CSB Bank Limited (NSE: CSBBANK) Q1 2026 Earnings Call dated Aug. 13, 2025
Corporate Participants:
Unidentified Speaker
Pralay Mondal — Managing Director and Chief Executive Officer
Satish Gundewar — Chief Financial Officer
Rajesh Choudhary — Chie Technology Officer
Analysts:
Unidentified Participant
Shivaji Thapliyal — Analyst
Bhavesh Kanani — Analyst
Mona Khetan — Analyst
Yash Dantewadia — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the CSV Bank Q1FY26 earnings conference call hosted by yes Securities. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on Anachron phone.
Please note that this conference has been recorded. I would now hand the conference over to Mr. Shivaji Tafriyal from Guest Securities. Thank you. And over to you sir.
Shivaji Thapliyal — Analyst
Thank you. Muskan. Good evening and a warm welcome to all those who have joined the call. The CSB bank management is represented by Mr. Pralay Mandal, Managing Director and CEO, Mr. B.K. divakara, Executive Director and Mr. Satish Gundevar, Chief Financial Officer. We specifically thank the management of CSB bank for giving YES securities the opportunity to host their result call. The management will first be making some opening remarks after which we will throw the floor open for questions. I now invite the management to make their opening remarks. Pralay, over to you.
Pralay Mondal — Managing Director and Chief Executive Officer
Thank you Shivaji. And thank you everybody for joining the Q1 FY26 call of CSB Bank. I will start with the global scenario and then get into CSB specifics with the global trade is impacted by uncertainties of US tons and its tariff and other countries. Though USA has announced the new tariff, individual countries are still negotiating making the outcome uncertain. This uncertainty is getting reflected in currencies, rates and commodity prices. UK and EU have cut rates while US Fed continues to hold on its rates. With weakening data in the us it is likely that Fed will cut rates further in the coming months.
Global growth forecasts have been revised downward by major forecasts in recent months. India growth has been steady over the quarter. The series of liquidity measures taken and the rate cuts announced by RBI has brought the rates down on assets and liability. Both transmission has been good so far. Liquidity in the banking system has remained in surplus supporting the financial stability. The inflation focus has been revised lower. However, the projections for the next year are above 4%. The deposit and credit growth in the system is evenly balanced right now. With deposit growth on the rise and credit growth on the decline as compared to previous year.
The pattern has impacted the banking sector NIM significantly. We expect the banking sector NIM to stabilize soon and the liquidity remain comfortable. RBI may cut rates further in this fiscal year in the wake of uncertain trade negotiations with the US now coming to CSB Specifics on Financials the quarter gone by will be recorded as one of the most exciting quarters in our SBS 2030 journey. In view of the challenge, is it true the efforts and dedication we in what we achieved? I’m happy to share that all of us have successfully migrated to the new CBS Flex Cube and rolled out 50 plus surround systems with 12 within the CBS system which makes it to 62 surround systems without losing sight of the balance growth in the bank.
It has been extremely exciting quarter for us from our execution of this long awaited transformation journey on the technology side and all of us have been very very busy focusing on this particular aspect this quarter because based on this only the future of the bank will be rebooted Coming to financials specifically on profitability, net profit for Q1 stood at 119 crores up by 5% year on year. Operating profit of the bank grew by 28% on a yoy basis and stood at 220 crores. Other income registered a robust growth of 42% on a yoy basis and constituted 19% of total income for Q1FY26.
Cost to income ratio was lower at 64.70% as on Q1FY26 as against 67.69 I year back in Q1.25. Despite the interest rate transmission dynamics between advances and deposits, in a falling rate scenario NIM could be maintained at 3.54. We do not expect NIM to go down further from this level. ROI for the quarter ended 3625 stood at 1.03 percentage. As we know our bank has a history of continuing to grow the ROI through the quarters and peaks in the Q4 of year and this year also we’ll see the same trend. Bank is holding the contingency provisions intact and is continuing with the accelerated loan provisioning policy.
On the liability side and the funding base deposit growth momentum continues to be faster than the industry grew by 20% YoY amidst an industry growth of around 10%. CASA grew by 13% YoY and the CASA ratio stands at 23.49%. We have sufficient liquidity buffers and are maintaining an LCR at comfortable levels. We have been efficiently managing the liquidity risk because in Q4 of last year when liquidity was significantly negative, the bank took a call to manage the liquidity risk carefully as that risk is coming down. We now see OCD ratio at around 92%. Average LCR for the quarter has been around 123%.
NSFR ratio is around 120%. On the asset side of the business, net advances grew by 31% YoY, again significantly higher than industry growth of close to 10% YoY. All the verticals have started contributing towards asset growth with gold, corporate and SME portfolio registering YoY growth of above 30% at 36, 32 and 31% respectively. Retail loans other than gold grew by 19% despite a deliberate moderation in agri, MFI and other unsecured loans and we have been doing it for the last 18 to 24 months. Yield on advances for Q1 FY26 is 10.73 percentage. Regarding the asset quality matrices, GNP and NNP ratio for the quarter was at 1.84 and 0.66% respectively as against 1.69 and 0.68 percentage for Q1 FY25.
