Namaste, and good evening, ladies and gentlemen. My name is Sanjay Kapoor, and I'm the General Manager, Performance Planning and Review department of the bank. On the occasion of the declaration of the FY23 results of the bank, it gives me immense pleasure to welcome the analysts, investors, and our colleagues for an in-person meeting. I also extend a warm welcome to the analysts, investors, and colleagues who have joined this presentation through our live webcast. We have with us on the stage our Chairman, Shri Dinesh Khara at the center. Our Managing Director, International Banking and Global Markets and Technology, Shri C.S. Setty. Our Managing Director, Corporate Banking and Subsidiaries, Shri Swaminathan Janakiraman. Our Managing Director, Risk, Compliance and SARG, Shri Ashwini Kumar Tewari. Our Managing Director, Retail Business and Operations, Shri Alok Kumar Choudhary. Our Deputy Managing Director Finance, Shrimati Saloni Narayan.
Our Deputy Managing Directors heading various verticals and Managing Directors of our subsidiaries are seated in the first row of this hall. We are also joined by CFO and Chief General Managers of different verticals and business groups. To carry forward the proceedings, I request the Chairman, sir, to give a brief summary of the bank's FY23 performance and the strategic initiatives undertaken. We shall thereafter straightaway go to questions and answers session. Before I hand over to the Chairman, sir, 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 expectations and are subject to uncertainty and changes in circumstances. Actual outcomes may differ materially from those included in these statements due to a variety of factors. Thank you. I would request Chairman, sir, to make his opening remarks.
Chairman, sir, please.
Thank you. Thank you very much. Very good evening to all of you. Thank you very much for joining this analyst meet post the announcement of our financial year 23 annual results of the bank. As you're all aware that the global economy is passing through various uncertain times with the cumulative impact of adverse shocks of the past three years, most notably COVID-19 pandemic, geopolitical situations in Ukraine manifesting in unforeseen situations, spurred by the pent-up demand, lingering supply disruptions and commodity price spikes. Inflation reached multi-decadal high last year in many economies, nudging central banks to tighten aggressively to bring it back towards their target and keep inflation expectation anchored. As a result of all this, the baseline forecast of the global growth is to fall from 3.4 to 2.8, and then to rebound to 3% in 2024.
In the backdrop of all this, India continues to remain resilient to various adverse external environment owing to large domestic market. Despite all the headwinds, India's GDP in financial year 23 is estimated to grow at 7%, driven by investment and private consumption. Going forward, the economic activity would be supported by improving rural demand and the government's thrust on infrastructure spending. We also expect the revival in the corporate investment, which will give us opportunities of the healthy bank credit and also will lead to moderating the commodity prices. Despite the increase in interest rate and its transmission, credit growth has continued to grow in double digit and has been broad-based across all the sectors in financial year 23.
During financial year 2023, all scheduled commercial bank credit grew by almost 15% on a YOY basis as against 9.6% YOY in the financial year 2022. Aggregate deposit of all scheduled commercial bank grew at about 9.6% compared to the last year growth of 8.9% YOY. In the Union Budget for financial year 2024, several steps have been announced to push up the capital investment in the country, which will actually boost the credit demand in the economy. We expect the credit growth to continue in financial year 2024 also, though with some moderation, which can perhaps happen. In the work backdrop, let me now share with you the bank's numbers for financial year 2023 as well as for the quarter four of the financial year 2023.
I'm happy to share with all of you that the bank has for the third quarter in running have posted the highest ever quarterly profit at INR 16,695 crore. For the full year, our net profit has crossed the landmark number of INR 50,000 crore, which is the highest ever by any bank in India. Net profit for financial year 2023 increased by 58.58% YOY. While operating profit at INR 83,713 crore increased by 11.18% YOY. ROE of the bank for the year improved by 29 basis point on YOY basis to 0.96%. ROE improved by 551 basis point to 19.43%. Here, I would also like to mention that for three quarters in a row, our ROA has been more than 1%.
For the quarter four of 2023, net profit stands at INR 16,695 crore, which is higher by 17.52% sequentially and 83.18% on a YOY basis. Most other core profitability metrics have also improved over the previous year, as well as sequentially. Net interest income for the year has witnessed a growth of 19.99% on the back of improvement in yields and continuing credit offtake. Domestic NIM also improved by 22 basis point on a YOY basis. Non-interest income declined marginally by 9.73%, essentially attributed to the MTM loss of INR more than 7,000 crore, which was suffered in the 1st quarter. Other than that, our core income streams, fee-based incomes, have remained intact and have improved by almost 6.84% YOY.
Operating expenses increased by 13.68% YOY as we have started building provision for the wage revision, which has fallen due effective from November 2022. There is some increase in the overhead expenses, which is essentially attributed to the higher tech-related expenses like expenses on IT, development, mobile banking, ATMs, and also higher DICGC premium because of the growth in deposit, which we have witnessed in the last financial year. On the business front, the credit growth has been robust across all the segments. Domestic advances grew by 15.38%, headlined by retail personal advances, which grew by 17.64%, and corporate segment grew by almost 12.52% YOY. SME and the agri segment advances also posted healthy double-digit growth at 17.59% and 13.31% respectively.
