Bank of Baroda Ltd

NSE:BANKBARODA

Earnings Call Analysis

Bank Reports Strong Growth and Improved Asset Quality

The bank showcases solid expansion with a 17% year-on-year increase in global advances, supported by significant growth in domestic (16.5%) and international loans (21%). Retail advances particularly stand out with a 22% growth. Deposits are also on the rise, up nearly 15%, yet CASA growth is modest at 4.5%. Impressively, net interest income (NII) and profits after tax surged by about 15% and 52% respectively, leading to a robust return on assets (ROA) of 1.12%. Asset quality has seen a positive turn, with gross and net non-performing assets (GNPA and NNPA) decreasing noticeably. Despite this, some compression in net interest margin (NIM) is evident due to increased deposit costs, although it managed to match last year's H1 NIM of 3.3%.

Strong Loan Growth Amidst a Muted CASA Performance

The company's loan growth has demonstrated significant strength, with a 17% increase in global advances, driven by domestic loans at 16.5% and international loans at 21%. At the heart of this expansion are retail loans that saw an impressive 22% growth. Despite this, there was a slight cause for concern as the CASA (current account and savings account deposit) growth was muted, coming in at only 4.5%. However, the robust growth in total deposits, which rose by nearly 15%, and particularly the sharp rise in retail term deposits, somewhat mitigated this tepid CASA performance.

Financials Indicate Profitability and Effective Asset Management

The net interest income (NII) rose approximately 15%, and more impressively, both the operating profit and profit after tax surged by around 50% compared to the previous year. Return on assets (ROA), a key indicator of how profitable a company's assets are in generating revenue, has exceeded 1% for the half-year, an improvement from the past quarters. The balance sheet strength is further evidenced by the capital adequacy, with a CET1 ratio that could be 12.47% and a CRAR at 16.20% when considering the half-year profits, demonstrating solid capital buffers.

Maintained Guidance with Loan Book Growth Forecasts

In terms of future projections, the company maintains guidance to outpace the industry by 1-2% in overall loan book growth and by 3-4% in retail loans. The target is set for a 14-16% growth in the overall loan book. With an aggressive approach toward the retail sector, the ambition is to elevate its proportion from the current 27% to 35% in the next two to three years, indicating a strategic shift towards a more diversified and less volatile loan portfolio.

Pressure on Net Interest Margin Leads to Revised Guidance

The Net Interest Margin (NIM), a critical measure of the difference between the interest income generated by banks and the amount of interest paid out, has shown some compression, necessitating a revised guidance to 3.15%, adjusting from the previous forecast of 3.3%. Nonetheless, the company reported a robust net profit of INR 4,253 crore for the quarter, marking a consistent performance above INR 4,000 crore over the past three quarters.

Deposit Growth and Strategic Initiatives

Looking forward, the company projects a deposit growth of 12-13%, aligning with industry trends. A significant strategic shift was implementing a relationship management model to foster customer loyalty and engagement, with the intention of boosting CASA growth and containing the expansion of wholesale deposits. This is part of a broader initiative to optimize interest margins by balancing the cost and growth of deposits.

Earnings Call Transcript 2024-Q2

[Operator]

Good afternoon, everyone, and welcome to the analyst meet for Bank of Baroda's financial results for the quarter and half year ended 30th September 2023. Thank you all for joining us. We have with us Shri Debadatta Chand, the Managing Director and CEO of Bank of Baroda, and he's joined by the bank's Executive Director and the CFO. We have a short presentation followed by brief opening remarks by Mr. Chand and then the Q&A session. And sir, over to you.

[Debadatta Chand, executive]

Yes, good afternoon all. Before we all start, let me introduce the entire team. I'm Deb Chand, the MD and CEO, along with me, Mr. A. K. Khurana -- Ajay K. Khurana. He looks after the entire MSME vertical along with -- lot of platform [ function ]. Then we have Mr. Joydeep Dutta Roy, he's the Executive Director, looking after the retail part of the entire book, both on the retail assets and liability. Then we have Mr. Lalit Tyagi, he's Executive Director. He's looking after the entirely -- the corporate book of the bank, along with the international banking and treasury.

And let me again pleasure to introduce, for the first time, Mr. Lal Singh, who's joined us as Executive Director. And he's looking after most of the platform function, including the IT and the HR. And we have the CFO, Mr. Ian De Souza, whom you know since long.

So over to you, Ian.

[Ian De Souza, executive]

Can we have the PPT, please? Can you move ahead. Good afternoon, everyone. So to take you through highlights of our results. During the quarter, our global advances grew 17% supported by strong growth in domestic at 16.5% and international at 21%. Within our domestic advances, retail advances grew 22%, agri grew 13%, MSME continue the trend of growing 12% to 13% and corporate advances, after a long time, showed strong growth at 16.5%.

