Indian Bank
NSE:INDIANB
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Indian Bank
Earnings Call Analysis
Q3-2024 Analysis
Indian Bank
The bank has seen a robust 11% growth in its business, reaching INR 11.64 lakh crores. Deposits have expanded by 10%, with savings and current accounts (CASA) growing at 7% and 12% respectively. The bank's strategic focus on high-priority sectors, Retail, Agriculture, and MSMEs (RAM) is evident in its 13% advance growth. Under RAM, key performance highlights include a 14% increase in retail lending, driven by a 46% surge in auto loans and a 30% jump in personal loans. Agriculture credit also saw significant growth, particularly through a 28% rise in gold loans and a striking 58% in agri-allied activities. MSME increased by a relatively modest 7.5% while corporate credit grew by 10%. These figures point to a diversified growth strategy and suggest a strong uptake of the bank's services across a range of sectors.
On the profitability front, the bank reported a modest 1% year-over-year (Y-o-Y) increase in operating profit. However, the more striking insight is the 52% Y-o-Y surge in net profit, reflecting efficient cost management and growing income streams. The net profit growth owes allegiance to a 6% rise in Net Interest Income (NII) and a remarkable 21% rise in noninterest income, highlighted by a 318% jump in Public Sector Lending Certificates (PSLC) and 33% growth in cross-sales. It's noteworthy that the mere 1% operating profit increase for the current quarter was due to a one-off wage revision provision, where the bank prudently allocated INR 562 crores following a 17% wage settlement in the banking industry. With the current proviso, the bank holds INR 1,251 crores in total provisions, increased from INR 689 crores in the last quarter.
The bank's Net Interest Margin (NIM) witnessed a marginal decrease of 3 basis points, landing at 3.49%. Despite this, there was a positive outcome as the margin outperformed the initial guidance by 13 basis points, showcasing effective cost containment strategies. On the capital front, the bank remains solid with a 15.58% capital adequacy ratio, slightly above the previously reported 15.53%, and a robust Common Equity Tier 1 (CET1) capital ratio of approximately 14%. These metrics demonstrate the bank is well-capitalized, providing a cushion for future growth and regulatory exigencies. Specifically, a successful INR 4,000 crores Qualified Institutional Placement (QIP) added nearly 1% to the capital base, offsetting the increased risk weights on certain loans and supporting credit growth.
The bank continues to galvanize its digital capabilities, launching 15 new digital journeys in the quarter, bringing the total to 78. This digital advancement has resulted in substantial user growth across various platforms, with net banking soaring by 38%, debit card holders increasing by 10%, and credit card users up by 19%. Moreover, the bank has seen a 311% increase in users of UPI QR code, underlining the strategic priority placed on enhancing CASA. The digital transactional side also presents a stunning picture with mobile banking users and transactions growing by 47% and 26% Y-o-Y respectively. In terms of scale, the digital business has expanded from INR 2,875 crores to an exceptional INR 52,884 crores. Impressively, the bank has targeted INR 70,000 crores in digital business, indicating confidence in the traction of digital initiatives and readiness for the bank's evolution in a technology-driven banking environment.
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Thank you. Thank you, sir. Good evening, everyone. On behalf of Emkay, we welcome all the participants to Indian Bank Third Quarter FY '24 Post Results Conference Call.
From the bank, we have entire top management, including MD and CEO, Shri Shanti Lal Jain; and Executive Directors, including Shri Imran Siddiqui, Shri Mahesh Kumar Bajaj, Shri Ashutosh Choudhury, Shri Shiv Bajrang Singh and Sunil Jain and the other top management.
First, I would request MD sir to start with his opening remarks, where we want, sir, first you to highlight on the -- I mean share the key highlights on the third quarter results. And along with that, also please share the outlook on growth margins and asset quality going forward. After that, we will take the questions from the participants.
Over to you, sir.
Thank you, Anand ji. Good evening, all analysts and investors in the post result conference call.
So as far as business of the bank is concerned, we have grown by 11% and reached to INR 11.64 lakh crores, 11% deposit has grown by 10%, and advances have grown by 13%. In a deposit of 10%, our saving deposit has grown by 7%, current by 12%. And as a result, CASA has grown by 8% and the term deposit has grown by 11%.
In the advances, we have grown by 13% and on which RAM has grown by 13%. So RAM is retail, agri and MSME. Under the RAM, retail has grown by 14% and under the retail, our housing loan has grown by 12%, auto loan has grown by 46% and personal loan grown by 30%.
Now agri. Agri has grown by 16%, of which gold loan has grown by 28%, investment credit has grown by 7%, agri allied has grown by 58% and SHG by 40%. MSME has grown by 7.5%, of which micro is 18% and the small is 2%. And corporate credit has grown by 10%. So this is our business.
