TMB Q2 FY27 Earnings Call: Record Profit Up 42% YoY, Guides 20%+ Deposit Growth

TMB held its Q2 FY27 earnings call on October 26, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Profit, Highest Growth in 18 Years

• Net profit of Rs.451 crore — Q2 FY 2026-2027 was the highest ever, up 42.09% YoY, driven by core business strength rather than one-offs; MD Saleem S. Nair called it the highest growth in the last 18 years.
• NII of Rs.807 crore (+35.17% YoY) and operating profit of Rs.642 crore (+41.80% YoY); ROA 2.18%, ROE 16.92%, quarterly EPS Rs.28.49.
• Total business of Rs.1,30,237 crore — up 27.25% YoY per management (also quoted as 20.25% in remarks), ~8% faster than the industry and the eighth consecutive quarter of exceeding prior-quarter performance.
• Deposits Rs.69,546 crore (+25.49% YoY), advances Rs.60,691 crore (+29.32% YoY); balance sheet up 24.49% YoY vs a 10-year CAGR of 9.41%.
• Efficiency improving — cost-to-income at 38.28% (trending down), profit per employee ~Rs.35 lakh (+36.45% YoY), business per employee Rs.25 crore.
• Management attribution — structural changes in HR, business process automation and IT are releasing productivity into the system, with continued investment planned.

FY27 Guidance Raised; No Absolute Growth Targets

• Deposit growth guidance raised to 20%+ for FY 2026-2027 (from 18%+ guided in the Q1 FY 2026-2027 call), with advances growth anticipated at 22%+; both framed as minimums with the "plus" representing upside.
• CASA growth anticipated at ~17% for FY27, with H2 FY 2026-2027 CASA growth expected at existing levels or "a tad bit higher."
• Management explicitly ruled out targeting 25%, 30%, 20% or even 15% growth — the stated goal is simply to grow faster than the industry; Q2 FY 2026-2027 actual delta over industry was 8%.
• Long-term ambition of a 4-5% growth delta over industry over the next 3 to 5 years — if the industry grows at X%, the bank aims to grow at X plus 4 to 5% (period unspecified for sustainability of the delta).
• Branch expansion — 9 branches opened in H1 FY 2026-2027; management is committed to 60 branch openings in FY 2026-2027 and hopes to open 20+ branches outside Tamil Nadu by FY 2026-2027 year-end; 37 opened YoY as of Q2, 15 outside Tamil Nadu.
• Crude oil risk monitored — management anticipates some impact from rising oil prices, but as of Q2 FY 2026-2027 neither the export credit nor the existing MSME portfolio has been impacted.

Margin Up YoY, Down QoQ; H2 Guidance Upgraded

• NIM of 4.19% in Q2 FY 2026-2027 — up 36 bps YoY but down 10 bps QoQ (Q1 FY27: 4.29%); one segment quoted the print as 4.4%.
• H2 FY 2026-2027 NIM guidance of 4.10% (±5 bps) — an upgrade from the earlier 4% guidance for FY 2026-2027; management believes it can defend this level for the remainder of the fiscal year.
• Cost of deposits rose to 5.85% (from 5.68%) as term deposits grew ~29% YoY vs CASA growth of 16.26%; cost of funds at 5.93%, nudged up by ~Rs.1,000 crore of SIDBI refinance drawn in Q2 FY 2026-2027 at 7-7.5%.
• Yield on advances lifted to 10.32% (from 10.10%) — a conscious repricing of the gold loan and MSME portfolios to offset rising funding costs.
• 52% of advances repo-linked as of Q2 FY 2026-2027, ~44% MCLR, ~4.85% fixed plus a small treasury-linked portion; ~95% of the book is floating-rate. After the 25 bps repo hike to 5.5%, the repo-linked book reprices automatically at contractual reset dates, with full repricing over ~3 months; management indicated (hedged, "I think") the entire book will be reset by Q3 FY 2026-2027.
• Deposit stability — non-callable deposits formed 40.62% of the Rs.7,570 crore incremental term deposits in H1 FY 2026-2027; bulk deposits at 19.9% of total deposits (~Rs.69,000 crore) per CFO Sanjoy Kumar Goel; FCNR(B) mobilization modest at $51.94 million in Q2 FY 2026-2027 (base growth 47.14%), recently raised at ~7% with the 1-year FCNR(B) rate now ~4.25% (exact figure to be confirmed).
• NIM drag quantified — surplus funds moved into investments, taking the investment book from ~20% to ~22% of the balance sheet, earning ~7% vs ~10.3% on advances (a ~3% spread drag).

