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State Bank of India
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Ladies and gentlemen, good day, and welcome to State Bank of India's Q3 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjay Kapoor, General Manager, Performance Planning and Review, from State Bank of India. Thank you, and over to you.
[Foreign Language] And good evening, ladies and gentlemen. My name is Sanjay Kapoor, and I'm the General Manager for Performance, Planning and Review Department of the bank. On behalf of the top management of SBI, I extend a warm welcome to all of you joining us today on SBI's Q3 FY '23 Earnings Conference Call.
On the call today, we have with us our Chairman, Mr. Dinesh Khara; Mr. C.S. Setty, Managing Director, International Banking and Global Markets and Technology; Mr. Swaminathan J, Managing Director of Operating and Subsidiaries; Mr. Ashwini Kumar Tewari, Managing Director, Risk, Compliance and SARG; Mr. Alok Kumar Choudhary, Managing Director, Retail Business and Operations; Mrs. Saloni Narayan, Deputy Managing Director of Finance.
To carry forward the proceedings, I request the Chairman sir to give a summary of the bank's Q3 FY '23 performance and the strategic initiatives undertaken. We shall thereafter straight away go to the question-and-answer session. However, before I hand over to Chairman sir, I would like to read out the safe harbor statement.
Safe harbor provision. 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 would request Chairman sir, to make his opening remarks. .
Thank you. . Thank you very much. Good evening, ladies and gentlemen. Thank you for joining this analyst meet post announcement of the quarter 3 results of the financial year '23. The Indian economy has exhibited a remarkable resilience through 2022 in the face of the deteriorating global situations triggered by Russia, Ukraine war, monetary policy tightening and recurring base of the pandemic on the back of the strong financial and macroeconomic fundamentals.
An important factor in the overall outcome has been the better response of the monitary and fiscal policies in sharp contrast to the aggressive tightening worldwide. The new year brings so far continued momentum in India's growth story backed by the sustained strength in domestic demand. The World Bank has gone on record to say that the nation was well placed to steer through any potential global headwinds in 2023.
The IMF has also said that India remains a bright spot and would account for the significant portion of the global growth in 2023. Several high-frequency activity indicators like vehicle sales, petroleum consumption, traffic, RTO revenue collections sales have all shown improved Y-o-Y momentum in quarter 3 of financial '23.
GST revenue also continues to remain robust with 15% higher revenue in quarter 3 compared to the same period last year. In financial year '23, credit growth has continued to grow in double digits. Incremental 9-month credit growth has doubled in financial year '23 compared to financial year '22. Credit growth in the system is currently at 14.9% as against 9.2% in last year.
The good thing is that credit growth has gone based and not limited to a few industries or sectors. So we expect the pace to continue in the next financial year also, but some moderation can happen. At State of India, we have always maintained that our long-term strategy is to build sufficient resilience in our balance sheet. So while we'll continue to pursue growth in core operating income, we have also been proactive in identifying any potential risk and build adequate provisions for the same. And our operating results for the quarter are aligned with our long-term strategy.
I'm pleased to announce that for the second quarter and running, we have again posted our highest quarterly profit at INR 14,205 crores. Our business growth numbers are strong. And in terms of asset quality, our gross NPAs have dropped to its less level in more than 6 years. Let me now give some color on the bank's number for this quarter. Net profit for the quarter increased by 68.47% Y-o-Y to INR 4,205 crores, while operating profit at INR 25,219 crores, increased by 36.516%. The bank -- for the 9 months period improved by 23 basis points on Y-o-Y basis, and it stands at 0.87% and ROE improved by 458 basis points on Y-o-Y basis, and it is at 18.59%.
Most other core profitability metrics have also improved over previous year as well as sequentially. Net interest income increased by 24.05% Y-o-Y on improvement in yields and continuing credit offtake. Domestic NIM also improved by 29 basis points Y-o-Y and 14 basis sequentially. Noninterest income grew by 32.22% Y-o-Y. Operating expenses increased by 16.69% as we have started building provision for the wage revision, which has fallen due from November '22.
Other than that, our overhead expenses as well as staff costs are within control and our cost to asset continues to remain among the lowest in the industry, reflecting our efforts to build a long-term cost efficiency. On the business front, the growth momentum in domestic credit offtake has continued in this quarter also with growth coming from all segments. Domestic advances grew by 16.91% Y-o-Y. Headline by retail personal advances, which grew by 18.10% Y-o-Y and corporate segment, which grew by 18.08% Y-o-Y.
