State Bank of India

Thank you, Janice. And hello, everyone, to all who have joined us on this call today to discuss 4G FI20 results of State Bank of India. To discuss results and address questions from investors and analysts on this call, we have entire top management team of SDI led by Chairman Mr. Rajneesh Kumar. Thank you, sir, for this opportunity.

I will now hand over this call to Mr. Pawan Kumar Kheria, General Manager, Performance Planning and Review for further proceedings. Over to you, Mr. Kedia. Excuse me, sir. This is the conference operator.

I'm so sorry to interrupt. May I please request you to speak closer to the phone? Your audio is not very audible.

Okay. Good evening, ladies and gentlemen.

I'm Pawan Kedia. General Management Performance Planning and Review. On behalf of the top management of SBI, I extend a warm welcome to all joining us today on SBI Q4 FY20 Results Conference Call. On the call today, we have with us our Chairman, Mr. Rajiv Kumar, Mr. Dinesh Kumar Khara, Managing Director, Global Banking and Subsidies, Mr. Arjit Batu, Managing Director, Commercial Client Groups and IT, Mr. C.S. Sethi, Managing Director Retail and Digital Banking with additional charge of Stress Assets and Mr. Venkat Nageswar, Deputy Managing Director and Chief Financial Officer. Our Deputy Managing Director heading various workshops are also on the call with us. Before I request our chairman sir to give a brief summary of the bank Q4 FY20 performance and the strategic initiatives undertaken. I would like to read out the safe harbour statement. Certain statements in these slides are forward-looking statements. These statements are based on management 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. Good evening to all of you. This phone call, of course, is taking place in very unusual circumstances. And on audio, it is not the same. When we sit and we are face to face, I realize that, but can't help it. We have announced our annual results as well as the quarterly results. I will give you a few highlights of the performance. and a little bit on how do we see the situation unfolding and on numbers, because all the numbers are with you and anything which has not been covered or if you have any questions, so that questions definitely we will take. So the first is that this is, the highest ever annual profit recorded by the State Bank of India, 14,448 crores. And this has come in, I would say, not so easy circumstances because COVID-19 is what is target sometimes in March, but otherwise also because of the slower growth in Indian economy, the circumstances were not very easy. Our net interest income has gone up by 11%. Our NIM has gone up by 24 basis points. Operating profit is up by 23%. PVT and net profit in any case in 19, they were not very good. So percentage terms, it doesn't make much sense anyway. Then credit costs are down by 79 basis points. and net NPR also down by 78 basis point. Our provision coverage ratio, including the or advances under collection, it has gone up by 489 basis points, and now it stands at 83.62%. Capital adequacy ratio is 13.06, advances growth is 5.60, and Total deposit is 11.34. The deposit growth and advances growth. Advances growth may look that the growth has not been high. But still, we have been able to improve slightly our market share. And in deposits, we have been able to improve our market share quite significantly. And that trend is continuing even post-March. And we are currently, our deposit growth is around 16.5% value-wide basis. The advances was remains around the same on value-wide basis.

And the COVID period, it was a learning period for everyone.

And our business continuity plan, I will come to asset quality, earnings, other things later on. But during this period where first time the bank's business continuity plan has been tested in a very unique way. Earlier we were always prepared that something happens in our GITC, Navi Mumbai, then we will operate out of Hyderabad or we will operate out of Chennai. But this all was off this time. No use. What was under test was the human BCP. And there I would say that Hats Off to people in the State Bank of India. We have been able to provide uninterrupted service at all channels. In the same manner, it was in the pre-COVID period. And in fact, some of the channels, the performance is better than what it was in the past. And whether it was branch channel, whether it is our business partners, what we call bank mitra, ATM channel, internet banking, mobile banking, you know, all were up and running and there has been no revance from any corner, from any of the customers or the government or the local authorities that we are finding any difficulty as far as funding of State Bank of India is concerned. So that is the first point which I wanted to highlight that we have learned new way of working also and learning from the past we have prepared a plan that how are we going to reshape the State Bank of India. So that is one. The other issue of course which always would come to the mind is about the asset quality. So which is always a major area of concern and there have been lot of reports going around what will happen. So one is that we are very mindful of the fact that if there is a stress in the real economy, the banking system cannot remain unimpacted and the State Bank of India is also no exception. So we cannot ignore the hard reality on the ground. But I and my management team, we sincerely believe that we are much better placed than any other banks as far as dealing with the situation is concerned. On operational side, we have demonstrated that. On the business side, we will be able to demonstrate that on managing the stress in the book or managing the earnings. That also I am very confident that we will demonstrate that. And on what basis I am making that statement is very important. One is if I look back and if I look back the numbers in March 18, our core pre-provision operating profit was 51,000 crore. And our net NPA was in excess of 1 lakh crore. It was around, I think, 1 lakh 5000 crore or around that. In three years, we have a situation where our pre-provision operating profit, and I'm talking about core, is 61,000 crore. My total net NPA is 51,000 crore. So that means that as far as the Asset quality in terms of legacy is concerned, we are on the top of the situation. There is no legacy. There is no legacy accounts left to be dealt with. Even if I look at the slippages in 2020, our normal circumstances, basic scenario, the guidance has been that we should be able to manage within 1.5 or 1.6% of our book. But we are higher at 2.16% and three major reasons. One is, of course, one HFC, H&K account, it slipped. And that happened in the past, it can happen in future also. Can't rule out. And one company in the power sector restructured and because field restructuring so the state of account goes to D3 and it is again a chunky account and third was the elevated NPAs in our agriculture loan book for various reasons so these three were outliers in my view and That itself, the performance in 2020 is a pointer in the sense that our slippages, but for these Chanky accounts, they have consistently been coming out as far as the corporate book is concerned. On P-segment home loans, that is sterile. There is no allegation. S&E also more or less sterile. Agriculture was the only one which was elevated on a portfolio basis. So that itself leaves a cushion that it thinks otherwise we were expecting that if it is not COVID then we were on track to deliver superior performance in this current financial event. But now we have to give up that upside probably because of the COVID And our base case scenario is that we should be able to repeat our performance of March 20 with slightly better number on the net earnings. Our PVT is 250 billion rupees in March 20. And the tax is 42%. And all DT on account of loan losses that has been absorbed, we have moved to the new tax regime. So that itself like some impact would be there 5-10% on the net profit after tax. Now if things turn out to be slightly worse than what it is, then we have a sufficient cushion in our earnings. And we are looking at that what happens in the next eight quarters. We are not talking about What happens in June? In June, there will be no festival, which is because of moratorium. Legacy account, as I said, that our book is at 510 billion rupees. In two years, we provide 50 billion rupees agriculture, and that takes care of 400 billion rupees. And that takes care of entire net NPA and corporate book. which is 170 billion rupees, entirely taken care of. And then we have a good amount sitting in, D3 and loss, 100% provided, likes of Bhushan Power and Steel. All those Chakdi recoveries will also come in. So in such a scenario, I am expecting that in eight quarters of our earning, would be around 140 billion rupees. Is it correct? Sometimes I get confused. Rs. 140,000. Rs. 1.4 trillion. That is what I am expecting over a two-year period. Rs. 400 billion we will keep aside for the legacy provision. So that leaves us with Rs. 1 trillion need to take to take care of all the credit costs which may arise in this two quarters. Then we have our subsidiaries which are performing exceedingly well. There's a lot of value sitting in there. There's a lot of value sitting in our D3 and loss accounts. So in such a scenario, even if some of the problems of the real economy get reflected, the banks balance sheet, in my view, and in our assessment as we speak, but the situation is dynamic and we will keep on reviewing the situation. Current situation and we have reviewed, in fact, each and every account as far as the corporate book goes. And as of now, I don't see any major concern. As I said, it's not that it's 100% stress-free book, but the stress is definitely manageable.

