Bank of India to maintain FY26 NIM at 2.75% if there's no rate cut, says MD
This story was originally published at 21:49 IST on 9 May 2025
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--Bank of India MD: See global advances growing at 12-13% in FY26
--CONTEXT: Comments by Bank of India MD Karnatak at post-earnings press meet
--Bank of India MD: See global deposits growing at 11-12% in FY26
--Bank of India MD: Repo rate cut of 50 bps to hit NIM by 20 bps
--Bank of India MD: Aim to maintain FY26 NIM at 2.75% if there's no rate cut
--Bank of India MD: Target slippage ratio of around 1% in FY26
--Bank of India MD: Co lending pipeline currently at INR 50-60 bln
--Bank of India MD: No plans of QIP at present
--Bank of India MD: We will tap market with infra bonds
--Bank of India MD: Plan to raise up to INR 50 bln via tier-I, tier-II bonds
--Bank of India MD: Will maitain CASA ratio at 40% in FY26
--Bank of India MD: To maintain share of bulk deposits to total at 14% FY26
--Bank of India MD: To focus on low cost deposit mobilisation in FY26
--Bank of India MD: Expect to fund data centres, EV market, power sector
--Bank of India MD: Corporate loan pipeline at INR 600 bln
MUMBAI – Bank of India will aim to maintain its net interest margin around 2.75% in 2025-26 (Apr-Mar) if there are no further repo rate cuts from the Reserve Bank of India, Managing Director and Chief Executive Officer Rajneesh Karnatak said on Friday at a press conference following the bank's earnings release. "We're already at 2.82% (in FY25). If there's no rate cut, we'll try to maintain NIM near 2.75%," Karnatak said. "But if a 50-basis-point cut comes through, we may see a 20-bps impact on NIM."
Karnatak also said the bank expects global credit to grow 12–13% in FY26 and global deposits to rise 11–12%. "We're focusing on low-cost funding to protect margins, growing quality advances, and driving business through digital initiatives," Karnatak said. He added that governance, compliance, and operational efficiency will remain central to improving profitability.
As of Mar. 31, the bank's global advances rose 13.7% year-on-year to INR 6.66 trillion, including INR 5.64 trillion in domestic loans. Retail, agriculture, and micro, small, medium enterprises segments made up INR 3.23 trillion of the domestic book. Global deposits grew 10.7% to INR 8.17 trillion, with INR 7.01 trillion from domestic operations.
The public sector bank also aims to keep its current account savings accounts ratio steady at 40%. "We've already deployed strategies to improve CASA and deposit mobilisation," he said. The bank's CASA ratio as of Mar. 31 was at 40.28% as against 43.21% a year ago.
The bank will also hold its share of bulk deposits to total deposits at 14% and focus on mobilising more low-cost deposits to manage funding costs. "Our goal is to reduce deposit costs and protect our margins in the long run," Karnatak said.
Bank of India is targeting a slippage ratio of around 1% in FY26. "We're already seeing improvement. We're confident we'll bring slippage down from 1.6% to 1.0%," he said. The bank's slippage ratio for FY25 was at 1.36% as against 1.58% in FY24.
The bank has a corporate loan pipeline of INR 600 billion, which is about 9% of its global loan book, Karnatak said. "These are sanctioned but yet to be disbursed, largely in emerging sectors like warehousing and power, data centers and EV (electronic vehicle) segment," Karnatak said. He added that the co-lending pipeline currently stands at INR 50 billion to INR 60 billion.
On capital raising, Karnatak said the bank has no plan to raise capital through qualified institutional placement. However, it will consider tapping the market through infrastructure bonds as conditions improve. "We raised over INR 120 billion via infra bonds last year. We will assess the market for further issuances," he said.
The board has also approved raising up to INR 50 billion through tier-I and tier-II bonds. "Our capital adequacy is healthy at 17% (17.77% as of Mar. 31), but we will raise bonds as and when needed," he said.
Amid escalating tensions between India and Pakistan, Karnatak said the Reserve Bank of India has advised banks to maintain adequate cash in border areas. "We are following RBI guidance on that front," he said.
On the National Stock Exchange, shares of Bank of India closed 2.2% higher at INR 110.22 on Friday. End
Reported by Sachi Pandey
Edited by Akul Nishant Akhoury
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