Indian Bank

NSE:INDIANB

Earnings Call Analysis

Indian Bank Posts Strong Growth, With 36% Net Profit Increase

In the recent earnings call, Indian Bank reported a robust 10% business growth, with deposits up 8% and credit rising 12%. Retail and agriculture segments excelled, showing growth of 15% and 16% respectively. Operating profit grew by 10%, while net profit soared by 36%, driven by an 8% increase in net interest income and a substantial 44% recovery in bad debts. The bank maintained a healthy interest margin of 3.39% and improved return on assets (ROA) to 1.33%. Looking ahead, management projects credit growth of 11% to 13% and deposit growth of 8% to 10%, backing a continued positive outlook.

Solid Performance Amid Market Challenges

In the latest earnings call, Indian Bank reported a commendable financial performance for the second quarter of FY '25. The bank's total business grew by 10%, backed by an 8% increase in deposits and a successful 12% growth in credit. This growth trajectory aligns with the bank's earlier guidance, which expected deposit growth between 8% to 10% and credit growth between 11% to 13%. Retail credit soared by 15%, while agriculture and MSME loans grew by 16% and 8%, respectively. Moreover, the net profit surged by an impressive 36%, driven by a combination of net interest income growth, a stark 44% improvement in bad debt recovery, and an 11% uptick in fee-based income.

Focus on Asset Quality

The bank demonstrated strides in improving its asset quality, as the gross Non-Performing Assets (NPA) ratio fell from 3.77% to 3.48%, and net NPA decreased from 0.39% to 0.27%. This improvement reflects the bank's strategic management of recoveries and slippages, with a recovery of approximately INR 2,000 crores outpacing slippages of INR 1,357 crores. The provision coverage ratio also strengthened, rising from 96.6% to 97.7%, suggesting robust risk management practices.

Operating Margins and Financial Ratios

Though the operating margin saw a slight decline of 5 basis points, it remained competitive at 3.39% globally and 3.49% domestically. The bank's return on assets (ROA) and return on equity (ROE) further improved to 1.33% and 21%, respectively, showcasing enhanced profitability and operational efficiency. The cost-to-income ratio, however, stood at 44-45%, indicating room for further efficiency improvements.

Continued Guidance and Future Outlook

Looking ahead, Indian Bank affirmed its targets for FY '25, maintaining its guidance for credit growth at 11% to 13% and deposit growth at 8% to 10%. Management is optimistic about meeting these targets, driven by a robust sanction pipeline of around INR 32,000 crores, up 20% from the previous year. The bank aims for a capital adequacy ratio of 17.84%, considerably above the regulatory requirement of 11.50%, further solidifying its financial stance.

Digital Transformation Initiatives

Significant strides were made in the bank's digital transformation journey, with a remarkable increase in digital transactions to 92%. The mobile banking user base surged by 20%, while UPI transactions grew by 27%, exemplifying the increasing consumer adoption of digital alternatives. The bank continues to invest in enhancing its IT infrastructure, underscoring a commitment to digital innovation in serving customers effectively.

Concluding Remarks and Investor Sentiment

The overall outlook during the earnings call reflected a positive investor sentiment, emphasizing the bank's consistent performance despite external challenges. The management's proactive approach to managing asset quality, along with a clear roadmap for growth and digital transformation, positions Indian Bank favorably in the competitive landscape. Investors can take note of the bank's ambitions to optimize profitability while managing risk exposures effectively, reflecting a balance of growth and stability.

Earnings Call Transcript 2025-Q2

[Anand Dama, analyst]

Yes. Good evening, everyone. We welcome you all to Indian Bank's Post Results Conference Call for the Second Quarter FY '25, hosted by Emkay Global.

From the top management, we have with us today Shri Shanti Lal Jain, MD and CEO; Shri Mahesh Kumar Bajaj, Executive Director; Shri Ashutosh Chaudhry, Executive Director; Shri Shiv Bajrang Singh, Executive Director; and Shri Brajesh Kumar, Execute Director.

I request the MD sir to first briefly summarize the key highlights from the second quarter results and also provide future direction on growth, margins and asset community, post which we will have the Q&A session. Over to you, MD, sir.

