Good evening, everyone, and welcome to Bank of Baroda's results for the quarter one ended June 30th, 2025. Thank you all for joining us. We have with us today our MD and CEO, Shri Debadatta Chand, and he's joined by the bank's executive directors and our CFO. We'll start with brief introductions and then a short presentation, followed by opening remarks by Chand sir, and then we'll start with the Q&A session. Chand sir.
Yeah, thanks, Phiroza. Again, good evening to all of you, all my analyst friends, and let me introduce the management team here. I'm D. Chand, I'm MD and CEO of Bank of Baroda, and with me, 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. With us, Mr. Sanjay Mudaliar, he's the Executive Director. He looks after the IT function of the entire bank and also on the retail asset, apart from multiple other departments he has. With us, Mr. Lal Singh, he's the Executive Director. He looks after the recovery, the priority sector, and also, more importantly, the HR function of the bank. 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. We have the new CFO, possibly you are meeting him for the first time, Mr. I.V. Sridhar, has taken charge as the CFO, and he is part of the management discussion today. With this, I mean, Mr. Sridhar, please go through the presentation, then I'll have my opening remarks.
Thank you, sir. Good evening all. It's my privilege to present before you the financial highlights of Bank of Baroda for the quarter ended, 30th June 2025. 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 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 INR 8,236 crore, registering a YoY growth of 15%. Our net profit for the Q1 of 2026 stands at INR 4,541 crore, registering a growth of 1.9% YoY. Return on assets remains above 1% at 1.03% in Q1 of FY 2026. 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 live-in deposit pricing.
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 a reclassification of interest on income tax refund, and the historical NIMs have been normalized as per the revised reclassification for compatibility. Our NIM for Q1 FY 2026 stands at 2.91%. Regarding asset quality, our asset quality remains robust. Our GNPA has improved by 60 bp s YoY and stands at 2.28%. Net NPA is below 1%, and that is at 0.64%. Our provision coverage ratio, including TWO, is comfortable at 93.18%. Our slippage ratio for Q1 FY 2026 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 2025. Our collection efficiency, excluding agriculture, remains robust at 98.9%. In terms of our capital adequacy, our capital position continues to be strong, with CET1 at 14.12%, Tier 1 at 15.15%, and CRAR at 17.61%. Our LCR remains healthy at approximately 119% as of June 2025. Adjusted for the profits of Q1 2026, the capital adequacy would have been 18.04%. Thank you.
Thank you, Mr. Sridhar. Again, just to give quick remarks on the qualitative aspect of the results, we'll go more for question and answer rather than my initial remarks. Let me tell you again, the bank business model, as I told earlier, is working on a sustainable and a consistent and a stable outlook model. I think the performance that you 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'm talking this service 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, one of the good growths we have.
The advance growth is propelled mainly by the RAM book, which is growing almost at 18%. The retail continued to be strong. The MSME is growing at 13.1%. The agri is one of the highest growths we had in the last many quarters, at 16%, in excess of 16%. I think RAM will continue to grow strong. The bank is focusing, and the corporate growth is at 4.2%. You may say it's muted, but if I look into the entire industry outlook and the performance, this growth is aligned with the growth. I'll give you a couple of data points on the corporate growth. We had a 2.5% YoY growth in June 2024. Typically, at the beginning of the quarter, we realign the book. We realign the book on the bulk deposit, which has gone down by INR 23,000 crore, and so has the corporate book.
Let's also admit a couple of fundamental factors here in the corporate book. There are corporates having strong cash flow position, they are deleveraging. The demand is not that much because there is deleveraging happening on the corporate book. At the same time, good corporates are able to tap bond market at a cheaper rate. The BRLR has reacted, but the MCLR would take a bit of time because it is tagged with the custom deposit moderation. They're able to raise at a cheaper, so that the demand from the bank's creditors are less. Mostly, because of a seasonal factor, I think the corporate growth is at 4.2%, but better than a couple of other banks. Still, we want to upsize this as we had a 2.5% last quarter of last year, but the full year was almost 9%.
We are thinking of almost growing at 9%-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 of today. The bulk deposit has been reduced by INR 23,000 crore. The CASA growth of 5.5%, both on the saving and CASA, is consistent for the last many quarters. In case you are tracking, the PO performance, I think, we're able to take the lead on that. That is the cost trend. 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. The meaning thereby, the focus continued to be on the stable deposit. For that, three data points I will tell, which again, you can talk about the liability management which the bank has done.
