Ladies and gentlemen, good day, and welcome to State Bank of India Q4 FY 2022 earnings conference call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pawan Kumar Kedia, General Manager, PPR from State Bank of India. Thank you, and over to you, Mr. Kedia.
Thank you. Good evening, ladies and gentlemen. I am Pawan Kumar Kedia, General Manager, Performance, Planning and Review. On behalf of the top management of SBI, I extend a warm welcome to all joining us today on SBI Q4 FY22 earnings conference call. On the call today, we have with us our chairman, Mr. Dinesh Kumar Khara, Mr. C.S. Setty, Managing Director, Retail and Digital Banking, Mr. Ashwani Bhatia, Managing Director, Corporate Banking and Global Markets, Mr. Swaminathan J., Managing Director, Risk, Compliance and Stress Asset Resolution Group, Mr. Ashwini Kumar Tewari, Managing Director, International Banking, Technology and Subsidiaries, Mr. Alok Kumar Choudhary, Deputy Managing Director Finance, Mr. Shiva Om Dikshit, Chief General Manager, Financial Control, and Mr. Charanjit Attra, Chief Financial Officer.
Before I request our Chairman, sir, to give a brief summary of the bank Q4 FY 2022 performance and the strategic initiative undertaken, I would like to read out the safe harbor statement. Certain statements in these slides are forward-looking statements. These statements are based on management's current expectation and are subject to uncertainty and change in circumstances. Actual outcome may differ materially from those included in these statements due to a variety of factors. Thank you. Now, I would request our Chairman, sir, to make his opening remarks. Over to you, sir.
Thank you. Good evening, friends. Thank you for joining this conference call before a long weekend. It's a pleasure to connect with you all again in better circumstances, with the threat of the pandemic having been effectively addressed through a vaccination drive of epic proportions. I thank all our stakeholders, including our customers, shareholders, analysts, employees, and the broader ecosystem for being supportive of our efforts and initiative in our journey. I also take this opportunity to express my heartfelt gratitude to our shareholders and our financial market participants who have supported the bank through the challenging times in the recent past. The recovery of the global economy was hampered in Q4 of 2021 due to the resurgence of Omicron variant, which led many countries to re-impose lockdowns, travel restrictions, and other containment measures, which actually disrupted economic activities and supply chains.
More recently, the situation in Ukraine has further weighed down on the global trade dynamics and has led to spiraling of oil and other commodity prices. The domestic economic scenario has also been affected by geopolitical events. RBI has lowered the financial year 2023 GDP growth forecast to 7.2% from the earlier guidance of 7.8%. While possible upside could emanate from the sustained domestic demand, government's thrust on CapEx, a normal monsoon, and healthier corporate balance sheets, the heightened geopolitical tensions do pose downside risk to the GDP growth. Amidst these extraordinary global and financial challenges that the world has faced in financial year 2022, the bank has again delivered good outcomes in various profitability and asset quality parameters.
This is a vindication of the flexibility and strength of our operating model and the stupendous efforts put in by the team in State Bank of India. This has helped us to close financial year 2022 with robust results, which affirm our commitment to maintain our leadership position and set the tone maintaining the momentum in financial year 2023. I would like to highlight a few key areas of our performance. The bank has clocked highest ever profit of INR 31,676 crore for the financial year 2022, which is an increase of 55.2% over financial year 2021. The return on asset at 0.67% has witnessed an increase of 19 basis points, while ROE at 13.92% has increased by 398 basis points over the previous year.
The bank's deposit and advances grew by 10.06% and 11% respectively in financial year 2022, which in absolute term works out to INR 3.70 lakh crore and INR 2.79 lakh crore respectively. Our retail personal book at INR 10 lakh crore is growing at three-year CAGR of 16%, and we have also maintained our leadership position in home loan and auto loans. The bank's NII for financial year 2022 has shown a YOY increase of 9.03%, while NIM for domestic operation, it stands at 3.36%. That is 10 basis points higher than March 2021, reflecting the bank's resilience during a challenging year.
As far as asset quality is concerned, the bank's gross NPA and net NPA as of March 2022 were at 3.97% and 1.02% respectively, which is an improvement over financial year 2021 numbers of 4.98% and 1.50%. The slippage ratio for financial 2022 is 0.99%, 19 basis points lower than March 2021. The bank's ability to bring down the net NPA around 1% is a result of focus and continuous attention in this area. We have been able to contain the credit costs at 0.55% as against 1.12% as on March 2021. An improvement of 57 basis points we have seen in this particular area.
We have been constantly calibrating our lending strategies to maintain the quality of loan book, which is reflected in our corporate exposure with 89% of the book being in investment grade. The book continues to remain well-capitalized with CET1 ratio at 9.94% and capital adequacy ratio of 13.83% against the regulatory requirement of 8.6% and 12.10% respectively. The bank has also been able to keep the RWAs to total asset below 50%, indicating the quality of the portfolio. Our journey towards digital leadership continues. We have been witnessing increasing digital adoption by the bank's customer and now more than 95% of the transactions are routed through alternate channels. The adoption of YONO has significantly increased with registration crossing INR 4.83 crore.
