Good evening, everyone, and welcome to the analysts' meet for Bank of Baroda quarterly results for the quarter ended December 31st, 2025 . Thank you all for joining us. We have with us our MD and CEO, Dr. Debadatta Chand, and he's joined by the bank's executive directors and our CFO. We will start with a short presentation, followed by opening remarks by Dr. Chand, and then we will move on to the Q&A session. Chandra, over to you.
Thanks, Foram, and again, good evening to all my media friends who are present here on the call. Just to introduce the management team, with me, I'm D. Chand, MD and CEO. With me, Mr. Lalit Tyagi, the executive director. He looks after the C&IC, the treasury, and the international banking. With him, Mr. Sanjay Mudaliar is the executive director. He looks after IT, the retail asset, and couple of other platform function. Then we have Mr. Lal Singh, executive director. He looks after the HR, recovery, and the MSME and agri vertical. We have Madam Beena Vaheed, she's executive director, looks after control, compliance, platform function, along with the retail liability franchise of the bank. We have the CFO, Mr. Inumella Sridhar. He has been there for a couple of quarters now. So, Mr.
Sridhar, over to you for the presentation.
Thank you, sir. Good evening, everyone. It's my privilege to present before you the financial highlights of Bank of Baroda for the quarter and nine months ended thirty-first December, 2025. Our global advances have grown by 14.7% year-over-year, with the domestic advances growing by 13.6% and international by 19.3%. Within the advances book, the bank has continued to focus on RAM advances. Our organic retail book grew by 17.4%, agricultural by 19%, and organic MSME by 16.4%. Corporate loans have grown by 8.1% year-over-year.
Within the retail segment, we have seen smart growth across the portfolio, with education loan growing by 12.8%, personal loan by 12%, home loan by 16%, auto loan by 17.4%, and mortgages by 21%. In terms of deposits growth, our total deposits have grown by 10.3%, with international deposits growing by 5.7% and domestic deposits by 11.1%. The domestic CASA deposits have grown by 8.6%, and term deposits have registered a growth of 12.7% year-over-year. As of 31 December 2025, the bank's domestic credit deposit ratio stands at 83.89%, and CASA ratio stands at 38.45%.
With regard to quarterly profitability metrics, our operating profit for the quarter stands at INR 7,377 crore. Bank's net profit for Q3 stands at INR 5,055 crore, registering a growth of 4.5% year-over-year. Return on assets remained consistently above 1% at 1.09%, for the as of 31 December 2025. Return on equity stands at 15.59% for the quarter. For nine months, FY 2026, our operating profit stands at INR 23,190 crore. Our net profit for nine months, FY 2026, stands at INR 14,405 crore. Return on assets remain above 1% at 1.05% in nine months, FY 2026.
Return on equity stands at 14.81% for the nine months ended December 2026. With regard to our key ratios, our yield on advances stands at 7.56% for the quarter and 7.84% for the nine months. Bank's prudent liabilities management has led to a sequential decline in the cost of deposits for the quarter, which stands at 4.75% as against 4.91% for the previous quarter. With regard to our net interest margin, it stands at 2.78% for the quarter and 2.88% for the nine months. Now, we come to our asset quality, which continues to remain robust. Our gross NPA ratio has improved by 39 basis points year-over-year and stands at 2.04%.
Net NPA ratio is below 1% at 0.57%, an improvement of 2 basis points year-over-year. Our provision coverage ratio, including TW, is comfortably at 92.73%. Our slippage ratio for Q3 FY 2026 has reduced by 4 basis points year-over-year and stands at 0.86%. Credit cost remains low at, and stands at a level of 0.17% for the third quarter of FY 2026. Coming to our SMA and collection efficiency, our overall SMA 1 and 2, as a percentage of our standard advances, stands at 0.36% as of December 25. Our collection efficiency, excluding agriculture, remains robust at 98.6%.
In terms of our capital adequacy, our capital position continues to be strong, with the CET1 at 12.45%, Tier I at 13.10%, and overall CRAR at 15.29%. Our LCR remains healthy at approximately 116% as of December 25, adjusted for the profit of nine months, FY 2026, capital adequacy would have been 16.47%. Now I request MD sir to-
Well, thank you, Mr. Sridhar. Again, once again, all my analyst friend, good evening to each one of you. Let me make a couple of quick qualitative points here. The financial this quarter again talks about the same business model that we have been talking about, which is again to strengthen the fundamental core and be consistent and stable outlook. The current quarter also the numbers shows that the bank pursue this objective of being a fundamentally strong core, at the same time, a sustainable performance. Secondly, the profit numbers that you see for this quarter is purely out of the operation. We don't have any one-off anywhere in the other non-interest income or anywhere which gives slightly elevated level of profit.
