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Federal Bank Ltd
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Ladies and gentlemen, good day, and welcome to the Federal Bank Limited Q1 FY '22 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anand Chugh, Head Investor Relations, Federal Bank. Thank you, and over to you, sir.
Thanks, Nirav. Very warm welcome to all of you who have joined us for the quarterly earnings call. I hope and pray that you and your near and dear ones are safe in this challenging environment. And just as 92% of our eligible employees have taken at least one shot of the vaccine, I believe all of you would have also played your part in this fight against COVID. Let me begin with the latest development. Our Board has today approved issuance of shares to IFC Group to an extent of 4.99% of banks paid up capital, and I use this opportunity to welcome IFC as a significant shareholder of the bank. The addition of this marquee name to the list of our prominent shareholders reinforces the trust and confidence reposed by IFC Group on the bank and its management. Infusion of quality capital further strengthens Tier 1 and overall CRAR of the bank. We are pleased and encouraged that RBI as well ahead of the due date confirmed the extension of [ Shyam ] MD and CEO for three years and we believe this approval gives us stability and continuity at the top -- that too at the time when the economy is passing through one of its toughest phases. Our digital and retail teams were on overdrive as their hard work over the past several months started seeing the light of the day. We launched our own credit card and opened it up for employees and existing to bank customers. The onboarding process for the same is simple and digital and it consists of just a few clicks. epiFi and Jupiter, our new banking partners launched their services and initial response has been encouraging. We also partnered with DGV and Amul to digitize farmers and payment life cycle that aims to cover base of 36 lakh farmers. We were adjust as the best private sector bank by Outlook Money. Also, we run high in employee satisfaction index as great places to work in [indiscernible] as 47th best workplace in the country. Coming to financial performance of Q1 FY '22. The quarter was marked by onslaught of Wave 2 and its legal impact. Despite the turbulent external environment, we were able to report steady performance as we saw new highs being achieved on the front of operational profit and CASA percentage. We were able to largely hold on and maintain collection efficiency, asset quality and provision coverage ratio. I'm sure you would have got a chance to look at the numbers and investor deck. The entire senior team is on the call and would be happy to respond to any query or question that you may have. With this, I'd like to hand over the mic to Shyam for his opening comments. Over to Shyam.
Thanks, Anand, and good afternoon, everybody. I hope everybody is safe and all going well. I'm not going to elaborate too much. I think Anand has mostly spoken of the headline items. I do want to take this opportunity to both say, thank you, and welcome our friends from IFC. I believe this is a good advertisement for Federal Bank's commitments to green, Federal Bank's focus around getting in marquee investors. So thank you very much for IFC, and welcome to our Investor Day. For the quarter, if we thought Q1 last year was tough, and we were tested, I do believe it looks like a trailer because this year, certainly, April, May took us all by storm. Nobody was spared. We did see a lot of our employees and their family's having impact of one form or the other. And we, in fact, did lose some employees and well over 2,000 employees over the period have had unfortunately been affected by COVID [ beta-2 ] [indiscernible] employees. But I'm greatly encouraged that the team has rallied around. Any amount of preparation was never enough. It's only the attitude that matters. And I'm quite encouraged that people have actually made their best possible effort and all branch-related activity of field-related activity, which meant going into the branches, meeting customers were affected for a greater part of this quarter. No surprise, everybody knows that. And it didn't have an impact. I do think people rallied around quite nicely in June to recover lost crown. The quarter, like Anand mentioned, did see a very strong performance by our treasury team on the back of being able to sort of do some good work on the bond market side and that has given us strong cover, which we use quite prudently, sensibly to ensure that we continue to remain well provisioned. The portfolio, while held out well did see challenges in pockets and geographies where accessibility was modest or literally stopped in some instances. And we took some calls around our gold loan business to make sure that the customers who are already sort of impacted by the environment were not subject to even more stress. So for the first time in all our life, we saw some slippages or restructuring in gold, but both of which, I believe, is only a matter of time before it cures itself. So -- but prudently, we made very significant provisions for that as well. Anand did mention about some of our digital [ 4 As ]. I've mentioned for long. I see digital not just as sort of a technology-led, but it's the way of work. And it can potentially give a bank like us extreme reach and some of these partnerships that we're working with fintech can open up lacks of customer opportunities and cross-sell opportunities, all of which we are acutely focused on. And I think as the base builds and our analytical capabilities are getting better every passing day this cross-sell opportunities only materially improve. Even through this pandemic, the one thing that I'm greatly excited by is, we've built about a INR 2,000 crore personal loan book, all of it digitally originated and from our existing client base, not new to bank. Through this period, they have held up well. In fact, it has marginal or almost no slippages. So evidently, the choice is good. The analytics is good, the ability to keep the best customers going is good. So I am encouraged that as we get the credit card opportunities, which are unfortunately is temporarily on hold for the Mastercard issue. As I mentioned in the last call, our credit card is largely going to be initial period existing to bank digitally capable -- digitally originated. I do see that looking like a nice opportunity as things open up, and we are making a plan B come alive very soon. So let me just say that Q1, we -- in the face of quite challenging environment, we did brave quite well. The environment is beginning to look better, not across the country. between weather and COVID, there seems to be one challenge or the other at any point in time. But I'm hopeful that it's something that's now become part for the course, and our teams are both adjusted to the new reality and are able to cross over this challenge. Portfolio quality, while it held up, there have been pockets of challenges, and we are -- our collection efforts are sort of getting redoubled as things open up, the ability to meet clients and have conversations and recovers improving. And on the overall corporate book, mercifully, all through this period, we haven't had no significant challenge on the corporate side. So more than half of the book is well field. So it's the small business, business banking select customer -- commercial banking customers who are going through the challenges. And between an array of solutions that we have, we should be able to navigate through and ensure that, hopefully, the rest of the financial year turns out pretty decent. So let me just pause here and say that we are hopeful of a reasonably decent year with the worst being over. I'm assuming Wave 3 doesn't become anything like what we have faced. And should that hold, we should be able to repeat our FY '21 kind of outlook or better. So let me just pause here and open up for questions. As Anand mentioned, our entire senior team is here. We'll be happy to answer any questions.