YONO has created a significant value for the bank and we are now moving towards YONO 2.0 with many more advanced features. Amongst banks' overseas offices, nine foreign offices and subsidiaries have gone live with YONO Global. I'm happy to announce equity dividend of 710%, that is INR 7.10 per share. We are aware of the areas where we need to improve our performance further. With economic activity continuing to improve and the resultant higher credit offtake, the bank is aiming to increase its market share in advances. We are also focusing on current account deposits to improve our CASA ratio. Our long-term goals are very clear, and we are committed to maintain our number one position in the industry. Now before I conclude, I thank you all for your continuous support to the bank.
We are proud to be part of SBI and consider it as a privilege to be able to contribute towards the growth of our economy and the bank. We remain committed to reward your trust in us with superior sustainable returns over the long term. I wish everyone here good health and a very happy weekend. The floor is now open for your questions. Thank you very much.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Reminder to the participants, anyone who wishes to ask a question may press star and one at this time. The first question is from the line of Mahrukh Adajania from Edelweiss. Please go ahead.
Hello, sir. Hi. Sir, I had a couple of questions. Could you give us a breakdown of your loan book by benchmark rate?
Well, almost about 74% of the loan book is linked to MCLR, EBLR or T-bill rates.
Correct. How much is EBLR and how much is T-bill?
See, when it comes to T-bill would be about 11%, and external benchmark rate is about 23%.
Repo. Mainly repo.
Mainly repo rate.
Got it, sir. My next question is on small loans. A lot of PSU banks have seen big slippage in small loans below INR 5 crore. Any geographic pressure that is visible to you there? Any experiences you can share?
No, actually, as such, I would say that our even smaller loan book also it has actually improved in terms of its NPA percentage as compared to what we had seen in the past. I think we have not seen any such trend. Even in the restructured book also, which we have, particularly as far as SME is concerned, the book was about 32,000 out of 30,000, which is the current outstanding MSME book is about INR 12,000 crore. But we have seen the NPA ratio of just about INR 720 crore, which is actually much better as compared to the general trend which you have seen.
If I can add.
Yes, please.
Actually, Mahrukh, we have witnessed net decline of NPAs across the retail banks, number one. Number two, even among the SMEs also, the run rate of slippages is lower than what we had, pre-COVID. The third piece what you asked, there is no geographical concentration of any of these loans. I think, we are not witnessing any such, concentration.
Got it, sir. Sir, in terms of restructuring of INR 30,000 crore, so that is OTR 1 and 2. Over and above that, any past restructuring scheme or this includes everything?
This actually includes everything. Over the two thousand-
1 and 2.
Yeah, this is actually 1 and 2. 1 and 2 put together is about INR 30,960 crore.
INR 7,000 crore is earlier.
INR 7,000 crore is the earlier book.
There's no overlap in the two?
No, no.
It's INR 30,000 crore + INR 7,000 crore. Would you be able to quantify your slippage from ECLGS? What the outstanding is currently?
Uh...
ECLGS.
Yeah.
ECLGS outstanding is about INR 32,000 crore now. The slippages are less than 2% so far.
Got it, sir. Sir, my last question is if you could highlight your outlook on CapEx, corporate CapEx for your bank, and I also see pickup in steel, textile, and petrochemical loans on a sequential basis that's working capital related or something else?
See, as far as what we have observed is that our working capital unutilized limits are about INR 2,76,000 crore. When it comes to though the working capital utilization has improved, actually unutilized limits are just about 46% now. I think as compared to almost 50% unutilized limits as at the end of the last quarter, the situation has improved. When it comes to the term loan, the unavailed limits are just about 19%. That also is actually showing that this is very healthy trend. Apart from that, we have some kind of a visibility of the proposals which are being processed by us.
I think that way, the That is a broad picture as far as the corporate book is concerned, and that is the, I mean, that is very clearly reflecting the kind of uptake which we can get to see going forward.
Just to add, over there, the unutilized limits at the end of December were in excess of INR 3.10 lakh crore. That has actually come down to INR 2.76 lakh crore, as the chairman said. The unavailed term loan also, which was in excess of INR 2.1 lakh crore, is now down to INR 2 lakh crore. The growth in the corporate book that you've seen, a very big chunk of that has happened in the fourth quarter.
Okay, sir. Thanks a lot.
Thank you. The next question is from the line of Mona Khetan from Dolat Capital. Please go ahead.
Hi, sir. Good evening. Firstly, I wanted to check the segment-wise break-up of the INR 2,800 crore slippage.
Segment-wide breakup of?
INR 2,845 crore is the quarter four slippage.
Right.
It was INR 1,200 crore in corporate, INR 1,200 crore in agriculture. The remaining is retail and SME.
Okay. This includes one of the large retail accounts as well?
No, it is one of the large corporate accounts is included. One of the large corporate account is part of this, which actually we have provided for fully now.
Correct. We have provided for it fully last quarter. It's the same account.
Yeah. That's right.
Okay. Sure. Secondly, when I look at the yield on advances, they have been, unlike most peers, stable Q-on-Q in your case. Any color on that?