The profit that we are declaring this quarter, and the net profit has seen a 4.5% jump, is purely out of the operational profit. Secondly, only, the, the balance sheet numbers we have seen already were declared the provisional. This is one of the strongest number we have in last eight quarters. The advances almost reaching 15%, the deposit almost at 10%, the domestic deposit at 11.1%. I think we're one of the strongest. Only two points I will touch here, that, the RAM is almost at 17%-18%. The corporate has gone into 8% now, and the full year we are targeting to be at 10%.
Similarly, on the liability piece, our saving growth of 7.6% and CASA pro growth of—sorry, CASA growth of 8.6%, I think one of the best in the top quartile in the banking sector. So continue to focus on the low-cost deposit, at the same time, build a asset book, again, consistent in terms of our objective of a diversified book. I mean, creating a more stable outlook with regard to growth of asset book. On the main important part that you would have seen is that the cost of deposit, the global cost of deposit at 4.75 and the, I mean, the domestic at 4.99.
That means on both the count, last quarter we pierced the global deposit cost below five, and this quarter we have both domestic and also global below five. In case you look at the market threshold, this is one of the top quartile, a good number in terms of cost of deposit, rather the pristine level to have. That's something a prudent liability management that we carry in terms of not to depend heavily on the bulk deposit, rather focus on the low-cost deposit, is giving us positive outcome. At the same time, the margin that you see for the nine months is at 2.88. We had given a guidance of 2.85-3, and we are right on the band of 2.88. Whereas the Q3 is 2.79.
But, the overall guidance for the full year continue to be at 2.85%-3%. On the asset quality, again, the numbers were very well in terms of the benign asset cycle we have, not only for the bank, but the entire industry. The GNPA of 2.04%, net NPA of 0.57%, slippage cost of 0.86%, and the credit cost at 0.17%, with the collection efficiency almost the same level at 98.6%, excluding agri. And the CASA, the SMA 1 and 2 book of the pre-COVID data has improved from 0.39% to 0.36%.
I think the bank is riding on an excellent asset quality as at end of the last quarter, that is the Q3. A couple of fundamental things I think that's important for you to understand, that in terms of if I compare, December 2025 over December 2023, the book value of the bank has gone up from almost from INR 180 to INR 250. That's an accretion of almost like INR 80-INR 85. That's significant. Secondly, the bank has been, persistently, putting a stable outlook, like the ROA is almost now 14 consecutive quarters we are posting continuously more than 1% ROA. In terms of profit, this is the, 12 quarter we are posting more than INR 4,000 crore of net profit.
Out of the last six quarters, this is the third quarter we are posting more than INR 5,000 crore of net profit. The point that I'm driving is a consistence, a consistency in terms of the income-earning potential of the portfolio, and the outcomes are very favorable in terms of a consistency and also at an elevated level of profit that we have operated. Couple of things that possibly just to take a note of that, we got the Best Bank award by The Banker U.K., so sometime back, that we put that on the public domain also. And that's a strong validation of the bank's journey, which is consistent with growth, which is sustainable and also transformative.
At the same time, on the technology, IBA Technology Award, which was announced recently, there are seven themes on that, and Bank of Baroda could win four out of seven as a winner, and the fifth one is also a special mention award, a special mention award. So, it's a huge recognition to the bank's digital robustness and the bank's architecture in terms of creating a customer experience, which is definitely better. And we'll keep on driving more on this, but then I think the awards of four winner is a huge recognition to entire Barodian who works on transformation, technology, and deriving better customer service. With this, I open the floor for question answer. Foram, over to you.
Thank you, sir. We will now open it up for Q&A. If you have a question, please raise your hand, or you can also type your question in the Q&A box. Would request you to please limit your questions to two for now, and if we have time, we'll come back to you. The first question is from Mahrukh Adajania?
... Yes, sir. Good evening, sir. Sir, I had a couple of questions. Firstly, I'll first list out my questions. Firstly, in terms of NII growth, if you could help us distinguish between total NIM and core NIM, because last time you had kind of given that cut, right? That 2.8%-2.96% is the total NIM, and then 2.76% or something is the core NIM. So what is the comparable figure for core NIM this quarter? That would help. And, you know, if there's any recovery income on NPLs, which is higher than last quarter in the NII. And secondly, in terms of written-off recoveries, they doubled QOQ.
So if you could give the split between retail and corporate, and if there was anything lumpy. And, my third question really, sir, is on the NII growth, right? So of course, there's a bit of lower tax refunds, and, you know, there's a distinction between core and total NIM. But our loan growth is exceptionally high, which is a big positive, whereas the NII growth is in low single digits. So would we be better off if we consolidated growth and improved margins, or that's not an option?
Okay. So, Mahrukh, typically your question around the NII, the NIM, and the core NIM. Look, as I said, that as far as NII is concerned, INR 11,800 crore NII is, you would have seen, because you are comparing with banks, is one of the strong NII number on absolute terms. So that is very clear on that. So our NII is INR 11,800 crore, and the NII is purely out of the core operation, nothing one up there. So that's a, a pure operational NII, that is INR 11,800 crore. Coming to your, the NII growth has been, slightly, I mean, stagnant or maybe at the same. The reason being the, the interest expenses and the, the interest income.
