State Bank of India

Namaste and good evening ladies and gentlemen. My name is Sanjay Kapoor and I'm the general manager of performance planning and review department of the bank. On the occasion of the declaration of the FY23 results of the bank, it gives me immense pleasure to welcome the analysts, investors and our colleagues for an in-person meeting. I also extend a warm welcome to the analysts, investors and colleagues who have joined this presentation through a live webcast. We have with us on the stage our Chairman, Shri Dinesh Khara, at the center. Our Managing Director, International Banking and Global Markets and Technology, Shri C.S. Satti. Our Managing Director, Corporate Banking and Subsidiaries, Shri Swaminathan J. Our Managing Director, Risk Compliance and Sarji, Shri Ashwini Kumar Tiwari. Our Managing Director Retail, Business and Operations, Shri Alok Kumar Chaudhary. Our Deputy Managing Director Finance, Srimati Saloni Narayan. Our Deputy Managing Directors heading various verticals and Managing Directors of our subsidiaries are seated in the first row of this hall. We are also joined by CFO and Chief General Managers of different verticals and business groups. To carry forward the proceedings, I request the Chairman, Sir, to give a brief summary of the Bank's FY23 performance and the strategic initiatives undertaken. We shall thereafter straightaway go to questions and answer session. However, before I hand over to the Chairman, Sir, I would like to read out the Safe Harbour Statement. Certain statements in these slides are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual outcomes 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. Chairman Sir, please. Thank you. Thank you very much.

Very good evening to all of you. Thank you very much for joining this analyst meet post the announcement of our financial year 23 annual results of the bank. As you are all aware that the global economy is passing through various uncertain times with the cumulative impact of adverse shocks of the past three years, most notably COVID-19 pandemic geopolitical situations in Ukraine, manifesting and enforcing situations spurred by the pent-up demand, lingering supply disruptions and commodity price spikes. Inflation reached multi-decadal high last year in many economies, nudging central banks to tighten aggressively to bring it back towards their target and keep inflation expectation anchored As a result of all this, the baseline focus of the global growth is to fall from 3.4 to 2.8 and then to rebound to 3% in 2024. In the backdrop of all this, India continues to remain resilient to various adverse external environment going to large domestic market. Despite all the headwinds, India's GDP in financial 23 is estimated to grow at 7%, driven by investment and private consumption. And going forward, the economic activity would be supported by improving rural demand and the government's thrust on infrastructure spending. We also expect the revival in the corporate investment, which will give us opportunities of the healthy bank credit, and also will lead to moderating the commodity prices. Despite the increase in interest rate and its transmission, credit growth has continued to grow in double digit and has been broad based across all the sectors in financial year 23. During financial year 23, all scheduled commercial bank credit grew by almost 15% on a YOY basis. as against 9.6% YOY in the financial year 2022. Aggregate deposit of all scheduled commercial bank grew at about 9.6% compared to the last year growth of 8.9% YOY. In the union budget for financial year 2024, several steps have been announced to push up the capital investment in the country, which will actually boost the credit demand in the economy. And we expect the credit growth to continue in financial year 24 also, though with some moderation, which can perhaps happen. In the above backdrop, let me now share with you the bank's numbers for financial year 23, as well as for the quarter 4 of the financial year 23. I am happy to share with all of you that the bank has For the third quarter in running, we have posted the highest ever quarterly profit at 16,695 crores. And for the full year, our net profit has crossed the landmark number of Rs. 50,000 crore, which is the highest ever by any bank in India. Net profit for financial 23 increased by 58.58% by OI, while operating profit at 83,713 crore increased by 11.18%, ROI. ROE of the bank for the year improved by 29 basis point on YOY basis to 0.96 and ROE improved by 551 basis point to 19.43%. Here I would also like to mention that for three quarters in a row our ROE has been more than 1%. For the quarter four of Net profit stands at 16,695 crore which is higher by 17.52% sequentially and 83.18% on a YOY basis. Most other core profitability metrics have also improved over the previous year as well as sequentially. Net interest income for the year has witnessed a growth of 19.99%. On the back of improvement in yields and continuing credit of take. Domestic NIM also improved by 22 basis point on a YOY basis. Non-interest income declined marginally by 9.73% essentially attributed to the MTM loss of rupees more than 7000 crore which we suffered in the first quarter. Other than that, our core income streams, fee-based incomes have remained intact and have improved by almost 6.84% YOY. Operating expenses increased by 13.68% YOY as we have started building provision for the wage revision which has fallen due effective from November 22. There is some increase in the overhead expenses which is essentially attributed to the higher tech-related expenses like expenses on IT, development, mobile banking, ATMs, and also higher DICGC premium because of the growth in deposit, which we have witnessed in the last financial year. On the business front, the credit growth has been robust across all the segments. Domestic advances grew by 15.38%. Headlined by retail personal advances which grew by 17.64% and corporate segment grew by almost 12.52% by OI. SME and library segment advances also posted healthy double digit growth at 17.59% and 13.31% respectively. Domestic deposit grew by 8.50% by OI driven by the growth in savings bank deposit and term deposits. Our foreign offices have continued to perform well with good growth in advances as well as in deposit. With regard to the asset quality, our gross NPA ratio has come down by 119 basis point and stands at 2.78%, which is its lowest level in more than 10 years. Our net NPA ratio has also declined by 35 basis points and stands at 0.67%. Slippage ratio for the year stands at 0.65%. The consistently improving asset quality is also reflected in our credit cost, which stands at 32 basis points for the year and is down by 23 basis points on a YOY basis. We have a well-provided stress book with PCR showing improvement by 135 basis point at 76.39%. PCR including OCA improved by 171 basis point YY and stands at 91.91%. On the restructuring front, our total exposure under COVID resolution plan 1 and 2 stands at 24,302 crores as at the end of quarter 4 of financial year 23. The researching book has behaved well and when we look at our SMA-1 and SMA-2 also in this category, they are much within the range of about 11%. As against this book, we have already provided 30% as you are all aware as compared to the 15% requirement of RBI. So we actually have insulated our book from any potential threat from the restructuring which might happen, which have already been, the restructured book has already been taken care of by additional poison, but the book is behaving much better than what we have seen in our SMA book otherwise or in the stress book overall. The bank has remained very well capitalized and we have sufficient headroom to take care of the normal business growth requirements. Our capital adequacy ratio has improved by 85 basis point YOY and stands at 14.68%. CET1 ratio has also improved by 33 basis point to be at 10.27% and both the ratios are well above the regulatory requirements. Digital continues to be an important customer acquisition engine for the bank across assets as well as liability products. During the year, we have sourced 64% of our savings bank account and 35% of our retail asset accounts digitally through UNO. We have embarked upon a journey of creating a digital bank of choice within the bank when we have launched our Euro 2.0. Our subsidies have also consistently performed well and continue to create significant value for all the stakeholders and most importantly, the customers of the bank. Most of our subsidies are leaders in their respective segments. We will continue to nurture these subsidies and see them creating value for their own shareholders as well as the shareholders of SBI. Before I conclude, I thank you all for the continuous support to the bank. We consider it as a privilege to be able to contribute towards the growth of our economy. We remain committed to rewarding your trust in us with superior sustainable returns over the long term. I wish everyone here the very best and now the floor is open to all of you for the questions. Thank you.

