State Bank of India
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State Bank of India
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Good evening, ladies and gentlemen. I'm Pawan Kumar Kedia, General Manager, Performance Planning and Business. On behalf of the top management of SBI, I extend a warm welcome to all joining us today on SBI's Q1 FY '22 Earnings Conference Call. On the call today we have with us our Chairman, Mr. Dinesh Kumar Khara; Mr. C.S. Setty, Managing Director, Retail and Digital Banking; Mr. Ashwani Bhatia, Managing Director, Corporate Banking and Global Markets; Mr. Swaminathan J, Managing Director, Risk, Compliance and Stress Asset Regulation group; Mr. Ashwini Tewari, Managing Director, International Banking, Technology and Subsidiaries; Mr. Alok Choudhary, Deputy Managing Director of Finance; Mr. Charanjit Attra, Chief Financial Officer. Before I request our Chairman to give a brief summary of the bank's Q1 FY '22 performance and the strategic initiative undertaken, I would like to read out the safe harbor statement. Certain statements in these slides are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual outcome may differ materially from those included in these statements due to a variety of factors. Thank you. Now I request our Chairman to make his opening remarks.
Thank you. Thank you, Pawan. Good evening, everyone. Thank you for joining this conference call. Well, friends, the quarter 1 financial year '22 results, we have already declared, and I would like to press on the call that it was quite a challenging quarter for all of us due to the second wave of COVID-19. I hope all of you and your loved ones are safe and healthy. I want to start by thanking the support of all our stakeholders during these challenging times. During the first and the second wave, our employees have continued to provide banking services to our customers, often at risk to their own wellbeing. As always, the bank has delivered on its obligation to stakeholders even in the face of the extreme challenges. That is an inherent aspect of the culture of the bank. The same could be possible due to our focuses on process and structure in which every employee of the bank has [ space ] to make a difference. Having said that, I would also like to bring it to the notice of all that almost 74% of our employee base have already been vaccinated to ensure we should be sufficient to tide over any future challenges which we might come across. When we look back at quarter 1 financial year '22, considering the extreme challenges that all of us have faced, we are proud of our performance. As all of you already have our presentation, I would like to highlight a few key aspects of our performance, keeping in [ real that as ] the seasonality factor and its impact on the bank's business, comparison of the performance has been essentially focused on Y-o-Y basis. Our slippage ratio in the quarter is at 2.47%. This is higher because of the impact on collections. A significant amount of these slippages have come from the retail portfolio, which is essentially [ afort elastic ]. However, the good news is that in July 2021, we have been able to regain some ground and are confident that we will be positioned to pull back and see much better performance in the days and weeks going forward. In the context of challenges faced in quarter 1, we believe these results are strong and comparable. All of you will notice that we have fared well on the asset quality through financial year '21 and now in quarter 1 of financial year '22 as well. In fact, the bank's book have now undergone 2 stress tests, one during the first wave, and the second and the most [ severe in ] second wave. And through both these tests, we have delivered reasonably well on the asset quality. Our net NPA level at the end of quarter 1 stands at INR 43,000-odd crores with a provision coverage ratio of almost 86%. Additional provisions, including COVID provisions not included in PCR, are INR 29,816 crores. To put the context to those numbers, our operating profit was INR 71,554 crores in financial year '21 and the same is INR 18,925 crores in quarter 1 financial year '22. The bank has been able to deliver this level of operating profit despite the relatively low credit deposit ratio. As far as the capital is concerned, our CET ratio as on June 2021 is 9.91%. Given our competitive positioning and our value drivers, we believe our current capital and future internal accruals will be adequate to support our long-term growth targets. Given the dynamic situation and the likelihood of a third wave, coupled with the interplay of economic linkages between enterprise and individuals, leading to reprioritization [ and complication ] in time of adversity, we would like to refrain from giving any forward-looking guidance at this point of time. However, my team and I are focused to achieve our long-term sustainable RoE target of 15%. While the challenges due to COVID-19 and its resultant impact are still very real, we believe the bank can weather the disruptions and come out stronger over the medium term. To ensure this to happen, we have a sharper focus on Yono, which is our flagship app. And we have seen a significant increase in number of people who have downloaded this app. And the effective registration now exceeds 4 crore, and it is actually growing at a fast pace. To my mind, it is actually -- it has already touched 4.10 crores. As we have our online banking channel has got almost [ 14 ] customers already using this, additional 4 crore customers coming through Yono gives us a distinct leverage to ensure that we are in a position to reach out to our customers and offer them the services even in the most difficult circumstances. And in the current financial year also, we have successfully dispensed to more than INR 4,500 crore worth of [ payout ] personal loan with the help of Yono, which is end-to-end digital. Going forward, we'll be enhancing this capability by offering even the 2-wheeler loans. And also the recently introduced [ coverage ] loan also has been made available through Yono. To conclude, I once again thank you for all your support, and we remain committed to reward your trust in us with superior sustainable returns over the long term. So my team and I are now open to taking your questions. Thank you.
[Operator Instructions] The first question is from the line of Mahrukh Adajania from Elara Capital.
My first question is on margins. So what was the interest income reversal during Q1?
INR 800 crores.
Okay. And last quarter, in the fourth quarter, it was around INR 3,000 crores, including compound interest. So what explains such a sharp drop in NIM between March and June?
That was essentially because for the full year we had not really returned any of the NPA. And naturally, the interest reversal was also not accounted for. And since it happened for us almost for the full year, it was INR 3,000 crores. This time, for the first quarter, it's INR 800 crores.
Yes, sir, but I'm just comparing Q-o-Q. So Q-o-Q also, the NIMs are...
You have to appreciate that last year, though it was at the quarter end, but it was for the full year.