PCR now stands at 80.46 with PwO and 64.52 without PwO. Bank is holding a provisioning buffer of around 194 crores over and above regulatory requirements. Out of this around 105 is contingency provision. We have a robust capital base CRR of 21.71 TR1 ratio of 19.92 low proportion of risk squared assets compared to the industry which is 41%. Shareholder value creation. The book value per share is at rs258 right now. EPS for the year is 27.42. ROE for the year is 10.9. Like ROA, ROE also progressively grows for US quarter on quarter peaking in the fourth quarter and which again this year will be no exception.
On distribution we have a network of 834 branches now and 800 ATMs as on 3625. In conclusion, I would like to say that our top line, both deposits and advances has shown strong yo growth of 20% and 31% respectively compared to Q1FY25. Our CASA book grew by 13%. All the three asset verticals with retail including gold loan, SME and wholesale banking grew by more than 30% over Q1FY25 on the profitability while our operating profit grew by 28%. On a YoY basis net profit increase was at 5% due to slightly higher slippage and resulting provisions. However we would recover a decent amount subsequently and we have already recovered a fair bit already in this quarter in Q2 I mean and expect portfolio quality to improve in this quarter itself.
If I look back and review the journey we completed in Q1 FY26, I proudly say that the CSB team has done a remarkable job in truly short span of time duly balancing the tech transformation and growth. We have achieved what we aspired for in building the platform for future. We have built a solid foundation for scaling the bank in terms of business and customer experience as we go along. Given the complexities involved in such a massive project, it will take a couple of months more to fully stabilize everything. Once the systems are stable, we’ll kick start the scale phase with lot of confidence as we’ll be in a better position to serve our customers by providing innovative customized products straight through processes, seamless digital experience, higher operational efficiencies, et cetera.
We’ll also be benefited at lower cost points and additional revenue streams. Thus we’ll start the journey of becoming a respectable mixide bank by 2030 and hopefully we can execute to reach that mission ahead of our targeted timeline. As I have told in past that as a part of our SBS vision, our sustained phase and build phase is expected to get over by FY beginning of FY27 and the real scale phase and the most exciting part of the journey is going to start from FY27 beginning and FY27, FY28, FY20 and FY30. These four years will take the bank to a completely different spectrum.
I’m happy to report that based on the technology transformation journey we have done successfully and one of the best which our partners have seen, we are actually ahead of curve in terms of what we had planned and targeted and hence rebooting of the bank from our infrastructure, capability, systems, processes, technology, people and products will be complete and our scale journey will begin starting by 27 and all of us are excited for that journey. With that I hand it back for questions. Thank you very much.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask question may press star and one on the touchdown telephone. If you wish to remove yourself from question queue you may press star and 2. Participants are requested to use handsets while access Ladies and gentlemen, wait for a moment while the question queue assembles. The first question is from the line of Bhavesh Kanani from S1 Investments. Please go ahead.
Bhavesh Kanani
Thank you for the opportunity. This one is on the non interest income so essentially last 45 quarters we have seen NI remaining flat and it is the non interest income which is allowing us to do higher OPEX and still report growth at the bottom line. However, for some odd reason the disclosures on non interest income split has been discontinued in FY25 itself. So would appreciate if that is available to the public in general that was one and two within that if you can add some color on specifically the fees and commission line. While in past you have shared that large part of that is driven by insurance distribution income.
Some color on the potential penetration that is still pending. Have we reached out, you know all the branches with ability and skill set to sell insurance or there is still some room left which can be helpful in FY26 in terms of growing the fee income. And lastly was on liquidity. While excess liquidity has come off sequentially, one would have imagined little more reduction given that our loan book growth is quite healthy. And you know, instead on the liability we see that other liabilities have gone up sharply. So some color on that would be helpful.
Pralay Mondal
Bhavish, last question I didn’t understand what, what does it mean?
Bhavesh Kanani
So sir, essentially you know, when we met last time the story was that we had amassed excess liquidity in Q4. Given the situation back then and now that liquidity situation has improved at system level that would allow us opportunities to, you know, kind of normalize the excess liquidity which will allow us to fund growth without really taking hit on the nim. So you know, the reduction in excess liquidity is quite small. I think about 200 odd crores compared to a loan book which has sequentially grown by a larger extent. So it appeared to be the case where we have funded the loan growth by increasing liabilities.
And that too is coming from not from borrowings or deposits, but there is a staff increase in other liabilities which has reached which has crossed some 2000 crores odd. So I was just wondering what is leading to that increase and incrementally your sense on to what level liquidity can be pared down without, you know, without. Without really, you know, disturbing the 5 or 6% kind of liquidity we have usually maintained.
Pralay Mondal
Got it, got it. I understood. So let me try to respond each of these questions on the NII which is non interest income and overall income. As you rightly said that we when we met I had said already that as a bank we are not very focused on non interest income in this bank. Around two, three years back and last two years we have put conscious effort to put focus on non interest income. It’s just A matter of cycle that including non interest income or income, that other part which is the interest income has not been growing very well which is part of the cycle because as we grow at such a rapid pace there is some contraction of NIM which you can see.
