State Bank of India

Ladies and gentlemen, good day and welcome to State Bank of India Q2 FY22 earnings conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pawan Kumar Kedia, General Manager, Performance Planning and Review, State Bank of India. Thank you and over to you, sir.

Good evening, ladies and gentlemen. I am Pawan Kedia, General Manager, Performance Planning and Review. On behalf of the top management of SDI, I extend a warm welcome to all joining us today on SDI Q2 FY22 Earnings Conference Call. On the call today, we have with us our Chairman, Mr. Dinesh Kumar Khara, Mr. Sreeya Sethi, Managing Director, Retail and Digital Banking, Mr. Ashwini Bhatia, Managing Director, Corporate Banking and Global Markets, Mr. Swaminathan J, Managing Director, Risk, Compliance and Stress Assets Regulation Group, Mr. Ashwini Tiwari, Managing Director, International Banking, Technology and Subsidies, Mr. Alok Chaudhary,

Deputy Managing Director, Finance, and Mr. Karanjeet Atra, Chief Financial Officer.

Before I request our Chairman Sir to give a brief summary of the Bank's Q2 FY22 performance and the strategic initiative undertaken, I would like to read out the same 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 would request Chairman Sir to make his opinion now.

Thank you. Very good evening to all of you. Thank you for joining this conference call. Today I would like to start by thanking the support of all our stakeholders including our customers. shareholders, employees, and the broader ecosystem, which has always been supportive of our efforts and initiatives. I also take this opportunity to express my heartfelt gratitude to our shareholders and other financial market participants who have supported and valued the bank through the challenging times in the recent past. I feel a sense of immense pride for our institution as we discuss today our quarter to financial year 2022 results. Today, some of our outcomes through this period are industrially by fair margin, while others are comparable with the best, especially when normalized for the scale and complexity of our operations. I feel satisfied to see the results of our continuous efforts to improve our credit redirecting process and systems, which have led to significant improvement in asset quality outcomes for the bank. I'm glad to share that we could absorb a liability to the tune of 7,400 crores due to an announcement in family pension in this quarter itself without availing the relief which was granted by the Republic of India in terms of deferring it for five years without impacting the profitability outcomes of the bank too. This actually demonstrated the strength of our balance sheet. I'm happy to highlight that our retail book at 9 lakh crore, which is the largest in the country, is growing at a three-year cause of 16% plus. With an industry-leading asset quality, I'm also glad to share the progress we are making in the regional banking. 62% of our savings bank accounts opened in the first half of 1922 were through YOLO. We opened almost 27,500 savings in the account on a daily basis through Yono in the quarter 2 fund in 2022. We think these outcomes demonstrate the resilience of the bank underpinned by our process-oriented culture, the quality of our employees, and the expertise and the vision of our leadership team. While we are happy with the outcomes in the current quarter, we are also mindful of areas that require further improvement. With the country crossing the milestone of 1 billion vaccinations and hopefully the third wave not being there or being far less disruptive, the wheels of the economy picking up speed. We should see higher credit offtake in the near future. On the liability side, we continue to focus on increasing our share in current accounts while maintaining our leadership position in savings deposit. We believe from a P&L perspective, the bank is at an injection point. As credit growth improves, the bank will be able to better utilize its strength on the liability side. Further, operating costs are likely to lag income growth as operating leverage kicks in, which would also give a more normalized picture of the cost ratios. Our aspirations from our current position of strength is to consistently deliver a ROE of 15% through various cycles, Hopefully, as the economic growth picks up, we should be able to deliver on our targets sooner than expected. However, we remain confident of the uncertainties of the world we are operating in, and therefore, we believe that it is early to give a timeline for reaching our targets. Concluding my opening remarks, I want to thank you all for your support to the bank. The bank, while pursuing its own progress, contributes to the progress and economic growth of the broader ecosystem. We remain committed to reward your trust in us with superior sustainable returns over the long term. My team and I are now open to taking your questions. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. First question is from the line of Maruka Dajani from Ilaria Capital. Please go ahead.

Hello, sir. Congratulations and happy Diwali. So my first question is on recovery. So in the last phone call, you had said that probably you had recovered 40 to 45 billion of first quarter slippages already. And that was in August. So the recovery of the first quarter slippage would have increased only after that. So what would be the total recovery from the first quarter slippage we have so far? Would you be able to give that number against 40, 45 billion you had given last quarter?

