Bank of India Limited (BANKINDIA) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. On behalf of Bank of India, I extend a warm welcome to all the esteem analysts who have joined us today in person as well those who have joined us virtually from different cities across India. We are pleased to announce Bank of India's financial results for Q1 FY '27. I would like to introduce the Bank of India's management team present for today's analyst meet. Shri, Rajneesh Karnatak, MD and CEO, Shri P.R. Rajagopal, Executive Director; Shri Sobradkumar, Executive Director; Shri Rajeev Mishra, Executive Director; and Shri Pramod Debari, Executive Director. We will now begin this analyst briefing to start, I'd like to invite Shri Rajneesh sir to address this grading, after which we will open the floor for the Q&A session. So over to you.

Thank you, ma'am. So good evening, ladies and gentlemen. Thank you for your joining us today, ahead of our announcement for the financial results for Q1 FY '27. The first quarter of the year has been marked by a changing global environment. while West Asia uncertainties continue to trade-related developments remain fluid. The Indian economy has remained on a firm footing. Inflation has remained broadly contained, although the uneven progress of the monsoon and its implications for food prices continue to warrant close attention. Domestic economic activity has remained steady and the Reserve Bank of India has maintained a supportive policy stance to support growth. These developments have created a favorable environment for the banking sector. The new financial year has opened steady note. Building on the progress achieved so far, our focus is on sustainable growth, prudent lending and disciplined execution across all our businesses. My remarks today are divided into 3 parts: first, being the institutional initiatives, the second being the business; and the third being profitability and asset quality. So as far as the institutional initiatives are concerned, to sharpen the market focus and accelerate the growth, Bank of India has established a dedicated centralized sales vertical to streamline the business outsourcing, these functional verticals holds end-to-end responsibility for driving customer acquisition, enhancing business productivity and boosting the revenue across the streams. The second initiative that we have taken is on complementing this is the establishment of the strategic business branch, the SBB at Mumbai, dedicated to capturing high-value pool buyouts, co-lending treats business and also supply chain financing. With the aim to enhance the digital convenience and seamless banking, Bank of India has now offered the virtual personalized debit card in the rupee segment. Customers can instantly apply for and self-activate the card directly through BOI online mobile banking application. The fourth initiative that we have taken is to elevate the user experience, the bank has introduced the BOI Star Choice current account, which gives clients the unique capability to select the last 7 digits of the account number. The bank has also operationalized the central video customer identification process center in Mumbai, enabling seamless end-to-end digital account opening through the e-platform without manual intervention, driving operational efficiency and a frictionless customer service. Digital Banking has taken a leap forward in Kenya, Bank of India, Kenya mobile banking application is now live bringing customers the convenience to anytime banking, real-time transactions and seamless MSI interaction. To revamp the bank's existing cash management services, Bank of India Services Limited is facilitating the proposed mechanism to deploy dedicated field staff on the ground. This -- on the street presence will allow us to leverage the