Bank of India Ltd (NSE: BANKINDIA) Q3 2025 Earnings Call dated Jan. 24, 2025
Corporate Participants:
Rajneesh Karnatak — Managing Director and Chief Executive Officer
Unidentified Speaker
Analysts:
Niteen Dharmawat — Analyst
Aditi Naval — Analyst
Unidentified Participant
Ashok Ajmera — Analyst
Presentation:
Operator
Ladies and gentlemen, good evening and welcome to Bank of India’s Q3 FY ’25 Virtual Analyst Meet. I would like to thank you all for taking our time and joining us today. We have with us Shri Rajineesh Karnatak, MD and CEO; Shri M, Executive Director; Shri Subrat Kumar, Executive Director; Shri Rajiv Mishra and other top management team from Bank of India. We have placed all microphones on-mute. At the end, during the Q&A session, we will be sending you a request to unmute yourself in order to ask questions. I will take you through this process before the Q&A session. However, the management will continue to remain unmuted throughout the session.
I would now request me, Rajnesh Karnatak to address this gathering. Thank you. Over to you, sir.
Rajneesh Karnatak — Managing Director and Chief Executive Officer
Thank you, thank you so much. Good evening to all the dignitaries. Ladies and gentlemen, present in today’s Analyst meet. It is my pleasure to welcome you all for today’s interaction post publication of our financial results of the Bank for Q3 FY ’25.
In this present geopolitical landscape characterized by uncertainty and volatility, India’s GDP growth estimates for FY ’25 is at around 6.5% and is the highest among both advanced economies and emerging markets. The visible demand rebound and revival of public capex on infrastructure will have multiplier effects, stimulating growth in key sectors. There has been visible upturn in economic indicators signaling sustained growth path ahead.
The key focus area of our bank will be enhancing customer experience through all channels and acquisition of new customers consistently by providing innovative niche services. This will lead to fortification of low-cost deposits that is CASA and retail term deposits for sustainable credit growth.
My speech today has four parts for the coverage. Part one is with respect to new initiatives number-one, new-home loan product, Star home loan, a scheme designed for employees of central, state government, PSUs, large corporates and MNCs has been launched. Number two, bank has adopted two-year roadmap under champion sector priorities of MSME targeting business in tourism, hospitality and logistics. Number three, utilizing market intelligence and analytics-driven a strategy for development of MSME cluster-based finance; number four, introduction of new Kissant drone scheme; Akash Dooth, loan up to INR25 lakhs for purchase of new drones with equipment and accessories for agriculture usage. Number five, automation and simplification of REKYC via BC channel applicable to low-risk customers having valid OVDs.
The second part is with respect to IT and cybersecurity. Number-one, as part of the project Nextech, bank has opened 24×7 resiliency operational centers, ROCs for quick response and recovery from disruptions of banks’ applications, including CBS, e-platforms, mobile banking app, et-cetera, due to natural disaster, system outages and cyber-attacks. Number two, procurement of cyber solutions for proactive management with focus on retention and containment of cyber risk. Number three, enhancement of universal application API gateway for open banking. Number four, implementation of customer feedback through QR code displayed at branches for improving service quality.
The third-part of the speech is with respect to business. Global business has increased by 13.62% on a Y-o-Y basis from INR12.72 lakh crores in December ’23 to INR14.46 lakh crores in December ’24 with an incremental growth of INR1,73,000 crores. Gross advances increased by 15.30% Y-o-Y from INR5.65 lakh crores in December ’23 to INR6.51 lakh crores in December ’24 with incremental growth of more than INR86,000 crores. Global total deposit has increased by 12.29% Y-o-Y from INR7 lakh INR7,000 crores in December ’23 to INR7,94,000 in December ’24 with incremental growth of more than INR86,000 crores. Domestic deposits increased by 13.26% on a Y-o-Y basis from INR5,99,000 crores to INR6,78,000 crores in December ’24 with incremental growth of more than INR79,000 crores.
CASA has increased by 6.07% on a Y-o-Y basis from INR2,61,000 crores to INR277,000 crores in December ’24 with incremental growth of more than INR15,000 crores and with a healthy CASA ratio of 41.05%. Domestic gross advances have increased by 15% on a Y-o-Y basis from INR4,75,000 crores in December ’23 to INR546,000 crores in December ’24 with incremental growth of more than INR71,000 crore crores. Sequentially, it has grown by more than INR25,000 crores with a sequential growth of 4.92%. RAM advances have increased by 18.96% on a Y-o-Y basis from INR2,62,000 crores in December ’23 to INR3,12,000 crores in December ’24 with an incremental growth of more than INR49,000 crores and with the RAM advances contributing 57% of the total domestic advances.
The fourth part of the speech is with respect to profitability and asset quality. Operating profit for Q3 FY ’25 stands at INR3,703 crores, witnessing a Y-o-Y growth of 23%. Net profit of Q3 FY ’25 stands at INR2,517 crores, witnessing a Y-o-Y growth of 35% for nine months December ’24 and it stands at INR6,593 crores with a Y-o-Y growth of 35%. Global NIM has stood at 2.80% and the nine-month NIM is at 2.90% for December 24.
As regards interest income, interest income for the quarter Q3 FY ’25 stands at INR18,211 crores, witnessing a Y-o-Y growth of 20% and the Nine-Month interest income stands at INR52,000 crore-plus with a Y-o-Y growth of 18%. Non-interest income for Q3 FY ’25 stands at INR1,746 crores, witnessing a Y-o-Y growth of 46% and the nine-month figure is at INR5,566 crores with a Y-o-Y growth of 28%. There has been improvement in asset quality with reduction in both gross NPA ratio and the net NPA ratio. Gross NPA ratio is at 3.69% only and has improved by 166 basis-points. Net NPA ratio is at 0.85% only and has improved by nearly 56 basis-points on a Y-o-Y basis. There has been also significant improvement in the slippage ratio at 0.19% only.
