Ladies and gentlemen, good day, and welcome to State Bank of India's Q3 FY23 earnings conference call. As a reminder, all participant lines will be in a 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. Sanjay Kapoor, General Manager, Performance, Planning and Review from State Bank of India. Thank you, and over to you.
Namaste, and good evening, ladies and gentlemen. My name is Sanjay Kapoor. I am the General Manager, Performance, Planning and Review Department of the bank. On behalf of the top management of SBI, I extend a warm welcome to all of you joining us today on SBI's Q3 FY 2023 earnings conference call. On the call today, we have with us our Chairman, Mr. Dinesh Khara, Mr. C.S. Setty, Managing Director, International Banking and Global Markets and Technology, Mr. Swaminathan J, Managing Director, Corporate Banking and Subsidiaries, Mr. Ashwini Kumar Tewari, Managing Director, Risk, Compliance and SARG, Mr. Alok Kumar Choudhary, Managing Director, Retail Business and Operations, Mrs. Saloni Narayan, Deputy Managing Director, Finance. To carry forward the proceedings, I request the Chairman, sir, to give a brief summary of the bank's Q3 FY 2023 performance and the strategic initiatives undertaken.
We shall thereafter straightaway go to the question and answer session. However, before I hand over to the Chairman, sir, I would like to read out the safe harbor statement. Safe harbor provision. Certain statements in these slides are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes 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 Chairman, sir, to make his opening remarks.
Thank you. Thank you very much. Good evening, ladies and gentlemen. Thank you for joining this analyst meet, post announcement of the quarter three results of the financial 2023. The Indian economy has exhibited a remarkable resilience through 2022 in the face of the deteriorating global situations triggered by Russia-Ukraine war, monetary policy tightening and recurring waves of the pandemic on the back of the strong financial and macroeconomic fundamentals. An important factor in the overall outcome has been the measured response of the monetary and fiscal policies, in sharp contrast to the aggressive tightening worldwide. The new year brings hope for continuous momentum in India's growth story, backed by the sustained strength in domestic demand. The World Bank has gone on record to say that the nation was well-placed to steer through any potential global headwinds in 2023.
The IMF has also said that India remains a bright spot and would account for the significant portion of the global growth in 2023. Several high-frequency activity indicators like vehicle sales, petroleum consumption, railway passenger traffic, air traffic, RTO revenue collections, fertilizer sales have all shown improved YoY momentum in quarter three of financial 2023. GST revenue also continues to remain robust, with 15% higher revenue in quarter three compared to the same period last year. In financial 2023, credit growth has continued to grow in double digits. The incremental nine-month credit growth has doubled in financial 2023 compared to financial 2022. Credit growth in the system is currently at 14.9% as against 9.2% in last year. The good thing is that credit growth is broad-based and not limited to a few industries or sectors.
We expect the pace to continue in the next financial year also, but some moderation can happen. At State Bank of India, we have always maintained that our long-term strategy is to build sufficient resilience in our balance sheet. While we'll continue to pursue growth in core operating income, we have also been proactive in identifying any potential risk and build adequate provisions for the same. Our operating results for the quarter are aligned with our long-term strategy. I'm pleased to announce that for the second quarter in running, we have again posted our highest ever quarterly profit at INR 14,205 crore. Our business growth numbers are strong. In terms of asset quality, our gross NPAs have dropped to its lowest level in more than six years. Let me now give some color on the bank's number for this quarter.
Net profit for the quarter increased by 68.47% YoY to INR 14,205 crores. While operating profit at INR 25,219 crores increased by 36.16%. ROA the bank for the nine months period improved by 23 basis points on YoY basis, and it stands at 0.87%. ROE improved by 458 basis points on YoY basis, and it is at 18.59%. Most other core profitability metrics have also improved over previous year as well as sequentially. Net interest income increased by 24.05% year-on-year on the back of improvement in yields and continuing credit offtake. Domestic NIM also improved by 29 basis points year-on-year and 14 basis points sequentially. Non-interest income grew by 32.22% year-on-year.
Operating expenses increased by 16.69% as we have started providing for the wage revision, which has fallen due from November 2022. Other than that, our overhead expenses as well as staff costs are within control. Our cost to assets continues to remain among the lowest in the industry, reflecting our efforts to build a long-term cost efficiency. On the business front, the growth momentum in domestic credit offtake has continued in this quarter also, with growth coming from all segments. Domestic advances grew by 16.91% year-on-year, headlined by retail personal advances, which grew by 18.10% year-on-year, and corporate segment which grew by 18.08% YoY. SME and agri advances also posted double-digit growth at 11.52% and 14.16% year-on-year respectively.
