Speaker #1: And welcome to Bank of Baroda's media conference for its financial results for the quarter ended September 30, 2026. Thank you all for joining us.
Speaker #1: We have with us today our MD and CEO, Dr. Chan. He's joined by the bank's executive directors, and our CFO. We'll start with introductions, then we have a short PPT, followed by opening remarks by Dr. Chand, and then the Q&A session.
Speaker #1: Chandra, over to you.
Speaker #2: Good evening, all my media friends. Again, thanks to all of you for joining on this call. And as you're going to discuss the quarter ending September, the results, both on balance sheet and also on the financial, let me introduce the management team.
Speaker #2: I'm D. Chand, I'm the MD and CEO of Bank of Baroda. With me, I have the executive directors, Mr. Lalit Tyagi is the executive director, he looks after the corporate credit international and treasury function of the bank.
Speaker #2: Then we have Mr. Sanjay Mudaliar, he's the executive director who looks after IT and the retail asset and a couple of other functions. We have Mr. Lal Singh, he's the executive director, he looks after the recovery, the HR, and also the agree and MSME vertical of the bank.
Speaker #2: And we have Madam Bina Waid, she looks after compliance control function, including the finance function on the CFO desk and also the retail liability function of the bank.
Speaker #2: And as you know, we have IVL Sridhar, he's the CFO of the bank. With this, now I'll hand it over to Mr. Sridhar to run through the presentation, and then I'll have my opening comments.
Speaker #2: And then we'll proceed.
Speaker #3: Thank you, MD sir. Good evening, everyone. It's my privilege to present before you the financial highlights of the Bank of Baroda. For the quarter and half year ended 30th September 2026, at the end of Q2, FY27, the bank's global business has crossed the milestone of 32 lakh crore and stands at 32.58 lakh crore, registering a BY growth of 17.2%.
Speaker #3: Our global advances have grown by 18.3% BY, with the domestic advances growing by 13.5%, and international advances growing by 39.7%. Within the advances group, the bank has continued to focus on RAM advances, our organic retail book grew by 18.6%, agriculture loans by 19%, and organic MSME by 21.3%.
Speaker #3: Corporate loans have grown by 6.3% BY. Within the retail segment, we have seen a smart growth across the portfolio with auto loans growing by 27.8% BY, mortgage loans by 20.3%, home loans by 14.6%, education loans by 9.9%, and personal loans by 6.8%.
Speaker #3: In terms of the deposit growth, our total deposits have grown by 16.4% BY, with international deposits growing by 14.9%, and domestic deposits by 16.6% BY.
Speaker #3: The domestic CASA deposits have grown by 10.4%, and term deposits have registered a growth of 20%, 20.5% BY. As of 30th September 2026, the bank's domestic credit deposit ratio has reduced by 323 bits and stands at 80.08%.
Speaker #3: Bank's domestic CASA ratio stands at 36.37%. With regard to our quarterly profitability metrics, our operating profit for the quarter stands at 11,430 crores, registering a growth of 50.9% BY.
Speaker #3: This is the highest ever operating profit posted by the bank. Our net profit for the quarter grew by 35.8% BY, and stands at 6,532 crore.
Speaker #3: Again, this is the highest ever quarterly profit posted by the bank. Return on asset stands at 1.26%, improving by 19 bips BY. Return on equity stands at 19.2%, 19.28% for Q2 FY27, increasing by 363 bips BY.
Speaker #3: In terms of the profitability for the half year, our operating profit for the quarter stands at 19,557 crores, registering a growth of 23.7% BY.
Speaker #3: Our net profit stands at 7,810 crores for the half year, ended 2027. Return on asset stands at 75 bips for the half year, return on equity stands at 11.63% for the half year.
Speaker #3: With regard to key ratios, our yield on advances increased by 4 bips, sequentially, and stands at 7.41% for the quarter. It stands at 7.39% for the half year.
Speaker #3: Bank's cost of deposits for the quarter stands at 4.71%, it stands at 4.68% for the half year. Our net interest margin stands at 2.74% for the quarter, and 2.76% for the half year.
Speaker #3: Now we come to the asset quality of the bank, which remains to be robust. Our gross NP ratio improved by 38 bips BY and stands at 1.78%.
Speaker #3: Net NP ratio also reduced by 20 bips BY and stands at 37 bips. Bank's balance sheet continues to be robust, with a healthy provision coverage ratio.
Speaker #3: PCR with technical rate of improved by 144 bips. To 94.65%. Our slippage ratio Q2 FY2027 has reduced by 22 bips BY and stands at 69 bips.
Speaker #3: It has also reduced by 23 bips BY for half year and stands at 0.67%. The bank has made prudent provisioning to strengthen the balance sheet, therefore the credit cost for the second quarter stands at 55 bips.