Domestic deposit grew by 88.50% YOY, driven by the growth in savings bank deposit and term deposits. Our foreign offices have continued to perform well with good growth in advances as well as in deposit. With regard to the asset quality, our gross NPA ratio has come down by 119 basis point and stands at 2.78%, which is its lowest level in more than 10 years. Our net NPA ratio has also declined by 35 basis point and stands at 0.67%. Slippage ratio for the year stands at 0.65%. The consistently improving asset quality is also reflected in our credit cost, which stands at 32 basis point for the year and is down by 23 basis point on a YOY basis.
We have a well-provided stress book with PCR showing improvement by 135 basis point at 76.39%. PCR including TWO improved by 171 basis point YOY and stands at 91.91%. On the restructuring front, our total exposure under COVID resolution plan one and two stands at INR 24,302 crores as at the end of quarter four of financial year 2023. The restructuring book has behaved well. When we look at our SMA 1 and SMA 2 also in this category, they are much within the range of about 11%. As against this book, we have already provided 30%, as you're all aware, as compared to the 15% requirement of RBI.
We actually have insulated our book from any potential threat from the restructuring which might happen, which have already been, the restructured book has already been taken care of by additional provision, but the book is behaving much better than what we have seen in our SMA book otherwise or in the stress book overall. The bank has remained very well capitalized, and we have a sufficient headroom to take care of the normal business growth requirement. Our capital adequacy ratio has improved by 85 basis point YOY and stands at 14.68%. CET1 ratio has also improved by 33 basis point to be at 10.27%, and both the ratios are well above the regulatory requirements. Digital continues to be an important customer acquisition engine for the bank across assets as well as liability products.
During the year, we have sourced 64% of our savings bank account and 35% of our retail asset accounts digitally through YONO. We have embarked upon a journey of creating a digital bank of choice within the bank when we have launched our YONO 2.0. Our subsidiaries have also consistently performed well and continue to create significant value for all the stakeholders and most importantly, the customers of the bank. Most of our subsidiaries are leaders in their respective segments. We will continue to nurture these subsidiaries and see them creating value for their own shareholders as well as the shareholders of SBI. Before I conclude, I thank you all for the continuous support to the bank. We consider it as a privilege to be able to contribute towards the growth of our economy.
We remain committed to rewarding your trust in us with superior, sustainable returns over the long term. I wish everyone here the very best. Now the floor is open to all of you for the questions. Thank you.
Thank you, Chairman sir, for your opening remarks. We now invite questions from the audience, and for the benefit of all, we request you to kindly mention your name and company, before posing the questions. To accommodate all the questions, we request you to restrict your questions to maximum two at a time.
Hello, sir.
Kindly restrict your questions to the financial results only, and no questions about the specific accounts, please. In case you have additional questions, the same can be asked at the end. We now proceed with the question and answer session.
Hello, sir.
Yep. Please go on.
My question, I'm taking from your comment about the credit growth will continue with some moderation in FY24. For the bank, what is our expectation of credit growth for the bank for the FY24? Secondly, in terms of deposit growth and the pricing of deposit for the year, do you see a material increase or risk to our margins, domestic margins? This is the first question.
Sure. As far as the credit growth is concerned, we expect that we'll have a opportunity of growing at. As far as the loan book is concerned, we should be growing somewhere in the range of between 12%-14% overall. As far as the deposit is concerned, in the current financial year we have seen an increase in our deposit cost to the extent of about 16 basis points, and much of it has come in the last quarter. We have seen from last quarter till now an increase of about nine basis points. Whether to support this kind of a credit growth, whether we'll be required to go aggressive for the deposits? Perhaps no. The reason behind it is that we still have excess SLR to the extent of about INR 4 trillion.
We have increased our interest rate on the deposit essentially because we always perceive that deposit is a franchise, and to the extent possible we will take care of the interest of the depositor, provided our overall cost of resources don't go up much. We have some elbow room which is always available, so we try to calibrate the deposit interest rate within that elbow room only.
You don't see any risk to the margin to sustain-?
Sorry?
You don't see margin to, materialize-.
In fact, we still have some kind of a cushion available for our MCLR to go up, and we have capped it essentially to really take care that our margin should not undergo much of a loss.
Okay. Right, sir. Second question.
Can you bring your mic close to your lips?
Yeah.
Thank you.
Yeah. Second question on the. Sir, when you talking about operating metrics for the year, the 96 basis point ROA and the 3.58 net interest margin domestic side, the only metrics where we can see some improvement, because other metrics are top-notch and the best of in decades. The cost-to-income ratio operating efficiency basically.
Sorry, operating?
Operating efficiency.
See the as far as operating efficiency is concerned, the important component is cost-to-income ratio. Cost-to-income ratio also essentially we have seen What we have seen in this quarter, somewhere around 53% is our cost-to-income ratio. This is essentially because we have already started providing for the wage revision, which has fallen due in the month of November. INR 500 crore is the allocation which we are doing every month, INR 500 crore. Last five months we have already provided for INR 2,500 crore.
