So good evening once again, and namaste, ladies and gentlemen. My name is Sanjay Kapoor, and I am the General Manager, Performance Planning and Review Department of the bank. On the occasion of the declaration of the results of Q1 FY24 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 this stage our Chairman, Shri Dinesh Khara, at the center, our Managing Director, International Banking, Global Markets, and Technology, Shri CS Setty, our Managing Director, Retail Business and Operations, Shri Alok Kumar Choudhary, our Deputy Managing Director, Finance, Srimati 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 Chief General Managers of different verticals and business groups. To carry forward the proceedings, I request our Chairman, sir, to give a brief summary of the bank's Q1 FY 2024 performance and the strategic initiatives undertaken. We shall thereafter straightaway go to the questions and answer session. However, 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. Now, I would request Chairman, sir, to make his opening remarks.
Chairman, sir, please.
Thank you. Very good evening, ladies and gentlemen. Thank you for joining the analyst meet, post the announcement of the first quarter result of financial year 2024. In July 2023, IMF upwardly revised the 2023 global forecast to 3% from 2.8% in April. Immediate concerns about the financial stability have been subsided owing to the resolution of the U.S. debt ceiling standoff and strong action by authorities to contain turbulence in U.S. and Swiss banking. The recent downgrade of the U.S. by Fitch over concerns of country's finances and debt burden could trigger bouts of financial volatility, with risk of reactions from the market. Against this backdrop, Indian economy continues to exhibit stronger than expected growth momentum, with robust domestic investment providing the necessary support amidst weaker external sector dynamics.
Looking ahead, real GDP growth is expected at 6.5% in financial year 2024, aided by the government's thrust on infrastructure spending, traction in domestic demand, a revival in corporate investments, and healthy bank credit. Headwinds from prolonged geopolitical tensions and slowing external demand are the key risks to the outlook. On the banking front, credit growth has continued to grow in double digits and became broad-based across sectors. During the first quarter of the financial year 2023-2024, all scheduled commercial banks' bank credit grew by almost 16% Y-o-Y, and aggregate deposit grew at 12.9%. As demand for credit continues, we expect credit and deposit may grow up by 14%-15% in financial year 2024.
In the above economic backdrop, let me now highlight a few of the key aspects of the bank's performance in financial year 2024, Q1 of the financial year 2024. I'm pleased to announce that for the fourth quarter and running, we have posted our highest ever quarterly profit of INR 16,884 crore. Net profit for the first quarter increased by 178.25% Y-o-Y, while operating profit at INR 25,297 crore increased by 98.37%. ROA of the bank for the first quarter improved by 74 basis points on Y-o-Y basis to 1.22%, and ROE improved by 1,433 basis points to 24.42%. Here also, I would like to mention that first quarter is very unique in its character.
In the first quarter, one, we don't have the advantage of the carry forward of the recoveries of the previous quarter. Second, in the first quarter, In the last quarter of any, any financial year, there are invariably various one-offs. To that extent, that also inflate the performance in the last quarter of any financial year. That's why we are comparing our performance on a Y-o-Y basis in the first quarter. I thought I'll just put across the viewpoint which we have in this context. Most of the core profitability metrics have also improved sequentially. Net interest income for quarter one, financial year 2024, increased by 24.71% Y-o-Y, on the back of the improvement in yields and continuing credit offtake.
Domestic NIM, at 3.47%, has also improved by 24 basis point Y-o-Y. Non-interest income has increased by 421.73%, mainly due to the MTM write-back, as well as gains booked in derivative income. Our core income streams, fee-based income are steady and have improved by almost 4%. Operating expenses increased by 23.68% Y-o-Y, as we have started building provisions for the wage revision, which have fallen due from November 2022. On the business front, the credit growth has been robust across all segment. Domestic advances grew by 15.08% Y-o-Y, headlined by retail personal advances, which grew by 16.46% Y-o-Y, and Corporate segment, which grew by 12.38% Y-o-Y. SME and Agri segment also posted a healthy growth in the loan book.
It grew at 18.27% and 14.84%, respectively. Domestic deposit grew at almost 12%, driven by the growth in current account deposits and term deposits. Our foreign offices have continued to perform well, with good growth in advances as well as in deposit. However, we have generally maintained some kind of pause in the international book for the simple reason that international economies, global economies, are facing some kind of challenges, and we would like to build up our book depending upon our risk appetite in those economies. With regard to asset quality, our gross NPA ratio has come down by 115 basis points Y-o-Y and stands at 2.76%, and continues to be at its lowest level in more than 10 years.
Our net NPA ratio has also declined by 29 basis point and stands at 0.71%. Slippage ratio has improved by 44 basis point Y-o-Y and stands at 0.94%. The consistently improving asset quality is also reflected in our credit cost, which stands at 32 basis point and has improved by 29 basis point Y-o-Y . We have a well-provided stress book, with PCR showing improvement by 23 basis point Y-o-Y at 74.82%. PCR, including AUCA, improved by 127 basis point Y-o-Y and stands at 91.41%.