Although there's a strong asset book almost at 15%, but there is a repricing happening on a couple of books on the asset side, also continue to do that. Similarly, on the liability piece, although the cost of deposit has been lowest, but on the wholesale market or the borrowing market, still the cost are elevated, where, as you know, the ten-year G-Sec still being high. So in scenario, the NII is almost at an elevated level, but stagnant, in the sense, the same level. I don't have a core NIM or a separate NIM. All NIM is core. Absolutely, but specific to that, in case you are talking about the income tax refund, last time also we had some amount, this time also we have some amount.
The impact on the number can be something around 5-6 basis points maximum, but everything is core, and that is at nine months, it's at 2.88. So we had given guidance of 2.88-3, and we are on the target. You had one more question, Mahrukh, can you just repeat that?
Yes, sir. Actually, I wanted the TWO, the recovery in written-off-
Recovery.
has gone up. Yes.
So, normally I always say that's a normalized, I mean, it has been, I've been telling it for last five, six quarters. Our recovery of written-off is a normalized INR 700-INR 750 crore. I mean, I'm repeating this statement for multiple quarters now. Last quarter was slightly less, but this quarter it has gone into, the level of, that. And, look, we have a total book of almost INR 63,000 crore. So there will be recovery, but the normalized quarter is INR 700-INR 750 crore, and this quarter it is slightly 800 plus something. So in that way, there is no one-up there, it's a normalized, recovery out of written-off. On a guidance scale, we continue to have INR 700-INR 750 crore per quarter.
So, there is no one-off currently in the entire, whether you talk about other interest income or non-interest income. Absolutely, the book is all good. Another thing also you need to comment on the loan book growth. On a loan book of almost INR 1,100,000 crore, everything, our book is entirely organic. The outstanding pool as of today is only INR 22,000 crore, which is again going down quarter to quarter. So in that way, the book is organic. The income out of this book is entirely, again, purely operational. So that is what a statement I would make.
Okay, sir. Thank you. Thanks a lot.
The next question is from Nitin Aggarwal.
Yeah, hi. Thanks for the opportunity. So I've two questions. One is on the LCR and the CD Ratio. If I look at LCR ratio has dropped quite sharply in the last two quarters, and so how do you think about that? And likewise, on the CD Ratio, which has been, like, rising with the sort of strong growth that we are reporting. So what are the comfortable numbers that you will want to, like, guard?
So Nitin, on the LDR or the CD ratio, we say perennially we have been operating 80+%. And, this quarter, the global is 86% and the domestic at 83%. So earlier also we said on the domestic will be comfortable on the range of 82%-84%. But global is always something different, so global can impact. But overall, the global side also, it would be something around 86%-88% would be the range. Saying so, you rightly talked about the LCR part, because the LCR gives comfort. So, as long as the LCR is comfortable, we should not be very, I mean, focused on the LDR. So the LCR, I mean, our target is always to operate around 120%, right? So last quarter we were 120%, this quarter we are 160%....
If you look at the book on the investment side, we almost sold INR 28,000 crore of investment this quarter, precisely to take advantage of the low yield and getting it repriced at a higher, you know, the 10-year yield at this point of time. So, that will build up actually our comfort range to operate 120. 116 is also a healthy number, but then we'll going to operate at 120, on the LCR. So, Tyagi sir, anything you want to add on the LCR or, okay?
No, sir, in fact, you have said it right, that our target range is around 120. We have been operating around that level. To take advantage of the market yields and also OMOs, the excess SLR has gone down slightly, but we will build up as the yield curve is showing some traction.
Yeah.
Sure, sir. And sir, the other question is around like, ECL. If you can give some color as to what kind of requirement are you seeing, in terms of, for the transitioning to the ECL? And, when we are having already a very strong asset quality, our slippages are in control, credit cost is, like, making new lows, why are we not, like, raising coverage further and making more provisions towards ECL transition? So what is the thought process on that, and how many years, like, basically do you want to cover that journey?
Okay. So, let me come to two aspects, differently. As far as credit cost, I actually, actually, for all the analysts, let me, I mean, give the guidance actually that is important, actually, I missed this piece. Our credit guidance continue to be 11%-13% with upside, which we have done it this quarter and possibly going to do in Q4. Deposit is to be 9%-11%. At the same time, the ROA above 1%. Margin guidance is 2.85%-3%. At the same time, the slippage is 1%-1.25%, but the credit cost, which was below 0.75, we have revised upward, in a sense positive, to below 0.60.
Precisely, the credit cost for last nine or 10 quarters has been at 0.34; this quarter, at 0.17. So, considering the quality of asset we have, I think the PCR part you are referring to, I think we are adequately provided in terms of the provision coverage you require to build that. Apart from that, we have built up a floating provision of almost INR 1,000 crore. We did that. We're one of the early banks to do that, and we typically said that keeping the ECL in mind, and we have done that. And going forward also, we'll be mindful in creating further buffer on the ECL. Just to give a data point on the ECL on a quick, it's draft guidelines, nothing final, but then we keep on doing pro forma calculation.
