TAMILNAD MERCANTILE BANK (NSE: TMB) Q3 2026 Earnings Call dated Feb. 04, 2026
Corporate Participants:
Salee Sukumaran Nair — Managing Director and Chief Executive Officer
Sanjoy Kumar Goel — Executive Vice President – Chief Financial Officer
Analysts:
Unidentified Participant
Sucrit Patil — Analyst
Darshan Deora — Analyst
Presentation:
operator
Ladies and gentlemen, you’ve been connected to Tamil Mercantile bank conference call. Please stay connected. The call will begin shortly. Participants, you have been connected to Tamil Merkanth Bank. Please stay connected. The call will begin shortly. Sa. Sam foreign. Ladies and gentlemen, good day and welcome to Q3 and 9 months FY26 conference call hosted by Tamil Nadu Mercantile Bank Limited. This conference call may contain certain forward looking statements based on the beliefs, opinions and expectations as on date of this call. These statements are not the guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Today on the call, we have with us the following management representatives. Mr. Salli S. Nair, Managing Director. Mr. Vincent Menucheri Devase, Executive Director. Mr. Sanjoy Kumar Goel, Chief Financial Officer. 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 this conference call, please signal an operator by pressing star then zero on your touchdown phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Salli S. Nair, Managing Director of the Malnal Mercantile Bank. Thank you. And over to you, Mr. Nairobi.
Salee Sukumaran Nair — Managing Director and Chief Executive Officer
Yeah, thank you. Thank you. Thank you very much. And I think before I start the presentation, I must take you back to the call. The analyst call that we had in quarter two after the results of quarter two was announced. Where, you know, we, you know, while we stated the numbers for quarter two and we also gave a guidance for what we are likely to achieve in quarter three and for the year as well. If I take you back to that numbers, CASA quarter two grew at 9.30. Deposit grew at, deposits grew at 12.32 and the overall business grew at 11.40.
And the guidance that we gave at that time was that, you know, for quarter three we will be up 1% in terms of total business growth, it will be higher by 1%, which is 12.40% plus. And we also said that quarter four it will be up 1%, even higher, which is 1% to 12.40 makes it 13.40%. And that is what we had given as guidance for the year. Now if I look at. We also did give some guidance on the net interest margin where we said we should be looking at something like 3.85, 3.85% and the ROA at 1.75 to 1.80.
So keeping these numbers or the guidance that we have given after quarter two results. Let us come back to quarter three that we have published today. So obviously I think the numbers and when we look at quarter two and the guidance is that we have given for quarter three, the numbers are much, much, much better. Clearly the growth momentum that we have initiated in the bank is accelerating. As I said last time itself, 26 for us is the year of laying the foundation for the takeoff, a transformational year. And I think that’s precisely what the year has been so far in the last nine months and that results are now beginning to show.
I think we did see some signals of it in quarter two, quarter one to some extent and certainly, you know, sort of strengthening in quarter two and quarter three is further evidence that the motions that we are putting, the transformation actions that we have placed on and the journey that we have moving on is bearing fruit for us to take you through the numbers. The total business, the guidance was 1% up, which is 12.40 plus. But the actual delivery quarter three is 14.28%. So we have beaten our own guidance. I think the transformation journey is yielding results faster than we originally anticipated.
The deposits are at 12.53% up 56,707 CASA. Again last quarter we did say that we will be touching 12% and 12% plus. We have delivered a 14.94% CASA year on year. Growth advances 16.30. The guidance we gave was 14 to 15% and delivery is 16.30% RAM at 18.29%. So if you look at the business growth that we had promised, we will deliver in quarter three we have beaten in every aspect. So that’s something that I want to place on regard for the analysts initially. Now this is also getting translated into numbers that have this bank has not seen earlier.
In terms of profitability. If you look at the net interest income 13.28% year on year, operating profit at 14.84% and net profit 13.74%. And that’s quarterly the highest ever this bank has recorded.341.50 crores, 13.74. Obviously that sort of a record profit is also translating into a good ROA. ROA is at 1.97%. If you recall, FY25 ROA that we delivered was 1.81% for the year, FY25, 1.81%. This for the quarter this is up 1.97%. Similarly for return on equity, FY25, the delivery, what we did deliver, our performance was 13.79%. That’s also up to 14.22%. So on the profitability also we have delivered higher than expectations, higher than our own expectations.
And I’m sure these numbers are going to get continued and get accelerated further or get strengthened further. Now these numbers are not and I think these numbers are also coming on. The growth momentum is coming on a very well disciplined foray into business. If you look at some of the numbers that we have showcased in the presentation, slide number two, I’m sure all of you have the slides. CASA share has improved 155 basis. No 27.95% CASA share has come. That is 20, that is 59 basis year on year and that is 155 basis from the valley.
And I’ll tell you, I’ll take you through that a little later. So 27.95% CASA share. So that is a turnaround story in the CASA and this has been a cause of worry for us and a lot of initiatives that we have taken on the ground. I did explain some of it in the last quarterly results and even before TBG has been installed, sorry, Transaction business group has been initiated with relationship managers on the ground, moving into markets, getting those current accounts, savings accounts, the government accounts, you know, the entire gamut of task accounts. The savings SB account also is getting strengthened.
So CASA is a good story that we would like to place on record. And net interest margin year on is up. It is 4.04%. Now this is for the quarter and if you recall I have said in the guidance that we will be 3.85% for the YTD for the year nine months. We are at 3.90% and this I am sure when the year closes this will be strengthened further. Last up to 3112610 months. We have opened 36 new branches. This has also provided the momentum for us. The growth momentum. Opening another 14 plus branches in the remaining two months, February, March and 50 plus is something that you will see when the year goes.
And all this we have not taken on unsecured exposure. The growth momentum is riding on secured exposure and secured exposure is just about 11 basis of the total gross advances. If you recall I also mentioned, I have also stated that we would be in the 45 to 46% range in the cost to income ratio for the quarter and the delivery. And we have actually we are at 44.40% which is lower than the guidance and 1.91% lower on a year on year basis. On the credit costs, of course I think the recovery has been good. So the provisions that were cost Border kind of slippages have been absorbed by the recovery and the ultimate credit cost is negative 10 basis it is 18 basis down y o y GNPA 91 basis 0.91% down 41 basis year on year and net NPA is somebody did call it insanely low.