Because of Supreme Court directive, the NPAs were not recognized. So on the pro forma business, we've indicated. So all those NPAs were recognized in the last quarter and the relative income which was booked earlier was reversed.
Correct. But sir, so between fourth quarter and the first quarter, that is fourth quarter ending March '21 and then first quarter ending June '21, there has been a sharp drop in loan yields. So is it because of the product mix change? Or what explains that?
[ it was in that time that ] Y-o-Y [ it hung ] around INR 3,000 crores [ which is the same it as did further ] lower interest rates which have been charged in this period. [ as well it] our [ npr ] was around [ 1.15 ], the numbers [ at 8.8 ] which came down to 7%. So that is why in the first quarter, [ the npr ] was 7.1% effectively. And then often [ here ] we are booking on 7% kind of [ a silla ] plus the other additions in that. So this start growth in the [ gay ], that has led to this kind of figure. Otherwise, Y-o-Y, we have a [ grow thing at 1 ] more than 1 1 [ crore lakh ] kind of crore. So this is interest rate is in the growth as well as the build on [ account ] which has come down [ fast ].
Okay, sir. Sir, and my other question is that you have a buffer provision of around INR 29,816 crores and you've given a breakup. The first is INR 15,700 crores as standard asset provision. These are the RBI mandatory provisions, correct?
Yes.
Yes. And just to [ give you one provision ] we are mandated to [ provision 1 2 ]...
Sorry, sir, I can't hear you.
RBI provisions are there. But other partner is also some of the specific provisions in the bank that 1 is on account of provisioning of assets. So the coming instead of 2, 3 factors in this. And the [ amazon ] part of it is the restructuring which we gave, so the provisions on account of restructuring, that also. And [ I will time as ] the standard. So that part also improved in that range [ over time ]. So 3, 4 factors combined.
Okay. So what would be the RBI mandatory provision there?
RBI mandatory provision is essentially [ form out of 2 ] on account of the restructuring. And apart from that, on the stress tests, which is of a [ standard asset ], which is at 0.25%.
Just giving this quarter as of now...
Maybe specific we can share.
[ can specifically ]
Okay, sir. Sir, and just one last question, on home loan slippage. You gave a number of 1.53% in the press meet. That is annualized, correct? Which means that the home loan slippages are around INR 1,900 crores. Is that the correct figure?
No, home loan slippages at...
So we have given retail personal together.
Retail personal also has been given. So that is the reason why it is so. But when it comes to our home loan NPA, it is essentially at 1.39%. But if we return the pullback, it will actually come to 1.14%.
Got it. But the number you gave of 1.53% of slippage in the press meet, that is annualized, correct, which means it's a INR 1,900 crore kind of slippage?
All slippages are annualized only.
[ All slippages are ] annualized.
So it's around INR 1,900 crores.
[ I don't know ] where that number is coming from. So we have said the retail parcel loans decreased 5,268 in Q1. It includes home loans. Home loans separately is 3,123.
INR 3,123.
The next question is from the line of Nitin Aggarwal from Motilal Oswal Securities.
So a couple of questions. Like, firstly, like -- when you refer to the significant pullback that we have seen in July, what are the segments where you have seen these pullbacks?
So we have seen the pullbacks coming back from practically all the segments. It is home loan, it is also in the SME and also in the personal loans. So all segments have seen a pullback.
So can you share some color on collection efficiencies as to where we were in June and where we are in like in July?
We were somewhere around 92% in June, and now we are actually more than 93%.
[ Now in around ] 93%...
So actually, it is somewhere around 93.5%. So it has improved by almost [ .4 ]%.
Okay. And secondly, on the -- what is the quantum of say ECLG loans? And [ then now ] the SME slippage now they are higher than what they were [ standing in ] the last year.
ECLGS loan, we had sanctioned INR 30,000 crores, and disbursements took place about INR 27,000 crores. And the current outstanding is at about INR 22,000 crores.
Okay. So I'm asking, sir, in the context of the SME slippages that we had in the first quarter now which is higher than versus the entire year, what kind of comfort do you draw on this portfolio as this comes out of moratorium starting next quarter?
See, the point is that when it comes to SME slippages, they have essentially come from the fact that the cash flows were totally disrupted in the first quarter. Out of 90 days, 60 days, there was hardly any activity. And there was a huge restriction on the mobility. I think the post situation where the lockdown situations have been eased out, there is a scenario where we expect that the cash flows of SMEs will get [ pel get sure ] referred. And they will be in a position to come back faster when it comes to the recovery piece is concerned.
Okay. And sir, lastly, we are seeing an increasing use of digital channels and cost issues have shown some improvement this quarter. So how much room do you think is there as like with higher uses of Yono and business being sourced there around both asset and liability side, where could we be on the cost to asset or cost income ratio next 2 years?
As I've been sharing from the very beginning that cost-to-income ratio is one of our major focus. There are certain structural issues. But when it comes to the noninterest income is concerned, the mobility is one of the major important factor and that will actually help us in addressing 1 lever. The other lever is the rigidity of the cost structure that also we are trying to address. And hopefully, I think maybe give us another quarter or 2, we should be in a position to get some kind of a trajectory as the cost income ratio is concerned.
The next question is from the line of Adarsh from CLSA.
Sir, when talking on margin, the last question, there is a drop in margins from fourth quarter to first quarter after adjusting for reversal. So can you please explain that again, because the rate is quite sharp.
