Bank of Baroda earnings call

Good afternoon everyone and welcome to the analyst meet for Bank of Baroda's financial results for the quarter and half year ended 30th September, 2023. Thank you all for joining us. We have with us Mr. Debadatta Chand, the Managing Director & CEO of Bank of Baroda and he's joined by the Bank's Executive Directors and the CFO. We have a short presentation followed by brief opening remarks by Mr. Chand and then the Q&A session. Chand Sir, over to you.

Yes, good afternoon all. Before we start, let me introduce the entire team. I'm D. Chand, the MD & CEO. Along with me we have, Mr. Ajay K. Khurana, he looks up at the entire MSME vertical along with other platform function. Then, we have Mr. Joydeep Dutta Roy. He's the Executive Director looking after the retail part of the entire book, both on the Retail Asset and Liability. Then, we have Mr. Lalit Tyagi. He is the Executive Director. He is looking after the entire corporate book of the bank along with the International Banking and Treasury, and again pleasure to introduce for the first time Mr. Lal Singh, who joined as Executive Director and he is looking after most of the platform functions, including the IT and the HR. We have the CFO, Mr. Ian Desouza, whom you know since long. So, over to you, Ian.

Thank you, Sir. Can we have the PPT please? Can we move ahead? Good afternoon, everyone. So, to take you through highlights of our results. During the quarter, our global advances grew 17% supported by strong growth in domestic at 16.5% and international at 21%. Within our domestic advances, retail advances grew 22%, Agri grew 13%, MSME continued the trend of growing 12% to 13%, and corporate advances after a long time showed strong growth at 16.5%. In terms of our diversified retail loan book, our home loan book is growing at 16%. Education and auto loans are growing at 18% and 21% respectively. Personal loan growth has been 67%, but here on, our growth may moderate a bit. Next, in terms of our liabilities, our total deposits grew almost 15%. Our CASA, growth was a little muted at 4.5% year-on-year. Domestic term deposits grew at 17.7%. A notable fact here is term deposits on the retail side have shown sequential growth and the growth in bulk deposits from double digits last quarter sequentially has moderated down to single digits. In terms of our CD ratio, our domestic CD ratio is more or less in line with the CD ratio we printed in last quarter, though it is about 450 bps higher than a year ago. Moving ahead please. NII for the half year has grown close to 15% year-on-year. Operating profit strongly printed at 50% higher year-on-year. Profit after tax is also around 52% higher. ROA is a metric that we've been tracking ourselves on and for many quarters we have been at 1% plus ROA and this half year is no exception. We had 1.12% ROA as compared to a ROA of 0.84% for the same period in the previous financial year. Next please. The same metrics if you look at from a quarterly perspective, operating profit is up 33% on a YoY basis. Profit after tax almost close to 30% and ROA is further strengthened. It was 1.01 the same quarter a year ago and 1.14 now. Moving ahead. In terms of deposit costs, we have seen some spike given the continuing liquidity scenario. We had expected the scenario to start to abate, but it looks like given the signals from the Fed and the regulators that this liquidity scenario will continue and elevated rates will continue for a while. So, we've seen deposit costs go up quarter-on-quarter, but if you see H1 to H1, we have maintained the NIM, but, however, given the steep deposit hike and the advances yields being in line with the previous quarter, we have seen some NIM compression and NIM has on a quarterly basis has come down by around 20 basis points. Please go ahead. In terms of asset quality, you see that the asset quality has strengthened almost 200 bps have been shaved off our GNPA as compared to a year ago position. NNPA remains benign at 0.76%, almost 2 basis points sequentially down. Provision coverage ratio including TWO accounts remains high at 93%. Our slippage ratio looks elevated at 1.81% as compared to the previous quarter sequentially, but however, this includes the slippage of a large aviation account of almost INR 1,773 crores. If that were to be excluded, this slippage would be just 1.08%, which is just about 2 bps higher than the slippage in the previous quarter and within the range of guidance that we had given for slippage. Similarly, if we look at the cost of credit, it is a bit elevated at 0.92%, but however, we'd like to call out on the non-guaranteed portion of the aviation account, we have provided 100%, so we've taken almost INR 534 crores of extra provision on that account. We've also taken prudential provision to maintain our NNPA and coverage ratios, so put together, that's almost INR 1,000 crores of provision that has been taken to strengthen the balance sheet. If that were excluded, our credit cost could be around 0.52%. That is in line with the adjusted credit cost for the previous quarter of 0.44%. This 0.52% would also include a provision of INR 639 crores for the aviation account that slipped. Please go ahead. In terms of our collection efficiency, that continues to be strong at close to 99%. The SMA 1 and 2 CRILC above INR 5 crores is at 0.22% indicating that there's no large account that's on the horizon for slippage. Please go ahead. Our capital position remains strong. Our capital position as compared to a year ago is about 5 basis points stronger in terms of CET 1, we have 11.57%. But as you probably know, these numbers don't include the profit for the half year. If the profit for the half year was to be included ex-dividend, our CET 1 would have been at 12.47% and our CRAR would have been at 16.20%, which is very close to the number we ended the previous financial year at, which was 16.24%. That brings us to the end of my opening remarks. Back to you, Phiroza.

Thanks, Ian. Chand Sir, can I request you to give your opening remarks, please?

Yeah. Once again, good afternoon to all and the current quarter performance is a consistent in terms of the performance we had for the earlier quarter and also the last full financial year where the bank had a very healthy profit of INR 14,100 crore. So, most part of the presentation has covered the financial for this quarter, but let me make couple of comments with regard to the overall financials. If you look at our loan growth book, the loan grew by 3.4% quarter to quarter and 17% on YoY with the retail growth of 22.2% YoY and 5.2% sequentially. We continue to maintain our guidance of growing above the industry by 1% to 2% on the overall loan book. At the same time on the retail side, we need to grow 3% to 4% higher than the industry average on the retail book. We continue to maintain that the overall loan growth would be 14% to 16% and last time also I guided the market that we will be growing at 15% and this quarter it has been 17%. With the guidance of 14% to 16% for the overall loan book, the corporate would continue to grow at 12% to 13% and the retail would grow 20% to 22% and international would be around the Banks growth that is 15%. That is what the guidance is, going forward. Our loan book strategy has been to increase our retail business aggressively. Currently, the retail is around 27% on the retail book and we intend to take it to 35% in next two to three years’ time and the corporate book would come down to 35%. In terms of the NII or the Bank, already you have seen that the YoY growth is 6.5% backed by a strong loan book growth of 17% despite bitter margin compression in this quarter that we have seen. On the NIM outlook, although on H1 scale, we maintain the H1 of last year on the NIM, but there is a NIM compression and the outlook or the guidance that we are going to give it now is around 3.15% plus minus 5 bps going forward. We had guided the market earlier that we will have a full year NIM of 3.3% as against that the guidance is now 3.15% with a plus minus 5 bps around the guidance number. On the cost to income, we are again guiding the market to be around 45%. We have not added much cost with regard to the branches or manpower in this quarter. The good part of this quarter, as you would have seen in the numbers that there is a strong fee-based income and also non-interest income. It's precisely as per the last time where we outlined a strategic initiative in terms of the year of fees and flows. We are seeing significant traction on this concept. We have implemented a couple of particularly for large corporate and mid corporate the concept of Share a Wallet, account planning, and relationship management. We're trying to have the culture of sales in branches and we're driving the bank from engagement or relationship banking to drive across sell. In terms of profitability, it was a healthy profit that you have seen, a net profit of INR 4,253 crore for this quarter and this is the consistently the third quarter we are posting in excess of INR 4,000 crore. The H1 profitability grew by 52%. In terms of the last year full profit by Q2 half year of current financial year, we have almost achieved 60% of last year's full year profit. The good part is that the ROA has been more than 1% consistently for last one year and our endeavor is also to maintain this ROA guidance of more than 1% going forward. On the asset quality, NNPA improved to 0.76% with GNPA improving by 199 bps on YoY basis. We have dedicated collection vertical for RAM which is unique in the entire PSB space. Deposit has been growing in line with the industry. We can expect going forward deposit growth of 12% to 13%. We have calibrated the retail term deposit and wholesale deposit. We have given the breakup this time and you can see the wholesale growth in this quarter is around 3.4% sequentially, which continue to be 11% to 15% for last many quarters from now. So, considering the overall scenario we are trying to contain the growth of wholesale deposit. Couple of things which are very important for the first time in the entire festive campaign which is normally on, during the festival time, we have started a campaign with regard to BOB Ke Sang Tyohaar Ki Umang and it is not only a campaign on the asset side, but also on the liability side. There are five new products that we introduced on the liability precisely to give boost up to the CASA, particularly the saving. BOB, Light, BOB Bro, BOB Parivaar Family Account, and BOB SDP Account and Baroda NRI Pack Account. We are seeing significant traction on all these deposits and I feel that this campaign going forward would push up my CASA further at the same time allow me to contain the bulk deposit and consequently improve or optimize on the NIM side. Thank you very much. We'll go for the question answer now.

