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Indian Overseas Bank
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Good evening and warm welcome to everyone. Thank you for gracing us with your presence today as we meet to discuss Indian Overseas Bank's financial performance for Q4 and the year-ended financial year 2024 as of March 31st, 2024.
I am Aryan Rana and I am truly honored to guide you through today's presentation. Before we begin, I want to extend our sincere appreciation to each one of you for taking time to join us in person today.
Founded on February 10, 1937, Indian Overseas Bank embarked on a mission to specialize in foreign exchange business with a vision to expand our global footprint. IOB was one of the 14 major banks that were nationalized in 1969. Over the years, we have not only met but surpassed our initial objectives as evidenced by our impressive market capitalization of INR 126,000 crore today. Indian Overseas Bank has seen an impressive surge of nearly 175% in the last year and about 800% over the past five years in its market capitalization.
With overseas presence in four countries such as Singapore, Hong Kong, Thailand, and Sri Lanka, Indian Overseas Bank's total business has surged to over INR 504,923 crore as of March 31, 2024. Despite several external challenges the global economy facing, our impressive growth solidifies Indian Overseas Bank's position as one of the top banks in the financial sector.
The financial results are available on our website and on stock exchanges. Before we begin the presentation, I must remind you that our discussion may contain forward-looking statements that involve risks, uncertainties, and other factors. These statements should be viewed in conjunction with our business risks that could affect future results, financial performance, and achievements. To discuss results and address analyst queries, we have our management team with us, including Shri Ajay Kumar Srivastava, Managing Director and CEO of Indian Overseas Bank, seated in the middle, and next to him, on the right, is Shri Joydeep Dutta Roy, Executive Director, IOB, and in the left we have Shri Dhanaraj T, Executive Director, IOB. We will begin with our overview of Q4 and year-ended financial year 2024, followed by a presentation on our digital banking business, and conclude with Q&A session.
Now, I will hand over the floor to Sri S P Mahesh Kumar, Chief Financial Officer and General Manager, IOB. Over to you, Sir. Thank You.
Thank you Mr. Aryan.
Ladies and Gentlemen, Good Evening to all. As already described the journey of IOB, the bank has competed 88 years of successful existence, making it one of the strong PSBs in India. During the current financial year 2023-2024, the Bank has achieved remarkable milestone of exceeding INR 5 lakh crore business mix as on 31st March 2024 and this is the vision and mission statement of our bank.
Basically, the vision states about to emerge as the preferred bank connecting generations with high standards of ethics and governance. That generation is now GenX and then with old customers also who are preferring to the brick-and-mortar type of branches. That generation as well as the new tech-savvy GenX candidates.
And now I present you the overview of the bank's performance during financial year 2023-'24. CASA grown in absolute terms to INR 1,26,000 crores and also in terms of percentage, 16 bps increase to 43.90% over previous year. Total deposit growth achieved INR 2.86 lakh crores as on 31st March 2024 with impressive growth rate of 9.59% over previous year. Gross advances grown by 15.88% over previous year now stood at INR 2.19 lakh crore. Annual operating profit registered an improvement of 13.83% over last year and it has at INR 6,764 crore and net profit grown by INR 26.54 crores over previous year. Now it is INR 2,656 crores for the year ending March 2024. And provision coverage ratio is one of the highest as 96.85%.
Capital adequacy ratio also 17.28% against the regulatory requirement of 11.5%. This is the overall business composition. Deposit consists of SB account growth is there of INR 102,000 and current account deposit was at INR 22,919 crores. Total CASA recording INR 126,000 crores and Term deposits INR 160,000 crores and Total deposits is INR 2.86 lakh crores. On the advances front, retail loans was INR 48,514 crores. Agri loans is INR 55,636 crores, MSME loans is INR 41,552 crores and Total RAM segment here is INR 145,702 crores. Corporate and overseas is INR 73,316 crores and total advances was at INR 219,000 crores.
Now coming to the performance highlights in key parameters. CASA registered, I already told, 9.99% growth over the previous year. And year on growth in percentage terms that is 16% -- 16 bps has increased to 43.90%. Total deposits grown by 9.59% over the previous year. Home loans growth is 14.53%. Jewel loan growth is 29.61%. Total advances registered a growth of 15.88% and stood at INR 219,000 crores. Total business growth mix achieved was INR 505,000 crores with an improvement of 12.23% over previous year.
Credit to deposit ratio improved by 416 bps that is 76.61%, previous year it was 72.45%. Net interest income improved over 19%. Net interest margin improved by 35 bps over previous year to 3.28%. Operating expenses increased by 35.81% mainly due to increase in interest expense and staff cost due to revision in salaries and retirement benefits after 12th bipartite settlement. However, there is a considerable increase in operating profit by 13.8% over previous year and it is stood at INR 7,764 crores. Gross non-performing advances reduced by 51.72% over previous year, it is at now INR 6,794 crores, reducing 434 bps over previous year and stood at 3.10%.
