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Bank of India Ltd
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Ladies and gentlemen, good day, and welcome to the Bank of India Q4 FY '20 Conference Call. [Operator Instructions] Please note that this conference is being recorded.
We have with us today, Shri A.K. Das, MD and CEO; Shri P R Rajagopal, Executive Director; Shri Swarup Dasgupta, Executive Director; Shri M Karthikeyan, Executive Director; Ms. Monika Kalia, Executive Director; and other top management team from Bank of India.
I now hand the conference over to Shri A.K. Das, MD and CEO. Thank you, and over to you, sir.
Thank you very much. Good afternoon, all members of our analysts, investors and ladies and gentlemen, I extend a very warm welcome to each one of you for today's interaction.
And while we share with you the financial results of the bank for Q4 as well as full year of financial year of '21, '22. As you all are aware, we are all passing through critical and challenging times. And just when the recovery to growth path was making a modest beginning, the Russia-Ukraine war made a complete [indiscernible] and the entire globe is now grappling with the situation of supply shocks, inflation and [indiscernible] monetary tightening measures by the central banks. IMF in its latest world economic report has made a downward revision of earlier positions and put global output growth rate at 3.6% for both the years 2022 and 2023. The emerging markets and developing economies, however, are expected to grow at a better rate, 3.8% in 2022 and 4.4% in 2023.
Back home, the GDP growth rate for FY '22 has been estimated at 8.9% by NSSO. And for FY '22, '23, the growth rate is projected at 7.2% by the Reserve Bank of India. On the positive side, the ending of the pandemic situation, growing recognition coverage, pickup in contract intensive services and trust in infra facility and expenditure by the government is expected to spur higher growth. The banking industry during '21/'22 witnessed a comparatively lower deposit growth of 8.9% and a higher advantage growth of 9.6%, which exhibits regaining of consumer confidence and traction in business activity, which we expect to continue during the current year also.
Against this backdrop, the bank pursued a few strategic initiatives during FY '21 and '22. One of them being reorientation of business strategy with trust and advances growth rather than deposit growth. Secondly, continuous emphasis has been made on outreach campaigns not only for business growth, but also for building bonds with the customers. The slippage and NPE management always remain higher on the bank's agenda with measures for improving collection efficiency and NPA recovery. For enhancing operational efficiency, 2 more engages that is National Banking Groups and 9 new zones were carved out, which were operationalized from April 1 this year. On technology front, the bank migrated to Finacle 10 and other digitation platforms like data lake platform projects were initiated. With these measures, a road has been paved towards sustained growth path.
I'm happy to announce that the bank's net profit for Q4 jumped by 142% to INR 606 crores. And for the full year, the bank posted a net profit of INR 3,404 crore, registering an increase of 57.6%. There has been improvement in NIM, which moved up from 2.01% in Q4 of FY '21 to 2.58% in Q4 of FY '22. Domestic NIM also improved from 2.16% to 2.90%. Asset quality further improved with a reduction in gross NPAs, both amount-wise and percentage wise. The gross NPA ratio was brought down to below 10% and net NPA is below 2.5%. Slippage ratio for Q4 was restricted to 0.44%. And for the entire year, it was brought down from 2.41% to 2.15%. Similarly, credit costs improved from 1.8% in FY '21 to 0.75% in FY '22.
During FY '22, the bank expanded its credit growth to 11.35% with increase in RAM advances by 15.70%. During current year, with onboarding of e-platform and end-to-end digitalization in credit sourcing, processing and delivery, there will be significant jump in credit offtake. We expect credit growth of 10% to 12% during the current year. For augmenting yield and advances and NIM, the bank is aligning its asset growth to high yielding areas. With the bank's continuous drive for managing asset quality, we expect gross NPA ratio to be contained below 8% and credit cost at less than 1% by the end of the current financial year. We aim to realize a NIM of around 3% by March '23.
This is, in a nutshell, the numbers. I believe the data and other things have been already shared with you. I would once again thank you all for the continued support. And now we let the floor be open for discussion. Thank you.
[Operator Instructions] We have the first question from the line of Ashok Ajmera from Ajcon Global.
Mr. Das, Mr. Rajagopal, Dasgupta-ji, Karthikeyan-ji, Monika-ji. First of all, of course, congratulations for showing the good -- for reflecting good operating profit at least, though the provisioning is higher end net profit is under pressure. But overall, what is important is that your operating profit is increasing, which is good, even the advances, the global advances and the local domestic advances are also growing up well. Having said, sir, a few observations and some questions. First of all, I saw a figure in the note number 33 of RBI penalties. I mean there's a heavy amount of penalty of INR 4.27 crores for domestic, I mean, by RBI and INR 16.54 crores and INR 0.25 crores by the overseas regulators. Can I know that why such a hefty penalties have been imposed on the bank and what action the bank has taken for that case?
There is one overseas penalty, as you rightly mentioned and one RB penalty for 2, 3 compliance issues. We have paid the penalty. We were also given a chance to defend ourselves. Certain issues which RBI flagged have already been corrected, but the role of the regulator needs to enforce the penalty and all. So it's a learning for us, a deterrent for future circumspection. So that way, I think we have corrected basically, in the overseas centers, it was AML KYC related 5 to 6 years just this much only I can share 5 to 6 years' time period they reviewed and they found certain anomalies there. And overseas regulators as they're known for, they are very, very strong in enforcing the penalty and all. Similarly, in the domestic arena, there were 2, 3 issues like delays reporting of fraud in 1 or 2 cases and a few other cases. But we have taken due care that such violations don't arise in future.
