State Bank of India

Good day and welcome to State Bank of India Q4 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 we meet a suspense during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Pawan Kumar Kedia, General Manager, PPR from State Bank of India. Thank you and over to you, Mr. Kedia.

Thank you. Good evening, ladies and gentlemen. I am Pawan Kumar Kedia, General Manager, Performance Planning and Business. On behalf of the top management of SGI, I extend a warm welcome to all joining us today on SGI Q4 FY22 earning conference call. On the call today, we have with us our Chairman, Mr. Dinesh Kumar Tara, Mr. T.S. Satish, Managing Director, Retail and Digital Banking, Mr. Ashwini Bhatia, Managing Director, Corporate Banking and Global Markets, Mr. Swaminathan Jain, Managing Director with Compliance and Stress, S.S.P. Logan Group, Mr. Ashwini Kumar Tiwari, Managing Director, International Banking, Technology and Subsidy, Mr. Alok Kumar Gaudi, Deputy Managing Director, Finance. Mr. Sivam Dixit, Chief General Manager, Financial Control. And Mr. Karanji Tatra, Chief Financial Officer. Before I dismiss our chairman sir to give a brief summary of the bank Q4 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 correct expectations and are subject to uncertainty and change 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 our chairman sir to make his opening remarks. Thank you.

Good evening friends. Thank you for joining this conference call before a long weekend. It's a pleasure to connect with you all again in better circumstances with the effects of the pandemic having been effectively addressed through a vaccination drive of epic proportions. I thank all our stakeholders including our customers, shareholders, analysts, employees and the broader ecosystem for being supportive of our efforts and initiatives in our journey. I also take this opportunity to express my heartfelt gratitude to our shareholders and our financial market participants were supported the bank through the challenging times in the recent past. The recovery of the global economy was hampered in Q4 of 2021 due to the resurgence of Omicron variant which led many countries to reinforce lockdowns, tower restrictions, and other containment measures which absolutely disrupted economic equity and supply chains. More recently, the situation in Ukraine has fallen their way down on the global trade dynamics and has led to squandering of oil and other commodity prices. The domestic economic scenario has also been affected by geo-political events. RBI has lowered the financial accountancy GDP growth forecast to 7.2% from the earlier guidance of 7.8%. While possible upsets could emanate from the sustained domestic demand, moment thrust on capex, a normal monsoon, And healthier corporate balance sheets, the heightened geopolitical tensions, do pose larger risks to the GDP growth. Amidst these extraordinary global and financial challenges that the board has faced in financial year 2022, the bank has again delivered good outcomes in various optimality and effect quality parameters. This is a vindication of the flexibility and strength of our operating model and the stupendous effort put in by the team in the State Bank of India. This has helped us to close Financial Year 2022 with robust results, which affirm our commitment to maintain our leadership position and set the goal of maintaining the momentum in Financial Year 2023. I would like to highlight a few key areas of our performance. The bank has logged highest travel profit of Rs. 31,626 for the Financial Year 2022, which is an increase of 65.2%. over financial year 21. The return on effect at 0.67% has witnessed an increase of 19 basis points, while ROE at 13.92% has increased by 298 basis points over the previous year. The bank's deposit and advances grew by 10.06% and 11% respectively in financial year 22, which in absolute terms works out to 3.70 lakh crores and 2.79 lakh crores respectively. Our retail personal book, I2P Sandlack Road, is growing at a three-year target of 16%, and we have also maintained our leadership position in home loan and auto loan. The bank's NII for financial year 2022 has shown a YOY increase of 9.03%, while NIM for domestic operations is taxed at 3.36%, that is 10.5% in March 2021, reflecting the bank's rebellious during the challenging year. As far as asset quality is concerned, the bank's gross NPA and net NPA as of March 22 were at 3.97% and 1.02% respectively, which is an improvement over financial 21 numbers of 4.98% and 1.50%. The slippage ratio for financial 22 is 0.99%, 19 basis points lower than March 21. The bank's ability to bring down the net NPA around 1% is a result of focus and continuous attention in this area. We have been able to contain the credit costs at 0.55% as against 1.12% as on March 21. An improvement of 57 basis points we have seen in this particular area. We have been constantly collaborating our lending strategies to maintain the quality of loan book which is accepted in our corporate exposure with 89% of the book being in investment grade. The book continues to remain well capitalized with CET1 ratio at 9.94% and capital adequacy ratio of 13.83% against the regulatory requirement of 8.6% and 12.10% respectively. The bank has also been able to keep the RWA to total assets below 50%, indicating the quality of the portfolio. Our journey toward digital leadership continues. We have been witnessing increasing digital adoption by the bank's customers and now more than 95% of the suggestions are routed to alternate channels. The adoption of UNO has significantly increased with registration costing 4.83 crores. UNO has created a significant value for the bank and we are now moving towards UNO 2.0 with many more advanced features amongst its overseas offices. Nine foreign offices and subsidies have gone live with UNO Global. I am happy to announce equity dividends of 710%. That is Rs. 7.10% per share. We are aware of the areas where we need to improve our performance further. With economic activity continuing to improve and the reverse of higher credit optics, the bank is aiming to increase its market share in advances. We are also focusing on current account deposit to improve our KASA ratio. Our long-term goals are very clear and we are committed to maintain our liberal owner position in the industry. Now, before I conclude, I thank you all for your continuous support to the bank. We are proud to be part of SBA and consider it as a privilege to be able to contribute towards the growth of our economy and the bank. We remain committed to reward your trust in us with superior sustainable returns over the long term. I wish everyone here good health and a very happy weekend. The floor is now open for your questions.