I would say that we have, I think when it comes to recoveries, of course, whatever was the stress situation in the first quarter for our retail book, and we could pull back all, and we have another, I would say that 8,000 per month of 8,000 crore worth of recoveries were also affected worldwide. Out of 15,000. Out of 15,000. It's amplified. 15,000 were given glossary pages. Out of which Q2 pullbacks were around 8,000.

For renter, this 8,000 would be netted from the glossary page for figure of Q2, right? Because it was... Correct.

I will see our notes to account serial number 5 that makes very amply clear that the figure of the quarter is the balancing figure between the figure of 30th of September and the published figure of 30th of June. So this is how we have been reporting and because this is the figure as of now and that is how the balance sheet runs. So between two two gates, whatever is the difference, that is the recovery, which is as stated in our NURSU accounts.

And in terms of, was there any tax refund or recovery income going through NII this quarter?

Yeah, we do have some tax refund, which is there. And it is 1922 crores. And it has been there in the past also. In 2021 also, we had 1517 crores. So, I believe it's almost like annual feature which is there.

Sorry, but this quarter it was how much?

1922 crores.

1922. And in the fourth quarter, in the first quarter, we did not have much tax refund, right? Though in the full year, FY21, you did have.

No, no, no. body.

And sir, just one last question in terms of retail restructuring, would you be able to give a breakdown of how much was restructured under Express and how much was restructured under Home Loans?

I think in the Express, there was hardly any restructuring. It was all in the Home Loan or in SME category.

Okay, sir. Thank you so much. Thanks a lot. Thank you.

Thank you. The next question is from the line of Ashoka Jumeirah from AgCon Global Services. Please go ahead.

Thank you for this opportunity. Good afternoon, sir, and a very happy Diwali to all of you. My congratulations to you, Khara saab, and your entire team of Satira, Bhatia saab, Ashwin sir, and all the EMD top management and entire staff of the bank for such a fantastic result of the State Bank of India. Just immediately after we came out of that pandemic almost coming out of it. It's a fantastic feeling also. And now your bank has become, you know, like almost about 30,000 plus crores profit bank, net profit bank, which is a very welcome sign. Having said that, sir, I got some small query points. Number one is that this 7,418 crores which you have provided for because you had sufficient room here this time. because the slippage also came down to 4,176,715,000 crores in the last quarter. Will it be available for the tax benefit also? Because the dispensation was for five years and you provided the entire one year itself.

Will we get the benefit of the entire provision in the income tax also?

Yes.

If you see the RBI later in this regard, in October, RBI basically wanted that the bank should take it in the quarter itself. They should not amortize it. But they had also given B. If some bank doesn't have the room, they can amortize it for five years. I think it was an option which was given by RBI either to decorate for five years and also... carry out the treatment which they have prescribed or absorb it in the first year itself in the quarter concerned. So since IBE dispensation has given both the options, I'm sure tax authorities will be sufficient to give compensation. It's an actuarial valuation. It's an actuarial valuation so there's no tax only involved with it. But only as a cost. All right, so to the extent it's a cost, it will be allowable cost. Yeah, allowable cost. Yes, yes. Okay, so thanks for this clarification. Sir, for this SMA 1 and 2, you have given above 5 crore of 6690 crores for this slide number 31. What is the total figure even if you take less than 5 crore also, sir, the entire amount? But it's not a significant number at all.

All right, sir.

Sir, it's nice to know that it's not a very significant figure. Some items on the expenses and income, some small queries are there. the miscellaneous expenses shot up to 1,709 crore from 1,000 crore. At the same time, the miscellaneous income came down to only 365 crore from 1,181 crore. Can you throw some light on this? One is that miscellaneous expenses going up by 600, 700 crore and miscellaneous income is coming down by 700 crore, having the effect of multiple, I mean, effect of almost about 1,400 crore. Miscellaneous income would have an effect of that... No, the expenses are... Yeah, in case of miscellaneous expenses, what you have pointed out, if you see that 13,000 to 1,709 kind of figure. Actually, the development in this regard is that the expenses have gone for GST increases there because GST operating expenses increased a bit, so GST increased. Then we have some increase in donations also. Like we give donations to our foundation and then we make other donations in this year also. So that is also around 100 crore. Then law charges, credit fees, then security, GST and some of the other expenses which are numerous and many. So all these things they make up for this difference.

Thank you. Mr. Ajmera, may we request that you return to the question queue for follow-up questions. Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.