So that is what it is. 0.20% I think where again demonstrating that this bank’s history of stress management is something that we are very proud of and we will continue to. We are continuing to demonstrate that on the ground with the stress numbers that are market meeting. Even on the SMS side I am including the SMA0 here. So when I look at the SMA01 and 2 together, all SMA together it is 2.24%. So effectively portfolio at risk one day is at 3.15%. That is 2.24% of SMA and 0.91% of DNB together portfolio at risk for this bank one day past due one day is 3.15%.
I don’t know how many banks in the country has that kind of a number. PCR again this is on book. PCR is at 78.35%. If you recall RBA has been nudging the banks to move to a 70% target on book target. Many of the banks have not touched it and we are at 78.35%. It is an up a full 9.28% year on year. And PCR with technical write off is at a whopping 96.08%. So that that shows the kind that the growth that is being brought into the bank that being achieved. When you look at the kind of advances growth 16.30% is riding on a very very strong stress management network that we have.
And it is the appraisals are not being compromised for the growth to generate the kind of growth that we have seen. So moving on deposits. The deposits portfolio like I just mentioned cars are up 49.4%. Our initiatives are bearing fruits. Total deposit at 12.53 and I’ve showcased in slide number nine. If you have looked at we turn to your presentation the way the CASA share has moved right. I think it has hit it was. It has a worry for the. For the industry itself. And we lost 3% in FY25 and we hit a rock bottom of 26.44%.
CASA share and anticipating that in last year itself we had put in place a lot of initiatives we those initiatives in the current year and initiatives are bearing fruits. If you look at it quarter after quarter we have been able to ramp up the CASA share and CASA share today stands at 27.95% a full 1.55% higher than what we had on 31st March 25th on the advances portfolio. Again I think we have delivered a robust performance. I and this robust performance I said, as I said earlier is on the strength of good stress management also wherever, Sorry, good stress management wherever.
NNPA I just mentioned is 20 basis and GNP is 91 basis points. Well, both of them well, well well under 1%. So the advances quarter on quarter has, Has gone up. Yeah again the story here is while yoy it has gone up 16.30%. If you look at it carefully the growth in the quarter so that means that the climb is fairly steep it is 8.17. And the story here is the MSME. If you look at the MSME while it shows a y O Y 8.43% the initiatives that we have put in place, the degrowth that was happening in the MSME area which I did mention last analyst call itself that we have arrested it in the first quarter we had a negative growth.
Second quarter we did and we did show a positive growth and now we are seeing the initiatives. Bearing fruits and the MSME for the quarter is at 6.74. That’s one story that you need to watch over how the MSME will behave and, and this is something that we will continue. We’ll see that the number continue, continue to strengthen so that unsecured exposure I just mentioned is just, it’s at a bare 11% coming on to the perform P and l performance itself I 341.50 is the highest profit we have earned 38.74%. And if you look at the nine months also the performance in the net profit is creditable.
It doesn’t, the number doesn’t reflect it. Because of the advances in the collection one time recovery that we had last year. If you sanitize for that, if you, if you remove that the impact of that you notice that you will notice the net Profit is up 18.05%. Again we have delivered strong shareholder value 9774 and an EPS of 21.57. I’m happy to say that the market has begun to understand the kind of robust performance that we are delivering and has been rewarding us with a higher, higher, higher, higher market cap. And in the last, in fact three, four months itself we have seen a 40% growth in the share value so I think that’s again I’m happy to say that we have validated that by delivering an earning per share of 21.47% and the book value currently stands at 617.22 like I said ROA is at 1.97.
I think that may be hard for many to believe but that’s what this bank has delivered for quarter three of F526ROE I just mentioned earlier 14.22 and asset quality is also I think it is in the slides I think we have delivered some of the best in the market in the Industry slippage under control 5 basis SMA trending down like I just mentioned it is at 2.24% it was at 2.55% as on 31st of March we have brought it down further so continues to go down the stressors that continue to decline it the restructured is at 1.40 and continuing to decline.
We have also seen the new regulations I did mention about it in last year last quarter sorry the expected credit loss I did mention that the impact will be 212crores the impact is now up to 264crores because the standard assets are climbing. There is a robust advanced growth that is seen and that that is having an impact on the standard asset provision. So it is now up to 264. This is something that we’ll keep watching even at 264. As I mentioned earlier though RBA RBA has given forbearance to you know space it out over 5 years from 1st April 2027 we would be in a position to take it immediately because we already have a 250 crore contingency provision which I did mention last which should more or less take over take until the impact.
So on the other regulation that RBA has brought in and their liquidity coverage there’s a run additional runoff for the for the lithal banking, the mobile banking etc. We have had a calculated data as well the impact is going to be the entire gamut of the new regulations on the LCR impact is just negative 2% so the LCR continues to be at a robust 131% for us so we have no liquidity concerns from that angle and NIM I said is 4.04% that is riding on a cost of deposit which has come down 7 basis point to 5.83 it was if you recall it was 5.90 last quarter it was down to 5.83 whereas on the advances side I think we are holding on again while the report cuts is in place.
I think our gold loan portfolio has helped us weather that support yield on advances at the level that was seen last quarter as well. So the NIM is at 4.04% cost to income ratio. Another I just mentioned earlier, 44.4% and on the digital transaction I think if you look at the presentation and I’m sure you will scrutinize it further 96.96% of our transactions are now handled digitally. Just about 3.04% is only handled through the branches. It is now just it is about 60 lakh transactions across the branches for the quarter so that is slowly, slowly coming down.
Digital transactions are moving up. The productivity of employees are that way on our right so the modernization of the bank is underway. Significant IT investments have been made. We had allocated 250 I think about half, half of it has already been done and substantial of course orders have already been paid for the transaction. It is being paid in parts. I think we’ll see a significant improvement in the IT field. Quite a few have been completed. The Oracle Fusion components, the HCM the customer experience package, the vendor management system has already been implemented in the previous quarters.
The automation office automation has also been completed. We have the fintech tie ups have we have already onboarded a few fintechs Digital transformation as I speak the digital engagement hub the completely revamped digital Internet banking is on the cards and certainly this week and maybe hopefully next week I think we will be opening up it is undergoing UAT it is being undergoing UAT with the staff members of the bank the new revised a completely revamped Internet banking and we shall be opening up it up to the public possibly next week I think it will happen by the 14th or prior to the 14th of February so that is going to be a completely transformational digital banking.
