State Bank of India

Good day and welcome to State Bank of India's Q3 FY23 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 pressed on phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjay Kapoor, General Manager, Performance Planning and Review from State Bank of India. Thank you and over to you.

Namaste and good evening ladies and gentlemen. My name is Sanjay Kapoor. I am the General Manager, Performance Planning and Review Department of the Bank. On behalf of the top management of SBI, I extend a warm welcome to all of you joining us today on SBI's Q3 FY23 earnings conference call.

On the call today, we have with us our Chairman, Mr. Dinesh Khara, Mr. T.S. Sethi, Managing Director, International Banking, Global Markets and Technology, Mr. Swaminathan J., Managing Director, Corporate Banking and Subsidiaries, Mr. Ashwini Kumar Tiwari, Managing Director, Risk Compliance and Salty. Mr. Alok Kumar Chaudhary, Managing Director, Retail Business and Operations. Mrs. Saloni Narayan, Deputy Managing Director, Finance. To carry forward the proceedings, I request the Chairman Sir to give a brief summary of the Bank's UGFI 20C performance and the strategic initiatives undertaken. We shall thereafter straight away go to the question and answer threshold. However, before I hand over to the chairman, sir, I would like to read out the safe harbor statement. Safe harbor provision. Certain statements in these slides are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual outcome may differ materially from those included in these statements due to a variety of factors. Thank you. Now I would request chairman, sir, to make his opening remarks. Thank you. Thank you very much. Good evening, ladies and gentlemen. Thank you for joining this anniversary announcement of the Apartheid Resort of the Peninsula 23. The Indian economy has exhibited remarkable resilience through 2022 in the face of the deteriorating global situation triggered by Russia-Ukraine war, monetary policy tightening and recurring base of the pandemic. On the back of the strong and macroeconomic fundamentals. An important factor in the overall outcome has been the measured response of the monetary and fiscal policies in sharp contrast to the aggressive tightening worldwide. The new year brings hope for continued momentum in India's growth story backed by the sustained strength in domestic demand. The World Bank has gone on record to say that the nation was well placed to steer to any potential global advent in 2023. The IMF has also said that India remains the bright spot and will account for the significant portion of global growth in 2023. Several high-frequency activity indicators like vehicle sales, petroleum consumption, railway passenger traffic, air traffic, car fuel revenue collections, petrol sales have all shown improved IOI momentum in Q3 of financial year 2023. GST revenue also continues to remain robust with 15% higher revenue in Q3 compared to the same period last year. In FY23, credit growth has continued to grow in double digits. The incremental 9-month credit growth has doubled in FY23 compared to FY22. Credit growth in the system is currently at 14.9% as against 9.2% in last year. The good thing is that credit growth is broad-based and not limited to a few industries or sectors. So we expect the pace to continue in the next financial year also. But some auditions can happen. At State Bank of India, we have always maintained that our long-term strategy is to build sufficient resilience in our balance sheets. So while we will continue to pursue growth and core operating income, we have also been proactive in in identifying any potential risks and build adequate provisions for the system. And our operating results for the quarter are aligned with our long-term strategy. I am pleased to announce that for the second quarter in running, we have again posted our highest ever quarterly profit at Rs. 14,205 crores. Our business growth numbers are strong and in terms of protect quality, our growth and have dropped to its worst level in more than six years. Let me now give some color on the bank's number for this quarter. Net profit for the quarter increased by 68.47%, while operating profits at 25,219 crores increased by 66.16%. However, the bank For the 9 months period improved by 23 basis points on YOY basis and it stands at 0.87% and ROE improved by 458 basis points on YOY basis and it is at 18.59%. Most other core profitability metrics have also improved over previous year as well as sequential. Net interest income increased by 24.05% YOY on the back of improvement in yield and continuing credit offtake. Domestic NIM also improved by 29 basis points by a while and 14 basis points sequentially. Non-interest income grew by 32.21 to 2% by a while. Operating expenses increased by 16.69%. As we have started grading poison for the rate revision, it has fallen due from November 22. Other than that, our overhead expenses as well as half costs are within control, and our cost to assets continues to remain among the lowest in the industry, reflecting our effort to build a long-term cost efficiency. On the maintenance front, the growth momentum in domestic credit uptake has continued in this quarter also, with growth coming from all segments. Domestic advances grew by 16.91% by OI, headlined by retail personal advances, which grew by 18.10% by OI, and corporate segments, which grew by 18.08% by YY. SME and RE advances also posted a vertical float at 11.52% and 14.16% by YY, respectively. Our personal retail loan book, excluding housing, segments have crossed the milestone of 5 trillion. Domestic deposit grew by 8.86% by YY, driven by growth in savings and deposits and term deposits. Our foreign officers have continued to perform well with good growth in advances as well as deposits. Coming to asset quality, we continue to post improving outcomes. Our gross NPA has dropped below 1 trillion and stands at 98,347 crores. In terms of ratio, our GNPA has come down by 136 basis points on a YY basis and stands at 3.14%. Our net LCA ratio has also declined by 57 basis points and stands at 0.77. Slippery ratio for the quarter stands at 0.41%. Consistency improving asset quality is also reflected in our credit cost, which is at 21 basis points for the quarter and is down by 28 basis points on BioWare basis. On the restructuring front, Our total exposure under COVID Resolution Plan 1 and 2 stands at 26,035 crores. As at the end of 4.3 of financial 23, the resubscription book has behaved well with almost around 10% of the current exposure falling under SMA 1 and SMA 2. We are holding sufficient additional positions against the resubscribed account. The bank remains well capitalized and we expect our internal accruals will be adequate to take care of the normal business growth requirements. Our capital adequacy ratio, without adding profit for the 9 months, stands at 13.27% and CET ratio at 9.26% are well above the regulatory requirements. Digital continues to be an important acquisition engine for the bank across assets as well as liability products. During the quarter, we have closed 64% of the savings bank accounts and 41% of the retail asset accounts digitally through humans. Our subsidiaries have also consistently performed well and continue to create significant value for all the stakeholders and most importantly for the customers. Most of our subsidiaries are leader in the respective segment. We will continue to nurture these subsidiaries and see them creating value for their own shareholders and as well as the shareholders of SBI. Now before I conclude, I thank you for your continuous support to the bank. We consider it a privilege to be able to contribute towards the growth of our economy. We remain committed to reward your trust in us with superior sustainable returns over the long term. I wish everyone good health and very happy return. The floor is now open for 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 1 on their text or 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. We have our first question from the line of Mahroog Adhijaniya from Nuwama. Please go ahead. Hello, sir. Good evening.