Thank you Chairman sir for your opening remarks. We now invite questions from the audience and for the benefit of all, we request you to kindly mention your name and company before posing the questions. To accommodate all the questions, we request you to restrict your questions to maximum two at a time. Also kindly restrict your questions to the financial results only and no questions about specific accounts please. In case you have additional questions, the same can be asked at the end.

We now proceed with the question and answer session. For the bank, what is our expectation of great growth for the bank, for the FY24? And secondly, in terms of deposit growth and the pricing of deposit for the year, do you see a material increase or risk to our margins, domestic margins? Sure.

As far as the credit growth is concerned, we expect that we will have an opportunity of growing. As far as the loan book is concerned, we should be growing somewhere in the range of between 12% to 14% overall. As far as the deposit is concerned, in the current financial year, we have seen an increase in our deposit cost to the extent of about 16 basis points. And much of it has come in the last quarter. We have seen from last quarter till now an increase of about 9 basis points. Whether to support this kind of a credit growth, whether we will be required to go aggressive for the deposits, perhaps no. The reason behind is that we still have excess SLR to the extent of about 4 trillion. And we have increased our interest rate on the deposit essentially because we always perceive that deposit is a franchise and to the extent possible we will take care of the interest of the depositor provided our overall cost of resources don't go up much. So we have some elbow room which is always available. So we try to calibrate the deposit interest rate within that elbow room only.

So you don't see any risk to the margin to sustain?

Sorry? You don't see margin to I expect in fact we still have some kind of a question available for our MCLR to go up And we have kept it essentially to really take care that our margin should not undergo much of a loss.

Right, sir. Second question on the – Can you bring your mic closer to you? Yes, second question on the – when you are talking about operating metrics for the year, 96 basis point ROA and the 3.58 net interest margin domestic side. The only scope, only metrics where we can see some improvement because other metrics are top notch and the best of in decades. So, the cost to income ratio, operating efficiency basically.

Sorry, operating?

Operating efficiency.