[Shanti Jain, executive]

Yes. Good evening. Welcome to all analysts and investors in the post results con call. We have declared our results today, and you might be having the investor presentations. For immediate understanding, I will talk a few highlights. We have -- our business has grown by 10% and deposit of this -- deposit has grown by 8% and the credit has grown by 12%. Under the credit, our retail credit has grown by 15%, agriculture by 16%, MSME by 8%, but the standard MSME has grown by 12%. And the corporate 9% and the standard corporate 10%.

So all are basically double digit -- all are in double-digit, and we could maintain our CASA more than 40%. So we are at 40.47% is again 40.56% of the last.

In the beginning we said -- given the guidance that our deposit will grow between 8% to 10%. We have grown by around 8%, and we raised infra bonds of INR 10,000 crores, which works out to 1.5% so 8%, 1.5%, 9.5% of total, we are there. In the credit side, we said 11% to 13%, and we have grown 12%. This is a business side and profitability, of course, the operating profit has grown by 10%. The net profit has grown by 36%. The profitability has grown on the back of NII growth of 8%, bad debt recovery of 44%, fee-based income up 11% and cross sale income, 5% and the PSLC income more than 8%.

As far as your question on the margin side also, our margin was 3.39 global and 3.49 domestic as against 3.44 of the last quarter, so a reduction of 5 bps. If you adjust the P&L charges it is -- impact is 6 bps. Earlier, it was 2, now it is 8. So incremental is 6. If you add 6 bps of 3.39, it is 3.45, which is more than the last quarter margin.

Now come to the same story, the domestic side. Now our ROA has improved from 1.06 to 1.33 or 1.20 of the last quarter. ROE also is 21%; cost income ratio of 44%, 45%. We had better additional provision close to INR 150 crores because of the FIMMDA rate has come down to 6.94% and we decided that let us make higher provisions and based on the actual as well.

Yield in the quarter, the cost of deposit has grown by 8%, yield on advance has also grown by the 8% both side 8% and in the investment side, because the investment -- yield itself is coming down. So whatever incremental investment you make, it cannot be 7.15% and the rate itself is a -- is a 6.86%. So there will be an impact of that also. As far as asset quality is concerned, it has come down from 3.77% to 3.48%.

The net NPA has come down 0.39% to 0.27%. And the provision coverage ratio increased from 96.6% to 97.7%. Our story for the recovery more than slippage is continuing. Last time INR 2,000-odd crores we have recovered and the slippage is INR 1,357 crores. And you see last quarter also last year also, prior to that also, our recovery was more than our slippage as a result of our gross and net NPAs coming down. And our collection efficiency is 95%. We are maintaining that collection efficiency. So point is that whatever is -- some overdue is there, we are recovering that overdue also and maintaining this.

Capital adequacy ratio is 16.55%. And if we add a half yearly profit of INR 5,110 crores, it is 17.84%, 17.84% is against 11 point -- 16.5% virtually as against 11.50% of regulatory, right.

Now this SMA book has slightly increased from by INR 2,400 crores -- INR 2,300 crores SMA, and which is because of the one account of INR 2,200 crores, which was appearing in SMA 2 as on 30th September has now come down to SMA 1 part of the regulator has been paid by the customer, it is a government-guaranteed account. As far as digitization is concerned, today, 91%, 92% of the transactions are happening on a digital basis. So regarding all our other current, we have given a guidance of recovery of INR 7,000 crores, we are INR 3,958 crores.

We have said the AUC recovery to 2000 for a full year, we are at INR 1,200 crores. NIM, we have given 3.40%, we are at 3.39% -- domestic rather 3.40%, we are at 3.49%. ROA, we said that around 1.20%, now, we are at 1.33%. ROE, we said 19%, 20%, we are at 21%. So credit cost has also come down at this point, 65%, slippage ratio also has come down to 1.06%.

