Bank of Baroda Ltd

NSE:BANKBARODA

Earnings Call Transcript 2024-Q4

[Phiroza Choksi, executive]

Good evening, everyone, and welcome to Bank of Baroda's Financial Results for the Fourth Quarter of FY 2024. Welcome to the Analyst Meet. We have with us, Shri Debadatta Chand, the MD and CEO, and he's joined by the bank's Executive Director and the CEO. We have a short presentation for you, followed by opening remarks by Chand sir followed by the Q&A session. And Sir, over to you.

[Debadatta Chand, executive]

So thanks, Phiroza. So to introduce the management team, I'm D Chand MD and CEO, and I've been interacting with you for a couple of quarters now. And with me, Mr. Lalit Tyagi, he's Executive Director, he looks after Corporate Credit, International and Treasury apart from couple of other department.

We have with us also Mr. Sanjay Mudaliar. He is joining for the first time. In terms of analyst meet, he's Executive Director looking after the digital side and also importantly, he's the retail face of the bank in terms of looking out of both retail asset and retail liability. And we have with us, Mr. Lal Singh. He has been there for at least a quarter now for interacting. Mr. Lal Singh is looking after the recovery more importantly and also the priority sector department like MSME and Agri. And as you know, we have with Mr. Ian De Souza, he's the CFO of the bank. So with this, over to you, Ian, you can make a presentation in [indiscernible] I'll give some comments on that.

[Ian De Souza, executive]

Phiroza, can we put up the presentation please. So we can go ahead.

Good afternoon, everybody. Very nice to see all of you once again and to bring you some highlights of our results that we just declared. So one of the top line levers that we just declared. So one of the topline numbers that we declared today as of March is INR 24 trillion benchmark we have crossed for the first time in terms of our total business, and we have retained our full position as one of the second largest public sector banks.

In terms of growth in advances, we have given you guidance that we will be growing around 13%. We are very near that mark at 12.5% year-on-year growth in global advances. In terms of our stated aspiration to grow our [indiscernible], we are growing excellently well in retail at close to 21%. In MSME and agri, we continue to grow around 12%. Corporate, we had been growing at a faster pace earlier. We have consciously taken it forward to grow at a lower rate.

In terms of within the retail portfolio, home loan is printing at close to 14.5%. Education is around 19% and auto loan is around 23.8%. We had given guidance in earlier quarters that we would moderate the growth of our personal loan. So last financial year, our personal loan portfolio grew close to 100%. We had moderated [indiscernible] down to 16% last quarter year-on-year.

This time, it's printing at 52% almost year-on-year. So this is a portfolio which we will continue to focus on, but we will not grow at that aggressively.

In terms of deposits, can you go to the next slide. In terms of deposit, we have given guidance of around 12%. Our deposit growth has been a little muted, but this is a number that we will be focusing on in the coming quarters to get it up in a trajectory. In terms of CASA, sequentially, our CASA grew at 7.5%. The year-on-year, it has grown at around 5.5%. But this is a little ahead of the peer group that we have been seeing the results coming out in the last few days. In terms of CD ratio, this is a ratio we are conscious of needing to manage and we have reduced such CD ratio by 200 basis points sequential quarter wise.

Our CASA ratio has improved sequentially by 64 basis points. Operating profit has grown above 15%. Profit after tax has grown more than 26%. ROA, we've been delivering 1% plus ROAs for 7 quarters now. And this quarter, we have delivered ROA at around 1.25%. And for the full financial year, it's 1.17%. This is the second financial year, we have delivered 1%-plus ROA. In terms of ROE, we are close to 19%. In terms of yield on advances, our yield on advances grew almost 100 basis points year-on-year. There has been pressure on our deposit cost as the liquidity scenario has remained tight. We've seen almost 100 basis point increase in deposit costs as well.

Our NIM for the quarter has printed very smartly at 3.27%. I'd like to call out here that there have been some seasonal effect here of the year-end recoveries. And if you had to exclude the seasonal effect of higher-than-expected year-end recoveries, 3.27% print at close to 3.15% for the quarter. And our full year, excluding the execution of recoveries we had in the last year, instead of printing at 3.18%, would print at around 3.14%. So we are -- even on a normalized basis, normalizing for excess one-offs, we would have achieved our guidance of around 3.15% for full year NIM.

In terms of asset quality metrics, you see our asset quality improving year-on-year. GNPA is below 3%, and NPA is well below 1% at 0.68%. Provision coverage ratio is very comfortable at 93.3%, including TWO. Slippage has been below our guidance to 1% to 1.25%. It's been at the lower end of the range. I'd like to draw your attention though it is below our range of 1% to 1.25%. There were 2 large slippages during the course of the year. And even after that, this has been below 1%. So there was the aviation account, which was INR 1,700 crores and an international account of INR 500 crores.