Speaker #3: The credit cost for the first half stands at 42 bips. With the credit cost without the potential provision would have been 28 bips. Coming to our SMA and collection efficiency, our Relic SMA 1 and 2 percentage of our standard advances reduced to 6.06% as of September 26, as against 0.39% for June 25.
Speaker #3: Our collection efficiency excluded agriculture remains robust at 99.2%. In terms of our capital adequacy, our capital position continues to be strong with CET 1 at 14.2%, TIRE 1 at 14.7%, and overall CRIR at 16.61%.
Speaker #3: Our quarterly average LCR remains healthy at approximately 133.6%. Over to Firoz. Thank you.
Speaker #2: Thank you, sir. Chan, sir.
Speaker #3: Okay. So once again, thank you all of you, and let me based on the EPT presented by the CFO, make me some specific qualitative comments on the financial.
Speaker #3: As you know, the bank had a very strong quarter. I think this is one of the quarters where both on the deposit advances we are possibly seeing the same kind of a growth possibly in June 2023.
Speaker #3: So almost more than 3 years possibly we are getting a similar number of growth both on deposit and advances. As the CFO said, the global advances growth was 18.3%.
Speaker #3: The global deposit was 16.4%. So this quarter, as you know, there was a specific scheme of FCNR, and it will be interested to know the impact of FCNR both on the business, both on the deposit and advances.
Speaker #3: Even although there would have been a normal equation during this time, but excluding that also, the bank, suppose you exclude the FCNR on the impact both on deposit and advances, the global deposit growth was at 11.2%, and the advances growth was at 13.5%, which is precisely in line with the guidance that we had given 10 to 12% for deposit.
Speaker #3: And 12 to 14% for advances, excluding I mean, the FCNR that we got a very strong response on the FCNRB. Due to our billing of India's international bank, the FCNRB, we have received a strong response on the FCNRB almost to the extent of 8.08 billion USD.
Speaker #3: And that shows the customer faith in the bank in terms of resilience, strength, and also billing into our positioning as an international bank. The domestic growth also similarly very strong.
Speaker #3: As you would have seen, the domestic deposit growth was at 16.6%. The international, I mean, global was at 16.4. The domestic at 16.6. And the global advances also I mean, at 13.5%, which also I mean, if you exclude FCNRB also is at the same level.
Speaker #3: CASA, this is the second quarter possibly we are growing at more than 10%, and this is something I was telling all along. Saying that because of our efforts to improve service delivery, bundling, attractiveness of the product, we are getting a good response on the CASA, and I think if you compare the CASA growth of Bank of Boreda for last many quarters, I think we are able to be better than the median of public sector banks.
Speaker #3: And particularly in comparison to large peers. Similarly, the FCNRB, we are showing you separately in the analyst, I mean, the presentation case presentation. Because that's something gives like if you include that in the retail deposit, the growth would have been significantly higher.
Speaker #3: But excluding that also, the growth in our retail deposit was almost 8.3%, and bulk also contained at 14.5%. A couple of things again on the profitability front, you would have seen one of the highest profits that we had in last many years.
Speaker #3: 6,500 crore is I think as the CFO said, one of the best quarters we had in last many, many years. And this the 6,000 crore I mean, if you look at the NI growth, it has been positive at 9%, 9.2%, both I mean, the same growth both for quarter to quarter I mean, quarter on a YY and also half year on a YY.
Speaker #3: The operating profit has been very strong. The NI there is a positive growth. And even if the operating profit of 11,430 crore, if you exclude because as you know, there is a sale of NSC, which has given a positive I mean, profitability from the sale of NSC, both in terms of the cash profit we got of almost 1,000 I mean, 1,340 odd crore.
Speaker #3: Similarly, there is a valuation gain also. If you exclude that also, the operating profit I mean, would be at 7,749 crore, which is again highest ever in the bank.
Speaker #3: So what I meant to say, the operating core matrix of the bank continues to be very strong. We are able to I mean, quarter to quarter able to perform in terms of the core operating profit, the core strength of the bank.
Speaker #3: The margin if you look at it, it was at 2.74 for the quarter, but we had given a guidance of 2.75 to 2.95. But if you take the half year, it is at 2.76, which is precisely in line with the guidance.
Speaker #3: And when you see the interest rate outlook both for Q3 and Q4, I think the margin would be upward by a significantly and would be within the range that we had guided.
Speaker #3: Asset quality continues to be the pristine in the way that I mean, all the asset quality parameters if you look at, if you look at the clinic data, the recovery, the cash recovery, and the upgradation, if you look at the numbers, it is better than the last quarter.
Speaker #3: And also same quarter last year in terms of number. The press slippage has been lower than the same last quarter, and also the same quarter last year.
Speaker #3: The clinic data, as I said, SMA 1 and 2 at 0.06, which is better than 0.07 in the last quarter. Collection efficiency excluding agriculture at 99.22.