So, a couple of questions. Firstly, the write-offs are slightly higher this quarter, so if you could explain. And also on trading games, the Treasury bid, Why does it look so high this quarter? So, these are my first two questions and then I have one more.

Yeah, write-off is in the normal course of business. It is nothing very unusual. I think it is about 10,000 per score is the write-off amount. And it is in the normal course of business. So, nothing very unusual.

So, it was 3,000 last quarter, right?

Yeah, I think normally we undertake write-offs towards the third quarter and the fourth quarter. So that is why it has changed this year and it was not there in the past.

And the treasury part? Yeah, on the treasury part. The treasury part, it also includes some amount of write-backs of the MTM process because the MTM requirements have come down, the market losses have come down So, that is getting reflected in the survey.

Got it. So, sir, in your exposure to a large group in press, you've made some comments that it's 0.86% of total exposure. But what is the total exposure? Because we get to see only your gross advances.

So, and your partial... 0.88% of our loan book, which is 31 lakh crore, find out.

Okay. Okay. Got it. And this includes all the sanctions across all offices?

It's an outstanding exposure across all offices.

Outstanding. Okay. Okay. But sir, you wouldn't talk about your sanctions?

I think as of now, what is material is that only.

Okay, but if you can get out because like PNB disclosed their sanctions, right?

It is their prerogative and normally we don't entertain questions relating to a particular account because there is a customer privacy issue involved.

Okay, sir. Sir, if I can squeeze in just one last question. What do you think is the outlook on deposit growth and therefore margins? Right, you've done for, you know, operating performance has been phenomenal. Deposit growth is not great but you don't even need it because you have been running the lowest CD ratio amongst the lowest CD ratio in the industry on the domestic front. So what is the outlook on deposit growth and therefore margins from year on? When do you think margins sustain at the 3Q levels? Do they drop? When do they drop? How does deposit growth accelerate?

As of now, we are having excess SLR to the tune of about 3.2 trillion. And we are very mindful, like I've said it in the past also, a deposit is a franchise and we always remain mindful of the depositors' interest. So in the buckets where we feel that we can attack the retail deposit, we are ensuring that we must be in line with the market trends. And that is a policy which we have adopted and we will continue to follow that. So, based upon that, since you are also acknowledging the fact that we still have one of the lowest credit deposit ratio, depending upon the need, we will be calibrating our interest rates. But I would also like to mention that about 74% of the loan book is linked to either EBLR or MCLR. And out of this 74%, I would say about 40% would be on account of MCLR. And if at all we increase the deposit interest rates, that will also give us elbow room for increasing the MCLR, which will help us in ensuring that the NIMS should not get adversely affected.