Similarly, net NPA reduced by INR 62.74 crores to INR 1,217 crores and percentage terms reduced by 126 bps and stood at 0.57%. Capital adequacy ratio improved by 118 bps over previous year and strong at 17.28%. Return on assets improved by 13 bps over the previous year and that is at 0.81% of total assets. Return on equity improved by 69 bps over the previous year at 16.24%. Customer touch points, it is almost equally distributed among the rural, semi-urban, urban and metro cities and we have presence of 3,236 branches across the country. 28% in rural, 30% in semi-urban, 20% in urban and 22% in metros. Same way 3,586 ATMs spread across the country and we have strong force of 6,739 business correspondents to cater to the needs of the customers predominantly in rural areas. In addition to the strong domestic presence bank has four overseas branches one situated in Hong Kong, Singapore, Sri Lanka and Thailand.
This is financial performance. Overall interest income grown by 23.96% mainly due to growth in advances. Interest expenses increased by 27.60% due to increased deposit levels as well as the borrowings to meet the credit demand. Non-interest income improved by 37.68% due to recoveries in return of accounts, improvement in investment provision and other fee income. Total provisions reduced by 6.79% mainly on account of reduction in NPA provisions by 5.32%.
Total expenses incurred due to reversal of deferred tax asset amounting to INR 734 crores and also we have made provision of INR 22.67 crores towards our overseas branches towards Income Tax. The bank has posted an impressive net profit of INR 2,656 crore for the financial year 2023-'24 with an improvement of 26.54% over the previous year. Cost to deposit increased to 4.7% over previous year due to offering of competitive interest on one of the term deposit, it is 444 days deposit scheme is there, which is offered by IOB. Cost of funds increased due to increase in borrowings to meet the surging demand for the credit. Yield on investment improved from 5.83% to 6.39% and yield on advances improved by 99 bps, 7.81% to 8.80%. This I'm talking about annual improvement positions mainly due to improved margins under RAM segment and in addition to marginal increase in MCLR during the year.
There is a considerable improvement in yield on funds by 113 bps to 8.03%. Return on assets improved by 13 bps that is 0.81%. Cost to income ratio increased from 51.94% to 56.32% mainly due to increase in staff cost. Without considering the increase in superannuation benefits on account of bipartite settlement, the cost to income ratio would have been lower at around 44%. Overall growth registered under retail by 14.42% mainly due to improved credit growth under home loans, vehicle loans, personal loans and other retail loans like jewel loan, deposit loan, et cetera. Agri credit growth by 26.48%. MSME grown by 19.21% mainly due to credit growth under medium enterprises. Credit to corporate, there main focus in corporate credit is towards A and above rated corporate borrowers constituting 65.53% of the total lending. Unrated accounts represent 30 accounts out of that 29 accounts represent the state government entities where unrated is there.
In case of restructured, there is a considerable reduction in restructured accounts by 23.64% over last year. SLR investments holding increased by 7.51% in order to churn the portfolio towards better-yielding securities. Average coupon yield is at 6.61% per annum. Gross NPA reduction by INR 7,278 crore that is 7.44% last year and now it has come down to 3.10%. Net NPA reduced by INR 2,049 crore to INR 1,217 crore and in terms of percentage 1.83% to 0.57%. Total recovery from NPA during the year was INR 5,459 crore. Provision coverage ratio improved from 92.63 to 96.85 registering an increase of 422 bps. PCR excluding technical write off also improved from 76.79% to 82.09%. Robust and continuous monitoring system has improved in controlling slippages and Slippage ratio reduced by 200 bps from 2.87% to 0.87%. Slippages for financial year '22-'23 was INR 4,029 crore, now it is reduced to INR 1,516 crore during financial '23-'24.
The focus is given towards capital light advances. Despite increase in the advances level, the credit risk weight set to advances ratio reduced to 54.05%, earlier it was 56.46% one year ago. Further, improved profitability added to common equity tier 1 capital. Thus, CRAR CET1 has increased to 14.47%. Overall, CRAR improved by 118 bps to 17.28%. Significant improvement in return on equity, earnings per share and performance -- this has improved valuation to the shareholders also. For the past 5 years, the growth you can see on the increased trajectory in terms of CASA absolute terms as well as CASA in percentage terms, term deposit in absolute terms and percentage terms and retail advances. Growth you can see in terms of INR 30,423 was there. Now it has grown up to INR 48,514 crore. Similarly, agriculture advances, MSME advances, corporate advances and overseas advances.