Yeah, congratulations to the entire team for a great set of numbers. So first question is on yield. So not the overall interest income, but particularly yield on advances. So if we calculate, that has also gone up. So was there any element of interest or recoveries out there in this?

And where should we finally see the yield on advances stabilizing? So that's the first question.

EGON advances, yeah, there is a component of some of the right backs which we've had. And also the other aspect is the lower amount of interest reversals also would have an impact on the EGON advances. In terms of normalizing, if at all we do, I think we'll have the number, just one second, let me just try and get that number. If we normalize for the non-offs on the yield of... In the yield on advances, there is no on-offs. Yield on advances... Only the right-offs, I think... Yield on advances, basically, if you see, last quarter, it was 15,166 crores. So there's a reversal. Yeah, it does not happen, so that's why it is seen like this. And this quarter the slip rate has been very less. So we have got again whatever reversals happened last quarter. Those reversals were then again the books. And this time reversals were very less.

So this is how... I think it's a reflection of the asset quality.

Yeah, it's a reflection of the asset quality.

And any recovery from DSSL or anything which is getting recognized? So this will be entirely... DSSL will be entirely in provisioning.

We have not written off. So that's why...

that has not come in here it has only it has affected the problems okay sure and uh secondly in terms of uh growth so again on the corporate side uh there is still be leveraging and that's the only uh segment which was down quarter on quarter and that's to four or percent so uh last time you were highlighting in terms of uh the under utilization of the limits and all but finally i think we need to see some corporate growth coming back for the industry. So what would be your outlook in terms of some indicators that indicators are suggesting that it should be defined for investment related capex but from SBI side are we seeing that over next couple of quarters we should see it coming back?

Even now also the capacity utilization stands at around 60% only. So when it comes to the corporate credit It is a function of the capacity utilization, first of all. But only one thing which I must mention, that we already have got unavailed common loans and unutilized working capital, almost 4,50,000 crores. And we have got some pipeline for the new proposals also, which are as high as 1,15,000 crores. So that is a kind of a number. But in the month of October, we have certainly seen some traction in terms of the corporate credit growth. Maybe I request Mr. Ashni Bhatia to further add his view on this subject. Yeah, so we have seen a pickup in the first month of this quarter. You are absolutely right that in the quarter ended 30th September, corporate loans were below the March levels. As we get into the busy season, we are already seeing more inquiries, higher utilization. This utilization may also come from oil companies. At the same time, we are seeing some deleveraging happening as far as iron and steel industry. But from the iron and steel industry, we are also getting proposals for Greenfield, Brownfield expansion at the same time.

We're getting inquiries from DLI and other assets. We think the pipeline right now as a general sector is pretty good.

And international is going on strong.

I think this quarter, again, there was further rise. So I think that the overall demand for quality Indian corporates in some of the countries, that is very much on. In fact, in the overseas locations, we are generally having exposure to all the well-rated corporates. And because all these economies are doing very well, so it has opened up a huge opportunity. We are quite confident of building a healthy book in the international space. Sure. Thank you. Thank you.

Thank you. The next question is from the line of Mona Chetan from Dollar Capital. Please go ahead.

Yeah. Hi, sir. Good evening and thanks for taking up my question. So on the non-COVID, how much would be the non-COVID MSME restructuring in our book that was under the earlier release scheme?

Sorry, non-COVID.

Non-COVID. Non-COVID. Total restructuring is 38,000. 38,000 days on account of restructuring 1 and 2. 8,000 days is a legacy restructuring. Out of which about 3,700 days? Thank you. Got it.

And on DHS and recovery, just a clarification. So, of the 10,000 or so of exposure, about 4,000 will be taken through the recovery and upgrades in the GNPA movement, while the rest of 6,000 will go via the write-ups. Is that a correct understanding?

Can you repeat your question?

Yeah, so when we look at the DNPA movement this quarter and the DHFL recovery, so of the 10,000 crore of DHFL exposure, 4,000 which has been recovered will go through the upgrades and recoveries line of 7,000 crore in total, whereas the rest of 6,000 will go via the writer. Is that a correct understanding?

No, actually, see what happened, we had provided for fully in case of DHFL. and having provided for fully to the extent that we have got the recovery, of course it was not written up in our books. If it was not written up in our books to the extent of the recovery, we could reverse back the provenance. And the remaining, of course, since it is resolved, so the remaining will have to be written up.

Right, so of the 7,000 crores of upgrades that we...

