IDBI Bank Ltd

NSE:IDBI

Earnings Call Analysis

Earnings Call Transcript 2023-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the IDBI Bank results conference call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand over the conference to Ms. Divya Purohit. Thank you, and over to you, ma'am.

[Divya Purohit, analyst]

Thank you, Sima. Welcome, everyone, to IDBI Bank's results call. Today from the management, we have with us Mr. Rakesh Sharma, Managing Director and CEO; Mr. Jay Samuel Joseph, Deputy Managing Director; Suresh Khatanhar, Deputy Managing Director; and Mr. P. Sitaram, Executive Director and CFO. Thank you so much for the opportunity, sir. And over to you, Mr. Sharma.

[Rakesh Sharma, executive]

Yes. Thank you, madam. Good evening, ladies and gentlemen. It's a great pleasure to welcome all of you to this analyst meet for our second quarter financial year '23 result announcement. Thank you so much for attending this conference. I would also like to take a moment to wish everyone a great Diwali, which we will be celebrating soon. May there be an abundance of light in each one of our lives both professionally and personally. The Indian economy today is witnessing a significant growth across all sectors despite the inflationary hurdles and global headwinds. We are now the fifth major economy in the world and are performing better than many other major global economies.

As you may leave pandemic behind us, the banking system, along with our entire economy, is looking forward to a sustained growth add. IDBI Bank continues to move on its growth trajectory with yet another strong quarterly performance. While our CFO will present the highlights of our quarterly results to you, let me brief you some of the key highlights of our performance and growth. So first of all, the net profit. We have recorded a highest ever quarterly net profit in the history of the bank by showing a profit of INR 828 crores, which has 46% Y-o-Y growth and 10% Q-o-Q growth.

So the other parameters also, like operating profit, net interest income and net interest margin have shown substantial improvement. The CASA ratio, we have been able to maintain at 56.19%, and there has been overall growth of 54 basis points Q-o-Q. Similarly, ROA, which we had indicated that it will be above 1%, the ROA for the quarter was 1.09%, growth of 30 basis points Y-o-Y. And on the asset quality front, net NPA is 1.15%, reduction of 56 basis points Y-o-Y and 10 basis points Q-o-Q. Our -- we have the highest PCR of 97.86% in the industry.

We -- like as we have been doing in the past, this quarter, also, we have made some proactive and enhanced provisioning, which is not otherwise required by the regulators. So that is around the total, including accelerated provision on NPAs, some provision, additional provision on non third base facilities, which are there in NPA and some additional provision on the restructured assets, aggregated amounts to almost INR 636 crores. Other parameters like cost of deposit, cost of funds have also shown improvement. And the capital adequacy ratio also is robust at 19.48%.

So with this, the parameters, which are showing overall improvement, I will stop here, and I will request our CFO, Mr. Sitaram, to give the presentation. And thereafter, we can have the question and answer session.

[Pothukuchi Sitaram, executive]

Good afternoon. Happy Diwali to all of you, and thank you for joining this conversation. The bank has reported a PAT of INR 828 crores, which is the highest in its quarterly recorded in its history. PBT is at INR 1,437 crores. Operating profit of INR 2,208 crores. NII of INR 2,738 crores. And the NIM has come at 4.37%. Overall, the ROA for the quarter is 1.09% on an annualized basis. And if you take the half yearly prices, it's about 1.03%. The ROE is above 15% -- 15.2%. Cost to income continues to be well under control, 42.29%. And capital is comfortable at Tier 1 of 17% and total CRAR of about 19.5% without taking the half yearly profit into account. Total RWA has gone up by about INR 4,000 crores -- INR 157,840 crores.

It's mainly on the back of growth in advances. Cost of deposits stands at 3.44% and cost of funds at 3.72%, more or less in line with Q2 and the marginal increase over year-on-year. CASA is slightly higher at 56%. The deposits have grown to INR 230,000 crores. Net NPA stands at 1.15%. GNPA has come down due to recovery as well as a technical rigor that is about 16.5% and PCR has marginally improved to 97.86%.