Okay, sir. Point will taken, sir, because this was in extraordinary, I mean, exceptionally high amount that is on the penalty on the bank, really sends along this. Sir, on the advances side in the bank, there is an increase of almost about, I think, INR 1,000 crore in the personal loan book in this quarter. So can I know what kind of this -- there are all salaried loans or there is a tremendous growth in this particular portfolio? So is there any change in the policy or because of digitalization, it is or what is it, sir?
P R Rajagopal, would you like to respond?
These personal loans, basically, we had a very liberal personal scheme that we have actually put in place during the COVID time, which continued in 2020, '21 also and '21, '22 also. There is a lot of demand for personal loans because most of these loans are consumption loans. Now the another question that you asked is, whether it is salaried or nonsalaried, it is a mixture of both. It is not salaried alone, it's a mixture of both. And there are some small and business loans also people have taken to supplement -- to augment their capital. So it's a very small loan segment and has grown very aggressively because of the demand for personal loans than any other loans. If you see our balance and the balance sheet of others also, you'll find out that most of the banks have grown personal segment very aggressively because of the demand in the market, basically. If you see…
What is the duration of these loans or average repayment duration?
Average we provide is 1- to 3-year loan mostly, 1 to 3 year loans. All are demand loans. So most are 1 to 2 years.
So the growth looks very pronounced because of the low base. It's hardly 3% of our entire retail portfolio.
On a better term, I mean, overall, in absolute terms, the amount has increased payment -- so it's good. I mean if it is within the -- I mean, control and the recoveries are good and the period is only 2, 3 years. I think it's a good segment. Sir, coming to the treasury, because of the pressure now coming in, the interest rates are hardening up. Our treasury income has gone down in this quarter. And there is also a loss of about INR 111 crores on the investments. So what is our going forward because we have a good sizable AFS book also, what is the views of the treasury even in our bank? How are -- I mean we are cushioned to how much more because even RBI Governor also has given the indication that there is hardening of the interest going to be, and they didn't want to give the shock that is why they came in, in the interim policy suddenly. So what are our views? Sir, we have about INR 38,000 crores of AFS book on 31st March, whether some profit has already been realized in the month of April or we are still holding on -- sitting on?
So Sasi?
Yes. Ajmera-ji, this is Sasidharan, GM Treasury. See, your question is with respect to the HTM portfolio and how it is going to behave going forward when the yields are moving up. I would like to submit 2 things. One is the SLR securities with end duration of 0.47, my portfolio is only INR 26,336 crores. And the portfolio of INR 26,336 crores, 0.47 is duration. It's a very small number, if you look into it. That translates to around 10% of the total 10 -- if there is a 10 basis points increase, the total increase for both the portfolios put together would be around INR 40 crores. I have a reason to say this because the noise of investment, which is shown as INR 12,169 comprises of some equity and other securities also. See, actual amount would be around INR 6,800 crores, which is in the LCD. So 3.62 for that and INR 26,336 crores as far as end duration 0.47. We are expecting around INR 40 crores of depreciation for a 10 basis points movement. And we are at around 0.47, 0.44 level, probably another 30 or 40 basis points can move as far as the 10-year security instances. That is one thing, sir.
The other thing is that the government securities, INR 26,336 crores, most of it is in FRBs also. Last year, the FRBs delivered in a very weird way. Normally when the interest rate moves up for the FRBs should act as a hedge, but unfortunately, that has not happened. We hope for should the clarity emerging out of the policy actions. We are sure that there will be demand for FRBs and the flavor of the season with the FRBs. So overall, we don't think we will have a big challenge to face as far as the portfolio is concerned. And we do have a huge HTM portfolio available for us for further purchases and that can be accommodated in the HTM portfolio. We are close to around 18.61% as far as the HTM portfolio is concerned. And with the current increase of 1%, we still have close to about 4.5% to 5% case available room in HTM. So I think, sir, we should be comfortably placed. I hope I have answered your queries properly.
Yes. Sure. Definitely, sir, you have answered my queries, and you have given some kind of confidence also that up to 30, 40 basis points, I think we can absorb the shock. I hope that you should not go beyond that because overall, the target should be not more than 100 basis points out of that 40 is already announced. So anyway, sir, coming to the recovery side, of course, our slippages are under control, cash recovery is also good, and there is the upgradation also. But coming to recovery in some of the large accounts and especially just 2, 3 accounts, which have been talked about, what is actually the provisioning on those accounts and also the chances of the recovery, along with the scope for recovery now in the NCLT, whether the speed -- whether it speeded up now or it's still the same story what was there last year?
Yes. So the 2 large accounts, which we are mentioning is 100% provided in terms of future. And in terms of the other accounts, say, which is already admitted to NCLT, the closing coverage ratio is around 35%. So 50% now against now most 35%. So that is one thing. And you can see the cash recoveries also last year, we have increased the cash recoveries by an extent of 60%, that's just the [indiscernible] INR 6,707 crores. So a good recovery is happening in the system and the engagement with the customer is being aggressively followed as various channels have been used. And so going forward also, we are planning for a reduction of INR 3,000 crores per quarter. That's our repo.