Here also, I would like to add that when it comes to our loan book being healthy in quality, we are not required to provide for, because for the simple reason, one, the quality of the book, and secondly, we don't have the aging provisions which we need to provide for. On the restructuring front, our total exposure under COVID Resolution Plan 1 and 2 stands at INR 22,666 crore as at the end of the first quarter of the financial year 2024. The restructuring book has behaved well, with about 11% of the current exposure falling under SMA-1 and SMA-2 category. We are holding sufficient additional provision against the restructured accounts.
If you recall, we have been maintaining provision to the extent of about 30% as compared to 5% and 10% requirement prescribed by the RBI for such book. The bank remains well-capitalized, and we have sufficient headroom to take care of the normal business growth. Our capital adequacy ratio has improved by about 113 basis points Y-o-Y and stands at 14.56%. CET1 ratio has improved by 47 basis points to 10.19%, and both the ratios are well above the regulatory requirement. Here, and I would like to add, with the, with the current capital adequacy, with the current capital, we can support the loan book growth to the extent of another additional INR 7 trillion. Digital continues to be an important customer acquisition engine for the bank across asset as well as liability products.
During the quarter, we have sourced 63% of savings bank account and 35% of retail asset accounts digitally through YONO. We have recently launched YONO for Every Indian, in which customers of other bank can now access and experience the seamless UPI journey on the 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 leaders in their respective segments. We'll continue to nurture these subsidiaries and see them creating value for their own shareholders, as well as the shareholders of SBI. To conclude, I would like to thank all of you for your continued 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 time. I wish everyone here the best of health and happiness. My team and I are now open for taking your questions. Thank you.
Thank you, Chairman, sir, for the presentation. We now invite questions from the audience. 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. Kindly restrict your questions to the financial results only, and no questions be asked about specific accounts, please. In case you have additional questions, the same can be asked at the end. We now proceed with the questions and answer session.
Yes, sir. I'm Ashok Ajmera, sir, Chairman, Ajcon Global. Sir, at the outset, compliments to you for the highest ever profit and the fourth consecutive quarter that every time we are making the higher and higher. My other compliments is on that we are sitting on a non-NPA provision of INR 34,955 crore, which is almost about 152% of your entire net NPA, which is keeping the well, I mean, bank well cushioned. Now, having said that, sir, couple of questions, rather your guidance on the number one is on the credit growth. Of course, you said that some of the other parameters, you know, the figures should not be compared on quarter-on-quarter, but, you know, a year-back figure become obsolete, especially in the financial sector.
We will definitely compare with the last quarter only. If you look at it, that 0.25% and or 1.25% growth on the credit, and global credit has gone down rather, about almost by about INR 8,000-9,000 crore, I mean, international. Our own domestic book also has grown by, I think, around 1.4% or 1.45%. Going forward with this kind of 14%-15% guidance, are we fully like having the sanctions and the proposals in the pipeline, that in next three quarters we run 4.5%-5% every quarter, the loan book? This is my first question, sir.
Should I answer? Yeah.
Yes, sir. I will ask second.
Okay, fine. Okay, well, what you mentioned in terms of, you should compare the credit growth on a sequential as compared to year-on-year. You know, when it comes to the economy, why there's a busy season and a lean season? There are certain reasons, because our economy has got certain characteristics. Likewise, I stick to my argument that first quarter we should compare only on a quarter-on-quarter basis. Not on a quarter-on-quarter, but on a year-on-year basis. The kind of situation we witness in the first quarter of any financial year are very different as compared to the last quarter.
Now, your second question, when you are comparing the growth in advances on a quarter-on-quarter basis, certainly, I, my, my submission to you would be that, there are reasons why we are not doing it, and it is born out of what we have seen over the years. Now, what you mentioned in terms of the, our ability to grow. Retail personal, we have grown at 17% compounded annual growth rate for more than 3 years, and we don't see any reason that we'll not be in a position to grow at this pace going forward also. Why I'm saying that is, that because we are already seeing that, when it comes to home loan sanctions, they are already sanctions are up to the extent of 15%. The other very important component of the economy is the corporate sector.
The growth rate, which is, and we searched for the economy, is 6.5%, and it is riding on the basic few critical sectors which are going to lead this growth. It starts from infrastructure, where perhaps when it comes to the financial closers, we don't see any competition. When it comes to core sectors, additional capacities being created, there also for the financial closer, we are the one who are the preferred banker. When it comes to our ability to underwrite, we feel quite confident, and that is, I would like to add that even as on date, we have got our pipeline to the tune of about INR 3.5 trillion, out of which about INR 1.2 trillion are already sanctioned, and another INR 2.3 trillion are in pipeline. This is about the corporate sector.