A lot of things we are doing for digitization, a lot of things we are doing for HR side, so I request my colleague, Bajaj Ji to tell you about the digitization that we are doing. And then we are open to question and you raised about 2, 3 points let me reply this also. Growth, we will continue to have our same guides which we have given. Margin side also, our endeavor is always to stick to our guidance and rather give better than the guidance of 3.40%, which we said we'll continue that also. And asset quality, of course, the collection efficiency is 95%. And SMA 2 number barring this one account is same and INR 20 crores here and there, not much. So asset quality also will be going probably better.

Bajaj Ji, please.

[Mahesh Bajaj, executive]

Thank you, sir. Good evening, friends from the analysts and the investors. We have already placed this presentation on digital transformation, digital migration. I'll just touch a couple of points, then we'll take questions. Our -- the migration from branch channel to digital channel have gone up from 89% to 92% and Y-o-Y 3% plus.

Apart from that, we have come up with a new omnichannel app. The mobile banking users have gone up by 20%, which is INR 1.51 crores, INR 1.81 crores. Same way, transaction has also gone up by 10%. UPI users have gone up from INR 1.5 crores to INR 1.95 crores, which is Y-o-Y 27% plus and remitter transaction also 62% Y-o-Y. Even if you talk about the daily UPI transaction, now the daily UPI transaction are INR 2.28 crores, which is remitter INR 1.55 crores and beneficiary INR 0.73 crores.

Apart from that, the net banking user also have gone up 98 lakh to 1.11 crores. And the credit card user also gone up by 50% from 1.77 lakhs to 2.56 lakhs. Same way the FASTag users also have gone up by 37%. And PoS also have gone up by 56%.

We are continuing our digital initiatives, the journeys, which we started in the June '22. This half year, we have completed 24 journeys, and we are prioritized 56 journeys, Q2 '18 and Q3 '13 and Q4 '19 journeys, we are planned. Last year, we did a digital business of INR 81,250 crores. And last half year, it was INR 29,116 crores. This half year, it is INR 79,059, which is 172% Y-o-Y plus.

Same way, in RAM 24,000 to 63,000, which is 162% growth and e-deposits on the liability side also, it was 4,911, now it is 15,000, which is 206%.

Apart from this assets and liability, we have taken certain other initiatives, which is like EBG, EOTS, death claim. So there also, there is an improvement INR 0.3 crore to INR 537 crores, and even adoption also has gone of MSME to 77 retail, 73 and agri, 91%. Even the last time also, the question was how much we are spending on the IT. It remains almost same. The OpEx, it is 10% and NIS, if you see, it is 27%. Apart from this, we have -- we already on the capital expenditure, INR 135 crores for this half year, we have done, and we are committed to almost INR 200 crores to INR 450 crores, INR 500 crores of capital expenditure apart from this revenue expenses.

So we'll take questions at the end during the call. So these were the few initiatives we have taken by us.

[Shanti Jain, executive]

Now we are open for questions.

[Anand Dama, analyst]

[Operator Instructions] The first question we'll take up from a Ashok Ajmera.

[Ashok Ajmera, analyst]

Before my time gets over, sir, let me, first of all, wish you a very, very happy Diwali to everyone to you and the -- all the people there, the analyst fraternity as well as the people in the Indian Bank. And sir, compliments to you, sir, for a good set of numbers, especially on the profitability front, good profitability. And all the -- most of the parameters of the profit, the expenses, the asset quality, the gross NPA has also come down substantially. The net NPA is now 0.27%.

But having said that, sir, I just -- if I look at the business growth, both the deposit and the credit though the annualized basically the tracking 4 quarters, if you are taking then it's okay, 10%, 12%, 11%. But if you look at the current FY '25 half year, our business growth is only 1.79%. Our deposit growth is only 0.75% and our credit growth is only 3.16%.

So having said that, if we look at the entire FY '25, even based on your target also, sir, you need to raise the deposit of almost about INR 70,000 crores in the remaining 5, 6 months, you need to disburse the credit of almost INR 52,000 crores. So for that, sir, what is the road map ahead, I mean, what are the plans? What are the sanctioned pipeline and proposal, which are already in sanctioning stage or disbursement stage? And how do we basically plan to meet these kind of targets for the whole of FY '25? This is my first question.