See, as far as operating efficiency is concerned, the important component is cost to income ratio. And cost to income ratio also essentially we have seen what we have seen in this quarter somewhere around 53% is our cost to income ratio and this is essentially because we have already started providing for the wage revision which has fallen due in the month of November. So 500 crore is the allocation which we are doing every month 500 crore. So last 5 months we have already provided for 2500 crore. But at the same time, if we ignore this particular increase and also whatever PLI which will be paying now because as for the arrangement for 10% increase in operating profit, we are required to pay 10% of the wages as a PLI and that is something which will be required to do which will require some kind of present worth about 600 odd crores. So we have already provided for all those things. So these are the expenses which will take place in the next financial year. What is, we have got certain rigidities in our structure when it comes to cost and part of the rigidity is coming from the fact that almost about 18-19% of our cost is on account of the retirement benefits. So that is something which is a function of how the interest rate moves. We have to make the actual provision so that is something which happens. But other than that, our effort and endeavor is to improve our income. And with that in mind, what we have seen in the current financial year, if at all we improve our income and also we keep the NPAs in check, Quality of assets remain the best. Then perhaps we are in a position to address these challenges. And of course other income continues to be major focus. We have already seen decent traction in the forex income in this year. And also the cross selling income has gone up by almost 26-27%. So I think going forward, these are the levers which we are working on and it will certainly help us in improving our income. And at this stage, when it is a normal year, perhaps even now all safe at all, we ignore the impact of the additional provisions which we have made, we would have been somewhere around 50% in our cost to income ratio. So I think as a strategy, we are very clear in our mind that the rigidities we will have to live with and we will have to only think in terms of improving our income and cost we are trying to contain and control with the help of our digital engine. This year we have already underwritten more than 1 trillion worth of assets through the UNO. So, naturally eventually when this number grows up this will also help us in reducing our overall cost. So I think we are on a very clearly stated trajectory in terms of how should we address this cost to income ratio and that will be ensured. And the other very important lever for a bank like us when it comes to efficiency is what matters is the ROA and the ROE. ROA we have been exceeding 1% for now for last three quarters on a sustainable basis. This quarter I think we had a ROA of 1.27%. 1.23. 1.23. So hopefully with the kind of focus which you have brought in, I am sure there will be a point of time when our cost to income will also come down. Apart from this, this year we also had another event of MTM which was about 7,000 odd crores. When we look at the yield movement, That is behind us. And even at the end of the financial year also, the impact of that remained. So that is also having an impact on the cost. So these are some of the factors which have an impact. So there are some factors which are one-off. Those one-offs will go away. So that will also have a bearing in terms of improving our cost and commission.

Appreciate the insightful answers and congratulations to the SBA team for the extraordinary performance and execution. All the best for sustaining the metrics of FI23. Thank you.

Compliments, sir, for yet another good quarter and the whole year of very good performance. You exceeded in most of the numbers, the net profit going beyond 50,000 crores, the operating profit of more than 83,000 crores. And the bank is cushioned Very much for any future eventuality in case anything slow down or something is there. Sir, I have got some numbers which I would like to just like we have the non-NPA provision of almost about 35,000 crore. Means our total provision held in the books including everything is 2,44,000 crore. And if you include this 35,000 then 2,79,000 crore is the Provisioning in the entire book if you take 100% of the AUCA provided for. Now going forward sir, two things are there. One is that there was some odd amount of some 2500 something of a extra provision for some other corporate related accounts, corporate accounts or something. So is there any specific account in mind for that or it was, so this is just one. Secondly with the ECL now going to come, I mean the guidelines are getting finalized and everybody knows that it is going to come. How much have we prepared ourselves for that and is there any specific provision already has been made in this year in this quarter for that? And what is your assessment on that, on the ECL vis-a-vis the extra provisions which we are holding?

So, well, of course, what you mentioned in terms of there is some number which is 2600 odd crore. I would like to elaborate upon the process which we follow. There are certain accounts which may not really qualify to attract any provision. But in our own assessment, these are the accounts which can potentially be a threat going forward. As a matter of prudent practice in the bank, we have taken a call that we will ensure that our balance sheet stays protected and we start providing for them. And these provisions are done on ad hoc basis and as and when there is an eventuality which materializes, then these provisions are crystallized. The second question relating to ECL is Well, I think to my mind till such time the RBI regulations are announced on this subject, it is more of a fiction. And to really address that fiction, let me assure to this whole house that we are very well prepared. The number which you are seeing as our non-NPA provisions, we have done some back of the envelope calculation which of course I cannot disclose till such time I go to my board. But my own assessment is that number is much below this number. And that too it will be spread over five years. So considering the fact that if at all it has to be spread over five years and that is a kind of a number. And in that context I would also like to draw your attention to the fact that you would recall last year For family pension, we provided for more than 7,500 crore in one quarter in single go. In September 2021. And even this year, even this year also 7,000 crore.

Quarter one of this year, 7,400 crore.

No, no, I think. No, no, that was September 21.

Yeah, yeah. In financial year 21-22.

Yeah, you are right.

That's why I didn't touch.

So 7,000 crore MTM also we absorbed in one quarter.

Yeah.

So I only want to assure all of you that this is something which none of you should bother for and we have got the ability to take care of that without any impact on the earnings of this bank. And let me tell you, I just want to assure all of you, you need not worry about that.

