Good afternoon, everyone, and welcome to the analyst meet for Bank of Baroda's financial results for the quarter ended September 30th, 2024 . 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 will start with a short presentation. We will then have brief opening remarks by Mr. Chand, after which we will have the Q&A session. O ver to you.
Sure. Good evening, friends. Just to introduce the management team, I'm D. Chand, MD and CEO of the bank. I've been interacting with you for almost six quarters. With me, Mr. Lalit Tyagi, he's the Executive Director, looking after the corporate credit, international banking, and also the treasury. And with us, Mr. Sanjay Mudaliar, our Executive Director. He looks after the entire IT infrastructure and IT of the bank, along with the retail asset book of the bank. Again, with us, Mr. Lal Singh, he's Executive Director, looking after the recovery, the stress asset book, and also the HR function, apart from a couple of other platform function.
The new vis-a-vis the last quarter and this quarter, the new member of the management team is Madam Beena Vaheed . She looks after most of the platform including control and platform function and also the retail liability piece. So with this, Mr. Chayani, he's the CFO. He's interacting with all of you for two quarters now. Over to you, Mr. Chayani.
Thank you, sir. And a very good evening to, you know, everyone. In advance, I wish you all and your family members a very happy Diwali. It's my privilege to present before you the financial highlights of Bank of Baroda for the quarter half year ending September 2024. You all will be happy to note that Bank has crossed a business volume of INR 25 trillion as of 30th September 2024. If I look at the components, the asset side, global advances has grown by 11.6%, and especially domestic advances has grown by 12.5%. Component-wise, we are exhibiting a robust growth in our organic retail by around 20%. Agriculture is growing around 11%, MSME at 12%, and corporate at 10.6%.
In retail also, our growth trajectory is very significant with respect to the mortgage, growing at 13.2%, home l oan at 16.2%, education at 17.2%, auto l oan at almost 23%. And as you all recollect, last quarter, and for the past quarters, we have said that we are moderating the growth in our personal loan book. It has come down from 39% as of the last quarter to 25% this quarter. Can you please change the slide? Coming to the liability piece, the liability remains a focus area for the banking industry as a whole. Our total deposit has grown by 9.1%.
Our two highlights of the as of 30th September is that consistently in Domestic CASA, we are growing at 7%, and retail deposit, we are growing at 7.2%, which is better than some of our peers. And as far as our CD ratio. Can you please go back? Yeah. As far as our CD ratio is concerned, CD ratio is at 83.83%, and CASA remains strong at 40%. Please, next slide. Profitability metrics. Operating profit has year-over-year growth of 18.2% and moved from INR 8,020 crore to INR 9,477 crore. Very happy to submit that for the first time, we have posted a profit after tax more than INR 5,000 crores with a year-over-year growth of 23.2%.
One of the strong profitability metrics is return on assets, and for last nine quarters, we are posting return on assets more than 1%. As of 30th September, return on assets on quarterly basis is 1.30%. Similarly, return on equity is comfortable at 19.22%. Next slide. If we come to the half-yearly picture, operating profit has grown from INR 15,844 crores to INR 16,638 crores, with a growth of 5%. That has increased by 16.5% half-yearly basis. Return on assets half-yearly it is 1.20%, and return on equity is 17.79%. Next slide, please. Yield on advances versus Q2 2024, Q2 2025, there is a increase from 8.43% to 8.48%.
However, if I compare that with Q1 of 2025, there is a slight reduction in the yield on advances from 8.55% to 8.48%. Cost of deposit remains elevated up to 5.12%, as compared to Q1 of 5.06%. Net interest margin has been within our guidance of 3.15% ± 4 or 5 basis points, and as of September, net i nterest m argin is 3.10%. It is more than that of Q2 of 2024, with 3 basis points. However, there is a dip as far as Q1 2025 is concerned. This is mainly because of the fact that with the change in the guideline or penal interest to be converted to the penal charges, the interest component has gone down.
That has resulted in reduction from 3.18% to 3.10%. Next slide, please. Asset quality remains strong at 2.5% gross NPA. Half-yearly basis, it has reduced from 3.32%. Similarly, Net NPA has reduced from 0.776% to 0.60%, and provision coverage ratio remains at a stronger point of 93.61%, improved from 93.16%. Next, please. If I look at the slippage, slippage is within our guidance of 1% to 1.25%. As of September, it is 1.07%. Credit cost, again, is 0.65%. Slippage ratio, if I compare H1, then it has come down from 1.28% to 0.90%, and credit cost is 0.55%, which is within our guidance. Next, please.
SMA book of the, as of, the 30th September, is 0.47%, and our collection efficiency remains robust at 98.5%. Next slide, please. The bank is enjoying a strong capital position of, the CRAR, as of 30th September, is 16.26% and enjoys a healthy LCR of 123.7%. That's all from my side. Over to you, Chand, sir.