Corporate sector, when it takes a lead, it shows up into all other sectors of the economy. The more prominent among them are the SME and the retail. Agriculture sector is a function of the weather gods, and fortunately, the rain, if at all we look at the long-term average for the rainfall, it seems to be better than previous years. Hopefully, we'll get to see a decent traction in the rural economy also, which will give us enough opportunity to support that growth. This is the broader economy. The next comes our ability to respond to such challenges. For last couple of years, we have been very mindful in terms of strengthening our structures so that we are in a position to deliver. To address the retail, last year, we added almost about 140 RACPCs. Almost about 140 RACPCs we have already added.
Similarly, for SME, we have significantly built the muscles of the bank for addressing the SME, and that is something which you have already seen. Now, we are growing. Even this quarter, Y-o-Y, we have grown at 16% in SME. Rural, again, we have grown to the extent of about 12%-13%. Many of you who are, who are tracking the bank for many years would have seen that rural, we were almost stagnant. When we are growing there, we are very, very mindful about the quality of the book which we are underwriting, and that is the reason why from somewhere around 15% of NPA in the rural book, it has come down to 11%, and we are very clearly targeting this to be in the single digit in this financial year.
I think our focus is when it comes to growth, we are very mindful that the growth should be in sync with our risk appetite, and growth should not be reckless growth. That is something which I would like to add.
Sir, when you referred here of the competition, now with this grand merger of HDFC and HDFC Bank, which has become a behemoth now, and I think the credit book is also almost of our size or maybe I have not just compared.
I don't think so. I think you are not updated.
Oh, not updated. Okay.
Yeah.
Now that big bank now again, is a private sector coming in, from the competition point of view, or, is there any particular working, any action plan to take, take on them, with this changed scenario?
They are focusing on the physical branch expansion. We are focusing on digital as well as physical, as well as other channels. As I mentioned that we are very mindful in terms of strengthening our structures on ground, because, you know, when it comes to merger, we have also handled the merger of eight banks.
It's not merely adding the balance sheets. It is ensuring the integration of the culture and also ensuring that the control structure is effective enough. That is what my learning is from the mergers. Yes, of course, as a leading bank, we have to be very mindful of what the competition is doing, and we are ensuring that we should stay ahead of the curve. Yeah, please.
Sir-
Yeah.
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Mic, sir.
Yeah.
Bank is basically people, right? Customers and the people who serve the customers. If you see a State Bank of India, what is the number of people they leave us every year? Hardly maybe 1,000 people will be leaving us, right. What is the attrition in the market? The people who are going to serve, the marketing people, the servicing people, I don't want to quote the numbers, right? If you can find that there is a behemoth, you used the word behemoth, I think that word suits us more. With this, that people who are to serve the customers, people who are to market, they're all a solid block, not leaving the State. You are comparing with somebody or people where the main people who are going to serve themselves are at a very high rate of churn.
That is one. Number two, the number of customers we acquire as a bank. The number of customers we acquire is much more than what anybody else acquires, and the number of millennials who the accounts are open, that is also more than 50% new customers are millennials, up to the age of 30. Both the sides, people who serve, they're a solid block, totally committed, and the number of people who repose faith in us, they are also quite large in number. From that perspective, I don't think that there should be any challenge.
Yes, the point well taken, sir. Just one-
We-
On the AUCA. Just one, one distinction. Sir, you have given the split of the AUCA numbers: 10 year and old, INR 5,300 crore, 5 year and old, INR 68,481 crore, and less than 5 years, INR 102,471 crore. Just a ballpark, just a, like these are all 100% provided for accounts. What, as per your analysis, since you have given a detailed analysis of the breakup of the aging-wise, what can we roughly take as a recovery, maybe in next coming 2, 3 years, 5 years out of this INR 176,000 crore, sir?
The recovery in AUCA is a function of the available security. There cannot be any ballpark figure for which we can ascribe for the recovery in AUCA. It is actually case-to-case basis, and that is why our stress assets resolution group is now actually addressing how to make the maximum possible recovery from these accounts.
Any assessment of the because when this analysis is done, the security also must have been like-
No, that's what I'm saying, that it cannot be aggregated.
Oh.
It would be, it would be more at a disaggregated level. The approach will depend upon the upon the security, which is available in each of the account.
Thank you.
Thank you.
Thank you very much.
We'll move to the next one. Yeah, please. Yeah.
Sir, this is Anand Dama from Emkay Global. My question was on margins. This quarter, if you look at on a quarter-on-quarter basis, we have seen a 27 basis point contraction in terms of margins.
Quarter on quarter, let me just put across when it comes to NIM, what will you do for the one-offs which you get on the last quarter?
Sir, agreed.
Mm.