Okay. So, more or less, stable NIMS from your end.

I expect that. Hopefully.

Okay, sir. Perfect. Thank you. Thanks a lot, sir.

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

Thanks. Good evening, sir. Just a couple of questions. Number one, on the provisioning bit, we've seen a jump in standard asset provision in this quarter. And I think outstanding standard asset provisions are about 23,000 crores. So just wanted to understand why are we carrying such a large provision here? Is there an element of contingency also that has been added in here?

Yeah, there is one of course is when our loan book has grown, that has also led to an increase in provisioning because we are required to maintain standardized provision for the standard assets also. Secondly, of course, we are always very mindful of, if at all we get to see any kind of a stress on the ground in any of the accounts, we do make some provision which are protein in nature and much of it will depend upon how the account, I'm not sure what is the trajectory of the account. And accordingly, we crystallize those provisions. So, partly it is on account of our increase in the loan book and partly it is on account of our policy in terms of making the provisions proactively as against after the occurrence of the event.

Sir, this translates into roughly about 75 to 80 basis points of the loan book. So, fair to say 30 to 40 basis points may have been built just, you know, for any future contingencies?

Yeah, could be that. As I mentioned that If at all we get to have visibility of any kind of a stress in our loans, loan account, we rather believe in making those an effect.

It is across the sector.

It is across the sector.

It is the corporate.

Yeah, it is on the corporate level.

And it is a standard of this provision. Yeah, yeah. Yeah. All right. Thanks. Sir, just on this provision for employees of 5,429 crores in this quarter, So, what is the element of one-off here or this is going to be the recurring quarterly matter?

No, we have a provision relating to our base revision. It is about 996 crores on account of that and other than that are the provisions which have been made based on the absolute assessment for our retirement liabilities etc. So, it is as per the, yeah.

So, and this is 996 crore, would you be making this every quarter, additional provision?

On an average, about this is for every month, it comes to about 500 crore every month. That should be the provision which should be required to meet the liability relating to the wage provision.

Sorry, I missed out on the number. Can you please repeat? Sorry?

Around 500... No, about 996 crore is something which we have provided for. And this is a poison for two months time. Okay. And apart from that about 500 score? No, every month 500 score will be the poison for the major reason and apart from that some poison we have made on account of the pension and gratuity liability which is essentially on account of the discount rate and also as per the recommendations of that jury.

All right. Sir, just one more question. Again, going back to the exposure, that is, of course, in the public discourse. Can we get some more color as to the exposure?

I think towards the end of this meet, I mean, after I complete all your answers, I will make some statements, confidential statements relating to that particular group.

Sure, sir. I'll wait for that. Yeah.

Thank you. Thank you. We have a next question from the line of Ashok Ajmera from Ashcon Global. Please go ahead.

Compliments to you, Khara Saab, and the entire team. I think for the mind-blowing profit, it is one of the highest, I think, uploading profit in last maybe 4-5 years, even in the net profit. Even the effect quality has improved tremendously. Overall performance of the bank is so robust that even if there is any problem concerning to this large group, which may not be even in the top 15 group of yours as far as the exposure is concerned, I don't think the bank like the State Bank of India will have any kind of problem when you are operating profit itself is 26,000 crore per quarter. So, having said that, sir, we will wait for your final comments on the total overall exposure to this group, fund-based, non-fund-based, bond, equity, foreign bond, which you have assured that you will give the statement at the end of the question-answer session. Having said that, sir, I have some couple of some data points and some information. We have gone slow in this quarter on the corporate trading. So, what is our facility ratio which will settle down if we take the whole FY23 by March, the composition between the RAM and the corporate?

I think it will be more or less where it is in the month of December.

Very simple.

Okay.

So, it could be mightier movement for many of the segments, but it could be more or less on these ends.

All right. Sir, if we go on the income side, the other income has gone up to 11,467 crores from 8,874 crores in the last quarter. And I think the major part of it, it comes from, I mean, treasury, the profit. So, profit and sale and revaluation of the treasury is 2937 crores against 457 crores in the last quarter whether this trend is going to be continued in the coming quarter January March also and how do we see now with the interest rate almost peaking up maybe another 25 basis point where do we stand on the treasury side sir as far as the real estate is concerned there are two components one of course is the improvement in yield on investment

And secondly in this quarter we have booked some MTM gain which is about 2200 crores. Which is more of a right back because if you recall in the first quarter we had made a MTM loss which was about 7500 crores. We had some MTM gain last quarter also which we did not book for the reason that we had seen the E-River somewhere it has again shooted. So that is the reason why we did not book at that stage. But now we have seen that these are now coming within the range and that's the reason why we have done this. So I think that is the major reason when it comes to the kind of movement we are observing in the industry. The other item is we had some derivatives which are again rupee-dollar traps which we had done. So some loss component is there on those derivatives. So that is also booked in that. in that particular sense.