In terms of our diversified retail loan book, our home loan book is growing at 16%. Education and auto loans are growing at 18% and 21%, respectively. Personal loan growth has been 67%, but year on out, this growth may moderate a bit.

Next please. In terms of our liabilities. Our total deposits grew almost 15%. Our CASA growth was a little muted at 4.5% year-on-year. Domestic term deposits grew at 17.7%. A notable fact here is term deposits on the retail side has shown sequential growth. And the growth in bulk deposits from double digits last quarter sequentially, has moderated down to single digits.

In terms of our CD ratio. Our domestic CD ratio is more or less in line with the CD ratio we printed in last quarter, though it is about 450 bps higher than a year ago.

Moving ahead, please. NII for the half year has grown close to 15% year-on-year. Operating profit strongly printed at 50% higher year-on-year. Profit after tax is also around 52% higher. ROA is a metric that we've been tracking ourselves on. And after many quarters, we have been at 1% plus. And this half year is no exception. We had 1.12% ROA as compared to an ROA 0.84% for the same period in the previous financial year.

Next, please. The same metrics, if you look at from quarterly perspective, operating profit is up 33% on a quarter-on-quarter a year ago. Profit after tax, almost close to 30% and ROA is further strengthened. It was 1.01, the same quarter a year ago and 1.14 now.

Moving ahead. In terms of deposit costs, we have seen some spike given the continuing liquidity scenario. We had expected the scenario to start to abate. But it looks like, given the signals from the Fed and the regulators, that this liquidity scenario will continue and elevated rates will continue for a while. So we've seen deposit costs go up quarter-on-quarter. But if you see H1 to H1, we have maintained the NIM. But, however, given the steep deposit hike and the advances yields being in line with the previous quarter, we have seen some NIM compression. And NIM has -- on a quarterly basis, has come down by around 20 basis points.

Please go ahead. In terms of asset quality, you will see that the asset quality has strengthened. Almost 200 bps have been shaved off our GNPA as compared to a year-ago position. NNPA remains benign at 0.76%, almost 2 basis points sequentially down. Provision coverage ratio, including TWO accounts remains high at 93%. Our slippage ratio looks elevated at 1.81% as compared to the previous quarter sequentially. But, however, this includes the slippage of a large aviation account of almost INR 1,773 crores. If that were to be excluded, the slippage on our [indiscernible] aspect would be just [ 1.08 ], which is just about 2 bps higher than the slippage in the previous quarter and within the range of guidance that we had given for slippage.

Similarly, if we look at the cost of credit, it is a bit elevated at 0.92. But, however, we'd like to call out on the nonguaranteed portion of the aviation account, we have provided 100%. So we've taken almost INR 534 crores of extra provision on that account. We've also taken prudential provision to maintain our NNPA and coverage ratios. So put together, that's almost INR 1,000 crores of provision that has been taken to strengthen the balance sheet. If that were excluded, our credit cost would be around 0.52. That is in line with our adjusted credit loss for the previous quarter of 0.44. This 0.52 would also include a provision of INR 639 crores for the aviation account that's slipped.

Please go ahead. In terms of our collection efficiency, that continues to be strong at close to 99%. The SMA1 and 2 CRILC above INR 5 crores is that 0.22%, indicating that there's no large account that's on the horizon for slippage.

Please go ahead. Our capital position remains strong. Our capital position as compared to a year ago is about 5 basis points stronger.

In terms of CET1, we had 11.57%. But as you probably know, these numbers don't include the profit for the half year. If the profit for the half year was to be included, ex-dividend, our CET1 would have been at 12.47% and our would CRAR have been at 16.20%, which is very close to the number we ended the previous financial year, which was 16.24%.

That brings us to the end of my opening remarks. Over -- back to you, [ Feroza ].

[Operator]

Thanks, Ian. And Chand sir, can I request you to give your opening remarks, please?

[Debadatta Chand, executive]

Yes. Once again, good afternoon to all. And the current quarter performance is consistent in terms of the performance we had for the earlier quarter. And also, the last full financial year where the bank had a very healthy profit of INR 14,100 crores.

So most part of the presentation have covered the financial for this quarter, but let me make a couple of comments with regard to the overall financials. If you look at our loan growth book, the loan grew by 3.4% quarter-to-quarter and 17% Y-o-Y, with a real growth of 22.2% Y-o-Y and 5.2% sequentially. We continue to maintain our guidance of growing above the industry by 1% to 2% on the overall loan book. At the same time, on the retail side, we need to grow 3% to 4% higher than the industry average of the retail book.

We continue to maintain that. The overall loan growth would be 14% to 16%. And last time also, I guided the market that will be growing at 15%. And this quarter, it has 17%. With the guidance of 14% to 16% for the overall loan book, the corporate will continue to grow at 12% to 13%. And the retail would grow 20% to 22% and international would be around the bank's growth at 15% that is where the guidance was going forward.