Just to clear on the pro forma calculation or the impact on the CRAR because of the ECL, because there are two factors here. One is a one-time impact because of the ECL. Another, there is a, the risk weight, also there is another guidelines where there is a significant write-back possible. So the net impact on the ECL or CRAR, which can be spread over five years, would be somewhere at 0.6 or 0.7 maximum. That is what, as per the guidelines, final guidelines, we'll conclude differently. The incremental provisioning, recurring provisioning year to year because of the ECL is only can elevate the credit cost only by 18 basis points, as in today.
Considering my guidance of 0.6, the average of 10 quarters almost at 0.34, current quarter at 0.117, I think we're adequately positioned over there.
Right, sir. Got it. Thank you so much, sir. These, these are my questions.
Yeah.
The next question is from Kunal Shah.
Yeah. Hi, am I audible?
You are audible. Please go ahead.
Yeah, sorry. So once again, to touch upon interest on income tax refund. So you mentioned like 4-5 basis points of benefit in NIMs of 2.79. So the core NIMs would have been closer to 2.74 or so.
Yeah.
So maybe interest on income tax refund would still be like, INR 400-INR 500 crore, even during this quarter?
That's the routine, actually. That's why last time also I said, the tax refund happens different amount, different quarter. So as a accounting, it is part of the interest income, which has been classified, so there is no core NIM or other NIM. Everything is core for that. But, if you talk about the element per se, then yes, there is a 5-6 basis points impact, because of that, and it can be in the range of 270-274 kind of level. But that purely is a calculation, but my NIM is 2.79, so that's the core NIM.
Got it. Got it. And, secondly, with the respect to maybe on the ECL side, last time you have still created the floating provisions as a prudent measure of almost like, say, INR 400-odd crores. We have floating provisions to the tune of INR 1,000-odd crores. So is that sufficient, and now there is no further need to create the floating provisions going forward?
So, as I said, just to the earlier question also, the impact-
Yeah
... on the CRAR will be 0.7, 0.6, I mean, 60 basis points. At the same time, the, the recurring provision requirement would be 18 basis points on the credit cost.
Yeah.
Current provision level is adequate, almost to that level, right?
Okay. Got it.
So, but-
And, um-
Yeah.
Yeah. And just, maybe on labor code, any impact during the quarter, or no, not really? Maybe we have been making this-
That's what the auditors also given in their report, key, there is no material impact, because, one of the key, impact on the labor code with regard to the gratuity, to be provided, right? So, our-
Yeah.
As per our current employment practice or the service code, anybody joining the bank, we assume that he stays for five years, so we make adequate provision therein, taking him as a five-year... I mean, he's continuing for five year. So in that way, there is no impact post the labor code, particularly on the gratuity, which can have an impact. So there is no material impact as far as the gratuity, the labor code is concerned. There are other parts there in other parts of the code.... the bank would be complying with that. Lal Singh, sir, anything further you want to add on the labor code or?
No, sir, there is not much impact as far as the labor code is concerned, and these rules are being finalized. So once they are finalized, then we see the actual impact.
Right now there is no impact. Hardly it impacted, it has impact of INR 8 crore-INR 9 crore. Okay. Thank you.
Okay. On growth, you have not revised the guidance. Now you have revised on the credit cost side, but growth, we are already like, say, closer to 10 odd % year to date from March to December. Then doesn't it appear that we will easily beat this 11-13 advances growth, or is there a rundown expected on the corporate, and that's the reason we are not revising this guidance?
No, actually, there is no rundown here. Actually, as I said, 11-13 upside. So this quarter we had 15, so precisely that upside is to exceed 13%. At the same time, look, one thing structurally that we need to be mindful while designing business is with regard to the, what is happening on the resource side, particularly on the deposit market. So although we have seen significant uptick in terms of deposit, my CASA, the saving has been 7.6%, which is one of the-- I think one of the best in the market currently. We continue to focus on the low-cost deposit, but not be very, over, I mean, over on board into the wholesale market, where the cost is slightly higher.
So given this scenario, I'm not relying heavily on the wholesale market, then I think, the advances side, the growth will be somewhere around 15%, 14.5, 15%. So that's why we revised that 11%-13% with upside. So, that's the purpose of, I mean, exceeding above 13% as of March 2026.
Got it. Thanks. Thanks. Thanks a lot, sir. That's all from my side. Yeah.
The next question is from Abhishek M. Abhishek, can you unmute yourself? Yeah.
Hello. Am I audible? Yeah. Thank you.
Yeah, go ahead.
