Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Bank of Baroda Ltd (NSE: BANKBARODA) Q4 2026 Earnings Call dated May. 08, 2026
Corporate Participants:
Unidentified Speaker
Debadatta Chand — MD, CEO & Director
I V L Sridhar — Chief Financial Officer
Unidentified Speaker
Beena Vaheed — Executive Director
Lalit Tyagi — Executive Director
Analysts:
Rikin Shah — Analyst
Unidentified Participant
Kunal Shah — Analyst
Unidentified Participant
Ankit Bihani — Analyst
Presentation:
Unidentified Speaker
And welcome to the analyst meet for bank of Baroda’s financial results for the quarter and year ended 31st March 2026. Thank you all for joining us. We have with us today our MD and CEO Dr. Devadak Chand. And he’s joined by the bank’s Executive directors and our cfo. After brief introductions we have a presentation on the results with the highlights of the performance which our CFO will take you through followed by opening remarks by Dr. Chand and then we will start with the Q and A session answer would request you to begin.
Debadatta Chand — MD, CEO & Director
Thanks Feroja and all my analyst friends. Very good evening to all of you. I think you have a busy day today because three banks announced their financial today. So thank you so much for joining. And just to introduce the management team I am Deechon MD and CEO bank of Aurora. With me Mr. Lalith Yagi. He’s the Executive director. He looks after the corporate credit, the international banking and more importantly the Treasury. With him we have Mr. Sanjay Mudaliyar. He’s the Executive director. He looks after the IT function of the bank and including the retail asset which is again a large book as in today apart from a couple of other platform function.
Then we have Mr. Lal Singh, his executive director. He looks after the SAMB vertical which is a stress asset management vertical including HR and also the MSME, the. The. The department also a part of his portfolio we have Madam Bina White. She looks after the operation of the bank. The CCO reports to her including the risk management many of the platform function including the compliance and control audit and also the retail liability which is again a large franchisee for the bank. And we have the CFO Mr.
IVL Sridhar. So he has been there for a couple of quarters interacting with all of you. With this I hand it over to.
Unidentified Speaker
So we will now have the presentation. I think you may be on mute
I V L Sridhar — Chief Financial Officer
Foreign. It’s my privilege. Good evening everyone. It’s my privilege to present before you the financial highlights of bank of Bar for the quarter and financial year ended 31st March 2026. As at the end of 2026 the Bank’s global business volume has crossed milestone of 30 lakh crore and stands at 30.78 lakh crore registering a y growth of 13.9%. Our global advances have grown by 16.2% y o y with domestic advances growing at 14.5% and international at 24.4%. Within the advances book the bank has continued to focus on RAM advances our organic retail book grew by 17.9%, agriculture by 20.7% and organic MSME by 15.6%.
Corporate loans have grown by 11.2% y o y within the return segment we have seen smart growth across the portfolio with auto loan by 20.6%, mortgage loans by 19.3%, home loans by 14.6% and education loans by 10.9% and personal loans by 8.7% by O in terms of deposit growth, our total deposits have grown by 12% with the international deposits growing by 7.5% and domestic deposits by 12.8%. The domestic CASA deposits have grown by 9.8% and term deposits have reached a growth of 14.8% y as of March 31 March 2026, the bank’s domestic credit deposit ratio stands at 83.4%.
The CASA ratio stands at 38.9%, up by 45 bips quarter on quarter. With regard to our quarterly profit metrics, our operating profit for the quarter stands at 9,069 crore registering a growth of 11.5% YoY. The bank has adopted new mortality for arriving at the AS15 liability which led to an increase in the employee cost by 520 crore. Our net profit for Q4 2026 stands at 5616 crore registering a growth of 11.2% y which is the highest ever quarterly net profit. Return on assets remain consistently above 1% at 1.15% in Q4 2026.
Return on Equity stands at 17.27% for the quarter. For the full financial year FY 2026, our operating profit stands at 32,259 crore. Our net profit for FY 2026 stands at 20,021 crore which is the highest ever net profit. Return on assets remain above 1% at 1.06% in FY 2026. Return on Equity stands at 15.39% for FY 2026. With regard to key ratios, our yield on Advances stands at 7.44% for the quarter and 7.71% for FY 2026. Bank’s cost of deposits for the quarter stands at 4.78%. It stands at 4.87% for FY2026 as against 5.10% in FY 2025.
With regard to our net interest margin, it stands at 2.89% for the quarter registering a sequential improvement of 10bps. It stands at 2.89 for the whole FY 2026 now we come to our asset quality which continues to remain robust. Our GNP ratio has improved by 37 bps y stands at 1.89%. Our net NP ratio is below 1% at 0.45% an improvement of 13 bps y. Our provision coverage ratio including TW is comfortable at 93.94%. Our slippage ratio for Q4 2026 has reduced by 11 bips yy and stands at 0.89%. Slippage ratio for FY 2026 also reduced by 6 bips y to 0.72%.
