To all my analyst friends here. Just to introduce the management team, I'm Debadatta Chand, MD and CEO, Bank of Baroda. With me, we have Mr. Lalit Tyagi. He's the Executive Director looking after corporate credit, international banking, and treasury. With him, Mr. Sanjay Mudaliar, he's the Executive Director. He looks after the IT function and more importantly, the retail asset of the bank. We have Mr. Lal Singh, he's Executive Director. He looks after HR function, the recovery function, and also the MSME vertical of the bank. We have Madam Beena Vaheed, she's the Executive Director, looks after the control and assurance function, and more importantly, the retail liability function of the bank. We have the CFO, Mr. Sridhar, who have joined earlier also, has joined with him.
With this, I would request the CFO to make a presentation, I'll have my quick comments, we'll go for the question and answer. Over to you, Mr. Sridhar.
Thank you, MD sir. Good evening, everyone. It's my privilege to present before you the financial highlights of Bank of Baroda for the quarter that ended 30th June 2026. As at the end of Q1 FY 2027, the Bank's global business stood at INR 30.5 lakh crore, registering a YoY growth of 15.4%. Our global advances have grown by 17.4% YoY , with domestic advances growing at 16.1% and international at 23.3%. Within the advances book, the bank has continued to focus on RAM advances. Our organic retail book grew by 18.4%, agriculture by 18.7%, and organic MSME by 20.3%. Corporate loans have grown by 15.3% YoY . Within the retail segment, we have seen smart growth across the portfolio with education loan at 10.8%, home loan by 14.7%, auto loan by 25.3%, and mortgage loan by 27.4% YoY .
Regarding the deposit growth, our total deposits have grown by 13.8%, with international deposits growing by 8.9% and domestic by 14.7%. The domestic asset deposits have grown by 10%, and term deposits have registered a growth of 17.8% YoY . As of 30th June 2026, the Bank's domestic credit deposit ratio stands at 83.31%. The CASA ratio stands at 37.72%. With regard to our quarterly profitability metrics, our operating profit for the quarter stands at INR 8,127 crore. As you are aware, the Bank entered into an out-of-court settlement to resolve a legacy litigation issue of NMC Group. The liability of the Bank in these proceedings is limited to the sum of $600 million, which was paid on 1st July 2026. The settlement amount has been debited to the profit and loss account for the quarter ended 30th June 2026.
Our net profit for Q1 FY 2027, after absorbing the impact of the settlement, stands at INR 1,278 crore. Without the impact of this exceptional item, net profit for the quarter would have been INR 5,528 crore. Return on assets stands at 25 basis points, excluding the impact of the exceptional item, ROA would have been 1.10%. Return on equity similarly stands at 3.89% for the quarter. If we don't include the impact of this exceptional item, return on equity would have been 16.57%. With regard to key ratios, our yield on advances stands at 7.37% for the quarter. Bank's cost of deposits for the quarter stands at 4.66%, reduced by 12 basis points on QoQ basis. We come to the asset quality, which continues to remain robust.
Our GNPA ratio has improved by 29 basis points year-over-year and stands at 1.99%. Net NPA ratio is below 1% at 50 basis points, an improvement of 10 basis points year-over-year. Our provision coverage ratio including TWO is comfortable at 93.28%. Our slippage ratio for Q1 FY 2027 has reduced by 25 basis points year-over-year and stands at 91 basis points. Credit cost for Q1 FY 2027 stands at 29 basis points as against 55 basis points in Q1 FY 2026.
Coming to our SMA and collection efficiency, our aggregate SMA 1 and 2 are as a percentage of our standard advances reduced to 7 basis points as of June 2026, as against 40 basis points for June 2025. Our collection efficiency excluding agriculture remains robust at 99.2%. In terms of capital adequacy, our capital position continues to be strong with the CET1 at 13.9%, Tier 1 at 14.41%, and CRAR at 16.30%. Our quarterly average LCR remains healthy at approximately 127%. Thank you. Over to you, MD Sir.
Thank you, Mr. Sridhar. Friends, Mr. Sridhar has said about all the financial numbers. You know better in terms of numbers, only I'll make a couple of comments here that the Bank growth engines are all intact, growing, strongly kicking and rolling also. The numbers would have seen that the June quarter numbers has been better than the full year of March. March 2026 for the full year, we had a very strong number. The credit growth in March was 16.2% and June now 17.4%. The deposit growth in March was full year was 12%, and now it is 13.8%. The domestic is almost above 14%. In terms of the growth engine, the Bank's ability to grow have been significantly, or the capacity, it's all performing well or rather doing better than the system, I would believe.
I'll only say asset quality. It's the benign asset quality continuing. The aggregate data, the slippage ratio, you would have seen the collection efficiency is now all-time high at above 99%. I think the asset quality, the journey continues. Marginal, in terms of YoY, the GNPA, NNPA, it has significantly gone down. Sequentially, you would've seen a marginal uptick. That precisely because of the lower denominator of 0.1 and secondly, a conservative write-off that we have forwarded in this quarter as compared to the same quarter last year. The write-off last year, June quarter, was almost INR 2,200 crore.
