segment, we have seen smart growth across the portfolio with educational loan growing by 14%, home loan at 16.5%, auto loan by 17.7%, personal loan by 18.6% and mortgages by 19.8%.

In terms of the deposit growth, our total deposits have grown by 9.3% with international deposits growing by 7.2% and domestic deposits by 9.7%. The domestic CASA deposits have grown by 6.6% and the term deposits have registered a growth of 11.7% YOY. As of 30th September 2025, the bank’s credit deposit ratio stands at 85.26% and the CASA ratio stands at 38.42%.

With regard to our quarterly profitability metrics, please note that in Q2 FY 2025, the Bank had a one- off recovery from written-off accounts, which has elevated the base. Our operating profit for the Q2 of FY26 stands at 7576 crores. Our net profit for the Q2 of FY 2026 stands at Rs. 4809 crores. Without the one-off item which I have mentioned earlier for Q2 of FY25, the growth in net profit would have been 22% for Q2 of FY26. Return on assets remains consistently above 1% at 1.07%. Then, the return on equity stands at 15.37% for the quarter.

Regarding profitability, our operating profit stands at 15,812 crores for the half year. Our net profit for the half year stands at 9,351 crores. Return on assets remains above 1% at 1.04%. Return on equity stands at 14.95% for the half year.

With regard to our key ratios, our yield on advances stood at 7.81% for the quarter and 7.95% for the half year. Banks' prudent liability management has led to a sequential decline in the cost of deposits for the quarter which stands at 4.91% as against 5.08% in the previous year's quarter. With regard to our net interest margin, it has sequentially improved by 5 bps to 2.96% for the quarter. It stands at 2.93% for the half year.

Regarding asset quality, we have the best asset quality and it continues to remain robust. Our gross NPA ratio has improved by 34 bps YOY and stands at 2.16%. Net NPA ratio is below 1% at 0.57%, an improvement of 3 bps YOY. Our provision coverage ratio including TWO is comfortable at 93.21%. Our slippage ratio for the second quarter of FY 2026 has reduced by 16 bps YOY and stands at 0.91%. Credit cost remains lower and stands at a level of 0.29% for the second quarter of 2026. Without the floating provision, the credit cost would have come down even further down. We have made a floating provision of 400 crores as a prudent measure.

Coming to our SMA and collection efficiency, our CRILIC SMA 1 and 2 as a percentage of our standard advances stands at 0.39% as of September ‘25. Our collection efficiency excluding agriculture remains robust at 98.6%.

Regarding capital adequacy, we have a strong capital position. Our capital position in CET-1 as at 30th September ‘25 is 13.36%. Tier 1 capital adequacy ratio is at 14.15% and overall CRAR is at 16.54%. Our LCR remains healthy at approximately 121% as of September ‘25. Adjusted for the profits of the half- year profits of 2026, capital adequacy would have been 17.36%. Thank you.

As we said earlier also, the Bank strongly believes in how to strengthen the fundamental parameters of the Bank. And our performance has been consistent for many years, many quarters in terms of the numbers that we give to the market. So, in the context of that, let me again wish all analysts, friends who are joining today, a very good evening. And thank you very much for joining on a Friday evening with us.

So, in terms of numbers and all, we have yet another sound and good quarter as far as Q2 is concerned.

On the business number, already provisional number we announced sometime back. All of you have taken note of that. The media coverage with regard to a strong growth, so I have nothing more to add to that. But only I will highlight on the advances side, our advances growth is propelled by the RAM growth. And you would have seen the retail growing at 17.6%, Agri at 17.4% and the MSME at almost 14%.

The second aspect again on the asset book is the corporate growth. Some of you possibly would be looking at a number at 3% now. So, let me give a couple of comments on that. The corporate growth seasonally, we have a weak Q1 and Q2 always and we pick up in Q3 and Q4. Last year, we had a growth of almost 10 to 11% on the corporate book. And this year also, we expect to grow at 10 to 11%.

Saying so, I mean, if you look at the sequential growth on the corporate book, although the YOY is 3%, it is at 8%. So, it can build the momentum therein. There were strong pipelines to support a growth of 10 to 11% as far as the corporate loan book is concerned.

Deposit, you would have seen on the overall growth that we already announced. But at the same time, let me say saving has been one of the consistent, you must be mapping out our numbers with peer banks. And we have been consistent on that, although the growth is low, as the growth used to be in the earlier years, but it has been one of the consistent outperformance of 1 to 2% on many large peers.