Credit cards for Q4 FY 2026 has increased to 0.76% as against 0.44% in Q4 FY 2025 due to the prudential floating provision of 1500 crore made by the bank during the quarter. Credit cost excluding the floating provision would have been 0.32% for the quarter. Credit cards for the full financial year stands at 0.46%. Again, the credit cost excluding floating provision would have been 0.34% for the full year. Coming to our SME and collection efficiency, our clinic SMA102 as a percentage of our standard advances reduced to 0.18% as of March 26 as against 0.33% for March 25.
Our collection efficiency excluding agriculture remains robust at 98.9%. In terms of our capital advocacy, our capital position continues to be strong with CET1 at 13.16%, Tire1 at 13.64 and overall CR at 15.82%. For quarterly average NCR remains healthy at approximately 127%. Bank has declared a dividend of Rupees 8.5 per share subject to requisite approvals. Thank you.
Unidentified Speaker
Thank you sir. Chancellor, over to you for your opening remarks. So you’re on mute.
Debadatta Chand — MD, CEO & Director
So thanks Siddhas. And I mean to all my analyst friends. Let me make couple of qualitative comments on the finance that you have announced for this year and also for the quarter. I think we have a very strong growth both on the balance sheet and also on the profit and loss. A couple of numbers that we see on the balance sheet. This year we crossed the league of 30 lakhs plus kind of a business and the business stands at 30.78 lakhs crore of business as in 31st March. At the same time couple of other milestone that we see on the financial is that we cross 20,000 crore of net profit for the standalone entity and the profit becomes 20,000 0 to 1 crore for the financial year and the profit for this quarter 5600 possibly is the highest in any quarter for the bank for many years.
Maybe for the decades. On the advances side, although our guidance was 11 to 13%. But in terms of the percentage that we announced is the advanced global advance growth of 16.2% and the domestic advance growth of 14.5%. At the same time the deposit side we have seen one of the best quarter which again a couple of quarters we seen our deposit not catching up to the growth in advances. With the deposit growth is almost 12%. Full global deposit with the CASA at 9.8 and the saving growth at 9.1. I think these are the numbers which maps very well with regard to our focus on low cost deposit and our focus to grow on the casa.
Because we last many years we are focusing on the CASA deposit and we have I mean improved on the services side, product side bundling of products so as to improve on the CASA front both the growth of advances and deposit. If I see this is the best quarter in last 10 quarters. So I mean we have seen the journey of banks, the journey of the industry for last 10 quarters in terms of growth percentage. But our number or the percentage growth in this quarter has been the best in last 10 quarters. On the profitability front the NIL growth has been positive and you would have seen a number saying that the increase in interest income has been higher than the interest expenses.
That’s something in earlier quarter slightly it was going negative in terms of the interest income not growing up to the extent of the growth in interest expenses. So I mean this quarter, I mean the trend is different. The interest income growth has been higher than the interest expenses. Consequently the NIM, the NI is at 12,495 94 crore which is a growth of 8.7%. The NIM domestic at 3.04. At the global area 2.89. And this NIM percentage is also higher than that of last quarter. As the CFO said on the on the employee front because of the hardening of the yield on the obligation under AS15 has gone down.
But at the same time the bank decided to migrate to the new modality table where there is an additional liability requirement of 520 crore which you have provided for. So I mean the employee cost that you would have seen including as 15, the trend is in line with the system. What other banks also would have announced couple of numbers in terms of the operating profit of more than 7,000 cr. I mean we are announcing this more than 7,000 cr on operating profit for last 14 quarters and this quarter it is 9,069 crore net profit.
We are announcing more than 4,000 cr for last 13 consecutive quarters. Similarly the ROA of more than 1 that is one of the guidance number we have that we are having more than one for last 15 consecutive quarters. The AC to the book value which is again one of the fundamental factors in terms of what you look as a investor. It has improved from 148.8 rupees in from March 23 to to 51.7 rupees in March 2026. Increase or incremental addition of book value to the extent of 102.90 rupees. Asset quality has been one of the best as far as the numbers are concerned.
The GNP at 1.89. The net NP at 0.45 both in terms of the slippage ratio and also the credit cost. The credit cost full year is 0.46 as compared to 4,7. Both will be within our guidance range. I think the asset quality and in terms of the prelim data in terms of SMA 1 and 2 more than 5 crore also it has gone down from almost from 0.36 to 0.18. So with this I think the asset quality has been one of the good as far as we are concerned. Secondly a couple of initiatives that I want to highlight before you is that the bank recently raised a 10,000 crore of green infra bond.
This is the first in India to raise a green infra bond and the response was 3x of the amount that we wanted to mobilize. We have an outstanding green deposit as in today to the extent of 1899 crore and I think by far is the highest deposit in the system. We also announced this time that we’re going to raise capital in the form of 81 and Tier 2 to the extent of 6,000 crore in this financial year. I’ll also remind you a earlier announcement wherein we announced that the bank would be keen to raise 8,500 crore of equity capital over a medium term that is up to FY28.
So in terms of capital raise it’s almost like we have the. What you can say not pipeline but a room to raise 14,500 crore consisting of 8,500 crore pure equity and 6,000 crore of 81 and tier 2 for this year 26, 27. Let me repeat couple of guidances. Normally we give the loan guidance. We are upsizing from the earlier guidance of 11 to 13 to 12 to 14%. Considering our performance subject the global headwinds doesn’t impact big time to the Indian market. The Deposit growth is from 9 to 11. Earlier it has been upsized to 10 to 12%.