Yeah. Hi, sir, good evening. You made an interesting comment. You said that if LCR is adequate, then LDR should not matter. Your domestic LDR at 83%-84%, as long as you have 160%-120% LCR, this can go up, right? Because even if it goes to 86-87, it will be fine with you, or do you have to manage the optics of 83-84 not going up?
No, look, I mean, you said right. Actually, domestic, we want to be in the 82%-84%. I mean, the optimal that we are looking at domestic is 84%. Whereas global can be around 86%-88%, because the global CD is always higher than 100%. That's the market dynamic. The point here, in terms of resource management, if you are referring multiple alternate resources where you can optimize costs, then we do not rely on high-cost deposit. We have, last 10 quarters at least, we are telling the bulk deposit, actually, we want to contain that because there's a volatility in it. So we are getting other alternate resources, which is in the form of refinancing, infra bond, global range of resources. So I think wherever we can optimize cost, we'll go for that.
That not necessarily be a deposit. So in that way, the solvency and the liquidity would be ensured while driving the asset side of the book. Saying so on the LCR front, which is more important, we almost our target range is 120. We normally, I mean, this quarter it has gone down to 116 because we have sold almost INR 28,000 crore of investment book just to take advantage of the rate cycle. And you know what is the rate cycle. We are going to replenish that because the 10-year has been higher now. So it's more of a treasury operation to slightly go down below 120, but we'll be in a position to recoup that, I mean, in a quick time in terms of maintaining our target range of 120.
So, in terms of the resource profile, the bank's resource profile is very strong. Somewhere some change in terms of LDR we see because we have to want to optimize that. Suppose I get a alternate resources which is cheaper than a... Although we continue to focus on the low-cost deposit, cheaper than the bulk deposit or CD, then obviously our tendency to go towards that, and that typically not reflected in the deposit, so your LDR seems to be slightly at a higher side. Otherwise, the bank is managing all this parameter, I think on a sustainable and stable look, and the solvency and the liquidity profile is very, very strong for the bank. So anything-
No, no, that is absolutely. Yeah. No, no, that is—I, I take your point. That's not my question. So my question was that even if this 83-84 LDR goes up-
Mm-hmm.
Because you are optimizing for different liabilities and your loan growth is 15, your deposit growth is 10, so anyway, it should go up as you go forward. It shouldn't be a problem, right? It shouldn't become a limiting factor. That is all I'm asking.
Sure.
It can go up to 85, 86, 87, it's fine.
In terms of resource profile, because you must be tracking many banks in terms of the profile of resources, our book is much more diversified on the resource side also, not only on the asset side. Again, because we have a large operation, the global LDR, if you look at the international operation on the CD ratio is more than 100. Because many of the same sources of deposit, if it is more than one year, it is seen as a borrowing rather than a deposit. So, these are all the sources are quite strong. So I don't think there is any limiting factor for that. The bank continue to grow strong, and our guidance of growing at, let's say, higher than 13%, continue to be there without any issue there.
Sure, sir. Second question is on NIM. So from here, what levers do you see?
See, there are two things. We said earlier at the beginning of the year, saying that in terms of resetting of interest both on the asset liability, Q3 and Q4 would be better than the Q1 and Q2. That is one articulation we had in Q1 and Q2, but Q3 continued to be, because there was a retraction in Q3, which was initially while commenting was not in mind. So the asset liability continued to again reset at a different level, particularly there is a lot of resetting happening on the fixed price asset, particularly on the corporate loan book. So a scenario like that, and the absolute number of NIM, if you see comparable with the industry, it's absolutely at a very good level, pristine level.
In terms of a Q4 exit, suppose you are referring in the process, full year will be 2.285-3, and exit has to be higher than 2.85. So, it may end up somewhere at 2.85 or 2.90 kind of level. That is what our expectation. Why I'm again hopeful on this, the cost of deposit is now all-time low at 4.75 for the global book, and which was 4.99 earlier, I mean, or 4.93 or 4.94 earlier. So the entire book could run at 4.75 at least for this quarter, full quarter. Whereas there is only on the asset side, the repricing continue to be at a lower rate because of, the asset market bearing.
So, net to net, I think we'll be in a position to maintain that 2.85-3 guidance that we are giving for the full year.
Yes, sir, it just seems like for the Q4, you know, there wouldn't be too much repricing left on the cost of deposit side. And on the yield side, you're continuing to grow, you know, NBFCs, power, triple A corporates, housing, all the lower yielding sectors where yields are low. So just on an incremental basis, it seems like margins will come down rather than go up. So what am I getting wrong here?
No, there are two things like, as you said, the, the-
Even your slippages are really low, so the interest reversal benefit is also not going to be much incrementally. So whichever lever I look at, I can't really find a lever which shows margin will go up.