[ Mr. Anand ], you would like to?
The process has speeded up in the NCLT. So all the members post having speed up their assets, there are no latency so in this year, we hope a better result through NCLTs.
Sir, we should say 50% provision is made. What is in the absolute number would be the remaining 50% or the overall amount?
In terms of rate, is then 63 of exposure, 50% has already been made.
And the other one?
Other one is 100%.
All right, sir. Sir, coming on the last question in this round.
Sir, do request you to kindly come in the queue for the follow-up questions.
We have the next question from the line of Suraj Das from B&K Securities.
And congratulations on a good set of numbers. Sir, continuing with the previous question, so on the future growth, has it been fully recognized? Or there are -- I mean, get some accounts which have to be returned as of the end of year?
So we are having, I'm [ Anand ] here, a successful vertical. We are having exposure in 3 of the group puzzles. Out of these, 2 have already been marked as NPA, and we have a full provision. The third amount has not been marked as HTM because as far as '21, there was no financial default in that account.
Okay. What would be the exposure on that account, sir?
About INR 386 crores.
Okay. Understood, sir. Any provisions here? I mean, as of now?
Yes. No. Yes, in this account also, as per OTR, we have that provision requirement of 10% which is mandatory of per the RFPR, that's mandatory.
Okay. Understood sir. Now sir, my first question is on the restructuring side that you have given on the Slide #27, the restructuring number. So this number, I mean, does it include any total restructuring number, including COVID 1.0, 2.0 and also the earlier MSME, CDR, LCR and all those things? Or do you have to add also the BSC MSME number which you have given in the footnotes?
It includes all the numbers. The RFPR 1, RFPR 2 and all the other restructuring, which the bank has in kept in force. The total number is INR 16,880 crores, that's standard.
Okay. Understood, sir. And sir, on this restructured book, you have a provision of INR 1,140 crores, something around that. This looks optically, I mean, low something around 7%, 8% coverage only.
Why is that if we look at the actual portfolio of this, it's coming to around 8%, 9% only. Among the restructured assets, the SMA percentage is 9% SMA 1 and SMA 2 and it is around 10%. So that's how these numbers are.
Okay. Understood, sir. Now sir, coming to the ECL rate, ECL rate disbursement seems to have increased, I mean, drastically from something around INR 5,500 crores to something around INR 8,000 crores on a Q-o-Q basis. So I just want to ask what is the outlook here? And I mean, what is the NPA levels in the CLS book?
ECL book NPA numbers you have, it seem like INR 6,000 crores, if I remember correctly. All CDs put together. Any idea, what is the NPA? We will share with you the NPA numbers out of ECLGS.
Okay, sir, that is okay, sir. And the number which you have given on Slide #42, that is INR 7,997 crores, is it visible amount? Or is it the outstanding ECLGS amount?
Both are same, Mr. Suraj.
Okay. Understood, sir. And sir, coming on to the -- I mean business side. So sir, can you give a breakup of your loan book by how much of the loan book would be ECLR linked, how much of the loan book would be NCLR linked, or let's say, fixed rate loan?
Yes. See, broad segment only I will share with you. In NCLR, 1 year, overall, we got about 75% of our loan book linked to NCLR 1 year. Now when it comes to ECLR, out of retail advances, 47.18% are CCLR linked. And within SME, that number is 57.53%. In corporate advances, about 33% are linked to ECLR.
Okay. And what will be the total loans which have been into fixed debt out of total loans?
Anybody has got that number? Total number loan out of loan book amount which is linked to fixed rates. It is about INR 41,600 crores.
Okay, sir. And last couple of questions on my side. One is on the -- I mean, names and yield size, so your yield on funds seems to have increased from 5.24 to 5.40. Why is that yield on advances has decreased from 7% to something around 6.7%, 6.8%. So sir, I mean, if you can throw some light here? I mean why the yield on advances has decreased while the yield on price has increased?
Yield on funds have increased. Yields on funds are difficult of course, the applied funds, which are in the [indiscernible] government SLR and non-SLR segment. And it is also included in the finances whereas the yield advances only, [indiscernible] in deployment other than loans, we have got as our CFO is saying, plus we have got TLTRO and other things also. So that is why we heard the reason for it is showing, but these are dynamic numbers, Suraj, I think the core parties our yield and advances, which we are trying to improve through our linked. And through volume growth, more volume growth, we are trying to improve because of investment denominator is high.
Okay. But the reason why I was asking is that because if I see your income on investment and interest on RBI and other balance and all that thing, so that number on Q-o-Q I mean, is broadly stable. While the total investment has also, I mean, increased on a Q-o-Q basis. So I mean, that should be -- I mean, roughly the yield on non-advances should be roughly either similar or some are some downward pressure. But here in the slide, it is showing that the yield on funds have increased. That is the main I was asking that question.
Okay. We'll get back to you on that, Suraj.
Sure, sir. And sir, my last question.
Mr. Das, I would request you to kindly come for your follow-up questions back in the queue.
We have the next question from the line of [ Krishna ] from Wipro.
I'm here to ask you about what has Bank of India here to secure the assets of user growth because it has just positioned the company for [indiscernible] for the asset or for future growth?