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 their touchscreen telephone. 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 question queue assembles. Reminder to the participants, anyone who wishes to ask a question may press star and 1 at that time. The first question is from the line of Maru Gadajanian from Edelweiss. Please go ahead.

Hello, sir. Hi. Sir, I had a couple of questions. Firstly, could you give us a breakdown of your loan book by benchmark rate?

Well, almost 74% of the loan book is linked to MCLR, EGLR or people's

Correct. But how much is VDLR? How much is T-bill?

See, when it comes to T-bill would be about 11%. And MCLR is about 41%. And external benchmark is about 23%. Mainly reporting. Mainly reporting.

Got it. Got it. So, and my next question is is on small loans so a lot of a lot of CSU banks have seen big slippage in small loans below 5 crores so any geographic pressure that is visible to you there any experiences you can share no actually as such I would say that our even smaller loan book also

it has actually improved in terms of its NPA percentage as compared to what we have seen in the past. So I think we have not seen any such trend. And even in the restructured book also, which we have, particularly as far as SME is concerned, the book was about 32,000 out of 30,000, which is the current outstanding. The American-made book is about 12,000.5%. But we have seen the NPA ratio of just about 724, which is actually much better as compared to the general trend which we are seeing. So, if I can add, actually, Maruk, we have witnessed net decline of NPAs across the region. That's number one. Number two, even among the SMEs also, the done rate of shortages is lower than what we had before. peak over it. The third peak, what you asked, there is no geographical concentration of any of these zones. I think we are not witnessing any such concentration.

Got it, sir. Sir, in terms of restructure of 30,000 crores, so that is OTR 1 and 2, over and above that, any fast restructuring scheme? Or this includes everything?

This actually includes everything. 1 and 2. Yes, it is actually 1 and 2. And 1 and 2 is put together is about 30,960.

7,000 is the earlier book.

7,000 is the earlier book.

But there is no overlap in the two? No, no. Okay. Okay, so it's 30,000 plus 7,000. And would you be able to quantify your slippage from ECLGS? And what the outstanding is currently?

Okay. Yeah. ETB's outstanding is about 32,000 crores now. The clickages are less than 2% so far.

Got it, sir. Sir, my last question is if you could highlight your outlook on CAPEX, corporate CAPEX for your bank. And I also see pickup in seal, textile and petrochemical loans on a sequential basis. That's working capital related or something else?

See, SRF, what we have observed is that our working capital unutilized limits are about 2,76,000 crores. And when it comes to, though the working capital utilization has improved, actually unutilized limits are just about 46% now. So I think as compared to almost 50% unutilized limits as of the last quarter, the situation has improved. And when it comes to the unknown, the unavailed limits are just about 19%. So that also is actually showing that this is very complicated. Apart from that, we have some kind of a visibility of the proposals which are being processed by us. So I think that is a broad picture as far as the corporate book is concerned. And that is very clearly reflecting the kind of offset which we can get to see going forward.

So, just to add over there, the unutilized limits at the end of December were in excess of 3,10,000 crores. That has actually come down to 276,000 as the chairman said.

The unavailable term loan also, which was in excess of 2.1 lakh crores, is now down to 2 lakh crores. So, the growth in the corporate book that you've seen, a very big chunk of that has happened in the fourth quarter.

Okay, sir. Thanks a lot.

Thank you. The next question is from the line of Mona Khaitan from Lola's Capital. Go ahead.

Hello, sir. Good evening. So, firstly, I wanted to check the segment-wise break-up of the 2800 crore slip-in.

Segment-wise break-up of? Segment-wise break-up of. 2008-45 is the quarter-four slip-in. Right. It was 1200 in corporate. It was 1200 in agriculture. The remaining is retail and essential. Okay.

So, this includes one of the large retail accounts as well?