[Operator Instructions] The first question is from the line of Mahrukh Adajania from Elara Capital.
Anand, congratulations on your reappointment sir. Sir, my first question is just at all you could give us a breakdown on your home loan slippage -- of course, you've given extensive disclosure, but if at all, you could share that number, slippage on home mainly?
You mean of the retail, how much is home is that the question?
Yes, sir.
I think about half of it would be home loan, Mahrukh. Exact number I won't have, but roughly about half of it, 60% will be home loan. Other than that is LAP.
Okay. Got it. And the other question is in terms of gold loan, what is the NCV on gold loan? And how do you think these get resolved because most of the gold loans section that were decent last year would have been by those customers who wouldn't have got other unsecured loan, would that be correct?
Our gold loan book between restructured and slippage is INR 275 crores, INR 225 crores on restructure and INR 50 crores on -- the slippage. Of this INR 275 crores, if I remember right, about INR 40 crores, INR 50 crores is the only one which is about 93% LTV. It's really very marginal, Mahrukh.
So that will be a will be a [ true ] question and it's NCV -- our book NCV [ 4074 ].
No, I was narrowing down to her question, but yes.
Yes. Yes.
Got it. And would you have any buffer provisioning now?
So we have only two types of provisioning, credit provision or standard asset provision. Standard asset provisions, we've made accounts that were in SMA-2 or which we were challenged and which needed help. They have become restructured and all restructured, we made 15% provision.
Got it. And what about [ NI ] versus what was that for this quarter?
INR 65 crores.
Shyam one last question. In terms of your capital issuance, you've taken board approval or foreign issue. And not of you know the private placement that happened today. But otherwise, you have a more approval. So will you be raising as much or that's just the outer limit?
If -- I'm sure you've been tracking us. Last year also, we had a similar number. And over my 10, 11 years, the only time we raised was a QIP four years back. We are very stingy and prudent about our capital allocation and usage. We've just got an enabling resolution as we did last year. very unlikely we will go for an issuance in a hurry. And if we do, we'll be calibrated to the requirement. But yes, we do have an approval on that.
The next question is from the line of Jai Mundhra from B&K Securities.
And congratulations on a good set of numbers and disclosure, sir. First question is, sir, on restructuring. So restructuring 2.0, if you can -- I mean, we have given the outstanding number. But if you can bifurcate how much was restructuring 1.0 and 2.0? Or is this the balance is the 2.0 versus last quarter?
Yes, about INR 850 crores is this quarter restructure.
And there was no balance increase in the previous restructuring, right?
Very marginal, very margin achieved.
Sure, sir. Second question on your slippages -- and sorry, and any range for the -- we still have three months for this current window in restructuring any sense, sir? And how much more could come in the [indiscernible].
We have said -- we had said at the beginning of the -- in April -- sorry, May 16, when we did our results, we thought about 1% of the book. Like last time was 1%, we said this year also be it 1%, 1.2%. I'm thinking that it will be around the same thing. INR 850 crores has been done, another INR 400 crores, maybe the restructuring that will come up in this quarter.
Sure, sir. And secondly, on slippages, sir, I think in your opening remarks, you had mentioned that things are looking better incrementally. So safe to say that assuming no third wave, as you said in your opening comments, is that it is not -- if it does not become unmanageable, then the slippages would have already peaked in this quarter. I mean would that be a right statement? Or how would you look at slippages [ '23 ]?
I'll only draw on the following, [ case ]. That last two financial years, our slippages are roughly about INR 1,800 crores each year, right? This financial year should be around that or plus/minus another 10%.
Sure, sir, last question from my side is, sir, you have given a lot of details on fintech and of course, your annual report also talks about very improved digital capability. Any thoughts on how does -- I mean the numbers perspective, when do we see this translating into a, either higher growth or b, higher [indiscernible] or c, higher cost efficiency. I mean, any qualitative comments around those, sir?
So I think all of that are the reason we are doing this and to be relevant and in the -- really at the forefront. We have seen that. I mean we are seeing that happen. Our non-people cost has been flattish or dropping. So -- and we have not added branches, but we are growing quite smartly. And these are proof points of the digital capabilities of the bank. And in the face of very dominant names, we are either top one, two players in the universally accepted MEITY scorecard. So on every count, our capabilities is matching or rivaling or sometimes better than many, and we don't want to let steam on that. And in terms of translating into numbers, you're seeing it happen, right? I mean our cost income. There's one stubborn part of our cost, which unfortunately is not in our -- entirely in our hands. I know nobody likes to hear that, but it is the truth, is the pensioning related. If you sniff that out, our efficiencies are improving every quarter.
