State Bank of India

Ladies and gentlemen, good day and welcome to SBI Q4 Meet hosted by State Bank of India. 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 card and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Pawan Kedia, General Manager, Performance Planning and Review from State Bank of India. Thank you and over to you, sir.

Thank you. 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 Q4 FY21 Turning Conference Call. On the call today, we have with us our chairman, Mr. Dinesh Kumar Khara, Mr. C.S. Shakti, Managing Director, Retail and Digital Banking, Mr. Aswani Bhatia, Managing Director, Corporate Banking and Global Markets, Mr. Swaminathan J., Managing Director, Risk, Compliance and Stress Assets Resolution Group, Mr. Aswani Diwari, Managing Director, International Banking, Technology and Subsidy, Mr. Alok Chaudhary, Deputy Managing Director, Finance, and Mr. Charanji Tatra, Chief Financial Officer. Before I request our Chairman to give a brief summary of the Bank's Q4 FY21 performance and the strategic initiative undertaken, I would like to read out the safe forward 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 request our chairman, sir, to make his opening remarks.

Thank you. Thank you very much, Mohan. Good evening, ladies and gentlemen. Thank you for joining this conference call. I want to start by thanking the support of all our stakeholders during these challenging times. Our employees have worked tirelessly to support our customers. We also appreciate the support of our customers. In financial year 21, the bank has delivered a ROE of almost 10% with a slippage ratio of 1.18%. The net NPA is at 36,810 crores, which is 0.5 times of our financial year 21 operating profit. In addition to a PCR of 70.88%, the bank has additional provision of 25,376 crores at the end of financial year 21. I would like to highlight that the bank has delivered almost a 10% ROE in a year when the credit deposit ratio is at a cyclical low. And when the incremental credit deposit ratio was only 26% due to various one-off factors. The bank has demonstrated its resilience in this challenging period. In the long term, the commitment of the management remains to demonstrate that this institution can deliver sustainable ROE of 15%. While challenges remain due to the COVID-19 and its resultant impact, we believe that the bank can weather the disruptions and come out stronger. We won't give a timeline for our ROE target in the current uncertain environment. However, we remain confident that the bank has enablers in place to deliver 15% sustainable ROE over the long term. In our view, the recent past from 16 to 20 is only a small period for a bank of our heritage of more than 215 years. We believe with the efforts of our team, we have put up that the period behind us should be a history now. We have used that period to further insulate the bank against visible and invisible risk, further strengthen our processes, and have put in place long-term value drivers like digital banking and stress assess resolution skill sets. We remain well capitalized with a CET ratio of 10.02%. Given the dynamics of our business, our competitive positioning, and our value drivers, we believe our current capital and future internal accruals will be sufficient in helping us achieve our long-term growth and return targets. Further, we remain conscious that the cost of equity is a value driver of our bank and we intend to minimize the same to maximize the value of our existing long-term shareholders. We have supported the bank in very challenging periods. We believe at our scale and the resultant complexities, we have been successful in balancing the requirement of all the stakeholders. Concluding my opening remarks, I would like to thank you all for the support to this institution. 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 very much.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the attached hotel screen. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, We will wait for a moment while the questions keep assembling. The first question is from the line of Madhu Patajanian from Ilaria Capital. Please go ahead.

Congratulations. My first question is on your interest reversal. So what was the total interest reversed in Q4, including interest on interest?

Yeah, as far as the interest reversal is concerned, we reversed about 2,127 crores during the quarter as the performance of previous quarters was stamped as NPA. And also interest on interest component is somewhere around 830 crores.

Okay, so both together around 30 billion.

Yeah. Okay, and the other question is that in the... Actually, if we reckon that component, the number which actually is the NII for the quarter will actually look to be an improvement of 4.18% sequentially as against a decline of 6.08%, which apparently is looking like.

Correct, sir. Sir, my other question is on inter-quarter netting. So in the third quarter, we had recoveries of the second quarter performance slippages of around 60 billion. So was there any such inter-quarter netting in the fourth quarter in the gross slippage number? The reason I'm asking is, okay, yeah.

Yeah, yeah. Actually, you know, this was a year and closer. And so there was no question for us to account for any such recoveries as on 31st of March.

Okay, so this is the complete gross number without any inter-quarter netting.

Absolutely.

Okay, sir, because the reason I'm asking is because if you try to subtract nine months agri-slippage from full-year slippage, then it's kind of a negative number.

Yes. Maharak, these numbers, actually the aggregate NPAs have come down.

Okay. Yes. Okay. Got it, sir. And my third question is on April collection efficiency. Firstly, what is the total number of infected employees currently in the bank?

Well, of course, the number would not be there with me rightly right now. But nevertheless, we have made some efforts. We have, as far as our own infrastructure is concerned, we have tried to convert them into the quarantine centers. Almost 1,000 towards such number of vets have been created as the current time centers. And we are ensuring that our employees stay protected. And for that, we have also got the vaccination done. Almost 1,10,000 plus employees have already been vaccinated in the bank. So that's what the situation is.

And the April collection efficiency and even any color on May collection efficiency that you could give? Because the problem started after the fourth quarter.

April collection efficiency is around 95, 96. So May is, we have not yet looked into it. It looks like to be around the same as of now.

But March would be what compared to this 95, 96 in April?

I think March was little better than this. 20 basis point more it was in March.

Okay, so there has been no impact of the second wave on your collection efficiency.

See, I mean 20 basis point impact which is there and moreover, you know, there is always some kind of a lag between the event and the actual collection. So that is something which we will have to wait and watch.