So that’s that is there Mobile banking is getting upgraded. Your LMS LOS package phase one has been completed. It’s been rolled out and it is now beginning to show I think MSME some of the MSME numbers that we have seen 6.74% for the quarter is riding on the on this and I think phase two, phase three etc it’s on the job. I think we are on the job. I think the benefit of that should accrue to us in FY27 so call center has been the connecting the CX to call center connectivity is on and there is a host of other items I’m not getting into the details.
The host of other IT initiatives are on and some of them have been completed in a modular fashion and beginning to give us results. And by the first quarter of next year, I hope, we hope to complete most of these initiatives with the full result impact of that, the productivity gains of that being available in the next year. And obviously we have also taken as part of our growth strategy HR and we will be. We are in the process of either part of IT have come in and we are in the process of getting an additional 100,043 new hires looking at strategic leadership for new branches outside the Tamil Nadu.
Much of this will happen to strengthen our HR base outside Tamil Nadu and part of it to ramp up our CASA growth. So that’s significant HR hiring we are trying to do to manage the growth that is being anticipated. Like I said, 36 branches we have opened so far. We are expanding. We have done 13 branches outside the state of Tamil Nadu. And this, the foray outside of Tamil Nadu as well will continue going forward. I think I will stop here. Of course we have been very, very active on the CSR front as well and also got certain awards.
I stop here and I will open up myself to questions. I have with me Mr. Vincent, the Executive Director, the CFO, Mrs. Sanjay Goyal and apart from the three business heads, I think the resource head, branch banking head Ashok Kumar, the credit, the country head, credit Anand Ganesh and the chief quality control officer and in charge of stress management, Mr. Vijay. Yeah. Now we are open up for questions.
Questions and Answers:
operator
Thank you very much. We’ll now begin with the question and answer session. Anyone who wishes to ask the question may press star and one on data stone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles participants. You may press star and one to ask a question. The first question is from the line of Sukrit Patil from Eyesight Fintrade. Please go ahead.
Sucrit Patil
Good evening to the team. I have two questions. First of all, thank you for the overview. Looking ahead as the bank looks to grow beyond its traditional stronghold while maintaining its conservative DNA. How does management decide where to push growth versus where to stay cautious? What early trends in customer behavior or portfolio quality usually guide these decisions before they swap in the headline numbers? That’s my first question. I’ll ask my second question after this. Thank you.
Salee Sukumaran Nair
Are you asking in terms of the branch expansion or are you Asking in terms of the business expansion, I’m asking.
Sucrit Patil
In terms of growth versus risk.
Salee Sukumaran Nair
Growth versus risk. Let me also tell you that some of us, one of the reasons why we have been able to deliver such exemplary numbers on the stress side is that we have a sizeable gold loan portfolio which we now continuously are growing. If you look at the number, the personal gold loan portfolio has grown 60% plus. So that is one area that we will continue. We are very, very careful about the commodity risk involved. So the LTV is something that we monitor on a daily basis. We have put in place system that gives us a sensitivity on the LTV on a daily basis being monitored by a team in the head office.
So this portfolio is something that will grow. We are quite conscious of the committed risk involved. So we will grow this portfolio. And apart from this, like I was mentioning earlier, this for this bank’s forte has been the MSME and that’s something that we are getting right back into. We have spent some time in getting the systems in place. We have put in place the credit management centers which now has been completely operationalized in Tutukudi. And this has also been rolled out in a hybrid fashion across the other 11 regions. And the CMCs and the systems that we have put in place, the credit challenges that we have put in place, the leisure managers that we have put in place gives us the confidence that MSME is one area where we will be able to push growth in a substantial way.
And I think the results are also being seen from that angle. So MSME is going to be there. Gold loan will continue. That is our bread and butter. So that helps us with some of the report cuts as I told you earlier. And apart from that, we will also be looking at the housing loan and the car loans. So that is where retail is essentially going to be the focus. And in some measure and small measure, we are also trying to get back into the corporate book. If you notice that we have grown that book.
Some, some, some growth has happened in the corporate book. So 6 to 10% is what we want to retain there. We don’t want to completely exit from the corporate book while our bread and butter is going to be the RAM which has given us a growth of 18.29% year on year. We are getting also in some measure back into the corporate book which is shown as others in the presentation. So RAM and krazos. So that is where it is all depends on essentially the mid corporate, right? Good, acceptable mid corporate. And we have, you know, we have, you know, this we do look for some collateral.
So this will, all exposures will be taken with some amount of a cost.
Sucrit Patil
Thank you. My second question to Mr. Goyal is again a similar, along the similar line from a financial management point of view beyond the reported NIMS and cost ratios, again, what internal indicators do you track mostly very closely to judge whether liquidity, cost of funds or operating efficiency is moving in the correct direction as you have planned. And what is your point of view on this for the next few quarters?
Sanjoy Kumar Goel
That’s a very complicated question. Basically see this. We have a very robust alcove management system in the bank and we meet up very regularly and liquidity management is being monitored on a very periodic basis and interest rate is also monitored there. So let me, let me, let me sort of amplify that and tell you that liquidity is something that we are, I just mentioned that our liquidity LCR is 131%. Right. So that we are, we are quite comfortable on that. But that is something that is on a 30 day basis. Let me tell you that at the head office here I directly monitor the liquidity practically on a two hourly basis.
I look at my inflow of deposit and look at my outflow, both inflow and outflow and the settlement account with RBA on a two hourly basis. I track to see that the liquidity is under control. We have a very robust Treasury Department in place. We have enough excess slr, we have excess non SLR giving us the wherewithal to manage liquidity. I don’t think liquidity that much of a problem. Your second one is on the nim. And let me also tell you that, you know this is, this is a bank is very, very strong under mis, even on the nim, on the deposit, you know, deposit, cost of deposit and the E loan advances also is monitored on a daily basis.
