Loan-growth guidance upsized for the first time in the year (11-13% to 12-14%).

Is there any one-off expenditure because your operating expenses have gone up?

No. Actually, the operating expenses, which is almost at Rs 8,000 crore, slightly on a Y-O-Y scale around Rs 400-500 crore higher. But if you look at a couple of heads like the repairs and maintenance, the depreciation and insurance, the legal charges heads have gone up. So, these are purely transactions which requires a higher expenditure on this front. So, there is no one-off expenditure for this quarter.

Why have you kept credit growth guidance at 11-13% despite the 14.7% growth and RAM strength? Are you being conservative?

We had 11 to 13% with an upward bias, so obviously as we achieved 14.7%, we will be definitely exceeding 13% on that. One condition we would be mindful while giving a guidance is that the advances growth for all the banks have been quite strong. But deposit growth has not been to that extent because of the profile change that happened in the market. So, we will be mindful of the deposit growth while positioning the advances growth. Given a scenario, would the deposit continue to flow the same way, we will be almost at 14-15%. So that is why the guidance is rather revised positive in terms of 11 to 13% with the upward bias. That means we are expecting higher, we are not conservative, we are optimistic having a growth higher than 13%.

Where is this corporate growth (8%) coming from? How much is term loans and what is the pipeline?

Q1 is a slow quarter for us and Q3, Q4 are the productive quarters for corporate. We said we are going to hit the band of 8 to 10% and rightly for Q3, we are at 8.1%. March end, we will be hitting 10%. We have almost Rs 75,000 crore of pipeline consisting of Rs 45,000 crore of sanctions, which is yet to be disbursed. And remaining Rs 30,000 crore would be a proposal received in the process of getting sanctioned. So, the pipelines are strong. Overall, we are looking at a 10% Y-O-Y growth on corporate as of March 2026.

Where is the pipeline coming from sectorally, given the private Capex context from the economic survey?

The pipelines are broad-based. As a pan India Bank with a strong legacy, the demand is coming across all the sectors. All the 17-18 industries we publish have maintained a market share. The demand is broad based. Couple of sectors we see good demand - renewable sector, some of the energy power sector, data center, couple of service proposal in the form of LRD, Chemicals is showing some good outcomes. Somewhere may be a term loan requirement, somewhere can be an enhanced working capital requirement.

Where do you see exit FY26 NIMs given upcoming policy action?

The exit NIM has to be somewhere better than the current level of 2.79%. Q3 and Q4 would be better than the Q1 and Q2 but when we migrated to Q3, some reduction happened, the repricing happened with some lag time on the wholesale market cost because of the 10-year G-Sec slightly still being elevated. So, slightly still there are pressure on the margins. But at Q4 exit, we are at 2.88% but it has to be higher than the current level of 2.79%. Somewhere, we will be above 2.85%, rather we can be somewhere at 2.90% also.

Are you expecting pressure on cost of deposits to continue? Present credit to deposit ratio? Excess SLR?

On cost of deposit - the cost on the retail front has moderated significantly whereas on the wholesale front continue to be high. A lot of money flowing to the capital market and that somewhere with a lag coming back to the wholesale market. The global cost of deposit at 4.75% and the domestic at 4.99%. We can hold on to the yield on both the advances and investment for next quarter, possibly we can add another 6-8 BPS of the margin on the NIM side. CD ratio - we have been perennially operating within 80%-85%. This quarter is 86% precisely because the international credit deposit is more than 100%. The domestic is 83%. On SLR, we are almost at 21.5%, so roughly 2.5%-3% excess is a business statutory requirement area.

Capital adequacy has come down from 16.54% to 15.29%. Is there any plan of fundraising in Q4? On OMOs - have you participated?

At 15% and overall at almost at 17% if you add the profits, it is a very comfortable level. Obviously, there is a dip because we are growing; the advances growth is almost 14.7%. We announced two enabling provisions to the market - raise equity up to Rs 8,500 crore till March'2028. Furthermore, in AT-1 and Tier 2, last year we had a mandate of Rs 7,500 crore. We raised roughly Rs 3,500 crore, so there is a spillover of Rs 4,000 crore. As on March'2026 also, without any capital raise, will be above 17% once we add back the profit. But in case there is a need at any point of time, we have enabling capital raise plan. On OMO - yes, it's a good thing actually in the sense injecting liquidity and banks do participate. I don't know the exact number but we do participate in all OMO option.

While your Operating Profit is down, your Net Profit is up. Why? And could you repeat the outlook for cost of credit?