The custom deposit at 5.05%. This is one of the lowest in the industry. I'm talking about large POs. The CASA at 39.33%. This is one of the highest as far as the percentage in the entire PO, large POs. At the same time, the margin, I'll come to margin later, we are holding at 2.91%. The margin, this is the last quarter. From 2.98%, it has gone down to 2.91%. Only a cut of 7 bp s. You would have read many articles which have 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 into 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%.
If I don't take the income tax refund, which has been classified as interest income this quarter, then still it would be at 2.81%. The cut is almost the same, like 6 or 7 bp s. That is something very fundamentally talks about, custom 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 is something the bank is focusing very clearly on. I'll come to, on the profitability, only one statement. If you look at the net profit, the bank has been posting net profit of more than INR 4,000 crore for the 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 an ROA more than one, that is in September 2022.
So I'm at an elevated level. 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 is why the profit percentage is less, although the operating profit growth is very strong at 15%. I think profitability of the bank is clearly on a sustainable path. No doubt the NI has impacted because of the transition happening on the asset liability, as you know, and it's similar for all the banks. All the banks have taken some cut in the net interest income. I think on the profitability, the bank book is strongly have, the earning potential, the profit potential is quite strong as the bank's book is concerned.
Lastly, cover only on the slippage side. The bank's slippage this quarter has been INR 3,500 crore as compared to our normalized slippage of INR 2,800- INR 2,900 crore. That's 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 a color of that. Secondly, on the personal loan book, there is a marginal increase in the legacy that's only INR 100 crore. Barring these two, there is no impact, and the asset quality is very stable. The GNPA is the best. The credit data shows that at 0.4%, SMA1 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.
In that way, the asset quality stories continue 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 was then conduct 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 SMA1 or 2. Now in the international territory, the account has gone to a resolution process called CNC. 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. We'll get to know the outcome of this account after 210 days in terms of resolution. Let me again give you a couple of factors here. The account is a secured advances having a coverage much more than one, right?
If you look at the vintage of this account, from a peak level of exposure of INR 80 million, it has gone down to almost like INR 50 million. There is a continuous reduction happening in the account. We do not see any challenge, although we have made a 40% provision as a prudential provision there. We do not see any challenge on this account, and we think we can recover the amount in full. Broadly, I covered the aspect that I wanted to say on the fundamental. On the NIM 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.
Looking at the outcome of everything, Q2 can continue to be a bit of, again, pressure on the margin and NIM, but again, Q3 and Q4 would be much, much better in terms of what we have seen in Q1 and Q2. With this, I thank all of you for joining on today's evening, and we'll open for question and answer now.
Yes, tha nk you, sir. The first question is from [Vikrant] Shah. [Vikrant], if you can please unmute yourself.
Hi, good evening, sir. Am I audible?
You're audible, [Vikrant]. Please go ahead.
Thank you for the opportunity. Three questions, sir. The first one is on the fee income. 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, you know, we have withheld kind of margin guidance, but clearly there has been some reclassification. 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 a substantial amount of trading gains, which may not incur in the coming quarters.
Suffice to say that meeting 1% ROA is only a possibility if the trading gains sustain, but without that, the 1% ROA would be a tough target to achieve.
Okay, thanks. On the fee side, yes, it's slightly soft as far as the growth is concerned. The bank is clearly focusing on the fee side, and it's being something that we are targeting for the last many quarters now. We earlier said we run a, some kind of a internal focus on fee and flow and focusing cash management. We have significantly progressed. We captured cash management on the MSME sector more as compared to the corporate. I think the growth would be upsized, and that is what keeps focus. I cannot give you a number here, but then clearly the management is working to improve the fee side of the income. On the margin guidance, this is an income tax refund which has been accounted as per the regulatory clarification on the matter, and all the banks have done that.
Suppose you exclude the impact of this, the NIM would be 2.81% as compared to 2.91% that we are showing. This is in comparison to 2.86% that we declared in Q4. If you look at, including or excluding the cut, it is almost 6 bps - 7 bp s. The comparison I want to give you, if you look at multiple media articles therein, the average cut in the NIM based on the declared results of banks, the average is 17 bp s. Whereas we are able to sustain at 6 bps - 7 bp s cut in the NIM. Going forward, the next quarter will still be under pressure. I think the deposit repricing is going to happen for the next quarter, almost 70%-80% of that. The upside benefit is going to see clearly in Q3 and Q4.
