Bank of India lowered ECLGS 5.0 target by 20%+ unexplained
Profit surged 36% to ₹3,068 cr but management cut its ECLGS 5.0 funding estimate from 10-12 thousand cr to around 8,000 cr without explanation, raising questions about guidance credibility.
What's new
- Q1 PAT rose 36% year-on-year to ₹3,068 cr, with operating profit up 26%.
- Global advances grew 18.8% to ₹8.0 lakh cr, with RAM advances up 19.8%.
- GNPA improved to 1.8%, NNPA to 0.5%, and credit cost was 0.2%.
- ECLGS 5.0 funding target cut to around ₹8,000 cr from earlier 10-12 thousand cr.
Themes from the call
Demand
Global advances grew 18.8%, with a corporate pipeline exceeding ₹1 lakh cr, but personal loans rose only 3% due to guardrails.
Margins
Global NIM slipped to 2.5% from 2.6% a year ago, with cost of deposits down 15 bps but CASA mix fell to 36.7%.
Capital allocation
CRAR strengthened to 18.7%; management targeted $1.2 bn in FCNRB deposits by Sep 30 and $4.3 bn in total external funding by Dec 31, 2026, with borrowing up to 9.0 times.
Guidance watch
- FY27 global advances growth 15-16% and deposits growth 13-14%, unchanged.
- FY27 ROA of 1.0% or higher, global NIM 2.5-2.6%, CIR 48-49%.
- FCNRB deposits target $1.2 bn by Sep 30, with gearing up to 9.0 times.
- Credit-card base target of 3 lakh by FY27.
- ECLGS sanctions and disbursements around ₹8,000 cr by scheme end (reduced from earlier 10-12 thousand cr).
Risk flags
- ECLGS 5.0 target cut by at least 20% without explanation for the change.
- Personal loan growth restricted to 3% by guardrails; focus shifting to salaried customers.
- West Asia exposure remains under monitoring, with SMA of ₹4,070 cr and fresh slippages of around ₹1,800 cr.
- NIM compression from 2.6% to 2.5% without clear attribution.
Key quotes
-
"So, we have done calculation in that and we expect to fund around 10-12 thousand crores under the ECLGS scheme."
— Management, May 2026 call -
"We expect that by the time the scheme comes to an end... we will be able to do around 8,000 crores of sanctions and disbursements."
— Management, Jul 2026 call
The brief
Bank of India delivered a strong quarter: profit surged 36%, operating profit rose 26%, and asset quality improved with GNPA falling to 1.8% and credit cost to 0.2%. Yet the call leaves a nagging question. Management slashed its ECLGS 5.0 funding target from 10-12 thousand crores to around 8,000 crores without offering any reason. Was it demand? Eligibility? A measurement change? Investors deserve to know. The rest of the guidance held steady: advances growth 15-16%, deposits 13-14%, ROA above 1%, NIM around 2.5-2.6%, and a continued push into external funding with $4.3 billion targeted by year-end. But the unexplained guidance cut casts a shadow over management's credibility on funding estimates. The bank's capital position is strong — CRAR at 18.7% — and its focus on RAM, MSME, and corporate lending is sensible. International business is being repositioned toward higher-margin corporate lending away from trade finance. Still, NIM is under pressure, and personal loan growth is constrained. The ECLGS revision may be a small number in context, but it is the kind of inconsistency that makes analysts dig deeper. For now, BOI's business trends are intact, but the funding guidance needs a clearer narrative.
BOI's profit surge is real, but the unexplained 20%+ cut in ECLGS 5.0 target chips away at guidance credibility.