And as regards credit cost, it is at 0.39% only. Considering the positive outlook, as stated earlier, domestic credit growth will be around 14% to 15% and domestic deposit growth is projected at around 13% to 14% for FY ’25. The major thrust will be on increasing high-yielding advances, CASA mobilization and retail term deposits for improving margins by leveraging technology.
Apart from above, we shall work on reducing SMA and fresh slippages. Our priority will also be to strengthen the bottom-line by improving efficiency parameters, intensifying recovery measures and expanding our market-share. Moreover, ensuring robust risk management, corporate governance and compliance culture in the bank will remain the guiding force of the top management.
I would like to thank you all for your continued support. The floor is now open for discussion and question-and-answer. Thank you so much.
Questions and Answers:
Operator
Thank you, sir. We will now take the Q&A session. Participants, you will notice a small icon on your screen, a hand sign. Once you press this, it will alert us that you would like to ask a question. We’ll go-around one-by-one. The analyst asking the question will be unmuted. You will get a notification on your screen to unmute yourself. Click the unmute button and identify yourself before asking the question. Each participant will be allowed to ask three questions. If they have more questions, they are requested to join the queue back. As soon as someone presses a hand sign to ask a question, we will take this ahead.
The first-call is from Mr Nitin Dharmawat from Aurum Capital. Sir, kindly unmute yourself and proceed sir you may proceed.
Niteen Dharmawat
Yeah, am I audible, sir? Yeah, we can hear. Yeah. Thank you so much. This is Nitin Dharmawat from Aurum Capital. A couple of questions, sir. In personal loans, the category has gone up by 42% at the growth and it is the highest-growth amongst the retail loans. It is still small in size compared to overall book, but do we see any risk here as it grows further?
Rajneesh Karnatak
Yeah. So on personal loan side, as you have observed that INR12,394 crore is our outstanding in the personal loan book and the growth is Y-o-Y 42.49%. See, this growth of 42% is also because of the low-base which is there. That is the reason why this figure of Y-o-Y growth is coming. However, to give you some color on our personal loan book, this also includes INR500 crore-plus of the credit card book, which we hold in Bank of India. So this includes that. Other thing is that our personal loan book of INR12,394 crores is only 1.89% of the global loan book. So it is less than 2%.
As regards within the retail book of the bank, which is at INR1,27,000 crores as on December, the personal loan book component is only 9% of it. And within the personal loan book, to clarify, we have put a lot of guardrails as regards the sanctions and credit underwriting is concerned. Here we have taken a CIC score of 700 plus. Our total personal loan book has salaried customers of nearly 65% of the book and remaining 35% are the self-employed and others. And within the salaried class, majority of the customers are having salary account with Bank of India. So we have clear visibility as far as the cash flows of these borrowers are concerned.
Apart from that, we have also given personal loan under a scheme where the borrower has taken housing loan from us and as a top-up, we have given the personal loan also. There also we have clear visibility and mortgage also available as far as the housing loan is concerned. To give you something more information about the personal loan book, the stress in the personal loan book as regards SMA-1, SMA-2 and the NPA is only about INR600 crores of this total outstanding of around INR1,200 crores, which is not even 0.5% of the total personal loan book.
Niteen Dharmawat
Got it, sir. My next question is, there is lot of talk about slowdown, growth issues, stress in some of the pockets of the banking and financial sector. Do you experience that as well along with any risk or we are able to find good opportunities as visible from our Q3 results.
Rajneesh Karnatak
So if you see our Q3 results, our growth has been in double-digits on all the segments, right? If you see our overall business growth, it has been in double-digits. If you see our credit growth and domestic, whether it is domestic deposit or whether it is global deposit, it is in the double-digit. So global deposits have grown for us by 12.29%, global advances have grown by 15.30% and total global business has grown for us by 13.62%. So as Bank of India, we find no challenge as far as the growth numbers are concerned.
As I said in my opening speech also, for us, we are projecting a guidance of credit growth of around 14% to 15% for the bank and deposit growth of 13% to 14%. As on-date, as when we speak, if I give you the credit pipeline, which we have, we have nearly INR70,000 crores of of credit pipeline, out of — out of which nearly INR60,000 crores is in the corporate book, both domestic and international and another INR10,000 crore of the pipeline is in the RAM book. So INR70,000 crore-plus is the pipeline with us, which is more than 10% of the global advances of the bank. So that is the kind of credit growth which we are seeing. So we don’t see any challenge happening on that front for us.
Niteen Dharmawat
Got it, sir. And my next question is, why cost-to-income ratio is going up and where it is likely to stabilize?
Rajneesh Karnatak
Yeah. So cost-to-income ratio has definitely gone up in this quarter and 51 points something is the cost-to-income ratio. But in the 12-month number when you will see this will get moderated for the bank.
Niteen Dharmawat
Got it, sir. And my final question is, you mentioned that infra growth is visible. Can you please elaborate more on this as we hear that it is still missing in the economy?
Rajneesh Karnatak
Come again, please.
Niteen Dharmawat
Infrastructure growth. So my general question, when you were commenting about the result that time you mentioned that infra growth is visible now. So can you elaborate more on that?
Rajneesh Karnatak
Yeah, yeah. So as far as the infra book is concerned for us, we are seeing a lot of transactions in the infra side also happening. So we are sanctioning accounts in road sector, which is predominantly HAM segment and also imports. Apart from that in power sector, renewable energy also, we are seeing traction where disbursements are taking place both in the solar and also in the wind side. Apart from that, there are other segments of the infra sector also which we are seeing some traction coming. And even in thermal energy, we are seeing some refinance transactions which are happening wherein the present COD is there, cash flows have already come and if the rate of interest is high, that borrower is coming to our bank for reduction in the lower rate of interest. So there also we are seeing some traction. So infra book also we are seeing certain tractions as far as our sanctions and disbursements are concerned.