We now open the floor for question and answer. I request everybody who has to ask questions to raise their hand. Please restrict yourself to two questions at a time, so that everybody gets a chance to ask. We'll wait for five seconds for the line up to populate. The first question is from Jay Mundra. Please unmute yourself and ask the question.

Yeah. Hi, good afternoon, Sir. First question, Sir is on your international slippages. So, that has also increased in this quarter at around INR 500-crore plus. So, A - if you can provide some details as to where that is coming from and you know, could this be a bit of a recurring nature?

So, good afternoon Jay. Its one account which slipped during this quarter and this is one account which is fully asset based. So, it's typically because of some liquidity issue, the account has slipped. We are hopeful that maybe in the coming quarters the asset is a good quality asset and it will be upgraded also.

And which segment would this account be, Sir? I mean which sector?

It is on the typically, the real estate sector.

Okay, okay. Sure. Secondly Sir, you have revised your NIM guidance. Is this more, I mean we can see that the yields have started to flatten whereas cost of deposit is still rising? So, would that trend sustain, that yield, you know, barring the loan mix thing, barring the loan mix improvement, the yields would be more or less flattish and the cost of deposit could keep rising. Is that the way to look at it?

A couple of things happened last time. We gave a guidance of 3.3% on the backdrop where there was an outlook at that time that the rate of interest would reverse in Q3 or Q4, but since then, the outlook has completely changed and currently if you look globally also in here in India, the outlook is higher and going to stay for longer. So, on that particular outlook, there was a cost impact therein, but if you clearly see the cost impact mainly came out of the term deposit. So, if you look at the current numbers that you have declared, we are going to have a containment on the wholesale deposit and cost on that. So, now if you look at the outstanding, the entire cost impact has come in this quarter. So, going forward, I don't expect any further cost impact on the cost of deposit because of the higher rate in the term deposit. At the same time, as a strategy we have pushed aggressively with regard to the saving and CASA. Saving, I've already announced a couple of schemes where there is traction going on and on the CASA front also there is relationship manager again on the entire retail liability piece, we have changed the structure in terms of how do you deliver this product. So, we implemented a relationship management concept therein. So, I'm thinking that going forward the CASA would grow slightly better than what we are looking at currently. At the same time, clearly we will contain the wholesale deposit and I don't see any impact of further rising on the cost of deposit going forward and at the same time, maintaining our asset quality and the return on the asset and then possibly the NIM guidance that we are doing is going to be maintained.

Understood Sir. And Sir, just if I can ask this account which has slipped in the overseas? This is from which country I mean because you know we have grown overseas book at a rapid pace in the last year. So, just wanted to check you know if there is any country which I mean you mentioned the real estate, so if you can also share the country where this had slipped?

It is in the Middle East. It is not in the US market or any other market, it is in the Middle East.

Right, right, right. So, okay and this is no India linkages, right, the group would be Middle East based only or this is like you know India based or having some JV kind of a thing?

No, I don't think much of India exposure, they are in, but then it's basically a UAE entity. Khurana saab, anything you want to add on this?

No, it's a company having business everywhere, but they're based in UAE only, not here.

Okay. Thank you, Sir. I'll come back in the queue.

Thank you.

The next question is from M B Mahesh from Kotak Securities. The Bank has reported a strong income in recovery from write off. How should one look at the contribution in second-half of FY24?

Okay. Khurana saab, can you take this question?

Yeah, few one offs were there during this quarter, but you know maybe little bit here and there, but we are expecting the next two quarters also, a little less than this in write off accounts.

The next question is from Rikin Shah of IIFL. Would you please elaborate on what is driving the strength and fee income growth and is it going to be reoccurring in nature?

Yeah, it's very good, this typically is the strategy that we last time said that the Bank is keenly focused on the initiative called fees and flows. So, the aspect of fees that we have seen this year is particularly on the large corporate, in the mid corporate we implemented the concept of relationship manager and the idea of relationship manager is to measure the SOW, the share of wallet of all these accounts and try to leverage the main relationship for multiple other engagement and that's seeing now good traction therein. So, it's something strategic, it's something structural now, and we expect going forward, the growth would continue to be there in this particular front.

Thank you. The next question is from Kunal Shah from Citi. Please unmute yourself and ask the question.

Yeah. Hi, Sir. So, particularly on the recoveries from write off, so, the only question was when you look at it significantly higher amount this quarter, so was there any particular maybe particular account which is leading to that, so I think MB also asked that question, but didn't get the reply in terms of what has led to almost like INR 1,230 odd crores kind of recovery and in terms of the outlook, should we expect that to normalize to less than INR 500 crores kind of a number or we should see this kind of trend because that is supported the earnings this quarter in particular?

Khurana Saab can you take it and then CFO can join then.

Some INR 400 to 500 crores was one off in this quarter that is one ILF account was there, but what we see is in next two quarters also there are few accounts lined up. So, we are expecting almost whatever we have recovered in half year overall. For 10% here and there we should, we are expecting this.

I agree with Khuranaji’s view. So, we should see around 2,000 crore level for the H2 of financial year 24 similar to H1.

Okay. So, that kind of a recovery will continue in H2 as well?

Yes.

Okay. Great. Yeah. Thank you.

The next question is from Sushil Choksey. Please unmute yourself and ask a question.

Congratulations to BOB team for excellent result. Sir, my first question is our new mantra is to grow more on retail. What are the new initiatives which you would take to sustain a growth with a good margin on a year-to-year basis and does bank view that every bank is looking at retail as a priority sector in terms of growth engine? So, housing loan is concerned, auto loan is concerned, education loan is concerned, competition may not give you that kind of a healthy margin, which Bank has initiated so far. So, what would be the difference which BOB would do it if you can publicly speak about it, which would make your product more viable compared to competition?

No, that's fair. Thanks for the question. On the retail asset side, consistently we're growing higher than the market. I mean that is what, it's not one quarter, it has been almost now seven, eight quarters where our growth is higher than the industry average. The second aspect is very important. Recently in terms of structure of all these branches, we have segmented branches in the entire Bank now in terms of retail oriented branches, priority sector oriented branches, corporate branches, and all these branches as I said also initially there is a clear sales focus now and the sales focus in terms of implementing some kind of a relationship management concept about their RMs should be there now in all these branches more than what it used to be earlier, one. The second is clearly in terms of generating bulk leads also one separate section looking into bulk leads in all these segments like if I'm talking about housing loan or a car loan or an education loan or personal loan, we are more going for bulk also. Thirdly, if you look at Bank of Baroda in terms of other digital delivery, particularly I'm talking about the digital lending platform. So, the delivery in terms of all these loans are, I mean very competitive service the market. So, I'm typically referring the TAT in terms of the delivery. So, already we do have a bit of delta over the market average. Best Bank can be growing much higher than me. I know the bank that we are talking about, but in terms of market average, I am slightly growing above the market average and that's already the USP as far as Bank of Baroda is concerned and I think the new initiative that we started to make the organization more sales focused and more of a digital orientation in terms of process delivery, one thing also last quarter we announced that we have now the regional processing centers for retail asset sanction at the regional level, which earlier used to be at a centralized level. So, that is a bit of decentralization they are in, but the same time we have ensured that the underwriting standards are clearly maintained in those centers. So, a lot of churn also happening within the Bank to drive it further and I think the market is growing also across this segment across all banks and since we have a guidance of growing slightly higher than the market, I believe we're going to sustain this going through. Anything, Joydeepji you want to supplement to this or?

No, I think you have covered beautifully. Just to add one more thing that on the asset side, we are also giving due focus to various channels even within a product, for example within housing loan also we are looking at different types of channels through which we onboard customers and give more loans etc. So, there's a builder channel, the DSA channel, the aggregator channel, the branch channel. So, all of these are now given proper focus and teams have been created, which again would help us, do much better business and also that guidance of doing better than the industry in terms of retail being 4% to 5% above industry, that continues and the focus on relationship at the branch level, which has been a recently introduced concept and which MD was talking about that again would help us even though the margins may be small, may be competitive in terms of the competition also giving very fine rates etc., but at the same time these are loans which have a lifetime value and customers are there for longer tenure. We need to build the relationship and through cross sell etc. there is a lot of value that we can generate. So, that relationship management also helps us in that direction.