Speaker #3: The slippage ratio is at 0.69, although we give a guidance of 1 to 1.25. And last quarter it was at 0.91, better than that.
Speaker #3: As the CFO said that the credit cost at 0.55, excluding the prudential provisioning, it is at 0.18. So let me cover about the prudential provisioning part of it.
Speaker #3: We have almost made 1,300 crore of prudential provisioning on the NP and VAT debt. Need-based prudential provisioning, considering our roadmap for ACL migration. Mind you that we had also had a floating provision of almost 2,500 crore earlier.
Speaker #3: So the bank is buffering it balance it in terms of our ACL migration, and that is what we have made we have also made a contingency provision of 300 crore.
Speaker #3: I mean, over and above 1,300 crore. Typically to take care of the change in valuation on the both in terms of the debt market and equity market, which continues to be volatile.
Speaker #3: So roughly around 1,600 crore both in terms of I mean, the NPA provision and also the contingency provision we have made cushion in the balance sheet to take care of the future requirement as far as the provisioning requirement is concerned.
Speaker #3: With this, the net profit at 6,532. Again, this is the first quarter in many quarters like this is the highest ever rather. We exceed at 6,000 crore of net profit.
Speaker #3: If the prudential provisioning is not done, the profit would have been higher, but then the prudential provisioning has been made just to take care of our migration towards ACL to buffer the balance sheet.
Speaker #3: The capital continues to be strong at 16.61. Two more points I'll just cover. Before I end my and give you the guidance with regard to the bank's balance sheet.
Speaker #3: One is that the bubble too has come into live in this quarter. And the bubble too has many unique feature in terms of I mean, Voyage I mean, communication there in the bubble too.
Speaker #3: And also it is AI powered. Similarly, on the cybersecurity, we announced a mascot call Cyber Viru, and that's getting very well received. We had earlier also, I said that on the cyber thread, we need to have the literacy part taking it to the customers, and we have been very aggressively pursuing the both Cyber Viru as a concept to create cyber awareness.
Speaker #3: Let me create a couple of I mean, give the guidance that we had given last time and this time. As far as credit growth is concerned, we had given a full year guidance of 12 to 14% last time.
Speaker #3: We are upsizing that guidance from 12 to 14 to 13 to 15. So let me repeat on the credit growth from 12 to 14% guidance, we are upsizing that to 13 to 15.
Speaker #3: Similarly, the deposit guidance we had given 10 to 12%, we are upsizing that to 11 to 13%. That means 1% both up in deposit and advances.
Speaker #3: Our margin guidance on the NIM continues to be the same same 2.75 to 2.95. As I said, we are slightly more positive towards a upward bias on the margin both in Q3 and Q4.
Speaker #3: The credit cost continues to be less than 0.6. The slippage continued to be 1 to 1.25, although we have been performing much, much better for last many quarters, maybe 12, 10, 12 quarters.
Speaker #3: On the ROA front, last time we put the ROA guidance on hold. Let me articulate that. For Q2, Q3, Q4, we continued to have a ROA above 1.
Speaker #3: As you know, June there was a because of the settlement issue, the ROA went down significantly. So as against a full year guidance, what we say that this quarter it has been 1.26.
Speaker #3: But full year for Q3 and Q4 also, we expect the ROA to be more than 1. On a full year basis, we'll try to be near to 1.
Speaker #3: So this is what a ROA guidance which I put on hold last quarter. And ROA continued to be 15 to 16%. With this, again, thank all of you for joining for the call today, and we are open for question answer now.
Speaker #1: Thank you, sir. If you have a question, please raise your hand and we'll come to you. The other option is for you to type your question in the Q&A box.
Speaker #1: We'll start the first question from Joel Ribello of the Economic Times.
Speaker #2: Hello. Can you hear me, sir?
Speaker #3: I can hear you, Joel. Please go ahead.
Speaker #2: Sir, congratulations. Very strong set of numbers. I have a couple of clarifications before I come to your question to the questions. Besides this NAC stake, is there anything else in the other income?
Speaker #2: Just wanted to clarify because this is a big number. Other income has gone up by a sharply, so just wanted to clarify that first.
Speaker #3: It's only NAC is one of nothing else. Remaining all balance sheet item.
Speaker #2: Okay. Okay. So that is the main, main reason. And even the provision, sir, provisions have gone up mainly because of the prudential and contingency that you all made.
Speaker #2: This is about 1,600. Correct, sir. So just to get my math right, sir, 1,300 plus 2,500 floating you all had. So we should add these two.
Speaker #2: So it becomes 3,800. They are separate.
Speaker #3: Offering balance sheet, we have created cushion. Actually, as you migrate. At that time, we'll just decide I mean, floating would be clearly absorbed in the ACL migration itself.
Speaker #3: That's otherwise can't be huge, right? But other provisions will be used at different point of time. So we are buffering the balance sheet in terms of a ACL migration.
Speaker #3: That is what I said.
