Indian Bank
NSE:INDIANB
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Indian Bank
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Yes. Welcome, everyone. We have with us today Indian Bank management to discuss the first quarter FY '24 results update. First, sir I would request you to brief us on the first quarter results and the outlook on growth margins, asset quality going forward. Thereafter, we will take the Q&A session from the participants. Over to you, sir.
Yes. Good evening to all the analysts and investors in the post results concall. So, we already uploaded the presentations for the performance. I will discuss slightly about that, and then we'll open for question and answer. In between what we are doing for digitization, our colleague Bajaj-ji will brief.So as far as business is concerned, our business has crossed by INR 11 lakh crores, of which deposit is INR 6.21 lakh around INR 4.80 lakh crore of advance. And advance, we are growing 13% and in 13% RAM sector, again, we are growing 13%. And in the RAM, the retail, we are growing 16%.Last quarter also, you might have seen we have grown 13% in the RAM sector. And last quarter, 13% in retail. Now it is - retail is 16%. In agriculture, we are growing 16%, last quarter also, we have grown 16%. In MSME, we are growing 7%. Last quarter too, we have grown by 7%. And in corporate, we have grown 12%. So our growth is 13% in advances. So if you include the write-up, it is around 15.5% or 16% of credit growth, which we are seeing.In the retail growth of 16% is backed by the housing loan growth of 14%, auto loan growth of 29% and personal loan growth of 52%. Likewise, the 16% agri growth is backed by the crop loan, wherein 71% is jewel loan where we are growing 20%. So crop loan growth is mainly the growth of the jewel loan, which is out of INR 80,000 crores, around at INR 57,000 crores, which is growing 20% and continuously growing.Investment credit has grown by 8%, agri-allied by 16%. And one is SHG where we are growing 44%. And now we have moved to SHG from southern state to the Bihar, Assam, Rajasthan, Orissa and all places. MSME, we are growing 7% and corporate we're growing 12%. In the deposit side, we are growing 6% last quarter also, we have grown 6%.And -- but the retail deposit is growing 7% in the last quarter-on-quarter it is 2%. We have given a guidance of 8% to 10% of deposit growth. So, we are catching that. And in the credit side, we have given a guidance of 10% to 12%, we are at 13%.Now coming to the asset quality, we have given a guidance at the beginning of the quarter that we will be below 5% by the end of this financial year. At that time of our gross NPA was 5.95% today after this result, it is 5.47%, so around 48 bps came down in 1 quarter. And the net NPA was 0.9%, we said that our NPA should come down so it is at 0.7%. And PCR, which was 93.8% is now 95% plus.Continued this quarter, our recovery is more than our slippage last quarter -- last year also our recovery was more than slippage, we have given a guidance of INR 8,000 crores of recovery, so INR 2,000 crores of recovery in the quarter, we ended the INR 2,008 crore of a recovery in the quarter. Of course, this time, the recovery is more happened other than the PWO recovery. Last quarter, it was in a PWO recovery. So that is some kind of a plus/minus on that side.As far as profitability is concerned, our NII has grown by 26%. We have improved our margin from 3.5% to 3.61%. Our operating profit has grown by 16%. Our profit before tax has grown by 78%. And PAT has grown by 41%. Yes, you all know that till last year, we were getting a benefit of carry forward of losses partially in the last financial year. This year this not available and therefore, the taxation rates we applied to 25-plus percent, presently 28% because some are allowed some are not allowed. So this is the tax rate for us. But our profitability is improving. As far as capital side is concerned, we are in 15.78%, slight reduction in the capital because of -- 2, 3 reasons. One is the reason that operational risk has increased because you know as an operational risk, we have to take a 3-years number.So up to last '23, we were having a number of '20, '21 and '22. And '20 was a loss year because of amalgamation, so that has been replaced by the profit of INR 5,282 crores and the resulting increase in the RWA for operation risk. In a slight increase in the market risk, because we have built up the portfolio in AFS book and increased the durations as well.And we have built that portfolio last quarter, and we are actually building the portfolio, resulting in increase in market risk a little bit and slight bit increase in the current risk, because of the credit growth. But we are 15.78%. If you add a profit of the current quarter, it is again 16.30% that way that is our number.So this is -- I told about 10% to 12% of our credit growth. We ended at 13%. And you see from last quarter that we are -- our growth is in a very, very planned way. We have grown last year also [indiscernible] 13 RAM, 12 corporate, this time also the same number we are growing. So and that model is actually giving us a margin, increasing