It is not just the ytd, YTD or QTD that we monitor. We also look at the cost of deposit for the day. The cost of the deposits contracted for the day is monitored similar to the advances that we have contracted for. The disbursement that have happened for the day is monitored. So the NIM is something that we look at it on a daily basis and that I don’t know many of the banks, we may not be able to do this. But being the size that we have and the fact that we have a very, very, very strong MIS in place, we monitor is on a, on a, on a, on a, on a, on a daily basis, I think this is something That I look at it because I think this is what delivers the profits for us.
What is the third one you were talking about? Third. Sorry, what was the third one? You talked of the nim. You talked of the equity, equity cost of funds moving at right hand. And what do you see the next few quarters? No, I think. I think like I said, you know it all. Okay. I think going forward it all depends on which way the repo cut is going to happen. And. But personally when we look at it for the kind of management of cost of deposit and yield on advances that we have put in place, we are quite confident that in the current year, in the current year we have delivered a 3.90% for the nine months while we have delivered 4.04% for the year.
For the quarter we have delivered 3.9% for the current year. And this is going to move certainly. And we are looking at 3.90 to 3.95% for the current year. And going forward I think it should be in the 3.80 to 3.95% range depending on which way the governor of Reserve bank of India takes the report rate.
operator
Thank you very much Sukhrit. I’ll request to come back for a further question please. Thank you. Next question is from. From MK Ventures. Please go ahead.
Unidentified Participant
Hello. Yeah. Yes. Yeah. Congratulations on the results of fantastic numbers. I had couple of questions. So what I understand we have some shareholder case going on. Wanted to understand what would be the impact on the bank and can you help me map out the best case and the worst case outcome for the bank.
Salee Sukumaran Nair
Shareholders have that what is happening on the shareholder is their business. Right. It doesn’t impact the functioning of the bank at all. But having said that the only impact that is likely to happen on on is that that as part of the shareholder case that say no it is in the court. It is the ED is investigating some of the. Some. Some of the purchase of shares where the funds have come in from a PMLA angle, etc. So that’s happening. But on the bank the ED has showcased send us a showcase notice for 1037 crores.
So that is the only impact that is that is going to happen on the bank. 1037 crores of showcase notice that they have sent us and why they have sent this notice to us? Because there was a right issue. This is under the fema. Sorry, there was a bonus issue, not a rights issue. It was a bonus issue. And this show cause notice has been sent to the bank on on on in connection with the FEMA there was a bonus issue. That’s that we did and the ed’s show course notice is in connection with that.
And of course even though the amount looks so high, we have taken legal opinion and obviously there is no money involved here. And if you look at the FEMA regulations the maximum that can the bank can impact when the case gets resolved is 2 lakhs. I think we have taken legal opinions from one of the best corporate legal firms in the country to make an assessment of the impact of Dashoko’s notice. And that is going to be 2 lakhs. The reason is that it was bonus issue and there was no money transfer involved. The net worth allotted to one share was split into 500 shares.
So there was no money. So. So the impact is from a bank’s point of view is 2 lakhs. The best case would be nil. And the Worst case scenario 2 lakhs penalty on the bank.
Unidentified Participant
Understood fully provided. I mean I think it is too lakh. Yeah. Okay. So my second question was in terms. Of growth in terms of branches and regions. So what’s the growth strategy for growth.
Salee Sukumaran Nair
Outside Tamil Nadu and any focus states that we’re looking at? Yeah, I think, I think we have. Like I mentioned earlier we have opened 36 branches so far in the current year and in it is not in the three quarters in the 10 months and after 31st of Jan 26 we opened 36 branches. 13 of these branches have been opened outside Tamil Nadu. So 13 to 23. I think that is the ratio that we are at. If you look at that from a larger perspective, I think about 26% of the branches were outside. And that’s something that we want to drive up I think over a period of the next five years to at least 35% plus.
I think the opening of the branches will reflect that strategy. So 13 branches opened outside these branches are the states that we are looking at are states closer to Tamil Nadu. The states of Kerala, the states of Karnataka, Maharashtra, Gujarat and the two Telugu states. I think that’s where our focus would be going forward. Like I said, the focus is also to shift the TN non TN ratio slowly move it in favor of the non TN over a five year period. We look at 35% plus of branches coming out of states outside the Tamil Nadu.
And I did mention the focus areas focus states for you. Sure sir. So okay, last question.
Unidentified Participant
Sir, as you mentioned the gold in. Our portfolio is more than 50% of. The portfolio right now. So can you help me with the ROA for the gold segment and the non gold segment.
Salee Sukumaran Nair
No, I didn’t say that. I don’t know from where you got this 50%. Okay, so I would have misheard it.
Unidentified Participant
Yeah. What is the percentage of portfolio gold right now?
Salee Sukumaran Nair
45. It’s about 45% is gold at the moment. Okay. And that’s also because the other segments have not been growing. Now that the other segments have been growing. Hopefully the mix will, we will try certainly retain it well below 50%. That’s the, that’s the. It’s going forward. See we would certainly grow the gold loan portfolio because that gives us the stability from an interest income perspective. And you know, for the continuous. How do I put it? Stability in the growth while the extra growth is now going to come from the MSME space. Okay. Yeah, sorry I interrupted your question.
You tell me what you can. Yeah. Yes.
Unidentified Participant
The question was so what is the. Gold segment ROI and the non gold segment ro. The retail MSME.
Salee Sukumaran Nair
Gold segment ROA and the retail. Do we have a separate number? Combined number is 1.97 and I must say that significant would be contributed by the gold. I can get you the number. I can get that number one. You can, we can share it with him later. I’ll share it with you.
operator
Thank you. Harshit, I’ll request you to come back for a follow up question. Next question is from line of began Hariya from Green Edge Wealth. Please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity, sir. Congratulations on great numbers and you know, your all time high profits, all time high share price. I think we have a long way to go. Let me tell you the best is that to come. Yes sir. Thank you. And you know what I appreciate is. You know in every quarter you have.
Salee Sukumaran Nair
You know, guided us well and you know never over guided and you know delivered more than what you promised. So kudos on that. So just two questions from my side. So first is, you know this gold loan, gold loan prices are up. You know, even the gold loan growth is very, very strong. So would you like to revise your guidance? You know you said we may do 13 to 14% kind of advances growth in FY26. So would you want to guess any number for FY26 and FY27? Like what, what are we aspiring?
