Bank of Baroda Ltd (NSE: BANKBARODA) Q2 2025 Earnings Call dated Oct. 25, 2024
Corporate Participants:
Debadatta Chand — Managing Director & Chief Executive Officer
Manoj Chayani — Chief Financial Officer
Lal Singh — Executive Director
Lalit Tyagi — Executive Director
Analysts:
Kunal Shah — Analyst
Unidentified Participant
Ashok Ajmera — Analyst
Presentation:
Operator
Good afternoon, everyone and welcome to the Analyst Meet for Bank of Baroda’s Financial Results for the quarter ended September 30, 2024. Thank you all for joining us. We have with us today our MD and CEO, Shri Debadatta Chand and he is joined by the Bank’s Executive Directors and our CFO. We will start with a short presentation. We will then have brief opening remarks by Mr. Chand, after which we will have the Q&A session. [Technical Issues] over to you.
Debadatta Chand — Managing Director & Chief Executive Officer
So good evening, friends. Just to introduce the management team. I’m D Chand, MD and CEO of the Bank. I’ve been interacting with you for almost now six quarters now. With me, Mr. Lalit Tyagi, he is the Executive Director looking after the Corporate Credit, International Banking and also the Treasury. And with us, Mr. Sanjay Mudaliar, he’s the Executive Director, he looks after the entire IT of the entire IT infrastructure, IT of the Bank along with the retail asset book of the bank. With us again are Mr. Lal Singh, he is Executive Director looking after the recovery, the stress asset book and also the HR function apart from couple of other platform function. And the new vis-a-vis the last quarter and this quarter the new member of the management team is Madam Binawai [Phonetic]. She looks after most of the including control and platform function and also the retail liability piece.
So with this, Mr. Chayani, he is the CFO. He is interacting with all of you for two quarters now. Over to you, Mr. Chayani.
Manoj Chayani — Chief Financial Officer
Thank you, sir and a very good evening to everyone, in advance, I wish you all and your family members a very Happy Deepawali. It’s my privilege to present before you the financial highlights of Bank of Boroda for the quarter half year ending September 2024. You all will be happy to note that Bank has crossed a business volume of INR25 trillion as of 30th September 2024. If I look at the components, the asset side, global advances has grown by 11.6% and especially domestic advances has grown by 12.5%. Component wise, we are exhibiting a robust growth in our organic retail by around 20%, agriculture is growing around 11%, MSME at 12% and corporate at 10.6%.
In retail also, our growth trajectory is very significant with respect to the mortgage, growing at 13.2%, home loan at 16.2%, education at 17.2%, auto loan as almost 23%. And as you all recollect, last quarter and for the past quarters, we have said that we are moderating the growth in our personal loan book. It has come down from 39% as of the last quarter to 25% this quarter. Can you please change the slide?
Coming to the liability piece, the liability remains a focus area for the banking industry as a whole. Our total deposit has grown by 9.1%. However, our two highlights of — as of 30th September is that consistently in domestic CASA, we are growing at 7% and retail deposit we are growing at 7.2%, which is better than some of our peers. And as far as our CD ratio, can you please go back? Yeah. As far as our CD ratio is concerned, CD ratio is at 83.83% and CASA remained strong at 40%. Please, next slide.
Profitability metrics, operating profit as Y-on-Y growth of 18.2% and moved from INR8,020 to INR9,000 to 477. Very happy to submit that for the first time, we have posted a profit after tax more than INR5,000 crores with a Y-on-Y growth of 23.2%. One of the strong profitability metrics is return on asset and for last nine quarters, we are posting return on asset more than 1%. As of 30th September, return on asset on quarterly basis is 1.30%. Similarly, return-on-equity is comfortable at 19.22 percentage. Next slide please.
If we come to the half yearly piece, operating profit has grown from INR15,844 crores to INR16,638 crores, with a growth of 5%. PAT has increased by 16.5% half yearly basis. Return on asset half yearly it is 1.20% and return-on-equity is 17.79%. Next slide, please.
Yield on advances versus Q2 2024, Q2 2025, there is a — there is a increase from 8.43% to 8.48%. However, if I compare that with Q1 of 2025, there is a slight reduction in the yield on advances from 8.55% to 8.48%. Cost of deposit remains now elevated up to 5.12% as compared to Q1 of 5.06%. Net interest margin has been within our guidance of 3.15 plus minus 5 bps. And as of September, net interest margin is 3.10. It is more than that of Q2 of 2024 with 3 basis point. However, there is a dip as far as Q1 2025 is concerned. This is mainly because of the fact that with the change in the guideline or a panel interest to be converted to the panel charges, the interest component has gone down. That has resulted in reduction from 3.18% to 3.10%. Next slide, please.
Asset quality remains strong at 2.5% gross NPA half yearly basis, it has reduced from 3.32%. Similarly, net NPA has reduced from 0.76% to 0.60% and provision coverage ratio remains at a stronger point of 93.61%, improved from 93.16%. Next, please.