The NIM we achieved 2.89 this quarter but we are slightly looking at a probable repricing of asset liability. While projecting at 2.75 to 2.95 for the full year. The ROI continue to have more than one. That is what we we had earlier guidance also continue to have the same guidance. The slippage ratio also we still keep it at the same level of 1 to 1.25 and the credit cost below 0.60. So these are a couple of guidance I think important for you with this. I’m close. I mean I’m done with my opening remarks.
We’ll open for question and answer.
Unidentified Speaker
Thank
Unidentified Speaker
You sir, if you have a question please raise your hand or you may also type your question in the Q and A box. We will start the first question with Rikkin Shah Ricken. If you can please unmute yourself.
Questions and Answers:
Rikin Shah
Good evening sir. Thanks for the opportunity. Just two questions. First one, you know on your reported global yields on advance and cost of deposits both have moved down and the cost of deposits have gone up but the margins are higher. So presumably that’s due to some interest on IT refund. So while I do acknowledge that you’ve called that to be core in the past but if you could just quantify the amount of the same, that’s number one. Second question is specifically on cost of deposits. So if the overall, sorry the global as well as domestic cost of deposits have marginally gone up in this quarter versus the last quarter.
So how’s the outlook on the SEM? Fair to say that the TD repricing is already done for us completely and how only the cost of deposits move. And the third and the final question sir is on the Opex 2 moving parts as you pointed out. Now with this mortality rate change, how should I think about the ongoing OPEX going ahead? Employee expenses specifically?
Debadatta Chand
Okay, thanks. Coming on the margin and particularly the yield on advances in the first up deposit. I think the base, the denominator for both the things are different. Right? Whereas the NIM takes care of the full on the on the asset side. So the spread and margin are different. So we should not compare the spread and margin because that would give a different picture at the same time I do agree there is a line item with regard to the IT refund and earlier also I Said because since we have a large, I mean the provision on the it, we keep on getting this as a normal flow.
It can be higher or lower in a particular year. And precisely for that reason, although we had a 2.89% NIM for this quarter we projected at 2.75 to 2.95. So that accounts for any volatility. That may be because of the IT refund. But for me the NIM is one that’s a core name and what we announced the name is the core name. So that is with regard to. I mean we should not get confused with the spread and margin because margin computation is different than the spread.
Rikin Shah
But would you like to quantify sir the interest on IT refund in this quarter? I think last quarter it was about 300 or 400 crores.
Debadatta Chand
No, actually we don’t have a number. I don’t have a number. You can offline, can I get a number? But again on the same thing I reiterate because there are refunds significant difference coming every year that we have seen. And the amount can be higher and lower. And precisely for the that reason actually I’ve given a guidance lower guidance at 2.75.
Rikin Shah
Got it sir.
Debadatta Chand
But the whatever amount that’s very insignificant to the world. I have a income base of almost 1 lakh 26000 crore. So in that way that’s not very significant to impact on the margin cost of deposit. You are right. I think it’s getting sticky at this point of time. So if I compare the March over December. Although the cost of deposit for as far as we are concerned is one of the lowest in the market, right? At 4.78 I think we are one of the lowest in the market on the custom deposit. But going by the liquidity scenario prevailing because suddenly in the March quarter the geopolitical issue came big time and which is still persisting.
So in that way my sense is that the cost of deposit is going to sticky. Maybe there is a scope of realigning on the asset side. But as of today I don’t see cost of deposit further going down at the current scenario if the liquidity continue to be the same like it is as in today. So in that way slightly mindful of the repricing effect of the asset rather than the deposit. Because deposit whatever has been fully repriced as in today, based on the current level on the mortality, I think the CFO would be the right person.
But before that madam, anything you want to say on the cost of deposit,
Beena Vaheed
Sir? Because I Think it is likely to remain at the same levels because it will be elevated. March quarter we saw a slight increase in the cost of deposits and it is likely to continue for this quarter as well because we don’t see it coming down in any time, at least for the next three months.
Debadatta Chand
So Mr. CFO, can you just address the modality table and what is the benefit?
I V L Sridhar
Sir, actually the one time impact that we have taken due to movement in immortality is 520 crores. This is one time going forward the recurring impact will be very negligible.
Rikin Shah
Got it sir. Perfect. Thank you. And sir, if I can just add on one more question. You know in the SBI call just prior to our call they were alluding to some scope to improve the yields on advance as the corporate borrowing moves from the T bill to the mclr. Is this something that we can also possibly do or is that likely or a positive kicker on yields on loan going ahead?
Debadatta Chand
That’s why I said actually when I said the deposit is sticky that means the only scope for us to realign the asset pricing. Right when the rates were really low many MCLR linked loan got replaced with the external benchmark. More particularly TV with the elevated, I mean the rate structure which is prevailing because of the geopolitical issue. I think there is a scope for realigning that portfolio and that is what actually our strategy to look into those pricing very closely.