If you take out the one-offs-
Mm.
... still we have about 50 odd basis point contraction that is there.
See, again, again, you have to, I think you have to understand how the increase in interest rate will show up in the deposits, or the increase in advances will show up in that one, in the loan book. There's always a trajectory which is followed. I think it is not a linear way of really looking at the things. Anyhow, you please carry on with your question.
Coming to your stuff, you know, Y-o-Y basis, if I look at it on a full year basis, where do we settle in terms of margins when we?
I expect that we should be having 3.47, would be our effort to retain this kind of a NIM.
Okay. Secondly, on your slide number 15, basically the margins that you show over there, that I believe are like cumulative margins. So there is a difference between what you show on slide number 22 and what you show on the slide number 15. Particularly in the first quarter, even if you look at the cumulative margins, should not be different than what you show on the slide number 22, right? Why is this a wide difference between what you show on slide number 15 and the slide number 22?
What is the difference? It is slide number 22, also 3.47 is the NIM for domestic, and, when it comes to-
If you look at the whole bank, sir.
3.33, and 3.33 is there also.
Last quarter was 3.37 over there.
The 3.37? I really don't remember this one. 3.60. 3.60, 3.84. Just go reconcile it.
Sure.
Yeah.
Just secondly, was on the PSLC fees. We saw in case of Canara Bank, there was huge fees which actually came from PSLC. There are other banks also who are exploring the PSLC fees. Any opportunity that we have in terms of-
Actually, our, our corporate book is, growth is we have got a corporate book which is all, would be as, as high as about INR 15 trillion or so. On a INR 15 trillion, we have to actually depend upon purchasing PSLCs. We don't have a situation like that. They have some earnings, but if at all they will grow on the corporate side, maybe they may not have those opportunities going forward. But yes, of course, our considering our book, which is about INR 33 crore, INR 33 trillion, out of this INR 33 trillion, about INR 15 crore would be the corporate book, and about INR 12 crore would be the retail book. Our as rural is somewhere around INR 2.6, and SME is somewhere around INR 3.7.
That is a kind of a composition which we have. In any case, we have to... I mean, if at all, we grow at about 14% or so for our corporate book, then we have to look at, we, we may not have opportunity for organically growing in the PSLCs. Priority sector will have to look at PSLCs only.
Okay. Thank you, sir.
Next-
Alternatively, till there's a change in the definition of the priority sector. Today, it is also being talked about, can the solar be part of the priority sector? We have over 40,000 book, which we have done for the renewable energy itself, ideally speaking, it actually qualifies for the priority sector. Hopefully, there could be some consideration on that.
Hi, Siddhant Dand from Goodwill. We are seeing a lot of products come on the savings account side, CASA side, the SA side, where, you know, they're disrupting the market when, you know, like Kotak came out with their ActivMoney, IDFC and other small private sector banks are giving much higher rate of interest. At what point, 2 years, 5 years, do you think that the bridge between the FD and the savings account will come closer, even for public sector banks? Do you think that will happen? Secondly, you know, the interest rates in PSU banks, and even for current account, which is at zero, is kind of hitting when inflation is higher. Are you seeing a gradual drop in CASA over the years? Will you see that?
Well, CASA, the behavior, if at all, you will look at the CASA pre-pandemic and during pandemic and post-pandemic, these are the three stages in which CASA should be looked at. Not in this slide, I'm just describing you otherwise. Pre-pandemic, the CASA used to be somewhere around 40% in the system. During pandemic, it went up to 44%. Post-pandemic, it is around 42%, 43%. This is the macro level picture of CASA. What you talked about, the CASA and most of the SA for various public sector, private sector banks like Kotak, it may be termed as CASA, but I would say that SA is actually term deposit. From the cost point of view, that SA is actually term deposit. It should not be looked at it.
CASA, yes, of course, we should be, we have to be very, very cognizant of the CASA component of various private sector banks. Therein, I would like to say that, the current account market, as such, has undergone a change. Earlier, significant portion of the current account market, almost 55% of the total current account market, used to be government accounts. They started SNA, CNA, now they are thinking in terms of just in time, which very clearly means that the float which used to be available in current account in the past will not, will no more be available. Having recognized this reality, what we started doing for about, last about 6+ months, we have started focusing on the current account from trade, commerce, industry, trust, et cetera, et cetera...
I'm happy to share with you that between March, up to March, we were growing faster than any other bank. June, we were growing faster. Even July, we are growing faster. We have- it's not that it's in the natural course, we have made certain efforts, we have tweaked our strategies, and that is something which is helping us. Our effort is going to be the CASA in the real sense of the word, lowest possible cost of resource. I'm quite confident that the initiatives which we have taken will further enhance our, and rather, strengthen our position as far as CASA is concerned. Having said that, macro cannot be ignored. Also the other reality to be seen is, during inflation, invariably, we have seen that there's a trend to the term deposit. Money moves to the term deposit.