SME and Agri advances also posted double-digit growth at 11.52% and 14.16% Y-o-Y, respectively. Our personal retail loan book, excluding housing segment has cost the milestone of 5 trillion. Domestic deposit grew by 8.86% Y-o-Y, driven by growth in savings in deposits and term deposits. Our foreign offices have continued to perform well with good growth in advances as well as deposits.
Coming to asset quality. We continue to post improving outcomes. Our gross NPA has dropped below INR 1 trillion and stands at INR 98,347 crores. In terms of repo, our GNPA has come down by 136 basis points on a Y-o-Y basis and stands at 3.14%. Our net NPA ratio has also declined by 57 basis points and stands at 0.77. Slippage ratio for the quarter stands at 0.41%.
Consistently improving asset quality is also reflected in our cost, which is at 21 basis points for the quarter and is down by 28 basis points on Y-o-Y basis. On the restructuring front, our total exposure in the COVID resolution plan 1 and 2, stands at INR 26,035 crores, as at the end of quarter 3 of financial year '23. The restructuring book has behaved well with almost around 10% of the current exposure falling under SMA1 and SMA2.
We are holding sufficient additional provisions against the restructured account. The bank remains well capitalized, and we expect that our internal accruals will dedicate to take care of the normal business growth requirements. Our capital adequacy ratio without adding profit for the 9 months stands at 13.27% and CET ratio at 9.26% are well above the regulatory requirements.
Digital continues to be an important acquisition engine for the bank across asset as well as liability products during the quarter. We have sourced 64% of the savings bank accounts and 41% of the retail accounts -- retail asset accounts digitally through YONO. Our subsidiaries have also consistently performed well and continue creates significant value for all the stakeholders and most importantly, for the customers.
Most of our subsidiaries are leader in the respective segments. We will continue to nurture these subsidiaries and see them creating value for their own shareholders and as well as the shareholders of SBI. Now before I conclude, I thank you for your continued support to the bank. We consider the privilege to be able to contribute towards the growth of our economy. We remain committed to reward your trust in us with superior sustainable returns over the long term. I wish everyone good health and a very happy weekend. The floor is now open for your questions. Thank you.
[Operator Instructions] We have our first question from the line of Mahrukh Adajania from Nuvama.
Sir, a couple of questions. Firstly, the write-offs are slightly higher this quarter. So if you could explain and also on trading gains, the -- I mean, the profit -- the treasury bid, why does it look so high this quarter? So these are my first 2 questions, and then I have 1 more.
Yes. write-off is in the normal course of rates. It is nothing very unusual. I think it is about INR 10,000-odd crores. There's a write-off amount. And it is in the normal course of business. So nothing very unusual.
So it was INR 3,000 crore last quarter, right?
Yes. I think normally, we undertake write-offs towards the third quarter and the fourth quarter. So that is why it has -- this kind of tend to see this year, and it has not there in the past.
On the treasury part.
Yes, on the treasury part.
On the treasury part, it also includes the markup write-back of the MTM because the MTM requirement has come down. The mark-to-market losses have come down. So that is getting reflected in the treasury account.
Got it. Sir, and in your exposure to a large group in press, you've made some comments that is 0.86% of total exposure, but what is the total exposure because we get to see only your gross advances to and your part.
At 0.88% of our loan book, which is INR 31 lakh crores and odd.
Okay. Okay. Got it. And this includes all the sanctions across all offices?
It's outstanding exposure across all offices.
Outstanding. Okay. Okay. So -- but sir, you wouldn't talk about your sanctions?
I think as of now, what is material is that only.
Okay. But if we can get up because like PNB disclosed their sanctions, right? So...
It is there and normally, we don't entertain questions relating to a particular account because there's a customer privacy issues involved.
Okay, sir. Sir, and if I can squeeze in just 1 last question. What do you think is the outlook on deposit growth and therefore margins, right? You've done -- operating performance has been phenomenal. Deposit growth is not great, but you don't even need it because you have been running the lowest CD ratio once the lowest CD ratio in the industry on the domestic front. Sir, what is the outlook on deposit growth and therefore, margins from here on? When do you -- do you think margins sustain at the 3Q levels? Do they drop? When do they drop? How does deposit growth accelerate?
As of now, we are having excess SLR to the tune of about INR 3.2 trillion. And we are very mindful that I've said it in the past also deposited the franchise, and we always remain mindful of the depositors interest. So in the buckets where we feel that we can attract the retail deposit, we are ensuring that we must be in line with the market trends. And that's the policy which we have adopted, and we'll continue to follow that.