So, basically, you're saying that formalization of economy and Indian economy going to 5 trillion would enhance the potential on a consumer demand far larger than where we stand today?

Very fair, very fair.

Secondly Sir, based on current Fed outlook which has emerged post Wednesday meeting, the answer you are expert at treasury don't you see what was the turmoil going into the next second-half and based on RBI governors speech at Business Standard event and the way world is transformed between Wednesday and Friday for yields are concerned, don't you see second-half being a little different compared to what the fear in the street is?

See anyway being a market person also I believe we normally anticipate the market, not predict the market. So, in that way my current anticipation is that the levels have already peaked out because market moves ahead of most of this event. In terms of the stance part, everything, I think the yield is a lead indicator to give direction to the market. So, in that way particularly from the treasury side, I do not expect yield to go up further. Already it is finding near peak level that is what my sense is. Market has resilience. We have seen a different scenario also particularly our bond market is much more resilient, much more robust, not that volatile like any other market globally is. So, in that way if I find not much of what you can say any adverse impact come out of the yield movement in the next quarter or going to be the next half year. We are broadly at this level discounted most of the factor at least for near future subject any geopolitical issue not disturb, I mean disrupting the market globally also Indian market. Otherwise fairly balanced level of the 10-year yield and I don't think in terms of rate of interest anything is going to be much of change in the coming quarters, rather in case you get fair lead with regard to the rate reversal then possibly the levels will start discounting that and start moving in a positive direction.

Thank you, sir. The next question is from Abhishek Murarka from HSBC. What is the breakup of your loans by MCLR, EBLR at fixed rate? How much of MCLR linked loans are likely to re-price in the second half of financial year? Can that lead to increase in your yield specifically?

I believe, Ian, you can correct me, the MCLR link is almost now 52% now.

Yes

There is a bit of book still left to be repriced at the MCLR but then going by the cost metrics I believe there is still upside for MCLR going. Because normally MCLR moving with a lag vis-à-vis cost of deposit. So, still there is upside rather than the repriced book giving me a better ROA. I believe possibly the level of MCLR is going to give me a higher yield on advances. So, that’s the sense correctly, in terms of repriced books there is upside but then that may not be significant to offset the cost of deposit which we have seen this quarter. But I believe the level of MCLR needs to re-align and then possibly can give further income pushing up the yield further. Is there anything, Ian, you want to supplement on it?

So, there is a very small proportion of less than 30% which is probably up for repricing. Bulk of the book is already repriced. And it is the cost pressure that has to be transmitted to the MCLR.

Thank you, sir. The next question is from Prakhar Agarwal of Elara Capital. His questions are in 3 parts – what explains strong growth in international deposits? Second question, can you please explain the product differentiation on the new products that you mentioned. Is it rate or something else? And third question is given that have to give our NIM guidance how you look at ROA guidance now?

Okay, so let me address the last first, in terms of NIM and ROA as far as the Bank is concerned, we have put NIM and ROA on the same platform. Rather if you want me then I will flip it, the ROA and NIM combination that is what strategy the Bank is going with forward. We continue to hold our ROA guidance in excess of 1 because NIM is purely driven by the interest expenses and income earned whereas ROA is driven by a lot of fee and non-interest income that you are generating based on our concept of fees and flows. So, apart from the normal income which is captured in the NIM, I believe my fee income and non- interest income the growth is going to be significant in the coming quarters. And in that sense slightly because of the cost pressure that we have seen this quarter, we have revised the NIM guidance. But ROA continues to be in excess of 1% rather the last quarter is at 1.14% which is a very healthy one, not only for us for the entire industry also. So, we will continue to have ROA in excess of 1%, and at the same time try to optimize NIM based on the evolving scenario which the market will offer to us. The second is regarding the new products that we have talked about. In terms of the pricing - there is no differentiation therein, but the differentiation is more on the offerings. The offerings are like the first product BOB LITE we talked about is 0 balance. So, in terms we are slightly looking at a growth with 0 balance. But then with certain balance then a lot of advantage will accrue to the customer in case they maintain the balance. These are all on the services and offerings rather than the pricing, the pricing will continue with the same like a general saving product in that particular segment. Joydeepji, do you want to add anything on this – the product side?

Just to add that this time the focus has been on bringing out a very comprehensive offering in the festival campaign, not just focusing on the asset side but also on the liability side. And in the liability side, there is a range of products that have been introduced, not just one or two products addressing different segments of customers. As our MD was mentioning about BOB LITE, this is again sort of a requirement that many customers themselves responded in a survey that they don't want any minimum balance requirement etc. But at the same time they want offers and very attractive offers, etc., on various transactions that they do. This account is basically a 0 balance with no minimum balance required, but at the same time very high on offers and if people have to, sort of take advantage of the offers they automatically end up keeping balances which also helps the banks. There is a BOB Bro account which is targeted to the student population. There is a Parivar Concept account which has been introduced which is like a family plan in a telecom or in normal phone accounts that we have, we have this concept of a family plan. Similarly, here we have introduced a family plan for group of accounts belonging to the same family where there is no individual balance requirements for each individual family member but for the family as a whole if they meet some total balance requirements then they get advantages in terms of various benefits, etc., from the Bank. Then there is a re-positioning of our RD product as SDP or Systematic Deposit Plan which is both possible for a fixed amount or a flexible amount. So, a lot of product features and innovations have been brought about which are not on the pricing side but in terms of giving what the customer wants and addressing some of the customer needs. And I think that would be much more helpful for the bank as a part of its CASA strategy also in the CASA and deposit build up, plus also addressing the needs of the customers.

So, addressing your first point with regard to the international deposit growth typically in international market we raise the deposit based on our asset growth. But this quarter the growth in the deposit is slightly higher than the asset so as to fund the asset, point one, and secondly to make some interbank operation therein because that gives a bit of differential rate of interest. And some part of global market on the investment side also looking very, very attractive. Just typically a mix of the asset strategy, investment strategy and international operation for that matter. But broadly we guided the market both in terms of asset and liability international book. There is a moderation that happened vis-à-vis Q2 over Q1, and going forward it will converge to domestic growth. So, maybe Q3 and Q3, the numbers would almost converge to domestic growth excluding the USD and differential, it would normalize to the domestic growth.

The next question is from Manish Shukla from Axis Capital, please unmute yourself and ask your question.

Good afternoon and thank you for the opportunity. The previous three quarters you had a very decent growth in bulk or short term deposits. Now in Q2 obviously you have not grown but these past deposits will come up for repricing over the next two quarters. So, what kind of cost of funds impact they are likely to have.

That is a fair question, if you look at current quarter, the growth in bulk has been much lower as compared to earlier quarters, and this is a conscious strategy to grow slightly lower in that. But you are right, there is going to be a repricing of all these deposits mobilized in earlier quarters. But if you look at the retail term deposit also the growth is now higher as compared to earlier quarters. So, my first objective would be to reprice the position of deposit not in a bulk segment but in the segment of other retail or on the CASA segment because we are pushing CASA aggressively now. At the same time on the level of bulk deposit cost I think now levels are peaking out now. Actually, I don't think much further costs are coming on the bulk segment rather I would think going forward subject to the liquidity being consistent then there can be a moderation also possible, in that case I will get the repricing benefit. But the third aspect which is very important for bulk segment like that, thinking through maybe in Q1 of the next financial year or Q2 of next financial year if there is a rate reversal coming then one of the biggest beneficiary of that would be Bank of Baroda because then we have this bulk segment going to repriced in those quarters. So, it is a combination of multiple things. But then on the cost side, I am not expecting or not anticipating any significant change vis-à-vis the current cost on bulk deposits.

Sure, my next question is post the RBI restrictions related to the BOB World App what are the steps you have taken within the Bank and can it have any near medium term business impact.

No, that we have clarified, if you see one of the notes to account, it is amply clarified by the auditor also. So, a scenario like this where there are basically two impacts, one is service another is account opening. If you look at my account opening through BOB World the percentage was very, very less, less than 3% or less than 2.5%, so it not going to impact me. And normally a scenario wherein for a new customer I am onboarding into a platform then there are multiple channels where these channels go up significantly high. So, if you look at my deposit that let’s say 10th October is the date and today, my all segment deposits have been much higher compared to the level at that time. So, business is as usual for us, so we don’t see any impact because again, yes, there are certain services we are unable to provide to new customer. But then they have multiple channels available to do their transaction. So, in that way the impact is minimized or impact is very less. So, going forward again if you go to the main part of it, there is a regulatory action and there is a compliance for the Bank on the regulatory action. So, a lot of action we have already done in terms of compliance and we are hopeful that the ban is revoked at the earliest on the matter. But in terms of business the business is as usual. We have strengthened channels to compensate any loss that is accruing out of bringing on new customers, existing customer having seamless service, rather the number of financial transactions and non- financial transactions through all digital platforms have significantly gone up during this time. My other channels are working very strongly at this point of time.