Here it is INR 625 crore. In that way, the business growth, the asset quality continue to be strong, robust, and that's something is also getting reflected in the profitability, more particularly on the NII growth and also on the operating profit. I'll come to net profit later. In terms of guidance, the credit growth, we continue to have the same guidance of 12%-14%, although we are outperforming, the geopolitical is something that allowing us to be slightly cautious at this point of time. The deposit growth, we again put it at 10%-12%, same as earlier we articulated. The credit deposit ratio we used to operate between 84-86, as you carry a significant excess SLR. The NIM this quarter has been 2.77.
Our earlier guidance was 2.75-2.95. We continue to hold the same NIM guidance. The credit cost this quarter has been 0.29. It is less than the 0.6 guidance we had given earlier. On the slippage also at 0.91, better than the Q1 of last year. On the guidance is 1%-1.25%, we'll continue to hold that. ROA for last 17, 18 quarters, we have been doing ROA in excess of one. This quarter, because of the full impact of the settlement has been taken in June quarter, the ROE is 0.25. Suppose you exclude that exceptional item, it is around 1.10. Our ROA guidance will hold and watch now, possibly the full year guidance, we'll give it after we migrate to the next quarter.
At least, Q2, Q3, and Q4, we expect the ROA to be more than one. Full year basis, we'll give a guidance later. ROE continue to have 15%-16%. Let me come to the NMC case. Because of the silent period, we didn't articulate the post of our announcement to the exchange on 2nd of July. As you know, the CFO also talked about, we entered into an out-of-court settlement with a joint administrator. The payment of $600 million was made on 1st July, and the exchange was notified on 2nd July. This settlement resolves all the claim.
I repeat, the settlement resolves all the claim between the parties without any admission of liability or wrongdoings. The bank liability in this proceeding, both the proceeding, ADGM and also the U.K. court, is limited to $600 million. The terms of the agreement is confidential because the case is subsidized vis-à-vis other defendant. The claim against the bank has already been discontinued in both the court. The financial impact has been fully absorbed in June. We have not touched the floating provision that's continued to be INR 2,500 crore there in the books. Typically, the ECL migration, we have kept the provision for that.
This brings closure to a very complex and longstanding cross-border dispute, which inherently complex in nature, involving multiple jurisdiction, different legal systems, and extended legal processes. Commercial settlement are a well-established global practice for achieving certainty and finality in such matters. The decision to settle the case was taken after careful assessment based on the legal advice, and it is based on the commercial consideration involved, including time, cost, and the uncertainty of prolonged litigation. It's a commercially appropriate decision taken without any admission of liability or wrongdoings. It allows us to close a legacy matter. I repeat, it allows us to close a legacy matter and focus on our customer stakeholder and long-term sustainable growth. You would have seen those numbers in the June quarter itself. The Bank of Baroda remains strong, well-capitalized, and financially a resilient financial institution.
The bank continued to hold the floating provision of INR 2,500 crore, which I said earlier. Our capital adequacy remains very strong. Rather, in June it has improved vis-à-vis March. A stronger asset quality. Also, we have seen the growth momentum across all balance sheet parameters. We remain committed to high standards of governance, prudent risk management, and a strong compliance framework across all our operations, both domestic and international. Thank you very much, and we are open to question- and- answer now.
Thank you, sir. If you have a question, please raise your hand, or you may also type your question in the Q&A box. We request you to please limit yourself to two questions, and if we have time, we'll come back to you. The first question is from Mr. Ashok Ajmera. Sir, please unmute yourself.
Yeah. Good evening, sir.
Good evening, Ajmera, sir. Good morning. Good evening.
Sir, even if you take out this out-of-court settlement, this one-time $600 million hit. If you see the quarterly result of June quarter, now most of these parameters, sir, we have little bit faltered. Because if you see the deposit growth, the business growth, I think after many, many quarters, it is down than the previous quarter. The settlement may not be a reason for that. Having said that, even that asset quality you are saying is robust. In this quarter, especially you see it, both our gross NPA and net NPA has gone up in absolute term as well as in the percentage terms. Because there is no growth, even the percentage terms also, it is higher. CRAR comfortable because you're not done the credit. Naturally, CRAR will be, you say, is comfortable.
Sir, on the whole, we are little bit disappointed. We have taken the hit. We have agreed. Okay, it may be a very good judgment assessment from the management point of view. Otherwise, if you look at the quarter, because the provisions also reduced to see that the profit is at least there, INR 1,278 crore. Secondly, even if you add this to the settlement, I think some part of settlement amount was anticipated and provided for also in the past. Even otherwise also, the profit would have not even equal to the last quarter.
On some of these things, sir, can you clarify that why we have not only muted but a negative growth in this quarter on many of these fronts? Then going forward, when we say 12%-14% or this credit growth, how do we then will plan to achieve that? In fact, even the ECL provision, yes, it cannot be touched because INR 2,500 floating is now basically earmarked for ECL provisioning. On that front, what are our plans to take care of the remaining amount of the ECL, because the assessment must have been over by now fully.
It's a very broad study. The result little late today. If you can add something to it, because the treasury has added the, even that INR 1,278 crore is also because of the treasury income going up to almost INR 900 crore as compared to only INR 43 crore in the last quarter. Operational wise, this quarter overall seems to be a little dismal, a little disappointing to me personally.