And because as I said before that liquidity given where it was in fourth quarter we said that we will not take any liquidity risk and from that perspective we did take excess fund which ensured that we didn’t know that time that liquidity situation will change in the ecosystem. So to that extent we are carrying that cost through and which is to some extent impacting on NIM to some extent. So that is correct estimate coming to non interest income kind of a color insurance income continue to do well. Generally our PSLC income in the fourth quarter goes up little bit and then it normalizes first quarter onwards our core fee income which is typically if you look at it, if it’s overall non interest income is 19% it generally varies between 17 to 19%.
Last quarter was 21. Last to last quarter means Q4 but generally it’s somewhere around 17 to 19% but core income is around 14 to 15%. We don’t keep the PSLs in the core income. That’s why you will see that this quarter our overall non interest income has come down little bit compared to Q4. Coming to a question that would we be sustainable? I think it is going to be more than sustainable because once we have given the technology transformation news to you, you know that next year onwards we’ll start scaling up our transaction banking business and our retail assets business which are all fee oriented businesses based on fee, based on transactional fees and processing fees and many other fees.
So that will grow. Insurance is a function of penetration into customer and next year onwards we’ll start building our customer base significantly because huge amount of focus will be on customer acquisition and as more customer comes in penetration on a larger base will be higher. So we will continue to do well in insurance business and we are going to implement after this CMS trade and supply chain systems immediately after there as they’re talking we are working on that and all of that will help in transaction banking business because we build up a very good wholesale team and wholesale portfolio.
So the transaction banking business will also add to fees. So I think as we grow the overall basic corp book our fee business will continue to grow and there is no really one off on that. We are sitting on a fairly large given our size, fairly large AFS book and we didn’t max it out this quarter because we know that yields will come down eventually through the year. And from that perspective you will continue to see non interest income continuing to grow. On your second question or second question I’ve already answered on insurance we will continue to do well on insurance, you will see that.
And on the liquidity question, I agree with you. What I said is also right what you’re saying. Let me respond. If you look at our CD ratio this quarter it has come to 91% and generally it was around 83, 84% in that range. 84, 85, 86 in that range. One of the reasons exactly what you’re saying we have done is we said that the liquidity risk in the system is lower and hence we must start efficiently using the liability better. And that’s why we said that, you know, with the limited risk on the liquidity side we will lose it better.
That’s why the CD ratio has gone up a little bit. But we’ll bring it down to somewhere between 85 to 90. But we’ll somewhere in that place. Previously my guidance was between 80 to 85. Now my guidance is between 85 to 90 in that you will keep it at the size of our balance sheet and with the liquidity comfort which is there in the ecosystem. And I’ve always said that our liability franchise is not yet to the level where we want it to be and that journey will start. We are waiting for the serious migration to happen.
After this the products will get implemented and next year onwards we’ll see the liability franchise growing at a very rapid pace. That will not only help our liability book, more importantly we will have more customers through whom we’ll acquire and build the businesses. That’s why we are starting to build our retail assets, products and more detailed liability products, current account, products, trade products. All these things which are building cms, all these things we are building to build that franchise. Till that happens, we are. Last year we did depend on FCY borrowings, we did depend on series and to that extent that support will request for another one or two years while in parallel the liability franchise build.
Because you know that liability franchise takes two to three years to build. So that’s broadly what may respond to your question, sir.
Bhavesh Kanani
That’s certainly helpful sir. Just you know, repeating the same request that if the mix of non interest income is disclosed like we used to do in FY24 that would only add to the wonderful plans that we have and it will add to the confidence.
Pralay Mondal
And I’ll check with our CF on this, okay?
Bhavesh Kanani
And the last data getting one was the other liabilities. Is there anything to look into that number which is in charge sequences?
Pralay Mondal
No, there is.
Satish Gundewar
three other liability. What you’re talking about is the 2600 crores that you see on the 30th of June is a transitionary balance because the reconciliation happens with a one day lag and then it get just gets adjusted with our balance with rbi. So it is not something which is a permanent nature. It is just a one day thing and the reconciliation then happens, then it gets settled.
Bhavesh Kanani
Okay, that’s helpful. I hope you will share the disclosures on non interest income on exchanges or on your website.
Pralay Mondal
Okay, thank you very much for your question. Bhavish. Next. Next. Thank you.
operator
Thank you. The next question is from the line of Mona from Dalit Capital. Please go ahead.
Pralay Mondal
Hi Mona.
Mona Khetan
So firstly I missed your opening remarks. So sorry if I’m repetitive on the slippage bit. 139 crore. What would be the quantum of unsecured loans out of this if any?
Pralay Mondal
Yeah, so I don’t exactly remember that number but broadly I can tell you that our unsecured book overall is around 3% of the overall book. So it ought to be more than 2025 crores. Satish is looking for that number but it is there. But as a percentage it is high. But the book itself is 3% so it is not significant. But yes it has increased. The three businesses which is unsecured personal loan, the MFI little bit of a paid cards and agree and mfi. These, these businesses had a little bit of a slippage which is around I think somewhere close to, I was right around somewhere around 25 to 30 crores.