The next slide, again, we have put this PAT growth of INR 828 crores is a growth of 46% Y-o-Y and 10% sequentially. PBT is a growth of 86% Y-o-Y and 32% Q-o-Q. The gap between PBT and PAT is mainly because what MD mentioned that we have done some amount of additional provisioning that -- conservatively.

Operating profit at INR 2,208 crores is a growth of 64% Y-o-Y and 8% sequentially. NII has grown by 48% and 10% sequentially. NIM at 4.37% has improved by 1.35% year-on-year and 35 basis points quarter-on-quarter. The cost to income, as I said, it's well under control. There is a reduction of 1.15% sequentially.

Now the CASA continues to be high at 56%. The retail to corporate, as we had guided earlier that it will remain in the range, and it continues to be in that range. Overall, we can expect that the retail to corporate will remain in this -- within a range of plus or minus some 4, say, 62 to 68 for retail and the balance coming from corporate. The net advances growth is 17% year-on-year and 6% sequentially. The net NPA, MD has already mentioned, there is a reduction of 10 basis points from last quarter. And GNPA is reduced by 3.39% from last quarter on back of recovery as well as at TW. PCR has improved to 97.86% and capital adequacy, as I mentioned, is very comfortable.

Coming to Slide 9, you can see that the component of the net interest income, the NII, as I said, has grown by 48%, out of which interest income has grown by 20% year-on-year and 7% sequentially. Interest expenses also contributed to NII. There is a margin reduction of 3% Y-o-Y, and there is a small increase of 4% sequentially. If you compare the half year, it's about the 20% increase in the NII, mainly on the growth of both interest income and also a reduction in the interest cost. The other income, again, in the other income, there is included a gain from the sale of our stake in the life insurance joint venture that we had with Ageas .

That balance stake which we had has also been transferred and we have recorded a gain of INR 380 crores, which is included in the other income. In Q1 also, we had a similar gain from -- of about INR 140 crores from sale of assets. So overall, the growth in other income is about 11% Y-o-Y and a margin reduction of 5% from last quarter mainly because of the nonrepeat of the gains from sale of [indiscernible], which we had recorded in the first quarter.

Now the OpEx as has increased by about 9% from last year and 3% sequentially, mainly due to increase in the employee cost. The employee cost has mainly gone up because of, one is the headcount has started increasing. Now that we are out of PCA, we are allowed to the recruitment after the business is growing. And secondly, the accumulation of leaves for the employees has also gone up, and the valuation is now at the higher salary rate that we had settled at last time.

Some amount of variable pay component has also come in, in this quarter. So overall, therefore, the OpEx has grown by about 9% last -- compared to last year and 3% sequentially, half year to half year about 12%. So after all this, so we are having a net profit growth of 64% to the announced INR 2,208 crores and 8% growth sequentially.

And half year to half year as we compare, it's about 1%. If we exclude this gains from strategic sales, the operating profit has shown a growth of 36% year-on-year and a small reduction of 4% from last quarter. Mainly because of the capital gains from GSK, which is not there. And overall, for the half year, as we compare, it's about 11% less.

So provision contingencies are higher by 35%, both due to statutorily required regulatory provisions plus whatever we have voluntarily on a conservative basis, made additional provision, both for NPAs as well as for restructured assets under COVID, et cetera.

The PBT has shown a growth of 86% year-on-year and 32% sequentially. PAT has grown by 46% to INR 828 crores, which is also a 10% increase over last quarter.

If we come to the next slide, we have shown the breakup of each component, which has contributed to the growth of the PAT from INR 567 crores to INR 828 crores, in which you will see that there is a -- all the components have contributed. However, the increase in the tax requirement has taken away INR 401 crore. Similarly, for the half year from INR 1170 crore to INR 1584 crore again, all the -- mainly the NII has contributed to the growth in the bottom line. But obviously, the increased tax requirement has taken away some of that.

Now we come to the next slide, which is the breakup of NII, you can see that the contribution to the growth in NII has come from a healthy growth of interest on advances, that is about 21% growth year-on-year and 15% growth sequentially. And income from interest or investment has grown by 16% year-on-year, but sequentially, it is at the same level.

