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Bank of India Ltd
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Ladies and gentlemen, good day, and welcome to Bank of India Conference Call. [Operator Instructions] Please note that this conference is being recorded. We have with us Shri A.K. Das, MD and CEO; Shri B.R. Rajgopal, Executive Director; Shri Swarup Dasgupta, Executive Director; Shri M. M. Karthikeyan, Executive Director; Shrimati Monika Kalia, Executive Director; and other top management team from Bank of India.
I now hand over the conference to Shri A.K. Das, MD and CEO. Thank you, and over to you, sir.
Thank you very much. Good afternoon, ladies and gentlemen. Thanks for joining this conference. I, on my personal behalf, also on behalf of the Bank of India, extend a warm welcome to you for today's interactive session and share with you the financial results of the bank for the Q1 of FY '22-'23.
Before the global economy could recover from the pandemic fully, the higher-than-expected inflation, especially in the U.S. and major European economies is triggering a tightening of global financial conditions. Inflation at current levels represents risks for current and future macroeconomic stability and to bring it back to targeted levels, central banks of major advanced economies are withdrawing monetary support and raising policy rates.
Indian economy has shown resilience drawing strength from its macroeconomic fundamentals. The Reserve Bank of India has projected that the economy will grow at 7.2% in the financial year '22-'23. The Central Bank has increased its inflation forecast to 6.7% for the current fiscal year. And to contain it, it has been taking a host of initiatives. As the Central Bank gradually withdrawing its accommodative stance, the surplus liquidity in the system has come down in the banking system. The banking system registered credit growth of 3.28% YTD, and credit growth is likely to continue as the year progresses.
Resource mobilization drive could just come to the fore. Against this backdrop, bank's performance has been reflective of the strategy adopted in quality asset creation and effective liability management. The Y-o-Y credit growth of the bank in June 2022 has been 15.2% as against Y-o-Y deposit growth of 2.78%, conforming to our continued reorientation of the balance sheet. RAM advances increased by 15.72% year-on-year, and CASA ratio was at 44.7% of total deposits as against 43.22% in June 2021.
Increased focus on managing asset quality brought down the GNPA ratio from 9.98% in March 2022 to 9.3% in June 2022. Net NPA ratio also improved to 2.21% from 2.34% in March 2022. As regards operating efficiency and profit numbers, I wish to share that the bank's net interest income has improved by 29.51% over corresponding quarter of previous year. NIM Global improved from 2.16% in June '21 to 2.55% in June '22. There has been a decline in operating profit on a Y-o-Y basis due to predominantly decrease in noninterest income, mainly on account of lower income from treasury operations.
Net profit stood at INR 561 crores for the quarter under the year. With a view to improve customer experience and enhance ease of banking, several new tech initiatives are being taken. Next month, digital savings bank account and online loan products are scheduled to be launched. Bank is also launching 2 digital banking units in 2 major cities of the country.
We will continue to focus on credit growth with greater emphasis on RAM. In the current year, advances is projected to grow by 10% to 12% with RAM growth expected to be higher, supported by tech enablers, corporate book will also continue to be in focus for converting the new corporate clients.
I once again thank you for your value presence and for your continued support. I believe the presentation has been shared with all concerned. With that, the floor is now open for discussion and question and answers. Thank you very much.
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Suraj Das from B&K Securities.
So I have a couple of questions. First question is on the yield side. So if I see your yield on advances, that has decreased Q-o-Q by around 20 basis points whereas your yield on fund has increased on a Q-o-Q basis. So I just wanted to know if you could give, I mean what is the outlook on your fund. And also, I mean, since yield on fund has increased vis-a-vis declining yield on advances. So what about the yield on investment? Yes, that is the question.
Can you please repeat your question? There are 2, 3 questions clubbed together. Can you please repeat them again, Suraj?
Yes, sir. Sir, if I see your yield on advances, that has decreased around 20 points Q-o-Q, whereas your yield on fund has increased. So just wanted to know your view here.
Yield on advances has come down by 20%, whereas yield on funds have gone up. It has only marginally gone up, Suraj. It has not gone up, on a sequential basis, if you see, you have this slide with you, Slide 21. On a sequential basis, the growth is marginal. It is not very, very significant growth in yield on funds and actually is reflected by the rate structure in the markets naturally. So you look at the sequential growth on a year-on basis, you will certainly find a very drastic growth over there, but it is not so on a sequential basis.
6 basis points.
Okay. Okay. And sir, I mean, what would be your EBLR, MCLR, I mean, loan mix? I mean what would be how much percent of our loan book would be...
As of date around 53% is in my MCLR and remaining 47% is around in EBLR, okay? And that continues to be so since we are actually having a lot of emphasis on RAM growth as such. So naturally, this proportion may grow, though not substantially, it's a proportionate change in proportion will happen, but necessarily, there will be more proportion of EBLR coming. And we also see increase in the rate size, and it will be profitable for the bank to have more EBLR in the portfolio than MCLR.
Right, right. And sir, entire rate hike has been passed to the EBLR customers? Or I mean, how do you think...
Yes, yes. except in some of the sub portfolio. For example, in retail, you have a portfolio of home loans, which is a very sticky portfolio across the industry. So there some concession has to be necessarily given to keep pace with the market competition. There are cases where we have given concession to, even though we did not really pass on the increase in EBLR...