Future growth, see, already you know, we are part of NCLT application, allowing interim application has been filed. I need to provide the further alienation of assessment. So whatever has already created that we will be taking up or after the chief is admitted. So for the time being, we have filed annual interim application around the real application to provide the partner transfer of shops.
No, sir, first, you had to secure the assets of interim growth, then you had to proceed for NPL proceeding?
Security, in a sense, the security always is at a anybody taking over the asset will be taking on the subject to the right of the family. So definitely, these had a revenue source, security taking over, it will be subject to the bad price that we'll be taking a call to enquiry team. It is not that they are getting an asset or taking over the assets.
Sir, as you have the secured creditors of future growth, then without your permission, how do they manage to take over the assets of future growth?
We cannot comment, we have a valid bilateral contract between future and retail. I don't think we can comment on it at this point of time. But for the time being, we can take of protecting the lenders' interest, which I have told you what steps we'll be taking.
We have the next question from the line of Sushil Choksey from Indus Equity Advisors.
Congratulations to the management and team.
Mr. Choksey, we request you to kindly come a little closer to the mic. Your voice is not audible much.
Congratulations to the team Bank of India for a stable and good result. Sir, my first question is your guidance on growth on retail and corporate bank guidance on NIM, CASA, and guidance on treasury book.
Okay. Thank you very much for your compliments. I think you missed out my initial remarks.
No, I heard on the NIM, sir, but general guidance.
General guidance is credit growth of 10% to 12% with more focus on corporate segment and MSME because agri and retail, they are steady at over 18% there. And NIM, it is about 3% that we have. Our domestic NIM is 2.9% for Q4 stand-alone. So we are envisaging to take it to above 3% by March '23. Guidance on asset quality, like we had said last time, our basic aim was to bring it down gross NPA ratio below 10%. We have been successful in doing that, 9.98%. By the end of this financial year, we expect the NPA ratio to be brought down below 8%.
For that, we have our recovery and other slippage management strategy. We will further improve on the slippage management, which has been a forte for us during the last 4, 5 quarters. We're also aiming at about INR 12,000 crores reduction in NPA partly through NCLT resolution, which could lead to a reduction of about INR 4,600 crores, partly through NARPL transfers of about INR 2,500 crores, and of course, the rest through normal recovery process there. So with this, I think we will be able to improve our NIM. We'll be able to improve our operating efficiency and also to further strengthen our strong liability franchise, 45% and above CASA is a good number, probably one of the industry's best only behind 1 or 2 other peer banks. But we'd like to have it stabilized even at a higher level. So all this taken together, I think it should be a good year for us at current financial year.
Sir, can you possibly have a data point that when you reach 45% of CASA, what percentage of these customers are also there assets as well as liability both sides?
That, we need to work out -- if you -- if I request you, can you please reach out to our department, if you can write a mail on that, I'm sure our people will be able to help you.
I'll do that. Sir, now looking at.
And one more thing I missed out, our retail deposits, our intent also was to reduce the bond deposit. So now we have been able to reduce our bulk deposit percentage to 11%. It was earlier 16% at the beginning of the year. Now it has come down to 11%. That is also another cost saving measure we've taken.
And these deposits are more from Tier 1 cities or they are from non-metros and smaller towns too?
You are asking such questions, we have on a simulation and come here not. So kindly add this to your other question also. So I will ask the department, definitely, they will give you the freedom.
Sustainable numbers that sometimes have replied, sir. I just asked, it do.
Okay. We will give that number. We will give that number.
Sir, are you seeing based on 45%, your penetration on home loan, vehicle loan and mortgage loans where you have done well, are you likely to increase your percentage of growth higher there than they use kind?
Yes. Very much cross-selling, upselling is our major objective. Now by -- after the mid of the year when we have the digital platform in place, we've already built up a road map effective marketing of those loans where right from mid-stage to disbursal stage also, we will give through an individual application. We will provide these loans. I'm sure that will bring us a lot of benefits, especially in the retail space.
Sir, these personal loans are how many -- what percentage will be secured and what would be unsecured?
Mostly unsecured, but doing well. I mean there is no cause for any concern.
Mostly unsecured. In fact, personal loans are doing better than secure loans.
Actually, yes.
The data mining companies are indicating that.
Okay.
Any...
Mr. Choksey, we request you to kindly come in the queue for follow-up questions.
We have the next question from the line of [ Abhijit Kumar from Sharegiants Wealth Advisors ].
Sir, my question was like what is the max strategy, like you have get exposure which we have provided this quarter for future growth. So like recently, the deal was rejected by the creditors committee. So like what is your alternative strategy to recover the deals because the total exposure of banks is large and already the assets have been taken by the line. So how do you feel or are you comfortable of recovering the amount if you can uncover some items?
Yes. I'm Anand here. The case is likely to be acquitted LCAP by the NCLT. Once it is acquitted, we will get a resolution plan through the NCLT. So depending on -- now I think it is slightly early to comment up on it, it all depends on the EOIs, which we are receiving at the bank which you are receiving. There are often be -- POC will be taking a call on it in this territory. This is the case as I said, it is slightly early to comment up on the chance of resolving that account at this point of time.
Sir, like -- but how is most of the stores have already been taken by Reliance. And whatever stores are remaining that are also getting closed. So like if there is no stores remaining, so what is the chances of recovering an NCLT, that is really boring. How will this happen exactly the net of pre-curve, if you can like.