Niteen Dharmawat
Perfect, sir. Thank you so much and wishing you best. Thank you for the opportunity.
Rajneesh Karnatak
Thank you, Nitinji. Thank you.
Operator
Thank you, sir. Sir, next question we’ve received in the chat from Mr Narendra. His question is what is the longer-term guidance on credit cost and cost-to-income? Yeah, credit cost and cost-to-income.
Rajneesh Karnatak
So as regarding credit cost is concerned, see, our credit cost for this quarter has come down to 0.39%, which was as high as 0.97% in the Q2 of this financial year. As regards the guidance for the full-year is concerned, we are giving a guidance of 0.70% for FY ’25 on the credit cost, which remains to be the same, which the guidance which we had given in the last quarter. As regards cost-to-income ratio is concerned, there also we are expecting that our guidance is at around 51%. So we would be able to maintain a cost-to-income ratio of around 51%, even though there has been increase in this quarter at 52.63%. However, the nine-month number, if you see for us is only 51.76% and the last quarter it was 51.22%. So we would be — as of from the management side, we would be liking to get it controlled and remain at a level of around 51% for FY ’25.
Operator
Thank you, sir. Sir, the next question is from the line of Ms Adity Naval from RSA and Ventures. Ma’am, you may unmute yourself and proceed Adity you may proceed.
Aditi Naval
Am I audible? Yeah we can hear. Yes, yeah. Hi, sir. Thanks for taking my question. So I just had a few questions. So one was on — so in the last quarter you had mentioned that there were certain corporate loans that you had not you had not — you are just — you’re not repriced them and sorry. Yeah, you’re not renewed the corporate book, I think around INR18,000 crores INR19,000 crores. And looking at the sequential growth in the corporate book, there seems to be a good growth in the book.
So my question was how is that NIM compression that had come owing to this degrowth in the corporate book not reversed in this quarter? That is one. And second is, sir, you had also guided for tech expenses of around INR2100 crores for the entire quarter — for the entire year in — and of which one-half you had done about INR700 odd crores. So are we on the — are we in-line to attaining that budgeted of expense of INR2,100 crores?
Rajneesh Karnatak
Adity, what we’ll do is we’ll take one question at a time. First question was regarding the corporate credit growth of the bank, right? Gent. Yeah. So if you see our slide also, our corporate credit number was INR2,12,000 crores as on December ’23. It has now touched INR2,34,000 crores as on December ’24 and there has been a Y-o-Y growth of more than 10%. So that is the one part.
The other thing is that, as I said earlier also, if you have heard, we have a very healthy pipeline as far as the corporate credit growth is concerned. So credit pipeline in corporate is around INR60,000 crores and which is nearly 10% of the global credit which we have. And if you see within the corporate credit book, which is nearly 25% of the credit book which we have. So that is the kind of number we are having and we have traction in all kinds of segments and sectors, not only infrastructure, but also in the new-age segments and sectors like solar and PV modules. There also we are giving sanctions. We are giving sanctions in ethanol also. We are giving sanctions in warehousing also.
Apart from that, there are certain proposals and sanctions which have happened for data center funding and also for the automobile segment, not to speak of the traditional sectors like steel, textile, pharma and other kinds of things, minings and oil. There also we have given sanctions. So all-in all, we do not see any challenge as far as Bank of India is concerned with respect to the corporate credit growth is concerned.
Aditi Naval
No, you can repeat. Yeah, my question was. My question in terms of the corporate book was, so in the last quarter, there was some subdued interest income owing to the corporate book being very flattish or not growing as much. So if that corporate book has sequentially grown in Q3, then ideally that interest or the NII should have favorably gotten impacted by that? That is my question. Correct, correct. Essentially on the interest income.
Rajneesh Karnatak
Yeah. If you see our ratios and so in the presentation also, you will see that there has been improved in the overall interest income of the bank. So last quarter what had happened that we had left some of the transactions which were at very fine rate. So that kind of situation is not there as far as this quarter is concerned. In fact, if you see our yield on advances, they have improved from 8.45% in the month of September to 8.55% in the month of December. And our cost of deposit has gone down by — gone up by only 1 basis-point for 4.95% to 4.96%. The gap between the two now is 3.59%, a very healthy number as against the gap of 3.50% in the last quarter. In fact, we have been able to reverse this trend in this quarter by having better corporate advances, which are on MCLR and better rates.
And in fact, if you see our website and other things also, we have increased our MCLR, one year MCLR also. Now our present one-year MCLR is 9.05%. And when the last-time the repo increase was made by RBI was in month of January 2023, when they had increased the repo from 6.25% to 6.50. That time our MCLR was 8.40%. The increase of MCLR was — that repo was only 25 basis-points. And today as we speak, our MCLR has gone up by 65 basis-points. So we have done the transmission of rate of interest also on the MCLR side, which is now helping us to improve our interest income and obviously at the end-of-the day, the net interest income.
Aditi Naval
Got it, sir. So again, just one — just sorry for hopping on that, but that NIM dropped from 2.82% to 2.8% this quarter. So is it owing to the P&L charges or going from interest income to other income or is it some other factor? That’s
Rajneesh Karnatak
One of the — one of the reason is the P&L charges also, but otherwise if you see our global limit has come down from 2.82 to marginally 2 basis-points less at 2.80. Another important thing in our balance sheet, Bank of India balance sheet, which is not there in other banks is that 50% of 15%, 1%, 5% of our book is international book where the margins are even lower. So that is also contributing to a lower NIM. However, overall, we are very confident that see our — if you see our nine-month NIM, it is 2.90%, but this quarter it has come down to 2.80%. But nonetheless, if you see other banks results, our NIMs are at par with what the industry is doing.
