Bank of Baroda Ltd

NSE:BANKBARODA

Earnings Call Transcript 2023-Q1

[Operator]

Good morning, everyone, and welcome to the analyst meet for Bank of Baroda's financial results for the quarter ended 30th June 2022. Thank you all for joining us. We have with us today Shri Sanjiv Chadha, Managing Director and CEO of Bank of Baroda, who will be leading the call, and he's also joined by the bank's Executive Directors. We will start with brief opening remarks on Mr. Chadha and a short presentation, followed by the Q&A session. Mr. Chadha, over to you, sir.

[Sanjiv Chadha, executive]

So thank you very much, Feroza, and a very good morning to everybody. Thank you very much for joining us.

Let me just begin by introducing my colleagues on the call. We have Mr. Ajay Khurana, our Executive Director; Mr. Debadatta Chand, Executive Director in charge of Corporate International and Treasury; Joydeep, our Executive Director, who looks after all our platform functions, including HR, Risk, Compliance and much more actually; and then, of course, our CFO, Ian de Souza, with whom many of you would be very familiar. So let me just begin with just maybe 5 or 7 minutes, going to 5 or 6 slides, which to my mind are the highlights for us and also might, in some ways, anticipate some of the discussion as we go forward. So from the perspective of the bank, the standout point for this particular quarter was the return of growth for the bank.

All of you have been tracking the bank for many quarters, and you would have observed that we actually had reasonable progress in terms of credit costs coming down, in terms of margins improving. But if there was one challenge, it was that our performance in growth was good, but not really an outlier by any standards. That was largely driven by the fact that we had chosen to protect our margins in corporate. Until last year, at least the choice was very stuck, either you grow your margins or you grow your business in corporate. And given the fact that corporate is the largest part of our balance sheet, debit growth in corporate had meant that the overall growth of the bank was moderate. At the beginning of this quarter, we had guided that in our view, the time had now come where it might be possible to grow corporate along with making sure that our margins remain intact.

And I think that's what we are now beginning to see. And largely, again, powered by that, we have seen global advances for the bank grow by 18%. In part, of course, this is due to the fact that the corresponding quarter of last year, the first quarter, was impacted very seriously by COVID. And we actually had had a significant degrowth in corporate loans. But even apart from that, I think in every subsequent quarter, we have had good quarter-on-quarter growth, and that momentum continues. You'd also see on your screen that international also has contributed very handsomely to the growth. We had been discussing that how last year, because of the fact that corporate margins were under pressure, it was profitable for the bank to also focus on the international book, which too is corporate, but which gave us better margins.

So international has grown by about 30% Y-o-Y. Within domestic growth, which was 15.7%, the -- again, the standout performance has been in retail, where organic retail has grown by 23.2%. Now even through most of the last few quarters, there were areas where -- in retail, where we had grown fairly quickly. I think car loans was a case in point where for many years, we have had more than 20% growth. But why maybe we're held back was the fact that, relatively speaking, our home loan growth was less fast.

And given that home loans are 70% of the book, if your home loans are not really growing very quickly, the overall growth does tend to get dampened. So the fact that home loans actually have moved up by more than 15% Y-o-Y for us has -- and then if you add to that, car loan growth, which is now 25%, education loans have been doing well. They are accelerate further to about 20% growth. And personal loans, which were powered again by the digitalization of the bank and by bob World, have grown by nearly 150%. So this, along with, again, reasonable growth in other segments, including agriculture, MSME, has meant that we have actually had a very good growth figure to report.

Again, if we were to just go back to the previous slide, one last point I want to add is that when it comes to agriculture, again, the quality of the growth is improving very significantly because whole loans are growing at 2x the rate of overall agriculture loan growth. And also, within retail, apart from home loans, mortgage loans and car loans, now gold loans, again, has started adding a significant bit to that. So again, I think that should speak well for the asset quality there also as we go forward. Now we're coming to deposit growth, I think it has been decent. We have had again consistent CASA growth of which has been double-digits, which we continue to see.