Okay, so my last question is on express loans. We already have a book of 1.9 trillion. It's grown 8% quarter on quarter and 36% year on year. So it's a very sizable book. So can you give some more color in terms of number of accounts over which these loans are split and total percentage of government employees who avail these loans including defense and also all government and government related employees percentage and also the number of total accounts.

It could be majorly government employees only. These are salaried accounts only and also A very significant portion of that is. I would say that as I hear about 95% would be. No, I think these are salaried accounts.

95% salaried accounts.

95% salaried accounts as far as government employees, about, say, yeah, around 50% of that would be the government employees.

And 50% less of the corporate employees who have salaried accounts. Corporate salaried accounts. Our focus on express credit would be on the salaried class and particularly those employees who have salary accounts with us under the corporate salary package. And today we have about 1.6 crore customer CSP accounts. And our penetration, if you take only our express credit, is just about 19%. So we believe that there is a potential to grow this book further. But yes, we are mindful that we have reached certain base number now. We may not be having 36% growth rate. Slightly could be moderated to 30, 31%. That is our, at least for the current year.

Okay, so around 19% of 1.6 crore would be the total number of accounts in Express Loan?

No, there could be some outside the corporate salary package also. Okay. When I'm talking about salary accounts, there are two types of salary accounts. Where we have a type with the corporate, where corporate salary package is offered to them. There are other people who have salary accounts with us. Based on their salary details and all, we offer the Express Credit. So there would be much better, you know, potential even beyond the CSPs. That is what I want. Even CSPs as a group, if you consider my potential target group, I have just got 19% penetration now.

The number of accounts, Maruk, we can reach to.

Yeah, we can definitely give you how many. Thank you.

We would request the current participant to please come up in the question queue for any follow-up questions as we have several participants waiting for their turn. The next question is from the line of Adarsh Karsanpuria from CLSA. Please go ahead.

Hi, so thank you for taking my question. Congrats on the great numbers. Question is on the staff overall expenses. I see that, you know, as we had mentioned that the provisions on employee will now go down But then the salary jump that we have seen from 7,000 to 9,400 is materially higher. So can you clarify, is this the run rate or are there some one-offs in the salary expenses?

So just one second. I'm just pulling out the details.

Right, 29.

Yeah, when it comes to the salary is concerned, one of, of course, we have paid the areas this year, so that is something which has gone out. And, yeah. So, apart from that, we have got a significant proportion of a retirement benefits, which is pension, gratuity and other benefits which are there and if we look at that number on a YOY basis, we have actually seen growth in wage revision is a major component in this which is 78.50% and overall the growth on a YOY basis is 12.26%. So the pension has witnessed a growth of about 2.55% and which is again a function of the interest rate movements. So that is something we have to go by the actuaries' advice. And other benefits have gone up by about 5.91%. So that is how it is really stacked up. And when it comes to the salary per se has witnessed a growth of about 10.85%. And the provision for employees have witnessed a growth of 12.28%. So that's how it is stacked up.

But sir, I just stick to, if you break up the stock expenses, again, when we try and do that, the core cash component of salary moved up from about 6,900 crores to 9,400 crores, so 2,500 crores jump. Some of it was expected as cash payouts after the wage revisions had increased. But I believe this was not the increase that was expected, right? So I think if I remember correctly in the last quarter, it was indicated that we'll see a thousand odd crore quarterly increase in the salary number. So I was just curious if there is anything more or should 9500 be the cash salary component going forward?

In quarter four, the areas got paid. In quarter four, we have paid the area. So I think it would have some kind of a carry forward in terms of if at all provisions would have been short or something that would have been accounted for. So on an average the increase in salary bill is expected to be around 1500 crore.

For a quarter.

As compared to what it was in the past.

Got it. So the same question on overheads there is a meaningful increase in overheads in the fourth quarter. we would usually add a very tight leash over the last few years on the overhead number. In this quarter, that kind of jumps, if you can just explain that as well.

Yeah, sure. In fact, as far as overheads are concerned, the major jump is coming from the DICGC premium, which has gone up because our deposits have gone up and the DICGC premium rates have also gone up. So that is a reason why there is a growth in the insurance component, which has gone up from 3 to 1.3 crore in the previous year to 4,348 crore. The other important area where it has gone up is business acquisition and development, which is essentially now a BC-related expense. It used to be 2,548 crore in the financial year 2020, and in the year 2021, it has gone up to 4,107, which means that about 61% growth is seen there. So that's what is explained here.

And just to understand this better, the full year's impact of higher premium in insurance, deposit insurance has come in the fourth quarter only. All of it gets paid in this quarter.

It could be as and when the... The charges went up this year, but at what point of the year?

It was paid off yearly. You will see the impact in September and March.

The last thing I want to check, which has been a very big positive surprise, is how Retail has held up for the bank. we've made a point over the last few quarters as through covid that a good part of our book is uh salary to government employees but in spite of that uh the quality of the book has been uh you know 0.4 percent slippage in a pandemic year is extremely strong numbers just wanted to understand um would you consider this a sustainable trend or how should one look at it because this is you know, you're already very good on retail asset quality and this year in a pandemic, it's been even better. So if you can just throw some light on that.

Of course, when it comes to slippages, part-rate is a function of the underwriting and second, it is also a function of the effort to recover. So I think when it comes to underwriting, we are not likely to dilute our standards. So that is something which will give us edge and going forward, will certainly maintain our efforts for the recovery also as we have been doing in the past. So I think going by these two major components, we hope that we should be in a position to maintain this quality going forward also.