Other interest income, which includes some amount of interest on refund of income tax that has grown by about 30% year-on-year. And compared to last year, we didn't have so much of interest on refund of income tax. So that's reduced by about 31%. Overall, if you compare half year to half year, there has been a growth of 53%. And interest expenses have -- total -- have degrown by about 3% from last -- year-on-year, and grown by about 4% sequentially, mainly because of the lag effect of the increase in interest rates that we have been affecting.

And NIM, if we exclude this interest on the IT refund, the stand -- the NII stands at about INR 2,644 crores, which is a 43% increase Y-o-Y and 14% increase sequentially. And NIM stands at 4.22%, which is an improvement of 1.2% compared to last year and 50 basis points sequentially.

Coming to the next slide. This is the breakup of the other income. As I mentioned that there is one -- there is a gain of INR 380 crores coming from sale of a stake in Ageas Federal. And last quarter also, we had a gain of about INR 140 crores from RCI. These are included under the head profit loss on sale of investments. Otherwise the commission exchange brokerage that income has more or less remained the same compared to last quarter and grown by about 10% year-on-year.

And the revaluation is subject to the movement and the quarter-end interest rate. We had a total reduction in the revaluation, the hit as compared to September 1, we have only INR 7 crores this time. And compared to INR 66 crores of June '22 quarters, it is 89% reduction. The ForEx income has also slightly declined. It has come down by about 17% Y-o-Y, sequentially, also 21%.

Dividend income, the -- all the 3 subsidiaries have contributed to this. And recovery from return of cases is a principal component that we have yet. And here, it is about INR 26 crores for the quarter as compared to INR 137 crores in last year, that the 81% reduction, and 35% reduction from the last quarter. Overall, the miscellaneous income also has come down by about 63% from last year and 82% from -- sequentially to INR 18 crores. So the overall, the other income has shown a growth of 11% year-on-year and 5% sequentially.

Provisions and contingencies. Here, you can see that we have a provision for standard asset component, which is we have made about INR 339 crores or net. And last quarter also, we have done about INR 411 crores. Similarly, for the provision for NPA, we have made, as I said, even additional provision. The slippages have been, on a net basis, hardly about [ INR 20 crores ]. But as I said, we have made additional provision for NPA. The figure here is showing net mainly because; one, NPA has been converted to equity shares, therefore, the amount of provision that was held for that NPA has got transferred to depreciation on investment, that provision for investment. So therefore, there is not a net reduction. There is a movement from 1 head to other. Otherwise, we have continued to make anticipatory and conservative provision for NPAs also.

Then the -- so net-net, the provisions total have gone up by INR 601 crores compared to year-on-year, comprising both of regulatory requirement as well as the additional voluntary provisions that we have made. This has also increased by about 85% if you compare serially.

The next slide shows the movement. Yield on advances has improved mainly because of, again, the impact of the changes in RLLR that we are doing and also the lag effect coming from MCLR revision. NIM has improved to -- as I said, this 4.22% is without taking into account the interest on refund of income tax. The cost of the net income remained steady more or less at 43%.

The next slide, we have shown this cost of funds and cost of deposits, there is a lag effect here. We have increased the deposit rate slightly behind the market, mainly because we don't want to be a leader function here. But the revision in the deposit rates will gradually have an impact on the portfolio. We would see some amount of increase in the amount of -- the cost of deposit, but we expect that we'll also see a corresponding improvement in the advanced side so that we'll be able to maintain our NIM at the healthy level that we have currently.

On Slide 17, this is the balance sheet. You can see that we have grown to INR 309,000 crores approximately. Now going to Slide 18. As I said, total deposits have also improved to INR 230,000 crores. CASA has improved, the composition of deposits more or less remains same. We are looking to where we need additional requirement. We are strategizing to increase the deposit rate as to respond to the market moves made by other banks.

Along with that, we would also be pursuing now to mobilize more bulk deposits in the previous few interactions, we had indicated that there is some scope to increase the composition of bulk deposits because we are at quite a low place here. So we'll look wherever we find it is competitive.