If I look at the slippage, slippage is within our guidance of 1% to 1.25%. As of September, it is 1.07%. Credit cost again is 0.65%. Slippage ratio, if I compare H1, then it has come down from 1.28% to 0.90% and credit cost is 0.55%, which is within our guidance. Next, please. SMA book of — as of 30th September is 0.47% and our collection efficiency remains robust at 98.5%. Next slide, please. The Bank is enjoying a strong capital position of the CRAR as of 30th September is 16.26% and enjoys a healthy LCR of 123.7%. That’s all from my side.
Over to you, Chand sir.
Debadatta Chand — Managing Director & Chief Executive Officer
Sure. Thank you very much, Mr. Chayani. Again to my investor and analyst friend, very good evening to all of you. And let me — the CFO covered everything, but make some of the qualitative comments with regard to the financial result we have announced today. We have again declared a very good quarter, Q2, both in terms of a very strong top line and also a strong bottom line in terms of the net profit going up by 23.2% Y-o-Y and 17.4% quarter-to-quarter. The aspect which is again important on the book size is that in spite like the strong growth on the asset side, we are able to achieve our margin objective and that is what the CFO outlined before all of you.
On the resource side, couple of qualitative comments. Earlier also we said like we should not grow book based on the wholesale deposit growth. Our focus was clearly on the retail CASA, the retail term deposit and the numbers you see for this quarter, which is at 7% and 9.6% for the retail term deposit and this is the same growth that we had achieved in Q1 also. Clearly, in terms of the peer comparison is clearly we have a very strong performance and that is what the focus is going to be.
We want to optimize on the retail space more in terms of the liability rather than growing on the bulk deposit, which again can be a price — I mean, price impact for me in terms of margin therein. On the asset book, again, the domestic asset book, the growth is 12.5%. International is 11% — I mean the global is 11.6% because earlier also we said that the growth of international which use to be very high earlier, we clearly want to moderate. We have seen that the international book growth is only 7.6% this quarter. And because of that, the global book is 11.6%, but the domestic book, which is a very large in terms of the overall book is still going very strong at 12.5%.
The margin guidance that we had given that is at 3.15 plus-minus 5 bps, in spite of the deposit cost going up by 5 bps, 5 or 6 bps quarter-to-quarter because of the management of the ALM, we are able to maintain the margin guidance. I mean, bearing that impact of 5 bps, otherwise, the NIM would have been higher than that we have announced 3.10, the panel interest to panel charges. Otherwise, the NIM is still very strong and that is what one of the objective in terms of how do we balance the growth and margin that’s clearly our strategy as we move forward.
The domestic margin NIM is 3.27%, which is fairly very satisfactory in terms of the peer comparison also and the kind of margin we are generating out of the — out of the book. The net profit has been very significant. Mr. CFO has already announced this is the first quarter where we have crossed INR5,000 crore of net profit. The net profit growth Y-o-Y is very high 23%, quarter-to-quarter is also quite high. Obviously, the net profit had been boosted by a bit from the recovery out of TWO, which would have seen that we announced the data to you in the market.
ROA has been consistently — we had given guidance earlier to maintain above 1%. This quarter it is 1.3% and the half full half year is 1.20%. And earlier also we said while constructing the book both in terms of the asset liability, we operate the NIM and the ROA as two in parameters to optimize in that. So we’ll continue to have those focus going forward also.
The asset quality has been the GNP of 2.5% net NPA of 0.6%. We have improved vis-a-vis quarter-to-quarter, although we don’t give guidance on the GNPA and net NPA, but always we say that we intend to trend it downwards both GNPA and net NPA on the matter. And on the slippage cost and the credit cost, slippage ratio and the credit cost, we are within the targeted guidance. The slippage ratio, the guidance is 1% to 1.25%, we’re at 1.07%.
The credit cost guidance has been 0.75%, which was reduced from 1% to 0.75% last quarter were at 0.65% on that. A couple of other things which are again important for a overall business perspective that as all of you know, that we announced a cricket legend as our global brand ambassador recently. And the idea for the phase is to retailize the bank more. So I think with this brand ambassador phase, we are going to have more of retail presence in the entire country. We want to go to each and every customer in the country in terms of retailizing the book for the purpose.
The bank committed big time on the ESG commitment. We have earlier also announced couple of new initiative. We are one of the bank having like the first or second to announce the green deposit. We have a significant green outstanding loan exposure as on today. We planted trees across country to have a greener planet, actually, we got some award because of that. On the priority sector lending, the bank is quite strong at. So the ESG is one of the core theme the bank is working on, while overall business trying to achieve the business growth as we said earlier.
Digital is also another focus area and as you know that we announced a virtual relationship AA, AA — but actually Aditi, wherein it was — virtual relationship manager interacting with the customer on a — based on AI model and there are large number of customers who have onboarded into this model — this customer relationship enagagement and there we are getting good satisfactory comments from the customer on that.
So let me come to the — that digital customer service is one of the core theme that the bank is working on and whatever we are as on today, going forward, we’ll try to improve the digital customer service that is one of the theme that we are working strongly on that.