Okay. Understood. Understood. Just a question on the treasury side, you have given a total number of treasury...
Mr. Das, sorry to interrupt you sir, the audio is breaking from your line. Please check.
Okay. So sir, the second question is on treasury side. So you have given a total number of treasury gains plus MTM loss. So if you can just bifurcate how much would be the MTM loss in that INR 148 crores?
Yes, Sashi.
Sir, the total loss on account of MTM is INR 248 crores, and we have made some INR 100 crores by way of sale of securities. So the net amount is reflected in that Slide 19 as INR 148 cores.
Okay. Okay. Understood. And sir, you have given the total restructured book breakup and all that thing. So I just wanted to know how much of the total restructured book would be out of moratorium on the COVID restructuring part, how much slippages has been there first booked this quarter?
I understood, but your question is not very clear. Audio was not clear, Suraj. If you can repeat that question again, it will be great.
I was asking about restructured book. So you have given COVID 1.0 and 2.0 restructured book of INR 2,400 crores and around INR 8,000 crores. I wanted to know, sir, how much of the book has been out of moratorium so far and resumed dealing. And what is the slippages that you have witnessed on this book in this quarter?
Yes. The total, as you said rightly, INR 10,407 crores is the total exposure in RFCRS1. Initially, the retail segment slippages were at the order of 34% during December 21, has now come down to 13% during this quarter. There is a good improvement in the operational collection efficiency. The pain or the slight cause of worry is in the MSME segment where you can see nearly INR 2,941 crores, INR 1,159 crores in RFCRS1 and INR 2,941 crores in RFCRS2 is causing where the slippages are in the order of about 22%. For that purpose, we have constituted teams in various zonal offices to ensure that the RFCRS2 and 1 collection efficiency in MSME picks up. Retail, of course, we do not have any issues. And then corporate and normal restructuring also, the recoveries have been good.
Okay. Okay. Understood sir. And just if you recount the 72% in the MSME book slippages, so that is on the total MSME restructured book, that is INR 1,159 crores plus INR 2,941 crores. So on these, 22% slippages was there, right?
Yes. Yes. There also, if you see, agriculture, retail, there isn't much pain. There also, it is on account of corporate which is in SMA-2, which was 233 in March '22 has gone up to 790, an increase of INR 557 crores is on account of again road assets and as well as manufacturing. It's contributing, I mean, in total of about 8 to 10 accounts only, corporate book, that's how it has increased, but we are hopeful that in the due course of the market picks up, the recoveries in those accounts also will come.
Okay. Okay. Understood, sir. And last question from my side, you have given sir, SMA 1 and 2 on the INR 5 crores. However, you used to give also all-inclusive SMA 1 and 2 number as well. So if you can disclose that number or, I mean, what would be the ballpark number for the all-inclusive SMA 1 and 2?
15,000 was last March '22 position of 1 and 2 in all SMA 1 and 2 combined, which has now gone down to 12,763. I'll give you the numbers.
[Operator Instructions] The next question is from the line of Bhavik Shah from Morgan Stanley.
Sir, we have seen quite healthy growth this quarter. Most of it was from international book. Can you elaborate which segments, what is the nature of loan that we have grown in international segment?
Yes. The total growth during this quarter is INR 13,500 crores and in terms of percentage of that, we did credit financing INR 8,157 crores and oil companies, that it better we consult to the RBI, but it is INR 1,400 crores [indiscernible] INR 800 crores and there is increasing extension of fluctuation which is roughly about INR 3,000 crores.
Okay. Understood, sir. And sir, what would be your outlook on growth margins and asset quality?
In terms of asset quality, we have set a target of INR 2,500 crores reduction every quarter, of which INR 1,700 crores will come from upgradation and cash recoveries and the rest will be through the various OTS programs, which is lined up. And we are sure and this year, we think about INR 3,000 crores will come through resolution of NCLT as far as our guidance...
Growth and margins?
Our growth guidance, advances growth guidance will be in the range of 10% to 12% for the full year. So far up to June, we had YTD growth of about 5%. So that is only or mostly on the back of good RAM growth. Corporate is yet to pick up. We believe that from this quarter onwards, there could be some movement in the corporate book. So keeping that in mind, we believe we could end up with 10% to 12% growth for the entire year. And regarding margin, our global NIM has been 2.55%, while domestic NIM has been 2.88%. So we have a guidance there because of a lot of repricing happening in both sides, it'll be good if we can maintain that 2.90% domestically. And we expect our global NIM to improve from 2.55% to 2.75%. That's the guidance.
Okay. Understood, sir. Sir, a couple of my questions, sir. One sir, what would be your LCR ratio as on quarter end? And certain sir, if you could give the breakup of the slippages would be great. And sir, what is your corporate domestic yield going in the market, like I just wanted to understand the pricing competition.
One first question was regarding LCR, right?
Yes, sir.
180 continues to be...it hovers at around 180. What was the second question?
Sir, breakup of fresh slippages.
Fresh slippages totally is INR 2,833 crores for this quarter. Major comes from a very high-value retail asset, that is one major component there. And other things is the road assets and manufacturing assets totaling to about INR 850 crores. The rest of the assets are falling in agri, MSME and retail. We will get you the percentages.