The yield on advances as of now is stable. Going forward, I expect that it should improve because our 74% book is linked to external benchmarks, whether it is repo or it is EBLR or it is MCLR, or it is T-bill. In case of a rising interest rate scenario, it will lead to a situation where it should actually improve.
Sure. My question was pertaining to the fact that despite the sequential rise in your corporate book, your yield on advances has not been impacted. What really is helping?
Actually, part of it is also attributed to the kind of a interest rate scenario which is obtaining at the material point of time. For a good part of the financial year 2021-2022, we had a scenario like that. That is the reason why perhaps it has not moved as it should have, you know, on account of increase in our quarter. The corporate book.
Here of course, I can add that, you know, just take the example of the loan book that is linked to the T-bills, which is currently 11% of our total book. If you look at the movement of T-bill rates just in the last week, the 91-day T-bill has moved about 100 basis points. All the price action has happened in the first quarter of this year. When we started the product, the T-bill rate was at close to 3.3%. Today, the 91-day T-bill, you know, the cutoff a couple of days back was at 5%. If any movement happens, it will happen from now onwards whenever the repricing happens.
Mm-hmm. Got it. Just finally, for the restructured book, for what percentage of the book has the moratorium ended and the billing started?
Among the home loans, the moratorium ended. In all cases, the repayment has started from April.
For the entire restructured book?
Yeah. Which actually is somewhere around about INR 15,000-odd crore, which means about 50% of the book, the moratorium has already ended, and also repayment has started. Even in the home loan book in particular, we have seen a situation where the people have started repaying even as per the original repayment schedule, so which means that they are not really availing the restructuring. Again, I would like to draw your attention to the fact that it is essentially attributed to the stabilization of the cash flows. With the stabilization of the cash flows, we are observing that people have started repaying the loans, which even they are
Sure. Thank you. That was very useful. All the best.
Thank you. The next question is from the line of Gaurav Kochar from Mirae Asset. Please go ahead.
Yeah. Hi, good evening, sir. Thanks for the opportunity. Wanted to ask on the investment depreciation this quarter. We've seen a INR 2,060 crore sort of cost. Is this the MTM hit since the yields went up, or is this something related to the security receipt-related provision?
In fact, security receipts, it is part of it on account of the security receipts, and we have only provided for outstanding in the security receipts.
Okay, sir.
I mean, maximum component is coming from there.
Okay, sir, anything else that could come up on the security receipt provision in fiscal year 2023, or you think
No, that has been fully provided. As of now, it is fully provided. If at all some new security receipts come, then only we'll have to look at it. Otherwise, as of now it is fully provided.
Okay. Got it. Sir, with the yields, benchmark yields have started to move up. Is that now, you know, going to affect the bond portfolio in a way, in this quarter maybe, if not the last quarter?
See, out of about INR 14 lakh crore of treasury, our AFS book is about INR 4 lakh crore?
5.6.
INR 5.6 lakh crore. There our duration is 2.08, and majority of that is HTM. There actually HTM should with the increasing yields, we should be benefited. Overall, let us see how really things will pan out because it is all valuation is done at a point of time. How would be the yield at that material date that we'll have to wait and watch.
Right. Sure, sir. On the, I mean, just wanted your thoughts on this. In this quarter also there was a negative net slippage for us. The BAU credit cost was zero. The entire credit cost could be attributable to the higher PCR that we opted for. Going forward in fiscal year 2023, given we are in the middle of, say, a benign credit cost environment, how do you see the credit cost for this year, given that we are already sitting on high PCR, 90% to be precise, if I include the AUCA accounts. You know, we also have some buffer provisioning of INR 30,000-odd crore. What are your thoughts on the credit cost for fiscal year 2023?
See, we have set a boundary condition for ourselves as credit cost is concerned, which is 1%. Our effort and endeavor is to keep it as low as possible. I think, that's how I would like to respond to this question.
Okay. Sir, in a COVID year with two waves, we did around 90 basis points, including some, you know, restructured related provisioning. Is it fair to assume we can do better than this in fiscal year 2023?
Yeah. Actually, we all operate in a macro which is always uncertain, so it's very difficult. That's why we have set a boundary condition. As I mentioned, that effort is always to minimize it. I mean, we cannot really visualize those uncertainties, so that is the reason why I'm unable to go beyond this.
Sure, sir. Just last question, if I can squeeze in. This we have observed, you know, fee income has been weak for even the large private peers. Anything that you can talk about, whether, you know, because of the growth, I mean, is it that growth is coming at the cost of some fee income, both on the retail and corporate side?
No. In fee income, there is one very important lever which I would like to draw your attention to. One is Forex income which you would have seen that it has gone up by almost 44%. Similarly, the cross-selling income went up by about 32%. I think we feel that there is a huge opportunity which exists, and we will be looking at really sweating this opportunity going forward.
Sure. I was talking about the processing fee, sir. That has seen a decline on a [audio distortion]
I think we, of course, you know, last year has been little tepid when it comes to new proposals, and hopefully if at all this year, the kind of expectation which we have in terms of the corporate credit to grow, perhaps we hope to see better numbers here.
