State Bank of India

Namaste and good evening, ladies and gentlemen. I am Sanjay Kapoor, General Manager of Performance Planning and Review Department of the Bank. On the occasion of the declaration of the bank's quarter three for FY24 results of the bank, I am delighted to welcome the analysts, the investors, and the colleagues for this in-person meeting. I also extend congratulations A warm welcome to the analysts, investors, and colleagues who have joined this presentation through our live webcast. We have with us on the stage our Chairman, Shri Dinesh Khara, at the center. Our Managing Director, International Banking, Global Markets and Technology, Shri C.S. Sethi. Our Managing Director, Corporate Banking and Subsidiaries, Shri Ashwini Kumar Tiwari. Our Managing Director, Risk, Compliance and Stress Assets Resolution Group, Sri Alok Kumar Chaudhary. Our Managing Director, Retail Business and Operations, Sri Vinay M. Tonse. 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 front row of this hall. We are also joined by chief general managers of different verticals and business groups. So to carry forward the proceedings, I request Chairman Sir to give a brief summary of the bank's quarter three FY24 performance and the strategic initiatives undertaken. We shall thereafter straightaway go to the question and answer session. However, before I hand over to the Chairman Sir, I would like to read out the safe harbor 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. Good evening, dear friends. Thank you for joining this and this week today. I would like to start by thanking the support of all our stakeholders, including our customers, shareholders, employees, and the broader ecosystem. Without their support, we would not have been able to achieve what we could. Fairness to all our stakeholders remains at the crux of the bank's culture. which in turn has helped us in creating sustainable value. Let me start with a brief description of the present global and domestic economic scenario. Global economy is projected to grow at the rate of 3.1% in 2024 and 3.2% in 2025, owing to greater than expected resilience in the US and several other emerging economies. While global economy is showing resilience, the projected growth is still below the historical average of 3.8% for the 20 years starting from 2000. While the likelihood of a hard lending has receded, still there are certain risks that need to be monitored. New commodity price spikes from the geopolitical shocks, Supply disruptions and persistent underlying inflation could prolong the tight monetary conditions. Against this backdrop, the outlook for the domestic activity is brightening on account of the sustained buoyancy in the services, consumer and wages optimism, public spending on infrastructure, and the underlying strength of the financial sector's balance sheet. Consumer confidence has improved, with uptick in most of the macroeconomic conditions. The union government at a historically unprecedented rate, and it has taken the overall public sector capital investment from almost about 6 trillion in 2015 to 18 trillion in 2025, as per the budget estimates, which is a jump of almost three times. Gross tax to GDP is in financial year 25 is projected to touch 11% plus, the highest ever in 16 years. GST monthly threshold has moved up to 1.64 trillion and even in the previous month of January, we have seen a level of 1.67 trillion. CPI inflation is expected to moderate in coming months. On external front, the current account deficit is modest with foreign exchange reserves providing a strong buffer. IMF has recently updated India's GDP outlook growth for the year 2024 to 6.7% from 6.3% earlier, underpinning the growth potential of the Indian economy. While recognizing the global risk and the volatility in financial markets, that Real GDP growth is expected to be 7.3% in financial year 2024. Interim budget has estimated the nominal GDP growth of 10.5% for the year 2025. On the banking front, the deposit growth has rebounded, but sustained credit growth momentum has increased, the wedge between deposit and the credit growth. As on 12th of January, also due to commercial bank, credit grew by almost 20% as compared to 16% last year. And the deposit grew by 13% as compared to almost 11% last year. Latest credit growth numbers reveal the sustained pickup across agriculture, MSME and services. Coming to the bank's performance, once again we have delivered stellar numbers. Our net profit in nine months of the financial year 24 stood at 40,378 crores, which has witnessed an increase of 20% plus over nine months of financial year 23. This is despite providing for a wage revision of 12,718 crores during the current financial year, as per the bipartite wage settlement at the rate of 17% wage hike. Further, I'm happy to share that our net profit for the quarter 3 of financial year 24 stands at 9,164 crores. After absorbing the additional liability to the tune of Rs. 7,100 crore in a single quarter as a one-time exception item. This comprising of two sub-items, firstly Rs. 5,400 crore, which is on account of an increase in pension