Sure. Thank you very much, Mr. Chand. Again, to my investor and analyst friend, a very good evening to all of you. The CFO covered everything, but make some of the qualitative comments with regard to the financial result we have announced today. We have again declared a very good quarter, Q2, both in terms of a very strong top line and also a strong bottom line in terms of the net profit going up by 23.2% year-over-year, and 17.4% quarter- to- quarter.
The aspect which is again important on the book side is that, in spite, like, the strong growth on the asset side, we are able to achieve our margin objective, and that is what the CFO outlined before all of you. On the resource side, a couple of qualitative comments. Earlier also we said, like, we should not grow book based on the wholesale deposit growth. Our focus was clearly on the retail, CASA, the retail T erm Deposit. And the numbers you see for this quarter, which is at 7% and 9.6 % for the retail Term D eposit, and this is the same, growth that we have achieved in Q1 also.
Clearly, in terms of the pure comparison is clearly, we have a very strong performance, and that is what the focus is going to be. We want to optimize on the retail space more in terms of the liability, rather than growing on the bulk deposit, which again can be a price, I mean, price impact for me in terms of margin there. On the asset book, again, the domestic asset book, the growth is 12.5%. International is 11.6%, I mean, the global is 11.6%, because earlier also we said that the growth of international, which used to be very high earlier, we clearly want to moderate. We have seen that the international book growth is only 7.6% this quarter.
Because of that, the global book is 11.6%, but the domestic book, which is a very large in terms of the overall book, is still growing very strong at 12.5%. The margin guidance that we had given, that is at 3.15 ± 5 basis points. In spite of the deposit cost going up by 5 basis points, 5 or 6 basis points quarter- to- quarter, because of the management of the ALM, we are able to maintain the margin guidance. I mean, barring that impact of 5 basis points, otherwise, the NIM would have been higher than that we have announced 3.10%, the penal interest to penal charges.
Otherwise, the NIM is still very strong, and that is what one of the objective in terms of how do we balance the growth and margin, that's clearly our strategy as we move forward. The domestic margin NIM is 3.27%, which is fairly very satisfactory in terms of the peer comparison also, and the kind of margin we are generating out of out of the book. The net profit has been very significant. Mr. CFO has already announced this is the first quarter where we have crossed INR 5,000 crore of net profit. The net profit growth year-over-year is very high 23%. Quarter- to- quarter is also quite high.
Obviously, the net profit has been boosted by from the recovery out of technical write-offs, which would have seen that we announced the data to you in the market. ROE has been consistently. We had given guidance earlier to maintain above 1%. This quarter it is 1.3%, and the half full half year is 1.20%. And earlier also, we said while constructing the book, both in terms of the asset liability we operate the NIM and the ROA as twin parameters to optimize in that. So we'll continue to have those focus going forward also. The asset quality has been the GNPA of 2.5%, Net NPA of 0.6%.
We have improved this quarter -to- quarter, although we don't give guidance on the GNPA and Net NPA, but always we say that we intend to trend it downwards, both GNPA and Net NPA, on the matter. And on the slippage ratio and the credit cost slippage ratio and the credit cost, we are within the targeted guidance. The slippage ratio, the guidance is 1% to 1.25%, we're at 1.07%. The credit cost guidance has been 0.75%, which was reduced from 1% to 0.75% last quarter, we're at 0.65% on that.
A couple of other things which are again important for the overall business perspective, that as all of you know, that we announced a cricket legend as our global brand ambassador recently. The idea for the phase is to retailize the bank more. I think with this brand ambassador phase we are going to have more of retail presence in the entire country. We want to go to each and every customer in the country in terms of retailizing the book for the purpose. The bank committed big time on the ESG commitment. We have earlier also announced a couple of new initiative. We are one of the bank having like the first or second to announce the green deposit.
We have a significant green outstanding loan exposure as on today. We planted trees across country to have a greener greener planet. Actually, we got some award because of that. On the priority sector lending, the bank is quite strong at. So the ESG is one of the core theme the bank is working on, while overall business trying to achieve the business growth, as we said earlier.
Digital is also another focus area, and as you know that we announce a virtual relationship, but actually Aditi, wherein it was a virtual relationship manager interacting with the customer based on a AI model, and there are a large number of customers who are onboarded into this model, this customer relationship engagement, and there we are getting good, satisfactory comments from the customer on that. So, let me come to that digital customer service is one of the core theme that the bank is working on, and whatever we are as on today, going forward, we'll try to improve the digital customer service. That is one of the theme that we are working strongly on that.
With this, let me come for some of the guidances, part of it. As you know, the deposit market is quite challenging at this point of time. Most of the banks, although I think we have done better on quarter to quarter on the deposit, but it's a challenge because the savers' money going to alternatives, like capital market and all that is what we have seen in the past. In case you look at our quarterly, quarter- on- quarter growth, it is almost at around 9% or 8.6%.
So with this, actually, earlier we gave a guidance of 10-12%, yeah, the deposit growth, but now because on the system has the same issue, then we are slightly lowering the guidance from 10-12% to 9%-11%, although we'll try to operate in the upper band of that, that is, that is at 11%. Currently, the growth is 9%. That means my Q3 and Q4 growth on deposit has to be higher than obviously 9% to achieve the 11% kind of a number going forward for FY 2024/2025. Because of the credit growth and the deposit growth is much talked about in the system.