Okay. So, the last question is on fees, I mean fees have been a very big growth engine as you mentioned, but if I see over the last one year six months the rating profile of your corporate book has gone up and you are saying that the fees is coming from the corporate channel. So, can you give a specific example in terms of either the type of the product or the type of the corporate which are driving these fees. Because typically what we understand is that making fees from large corporate is a difficult task. You seem to be doing it, so, what is it that is working for you.

So, generally what happens there are couple of things that we implemented, you are precisely right on that. My asset quality in terms of earlier also multiple times we have said on the corporate book, underwriting is a very key aspect for Bank of Baroda in terms of underwriting standard. At the same time when we implemented the SOW concept or the relationship management concept we are aggressively pushing for the cash management business now. And I will just give you a data point without actually sharing the data, the number of customers we would have on boarded in the last 6 months are almost equal to the number of customers we have on boarded for the last many years. So, a significant push is on the CMS, the moment you push the cash management service there are a lot of flows being captured and there are charges therein. So, this is pushed up significantly. Thirdly, when we do all this processing fee and all, let’s say a year back or a year and half back all these customers the base pricing used to be a particular level but then all these charges also because liquidity was abundant was very competitive and the charges also are very low, now we are revisiting all those charges in terms of what is the actual you need to charge in the current market. So, even if your base price may not go up significantly high but at the same time the charges are being reviewed and they are getting captured. So, in that way there is a good traction therein. Tyagi saab, anything add on this further?

In fact, you have covered all, all I can say that right now we are able to capture more share of the flows of the customer and we have been able to engage them bit more and that’s where the income is getting added up.

Thank you, sir. The next question is from Rakesh Kumar of B & K, please unmute yourself and ask the question.

Thanks, sir. So, a couple of questions I have, firstly with respect to term deposit being in the bucket of more than two years, could you quantify the proportion of that term deposit sitting in more than two years’ bucket.

See, we will provide you the data exactly but then if you look at the duration of my term deposit portfolio, I am excluding the behavioral pattern of getting rolled over again and again. But it is almost like one year two months kind of a number that talks about deposit below one year and deposit above one year. Exactly, Ian, you have the data, you can share otherwise you can share it later.

We will share it offline, sir.

Because see the reference to the question is that RBI says that in the term deposit more than 2 years in the fresh deposit transmission is only 130 bps as compared to repo rate rise around to 250 bps. So, I think there is a quite large amount of repricing is yet to be done on the term deposit side for the industry and for you also. I wanted a clarification on that front. But anyways if you can help me with that data later on it will be helpful.

Actually, I can respond to that, most of the deposits particularly on the term segment the preference is on the one year, around one year, I mean that’s the normal preference, it would do higher means slightly a tendency to put long term then they put in the higher buckets. In 2-3 years’ segment let me say that recently we were offering a peak rate in that bucket now, that revision we have made it just two months back I believe. There is one segment where again we are trying to bit of more deposit because that adds to my liquidity stability, right, so in that way there is a very clear strategy as far as we are concerned but the fair data we will provide.

Sure, sir. Can you share the NPA what we have sold this quarter so there is a reversal of provisions of close to around INR 150-160 crores in this quarter, is it correct.

No, that’s typically because of that classification. Ian, can you just clarify that.

Yes, in terms of slippage are you asking about?

NPAs sold to ARC, so there is a reversal of provision of INR 160 crores as per the notes to account.

Khurana saab

Yeah, this is correct, the figure is correct.

And secondly, sir, there is another reversal of provision of around INR 82 crores as per the notes to accounts No. 17, so if you can just reconfirm if that is also correct.

Mr. Khurana, otherwise you can provide him offline.

We will provide this offline.

Sure, sir. There is another, you know, we saw that from certain accounts….

We will take your questions offline, you can contact me because we have one more panelist who wants to ask a question.

Just the last question, sir, just a clarification again on the notes to accounts. We had close to around INR 1100 crores provision on certain accounts and now that provision has come down to INR 810 crores. So, what has…?

Correct, I will take that question. It is included provision on the aviation account, that account has slipped and that provision has now shifted to NPA provision. It is no longer standard account so we have released that provision and the provision has been made under the NPA provisions.

Can we go to the next person?

The last question of this evening is from Mr. Chintan Shah of ICICI Securities, please unmute yourself and ask the question.

Thank you for the opportunity. Just two questions from my end. Firstly, on the domestic LDR, sir, currently CD ratio is 78% on the domestic side. So, is there any scope for taking it further out from here or would it stabilize at these levels that is the first question.

So, obviously we would like to, for a NIM accretive measure we would like to have higher CD ratio, but then again all would depend on the kind of growth that you are looking at in all the segments. Would you improve yes, we would definitely like to have higher CD ratio.

But sir, is there any upper ceiling or something like you are ….

There is no upper ceiling, it is only optimizing the CD ratio that is how we look at. Because CD ratio is not the only parameter that we look into, it is the combination of many parameters we evaluate CD ratio. There is no upper ceiling but obviously we try to optimize on the CD ratio.

Sure. Sir, secondly on the slippages we had one large aviation account and one international book, there would be some interest reversal also on account of these slippages. So, if you could quantify the amount and what would be the margins which is 3.07, what would be that if those two slippages were not there. How much would that be?

Khurana saab or Ian, could you?

We will come back to you, you can ask me this question separately but these accounts were in stress for quite some time so it should not be a big amount but we will come back to you on this.

Sure, that’s it from my side, thank you.

Thank you, everyone, that’s the last question we will be able to take today. Ian, can I request you to give the vote of thanks, please.

So, thank you everyone for joining us on a Saturday afternoon and as always it has been a pleasure to have you with us, look forward to seeing you the next time around, thank you so much.

I thank all of you, thank you. ************ Bank of Baroda Media Conference for Quarter ended 30th September 2023 4th November 2023 Participating members from the Management Team of the Bank  Mr. Debadatta Chand, Managing Director & CEO  Mr. Ajay Kumar Khurana, Executive Director  Mr. Joydeep Dutta Roy, Executive Director  Mr. Lalit Tyagi, Executive Director  Mr. Lal Singh, Executive Director  Mr. Ian Desouza, Chief Financial Officer (CFO)

Good afternoon, everyone and welcome to Bank of Baroda‘s financial results for the quarter and half year ended September 30 th, 2023. Thank you all for joining us. We have with us today, Shri Debadatta Chand, the Managing Director and CEO of Bank of Baroda a nd he's joined by the Bank’s Executive Directors and the CFO. We have a short presentation, followed by brief opening remarks by Mr. Chand, and then the Q&A session. And sir, over to you.

Good evening, all. I’m D. Chand, I’m MD and CEO. So along with me, Mr. Ajay K. Khurana, the Executive Director, he looks after the MSME vertical, including Recovery and some of the platform function. Then we have Mr. Joydeep Dutta R oy who is the Executive Director, he is looking after the retail asset, the retail liability and some of the platform function. Then we have Mr. Lalit Tyagi, he's the Ex ecutive Director looking after the corporate credit, international banking and Treasury and also, I have pleasure to introduce our new Executive Director, Mr. Lal Singh. He looks after most of the platform function including the HR and the IT. And with us again, you will know Mr. Ian Desouza, who is the CFO of the Bank and has been interacting with you for quite a many quarters now. So, with this over to Ian.

