Bank Of Baroda Delivered One Of Its Strongest Quarters In The Last 8–9 Quarters | Debadatta Chand

Before I answer this question, let me put a couple of points which are important for the Q3 outcome. Look, in terms of performance of the bank, the bank performance has been consistent for last 13-14 quarters. So if you look at the profitability, in terms of business we had the strongest quarter in last eight quarters. The credit growth has been almost at 14.7%. Deposit, domestic deposit growth is 11.1%. So in that way we have a very balanced quarter and whatever profit you see is purely out of the operation. There's no one-off. So coming to the margin side, let us also account for two factors here. One is in terms of CASA percentage, we are one of the top quartile in terms of 38.45. In terms of cost of deposit we are at 4.75 which is one of the lowest in the market. So both the factors have a huge impact in terms of the margin. So if you look at the margin guidance we had given for full year, it was at 2.85 to 3%. Whereas in 9 months time if you exclude the Q3, the 9 months were at 2.88, that means bang on the target. But Q3 has been slightly lower than the lower range. The reason being, I mean between the last time we spoke and today there is a market action happened in terms of a cut in repo in the month of December. So that also, with every cut in repo rate there is a realignment that happens on the asset and liability. So considering that, the margin for this quarter has been 2.79. But for a Q4 perspective or a full year perspective, still we are hopeful because we have more than one lakh of liability which is going to repricing in this quarter. Considering the cost of deposit at 4.75, I'm hopeful that we'll get a substantial reduction in the cost of, I mean in terms of the interest expenses for this quarter. Although there will be resetting happening on the asset also, but at the same time I think we'll be in a position to achieve 2.85 to 3%. I'll not say we're bottomed out but then clearly on the range we are there as 9 months and I think we'll be in the range in Q4 also.

No, no, ECL provisioning is a draft guidelines yet to be finally issued. Actually it has to be finally issued and then only the banks would implement that. So it's a draft guidelines, point one. The final guidelines can be different than the draft. But assuming the draft guidelines as it is, on a back of the envelope or a thumb rule basis, there are two impacts of the ECL. One impact is with regard to a one-time impact on the capital and another is a recurring impact on the income. So as far as one-time impact on the capital, the impact can be roughly around 100 bps on the capital. Whereas there is another draft guidelines which talks about rationalizing on the risk weight on the credit side, advances side, that is going to give us a benefit of almost 40 bps, I mean 4%. So in that way the net impact on the CET that we expect based on the draft guidelines is around 6%. Which can also be a portion for five years as per the draft guidelines. Secondly, coming to the recurring part of it, once the one-time impact is taken in the books, the recurring impact, we said that the impact can be almost 18 bps on the credit cost. So that is the normal calculation as today, but exact number we'll get to know as the final guidelines is issued on the matter.