Okay. Perfect, sir. All the very best. Thank you.
Thank you.
Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.
First, with respect to Forex again, I think you drew the attention to Forex. What is actually leading to this kind of growth in the overall Forex and how sustainable would this be? Because this quarter has been quite significant, INR 1,500-odd crore coming through that area.
This is a sharper focus on the Forex business which is emanating from our retail outlets.
Okay. This would be more granular and, there is no one-off and, broadly we can-
There is no one-off. I can assure you there is no one-off. It is broadly spread out. It's very broad-based.
Okay. Now this is more sustainable. Even on the OpEx side, when we look at it, particularly on, say, the card and the digital expenses that has gone up sequentially as well as year-on-year. What is actually leading to that? Is it like the up-fronting of the cost or again, and this trajectory will also continue?
Which one you said?
INR 2,800 crore. This ATM cards and tech expenses, that's almost INR 2,800- odd crore, significantly up, both on year-on-year as well as quarter-on-quarter basis.
I think predominantly is the tech expense, right?
We are changing a lot of ATMs.
No, that is not reflected here.
Okay.
Because we have the break up, right, Alo?
Let me have the break up looked into and just one sec. Yes, sure.
ATM has changed. Six model
It's actually recurring expenditure, which are all very operational in nature. The major component is ATM interchange expense, which is thereabout INR 1,531 crore.
Okay. INR 1,500 crore is the ATM interchange expense.
Yeah, that's right.
On investment provisioning, last time there was INR 8,600 crore of SRs which were unprovided to the extent of 13%. Now that we have provided, I think INR 1,000-odd crore would be coming from SR markdown, and 1,000 would be the MTM on AFS.
No, it is not MTM. We have actually debited the P&L and provided for it. It's not MTM.
Composition.
Composition.
Composition, yeah. SR outstanding is about INR 10,990 crore, and that is fully provided. The investment depreciation largely is coming on account of the SR charges. The balance, of course, would be there.
Yeah. INR 2,400 crore came from SR-
Okay.
In the quarter. Around, the remaining part comes from some of the provisions which were done on some of the bond restructured bonds.
All right. I think here also. Yeah. That's all. That's it. Yeah.
No, sorry, couldn't hear that. Yeah.
Yeah. I said that INR 2,400 crore between Q3 and Q4 together, we did accelerated provisioning. The remaining is on part of some of the NPAs in where we have made some provision.
Sorry to interrupt you, sir. This is the operator. We are not able to hear your audio clearly, sir.
About INR 2,000 crore is on account of SRs and also whatever NPAs were there, we have provided for those NPAs too.
Okay. Got it. Yeah. Thank you.
Thank you. The next question is from the line of Rakesh Kumar from Systematix Group. Please go ahead.
Yeah, hi. Thanks a lot, sir, for the opportunity. Couple of questions. Firstly, like, have you sold anything to ARC this quarter? Is there, you know, is that number getting reflected in the NPA recovery this quarter?
Yes, we have done sales and that is reflected in the recoveries. Quarter four was eight accounts, and recovery was INR 297 crore. For the whole year it is 23 accounts. The recovery is INR 1,188 crore in all. Cash was INR 1,105 crore, and the SRs, INR 83 crore. That's for the full year.
Secondly, sir, like, we have written back contingent provision also, this quarter. As you mentioned just now, that close to 50%, or perhaps I couldn't hear it, almost all the accounts of restructured book has started billing. If there is a remaining account, you know, billing where the billing has not started, so what is the, you know, what is the status of those restructured account now? Because now we don't have any contingent provision left.
No, no.
Let me clarify this. It's not written back. The contingent provision that was kept, COVID, has now been kept as an additional provision for restructured book. Restructured book requires 15% regulatory provision. We have made additional 15%. The contingent provision has now been made as specific provision to these accounts as a prudential measure. Otherwise, the behavior of the book does not warrant any additional provisioning. But since there was a contingent provision that has been made now as provision applicable to the restructured accounts and additional prudential measure. It's not written back.
Yeah. Got it. Probably, just on this credit growth thing, like, was there a stronger credit growth number in the last fortnight? Or if you can help us with what is the daily average growth number in credit because you know, P&L account, especially on the interest accrual side, it is not looking that great if we consider the sequential number. If you can help us on the credit growth number on a daily average basis for this quarter or maybe on the last fortnight also.
I can only say that it is not really one-off, which has been seen in the last quarter or on a particular day. It has been spread out and it is, this is something which I can say. As far as numbers are concerned, we'll try to get you. The reason why perhaps it is not seen.
As far as the P&L and the interest income is concerned, because you would probably appreciate that towards the last quarter of the last financial year, interest rate environment was quite benign. That is one of the reasons the growth probably is not commensurate as far as the interest income is concerned. Nevertheless, as far as the growth part is concerned, maybe if at all any one of you have the numbers.
INR 1.54 lakh crore disbursed in the last Q4.