[Shanti Jain, executive]

Ajmera Ji, we told that we will grow in credit 11% to 13%. We are growing 12%. It means we are as per the trend. You rightly said that the growth in the first half vis-a-vis the gap, which we have to fill in the next half is an issue which you are raising. But you see the last year number. Last year number is the same when you growing as per trend, but will happen last year, also, we've grown INR 40,000 crores in the second half. This year also the gap is INR 40,000 crores in the second half. The same number we are continuing. This is how the business is happening in the country. So we are actually exactly on the track -- exactly on the track. Now your question was how much was the sanctions? How much was in the pipeline?

I'm telling you, we -- this year, we have sanctioned 20% more than the last year. Last year, in the first half, we sanctioned INR 27,000 crores time, we have INR 32,000 crores. So it means we have a more pipeline, right? So this -- the pipeline I'm telling you that the 3, 4 parts of this pipeline, undisbursed term loan is around close to INR 7,000 crores. Sanctions, which we already -- sanctions INR 7,200. INR 7,000 crores where the partial disbursement has happened and partial disbursement based on the growth or based on the completion of the project will around INR 16,000 crores, INR 17,000 crores of a proposal in pipeline, undisbursed working capital limits are close to INR 28,000 crores.

So considering this repayment and all the sanctions, which we are having -- we are confident of achieving this. Of course, the number slightly came down because 2 reasons. One is that whatever the corporate lending, if the margins are not there, then we allowed let it go. Rather you know we continuously, we are on the profitable growth path. We are not on a growth path because you see our margins and everything.

So this is -- so we are confident that the way we are doing every time this time also, because your band is 11 to 13, you are growing 12, you we are on the track. You are on the track as per the last. Likewise, in the deposit also, we said 8% to 10%, we are at 8%. So my point is the growth in credit and the growth of deposit, you see both we match.

Even if you say up September '23 to September '24 growth in deposit and growth in credit, you see the gap of around INR 6,000 crores or INR 7,000 crores, we've raise an intra bond of 10,000, rather we have a profitability more than the INR 5,000 crores this time, last time INR 4,000 crores, INR 9,000 crores. So the liquidity point of view also, we are comfortable -- from the growth point also, we are comfortable. All other engines whether retail agree and MSME, we are growing 14%, which is more than the guidance we have given.

[Ashok Ajmera, analyst]

Thanks for this reassurance, sir, because like some of the banks have done -- recently, we just concluded one of the other big banks analyst meet. And there in the first half itself, they grew about 6%, 6.5%, 7%. So that is why the question came to my mind that -- but anyway, if you are as long as you are meeting the targets of the whole of the FY '25, I mean, there is no issue and that reassurance goes very well.

Having said this, sir, you had covered this SMA 2, I couldn't hear it properly that time -- so you said that 1 account out of the 3,301, which has come in SMA to above INR 5 crores, is around INR 2,000 crores something and it is a government account. So can you just repeat it, sir, or explain it a little more clearly, sir?

[Shanti Jain, executive]

Okay. So actually, what we see and the SMA 2 number, right? So just SMA 2 number was -- SMA 1 plus 2 was just a minute...

[Ashok Ajmera, analyst]

No, 2 was INR 3,301 crores.

[Shanti Jain, executive]

Just a minute, let me...

[Ashok Ajmera, analyst]

As compared to INR 1,075 crores in the last quarter.

[Shanti Jain, executive]

Okay. I'm just telling just minutes. SMA 1 and 2 was INR 2,450 crores in June, which has increased to INR 4,762 crores. Slide #32. So incremental is INR 2,300 crores. Out of INR 2,300 crores, INR 2,200 crores is one account first point. First point is one account in the corporate, and that is why you are seeing corporate, it was 365 become INR 2,500 crores. So INR 2,200 crores. And this is a government account guaranteed by a government and they have paid this irregularity, which was SMA 2 in September has now become SMA 1. So part of the irregularity they have cleared. Clear, sir?

