# 1. Financial Performance ## A. Key Figures * **Total Business:** **₹2,11,647 Cr** (Dec-25) (+16% YoY, +4% QoQ) * **Operating Profit:** **₹1,005 Cr** (Q) (+23% YoY, +14% seq. ex-₹139 Cr one-time) * Net Profit: **₹689.96 Cr** (Q) (+25% YoY, +20% QoQ) * Noninterest Income: ₹509 Cr (9M) · Recoveries: ₹601 Cr (till Dec '25) (in line with ₹600 Cr guidance) * **Bancassurance Income:** **₹133 Cr** (YTD) (+33% YoY) * **Operating Expenses:** **₹743 Cr** (Q) (↓₹14 Cr seq.) ## B. Revenue Growth * **Sustained Top-Line Momentum:** Total business achieved robust year-on-year and sequential growth, reflecting strong underlying demand and operational scaling. * **Profitability Leverage:** Operating profit growth significantly outpaced revenue, driven by operational efficiency and absence of non-recurring cost items. ## C. Profit Margins * **Cost Discipline Achieved:** Cost-to-income ratio improved markedly, coming in at **98% for 9M**, well within the stated target of under **50%**, signaling strong expense control. * **Efficient Expense Management:** Staff costs remained flat despite inflationary pressures, aided by lower headcount and productivity gains. ## D. Cash Flow * **Non-Fund Income Strength:** Fee income growth remains resilient, with bancassurance delivering strong double-digit expansion and PSLC sales contributing **₹35 Cr** in the quarter. * **Credit Recovery Execution:** Full-year recovery guidance of ₹600 Cr was met by end-December, underscoring effective asset quality management and collections capability. --- # 2. Loan Book & Asset Quality ## A. Key Figures * **Advances:** **₹97,052 Cr** (+17% YoY, +5% QoQ) * Gross NPA: 0.71% → 0.71% * Net NPA: 0.19% (steady) * SMA 30+ Ratio: 0.24% (↓ from 0.27%) * Fresh Slippages: **₹154.14 Cr** (0.63% annualized) * **NPA Migration:** **₹81 Cr** (₹114 Cr allocated) ## B. Advances Growth * **Retail-Led Expansion:** Loan book growth driven by retail segments, with disciplined pricing and risk management despite competitive pressures. * **Risk Mitigation in Agri-Jewel:** Conservative **loan-to-value of 59%** ensures adequate margin coverage and supports portfolio resilience. * **Collateralized Restructured Book:** Restructured exposures largely secured, with unsecured advances contained at **91% of total advances**, supporting stable NIM at **99 bps**. * **Intentional Growth Moderation:** Expansion tempered to preserve asset quality and deposit margins, prioritizing sustainability over volume. ## C. NPA Trends * **Improving Asset Quality:** SMA 30+ ratio declined across all verticals, reflecting tighter monitoring and improved collections. * **Contained NPA Migration:** Credit costs elevated due to provisioning allocation, but migration primarily from restructured and standard assets with high coverage. * **MFI Portfolio Recovery:** Multi-lender risks and delinquencies addressed; fresh MFI exposures fully guaranteed, positioning for future ramp-up. ## D. Slippages & Write-offs * **Sharp Decline in Fresh Slippages:** Current quarter slippages down significantly from prior quarter, with **no major corporate account defaults**. * **Shift in Slippage Profile:** Recent slippages concentrated in **RAM verticals** (commercial, MFI, retail), marking a structural improvement from historical corporate-led stress. * **Proactive Resolution Strategy:** Specialized legal and asset disposal teams deployed to accelerate recovery; **₹2,500 Cr** in secured properties under resolution. * **Elevated Write-offs = Cleanup, Not Deterioration:** Higher write-offs over 9 months reflect write-off of fully provisioned legacy NPAs; future write-offs expected to normalize. --- # 3. Deposit & Funding Mix ## A. Key Figures * **Total Deposits:** **₹1,14,595 Cr** (+4% QoQ, +16% YoY) * **CASA Growth:** **+2% QoQ** (Demand: +1%, Savings: +2%) * **Term Deposit Repricing:** **~20%** repriced in Q3, **10–15%** expected in Q4 * **LCR:** **133%** average in prior quarter ## B. CASA Growth * **Core Deposit Momentum:** Strong YoY trends in new-to-bank customer balances—**6% growth in savings** and **10% growth in current accounts**—highlight effective acquisition strategy. * **Quarter-End Inflows:** Better-than-expected inflows into current accounts boosted CASA stability and signaled improved liability quality. * **Retail Deposit Resilience:** Despite flat QoQ retail growth, robust **13% YoY increase** reflects sustained competitiveness in deposit sourcing. * **Funding-Led Constraint:** Loan growth is being limited by funding availability, not credit demand, underscoring strategic