With this, let me come for some of the guidances part of it. As you know, the deposit market is quite challenging at this point of time. Most of the banks, although I think we have done better on quarter-to-quarter on the deposit, but it’s a — growth is a challenge because the severse money going to alternate like aftermarket and all that is what we have seen in the past. And in case you look at our quarterly — quarter-on-quarter growth, it is almost at around 9% or 8.6%. So with this actually, we gave a guidance of 10% to 12% the deposit growth, but now because on the system has the same issue, then we are slightly lowering the guidance from 10% to 12% to 9% to 11%, although we’ll try to operate in the upper band of that is at 11%. Currently, the growth is 9%, that means my Q3 and Q4 growth on deposit has to be higher than obviously 9% to achieve the 11% kind of a number going forward for FY 2024, 2025.
Because of the credit growth and the deposit growth is much talked about in the system. So because we are revising on the deposit guidance based on the actual numbers we have achieved, although the growth in Q3 and Q4 has to be much higher than the Q1 and Q2. But then the loan side guidance also, we are revising from 12% to 14% to 11% to 13%, although we’ll try to operate at 13% level. Precisely for TWO count, one is that, we do not want to increase the credit deposit growth to a level where it’s not a sustainable point one, keeping the margin guidance in mind, the number two. Third is that as the deposit is revised, obviously the credit target has to be revised. The international book is going to moderate actually that is what actually we’re talking about a global book, although the domestic book continue to be higher than 12.5% that we achieved. So the guidance on the advances is 11% to 13% with — our efforts to operate at 13% for the full-year on the — because we are walking into both very productive quarter Q3 and Q4, which are the busy season quarter and I think we’ll be in a position to achieve rather surpass the guidance that we are giving on the asset side.
Margin, the same guidance we had given 3.15 plus-minus 5 bps. The reason being slightly realigning the balance sheet has given positive outcome to us that we have done that in Q1. And going forward, we are expecting bit of moderation to happen on the deposit cost based on the liquidity stance or the rate stance possibly that would happen in the economy. So there are Q3 and Q4 available to us. So I think we still maintain the NIM guidance at 3.15 plus minus 5 bps.
The credit cost continue to be the same below 0.75%. The slippage ratio continue to be the same like 1% to 1.25%. The ROI — ROA guidance continue to be above 1% and try to optimize at 1.10%. So these are the couple of guidances we had given to the market and I want to reiterate now the same thing. The bank has a significant growth this quarter in Q3, Q4 going to be higher than the growth that we have seen on the asset and liability side in Q1 and Q2. As you know that Q1, we realigned the book slightly keeping the fine price book on the corporate slight level, I mean slightly reducing that book. The corporate growth was 1.6% in Q1, this quarter it is 10.6%, very strong and going to again add 10.6% to achieve a 10% growth on the corporate, so that I achieve the overall advanced growth of almost like 13% in the band of 11% to 13%.
With this, I think I’ve done with regard to my comments and now over to you Teja for the question-and-answer.
Questions and Answers:
Operator
Thank you, sir. [Operator Instructions] So the first question is by Kunal Shah. Kunal, request you to unmute yourself, please?
Kunal Shah
Am I audible?
Debadatta Chand
Yeah. Kunal, you are audible. Please go ahead.
Kunal Shah
Yeah. Congratulations. A couple of questions. First want to understand on the provisioning side. So, obviously, there was recovery from written-off, but at the same point in time, provisioning was slightly on the higher side. We did INR230 crores of floating provisions. But besides that, was there any prudent specific provisioning also done just to make sure that, okay, whatever has been the one-off on the recovery trying to offset that. And if you can just quantify that amount of specific prudent provision?
Debadatta Chand
See, Kunal, you said right, we have INR230 crore of floating provision, with this the floating provision has gone up to INR600 crore now, outstanding floating provision therein. As you would have seen that bit of a prudential provisioning we have taken both on the standard asset side and also on the NPA side, right? So exact quantum, I can’t tell you at this point of time, but then in case we can provide you subsequently, but then clearly we have taken bit of extra provisioning both that is a potential provisioning, obviously specific provision that is both on the — on the standard asset and also on the NPA side.
Kunal Shah
Okay, because despite write-off, our coverage is still sustained, which is a good thing and I think that’s more the prudent specific provision seems like. Okay. And secondly, if you can quantify this impact of penal charges on NIM. So from 3.18% to 3.1%, how much was the exact impact because of this penal charges?
Debadatta Chand
Yeah. As you said that, it’s impact of almost 5 bps, the amount is almost like INR179 crore, INR180 crore on that. So that has moved from on the interest income to the other income in that way.
Kunal Shah
Okay. Okay. Thanks. Thanks and all the best, yeah.
Operator
The next question is from Param Subramaniyam.
Unidentified Participant
Hi, sir.
Debadatta Chand
Please go ahead.
Unidentified Participant
Subramaniyam from, yeah. Sir, just a question again on the write-offs. So we saw high write-offs this quarter and then higher recovery from written-off as well. Is it — are both of these linked? Is it part of one settlement where we see a higher write-off and then recovery from written-off because one of the large private sector banks also talked about this previously, yeah.
Debadatta Chand
No, actually these are not linked in that way. They are different accounts for the write-up and different accounts for the recovery that happened. There is one large NCLD account where actually we got good amount of recovery out of that because that got reserved. Our write-up is typically linked with the level that you can do on the write-up and based on that we have done that. Actually, that’s part of the normal that we have been doing for many quarters now. This quarter slightly may be elevated because it does allow me because there was a substantial [Indecipherable] recovery allow me to have a higher write-up on that.