Our loan book strategy has been to increase our retail business aggressively. Currently, the retail is around 27% on the retail book, and we intend to take it to 35% in the next 2 to 3 years' time. And the corporate book would come down to 35%.

In terms of the NII of the bank, already you have seen that the Y-o-Y growth is 6.5%, backed by a strong loan book growth of 17% despite a better margin comparison in this quarter that we have seen.

On the NIM outlook, although H1 scale, we maintain the H1 of last year on the NIM, but there is NIM compression and the outlook of the guidance that we're going to give it now is around 3.15% plus/minus 5 bps going forward. We had guided the market earlier that we will have a full year NIM of 3.3%. As against that, the guidance is now 3.15% with a plus/minus 5 bps around the guidance number.

On the cost to income, we are again, guiding the market to be around 45%. We have not added much cost with regard to the branches or manpower in this quarter.

The good part of this quarter, I would have seen the numbers that there is a strong fee-based income and also noninterest income. Precisely last time, we also outlined a strategic initiative in terms of the year of Fees and Flows. We are seeing significant traction on this concept. We implemented a couple of -- particularly, for large corporate and mid-corporate, a concept of share of wallet, account planning and relationship management. We're trying to have the culture of sales in branches, and we're driving the bank from engagement or relationship banking to drive the cost share.

In terms of profitability, it was a healthy profit that you have seen of a net profit of INR 4,253 crore for this quarter. And this is the consistently the third quarter, we are posting in excess of INR 4,000 crore. The H1 profitability grew by 52%.

In terms of the last year's full profit by Q2, half year of current financial year, we have almost achieved 60% of last year full year profit. The good part is that the ROA has been more than 1% consistently for last 1 year. And our endeavor also to maintain this ROA guidance of more than 1% going forward.

On the asset quality, an NPA improved to less than 0.76% with GNPA improving by 199 bps on Y-o-Y basis. We have dedicated collection vertical for RAN, which is unique in the entire [ PSB ] space.

Deposit has been growing in line with our industry. We expect, going forward, a deposit growth of 12% to 13%. We have calibrated the retail term deposit and wholesale deposit. We have given a breakup this time. And you can see the wholesale growth in this quarter is around 3.4% sequentially, which continue to be 11% to 15% for the last many quarters from now. So considering the overall scenario, we are trying to contain the growth of wholesale deposits.

A couple of things, which are very important. First time in the entire festival campaign, which is normally during the festival time, we started a campaign with regard to BOB Ke Sang Tyohaar Ki Umang. And it is not only on the campaign on the asset side but also on the liability side. And there are five new products that we introduced on the liability precisely to give boost up to the CASA, particularly the saving, BOB Lite, BOB Bro, BOB Parivar, family account and BOB SDP account and Baroda NRI Pack account. We are seeing significant traction on all these deposits. And I feel that this campaign going forward will boost up my CASA further, at the same time, allow me to contain the bulk deposit and consequently improve or optimize on the NIM side.

Thank you very much. We'll go for the question and answer now.

[Operator]

[Operator Instructions] The first question is from [ Jai Mundra].

[Unknown Analyst]

First question, sir, is on your international slippages. So that has also increased in this quarter at around INR 500 crore plus. So a, if you can provide some details as to where that is coming from? And could this be a bit of a recurring nature?

[Debadatta Chand, executive]

So it's one account, which slipped during this quarter, and this is a one account, where it is fully asset-based. So it's typically, because, of some liquidity issue the account has slipped and we are hopeful that maybe coming quarters, the asset is a good quality asset, and it will be upgraded also.

[Unknown Analyst]

And which segment would this account be, sir -- I mean, which sector?

[Debadatta Chand, executive]

It is on the -- typically, the real estate sector.

[Unknown Analyst]

Okay. Okay. Sure. And secondly, sir, you have revised your NIM guidance. Is this more -- I mean, we can see that the yields have started to flatten, whereas cost of deposit is still rising. So would that trend should sustain that yield -- barring the loan mix thing, barring the loan mix improvement, the yields would be more or less flattish and the cost of deposit could keep rising. Is that the way to look at it?

[Debadatta Chand, executive]

A couple of things happened, last time, we gave the guidance of 3.3% on the backdrop where -- there was an outlook at that time that the rate just to reverse in Q3 or Q4. But since then, the outlook has completely changed. And currently, if you look globally also in here in India, the outlook is higher going to stay for longer.

So on that particular outlook, there was a cost impact therein. But if you clearly see the cost impact mainly came out of the term deposits. So if you look at the current numbers that we have declared, we are going to have a containment of -- on the wholesale deposit and [ pursuant ] cost on that.

So now if you look at the outstanding, the entire cost impact has come in this quarter. So going forward, I don't expect any further cost impact on the cost of deposit because of the higher rate in the term deposit. At the same time, as a strategy we have pushed aggressively with regard to the saving in CASA.