In terms of the international deposits, they have kept a pace with the loan growth, which, again, I think is significant. To the extent that the growth in international loans has been funded in large measure by deposits [ run ] and again, wholesale funding, which again has challenges in terms of the risks that might be there because of the volatility in interest rates and the upward trend that we have seen. So this is where, again, the summary in terms of where we stand, in terms of deposit growth. Our CASA continues to again improve. You might recall that we have begun with a CASA ratio of 37% about 3 years back. This has now moved up to 44%. And as interest rates harden, the fact that the bank now has a good CASA ratio, pretty much in line with the best in the business should mean that we should actually be seeing improvement in margins because at least a significant proportion of loan growth will be funded by low cost CASA deposits.

If we look at credit deposit ratio, we had, because of discipline in terms of matching deposit and credit growth, had a decent CD ratio right through the pandemic also, where it was mostly upwards of 75%. Now we see it has gone up to 80%. There, of course, would be the question in terms of what implications it has in terms of funding growth. So to my mind, there are 2 parts to it. One is that as we see deposit rates also start normalizing, not remaining negative in real terms, I think you should see some pickup in deposits. The second part is, even today as we speak, despite making sure that we are as optimally placed in terms of the mix in the balance sheet, there is still a substantial amount of loans which are sub-optimally priced given where the direction of interest rates are.

So I think there's scope to reshuffle the portfolio, also, to make sure that we optimize yields on the portfolio. So coming to profitability. The NII, again, has grown by about 12%. So if you were to, again, juxtapose this against the 18% growth in loans, the difference is largely because, as I mentioned earlier, the quarter 1 of last year was actually had negative growth in corporate loans in particular. And therefore, in terms of average growth, which is what is responsible for NII, that would be a little lower. Net interest margins are steady. The main reason why they are a bit lower as compared to the last quarter of the previous year, it is because there were again some items which were there with -- through recovery, which went to the interest line.

But we expect, again, and this is what our guidance has been, that there is scope for further improvement in margins even as we grow the loan book. And we have guided that we should expect about a 10 basis points improvement in margins over last year, and we stand by that guidance. The operating profit piece is something, of course, which all of you are well aware, and I don't believe it merits too much explanation. But just again, to emphasize that the degrowth in operating profit is largely on account of a fact that as per current RBI guidance now, the mark-to-market now comes above the operating profit line. And if you were to exclude treasury gains and also interest on IT refund, which is a one-off, actually, the growth in core operating profit corresponds pretty much to the growth in net interest income.

So in consequence, and we have seen the profit have again recorded good growth of about 80% Y-o-Y, and even if you were to compare it with the last quarter of last year, it's a reasonable growth. Coming to asset quality. I think we have seen this trend in terms of improving asset quality, sustained right through the pandemic. As we have discussed before, this has largely been driven by the improvement in the corporate credit cycle. That continues a base. As a consequence, there is continued reduction in gross NPAs and net NPAs. Net NPA is now actually down to about 1.5%, to my mind, is a good position in terms of indicating limited downside from the existing NPA book of the bank, as also indicated by the provision coverage ratio of nearly 90%. And equally, the slippage ratio, again, has been reducing as per guidance.

We had guided that slippage ratio would be between 1.5% and 2%. So it has come out at 1.71%. And I think there is, again, scope for that to improve further. Credit costs, of course, are at possibly record lows. That is partly because we had taken some accelerated provisioning last year. But equally, I think it is also because of what I mentioned earlier, that there is an improvement in the corporate credit cycle which is being sustained. And that improvement will outweigh any negatives which might be there, say, on account of any issues with the MSME book. So therefore, we expect we have guided that the credit cost this year should be between 1.25% and 1.5%.

For the moment, we stand by the guidance. possibly, there might be scope again for some improvement there. But we'd like to again see the improvement sustain over the next few quarters. Coming to, again, SMAs and collection efficiency. To my mind, this is the best indication in terms of, again, an advanced indicator of asset quality, as we have seen that the improvement in the CRILC SMA 1, 2s is stocked as compared to the previous year. And the fact that this is not something which is a one-off or not representative, as indicated by the fact that the collection efficiency also has improved in tandem and now stand at about 98%. In consequence of the improvement in profitability, the capital adequacy ratio of the bank continues to be in a very comfortable range of between 15.5% to 16%.

We believe that this year also, our internal accruals should be adequate to fund growth. And while we might be looking at accessing markets for replacing maturing AT-1 Bonds and maybe some Tier 2 issuance, but otherwise, we believe they may not be an occasion for us to access the markets for pure equity this year. Lastly, in terms of digital, which in so many ways underlines a lot of efficiency gains that we have seen, bob World now has 22 million users. And this is within one year. We had launched bob World in August of last year. And also, in terms of active users, now it is 38% of our non-FI customers. We believe there's scope to take it to nearly 50% by the end of this year, which would pretty much bring us in line with the best in the business in terms of using mobile interface as the primary interface with customers.