When it comes to the margins, NIM essentially, we have seen that because of the low economic activity and the real economy being where it is, the credit deposit ratio have actually seen a further reduction. And that is something which is another contributing factor. Apart from that, there was a pressure on the 2 advances because when it comes to the quality corporate, there is a whole lot of challenges there. So -- but otherwise in terms of the corporates are not really availing the limit. The unutilized portion has gone up even further. When it comes to large corporate, it is as high as about 40% now. When it comes to SMEs, there is a slight improvement. It used to be 30%. Now it is about 25%. So I think partly it is underutilization. And partly, it is also attributed to the fact that the credit deposit ratio needs to be improved, which, of course, is a function of the real economy. Once the real economy looks up, we should be a position to support the credit growth and which will certainly help us in improving our revenue.
So just to ask your opinion. We had good margins in the first 9 months and then it dropped because of the one-off in the last quarter and now because of the yield and CD ratio pressure. Do you expect that we can get back to margins where we were in the first half last year? Or because the corporate book yields are low, activity pickup is slow, margins are unlikely to get back there?
We are actually calibrating our portfolio also. And hopefully, we should be in a position to come back to the [ past trajectory ] in terms of NIM.
[ Even behind. Is there a unique concept as a matter of the innovator and ]...
Sir, sorry to interrupt you. Your voice is not audible.
Yes. So NIM, if we see the calculation, it is an average earning assets is normally what happens as the year progresses, so average earning FX income becomes a kind of -- I mean, you have moving asset growth and then the lending assets become -- slowly moderate. Now as you know Q1 '21, the average earning EBIT was 31 55. And this time, it is INR 33. So in the first quarter, normally [ it is set the amount of travel ] and NII, the [ Visa amayo ] was not that [ big ]. So that is our [ the look the term in ] from 3.24, 3.25 on a Q-o-Q Y-o-Y basis.
Got it, sir. And just one more question on the same margins. When you look at the incremental loan yields that you're booking on existing loans versus the stock, how large is the gap? And the same question on cost of funds, because I think -- what I'm trying to understand is the yields were X amount, this particular quarter on the full loan book. What are the incremental yields that we're kind of generating in the last couple of quarters?
Incremental yield would be somewhere around -- it could be around 7 point -- 7 -- just give me a minute, I think we'll have to look into what is the incremental yield. I think we will get back to you. This number may not be readily available with us. We will have to get back to you on this.
Okay. And my last question is the SME book. Sir, a lot of dispensations were given to SME CLGS restructuring and some of those dispensations still continue. And in spite of that, we've got slippage, understandably because of Wave 2. But as you go into the next few quarters, you will actually have a real test of debt servicing for some of these SME loans. So what's your expectation for the SME stress? Because that did enjoy a lot of dispensation benefits last year.
So see, the point is, as I was mentioning, the way the stress has come into the SME book, it might even go away at the same pace, if [ it turns ] cash flow [ gets a press ]. That's the belief and that is what we have seen also. And the cash flow disruption was essentially on account of the restricted economic activity. And once the unlock situation happens, I'm quite confident that the cash flows [ are back to pert ] and we will have a situation where they will once again be very active. And some of them, yes, of course, I agree, if at all, the damage is beyond repair, then of course, they will go away. And -- but for that, I think we have adequate buffer. We have already created whenever we are doing any restructuring. As against our mandated provisions for IBA, we are generally keeping a little higher provisions for any restructuring. And our past experience, which, of course, is not representative in the true sense of the word, we have seen that almost about 50% of such restructured account survives and do well. That is under normal situations. But these have been very abnormal situation where the cash flow disruption also happened very suddenly and the repair also is expected to happen at a [ happily fast ] pace. So that's all I visualize SME.
And my last question...
Sorry to interrupt you, I request you to come back in the question queue with your question. The next question is from the line of Saurabh from JPMorgan.
Sir, two questions. So one is on the corporate loans, can you just elaborate what your outlook given the growth is weak sequentially? And also, what are your latest thoughts on the telecom exposure, given the comments that we're hearing. And the second is on Yono, but I can do that as a follow-up.
The first question relating to the corporate book, well, of course, the growth is quite muted. We have seen it. And there is a degrowth. And -- but if we reckon the loans -- I mean our subscription to the CPs or the commercial paper and the bond, then it still looks a little reasonable. It shows about some marginal growth. But the fact remains that there are -- when it comes to the pipeline, there are underutilized limits, almost about 3 lakh crore. Also, almost when it comes to the proposals and pipeline, they are almost about 1 lakh, 30,000 crores. So that is something that is what is there in the corporate book. Also, there is also the fact that the deleverage which happened in the corporate in the last 1 year, that is also another contributing factor for the diluted growth seen in the corporate credit. So I think part of it would be the kind of liquidity which is seen in the system. How long that liquidity [ which is there ] which comes from overseas markets will be supporting the Indian market is one question. Second is the revival of the demand, which is probably announce their investment spend. That is another very important factor which will have an impact on the credit growth in the corporate book. And your other question relating to telecom-related matter, and this is a bit larger in dimension, and we are engaging with all the stakeholders to see that how best it can be resolved. And I think we'll have to wait and watch for outcomes, but we are trying to insulate our balance sheet from any shock which might emanate from this. Maybe I'll request Ashwani Bhatia to supplement.
Yes. So everyone is aware of the problem on the telecom side. We are also worried, but at the same time, we are engaged with all the parties concerned. I mean, if you just talk about the EBITDA, it's quite okay. But the liabilities of the company are outside the balance sheet. That is a worry. [ Telco ] is something [ puts all ]. That's all we can say.
Okay. Fair sir. The second one is on Yono. So this PAPL loans which you do, I'm guessing this is unsecured loans, right, of INR 2,500 crores that you have disclosed. Do you know what is the total outstanding disbursed under this PAPL in Yono?
So PAPL, you rightly said that these are unsecured loans. And the total outstanding in PAPL would be actually reflected in our extras credit portfolio, which is around...
25.