Saving, I've already announced a couple of schemes where there is traction going on. And on the CASA front also, there is the relationship manager, again, on the entire retail liability piece, we have changed the structure in terms of how do we deliver this product. So we implemented a relationship management concept therein.

So I'm thinking that going forward, the CASA would grow slightly better than what we are looking at currently. At the same time, clearly, we'll contain the wholesale deposit. And I don't see any impact of further rising on the cost of deposit going forward. And at the same time, maintaining our asset quality and the return out of the asset and then possibly the NIM guidance that we are doing is going to be maintained.

[Unknown Analyst]

Understood, sir. And sir, just if I can ask this account, which has slipped in the overseas. This is from which country, I mean, because we have grown overseas, booked at a rapid pace in the last year. So just wanted to check if there is any country, which -- I mean, you mentioned the real estate, so if you can also share the country where this had slipped.

[Debadatta Chand, executive]

It is in the Middle East. So it's not in the U.S. market or any other markets, it's in the Middle East.

[Unknown Analyst]

Right, right, right. So okay. So this is no India linkage, right? The group would be Middle East-based only? Or this is like India-based or having some JV kind of a thing?

[Debadatta Chand, executive]

Yes, don't think much of India exposure therein, but then it's basically UAE entity. Khurana sahib, anything you want to add on this?

[Ajay Khurana, executive]

No, it's a company having business everywhere, but they're based in their only, not here.

[Operator]

The next question is from Mr. M.B. Mahesh from Kotak Securities.

[M. B. Mahesh, analyst]

The bank has reported a strong income in recovery from write-off. How should one look at the contribution in second half of FY '24?

[Debadatta Chand, executive]

Okay. Khurana sahib, can you take this question?

[Ajay Khurana, executive]

Yes, a few one-offs are there during this quarter. But maybe a little bit here and there, but we are expecting next 2 quarters also, a little less than this -- in write-off accounts.

[Operator]

The next question is from [ Ritin Shah ] of IFS.

[Unknown Analyst]

Would you please elaborate on what is driving the strength and fee income growth? And is it going to be recurring in nature?

[Debadatta Chand, executive]

Yes, it's still very good. It's typically the strategy that we last time said that the bank will be keenly focused on an initiative called Fees and Flows. So the aspect of Fees and Flows that we have seen this year is particularly on the large corporate and the mid-corporate, we implemented the constructor relationship manager. And the idea of relationship manager is to measure the sort of the share of wallet of all these accounts and try to leverage the main relationship for multiple other investment, and that's seen good traction there. .

So it's something strategic. It's something structural now. And we expect, going forward, the growth will continue to be there in this particular front.

[Operator]

The next question is from Kunal Shah from Citi.

[Kunal Shah, analyst]

So particularly, the recoveries from write-offs. So the question was when we look at a significant higher amount this quarter, so was there any particular -- maybe particular account, which is leading to that? So I think MD also asked the question, but didn't get the end in terms of what has led to almost like INR 1,230-odd crores kind of recovery?

And in terms of the outlook, should we expect that to normalize to less than INR 500-odd crores kind of a number? Or we should see this kind of trend because that has supported the earnings this quarter in particular?

[Debadatta Chand, executive]

Khurana sahib, can take it and then CFO can join then..

[Ajay Khurana, executive]

So some INR 400 crores to INR 500 crores was one-off in this quarter, that is -- when -- [indiscernible] account was there. But what we see is the next 2 quarters also, there are a few accounts lined up. So we are expecting almost whatever we have recovered in half year overall. By 10% here and there, we should -- we are expecting this, this, this.

[Ian De Souza, executive]

I agree with Khurana ji's view. So we should see around INR 2,000 crore level for the H2 of financial year '24, similar to...

[Kunal Shah, analyst]

So that kind of a recovery will continue in H2 as well?

[Ian De Souza, executive]

Yes.

[Operator]

The next question is from Susheel.

[Unknown Analyst]

Congratulation to BOB team for excellent result. Sir, my first question is our new mantras to grow more on retail. What are the new initiatives, which you would take to sustain a growth with a good margin on a year-to-year basis? And does bank view that every bank is looking at retail as a priority sector in terms of growth engine? So where housing loan is concerned, auto loan is concerned, education loan is concerned, competition may not give you that kind of a healthy margin, which bank has initiated so far. So what would be the difference? Which BOB would do and if you can publicly speak about which would make your product more viable compared to competition?

[Debadatta Chand, executive]

No, that's fair. Thanks for the question. On the retail asset side, consistently, we are growing higher than the market. I mean, that is what -- it's not 1 quarter. It has been almost now 7, 8 quarters where our growth is higher than the industry average.

The second aspect is very important. Recently, in terms of structure of all these branches, we have segmented branches in the entire bank now in terms of retail-oriented branches, priority sector-oriented branches, corporate branches. And all these branches, as I said also initially, there is a player sales focus now. And the sales focus in terms of implementing some kind of a relationship management concept over there, RMs would be there now in all these branches more than what it used to be earlier on.