Aditi Naval
Understood, sir. Sir, second was a little data keeping question. So again, going back to last quarter, you had mentioned that IT expenses you’ve been budgeting around INR2,100 crores for the entire year and until one-half, you’ve done about INR700 odd crores. So are we on-track of meeting that INR2100 crore or is there any revision in the estimates in the budget?
Rajneesh Karnatak
No, no, we have not changed the guidance in the opex and capex, both on the IT segment. We have kept that book at around INR2,000 crore expenditure. Last year also it was INR2,000 crore and we had spent nearly INR1,800 crore, which was nearly 90% of our budgeted IT expenditure. This year also it is between INR2,000 crores to INR2,100 crores and we are on-track — track to that. And by Q4, we’ll be able to achieve most of the budget in the IT IT sector. And it is in all the three components, whether it is IT, whether it is digital and whether it is cybersecurity in all the three components we are spending on the IT side.
Aditi Naval
Got it. And sir, just one last question will be on employee expenses. So sequentially there has been a drop. So is it explainable by the fact that last quarter there was bond yield decline and hence you had to increase the provision on your retirement benefits. So that is not there this quarter or is there any other one-off?
Rajneesh Karnatak
So last quarter there was some provision also because of the employee expenses. Now the waste settlement which was there, it has now been implemented and now it is well settled within the system. So for all our officer staff and also clerical staff, the new salary package is there. So now it has now got streamlined and moderated.
Aditi Naval
Got it. So that will be. Thank you. Thank you so much. Thank you.
Operator
Thank you, ma’am. Sir, the next call is from the line of Yash. Yash, kindly unmute yourself and proceed
Unidentified Participant
Am I audible? Yes, yes. Thank you for the opportunity. So first question is with regards to slippages and provision for and. So it is evident that in the December quarter, the slippages and provision for have substantially reduced as compared to the last three financial quarters. If you could please explain the sir?
Rajneesh Karnatak
Yeah. So as regards our fresh slippages are concerned, if you see the fresh slippages have come down significantly. So this quarter our fresh slippages are only INR1,105 crore as against INR2,546 in September and further as against 1,313 in December ’24. So that is regarding the fresh slippages. As regarding the provision is concerned, the provision has come down in this quarter on the NPA side. So that is a number which is there because that is whatever the provision we have made in this quarter on the NPA book is as per the RBI guidelines as per the guidelines.
Unidentified Participant
So last quarter you had mentioned that there were some government loans which were actually slipped and they were secured in nature. So are they still — have they upgraded or have they slipped down? Could you please elaborate on that?
Rajneesh Karnatak
, there were certain provisions with respect to the 7th June circular. Now those accounts basically they have now got regularized in the system. So no more provision is required under the standard category of 7th June 20 this one, 18 of RBI. So because of which there has been certain reversals as far as the provisions is concerned.
Unidentified Participant
Okay, sir. Thank you. And as far as next question is concerned. So you had guided for a better recovery in the TWO in the Q3 and Q4 in the second-half of the financial year. But as we can see that the recovery hasn’t been so great and the other income has dipped quite a bit, if you could tease it out.
Rajneesh Karnatak
Yeah, yeah. So recovery in the written-off account, if you see our non-interest income, which is there. So recovery in written-off account was INR685 crores in Q2, which has come down to INR391 crore. There was one lumpy recovery which had happened in the Q2 of this financial year because not being there in this quarter, it has now moderated at INR391 crores.
As regards the other part that the overall income from INR2,518, non-interest income has come down to INR1,700 crore, that is morely because of the profit from sale and revaluation of investments in the treasury book which has happened, which has resulted in the moderation of the income from the treasury book. That is why the overall it has come down. However, let me clarify that on a Y-o-Y basis, our total noninterest income has jumped by 46%. It was at INR1,193 crores in December ’23 and now it is at a healthy number of more than INR1,700 crores as on December ’24, an increase of 46%.
Unidentified Participant
Okay, thank you. Thank you so much.
Operator
Thank you, sir Adity your hand is raised you may unmute and proceed Adity, you may proceed. We’ll come back to you, Adity. I send some issues with to join in. Next in-line, we have Mr Sushil Chokshi, sir, you may unmute yourself and proceed. Sushil, sir, you may proceed, please.
Unidentified Participant
Congratulations to Bank of India for excellent performance. Sir, my first question is your outlook on growth, specifically for credit in current market is very positive and encouraging. Your CASA is at 41%. Now to improve on all parameters from where you stand today, you stand-on, but you can grow further. What kind of initiatives will you take, which you think are racking to get accelerated growth much more from where we stand today?
Rajneesh Karnatak
Yeah. Thank you,. Thank you so much. See, if you see our growth, both the domestic and international growth and global growth, everything is in the double-digit. So that kind of number we have already achieved.
As regarding guidance, as I already said, we have already given a guidance that credit growth in this financial year will be around 14% to 15% and domestic deposit and international deposit to combined together will be around 13% to 14%. So we have taken many steps within the bank to improve both liability side and the asset side franchise. And that efforts will continue to happen and lot of transformational journeys all the verticals have taken in the bank. And not only in the CASA side, but also on the retail term deposit sides. In fact, we are also focusing on the bulk deposit where we can get bulk deposit at lower rate without giving anything over the card rate there also we have identified more than 100 branches in the bank where we are trying to take deposit at the card rate which we have — we publish every day. So that is another step we have taken.