Okay so our largest leavage, I think to address your question, our largest leverage has been in SME this, this quarter a little bit. And that’s primarily due to three, four accounts. And also let me also say that what had happened this quarter is because we are very busy on the migration. There was that availability because you know that to manage the NPN to understand everything we knew data every day those, those data were taking little time for us to completely reconcile and get it. So by the time we got it we didn’t get enough time to you know manage the NPA.
Well in SME business as we talk while SMA business had a slightly larger slippage but one account with 25 crores we have already not one account but one of the accounts with 25 crores we have already recovered as we are talking today. So and there are two accounts which happened where there were some challenge, somebody the owner died and something happened, etc. Where the next generation is taking over the business. But all these are good news in SME is that all these are fully secured and this will not really go bad at any point of time.
So as the business starts going back, this does not worry me. So through the year this should be able to recover. Otherwise I think overall there is not much of any exceptional slippage in any other portfolio. This has happened only in 34 accounts. We are already at 25 crore has been upgraded. So that’s, that’s, that’s answered question.
Mona Khetan
So fair to say that out of this 139 crore 25 crore got upgraded so far already?
Pralay Mondal
Yes, yes, yes, yes.
Mona Khetan
And also just on the unsecured date, is it partly led by FLBT cover against some of these assets which is resulting in delayed recognition or something? If I’m reading it right, which one on the unsecured loans which is I guess pl and you know some of the MFI portfolios are probably have some FLDG cover and you know, is it, is it the delayed recognition coming? Because there was some cover initially and now it’s above that cover which is why the recognition.
Pralay Mondal
So no, I don’t think that is an issue. In general what happens is FLDG is only in one business which is an mfi. In northern business we have fldg but we have collection efficiency related incentives linked to that. So some cost will come down in case they cannot. But they’re trying hard to get it right. But otherwise if you look at it, we have been consistent in retail loans. If I look at it over the four quarters, five quarters actually June 24, September 24, December, March and June 25, every quarter is between 23 to 27 crores.
Okay, so it’s not that we have seen any major escalation happening suddenly. Also AGRI and MFI has also been more or less similar across the last three quarters. So there is absolutely no aberration in any other port. And if you look at it, our slippage in June 24th was 103 crores and now it is 136 crores. Out of the 136 already 25 recovered. So to that extent there is no exceptional exception in anything anywhere. Yes, we had two, three very strange situations in the SME portfolio which had nothing to do with credit underwriting, which has nothing to do with trend, nothing to do with any industry situation.
It is just pure, you know, accidental kind of a Situation where somebody died or something happened. So we are working with them and these are all very well covered. So I’m not so worried about this quarter frankly. But yes, on the MS, on the retail loans, what goes a lot of that will not come back. But that has been the story for the last five quarters.
Mona Khetan
Secondly, when I look at the cost of deposits, I understand a large part of it was by deposit and given the sharp decline in rates on the bulk front, ideally the expectation was the cost of to come down and get seeing it rising which is unlike what we’re seeing for the rest of industry in general. So how do I lead this? I mean I was really surprised to see the cost of deposits rise during the quarter because I would expect some of the bulk deposits to reprice at lower levels. Right. And your deposit growth is declined. So yeah, how do we read this?
Pralay Mondal
No. So Mana, you are absolutely correct in your question. So you will see that playing out in our portfolio as well from Q2, Q3 onwards. So two things happened here on the deposits. One is that lot of these bulk deposits and lot of these businesses we did because lot of our assets business growth last quarter because we are not growing at a 10%, we are growing at 31%. So a lot of this business growth especially on the wholesale side, retail comes every day, gold loans comes every day but wholesale SME comes little bit rear ended.
So to fund that deposits we had taken lot of bulk deposits in the last end of the quarter which was in March after. And by that time there is no clarity about the liquidity positions what the RBI was looking at. So given that that cost in that quarter came only for 10 days, 15 days, 20 days maximum. That cost has taken us through the whole of quarter over the 90 days and that partially has done. We have got a six basis point increase in cost of funds that primarily has contributed to this. The other thing which has happened is I was analyzing this that lot of older deposits because before once the interest we knew that interest rates are going to fall we stopped taking long term deposits like three years, four years, five years, etc.
But we had some deposits which are old which started, you know, maturing and hence got repriced even if it is a lower rate and started repricing at a higher rate than what they were initially booked their contracted rate few years back. Okay, so these two events happened. Having said that, I think all the. But if you had a parameter by which we could show you that how our contracted rates from for the last quarter incrementally are okay. Either it on CDs or it is on bulk deposits. You’re absolutely right. We are doing better off. What it means is Q2, Q3 onwards, we’ll start seeing a drop in our deposit costs.
Mona Khetan
If you could share what would be the expectation from a full year perspective on roe.
Pralay Mondal
Can, can you speak a little louder, Mona? Sorry, I can’t hear you.
Mona Khetan
Yeah, sorry. If you could share your outlook on the NIM and ROA for this system.
