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LDR at comfortable level to support growth

CBK saw a good quarter as core PPoP was ~13% ahead of PLe driven by higher NII/NIM and lower opex. Reported NIM performance was better to peers since it rose by 9bps QoQ driven by (1) fall in deposit cost and (2) healthy retail growth at 8.6% QoQ. NIM for FY27 is guided to be between 2.5-2.6% (FY26 2.51%). Provisions may remain stable at 0.75% despite ECL impact which could be INR 100bn or 9% of equity, primarily towards stage-2 and non-funded exposure. CBK is better placed than peers in terms of LDR, which is lower at ~78%. We trim multiple from 1.1x to 1.0x on Mar’28 ABV and lower TP to INR 150 from INR 160. Revise rating to ‘ACCUMULATE’ from ‘HOLD

Good quarter due to better NII/NIM and opex:

NII was higher at INR 98.1bn (PLe INR 95.2bn) due to NIM (calc.) at 2.26% (PLe 2.19%); reported NIM was up 9bps QoQ to 2.54%. Loan growth at 16% was 100bps lower, while deposit growth at 10% YoY was 65bps higher. CASA ratio was stable QoQ at 27.3%; LDR was 77.8% (77.1% QoQ). Other income was lower at INR 48.2bn (PLe INR 55.4bn) due to treasury loss; fee was in-line while TWO recovery was better. Opex at INR 78.7bn was 3.5% below PLe led by staff cost. Core PPoP at INR 64.5bn was 12.8% above PLe. Asset quality was a slight miss; GNPA was 1.84% (PLe 1.88%); however, net slippages were higher. Provisions were lower at INR 9.9bn (PLe INR 21.4bn) due to reversal in other provisions. Core PAT was 59% above PLe at INR 42.6bn. PAT was INR 45.1bn (PLe INR 35.6bn).

Positive surprise on NIM: QoQ improvement in NIM

QoQ improvement in was driven by lower repricing of bulk deposits, raising cheaper RTD compared to bulk deposits and increase in RAM credit. CBK expects NIM to hover between 2.5-2.6% for FY27 (2.51% in FY26). Provisions may remain stable at 0.75% despite ECL implementation since SMA fell from INR 405bn in Mar'25 to INR337bn Mar'26. Bank estimates a one?time ECL provision of ~INR 100bn primarily towards stage-2 and non-funded exposure.

Loan growth led by corporate/retail:

Credit accretion was 4.0% QoQ mainly led by retail (+8.6%) & corporate (+3.9%). Focus remains on expanding RAM share, while steering away from low yielding advances. Targeted RAM/corporate mix is 60:40; undisbursed corporate pipeline stands at INR 200bn. Gold portfolio stood at INR 2.45trn, of which INR 1.54trn is agri gold. Bank expects double digit growth to continue in gold loans, driven by high branch presence in South India. Management guided credit growth of 11- 12% for FY27, which the bank can surpass.

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