The next question is from the line of Nitin Aggarwal from Motilal Oswal Securities.
Congratulations, sir, on the extension of the term. A few questions, [indiscernible]. Firstly, on the restructuring in the corporate segment, if you can go on to the number of accounts that you have restructured in there and how the LTVs have been. And what is your sense on the say, LGDs in the corporate accounts of your restructured versus the bad loans in that segment?
In the corporate, there's only one or two accounts achieved. I think could be -- probably two account. Babu, was that right?
Yes. In -- you mean, [ RF-2 ], there is no restructuring to us in one not only what is your aspect.
Yes.
Okay. And in commercial banking?
Restructuring in commercial banking is about totally INR 275 crores this quarter would be about INR 100 crores, Babu?
Yes, this quarter, commencing by it's only INR 64 crores.
Okay.
Okay, sir. And sir, when you say like that this year can still be better discounting [indiscernible]. But how do you read the situation in Kerala because we are seeing high COVID cases there. How -- would that make you when you like look forward in projects, things for FY '22?
We've long said that we are as India as anybody else is next Kerala one geography where we have material presence, but that's not in any way hampering our overall activities. Yes, there are certain things that will get affected, but we've got offsets. And despite Kerala's number of instances, the ability to sort of address is into it. It's not that it's totally disappeared. But ability address is improving people are braving it. I must remind ourselves that our strongest suite in Kerala is our liability franchise, right? For 5, 6 years, we've been quite cautious about our credit growth in Kerala. So the book that we have is quite vintage and well seasoned.
Okay. Okay. And lastly sir, if you can give some details on the recoveries from written off accounts, like?
But this quarter was exceptional because we have one strong recovery on our [indiscernible] account, public and everybody knows Kingfisher. So that's the only thing.
The next question is from the line of Renish Patel from ICICI.
Congrats on a great set of numbers. Sir, there's just one clarification on... [Technical Difficulty] Okay. Sir, congrats on a great set of numbers. Sir, just two things. So one on the collection side. So because of lockdown, we have raised demand for April and May or how it is, sir?
Babu, you want to go?
Yes, sir. Yes. Yes. there were demand and the [indiscernible] collection efficiency stand as far maybe now the same level that were in March and December, now it is 95.2%. That is our collection efficiency, as was almost the same level in the previous quarter. Additionally, I would add that there was no moratorium as such -- So there was no moratorium. So everything there was a demand certainly as per the IRAC norms or so.
Got it. Got it. Okay. And sir, Shyam sir, now coming back to this fintech tie-ups, okay? So of course, we have been tying up quickly almost a leader of the 8 segments. But initially -- so in this partnership, who is going to bear the customer cost of acquisition, it is us or the partners?
We have a cost sharing and a revenue sharing model. And the model is not unique -- I mean it's not the same across every partner, depends partner to partner. But it's not a high-cost model is structured in such a way that the fintech carries the bigger part of the originating cost.
Got it. Got it, sir. And on this, again on the related to this BharatPay tie-up, if you, sir. So now here, what is the MDR cuts we get?
Shalini, do you want to go?
Yes, I'm here, I'm here. So I think on BharatPay, and maybe on the UPI transaction, the MDR is governed by NPCI as you know. So depending on the value of the transaction, there is a certain level of MDR that we are supposed to charge. And there is a sharing formula, therefore, that we have agreed with BharatPay on the basis of which we do it. But I think the broader point that needs to be made is I mean these are person-to-merchant payments being encouraged to bring up the entire digital landscape in the country. So the MDR piece is anyway governed by NPCI, and we have a sharing between ourselves. But I think the broader point I would like to make is the BharatPay relationship is designed in such a way that it gives us -- it opens up the opportunities for access to a range of merchants across the length and breadth of the country, which we normally would not have had access to.
Okay. Okay. So I mean it is said to assume that the escrow mechanism with us?
Sorry, I didn't get that.
So for BharatPay, will you be managing the escrow count for them? Or how is the arrangement?
There are different models that are in place depending on the kind of merchants that they onboard. So it's a varying kind of a model. Some merchants, there is an escrow with us, some merchants, there is account with another bank, and we have a pass-through. So it depends on the kind of the merchant, the geography, we've got varying arrangements in place and all automated. I mean we don't do any of this manually here.
Got it. Got it. So just a last follow-up on this. [indiscernible] -- Of course, initially, I don't think we'll be getting any revenues. So on, let's say, a cost-to-income metric, where do you see this partnership for breaking even? I mean, let's say, 6 months, 8 months, 12 months.
I think the way we see these things in all these relationships are three elements of revenue. One is the incremental CASA that will build up. Second is the increasing cross-sell that we can put up on this base. And the third is the new client base that we will keep adding and therefore, the franchise gets expanded. All of these are activities we're working on. Like I said, it's not incrementally cost, it doesn't throw a big cost on us. Revenue depends on many things, right, the balance build and the cross-sellability.
The next question is from the line of Rakesh Kumar from Systematix Group.
Sir, the first question is with respect to PSLC, what we purchased this year, like previous financial year of around INR 12,000 crores. So what was the total cost that we had to bear for that?
In last year?
Yes, sir.
Last year was INR 35 crores.