Whatever we could do our best, we have done that, we have fully provided so that our balance sheet is effective the cushion from that. And the recovery part, I think everything is not in our hands. We hope that with NCLT decision being tested, so we are completely dependent on that. And after all or like just Anand told, we will take a decision after the NCLT verdict on 6.
So any chance of taking the stores back, which have been taken of one?
See, actually, whatever trends have to be stopped and the available stock in that shop. So definitely, as the legal steps will be taken for retrieving that, but against this segment. Whatever charges there is only we can take it back, other assets, we will not be in a position to fetch.
Okay. So stores you may not be able to take, but at least the inventory valuation, you can bring that from the Reliance, is that.
It is.
We have the next question from the line of [ Jitesh Mehta from Actis ].
Sir, can you throw some light on upcoming your QIP? How much will be price and amount?
We are just about done with our March results. So we have 2 years -- we just got an in-principal approval on the Board, and we will take the call after Q1. Right now, we don't leave that urgently capital augmentation.
We have the next question from the line of [ Sumukha Jay from SKS Capital ].
My question was already answered. Thank you.
We have the next question from the line of Ashutosh Mishra from Ashika Stock Broking.
Sir, I have 2 questions. The first is what is our return on book at this point of time? And what time of recovery do you see coming from that book?
Second question?
What kind of recovery you are seeing.
In terms of written-off accounts last year, totally, INR 10,324 was the written-up amount and the cash recoveries in written-off account was INR 1,035 crores. And yes, that is a good traction because see, what we have concentrated now on all those doubtful one and losses has been very meticulously been followed up. And last quarter, as you could have seen a recovery of INR 354 crores in those assets, which has been continuously on the increasing trend. So while being improved and the situation is good, slightly improving, so we are getting good traction and good recovery from those segments, which will definitely drive our provisions as well as increase our P&L.
You would have seen in the financial year comparison FY '21 and '22, our recovery from the written-of accounts has almost -- it has more than doubled from 500-odd to 1,000-odd. And that has partially compensated our loss in treasury. So I think.
Sir, do you expect this trend to continue this 1,000-odd type of recovery in FY '23?
Yes. We do.
And then on, sir, the on total assets, so what is the quantum of -- what is the asset we have and whatever provisions are holding on that?
Just a minute. Provision is around 92%.
Okay. And sir, by then, you are seeing this NARC transfer?
Several assets.
Yes. NARC, actually, some of the accounts, which have been identified, they have also appointed some trend setters for connecting due diligence and all. They're after being separate situation has happened, and we will be taking further course of action for further proposal by taking approval from the appropriate party. At least by this, we are expecting transfer of some moves. Even though not all accounts are getting transferred, we process to start by this further.
We have the next question from the line of Sushil Choksey from Indus Equity.
Sir, what is our plan to bring down government holding to 75%?
We have got NPL approval from the Board raising of another INR 2,500 crores this financial year. The modus operandi and details will be worked out after Q1. So if we are able to do that, we'll be able to bring down the government stake below 75%.
Sir, my suggestion is, I don't know if any public sector bank is explored or not. Can we convert the additional equity to bring down 75% to 75% into a preference share or Tier 1 capital bonds or whatever whereby we don't destroy our book value because after our last QIP the market prices stand, I'm not saying the market conditions have not changed, but looking at the performance, that would be more an enabler than destructive of price.
Yes. Once we'll not be able to reduce or compensate it, preferential, we cannot go because it's a normal company. But definitely, we have to go for QIP or FDO or preferential.
I think you have not understood my suggestion. I am saying convert the equity shares into preference shares or Tier 1 bonds where the government will have an 8% or 7% yield on the instrument and the shares are converted at a SEBI risk formula whereby equity reduction happens.
Sushil-ji, this is a good suggestion, we'll try to look at it. We'll exactly look at whether it is possible or not because nobody has done that in the market as of now, as far as I know. That there it is a better proposition on that we'll evaluate it also.
I will share some data on that. We all discuss.
Yes, Phase 1, Phase 2.
Second thing, sir, on the growth pattern, again, I expect that you won't have answered the corporate credit growth. How much would be public sector and how much would be private sector in the last 12 months?
You want bifurcation between public sector and private sectors.
Basically I want to know what's the position.
If you see -- as on date, if you see, you know the portfolio very well. Nobody needs to tell you about the portfolio of Bank of India. 80% is NBFC plus government and public sector put together and the overall cap ratio. So naturally, the demand pickup happens, see, today, what is happening in the last 1 or 2 years, there is no incremental capital permission and the private CapEx has not actually picked up in the last 1 or 2 years. Most of them are conserving cash, including the companies. Now we'll see exactly how it pans out, because a lot of mergers and acquisition, consolidation in the commodity sector still continues to happen. And manufacturing is to completely pick up. The only services sector, there is a demand, but not in big and services sector. It is only, again, retail and MSME, some demand is visible.
In these circumstances, private sector cap rate book to grow, it will only grow modestly in so far as our overall portfolio, the proportion of the overall cap rate portfolio that we have. We don't see great growth in cap rate, but of course, whatever is the existing relationship we have, we have good relationships. We are aware of what the capital ratios we have. So wherever there is an additional requirement for investments, wherever there is a brownfield expansion that happens, we'll continue to take that export. So that's what the idea even so far as our strategy for growing the pit.