Thank you for that assurance, sir. I have got some couple of just data point and I just explanation on some P&L account, expenditure account. income and expenditure account. The miscellaneous income in this quarter has gone up to 4187 crore as against 1214. The breakup of miscellaneous income has not been given. So what is this 4287 crore in this quarter comprises of? This is number one.

I think miscellaneous income would have one component of the Return of Recovery I think we will get you the numbers.

No, no, there is no issue, sir.

Second is, sir, this employee cost is understood.

Just one second.

Can you, I mean, can we get the breakup of that? How much is recovery?

We'll give you the break. By the way, we have 12 auditors. This is just for our information. This is a very unique example in the banking system. One bank is being audited by more than 12 auditors.

This has nothing to do with that auditorium.

So I think you should not have any doubt on the numbers.

No, no, doubt is not there at all. There is no question of any doubt. Sir, secondly, the employee's cost is understood. It has increased from 14,700 to 17,000 crores in this quarter. But even the overall operating expenses have also gone up by almost about 2,500 to 3,000 crores in this quarter. So, that is also if there is any one-off thing in that or it is going to be trained in the subsequent quarters. This is, this was my.

Next slide. Next slide.

Yeah. So, if you see the. Next to next.

It is the next. I think I must have.

Next to next slide will give you the entire break up of operating. All right. Yeah, these are the total expenses.

And third sir, on the capital adequacy, okay, we are above the regulatory norms. But now when our deposit growth, I mean the credit growth is still we are targeting 14-15% or 14.5-15%. But the deposit is still I think 8% or so.

Deposit growth is about 9%. 8.5-9%. But I also mentioned that we have got excess SLR of 4 trillion. Excess SLR of 4 trillion is something which we have. Which we can always unwind and support the loan book growth. Thank you, sir.

Yeah, sure. Thank you. Yeah, please.

So as far as miscellaneous expenses is concerned, expense also they were asking, sir. So under the overheads, the biggest contributors are tech expense, insurance expense, and expense on GST. Sequentially, overheads have increased by 26.73%, which is the usual phenomenon in the last quarter because all the bills are paid or either accounted for. So these are the reasons.

Yeah, please. Sir, Ramesh Bhojwani from Meta and Vakil. Sorry? Ramesh Bhojwani from Meta and Vakil. Can you bring the mic closer to your mouth, please? First and foremost, not only for state bank, this full year has been the best in the banking industry for all the banks. And it comes once in a decade or even once in 15 years. Going back 15 years, we saw the worst scenario where gross NPAs hit 14.51. Today, your gross NPAs are 2.79. So the economic cycle has turned and two thoughts come to my mind as you also mentioned it in a subtle way that going forward this trend, this tempo will continue maybe at the same rate or little lesser. That is number one. And the number two is, sir, two days back, Wholesale price inflation came negative, minus 0.92 basis point and the CPI is below 4.9. I personally believe in June when RBI will come, I am seeing a cycle of rate reduction to start. with 25 basis point, if not 50. And monsoon is expected to be 94 to 102%. So it's a reasonably average or a reasonably expected rainfall. So going forward, the rate down cycle will start. Maybe 25 basis point this time and subsequently 50-50. So in such a scenario, how do you see the whole banking matrix and parameters playing out.

See, I would say that what you mentioned was something which I always had in mind and that is one of the reasons when the rest of the market was only increasing the deposit interest rates, we did not increase the interest rates.

Excellent.

Isn't it? And then I knew that from this pole to this pole, Let there be aberrations. Let others face those aberrations. We are the largest bank. Let us stay cool. We remain cool. So this is something which we were expecting to happen.

This is like a foresight which you are now seeing playing out.

This is something which we were very mindful and we did not, you would have observed that we started increasing interest rate somewhere in November, December quarter because we were feeling that our depositors interest is getting compromised. Those who have stayed with us all this while we should take care of them and that is why you would have observed that I also mentioned that we increase the deposit rate in some buckets so that we should take care of our depositors interest. But keeping in mind the overall cost of resources should not go up. So that is something, that is what I also believe. So if at all, if that happens what you are saying, what we believe will turn out to be correct. And when it comes to interest rates, even if it comes down, we have not increased our interest rate to the hilt already. We still have elbow room there. So we will not be required to reduce our interest rate. So the picture which you are seeing today will probably stay.

Wonderful. Brilliant. You have put it very beautifully.

So that is what my sense was. And secondly, we ought to mention in terms of what we saw 15 years back.

Yeah.

And it's a similar, it's a once in 15 years kind of a event which happens when the banking sector does well. Yeah. But yes, of course, banking sector, banks and banking sector, they are the institutions.

Yes.

Even if they face accidents, they internalize those learnings.

Yes, but great resilience is there in the banking sector in India. Thanks to our RBI structure.