our customer base and that support us for further growth and we would like to continue with this model.Asset quality is basically the INR 1,753 crores of slippage in a corporate slippage on account up INR 190 crores, which is basically a account dealing in computer and accessories trading, there in Mumbai, we have taken [ earning phase ] the cash flow and the recovery has started coming in this account. Other than this around 45% of the spillage is in MSME book, and again, the 40% is from the restructure book.So that is that. In addition to that, what we have done -- we last year, like I have said that we were having a PSLC income INR 479 crore, but the distribution was INR 298 crore in the first quarter, and INR 111 crore in the second quarter and INR 37 crore and INR 41 crore in the third and fourth quarter. So it was on a receipt basis, what we have done this -- we have done this on an accrual basis.So INR 150 crores we have booked as an income for the last quarter and INR 450 crores will be booked in the next 3 quarters. So it is against INR 479 crores, we will be having INR 600 crores. And during the year also, we have some PSLC income. In a provision side, what we have done, we have increased a little bit of provision from 20% to 25% on our restructured book of around INR 500-odd crores. These are the 2 things we have done. Otherwise, the performance was -- in spite of that, the performance is better as you see the PBT level, NII level and the PAT level.Now I will request our colleague, Bajaj ji to give a little brief about the digitization, because we are doing a number of things on digitization, on HR side as well. So I request him to tell.
Thank you, sir. Good evening, everyone. As last time also we told, we started our digital transformation journey in the month of April '22 with the first journey as PAPL. And now if you -- the financial year '23, we did 25 journeys. And during this quarter, we launched another 11 journeys. So total 36 journey till 30th June, and we are proposing -- planning to launch another 13 journeys during the next -- this current quarter.And if we talk on the digital business, last year entire year, we did INR 5,640 crores business. And last year also, we were telling we'll be growing 7 to 8x. In the same line, we have done business of INR 9,179 crores, which is for the first quarter itself against INR 5,640 crores. Same way, it is almost all journeys eDeposits. We have grown by 60% loan against deposits, 182%.Jewel, which we started in the last quarter, which was just INR 57 crores last year. And this year, first quarter itself is INR 4,755 crores. And the MSME renewal, cases renewal, all these journeys are doing well for us. The last year, quarter-on-quarter, first quarter, we did INR 147 crores of business. Second quarter, we did across RAM and liability. We did INR 591 crores, third quarter, we did INR 2,138 crores and fourth quarter, we did INR 2,765 crores.And this year, first quarter itself is INR 9,179 crores. So first quarter, we launched 6 journey last year up to September, and then October to December, another 6 journeys Jan to March, 13 journeys. And this year, in the first quarter, I already told the 11 journeys. And our -- the digital channels business has now across all digital channels, it has gone up by the 7%. It was 78% last year in June and this June it is 85%.Even on the liability side also, we are acquiring customers on the digital mode to tab our end-to-end digital branch journey, which is last year, it was -- last quarter, it was in the financial year Q1, FY '23. It was 3.52 lakhs, and this year, 5.5 lakh customers we acquired through this mode, which is almost 68% of total deposit customers acquired and which is 56% Y-o-Y growth.Same way the digital lending platform, I already told and the omni-channel, we are coming up with a new app, which is for the closed user growth, we are going to launch in a couple of days and after regress and successful testing across our -- the internal users and maybe a couple of other people, then we'll be launching for the market.And we have other capabilities we have built up on the like middleware CVS APIs, open APIs, for the digital banking, cloud state the technology. We are on the public cloud for our smart office -- private cloud also, we have now acquired, a vendor is onboarded for this. The core banking as well as the 86 platform.To take care of cybersecurity, we are coming up with various new initiatives. We have taken the advanced cyber soft, advanced technology for customer data protection in line with the requirement. And we have created analytics center of excellence for the usage of data for the data governance. The customer CRM model as well as the CMS cash management service, we are in the pipeline to -- which are in the pipeline for the -- taking on the -- onboarding the customers already RFPs are floated and just at the last minute of finalizing the vendors.Same way we created the 2 general manager positions for the fintechs and government partnership. We have done a couple of partnerships with some fintechs as well as the government.I think, I think now -- now we are open for question and answers.