Speaker #2: For the ACL. Is this the first time you'll have done for ACL migration, sir?
Speaker #3: No, no. ACL, I said floating provision we have been making for quite a few quarters. And for the ACL migration. As far as provisioning, since we had a one-off in terms of NAC, so we thought fit to have a prudential provisioning.
Speaker #3: Just to take care of the requirement of provisioning.
Speaker #2: Okay. Okay. Okay. Okay. Now coming to my question, sir, what is the reason why you all upped your credit and deposit growth? Because you all normally stick to your this what is the reason why it gives you this confidence.
Speaker #3: Look, the June quarter also we had a very strong quarter. Almost the growth was above 15% on the advances side, particularly, and the deposit was near to 15.
Speaker #3: So June we had a strong quarter, which normally is so slow quarter for us in earlier years. Secondly, this quarter, in case you take the FCNR, the impact the growth has been almost at 18% on the advances.
Speaker #3: Deposit is also 16 and a half percent or 16.4%. So obviously, the on the slack season, we have two very strong quarter. Obviously, this is normally do better.
Speaker #3: So obviously, the natural outcome is to upsize the guidance.
Speaker #2: Okay. Okay. Sir, also to get my ROA number right, you said ROA will be above 1% for the full year.
Speaker #3: I said we put the ROA guidance on hold last time when I announced the June because we had a significant impact on the profitability because of the settlement.
Speaker #3: So what we are saying that the Q2, Q3, Q4 will hold the ROA guidance in excess of 1, right? And while you because we had a lower ROA in the June quarter, full year basis, we'll try to be near to 1.
Speaker #3: I'm not saying full year would be in excess of 1, right?
Speaker #2: Okay. Okay. Sir, we are in a you know, in a volatile time, international geopolitics, domestically, inflation is up, you know, there are some job losses also.
Speaker #2: In this you know, some states also suffering from drought, we are not too sure of the monsoon and its effect. In this scenario, just an outlook you I know that you all have relied on the first two quarters of performance to up your forecast.
Speaker #2: But just an outlook on what's the pipeline looking like and from where you expect demand.
Speaker #3: Well, if you look at Bank of Baroda, I mean, we typically the December quarter and March quarters are the busy sitting quarters, and we normally perform very strong in these two quarters.
Speaker #2: Right.
Speaker #3: Considering of I mean, the headwinds that we talked about in the current scenario, but if you look at the retail growth, it still continue to be almost my RAM growth is almost 18 to 20%.
Speaker #3: The retail growth is 18.5%. MSME 21.1%. So in that scenario, I don't think a challenge in terms of the geopolitical impacting I mean, this industry in a big way where the growth can be less.
Speaker #3: I was just saying it's another GDP for I mean, the next quarter it is coming at 7.6 somewhere, right? Condition on a when I mean, and now actually, one thing that this year, the FCNRB has given induced a significant equity within the bank.
Speaker #2: Right.
Speaker #3: Bank of Baroda rather we have not utilized full liquidity. We have stored deposit. Suppose I put it in that word, stored liquidity rather in that way.
Speaker #3: So this we used to fund the advances both in December and March. So considering on the scenario, we are quite hopeful that a overall 13 to 15 for a full year basis and in the same way, like on the deposit up to 13% will be in a position to achieve.
Speaker #3: And that's what our normal trajectory as on today talks about with regard to the numbers there.
Speaker #2: Okay. Sir, my final question, you know, this case in the UAE with BR Chopra, and they have said that they have filed suits you know, there are a lot of media reports also.
Speaker #2: I know that you all have issued a statement yesterday you all settled this case earlier. I'm assuming that there was a point where I mean, you all also made a party to it.
Speaker #2: So you all had to settle it. But now that he's also claiming more he's basically claiming more from the bank, and he's saying that he's be claiming just your comments on what how are you all looking at it.
Speaker #2: I know that you all have said that you all have still not seen the suit or the filing, but just your comments.
Speaker #3: It's actually expecting this we had given the I mean, the exchange notification yesterday, right? So.
Speaker #2: Yesterday. Yes.
Speaker #3: In contested allegation, we can't comment as a principle on a contested allegation. Secondly, the case the same case is subsidized in the the overseas UAE vis-à-vis the principal individual.
Speaker #3: We will also decide our recovery action against the principal individual will continue. So we stand at the same level as in today as we speak, right?
Speaker #2: Thank you, sir, and all the very best for the rest of the year.
Speaker #3: Thank you very much.
Speaker #1: Thanks, Joel. The next question is from Ashish Agashe of PTI.
Speaker #2: Thank you so much, Firoza. Hope I'm audible, sir.
Speaker #3: You are audible, Ashish. Please go ahead.
Speaker #2: Yeah. Sir, how much of the 8.8 billion has been deployed as of now? Because in the investor presentation, there's a 60,000 crore mention of a leveraged loan book as well.