existing corporate relationships driving through deposit growth and broader business opportunities. As far as the business is concerned, Global business has grown by 16.57% on a Y-o-Y basis from INR 15.06 lakh crores in June '25 to INR 17.55 lakh crores in June '26, with the incremental growth of INR 2.49 lakh crores. Global deposits have increased by 14.90% on a Y-o-Y basis from INR 8.34 lakh crores in June '25 to INR 9.58 lakh crores as on June '26, with an incremental growth of INR 1.24 lakh crores. As far as domestic deposits are concerned, they have increased by 16.5% on a Y-o-Y basis from INR 7.10 lakh crores in June '25 to INR 8.25 lakh crores as on June '26. CASA has increased on a Y-o-Y basis to INR 2.82 lakh crores in June '25 to INR 3.02 lakh crores as on 30 June with an incremental growth of more than INR 20,000 crores and CASA ratio stood at 36.8%. As far as the global advances are concerned, they have increased by 18.84% on a Y-o-Y basis from INR 6.72 lakh crores in June '25 to INR 7.98 lakh crores in June '26, with an incremental growth of INR 1.25 lakh crores. As far as the domestic gross advances are concerned, they have increased by 19.20% on a Y-o-Y basis from INR 5.65 lakh crores in June '25 to INR 6.74 lakh crores as on June '26. RAM advances have also increased by 19.75% on a Y-o-Y basis from INR 3.25 lakh crores in June '25 to INR 3.93 lakh crores in June '26, constitute nearly 54.30% of the advances coming under the RAM segment. As regards to the profitability and the asset quality is concerned, operating profit has improved by 25.99% on a Y-o-Y basis and it stood at INR 5,051 crores for June '26, as against INR 4,009 crores as on June '25. Net profit has increased by 36% on a Y-o-Y basis, and it stood at INR 3,068 crores for June '26 as against INR 2,252 crores as on June '25. Net interest income has also increased by 12.61% on a Y-o-Y basis, and it stood at INR 6,833 crores for June '26 as against INR 6,068 crores in June '25. Noninterest income has increased by 19.07% on a Y-o-Y basis, and it stood at INR 2,579 crore for June '26, as against INR 2,166 crores as on June '25. Global NIM stood at 2.52% in June '26, as against 2.55% in June '25. Slippage ratio has stood at 0.24% in June '26 as against 0.33% in June '25. Credit cost has also declined to 0.15% in June '26, as against 0.17% in June '25. There has an improvement in the asset quality also with reduction in both GNPA and NPA, gross NPA ratio has improved by 111 basis points in -- on a Y-o-Y basis to 1.81% only as on June '26. Net NPA ratio has also improved by 24 basis points on a Y-o-Y basis to 0.51% as on June '26. Provision coverage ratio has improved to 93.63% in June '26, as against 92.94% in June '25. As on 30th June '26, banks CRAR has improved to 18.69% from 17.39% as on June '25. Going forward, the outlook for the Indian economy remains constructive, supported by stable consumption patterns, continued public investment and healthy credit demand across the sectors. However, geopolitical developments and evolving financial market conditions continue to warrant close monitoring. Against this backdrop, our guidance for FY '27 stays unchanged. Global advances to grow by 15% to 16% and global deposits by 13% to 14% on a Y-o-Y basis. Our approach will continue to be guided by balance growth with focus on improving our deposit mix, supporting credit demand maintaining sound asset quality and making processes more efficient through technology and better customer service. Our Q1 FY '27 results and investor presentation have been released today provide detailed insights into our quarterly performance, key business developments and outlook for the remainder of the financial year '27. Thank you once again for joining us today here. I invite you for your questions. Thank you so much.

