Bank of Baroda Ltd

NSE:BANKBARODA

Q2-2026 Earnings Call

[Operator]

Good evening, everyone and welcome to Bank of Baroda's analyst meet for our financial results for the quarter and half year ended 30 September 2025. Thank you all for joining us. We have with us today our MD & CEO, Dr. Debadatta Chand and he is joined by the bank's Executive Director and our CFO. We will start with a brief presentation on the results, followed by opening remarks by Dr. Chand and then we'll have the Q&A session. Chand sir I would request you to begin.

[Debadatta Chand, executive]

Thanks, Phiroza. And just to introduce the management team, I'm D. Chand. I'm the MD and CEO of the bank. I've been interacting with all of you for quite a while now. With me, Mr. Lalit Tyagi, he's the Executive Director. He looks after the corporate and institutional credit, the international banking and treasury for the bank.

With him again, Mr. Sanjay Mudaliar, he's the Executive Director. He looks after all IT function of the bank and also the retail asset of the bank, which includes all the housing and all those loans we talk on the retail side. With Mr. Mudaliar, Madam Beena Vaheed, she the Executive Director. She looks after all control and assurance functions, more importantly, the operation department, the risk management department and also with regard to the retail liability franchise of the bank. And now we have the CFO, Mr. IVL Sridhar. He has been there also for, I think, a couple of interaction now.

So with this, Sridharji, over to you. Have your presentation.

[Sridhar Inumella, executive]

Thank you, sir. Good evening all. It's my privilege to present before you the financial highlights of Bank of Baroda for the quarter and half year ended 30th September 2025. Our global advances have grown by 11.9% Y-o-Y with domestic advances growing at 11.5% and international at 13.8%. Within the advances book, the bank has continued to focus on RAM advances. Our organic retail book grew by 17.6%, agriculture 17.4% and organic MSMEs grew by 13.9%.

Corporate loans have grown by 3% Y-o-Y. Within the retail segment, we have seen small growth across the portfolio with education loan growing by 14%, home loan at 16.5%, auto loan by 17.7%, personal loan by 18.6% and mortgages by 19.8%. In terms of the deposit growth, our total deposits have grown by 9.3% with international deposits growing by 7.2% and domestic deposits by 9.7%. The domestic CASA deposits have grown by 6.6% and the term deposits have registered a growth of 11.7% Y-o-Y. As of 30th September 2025, the bank credit deposit ratio stands at 85.26% and the CASA ratio stands at 38.42%.

With regard to our quarterly profitability metrics, please note that in Q2 FY 2025, the bank had a one-off recovery from written-off accounts, which has elevated the base. Our operating profit for the Q2 of FY '26 stands at INR 756 crores. Our net profit for Q2 of 2026 stands at INR 4,809 crores. Without the one-off item, which I have mentioned earlier for Q2 of FY '25, the growth in net profit would have been 22% for the Q2 of FY '26. Return on assets remains consistently above 1% at 1.07% and then return on equity stands at 15.37% for the quarter. Regarding profitability, our operating profit stands at INR 15,812 crores for the half year.

Our net profit for the half year stands at INR 9,351 crores. Return on assets remains above 1% at 1.04%. Return on equity stands at 14.93% for the half year. With regard to our key ratios, our yield on advances stood at 7.81% for the quarter and 7.95% for the half year. Bank's prudent liability management has led to a sequential decline in the cost of deposits for the quarter, which stands at 4.91% as against 5.0% in the previous year's quarter. With regard to our net interest margin, it has sequentially improved by 5 bps to 2.96% for the quarter. It stands at 2.93% for the half year. Regarding asset quality, we have the best asset quality, and it continues to remain robust. Our gross NPA ratio has improved by 34 bps Y-o-Y and stands at 2.16%. Net NPA ratio is below 1% at 0.57% an improvement of 3 bps Y-o-Y.

Our provision coverage ratio, including TWO is comfortable at 93.21%. Our slippage ratio for the second quarter of FY 2026 has reduced by 16 bps Y-o-Y and stands at 0.91%. Credit cost remains low and stands at the level of 0.29% for the second quarter of 2026. Without the floating provision, the credit cost would have come down even further down. We have made a floating provision of INR 400 crores as a prudent measure. Coming to our SMA and collection efficiency. Our CRILC SMA 1 and 2 as a percentage of our standard advances stands at 0.39% as of September '25.