Now coming to the financial numbers. The operating profit of the bank has grown 1% on a Y-o-Y basis, and the net profit has grown 52% on a Y-o-Y basis. The operating profit growth is back on the NII growth, which has grown by 6%. And the noninterest income, we have grown 21% in fee-based income. Under the fee-based income, processing fees has grown by 9%, cross-sale by 33%, PSLC by 318% and PFMS by 45%. As far as 9 months are concerned, the operating profit has grown by 11%, and the net profit has grown by 52%.
So this current quarter, the operating profit has grown only by 1% because of one major reason, the wage revision provision. So we have made -- as you all know that the IBA has for 17% [ wage ] settlements. So what we have done is we have made 17% wage provision. In addition to 17% provision, we have also made provision for retirement benefits. So basically leave encashment, gratuity or pension and all.
So in all, actually, in the current quarter, we made a provision of INR 562 crores on account of wage revision. So currently, we are holding a total provision INR 1,251 crores as against INR 689 crores of last quarter. So this INR 562 crores for the normal amount, which we are expecting per quarter will be between INR 200 crores to INR 225 crores. So INR 562 crores minus INR 225 crores, so close to INR 340 crores will be additional cost in this quarter, if you add [Technical Difficulty] operating profit naturally will increase in the quarter.
Now after that, when you come to the margins and all. So point is that the margin, which was 3.52 has come down to 3.49. So there's a 3 bps reduction. Of course, our yield on advances have grown from 8.75% to 8.78%, 3 bps. Likewise, our yield on investment too has grown by 6.77% to 6.80%. So that -- whereas the cost of deposit has grown from 4.89 and 4.99. And as a result, there is a reduction in the NIM by 3 bps.
So what we have done [Technical Difficulty] earlier you know that at the beginning of the year, we said that we will be having a margin of 3.41% plus/minus 10, 15 bps. So as against 3.41% margin, plus/minus 10, 15, we are at 3.54%. So virtually on a positive side, we are 13 bps higher than what we have guided earlier.
The current quarter has come down, but you see our -- we could be able to maintain our domestic CASA above 41% sequential basis also. So our endeavor is always be to contain our cost of deposits. And that containment could possible only through CASA. And we -- so far, we are successful. Of course, naturally, you all know increasing in interest [indiscernible] the asset gets repriced earlier and the liabilities follows. So that is a liabilities repricing.
And because of this wage revision provision, the cost-to-income ratio is also from 44 to 46. [Technical Difficulty] has come down. Collection efficiencies, we are maintaining 95. Our recovery was around INR 2,500-odd crores. And the slippage is INR 1,600 crores. So we have maintained our recovery more than the slippage, which we are continuously guide you. In 9 months also, that has a recovery is INR 6,800 crores close to as against INR 5,500 crores of a slippage. So in a 9 months also, we are more than this. And we said that we will be having INR 8,000 crores of recovery, INR 2,000 per quarter.
So this quarter, too, we are expecting INR 2,000 crores recovery. So this is our practice of recovery, more slippage will come down. And as a result, our gross NPA, net NPA and PCR has improved. So gross NPA has come down from 4.9% to 4.47%. Likewise, the net NPA 0.6% to 0.53%. And the two things, the slippage ratio and the credit cost. So the slippage ratio, too, has come down to 1.28%. And credit cost has also come down 0.79% to 0.76%. So that trend we expect to continue.
Now next is capital adequacy ratio. So as against 15.53%, we are at 15.58%. We have raised INR 4,000 crores of a QIP. So the INR 4,000 crores means around close to 1%. So what happened because of the RBI guidelines for increase in risk weight on NBFCs and a consumer loan, it impacted 57 bps to us. Besides this, the credit growth. These are the 2 factors. As a result, our capital adequacy is 15.58%. But if you add the 9 months of it, it will become 17.11. So 153 basis points is the impact of 9 months profit. So if your CET capital also you see, 12.36% plus 1.53% is 13.89%. So in a bank where 17% capital adequacy and CET is 14%, so bank that way is adequately capitalized.
So this is our financial numbers. Now I request my colleague, Bajaj ji to give some overview about that Digital, what we are doing, and then we will be open for question and answers.
Thank you, sir. Good afternoon, everyone. As we are continuing with our digital transformation journey, this quarter, we launched the 15 journeys and put against our 12 journeys during Q2. So to put together product, processes and portals, we have now close to 78 journeys. And as per the bank strategy, we are creating all digital channels plus onboarding the customer on digital channel and then making them to use these channels.