Whatever increase in cost of deposit we have seen in this quarter, is essentially because last year, in the second half of the previous year, in certain buckets, we had increased the interest rate. Whenever the renewals of those term deposits have happened, all that has been factored in already. Unfortunately, last policy also, there was no increase in the policy rates. We expect with the kind of inflation trends which are seen, hopefully, there should not be any increase in the interest rates from the... as far as the policy is concerned. If at all that is the situation, then hopefully, as far as cost of deposits are concerned, it should stable around this level for some, some time to come.
My second question is, you know, cross-sales number are improving at around 17%, but for a bank of our size and the subsidiaries we have, it should ideally be growing higher. Have we considered, like, open architecture instead of closed architecture when it comes to cross-selling?
You know, typically speaking, we have to be very mindful of the kind of customers who walks into our branches. When we offer the product, we have to keep in mind what they expect. Our assessment of the ground level situation is, customers who walk into State Bank of India's counters, they are looking at the product from the State Bank Group. They're not looking at the product from any other entity. That's this is the strategy which we are following. Hopefully, this number in the first quarter is not always all that great. We always know that insurance gets sold only in the last quarter of the financial year, and it will... This is again, it's not a linear trend which you will get to see. Quarter on quarter, it will keep on changing.
Last year, we had seen growth about 30%, and I'm quite confident that this year also, the growth will not be less than 30%, it will be rather more.
Perfect. Thank you.
Next person, please. Done.
Yeah. Hi, sir. Samir from JM Financial. Thanks for the opportunity. If I see other lines of fee income, on a Y-o-Y basis, we kind of see a bit of sluggishness, with respect to loan processing charges, et cetera. How do you think the fee income lines move through the year?
Loan processing charges, of course, when we are looking at the quality book to be underwritten, the market dynamics which really force us to do that, not that it is going to be there forever. Yes, of course, it was. I would say that it's more of a temporary situation.
Okay. Just secondly, if you could provide the-
Also there was, I think last year, we had some one-offs also, which was in, in the first quarter itself, so that is the other reason why it is looking flat.
If you could provide the slippage breakup across segments.
Slippage breakup across segments? I'll just provide it to you. Just 1 sec. Yeah. Our slippages were to the tune of about INR 7,659 crore. Retail personal was about INR 2,400 crore, agri was INR 2,300 crore, SME was INR 2,400 crore. Out of this, we have already recovered, pulled back about INR 700 crore in retail personal, in agri about INR 300 crore, and INR 600 crore in SME.
The recoveries are in 2Q , basically, or in the same quarter?
Yeah. Recoveries have happened in the month of July.
Okay. Yeah. Thank you.
This is what I wanted to say, because, you know, when we reckon slippages, we reckon slippages at a point of time. The fact of the matter is that SMA 0-1-2, that also, our teams on ground keeps on recovering, and at times, it is attributed to some kind of a cash flow mismatch with these entities. We, we do get, we do get decent recoveries out of SMEs.
Thank you. Thank you, sir, and all the best.
Thank you.
Next one?
Yeah. Kunal over here from Citi. Particularly with respect to the growth in couple of sub-segments, one is in terms of the Xpress Credit. The sequential growth is lower. Now, we are getting towards almost like 20% year-on-year growth compared to a much higher run rate. What would be maybe any, any early delinquencies which we are seeing, and your view in terms of RBI indicating to go a bit conservative on the-
Nothing like that.
... concept you are trending.
I'm actually. I thought that, let me jump into this issue right away. When it comes to Xpress Credit, you would have seen the quality is perhaps as good as it used to be in the past. We have no challenge. I will repeat once again that 94% of our Xpress Credit is given to the salary earners, and they are the salary earners who are working with either state government, central government, central forces, paramilitary forces, public sector enterprises. Only about 4% or 5% is with the corporates. They are well-rated large corporates. We don't experience any challenge in Xpress Credit.
Whatever little GNPA you are seeing here is also essentially attributed to the fact that when people are not getting their salaries in, in some of the state governments, that is the reason why it is showing up like this. Apart from that, those who unfortunately, those who are no more, they are the ones who are, who are contributing to this kind of a NP. Otherwise, there is nothing like stickiness in this particular portfolio. The other question, which you had about growth, is not tapering to about 25%, 26%. There are reasons, you know, when we look at the leverage on the individual balance sheet in the economy, that is somewhere around 25%, 26%.
We feel that we will try to keep it at this level, and maybe during festive season, we will get to see some kind of blip in this.
Sure. Secondly, on corporate lending, so we have one of the lowest MCLR, but still, when we compare, we have always highlighted in terms of the-
Unfortunately, people are quoting for term loan, they are quoting T-bill rates.
Yeah.