[Operator Instructions] We'll now proceed, please raise your hand for the questions.

Hello. I'm Ashok Ajmera. Sir, compliments to you, sir, the entire team of Bank of India for a good set of numbers in the first quarter of FY '27. Sir, the numbers are good. Somehow we are escaped from whatever is happening geopolitically because we started from 28th of February -- but some of that impact is still not been so much visible to us, if you see the numbers and other things. But the way these things are going is still. I mean, of late, have you started feeling some kind of stress in some of the accounts, especially the MSME and the small loan accounts. And this ECLGS 5 I mean that will give some color of what is the need of the people. How much have they already received the money from you, how much disbursement has taken place, Senshin has taken place and whether more and more people are approaching, which will give a little idea about the stress building up so that the future quarters may or may not be impacted that much. This is just my first listing observation from you, sir.

Yes. Thank you so much. Ajmera Ji, on the first point with respect to the West Asia crisis and its stress building up. So we have 2 data points in our balance sheet presentation today. First point is with respect to the SME numbers. And the second point is with respect to the asset quality and the fresh slippages, which are there. So as far as the SME numbers are there, if you see our INR 5 crore and above SME numbers, our SMA has now come down to INR 4,070-odd crores, which is only 0.52% of our standard book, which was around INR 4,700 crores as on 31st March and more than INR 7,000 crores as on 30th June 2025. So as far as the SMA numbers are concerned, the collection efficiency remains intact for Bank of India, #1. Our zonal collections are doing excellent work, which is enabling us to reduce our SME numbers overall. So the stress of the West Asia crisis does not seem to reflect over there. As far as the fresh slippages are concerned, there also, if you see the fresh slippages have been including the existing debit outstanding, which increases in the existing NPA accounts has been only around INR 1,800 crores as against INR 2,100 crores of fresh slippages, which had happened in the quarter of the June '25. So there also, we have been able to control the slippages, Normally, the Q1 slippages in Bank of India are normally higher than the other quarters. And with the progress of time, the fresh slippages will go down further in the coming quarters. So there also, we feel that the asset quality has been intact for us. So at present, we do not see any much stress as far as the West Asia crisis is concerned, which is getting reflected in the SMA or the fresh slippages. However, having said that, we are monitoring the situation very closely. There are certain sectors where we feel that there has been direct impact, particularly sectors like chemical sectors like ceramics and also sectors where import and exports are there, particularly import of oil or gas is there. So there, we are monitoring the situation very closely. Apart from that, because of the supply chain crisis which is happening in the -- because of the West Asia, there is also an increase in the working capital cycle. So however, that has been taken very well -- taken care very well by the government through the ECLGS scheme. So as far as that scheme is concerned, we have already sanctioned somewhere around INR 6,000 crores under the ECLGS scheme, out of which INR 4,600 crores has already been disbursed. And we expect that by the time the scheme comes to an end, which is around INR 2.5 trillion when it will get away the scheme comes to an end. But at that time, we feel that around INR 8,000 crores of sanctions and disbursal we'll be able to do. So the MSME accounts where there is certain stress because of the increase in their working capital cycle due to the West Asia prices. they have already availed or will be availing the ECLGS scheme that will help them to tide over this situation, which is there presently prevailing.

Sir, we are one of the large player even in the international market is also reasonably large. And now with this relaxation in the interest rate by the RBI on the FCNR and the other foreign other 2 routes of bringing the foreign deposits, where do we stand there? Can you give some color on that? And what is our overall plan this year up to September and the whole year under those 2, 3 routes, which are available to you? And how is it expanding our deposit base. And at the same time, the credit linked to the money which is coming in deleveraging. So can you give some color on that, that where do we stand as far as Bank of India is concerned on that?

Yes. So as far as the FCNRB is concerned, See, we have ourselves set a target of around $1.2 billion that we will be mopping up under the. So in that, we have a very robust mechanism. We have an international presence of more than 15 countries, #1. #2, as far as our AD branches are concerned, branches, which are enabled to take FCNRB and NRI branches all put together are somewhere around 250 across spread across all the entire country in the 13 FGMs and presently, as we talk, we have already garnered more than EUR 200 million of FCNRB deposit. And our target is to achieve the number of 1.2 billion by 30th September. And we are seeing this deposit coming from across the globe, whether it is U.S. sake of Canada, whether it is in the 4 countries in Africa, whether it is Europe, particularly U.K., whether it is in the East Asia whether it is coming from our Singapore or Hong Kong or Japan. So we are seeing this money coming from across the globe as far as that is concerned and also within the country from all NRI segments in all the 13 FGMs, which are there. As regards the leverage is concerned, in the leverage also, we have our product, which is up to 9x the leverage we will be giving, so that is the product that we have approved -- got approval from our Board that we have already rolled out and we are marketing that leverage product also. As far as the costing part is concerned, we are offering these products at -- for a 3-year FCNR, we are giving 6.25% for a 3-year to 4-year FCNR term, we are giving 6.30%. And for the 5-year, we are giving 6.50%. So presently, if you see the bulk deposits, we are getting at somewhere around 7% and if you even see the gap, which is there for the 5-year FCNR at 6.5% with the hedging cost being taken care by the RBI. So we are getting a clean spread of around 50 basis points even on that 5-year deposit. So definitely, there is some gap for us and attraction for us, and there is no CRR, SLR also to be maintained on those deposits. So definitely, there will be certain cost benefit analysis for us and the cost of deposits will be coming down for the bank. On that account.