Rikin Shah
Got it sir, thank you.
Unidentified Participant
The next question is from Jayant Karate.
Unidentified Participant
Thank you for the opportunity. Sir, my question is on the ECL guidelines that have come through. You have been in the past transparent about the impact. I think you’ve called out around 18 bips, sort of a steady state impact. Is the final guideline to your earlier calculation tallying with it, is it better than that or. Or could it be higher than that? That’s the first question.
Debadatta Chand
Yeah, thank you very much for that. Actually earlier it was a draft guideline so it was possible to estimate or guesstimate those impact. Right. So now there is a final guideline. So what is our, I mean stance is that unless and until we compute fully on that it’s not proper to quantify that at this stage. But my sense is that whatever guidance we had given earlier it is not going to. It would be aligned to those numbers. So I’m not expecting any significant change visa with the earlier. I mean although that was a more of a tentative calculation in that manner.
But we want to see the real impact and then possibly articulate better and that would be proper to articulate rather than giving any number at this stage. So that’s what actually I said in the media meet also and I’m seeing it.
Unidentified Participant
The second question is on the trajectory of margins. While I understand your full year guidance is in that 2.75 range. Is it fair to assume it will first move down and then move up in the second half given the near term pressure on deposits and given the asset repricing strategy that you’re trying may take a while before it shows up on yields.
Debadatta Chand
You are right. One thing that we are assuming for this quarter at least that the cost structure is going to be sticky. I mean as I said the cost of deposit further moderation going by the current scenario we’re not looking at. So the only way the name we can manage with regard to realigning the asset pricing and that would be one of the key focus as far as our. I mean management work is concerned. But at the same time why slightly we give a conservative number because this IT refund is a flow which is although a continuous one.
But it can go up and down in every quarter and that depends upon the refund order that we get. So keeping everything in mind. So we have given a slightly conservative guidance on the the lower side. Not necessarily it would happen in the Q1 maybe at the latter quarter. But that all depend upon. How do you do all this what you can say math together so as to protect the margin.
Unidentified Participant
And I assume sir the 2.75 is is the lowest number X of it refund. That’s why you kept that that all four quarters
Debadatta Chand
Together. I think we should not be breaching this lower threshold of 275
Unidentified Participant
Even with 0 ID refund. That’s why you confident
Debadatta Chand
I’m
Unidentified Participant
Saying that’s why you are trying to
Debadatta Chand
Estimate. We have some estimate of the IT refund for the full year based on the orders and the seasonal or whatever the past trend. So based on that is the guidance
Unidentified Participant
Understood. Lastly on on the incremental opex I do understand is there any revision on employee wage because of the yield movement that you have taken in this quarter?
Debadatta Chand
No, the AS15 impact already articulated by CFO I think. CFO can you just go ahead with your AS15 impact. So that is the only OPEX that maybe slightly you may be interested to know.
I V L Sridhar
Actually the mortality tables which we have adopted are the latest tables. With that the one time increment in the AS15 obligation is around 530 crores that we have fully absorbed in this quarter Going forward the recurring impact will be negligible Regarding your question, I think it pertains to the base settlement which is still not a due.
Unidentified Participant
Thank you very much and all the best for the. Thank you.
Unidentified Participant
Next question is from Kunal.
Kunal Shah
Hi. Am I audible?
Debadatta Chand
You’re audible. Please go ahead.
Kunal Shah
Yeah, thanks for taking the question. So firstly when we look at it, the increase in the bulk deposits which have been there and I think the earlier question on cost of deposits, I think it would be also the factor of bulk deposits getting raised which was almost like say 14% quarter on quarter and 25, 26% year on year. Maybe few quarters back we had seen an incident wherein all of a sudden we reduced both the bulk deposits as well as the wholesale portfolio at one point in time and we saw a significant reduction in the balance sheet size at any point in time.
Would again we be pursuing that in terms of the margin management or ROA management exercise. If you can just clarify that. So that’s the first question. Second question is on floating provisions. 1500 odd crores. So this would be towards ECL transitioning I believe. And how much more do we plan to create it further? Is it like maybe so obviously credit cost was much higher during the quarter including this floating. But would we see that continuing for a couple of more quarters? And on recoveries from written off again compared to our guidance of 750, 850 odd crores we saw a substantial increase.
That seems to be some one off account out there. But otherwise in terms of the guidance for FY27, do we continue to maintain 750, 850 crores? You alluded to most of the other parameters in guidance but this time you are not given it for recoveries. So just would want to reconfirm that as well.
Debadatta Chand
Thanks. Kunal. You said right. With regard to. We said earlier maybe two, three years back that we want to reduce the dependency on full deposit. When I said dependency at that time bulk used to be almost like I’m talking about the total deposit as a percentage was almost 23, 24% and we went down to almost a level of 17% at some point of time, maybe 2, 3/4 prior to this. Having said so because of bulk deposit dependency here the balance sheet size has not actually was, I mean degrowth, I mean the balance, it continued to grow strong.