Pralay Mondal
Yeah. So for us, typically what happens is. Let me take the ROA point first. If you look at it, year on year our RA has come down from 1.27 to 1.03. But on a quarter on quarter it has come down significantly more. And that is how it will play out this year also because our ROA keeps increasing every quarter and it culminates at a much higher level in the end of the year. For example, last year we in Q1 we were 1.27% and we ended the year with 1.79%. So this year also I think on an average we should be somewhere around 1.5.
That was my guidance and we will retain there on the nim we have surely bottomed out now so we will be between 3.5 to 4. Why? What gives me this confidence? I’ll tell you, I’ll give a logic to this is a. Our. Cost of funds will start coming down because as you rightly said, bulk and CD rates are coming down and our bulk is around more than 35, 40%. So from that perspective it will in a way help us because retail will not come down that much from the two bulk. So we think that our cost of fund will start showing better trends. The other thing, what will happen is also on your previous question, I want to also say that we tactically moved out some of the current accounts out of our base because we said that we want to build a proper current account franchise based on transaction banking etc.
So that also increase our cost of funds little bit. Now through transaction banking, wholesale and other businesses will start building the current account. That will also give us a little better cost of funds. And thirdly, because our EBLR portfolio is around 20%, EBLR plus TBL portfolio around 17% and our MCLR is only thing which is around 20% which will reprice through the year. Our fixed book is around 60% and hence we will have dual advantage on that front that yields will not come down sharply and our cost of funds will come down little. Well, given that I’m very very Confident that we will be in the range of 3.5 to 4% EBLR is around 7 EBLR plus linked which from a cost of funds, sorry cost of interest. Interest cost is similar. So interest expense is similar. When it comes down, the interest rate comes down it is around 17%.
Mona Khetan
And just one question. So if I look at your you know fee line, the four fee lines, extra treasury gains, you know are there any one off in the last fiscal. Not this quarter but in the last fiscal in terms of syndication income or something because it looks like people assets, it’s settling at lower level. Yeah.
Pralay Mondal
Yes. So last year we had three syndications done. So far we have got a very good wholesale team now and very good quality wholesale businesses started coming into the bank and that is shown with the kind of growth which we’ve got both on the corporate banking and on the mid market side this year. In a year when we actually almost ran a thousand crores of DA portfolio which represented the wholesale part of the bank for whatever structural business we put. So that team did put three syndication, one more syndication as we’re talking we’re doing. So we are doing those kind of deals.
Yes. Where we. Because given our size of our balance sheet we cannot take a 500 crore exposure. Right. So we don’t take more than 150 or 100 or whatever unless we sell down to. And some of the sells are happening to larger banks as well. Top three banks and top four banks et cetera. So yes, we had some integration fees last year also as you know that we have got. We are sorry net sellers in PSLC market and a lot of that stuff we do in the last quarter of the year. And that’s one of the reasons our ROA and our fee income is significantly higher in the Q4.
Mona Khetan
Got that. Just one last clarification. So what would be the income from these indication deals for large system that we can share?
Pralay Mondal
That is too much details. But yes, I, I shared as much as I could. We have done three syndication deals. We are working on the fourth one.
Mona Khetan
Thanks so much and all that.
Pralay Mondal
Thank you Mona. Thank you.
operator
Thank you. I reminded all participants you may press star and want to ask questions. The next question is from the line of Yash Dantwaria from Dante Capital. Please go ahead.
Pralay Mondal
Yeah. Hi sir. So my first question is regarding the NIM guidance that you just gave. Don’t you think your guidance is very vast, right?
Pralay Mondal
Very what?
Yash Dantewadia
Very wide. The guidance is divide.
Pralay Mondal
Yes. I can only tell you that we live in a world today where we don’t know what happens after 21 days. Okay. So in, in that kind of a scenario with global turmoil and global uncertainties, it’s better to be said than sorry letters. So it is wide. If you want me to be more sharper, I will say that we will be somewhere in between of that curve but it will vary from quarter to quarter. So if you take for the full year, I am hopeful that we should be somewhere in between of that which is around 3.7.
Yash Dantewadia
So can you please tell me if you factored in a rate cut in this? If you have. What kind of rate cut have you factored in?
Pralay Mondal
See, I’m not an economist so I cannot factor in a rate cut. But people are saying, I’m reading that given where the intuition is normalize it for the base effect. Okay. And given that there are enough global uncertain uncertainty which we don’t know which way will play out, everybody says that there is a reasonable chance of one red card somewhere around between September to November. So if that plays out, we have factored that in because we are lucky that we our eblr linked and TV linked portfolio is only 17%. So that red card, even if it happens to impact it on mclr, will go to next year.
Okay. Next financial year
Yash Dantewadia
I’m assuming you factor. In 50 basis points, right?
Pralay Mondal
95. 25 basis points.
Yash Dantewadia
Okay. Yeah, yeah, yeah. So my next question is regarding your loan book. Sort of by the end of this year, how do you think the mix is going to look between. Yeah, yeah, yeah. Between all the sort of golden lab etc SME, secure and secured. Could you just give some guidance on how your kind of envisioning the loan book to look like by the end of this year?
