Ladies and gentlemen, good day and welcome to State Bank of India Q2 FY 2022 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pawan Kumar Kedia, General Manager of Performance, Planning, and Review, State Bank of India. Thank you, and over to you, sir.
Good evening, ladies and gentlemen. I am Pawan Kedia, General Manager, Performance Planning and Review. On behalf of the top management of SBI, I extend a warm welcome to all joining us today on SBI Q2 FY 2022 Earnings Conference Call. On the call today, we have with us our Chairman, Mr. Dinesh Kumar Khara, Mr. C.S. Setty, Managing Director, Retail and Digital Banking, Mr. Ashwani Bhatia, Managing Director, Corporate Banking and Global Markets, Mr. Swaminathan J, Managing Director, Risk, Compliance and Stressed Assets Resolution Group, Mr. Ashwini Kumar Tewari, Managing Director, International Banking, Technology and Subsidiaries, Mr. Alok Kumar Choudhary, Deputy Managing Director, Finance, and Mr. Charanjit Singh Attra, Chief Financial Officer. Before I request our Chairman, sir, to give a brief summary of the bank's Q2 FY 2022 performance and the strategic initiatives undertaken, I would like to read out the safe harbor statement.
Certain statements in these slides are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual outcome may differ materially from those included in these statements due to a variety of factors. Thank you. Now I would request Chairman sir to make his opening remarks.
Thank you. Very good evening to all of you. Thank you for joining this conference call. Today, I would like to start by thanking the support of all our stakeholders, including our customers, shareholders, employees, and the broader ecosystem, which has always been supportive of our efforts and initiatives. I also take this opportunity to express my heartfelt gratitude to our shareholders and other financial market participants who have supported and valued the bank through the challenging times in the recent past. I feel a sense of immense pride for our institution as we discuss today our Q 2 financial year 2022 results. Today, some of our outcomes through this period are industry-leading by a fair margin, while others are comparable with the best, especially when normalized for the scale and complexity of our operations.
I feel satisfied to see the results of our continuous efforts to improve our credit underwriting process and systems, which have led to a significant improvement in asset quality outcomes for the bank. I'm glad to share that we could absorb a liability to the tune of INR 7,400 crore due to enhancement in family pension in this quarter itself without availing the relief which was granted by Reserve Bank of India in terms of deferring it for 5 years without impacting the profitability outcomes of the bank too. This actually demonstrates the strength of our balance sheet. I'm happy to highlight that our retail book at INR 9 lakh crore, which is the largest in the country, is growing at 3-year CAGR of 16%+. With an industry-leading asset quality, I'm also glad to share the progress we are making in the digital banking.
62%, of our savings bank accounts opened in the first half of FY 2022 were through Yono. We opened almost 37,500 savings bank accounts on a daily basis through Yono in Q2 FY 2022. We think these outcomes demonstrate the resilience of the bank underpinned by our process-oriented culture, the quality of our employees, and the expertise and the vision of our leadership team. While we are happy with the outcomes in the current quarter, we are also mindful of areas that require further improvement. With the country crossing the milestone of 1 billion vaccinations and hopefully the third wave not being there or being far less disruptive, the wheels of the economy picking up speed, we should see higher credit uptake in the near future.
On the liability side, we continue to focus on increasing our share in current accounts while maintaining our leadership position in savings deposit. We believe from a P&L perspective, the bank is at an inflection point. As credit growth improves, the bank will be able to better utilize its strength on the liability side. Further, operating costs are likely to lag income growth as operating leverage kicks in, which would also give a more normalized picture of the cost ratios. Our aspirations from our current position of strength is to consistently deliver a ROE of 15%, through various cycles. Hopefully, as the economic growth picks up, we should be able to deliver on our targets sooner than expectation.
However, we remain cognizant of the uncertainties of the world we are operating in, and therefore, we believe that it is still early to give a timeline for reaching our targets. Concluding my opening remarks, I want to thank you all for your support to the bank. The bank, while pursuing its own progress, contributes to the progress and economic growth of the broader ecosystem. We remain committed to reward your trust in us with superior sustainable returns over the long term. My team and I are now open to taking your questions. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. First question is from the line of Mahrukh Adajania from Elara Capital. Please go ahead.
Hello, sir. Congratulations and Happy Diwali. Sir, my first question is on recovery. In the last phone call, you had said that probably you had recovered INR 40 billion-INR 45 billion of first quarter slippages already, and that was in August. The recoveries of the first quarter slippage would have increased only after that. What would be the total recovery from the first quarter slippage we have so far? Would you be able to give that number against INR 40 billion-INR 45 billion you had given last quarter?