We are holding access to them for that. Yes. If I would request your attention on slide number 30 of our presentation, the real issue of Raita should be that in the entire half-year, it is taken over 54 crores. Because for the purpose of NPA and OCA, we can see that anything moved from NPA and OCA, the real Raita in the entire half-year is Okay. Okay.

And finally, on the, you know, again, coming to the movement of GNPA, when we look at the slippages, as you mentioned, the pullbacks of previous quarters are very short in this quarter. So, Ideally, if we have to look at the drop, if it is a recovery, 8,000 crores or so will be added to both, if it is a recovery in a country. Is that a correct understanding?

I think so.

You would say that by setting C, we say you have abraded some changes, right, and some abradations. So if you do cumulatively like this, then in 365 days, maybe the numbers will be ballooning like anything, right? So at the end of the year, what is your total slippage is the number as on the previous 31st March and the number as on the current 31st March. So this is how it is calculated. This is the balancing figure as I have told you. This is the balancing figure as on 30th September, what has been reviewed. and published by the bank, mine has already published three years for the TV quarter. So this is how this goes and this is the concept which should be understood.

Sure, got it. And is it possible to say the breakup of fresh lipid is segmental?

I think we can do this. Investors will share with you. But mostly it's corporates only. It's not retail, this is, majorly it is all corporate.

Thank you. Ms. Ketan, may we request that you return to the question queue for follow-up questions? Thank you. The next question is from the line of Shagun Verma from Goldman Sachs. Please go ahead.

Yeah, thanks. This is Rahul here. Good morning, everyone. As a follow-up on the question, even though it's sort of a net that this is in the quarter, Is it fair to assume that the nearest account which was in the news has already been accounted for in this quarter? It is fully provided for. It is accounted for and fully provided for. Okay, okay, got it. So second clarification question is, can you just share what would be the loan duration of these restructured loans? I mean, when would these accounts start coming out of the restructuring phase? So in case of home loans, most of the people availed a moratorium ranging from 18 to 24 months. But what is interesting is that many of them probably would start paying off. Basically what we have seen is that many of them are having a high signal score. Probably they were just taken as a safety measure. Most of them may not avail these. It is actually a hedge against the possible risk of the third wave or disruption in the cash flows. What about SME loans, sir? And how is the stress in general for the SME accounts? So the restructured book, you know, is, because there is a moratorium, you have to assess anything. But there is a turnaround in the sector. Some sectors are doing like, particularly secondary students are there, they have taken the restructuring. So hopefully, I think they will also be able to come out before they complete the two-year moratorium. They are also making MSMEs as two-year courses. Actually, this restructuring, there is a characteristic difference because this is essentially a function of the disruption to cash flow. When the cash flows are getting repaired and restored, people would like to come out of the restructuring tag. That is what we have generally observed. So I think this is what we expect to witness going forward. All right. So just two more questions. On the growth side, you talked about... pockets, you know, still have not availed of the credit limits. But when you look at slide 10 of your presentation deck, you see, you know, the loan book reduction across many, many industries. Is this because of the repayments or the competitive pressure that you're witnessing? Can you just throw some color on that and how do we kind of, you know, start kind of, you know, if you're seeing the competitive pressures, How do we kind of respond to that? The point is when we look at this particular slide, whatever we have seen, like, you know, iron and steel, etc., it's all dealing with. Similarly, aviation and airports also. We had one account got refit. That is a reason. Likewise in case of tourism and photos. So, in fact, there's hardly any I mean, hardly any reason for us to really visualize that it has gone to the completion. It is not really so. And similarly, part of it is also on account of the repayment which you are due and which you have received on time. So that is also a reason. But it has not been replaced by the fresh disbursements in the sector. That is a reason. So it is not really attributed to their competition taking over our accounts. So this sanction limit of 4 lakh crore plus you talked about in your presser, what percentage can really fructify from this and over what period? See, eventually as I mentioned that it is a function of the capacity utilization. So there are many moving parts, but our expectation at all I can put it like this. And as of now, we have seen the credit growth about 6.17%. So I hope that the kind of availments which will come in and kind of disbursements which will be available in the coming, we should perhaps see the growth in December around 10%.

Thank you. Mr. Verma, may we request that you return to the question key for follow-up questions? Thank you. The next question is from the line of Mohit Surano from CLSA. Please go ahead.