Our collection efficiency, excluding agriculture, remains robust at 98.6%. Regarding the capital adequacy, we have a strong capital position. Our capital position as CET1 as at 30th September '25 is 13.36%. Tier 1 capital adequacy ratio is at 14.15% and overall CRAR is at 16.54%. Our LCR remains healthy at approximately 121% as of September '25. Adjusted for the profits of the half year profits of 2026, capital adequacy would have been 17.3% -- thank you.

[Debadatta Chand, executive]

Thank you, Mr. Sridhar. And let me add a couple of minutes only some qualitative comments. As we said earlier also, the bank strongly believe in how to strengthen the fundamental parameters of the bank.

And our performance has been consistent for many years, many quarters in terms of the numbers that we give to the market. So in the context of that, let me again thanking all analysts, friends who are joining today a very good evening. And thanking very much -- thank you very much for joining on a Friday evening with us. So in terms of numbers and all, we have yet another sound and good quarter as far as the Q2 is concerned. On the business number, already a provisional number we announced some time back. All of you have taken note of that.

On the media coverage with regard to a strong growth, so I have nothing much -- nothing more to add to that. But only I will highlight on the advances side, our advanced growth is propelled by the RAM growth. And you would have seen the retail growing at 17.6%, agri at 17.4% and the MSME at almost at 14%. The second aspect, again, on the asset book is the corporate growth. Some of you possibly would be looking at a number at 3% now. So let me give a couple of comments on that. The corporate growth, seasonally, we have a weak Q1 and Q2 always, and we pick up in Q3 and Q4.

Last year, we had a growth of almost 10% to 11% on the corporate book. And this year also, we expect to grow at 10% to 11%. Saying so, I mean, if you look at the sequential growth on the corporate book, also the Y-o-Y is 3%, it's at 8%. So you can believe the momentum there. We have a strong pipelines to support a growth of 10% to 11% as far as the corporate loan book is concerned. Deposit, you would have seen on the overall growth that we already announced.

But at the same time, let me make saving has been one of the consistent -- you must be mapping out our numbers with peer banks, and we have been consistently -- although the growth is low as the growth used to be in the earlier years, but it has been one of the consistent outperformance by 1% to 2% on many large peers. So our focus continues to be on the low-cost deposits, and that is what we believe strongly.

And the focus continue to slightly deleverage on the bulk deposit, and we have been doing that for the last 2.5 years. So the outcome therein because that we say prudent liability management, which the CFO talked about, I'll tell you a couple of outcomes which can take note of the numbers we presented. Our CASA percentage is 38.42%. That is one of the top quartile in terms of number, you must be mapping out all banks, and there we are at 38.92%. My interest expenses growth this quarter is 4.9% as compared to more than 9% growth last quarter.

That means typically on a trajectory where typically we debate with regard to the repricing of asset liability, now we have a control on the interest expenses. And what is the outcome? The first time maybe you would compare our own NII growth last quarter, which was negative. The NII growth this quarter has been positive. And this positive when I say repeatedly positive, you can very well compare the NII growth happening in the system. At the same time, the net interest margin, where we talked about the margin compression or pressure for 2, 3 quarters now, we have improved the NIM.

The NIM has improved from global from 2.91% to 2.96%. The domestic has improved to 3.10%. The international has improved. So overall, the prudent pricing strategy or liability management or asset management is helping us to maintain our margin or improving that. The ROA and ROE, 2 factors, which again on the profitability, it has been better than the last quarter and better than the last quarter and the same quarter of last year. So the impact of the prudent management is helping us in terms of maintaining the qualitative, what you can say, income earning potential of the book that is very, very fundamental as far as the bank is concerned.

As I said, the net interest income is at 2.7% positive as against a negative growth we had in last quarter. On the operating profit, as Mr. Sridhar has rightly mentioned, Q2 of last year, we had a one-off from one of the NCLT resolution account, which is a significant amount. And the pretax benefit of that is almost INR 900 crores. So in that comparison, both at the operating profit level and net profit level, there has been a -- I mean, the same quarter comparison last year, there is a degrowth or there is a negative growth. Saying so, the sequential growth in the net profit has been positive by 6% -- so we had almost INR 4,500 crores of net profit in last quarter.

We're almost at INR 4,809 crores of profit in this quarter, which is a 6% growth. And this net profit, we looked in the light of the floating provision that we have made up to the extent of INR 400 crores. I mean that's a prudent provision we have made, keeping the ECL framework in mind and taking the entire floating provision to INR 1,000 crores. So these are, again, these numbers to be looked in the context of the floating provision that we have made of INR 400 crores and continue to buffer this particular floating provision, although there is no guidance for the matter, but then we'll try to buffer it more as we move forward.

