Indian Bank
NSE:INDIANB
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Indian Bank
Earnings Call Analysis
Q2-2024 Analysis
Indian Bank
Indian Bank has seen its business grow by a solid 10%, reaching INR 11.33 lakh crore as of September 2023. This growth includes a 9% increase in business deposits, now at INR 6.41 lakh crore, with a particular emphasis on credit which has surged by 12%. Notable increases within the credit segment include a 36% jump in auto loans and a 49% rise in personal loans. Agricultural loans also saw impressive growth at 16%, with a substantial portion comprising of gold loans which expanded by a notable 28%.
Not only did the business scale up, but profitability also strengthened significantly. Operating profit soared by 19% year over year, while net profit remarkably increased by 62%. These gains have been attributed to a 23% rise in Net Interest Income (NII) and a 9% lift in noninterest income, supported further by a robust 52% increase in Priority Sector Lending Certificate (PSLC) income. An improved asset quality reported a 50 basis point reduction in the gross Non-Performing Assets (NPA), from 5.47% to 4.97%, and a net NPA drop from 0.7% to 0.6%.
The bank has successfully maintained recoveries higher than slippages, which indicates a healthy credit environment. Slippages were reported at INR 1,976 crores with recoveries at INR 2,265 crores for the quarter, contributing to overall reducing net figures. Capital adequacy remained strong, with capital at 15.53% and expected to improve to 16.53% after accounting for six months of profits. This stability underscores the bank's ability to support its growth ambitions without compromising on financial soundness.
Nearly 63 digital journeys, with more than 45 relating to digital lending platforms, indicate that Indian Bank's focus on digitization is maturing and already yielding substantial results. In one half-year period, the bank generated close to INR 29,000 crores of business through digital initiatives, a significant leap from INR 376 crores in the prior year. Retails, agriculture and MSME segments have particularly benefitted from these platforms, reflecting the bank's adept adaptation to the digital age and satisfying the growing appetite for convenient digital banking solutions.
Steady advancements in digitization are evidenced by the 47% surge in transactions through the bank's 'my banking' services and a 17% rise in the user base. Unified Payments Interface (UPI) users and transactions have grown by 34% and 65% year over year, highlighting Indian Bank's efforts in promoting and integrating digital channels that cater to the evolving needs of customers and the wider push towards a digital economy.
Margin pressures, common in competitive banking environments, were also visible as domestic margins narrowed by 9 basis points to 3.52%, down from 3.61%. This moderate contraction reflects a responsive banking practice that aims to balance growth, profitability, and market conditions.
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Thank you, sir, for providing us the opportunity to host this call. Good evening, everyone. Today, we have the entire management of Indian Bank where we will basically discuss the Q2 results call as well as the outlook on the growth margins and asset quality going forward. We first welcome Shri Shanti Jain, MD and CEO; Shri Imran Siddiqui, Executive Director; Shri Mahesh Kumar Bajaj, Executive Director; Shri Ashutosh Choudhury, Executive Director; and Shri Bajrang Singh, Executive Director from Indian Bank. Request, sir, first to briefly give us the highlights of the results -- Q2 results. And thereafter, we can take some time basically for the outlook on the growth margins and assets going forward. Over to you, sir.
Thank you. Good evening, all analysts and investors for post results con call for Q2 FY '24. Our business has grown by 10% and reached to INR 11.33 lakh crore in September '23. And our business deposits has grown by 9% and reached to INR 6.41 lakh crore, and credit has gone by 12%. Under deposits, the saving deposit has grown by 8%, and the term deposit has grown by 10%. And we could maintain the domestic CASA more than 41% in the current quarter.
In a credit side, our all component, REM has grown by 12%. Corporate has grown by 12%. Under REM, retail has grown by 14%. And under retail, housing loan has grown by 13%. Auto loan has grown by 36% and personal loan by 49%. Likewise, in the agri side, we have grown by 16% and 75 -- crop loan has grown by 17% and 75% of the crop loan is a gold loan, which is growing by 28%.
The SSG has grown by 41%. Agri allied by 46% and investment credit by 11%. MSME has grown by 5% and Corporate has grown by 11%. But in case of a standard corporate has grown around 14%. Likewise, the mid-corporate has also grown by 11%. So this is a business side. As far as our profitability is concerned, our operating profit has grown by 19% on a Y-o-Y basis and sequential by 4%. Our net profit has grown by 62% and sequentially 60%. The operating and net profit has grown on the strength of NII, which has grown by 23%. And when the noninterest income has also grown by 9%. And under the noninterest income, our fee-based income has grown by 11%.
Processing -- other fee-based processing has grown by 17%. PSLC income has grown by 52% and INR 336 crores is unamortized, which will -- and remaining Q3 and Q4, and bad debt recovery has grown by 6%. As far as our asset quality is concerned, the gross NPA has come down from 5.47% to 4.97%, 50 bps reduction and the net NPA has come down from 0.7 to 0.6%. Car improved from 95.10 to 95.64. We maintained the trend of recovery more than the slippage in the current quarter, the slippage was around INR 1,976 crores, and the recovery was INR 2,265 crores. So last year also slippage was INR 6,642 crores and the recovery was INR 8,504 crores. In the last half year, total slippage about INR 3,730 crores and the recovery is INR 4,272 crores, which is -- as a result, all net has come down.