On a full-year basis, we are giving a guidance of 2.85%-3%, but again, we'll just see after September, anything we need to revisit on that because clearly as all of us understand, 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 12 quarters we have posted ROA in excess of one. You know there is a substantial treasury gain here, no doubt about it. 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 lowering yield movement. Secondly, the RBI comes out with a lot of OMOs in between. Then out of the STM, you can offer those yield to the OMO.
The OMO possibly the things can continue, and then possibly it's 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. Even if there is pressure, we have on the provisioning side, we have taken a bit of prudential provisioning therein. A lot of, I mean, they are in the system to sustain the profitability at the level at which we are operating now. We are maintaining in 12 quarters. I think we'll be in a position to maintain next quarter also. Thank you.
The OMO possibly the things can continue, and then possibly it's 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. Even if there is pressure, we have on the provisioning side, we have taken a bit of prudential provisioning therein. A lot of, I mean, they are in the system to sustain the profitability at the level at which we are operating now. We are maintaining in 12 quarters. I think we'll be in a position to maintain next quarter also. Thank you.
Sir, just a couple of follow-ups, if I may, on margin itself. If you could share what is the percentage of loan book mix in terms of repo, other EBLR, MCLR, fixed. Number two, if you could just share what out of 100 basis points of repo rate cut that has happened, how much of that has already flown through in the book so far. Lastly, in terms of cost of funds, you did mention that we would see 70%,80% depository pricing happening in the next quarter. If you could just talk about what is the typical duration of the term deposits and how much cost of funds can go down from the current levels.
Yeah, so coming to the segment of the loan, your BRLR book is almost 35%. Your MCLR book is 45%, fixed is 6%, TVL is 7%, and the GSEC is 6%. That broadly covers the mix of the percentage over there. 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. It would 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. There would be a lot of repricing happening on that count. This is a quarter we need to watch out. That's something, but then repricing.
The cost moderation, again, as you talked about at a 5.05% cost of deposit, I would say one of the positive narrative in our entire bank with regard to the way we have maintained the cost of deposit at 5.05%. Even in the case where there is a, I mean, the duration normally of term deposit is almost one year. Almost three-four months has gone. 70% is going to reprice. Going by that, we are thinking on the cost of deposit, at least there would be a 15 bps-17 bp s moderation going forward by September. That typically takes care of the repricing that is going to happen on the asset side. That will be almost at a margin guidance which we had given. Notwithstanding the fact that because a lot of uncertain elements are there, there would be a bit of pressure continue, at least for one quarter.
Thereafter, there is a positive upside on the higher side.
Thank you, sir.
Thank you. I would request everyone to please limit yourselves to two questions, and we'll come back to you if there is time. The next question is from Ashok Ajmera. Please unmute yourself.
Good evening, sir. Thanks, sir. Yes, definitely compliment, sir, that in spite of this very difficult quarter, going through the transition, you have shown a good operating profit. Somehow, I mean, balanced most of the things, which shows your, of course, your leadership and the top management of Bank of Baroda, and working very hard on it. Having said that, sir, a couple of questions and some observations, sir. In the SMA book, we have given only percentage, and that is also a mix of one and two. Can I know exactly the numbers of SMA1 in this quarter and SMA2? Because we have seen in most of the banks, SMA2 numbers have suddenly gone up. In your case, if it has gone up, what is the explanation for that? Since I do not have the number, I cannot ask exactly on that. Only the percentage is there.
Thank you, Ajmera sir. Thank you for complimenting the bank. We'll be walking again. As I said, we work on how to, again, I mean, optimize the fundamental strength of the bank. That is what actually, thank you very much for that. Talking on the SMA, we only give as a percentage we are giving. If possible, then I'll share the data, but I'll just give a color to the SMA1 and 2. If you look at the percentage that we are given at 0.4%. It consists of three accounts, which are again the government entity, government guaranteed, but always move between SMA1, 2, and then standard. 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 SMA1 and 2 credit book is at 0.10%.
I mean, if you look at, you are comparing also this credit data in terms of percentage, then 0.4% is one of the lowest if I compare large peers. In that way, the bank is quite confidently working on that in terms of percentage. On the number side, I'll let you know in case there's a publish we have published earlier, and then we'll inform you on the number. Anything, Lal Singh sir, you want to add on this?
Hello. Sir? Lal Singh?
No, sir. Nothing.
Okay. Thank you. So this data with regard to number, absolute number, we'll let you know on that.