On the asset quality, one of the best quarter, I can see it to the best quarter we have in this quarter. GNPA of 2.16%, net NPA of 0.57%, slippage ratio of 0.91%, credit cost of 0.26%. I mean these are the numbers which are better than the last quarter and the same quarter last year. Again, a couple of points, I would say. The fresh slippage of INR 2,669 crores, this is in terms of slippage better than the last quarter and the same quarter last year. The cash recovery has been better than the last quarter and the same quarter last year.

The upgradation has been better than the last quarter and the same quarter last year. So in the -- I mean, in a summary note, I can say this is one of the best asset quality. And when I say we believe in fundamental growth of the company and the bank, and this is one of the point which is again driving along with the top line, bottom line, asset quality, we want to maintain at a very good level at pristine level. However, going forward, we maintain the slippage -- the guidance at 1% to 1.25%, precisely maybe headwinds be there in the geopolitical scenario that are evolving and the credit cost below 0.75%, although the current credit cost is much lower than that.

So on the business front, again, I mean, I'll just tell one point that the cost of deposit is at 4.91%. And in case you are mapping out the industry cost of deposit, this is one of the lowest point we have reached on the cost of deposit. And that talks about the prudent liability management that we are talking about for the bank. So on the business front, again, we continue to focus on the IT, digital, trying to innovate, trying to, I mean, be making our system robust, protecting cybersecurity threat. So that's something we need to be ahead of the curve, and we clearly intend to do that. We want to improve our customer service further. We want to improve our service delivery further, and we are working on those things.

On a branch banking, again, I say we are reimagining the branch banking and would have seen the bank rolling out a unique concept called physical branches. We have 10 branches now. I'm not going to the details. You can see that in the literature available in the website. And also, we deployed a virtual branch in those physical branch where a human-like robot can interact on a live basis with you. So these are a couple of things and a couple of other things where we are again working is that the ESG has been a core theme, and we have been very strongly working on the ESG mandate. We announced our ESG policy of net zero by 2057.

Recently, we created a BOB Forest in the BKC area almost 6,000 square feet of area where plants are 100 of plants from Sahyadris range have been planted over there. It's a B forest, which is planted in BKC, I mean, where we are talking about the commercial area of Mumbai. And we'll be replicating this BOB forest concept across, and this is typically in line with our ESG mandate. We think ESG is one of the core mandate the bank has the responsibility, and we should do much more than that.

With this, again, like thanking all of you for joining today. And Phiroza, over to you for question and answer.

[Operator]

[Operator Instructions]

We will start the Q&A session with Mr. Ashok Ajmera. So if you can please unmute yourself.

[Ashok Ajmera, analyst]

Good evening, sir and complements to you for another good quarter of good set of numbers. At least on the net profit level, even though the operating profit is substantially down because of the lesser provisioning requirement, the net profit is very comfortable. It gives a comfort because ultimately, everybody looks at the bottom line of the bank.

So on that front, at least all is well. Now having said, sir, said that my -- some few standard questions and some observations, sir, and which always encourages us to analyze the things properly for the time to come. So one thing is, sir, on the -- in this quarter, though the credit growth is -- this quarter is reasonably good. But because of the fall in the first quarter, our overall in 6 months, we have grown only by 3.9% as far as the credit is concerned, net credit is concerned. And if you look at your 11% to 13% guidance and even if you take average 12% guidance, you need to have the total credit for the FY '26 of INR 148,000 crores growth. So we have achieved only INR 48,000 crores.

So almost INR 1 lakh crore growth in the next 5.5 months or 6 months are required to be there to meet the kind of guidance. So on that, sir, where do we stand from the point of view of the sanctioned pipeline and the strategy and too much of reliance on retail, I think is not going to sustain for a longer period of time because everyone is chasing a retail book. So you have to ultimately rely on corporate also for increasing our credit growth. So what are your views on that? And how do we plan to achieve that? That is my first question because the business growth-wise also, we have grown only 2.82% in 6 months of FY '26.

So this is -- I'll come back with shall I.

[Debadatta Chand, executive]

You can. Then I noted then you can go to the next case.

[Ashok Ajmera, analyst]

Our operating profit is also down because of mainly the treasury profit, which is almost gone down by almost 50% from INR 2,226 crores to INR 1,086 crores because of the pressure on the treasury because of the rate movements.