Yeah. That is the. It has been equally spread out. It is not that it has happened only on a particular day. INR 1.54 lakh crore worth of disbursements have happened in the last quarter, but it is spread out across the quarter. It may not be out of place to mention that I think in the past also we have been talking, and I have indicated in the past also that there was underutilization of the working capital and non-availment of the term loans. Some of them also got availed in the last quarter. That is how it is.
Sir, WCL which is unutilized INR 2.7 trillion, what is the risk rate on that, sir?
Risk rate would-
That is not really.
It should be the usual risk rate.
Only AAA companies.
89% of the corporate book is into the investment grade. That is how it is. Majority of them would be into that kind of a category.
Mm-hmm. Okay, sir. Okay. Thanks a lot. I'll come back to the queue. Thank you.
Thank you. The next question is from the line of Ashok Ajmera from Ajcon Global Services. Please go ahead.
Thank you for giving me this opportunity. Good evening, sir, and congratulations and compliments to you, Khara, sir, once again for the fantastic performance of the bank. I think on every parameter, I mean, your guidance and everything you have achieved for the quarter as well as the whole year. Having said this, sir, I have got some data point and some information and a few comments. Sir, our fund-based credit domestic is INR 24,06,761 crore. Can I know the number of the non-fund-based facility which is sanctioned and availed, which is there on the non-fund-based front, sir?
Thank you very much, Ashok Ajmera ji. I will get you the number relating to the non-fund-based. I don't have that number readily available with me. Actually, the domestic advances are INR 24.06 lakh crore. If we add the foreign book also, it is INR 28.18 lakh crore.
Yes, yes. Okay, I'll take that later, sir. Sir, some comments on your co-lending space, sir, because last time I think we discussed something about it that you are very aggressive on that and you have enrolled many partners. Can you give the color of the I mean, how much have we achieved through the co-lending?
Co-lending, we have started, but in the early days, you know, there are always some knick-knacks which needs to be adjusted. So I would say that, last quarter was more like that. Perhaps we'll see the upside coming from the co-lending in this year.
Yeah. Any number on 31st March.
Sir, Ashok Ajmera ji, C.S. Setty here. Co-lending is, we have entered into partnerships mostly in the last quarter, financial year. We are putting up the integration, technology integrations and settlement accounts, escrow accounts currently. I think it will pick up now. It was not much in the last financial year. Our target for the current year is at least INR 10,000 crore is what we are aiming to 15- 16 co-lending arrangements.
That's what I want, that's what I wanted to hear.
Yeah.
Anyway, some target. Sir, my next is on NARCL. Like, for last two quarters we have been discussing, and I think now it might materialize in the current quarter.
Yeah.
Where do we stand now? What is the current status of how many accounts are going in the first phase and how much is the amount and, can you give some color on that, sir?
As of now, the number of accounts identified are those 15 accounts, so that's about INR 50,000-odd crore. That is for the system as a whole. It's progressing. As you are aware that it involves various stages. It is as of now at that stage. Hopefully in the current quarter, we should be in a position to see some activity on this particular account.
Sir, coming to this, again, Future Group, I mean the retail group and SREI, where do we stand provision wise, both, loan book and the investment book?
100% provision already made, sir.
For both the SREI as well as the
Yeah, yeah. Absolutely. On the debt and investments both. Book is fully insulated from any future shock.
Sir, one question is extended question on the same treasury. Now with the interest rate hardening, I mean the way the things are going, the inflation is going up, rupee is weakening and there is a pressure. How much further basis point which we can, you know, easily absorb in our AFS book? I think you said INR 5.61 lakh crore and 2.08 is the maturity period. How much more, suppose 50 basis point, 70 basis point we can absorb easily without actually booking the losses?
I would not be in a position to answer this question.
Wait, wait. Okay.
Moreover, you know, all this is a function of a movement in yield on a particular day when this is all assessed. This is very, very difficult to really predict as of now. Yes, as I mentioned, we have already ensured that our HTM should be strong enough, and we have already done that because we are permitted to move investments from HTM to AFS on a particular date. That aspect we have already done that. That is something which is within our control and we have already taken care of.
Thank you. Mr. Ajmera, may we request that you return to the question queue for follow-up questions. Thank you. The next question is from the line of Naishi Shah from Acko General Insurance. Please go ahead.
Sorry, all my questions have been answered. I don't have any further questions. Thank you.
Thank you. The next question is from the line of Abhishek Murarka from HSBC. Please go ahead.
Hello. Good evening, sir. Thank you for the opportunity. Couple of questions. One on growth. The SME growth sequentially was a little weak. In fact, the book was flat, but you know, when we compare it to peers, we've seen them grow at a fairly fast clip. Can you just make some comments on the space? Is there a lot of pricing pressure? Is there a lot of competition or any other reason why the book may not have grown this quarter? That's the first question. The second one is on margins. What is your outlook from here? You have a low CD ratio, so there should be some benefit of that. There's also likely to be some pressure on, you know, deposit rates, et cetera. What is the outlook? These two questions, sir. Thank you.