So with that, our -- we're having all the net banking, debit card, mobile banking, all these digital channels, the users are increasing and transactions are increasing. If we see the mobile banking, the users have gone up by 47% from 1.08 crores to 1.59 crores. Transactions also have gone Y-o-Y 26%, which was in December '22, 1.38 crore. This time, it is 1.74 crores. Same on the UPI side, also the users have gone Y-o-Y 38% from 1.19 crores to 1.64 crores. And the transitions also have gone up from 54 crores to 93 crores, which is Y-o-Y 72%.
Same way, the user on the net banking have gone up by 38% from 74 lakh to 1.03 crores. Debit card, 10% from 2.93 crore to 3.22 crores. Credit card users have gone by 19% from 1.56 lakhs to 1.86 lakhs. UPI QR code, whether it was our -- just to -- for the CASA, we are very much focused on that. That has gone up by 311% Y-o-Y. It was 8.78 lakhs in December '22. Now it is -- in December '23, it is 36.07 lakhs. Same way, the POS also have gone up by 47%, which is Y-o-Y from 14,772 to 21,725. Digital migration also last year, it was -- December '22, it was 83%. Digital transaction, which has gone up to 87%. Even the quarter-on-quarter, 1% from 86% to 87% and 4% Y-o-Y growth is there.
Same way, the digital business, which was December '22, it was INR 2,875 crore. It has gone up to INR 52,884 crores, which we are targeting INR 70,000 crores. The target -- not only in the deposit size, it has been grown in the both RAM sectors. And we are planning another 8 to 10 journey during this quarter also from the -- this March quarter.
Same way, I told you the last time the bank has taken various digital initiatives, the DLP, digital lending platform, Tap banking, omnichannel, analytics center of excellence, [ branch central serverization ], middleware, Eximbills new module. To add in this quarter, we have added one more thing that is [ E-OTS ] up to INR 10 lakh, which is nondiscriminatory, nondiscretionary. That is for the ease of customers doing the OTS, it can be done sitting at home also. Apart from the death claims settlement portal also, we have launched and it is now stabilized.
With that, if any question is there, we can take up. These are the various new initiatives bank has taken on the digital [ enablers ] and initiatives.
Now we are open for question and answers.
Yes. Thank you, sir. Now we will open up the floor for questions. [Operator Instructions] We have first question coming in from Mr. Ashok Ajmera.
Yes, compliments to you, sir, for yet another good quarter of very good results, very good performance overall and even the -- I mean the credit growth also is in line with the guidance or might exceed from the guidance if we consider this current quarter also, which will be ending in March, I'm sure. Sir, having said that, you said that all the employees -- I mean, but for employees cost because of the increased provision based on 17%, the operating profit is much higher than the last quarter would have been. But if I see it in the employees cost, the increase is only INR 160 crores in this quarter vis-a-vis the last quarter from INR 2,176 crores to INR 2,335 crores. So where the burden of this additional cost has gone in the P&L?
Okay. Thank you, Ajmera ji, first. Second, there are 2 places. One is the salary and the employee cost, right? So what is our normal expenditure is around INR 1,345 crores or so, right? So last quarter, also, we have made an additional provision of INR 271 crores because to catch up the provision of 15% earlier, right? So now -- that is why on a sequential basis, it is not appearing. But fact remains, our expenditure is INR 1,345 crores. We have made a provision for INR 310 crores to catch up the 17% and also the INR 253 crores for retirement. So both -- the INR 679 -- out of INR 679 crores, INR 253 crores is on account of this.
So sir, basically what I'm trying to send is that from the next quarter, our wage -- this employee cost, which is INR 2,335 crores, where it will go -- I mean come down. How much will it be INR 1,700 crores, INR 1,000 -- because if you had this INR 200 crores per quarter, additional and if you reduce that INR 500 crores extra, then will it be INR 1,700 crores, INR 1,800 crores?
So my point is that INR 562 crores minus INR 225 crores is a normal. So this INR 337 crore, if you exclude, it will become the normal number. Some plus, minus can always happen.
I mean still about INR 300 crores, INR 350 crores chances are there of its reduction.
Yes, yes. So one eventuality can come that in case the pension, some amount has to be paid, then we have to add...
Yes, actually, I'll -- but that will be, I don't think more than INR 25 crore, INR 30 crore or INR 50 crore extra.
20, 30...
Otherwise, whatever is presently information available to us, we have provided.
Sir, I mean, in spite of this on record, the operating profit, a little -- the cost of allowing it to go down, you have made as per note #19, an additional provision of INR 399.72 crores over and above the I mean requirement. So what were the need? Are you anticipating some account to slip or -- are you trying to take care of the next quarter? Are you having -- sensing something for the next quarter for which this additional provision is made? Otherwise, this could have been saved actually. And the operating profit would have been more by INR 400 crores.