No, it is one of the large corporate accounts. One of the large corporate accounts is part of this, which actually we have provided for fully now.

Correct. We have provided for it fully last quarter, the same account.

Yeah, that's right.

Okay, sure. And secondly, when I look at the yield on advances, unlike most peers, they have been stable Q&Q in your case. So, any color on that?

Well, see, the yield on advances as of now is stable. And going forward, I expect that we should improve. Because our 74% book is linked to external benchmarks, whether it is repo or it is EBLR, what it is, NCLR, what it is CBL. So, in case of rising interest rate scenario, it will lead to a situation where it should actually improve.

So, my question is pertaining to the fact that despite the sequential rise in your corporate book, your yield on advances have not been impacted. So, what really is helping you?

Actually, part of it is also attributed to the kind of an interesting scenario which was obtained at the material point of time. And for a good part of the financial year 2021-22, we had a scenario like that. So, that is the reason why perhaps it has not moved as it should have on account of increases in our course. It's a perfect book. Yeah, here of course I can add that, you know, just take the example of the loan book that is linked to the table, which is currently 11% of our total book. If you look at the movement of table rates, just in the last week, the 91-day table has moved about 100 basis points. The price action has happened in the first quarter of this year. So, when we started the product, the The TFL rate was at close to 3.3. Today, the 91-day TFL, it was a cut-off a couple of days back, was at 5. Now onwards, whenever the repricing happens,

Got it, got it. And just finally, for the restructured book, for what percentage of the book has the moratorium ended and the billing started?

Among the home loans, the moratorium ended. In all the cases, the government has passed it.

For the entire restructured book?

Yes, for which actually somewhere around about 15,000 thoughts which is about 50% of the book summary term has already ended and also the agreement has started and even in the home loan book in particular we have seen a situation where people have started repaying even as per the original agreement to do so which means that they are not really availing the restructuring again I would like to draw your attention to the fact that it has been attributed to the stabilization of the cash flows with the stabilization of the cash flows we are observing that people have Thank you, that was very useful and all the best.

Thank you.

The next question is from the line of Gaurav Kochhar from Mirai Asset. Please go ahead.

Yeah, hi, good evening, sir. Thanks for the opportunity. Sir, I wanted to ask on the investment depreciation this quarter, we've seen a 2060 crore sort of cost. Is this the NPM hit on the, since the years went up, or is this something related to the security receipt related provision? In fact, security receipt, it is part of it is on account of the security receipt and we have only provided for outstanding in this security receipt. Okay. Part is, I mean maximum component is coming from there. Okay, okay. Sir, anything else that could come up on the security receipt provision in fiscal year 23? No, as of now it is fully provided. As of now it is fully provided. If at all some new security receipts come, then only we will have to look at it. Otherwise, as of now it is fully provided. Okay, got it. And sir, with the yield, the benchmark yield has started to move up. Is that now going to affect the bond portfolio in a way or in this quarter maybe? If not the last quarter? If out of about 14 lakh crore of treasury, our AFS book is about 4 lakh crore? 5.6 lakh crore. And there our duration is 2.08. And that is the majority of that is So, there actually HTM should, with the increasing use, we should be benefited. And overall, let us see how really things really pan out and because this is all validation is done at a point of time. So, how good will that material be? That's what we will have to wait and watch. Right. Sure, sir. And on the, I mean, just wanted your thoughts on this. In this quarter also, there was a negative net slippage for us. The BAU credit cost was zero. The entire credit cost could be attributable to the higher PCR that we opted for. Going forward in fiscal year 23, given we are in the middle of, say, a benign credit cost environment, How do you see the credit cost for this year? Given that we are already sitting on high PCR, 90% to be precise, if I include the offer accounts. And, you know, we also have some buffer provisioning of 30 or 1000 crores. What are your thoughts on the credit cost for fiscal year 2023? See, we have such a boundary condition for ourselves as credit cost is concerned, which is 1%. And our important endeavor is to keep it as low as possible. So, I think that's how I would like to respond to this question. Okay. Sir, in a COVID year with two waves, we did around 90 basis points, including some, you know, restructured electric provisioning. Is it fair to assume we can do better than this in fiscal year 23? Yeah, actually, we all operate in a macro which is always uncertain. So, it's very difficult. That's why we have had a boundary condition. But I mentioned that effort is always to minimize it. So, I mean, we cannot really visualize those uncertainties. That is the reason why I am unable to go beyond this. Sure, sure, sure. And just last question if I can squeeze in. This you have observed, you know, fee income has been weak for even the large private pairs. Anything that you can talk about better, you know, because of the growth that, I mean, is it that growth is coming at the cost of some fee income? Both on the details. The income, there are one very important lever which I would like to highlight your attention, draw your attention to. It is only the forest income which you would have seen that it has gone up by 34%. And similarly, the cost-selling income went up by about 32%. So, I think we feel that there is a huge opportunity which exists and we will be looking at really cutting this apostatic leap forward. Sure, sure. And I was talking about the processing fee, sir. That has seen a decline. Of course, you know, last year has been a bit of effort when it comes to new proposals. And hopefully, if at all this year, the kind of expectation that we have in terms of corporate credits to do, perhaps we hope to see better numbers here. Okay. Perfect, perfect, sir. All the very best. Thank you. Thank you.

Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.

Yeah. So, first, with respect to, again, forex, I think you gave the attention to forex. But what is actually leading to this kind of growth in the overall forex and how sustainable would this be? Because this quarter has been quite significant, 1500 odd crores coming through that year.

This is a type of focus for the product trainers which is emanating from other retail outlets.

Okay, so this would be more granular and there is no one-off and broadly you can... I can assure you there is no one-off.

It is broadly spread out. It's very broad-based.

Okay, okay. So, this is more sustainable. And one of the effects when we look at particularly on-site card and the digital expenses that has gone up sequentially as well as year on year. So, what is actually leading to that and this is, is it like the up-fronting of the cost or again this will also continue? Which one you are talking about? 2800 crores. This ATM cards and tech expenses, that's almost 2800 crore significantly up both on year-on-year as well as quarter-on-quarter basis.

I think predominantly it's the tech. It's like ATM, we are changing the lot of ATM. No, that is not tech. Okay. It has a break-up price. Let me have the break-up looked into and just one second. It's the ATM. The current expenditure, which are all very operational in nature, and the major component is ATM interchange expense, which is about 1531 crores.

Okay, 1500 is ATM interchange expense. That's right. Okay. Okay. And on investment provisioning, last time there was 8,600 crores of SRs which were provided to the extent of 13%. So now that we have provided, I think 1,000 odd crores would be coming from SR markdown and 1,000 would be the M2M on ASI.

No, it is not M2M. We have actually, we have debited the P&L and COAG for it. Composition.

Composition. Composition, yes. SR is now, SR outstanding is about 7,980 crores and that is fully provided. So the investment reputation largely is coming on account of the SR charges. The balance, of course, would be there.

Yes, of course. 2,400 crores from SR. Okay. And around the remaining parts and so on, some of the provision figures are on some of the bonds, research bonds. And I think there also, yeah, that's all.

No, sorry, couldn't hear that, yeah.

Yeah, so I said that 2004 and there, so between 2011, we did accelerator programming.

And then in many ways, I thought of, you know, NTI, where they are, and then I gave them medical approvals.

Sorry to interrupt you, sir. This is the operator. We are not able to hear your audio clearly, sir.

So, about 2000 total on account of SRS and also whatever NPAs were there, we have provided for those NPAs too.

Okay. Okay. Got it. Okay. Yeah. Thank you.

Thank you. The next question is from the line of Rakesh Kumar from Systematics Group. Please go ahead.

Yeah, hi. Thanks a lot, sir, for the opportunity. So, couple of questions. Firstly, like, have you sold anything to ARC this quarter? And is there, you know, is that number getting reflected in the entry and recovery this quarter?

Yes, they have done, share center is reflected in the recovery. And quarter 4 was 8 accounts. And recovery was 297 crores. And for the whole year, it is 23 accounts.

The recovery is 1,188 crores in all. And cash was 1,105 and the SR takes 3 crores. That's for the full year.

And secondly, sir, we have written back some things into the notes for this quarter. And as you mentioned just now, that close to 50% or perhaps I couldn't hear it. Almost all the accounts of your subject book has started billing. So if there is a remaining account, you know, billing where the billing has not started, so what is the, you know, what is the status of those subject account now? Because now we don't have any contingent provision left. No, no, it is not verified.

We have not written back. The condition provision that was kept COVID has now been applied to be kept as an additional provision for this structured book. This structured book requires 15% regulatory provision. We have made additional 15%. So, the condition provision has now been made as specific provision to these accounts as a prudential measure. Otherwise, the behavior of the book does not warrant any additional provision. But since there was a contingent provision that has been made now as provision applicable to the restricted accounts and additional food and sale measure. So, it's not... Yeah, got it.

So, partly just on this credit growth thing. So, like was there a, you know, stronger credit growth number in the last fortnight or if you can help us with what is the daily average, you know, growth number in credit because So, you know, P&L account, especially on the interest approval side, it is not looking that great. If you consider the sequential number, if you can help us on the credit rules on the daily average basis for this quarter or maybe on the flash fortnight also.