Because we are revising the deposit guidance based on the actual numbers we have achieved, although the growth in Q3 and Q4 has to be much higher than the Q1 and Q2, but then the loan side guidance also, we are revising from 12%-14% to 11%-13%, although we'll try to operate at 13% level, precisely for two counts. One is that we do not want to increase the credit deposit growth to a level where it should not be sustainable, point one. Keeping the margin guidance in mind, the number two. Third is that as the deposit is revised, obviously the credit target has to be revised. The international book is going to moderate.
Actually, that is what actually we are talking about, a global book, although the domestic book continue to be higher than 12.5% that we achieved. So the guidance on the advances is 11%-13%, with our efforts to operate at 13% for the full year on the because we are working into both very productive quarters, Q3 and Q4, which are the busy season quarters, and I think we'll be in a position to achieve rather surpass the guidance that we are giving on the asset side. Margin, the same guidance we had given 3.15% plus minus five basis points. The reason being, slightly realigning the balance sheet has given given positive outcome to us that we have done that in Q1.
Going forward, we are expecting bit of moderation to happen on the deposit cost based on the liquidity stance or the rate stance, possibly that would happen in the economy. So there are Q3 and Q4 available to us, so I think we still maintain the NIM guidance at 3.15% ± 5 basis points. The credit cost continue to be the same below 0.75%. The slippage ratio continue to be the same, like 1%-1.25%. The ROA guidance continue to be above 1% and try to optimize at 1.10%. So these are a couple of guidances we had given to the market, and I want to reiterate now the same thing.
The bank has a significant growth this quarter in Q3, Q4, going to be higher than the growth that we have seen on the asset and liability side in Q1 and Q2. As you know, that Q1, we realigned the book slightly, keeping the fine price book on the corporate side level. I mean, slightly reducing that book. The corporate growth was 1.6% in Q1, and this quarter it is 10.6%, very strong, and going to again higher than 10.6% to achieve a 10% growth on the corporate, so that I achieve the overall advance growth of almost like 13% in the band of 11%-13%.
With this, I think I'm done with regard to my comments, and now over to you, Foram, for the question and answer.
Thank you, sir. We'll now start the Q&A session. If you have a question, please raise your hand or you may also type in your question in the Q&A box. I would request you to please limit yourself to two questions, and if we have time, we'll come back to you if you have an additional question, and we'd also request you to just introduce yourself before you ask your question. So the first question is by Kunal Shah. Kunal, request you to unmute yourself, please.
Yeah. Am I audible?
Yes, Kunal, you are audible. Please go ahead.
Yeah. Congratulations. A couple of questions. First, want to understand on the provisioning side. So obviously, there was recovery from written off, but at the same point in time, provisioning was slightly on the higher side. We did INR 230 crores of floating provisions, but besides that, was there any prudent specific provisioning also done just to make sure that, okay, whatever has been the one-off on the recovery, trying to offset that? And if you can just quantify that amount of specific prudent provision.
See, Kunal, you said right, we have INR 230 crore of floating provision. With this, the floating provision has gone up to INR 600 crore now, the outstanding floating provision therein. As you would have seen, that bit of prudential provisioning, we have taken both on the standard asset side and also on the NPA side, right? So exact quantum, I can't tell you at this point of time, but then, in case we can provide you subsequently. But then clearly, we have taken a bit of extra provisioning, both, that is a prudential provisioning, obviously, specific provision that is both on the standard asset and also on the NPA side.
Okay, because despite write-off, our coverage is still sustained, which is a good thing, and I think that's more, the prudent specific approach, it seems like. Okay. And secondly, if you can quantify this impact of penalty charges on NIM, so from 3.18% to 3.1%, how much was the exact impact because of these penalty charges?
Yeah, as you said that, it's an impact of almost 5 basis points. The amount is almost like, INR 179 crore-INR 180 crore on that. So that has moved from, the interest income to the, the other income in that way.
Okay. Okay. Thanks. Thanks, and all the best. Yeah.
Thank you. The next question is from Param Subramanian.
Hello.
Hi, Param. Please go ahead.
Y eah, sir, just a question again on the write-offs. So we saw high write-offs this quarter, and then higher recovery from written off as well. Is it, are both of these linked? Is it, is it part of one settlement where we see a higher write-off and then, you know, recovery from written off? Because one of the large private sector banks also talked about this previously. Yeah.
No, actually, they are not linked in that way. They are different accounts for the write-off and different accounts for the recovery that that happened. There is one large NCD account where actually we got a good amount of recovery out of that because that got resolved. Write-off is typically linked with the level that you can do on the write-off, and based on that, we have done that. Actually, that's part of the normal that we have been doing for many quarters now. This quarter slightly may be elevated because it does allow me, because there was a substantial TWO recovery, allow me to have a higher write-off on that. Anything, Mr. Lal Singh, you want to add on this?