The strategy was to replace the bulk with the low cost deposit. And there we have been doing consistently well for last many quarters. And this quarter also you would have seen our Saving growth is 9.1%. And you can compare with many banks who have declared and what is the growth they do have. So the strategy has really worked in terms of focusing on the saving and that’s why we have one of the highest CASA percentage within the PO banks. I mean currently also it is almost at 39% and you have the comparison available so you can make it out how the strategy work.
On the balance sheet we have grown significantly but in the same time we could able to change the bulk percentage from bulk to low cost side for the March quarter particularly the geopolitical what has happened there was a liquidity possibly the the loan growth has been very at a 16.2% so you need to be there in terms of managing both your liquidity at the same time. Maybe you need to mobilize bit of a deposit both from the bulk and CD together we have a component of CD in the bulk the number that we see 3 lakh 20 or 3 lakh 21.
So CD as you know these are again slightly the duration less with the cost also lower than that of bulk deposit. Because typically bulk deposit is a one year deposit. So in that way the bank is managing the liability, I mean the liability profile in a manner which is again optimal in terms of liquidity, optimal in terms of pricing, optimal in terms of margin. So that we have been doing since long and I think that’s something a positive trajectory of the bank for last many quarters and years now on the floating provision the provision has been created typically to buffer the balance sheet for any extraordinary scenario not for tagging with any ECL provision posse resident this for a protein position cannot be touched unless and until there is a regulatory approval for that.
So it’s basically buffering the balance sheet strength to create floating provision rather than tagging with any particular ECL impact. If ACL impact is to be taken in the books directly, we’ll take it in the books directly without touching the protein provision. So I mean these two are not linked with that. But obviously yes any headwinds that can create both globally also any such headwinds. I mean because of the geopolitical issue we are mindful of offering the balance sheet in terms of creating balanced strength.
Third, with regard to you said right, the two this time has been I mean higher as compared to. Because normally we give a normalized guidance of around 750800 crore this time. Obviously March quarter is always a productive quarter in terms of slightly making your efforts more in terms of recovery and that has resulted into a higher recovery particularly from TW. And I will continue to have the same normalized guidance of 750 to 800 crore. My need by TW book is almost 62,000 crore. So estimating any such recovery quarter to quarter is.
I think it’s a appropriate and slam one. So these are a couple.
Kunal Shah
Yeah. So. But would there be chunky account of 500, 700 crores in recoveries this quarter?
Debadatta Chand
There are many actually. It all depends upon when the resolution happened. And when you recover money. There are legal processes and CLD processes, multiple such things. So purely pinpointing that it can happen in a quarter, it’s not possible. But then we are hopeful because the kitty is quite. 62,000 is quite a large number.
Kunal Shah
No, no, I’m saying in Q4 was there any chunky account of 500 700. Not,
Debadatta Chand
Not any chunky one. It is a. I mean mid size. Some of the exposure which has mid size. Maybe maybe 200 to 50 crore. Couple of such accounts there.
Kunal Shah
Okay, got it. Perfect. Yeah. Thank you. Thanks. And all the best. Yeah.
Debadatta Chand
Thanks Kunal.
Unidentified Participant
Next question is from Parth Gutka part if you can please unmute yourself.
Unidentified Participant
Yeah. Hi sir. Sir, what was the LCR as of the March end
Debadatta Chand
With 127%.
Unidentified Participant
Okay. And of this recovery from TW of 1400 crore has some amount gone to the interest income line item?
Debadatta Chand
It is so. Yeah. So okay. Interest income and also on the recovery on that so roughly. Okay.
Unidentified Participant
Sorry sir, I missed, missed the amount 100cr
Debadatta Chand
Has gone to the interest income part.
Unidentified Participant
Okay. Okay sir. Okay sir. Thanks a lot.
Debadatta Chand
Okay.
Unidentified Participant
Next question is from Ankit Bihani.
Ankit Bihani
Yeah. Thank you for the opportunity. So my first question is on the growth and deposit growth guidance. So still we are expecting loan growth to continue to outpace the deposit growth going ahead. And given that now, now how much buffer do you have on the LCR front now and what would be the comfortable LCR that we would like to maintain? And my second question is again on the interest on IT refund while you call out it as core. You know a contribution to code names. But this number is very volatile.
And do you expect this to sustain perpetually because somewhere this has to come down. Right. Because in our calculation I think it is contributing around about 10 to 15 bip towards your ROA. So what if this. So how long your interest in IT refund can continue?
Debadatta Chand
Okay, so first thing you talked about lcl. I answered secondly on the IT refund. Let me on growth outpacing deposit. Look a sustained basis, you have the capital, right. So you have a lot of other alternative resources where you can take refinance you can raise bonds. So we as a bank clearly focus on creating a stable resource base. I launched a deposit base. So while maintaining even you would have seen the CD ratio almost at domestic around 83 point something on that improved VISA vis last quarter anyway on the CD ratio.
So the growth percentage the base of deposit is a larger base as compared to the base of advances. That is point one. So secondly, in a. In a scenario where banks are holding like a bank like us holding more excess slr any deposit we raise need not be put that into SLR because the entire money can go to deposit. And that is what a scenario we are seeing in many last couple of years where because you are holding excess SLR the money incremental deposit we are raising a straight going into the advances.