[Ashok Ajmera, analyst]

Yes, sir. This is -- yes, because the figures just shot up this thing. And sir, this -- our -- on the recovery front, again, you are within the target, I mean, there's a good recovery. So can you give some color on the present recoveries and going forward with the NARCL and NCLT are the things are speeding up? Are we going to have a better recovery than even our targeted one, because we also got good pool of even return of accounts also and a lot of cases are at a positive stage.

[Shanti Jain, executive]

Yes. So last time, we have recorded INR 8,600 crores, right? At this time, we say we'll be having a less recovery because INR 7,000 crores to INR 8,000 crores more or less. So virtually internally, we decided close to INR 2,000 crores of a recovery, we'll do. In the last 2 quarters, we recorded close to INR 4,000 crores. This is one point. Now going forward, the recovery. This is a second question. So 2 things is there that we are in INR 41,000 crores of PW a book of INR 19,000 crores, so around close to INR 60,000 crores of a book, right? .

We are having close to INR 2,000 crores of NCLT book. Now this -- going forward, the recovery, which we are expecting from the NCLT, surfaces, OTS and ARC because we have -- NCLT, I told we have a huge pool. SARFAESI also last time -- last time, we recovered around INR 860 crores. In the last half, we recovered INR 400 crores. So same number we are trying to achieve that this year also. Half year INR 400 crores, next year INR 400 crores.

Likewise, in the OTS last time, we recovered INR 1,500 crores. This half year, we recovered INR 755 crores. So we are going totally on those lines. ARC, of course, last time we have recovered INR 465 crores. In this year, we have recovered INR 97 crores. But you see one presentation NARCL. There are 7 account of INR 700 crores where bids have been received.

So we'll go for the Swiss challenge and this amount when we'll transfer to NARCL, naturally this ARC recovery will happen. So we are dot on the track -- around INR 2,000 crores of quarterly record, of course, our guidance will continue to be around INR 7,000 crores to INR 7,500 crores okay, the recovery. So we are moving on that direction.

[Ashok Ajmera, analyst]

Point will taken, sir. Last question in this round of treasury, sir. Our performance of treasury is reasonable in this quarter also. I mean, we have made some good decent profit also -- trading profit also as well as the -- also the valuation profit and gains also. So going forward, sir, what is your take on when we -- I think we expect some rate cut also in December.

We'll be having the better profitability on the overall treasury operations including the equity debt trading also as well as on the -- because of the rate cut on the valuation front also. So overall, in the next 6 months, I mean, this current 6 months will be better than the last 6 months on the treasury?

[Shanti Jain, executive]

Two things -- 2, 3 things I'll complete the entire investment book. First of all, we have added the investment by INR 5,000 crores. In June to September, right? Because we are in a liquidity in the first point. And we have -- INR 3,000 crores we have added in SLR and INR 2,000 crores in non-SLR, right? Now second point is there's a yield on investment, which is very, very important.

Our yield on investment in June was 7.15% in September, it is 7.17%. So our yield on invest is INR 7.17% and the 10-year G-Sec is [ 6.86-87%]. So we have much above the 10-year G-Sec second point. Now as per the guidelines, the unrealized profit on AFS will go to the reserve -- AFS reserve and FVTPL comes in the P&L. INR 700-odd crores, which is an unrealized profit because of this go to the AFS reserve. We could have even INR 700 crores more, we could have earned. But we thought that let us have a good margin continue -- we have a good margin and continuously profitability. So this is our treasury. Otherwise, the profit would have INR 200 crores plus INR 700 crores.

It would have come down in the time to come, right? This is the second point. So third point is that what we are doing is treasury. We know that interest rate has come down. That is why we have built the book at 7.17. Today also, when the -- and the yield is between around 6.9%, we are buying. If it's going below 6.8%, we are sailing this how we are moving. So we think that it should be around 6.75% to 6.85% or this should be the trend. But we are sitting in a very comfortable position, sir.

[Anand Dama, analyst]

The next question from Mona.

[Mona Khetan, analyst]

Congratulations on a good set of numbers. Just 2 questions. So firstly, in your notes to accounts, you've mentioned that about INR 300 crores of provisions were made outside of the minimum regulatory requirements. So this is part of PCR itself, right, or it's outside of PCR?