Cost of credit is 0.17%. Last 10 quarters average is almost 0.34%. We are revising the guidance from 0.75% to 0.60%. Operating Profit got impacted because we do not have one-off either in the Other Interest Income or any other heads on Trading Profit side. The Net Profit is slightly up by 4.5% because the provisioning requirement has been slightly lower. Last time we had a floating provision, this time we do not have a floating provision - that is a positive delta. On standard asset provision, the normalized provision is almost Rs 150 crore, which was there in the Q3 of last year also but Q2 we had an elevated number.

Your deposit costs have gone up year on year?

No, the deposit cost is one of the lowest now at 4.75%. The domestic is also at 4.99%. It has gone down. Q3 of FY25, the global cost of deposit at 5.08%, which has gone down to 4.75% now in the same quarter this year.

What was the source of treasury gains during the quarter? Did you participate in any IPOs?

We do participate in the IPO, multiple IPOs we have participated and we get good money. The Treasury Income is roughly around Rs 1,000 crore and out of that the Trading Profit is almost Rs 836 crore. The Rs 836 crore compares well with the last quarter and the same quarter last year. The Treasury Income vis-a-vis the last year, there is almost Rs 150 crore better than the same quarter last year. Our Treasury book is almost Rs 3,36,000 crore.

Given gold price volatility, how are banks cautious about gold loans?

We have 2 gold loan schemes - one is Retail and the other is Agri-gold. The Retail scheme book is only Rs 10,000 crores. The book is small. According to the RBI guidelines whatever LTV we have to maintain, the margin and what volatility is there in the price, the portfolio is regularly reviewed. As of today, there is no concern in our portfolio. Growth in Agri-gold is good. The same measures are taken. As of today, the price is elevated but we have not seen much of price volatility. Our portfolio compared to the system is not very big.

Are people taking personal loans to invest in gold/silver - is there NPA risk?

We have been saying from past many quarters that we do not drive aggressive growth in Personal loans. In this quarter our QoQ growth is 1.1%. Typically, our Personal loans are given to salaried people with whom we have signed a corporate package or with the State government. The element of speculation cannot be much in our portfolio. We are quite mindful of elevated slippages in Personal loans. GNPA in Personal loan has improved from 4.81% to almost 4.42%. The portfolio is quite well balanced, diversified and we are not a very big player in those segments.

Distinguish between total NIM and core NIM (last time 2.96% total, 2.76% core). What is comparable core NIM this quarter? Is there higher recovery income on NPLs in the NII?

Our NII is Rs 11,800 crores. The NII is purely out of the core operation, nothing one-off therein. That's a pure operation NII. The NII growth has been slightly stagnant. The reason being the interest expenses and the interest income, although there is a strong asset book almost at 15%, but there is a repricing happening on a couple of books on the asset side, and we continue to do that. I don't have a core NIM or a separate NIM, all NIM is core. In case you are talking about the income tax refund, the impact on the number can be something around 5-6 bps maximum. But everything is core and that is at 9 months, it is at 2.88%.

Recovery in written-off has doubled QoQ - what's the split, anything lumpy? And on NII growth, would we be better off consolidating growth and improving margins?

Normally I always say that the recovery from written-off is normalized at Rs 700 to 750 crores. Last quarter was slightly less, but this quarter it has gone into the level of that. We have a book of almost Rs 63,000 crore. The normalized quarter is Rs 700 to 750 crore and this quarter it is slightly Rs 800 crore plus. There is no one-off therein. On loan book - the book is entirely organic. The outstanding pool purchase as of today is only 22,000 crores, which is again going down quarter-to-quarter. The income out of this book is entirely again purely operational.

LCR has dropped sharply in the last two quarters. And CD ratio has been rising with strong growth. What are the comfortable numbers?

On the LDR or the CD ratio, we have been perennially operating at 80% plus. This quarter, the global is 86% and the domestic at 83%. On domestic will be comfortable in the range of 82 to 84%. Global side also it would be something around 86 to 88%. For the LCR, our target is always to operate around 120%. Last quarter 120%, this quarter we are 116%. We almost sold Rs 28,000 crores of investment this quarter, precisely to take advantage of the low yield and getting it replaced at a higher yield. 116% is also a healthy number, but then we will be going to operate at 120% on the LCR.

On ECL - what kind of requirement are you seeing? Why not raise coverage further and make more provisions toward ECL transition?