No, this provisioning will -- [Audio Gap] the operating profit, Ajmera ji. This is the below the operating profit number, right? And this -- what happens, we do this provisioning based on our portfolios and all. So we are continuously doing that.
All right. So it was below the profit. It has not affected the profitability.
OP -- only that wage arrear impacts the OP.
Now sir, coming to...
Because -- we are providing -- we are -- wage arrear or provision, we all is above the line for us.
Yes, yes, you have been very prudent all the time, sir. Sir, one question is on this -- which is there in every bank as per RBI's revised these guidelines and circular. Number one, especially in those accounts, how much total -- how many bps effect is there on our bank on the increase, if you look at the capital adequacy as well as the cost because of the CRR and other conditions. What is the impact and how much impact is passed on to the customers, like NBFCs and this thing, a net effect, which we have taken net impact of that?
So Ajmera ji what the RBI has done, RBI's then increase in the risk weight by 25% on the existing. Suppose, in a AAA, you are having 20% split against 20, it will be 45. Likewise, those who are 30, 55 or 50, 75, right? So as a result, there is a 25% increase in the RWA of NBFC, other than housing. And also the 25% on the unsecured consumer loan. So as a result what happened over RWAs increase impacting around 57 bps. 57 bps -- 50 bps.
Now the second question of yours is, whether we are able to pass on the increase cost because of this? So what happens in NBFC is also because we are having AAA, AA and A. So it cannot be passed on uniformally to all, right, so because we are living in a competitive area. So wherever new proposals are coming and wherever the proposals are coming for repricing, we are trying to get something extra.
Sir, last question in this round is on the treasury operations, where the segment-wise, if you see there is a little reduction in the treasury profit as compared to last, though, even though the profit is good. I mean, it's not that. So now considering whatever is happening, RBI says that there is no scope of further reduction for the time being, looking at the high inflation and all that. So where do you -- what do you anticipate in the current quarter now, January, March quarter, any kind of mark-to-market, or how is our portfolio is -- has been built to take the advantage of, I mean, day-to-day trading or opportunities?
So sir, Ajmera ji, what the RBI said, RBI said that the first motto is to contain the inflation. So inflation is 5.69% last, right? Even the RBI said the -- average inflation will be 5.4%. Even the last year, it was 4%. Next year also, it is 4.5%. And the RBI on record says they will reduce the rate when -- on a durable basis, the inflation will come down. This is what -- this is India's stand. When we see overseas, you see the U.S. [indiscernible] softening, even though China is also reducing. So what we have done. And we also know that from the first quarter, our -- these bonds and all will be part of the indices and also there will be softening.
So what we are doing, we are increasing our duration or increasing our AFS book. Even you see a 13% on a Y-o-Y basis, we have increased our AFS book. And today, I'm telling you my AFS book holding is this 7.33, which used to be 6.84. So it's a good quality asset we built and continuously bank will get a good return from that. So we expect that the 10 year [indiscernible], which is around 7.20 will remain between 7.10 to 7.25 range. And in the first quarter, that can be softening up because a part of the indices and all. So that is the opportunity for us to make money, and we are building the way our portfolio. The one thing is also happened from the April that the new RBI guideline will come into force, where the investment where actually what happens. Now the HTM is HTM, AFS is AFS. Of course, on 1st April, you can shift some of the amount...
But this time being the interim budget, I think the clarity may not be there in April -- full clarity may not there about the government...
RBI has already issued a circular, sir. RBI has already issued a circular, and circular is effective from 1st April. So my -- where I'm standing today is I'm having good holding yield on AFS book of 7.33, which is more than the current rate of 7.20. So there is no question of mark-to-market.
All the best. If time permits, I'll come back again.
Next question, we'll take from Gaurav, Nine One Capital.
Again, congratulations for a good set of numbers. Sir, I joined the call a bit late. So if you talked about your advances growth guidance for this year and for next year, if you can reiterate.
Okay. So at the beginning of the year, we said that credit will grow 10% to 12%. We have grown 13%. And our growth is a broad-based growth, actually. In the RAM also, we have grown 13%. In the RAM retail also, we have grown. All components of the retail [Technical Difficulty]. MSME has grown, right? So our growth is a broad-based growth. Now what the -- RBI said that our GDP growth in the current financial year will be 7%, even the next financial year also will be 7%. So we will -- the same kind of opportunities we are expecting next year as well, and the way the income level of the citizens are increasing. So there will be opportunity for consumption loan or housing loan or auto loan.