Perfect. Thank you and all the best.

Thank you. Thank you very much.

Thank you. The next question is from the line of Nitin Agarwal from Motila Rukhpal Securities Limited. Please go ahead.

Hi, thanks for the opportunity. A few questions. Firstly, again on the OPEX, when you aim for 15% ROE, what levels of cost income on cost to asset ratio are you looking at in the medium term?

Well, I have been maintaining that there are certain cost rigidities which we have in our system. We'll have to live with those rigidities. But nevertheless, Income is something which is a major focus for us and we have already started working on it. And hopefully going forward, maybe in six, eight months time, you will probably get to see some kind of an improvement in the income lever, which will help us in reducing our cost to income ratio. Ideally speaking, we would like to bring it below 50 and would like to keep it at below 50 levels.

Okay. And on the cost of deposits, while the cost of deposits has been coming off quarter of the quarter, but this time the decline is a little more moderated. But our cost of deposit still remains higher than some of the other large private banks. So what is the reason behind this and what sort of retricing benefits are we expecting here over the next couple of quarters?

As far as cost of deposit is concerned, you will have to probably acknowledge the fact that when it comes to there is deposit is a major source for many of the retirees also when it comes to their income flows and it is always a function of the inflation also so I think for all purposes we have a situation where my mind as deposit rates are concerned they have already bottomed out perhaps we may not go down any anymore but when it comes to franchise value in we have to keep that in mind and we have to also keep in mind the overall a very large community of the depositors were actually retirees. So with that in mind, there are certain considerations that you have to keep in mind. We will try to keep the deposit rates at this level for some time to come. We have already, when it comes to our term deposit rates, we have already brought it down significantly already. So I think, to retain at that level and we'll see that how long we can stay on at that level.

Lastly, our SA numbers have been vastly different from our closest PSU peers. While this has been so for very long, I just wanted to understand, is this really a function of the customer profile underwriting or the way we do our monitoring and collections which ensures the borrower stays up in time? I'm just asking because the gap is just too wide between us and the next best PSUs.

In terms of asset quality, you mean? No, SME numbers.

SME numbers, okay. SME numbers, yeah, sure. Yes, one sec. SME numbers involve a very close follow-up. It involves a follow-up at different levels. So we have the follow-up teams which are there in each of the circles when it comes to retail. And in fact, in the large corporate book, we don't emphasize much of a challenge. Nevertheless, in the retail, particularly in Agri and SME, we have a situation where we ensure that people in the circles are in a position to follow up and ensure the upgradations of SME tools.

What are the reasons that come to your mind? Why the difference is so big between us and the next few years?

There has not been a patient to comment about other PSU peers, but nevertheless, we are maintaining, making all possible efforts to see that we contain these numbers and bring it down. So, which essentially means that a close follow-up is something which is very much an integral part.

Thank you so much.

Thank you. The next question is from the line of Suresh Ganpati from Aquari. Please go ahead.

Yeah, thank you. So two questions. One is RBI had recently fined SBI for payment of commissions to employees. Can you just highlight what exactly was the issue? That's one first question. And the second is on growth, credit growth. I mean, how much of, sir, do you think this is a demand versus supply issue in the sense that are banks like you becoming a bit more conservative and therefore not willingly disbursing credit? And also, is it a function of the fact that demand is very weak in the economy and therefore the credit growth is so weak? Yeah, thank you, sir.

Right. The first question relating to RBI fine to bank for giving commissions to employees, I think that probably needs to be clarified a bit. We are the corporate agents and are distributing products of our JV companies and in view of that we get the corporate commission and out of the corporate commission we have got a system in place where we are incentivizing our employees and that incentivization is not only for marketing of these joint JV products only that actually is a very comprehensive matrix which we have which covers the bank's own product recovery efforts and also third-party sale, which is actually our JV products. So based on the evaluation through that mechanism, this kind of a incentivization used to happen. Nevertheless, since the regulator has fined us, we pleaded before the regulator, but nevertheless, they decided we have gone ahead and paid for that. But as far as we are concerned, we have done it as per what the the overall regulation and the boundary conditions were at the material point of time. But nevertheless, they're having fine. We have stopped doing any such kind of incentivization.

Sir, just to interrupt, other banks also do this, right? They give incentives for cross-selling and third-party distribution.

I will not be sufficient to comment on that because this is a view taken by the regulator for us and I can only convey the viewpoint and the standpoint taken by us in this matter. but so we respect the regulatory decision and accordingly we have started working in this point so second question was relating to credit growth yeah credit see the credit growth I would like to mention here the corporate credit growth almost about the we had unutilized lines to the extent of 70% in the working capital and also when it comes to the term loans which are sanctioned, almost about 28% of the term loans were not disbursed. So when it comes to utilization of lines, to my mind, it is a function of the demand. And then when the demand picks up, the corporates also start availing these limits. That is one factor. The other very important factor is, as far as large corporates are concerned, there are options available to raise money from the debt capital market and the equity capital market also. And since these markets were flush with funds, the corporates could find it easier to raise money from these options. So if at all we capture the evolution of our bond book, I would say that the corporate credit growth is almost around 6%.

Okay, thank you.

Thank you. The next question is from the line of Akriti Kakkar from Goldman Sachs. Please go ahead.

Yeah, thanks. Good evening, sir, and everyone. I hope you all are staying safe. First of all, congratulations to you and your team for doing this amazing quality. I've got three questions to allow. The first one is, on the research...

Mr. Thakkar, we would request you to please come off speaker. We are not able to hear you clearly.