SME book, of course, I think if we compare with March 2020 to 2021 moment, as compared to that, it has witnessed a stronger growth. I would say that going forward, perhaps we should be in a position to see even stronger growth coming in SME segment. We are actually, structurally, we have strengthened our delivery process in SME in last one year, so that should help us. It has actually, I would say that it is still we are upgrading that process also. That should help us in seeing better numbers in SME.
If I-
Yeah, please.
Sir, please.
Please.
If I may add here, if we take only pure MSME. You know, this SME we have, a large companies also which do not qualify MSME as a part of our portfolio. If you see the pure MSME, we had a annual growth of almost 30%. So I think it's a very large, significant growth. As Chairman was mentioning, lot of initiatives in terms of changing our technology platform, cluster-based financing, and two- tierings of the relationship manager on the ground. Several initiatives have been taken. I am sure this growth will be sustainable in the current financial year.
Sir, any comment on the pricing here?
Pricing, I think, we don't visualize any pressure on pricing as far as our SME book is concerned.
Okay. The second question on NIM?
Second question, NIM, I think, you know, generally, typically speaking, the kind of trend which we observe, the deposit interest rates move up with a lag. Considering the fact that our 64% of,
74.
74% of the book is linked to MCLR, EBLR and T-bill. We should be in a position to see an improvement in NIM.
Thank you, Mr. Murarka. May we request that you return to the question queue for follow-up questions. The next question is from the line of Prashant Kumar from Sunidhi Securities & Finance. Please go ahead.
Thanks for the opportunity, sir. If I missed, I'm so sorry, but on the loan processing fee on Q3 it was around INR 9 billion and it jumped to INR 15 billion. Such type of move in Q3, is there any waiver or something?
No. Generally, what happens is that the renewal of the loan, I mean, renewal of the working capital happens towards the last quarter. Majority there's always some kind of a, you know, concentration towards the last quarter. That is the reason why last quarter has seen a growth as compared to quarter three in the loan processing charges. Apart from that, there's nothing else to explain for this.
Okay. On PCR ratio, it has improved to 75% and expanded. As you mentioned that, the restructure book and other slippage is also going down and restructure book is also performing well. What is the reason still you are increasing PCR and it is on credit cost, if you could give some color?
One of course, you know, we don't have a situation like the aging provision, et cetera, et cetera. That is one thing which is there. PCR, nevertheless, you know, as a matter of policy, we have decided that we will insulate our balance sheet from any potential shock which may come. That's why at the earliest sight of the risk, we are trying to see that we should adequately provide for such risk, such kind of a delinquency. That is something, that is the reason why we do it. 75% is there, and also if we look at the corporate PCR, even excluding AUCA, stands at over 93%. You know, we don't want our balance sheet to be exposed to any kind of risk. That is, that is the reason why we are practicing this.
One last on deposits and general insurance. It has increased from INR 14 billion - INR 16 billion. Sequentially, there is huge jump. Is there anything missing? I mean, deposit also has increased around 6% sequentially, so it may be some impact of this, but the jump is high, so is there anything I am missing on that calculation?
Deposit would be essentially the DICGC fee and general insurance is insurance of our assets also. You know, you would have seen in the previous year in general the cost of insurance has gone up, so it is a factor in that.
Oh. Okay. Thank you so much, sir. That's it from us.
Thank you. The next question is from the line of Jai Mundra from B&K Securities. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. I have two questions. First-
Mr. Mundra, we are not able to hear your audio, so please increase the volume of your device.
Yeah. Is this any better?
Yeah, please go ahead.
Yes, sir. The first question is on deposit cost and LDR. If I calculate, our domestic LDR is around 61%, which is clearly suboptimal. At the same time, if I were to see our deposit rates, historically, I believe SBI was the price setter and with other private banks having some spreads over SBI deposit rate, which currently does not look like the case. At the same time we have deposit and we have the domestic LDR at 61%. If you can comment as to if you want to bridge this anomaly of lower LDR as well as slightly higher deposit rate or, you know, what, how are you thinking on this?
The issue is that, maybe as on March it was at 61%, but today it would be somewhere around 62.6%. That is the kind of a credit-deposit ratio we are seeing. We could see the kind of a growth which we might get to see in the loan book. I think, maybe at a point of time we took a call in terms of revising the term deposit rates and that too in one to two year duration. That is something which we did, and we just wanted to be ahead of the curve and that is something which we have done. I think on a quarter-on-quarter basis, it may not really reflect the right picture. Once we have one year time period, it will probably look normalized.
In any case our deposit rates are not, they're either lower or, you know, they're subpar.
They're just subpar.
Our rates are higher than any other competitors.
I'm not really very sure of the reason for your impressions, but nevertheless this is our position.
Okay. Secondly, sir, we had announced $1 billion line of credit to Sri Lanka.
Mm-hmm.
Right? Of course that country is in financial stress. Is that $1 billion is on our book or this is just a government assistance? Is there any risk to SBI because of this thing?
This is guaranteed by the government of India.
It's on our book, but guaranteed by Government of India.
It's on our book, but guaranteed by Government of India.
Fully guaranteed.
Fully guaranteed.
Fully guaranteed by government.
There's no risk.
No risk on us.