Unidentified Participant
Yes. Yes. Okay. Okay. I think, I think you hit it. I think you also mentioned that we under, what do you call under promise on over. Under promise on over deliver. Right. I mean you want to stay in that territory, continue to stay in that territory but give us your entire Promise number. Let me tell you for FY26 the advances what we promised in the Last guidance was 14 to 15% if you recall. But clearly when we close the year we are going to be 16% plus. And how much of plus is something that we will discuss when we meet again in the month of May when the results are there.
16%. Great. So now my only you know one data question is you know if you can give the gold loan number between retail and agri holdings. I think it was 3,000 and 15,000 crores last quarter. So. 16, 599 is agreed.
Salee Sukumaran Nair
6711.49. 6700 is the, is the personal gold loans and 16% plus is the agri component.
Unidentified Participant
Okay. Okay, sir. And in retail what products are we doing? Very good growth we saw. So apart from gold loan is this car loans home loans also doing well?
Salee Sukumaran Nair
Car loan home loans is another focus area but it has not been up to the mark so far. So we are revamping our strategy there. We are focusing on builder tires, we are focusing on types with the car dealers. I think this is the story that is yet to unfold but you will see some good numbers coming in here also. Like I said, the msme, our initial focus was the msme. Now that it is turning around, we are now shifting. While we continue to push the MSME space we will now shift focus to other areas as well.
Particularly the home loan segment and the car load segment. You want to add. Yeah. So on vehicle loan the target which we had internally set up to January we have already met which means that there is a growth in vehicle loan segment, housing loan. Initial few months we could not grow and we have also not focused much because of the obvious reasons because the kind of rate of interest, we didn’t want that to impact our name. But now we are focusing because this gives us an avenue to have a long term relation with the customer.
So home loan is picking up now. In the next quarter, the ongoing quarter and the quarters to come we’ll find good traction on home loan also.
Unidentified Participant
You all the best. I’ll come and you know for you for the next con call. Thank you so much.
Salee Sukumaran Nair
Thank you, thank you.
operator
Thank you. Next question is from line of Aravind Ravi Chandra from Syndrome Alternate assets. Please go ahead.
Unidentified Participant
Thank you so much for the opportunity and congratulations on the. Very sorry to interrupt you.
operator
Can you please speak through the handset?
Unidentified Participant
Yeah. Is this better?
operator
Yeah, yeah, yeah.
Unidentified Participant
Thank you for the opportunity and congratulations on the very good set of numbers. Can you explain me like you know how the growth would look like in retail segment excluding gold loans. That is my first question. And in msme, you know, like. Like you know, is there any like you know, unsecured MSME in the sense like you know, purely consecutive business loan, you know, given for working capital. What would be the mix there? Like you know, because under the growth, how is the growth shaping up there? Like between term loans and other, you. Know, working capital and other products, the housing loans. The first question you mentioned, we are still. The growth is only picking up and we will only cross the year in single digits. Right?
Sanjoy Kumar Goel
We don’t. Sorry sir, like I’m. I was asking like you know, excluding gold loan, like how the growth is. That’s what I’m saying. Excluding the load in the retail segment. Right. Talking about retail segment. I’m removing the agree and the MSME out of it. The retail segment where the. The gold loan has been the driver. The. The retail segment minus the gold loan continues to be the. In the single digits. But that like I said, that is going to be the focus area for us to see for us currently. And you will see some good numbers coming there. And on the MSME what you asked, we don’t as a bank lend on unsecured basis. If you look at our unsecured number, it is just 11 basis, 0.11% of our overall advances.
So we don’t as a rule lent on an unsecured basis to msme.
Unidentified Participant
Just to get a clarification like when we say secured msme are we talking about LAB itself or are we talking about other forms of collateral also?
Salee Sukumaran Nair
But LAP is not a significant portion. I am talking about all kinds of MSMEs.
Unidentified Participant
Oh, lab is a fine. It goes then like rest. Rest of it. When we say secured, what kind of.
Salee Sukumaran Nair
You’ll be having largely balance sheet financing. But we we to strengthen our recourse mechanism, we as a rule take collateral as well.
Unidentified Participant
Okay. Okay, understood. And of course collateral is there. But to the MSME itself it is not unsecured. It is again the primary security that the MSMEs offer for the kind of advances that we give. Thank you Arvind.
operator
I’ll request to come back for a follow up question. I request to all the participants kindly restricted to two questions per participant so the management can address all the participants in the queue. Next question is from line of Darshan Deora from Invest Group. Please go ahead.
Darshan Deora
Yeah. Am I audible?
operator
Yes, go ahead.
Darshan Deora
Yeah. Firstly congratulations Mr. Nair and the entire management team. Really you all have hitting it out of the park. Results are excellent. So congratulations to all of you.
Salee Sukumaran Nair
Thank you. Thank you.
Darshan Deora
So I wanted to ask you regarding the agri gold business. It doesn’t seem that the agri book has grown much this quarter in Q3, is that correct?
Salee Sukumaran Nair
Yeah, it is. See, there has been a lot of regulatory action on the agreed space. Though there has been some forbearance in terms of, you know, voluntary pledge. Voluntary pledge for. Agree. We have been. See, we want to be on the right side of regulations. So we have been very, very careful in expanding our agri portfolio.
Darshan Deora
Can we expect, you know, by when can we expect, you know, the growth to come back in the agri?
Salee Sukumaran Nair
It is already beginning to show.
Darshan Deora
Okay, Right. If you look at the quarter I don’t have, I don’t know. Do we have the quarter number? Yeah. Agree, Agree. It is already beginning to come back, let me tell you. Okay. And I’m sure that will get reflected in the yearly numbers when we publish it. Great, great. And the second question I had was on the MSME business, what would be our average yield or blended yield on the MSME business?
Salee Sukumaran Nair
MSME business, you have the average yield. I’ll get you that number. I think I’ll get you the number.
Darshan Deora
Approximately. Any idea? Approximately. Would it be higher than the gold?
Salee Sukumaran Nair
No, I, I think if I give you an approximation, it is going to be a very, very guesstimate. But I think it should be in the 9.5 to 9.75 range.
Darshan Deora
Okay, so. So then currently aggregate, the current yield is 10.63. Quarter. It was 10.75 last too large because first quarter it was 11%. So this year average is somewhere around 10.8%. This is for the. That’s why I said I’m told that it is 10% plus. 10% plus. That’s a healthy yield. That, that’s all I wanted to see. Because you know, the gold business obviously is, is helping us in terms of the yield, but even the MSME business as you’re growing it, that should also support our overall yield and then our overall nims. So I appreciate that.