It is, I can only say that it is not really one of which has been seen in the last quarter or on a particular day. It has been spread out and it is, this is something which I can see, but as numbers are concerned, we will try to get to. And the reason why perhaps it is not seen as a P&L and as income is concerned, because you would probably appreciate that towards the last quarter of the last financial year, interest rate environment was quite benign. So that is one of the reasons. The growth probably is not commensurate as far as interest income is concerned. But nevertheless, as far as the growth part is concerned, maybe I don't know if you have the numbers. 1,54,000 growth in the last two quarters. Yeah, it has been equally spread out. It is not that it has happened only on a particular day. 1,54,000 growth worth of disbursements have happened in the last quarter. But it is spread out across the quarter. And also, it may not be out of place to mention that I think in the past also we have been talking and I have indicated in the past also that there was underutilization of the version capital and non-availment of the script downloads. So, some of them also got raided in the last quarter. So, thank you for this.

I saw WCL which is run as well as 2.7 trillion. What is the risk rate on that, sir?

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The next question is from the line of Ashoka Ajmera from H1 Global Services. Please go ahead.

Thank you for giving me this opportunity. Good evening, sir. And congratulations and compliments to you, Khara sir, once again for the fantastic performance of the bank. I think on every parameter, I mean, your evidence and everything you have achieved for the quarter, especially the whole year, Having said that, sir, I have got some data points and some information and a few comments.

Sir, our fund-based credit domestic is Rs. 24,651.

Can I know the number of the non-fund-based facility which is sanctioned and availed? It is there on the non-fund-based front, sir.

Thank you very much, Ashok. I will get you the number relating to the non-fund-based. I don't have that number available to me. Actually, the domestic has also 24,600 crores, but if we add the foreign book, also it is 28,800 crores.

Yes, yes. Okay, I will take that later, sir. Sir, some comments on your co-lending space, because last time I think we discussed something about it that you are very aggressive on that and you have enrolled many partners.

So, can you give the color of the, I mean, how much have you achieved through the co-lending? Co-lending, we have started, but in the early days, you know, there are always some knick-knacks which need to be addressed. So, I would say that last quarter was more like that. Perhaps we will see the upside coming from the co-lending in this year. Yeah, I mean, of course, on 31st March, 3, anyway, 1 of the, I am 30 years. Co-lending, we have entered into partnerships mostly in the last quarter of next year. And we are putting up, you know, the integrations, technology integrations and instrument accounts, escrow accounts currently. So I think we need to pick up now. It was not much in the last quarter of next year. But our target for the current year is at least 10,000 courses per year, you know, 15 months.

That's what I wanted to hear. Anyway, some targets. Sir, my next question is on NARCL. For the last two quarters, we have been discussing and I think now it might materialize in the current quarter. So, where do we spend now? What is the current status? How many accounts are going in the first phase and how much is the amount? Can you give some color on that, sir?

As of now, the number of accounts identified are those 15 accounts, so that's about 50,000 crores. So, that is for the system as a whole and it's progressing as you are aware that it involves various stages. So, it is as of now at that stage. Hopefully, in the current quarter, we should be in a position to see some activity on this particular account. Sir, coming to this again Twitter group, I mean the written group and shrines,

Where do you stand the provision wise both loan book and the investment book? 100% provision already made sir. For both the SHI as well as Absolutely.

On the debt and on the investment book. Book is fully insulated from any future shock. Sir, one question is extended question on the same treasury how with the interest rate hardening I mean the way the things are going the inflation is going up rupee is weakening

and there is a pressure how much further basis point which we can you know easily absorb in our AFS book I think you said 5.61 lakh and 2.08 it is maturity period how much more suppose 50 basis point 70 basis point we can absorb easily without actually booking the losses I would not be able to answer this question because we will have to

And moreover, you know, all this is a function of a moment of yield on a particular day when this is all assessed. So, this is very difficult to really predict. But, yes, as I mentioned that we have already ensured that our HTM should be strong enough and we have already done that because we have committed to move investments from HTM to AFS on a particular day. That aspect has been already done that. So, that is something which is within our control and we have already taken care of.

Thank you. Mr. Ajmero, may we request that you return to the question queue for follow-up questions. Thank you. The next question is from the line of Nishi Shah from Adco General Insurance.

Please go ahead. Sorry, all my questions have been answered. I don't have any further questions.

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

Hello. Good evening, sir. Thank you for the opportunity. so couple of questions one on growth the SME growth sequentially was a little weak in fact the book was flat but you know when we compare it to peers we've seen them grow at a fairly fast clip can you just make some comment on the space is there a lot of pricing pressure is there a lot of competition or any other reason why the book may not have grown this quarter that's the first question The second one is on margins. What is your outlook from here? You have a low CD ratio, so there should be some benefit of that. But there's also likely to be some pressure on, you know, deposit rates, etc. So, what is the outlook? These two questions, sir. Thank you.