The second is clearly in terms of generating -- [ bulk list ] -- also one a separate section looking into [ bulk list ] in all these segments like if -- I'm talking about housing loan, a car loan or an education loan or personal loan, we are more going for bulk also.

And thirdly, if you look at Bank of Baroda in terms of the digital delivery, particularly -- I'm talking about the digital lending platform. So the delivery in terms of all these loans are -- I mean, very competitive vis-a-vis the market. So I'm typically referring the TAT in terms of the delivery.

So already, we do have a bit of delta over to market average. Best bank can be growing much higher than me. I know the bank that we are talking about. But in terms of market average, I'm slightly going above the market average. And that's already the USB as far as Bank of Baroda is concerned. And I think the new initiative that we started to make the organization more sense focused and more of a digital orientation in terms of process delivery.

One thing also, last quarter, we announced that we have now the regional processing centers for retail asset -- at the regional level, which earlier is to be at a centralized level. So there is a bit of decentralization therein. But at the same time, we have ensured that the underwriting standards are clearly maintained in those centers.

So a lot churn also happening within the bank to drive it further. And I think -- is growing also across this segment across all banks. And since we have a guidance of growing slightly higher than the market, I believe we are going to sustain this going forward. Anything Joydeep, you want to supplement to this?

[Joydeep Roy, executive]

No, I think you have covered the problems beautifully. Just to add one more thing that on the asset side, we are also giving due focus to various channels even within our product. For example, within housing loan also, we are looking at different types of channels through which we onboard customers and give more loans, et cetera. So there's a builder channel, the DSA channel, the aggregator channel, the brand channel.

So all of these are now given proper focus and teams have been created, which again, would help us do much better business. And also that guidance of doing better than industry in terms of retail being 4% to 5% above industry, that continues.

And the focus on relationship at the branch level, which has been a recently introduced concept and which MD was talking about, that again would help us, even though the margins may be small, maybe competitive in terms of the competition also giving very fine rates, et cetera.

But at the same time, these are loans, which have a lifetime value. And customers are there for longer tenure. We need to build a relationship. And through cross-sell, et cetera, there is a lot of value that we can. So that relationship management also helps us in that direction.

[Unknown Analyst]

Basically, you're saying that formulation of economy and Indian economy going to INR 5 trillion would enhance the potential on a consumer demand far larger than where we stand today.

[Debadatta Chand, executive]

Very fair, very fair...

[Unknown Analyst]

Sir, based on current Fed outlook, which has emerged post Wednesday's meeting, to answer your export and treasury, don't you see what was the turmoil going into the second half. And based on RBI governor's speech at business standard event, and the way world is transformed between Wednesday and Friday for yields are concerned, don't you see second half being a little different compared to what the fear in the Street is?

[Debadatta Chand, executive]

See, anyway, being a market person also I believe we normally anticipate the market not to predict the market. So in that way, my current anticipation is that the levels have already picked out because market moves ahead of most of this event.

In terms of the stance part, everything, I think the yield is here -- leading indicator to give direction to the market. So in that way, particularly from the treasury side, I do not expect it to go further. Already, it is finding near peak level that is what my sense is. Market has resilience. We have seen a different scenario also, particularly our bond market in much more resilient, much more robust not -- that volatile like any other market globally.

So in that way -- not much of what you can say, any adverse impact come out of the yield movement in the next quarter or going to be the next half year. We are broadly at this level, discounted most of the factor, at least for near future, subject any geopolitical issue not, disrupting the market globally also Indian market. Otherwise a fairly balanced level of the [ 10-year ] yield. And I don't think in terms of rate of interest or anything going to be much of a change in coming quarters. Rather, in case we get a [indiscernible] with regard to the rate reward, then possibly the levels will start discounting that and start moving on a positive direction.

[Operator]

And for the next question is from Abhishek Murarka from HSBC.

What is the breakup of your loans by MCLR, EBLR [indiscernible]? How much of MCLR-linked loans are likely to reprice in the second half of financial year? Can that lead to increase in your yield specifically?

[Debadatta Chand, executive]

I believe, Ian, you can correct me, the MCLR-linked is almost around 52% now.

[Ian De Souza, executive]

Yes.

[Debadatta Chand, executive]

That's a -- yes. There is a bit of book still left to be repriced at MCLR. But then, going by the cost metrics, I believe there is still upside for MCLR going because normally, MCLR moving to lag vis-à-vis the cost of deposit. So still very upside. So rather than the reprice book giving me a better ROI, ROAA believe possibly the level of MCLR is going to give me higher yield on advances. So that's a sense currently.

In terms of repriced book, there is upside, but then there canNot be significant to offset the cost of deposits, which we have seen this quarter. But I believe the level of MCLR need to realign and then possibly can give it more further income using of the yield further. Is that -- Ian, anything you want to supplement on this?