Pralay Mondal
Yeah. So if you look at it, what has happened this year, what you have already reported is one person says it has gone up in the world and that has got from MFI and agribusiness. Okay. Because that is something we slowed down and that I mean by that mixed percentage formula it went to gold. What I see now onwards is wholesale will maybe go up by another 1% or 11 1/2% or 2% this year. So let’s say wholesale is around 23 now it may go up to 25. I don’t see our MFI agree and retail going up that much if at all.
It will remain at this level. Maybe few basis points here and there. It can come down also because our real journey will start from next year. We won’t take risk in this environment at this point of time. Our SME may go up by 50 basis points compared to where it is today, around 30% right now. So we should be seeing somewhere between 13 to 14%. And I think gold will continue to be where it is. I must mention here one thing that our detailed portfolio, what we show also includes loan against securities which has some gold loan and that gold loan based on the recent RBI circular we may have to do differently and categorize categories differently and hence that itself will bring down the retail again further and may with that may come back to gold.
So gold for very different reason, technical reasons, it may go up little bit. So in short what it means is retail will come further because of this technical reasons. LAS will come down. LAS is typically around 2,000 crores right now for us, which is around 2,000 or 35,000 crores is less right now. And that probably will come down significantly and that may move some part of that to the gold. Some part of that will move to the wholesale, some part of that could move to the SME.
Yash Dantewadia
So my last question is regarding your sort of exit ROE and roe. I know you guided for an exit roa, but if you could just also guide me for the exit ROE for this financial year.
Pralay Mondal
So we will aim for, as I said and this is consistent, I’ve been telling over the years, ROA 1.5 and ROE 15% is something which is like Lachwan Raka for us. We have to achieve it and we aim to do that.
Yash Dantewadia
I’ll come back in queue. I have a couple more questions. Thank you so much.
Pralay Mondal
Thank you.
operator
Thank you. The next question is from the line of Shivaji’s top rail from. Yes, security. Please go ahead.
Shivaji Thapliyal
Yes, thank you for the opportunity. So a few questions from me. So firstly on asset quality. So. Well, traditionally our book was not so mature and therefore it was not really throwing up slippages. Even now the slippages are, you know, compared with the broader banking universe is still under control but nevertheless some slippages are transpiring. So you know, where would we put the credit cost guidance for the full year and where would we put it, you know, on a steady state basis say, you know, from FY27 onwards? That’s question one. Secondly, from an OPEX standpoint, you know, you have been, you know, making guidance in the past in terms of a glide path.
Would like some reiteration or maybe some any further color on how things are shaping up off late in that regard and where the number might end up for the full year, this year and where we are probably Going to head, you know, FY27 onwards. And thirdly, on the, you know, loan growth front there, you know, we have a small base and I think going 20 plus has never been a challenge in that sense. But nevertheless, any, you know, what is the internal aspiration there from a CEO perspective? If you could give us some color on that, those would be my three questions.
Pralay Mondal
Thank you, thank you, thank you for your question. So I’ll go one by one on the credit cost. General guidance always has been, I’m just repeating like a record that our GNPA will be less than 1%, NNP will be less. Sorry, GNP will be less than 2%, NNPA will be less than 1% and credit cost will be less than 6,50 basis points. That has been our overall vision till FY 2030. We have been of course, much lesser than that. Even this quarter we are lesser. And our guidance for this year is gnpa, NNPA and credit cost all the way lower than where we are in Q1, that’s for sure.
Okay. Unless of course, we don’t know the global uncertainty on the report it comes. I’m just not taking that into consideration. If that happens, then we have to recalibrate. Second part of your question is on OPEX glide path. If you look at it carefully, our OPEX glide path is going down to 50% by 2030. We hold on to that because our real story will emerge from next year as a liability franchise starts building along with that Rossel on assets fees and transaction banking and wholesale and SME, all of it together. So the real orchestra will start playing out from only next year and we’ll start seeing results FY29 onwards.
So I’m pretty much holding on to that light path of 50% on Opex side at cost to income side. And if you look at it this quarter, even our YOY growth and operating expense is only 12%. So we have been pretty conservative in terms of our operating expense. The time when we are massively investing in technology. So to that extent we are very conscious of productivity and operating cost. The reason our cost income has gone up slightly on a year on year basis. It has come down on a quarter on quarter, it has gone up a little bit is of course because of the income and other income and everything has come down a little bit.
So once the ROA starts going up back to 1.5%, still itself come down to some extent. But the real shop glide path will be FY28 onwards. And we’re pretty confident of reaching 50% by 2030 on that loan growth on a three year basis, I think we’ll have a reverse trajectory. With every year growing, our loan growth will only go up. Why? Because even now we can grow faster than what we are growing in loan. Let me tell you, our constraint is liability. And once a liability franchise starts building up because based on bulk and based on cities and based on based on whatever little bit you are doing on the retail side etc.