Actually, the peak deposit rate was 6.50%, which has been reduced to 6.25% during the quarter in Q3 on the retail side, right? So the repricing that you are talking about, almost done, the impact of the repricing would not have been felt full quarter in Q3, which will be felt full quarter in Q4. So that's the upside there in the book, in that way. So, the repricing due, the only challenge here is with regard to the repricing due on the bulk deposit. Actually, that market is slightly still tight, so, that can put pressure. So there are ups and downs therein. See, on the RLLR side, external benchmark, these are already done. The corporate, which was getting repriced now because the tenure has been elevated, I mean, things are looking different now.
The repricing, which is to happen at a lower rate, now going to happen at a higher rate because the bond prices have gone up, the yields have gone up. There are both positives and negative. For a bank like of our size, I mean, six, seven basis points optimizing on the NIM is not an issue. We'll be in a full year the same, right? 2.85%-3%. Mr. Tyagi, anything you want to add on the repricing, please?
Yeah. So, sir, in fact, till November, there is a data from RBI also, which says that on the fresh deposits, the transmission of the previous cuts before the December cut has happened. But on the stock, it is still happening. So partly, I am supporting your argument, Amrith sir, that still stock is yet to be repriced. So probably there is some benefit which is still to accrue on the deposit side. And on the advances side, particularly on the corporates, if no further cut is there, so largely whatever demand they have made, largely it has been met till last quarter. So now, looking to the elevated capital market rates, probably corporates are also adjusting to the new reality of slightly higher pricing, as we feel.
Yeah, uh-
Got it. Right, sir.
Okay, great.
Okay, thank you. Thank you, and all the best.
Thank you. Thank you. Next question is from Piran Engineer.
Yeah, hello, sir, and congratulations on the quarter.
Thank you.
Just firstly, one clarification on one of your previous comments when you mentioned that incremental credit cost will be 18 basis points due to ECL. Are you just referring to for the first five years of transition, that is the 18 basis points, or the sustainable steady state is 18 basis points?
Yeah, the sustainable steady state, actually, there are two impacts of the ECL. One impact is because of the one-time impact on the CRAR.
Correct.
Where, we are looking at almost, actually we are netting it off. There is an ECL impact, and there is a, I mean, there is a, some kind of a reversal or pullback happening because of the risk weight getting changed as per the draft guidelines. So the net impact is going to be 60, and that would be spread over five years. So the spread over part is over. On an ongoing basis, you need to have this, ECL provisioning, and our normal thumb rule calculation, which may undergo a change, talks about the impact of 18 basis points, on an ongoing basis, year-to-year basis. That's why actually, what we have done as on today, our eight nine years average credit cost is almost at 0.34.
So cushioning that, we got into a revised credit cost guidance of credit cost not exceeding 0.6 as against 0.75. So that's the statement I made earlier.
Understood. Okay. Okay, sir. Then just getting on to my question, firstly, in the agri book, excluding gold loans, do we do farmer finance, which has, you know... RBI had some observations with some private sector banks and made them, they were not PSL compliant, et cetera. Did we also have such an observation?
... you know, frankly, we have no, no observation on the PSL categorization classification. We do big farm lending. So absolutely no.
So then, if I may ask, because none of the PSU banks have had this problem, what do PSU banks do differently that, you know, they are on the right side of it, and private banks, all the top three banks have had observations?
You have to ask that, what-
It's a fairly straightforward product, so.
I mean, I think I don't know, but then you have to ask the other why they-- what they did indifferently so that otherwise you-
So let me ask you this way, sir: Do we track the end use of the loan once we give it to a farmer?
It's a farm loan, we have been-
We can't, right?
Absolutely. The farm loans are for farm loans, right? So as per the guidelines, we do comply to all those guidelines.
No, no, I mean, that's fair, but how would you track the end use of the loan?
Yes-
If you give a farmer, he-
Right
... takes the money and buys a bike or a TV, how will you know?
No, no, so look, these are guidelines. Actually, the banks are not doing farm loan only recently, we have been doing for decades and century now, right? So in that way, what are the compliance required to extend farm loan, the bank is complying on, including the end use that is being prescribed as per the circular, as per the guidelines. So absolutely no issue.
Okay. Okay, that's-
In terms of farm loan also, it is not that certain percentage can be used for consumption, specifically referring to your point. Lal Singh, sir, anything you want to support on this?
Yeah, we... In fact, in farm loans, we have the system of first post-inspection and verifying the end use in the larger farm loans.
Understood. Okay. Then my next question is on the MSME book, INR 150,000 crore. Just, can you give a sense of how much is secured versus unsecured, and how much of the book is working capital versus term loans? Some sense on the average ticket size of that book.
We have a mostly a secured book there, because our unsecured book is with regard to the cash flow base, which we have launched recently. Otherwise, whether it is a MSME working capital loan, term loan, or whether it is a any loan we give on the MSME, these are by and large secured. Anything, Lal Singh you want to say?
No. Our book is mostly a secured book, and wherever there is unsecured, that also is covered by the CGTMSE coverage or NCGTC coverage.
Yeah.
Okay, and like, is it mostly working capital or mostly term loans?
That's a-
It's, it's on both ways. It's a composite.