We'll be raising bulk deposits, and we can see that 5.5% even going up to, say, 8% or 10% or slightly beyond that.

On the business performance against the net rate that is the savings deposit as on a growth of 5% Y-o-Y, but more or less level with the last quarter. Retail deposits also have grown by about 2%. Current deposit has grown by 7%, but it is slightly volatile, okay? And bulk deposit, as I said, Q-on-Q, we have grown by 11%. This is the strategy. So I think Q-o-Q sequentially over the current year, you will see a little growth on this side.

And on the business performance and advances, more or less, as far as in terms of [ interface ] composition of the components of the advances, it has remained steady sequentially as compared to last quarter. Our strategy remains the same that we'll continue to pursue a differentiated granular approach to build up more retail business, and we'll follow a calibrated approach towards the corporate book. We are examining all types of avenues that we can exploit in terms of enhancing our relationship with both the existing mid-corporate or the mid corporate that are there in our book earlier, but had to exit during PCA regime as well as also to generate business from personal mid-corporate with whom we didn't have relationships earlier.

Large corporate also, we'll be looking at, but that will be on the -- with a lesser ample.

Now to come in to business performance. This is the gross expenses have grown. Out of that, the standard component has also gone, you can see, on the back of mainly the growth in retail, which has registered about INR 4,800 crores increase.

Now on the corporate retail ratio, as I mentioned, that this will always now remain within a range that has been our strategy. And the net advances have grown to INR 146,752. Coming to the next side, this is the priority sector. We are at all our targets. With the amount of PSL deposits that we have are gradually coming down with the dates of repayment on the schedule maturities.

Coming to Slide 24, this is the investment breakup, the AFS breakup. Again, there has not been much of a moment from the last quarter. We will -- to the extent that we have booked gains from transfer of securities or direct sales from HTM, we'll look to build back that thing to -- till the next time. So you'll see some buildup on that portfolio. Otherwise, I think the market duration of the AFS portfolio is quite under control at 1.27.

Next, if we come to page, that is the Slide 26, this is the provisioning we have for the COVID portfolio. Last June itself that we had taken it down to 2 components. One was the INR 116 crore as required by RBI regulation as well as INR 360 crore as also as required by RBI regulations for the FITL and other mandatory provisions for -- arising from COVID restructuring. That's total INR 476 crore, that has marginally gone up to the INR 486 crore, mainly because RBI has clarified in August that the percolation of these accounts also should be provided for. This came in mid of August, and that provision also we have done, the contingency provision, which is something which we have done, anticipating that some states may emerge out of this portfolio that we have taken it a little higher this time, not because of there is an increase in SMA 1 or 2, but we want to see the year play out fully.

We would like to wait until March '23 before we feel that okay that most of the path has been negotiated. The experience in the first half has been very encouraging. The slippages have not at all been to the extent that it was up and during the beginning of the year, yet we will continue our conservative stand as far as provisioning is concerned, we announced that amount of provision to INR 980 crores. Therefore, about INR 1,000 crores additional, we are keeping on a voluntary basis.

The next slide is on the PCR. Therefore, it has cropped up to 97.86% with the additional provisioning that we have made on the Doubtful-2 category. So now if you look at doubtful 2, almost 50% is now fully provided and the remaining 50% is provided to about 64%, now the overall -- therefore, we have both in Doubtful -- in Doubtful-1, we have about 1/3 of the portfolio provided at 100%. Doubtful-2, we have about 100%. And probably we have the highest PCR in the industry now for us at 97.86%.

On the NPA movement, slippages sustain and the increase in existing NPA have come to about INR 663 crores. Settlements and upgradation aggregate to about INR 640 crores, and therefore, the net increase is only about [ 23 ] slippage this time. and we are proposing a write-off of about INR 5,200 crores, which has been -- so overall, the closing balance is lower by about INR 5,200 crores. That is INR 28,722 crore. The slippage ratio after taking this into account, this slippage of is coming to about 1.31%, okay?