Salee Sukumaran Nair
In fact, if you look at it, the net interest margin has improved and that’s also riding on the yield on advances, moving up from 9.97 to 9.99%.
Darshan Deora
Yeah, yeah, I noticed that. I noticed that. I think we’ve done a good job with retail gold. Hopefully agri gold picks up also. And again, congratulations on a great set of numbers and look forward to this continued performance in FY27 also. Yeah, thank you. And I’m sure the FY27 hopefully will be better than what we have. What we’ll be delivering in FY26. Wish you the best.
Salee Sukumaran Nair
Thank you. Thank you.
operator
Thank you. Next question is from Land of par gutka from 361 Capital. Please go ahead.
Unidentified Participant
Yeah. Hi sir. Thanks a lot for the opportunity. So my first question is what is the LPB on the Golden Book? And also what is the LTV at the time of sourcing?
Salee Sukumaran Nair
LTV on the Global Dome is 54. 54. Average LCB average overall portfolio. LTB is 54%.
Unidentified Participant
Okay. And at the time of sourcing. At the time of sourcing around 73. 73%. Okay.
Salee Sukumaran Nair
It is. We don’t. We have our own internal caps in our internal commodity risk caps. When you have. You know what, whatever the market moves are actually not factored in while. While we give our own program rates for rollouts. Okay.
Unidentified Participant
Okay, sir. And so just to follow up on that. Isn’t there any regulatory cap from RBI on a particular portfolio exceeding say for example our gold loan portfolio is more than 40% of the overall loan growth. So isn’t there any regulatory cap from rbi?
Salee Sukumaran Nair
I don’t think there is. I don’t. We need to keep the cap internally. Basically that’s it. I think what. What regulation says that internally we need to have board approved gap.
Unidentified Participant
Okay. Okay. Fair enough. Kept for ourselves is 50%. Okay. Okay. And second question is what was the recovery from return of account in the interest income line item in this quarter or last quarter and same time last year.
Salee Sukumaran Nair
Interesting interest. I think practically last nine months. Last year we have had some good recovery. But this year. It is 1.82 crores. 1.82 crores. Yes. You are talking about return of recovery from return of account that has been predicted to interest account, right? Yes. Yes, sir. 1.82 crores.
Unidentified Participant
Okay. Okay. This is. This number is for the nine months, right? Or for Q3 for the entire nine.
Salee Sukumaran Nair
Months it is 8.60 crores.
Unidentified Participant
Okay, sir, that was helpful. Sir, and my last question. Sir, let me also.
Salee Sukumaran Nair
Since I mentioned the 8.60 crores for the nine months in the current year. Let me also tell you the recovery the nine months of last year which was 58.18 crores.
Unidentified Participant
Okay. Okay. That was helpful. Sir. And my last question is what percentage of deposits are yet to be repriced.
Salee Sukumaran Nair
I think it will give me something on that. One second. Just hold up. No, I think. You have it to be replaced. We can come back. Now. We’ll come back to you on this. I think we will. We have the data here. I don’t. Like I said, I don’t want to give you SBS estimates. Let me give you the accurate data. We’ll come back to you on this.
operator
Okay, thank you Parth. I’ll request to come back for a follow up question. Thank you. Next question is from line of Rohan Nelson, individual investor. Please go ahead. Pleasure to meet you all.
Unidentified Participant
So I just have two questions. Could you give some sort of rough metric or indicator to understand the business performance trend in the states besides southern regions of India and also let know whether there is a plan to establish a presence in the Gift City?
Salee Sukumaran Nair
On the Gift City front, at the moment, no. But though we have been. No, at the moment I would say we do not have a plan, a concrete plan as such. Some thinking is on, but we don’t have a concrete plan. But on the, on the, the other question, the first question that you did mention, on the branches outside, we have about 26. We have about 26% of the branches outside, outside Tamil Nadu and I think. It is about 23%, right? Yeah, it’s around. It is about 20 to 23% of business comes from outside the state of Tamil Nadu and 26% of the branches.
Unidentified Participant
Okay. Versus last quarter, how much as well, just to see the difference. You’re talking about the incremental growth.
Salee Sukumaran Nair
Yeah. Yeah. Well I think I’ll have to get you that number. I don’t think we have that granular. Right. Okay, we’ll get you that.
Unidentified Participant
All right. Thank you. Thank you.
operator
Thank you. Next question is from line of Sonal from Princeton Capital. Please go ahead.
Unidentified Participant
Hi sir, this is Kunal Minas from PCN Capital. My first question is with regard to the steady state NPA levels that you would see in your retail, agriculture and MSME segment. Obviously the numbers are fairly low right now as we see from a 2, 3 year old perspective. And from a credit cost perspective, what are the numbers these books would mature to?
Salee Sukumaran Nair
Basically see, like I said, when we are expanding the MSME portfolio and we have ambitious plans to expand that, like the quarter itself, you have seen a 6.74% growth. So at some point we can’t disable the NPS. And going forward, while we are looking at NPA number even in FY20, significantly below 1%. But years thereafter we might see some kind of an NPA crop up. But our own estimate that we would be able to contain it below 1.25% going even going forward. So. And the credit cost, when I look at my own for going next year.
When we look at the credit cost itself I think the credit cost is likely to be less than 15 basis for FY27 but going forward this is going to move up but it should be under 40 basis anyway. That’s our own estimate that we have seen.
Unidentified Participant
Got it sir. So my second question was with regard to coal ending how much of the incremental book are we sourcing through coal lending or. It’s still very early days for coal ending.
Salee Sukumaran Nair
Co lending is one area that we are you know trying to get into so far. Let me tell you we are not onto the co lending space. We are just getting the platform in place. We are getting a co lending platform, a full purchase management platform in place. Once the platform is in place only then we have a tie up already. We have already started up on the tie up with NBFCs. We have already done one tie up. The real show will happen only after the platform is in place. We don’t want to do something that we will not be able to manage.
So we are focused on the getting the platform. I think the platform should be there this this quarter and you will see some co lending space expansion happening in the next year.