Thank you, sir. So, in this quarter happy to report that our global advances grew 17% year on year, supported by domestic growth at almost 17%, international grew at around 21%. In terms of our segment wise growth in domestic, retail organic grew close to 23%, Agri grew 13.7%, MSME continued with the trend of going 12 to 13%. Corporate has picked up growth at 16.5%. In terms of our segment -wise retail book, our mortgage book grew around 13 to 14%, home loan grew 16%, education loan at 18% and auto loan at 21%. While we'll continue to see strong growth in personal loan, this may stabilize or moderate as we go forward. Next slide, please. On the deposit front, our total deposits grew close to 15% supported by growth in our domestic book at around 12% . Domestic CASA deposits growth was little softer than usual at 4.4% year on year. Term deposits, domestic term deposits were strongly supported at close to 18%. One highlight of the domestic term deposit growth is the moderation in the sequential quarter growth of bulk deposits, which was sequentially growing at 11% last quarter. It is now growing substantially lower in single digits. And we've seen sequential growth of around 3 to 4% in the normal retail term deposits. Our CD ratio, though, elevated as compared to a year ago, is more broadly in line with the CD ratio we saw last quarter that is the end of Q1. Can you go ahead please. In terms of our net interest income for the half year, we saw net interest income growth of close to 15%, NII growth close to 15%. Our operating profits supported by NII and other income grew at close to 50%. Our profit after tax for the half year grew 51% as compared to the same period a year ago. And ROA is a metric that we like to emphasize for tracking our performance, which we had said more than a year ago will be 1% and higher, continues to trend at 1.12% for the half year as compared to a little below 1% for the same period a year ago. Can we go ahead please. If you look at the same metrics for the quarter comparing it to a quarter a year ago, the NI I grew at around 7%, operating profit grew at 33%, profit a fter tax at 28%. And ROA, the metric that I spoke about earlier, is very smart at 1.14%. Can you go to the next slide. In terms of the yield on advances , you would see on a half year basis, yield of advances have gone from last year for the first half of 6 .91% to 8.42%. Yields have been flattish in terms of sequential quarter moving in just about 3 bps higher. C ost of deposits have expectedly caught up and are around 24 basis points higher than the same a quarter ago. But if you see the NIMs, the net intere st margin, which is interest income minus the interest expense that has sustained for the half year at around 3.17%. The sharp pressure on cost of deposits due to the prolonged situation on the liquidity front. We had expected the liquidity to start improv ing by quarter three, but due to various regulator and geopolitical tensions, it looks like the liquidity scenario is unlikely to loosen up very soon. So, we've seen on a Q -on-Q basis a 20 bps compression in, but that has been supported by other income, and we've had our ROA higher than the previous quarter. Can we go ahead please. In terms of asset quality, we'll see asset quali ty continues to improve. O ur GNP ratio has declined by almost 2% and is at 3.32 % this quarter. NNPA also is 0.76 % as compared to 1.16%, a year ago. A provision coverage ratio including TWO accounts remains strong at 93%. Our slippage ratio looks elevated here, it's at 1.81%. But this includes one large aviation account of 1,773 crores, if we exclude that account, then our slippage would have just been 1.08%. On the credit cost, credit cost looks a little too elevated at 0.92%. But if we normalize this credit cost or the fact that we took a full provision on the aviation account, it's 100% provided for , on an INR 1200 crore exposure. And we've taken in additional provisions to strengthen our balance sheet ratios. If we exclude that our credit cost would just be 0.52%. Please go ahead. O n the CRILC SMA for loans above five crores that continues to improve . We have just 0.22% of our loans above five crores which are in SMA 1 and 2. Collection efficiency continues to improve and is currently at 99%. Please go ahead. In terms of our capital ratios, our capital ratios are significantly strong and are significantly better than a year ago peri od at 11.57%, on CET -1, tier one is 13.19 % as compared to 12.81%. And our overall capital adequacy is 15.3 % which is better than 15.25% reported a year ago. These numbers do not include the profit for the half year. And if you consider the profit for the h alf year ‘x’ is a portion that we have to set aside for proposed dividend. Our CET -1 would have been 12.47% as of 30th, September, and CRAR would have been 16.2 %, which is comparable to the CRAR we had at the end of March of the financial year ended 23 of 16.24%. You can just quit. Now I'd like to talk a bit about the festival schemes. We have for the first time launched a festival scheme both on the liability side as well as asset. We have launched schemes that have a lot of features. We have a BOB LITE s cheme, which requires lesser or no minimum balance but a lot of features as you start to transact with the bank. We have a BOB BRO for new gen students. We have a new salary account. We have a systematic deposit plan which is rebranding or kind of a SIP fo r term deposits. We have an NRI package and we have a family account taking off from the family accounts proposed by utility companies. A family plan as it is called. On the advances side, the retail asset side we have attractively priced loans, both from the home loan which starts as low as 8.4 % to car loans priced at 8.7 %. Special offers for women, salaried, government salaried and Defense salaried and again we have a Parivar account. That brings us to the end of the presentation. Back to you Phiroza.

Thanks Ian. Chand sir - If you could please give us your opening remarks.

Yeah, thanks Phiroza. See, media friends, it's already said that this quarter has a strong top line and also bottom line. Our asset growth has been i n excess of 18% whereas, the net profit has grown by 28.4% YoY. The operating profits has grown by 33% YoY. So, in terms of profitability and the business growth we have had a very strong numbers this quarter. Let me give some of the outlook that we have g oing forward. So, as you have seen that the loan book grew by 3.4% sequentially and 17% YoY, with the retail growth of 2 2.2% YoY and 5.2% sequentially. We continue to maintain our guidance that we will be growing above the industry by 1 to 2% where the overall book is concerned. At the same time, the retail growth would be 4 to 5% higher than the market. Our overall guidance is that , on the overall loan book, we will continue to grow above 15%, the corporate growth would be something 12 to 13%, retail would be in excess of 20% and international growth would be aligning to the domestic growth of 15% going forward. On the loan mix again, we articulated earlier also, current retail book is 27%. We intend to take it to 35% in two to three years’ time and a corp orate book although gre w very strongly but would come down as a mix to 35%. The NI I of the bank grew by 6.5% YoY led by a strong loan book growth in spite of a margin compression. The NIM outlook which we had given last time, at 3.3% for the full year, we' re revising the new outlook now. So, the current guidance we're going to give is 3.15% with plus minus 5 BP S going forward. This is because of the cha nge in the cost matrix for the B ank, depending on the market scenario. Although we have a very tight control on the cost to income in terms of not adding much on the branch side or the manpower side. As we articulated last time, we declared a strategic initiative of the year of f ee and flows . We have seen a significant increase in the f ee side. We have been pursuing concepts l ike account planning, relationship management, share wallet and that has given a good increase in a fee as you would have seen in this quarter. Cash Management is also a ver y important area as far as the B ank is concerned. So, we are pursuing the cash management services not only for the corporate sector, but mid corporate accounts, and also MSME acc ounts. We are trying to have a culture of sales. We are moving from the transactional banking to the engagement or relationship banking. On t he profitability side, as I've already said, this is the first time like not only the first time, consistently three quarters we're posting, in excess of INR 4,000 crores of net profit. And our full half year profit has been INR 8323 crore, which is a grow th of YoY 52%. We have been consistently delivering on the ROA. So, for last five quarters the ROA has been excess of one. We are maintaining our guidance of having ROA more than 1% going forward. There's a good increase in the asset quality, and NNPA improving to 0.76%. The GNPA improving by 199 bps YoY in the H1 of FY2024. We have a dedicated collection vertical that works both for retail and other segment. That's also unique amongst the PSB space. On the deposit side, clearly for last couple of quarters , not only in the entire banking industry but Bank of Baroda also, the growth has been lagging behind asset growth. So going forward, although we have posted 14.6% YoY on that deposit, but we are projecting a 12 to 13% guidance on the growth on the deposit front. One clear thing you would have noticed this time that we have given the breakup of term deposit. And the growth in the wholesale term deposit is 3.4% sequentially, which has been lower than almost 11 to 15% growth we have seen in many of the quarter s in the past. So clearly, we're trying to optimize on the bulk deposit front, moderate that growth so that we can maintain margin and revert the strategy going forward. As Ian rightly said, this is the first time in the festival time we have both on the asset side and also on the liability side different offerings for customers. We've seen in market a good traction on all these offerings. And going forward with this offering we wish to improve our CASA higher than the current percentage at the same time moderating on the bulk deposit. Thank you very much for all of you for joining today. We're open to question & answer now.

Thank you, sir. We will discuss the two questions per person. Please raise your hand before asking the question, please ann ounce the publication before asking the question. We will wait for five seconds for the lineup to populate. The first question is from Siddhi Nayak from Reuters, please unmute yourself and ask the question.

Hi, Sir. Siddhi here. I just wanted to ask you.

Please go ahead.

So, your CASA growth is around 4%, wanted to get your sense of you said you’re going to see it moving. Also wanted to understand how you would do that. Would you prefer raising rates or what how would that be? It's my first question.

Siddhi, slightly I could not hear the full part. Can you just repeat that?

The CASA growth, I wanted to understand how are you planning to tap the CASA growth? How would you grow that that particular segment and would you prefer raising CASA rates?