Sir, our credit cost and cost to income ratio both have improved tremendously. Do we see this trend to continue? Like the cost to income coming down in the credit cost both are to come down even at this low level?

I think for the quarter ending March 23, I can say for sure. And I think we will be in a position to give some guidance As we move further, it will also be the function of how the macroeconomy will be moving. But nevertheless, as of now, it looks like that for the quarter ending March 23, we should have a similar kind of a credit cost.

My last question in this round, sir, is on TLI. How much provision on TLI the bank has made for the nine months?

PLO provision would be in line with what the number is likely to be, the cost is likely. It could not be very significant amount and it would be very small number which is there. So, it is, you know, it is for the 5% increase, it is 5 days salary and for 10% it would be 10 days salary. So, it would not be very significant component.

Okay. But we have provided for, I mean, we have already met the provision for it.

That's always there. No, we have so many pockets where we are keeping so much of poison. I mean, non-NPA poison, as I hear, is about 33,000 crores.

Yes, sir. I think the concern of the market is absolutely unfounded. But anyway, all the best to you. I think sooner or later the market will understand the economics of the bank and the financial. Thank you very much and all the best to you, sir. Thank you very much. Thank you.

We have our next question from the line of Anand Dama from MK Global.

Please go ahead. Thank you, sir, for the opportunity, sir. We've heard about a lot of resolutions in the pipeline right now, like SKS power and all. Do we have any resolution pipeline, particularly for the fourth quarter and over next six to nine years? There are so many resolutions in pipeline, that is, But it's of infinite till that case applies because it is always a process which is carried out in all these matters. And how much time will be taken at each of the steps is actually at times is not very certain. So that is one of the reasons why saying it's so much of uncertainty that in the last quarter we'll have so many resolutions coming to, it will not be in order for us. But nevertheless, I'll ask Mr. Sivari if at all he can throw some, he can give some color in this direction.

Good afternoon, sir. The many cases which are at present stages, but we cannot be sure in the history of various illegal proceedings stuck through paper at the time and on date. And, sir, I mean, these are high-level numbers. High-level numbers. They are very important. I'll give you high level number going forward in the course.

Sure sir, thanks. That will be great. Sir, secondly is the outlook on margins. I think this quarter also we have seen a meaningful margin update. We still have some room in terms of LGR improvement and as you said that MCLR also would increase as basically the cost increases. I would suggest that let us keep as far as the guidance part is concerned I would like to keep the guidance at this level and let it all there will be room for improvement will certainly ensure that. Incidentally, you know, in this NIM also, it would have been even better, but because in the last year, we had the income tax refund, which was as high as about 2400 crore. As it is that, this year we have got income tax refund, which is just about 800 crores. Interest on income tax refund. So, that is the other reason. It will have an impact about 6-7% overall. But, yes, of course, if at all we do apple-to-apple comparison, perhaps, in fact, I mean, change can be even better. So, this is just for information.

Yeah, sure.

I think that should also play out in the fourth quarter. Yeah, hopefully. Let's hope for the best.

yeah okay thank you thank you we have our next question from the line of abhishek murata from hsc please go ahead hi sir good evening uh actually just one request when you make your comment on the last column right if you could clarify whether this 27 august includes even lcdg you know non-fund based and overseas loans. So, just at the cost of repetition, just requesting that. And also, if you also qualify, if there is a resonance opportunity, given that, you know.

Sorry, I said that or the second one?

The second one is, if there is a resonance opportunity, given that your logic closure framework wise, there is a lot of headroom and a group, like several projects appear to be credit worthy, then would you do it? So, just these two things, if you could cover in your comment, maybe now or later, whatever, it would be very useful.

I think the second question I can answer you right now that is if at all any refinance opportunity is always evaluated on merits. So for me to say that anything right now will not be in order and then when any such demand will come we have not received any such demand or any such request if at all any such request will come it will be evaluated only on merits and while evaluating we are always very mindful in terms of the sake of the promoter or of the entrepreneur and the kind of risk which it is And based on that very comprehensive assessment only, views are taken. It is not merely simply one request comes and we grant the facilities. Let me just say that.