In this journey and the growth -- CD ratio also achieved 76.61%. Personal loan segment -- in terms of retail loan segment personal loan segment also improved, home loan segment, vehicle loans, other retail loans also increased. Overall, total retail loans portfolio has improved. In this journey, sir, all of you can see this chart, gross NPA has come down drastically and net NPA also has come down. In terms of net NPA ratio also it has come down drastically.
On the other side, provision coverage ratio has improved. PCR excluding technical write-off also improved from 76.79% last year to 82.09% in the current year. Book value per share valuation also you can observe, sir, what is the share value we are providing to the shareholders. On terms of book per share has improved, share price has also improved and then market capitalization also improved to INR 113,377 crores which making IOB in the 5th in PSBs and earnings per share earlier it was negative in 2020. The journey you can see, sir, INR 1.40 per share that earnings per share also has improved.
Now I request my colleague Mr. Lakshmi Venkatesh to tell you about the technology and digital initiatives.
Good evening to all ladies and gentlemen. I am Lakshmi Venkatesh, General Manager heading Information Technology and Digital Banking of the bank. And as our mission document says our mission is to provide best banking solution through digital and physical experience for customer delight with skilled manpower. So we stick to that mission document and accordingly we day by day improve and innovate our digital services and technological services and we have got a robust and resilient tech platform and we are -- first slide please.
Sir, we have got a robust and resilient tech platform and we are committed to digital transformation journey and digital innovations with clear strategy to bring customer delight and we are pioneering various digital initiatives through a spectrum of digital banking products which will match the evolving customer needs at industry standards and our base focus areas are technological resilience, customer centricity, digital innovation, operational efficiency. And on the technology resilience area we have got the industry's best core banking solution and our capabilities are to process about 5,000 transactions per second.
Our scalable private cloud and container platform are handling our digital process in a leading way and we have got a strong network of dual connectivity with a good speed at 3,200 branches across the country and we have got a very strong ATM network of 3,500 plus which is growing day by day and we have got one of the best uptime in the industry about 98 percentage uptime and total availability with the continuous availability of cash which is the basic requirement of a customer and we stand one among the top banks in providing continuous cash availability in our ATMs and we have got integrated payment hub for providing our payment solutions like PFMS, NEFT and RTGS solutions which makes the transactions superfast and make the customer to feel very satisfied.
On the customer centricity we have got secure and user-friendly internet and mobile banking applications. Now we are upgrading to a newer platforms where the experience will be much better in the coming days and our aim is to provide self-service centric solutions to the customers like digital banking unit and also various straight through process for customer experience where the end-to-end credit application and sanction disbursement utilization, everything will be through straight through process and at any time anywhere services are delivered by us by opening account at any point in time of the day through tab banking and in this regard I am very happy to inform that our bank is one of the pioneering banks in introducing the facial authentication through Aadhaar integration for account opening, others are using only thumb impression.
And our bank will be only one of the two banks that will be using the facial authentication for opening of accounts and frictionless digital journey by leveraging digital public infrastructure like Aadhaar, UPI, these things will facilitate minimum inputs by the customer, auto filling of the forms and instantaneous opening or processing of the SB or loan accounts and digital banking kiosks also in the line to come and we will be introducing digital banking kiosks across the country at the selected centers to begin with.
The first point I have covered already and one of the very innovative products of our bank is My Account My Name which will empower the customers to have their own VAN for their account which is a combination of seven characters alpha, numero or alpha numero through which they can send the money, through which they can get the money from other banks. This virtual account number is a very innovative product of Indian Overseas Bank and we are the first to introduce this in the banking sector.
And we are one of the top banks in issuing bank guarantees through electronic mode in tie-up with NESL and up to date we have issued about some 2,200 e-BGs since we introduced and we are the number two among the banks in issuing the #2 among the banks in issuing highest number of e-BGs and online instant safe deposit locker allotment is another innovative product of Indian Overseas Bank which we had introduced in the year of reporting that is 2023-'24 where a customer can browse through, find out in which branch of his choice locker facility is available, of which size, of which category and of what cost.
And he can choose and he will instantaneously get the locker allotted and he has to go and just get the keys from the branch after complying with the KYC requirements within a period of 10 days and online account number portability across the branches of the bank is also introduced through our website so for a person who is frequently moving from one place to another place it is a very big problem for him to go and get his account transferred from one branch to another branch, here we have provided the facility to instantaneously transfer his account from one branch to another branch and this gives a very, very fantastic experience to the customers at the least difficulties or inconvenience to him.
We have got a secure interbank and mobile banking facilities and the security levels are at the industry level best and -- our bank also provides a digital application for collection and recovery of the customer borrowers' dues which has enhanced the collection efficiency and we have introduced the customer relationship management tool for widening and deepening customer engagement where we can identify the customer's preferences through AI/ML based analytics and we will be able to provide the exact customer need through this platform.