This is for the -- after taking -- then the credit cost for the quarter has come to about 0.18 %. This, of course, is because, as I mentioned, this also takes into account that the movement of the NPA provision it is not likely to remain at this subdued level of 0.18%. But definitely, we are expecting that it will remain at about 1% or lower than that for the current year.

Next slide is the NCLT, is a summary of the position. I'll not go much into detail on this. As -- on the next slide, on the SMA position, again, I will not dwell much on this. It's quite well under control as compared to last quarter, it has marginally improved.

The last slide on the capital adequacy, again, I mean I just mentioned that the increase in RWA, which I said earlier, has come due to increase in credit risk weight, slight increase in market and overall capital adequacy, all our figures are comfortable. Leverage ratio is 7.5%, which is quite comfortable.

And the last slide is on the shareholding pattern. Again, here, there's nothing much to say. There's not much any big change in the shareholding pattern compared to last quarter.

So we come to the Slide 35. These are the customer Included financial transactions on the digital basis. We have not yet set up any DBU to anticipate a person but we do have plans eventually to do that. As of now, this entire digital footprint is through the existing digital offerings that we have by way of both ATM, online, the banking, mobile app and all other alternate channels. So the -- you can see that there is a significant -- about 95% of the customers into transactions are now going through the digital channel, out of which UPI has taken the lion's share.

So next is just giving a breakup of the digital footprint. I will not take up your time on this. nor will I take you time for the next slide. This is a report on where we stand as far as the financial inclusion is concerned. The next slide -- 2 slides, sir, on the financial inclusion. When you come to the subsidiary slide, all the subsidiaries have reported gain for this quarter.

And looking ahead for the guidance, MD I request the..

[Rakesh Sharma, executive]

Now the guidance part, of course, we had -- like at the beginning of the year, we had given certain numbers. So as you will see from the presentation which our CFO has made, we have overperformed on almost all the parameters. As regards the business growth, advances as against 10% to 12% target, we have grown by 17% in net advances, but the ROA is also above 1%. And the slippage ratio is well within control. It has -- against our estimate of 2.5%, it is 1.31%. And the credit cost also is lower than that. ROA and ROE also we have been able to improve. And the NPA level we had indicated that net NPA at 1.25%. So it is -- we have already reached 1.15%. As far as gross NPA is concerned, we had indicated that we'll be below 15% by 31st March, '23. Now we have reached almost 16%. So that way, we -- with the transfer of some assets to NARCL, which are identified for transfer. And now NARCL has already started giving some offers. So with that, we expect that some assets will be transferred to NARCL by 31st March, we will be much below the 15% because the number, which we had indicated earlier.

NIM I think it's 3.2%, it is 4.37%. Even if we exclude income tax refund interest, then also it is 4.22%. And we are quite comfortable here. And the digital footprint also, we have started -- a lot of initiatives have been taken. We have done a tie-up arrangement with -- for supply chain finance also. And the cost-to-income ratio also is much, much below the expected level.

So as we had indicated, so we have overperformed in all the parameters, and we are quite hopeful that this type of performance, we will be able to sustain it. Rather, we will be able to improve working performance. Now we can take questions, if any questions are there, and we can go ahead. Thank you very much.

[Operator]

[Operator Instructions] We take the first question from the line of Mr. Sanjeev Kumar Damani from SKD Consulting.

[Unknown Analyst]

Sir, am I audible? So I continue?

[Pothukuchi Sitaram, executive]

[Foreign Language].

[Unknown Analyst]

[Foreign Language]

[Pothukuchi Sitaram, executive]

Gross advances once we direct the provisions that have been made for nonperforming assets, that is net advanced.

[Unknown Analyst]

Gross advance is bigger and net advances are lower. Am I right, sir?

[Pothukuchi Sitaram, executive]

That is right. Gross advances minus provision for nonperforming advances is net advances.

[Unknown Analyst]

Here when I was seeing in the slide, the gross advances figure was bigger.

[Pothukuchi Sitaram, executive]

Yes. Gross advances minus provision for NPA is equal to net advances. So the gross advances will be higher.