I will get you the percentage now only. Out of 2,833, corporate is about 17%. retail is 13%, agri 26%, MSME, 32%. Plus overseas, it's about 12%, including valuation and other things, exchange and other fluctuations. So that is the broad breakup.
Understood. And sir, amongst the retail agri MSME, what will be from the restructured book?
About 14% in retail, the retail is 361, agriculture is 734, MSME is 908, corporate others is 492.
So in the restructured... within restructured, he's asking.
Within the restructured, one second, INR 5 crores and above, I have agri at 147, retail INR 20 crores, MSME INR 511 crores, corporate INR 790 crores, total 1,468 above INR 5 crores, SMA 1 and 2 put together.
Sir, any lumpy corporate accounts slip from restructured book?
Yes, I told you that some road sector advances are there, which is there, which is about INR 359 crores.
Okay. And sir, last question, sir. How is the pricing competition in the domestic corporate market on yields? And what would be the yields currently?
6.7%. That's what my general manager of large corporate says. 6.7%.
The next question is from the line of Ashok Ajmera from Ajcon Global.
Sir, there is of course a pressure on the operating profit, which has come down by almost INR 280 crores. So I can understand it that because of the treasury pressure on the treasury, I will come back on this specific question. But my first is I just want to know that we have been discussing for last 2, 3 quarters, last quarter also we discussed about strengthening the digital footprint and digital space. So where have we reached on the digital platform end-to-end and how much work is left? And what kind of budgeting we have for the digitalization in the bank sir?
Yes. If you see, I have defined in this slide, Page 35, the Slide 35, I am not going all these, the initiatives are there. In that, what has happened is when we discussed the last time, it was still in the RFP stage, design stage. Now all design stage is over and the rollout has started happening. We have already rolled out on 3 products, which is in MSME, which will go live in a matter of days, savings product, one MSMEs issue product and then agri gold loan product. So this will go live. And then once that goes live, in another month down the line, we are planning around 60, 70 products in digital that will go live. We are actually putting in our policies in place by this time, and then we'll roll out everything. That's what the plan is.
And as far as the budget that we are talking about, I have last time I shared with you, Ajmera Saab, that in our utility platform, what we call the E platform, the budget is around INR 360 crores plus. And we have our own data lake and then super app that we are coming out that together cost us around INR 600 crores. So total budget is around INR 1,000 crores to put it precisely, the entire digital initiatives. The timeline that we are talking about is 23 September max.
Point well taken sir. Yes, of course, you have given elaborate information, but I just wanted that what actually has already been implemented. So yes, point well taken.
Three products and another 40 products will get implemented in a month.
Sure, sir. Because we want to see Bank of India to be fully on the digital map as other banks are also running very fast on that trend. Sir, coming on the credit growth, I mean, if you see the domestic growth is very sluggish, I mean it is around 1.83% in this quarter, April, June. And when we are talking about 10% to 10% growth, do you mean to say that in the remaining 3 quarters, we will have about 10% of the domestic credit growth or it includes even the global credit growth where you are increasing your footprint it seems for global market. I don't know, I mean, how much margin or NIMs we are having on that. But on the domestic front, can we say that in the remaining 3 quarters, the domestic credit growth can be around 10% or so?
Yes, I will answer your question. First, on the overseas books, I think the NIM is about 0.98% the that is as against domestic NIM of about 2.88%.
And about the domestic credit growth sir?
This is the operator. Mr. Ajmera, please stay on the line. Ladies and gentlemen, the line for the management has got disconnected. We request you all to please stay on line, while we reconnect them. Thank you. Ladies and gentlemen, thank you for patiently waiting. The line for the management is reconnected. Over to you, sir.
Yes, Ashokji.
Yes sir, yes sir, I'm here.
Can I start?
Yes sir, yes sir.
We have seen this industry for ages, and we all are aware of the pains and fangs in the first quarter. Q1 is supposed to be a very lean quarter and all. So that way, Q1 probably will not be a barometer of the entire financial year. But still then, in the domestic arena, we have done a growth of about 9% year-on-year and a 5% growth vis-a-vis industry banking systems, 3.28% growth.
And it has been predominantly in the domestic part, predominantly, that has been triggered by a good growth in retail, 22% including 15% growth in home loans. agri 16% and the MSME at about 8%. Now there is every reason to believe that at some point of time, going by the indications as of now, corporate loan book will start picking up. We did see a very modest level of sanctions predominantly on the demand front only, the lack of demand.
We did about INR 7,000 crore to INR 8,000 crore of sanction in the first quarter. But as I speak, we got about another INR 12,000 crores of loan proposals in process now. So these are mainly for metals, chemicals, bit of pharma also is there and some amount of infra loans. So based on our experience so far, 9% Y-o-Y and 5% YTD growth is not all that bad. I think it should give us a reason to believe that minimum 10% to 12% growth should be possible one.
Absolutely. Appreciate on that. I'm not putting any comment on that, I just wanted to understand management views for going forward. Sir, when we talk about this credit growth, we have the NBFC exposure of about 8.93%, INR 35,825 crores other than HFCs. Going forward, what is your plan to increase our credit numbers through the NBFC for onward lending and also for co-lending so that we reach to the last mile?