Sir, I'll just tell you, I'm also slightly disappointed that, you've not read the numbers particularly. I just tell you why I'm saying so I'm disappointed. My credit growth for this quarter is 17.4%. My deposit growth is 13.8% global, and international is 14.5%. I mean, domestic is 14.7%. These are possibly one of the strongest growth, not only for the bank itself in all the quarters, but the strongest growth possibly in the industry itself, when I'm comparing with the large peers. The asset quality, the aggregate data, the SMA 1 and 2, more than INR 5 crore for the book as a whole, consisting of domestic and international. From 0.18 it has gone down to 0.07. The slippages have gone down.
A treasury, a book of almost INR 3,070,000 will have some treasury income, and that treasury income is INR 893 crore, which is much less than the same quarter last year of INR 2,200 crore. I think there is not a single parameter in the balance sheet and profitability other than the net profit, which has then shown a decline trend or a lower growth or a lower profitability matrix. These are all very strong numbers. I would honestly request you to please have a relook on the numbers because these are no count in any way, any of the number has given any negative vis-à-vis the last quarter. It is one of the strongest performance growth we have in all this quarter.
In terms of profitability, look, we said earlier in one of the earlier conversation I was telling, we cannot make a provision on a settlement case for a specific provision or a litigation case. We buffer the balance sheet floating provision, looking at the floating provision would buffer for the ECL impact. That's why the full impact of the settlement, full impact has been given in this quarter. There is no earlier any provision which has helped in terms of negating the impact of the INR 5,680 crore, the impact on this quarter.
On the ECL front, you said right. The GNPA, NNPA, if you compare June over June 2025, there is a significant dip. Sequentially, it has gone up because of the denominator, because the overall RWA has gone down, because June is typically slightly lower than that of March. Secondly, just look at one number therein. The write-off that we had in June 2025 was INR 2,200 crore. We have done a conservative write-off of INR 625 crore, and that's why we are looking at a absolute number of GNPA or NPA slightly half. Had we gone for a similar write-off, the number would have been much, much lower. I don't think any count slightly I'm disappointed rather in terms of my sincere request would be, please have a look. We'll be happy to further interact to clarify all your doubts.
The bank's financial strength, position, balance sheet growth are one of the strongest as on June. Yes, this exceptional item impact has pulled down the net profit. Again, Q2, Q3, Q4, I'm expecting a ROA still above one. Full year ROA guidance w e'll just see in the next quarter. Clearly full year may not be exceeding one, then we'll give a guidance in the next quarter. I think the bank is doing well. Thankfully, putting your confidence in the bank and analyzing the bank closely. I would happy to interact more with you just to clarify some of the doubts you have.
Sir, I stand corrected, sir, because the results had come very late, and I might not have fully understood the numbers as you are explaining. Sir, now when this-
I cannot hear you
Is it over for everyone, or you still have a claim on this? On this case you are referring, an NMC case? Sir, the case is over for once and for all?
No, the case as far as the legal in both the courts are all over. Our claim against the principal individual would continue both in India and outside.
Okay. There are chances of some recovery.
Yeah. That is why I said the principal individual in this case, that is as per the agreement, we will continue both in India and outside.
Okay, sir. Thank you. Thank you very much.
Thank you, sir. Next question is from Ritesh Shah.
Hi. Good evening, sir. Thanks for the opportunity. I actually had six questions, but short ones. The first one is, on the duration of the investment book. The question here is that the duration on the investment book has gone up both sharply QoQ and YoY. Curious to understand the thought process in the context that the next potential rate action by the central bank could be a rate hike, not imminent, but eventually. While the increase in duration aids the coupons right now, but in the future it can result in MTM losses. Just wanted to understand the thought process there. That's the first question.
Duration has gone up. Typically, you would have seen this quarter, the peak yield was almost at 713, 714, I believe. Obviously, at a higher yield, the bank would like to have a bit of, what you can say, investment over there just to take upside of the yield movement. Precisely, that is the reason why the book also would have seen an increase. The book has been spread out in three component, AFS, HTM, and also the FVTPL. If you look at this component they are in, and the yield has now moved down to 675 or 680 kind of level. You could anticipate the upside on those investment which we have made at a higher rate.
At the same time, we have positioned in terms of all the three books in a manner where any impact of a rate hike consequent with the yield going up, the bank is adequately protected in that count. It's a very prudent decision to add bit of duration, just to take advantage of the rate movement, and which has come right for the bank in terms of the subsequent yield movement. Any rate upward movement, then we'll be absolutely preparing in terms of how do you manage the duration there.
Got it. Understood, sir. The second question, happy to see that you have de-grown your corporate loans by 7% and still the overall loan growth is strong. Could you talk a bit more about the competitive intensity in the corporate loan segment? Also if you were able to shift some of the customers from the T-bill to MCLR rate in the quarter as you were mentioning last quarter.
You are right on the, yeah, the corporate loan growth has been very strong, YTD, that is the only component in the advance book you would have seen there is a bit of degrowth. Otherwise, sequentially, all the advance book, whether it is agri, retail, MSME, there is a YTD positive, right? Rightly so, that is best strategy wherein we wanted that, in the corporate book itself, the non-MCLR link, which can be any benchmark link. Considering the elevated cost structure on the deposit side, we're trying to move them upward in that way. That precisely resulted into let go some of the very fine price asset. You are right on that.