Sir, historically, bank enjoys a very good reputation in business to a particular region, that's why I asked that question. My last question, we are talking about digitization and digital platform, what kind of CapEx and what kind of products will be able to do it or is only digital for retail?
No, it is not like this, I'll tell you, we have actually over a period of 5 years, our CapEx for the entire IT is around INR 5,000 crores, okay. Now the major thing that we have actually planned for the next 18 months, coming 18 months is around INR 1,000 crores plus. So there we'll have all the entire utility platform in which is not retail alone, it will be both liability, assets as well as include the entire gamut of asset sites, including trade finance, supply chain, corporate book, everything will be there as part of the digital, because it is inevitable. I cannot do anything without digitization. So it has to be there.
No problem. Sir, congratulations and all the best for the current year through the entirety for Bank of India. For data, I'll take the questions offline.
Yes. Thank you, Sushil.
We have the next question from the line of Bhavik Shah from Morgan Stanley.
Sir, congrats on a good set of numbers. Sir, I just wanted 3 questions. First, sir, what would be the LCR ratio as on fiscal '22.
LCR, 112.
Okay. And sir, what would be the yield on investment this quarter compared to last quarter?
Yield on investment, 6.57 compared to last quarter. Around 7. 6.57 is the Q4 number. And 6.9 corresponding number.
So 6.75 this quarter versus 6.9 last quarter?
Yes. Last quarter, year-on-year basis, you're talking.
No, last quarter.
Last quarter, it remains same, not much difference is there, it's all the same.
Sir, why have you seen a very like 15 basis points increase in year point quarter-on-quarter?
Yield down 16 bps quarter-on-quarter. See, what happens is if you see -- no, normally, what happens to the HTM securities that were shifted, there will be a lot of charging that happens at the AFS level. If you see the AFS portfolio, you'll understand this. So the AFS portfolio quarter-on-quarter basis, it has come down. So there is a lot of churning that has happened in the AFS portfolio. So naturally, the yield will go up there.
Okay. Understood, sir. And sir, how is the restructuring book performing with respect to collection efficiency across retail MSME?
The collection efficiency is very good. As of now, if you see the restructuring that we have around INR 15,000 crores is a restructuring look, not much has been there, around 1%, 1.5% is the slippages over there in the MSME as well as the overall fee structure. So if you see the MSME there, last taking September 21 as the cutoff debt for implementation sign lines as per the RBI guidelines, the last 6 months slippages has worked out, it is less than 1%.
Okay, sir. So that's it from my side.
We have the next question from the line of [ Sumant from SS Tours & Travels ].
My question is regarding the future [Foreign Language].
Actually [Foreign Language].
We have the next question from the line of Suraj Das from B&K Securities.
So just a couple of retargeting questions. So the capital number, which you have reported around 14% CET1, does it include the dividend which you have announced? And also, does it include the tariff forward time-dependent provision, the provision of that?
No.
Okay. So it does not include both. And sir, what is the -- what would be the outstanding DTA number as of '22?
It is INR 8,700. We have brought down the DTA from last year, it was INR 12,900, we've dropped down it to INR 8,700.
Okay. Understood sir. And the last question, sir, are you fully compliant on the investment fluctuation results according to the RBI guideline, which would be around 2%.
That's right. Yes, we are fully compliant. In fact, in the last year, we have been fully compliant.
Okay. And sir, the treasury loss which you have reported, does it also include the MTM hit? Or is it -- I mean it does not include the MTM hit?
The total includes the MTM hit also. As per the new guidelines, we have included the MTM hits also. That's why that INR 111 crores is shown in that figure.
And how much would be the MTM hit for this quarter, sir?
Just wait for some more time, but I can say that the total both the non-SLR and SLR portfolio put together and there is a 10 basis point increase, we are likely to see a hit of about INR 40 crores. So it depends upon where these are going to move by 30th of June.
We have the next question from the line of Ashok Ajmera from Ajcon Global.
Sir, I would like to a little bit dwell upon, again, the credit -- especially the corporate credit and because we are talking about 10% to 12% means we are talking about something like INR 40,000 to INR 58,000 crores of growth. So my question to basket size, we had a growth in NBFC of INR 2,000 crores in this quarter. We had one major growth in the power distribution company from INR 6,200 crores to INR 9,986 crores in the distribution field. So similarly, is there any identified areas in field or across the industry? Because I don't see much growth in our domestic credit industry-wide, if you see Slide #12, like infrastructure, textile, gems, jewelry, chemicals. So what is exactly our plan to achieve this number of 12% growth, of course, a part of it is the RAM also. But is there any study has been -- any planning has been done on it like NBFC, so co-lending, pay so much, we are targeting INR 3,000 crores, INR 5,000 crores on co-lending or if it is a power in infra. So can you throw some light on that, please?
Sure, for the corporate credit, we have planned. So far, we have planned, this year, we will grow by roughly around INR 13,895 crores. We are expecting some good projects from the garment sector also under Gati Shakti. Health and pharma, we are doing. Further, coupled with that, wherever the good rated corporates are coming, there also we are lending. And NBFC, whatever you are seeing, it's actually government NBFCs or like Tata like that, very, very prime rated corporates are there. But as a prudent measure, we are not going to increase further our size exposure in NBFC. But -- and we are having some issues with the unsecured exposure also to secure credit whatever comes in our way. And if it's a good rated and case to case basis, we will examine. And for your information, so far, in the first 1 month only, we are having the sanction to the tune of INR 5,500 crores, plus we are having INR 40,000 crores undisbursed limit with us. So we are hopeful that the credit pickup will be there, and there will be no difficulty in raising our book size in corporate credit by INR 14,000 to INR 15,000 crores.