Speaker #2: So how much of it is deployed? How much of it you plan to deploy or is there some cutting of high-cost deposits as well which you have done?
Speaker #2: How is it, sir?
Speaker #3: No, you said right. Actually, I use a word called stored liquidity. So as on today, in terms of the money that we received out of FCNRB, which is converted into rupee through a swap route, almost 74 odd thousand crore, 75,000 crore mostly that we have stored liquidity at some I mean, some form.
Speaker #3: And there is going to be utilized in the December quarter and March quarter. So in that way, the reduction in bulk deposit because you can reduce bulk deposit to the extent of the reprice deposit.
Speaker #3: You can't reduce the outstanding bulk deposit. So the bulk deposit has seen some around 10,000 crore of reduction as on today as you speak for September.
Speaker #3: But a significant bulk deposit can also be I mean, on repricing, we may not contract them at a higher rate. And this liquidity is going to help to reduce those.
Speaker #3: That can happen in December quarter.
Speaker #2: Okay, sir. And sir, what is Joel had also asked this, what is the pipeline of corporate loans which you see going ahead where significant amount of these deployments would be probably happening and which sectors are you seeing the demand, sir?
Speaker #3: See, as I said, our retail and agri continue to be around 20%. It has been the last for last many quarter. If you look at the MSME growth this time, and it is also for past few quarters, it is almost at slightly above 20% this quarter it is 21.3%.
Speaker #3: If you look at the corporate that we have given at 6.4%, June it was 15.4% almost the corporate growth. The core corporate has grown almost by 12%.
Speaker #3: The mid corporate has gone by almost 26%. The only segment where there is a some kind of a degrowth or a lower growth is on the fine price asset book, right?
Speaker #3: Obviously, when the rate transition happening, we wish to pass on. In case we are not able to pass on, possibly we will not like to contract it.
Speaker #3: So in that scenario, the corporate has seen 6.4% growth. As on today, if I look at the pipeline, almost we have 60,000 plus pipeline with us with regard to I mean, to be process and sanctions, sanction not disburse.
Speaker #3: So there is a strong pipeline. Secondly, we had given guidance earlier also which we still stick to it for a full year basis on the corporate loan book we are expecting more than 10%.
Speaker #3: So considering that the demand is there in the market, MSME the demand is very strong. Supported by a couple of government initiative with regard to the guarantee scheme and all those.
Speaker #3: And I think the demand on the corporate or the mid corporate or the MSME continue to be strong for December and also for March.
Speaker #2: Okay, sir. And sir, what is the estimate of money required for the ECL transition? And subsequent quarters would we also see some elevated provisioning on the prudential basis possibly?
Speaker #3: See, ECL last time we said there is a one-time impact of the CIR and there is a recurring impact on the I mean, on the credit cost.
Speaker #3: One-time impact last time we said it would be almost like 125 BPS, right? And that roughly translate to 12,500 crore on a thumb rule basis.
Speaker #3: We are already holding a floating provision of almost 2,500 crore which can be adjusted as per the guidelines, right? So in that way, the the remaining impact on a five-year basis can be 20 25 BPS at best, right?
Speaker #3: Secondly, on the recurring impact which can elevate the credit cost, there are two calculation. One is a gross basis and the energy net basis.
Speaker #3: So gross we expect the credit cost can go up to the extent of 30 to 35 BPS and net we can expect between 20 to 25 BPS.
Speaker #3: Our credit cost guide I mean, guidance has been 0.6. We are holding since long. This quarter if you exclude the prudential provisioning, the credit cost is at 0.18.
Speaker #3: So earlier also we said within our guidance we'll be in a position to absorb the impact of the ECL.
Speaker #2: Okay, sir. Thank you so much. I'll come back.
Speaker #3: Thanks, Ashish.
Speaker #1: Thanks, Ashish. The next question is from Abhijit Lele of Financial Express.
Speaker #3: Yes, Lele sir, please go ahead.
Speaker #1: Sir, you'll have to unmute yourself, sir.
Speaker #2: Hi, good evening. I will straight come to the FCNRB deposits accretion. How much actually you have given the loans to the NRIs to make the FCNRB deposits?
Speaker #2: That is, you have raised about about 8 billion or so to for that, how much of loans actually have you given from your international branches?
Speaker #2: That was the one question. The second was about the you are ECL prudential provisioning that you have done as a roadmap. Would that be a every quarter now you will try to find out some ways to build that kind of a prudential form so that you are transition becomes much and much easier?
Speaker #2: That took place.
Speaker #3: So thank you, Lele sir. On the FCNRB, look, the loan at the leveraging is part of the scheme itself. So let us not segregate the deposit and the overseas loan.
Speaker #3: So we have mobilized 8.08 billion of FCNRB deposit and 70% of that would have been a leverage I mean, advances which you have come as a deposit therein.