The strategy is bang on that, taking advantage of the change in interest rate structure in the industry and moving bit of non-MCLR book into be it an MCLR or near to MCLR book in that way, right.
Got it, sir. The third question is on commission exchange brokerage fee income. It is down almost 47% YoY, not looking QoQ given the seasonality, but even YoY it's down. What is dragging that down?
That's one element actually we need to optimize that, we need to focus more. Somewhere on the pricing strategy on the commission exchange, because sometimes we see on a higher growth on the advance book than you let go couple of at a lower processing, lower yield. These are all overall all-in yield concept, right? In terms of overall yields that you get rid of those account. You are right, this is one element we need to focus more in the coming quarters.
Got it. Sir, the next one is on the revaluation of investment gain of about INR 365 crore this quarter. Could you just provide some more color on that? What was that?
Specifically because of the yield movement that happened, no. Because when you compare the March over the June closing vis-à-vis March, the yields were lower. That was the reason why there is a bit of a write-back that is possible on that book.
Okay. The second last question is, sir, you did mention that write-offs were lower in this quarter versus the last quarter last year. You did mention it's conservative. If the write-offs were higher, we would have seen even higher provisions in this quarter and the credit cost, right? I do understand that the GNPA, NNPA ratio going up because of lower write-offs. Should one expect the write-offs to be higher in the coming quarter and consequently higher credit cost?
No, look, the write-off book is a book which is fully provided, 100% provided, right? Out of the kitty, then you decide to vest on write-off, Technical Write-Off, not the actual write-off. Don't get confused with that. Depending upon the ability to get recovery of this money within the time frame. All the banks would have seen this as an element in terms of finally impacting the GNPA and net NPA. This quarter we have done a conservative write-off, write-off won't increase your provision. Your PCR, it impacts in terms of lowering the PCR rather than the other way. We wanted to protect the provision coverage ratio, and that's why we have gone for a conservative write-off. That slightly marginally elevated the GNPA and net NPA on a sequential basis.
Although our GNPA N NPA in the system, if you compare, this is one of the good number to have, and that has seen a significant fall from the GNPA and N NPA of the June 2025. I think it's a prudent management. What comfort you should take out of the book as on today, as we speak, that the SMA slip data has seen a significant fall. From 18 basis points, it has gone down to 7 basis points. The collection efficiency, excluding agriculture, which was at 98.9%, it has gone past 99% now. In terms of slippages that we have seen for this quarter, it is lower than the June quarter slippage, because you can't compare with March, because March is always a different quarter, productive quarter.
The recovery, if you combine the recovery of NNPA and the TWO, that amount is also higher than that of the June last year. In terms of asset quality story, I think things are quite strong, and the quality issue is something very benign in terms of the asset quality issue. As in today, on the books, we do not see slightly when we last interacted, possibly, we mindful of the geopolitical impact on the books. Rightly, the government came out with the ECLGS, so particularly the segment of MSME has been protected well now. In that way, we don't see any numbers at this point of time which talks about a stress in the book, which is higher than that of the last quarter.
The stress in the book, which is normally at a minimum level, and which is comparable with, rather lower than that of last quarter.
Fair enough, sir. That's my last question is on FCNR. If you could just talk about how much of the funds you have already mobilized, what is your target? More importantly, if you provide self-leverage on your balance sheet, how does that impact your margins, NII and PAT? Margins may potentially go down, but it aids your NII and PAT. Just your thoughts on how it impacts your different financials as well. Thank you. That's all from me.
Yogesh, can you quickly take this last question?
Thank you, sir. On FCNR, up till now, we have raised in excess of $600 million. In terms of providing the facilities to the NRI depositors against their deposit, we are facilitating them with the loan against their FCNR deposit. Apart from this, the normal NRI deposit flows are also there, where the depositors are not opting for the loan against the deposit. We aim to get into the total flows in excess of $4 billion-$5 billion, ballpark figure of $5 billion, which comprises of all three components, FCNR, FCCB and ECB routes also.
Got it. Sir, how would you think about this FCNR impacting? How does that flow through in your margins and PAT? Because the self-leverage when you provide would be at a lower spread. Does that dilute your NIM in the near term, and then of course, as you deploy all of those funds, it flows down into your NII, PAT? How to think about that?
Amit sir, if I can take?
No, no. Thank you, sir. Please take it.
Yeah. In terms of the Indian book, the INR deposit cost of these FCNR deposit is quite competitive. We are offering the INR deposit rate around 6.5%, 6.4%. This will be our lended cost for the INR resources. When the NRI depositors take loan against such deposit at the overseas jurisdiction, they are provided by the overseas branches according to their own cost of fund, thus resulting into leaving margins at that end also. At both the ends, the business is resulting into the margins.
Thanks. Next question. Before that, if everyone can please limit themselves to two questions, just in the interest of time. The next question is from Kunal Shah. Kunal, please unmute yourself. We will go to Gaurav Jani. Gaurav?
Yeah, am I audible?
Yeah, Kunal, go ahead.
Yeah, Kunal.