[Shanti Jain, executive]

So whatever provision we make, if it is a standard asset provision, it cannot be a part of the PCR because NPA provision only comes in...

[Mona Khetan, analyst]

Okay. So this is standard provisions.

[Shanti Jain, executive]

It's a standard.

[Mona Khetan, analyst]

Okay. Got it. And secondly, so if I have to look at the balance sheet level, what sort of outstanding standard provisions we have on the books?

[Shanti Jain, executive]

In the entire book, we are having standard asset provision close to INR 8,500 crores.

[Mona Khetan, analyst]

Okay. And how much of this is towards restructured book?

[Shanti Jain, executive]

Generally, we are having restructured book close to around 30% -- 28%.

[Mona Khetan, analyst]

28% PCR...

[Shanti Jain, executive]

It is again a regulatory requirement of 10%, we are having 28%.

[Anand Dama, analyst]

Next question we will take from Dixit.

[Dixit Doshi, analyst]

One question. Firstly, when clarification, you mentioned that this one corporate -- government corporate account, which is in SMA 2. So we have received some amount after the September, you are saying and therefor it is moved to SMA 1 now.

[Shanti Jain, executive]

Part of the irregularity -- suppose the irregular amount say INR 100 crores and we recovered INR 50 crores. So the irregularity, which was 60 days has become less than 60 days -- 30 days.

[Dixit Doshi, analyst]

Okay. And are we holding any provision against this account?

[Shanti Jain, executive]

We are having a provision based on the portfolio and all.

[Dixit Doshi, analyst]

Okay. And my last question is, in the noninterest income, under the miscellaneous income has gone up INR 228 crores from INR 99 crore year-on-year or INR 135 crores quarter-on-quarter. So was there any one-off in this INR 228 crores any significant one...

[Shanti Jain, executive]

Basically, this is the penal interest, major part of it is a penal charges.

[Dixit Doshi, analyst]

Okay. Therefore, it has gone up substantially YOY.

[Shanti Jain, executive]

That is why the NII growth is looking less and...

[Anand Dama, analyst]

[Operator Instructions] So before that, there is one this -- one of the question, which is there in the chat box. What is the LCR for the second quarter? And any impact that you saw primarily because of the RBI supervision, which ask you of the banks basically to rework their LCR...

[Shanti Jain, executive]

What is the question? What is the...

[Anand Dama, analyst]

What is the LCR for second quarter, liquidity coverage...

[Shanti Jain, executive]

LCR is close to around 120% plus we are -- last quarter, we were having LCR of 114% June, now around of 120% plus 121%, 122% the range we are in.

[Anand Dama, analyst]

There were these banks basically who had said that there was this RBI supervision and because of which there was some impact on the LCR. So how come basically our LCR has actually gone up? Is it that we have raised some funds recently?

[Shanti Jain, executive]

What happens, the RBI is based on the guidelines, we also fine tune our guidelines. So after considering everything, it is 122%.

[Anand Dama, analyst]

Sir, and secondly was there was this Telangana farm loan waver. Any impact of that basically has reflected into our numbers. Similarly, if you look at -- a lot of banks have reported higher NPAs in the retail segment. Obviously, we do not have as much of exposure to unsecured loans, but [indiscernible] we are seeing in any other segment?

[Shanti Jain, executive]

No, we are having even less than INR 200 crores. So we are not having much exposure in Telangana. And they are paying us money [Foreign Language]. So we are having close to INR 200 crores -- INR 206 crores.

[Anand Dama, analyst]

In the retail book, are you seeing some stress?

[Shanti Jain, executive]

No, you see our retail book, SME and all these slippage is INR 120 crores, and the collection efficiency is 95%, 96%. So there is no issue, sir. INR 110,000 crores booking small ones.

[Anand Dama, analyst]

[Operator Instructions] Suraj, you please unmute yourself and ask your question.