So based upon that, since you are also acknowledging the fact that we still have one of the lowest credit deposit ratio. Depending upon the need, we will be calibrating our interest rates. But I would also like to mention that our -- about 74% of the loan book is linked to either EBLR or MCLR. And although the 74%, I would say about 40% would be on account of MCLR. And if at all, we increase the deposit interest rates, that will also give us algorom for increasing the MCLR and which will help us in ensuring that the NIM should not get adversely affected.
Okay. So more or less stable NIM from hereon?
I expect that hopefully.
We have our next question from the line of Rahul Jain from Goldman Sachs.
Just a couple of questions. Number one, on the provisioning bit, we've seen a jump in standard asset provision in this quarter. And I think outstanding standard asset provisions are about INR 23,000 crores. So just wanted to understand why are we having such a large provisions here? Is there an element of contingency also that has been factored in here?
Yes, there is one-off costs when our loan book has grown, that has also led to an increase in provisioning because we are required to maintain standard provisions for standard assets also. Secondly, of course, we are always very mindful of, if at all, we get to see any kind of a stress on the ground in any of the accounts. We do make some provisions which are floating in nature, and much of it will depend upon how the account at what is a trajectory of the account and accordingly, we crystallize those provisions. So partly it is on account of our increase in the loan book and partly, it is on account of our policy in terms of making the provisions proactively as against -- after the event.
Sir, this translates into roughly about 75 to 80 basis points of the loan. So fair to say 30 to 40 basis points may have been built just for any future contingencies.
Yes, would be like. As I mentioned that if at all we get the visibility of any kind of a stress in our own loan account, we rather believe in making provisions. I mean it is a cost is the corporate. Yes, it is not the corporate book only.
And that is the standard asset provision.
Yes, yes.
Sir, just on this provision for employees of INR 5,429 crores in this quarter. So what is the element of one-off here? Or this is going to be the recurring quarterly number?
No, we have a provision relating to our revision, which is about INR 996 crores is on account of that. And other than that, the provisions which have been made based on the astute assessment for lower retirement liabilities, et cetera. So it is as per the yes.
So and this INR 996 crores, would you be making this every quarter, additional provisions?
On an average about it is for every month, it comes about most about INR 500 crores every month. That will be the provisions which will be required to meet the liability relating to the wage revision.
Sorry, I missed out on the number. Can you please repeat?
Sorry? Around INR 500 crores -- no, about INR 996 crores is something which we have provided for. And this is a provision for 2 months' time. Okay? And apart from that, about INR 500-odd crores. So every month, INR 500 crores will be the provision for the the major reason. And apart from that, some provisions, we have made on account of the pension and gratuity liabilities, which is essentially on account of the discount rate and also as for the recommendations of that gratuity.
Sir, just 1 more question. Again, going back to the exposure that is, of course, in the public discourse. Can we get some more color as to the exposure.
I think towards the end of this week, I mean, after I complete all your answers, I will make some statements, comprehensive statement relating to the exposure to that particular group.
We have our next question from the line of Ashok Ajmera from Ajcon Global.
Compliments to you, Khara and the entire team. I think one of the the mind blowing profit actually, one of the highest pricing operating profit in last maybe 4, 5 years, even in the net profit. Given the asset quality has improved tremendously. Overall performance of the bank is so robust that even if there is any problem concerning to this large group which may not be even in the top 15 group of your -- as far as the exposure is concerned, I don't think the bank like State Bank of India will have any kind of problem when you are operating profit itself is INR 26,000 crores per quarter. .
So having said this, sir, we will wait for your final comments on the total overall exposure to the group fund based, nonfund based, bond equity, foreign bonds which you have assured that you will give the statement at the end of the question-answer session. And having said that, sir, I have some couple of some data points and some information. We have one flow in this quarter on the corporate credit. So what is our basically ratio, which will settle down if you take the whole FY '23, by March, the composition between the RAM and the corporate.
I think it will be more or less where it is in the month of December. It will be a marginal movement from many of the segments, but it would be more or less on the.
All right, sir. If we go on the income side, the other income has gone up to INR 11,467 crores from INR 8,870 crores in the last quarter. And I think the major part of the item from -- I mean, a treasury profit. The profit and the sale and revaluation of the treasury is INR 2,937 crores as against INR 457 crores in the last quarter. Where this trend is going to be continued in the coming quarter, January, March also? And how do we see -- now with the interest rate, almost speaking up maybe another 25 basis points, where do you spend on the treasury side, sir?