So, our focus continues to be on the low-cost deposit. And that is what we believe strongly. And the focus continues to slightly de-leverage on the bulk deposit. And we have been doing that for the last two and a half years. So, the outcome therein, because we say that it is prudent liability management, which the CFO talked about, I will tell you a couple of outcomes, you can take note of the numbers we presented. Our CASA percentage is 38.42%. That is one of the top quartile in terms of number, you must be mapping out all banks and there we are at 38.42%. My interest expenses growth this quarter is 4.9% as compared to more than 9% growth last quarter. That means typically on a trajectory where typically we debate with regard to the repricing of asset liability, now we have a control on the interest expenses.

And what is the outcome? The first time maybe you would compare our own NII growth last quarter, which was negative. The NII growth this quarter has been positive. And this positive when I say repeatedly positive, you can very well compare the NII growth happening in the system.

At the same time, the net interest margin where we talked about the margin compression or pressure for 2-3 quarters now, we have improved the NIM. The NIM has improved in global from 2.91 to 2.96.

Domestic has improved to 3.10. The international has improved. So overall, the prudent pricing strategy or liability management or asset management is helping us to maintain our margin or improving that.

The ROA and ROE, two factors, which again on the profitability, it has been better than the last quarter.

So, the impact of the prudent management is helping us in terms of maintaining the qualitative, what you can say income earning potential of the book that is very, very fundamental as far as the Bank is concerned. As I said, the net interest income is at 2.7% positive as against a negative growth we had in last quarter. On the operating profit, as Mr. Sridhar has rightly mentioned, Q2 of last year, we had a one-off from one of the NCLT resolution account, which is a significant amount. And the pre-tax benefit of that is almost 900 crores. So, in that comparison, both at the operating profit level and non- net profit level, there has been, I mean, the same quarter comparison last year, there is a degrowth or there is a negative growth. Saying so, the sequential growth in the net profit has been positive by 6%. So, we are at almost 4,500 crores of net profit in last quarter. We're almost at 4,809 crores of profit in this quarter, which is a 6% growth. And this net profit we looked in the light of the floating provision that we have made up to the extent of 400 crores. I mean, that's a prudent provision we have made keeping the ECL framework in mind and taking the entire floating provision to 1,000 crores.

So, these are again, these numbers to be looked in the context of the floating provision that we have

made of 400 crores and continue to buffer this particular floating provision. Although there is no guidance for the matter, but then we'll try to buffer it more as we move forward.

On the asset quality, one of the best quarters I can say, touch wood, the best quarters we have in this quarter. GNPA of 2.16%, net NPA of 0.57%, slippage ratio of 0.91%, credit cost of 0.29%. I mean, these are the numbers which are better than the last quarter and the same quarter last year. Again, a couple of points I would say, the first slippage of 2,669 crores, this is in terms of slippage better than the last quarter and the same quarter last year. The cash recovery has been better than the last quarter and the same quarter last year. The upgradation has been better than the last quarter and the same quarter last year.

So, I mean, in the summary note, I can say this is one of the best asset quality. And when I say we believe in fundamental growth of the Company and the Bank, and this is one of the points which is again, driving along with the top line, bottom line asset quality we want to maintain at a very good level, a pristine level.

However, going forward, we maintain the slippage guidance at 1-1.25%, precisely maybe probable headwinds be there in the geopolitical scenario that are evolving and the credit cost below 0.75%, although the current credit cost is much lower than that.

So, on a business front, again, I mean, I'll just tell one point that the cost of deposit is at 4.91%. And in case you are mapping out the industry cost of deposits, this is one of the lowest points we have reached on the cost of deposit. And that talks about the prudent liability management that we are talking about for the Bank.

So, on the business front, again, we continue to focus on the IT, digital, trying to innovate, trying to, I mean, making our system robust, protecting cyber security threat. So, that's something we need to be ahead of the curve, and we clearly intend to do that. We want to improve our customer service further. We want to improve our service delivery further, and we're working on those things.

On a branch banking, again, I say we are reimagining the branch banking and would have seen the Bank rolling out a unique concept called phygital branches. We have 10 branches now. I'm not going to go into details. You can see that in the literature available on the website, and also deployed a virtual branch in those phygital branches where a human-like robot can interact on a live basis with you.

So, these are a couple of things, and a couple of other things where we're again working is that the ESG has been a core theme, and we've been very strongly working on the ESG mandate. We announced our ESG policy of net zero by 2057. Recently, we created a BOB forest in the BKC area, almost 6,000 square feet of area where hundreds of plants from Sahyadri range have been planted over there. It's a BOB Forest, which is planted in BKC, where you are talking about the commercial area of Mumbai. We'll be replicating this BOB Forest concept across, and this is typically in line with our ESG mandate. We think ESG is one of the core mandates where the Bank has the responsibility,

and we should do much more on that. With this, again, I'm thanking all of you for joining today. And, Phiroza, over to you for question and answer.