So on account of these 2 accounts, there was a slippage of INR 2,200 crores. Despite that, we have delivered as per our guidance. In terms of credit cost, I think this is a number that is optically a bit high because we had taken a conscious call to provide for the aviation account slippage. Earlier until quarter 3, we had provided around INR 1,200 crores on the aviation account, and this quarter, we have provided a further INR 550 crores. So essentially, we provided 100% on the aviation account in this financial year, whereas we were required as per our policy to provide around 20%.

[indiscernible] provided around 20%, that would have been a provision of just around INR 500 crores. This essentially, we provided around INR 1,200 crores more on the aviation account, plus a floating provision we had taken in the June quarter of INR 200 crores. If you exclude for that, our credit cost would be in line with the previous year's credit cost.

So in terms of our CRILC SMA1 and SMA2, you would see this number has been trending down continuously. At this moment in time, it is just 0.15%, which indicates a very strong asset quality, and there's nothing that on the radar in terms of large exposures has been noncurrent. In terms of connection efficiency, we continue to print strongly at 98%. In terms of our capital adequacy, as you are aware, there were the RBI guidelines, which actually required banks to provide higher risk weights on certain NBFC and unsecured loans that actually would have -- has pulled down our capital adequacy by around 65 basis points, and we had called it out in the earlier call last quarter.

Despite that, our capital adequacy has printed at a level which is higher than the last year capital adequacy, solely on the basis of internal accruals. We have done bond-raising but the bond raising has only been to the extent to replace maturing bonds. So this is entirely organic replacement of capital. And our CET1 is also very smartly at 12.54%. LCR remains at close to 121% as of March 24. With that, I come to the end of my presentation. Back to you, sir for your remarks.

[Debadatta Chand, executive]

Thanks, Ian, good evening to all of you, and let me make a couple of comments on that this year or the quarter our performance has 3 strong outcome. One is that we do have a robust book growth. And this book growth is calibrated to the growth in deposit because earlier we said that we want to reduce our dependency on wholesale deposit. So calibrating the growth of deposit, the advanced book has been almost 13%, 12.5%. The domestic advance growth is at 12.9%. And the important part is that earlier also, we said that the international book will moderate. We have moderated to 10.5% as compared to a 40% increase earlier. So considering that, it's a robust growth in terms of book, calibrating to the growth in deposit. The second aspect, which is important out of this financial is that we do have a very strong financial performance. And the book is growing at 12.5%, 13%, wherein the operating profit has gone up by 15.1%, and the net profit has gone up by 26%. So there is a strong financial as far as this year financial FY '23, '24 is concerned.

The third thing which is important is a much better asset quality. While it is important that we have seen, there is a significant improvement in all parameters as far as the asset quality. Please be also be take a note that as far as asset quality, the earlier position also, we are benchmarked to some of the best in the banks in the entire industry.

And the same position also, we have reduced both GNPA, NNPA. So specific comments than I have, apart from these three important aspect that I talked about, we have achieved a significant milestone in this financial year that's that in terms of scale of the total business, we have exceeded INR 24 trillion in this financial year ending March '24. So there's a very significant skill in terms of the space we operate in terms of PSU. Our retail advances also this year crossed INR 2 lakh crores, which is, again, retail has been growing almost more than 20% for the last many quarters now. And earlier also, we talked about -- talked to all of you that we want to slightly push for our -- utilizing our book.

So in line with that, the retail growth has been very strong, our net interest income has exceeded INR 44,000 crores for the first time, and that gives a growth of around 8.5%. There is a bit of squeeze because of the cost pressure therein. And the operating profit exceeded INR 30,000 crores for the first time. And that's something I already talked about a growth of 15.3%. The operating profit growth has also supported by a very strong and sustained focus on the noninterest income. And if you look at the noninterest income for this year vis-a-vis last year, the growth is almost 40.7% from INR 10,000 crores to, it has gone up to INR 14,495 crores. It is coming mainly for 2 [indiscernible]. One is with regard to the CEB. The commission exchange brokerage where the growth is also 19.9%, whereas other treasury income has been almost at 40%.

So consequently, all these what I highlighted, the net profit has seen an increase of 26.1%, which is a INR 17,789 crores as compared to INR 14,410 crores last year. And here are a couple of comments I would like to give that for the last 5 quarters, including March '24, where we've been posting profit in excess of INR 4,000 crores. In terms of a run rate, if I said that this year profit is almost 123% of the last year profit.

So a couple of guidance that would all like to be interested to know for FY'24, '25, we are expecting the outlook that we see as of today, we're expecting deposit growth between 10% to 12% with a focus on CASA and the retail term deposit. On the advanced growth, we are looking at 12% to 14% with a focus on retailizing the book more, which retail as such growing at more 20% with a corporate growing almost 11% to 12%. The NIM guidance, as Ian already said, if you look at the full year NIM, it is at 3.18%, rather the sequential growth in the NIM has been better because we had last time discussed with regard to the dip in the NIM on December quarter, but we have improved this for this quarter.