At the same time, if we ignore this particular increase and also whatever PLI which we'll be paying now, because as per the arrangement for 10% increase in operating profit, we are required to pay 10% of the wages to, as a PLI, and that is something which we'll be required to do, which will require some kind of provision worth about INR 600 odd crore. We have already provided for all those things. These are the expenses which will take place in the next financial year. We have got certain rigidities in our structure when it comes to cost, and part of the rigidity is coming from the fact that almost about 18%, 19% of our cost is on account of the retirement benefits.
That is something which is a function of what the how the interest rate moves. We have to make the actuarial provision, that is something which happens. Other than that, our effort and endeavor is to improve our income. With that in mind, what we have seen in the current financial year, if at all we improve our income and also we keep the NPAs in check, quality of assets remain the best, then perhaps we're in a position to address these challenges. Of course, other income continues to be major focus. We have already seen decent traction in the Forex income in this year. Also the cross-selling income has gone up by almost about 26%-27%.
I think going forward, these are the levers which we are working on, and it will certainly help us in improving our income. At this stage, when it is a normal year, perhaps even now also, if at all we ignore the impact of the additional provisions which we have made, we would have been somewhere around 50% in our cost-to-income ratio. I think, as a strategy, we are very clear in our mind that the rigidities we'll have to live with, and we'll have to only think in terms of improving our income. Cost we are trying to contain and control with the help of our digital engine. This year we have already underwritten more than INR 1 trillion worth of assets through the YONO. Naturally, eventually, when this number grows up, this will also help us in reducing our overall cost.
I think we are on a very, very clearly stated trajectory in terms of how should we address this cost-to-income ratio, that will be ensured. The other very important lever for a bank like us when it comes to efficiency is what matters is the ROA and the ROE. ROA, we have been exceeding 1% for now for last three quarters on a sustainable basis. This quarter, I think we had a ROA of 1.27%.
1.3.
1.23. 1.23. Hopefully, with the kind of focus which you have brought in, I'm sure there will be a point of time when our cost to income will also come down. Apart from this year we also had another event of MTM, which was about INR 7,000 crore. When we look at the yield movement, that is behind us. Even at the end of the financial year also, the impact of that remained. That is also having an impact on the cost. These are some of the factors which have an impact. There are some factors which are one-off. Those one-offs will go away, that will also have a bearing in terms of improving our cost income ratio.
Appreciate the insightful answers and congratulation to the SBI team for the extraordinary performance and execution. All the best for the sustaining the metrics of FY 23.
Thank you.
Thank you.
Thank you.
Compliments, sir, for the yet another good quarter and the whole year of the very good performance.
Thank you.
You have exceeded in most of the numbers with the net profit going beyond INR 50,000 crore, the operating profit of more than INR 83,000 crores. The bank is cushioned very much for any future eventuality in case anything slow down or something is there. Sir, I have got some numbers which I would like to just, we have the non-NPA provision of almost about INR 35,000 crore. Means our total provision held in the books, including everything, is INR 2,44,000 crore. If you include this INR 35,000, then INR 2,79,000 crore is the provisioning in the entire book if you take 100% of the AUCA provided for. Going forward, Sir, two things are there.
One is that there was some odd amount of some INR 2,500 something of a provision, extra provision for some corporate, other corporate related accounts, corporate accounts or something. Is there any specific account in mind for that or it was? This is just one. Secondly, with the ECL now going to come, I mean, the guidelines are getting finalized and everybody knows that it is going to come, how much have we prepared ourself for that? Is there any specific provision already has been made in this year, in this quarter for that? What is your assessment on that, on the ECL vis-a-vis the extra provisions which we are holding?
Well, of course, what you mentioned in terms of there is some number which is INR 2,600 odd crore. I would like to elaborate upon the process which we follow. There are certain accounts which may not really qualify to attract any provision, but in our own assessment, these are the accounts which can potentially be a threat going forward. As a matter of prudent practice in the bank, we have taken a call that we will ensure that our balance sheet stays protected and we start providing for them, and these provisions are done on ad hoc basis. As and when there is a eventuality which materializes, then these provisions are crystallized. The second question relating to ECL. Well, I think to my mind, till such time the RBI regulations are announced on this subject, it's more of a fiction.
To really address that fiction, let me assure to this whole house that we are very well prepared. The number which you are seeing now as our non-NPA provisions, we have done some back of the envelope calculation, which of course I cannot disclose till such time I go to my board, but my own assessment is that number is much below this number, and that too it will be spread over five years.
Yes.
Considering the fact that if at all it has to be spread over five years, and that is a kind of a number. In that context, I would also like to draw your attention to the fact that you would recall last year for family pension, we provided for more than INR 7,500 crore in one quarter.
Yes.
In single go.
In-
In single go.
In September in 2021.
Even this year also INR 7,000 crore.
Quarter one of this year, INR 7,400 crore.
No, no, I think.
No, no.
Last one.
No, no. That was-
No, no. MTM.
September, 2021.
Yes. Yes.
In financial year 2021, 2022.
Yeah, you're right.
That's why I not in touch.
INR 7,000 crore MTM also we absorbed in one quarter.
Yeah.
I only want to assure all of you that this is something which none of you should bother for, and we have got the ability to take care of that without any impact on the earnings of this bank. Let me tell you, I just want to assure all of you need not worry about that.
Thank you for that assurance, sir. I have got some couple of, just, data point and, just explanation on some P&L account, expenditure account.