Thank you, sir. First on the restructuring, potential restructuring of loans which RBI has allowed. What do you think, what could be the potential pool of restructuring that we need to do, particularly in the MSME portfolio?

I think we'll have to wait and watch for some more time to come. Because what our last year's experience is, when it comes to restructuring book, we had a total restructuring applications worth about 17,852 crores. So how will it really, how will the corporates or maybe the SMEs will really respond? We'll have to wait and watch. But nevertheless, we are in readiness to offer them the support if at all they need it. And we have already put in place the structure. The policy is already approved and also put in place the structure. We'll be reaching out to all those who are eligible through various SMSs and emails, etc., and based on their response we'll be in a position to take stock of the situation so we are about to begin that particular stage so it is too early for us to visualize what is the likely book which will go through a restructure okay but if you look at last year's experience and this number of 17 and a half 18 000 outgrows

How much of this would be an account of MSMEs? And I guess we had also done it last year also something because the SME restructuring has been there for some time.

Last year, out of the 17,852, about 2,000 odd crore was in SME. So, but the last year and this year situation seems to be a little different. But I think we'll have to wait and watch because normally what happens is that SMEs are also very mindful of the fact that if at all they avail the restructuring it will have an impact on their ability to raise resources at cheaper rates. And so I think we'll have to wait and watch and see how situations are. And maybe then only we'll be able to give some kind of a color on that.

Got it. Sir, of this SME 1 and 2 data that we give, which is for loans more than 5 crores, would you also be able to share some sort of a DPD breakdown for the retail and the MSME portfolio less than 5 crores? Sure.

I think below that would be the collection efficiency should be a good indicator. I don't think we will not be efficient to share below that, below five crore. Collection efficiency being around 95, 96% could be a derivative number which can give some kind of a color on the book.

Now, so just to respond to what Harai is saying, our collection efficiency is based on the fact that we consider seven-day overdue DPD, 89 DPD. So the whole gamut of DPD is covered in this one single number what we are giving. And also it covers across the business segment. So I think that's a better indicator, as you said, instead of actually getting into the DPD. And we've been consistently giving this number every quarter.

So you're saying this is 91, 96% is based on 89-day DPD?

No, 7 days to 89 days. 7 days to 89 days.

And this would also include agriculture, I guess.

Other than agriculture. Agri is a seasonal repayment. Whenever there is a harvest, then only there is a repayment.

Yeah, of course. Sir, one more question on the NARC, which has been operationalized in the media articles. Can you share with us what would be the broad concludes, how much of portfolio that you will look to transfer? I can see you're already carrying provisions, so will you need to take any more head or there will be cash in the back of this? Any other you can share on that?

We are in the process of finalizing the accounts, but as far as any more provisions to be taken, I don't expect. That is one. But yes, of course, we'll certainly be transferring the accounts. And we are quite convinced with the concept. And we are quite hopeful that it will be a very positive development when it comes to the resolution of the stress assets in the economy.

All right. So I have one more question, but I'll come back and get to you. But if you allow me, I can ask.

Please go ahead. Go ahead.

Yeah, sure, sure. Sir, this is with regards to the investment in technology. So, you know, based on the LPCR data, you know, our technical decline seems to be on the higher side compared to the VLBAN. So, you know, how would you view that and would it mean that we need to offer investment significantly in the technology side, including hardware and, yeah, data centers, etc., etc., anything?

It's an ongoing process but we are quite confident of the fact that we have to keep on investing into technology and we have to make a very robust database and also very robust systems and platforms. That is something which we are quite committed to. Maybe I'll ask Mr. Ashnik Tiwari to come in, who looks after technology.

I supplement what the chairman said, actually. He's right that the investment is a continuous thing. And we are all mindful of the fact that the digital transactions, especially UPI, has really been setting all the chords in terms of numbers. So therefore, there was a lack of investment in the infrastructure, which has now been done. And if you notice the latest figures, which have come out in February and March from RBI, there are technical declines have come down significantly from what they were in November, December. So the improvement has already taken place. And we are hopeful that with this continuous investment and monitoring, we'll be equivalent or better than the years. The reason why I ask this question is because one of the large private sector banks, of course, all of us know, they were banned to onboard new credit card customers, not to launch any more digital businesses. So given that the number is on the higher side, do you think this is something that can perhaps impact us also? And in that regard, what measures can we take? Yeah, I get your point. Actually, if you talk about our core channels, which is Yono and the internet banking. So we had some issues in November, December, where we had problems. But I can give you the data of May, which is not in public domain yet, in the sense that we had zero downtime in internet banking till 20th of May. And we had about some 13 minutes in UNO, unplanned downtime. So therefore, a lot of improvement has already happened in these channels. On UPay also, technical declines have come down to below 1% for the latest available data. So we have seen improvement. Of course, we have to see whether this sustains.

So we are continuously working on this and hopefully we will not have an occasion where... Our effort is to ensure that it remains sustainable and whatever we have done in the recent past was strengthening these delivery platforms. We will continue to be very focused on ensuring a delivery which is without any disruption.

Thank you. We would request the current participant to please come back in the question for any follow-up questions. The next question is from the line of Mahesh N.D. from Code of Security.

Please go ahead. Just two questions from my side. What would be the... This year, if you look at the recoveries, we had about 17,000 crores of recoveries from the NPR line and about 10,000 crores of recovery in the non-interest income line.

uh if you could just give us some color outside of the one in bfc which is sitting there what are you seeing in terms of uh your your recovery from the npl slash return of food uh we i don't think we would have much of chunky accounts left out now um but uh uh we will be actually resorting to narc we'll be resorting to uh uh the compromise settlements, etc. So, but maybe I'll ask Swaminathan if at all he can give some color on that.