It is around INR 25,000 crores, about 2 lakh crores which is there in excess credit. So that is the kind of -- because we started around last year at the end of the first quarter, where we're dispensing about INR 5,000-odd crores. This year, in about 40 days' time, we have dispensed about INR 4,000-odd crores. So that is a kind of a number. But it is all analytics driven. And it is all -- it is offered to those who are maintaining their corporate [ service package ] accounts with us.
Okay. And the average ticket size there is [ 3 lakhs ], right? I mean that's what I get as a calculated number. Will that be the correct number?
Pardon? If you can repeat your question, please?
Average ticket price will be 3 lakhs rupee for these loans.
Yes, somewhere around that number.
The next question is from the line of Kunal Shah from ICICI Securities.
Yes. So firstly, in terms of the international book, so that's been expanding since the past 2 quarters. In fact, we would have added almost INR 40,000-odd crores out there. How is the demand over there? And basically how should we look at this book in particular because that's degrowing mono sequentially as businesses suffer? So what would be the outlook with respect to international book?
I'm quite hopeful that it will grow because the kind of activity which we are seeing in the developed world is something which is quite encouraging. And we are seeing significant activity and we are in a position to support it well. And also, we are also having rupee-dollar swap, which is also helping us in sort of funding it at a very, very cheap cost. And also maybe [ Alok ] will have something to add.
Yes. So just to add to what the Chairman said, we are seeing very good opportunities available in the developed markets, so the U.S., U.K. and Hong Kong. So we are exploring those. And we are doing largely very good credit qualities are real big names for high investment-grade kind of assets. And therefore, it is secured and yet it is also offering a good amount of traction in [ needed ]. So that will be something we look at the international book to grow this year while we are still kind of coming out and the investment climate is improving in India. [ At this ] time, this is providing us a good diversification geographically. That's also the kind of loans we do here.
Sure. And secondly, in terms of this coverage the personal loans, so again, would that be accounted in the express credit or it would be there in the other personal loans? And when we look at it in terms of the express credit compared to what the sequential run rate we used to see, in fact, at this time, degrowth has been INR 3,000-odd crores, so is it in terms of making some credit filters stronger out there? Or is it more a demand thing? Or maybe the incremental loans and the coverage are getting booked in other personal loans and it's not being there under the express credit, so that's the reason?
No, coverage loans are categorized under other [ base ] segment loans. And we have done there -- we have distributed about INR 1,000 crores worth of coverage loans and it got started in the middle of June. So that is where it stands. And excess credit, part of it is also because the customers are expected to really do a bit of an activity on the -- on the Yono. And only then it is dispensed. So I think it is not that we have -- as far as the filters are concerned, filters have remained the same. But maybe I think it is at the material point of time, probably people are not as much focused in terms of raising credit as they were probably focused on taking care of themselves and their family members.
Sure. And just one last clarification. This [ NIMs ] are 3.26 FY '21. And Q4 was actually 3.11. So actually, sequential there is an improvement from 3.11% to 3.15%. Is that the right way to look at it?
Yes, it is the right way.
Yes, that's right.
The next question is from the line of Abhishek Murarka from HSBC.
Yes. So a couple of questions. One on excess credit. Can you share what is the growth outlook on a Y-o-Y basis, obviously, because the growth will go. But incrementally, how do you see growth there? Second question on that is, what is the credit cost you factor in normally in a normalized state for that portfolio? And can you also share the slippage in express credit for the quarter?
Express credit has not seen much of a slippage. And maybe you can respond.
On the express credit, I think -- as you know, we give express credit to mainly our corporate salary package holders. These are like [ X or X1 starred ]. And if you look at our CMP account, we have about INR 1.7 crores CMP account. And the current penetration for express credit is about 25%, 30%. Less than 30% [ penetrated ]. So we have good growth potential there. Currently, we are growing, even in July, we have around 14%. And we assume that 25% to 26% growth rate is [ possible ] at least the current year. And the express credit NPS, if you see, it is less than 0.7%. The credit costs are virtually very small there. The portfolio is of a high quality.
Sir, the question really is not about the existing credit cost. It's just about in the product, what kind of credit cost do you build when you price it?
So that question, that answer, I think we'll have to look at that.
I'm not able to immediately respond to that.
But actually suffice to say that amongst our [ D ] segment products, it is the safest product.
And products also.
And very high yielding. The returns are very good. So if you're talking of a number, maybe it would be not more than 0.5%.
Okay. And what are the yields in this product, sir?
11%.
Okay, okay. And sir, the second question is on the corporate portfolio. Can you share the yield on the corporate portfolio, maybe for 4Q and 1Q?
It's not there. We'll give you those details. We do not have it right now.
Okay. And just slipping in the last question. You had shared the NPA in [ core ] loan as of July end on -- in the press release. Can you share a similar NPA number as of July end for SME and express credit, if possible?
Yes. We'll just take out what we -- what can be shared.
The next question is from the line of Sameer Bhise from Axis Capital Limited.
Just so you mentioned that there are proposals around -- of around 1.3 lakh crores on the corporate side. Can you elaborate on what kind of projects or proposals [ are you ] maybe sectors or any directional commentary on that side will be helpful.
Specifics would not be there with us. But nevertheless, it is essentially coming from the infrastructure sector.
Largely government-driven projects, I believe?
No, it is mixed. Iron and steel and infrastructure sector are the major players.
The next question is from the line of Anand Dama from Emkay Global.
So first, the NPA formation that we have seen particularly into the personal loan segment, not [ in tech ] per se, but the home loans and the gold loans, what really explains that? Was there a difficulty in terms of recovery or the underlying customer gone into stress? And if you can also help us with what kind of clawback in terms of NPA you have already done in the month of July.