and addressing the anomaly which used to be there between the employees who retired many years back. Some of the employees were getting pension at the rate of 40%, while others were getting pension at the rate of 50%. This matter was subjudiced for a fairly long time, and it is almost likely to get resolved soon. And with that in mind, we had a very clear visibility in terms of the likely liability, and we have decided to provide for the same in the current quarter. Secondly, we have also provided for 1,700 crore towards the dearness relief neutralization, for the pre-2002 retirees and family pensioners. Our ability to absorb the above liabilities without significantly impacting the long-term profitability outcomes of the bank demonstrates the strength of our balance sheet and also the reflection of our philosophy that we must ensure that the balance sheet stays strong under all conditions. ROA of the bank at 0.94% for 9 months of financial year 2024 has improved by 7 basis points over 9 months of FY23. The ROE for 9 months of FY24 stands at 19.47%, which has improved by 88 basis points over 9 months of FY23. We have been consistently delivering ROE in excess of 15% for last 6 quarters. Our aspiration from our current position of strength is to sustainably deliver ROE a ROE of more than 15% through various business cycles. The cost-to-income ratio of the bank stands at 57.35%, including wage raise and poison, and excluding the impact of one-time exceptional item of pension liabilities and dearness relief neutralization. Overheads have been under control and have been shown a decline of 3.10% sequentially. The underlying driver for the sustainable step step up in the profitability profile of the bank, have been the unmatchable liability franchise with 48 crore plus customers, comprising nearly 34% of the Indian population. Our customer-centric approach, the process-oriented culture of the bank, strengthened underwriting processes and correct pricing of the risk have also contributed to the sustainable profitability. We are mindful of our liability portfolio as it provides a stable stream of resources for us. We continuously monitor the concentration of our deposit profile daily, ensuring that the dependency on the wholesale funding is contained within the prescribed level. The differential rate of deposits and the CDs are just around 13% of our total deposits. We retain reasonable reserve resource in the form of liquid assets Over and above the CRR and the SLR requirement to meet the future contingent demand and broad basing the deposit mix. Unencumbered excess SLR stands at about 4 trillion as on 31st of December 23. Liquidity coverage ratio at about 131% as on 31st of December 23 is well above the regulatory benchmark. I am happy to highlight that the credit growth has been robust. across all the segments. Our retail personal loan book is more than 13 trillion, is growing at 15% plus YOY, with an industry-leading asset quality. The growth in Agri, SME and corporate segment has witnessed a healthy growth of 18% plus, 19% plus and almost 11% respectively. I am glad to share the progress we are making in digital banking. 59% of the savings bank accounts were opened through UNO in 9 months of financial year 24. We are also leveraging analytics with significant business of rupees, 95,000 crore being sourced through analytical leads showing growth of 37% YOY. With regard to asset quality, our gross NP ratio has improved by 72 basis point YOY and stands at 2.42% as at December 23rd. and continues to be at the lowest level in more than 10 years. Our net NPA ratio has also improved by 13 basis points and stands at 0.64%. Slippery ratio for 9 months of financial year 2024 has improved by 5 basis points YOY and stands at 0.67%. The consistently improving asset quality is also reflected in our credit cost. For 9 months of financial year 2024, it stands at 0.25%. and has improved by a 12 basis point on a YOY basis. We are well provided for our loan book with PCR, including OCA standing at 91.49%, and PCR for quarter 3, Peninsula 24 standing at 74.17%. While we are glad about the outcome in the current quarter, we are also conscious of the areas for further improvement. On the liability side, we continue to focus on increasing our share in current account, while maintaining our leadership position in savings deposit. Our CET1 ratio, after considering drawback of 9-month profit, is at 10.38%. Additionally, the current ROE profile of the bank is above the credit growth trend, which will lead to CET1 incremental accretion. However, the bank is open to raising equity capital if the growth trends are higher than expectations. Our subsidies are also consistently performing well and continue to create significant value for all the stakeholders, and most importantly, for the customers. Concluding my opening remarks, I want to thank you all for your support to the Bank. The Bank, while pursuing its own progress, contributes to the progress and economic growth of the broader ecosystem. We remain committed to reward your trust in us with superior sustainable returns over the long term.