And on a normalized basis also, it is higher than that of the last quarter. That is -- I'm talking about the December quarter. And the full NIM is almost at 3.18%. So we are maintaining our guidance on NIM at 3.15% plus minus 5 bps, but as the market outlook would change, then we'll just see going forward, whether we need to revise the guidance, but we hold for a full year guidance of 3.15% plus minus 5 bps. The ROA has been consistently for the last 7 quarters more than 1. And earlier, we have given a guidance of ROA in excess of 1, but we are revising upward the guidance from 1% to 1.10%. So considering the strong profit metrics, we do have, we are fairly confident that will achieve a full year ROA of 1.10%.

On the slippage ratio continue to have the same guidance of 1% to 1.25%. So we are preparing ourselves for all scenario going forward. So although the slippage for this year has been less than 1%, but we are maintaining the guidance at 1% to 1.25%. The credit cost continue to be, it is already less than 1%, continue to have the same guidance of less than 1%. Now on asset quality, particularly, I would like to highlight that apart from the reduction in GNPA and net NPA. Typically, you all look at the portfolio at risk or the book at risk. And that typically, if I take the SMA1 and SMA2 of the CRILC plus the restructured standard book.

In terms of percentage to the outstanding standard advances, which was at 2.04% as on March '23, has gone down to 0.92%. So not only on the GNPA, net NPA, we have seen significant improvement, but also the portfolio which can be at risk also has gone down significantly. So going forward, the outlook is much better as far as asset quality is concerned. So these are a couple of points that I wanted to highlight, and we are fairly confident that the bank has a strong robust business model, and we'll continue to sustain that going forward. With this, I open for question and answer. Over to you Phiroza.

[Phiroza Choksi, executive]

[Operator Instructions] The first question is from Ashok Ajmera.

[Ashok Ajmera, analyst]

Definitely, the results are very good overall performance of the bank on all the parameters is really -- I mean, on some of the parameters, it is more than what was expected. Having said that, sir, I have got a couple of point of informations and some concerns on that slippages and the provisions. So some -- like you see this -- our provision on this aviation account, INR 1,750 crores was the total, I think, approximately outstanding. And you said INR 1,200 crores was already provided for and now INR 550 crores has been provided now, and that is why our provisioning is a little higher.

But sir, here, I feel that we had some major collateral security also from this account. So number one, yes, it is -- as a prudent measure, it's really good that you provided for fully. But when do you expect the recovery to come, if not from the main account, at least by -- from this collateral because only I think you 2 or 3, 2 banks are only mainly are there. I think you and Central Bank, if I'm not wrong or maybe -- so can we expect some major recovery from those collateral securities on this? These are just my first question, sir.

[Debadatta Chand, executive]

If I respond to that, as you said rightly, the account is now 100% provided. In terms of the recovery out of this account earlier also, we said that we have a very high, what you can say, expectation of recovering the amount in full. Why because apart from the primary we said earlier, the account is heavily collateralized. 1/3 of the exposure is government guaranteed, and the balance also, if you look at the collateral value, it's covered as of today, including a bit up leftover primary. So we are hopeful like if you look at this account, the upside is there for the subsequent years out of this account. In terms of timelines, there are 2 litigation process, the legal process going on. One is with regard to the Delhi high court that you have already seen that and the second is with regard to the NCLT process.

NCLT process now the CIRP date has been extended by another 2 months. So they are all legal processes where it has its own time to consume and get a recovery. We expect it to be done at the earliest, but then again, we'll be depending on the legal process to get recovery. But as far as the upside is concerned, the entire upside is there with us. And we expect also, I mean, full or maximum recovery out of the account as you stand. Mr. Lal Singh, anything further you want to add on this?

[Lal Singh, executive]

No sir. It's okay sir.

[Ashok Ajmera, analyst]

My second question is on a very talked about subject of recent guidance note by RBI for higher provisioning on the project loans of 5% going forward in the next 2 or 3 years. We had a very detailed discussion yesterday in State Bank of India also on this because you come, I mean, next to SBI. And there, they said that out of our total on book, it looks INR 450,000 crores total infra and everything, the project loan, which might come up under the purview of this guidance would maybe only INR 1.5 lakh or something or 1.4 lakh or something.

And in that also, there are ifs and buts and there's no full clarity. So in our case, as a ballpark figure out of your total portfolio, how much portfolio do you think and come under the purview under, if this guideline is implemented as it is? And what are the other finer points? Have you done some calculation that how much need to be provided for in next 2, 3 years for us and whether it is under control? Manageable? We are comfortable? Or yes, there is some concern on the capital adequacy also later going on that?

[Debadatta Chand, executive]

Ajmera sir, actually you are fairly right, but there are two, you will be excusing me for that actually as far as this particular circular or this is concerned, this is a dropped guidelines as part of the consultative process. So there is no finality. So our corporate policy is to not to have huge with regard to a dropped guidelines and consultative process. So that's why I'm not in a position to tell you with regard to the outstanding book.