Anything, Mr. Lal Singh, you want to add on this?
Lal Singh
So there is a guideline and accordingly as per the guidelines of DFS and RBI, we can — we have the provision of writing of the accounts up to the recoveries done in the quarter.
Kunal Shah
Yeah, fair. Okay.
Operator
Next question is from [Technical Issues]. Next question is from Maruk [Phonetic].
Debadatta Chand
Yes, Maruk, good evening. Please go ahead.
Unidentified Participant
Good evening. Hi. Sir, I have two questions. Firstly, that was there any penal interest reversal even last quarter, it would have been smaller, but was there any?
Debadatta Chand
Yeah, there is a small amount.
Unidentified Participant
And then my other two questions, sorry, I’ll slip in one more. So my other two questions are that a lot of state banks are seeing some central government accounts and some of them are even talking about state government accounts are either slipping or becoming SME. So without naming, what would be your collective exposure to these accounts because your SMA has not gone up, so you may not have any significant exposure or maybe you have and it’s not part of SMA already. So if you could throw some color on any potential SMA or slippage you are likely to see from any central government accounts, at least some color on the exposure there. So that’s my second question. And sir, my third question really is, how do you see your cost of deposits given that a lot of competition is still happening and there are so many new festive offers now, the real impact of which will be seen in the next quarter, in terms of deposits. So these were my questions. Thank you.
Debadatta Chand
See, Maruk, see if the first aspect in the panel interest in the last quarter, which got reversed into charges, that was only around INR13 crores therein. So the major part in the Q2 like almost INR170 crore — INR76 crores in the Q2 only not in Q1. The second aspect of the SMA book that you are talking about, yes, if you look at our billing data SMA1 and SMA2 and there is a bit of increase therein and there are two state PSU accounts therein. But these are purely technical delay which typically would be — I mean recouped into standard at the earliest, so absolutely no challenge therein. There is the state PSU accounts, a couple of and the amount would be in the range of around INR3,300 crores, INR3,400 crores on that.
So there actually it’s more of a technical overdue which can immediately pull back based on the past track that we have seen. So there is no slippage of any state PSU or central PSU in any manner as far as Bank of Baroda is concerned. So absolutely, we have a very good book on that. Thirdly, on the cost of deposit, as you would have seen that Q2, the cost of deposit has gone up by 6 bps. Q1 over March was almost flat, but it has gone up. With this actually, I believe the repricing effect of the deposit is almost over by this time. And there are two outlook as a house few we are working on. One is a case wherein there may be a bit of cost moderation that can happen maybe towards the late of Q3 or the early of Q4.
Considering that, the RBI changed the stans from withdrawal to neutral now and the liquidity in the system we have seen October is much better than September, September is much better than August. So scenario where the liquidity comes back, actually we have seen the CD rates going down substantially till the wholesale deposit in the retail has been kept high because the growth has not been substantial, so the festival campaign is going on.
With this I believe broadly the cost of deposit side is fairly balanced and in any scenario, as we are giving — keeping the same margin guidance that means through the ALM, asset liability management, I think we’ll be able to maintain the margin case where cost of deposit goes up, then we have to pass on to the borrower, if it goes down, we’ll pass also the benefit to the borrower. So in that scenario, for the full-year, we are keeping it balanced. So I don’t think much of impact coming out of the cost of deposit going forward, although the levels are elevated, no doubt about it. But then somewhere maybe late Q3 or early Q4, we are hoping for some kind of a moderation considering better system liquidity.
Unidentified Participant
Yes, sir. Thank you. Thanks a lot.
Operator
Maruk, we now go to Ashok Ajmera, sir, please unmute yourself, you can ask your question.
Ashok Ajmera
Chand sab and the entire team of Bank of Baroda and compliments to you sir for a very good quarter of very good set of numbers especially you know like many a time we just plainly look at the bottom line and the bottom line in this difficult times when even the market is also going down for last few days, gives a very good feeling like if that has improved. Of course, a major part of is contributed by the other income. And I think in your initial comment and giving the answer of the first question, you had said that there is some smart — I mean recovery from some account and the other income has gone up to INR5,081 crore this quarter as compared to INR2,487 crore. So my first question is only on the — I mean, considering that the NIM and other thing is not going to change much, I mean you are still continuing a target of 3.15%. Going forward, in the coming two quarters, what kind of bottom line we see like your operating profit is growing rapidly. So naturally and the provisions are — should be under control, if there is no chunky account. So where do you see the profitability of the bank going forward? Are we matching this quarter going — improving it? So this is my — just the first question. And basically your little more broader guidance on that. And my second question is on, the treasury is also doing very well sir, treasury income even from the — trading gains are to the range of INR550 crores as compared to last quarter of INR164 crores. And overall treasury profit even on the revaluation of the investment has also gone up. So whether that trend is going to continue in coming two quarters, especially when we see that the rates might come down in December a review by regulators. So on that, whether they’re going to continuously help the profitability of the bank. So this is on the second this thing. And third is, sir, on the deposit front and overall business growth front, many of the senior bankers in last couple of months have been saying that lot of money has flown to the capital markets and because of that, there is a pressure on the — especially on the CASA side. But now since the market has gone down, like some of the stocks have gone down to maybe, 15%, 20%, 25% and maybe the appetite of the people might come back to keep the deposits with the banks. So going-forward, what do you see this pressure on deposits will continue or it may little bit eased out. So these are the certain — some questions and some of your guidance and observation, sir.