Just to supplement to what Chaman said, as far as the recovery is concerned, more or less, the numbers would remain in line with what we had achieved last time, but the only difference will be that we were, in the last couple of years, there were certain chunky accounts which got resolved. But today the recovery for this year and going forward will have to happen across many accounts. So we are working on those granular details, but also it will depend on how fast the second wave settles down so that our recovery efforts can get intensified. So at this point in time, we are not giving a specific number for recovery that we are budgeting for this year, but maybe over the next four to six weeks we will come up. Maybe as part of the Q1 call, we may be able to give you guidance in this matter. Thank you.

So just one clarification here. This commodity rally that you are seeing out there, has it resulted in a better interest for those distressed assets or do you think it is an over-expectation given the fact that these assets may have significantly deteriorated on the ground?

Absolutely. In fact, we have seen renewed interest With this cycle getting better, we in fact got better realizations in a few accounts and we are hopeful that this upside cycle will be beneficial to us in terms of improving the recovery percentage out of these test accounts. And there are interests coming in the brownfield assets. We are working on this and would like to make full use of this upside that is now visible.

And my second question is on the net NPLs. Today your corporate book is carrying approximately 90% coverage. Could you also tell us what would be that in terms of absolute amount, the net NPLs which is being... Net NPLs in corporate book is almost down to 8,000 crores.

As a total net NPL out of 36,000 crores plus, the corporate book is about 8,000 plus.

So this year you would expect most of the provisions only for your retail and MSME slash Agri book. Is that a fair assumption?

MSME slash Agri would be the major. Retail is also not much.

Retail is also holding on well. It will be MSME and Agri will be just space to watch out and that is a space we are also very mindful in terms of keeping track.

Perfect. And in that context, can you give now a guidance to provisions for next year or you think it's going to be challenging?

Too early at this point in time. Maybe it will take, we need to size up maybe another four to six weeks time it will take for us to estimate the impact.

We don't want to give any estimation of guidance which we are, I rather believe in, as far as promise is concerned, I would like to deliver better than the promise. Absolutely.

Thanks a lot for this. I'm done.

Thank you. Thank you. The next question is from the line of Aditya Singhania from Enam Holdings. Please go ahead.

Thank you. So I actually wanted to clarify on the provisioning question that Mahesh just asked. I understood from your TV interview that you guided that credit costs could be similar

in FI22 to FI21. And in that context, your credit cost mentioned in the presentation is 1.1%, which is the provision number.

No, no, I mentioned that it will be within 2%. This has been my guidance even in the third quarter. This has been my consistent guidance always. So I think our effort would be to keep it at 1.12, but nevertheless to keep it below 2. Ideally speaking, we would like to keep it at 1.12 where it is this quarter. but in any case, less than two by all means.

So just in that context, if I could ask, you know, you're already sitting at 70% provision coverage ratio and an additional buffer due to COVID with the strong corporate net NPS, the low corporate net NPS as well. So, you know, where would you expect such a large provision number to come from, if at all?

As I just mentioned that SME and Agree other areas to watch. And that is something which we are ensuring that the quality should hold up. So the very important aspect is we are a little unsure about the current COVID wave, how will it really pan out and what all impact will it leave. It may so happen that it may not leave much of impact, but nevertheless, I think we should be better prepared for any kind of eventuality. Right.

And just one more clarification. If you could talk about any plans for listing of your subsidiary, the general insurance and asset management.

We do have plans, but much of it will depend upon how the capital market continues to evolve. And we will be very mindful. And at the appropriate time, we will be coming to market.

Right. Thank you, sir.

Thank you. The next question is from the line of Jai Mundra from BNK Security. Please go ahead.

Yeah, Ayesha, thanks for the opportunity. Sir, A, if you can share the ECLGS loan that the bank has, which the bank has disbursed, but more importantly, if you can share the outstanding loan which is linked to this ECLGS disbursement book. In a way, if you are keeping a track of the principle as well if as in how that has moved um so a the eclg is amount and the b the principle which is linked with the eclg 25 000 crore is the acg list book which you have created last year uh if you are talking in terms of the overall exposure this is linked to the dsl

We don't have the numbers as of now. But you must also remember that GECL repayment has not begun. So that will be from June onwards. So how the GECL linked principal outstanding will behave probably will come to know from June onwards.

GECL is 20% of the exposure. So if it is 25,000 crores, you can do a reverse work. But that's not a concern at this point in time. That will have to be looked at later.

Right, but so broadly that number should be 5x of the disbursed amount, right? Assuming there is no significant repayment as yet.

Yeah, absolutely. Repayment has not started yet. And some of them might have availed a lesser amount.

No, no, some see it was maximum of 20%. So some people would have drawn only 10%, 15%. But if you want a bar path figure, I think you have 20%. That is 5x of it.

Sure, sir. And second question is, sir, on staff cost, I think this question was asked earlier, but just to be very sure, I think we had also seen that in a PSU bank, it looks like there has been some performance-based incentive that has been given by at least few banks. Is that the reason why the salary cash component has risen from 7,000 all crores to 9,400 crores or just the earlier as mentioned earlier?

This was because if at all that has to be paid, that will be paid based on this year's results and we would have only made a provision for it. It would not have been cash out go. So that would not have been booked like that. But nevertheless, as was mentioned, the 1,500 crores is the quarterly expense which is expected.