I would say that we have. I think when it comes to recoveries, of course, whatever was the stress which we had seen in the first quarter for our retail book, and we could pull back all and we have further. I would say that INR 8,000 crore worth of recoveries were also affected overall. Out of INR 15,000 crore actually. Just amplify, sir, this figure. Marhukh, INR 15,000 crore was given gross slippages, out of which due to pullbacks were around INR 8,000 crore.
Sorry, Renta, this 8,000 should be netted from the gross slippage figure of Q2, right? Because it was-
Mahrukh, if I may, please. Mahrukh, you see our notes to accounts, serial number 5, that makes very amply clear that the figure of the quarter is the balancing figure between the figure of thirtieth of September and the published figure of thirtieth of June. This is how we have been reporting and because this is the figure as of now, and that is how the balancing is done. Between two dates, whatever is the difference, that is the recovery which is as stated in our notes to accounts.
Got it, sir. Sir, in terms of, was there any tax refund or recovery income going through NII this quarter?
Yeah, we do have some tax refund.
Yes.
Yeah, we do have some tax refund, which is there, and it is INR 4,922 crore, and it has been there in the past also. In 2021 also we had INR 1,517 crore. I believe it's almost an annual feature which is there.
Sorry, but this quarter it was how much?
Thousand nine hundred and twenty-two crores.
1,922. In the fourth quarter. In the first quarter, we did not have much tax refunds, right? In the full year FY 2021 we did have.
No, no.
Got it. Sir, just one last question. In terms of retail restructuring, would you be able to give a breakdown of how much was restructured under Xpress and how much was restructured under home loans?
I think in the Xpress there was hardly any restructuring. It was all in the home loan or in SME category. Yeah.
Okay, sir. Sir, thank you so much. Thanks a lot.
Thank you.
Thank you. The next question is from the line of Ashok Ajmera from Ajcon Global Services. Please go ahead.
Thank you for this opportunity. Good afternoon, sir, and a very Happy Diwali to all of you. My congratulations to you, Khara Saab, and your entire team of Setu Saab, Bhatia Saab, Ashwin sir, and all the EMT top management and entire staff of the bank for such a fantastic results of State Bank of India. Just immediately after we came out of that pandemic, almost coming out of it. It's a fantastic feeling also. Now your bank has become, you know, like almost about INR 30,000+ crore profit bank, net profit bank, which is a very welcome sign. Having said that, sir, I got some small query points.
Number one is that the INR 7,418 crore which you have provided for because you had sufficient room here this time, because the slippages also came down to INR 4,176.7 crore against INR 15,000 crore in the last quarter. Will it be available for the tax benefit also that, because the dispensation was for five years and you have provided the entire one year itself. Will we get the benefit of the entire provision in the income tax also?
May I? If you see the RBI letter in this regard and approval, RBI basically wanted that the bank should take it in the quarter itself. They should not amortize it. They had also given B
If some bank doesn't have the room, they can amortize it for five years.
I think it was an option which was given by RBI either to depreciate for five years and also carry out the treatment which they have prescribed or absorb it in the first year itself in the quarter concerned. Since RBI dispensation has given both the options, I'm sure tax authorities will be sufficient to give comment.
It's an actuarial valuation, so there's no tax annually involved with.
No, but only as a cost.
All right.
To the extent it's a cost, it will be allowed. It will be allowable cost.
Yeah, allowable cost.
Yes, yes. Okay, sir. Thanks for this clarification. Sir, for this SMA one and two, you have given above INR 5 crore of INR 6,690 crores, for this, slide number 31. What is the total figure if you even if you take less than INR 5 crore also, sir, the entire amount?
That we don't really. I will think too, but it's not a significant number at all.
All right, sir. Good. Sir, it's nice to know that it's not a very significant figure. Sir, some items on the expenses and income, some small queries are there. The miscellaneous expenses shot up to INR 1,709 crore from INR 1,000 crore. At the same time, the miscellaneous income came down to only INR 365 crore from INR 1,181 crore. Can you throw some light on this? One is that miscellaneous expenses going up by 600-700 crore and miscellaneous income is coming down by 700 crore, having the effect of, I mean, effect of almost about 1,400 crore.
Miscellaneous expenses are actually. In case of miscellaneous expenses, what you have pointed out, if you see that, 1,013-1,709 kind of figure. Actually, the development in this regard is that the expenses have gone up. GST increase is there because GST on operating expenses increased a bit, so GST increased. Then we had some increase in the donations also. Like we give donations to our SBI Foundation, and then we made other donations during this year also. That is also an increase of around INR 100 crore. Then law charges, audit fee, then security, GST and some of the other expenses which are numerous and many. On average all these things they make up for this difference.
Thank you. Mr. Ajmera, may we request that you return to the question queue for follow-up questions. Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.