You cannot have a sustainable growth on the asset side. Additionally as the retail part of the franchise starts growing also we are pretty clear that wholesale and SME also has to bring in liability because they have a safe funding target. Especially on current accounts, especially on low cost funds etc. Once that starts playing out, we will be able to grow faster. And because multiple products will start playing out like last year our wholesale started. SME has been going on for the last 2, 3 years. Detailed part of the story will start next year. So and gold will continue to grow as it is growing.
So given that suddenly we are seeing if you look at consistently this year, SME, wholesale and retail, all three grew by 30% plus and this has never happened to the bank. When I said retail I include gold in that. So three franchise, each of them growing 30% plus shows that we have the sustainability. And now we have caught the rhythm of building that business. Our constant comes on the liability side and we are fully focused on that. And once we build that, our credit growth which is right now somewhere between 20 to 25 safely and maybe above 25 also if our liability allows us then next year onwards as our liability franchise becomes better, we will do better growth on asset side.
So we are pretty focused. We don’t have a capital issue. We have enough. Our CRA is on the higher side. So from all aspects growth is not a problem for us.
Shivaji Thapliyal
Thank you.
Pralay Mondal
Thank you Shubhaji.
operator
Thank you. The next question is from the line of Ruchikesh BC an individual investor. Please go ahead.
Unidentified Participant
I think most of my questions have been answered. Thanks for the opportunity though. Just wanted to ask regarding the ROA guidance. Previously it was like in the range of 1.5 to 1.8% for the. But right now you just mentioned that you will be touching around 1.5% so. I mean are we like having 1.5% I mean essentially reducing the guidance, is it?
Pralay Mondal
Thanks Vish for your question. So what I said was 1.5% ROA and 15% ROE is our Lakshman so we cannot go beyond that. But if we have that opportunity. We do higher than that. Having said that, we all know the environment we are in today, not only us. If you look at the entire ecosystem, there are challenges in the ecosystem and there are known unknown challenges and unknown challenges right now, which are mostly coming from global uncertainty. Given that, I think we will be happy to be around 1.5% this year. But our guidance on 1.5 to 1.8 is for HBS 2030 journey.
I’m 100% confident that we will achieve that vision of 1.5 to 1.8 and maybe we’ll be closer to 1.8 as our retail assets and other franchises starts picking up and our overall cost of fund starts, sorry, cost of cost to income starts coming down and we leverage the branches and our franchise better. So our guidance of 1.5, 1.8 in past also is over SBS 2030, which is again the light path or whatever, Rice path, whichever way we look at it. But this year, given the world Global Uncertainty, 1.5 is something which we should achieve and we’ll be happy about it.
Unidentified Participant
All right, thank you so much.
Pralay Mondal
Thank you. Thank you.
operator
Thank you. The next question is from the line of Yash from Dante Capital, please.
Yash Dantewadia
Hello.
Pralay Mondal
Hi, Ash.
Yash Dantewadia
Hi. Hi, sir. So my question is mainly regarding your gold loan yields. How do you see your gold loan yields moving from here?
Pralay Mondal
So our gold loan yields typically has been within 1 11.5 to 11.12% depending on which products. We’re looking at it because of the regulatory guidelines now that has come, which is now very clear. It’s no longer draft, no longer any guesswork, it’s very clear back and wide. We know what business we can do, what business we cannot do. And hence I think our higher yielding businesses will grow little more because the loan against securities business, which was more pleasure, kind of a business that comes slightly at a lower yield. So from that perspective, I think we should not see a fall in yield on our whole loan.
I think we should be somewhere around 11.8. In that range we’ll target.
Yash Dantewadia
Yeah. And so my last question is regarding your cost of funds. What kind of exit in cost of funds like Q4? How do we see this number going to come down? But do you have an estimate that you can check?
Pralay Mondal
Very difficult, boss. You know the way situations are evolving, one day the yields are 6 point, sorry, 6.2, 6.3. One day is 6.5, 6.6. So how do I know which way it is going? But broadly the way we are looking at it, I think from the current level 20 basis points drop is minimum, which we can aim for in my view.
Yash Dantewadia
Right. And as far as this technology platform and whatever you’ve been working on in the last maybe I think around two years, if I’m not mistaken, what is it going to kind of help us the most and what percentage of our collections are online today without physical or physical connections?
Pralay Mondal
Basically, I’ll answer the second question first. Our CIO is sitting here. I invite him to give you some broad perspective of what we have done and what we plan to do and how it will help because he and his team has worked very hard. So let him also talk to on this, Paul, on what we have achieved. But on this collection scene I can tell you is that while I understand digital collections and all that, of course we are invested into that, we are into telecalling collections, all of that together. But our overall retail book is very small which requires all these straight through process collections and all that.
That is very small. Today we are building the capability, but that opportunity itself is small. And even on the credit card side because we don’t have our own credit card product, we do it through Jupyter and all that. They have their collection set up which they do, which has all online and everything and offline. Of course you cannot do recovery with online. So given that we are preparing for ourselves but we don’t have that portfolio size to test that as much. But we are building that SME and wholesale and those kind of businesses you need mostly legal, technical, all those kind of things to collect.