Thanks to the regulator and thanks to the practices adopted in the risk management practices adopted by the banks.

We have SLR and CRR which combined becomes 21%. In a country like US, they have only 4% CRR. And what we are seeing today, we are not even seeing the tip of an iceberg or a beginning of a storm.

So I think on this particular account, whatever learnings which got incorporated, they have been very well practiced in the system. We have significantly strengthened our risk management practices over the years. Yes. And we are in a position to ensure that the underwriting should be of excellent quality. Not only underwriting, even control follow-up should be of the highest order. And also the ecosystem has also got developed over the period of time. Yes. Today there is a situation where CRLC is there. Today there is a situation when IBC is in place. So borrowers are also responsible. Banks have also strengthened their risk management practices. So overall, this is nothing but a reflection of an economy's transition from a developing to the developed state. Thank you.

Thank you very much. All the best.

Excuse me. Sir, here at the last bench. Yeah, please go ahead. Hi. This is Vishal from UBS. Sir, two questions from my end. One on express credit which is now almost 9-10% of our loan book and actually has grown at a very express rate as well. So how do you derive comfort on this book and also what would be the lead indicators before you start worrying about this book? Right now the gross in-pay is 0.6% only but generally how do you track that book? I think I have stated in the past analyst meets also and I will again repeat the same thing. When it comes to our express credit book, we give it only to our corporate salary package customers and also perhaps our experience is that it is though it is unsecured but it is better than the secured book. And that is something which we have already demonstrated and the NPA ratios we have already seen. more than 83% of the customers are either employed in armed forces or government employees and apart from that more than 12% of the customers are employed in the reputed corporates with very low incidence of default so this is the kind of a book which we have 95% of the book if at all people are going to get their salaries will be in a position to recover the loans I have not seen a single default from the defense forces in terms of payment of salary in my 38, 39 years of my service life. So I do not think it will ever happen in this country. So I think we need not worry much about it. Thanks for that, Kalar. And the other question which keeps, I am sure, coming to you is capital. So clearly you have increased the cushion. Now what would trigger a capital raise from here? See, you are from UBS, no? Yes. So, I would like to ask you a question in an economy like ours. How many entities can raise 40,000 crore worth of equity in a year? I think we can answer that. You can raise. You can raise. SBI can raise. No, no. You answer my question. How many entities have raised 40,000 crore worth of equity in last 5 years time? SBI would have. We have not raised. We have brought back that profit, man. And this is something which I have been saying for last six months plus. We have created value for our existing shareholders. And without diluting our return on equity. I think you people, if at all you have invested into State Bank of India stock, you should be rather happy. And also, when it comes to capital, unless rental, we set that capital right. You know, it is not merely a number. You need to understand this. This 14.68% is something which is our capital adequacy ratio. And today with 14.68% capital adequacy ratio, I can support the loan book growth to the extent of 7.10 trillion without any impact. That 7.10% if at all I underwrite well, that will only give me an opportunity to plow back. So I think this is a machinery which we should salute. If at all we only ensure that we underwrite properly, And there are no NPA provisions. There are no aging provisions. We need not look at market for raising further equity. We should only generate profit and plough it back. I think that would be great, sir. I think we have not seen that in last 15-20 years. This is for the first time we are seeing that there is a plough back. No, I think you have not seen it for, maybe you might not have seen for last 3 years. We are very clearly focused on this. That we will only plough back profit. And we will create value for our existing shareholders. Those who have stayed with us through the thick and thin, we will work for them, we will create value for them. And that is one of the reasons why today when we went to the board, we have declared a dividend to the extent of 1113%. Last year we had declared a dividend of 770%. How many corporates are there in the country who have raised this kind of a dividend? Thank you, sir.

All the best. Hi, sir. This is Jayamundra from ICICI Securities. Question on your fee income, sir. So maybe fourth quarter has a seasonality. So if I look at full year, your core fee, ex-Treasury, it is around 60 to 70 basis point of the assets, right? Which has been more or less stagnant. It is growing more or less in line with the loan growth. But it has been stagnant at that level, 60 to 70 basis point of the assets. As compared to the, let's say, other peers which are, you know, 1.5 to maybe 2% of assets, they clock that kind of a fee. We are very well placed on the OPEX to asset level and of course NIIN credit cost. So wanted to understand sir, do we have any internal target or aspirations to raise fee to asset ratio?

See that context here too, of course it was a very conscious call which we took in terms of waiving off our processing fee in the last quarter. So, these are all, you know, these are the competition related dynamics which will always be at play. But yes, of course, for a bank like us with 32 trillion worth of asset book, loan processing will continue to be one of the major earning point when it comes to WFE income. Apart from that, the cross-selling is another area because we are leveraging our distribution channel and we have seen a growth of almost 27% in the cross-selling income. On this, we have got a very clear target. In the medium term, we would like to make it a billion dollar plus. So, today we have reached about 3600 odd crores. We would like to see this number somewhere around 7 to 8000 crores. The other... Other major area is going to be the forex income, which we have already seen a growth of almost 25 to 26% in this year. So these are the major levers of growth in fee income, loan processing, cross-selling, forex. This will be the mainstay for our fee income going forward.