That's useful. And my second question is actually on your international loans. Now, potentially, there's been, I think, a couple of quarters back, you were talking about being a little aggressive there and, you know, looking for opportunities outside. What is the outlook there for? Next one year, are you looking to grow that Maybe to a higher percentage of loans. What's the strategy?

Steve, in terms of dollar, our international book has gone by about 9.15%. And when it comes to RALU rate, when we convert it on the RALU rate, it looks like that it will go at about 20% plus. But de facto, in terms of dollar, it is just about 9.15%. And now our focus is for improving the NIM as far as our international interest is concerned. So that is the reason you might have observed that our NIMs have improved significantly. We have moved towards 1.67 as far as our international NIMs are concerned. And this is on a quarter on quarter basis. An improvement of over 23-24 basis points. So that's how it is. And when it comes to the composition of the international book, it is essentially local lending in those markets. which is not necessarily to renting corporates only. It is even to the local corporates and we are participating in the local syndication. And also when it comes to India Link North, we are majorly ECBs. And ECBs to either AAA or AA rated entities only. And that's how this whole complexion is. Apart from that, the last component is estate finance. trade planners book, wherever we are getting the margins, we are participating on the platforms and wherever we are in a position to get the margins, there we are actively involved.

So, margins in the international book should hold up around current level?

I hope that we should be in a position to maintain at this level, if not improve.

Perfect, sir. Thank you. And this one question I have seen on SAE. For several quarters, that book was not really growing and this quarter there is about I think a 10% CO2 jump in that book. So, if you could share this, you know, what is change? Is it a change in product geography, you know, customer focus? What has really changed over time? Whether this is sustainable?

Yeah, we have in SME, we have invested well in terms of structures, in terms of capacity building and also in terms of focus. That is something which has been brought in for last about a year plus. And the results we are now in a position to see. Last quarter also we saw a decent growth in SMA book and this quarter also we are seeing a decent growth in SMA book. And here I would like to mention that we are having a focus on the distributor finance, vendor finance, balance sheet based lending and also we have come out with another loan product which is essentially run through UNO. which is a pre-approved wages loan where we are looking into the transactions and the current accounts and based upon their transactions, we are efficient to offer the loans to all such entities also. These are actually small in nature, but this is something which is becoming very popular. So, these are some of the contributing factors and we have grown SME by almost 43,000 crores on a year-on-year basis and these are some of the contributing factors. It has become a continuous focus area and also we are very mindful in terms of quality of our lending and we are creating a loan management system where we are having adequate visibility in terms of the unstructured information through the GFC and etc. So that way we have significantly strengthened our underwriting practices in SME. We have invested in terms of manpower We have invested in terms of product. So, all that is showing up. And to my mind, it is sustainable. We have set a target for reaching 4 trillion number by the year March 24. But the way things are, we should be very near to that by March 23.

Perfect, sir. Thank you for that excellent color and all the best for future quarter. Thank you so much.

Thank you very much. Thank you. Thank you.

We have a next question.

Mr. Qari has to contribute something. So, if the question about how much recovery or resolution we can expect.

So this is the past record plus the recovery already done and the subject to of course the court decision in two cases.

It should have a number between 3000 to 3500 in quarter four.

Thank you sir. We have our next question from the line of Kunal Shah from CT2. Please go ahead.