Income and expenditure account. The miscellaneous income in this quarter has gone up to INR 4,187 crore, as against INR 1,214. The breakup of miscellaneous income has not been given. What is this INR 4,287 crore in this quarter comprises of? This is number one.
I think miscellaneous income would have one component of the.
Return of,
No, no, sir.
Recovery.
Limited.
I think we'll get you the numbers.
No, no. No issue, sir. Second is, sir, this employees' cost-
Maybe CFOs have good. Yeah.
Employee cost is understood.
Just one second. Yeah.
Sir.
I mean, can we get the breakup of that? How much is recovery?
We'll give you the breakdown.
Okay.
Keep quiet.
Second, sir.
Our here by the way, 12 auditors, haan, jo ki saare circles ko audit karte hai.
No, no. This is just for our information and analysis.
uske upar se ek consolidated auditor hai.
This is-
Ye jo hai, this is a very unique example in the banking system. One bank is being audited by more than 12 auditors.
No, no. This has nothing to do with that audit.
So I think-
Just for-
You should not have any doubt on the numbers which we give.
No, the doubt is not there at all. There's no question of any doubt. Sir, secondly, the employees' cost is understood. It's increased from INR 14,700 to INR 17,000 crore in this quarter. Even the overall operating expenses have also gone up by almost about INR 2,500 crore-INR 3,000 crore in this quarter. That is also, if there is any one-off thing in that, or it is going to be a trend in the subsequent quarters. This was my.
Next slide.
Next slide.
Dikhaye. Next slide dikhao.
Operating.
Yeah.
If you see the annual presentation.
Next to next. It's the next.
Yeah. I think I must have missed something.
Next to next slide, it gives the entire breakup of operating ex- overheads.
Yeah, these are the total expenses, sir. Third, sir, on the capital adequacy, okay, we are above the regulatory norms. Now when our deposit growth, I mean, the credit growth is still we are targeting 14%, 15% or 13.5%, 14.5%, 15%. The deposit is still, I think, 8% or so.
Deposit growth is about 9%.
Uh, nine, eight and a half to nine.
9%. I also mentioned that we have got excess SLR of INR 4 lakh crore, INR 4 trillion. Excess SLR of INR 4 trillion is something which we have.
Okay. money will be pulled out of.
Yeah.
Bhagwan ji reha hai.
Which we can always unwind.
Which will be met.
Which we can always unwind and support the loan book growth.
Thank you, sir, in this round.
Can we move to the next person please now?
Thank you. Yeah, yeah, sure. Thank you.
Mic this. Yeah, please.
As far as miscellaneous expenses is concerned, you can come to expense also they were asking, sir. Under the overheads, the biggest contributors are tech expense, insurance expense, and expense on GST. Sequentially, overheads have increased by 26.73%, which is the usual phenomenon in the last quarter because all the bills are paid or either accounted for. These are the reasons.
Yeah, please.
Sir, Ramesh Bhojwani from Mehta and Vakil.
Sorry?
Ramesh Bhojwani from Mehta and Vakil.
Can you bring the mic closer to your mouth please?
Yeah. First and foremost, not only for State Bank, this full year has been the best in the banking industry for all the banks. It comes once in a decade or even once in 15 years. Going back 15 years, we saw the worst scenario where gross NPAs hit 14.51. Today, your gross NPAs are 2.79. The cycle, economic cycle has turned. two thoughts come to my mind, as you also mentioned it in a subtle way, that going forward, this trend, this tempo will continue maybe at the same rate or little lesser. That is number one. The number two is, sir, two days back, wholesale price inflation came negative, -0.92 basis point, and the CPI is below 4.9.
I personally believe in June when RBI will come, I am seeing a cycle of rate reduction to start with 25 basis point, if not 50. Monsoon is expected to be 94%-102%. It's a reasonably average or a reasonably expected rainfall. Going forward, the rate cycle, the rate down cycle will start maybe 25 basis point this time and subsequently 50-50. In such a scenario, how do you see the whole banking metrics and parameters playing out?
See, I would say that what you mentioned was something which I always had in mind. That is one of the reasons when the rest of the market was only increasing the deposit interest rates-
Yeah
we did not increase the interest rates.
Excellent.
Isn't it? Then I knew that from this pole to this pole, let there be aberrations.
Yeah.
Let others face those aberrations. We are the largest bank. Let us stay cool.
Yeah.
We remain cool. This is something which we were.
This is like a foresight.
expecting to happen.
This is like a foresight which you are now seeing playing out.
This is something which we were very mindful, and we did not, You would have observed that we started increasing interest rates somewhere in November, December quarter because we were feeling that our depositors' interest is getting compromised. Those who have stayed with us all this while, we should take care of them. That is why you would have observed that I also mentioned that we increased the deposit rate in some buckets so that we should take care of our depositors' interest. Keeping in mind the overall cost of resources should not go up. That is something, that is what I also believe. If at all. If that happens, what you are saying, what we believe will turn out to be correct.
When it comes to interest rates, even if it comes down, we have not increased our interest rate to the hilt already.
Yeah.
We still have elbow room there, so we'll not be required to reduce our interest rate. The picture which you are seeing today will probably stay.
Wonderful. Brilliant. You have put it very beautifully.
That is what, my sense was.