As far as our SMA 1 and 2, it has come down slightly more than INR 5 crores, and we are maintaining the collection efficiency of 95%. As far as restructured book is concerned, it has come down to INR 9,980 crores. COVID restructuring, and we are having around 27% provision there against. So asset quality, whether SMA 1 and 2, NPAs -- and this structure book, all is coming down. As far as capital is concerned, we are at 15.53% We have not added the 6 months profit. If we add a 6-month profit, it will improve by around 1% to 16.53%. We started from 16.49% in March and up with profit 16.53%, which shows that our generations are adequate to take care of our growth. Because in spite of around INR 112,000 crore or INR 113,000 crore growth or capital adequacy is intact.
As far as our treasury is concerned, we have added around INR 13,000 crores in the treasury in the last quarter. And as a result, our holding on yield, which is on an AFS book is around 7.30%. And roughly, we are protected up to 7.2%. And here around modified duration of AFS and HFT is 2.84%. And out of around INR 2 lakh crores of treasury book, 147 is -- CMN 56 is AFS. As far as digitization is concerned, our digitization.
I now request my colleague Bajaj ji to talk about digitization, what we are doing. But we have opened around 38 branches in the -- over all RRPs are doing exceedingly well. Their business has grown by 21%. Their operating profit is 16%, and the net profit is 36% in half year, and all 3 are having net NPA 0. And our joint venture, Sompo is also having a profit of INR 123 crores in the first half as against 85% of the last year.
Likewise, our subsidiary, in bank -- merchant bank is having a profit of INR 3.87 crore as against INR 1.16 crores. So all our joint venture subsidiaries and RRBs are doing good. Now I request Bajaj saab to discuss about that. Digitization, where we are -- digitization business, where we are focusing and all.
Thank you, sir. Good evening, everyone. As far as the digital transformative initiatives are concerned, we started almost 18 months back. So till 30th September, we have done almost 63 journeys. Out of the more than 45 journeys are pertaining to the digital lending platform. And it has started yielding results also. Last half year, we did close to INR 376 crores of business. And this half year, as INR 29,000 crores crore business.
INR 376 crores to INR 29,000 crores.
INR 376 crores to INR 29,000 crores. Where in the retailer side, we have done close to INR 2,500 crores; agriculture, INR 18,700 crores; MSME INR 3,000 crores and liability business, INR 5,000 crores. So put together, even the last year, entire last year, it was INR [ 5,600 ] crores. And this year first half itself, if close to INR 30,000 crores.
We have already done more than 45 journeys. And this quarter, we are planning to launch another 12 journeys pertain to this digital lending platform. We has already approved the business as quarter-on-quarter. this quarter itself, we have INR 30,000 crores. Where at the last quarter, we did INR 9,000 crores business. On the DLP and omnichannel, the omnichannel last quarter also, we are telling that we are going to launch. On the 15 August, we have launched our omnichannel for the closed-user group so that we are testing the ground before going to the public. So next 3 to 4 months, we'll be doing the regress testing, and then we'll go to the field.
On the digital channel business, the Y-o-Y growth on my banking is close to 47% transactions, and the my banking has grown up by 17%. UPI users have grown 34% Y-o-Y. UPI transactions have gone up by 65%. Net banking user also Y-o-Y growth is 37%. Debit card users grown 16%. Credit card users grown 10%. And the -- as for the UPI QR code, it has gone up from INR 4 lakh to INR 39 lakhs. And the UPI QR code transactions have gone up the last half year year was 108 lakh and this year it is 998 lakhs. So close to 10 crores.
With that, the [indiscernible]
I'll -- 2, 3 points basically, which is very important for the margin. So the margin -- domestic margin is 3.52 as against 3.61 of the last quarter, with reduction of margin of 9 bps. This is because of increase in the cost of deposit first point. And second one is that there is a interest reversal of some cases account around INR 261 crores, impacting margin by 12 bps. At the beginning of the year, we said that we will be able to protect our margin of 3.41% for the -- which was a FY '23 margin. We are presently at 3.57. We told 3.41 plus/minus 10, 15 bps, and we are near to that.
The deposit we told at the beginning that will grow between 8% to 10%. So we are 9%. All our guidance advanced 10% to 12%, we are at 12%. GNP below 5%, we are at 4.97%. And NPA lower than 0.9%, we are at 0.6%. ROE, we said that 1%, we had at 1.01. That cost income ratio, we said 44, we are at 40.29%. And credit cost, of course, we said 1.25, we are at 0.81. And the slippage ratio, we talked about 1.5%. We are at 1.67%. So majority of our guidances, we have -- the results are in line with the guidance.
Now, we are open for questions.
Thank you for the elaborated guidance, sir. So let me start with the call. I just wanted to understand your thoughts, particularly on the credit growth front and deposit front. So our deposit growth seems to be pretty on the lower side. Our CASA also has come off a bit during the current quarter. Any strategy that you have to protect your CASA going forward?
Yes, we have done a number of -- The deposits comes from -- customers. For existing customer deposits comes from FI customer, deposit comes from, NRI customers deposit comes for the institutions. So deposits come from -- Deposits come from the government business, right? So what we have done from last about 1.5 years, we have created INGR sales, which we call they were liability vertical, which government resources so 6 or 7 center, which is at Lucknow, at Chandigarh, at Calcutta, at Chennai, at various centers. So we are getting a good business -- government business, government deposits. FY is a one channel, which is also giving us more than 20% growth in the CASA. We have started our remittance business, NR business. We have recruited the people, and the results will start coming on that. The third one.