Yeah, congratulations. Good set of numbers. So, firstly, sorry, just to touch upon in terms of the recoveries and upgrades. So, X of the resolution which you have highlighted, maybe the run rate which is there for this quarter of Rs.1,700 crores, should that be the normalized one or this is relatively on the lower side? So, actually, recovery is a clear thing here. Also, we have to keep in mind that last year, about Rs.1,692 crores was on account of a particular account. one account so if we know if we if at all we have to do the Apple to Apple comparison then perhaps our growth in recovery is as high as about 18 to 20 percent so I think we expect that going forward we don't have chunky accounts which are which are awaiting resolution and perhaps it might take little longer also but now there are the type of efforts which are being put in in terms of OTIs, in terms of, you know, and those kind of things have helped us in sort of ensuring that recoveries happen faster. And we expect that we should be efficient to maintain this kind of a number at least in this quarter also. Sure. So, when we look at it in Q1, Q2, it was somewhere around $5,200. Last whole year, it was $21,000. of interest plus upgrades compared to maybe almost like 1600 crores kind of a number for this quarter so you are saying maybe X of the any resolutions this should this can ideally be the 100 even though focus is there in terms of improving it actually sir you know you would have observed that the stock has come down quite a lot which is yeah it is now less than 100,000 crores so that itself is leave the I mean these are also the amount is also small in each of the cases. So, each of the resolutions, when it comes to effort, it takes almost the same amount of effort, but the recovery may not be as commensurate with effort. So, that's why, you know, numbers may look small, but in terms of the recovery, it will be a sustained effort. And normally, we get to see some kind of a better recovery in the last quarter. We hope that there will be a marginal improvement over whatever we have done this quarter. And secondly, in terms of the corporate exposure and getting into infra, there is some rundown of almost 15,000 since telecom and even in par. So is it more of a repayment of the account or is it a refinancing at the lower rate by the competitor? What is actually leading to that? And what would be the overall outlook on the corporate credit growth? The corporate credit growth, we have got... Proposals in pipeline as high as about 1.9 trillion. And where availment is yet to be taken both in term loan and working capital under utilization, that would be as high as about 1.1 trillion. So overall about 3 trillion is the number in the corporate book which we are having some possibility of converting into. That is the unutilized will certainly happen. One positive thing which I must mention is relating to the availment of the term loans and the non-availment of term loan has come down quite a lot and that is normally a cause as well because generally after that the working capital improves. So I think with that kind of a scenario I expect even working capital utilization will also improve. It has come down from about 56% to 54% but we have also seen the increase in credit growth, I mean, Chinese has gone above about 24% as far as the large corporate credit is concerned. So, I think overall, I expect that we'll have a good visibility of opportunities coming in here and also the quality loan we should be in a position to next year. Okay. And on telecom exposure and power, anything specific, particularly in this quarter? 15,000 crores have run down in telecom. This is actually year-on-year run down.

This plan number 10 carries year-on-year reduction. And this is usual rate repayment as well as the reduced utilization in customer cost.

Okay, yeah, so compared to like September, September also it was almost 43-44,000 crores and that's down to 20. Also, there is a, when they have, there would be some repayment which should have come.

That is...

Okay. So, these are the implementations. It's not like refinancing and making some kind of a race, the competition and the losing of to the competition. No, no, no. Not at all. Not at all.

Thank you. We have our next question from the line of Jai Mundra from BLK Securities. Please go ahead.

Hi, sir. Good evening. Sir, last time you had given loan growth range of around 15% for 23 this quarter as we said corporate growth you know usually have some seasonal uptick in fourth quarter and we mentioned a decent amount of pipeline which is there which could be you know disbursed what would be your you know outlook on the loan growth for the full year and for 23 and maybe beyond if possible

I think, I expect that the loan growth should be somewhere in the range of 14-16%. I have still maintained my accepted indication which I have given last time also.

Okay. And sir, you had mentioned your excess SLR at at least 3.2 trillion and within which then how much would be the scheduled redemption because that is what you know possibly will help you offset the deposit thing, I mean, what needs to be the scheduled redemption amount out of this?

The remaining period for redemption will not be much. For the current plan here, it would be just about Rs. 20,000-30,000. But we are also adding at the same time. You see, I think there are investments happening in the ASEAN and from the G6 also. I think broadly, we expect that the G6 itself will remain at this level for some time.

Because your loan-to-deposit ratio is now 73, it is low relatively.

If at all we put the IBG also. If at all we look at domestic, it will be somewhere around 66-67. IBG funding is very different. For IBG funding, we run our international banking group more like a corporate bank. And there the loans are not necessarily funded from the deposit. They are predominantly market borrowing clients etc. etc.

Right. So even overseas thinker this quarter the growth I mean the book has been flattish on QOQ basis. So, how should, I mean, and you mentioned that the dollar term growth is only, let's say, around 9%. How should we look at the growth in overseas books, sir, specifically going ahead, assuming, in dollar terms, you may say.

We are very mindful in terms of the NIM that you are generating there and that is the reason. It was a conscious effort. It is not that we don't have, we are not having opportunities. Since we are trying to maintain the NIM, improve the NIM, that is the reason why We are at this level. And considering the kind of economy which we are seeing across the globe, 9.15 in the international space is a decent number. Right. And today, this group is actually contributing 15% of our total loan book of the bank.

Right. And sir, question on your agri-loan growth. So, your agri-loan growth has been consistently lower than overall loan growth. In this quarter, this is like 11-12%, 11%. And overall loan growth is 18-19% or 18%. And as of FY22, we were PSL deficient. Now, so what are you thinking in terms of PSL compliance especially on Agri side because that growth has been very lackluster whereas the overall growth has been reasonably strong.