Our personal retail loan book, excluding housing segment, has crossed the milestone of INR 5 trillion. Domestic deposit grew by 8.86% YoY, driven by growth in savings and deposits and term deposits. Our foreign offices have continued to perform well with good growth in advances as well as deposits. Coming to asset quality, we continue to post improving outcomes. Our gross NPA has dropped below INR 1 trillion and stands at INR 98,347 crores. In terms of ratio, our GNPA has come down by 136 basis point on a year-on-year basis and stands at 3.14. Our net NPA ratio has also declined by 57 basis point and stands at 0.77. Slippage ratio for the quarter stands at 0.41%.
Consistently improving asset quality is also reflected in our credit cost, which is at 21 basis points for the quarter and is down by 28 basis points o YoY basis. On the restructuring front, our total exposure under COVID resolution plan one and two stands at 26,035 crores as at the end of Q3 of financial 2023. The restructuring book has behaved well with almost around 10% of the current exposure falling under SMA-1 and SMA-2. We are holding sufficient additional provision against the restructured account. The bank remains well capitalized, and we expect our internal accruals will be adequate to take care of the normal business growth requirements.
Our capital adequacy ratio, without adding profit for the nine months, stands at 13.27% and CET ratio at 9.26% are well above the regulatory requirements, which still continues to be an important acquisition engine for the bank across assets as well as liability products. During the quarter, we have sourced 64% of the savings bank accounts and 41% of the retail asset accounts digitally through YONO. Our subsidiaries have also consistently performed well and continue to create significant value for all the stakeholders and most importantly, for the customers. Most of our subsidiaries are leader in their respective segments. We will continue to nurture these subsidiaries and see them creating value for their own shareholders and as well as the shareholders of SBI. Before I conclude, I thank you for your continuous support to the bank.
We consider it a privilege to be able to contribute towards the growth of our economy. We remain committed to reward your trust in us with superior sustainable returns over the long term. I wish everyone here good health and very happy weekend. The floor is now open for your questions. Thank you.
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 touch-tone 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. We have our first question from the line of Mahrukh Adajania from Nuvama. Please go ahead.
Hello, sir. Good evening.
Yes.
Hi. A couple of questions. Firstly, the write-offs are slightly higher this quarter, so if you could explain? Also on trading gains, the profit, the treasury bit, why does it look so high this quarter? These are my first two questions, and then I have one more.
Yeah. Write-off, is in the normal course of business. There's nothing very unusual. I think it is about INR 10,000 crore is the write-off amount, and it is in the normal course of business, so nothing very unusual.
Though it was INR 3,000 last quarter, right?
Yeah. I think normally we undertake write-off towards the third quarter and the fourth quarter. That is why it has which is kind of a trend is seen this year and that was not there in the past.
The treasury part.
Yeah, yeah. The treasury part.
The treasury part.
I hope it it also includes the some amount of write back of the MTM portfolio because the MTM requirements has come down, mark to market losses have come down, so that is getting reflected in the the data.
Got it. Sir, and in your exposure to a large group, in press you made some comments that it's 0.86% of total exposure. What is the total exposure? Because we get to see only your gross advances. And your-
0.88%. 0.88% of our loan book, which is INR 3,100 crore, point out.
Okay. Okay. Got it. This includes all the sanctions across all offices?
It's outstanding exposure across all offices.
Outstanding. Okay. Okay. Sir, you wouldn't talk about your sanctions?
I think as of now, what is material is that only.
Okay. If we can get a... because like PNB disclosed their sanctions, right?
Yes, it is their prerogative and normally we don't entertain questions relating to a particular account because there's a customer privacy issues involved.
Okay, sir. Sir, if I can squeeze in just one last question. What do you think is the outlook on deposit growth and therefore margins, right? Operating performance has been phenomenal. Deposit growth is not great, but you don't even need it because you have been running the lowest CD ratio amongst the lowest CD ratio in the industry on the domestic front. What is the outlook on deposit growth and therefore margins from here on? When do you think margins sustain at the 3.2% level? Do they drop? When do they drop? How does deposit growth accelerate?
As of now, we are having excess SLR to the tune of about INR 3.2 trillion. We are very mindful that I've said it in the past also, deposit is a franchise and we always remain mindful of the depositors interest. In the, in the buckets where we feel that we can attract the retail deposit, we are ensuring that we must be in line with the market trends, and that is, that's the policy which we have adopted and we'll continue to follow that. Based upon that, since you are also acknowledging the fact that we still have one of the lowest credit-deposit ratio, depending upon the need, we will be calibrating our interest rates.
I would also like to mention that our about 74% of the loan book is linked to either EBLR or MCLR. Out of the 74%, I would say about 40% would be on account of MCLR. If at all we increase the deposit interest rates, that will also give us the elbow room for increasing the MCLR and which will help us in ensuring that the NIM should not get adversely affected.
Okay. More or less stable NIMs from here on.
I expect that, hopefully.
Okay, sir. Perfect. Thank you. Thanks a lot, sir.