And we have also introduced a loan originating system for various RAM segment credit products and in this we have also introduced the straight through processes for availing loans and that is also a very good customer experience for our customers and whom to be boarded on and digital journeys for seamless customer onboarding is a daily innovation process and digital document management system provides the office note automation which eliminates the paperwork across the branches and the administrative offices of the bank and the documentation, loan documentation, other documentation will also be slowly ported to the automated mode.
And sir, as I already told our value deliveries are at enhanced customer satisfaction, productivity enhancement and our business growth, agility and adaptability and during the year 2024, our bank has bagged five important awards out of the total seven categories available from Indian Banks Association Banking Technology Awards. We had won the -- winner in best technology talent, best digital financial inclusion categories and we had won the special mentioned prizes in best technology bank and best AI/ML adoption and we are runners in best fintech and DPI adoption. And Government of India has also recognized our bank as the top improver in the EASE 5.0 citation during the last year and this showcases the way we are taking forward our digital initiatives and technological capabilities.
Thank you, sir, and thank you for giving me an opportunity.
Thank you very much, everyone. [Operator Instructions]
Sir, in the last 5 years we have seen the performance from INR 7 to INR 70 [indiscernible]. Market Cap from INR 12,000 to INR 120,000 crores, 10 x in 5 years. Fantastic performance, [Foreign Language]. So, compliments to you for the fantastic performance over the last 5 years. The bank was indeed in a very difficult shape. In fact, RBI had to put it under monitoring just like some of the other few banks also. And really, overall show is -- I mean must compliment everyone, top management of the bank, especially for the performance in '23-'24, overall performance, if you look at it. Having said that, sir, I have got some couple of observations and some questions. If you look at the other income, like other income has gone up from INR 1,261 crores in this last quarter to INR 2,477 crores. INR 900 crores, I think, is that recovery from the written-off account. But there is another INR 900 crores, which has been shown as other, other income, all other income, INR 943 crores as against INR 235 crores in the last quarter.
So what is that in other -- all other income, which has gone up by INR 600 crores. So this is -- I mean, I have some couple of other…
Yes, that consists of treasury income and all other incomes like processing fee we charge on whatever loans we sanction, exchange commission, nonfund business. We are focused on all other areas from where income can be generated. So all these areas have attracted our attention. We have worked systematically for generating income from those sources. And that is the total...
The point is only in March quarter because investment is separately shown income. So almost about INR 500 crores to INR 600 crores is only as compared to the last quarter to the March quarter. So whether any one-off which we can like discount or reduce for the future this thing or it's going to be the regular phenomenon?
It's more or less the same thing. One-off is not like that is -- which is very substantial or it's going to make substantial impact on that.
Sir, similarly, sir, in the employee cost, though every bank employee cost has gone up because of the wage revision. But in many of the banks up to December, most of the amount was taken care of. And in March, also, there was some increase. But in our case, employee cost has gone up from INR 1,270 crores to INR 2,517 crores. So almost about INR 1,300 crores, INR 1,250 crores is only in 1 quarter only. So can the breakup or some explanation? And also what will be the ballpark number going forward per month of the wage bill, employee cost?
Yes, everything we booked in Q4 only. And it was not only increase in wage, but terminal dues also, pension, gratuity, the requirement arising out of this wage revision for future payment that also have been factored into that.
The revision in pension, I think the INR 255 crores also you have -- all the balance amount you have written off in this...
We have done everything whatever was required.
Sir, one is on the credit side that overall, for the year, we have grown well on the credit. But if you look at this quarter, I think it was totally a muted quarter. Where...
It was not a muted quarter because figure is conveying that message to you, but it was not a muted quarter. What happened around INR 5,000 crores of credit, which was lent as on a, I will say, lower rate of interest or some negotiation was happening. That was paid back. So that is why Q4, because of this INR 5,000 crores coming back into the system, the growth appears to be muted. But otherwise, growth was there.
So now in the coming quarters, that will be recouped...
Absolutely. Absolutely, it will be recouped, yes.
And what is our growth target for the '24, '25?
We are targeting around 13% growth in credit.
In credit. Sir, the last one on this DTA, just a clarification because going forward, I mean, we have INR 5,300 crores DTA credit because we are still in the old tax regime. So how are -- I mean, what are we planning going forward about the tax?
Maybe around '27 -- year '27, '28, we will be shifting.
After entire writing of DTA. Okay. I'll come back again if time permits.
Srivastava. Excellent performance and good to see that you are physically interacting with us like some of the best banks like State Bank's MD and their team has been doing and hats-off to you. And good to see you are the forefront of technology.