So on that, if you can give the color for the remaining 2 quarters to come, how do we -- even though we are expecting a 25 basis cut as the rate cut is still -- so how is this time lag you have planned and how we are going to get the benefit in now remaining 5.5 months of this quarter so as to improve the treasury income and thereby on NIM front, you have somehow maintained and rather grew, but how it will help to increase the NIM further? This is my second thing, sir. And we have eaten away 1.07% of the bps -- 107 bps from the CRAR so in this quarter.

So even though the profit will be added at the end of the year, so how do we plan to like match the credit growth, which is required substantially to be increased and vis-a-vis the capital adequacy. On that, if we can have some light from you. And last one is that we have given only SMA just percentage that we are about 0.40%, 0.39%, but we have not given in the absolute number and especially the breakup of the SMA-0, SMA-1, SMA-2, which gives an idea what is going to come in the future. So these are my few observations and some questions and some impressions which I want to have from you, sir.

[Debadatta Chand, executive]

Thank you, Ajmera sir. Thank you very much, and thank you very much for being the first one to ask on the analyst side. So we expect always you to ask the first question.

So let me -- a couple of points that when you look at the net profit, look, the net profit growth this quarter sequentially is 6% and when we're comparing with Y-o-Y, there is a degrowth because in last quarter, we had some one-off that we already clarified. Otherwise, the net profit is strong, INR 4,800 crores. I mean you may compare with the system also, that's quite a good number. The net profit also INR 4,800 crores to be seen in the light of a INR 400 crore provision -- floating provision made by us.

And that actually, as we said, that we're just looking at the ECL migration and how do we prepare ourselves in terms of migrating to ECL, this may not be adequate, but then we think of how do you create more buffer on this. The corporate credit loan book, the retail going to be -- is doing good. And in terms of the numbers that the quality of book that we look at, I don't think any challenge at this point of time to slow down the retail growth. I mean retail, the RAM will need to grow faster. That's a portfolio which gives a diversification benefit.

That's a portfolio which is highly collateralized as compared to any other portfolio. That's a portfolio also gives me good yield vis-a-vis any other portfolio. So continue to grow on the retail as it is. On the corporate loan book, yes, I do agree things have been muted. I mean, muted not only for us, for the system when you compare the growth in the earlier years. We need to focus on corporate, no doubt about it. Q3 and Q4 are normally the better quarter for us in terms of corporate growth. And I think we're giving a guidance of 10% to 11% growth. We'll be in a position to achieve that.

Saying so, there are 2, 3 elements that we must account for while looking at the corporate growth. One is that the core corporate is going strong. The area where we are slightly restricted because of a margin guidance is a very fine price asset where how below you can dip in terms of taking an asset. And these are typically refi deal or very high-rated corporate deal. So there, as of today, we are restricted because thinking Q3 can be better. So in that way, we are not losing out any business opportunity in terms of the corporate growth. We are sufficiently providing money to the market in terms of growing on the corporate.

The second thing that many of our own corporate when in the first quarter or the first half, they have gone to the bond market in terms of raising money through CP and other instrument while, again, I mean, not availing on the loan side. And we have seen a trend they are coming back to the loan market. That is point one. Point two is a case where, I mean, look, I mean, a bank like us again participate in those markets as part of the investment. So whether it is a credit or credit equivalent, I think banks are sufficiently providing liquidity to the corporate sector.

So I don't think any -- I mean, you have to club both the things to understand whether money flowing to the corporate sector or not, money flowing from the banking system to the corporate sector at a decent pace, although the corporate loan book would see different. The thirdly, which is important, again, I'll also request because you always analyze banks. The corporate that we publish in the analyst presentation is the pure corporate. It's an organic book. We give another component called others, which is below that, which is consisting of staff loan or the inorganic book. The same classification may not be available with other banks.

So in that way, it is not comparable, but I tell you the growth that we have is the corporate -- it's a pure organic corporate book. I think in case the data available for all the banks, then we can have a comparison proper. So in that way, we are quite happy with regard to the way we are pressing out the corporate growth and we'll operate at 10% to 11%. We need to focus on corporate, no doubt about it. But then I think the money which has gone to the retail sector will drive consumption and that will drive the private CapEx going forward, and that's a story that I'm -- that's a narrative that I'm working on. Treasury income, you are right.

The operating profit we have declared this quarter is the normalized quarter. I mean we have no one-off here. So going forward also, we look at similar operating profit or any one-off happening because of a regulation coming out of a TWO account or a written off account or a higher treasury income because of the bond price movement going down, the yield going down. I think we can upsize the operating profit going forward, about INR 7,500 crores to INR 8,000 crores is a normalized operating profit range for us. CRAR, we are quite adequately capitalized. I mean, excluding the profit, the CRR, I mean, including profit, the CRAR is 17.36%.