But as far as the impact is concerned, as of today, what we see out of this is that there are two things that a bank typically can do. One is with regard to in case you have usage capacity, you can absorb the cost otherwise you can pass on. So we, as intermediately obviously would like to pass on that impact. So if we are going to impact scale, I don't think the credit cost would go up significantly.

It can be a couple of like a percentage point less than 10 bps for the matter. So -- but as on today, our corporate policy, we are not commenting on a dropped guideline because that is what we believe not fair at this stage because the guidelines has not been issued. It is only a consultative. The final circular can be different than the original one. We do not know about that. So that's why I'm not commenting. Mr. Tyagi if you want to add anything to it.

[Lalit Tyagi, executive]

No sir, you said it all. I would say that since these are the draft guidelines and consultations are there. RBI in fact, has also solicited the views of these stakeholders. And these guidelines are getting evaluated at our end also at the industry level. And I would urge to have the little bit more time to clarity to emerge, as far as the impact is concerned, I'm sorry.

[Ashok Ajmera, analyst]

Yes. No, no problem. I mean, impact, you said it will not be more than 10 basis or 15 basis points. That's okay point will taken. Sir, my last question in this round, if and otherwise time permits I will ask some more. Is on the our other income other than interest income, there we have performed very well on the treasury front, you said. So one is that. And another one is, sir, there is one other income without any explanation of INR 313 crores in this quarter.

Can I have some color on that, some information on that, this INR 313 crores. And going forward in treasury. Now with some signs of rate might because our AFS book also good. So some color on the treasury. And similarly, in the written-off account also the recovery this quarter has been very handsome INR 1,202 crores as compared to INR 847 crores. So on these 3 covering -- all these 3 other income and the -- can you just comment on that, sir?

[Debadatta Chand, executive]

Yes. On the treasury, I'll comment on live to Ian and Lal Singh to address the remaining 2. Treasury, as you said that 2 things contributed, one is a higher trading profit this year as compared to last year. Secondly, last year, there was a depreciation in the book, whereas this year, there was a write-back progression of INR 489 crores. So that has contributed in terms of noninterest. But nevertheless, we also said earlier, we strongly what you can say, running a drive for a fee and flow within the bank. So we'll be augmenting the CEB, the commission exchange brokerage going forward.

And that's going to be -- it's a sustained efforts and focus to improve the fee income and also the noninterest income. Going forward, as you know, you are also part of treasury, there is a change circular now right? So in the change circular, the trading profit won't be to the extent that we booked last year because we are not going to have the AFS profit getting into the profit and loss, right? So there may be a dip in the trading profit going forward. But one thing is very clear that the interest income and investment would go up significantly, and that would compensate to a very large extent, the dip in trading profit.

So that's something again is up A and the new circular is quite positive on the capital front, right? So that would go to reserve and that's something very positive on the capital front. So this all sup up to will be in a position to what we can say, optimize on all the front, so as to maintain the profitability, income earning potential, contribution to the capital out of treasury book.

So that is what we believe is going to happen for next year. On the interest rate also, I do believe things although may be elevated for a longer time but then, there is a more than as expected maybe in Q2 or Q3, and that may give some further upside to the profit side, right? So on the -- Ian on the INR 313 crores, you just take that call and the return -- I mean, the profit on the return of accounts possible [indiscernible] can control.

[Ian De Souza, executive]

Yes, sir. So the other income other is actually interest we have received on our income tax reform. So since the time is elapse, since the reform was due crossed we received interest on. So this is more like a one-off. It is not sequentially repeatable, but it can come in future as...

[Ashok Ajmera, analyst]

So Lal Singh sir, on the recovery to on return of accounts, can you give some color?

[Lal Singh, executive]

So the recovery in the written-off account in '24, '25 is also expect it to be sustainable on the same basis last year. Last year, we did INR 5,098 crores. And this year also, we expect the similar recoveries in this portfolio. We have the portfolio of around INR 46,000 crores. So we expect this march of recovery.

[Operator]

The next question is from Kunal Shah.

[Kunal Shah, analyst]

Yes. So firstly, with respect to deals and more so domestic held on advances, no doubt you highlighted the impact of recoveries to be 5 bps on the overall NIM. So that would be translating to, say, 7-odd bps on the domestic yields. But besides that, also there is quite a significant expansion in the yields even after growing the corporate substantially on a quarter-on-quarter basis. So what would have led to that? So is there a repricing or some other element as well in the yields?

[Debadatta Chand, executive]

That's a fair thing. If you look at our the EVLR or the BRLR, which is the repo linked that you've already done. So there is no upside in that book for the last many quarters now. Whether it's MCLR, it moves along with the cost of deposit. And if you look at for many months now, often when we're increasing the MCLR, the pricing on the MCLR that is one. Secondly, we also said last time that when we announced the June quarter saying that there is a bit of upside left with regard to the repricing of the MCLR book because then normally, if it is a one year MCLR, only we can reprice the revised MCLR up to one year. So that's the offset was also available, leading to a good growth in the yield of advances in that way. Anything -- Ian, any further to add to this?