Yes, sir. Thanks, thanks for update. Sir, first the question that I had was basically, in your presentation, you have given a domestic NIM. Is it possible for you to give the overall global NIMs?
Okay. That we'll provide. Okay. So, we'll provide mean time. You can ask other questions, no problem.
Sir basically, I think there are a lot of questions which are lined up, and Mr. Ajmera has raised his hand for a long time now. Yes Ajmera-ji, you can unmute yourself and ask a question.
Sir, congratulations to you and the entire team for the -- yet another very good quarter, fantastic results on all the parameters, whether it is operating profit, net profit, asset quality, reduction in the gross NPA, net NPA percentage wise also. But having said that, I've got just a couple of observations and some questions. One is to take it based with the digital topic only. What is our total digital spend budget for this FY '24? And out of which how much are we -- how much is going to as a CapEx? And how much percentage-wise is going to go to the P&L? This is my first question.
Yes, sir, last 3 years, we have spent almost INR 1,500 crores against 50% in capital and 50% in revenue side. This year, our target -- our budget is INR 570 crores out of that capital is INR 395 crores and the P&L side is INR 170 crores. And we have already done almost this, here INR 124 crores is already spent.
Sir, on the recovery front from the return of account and overall recovery also, I think this quarter has been a little muted. What is our overall recovery target are we going to meet that for FY '24?
Ajmera-ji our target at the beginning of the year, we said that it will be INR 8,000 crores. So INR 2,000 crores per quarter. We ended the 2008. So we are achieving our target. And going forward, also we'll achieve target. What happens this time as against coming recovering the [Technical Difficulty] which is coming in our -- in the normal accounts, by way up-gradation, by way case recovery. Even you've seen -- we have seen the -- even the restructured account, we upgraded. So that overall recovery is there for INR 2,000 crores. Second point is that if you have a recovery, you get a 100%. But if you have a recovery other than that you have 95%, because our PCR is 95%.
Sir, our performance on the treasury front is also excellent in this quarter. Going forward, and you said that you have increased your AFS book modified duration also. So going forward, how do we see, on the treasury front, going forward, considering the muted rate hike or are we comfortable with this increased modified duration in AFS book?
Let me tell my philosophy and how we are working in our treasury book, right? So we are having INR 1,91,000 crores of a treasury book, of which around 26% is in AFS and 74% is in HTM. We have shift around 2% we added in a AFS book, the first point. Second point is that we are moving from the low interest rate to a high interest rates. So what we are doing, we are continuously churning our portfolio, AFS because HTM, you have a limited scope.The interest -- the holding yield of AFS was 6% in June '22 last year, which we moved today to 7.27%. It means we have done a huge churning some of the assets which are carrying lower rate, we have shifted -- sold out and created a new asset. And as a result, what will happen going forward, bank will continue to get good NII this is 1 point.And second point is what is our thinking that when the interest rate will come below -- around 7% or between 7% to 7.5% we will start selling. We have built a portfolio between [Technical Difficulty] 7.30% and the modified duration also increase. So there's opportunity for us in the future too [Technical Difficulty]. And that is our philosophy and that happened which was 1.98% in March has become 2.88%. So MD has also increased and also the holding yield has also increased. And so far, the current rate is 7.08%. So this is opportunity for us.
Sir, couple of questions on the credit front, credit growth.
So you're okay with my answer.
Sir your -- it's a fantastic -- you are a chartered accountant and you got a very good treasury team along with you to manage. So, we are impressed with that, and it is showing good results also. Sir, on the credit side, credit growth -- also now again, this quarter has been, I think, around 2% and again the overall guidance of I think 1310. So going forward, we will be able to meet the credit growth. And from what -- I mean, the composition of the RAM and corporate book will remain same?