Hi, and congrats to the great group members. Sir, I had a question. If I try and normalize the performance of this quarter for the family pension that we've provided upfront basis and adjusted for like one of recovery from the MDST, it looks like we've already crossed our threshold of 15% RE and given the trend that we're seeing in asset quality, it looks like we certainly will undershoot credit costs in the near term, right, at least in the next few quarters or couple of years at least. So, in that sense, it looks like the bank is quite well positioned to kind of deliver more than what we have

indicated right because you're already at 15% RL coming just out of your school. So just wanted to understand right that is this proper test correct and what is your risk to that?

I think your assessment is quite correct but we do believe that whatever cost or risk we can perceive we should be rather prepared for leaving out all that well in time. So, we have Delco room available and we have done that. So, hopefully, because, you know, we all operate in the uncertainties. What uncertainty will hit from where, one really does not know. So, we have to ensure that while we have time, when we have resources to our side, we should rather provide for it.

Got it. Sir, and the second question I had was on the core negative margins or core NINs. We reported a 31,000 crore approximate number. Out of that, there is some refunds that some may be because of asset quality.

So, from a power rating perspective, what should be the adjustment to get the core NI of the bank, which is like more a recurring number that one should work with? Actually, when it comes to NI, well, of course, you know, every year there will be something or the other. This is what we have seen in the past. And I think those one-offs will continue. And those one-offs are not as significant in number considering the overall incomes. So I think perhaps I will not be efficient to give you any kind of a normalized number because it has been there in the past also. It has happened this year also. There will be marginal differences here and there. For instance, I'll just share with you that in the year 2021-2022, we have the income tax refund of interest on the income tax to fund of 1922 crore in 2021 it was 1517 crore so likewise we have seen that on a year on year basis they have always gone such up one off service so this whole of 1900 crore is this quarter sorry the whole of this income has come in this quarter itself so this quarter this quarter we recognize we receive that's all And what's your outlook on margin, sir? We are at a decent point in terms of margin. It looks like rates have kind of clearly bottomed out and depending upon how much RBI wants to calculate, it can go up.

So, what would be your name outlook, let's say, next 12-18 months? Not going to be perfect.

Our effort would be that we should be reached on between 3.20 to 3.30. That's good. Thanks and congratulations.

Thank you very much. Thank you. The next question is from the line of Abhishek Muraraka from HSBC. Please go ahead.

Hi, good evening, sir, and congratulations for the quarter. A couple of questions. One, what is your exposure to the Calcutta-based NBFC and whether that is now fully provided for, I guess? to this what is the exposure to that group and secondly if you can share the increment and yield on express credit and home loans that would be useful. Well as far as the Calcutta based NBFC is concerned it is fully provided for and as regard the yield on the excess credit and home loan is concerned I would not be the patient to share the data because I am not keeping it with me maybe you can get in touch with our investor submission. Sure, and what would be the exposure to the Calcutta-based NBFC? Is it around 2,000 crores? 2,700 crores. The entire amount has been provided. Yeah, 2,700 crores. Okay. And your recovery from the HFL, did any part of it flow through interest income? Just trying to clarify that. No, no, no. Nothing. Okay, okay. Right. Thank you so much, sir. Thank you for my question and all the best. I wish you a happy Diwali.

Thank you. The next question is from the line of Nirenjan Karfa from Nomura. Please go ahead.

Thank you very much, sir. Just a question on capital. I mean, we are doing quite well and hopefully the growth is in front of us. Is there a possibility you want to raise capital over the next 12-18 months? We still have an algorithm for about 4,000 crore of 81 to be raised. Board has already given us the approval for that. Okay. And the current kind of a growth of about 30-odd percent we can easily support with our existing capital. For all purposes, we have already raised 6,000 crore in the month of October in 81. If we add that, we are at about 14.22%. So 40.22% capital, we'll be looking at the growth opportunities and if need be, we will be tapping the market, but that will be at the opportune time, keeping in mind the interests of all the stakeholders. Right. And sir, any color on potential IPOs that you offer subsidiaries, you know, the general insurance and mutual fund? Is that also probably factored in your calculations? No, we have not factored the IPO of our subsidiaries. As I mentioned in the past also, we have been nurturing these entities and it's not a compulsion of our raising capital which will really push us for taking them to IPO route. It will be rather meeting their own ambition and aspirations because when they become the industry leaders in their own right they should get listed that will be something the writing principle we are already engaging with our jv partners and in case of one of the subsidiary and at the material point and and the opportune time was sharing that information with you right right and so on going back to that movement of mtl i just wanted to re-clarify this So for example, if there were 100 rupees which slipped in Q1 and we managed to recover 50, what we are reporting in Q2 is basically a net of 50. So basically what you have reported is a cumulative Q1 and Q2 number. Is that right? This is the slippage part which you are saying? Yes. This is how we represent the slippage. Yes. See, on two different dates, in this particular case, 30th September, And prior to that, 30th June. So whatever was the slippage number as on 30th June and whatever the slippage number as on 30th September, the difference between the two would be the slippage.