Yeah. Few questions. Firstly, on this entire NMC case, in fact, in terms of the disclosure, even in the annual report, we just indicated that this case is pending, but in terms of the liability amount, given that it was so huge, at almost $600 million, why there was no indication in terms of the liability which can accrue to us, even closer to the settlement of the case? If you can just highlight in terms of what actually has been the nature of the transaction. Is it like Obviously, this is not the lending one, this is something related to the trade finance, and finally, maybe there was some fraud in our Abu Dhabi branch, has been Maybe people have said, like, that's involved into it.
If you can just highlight the nature of this entire case that is leading to this kind of a liability. You mentioned that out of the court settlement was better in terms of the time, quantum, everything involved. Would the liability have been much, much higher, okay, maybe had this not been settled out of the court? That's the first question. The second question is, again, on ECL. Sorry, on fee income, was there any writeback on account of this? Was any fee written back or something, which is leading to the decline over there? Anything related to this particular transaction or not really? That's the second question. On ECL, maybe last time also you had indicated some impact, but has there been any change in that after having gone through in detail, any change in the ECL quantum?
Margins, on the core basis, if we look at it, we have seen yield on advances falling lower than that of cost of deposits. Can we say that the core margins have behaved better, and was there any interest on IT refund during the quarter?
Kunal, coming to the NMC case, the nature of transaction, as I said in my statement, it's a confidential agreement, the case is still sub judice, as far as the other defendants are concerned. I'm afraid that we can't articulate anything on the matter. In terms of the annual report and the settlement that you talked about, annual report was based on the position at that point of time. The case has gone for advanced trial post-March, the settlement has been done vis-à-vis the court litigation process, both for the Abu Dhabi Global Market Court and also the U.K. court, based on a commercially prudent decision as advised by the legal counsel on the matter.
As you would know that the best of global legal firms were engaged by the bank. Similarly, the global individual also has a legal counsel therein. That's a prudent call. In terms of your query with regard to the case details, I'm afraid I'm in a position to anything articulate at this point of time. A legacy overhang issue, we are able to resolve that. Believe me that there are two issues here. The underlying cause of the issue is overseas jurisdiction.
A payment has been made out of a overseas jurisdiction, dipping into their own resources. The domestic book is insulated out of this. The legal framework, the legal processes, these are different country to country, we need to be sensitive on those. In terms of the fee income, the fee income is a composite of many factors. There are income out of that, there are expenditure out of that. When a book growth has been very significant, you can't load everything to the customer.
Typically, globally also, many of the case in the advanced portfolio look into all-in cost, all-in yield. These are the factors that impacted the fee income, we are trying to, again, we said that this is one element we need to look into to optimize. ECL impact, earlier I said the impact would be 125 basis points minus a pullback of 50 basis points, both the final guidance have been issued. The pullback is now almost 15 basis points, the impact of the ECL would be almost 110 basis points on the CRAR, translating into something around INR 12,000 crore. We have the ECL provision, floating provision of roughly INR 2,500 crore, the balance to be spread over.
We have a strong, although the CRAR is adequate, we have a strong capital raise plan. I think, the migration would be smooth, seamless. The core income part of that is what I'm telling. In spite of this condition, when you look into multiple banks, the financial result, the NII growth is at 9.5%. We're able to optimize both in terms of the earning potential of the book, at the same time, the interest expended part of the book. Obviously, that has not translated into operating profit because of the lower fee income. At the same time, the net profit has been impacted because the cost of the full settlement has been impacted this year. You may come say that why the provision was not held earlier.
As per the legal advice on a case which is under litigation and negotiation, you can't have a specific provision there, right? I think I answered all your query. Any further query, you can raise it before us, we'll clarify to you.
From your IT refund.
IT refund, it is something around INR 300 odd crore, I believe. CFO, what is the number?
Yes, sir. 370.
Thanks.
Yeah.
Thanks. That answers all the question. Thank you.
The next question is from Gaurav Jani.
Thank you, sir. Sir, just taking ahead Kunal's question, just one simple question, right, on the NMC case. Why did we have to settle? I believe we would be a creditor, right? Unless we are given a guarantee or something. Just a simple question out there. Secondly, I understand core margins sequentially would have gone up, right? Adjusted for interest on IT refund. That's number 2 . Third, if you can just quantify the one-time impact, in your staff cost. Seems to be up by about 20% sequentially. Right?
Yeah.
Yeah. Lastly, sir, you did quantify about the one-time impact on capital of about 100 basis points. What would be the sustainable impact due to ECL, right? One would be the one-time. What will be the sustainable impact? Yeah. Those are my questions.
NMC case, Gaurav, we have to differentiate the credit engagement and the case itself, right? The settlement has been done based on the case that was going on against the bank in Abu Dhabi Global Market Court, and a similar case which was pending but on hold at the U.K. court. You have to differentiate the credit engagement and the litigation that was going on. The settlement has been done based on the advanced trial nature of the court, based on the legal advice to clear a overhang, which was there for long. Again, it's a dated case, right? Dated overhang. Core margin, last time also, when we had a 2.83% or 2.84%, I believe on the NIM, I guided the market at 2.75%-2.95%. Meaning thereby, there would be margin is under pressure.