Yeah. Congratulations to the entire team for a great set of numbers. First question is on yield, not the overall interest income, but particularly yield on advances, if we calculate that has also gone up. Was there any element of recoveries, interest recoveries out there in this? And where should we finally see the yield on advances stabilizing? That's the first question.
Yield on advances. Yeah, there is a component of some of the write-backs which we had. Some of that. The other aspect is the lower amount of interest reversals also would have an impact on the yield on advances. In terms of normalizing, if at all we do, I think we have the number. Just one sec. Let me just try and get that number. If we normalize for the one-offs on the yield-
In the yield on advances there is no one-offs, sir. Yield on advances
Only the write-offs I think.
yield on advances basically if you see last quarter it was INR 15,066 crore. There was a reversal. I mean.
Yeah. Interest amount which has not happened, so that's why it is seen like this.
This quarter the slippage has been very less. We have got again whatever reversals happened last quarter. Those reversals were then again booked and this time reversals were very less. This is how.
Effect is a reflection of the asset quality.
Yeah, it's a reflection of the asset quality.
any recovery from DHFL or anything which is getting recognized so this will be entirely-
DHFL will be entirely in provisioning.
We have not written off so that's why that has not come in here. It has only affected the provisions. Okay. Sure. Secondly, in terms of growth, again on the corporate side, there is still de-leveraging and that's the only segment which was down quarter-on-quarter and that too 4-odd%. Last time you were highlighting in terms of the underutilization of the limits and all, but finally I think we need to see some corporate growth coming back for the industry as such. What would be your outlook in terms of some indicators? Lead indicators are suggesting that it should be different for investment-related CapEx, but from SBI side, are we saying that over next couple of quarters we should see it coming back?
Even now also the capacity utilization stands at around 60% only. When it comes to the corporate credit, it is a function of the capacity utilization first of all. But only one thing which I must mention that we already have got unavailed facilities.
Term loans and unutilized working capital almost about INR 450,000 crore. We have got some pipeline for the new proposals also, which are as high as about one lakh fifty thousand crore. That is a kind of a number. In the month of October, we have certainly seen some traction in terms of the corporate credit growth. Maybe I'll request Mr. Ashwani Bhatia to further add his view on this subject.
We have seen a pickup in the first month of this quarter. You are absolutely right that in the quarter ended 30 September, corporate loans were below the March levels. As we get into the busy season, we are already seeing more inquiries, higher utilization. This utilization may also come from oil companies.
At the same time, we are seeing some deleveraging happening as far as iron and steel industry is concerned. From the iron and steel industry, we are also getting proposals for greenfield, brownfield expansion at the same time. We are getting inquiries from CLN and other assets. We think the pipeline right now, as the chairman said, is pretty good.
International is going on strong. I think this quarter again there was further rise. I think that the overall demand for quality Indian corporates in some of the countries, that is very much on.
No, in fact, in the overseas operations, we are generally having exposure to all the well-rated corporates and because all these economies are doing very well, so it has opened up a huge opportunity. We are quite confident of building a healthy book in the international space.
Sure. Okay. Thank you.
Thank you.
Thank you. The next question is from the line of Mona Khetan from Dolat Capital. Please go ahead.
Yeah. Hi, sir. Good evening, and thanks for taking up my question. On the non-COVID, how much would be the non-COVID MSME restructuring in our book that was under the earlier release scheme?
Total book of restructuring was INR 38,000 crore. Total restructuring is INR 38,000. INR 30,000 there is on account of restructuring one and two. INR 8,000 crore is the legacy. Yes. It is a legacy restructuring. Yeah. Out of which around INR 3,700 is the SME.
Okay. Got it. On DHFL recovery, just a clarification. Of the INR 10,000 or so of exposure, about INR 4,000 will be taken through the recovery and upgrades in the GNPA movement, while the rest of INR 6,000 will go via the write-offs. Is that a correct understanding?
What is the question? We request you to please repeat your question.
Yeah. When we look at the GNPA movement this quarter and the DHFL recovery, so of the INR 10,000 crore of DHFL exposure, INR 4,000 crore which has been recovered will go through the upgrades and recoveries line of INR 7,000 crore in total, whereas the rest of INR 6,000 crore will go via the write-off. Is that a correct understanding?
No, actually, see what happened, we had provided for fully in case of DHFL. Having provided for fully to the extent we have got the recovery. Of course, it was not written off in our books. If it was not written off in our books to the extent of the recovery, we could reverse back the provisions. The remaining, of course, since it is dissolved, remaining will have to be written off now.
Right. Of the INR 7,000 crore of upgrades that we see.