There are, in fact the way we started working on SME, we have already started working for Agri also and we are trying to actually work in terms of the realignment of Agri book And that process is already on. Earlier we were into low value or small value working capital loans only. We have already done about 40% of this book has become every good loan. And the remaining book also we are looking at it often. In fact, we are always working on it. High value agricultural loan as well as getting into the agriculture part. The agri-tech and... agri infrastructure so that is something which we are working on and this is the result of that conscious effort which has been put in and hopefully we have set a target of 3 trillion for the financial year 2024 for this book to reach but we are quite hopeful that in this quarter also we will get to see a decent growth and we are much on course as far as our internal targets are concerned.

And also the supplement sir, PSL is also is contributed by SMB and over the affordable goals. So there is other contribution of the PSL not only SMB.

So if I can add. Yes please. As far as AGRI, PSL is concerned, it's not a challenge in terms of the AGRI mandate of 15%.

It's not at all a challenge. We are compliant with that.

And for some of the other PSL segments where PSL is calculated, so that

We have metal flies buying PTC, PSI certificates. So that we will do.

But for AgriFront, there is not an issue. And to add to what the Chairman said about Agri, we are concerned about the quality of Agri which we create because we have seen the Agri NP which is higher, 12.2 percent, the Agri NP percentage which we are seeing in the presentation.

The colour and composition of AgriBook has been changed entirely since now. It means creating new kinds of products.

It also means targeted approach towards selecting customers as well as use of analytics and technology. So all these things are getting, so it is getting turbocharged so to say in order to get a better quality sustainable AgriBook for you.

Thank you. We have our next question from the line of Adarsh Parat Rankuria from CLSE. Please go ahead.

Sir, the question was on the exposure, so I'll wait for your comment.

Thank you.

Sorry? The question was on the exposure, so I'll wait for your comment. Okay.

Thank you. We have our next question from the line of Prakhar Agarwal from Ilaria Capital. Please go ahead.

Yeah, hi sir. Thanks for this opportunity. Just two things. One, what is the SR standing on our book?

SRs have already been provided for. Whatever SRs were there, we have 100% provided for those SRs. It's about 7,000 stock producers.

So, they were provided, do you mean this quarter or they were already provided earlier?

I think last quarter. Last year itself, we had provided for it.

Got it. So, secondly when I look at the margin then you probably said that we will be able to sustain the margin. So, when I move into FI 24 should there be a conclusion that we should be essentially be equal to average of what we have reported in FI 23 because we have seen sequential uptake in FI 23 at every quarter. So, to that extent if I were to average that out despite the cost which will happen we will probably be maintaining a similar minimum FI 24.

Is that a fair report? That will be our effort.

Got it. And just last bit on this, you said that around 2200 crores of unwind that we have probably seen this quarter. In Q1, we had around 7000 odd crores. So, when do we expect the balance to get unwind? Over a period of 2-3 years or how we should look at it?

We have already provided for that 7500 crores. We have already provided for that.

No sir, so at that around 2000 crores you said that that card should be written back this quarter.

The right side we are doing, which is the right side we are doing, it's an MTM part only.

Got it, got it. Got it, got it.

I mean how the yield will move, it will be a function of that.

So I got it, that is it on my side.

Thank you. We have our next question from the line of Manish Ostwa from Nirmal Bank. Please go ahead.

Yes, sir. Thank you for the opportunity. I have only one question. On the short-term liquidity in the market, internet market has tightened recently and because of that the CD rate has increased. So, how do you see the funding environment in the wholesale market during the busy season, the quarter 4?

See, I think as we keep saying, you know, our funding of the credit code

We use various instruments. Deposit, of course, is a mainstay. And market borrowings is one. But our Indian people borrow from the market at very competitive rates, continuously available to us. And in terms of the deposit, I think there would be some small uptake only, but deposit rate. And we, based on our requirement, we align to the market rate. I think probably we were able to contain the cost of resources if you see. I think we expect that in the future for our infrastructure in this country.

The other thing which I would like to add here is what Mr. Shetty has mentioned. You would have observed that in the current financial year, we have already gone to market and raise infrastructure bonds at a very, very competitive rate. So I think that also is one of the solutions since we are having a reasonable portfolio of powerful infrastructure assets. that's the other source which is available and which actually becomes much more competitive in terms of cost. So, already 20,000 they have raised and that is something that will be the strategy going forward also.

Okay, and one small point on the equity capital raise plan for the bank, so any plan for that to raise the capital to support the group?