Sure. Sir, on corporate growth, right? This quarter there has been a healthy 10%-11% quarter-on-quarter corporate growth and also decent on a YoY basis. Is this more seasonal, or you think, you know, SBI outlook on corporate growth has changed a little bit? I mean, in the last few quarters we were saying that we will pick and choose. Or are you seeing slightly better opportunity now? How should one look at it, the corporate growth jump?
See, you would have observed that 89% of our exposure to corporates are into the investment grade. There is no compromise as far as underwriting is concerned. Secondly, what I mentioned in terms of the unsecured working capital facility, which used to be as high as about 50%. Now it has come down to about 44% kind of a number. I think to that extent there is a definite improvement and in terms of the working capital utilization and similar situation for the unsecured term loans. These are some of the things which is a function of, you know, the capacity utilization and part of it also when it comes to working capital utilization would also be on account of the upside which is seen in the commodity prices.
I think, I would say that it is not one-off. To my mind, it appears to be sustainable.
Thank you, Mr. Mundra. May we request that you return to the question queue for your questions. The next question is from the line of Saurabh Kumar from JP Morgan. Please go ahead.
Sir, two questions. One is on this AUCA recovery. What will be your expectation going ahead? You know, especially in relation to the power sector above, do you think that the resolutions pick up now given the situation of, you know, power assets in the country? The second is just want to reconfirm my understanding. On this, If you have a yielding fees, you obviously for investment depreciation, but there should be an offsetting impact, to some extent on the employee provision. Will our understanding be correct? Thank you.
As far as the impact on the power sector, I think there should be an effort to fetch better value, but let us wait and watch how everything pans out going forward. Because very often when it comes to the foreign capital, they have got certain limitations for supporting the thermal power. So that is something which I would like to mention. But yes, nevertheless, I think the plants would be seen performing and which might perhaps evince some interest from the potential buyers. So that's how I understand. Your second question was relating to?
AUCA
AUCA recovery, actually, we could have about INR 7,800 crore worth of recovery.
INR 7,800, sir.
Going forward, maybe you would like to comment.
Generally, our run rate on AUCA recovery is about INR 8,000-INR 10,000 crore. This year also, we'll be targeting a similar number.
Okay. Thank you. Sir, the second question, you know, on this investment. We have an investment depreciation, but let's say for this, you know, 50 basis point yield increase, how much relief do we get on employee provision?
That's different.
No, actually, earlier it used to be like that. Now since our when it comes to the pension liability and the gratuity liability, those funds are now managed by our SBI Funds Management.
That was a trust.
That's a separate trust also. It is not managed by the bank, so it will not be in a position to.
Okay.
Yeah, offset.
Okay. Understood. Thank you, sir.
Thank you. The next question is from the line of Jignesh Shial from InCred Capital. Please go ahead.
Yeah. Hi. Just reconfirming what you said earlier. There have been eight accounts sold at INR 297 crore during quarter two years , and full year 23 accounts at INR 1,188 crore. Is this number correct?
Yeah, right. ARC sale. If your question is on ARC sale, quarter four, eight accounts, amount realized is INR 297 crore.
Yeah. Full year 2023 and INR 1,188 crore.
INR 1,188. You are right. That's the ARC recovery.
It has been fully provided now.
Not necessarily.
Not necessarily, but much of this would have been earlier provided and if it was, and if there was any provision right now, that has been accounted for.
All right.
This could be of different category of accounts.
Okay. Second, the continued provision against COVID, what we were adding it earlier, now we are keeping it against restructured accounts. Is my understanding correct?
Yes. Yeah. The COVID provision which was there, now it is against the restructured accounts. That's it.
Can you quantify please once?
The additional provision for the restructured accounts now stands at INR 7,900 crore. INR 79,122 crore to be precise.
Just, can you give some brief details about how the business has happened through YONO? More details about, on, you know, the loans sold or customer acquisition has happened through YONO app and all. If you give just a brief about that during the quarter.
Almost about 26,000 savings bank accounts are being opened on a daily basis through YONO. When it comes to the mutual fund sales, this has been about INR 1,548 crore. About 11.36 lakh personal accident insurance policies we have sold through YONO. When it comes to our pre-approved personal loans which were disbursed during the quarter, they were about INR 6,500 crore. Krishi Gold loans which we sanctioned were about almost INR 13,000 crore in the quarter. OCC accounts which were reviewed through YONO were almost 2.35 lakh accounts which we reviewed.
Loan book is INR 25,000 crore.
Loan book overall is about INR 25,000 crore with the help of YONO.
All right. Thank you so much, sir. That's useful. All the best.
Thank you.
Thank you. The next question is from the line of Roshan Chutkey from ICICI Prudential Mutual Fund. Please go ahead.
Yeah. Thanks so much for taking the question. Firstly, this other provision bit of INR 1,495 crore, what is this relating to?
Part of it would be the standard provisions also, no? Just one sec. Can you please pull out the slide? INR 1,49 crore.
Which slide?
Yeah.
Slide number 26.
Sorry. Can you please repeat your question?
On slide number 26, you have this other provisions, right, of INR 1,495 crore. What is this corresponding to?
It's contained.