So as far as the treasury side is concerned, there are 2 components. One, of course, is the improvement in yield on investment. And secondly, in the quarter, we have booked some MTM gain, which is about INR 2,200-odd crores, which is more of a write-back because we -- if you recall in the first quarter, we had made an MTM loss which was about INR 7,500 crores. Also that about -- we had some MTM gains last quarter also, which we did not book. For the reason that we had seen the yields were somewhere it has again shooted. So that is the reason why we did not book at that stage. But now we have seen that yields are now coming in within the range and the reason why we have done this. So I think that is the major reason when it comes to the kind of movement observing in the treasure and other item is we had some derivatives, which are again up which we have done. So some loss component was derivative, so that is also booked in that in that particular segment.
Sir, our credit cost and cost-to-income ratio bond improved tremendously. Do we see this trend to continue? Like cost to income come down and the credit costs, both are to come down even at the lower level -- in the coming quarter?
The quarter ending March '23, I can say for sure. And I think we will be the patient to give some balance as we move further, depending -- it will also be the function of an economy in general macro economy will be moving. But nevertheless, as of now, it looks like that for the quarter ending March '23, we should not be -- we should have a similar kind of a credit cost.
My last question in this round, is on PLI. How much provision on the -- on PLI bank has made for the 9 months?
That would be in line with what the number is likely to be -- the cost is -- it could not be very significant amount. And it could be a very small number, which is there. So it is for a 5% increase, which is 5 days salary and for 10%, it will be a 10-day salaries. So it will not be a very significant component.
Okay, sir. But we have provided -- I mean, we already made the provision.
That's all No, we have so many pockets where we are keeping so much of provisions. I mean non-NPA provisions are about INR 33,000 crores.
Yes, sir, I think the concern of the market is absolutely unfounded. But anyway, all the best to you, I think the sooner than later the market will understand the economics of the bank and the financial.
We have a next question from the line of Anand Dama from Emkay Global.
We've heard about a lot of resolutions in the pipeline right now, like SKS Power and all. Do we have any resolution pipeline, particularly for the fourth quarter and over next 6 to 9 months that we can talk about?
So there are so many resolutions in the pipeline, such as but it penetrates lies because it is always a process which is carried out in all these matters and how much time will be taken at each other step is actually is not very certain. So that is one of the reasons why saying it so much of a certainty that in the last quarter, we'll have so many resolutions coming through as it will not be in order for us. But nevertheless, I'll ask Mr. Tewari, if at all, he can give some color in this direction.
In many cases, which are at other stages, but we can't be sure it anything in various legal proceedings top to give a today sir, to some high-level number. I'll give you a high level numbers going forward in the call.
Sure, sir. That would be great. Sir, secondly is the outlook on margins. I think this quarter also we have seen a meaningful margin uptick. We still have some room in terms of earlier improvement. And as you said, that MCLR also would increase as basically the cost increases.
I would suggest that let us keep as a guidance part is concerned, I would like to keep the guidance at this level and if at all, there will be room for improvement, we'll certainly ensure that. Incidentally, this NIM also, it would have been even better. But because in the last year, we had the income tax refund because as is about INR 2,400 crores. As against that, quarter -- this year, we have got income tax refund, which is just about INR 800 crores. Interest on income tax refund. So that is the other reason. It will have an impact about 6, 7 basis points overall. But yes, of course, if at all, we do -- if at all, we do apple-to-apple comparison for us impact. I mean change can be even better. So this is just for information. Yes.
Yes, sure. I think that should also play out in the fourth quarter, right?
Yes. Hopefully, let's hope for the rest.
We have our next question from the line of Abhishek Murarka from HSBC.
Actually, just 1 request when you make your comment on the lag conglomerate. If you could clarify whether this INR 27,000 crores includes loans, LCBG, nonfund-based and overseas loans. Sir just at the cost of repetition is requesting that. And also, if you could also clarify that if there's a refinance opportunity given that.
the second one.
The second one is if there's a refinance opportunity given that your large exposure framework wise, there is a lot of headroom and the group like several projects appear to be creditworthy, then would you do it? So just these 2 things, if you could cover in your comment maybe now or later, whatever, that would be very useful.
I think second question I can answer you right now. That is, if at all, any refinance opportunity is always evaluated on merits. So for me to say that anything right now will not be an order and as and when any such demand will come. We have not received any such demand. So for any such requests, if at all, any such request come, it will be evaluated on our merit. And while evaluating, we are always very mindful in terms of the stake of the promoter or the entrepreneur and the kind of risk which it is.
And based on that very comprehensive assessment only views are taken. It is not really simply 1 request comes and we grant the facilities.