The split, sir, if you just rough split, 50/50, 70/30.
No, I don't, I don't have the exact figure.
Provide you the data, we'll provide you the data.
The ticket size would be, like, INR 0.5 crore-INR 1 crore, or is it higher?
It's around INR 1 crore-INR 5 crore.
1 crore-INR 5 crore. Okay. Yeah, okay, that's it, that's it from my end. Thank you, and wish you all the best for the future quarters.
Okay.
The next, I think the last couple of questions. First, Ankit Bihani, please.
Yeah, yeah. Thank you for the opportunity. So my question was on margins. So our nine-month margin now, now stands at 2.88% and is towards the lower band of our guidance. And now with full impact of the 25 basis point cut coming in, would we want to revise our guidance? And the other thing is that you've highlighted that interest on IT refund is part of core NIMs, but this number is very volatile. Further, when you say it's core NIMs, is it something structural and we'll continue to see for the foreseeable future, or it should be limited to a few quarters? How would one read into it? Because the other banks referred this item as one-off.
Two things. One is with regard to, you talked about the NIM.
Got it
... so a bit of a liability profile, because our cost of deposit has gone down significantly lower at 4.75, right?
Mm.
So in that way, the reprice, almost we have INR 130,000 crore repricing due, partly because of the bulk deposit and partly because of the core deposit. So that is going to significantly upside the, the NII on in that way. On the, on the asset side of the book, yes, the VRR cut has already happened. We have external linked benchmark. There is a book which is, not out of, I mean, that is beyond MCLR. But of late, because of the rate structure on the 10-year G-Sec and all, again, the repricing happening on couple of so-called fine asset is also at a different level, higher level. So in that way, the full year NIM would be in the range. There can be changes therein.
When there is a transition happening in the entire economy, particularly banking sector, both on the asset-
Mm
... liability because of the rate. Precisely, I mean, putting at one is not possible. But then, the level that we are declaring also, you can see in the market, is a quite elevated level. Because of a core strategy, we have a lower dependency on the bulk deposit, we have said multiple quarters earlier. Secondly, in terms of the asset book, we have a growth on the RAM, which is stronger, but it is NIM accretive. So, I mean, we are not getting into risky, like, personal loan growth is a normal 12% kind of thing. So in that way, fairly being operating at 2.85-3 is a fairly a good level for us to achieve that, and I think we are hopeful of doing that, right? That is one.
Secondly, the core NIM that you talked about in the refund. Say, look, it's a guidelines which came saying that, this, the interest on income tax refund to be taken as part of the income, right? That was a-
Mm
... RBI guideline. So otherwise, suppose you take that as a one-off and a non-core, then should not have been that guideline. The guidelines clearly says about its accounting treatment, as per the regulatory norms.
Okay.
That's our treasury. So in terms of volatile component of that, every year we get something on that... because of the interest on that. Some quarter it can be higher or lower. And what is the delta? I mean, negative delta, we are talking about INR 300 crore, INR 200 crore, or INR 400 crore.
Mm-hmm.
On a book where my revenue is almost INR 120,000 crore-INR 130,000 crore.
Mm-hmm.
I don't think it's something generating 200-300 is a one-off or a volatile company. What is the one-off we normally refer?
Mm.
One-off is a refer, let's tell you NCLT, all of a sudden there is a NCLT recovery substantially boosting the recovery of TWO. That's one-off.
Mm.
Suppose you have a sale of a investment which was not part of a normal growth, investment, it is more of a strategic investment which is sold, so these are one-off. So, I think in that way my comment was there, and we need to take in that context. So, as far as computing, we don't want to define a core name or a normal name. It's a core name only. The element of tax refund, the impact can be around 5, 6 basis points, depending upon, you know, which quarter we get how much in that way.
Okay. My next question is on the credit cost front. The credit cost this quarter has been quite low at 25 odd basis points. It has been supported by decline in PCR also, which had declined by 190 odd basis points on a quarter-over-quarter basis. If I adjust for that, credit cost would have been largely flat on a quarter-over-quarter basis. How should one read into it?
Listen, the PCR level, we need to maintain that based on asset quality. And if you look at our bank for that matter, last 13, 15, 16, 18 quarters, the trending has been quite... It's not a volatile number we see on the asset quality. I mean, the trending has been clearly every quarter to quarter is declining in terms of the GNPA and net NPA. So, we are at a good level of asset quality in terms of the book, in case you look at how much is the book, A and above. So, subject there is a normalized credit cycle which we are seeing now, which likely to last for longer years. I think, there is no concern with regard to the PCR level that you are taking.
Our PCR is lower, possibly, asset quality is better. We need not provide for all those, right?
Mm.
A credit cost typically is a function of your slippage and all, and how much provision you are making. Our last 8, 9 quarters, credit cost is the average of 0.34.
Mm-hmm.
that's why we're revising from, like earlier, many people used to ask us, saying that, "Why you are not revising your 0.75?" But first time we are getting a comfort of revising because of the average has been below this range. So that, that-
Mm.