and we are capable of managing that stress.

About, there are certain steps and that is where I would, I think the presentation will be available to most of you. So, I am not going into the numbers. I am going into that how are we dealing with the COVID-19 situation. And I'm not using the word post because nobody knows today when that post will be. So it is a COVID-19. And our slide 17 of the presentation which shows that how as a very responsible corporate citizen, the state bank people have responded to the situation and have delivered both in terms of the quality service as well as the what we call the commitment to the society. And first time statement, employees contributed two days salary to the PMK as well. We have already committed that 1% of our net profit. It goes to our CSR activities, 25% of that. This 0.25% will be available for our foundation. and who are doing tremendous work to help out. Operation Resilience, I have already spoken about. Moratorium, already I gave numbers that 82% of our customers in detail, they have paid two or more installments. In corporate, it is hardly any number, 13% or 14% people in terms of amount, insignificant who have availed of moratorium. And in the corporate book, people are keeping it more as a reserve rather than anything else. Even if they have the capability of pay, just keeping some money for the rainy day. So I don't foresee any problem that our corporates will not be able to service their accounts. And now COVID-19, how are we going to deal with this situation? And they are on slide 18. I have put six points. A very strong liability franchise with a customer base of 49 crore. This is more than the population of couple of continents. And the kind of capability today's state bank has in terms of its IT, we can serve, we have created capacity for serving 2 billion customers. So that is the kind of capability we have today. And distribution network, I doubt that any bank in the globe can match SBI's distribution network. We have branches, we have digital channels, we have ATMs, we have 62,000 bank mitras. So even the physical presence is 62 plus 22, almost 84,000 physical touchpoints. And let me tell you, during this period when we had to transfer money to almost 9 to 10 crore customers, PM general account, women accounts, Kisan beneficiaries and everything has gone so effortlessly smoothly because of the fact that Bank Mitra channel we utilize their capability to the full extent and they delivered excellent service and very good help and going forward we are going to use them more effectively as far as our collection activities are concerned. I mentioned that our core PPOP, I'm just not mentioning whatever we get from some strategic investment sale or something like that, that is going at 10%. And that itself will give us in two years about 1.4 trillion rupees pre-provision operating profit. And that is a big shock absorber against any elevation in future credit costs. Legacy stress I have already spoken and all those numbers are there. So we are at just 510 billion rupees. That is what our net NPA is. We are well capitalized, well above the regulatory provisions required. We have large value sitting in subsidiaries. I have not mentioned but our D3 and laws book also gives us lot of money. by way of recoveries. Today, I can say with confidence and pride that what we have created in terms of UNO platform, no other bank can match it. And we are serving across retail, Krishi, UNO business, global, and corporate internet banking, which is about now 7 crore users. And even in COVID period, our UNO registrations are going on. We introduced a personal goal loan. In 10-12 minutes, people can get personal goal loan using Yono. Then a special pre-approved personal loan. So we are doing 1 billion rupees a day, minimum. Sometimes it is exceeding. And the selling of insurance products, credit cards, car loans, home loans, and it is not the end of the story still working yes and within six months the you know business platform which we are building for the corporates it will be state-of-the-art one of its kind and whatever functionalities are today the business users are very very pleased with its design and the performance and the productivity gain it has started happening It will be speeded up. We are now reducing our staff strength at administrative offices by 20%. Financial inclusion and micro market vertical has been launched and that has been launched on 1st of June. 35 RBOs, regional business offices have been closed. 20 administrative offices have been closed And as I said that we are redeploying people in a big way in the field and the new model where the partnership with the VC channel of Bank Mitras reliance on the people who have retired from the bank. So it's a very differentiated HR strategy to run this channel. Its contribution in branch network is higher, 38%. Its contribution in business is just 12%. and even if we improve it by 50 percent from 12 to 18, 20 percent it will be a huge productivity gain for the bank. So, this is around the FIMM vertical and our cost to income ratio at 52 percent. So, it is improved by 3 and a half percent, but our only issue is that the payment or provisions for the retirement benefits. So because of the fact that yields have gone down to some extent that is impacting us and when we do any comparison with the private sector banks this is the legacy of we have 12 to 13 percent of our income is going for these provisions which is inevitable and which is a cost which we have to realize We can't accept it, but if we just for a moment keep it aside, then our cost to income ratio is best and it is best in class, best in the interest. But as I said that I can't avoid it, I have to take into account, I have to provide for it. But for the comparison purpose only, I wanted to make this point and further productivity gain will be there. We are having a very tight control over overheads. that is like the past three years performance in terms of what is the growth rate in overheads that is very much for everyone to see and other than the cost component of if I exclude that then hardly 4% CAGR. So for a bank of our size which is very good and it is going to come down that is what I believe and Asset quality on slide 19, we have given some flavor about like why we believe that we will be able to maintain the asset quality. And other income, definitely there is going to be some impact. Our forex income will be impacted because the foreign trade of India has come down. The NRI remittances also will come down. recoveries also we are expecting that there will be an impact government business also but whatever impact is there on the other income we will be able to make it by NII I am not talking about NIM NIM I don't think that it's going to improve any further it is 3.19 and we should be able to maintain 3.19 or around But NII because of the balance sheet growth that will happen. And I think easily we will cross 1 trillion this year itself. So in such a scenario, the deep provision operating profit, we should be able to maintain it for PPOP. So this year this thing is 680 billion rupees. Okay, we may be without even this strategic sales we may be able to that is 680 million rupees and if there are any investment sale or that may be something. Extra solution question is there and definitely I can see that next slide which is 20. So, the agriculture I feel that there may be some opportunities coming in now with all the agri reforms. MSME end-to-end digitization has happened for so many products and we are using advanced analytics for underwriting and that is where again we may get some good quality growth and without compromising on underwriting standards. So nowhere bank is going to dilute its underwriting standards and we have been prudent in lending, we will continue to be prudent in lending. but at the same time if there are opportunities in the market so we are not going to miss it and detail I have already told that we are growing at 17% YOY currently so even if there is some slowdown but still we will be able to maintain I have already spoken about slide 21 how strong is the liability franchise distribution network and transaction banking unit of the bank. Slide 22 again I have spoken about that how we are going to maintain our core PPOP and DTA on account of loan losses is fully now taken care of and we are moved to the new tax regime. Slide 23 again about the loan portfolio and the last point about that we are moving to cash flow based lending we are using advanced analytics for the underwriting of the loan and that is how what enables us to give loans on a digital platform then collection mechanism collection is something where this will be very much under focus this year and it will be through partnership model particularly with our We have tested it successfully in Maharashtra and now all India all the rollout has happened. There are partnerships like SkyMet in MP which has worked very successfully in renewal and underwriting of KCC loans. On UNO also we are bringing KCC review. So, this will be just a 5 minute exercise. Again huge productivity gain. EWS system is very advanced in the bank. and specialized agencies which were appointed for monitoring of large exposure so many of them are in fact bringing lot of technological capabilities within for monitoring of the account uh 25 page 25 i have again spoken about our strong capital position and what are the levers available to us uh i have again spoken about slide 26 which is all about the digital platform and I can share that it has got huge recognition not only in India but globally and all over international partners of repute like IBM and McKinsey so this is their marketing tool now that they showcase you know everywhere and we have a plan and we are working on it and I think within two years we are going to create a very large B2B platform called Bharat Craft which will be in association with the MSME Ministry and the State Bank in India is today best place and we are creating capability and architecture in such a way that you know becomes a platform and it will have capability to integrate top two other platforms which are emerging in a big way so SBI you can imagine that what is the future SBI one as far as digital is concerned it will be a platform you know will be the brand name and that is a vision what we started it is now coming to a sort of food we are coming to near maturity I won't say that is a majority lot of work still needs to be done and a flexi SBI which will be capable of delivering not the doorstep banking bank at the doorstep what from anywhere is the now new norm new motto and our teams are working they have already have some prototypes and I have no doubt that in a very safe secured manner our people will be able to deliver services from anywhere and even the building in which we are sitting. So, we are now going to reduce the staff extent by 50 percent. So, my CDO is confirming that we are going to reduce the staff extent by 50 percent in the corporate centre. It is not that we are not, we will not be using that people, but some of the departments what we are finding that working from home is proving to be more productive even for me when I work from home I am more productive than coming to the office and that is true for all the MDs also. So, we have documented now and the again these slides 28 and 29 are more or less what I have spoken about that. how are we going to deal with the asset quality, how are we going to protect our free provision operating profit digital capability HR and the motto is change the bank, run the bank, fix to flex it. So that is all from my side and now whatever questions you have please one by one.

Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch screen telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. I'd like to remind all participants, before we start with the question and answer session, please limit your question to two per participant. You may rejoin the queue if you have a follow-up. We take the first question from the line of Amit Kumar from UTI. Please go ahead.

Good evening, sir. Hope all of you are doing fine. I just had a question on the moratorium.

If you can just give us an absolute number of loans which are under moratorium either in percentage terms and also how are you approaching the second moratorium?

So, one is that from our side we gave moratorium to 100 percent P and only thing what we did is that wherever there are standing instructions on NASH mandate we did check from the customers that what would they like to do with their mandate and which was I think a right thing to do. And if I look at the we are checking the numbers not in terms of the portfolio size, 82 percent people have paid two EMIs in this moratorium period and if I look at that second time when we went and checked from people about their mandate there is no significant difference. So, this 82 percent maybe in September it will improve, but right now we are expecting that there may not be any major change in the period because now the unlocking has started happening and there will be more cash in the hands of the people. So, sir, shall we assume that the second moratorium also is available for all the customer on a blanket basis? Yes, other than NBFCs where we are doing case to case basis and in case of NBFCs only 16 out of 117 have so far opted for the moratorium. And the 16 would account for what percentage of the NBFC book? Not more than 5%. Less than 5%. Less than 5%. answer this 82% have paid this number is as of April end or May end so basically we should assume that 18% of the portfolio is under moratorium as on May end from my side 100% is under moratorium but from customer side it is 18% okay thank you sir that's it from my side yes thank you we take the next question from the line of Deepak Agarwal from ASIC AMC please go ahead hello good evening sir good evening sir wanted to understand on the recent discipline code sharing relating to waiver of interest during moratorium period so wanted to understand your views is it possible not possible how should we look about it? No on a subject matter it's not appropriate for me to make any comment but only one is statistics which I shared on one of the channels also is that the state bank has two and a half crore borrowers and it has 49 crore depositors and bank in its fiduciary capacity is what it does take money from the depositors, give it to the borrowers, borrowers pay back, they pay back to the depositors. So, wherever it has so happened that borrowers have not paid back, so those people found it difficult to give money back to their depositors, more than that I won't say anything else. Ok, got it got it. Sir, second question relating to moratorium you did mention that about 18% of the people have asked. But when we look at other, obviously other state-owned banks are here to report numbers, but even if you see for large private banks, those numbers are closer to 30-35% in many cases. So how should we understand, like, is it, why are the numbers much lower? It's a good thing it's lower, but how do we reach them, sir? Because one simple thing that our segment from the beginning has been more towards the salaried class and within the salaried class also employed by the governments or their undertakings, public sector undertakings. So, the customer profile was always different and we have always been very careful about the loan to value ratio as well as to their capability to pay. which is EMI, NMI ratio. So we have not gone overboard in the last. Whenever we have just started building our portfolio and for the pre-approved personal loans or personal loans, again it is all against salary. So the absence of what we call self-employment, professionals or self-employed people, so that percentage in the state banks case is very low. And I think that is the only possible reason that why the number in case of the State Bank of India is different than other banks. Okay, okay, okay. So, if you have to say further on this say SME because if you talk to others say SME is almost 70-80% of people have availed moratorium in at least other banks and NBFCs. So, what would be a similar number because SME is roughly 2,80,000 crore book for us It is not 2,80,000 crores, it is 1,89,000 crores. And out of which performing would be about 165 or 170.