Yeah.
Secondly, what you mentioned in terms of what we saw 15 years back.
Yeah.
It's a once in 15 years kind of a event which happens when the banking sector does well.
Yeah.
Yes, of course, banking sector, banks and banking sector, they are the institutions.
Yes.
Even if they face accidents.
Yeah.
they internalize those learnings.
Yes. Great resilience is there in the banking sector in India. Thanks to our RBI's structure-
Thanks to the regulator and thanks to the practices adopted-
Yes.
the risk management practices
Yes.
adopted by the banks.
We have SLR and CRR, which combined becomes 21%.
Yes.
In a country like U.S., they have only 4% CRR.
Yes.
What we are seeing today.
Yes.
we are not even seeing the tip or of an iceberg or a beginning of a storm.
Yeah. I think on this particular count, whatever learnings which were, which got incorporated, they have been very well practiced in the system.
Yes.
We have significantly strengthened our risk management practices over the years.
Yes.
We are in a position to ensure that the underwriting should be of excellent quality. Not only underwriting, even control follow-up should be of the highest order. Also the ecosystem has also got developed over the period of time.
Yes.
Today, there is a situation where currency is there. Today, there is a situation when IBC is in place, so borrowers are also responsible. Banks have also strengthened their risk management practices. Overall, this is nothing but a reflection of an economy's transition.
Yeah.
from a developing to the developed state.
Yes.
Thank you.
Absolutely. Thank you very much. All the best.
Next person please.
Hello? Excuse me. Sir, here at the last bench.
Yeah, please go ahead.
Hi. This is Vishal from UBS. Sir, two questions from my end. One on Xpress Credit, which is now almost 9-10% of our loan book and actually has grown at a very express rate as well. How do you derive comfort on this book? Also, what would be the lead indicators, you know, before you start worrying about this book? Right now the gross NPA is 0.6% only, but generally how do you track that book?
I think I have stated in the past analyst meets also. I will again repeat the same thing. When it comes to our Xpress Credit book, we give it only to our corporate salary package customers and also perhaps our experience is that it is, though it is unsecured, but it is better than the secured book. That is something which we have already demonstrated and the NPA ratios you have already seen. More than 83% of the customers are either employed in armed forces or government employees. Apart from that, more than 12% of the customers are employed in the reputed corporates with very low incidence of default. This is the kind of a book which we have.
95% of the book, if at all people are going to get their salaries, we will be in a position to recover the loans. I have not seen a single default from the defense forces in terms of payment of salary in my 38, 39 years of my service life, so I don't think it will ever happen in this country. I think we need not worry much about it.
Okay. No, thanks for that color. The other question which keeps, I'm sure, coming to you is capital.
Yeah.
Clearly you have increased the cushion. Now, what would trigger a capital raise from here?
Say, you are from UBS, no?
Yeah.
I would like to ask you a question. In an economy like ours, how many entities can raise INR 40,000 crore worth of equity in a year?
No, I think we can answer that. You can raise-
No.
You can raise.
No.
SBI can raise.
No, no. You answer my question. How many entities have raised INR 40,000 crore worth of equity in last five years' time?
SBI would have.
We have not raised. We have plowed back that profit, man.
Yes.
This is something which I've been saying for last six months plus. We have created value for our existing shareholders. Without diluting our return on equity. I think you people, if at all you are, you have invested into State Bank of India stock, you should be rather happy. When it comes to capital, unless and until we set that capital right. You know, it is not merely a number. You need to understand this. This 14.68% is something which is our capital adequacy ratio. Today with 14.68% capital adequacy ratio, I can support the loan book growth to the extent of INR 7.10 trillion without any impact.
That 7.10%, if at all I underwrite well, that will only give me an opportunity to plow back. I think this is a machinery which we should salute. If at all, we only ensure that we underwrite properly and there are no NPA provisions, there are no aging provisions, we need not look at market for raising further equity. We should only generate profit and plow it back.
Yes, I think that would be great, sir. I think we've not seen that in the last 15, 20 years.
No.
This is for the first time we are seeing that there's a drawback.
No. I think you might not have seen for last three years. We are very clearly focused on this, that we will only plowback profit and we will create value for our existing shareholders. Those who have stayed with us through the thick and thin, we will work for them, we will create value for them. That is one of the reasons why today when we went to the board, we have declared a dividend to the extent of 1,113%. 1,113%. Last year, we had declared a dividend of 770%. How many corporates are there in the country who have raised this kind of a dividend?
Thank you, sir.
Thank you.
All the best.
Yeah. Hi, sir.
Hi, sir.
This is-
Yes, sir. Again.
Yeah, please.
Jai Mundhra.
Gentleman, please.
Yeah.
Please.
Yeah. Jai Mundhra from ICICI Securities. A question on your fee income, sir. Maybe fourth quarter has a seasonality. If I look at full year, your core fee, ex-treasury, it is around 60 to 70 basis points of the assets, right? Which has been more or less stagnant. It is growing more or less in line with the loan growth, but it has been stagnant at that level, 60 to 70 basis points of the assets. As compared to the, let's say, other peers which are, you know, 1.5% to maybe 2% of assets, they clock that kind of a fee. We are very well placed on the OpEx to asset and of course, NII credit cost.