[Ian De Souza, executive]

Yes. So there's a very small proportion now less than 30%, which is probably up for repricing. Now bulk of the book has already repriced and is the cost pressure that has to be transmitted to the MCLR.

[Operator]

The next question is from Prakhar Agarwal of Elara Capital.

His questions are three-parts. What explains strong growth in international deposits?

Second question, can you please explain the product differentiation on new products that you mentioned? Is it rate or something else?

And third question, given we have tweaked our NIM guidance, how you look at ROA guidance now?

[Debadatta Chand, executive]

Okay. So let me address the last first. In terms of NIM and ROA, as far as the bank is concerned, now we are putting NIM and ROA on the same platform. Rather, if you want me, I'll repeat rather, ROA and NIM combination, that is what the strategy of the bank is going forward.

We continue to hold our ROA guidance in excess of one because NIM is purely driven by the interest expenses and the own, while as ROA is driven by the -- a lot of the fee and noninterest income that we are generating best on our concept of Fees and Flows.

So apart from the normal income, which is captured in the NIM, I believe my fee income and noninterest income, the growth is going to be significant in coming quarters. And in that sense, slightly because of the cost pressure that we have seen this quarter, we revised the NIM guidance. But ROA continue to be in excess of 1 rather last quarter ROA is at 1.14, which is a very healthy one, not only for us, for the entire industry also.

So we'll continue to have ROA in excess of 1, at the same time, try to optimize under NIM based on the evolving scenario which the market would offer to us.

The second with regard to the new products that we talked about, this is the pricing, there is no differentiation therein. But the differentiation is more on the offerings. The offerings are like the first product of BOB Lite, we talked about a zero balance. So in terms of we are slightly looking at a growth with a zero balance, but then with certain balances, then a lot of advantages accrue to the customer in case they maintain the balance.

So these are all on the services and offering rather than the pricing. The pricing continue to the same, like a general selling product in that particular segment. Joydeep, anything you want to add on this, on the product side?

[Joydeep Roy, executive]

Yes. So just to add on that, this time, the focus has been on bringing out a very comprehensive offering in the -- for the festival campaign, not just focusing on the asset side, but also the liability side. And in the liability side, there's a range of products that has been introduced, not just one or two on products addressing different segments of customers.

So as MD was mentioning, on the BOB Lite, this is, again, a sort of a requirement that we customers themselves responded in a survey that they don't want any minimum balance requirements, et cetera. But at the same time, they want offers and very attractive offers, et cetera, on various transactions, et cetera, that they do.

So this account is basically a zero balance with no minimum balance requirements, et cetera but, at the same time, very high on offers. And if people have to sort of take advantage of the offers, they automatically end up keeping balances, so -- which also helps the banks.

There's a BOB Bro account, which is targeted to the student published. There is a Parivar concept account. There's a Parivar concept, which has been introduced, which is like a family plan of -- in a telecom or in the normal phone accounts that we have, we have this concept of a family plan. So similar here, we have introduced a family plan for a group of accounts belonging to the same family where there's no individual balance requirements for each individual family members.

But for the family, as a whole, if they meet some total balance requirements, then they get advantages in terms of various benefits, et cetera, from the bank. So then there's a repositioning of our RD product as an SDP or a systematic deposit plan, which is both possible for a fixed amount or also a flexible amount.

So a lot of product features and innovations have been brought about, which are not on the pricing side, but in terms of giving what the customer wants and addressing some of the customer needs. And I think that would be much more helpful for the bank as a part of its CASA strategy also, in the CASA and the deposit buildup, plus also addressing the needs of customers.

[Debadatta Chand, executive]

So addressing your first point with regard to the international deposit growth. Typically, in the international market, we raised the deposit and asset growth. But this quarter, the growth in the deposit is slightly higher than the asset because to fund the asset point one, and secondly, to make some interbank operation there in because that gives a bit of differential rate of interest.

And some part of global market on the investment side are also looking very, very attractive. So this typically is a mix of the asset strategy, investment strategy and interbank operation for the matter. But broadly, we guided the market both in terms of asset and liability international book. There is a moderation that happened vis-à-vis, Q2 over Q1. And going forward, it would convert to the domestic growth. So maybe in Q3 and Q4, the numbers would most converse to the domestic growth. Excluding the price -- the USD/INR differential, it would normalize to the domestic growth.

[Operator]

The next question is from Manish Shukla from Axis Capital.

[Manish Shukla, analyst]

So for the previous 3 quarters, you had a very decent growth in bulk or short-term deposits. Now in Q2, obviously, you have not grown. But these past deposits will come up for repricing over the next 2 quarters. So what kind of cost of funds impact is likely to -- that likely to have?