So in that way I think this gap of 2 1/2 3% is sustainable one in terms of growth of advances and growth of deposits. So that covers your the advances outpacing deposit. At the same time, obviously bank would like to augment the resource base and you want to grow higher on deposit interest in it refund. Earlier also I said yes, it’s a line item which is as part of clearly as per the accounting, but can be volatile. Yes. So I do not estimate with regard to what is the year this year, what is going to be a year next year.
These are all I mean based on the actual tax reform. So that’s why accounting for the estimate we give a margin guidance. And that’s why having achieved 2.89 also I am giving a guidance of 2.75 to 2.95 accounting for the same amount of money which you got this year possibly may or may not be in the next year based on the available what is the refund that we expect and that your issue is I mean covered in the margin guidance. That is what my. We typically don’t get into quantifying because it’s a line item always there in the income as per the normal accounting norms.
So then why should I segregate that amount as a different amount? Yes, it is volatile, I do agree. But then we account this estimate in terms of how much we get in this year in the margin guide.
Ankit Bihani
Lastly, how long this can continue like one year, two year, three or four year, whatever you can say.
Debadatta Chand
I mean look
Ankit Bihani
At our tax rate. It is
Debadatta Chand
Yeah, next year again. So as far as this year guidance I’m very clear that there is going to be a good amount coming. Right. So next year suppose I see there won’t be any money. Then I Possibly won’t account this and give a different guidance. So my guidance for tax refund is based on this only one year so perpetuality will discuss maybe in the next year.
Ankit Bihani
Okay and so lastly on the ECL front so I think I missed out on the answer of yours there. So any the quantification on what could be the impact and how, how could a credit loss, credit cost run rate move on implementation of ecm?
Debadatta Chand
So that is what we said earlier actually look when the draft guidelines was there actually it was able to estimate or guesstimate with regard to the likely impact and that we articulated in terms of actually absolute number also in terms of percentage both on the CRA and also on the credit cost. But having issued the final guidelines it won’t be proper to without really running transaction wise difficult to save with regard to any quantification we’ll do that but we’ll do it slightly once we implement and then have a number, possibly 1/4 number coming very clear on that.
So I am not articulating any number but my sense as in today when I look into the final guidelines and the draft guidelines will not be off track from the number that we estimated earlier it will be aligned to those numbers but actual, I mean once you slightly implement a transaction level and get a clear picture at least for 1/4 to quantify everything on the ECL impact
Ankit Bihani
The last quarter did you guide that the run rate, credit cost run rate could increase by 18 months if I am able to recollect correctly.
Debadatta Chand
I mean possibly you have to recollect. I can’t recollect but whatever we said I think my sense is that it’s not going to overshoot significantly.
Ankit Bihani
Okay, thank you for.
Unidentified Participant
Thank you. If anybody has any questions I’ll just repeat please raise your hand or you may type your question in the Q and A box. The next question is from Ricky Shah.
Rikin Shah
Hey, thanks for taking my follow on question. So this is relating to the slr, right? So we do disclose the domestic SLR which is about 3 trillion on our balance sheet right now which has just not changed in the last three, four years. So as a proportion of the NDTL it has come off very sharply and it’s about 70%, 17% right now because I have only the total NDTL, not the domestic NDTL. My question to here is that how much scope do we have further to you know or how much excess SLR is still left on the balance sheet for us to keep optimizing?
That’s number one. The number two is you Know, until now we were able to, you know, bring down the SLR excess SLR via surrendering a lot of the securities in the OMO or the switches. The likelihood of the same is probably low going ahead. So even in the event, if there is no omo, would you be willing to to liquidate it in the market? And thirdly, just as a philosophical level, isn’t it a better idea to lock in bonds at the higher yields right now, sir, rather than lending to the corporates and home loans at the similar rates where of course there will be some amount of capital charge and credit risk also involved.
Debadatta Chand
You’re right, the treasury management, the bank is running one of the largest book actually we are amongst the top three or four in terms of holding. So at some point of time the SLR holding was almost 26, 27% but subsequently as of today it is around 20, 22.5% or 23%. It goes on floating. But while managing this SLR, it is not one way that we surrender. I mean we sell or we put that on, we keep on buying at different level as per the market condition. So whenever we feel the levels are elevated, we get into the market.
So it’s a churn happening maybe 1, 2% on the SLR is a continuous turn that happening in terms of buying and selling. So in that way it’s always optimization game rather than a single selling that SLR and make profit. So in that way I think we are managing treasury well in that way. And I think that something is part of the treasury management because the trading profit comes out of all this churn. It’s not necessarily you sell only your book and make profit. You have to buy and sell and then only you can make profit.
So our strategy on that would continue but in terms of a comfort range you want. Because see the advantage of XSSLR is that it generate liquidity, right? That’s, that’s the very potent or important purpose of running xsslr and that helps in liquidity, right? So that’s, that’s very clear. So bank would like to now as against 18%, you are at 22, that means you are almost running four and a half percent access SLR. We might like to operate at a safety, I mean a threshold of maybe three, three and a half percent at all point of time because the purpose is not only an investment in terms of generating profit, the purpose is also generate liquidity at the right time in case you require to.