So next year, too, we want to grow with the pace which we are growing. But over -- you see we are maintaining our 62 30. For other, we are moving towards 63 RAM. So that kind of a broad growth we will have. So that -- in that growth, we will -- our risk will be mitigated. Our margins will be better. Our customer base will be increasing. And all our branches will be able to acquire more and more customers. So that will be better for us for future.
Understood, sir. And sir, on the provisioning side, this quarter, we did INR 1,350 crore kind of provisioning. We should do something similar for the next quarter, which will give us a full year number like close to INR 6,000 crore, if there is no negative surprises. Sir, do you see a similar kind of number for FY '25 also on the provisioning side, INR 6,000 cores, INR 7,000 crores kind of number for the full year FY '25?
Number may come down next year because the net NPA number come down, slippage number is coming down as our SMA numbers are coming down. So number will come down slightly.
Okay. Okay. And sir, lastly, just if you can explain about your employee costs, you were mentioning that you have over-provided INR 500 CR worth. I couldn't understand much of what you were trying to say. If you can just explain again. And what kind of benefit you expect to get in the next quarter?
What I told that we have made a full provision of 17%, right? Besides 17%, we have made provision on an estimated basis for pension and gratuities, also retirement benefit. So put together, I can say we are having around 21% provision as against the 17%, but this is really a need. When you are salary and everything will increase, naturally, your retire benefit will also be increased. So based on our estimates, we've made a provision.
So sir, are you over-provided or not? I think INR 500 cr is...
Not over provided. We have provided, but as per the available information.
Okay. So next quarter, you won't see INR 300 crores lower number, which Mr. Ajmera was kind of pointing out?
Next year, next quarter, only one eventuality can come. That is a pensioners also some ad hoc amounts are being given. So actually, that number has not come out. If whatever the number will come, that can be extra. Otherwise, our normal provisioning would be INR 200 crores to INR 225 crores per quarter.
Next question we will take from Rakesh Kumar.
Sir, a couple of questions. So firstly, starting with the recovery number for this quarter, like -- so if you see that in the Slide #29, there is a drop in the gross NPA in MSME and the corporate number, corporate NPA number. So are these very older gross NPA numbers because the recovery number is also looking quite good. So if you can help us understand this drop in the NPA, especially in MSME and corporate?
So what happens basically for corporate or MSME from where we get recovery, we get recovery from the NCLT, we get recovery from the SARFAESI, we get recurred from OTS, we get recovery from the [ ARC ] sale. So these are the ways through which we generally do recovery. So when that -- in fact, I'm telling you more than 50,000 OTS we have done in the last quarter. So because of the recovery and some account of even because of the write-off too the number has come down.
Okay. Got it. Got it, sir. So what are the prospects going forward on this, sir, if you can elaborate?
So prospect is our net NPA is only INR 2,500 crores, sir. Otherwise, gross number is continuously coming down, and it is 4.97%. You see [indiscernible] commission, we started from 11.20%. On a quarter-on-quarter basis, quarter-on-quarter basis, we are coming down. Now we are all -- even though we are very aggressive in our OTS, we are -- even online OTS we started, so anybody who can even apply for our -- even the website, up to INR 10 lakhs and we'll get OTS, so that we'll get our money because then we are having a 95%, 96% provisions. So let us recover our money.
So if I adjust, sir, the recovery number, like what is given in the Slide #28, like INR 1,150 crores that we have recovered in this quarter, which is much higher than previous September quarter number. And if we same -- if we adjust also the interest income number, you know that there's a quite lot of drop is there in the credit yield on a sequential basis, close to around 50 bps decline is there in the credit yield. So...
No. Just -- please don't decline, deduct from there. Otherwise, you'll get confused. Please...
No, no, sir, I'm not -- I'm not reducing the entire number, sir. I'm reducing the INR 1,151 crore minus your recovery or return of number, which is close to around INR 418 crores. So INR 418 crores is already there in your noninterest income. So I have not deducted that number. Excluding that, I have deducted and I have done the similar thing for September quarter also. So there is a -- so on the normal business, there is a drop in the credit yield number. So 2 things. So how the credit is that we are looking at going ahead from here, excluding the recovery number and margin, sir. So these 2 numbers, if you can guide us will be very helpful on a normalized basis.
So point is that there is -- in the Slide #28, you see MOI recovery INR 215 crores. That has to be done, not the INR 1,100 crores, right, first point, which was INR 256 crores of the last quarter. What happens is INR 215 crores is a MOI recovery, which will go into interest income. At the same time, around INR 200 crores of interest reversal tax placed on -- in case of slippage. So virtually, it is nullified both ways.