Wanted to understand, sir, do we have any internal target or aspirations to raise fee to asset ratio?
That context you have to. Of course, it was a very conscious call which we took in terms of waiving off our processing fee in the last quarter. These are all, you know, these are the competition related dynamics which will always be at play. Yes, of course, for a bank like us, with INR 32 trillion worth of asset book, loan processing will continue to be one of the major earning point when it comes to our fee income. The cross-selling is another area because we are leveraging our distribution channel and we have seen a growth of about more than almost 27% in the cross-selling income. On this, we have got a very clear target. In the medium term, we would like to make it a $1 billion plus.
Today, we have reached about INR 3,600 odd crores. We would like to see this number somewhere around INR 7,000-8,000 crore. The other major area is going to be the Forex income, which will, which we have already seen a growth of almost about 25%-26% in this year. These are the major levers of growth in fee income, loan processing, cross-selling, Forex. This will be the mainstay for our fee income going forward.
Right. Sir, question on your deposit cost, right? A, the deposit cost that we report in our presentation is, I believe, the cumulative number, right? Which is, let's say 1 Q, then first half, then 9 months, then full year. If possible.
It's a deposit cost at a point of time.
Correct.
Yeah.
I was looking at if you have the quarterly number, Because you are giving and of course.
Because we are giving.
Okay, sir. Just lastly, would it be safe to say that the card rates on deposit, right? If I look at SBI term deposit rates, they have not changed, barring very few five basis points here and there since Feb, right? Would it be safe to say that the card rates on TD have almost peaked? Thank you, sir.
Can we move to the next person? Yeah.
Hi, sir.
Who is this?
Sir.
Yeah, please go ahead.
At the back.
Yeah.
Sir, Nitin Aggarwal from Motilal Oswal. Sir, congratulations on a good year and reaching the milestone of INR 50,000 crore profit this year. One question on YONO wherein like, it is contributing 64% of the savings bank account that you are opening. How do you look at the cross-selling as a strategy for the accounts, the customers that you are gaining through this channel? If you can also share some color on the value of the balances, like in terms of the customer behavior over past couple of years, how are you seeing the progression in terms of the deposit balances in these accounts?
Well, as a strategy, when it comes to YONO, I think for a bank like us, we perceive YONO as a distribution channel. There are a set of customers who can perhaps be serviced only through this channel, and there are a set of customers who can be served through the physical channel only. Phygital is a reality for us, and we will continue to work on this. Well, when it comes to YONO, we have blended it with analytics also now, and by virtue of analytics, we're in a position to have a much better assessment of our customer behavior, customer profiling, and that helps us in going for the targeted marketing also. The question which you have asked in terms of value and all that, I would not have it right now with me.
Maybe I can share with you separately. Yes, of course, the intention is to, we are targeting a specific customer segment with the help of YONO. We are going ahead in terms of upgrading this essentially with that in mind, because the kind of customer base which is being targeted, they would like to experience frictionless banking, and that is something which we are offering through YONO.
Right. Sir, second question on the deposit rates. Apparently it looks like that the overall rate environment has peaked out. RBI has taken a pause for now, and inflation data points are coming quite benign. By when we can expect the interest rates, the deposit rates to start to moderate? Will you look from the RBI to change their stance and reverse the trajectory to take that step? Or that can be pretty much in advance prior to RBI, like, reducing the repo rates?
Moderation in deposit will be a function beyond the repo rate also. There are many banks in this country who are running into a credit deposit ratio of as high as 85%. If at all they have to remain relevant in the loan book side, then they'll have to continue to increase their deposit rates. I think, to my mind, repo rate is just one indicator which will be put to use to arrive at the deposit rate. Other than that, there would be. Again, it would be a function of the market in terms of borrowing. If at all they're increasing their interest rates and are underwriting loans, then I'm sure they will very soon start providing for it also.
It's a very fine balance which we have to keep in mind, while doing the real-life business in the banking sector.
Sure, sir. Thanks so much.
Yeah. We'll take one last question from gentleman, yeah. Can you bring the mic here? We have a lot of questions received through online webcast also. We'll take the last question.
Congratulations to team SBI. This is Sushil Jogi from IndusInd. Sir, do you expect that credit growth will be more front-ended in the first half of this year in view of election, infrastructure spend and various other factors?
I would say that it should be all through the year.
All through the year.
See, today, we have to be very mindful of the fact that, for the system as a whole, a significant portion of the credit growth is coming from the retail. The retail demand is, all season demand. The other piece is infrastructure-related spend, et cetera. I think the infrastructure project normally have got long gestation period. The sanctioning might happen at a point of time, but the availment might get spread over the period of time. I think to my mind, it should happen throughout the year.
These projects can carry a credit for two, three years because this will be big projects.
Yeah, yeah.
Okay. Second question, sir. You've spent a lot of...
Also, by the way, apart from the infrastructure spend, the sharper focus on renewable, sharper focus on solar, sharper focus on battery, EVs, et cetera, these are actually new growth levers in the economy.
Won't it be linked to your green deposit scheme which RBI is rolling out? Green deposit scheme.