Fourth one is what happens, we analyze 200 centers where our deposit growth is substantial in the system. We have already opened around a 51 retail acquisition center and deployed manpower. We also came out with the various schemes like insurance free or some charges reduction on a deposit from the institutions or from the organizations, we have developed various product for religion institutions or corporative societies for a number of sectors. So we are working on a various sector, and that is why we will be able to maintain in this increasing interest in Europe at a domestic as some more than 41%. And we'll continue to work on that because going forward also, we need to intend that range.
What is your broader guidance on trade and deposits [indiscernible]
So I'll stick to that 8% to 10%, which I've given at the beginning. So we are at 9% to certain number. And even the advance is also 10% to 12%, we are at 12%. We -- generally, we are conservative in giving guidance. So we'll give the outlook.
Sure, sir. We can start with the Q&A now. First question we have from Mr. Ashok Ajmera.
Sir, as you are rich complements to you for the fantastic results on almost 3 parameter and achieving almost every target given. Having said that, I've got just a couple of questions and some observations. One, sir, on the treasury operations, our AFS book is increasing from -- has gone up to originally from INR 44,000 crores, INR 45,000 crores to INR 49,000 crores in last quarter to now INR 57,000 crores. And modified duration also which used to be generally 1.8 to 2.25 has gone to 2.84. Maybe last quarter also, it was 2.88. So can you give some color on our overall treasury? What is the thought process behind it? And how much are we making the money and whether it is a good idea to give a conservative statement for the credit growth of just 10% to 12% and putting more trust on the deploying the money in the treasury.
So thank you, Ajmera Ji. First, you rightly observed that our AFS book has increased. There was intentionally, we have increased our investment book because there's a time to increase your durations because we know that going forward, the interest rate will come down, and this is the right time if you can invest at a 7.3% to 7.40%. Between this -- we have invested this money. And as a result, our holding on yield has improved. So all what happens this investment will continue to give us a good return.
We are lipids, we are lipid, even our LC 131%. So we are lipid for the credit growth as well. But I'm very margin conscious, wherever we are getting good proposal. And at good margins, we are moving ahead with this. So wherever the asset quality and margin, both combination will happen, we have -- And you're right, they said 2.84 -- it has become 2.84. So we have built up.
Sir, the other question was coupled with that only, sir. Are the credit gross side our bank -- it has got -- I mean, such an efficient management led by you and -- very, very good underwriting standards. Very good credit bottom to top line. But if you look at the growth on the domestic book, it's only INR 8,000 crores on a book of INR 4,58,000 crore. Whereas the overseas book has gone up by almost about 16%, 17% to INR 4,837 crores, which gives a very small yield comparatively. So some of the other banks, of course, one small 1 or 2 banks are giving even 20%, 22%, 24%. I will say that. But can -- go for at least 14%, 15% -- 14% to 16% and make some good money on that because I understand your AA -- AAA rating is what -- percentage-wise has gone down because they don't get the proper NIM or yield. Whereas -- even there a scope for even a and some of the good BBB-plus accounts also with a good underwriting standard you have. I think something on that can be thought and this conservatism should be reduced, and we should come to some realistic level of the credit...
No, sir, we are open actually. This I'm telling you 14% to 15% in corporate. Actually, what happens, our NPA has come down substantially in the Corporate book as well. And with Corporate 2 is growing around 10%, 11%. And we are open for all even BBB, A, AA, AAA, all these accounts provided we get a good margin. In market, there is a point of giving [indiscernible] which you can see our NII growth is at 23%.
Looking at that only, I'm saying that if the book further expands, can -- we are open for expansion, sir. We are actually going in a planned way. So our risk is spread. Our return continuously back and give the results on a sustained continuously good result on a sustainable basis.
Coming on that only, sir, in the unrated other than government unrated, INR [ 10,41,962 ] crores. So those unrated other than the state government and the central government accounts, which are those unrated accounts and whether agree, I mean, what is the composition of that?
I'm telling you what happens, our 74% is a BBB+ above, right? 15%, 16% is a PSU, 90%. Remaining 10% is basically the high project where after completion, you get a rating or an educational institution or hospitals or contractors or LRD exposures and all where you will not get a rating. These are all -- majority of these are our cash flow-based lending...
Sir, just a small amount, but a question on this PM SVAnidhi, it's a new product, which is being, of course, aggressively marketed by all the banks, almost about 4.5 lakh accounts with outstanding of INR 586 crores. What is your experience even for us to know as when is the -- how are we going? And what is the -- basically, our experience on these accounts...
From the banking perspective, I believe this is a committed disbursement not outstanding. The disbursement is much, much lower because there are 3 variants of PM SVAnidhi. First is a 10,000, then 50,000 and then beyond this, right?
INR 20,000.
INR 20,000 and then INR 50,000, first. Suppose you pay INR 10,000 then you are eligible for INR 20,000. If you pay INR 20,000, you are eligible for INR 50,000. So there are 3 things here. First is the interest rate, you are getting good returns, 13% or so. Government of India is giving 5% or 6% -- Government of India is guaranteeing you. So from a -- as a bank's perspective, your asset quality is guaranteed. Your return is guaranteed. You will increase your customer base. So from the banking perspective, they have protected us from all angles.