Right. And sir, question on your deposit cost, right? Okay. So, A, the deposit cost that we report in our presentation is, I believe, the cumulative number, which is, let us say, 1Q and then first half, then 9 months and then full year. So, if possible, I wanted to get… It is a deposit cost at a point of time. Correct.

Yeah.

So, I was looking at if you have the quarterly number because in a rising rate or so far… There are many banks which do not give deposit cost.

What do you ask them? Would it be safe to say that the card rates on deposit, if I look at SBI term deposit rates,

They have not changed barring very few five basis points here and there since Feb. Would it be safe to say that the card rates on TD have almost peaked?

See, it is like this that I would only like to mention, since you have come from the ICICI, I should say that very clearly. In bulk deposit, you go to the market and see who goes to rate code and from that you will know what is the difference between our card rate and actual deposit rate.

Can we move to the next question? Yes.

Hi, sir.

Who is this?

Sir, Nitin Agarwal from Motilal Oswal. Yes, sir. Congratulations on a good year and reaching the milestone of 50,000 crore profit this year. one question on you know wherein like it is contributing 64% of the savings bank account that you are opening so how do you look at the cross selling as in strategy for the accounts the customers that you are gaining through this channel and if you can also share some color on the value of the balances like in terms of the customer behavior over past couple of years how are you seeing the progression in terms of the deposit balances in these accounts well as a strategy when it comes to

You know, I think for a bank like us, we have to have, we perceive you know as a distribution channel. So there are set of customers who can perhaps be serviced only through this channel. And there are set of customers who can be served through the physical channel only. So physical is a reality for us and we will continue to work on this. Well, when it comes to Yono, we have blended it with analytics also now. And by virtue of analytics, we are in a position to have a much better assessment of our customer behavior, customer profiling. And that helps us in going for the targeted marketing also. The question which you have asked in terms of value and all that, I would not have it right now with me. Maybe I can share with you separately. But yes, of course, the intention is to, we are targeting a specific customer segment with the help of UNO. And we are... Going ahead in terms of upgrading this essentially with that in mind because the kind of customer base which has been targeted, they would like to experience frictionless banking and that is something which we are offering through you.

Right. And second question on the deposit rates. Apparently, it looks like that the overall rate environment has peaked out. RBI has taken a pause for now and inflation data points are coming quite benign. So by when we can expect the interest rates, the deposit rates to start to moderate, will you look from the RBI to change the stance and reverse the trajectory to take that step or that can be pretty much in advance prior to RBI reducing the repo rates?

See, moderation in deposit will be a function beyond the repo rate also. There are many banks in this country who are running into a credit deposit ratio of as high as 85%. And if at all they have to remain relevant in the loan book side, then they will have to continue to increase their deposit rates. So I think, to my mind, repo rate is just one indicator which will be put to use to arrive at the deposit rate. But other than that, there would be, so again it would be a function of the market in terms of borrowing. But if at all they are increasing their interest rates and are underwriting loans, then I am sure they will very soon start providing for it also. So it is a very fine balance which we have to keep in mind while doing the real life business in the banking sector.

Sure, sir. Thank you so much. We will take one last question from gentleman here. Can you bring the mic here? We have a lot of questions received through online webcast also. We will take last question.

Congratulations to team SBI. This is Sushil Jogsi from Indus Equity. Sir, do you expect that credit growth will be more fronted in the first half of this year in view of election, infrastructure spend and various other factors?

I would say that it should be all through the year.

All through the year.

Because today we have to be very mindful of the fact that for the system as a whole, a significant portion of the credit growth is coming from the retail. And the retail demand is all season. All season demand. So, and the other pieces, infrastructure related spend, etc. I think the infrastructure project normally have got long gestation period. So, the sanctioning might happen at a point of time, but the available might get spread over the period of time. So, I think to my mind, it should happen throughout the year.

These projects can carry credit for 2-3 years because this will be big projects.

Yeah, yeah. Second question, sir, you've spent a lot of... Also, by the way, apart from the infrastructure spend, sharper focus on renewable, sharper focus on solar, sharper focus on battery, EVs, etc. These are actually new growth levers in the economy.

Won't it be linked to your green deposit scheme which RBI is rolling out? Green deposit scheme?

See, irrespective of the green deposit or otherwise, actually speaking, it's a bit of a dilemma. Green deposit, whosoever put the green deposit, he expects better returns. And wherever you want to lend the green deposit, you have to give concessions. So, how to really strike out this balance? So, I think it will probably stabilize over a period of time, irrespective of the color of the deposit, green or black. Whatever be the color of the deposit, the opportunities will be supported.