Understood, sir. That's useful. And my second question is actually on your international loans. Now sequentially, there has been I think a couple of quarters back, we were talking about being a little aggressive there and looking for opportunities outside. What is the outlook there, sir? Next 1 year, are you looking to grow that maybe to a higher percentage of loans or what's the strategy?
See, in terms of dollars, our international book has grown by about 9.15%. And when it comes to repo rate, when we convert it on the repo rate, it looks like that it has gone as was 20% plus. But the factor is dollar in terms of dollar, it is just about 9.15% and now our focus is for improving the NIM as far as our international book is concerned. So that is the reason you might have observed that our NIMs have improved significantly. We moved towards 1.67 as international NIMs are concerned and it is on a quarter-on-quarter basis, an improvement of about 23, 24 basis points.
So that's how it is. And when it comes to the composition of the international book, which is essentially local lending in those markets, which is not necessarily to the ending corporates only. It is to even to a local corporate, and we are participating in the local syndications. And also when it comes to India-linked loans, we majorly to either AAA or AA-rated entities only. And that's how this whole complexion is.
Apart from that, large component to a trade finance. Trade finance book, wherever we are getting the margins, we are participating on the platforms. And whenever we're in efficient to get the margins, there we are actively involved.
Sure. Sir, margins in the international book should hold up around current levels?
I hope that we should be efficient to maintain at this level, if not improve.
Perfect, sir. And just 1 question, I squeeze in on SME. Now for several quarters that book was not really growing as this quarter is about, I think, the 10% Q-o-Q jump in that book. So if you could share what has changed? Is it a change in product, geography, customer focus? What has really changed over there and whether this is sustainable?
Yes. We have -- in SME, we have invested well in terms of structures, in terms of capacity building and also in terms of focus. That is something which has been brought in for last about a year plus and the results, we are now in efficient to see last quarter also, we saw a decent growth in SME book. And this quarter also, we are seeing a decent growth in SME book.
And here, I would like to mention that we are having a focus on the distributor finance, vendor finance, balance sheet-based lending, and also we have come out with another loan product, which is essentially run through , YONO, which is a preapproved business loan, where we are looking into the transactoins and the current accounts. And based upon their transactions, we are efficient to offer the loans to also entities also, which are actually small in nature.
But this is something which is becoming a very popular. So these are some of the contributing factors, and we have grown SME by almost INR 43,000 crores on a year-on-year basis, and these are some of the contributors. It has become a continuous focus area. And also, we are very mindful in terms of quality of our lending, and we have created a loan management system where we are having adequate visibility in terms of the the unstructured information through the GST, and et cetera, et cetera.
So that's where we have significantly strengthened our underwriting practices in SME. We have invested in terms of manpower. We have invested in terms of product. So all that is showing up. And to my mind, it is sustainable. We are set a target for reaching INR 4 trillion number by the year March '24, but the way things are, we should be very near to that by March '23.
We have the next question.
Just 1 second, Mr. Tewari has to contribute something.
So this is a question about how much recovery or resolution we can expect. So this is the past record plus the recovery already done and is subject to, of course, the court decision in a few cases. We should have a number between INR 3,000 crores to INR 3,500 crores in quarter 4.
We have our next question from the line of Kunal Shah from Citigroup.
Yes. Congratulations, good set of numbers. So firstly, sorry, just to touch upon in terms of the recoveries and upgrades. So ex of the resolution, which you have highlighted, maybe the run rate which is there for this quarter, of INR 1,700 crores, should that be the normalized one? Or this is relatively on the lower side?
Actually, recoveries, which you are seeing here also we have took in mind that last year, about INR 1,692 crores on account of a particular account, which was one account. So if we ignore -- if we -- if at all, we have to do the apple-to-apple compass, than perhaps our growth in recovery this quarter was as I would got 18% to 20%. So I think we expect that going forward, we don't have chunky accounts, which are awaiting resolution.
And perhaps it might take a little longer also. But now the less, the kind of efforts which are being put in, in terms of yes, in terms of an and those kind of things have helped us in sort of ensuring that recoveries happen faster. And we expect that we should be patient to maintain this kind of a number, at least in this quarter also.
Sure. Sir, compared -- like when we look at it, say, in Q1, Q2, it was somewhere around INR 5,200-odd crores last whole year, it was INR 21,000 in terms of recoveries plus upgrades compared to maybe almost like INR 1,600 crores kind of a for this quarter. So you're saying maybe ex of any resolution to this should this can ideally be the run rate, even the focus is there in terms of improving it?