Co-lending, we have got already 2 to 3 partnerships where we are just about off the block. And direct NBFC exposure, we have got clear cut mandate because we have almost hit the ceiling. So on a very, very selective and very good rated accounts only, we will examine. Pool buyout, we are open. I think recently we have done 2 to 3 pool buyout transactions of which about INR 200-odd crores have been disbursed. So this is the position.
There is one data point. I mean, some information, note number 11, sir, we have made the provision of currently the provision holding at INR 179.37 crores. Out of the provision of INR 675 crores out of this in this quarter, it is INR 179 crores in that 15 borrowers account, what is the total outstanding on those 15 borrowers account note number 11 under RBI circular of June 7, 2019?
See, we are having about 16 accounts totally there, in some of the accounts once we cross this 180 days, we have to make 20% provisioning and once we cross the 365 days, we have to make 35% provisioning. Total provisioning comes to INR 675 crores. Outstanding is 3,431.
Sir, this one very old note is coming with the disputed amount with another PSU bank and 50% provision of INR 144 crores has been made, what is this, I mean, is it going to resolve, or this dispute is going to continue for a longer period of time with this kind of provisioning?
That is with regard to one of our [indiscernible], there are already under the liquidation whatever the amount the bank has to recover that has come through the liquidation process. Okay? And thereafter, the CBI case has also come to a conclusion. The dispute with other bank is continuing because the competent authority that is the settlement dispute committee before the DFS. And one hearing was conducted and we are trying to sort the matter through the DFS mode.
Sir, my last question is on the entire treasury operations, now we have made a treasury operation, if you see the segment-wise INR 974 crores, the profit income is there. But at the same time, there is a loss on the sale of the investment and also the revaluation. So going forward now, how do we see the treasury performing? And how much cushion do we have if you go for another say 35 basis point or 50 basis point hike by the RBI, how far we are insulated and how much are we insulated?
As regard to your first question going forward, how the portfolio is going to behave. We believe that the worst is over as far as mark-to-market positions are concerned. Currently, we are fixed at 7.60% and currently we're trading at 7.20%. Internally, we feel that 7.50, 7.70 should be the maximum we should see on the 10-year yield. So MTM losses, we don't see much of an upside from these levels. In fact, our calculations were based on a carrier yield of 7.45.
Now we will have to wait and see September how it behaves. RBI increase, yes, RBI increase is expected, again, the market news is that 35 to 50 basis points hike can be there. But if you look into the way the markets have behaved even before the RBI has started implementing these increases, the markets have run far ahead of the regulator.
So even if there is going to be an increase, we don't see much of a hike as far as treasury yields are concerned. And we are looking at the terminal repo rate of around 6%. It can be 10, 15 basis points up or down. So essentially, whichever way we look at it, we feel that 7.70, 7.75 should cap. So that way the worst is over, that's what our internal assessment is, but market always humbles you and market always surprises you. That is the caveat we have.
Sir, my last question in this round is on the slippages, our slippage is increased in this quarter to INR 2,465 crores as against INR 1,502 crores in the last quarter, percentage-wise also 0.69%. Going forward for the whole year, what is our slippage target, sir? And because it is our cost also has gone up actually cost to income. So overall recovery and these slippages because even written-off account also we have written off INR 2,340 crores versus INR 313 crore in last quarter. So overall, where do we stand on the recovery front? And how much slippages we can expect for the entire year?
If you see the slippage ratio, year-on-year, 1.07%, we have brought it down to 0.69%. Going forward, 20% reduction in slippages is the guidance, number one. Number 2, in terms of recovery, as I already told you and you were also informed earlier, every quarter, we are I mean projecting a recovery reduction of INR 2,500 crores, of which INR 1,700 crores will be cash recovery plus upgradation and the remaining will be coming from return of recovery for potentially written off accounts as well. So slippages last year, if you could see the entire year baseline projection was INR 9,000 crores. We have come to a level of INR 8,851 crores. This year, we are sure that we will not be able to cross, we should not cross INR 8000 crores. That's our criteria.
The next question is from the line of Mayank Sethi, individual investor.
Sir, my question is Bank of India has a long history, structurally how Bank of India is different from other PSU banks. And based on the unique strengths that our bank has, which areas the bank can grow and gain a leadership position compared to other PSU banks?
It's a very short question, but requires a long answer. See, there is not much to choose from when you assess the structural comparisons. And we are working in a multiple hierarchical structure and Bank of India, just which is going to complete 116 years, has got several firsts to its credit. And in digital space also, otherwise also, in overseas presence. And it has got a lot of capacity built into it.
Now last 2 years, there were certain issues that affected not only Bank of India, but all of us. One lag that probably was there for a little longer time was the digital footprint. I think our ED Mr. Rajgopal, he has basically explaining that how we are going to go ahead on the digital front here. I think by September, we will see further signs of the digital footprint. And in the next 1 year, I think we will be comparable to the best. So this is the basic premise on which we have structured our corporate objective for the current year that is reshaping the future.
Another thing I would like to add to whatever MD, CEO has said, Mr. Sethi, the unique areas where bank had strength were basically in the trade finance and in operating finance and working capital and as well as in the bank used to be the leadership position in exports, especially for diamond and other jewelers. We used to continue to receive awards from the export organizations. We use one of the best banks in terms of funding to exporters. And the last thing is that we used to be leaders in terms of actually funding the capital market and intermediaries.