That's something we are doing. So, in that way, I mean, I think we're fairly balanced in that way. I mean, our asset quality better, that's why PCR, many, many of the large banks, if you see-
Mm-hmm
... PCR, a couple of banks are definitely high. But their journey on the net profit and asset quality are different behavior than the asset quality behavior we do have. And that typically puts you at the where, where you need to put your PCR, right? So in that way. So, anything Madam Beena would like to talk on the PCR?
We're at a comfortable state, sir, with regard to PCR, because our slippages have been low, and there's no requirement for an additional provision at this point of time.
Okay. Okay. Yeah, thank you for answering my questions. All the best.
Thank you.
Thank you. That's the last question we will be able to take today.
Ankit has his hand raised, if you can take it.
Yeah, sure, sure.
Ankit, please finish. Ankit, please finish. Then the last question we'll take from Rikin. Rikin? Rikin Shah.
Yeah, good evening, sir. Thank you for the opportunity. Just two questions. First one, you know, you have been on the journey of bringing down the bulk deposit share over the quarters. But in the last few quarters, the bulk deposit growth has been higher, and the share of retail term deposit has been declining. So why are we shoring this up again, especially when the wholesale rates have started to firm? That's my first question. And the second question is, just if you could, you know, guide us perhaps as to what proportion of the term deposit book is yet to reprice. So let's say 20%, 30%, 40%, whatever that percentage could look like.
Mm. The bulk deposit, as we said, is essentially-
... 25%
the moment you fund your asset out of-
28
- or the incremental, bulk deposit, and possibly you are not focusing on the low-cost deposit. So last six, seven quarters, we focus on how do you focus your low-cost deposit. And it's not an objective, but if you see, look at the CASA growth of the bank, vis-à-vis the what is happening in the system, not that we're at the top, but we are one of the best in the market in terms of the CASA growth, consistently for last many quarters. So clearly, within and outside, the message is that we need to rely on low-cost deposit more. That's going to give you a sustainability, and also it's going to be a good reserve for you for long term. That's something the fundamental core of the sustainable that we normally talk about.
So we have to rely on bulk at some point of time, the reason being, there is a wide gap between the asset growth and the liability growth. Suppose this quarter itself, suppose I grow at 15% on the asset and the liability growth, although liability has a larger base, but then somewhere I have to depend upon the wholesale funding. Actually, the bulk is more of a wholesale funding. So the bulk is not the highest cost at every point of time. Some of the time, the bulk rates are quite benign. So at some point of time, the rate on the bulk was almost at the rate at the retail we used to pay. So in that scenario, we'll try to slightly front-run the bulk in terms of acquiring that.
So it's a balancing in terms of how do you manage. But the theme is that, I mean, I should fund my incremental asset more out of the low-cost deposit, rather heavily relying on the bulk deposit. So as on today, if you look at the bulk as a percentage, actually, this data you may not get from many banks. It's almost at, the bulk as a percentage of, I mean, the domestic deposit, it is almost at 19%-20%. That's, I think, a fairly comfortable level for a bank like us to operate. Although some of the quarters you would have seen, there is a bit of a growth happening.
So I'll not say that we'll not rely on bulk, but as an objective, we'll not be funding incremental asset only by raising or to raising the large extent, so we're not in a balanced expansion mode at a cost. So we want to rationalize cost, that's the key thing. So that's why you will find a couple of quarters of bulk growth is higher. Reason being, the asset is growing faster, right? So the system need to give enough deposit to us to only rely on the low-cost deposit, right?
Got it, sir. Sir, on the second question, please, what proportion of term deposits are yet to reprice?
I think, roughly a ballpark number can be around 25%, kind of a number, but then we'll come back to you on this. Exact data I don't have as on today.
Got it, sir. Sir, one last housekeeping question: What is the quantum of outstanding standard restructured loans in this quarter?
It is not much, actually. That's a subject we-
Yeah, it's a very small number usually.
Yeah, I don't know.
INR 6,000-INR 7,000 crore.
No, no, sir, it's around INR 8,000 crore. INR 8,000 crore.
Okay. Thank you very much.
Actually, initially, when the standard restructure was started post-COVID, actually, what was important is the slippage that was happening, migration that was happening. Now, that is completely stopped. So, so there is no concern with regard to it. It is no more a stress book as far as standard restructure, but the number is INR 8,000 crore.
Okay. Thank you, sir.
Thank you. I would request, Sridhar sir, to please give the closing remarks and the vote of thanks.
Sridhar, you are on mute. You have to unmute yourself.
Thanks. So I would like to extend my sincere gratitude to all of you for joining us today for the announcement and discussion of our financial results. Should you have any further questions, please feel free to reach out to me or to my investor relations team. Thank you once again for your time and continuous support.
Have a great evening again.
Thank you.
Thank you very much. Thanks for joining us. Thank you.