Sir, so basically, this INR 1,151 crores minus INR 418 crore, which is AUC recovery, where that number is sitting in the P&L?
Yes, yes, yes, that number is INR 1,151 crores minus INR 418 crores, INR 700 crores, which we have not booked as income. We have not booked as income because the money has come and money will come in a later date. Actually, in NCLT, we'll get money in a 5 years' time and some will give in a 7 or 8 years' time. So we have not booked as an income. And this is the main reason. When the money will come, we'll book as an income.
Okay. So you have booked only INR 215 crore this quarter.
Interest only INR 215 crore and INR 418 crores, whatever cash we have received, we have booked as income.
Okay. So where the remaining amount of INR 700 crores is lying right now?
That will -- that cannot be booked in our income as per our accounting policy and accounting standard. Unless we receive the money, we can't book it as income.
So suppose if we receive that number in the next quarter, in the next half, next 2 quarters, so where that money will be going to accrued in the P&L?
That income will go as a recovery in the write-off next time because we only book INR 418 crores, remaining will be booked as and when received.
Okay. Okay. Okay. So margin...
So it's a conservative or prudent policy.
So what is the margin guidance that we are looking at, sir, in the next quarter or so?
So what we have said at the beginning, the 3.41%, plus, minus 10, 15 bps. So 3.41% plus 53, 56, we are at 3.54%. And naturally in an increasing scenario, some impact will come in the cost of deposit, some of amount, but our endeavor will always be to protect that. And for that, we are -- we told you, today, also 61% of my book is MCLR book. So the asset will also come for repricing, when the liability will also come for repricing. At the same time, what we have built in a treasury, the AFS, holding is 7.33 as against 6.84 of last year. So we are -- what we are doing, we are building asset where we are getting more income, MCLR repricing benefit will get. So we'll try to try to match the increased cost. And so far, we are successful. 2, 3 bps here and there can always happen.
Next question we'll take from Ashwini.
Sir, current margins are likely to take a high of 3.5%. So do you really think that this can be sustained over a period of time for 2 years? Because even in the earlier times, we used to make roughly 3% margins on a normalized basis. And whatever margins which we are making is because our deposits are repricing slower than the loans. Do you see any pressure from RBI to increase the deposit rates as the cost -- or the increase in the repo rates have been somewhat passed on the yield side, but not on the cost side.
So my point is that RBI never say you increase deposit rate or whatever it would be. It is the bank's management which decides the interest rates on deposit or advances based on their ALM position. Now my point is that as an organization where we should focus. We should focus on a CASA. So so far, we are successful to maintain 41% plus domestic CASA.
If you are able to control that CASA, what will happen, your cost will not increase because if you are not able to take CASA entire money, you have to fund with the term deposit, where the rate of interest is high. So our -- what we are doing to increase CASA, we are doing a number of things to increase CASA. We have in the state -- around 13, 14-state government, we have started our office [indiscernible]. Even 51 cities where the money is there, we have started our resource acquisition center. We are doing a number of things through technology. We are giving a number of value-added products.
So we are doing a number of things to bring CASA in our fold and that CASA will save us as far as the increased cost is concerned, but fact remains going forward, what will happen is that deposit will not grow because I'm telling you market is very, very challenging, very, very challenging because if you're not able to get the natural otherwise, our current growth will suffer.
But as on date, we are at 78% CASA. As on date, we are at LCR of 140%. As on date, we are having excess SLR of 43%, and you see we have built the treasury book. So as on date, we are comfortable. But going forward, slowly, slowly some money will come from the treasury book to the credit book. So we can go 2% or 3% higher. At the same time, we will work for increasing deposit. And I'm telling you that in the last 9 months, we opened around 45 lakhs new account, new saving bank account, and we are entirely working on the CASA part.
So deposit is a challenge, but we are working.
Sir, you said your CD ratio is 78%. That...
So my point is the CD ratio is only LDR, loan and deposit. Other sources are also there. Other sources is, say, I raise INR 4,000 crores of per capital. Money has gone to the advances. So even then my CD ratio is higher. So I have taken some refinance, even the LDR is showing increasing trends. So my point is this LDR is not all in totality. LDR is relevant. Maximum is LDR, but other venues are also there. And where you are having your liquidity. So I'm telling you still having INR 40,000 crore plus. So that naturally in advance your return is more than your investment return. So some of the money we'll take from that also and some of the money we will raise from the deposit also. This is a job of ALM of a bank.
And sir, the last question from my side. What is the comfortable LD ratio to which you can go to, the maximum loan-to-deposit ratio?