Okay. My last question in this round, sir, is on our overall recovery prospects, if you combine with NAR CL, some of the disposals coming forward, NCLT and some -- to the other ARC scheme -- some plans for selling some assets or some accounts. So -- I mean, can you give us some color on that, how do we look the next 1 or 2 quarters in this year remaining?
So Ajmera Ji, 2, 3 things. We are continuously giving the improvement in recovery. We decided that our recovery should be INR 8,000 crores. So in 6 months, we are at INR 4,300 crores. So we are going on that. Second one point is that your recovery, NARCL, but happened in NARCL, around a INR 41 account of INR 8,900 crores has been identified. We shifted around a 3 account to NARCL and book balance of INR 1,959 crores. And some of the money we received, some of the NCD OCD will receive. And remaining 8 accounts there, we have received a bid. So what happens when you receive a bid, it to the Swiss challenge. Anybody can -- I rate then whoever is better rate will give to that. So this -- first we take from them and go for Swiss challenge. This is also second, is going on. Third, where we think that we can recover more so this keep on -- some transactions we are keeping out. So we are working on that, but I'm telling you, we will have a recovery more than what we planned in the current financial year.
The next question we have from Dinesh Jethani.
First of all, congratulations on the great set of numbers. So my first question is on the asset repricing. Considering majority of our book, which is MCLR-linked. Just wanted to understand what percentage of overall advances is currently reflecting the existing MCLR rate? And the balance, when can we expect the repricing to happen?
[indiscernible] our 64% book is on MCLR. First quarter also, it was 64% maintaining at around 31%, 32% is on a repo. So what happens this book is keep on coming for repricing, maybe around INR 40,000 or INR [ 4 ] crores will come in the current quarter for repricing. What happens today my 1 year MCLR is 8.70% and prior to that it was less than 8%. So this will come for repricing. In the meantime, some deposit will also come for repricing. So it keeps on happening, but our endeavor is that we should be able to protect our net interest income and the margin.
You said INR 40,000 will come for repricing in Q3. And what could be expected in Q4 then?
You see, 64% of the book is there. So INR [ 5,64,003 ] lakh crores, right?
INR 46,500.
INR 46,000 currently is coming. So virtually, what happens -- Q4 is INR 46,500 crore.
Got it. Got it. Sir, second question was -- large part of our book is MCLR linked and with -- now largely being still. So wanted to understand deposits will continue to reprice at their own pace. So what gives us confidence in maintaining the NIMs going forward?
So you see, our RBI has increased the repo rate, right, from May last year. We too have started increasing our deposit rates, right? So what happens, majority of deposits have bracket out 1 year to 1.5 years. Majority of the -- or in fact, our duration of our liabilities is 1.62. So majority of the book has already been repriced, first. Or entire your CD book, your wholesale book, your less than 1-year book, even the 1-year book has been repriced. A small portion is, again, 2 year, 3 year, 5 year, it will come for repricing at a very, very small percentage. So when your majority of book has already been come to reprice, some may also come, but this MCLR will take care of all these issues. As second or you see -- treasury yield is also increasing. So all this gives us the confidence that we should be able to contract our margin. And the way we are doing so. Our NII is growing.
Got it, sir. That was helpful. And my last question from my side. I wanted to understand the recovery number target expected for FY '24. And also wanted to understand, since the PCR is in a much higher range today, so that contribution to other income will continue at the same pace or we can expect some decline on that side?
So your point is that recovery we have -- at the beginning of the year, we said INR 8,000 crores is our recovery target, right? So today, we are at INR 4,272 crores in the 6 months. So we are confident that we will be able to achieve this INR 8,000 crore number. And majority of this recovery will naturally will come from the NCLT, OTS, ARC, compromises. This all will happen at this -- because we are having close to INR 40,000 crores of PWO book and around INR 25,000 crores of gross NPA. So a huge number we are in. So I'm sure that going forward, this number will continue...
Got it. And on a broader basis, this 1% ROA, so on a sustainable basis, if one has to take out the recovery number, will be able to still maintain a sustained 1% ROA from FY '25 and beyond perspective. Since decent portion on the ROA is contributed by the recoveries also. So I wanted to understand sustainability of the same.
Sustainability, you can see that our 1.06 is ROA for the last quarter and then an average of 1.01. So whether NII is growing and then your net NPA has come down 0.60. So where the baggers you are having, and we are having a standard aside -- and all this. So we are optimistic that we should be able to maintain this ROE more than 1%.
So next question, we have from Dixit Doshi.
Congrats for the good numbers. A couple of questions. Firstly, if I see from last couple of quarters -- from last almost 3, 4 quarters, in the provision, we are doing provisions for the standard asset as well, just to make the book much more stronger. And now our PCR is also reached 95% plus and our night NPA is hardly 0.6. So -- and also we are holding a lot of provision of standard in an excess program. So can we assume that the provisions for standard asset and as well as NPA will continuously coming down over the quarters, coming quarters?
It should come down [indiscernible]
Net NPA INR 2,800 crores.
So naturally, we are not carrying any buckets. And this is standard advances also, we are making provisions based on our own assessment portfolio based in asset-specific base, right? So should take care of any kind of eventuality will come. So the bank is actually fully protected to my mind from the asset point of view. At this point of time, if the thing essentially go wrong, that's a different issue. But otherwise, we are sure of our asset quality and...