[Suraj Das, analyst]

Sir, one question on your housing finance book. So if I see Slide 12, the housing finance rating mix has changed drastically because I think some accounts from the AAA has been, I mean, either prepaid or something like that and corresponding the housing finance book has also come down to INR 13,000 crores to INR 8,000 crores. So if you can give some color here.

[Shanti Jain, executive]

Yes, yes. One of the big accounts, which -- because of the rate in all issues is repaid back.

[Suraj Das, analyst]

Okay. Okay. Sure. Is it, sir, ICICI home finance?

[Shanti Jain, executive]

Account specific will not work.

[Operator]

Next question we'll take from Jai Mundhra.

[Jai Mundhra, analyst]

A couple of questions. First, sir, we have this in the bank housing, right, which -- where we have -- which is 51%, where we own 51%. If you look at the draft RBI circular on the investments, et cetera, how do you see the fate of that entity? Would you be okay to merge with the bank? Or how should one look at it?

[Shanti Jain, executive]

No, this interbank housing, we are closing.

[Jai Mundhra, analyst]

Okay. So this anyway was going to get down irrespective of RBI circular.

[Shanti Jain, executive]

No, no, we are closing it because there is no activity in the company except they are having some assets. They are having some assets, so we are in the process of selling those assets.

[Jai Mundhra, analyst]

Okay. Okay, understood. But we earlier -- I mean we only have 51% stake, right? I mean, the other 49%...

[Shanti Jain, executive]

No, we are having 51%, HUDCO is there with us and -- 25% HUDCO and rest with the public. Last so many years, there is no activity except...

[Jai Mundhra, analyst]

Yes. So that is a different kind of an entity. I was just looking if...

[Shanti Jain, executive]

No we are in the process of selling the asset, which they are having.

[Jai Mundhra, analyst]

Right. Okay. And sir, secondly, if you can share your loan book mix by benchmark, how much is EBLR, MCLR fixed rate book and foreign currency, et cetera?

[Shanti Jain, executive]

Yes. So my -- as on 30th September, MCLR book is 58%. And our repo link is 36%, and fixed is 5% and others is 1%.

[Jai Mundhra, analyst]

Okay. And sir, this MCLR...

[Shanti Jain, executive]

In MCLR also, 1 year MCLR is 80%.

[Jai Mundhra, analyst]

Okay. Sure. And sir, repo will anyway be within immediate or maybe 1 week repricing kind of a thing, right?

[Shanti Jain, executive]

Repo will be the next day.

[Jai Mundhra, analyst]

Okay. And sir, this on PSL, right? So I think the other income spike you have already answered. On the PSL gains that we have seen, I believe we have a policy of amortizing PSL gains throughout the year. So that the amount is more or less consistent.

But what I wanted to check was if -- I mean, where is the commission that we get. If I look at annual report, we tend to sell most of the category in SMF at small and marginal pharma, the small sale is there in the PSLC agri. But if you can highlight what kind of the yields that you get that you have got in the Q1 and Q2?

[Shanti Jain, executive]

Two, three things basically. In PSLC side, our income, which used to be INR 400-odd crore in '22, INR 657 crores in '24 now INR 700 odd crores and around INR 364 crores -- INR 182 crores last year and 2x2, INR 364 crores, we are carrying it forward, which will be the income for the Q3 and Q4. So this -- earlier, we used to have one quarter. But from last year, we changed this policy. So this is going on. And we are selling the PSLC in small and marginal farmer in other categories as well. But better return is in this category. 95% of our original, small and marginal farmer.

[Jai Mundhra, analyst]

Right. And what kind of the yield could be there, sir, for this first half or maybe the last quarter on the PSLC?

[Shanti Jain, executive]

Around somewhere 2.1, 2.15. This is on a market. It is a market basically, around 2 you can say.

[Jai Mundhra, analyst]

Okay. So the market rate for PSL has been holding up, right? I mean earlier, it has gone down to as low as maybe 0.5% also. But as of now, it is reasonably...

[Shanti Jain, executive]

With the basis of time, it will come down. So we've sold out in the first quarter itself.