Yeah, SMA book, of course, I think if we compare with March 20 to 21 movement, as compared to that, it has witnessed a stronger growth. So, I would say that going forward for us, we should be in a position to see even stronger growth coming in SME segment. We are actually, structurally we have strengthened our delivery process in SME in last one year. So that should help us and it has, it has actually, I would say that it has still, we are upgrading that process also. So, that should help us to see better numbers in SME. If I may add here, we take only If you see the pure MSME, you know with MSME you have a large company which is not qualified MSME is the part that is good to you. If you see the pure MSME which had a annual growth of almost 30%, IP is a pretty large niche input and as I was mentioning, lot of initiatives in terms of changing our technology platform, cluster-based two tierings of the existing manager of the ground. Seven initiatives have been taken. I am sure it will go to sustainable at the current time. And sir, any comment on the pricing here? Pricing, I think, we don't visualize any pressure on pricing as far as we go. Okay.

And the second question on link?

Second question, NIM, I think, you know, generally, typically speaking, the kind of trend which we observe, the default interest rates move up with the lag. And considering the fact that our 64% of the book is linked to MCLR, EBLR, and TBL, so we should be in a position to see an improvement in NIM.

Thank you Mr. Murad, I may request that you return to the question queue for follow-up questions. The next question is from the line of Prashant Kumar from Sunidi Securities and Finance.

Please go ahead. Thanks for the opportunity sir. If I missed, I am so sorry but on the loan processing fee, on Q3 it was around 9 billion and it jumped to 16 billion. So, such a move in Q3, is there any waiver or something?

So, generally what happens is that the renewal of the working capital happens towards the last quarter. So, there is always some kind of a confrontation towards the last quarter. So, that is the reason why last quarter has seen a growth as compared to what we see in the loan processing charges. But apart from that, there is nothing else to explain for this.

Okay. And on PCR ratios, it has improved to around 75% in expanded and as you mentioned the restructure book and other facilitators is also going down and restructure book is also performing well so what is the reason still you are increasing PCI and it is on the on credit cost if you could give some color see one of course

you know, we don't have a situation like the aging poison etc. etc. So that is one thing which is there. But easier nevertheless, you know, as a matter of policy, we have decided that we will insulate our fellowship from any potential shock which may come. So that's why at the earliest sight of the risk, we are trying to see that we should adequately provide for such risk, such kind of a delinquency and that is something, that is the reason why we do it. So 75% is there and also if we look at the corporate CC are even excluding offers at about 93%. So, you know, we don't want our balance sheet to be exposed to any kind of risk. That is the reason why we are practicing this.

One last on deposit and general insurance. It has increased from 14 billion to 16 billion. Sequentially, there is a huge jump. Is there any missing? I mean the budget also has increased around 6% frequently so it may be some impact of this but the jump is high so is there any I am missing on that calculation?

The project would be essentially the GICGP and the general insurance is the insurance of our effects also and you know you would have seen in the previous year in In general, the cost of insurance has gone up, so it is a factor in that.

Oh, okay. Thank you so much, sir.

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

Hi, sir. Thanks for the opportunity. I have two questions.

Mr. Mundra, we are not able to hear your audio, so please increase the volume of the device.

Yeah, is this any better?

Yes, sir. So, the first question is on deposit cost and LDR. If I calculate our domestic LDR is around 61%, which is clearly sub-optimal. And at the same time, if I were to see our deposit rates, historically, I believe SBI was the price setter. and with other private banks having some threat over SBI deposit rate, which currently does not look like the case. And at the same time, we have the domestic LDR at 61%.

So if you can comment as to if you want to bridge this anomaly of lower LDR as well as slightly higher deposit rate, or how are you thinking on this?

The issue is that maybe I don't know how it was at 61%, but today it was at 162.6%. That was the kind of a credit deposit issue we are seeing. So we could find the kind of a growth issue we might have to see in the loan book. So I think maybe at a point of time we took a call in terms of revising the term deposit rates and that too went through one to two year durations. So that is something which we did and they just wanted to be ahead of the curve and that is something which we have done. But I think on a cultural basis, it may not really reflect the right picture. Once we have one year time period, it will probably look normalised. But deposit rates are not, they are either lower or, you know, they are all not far. We are at rates that are higher than... I am not really very sure that they are useful, your impression, but nevertheless, it is very strong.

And secondly, sir, we had announced $1 billion line of credit to Sri Lanka, right? And of course, that country is in financial stress. Is that $1 billion is on our book or this is just a government assistance?

Is there any risk to SDI because of this thing? This is guaranteed by the government of India. On our book. On our book, but guaranteed by the government of India. On our book, but guaranteed by the government of India.