Yes. So this provision for standard -- we are doing it from many quarters, and we are holding a lot of ex provision. So is it fair to assume that, that provision will not increase substantially. If you may continue doing the standard asset provisions, but it will not be significantly increased.
Because as a bank, would always be making buffers, but not substantial because based on that, there's nothing in the economy, right? And various parameters are there based on that every quarter our RMC decides what kind of risk we are seeing in future in all sector, which industries, which is right business. But all this keeping in view, I think that should not be a substantial increase, sir.
Okay. And my second question was regarding the QIP. So if you can mention that till what period we have the permission from the SEBI to bring down the government holding? And are you planning the QIP -- Or will you wait for that time till the said we have given the extension?
So our shareholders and our board has given approval to come out that QIP up to INR 4,000 crores a time during the current financial year '23, '24. And we are accordingly working with that. And so our enables to approach to the market at an appropriate time.
So till what period we have an extension on SEBI?
The extension is with us. So I think that Accenture is August 24, extended by 1 more year.
So where does that stand the margin outlook?
Yes. But in the beginning of the year, we said the 3.41% was the margin and -- or India able to product that margin with a plus minus 10, 15 bps. Today is against 3.41. We are at 3.57, right? 3.5 to the last quarter because of that interest reversal and all happen in like EC launch and all.
So whatever based on the MCLRcredit that repricing, majority repricing has already been happened. We are hopeful that we're able to maintain our guidance which we have given at the beginning.
Sure. And how much was the impact of interest versus on the margin this quarter?
Around 12 bps.
Okay. Got it. Secondly, on the -- if I look at the breakup provisions, you have made some INR 570 crores to a standard asset. What is...
This is basically provision we made on a portfolio basis and even in sort accounts on account specific basis. So on a portfolio basis, based on the certain parameters, we are making provisions.
Okay. So if I have to understand x of NPA provisions, how much do you hold on the balance sheet, what would that number be?
You are interested in...
Total provision...
Standard asset provision which we are having?
Yes.
To our CFO, Sunil Jain, standard asset provision...
For this quarter, sir, net...
What is the -- standard asset provision?
Yes, sir.
We are having total amount.
As on date, we are having total standard asset provision of INR 7,400...
That you to exclude this 7 June, because some of this may be the NPS. So standard asset provision, how much we are having? So calculate and tell, right? [indiscernible]
Sure. Just -- and just finally on the -- if you could share the outstanding and cleaning the MSME book and how much hedges we have had so far?
So in a restructure book, basically, we are having INR 9,980 crores. Now INR 9,000 crores -- and we are having 27% of provision. No, I'm telling you the entire restructure book, what happens. We have done a total COVID restructuring close to INR 18,400 crores, right? And today, balance is INR 9,900 crores. So close to INR 10,000 crores. So reduction of INR 8,000 crores. Out of INR 8,000 crores, INR 2,500 crores is -- gone to NPA, remaining we have recovered. So INR 5,500 crores we have recovered. So today, virtually, 54% is outstanding remaining in the restructure book. You understood what I said?
Yes. Yes. Got it, sir. And just if you could share the standard asset provisions on the balance sheet...
Yes, we'll tell. We'll tell...
Next question Darshil.
Congratulations on a great set of results. I think most of my questions have been answered, sir. But just wanted to know if any guidance we could give on FY '25? Or we know maybe can we have a higher growth because I think we are being a bit conservative in terms of our growth. So anything color on FY '25?
FY '25, we will give us the [indiscernible] Guidance on FY '25 when we complete FY '24, sir. Because visibilty of having 1.5 years from now is --
Yes. Okay. Okay. No worries.
But we will continue to go absolutely because you see this is a bank which is growing more in retail than the corporate. It's very easy to have a good growth when you do a corporate lending. But yes, the retail growth is more than the corporate growth. This is a big point. And this shows that our branches are able to create asset. And when you -- all branches are able to create asset, your customer base increases. So in the future also, you can grow. So will bank will continue to grow. The business model is like this, sir.
Okay. And sir, just like it would be right to state that we are being a bit conservative in terms of our guidance and we can maybe over-deliver are promise, would that...
It is always better to give guidance and cross that guidance, rather than giving a higher guidance and then...
So we had one -- we have basically one question from the chat box from MV Mahesh. So basically, sir, the question was that there is a corporate of INR 570-odd crores during the current quarter. Any comment that basically you can give on that corporate account.
Yes, yes. There are basically 3 accounts, right? One account of INR 372 crores is with a fully sub-based group, right? We are a member. One account is a EPC contractor and the third account is a textile. So all put together the INR 500-odd crores.
So basically, is the trend that you want to see going forward [indiscernible]
Client past to the discount -- cash flow mismatch. The result part happens that the LC guide evolves. So already, we signed ICA with them and been working on the resolution plan. In the meantime, we are having around a 60% provision there, I guess.
Okay. So during the current quarter also, we have made some additional provision on those accounts?
We are having more than provision, but we'll take a call when the quarter is end. Otherwise, presently, we are having 60% provision.
Sir, one more question is that there's been an RP nudge, which market has been talking about to increase the SREC. What's your view on that?
Which one, please come again?