57,000 were come along, sir.

57,000 people.

57,000 crores.

57,000 crores. So that comes to about, I would say, this also number will come out to less than 25%.

No, sir, in this instance, we have about 47% of the people.

In MSM the number is higher and in line with other banks. Got it, got it. Okay. And so just last something from my side. So your tenure with the bank is I think around September it ends. Anything you are hearing from RBI because we keep on hearing that there could be extension this time around generally for the sector. That you have to ask RBI and whatever. Okay.

Thank you so much. Thank you.

Thank you. We take the next question from the line of Maru Kadjania from Ilara. Please go ahead.

Hi Sir, just a clarification again on moratorium, if you were to include moratorium offered on working capital what would our moratorium number be against the 23% on just term loans?

We are not tracking it that way, the way we are tracking is that what is the interest amount on a monthly basis which we are setting aside and is not paid so that number is coming to an average of 1500 crore per month.

Okay and sir correct me if I am wrong so what you said is that the people or the amount of loans and the moratorium that you disclosed is all those who have not paid two installments.

82% have paid two or more installments.

So when you say someone is under moratorium or 23% is under moratorium, it means that the person has paid one installment or two installments or no installment.

No, no, no. Very clearly, we are not taking one installment payment. When we say that two or more installments out of three, the number is 82%. One installment, you add another 10%. So that becomes 92%. Those who have not paid any installment, that is 8%.

Okay, so the moratorium is?

100%. From my side, 100% people, we have given moratorium as per RBI guidelines. It is your choice. I have given to you. You don't want to pay, don't pay. But if you want to pay, I am not stopping you from paying.

But 23% includes those who have not paid 1 and those who have paid 2 also, right?

23% includes again 23%, you say 8% who have not paid any installment. 9%. 9%. 7%. 7% is? 1 E.M. 1 E.M. I think. And the install have paid. Decimals some difference happened. So, ultimately it is coming to 17% also. So that will like, one is that even if those who have not paid, it is not a pointer to the fact that they will default. So that is one. In housing loans, because the portfolio quality is such, loan to value ratios are so good, I have seen in the past that even if there is some delay or area condition, but over a period of time it gets adjusted because 92% of our home loan is to those people who live in those houses, so they do not easily default.

So, and my other question is on your margin, so there has been declining yield in the quarter on a sequential basis that is driven by what?

Interest reversal on Agri NP and SR Steel.

Correct, but this Agri-MTL it just during the quarter or there has been some change in policy?

During the quarter.

So whatever became MTL during the quarter reversal on that right not any change in policy or any such thing? No.

Because you have to go back three years.

Okay, so it's a three year reversal.

So 5000 crore fresh rupees in Agri, so obviously there is a reversal of? interest on this 5000 coins that itself will be fairly substantial amount almost 20-30 percent.

Thank you we take the next question from the line of Roshan Siddiqui from IIT Central Mutual Fund please go ahead.

Yeah thank you taking my question am I audible yes yes hello yeah please go ahead sure

So sir I wanted to understand the thought process behind how you go about doing the deposit rate cut when we did cut rates last month five and a half on TD just wanted to understand is there any quant approach that we follow just your thoughts on this. So the thought is that we should protect our name and if RBI cut 6 so we also cut the rate. the issues that when RBI cut the rate transmission has to happen. So, we have to pass on the rate cut benefit to the borrowers and I can't do that without doing the transmission on the liability side. So, we do transmission on both sides. So, in January you were at around 6.1. Now you are at around 5 and a half. Yeah. In the interim RBI has cut a lot more than that and I mean but that is only ALM function so on asset side also it is not that completely we have passed on there is something called external benchmark linked loan so there we pass on the full but MCLR it doesn't happen in full because the formula in MCLR is different so ultimately as I said that MCLR is linked to the deposit rate right MCLR is linked to the deposit rate right margin deposit rate right Yeah, MCLR, MCLR. Marginal cost of lending rate that is linked to your cost of funding. Right. Your external benchmarking rates it is not linked to your cost of funding, it is straight away linked to your vapor rate movement. That's right, my point is when you are borrowing that 5 and a half and parking in RBI, at RBI reverse repo window. getting money at 2.7 also and getting money at 2.90. So, it is not that entire five and a half and we have to take care of our retail franchise and in what maturity it is. So, then this is a temporary phenomenon, it is not a permanent phenomenon. So, I cannot cut the interest rate on fixed deposits beyond a point. There are several considerations in the whole exercise, but As far as refouling lawyers are concerned, so we take care by cutting down the interest rate that our NII or sorry not NII, name remains protected. Sure and just one other question on the moratorium. I was not very clear when you asked answer, Maruk if you can just repeat yourself there. So, 23 percent is the moratorium that is considered based on the how what is the approach that you follow you said. We are taking the approaches that we have provided moratorium from our side to 100% of the people are there, they are MDS and what we are finding that 83% people they have paid toward more installments. 83% of this 24% school. Total, total.