[Ian De Souza, executive]

I think it's perfectly called out because for us, actually, it works in 2 ways, right? Because when the repo rate was going upward because of our smaller share of retail advances we bought lesser benefit, but when the repo rate is stabilized and it perhaps could -- policy rate could come down in the future, we actually re-phase to that extent because 50% of our domestic book is on MCLR. So we will be, to that extent, protected because that would take normal to come off. So that's something just to keep in mind when you're running your models.

[Kunal Shah, analyst]

Sure. And secondly, when we look at it in terms of the provision on employees, so that at least on a sequential basis, that number seems to be high compared to INR 800 crores kind of a run rate, it is like INR 1,600 crores, while we were well provided on the wage revision and the related cost. So what is this element of incremental?

[Ian De Souza, executive]

Yes. So let me just take that one, Kunal. So essentially, if you recall, in our previous call, we had guided that once the weighted settlement details are out, we could potentially have a INR 400 crore impact on account of retirees. So essentially, that guidance has played out and there is a INR 400 crores impact. However, what we could not foresee that bond yields will fall at the end of March. And as a result, the discount rate has come down sharply. So the discount rate has contributed to another INR 400 crore impact. But this INR 400 crores impact is on account of the discount rate is unlikely to repeat. And with bond leads hardening, you could see some reversal of the second tranche of INR 400 crores, but these are more onetime hits. These are not to be built in on a sequential impact going forward.

[Kunal Shah, analyst]

So INR 400 crores is on that count?

[Ian De Souza, executive]

Totally INR 800 crores. Totally INR 800 crores because you wouldn't see INR 812 million in quarter 3 and doubled to INR 1,600 crores. The one [indiscernible] impact of INR 800 crores in two components.

[Kunal Shah, analyst]

Okay. Okay. Got it. And one last question with respect to the GNPAs on PL. So that is now almost 1.95% and that on a growing book at 50-odd percent on a year-on-year basis. So slightly on a lag book, it seems to be quite higher. So how we are maybe at least in terms of the pricing and how protected we are with respect to the credit cost on that front? So even though a small component, but yes.

[Debadatta Chand, executive]

Yes. As you said, right, the book is small and 1.9% GNPA, but we are also looking at more importantly, the collection efficiency and also the slippages part of the PL book. And these are all within the threshold in terms of the slippage. So absolutely no concern at this stage with regard to any stress book building up in the PL book. Secondly, there are two things we did vis-a-vis the last book that we had discussed on this. One is we said we are going to moderate and we are clearly moderated because the [indiscernible] starting in December and March quarter, if you run 2 more quarters, the growth would come almost at 30%, 35% as compared to almost 80%, 100% all year.

Secondly, in the [indiscernible] also, we strengthened our underwriting model by taking a lot of, I mean, advised from many of the rating agency consultant and bureaus part of it. So the underwriting model is much stronger. This is on a backdrop of two facts, which you need to account one that almost all are my existing customers, and they are already availing one loan apart from this law and conduct of all these loans are fairly good.

So I do not think any concern or a lot at this stage with regard to that. But then we -- some of the aspects that we are raising were mindful of and almost already curated on that book in that way. So there is no limited risk out of the portfolio at this stage. They are all within the normal norms. [indiscernible] anything you want to supplement on this?

[Unknown Executive]

No, sir, I think you have covered it.

[Operator]

Next question is from Rikin Shah.

[Rikin Shah, analyst]

I have a few questions. First one is on international deposits. So that has been growing quite rapidly at north of 25% Y-o-Y. So if you could explain a bit more what is the nature of these deposits, who are we getting it from, et cetera? So that's the first one. The second one is on the fee income. Of course, the focus on flow is translating into recent commission exchange brokerage, but it has been a bit volatile in terms of the Q-on-Q trends, right? So the full year fee-based income has grown at 16%. How would you expect this fee income growth in FY'25 is the second question?

And the third one is on asset quality. So the MSME slippages have also inched up in this quarter. Is there a common trend or any color that you could provide on the MSME slippage? And further to the question on personal loans, if you could just give more details about the yields that we charge, average ticket size and the credit bureau score of our customers, that would be helpful. And the final question is a data keeping one. If you could just help quantify what is the outstanding quantum of restructured loan book for us. I think it was INR 9,900 crores in the previous quarter. What is that number now?

[Debadatta Chand, executive]

So on the international thing, Mr. Tyagi would supplement me later. Actually, it's something to fund the asset growth internationally and also two bit of treasury operation there in, right? So treasury of typically where you can optimize your investment and the return. So is that typically leading to slightly higher growth. This is one. Mr. Tyagi you can supplement later.

On the fee side, I think it's sustainable because we have created a [indiscernible] vertical that was fully stabilized across the bank, particularly for mid-corporate and large corporate in last year. And they are looking at share of valet. They are doing account planning. They are one-to-one relationship manager with the customer. Whenever they talk with the customer, they are talking about all sides of the relationship.