So point is that the RBI -- in addition to RBI, RBI has come LDR, RBI NSFR, RBI LCR, right? These are the number of things through which it is controlled, the short-term liquidity, long-term liquidity, LDR, right? So I'm telling you 142% of LCR where we're sitting as against 130% of the last quarter and the excess SLR we are having, and we are having the deposits also. So we can -- I can say even 1% or 2% higher also we can do more without impacting much.
So but at the same time, what you see, our 10% growth in deposits. So it's 650,000, 10% INR 65,000 crores, 13% credit growth, 565,000. Both are matching for us. So far, we have been able to match both the things. So the way we are growing if we continue to grow, will not have much impact on us.
Our next question we'll take from Dikshit.
Can you hear me?
Yes, Dikshit, please go ahead.
Congratulations for a good performance consistently. I have 3 questions. Firstly, so ever since our net NPA has gone below 1%, we started doing the provision on the standard asset from last 3, 4 quarters. And gradually, every quarter, that provision is also coming down. So this quarter, it was only INR 400 crores. So do you feel that trend will continue, that provision on standard asset will also come down? And how much excess provisions we have created over last few years?
So 2 things. I always said that in good times, we should create buffers. And good times also -- when you grow at 10%, 12%, 13%, you are virtually seeding the -- yes, seeding the seeds for risk given. So I always say that one should buffer at a good time. So we are creating a buffer, and buffer is on the portfolio based on our own assessment. Slowly, slowly, the buffer will also completed. Slowly, slowly what will happen that our net NPA also will come down. So bank is getting strengthened and strengthening this process. But this -- I think going forward, it will not happen like this.
How much provision we would be holding other the NPA provisions?
We are having close to INR 7,500 crores of standard asset provision, which includes all provisions, whether the standard asset provision or 7 June provisionor all of the provisions put together.
Okay. Now my second question was, this quarter, if we see our slippages, it was only INR 133 crores on the corporate side. But what we have read in the paper that the BGR system where we had exposure of more than INR 300 crores has defaulted. So has it not been counted as NPA or -- it was already counted as NPA earlier?
That we counted last quarter itself.
Okay. And that was -- provisions also we would have made...
So we are having 95%, 96% PCR.
Okay. Yes. And one last question from my side. So our net NPA is below 1%. And recently, there was some article in the newspaper that RBI is proposing that companies with 1% to 2% net NPA can pay up to 35% dividend or below 1% can pay up to 40%. I know most of the PSU banks are paying 20% dividend payout. Do you feel that it can go up?
As you see last year, we have paid a dividend of 86%, right? So when we are earning naturally, we have to share the earnings with our investors as well.
Okay. But this payout ratio can go up...
No. As far as the metrics is concerned, we comply all the metrics, when net NPA is less, right? CRAR also, we are comfortable. No [indiscernible] clean report. So we are complying all. No RBI observations and all, nothing.
So before we take the next question from the participant, there was this question in the chat box that there was this news flow around some mis-selling of mutual fund insurance products and where after SBI, Bank of Baroda, even Indian Bank had suspended basically this business from the loans. Any comments over there? Number one. Second question is that, any impact due to the recent Tamil Nadu floods during the current quarter in terms of NPAs or any SMA pool buildup, which has happened...
So 2 things, you said with the mis-selling complaints on account of mutual fund and all. So this is not related to us and not the case with us, first point, right? The second point is the impact of Tamil Nadu flood and cyclone, right? So in 6 districts, it is a flood and 4 district, it is a cyclone. So 10 districts basically. So we see the Tamil Nadu government, too, has declared it as a natural calamity, right? And so we are working on that. So we started restructuring some account, but we do not have much of exposure for the crop loan and all in Tamil Nadu, right?
So major comes in a crop loan where the crop loss is between 33% to 50% or more than 50%. We are not having much of our exposure on that account. Second, these are basically the retail or the MSME. So far, no big proposal has come to us. So some amount of restructuring we have done in Manipur, small we are 5, 6 branches we have.
So is it possible to quantify the restructuring, additional restructuring that we have done during the quarter?
Maybe around INR 50 crores, INR 60 crores, not beyond that.
Okay. Yes. So next question, sir, we'll take from Mona Khetan.
Just one clarification on the wage hike provisions. So how much were we providing per month till last quarter? And how much is it now?
The point is that, madam, 17% amounting to around 14 months, it is INR 998 crores, right? So INR 70 crores on an average per month. So we say INR 200 crores to INR 225 crores because with the DA and all, plus and minus always can happen. So that is 70 into 30 is 210. I told between INR 200 crores to INR 225 crores. That is a normal amount of a wage hike expenditure will come on us. Now second is related to that is basically an impact on your retirement benefits because when somebody is retiring, you have to pay leave encasement at a higher rate or gratuity at a higher rate or a pension at a higher rate. That also based on estimates, we have provided around INR 253 crores.