So these areas have actually been taken over by private banks. Most of our customers have actually gone to private banks because of the huge technology changes, tectonic shifts that have happened in this area. So what we have done in the last 1.5 years, 2 years is we have actually brought those technology interventions that are required to actually regain the uniqueness of this bank in these areas.
And another 1.5 years down the line, we'll actually be able to get a leadership position back in these areas, and we'll be competing with best of the banks in this area as either to we were say 10, 15 years back. So this is what this one is. This could not happen in the last decade for a very simple reason because it requires huge investment in technology, which we could not do. Now structurally, we have actually made that shift in terms of technological intervention in all these unique expertise that the bank has. So naturally we will grow in these areas going forward.
That is helpful, sir. My second question…
Our ED Mr. Karthikeyan wants to add.
Our bank is also strong and leader in terms of financial inclusion, where 3.28 crore accounts have been there and 2.71 crore accounts are at a reactive position and the balance outstanding in these accounts are amounting to INR 11,074 crores. So the average balance in these accounts amounted to INR 4,000 crores. In all the government sponsored schemes, we are excelling, and we have been awarded also for good performance in these segments.
Okay. Very helpful, sir. Sir, my second question is for many PSU banks, their subsidiaries have gone quite big, for example, for SBI, life Insurance, cards business. For us also, we have some subsidiaries. Over the long term, do you see the potential of any of our subsidiaries that can grow very big and maybe we can list them in the stock exchanges?
See, even though we have not really -- it is too early to say that we can list and grow. But one thing that strategy is out in [indiscernible] so far as the subsidiaries are concerned, there are very good subsidiaries where like typically, we have our own finance subsidiaries [indiscernible] doing reasonably well with an AUM of around INR 2,000 crores or less.
And we have another insurance subsidiary, which is also doing reasonably well with embedded valuation of around INR 25,000 crores plus. And then we have a merchant subsidiary, which gets us good leeway in terms of the subsidiary services that we can provide to the financial intermediation that is also there. And we are also actually trying to augment these subsidiaries in a very, very robust manner.
Another thing is that our AMC has also started doing well. We are also building up the necessary infrastructure within the AMC so that we can actually scale it up in a very robust manner. So these are the areas, maybe another 3 years down the line, we will be listing this. Most probably, most of this one start with and actually have a partner in the AMC to this one because we already today 100% holding in AMC as of now. We may have partners going forward. This is our plan.
I understand, sir. Sir, my next question is...
Sorry to interrupt you, Mr. Sethi. May we request that you return to the question queue for follow-up questions? The next question is from the line of Sushil Choksey from Indus Equity Advisors.
Congratulations on a stable result despite noninterest income being down dramatically year-on-year and quarter-on-quarter. Sir, you highlighted that you are making a huge digital spend for INR oads into various type of businesses. Can you quantify the budget and elaborate a bit on the products?
Yes. See, no, I would request you to kindly go through the slides which have been put out, Slide 35 onwards in the presentation, Choksey saab. [Foreign Language] we have a 5-year plan of almost INR 5,000 crores plus budget for the entire tech initiatives that we have taken. In the chose budget we have taken already around INR 1,800 crores plus is already approved in particular that have been given in this -- most of the initiatives.
The first initiative that we have actually rolled out and it has actually rolled out a great extent is the utilities in terms of lending automation systems and lead management systems, the rollout has happened and then the full rollout will happen over a period of, say, 1 or 2 months down the line. So mostly, the foundation there will be formally introducing the products to the customers. That's what our plan is.
And insofar as the other thing that's great initiative that we have taken is, we are putting in place the universal app, which is basically an engagement layer API application that ICICI has done or Axis has done, we are also coming out with that. The rollout time is 18 months [indiscernible] has been already given. So you can calculate from August now 18 months down the line, it will be up and running fully for us where the same capability that you are seeing in ICICI, Axis and HDFC, same capabilities will be available with the bank, that is the second one.
And third, we have actually taken data lake initiative where we can make intelligent personalized offers to the customers. See, what we are talking today is, we are talking in terms of hyper-personalization. At the individual level, we can actually make a product, customized product and offer. So that rollout will happen over a period of, RFP is already done. Technical evaluation will happen in another 10, 15 days. But most probably will be given by end of September.
And once purchase order is given, then the rollout time is again 18 months to 24 months for data lake. And it will be rolled out typically on a staggered manner such that we derive benefits out of it on a staggered manner over a period time. It is not that 24 months, nothing will be done and only after 24 months rollout will happen, rollout will happen in a very staggered manner. There will be a lot of intervention that will happen at data lake level. That's what we are planning.
Apart from that, there will be a lot of utilities in terms of our processes and other aspects that will come into play in terms of our collections, in terms of our recovery, in terms of the scorecards or credit underrating and even third-party sales, third-party product sales, all those digital initiatives are also being undertaken very, very effectively. We'll have a completely different mobile experience. You will have a completely different internet tracking experience in terms of customer engagement is considered. So even with the existing mobile, we are growing at 40%, and there will be completely phenomenal growth that will happened in our mobile banking once we came out with some of it a very improved product over there. And that is also slated to come another 2 months to 6 months down the line.
