Bank of India targets 13-14% loan growth in FY26, seeks high-yielding loans
This story was originally published at 20:56 IST on 21 January 2026
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--Bank of India MD: Aim to increase share of high yield advances in book
--CONTEXT: Comments from Bank of India mgmt in post-earnings media call
--Bank of India MD: Aim for advances to grow 13-14% in FY26
--Bank of India MD: Aim for deposits to grow 11-12% in FY26
--Bank of India MD: Feel robust growth happening in domestic credit
--Bank of India MD: Aim to protect NIM at current level in Q4
--Bank of India MD: Will be challenge to maintain CASA ratio in coming qtrs
--Bank of India MD: Investing 10% of operational expenditure on IT
--Bank of India MD: Have corporate loan pipeline of INR 800 billion
--Bank of India MD: To open 60 branches in Q4, 200 branches in FY27
--Bank of India: See impact of 2% on capital from expected credit loss norms
--Bank of India MD: No plans to list any subsidiaries in Q4
MUMBAI – Bank of India is targeting advances growth of 13–14% and deposit growth of 11–12% in FY26, betting on strong domestic credit demand while focusing on improving the yield profile of its loan book, the bank's Managing Director Rajneesh Karnatak said at a post-earnings media call.
"We feel that there is robust growth happening, particularly in domestic credit," the managing director said, noting that domestic advances rose around 15% year-on-year in the December quarter. The lender plans to tilt its portfolio towards higher-yielding assets through calibrated churn in the corporate book and faster growth in retail, agriculture and micro small and medium enterprises loans.
The MD said the bank aims to increase the share of high-yield advances in its overall portfolio. "We are in a position to churn some of our portfolio from low-yielding loans to better-yielding loans without increasing risk," he said, adding that nearly 96% of advances are investment-grade rated.
For the March quarter, the lender expects pressure on margins following the cumulative policy rate cuts, but remains confident of defending profitability. "We feel that we will be able to protect our net interest margins at the level which we have been able to bring at this level," the MD said, adding that the same asset-liability strategy adopted in Oct-Dec will continue in Jan-Mar.
The bank flagged challenges on the deposit front, particularly in maintaining its CASA ratio amid structural shifts in household savings. "It is very difficult to get CASA these days for all the banks...definitely there will be a challenge in CASA in the coming quarters," the MD said, pointing to rising investor preference for mutual funds, equities, and insurance products.
Bank of India currently has a corporate loan pipeline of around INR 800 bln, with exposure spread across infrastructure, renewable energy, data centres, EVs and traditional manufacturing sectors. The management said the pipeline is "very robust and 360-degree across industries", providing visibility for credit growth into the next financial year.
As part of its expansion strategy, the bank plans to open 60 branches in the March quarter and about 200 branches in FY27. The MD said branch expansion remains critical for customer acquisition and service, even as automation improves back-office efficiency.
On technology spending, the bank said it is investing heavily in digital transformation, artificial intelligence and cybersecurity. "We are investing nearly 10% of our total operating expenditure towards IT," the MD said, adding that automation initiatives have already led to significant productivity gains.
The bank also disclosed that it expects a capital impact of around 2% from the implementation of expected credit loss norms, though management said the impact would be comfortably absorbed given strong profitability and capital buffers. "ECL framework, we have already started the working based on present RBI guideline, we are expecting impact should be at around 2% of CRAR (capital to risk-weighted asset ratio). Our present CRAR is around 17.09%, 1% of that comes around INR 4,600 crores (INR 46 billion). We are expecting the impact should be around 2% of the CRAR on five year term, which means annualised basis comes to 0.4%."
On corporate actions, the MD clarified that there are no plans to list any subsidiaries in the March quarter. "It will not happen in this financial year," he said, adding that discussions are ongoing but no immediate timeline has been set.
Bank of India reported steady improvement in asset quality during the quarter, with lower slippages and stronger provision coverage, and said it remains focused on balancing growth, profitability and balance-sheet resilience amid evolving macroeconomic conditions. End
Reported by Kabir Sharma and Suryash Kumar
Edited by Akul Nishant Akhoury
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