My team and I are now open to taking your questions. Thank you very much. To accommodate all questions, we request you to restrict questions to maximum two at a time. Also, kindly restrict your questions to the financial results only and no questions be asked about specific accounts, please. In case of additional questions, the same can be asked at the end. We will now proceed with the question and answer session. Thank you, sir. Thank you.

This is Ashok Ajmera, Chairman, Ajcon Global. Sir, compliments to you for the fantastic results, but for that exceptional item, Even the net profit would have been higher, more than 20,000. I mean, the operating profit also has gone up and net profit also would have been much, much higher. So my question is on that only, number one, that this 15 to 17 percent, I mean, the expected rate was 15 percent. Now it has gone to 17 percent. So in our employee cost, in the normal P&L, there is hardly any impact if you see the numbers of the last quarter and this quarter, and which it seems that you have taken in exceptional items. Whereas in case of all other banks so far, they were taken in the regular P&L, the direct hit of the increase. This is number one. And secondly, what was the need for provision in this quarter itself of such a big amount? Was it because the results were good, the profitability was good? Or is it because in the next quarter you are feeling that may not be so robust or so good? And third is that you wanted to make the banks balance sheet very healthy. This is my first distinction.

Well, I think when it comes to the way we look at this expense particularly, as far as the provision for the wage increase is concerned, we were providing at the rate of 10% from November 22 onwards. Later on, we increased it to 14 percent, and when the MOU got entered into, as of now, it is not crystallized into liability. That will crystallize into liability at a later date. So that is the reason why we thought much in order to create a provision, because only and only when it gets crystallized into liability, it should be taken as an expense. That is something which we have done. I must mention that up to September 23, we had made a provision of 8,895 crores. and we have made additional provision for the wage increase in this quarter to that you know about 6,313 crores. So in all we have now made provision which is as high as 8,895 and provision made for during this financial year is 12,718 crores. And the additional provision which is required to be made In this financial year, it would be another 5,400 crore. Your second question, why we have made provision in this quarter. 7,100 is actually a provision which is essentially we have made because as I mentioned in my opening remarks also, there was an anomaly in the pension being paid to the different set of employees in the bank. Some set of employees were being paid pension at the rate of 40%, the other were being paid pension at the rate of 50%. And this matter was pending before the court of law since 2002. And now, of course, there is a definite progress, though we still don't have the liability. But nevertheless, since we saw this, it's an event which is almost certain to happen. were actually suggested that we should make a provision of another 5,400 crore for meeting this liability in future. And also the other piece was relating to the difference in the dearness relief. For the pensioners who retired before 2002, November of 2002, that liability was ascertained at 1,700 crore and the actuarial assessment suggested that we should provide for this So the decision to account for these liabilities have actually happened because there was a crystallization of the liability. It has nothing to do in terms of whether this quarter is strong or the next quarter is weak. I am not supposed to make any kind of projections about the next quarter, but the general expectation is that last quarter is always a strong quarter and also the kind of growth trajectory which you have seen I have no reason to believe otherwise. So I think that should actually answer all your questions.

Just a connected question, ma'am. We will get the tax benefit on this provision for the year end? We will get the tax benefit.

We will get the tax benefit.

Sir, my second one is on the capital adequacy, sir. I mean, we are growing very fast and we have to, I mean, we need to grow in spite of even this size, such a large size, still we are going in percentage terms also, 13, 14%, 15%. So on capital adequacy, though, I mean, you have excess SLR, you said 4 trillion, but don't you feel that some major decision is required to be taken to bring it, the capital adequacy on par with some of the other banks? I would not use the word peer bank because they are too small as compared to you, but still... a capital adequacy of about 15.5%, 16%. Don't you think that some drastic decision or bold decision is required to be taken when the share price is also reasonably good now?

See, if at all we reckon the profit which we have booked till now, and if we reckon it to be plowed back into the system, our capital adequacy ratio would have been 14.34%, and our CET1 would have been 10.38%. So this is something which I think we need to reckon. And the other piece is that our ROE is growing at about 19 to 20 percent. And also our loan book is growing at about 14, 15 percent. So long as our ROE is growing faster than the loan book, the incremental ROE will actually give us the ability to plow back the profit and which will ensure that we stay healthy as far as the capital adequacy is concerned. But nevertheless, we are quite open. We are reviewing this situation on an ongoing basis. And we are hopeful that there would be some resolution relating to the 81 pricing and the valuation issue also. So even that will also open up the opportunities in terms of raising money through 81 option. So we are quite open for all options. And we will, as I have mentioned in the past, we are well equipped to deal with the opportunity for growth in the loan book. and we will ensure that the capital should not come in the way for the growth of this bank. And even now also, if at all we reckon this kind of clawback, we can easily build up our loan book by another 7.5 trillion. So I think we are very well placed. I have no reason to doubt, but as I mentioned, that we are quite open if at all need be. We will not hesitate in terms of raising capital. We have identified enough resources through which we can raise the capital. It is not more than a one-quarter effort to raise that kind of a capital. And there is no reason for my investors also to really worry because when we are prudent in terms of identifying the source of capital and also the cost of capital, I think that should be a happy situation for all our investors.

Thank you, sir.

I got the signal. Thank you very much and all the best, sir.

Thank you. We'll move to the next question, please.

Hello. This is Manish Oswal from Nirvang Securities. My question on the kind of credit cost we are seeing in bank, if I look at the nine-month performance of the bank, when I compare to the last private banks, our performance is even better. Obviously, the economy is doing well, so that is one factor, but Can you talk about some of the structure factors in the bank underwriting practices which are sustaining these kind of credit costs? I have never seen these kind of credit costs in SBI in almost 15-20 years. So can you comment on that?

Thanks for the compliment. And what you mentioned in terms of economy doing well, and that is a reason for the credit cost being low. If that being so, then the industry should also have a similar kind of a situation. But nevertheless… I would like to highlight that we have worked on it for quite some time in terms of we have strengthened the mechanism for underwriting the risk, for having adequate appreciation of the risk, and for ensuring that there is adequate risk premium for the risk which we are undertaking. And that is something which has helped us in terms of ensuring that the credit cost should remain contained. Apart from that, when it comes to the portfolio selection also, we are very clear in our mind that what should be our portfolio composition. And we have leveraged whatever is available in the ecosystem, structured, unstructured. And also, when it comes to retail book, we have created our loan management system, which does not leave any discretion and there the decision engines are all embedded into the loan management system. So, you know, when it comes to detail, when you have got such a large network, you have to control the quality, and that is something which you have addressed through the loan management systems. And when it comes to the corporate credit, our credit review department, which is there, the credit committees and the composition of the credit committees are the one which helps us in achieving what we have achieved. And I think going forward, we are quite cognizant of the likely emergence of the risk, and we are ensuring that we should be ahead of the curve, and we should be the patient to manage those risks very well.