[Debadatta Chand, executive]

So that's a fair question. If you look at current quarter, the growth in bulk has been much lower as compared to earlier quarters. And this is a conscious strategy to grow slightly lower than that. But you are right, there is going to be a repricing of all these deposits we have mobilized in earlier quarters. But if you look at the retail to deposit also, the growth is now higher as compared to earlier quarters.

So my first objective would be to reprice a portion of deposit not in the bulk segment, but in the segment of on the retail or on the CASA segment because we are pushing CASA aggressively now. At the same time, on the level of bulk deposit cost, I think now levels are picking out now. Actually, I don't think much of further cost post or anything coming on the bulk segment.

Rather, I would think going forward, subject to the liquidity being consistent, then there can be moderate amounts -- possible in that CASA, I'll get the repricing benefit.

The third aspect, which is very important for a segment bulk like that, thinking through maybe, maybe in Q1 of the next financial year or Q2 of next financial year, if there is a rate reversal come in, then the -- one of the biggest beneficiary of that will be Bank of Baroda because then we have this bulk segment going to get repriced in those quarters.

So it's a combination of multiple things. But then on the cost side, I'm not expecting or not anticipating any significant change vis-à-vis, the current cost and the value cost.

[Manish Shukla, analyst]

Sure. My next question is post the RBI restrictions related to the BOB World app, what are the steps that you have taken within the bank? And can it have any near or medium-term business impact?

[Debadatta Chand, executive]

So that we have clarified, if you see one of the notes to account is amply being clarified by the auditor also. So a scenario like this where there are basically two impacts. One is a service. Another is an account opening. If you look at my account opening through BOB World, the percent is very, very less, less than 3% or less than 2.5% there. So it's not only impact me and normally a scenario wherein -- for a new customer and onboarding into a platform, then there are multiple channels where these channels go up significantly high.

So if you look at my deposit that we -- let's say, 10th October is a date and today, my -- all segment of deposits have been much higher as compared to the level at that time. So business is as usual for us. We don't see any impact because, again, yes, there are certain services we are unable to provide to new customers. But then they have multiple channels available to do their transaction. So in that way, the impact is minimized or impact is very less.

So going forward, again, if you go to the main part of it, there is a regulatory action and there is a compliance for the bank on the regulatory action. So a lot of actions we have already done in terms of compliance and hopeful that the ban is revoked at the earliest on the matter.

But in terms of business, the business is as usual. We have strengthened channels to compensate any a loss that is acting out of building of new customers, existing customers have similar service rather. The number of financial transition and nonfinancial transition through all digital platforms have significantly gone up during this time. So my other channels are working very strongly at this point of time.

[Manish Shukla, analyst]

Okay. So the last question is on fees. I mean, fees have been a very big growth engine, as you mentioned. But if I see over the last 1 year, 6 months, the rating profile of your corporate book has gone up, and you're saying that fees is coming from the corporate channel. So can you give a specific example in terms of either the type of the product or the type of the corporates, which are driving these fees? Because typically, what we understand is making fees from large corporate is a difficult task, and you seem to be doing it. So what is it that is going for you?

[Debadatta Chand, executive]

So generally, what happens, there are a couple of things that we implemented. You are precisely right on that. So my asset quality in terms of earlier also, multiple times, we have said on the corporate book, underwriting is a very key aspect of Bank of Baroda in terms of underwriting standard.

At the same time, when we implemented a set of look concept or relationship management concept, we are aggressively pushing for the cash management business now. And I'll just give you a data point without actually sharing the data, the number of customers we had onboarded in the last 6 months, they're almost equal to the number of customers we onboarded for last many years.

So a significant boosting on the CMS. The moment you push the cash management service, we have a lot of flows being captured and there are charges therein. So this pushed up significantly.

Thirdly, when you do all this processing fee and all, let's say, a year back or 1.5 years back, all these customers, the base pricing used to be a particular level, but then all these charges also because liquidity was happened and was very competitive and the charge was a low.

Now we are revisiting all those charges in terms of what is that actually you need to charge in the current market. So even if your base price may not go up significantly high, but at the same time, the charges have been reviewed and getting being captured. So in that way, there is a good traction therein. Lalit sahib anything you want to add on this further?

[Lalit Tyagi, executive]

In fact, you have covered also. All I can say that right now, we are able to capture more share of the flows of the customer, and we have been able to engage them a bit more. And that's where the income is getting added up.

[Operator]

The next question is from Rakesh Kumar of B&K.

[Rakesh Kumar, analyst]

So a couple of questions I have. So firstly, with respect to term deposit being in the bucket of more than 2 years, so could you quantify the proportion of that term deposit sitting in more than 2 years bucket?

[Debadatta Chand, executive]

See, we'll provide you the data exactly. But then if you look at the duration of my term deposit portfolio, it is -- I'm excluding the behavioral pattern of getting rolled over again and again, but it is almost like 1 year, 2 months kind of a number. That talks about deposit below 1 year and deposit above 1 year. Exactly, Ian, you have the data, you can share or otherwise we can share it to you.