All right, sir. Sir, on this, you talked about this international account and 210 days, and you said it is a very asset-backed, security-backed account. In this financial, only the 210 days period will get over. There are chances, and you already have provided 40% of that. There are very positive chances of getting off totally without any scratch from this account?
Yes, absolutely right. The current position is that because the account is, also has a lot of state backing on that in that international territory. I think there can be a resolution within 200 days, and if that happens, obviously this 40% would be reversed after that. As of today, frankly, it's on a curative process, actually. There is a standstill condition, but as a prudent measure, because you are a, 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's getting into a resolution process, but there is a curative process, and there is a preventive protection there.
Yes, sir. One point, sir, if I come on recovery. The recovery from the written-off account in this quarter is a little slower than the March quarter, it can be understood also. Overall, giving a color of the recovery, our entire recovery book, like including we have that all that NCLT maybe 99.9% provided for INR 43,402 crore in that account. Plus, we have a very good, robust, I mean, written-off book also from where the chances are good, and every year we are making good recovery. On the overall recovery front, I mean, I think the other three quarters should be much better than this quarter, sir?
Yeah, it would be better. As you rightly, our average run rate on the recovery TWO without any one-off, let me again say, without any one-off is roughly around INR 750 crore per quarter. Yeah, but June is typically a lot of transfer to happen slightly because of this, all this recovery. Normally, if you look at June 2024, also it was lower. You are right, the subsequent quarter will be much better than the numbers we have announced in June. With the hope that a couple of one-off can still be in the pipeline, which we are working strongly.
You know, sir, on the NCLT and the transfer to asset recovery companies, NARCL or other things, can you give at least something in the next two to three quarters? Are we having a lot of such accounts in the pipeline which are towards sale or resolution from where we can expect some larger recovery?
Frankly, as far as NARCL or ARC sell, we do not have much of pipelines for that, actually. We are trying for a very strong recovery mechanism itself. We are trying for multiple resolution processes just to recover money. In terms of pipeline, I do not have much in terms of NARCL particularly. There are a couple of accounts which, again, there are discussions going on. The fact of the matter is that the recovery target for the full year, that includes the recovery and TW, I think we will be exceeding the INR 10,000 that we have fixed internally to recover for the full year.
Last one, sir, on that airline account. We had, you know, the same question I asked in the Central Bank also. Earlier, we used to think that the recovery or the amount will be much, I mean, amount will be recovered much faster because you have that INR 1,200 crore, that land parcel, which is separately secured with you two banks, the value of which might have gone up now to maybe INR 1,700, 1,800 crore now. What is the status on that, sir? Are we expecting some major thing happening on that account in this year?
See, again, I mean, this sale of asset, particularly large piece of land parcel, is always a time-consuming exercise. The process is on again on the same, and the Central Bank is the lead, and they are taking lead on that. We are supporting that. Apart from the land parcel that we talked about, see, earlier we said the ECLGS money, we got it, so one-third of the exposure has gone down. The arbitration issue that is also going on the international market, where there is a strong possibility of the upside therein. There are multiple processes going on, but then land parcel is always time-consuming, and we need to be patient on that.
All right, thank you, sir. If time permits, I'll come back again.
Thank you very much.
Thank you very much.
Thank you, sir. Next question is from Kunal Shah.
Yeah. Yeah, hi, sir. Firstly, you mentioned in terms of making some prudent provisioning out there. I just want to get that sense. This is very well reflected in terms of the standard asset provisioning, which is there at INR 320 crore odd instead of maybe despite our book running down by 2.5%. Ideally, there should not have been any standard asset provisioning. There should have been the release. What is this? Maybe is this particularly towards any, maybe, so the standard asset provisioning, was there, what was the rationale for creating this? Yeah.
Yeah, a couple of, like, we go by the IRAC provisioning, but a couple of accounts where there is an inherent weakness, which as per the auditors, they think that we need to slightly be more prudent on that, then we provide as per the guidance of the auditor. Typically, if you look at IRAC and the prudential, there is a gap over there. Actually, we have provided slightly more depending upon the weakness of the account. Like a couple of large accounts, which is again, I mean, gets into SMA1, 2, again, going back to standard, again going to SMA1, 2.
Even if there is 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 it is IRAC basis, 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, and we need to provide. These are the extra, I mean, provisioning that we have made in the books as far as the provisioning requirement is concerned. Otherwise, we comply fully with the IRAC norms. At the same time, if there is an auditor guidance on matter, then we comply to that.
What was the provisioning and what was the outstanding amount, if you can just highlight that?