So you see there are 2 things. You see our compass composition part, 61% in June also. Today, also, it is 61%. Growth RAM 13% this quarter, growth RAM 13% last. So we are totally growing in the Plan B because we want to have our margins also. I told -- continuously telling that we are very margin-conscious bank, right. And it is reflecting in our NII income. So in retail agree, MSME is giving us a margin.At the same time, corporate, huge opportunities are there. Now today, you see the political stability, geopolitical relationship all macros are in favor of countries, good time for financial institutions or banks to grow. And we too are growing, and the growth opportunities are coming from the -- our sector, whether it's steel, or cement or a textile or city gas, or advanced metering, or NBFCs, right?So -- even the road. So -- but we are selectively moving on those. And creating a good portfolio, where we are not only margins, but -- and risk is spread. You see even our -- there's one slide I have given Slide #11, where we talk about how we are moving in a corporate. So that you see the entire incremental growth is happening through that BBB, AA and AAA. The growth is from that. So we are very selective on that way and growing and also getting margin.
Sir, my last question in this round is on ECL provision, are we -- have we calculated like last time also we discussed and how much buffer we have already have in our books extra provision, including maybe even maybe COVID buffer also. So are we fully equipped to take care of any challenges, any contingencies in future whenever it is finalized?
So in ECL, basically to my mind. Of course, the guidelines are yet to come from the Reserve Bank. Stage 3 Stages to the Stage 1 asset right. So Stage 3 is a NPA. We are all provision is substantially higher than the required provision, because 95% is there. Even the excluding fee WA it also 88%, 89%, excluding fee WA substantially higher, what is the Stage 2. Stage 2 is a restructured book also [Technical Difficulty] provision25% right? And a Stage 1 is a normal provision. Today, note book net NPA is INR 3,000 crores, right? And standard asset provision is close to INR 7,000 crores.
And on SMA book, SMA 2?
[Technical Difficulty] SMA 2 also we are having a provision.
How much is that sir?
Maybe around INR 1,000 crores or INR 900 crore to INR 1,000 crores over the month. So we are having the provision in all category. So bank is basically very sound as far as the balance sheet is concerned.
All the best sir. Because otherwise, all will tell me. I have taken a lot of time. I'll come back again, sir.
From ECL point also, as and when the guidelines come, we'll see. Otherwise, one guideline will come. I can't say today, but that we are having adequate buffers.
Yes, that's only we wanted to be assured that yes there is adequate buffers.
Yes. Next question we'll have from Mona.
And congrats on a good set of numbers. I just had 2 questions. So firstly, on the agri gold portfolio and the overall gold book, which has been growing pretty good in your case, -- if you could give some color in terms of what are the yields here, what are the LTVs? And what sort of your network branch network of 58,000 or so is enabled for gold lending?
My total gold loan book is around INR 64,000 crores, right? Out of the INR 64,000 crores INR 57,000 crores is in agri, around INR 5,000 crores is retail and around INR 1,500 crores in MSME. So put together, its INR 64,000 odd crores. How we are doing this business. The point is one is that we are having a 650 gold shops, where we have given man power [Technical Difficulty] in launch NPS.We have given keratometers also to see the quality. And now we have digitized the journeys as well. What happens and all people, every day, one branch is giving 20 loans that the loans are used loans they are giving, right? So to have a better turnaround time and also to manage the risk, we have started a digital journeys.And every day, this journey has picked up around INR 5,000 crores of book we have created in the around INR 200 crores, INR 300 crores INR 200 crores of gold loan is happening. And going forward, it will happen an entire gold loan slowly will become in digitized. In addition to the other branches are also therefore doing gold loans.So maybe around 1,800 to 2,000 branches are doing the gold loan business, but 650s mainly. So we will start -- we have trained the manpower there and we keep on training those manpowers and managing the asset. So that way, we are managing our gold loan book.
And what would be the yields and LTV for the gold book?
So around 8.6% to 8.75% gold rate that is one year NCR generally -- so 8.6% -- and we are doing in this business not from today from years together, decades together.
Right. So you mentioned about 1,800 to 2,000 branches are enabled for gold lending, of which 650 are special ones or rather focused one. So was this 1,800, 2,000 number I mean 2 to 3 years ago, the same network was enabled?
No, no, no what happens they are increasing, what happens because we are - we have become expertise in this kind of a business, right? And this kind of a business was mainly doing in the southern part of the country. What happens after amalgamation, we have trained the people of other parts of the country as well. Suppose and I'm telling you Rajasthan, Udaipur is doing this business, because the managers who come here, we train them and they start doing business. And slowly, slowly the portfolio is growing there as well.So likewise, this gold business, we are also making people expertise in SHG lending. SHG is a big lending opportunities in the southern part. Now we have moved SHG also in Orissa, even in Assam, even in Rajasthan, right, and slightly in Bengal as well. So these are the business. And here in SHG, we are having 50 SHG branches for managing this kind of business. So SHG, we are having INR 14,000 crores of a portfolio, which is growing at 40% plus. So these are business where we are actually training the people, monitoring their performance and managing the risk.