So the last one, sir, in this round Treasury has contributed very well in this quarter because of the revaluation and also the profit. And the overall everybody has paid some good money, but now going forward, again, the things are -- the yield movement is again getting adverse. So do you think that we will be able to maintain? And then if not, how do we compensate on the profit in the coming quarters, so as to improve from this quarter for the next 3 quarters of the year, and we stand benefited or stayed improved the overall for the financial year '27?

So as far as the interest cycles are concerned, see, if -- when the report will increase, if the RBA increases, the report rate, definitely, there 60% of our book is through the repo external benchmark there, we will be able to earn better interest income for the bank. So the NIMs will improve as far as the interest income is concerned on the loans and advances. In that situation, typically, the investment will be under stress. The investment book will be under stress or vice versa. So that thing will always play out in the market when the interest rates go up or they come down. So many things are not in our control in that manner. But 1 thing that we are trying to do is that we want to increase our advances in a very secular manner. So which means that we want to grow our RAM advances in retail, agriculture, MSME, we want to grow our mid-corporate book. We want to grow our corporate book. We also have international presence. We also want to grow our international book. And we are also growing our core lending pool purchase, supply chain financing and also our trades book. So we are trying to grow in a very secular manner as far as our rate book is concerned. So that any impact which is there in any particular geography, sector or segment, we are able to update and mitigate that risk as far as our credit book is concerned.

Manoj [indiscernible] here. Congrats to you and your team, excellent performance record, in fact, better than most private sector and public sector banks so far. Excellent. One can see in Slide #6. Slide #7 and also the other income record-breaking performance. So a couple of questions. One is how do we see our business in Gift City, our plans for that and growing up and huge transactions are happening in Gift City One is that. Second thing is in the Slide #7, we have shown excellent performance across all verticals. It's not just corporate loans. Each vertical we are done, record breaking performance 20% and above apparently. But somehow gold loans is not mentioned here. So what is our strategy for low gold loans and scaling it up because it's a product all even public sector banks have started offering and huge effectively tax-free opportunity. And do we have any business? I know we have, but type of plan scaling up and the kind of growth expected. So these are a couple of things. The third is Ashok bhai always, he already asked on FCNR. Now I see -- I personally visited our London branch -- now you have over 25, 30 years, 40 years experience internationally. In fact, Bank of India was the foremost bank with global operations. Now when we see the finance ministers target, initial target or revised target, our $1.2 billion is [ Norway ]. Actually, we should have 5% to 7% share of the target given by the Finance Minister, even RBI governor is pushing because this is a time we need to stabilize the rupee and also take opportunity of in this international uncertain period to do it. So I'm sure your $1.2 billion is very, very conservative. So if you can share any if possible and what is our plans and region-wise and continent wise because we are across effectively all continents. And this is opportunity to even grow. And lastly, I know informal consultations have started on PSU banks mergers. I'm saying informal. So your thoughts on that -- and ultimately, we need to have globally sized banks. And we have the leadership in that last time we have left out. Now I know we can do a not only acquisition financing, but I'd also acquire banks under consolidation process. So I would like to have your answers in detail.