So that's all from me by a way of opening remarks. Very happy to receive any questions.

[Operator]

[Operator Instructions] The first question is from Mahrukh Adajania.

[Mahrukh Adajania, analyst]

Sir, my first question is on your personal loan. So what is the ticket size? Would it have increased Q-o-Q? And what will be the rate you would be lending your personal loans at because the growth has been very sharp for the last 3 to 4 quarters? So that's my first question.

[Sanjiv Chadha, executive]

Yes. So Mahrukh, I think the reason why we have seen the acceleration in the personal loans is that this was an underexploited franchise for us. Now with good data lake in place, and more importantly, with our efficient digital interface through bob World, we are able to access our customer base to offer them these opportunities. When we began about a year back, we had a ticket size which was restricted to INR 50,000. Now we are going, I think, up to INR 5 lakh in that. So it is an impact of both, again, the fact that the penetration has increased and also that the ticket size has increased. The sharp growth, of course, is because we had started off with a low base. But now the kind of growth that we see, even quarter-to-quarter and Y-o-Y, is significant enough to add to overall retail loan growth and also to the margins that we make on our retail business.

[Mahrukh Adajania, analyst]

Sir, what will be the salary to non-salary breakup? And any yield that you can give? Some color on that.

[Sanjiv Chadha, executive]

Yes. So I'll just request it, Joydeep, has any ready answer on that. Otherwise, we will supply that to you off-line.

[Mahrukh Adajania, analyst]

Okay, sir. Sir, my next question is on international. Again, that book has grown very well over the last 3 quarters. So in the last 1 to 2 quarters, would it largely be term loans or is it still trade finance only?

[Sanjiv Chadha, executive]

So we have been...

[Mahrukh Adajania, analyst]

And which sectors, Sir? Which sectors? Yes.

[Sanjiv Chadha, executive]

Yes. So I think we have been cognizant that the growth should again also be accretive in terms of margins. So a large percentage of the growth is coming from term loans. As I mentioned earlier, this is in the context of the fact that in India, corporate loan margins were very, very weak over the last year. And therefore, it made sense for us to access the possibilities in the international market. The second part, again, which is important to appreciate, is that since it's a wholesale business that we run internationally, the cost-to-income ratio there is actually well below 25%. Less than half of what it is in India. And therefore, while margins may not compare with India. But if you add along with the margins which are available, the lower operating costs and also what has been over very many years, on an average, lower credit cost also, these make a lot of sense, particularly at the present juncture.

But I would again like to emphasize that for us, the national book offers as an opportunity for risk diversification, for tapping opportunities given where we are in the interest rate cycle. But ultimately, the bottom line is that we would want to allocate capital where it's most efficiently used. There was an opportunity for us to do that in the international operations last year, which is why we have had said good growth. I believe there is still again an opportunity to grow the book further this year. It may not necessarily be by a similar percentage, but I believe there's still an opportunity to grow that book reasonably smartly. So that's how we would be looking at seeing things. Wherever we believe that we can get the best current capital, that's the area we'd like to focus.

[Mahrukh Adajania, analyst]

Sir, any sectors over the last 1 to 2 quarters?

[Sanjiv Chadha, executive]

Yes. So this is a very deep market, right? The international syndicated loan market. And therefore, again, you are largely guided by your risk appetite, making sure that particularly in a rising interest rate regime, the interest-rate coverage ratios are good. I think -- so those are the kind of things that you look at, but not any specific sector as such.

[Mahrukh Adajania, analyst]

Got it. And sir, my last question, sorry, what did you say the margin guidance was?

[Sanjiv Chadha, executive]

So the margin guidance, again, is that we expect that them should improve further this year. We have at the beginning of the year set by about 10 basis points in terms of where they stood at the end of last year.

[Joydeep Roy, executive]

And just to add, Mahrukh, on that personal loan question, the breakup of salary and non-salary that you had asked, I think largely, it's salaried for us. Around 70% to 75% is the salaried component versus Non-salaried. And the average ticket sales is currently around 2.5 lakhs on the first year.

[Operator]

The next question is from Jai Mundhra.