Actually, you would have observed that the stock has come down quite a lot. That is now less than INR 100,000 crores. So that itself will leave -- I mean these are also -- the amount is also small in each of the cases. So each of the resolution when it comes to effort, it takes almost the same amount of effort, but the recovery may not be as commensurate to the efforts. So that's why number may look small, but in terms of the recovery, it will be a sustained effort. And normally, we get to see some kind of a better recovery in the last quarter. We hope that there would be a marginal improvement over whatever we have done this quarter.
Sure. And secondly, in terms of the corporate exposure and say, getting into Infra, there is some rundown of almost INR 15-odd thousand crores, say, in telecom and even in par. Sir, -- is it more of a repayment of the account? Or is it a refinancing at the lower by the competitor, what is actually leading to that? And what would be the overall outlook on the corporate credit growth?
The corporate credit growth, we have got proposals in pipeline as high as about INR 9 trillion. And the availment is yet to be taken both in term loan and working capital under utilization, that would be as INR 10 trillion. So overall, about INR 3 trillion is a number in the corporate book, which we are having some possibility of converting into, I mean, at least unutilized will certainly happen. I mean, 1 positive trend, which I must mention is relating to the availment of the term loans and the non-availment of term loan has come down quite a lot. And that is normally a progress well because generally, after that, the working capital improves.
So I think with that kind of a scenario, I expect even working capital utilization will also improve. It has come down from about 56% to 54%, but we have also seen the Indian credit growth -- I mean, sanctioning has gone up by about 24% as far as the large corporate credit is concerned. So I think overall, X, I expect that we'll have good visibility of the charges coming in here. And also the quality loan we should be a patient to exit.
Okay. And on telecom exposure and or anything specific, particularly in this quarter? INR 15,000 crores of rundown in telecom?
This is actually year-on-year to rundown. This number carries the year-on-year reduction repayment as well as the reduced utilization and customer costs.
Okay. Yes. So compared to like September, September also, it was almost INR 43,000 crores, INR 44,000 crores, and that's down to 20...
The also there is -- they have -- there will be some repayment which would have come.
Okay. So these are the repayment. It's not like refinancing and maybe some kind of a rate competition and losing up to the company, maybe...
No, no, not at all.
We have our next question from the line of Jai Mundra from B&K Securities.
Sir, last time you had given loan growth range of around 14% to 16% for '23. This quarter, as you said, corporate growth usually have some seasonal uptick in fourth quarter. And you mentioned a decent amount of pipeline which is there, which could be disbursed. What would be your outlook on the loan growth for the full year and for '23 and maybe beyond, if possible?
I think I expect that the loan growth should be somewhere in the range of 14% to 16%. I still maintain my accepted indication which I had given last time also.
Okay. And sir, you had mentioned your excess SLR at INR 3.2 trillion. And within which, sir, how much would be the scheduled redemption because that is what possibility will help you offset the deposit thing? I mean what could be the scheduled redemption amount out of this?
The remaining period serve will not be much. For the current financial year, it would be just about INR 30,000 crores and we are also adding the same tact I think there are investments happening in the from the also. I think broadly the -- we expect that this will remain at this level for contact.
All right. No, because your loan to deposit ratio is now 73%, right? While it is lower relatively, but it is still.
we put the IBG also -- if at all, we look at domestic, it will be somewhere around INR 66 million to INR 67 million.
Yes. IBG funding is very different. For IBG funding, we have -- we run our International Banking Group more like a corporate bank. And there, the loans are not necessarily funded from the deposits. and the borrowing market modeling -- they are predominantly market borrowing clients, et cetera, et cetera.
Sir speaking of overseas thing, sir, this quarter -- I mean, the book has been flattish on Q-o-Q basis. So how should -- I mean -- and you mentioned that the dollar term growth is only say around 9%. How should we look at the growth in overseas book, sir, specifically going ahead? Assuming in dollar terms, you may explain?
We are very mindful in terms of the NIM, which we are generating there. And that is the reason it was a conscious effort. It is not that we don't have -- we're not having opportunities since we are trying to maintain the NIM improve the NIM, that's is the reason why we're at this level.
And considering the, I mean, kind of economy which you are seeing across the growth may 15 in the international space is a decent number. And today, this group is comprising is actually contributing 15% of our total loan book of the bank.
Got it. And sir, next question on your Agri loan growth, right? So your Agri loan growth has been consistently lower than overall loan growth, right? In this quarter, this is like 11%, 12%, 11%. And overall loan growth is 18%, 19% or 18%. And as of FY '22, we were PSL deficient. Now so what is -- what are you thinking in terms of PSL compliance, especially on Agri side because that growth has been very, whereas the overall growth has been reasonably strong.