Within that, there is a retail portfolio where even your portfolio, even like home loan, car loan, and personal loans, where the gross and pay level is even significantly lower than the top-notch lenders in the Private space, so can you talk about that also?

We are actually the top notch. We are the industry best. No, no, I mean, I'm talking private sector, sir. No, so see the point is, you should be, one thing which you should, I expect you to be, it should be agnostic to the ownership, whether private or public sector.

Sure.

So it is more of a professionalism. I think professionalism is not the exclusive domain of a private sector. I think it is there, it is uniform. And anybody can be professional. And I actually rate ourselves as more professional than any private sector. I appreciate it, sir.

And the second question on your slide number 20, there is a statement which mentions that we expect our ROE is higher than the loan growth. And you said in your remarks that if the credit growth is even higher than your expectation, then we may tap the market. So what rate of credit growth where you see the need of capital to raise? And secondly, in your macro commentary, you suggested that 11% kind of nominal GDP for the FY25. So based on that, what kind of loan growth we are looking at?

Normally, when it comes to as compared to the nominal growth we have seen in the past, that the credit growth for bank life costs is generally 3% to 4% more than the nominal growth. And more than that is normally not there. And considering the fact that we are very selective in terms of the risk, as I mentioned, that risk is something which we are very cognizant of. So I would say that we should be, ideally speaking, we should be growing around 14%, 15% kind of a growth. And also I would like to mention that this ROE is actually a bit depressed because of the kind of, as I mentioned, that we have in this quarter itself, if you really look at it, I mean, till now we have made the additional provision of almost about Rs. 20,000 crore. We have got a profit of Rs. 40,000 crore for the nine months and Rs. 12,000 crore provision we have made in this financial year for the wage hike. And another about... 7,100 crore is on account of the one of the pension and the pension liabilities. So almost about 20,000 crore we have provided for. The impact on the wage increase in the next financial year is almost about 500 crore per month, which is about 6,000 crore overall. So 14,000 crore rupees is an additional provision which we are absorbing in this financial year. With that, our ROE is at about 19 and a half. My expectation is that we should be trading at more than 20% of ROE. And if at all we are trading at more than 20% of ROE and our loan growth is at 15%, incrementally we are creating additional elbow room for the loan book to grow. As I was mentioning that we have got enough elbow room to grow at about 7.5 trillion loan book can be grown. Our loan book is at about 35-36 trillion So, 7.5 trillion is almost more. 18 to 20% kind of a growth. I think 18 to 20% growth is some distance. Not that we don't have liquidity. We have got enough liquidity. Our liquidity coverage ratio is at 131%. And also, when it comes to our credit deposit ratio, today we are at as on 31st of December, we are at 66%. So, I think Liquidity-wise, no challenge. Ability to support growth in terms of capital, I don't see any challenge. I only need your good wishes and your support so that we should continue to grow.

All the best, sir. Thank you. We'll move to the next question here. This side. This side, please.

Sorry. Yes, sir. Hi. Good evening.

Yeah, please.

Go ahead. Sir, my first question is just on wages. Yes. That you have mentioned that, you know, you had aligned for DA to pre-2002 of pre-2002 employees and then, you know, the 40 and 50 percent alignment for wages.

Not wages, it is for pension.

Sorry, for pension. Yeah. So how long was this for? As in that, how long did the case go on? Because we don't recollect.

See, the point is that this case was going on from the year 2002. Okay. And as far as the pensions are concerned. As far as the DA neutralization is concerned, it was at an industry level, and this was a decision which happened at the behest of intervention through IBA. So this is something which we have identified the likely liability, and we have provided for it.

Got it. But the IBA would have told the entire –

Yeah, please. The second part, you know, there are two parts, 5,400 and 1,700. Yeah, 1,700. 1,700 is for the industry.

5,400 is only for state-backed companies.

It's only for specific to SBI. Right, right. So 1,700 likely impact for the industry as well depending on their size.

Yes, yes. Correct. And 5,400 is specific to SBI and both of them are one-time actuarial assessment which we have made and… We have only contributed to the pension fund corpus. That's all. Yeah. It's not a recurring expenditure.

So is there any other pending hike left from the past in terms of pension?

Fortunately, nothing. But as you never know, it can come up any day. As of now, there's nothing.

Okay. And in Q4, sir, then what is the pending provision of 55 billion that you've mentioned of 54? 5,409 crores. Yeah, 5,400 crores. That would include some impact on pensions or this is just… This is only salary. Only salary. Sir, that is salary plus the regular pension.

Salary plus, that is regular expenses. All staff expenses. All staff expenses because even now also… Everything is covered in that. Even now also when we are providing for, we are providing for everything on an ongoing basis. It is a recurring kind of a thing. But it will stop. 5,400 crore once we will provide, the 17% aspect is taken care of.

So then over and above that, whatever pensions will be provided for, that will just be interest rate related. Is that the case?