As regards the credit side is concerned, RAM, our all underwriting centers, whether retail, agriculture, MSME are functioning well and smoothly with all operational efficiency being coming to that because of which we are seeing very good RAM growth of nearly 19%, which has come in during this quarter on a Y-o-Y basis. Similarly, on the corporate side, our emerging corporate branches also have started giving traction and also the large corporate branches.
Similarly, as regards the recovery is concerned, there also a lot of good work is happening from the ARB branches where we have shifted all our NPA, which is INR50 lakh and above to these branches and good settlements and other kinds of recoveries are happening through these branches. Apart from that fresh slippage, if you see, we have now brought down our fresh slippage to INR1,100 crore in this quarter and our zonal collection centers are doing very well and the field is totally attuned and doing the collection efficiency and our collection efficiency has now improved to as high as 97% as on 31st December 2024.
So overall, we feel that with the kind of top-line which is happening and the kind of operating profit that we are able to get garner and we’ll be able to get good operating profit and net profit for the financial year ’25. Already we have achieved a net profit of INR2,500 crores in this quarter. We had given a guidance, if you remember INR8,000 crore of net profit for FY ’25. Already we have achieved INR6,500 crore of net profit in the nine months. So whatever the guidance we have given to the Street, we’ll be achieving those numbers.
Unidentified Participant
Sir, I know the previous participant did ask you on margins. If you can break-up what is your domestic NIM and global NIM on sector?
Rajneesh Karnatak
Yeah. With respect to domestic and global NIM,
Unidentified Participant
So domestic — the global NIM you have given, domestic NIM would be what because your growth path is very visible on the domestic front and I suppose Bank of India is tuned well to grow within the Indian corporate sector or retail sector with CASA being at 41%, retail consumer touchpoint may be going, SMA may be going better. You’ve reenergized your brand image with the whole base of customers which have banked with Bank of India for many decades. So that lost touch is getting back. So maybe you may create a tall tower, but that tall tower maybe more coming from the domestic NIM. So if you have a guidance on domestic NIM because I suppose the deposit rates have peaked, how do you see that shaping up? So we’ll answer on cost-to-income and all basis indirectly directed.
Rajneesh Karnatak
Yeah. So. So Sunilji, you have seen our global NIM, which is at 2.80%, it has come down by 2 basis-points only in this quarter. And as regards domestic NIM is concerned, last-time our domestic NIM was at around 3.14%. This quarter it has — it is at 2.98%, which is a healthy number. And if I tell you the nine-month NIM domestic NIM, it is at 3.19%. So we have to be mindful of the fact that we have 15% book, which is international book where the NIMs are less because of which the global NIM for Bank of India comes down. Down similarly for other banks who have good international book in their total global book. So as far as the guidance is concerned on the global NIM, it should be at around 2.90 for March ’25. That is the number we are giving.
As I explained earlier also, our yield on advances have improved by-10 basis-points compared to last quarter and our cost of fund has increased by only 1 basis-point from now 4.95% to 4.96% and the gap is at 3.59%, which was earlier 3.50%. So there also we have made a healthy margin in the interest income of 9 basis-points during this quarter and this is what we are focusing on by pursuing all the field functionaries and the branches. So we are very sure that whatever the number guidance we are giving at 2.90% for the entire financial year and the global NIM will be able to achieve.
Unidentified Participant
No, sir, I have no doubts that you will — you will underperform your guidance. I’m seeing that there is a scope that you will outperform the market expectations, including what you’re guiding for. So what are the two, three steps which you’ve taken which over a period of the entire calendar year ’25 may enable bank to get a bigger and a greater height from where you stand today?
Rajneesh Karnatak
So a lot of things we have done, see, especially on the technology side, we are doing lot of things. If you see our MSME book today out-of-the total MSME book, 15% of the MSME book is now coming through the digital platform through the assisted journey and the direct straight-through process. So that kind of thing has already happened in the bank. So a lot of transformational journeys we are doing at the top management side.
On the data like side, we have the entire data lake structure now in-place with lot of artificial intelligence and machine-learning, not only happening on the sales and marketing side in resources and also the asset side, but also on the credit underwriting side also, it is helping and also on the early warning system it is helping. So all these things are helping the bank in improving the overall efficiencies.
Apart from that, we have already embarked on the project, which is tech, tech Technext, which is — under which we are going for transformation journeys in IT, digital and cyber security. There also lot of automation is taking place and whatever the mundane task and other kinds of things are there that will get automated resulting in more time at the branch level for the staff so that they can concentrate on-sales and marketing and also on the collection part as far as the SMA is concerned.
So all these things taken together and also apart from that, not to mention the HR transformation journey also which is going, wherein we are redefining the job families, wherein we are making the succession planning and we are also giving lot of upskilling and reskilling and lot of training in the hybrid mode, both physical and the mode which is the online mode. So all these things taken together, I’m very sure in the next coming one and two years, there will be more operational efficiency coming to the bank and which will finally result into the better bottom-lines for the bank.
Unidentified Participant
Sir, my last two questions, in the credit growth, if I have to ask you, how much was private credit growth and how much is public sector credit growth? Is it possible because if your private sector growth is higher, the market appreciates much more. So that’s the reason and on a yield basis that would account for betterment.
Rajneesh Karnatak
See as regards the state government and central government accounts, we have been clearly bringing them down as a glide path outstandings we have been bringing down. As I said, INR60,000 crore is our pipeline. So I can — I do not have the figure exact breakup between the government and the non-government, but I can confidently say that majority of this book is private corporate sector.
Unidentified Participant
Sir, your outlook on investment book for the?
Rajneesh Karnatak
So investment also we are doing very aggressively and the IPOs which are coming there also we are investing and making good money. That is another thing which is there. And as regards the present situation which is there in the market with respect to rate of interest and the dollar-rupee which is there, we are very mindful of that. And wherever we see any option coming and situation coming where we can make some profit and gains, we are immediately doing the transactions.