[Jai Mundhra, analyst]

Sir, if you -- on similar -- on overseas book, if you can provide a breakup of INR 1.44 trillion loan books into buyer's credit, ECB, India linked corporate, non-India-linked corporate and local credit.

[Sanjiv Chadha, executive]

So I don't know whether we have that detail. I'll just request Chand Sahab either if he can give some broad indications, or again, he might provide the figure to you offline. Chand Sahab?

[Debadatta Chand, executive]

Sir, we'll give you the data separately, but the attrition in terms of the incremental business by and large out of the term loan than the [ credit ] finance. And the assets typically we kicked up in countries where the rating has been contributing in effects.

[Jai Mundhra, analyst]

Sure. Second question, sir, is on your restructured book. So if you can provide how much is the outstanding restructured book, COVID, and including any legacy, 5/25, et cetera? How much has come out of moratorium? And what was the slippages from restructured book this quarter? And was there any normal repayment from that book?

[Sanjiv Chadha, executive]

So Khurana Sahab will again answer the question. Khurana Sahab?

[Ajay Khurana, executive]

The total restructured book are all inclusive is INR 19,666 crores. Slippage, there has been a slippage of around INR 1,000 crores this quarter. And largely, this is -- we are getting a good repayment. Only that some 15%, 16% there is stress. There is a SMA1 and 2, we can say, otherwise -- and we are hopeful that in these 3 quarters, around INR 3,000 crores to INR 4,000 crores, INR 3,000 crores approximately should come also.

[Jai Mundhra, analyst]

Okay. Sorry. So just to confirm, sir, INR 3,000 crores, INR 4,000 crores should come out of moratorium?

[Ajay Khurana, executive]

Yes, exactly, yes. And this -- you can say, in the 4 quarters, yes.

[Jai Mundhra, analyst]

Sorry. So barring INR 3,000 crores, everything should come out of moratorium in 2, 3 quarters.

[Ajay Khurana, executive]

No. See moratorium has been even given up to now also. So improvement is getting started. So it -- what I'm telling you, stress is only in 15%, 16%. The rest will come slowly, but we are hopeful that rest will come slowly out of stress.

[Sanjiv Chadha, executive]

Yes. So Jay, I think what Mr. Khurana's point is that there may be about INR 3,000 crores, INR 4,000 crores where there is some stress. The other is likely to come out intact at the end of this year.

[Ajay Khurana, executive]

Yes.

[Jai Mundhra, analyst]

Sure. No. Understood, sir. And what -- out of this INR 19,600 crore, how much has restarted the billing and how much could be under moratorium broadly?

[Ajay Khurana, executive]

By this June, and almost all have started payment now.

[Jai Mundhra, analyst]

Right. So in a -- so okay, understood. And 15%, 16% is in the SME category, right? You have not included NPA here?

[Ajay Khurana, executive]

Yes. NPA has already been excluded.

[Jai Mundhra, analyst]

Correct. Okay. And the last question is, sir, on your salary cost this quarter, there is no additional family pension that we have done. Instead, the provisions for salary has increased by a few hundred crores. I was under the impression that if yields were to go up, then the bank should have some benefit in terms of staff retiral provisions. So if you can elaborate, sir, why is the staff provisions for salary has gone up.

[Sanjiv Chadha, executive]

So I request Ian to take the question.

[Ian De Souza, executive]

Yes. So Jai, you will see actually last quarter, that is the final quarter of financial year FY '22, we had us a good favorable tailwind in terms of these provisions, which are largely for retirers. And we were able to show a much lower provision. But essentially, there is a countervailing factor in terms of the inflation. So -- the Dearness Allowance also has a role to play because that gets projected into assumptions. So as a result, you will see a provision. That is in line with the same quarter last year but on account of a different factor. So if we have -- you are quite right. So if we have further [ repo ] rate hikes, the discount factor that we use for these calculations is likely to go up. But at this point, we are not sure how much of it will go up. So you will see a positive movement perhaps to the -- towards the end of the financial year as we get further clarity on the discount rate moving up, and hence, giving us a benefit here.

[Debadatta Chand, executive]

Jai, just to update you on the trade finance on the investment book, the book is around 20%, [indiscernible] 40%.

[Operator]

The next question is from Ashok Ajmera.