Yes, sir. So, there is a guideline, and accordingly, as per the guidelines of DFS and RBI, we can, we have the provision of writing off the accounts, up to the recoveries, done in the quarter.
Yeah, fair. Okay.
The next question is from... Yeah, Param is done. The next question is from Mahrukh.
Yes, Mahrukh, good evening. Please go ahead.
Yeah, good evening. Hi. So I have two questions. Firstly, that was there any penal interest reversal even last quarter? It would have been smaller, but was there any-
Yeah, there is a small amount-
And then, my other two questions, so yeah, slip in one more. So my other two questions are, that you know a lot of state banks are seeing some central government accounts, and some of them are even talking about state government accounts either slipping or becoming SMEs. So without naming, what would be your collective exposure to these accounts? Because your SMA has not gone up, so you may not have any significant exposure, or maybe you have, and it's not part of SMA already. So if you could throw some color on any potential SMA or slippage you are likely to see from any central government accounts, at least some color on the exposure there. So that's my second question.
So my third question really is: how do you see your cost of deposits, given that, you know, a lot of competition is still happening, and there are so many new festive offers now, the real impact of which will be seen in the next quarter in terms of deposits? So these were my questions. Thank you.
See, Mahrukh, see, if the first aspect in the penal interest in the last quarter has got reversed into charges, that was only around INR 13 crore therein. So the major part in the Q2, like almost INR 176 crore in the Q2 only, not in Q1. The second aspect of the SMA book that you are talking about, yes, if you look at our prelim data, SMA 1+2 , and there is a bit of increase therein, and there are two state PSU accounts therein. But these are purely technical delay, which typically would be, I mean, recouped into standard at the earliest, so absolutely no challenge therein.
There's the state PSU accounts, couple of, and the amount would be in the range of around 3,300-3,400 on that. So there actually it's a more of a technical overdue, which can immediately pull back. That's on the past track that we have seen. So there is no slippage of any state PSU or central PSU in any manner as far as Bank of Baroda is concerned. So absolutely, we have a very good book on that. Thirdly, on the cost of deposit, as you would have seen that Q2, the cost of deposit has gone up by 6 basis points. Q1 over March was almost flat, but it has gone up.
With this, actually, I believe the repricing effect of the deposit is almost over by this time, and there are two outlooks as a house view we are working on. One is a case wherein there may be a bit of cost moderation that can happen maybe towards the late of Q3 or the early of Q4. Considering that, the RBI changed the stance from withdrawal to neutral now, and the liquidity in the system, we have seen October is much better than September, September is much better than August, so scenario where the liquidity comes back, actually, we have seen the CD rates going down substantially, till the wholesale deposit and the retail has been kept high because the growth has not been substantial, so the festive campaign is going on.
With this, I believe, broadly, the cost of deposit side is fairly balanced, and in any scenario, as we are keeping the same margin guidance, that is, through the ALM, Asset Liability Management, I think we'll be able to maintain the margin, case where cost of deposit goes up, then we have to pass on to the borrower. If it goes down, we'll pass also the benefit to the borrower, so in that scenario, for the full year, we are keeping it balanced, so I don't think much of impact coming out of the cost of deposit going forward. Although the levels are elevated, no doubt about it, but then somewhere maybe late Q3 or the early Q4, we are hoping for some kind of a moderation, considering better system liquidity.
Okay, sir. Thank you.
Thank you, Mahrukh. We now go to Ashok Ajmera. Sir, unmute yourself. You can ask your question.
Evening, good afternoon, sir, and the entire team of Bank of Baroda, and compliments to you, sir, for a very good quarter of very good set of numbers. Especially, you know, like many a time, we just plainly look at the bottom line, and the bottom line in these difficult times, you know, when even the market is also going down for the last few days, gives a very good feeling, you know, like, if that is improved. Of course, a major part of is contributed by the other income.
I think in your initial comment and the giving the answer of the first question, you had said that there is some recovery, I mean, recovery from some account, and the other income has gone up to INR 5,081 crore this quarter as compared to INR 2,487 crore. So my first question is only on the, I mean, considering that the NIM and other thing is not going to change much, I mean, you are still continuing your target of 3.15%? Going forward, in the coming two quarters, what kind of bottom line we see? Like, your operating profit is growing rapidly, so naturally, and the provisions should be under control if there is no chunky account. So where do you see the profitability of the bank going forward?
Are we matching this quarter, going, improving it? So this is my just, the first, question, and basically, your little more broader guidance on that. And my second question is on the treasury is also doing very well, sir. Treasury income, even from the, you know, trading gains are to the range of INR 550 crores, as compared to last quarter of INR 164 crores. And overall treasury profit, even on the revaluation of the investment, has also gone up. So whether that trend is going to continue in coming two quarters, especially when we see that the rates might come down, in December, a review by the regulators. So on that, whether they this is going to continuously help the profitability of the bank. So this is on the, second this thing.