Come back again, Kunal, the interview.
No, no. So what was the overall book, okay, wherein we have identified that we are having some inherent weakness, and what was the provisioning taken against it, if you can just mention the absolute numbers for both?
That's part of the actually a couple of the SMA1, 2 book which you are showing. They are actually. Roughly around, you can take it on the standard asset, roughly around INR 500 crore-INR 600 crore there, which is an incremental provisioning that we have done based on the weakness of those accounts.
Okay, okay, okay. So INR 500 crore-INR 600 crore incremental, and after the release, it's showing like INR 324 crore, yeah?
Yeah.
Okay, okay. Secondly, on the international book, maybe you indicated that this is more on the restructured side, but maybe have we taken a look on the entire book looking at what is happening globally? No doubt the odds would be more like, say, the exposure to the domestic corporates. Do we see any risk, and maybe this is the first quarter wherein we have started to see some kind of a pain emerging on international, and this could again be the area of concern going forward?
No, absolutely not, actually. This account was under our monitoring for long because it was a restructured account on the international book, and all restructured book was earlier discussed on that. It was upgraded because it completed one-year curative process, and the account was standard at that time. It was showing weakness, so we knew that there are weaknesses. As of today, it has gone to a resolution process, right? It has not gone into the—it's a resolution process. We need to be, I mean, respect those processes in those countries.
Not particularly with respect to this.
I'm giving a color. Actually, as a prudent measure, we have made 40% provision therein, right? Which can be upgraded at the moment the curative process, the resolution happens, the money can be pulled back immediately, point one. Secondly, the asset has an asset coverage of more than one for very long. And if you look at the vintage of the account, there is a reducing balance over a period of time. We are not seeing any challenge for recovery in this account. Even if the worst case scenario, the account is not getting upgraded, we are hopeful for a full recovery out of this account. We are hopeful that the account may get upgraded during this year. There is a right back possible.
No, I was just saying X of this account on the balance overseas exposure, how are we evaluating because there are like a lot of global events which are happening. Just to make sure that our book is robust and we do not see further slippages on the international side because that tends to be chunky. How are we evaluating the entire portfolio and do we see any further stress which can come in over the next two to three odd quarters on the international or on the overseas exposure?
No, absolutely not. We do monitor, actually. We have a mid-office which talks about, which maps out every account globally in terms of the exposure therein. There is no stress in any other account. This account was in SMA1, 2 for some time and now getting into NPA. There is no other account as of today which is again showing the sign of SMA1, 2 and still standard. In that way, I do not see any challenge on the international front and particularly on the NPA position.
Sure. One last question, if I can. Just like the increase across the retail products on a sequential basis, be it housing, auto, you indicated even in terms of the PL. Is it like maybe with the seasoning of the portfolio, the kind of growth which we had, maybe would you see more to flow in in terms of the slippages, particularly because PL has been growing quite aggressively and now we have seen GNPAs at closer to, like, say, 4.8% odd. Maybe just if you can indicate for the overall retail as well as the MSME segment, yeah.
If you look at the, there are two factors here, the percentage GNPA and also the slippage ratio in all this product. We continue to grow strong on the retail and MSME. Retail is growing very strongly for the bank and so is the MSME we picked up in the last one year. If you look at the slippage, I mean, maybe on the retail, if you look at the slippage, MSME is June, there may be a couple of INR 100 crore or INR I150 crore in addition. If you look at the slippage ratio, because the denominator has also gone up, the slippage ratio will be still contained. Personal loan, yes, there is a bit of a legacy book has an incremental NPA going forward. The book is not large enough, point one.
Secondly, in terms of slippage ratio, I do not think there is a concern because the retail slippage ratio as of June is below that of June last year. In that way, the denominator is also going up. It is part of a normal business in terms of what you maintain. 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.
Okay, thank you, thank you.
Thank you. Next question is from Bhavik Shah.
Hi, sir. Thanks for the opportunity. Sir, our L2 maturity book is down 4% quarter on quarter. Is it because of OMO operations or we have kind of sold our 5% which was allowed under the new investment guidelines?
Tyagi, can you respond to this?
Yeah, thank you, sir. In fact, you said you picked it rightly. We took the advantage of OMOs and earned good profit also. There was a good opportunity.
Okay, okay. Thank you, sir. And sir, when is your ALCO meeting? I just want to understand how does repo pass-through work? Is it on T+1 or it happens?
Yeah, Tyagi?