I don't want to venture into such kind of, luxuries, if I may say so. With more so when people... If at all, people don't see interest rate risk, and if I see interest rate risk, I would rather be cautious than to be sorry.
Okay. In terms of excess SLR, now, what is the?
We have got excess SLR to the tune of about INR 4 trillion.
INR 4 trillion. It's the similar number like last year.
Yeah.
Okay. Yes. The MCLR repricing, we are not seeing any benefit coming into the yields. Was there any impact of interest reverses?
It has come, yield on advances have gone up, it is essentially on account of that.
Sequentially, when we look at it, yields have.
Sequentially, of course, you know, what will happen is that MCLR repricing will show up only when the renewal of the accounts happen. It will not be sequential.
When should we ideally see that happening?
You know.
Would it be Q2, Q3? How should?
8.10- 8. 78 .
From 8.10 - 8.78, it has already come in, the MCLR of the-
Even more.
No, 8.1 was full year. Again, if we go to the fourth year, it was 8.8.
Yeah. It has to be seen in the full year basis. It cannot be-
You see year-on-year.
Okay.
Again, you see year-on-year only this, yeah.
Okay. Got it. Yeah. Thank you.
Next person, please.
Hello.
Yeah.
Yeah. Can you hear me? Yeah. This is Rati Pandit from Nirmal Bang Institutional Equities. Thanks for the opportunity. We have seen that your international NIMS have gone up significantly, and I also looked at the slide where you have given the split of the business and other parameters. Just if you could elaborate more little bit on the business outlook over there and the margins.
International, we are very cautious.
Okay.
One, of course, because of the scenario in the global economies.
Mm-hmm.
One of the other reason is that, when we look at our book, international book, the India-linked loan, which are, which are seen lower, is essentially on account of the fact that, we had some oil companies had, these revolving lines, so they have not availed, that is one of the reasons. We are very, very mindful in terms of the quality of risk, where if at all, I may say so, we go for cherry-picking in our international book, which is not like domestic book. There we operate absolutely like a corporate bank, asset and liability both are, priced. They are actually, they are linked to the variable rates. We have already seen the kind of, movement in the Fed rate, et cetera.
SOFR and SONIA, all are getting influenced by that, and that is one of the reasons why, we see the kind of NIMS, which you are seeing. I would say that, over, over a period of time, it will get normalized also. It will not remain at this level for the rest of the year. There's one of...
And-
Yeah, please.
I think one is, of course, the movement in, and the reference rates moving, and we are also focusing on the margins. Even if business is not coming up, that is what you see in lower growth rate, what you have witnessed in the financial. Our focus on growth in margins and the underlying reference rates moving is contributing to that. As Chairman said, they are going to moderate as we go forward.
Usually, what is the difference in the yields we get from India-linked and non-India-linked corporates over there?
ECVs are generally slightly better priced, that is India-linked.
Okay.
The local, we normally focus on highly...
Well-rated.
... we do only investment grade. Obviously, the yields in the local loans are less.
Okay. My second question is similar to repricing on loan, what Kunal had asked. What proportion of our book is a fixed rate and significant part of it is already repriced and average tenor of same?
I think our floating rate, which would be MCLR, T-bill, everything put together, would be somewhere around 70%, 75%, and 24% is fixed.
Okay. Average tenor would be how much? 1 year recent or?
6 months would be a significant portion in MCLR.
It's 50/50.
EBLR is anyway repo link.
EBLR is anyway repo link.
MCLR is 50/50.
Mm.
6 months and 12 months. Okay, that's it from me, sir. Thank you.
Thank you.
Next question.
Hi, sir. This is Vishal from UBS. I'll ask a why, why question for you. On the overall expenses, there's a decline of 48% in the business acquisition side. Is there something which has changed in terms of-
I will just explain to you, earlier, for the PSLC, whatever we had defrayed, we had booked in the first quarter. That is the one reason. This time, we have amortized as per our accounting policy. That is one. Secondly, last time, last year in quarter one, we were not having provisions for the wage revision, which we have started doing it from the month of November onwards at the rate of INR 500 crore per month. The wage revision has fallen during the month of November of previous year, that is something. These are the, I mean, these are the reasons.
Sir, how much is the PSLC which got amortized?
How much? I could not have that.
We can give separately.
I will provide.
We'll provide you separately.
Okay, no worries. Another line, I think, item, which is standard assets. There is a reversal in that line instead of a positive number, of INR 430 crore or something. That reversal is on account of? Because the standard assets actually have grown-
Mm.
You know, Q-o-Q also.
Any idea?
I think we made some specific provision in the past on some of the accounts in the Q1 of the last year, which was not there this year.
How much did we, did we reverse? Because I'm sure that the positive standard asset number-
Mm-hmm.
We would have reversed something, you know, bigger, maybe tune of INR 1,500, whatever number that is.