Our credit growth guidance continues to be 11 to 13% with upside. Deposit growth guidance 9 to 11%. ROA above 1%, margin 2.85 to 3%, slippage 1 to 1.25%, but the credit cost guidance which was below 0.75%, we have revised downward to below 0.60%. We are adequately provided. We built up floating provision of almost Rs 1,000 crores. We were one of the early banks to do that keeping the ECL in mind. The impact on the CRAR because of the ECL is one-time. On the risk weight there is significant write-back possible. Net impact on the ECL CRAR which can be spread over 5 years would be somewhere at 0.6 or 0.7 maximum. The incremental provisioning recurring year-to-year because of ECL can elevate credit cost only by 18 bps.

On ECL side - floating provisions are Rs 1,000 odd crores. Is that sufficient? And no further need to create floating provisions going forward? And on Labour Code impact this quarter?

The impact on the CRAR will be 0.7-0.6, I mean 60 bps. At the same time, the recurring provision requirement would be 18 bps on the credit cost. Current provision level is adequate almost to that level. On Labour Code - the auditors have also given in their report that there is no material impact, because one of the key impacts of the Labour Code is with regards to gratuity. As per our current employment practice, anybody joining the Bank, we assume that he stays for 5 years. So, we make adequate provision therein. There is no material impact as far as the gratuity in Labour Code is concerned.

On growth - we are closer to 10% YTD. Doesn't it appear we will easily beat 11-13% advances growth? Or is there a rundown expected on corporate?

No, actually there is no rundown here. As I said 11 to 13% with upside. This quarter, we are at 15%. Precisely that upside is to exceed 13%. Structurally, we need to be mindful with regard to what is happening on the resource side, particularly on the deposit market. My CASA, the saving has grown by 7.4%, which is one of the best in the market currently. We continue to focus on the low-cost deposit, but not be very over board into the wholesale market where the cost is slightly higher. Given this scenario, I am not relying heavily on the wholesale market, then the advances side, the growth will be somewhere around 15%, 14.5 to 15%.

If LCR is adequate, then LDR should not matter. Your domestic LDR at 83-84%, can it go up to 86-87%? It shouldn't become a limiting factor, right?

Domestic we want to be in the 82 to 84%, the optimal we are looking at domestic is 84%, whereas global can be around 86 to 88% because the international CD ratio is always higher than 100%. The point in terms of resource management - if you are referring multiple alternate resources where you can optimize cost, then we do not rely on high-cost deposit. Wherever we can optimize cost, we will go for that, not necessarily be a deposit. The solvency and the liquidity would be ensured while driving the asset side of the book. The Bank's resource profile is very strong. I do not think there is any limiting factor for that, the Bank continues to grow strong and our guidance of growing higher than 13% continues to be there without any issue.

On ECL, incremental credit costs of 18 bps - is that the first five years of transition or sustainable steady state?

Sustainable steady state. There are two impacts of the ECL. One is the impact is because of the one-time impact of the CRAR. We are netting it off - there is an ECL impact and there is a kind of reversion or pullback happening because of the risk weight getting changed as per the draft guidelines. The net impact is going to be 60 bps and that would be spread over five years. On an ongoing basis, you need to have this ECL provisioning. Our normal thumb rule calculation talks about the impact of 18 bps on an ongoing basis, year to year basis. That is why what we have done as on today, our 8-9 quarters average credit cost is almost at 0.34%. So, cushioning that, we got into a revised credit cost guidance of credit cost not exceeding 0.60% as against 0.75%.

Credit cost is supported by decline in PCR of 190 bps QoQ. Adjusted, credit cost would have been flat. How to read this?

The PCR level we need to maintain based on asset quality. Last 13, 15, 16, 18 quarters, the trending has been quite consistent, it's not a volatile number we see on the asset quality. The trending has been clearly every quarter to quarter is declining in terms of the GNPA and net NPA. We are at a good level of asset quality. There is a normalized credit cycle, which we are seeing now, which is likely to last for longer years. If our PCR is lower, possibly the asset quality is better. We need not provide for our books. Our last 8-9 quarters credit cost is an average of 0.34%. And that's why we are revising. (Beena Vaheed added) We are at a comfortable state with regard to PCR, because our slippages have been low and there's no requirement for an additional provision at this point of time.

What is the quantum of outstanding standard restructured loans?

(Beena Vaheed: It's around Rs. 8,000 crores.) Initially, when the standard restructure was started post-COVID, what was important is the slippage that was happening, migration that was happening. Now that has completely stopped. So, there is no concern with regard to it. It is no more a stress book as far as standard restructure but the number is Rs 8,000 crore.