See, When it comes to gold loan, it was essentially the restriction on the mobility. Because what happens is in the gold loan and then there is a drop in margin. So naturally, they are required to come in and deposit some money, et cetera. So that is something which is coming in that way. And we have seen that post [ a ged ] 16th June onwards. We have seen decent pullback in the old loan account. So that is what explains what really was a contributing factor. What else you were asking?
So how about home loans?
Home loans also is like [ this ] because it is all effort elastic [ in terms of ] the recovery effort, as I was mentioning, this number, which is at 1.39% as on 30th June looks at 1.14% as on 31st of July. So that's a reflection of the effect which is seen on account of pullback.
Because I think in [ first quarter ] you said that 50% of the home loans are the self-employed category. Those are the customers who seem to be [ affected ] a lot.
No, see the point is that one is the impact on the cash flow. Second is our people reaching out to them. So when people reached out, we [ pulled ] to pull back [ these loans ].
Okay, sure. And sir, secondly, on the [ CAR business ]. So we have seen a sequential drop in the current deposits. So is it more seasonal? Or you are also seeing higher disruption coming in from the peers because of the recent RBI guidelines?
No, on account of the RBI guidelines in terms of value, I think it is we have suffered only just about 10%. In fact, our CAR has actually increased on a Y-o-Y basis. But yes, of course, if you will look at quarter-on-quarter, quarter-on-quarter, the March always has got the bulge, so which will not be there in the subsequent months. Current account, we have actually seen an increase of about 15 basis points.
So it's more seasonal in nature for the current quarter.
Yes. Current account is always seasonal. In fact, that is the reason why we have put up this comparison on a Y-o-Y basis.
The next question is from the line of Gaurav Kochar from Mirae Asset.
Sir, on the overall recoveries in July, what was the total quantum that we were able to pull back in the month of July?
Recoveries, July, we have done about INR 4,790 crores.
Okay. Okay, sure. And this, as you said, would be across the segments.
Yes, yes, it's across the segments.
Okay. And sir...
Essentially for retail, because essentially the retail I mean, SME regulatory retail, if I miss SME, agri and home loans.
Okay. Sure. And sir, of the remaining INR 11,000-odd crores which is left, how confident -- or what portion of that do you think could be recovered in the next couple of months?
See, we'll have to wait and watch. Efforts are all on, on the ground. And we'll try and see that whatever best we can, we should [ have the ambition ] to do that.
Sure. On the MSME side, sir, the MSME slippages were slightly on the higher side. Any rationale for not restructuring these loans if the borrowers were stressed?
No, we are doing the restructuring. In case of SME also, we have already restructured about INR 3,355 crores.
Great. Okay. So I mean the slippage is at INR 6,400-odd crores, so these would be restructured in the coming quarters? Or you'll be -- I mean, these will be recovered?
If I can just respond to it. Out of this INR 6,416 crores which you're saying are slippages, already around INR 2,300 crores has been upgraded by the recovery. There is nowadays INR 4,108 crores. So [ some of them ] may be restructured in the...
[ All can be state ] be restructured because they are all standard at a 30% [ mid-level fund maker ].
Right. Sure, that's helpful. And on the provisions for this quarter of around INR 10,000 crores, only INR 5,000 crores was towards specific loan losses and that was also in other provision. And even in the provision buffers that you have given, roughly INR 5,000 crores is the other provisions. So what is over and above the COVID provisions? So what does that stand for? I mean, is it specific to something? Or it is also part of the general [ liability ]?
No, see, when it comes to other provisions, other provision would also have... yes.
Yes. So it contains 2, the other provisions. One is that, as you know, that this restructuring regulatory requirement [ would be part of the agenda ]. But we have whatever extra, around INR 2,100 crores, we have put it here on our own in other provisions and around INR 2,800 crores would be on the [ NFB ] side, the [ nominal ] fund best for that also, we have [ that in provision ] .
Actually, those [ ITR comments ] which are restructured, there for the NFP, there's a requirement for making a [ presumption ]. That is something which has been talked about.
Okay. Okay. Got it. Sir. And just last question, if I can squeeze in. For the collection efficiency you mentioned of 90% to 93%, this is only on the overdue bucket, right? Not on the overall book.
What is -- it is 90 days DPD.
It's 90 days DPD based on the 90-day DPD principles.
Other than agriculture...
Other than agri. Agri, of course, is not covered under this DPD.
Okay. Okay. Sure, sir. So including the NPL, the collection efficiency was 93.5% for July?
See over around 93 2 98 3.5. So on some days, you took deposits because it is being monitored on daily basis. So it's over [ that range ].
[Operator Instructions] The next question is from the line of Nilanjan Karfa from Nomura.
Just a question going back to the...
I am sorry to interrupt you, your voice is not so clear.
Is it better?
A little bit.
So the question is on the express credit again. And I think we used to have something called a special [ PACL ] loan either where the balances were at roughly around INR 3,000 crores in March. Related to that, I mean, what is the current balance right now? And incrementing for the June quarter of the total disbursal we might have done, what is the total stock of loans that we do? And on the top of it, what's the pension loan there's [ all the ] ...
No in fact, pension loan, et cetera, are all covered under the other P segment loan. There is no special...
No, we had a special [ PACL ], which we have discontinued because that was only meant for during the COVID period. And we did not see great traction there. So the special [ PACL loan ] have been withdrawn. So the balance probably would have come down from INR 6,000 you were speaking, I don't have the number, but the product is not offered anymore.
Okay. So that special CAPL is now converted into a coverage loan. Is that how...
No, no, coverage is absolutely a fresh loan which has been given and that too for those who suffered from COVID. And it was based on the expenses that we [ felt were incurred ].
Right. And sir, what is the top-up loan, total top-up in that express credit across all the products?
No, top-up actually is something which is an annual feature because people depending upon their salaries. They come back. So I don't think we'll have that [ confidence level ] with us right now.