There are -- in fact, the way we started working on SME, we have already started working for Agri also. And we are trying to actually work in terms of the realignment of the Agri book, and that process is already on. Earlier, we were into low value or small value, working capital loans only. We have already done about 40% of this book has become Agri gold loan. And the remaining book also, we are looking at it and in fact, we are already working on it, high-value agricultural loan as well as getting into that in for the agritechs and agri infrastructure. So that is something which we are working on.
And this is a result of that conscious effort which has been put in. And hopefully, with the question we have set a target of INR 3 trillion for the financial year '24 for this book to reach, but we are quite hopeful that in this quarter also, we'll get to see a decent growth. And we will -- we are much on course as far as our internal target is concerned.
And so the supplemental is also a -- it is contemplated by SME and affordable home the other contributors to the case not only.
So if I can add please. As far as PSL is concerned, it's not a challenge in terms of the agree mandate to 15%. It's not at all a challenge. We are complying with that. And for some of the other, say, some segments where PSL calculated for that. We have other buying PTC, PSL certificates. So that will do. For Agri front, there is not an issue. And to add to what the Chairman said about Agri, we are conscious about the quality of agree which you create because we have seen the green, which is the highest which you're seeing in the presentation. So the color and composition of Agri book has been changed entirely as of now. It means creating new kinds of products. It also means a targeted approach towards selecting customers as well as use of analytics and technology.
So all these things are getting -- so it's getting turbocharged in order to get a better quality, sustainable Agri portfolio.
We have a next question from the line of Adarsh Parasrampuria from CLSA.
Sir, a question was on the exposure, so I'll.
Sorry?
The question is on the exposure. So I'll wait for your comments.
We have a next question from the line of Prakhar Agarwal from Elara Capital.
Just 2 things. One, data keeping. What is the on our book?
As I have already provided for whatever assets were there, we are 100% provided for those assets. It's about INR 7,000-odd crores there.
Sure. So they were provided during this quarter or they were already provided earlier?
I think last quarter, last last quarter -- last year, we had provided for it.
Sir, Secondly, when I look at the margins, and you probably said that we'll be able to sustain the margin. So when I move into FY '24, should there be a cognition that we should be essentially the equal to average of what we have reported in FY '23 because we have seen sequential uptake in FY '23 at every quarter. So to that extent, if I were to average that out, despite cost, still happen, we'll probably be maintaining a similar end in FY '24. Is that a fair statement?
That will be our effort.
Got it. And just last bit on this, your trading so probably you said that around INR 2,200 crores of unwind that we have probably seen this quarter. Now in Q1, we had around INR 7,000-odd crores. So when do we expect the balance to get unwind over a period of 2, 3 years, how we should look at it?
No, we've already provided for that INR 7,700 crores we had already provided for that.
So of that, around INR 2,000 crores, you said that that go to quarter. The balance.
You're doing, which is the right type of .
Got it.
I mean how the yield will move, it will be a function of that.
We have a next question from the line of Manish Ostwal from Nirmal Bank.
I have only 1 question. On the the short-term liquidity in the market, intermediate market has tightened recently. And because of that, the CD rate has also increased. So how do you see the funding environment in the wholesale market given the busy season in the quarter 4?
See, I think we keep saying our funding of the we use various instruments. Deposit, of course, is the main state and market borrowings is 1 month. But from the market at very competitive rates continues to be available to us. And in terms of the deposits, I think there would be some smaller 1 deposit rate. And we -- based on our requirement, we align with the market rates. I think broadly, we were able to contain the cost of resources if you see, I think we expect that in Q4 also that change will continue.
The other thing which I would like to add is what Mr. Shetty has mentioned, you would have observed that in the current financial year, we have already gone to market and raise infrastructure bonds and at very, very competitive rates. So I think that also is another source and since we are having a reasonable portfolio of over infrastructure assets. That's the other source which is available and we actually becomes much more competitive in terms of cost. So already INR 20,000 we have raised. And that is something that will be the strategy going forward also.
Okay. And 1 small point on the equity capital raise plan for the bank for the -- so any plan for that to raise the capital to support the growth?
We are -- as of now, I mean once the profits will be plowback after the March quarter, our rough estimation is that as far as the capital adequacy ratio is concerned, we'll be at 14.5%, we have made some rough assessments and it indicates that we can support the loan growth of at least INR 7 trillion. So we will be very closely evaluating the situation. And wherever required, whenever required, we'll certainly raise all kind of resources, not only equity, we will also be looking at 81%, 82%, whatever is the.