Speaker #3: So that's therein I mean, all the banks and all the system and the leverage is part of the scheme itself. Let us I mean, make it clear on this.
Speaker #3: So the 70% of that would have been the leverage I mean, loan which would have from the international the money would have come to India as a FCNRB deposit.
Speaker #3: And the leverage is part of the scheme that is what I can say. Prudential provisioning, let's say the ECL migration glide path had come long back.
Speaker #3: And we have been trying every time to buffer the balance sheet in a different way if there is a leeway for us to do that.
Speaker #3: The floating provision of 2,500 crore was created precisely for the ECL migration which can be adjusted as per the regulatory guidelines. This quarter NSC had given us a good what you can say uptick with regard to the profitability allowing us to make a prudential provisioning keeping the ECL or multiple other issues in do mind.
Speaker #3: So in that way, whether we do it every time that depends upon the the availability of resources within the profitability matrix of the bank.
Speaker #3: But obviously, strengthening the balance sheets creating buffer is always in our mind and we'll keep on looking at opportunity to create and strengthen it further.
Speaker #2: Okay. Coming back again to FCNRB, RBI gave you the swap sort of support, but the interest element remains the liability or the responsibility of the banks.
Speaker #2: So as far as on the 8 billion dollars, how much exactly is the annual interest outgo? Where you face the currency risk also because that's not hedged by the RBI.
Speaker #3: Look, Lele sir, actually this is a technical question, but I can answer in technical. Look, let's say on a 8 billion you pay at 6.5 or 6.75 whatever the pick rate.
Speaker #2: Okay.
Speaker #3: 350 400 million would be the interest component per year, right? In case you say 70% of this money is leverage, then obviously you are going to get those interest at that time.
Speaker #3: So you are running not running a currency risk. The balance of you are running a currency risk, right? And also look at opportunity to hedge this risk also.
Speaker #3: So in that way, I mean, the currency banks are active player in currency market since decades. So we'll be managing this issue definitely in a proper manner.
Speaker #2: Huh. What I understand is that is the interest rate oblique obligation which is coming out of interest rate part is limited which can be managed.
Speaker #3: I mean, on the deposit I have to pay interest at the same time on the leverage advances I'll receive interest, right? So the interest.
Speaker #3: The knock it off. So the balance that we need to think of a hedging or something else is a 30%. As such an basis we have being a international bank we have normal accretion of foreign currency.
Speaker #3: So really I since I've converted into rupee I'm not running a risk per se. But in case there is a requirement of hedging it will hedge it but current market is not I mean, proper now but in case there is a market opportunity we'll also try to hedge that.
Speaker #2: Okay. ठीक है। No, it's manageable. I understand that. ठीक है।
Speaker #3: We evaluate all these aspect and put that into strictly within controlled limits.
Speaker #2: Okay. I'm done with my queries. Thank you.
Speaker #1: Thank you, sir. So we have a few questions. I think we'll first go to Piyush. Piyush Shukla of ET Now. Piyush. Yeah, Piyush.
Speaker #3: For taking the question. Sir, first is you know you saw the banks or data leak happening a lot of customer data got leaked on the dark web internal bank audit a lot of them were leaked and these are very sensitive private details bank statement residential proofs.
Speaker #3: I want to understand sir there are some other banks also who have large banks who have seen these sort of things happening in the recent months.
Speaker #3: From a bank of perspective what are you doing to make sure this does not repeat and take corrective action? What is the corrective action that you have taken and and have you have you reassessed your processes?
Speaker #3: I have one one one more follow up.
Speaker #2: Yeah, Piyush sir, you said right with regard to the incident that happened we also at that time articulated and the response to the bank has been strictly as per the protocol in terms of strengthening forensic audit I mean I mean we got the entire security architecture revamp also in the in the sense reviewed and revamp.
Speaker #2: So we have taken multiple measures and the technology front just to address with regard to the cyber threat. And since you are referring the system.
Speaker #2: Too it's not specific to a bank actually the system is exposed to cyber risk right. Secondly with regard to the specific that you talked about the data that we said earlier I mean large percentage of data are unusable data only a very small data out of the one terabyte that you are referring maybe a customer data which is a disaggregated data already available in public domain.
Speaker #2: But we followed all the protocol or SOP in a similar situation which is followed globally in terms of reaching out to customer putting announce what you can say layer of protection to those customer and these are again not any disaggregated data already somewhere available within the public domain maybe in different place.
Speaker #2: So in that way the customer impact was not anything it was very negligible. But the bigger issue is to how do you strengthen the system and procedure you said right.
Speaker #2: Bank initiated multiple measures in terms of engaging consultant revamping the security architecture multiple things so as to prevent any such incident happening in the future.
Speaker #2: Saying so going by the I mean daily news that we read in multiple event happening here and there we are always on a heightened alert and we revamp the the security architecture to prevent any such incident happening in future.