Just to give you some broad numbers, if you take our term loan customers,

is about 94 points 94 lakhs unknown accounts and out of which the people who have not paid zero install who have not paid even a single installment is 9 lakhs 9 lakhs and 7 lakhs people are paid once and 7 lakhs people have paid one installment rest all have paid two installments or more many of them have paid even more than three installments The people who are paid zero or one installment, that number is 17%.

Thank you. We take the next question from the line of Manish Sarwar from Access Capital. Please go ahead.

Yeah. Hi, sir.

On the cost front I wanted to check what are the levers that we have to cut down on cost or can we say that next year which is fiscal 21 our absolute cost will be lower than F20?

It's not lower but our plan is that it will in absolute number other than the cost on account of retirement benefit that would all depend upon how the yields play out. But if you exclude that then our aim as of now is that there should not be any increase.

And where do you see you will have some savings coming in? Like most of the private sector banks have cut down significantly on rentals, work from home is helping them reduce cost. Are we also working on many such initiatives?

Yes, we are and that's where I said that our FIMM vertical initiative is a big initiative to cut down the costs. because they take 38% of our branch network and contribute 10% of the business so that is why we are cutting down from administrative offices so there will be savings there is a fairly big savings possible and then we are making it a flexi SBI that is also very much on the area. Yeah, travel, training, there are a lot of things which are happening. So, overheads, stop costs, all are expected to come down.

Okay. And if I may ask, you know, many of the private banks are also not giving any pay raise this year, no bonus this year. Can, as a public sector entity, we can do that?

As in, can we...

Okay.

And the second question is on the second round of moratorium. How are we doing? Are we will we give it to all our customers or do we approach do we have a different approach this time?

Really same approach and the same trend.

Okay.

Thank you. Before we take the next question, I'd like to remind participants, please limit your questions to one per participant. You may rejoin the queue if you have a follow-up as we have many people waiting for their turn. We take the next question from the line of Kunal Shah from ICC. Jyoti, please go ahead.

Yeah, thanks for taking my question. So firstly on the NBFCs, we are now 8% to 9% of the book. So how comfortable we would be further lending to the NBFC as a sector? And even within the corporates, are we seeing that more funding is done to the existing relationship from the undrawn line? And that could be one of the reasons wherein the moratorium is still on the lower side?

No, that is also not the case. So, just to give you a sense, in the COVID bind which you are aware that State Bank had given, you know, that additional 20%, additional 10% initially. In that, about 5000 crores we were able to sanction and the drawing is only 2000 crores.

So, they have taken sanction but they are not drawing because as of now As of March 31st, most of our corporates had sufficient cash before COVID. And going forward as the lockdown unfolds, they will then take a call and go forward. I think it is a reflection also of the quality of the book that we had before COVID has set in. So while there is a little bit of uncertainty about the impact of COVID, it is the quality of the overall asset book.

which is holding on for state bank and that is why you see that these numbers are significantly lower. And NBFC we are doing it on case to case basis and whatever is our share in the lending NBFC is borrowed from multiple sources and the requirements over which has come is not used, they are all smaller exposures. They are also we are making use and will make use of partial credit guarantee scheme which government is giving. And we will be able to support the sector. There is no doubt about it. But we will be able to manage the risk also. Sure.

Thank you. We take the next question from the line of Anand Varda from HPSC Mutual Fund. Please go ahead.

Hello, sir. I'm out. Yes, yes.

Just from the agri slippages you indicated this quarter of the 5,000 crores, we could seen have a reversal of 300 crores of interest income. If I had to look at for the full year as a whole, we had 15,000 crores slippages from the agri. Would that be fair to say almost 20 to 30% of interest reversal would happen on this? Yeah, 30% you can say. Because if we apply 9%, 9 into 3, 27% is so the three years interest will come to around there okay so it's activity four four and a half thousand foot of interest interest reversal could have happened this year agriculture yeah okay and so do you still believe sir since now agriculture that favor is behind as agriculture slip it has come down do you see where do you see this number for fi 21 normal which was like whatever was 19 or 18 number So our slippage would be in that way. Only in 2020 it was elevated. So it will be an additional NP of about 9 to 10, 8,000 crore. It just doubled. 8,000, 9,000, 8 to 15,000. Yeah. Okay. Yeah, and just here like the crops have been good. Ravi is good. Curry flowing I am told is going to be good. So that way like even in COVID-19 agriculture is one segment which is less impacted. So that way like in 20 and that's what I said that when we are doing all over this analysis the 7-8 thousand crore which we did extra in Agri. So Agri I am not expecting that it will be there. So, other sectors can contribute like your housing or SME. So, we have that question in.

Yeah, every component is a big component.

Thank you. We take the next question from the line of Raval Gada from GSP Investing. Please go ahead.

Yeah, hi sir, thanks for the opportunity.

Just couple of questions. First is on the fee income, sir, how are you thinking of fee growth next year?

And the second bit is in terms of the profit from the sale of subsidies to about 6,000 crore plus in FY20, how do you sort of intend to monetize those stakes in FY21 in terms of any thought process on that front?

So FY21 as we like to and half percent we can necessarily do and we have time for that and other than that we had AMC on the radar but in current situation I don't think that we can as on date I can make any definitive statement we will think but otherwise about the other income so including all this income from sale of investments and everything we are at 450 billion rupees. So, there may be like it will be difficult because one is the studied investment share is there then some pressure on forex income on the the same. So, that is what I said that there will be some pressure on the other income this year, but compensating would come from the NIMU.

Thank you. We take the next question from the line of Jai Moondra from the NK Securities. Please go ahead.

Thanks for the opportunity.

Sir, once again on moratorium, if you can share what is the loan and the term loan. So you have given 23% by value on term loan component. What is the total term loan of the bank?

We have not given it by value. We have given it by number. So, we said that 94 lakh terminal accounts are there, 9 lakh have not paid any installment and 7 lakh have paid one installment and rest all have paid two installments or more. So, I think that you mentioned in your presentation that 23% of the term loans. This is all about number. It's not about the value anyway.

So, by value what is the loans under moratorium sir for the entire bank?