Thank you. We have our next question from the line of Rahul Jain from Goldman Sachs. Please go ahead.
Thanks. Good evening, sir. Just a couple of questions. Number one, on the provisioning bit, we've seen a jump in standard asset provision in this quarter. I think outstanding standard asset provisions are about INR 23,000 crores. Just wanted to understand, why are we carrying such a large, you know, provisions here? Is there an element of contingency also that has been factored in here?
Yes, there is. One of course, is when our loan book has grown, that has also led to an increase in provisioning because we are required to maintain standard provision for the standard assets also. Secondly, of course, we are always very mindful of, if at all we get to see any kind of a stress on the ground in any of the accounts, we do make some provision which are floating in nature, and much of it will depend upon how the account, what is the trajectory of the account and accordingly we crystallize those provisions.
Partly it is on account of our increase in the loan book and partly it is on account of our policy in terms of making the provisions proactively as against after the occurrence of the event.
Sir, this translates into roughly about 75-80 basis points of the loan book. Fair to say 30-40 basis point may have been built just, you know, for any future contingencies?
Yeah, could be like.
Yeah.
As I mentioned that if at all we get the visibility of any kind of a stress in our loan account, we rather believe in making provision upfront.
It is across the sector.
It is across the sector.
It is in the corporate.
Yeah, it is on the corporate book.
This is your standard asset provision.
Yeah, yeah.
Yeah. Got it. Thanks. Sir, just on this provision for employees of INR 5,429 crores in this quarter. What is the element of one-off here? Or this is going to be the recurring quarterly number?
No, we have a provision relating to our wage revision, which is about INR 996 crore is on account of that. Other than that, the provisions which have been made based on the actuarial assessment for our retirement liabilities, et cetera. It is as per. Yeah.
This is INR 996 crore, would you be making this every quarter, additional provision?
On an average about it is for every month it comes to about almost INR 500 crore every month. That will be the provision which will be required to make to meet the liability relating to the wage revision.
Sorry, I missed out on the number. Can you please repeat?
Sorry?
Around five hundred-.
No, about INR 996 crore is something which we have provided for. This is a provision for two months' time. Okay?
Around 500.
Apart from that, about, INR 500 odd crores.
Five.
Pardon?
Every month, INR 500.
No, every month INR 500 crore will be the provision for the.
Wage revision.
for the wage revision. Apart from that, some provision we have made on account of the pension and gratuity liability, which is essentially on account of the discount rate and also, as per the recommendations of the actuary.
Got it. Sir, just one more question. Going back to the exposure, that is of course in the public discourse. Can we get some more color as to the exposure?
I think towards the end of this week, I mean, after I complete all your answers, I will make some statements, comprehensive statement relating to the exposure to that particular group.
Sure, sir. I'll wait for that.
Yeah.
Thank you.
Thank you. We have our next question from the line of Ashok Ajmera from Ajcon Global. Please go ahead.
Compliments to you, Khara Saab, and the entire team. I think for the mind-blowing profit, actually one of the highest, I think, operating profit in last maybe four, five years, even in the net profit. Even the asset quality has improved tremendously. Overall performance of the bank is so robust that even if there's any problem concerning to this large group, which may not be even in the top 15 group of yours as far as the exposure is concerned, I don't think a bank like State Bank of India will have any kind of problem when your operating profit itself is INR 26,000 crore per quarter.
Having said that, sir, we will wait for your final comments on the total overall exposure to this group, fund base, non-fund base, bond, equity, foreign bond, which you have assured that you will give the statement at the end of the question-answer session. Having said that, sir, I have some couple of data points and some information. We have gone slow in this quarter on the corporate credit. What is our basically ratio which will settle down if you take the whole FY 2023, by March, the composition between the RAM and the corporate?
I think it will be more or less where it is in the month of December.
Okay. No problem.
It will be marginal movement for many other segments, but it will be more or less on these lines only.
All right, sir. Sir, if we go on the income side, the other income has gone up to INR 11,467 crore from INR 8,870 crore in the nine last quarter. I think the major part of it is, it come from, I mean, treasury, the profit. Profit and sale and revaluation of the treasury is INR 2,937 crore as against INR 457 crore in the last quarter. Whether this trend is going to be continued in the coming quarter, January, March also? How do we see now with the interest rate almost picking up maybe another 25 basis points, where do we stand on the treasury side, sir?
As soon as the treasury side is concerned, I mean, there are two component. One of course is the improvement in yield on investment. Secondly, in this quarter, we have booked some MTM gain, which is about INR 2,200 odd crores.
Which is more of a write back because we have, if you recall in the first quarter, we had made a MTM loss.
INR 7,005.