Unidentified Participant
Got it. So can I sneak in a small question or. I’ll take you if you want me. To ask another question. Yeah, yeah please sir. Like you have a fairly deep relationship based banking mechanism as far as your MSME is concerned and where your existing geographical presence in Tamil Nadu and the region around is concerned. When you do go to regions outside how is that particular kind of the culture, the strategy kind of replicated in your areas or you grooming your managers in other regions to follow that? Because that’s something which is built over more than a decade actually. So it’s difficult to replicate that in IMs to be have done that very.
Salee Sukumaran Nair
Well I think to replicate what we are doing in Tamil Nadu outside the state of Tamil Nadu. I think that’s what your question is, right? Yes sir. Hello. Yeah. If you look at the kind of and in fact so part of it, we have put the presentation itself, the kind of HR initiatives we are engaged in. We are trying to hire local people and particularly experienced branch managers. In fact we are trying to get 20 high performing branch heads to open new 20 new branches outside Tamil Nadu next year. We have already started the process of hiring them this year. Now apart from that we are also hiring probationary officers. In fact we have already a tie up with the Manipal BFSA Academy to train them and as we speak 85 of them are undergoing training and as we speak we have already opened up for another 115 officers to be hired.
So these are aimed at next year. So 85 would be with us from April onwards and 115 should be available after June. So these are, you know, locals professionals being hired in the respective states so that we get the correct connect with the local business, the market connect in those localities. So I think that’s the strategy that we are trying to put forward. We’re also looking at, you know, the existing MSME base there and using them as a referrals to expand our business there. Some of the pockets we have a very strong presence going back decades and some of them we want to leverage.
And some of these guys have left us, you know, because of legacy reasons. We are trying to get them back as we modernize and I think that also should contribute to the growth going forward. So I don’t know whether I have answered you in the way you wanted it.
Unidentified Participant
No sir, you have. Thank you. Thank you sir.
operator
Thank you. Next question is from Harsha for Mercy Advisors. Please go ahead.
Unidentified Participant
Hello. Thank you for taking up my question. Can you hear me? Yeah. Yes, go ahead. So sir, out of our current book of GROSS advances, around 50,000 crores. Out of that MSME is around 15,000 crores, right?
Salee Sukumaran Nair
Yes. So some balance. So around 35,000 crores. Most of it would be gold loans, right? About 20 to 23 would be gold load, right? 23 is gold load, 23 is golden.
Unidentified Participant
So sir, what is your outlook that say in next 12 years down the line if gold price is correct or what would be outlook on that book? How, what do you aim to achieve in that book? Say 20 from 23,000 to in FY 27, 28. What do you aspire to achieve from that?
Salee Sukumaran Nair
Like I said, gold loan has been a steady source of interest income for us. There’s something that we will continue focusing on. In response to the regulatory guidelines. We have already put in place a cap of 50% for gold loan. We were mindful of the gap, mindful of that cap and within the cap we’ll continue to grow that, grow that cold loan going forward into the years as well. So what we are also trying to do is simultaneously we are looking at the other business opportunities. I did mention about the msme, the focus on the MSME already beginning to yield results.
We are getting into the housing loan, we are getting into the other retail segments, etc. And that is also something that will begin to contribute to the growth because going forward the MSME as when the price is correct, when they we are conscious that the msme the growth that we are experiencing in the current year is not going to last for you know the gold prices and the demand for the gold loan is not going to last going into the next few years. And that is where the our focus on the other income, other business stream should help us weather it.
And we are confident that we will be able to maintain the kind of number that we set the 16% plus plus I mentioned earlier for the current year and certainly 16 to 17%. Clearly even if the gold price is correct, we should be able to maintain that an advanced growth of 16 to 17% next year as well.
Unidentified Participant
Okay. Okay sir. So thank you so much and all the best and congratulations on the great numbers. Thank you.
operator
Thank you. Participants kindly restricted two questions per participant. Next question is from line of Rakesh Sharma, individual investor. Please go ahead.
Unidentified Participant
Yeah, thank you for the opportunity sir. And congratulations for good set of numbers sir. Any kind of. Any kind of disruption due to the Tamil Nadu elections and can we maintain such good kind of asset quality in.
Salee Sukumaran Nair
The next year also? We hope to do that. In fact we hope to retain the asset quality under 1% very clearly into next year as well. And on the growth I see no challenge even with the elections, I see no challenge to the the momentum that we have sort of generated continuing in next year as well.
Unidentified Participant
Thank you sir and best of luck for the future.
Salee Sukumaran Nair
Yeah, thank you.
operator
Thank you. Next question is from the line of Manit Jain from Siddhi Capital. Please go ahead.
Unidentified Participant
Yeah. Hi. Thank you. So congratulations on getting the growth in the MSME book after multiple quarters. Sir, in the last con call we you had mentioned that by December the bank will be fully ready to use the centralized dispersals for msme. And yet you have come up with a very good growth of about 7%. So I understand the coming quarter should be a much higher growth from here. Maybe in higher teens or maybe 20%. Is that correct to assume for MSME? Yes sir.
Salee Sukumaran Nair
Not in this, this quarter, this quarter four. But let us see what comes in FY27. Let me also tell you that. And on the msme space on the 27th of November we rolled out the LMS loan management system, the first phase of it and now it is fully functional. And fifth of Jan we rolled it out to the other regions. This was rolled out on a pilot basis in one of the regions here and now it has been rolled out to the others. So yes there will be Certainly an uptick in the MSME space given these initiatives, particularly the MSME rollout and the hybrid and the CMC now beginning to deliver in the other regions as well.
But you are to answer your question on the. Whether it will be in the high teens. I think we’ll wait for FY27 for that to happen. But certainly it is going to be much better than the MSME growth that we deliver this year and next year there’s going to be a significant, you will see a significant uptick in the MSME growth this year. I think we should end up with about 12%. I think 12%. I think we should end up the MSME growth. Remember that in the first two quarters. In fact in the first quarter we were hit by a negative growth in the MSME as we are putting in place the systems, as we are reorganizing, as we were training our credit analysts, relationship managers on the ways to move into the market.