We are only getting exposure for that. Yes. If I would request your attention on slide number 30 of our presentation. Real issue of write-off will be that in entire half year it is INR 3,064 crore. Because for the purpose of NPA, we consider anything moved from NPA as our book only. The real write-off in the entire half year is INR 3,064 as shown on slide number 30.
Okay. Finally, on the you know, again, coming to the movement of GNPA, when we look at the slippages, as you mentioned, the pullbacks of previous quarters are not in this quarter. Ideally, if we have to look at the bulk slippages and recoveries, INR 8,000 crore or so will be added to both slippages and recoveries in our book. Is that a correct understanding?
I think, you will see the slide 13C, which say you have every day some slippages, right? Some upgradation. If you do cumulatively like this, then in 365 days maybe the numbers will be ballooning like anything, right? At the end of the year, what is your total slippage is the number as on the previous thirty-first March and the number as on the current thirty-first March. This is how it is calculated. This is the balancing figure, as I have told you.
That this is the balancing figure as on 30th September, what has been reviewed and published by the bank minus already published figure for the previous quarter. This is how this goes, and this is the concept which should be understood.
Sure. Got it. Is it possible to get the break-up of fresh slippages segment-wise?
I think you can list Investor Relations. Investor Relations Department will share with you. Mostly it's corporate, sir.
It's not retail. This is, majorly it is all corporate.
Thank you. Mona Khetan, may we request that you return to the question queue for follow-up questions. Thank you. The next question is from the line of Shagun Verma from Goldman Sachs. Please go ahead.
Yeah, thanks. This is Rahul here. Good evening, everyone. Just a follow-up on question. So even though it's sort of a net slippage during the quarter, is it fair to assume that the accounts that has been, which was in the news has already been accounted for in this quarter?
It is fully provided for.
It's accounted for in NPA and provided for.
It is accounted for and fully provided for.
Okay. Got it. Sir, second clarificatory question is, can you just share the, what would be the loan duration of these restructured loans? I mean, when would these accounts start coming out of the restructuring phase?
So the, uh...
In case of home loans, most of the people avail the moratorium ranging from 18-24 months. What is interesting is that many of them probably would start paying off. It is basically what we have seen is that many of them are having a high CIBIL score. Probably they have just taken as a safety measure. Most of them will not or may not avail the full moratorium on their taken. It is actually a hedge against the possible risk of the third wave or disruption in the cash flows.
Technically, the moratorium is for 18 months, but I think, at the end of 1 year, we may see many of them, becoming normal.
All right. What about SME loans, sir? How's the stress in general for the SME accounts?
The restructured book, you know, is because there's a moratorium. We'll have to assess and see. There is a turnaround in the sector. Some sectors are doing well, particularly secondary steel and power. They have taken the restructuring. Hopefully, I think they will also be able to come out before they complete the two-year moratorium. There are also many MSMEs actually in two-year moratorium.
Actually, this restructuring, there is a characteristic difference because this is essentially a function of the disruption in cash flow. When the cash flows are getting repaired and restored, people would like to come out of the restructuring tag. That is what we have generally observed. I think this is what we expect to witness going forward.
All right. Sir, just two more questions. On the growth side, you talked about corporates, you know, still have not availed of the credit limits. When you look at slide ten of your presentation deck, we see, you know, the loan book reduction across many industries. Is this because of the repayments or there's a competitive pressure that you're witnessing? Or can you just throw some color on that? And how do we kind of start kind of? If you're seeing the competitive pressures, how do we kind of respond to that?
See, the point is, when we look at this particular slide, wherever we have seen, like, you know, iron and steel sector, it's all deleveraged. Similarly, aviation and airports also, we had
One account.
One account got repaid. That is what it is. That is the reason. Likewise, in case of tourism and hotels also. In fact, there's hardly any, I mean, hardly any reason for us to really visualize that it has gone to the competition. It is not really so. Similarly, part of it is also on account of the repayment which were due and which we have received on time. That is also the reason. It has not been replaced by the fresh disbursements in the sector. That is the reason. It is not really attributed to the competition taking over our accounts.
This sanction limit of INR 4 lakh crore plus you talked about, you know, in your presser, what percentage can really certify from this and over what period?
See, eventually, as I mentioned that it is a function of the capacity utilization. There are many moving parts, but our expectation, if at all I can put it like this, as of now, we have seen the credit growth about 6.17%. I hope that, the kind of availments which will come in and, kind of disbursements which will be availed in the term loans, we should perhaps see the growth in, somewhere around 10%.
Thank you. Mr. Verma, may we request that you return to the question queue for follow-up questions. Thank you. The next question is from the line of Mohit Surana from CLSA. Please go ahead.