Got it. So how many branches are labeled, say, 2 to 3 years back in your case for the Indian Bank?
We keep on increasing Madam. Numbers exactly numbers is very difficult to give on a year-on-year how we are but [Technical Difficulty] suppose we have let us train 400 managers on this business. So what we do, we call up managers from the northern part or say suppose we want to go to Orissa, we call them, send to those branches where SHG business is there. And then we'll give them a theoretical training and again, practical training and then they will start doing business.
Got it, sir. The other question was on -- you mentioned around SMA -- against SMA 2, you have provided about INR 900 crores to INR 1,000 crores provisions. So is it part of the restructured provisions that you additionally made or it's outside of the PCR and the restructured provisions?
This is outside.
Next question we'll take from Hardik.
Yes. Can you hear me?
Yes Hardik, please go ahead.
Yes. A couple of questions. Firstly on this gold loan portfolio. So what kind of standardization process we do just to make sure that any fraud or that thing doesn't happen at the branch level? And my second question regarding [Technical Difficulty], our yield so in gold loan predominantly, it was a market catered by either the unorganized players or the NBFCs. And both of them had a yield is a very high ranging from 15% to even 20%, 24%. So why the PSU banks are doing 8.6%, we can slightly increase the yield over this portfolio with such kind of growth?
Yes. As far as you're talking about the [Technical Difficulty] process, yes, because our MD sir was telling, we have further and decade together, Indian Bank has got expertise in this the agriculture loan business. So now after starting the digital journeys, so the process is totally digitized, either it can be done through the mobile or through website or branch assisted journey also, even customers who doesn't know -- who doesn't use the digital channels, it can come to a branch. And again, the journey total digital.Then we have the expert sitting over there in the branches who assess the gold purity and keratometer also have been provided to the 650 shops. So over a period of time, we got the expertise and verification is also done through our inspection center and the even the person from other banks goes and do the inspection. So that verification checking and rechecking is done at a regular interval to ensure the quality of the gold. So, we have a process of checking, rechecking and again on a quarter but its separately rechecking.
Okay. Any thoughts on yield on this book?
The market is very complicated I'm telling you. And the quality of people, which we take are different than the take -- and they go interior to the country. We are doing in the place where we are having branches and all. We have a strong room. We have all controls.
Okay. Now, my second question was regarding the provisions. So this quarter, again, we have done INR 828 crores of provision for standard advances. And now our net NPA provisions is only INR 930 crores this quarter and already our net NPAs is hardly INR 3,200 crores. So do you foresee that over the next few quarters also, we can make to either provisions for standard advances or do you feel that we have created enough buffer and therefore, given that provisions can go down?
No, my point is this all -- of course, you are very right that we are having INR 3,200 crores our net NPA. So the provisioning requirement will be substantially less going forward on this book, right? There is no second opinion on that. The standard asset provisions, right? So we keep on reviewing our portfolios on a quarterly basis, not only we, our risk management committee also reviews this portfolio and take a call on this, take a call on this, whether to have or not to have.
Next question we'll take from Mahrukh.
Yes hello sir. Sir, my first question is that how much of deposit and MCLR repricing on loans is still pending?
Madam, you see I am answering in a different way, right.
Yes sir.
You see the cost of deposits of the bank, which is 4.60% [Technical Difficulty] right? 3.85 was the cost in jewel room '22 right see please? General not to mind. 40% is a CASA and 60% is a term deposit, right? RBI has increased the interest rate at 250 bps, right? We have increased the deposit rates, anything between 1.6% or 1.7% to 2.1% also. On an average, I'd say I suppose take 2% on 60%, 1.2% is a maximum at the peak at the peak.So [Technical Difficulty] plus 1.2 is a peak 5.05 that is a peak. But it depends on your duration of your liabilities. That is a peak -- but you said 75% is already done. So slowly, slowly what happens it will not be so high, but quarter-on-quarter, it will be increased. So how to tackle this issue. How to tackle this issue is one we have more or advances from repo to MCLR. Now presently, last time I told 59 now it has become 64.So what happens, these assets are also will come for repricing and will give a better return as compared to the last time. Second one, I told that [Technical Difficulty] by investment portfolio and AFS yield from 6.0% to 7.2% or 7%. So that will give -- and third one is growth in advances. These 3 will give me additional NII. And here the major part is being taken care, right? And you also know that the deposit rates save become soft from March to today, right?So the hike will not be so much because 4.33 to 4.6, 27 bps hike we have seen in the quarter. It will not be so step going forward. So considering this and the deposit repricing, we are told that we'll be able to protect the margin. And you see that even increase our margins have improved.