[Ashok Ajmera, analyst]

Compliment, sir, for another yet quarter of the good set of numbers, especially increase of net profit. At least on the books, it has gone up as compared to the last quarter to INR 2,168 crores. Having said that, sir, I have got a couple of observations and some questions. Sir, on the treasury front, so like the revaluation of investment continuously in the last quarter also of INR 819 crore, and this quarter, INR 1,168 crores. So going forward -- because overall treasury entire operations, except the trading profit is there, is overall negative, which, of course, is basically understood because of the hardening interest rate. But going forward, where do we stand on account? How much are we cushioned even if it goes by 20 basis point or 50 basis point by RBI as compared to the Fed there? So can I get a view on the Treasury operation going forward in the next 3 quarters in my first question, please?

[Sanjiv Chadha, executive]

So Ajmeraji, I'll just give you a broad sense and then I'll hand it over to Mr. Chand to again give you a more detailed answer. The fact that this particular M2M loss that we have incurred, right? This represents about, again, I think a 60 to 70 basis point increase that happened in long-term treasury rates. Now it seems to be the market prognosis that while [ reported ] hikes would happen, but most of the increase has been factored in already, in terms of long-term rates. And therefore, the increase in long-term rates over the rest of the year is likely to be less as compared to what we saw in a single quarter, in this current quarter. So I think that's what we need to bear in mind.

The other part, of course, is that you might argue that this is always part of normal interest rate cycles, that when interest rates increase, the economy improves, you will see better loan growth, you will see better net interest income. And you will see some correction as far as the treasury valuations are concerned.

Now the improvement in NII and the benefit of the improvement in terms of credit cost is likely to sustain for a fairly long period of time. But the impact that we had to see in terms of M2M normally is compressed. And this particular instance has got compressed over a very short period of time. So overall, I think as we go ahead, the balance should work positively for the bank.

The second part, of course, is that how does it even work in the short term. So even when we had, again, a sharp market correction, the fact that we have seen a significant improvement in the profitability, I think, should possibly indicate that on balance, it should work out well for the bank going ahead also.

But let me hand it over to Chand Sahab in terms of an informed analysis of what are we likely to see as we go ahead.

[Debadatta Chand, executive]

Yes. The fact that last quarter had a significant [indiscernible] in place, but in a [indiscernible] scenario, 2 things happened. One is a negative impact on the depreciation side. At the same time, there is a positive income also. If you look at the interest income and investment has gone up significantly high in this quarter. And a bank having a larger FRB component, that positive upside is still there for subsequent quarters.

Coming to on the valuation side going forward, if you look at the levels at current -- at this point of time, both on the [indiscernible], even if there is likelihood of some realignment on the short-term rates in terms of repo and all, but then, the long term, doesn't seem to be very -- can go up significantly high, but on the outlook, most of the market participants do have at this point of time.

So taking all this thing, as sir has rightly said, the incremental impact of the [indiscernible] the subsequent quarter, we see very less as compared to the kind of [ piston ] we have provided in the June quarter. And if the outlook comes through, possibly there would be a -- right way also quite possible maybe in Q3 and Q4. That's a view, but market can go anywhere. So some of that part of a negative impact of the [indiscernible] scenario has been the book has taken that impact and subsequent quarters would be -- we are quite positive.

[Ashok Ajmera, analyst]

Point well taken. My second point is on the profitability. Again, on the employee cost, which has gone up in this quarter by almost about INR 300 crore, INR 270 crore. Sir, out of that, if you see Note #10, I mean, a provision of INR 73 crore on the revision in the family pension has been done only in this quarter. Rest, INR 1,091 crore, has been carried forward as per the RBI dispensation over the next 4 years or so. So still -- I mean, this INR 1,091 crore, some banks are prudent and providing a little more on this. What is our view on that?

And secondly, coupled with that, the provision is lower this time overall, and that is adding to our profitability. That may be because of the -- your transport of NPA accounts, and there, there is a provision reversal of INR 2,355 crores. So going forward, whether this trend of NPA selling is going to continue or do we see the similar kind of provision and reversing in the next coming quarters so as to have a clear idea of the profitability of the bank at the bottom line.