focus on deposit mobilization. ## C. Term Deposit Repricing * **Cost-of-Funds Tailwind:** Meaningful deposit repricing (~20% in quarter) drove funding cost relief, with further benefit expected as **10–15% of deposits renew at sub-offer rates**. ## D. Borrowings Strategy * **Opportunistic Funding:** Borrowings rose despite deposit growth due to **cheaper borrowing costs versus deposit costs**, optimizing overall funding mix. * **Strategic Deployment:** Incremental borrowings support investments in **credit substitutes and other assets**, aligning funding with yield-accretive asset deployment. * **Institutional Refinance Utilization:** The bank actively leverages low-cost refinance facilities from **NABARD and SIDBI** to enhance funding efficiency. ## E. Funding Cost * **LCR Outlook:** Upcoming LCR regulation from FY27 expected to reduce the ratio by **200–300 bps**, more than initially anticipated, requiring proactive liquidity management. * **Lite Branch Impact:** With only **40–50 lite branches**, their contribution to opex is negligible and does not alter overall cost trajectory. --- # 4. Segment & Business Mix ## A. Key Figures * **RAM Verticals Contribution:** **86%** of total business · **Corporate Banking:** **14%** * **RAM Verticals Growth:** **+4% QoQ** · **+19% YoY** * **Retail Advances Growth:** **+6% QoQ**, driven by jewel and mortgage loans * **Mortgage Loan Volumes:** **+14%** during the quarter * **Corporate Portfolio Growth:** **+6% QoQ** · **+14% YoY** * **Commercial Business Mix:** **36%** of total business · **Retail:** **26%** · **ABG:** **24%** * **Disbursements (Commercial):** **+21% YoY** * **MFI Portfolio:** **₹207.83 Cr** (Dec 2025) vs. **₹333 Cr** (Dec 2024) ## B. RAM Verticals * **Core Growth Engine:** RAM segment delivered strong double-digit annual growth and sequential expansion, anchored by robust performance in **jewel loans and mortgage financing**. * **Mortgage Scaling:** 14% volume growth fueled by integrated branch and open market channel collaboration; ~20 dedicated mortgage branches established to institutionalize LAP growth. * **Gold Loan Resilience:** Portfolio remains stable with no deterioration, supported by **efficient TAT** and deep customer relationships. * **LAP Momentum:** Growth reflects successful scaling of past channel experiments (NEO/open market), now embedded across the branch network. ## C. Corporate Portfolio * **Selective Expansion:** Corporate advances grew solidly, driven by opportunities in **commercial real estate, capital markets, and EPC sectors**, while maintaining disciplined risk and spread targets. * **Funding Shift:** Some corporate clients previously funded via loan book are now served through **NCDs and treasury instruments**, altering investment portfolio composition. * **Export Visibility:** Key exporters report order books secured into **March 2026**, though global diversification remains constrained by customization demands. ## D. Commercial Growth * **MSME Focus:** Commercial segment, the largest business vertical, grew sequentially with **21% YoY disbursement growth**, targeting high-potential small business expansion. * **Relationship Model Rollout:** Small business group model launched across **79 branches** with dedicated relationship managers to deepen engagement and ensure quality growth. * **Portfolio Discipline:** Bank exited weaker accounts and ceded some to competitors due to **unfavorable pricing**, reinforcing risk-reward alignment. * **Sectoral Pressure:** **Textile segment** saw lower utilizations; **vehicle loans** continue to contract due to **high interest rates**, with de-growth expected to persist. ## E. MFI & New Initiatives * **Agri-Loan Growth:** Agriculture portfolio grew 4% QoQ, with **agri-jewel loans dominating at 91%** of the mix. * **MFI Contraction:** Portfolio sharply reduced to **₹83 Cr** from **₹333 Cr** YoY, reflecting industry-wide adoption of **MFIN guardrails** and focus on credit quality. * **New Product Pipeline:** Credit card revamp underway with **new variants launching by quarter-end**; affordable housing loans in development with co-lending tech integration nearing completion. --- # 5. Interest Margins & Yields ## A. Key Figures * Net Interest Margin (NIM): 3.99% (exceeded FY25–26 guidance) (+22 bps QoQ) * Yield on Advances: 9.76–9.77% (stable) (+1 bp QoQ) * Yield on Investments: 6.64% (+4 bps QoQ) * **Investment Book Size:** **₹30,156 Cr** (+₹1,958 Cr QoQ) * **Treasury Trading Gains:** **₹16 Cr** (vs. ₹6 Cr prior quarter, ₹18 Cr YoY) ## B. NIM Expansion * **Sharp NIM Rebound:** Record 22 bps quarterly expansion driven by **16 bps decline in cost of funds** and improved asset yields, supported by bunched repricing of long-term deposits. * **Near-Term Pressure Flagged:** December 25 bps rate cut to weigh on next quarter’s yields; deposit competition may require **+50 bps higher rates**, threatening margin sustainability. ## C. Yield on Advances * **Stable Asset Yields Amid Rate Cuts:** Yield held firm at 76–77% due to proactive repricing of low-yielding loans and **strategic shift from floating to fixed-rate loans**. * **Portfolio Repricing in Action:** Fixed-rate loan mix expanded sharply to **23%**, while MCLR-linked loans declined to **20%**, enhancing yield resilience. ## D. Investment Yields * **Portfolio Rebalancing Boosts Returns:** Investment yield rose 4 bps on incremental deployment into **SDLs and NCDs**, favoring higher spreads and regulatory efficiency. * **Credit Substitutes Gain Traction:** Increased NCD investments reflect strategic pivot to lower-cost, risk-aligned exposure with existing clients, bypassing priority sector constraints. * **Treasury Activity Selective:** ₹16 Cr in trading gains reflect restrained selling amid favorable price expectations, despite higher portfolio averages during the quarter. ## E. Rate Repricing Impact * **Bunched Repricing Tailwind:** Major deposit book repricing—especially maturing 400/444-day products—delivered outsized cost-of-funds benefit concentrated in the current quarter. * **Gold Loan Mix Shifts Continue:** Ongoing conversion between fixed and floating rates in gold loans to optimize yield and client retention, expected to persist at renewal. --- # 6. Credit & Regulatory Risks ## A. Key Figures * **Incremental Provision:** **INR1.64 Cr** (for new labour codes) * **LCR:** **133%** (above private bank peers) * **Capital Cost:** **150%** (due to high delinquency and LGD) ## B. Gold Loan Compliance * **Proactive Regulatory Alignment:** Seamless transition to new RBI gold loan norms achieved through early preparation and implementation of robust compliance processes, including background checks and centralized verification. * **Agriculture-Jewel Loan Dominance:** Portfolio heavily skewed toward agriculture-jewel loans, with full adherence to RBI’s consolidated guidelines and relaxations. ## C. PSL & End-User Tagging * **Minimal Trade Relief Uptake:** Only one minor moratorium availed by a single exporter; no broader funding requests or PSL tagging issues reported. * **Clean End-User Compliance:** No identified risks in PSL tagging or end-user identification across the export portfolio. ## D. Regulatory & Credit Risks * **NCLT Recovery Uncertainty:** Recoveries from technical write-offs remain highly unpredictable with no timeline or visibility, making FY '27 expectations uncertain despite ongoing proceedings. * **Elevated Credit Costs:** High delinquency in certain segments drives a **150% capital cost** and elevated LGD, pressured by repossession challenges and **upfront commission expenses**. --- # 7. Guidance & Outlook ## A. Key Figures * NIM YTD: 3.88% (ex-one-off) · Full-year NIM guidance: 3.9–3.95% * ROA: 2.05% QoQ (vs. 1.81% prior) · 1.87% 9M average · Guided >1.85% for FY '26 * **Capital & Asset Quality:** **CRAR: 16.05%** (Basel III, pre-profit) · **Gross NPA <1.5%** · **Net NPA <1%** · **Slippages <1% of book** ## B. NIM Forecast * **NIM Pressure Anticipated:** Full-year NIM forecast moderated to 9.0–9.5% post **25 bps rate cut in December**, reflecting macro sensitivity despite strong YTD performance. ## C. ROA Target * **Sustained ROA Expansion:** ROA trajectory set to remain above 8.5% in FY '26—representing a structural step-up from prior 6.0–6.5% levels—driven by organic operating leverage and stable asset quality. * **No Near-Term FY '27 Outlook:** Management deferred ROA or earnings guidance beyond FY '26, citing need for post-March performance review. ## D. Loan Growth View * **Loan Growth Tied to Funding:** Despite healthy demand across verticals, **no revision to >200 bps above industry credit growth guidance**, with formal updates pending next quarter’s results. * **Forward Uncertainty:** Management refrained from providing next-year loan growth outlook, emphasizing dependency on **quarterly performance and deposit accretion**. ## E. Deposit Strategy * **Deposits as Growth Limiter:** Strong loan demand across segments is constrained by ability to raise low-cost deposits without compressing margins, making liability management a key strategic priority.