Right, sir. And the last thing, sir, on SMA book again, can the retail below 5 crores SMA, I mean, because other banks' data suggests that the overall SMA including 5 crores number is running into double-digit number. I mean, is that, I mean, for SBA you had clarified that you are not looking at the below 5 crores number, but somehow any perspective, sir,

perspective on what?

I mean broadly as you said that one minus collection efficiency you know is a derivative but just to be confirming that it cannot be a double digit number right for SBA.

We can only reiterate what was said already. Retail is typically asset quality or DPD is depicted in the collection efficiency.

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. The loan processing charges for the full year are up 20% when loan growth is 5%. So why that disconnect?

Sorry? No, no, the loan processing fee has gone up by 20%. Slide number 28, sir. When the loan growth is 5%.

See, the point is that loan growth is the actual availments. Loan processing fee is the limit. Limit sanction, which I mentioned also that there's a development of just about 70% of the limits have been utilized. And similarly, when it comes to term loans also, almost about 28% is an unutilized portion. So that is a reason that why the loan growth is appearing to be muted as compared to

the the loan processing charges one more thing also if i can add is that you know loan processing charges are also collected on the renewal that means without any new facility being given even if the annual renewal is there that also the loan processing charges will be there but so in case of an annual renewal the fees would have been there in your base last year also right unless you're charging more on the same loan I think what Kevin has said makes sense. That is the reason.

Typically in term loans, it's paid upfront while the availment will be over a period of time. These two numbers cannot be necessarily related to each other.

These would rather always be independent. Growth is the actual draw and that's the limit change.

Okay. In going to overheads, what is the exact nature of this business acquisition and development expenses? Because that has gone up 60% for the quarter. It is up two and a half times YY and QOQ.

Yeah, because we have significantly ramped up our BC network. So that is the reason why this has gone up significantly.

Is this for origination, for collection?

BCs are for carrying out operations. And since we have got a huge network of BCs, which we have added in the last one year, and that is something which, and also now we have started using them for collection purposes also. But that has been started only very recently.

And this also induces the home loan sourcing. Home loan sourcing. We are witnessing a home loan. P-Chunk Street has been increased.

The other question, sir, is on the loan book. Now your retail loan book as of March 21 is larger than corporate. Obviously, retail has grown at a very fast pace over the past few years compared to corporate. So how do you see the incremental shift happening for you between retail and corporate over the next few years?

So if at all, the economy will start growing at about 10% plus. 9% is something which is being talked about by various economists and we have a chance to grow at about 10%. The growth will come from SME and corporate.

Okay. But in the absence of that, retail will still continue to grow faster?

Retail will continue to grow because there is a scope, there is an opportunity which is available and we would like to tap all that opportunity.

Last question, in your opening remarks, you talked about capital requirement over the medium term, but where things stand right now for the next year or so, how do you see your capital requirements?

If at all it's a 10% of the asset growth, perhaps we can live with the current situation, but we will probably assess the situation once the COVID-2 is behind us.

and uh maybe that will be a point of time when we'll have a better visibility of growth and that will be a point of time when we'll decide about the capital sure sir thank you very much thank you the next question is from the line of products from jt marvin please go ahead yeah so three questions one is why is the current account uh number so high this quarter both quarter quarter and yy The second is, on this provisioning slide, I mean, on the standard asset provision, there is a 4900 crores of other provisions, you know, in the standard assets. What does it relate to? And generally, do you have a policy on how will you draw down on your standard asset provision? I mean, can we expect a drawdown in fiscal 2022 against the S&E slippages? And thirdly, can we just quantify the technology spent in the bank, both optics and capital?

Thank you. First I will take your question relating to this current account. Current account we have opened, there was a sharper focus on opening up new current accounts in the bank and that is something which has paid off in a way and we have seen the kind of growth which we have seen. The second question was relating to, can you please repeat the second question?

Sir, this was on the 4900 standard assets provision.

Yes, standard asset provision actually we have got is we maintain 0.25% of our standard asset as a provision. So that is something which is there and to use that if at all those standard assets turn into impaired assets then only those provisions are used otherwise it remains as it is.

No, sir. My question was on the 6,300 and the 4,900 crores, the additional provisions you've made over and above the tax.

6,300. Okay, fine. That is additional COVID-19 provision of 6,300 and which you have kept. That is essentially to meet the contingencies if at all it arises now post-COVID-2. That is one. And 4,900 again, they are the other provisions.

6,300 provision plus the Restructured provision to be kept on the COVID restructuring that is implemented so far.

Okay, so the weak standard assets plus the restructures.

Yeah, standard assets as per the regulatory requirement, various rates are maintained. We also maintain some additional provision in respect of structures identified as stressed. And then also now the new addition during the quarter is the restructured assets under the COVID package.

Okay, okay. Cancel on the technology spend?

technology spend just one sec yeah we will give you the figure give us to few minutes we'll just get the figures okay sir and just on this current account one side is was there a benefit because of this RBI circular in October or no no not really so not really so it was a change in the effort which was initiated for some time and we have strengthened our CMP also cash management product facilities which are offering

so current account is a function of various add-ons that is something which you have okay thank you the next question is from the line of ashok ajmera from agcon global services please go ahead uh good evening sir uh please accept my compliments on the fantastic number of results in fact you have You brought the whole sentiment in the entire banking stocks and the financial stocks up today with this kind of result with the NIM going 3.26, CAR is 13.74, handsome profit, good ROA of 0.48%. So my compliments to the entire team. Having said that, sir, I have got a couple of information points and some data points. Sir, in our note number 13, 830 crore is the interest reversal. as per the Honorable Supreme Court's order. So this entire 830 crore has been in this quarter only naturally because the order came in March 21. So it means the interest which was charged up to the last quarter, that is December quarter also, everything has been reversed now in this quarter, isn't it?