I think because we have made structural changes and this outcome, I think this is sustainable rather we'll optimize beyond 16% as far as the growth in the future year is concerned. On the asset quality, MSME, obviously, MSME, the class is different than other -- like we have seen a corporate slippage legacy some time back, but MSME was going. COVID impact was maximum on the MSME, although the MSME, if you look at the GNPA on the COVID time was much higher, not -- it has gone down significantly, aligning towards the median average.

The slippages slightly marginally above the -- our normal slippage ratio of 0.99. But then again, we are at the control of that. But also, there are two things which are again supporting for a growth in MSME. One is with regard to these are accounts highly collateralized as compared to a normal corporate account, one. Secondly, the yields on these accounts are much higher as compared to a normal corporate. So in terms of a trade up, vis-a-vis the pricing in year, I think these are all within the tolerance for us to grow at the same level going forward.

So I don't think anything further concern on this. On the personal loan, as I said, a couple of details you asked for, but I'll leave it to Mr. [indiscernible] he has the data ready, but otherwise, you can supply you offline. And with regard to the outstanding restructured book also it has gone down. Mr. Lal Singh, you can tell on the outstanding restructured book. So on the international deposit, anything, I guess you want to supplement.

[Unknown Executive]

Sir, you have already said the broad aspect. The little bit which I can add is, that is international, the deposit trails the advances. The more we grow the advances book, we raise the deposits. Sometimes we also raised the deposits for our market-making as well as into the investments. And there are various avenues, so such as customer deposit, institutional deposits, et cetera. And whatever market offers us the better opportunities, bank raises them and then deploy them accordingly. So that is one of the reasons for the faster growth of the deposit than advances.

[Debadatta Chand, executive]

I can add also one point here. My investment on international has grown almost INR 1,500 crores. And all sudden done the inflation levels are almost same and the yields are much higher, even almost comparable with the domestic yield as far as the investment overseas. So they are all treasury presence just to optimize on the yield side. So on the MSME asset quality, anything further Lal Singh, you want to supplement?

[Lal Singh, executive]

Yes. So as far as I said quality is concerned, the slippage ratio quarter-on-quarter last quarter, it was 2.57%, it's come down to 2.04%. And the recovery also is robust in the NPA recovery in MSME book is INR 2,655 crores in this. And as far as the restructured book is concerned, the book has reduced to INR 8,148 crores now.

[Debadatta Chand, executive]

So that's okay. On the personal loan [indiscernible], anything you want to supplement?

[Unknown Executive]

Sir, we will provide the relevant data offline to them.

[Operator]

Next question is from Nitin Aggarwal.

[Nitin Aggarwal, analyst]

A couple of questions. One is on the liquidity coverage ratio, which has seen a sharp fall this quarter, while we had a very strong deposit growth. So what has really driven this fall in the LCR ratio?

[Debadatta Chand, executive]

So LCR, it's managing actually we required to have more than 100%, but we used to maintain around 135%, taking the global and domestic together. So a bit of that change happened because of we want to realign some of the assets, both on the international and also on the domestic side, we're still at 120% is healthy. And as far as the normal stance is concerned, we continue to maintain at 120% and above going for. So in that way, there is a good coverage in terms of the LCR coverage going forward, right?

[Nitin Aggarwal, analyst]

And sir, second is on the CD ratio. So what is our domestic CD ratio now? And while we are looking to grow higher in terms of loan growth versus deposit growth next year, what will be your comfortable CD ratio range that we would look to maintain?

[Debadatta Chand, executive]

Okay. That's a fair question. Even if earlier also when we're at 84% CD last quarter, the domestic was at 76%, the international much higher. In case you look, this quarter, we have moderated the international growth substantially down, particularly on the asset side. So the current CD is 82 point something which already we have shown there in the PPT. So our guidance now -- not guidance, but our range for operating the CD is between 80% to 82% going forward. So when I said 80% to 82%, the bias again would be slightly towards 80% than 82%. So that you heard the normal we are looking to. But then again, when you construct the entire balance sheet in terms of both asset liability, a lot of other moving ports there in, but then we'll try to operate within the band of 80% to 82%.

[Nitin Aggarwal, analyst]

Right. And sir, lastly, on the margins because we had a very sharp NIM improvement on the domestic book by almost 22 basis point NIM recovery. So can we say that the NIMs have bottomed out any one-offs that we had this quarter? Any color around this?

[Debadatta Chand, executive]

So that is what the CFO already outlined on the -- if you look at the last quarter and this quarter, it is from 3.27% vis-a-vis 3.10%. But if you normalize, it would be at 3.18%. Iam, am I correct?

[Ian De Souza, executive]

About 3.15% for the quarter and full year also around the same level. So full year will be normalized 3, 4 basis points lower than the full year 3.18%. But for the quarter, it would be at 3.15% nominal versus 3.27% which is [indiscernible].