In fact, the repo cuts pass down immediately and ALCO meets every month on a fixed frequency.
Okay, understood. Sir, last question. Sir, last year your provision for employees was INR 800 crores. This quarter, we are close to INR 1,000 crores. Should that be the run rate going forward? AS 15 provisions are in?
Madam, [Beena Vaheed], our CFO. Madam, you are on mute. No, you are on mute, Madam.
Sridharji, will you just take that question up? On the.
Yes, actually, basically.
Provision for staff, yeah.
Basically, the discount rate has gone down. That's why the provision requirement has gone up for this quarter. That's the reason.
No, understood. This will be steady state for the next three, four quarters as well, right?
It depends. It depends on the rate movements again.
Okay, good. Thank you so much, sir. Thanks for the opportunity.
Thank you.
Thank you. Next question from [Bihani ].
Yeah, hi. Can you hear me?
Yeah, please go ahead.
Yeah, I just had two questions. One was on your return of pool, which was as of FY 2025, it was at INR 764 billion. I just wanted to know what would be the vintage-wise breakup, like less than five years, five to 10, and greater than 10 if you have that data.
I do not have a Lal Singh, Sahib. Can you respond or we can provide the data later?
Yes, sir. We will provide the data later.
Yeah. Okay, I just wanted to check how that less than five-year return of pool has moved across. You know, a time series data would be helpful. The second question is on your margins, which is at 2.91%. 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.
No, there is no one-off. Actually, I tell you, what is that impact we are talking about? The income tax refund was earlier taken as other income. In this year, it is not only for us, all of the banks, they have declared the income tax refund as an income. Consequently, the name is getting changed. We recalibrated the name that we declared earlier. On that basis, which was declared at 2.86, is 2.98. If you compare pre-post anything, the cut is only 7 bps, and that's one-off. The story here, which again, how it is compatible with the other numbers. When I run a customer deposit at 5.05, a CASA ratio of 39.33, I think the margin something strongly collaborates with all these numbers. That is what our strength in the current market vis-à-vis large peers, the space where we operate in terms of maintaining the margin.
There is no other one-off.
Okay, thank you. Those are the questions.
Thank you. Next question is from Mr. Sushil [Choksi].
As you mentioned, Team Bank of Baroda for stable numbers. Sir, looking at your outlook on treasury, how many repo cuts are you hearing or you are likely to project?
Okay, to respond to this, actually, we have a very strong economist with us, Mr. Madan Sarvamesh. So our house view is that we are expecting a further 25 bp s cut. But the expectation is more towards the end of the calendar year rather than immediately. I mean, I'm talking about we are not expecting any cut in the next policy, but possibly can happen after September.
Are you estimating 10-year G-Sec to touch 6% or looks difficult?
See, 10-year is not only dependent on the repo cut, but also influenced by the U.S. Treasury, right? You know what is happening on the U.S. Treasury. Let the Fed also cut the rate, then possibly yes, six. If the Fed is not cutting rate, then possibly can be a marginal decline, but not to a very large extent. Tyagi, any comment?
Sir, actually, you have said it all. In fact, when the rate cut was happened, at that time, the 10-year GSEC came down to 6.70, 6.80, and has pulled it up without any other ostensible reason. We believe that going forward, U.S. Fed move, as well as our own inflation trajectory and the commentary on the liquidity, will also play its own role.
Sir, what is your yield on RAM advances? Second thing, your corporate advances you have shed, are these mainly PSU-led or AAA rated, which you are not yielding even 6% or 6.25% when you shed it, or are there some typical loans which are replaced with CP and NCDs?
You are right. Typically, the corporate book, it is more on the fine price, which has got into further fine, which again is slightly suboptimal in terms of our margin and all. You are absolutely right. Otherwise, the core corporate is actually growing much stronger. We have not declared the core corporate growth, but it is growing much stronger than the 4.2% growth that we have shown. You are right because of, I mean, these are high-quality assets. Fine price has become sub, I mean, further fine, making it slightly challenging for us to hold on to those assets. 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, with the repo, I mean, it is almost 250 or 300, almost at 9 .5 kind of a number.
We have a RAM yield on that.
Sir, you had given a guidance in last analyst meet that your RAM should be 64 by year-end and the balance would be corporate. Are we on a trajectory or we are looking at exceeding RAM number at 64 with the current yield of 9, 9 .5 ?