We will start the Q&A session with Mr. Ashok Ajmera. Sir, if you can please unmute yourself.

Now, having said that, some of my few standard questions and some observations, and which always encourages us to analyze things properly for the time to come. So, one thing is only in this quarter, though the credit growth this quarter is reasonably good, but because of the fall in the first quarter, our overall in six months, we have grown only by 3.93%, as far as the credit is concerned, net credit is concerned. And if you look at your 11 to 13% guidance, and even if you take average 12% guidance, you need to have the total credit for the FY 26 of 1,48,000 crores, growth. So, we have achieved only 48,000. So almost 1 lakh crore growth in the next five and a half months or six months are required to be there to meet the kind of guidance.

So, on that, sir, where do we stand from the point of view of the sanctioned pipeline and the strategy and too much of reliance on retail, I think is not going to sustain for a longer period of time because everyone is chasing a retail book. So, you have to ultimately rely on corporate also for increasing our credit growth. So, what are your views on that? And how do we plan to achieve that? That is my first question because of the business growth wise also, we have grown only 2.82% in six months of FY 26.

So, this is what I'll come back with or shall I continue.

And we have eaten away 1.07% of the bps, 107 bps from the CRAR in this quarter. So, even though the profit will be added at the end of the year, so how do we plan to, you know, like match the credit growth, which is required substantially to be increased and whether we, the capital adequacy on that, if we can have some light from you.

And last one is that we are given only SMA, just percentage that we are about 0.40, 0.39%, but we are not given in the absolute number and especially the breakup of the SMA 0, SMA 1, SMA 2, which gives an idea of what is going to come in the future.

So, these are my few observations and some questions and some, you know, the impressions which I want to have from you, sir.

So let me, a couple of points that when you look at the net profit, look at the net profit growth this quarter sequentially 6%. And we're comparing with the YOY, there is a degrowth because the last quarter we had some one-off that we already clarified. Otherwise, the net profit is strong, 4,800 crores. I mean, you may compare it with the system also, that's quite a good number.

The net profit also 4,800 crores to be seen in the light of a 400 crores floating provision made by us.

And that actually, as we said that we were just looking at the ECL migration and how do we prepare ourselves in terms of migrating to ECL, this may not be adequate, but then we think of how do we create more buffer on this.

The corporate credit loan book, the retail going to be, is doing good. And in terms of the numbers that the quality of book that we look at, I don't think any challenge at this point of time to slow down the retail growth. I mean, retail, the RAM would need to grow faster. That's a portfolio which gives a diversification benefit. That's a portfolio which is highly collateralized as compared to any other portfolio. That's a portfolio also gives me good yield vis-a-vis any other portfolio. So, continue to grow on the retail as it is.

On the corporate loan book, yes, I do agree things have been muted. I mean, muted not only for us, for the system when you compare the growth in the earlier years, we need to focus on corporate, no doubt about it. Q3 and Q4 are normally the better quarters for us in terms of corporate growth. And I think we're giving a guidance of 10 to 11% growth, we're in a position to achieve that.

So, there are 2-3 elements that we must account for while looking at the corporate growth. One is that the core corporate is going strong. The area where we are slightly restricted because of a margin guidance is a very fine price asset where how below you can dip in terms of taking an asset. And these are typically re-fi deal or very high rated corporate deal. So there, as on today, we are restrictive because thinking Q3 can be better. So, in that way, we're not losing out any business opportunity in terms of the corporate growth. We are sufficiently providing money to the market in terms of growing on the corporate.

The second thing that many of our own corporate, when in the first quarter or the first half, they've gone to the bond market in terms of raising money through CP and other instruments while again, I mean, not availing on the loan side. And we have seen a trend, they are coming back to the loan

market, that is point one. Point two is a case where, I mean, look, I mean, a bank like us again participates in those markets as part of the investment. So, whether it is a credit or credit equivalent, I think banks are sufficiently providing liquidity to the corporate sector. So, I don't think any, I mean, you have to club both the things to understand whether money flowing to the corporate sector or not, money is flowing from the banking system to the corporate sector at a decent pace, although the corporate loan book would see different.

Thirdly, which is important again, I'll also request because you all always analyze banks. The corporate that we publish in the analyst presentation is the pure corporate, it's an organic book.