Some of the standard asset provision, which is held as an ad hoc basis, even if it slips, for example, that gets reversed from the standard asset portion.
Also from the COVID restructured book.
Yeah.
We have reversed because the accounts have increased.
What is the number, ma'am? Is that number there?
I'll give you the everything.
No worries. Thank you. If I may ask one last question on term deposit repricing, and that's anyway the topic of debate. How much of our TD book is kind of, you know, repriced once, or any sense on that?
Normally, we had come out with some, INR 500 is... Please.
See.
Mic.
Mic.
Every month, the churning of TDR would be to the tune of INR 120,000 crore-INR 140,000 crore every month. Now, depending on the rate at that particular point of time, there will be repricing. Most of the deposits, as you know, in the market, the people are quite savvy in terms of managing their interest. The deposits we use to hear of 7 years, 10 years, nobody comes there. People are mostly either in up to 1 year or 1-2 year, that kind of thing. If you're seeing our TD book, so almost in the 1 year, the entire book gets repriced.
Okay. Thank you.
Hi, sir. Param here from Nomura. Sir, on the corporate loan book, growth, you gave some color on the pipeline, for growth going ahead. As far as, you know, CapEx-led demand is concerned, both private and public sector, you know, how do you see that panning out, say, over the next year? Especially private CapEx, because we are in such a sweet spot, do you see that, you know, playing out, say, after elections or, you know, what's your sense on that? Yeah.
I think, what I mentioned about the number, out of that, about, INR 2.7 trillion is from the private sector, and the remaining is from the public sector. Private sector is significantly higher than the public sector.
Do you see that building up going ahead, say after-
Oh, yes, yes, very much.
Okay. Sir, within your corporate book, the, the fastest growing piece that we can see is the NBFC book. Even for the sector, as a whole, I think it's growing at 30% plus. That's the main driver. Do you see that sustaining going ahead?
From that, we are also seeing growth coming in from the renewable sector. Also, when it comes to even the NBFC sector also, the growth is essentially happening in the well-rated NBFCs only, and quite well-rated, I would say. Apart from that, infrastructure, road construction, et cetera, et cetera, there also we are seeing the opportunity. Infrastructure is one of the major one. Going forward, we expect to see growth coming in from, even from some of the steel and those kind of entities also.
Okay. Thank you, sir.
Hi, sir. Nitin Aggarwal from Motilal Oswal. Two questions, sir. One is on the proportion of bank employees that are there on defined contribution. How much that number is, and how has it changed over the last 3 - 5 years? What is the outlook on cost-income ratio that we can have? If I look at the cost to core income ratio, we have been around 54, 55. While you have highlighted many times in the past that bank has very limited levers to reduce cost income, but the other large private bank is now talking of a 30% cost income over a 10-year period. As SBI benefits from this defined contribution and the other operating leverage related benefits, how do you see the cost income ratio panning out?
For us, when it comes to defined contribution, that number has moved up by about 8%. It is now 60% are now into the defined contribution. About 40% are into the defined benefit. Defined benefit number has come down by about 1% in a year's time. Your what you have asked in terms of how do we have to reduce the cost-to-income ratio, on that, we are very clear that we will address by shoring up the income and also improving the productivity of our staff on ground. That is something which we are very clearly focusing on, and the cost-to-income ratio, if we look at in the current quarter, is around 50%.
I think, what we have done in last about a year or so, it has started showing up. Digital sourcing is one, one lever. Our SBOSS is another lever which we are leveraging. All this put together will help us in addressing the cost-to-income ratio in medium term. You know, when it comes to other banks talking of private sector banks talking of reducing, reducing to 30%, I would not like to comment on that. The kind of churning which they have is a, they should be actually worried about, as compared to reducing their cost.
Yeah, sir, that's a very long-term, 10-year guidance that you got.
In fact, if at all churning continues at this pace, that should be a cause of worry for them. Eventually, all said and done, banking sector is based on the knowledge.
Right, sir. If you can also share, like, what is the AS 15 liability that we have to provide for based on the wage hikes, and any provision that you have made towards that?
Actually, as of now, that has not been crystallized because the, the, the negotiations are still on. However, we have provided for at the rate of 10% increase. If at all, they we will have some visibility in terms of the actual number, we will be ensuring that we provide for the remaining amount also.
Quarterly actual.
Quarterly actual valuation, we are ensuring that we get it done on a regular basis, and whatever, whatever additional provisions are required, that we keep on providing on a quarter-on-quarter basis. There is no...
Fully provided.
No deferral. It is all fully provided.
Okay, sir. Sir, second thing I want to take your view on is, like, the branch count. If you look at, most private banks are expanding branches at a very aggressive run rate, and PSUs overall have been more or less static in terms of the branch count over the last many years. How do you look at expansion on that front in the coming years?