No, I mean, we gave a guidance of 64-65, but we always said two to three years. It is not going to happen this year because this year, look, as of today, if we are at 62.7, because the corporate growth is a bit muted. When the corporate growth catches to almost like 9%-10%, possibly this number may not be at the same level. Yes, the retail narrative and the retail push is working strong for the bank. You would have seen the retail growth has been consistently 3%-4% above the system retail growth. I am talking about the large peers, not the full system. In that way, continue to work to grow on the retail, and maybe two to three years will be in a position to achieve 64-65.
Sir, any digital expenditure, human resource expenditure which you are likely to incur, and any asset monetization plan in the subsidiary?
Digital, earlier we said our normal OpEx and CapEx, normally we tag it at 10% of the operating profit for the full year. That's something we work, and we also give an offside. If there is a requirement, we'll take it to 15%, but that's something we are working on. Employee headcount, yes, we have a plan to hire almost 15,000 employees, a different kind of mode on the operation and the relationship side in this year. Actually, it takes time to onboard them and put them into a year, but there is a good hiring plan. Expanding literally because there is a plan to open almost like we opened more than 250 branches last year, another plan to open another 300 branches this year. We are literally expanding. In that scenario, it's a, I mean, changes happening across in headcount, operating.
I mean, the spend on the IT, and then we're working on all the theme, I mean, on a holistic basis.
Sir, you are one of the early banks to have a shared service which you had set up in Gujarat and was supporting your RAM business specifically or FX and many other things. How's the outlook there, and what kind of capacity have you built so far?
The entity has almost provided on a headcount of 74,000 total, almost provided slightly above 10% to us in terms of their resources which are deployed now. So almost 10% of the, I mean, payroll headcounts they have provided. They are doing excellent service there in, I mean, doing activity which again put me on an efficient curve in terms of the cost structure. We will continue to engage them more and more the moment we find that they can do those because it's also a trade-off in terms of the skill set. The moment we find them they have the skill set to do my activity, we'll more and more do that. At the same time, on the payroll also, since we are expanding, we'll continue to hire more and more employees on the payroll also.
Are we using this facility for other banks to do work?
We are not allowed to do that. I mean, it is only for only Bank of Baroda, Kartik.
Okay, thank you for answering all my questions and good luck for the year.
Thank you very much. Thank you.
Thank you, sir. The last question for the evening is from Jay Mundra.
Yeah, hi sir. Good evening and thanks for the opportunity. Sir, first question on your yield, domestic yields, they are down like 15 basis points QoQ . Assuming no more action from RBI. What would be your sense how should it behave in the, let's say, in the near term and maybe for the rest of the year? The 50 basis point rate cut done in June, that will still be there for the next, that was only there in the only for one month. How do you look at the domestic yield in the near term?
That's a very fair question. As we said, that margin can be under pressure or continue to be under pressure one more quarter.
I was asking you.
Yeah. So on the BRLR or the Repo linked, already the reprices happened and the full quarter, the impact will come in this quarter, September quarter. At the same time, non-BRLR, which are MCLR or the external link, continue to reprice at a lower level and that is happening in the market. The moment as the cost moderation will continue to decrease the MCLR and that impact also would come. At the same time, as I said, 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 in a much better position to reprice deposit and get the benefit. On normal thumb rule as of today, actually, asset side, I cannot give you how much cut the asset, I mean, yield on asset would happen.
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 bps-17 bp s reduction in the cost of deposit and the cost of fund. That would be significant because deposit has a larger base. I think in that scenario, we are almost able to possibly maintain on the margin guidance. Saying so, the margin would be under pressure. 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% will be in a position to maintain on a full year basis. Saying that the Q2 can be something we need to watch it out. It can be under pressure.
We are in a better position to nullify the impact on the asset repricing from the liability mix that we carry as of today.
Okay. So, sir, just to get this clear, 15,17 basis points is the stock impact, right, on the overall cost of deposit, right, based on repricing of including bulk deposit and including the savings account also, right? Because we have cut savings rate by 20 basis points-30 basis points, 20 basis points-25 basis points.
Obviously, yeah. Actually, you would have said that there is an RBI report saying that. On the average, lending rate has gone down, almost, although first loan it has go,ne down by 51 bp s, but the average has gone down by, I mean, the average has gone down by almost 17,18 bp s, right? On the average lending, on the outstanding loan. Whereas the deposit on the outstanding deposit has gone down by only 2 bp s.
Right. So that RBI data is very, I mean, that has not much sense, actually. It keeps on fluctuating every.