INR 35 crores, sir?
Yes.
Okay. And sir, this quarter, we have seen there is a bit of a sequential decline in the car deposit number. So like if we have to like is it because of that, that in a larger corporate clients are -- might be drifting away to the larger bank where the funding costs are low. Is that the reason because the competition for car account is increasing day by day. So is that the reason? Or is just a blip for a quarter?
No, I think there are many things on that. One is car usually year-end is already both customers also plays a lot of car on the banks. And then as the year goes on, they draw down. Second is there is going to be some shift in current account behavior, courtesy RBI mandate. So I do expect the car to be more moderate at this point in time. I don't see car exploding. But where we exited last year for us to build back will be the challenge for the coming quarters. It will be a little more harder work than the past.
Got it, sir. And sir, thirdly on this NR deposit still we have done quite good performance on that front. But just to understand that how the market's here in the country and Kerala state has moved in the last one or two quarters?
Happily I'm thankfully doing well. Even now -- at least for us, our share of remittances is going up and publicly last disclosed RBI number, we are at about 18.5% of remittances of India. And that seems -- we're trending closer to 20% now. So even if the volume shrinks, we are gaining share.
And in NR CASA, sir? NR CASA competition?
And in terms of NR CASA. Because NR term is usually much smaller. It comes a staff and then only shifts to turn.
The next question is from the line of Ajit Kumar from AMBIT Capital.
Yes. So first, in the credit card business, how much delay we can expect in order to switch to Visa and then again bank will start [ lease ] issuing these credit cards?
We think about in 6 and 8 weeks, Ajit.
Okay. 6 to 8 weeks. And sir, second, on deposit side, if you look at our cost of deposit has further come down by 25 basis points in this quarter. And on the other side, if I look at your TD rate that has remained broadly unchanged from past 5 to 6 months. So for how many more quarters do you expect this cost of deposit to further come down mainly because of this lag impact of [indiscernible] considering TD rate cut has probably bottomed out?
We may be at the closer to the bottom of our overall cost of funds. I don't expect it to drop materially from here.
Okay. And sir, on the loan side, where will your focus in terms of growth considering lower gold loans, which used to be growing at a very higher rate, we'll now see moderation?
Yes. I think we heard you -- I don't know whether Shyam got disconnected. Shyam are you there?
Shyam, sir, can you hear us?
I think I'll take that question then I think.
Yes, Chugh go ahead.
Yes, the areas that we have been earlier also sharing with our stakeholders is that that we would be interested in increasing more of our business banking portfolio, retail. And definitely, I think this credit card has been a temporary blip because of this banning of Mastercard or so. Otherwise, that was also one of the areas that we were focusing on parallelly with gold -- and for your information off late last couple of weeks or so, gold once again has started picking up. So it's not going to remain stable. Yes, it was segment for almost three months, but now again, it has started moving up.
Sorry, Shyam here, I'm back. But any -- I'm sure you have answered. I don't know what the question is, but I'm sure...
The question was, I mean, because now the gold is going to moderate or rather remain stagnant, which are the areas you would focus on I mean, compensating for it because that was high-yielding sort of assets.
Yes. Okay.
So lastly, one, just data [indiscernible] question. What is the updated number for ECLGS disbursement till now?
The same this quarter, not much INR 3,000- odd crores over the last quarter and same I don't think it's changed much. [indiscernible], would you know? -- but I think the number is consistent.
So nothing under [ 3.0 ] and [ 4.0 ]?
No, no. Even if it is very marginal, very marginal.
The next question is from the line of Kaushik Poddar from KB Capital Markets.
Yes. Shyam, this thing, the odd -- just a minute, let me see the slide. Yes. The stretched book to total average assets has gone up to 2.24%, which is where Federal Bank was in third quarter '18. So -- and this is basically because of the huge restructuring that has happened. So how do you see that your restructuring restructured books playing out? When do they become standard in how many quarters?
It contributes the demand on these are in different quarters, Q2 some Q3, Q4 because restructuring portfolio at inherent moratorium build-in. So I think in the course of the next 12 months, it will start trending down. Now whether the 2.24% goes back to the 1.08% in 12, 18 months, depends entirely on the recovery from here on. But at this point in time, very early indicators look very encouraging.
Sir, Babu here. To supplement on this 14% of the restructured book was in demand in Q1 where we collected 95.5%. So we don't find a stress on collection even by keeping the restructuring.
I think the initial signs are that the restructured book is faring quite well because mainly it is secured. These are home loans, these are loan against property, LAP and all. So being secured book, even if there was some probability of default that has been taken care of through moratorium or through restructuring. The loss given default even otherwise even after slipping and all has been very low in these portfolios. So that is the reason if you see most of our restructured book is from retail home loan, retail LAP type of categories or so. We don't have unsecured there. There the probability of default and loss given default, both are high.
Yes, I saw your portfolio of the restructured loans and most of it seems to be secured.
And plus, additionally to -- just to add to your question, you said, when will they turn standard actually, as per regulatory prescription, post restructuring, they remain standard. So they don't slip.
But when will you take it to the standard asset? I mean when are they gearing as restructured?
They are standard asset.
They are standard asset.
Yes. And until they exist on the book, they would be called restructured assets.
Okay. Okay. It's not that after a few quarters payment, they become standard?