Sir, hi, and congrats on great result numbers. Sir, I had a question. If I try and normalize the performance of this quarter for
The final provision that we've provided on an upfront basis and adjusted for like one-off recovery from the NBFC. It looks like we've already crossed our threshold of 15% ROE. Given the trends that we're seeing in asset quality, it looks like we certainly will undershoot credit costs in the near term, right? At least the next few quarters or couple of years at least. In that sense, it looks like the bank is quite well positioned to kind of deliver more than what we have indicated, right? Because we are already at 15%, ROE coming just out of Q2. Just want to understand, right, that is this process correct, and what is the risk to that?
I think your assessment is quite correct, but we do believe that whatever costs or risk we can foresee, we should be rather prepared for meeting out all that well in time. We have the elbow room available, and we have done that. Hopefully, because you know, we all operate in the uncertainties. What uncertainty will hit from where, one really does not know. We have to ensure that while we have time, when we have resources to our side, we should rather provide for it.
Got it. Sir, the second question I had was on the core net interest margins or core NII. You reported a 31,000 crore approximate number. Out of that there is some refunds that some maybe because of asset quality. From a forward-looking perspective, what should be the adjustment to get the core NII of the bank, which is like more a recurring number that one should work with?
No, actually, when it comes to NII, well, of course, you know, every year there will be something or the other. This is what we have seen in the past. I think those one-offs will continue, and those one-offs are not as significant in number considering the overall incomes. I think perhaps I will not be in a position to give you any kind of a normalized number because it has been there in the past also. It has happened this year also. There will be marginal differences here and there. For instance, I'll just share with you that in the year 2021-22, we have the income tax refund of interest on the income tax refund of INR 1,922 crore. In 2021 it was INR 1,517 crore.
Likewise, we have seen that on a year-on-year basis, there's always one such one-off sort of it.
this whole of INR 91 crore is this quarter?
Pardon?
The whole of this income has come in this quarter itself, so.
This quarter, yes. We recognize, we receive. That's all.
Got it. What's your outlook on margins, sir? We are at a decent point in terms of margins, and it looks like rates have kind of clearly bottomed out, and depending upon how much RBI wants to tighten liquidity, it can go up. What would be a mean outlook, let's say next 12, 18 months, not 1 or 2 quarters?
Our effort would be that we should be range bound between 3.20%-3.30%.
Got it. That's good. Thanks, sir, and congratulations. Great results.
Thank you very much.
Thank you. The next question is from the line of Abhishek Murarka from HSBC. Please go ahead.
Yeah. Hi, good evening, sir, and congratulations for the quarter. Just couple of questions. One, what is your exposure to the Calcutta-based NBFC and whether that is now fully provided for, I guess? Just what is the exposure to that group? And secondly, if you can share the incremental yield on Xpress Credit and home loans, that would be useful.
Well, as far as the Calcutta-based NBFC is concerned, it is fully provided for. As regards the yield on the Xpress Credit and home loan is concerned, I would not be in a position to share the data because I'm not keeping it with me. Maybe you can get in touch with our investor relations.
Sure. What would be the exposure to the Calcutta-based NBFC? Is it around INR 2,000 crore?
Yeah. About INR 2,700 crore.
2,700.
The entire amount has been provided for.
Yeah, INR 2,700 crore.
Yeah.
Okay. Your recovery from DHFL, did any part of it flow through interest income? Just trying to clarify that.
No.
Nothing.
Nothing.
Okay. Okay.
Yes.
Right. Thank you so much, sir. Thank you. Those were my questions, and all the best.
Thank you.
Wish you a happy Diwali.
Thank you. The next question is from the line of Nilanjan Karfa from Nomura. Please go ahead.
Thank you very much, sir. Just a question on capital. I mean, we are doing quite well and hopefully the growth is in front of us. Is there a possibility you want to raise capital over the next 12-18 months?
I think we still have an elbow room for about INR 4,000 crore of equity to be raised. Board has already given us the approval for that.
Okay.
The current kind of a growth of about 30%, we can easily support with our existing capital. For all purposes, we have already raised INR 6,000 crore in the month of October in the AT1. If we add that, we are at about 14.22%. So 14.22% capital. We'll be looking at the growth opportunities and if need be we will be testing the market. That will be at the opportune time, keeping in mind the interest of all the stakeholders.
Right. Sir, any color on potential IPOs of two of our subsidiaries, you know, the general insurance and mutual fund? Is that also probably factored in your calculations?
No, we have not factored the IPO of our subsidiaries. As I've mentioned in the past also, we have been nurturing these entities and it's not a compulsion of our raising capital which will really push us for taking them to IPO route. It will be rather meeting their own ambition and aspirations because when they become the industry leader in their own right, they should get listed. That will be something the guiding principle. We are already engaging with our JV partners and in case of one of the subsidiary and at the material point and the opportune time we'll be sharing that information with you.