Today, there are concerns about technology disruptions happening, suddenly RBI inspection and the share price collapsed by 10% overnight. So you have been forefront and even recognition by credible agencies.
Now a couple of specific issues. What is our capital requirement for the next 3 years' growth? Can you quantify, do we have a strategic plan? And what are our plans for fundraising because there is huge demand now with this new economic super cycle, which has started on CapEx and other banks have announced fundraising plans. Indian Bank just announced, INR 12,000 crores fundraising. So we should not be left behind and lose market share.
Like it is very easy to sit on our laurels. We have done well. But what next? This specific issues because you have been very clear in strategy right from the beginning. Our friend who is now in RBL, he turned around Indian Overseas Bank. It put lots of efforts and brought it to this stage and the whole team has really worked hard, more the NPAs, more the recoveries. It shows that.
So this -- and the second thing is, I would like to know what are the plans for growth? You mentioned 13% corporate total loans. Specifically, you have shown excellent performance in home loans and jewel loans in the last year. So apparently -- and it is not on a small base, it is reasonable size, and we are growing. So at what rate we plan to grow the home loans and the jewel loans, if you can indicate, I think our rate should grow even faster compared to the opportunities.
Number three, if you can share the person handling digital, our experience on the RBI inspections and which are the red flags we should be concerned about. And so this is not a time to be relax, technology is evolving and that we don't have any issues. in respect of technology, particularly with RBI is apparently doing a great job on it. So these 3 issues...
Could you end up with your name and the company?
Yes, Manoj Alimchandani.
Sir, we request only 2 questions from each participant initially, then we can take third one. Thank you.
Yes, Manoj, thank you. So capital requirement for credit growth going forward, you are asking. See, last 2 years, if you see, we have grown in '22, '23, credit growth was around 24%. Last year, it is around 16%. This year, we are targeting 13%, but we are very hopeful that we'll be surpassing that.
Bank CRAR ratio is at 17.28%. Over last year, it has increased by 48 bps. If we grow at 13%, 14% for next 3 years at least, for that growth, my capital is sufficient. I do not need any additional growth capital to grow at the rate of 13% in credit for next 3 years. So that is one part.
And second part is about capital raising. We have already taken Board approval. I think it missed out from your attention. It came all over in the newspaper also, INR 5,000 crores we are going to raise. Board already approved, and we are in the process of getting all other approvals. And that is the plan maybe in later half of Q2 or Q3, we'll be raising that.
And the credit growth, as I said, that home loan or vehicle loan or all these products are part of the overall credit growth. And whatever we have been growing at the rate over the last 2 years, we'll be matching that. And fourth question, if you can repeat, I am forgetting.
Technology, yes, yes. The regulator, the regulator, yes, yes, because certain things happened in the banking landscape. As far as IOB is concerned, we are absolutely safe. The regular inspection and oversight happens from all regulatory authorities. And there is nothing, I will say, any significant remark or observation from the auditors or the regulator.
Sir, you've done a great performance over the number of years to recover from where we were to today. The transformation journey is applauded. And the second request is a consistent dialogue. I think I haven't seen anybody from IOB other than HO in Bombay. Last meeting was with Mr. R Subramaniakumar possibly in 16-17 at IOB BKC office. So if you keep consistent dialogue, that would be helpful or a con call.
My first question is, sir, we have written off lots of assets by provision or technical assets. What's the pool of assets available over a period of years? And what percentage of recovery are you estimating in this year?
Sir, last year, if you see, we recovered INR 4,700 crores. This year, we are targeting INR 6,000 crores.
How much?
INR 6,000 crores. So out of this INR 4,700 crores, almost 51% of the recovery came from technically written-off accounts, which were earlier 100% provided for. And out of that, we did that recovery. The total GNPA is around INR 6,700 crores percentage-wise is 3.10 only. And out of that, the regular slippage happens, including that, we are targeting that INR 6,000 crores, we will be able to recover in this financial year.
What is the total assets which are written off the books where you can...
That is around INR 38,000 crores, out of which INR 31,000 crores is fully provided, 100%.
Are you estimating any recovery out of that...
That is what I said. Last year also, 51% of my recovery came from those accounts only, almost INR 2,400 crores. So naturally, that is going to be the part of the strategy. And this year also around 50%, 60% we are targeting.
Sir, your RAM growth is comparable to peer banks pretty healthy. And what's your plan between that digital spend and connectivity because most of your products on MSME or retail needs a lot of digital initiative. So what's the CapEx targeted to achieve that sustainable growth and even gain market share because your equity permits?
And a question connected as you are not raising equity, how are we going to rectify the position of balance between book value to market cap? You're the most expensive bank if you go by that. And what's the direction you're getting from the bank on the equity side?