Part of it is for the non-fund based. Just one sec, I'll just give you the details.
This is non-fund based.
Yeah, it is all, non-fund based.
Non-fund based. Of the investment depreciation of INR 2,061 crore, how much is related to MTM?
It's not MTM. It is on account of the security receipts.
Mostly of that.
Okay. Where do you have MTM related provisions?
There was no MTM provision as on 31st of March.
Oh, okay. All right. Thanks so much. That's all from my side.
Thank you. The next question is from the line of Manish Shukla from Axis Capital. Please go ahead.
Yeah, good evening. You said that about 41% of the book is MCLR. Could you break up by tenure of the MCLR? As in how much will be one-year MCLR and how much will be less than one-year MCLR?
I would not have that detail with me, but b ulk of it is six months MCLR, which has become the benchmark.
Okay. That is good enough. Second, given the increase in digital and, you know, related transactions, how soon do you think it can start reflecting meaningfully in operating efficiency numbers in terms of cost to income?
Yeah, I think it's going to be an ongoing effort. As of now, about INR 25,000 crore worth of business is in terms of cost of sourcing, et cetera, is much lower as compared to-
Overall book.
The overall book, which is actually much bigger. I think maybe it might take some more time. Yes, of course, it's a step in the right direction. Would like to add that for a bank of our size, we don't have a choice of only having the digital. We have to have the digital model, so that is something which will work.
It's about 10% of the overall personal loan book, but as it scales.
Yeah. We would like to have as much as possible because it is a frictionless channel which is in vogue, and we would like to see that it improves even further. Almost about 5 crore worth of people having joined YONO. They are the registered users. Hopefully with the value add which is coming, many more will also come.
Sure. Last question, sir, is for the Xpress Credit loan product, what do you think is your potential target customer segment to which you can sell that product and how much of that have you already penetrated in terms of number of individuals?
This Xpress Credit is a product which is on a revolving basis also. Once it matures, it is not that, those customers will not avail. They will again avail it.
Sir, just to supplement, sir, what you said. I think every quarter we keep telling about this. Our target group is basically the corporate salary package customers. We have a universe about 1.75 crore as we speak, and it's growing, this CSP customer base. Our current penetration with Xpress Credit is just about 27%. As Chairman mentioned, it's not only that we have still unexplored kind of a customer segment. The enhanced salaries and all other things also contribute in terms of growth. Just to address your question, I think the penetration is just about 27%. We are further improving the penetration level and also adding to our corporate salary package customer base.
That is 27% of INR 1.72 crore. Is that right?
Yes, sir.
Oh. All right. Thank you. Those are my questions.
Thank you. The next question is from the line of Nilanjan Karfa from Nomura. Please go ahead.
Thank you, sir. Just two questions. On slide 18, we have this total provisions of INR 30,629 crore. Does this also include provisions that we have on security receipts, which is INR 7,859 crore or it is outside that?
No, that is outside. That is on the NPA provisions. That is on the provision for the investment in investment depreciation.
Okay. Thank you, sir. The second question, you know, obviously savings rates have come off quite significantly. In what conditions do you think SBI may have to start raising savings rates?
I think, we have not yet taken a call on this. Maybe we'll wait and watch how things really pan out and how the competition moves, and accordingly we will be taking call.
Right. Sir, if I can just delve deeper. I mean, would you be able to specify, you know, what is the cost that you actually incur on having a savings account, for which a 2.5% is probably what it is giving you, and therefore it cannot move up. Is there a potential-
We already allocate the cost like that.
You also must remember that savings bank account is an entry level.
Yes.
Our ability to upsell and cross-sell is there. It's not only about operational cost. It's an entry gate to our bank. I think from that perspective, it has to be.
Okay. You basically believe it has to be more competition driven and broader interest rate market.
Absolutely.
Yeah.
Okay. Thank you, sir.
Thank you. The next question is from the line of Ankit Laddha from Mahindra Manulife. Please go ahead.
Yeah. Hi, sir. Just one question. On the segmented breakup that you have shared, the retail banking operations income has, you know, dropped significantly during the quarter from-
I'm not very clear. We are unable to really understand what you are saying. Can you please be very nearer to the mic?
Yeah, that's fine. Yeah. Am I audible now?
No, there's some echo.
Okay. This is just on the segmental breakup that you have shared with the exchange filing. The retail banking operations income has dropped sharply during the quarter from around INR 6,900 crore in Q3 to around INR 4,040 crore in Q4. What was the reason for this?
Segmental revenue.
Segmental revenue. Maybe we can respond to this offline.
Offline.
Because I'm not having those details with me. Maybe I'll ask my-
We have distribution team.
Yeah. In the- [audio distortion]
Sure. Okay. No, no issue. Yeah. That's also my fault.
Thank you. Ladies and gentlemen, we are short of time. I would now like to hand the conference over to the Chairman, sir, for closing comments.
Thank you very much once again for taking out time to be with us. That too on a Friday evening. All the very best to all of you. Stay safe. Stay healthy. Thank you.
Thank you. Ladies and gentlemen, on behalf of State Bank of India, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.