Fully guaranteed.

Fully guaranteed by the government. No risk on us.

Sure. And sir, on corporate growth, right, so this quarter there has been a healthy 10-11% quarter-on-quarter corporate growth and also decent on a YOY basis. Is this more seasonal or you think, you know, SBI outlook on corporate growth has changed a little bit. I mean, so in the last few quarters, we were saying that we will pick and choose. Or are you seeing slightly better opportunities now? How should one look at it, the corporate growth jump?

You would have observed that 89% of our exposure to corporates are into the investment grade. So there is no no compromise as far as the rating is concerned. Secondly, what I mentioned in terms of the unavailed working capital security, which used to be as high as about 50%, now it has come down to about 44% kind of a number. So I think to that extent, there is a definite improvement. and in terms of the working capital utilization. And similarly, the situation for the unavailed term loans. So, these are some of the things which is a function of the capacity utilization. And part of it also, when it comes to working capital utilization, will also be on account of the uptake which is seen in the commodity prices. So, I think, I would say that this is not one of. To my mind, it appears to be such a number.

Thank you, Mr. Munna. May we request that we return to the question. The next question is from the line of Saurabh Kumar from J.P. Morgan. Please go ahead.

Sir, I have two questions. One is on this offer recovery. So, what is your expectation going ahead? And, you know, especially in relation to the power sector, do you think that the resolutions pick up now given the situation of, you know, power assets in the country? and the second is just want to reconfirm my understanding so on this if you have a yield increase you obviously for investment depreciation but there should be an offsetting impact to some extent on the employee provision will have understanding you correct thank you well as far as the impact on the poverty Well, I think there should be a mission to fetch better value, but let us wait and watch how everything is going forward. Because very often when it comes to the foreign capitals, there are certain limitations for supporting the thermal power. So that is something which I would like to mention. But yes, nevertheless, I think the plants would be seen in performance and which might perhaps have some interest from the potential buyers. So, that I understand. And your second question was relating to? Avka. Avka recovery actually, we could have about 7,800 crores.

7,800, sir.

And going forward, maybe you would like to comment.

Generally, our run rate on Avka recovery is about 8,000 to 10,000 crores.

And this year also, we would be targeting a similar number. Okay, thank you.

Answer the second question, you know, on this investment, so we have an investment appreciation, but let's say for this, you know, 50 basis point yield increase, how much, how much release will we get from this price provision?

No, actually, earlier it used to be like that, but now since our, when it comes to the pension liability and the gratuity liability, those funds are now managed by our SBA funds management. That's what I said, sir. So, that's a separate trust also. It is not managed by the bank. So, it will not pay the patient to offset.

Okay. Understood. Thank you.

Thank you. The next question is from the line of Jignesh Riyal from Ingrid Capital. Please go ahead.

Yeah. Hi. Just a recent for me. What do you see there? There have been eight accounts sold at 297 crores within the quarter to year. And full year 23 accounts at Rs.1188 Cr. Is this number correct?

Ya right sir. ARP sale. If your question is on ARP sale, quarter 4, 8 accounts amount realized is Rs.297.

Ya and full year 23 and 1188. 1188 you are right. That's the ARP recovery. And it has been fully provided now?

Not necessarily but much of this has been earlier provided and And if it works and if there is any provision right now, that has been accounted for.

But this could be a different category of account.

And second, the continued provision against COVID, what you were ending with earlier, now we are keeping it against restructured accounts. Is my understanding correct?

Yes. Yeah, yeah. The COVID provision is there, now it is against the restructured accounts. That's right. Can you quantify it, please, once? The additional provision for the reception account is 7,900 crores. 7,9122 is the price.

And just asking, can you give some brief details about how the business has happened to UNO? More details about the room sold or customer situation has happened to UNO, Apanor? Can you give just a brief about that?

Almost for 26,000 crores. 26,000 savings bank accounts are being opened on a daily basis. And when it comes to the mutual fund sales, this has been about 1,548 crores. About 11.36 lakh policies, personal access insurance policies we have closed. And when it comes to our pre-approved personal loans which were disbursed during the quarter, they were about 6,500 crores. Krishi Agri Gold Loans, which we changed, were about almost 13,000 crores in the quarter. And HTC accounts, which were renewed through UNO, were almost 2.25 lakh accounts, which were renewed. Loan book is 25,000 crores. So, loan book overall is about 25,000 crores with the help of you. All right.

Thank you so much. That's useful.

Thank you. Thank you. The next question is from the line of Roshan Shubke from ICICI Prudential Mutual Fund. Please go ahead.