When we status, IRAC status slips to substandard, then you make it standard and then you say out of this substandard has been elevated to standard assets after the satisfactory performance. But that is there when the restructuring is done, wherein the status of the account slips. Here in these cases, status has not slipped.
So they will remain restructured til the time that they repay the amount? Or how does it go?
Restructured standard. They will remain restructured standard.
They will remain as restructured standard. Okay. Okay. Till the time it is repaid or something on that. Yes, out of the book.
Yes.
Okay. And how do you see the NII growth playing out. And Shyam, you just commented that you don't see the fund -- the cost of fund not coming down. So in light of this, how do you see the NII growth playing out over the quarters?
Yes. We had said this year between 3.15% and 3.20% would be our NIM range. We are at 3.50%. -- the slippages trend better we expect that getting closer to 3.20%.
So will the NII growth be more than your loan -- more than asset growth?
It will last quarter, last 2, 3 quarters, you saw it happen this quarter because of the higher reversals that trended down as we'd see that coming down and the credit growth pick up and particularly with the higher-margin businesses like gold and business banking, you will start seeing this pick up again.
In this regard, I recollect you saying that you used to have some high-cost deposit or something, and they were supposed to get wound down over the years or something. I mean, has that happened? Or there is some scope of some?...
How much project -- large part of it is already unwound. A large part of it is already unknown. No, I don't see material improvement in the cost of fund.Yes, it could be a few basis points, but not material.
I would like to add here though cost of funds has bottomed out or closer to the bottom or so because of winding down of high-cost funds or so or the earlier deposits, which were contracted at a higher rate of interest term deposits also. But on the other hand, you will see even the yield on advances that was, I mean, correcting a falling or was, I mean more or less stagnant would also start rising up. So NII would come out of that differential. So I don't think there is going to be any impact just because cost of funds has bottomed out because so has the yield on advances.
Right, right. Yes. Okay, okay. But you are looking towards 3.2%, that's what's Shyam said?
Yes, that's for NIM.
Yes. Okay. Okay. And how do you see the cost? Do you see -- I mean you are not putting up any branches. So to that extent, of course, we are putting a lot of money in all these new technology and all that stuff. So how do you see the cost running, I mean, cost growth compared to NII growth?
You're seeing, like I mentioned, cost in of course, this quarter is extremely flattering at 45%. We think the -- getting close to 48%.
The next question is from the line of Piyush from ICICI Direct.
You can go to the next one, please.
We move to the next participant. The next question is from the line of Sameer Bhise from Axis Capital Limited.
Firstly, I just wanted to understand what is the split between the existing NPL in housing and LAP? So if total retail NPL is roughly INR 1,280 crores, how much of it would be housing and LAP?
Babu, we have a [indiscernible]? I would think of it would be INR 60 crores - INR 40 crores is my sense, but we can take a strong watch.
I mean the question basically was, so if roughly half of it is housing and LAP and if I look at roughly INR 1,300 crores of restructuring from these two books. The total stress seems to be roughly 7%. Is that a bit too high or does it make you uncomfortable?
I'd encourage you not to view restructuring equal to stress. It is not in our care. We have made the conscious coils, the situation to help customers who may have challenges and who may need the comfort of paying over an external period of time. It's not that they've all run into a problem. I can reconfirm we are not using restructuring as a means to avoid NPA.
So fair enough, it is visible from slightly higher slippages. So I'm sure you guys have been prudent enough to take that call. But just going by a gross number of, say, 7%...
That's why I think it's important you read it alongside the message Babu gave, 14% demand, 95.2% collection, which is a normal collection efficiency.
Fair enough. I would see [ positive ] the numbers later often. Secondly, what is the yield on the corporate book?
Doesn't change much, right? It would be in the same 8-point-something Harsh and Venkat? Would that be the right number?
The -- There is a 12-13 basis point reduction over Q4.
Okay.
One final bit on the credit card piece, any numbers of what proportion of the ETB customers have taken the card? And any sense on their profile like age-wise or vintage-wise? Any sense there?
It's very good, but very early samples getting close to 25,000 cars in one month. But it's early days.
But what does the pilot show? I mean, I'm sure some of these customers would actually already be credit card users or maybe they would be old customers?
I mean, I don't know if we can draw much of a pattern building balances. If I extrapolate this, we will be the world's best credit card, I'm not even getting there. It's very early. At least two quarters -- one quarter you should see to see the traction. And the first billing cycle is over for them.
The next question is from the line of Prakhar Agarwal from Edelweiss.
Just a couple of questions. First, on your SMA book worth, what would be a number of SMA book in terms SMA-0,1,2 I think if you could just?...
That is to the last quarter. I don't know if we can give specific numbers, but the SMA book is almost the same as last quarter at the end of June, at the end of July or 23 of July, it's improved even further.
Okay.
So last time we had [indiscernible] somewhere some 5% level, so that probably stays.
Yes, the It's thereabout. If you've said that, that's the same number. It improved slightly.
Secondly, in terms of Fedfina, when I look at the...
This is SMA-0,1,2.
Yes, I got that. In terms of Fedfina, when I look at the asset quality performance, there has been some pickup in there. Where is this rise coming from and what [indiscernible]...
Two of their large commercial real estate, I mean, for them, maybe like INR 5 crores, INR 8 crores kind of transaction. They have taken two transactions as an advance NPA...
Their core book is still looking quite intact.