No, no. That's not it. My sense, I can tell you, because the deposits are sticky because of the fixed nature. And assuming a deposit of a one-year duration on the term deposit. Bulk and CD have reacted big time. But assuming a deposit duration of one year, almost four months have gone now. So balance that is a six month. I mean, balance that is eight months. By end of September, I think 70%-80% of the deposit would get repriced in the manner. I mean, assuming a larger component of bulk, slightly a lesser component of the retail term deposit. By that time, we will have a fair view with regard to the trajectory going forward. We are working on this issue, yeah. Otherwise, the NIM cut for the bank would have been very significant as compared to, you have seen the other banks' NIM cut.
We are still able to maintain that. That is what the liability management we run, right? That's what our strength, I believe.
Right, right. And sir, overseas NIM are actually have gone up despite sharp moderation in the global interest rates. We also had small slippages in overseas book also. Still, the overseas margins have gone up from 170 to 175. 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?
Actually, overseas markets slightly moved ahead of us in terms of the realignment restructure on the reward. The peak level of NIM in overseas was 2.23. It has gone down to almost like 1.70. It has stabilized at that level. Now, again, we are able to get some good deals at a slightly better off rate. In that way, it has moved marginally from 1.70 to 1.75. Otherwise, the NIM cut of the overseas already happened. That is from a peak level of 2.23, has gone down to 1.70, and now it has stabilized. I mean, I'm not differentiating much between 1.75 and 1.70. Anything, Tyagi, you want to add on the overseas NIM?
No, sir, you have said it all. In fact, that is the reason that five basis point is transient, in fact. The earlier Fed cuts have already been priced in up till March.
Okay. Sir, lastly on MSME, right? If you see, the bulk of the slippages is now coming from MSME. Sometime back, we used to give this breakup of MSME book by CMR, right? How much is CMR one to three and then maybe three to seven or some bucketing there. Would be very helpful because now the entire, I mean, majority of the slippages are coming from MSME. If you can provide some more color on the rating of the MSME book, even now if you have on the, as of June 30th. Just on a quantitative basis, most of, I mean, the entire MSME should be secured, right? We do not do any unsecured MSME. Or do you have some proportion which is unsecured MSME?
No, actually, our MSME is basically, see, that you are on the retail piece also, these are all secured retail. Personal loan is very less there. Whereas MSME also, all our loans are secured. The unsecured MSME, we do not do much. The only case where unsecured MSME, if there are adequate backup, because now we have come out with a cash flow-based OD product, which is again unsecured. So the component is very less here. We do not do otherwise a business loan unsecured like what the NBFC and others do. Most of the portfolio is a secured one. Secondly, a couple of areas where I would have seen a growth in MSME because we are focusing on CBCME. That is one segment. Policy banks were not very strong. Now, we as a bank are quite strong on that. Supply chain is also picking up.
Trades that are good volumes happening now. Core MSME, we are bundling along with the cash flow of cash management system so that we understand the cash flow. Unsecured companies less, but then a couple of schemes were recently announced on secured OD, and that is based on the GST return. These are a couple of small schemes operating, but not much. Lastly, sir, anything you want to add on the unsecured one?
No, there is not much unsecured loans in the MSME. Wherever the loans are without securities, those are covered by the CGTMSE guarantee coverage from the government guaranteed schemes.
Okay. Last question, sir, if I may ask, what would be your best guess for the staff cost for full year FY 2026? Assuming whatever is happening on interest rate, because a lot of banks have also started doing PLI, I do not think we, or we would have done the one PLI, 15 days this thing. I do not recall a very big PLI scheme for us in FY 2025. What would be, I mean, if you have, what kind of PLI schemes that you are running for employees, and what would be your sense on the staff cost for FY 2026?
Anyway, Lal Singh , sir, what the Madam Beena, CFO, anybody can take this question?
Sir, if I may submit, we are making adequate provisions towards PLI, sir. Keeping in mind the requirement.
Adequately provided on PLI at the same time, AS 15 also, I believe we have adequately provided, right?
Yes, yes.
Yes, sir.
Yes.
Okay. Any further data on that, we can provide you offline.
Sure, sir. Thank you.
Okay. Thank you, everyone. That's the last question we'll be able to take. Can I ask Sridhar, sir, to please give the vote of thanks?
Thank you, Phiroza.
I would like to extend my sincere gratitude to you all for joining us today for the announcement and the discussion of our financial results. Thank you once again for your time and continued support. Have a great day ahead. Thank you.
Thank you very much. Thank you.
Thank you very much.
Recording stop.