Right. Good. Sir, going back to that movement of NPA, I just wanted to reclarify this. For example, you said about INR 100 which slipped in Q1 and we managed to recover INR 50. What we are reporting in Q2 is basically a net of INR 50. Basically what you have reported is a cumulative Q1 and Q2 number. Is that right?
This is the slippage part which you are saying.
Yes.
This is how we reckon the slippage. Yes. See, on two different dates, in this particular case 30th September and prior to that, 30th June. Whatever was the slippage number as on 30th June and whatever is the slippage number as on 30th September, the difference between the two would be the slippage.
Thank you. Mr. Karfa, may we request that you return to the question queue for follow-up questions. Thank you. The next question is from the line of Saurabh from J.P. Morgan. Please go ahead.
Yes, sir. Two questions. One is, you know, on the COVID draw down from INR 9,000 crores to INR 6,200 crores, that's on account of the NBFC?
No, no. See, the point is that when we did the COVID provision it is more like ad hoc provision. It was not a specific provision. In any case we have got a obligation that unless and until we, these general provisions will have to slide as on, let's say, first of March.
Yeah.
That is the that's an accounting norm. The other factor that as I mentioned that in the second quarter, in the first quarter, whatever slippages we had seen, we have been in a position to pull back almost all. That is the reason why whatever additional provisions we have brought in, we have already reversed it also. Because we don't see the possibility. The other thing is that our total restructured asset are aggregated to about INR 30,000 crore. We have looked into the PD computation of our legacy book and we have seen that generally about the default rates which went over 30% only. If we go by those reckoning, those numbers, we don't need more than INR 9,000 crore in any case.
Also I would like to, like you to consider the other fact that this restructured book is behaving very differently as compared to the legacy restructured book because it is attributed to the cash flow disruptions. As and when cash flows are getting repaired, we have seen the customers coming back and repaying also. So in view of that, we have kept about 20%, kind of a provision on the total book. As we see we'll have a visibility of the behavior if need be we will strengthen our these provisions also.
Sir, the second question, sir, is on your ROE, ROA targets, you know. The point is that if your credit cost normalizes and your ROA is exceeding this 0.2%-1% range you have, will it be fair to assume that you could possibly, you know, decrease your net interest margins to kind of compensate, kind of push up the growth?
I think we'll react to the situation when we come to that.
Okay. Understood.
Mr. Saurabh, does that answer your question?
Yes.
Thank you. The next question is from the line of Sumeet Kariwala from Morgan Stanley. Please go ahead.
Yeah. Hello everyone. Congratulations on the good set of numbers. I had a question on margin progression and how should we think about it as the interest rates cycle turns as compared to past cycles this time. If I look at the share of report linked loans are higher given the regulatory changes, the savings deposit rates are much lower. Should one expect margins to improve quite meaningfully as the rate cycle normalizes?
See, when it comes to the behavior of deposit and liabilities and the asset, the repricing at what periodicity it can happen will actually decide this particular aspect. Since we have our. When it comes to the interest rate sensitive deposit, they are essentially our fixed deposit and they are normally contracted for our maximum deposit and the fixed deposit are in the range in the one year category. I think maybe we'll have some for some time we might have some opportunity, but MCLR as and when and our about 29-30%, of our accounts are EBLR based when it comes to our advances and almost about 12% are in the fixed costs.
20%, is EBLR.
20%, is EBLR. About 37%, of our book is either fixed or EBLR. If at all EBLR also it is external benchmark linked. If the interest rate movement happens, we should be in a position to take care of our yield or our interest earnings. That is something that's what we expect. Yes, of course, you know, much of it will evolve as and when we will reach towards those stages, but this is what, how I look at the situation.
Thank you, sir. This is early days, but if I were to ask you, how should one think about savings deposit rates over the next one, two years, as interest rates move up, is there any framework that you have in mind?
I think it's a very dynamic situation, and we have to remain vigilant of the situation on the ground and be responsive to the needs of the customers and also the market.
Got it. Thank you, doctor.
Thank you.
Thank you. The next question is from the line of Manish Shukla from Citigroup. Please go ahead.
Good evening, and thank you for the opportunity. My question was on RWA density, RWA to total assets, that has been steadily falling. How much of it is driven by the demand and how much of it is, maybe caution or risk aversion on the part of the bank?
See, when it comes to, of course, it is partly attributed to, it's a very conscious effort in terms of our underwriting principles which we follow and partly attributed to our policies. Having said that, I would also like to mention that our Xpress Credit which is considered to be unsecured, it has gone up. Yes, of course, it's eventually what we are only keeping in mind is some kind of a risk reward relationship in terms of risk and what all reward we are in a position to generate. With that in mind, we are, it's kind of a trajectory seen. That's all I would like to answer your question.