Debadatta Chand
So thank you, Ajmera sahab. Actually I was looking for when you’ll come and I’ll answer on the treasury side, actually that’s something very good to I believe you and me. First with regard to — you talked about profit guidance, actually, normally we don’t provide any profit guidance, only guidance we provide on the ROA. So we are looking at asset growth of almost 11%, 12% and keeping the ROA at 1.1%, you can estimate in terms of that because profit actually we don’t know neither will — but always try to optimize that at any point of time. But the guidance that I can provide is on the ROA. ROA continue to be — we have achieved 1.3% this time. Yeah and full-year is 1.10%, although guidance is above 1%, but we’ll try to full-year 1.10% on the ROA. So that is something I can tell at this point of time.
On the treasury side, this has been a good quarter, but our trading property is morely by the bond, not equity. So equity ways couple of IPO has given some money, but then mostly on the bond side. So still with the outlook prevailing in the — although the market has bit of discounted, some of the cuts that likely to happen, but then I think the bond market would be fairly stable going forward. And even if the rate cut and all happening, then still it will be very positive because equity we don’t have much of exposure in that way. So in that way, I’m not very largely influenced by what is happening on the equity market.
One positive that I would say that actually last time when we interacted the treasury gain was slightly less than the…
Ashok Ajmera
Yeah.
Debadatta Chand
Many of the peers. I said that please look into a element of the AFS reserve, right? And again, I would — again, I request you or as if it is not captured in the analyst, my people would give you the data and we have added almost INR1,200 crores or INR1,300 crores of AFS results this quarter.
Ashok Ajmera
Okay.
Debadatta Chand
And that’s significant, that’s significant. And let’s say a scenario of a — we’re all migrating to Ind AS and the treasury impact coming into books. So we are very well-prepared on that. And that very significant — the outstanding book would be almost INR2,800 crores, INR3,000 crores on the AFS. That’s why the capital has also gone up, I mean CRA. So that’s something very fundamental to us. So we want to have a balance out my treasury gain at the same time keeping the reserve well in the book so that we are there for the long-term or I mean, opportunity on that, right, so that is what.
You also talked about deposit constraint, that’s — that’s the issue that slightly why we reduced the deposit guidance because on the Q1, the growth was almost 8.5%, Q2 it is almost at 9.6%. I had given a guidance of 10% to 12%, which again something not happening. And all of us know the deposit constraint happening in the system because of alternate like several are also preferring capital market big-time on that. So it’s impacting us. So reduced that guidance, but then at the same time, we also said earlier that we are one bank on the deposit innovating, bundling and trying to capture the market sentiment therein.
So if you say that SIP mutual fund is a flagship, now I introduced a product called SDP, which is a recurring deposit scheme, but we are marketing well, getting good traction from many of the savers who are coming to this product. This quarter itself, we raised almost INR250 crores on the SDP. I think the public would appreciate well in case this picks up — picks up and some correction happening in the capital market, I think people would more come to the deposit market.
So I think we will be fairly — although I’ve given a 9% to 11% deposit for the full year, but then I think we can operate at the top notch of 11%, that is what our — that means Q3 and Q4, I need to have a higher deposit growth and higher advance growth to achieve my revised target both on the deposit and in invoices.
Ashok Ajmera
Sir, just one question comes to my mind, some old. I think in the aviation account, that one large you along with the Central Bank, I think you two are the main bankers to that. And we have been in earlier, I mean, a couple of quarters back, we were talking very, very strongly about that, that we have got lot of collaterals and the losses ultimately will be very less or will recover the whole amount. So I just remember that we have not talked about that in the last quarter also and I think previous to that also. So what is the development on that account? And is there any chances of some major recovery happening or something has already happened or where do we stand on that account on the recovery front, sir?
Debadatta Chand
No, as I said earlier, the exposure — one-third of the exposure was that based on the guarantee cover it had and now we have received the full amount on the guarantee, so the exposure has gone down to two third, right?
Ashok Ajmera
Okay.
Debadatta Chand
So out of the two-third, there are again collaterals over there, there are some primary over there and some litigation finance money also can be expected. So in that way, fairly collateralized for us to recover money to the extent — full extent possible. Quite hopeful on that processes are going on because some of the process takes time. But as far as the outlook on the account is concerned, we are fairly confident that we can recover to a very large extent out of this account. One-third guarantee we have already received.
Ashok Ajmera
So the — in terms of absolute numbers, the balance outstanding is about INR800 crore to INR1,000 crore?
Debadatta Chand
Something around INR1,100 crore to INR1,200 crores in that.
Ashok Ajmera
INR1,100 crore to INR1,200 crores? Okay. All right, sir. Thank you very much, sir for the — thank you for giving me the time. And if time permits, I may come back again, sir. Thank you.