No. If I answer your second question first, there is no plan immediately anything on the CASA on the rate side. But if you will see the fest ival campaign, the offerings have been many as far as targeting CASA is concerned. So clearly, one structural change that we have made in entire banking in terms of CASA that on the retail liability also n ow we're going to have relationship manager. Typically, we had the relationship manager concept typically for large corporate and mid corporate. Now going forward, we're trying to have the relationship manager for the retail liability also. We had a segment of Radiance customer having a balance as more th an 25 lakhs now we're trying to have that concept below INR 25 lakhs also. So that typically will improve the CASA and same time the offerings and the tie ups we have made like all this product that we have said there are a lot of tie ups at the back end supporting all these product. So, the moment customer goes for that you will be getting multiple benefits out of those accounts. So, in that sense, we are thinking of slightly improving the CASA. Actually, the current CASA percenta ge is 39.6% but the aspira tion is to reach around 41% in near future. Yes, Siddhi are you there or…

Siddhi, do you have another question?

You can go to the next person in the queue.

The next question is from Ajay Ramanathan of Financial Express, please unmute yourself and ask the question.

Good evening, sir. Am I audible?

Yeah, you are audible, Ajay.

A couple of questions that I had, first is of course, we heard the news about the Chief Digital Officer having resigned. So, are you on the lookout for a new person in that post and what would be your strategy on digital going ahead?

Okay, you said that the CDO, see, as we have said earlier , also a couple of things came in the media also, we have taken action on the large set of people in the field. So, as far as the CDO is concerned, it is a cessation of service induced by the Bank and that's termination right. And currently, we are putting somebody as a CDO. So, if time comes, then we will look out for any new CDO.

Okay, also on your recovery from write offs, I see that it has improved sharply in this quarter. Are you taking any specific steps to improve recoveries, and also is there any large account that you have been able to recover.

Mr. Khurana, can you take up this question?

Yes. Our recovery campaigns are going on continuously. That is for smaller recoveries below one crore. But as far as , this good recoveries in write off accounts are there, there are certain big accounts where we got recovery and few other accounts are also lined up in next two quarters. So, this whatever our half year, whatever we have we recovered in writ ten off accounts similar to that we are going to recover in next half year.

Okay. Sure. Thanks.

The next question is from Dhiraj Tiwari of Economic Times, how much recovery you have done from written off accounts in the last two quarters, please giv e breakup. Are you working on any strategy to attract large size bulk deposits? Thank you.

I will take the second question then I'll hand it over to Mr. Khurana. See the bulk deposit it’s a large size so anything curren tly deposit above two crore is bulk deposit. So, we do have slabs there in bulk deposit which start from anything from 2 to 20, 20 to 50. So, lo t of slabs over there. So, the Bank is always in all the slab so that depends upon the level of, what you can say, the level of all these bulk deposit rates. And that's an ongoing, all the banks do. So, as we also on the bulk deposit. So, Mr. Khurana, could you take the first question with r egard to the recovery of written off in the last two quarters?

Recovery in written off accounts in last two quarters. First quarter, it was INR 663 crores and in the second quarter is INR 1231 crores.

Thank you, sir. The next question is from Abhijit Lele of Business Standard. Please unmute yourself and ask the question.

Good afternoon. Are you able to hear me?

Yeah, I can hear you please go ahead.

Now, taking ahead from this ‘bob World’, now one was there is a RBI curb on you. What steps you have taken for th e corre ction and what time that have you committed to RBI, to complete it and be open for its audit, so that you get permission to resume the work.

Yeah, as far as the ‘bob World’ is concerned, all of you know that there is a regulatory action and the regulatory action, we need to comply on some of the action points which the regulator has given. Already, we also clarified at that we have started working on some of the action points long back. And there is substantial compliance on all those parameters. It's a regulatory action. We have been engaged with the regulator in terms of compliance of all the se action point. And I can't give a timeline, but then obviously, we hope that the ban is revoked and we need to satisfy to the RBI, the re gulatory requirement of all these at some point, we're working sincerely on that a lot of compliance has happened. About going forward, we hope that we will fully comply with the action points of the regulator, we are a regulated entity and we need to comp ly fully on the regulatory action and thereafter hope that the ban will be revoked.

Sir, one thing is what RBI gives a clearance that I understand we can’t give a timeline, but what timeline you have set for yourself to correct yourself a nd present to RBI’s audit, that part I’m asking?

See as far as the processes are concerned, all the processes have been rectified, corrected, strengthen, made robust, there are multiple checks now. So, these are all cured and this is w hat we need to satisfy the regulator with regard to the robust mechanism. See the RBI action is on the customer onboarding process. So, already we are in process and we are curing data, we are complying and we will present. We need to satisfy the RBI, so t hey will give the comprehensive review on the matter and that RBI, the regulator has to be satisfied thereon, right.

Okay, another question is about, yes, that one airline account you have made a full provision what is the outlook for tha t industry of Bank of Baroda because not that all of them are in bad shape.

No, as far as outlook is concerned, we have a positive outlook, we do have exposure in other accounts. So absolutely, this is specific account only. The Airlin e, if you look at their profitability outlook, everything is improving. So, absolutely, no issue with regard to any other account that exposure we do have. The outlook is quite positive o n that but the specific account is on the legal process. So, that has to be cleared in the legal process itself. So, we can't comment further on that.

Okay, I'm through with my queries. Thank you.

The next question is from Mayur Shetty of Times of India. Please, unmute yourself and ask the question.

Yeah. Thank you, Sir. My question was also on bob World. I wanted to know what impact has it had on your customer acquisition, both on the liability and the asset side? And also I wanted to understand whether this RBI action pr ohibits you from launching any new apps, whether you can launch any app other than bob World?

No, on the first ques tion with regard to the impact. See, bob World is the service in terms of customer on boarding into bob World, in terms of account opening the percentage was very less earlier. It was less than 3% -4% because I do have multiple channels like branch banking, the tab banking; multiple channels to on board customer. So, in terms of impact, normally it so happens that because of any technical reason or a regulatory action one channel goes down, other channels do pick up significantly and that is what we are seeing now that in terms of business it's as usual for us but definitely for new customer some of the services we wish to p rovide through bob World is not available at this point of time but they can do the same activity that was being done in bob World through different platforms, different channels and they get the same seamless service. And that precisely in terms of cust omer acquisition, we are tracking the numbers. The numbers are looking all pretty good rather more than what it was the day the ban was done. At the same time with regard to any further app, we do have all the apps at present. This is a very robust platform, bob World. It has sound, secure system, active users seeded with unique number. So, absolutely no plan to have any new app and I don't think that's a requirement at this point of time. The app is a robust, secure platform that's the bob World and we ha d issues in terms of regulatory action on the customer on boarding process, please read that regulatory action clearly, and there we had some gaps and that we have strengthened and that's the process which we need to satisfy to the regulator with regard to our strengthening process and with the satisfaction, obviously, the regulator is going to have a view on that.

Thank you, Sir.

The next question is from Gopika from Mint. Please, unmute yourself and ask the question.

Hi, Chand Sir. Can you hear me?

Yeah, I can hear you, Gopika. Please, go ahead.

Okay. I wanted to ask you, so with respect to this particular aviation account now you're the second bank which is classified it as an NPA, could you tell me what is the general COC outlook on this account? Is there a potential to turn around this account since it has a major economic impact? Or are you seeing this going into liquidation mode?

See, as a manage ment of a B ank, I can't pre -empt the COC decision. COC decision is COC where multiple banks are there. But clearly as far as the account is concerned, it's under a legal process. There are again litigation outside the legal process also and there is also a viability issue that needs to be vouched. So, it would be the COC decision based on the all the factors which will be presented before the COC by the administrator. So, we can't give you any directional outlook in this account. Khurana Sahab, anything further you want to add on this?

No, you are right, Sir. It is difficult to tell because bidding process was on and there were bidders. So, as of now, it's difficult to say whether it will go for liquidation.

Sure. Sir, one question on the festive demand, how are you seeing the festive demand both on the Retail and Deposit, Sir?

On the Retail deposit?

Both Retail Loan and Deposit.

Yeah, the demand is very strong. Ac tually, schemes that we have announced also for the festival campaign is generating a good number therein. Overall economic scenario is pretty good, there are demands both happening on the consumption side and also on the festival purchase side. I think th e industry is also doing pretty well on both on the demand side for Retail Loan and at the same time also on the cash flow coming in terms of deposit form. So, if you look at the outlook, we are very optimistic and the impact would be, I mean, known in thi s quarter and we're very, quite positively, what you can say, see this outlook or the current d emand translating into more business and more profit for the Bank.