No, we are raising equity, INR 5,000 crores, we have already taken approval. So that we are working on that. And regarding digital spend, you are talking. Last year data, I remember. Last year, we targeted to spend around INR 1,100 crores on digital and IT infrastructure and digital software, hardware taking -- including everything, capital and revenue. And this year, the approval which we have got from the Board is around INR 1,650 crores. Around 50% spend we have increased on IT and digital infrastructure.
Any further questions?
[ Sumair Choksey, ] Indus Equity Advisors. Sir, just one clarification. You had mentioned, I think, for Ajmera's question about the INR 5,000 crores prepayment on the corporate side. So if I look at your advances, optically, it was INR 52,000 at '23 fiscal ended. It's around about INR 54,000. So just to gain some clarity, it would be around that INR 60,000 figure if not the INR 5,000 that you mentioned would be prepaid?
Almost yes, almost around INR 58,000, INR 59,000, yes.
So a follow-up on that is, would you look at -- when I look at the split between corporate and RAM, it was about 70-30 last year. This year, optically, it's fallen to 27 and 73, but you would like to maintain that 70-30 split? Or how are you looking at the corporate...
No. We have already taken a call inside -- we have done a lot of study. And we are shifting gear as far as RAM and corporate mix is concerned. The corporate RAM, we are targeting around 65%, 66%. And corporate from 30%, we are going to increase to around 34%, 35%.
Okay. And I would think, sir, you are -- optically, I think you presented this slide in terms of the rating that you are trying to look upon. So are we trying to seize upon that slightly lower rated in the AA, BBB category to get better pricing on our yield?
Yes. See, you have to strike a balance. In fact, if you are going for AAA and AA rated, everyone knows, the pricing becomes very challenging. So we have to strike a balance where the quality and health of the portfolio is also supposed to be ensured, and we need to earn also. So depending on whatever is available on the market and where on the table and where we are at that point of time when we are taking a call on any entity or any unit.
Based on that, we price it and take a call. Having said that, I have to say that last full year, as far as corporate is concerned, the slippage from corporate sector was nil. So that shows the level of underwriting, the improvement which we have ensured that, whatever corporates we are onboarding, they are not giving any challenge to us.
What's your outlook on treasury after RBI dividend payout plus the inclusion in bond index? I'm sure the windfall gain to most of the PSU and private banks is likely to happen in the current quarter. How are you going to balance between your HTM and AFS and the overall book? Would you shed assets if the yield is nearing 680 or you'll hold on instead of lending?
See, there is a full-fledged treasury for all these -- the basic things and the specific points which you are raising. But overall, of course, we like to book in Q1, whatever we can book. And going forward, we'll see depending on the portfolio, what sort of portfolio we are having and what opportunities are available in the market, we'll try to encash.
Sir, you answered my previous round question about digital spend of INR 1,100 crores. Are we targeting because your digital initiatives are larger pie for a 5-year, 10-year, 20-year vision, this INR 1,000 crores, INR 1,100 crores, what you're saying is a percentage of the total spend you would think over a period of 5 years. The technology spend cannot be visualized on a yearly basis. So what's the kind of a CapEx you have assumed for doing cloud or [ node ] digital initiative INR 3,000, INR 5,000 or migration of technology?
That detailed information we can, in fact, readily is not available with us. But having said that, I can assure you that digital and IT infrastructure and the software and the cyber, all these things are catching the top most attention of the management. And whatever needs to be done, including increased spending also, we are prepared to do that.
And sir, most of your gold loans are agriculture advances or it is pure gold loan?
It's gold loan only being used for agriculture activities.
And sir, how are you...
It is gold loan retail also, MSME also depending on what type of usage the borrower is doing.
Sir, how is your international operation?
We are having 4 centers only, Hong Kong, Singapore, Colombo and Bangkok and all 4 are doing exceedingly well.
So you have healthy margins coming because I didn't see the break...
Margin is not very high, but it's satisfactory.
This is Kartik Solanki from ELARA Capital. Congrats to the team on a good set of numbers. Sir, just a couple of questions from my side. After the total written-off pool, what would be the component of NCLT and the non-NCLT?
NCLT and non-NCLT, the exact figure I may not be having, but I think around INR 18,000 crores to INR 19,000 crores. It may not be exactly accurate. That is NCLT, NPA. Around INR 19,000 crores, round about...
And in the interest income component, what would be the proportion of dummy interest, like the interest from -- interest income on recovery of NPAs? What would be that...
Around 10% to 12%, I think.
Ashlesh here from Kotak Securities. Sir, 2 questions from my side. Firstly, on the -- I'm just referring to your Q4 presentation. You have given out 2 numbers. One is on Slide #7 about recoveries from written-off accounts that is INR 908 crores. And for the same item, you have given a different number, INR 936 crores in Slide #22. So I just wanted to understand what's...