And third is, sir, on the deposit front and overall business growth front, many of the senior bankers, you know, in last couple of months have been saying that a lot of money has flown to the capital markets, and because of that, there is a pressure on the, especially on the CASA side. But now, since the market has gone down, you know, like some of the stocks have gone down to maybe 15%-25%, and maybe the appetite of the people might come back to keep the deposit with the banks. So going forward, what do you see this pressure on deposits will continue, or it may little bit eased out? So these are the certain, some questions and some of your guidance and observations, sir.
Thank you, Ajmera Saab. Actually, actually, I was looking for when you will come, and I'll answer on the treasury side. Actually, that's something very good to, I believe you and me. First, with regard to, you talked about profit guidance. Actually, normally, we don't provide any profit guidance. Only, guidance we provide on the ROA. So we are looking at an asset growth of almost 11%-12%, and keeping the ROA at 1.1%, you can estimate in terms of that. Because profit, actually, we don't know, neither we will, but always try to optimize that at any point of time. But the guidance that I can provide is on the ROA. ROA continue to be, we have achieved 1.3% this time.
Full year is 1.10% . Although guidance is above one, but we'll try to full year 1.10% on the ROA. So that is something I can tell at this point of time. On the treasury side, this has been a good quarter, but our trading profit is mostly by the bond, not equity. So equity, maybe a couple of IPOs has given good some money, but then mostly on the bond side.
So still, with the outlook prevailing in the global, although the market has a bit discounted some of the cuts that are likely to happen, but then I think the bond market would be fairly stable going forward, and even if the rate cut and all happening, then still it will be very positive, because equity, we don't have much of exposure in that way. So, in that way, I'm not very largely influenced by what is happening on the equity market. One positive that I would say that actually last time when we interacted, the treasury gain was slightly less than the peers. I said that, please look into an element of the AFS reserve, right?
Again, I request you or else, if it is not captured in the analyst, my people would give you the data. We have added almost INR 1,200-INR 1,300 crore of AFS reserve this quarter. That's significant. That's significant. Let's say a scenario of a we're all migrating to Ind AS and the treasury impact coming into books, so we are very well prepared on that. That very significant, the outstanding book would be almost INR 2,800 crore-INR 3,000 crore on the AFS. That's why the capital has also gone up, I mean, CRA. That's something very fundamental to us. We want to have a balance out my treasury gain, at the same time, keeping the reserve well in the book so that we are there for the long term, I mean, opportunity on that, right? That is what. You also talked about deposit constraint.
That's a, that's the issue that slightly why I reduced the deposit guidance because on the Q1, the growth was almost 8.5%. Q2, it is almost at 9.6%. I had given a guidance of 10%-12%, which again something not happening. And all of us know the deposit constraint happening in the system because of alternate like savers are also preferring capital market big time on that, so it's impacting us. So reduce that guidance, but then at the same time we also said earlier that we are one bank on the deposit, innovating, bundling and trying to capture the market sentiment therein.
If you say that SIP mutual fund is the flagship, now I introduce a product called SDP, which is a recurring deposit scheme, but we are marketing well, getting good traction, from many of the savers who are coming to this product. This quarter itself, we raised almost INR 250 crore on the SDP. I think the public would appreciate well in case this picks up and some correction happening in the capital market. I think people would more come to the deposit market.
So I think we will be fairly. Although I've given a 9%-11% deposit for the full year, but then I think we can operate at the top notch of 11%. That is what our. That means Q3 and Q4, I need to have a higher deposit growth and higher advance growth to achieve my revised target, both on the deposit and advances.
So, just one question comes to my mind, some old. I think in the aviation account, you know, that one large, you along with the Central Bank. I think you two are the main bankers to that. And we have been in earlier, I mean, a couple of quarters back, we were talking very, very strongly about that, that we have got a lot of collaterals and the losses ultimately will be very less or we'll recover the whole amount. So I just remembered that, we have not talked about that in the last quarter also, and I think previous to that also. So what is the development on that account, and is there any chances of some major recovery happening or something has already happened? Or where do we stand on that account on the recovery front, sir?
No, as I said earlier, the exposure, 1/3 of the exposure was that based on the guarantee coverage it had, and now we have received the full amount on the guarantee, so the exposure has gone down to two-thirds, right? So out of 2/3 , there are again collaterals over there. There are some primary over there and some litigation finance money also can be expected. So in that way, fairly collateralized for us to recover money to the extent, full extent possible. Quite hopeful on that. Processes are going on, because some of the process takes time. But as far as the outlook on the account is concerned, we are fairly confident that we can recover to a very large extent out of this account. 1/3 guarantee we have already received.
So, in terms of absolute numbers, the balance outstanding is about INR 800 crore- INR 2,000 crore or?
No, something around INR 11 crore to INR 100 crore in that.
INR 11 crore-INR 100 crores.
Okay. All right, sir. Thank you very much, sir, for the-
Thank you.
for giving me the time. And if time permits, I may come back again, sir. Thank you, sir.