And one more question, if I could squeeze in, your outlook on the whole unsecured loan portfolio? How much a percentage of your retail book is your unsecured loan book? And also below 50,000, which is potential risky portfolio if you can say, how much that is?

See, already CFO in the initial presentation outlined that we as a Bank slightly would be moderating on the unsecured and personal loan, precisely for the reason that now we do have the aging of almost 2.5-3 years of data now and this data will be analysed and then we'll figure out the next strands of our personal loan. The growth was almost like 60%-70% year-on-year but the outlook that the growth we are targeting for this year is 35% beca use the base is quite small. So, we are just moderating the growth. As far as the portfolio is concerned, portfolio is still very strong. The NPA percentage is very low at this point of time. There are cash flow happening as far as Bank of Baroda is concerned, these are all my 95%-96% is my existing customer, any new customer bringing a salary account and then taking a personal loan only allowed to be on boarded into that. So, portfolio quality is fairly good. But because a lot of issues are being talked about in the market, so we have decided to slightly moderate the growth. In the meantime, we'll put a new strategy, do a portfolio analysis and then articulate to the market going forward. Growth would continue to be strong but then slightly will be moderating in terms of the YOY or quarter to quarter growth we had in this particular segment.

The next question i s from Dipankar Kumar from PTI. Please, unmute yourself and ask the question.

Sir, good afternoon.

Yeah, good afternoon.

Sir, on the recovery side, I just wanted to understand what is the H2 target for recovery and…

Sorry, Dipankar, but you are breaking. Can you please…?

…talking which ARC sale that you are planning in H2? Is it audible now?

I am sorry, Dipankar, your network is pretty shaky. Can you please repeat the question?

In written off account recovery, what is the H2 target for recovery? And how much ARC sale that you are planning in H2?

Khurana Sahab, can you take this question?

Yeah, H2 target is similar to what we have got earlier. That is around INR 6000 crores but as far as ARC sale is concerned, we do not have any plans so far as of now. That, of course, it keeps on changing whenever there is a demand and then, you kn ow, the Bank takes a call but as of now we do not have any plan.

And can I squeeze in one? Sir, on bob World side…Hello?

Yeah, please go ahead.

Please, go ahead.

What is the los s th at B ank is anticipating with regard to bob World manipulation?

No, first of all, let us be clear that the issue is with regard to customer on boarding where some SOPs were not followed. So, there's no manipulation per se. It's an iss ue with regard to adequacy of document or the data errors or some wrong feeding of data. So, currently it's a regulatory action. We are, I mean, engaged with the regulator. So, I won't share any data. It's between when the issue being discussed with the re gulator on the matter. But as we clarified also, there is a disclosure in the notes to account that very insignificant and immaterial, not very material at this point of time and maybe very, very less at this point of time.

The next question is from Shilpy Sinha of Economic Times. Please, unmute yourself and ask the question.

Sir, I have two questions. One is on your fresh sl ippages, if I see the investor presentation you have said that some INR 4331 crores you had fresh sli ppages. If you can tell us where exactly did this come from like the sectors and if there is any particular account? And the second one is on your fund raise, earlier this year we actually got the Board approval to raise some foreign currency funds. So, if there is any progress on that?

Sir, can I take that first question?

Yeah, you take the first question. Yeah-yeah, please.

So, in terms of the slippage, mainly it has happened in two big chunky places. One is an international account of around INR 500 crores and the second one was the aviation account, which was in stress last quarter itsel f, but it slipped this quarter INR 1773 crores. So, this put together is almost to INR 2000 crores of the sl ippage. If you normalize for this, you would see the slippage in line with the slippage that we’ve reported in earlier quarters and is in granular accounts across Retail, MSME and Agri. So, if you discount for this, it's in line with past quarters.

Okay.

And to your second question on the capital raise, it is more in terms of either sub debt which is Tier 2 capital or AT -1 bonds. It is not equity capital raising that we are taking permission for. It's likely that we'll do some part of it this quarter and some part of it next quarter. We will make a Stock Exchange notification before we take a final decision.

Okay, thank you.

The next question is from Vishwanath Nair of BQ Prime. Please, u nmute yourself and ask the question.

Hi, Mr. Chand. Vishwanath here. I just wanted to clarify something you mentioned earlier about your CDOs exit. Did you say that th ere was a termination from the B anks end? Is that what happened?

See, as I said, we have given an exchange filing with regard to cessation of service and that was B ank induced. Obviously, bank induced is like the termination of the contract for the matter and this is a larger action that we initia ted both at the branch and also at the corporate office level, right.

Okay. Because the way the problem has been described in other news reports, I know you have not clarified as to what exactly happened but the way it has been described it seems like a branch level issue. So, I'm not sure why the CDO is facing an exit?

No-no, it's comprehensive. First of all, actually, currently because there is a regulatory action and we are engaged with the regulator on multi ple counts on this, I'd not like to discuss further on that. Actually, once the entire process is over, we can clarify to the market. But then these are the due process followed and everything and the actions have been initiated.

Okay. One other question with regard to the aviation account that you mentioned, I understand that you can't really decide for the COC but you are a significant lender and there seems to be just one bidder at least according to market reports and it doesn't s eem to be very serious. So, I'm not entirely sure what is the hesitancy in calling it a case of liquidation?

No, it's a legal process. Actually, the COC would decide based on all the facts. Actually, it's not like taking a directiona l call at this point of time. Things are evolving and there are pending litigation therein, we are getting news of that. So, appropriately, we'll take a call on that actually. I'm not telling that any action is out of the table. All actions are there but t he action would be taken based on the appropriate timing of that. So, let us not prejudge with regard to what is going to happen to this account.

Fair enough. One last point on the unsecured, if I can squeeze that in. You said that you’ll undertake a portfolio analysis and see if there are any issues but are you seeing any signs of stress at this point in time?

No-no, my idea of portfolio analysis is to put a new strategy therein. Absolutely, we're not talking about the issues therein. Because a lot of concern is being expressed in different forum with regard to the growth of unsecured for the country as a whole, the banking system as a whole, so then it's always wh at you can say prudent for the B ank to have analysed the portfolio and that is what we're trying to do. Absolutely, as far as the Bank of Baroda portfolio is concerned, absolutely the portfolio is sound, the percentage of NPA is very, very less, and these are all my existing customer s, cash flow. So, ab solutely no concern with regard to Bank of Baroda portfolio. Just because there is a hygiene discussion happening in the market, we thought it fit to go for a portfolio analysis.

Thank you. Thank you.

The next question is from Harsh Kumar of Money Control. What is the Bank’s strategy to open branch network ahead by the end of this year?

See, that's a very fair question. We intend to open branches but then in this financial year I can't quantify beca use we have gone for a comprehensive segmentation of all branches in terms of branches which are predominantly Agri, MSME, Corporate, and Retail. So, once that exercise is over, we'll go for opening of new branches. We have planned to open new branches to cater to segment where the business profile has shifted like in most of the metro the outskirt is now a very good market for doing business. So, it would be more of rearranging the branches in terms of location and also expanding the market. So, we have pl anned to open new branches but then we can't say how many would be in this year. But directionally, yes, we are inclined to open new branches.

Thank you, Sir. The next question is from Ekta Suri of Zee Business. Please, unmute yourself and ask the question.

Am I audible?

Yes, Ekta. Please, go ahead.

Sir, actually, I wanted to ask that aft er this RBI regulation, is the B ank facing a kind of issue where the customer has lost the trust? And also on certain platforms RBI Governor did mention that how banks are basically misusing technology and kind of showing inflated numbers for the same and that's why governance is very important these days in the banking system. So, yes, the name of Bank of Baroda wasn't taken at the platform but since because the news happened very recently and then this comment was made. So, I wanted to take your comment on the same and also on the mistrust from the customer side.

Let me clarify, the re is absolutely no mistrust or lack of trust or any dilution of trust. As far as Bank of Baroda is concerned, this is an organization of 117 years having full trust of customer. And I have also said earlier, in terms of business, the financial transaction , it has gone up significantly high because other channels are doing. So, it's a wrong narrative anyway to put any trust issue here. The bank is very strong, the platforms are very strong. The issue with regard to regulatory action is mostly with regard to customer on boarding processes, not with regard to the platform per se, right. So, absolutely, we have a sound platform. The bob World itself is a sound and robust platform seeded with unique mobile number. Absolutely, no concern at all at any point of time and customer trust has gone up in terms of our action to improve the system. That is what when any such issue comes, the reaction is to improve the system. Let me tell you one thing very clearly, I'm growing at 17% YOY and in case I have to grow for next 5-6 years I'll be doubling the business of the bank. So, in that scenario if I improve my processes, system, make it more robust that would be a huge comfort. So, that is what the direction that we are moving at.