That will be from the quarter to quarter, whatever is the gap, if at all there is any.

It will not be because of the new wage?

No, no, nothing, nothing.

Okay, so it will just be the rate catcher.

As I mentioned, you know, in my passing reference, that the wage increase impact of all this, whatever wage increase is envisaged, is 500 crore rupees per month and for the year as a whole, it is going to be about 6,000 crore only.

Okay, so for the next quarter, then the wage provision, like your wage line is 98 billion this quarter, right?

Sorry?

Your wage, you have employee expenses and then you have contribution to employees. So the employee expenses are around 98 billion for the quarter, 9,000 crore. 800 crores. So next quarter, what will it be?

It would be about, no, 5,000, sorry, maybe if you can clarify, I'm not in a position to comprehend this question.

Basically, we have provided for 6,312 crores this quarter. For the next quarter, what remains is 5,408, out of which salary is 1,386 crores. And pension at the rate of 17% is 3,072 crores. Gratuity is 378 crores. Other employee benefits is 572 crores. And total it comes to 5,408 crores. Is it clear?

Okay.

Another point that I would like to make. that we have done all the provision for the wage settlement that has happened. So next year around, when you see the impact of this, the overall wage bill will be around 66,000, as against 77,000 this year because of all the provisions that we have already taken. So it is actually going to go down.

It is only wage bill, but the pension-related liabilities is actually over and above. No, sir, it is all put together. Okay, fine. No, no, 77,000.

77 is all put together. 7,100 is excluded.

Okay, that is what I am saying. 77,000 plus 7,100 is something which we have provided this year. So as against 84,000 crore, it is going to be only 66,000 crore.

Got it, sir. That is very clear. And my last question is on margins. So, can we say that now margins will be maintained at these levels?

Around the same level. We expect maybe at the most, if at all there is any dip, it would be only 2 to 3 basis point only.

Maximum. Okay. And most of the deposit repricing of the past is over now?

Yeah, yeah. Almost.

Okay, sir. Thank you so much and all the best.

Thank you.

Thank you. Thank you. Congratulations for a very stable result and all the guidance and the time and talent which SBI provides to the country. So my first question is based on the interim budget and the FOMC outlook and the behavior of money market. And if there is a proxy to India where money market is concerned, SBI should be the largest gainer. So based on 4 trillion of excess SLR. How is your outlook on treasury? Second thing, will the interest rates peak out as newspapers are indicating and RBI may cut to by 50 bips in the second half. The FOMC may cut in the last quarter. It's all speculation. But what is our internal outlook based on all the parameters which have happened in last one week?

See, when it comes to RBI and FOMC, I would say that they have decoupled to a greater extent. Our decisions are more based upon their own assessment, MPC's assessment, as far as the inflation trajectory is concerned. And as we read MPC deliberations, we would say that perhaps they are looking at inflation to come within 4% range. We are hopeful what you mentioned in terms of second quarter. Our assessment is second or third quarter, we should actually get to see some kind of a rate reduction. This is what our expectation is. And when it comes to the money market and the trajectory and its likely impact on the State Bank of India's balance sheet, I would put it like this, that much of it depends upon how the interest rate or the T-bill and the GSEC would be behaving as of 31st of March. That will be probably helping us in terms of the eventual outcome. Though going by the current trend, we are optimistic. But let's wait and watch.

Urbanization and consumption in India is growing and the economy is headed to 5 trillion, 7 trillion, 10 trillion based on numbers. Being the largest bank in India, I'm sure our consumer print, consumer-led banking and corporate banking both needs your support with the market share what we have. If you have to gear up for those kind of economy size and challenges for the consumer credit, What enablers you will have to do it now, along with Yono and so many other things, and what kind of digital spend you will have to do for the next three, four years to sustain those numbers?

Well, we have already invested in terms of the structures. When it comes to the credit processing cells for the real estate, our credit processing cells, last year we added almost 450. So now we are somewhere around 400 odd credit processing cells we have created across the country. We have enough feet on street for sourcing of applications. And also we have created a seamless process when it comes to the low-value SME loans. And also for the home loans also, we are working on a workflow mechanism so that the journey should become end-to-end digital. So I think it's a constant and an ongoing process which is there, and our effort is that we should stay ahead of the curve in terms of investing and ensuring that we deliver value to our customers and we should be expedient in terms of delivery.

Sir, at the rate what you're growing around 14%, as you indicated, based on nominal GDP, in three and a half years we would be nearing 50 lakh crores. So our cost to income with all the enablers which you have already placed in, will it not substantially be low?

Cost to income we are hoping, actually if you look at our productivity also, employee productivity, if you can pull out that slide please, employee productivity. So if at all you will look at that, our productivity is significantly higher, about 29.78 crore, which has gone up from about 18.77 crore in the year 2019. So that number... It has moved to 29.78 crore. So actually it has jumped up quite a lot. We are actually leveraging multiple things here. We are leveraging analytics. We are also cognizant of the need if at all we are exploring the possible application for Gen AI. And also we are looking at how we can leverage technology for the advantage of our employees. So I think it's a multi-pronged approach which we have in terms of addressing the requirements and also to ensure that we should be ahead of the curve, much ahead of the curve as far as the opportunities when they arise, we should be in a position to respond or maybe we should be in a position to create opportunities also.