Okay. Okay. Sir, the second question is on the restructured assets. I think in the March quarter, the pipeline, including implementation was I think roughly INR 17,800-odd crores, out of which, I think, we have implemented almost INR 13,000 crores. Is the balance going to come? Or is that folded into [ our PALC ]?
No only INR 2,000 crores worth of applications are pending for restructuring, that's everything else we have done.
The question was on the residual longer on the...
Nothing on the question. Nothing on [ this ].
Okay. I'm sorry, sorry, if I can take question, an additional question. The additional provisioning that we do on the NSD, this is part of the standard asset provision, right, that we [ disclose ]
Yes. These are nonfund-based facilities that are outstanding against accounts which are currently restructuring under the [ ACM ] mechanism where there has been an overdue. So this is made on a prudential basis on the NFB outstandings.
So this is included in that INR 29,816 crores.
Yes. Actually are forming part of INR 5,051.
Because the China asset solution will be only against the fund-based outstanding. The provision that is made against the non-fund-based outstanding is always classified into the other provisions.
The next question is from the line of Mahesh MB from Kotak Securities.
Just a couple of questions. One is on the slide that is -- sorry, can I have -- what is the outstanding restructured loans at the end of this quarter? And if you could give us some breakup of that as well.
Outstanding restructured account would be...
Total restructure.
Total restructure would be about 12,995 plus 5,246. So that is our total restructure. And in fact, if we look at our pending restructuring also, which is 2,056, then the total restructure comes to 20,297.
This has just been a marginal increase as compared to the last quarter, right? It's a INR 4,500 crores of increase. But why has the provision for standard assets gone up so much this quarter?
[ According to the assets ]...
[ Loan ] book has declined [ -- So but you still made about INR 1,500 cores, INR 1,600 crores of provisions.
The 5% additional provision for the restructured book we are [ going on ] ...
Actually, yes, that is what the whole thing is. For the restructured book, we are keeping 5% extra provision over and above what the RBI stipulates.
It's more than [ the restructured ] ...
As for regulatory requirement, we need to keep 10% for general and 5% for MSME. But on a flat 15% basis, provision is [there ] ...
About 15%.
So understand this. You have a total loan book of about 25 lakh crores. If I do 0.4% of it, it translates to about INR 10,000 odd crores of provisions for standard assets. This is on the loan book. Now you have INR 5,700 crores of extra provisions for INR 20,000 crores of restructured loans. This seems to be much higher.
We can give you the breakup, but 0.4% is not uniform. There are asset classes under which different provisioning requirements exist. And also, as a matter of prudence, the -- on the stressed sectors, additional provision is also made with the board approval. So this is something which mindful, there is a minimum guideline that is expected, but this has worked out on a granular basis on different asset categories as well as different sectors. The unique thing in the last 1 year has been the restructuring provision that we are making on accounts that are restructured under the restructuring package 1 as well as package 2, resolution framework 1 and 2, as well as the additional provisions that we are making at 15% instead of 5% or 10%. So that's how the numbers are still a little elevated. These are just kind of buffers that are being created over and above the regulatory requirement.
And can we have a breakup of this INR 20,000 crores of restructured loans across sectors?
Actually, we can provide it. We do have a breakup. I can broadly share with you. About INR 8,000 crores are into the retail personal. INR 9,000 crores in retail personal. SME, INR 3,000 crores. Corporate is just about INR 4,800.
Perfect. And one last question. In that noninterest income line recovery from written-off, was there any large item that was booked this quarter? Or these are regular written-off pool that is now coming in?
Only one item, which is one account recovery of INR 1,692 crores.
And that had no impact on the yield line, right?
No. This is an account which is already fully provided or [ uncalled ] part of AUCA. So it directly goes into the other income.
Sir, the reason I'm just pushing this question is, if it is pertaining to an aviation sector that was recovered this quarter, a few banks [ paying to make some adjustment ] on the NII line as well. So just trying to understand.
We have not done anything like that.
We have not done. It's booked as miscellaneous income only. That's why it's shown under the other income. So that is hopefully provided for under written off account. It's an account part in advances under collection. So it does not impact the NII line. If the account was in the live ledger, [ this would be under ] interest income. This is -- we have provided and taken out [ this part in our accounts ].
And just, this book, any -- given what you're seeing now in the balance sheet or other trends on the down, how are you seeing for this year in terms of income from the [ account push ]?
I think we have about a target of about INR 14,000 crores, INR 14,000 crores. And hopefully, we should be in a position to recover that.
INR 14,000 crores. This is excluding any sale to any RCF?
Yes, excluding that.
The thing is [ only our place where ] we are done. But it is at the a portfolio level, we hope that we should be in a position to recover that.
The next question is from the line of [ Mihil Dan ] from [ Goodwill ] Investments.
My question was actually regarding the salaries that the top management gets. It's quite lower compared to the top private sector banks and I want to know if the management has actively pursued about getting it to industry level? Because I feel we will not be able to retain talent on the top level if we continue giving such low salaries to the Chairman and the Managing Directors.
I think if you are talking about me, I am not going to leave until such time I [ so plan it ] from the bank. And likewise I think my other...
Long-term perspective, I don't think it's sustainable to pay so little to the top level management.
See, you have to see it in the context that in the bank, the top management comes from within the bank only.
Correct. But why would you [ want such a ] because it won't be sustainable compared to private sector [ salaries ]?
I think it's a subject matter which is beyond any one of us. So I think we'll have to live with that situation. But we have no grudge against whatever. It may be generally feel that -- it may be generally felt in the market, but I think we are quite accustomed to this. We have worked in subsidiaries also where people draw much more. So I think it's not a challenge at all. We have much bigger goals to look at than the money.