Yeah, that's right. Apart from that, there is unrealized interest also, which is about 2,100 crore, which was also reversed.

Yeah, so that is again, in fact, a plus point as far as this quarter. Otherwise, the results would have been... Yeah, I will give you the number.

Interest reversal was 2,127 crore during the quarter, apart from 830 crore, which was interest on interest component. It is an interesting... If we factor in that, then the NII for the quarter has improved by 4.18% sequentially instead of a decline of 6.08%. All right, sir.

Sir, this RBI has recently announced one COVID loan scheme, you know, of 50,000 crore for taking the repo rate and then getting that benefit of 0.40 basis point if you, again, put the money back to the extent of the loan given. So whether the bank has come out with a policy for this COVID loan for the medical purposes? And if yes, whether it is implemented and how much has already been sanctioned under this scheme? or what the bank plans to do for the remaining period?

First of all, thank you very much for your compliments. And now the other pieces relating to this health infrastructure related COVID book, which is expected to be created. And we have internally, we have thought of that we can create a book of somewhere around 10,000 crore. We already have got some exposure to pharma sector, which is to this extent already, but we will be very aggressively supporting the hospitals and nursing homes are augmenting their oxygen facilities. And also in the pharma sector also, if at all, there would be demands. We're more than happy to support their initiative.

Would you be considering the NDFCs also for the onward lending to the particular area?

Yeah, we are quite open because RBI schemes permit us to do that also. So we'll be quite keen to support any such initiative. And what you mentioned was in terms of we may not avail the facility under repo. But we'll be happy to avail the reverse repo facility and also the most important factor for us is the priority sector component. The priority sector is something which we are very happy to look at it.

Yes. Now coming to this credit growth for 10%. Sir, the corporate book as such is not growing much. I mean, the overall I think was just 6%. In the personal loan, the slippages have come down, you know, from 4,507 crore to 3,287 crore in this year as compared to 20. But at the same time, the personal loan book have already grown. I mean, all the retail personnel, they are already growing and every bank is chasing it. So where do you see basically the loan growth coming now in the 21-22? And how are you so hopeful of growing your book?

I'm hoping that SMA would be a good opportunity. Apart from that, even in the corporate sector also, see, corporates all these years had an option to go to the debt capital and the equity capital market because the markets are flush with liquidity for the reason that the West was not looking as good. Now, having seen the fact that in the West, practically all the economies have vaccinated themselves well, so i expect that there will be huge growth opportunities there so perhaps some money which used to flow in here it may not be available so that kind of a liquidity may not be available in the system and corporates might come back to the banking system for drawing the funds so that is how i look at it thank you we would discuss the current participant please come back in the questions here for any follow-up questions the next question is from the line of nilanjan from namura please go ahead

Thank you, sir, for the opportunity. Probably a few questions. So on the AUCA this quarter, can you confirm that we basically took in the Bhushan recovery, right? Bhushan recovery was 4032 crores. 4032. Accounted in this quarter, right?

Yes.

Okay. Okay, good. And just for clarification, so in the note 17... that table is basically what we have implemented, right? And what is, you know, under application is that 17,000 crores.

So that's a broad difference. That's implemented.

Correct, correct. And related, sir, I mean, you have already talked about the wave 2 impact and, you know, that you don't want to hazard against. I can understand it. But every news load does seem to suggest that, you know, Tier 3 onward, the impact has been particularly, you know, severe. Any initial feelers you have, you know, in terms of, you know, why it's such a humanitarian crisis, but any initial feeler about, you know, can things, you know, specifically that Agri and Agri-related retail, can that get really bad? And in that context, I mean, we had such a great performance. Why are we just carrying, you know, about a 60 basis point additional, you know, other than standard provision, that's a 50 basis point additional provision. Would we, I mean, should we not have taken in a, you know, maybe another, you know, 50 odd basis points? I mean, it would have, you know, given a lot of confidence around the balance sheet.

So. No, I see the point is that the, wave 2 is a bit of an uncertainty which we are living through and with what is being talked about is the wave 3 also. So I would say that there is we have moved up on the learning curve but nevertheless the spirit of the wave 2 is something which has actually hampered the life for many. So that is something which is so we are actually sort of going through a very very uncertain phase right now so because if at all we have got such kind of uncertainty the better way out is to keep as much cushion as possible to really tide over such uncertainty i think as i mentioned that maybe by end of june we'll have a much better visibility so that is a point of time when we can probably take a call And in any case, as a philosophy, we believe in strengthening our balance sheet. We don't want to compromise on that principle.

So the broad feedback is that in June we will probably take that call.

Yeah, June we will take a call.

Okay. And a quick data point, sir. Out of the 25,000 crore ECLGS, roughly how much was the ECLGS package 2?

ECLGS package 2? Just give me a minute. We'll just let you know. But in the meanwhile, there was one gentleman who had asked me about questions relating to IT, CapEx and OPEX. IT CapEx spend is about 1,300 crores. OPEX is about 5,800 crores.

Thank you. We would be glad to come back in the questions. The next question is from the line of Mona Pitan from Dollar Capital. Please go ahead.