Thank you. Mr. Kartham, may I request that you return to the question queue for follow-up questions. Thank you. The next question is from the line of thought up from J.P. Morgan. Please go ahead.

Yes, I have two questions. One is, you know, on the COVID-19 drawdown from 9,000 crores to 6,200 crores, that's on account of the NBFC? No, no, no. See, the point is that when we did the COVID-19, it is more like an ad-hoc COVID-19. That's not a specific COVID-19. And in any case, we have got an obligation that unless and until we, these general COVID-19 will have to as on, let's say, 1st of March. That is a counting norm. The other factor that, as I mentioned that in the first quarter, whatever slippages we had seen, we have been in a position to pull back almost all. So that is the reason why whatever additional provisions we have thought in, we have already reversed it. Because we don't see the possibility. And the other thing is that our total restructured assets are aggregated to about 30,000 cores. And we have looked into the PD computation of our legacy book and we have seen that generally about the difficulties to send over 30% only. And if we go by those reckoning, those numbers, we don't need more than 9,000 cores in any case. Also, I would like you to consider the other fact that this restructured book is behaving very differently as compared to the legacy restructured book because it is attributed to the cash flow disruptions as and when cash flows are getting required we have seen the customers coming back and reaping also. So in view of that we have kept about 20% kind of a provision on the total book but as we see we will have a variability of the behavior if need be we will send these provisions also. okay okay and the uh second question sir is on your roe roa targets you know uh so uh the point is that if your credit cost normalizes and your roa is exceeding this point to one percent range you have will it be fair to assume that you could possibly you know decrease your uh uh meticulous margins to kind of compensate kind of push up the growth i think we'll We'll react to the situation when we come to that.

Okay. Understood.

Understood. Mr. Saurabh, does that answer your question? Yes. Thank you. The next question is from the line of Sumit Kariwala from Morgan Stanley. Please go ahead.

Yeah, hello, Juan. Congratulations on a great set of numbers. I had a question on margin progression. And how should we think about it as the interest rate cycle turns as compared to past cycles? This time, if I look at the share of redwood, many clones are higher. Given the regulatory changes, the savings deposit rates are much lower. So should one expect margins to improve quite meaningfully as the rate cycle changes?

See, when it comes to the behavior of the deposit and liabilities and the asset, the repricing and what periodicity it can happen will actually decide this particular aspect. So, since we have our, when it comes to the interest rate sensitive deposit, they are essentially our fixed deposit. And they are normally contracted for our maximum deposit and the fixed deposit are in the one year category. So I think maybe we'll have some for some time we might have some opportunity but MCLR and our about 29-30% of our accounts are EBLR rates when it comes to our advances and almost 12% are in the fixed cost So 20% is EBLR and about 37% of our book is either fixed or EBLR. And EBLR also is an external benchmark link. So if the interest rate movement happens, we should be the patient to take care of our yield or our interest earnings. So that is something that's what we expect. But yes, of course, much of it will evolve as and when we will reach towards those stages, but this is how I look at the situation.

Thank you, sir. This is early days, but if I were to ask you, how should one think about series deposit rates over the next one, two years as interest rates move up? Is there any framework that you have in mind?

I think it's a very dynamic situation and we have to remain vigilant of the situation on the ground. and be responsive to the needs of the customers and also the market. Got it. Thank you. Thank you.

Thank you. The next question is from the line of Manish Shukla from Citigroup. Please go ahead.

Good evening and thank you for the opportunity. My question was on RWA density, RWA to total assets. that has been steadily falling. How much of it is given by the demand and how much of it is maybe caution or risk aversion on part of the bank? See when it comes to of course it is partly attributed to it's very conscious effort in terms of our underwriting principles it could follow and partly attributed to our policies and Having said that, I would also like to mention that our excess credit, which is considered to be unsecured, it has gone up. But yes, of course, it's eventually what we are only keeping in mind is some kind of a risk-reward relationship in terms of risk and what reward we should generate. So with that in mind, it's kind of a trajectory scene. So that's all I would like to answer your question.