Okay. Thank you. Thank you.
Sir, we'll now go to Jay. Jay, can you please unmute yourself?
Yeah, hi, good evening, sir, and thanks for the opportunity.
Thanks, Jay. Very good.
So we had said about that this year is going to be the, you know, year of fee and float. We have done reasonably well in the corporate growth pickup in this quarter, and yet, you know, the commission exchange brokerage has not picked up to the extent, you know, or commensurate with the credit uptake. Any sense there, sir?
Actually. Yeah, yeah, yeah. You said right. Actually, that is one area we are trying to optimize, although we could not get it to the desired outcome on that, precisely for two reason. One is that, on the actually the corporate book, and the commission income is getting a proportional increase therein. But on the retail side, because we are running a lot of campaigns in terms of all this, so the waivers are there on the processing fee and all those stuff. We had the monsoon campaign, and then immediately after that, the Festival Utsav campaign. Both on the liability side and asset side, there are what you can say, lower growth happening on that commission exchange on those things.
A lot of market, again, on the operational side, has moved to digital, so we are not getting the requisite commission out of those. Slightly on the wealth business, we again slightly restricted the business. So as you know, that guidance has been to more to focus on the core business. So there is a dip in the wealth income therein, leading to a overall the growth is, I mean, there is a growth, but the growth has not been substantial to tell us that the fee and flow really impacted the book big time. But on the corporate side, there has been good traction on that. The CMS fees and all going up significantly.
Beyond the corporate, now we are targeting all these MSME account to get into the CMS, and there actually we onboard a large number of accounts, the outcome would come later. So as an action point, clearly, internally, as a management take also, yes, we have not optimized on the CEB. We try to optimize going forward, but couple of aspect, which again has given a lower growth, we'll focus on those and that is an action point on the management to take on this.
Sure, sir. Thanks for the detailed answer. Sir, on your personal loan book, which is INR 32,000 crore, if you can share the outstanding GNPA here, and maybe the slippages, if you have, on this INR 32,000 crore loan book?
Yeah, our outstanding NPA, we have shared possibly somewhere, I don't know. It is around 3.18%. My retail NPA is around 1.5%. The book as a whole. And actually, there are two things, actually. Personal loan, the digital personal loan is something around INR 10,000 crore-INR 11 ,000 crore. The remaining all is a branch underwriting, where it has been there, not only recently, it was there earlier. So if you talk about couple of segment, because again, a personal loan is a data-driven thing. So looking at the outcome, we immediately take action, like on a digital small ticket, we have all completely stopped it now. On the physical sourcing, there are segments which are salaried, there are segments which are non-salaried. Actually, we have tightened the non-salaried portion.
The growth, actually, if you look at, it has come down from 100% to almost a normalized 25% now on the personal book. So clearly, we're acting on that. The asset quality is much better. Obviously, the slippage would be, suppose you compare, the personal loan slippage now and a year back, now would be higher than that. Let's say, on a number, if I give you, let's say, it was INR 100 crore earlier, five, six quarters back, the slippage, now it would be INR 250 crore out of the total slippage of INR 2,700 crore. So it's insignificant in terms of impacting anything, but that bit of elevated as compared to earlier, because the moment the book gets aging, then also the slippage do happen.
So in that way, it's a small book as compared to many other peer banks. We have taken action on that, and I think going forward, the same kind of a outlook we have for the personal bank.
Right. Just to get it clear, sir, you said this 3.1% kind of a GNPA for the unsecured retail book, right? Which is INR 32,000 crore?
Yeah, yeah, yeah, yeah, yeah, absolutely.
Right.
My overall GNPA of the retail is 1.5%, 1.49% something. So it is only for the unsecured personal; it's 3.18%.
Right. And the slippages you said is around from INR 100 crore - INR 200 crores. It has moved out to, like, INR 250 crores per quarter?
Yeah, yeah, yeah.
Sure.
And INR 100 crore, I'm talking about, one and a half year back when we never discussed on the issue, because there never was an elevated concern on that, right?
Right. Right. And lastly, sir, on corporate yield, right? So what is the-- on your corporate book, right, which is, let us say, I mean, the entire corporate book, what could be the blended yield here? And if you have the, loan mix by yield also. I mean, what is the blended outstanding corporate yield, and if you have the, percentage of loans for overall loans into EBLR, MCLR, fixed rate, and others. Thank you.
Mr. Tyagi, can you take it up this question?
Thank you very much. In fact, we may provide you the data, in fact, if CFO is having right now, otherwise, offline we can provide. Largely the pack is the highest yielding assets are RAM. Within that, agri and MSME are the highest, then retail, and then finally come to the corporate. You know, within corporate also, we have been able to manage the yield. That's how in Q1, we allowed the slower growth, because we managed the book well. Q2, probably, we have some traction, and we grew, that is visible in the 10.5% growth. However, that was managed well, despite the fact that there were challenges on the yield side. Exact corporate yield, we can provide you, okay?