But even if the scenario, 2 things happened slightly put the CET1 down. That's -- we wanted that to happen. One is a case where the AFS reserve, actually, it has gone down because of the market movement, you understand that better. At the same time, a couple of AT-1 redemption, we didn't replenish it, right? Maybe we are looking at a price point where you can replenish the AT-1 bond also. That's why it has gone down. At the current level, excluding profit also, we are heavily highly capitalized. And if you add profit, then it is almost 17.34%. So I don't think any challenge on that.

We had announced to the market an enabling clause of raising capital, but I don't think that is needed at this point of time. If there is a need, we'll see at that point of time with a due articulation to the market. So I think I have covered mostly the SMA breakup, actually, the [indiscernible] data only we provide more than INR 5 crores. I think other banks also do provide that. But any granular data you want, we can provide offline to you.

[Operator]

The next question is from Rikin Shah.

[Rikin Shah, analyst]

I have a few questions actually. First one, I wanted to check what is the total quantum of interest on IT refund in this quarter? And what would be the NIM ex of this one-off? And a continuation to that would be this is the third consecutive quarter where we have seen decent amount probably on interest on IT refund. So how should we think about it in the future quarters? I know it can be very difficult to predict, but do you expect more of them in the future? So that's the first one. And I have a few other. I'll come back after this question.

[Debadatta Chand, executive]

See, the IT refund happens, I mean, as and when we get the refund. And normal -- if you look at the refund this quarter, it is higher than the last quarter by almost INR 300 crores. So in that way, you can take an impact of the NIM, something around 7, 8 bps at best, nothing more than that.

But IT refund is a normal way every quarter the banks receive. So it is not a one-off. It's only the quantum of money that we receive in a quarter. And this quarter, if you compare to the last quarter, it is in excess of roughly around INR 3 crores, INR 350 crores. And that can translate -- 6, 7 bps of the NIM.

[Rikin Shah, analyst]

Okay. So sir, last quarter, I think the interest on IT refund was INR 370 crores. So this quarter, it would be INR 670 crores to INR 720 crores in absolute terms.

[Debadatta Chand, executive]

Yes, that is around INR 750 crores kind of a number.

[Rikin Shah, analyst]

Okay. Fair. Got it, sir. The second question is on the deposit repricing. Would you say that a large part of deposit repricing is already done by this quarter? And do you expect more in the coming quarters?

And then extension to that is we have heard from some PSU banks that they do think about cutting the MCLR rates, which can impact the yields in the coming quarters. So how should we think about the NIMs from the current level in the next 2 quarters, assuming there is no rate cut? We can keep that part aside.

[Debadatta Chand, executive]

So that, again, I highlighted my point that -- I mean, if you look at the entire cohort of banks who have declared their numbers and they would have seen the margin cut, right? In that scenario, we have given an increase in margin. So in terms of the management of the deposit, I think it was a prudent management in that way.

Saying so, in terms of the lowest point of the deposit market and the lowest point on the advanced market, we are already done in the current scenario, unless and until are we going to cut it further, right? So in terms of the repricing of this asset liability, again, the full effect of the repricing possibly would not have been felt this quarter. So the impact will be felt in the next quarter. So in that scenario...

[Rikin Shah, analyst]

Yes, sorry, go ahead, sir.

[Debadatta Chand, executive]

So there may be range bound movement of margin next quarter, but a full year basis, we're expecting 2.85% to 3%.

[Rikin Shah, analyst]

Got it, sir. And sir, nextly, on the employee expense, the provisions for employee expense has come off in this quarter. Is it simply led by the yield movement? And do you expect that to normalize in the coming quarter? And lastly, the question is also on the floating provision that you created of INR 400 crores. The outstanding is now INR 1,000 crores. You did highlight it is in anticipation of ECL. So how much more would be required in the run-up to the ECL transition? What would be the onetime transition impact from April 27? And also, what could be the change in steady rate -- steady-state credit cost? Those will be the remaining 2 questions.

[Debadatta Chand, executive]

Okay. Quickly, let me answer. The employee provision that you are talking about is precisely because of the yield movement. On the pension, the yield movement, it has gone up from 6.44% to 6.72%. So there is an increase for that the amount required is less.

Similarly, gratuity also, it has gone up by almost around 25 bps. So it is because of the yield movement impact. So absolutely in line with that we expect in case there is a yield movement. Secondly, on the ECL, let me tell you, these are draft guidelines, a lot of moving parts there in. But on a thumb rule, I can tell you as a ballpark number, which can be a back of the envelope calculation. What we are expecting the ECL impact for the full -- on the CRAR is roughly around 1.25%, right? So that will be spread over a period of 5 years, but then you take it at one time, it is 1.25%.