Do I assume that pure consolidation with Bank of India started from 2015 May-June to 2022 June of 7 years is virtually getting over and we will be on an accelerated mode where consumer loans are concerned?
Yes. Yes, yes. Precisely, precisely. You can assume like that.
Okay. Could you indicate what would be our CD ratio over a period of next 12 to 24 moths?
CD ratio, see, today, we have an ideal CD ratio of 74%, we would actually go to 80%, 80% levels of [indiscernible] level unless we have a very robust fund management system in place. You will require a lot of liquidity management system in place and you need expertise also to have that kind of CD ratio. So that will take some time. But until that time, I would actually stick to that 74%, 75% CD ratio for some type till the resources and skills build up in the bank in terms of fund management that the other banks have.
Okay. Sir, second question is [indiscernible] media as well as on the concall initial speech, is it that the pool buyouts, which you have initiated are yielding better results than in terms of earnings compared to our retail loans?
We would not say that, see, basically, what [indiscernible] net-net basis, the service charges and the interest rate share that the NBFC takes is much more. So naturally, it boils down to the average yield basis, whether it is a pool buyout or a direct customer acquisition basis, it is more only difference is the customer acquisition costs that we have in terms of retail push that is lowered in a pool buyout. So but over a period of time...
Sir, I get your point. But is it that you're yielding at approximately 1 year MCLR plus. That's what I want.
Yes, that is true. That is that MCLR plus continues to be at, 1 year MCLR continues to be at 7.5, we need more yield there. And most of the pool buyout loans are not in MCLR. Most of them are in RBLM because there are either retail or MSME loans. We cannot offer an MCLR linked loan.
We had a great rich heritage in terms of connectivity with business community in the western part of India, whether traders, small manufacturers, small businesses are concerned, seeing last 40, 50 years. Do we see that after digitization, most of the customers which are [indiscernible] by private banks in last 3, 4 years, you expect would come back to Bank of India?
Yes. That's what my interaction with our old customers feel. They only say the day you digitize and given the same facilities that the other bank gives, we'll come back. That's what everybody says.
Any guidance or any outlook on the investment book based on today's yield, not on the quarter end.
Today's yield?
See, as I explained earlier, the MTM loss currently stands at INR 250 crores. The upside, we are not expecting much because the yields are going to taper off, if at all there's going to be an increase, it's going to be a short-lived one. The other side is our CD ratios have improved. To that extent, the available [indiscernible] for us to make investment is also there, they go from the investment book to the advances book. So we should not see much of a MTM provision as far as [indiscernible] is concerned. It's slightly higher only.
I'm looking at the other way around that the global recession, India generally does well. So do we get some write-back in the quarters to come back.
Definitely, see, this, we expect that the interest rate should peak by Q4 of FY '23. And after that, there could be a case where the Reserve Bank can go for a pause or even start reducing the interest rates. So that is when the capital gains will start flowing into the investment.
The next question is from the line of Akash Jain from Ajcon Global.
Sir, my questions has been answered.
The next question is from the line of Suraj Das from B&K Securities.
Just wanted to get your view on the BB and below rated books, you have given in the Slide number 15, percent of domestic advances INR 7.5 crores is double below rated. If you can quantify what would be the [indiscernible] what is your view here in terms of what would be the largest ticket size here and how you are looking at this book?
Actually, I couldn't hear it...
BB below book that is there in that Slide 15....what is the absolute number in terms of [indiscernible] 7,355 crores Suraj.
Okay. And sir, I mean what would be the largest ticket size here in book and how you are looking at this book in terms of slippages and NPAs and all?
Larger size in terms of account level ticket size we accounted [Foreign Language]
Okay. Okay. Understood, sir. And sir, one last question. [indiscernible] to the restructured book, so if I see the COVID restructured book, something around INR 11,000 crores for last quarter, that has come down to INR 10,000 crores. So I wanted to know how much of that book is already out of moratorium, let's say, as of March end, it was out of moratorium, i mean there is no interest moratorium or something like that.
I tell you, the total book was around INR 1 lakh crores [Foreign Language] 30% is out of moratorium, 70% of the book continues to be in moratorium. 30% of the book is s out of moratorium. In terms of numbers, I'm just calculating in my mind and giving you the number, 30% of the book is out of moratorium.
Okay. Okay. Understood sir. I'm asking if you can give the breakup of segment-wise GNPA.
What is the segment-wise NPA breakup? [Foreign Language] We will give you that.
The next question is from the line of Sohail from Antique Stock Broking.
Sir, just wanted to understand 2 things. One is basically in terms of credit to deposit ratio, which has inched up to around to 73%. So what is your outlook in terms of cost of deposits, saving deposits and correspondingly, the pricing power in the system, if you could just give your qualitative comments on these 3 parts.
Cost of deposits, if you go see the trend, there is definitely in many banks, including our bank, there is a drive for resource mobilization because as liquidity has dried up and as the demand picks up, naturally, there will be a scramble for higher resources. The cost of deposits would see some uptick, but the same like we have done in our bank's case, we have decided to go at least 10% growth in CASA. We are at 44.70% of CASA percentage. So that will probably compensate at least partially any kind of repricing that is happening in the liability space. And in the asset side, of course, the repricing is relatively real time, especially in the EBLR segments. So that will also help us safeguard our margins. Apart from this, Monika, would you like to add anything on that?