One has corrected in July, Shyam.
That's why I said, two.
Yes.
Okay. So essentially these large part of the rise is driven by these two accounts..
Yes, yes. In fact, it's only these two accounts. Otherwise...
And growth of...
The book is faring quite well, barring these large -- I mean, according to them, this particular portfolio, real estate portfolio was there, which they are gradually depleting. And basically, it's -- no fresh underwriting is happening in this particular portfolio.
Not now, for the last two years.
Any further capital infusion that is required in Fedfina or any other [indiscernible]...
That was done recently in June, the last one.
We are not looking for at least next, say, two quarters, three quarters till we see how things pick up. They remain capitalized at this rate till March '21 -- March '22.
Perfect. And just last question in terms of your trading gains that has happened this quarter. So probably would that be a result of change in the power between AFS [indiscernible] that we are allowed to do sense or probably that exercise is still less.
[indiscernible]
That's normally done in the beginning of the year, and that exercise is done. If you compare these numbers with last year's number, more or less same, slightly less than last year, but almost, I mean, same range. Overall, other than this bond, there had been other areas where the overall performance of the treasury has been quite good. So whether on the currency side or derivatives or I mean, even equity everywhere it has been much better than the earlier quarters.
It has built a great successor there.
The next question is from the line of Abhishek Murarka from HSBC.
Congratulations for the extension in your tenure. So a couple of questions. One on the fintech tie-ups. So can you sort of give some sense of the throughput you're getting in terms of number of retail accounts or retail SAA accounts -- from these tie-ups? And maybe some sort of trend, let's say, a few months back, what were you getting in, what are you getting now?
Normally, in the non-COVID time, we were doing about 3,500 new accounts a day normally and in a good day 4,500. But in the COVID times that has come around about 2,500 or so. And our tie-ups are now beginning to kick in about another 1000, 1500 a day.
Okay. Okay. About 1,500 a day. Okay. And in [indiscernible]...
We are looking at much higher as things stabilize. They also are doing some very intelligent marketing, they do by invitation. So they're also building a demand.
And any targets, let's say, one year out, what is an aspirational number you intend to get to?
Shalini, you have a big agenda. Shalini, do you want to talk about it?
I think it's very difficult to kind of -- we've got some internal targets, obviously, that we work with the partners, et cetera. Let me just say that we expect this to be reasonably substantial portion, if I can count it that way and keep it that way. I think give us a couple of quarters more, and we'll be ready to kind of reveal a little more, yes.
Sure. Sure. Sure.
I think the gross point is that I think I'll just add to what Shyam has said earlier also, -- The numbers are kicking in. Both our Neo- banking partners on savings accounts are currently on a kind of wait list approach rather than just open to all. So -- and that's clearly because we want to calibrate the profile, they want to calibrate the profile. We want to calibrate the profile, et cetera, that is coming in. So we'll be waiting. So it's on a waitlist approach. Both have a very attractive and healthy rate list. And I think that will give us the numbers. The numbers are beginning to kick in. epiFi has scaled up more than Jupiter because epiFi was about 2 months earlier than Jupiter, I believe it to scale up two quarters down the line, I think we'll be able to kind of give a little more texture to it. The profile of the customer coming is obviously also important. These are the salaried millennials, the so-called digital native, the ones who've kind of depend on the mobile and walk through the mobile. So that's also an important aspect of this partnership.
Let me just add. For long, I've said there are two things, right? One is digital at the core human and the core and second is branch-like distribution heavy. As you know, we haven't added a thing in 5 years, we've added 20 branches or something. And my aim is as many as our branches give that many or more our partners will bring per day. So we're doubling our network. My feed, I want the bank to have a feed of 1,250 branches should feel like 3,000 branches. That's what we are working on.
Fair fair point. And right now, it is not really about cross-sell, right? It's just about getting access to ...
Originating. Cross-sell will be 6, 9, 12 months away as the base build.
Sure, sure. And the second question is on gold loan. Now can you like pinpoint any particular reasons why across the board that stress, we are seeing restructuring NPAs going up. Is it because of, let's say, last one year, when you've seen a lot of growth here, it's probably to a relatively weaker customer profile? Or is it because of the LTVs, which went up 19%?Can you [indiscernible]
One is just the sheer impact of COVID, which has killed everybody. Second is LTV coming down. Third is gold price falling, right? So a bunch of stuff, so ability to service -- And fourth is at least us and I think many other good well-meaning banks and NBFC have chosen not -- because I don't know if many of you may or may not know, in 2013, when the gold prices fell, and I don't feel guilty, but I was the leader of that pack. I said just sell and get out. So we were quite wicked with customers. We protected ourselves. That backlash took a good two years to cure because people say they are good weather friends. This time we've decided to be a little more, I would say, sensible about it and said, fine, if it means in this very -- if it was a normal time, I wouldn't have allowed that. But these are extraordinary times. We must be a little more sensitive to customers. And we said let's take that hit in neither as -- if they are eligible for restructuring rates, I will take that as NPA, and we will cure it in one or two quarters. At least that's our approach. I can't quite speak for others. But when I've spoken to a couple of bankers, the view is the same.
Okay. And fair to assume that incrementally, even though LTV may be lower, but growth will anyway be cautious. I mean it won't be like last year?