At the same time, there is also a guidelines with regard to the credit -- the RWA on the credit risk also as a dropped guidelines there. So that's going to give us almost a 60 bps positive because there is an RWA reduction. So that's a positive impact on the CRAR would be almost like 60 to 70 bps. So net to net, the impact that you are looking at for a 5-year impact is almost like 75 bps maximum. And that can be spread over a period of 5 years. If you take it at one time, it can be 0.75. This is purely a provisional number, a provisional calculation in terms of what we see as of today based on the draft guidelines that we understand as the final -- I mean, in terms of the final control.

So I don't think ECL -- you know the capital adequacy for most of the banks like us. So a net impact of 0.75 may not be significant, right? So that's something that we should do. Secondly, on a recurring basis, on a provision requirement, it can impact the credit cost almost to the extent of 20 to 25 bps maximum. But these are very ballpark provisional number based on the interpretation we have as on today. Number can change, but the impacts are not significant as on today in case we look at our book, our profitability, our capital adequacy, our -- I mean, provision requirement, I think it's not significant as of today.

[Operator]

Kunal Shah, please.

[Kunal Shah, analyst]

Yes. Sorry, so to again jump upon and get the handle on the margin number. So last time, when we look at it adjusting for IT refund and the recoveries, you indicated core NIMs to be 2.81%. Would it be fair to assume that core NIMs this quarter would have been closer to 2.78% or so? -- compared to the reported NIM, which are there?

[Debadatta Chand, executive]

I mean how you computed core NIM? I said the 2.96% is the global NIM...

[Kunal Shah, analyst]

INR 750 crores. So that has like 18, 19 basis points of impact, okay, overall. So maybe 2.78% would that be the fair assumption? So if I have to look at it on a core basis, is it like NIMs have declined by 3, 4 basis points or so on a quarter-on-quarter basis?

[Debadatta Chand, executive]

See exact calculation, I'll give it to you, but then I don't think the NIM has improved. Even if excluding the IT refund on both sides on the last quarter and this quarter, the NIM has improved. So I think I don't -- not exact calculation, but in case you want, we can send you the impact of the core NIM. Core NIM going to be stable. It is stable, and it has really helped us in terms of improving the core NIM.

[Kunal Shah, analyst]

Sure. And in terms of the guidance, so maybe compared to 2.96%, maybe even if I adjust and based on that calculation, it's coming closer to 2.8%. How confident are we in terms of getting it through maybe more than 2.9% or closer to 3-odd percent by the exit quarter of FY '26?

[Debadatta Chand, executive]

See, that's why I said Q3 would be a range bound in terms of margin because, again, the repricing full effect has come in the current scenario, but the full impact for the quarter has not come. So on the asset side, there are going to be a lower income in terms of the full quarter impact.

At the same time, the deposit, again, see, look at 4.91% deposit cost, I'm one of the lowest in terms of the deposit cost in the entire system, if you look at all the banks. So in that way, the benefit is going to be there for the deposit side. So net to net, it will be a range bound. But full year basis, again, Q4, we are expecting a rise in the NIM. So in that scenario, I think the guidance we are giving 2.85% to 3%. So that's the global NIM that you are talking about without any core, non-core that you are referring. But global NIM basis, we'll be at 2.85% to 3%.

[Kunal Shah, analyst]

Including the IT refunds, which are there. So on a reported basis.

[Debadatta Chand, executive]

That's a NIM, right? Every quarter, we get some IT refund. It's part of a regular -- it's not a one-off. Like NCLT recovery can be a one-off, but IT refund is not a one-off. We keep on getting some amount. It may be higher or lower.

[Kunal Shah, analyst]

Yes. Got it. Sir, the question was maybe given that our growth on the corporate side has been quite active, plus when we look at on the deposit side, in fact, the wholesale deposits have grown quite stronger when you look at it, almost like, say, 15% up quarter-on-quarter, 17% year-on-year. So I think this to have some pressure on the margins during the quarter. So that's the reason I was not sure if there is an increase in the NIMs on the core basis, yes.

[Debadatta Chand, executive]

See, look, on the wholesale deposit, as you said, we have been saying that the dependency want to reduce. So in terms of the percentage of retail deposit, term deposit or the overall deposit, it has as a percentage have gone down. So this quarter, something -- I mean, even if there is a marginal because you would have seen the retail term deposit growth is 9.1% and the wholesale, including CD is 17%.