So express credit will have a risk rate of 100%, right?

Yes, of course.

Yes, so my question is that, I mean, I'm assuming that there would have been good benefit of NPA decline over the last one year on the RWA front.

Now, incrementally, if NPA decline were to moderate and express credit continues to grow towards the overall retail, do you see RWA density inching higher? I think it will go marginally, but will remain within the tolerable limits.

okay all right thank you thank you thank you the next question is from the line of jay mandra from bnk securities please go ahead yeah hi sir thanks for the opportunity first question sir we need to discuss this segment wise if it is

Right, so this quarter maybe there is a inter-quarter netting of slippages that we have done. But if you were to show the segment-wise slippages like we used to do earlier, retail, corporate, agri, SME, that would be very helpful, sir.

See, what happened, we used to show segment-wise earlier because all the slippages were a matter of concern. So now it has come down significantly and we feel that Maybe if at all, if somebody would need it on a segment wise, maybe you can reach out to our BP investors relation. Those details will be available, but it is nothing too great, too big a number. So that's why we have not given the segment wise.

Sure. Then secondly, and on ECLGF book, sir, if you can quantify how much is the outstanding ECLGF? And how would you read the health of this portfolio?

Because I just wanted to understand when the moratorium book will come out of moratorium in this one, how do you read that progression here? Early days, but still maturation has yet to happen. Nevertheless, As of now, it is behaving okay. And about 26,000 is the ECG register.

Sorry, how much 26,000?

About 25,078 is the book. 26,003 6G. And as of now, only 2% we have seen which has got classified as NPA in the GECF. So when, sir, this 2% of the loan slips, the entire corresponding, the other facility, the main facility will also be classified as NPA, right? There's a total impact of that. Okay. There's a total impact of the NPA in the GCL book.

Understood.

And otherwise, you are seeing the portfolio behaving reasonably in line with other part of the book, right? Otherwise, we don't see much of a challenge in this. Sure, sir. Understood and thank you and all the best, sir.

Thank you. Thank you. The next question is from the line of Abhishek Khanna from Jefferies. Please go ahead.

Good evening sir, this is Prakash and congratulations to you and your team for a phenomenal performance.

Sir, just one request, if you would reconsider going back to the asset quality disclosures on a gross basis, because as we get into the third and the fourth quarter, it will become even more difficult for us to understand the quarterly performance and most of the pay aspects are mostly all on daily stamping and gross quarterly disclosures. So very humbly request that you could reconsider switching back to the gross disclosures next time. It has been consistent whatever disclosures that you have seen in the previous quarters are also the slippages are net of pullback that happened during the quarter. So that's how it is getting reported. Maybe this quarter being such a small amount of 1000 crores it is attracting a lot of attention. Otherwise the way in which it is always calculated is the opening balance at the beginning of the quarter. and the closing balance, the portion that slipped and remained is what is disclosed as the slipage. Because as... Sir, may I just reconfirm, were you also in the past, you were reporting on inter-quarter adjustment also, like something that slipped in 1Q but recovered in 2Q, was that also noted up in the past? It is. It has been done in the past also. It has been given. It has been a consistent practice also.

All banks do that, not only banks.

Yes, and other banks as I understand are also doing likewise. Because in any banking, as MD Finance explained, every day there could be one or two accounts slipping and then within 2-3 days they will be getting pulled back. So, in case if you have to keep aggregating these numbers, that will be, you know, kind of, will not reflect the true position. It's always a comparison between the opening and closing position. The split rate is, the accounts that slip and remain in the slipper slip category is what is disclosed at the end of the quarter. So there has been no change in the disclosure practice as far as this particular item is concerned.

Okay. Thanks for the clarification.

Thank you. Thank you. The next question is from the line of Maruka Rajanian from Ilaria Capital. Please go ahead.

Thank you so much for taking my question again. So, I just wanted to re-clarify one thing again on DHFL. So, basically the entire exposure including loans and bonds would have passed through the recovery or write-off line in the moment of GNPL. Is that correct?

Entire exposure?

This is around 100 billion, right? Because some banks show me GNPS, but I think you show GNPS, so bond and loan both. And in terms of what is accounted for in the recovery line and what is accounted for in the rise-off line, would that be 40-60? 40 billion and 60 billion, is that the correct...