So I think that would be one of the strategy as far as the bank is concerned. Mr. Tagi, anything you want to add on this?
Lalit Tyagi
Yeah. So sir, actually apart from this we also wish to have a comfortable LCR and that’s where the access SLR also helps us in maintaining our comfortable LCR posting.
Rikin Shah
Sir, the choice between you know locking in the long term bond yields at reasonably decent rates right now versus growing aggressively in the home loan, corporate and auto loan where you know the risk adjusted NIMS or more importantly one adjusted for the capital RWAs. How do you think about it?
Debadatta Chand
Yeah. Mr. Tagi, you answered this
Lalit Tyagi
So thank you very much. So sir, actually both instruments or both markets are different. So investment yield, investment holding achieve different objectives. And remaining in in the loan market whether it is home loan, whether it is corporate book, whether it is msme they are different. And loan books give gives us loan customers, gives us deposits also other cross sell opportunities also. So it’s not straight through interest rate. We look upon when we land in home loan, car loan or corporate segment.
We also look at the holistic relationship and also we expand the bank’s various product profile. So I mean and you know different liability profile meets these different asset book objectives.
Rikin Shah
Perfect. Thank you.
Lalit Tyagi
Thank you.
Unidentified Participant
Thank you. The last question that we will be able to take today is from J. Mundra.
Unidentified Participant
Hi, good evening sir. And congratulations on your thumb extension. Sir, I wanted to check on your capital raising plans. Is that on track and how soon can this be done?
Debadatta Chand
Thanks Jay. Thank you very much. The capital already we have announced actually 81 and tier 2 for this year. I mean I’m talking about 26, 27. We have announced that we’ll be raising 6,000 crore. But in case you don’t raise then it can also go to the subsequent year. Because we have use award if expedient on that. Earlier we announced a equity raise of almost 8,500 crore to be as a enabling provision to raise by FY22, 2028. So we can raise that money in any year up to 28. So almost 14500 crore is the the plan raise of capital both from the equity and also on the 81 tier 2 which is slightly.
I mean it can be on the this year or subsequent year. We have taken a medium term plan of FY28 beyond this capital Also we normally keep raising infra brawn and other. Those are also part of the resources where you have to announce to the exchange. So those if there is a requirement to do that. Because sometimes we look at the duration of your liability book as a whole and somewhere we find that because we Compute the duration of asset also and the gap between duration of asset full book. I’m not talking about only investment.
So in case you want to tweak something as a asset liability management purpose we keep raising long term resources also. So it’s all the ALM management that would decide whether we need to raise long term resources in the form of infra one and other one. If that be the. So then we’ll announce to the market at that point of time. But it’s already announced approved by the board is enabling 8500
Rikin Shah
6081,
Unidentified Participant
Right? Sure sir. And sorry, the. The capital raise plan of 8,500 crore that is also on track, right? I mean you have a decent very strong CET1. But still despite that that plan is on, right?
Debadatta Chand
Yes, it is on. It is always on table and it would depend upon the time at which we really want to tap it. Actually based on the market conditions and the requirement of capital for the bank for different. I mean any. Any scenario going forward maybe a geopolitical or anything if there is a need we’ll resident but then it’s a enabling that is applicable till FY28,
Unidentified Participant
Right? Sure. And sir, do you have a number for blended bulk deposit cost for last quarter? Because I believe bulk deposit rate would have started to cool off or qualitatively if you can comment, you know how much let’s say the blended bulk deposit rate would have come down for you.
Debadatta Chand
Yeah, I don’t have a. I mean data on this in case you want we can offline provide you. But the issue is that. Actually I was just giving you context in one of the earlier conversation wherein in two three years back we had a larger percentage of bulk as a percentage of total deposit Amanda denominator because people compute in different way then get confused on this. So it was almost 24, 25% at some time and we. We reduced that to 17% of total deposit couple of quarters back. Now as you know the liquidity scenario in March quarter is always a different scenario because of the geopolitical inducing bit of a liquid.
I mean tightness. So then from 17 it went to 19% but still below 20% which is my normal what you can say the guidance with regard to bulk deposit. So we’ll continue to optimize based on the need for liquidity, need for the growth on the asset. At the same time the pricing impact also will be mindful while doing this. So it’s overall concept of liquidity management that decide how much bulk we need to have go for products.
Unidentified Participant
Right sir. And sir, do you suspect any increase in the term retail term deposit rate in the near term? Because I think a few banks have started to increase retail TD rate. But what is your sense on that?
Debadatta Chand
See I’m not predicting any increase in deposit rate but one thing I’ve said that the cost of deposit which we are one of the lowest in the system. If you look at the numbers of 4.78 that’s going to be sticky in the Q1. Sticky in the sense. I’m not expecting that to go down further. I think that
Unidentified Participant
Number may not be very comparable because we have a 20 plus share of overseas. Right. Which is. I’m talking about
Debadatta Chand
The domestic. Domestic. Right,
Unidentified Participant
Okay, sure. That’s still
Debadatta Chand
Below 5. Not many banks below 5.