Then there is some component which has gone into it, but this is precisely out of the CD increase in outstanding. And as you know, the certificate of deposits, these are short term having a much lower pricing. So in that way, there is no pricing impact on this 17 vis-a-vis 9, where one bank declaring the bulk deposit as a subgroup to the term deposit for many quarters, you need to get those data for the banks. And then only you can have a clear comparison in terms of what is the growth we have and what is the growth others can have. But as a strategy, I've been saying that the dependency you want to reduce for a volatility purpose on a price point purpose, and we're quite successful in terms of managing. So it's not 1 or 2 numbers you are looking at.

Look, the NII growth has been positive, which is, again, if you compare on a whole system basis, there are many having a negative growth. We had a negative NII growth last quarter, which is positive now. The ROA and ROE both are better than the last quarter. So in that overall construct of the book and considering the cost of deposit at 4.91%, which is one of the very good level. I think the prudent management helping us in terms of maintaining profitability.

And that's something fundamental as far as our margin guidance at -- look, there are 2 other points that you need to look into. The CASA percentage is one of the top quartile. You have the numbers for us, right? It is one of the top quartile for the bank. So these are all numbers leading to a -- I mean, fundamentally talking about better management of the liability at the same time, protecting margin or the profitability.

[Kunal Shah, analyst]

Got it. And on PL, so the GNPAs have gone up again to 4.81%. Last quarter, it was 4.48%. We are hearing from most of the players that at least the pain, the incremental stress formation is subsiding in personal loans. Should we also believe that maybe for us as well, the GNPAs in PL have now peaked and we should see the improvement or there is some pain still left to be recognized?

[Debadatta Chand, executive]

No. Look, on the overall retail, the slippage has been lower last quarter. That numbers are given, I mean, the retail slippage, right? But PL is a very small component of the overall -- the outstanding PL book is roughly around INR 12,000 crores.

If I look at the slippage, we are not declaring that number. But if I look at the slippage of the PL this quarter, it is lower than the last quarter. So in terms of the pressure on the PL book, although we have a lower book, it is no more there. Rather, we should see improvement in this number going forward.

[Operator]

The next question from Mahrukh, please.

[Mahrukh Adajania, analyst]

Sir, I have a few questions. Firstly, in terms of your recovery from written-off accounts, TWO, the income is lower. Do you want to reduce reliance or it's going to remain volatile and lumpy even in the future quarters?

So that's my first question. Secondly, you did mention that on a run rate basis, if ECL were to be implemented, your credit costs would move up by 25 bps. So is that what you should build in structurally now to assess your long-term ROAs, like the current credit cost or, say, the full year credit cost plus 25 basis points? And my third question is, I think it was asked before, but I didn't quite catch the answer. How much of MCLR repricing is left? -- how much more can MCLR go down? So these are my questions, sir.

[Debadatta Chand, executive]

So coming to the recovery of written off, our normalized run rate is roughly around INR 700 crores to INR 750 crores. That is what a normalized run rate we give. The Q2 of last year, that was an elevated INR 2,500 crores that we have explained why it was so.

This quarter, it is INR 493 crores, which is definitely below the run rate. But going by the pipeline cases and all, I think we'll come back to a normalized INR 700 crores to INR 750 crores per quarter on the recovery of the TW. On the ECL impact, the credit cost you talked about, this is again a ballpark back of the envelope calculation. But obviously, we have provided floating provision, keeping the ECL framework into mind. So we think we need to create buffer, but we have not decided as a policy, how much to do it what time to do it. So these are all depending upon the -- going forward, a lot of clarity would come on the ECL framework. Actual calculation getting into transaction level would give us more clarity.

So we have not decided how much to provide on the ECL, but then we'll be mindful that we need to create more buffer, so we'll be moving in that direction. MCLR, my book is almost 35%, 36% now, and many of the banks have declared MCLR. The composition of MCLR depends on the moderation in cost of deposit. If further moderation is going to happen on the cost of deposit based on the repricing, obviously, we'll pass on those benefits. It's a model which is a tested model.

So there is nothing much we do. It's a calculation already hardcoded. So I cannot say how much it would go down, all would depend upon the cost moderation or the deposit cost, which is 4.91%, how much it would go down in future and the MCLR would depend on that. So I think, Mahrukh, addressed all your 3 questions.

[Operator]

The next question is from Bhavik Shah.