[Sanjiv Chadha, executive]

So again, give you a broad, again, sense in terms of how I look at it. And then again, Khuranaji will give you a more detailed response. So what -- you're right, that we actually have a low provision this quarter, but that largely is because we had taken accelerated provisions in the previous quarter, right? So whenever you have got good profit, the bank had a choice of doing some advanced provisioning, building some cushions. So what we have done is we have chosen to do it in terms of creating credit provisions. And that's why, again, we see that whenever -- when the bank actually had a bit of a challenge in terms of mark-to-market, the fact that there was some advanced provisioning has helped, again, in terms of making sure that the credit provision is correspondingly lower. But more importantly, I think there are broad trends which are there to see.

For instance, if you look at the slippage ratio, right, it has been coming down. If you look at the gross net NPAs, they have been coming down. If you look at the guidance for credit cost, we have indicated this year that the credit cost is going to be between 1.25% to 1.5%, which is significantly lower as compared to previous years.

So I think there are some broad trends which are there. And we have had occasion to discuss earlier that this is largely to do with the fact that the corporate credit cycle is now working very well, which is why we saw this improvement even through COVID. So therefore, to my mind, even as we go ahead, the trend of lowering of credit costs is likely to continue and is likely to add to the bottom line. But it is not because we are stinging in any way on provisioning. If you see the PCR for the bank, right, it is up 90%. Even if you take technical written off accounts out, it is still more than 75%. And this is among the highest in the industry. So I think the point is that the bank is very well provided as far as the NPA book is concerned. And therefore, as we see the growth, the benefit of the growth will accrue more and more to the bottom line. But in terms of your question, I'll just request Khuranaji if he has anything more to add in terms of specific figures.

[Ajay Khurana, executive]

Yes, sir. Generally, as far as any selling is concerned, we have not sold anything or transferred any NPAs. This is a credit cost is reduced as -- informed that because we have gone for escalated provisioning earlier, one. Second is, if you look at our slippage and our recovery, they are almost equivalent. So in the -- because recovery is also good, so that is why we are -- our credit cost is getting reduced. So these are the main reasons. Not anything else is not there.

[Operator]

The next question is from Mahesh M.B.

[M. B. Mahesh, analyst]

First question is on the...

[Operator]

Mahesh, I'm sorry, you're inaudible. Can you please be loud? .

[M. B. Mahesh, analyst]

Is it better?

[Sanjiv Chadha, executive]

I think a bit closer to the mic, Mahesh, you are very faint. Your voice is very faint actually.

[M. B. Mahesh, analyst]

Yes. Is it better now?

[Sanjiv Chadha, executive]

Yes, much better.

[M. B. Mahesh, analyst]

Sir, I just wanted to understand this power sector demand revival that you've seen for the last couple of quarters. Where is it coming from?

[Sanjiv Chadha, executive]

Sorry. Could you repeat that? I think we lost you at the end.

[M. B. Mahesh, analyst]

The growth that you're seeing on the power sector side, if you could explain where is it coming from.

[Operator]

The growth in demand in power sector, where it is coming from?

[Sanjiv Chadha, executive]

Yes. So I think there are 2 parts to, again, the growth in terms of power assets. One, of course, is that there is a lot of greenfield activity which is there in the renewable sector. So that's what has been actually been responsible for a fair bit of increase as -- over the last few quarters. But then, again, there are some good quality assets which are there even in terms of thermal power, which are mature, well performing, with modest levels of leverage. That is also something that we have been looking at. But let me again hand it to Mr. Debadatta Chand to amplify that.

[Debadatta Chand, executive]

Yes. Our sector, typically, the book increases out of the demand we had in a couple of months from now in the entire economy. And that can typically be the higher input cost, new energy efficiency measures, lot of renewable energy, new projects coming in. So broadly, we're riding on those demands. And the forward book also significantly seen in that way a good movement therein.

[M. B. Mahesh, analyst]

Okay. The second question, what is the visibility now on the corporate NPL book that you have, about INR 13,000 crores, in terms of recovery?

[Sanjiv Chadha, executive]

So I think in terms of the corporate book, the large recoveries have largely happened. The book is also almost completely provided. So to that extent, I think there is an upside which still remains. But I think now onwards, the large ticket resolution which had to happen have happened. So therefore, the kind of spikes that you used to see at times in one quarter, they are unlikely. And we should be seeing steady recovery, still substantial recoveries but steady recoveries as we go ahead.

[M. B. Mahesh, analyst]

Okay. And last question, what is the total number of customers that you have? In -- If I were to just look at Slide 27, which says 21 -- 22 million activated users and 40 million downloads. What is the opportunity which is still pending?