We give another component called others, which is below that, which is consisting of a staff loan or the inorganic book. The same classification may not be available with other banks. So, in that way, it is not comparable, but I tell you the growth that we have is corporate, it's a pure organic corporate book. I think in case of the data available for all the banks, then we can have a proper comparison.

So, in that way, we are quite happy with regard to the way we are testing out the corporate book and we will operate at 10 to 11%. We need to focus on corporate, no doubt about it. But then I think the money which has gone to the retail sector would drive consumption and that would drive the private capex going forward. And that's a story that I'm, that's a narrative that I'm working on.

Treasury income, you are right. The operating profit we have declared this quarter is the normalized quarter. I mean, we have no one-off here. So going forward also, we look at similar operating profit or any one-off happening because of a resolution coming out of a TWO account or a written-off account or a higher treasury income because of the bond price movement going down, the yield going down. I think we can upsize the operating profit going forward, but 7,500 to 8,000 is a normalized operating profit range for us.

CRAR, we are quite adequately capitalized. I mean, excluding the profit, the CRAR, I mean, including profit, the CRAR is 17.36%. But even in the scenario if two things happen which slightly put this CET1 down. That's, we wanted that to happen. One is a case where the AFS reserve, actually it has gone down because of the market movement, you understand that better. At the same time, couple of AT1 redemption, we didn't replenish it. Maybe we are looking at a price point where you can replenish the AT1 bond also. That's why it has gone down.

At current level, excluding profit also, we are heavily, highly capitalized. And if you add profit, then it is almost 17.36%. So, I don't think any challenge on that. We had announced to the market an enabling clause of raising capital, but I don't think that is needed at this point of time. If there is a need, we will see at that point of time with a due articulation to the market.

So, I think I have covered mostly…. the SMA breakup, actually, the CRILIC data only will provide more than 5 crores. I think other banks also do provide that. But any granular data you want, we can provide offline to you.

First one, I wanted to check what is the total quantum of interest on IT refund in this quarter? And what would be the NIM ex of this one-off? And a continuation to that would be, you know, this is the third consecutive quarter where we have seen decent amount probably on interest on IT refund. So, how should we think about it in the future quarters? I know it can be very difficult to predict, but do you expect more of them in the future? So, that's the first one.

And I have a few other, I'll come back after this question.

But IT refund is a normal way every quarter the Bank receives. So, it is not a one-off. It is only the quantum of money that we receive in a quarter. And this quarter, you compare to the last quarter, it is in excess of roughly around 3-350 crores. And that's how you can translate to 6-7 bps of the NIM.

And lastly, the question is also on the floating provision that you created of 400 crores, the outstanding is now 1000 crores, you did highlight it is in anticipation of ECL. So, how much more would be required in the run up to the ECL transition? What would be the one-time transition impact from April 27? And also, what could be the change in steady rate, steady state credit cost? Those will be the remaining two questions.

Secondly, on the ECL, let me tell you, these are draft guidelines, a lot of moving parts therein but on a thumb rule, I can tell you as a ballpark number, which can be a back of the envelope calculation. What we are expecting the ECL impact for the full on the CRAR is roughly around 1.25%. So, that would be spread over a period of 5 years, but then you take it at one time, it is 1.25%. At the same time, there is also guidelines with regard to the credit, the RWA and the credit is also as draft guidelines being there. So, that is going to give us almost 60 bps positive because there is a RWA reduction. So, that is a positive impact on the CRAR would be almost like 60 to 70 bps. So, net to net, the impact that you are looking at for a 5-year impact is almost like 75 bps maximum.

And that can be spread over a period of 5 years. If you take it at one time, it can be 0.75. This is purely a provisional number, a provisional calculation in terms of what we see as on today based on the draft guidelines that we understand as the final, I mean, in terms of the final contour. So, I do not think ECL, you know, the capital adequacy for most of the banks like us. So, if net impact of 0.75 may not be significant. So, that is something that we should do.

Secondly, on a recurring basis on a provisional requirement, it can impact the credit cost almost to the extent of 20 to 25 bps maximum. But these are very ballpark provisional number based on the interpretation we have as on today. Number can change, but the impacts are not significant as on today. In case you look at our book, our profitability, our capital adequacy, our provision requirement, I think it is not significant as on today.

So, last time when we look at it adjusting for IT refund and the recovery, you indicated core NIMs to be 2.81%. Would it be fair to assume that core NIMs this quarter would have been closer to 2.78% or so compared to the reported NIMs which are there?

