“The net interest margins have come down, but the pressure will not be there in this quarter. We will be able to protect the NIMS for the simple reason that there is a huge franchise with us and our CASA ratio is around 44%,” says Rajneesh Karnatak, MD & CEO, Bank of India.

Let us put the focus right now on the profitability in particular. Your interest expenses have increased sharply, leading to a decline in your net interest income. If you look at the yields and advances, it was also lower. If you could tell us what exactly led to the scenario and how yields on advances will shape up going ahead for the bank?
Yes, if you see our results for the nine months. So, operating profit has come down sequentially also and on YOY basis, it has improved. So, as far as the net profit is concerned, it has improved sequentially and YOY basis.
So, the net profit has increased by 62% on a YOY basis. On the nine-month basis, it has improved by 82%. Similarly, for the operating profit on the nine-month basis, it has improved and it has shown an increasing trend of around 14%.

So, you are correct that the yield on advances has come down because of the simple reason that there is pressure on some corporate advances where the margins are thin.

And the cost of deposit has also gone high because of the cost which is increasing in the last quarter, in the December quarter, which has increased.

So, the net interest margins have come down, but the pressure will not be there in this quarter. We will be able to protect the NIMs for the simple reason that there is a huge franchise with us and our CASA ratio is around 44%.
If you see our retail term deposit in the presentation, it is also at 44%. So, our bulk deposit is only around 12% of our total domestic deposit. So, 88% of our deposit being retail term deposit and CASA deposit. So, our cost of deposit is on the lower side and it is well below 5% level.

Talking about your NIMs that have also come down this quarter although the nine-month FY24 NIMs remained at the 3% level but do you think there is room for improvement for the NIMs from next quarter onwards? And will that stay above the 3% mark for the whole year of FY24?
You will see that our nine-month NIMs is at around 3% level. But if you see the domestic NIMs, it is at 3.3% on a nine-month basis and for the international, it is 1.4%.

So, NIMs, whatever they are at the present December moment, they will be able to protect these NIMs. As I said earlier, we will be aggressively going for retail term deposits, CASA with the help of our franchise.

So, we are having 5,100 branches out of which 60% branches are in rural and semi-urban areas. Then we have ATMs and CRMs. They are another delivery point for us. And then finally, the BC’s business correspondence, which are around 19,000. So, Bank of India has a strong franchise of around 32,000 delivery points for our customers. With improved customer service and customer experience, we are very much sure that our reliance will continue to remain on retail term deposits and CASA deposits and less on the bulk deposits, which is only 12% as of December.
And with the growing of our RAM book and improving in the overall margins on the credit side and the reduction in the S&P book and also in the reduction in the NPA, we will be able to protect our margins, operating profit, net profit and also the NIMS.

Right, sir. Let us now put focus on your asset quality, which has actually seen a good recovery if you look at it on a quarter-on-quarter basis, be it the gross NPA levels or your net NPA levels for the matter of fact. And apart from that, your slippage is also low. Can we expect now this sort of a trend to continue going ahead? Can we expect a healthy asset quality going ahead? And what is your internal targets for NPAs, if there are any, and if you can share it with us?
If you see our gross NPA, it has touched at around Rs 30,000 crores. YOY, it has come down on the amount wise at around Rs 8,000 crores. On the percentage terms, we are at 5.35% of the gross NPA which used to be at 7.27%. So our gross NPA on a YOY basis has already come down by 2.61%.

On the net NPA side, our number is at around Rs 7,000 crores. And on a YOY basis, it has come down by 20 bps. As regards the slippages are concerned, so the fresh slippages during the December quarter was only Rs 1,300 crores.
And against which the total recovery plus the write-off was around Rs 2,700 crores. If you see the nine-month basis also, the recovery was much higher than the total recovery and the write-off was much higher on a YOY basis on a nine-month basis, than the fresh slippages which we have taken place.

So as regards the guidance is concerned, so for March 24, we are giving a guidance of around 5.10% for the gross NPA and at around 1.30% for the net NPA.

Lastly, your credit deposit ratio rose to 80%, while your corporate book, 45% of the total book grew by 8% this quarter. But post-elections, the private capex is likely to kick in. Are you well-placed in terms of the liquidity for the growth opportunities?
If you see our CD ratio, it was at 79.3% as on December. So as far as the CD ratio for March 24 is concerned, it will remain nearly at the same level. See as per the RBI regulations, we have to keep the SLR and CRR. So SLR being 18% and CRR 4.5%, aggregating 22.5%. The idle CD ratio in that manner, as per the regulatory guidelines, is around 87.5%. So it is 77.5%. So 79% of CD ratio is quite comfortable, this is what we feel.

Apart from that, let me bring to your notice that we are having excess SLR also up to the tune of around Rs 30,000 crores that will also help us for any incremental growth in credit, whichever happens during this quarter also.
We have a robust pipeline of say around Rs 50,000 crores as far as corporate credit is concerned including grant credit. So there should not be any challenge as regards the CD ratio is concerned.

Because as I told, we have excess SLR of around Rs 30,000 crores and it will help us improve that and the incremental deposit also, which we will get in this quarter, both on the CASA side and the retail term deposit side, will help us keep our ratio well below 80% mark for March 24 also.

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