Mr. Chand, welcome to the show. Always a pleasure to speak to you. My question to you is if I have to look at the operational numbers, momentum remains strong. We've seen a 9.5% year-on-year increase in terms of the NI. The headline PAT, there has been a one-time 5,680 crore charge that has been taken against the NMC litigation settlement charge. Now, the question is: is this overhang entirely over or is there any residual impact remaining?
So, you said right as far as the cases both in the Abu Dhabi global market and also the UK court, this is full and final settlement besides the NMC case. So, in terms of the overhang besides this case, it's full and final and it's over. And as you said right, the bank's core operating parameters are quite strong. The business growth is one of the strongest quarters that's better than the last full year itself. At the same time, the NI growth has been at 9.5% which is quite positive. So, in that way I believe the overhang of this particular exceptional case is over. And the bank is going to post a better outcome in the coming quarters.
Got it. So, no overhang from hereon. Now, as we spoke about the core strength, how do you foresee normalization in terms of ROEs because your target is 15 to 16%? Is that intact or do you think there could be an upgrade coming in there?
No, no, no. Full year basis we'll outline maybe up to next quarter, but as far as the Q2, Q3, and Q4 are concerned, we said both in terms of ROA in excess of one and the ROE in excess of 15 we're going to achieve that. Obviously, this quarter it is lower because of the exceptional item. So, slightly we'll get more clarity with regard to because we are also expecting a couple of one-off in terms of offside in coming quarters. So, having those kinds of clarity, possibly on the full year we'll better outline in the next quarter. But, as far as the quarter to quarter is concerned, Q2, Q3, and Q4, both in terms of our earlier guidance on the ROA and ROE, we'll be in a position to achieve those numbers.
Okay. So, that's with regards to the returns as well. Now, there has been a compression that we've seen in terms of the net interest margins. Mr. Chanda, that's pretty marginal. However, it is well within what you've guided for FY27. Are you seeing any further pressure in any of the quarters, or do you think the momentum is towards achieving what you have guided for?
I don't think so, because if you look at it, there are two factors that you have to account for what happened in this quarter. Our NII growth is 9.5%, whereas the asset obviously has grown higher than that. That's compressing the margin, but that is within our guidance of 2.75 to 2.95. There are two things that we are looking at this point of time when we talk about Q2. One is the case where the non-MCLR book in the corporate is slightly seeing an upward repricing. Obviously, because of the elevated deposit cost structure. At the same time, the wholesale deposit because of the post the FCNR B announcement, we've seen beta moderation there. So, with both the factors, I think the guidance of 2.75, the bank would continue in that particular range. And at least for Q2, I think it would be in the same range, but I think there is an upside there in the margin.
And what about the advances and the credit growth? Because global advances, a 17.5% growth is what we've seen, Mr. Chanda. Now, your credit growth guidance is in that range of 12 to 14%. So, how do you actually plan to sustain the outperformance that you've given in this quarter?
See, there are two things. For the full year FY26, my credit growth was 16.2%. This quarter it is at 17.4% of global advance. So, this is way ahead of our guidance of 12 to 14%. But full year guidance we're not changing because there are two factors also you have to account for when you give a full year guidance. One is the geopolitical overhang continues in the market line. So, as of today, the Indian economy is resilient, so is the bank's book, so there is no impact as of today. But if the geopolitical continues to be at an aggravated scale, then possibly there can be an impact there. And secondly, we're tracking the monsoon also very closely. So, based on that, we're not revising our guidance of the advances 12 to 14%. Rather, I'd prefer to outperform that guidance going forward. After looking at the Q2 outcome, possibly we might think of upsizing this guidance in case the growth momentum continues as it is today.
You know, that's very interesting because then the investors are going to now watch out for the second quarter where there is a potential of an upsizing of the advanced growth guidance that could be coming in as well. The other question I have for you is in terms of asset quality. You know, optically when we see there is a little bit of deterioration that has come in. Are you seeing any stress emerging over there? What's the plan to manage it?