[Sanjiv Chadha, executive]

So I think we have -- we can divide the customer base into 2 parts. We have a total about I think 130-odd million customers as far as I recall. Out of that, about 50%, 55% are FI customers. We have about 60 million customers who are non-FI customers, non-Financial Inclusion customers. So you can argue that the bob World is again an application which is largely targeted at this segment. Now if you look at private sector banks, which do not have as many FI customers, then the kind of penetration rate that they have achieved with mobile banking at time moves up about 50%, 55%. So I think that is, I think, the kind of upside which is still there. So we are currently at 38%. I believe it should be possible for us to take this penetration to about 50% of the non-FI customer base by the end of the year.

[Operator]

The next question is from Ritesh [ Bam ]. Overall deposit growth was lower Q-o-Q despite the same interest expenses are up 5% Q-o-Q and domestic cost of deposits is down by 4 bps. Can you comment on that, sir?

[Sanjiv Chadha, executive]

So can you just repeat that once more?

[Operator]

Overall deposit growth was lower Q-o-Q, despite the same interest expenses are up 5% Q-o-Q and deposit costs of -- and domestic cost of deposit is down 4 bps. Any comment?

[Sanjiv Chadha, executive]

So I think 2 factors are at play. It is, I think, really normal seasonality that you see higher growth of deposits at the end of the financial year, right, as compared to the first quarter. So that's #1. #2, again, in terms of actually deposit costs being lower, so if we were to look at Y-o-Y, that is because for most of the last year, we actually had a lowering of deposit costs. Now what we are seeing is we are seeing some kind of stabilization. So I think that's what is likely to be the position. We should see now deposit costs pretty much leveling off and possibly start increasing modestly as we go ahead. So therefore, what we have seen is entirely consistent with what you would expect that, A, that deposit growth in the first quarter of the year is lower as compared to last quarter of last year. #2, overall, since out of the 4 quarters, we are now measuring, at least there were 2, 3 quarters where deposit costs were coming down significantly, you still have a little bit of benefit from that even as we speak today.

[Operator]

The next question is from Anand Dama.

[Anand Dama, analyst]

Sir, what is the overall growth run rate that you would look at by the year-end? So should we have about 12%, 13%, 14%, whatever?

[Sanjiv Chadha, executive]

So I think we are at the beginning of the year. And we had guided at the beginning of the year that we are -- we believe that the industry might grow about 10% to 12%. And we would expect to grow faster than industry or [indiscernible] industry or maybe faster we can help it. I think we stand by that guidance. Very obviously, the growth momentum of this quarter is significantly quick -- quicker. But then I think for the moment, since it's just one quarter, we'd like to see how it goes. So we retain that guidance. Industrial grade growth rate probably up about 12% and are targeting a slightly faster rate while keeping our margin intact or improving them as we go ahead.

[Anand Dama, analyst]

Any -- in the overseas book, is there any short-term loans that you would have given basically which would run off as being more?

[Sanjiv Chadha, executive]

So I think Chand Sahab had clarified that, that the proportion of short trade finance is relatively low. It's relatively low. It's about 20% book, I think he has clarified. So therefore, we have a fairly stable book. And therefore, again, we believe that we don't expect any contraction of the book in the near future.

[Anand Dama, analyst]

Sir, any NARCL transfers? So when do you expect that to happen? And what is the quantum of plans for that?

[Sanjiv Chadha, executive]

So I think there are some formalities that need to be completed, which again are not entirely in our hands. But we have guided earlier also that because of the nature of our book and the resolution that have happened over the past period, the figure for us is not going to be very substantial.

[Anand Dama, analyst]

Okay. Okay. And sir, lastly, you have a significant stake in the insurance company, which is India Life. Any plans to sell stake in that insurance company? Anything which has come from [ Abia ] or from government basically to cut down their stake into the nonbank holding specifically?

[Sanjiv Chadha, executive]

So I think we have put in the public domain the current position. I think now going forward, in terms of what might be plans, that would be really for the company to answer.

[Operator]

The next question is from Rakesh Kumar question.

[Unknown Analyst]

Sir, as you mentioned, sir, the credit growth guidance that we have is slightly higher than the industry growth for this year, correct?

[Sanjiv Chadha, executive]

Yes. So we have guided that we would want to grow at industry or higher.