I think we can provide you more granular details. But as a matter of principle, as you would know, you are aware of the exposure that we had in both loans and the investment. And this was an account which was fully provided for both the loans as well as bonds. And the recoveries are also in public domain. So when the provision is returned back, it is returned back to the extent of recovery. The balance of provision is used for writing off. So there has been no change in the accounting treatment for these accounts as compared to any other account. But if you need the granular details, I am sure our industrial relation will be able to provide you bilaterally.

Thanks a lot. And so just one more question in terms of keep it for the quarter. Since almost entire is corporate, so basically two to three accounts led with it.

So, we didn't say almost entire corporate. Largely corporate and you also know one large account is known to. So, that's the only.

Those and that account there were no other corporate.

There were a few accounts. But in terms of number it may not be as large. 4176 and 2700 both numbers are available with you.

So, the remaining cannot be anything chunky.

Okay. Thank you.

Thank you. The next question is from the line of Jignesh Viral from Intuit Capital.

Please go ahead. Hi, Sharon. Thanks for the opportunity. I just wanted to check. There have been a lot of noise happening around on the digital lending segment side altogether. Though it is a smaller segment compared to what SBI does in general. But can you give me a close and light on how you are seeing this particular space? and some more details about your Juno ethanol, that would be pretty useful. Thank you. Yeah, we are, in fact, as Juno is concerned, pre-approved personal is something which has become very popular, and it is end-to-end digital, and we are generally underwriting about 5,000 probes of pre-appeal almost on a quarterly basis. The first quarter, of course, was a little subdued. So that's why it was about 2,500, 2,800 crores. So already, YTD, we have done about 7,875 crores as far as pre-approved personal loans are concerned in the current financial year, YTD. And I'm quite hopeful that the remaining two quarters, we can easily do at least 7,000 crores plus in the pre-approved personal loans. So that is one part of it. Apart from that, we are using this for doing our KPC reviews also. Almost about 3.65 lakhs over the portfolio got reviewed with the help of YOLO. And also we are using it for opening our accounts. About 27,000 odd accounts are getting opened on a daily basis in the current quarter of this financial year. Sold a volume of 5000 crores worth of mutual funds with the help of UNO. And our total registration as of now is about 4.4 crores. And we have online banking facility which we started offering way back in the year 2001. Which is 20 years old facility where our total registration is about 9 crores plus. This is a new offering where our total registration is 4.4 crores. We are seeing the average daily login of about 1.20 crore kind of a number on this loan. Even non-life policies also, about 22 lakh policies have been sold in the current financial year till now. In the first half of this financial year. So that's what it is. And even in the goal loan, we are actually leveraging it in a very big way. And it actually helps people to have the convenience They can apply for the gold loan. They can have it sanctioned. Only the physical delivery is to be done by using a particular reference number. And worth about 10 lakhs called 60,000 crore worth of gold loans also could be dispensed with the help of Twitter. And this is just really helpful. It just, you know, there have been lot more, you know, large players are coming up. Do the overall quantum of lending right now seem to be smaller? See, in the form of BNPL and all. Are you guys seeing enough that this particular segment can become, you know, gradually over a period of time? Completely tough competition as far as consumer lending or emotional lending is concerned? Or how do you see that particular space growing up? What's your stance on this? See, when it comes to the commoditized product, they can be easily rolled out and offered through the YOLO. This is what the strategy we are following. And our effort going forward would be that as many as commoditized product, we should be efficient to offer through this channel. So maybe it is the banking or maybe our financials of the store, we are very efficient to sell the products of our various subsidiaries also. So that's what the strategy would be.

Thank you. Ladies and gentlemen, we will take one last question from the line of Russell Kumar from Diamond Atrium.

Please go ahead. Good evening. Just to conclude on the UNO platform, in the next couple of years, is there any plan to benchmark the valuation for UNO as well? Even the franchise and kind of work you're doing on your own is much more appreciated, I think, by the broader community. Thank you, Joseph.

At a material point of time, we will consider. But as of now, we intend to ensure that we make it robust and so that it should be efficient to fetch the right value. As and when if we decide to monetize it.

Appreciate it. So thank you and all the best to the team. Thank you.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

Thank you very much. Wish you all very, very happy with the public. We will be very happy, healthy and prosperous for everyone. Thanks a lot.

Thank you. Ladies and gentlemen, on behalf of State Bank of India, that concludes this conference. Thank you for joining us and you may now disconnect your lines.