And on the regulator's comment, Sir?

No-no, always we are a regulated entity and regulators comments always we look into our system, processes. So, we respect any regulator comment on the matter but then as far as we are engaged on the particular piece with the regulator, that's why some of the data points people asked and I didn't provide because we are engaged with the regulator on the issue. So, absolutely, no issue with regard to that.

Okay. Sir, my one more question was on Go Air. Would you be open to give more funding, additional funding to Go Air right now at this point? There was some media reports which said that, so would you clarify on that?

So, no, it's a COC call based on the information they do have with r egard to the litigation piece, the viability piece. So, COC would take appropriate calls. So, I would not like to react to any media news with regard to funding or no funding.

Okay, Sir. Thank you.

The next question is from Amol Dete of Economic Times Online. Please, unmute yourself and ask the question.

Hi, Sir. Good evening. Amol here.

Yeah, good evening.

Yeah. So, initially you spoke about the new CDO is in the pipeline, specifically for the BoB after whatever has happened. So, could you please tell us by any chance will you reveal the name who's going to be the next CDO? And if not the name, perhaps you could tell us whether he will come from inside or he will be an outsider? How do you look at it?

No-no, currently the exchange filing that we have given and the new CDO name is already, i t's not a CDO role now, it's the Head of Digital Banking and the Digital Business, right. So, already we have disc losed the name. She's an internal candidate, quite capable, qualified to run the process. Going forward if need be, then we need to further scale up the digital business of the Bank and then we can look for a CD O maybe from outside or maybe f rom inside. But, currently, there is no immediate plan for anything of that sort. The Bank has internal capacity to handle all this responsibility and precisely what we have done that particular exchange filing.

Okay, sure. Sir, in a couple of quarters previously specifically the BoBs growth in the road and infrastructure segment was quite robust. So, currently, if you could give me an outlook specifically for the next 2-3 quarters? Which are the sectors that you are betting on heavily?

Yeah. Mr. Tyagi, can you take this question up?

Yeah. So, as the country is also witnessing a significant investment from the government side in the infrastructure, so we are also riding that. Of course, there is no such aggressive plans to grow higher than the industry. There are good traction in the renewable sector, road sector and some of the associated infrastructure and we believe that the kind of growth we have witnessed in the past and the project pipelines are there and the monetization of the existing assets also. So, there are decent opportunities and we believe the growth will remain what we have witnessed in the past.

See, just to add to what Mr. Tyagi said, that if you look my segment growth that we published along with the analyst presentation, I have a very balanced growth in all segments. There is no excessive growth in one segment. It's a very balanced growth. Somewhere it may be 6%, somewhere it may be 10%. So, that you have the portfolio, wha t you can say, construct in the strategy that we normally follow to diversify the risk.

Yeah, sure-sure. So, you already clarified a lot on bob World but, you know, since the regulator has come into the picture and earlier also every B ank has pitched their app so aggressively. You know, if you could highlight one more point here is this that the BoB branches and specifically the bob World, you know, allowed people to route their loans or maybe loan generation and all the loan related activi ties through the through the bob World app, so do you think by any chance it will have some or minimal impact at least on the digital lending side because all the digital loans were routed through the bob World, if I'm not wrong?

No-no, actually we do have a digital lending platform independent of above bob World, point one. Secondly, bob World was a sourcing point and also some kind of end -to-end to sanction for personal loan. So, in terms of sourcing of leads for digital platform, b ob World has a small percentage therein, right. And typically most of the loans, again, existing customer do apply. So, the sourcing is as robust as it was earlier. The second aspect with regard to the personal loan, which was end -to-end digital and was t hrough bob World other than the branch channel or any other channel, as such I said that based on the discussion we have in the entire economy slightly while moderating the growth still is very strong. Suppose, I say on the personal loan we intend to grow at 35%, the growth is still strong but considering the earlier growth of 60% -65% on a low base anyway, this would be slightly in moderation. In that way it is not going to impact me in terms of my strategy on the personal loan vis- a-vis the issue of bob World that we are discussing.

We will take last two questions. The second last question is from Anil Pandey of Jagran. Out of the INR 1.89 lakh crores of international advances, could you please give a breakup of the type of loans including the ECB loans and other type of loans from foreign offices? Thank you.

So, we have loans and local assets. ECB is not a very significant percentage therein. We do have trade asset, high -quality asset, assets in local market like U.S., A ustralia and these are well balanced, well structured, well diversified. But, Mr. Tyagi, anything further you want to add on this?

Yeah. So, our international loan book comprises of ECBs, as MD said, local corporate book as well as the trade assets. It's a fairly balanced book and we time to time continue to diversify our loan book. We have wholesale market presence in various geographies and all these branches are doing well in terms of the loan acquisition and the disbursals.

Thank you. The last question is from Praga tti Oberoi of Bloomberg. Please, unmute yourself and ask the question.

Yeah. Hi, Mr. Chand. I have a couple of questions. One is that, again, on Mr. Akhil Handa's termination of the contra ct, so just getting a clarity on this. That was in response to the bob World app fiasco that entirely went down and the Bank took a call to end his contract, right?

See, Pragati, normally we don't discuss employee specific issue in a platform like this but then there was an exchange filing. I just clarified that exchange filing that's it. Like beyond that, I would not like to discuss further because normally we don't discuss employee specific because actions have been initiated agains t the set of people both at the branch and at the supervisory level. So, these are all part of that. Actually, we can't exclusively identify one individual against any other. It's a group action being initiated, right.

Okay-okay. Fair enough, Mr. Chand. Actually, my question just stemmed from the fact because after the call was taken and after the news that broke out, there was from the employee side or from the particular person side of narrative as well that said that, you know, ‘I am stepping down from the role’. So, there was something that was not joining the dots and hence I thought I would seek the clarity from you.

Okay. That’s correct.

Yeah. Yeah, okay. Second thing, Sir, I wanted to ask, I understand that the Bank has not yet given us a clarification on what exactly happened and you have reiterated that the issue was in the customer on boarding process there. But, Sir, there are rules in place, there are compliances in pla ce and tha t's exactly what the B ank is trying to do now, from what previous reports have come in it was basically one SIM or like one mobile number being linked to several accounts or what is it? How is that exactly possible that one mobile number can be linked to f ive different people? Like something has to be a problem in the app, right?

Actually, let me again, because that is what when there is a regulatory action and we are satisfying the regulator, I would not like to discuss further on that. The only issue that I'm telling is that the customer on boarding process that we refer to is for deactivated users, right. So, there are gaps in terms of adequacy of documents, data error, and wrong data feeding. That is what all that and this process has been strengthened further. So, when a particular customer having a deactivated user status and there is an on boarding process which was not followed by branches then we have strengthened the system. Materiality impact is very less. If you talk about p ercentage of this on the overall customer on boarded, the percentage is very, very less. But there are instances where there was compliance gap and that's where the actions have been taken by the Bank on a group action basis. So, this is all but once the r egulatory action is through then when we meet next, possibly we can clarify further on that because see the current action is on a regulatory action and we are satisfying to the regulator with regard to the compliance and all those action part. So, further details, I’ll not be in a position to provide to you.

The last question is, what is the percentage of bulk deposits in your total deposits? And has it increased in the last two quarters or stayed the same?

See, that's again as a strategy. I very clearly articulated, there is a percentage, the data also we have provided in the analyst presentation, and you can very well make it out. As a strategy going forward, the bulk was increasing at a faster rate as compared to the gr owth in Retail term deposit. This is not only specific to Bank of Baroda, the entire industry has a similar trend but we as a Bank decided that going forward let us not grow on the bulk segment like the same rate at which the bulk was growing. So, if you look at this quarter, the sequential growth is only 3.4% and if you multiply 4 into that, it is almost like 15% which will align with my deposit growth in the entire like the grow sequentially on the deposit growth that we have given. So, it is aligning to the deposit growth. So, there are two advantages also like bulk also get repriced very quickly. That's a scenario where there is a rate reversal happening, then the benefit would come to bulk more quickly whereas in Retail, normally, the tenure will be longer than the bulk. So, all this, our ALM aspect which are duly taken in terms of a strategic input in the ALCO as done in all the banks and adequate care taken in terms of managing the book so that we grow in a very, what you can say, the pace of the growth is very steady and robust in that.

Thank you, Sir.

That is the last question that we'll be able to take today. Thank you all for joining us. Have a great evening ahead.

Thank you very much and I thank all media friends. This is on a Saturday we called all of you. So, thank you very much for that. ********************