And sir, I have 2 other questions 1 is what is your total stock of standard provisions other than the RBI mandated provisions. So whatever you have on restructured or SMA or anything [Technical Difficulty] standard category other than that 0.4% that RBI mandates?
Madam, we are having around close to INR 7,000, INR 6,800 some odd crores of standard asset provisions, right? So major part of this is basically, we have taken a higher provision as a higher buffer majority of this. But fact 3 months you see on one side, my gross NPA is INR 26,000 crores [Technical Difficulty] and net NPAs INR 3,000 crores. So INR 33,000 crores provisions, INR 23,000 plus 7 30,000, 30 divided by 26, it is, I think, 120%.
Yes good. Okay sir. Got it. Got it. [Technical Difficulty] the last question is your new loan deposition, right? Because in the first quarter, while, of course, there could have been volatility in rates and [Technical Difficulty] in the first quarter, a lot of deposit growth, HDFC Bank was also silent in the first quarter, and they will ramp up. So in this context, how do you see deposit growth and incremental deposit rates spanning out?
Let me tell you. What we have told in the beginning that we'll grow 8% to 10%. This, we have to grow. There is no second opinion, right? Otherwise, we will fund our credit growth target this we have to grow. At this point of time -- what is my CD ratio my CD ratio is 77%, right? I'm still having INR 35,000 crores of excess LCR. My LCR book is 131%. So [Technical Difficulty] I have little liquidity, right?So going forward, what will happen and we will create more assets, which we will need more capital. So at this time, raising money at higher rate doesn't make much sense to our margin, right? So we are maintaining this 77%, 78% [Technical Difficulty] CD ratio. But deposit side, we are working very hard on the retail deposit side. So retail deposit side, we have opened 20 liability acquisition centers also.We have now started NRIs business also. We have started cash management. All will give me a deposits. We come out product insurance linked product. So, we are focusing on salary account, we are focusing on family accounts. The number of things we are doing. But the result will slowly, slowly will come. But I can grow more also, but you have to get and 20, 30 bps more. So as and when -- this is no point the deposit is not available. You'll give 10%, 20%, you'll get more deposit - you'll get a more deposit. So all is a conscious call we are taking.
Next question we'll take from Sushil.
Congratulations to the Indian Bank management team -- most of my questions have been answered. Sir, my last question to you or the first question. Sir, you spoke everything as a transformation happening in Indian Bank under the current management and your leadership. Can you elaborate more like last quarter [Technical Difficulty] how would you like to see the next 1 year and where Indian Bank would look in the transformation journey for yes to come?
So cost digitization, our colleague Bajaj is already told. So we have launched the journey, but what happens slowly, slowly, the business will pick up. And we are doing a lot of things in a core side. We are a lot -- of doing on the customer side and middleware omni-channel or CR, the number of things we are doing. So that naturally it will takes time, sir, but it will happen.But second side is that your revenue side, so we are starting this cash management already. We have floated the RFP and all the cash management business will start. Likewise, we have recruited people for the remittance business what happens, majority [Technical Difficulty] are taking place in the southern part of the country. And through NRI also been deposit terms, you get a housing loan and all proposals.So we have started this remittance business, NRI business and totally, we have recruited people from the market as well. The second part of that. Third part is that the subsidiary license, which we have got already yesterday, we have finalized our consultant everything, because you know 2 or 3 or month X place in the public sector, we have to float RFP recruit onboard the consultants. So everything we have completed.And now in the next 3 to 4 months, I think subsidies should take place. We will start recruiting the people and all. So these things we have started in a number of places we have done a technology tie-up alliance various government departments as well for their funding distributions because the government too is sending the money for any number of welfares schemes. So we have done this.We have in various state headquarters, we also opened our government relationships. So a number of things we have done slowly, slowly, the benefit will start accruing. And in the meantime, our core business is growing. This is how we are making ourselves ready for the future. So [Technical Difficulty] we will see that our digital business, we are at 9,000 crores or 10,000.We started slowly in the next quarter, it will further improve but starting will take time, sir. And here, we came in retail side, agri side, MSME side, even [Technical Difficulty] side all side journeys we are coming. So benefit will accrue subsidiary will come, cash management will start. The remittance will start going forward. [Technical Difficulty] that everything should contribute to our bottom line as well as bank will become more.