Yes, yes. I agree, but in the long-term perspective, 10 years down the line, 20 years down the line, that...
Let's hope maybe things might change by that time. You are so [ persistent ], maybe things might change also.
The next question is from the line of Anand Laddha from HDFC Mutual Fund.
I just wanted to understand that this quarter, we had a INR 16,000 crores of slippages. And if I had to look at FY '21, last year, the whole year, we had INR 28,000 crores slippages. So any view, any sense you wanted to give us what sort of slippages we are looking for the full year? And what part of the [ FDFA ] are we targeting?
No, see, you have to see it in the context. Last year, full quarter, the slippages could be reckoned only towards the fourth quarter. And also, the fact remains that this year, the first quarter, in terms of the severity, was much tougher. So in that -- I mean, this number has to be seen in that context. And also, there was a [ full ross ] challenge in terms of mobility. At a point of time, all of us are under obligation to run [ assure with guesswork ] 15%, 1-5 percent. We had to run the operations. So we have ensured that the operations continue. And we should be in a position to contribute to the economy. But I think in that context, it was -- it has hit the most. But nevertheless, with the kind of restructuring and hopefully with the economic activity coming back, I mean, quarter-on-quarter, things may not move in a very linear manner. It may be different, depending on the situation each quarter.
Okay. Sir, my question was like last year, full year, we had INR 30,000 crores of slippages. This year, what we have [ this thing ]. So if one has to take a full year view of FY '22, where do you see or what are your expectation on the slippages side for the full year? Also on the recovery upgrade side, do you see in the next 9 months, you see more upgrades and recovery coming there? Is there any internal budgeting we have done for what we expect?
No, internal budgeting we have done, but it is all based on certain assumptions. So how far those assumptions are maintained, how far those assumptions stay relevant, that is something which you have to wait and watch. We are going through very, very uncertain times. So I think giving any kind of prediction at this stage may be very inappropriate. But maybe after second quarter, maybe we'll have some visibility. And perhaps the potential threat of Wave 3 also will be behind us. That will be a point of time when we can probably come out with some kind of an indication how the year looks like.
The next question is from the line of [ Kushal Sarva ] from [ Athena ] Investments.
I wanted to get a sense of, since SBI is going so much digital, over 3 to 5 years, what kind of cost/income ratio reduction can one expect? I understand you will have a lot of constraints because of the restructure [ by the state and ] union and all. But over -- if you can give a medium-term trajectory on the cost/income ratio.
So this is more like -- it is more like what we expect. How far we really make it happen, to be seen. We would like to be as efficient as the best of the institutions, irrespective of the ownership, it should be irrespective of ownership. So in that context, I feel that since we have got the distribution reach of more than 22,000, which is spread out across the length and breadth of the country, rural, semiurban, metro, all locations. To my mind, we are moving away from the pure banking to the status of a financial superstore. And if at all it becomes a reality, we can perhaps leverage these 22,000-plus branches for distribution of products from our various companies as well as apart from dispensing the banking-related services. Having said that, it would not be out of place to mention that when it comes to the various products from our subsidiaries, it's actually a blue ocean opportunity for us. And if at all we succeed in doing that, it will actually shore up our other income significantly. And also, it will make the bank asset-light also in many respects. And that will probably help us in improving our ROE and as well as ROA.
But if one looks at your subsidiaries we're already in terms of performance best of the class, in terms of return ratios and expense ratios and all. Only the main bank where one feels that there's a lot of scope. And I mean, if you look at, for example, Bajaj Finance, they've managed to significantly reduce their cost/income ratio over last 4...
Sir, sorry to interrupt you, but your voice is coming in and out. Can I request you to speak over the handset?
Yes [Technical Difficulty] They are already very efficient and probably have best-in-class ratios. It's the bank where I think there is a huge amount of scope. And if you look at, for example, Bajaj Finance have reduced their costs significantly over the last 4, 5 years. So I wanted to get a sense in terms of percentage if bank has set a target or something like that and maybe an estimated target.
I think we are actually taking some steps. Maybe it is too premature for us to talk about that in this analyst meet. But maybe another quarter or 2, we should be in a position to articulate those thoughts also, which will probably help us in reducing our cost. But the answer which I gave you was essentially from the point of view of improving our other income, because on the cost-to-income ratio, income is a very significant component. And if at all we can improve our other income, it will go a long way in terms of helping us in reaching our cost-to-income ratio goals. And as I mentioned that we would like to be the best in the -- as far as this industry is concerned, as well as the cost/income ratio is concerned.
Next question is from the line of Ashok Ajmera from Ajcon Global Services.
I got it very late, and most of the questions have already been answered by you. Sir, my compliments to you, sir, for the highest, I think, quarterly profit of the bank, over INR 6,500 crores. And even in spite of all this a little bit of pessimism which has been set up because of the COVID 2, I'm very optimistic that the bank will do well in the next few quarters and year.Having said that, sir, I would just like to know on the optimistic note that what is our sanctions pipeline? I mean how much have we got the sanctions which has not availed? How much is out of the existing working capital sanction regularly which is already there, which is still a major part of its not avail. So something we can get some color on the -- if everything goes well and if there is no third wave, then where can we go from here in advancing our credit front?
Thank you very much for your compliments. And when it comes to the sanction limits, which I have not been aware, they are aggregating to somewhere on around 3 lakh crores. And the pipeline for the proposals is about 1 lakh 30,000 crores. And let me share with you, we have sufficient liquidity available with us and we have enough headroom available in the capital. So we are actually raring to support this kind of a growth in credit.
Because once that happens, all these cost-to-income ratio and everything like will automatically come under control [ and we will have ] credit growth, and we don't have to -- too much [ credit ] on that. My second one data point, in that unresolved cases of the NCLT, 160 to 365 days, what is the total outstanding amount and the provision made on that?