No. I had not well before we visualize this product. I said this year, it will 35%, 40% because last year grew 70%, right? It is impossible to repeat on a larger base. So I said, 20% to 40%. First quarter has been flat or slightly degrowth. I expect this year still to see if things pick up by [indiscernible], we should see 30% growth.
Okay. Okay. Okay. And finally, just a quick data-keeping question. If you can share the breakup of the incremental restructuring. So you've given the breakup of outstanding -- If you could just share the incremental broadly, that would help?
INR 850 crores, INR 450 crores is retail, INR 200 crores is gold balance is a mix of -- sorry, business banking and [ commercial ].
The next question is from the line of Krishnan from HDFC Securities.
So two things. One, around the gold loan portfolio, the ticket sizes have kept going up. I think Q3 to Q1, it's been flat to otherwise it seems like a INR 1.4 lakh kind of ticket size. Is that unusually high? Is that something that can see something about the customer profile there? In terms of how much leverage there is on that portfolio?
Yes, please go ahead.
On the ticket size, typically to benchmarking in some of the [indiscernible] the range of 14,000 to 16,000 other [indiscernible] banks typically have a higher ticket size because the more rate-sensitive customers and the larger ones typically flock towards the bank. That's number one. Secondly, we are also looking at targeting a different kind of a customer base and encouraging them given the low cost of funds by way of gold loans and a steady source. So that also has been helping us. So a new segment. So typically, the largest set of customer comes to us. So we do expect that only to -- on a big level. And in fact, some of the customers we are looking at could be digital [ INR 2.5 lakhs ] and [ INR 4 lakhs ] also.
Yes Yes. My only point was could be the more business loans rather than consumption loans?
INR 2 lakhs, INR 3 lakhs is consumption loan. That's not really business loans because that's a different set we done together. But the ticket journey because, like I mentioned, we have more rate-sensitive customers also.
Got it.
Also, we reach out, right, rupee arrangement is reach out. So you got a different profile also.
Those are banking, that helps a lot, and the tickets are still higher over there.
The next question is from the line of Manish Shukla from Citigroup.
One clarification on restructuring outside of COVID, what would be the restructured book of non-COVID under either RBI, SME scheme or otherwise?
Almost, nothing.
Okay, fine. And on the retail side, this time, we're seeing a higher restructuring in lab and housing -- Could you explain the nature of demographics or whichever way you see this customer assessment? Is this, I mean, translator impact of COVID? Or I mean, how do you see the stress in this book? I appreciate that it's a secured book but this is the first time that we have seen these levels of numbers?
Largely COVID only. It's the impact of COVID whether it is lastly but transitory only time will tell. But the trigger is COVID.
Is there a primary self-employed or salaried or...
Our retail book, which is the origination from 2018 is more salaried than self-employed. And if I look at the vintage of restructuring by geography, Kerala is about 50% of the restructuring that we've done of this portfolio and Kerala is re sales employ.
Got it. That's really helpful. On the digital native and digital acquisitions, right, you mentioned that you would expect the volumes from these sources should be as much as branches. But do you have enough data to talk about the average balances? How do the balances compare between branch accounts and online accounts?
Very early, right? We are sourcing two months, three months. You can't quite make anything on that chief. At least 6 months data, I need to -- for us to make that statement because we've built INR 100 crores on this, and we have, say, INR 40,000 crores on the other, hard to tell this.
Okay. Fair. Last, you said on treasury for the treasury income of the quarter, how much would be other than bond non-bond related treasury gains?
There [indiscernible]. If you see the Q1 FY '22 Exchange Commission Brokerage has a fee is [ 161 ], Forex is [ 41 ]. That's the breakup. And [ provident ] on sale of securities is [ 258 ].
No, sir, I'm talking about the -- Is that all bond or something else?
Significantly bond.
I'm just trying to understand in a quarter in which rates were large had higher you booked treasury gains. Is it largely because of [ GSACS ] or was there something else?
[ Krishna ] you want to answer?
[ GSACS ] and some very small amount of non-SLR as well, but mainly [ GSACS ].
No, no, I'm sorry. When I said [ GSACS ], the RBI repurchase program? Or is it the market? Because was there enough opportunity to create in the market? I'm just trying to understand the gain.
Achieve that not be that much, but you have the beginning of the year, you have actively transfer. So through that, in the market, the sale has been made and all. So it is mix of all.
The next question is from the line of Mahesh M.B. from Kotak Securities.
Just one thing from my side. The restructuring that you did on the retail side, can you give us some color on what is the kind of restructuring you have done? Let's say in housing or in LAP, what kind of benefit is...
INR 450 crores is the restructuring in retail, 60-40 home loan, LAP and I also mentioned the kind of mix to Kerala, and Non-Kerala salaries also. Sorry, what else is the question?
Just trying to understand, did you -- what you just kind of extended the the [indiscernible] reduce the EMI.
Babu?
Yes, sir, at least in the permitted tenor of two years as well as banks are given the decision-making process depending upon the retirement of the borrower to give moratorium up to even 24 months. But from the asset generally, the demand is only for 6 to 1-year moratorium, which we have considered based on the retirement of the customer. Otherwise, the tenor expense rates running only after two years.
And this be classified as restructured till when?
A 2-year extension in the case of the retail launch [indiscernible]
Babu that's not the question.