Sir, on this, again, coming back to IT, digitalization, end-to-end, I think we have been hearing it for a long, long time. So is there any fixed deadline. It is going on for last -- I have been hearing at least for the last 4, 5, 6 quarters. So what is exactly the launching date of a particular product or a particular activity like when we are talking end-to-end means everything. So we are again saying '22, '23. But any idea that by what period, which month by what we can put some deadline on it?
Yes. So the launch will happen -- see, all these projects are concurrently running as should be, okay. And added to that, what I would tell you is, normally, what happen is lead time for rollout of any initiative that has taken me 18 months to 24 months. So if you have been visiting for the last 4 quarters, we have actually taken steps in terms of rolling out. Now we are ready to roll out, and the rollout will start happening mostly by June onwards. So 1, 2, 3 products will start because most of the products are already in the closed group and under testing. So one by one, first, we'll start with retail, MSME and agri and thereafter will actually shift to corporate. Similarly, for example, trade finance and supply chain, the UIT is already on. It will be rolled out in July. So like that, most of this rollout will happen by September '22, that's what we have planned, and further projects are there where rollouts may go up to March '23. Month-on-month basis, there is a planning.
We have the next question from the line of [ Sumukha Jay from SKS Capital ].
I have a question again regarding the future group, sorry for that. So my question is, generally, when scheme of unmet does not go ahead and you go to the NCLT, the hair fall would be more than what you would be getting through a deal, right, or how are you going about this? Can you please?
There are many -- See, my dear, there are many things that you will have to actually have counterintuitive view. And what you are basically talking is intuitive. Naturally, the scheme is or deal is better than NCLT something intuitive. In this case, we are looking at very counterintuitive things that are not visible on the pace of it in these accounts, okay. What we see is there will be better recoveries. In the deal, actually, deal was one-sided. Again, I said already the deal was one-sided or only of unsecured bondholders, whereas secured lenders and other products not given a very good deal.
So naturally, when they are pressing for it, there is a good brand value over there. There's a good logistic infrastructure over there, which become -- Reliance is interest rate in taking over or any other even Amazon may have cheap and take over. Today, Amazon is fighting 2 time do we think there is no value in future. If there is no value in future, why Amazon is fighting so much They are soft of taking fighting reps, spending crores of rupees on the legal case and fighting this case to for what. So there is a market they need. They have to enter. So there is an intangible value that this particular group has, which will be able to realize over 1 or 2 years even at we pushed for NCLT. That's what our take is on this account.
Yes. So just one follow on from this is do you kind of like unprecedented like so like any company, any time which we can take INR 8 crores and this will be a day for legal cases as well rates. So why not also join hands with Amazon to fight on behalf of the bank for the...
All the options are open. All the options are open to us, seeing so far as lenders are concerned, especially a great bank like Bank of India and special bank and others, our primary aim is to maximize recovery for the bank, okay. We have taken huge exposure on this account. So naturally, all options are open to us. We may join Amazon, we may -- all options are open. All options are being evaluated. At the right point in time, right kind of option will be chosen for maximizing recovery.
As retail investors, we can hope for the best in the future, right, sir?
Yes.
We have the next question from the line of [ Vishal Singh from Lalkar Securities ].
I want [indiscernible] why has not any action being initiated against Mr. Kishore Biyani for just relating the lease? And you have not been disclosed about the lease being transferred, no criminal proceedings against Mr. Kishore Biyani was initiated.
Why do you think we have not initiated action or lenders have not initiated action, where did you get that news? Already the -- okay, the action against him will be taken even if drag to NCLT, if necessary, even the other types of options that banks can take against the personal guarantor is being taken. Okay.
I was on the status why you have the power to take action against him.
Yes, might be. Yes, public sector banks are not so weak that we cannot take action. Vijay Mallya, we have taken so much of action my dear. That's why they recorded almost INR 7,000 crores plus.
But sir, are you waiting for you to fly to London, you have to take action immediately?
We have already taken -- see, we've already initiated process of issuing the court circular. Again, the circular is already decided with the comparison will give. I don't think he'll fly anyway, don't worry.
Okay. Sir, one more question I have. But why did you -- why the brand rejected the deal? Why there offer direct?
We have told you...
Where are you expecting NCLT cases?
I have replied this quite a lot of time, saying that it is one sided, it is only covering bond holders and the other unsecured creditors, not secured creditors. We have been given a raw thing in the entire scheme. So we find a lot of value in that company. We find not a value in this brand. But naturally, we want more. [Foreign Language]
We have the next question from the line of Jai Mundhra from B&K Securities.
Sir, first...
Mr. Mundhra, we are unable to hear you pretty clearly. Please go off the speaker phone.
Yes. So is it any better now?
It's still pretty low.
So out of your INR 7,000 crores of staff cost, how much is cash salary and how much is retiral provisions, if you have that breakup?