No, I think [indiscernible] covered it appropriately, the cost of deposits is almost around the lowest in the industry so far. So we have been able to manage our cost of deposits in a very efficient manner. So in line with that, we have a great focus on our CASA growth this year, and we have introduced various schemes, even the salary plus scheme for garnering more salary account. And the term deposit because kind of trade off between the CD ratio and all that we will keep on monitoring very closely. And as and when required, we will complement our rate accordingly.
Sure. And this, I also actually wanted to ask right now what is happening is basically the differential between saving deposit rate and the term deposit rates are basically very low or has narrowed down over the period of time. Now when the term deposit rates start pricing, at what point of time do you think that we as well as the system would actually have to look at the saving deposit rate again?
The term deposit is again started going up. Whether we increase or not, [indiscernible] to decide. If they do want to keep it in CASA, of course, they are free to switch over to the term deposit, so already in the system, SB is around 2.75, term deposit 1 year is around 5.50 or so. This is for the retail depositor. So already, the [indiscernible] have started increasing.
Mr. Sohail, may we request that you return to the question queue for follow-up questions? The next question is from the line of Jai Mundhra from B&K Securities.
Sir, it looks like the CET1 number has been changed. Is it due to the...
Sorry to interrupt you Mr. Mundhra, the audio is very low from your side. Please use the handset mode.
I was saying, sir, the CET number for March, it looks like it has been restated. Is it because of the dividend thing that was changed or there was something else?
No, it's partly because of dividend and partly some additional disclosure we have made recently. So because of that...
Recap bonds, right?
Yes, yes. Partly recap bond and partly dividend.
Sure. Secondly, sir, on yields. So if I see your last 12 months, you have not changed too much of your MCLR. And MD sir also commented that you started to pass on the rate hike on EBLR basis. So what explains the drop in the loan yield by around 20 basis points.
Because of our high growth in our international book, where actually yields are lower. And recently, we have hiked our MCLR going to hike our MCLR by 10 basis points. And international also, we are very choosy about assets. but majority of assets are in the short term in assets, balancing our books and other ratio by international group.
Okay. And sir, there was increase in the overseas deposit also, right, this quarter. I mean, that is deposit only right? It is not borrowing et cetera, it is the local deposit in overseas branches?
It's a mixture of local deposit as well as borrowing [indiscernible] whether it is [indiscernible] to estimate our asset growth here.
Okay. And did I hear it correct that 70% of the book of the restructured book has already come out of moratorium and rest 70% could still be in moratorium?
Other way around.
Mundhra, other way around.
Sorry. So 70% has already come out of moratorium...
30% has come out of moratorium, 70 continues to be in moratorium.
Right. Okay. So does that mean, sir I mean, this quarter, we had some INR 1,400 crores something slippages from restructured book, right? And if I see INR 15,000 crores restructured, only 30% has started billing. So let's say INR 4,500 crore. Out of that, some INR 1,400 crores has slipped, at least on, while an absolute number, INR 1,400 crore is manageable. But in terms of percentage, that shows a very bleak picture that out of INR 4,500 crores, INR 1,400 crore has...
Jai, that is because you know very well there was an OTR of big accounts, which are to be classified as NPA because of the litigation. So that...
If you remove that, sir, let's say, remove the corporate account only, let's say, retail account...
If you remove the corporate account for almost INR 500 crores goes out of it. So the [indiscernible] slightly one which was being expressed. But I see there is a total mechanisms built in now across geographies. We have put in place persons to closely monitor this [indiscernible] 1 and 2. So that could be a granular level follow-up in all terms, both personally as well as technologically. We don't foresee any risk on that.
And sir, on your ECLGH, you have given the disbursement number of somewhere around INR 8,200 crores, what is the outstanding and how much is the gross NPA there?
There it is [indiscernible] of the COVID book ECGLS book is NPA, that is around INR 217 crores of [indiscernible] Not much is NPA there and outstanding actually I don't have the figure exactly now. I can give you a little later, if you want.
Sure, sir. And last question, sir, what would be your credit cost and ROA guidance we used to give, I think, last year, we did more or less to the guidance. But what would be your credit cost and ROA guidance for full year '23?
Credit cost, we will continue to like it was about 1%. That will be the benchmark. This time, which was a little more on account of slippages. So 1% will be ideally our credit cost. ROA, we would like to see that at least 0.75% by the end of the...
Right. Sir, even 1% credit cost would be like some INR 4,000, INR 5,000 crore number, which would mean that last year, we also did around similar number. So I don't know. So yes.
This is not a static number, Jai. This will keep on getting revisited from time to time. As on date, this is a presumption. We will try to revisit it as and when we progress.
Most of the public sector banks, Jai, what happens is in the first quarter, you will see credit cards going up. And again, it tapers in the next 3 quarters. There's always the trend if you see last 5 years, we take the balance sheet and [indiscernible] balance sheet problem period.
The next question is from the line of Ashok Ajmera from Ajcon Global.
I have some observation or some answers to spot on the taxation front, I mean we opted for the old rate of taxation so far. So out of the net liability of like provision of INR 300 crores, which we have made, can we give the numbers of the total losses, carry forward losses available, the DTA, MAT credit, how this INR 300 crore has been arrived at. And secondly, is it, how much is actually as a tax is required to be paid in cash?