RBI -- the savings rate?
No, no. Interest rates are deregulated.
Yes. So I mean because there was chatter that RBI actually merging the banks to increase the savings rate...
RBI on records have deregulated, sir. Deregulated the interest rate on deposits and advances...
So you don't think that's going to happen?
The point is only the monetary transmission should be perfect, right? So monetary transmission of 2 have increased -- what happens. The deposit we used to take 5% in the Corona time, now we are taking at 7% plus. So the deposit side is gone and what happens to the credit side also 40% in CASA and 60% is converted into MCLR. So MCLR, which used to be 7.30 is today, 8.70, 150 bps. So 250, 60% is 50 bps, more or less -- sir.
Next question will take from --
Congratulations team, Indian Bank for excellent performance. Sir, my majority questions are answered. My basic question is, sir, you are making your bank future digitally and otherwise also enabled on various parameters and you are known in the marketplace for a TAT on large tickets. Can you throw a color how well you will do on retail on a similar account? And how soon you would be ready for all the digital initiatives and the initiatives you've taken to bring down your cost of income on a drastic basis?
Yes. So 2, 3 points -- One is basically, digital journeys. So digital, we are working a number of things from the core side as well as from the journey side and also from the -- and also from the operations point of view, I'm telling you. First journey, Bajaj Ji has told, we have came out with the journey, the retail, agri, MSME, options, even in third-party products, in retail housing loan, auto loan, personal loans, PAPL, gold loans, like with now we are coming out in that agriculture gold loan, loan. And again, MSME small loan, GST cash flow based. In a third party, even the renewal of insurance, right, loan against insurance, -- insurance policies. So a number of things we came out on that side. Even I'm telling you from the cost point of view also, we came out of the server centralization when I came to discuss and then it just rolled out around a few months back, around 3,500 branches. But today, it's 5,000 branches have rolled out in a server centralization. But what is service centralization I'm telling you.
Earlier we used to have severe at all branches. Now all is centralized at our data center. So earlier what happens, you need to have a AC force these servers 24x7 5,000 branches, 10,000 ACs. And the 25% of the space is being occupied by the servers, we have shifted all this. At the same time, we are also working on a DMS, document management system. So where we are taking -- scanning the copies of document, whatever available and shifting to the godown. So it's the result what happens -- 50% of the space of the branches is being bucketed, so that we are renegotiating. We are going for other branches to say post one point.
In the IT side, we have come on middleware. So now, we are using even middleware for our other income because you say suppose Google Pay, they are not bank. The transactions are being routed through the bank. So we can use our middleware. So we have started using for various customers for our middleware. In likewise these journeys. In ForEx also retain a number of things. In our subs also -- today we have finalized, today the Marina articles, initial subscription, everything we are going approach to the RBI 12 hours.
So there are a number of things going on. In HR side also, we have a number of -- the entire performance and system as we are given thing for ForEx. We have recurrent people from the market, lateral recruitment and all levels improvement of the GM level. So these are the number of things to improve the operational agencies to bring that new plant to bring the new experience in the bank for our future.
CMS also we started already finalized that. Vendor has -- Software is in place. So a number of things -- so results have started coming. Bajaj Ji has sold at INR 30,000 crores. So without a INR 30,000 crores, your OpEx has come down, you see the 28% growth in gold loan happened only because of the digitization. Otherwise, it would not have been possible. So that the efficiencies will come through digitization in a time to come as well. I think I replied the question on anything more than...
Sir, your reply. Only thing is this is going to have a big impact on income of the bank and margins and profitability. So are you being conservative here cost to income is concerned? And do you see a far greater improvement by the quarter when you end the year? Or you see it next year...
Our profitability has -- net profit has grown. Earlier, we were getting cash benefit. Even after paying 28%, we are growing [ 37% ]. So these all results have started coming, sir.
Okay. Sir, second thing, our outlook on treasury, indicating that you are seeing treasury purchase to give you a benefit maybe in the last quarter or next year. So the interest rate cycle may peak out by December, how much, I'm not predicting, but you are taking a view that for your next year, you will have -- which reward in treasury?
So see sir, we keep on [ charting ] our portfolios. Actually, when the interest rate started increasing, we returned our portfolio and you see the interest holding yield, the portfolio has increased. So we keep on doing our churning our portfolio to get better and better.
Low earnings is rolled.
And low earnings even we sold even prior to this U.S. bank failure and all.
In terms, do you expect profitability in treasuring Q3 and Q4?
Sir, there should be some profit. But you see treasuries volatility of the market is also one factor.
Take it on board.
But we keep -- our endeavor is always to answer, sir. And very well good opportunities come we take.
Next question, we'll take from Mayank.
My question is again on provisioning line. So INR 574 crores we provided on this quarter against standard assets. So do we see that in that portfolio, that is the reason we have created this provision? Or this provision is created with the purpose of...
No, provisions are always -- buffers are always created in good times. So we are passing through a good time. We have created buffers and -- but these are based on the portfolio based on, on studies and all.
So it's not based on any incremental step -- more prudent...
And prudence is also there.
Got it. And what will be total outstanding assets provident like which we created like this quarter plus the vision which we are holding on the structured portfolio?
We too are having around INR 5,000 crores of provision, sir. Total...
This is excluding regulated general provision?
That includes regulatory as well.