INR 7,500 crores. After that about, we had some MTM gain last quarter also, which we did not book for the reason that, we had seen the yields were somewhere it has again shooted. That is the reason why we did not book at that stage. Now we have seen that yields are now coming in the, within the range, and that's the reason why we have done this. I think that is the major reason when it comes to the kind of, movement we are observing in the, in the treasury net results. The other item is, we had some derivatives which are again rupee-dollar swap which we had done.
Some loss component is there on those derivatives, so that is also booked in that, in that particular head.
Sir, our credit cost and cost to income ratio both have improved tremendously. Do we see this trend to continue? Like cost to income coming down and the credit cost both are to come down even at this low level?
I think for the quarter ending March 2023, I can say for sure. I think we will be in a position to give some guidance as we move further, depending it will be a, it will also be the function of how the, I mean, economy in general, macro economy will be moving. Nonetheless, as of now it looks like that for the quarter ending March 2023, we should have similar kind of a credit cost.
My last question in this round, sir, is on PLI. How much provision on the, this, on PLI the bank has made for the nine months?
Provision would be in line with what the number is likely to be. The cost is anticipated. It could not be very significant amount, and it will be very small number which is there. It is, you know, it is for 5% increment, it is five days salary, and for 10% it will be 10 days salary. It would not be very significant component.
Okay, sir. We have provided for, I mean, we have already made the provision for it.
That's always there. No, we have so many pockets where we are keeping so much of provision. I mean, non-NPA provision as I hear is about INR 33,000 crore.
Yes, sir. I think the concern of the market is absolutely unfounded. Anyway, all the best to you. I think the sooner or later the market will understand economics of the bank and the financial. Thank you very much, and all the best to you, sir.
Thank you very much, Ashok. Thank you.
Thank you. We have our next question from the line of Anand Dama from Emkay Global. Please go ahead.
Yeah, thank you, sir, for the opportunity, sir. We've heard about a lot of resolutions in the pipeline right now, like SKS Power and all. Do we have any resolution pipeline particularly for the fourth quarter and over next six to nine months that we can talk?
There are so many resolutions are in pipeline that is, but it doesn't benefit that crystallize because it is always a process which is carried out in all these matters. How much time will be taken at each of the step is actually at times is not very certain. That is one of the reasons why saying it so much of, I mean, certainty that in the last quarter we'll have so many resolutions coming through. It will not be in order for us. Nevertheless, last Mr. Tewari, if at all, he can give some color in this direction.
Thank you, sir. There are many cases which are at final stages, but we cannot be sure since everything and various legal proceedings have to create a timeline or a date. I will, sir, I will give you some high-level.
High-level.
I'll give you a high-level number, going forward in the call.
Sure, sir. Thanks. That will be great. sir, secondly is the outlook on margins. I think this quarter also we have seen a meaningful margin uptake. We still have some room in terms of LDR improvement. As you said that MCLR also would increase as basically the cost increases.
I would suggest that let us keep, as a guidance part is concerned, I would like to keep the guidance at, at this level. If at all there will be room for improvement, we'll certainly ensure that. Incidentally, you know, in this NIM also, it could have been even better, but because in the last year we had, the income tax refund, which was as high as about INR 2,400 crores. As against that quarter, this year we have got income tax refund, which is just about INR 800 crores.
Interest
Interest
Interest on income tax refund. That is the other reason. It will have an impact about 6, 7 basis points overall. Yes, of course, if at all we will, if at all we do apple-to-apple comparison, perhaps the impact, I mean, change can be even better. This is just for information. Yeah.
Yeah, sure. I think that should also play out in the fourth quarter, right? That's right.
Yeah. Hopefully. Let's hope for the best.
Yeah. Okay, sir. Thanks a lot.
Sure.
Thank you. We have our next question from the line of Abhishek Murarka from HSBC. Please go ahead.
Hi, sir. Good evening. Actually, just one request when you make your comment on the large corporate. If you could clarify whether this INR 27,000 crores includes non-LC/BG, you know, non-fund-based and overseas loans. Just at the cost of repetition, just requesting that. Also clarify that if there's a refinance opportunity given that, you know...
Just on the second one.
The second one is if there's a refinance opportunity, given that your Large Exposure Framework wise there is a lot of headroom and the group like several projects appear to be creditworthy, then would you do it? Just these two things if you could cover in your comment maybe now or later, whatever, it would be very useful.
I think second question I can answer you right now. That is if at all any refinance opportunity is always evaluated on merits. For me to say that anything right now will not be in order and as and when any such demand will come, we have not received any such demand or any such request. If at all any such request will come, it will be evaluated only on merit. While evaluating, we are always very mindful in terms of the sake of the promoter or of the entrepreneur and the kind of risk which it is. Based on that very comprehensive assessment only views are taken. It is not merely simply one request comes and we grant the facilities.