Unidentified Participant
Sir, thank you and all the best for the years to come. Thank you for taking all my questions. Thank you,. Thank you so much. Thank you.
Operator
Thank you, sir. Sir, we’ve received a follow-up question from Adity Nawal on the chat. Her question is SM82 increased by INR800 crores. Any specific account that has slipped.
Rajneesh Karnatak
SMA as regards SMA-2 number is there, overall SMA has come down, if you see from our presentation. However, there has been an increase in SMA-2 number, which is there, but that is because of a few accounts which are of state government, one state government PSU accounts which are there because of which is that increase. However, overall SMA number has come down from INR7,600 crores to INR7,200 crores. So in percentage terms, it is only 1.16% and as against 1.29% in September. Within SMA-2 also, this number is at 0.49% only of the overall standard book of the bank. And these accounts which are there for the PSU, state PSUs, a couple of them accounts are having state government guarantees also. In fact, one of the account is now as on today when we speak is totally out of SMA category and is a standard regular advance. So we find no threat in this quarter of any delinquency happening in these accounts.
Operator
Thank you, sir, for the clarification. Sir, next question we’ve received over text from Mr Sai Karthik from Investec. He’s got two questions. The first one is, when system growth has reduced, how is Bank of India managing 14% growth? And the second one is, what is the guidance for recovery from write-off assets for FY ’25 and FY ’26?
Rajneesh Karnatak
So as regards the credit growth is concerned, I have already explained earlier that our entire machinery at the field-level is totally geared up for credit. So we have underwriting centers in the bank, wherein the branch is totally dealing to the underwriting and the underwriting happens at the centers which are retail, agriculture and MSME. 450 underwriting centers are there in the bank and branches are hooked up to them and they send the proposal, do the sales and marketing and underwriting happens there, which helps in improving the operational efficiency. So that is one part.
Apart from that, as far as the emerging corporate is concerned, there also we have now emerging corporate branches. From there also the proposals and traction is coming from the Tire 2 and Tire 3 cities. And then we have the large corporate branches where also they are reporting directly to the head office and we are seeing lot of traction coming through the proposals which are there. International book is also growing for us on a very selected basis, we are growing the international book.
Apart from that, we are also growing the overall numbers which are there in the book and we are concentrating on the disbursement. So we are not only concentrating on the sanctions, but also the disbursements, which are helping us increase the outstanding in our overall book and also improving the interest income in the bank. So all these efforts are helping us to improve the overall credit numbers which are there and the growth which is — which we are seeing now in our book.
As regards the NPA numbers or their written-off accounts, they are also as you see from the book that this year — this quarter also INR300 plus of recovery we had done on the written-off. Last quarter it was more at INR600 crore-plus, but that was a lumpy account. But this quarter also we expect that the recovery from written-off account will be somewhere around INR300 crores INR500 crores.
Operator
Thank you, sir. Sir, next question we received over text from Mr Vijay from HSBC. His question is, if you could shed some more light on the quality of the retail book, specifically the unsecured and the personal loan segment.
Rajneesh Karnatak
Yeah, yeah. As far as our retail book is concerned, there if you see our total outstanding is INR1,27,000 crores as on December ’24, which comprises of housing loan, which is nearly 51% of our total retail book. Vehicle loans are nearly 15% of that retail book. Education loan is 3%, mortgage loans are 8%, personal loan are 9% and others, which is predominantly staff loan, loans against FDs and others are 14%. So if you see the unsecured portion, basically it is the education loan maybe to a certain extent which are loans up to INR7.5 lakhs and personal loan book of nearly INR12,000 crores, which is only 1.89% of the total global loan book. And within the — the retail book, personal loan book is only 9%, which is in single-digit.
As regard the stress in the personal loan book is concerned, as I said earlier also, it is only between INR500 crores INR600 crores, which is SMA-1, SMA-2 and NPA in the personal loan book. So that again is only 0.5% of the total personal loan book of the bank. So we do not foresee any challenge as far as the personal loan book is concerned on the asset quality. And as I said, lot of guardrails we have placed on the underwriting, INR700 crore and above is the CIC score.
And apart from that, 65% of this book is the salaried book and remaining 35 is the non-salied book and salaried book also majority are the — having their salary account and saving with Bank of India and we have clear visibilities on the cash-flow. So we foresee no challenge as far as our personal loan book is concerned.
Operator
Thank you, sir. We’ve received one small question in the chat box from Mr Manoj Kumar. His question is, may I know the LCR of the bank?
Unidentified Speaker
LCR. LCR. So LCR, our average LCR is around 117 something, that is the number at which our LCR is. And it is above the threshold level of fixed 100 of 100 fixed by RBI. So we are comfortable as far as the LCR is concerned.
Operator
Sure. Sir, next question is from the line of Atish Chaudhary. You may unmute yourself and proceed you may unmute yourself and proceed we will come back to you sir the next question is from the line of Mr Ashok Ajmera sir you may proceed. Ashok sir, you may unmute yourself and proceed so allow us a moment we will try to understand, you may now proceed you would see a screen which allows you to unmute kindly do so and proceed we are unable to get on the call. Atisha you may now proceed or alternatively both of you could type-in your question in the chat box that you can see on the in the meanwhile, sir, we have a follow-up question from Yash. Yash, you may proceed.
Unidentified Participant
Sorry to receive your question. I just wanted to gain more clarity at what resulted in the slippages and bad end outcome rates being reduced so much?
Rajneesh Karnatak
Can you come again, please?
Unidentified Participant
The bad end slippages have reduced quite considerably as compared to the last 3/4, what resulted in such a big improvement as far as the concerned. That’s all.