[Jai Mundhra, analyst]

Okay. Understood. Sure. And sir, lastly, on credit cost, right? So while the math is okay, that you have reduced your net NPA by 12 basis points, and we have reported a credit cost of 65 basis points annualized, right? So, so far, the math is good. But right now, you have a net NPA, which is very, very low. And so going ahead, the credit cost could be like 20, 30 basis points also. What is the -- what is your assessment, sir, assuming you have said that there is no asset quality stresses any part of the portfolio and the SMA 2 number that we saw is also government entity. So the incremental credit cost assuming you make your net NPA stable, could be as low as 20, 30, 35 basis points. Would that be a fair assessment?

[Shanti Jain, executive]

The credit cost is coming down because of the net NPA itself is coming down, right? So naturally, the credit cost will further come down. How much it will come down will depend on the further slippages in a small account even can -- in agri or other accounts. But definitely, the credit cost will come down considerably.

[Jai Mundhra, analyst]

All right. And last question, sir, if you have the number for SMA 1 plus 2 at the bank level, right? Because even in this quarter, a lot of slippages would have come from below INR 5 crores account. So if you have that number, it will be very, very helpful, sir.

[Shanti Jain, executive]

Okay. That we'll provide you.

[Anand Dama, analyst]

Next question we'll take from Mona.

[Mona Khetan, analyst]

Just a follow-up question. So if I look at the liability accretion in H1 between deposits and borrowings, you've relied or the bank has relied a lot more on borrowings versus deposits. So if you could just highlight what is going on here? Is it a challenge in deposits? Or is it because you're getting borrowings at a much competitive rate? If you could just throw some light here?

[Shanti Jain, executive]

You see what is -- 400 days deposit rate is 7.30% today. If you see the bulk deposit interest rate is anywhere between 7.7% to 7.9%, these are the 2 rates. What is -- on what rate, you raised the infra bond at average price of 7.18%. Plus there is no CRR/SLR obligation, no DICC's obligation. So if you reduce the cost of around 40 bps because of negative carry on, it comes to around 6.8%. So which is -- which makes a huge sense to us, and therefore, we have gone for infra bond, because ultimately, the margins are important, and we have a use infra book of close to INR 55,000 crores even -- so there's opportunity for us, so we are going for that.

[Anand Dama, analyst]

Next question we'll take from Rakesh.

[Unknown Analyst]

Thanks for the opportunity and quite a stable performance, especially on the asset quality side, quite good performance this quarter again. Sir, just 1 question with respect to the loan write-off. So are we looking at close to another INR 3,000 crores of loan write-off in the second half, considering the run rate and plus what we had in the loss asset as on March '24?

[Shanti Jain, executive]

Our loan write-off rate itself is coming down. Going forward, lesser write-off is against the current write-off, because some of the outstanding which we are getting, we are getting a tax benefit as well. So considering all aspects, we go for write-off, technical write-off. But some write-off will always happen because of the compromise and because of our balance sheet management.

[Unknown Analyst]

Correct, correct. And sir, PCR, we are expecting to like maintain at this level? Or just considering that accumulated provision number is also coming down. So just from that perspective, I'm asking the PCR number, we would maintain around this level only sir, correct no sir?

[Shanti Jain, executive]

PCR at 97.6% or close to 98% of the PCR we are having.

[Anand Dama, analyst]

Sir, one question which has come in the chat box is that another public sector bank had a higher AS-15 provision during the current quarter. Is there a possibility that we might also do something similar maybe in next second half?

[Shanti Jain, executive]

No, we have already increased our AS-15 provision from INR 547 crores of the September '23 to INR 812 crores. We already increased AS-15 provision and the reason for increase in AS-15 provision is that we brought the discount rate to 6.94% is against 7.16% of the June and all. So we are exactly what the current market is.

[Anand Dama, analyst]

Sir I think we do not have any further questions. Maybe we can close the part. Sir, if you have any closing comments to made.

[Shanti Jain, executive]

Thank you very much for all analysts and investors for sparing your valuable time and giving us an insight and giving us a motivation to do better. So to kindly keep supporting us. Thank you very much, and Happy Diwali to you all.

[Anand Dama, analyst]

Yes. Thank you all participants and Happy Diwali from us.