[Debadatta Chand, executive]

So one thing that we discussed last time, practically we discussed much more on the margin side. And we announced to the market at that time saying that we reduced our deposit by INR 25,000 crores for the December quarter, although some increase in this quarter. So if you look at the policy scale, we are trying to slightly reduce the dependency on wholesale deposit to grow.

That's a clear policy. That's why we said initially that I'm calibrating on the advanced growth vis-a-vis the growth in deposit that is point one. Going to the case where the liability book, which is a retail term deposit that I'm talking about, that's almost reprice in last quarter. I mean if you look at the hike that happened and then the normally the duration is one year. So these are typically all fully reprise. So the incremental impact because of raising deposit for [indiscernible] rather the repricing would be positive going forward rather than negative that is what my sense. So we think the margin as you are guiding sustainable going forward.

[Operator]

Next question is from Mahrukh Adajania.

[Mahrukh Adajania, analyst]

Two questions. So we had excess provisions as in that our wage hike assumptions were higher than the final settlement. So how much was the write back. We can see some movement in employee expenses, I mean not in provisions, but in employee expenses. But what was the actual write-back on the provisions? And then what will be the run rate per month or per quarter of the non-actuarial employee expenses for the next year?

[Ian De Souza, executive]

In terms of the BAU wage allowance, as is we were providing in line with the final hike that was around 17%, we were providing just marginally above that. So it's not that we were providing significantly above that. So when the main settlement was made known in the last quarter, we were fully provided. So there's been no write-back per se in that line. In terms of the retirements, as I had called out in earlier comments, we made additional provision on account of retirees, on account of a wage settlement of around INR 400 crores.

In addition, there is a one-off increase in retiree provision on account of the discount rate coming down because bond yields are down in the March quarter. So totally on retirees, we've seen INR 800 crores one-off increase in the quarter ended March. I hope that answers your question.

[Mahrukh Adajania, analyst]

No, my question was that for FY '25, what is the quarterly run rate of employee expenses that we should expect?

[Ian De Souza, executive]

If you leave aside, the INR 800 crores one-off increase. I think this is the run rate you can expect. So if you take our provision for retirement at around INR 800 crores cost plus what we're seeing in terms of employee expense, I think that's the run rate we have been expecting. [indiscernible] cost of quarter 4 by 800 crores and [indiscernible].

[Mahrukh Adajania, analyst]

Got it. That's very helpful. Also, would you comment on the agri slippage? Any seasonality there? I mean usually, the seasonality is in the first and the third quarter or any geographic issue like in Punjab or anywhere. The agri slippage also rose Q-o-Q along with MSME.

[Debadatta Chand, executive]

Just to answer that, if you look at the normal slippage ratio because of corporate slippage has been very pretty low, right? So the average slippage is almost at 0.99% at this point of time. But a couple of products where in slippage would be higher. That is a normalized slippage. I don't think there's a limited slippage on the agriculture. So Lal Singh anything that you can highlight on this?

[Lal Singh, executive]

So as far as agri slippage is concerned, during the year, it is INR 2,033 crores and last year it was INR 2,100 crores. But quarter-on-quarter, in Q4, it is INR 917 crores whereas the Q3 -- Q4 '23 was INR 540 crores. So there is an increase of around INR 400 crores in the...

[Debadatta Chand, executive]

But on a yearly basis, this is almost normal, right?

[Lal Singh, executive]

Yearly basis, it is normalized. It is less than the last year.

[Operator]

The next question is from Rakesh Kumar.

[Rakesh Kumar, analyst]

So a couple of questions. Firstly, on this nonretail term deposit growth, which is at around 18.5% year-on-year. And now composition has reached to around 1/5 of the total domestic deposit. And if you look at CASA and retail TD growth is around 5%, 5.5% year-on-year kind of 5.3%. So basically, like if we anticipate this kind of growth, say, in '25, then -- and looking at LDR of around 80%, 81%, how do we look at credit growth number? So should not -- we'll have to depend more on wholesale TD number considering that CASA and RTD growth is just around 5.5%.

[Debadatta Chand, executive]

No, that's why I said on -- particularly on the retail side and CASA last 6 months, we made concerted efforts to increase this book. If you look at CASA growth sequentially higher than the annual growth. So clearly, the trucks and building off. In terms of product offering, both on the term deposit and we have differentiated a large number of products, where one bank having differentiated like we came out with a product called SDP, which is equally like SIP, which is a recurring deposit scheme.

We are one of the bank, along with another bank to offer the Green deposit at this point of time. So there are multiple efforts going on, and you are right that we need to optimize on the retail deposit, no doubt about it. But going by the guidance that we have given, as you would have seen that last year also, we raised almost INR 20,000 crores or INR 25,000 crores, both in terms of the capital issuance and also on the infra bond.