Rajneesh Karnatak
Yeah, there are — yes, yes, there are two things in that. One thing is that, as I said earlier, our general collection centers are really doing good work at the field-level and a lot of good collections is happening at the field-level and 97% nearly of is our collection efficiency as on 31st December. That has helped us in reducing the fresh slippages which are happening. As regards the aberration which you are seeing between the two quarters, last quarter, our fresh slippage was INR2,546 crores and this time it is only INR1,100 crores. That is because of one single PSU account of more than INR1,000 crores, which had slipped. And that was a one-off thing which was there because of which the entire figure got distorted in the last quarter of September. So now that account not being there in this quarter, now it is normalized and we are very confident that going here forward, we’ll be at these numbers. 1,100 is the fresh slippage only during this quarter — this quarter
Operator
Thank you yash. Sir we’ve received the question from Atish on the chat box the question is in SMA-1 and 2 how much rupees and crores is from state government.
Rajneesh Karnatak
So SMA-1 and 2, so we’ll provide it separately. We are not aware. In SMA-2 majority is from the state government only, state government PSU, total fully adjusted for from the PSUs. 5,000 crores. So of the total SMA book, which we have shown of INR7,200 crores, INR5,000 crore is for the PSU book from the PSU book.
Unidentified Participant
Okay. Okay. Sure. Yeah. And sir, if you have the reasons for write-back of INR299 crores of standard assets provisions,.
Unidentified Speaker
So write-back of provision is because of the 7th June circular note. So we had made some revisions of the 7th June circular in standard accounts because of which the proper functioning of the account, they are not on SMA and out of order now because of which as per RBI guidelines, we can reverse those provisions. So that has resulted in reversal of that provision.
Unidentified Participant
Okay, sure. And sir, if I look at presentation, the yields on advances have gone up. Yields on investments have gone up, but the yields on funds have actually declined. So I was not able to understand the amounts.
Rajneesh Karnatak
Yeah, yield on funds has gone down from 7.55% to 7.22. Maybe, you’ll be able to
Unidentified Speaker
So what happened in this quarter — sorry, in this quarter, what we did, we have optimally utilized both the channels, deposit as well as the borrowing. And with the mix of that, the entire fund — costing of fund has gone down because see, of course, like we have used the normal borrowing plus — borrowing proceeding borrowing through deposit.
Unidentified Participant
Can you hear me, sir?
Unidentified Speaker
Yeah. I think I was responding to Mr Atisha, right? So I think this — so this is the major region, the optimal use of all the mix of borrowing as well as deposit and keeping a tab on the bulk deposit, which you can see, which is one of the lowest in the industry, I mean like public sector peer if you compare with. So that’s why we have managed our yield of funds on the lower side.
Unidentified Participant
Thanks. So actually, sir, you sir. I actually was also asking on yields on funds, which is the — I think is the — on the asset side, right? I mean the yields on funds, when you have yield on investment rising, yield on advances rising and yet the yield on — overall yields have actually seemed to have declined. So that was the — I also wanted to check on that.
Unidentified Speaker
Yeah, Valana. From 7.55%, it has come down to 7.22% right.
Unidentified Participant
But advances and investment
Unidentified Speaker
Yields on placements have come down,
Unidentified Participant
Sorry, what is that placement?
Unidentified Speaker
Bank placements. Yields on placement has come down because most of the things are through borrowing only in today’s tight situation, that’s why placement has come down.
Unidentified Speaker
Placements, that income has come down, that is why. And we are mostly on the borrowing side.
Unidentified Speaker
Yeah, that’s what.
Unidentified Participant
Okay. And sir, lastly, I mean, last quarter you had said that you could not deploy a large amount of funds and then you could only deploy at the end-of-the quarter and hence the last quarter margins were lower. This quarter, we had, you know, lower slippages also from corporate as well as across all things. And yet the margin improvement is only 2 basis-points. So is there any follow-through that can come in 4th-quarter or you think that because you are growing corporate, that advantage is lower.
Unidentified Speaker
No, this time what we have concentrated is with respect to the disbursal. So as I said that last-time the — mostly disbursals had happened in the end-of-the quarter in September after 15 September, which is the reason that the entire interest income did not come in the 90 days. So this quarter, what we did, we followed up with the field functionaries and made sure that the disbursements are followed up and quick disbursals happen wherever the sanctions are happening. That was one point.
As regards your yielding advances is concerned, if you see the data here, so our yield in advances have gone from 8.45% to 8.55% and they have increased by-10 basis-points. And our cost of fund has increased by only 1 basis-point. So the gap between the yield loan advances and the cost of fund is now a very healthy 3.59% as on December, which was at 3.50% as on September. So that — and that area also, we have improved by nine basis-points, which has helped us in improving the overall net interest income of the bank.
Unidentified Participant
Right. And sir, what would be your incremental yield to corporate blended? I mean roughly, I mean, would it be like 8%, below 8% or maybe above 8% to corporate book?
Unidentified Speaker
Major — in corporate book, majorly we are lending at the MCLR. It may be overnight MCLR one month, three-month or one year MCLR. So that figure exact at the corporate blended return I’m not having at this moment, but definitely our — from the top management side, it is that we should have advances on the MCLR side only.
Unidentified Participant
Okay. Great, sir. Thank you and all the very best. Thank you.
Operator
Thank you, sir. Sir, we have a follow-up question from Mr Dee Manoj Kumar on the chat. His question is, may I know the reason for high balances with banks and money at a call, short notice, which is a drag on NIMs, which can — which we can see by a drop-in the yield of funds give that mic
Unidentified Speaker
The higher balances are on account of our foreign branches placing funds overseas because of that the balances are higher as well as the swaps which we have which we do that those placements are with the overseas banks sorry.