Understood, sir. That's useful. My second question is actually on your international loans. Now, sequentially they've been rising. I think couple of quarters back you were talking about being a little aggressive there and, you know, looking for opportunities outside. What is the outlook there, sir? Next one year are you looking to grow that maybe to, you know, higher percentage of loans or what's the strategy?
See, in terms of dollar our international book has grown by about 9.15%. Though when it comes to Rupee rate, when we convert it on the Rupee rate, it looks like that it will grow now as about 20% plus. De facto it is-
Dollar plus.
Dollar, in terms of dollar it is just about 9.15%. Now our focus is in for improving the NIM as far as our international book is concerned. That is the reason you might have observed that our NIMs have improved significantly. We have moved towards 1.67% as our international NIMs are concerned and it is on a quarter-on-quarter basis an improvement of over 23, 24 basis points. That's how it is. When it comes to the I mean, composition of the international book, it is essentially local lending, and, in those markets which is not necessarily for, to the Indian corporates only. It is to even to our local corporates and we are participating in the local syndications.
Also when it comes to India linked loans, they are majorly ECBs and they are ECBs to either triple A or double A rated entities only. That's how this whole complexion is. Apart from that, last component is a trade finance. Trade finance book, wherever we are getting the margins, we are participating on the platforms and wherever we are in a position to get the margins, there we are actively involved.
Sure. In margins in the international book should hold up around current levels?
I hope that we should be in a position to maintain at this level, if not improve.
Perfect, sir. Thank you. Just one question I have for you on SME. For several quarters that book was not really growing, and this quarter there's about, I think, a 10% QoQ jump in that book. If you could share just, you know, what has changed. Is it a change in product geography, you know, customer focus? What has really changed over there, and whether this is sustainable?
Yeah, we have In SME we have invested well in terms of structures, in terms of capacity building, and also in terms of focus. That is something which has been important for last about a year plus. The results we are now in a position to see. Last quarter also we saw a decent growth in SME book and this quarter also we are seeing a decent growth in SME book. Here I would like to mention that we are having a focus on the distributor finance, vendor finance, beneficiary-based lending.
Also we have come out with, another loan product which is essentially run through YONO, which is a Pre-approved Business Loan where we are looking into the transactions and the current accounts, and based upon their transactions we are in a position to offer the loans to all such entities also, which are actually small in nature. This is something which is becoming very popular. These are some of the contributing factors, and we have grown SME by almost INR 43,000 crore, on a year-on-year basis, and these are some of the contributing factors.
Okay.
It has become a continuous focus area. Also we are very mindful in terms of quality of our of lending. We have created a loan management system where we are having adequate visibility in terms of the unstructured information through the GCC and et cetera, et cetera. That way we have significantly strengthened our underwriting practices in SME. We have invested in terms of manpower, we have invested in terms of product. All that is showing up. To my mind it is sustainable. We have set a target for reaching 4 trillion number by the year March 2024, the way things are, we should be very near to that by March 2023.
Perfect. Thank you for that excellent color and all the best for future quarters. Thank you so much.
Thank you very much.
It's okay.
Thank you.
Three thousand-
We have our next question.
Just one second. Mr. Choudhary has to contribute something.
Just a question about how much recovery or resolution we can expect. Basically past record plus the recovery already done and just subject to of course the court decision in few cases, we should have a number between INR 3,000 to INR 3,500 quarter four.
Thank you, sir. We have our next question from the line of Kunal Shah from Citigroup. Please go ahead.
Yeah. Congratulations. Good set of numbers. Firstly, sorry, just to touch upon in terms of the recoveries and upgrades. So X of the resolution which you have highlighted, maybe the run rate which is there for this quarter of INR 1,700 odd crores, should that be the normalized one or this is relatively on the lower side?
Actually recovery which you are seeing here, we have to keep in mind that last year about INR 1,692 crore on account of a particular account. It was one account. If we ignore the, if we, if at all we have to do the apple to apple comparison, then perhaps our growth in recovery this quarter is as high as about 80%-20%. I think, we expect that, going forward we don't have, chunky accounts which are awaiting resolution. Perhaps, it might take little longer also. Nevertheless, I mean, the kind of efforts which have been put in in terms of OTS, in terms of, you know, [NCLT] and those kind of things have helped us in sort of ensuring that recoveries happen faster.
We expect that, we should be in a position to maintain this kind of a number at least in this quarter also.
Sure. Compared, like, when we look at it, say in Q1, Q2, it was somewhere around INR 5,200 odd crores. Last whole year it was INR 21,000 crores in terms of recoveries plus upgrades, compared to maybe almost like INR 1,600 crores kind of a number for this quarter. You are saying maybe x of the any resolution, this should, this can ideally be the run rate even though focus is there in terms of improving it.
Actually, because, you know, you would have observed that the stock has come down quite a lot. I mean...
Yeah, yeah.
is now less than INR 100,000 crores.
Yeah.