And that’s where our legal teams are very strong. And our primarily recovery and collection on the SME and wholesale side is handled in on offline mode and on man to man collection. So that’s the way it works. On the technology I’ll just say one line and then I’ll hand it over to Rajesh. It will help everybody. Okay? Because we must understand that we are coming off a legacy system where you cannot add one more product, then the system doesn’t work. Okay? What we have in Marvel Premium Liability introduced, it could not be introduced properly. Okay? We didn’t have transaction products, we didn’t have cms, we didn’t have trade, we didn’t have supply chain.
Okay? Our mobile banking, banking was functional but on OBDs we are moving at a very different level. Our entire digital ecosystem, our service platform, everything, what we are doing is very differently. Our data centers today are having two data centers along with two India which are most sophisticated and the best places we are on 11G on Oracle platform on the database. Now we are in 19C which is the latest. 11G is not even supported. So that kind of a transformation we are doing and it will help every business. In the wholesale side it will help the transaction banking.
On treasury side also it will help transaction banking and some of the other systems they are implementing. But it will maximum help in retail acquisition of new customers. STP onboarding, creating various services, various products. Because why should a customer come to me if I don’t? I’m not able to give personalized STP different kind of services with a good onboarding system processes. We have created ecosystem around it through our relationship management. All the systems are ready, we have contact centers, we have created everything. We’re just waiting for this connectivity to happen through the technology. Once SMA to help in a big way.
We are going to launch our new corporate net banking in the next six months, six to nine months which will help us in a big way. Both SME and corporate banking and of course retail assets, lms, los, all of that stuff was not in the bank before actually. I mean how could you run a retail asset business without these products, without these systems. So all of these are now going to be functional. So given that it will help retail the maximum in my view and Gold Loan is a functional business. It is more structure, free systems and better efficiency does help.
We are also working on a new for our acquisition platform which is digital. I think we are going to make significant investment there to upgrade it because our main focus will be on customer acquisition. The detail has to be built up. We are going to launch various current account products now. Now that we’ll have those systems and processes and once we have the corporate net banking in place it will be differently altogether. What kind of talent account will do. So that’s a flavor on what we are planning to do on the business side. Okay, but just requesting Rajesh Chaudhary who is the CIO who has led the entire tech transformation for the bank to give a five minute snippet on what we have done and what we plan to do and how it will help the bank.
Over to you Rajesh.
Rajesh Choudhary
Thank you Praveen. I think you covered quite a lot but I think in a quick summary what we have done is we have overhauled the entire technology ecosystem in the bank. Setting up four data centers, building new core banking which just went live in the month of May along with 50 plus different surround systems. It has been a massive transformation and that’s what all the partners who have been working with us, they Tell us that they haven’t seen something of this kind. Of course there are a lot of core banking transformation which keeps happening, but so many systems going live together is something very unique.
So at this point of time we have got systems in place for the business. So like we are now ready to create products and build capability for doing business for all the respective business clients. We have also built capability to do the right compliance and the right regulatory work. So there is a significant amount of regulation. What we have to deal with cyber security, information security. We have to ensure that the entire ecosystem is safe for our customers, for our employees and for the banking industry as a whole. So we have all the elements in place and with respect to channels, with respect to payments, everything is overall.
So we have got everything brand new and we are ready to deliver it to our customers. And we will keep optimizing this, we will keep investing further. But the major overall has been done and we are all geared up to do more and more business on this.
Pralay Mondal
While you’re talking on the regulatory. But we have interned a new FRM system and given a new compliance system. So almost everything is fresh and rebooted at the bank from a technology perspective. Yash.
Yash Dantewadia
Yes. So one last question before we drop off produces secured versus unsecured breakup of the group currently.
Pralay Mondal
So unsecured can be seen in two ways. Retail unsecured is only 3% of the overall banks book. But then when you look at secured, some of the unsecured businesses are the basic business. If you do business in Tata, if you do business in general, which you have done by the way. Okay. They are more secure than secure businesses actually. So if I give you that ratio, that may not be the ranking presentation, what we call retail one is 3% and SME, we almost never do unsecured business. So that’s probably what it is.
Shivaji Thapliyal
So out of the entire you said you’ve recovered 25 or over and you, you think you’re going to recover more. Right.
Pralay Mondal
So that will happen to the year, the rest will happen through the year because the business has to be restructured. But the point is they’re all secure businesses that are well collateralized. So this will not go anywhere. But we obviously assume how you run the business is you don’t immediately call back the loan and say that give me the money or I’ll sell your property. You have to help them in rebuilding the business. That’s what you’re doing. But these are recoverable. That’s the point I’m making.
Yash Dantewadia
Thank you. Thank you so much for taking on the question so patiently. Have a great day.
Pralay Mondal
Thank you. Thank you very much. Thank you.
operator
Thank you. Ladies and gentlemen. That was the last question for the day. I would now hand the conference over to the management for the closing comments. Over to you, sir.
Pralay Mondal
Thank you very much. We had a wonderful conversation. And thanks for patiently listening to us. Look forward to our next quarter. Analyst again, thank you very much, everyone.
operator
Thank you on behalf of ES Securities. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.