Excluding that, what would be the amount?
Maybe 80 -- 75%, 80% can we had. That's what we have to work out.
Next question we'll take from Jay.
Congratulations on a good quarter. Sir, I wanted to check on your cost of deposit, right? So if I see your card rates, they are very competitive. And you are -- you have a decent scope on loan-to-deposit ratio also. But the cost of deposit has gone up significantly in this quarter. So how -- I mean, what is the key reason for such a sharp rise in the cost of deposit?
You see the cost of deposit has increased because the know reason. Known reason is a -- deposit costs increased with the lag, right? I'm telling you 210, 220 bps increase in the deposit, which we used to take 5, 10. Now we are taking 720 -- 220 bps, 60% is your term deposit, actually 120 bps will increase, right? 120 -- but some of the -- because some of the 3 year, 5, 4 years, so 100 to 120 bps -- will increase. This is natural, sir. This is natural. So with the repricing this deposit cost has increased. But our endeavor is up to maintain that. So where MCLR has increased. Our yield or investment has increased because we can't say that deposit costs will increase. To remain competitive in the market, you should give a competitive rate. But my objective is to earn also.
Right. Okay. So sir, if you were to see that basis the repricing cycle, I mean, where do you think the cost of...
If you compare September '22 versus '23, 87 bps.
Right, right.
So 87 bps means 150 bps [Foreign Language] 60% of 150 bps.
Right. So sir, I mean, where do you think considering RBI does not do anything further, right? Let's say, RBI's status quo for the next 18 months. Where do you think your cost of deposits should be settling? I mean, do you think this like 250 basis point, at least, will pass on in the entirety on the...
No, no. Point is that majority of the deposit is already repriced. So whatever you see -- when they started. They stared in May. And around at 35 plus [ 2060 ] -- around 190 bps, they have increased til September. So they have increased our pricing still from the September onwards, right? So we are in the month of October now. And our duration of the liabilities is this, 1.6. And you see 15% bulk in CD and all because they are always up to 1 year. So they already be repriced. A majority of the short term. So maybe in this here and there or by the end of the March entire repricing should happen -- MCLR book, which is coming for repricing, I think. We are ready, sir. Actually, we thought plan 6 months or 1 year back to move to the MCLR because that repo is now virtually stabilized. Whatever increase is happening, happening in MCLR.
Correct. Correct. Correct.
1.5% we have already -- in deposit also. And 7.3% has become 8.7%, 1 year MCLR -- So almost stabilized. And you see all banks are taking this deposit for 1 year, 400 days, 450 days, right? So the major increase is happening in this.
Right. Okay. Okay. Okay. And so sir, I mean you said that even the yield on advances, they are rising, and this is purely mostly on MCLR repricing, right?
Right.
And are you seeing any incremental resistance in when you were to pass on the MCLR because some of the banks are commenting that corporates anyway wants very finer prices, and they are letting go off such disbursements, which are at finer rates. What has been your experience?
The experience, they're selling right thing, sir. That is why you see corporate growth is less. Corporate is asking at a very, very fine rate, and then you can't make margin there. And suppose you take a money at 7.5%, 7.7% and put your DICC cost of this CRR cost, then it's not for...
Okay. Understood. And lastly, sir, I mean, lastly, there was -- we had around INR 3,500 crores of MSME restructuring, which is outside of this COVID...
No, no, no. There's ARPU together. So that is a 3,000 tranche -- that has subsumed in the COVID.
Okay. So that has been subsumed...
Or maybe around INR 200 crore -- INR 200-odd crores, which is outside this, nothing more than this. You are talking about the North accounts because which is giving based on that particular circular of the Reserve Bank, right?
Yes, yes. Sir, even earlier, I think...
And it remains -- it is INR 200-odd crores, nothing more than this. We have decided this.
Sorry. Sorry. This is not MSME, but sir -- but yes. But this is pertaining to CDR and all those other cases. I think that was the residual...
You have done restructuring some of become NPA even then you to go as per your RBI circular and all. So -- but that remains under those tranche A1, tranche A2, amount is INR 221 crores, as on date.
Right. But is there any other CDR or any other [ 525 ], which is outside...
No, no, no. They are all NPAs. [indiscernible]
The structured book is INR 9,000 --
Today, only 2 type of -- one is COVID. Sorry, the second, you have increased your DCCO. We -- particular times.
Shall we take the last question from Mr. Ajmera.
Sir, one is that in your last -- I think in the last quarter or so you had said that for the CASA and the retail deposit, you are working and giving main focus to institutional accounts, educational institutes, temples and also the relationship with in the Lucknow, Chandigarh, et cetera. So sir, any development? I mean has it given any fruits on this work on...
You see last quarter, deposit was 6%, now it is 9%, 10%.
So I mean we are continuing our...
Yes, we'll continue, sir. We'll continue.
So this is reflecting in our numbers?
We are maintaining our CASA at 41%. [indiscernible] And margins and all. So not only your deposit, but your margins as well.
And sir, some color on the gold loan book. The gold loan and the yield on that? And what is the breakup of the actual gold, I mean direct gold loan and the agriculture gold loan?