Sir your geography is [Technical Difficulty] the Society of India, which is more of Southern India, premerger and post-merger, also, you have a higher dominance to get talent to market your products, whether you're marketing 1 product, 2 products or you will target 3 products -- how will your productivity in terms of empowerment of your human talent, which you would like to hire and cross-sell? Are you on the journey of achieving in next 12 months or it will take a longer time?
No, benefits should start accruing within 12 months -- and it will be scaled up in the time to come, but benefit will start accruing. And sir, first time first year, it is less second year it multiplies actually, it multiplies.
So the fruits will be visible over a period of a number of years, and it's not necessarily in the next 12 months, that sort of I am asking?
No, no fruits will start – you'll see the fruits.
But you will see definitely.
We have already started seeing the fruit. Yes, we have already started seeing the fruit, yes.
Sir, second thing is -- the government business potential, because you're Tamil Nadu centric bank, you have good presence in entire Eastern coast and Southern states and the kind of activity which is happening on manufacturing in your state and the geographies where you are present, are you seeing more kind of corporate demand or SMA demand in term loans, working capital?
Yes, you rightly said, sir, that is why our mid-corporate growth is around 18%, 19% because this -- we are growing more in mid-corporate also that this is giving a better margin.
One more correction. We are now not Tamil Nadu focus bank. We are now having to presence in northern part quite good presence after amalgamation and these transfers we are having good presence.
Sir that's why pre-merger and post-merger that's why I know that?
Our post-merger we are having good business.
Sir, I'm covering your bank for many years sir I am really familiar with?
No issue, no issue.
Next question we'll have from Mr. Narendra.
And congratulations good set of numbers. So you said that you are expanding. So is there any guidance that you would like to do on the cost to income side?
So cost to income was INR 44.20 last year, right? And cost to income in the current quarter is also 44.22 million. At the beginning of the year, we said that we'd like to maintain cost to income ratio at that level. So we'll be able to maintain this quarter at 44.22%. So going forward, our endeavor will be to maintain that kind of a cost income ratio.
And same is the case with the NIMs and credit cost to, sir?
Which one?
NIMs and credit cost.
Credit costs will come down, credit cost, it was June from 20 to 2.02% then 0.98% in March, then 0.82% in June, and net NPA 0.7% natural credit costs will come down.
So any kind of number you would like to give?
It should do less, Baba.
Sir we will have last question from Mr. Ajmera.
Sir, just a couple of questions in this round. One is that are we seeing any impact on this recent floods happening, whether any immediate impact, because it is devastating many of the states and many of the cities. So are we seeing any impact of that?
The flood is happening in Gujarat or Himachal, right western even some part of the -- but you see the immediate impact will come on the agriculture side on that side. So, we are basically having a good collateral, good securities. So not much impact I'm seeing sir considering our presence and all. Exact data, of course, will come and then we'll be able to analyze.
My second question, sir, is on our recovery scheme in that, are we aggressive on the OTS more than going to and see other?
Always recovery is more in OTS than NCLT. So, we are aggressive and you see our numbers OTS numbers are also increasing.
So what is the composition of recovery through OTS?
So OTS is around what happens -- if you do a big OTS, a big number will come to do a small, small amount like INR 236 crores or INR 240 crores open number we have received. But we are having already OTS approved around INR 700-odd crores in hand.
Any policy on nondiscretionary OTS?
Yes, we are having a nondiscretionary, nondiscriminatory OTS for MSME, for education loan, we are having sir.
And the last one sir something -- some color on overall - HR initiative and HR developments and then going forward, how do we plan to manage our costing by hiring new people for various digital banking and various other initiatives which we are taking. So can you give the color on the overall HR policy?