We are, as of now, we I mean, once the profits will be brought back after the March quarter, our rough estimation is that as far as the capital adequacy ratio is concerned, we'll be at about 14.5. And at 14.5, we have made some rough assessments and it indicates that we can support the loan growth of at least 17. So, we will be very closely evaluating the situation. And whenever required, whenever required, we'll certainly raise all kind of resources Not only equity, we will also be looking at 81, 82, whatever is required to be done.

Thank you for the opportunity and all the best for the coming months. Thank you. Thank you very much.

Thank you. We have a next question from the line of Manish Shukla from Access Capital.

Please go ahead. Good evening and thank you for the opportunity. So when you said about wage revision monthly run rate was about 500 crores, that assumes what price That assumes what rate of wage inflation? 10%, 12%, 15%? 10%. 10%. Okay. Second question, sir. On the standard asset provision of 23,000 crores that you are carrying, roughly how much is it that you think is additional or extra and under what situation will you be dipping into it? Hmm.

This poison which you are sharing I would say roughly one is a traditional poison for restructured standard accounts. This is essentially for the restructured book which you are carrying on the balance sheet. So that was it is about 30% of our restructured book which is about 24,000 crores. And the remaining one is 23,116 crores which is for standard sets. As I mentioned that part of it is on account of our standard test as it is. And part of it is on account of whatever visibility of stress we have on ground. So, how long we will carry, we normally take part of the situation quarter on quarter basis and based upon that we take a call. It may or may not happen. It may or may not take place. But depending upon the situation which we are feeling at the end of the quarter, we will be taking the call.

Majorly, it is the normal standard of the provision.

Majorly, you know, predominantly it is for the standard of the provision.

Sure, sir. And couple of times we mentioned that our LDR, at least domestic LDR remains pretty low. But at the same time, during the quarter, borrowings have gone up by about 60,000 crores and we also hinted at potentially raising more borrowings. I'm just wondering, given the excess SLR and low LDR, why would you consider raising money on your debt borrowings?

This is more of a market operation because we have to evaluate all the options and ensure that our cost of resources remains the lowest.

Okay. Last question, sir. In the budget, your finance minister has enhanced limit for certain small selling schemes and introduced a new scheme as well. Do you think that puts pressure on retail deposits for the system?

Either in terms of availability or... Total size of that kind of a deposit is about 2 trillion. And when it comes to banking system, banking system deposits are somewhere around 100, 140, 150 plus, 150 trillion plus. So it might have some impact, but not as significant as it should be. Because we have seen in the past when it comes to special deposit schemes, they have been always carrying an interest rate which isn't quite high as compared to bank deposits. But I don't think it could make a significant dent into that deposit base of the banking system. So that's how I look at it. And apart from that, you know, when you keep deposits with the banking system... It is also liquidity is something which is available. When you keep deposits like that, the liquidity is not available. So, it is more like a premium somebody is paying for keeping the illiquid asset. You understand it better. You are into the finance world.

Thank you. We will now have the address for the chairman. Please go ahead, sir.

Yeah, sure. As far as the exposure relating to a large problem it is concerned, We have seen over the last 5-6 years the share of exposure of the Indian Public Sector Bank as a percentage of their total debt has consistently declined from 65% in 2016 to 31% by the end of 2022. During this period their debt to Avida which is a key municipal has been improving for the better, demonstrating the group's ability to complete and generate cash in a timely manner from project which we undertake. As is known, most of the recent acquisitions have been financed through overseas borrowing and market instruments. Hence, we don't envisage any risk build-up to the Indian banks on this account. As far as we at SK are concerned, our group exposure is well below the large exposure framework and The loan outstanding exposure stands at 0.88% of our SPA's total loan book as on 31st of December 2022. Majority of the SPA loan outstanding are towards operating assets and projects that have been computed and generating cash accruals. The projects that are under construction are on schedule as of now. The loan extended by SBI are secured by the project assets and there is no facility granted on unsecured basis. The cash flows are routed through the designated accounts as per mechanisms are in place to ensure timely servicing of the dues and there has been no record of any delay or default to the date. We have not extended any finance against pledge of promoter's equity wherever shares have been pledged in favor of SBI in certain entities. They are in the nature of additional collateral security. Non-funded exposure of SBI is mostly towards letter of credit and guarantees, both performance and financial. Non-guarantees issued towards securing their other financial obligations are not there. No guarantee was issued. There are no concerns on the book's ability to service the loan book at this point in time.

We hope it clarifies. I hope it is.

I have tried to address the majority of the concerns of all concerned.

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

Thank you very much to all of you for taking out time meant to be with us on this weekend evening. I take this opportunity to wish all of you the very best and have a great and enjoyable weekend. Thank you very much.