Xpress Credit will have a risk weight of 100%, right?
Yes, of course.
Yeah. My question is that, I mean, I'm assuming that there would have been good benefit of NPA decline over the last one year on the RWA front. Now, incrementally if NPA decline were to moderate and Xpress Credit continues to grow towards overall retail, do you see RWA density inching higher?
I think it will grow marginally, but will remain within the tolerable limits.
Okay. All right. Thank you. Thank you, Doctor.
Thank you. The next question is from the line of Jai Mundhra from B&K Securities. Please go ahead.
Yeah. Hi, sir. Thanks and thanks for the opportunity, sir. First question, sir. We used to discuss the segment-wise slippages, right? This quarter maybe there is an inter-quarter letting of slippages that we have done. If you want to show the segment-wise slippages like we used to do earlier, retail, corporate, agri, SME, that would be very helpful, sir.
No, I feel, see, what happened, we used to show segment wise earlier because all the slippages were a matter of concern. Now it has come down significantly, and we feel that maybe if at all if somebody would need it on a, segment wise maybe you can reach out to our VP investor relations. Those details will be available, but it is nothing too great, I mean, too big a number. That's why we have not given the segment wise.
Sure. Secondly, on ECA, GA books, sir, if you can quantify how much is the outstanding ECA, GAs, and how would you read the health of this portfolio? Because, you know, I mean, just wanted to understand when the moratorium book will come out of moratorium in this month, how do you read that progression here? Thank you.
Early days, but it is still maturation has yet to happen. Nevertheless, as of now it is behaving okay. About 30-
26,000.
26,000 is the GNPA's book.
Sorry, sir. How much? INR 26,000.
About 25,078 is the book. 26,360. As of now, only 2%, we have seen which has got classified as NPA in the ECLGS.
when, sir, this 2%, of the loan slips, the entire corresponding, the other facility, the main facility will also be classified as NPA, right?
There's a total impact of that.
Yeah.
Okay. Understood, sir.
There's a total impact of the NPA in the ECLGS book.
Understood. Otherwise you are seeing the portfolio behaving reasonably in line with other part of the book, right? Non-ECLGS.
Yeah. Otherwise, we don't see much of a challenge in this.
Sure, sir. Understood and thank you and all the best, sir.
Thank you.
Thank you. The next question is from the line of Prakhar Sharma from Jefferies. Please go ahead.
Good evening, sir. This is Prakhar. Congratulations to you and your team for a phenomenal performance. Just one request, if you would reconsider going back to the asset quality disclosures on a gross basis because as we get into the third and the fourth quarter, it will become even more difficult for us to understand the quarterly performance and most of the peers, tech or mostly, are all on daily stamping and gross quarterly disclosures. We will humbly request if you could reconsider switching back to the gross disclosures next time, sir.
No, it has been consistent. Whatever disclosures that you have seen in the previous quarters are also these slippages net of pullbacks that happened during the quarter. That's how it is getting reported. Maybe this quarter being such a small amount of INR 4,000 crore, it is attracting a lot of attention. Otherwise, the way in which it is always calculated is the opening balance at the beginning of the quarter and the closing balance. The portion that slipped and remained is what is disclosed as slippage because as
Sir, may I just reconfirm you. Were you also in the past you were reporting on, inter quarter adjustment also like something that slipped in one Q but recovered in two Q?
Yes.
Was that also netted off in the past?
It is. It has been done in the past also.
It's been given.
It has been a consistent practice also.
All banks do that's on the back.
Yes. Other banks, as I understand, are also doing likewise.
Because in any banking almost as MD Finance explained, every day there could be one or two accounts slipping and then within two, three days they will be getting pulled back. In case if you have to keep aggregating these numbers that will be, you know, kind of will not reflect the true position. It's always a comparison between the opening and closing position. The slippage is the account that slipped and remained in the slipped category is what is disclosed at the end of the quarter. There has been no change in the disclosure practice as far as this particular item is concerned.
Okay, sir. Thanks for the clarification. Thank you.
Thank you. The next question is from the line of Mahrukh Adajania from Elara Capital. Please go ahead.
Thank you, sir, for taking my question again. I just wanted to re-clarify one thing again on DHFL. Basically the entire exposure including loans and bonds would have passed through the recovery or write-off line in the movement of GNPA. Is that correct?
Entire exposure. Right. That's right.
Which is around INR 100 billion, right? So because some banks show only GNPA, but I think you show GNCA, so bond and loans both. In terms of what is accounted for in the recovery line and what is accounted for in the write-off line, would that be 40-60? INR 40 billion and INR 60 billion, is that correct?