Yes. DTA is around INR 8,700 crores, and we [indiscernible] credit also, so being the [indiscernible] we continue to be the old regime. And over and upon, there is a large credit allowability to nationalize banks that are also pending. Once the decision will come, then we take appropriate decision in shifting to the new regime in time. As such, there is no [indiscernible] limit that within that time limit, we have to shift to new regime. That's the reason we are just waiting and watching on the appropriate decision of the high court to come on this particular aspect. Subsequently, we have to take a suitable decision.
Now taking the point from the deposit, earlier we were discussing, our domestic deposits has come down in this quarter by almost about 1%, like from INR 550,000 crores [indiscernible] crores, so going forward, as we were talking and Madam was giving some rationale also, are we going to be tightening as far as the interest rate is concerned and keeping the deposit low? Or we plan to grow the domestic deposit also equally as the global deposit, international deposit is also going up. So what is our, I mean, your views on that? I mean, are we going to keep it down?
No. I should say like this, I have explained earlier also that we would like to grow at around 10% in our CASA. So that roughly CASA ratio of 46% can be achived by the year-end. And the term deposits will, of course, be complementing the needs of the business. So whenever there is a need for [indiscernible] growth, we will be complementing the term deposit number according to the market scenario. As already has been talked about by [indiscernible] you would have seen that what the market has expected. That is already cooling down because we are not seeing that harsh reaction from Reserve Bank of India. So maybe going forward in the next 2 quarters, we may see some [indiscernible]. So it could be added time to hold on we really need it on our business growth and then take a call accordingly. Okay?
Point well taken ma'am. On this non-SLR book, we have HTM 29,880 that's okay. On AFS book, 81,204. What is the nature of this investment non-SLR is all AA, AAA, what kind of investment is it?
AFS book, 11,200 is for, we have about 30% is in AAA. That's what I can immediately tell you and the other information I can give you offline, please.
That's okay, sir. No issues. Sir, on the ratings side, the external rating, I saw a look down that above INR 7.5 crores rated accounts, corporate rated account. So this INR 7.5 crore is a threshold limit by RBI? Or we have put as a bank, we have put up the limit of INR 7.5 crores below that, the people do not require the external rating. I'm not actually basically aware of it.
Basically, it is a regulated retail and corporate threshold that RBI has put up. But in so far as the bank is concerned, the threshold is INR 25 crores and below no rating required, external rating required, INR 25 crores and above, rating is required, external rating...
Only above INR 25 crores external rating required according to you?
Yes. Not according to me according to the policy of the bank.
Yes. We consider you as a policy maker of the bank sir, when you talk as a banker. Sir, there is a small I mean question actually, there is RBI levied again this quarter penalty of INR 70 lakh on to the bank. In it a regular feature with the thing or any specific incident has taken place when the penalty of INR 70 lakhs has been put up by RBI.
Penalty is regular feature, I think, don't say. So penalties are for occasional breaches, aberrations. So that we are seeing not only in case of our bank. But yes, there are one of 2 instances where certain unauthorized debits were made and certain breaches or violation of KYC not there. As a big bank, big numbers are there. We are still in a data cleaning mode. So this is the RBP supervisory team's observation when they take the data dump and check it. And we are in the correction mode now. By and large, we have corrected the data. But having said that, we also need to ensure that in future such [indiscernible] don't occur, so this was kind of a one-off [indiscernible]
And added to that, it basically pertains to a legacy observation in the [indiscernible] reports of the RBI, for that things are not there in 2020, '21. So most of them are corrected now.
My last question is around also, on our ERP, there was some IT ARC fill of INR 102 crores provision has been reversed. The entire accounts were much have been driven updated by the total proceeds come as reversal of provision. Moving forward, you have also stated that NARCL [indiscernible] account will set I mean, with the growth outstanding of INR 2,435 crores. Is it going to be teed in this current quarter? And even if we assume about 20% or 18%, so it becomes about INR 480 crores, 15% of that, about INR 70 crores, INR 75 crores cash. Can we expect in this quarter to come in from NARCL.
See, NARCL is functioning fully now, I don't think that in this quarter we have proudly have probably in Q3 as they have appointed some of the agencies for [indiscernible] You know they have to do the legal scrutiny and verification of property, which is going on.So going forward, it may happen only in Q3, not in Q2.
All right. Okay. All right. If you permit the moderator, one just last question. On the [indiscernible] we have amortized the still about INR 439 crore carry forward. Do you have any plan to take it places forward than the 4, 5 years' time, which has been given by the RBI?
So the, in fact, we've [indiscernible] provision. So as of now, we'll be taking advantage of [indiscernible] given by RBI looking at the requirements on our 15 last provision. If going further, things improve, then we can think uptake.
Ladies and gentlemen, we will take that as a last question. I would now like to hand the conference over to Sri A.K. Das for closing comments.
Thank you very much all investors and analysts for taking active part in this interactive session. And we hope we have explained [indiscernible] satisfaction. In case there are any further requirements or any further data, kindly get in touch with our finance department. I'm sure they will provide you all required data, thanks once again for attending this conference. Good day.
Thank you. Ladies and gentlemen, on behalf of Bank of India, I announced that this conference concludes. Thank you for joining us, and you may now disconnect your lines.