See, irrespective of the green deposit or otherwise, actually speaking, it's a bit of a dilemma. Green deposit, whosoever put the green deposit, he expect better returns. Wherever you want to lend the green deposit, you have to give concessions. How to really strike out this balance? I think it will probably stabilize over a period of time, irrespective of the, I mean, color of the deposit, green or black. Whatever be the color of the deposit, the opportunities will be supported.
Sir, outlook on your foreign offices. Second thing, you've spent a lot of money on creating digital and physical infrastructure, which may increase your salaries at the individual level because it's performance-led and the kind of productivity they are going to lead. This may lead to a lot of income, but the cost may freeze from a outlook on a long-term point because some initiatives are visible, some are not spoken so far.
Yeah. Well, as far as the foreign offices are concerned, we are very mindful in terms of our NIMs in the foreign offices. That is the reason why we started slowing down our growth in the last quarter of this financial year, because there are a good number of opportunities which are available in the receivable finance. That is available at a very, very low margins. We sacrifice the top line for our profitability from the foreign office. That is the reason why you would have observed that our NIM in the international book has gone up from 1.32% odd to 1.69%, 1.70%. That is something which we are very clearly focused on. Foreign offices are more like our, I mean, corporate bank.
Being a corporate bank, majority of the offices are into the corporate lending only, but we are very mindful in terms of the quality. We participate in syndication. We are not as much into bilateral credit. We are there for ECB supporting large corporates from India. This is the broad components of our loan book in the foreign offices. Our effort is to now to move up from the lead syndicator also, to assume the status of lead syndicator so that we should be able to earn the fee income as well. In some geographies, we have already started doing it, but increasingly we would like to see it happening across.
Your second question relating to branch network of 22,400 and with the increase in salary, we might have a situation of the cost going up. You would have observed that the fee income which has now we are seeing about 26% odd kind of a growth. Our effort is that our employees who are posted in the branches, we should use them for high-skill job, whether it is marketing or it is processing. In the rural segment, we have started getting into a high-value agri loan book, and for that we need the processing capacities. We'll be utilizing our employee base. We have already put in place about 47 CPCs for agri.
Yes.
47 CPCs we have already-
Forty-five.
Huh?
Forty-five.
45 CPCs have already started functioning in the last second half of this financial year. Going forward, we'll be doing that. We'll be doing quality business. We'll be using our high-cost resources for underwriting quality business. We'll be using them for marketing, cross-selling. 26% growth, which you have seen, is not the ultimate. As I mentioned that we have got a very clear target for having a $1 billion earning from the fee income, which means that the distribution of our subsidies product from these upcountry locations where the penetration level is very low. We are leveraging the brand value of State Bank of India.
We are leveraging the branch network of State Bank of India. We are ensuring that it should be a most reliable product which we should sell from those counters, those people who are being exposed to this product for the first time. That is something which our effort is. We have already seen the result. Going forward, it will only multiply.
What can be our digital spend on a sustainable basis?
I have not really applied myself on this job, but we are ensuring that We actually aim to become a digital bank of choice within State Bank of India. Even before the central bank comes out with its regulation for the digital bank, we want to be in readiness.
Thank you for answering all my questions. All the best.
Thank you, sir.
Thank you. Sir, we have received a few questions from the online delegates.
Okay. I have got some questions which I received online, I think I'll just take few minutes to answer all of them. The first question is please provide guidance on NIMs credit growth and deposit growth in financial year 2024. I've already answered this question. The next question is from Sneha Ganatra, any plans to list subsidiary? As of now, there is no such plan. Another one from Velu Gopalakrishnan Kannan, V.G. Kannan, would you be considering increasing interest rate on savings bank deposit, which has been rather stagnant? If so, will it not affect your NIM? We don't have any plan to raise the savings bank rate for the time being. Subir Samaddar. Overall overseas lending portfolio, it is INR 4,92,440 crore, it has witnessed a rupee term growth of 19.55%.
In dollar terms, it has grown by about 10%. Manish Dhariwal, kindly share the reasons for dip in corporate loan growth. No dip in corporate loan growth. Corporate loan has actually grown at more than 12%. Akash Agarwal, can I know the impact of wage revision in total employee cost? Total employee costs INR 57,292 in 2023. Wage revision is about INR 2,490 crore in financial year 2023, so it is 4.35% of the employee cost. Employee cost went up a lot this quarter driven by provisions. Can you break up the provisions? Wage revision provisions are INR 498 crore, which has gone up. Pension and other retirement benefit, it has gone up by INR 1,359 crore, essentially on account of the yield movements.
Vishal from Rediffmail, he has sent a question. What is the trend of NII YOY, and how are you looking for growth in first six months of the financial 2023/2024 in terms of NII? NII growth in the current year, I mean, in the financial 2023 was 19.99% and 29.47% in quarter four of financial 2023 over quarter four of financial 2022. Yeah. Please.
Thank you, sir.
Now I can take the.
I trust all the questions have been addressed, and we'll be happy to respond to other questions in offline mode, and people can reach out to our-.
No, let us hear if at all somebody has any question, let us.
Can you bring the mic here, please?
Yes.
Sir, in international book geographically, INR 492,000 crore, we have major. almost about 26%-27% in U.S. and then UK. and some of the other European countries and Japan and other places. With this, whatever is happening globally outside and our lot of capital has been invested there, and the movement in the rupee and dollar, of course, for some time it is stable. How do you see that going forward? As you already said that you are tempering the further growth in the book.