[Ian De Souza, executive]

We share it offline, sir.

[Rakesh Kumar, analyst]

Yes. Because, see, the reference to the question is that RBI says that in the term deposits more than 2 years. In the first deposit, transmission is only around 130 bps as compared to a reported price of around 250 bps. So I think there is a quite large amount of repricing is yet to be done on the term deposit side for the industry and for you also, I think. So I wanted a clarification on that front.

But anyway, if you can help with that data later on, that would be helpful.

[Debadatta Chand, executive]

Actually, just it's fair actually, most of the deposit, particularly on the term segment, the preference is on the year around 1 year. I mean, that's the normal preference. People do have slightly, a tendency to put long term, then they put it in the higher buckets.

In 2 to 3 segment, let me say that recently, we were offering the [indiscernible] rate in that particular bucket now. And that provision we have made it just 2 months back, I believe. So there is one segment where again, we are trying to have a bit of more deposits because that adds to a liquidity stability, right? So in that way, the clear strategy as far as we are concerned, but the fair data will provide to you.

[Rakesh Kumar, analyst]

Sure, sir. Secondly, sir, on this NPA, what we have sold this quarter, so there is a reversal of provision of close to around INR 150 crores, INR 160 crores this quarter. Is that correct?

[Debadatta Chand, executive]

No, that's typically because of that classification. Ian, can you just clarify that?

[Ian De Souza, executive]

Yes. In terms of slippage, are you asking about?

[Rakesh Kumar, analyst]

Yes. NPA sold to [indiscernible]. So there is a reversal of provision of INR 160 crore as of -- accounts?

[Debadatta Chand, executive]

Yes, this is correct.

[Rakesh Kumar, analyst]

And secondly, sir, there is another reversal of provision of around INR 82 crore as per the -- accounts #17. So if you can just reconfirm if that is also correct?

[Debadatta Chand, executive]

Khurana sahib, otherwise you can provide them offline then.

[Ajay Khurana, executive]

Provide this offline.

[Rakesh Kumar, analyst]

Sure, sir. There is another -- like we saw that from certain accounts...

[Ajay Khurana, executive]

I think -- we are -- we'll take your questions offline, we can contact me because I think we have one more analyst who wants to ask a question.

[Rakesh Kumar, analyst]

Just a last question, sir, just a clarification again on the notes from the accounts. So we had close to around INR 1,100 crore provision on certain accounts. And now that provision has come down to INR 800 crore, INR 810 crores. So what...

[Ian De Souza, executive]

I'll take that question. It included a provision on the aviation account. Now that account has slipped and that provision has -- it to NPA provision. There's no longer a standard account. So we've released that provision and the provision has been made in the NPA provisions.

[Unknown Executive]

Okay. So can we go next Feroza.

[Operator]

The last question for the evening is from Chintan Shah of ICICI Securities.

[Chintan Shah, analyst]

So just two questions from my end. Firstly, on the domestic LDR. So sir, currently, CD ratio is around 78 percentage on the domestic side. So is there any scope for -- or taking it further up from here? Or would it stabilize at these levels? Yes, that is the first question.

[Debadatta Chand, executive]

So obviously, we'd like to because for a NIM equity measure, we'd like to have a higher [indiscernible] But then again, all will depend upon the kind of book growth that you look at all these segments. So if we would you like to improve. So answer is yes, definitely would like to have higher [indiscernible].

[Chintan Shah, analyst]

But is there any upper ceiling or something, like are you looking...

[Debadatta Chand, executive]

No. No, upper ceiling. It's only optimizing the CD. That is how we -- because CD is not the only parameter that we look into the combination of many parameters who do -- evaluate CD. So there is no upper ceiling, but then obviously, we try to optimize the CD.

[Chintan Shah, analyst]

Sure. And sir, secondly, on the slippages, so we had one large aviation account and one international book. Say, there would be some interest reversal also from these slippages. So if you could just quantify that amount? And what would be the margins, which is 3.07, what would be that if those two slippages were not there? How much...

[Debadatta Chand, executive]

Either Khurana sahib or Ian, can you...

[Ian De Souza, executive]

When changes come back to you can ask me this question separately. But these accounts were in stress for quite some time. So it should not be a big amount, but we'll come back to you.

Feroza, back to you.

[Operator]

Thank you, everyone. That's the last question we'll be able to take today. Ian, can I request you to give the vote of thanks, please?

[Ian De Souza, executive]

So thank you very much, everyone, for joining us on a Saturday afternoon. And as always, it's been a pleasure to have you with us. Look forward to seeing you the next time around. Thank you so much.

[Debadatta Chand, executive]

Thank you. Thanks all of. Thank you.

[Operator]

Thank you.

[Joydeep Roy, executive]

Thank you, everyone.