So we did have a bit of a disruption in the first quarter, second quarter, I think we came out of it. So this 12%, near 12% that we are looking for in the current year is based on that. So when you, when you look at. I think you do get an answer from what I said from that for next year. 12% for the entire year. So that’s a pretty good number. It’s going to be good. Yes. Lost the first quarter. Yeah. Yeah. So again coming back to your retail exposure increasing drastically maybe because of gold loans or otherwise, but having touching more and more retail customers, there should be an opportunity to cross sell other products and increasing your non interest fee based income. What is the outlook, what are you doing there and what is your plans on growing your credit card book or unsecured book? Can you give me some outline on that? We have, we have about 65 lakh liability customers and another 12 lakh plus of advanced customers. Right. That’s a huge number, a huge population for us to cross sell for a stop sell. What we have also done is already implemented is a customer experience package which you know, which is now made available across our branches. So even complete understanding of the kind of products that a customer can possibly be sold. So to that one of the initiatives that of course into next year is we’re also looking at a CDP platform and by the way we have also inaugurated an AI based call center looking at upsell.
And so this is going to be one major area. How do we use our customer base to generate value going forward? That’s like I said, the customer experience Package has already been put in place. The call center has been completely revamped and you will see some numbers. This huge database that we have, the huge customer base we have is something that we are going to leverage for productive purposes for generating profit as we go forward. You will see those numbers reflect that in the coming years. We have just started the. We have just started it.
That’s why I’m not going to put some numbers to it. We have just started it. We are fully conscious of it. We are, we are begun to leverage it. And we can see the numbers when we look at the cx, the leads being generated for specific products for bank assurance etc, we can see that it is beginning to take effect across the branches. And I think that’s something that will be accelerated in the coming year.
operator
Thank you Muneet. I’ll request you to come back for a follow up question. Next question is from line of Shakti Dinesh individual investor. Please go ahead.
Unidentified Participant
Yeah, hello. Good evening. Amodhavur.
Salee Sukumaran Nair
Yeah, sure, go ahead. I can hear you.
Unidentified Participant
Yeah, yeah. So I have a question regarding the credit management sector. So just want to understand where do we stand on the implementation like in terms of how much loans, retail and MSME loans are processed through that.
Salee Sukumaran Nair
So you’re seeing the credit management setup and how much of it? Oh yeah, yeah, yeah. Let me tell you. We were. Our advanced portfolio, about 45% is a jewel loan. Right. The jewel loans will be managed by the branches we have 614 currently. It will be managed because it is, you know, it is a location specific. And other than the jewel loan, other than the your loan again deposits which again the branches will handle. The rest of the advances portfolio will be handled by the cmc. That is how the CMC has been set up. Which means the CMCS would be handling the MSME portfolio entirely.
The CMC will be handling the home loan portfolio. The retail segment of retail segment as well. Other than the jewel loan also will be handled at the cmcs. Bringing in standards of appraisal. We are bringing in high quality, you know, so that you know, mindful of, you know as we expand we are also looking at how do we control the stress elements going forward. So, so with the CMCs would be handled by, by members of the officer officer community who will be repeatedly scattered skilled. I think they are undergoing, you know, series of skilling exercises.
Credit channel is who are skilled enough would be managing it from a centralized location. So this is our strategy to look at how we manage the stress going forward. So cmcs would Be handling all other than the dual loan portfolio. Okay so it will be implemented fully by FY27. Only by FY27. Yes.
Unidentified Participant
Okay so then final question like so in terms. So now that I understand that the process for the loan approval flow will go through the cmc. So just wanted to check like so the loan sourcing and the origination will be done at a branch level, at the RM level and then the appraisal will be done at the cmc. So so basically we are building like a standard pipeline for to process the cases first. Is that what we are able to do.
Salee Sukumaran Nair
The branch job is a partner is is to gather the resources, the deposits the focus. We are reovating the branches to generate the resources for the lending machine. Apart from the jewel loans I did mention of course the branch also would be generating the leads if there is a for an advanced customer. If the lead is. If a customer comes to the branch the lead will be generated and that would be passed on to the relationship managers. We are also building an army of relationship managers touched the branches moving around in the market and the CMC who would be sourcing or converting these needs into deals.
And like I said the appraisals would be done at the CMC with the delivery of the disbursement happening at the branches. Okay. Yeah we have just get a put in place the lms. The phase one has been implemented so the entire process will be online. Okay. Manager to start a proposal from the premises of the borrower itself.
operator
Thank you very much ladies and gentlemen. We will take that as the last question. I would now like to hand the conference over to Mr. Sally S. Nair Managing director of the Medall Mercantile bank for closing comments.
Salee Sukumaran Nair
Yeah, thank you. I think like I said this has been a good quarter for us. But as I said repeatedly in between that the best is yet to come and I’m sure our quarter this year we will close with numbers higher than what we have delivered for the quarter. We expect the CASA growth to be in excess of 15% advances growth I said as I said would be 16% plus plus and the total business growth, the advanced growth will be in the range of 16 to 17% and the total business we are expecting at least 15% plus.
I did mention that we will deliver 1% higher than what we did in quarter three and that would be our endeavor. Certainly it will be 15% plus. So I think we are increasingly becoming confident of the kind of numbers that we can deliver. The kind of businesses that is happening. It is all riding on the kind of on the initiatives that we have taken both at the HR level, both at the systemic level, both at the process level and also a significant infusion of technology into the processes. We are automating the processes, practically transforming the bank into a robust machine for both the liability side and the asset side going forward.
I think like I said, the FY26 is going to be a year for us in that transformation journey. We are laying the foundation and you have to watch us for what we deliver in FY27. And to put it, the quarter four results hopefully would be better than quarter three. I think that’s something that we are very, very, very confident about. Yeah, I think that’s from our side. Thank you for attending the investor meet and I’m sure in fact I should thank the investor community. The market has finally woken up to the existence of Tamil Nadu McIntyre bank and has been rewarding us.
As I said in between that the last, I think the last three, four months itself we have seen a 40% plus growth and that is, it is, I assume it is just, you know, correcting the anomaly that had kept in into the system. And as you move forward the robustness of the growth will hit the market and I am sure the market will continue to reward us further. And looking at the peer level banks, the kind of price earning that they have, we have done a. The kind of price earning they have been given. I am sure our performance as we go by in the next few quarters will help us earn those kind of price earning levels.
Thank you very much for attending this concourse. Thank you.
operator
Thank you very much on behalf of Tamil Nadu Mercantile bank limited that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.