[Unknown Analyst]

I'll just, Mahrukh's question a little forward. Sir, MCLR calculation also has a return on equity as a parameter. Last few years, our return on equity was very good. So when will we review that? Like is there a plan to kind of mark that down maybe over the course of the year?

[Debadatta Chand, executive]

That will depend because there is a certain policy on how do you -- when you can review at what frequency and what condition. So they are all as per the policy they are in. So only thing which is variable as of today is the cost of deposit. So -- we'll also do -- we look at the market, what is happening in the market in terms of the level and then we possibly can take a call. But as of today, I don't think we need to take a review. But in case there is a requirement as per the policy, we'll take a review at a later date, not now.

[Unknown Analyst]

Understood, sir. And sir, we saw very strong growth in NBFC portfolio this quarter, quarter-on-quarter. Just wanted to check, those were repo-linked MCLR linked? And what was the yield 7.1%, 7.2% of?

[Debadatta Chand, executive]

Look, NBFC, what happened actually, there was a lower growth in NBFC book, the demand from the NBFC was lower in last quarter. So in terms of NBFC as a percentage of book, it has not gone from the peak level below the peak level. I mean when I'm telling peak level is a quarter prior to that. So in that way, we are quite -- we have a policy on that. We have a threshold therein, we are all operating within the policy and threshold therein.

So in terms of pricing of NBFC, normally, we get MCLR linked, but some of them can be repo linked. But then exact composition, I don't have, but then the yield is quite good out of NBFC, and that's a demand coming from now. And our A and above book has gone up in case you have seen the data there. So in that scenario, I think we are creating good quality NBFC book at the same time, mindful of the yield. Mr. Tyagi, anything you want to add on NBFCs?

[Lalit Tyagi, executive]

So in fact, we have said all. I can add only that NBFCs, there was subdued demand in the June quarter. And in September, they came to the market. And we supported them because we have the relationship in the past also. Some of the new clients also were added. And we have diversified NBFC portfolio.

[Unknown Analyst]

Okay, sir. Okay. Sir, last thing, sir, what CD ratio are we comfortable with global and domestic? What credit-to-deposit ratio would we be comfortable with?

[Debadatta Chand, executive]

Look, we are at 85% now. And when the deposit is not growing, obviously, you can't reduce your LDR or the CD ratio. But we are comfortable operating at 82% to 85%, quite comfortable. Look, our LCR is good, our CRAR is good. Our ability to grow is much higher. So in that way, we are comfortable at the current level. But once the deposit cycle improves, then possibly we can think of lowering, but we are okay with that 85% level.

[Unknown Analyst]

Okay. So we won't go beyond 85%?

[Debadatta Chand, executive]

I mean not actually. See, look, a couple of things which are supporting us. Look, my SLR, I'm surplus in SLR, LCR is comfortable. CRAR is good. So I don't have to be worry about any level that we see on the LDR. So not very -- I mean, very sticky on any particular level, but we are comfortable at the current level that we are operating.

[Unknown Analyst]

Understood, sir. And sir, our write-off declined quarter-on-quarter, INR 2,400 crores, we did INR 1,000 crores. I just wanted to check with you at what net gross NPA level would we be comfortable with? We are at around 2.2% as of now. So do you plan to accelerate write-off or as in now you're done with the write-offs?

[Debadatta Chand, executive]

No, in terms of write-off, you would have seen we have much lower write-off as compared to the earlier quarters and still is so low, right? It's something on the asset quality or the positive part of the entire, I mean, management that you can look into. So in terms of TWO [indiscernible] recovery, we intend to upsize this going forward. Actually, our normal run rate is roughly around INR 700 crores to INR 750 crores. So I think we need to improve on that count. So in that way, I'm not -- I mean, in a process where I think we can -- on this.

So the TWT is roughly around INR 63,000 crores as on today. So in case we can do write-off, we can do much higher, but then we are going at a normal level. So there is no guidance for GNPA to hot level 2, but the current levels are quite what you can say, strong vis-a-vis the systemic levels that we see. And so for most of the banks. And like us, we are also at a very good level on the GNPA.

[Operator]

Unfortunately, we run out of time. So that will be the last question we will be able to take. If I can ask Sridhar, sir, to please give the concluding remarks.

[Sridhar Inumella, executive]

Thank you all. I would like to extend my sincere gratitude to all of you for joining us today for the announcement and discussion of our financial results. Should you have any further questions, please feel free to reach out me or our Investor Relations team. We'll be happy to share any further information required. Thank you once again for your time and continued support. Have a great evening ahead and weekend ahead. Thank you.

[Debadatta Chand, executive]

Thank you very much. Thank you.