So I'm telling you, sir. Yes. In HR, basically what's happening -- we are having 40,000-plus employees. And average 38 years, and we are having good employees. We are continuously giving them promotions as well. Now going forward happens for the new business, you need to have a good [Technical Difficulty] So we have a Board approved policy wherein we can we'll hire the people from the market as well.If you see my total salary expenditures and all for the bank as a whole, we are having around INR 7,500 crores of expenditure last year for. If this 1% of this expenditure, which is INR 75 crores, if I can recruit 20, 25 people, 30 people, even then we can do a good business because new people will come, new business opportunities will come. So -- and that what will happen when we have our people who understand the business and the 99% people will follow and the grooming will happen in the bank.So going this philosophy, we are recruited people for the IT. We have recruited people in cyber. We have recruited for cash management, remittances, we are doing that. The one part we are doing. Second part is that even the various scale, 3 scale 4 we are recruiting people literally also because we are taking chartered accounts, MBAs who forex people, risk management people. So site also we are taking [Technical Difficulty] we are doing -- we are taking -- PO levels.We are taking people at clerical grades right? So all -- because we need expertise in all field, because of huge opportunities in the trade finance imports, exports, credit, the way the country is opening, then naturally, they'll need requirement of the trained manpower this second. Third one is we are also giving training to the people not only in our college. We are giving people the ascending or people to various other colleges also for their continuous learning.So around 750 people. This year, we are training more on the credit side and all, this is one. The fourth one that what we have done we have changed the entire system last year, we came out with a performance management system, wherein we have given the target for each and every officer. Earlier, the target was only for branch manager now each and every officer is in target, and they can see the target on their mobile even in the laptop and improve their performance.The yearly, our score is based on the target they achieved. So in performance management system also by giving targets, we have seen that the productivity the people are increasing, because when you monitor each and every people and they also understand that by doing this, their scores are better, naturally the productivity increases. So from [indiscernible] then training angle from various angles, we are making our people - our business.Because to my mind, for a banking you need a technology, you need a talent and the grooming of the people. So we are working on that. And from the last 1.5 years for we seek other consultant for [Technical Difficulty] management system, we are continuously with them as well.
And the foresightedness also.
Right.
We are working very well doing on all the fronts and that is reflected in our stock price also recently. And I think still it is underpriced according to me. So all the best -- and we will see again in the next quarter.
Thank you.
So with your permission, we can take one more question from Mr. Rakesh.
Yes, please.
Rakesh, please ask a question. Rakesh we are not able to hear you. Sir, meanwhile if you can just provide the global links number that I basically asked at the beginning of the call?
3.56.
3.56 and sir, may I know if you can put that into the presentation also next time, that will be great.
Next time we'll present. So this time we already presented. Next, we will present it.
[Technical Difficulty].
Yes. On multiple fronts, asset quality margin and very balanced and prudent growth that we are doing. So one of the best results among the all banks in this quarter. Sir, just one question. Is there any change in the PSLC income recognition with reference to the notes of accounts, number 3.
I clarified at the beginning, what happens. Earlier, we used to book the income based on the realization basis. So you see last year, my first quarter income was INR 298 crores second quarter INR 111 crores. Third quarter INR 37 crores and INR 41 crores fourth quarter. So this is uneven growth. In fact, we sell the PSLC for a year, right? So what we thought it is not better that we booked based on the realization. For second, we believe the consistent performance consistently, it should to perform.So last year income was INR 479 crores -- of course, the first quarter was only INR 298 crores. In the first quarter of this time, we have done a good job, and we have INR 600-odd crores of income. So we thought -- and the better that we should book based on an accrual basis of accounting and therefore, INR 152 crores of income we have shown in first quarter and naturally the next 3 quarters will be INR 150 crores each plus the income we generate in the remaining 9 months. And that will be amortized over the remaining period.
Sir that will be all. We don't have any further questions. If you have any closing remarks you can make.
Thank you. Thank you all the investors and analysts for your continuous support and guidance to us and investing time on us. And we believe we'll be trying over level best [Technical Difficulty] in time to come. Thank you
Thank you, everybody.
Thank you, and best wishes to you, sir. Have a nice day.
Thank you, sir. Thank you. Thank you very much.