In spite of the fact that the NII has increased by 9.5%, obviously the average asset has increased higher than that, impacting the core margin to 2.77% on that. The one-time impact on the ECL is a impact of 110 basis points, which can be spread over as per the amortization plan therein. Full year impact can be something around 20-22 basis points, and we have a huge capital plan. As in today, we are highly capitalized, there is no impact on that. Staff cost has gone up. Vis-à-vis March, but if you look at the staff cost compared to the June, it is below that level. Over March is because of the AS 15 provision, which again tracks the yield movement. In that way, that is the staff cost. Otherwise, we have a good control on the operating expenses.
The operating expenses is contained, rather it is flat to negative. The staff cost is also contained. The increase that you are looking at the staff cost in June over March is precisely because of your AS 15 provision, which is tracking the yield movement. Right?
How much would that be though? Can you quantify the AS 15 amount, the one-time impact?
I don't have data. Either Madam Beena or CFO, you have the data, you can. Otherwise, you can share it. Madam Beena?
We'll share the data, sir.
We'll share the data.
Yeah. That is just from mine. Thank you.
Okay.
Thank you. The next question is from Bimal Panthal. He has typed in his question saying, congratulations for a robust performance. Two questions from my side. What is the IT budget of the bank for the year? Any plans of raising funds through equity?
Good. Thank you very much. At least I got one congratulation now. In terms of equity, I just tell you before I hand it over to Mudaliar sir on the IT budget. Equity, we have already announced earlier. We intend to raise INR 8,500 crore of equity over a medium-term outlook that's ending up to March 2028. Currently, as on today, 16.3, I do not feel there is an immediate requirement. Since the bank is growing strongly because 16%-17% advance growth is something sustaining that on the capital front is difficult, bank may raise capital. That would depend upon the timing of our equity raise and the price at which we can raise the market. That's what. On the IT budget, Mudaliar sir, can you just take this question?
Thank you, sir. The IT budget is currently what we are having, both OPEX and CapEx put together is in excess of INR 4,000 crore.
Yeah.
Thank you. The next question is from Jai Mundhra.
Yeah. Hi. Good evening, sir, and congratulations on a steady quarter barring the NMC thing. Sir, on NMC, I wanted to check, have you internally fixed any responsibility, any disciplinary action sort of a thing now that the matter is closed from your end?
Okay. Thanks, Jai, for congratulations. I think the bank had a strong quarter, and you appreciated that well. On the NMC, look, for any staff side, every bank, we're a government-owned bank. It has its own processes in terms of how do you take through all these accountability issue. In line with the guidelines that we have in place, we're a government-owned bank, again, I repeat, whatever required to be done in terms of the staff responsibility, anything, either would have been done or is going to be done. In that way. That's internal to the bank in terms of how do you look at this issue. Currently, we have resolved a large legal overhang, which was going on for long.
We need to see the settlement vis-à-vis the court process itself rather than any creditor or any other relationship for that. In terms of our claim against the principal individual will continue even if after the settlement. That's the point I would raise.
Okay. Sure, sir. Second is around ECL. Now, if I heard you correctly, you said that the total transitional impact will be around 1.1% of RWA. If I remember correctly, then earlier it was a slightly lower amount, right? 0.6%, 0.7%.
Yeah.
Of course, at that time, maybe the guidelines were drafted, now you have the final guidelines. Still, if you can elaborate, sir, this is only for credit or there is something else on investment or any other heads there, or this is purely credit-related provision?
Actually, earlier, maybe prior to the last quarter, I used to say 125 basis points is the impact, but there is a pullback of roughly 50 basis points because of the project loan guidelines. The project loan guidelines, when the final guidelines came, the pullback was not 50, it was something around 15, 20 basis points. In that way, the net impact is 110 basis points. Now the calculation, the guidelines has been issued. The banks are trying to migrate to the new framework as early as possible so that we can have a parallel run. The impact that we see one time is 110 basis points, which can be spread over as allowed in the guidelines itself. You have this ECL or any other question you had? I just missed it out, Jai.
No, sir, that was it on ECL. Secondly, sir, on gold loan. QOQ, there is a dip in both retail gold as well as agri gold. Of course, there were new rules which had come in. Any color there? Is this conscious or you are seeing any changes in internal policies, et cetera, to have such kind of a gold loan growth on a QoQ basis?
No. Actually, there are two heads in the advances. You would have seen gold loan and the corporate loan slightly, there is a YTD negative, whereas remaining all is YTD positive. This is typically seasonal in terms of demand scenario, right? Particularly in the corporate loan book, we see either we allow some of the fine price asset to go, or there is an inflow coming because of the corporate is now getting cash because of all this release of their payment from different agency or different company. It's typical seasonal. There is no strategy there. We are growing at the same pace as the gold and the book in terms of asset quality continue to be strong. Absolutely, we intend to grow in this segment.
Sir, I was talking about gold loan. Sorry. Corporate, I understand.
I mean, you would have seen the element of gold loan and also corporate. Sometime these are seasonal because normally June is a slack season. In that way, these are seasonal. There is no strategy change in terms of slowing down or anything. That is what the point. The gold loan also will continue to grow in the same manner, and the asset quality looks quite okay at this point of time.
