Hello, welcome to ETBFSI.com by the Economic Times. My name is Amul and I'm in conversation with Debadatta Chand, the MD and CEO of Bank of Baroda. I'm glad to have you on this show.
Thank you very much. Thank you.
So to begin with, I'm sure you must have already answered a question about bad revenue growth a lot of times. So I will just quickly talk about first, you know, margins, corporate credit growth, then industry and perhaps we take in the future. These are the two three topics that I want to discuss with you on a slightly broader level so that my readers and viewers can get a better perspective. To begin with, what I have learned from many other interviews of the bankers and also the analysts is that more than 3% margins for the bankers, whether it's private or PSU, is going to be tough. You're already leveling at 2.96. There is some improvement in the margins also this quarter. How do you see the whole, or how would you like to give a guidance specifically from margins from the Bank of Baroda perspective?
Thank you very much for inviting me. And before I go to the margin, let me put a couple of facts before you.
One is a case like very significant growth in terms of the top line. One of the good parts of the topline growth is the sequential growth has been quite strong. Corporate almost 8% and the MSME sequential is almost 6 and a half percent, and retail almost at 5% sequential growth. So the growth path, the bank is doing well. So one of the key themes while driving the growth of the business model that we want to keep is the underwriting tight, at the same time clearly focus on the margin and then growth.
So margin and growth is always a trade-off in that.
So the bank, a couple of things again which again vouch the margin being one of the good numbers is that my cost of deposit at 4.91 is one of the lowest you would have seen in the system.
At the same time there is a positive NI growth.
And at the same time, the asset quality has been quite good.
So leading to a scenario wherein we are finding a margin also something on the top quadrant.
But in terms of the repricing of asset liability, many of these asset liability repricing would have happened during the quarter. I'm talking about Q2 and the full quarter impact possibly it not have seen. So the next quarter is going to be a quarter wherein possibly we'll see the full impact of the asset liability repricing.
Subject there is no rate cut.
In that scenario, our guidance for the next quarter margin is that it is going to be rangebound.
So rangebound in the sense that it can be higher or it can be lower also.
At the same time, our estimate that Q4 would be better. I mean there would be upside and full year basis will be at somewhere 2.85 to 3 on a global basis.
Whereas the domestic name which was at 3.10 in September, that would again move in the same range at least for one quarter and then we can see some improvement in Q4. But then next quarter we need to watch out.
That's why we say very clearly it would be a range bound. So we need to see the real impact on the books before the numbers are computed.
Okay. But that's the total that you see. I mean we will close the year with 2.85 to...
Okay, which is on the basis, I mean which is on average around 3%. Maximum...
No, average it can be below 3%. I mean global, see I run a larger international book.
So the book is almost 20,000 and the margin although it has improved this quarter, global name has improved but then it is not so like a domestic name. So it is somewhere at 1.75 to 1.8 at best.
Certainly sir. So then it puts global name into... on a domestic basis the range can be around three.
Global basis it can be 2.85 to 3.
Right. There are mixed views and the mixed signs about the corporate growth. While the bankers are saying there is some improvement, when you look at the industry side, either the green field or the white field capital, still we are seeing a dip into it though the corporates have announced a lot of plants. In fact, in the earlier quarters you had said that the corporate lending has dipped sequentially due to sectoral seasonal factors and warm market shifts. How has been the performance starting from this quarter because we have seen some uptake since the beginning of this quarter itself? And what is your whole observation specifically about the corporate credit growth?
Look, the corporate credit like this quarter on a year-on-year scale we are slightly muted but on a sequential credit the growth is almost 8%. And when we speak as on today, we do have a pipeline of almost 4,000 sanctioned not disbursed. Yes. And 25,000 which are under process. So almost a pipeline of 65,000. Another underlying thing that you can take is that Q3 and Q4 are normally productive quarters. These are busy season quarters, but the growth normally the normal working capital borrowers also they increase their availment. In that scenario, I'm expecting a full year 10 to 11%. There are sectors which are doing quite well. Investment happening on sectors like renewal side, data center side, road projects, infra projects, commercial real estate where buildings are being constructed. So I think there is a whole lot of things getting into the corporate piece. One thing that happened during the last two quarters Q1 and Q2, many of the corporates either because they are cash, they have the capex but they either put out their own internal approval or press equity because the capital market is quite strong. At the same time, on the loan side they got into bond market and borrowed funds because that is something linked with the bond market price. Yes. So the real corporate loan growth in the banks' book may not be a true reflection of the private capex happening in the economy. I think the private capex still is quite strong.