It will be, we have not done that analysis but it will be lower because it will be the smaller value loans. where people will find it difficult to service, but that analysis also I think we can do. We can do, but currently we have not done. Currently we have not done. We have an estimate in the corporate book. Corporate book we have. Corporate book with hardly 7 to 8 percent in terms of value. And in terms of number it is 13 percent. In number it is. So, corporate book we have that number. For the retail we have not done, but what happens that these are generally the small value accounts where there is. uh this situation the mid value high value they don't differ thank you we take the next question from the line of circle please please go ahead uh thank you uh sir uh you know you could be clarified like uh on the working rapidly side you mentioned that about the 1500 crores of interest income only has taken a moratorium uh per month basis so uh

At the bank level, what is the size of working capital loans?

Out of like, you know, the 23 lakh crore, you know. Forget about the IPG book. So our domestic book is 28 and a half lakh crore. And I think it would be about 9 lakh crore. 4 to 5 in corporate. I'll just tell you what is our working capital outstanding. That's a daily number, but it will be about 9 lakhs. 9 lakhs.

9 lakh crores. And there could be some deposits and all this.

No, whatever it is. All type of working capital loan, our total book is 9 lakh crores. Right. So, sir, basically, if I can come to say, even if you take an average yield of 9% on 9 lakhs, It is 81,000 crore means 7,500 crore or so. That would be the interest applied to these accounts. Again, it will come to the same 15 to 20 percent.

Sir, would it be fair to assume that or just a reverse calculation as you rightly said that 1,500 crores on a full year basis works out to whatever 18,000 crores. I know it's not a full year adjustment.

I'm just basically, you know, looking at it. In six months period, you will have 9,000 crore of interest to be recovered in seven installments starting from September. That's all.

So, broadly by value, would it be fair to assume that right now, approximately 20% of the working capital borrowers are also taking moratorium from interest servicing?

Maybe, yeah. Yeah? Okay.

Thank you, sir. I would like 71,000.

Thank you. We take the next question from the line of Dora Venduja from GPL Capital.

Please go ahead. Thank you for taking my question. Am I on well? Yeah. Yeah, I just wanted some color on advances going forward, especially to, you know, the MSME sector given the guarantee under the new scheme. So how are we seeing that pan out and how can you throw some color on that?

So, GCL we have 8 lakh eligible borrowers and 29,000 crore that is what is it comes out to be 20%, right. So, what is like by 5 times, so 1 lakh 50,000 crore worth of portfolio is eligible and then we have given offer to everyone. and let us see that how many people avail that offer. But we are open to giving it to everyone.

So what has been the response so far from this?

So far good about 10% we have in terms of number and 30% or 35% in terms of value. So that is already done.

All right, all right. Makes sense. Thank you.

Thank you. We take the next question from the line of Rahul from Goldman Sachs. Please go ahead.

Yeah, hi. Good evening, sir. Am I audible? Am I audible, sir?

Yes, sir. You are audible. Please go ahead.

Thank you. Sir, just one clarification. So the moratorium number that you have disclosed, just wanted to check, does it cover all the portfolios including agriculture, et cetera? It is your P, Housing and Lessing. Agree, we have not covered. Agree and corporate. We agree and corporate. Agree, now the government has given time up to 31st August. In any case, agree because it is aligned to the crop season. So there is no relevance of monthly moratorium or EMI. the this is all the crop season is I think May and November that's right so in any case the payments would have become due in 31st May so which will get extended by 90 days it is aligned to crop season make sense and so basically outside of these sectors it covers all the category of customers including everybody other than actually everything yeah yeah Just one small clarification further. So, is it possible to get some color as to the customers who paid no installments, which is 9 lakhs, and those who paid one installment, that is 7 lakhs. Can you give us some color as to which sector, which segment is this, or which category? We will do. But as I said, there would be smaller accounts, not the bigger accounts. Yeah, because the worry is, sir, in seven months, you know, how easy it would be to cover, you know, the rest of the installments. A large chunk of it would be housing loans. And housing loans, as I said, that it is a function of two things. One is that even if there is some area conditions, but people pay. And why do they pay? Because 92% of them live in those houses. That's why the recovery percentage I am not worried about either in housing or P-segment.

Even P-segment, sir. Unsecured personal loan. These are the 20% overall. But if you take only the unsecured personal loan, the people who are availed moratorium is 5%.

And SME because of all these leverages which have been given by RBI. So that's why you will be able to manage. So the We are not overtly worried about what will happen in September. And let me tell you that our soft calls, not the recovery call, but our customer engagement during this period has increased. Because many people are working from home, so all of them, they have been told to do soft calls on the customers. But that is going in a very soft manner. Many of the customers have said they are T-segment and home loans. They are not paying because they just want to conserve cash for the family.

As soon as possible, they will pay. Yeah.

Thank you. We take the next question. from the line of Anand Ladha. Please go ahead. Mr. Anand Ladha, your line is unreaded. Please go ahead with your question, sir.

There's some problem.

As there is no response from the current participants, we take the next question from the line of Marika Jarnia from Inara. Please go ahead.

Yeah, hi, sir. Yeah, I just wanted to check on NDSC. So in April, how much would you have of fresh loans or fresh... Debt, would you have extended to NDFCs and HFCs collectively in April because there was CTRO. A lot of NDFCs have said on call that they have borrowed from CFUs including SBI.

So, sanctions, we are working on about 50 proposals. Most of them are to the smaller companies, the smaller NDFCs. And roughly, it would be totaling around 15,000 to 18,000 crores of proposals. of which I think by now 20% would have been sanctioned. But the reversal will now happen. As you rightly said, it is a mixture of investment and loans. And in no case, just to give a color, in no case have they asked for anything more than maybe 15%. The average is around 15% to 20% of their existing exposure.

Okay, sir, and how much of this is under TLTRO 1 and 2?

TLTRO 1 and 2, we will have to split the NBFC, but TLTRO 2 was only for NBFC.

Sorry, sir?

1000 crores we have already given to NBFC.

TLTRO 2 was for NBFC, so 3000 crores is what we took from RBI. 1000 crores is already given. And the remaining 2,000 are also lined up.

Yeah, 2,000 also should be happening very soon.

Okay, sir. Thank you.

And now we take the next question from the line on the luncheon transfer from IDFC security.

Please go ahead.

Hi, sir. Going back to the SME question, I mean, I couldn't follow what you explained about the GCL, which is 29,000 crores. Could you explain that, please?