So there are two things here, actually, slightly the corporate yield, if you compare the Q2 and Q1, it has gone down because of the penal interest and charges accounting. That's one. Secondly, actually, in terms of the composition of the book, almost 47% is MCLR, 33% is EBLR. Roughly around 80-odd% has been the floating rate side. So that there is a ability to pass on is much higher with the bank at different market conditions, right? As Mr. Tyagi said, right, Q1, we wanted to realign the book, and that was the beginning of the quarter, allowing us to realign.
Realign only on the corporate side because of the fine price book, and then how do you want to, I mean, how much margin importance you give and how much book growth you want. So we wanted to realign. The growth was 1.6%. Clearly, this quarter, some of the price point was pulled up in the sense that market was offering us a higher yield on those advances, so then we went ahead with that. So it's a balanced view in terms of pricing, but clearly, when we construct the book, clearly, our margin is one of the objective we keep that in mind. So that's something, the margin, RAROC, these are all important, what you can say, parameters for us to consider when we increase the book.
Right, sir, and if I may ask one more question, if allowed. Sir, I mean, your segmental GNPA suggests that the corporate GNPA is now only INR 600 crores, right? And you have, INR 10,000 crores of MSME and slightly higher in agri. So but corporate GNPA are like, you know, almost zero. You still said that you would want to keep bringing down Net NPA. So, I mean, you have already 0.6% Net NPA, so what is the thought process there of further-
That's actually, Yeah. Yeah, please go ahead.
No, no, so, so that is why I wanted to check.
So, I tell you, actually, before to this, there was a media meet, and everybody was asking guidance on the Net NPA. We said that we do not give Net NPA guidance, but always we try to trend it downward. That is what, yeah. So the trending downwards is up to what extent and what actually the time and market would tell or our position would tell. So, corporate side, actually, I mean, there is not much of scope in terms of the NPA outstanding, although, the recovery out of TWO, there is a good kitty on that, actually. But then, this is clearly less.
The focus that we are giving, much of the slippage that happened that you have seen, it is more of a less than INR 5 crore segment where the slippages happened. And these are again retail book or a MSME book or a a gri. So the probability of again getting them upgraded is quite high as compared to a corporate loan book, because the moment corporate goes down, because the exposure is huge, the market conditions are different, very difficult to pull it back unless and until you get into a resolution process or a like the IBC process.
I think the recovery out of the small loans which slipped in last two, three quarters, although the level is very less as compared to the bank is concerned, INR 2,700 crore is the normal run rate kind of a slippage, but then we'll try to again optimize on that. One of the that when I was talking to the media on the same thing, our recovery target is INR 12,000 crore for the full year, whereas the slippage we need to contend at INR 9,000 crore-INR 10,000 crore . Giving us a INR 2,000 crore at least a delta in terms of reducing all these percentages. But having achieved 2.5% and 2.6% , I'm absolutely clear that it's a difficult move to again bring substantially down on these two ratio.
Thank you, sir. The last question for today, will take it from Rakesh Kumar. Rakesh, can you please unmute yourself?
Yeah, hi. Thank you, sir. So just couple of questions I had. Firstly, on the, you know, the interest income from the dummy ledger r ecovery, has it not been that great, considering that, we had, written off recovery of INR 2,500 crore and, margin was slightly soft? So that was the first question. Second question, 18% of our loan book, the overseas loan book, has quite a lot of volatility on the margin front. So if you, if you could help us on that front. And the third question is basically, we used to have, you know, the provision write back with this, restructured book, being upgraded. I think that did not happen, this quarter, and this was a regular, thing in our provision line item. So a nd the nature of agri slippage, the last question, sir. Thank you so much.
Sure. I'll take the second, which, with regard to the international margin. International, actually, if you look at the international market, at some point of time, the returns were quite high. So we almost achieved a NIM of almost 2.13% or 2.14%, which has gone down to 2% now. What is happening in the international market is that a lot of repricing happening at this point of time, right? Because, there is a Fed cut, rate cut, there are overall pulling of the rate of interest in those market. So that's why the growth, if you look at, we have clearly moderated, keeping this in mind that, the, the repricing pressure.
Since overseas market, both asset liability are floating, there is a bit of lag in terms of repricing on the deposit side, so that would eventually catch up, putting the margin. And normally, on the international, internally, we target something around 1.9% to 2% as a ideal margin level to maintain going forward. But the advance growth, clearly we have moderated, the growth has been lower this quarter. On the interest from the dummy ledger, Mr. Chayani, can you take this question, or you could provide later on?
So, sir, the interest, Rakesh, what you are talking about, the other interest income, and the comparison between the Q2 of FY 2024 versus Q2 of FY 2025, there is a reduction in the interbank placement of around INR 13,000 crore. Hence there is a dip in what you are observing. And if any further clarification queries required, please contact with me, I will provide that.
And he has also a third question. What is that, you said? Agri slippage has been brought back actually, that sometime seasonal also. The moment you migrate to Q3, actually this is the time where the crop harvesting and the money they get, actually the position improved significantly in Q3 and Q4, as far as agri book is concerned. But these are all small ticket diversified across the country, kind of A &A, so nothing specific with regard to that.