We have a next question from the line of Manish Shukla from Axis Capital.
Sir when you said about wage revision, monthly run rate was about INR 500 crores, that assumes what rate of wage inflation 10%, 12%, 15%.
10%.
10%. Okay. My second question, sir, on the standard asset provision of INR 23,000 crores that you are carrying, roughly, how much is it that you think is additional or extra and under what situation will you be dipping into it?
This provision which we are carrying, I would say, roughly one is this additional provision for restructured standard accounts. This is essentially for the restructured which you are carrying on the balance sheet. So it is 30% of our restructure book, which is about INR 24,000-odd crores. And the remaining 1 is INR 23,116 crores, which is a standard assets. As I mentioned that part of it is on account of our standard assets as it is. And part of it is on account of whatever visibility of stress we had on ground. So how long will carry normally take stock of the situation quarter-on-quarter basis. And based upon that, we take a call. Yes, I may not realize -- it may not happen. It may or may not specialize, but depending upon the situation, which will be obtaining at the end of the quarter, we'll be taking the call.
And majorly an almost standard.
So majorly not Yes. Yes, predominantly, it is for the standard only.
Sure, sir. And a couple of times, we mentioned that our LDR at least domestic LDR remains pretty low. But at the same time, during the quarter, borrowings have gone up by about INR 60,000 crores, and you also entered at potentially raising more borrowings. I'm just wondering, given the excess SLR and low LDR, why would you consider raising money via debt borrowings?
This is more of a market operation because we have to evaluate all the options and ensure that our cost of resources remains the lowest.
Okay. Last question, sir, in the budget, the Finance Minister has enhanced limit for certain small savings schemes and introduced a new scheme as well. Do you think that puts pressure on retail deposits for the system either in terms of availability or rate?
I mean, total size of that kind of deposit is about INR 2 trillion. And when it comes to banking system, banking system deposits are somewhere around 100, 140, 150 plus 150 trillion plus. So it might have some impact, but not as significant, which should be really because we have seen in the past when it comes to special deposit schemes, they have been always carrying an interest rate, which has been quite high as compared to bank deposits. But I don't think it could make a significant dent into the deposit base of the banking system.
So that's how I look at it. And apart from that, when you keep deposits with the banking system, it is also liquidity is something which is available and to keep deposits like that, the liquidity is not available. So it's more like a premium, somebody is paying for keeping the illiquid asset. You understand it better, you are into the finance world.
We will now have the address from the Chairman. Please go ahead, sir.
Yes, sure. On -- as far as the exposure relating to a large complement is concerned, we have seen over the last 5 to 6 years, the share of exposure of the Indian public sector banks as a percentage of the total debt has consistently declined from 55% in 2016 to 31% by the end of 2022. During this period, the debt EBITDA, which is a key monitorable, has been improving further better demonstrating the group's ability to complete and generate cash in a timely manner from projects which we undertake.
As is known, most of the recent acquisitions have been financed through overseas borrowing and market estimates. And so we don't miss build up to the Indian banks on this count. As far as we at SBI are concerned, our group exposure is well below the large exposure framework and the outstanding -- loan outstanding exposure stands at 0.88%. So our SBI total loan book as on 31st of December '22.
Majority of the SBI loan outstanding are towards operating assets and projects that have been completed and generating cash accruals. The projects that are under construction are on schedule as of now. The loan extended by SBI are secured by the project assets, and there is no facility granted on unsecured basis. The cash flows are routed through the designated accounts as per mechanisms are in place to ensure timely servicing of the dues and there has been no record of any delay or default till date.
We have not extended any finance against pledge of promoter security. Wherever shares have been pledged in favor of SBI in certain entities, there on the nature of additional collateral security. Nonfunded exposure of SBI is mostly towards letter of credit, bank guarantees, both performance and financial, non-guarantees issued towards securing the other financial obligations are not there.
No guarantees as an issue. There are no concerns on the group's ability to service the loan book at a time. I hope I have tried to address the majority of the concerns of all concerned.
Thank you. Ladies and gentlemen, due to paucity of time. I would now like to hand the conference over to Chairman, sir, for closing comments.
Thank you very much to all of you. taking out time and to be with us on this weekend evening. I take this opportunity to wish all of you the very best. And have a great and enjoyable weekend. Thank you very much.
Thank you. On behalf of State Bank of India, that concludes this conference. Thank you for joining us and you may now disconnect.