Yeah, thanks so much for taking my question. Firstly, this other provision is a bit of 1495 crores. What is this relating to? 500 crores is a standard provision for this. Yes, sir. Yes, sir. Can we please quote the claim? 14,000 crores. Yeah. Sorry. Can you please repeat your question? On slide number 24, you have these other provisions, right, of 1495 rules. What is the correspondence? Part of it is for the non-fund base. And just one second, I'll just give you that. Yeah, it is all the non-fund base. And of the investment depreciation of 61 crores, how much is related to MTM? It's not MTM, but on account of the security issues. Mostly, yeah. Okay, and where do you have MTM related provisions? There was no MTM provision as of 31st of March.

Oh, okay. Thank you. That was a message. Thank you. Next question is from the line of Manish Shukla from Axios Capital, please go ahead.

Yeah, good evening. You said that about 41% of the book leaves MCLR.

Could you wake up by tenor of the MCLR?

I mean, how much would be one year MCLR and how much would be less than one year? I would not have that difficulty, but the bulk of it is six months MCLR which has become the benchmark.

Okay, so that is good enough.

Second, given the increase in digital and UNO related transactions, how soon do you think it can start reflecting meaningfully in operating risk efficiency numbers in terms of cost to income?

Yeah, I think it's going to be an effort, ongoing effort. And as of now, about 25,000 crore worth of pages in terms of cost of sourcing, etc., is much lower as compared to the overall book, which is actually much bigger. But I think maybe it might take some more time. But yes, of course, it's a step in the right direction. And I would like to add that for a bank of our size, we don't have a choice of only having the digital. We have to have the digital model. So that is something we should work. This is about 10% of the overall portion on Voke. But as it scales... We would like to have as much as possible because it is a frictionless channel which is in Voke. And we would like to see that it improves even further. All this work, like for work of people having joined Jono, they are the usual users. Hopefully, with the value add which is coming, many more will also come. Sure.

Last question, sir, is for the express credit loan product, what do you think is your potential target customer segment to which you can sell that product and how much of that have you already penetrated in terms of number of individuals?

If express credit is a product which is on a I think every quarter we keep telling about this, the other target group is basically the cost of the qualified customers. And we have a universe of about 1.754 as we speak. And it's growing. This is TSP customer base. And our current target group is just about 1.75%. As Kevin mentioned, it's not only that we have still unexplored kind of customer segment. We enhanced the salaries and all other things also contributed to the growth. So, just to address your question, I think the penetration is just about 27%. We are further improving the penetration level and also adding to our customer service package, corporate service package, customer page.

Sure. So, that is 27% of 1.72 crores. Is that right? Yes, sir. Oh.

All right. Thank you. There is one more question.

Thank you. The next question is from the line of Unilever Karfa, Sangamura. Please go ahead.

Thank you, sir. Just two questions.

On slide 18, we have this total provisions of 30,629. Does this also include the provisions that you have on CKM 2.8, CKM 785.9 or is it outside that? No, that is outside. That is on CKM 4.6. That is on the provision for the investment depreciation.

Okay. Okay. Thank you, sir. And, sir, second question, obviously, savings rates have come off quite significantly. In what conditions do you think SBI may have to start raising savings rates?

I think we have not yet taken a call on this. Maybe we'll get and watch how things will pan out and how the competition moves and accordingly we will be taking calls. Right. So, if I can just delve deeper, I mean, will you be able to testify, you know, what is the cost that you actually incur on having a savings account for which a 2.5% is probably what you think you can do and that you cannot move up? potential or yeah look at the cost like that so market must be remembered that savings bank account is an entry level and our ability to sell and cost the return it's not only about the operational cost it's about energy I think from that perspective it has to be okay so it will be basically which has to be more competition driven and broader interest rate now yeah okay thank you sir

Thank you. The next question is from the line of Ankit Ladhani from Mahindra Manilai.

Please go ahead. Hi, sir. Just one question. On the segmented break-up that you are showing, the retail back-up options have dropped significantly during the quarter.

Yes, we are unable to really understand what you are saying. Can you hear me? Be very nearer to the mic.

Yeah, this one.

Yeah, am I audible now?

Okay, give me just some segmental breakup that you have shared with the exchange finance. The retail banking operations income line dropped sharply during the quarter from around 6,900 crores in Q3 to around 440 crores in Q4. So, what was the reason for this?

Segmental revenue. Maybe we can respond to this offline. Offline. Yeah, because I'm not checking those details with me. Maybe I'll ask my... Yeah, in this situation. Yeah, in this situation.

No, no issue. Yeah, that's also my problem. Okay.

Thank you. Ladies and gentlemen, we are short of time. I would now like to hand the conference over to the Chairman, sir, for closing comments.

Thank you very much once again for taking our time and to be with us. Just two on a Friday evening. All the very best to all of you. Stay safe, stay healthy. Thank you.

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