Maybe I'll request...
Overall, NCLT file cases is about 2 lakh 19,000 crores. But if you want a particular breakup of -- on the base number of days, that's something I can share with you later. Yes.
Sir, only those cases which are 180 to [ 360 ] where the number of accounts are generally limited in the amount. Okay, no problem, I'll...
Retail is not readily available, [ as well the what ] we will share with you.
Sir, on the [ HBRC ] trend, what is the progress there, sir? And our number of accounts and the amount remains the same?
It remains the same what we have indicated earlier also. It remains the same, almost around INR 20,000-odd crores. That is the amount.
And when do we think INR 22,000 crores, I think it was.
Yes, somewhere around that. That's right. That, I think, as soon as I think the progress is quite satisfactory when it comes to [ NRCL ]. So hopefully, it will happen soon.
Okay. So that will also come in as a recovery, almost even if it is about 15% to 20%, the 5,000 we had calculated last time. So around INR 752,000 crores of cash you can get out of that.
That is so far a better number, by all means.
All right, sir. Sir, other provisions, I think my other colleagues were also talking and some have [ an idea ]. There is a -- out of the total provision of INR 10,052 other than income tax, INR 5,029 is for NPA and remaining INR 5,000 other out of that INR 2,928 crores is the other provisions. Can I get the breakup of that, those other provisions of INR 2,928 crores?
That INR 2,800 crores is on account of the NFB, non-fund-based limit, relating to those cases which are under IC and they are restructured. So a significant amount of that is on account of that.
Okay. All right. That is why that amount are looking a little high. Sir, what is...
Sorry to interrupt you. I would request to come back in the question queue for a follow-up question. The next question is from the line of Jai Mundhra from B&K Securities.
The restructuring number that you had given, total, including the pipeline is around 20,000, of which SME is 3,000 and retail and personal is 9,000. And I think corporate, you mentioned was some INR 2,800. So what is the remaining? I mean, we just wanted to double-check those numbers.
No, I mentioned about retail personal is about 9,000. And SME is at 3,630. Corporate is about INR 8,000 crores, INR 7,800 crores.
Okay, understood. Right, sir. Okay, sir. And last thing, sir, in your annual report, if I see advances to public sector, that has declined, I mean, [ to ] PSU enterprises. Any comments there, sir?
Public sector advances are somewhere 43% as a share of our public sector advances. PSUs and government department.
Right. But if I see the year-on-year, that has declined by around -- I mean by at least 10% or so. So any comments there, sir?
No. See, it depends if at all some of the public sectors would have repaid also. For instance, some of the public sector are taking cash surplus, they have repaid. So that's a part of the game. And moreover, when it comes to iron and steel, [ these is ], they are having cash surplus and all of them are really trying to delever themselves. So I think it is -- it keeps on happening. Sometimes it will go, sometimes it will come down.
The next question is from the line of Rakesh Kumar.
Just one small question. With respect to the overheads number, so if I see the business acquisition and development expenses, there is a bit of a volatility in that number. So if you could help us what is the reason for such a [ soft cadence ] in this quarter?
Two major components. One, of course, is the -- we have a large number of BCs now, about 70,000-odd BCs who are really helping us out. And second is essentially relating to, this time, we have started going for PSLCs right from the first quarters onward. So these are relating to that also because it gives us enough leeway when it comes to average participant loan. So that is something as a strategy we decided that we'll start going ahead by buying out PSLCs from the first quarter onwards. So that is -- these are the 2 major components.
The PSLCs are the certificate that we have bought. So what is the quantum and in which subsegment we have bought and at which -- at what price, how much we have paid for that?
It is..
Overall, 60,000.
Around INR 60,000 crores PSLC we have bought in the first quarter. And pricing of our deferred tranches will be from tranche to tranche will not be as readily available with us.
And like what is the tenor of this? like how much time value for 1 year?
Yes. Generally, it is for 1 year.
What is the cost you said, sir, cost? What is the...
Cost Will also differ from tranche to tranche because it is something which is market related, it will differ from tranche to trance.
Ladies and gentlemen, due to time constraint, we'll take the last question from the line of [ Agarwal ] from Edelweiss.
Just a couple of data points. When I look at your presentation INR 5 crores and below 18 of INR 11,300 crores. What would that number be below INR [ .05 crores ]?
I don't think we'll have that number readily available with us right now. Otherwise, it will be there in the system. But not available to us.
Sure, sir. Sir, secondly, on agri side. So when I look at notwithstanding what we saw in FY '21, but before that we used to see a share in coming in Q1 in terms of agri. And we have seen that this time as well for some of our peer banks agri was a contributor to slippages. Before [ now ] this was not the case. Is there some major timing difference or what explains this?
No, I agree, the portfolio has changed quite a lot. That is out of 2 lakh 14,000 kind of a portfolio which we have in 2 lakh 10,000 kind of portfolio, which we have. Now, the PCCs would be just 40 lakhs crore only.
1 lakh [ 2,000 ]
1 lakh 2,000. 1 lakh 2,000 crores. So the remaining is essentially gold loan, which are as high as INR 70 crores. Then we have got loans to [ SIG ]. And also some investment credit, et cetera, et cetera. So that's how the book -- the composition of book has undergone a change. So maybe that is perhaps the reason. And when it comes to the KCC, KCC, the repayment happens only it's according to the cropping seasons as per the RBI guidelines. So as and when the cropping season happens, then the demand is raised, and the behavior at the material point of time gets captured in the accounts.
Okay. And just one last question on. Any monetization plans during the year, if you have any?
Any monetization plan?
For the year that you probably see any...
I think it is a little premature at the material point of time we'll share with all. Thank you.
Thank you very much.
Thank you.