Speaker #2: We are always on alert we we are investing also additional resources to strengthen the security architecture including the cyber security architecture and it's always a I think globally also you look at this particular news it's a burning news and we are all fighting the issue so that the customers are totally they are protected in terms of all these threats.
Speaker #3: Sir, one parameter cost to income ratio has come down quite sharply both on a YOI and a Q1 Q2 basis is this because of the investments you are making in the IT systems essentially what is driving this lowering of cost to income and how by next financial year or in this current financial year end where do you expect the cost to income ratio to be?
Speaker #2: Look on a terminal number which we have presented 42 I think it's a golden number in that way. So every bank would like to be at 42 but then this quarter because of the the NSC one off we have seen this I mean although NSC benefit we have not taken to books we have rather made prudential provisioning but then the impact is definitely pulling down the cost to income issue.
Speaker #2: Our normal normal target is to be below 50% cost to income at all point of time. Couple of quarters we have been successful doing that.
Speaker #2: Couple of quarters there is a I mean some settlement on I mean the the employee settlement and all those it goes up to 50 like the settlement wage settlement I'm talking about.
Speaker #2: So in that way efforts to bring it below keep it below 50 but I wish to be somewhere because we have investment I mean a couple of things that we have done in the past to invest on technology so to improve productivity therein we're also working for a transformation exercise to revamp the branch modeling so that the productivity goes and the ease of delivery is easier.
Speaker #2: In that way we like to get into a 48 level but the normal guidance we give that we need to keep it below 50.
Speaker #3: And sir finally this proposed insurance commission and distribution norms by the ILDI what what is the view that you have with regard to the proposed norms do you feel it will if if it comes as is what would be the quantum or if is what what would what would be the value that you feel could be impacted couple of other banks have said not that much both in terms of feedback sir your views on that and potential impact if it comes as is
Speaker #2: Look I mean it's a insurance sector guidelines right. So I've not been insurance I promoted insurance company and we do the distribution. So obviously the entire discussion it's a draft final not issued but obviously in case the distribution commission is reduced obviously there would be impact.
Speaker #2: But as a wealth business and a wealth income we have not very significant wealth income. If you look at comparatively we are at a much much lower scale.
Speaker #2: I would say within my PSU peers also I'm at a lower scale. So in that way the impact would be less for us. But there would be impact if there is a commission personalization happening particularly on the distribution income there would be impact.
Speaker #2: But I cannot quantify at this stage what is the impact but there would be impact on that.
Speaker #3: Thank you sir. Thank you sir.
Speaker #1: Okay thanks Piyush. Sir we have one question three questions from Ramkumar of the Hindu Business Line. He has typed them in. The first one is will you be able to sustain the current profitability growth in the next few quarters in a rising interest rate environment?
Speaker #1: The second question is given that liquidity surplus in the banking system has shrunk and credit demand is holding up. Do you expect deposit rates to go up?
Speaker #1: And the third was you wanted a clarification on what our corporate credit pipeline is.
Speaker #2: The first is on the sustaining profitability excluding the one off which again we have not taken the full one off into profitability we have made prudential provisioning to the extent of 1600 crore.
Speaker #2: I think we are that's why I had given number on the operating profit excluding the NSC impact. The operating profit was at 7700 crore and if you look at our operating profit this is something 7000 plus we have been posting for last many quarters.
Speaker #2: So taking that as a number will definitely I mean my expectation that will sustain for quarter to quarter one. Secondly as a margin guidance when I look for Q3 and Q4 this is going to be positive margin guidance.
Speaker #2: Why? Because the repo has been increased from 5th October and my 38% of the book which is linked to the repo has been reset at a higher what you can say rate of interest of quarter percent.
Speaker #2: Similarly a lot lot of sub MCL are corporate book we could able to reprice them at a higher what you can say higher pricing and for that reason we would have seen a lower corporate growth because we have been very sensitive with regard to the pricing in the system and consequently what we charge to our customer.
Speaker #2: So in that way you have another question on the liquidity I use a word called we have been prudent in terms of because you have a large FCNRB inflow and consequently generating liquidity out of the RBI window we use a word called stored liquidity.
Speaker #2: So we have kept liquidity for supporting our advanced growth both for December and March. In that way our guidance everything I mean liquidity is not a challenge rather our prudent management is going to help us in terms of upsizing our advanced growth.
Speaker #2: And corporate as you said I mean I earlier also said 6.4% is the corporate growth but within that the mid corporate growth is 26%.
Speaker #2: The core corporate which is non-PSU is almost at 12%. The segment which has seen bit of a degrowth is because of the pricing they are very high quality asset but obviously would demand a better pricing.
Speaker #2: So on a pipeline scale we are almost holding more than 60,000 crore of pipeline in terms of I mean application being processed not sanctioned or sanctioned not disposed.
Speaker #2: In that way I think a stronger growth going to be in Q3 and Q4.