That we'll share with you separately, separately share with you, those are very granular details that will give you separately.
Right. So actually, what I was trying to understand is...
If you want in terms of proportion, it's almost 70-30 proportion. If you want to understand in terms of proportions.
Okay. If, sir, hypothetically, the yields go to go up by 100 basis points over the next 1 year, this 30%, which is roughly INR 2,000 crores of provisions, employee provisions, can there be any positive impact there because of the rising yield and hence, the retirement provisions liability may be lower?
I don't think there is any correlation between yield and retirement of provisions. See, in our case, retirement provisions are all defined benefit schemes, okay. And added to that, there are statutorily prescribed amounts. And insofar as that particular trust is concerned, yield on trust is completely different position. It is not part of our balance sheet at all.
Right. So that trust is independent, right? Maybe LIC, right?
Not LIC, we have our own trusts. We are our own trust. Trust as its own treasury. It makes these investments.
Right. So you're saying if the debt -- the retirement provisions that you will make is not impacted by yield movement, right?
Yes, I don't think so.
Okay. Understood. And sir, out of your 50,000 staff, how much roughly would be on defined benefit and defined contribution?
Around 10,000 as of now existing staff they are in terms of defined contribution. All other not defined contribution.
Could you hear that, Jai?
No, no. So 10,000 is on what defined benefit, right?
Yes, 10,000 of that pensions and the remaining 40,000, 41,000, they are the new question, they are under contribution pension.
Right. And so anyway, you have large proportion have already made move to defined contribution. So that way, it may not matter too much on the yield side. Is that right understanding?
I mean I think as we've already told that it is a separate trust and that trust that is on balance sheet. So any movement in that, that doesn't impact our balance sheet and the quality.
Okay. But sir, is there any because of yield movement, if there is any change in the planned liability or value of your planned assets? We have to make the shortfall good, right? So to that extent, it should matter?
Jai, it is like this. Now the point is so far at the provision under AS-15, it has to be nevertheless made. It has nothing to do with your yields, whether I use rights, these are down. It is not going to have any impact in terms of my AS-15 provisions. Of course, if these rate, my income is more than the ability to make provision is better, so that is the only advantage I have.
Yes, Monika, you would like to add?
So Jai, I think you are correct. The actuarial calculations that happen, that happens on the training area is yet to update. So may be a positive impact we come with the IRS.
I may not have to provide that's what.
Yes, the shortfall will be less because the ability for the project to grow the income of the trust would be considered at a higher level.
Right. Okay, madam. So that helps. And secondly, sir, in your opening remarks, you mentioned NIMs at 3%, right? And if I see your last 10 years, the bank has not done 3% NIM even on a quarterly basis. So why -- I mean what do you think is changing for the bank so that it can do 3% NIM? Is it like too optimistic? Or you think there are clear drivers for NIM expansion? I mean the reported NIM in the last 10 years have not been 3%.
So 10 years probably in the current context, it's too long a period to any -- do any comparison. I was only saying that 86% of my loan books are in the domestic arena, wherein the NIM is already 2.90 last quarter. And it has made possible mainly because of good traction in credit growth, especially high-yielding credit growth. So our objective is to go as close as possible to the 3% mark. It's the international book, which has shown lesser margins. We will try to make good that. But having reached 2.90 for Q4, there is every reason to be optimistic about that.
Not only that, I think on domestic, you can do, I was thinking that you have given for the full year, full bank. So that may be the disconnect.
Yes.
Understood. And secondly, there on your...
Sir, we request you kindly come for follow-up questions back in the queue, sir.
We have the next question from the line of Prabal Gandhi from Antique Stockbroking.
Yes. Sir...
Mr. Gandhi, please come off the speaker phone. We are not able to hear you.
Is it better now?
It's still a bit low.
Is it better now?
Let him continue, let him continue, we'll see whether we can make out.
So sir, my question is on the overseas loans. So this quarter and the last few quarters as well, we have seen a healthy momentum in the overseas book. Just want to understand how much of this could be because of the INR depreciation, if you could give a breakup on that front?
I would like to say that technically we are gone further down loans. That's why the -- I mean, growth there as well as we have done for the state finance portfolio. State finance portfolio has got in this case almost 1 million. And private finance, we are not for the term loan exposure, primarily on the balance indication and secondary market role growth. So that has increased our outlook. And we hope to continue in our bank this financial year so. We ask how much of this incremental growth is because of INR depreciation? It will be, I think, an insignificant portion. It is an insignificant number, I believe, INR variation related loan growth.
Okay. So coming to the ROE front, what could be the typical ROE that we would be making on the overall fees book?
ROA -- overseas and ROA, margin basis point, it is somewhere around 0.8. It's average 0.80.
ROA is 0.8?
Yes.
That was the last question. I would now like to hand the conference over to A.K. Das, MD and CEO, for closing comments, please.
Yes, I would take this opportunity to thank all the participants in this conference, all my colleagues and our key vertical heads who are present here, who responded to various questions. And we hope we've been able to satisfactorily respond to the question, a few other questions. I think once we receive the mail, we will respond to that. And this financial year -- so the last financial has been a good financial year for us. We intend to continue in the same way within the current financial year, and we look forward to your continued support and guidance all the way. Thank you very much, once again, and goodbye.
Thank you. Ladies and gentlemen, on behalf of Bank of India, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.