[Unknown Analyst]

Okay. Got it. Got it, sir. The second, my question is regarding investment in the shares of national stock exchange. Are we still holding them or they are also disposed?

[Pothukuchi Sitaram, executive]

We have not holding in National embassy.

[Unknown Analyst]

You don't have any Okay. Okay, sir. Secondly, sir, you know that the company is going for divestment by government of India and [indiscernible]. So in the process, I mean, have we identified certain assets which have very big value in the sense that some of the building plans, et cetera, that IDBI is holding or having offices at various places all over India. So I mean, have we thought of this while recommending our divestment that these assets should be either taken out or realized before giving it to any third party?

[Pothukuchi Sitaram, executive]

First of all, that transaction is from the owner side that they want to sell shares to someone else. So the bank by itself will not do anything because of that. And secondly, we are following the accounting policy as per our Indian GAAP, which is presently there, which requires the revaluation of fixed assets on a periodic basis. last revaluation that we have done once it's the year we keep doing. And so for the impact of the current valuation is already reflected in the balance sheet. Investments also as far RBI announced mark to [indiscernible]. [Foreign Language]

[Unknown Analyst]

Right, sir. We have shown certain investment of debenture INR 3,166 crores and some total INR 93,148 crores worth of investment has been there apart from deposits with RBI. So this INR 93 crore investment is at book value or it is realizable value in the presentation?

[Pothukuchi Sitaram, executive]

As I said that, see, the RBI, we classify the investment into 2 categories broadly. One is called [indiscernible], and that is held at the value at which we have invested. And the other is comparison of either available for sale or available for trade. Together, these are the mark-to-market constantly. And when were we declare results, it is at the latest values we report.

[Unknown Analyst]

Okay. And sir, regarding NPA, when you refer to NCLT and matters are under obligation of NCLT settlement, so they are already written off from the books of account as it is?

[Unknown Executive]

No, no. Not Necessarily.

[Pothukuchi Sitaram, executive]

Not necessarily. They're nonperforming. But how much provision we made and whether we write off all those are the voluntary additional value.

[Unknown Analyst]

I'm very sorry. Actually, I should have said that whatever matters are disputed, referred to NCLT or are under negotiations for that much value provision is already made as NPA in the books of account.

[Pothukuchi Sitaram, executive]

The provision for NPA is determined by the rates at which RBI has mandated. There -- the calendar rate of provisioning, we make that, plus there are other rules. As per RBI, we make additional [indiscernible]. And the third, over and above that the bank can make an assessment and even make even higher provision [indiscernible]. So these are the 3 components of NPI approval.

[Unknown Analyst]

You very much talked about this that you have made higher provisioning of INR 1,000 crores extra over and above the required one. Am I right, sir, you said..

[Rakesh Sharma, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Rakesh Sharma, executive]

No, we will not be able to make any comment on the divestment.

[Operator]

[Operator Instructions] We take the next question from the line of Mr. Pranav from Rare Enterprise.

[Pranav Tendolkar, analyst]

Sir, from the publicly disclosed document of [indiscernible], so they are doing that INR 22,500 crores is the minimum net worth required. So I am saying I don't want any data that is [indiscernible], but they've publicly said that in the document, divestment document. So can you just spend some time on understand -- like explaining this INR 22,500 crores net worth, NOHFC level, that is nonoperating financial holding company.

At that level, this network could be contributed by consortium or a single player? And also, is there a leeway to contribute that by debt. So for example, INR 22,500 crores is required to be invested -- sorry, it's required to be the net worth. And whatever is say today, there was a news that $7.7 billion is expected out of your value and 61% of that would be held by NOHFC or the bidder. So can this be contributed at a NOHFC level by debt?

[Rakesh Sharma, executive]

Thank you very much for asking. But please forgive me for saying this, that: one, in that EOI itself they have clarified that if any questions, written questions, you require any queries are there on the offer document, so by 28th October, you can raise the queries to, one, Mr. Hitesh Sachdeva in KPMG. So I will request you to please direct these questions because this entire process is being held by the transaction advisor.