Actually, the total eligible amount for this GECL loan is 1,70,000 crores. So 20% of that would be around 30,000 crores, which can be disbursed to 8.1 lakh SMB borrowers.

Right. And is it like a blanket approval for all of them?

We have given an offer letter to everyone who is eligible. So people have to opt in. That means if they want, they have to come and sign off. If they don't want, they don't have to come. So far, around 60,000 approvals we have given are aggregating to around 10,000 crores. So, once earned by value and around 10% by number, so far I've been given these sanctions. They may take money over a period of time because they've allowed the disbursement over three to four tranches.

Right. And just on the same question, sir, are you doing a fresh underwriting when you are giving the extra money irrespective of, in spite of this being a guarantee?

As you said, this is a guaranteed loan and it is also a pre-approved loan. So as long as the customer is fulfilling the requirements of the guarantee requirement, we are offering to everyone. There is no additional assessment involved in this. And the guarantee guidelines also say that there is no additional assessment required.

Data question, sir. What is the outstanding ICA that you are sitting on at this point? Yeah. Number or amount? Amount. We can provide it to you separately. Sure. Thank you very much, sir.

Thank you. We take the next question from the line of Sena.

Sir, just want to know what is the home loan moratorium, sir?

Home loan is around 20%. 20% of our customers of home loans have availed the moratorium.

At this time, the value-wise, sir, how much would that be?

We don't have the value-wise because we have not done that kind of analysis.

We actually went by the number of accounts, number of customers who are taking this. And in unsecured, it's just 5% of the customers have taken moratorium.

So when we are actually paying who has availed moratorium, in these three months, if they're paid – two and more installments, we consider that they have not availed the moratorium. So by that standard, it is 5.1% in the unsecured personal loan and 20% in the home loan.

Okay, sir. Thank you.

Thank you. We take the next question from the Naina Bhavikdhavi from Nippon India.

Please go ahead. Hi. Good evening, sir. A couple of questions. Just to continue the previous topic, what is the number of home loan customers that we have?

We have a total 38 lakh home loan customers.

Okay. And out of this, 20,000 are roughly getting more or less. Yeah. And secondly, sir, on the IVC front, where we were expecting a lot of resolution and unfortunately the COVID got stalled, with IVC being suspended for a year, how does the recovery pipeline, especially in the Agenda 5 Power Project and some of the ICAs that we have signed, How do you see recovery on the corporate side for FY21?

I think Chairman has also mentioned earlier occasion. The suspension, we have to await the ordinance anyway. But the suspension will not be applicable to the earlier defaults. So many of our power assets are under that category. And we have, wherever it is required, we have initiated the IGC process. I mean, I think 90% of our power assets, you know, is under IBC. And two, three cases where we were, you know, negotiating outside the IBC, we are hopeful that that will get done in the Q2, that is, quarter of July 2022.

And that quantum was like around 70,000 crores at that time, correct?

The total, our remaining power portfolio is around 34,000. 24,000, I think, is only four cases which are outside IPC.

And what will be the content be like for these four cases?

I can give you a little later.

Okay, no problem. We can share it, but IPP, our exposures now, whatever left is nothing significant. Okay.

And now incremental...

they are already in process and that too in any case we were not planning to take them to NCLT the issue is that whatever were the cases which were in June July when the revised resolution framework came so all those cases either they have been referred to NCLT or whatever was remaining, six cases. So we had no plans to take them to NCLT. We would have either provided 100% or if it is not 100%, we would have provided whatever RGI says in terms of 7th June circular. And so those accounts have been taken care of and it really doesn't matter that now we can't take them to IVC because that was not the plan.

And so we have 73% PCR under power access.

Yes. And there is another piece of information that power sector NPA is 73% CCR.

Thank you.

Thank you. We take the next question from the line of others from CLSA. Please go ahead.

Hello. Hello. Yes, please. Okay. Sir, I just repeat, you know, one of the questions we had on margins. Our yields have come off pretty sharply. One of the things that was mentioned was on the agri-reversal. What are the other reasons that you mentioned for the... In November, we had SRS field resolution. Yeah. Part of it, whatever came, part of it went to the interest income. Right, sir. But even if I track our NII, that I understand is a movement from the 3Q to 4Q, right? That it's a drop. But even if I go and track our NII from 2Q and 1Q level or even 4Q last year, in spite of the balance sheet growth, our NII is still down. So still not able because even last year we would have had the aggregate reversal. So our NII was down still YY. No, not to this extent because as I said that instead of 7,000 crore, if we have 15,000 crore and 30 to 35% would be NII reversal impact. So NII and quarter to quarter variation is all because of one account which is SRS team. So for NII, overall we have got 98,000 crore during the four quarters. And which is up by 11%. So, I think that is a fairly good number. And balance sheet growth, obviously, like more on the deposit side and loan growth has been 5%. So, if you look at this analysis of how the interest income has grown and how the interest expenses have grown, this one slide on that, that would explain the whole thing. So, no, it's pretty clear that we've done a good job in the year.

Just that as you exit the year, right, which was the third quarter and then the fourth quarter performance, there seems to be some shave-off in the margins if you exclude that SR scale, right?

So, it seems that there is some pressure. So, if you can just… In last year we had NIA of 98,000 crore, right? 98,000 crore. This year we will exceed 1 trillion, 8 lakh crore.

Understood. Perfect. So, okay. I will take it offline.

Thank you. Thank you. We will take the next question from the line of Anand Ladha from HGFC Mutual Fund. Please go ahead.

Sir, can you hear me now, sir? Yes. Yes.

Sir, on the pension negotiation side, sir, if you can give some position completed at what level it's happening and what sort of provision we have made. And on the pension side, if you can give some other like till what level rate of interest that is counted we have taken. And next year onwards, sir, what should be the provision? What is that reservation we have been providing at 10%. and this year we have made a provision of 3000 crore last year we made a provision of 4000 crore and this year the provision for wage division there are two components to wage division one is your normal what we call the payslip component and second is on account of payslip component the impact on the pension so pension because we are now in the normal course enhancing the escalation rate both For the salary and pension escalation rate, which has gone up from 0.4% to 0.8% now, so that's why in the wage division, your pension provision has come down. That is where we stand, and about the negotiation, I think everybody was locked down, so were our union leaders. Now, I think talks should restart. Coherently about this thing and about the pension as I said that in pension when you do actuarial valuation there are couple of assumptions. So the yields have come down by 100 basis point almost. So that's why your pension liability has the provisions have gone up from 7000 crore to 13000 crore. So that is the impact of One, the yield has come down. Second, progressively we are increasing what we call the pension escalation rate. And that will go on for three years more. We have to take it to 2%. That is our understanding with the Riverbank of India. Pension, I think, what I feel, that we are more than adequately provided. We are a little bit over-provided. But that's all right. And vegetation, whatever is required, we can absorb. But in any case, a large chunk of it we are providing.