Speaker #1: Thank you sir. Next question is from Shishri Sharma of ETBFSI. Shishri.
Speaker #4: Thank you Feroza. Good evening Chancellor Ramos. Questions and answered. However some specific ones MDR will soon come into force did you happen to calculate how much of a cost benefit will it result go into?
Speaker #2: Shishri I think I mean we are now it has been deferred. Secondly the timelines as a participant therein but currently it is not in place secondly secondly I also said in earlier post the MDR announcement whatever benefit the Bank of World is going to get out of MDR again 95% are not covered the P2 merchant also I mean substantial exemption therein only a segment very small segment would be impacted because of this MDR but this is a money required for us to invest into technology so as Bank of World whatever money will be getting out of this will be reinvesting into technology to improve the customer experience so in that way I think it's a very good move to strengthen the we need to take the UPI to the next stage in case we need to take to the next stage we need to invest more and more into the UPI ecosystem in the infrastructure and this is what a decision is taken and I think whatever benefit the bank is going to get we are going to reinvest the same money in the UPI rail itself nowhere else.
Speaker #4: Noted. Sir two more questions will you be looking to tap ECB OFCB RBI window and and second third sir on your credit card subsidiary could you give some outlook on what are the growth numbers that you are foreseeing by the end of this fiscal what are the trends you are seeing any any new segments that you will be entering into how is the whole subsidiary doing sir?
Speaker #2: Your first question was with regard to what?
Speaker #4: ECB OFCB.
Speaker #2: See already 1.1 billion we have raised and we we have a 4 billion mandate we would have announced but then obviously the pricing is not right at this stage pricing I mean looking at the global what is happening in US treasury and something if there is a pricing better and we are in a position to deploy that at a handful spread I mean then we'll definitely tap it but as a we have raised 1.1 billion we have a mandate up to 4 billion and the window is still till December so there is a time available for us to take a call on the matter credit card you said right Bank of World is one bank possibly the second bank to have a card business outside the bank and card of late has been one of the key theme as far as the bank is concerned and the industry is concerned just give you one data point there was a recent report where on the acquisition scale this card company in terms of acquisition is the fourth maximum in this year I mean they are incremental addition has been the fourth best so in that way that is a adequate focus on this again we want to take the card company to the next level again we are putting some new strategy the new vehicle therein so that we can have a significant growth in the card business this company is going to get much more attention as far as the bank is concerned because we strongly believe that card there is a significant potential to upsize the business and going by the customer base which Bank of World has I think there is a significant possibility potential to have a good business on the card segment.
Speaker #4: Sir any issuance credit card issuance number that you're looking at by the end of this fiscal or or if you could also talk about the outstanding book that exists as of now or and the target that you have by the end of this year.
Speaker #2: Readily data I think Mr. Mudliyar anybody can respond to the number I don't have immediate recollect on the number.
Speaker #4: Sure sir. Sir just I ask the question
Speaker #2: to Mr. Tyagi. Mr. Tyagi do you have the number?
Speaker #3: So right now unfortunately I do not have the readymade numbers but one thing I can say that as MDSAB has said that this company has garnered on a net basis fourth largest acquisition and probably we are putting up the another set of strategies how they can leverage the Bank of World franchise to increase the scale of the card distribution and card being one of the important product which is aligned with the retail liability distribution also so that remains one of the focus area for the bank also apart from the subsidiary.
Speaker #4: Okay thank you. Sir one more point on acquisition financing you already done some transactions over there any more in pipeline any quantum you could give or how is it going any more partnerships that you are looking at?
Speaker #2: Mr. Tyagi can you take this question?
Speaker #3: So as of now in domestic market we have not funded any acquisition finance however in the overseas market we are doing it for several years in domestic market we are in discussions with a couple of possible potential transactions we have announced our partnership with one Japanese bank Mizuho and jointly as well as on our own we are exploring we hope to have some you know traction on this in coming quarters right.
Speaker #4: Thank you thank you Chancellor thank you Lalit sir.
Speaker #2: Thank you.
Speaker #1: Thank you Shishri. Sir just last couple of questions one is on what is the impact of maintaining 99% of CRR on the bank and whether there is any impact in visage of El Nino on agri books.
Speaker #2: So on the CRR 99% I mean this is with regard to absorbing the liquidity from the system from the reserve bank of India and it would actually at the end of the day you maintain the CRR no earlier also used to maintain CRR only on the everyday basis you have to maintain a higher level of cash balance so maybe around 2 3000 crore is the impact which is again not very significant as far as we are concerned El Nino look the impact of the El Nino more particularly on the agri sector and consequent related sector actually many of the state like we are SLBC in three states so in concentration of the government and the SLBC would take the right call on the decision and definitely as a bank will be guided by that so if there is impact particularly on the sector like agri then possibly the SLBCs are empowered in discussion with the state government to take the right call on the matter so that the customers are taken care