That itself will leave. I mean, these are also the amount is also small in each of the cases. Each of the resolution when it comes to efforts, it takes almost the same amount of effort, but the recovery may not be as commensurate to the efforts. That's why, you know, number may look small, but in terms of the recovery it will be a sustained effort. Normally we get to see some kind of a better recovery in the last quarter. We hope that there would be a marginal improvement over whatever we have done this quarter.
Sure. Secondly, in terms of the corporate exposure, and say getting into infra, there is some rundown of almost INR 15 odd thousand crores, say in telecom and even in power. Is it more of a repayment of the account or is it a refinancing at the lower, at the lower rate by the corporate or what is actually leading to that? What would be the overall outlook on the corporate credit growth?
The corporate credit growth we have got proposals in pipeline as high as about INR 1.9 trillion. Where availment is yet to be taken both in term loan and working capital underutilization that could be as a whole INR 1.10 trillion. Overall about INR 3 trillion is a number in the corporate book which we are having some possibility of converting into, I mean at least unutilized will certainly happen. I mean, one positive trend which I must mention is relating to the availment of the term loans and the non-availment of term loan has come down quite a lot. That is normally it augurs well because generally after that the working capital improves. I think with that kind of a scenario, I expect even working capital utilization will also improve.
It has come down from over 56% to 54%. We have also seen the increase in credit growth, I mean sanctioning has gone up by about 24% as far as the large corporate credit is concerned. I think overall I expect that we'll have a good visibility of the opportunities coming in here and also the quality loan we should be in a position to exit.
Okay. On telecom exposure and are anything specific particularly in this quarter? INR 15,000 crores of rundown in telecom.
This is actually year on year rundown. This number then carries the year on year reduction and this is due to repayment as well as the reduced utilization and customer costs.
Okay. Yeah. Compared to like September also it was almost INR 43,000-44,000 crores, and that is down to INR 20 crores.
Some of the PSUs also there is a when they have there would be some repayment which were, which would have come that is.
Okay. These are the repayment. It's not like refinancing and maybe-
No, no.
some kind of a rate competition and losing out to the company, maybe.
No, no, not at all. Not at all. Not at all.
Thank you. We have our next question from the line of Jai Mundhra from B&K Securities. Please go ahead.
Hi, sir. Good evening. Last time you had given loan growth range of around 14%-16% for 2023. This quarter you said corporate growth, you know, usually have some seasonal effect in fourth quarter. You mentioned a decent amount of pipeline which is there which could be, you know, disbursed. What would be your, you know, outlook on the loan growth for the full year and for 2023 and maybe beyond if possible?
I think, I expect that the loan growth should be somewhere in the range of 14%-16%. I'll still maintain my expected indication which I have given last time also.
Okay. Sir you had mentioned your excess SLR at INR 3.2 trillion and within which then how much would be the scheduled redemption because that is what, you know, possibly will help you offset the deposit thing. What could be the scheduled redemption amount out of this?
The remaining period redemption will not be much for the current financial year. It would be just about INR 20,000-30,000. We are also adding at the same time INR 50. I think there are investments happening in HTM and some of the effects also. I think broadly we expect that this excess SLR will remain at this level for some time.
Right. No because, sir, your loan to deposit ratio is now 73, right? While it is lower relatively but it is still-
If at all it puts the IBG also. If at all you look at domestic it could be somewhere around 66%, 67% only.
Sure. Sure.
The IBG funding is very different.
Yes.
You know IBG, for IBG funding we have to we run our international banking group more like a corporate bank and there the loans are not necessarily funded from the deposits.
They are predominantly borrowing, market borrowing.
They are predominantly market borrowing clients, et cetera, et cetera.
Speaking on overseas thing, sir, this quarter, I mean the book has been flat, flattish on QoQ basis. How should I mean, and you mentioned that the dollar term growth is only honestly around 9%. How should we look at the growth in overseas books, sir, specifically going ahead, assuming or in dollar terms you may explain?
We are very mindful in terms of the NIM which we are generating there and that is the reason it was a conscious effort. It is not that we don't have, we're not having the opportunities. Since we are trying to maintain the NIM at a improve the NIM that is the reason why we are at this level. Considering the, I mean, kind of economy which you have seen across the globe 9.15% in the international space is a decent number.
Right.
Today, this group is comprising, is actually contributing 15% of our total than in our loan book of the bank.
Question on your agri loan growth. Your agri loan growth has been consistently lower than overall loan growth. In this quarter this is like 11%, 12%, 11% and overall loan growth is 18%-19% or 18%. As of FY 2022 we were PSL deficient. What is, what are you thinking in terms of PSL compliance especially on agri side because that growth has been very lackluster whereas the overall growth has been reasonably strong?