Yes, Mahrukh, I think we can provide you more granular details.
I think granular details are not readily available right now.
On a bilateral basis, maybe we can.
Yeah.
As a matter of principle, as you would know, you were aware of the exposure that we had in both loans and the investment and this was an account which was fully provided for both the loans as well as bonds and the recoveries are also in public domain. When the provision is written back, it is written back to the extent of recovery. The balance of provision is utilized for writing off. There has been no change in the accounting treatment for this account as compared to any other account. If you need the granular details, I'm sure our investor relations will be able to provide you bilaterally.
Thanks a lot. Sir, just one more question in terms of slippage for this quarter since that almost entire is corporate. Basically two to three accounts made this.
No, we didn't say almost entire corporate. The major part are the corporate.
Largely corporate and you also know one large account is known to. That's only 20.
Other than that account there were no other corporate slippages. Is it?
No. There were a few accounts but of much lower amount.
In terms of number it may not be as large.
4,176 and 2,700, both numbers are available with you. The remaining cannot be anything chunky.
Okay. Thank you.
Thank you. The next question is from the line of Jignesh Shial from InCred Capital. Please go ahead.
Yeah. Hi, sir, and thanks for the opportunity. I just wanted to check, there have been, you know, lot of noise happening around on the, on the digital, you know, lending segment side altogether, though it is a smaller segment, you know, compared to, what HDFC does in general. Can you please throw some light on how you are seeing this particular space and some more details about the your Yono app and all. That would be pretty useful. Thank you.
Yeah. We are, in fact, as far as Yono is concerned, a pre-approved personal loan is something which has become very popular and it is end-to-end digital and we are generally underwriting about INR 5,000 crore worth of PAPL almost on a quarterly basis. The first quarter of course was little subdued, so that's why it was about INR 2,500-INR 2,800 crore type of a number. Already YTD we have done about INR 7,875 crore as far as pre-approved personal loans are concerned in the current financial year YTD and I'm quite hopeful that the remaining two quarter we can easily do at least INR 10,000 crore plus in the premium book business. That is one part of it.
Apart from that, we are using this for doing our KYC reviews also. Almost INR 3.65 lakh crore worth of portfolio got reviewed with the help of Yono. We are using it for opening of the accounts. About 27,000 odd accounts are getting opened on a daily basis in the current quarter of this financial year. Sold almost INR 4,000-5,000 crore worth of mutual fund with the help of Yono. Our total registration as of now is about 4.4 crore plus. We have online banking facility, which we started offering way back in the year 2001, which is 20 years old facility, where our total registration is about 9 crore plus.
This is a new offering where our total registration is 4.4 crore. We are seeing average daily login of about 1.20 crore kind of a number on Yono. Even non-life policies also, about 22 lakh policies have been sold in the current financial year till now, in the first half of this financial year. That's what it is. Even in the gold loan, we are actually leveraging it in a very big way, and it actually helps people to have the convenience. They can apply for the gold loan, they can have it sanctioned. Only the physical delivery is to be done by using a particular reference number.
Worth about INR 60,000 crore worth of gold loans also could be disbursed with the help of Yono.
Understood, sir. Just, this is just really helpful. Just, you know, there have been lot more, you know, large players are coming up. Although the overall quantum of lending right now is pretty smaller, say, in the form of BNPL and all. Are you guys seeing that this particular segment can become, you know, gradually over a period of time, a very tough competition as far as consumer lending or MSME lending is concerned? Or how do you see that industry is growing there? What's your sense over this?
See, when it comes to the commoditized product, they can be easily rolled out and offered through the Yono. This is what the strategy we are following. Our effort going forward would be that, as many as commoditized product, we should be in a position to offer through this channel. Maybe it is the banking or maybe our financial super store, we are very efficient to sell the products of our various subsidiaries also. That's what the strategy would be.
Thank you. Ladies and gentlemen, we will take one last question from the line of Rahul Kumar from Diamond Asia. Please go ahead.
Good evening, sir, and festival wishes to the team. Just to conclude on the Yono, it is becoming a full-fledged platform. In next couple of years, is there any plan to benchmark the valuation for Yono as well? Because given the franchise and kind of work you're doing on Yono, it's much more underappreciated, I think, by the broader community. Thank you, sir.
At a material point of time, we will consider. As of now, we intend to ensure that we make it robust and so that it should be efficient to fetch the right value, as and when if we decide to monetize it.
Appreciate it. Thank you, and all the best to the team.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.
Thank you very much. Wish you all very, very Happy Deepavali. May it be very happy, healthy and prosperous for everyone. Thanks a lot.
Thank you. Ladies and gentlemen, on behalf of State Bank of India, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.