Sorry, sir, just to come back on ECL question, sir. This 110 basis points, in fact, again, is this gross or if you can just elaborate, if you are deducting, let us say, stage 3 provisions because you have a very strong PCR or are you deducting any HTM or any sort of gains that you have? Is this number 110 the net number or gross number? I understand this 15 basis points of.
I tell you the absolute impact on this. The net impact on the absolute is roughly around INR 12,000 crore. Right? On INR 12,000 crore, we are holding floating provision to the extent of INR 2,500 crore. Almost at INR 9,500 crore to INR 10,000 crore, we have to really give the impact on the capital, that is spread over for the amortized time.
Sure. Sure, sir. Last question, sir, on LCR. Last quarter our LCR was also 127%. This quarter is also stable. During the quarter we had LCR release, you would have had from bulk deposits and some of the non-financial corporates. Any thoughts why did we not see the LCR going up like other banks? Thank you.
No, actually, on the liquidity solvency front, we need to maintain LCR, actually. That is what we can't maintain a very high LCR, because then that would drag on your income and the yield. Earlier also, I said we want to maintain at 120 kind of a level. It's not that we can go up because of the bulk issue. We need to manage the book in a manner where the LCR maintains around 120. There's no other strategy on that.
Right. Sir, after this guideline, you can actually borrow more on bulk, right? We have this problem of Q1 corporate book degrowing, you take advantage of bulk, you grow corporate again. This new guidelines, does this help or is kind of a neutral from corporate degrowth?
What are the new guidelines you're referring? Which one?
Sir, on bulk deposits. Now you have a lower run-off, right? Run-off factor, I meant to say.
Overall, actually, look, we can manage. As long as you maintain 120%, absolutely internal threshold is okay as far as 120%, right? Lower run-off would help, bulk has, again, there are two factors. Bulk is also price sensitive. You must understand that, and it moves quite frequently along with the market change, right? We need to have a trade-off, actually. Bulk is a component of the overall domestic deposit. We want to maintain that level. If our entire deposit is growing, you need to maintain bulk at a certain percentage. It's a overall issue, both maintaining the interest side of it and also the liquidity side of it. Okay, the run-off is definitely going to help the LCR. We have grown on bulk, actually, in case you have seen.
The bulk and CD together, it is INR 2.31 lakh. Out of that, the bulk is at INR 2.11 lakh and the CD at INR 1.06 lakh. In that way, we have grown on those segments. LCR, we'll be maintaining almost 120% on this matter.
Sure, sir. Thank you, and thanks, sir, for answering all these questions. Thank you.
Thank you. Next question is from Param Subramanian. Param?
Hi. Thank you so much. Congratulations on the quarter. Sir, firstly, on the interest on IT refund, just a data keeping question. What is the number this quarter and last-
I could not get you. There was a noise.
Sir, the interest on IT refund, what was the number for this quarter and last quarter? First, that question.
I think CFO, can you take this? You are on mute, sir.
Sir, you're on mute.
This question often we are getting from the analysts. Earlier also, management has articulated that don't see it as a separate line item. It's part of the regular interest income. Depending on the completion of the assessments, we keep getting these numbers. Please consider it as part of regular interest.
Would it suffice to say that the core margins adjusted for this are stable quarter-on-quarter?
Yeah, they're stable. That's why the guidance, sir, has given. It is in line with this.
Okay, sir. Fair enough. Second question on the ECL, sir. Sir, some of your public sector peers, the run rate impact, they have called out, say, between 10 to 15 basis points. Any reason our run rate impact, when you said is 20 to 22 basis points should be higher relative to your peers, or are we being conservative?
I don't think, actually, that based on their book and their calculation. I've not read about other banks, what they have said. I think our numbers are comparable with any other bank on the matter. Rather, we hold INR 2,500 crore of floating provision in the books. Not many banks are holding that provision. In that way, our ability to migrate is much better. Secondly, when all the factors we look into, the factor is the capital position of the bank as on today, which is almost at 16.3%, and we do have a plan to raise capital. The impact on the credit cost side that you are referring, we are also at the same range of 15 to 20 basis points on the credit cost.
We are very clearly articulating the impact both on the CRAR and also on the credit cost, I think these are consistent. Only statement which I made some time back, earlier, a couple of quarters is, there was a project loan provisioning draft guidelines was giving a pullback of almost 50 basis points. That's not going to happen this time. Actually, the final guidelines have been issued, the impact is coming for us roughly around 15 to 20 basis points in terms of it.
Run rate, I've not seen how other banks will have a comparison, I think fairly, the numbers are comparable with the market and also fairly based on our books that we have as on today. Rather, in terms of the asset quality, you would have seen the numbers that we have given in terms of rating and all, it's much better.
Fair enough, sir. Sir, one question again on this ECL. Sir, see, what I understand, the loans are generally priced as, say, your repo-linked rate, RLLR, plus the base spread, plus the cost of risk, right? If the cost of risk is going up because of ECL provisioning, shouldn't that reflect in your lending rates as well on both your back book as well as your incremental loans? Which means, sir, shouldn't the pricing take care of the ECL cost? This is something I wanted to understand, sir.