[Operator]

[Operator Instructions] We take the next question from the line of Nitin Bala, Individual Investor.

[Unknown Analyst]

[Foreign Language] why the tax is so higher this time?

[Rakesh Sharma, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Rakesh Sharma, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language] And profit is increasing every quarter to quarter. [Foreign Language]

[Pothukuchi Sitaram, executive]

[Foreign Language] quite high in the industry. [Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Rakesh Sharma, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Rakesh Sharma, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Rakesh Sharma, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Rakesh Sharma, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Rakesh Sharma, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Rakesh Sharma, executive]

[Foreign Language]

[Operator]

[Operator Instructions] We have another follow-up question from the line of Mr. Pranav from Rare Enterprise.

[Pranav Tendolkar, analyst]

Sir, could you spend some time on explaining where the credit demand is coming up? Also, will this credit demand increase or decrease going forward for 2, 3 quarters? That is first question. Also second question is that, do you think that short-term rates will even spike from here? Because I think after a lot of time, banking liquidity that is left has become negative in deficit. So can short-term rates spike even higher from here? And in that case, will it be more prudent to improved deposit rates before everybody else so that you can get incremental volume of deposits?

[Unknown Executive]

Yes. Credit growth is driven by different factors in the different segments. First, on the retail side, though there was a lot of fear that credit growth will be very tempered because of the increase in interest rates. I think we are all being proven wrong that despite increase in interest rates, a lot of pent-up demand in consumer financing, home loan financing is showing up, and there is no letup in the demand for retail credit growth as well.

Now coming to corporates, again, the drivers investment cycle seems to be picking up. But even before that, those projects are still in the drawing board. Drawdowns are to happen, sanctions are happening, but drawdowns are to happen. But the utilization of credit by corporates is going up mainly because of the inflationary impact, the commodity price is going up. There is an uptick in the capacity utilization levels also across the corporate sector across all industries.

Hence, there is a higher utilization of working capital limits already sanctioned. Also, some demand has come from the bond market to the loan markets now because of the prices because of the rates in the bond market having acted more sharper than the loan market. So there is a host of factors which is driving up the credit growth you would have seen almost all the banks. In fact, RBI's latest published data sales, about 17% has been the credit growth in the last month's reporting Friday.

And we are also, if you look at our credit growth is also, we are also almost there. Going forward, the outlook, I think it should hold up -- the credit demand should hold up because, as I said earlier, the investment cycle is, again, back in -- the private sector investment, which was very low in the last 3 years is back on the table. So fresh CapEx and also both brownfield and greenfield investments are happening. So that should push up credit demand. So from the demand side, I think credit growth should be quite robust in the next 2 years going forward.

Now coming to the second part of your question on deposits -- growth in deposits or the liquidity. I think there is -- we are already seeing some actions from all the banks. Banks are increasing deposit rates. There is some chase for liability relationship deposits as well. But specifically about IDBI Bank, as CFO in his presentation said. To begin with, we started with a huge liquidity. Our LCR was about 140%. So to some extent, we have used up that excess liquidity. Even now, our liquidity is quite comfortable. So if need be, we can tamper the rate, we can increase the rate on the bulk deposits because the headroom to increase our absolute bulk deposit is much higher today.

Three years back when our bulk deposits were about INR 7,000, INR 7,500 crores, we have brought it to about INR 10,000 crores now. So there is a lot of scope. We can increase. It's a factor of -- as you know, bulk deposits are a factor of the interest rate. We can play on the interest rate for bulk deposits and increase our deposit size also. So there is no concern as far as our bank is concerned.

[Operator]

Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments. Thank you, and over to you, sir.

[Rakesh Sharma, executive]

Thank you, Madam. Let me conclude by stating that as we move forward, there will be a lot of pleasant surprises. Overall, IDBI Bank is posting good performance every quarter, and we are committed to enhance it further, sometimes bettering our projected number on select parameter as we did in the previous quarter. I again express my gratitude to all of you for your presence here and wish you a very happy Diwali. Thank you very much.

[Operator]

Thank you. On behalf of ICIC Securities, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.