Hi sir, good evening. I have two questions. Firstly, in the corporate segment, your 9 months pro forma plus the quarter slippages were around 3000 crores and that has now increased to about 7700 crores in the current quarter. So, is it fair to say that the large part of slippages during this quarter came from the corporate segment and if so, uh could you just throw some light on uh you know whether it's related to potential restructuring or in terms of the size of those accounts and detectors can you please repeat your question yeah so when i look at your nine months pro forma uh for corporate segments pro forma plus reported slippages they were about 3 000 crore in the last quarter and that now increased for the corporate segment to about 7,700 crore. So an addition about 4,700 crore in the corporate segment this quarter versus total slippages for the quarter at about 5,600 or thereabouts. So essentially a large part of slippages during the quarter have come from the corporate segment to just some color there.

Which slide are you referring to? She is referring to the 9-monthly patient. 9-monthly patient. Last quarter in the Q3, the corporate was at 3,003. And this quarter it is 7,000. No, quarter 4 is 6,558. So about 3,000. How much was it? Do you have some color? I think we'll have to look into that. And as of now, we'll have to look into what are the accounts which have contributed to this. But normally, we don't give specific accounts. But nevertheless, whatever was there, we have already taken care of. But nevertheless, I don't have the ready information on this.

OK. And secondly, on the restructured book, what is the, so we have a restructured book of about 18,000 score, including potential restructuring. What is the kind of provisions that we hold against this?

For restructured book, our requirement would be, we would be holding 15%.

Already restructuring implemented, note number 17 carries the restructured book as well as the provisions. 1126 again, 6125. Note number 17, not slides. That's in the notes. And then for the remaining application for which the process is on, we have made a 10% provision upfront. So they will become specific once the resetting package is implemented. Hope it's clear to you.

Just one on the restructuring again. So you've given a potential plus restructure total number of about 18,000 crores. So this includes the non-COVID related MSME restructuring as well?

Yes, this 17852 contains all types of restructuring as segment wise breakup is also available in slide number 18. So you will see SME 2118 crores there. Out of the 17,852, 6,125 is already implemented for which specific provision is already created. That's there in the note number 17. For the remaining 11,000 odd which is under process, the 10% provision is already created. That will become specific once the restructuring is implemented.

Thank you. I take the last question from the line of Soumya Agarwal from Smart Karma. Please go ahead.

Yeah, before Soumya asked, I think there was some question on the ECLGS. The ECLGS 1, we had disbursed 23,000 crores. ECLGS 2, we have disbursed 200 crores. Yeah, now Soumya can go ahead.

Okay, yeah. Hi, good evening. Just want to understand some trends here since SBI is the market leader in the banking space. It's been widely concurred that agriculture has been the largely resilient segment amid the pandemic. But if I look at the fresh liquid days for FY21, almost 9,500 crores or 33% is coming from the agri book. Even in terms of gross NPA, it is the most stressed segment at around 15% NPAs. So what experience does DACA to me? If you could shed some light on this.

the point is that agree we have traditionally we have seen that for this book this particular book is behaving but when it comes to SME yes of course we have seen a very different trend and we are not as far as concerned I would say that The trend is more in line with what we have seen in the recent past, but maybe I'll request Mr. Shetty to have better color on this.

Yeah, I think your question, last part also, I think many of the analysts have asked, if the rural economy is doing very well, how is that? If you see, much of the slippages have happened in the first two quarters. in the current finance year. We have also explained that the agricultural slippages happen for non-renewal of the crop loan. So when you don't renew the crop loan, it will be classified as NCA. First two quarters we were not able to do, the slippages have been higher. Subsequent two quarters, not only that, you know, when the lockdowns have lifted, our people were able to approach the villagers, farmers, and the renewal percentage has gone up. So aggregate slippages in the later two quarters has been much lower than the first two quarters. Again, it all depends on the composition of our agriculture portfolio. Out of 2 lakh crores, we have about 1 lakh crore crop loans and 70,000 gold loans, which is a safer portfolio for us. In these crop loans, it's a season and as well as, you know, debt relief measures announced by the state government. which will impact the renewal percentage. The moment the debt relief scheme, like for example, Maharashtra, we have received almost 5,000 crores of debt relief, where the NPA levels have dramatically come down during the current financial year. So it's all one quarter, one year to another year, the agriculture portfolio behaves differently. The last year has been that in the first two quarters, we had tough time in terms of crop loan renewal, which had contributed to slippages. We were able to pull back some. We are still working on that, and I think the, Improvement in the agriculture portfolio is visible in the last two quarters. Hopefully, that will continue. Only as Chaman initially pointed out, because of the smaller centers and villages are also getting impacted by COVID, there would be some stress on the agriculture portfolio going forward.

Also, I would like to add the very structure of agriculture book is about about 60,000 crore would be to SSGs also and normally they have got a very good repayment behavior. So actually 60,000 plus 40,000 which is gold loan. So there is not much of concern. The major concern is out of this 1 lakh crore. And there also if at all we succeed in doing the reviews and then the quality is not as much of a challenge. But yes, of course, COVID has restricted mobility. That is the fact which we need to keep in mind. And also this happens soon after the harvest when people have to go for swing. The review renewal happens around the same time. So actually it is a seasonality and if at all at the material point of time, if at all there are any restrictions on mobility, that causes problem in the agri-book.

Regarding the earlier question on slippages in the corporate book of 6558, there was one account of 3650 that was purely on technical reasons. So that will get into standard within this financial year itself. There was another chunky account also. There also I think we will be able to recover. So out of the 6,500, 4,500 will move into standard within this year itself.

Thank you. Due to time constraints, that was the last question.

Okay.

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