But full year basis, again, Q4, we are expecting a rise in the NIM. So, in that scenario, I think the guidance we are giving 2.85 to 3. So, that is a global NIM that we are talking about without any core/non-core that we are referring. But global NIM basis will be at 2.85 to 3.

Like NCLT recovery can be a one-off, but IT refund is not one-off. We keep getting some amount, it may be higher or lower.

So, in that way, there is no pricing impact on this 17 vis-à-vis 9, we’re one bank declaring the bulk deposit as a subgroup to the term deposit for many quarters, you need to get those data for other banks. And then only you can have a clear comparison in terms of what is the growth we have and what is the growth others can have. But as a strategy, I've been saying that the dependency we want to reduce for a volatility purpose, on a price point purpose, and we're quite successful in terms of managing. So, it's not one or two numbers you are looking at.

Look, the NII growth has been positive, which is again, if you compare on a whole system basis, there are many having a negative growth. We had a negative NII growth last quarter, which is positive now.

The ROA and ROE both are better than the last quarter. So, in that overall construct of the book and considering the cost of deposit at 4.91%, which is one of a very good level. I think the prudent management is helping us in terms of maintaining profitability and that's something fundamental as far as our margin guidance.

Look, there are two other points that you need to look into. The CASA percentage is one of the top quartiles, you have the numbers for this, right. It is one of the top quartiles for the Bank. So, these are all numbers leading to a, I mean, fundamentally talking about better management of the liability at the same time protecting margin or the profitability.

That numbers are given, I mean, the retail slippage, right? But PL is a very small component of the overall, the outstanding PL books is roughly around 12,000 crores.

If I look at the slippage, we're not declaring that number, but if I look at the slippage of the PL this quarter, it is lower than the last quarter. So, in terms of the pressure on the PL book, although we

have a lower book, it is no more there. Rather, we should see improvement in this number going through.

Sir, I have a few questions. Firstly, in terms of your recovery from written off accounts, TWO, the income is lower. Do you want to reduce reliance or it is going to remain volatile and lumpy even in the future quarters? So, that's my first question.

Secondly, you did mention that on a run rate basis, if ECL were to be implemented, your credit costs would move up by 25 bps. So, is that what you should build in structurally now to assess your long- term ROAs, like the current credit cost or say the full year credit cost plus 25 basis points?

And my third question is, I think it was asked before, but I didn't quite catch the answer. How much of MCLR repricing is left? How much more can MCLR go down? So, these are my questions, sir.

On the ECL impact, the credit cost you talked about, this again is a ballpark back of the envelope calculation, but obviously we have provided floating provision, keeping the ECL framework in mind.

So, we think we need to create buffer, but we have not decided as a policy how much to do it, what time to do it. So, these are all depending upon going forward a lot of clarity will come on the ECL framework. Actual calculation getting into transaction level would give us more clarity. So, we have not decided how much to provide on the ECL, but then we'll be mindful that we need to create more buffer, so we'll be moving in that direction.

MCLR, my book is almost 35-36% now, and many of the banks have declared MCLR. The computation of MCLR depends on the moderation in cost of deposit. If further moderation going to happen on the cost of deposit based on the repricing, obviously we'll pass on those benefits. It's a model which is a tested model, so there is nothing much we do. It's a calculation already hard-coded. So, I cannot say how much it would go down. All would depend upon the cost modulation of the deposit cost, which is 4.91%, how much it would go down in future, and the MCLR cost would depend on that.

So, I think, Mahrukh, I addressed all your three questions.

I'll just ask Mahrukh's question a little forward. Sir, MCLR calculation also has a return on equity as a parameter. Last few years, our return on equity was very good. So, when will we review that? Is there a plan to kind of mark that down maybe over the course of the year?

So, we'll also do, we'll look at the market, what is happening in the market in terms of the level, and then we possibly can take a call. But as of today, I don't think we need to take a review. But in case there is a requirement as per the policy, we'll take a review at a later date, not now.

We are at around 2.2 as of now. Do you plan to accelerate write-off or as in now you're done with the write-off?

So, I think we need to improve on that count. So, in that way, I am not, I mean, in a process where I think we can on this. So, the TWO kitty is roughly around 63,000 as on today. So, in case we can do write-off, we can do much higher, but then we are going at the normal level. So, there is no guidance for GNPA to what level to, but the current levels are quite, what you can say, strong vis-à-vis the systemic levels that we see. And so, for most of the banks and like us, we are also at a very good level of the GNPA.

Have a great evening ahead and weekend ahead. Thank you. ************