Operator
Am I audible? Yes, sir. Thank you for your response. Sir, next question we’re taking back from Mr Ashok Ajmera. Sir, you unmuted. Could you proceed?
Ashok Ajmera
Good evening, sir and the compliment sir, for the good set of numbers to the entire team of Bank of India. Having said that, sir, because I was not there half of the time, I’m traveling basically and I couldn’t hear the entire conversation. But on the on the first look, I just found that our operating profit has gone down in this quarter and that is mainly because of the other income has also gone down in this quarter, though the overall performance on the credit and the deposit side is growth is good. So on the profitability front, sir, what are the reasons for the operating profit going down, sir? And our net profit is higher because the provisions are less.
Rajneesh Karnatak
So thank you so much,. On the first point with regarding to operating profit, so operating profit has come down from INR4,447 crores in September to INR3,700 crore this quarter. The decrease is around INR400 crores only. But if you see the non-interest income, it has come down from INR2,500 crores to INR1,700 crores. There the dip is more than INR800 crores. And that is also because there was a lumpy recovery in written-off account wherein the recovery in written-off account figure I touched INR685 crores in the last quarter. But overall, if you see the operating profit on the operational part, our operating profit has gone up by 23% on a Y-o-Y basis. So our operating profit, which was INR3,004 crores in December ’23 is now improved to INR3,703 crores as on December ’24. And so the jump is nearly 23%.
As regards the net profit, you have rightly observed that there has been some less provision which has taken place. But what I can assure you is that whatever the provision we have made is basically asset quality in the book and also as per the IRAC guidelines of the RBI. So whatever is required has been provided for as per the RBI guidelines. So because of which the provision you are seeing on a lesser side, both on the bad and doubtful side and also on the performing side.
Ashok Ajmera
Have you used have you used the provision out of our buffer or our additional provision earlier made over the IREC norms? Have you used that some of it during this quarter?
Rajneesh Karnatak
No, no. See, actually what has happened in the standard book, 7th June circular is there. Wherever in those accounts where it was invoked, the account was SMA and because of which INR1,500 crores and above 7th June circular was there, provision was kept. Those accounts are performing okay now. And with the discussion, we have now reversed those provisions and these accounts are no more part of 7th June circular. All right Sir, my second question is on the treasury front, sir. On the trading, because treasuring the most of the income opportunity has gone with the profit M2M going to the reserve directly. But on the trading book, how the treasury performance looks because if you look at the segment side — segment profit side, I think our profits are lower from the treasury operations.
Operator
Apologies to intervene, sir, your voice is very feeble if you could come closer to your slide, please.
Unidentified Speaker
Yeah. Am I audible now?
Operator
Yes. Yes, sir.
Rajneesh Karnatak
Now if you see compared to Q2 in Q3, our profit numbers from treasury operations, especially through the sale of securities as well as the foreign-exchange transaction has come down majorly because yields went up during Q3 and most of the times yields were up and the market was volatile, so it provided less opportunities for tradings.
And secondly, on the FX side, in the last fag end-of-the quarter, we had a forward premium going up — shooting up so which brought the revaluations in the books down. So because of these two reasons, our income has come down from if you see from INR730 crores in Q2 to INR266 crores in Q3. However, in Q4, looking at the markets, we feel that yields are going to come down from here. You see tenure is trading around 671%. We expect a rate action as well as the regulator to ease liquidity in the markets. So that will bring yields turn-down and we hope to make money more both on both on the investment side as well as on the FX side. So we’ll be posting better numbers in Q4 as far as treasury operations are
Unidentified Speaker
Surely, you will that if are interesting interest income has also gone in the treasury. In the treasury book interest income, there is a interest income, but the unitirectional movement in always impacts the portfolio as well as the trading opportunity. That’s why the profit has taken a hit.
Ashok Ajmera
I understand, sir. Thank you very much, sir. And all the best to Bank of the team. Thank you, sir. Thank you,.
Operator
Thank you, sir. Thank you, sir. We have a follow-up question from Mr Atish on the chat. The question is how much of the NPA recovery is flowing into net interest income.
Unidentified Speaker
So that is part of the return of recovery from., Kumar, will you be able to tell
Unidentified Speaker
Yeah. INR464 crore is that partner. So that is INR464 crore that we have shown in slide number 25, recovery from URI and UCI. So that recovery is going directly for improving the net interest income?
Operator
Sure, sir. And a subsequent question is that what is your guidance for NIM for Q4 FY ’25 and full-year FY ’26?
Unidentified Speaker
So for FY ’25, as I said earlier that we are expecting that the NIM should be at around 2.90% for the full-year. FY ’26 at this juncture, we will not be able to give any guidance. Post March only we’ll be giving the guidance for FY ’26.
Operator
Noted, sir. And Atish’s last question is what is the overseas NIM this quarter?
Unidentified Speaker
So that trigger I’m not having at present, 1.6 global NIM we are having and the domestic NIM we are having that number we have not brought here, but we can send you separately.
Operator
Thank you, sir. And we have a last question from Mr Deep Manoj Kumar on the chat. It’s a final question where he says, may I know what is the PCR including two and PCR excluding two.
Unidentified Speaker
So PCR is 92.25%, 92% tangible and that PCR. So 92.3% no consistent 92.43%.
Operator
Sure, sir. Thank you. Sir, with this, we now conclude this session. I would now hand this conversation over to Mr Rajnesh Karnatak for his closing remarks. Over to you, sir?
Rajneesh Karnatak
So thank you so much for all the analysts who have been present over here, spend their precious time here for this analyst meet. Thank you so much from the entire top management of Bank of India here at the head office. Thank you so much.
Operator
Thank you, sir. Participants on behalf of Bank of India, I announced this conference as concludes. Thank you for joining us. You may now disconnect the call.