So there are areas where there is a possibility of getting refinanced at a much cheaper cost. So there are areas where I can source my international deposit and convert and still get a margin. So there are multiple ways to support the credit growth. That's why I think, again, we said as a policy, we want to reduce dependency on double deposit.

If you look at the June quarter and September quarter, the bulk was growing almost at 55%, 60%. But as for December, it was 10% and March, it is 18%. So efforts are on to make -- not to have dependent on bulk deposit too much. But at the same time, I think the guidance can be fully achievable within the LDR that we have announced of around 80 to 82.

[Rakesh Kumar, analyst]

Just one last question, sir. On the recovery side, basically NPA recovery and written-off recovery, the number is now INR 8,600 crores, 70 crores. And previous year, we had INR 13,400 crores number in the Slide #18. So there's quite a lot of drop is there, and we have seen in some of the other PSU banks also, we have seen that NPA recovery number has been coming down especially in the Q4, where it should have been a bump up actually. So how do we look at this number, NPA recovery plus TWO recovery in FY'25, if you can help us with some guidance would be very useful.

[Debadatta Chand, executive]

So I'll give a couple of comments, and then I'll hand it over to Lal Singh sir. One is that when you had a recovery, higher recovery last year, that was at an opening base of 1 April 2022. The NPA base was much larger as compared to the base we had for this year. The base we had for this year is around INR 54,000 crores which was much higher of 1st March 2022.

So once the PT is going down, obviously, the recovery would be less. There are a couple of, again, one-off in terms of last year recovery out of NCLT resolution. So this typically has behaved in terms of how do you look at the recovery last year and this year. As far as guidance, as against INR 12,000 crores of recovery guidance we had last year, we have announced to the market that 10,000 is the recovery target.

At the same time, the trending of GNPA NPA would be downward from the current level of 2.92%, although we are not giving a guidance, but the trending will try to move towards 2.5%. Similarly, the net NPA from the 0.68% to 0.5%, but then we're not giving typical guidance, whether it can happen in six months time or one year time. So clearly, see, I think if you compare my absolute number and also the level of GNP and net NPA, these are comparable in the best in the industry. So I am not at a limited level to reduce substantially.

I have already achieved substantial progress in terms of creating a much better asset quality. So in that scenario, the incremental impact would be very less as compared to the earlier impact. So with the -- whatever recovery that you are talking about, we will be in a positioned to achieve all these trending downwards kind of a GNP and net NP we are talking about. So we're quite hopeful of that. So Lal Singh sir anything further you want to add?

[Unknown Executive]

No, sir. You covered everything.

[Operator]

The next question is from Saurabh Kumar.

[Saurabh Kumar, analyst]

Sir, the first one is essentially on this AFS. Can you quantify the capital impact? That's first. Secondly, I mean, what would be your expectation of both the slippage and the recovery upgrade for next year? And the third is essentially on this core fee growth, you've obviously done very well this year. Do you think this 20-odd-percent run rate is sustainable into next year?

[Debadatta Chand, executive]

AFS, you mean to say on the new guidelines impact?

[Saurabh Kumar, analyst]

Correct, correct. Yes.

[Debadatta Chand, executive]

So it's positive. I don't know I said the number or not or otherwise we can share you off-line with regard to this number. But then it's in money in the sense that there is going to be accretion in the reserve a substantial amount, right? So that's one. Second is with regard to slippage and recovery, we set a recovery targeting of INR 10,000 crores.

And we have an internal policy wherein the cash recovery upgradation and recovery out of return of accounts has to be higher than the slippage. So obviously, I'm targeting a slippage much lower than 10,000 for the year, right? The terminal level goes down. And thirdly, core fee, when we have seen a core fee growth, particularly also to a large extent, dependent on the liquidity scenario.

If you look at the current liquidity scenario, it's possible to negotiate with customer right? At the same time we made structural change of creating a relationship vertical job is to, again, mind the customer in terms of relationship fee-based income and all those stuff. We have significantly improved our BCMS cash management service wherein huge transaction flow business I mean, fee were generating. So I think it's sustainable unless and until there is a -- the liquidity scenario tremendously changed from current to a highly surplus zone. Then there can be a change there. And otherwise, I think it's sustainable. So anything on the AFS, Mr. Tyagi you want to add?

[Lalit Tyagi, executive]

No sir, I think you have covered it.

[Debadatta Chand, executive]

Okay. Slippage recovery losses are broadly were in line, right? Okay. So thank you, anything further from you. Otherwise, we are done with the question.

[Operator]

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

[Ian De Souza, executive]

Thank you, everyone, for attending our call. And this time, thankfully, our call has been on working day. I think that's the feedback we got time and time game that we should not keep it on the Saturday. So thank you, and look forward to you can always write to us if you have any queries, which are remain remained unanswered in today's call. Write to me personally, all of you have my email id or you can write to Investor Relations at Bank of Baroda.

Thank you very much, and have a great evening ahead.

[Debadatta Chand, executive]

Thanks all again for joining for the today's conversation. Thank you all.