Outlook on your foreign offices and second thing you spent a lot of money on creating digital and physical infrastructure which may increase your salaries at the individual level because it's performance led and the kind of productivity they are going to lead. But this may lead to a lot of income, but the cost may freeze from an outlook on a long-term point because some initiatives are visible, some are not spoken so far.

Yeah. Well, as far as the foreign offices are concerned, we are very mindful in terms of our names in the foreign offices. And that is the reason why we started slowing down our growth in the last quarter of this financial year. Because there are a good number of opportunities which are available in the receivable finance. But that is available at a very, very low margins. So we sacrifice the top line for our profitability from the foreign office. And that is the reason why you would have observed that our NIM in the international book has gone up from 1.32 out to 1.69, 1.70. That is something which we are very clearly focused on. Foreign offices are more like our corporate bank and being a corporate bank, majority of the offices are into the corporate lending only. But we are very mindful in terms of the quality. We have become, we participate in syndication. We are not as much into bilateral credit. We are there for ECB supporting large corporates of India. So this is the broad component of our loan book in the foreign offices. Our effort is to now to move up from the lead syndicator also to assume the status of the lead syndicator so that we should get a position to earn the free income as well. In some geographies we have already started doing it but increasingly we would like to see it happening across. Your second question relating to branch network of 22,400 and with the increase in salary, we might have a situation of the cost going up. You would have observed that the free income which has now we are seeing about 26% kind of a growth. Our effort is that our employees who are posted in the branches, we should use them for high skill job. whether it is marketing or it is processing. In the rural segment, we have started getting into high value Agri loan book and for that we need the processing capacities. So, we will be utilizing our employees base. We have already put in place about 47 CPCs for Agri. 47 CPCs we have already done. 45. 45 CPCs have already started functioning in the last second half of this financial year. Going forward, we'll be doing that. We'll be doing quality awareness. We'll be using our high-cost resources for underwriting quality awareness. We'll be using them for marketing, cross-selling. 26% growth which you have seen is not the ultimate. As I mentioned that we have got a very clear target for having a $1 billion earning from the fee income, which means that the distribution of our subsidies product from these up-country locations where the penetration level is very low. We are leveraging the brand value of State Bank of India. We are leveraging the branch network of State Bank of India. And we are ensuring that it should be a most reliable product which we should sell from those counters, those people who are being exposed to these products for the first time. That is something which our effort is. And we have already seen the result going forward. It will only multiply.

So what can we add? Digital spend on a sustainable basis?

I have not really applied myself on this job, but we are ensuring that we should, we actually aim to become a digital bank of choice within State Bank of India. Even before the central bank comes out with its regulation for the digital bank, we want to be in readiness.

Thank you for answering all my questions. All the best. Thank you, sir. Thank you.

Sir, we have received a few questions for the online.

Yeah, okay. I have got some questions which I received online. So I think I will just take few minutes to answer all of them. The first question is please provide guidance on NIMS credit growth and deposit growth in financial year 24. I have already answered this question. The next question is relating to from Sneha Gnatra, any plans to list subsidiary? As of now, there is no such plan. Another one from Velur Gopalakrishnan Kannan, BG Kannan, would you be considering increasing interest rate on savings bank deposit, which has been rather stagnant, and if so, will it not affect your NIM? We don't have any plan to raise the savings bank rate for the time being. Suvi Samadar, overall overseas lending portfolio, it is 4,92,440 crores and it has witnessed a rupee term growth of 19.55%. In dollar terms, it has grown by about 10%. Manish Dharival, kindly share the reasons for dip in corporate loan growth. No dip in corporate loan growth. Corporate loan has actually grown at more than 12%. Akash Agarwal, can I know the impact of wage revision in total employee cost? Total employee cost is Rs. 57,292 in 2023. Wage revision is about Rs. 2,490 crore in financial year 2023. So it is 4.35% of the employee cost. Employee cost went up a lot this quarter driven by provisions. Can you break up the provisions? So wage revision provisions are Rs. 498 crore which has gone up. Pension and other retirement benefit, it has gone up by 1,359 crore essentially on account of the year movements. Vishal from Rediff Mail here sent the question, what is the trend of NII YOY and how are you looking for growth in first six months of the financial year 2023-2024 in terms of NII? NII growth in the current year, I mean in the financial year 2023 was 19.99%. And 29.47% in quarter 4 of financial year 23 over quarter 4 of financial year 22. Yeah, please. Thank you, sir. Now I can take the physical questions.

So I trust all the questions have been addressed. And we'll be happy to respond to other questions in offline mode and people can reach out to our… No, let us hear. If at all somebody has any questions, let us… Can you bring the mic here, please? Sir an international book geographically I mean for like 92,000 crore we have measured I mean almost about 26-27% in US and then UK and some of the other European countries and Japan and other places. Now with this whatever is happening globally outside and our lot of capital has been invested there and the movement in the rupee and dollar of course for some time it is stable. So how do you see I mean that going forward as you already said that you are tempering or the further growth.