Had you not provided the one-time provision this year, I think the year-end would have been the largest profit-making company of India.

You are right because by that reckoning we were already at 60,000 crore plus as of now. So going by the normal expectation, I think my dream is that this bank should generate 1 trillion profit and hopefully that is what I am seeing is that is the reality. That would have happened if at all we would not have been required to make such provisions.

Thank you, sir. Thank you for answering all my questions.

Next question here, please. Hi, sir. Saurabh from J.B. Morgan. Sir, two questions. One on your corporate banking piece. We have seen the private banks, you know, getting strained on LDR and all. Are you seeing opportunity either to buy portfolios from them or, you know, accelerate growth in that space? That's the first one. And secondly, your presentation mentions 50 business points, capital release. because of the investment fair valuation in April 24. Can you just comment on that? Thank you.

Well, as far as the private bank's opportunity is concerned, I would rather say that we already have got a pipeline which is almost worth 4.6 trillion. So that is one opportunity. But yes, of course, if at all opportunities come our way and it is in line with our risk appetite, we'll be more than happy to support such kind of – requirements of the corporates. Now the other piece which you have mentioned in terms of the impact to the extent of 50 basis point on the capital adequacy, maybe I'll request Srinivas Shetty to come in.

I think it's when we look at the devised valuation norms which are likely to come from 1st April next year Our broad assessment is that if you have the same portfolio levels and move and implement the norms, there is a positive uptake in terms of some of the portfolios what move to FPTPL from the AFS category. I think that is what adding to the positive MPM in that. While we may not immediately be able to add to the profit, the norms indicate that FPTPL positivity. Today, you know, any positive MTM cannot be booked. There's only negative MTM which needs to be booked. But the new norms allow us to move to AFS reserve. And AFS reserve is part of the set one. So probably to start with, we'll have to wait for the detailed RBI guidelines. How do they want us to? If I'm opening the balance AFS reserves in a positive way, whether I can book that or I need to book in the general reserve is something what we are negotiating. But it will definitely add around 50 basis points to set one. That is our assessment.

So, sir, on the… First of April, we have to actually draw up a balance sheet.

So that will come. It's only a matter of accounting, but it will add to the set one, 50 basis point. Is it clear?

My question was essentially, are private banks talking to you to sell their wholesale books?

No, no, no, no. As of now, we have not received any such request. But if at all it comes, I'll be more than happy to lap it up if it meets my risk appetite.

Yeah, next question.

Yeah. Yeah, hi. Kunal over here from Citigroup. So firstly, maybe just to get on to that number of 77,000 crores. So you highlighted that will be the staff cost for this fiscal, FY24. So today we are at almost 55. So that indicates another 22,000 crores for 4Q. That would be more to do with this 5,000 crores which is required. Because anyway, this quarter there was... additional wage division catch-up which was there, but we are expecting further rise in the employee cost bill for Q4 as well.

That is only additional provision which is required to be made in the fourth quarter is only 5,400 crores for the wage increase.

Okay. Because it was coming to 55 nine months in 77, so that's where maybe 22 seems to be the catch-up for 4Q in terms of the wage bill. which is still higher than Q3, considering that there was already a catch-up from 14 to 17 odd percent.

No, actually the requirement is only 5,400 crore additional. Apart from that, the normal wage bill, which is there, that is the only requirement.

Assuming that the bipartisan settlement is not implemented in the Q4, which is unlikely, I think we'll come probably, I don't know, it may take some time. Had it been implemented, it will become a normal wage bill.

That would have been almost 500 crore worth of additional wage bill on a month-on-month basis.

Okay. Okay. And secondly, in terms of the expansion in city ratio was there this quarter, but still if we look at it in terms of margins, there was still some decline of six or business points. Would it be fair to assume that this would be more back-ended growth and we will see the benefit on the interest more towards… You are very right because it would not have been uniform right from the first day of the quarter.

It would have happened towards… It is normally seen towards the busy season and also later than the busy season. That is something which is there. And also the fact remains that during the busy season, because in the retail sector, the competition really mounts and then we have to give all kind of concessions, relief, et cetera. But nevertheless, the asset come to a book. So that is something which has happened. So I think it is more abnormality considering the fact that we are choosing the quality and for quality we are willing to look at the lower risk. You will probably appreciate that the CRP naturally has to be lower for the better risk. And that is something which is the reason.

And lastly, in terms of RBI's increase in risk rates, both for NBFC as well as unsecured, so maybe they have not highlighted any which ways we have been commenting that our unsecured portfolio is much better than the secured as such. But just in terms of the RBI's indication or maybe highlighting that this could be the riskier segments, what would be our stance in both the segments and are we passing it on in terms of the increase in the lending rates?