Got it.
And, anything else you wanted, Rakesh?
Just one question, sir. That was, you know, the provision write back we used to do in the, you know, a standard asset provisioning.
Okay. Actually, if you look at the standard asset provisioning this quarter, there is a bit of prudential provisioning, has happened actually. That is what actually, if you look at the outstanding, not increasing the NPA level, but there is a prudential provisioning, so the standard asset provisioning has gone up marginally, I mean, maybe around INR 300 crore. That is what, we see from Q2 and Q1. Rakesh, is that, okay with you, all this, question that we have answered that?
Sir, I have one question, sir, here.
Yes, please.
Kapil here. Yes, sir.
Yes.
Sir, when we look at the other income component for this quarter, that has seen a big jump year-on-year also and quarter-on-quarter. So taking into account the nature of other income, what should we be pricing in in going for H2? Because, sir, if we remove the increase, then the expenses on the interest expenses are not commensurating with the bottom line which we have posted, if we remove that increase in the other income. So if you could give us some more color, how this line item is going to shape up, or what factors led to this huge jump in the other income component, sir?
See, there are three components. One is a fee-based income, treasury income, and other non-interest income, which typically the write back we got it because of the recovery in TWO accounts. On a normal scale, this run rate is almost INR 800 crore as compared to INR 2,500 crore, like INR 2,600 crore, that is for Q2. The normal run rate on this is around INR 850 crore on a quarter-to-quarter basis, right? The fee-based income, it's more mainly the CEB and other income, that's a steady state kind of a thing. We're going to focus on this, it may see a 5% or 10% increase. Treasury income is again, market dependent.
One thing, while talking to Ashok Ajmera Saab, I was telling that our AFS reserve is quite significant. Like, since the start of the accounting from first April, we built up substantial AFS reserve therein. That means the book has an in-money position significantly. So that can be in a scenario where the market is not good, we can still leverage that. So, it's component-wise difficult to give you a clear run rate on the— but the item which has seen a significant jump, that is the other income from the recovery out of the written off accounts, TWO accounts, there, the run rate is around INR 800 crore-INR 850 crore maximum. On a normal scenario, if we get again, couple of other recovery, that can happen.
So we have a large kitty. The TWO kitty is also substantially large. Suppose you get, then it can further add to that, like it happened in this quarter.
But other than that, sir, you are lowering your growth target for H2. That is what you... Can you repeat in terms of the advances and the increase in the loan book? We are lowering our expectation for H2 by what basis points? Sir, if you could just repeat please.
Yeah. Actually, starting the deposit, actually, you would have seen the deposit growth for Q1 and Q2 has been around 9% or 9.6%, and the guidance earlier was 10%-12%. And always debated in the market a lot, the gap between the credit growth and the deposit growth, right? So we wanted to take a call at this point of time. So, the ten to twelve percent on the deposit, we have aligned to 9%-11%, although we try to grow at 9%. This is on a backdrop of a Q1, where we realigned the book, where the growth has been much lower. So in case to achieve 11% growth in deposit, actually, the Q3 and Q4 is pretty much higher than the Q2 growth, right? Then only we'll achieve 11%.
So very clearly, the growth in Q3 and Q4 will be much higher than the Q2. Forget about the Q1. Once, because, on the deposit, year, we have to recalibrate the advance growth forecast, and that is what actually it was 12%-14%. We have reduced by one percentage point, making it more realistic from 11-13%. Although, again, as I'm saying earlier also, we'll try to operate at the upper band, that means at 13%. Current growth is 11.6% globally, 12.5% domestic. Domestic continue to be strong, that means the growth has been higher than 12.5% for Q3 and Q4. Internationally, since we are moderating, as I said, because of a couple of other reasons, the overall growth would be again, at 13%.
The 1% reduction is not a reduction per se on the growth forecast. It's something realigning or calibrating the growth outlook based on the deposit growth, which you'll appreciate that it's not for Bank of Baroda. Rather, we have done well vis-a-vis the peers. In case you have the data even today, the bank has done well on the deposit front. But since there is a change, so we are expecting asset growth to realign, keeping the margin at the same level. So that's very important when I'm saying that there's a growth here, the margin. So one of the objective is to clearly keep the margin into consideration, particularly on the corporate loan book side.
So these are a couple of. We want to more realistic as compared to what we can give a guidance of not lowering the growth in that way, right?
Yes, sir. Chayani sir, we request you to give vote of thanks, please.
Thank you all for sparing your time and guiding us for our future prospects. Due to shortage of time, we may not have answered some of your queries or clarification. Please do connect with me or connect with my office anytime to have more clarity on any matter. And with all your good wishes, the bank is going to achieve new heights every quarter. And lastly, on behalf of our management, I wish you all and your family members a very happy Diwali. Thank you.
Thank you all. Once again, thank you very much.
Thank you.
Thank you.
Thank you all.
Thank you.