Unidentified Participant
Right, sure.
Debadatta Chand
Please
Unidentified Participant
Complete
Debadatta Chand
In that way. I mean sticky means I’m not expecting to go down actually going up would depend upon the liquidity scenario in the market.
Unidentified Participant
All right. Have you made any PLI provision for this year in the quantum of that the performance linked incentive
Debadatta Chand
Pli? I’ll check just one second. Yeah we have made provision for that actually
Unidentified Participant
Sorry sir, how much is the quantum and you follow? I’m sorry sir, if I could get the quantum of for pli.
Debadatta Chand
Okay,
Unidentified Participant
Sure. And so this, this is now you. I mean where is it is in the staff cost or this is in some other provision Because I think they’re still under litigation. Right.
Debadatta Chand
So it is under stop cost.
Unidentified Participant
Thanks a lot.
Unidentified Participant
Very last question is from Kunal Shah.
Kunal Shah
Thanks. Thanks for the follow up. So particularly on the overseas exposure almost two sixty or thousand crores of a book. So maybe if you can just clarify in terms of the profile particular two aspect. One is directly Middle east exposure and second is how much is trade related and there has been. There have been trade disruptions which have been there. So any risk? Because today it’s almost zero NPA in overseas exposure do we see any risk of the NPA coming up over two to three odd quarters.
Debadatta Chand
Look overseas I mean the trade is normally up to 20 because we don’t allow trade book to significantly go up because there is a. The trade as a fine pricing because that also impacts your name. So I think on a. On a. On a percentage basis the trade is below 20. Exactly. If I know more I can give you because that’s what we prescribe for overseas two I’ll continue doing business. The remaining exposure are most mostly on a local syndication that particularly some of the markets were very big over there like us even Gibbsity has a big market and these are all global syndication where we participate with High street bank in terms of taking those exposure big books in US Australia, even Singapore for the matter and all those.
So I think as of today there is no impact in terms of their asset quality on this particularly Middle East. Yes we do have exposure because Middle east we have a large retail operation over there and then the outstanding can be in a range of around 5060000 as in today. But that’s again spread over multiple countries which are again some of the countries are aerated as in today. So the direct impact of this. I mean all those countries right. The regulator also they have announced some kind of a measures like the CLGs we have done in India so to sustain their operations.
So real impact will not get to know once and until we just see. But as of today there is no concern with regard to asset quality because these are the corporates having quite a strong balance sheet and our large percentage of exposure are local syndication which are global local syndication where market names in the book and they are very big. Some of them are Fortune 500. So I don’t think any challenge as in today with regard to the global international book. But yes, particularly operation we need to be slightly watchful for a couple of quarters.
Kunal Shah
Sure. And how much ECLGs 5.0 withdrawal are we expecting maybe the drawdown benefit which we might take up. So now we participated last time also quite actively.
Debadatta Chand
So I think the our book is 1 lakh 60 is the MSME book and roughly 55, 60% is the working capital and taking almost like everybody won’t go up to 20% maybe on a 15 scale I think 12,000 plus would be amount that will be dissociating on the receive. Yes,
Kunal Shah
Got it. And one last question. If you look at auto loan the growth is quite strong. We are seeing many of the PSU banks offering a very longer 10 out product 7 years, 9 years and that too at a very competitive rate. Okay, do we see some risk coming up? Because obviously there is a depreciation which happens after four, five years. There would hardly be any value left out there. So why so much of aggression from PSUs on auto and same with home loan in terms of competitive competitive rates when do we see PSUs lowering the aggression in these two segments?
On the rate side
Debadatta Chand
I don’t see a PSU outlook here but as far as the bank is concerned we’ll continue to grow on an auto loan resembling. Look, auto loan is not a like it’s not a productive asset to generate revenue. I mean it based on the cash flow a person is having from which he pays the money. So our selection of borrower in terms of auto loans are morely looking into cash flow salaried class where we have done a bulk transaction means bulk tie offs. So I think in that way the growth has been good. And as in today, whether I track the stress book or the the GNPA percentage I think these are all benign and very very small at this point of time because the other possibly the ability of the cash flow flow to support the payout is still continuing the same way.
So going forward in case there is anything that we see at a at a elevated level of risk over there, actually we do portfolio review every quarterly on all the books and these are all being done at a very serious senior level board level committee and also anything we see a incipientness in this sector which I don’t see as in today and then possibly we’ll have a look but as in today my guidance will continue the same way like we’re continuing on auto.
Kunal Shah
Okay, thanks. Thanks for patiently answering all the questions. Thank you and all the best.
Unidentified Participant
I would now request CFO sir to please give the vote of thanks.
I V L Sridhar
I would like to extend my sincere gratitude to all of you for joining us today for the announcement and discussion of our financial results. Should you have any further question please feel to reach us to me or to our investor relation team. Thank you once again for your time and continue support. Have a good great evening ahead. Thank you.
Debadatta Chand
Thank you very much. Thanks. Thanks a lot.
Unidentified Participant
Thank you everyone.