Yeah, we are actually... it has got an impact of about 49 business point for us, 81 and 70 business point for the capital adequacy ratio overall. So to that extent, the cost of capital has gone up while we are lending to this particular sector. And when it comes to NBFCs, et cetera, we are passing on, we are actually have jacked up the pricing also.

To the extent of?

Depending upon each of the NBFCs, depending on their risk rate. we will look at it, how much we should benefit. And on Express, we have not increased. We have increased in the Express credit also. Okay.

Next. Good evening. This is Mahesh from Kotak. Just to clarify the question that he had asked, this 77,000 that you are saying includes the 7,100 pros? No. Then I think the statement he has asked is right, right? Because in the nine months, you have provided 55.

Look, Kamba, again, I will just explain. So the wage revision impact is 18,000 to 127 for the whole year. So and for the next quarter, coming quarter, it's 5,409. We have already made a provision of 12,718 during the nine months. And in FY23, we made the provision of 2,920. 2,490, okay? The staff expense, which anyways we are paying to the staff, no? So you look at that. Up to 9 months, 24, it is 42,171. So 3 more months we will pay the salaries and pension and everything. That comes to 16,829 for the next quarter. Add to that 5,409. Is it clear? So, for the whole of next quarter, it is 22,238, which is staff expenses plus the provision. Put together all of this, for the whole year, it is 77,127, which means 59,000 for the wage bill and plus 18,127 for the increase.

Mr. Karazar, if you look at the numbers today, your average waste cost, even if you exclude these one-offs are running at about 30 lakhs, which is significantly higher than almost all the public sector banks and the private banks put together. Any direction in which you want to see how does this number go? Because this is simply way too high that we are seeing. Sorry, I could not get your question. Please. If you look at the wage cost for next year, which is about a little over 65,000 crores, on a 2 lakh employee base, you are still looking at about a 30 lakh.

2,35,000.

give or take the numbers will work out to roughly about 30 or lakhs per employee.

Most banks are... We have got about 300,000 pensioners also. But how do you solve this problem? Because a large part of the current cost... The problem which can be solved is only through improving the productivity. And that is something which we are trying to showcase. Our effort in terms of improving the productivity have already started eating desserts. And I'm sure going forward, this will also improve the productivity will actually improve. The kind of focus which we have on our digital, today almost 95,000 crore worth of loan book has been generated through the digital. And it is up by about 30%. Going forward, we expect that this particular lever will start creating value. And our back of envelope calculation is as far as the pension obligations are concerned, that we should be in a position to meet by generating this incremental productivity through the digital. And we have got the addition rate which is just about 1%. Perfect.

So just two questions.

As compared to the industry level of 35, 33 or whatever be the number. Perfect.

So two questions. One is what would be the outstanding priority sector book and RIDF investments or just specifically the RIDF investments? That specific will provide to you. Okay, just one question to you, sir. Some of the NBFC-led banks, companies like PFC, REC, have become a little bit more aggressive on the power sector. For some time, we have seen almost all public banks in general being slow on this sector. Is there any opportunity that is being missed here?

I don't see that we have missed out any opportunity. But yes, of course, as I mentioned, that we always evaluate the risk in terms of the return which we can get. And if at all it does not meet our risk appetite, we let it pass. So renewable energy is one of the areas where we are very clearly focusing and we have developed the expertise also. And we are seeing good traction coming for that.

We have one last question from one more person.

No, no. This gentleman is there.

Yeah, Bhavik from Morgan Stanley. Sir, two questions. First, sir, are other operating expenses growing at, say, 20% YY. Sir, how should one look at it? Like, will this be elevated or should it normalize?

Other operating expenses. Can you please pull out the slide?

Operating expenses, slide number 18.

Maybe if at all you can throw some light on this.

So, sir, majorly, sir, it comprises of the staff expense as you can see in that and also the pension.

No, so I mean other operating expense excluding the staff.

Just a minute. Other operating expense. Over there, sir. Overheads, I don't think there is a very significant number.

In terms of absolute number, they are not really very big number.

Not very relevant. But anyway, I can tell you some of the items where we have seen this growth. One is business acquisition and development expense, which is to the tune of 7 and 11 crores. Other tech expenses to the tune of 371 crores. DC, IDC insurance, 230 crores. GST expense, 128 crores. Donations, 81 crores. P&T expenses, 74 crores. I don't think there is such a big number.

We have a quarterly run rate of, say, 11,000 crores.

So actually, see, one aspect which is there when it comes to the insurance, particularly deposit insurance, as the deposit goes, this will continue to go.

And quarter on quarter, actually, it has gone down, sir. Hmm. From 11,948 it has gone down to 11,577.

Yeah, that is for the total overheads have gone down from 11,948 to 11,577. And I think there is the major items which are there is one among them is ATM, CDM, debit card and those expenses which I think is a cost of delivery which will continue to be there. And the other one is the business acquisition and development expenses. Again, It is corresponding to the business growth. It will continue to grow. So this is what is the behavior, what we will get to see.

So what will be the digital expenses as a part of this? Should we expect this to go to 13,000 crore run rate per quarter next year or more than that?