No, let me. I think.
But-
It should be seen in a very different perspective.
Yes.
I've got your question. See, the point is that today India has already become the fifth largest economy in the globe. Our exports have gone to the extent of $770 billion. Very clear focus in terms of manufacturing and re-exporting from the country. Similarly, we have got Apple coming into the country. They will also be exporting. We've got Foxconn, Apple, all the leading manufacturers are looking at India. Eventually, the way I look at the scenario is that we have got the potential to be, if not China, at least Taiwan. To that extent, there's going to be a huge manufacturing export which is should happen from this country. There's a very clear focus from the government, and the PLI is something which is intended with that in mind.
Eventually, when that kind of a situation comes, we have to have our global presence also. We have been calibrating our business strategies from time to time, depending upon the situation which are obtaining in those geographies. We have been a long-term player in the international market, and there is no other bank which is long-term player in international market, let me tell you. It is more of a strategic move. We have completed 101 years in UK. We have completed 50 years in New York. Maldives also we have completed how many? 50 years. Colombo today perhaps, maybe we would be surprised, more than 100, 150 years we have completed in Colombo. This is the only bank which has got deep roots in the international geographies.
As and when the opportunity will arise, we are the one who will be in a position to take benefit of this. Let me also bring back your memory to the year 2020, 2021. That was a point of time when there was no taker for deposit in this banking system of the country. We continued to mobilize the deposit, and then we went for the rupee-dollar swap. We created factoring as a product in the international market, and we made money on that. When the lending opportunities came up in India, we unwound those swaps, we brought that money back. When all others were clamoring for deposit, we were only unwinding our swaps. Even if there was a loss on the swap, still the cost was not as high.
I think these are the strategic moves which we always make to take advantage of the situation, and I always believe that the bank more than 216 years old should not look at one year, two or five years. It should look at 20 years, 25 years and 50 years hence. By that time, people will take time to really build up the organizations. We have already created. I think this is what our strategy is.
Thank you.
Yeah, please. Yeah.
Rahul Maheshwari from Ambit Asset Management.
Which one?
Ambit Asset Management.
Okay. Yeah.
Just as you in initial remarks said that the growth you are expecting 12%-14%, can we expect whatever the metrics or the engines which you have built, Sir, my question is, can the gap between the private sector banks, few private sector bank and the PSU, which was very high in the initial years in the past, can that be bridged or even SBI's type can grow much faster than the private sector bank? Looking at the two factors, one-
I think last year the loan book for the system as a whole has grown as 15%, we grew at 15.99%. People talk about elephant dancing. Elephant is racing. Racing faster than the system. It's not only dancing. I think the kind of potential which we have.
just second-
You will have to watch.
Just second thing, as you said, we know a few of the banks only participate for the large, corporates and the industrials loans which are there, as SBI is one of the primer. This time, if the cycle builds for the CapEx, what are the internal metrics that will be taken care of that we don't see the past cycle, which in the GNPA that had taken place?
We have significantly strengthened our risk management. We are very mindful. We actually prescribe our risk limits for each industry. We draw upon our learnings from the industry. What are the mitigants which are required to be put in place, we ensure that they're already in place. When it comes to the credit appraisal in apart from the appraisal in the committees, we have got the non-business heads who are there to independently appraise the proposals. I think these are enough mitigants at the as of now. Going forward, what else will be the need of the system, even that will be taken care of.
just last, what is the projects in pipeline?
Also, in the past, we were not having analytics. Today, we are using analytics in a very big way to build up our risk models.
What are the projects in pipeline? The large projects, any?
I would not like to name any of them, any one of them.
No, no. The quantum, can you give that? What is.
Almost INR 1.7 trillion worth of projects are work in process.
Okay, cool.
Thank you. We'll take one last question from the lady there, yeah.
Right. Thank you. I just wanted to understand what would be our exposure to the NBFC sector.
Sorry? Yeah.
Our exposure to the NBFC sector this year and last year.
NBFC sector exposure is INR 3.73 trillion is our NBFC exposure. That exposure is essentially to very well-rated corporates. These NBFCs, which are either into the public sector or supported by the leading corporate groups. 60% of the
Sorry, sir. The exposure is INR 3.57.
Sorry?
3.57.
INR 3.57. Yeah. INR 3.57 trillion.
What would it be last year?
How much was it last year?
Hmm.
It has seen a growth of about 31%.
2.71. Right.
Yeah.
Sir, lastly, on the slippages ratio, I mean, this is for the industry also, right?
Sorry?
The slippage ratio.
Uh-huh.
This is for the industry also. Will all the PSU banks have seen a low slippage ratio? Can this continue the sustainability?
Okay. Okay. Slippages ratio, are they sustainable? I think partly it is macro, but a significant part would be the underwriting and also the control and follow.
Thank you, sir.
Thank you. We'll be happy to respond to these questions in offline mode now. Let me end this evening with thanking the chairman, sir, the top management team, the analysts, ladies and gentlemen. To round off this evening, we request you to join us for the high tea which is arranged just outside the hall. Thank you very much, everyone.
Thank you very much. Thanks to all the participants. Thank you.