Key Financial Figures

  • Net Profit: INR 1,071 crores, representing 33.7% year-on-year growth
  • Operating Profit: INR 1,704 crores, up 25.5% year-on-year
  • Net Interest Income (NII): INR 2,786 crores, growth of 17.5% year-on-year
  • Net Interest Margin (NIM): 2.7%, improved 20 bps year-on-year and stable sequentially
  • Core Fees: Grew 18.7% year-on-year with broad-based traction across cards, third-party products, forex, and transaction banking
  • Cost-to-Income Ratio: Improved to 62.8% from 67.1% a year ago
  • Return on Assets (ROA): 0.9% for the quarter
  • Return on Equity (ROE): 8.3% for the quarter
  • One-off Items: Interest income on tax refunds of INR 119 crores (classified as non-interest income); Security Receipts gains of INR 86 crores (significantly lower than INR 338 crores in Q1 FY26)

Asset Quality

  • Gross Slippages: 1.4% of Advances (vs 1.6% in Q4 FY26 and 2.4% in Q1 FY26)
  • Retail Slippages: Lowest in past 10 quarters
  • Gross NPA Ratio: 1.3%
  • Net NPA Ratio: 0.2%
  • Provision Coverage Ratio: 81.7%
  • Recoveries and Upgrades: INR 564 crores for the quarter (including INR 86 crores from Security Receipts portfolio)
  • Security Receipts Guidance: Maintains FY27 guidance of INR 800-1,000 crores gains from SR portfolio

Growth and Balance Sheet

  • Total Advances: INR 2.85 lakh crores, growth of 18.3% year-on-year
  • Corporate and Institutional Banking: Strong growth
  • Commercial Banking (MSME): 17% year-on-year growth
  • Retail Banking: 6.9% year-on-year growth
  • Retail Disbursements: 27.5% year-on-year growth
  • Average Balance Growth: Underlying loan growth in 15-16% range
  • Total Deposits: INR 3.15 lakh crores, growth of 14.3% year-on-year
  • CASA Deposits: 14.3% year-on-year growth (15% on average balance basis)
  • Retail and Branch-led Deposits: ~60% of Total Deposits
  • Capital Ratios: CET-1 ratio at 14%; LCR at 138.2%

Rating Agency Updates

The Bank received significant external validation during the quarter:

  • Moody's upgraded issuer rating to Ba1
  • CARE upgraded Basel III Tier 2 and Infrastructure bonds to AA+
  • ICRA upgraded same instruments to AA
  • S&P Global assigned inaugural international rating of BB+

Capital Raising Plans

The Bank has an enabling approval for capital raising (refresh of previous year's approval) but currently has sufficient cushion for 3-4 quarters of growth. Management indicated comfort with 14% CET-1 but may consider raising capital to align with better-capitalized peers if opportunities arise. The capital raise is not linked to the ongoing AT1 court case, and there are no provisions made for potential adverse outcomes.

Strategic Priorities and Guidance

  • NIM Target: Aspire to move towards 3%+ over next 2 years through RIDF/Priority Sector Deposits rundown, disciplined deposit repricing, and improving CASA mix
  • ROA Target: Full-year aspiration of ~1% ROA for FY27
  • Growth Strategy: Grow at 15-17% (slightly above industry), focus on liability-led balance sheet expansion
  • Retail Growth: Expect double-digit growth in 3-4 quarters as disbursements (growing 25-30% YoY) translate to book growth
  • Product Mix: Maintain 75% secured vs 25% unsecured retail portfolio

Other Updates

  • Awarded 'Most Sustainable Bank' at Business Today's India's Most Sustainable Companies 2026
  • Included in FTSE4Good Index for fourth consecutive year
  • Recognized among top 25 India's Best Workplaces in BFSI for 2026
  • NRI homecoming campaigns received awards for disruptive use of AI

Q&A Highlights

  • FCNR Deposits: Seeing strong demand with current leverage at 9x; working with international banks including SMBC for limits
  • ECL Transition: Impact not expected to be material due to Security Receipts offset; detailed numbers to be shared later
  • Commercial Banking: Limited impact from West Asia war; portfolio quality remains good
  • Indo-Japanese Business: Strong traction expected in infrastructure financing and trade corridors leveraging SMBC partnership