Resilient Book Despite Drought and Gold Price Swings

• Gold loan portfolio at ~48% of the book (vs ~47% earlier), total 29,280 accounts split ~22,700 agri and 6,084 retail; average ticket size Rs.2.6 lakh (Rs.2.66 lakh) across 12 lakh+ customers.
• Drought impact flagged — on drought declared in Karnataka, Andhra Pradesh and Maharashtra, MD Saleem S. Nair said it "can have an impact" on the agro gold loan book, but overall gold loan demand "continues to be resilient."
• Daily LTV monitoring — the bank tracks gold loans daily on an individual and account basis, has readied asset resolution teams across its 13 regions, and triggers margin calls when outstanding (principal plus interest) touches 90% of the day's market value (a 10% LTV cushion); Agentic AI call centers are being put in place for margin calls.
• Portfolio LTV of 62.35% as of September 2026 — under the disclosed 20% sensitivity, only 3.13% of the gold loan book would be above market value; SMA plus NPA in the gold book at just Rs.28 crore (0.10%) as of 30 September 2026.
• Market context — gold touched $4,000/oz just before the call before easing; TMB has already cut its per-gram lending rate by up to Rs.800 in recent days and expects the industry to mark per-gram rates down in line with market prices.

Clean Book; Early Provisioning Ahead of ECL Norms

• Asset quality strong in Q2 FY 2026-2027 — GNPA 0.61%, NNPA 0.14%, credit cost 9 bps, slippages 6 bps; on-book PCR 77.49%, overall PCR 96.61%; SMA 0/1/2 pool at 1.67%, portfolio at risk 2.28% as of 30 September 2026.
• ECL readiness — in anticipation of ECL norms effective 1 April 2027, the bank fully provided for SMA-1/SMA-2 per ECL norms in Q2 FY 2026-2027, after 100% provisioning for stressed non-fund facilities in Q1 FY27.
• Estimated ECL impact of Rs.385 crore as of 30 September 2026, with Rs.304.24 crore (~80%) already covered via Rs.54.24 crore upfront ECL provision plus Rs.250 crore existing contingency provision (slide 29).
• Unsecured exposure just 20 bps — the Q2 uptick is not credit card or unsecured personal loans but an unsecured loan to Kerala State Electricity Board (a government entity) given against its cash flows; RAM at 94.33%; MSME share at 23.62%.
• Capital and liquidity ample — CAR 32.39%, leverage ratio 11.99% vs 3.50% requirement, LCR 139.43%, NSFR 146.15%; CD ratio 87.27% with management stating headroom to go up to 98% given shareholders' funds at 12.53% of balance sheet (page 33).

RBI Holds the Key; Fee-Income Headwind Flagged

• Disputed shares order — the order in the show cause notice matter was issued on 9 July 2026 (Q2 FY 2026-2027), with a 60-day appeal window that lapsed around mid-September 2026; neither the bank nor the ED (Enforcement Directorate) filed an appeal, so per management the order stands. A further 60-day appeal route remains available only via High Court intervention; as of the call, neither party has exercised it.
• Regularization rests with RBI — management stated regularization of the disputed shares is a FEMA issue and rests "only and only" with the Reserve Bank of India; the bank's application is pending with RBI, which will take the final call, and management committed to being 100% compliant with whatever decision the RBI takes.
• Bonus/split not blocked by the dispute — in the earlier bonus issue, shares were allotted even to disputed categories (bonus shares went to the ED on attached shares); management only said it would like to examine the matter, with no decision or timeline committed.
• IRDAI norms a fee headwind — management estimates the new IRDAI insurance norms will reduce insurance commission income by approximately 20% (period unspecified); insurance distribution commission income was just Rs.9 crore in H1 FY 2026-2027 (management corrected the Rs.26 crore figure cited in the question), a stream the MD described as "only picking up."
• CFO Sanjoy Kumar Goel said the bank is not heavily dependent on the insurance commission stream and incremental business growth — already underway — would more than make up the reduction; management expects a substantial increase in the stream going forward (period unspecified).
• Cost-to-income guidance tightened — 38%+ in Q2 FY 2026-2027 is "not defensible" going forward given pending branch openings (analyst Varun Dubey cited ~60% of the branch target met so far, H2 FY 2026-2027-weighted) and IT investments; FY27 guidance tightened to "well below 44%" from "below 45%" guided in the Q1 FY 2026-2027 call.