Does that answer your question?

Thank you. We take the next question from the line of Abhishek Nadal. Sir, my answer, please go ahead.

Yeah, thanks. Sir, my question has been answered. and all the best.

Thank you. We take the next question from the line of Anirban Selkar from Principal AMC. Please go ahead.

Yeah, hi. Thank you, sir. Just one question.

I see a sharp increase in your exposure to commercial real estate and to petrochemical sector. Could you explain that?

Commercial real sector is all LRD using discounting and that would be one. A lot of it is to the very large funds which are operating in India and have acquired some of the commercial units. So that is one. So qualitatively both the owner as well as the tenant. This is a very high quality portfolio. And as far as petrochemical sector is concerned, it is mostly government owned ONCs. And that is where our exposure is. So, this is one of the best quality portfolio ever.

Sir, my next question is regarding capital raise. So, we already have an approval. So, have we rethought the amount in the light of the recent event or?

No, I don't think we need to raise capital either from the government or from the market.

So, the CET1 is a 9.77%.

9.4 is around 51, so like our compound level is around 10, so it will happen in just a year hopefully.

Thank you. We take the next question from the line of Kajal Gandhi from ICC Securities. Please go ahead.

Hello. Am I audible? Yes, sir. Sir, I just wanted to know, you have seen extremely high level of deposit growth because the flow is coming to your side. So what will be your strategy now on the liability side? because we are sitting on excess liquidity.

It's obvious that of course we are the lowest interest here in the market and the differential is anywhere between 30 to 100 basis point. But we have a huge customer base, 49 crore customers. Only thing is that we want to keep it, the cost we have to keep under control, and that is what we have been able to do. And on the deployment side, we are looking for good opportunities. In two months, our high-quality bond portfolio has gone up by almost 1 trillion rupees. And they all are AAAs, 32,000 crores we got from RBI, so everything is very high quality department. So some expansion in the bond portfolio has happened and we are hoping that going forward the deposit growth may slow down. Because right now what is happening is that the money is flowing in and it is not going out as much. Even savings bank, I am seeing that the rate of withdrawal on a monthly basis for last two months, it has come down. Because the opportunity to expand is not there. People are not traveling, people are not going to shopping malls. Some for basic needs only people are using money.

So I think this will change. Yeah, next question. Nisam, I think one or two questions because we have answered everything.

Operator?

Yeah, so I think we'll take two more questions and then we'll close.

Yeah, I think there's some problem with the line. Just hold for a second.

I think it's going to be a positive. A detailed positive.

So while we wait for operator to reconnect, but I have one question.

Given you have such large market share in terms of having corporate salary accounts, so what trends have you witnessed in terms of salaries being credited for employees of corporates across India for non-PSUs?

Are you seeing any trend in salaries being credited for non-PSUs? Non-PSU portfolio is not as huge as the government. But if I go, we have not done that, honestly, that portfolio analysis in that sense. But most of the money comes to the savings bank account. And savings bank account, our YGT growth is almost 900 billion rupees. 90,000. 90,000. The savings bank is 90,000.

Now, here I am.

No, previous year was 15,000, 16,000. 9,000. So, it means that the salaries are being paid. Sure. So, I'll take this offline.

Operator, can we move to the next question?

Sure. We'll take the next question. From the line of Pankaj Agarwal from Ambit. Please go ahead.

Yeah. Hello, sir. Hello. Sir, am I audible? Yes. Yeah. Sir, in case you need to register this year,

What would be the tapered one? Would you go to the market or you would just take in your subsidiary?

What is it? Capital risk. Capital risk, one is that our profits and earnings should be sufficient. So first is we are relying on our surplus from the earnings. And subsidiary, of course, there is only one compulsion, which is to sell 2.11% of SBI life. That is what we have to legally do. That's just all of our choice and whenever the time is right, we will do it.

But sir, what would be the choice given where the stock price is?

Is it selling taking such things or raising from the market at such low values? Well, it is right. We are not going by the price. We will just see that whenever the time is right for listing our AMC and the SBA general. So, that is the call we will take. We are in no hurry, I would say. Okay, thank you.

Thank you. We'll take the last question from the line of Ramos from Goldman Sachs.

Please go ahead. Sir, thanks a lot for giving me the opportunity. And this last question, is there enough talk of possible restructuring of loan that could be allowed by the Reserve Bank of India? Should that be allowed? Restructuring? No. What do you think, how much of the loan portfolio could potentially be restructured? Just a rough guess. So if you ask me that in my portfolio, it is not more than half or 0.75% of my loan book. One is that this six months moratorium on term loan installment, in a way it is a mini where like the six months installment, one can choose to pay at the end of the term loan, whenever the term loan ends. Other than that, MSME, because there is a support available by way of this guaranteed emergency credit line, bank's own credit line, and the dispensation given by RBI for reassessment of working capital. So there are tools available. Now the deep restructuring, if you ask me, would be required only for those accounts or corporates which are really in deep trouble. So that we would know only when this unlocking happens and we come to know. But as of now, our discussion with all the mid-size and large corporates, we don't have any request as on date for any research. So I think and I would also, this is my view, would like to wait and recalibrate or calibrate their response depending upon how things unfold okay so essentially it should not really lead to a large buildup of your research in pipeline i don't think so that's very confidential thank you so much sir thank you thank you So we can close, right?

Yes.

All right. I would now like to hand the conscience back to the management for their closing comments. You may please give your closing comments.

Thank you very much to all the analysts. We really enjoyed the question and answer session. We hope we have replied to all the questions. Whatever is left over, we will provide separately. Thank you. Thanks to management team again. Thank you everyone. Thank you. Thank you.