Debadatta Chand
Okay. Thank you. Thank you.
Operator
Sir, we’ll now go to Jay. Jay, can you please unmute yourself?
Unidentified Participant
Hi, good evening, sir and thanks for the opportunity. Sir, first is, sir, we had said about that this year is going to be the year of fee and float. We have done reasonably well in the corporate growth pick-up in this quarter and yet, you know the commission exchange brokerage has not picked-up to the extent or commensurate with the — with the credit offtake. Any sense there, sir?
Debadatta Chand
[Speech Overlap] yeah, yeah, yeah, you said right, actually that is one area we are trying to optimize, although we could not get you to the desired outcome on that precisely for two reason. One is that on the — actually the corporate book and the commission income is getting a proportional increase therein. But on the retail side, because we are running lot of campaigns in terms of all this, so the waivers are there on the processing fee and all those stuff. We had the monsoon campaign and then immediately after that the festival Utsav campaign. Both on the liability side and asset side, there are some, what you can say, lower growth happening on that commission exchange on those thing. A lot of market again on the operational side has moved to digital, so we are not getting the requisite commission out of those. Slightly on the wealth business, we again slightly we restricted the business as you know that guidance has been to more to focus on the core business. So there is a dip in the wealth income therein leading to a overall — the growth is — I mean there is a growth, but the growth has not been substantial to tell us that the fee inflow really impacted the book big-time.
But on the corporate side, there has been good traction on that. The CMS fees and all going up significantly. Beyond the corporate now, we are targeting all this MSMA account to get into the CMS. And there actually we onboard a large number of accounts, the outcome would come later. So as a action point, clearly, internally as a management take also, yes, we have not optimized on the CAV. We try to optimize going forward, but couple of aspect which again has given a lower growth, we’ll focus on those and that is we have some point on the management take on this.
Unidentified Participant
Sure, sir. Thanks for the detailed answer. Sir, on your personal loan book, which is INR32,000 crore, if you can share the outstanding GNPA here and maybe the slippages if you have on this INR32,000 crore loan book?
Debadatta Chand
Yeah. Our outstanding NPA we have shared possibly somewhere, I don’t know, it is around 3.18%. My retail NPA is around 1.5%, the book as a whole. And actually there are two things actually personal loan — the digital personal loan is something around INR10,000 crore, INR11,000 crore. The remaining all is a branch underwriting where it has been there not only recently, it was there earlier. So if you talk about couple of segment because again, personal loan is a data-driven thing. So looking at the outcome, we immediately take action like on a digital small-ticket, we have all completely stopped it now. On the physical sourcing, there are segment which are salaried, there are segment which are non-salaried, actually we have tightened the non-salaried portion.
The growth actually if you look at, it has come down from 100% to almost normalized 25% now on the personal book. So clearly, we’re acting on that. The asset quality is much better, okay, obviously, the slippage would be suppose you compare the personal loan slippage now and a year back, now would be higher than that. Let’s say, on a number if I give you, let’s say it was INR100 crore earlier like six quarter back the slippage now it will be INR250 crore out of the total slippage of INR2,700 crore. So it’s insignificant in terms of impacting anything, but then a bit of elevated as compared to earlier because the moment the book gets aging then also the slippage do happen. So in that way, it’s a small book as compared to many of the peer banks. We have taken action on that. And I think going forward, the same kind of a outlook we have for the personnel.
Unidentified Participant
Right. So just to — just to get it clear, sir, you said this 3.1% kind of a GNPA for the unsecured retail book, right, which is 32%.
Debadatta Chand
Yeah, yeah, yeah, yeah, yeah absolutely.
Unidentified Participant
Right.
Debadatta Chand
My overall GNPA of the retail is 1.5%, 1.49% something. So it is only for the unsecured personnel, it’s 3.18%.
Unidentified Participant
Right and the slippages you said is around from INR100 crores, it has moved out to like INR250 crores per quarter?
Debadatta Chand
Yeah, yeah, yeah.
Unidentified Participant
Sure.
Debadatta Chand
And INR100 crore, I’m talking about 1.5 year back when we never discussed on the issue because there was a elevated concern on that, right?
Unidentified Participant
Right, right. And lastly, sir, on corporate yield, right? So what is the — on your corporate book, right, which is, let us say, I mean, the entire corporate book, what could be the blended yield here? And if you have the loan mix by yield also, I mean, what is the blended outstanding corporate yield and if you have the percentage of loans for overall loans into EBLR, MCLR fixed rate and others? Thank you.
Debadatta Chand
Mr. Tyagi, can you take out this question?
Lalit Tyagi
So thank you very much. So in fact, we may provide you the data in fact the CFO is having right now, otherwise offline we can provide. Largely the traject — largely the pack is, the highest yielding assets are RAM [Phonetic] within that Agri and MSME are the higher than retail and then finally come to the corporate. You know within corporate also, we have been able to manage the yield. That’s how in Q1, we allowed slower growth because we managed the book well. Q2 probably we have some traction and we grew that is visible in the 10.5% growth. However, that was managed well despite the fact that there were challenges on the yield side. So exact corporate yield we can provide you offline.