There are, in fact, the way we started working on SME, we have already started working for agri also. we are trying to actually, work in terms of the re-realignment of the agri book, and that process is already on. Earlier, we were into low value or small value working capital loans only. We have already done about 40% of this book has become an agri gold loan. the remaining book also we are looking at it how can... in fact, we are already working on it. high-value agricultural loan as well as, getting into the agri finance for the AgriTech and, agri infrastructure. that is something which we are working on. this is a result of that conscious effort which has been put in.
Hopefully, we will be in a position. We have set a target of INR 3 trillion for the financial year 2024 for this book to reach. We are quite hopeful that in this quarter also we'll get to see a decent growth, and We are much on course as far as our internal target is concerned.
Also the document first.
Yeah.
Now, the piece is also.
The PSL source.
Is contributed by SME and all affordable homes.
Yeah.
There are other, contributors to the piece and not only SME.
If I can add, Setty. As far as agri PSL is concerned, it's not a challenge in terms of the agri mandate of 15%. It's not at all a challenge. We are complying with that. For some of the other, say, segments where PSL is calculated, that we have methods like buying PTC, PSL certificates. That we will do. For agri front, there is not an issue. To add to what Chairman said about agri, we are conscious about the quality of agri book which we create. We have seen the agri NPL, which is higher, 12.2%, the agri NPL percentage which you see in the presentation. The color and composition of agri book has been changed entirely as of now. It means creating new kinds of products.
It also means, targeted approach towards selecting customers, as well as use of analytics and technology. It's getting turbocharged in order to get a better quality, sustainable, agri portfolio.
Thank you. We have our next question from the line of Adarsh Parasrampuria from CLSA. Please go ahead.
Sir, my question was on the exposure, so I'll wait for your comment. Thank you, sir.
Sorry? Where's your-
The question is on the exposure, so I'll, you know, wait for your comments. Thank you.
Okay.
Thank you. We have our next question from the line of Prakhar Agarwal from Elara Capital. Please go ahead.
Yeah. Hi, sir. Thanks for this opportunity. just, two things. One, data keeping. What is the FR of standing on our book?
FRs have already been provided for. Whatever FRs were there, we have 100% provided for those FRs.
How much-
It's about 7,000 crore rupees.
Sure. They were provided during this quarter or they were already provided earlier for?
I think last quarter or last quarter. Last year itself we had provided for it.
Got it. Secondly, when I look at the margins, and you probably said that, we'll be able to sustain the margin. When I move into FY 2024, should there be a conclusion that, we should be essentially be equal to average of what we have reported in FY 2023? We have seen, sequential uptake in FY 2023 at every quarter. To that extent, if I were to average that out, despite the cost which will happen, we'll probably be maintaining a similar margin in FY 2024. Is that a fair statement?
Our effort. That will be our effort.
Got it. Just last bit on this, your trading. Probably you said that around INR 2,200 crore of unwind that we have probably seen this quarter. Now in Q1, we had around INR 7,000 odd crore. When do we expect the balance to get unwind? Over a period of two to three years or how we should look at it?
No, we have already provided for that INR 7,700 crore. We have already provided for that, no?
No. Of that around INR 2,000 crores you said that got hidden by this quarter.
Which we are doing, which is the right type of MTM. It's a MTM part only.
Got it. Got it. Got it. Okay.
I mean, how the yield will move, it will be a function of that, no?
Sure. Got it. That is it, sir, on my end. Thank you.
Thank you. We have our next question from the line of Manish Ostwal from Nirmal Bang. Please go ahead.
Yes, sir. Thank you for the opportunity. I have only one question. On the short-term liquidity in the market, intermediate market, has tightened recently, and because of that, the CD rate has also increased. How do you see the funding environment in the wholesale market during the busy season, the quarter four?
See, I think, as we keep saying, you know, our funding of the credit growth, we use various instruments.
Mm-hmm.
Deposit, of course, is the mainstay. Market borrowings is one. But our ability to borrow from the market at a very competitive rate continues to be available to us. In terms of the deposit, I think there could be some small lumps economy bulk deposit rates. We, based on our requirement, we align to the market rates. I think broadly we were able to contain the cost of resource particularly, you know, I can be expected in Q4 also that same will come. The other thing which I would like to add here is what Mr. Setty has mentioned. You would have observed that in the current financial year, we have already gone to market and raised infrastructure bonds, and at a very, very competitive rates.
I think that also is another source, and since we are having a reasonable portfolio of infrastructure assets, that's the other source which is available, and which actually becomes much more competitive in terms of cost. INR 20,000 we have raised. Already INR 20,000 we have raised and that is something that will be the strategy going forward also.
Okay. One small point on the equity capital raise plan for the bank. Any plan for that to raise the capital to support the group?