Slide number?
Slide #7 and Slide #22. Recoveries from technically written-off accounts. Slide 7 says 908 and Slide 22 says...
Slide 7 of this PPT.
The Q4 presentation, which was on the -- on your website.
Mr. Mahesh, Slide #7 is something else...
Sir, if you don't have it handy, I'll come back to you. And sir, second question is on your cost of deposits. In this quarter, the cost of deposits has not increased much. What is the outlook that you have for the next few quarters?
We'll try to maintain at that level. See, it's directly related to the amount of CASA we are having. So if you see CASA percentage and CASA in absolute terms also, both it has increased. CASA percentage from 43.74% to 43.90%, and it is one of the best in the system. And in absolute terms also growth has been there. And CASA, everyone knows that it's cheaper cost of funds.
And we deliberately and as a part of strategy, we did not go back high bulk deposit rates, and that was to -- that is too costly also. So going forward, focus on CASA will be there. We -- last year, we have onboarded around 25 lakh new customers as far as CASA is concerned. And in those newly onboarded 25 lakh customers, we are having a balance of around INR 10,000 crores, CASA balance, as on date. The focus will be on mobilization of cheaper deposit, CASA, new customers onboarding. And cost of deposit, we'll try to keep it below 5 only. It's at 4.88. For the full year, it is 4.70. So around this range only, we'll try to keep it.
Sir, a couple of points for -- mainly for discussion, may not be for -- in detail you can elaborate. Sir, a lot of things in this bank have been cleared. The old -- a lot of legacy backlog, there were so many. But still, there are some points for which even the auditors have also made in the emphasis. Generally, they don't modify the report, they don't put any emphasis. But here, there are certain items where they have given the emphasis.
One is they said that there are old tax liabilities and of huge amount for which the cases must have been -- I mean, the appeal must have been filed in this thing. But in most of the other banks, if you see even all other 12, 11 public sector banks, I mean, these kind of things are no more there in any bank today. They're all cleaned up.
So first of all, can you give the color about this INR 5,000 crores, INR 6,000 crores or maybe more, I think, of this disputed tax liability? And where do we stand there? Are we -- how are we pursuing it so that we get over of it because you have not provided anything as per auditor?
Yes, because it's still sub judice and whatever claims have been raised, we have gone for appeal against that. And we are having very solid reasons to justify that why these tax demands are not required, I will say. And this is going on. And in fact, recently, whatever earlier 4, 5 years back, the files which were closed, against that also some demands have been raised and some allowances which were allowed at that point of time that has been challenged. So it's an ongoing process. I do not see any, I would say, seriousness in this. It's part of the process only that is what I can.
My humble submission is that nowadays, even the department is also very proactive. I mean only thing we should reach to the right level. There are all online complaints raising the flags and everything...
But having said that, it is -- it has caught our attention already. We are working on it, and it will be taken care of.
So these various liabilities, and it also says that -- there are a lot of -- otherwise, auditor will not emphasize if there are only a few entries. There are a lot of inter-branch reconciliation entries, which are also now -- nowadays, it's no more there in any other. So maybe some old this thing. But since it invited auditors attention...
Yes, we have legacy issues when we shifted from our own in-house CROWN system to CVS in 2015, '16 without much preparedness, I will say. So all -- because of that, only certain entries are still there, which we are struggling to reconcile, but nothing alarming. That is what I can say.
Yes. Sir, I'm Rohit from MMW. My first question is, sir, regarding your NTC, new to credit customers. So for this current year, how many new customers you have onboarded for new to credit?
That data will not be readily available with me, but mostly whatever ramp credit happens, retail, agri and MSME, I will say 98%, 99% of that is new to credit customers only. So that exact number, my CFO will share with you after that.
Yes, I'll take it later on. And sir, second question is your loan portfolio for your agriculture, agri lending loan portfolio is INR 55,000 crores. So what kind of credit underwriting parameters you do? Like is it standard something like because CIBIL and Equifax, Experian, these kind of benchmarks won't be applicable?
Yes, no, no, that benchmarks are there, may not be the entire portfolio, but these benchmarks are applicable. And credit -- agriculture credit does not mean nowadays only tractor lending or crop lending. A lot many other activities are also covered into agriculture. So all credit writing parameters, whatever are applicable to other sectors also. It applies there also.
In fact, I don't want to come in the way of anybody else if they have other questions. But if the time permits, I have certain -- this is more of a discussion because you have come after a long...
Yes, that is why we wanted to come here, yes.
There's some clarity. Sir, if you look at the Note #33 of the notes to the account, there is a big change in the method of provisioning. If you Note #33 of the accounts -- audited accounts. And because of that, for the MTM provision, you have taken hit off in this quarter of INR 576.96 crores, which has been put under the provisions and contingencies. So if that is the case, in that case, whether the provision otherwise would have been only INR 150 crores out of INR 768 crores?