[Unknown Analyst]

Sir, our retail term deposit growth is around [ 3.5% ] for this quarter on a year-on-year basis. So with this kind of retail term deposit growth, would it be easy for us in a rising interest of scenario to reach that kind of a credit growth number?

[Sanjiv Chadha, executive]

So I think even what you have indicated along with our record in terms of CASA growth, we're pretty much, again, match up with what is the current estimate. But again, as I mentioned in my opening remarks, the fact also is that as interest rates -- real interest rates become positive, that should positively impact deposit growth for all players. #2, even today as we speak, because of the overhang of liquidity, which was there for most of last year, in terms of composition of book, there is scope to reshuffle that to optimize yields. So I think that's also some of the things that we're likely to see.

[Unknown Analyst]

Okay. And sir, just last question pertaining to lots of accounts #12. If I see the similar number in the Q4, there is a bit of a reduction in the additional provision that we are holding on the stress to standard asset. So is it that because of some delinquency in the restructured book, we have reduced that provision, we have reversed that provision? Or there is some other reason for this provision number having come down from INR 598 crore to INR 465 crore?

[Sanjiv Chadha, executive]

So I just request Khurana Sahab to take the question.

[Ajay Khurana, executive]

No. That is correct. Because of delinquency, the standard, those have been restructured, have been -- become NPA. So that provision has been shifted.

[Operator]

Our last question comes from Abhishek [ Tandon ]. [Operator Instructions] We will move to Mona Khetan to ask the question.

[Mona Khetan, analyst]

So on the gold book, what would be your yield, both on the agri and the non-agri side?

[Sanjiv Chadha, executive]

So I think is that something that, Joydeep, you might want to take, that question?

[Joydeep Roy, executive]

So we don't have the ready figures right now, but we can supply it off-line or sed that for the [indiscernible].

[Mona Khetan, analyst]

Sure, sir. Secondly, what would be the outstanding disbursements on the ECLGS portfolio? And what sort of slippages we have seen from the same?

[Sanjiv Chadha, executive]

So I think as far as the ECLGS portfolio is concerned, I think the sanctioned about INR 10,500 crores, [ INR 9,500 crores ] is outstanding. Some repayments are there. My own sense is that now disbursement should be more exceptional rather than the rule. In terms of the quality of the portfolio, it seems to be holding up fairly well. As of now, the NPAs probably are less than 10%. So on current evidence, I think the ECLGS portfolio is performing reasonably well. Also, we had occasion to discuss in the past that since the ECLGS loans were priced actually very often at rates lower than the main book, right, for a lot of our borrowers. So it was not necessarily -- again, there was no necessary correlation between stress and the ECLGS book. So therefore, we expect this portfolio to continue to be reasonably strong.

[Mona Khetan, analyst]

Sure. And lastly, on the restructured portfolio, you mentioned INR 19,600 crores. So this is standard book, right?

[Sanjiv Chadha, executive]

This is the standard restructured book, indeed.

[Mona Khetan, analyst]

Okay. And so far, if I have to look at the cumulative slippages from the same, it's been around INR 40 billion or so, INR 4,000 crore?

[Sanjiv Chadha, executive]

So I think it depends on what time line are you really looking at when you say what is the cumulative slippage from that. But again, maybe khurana Sahab might have some indication on that.

[Ajay Khurana, executive]

No. Around the INR 4,000 crore in the last 1, 1.5 years.

[Mona Khetan, analyst]

Yes. So that would be the case for this COVID restructured book, right? The total slippages so far?

[Ajay Khurana, executive]

Yes. In fact, this entire INR 4,000 crore is not go -- given the COVID. The earlier restructure also, it is...

[Mona Khetan, analyst]

Yes, right. The COVID and the MSME restructuring?

[Ajay Khurana, executive]

Not MSME. Even the corporate big accounts are also there.

[Mona Khetan, analyst]

Okay. The SDRs and so on?

[Ajay Khurana, executive]

I'll not name. But yes, there are a few.

[Operator]

Thank you, everybody, for participating. I now request Mr. Ian de Souza to give word of thanks.

[Ian De Souza, executive]

I'd like to thank all the analysts on the call. As usual, it has been a very engaging set of questions, and look forward to seeing you in our next quarter call. Thank you very much.

[Operator]

We are now concluding today's call. Thank you.