Yes. So I'll explain that maybe see -- this question was previously discussed and [indiscernible]. In the case of corporate restructuring, the asset classification continues to be started and it never force in the substandard if it is not otherwise normally going by IRAC norms, unless normal restructured. So COVID restructure continues to be [indiscernible].
I would further add to that. If you see for the last 3 years, our quarterly investor presentation, you would find that we used to earlier also give a detail of the restructured standard together with securitization receipts and all. Now that accounts gradually depleted and became I mean, materially unimportant enough. So similarly, this restructured standard would continue to remain restructured standard because once it is restructured, it has that tax. The thing is when amount becomes materially smaller. And at the same thing, I think the installments are paid and all and the principal amount also falls thereafter, probably there may not be any need to specifically mention about it. But as long as it is an important number or so, it would continue to be presented transparently quarter after quarter. Would continue to be called as a restructured center.
Sorry, I just was under the assumption that the 25% of the longest tenor is paid, you can then subsequently be classified as we.
No, Mahesh no, no, no.
The next question is from the line of Anand Dama from Emkay Global.
Yes, sir, is it possible for you to share the SMA- 1 and the SMA-2 book?
I think the overall number we've shared and it's flattish. I don't know if you want to carve out one and two and share at this point in time. If you've not done it so far, I would not do it this now.
Okay. So quarter-on-quarter, will it be flattish?
Yes. In fact, I said at the end of June -- July 23 as of today, when we completed our Board presentation, it even improved from June 30.
Okay. Okay. Sure. And sir, secondly, that we were interested at some point of time in to acquiring a Microfinance company and there are some Microfinance here who are in trouble and would be looking at exiting someone basically even close to home. So would we really look at some kind of opportunity on the Microfinance front? Secondly, there are portfolio is also available on the credit card side. So would you really look at some kind of inorganic acquisitions in these book products?
Microfinance, we remain interested, but last two quarters, and as we speak in the last few months, we haven't looked at any. I mean many offers did come up, but we said we want to see how the COVID impact plays through. We are hearing things are improving in July. So maybe we will watch for this quarter, nothing on hand. On credit card, the only publicly available big name, we were interested, but they are not so that's not an option.
Okay. So basically, is it that the portfolio is different and basically than what we want to be in something to with that?
Sorry, I lost you.
So what kind of portfolio basically will really interest you when...
Microfinance interested. If I can get Microfinance portfolios or companies that are good and have weathered the storm. Certainly, we are interested. Basically, I don't want to take up something and then add to the problems when we're just sort of nicely dealt with the challenges on that. So we don't have the appetite to deal with the new problem. So are not, we will be interested.
And sir, is it possible for you to share the asset quality details of the [indiscernible] as well? [indiscernible]
If you back out those 2, 3 names which they have taken advanced and sorted that out in the portfolio is looking similar to Q2 -- Q4 last year. It's just 3 accounts which totaled to INR 12 crores, INR 13 crores or INR 15 crores. The portfolio is looking quite right now.
Inside ShivSena.
Yes, yes, I talk of ShivSena, yes.
The next question is from the line of Rakesh Kumar from Systematics.
Just a follow-up question. Is there any overlap between the externally rated corporate advances, BBB and below? -- of 11% and the restructured book or the SMA book. Is there any overlap?
Means the question is, is the corporate rated low? Is that what the question is?
Yes, sir. Yes, Yes, sir.
Thankfully, our restructured book in corporate is very marginal, just 2, 3 names please.
So means there is no overlap as such, actually. With SME also.
Maybe SMA may be. But SME and corporate is anyway low. Thankfully, our corporate book [indiscernible]
I covered that sharp. It covers that, and the amount is fairly insignificant. You needed the SMA-2 or restructuring, both of them put together even insignificant percentage.
The corporate book is performing. I should be very careful and say these things, but yes, performing very well.
The next question is from the line of Sameer Bhise from Axis Capital Limited.
Just one quick bit on the credit card piece. What proportion of the customers would you think won't have a card right now from the bank base?
We have a universe of close to INR 60 lakh, INR 70 lakhs that we can pursue in our pace. I don't know, maybe for Shalini, would you be able to give any kind of color on that?
If you look at our credit -- yes, Shalini here. If you access this against our credit criteria and look at the various criteria we take into account, our sensors and the initial round itself, we should be able to get about out of the if you take debit cards, for example, INR 80 lakh debit cards, it's a good indication that about 10% of that should be eligible for a credit card. Thats typically the ratio we've seen and what other banks have also experienced, but that is the preapproved direct offer. There will be then a further set of customers who can go in through a nonpreapproved route, which means we do a certain credit assessment for them. And then there is a set of customers who are eligible for what we call a secured card then customer portfolio, et cetera, is eligible for a secured card. So I think the three components are fairly substantial in that sense. But the first kind of approach we've had is for the three approved three click offer. And that's typically the ratio of about 1 is to 10 on the debit card side. So if you have INR 80 lakh debit cards, you can specifically expect about INR 8 lakhs of credit cards, eligible.
Thank you very much. Ladies and gentlemen, that was the last question for today. I will now hand the conference over to Mr. Anand Chugh for closing comments.
Thanks, everyone, for being joining us on the call this evening, and have a wonderful year ahead.
Thank you. Thank you, everybody.
Thank you, everybody. Bye. Goodbye.
Thank you.
Thank you very much, everyone.
Thank you very much. On behalf of the Federal Bank Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.