Debadatta Chand
So, there are two things here actually if I say that, slightly the corporate yield, if you compare the Q2 and Q1, it has gone down because of the penal interest and charges accounting, that’s one. Secondly, actually in terms of the composition of the book, almost 47% is MCLR, 33% EBLR, roughly around — roughly around 80-odd percentage has been the floating-rate side. So that there is ability to pass on is much higher with the bank at different market condition, right? As Mr. Tyagi said, right, Q1 we wanted to realign the book and that was the beginning of the quarter allowing us to realign. Realign only on the corporate side because of the fine price book and then how do you want to — I mean, how much margin importance you give and how much book growth you want? So we wanted to realign, the growth of 1.6%. Clearly, this quarter some of the price point was pulled up in the sense that market was offering such a higher yield on those advances, so then we went ahead with that. So it’s a balanced view in terms of pricing. But clearly, when we construct the book, clearly our margin is one of the objective, we keep that in mind. So that’s something the margin RAROC, these are all important what you can say, parameters for us to consider when we increase the book.
Unidentified Participant
Right, sir. And if I may ask one more question, the loud — sir, I mean, your segmental GNPA suggest that the corporate GNPA is now only INR600 crores, right? And you have INR10,000 crores of MSME and slightly higher in agri. So — but corporate GNPA are like almost zero. And you still said that you would want to keep bringing down net NPA. So I mean, you have already 0.6% net NPA. So what is the thought process there of…
Debadatta Chand
That’s actually, yeah. Yeah, please go ahead.
Unidentified Participant
No, no, so that is — I wanted to check…
Debadatta Chand
So I tell you actually before to this, there was a media meet and everybody was asking a guidance on the net NPA. We said, we don’t want to give net NPA guidance, but always we try to trend it downward that is what I hear. So the trending downwards is up to what extent and what actually the time and market would tell or our position would tell. So corporate side, actually I mean there is not much of scope in terms of the NPA outstanding, although the recovery out of TWO, there is a good kitty on that actually, but then this is clearly less. The focus that we are giving, much of the slippage that happened that you have seen, it is more of a — less than INR5 crores segment where the slippages happen. And these are again retail book or a MSME book or agri. So the probability of again getting them upgraded is quite high as compared to your corporate loan book because the moment corporate goes down, because the exposure is huge, the market condition are different, very difficult to put it back unless and until you get into a regulation process or a — like the IBC process.
So I think the recovery out of the small loans which slipped in last two, three quarters, although the level is very less as compared to the bank is concerned, INR2,700 crores is the normal run rate kind of a slippage, but then we’ll try to again optimize on that. So one of the — that when I was talking to the media on the same thing, our recovery target is INR12,000 crore for the full-year. Whereas the slippage we need to continue at INR9,000 crore to INR10,000 crore, so giving us INR2000 at least a delta in terms of reducing all these percentages. But having achieved 2.5% and 0.6%, I’m absolutely clear that it’s a difficult move to again bring substantially down on these two ratio.
Operator
Sir, the last question for today, we’ll get from Rakesh Kumar. Rakesh, can you please unmute yourself?
Unidentified Participant
Hi. Thank you, sir. So just couple of questions I had. Firstly, on the interest income from the dummy ledger recovery, has it not been that great considering that we had written-off recovery of INR2,500 crore and margin was slightly soft. So that was the first question. Second question, 18% of our loan book, the overseas loan book has quite lot of volatility on the margin front. So if you could help us on that front? And third question is basically we used to have the provision write-back with this restructured book being upgraded, I think that did not happen this quarter and this was a regular thing in our provision line item. So — and the nature of agri slippage, the last question, sir. Thank you so much.
Debadatta Chand
Sure. I’ll take the second with regard to the international margin. Our international, actually if you look at the international market at some point of time, the returns were quite high. So, we almost achieved a NIM of almost 2.13% or 2.14%, which has gone down to 2% now. What is happening in the international market is there are lot of repricing happening at this point of time, right, because there is a Fed rate cut, there are overall cooling of the rate of interest in those market. So that’s why the growth if you look at, we have clearly moderated, keeping this in mind that the repricing pressure. And since overseas market, both asset liability are floating, there is a bit of lag in terms of repricing on the deposit side. So that would eventually catch-up putting the margin. And normally on the international — internally we target something around 1.9% to 2% as a ideal margin level to maintain going forward. But the advanced growth clearly moderated, the growth has been lower this quarter.
On the interest from the dummy ledger, Mr. Chayani, can you take this question? Or you can provide later on.
Manoj Chayani
So, sir, the interest, Rakesh, what you were talking about the other interest income and the comparison between the Q2 of FY 2024 versus Q2 of FY 2025, there is a reduction in the interbank the placement of around INR13,000 crores. Hence there is a dip that what you are observing. And if any further clarification, queries, please contact with me, I’ll provide that.
Debadatta Chand
He had also a third question, what is that you said? Agri slippage has been broad based actually, they are sometime seasonal also. The moment you migrate to Q3, actually this is the time where the crop harvesting and the money they get, actually the portion improved significantly in Q3 and Q4 as far as agri book is concerned, but these are all small-ticket diversified across the country kind of EA. So nothing specific with regard to that.