Yes. Thank you. So I will go in the reverse order. So as far as the merger part is concerned, we have no comments. There has been no discussion with us. So it is only for the government to answer this question or the RBI. So we have no comments on that. Second, as far as this, your point is concerned with respect to the RBI circulars with respect to FCNR, OFCs, MTNs also with respect to the ECBs. Yes, $1.2 billion is our target that we have set for ourselves that -- and we are very confident that we'll be achieving it very quickly. So that is not the -- any issue with that. Apart from that, we have also set ourselves a target that we'll be raising around $2 billion as far as the OFCB and the MTN is concerned, that we will be doing, as you are aware, for FCNR, the RBI window is up to 30th September. And for OFCB and MTN, the window is up to the 31st December 2026. So another $2 billion, we will be raising it through that. The dollars will be coming into the country through that also. And the third opportunity, which is there with us, from the RBI circular is with respect to the ECB. There also in 4 to 5 accounts, we have already given in principle approvals of around $500 million. And we are very confident that there also, we will be doing around $1 billion. So put together, we will be somewhere around $4.3 billion by the end of 31st December with FCNR, OFC, MTN and the ECB, which is there. As regards our strategy in the Gilt City, yes, GigCity is our key strategy as far as lending is concerned. And their very good book is getting created. And in the present situation, also, if I tell you, our corporate pipeline is somewhere around INR 70,000 crores as we speak, which includes our pipeline for domestic corporates and also for the international corporate put together. And some of it in the international side is coming from the Gift City itself. So we have a very strong strategy as far as the Gift City is concerned, as regards to the gold loans are concerned, we have a book of somewhere around INR 57,000 crores as on 30th June. And the yield in that is more than 9%, somewhere around 9.10%. And if I give you the color on the asset quality there, the NPA is less than INR 100 crores. And we have a very clear strategy, so as far as the realization of these NPAs are concerned. So after giving 3 notices, within 90 days, we sell the gold and realize the money. So our gold loan book is performing very nicely, and we are growing also at a very good pace in the gold loan. And gold loan is 1 of our clear strategies as far as growth in the RAM advances are concerned.

In the gold loan, INR 17,000 crores currently, what is our growth number, if you can mention? And second thing is on the FCNR, you mentioned the rates and the spread also of 0.5%. And you mentioned about leverage. If you can mention a number of times leverage to your international branch because we know the leverage offered by foreign banks and IDBI Bank also. So we would like to know how does it compare?

So the approval from the board on the leverage we have taken at 9x. We have a metric for that. maximum, we will go up to 9x. That is as far as the leverage is concerned, deposit, I've already told that we are giving deposit at 3.2, 6.25x, 6.3x and 6.5x. So that is the thing which is there and 9x is the leverage that we are giving. And the growth in the gold loan is somewhere around 25% on a Y-o-Y basis.

Congratulations to -- congratulations to Team Bank of India for excellent performance. Sir, looking at your numbers, the guidance and the actual performance is a big mismatch. You may say I would outperform the guidance. But the team capability, the cash position, the credibility of the banking team, not only yourself and your DAS team, but the rest carries much more better weighted. So taking Manoj's question and many other aspects, bank may be at a better position if any question arises of FM taking a decision. This is my judgment. But now looking at $4.2 billion, which you are raising, speaking to 1 of our CGM in the past, he said in the last scheme of FCNR out of $34 million, only $6 million on leverage, $28 million was direct. So taking that question first, what is our estimate that we'll be leveraging what portion of $1.2 million and what would be a direct deposit because direct deposit is more of your existing customer or the customer who want to be sticky. Flipper will come for one time.

Yes. It's rightly said, it's a very technical thing on the FCNR. To give you more sense , we have more than 3 lakh NRI PIO and IC customers with us as Bank of India platform. So -- and we have a very strong franchise as far as the NRI customers are concerned. So we are very confident that quite a few whatever, even today, when we speak that we have $200 billion already garnered in FCNR, majority of which is in the core FCNR deposit and leverage much is not there. But going forward, we definitely expect that some leverage will be happening. And because already certain discussions are there with some of the large HNI customers, we are having that who are seeking leverage from us. So the leverage, as I said, maximum will be giving around 9x. This is the leverage that we will be giving.

I understood. But -- it's a matter of spread, which all of us know and the dollar demand is tight. So -- the spread has reduced compared to what was initially offered -- and it may be different in a month. It may be different today. Yes. Go ahead, sir.

Yes. So spread at this juncture, I will not be able to like detail because, see, we have to take the borrowing part also. So the borrowing rates also, you are well aware about the market, international market also. These rates are also constantly changing, and it's a moving target. So what is the gap in as far as the leveraging is concerned on the rate side, on the interest rate side over there, at this juncture, we'll not be able to tell, but definitely, we are targeting leverage also.