We are looking at expanding digital. Even when it comes to physical, we intend to add about 300 odd branches in the current year, depending upon the potential where the branches are required. Yes, of course, we are not only looking at the branches and the digital, we are also looking at the BCs. We are understanding what the customer needs are, and accordingly, we are providing the vehicles which will help us in serving them better.
Thank you, sir.
Yeah, please.
Yeah, see, how this narrative changes?
Some years back, we were always saying the branch is dead. That was the normal narrative, right? The physical branches which we had, were supposed to be a kind of drag in terms of cost. Now people understand, the ecosystem understood that we are in a phygital country, where both physical and digital are required. When you're already at 22,023 places, with 78,000 CSPs, which are mini branches in some sort, of course, all the facilities will not be available. With this kind of footprint, what we are more interested in is deepening relationship with the existing franchise and sweating the assets which we already have. Somebody is building an asset, we already have an asset, and we are trying to sweat it out. Our strategies will have to be different, no?
Because somebody who is already 216 years old, with all systems, governance, et cetera, will have different priorities than somebody who is new to the industry and trying to make greater footholds. Otherwise, also, our digital transactions are now about 87%. When it comes to transaction outside the branch, they are, as I hear, about 97.5%. I think, we are ensuring that wherever there is a requirement, we must have the branch. Yes, of course, it's not a. I think each bank will have to have their own strategies. Perhaps, the competition cannot guide each other's strategies.
Right, sir. Thanks a lot.
We'll have one last question.
Hi, sir. This is Hardik Shah from Goldman Sachs. My first question is on deposit rates. We note that SBI is offering higher term deposit rates versus top private banks, despite having a lot of buffer on the credit to deposit ratio. What are your thoughts on this?
See, as I have said in the past also, it's not uniformly we are offering higher deposits. We are offering in some buckets, and the intention is that we intend to take care of our depositors' interest also. It is not merely a commercial consideration. We are a bank which is more than 217 years of existence, so we have to nurture our customers, and we have to be mindful of our relationship with them. That is the reason why in some of the buckets we increase, which actually address our commercial requirements, also ALM requirements as well, but not universally, because we are very mindful that overall how much impact it will bring in, in terms of the cost.
Okay. sir, my second question is on home loans, particularly, we have lost market share. Our Y-o-Y growth is lower than the industry growth. What are your thoughts on that?
See, home loans again, you know, when you go for lending, you reduce the interest rate, you can increase the growth. I'm not into that. I'm accountable to each one of you quarter after quarter, and for many, many more years. It's not, my life does not come to an end after one quarter. That's why I have to be very mindful. Whatever pricing strategy I put in place, I should be in a position to sustain it.
Understood. Thank you, sir.
Yeah.
Thank you. We have a few questions coming in through the online webcast.
Yeah.
These will now be addressed by the Chairman, sir.
First question is coming from Mr. Arun. He's asking: Is there any plans to make AMCE Venus go public? It's not on cards as of now. We may consider, if at all, there would be any felt need in future date. The asset quality is stable, how do you see the balance of slippage and recoveries? As advised, as on 30th June, the fresh slippages were to the tune of INR 7,659 crore. Out of this, the pullback of more than INR 1,500 crore has already happened as on 31st July, which is amounting to about 20%. Our effort and endeavor is to contain the slippages in the coming quarters. A question on deposit competition.
The health of banking sector is strong, and excess liquidity in the system has been has been used up, all banks competing hard for deposit. Well, as we look to compete and keep it current market share on incremental deposit, our expectation is that the ASCB deposit should grow at about 12%-13% and advances to grow at 14%-15%. Our growth in deposit and credit is also expected to be almost on the similar lines, and we certainly don't experience that kind of pressure, which perhaps others might be experiencing. One, of course, when it comes to our credit deposit ratio, we still have enough elbow room available. Secondly, we have got excess SLR available to us. Yes, of course, we remain mindful of the interest of our depositors, and we don't want to shortchange their interest.
When can we see an IPO of SBI MF? Already explained. Any plans for value unlocking in case of YONO app? For us, YONO app is a distribution platform. Maybe tomorrow, some analysts might start asking, "When are you spinning off your branches?" I think without branches, the bank does not exist. When even private sector banks are thinking in terms of adding branches, no idea of spinning off YONO. Can you continue with 15% loan growth in financial 2024? In all likelihood, yes. Can you please provide a breakdown of your loan book in terms of how much is fixed, floating, et cetera? As indicated, about 26% is float, is fixed, and the remaining 74% is floating. Thank you.
Thank you, sir. Yeah, I trust all the questions have been addressed. We'll be happy to respond to other questions in offline mode. Let me end the evening with thanking the Chairman, the top management, the analysts, ladies and gentlemen. To round off this evening, we request you to join us for high tea, which is arranged just outside the hall. Thank you.
Thank you.