See, there are a couple of guidelines on the retail loan while changing the spread, actually, what is the frequency at which you can change the spread. A frequency you can change the spread in case there is a credit worthiness deterioration therein or a force majeure kind of thing. The ECL migration and consequent impact on the pricing, we have to take a call based on the regulatory guidelines at that point of time. Obviously, if the cost is coming to the bank, the bank would obviously like to pass on to the customer to maintain the margin.
I mean, as on today, I can't comment, is that pricing the spread we are going to change because of this. To see the regulatory guidelines, because there are certain conditions at which you can change the spread before that three years norms that we have. That we have to see on that.
This should be, sir, this flexibility you will have on your back book as well?
Obviously, yeah.
Okay. Okay, perfect, sir. Very clear.
What is your ability to pass on? Actually, that's something that also we have to see. Back book in the sense you're talking on NPA?
No, no. I mean.
The back book
The loans you have already given out. T here you can increase the spread, the loans that you have already given out.
Yeah, yeah.
On your existing book.
Yeah, yeah. Absolutely.
Perfect, sir. Yeah. That's what I wanted to understand. Thank you so much. Congrats on the call.
Thank you.
Thank you. The last question is from Jayant Kharote.
Thank you for the opportunity, sir, congrats on a good operating quarter. Sir, first question is on the margins. If I heard correctly, you mentioned last quarter core NIMs were around 2.83% or 2.82%, which has come down to 2.77%. Is that correct, did I misunderstand something? If that is correct, sir, the-
Last quarter, the NIM was higher than 2.77%. I mean, actually, at that time itself, I had given a guidance of 2.75%.
Understood.
Look, in terms of the pricing of asset liability, the NII growth tells you about the pricing of asset liability that we have prudently managed. Obviously the asset growth has been higher so that the NIM getting impacted, right? Look, we run a higher international book, and the international will operate at a much lower margin of 1.4% or 1.5% therein. Now it has improved slightly. The domestic NIM, more particularly, it is at 2.93%, in excess of 2.90%. When I talk about the domestic NIM or even the global NIM, it would have made comparison across many of the banks. In that way, we again say it's a top quartile. In that way, we're quite confident that we maintain the margin going forward, and the guidance range continues to be 2.75%-2.95%.
Why I was asking is if sequentially, if we had, let's say, a small 5- 6 basis points contraction in core NIMs, then what gives you the confidence that we can arrest it at 2.77%, and not go down below our 2.75% guidance? I'm talking about core NIMs excluding IT refund. In this, sir, what is giving you more confidence? Is it your actions on the asset yield side, or is it the funding cost environment that is looking much better to you, to confidently guide for no more decline from here?
Two things you said, right? One is on the asset side, because last two quarters we have seen on the pricing on the asset. I'm talking about non-repo linked loans. It has been slightly, we're able to price in better. Particularly non-MCLR corporate book, we're able to take them to near to MCLR or at MCLR, so that's a upside there in the books already. On the deposit, continue to be elevated, but, one positive you would have seen that the bulk deposit rates or the CD rates had gone down post the announcement of the FCNRB scheme. In terms of incremental bulk deposit, I think the average cost is now lower than that of March now.
Considering those two scenario, but the asset continue to grow faster, actually asset growth of 16%-17% would put pressure on margin and also on the capital adequacy, which we are managing it well. Considering those scenario, I think still we are upbeat that we'll be in a position to hold on to 2.75%-2.95%.
Okay, sir. Second question was on ECL. Sorry to again bring this. There is a bit of confusion. In the previous answer you mentioned 15-20 basis points, whereas I think before that, it was 20-22 basis points. Which of the two number is the correct number, sir? What the steady state impact, is it 15-20 or 20-22?
Look, there are two impacts. I think I would ask one of the ED to support me, possibly I am not clarifying well. The overall impact is 110 basis points on the CRAR, that is going to be spread over. In case you spread it over four years or five years, in whichever manners we will decide, that is 20-22 basis points is the impact on the CRAR. There is impact on the credit cost. Credit cost, earlier we talked about around 15-20 basis points impact on the credit cost. Computation of the credit cost is going to be evolving rather than the impact on the CRAR, because CRAR, you know the book has been frozen. Right? Credit cost would evolve with regard to the fresh flow of book happening after 1st April 2026.
As in today, as we speak, the impact can be 15-20 basis points, slightly in those range. Madam Beena, anything you want to support? This could be a clarity people want.
If this is the case, how do we continue with 1% ROA if there is a 20 basis points impact on our steady state credit cost?
Previously, I don't know, you were asking or somebody was asking, after ECL whether you are going to price asset in a manner which pass on the ECL cost, right?
That would have to be an industry move, right? That will have to be an industry move, right?
It has to be. It has to be, obviously. Madam Beena, anything you want to support on the ECL slightly?
No, sir. It will be roughly between 15%-20%, what you said is.
Yeah.
Okay. Thank you, sir, and congrats once again for a good operating quarter.
Thank you very much.
That's the last question we'll be able to take today. Would request CFO, sir, to please deliver the vote of thanks.
I would like to thank all the participants for joining us today for the announcement and discussion of our financial results. Should you have any further questions, please feel to reach out to me or my Investor Relations team. Thank you once again for your time and continued support. Have a great evening ahead and weekend. Thank you.
Thank you very much. Thank you.
Thank you, everyone.