Got it. So it's essentially INR 75 crores per month or so that you will be incrementally providing based on 17% hike. But wasn't this higher earlier? Because I recollect an amount of about INR 270 crores that you mentioned earlier that you were making.
Madam, but how these things happen actually, when you start a discussion with the union, association, you don't know whether it will end at 15%, 13% or 17%, right? So suppose the IBA has offered a 13%, we have made a provision up to 13%. Then IBA in the next meeting or 2 meetings later offered 15%, whatever the [ IBA ] offered, we made a provision. Finally, they settled 17%, we paid 17%. This is how it happens because you do not know how much it will go.
Got it. So you were -- till now you were making provisions based on 15% hike.
So what happens, suppose IBA has offered 15%. So you already made 13%. So you catch up provision you have to make every time.
Sure, sure. Got it. And within your loan mix, can you just share what's the MCLR and repo component?
So 61% is our MCLR, 34% is our repo, remaining 4% or 5% is fixed for a [ staff loan ].
Got that. And just one final clarification as well. So you mentioned INR 7,500 crores of standard asset provisions. So this will include your portfolio and account specific provisions as well as those for restructured and general provisions.
Yes, yes. All put together.
Sir, we have 1 last question coming in from Mr. Sushil.
Congratulations to Indian Bank team for the excellent performance and a great QIP. Sir, my question is, which I've repeated in various quarters, you've taken so many initiatives within the bank where technology is concerned, product integration is concerned, shared service, which you've highlighted, you started cash management. Can you throw some light on the total digital spend? Have you reached the journey or it's a continuous process? It's always a continuous process, but in the first initiative where have we reached and when will we see additional benefits of all the rollouts, which you have done.
So Choksey sab, we said about digital journeys, right? So we said that we will be having a INR 70,000 crores of business in the first year. This is what we targeted. Today, we are closing INR 52,000 crores. And last quarter is around INR 23,000, INR 24,000 crores. The way we are growing, it will be -- I'm sure that we'll be able to close INR 70,000 crores, which we decided. So this is a tangible benefit we are getting from the digitization. And our colleague, Bajaj ji has said that 78 journeys we already started. What happens when you do these kind of journeys? 2 or 3 benefits you will get. First, the entire due diligence will be taken care by the system. So the NPA level or delinquency level on such type of loans are generally lower than the -- when we take state loan and manually we do.
Second, your TAT will increase, right? Third one is what happens, all your digital numbers are information is available in your system, so you can do cross-selling in future as well, right? And fourth one is what happens, we are also learning every day through digitally. Our team is also learning every day. Our field is also learning every day. So naturally, our growth will happen. So we -- whatever investment we have, we started getting benefit of that. Now every quarter, we' rolling out 9 or 10 journeys, and that we'll continue to do.
In addition to that, that we also got a permission from Reserve Bank of India around 3, 4 days back, final approval for starting up our subsidiary. So we have started recruiting the people. So very soon, this subsidiary will also be in the working positions, right? So that will get further the asset sale or acquisition or a recovery or a debit card, a number of activities, we will have through that subsidiary. So it'll improve customer experience, it will improve our acquisition cost, and it will get a number of benefits to us, second.
Third one is in the digitization, our colleague has told that we have done, besides this, number of other things as well from the cyber side, even that cost-cutting also that document management system or server centralization, lot of things we have done. And now not only we are incurring, we are starting getting benefit of that. So this is the bank, sir, we -- whatever expenditure we incur, immediately, we would like to get the benefit of it. So we'll continue that journey.
And as far as total expenditure is concerned, Bajaj ji, you can tell.
Yes. Actually, the last 3 years, we have done close to INR 1,500 crores this -- and the -- another 2, 3 years, we are again committed to almost same kind of every year, close to INR 500 crores, which is almost INR 300 crores in the capital side and almost same amount in the revenue side, INR 332 crores and INR 242 crores. That is estimated INR 565 crore is a cost estimated for this financial year, which is -- revenue side is INR 242 crores and capital side INR 322 crores.
Sir, you've done brilliantly on CASA, do you estimate that cost of deposit would peak out by mid-June or September in current year?
So point is that May '22 onwards, the repricing has happened. So I think June -- by June, most of the things should have been [indiscernible].
Sir, with that, would want to end the call. But before that, we would request if you have any closing remarks to make?
So thank you all the analysts and investors for your continuous support and the insight which you are giving, which is helpful for us in deciding our policy and coming out with better results. So thank you once again, and please keep supporting us.
Thank you.
Thank you for providing us the opportunity, and thanks for participants. A very happy evening.