We are, I mean, once the profits will be brought back after the March quarter, our rough estimation is that as far as the capital adequacy ratio is concerned, we'll be at about 14.5%. But at 14.5%, we have made some rough assessments, and it indicates that we can support the loan growth of at least INR 7 trillion. We will be very closely evaluating the situation. Wherever required, whenever required, we'll certainly raise all kind of resources, not only equity, we will also be looking at AT1, AT2, whatever is required to be done.
Thank you for the opportunity and all the best for the coming quarters.
Thank you. Thank you very much.
Thank you. We have our next question from the line of Manish Shukla from Axis Capital. Please go ahead.
Yeah. Good evening, and thank you for the opportunity. When you said about wage revision, monthly run rate was about INR 500 crores. That assumes what?
Sorry?
That assumes what rate of wage inflation? 10%, 12%, 15%?
It's over 10%.
10%. Okay. Second question, sir. On the standard asset provision of INR 23,000 crores that you are carrying, roughly how much is it that you would think is additional or extra? Under what situation will you be dipping into it?
This provision which we are carrying, I would say roughly one is a traditional provision for restructured standard accounts. This is essentially for the restructured book, which we are carrying on our on the balance sheet. So that was it is about 30% of our restructured book, which is about INR 24,000 odd crore. The remaining one is INR 23,116 crores, which is for standard risk. As I mentioned, that part of it is on accounts of our standard standard test as it is. Part of it is on account of the whatever visibility of stress we had on ground. How long we'll carry. We normally take stock of the situation quarter-on-quarter basis, and based upon that we'll take a call. May or may not.
It may or may not happen. It may or may not crystallize. Depending upon the situation which will be obtaining at the end of the quarter, we'll be taking a call. Majorly just normal standard. Majorly normal. Yeah. Predominantly it is for the standard risk only.
Sure, sir. Couple of times you mentioned that our LDR, at least domestic LDR remains pretty low. At the same time, during the quarter, borrowings have gone up by about INR 60,000 crores. You also hinted at potentially raising more borrowings. I'm just wondering, given the excess SLR and low LDR, why would you consider raising money or a debt borrowings?
This is more of a market operation because we have to evaluate all the options and ensure that our cost of resources remains the lowest.
Okay. Last question, sir. In the budget, the finance minister has enhanced limit for certain small savings schemes and introduced a new scheme as well. Do you think that puts pressure on retail deposits for the system, either in terms of availability or rates?
I mean, total size of that kind of a deposit is about INR 2 trillion. When it comes to banking system, banking system deposits are somewhere around INR 150 trillion plus. It might have some impact, but not as significant which should be really... Because we have seen in the past when it comes to special deposit schemes, they've been always carrying an, I mean, interest rate which has been quite high as compared to bank deposits. I don't think it could make a significant dent into the deposit base of the banking system. That's how I look at it. Apart from that, you know, when you keep deposit with the banking system, it is also liquidity is something which is available.
When you keep deposit like that, the liquidity is not available. It's more like a premium somebody is paying for keeping the illiquid asset. You understand it better. You are into the finance world.
Thank you. We will now have the address from the Chairman. Please go ahead, sir.
Yeah, sure. As far as the exposure relating to a large conglomerate is concerned, we have seen over the last five to six years the share of exposure of the Indian public sector banks as a percentage of their total debt has consistently declined from 55% in 2016 to 31% by the end of 2022. During this period, the debt to EBITDA, which is a key monitorable, has been improving for the better, demonstrating the group's ability to complete and generate cash in a timely manner from project which they undertake. We don't envisage any risk build-up to the Indian banks on this count.
As far as, we at SBI are concerned, our group exposure is well below the Large Exposure Framework, and the loan outstanding exposure stands at 0.88% of our SBI's total loan book as on 31st of December 2022. Majority of SBI loan outstanding are towards operating assets and projects that have been completed and generating cash accruals. The projects that are under construction are on schedule as of now. The loan extended by SBI are secured by the project assets and there is no facility granted on unsecured basis. The cash flows are routed through the designated accounts. Escrow mechanisms are in place to ensure timely servicing of the dues and there has been no record of any delay or default till date. We have not extended any finance against pledge of promoters' equity.
Wherever shares have been pledged in favor of SBI in certain entities, they are in the nature of additional collateral security. Non-funded exposure of SBI is mostly towards letter of credit and guarantees, both performance and financial. Non-guarantees issued towards securing their other financial obligations are not there. No guarantees have been issued. There are no concerns on the group's ability to service the loan book at this point in time. We hope it clarifies. I hope it is. I have tried to address the majority of the concerns of all concerned.
Thank you. Ladies and gentlemen, due to paucity of time, I would now like to hand the conference over to Chairman, sir, for closing comments.
Thank you very much to all of you for taking out time and to be with us on this weekend evening. I take this opportunity to wish all of you the very best and have a great and enjoyable weekend. Thank you very much.
Thank you. On behalf of State Bank of India, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. The conference is now-