No let me I think it should be seen in a very different perspective. I have got your question. See the point is that today India has already become the fifth largest economy in the globe. Our exports have gone to the extent of 770 billion. So very clear focus in terms of manufacturing and re-exporting from the country and similarly when it comes to We have got Apple coming into the country. They will also be exporting. We have got Foxconn, Apple. All the leading manufacturers are looking at India. So eventually, the way I look at the scenario is that we have got the potential to be, if not China, at least Taiwan. And to that extent there is going to be a huge manufacturing export which should happen from this country. There is a very clear focus from the government and the PLI is something which is intended with that in mind. So eventually when that kind of a situation comes, we have to have our global presence also. We have been calibrating our business strategies from time to time depending upon the situation which are obtaining in those geographies. But we have been a long term player in the international market. And there is no other bank which is long term player in international market. Let me tell you. So it is more of a strategic move. We have completed 101 years in UK. We have completed 50 years in New York. And we have, Maldives also we have completed how many? 50 years. Colombo today perhaps maybe we would be surprised more than 100, 150 years we have completed in Colombo. So this is the only bank which has got deep roots in the international geographies. And as and when the opportunity will arise, we are the one who will be in a position to take benefit of this. And let me also bring back your memory to the year 2020-21. That was the point of time. when there was no taker for deposit in this banking system of the country. We continued to mobilize the deposit and then we went for the rupee dollar swap. We supported, we created factoring as a product in the international market and we made money on that. When the lending opportunities came up in India, we unbound those swaps, we brought that money back And when all others were clamoring for deposit, we were only unwinding our swaps. Even if there was a loss on the swap, still the cost was not as high. So I think these are the strategic moves which we always make to take advantage of the situation. And I always believe That a bank more than 216 years old should not look at a year, two or five year. It should look at 20 years, 25 years and 50 years. By that time people will take time to really build up the organizations we have already created. So I think this is what our strategy is. Thank you. Yeah, please.

Ahul Maheshwari from Ambit Asset Management. Which one? Ambit Asset Management. Okay, yeah. Just as you in initial remark said that the growth you are expecting 12 to 14%, can we expect whatever the metrics or the engines which we have built to My question is, can the gap between the private sector banks, few private sector banks and the PSU, which was very high in the initial years in the past, can that be bridged or even SBIS type can grow much faster than the private sector bank?

I think last year, the loan book for the system as a whole has grown as 15%. And we grew at 15.99%. People talk about elephant dancing. Elephant is racing. Racing faster than the system. It's not only dancing. So I think the kind of potential which we have.

You will have to watch. And just second thing, as you said, we know a few of the banks only participate for the large corporates and the industrial loans which are there as SBI is one of the primers. This time if the cycle builds for the CAPEX, what are the internal metrics that will be taken care of that we don't see the past cycle which in the GNPA that had taken place?

We have significantly strengthened our risk management and we are very mindful we actually prescribe our risk limits for each industry and we draw upon our learnings from the industry what are the mitigants which are required to put in place we ensure that they are already in place and when it comes to the credit appraisal apart from the appraisal in the committees we have got the non-business who are there to non-business heads who are there to independently appraise the proposals So I think these are enough mitigants as of now. Going forward, what else will be the need of the system? Even that will be taken care of.

And just last, what is the project?

And also, in the past we were not having analytics. Today we are using analytics in a very big way to build up our risk models.

And what are the projects in pipeline, the large projects?

I would not like to name any one of them.

No, no. The quantum, can you give that?

Almost 1.7 trillion worth of projects are in work in process.

Okay, cool. Thank you. We will take one last question from the lady there.

Thank you. I just wanted to understand what would be our exposure to the NBFC sector. Sorry, yeah. Our exposure to the NBFC sector this year and last year.

NBFC sector exposure is 3 point 3.73 trillion is our NBFC exposure but that exposure is essentially to very well-rated corporates, these NPFCs which are either into the public sector or supported by the leading corporate groups.

Sorry, sir, the exposure is 3.57 trillion.

And what would it be last year?

How much was it last year? It has seen a growth of about 31%.

2.71.

Right. And lastly on the slippages ratio, I mean this is for the industry also, right? Sorry? The slippage ratio and this is for the industry also. All the PSU banks have seen a low slippage ratio. Can this continue, the sustainability? Yes.

Okay, slippage ratio, are they sustainable? I think partly it is macro but significant part would be the underwriting and also the control and follow-up.

Thank you, sir.

Thank you. We will be happy to respond to these questions in offline mode now. Let me end this evening thanking the chairman, sir, the top management team, the analysts, ladies and gentlemen. And to round off this evening, we request you to join us for the high tea, which is arranged just outside the hall. Thank you very much, everyone.

Thank you very much. Thanks to all the participants.

Thank you.