Not really. In fact, it was part of regulators' observation. Some accounting, I will say, the inaccuracies were there. That accounting inaccuracies were rectified by this voucher. So that is why it has come. But material impact on provision or profit is not there.
So it said that in this quarter, it has been -- this MTM loss has been taken in this quarter.
It is, yes. It is only an accounting entry. And if detailed information you want, I will ask my CFO to give you separately.
Because I just wanted to have the clarity that in future, are we...
No, there were certain inaccuracies which were going on in the system for last so many years. And as part of a yearly inspection, these things were pointed out to rectify and it was rectified. But it has got no material impact on any of the figures.
One good thing is that in this quarter, there is no RBI penalty. But in the earlier quarters in this current year, there were INR 3.5 crores to INR 4 crores of, I think, penalties which have been put on the bank. So whether it is because of this -- some of these irregularities or...
Not really, those are different issues and those -- whatever penalty, INR 3 crores or INR 4 crores have been given, that were related to some corporate accounts and it was applied to many other banks also, in which IOB was also one of the banks.
Okay. All right. Sir, in case of this acquisition, sale of assets to ARC, INR 1,842 crores has been sold to ARC. Consideration is INR 660 crores and reversal in the provision is INR 161 crores. So I believe this INR 161 crores may be the cash component. And the remaining component from the consideration is the SRs and whether it is NARCL or other ARCs.
Both. It includes NARCL also and other ARC also.
So can there be some breakup out of INR 1,842 crores?
Yes, that we can give you separately, yes.
Any other questions?
Yes, sir, you're doing batting on behalf of everyone. Most welcome.
Sir, has already been said earlier also, you have given the valuation slide also here, in these slides. But if you look at or compare with any other bank, including even some of the even private sector bank, our market price vis-a-vis many of those parameters of the stock. Of course, it's not of your concern, but just for discussion purpose, is too high than some of this benchmarking figures which are available. So one is that the book value to -- so our adjusted book value is 8.5 or 9.
And if you take plain net worth and divide by number of shares, then it is coming around 14, 13.5 to 14. But still, the multiple is too high. So one is that raising the capital and putting in proper use and reducing that. Second is to definitely increase the overall performance of the bank, including the -- finally, the ROA and the entire profitability and also the loan book because higher income, higher ROA, the profitability, nowadays, since that AFS -- I mean, the profit, loss thing have gone, everything has come under NIM now.
So operational efficiency requires to be increased and proper use of the money, is to be done to justify this INR 65 or whatever, INR 62 or INR 70 price of our stock vis-a-vis some of these parameters. Otherwise, it may not sustain for -- one more reason of this is government holding. I mean the public and other holding is only 4%, 4.5% or maybe around 4%, 4.5%. So what is the plan for the dilution so that more equity gets in the hands of the retail and institutional players and the right price discovery can take place. So your thoughts on this, like some of these points, sir.
Sir, this government holding of 96%, as I said, we have already started the process. And in this year, we are planning to raise INR 5,000 crores worth of, that dilution will happen. And by this dilution, maybe around government holding will come down to around 80%, 81%, 82%. That is what we are expecting. And second thing about share price and all, sir, what is in our hands is to perform. That we are seriously trying and we are delivering quarter-on-quarter. Remaining things for people like you and market to decide and where that share price should be. We are focusing on whatever is in our hands.
In our hands, we have to grow. We have to grow and we have to grow organically, and we have to grow healthy. We have to increase income. We have to reduce expenditure so that more and more profit is generated. My asset book has to be healthy. Slippages should not be there. Digitally, cyber, all these things should be absolutely perfect. So all these things are in our hands on which we are focusing and we are delivering. Remaining things is for the market to decide.
Thank you very much, sir. I have taken a lot of your time. Thank -- and as has been told just now, have the frequent meetings after every quarterly results, one visit to Mumbai, it will help a lot.
We'll do that, sir. It's just the beginning. We'll follow it.
Any more questions? Anyone? So as there are no further questions, I would now like to hand over the conference to Shri Ajay Kumar Srivastava, our MD and CEO, for closing remarks.
So thank you, sirs, and thank you, madam. Thank you, everyone, for coming and spending time with us. And all of you have noticed that we are performing consistently. We are consistent. That is what I can say, quarter-on-quarter, year-on-year. And that is going to be the hallmark. And on behalf of the management and the Board of Directors of the bank, I do assure all of you that going forward, the performance will be even better. Thank you. Thanks for coming. Thank you, everyone.
Thank you, ladies and gentlemen. On behalf of IOB and Veritas Reputation, we conclude this meeting. Please join us for hi tea. Thank you.