Gold loan, we are earning close to INR 70,000 crores of a book. INR [ 63,000 ] crores, INR [ 64,000 ] crore is in agriculture part, right? And what we have done -- how we are managing this business, we are now having 650 gold shoppes, where we are totally given gold champions, even -- even caratometers, securities, safeties, demo inspections, controls, insurance, everything is in -- Digital also, because everything should -- so this is how we are doing this. Now not it happens in reality, I'm telling you that people are taking gold and -- even not taking gold back from us. So whenever they need, they come and take loan even. So this is like a loan against FDRs for us. Because we are doing this business from the decades. So this is a good business, giving good return to us. Not only we are giving -- we are getting 1 year MCLR plus in this portfolio. And the portfolio is good and...
Fully secured and all that in...
Good and growing. And same customer base is also improved. So that's what gives us a CASA and all.
Sir, on this provisioning, you are -- I mean in the giving answer of our -- my earlier, you were saying that, I mean, it's prudent to be providing in the good times. But in some of the earlier quarters, you said that now our provisioning requirement is reducing. So we, of course, prudence is required and the cushion has to be built in. But at the same time, on a current basis, the analysts or the investing community always looks for the enhancement or increment in the profit, the bottom line --
So now going forward, again, like -- this time, the provision was, I mean, of course, total provision was INR 1,550 crores. But out of that, against NPA, it was INR 917 crores as again, INR 929 crores in the last quarter. But just a small INR 10 crores less than the last quarter. So going forward, do we take it that since the provision requirement is coming down and we are very, very comfortable now on the net NPA, I think, which is less than now 0.7 something that the real profit will actually come in the books -- shown in the books as a net profit, without coming...
Definitely, the profit will come in book only, sir. And credit cost which is -- which was 0.79. Now our net NPA itself is 0.6. So credit costs will further come down. When your net NPA is 0.6, naturally, your credit cost will come down. Cannot be more than this, right? And when you are -- recovery is more than your slippage, yes, given the situation when your recovery. So naturally, this all numbers will flow in the balance sheet. P&L.
But certainly, last year, sir, this fall in the ForEx income, is it -- I mean, fluctuating things?
Earlier, actually, you see the difference between the Indian stake and the U.S. stake, we are at 7.38, [indiscernible] 2.35%. SAP ratio, the SAP premium, which was 90 days premium used to be 3.3. Today is 1.32%. So margins have come down there, impacting the ForEx income. But we have -- such other avenues model and other income growth. See our PSLC income was INR 479 crores. We have INR 329 crores, INR 336 crores, we have shifted to INR 653 crores. INR 300 crores we have [indiscernible]
You had expanded one in detail -- In fact, your GM treasury also, but at that time when the ForEx income was coming very good. I mean the difference was quite effective. [indiscernible]
So we talk about or premium has come down just sell. That's why earlier we used INR 38,000 crores of interbank plasma. Now that has come down substantially. So based on the market or incomes. But we are having various revenue streams that we keep on working to have growth in our other income and at all. I'm sure you would...
Thank you very much, sir, for giving this opportunity second time to -- and answer almost every question by the analysts. We are more clear about this bank. We wish you all the very best. We still feel that the bank is still undervalued to the market. We should get the...
We are open for all questions all time.
So then basically, sir, with your permission, can we take 2 more questions? So Mr. Punit want to ask a question. We'll take a question from [indiscernible]
Just a small clarification. So you mentioned some time back that standard asset provision standard about INR 5,000 crores in your case, right, including general, restructured and other provisions. So if I remember it correctly, this number was about INR 6,800 crores last quarter. So has this...
Some of the provision -- yes, yes, yes. Please, please. Some of the provision we have excluded because here we are talking about the standard asset provision.
Okay. So I mean what is the -- so like to like against that...
Other provisions are 7 June provisions or -- So madam, otherwise, you -- send us a query, we will reply, right? So you send us a letter.
Next question we'll take from Jay.
No, no. My question has been answered.
Sure. So basically, I think the question has come from Puneet. He wants to get the guidance on OpEx, number one. And second question is when can we expect the QIP to get completed.
That good. So OpEx, OpEx is basically 2 components. One is the salary and some other operating instances, right? And salary itself has a 3 component. One is the salary, one is wage revision, third one is PLI. So you know that PLI is able when you are operating profit is more than 15% or 15 days. So we started -- earlier, we used to do these provisions so not December or the March quarter. We started from the first quarter onwards based on our numbers and all. So there is a PLI part. One Second part is that this wage revision has become due. So this year, this quarter -- around INR 271 crores of a base revision provisions. And presently, we are having around close to INR 689 crores of a base revision provision. The other overheads is basically slightly increased because of some ATM-related expenditure. It's because your digital transaction will increase naturally your operating expenses increased and your digitization is happening in such a large scale. So AMC charges, right? And even the card issuance charges, even the UPI charges, these are all able. So this is all a normal business operations. If you are top line grows, there should really some expenditure but we also grow. So if you exclude this PLI and wage arrear, on a like-to-like basis on a salary only grown by 5%.
So basically for the wage revision, we are providing at 12% or we have started providing at 15%?
Percentage, we will be not able to tell you, but they are adequately provided.
I think that's it from letting the audience. So we can wind up the call there to make...
Come again, please?
Sir, if you have any closing remarks to make?
Yes. So thank you. Thank you, all analysts and investors in a continuing interest in the bank. So we'll again meet next time with a better performance. Thank you once again.
Thanks a lot management, and thank you all the participants. With this, we'll end the call. Thank you.