Much of it, when it comes to digital, part of it would get depreciated also. So we will have to see that composition, how much we can depreciate, how much we can book in the revenue book. that is something which we'll see.

And sir, second question, sir, recovery from return of accounts, the OCA accounts, they have been around, say, 4,300 crores so far in the nine months. Sir, as in, how should one look at it? Like, how do we expect?

The stock is actually, is now coming down. So, I think, and also, there are no lumpy recoveries which are expected to come in. These are all small value recoveries which will come in. But, Yes, our effort is to see that we should step it up as much as possible. But it has got its own limitation because OCA is generally those accounts where the security, if at all it is there, is much lower. And various such considerations are there when it comes to affecting recoveries in OCA accounts.

So in the next six months, do we expect anything significant from NCLT, like in the pipeline?

It is very difficult to predict what will come through NCLT. But nevertheless, our effort is to make – I mean, there is no – we don't let our effort go waste. We are pursuing quite actively, and wherever possible, we will certainly be looking at the outcome. But when it comes to NCLT, it is not merely what our efforts are. We have to depend upon the other members of the consortium, COC, et cetera. And there is a dependence on the decision taken by them also. So I think, and also the ecosystem, how the ecosystem works.

So lastly, sir, as in from this 4,000 crores, how much work is from NCLT, as in if you can shed some money?

I will not have that granularity.

No, we don't have anything from NCLT in this, at least as of the numbers. Basically, it is contributed by our retail branches to the tune of 1,537 crores. The specialized wing has contributed 2,758. I think the biggest recovery during this year is around 200 crores as far as lumpy recoveries are concerned. IBG has had a small recovery of 33 crores.

So generally these are all compromises, something which works much, or the surface reaction, which yields better results and faster results.

So, thank you, sir. And, sir, good luck for future books.

Thank you.

Thank you.

So, we have a few questions coming through. There was one question on RIDF outstanding.

Yeah.

The outstanding is 2,67,000 books.

So, we have a few questions coming through the online webcast. These will now be addressed by the chairman, sir.

Yeah. This question has come from Aditi Naval. With respect to business development expenses, there has been quite a significant jump since September quarter. wanted for you to throw some light on the same. Business acquisition and development expenses has increased by 194 crores sequentially. On quarter-on-quarter basis, increase is due to amortization of the PSLC issuance charges of by Rs. 65 crores. And business operation expenses have gone up by 81 crores. And auto loan sourcing fee by 54 crores. That is the explanation for the business increase in business development expenses. The other question has come from Isanil Charasia. What were the number of branches at the end of December 23? At the end of December 23, we had 22,494 branches. Next question comes from Ashish Agarwal. Percentage of book linked to MCLR, EBLR and fixed rate book? MCLR 37.6%, TBLR is 27.4% and fixed rate is 20.9%. Another question has come from C.G. Philip. Any guidance on loan growth and deposit growth for financial year 24? We expect Altidule Commercial Bank's deposit to grow by about 12 to 13 percent and ASCB advances to grow by 14, 15 percent. Accordingly, our growth in deposit and credit is also expected to be in the similar range. Next question comes from Mr. Abhishek Murarka. Will any part of 70 7,100 crore provision recur from the next quarter onwards. Also, what will be the approximate additional wage provision you will have to make in fourth quarter. There will be no recurrence of this one-time provision. This is something which I would like to mention. It is only one-time and for the uniform pension from 40 to 50 percent and DR neutralization also is only 1,700 which is one-time. There is no further repeat of such provisions. And provisions to be made in quarter 4 of the financial year 2024 is about Rs. 5,400 crores for the increase in wage to 17%. Mr. Param Subramanian, why did we see a drop in NIM? How much wage revision poisoning is still pending? NIM has come down mainly due to repricing of deposit at higher rates, mainly term deposits. And poison to be made in Q4 of financial year 24 is Rs. 5,400 crores. Shidhalir Ganesh, any special plans for agriculture business growth? Agri-Advances have registered a growth of 18.12% while we will continue to grow in our traditional book in KCC and Agri-Code Loans. Our key focus area will be to finance all the players involved in entire Agri-Value chain. Under investment credit, we are seeing a lot of opportunities under Atmanirbha Bharat scheme of the Government of India, that is AIF and the FME. We have launched two new products, namely Agri Enterprise Loan and Kisan Samridhirin, which will enable us to onboard high-value farmers. This question is from Ashish. Please tell us about exceptional item of 7,100 crore, one-time present for competition of pension from 40% to 50%. and dear neutralization for all pensioners, family pensioners who retired prior to 1st of November 2002. One-time provision for competition of pension is 5,400 crores. One-time provision for dear neutralization is 1,700 crores.

Thank you, sir. I trust all the questions have now been addressed, and we'll be happy to respond to other questions in offline mode. So let me end the evening with thanking the chairman and the top management team, the analysts, and ladies and gentlemen. We'll round off this evening, and we request you to join us for high tea, which is arranged just outside the hall. Thank you.

Thank you very much to all of you. Thank you.