Unidentified Participant
Got it, sir.
Debadatta Chand
And anything else you wanted, Rakesh?
Unidentified Participant
Just one question, sir. That was the provision write-back we used to do in the standard asset provisioning.
Debadatta Chand
Okay. Actually, if you look at the standard asset provisioning this quarter, there is bit of potential provisioning has happened actually, that is what actually if you look at the outstanding not increasing the NPA level, but there is a potential provisioning, so the standard provisioning has gone up, marginally, I mean maybe around INR300 crores that is what we see from Q2 and Q1.
Rakesh, is that okay with you? All this question that we have answered that?
Unidentified Participant
Sir, I have one question, sir…
Debadatta Chand
Yeah, please.
Unidentified Participant
[Speech Overlap].
Debadatta Chand
Yeah.
Unidentified Participant
Sir, when we look at the other income component for this quarter, that has seen a big jump year-on-year also and quarter-on-quarter also. Sir, taking into account the nature of other income, what should be pensioning in going for H2 because if we remove the increase, then the expenses on — the interest expenses are not commensurating with the bottom line, which we have posted, if we remove that increase in the other income. So if you could give us some more color how this line-item is going to shape up or what factors led to this huge jump in the other income component, sir.
Debadatta Chand
See, there are three component, one is a fee based income, treasury income and other non-interest income, which typically are the write-back we got it because of recovery in TWO comp. And on a normal scale, this run rate is almost INR800 crore as compared to INR2,500 crore like INR2,600 crore that is for Q2. The normal run-rate on this is around INR800 crore, INR850 crore on a quarter-to-quarter basis, right? The fee-based income, it’s mainly the CV and other income, that’s a very steady state kind of a thing. We’re going to focus on this. It may see a 5% or 10% increase. Treasury income is again market dependent. One thing while talking to Ajmer sab, I was telling that our AFS reserve is quite significant, like from the — since the — just the start of accounting from 1st April, we built-up substantial AFS reserve therein, that means the book has in money position significantly. So that can be in a scenario where the market is not good, we can still leverage that.
So it’s component-wise, difficult to give you a clear run-rate on the — but the item which has seen a significant jump, that is the other income from the recovery out of the written of accounts, TWO accounts, there the run-rate is around INR800 crore, INR850 crore maximum. On a normal scenario, if we get again couple of other recovery that can happen, so we have a large kitty, the TWO kitty is also substantially large suppose you get and it can further add to that like it happened in this quarter.
Unidentified Participant
Other than that, sir, you are lowering your growth target for H2 that is what — can you repeat in terms of the advances and the increase in the loan book, we are lowering our expectation for H2 by what basis points, sir, if you could just repeat, please?
Debadatta Chand
Yeah. Actually, I started the deposit actually, you would have seen the deposit growth for Q1 and Q2 has been around 9% and 9.6% and the guidance earlier was 10% to 12%. And I always debated in the market a lot the gap between the credit growth and the deposit growth, right? So we wanted to take a call at this point of time. So the 10% to 12% on the deposit, we have aligned to 9% to 11%, although we try to grow at 9%. This is on a backdrop of a Q1 where we realize the book where the growth has been much lower. So in case to achieve a 11% growth in depositm actually the Q3 and Q4 has to be much higher than the Q2 growth, right, then only we’ll achieve 11%. So very clearly, the growth in Q3 and Q4 would be much higher than the Q2, forget about the Q1.
Once because on the deposit here, we have to recalibrate the advanced growth forecast and that is what actually it was 12% to 14%, we have reduced by 1 percentage point, making it more realistic from 11% to 13%, although again as I’m saying earlier also, we’ll try to operate at the upper bank, that means at 13%. Current growth is 11.6% globally, 12.5% domestic. Domestic continue to be strong, that means the growth has been higher than 12.5% from Q3 and Q4. Internationally, since we are moderating, as I said, because of couple of other reasons, the overall growth would be again at the 13%.
So the 1% reduction is not a reduction per se on the growth forecast, it’s something realigning or calibrating the growth outlook based on the deposit growth which we’ll appreciate that it’s not for Bank of Baroda and other we have done well vis-a-vis the peers, in case you have the data as on today, the bank has done well on the deposit front. But since there is a change, so we are expecting a asset growth to realign, keeping the margin at the same level, so that’s very important. When I’m saying that there is a growth here, the margin. So one of the objective is to clearly keep the margin into consideration, particularly on the corporate loan book side. So these are couple of — we want to be more realistic as compared to what we can give a guidance and not lowering the growth in that way, right?
Operator
Chayani sir, would request you to give vote of thank, please.
Manoj Chayani
Thank you all for sparing your time and guiding us for our future prospects. Due to shortage of time, we may not have answered some of your queries or clarification, please do connect with me or connect with my office anytime to have more clarity on any matter. And with all your good wishes, the Bank is going to achieve new heights like every quarter. And lastly, on behalf of our management, I wish you all and your family members a very happy Deepawali. Thank you.
Debadatta Chand
Thank you all. Once again, thank you very much.
Lal Singh
Thank you, all.
Lalit Tyagi
Thank you.