Sir, I will start in reverse your international book looks promising. Business prospects for India are getting better from a constraint which we led or the country needs more export more manufacturing. How are you seeing traction besides Gift City in the geographies where you are present for local as well as domestic business, which is intra means local to global.

Yes. So as far as that is concerned, in the pipeline, if you see for Bank of India, if I can tell you, see, we have a presently pipeline of more than 1 crore in the entire loan book of the bank, which is a very secular loan book. So if I tell you the corporate and the international book, the pipeline is somewhere around INR 70,000 crores. remaining pipeline is with respect to our RAM advances, digital book and also the pool purchase co-lending treads and supply chain financing. That is the kind of more than INR 1 lakh crore of supply -- this pipeline that we are having. Within that, we have a very strong pipeline in the international book also. It is not only in the Gift City but also in our main centers, major centers like New York, like London, like Japan and also in Hong Kong. So these are the centers in Hong Kong and Singapore from where good pipeline. And this pipeline is coming not only from Indian corporates but also local corporates over there. So we have a very strong pipeline in the international book also is concerned. If you see our numbers in this quarter for the first time, we have touched more than INR 2.5 lakh crores of international business. In fact, we have closed at around INR 2.56 lakh crores. So in the coming time also, we are very confident that we'll be able to build the international book in that, you may not see a very high delta because as a strategy, what we are trying to do, we are trying to improve our NIMs in the international side also. If you see our presentation, around 32% of our international loan book is trade finance, where the margins are very less. We are trying to now replace this trade finance book with the Indian corporates and domestic corporates.

Looking into business prospects, I have no doubt that you will outperform the market, majority of them on outperform. Now to make enablers in place, 1 is your digitization, Second is your human resource, the talent, which is there which may stay with you, if you take care of them in terms of quality, giving them training, giving them right locations and easing this bank to the next level from where it is today. So what is our spend? How are we investing in that human resource that they become the leaders of tomorrow too?

Yes. So we are taking a lot of things for transformation part as far as the entire organization structure is concerned. So in HR, we are driving that Star light program, which is for upskilling and reskilling our present workforce, not only the officers, but even the clerical staff and also the substaff, There, we are doing a lot of work as far as the reskilling and upskilling is concerned and building capabilities within our staff and also do succession planning. So a lot of courses have been started, mentor mentee programs have been started. Coaching has been started -- and we are sending our staff to not only domestic key centers, coaching centers and training centers, but also at the international centers. So a lot of work and effort is being made to have -- we have a slide also this time on the kind of work we are doing on the learning and development part as far as the HR part is concerned. On the technology part, again, I would say that we are spending much money as far as the IT digital and cybersecurity is concerned, the IT part, a lot of money is being spent on the digital. Now our loan operating system is also well established, and we are seeing the results coming out of that and majority of this sanction at least 22% of our now the entire domestic book in the domestic credit is now digital sanctions. Apart from that, now analytical sanctions are also happening, where the data lake project is there, where the leads are going from that data lake projects, they are flowing into the CRM next package from CRM next they are being pushed to the branches for the existing customer. There, if you see our slide there also, we have built a business of more than INR 18,000 crores. So a lot of efforts have happened on the IT side also on building the AI capabilities, digital capabilities within the bank. And now the time has come for us after spending so much of money that we want to have this technology transformation and have this automation and get the business out of it. Already, we have started seeing the business and now is the time to ramp it up and grow that business.

Request you, yes, because we have many questions coming online also. So we'll take 2, 3 on question, sir. Sorry. Sir, can you just give me 2 minutes, I'll just take for you online questions also, which are coming in. So there is 1 from Ravish, Morgan Stanley. He is asking how should we think of PSL income for the 3 quarters, this quarter base being INR 277 crores. Second question is any reversal of provision for AS 15 since the reversal was not done in the last quarter. while other banks did it in last quarter?