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State Bank of India
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Good evening, ladies and gentlemen. I'm Pawan Kedia, GM Performance, Planning and Review. On behalf of State Bank of India, it gives me great pleasure to welcome all of you, the analysts, our colleagues present in this hall. A warm welcome to all our analysts, investors and colleagues who are joining us through the live webcast on the occasion of the declaration of FY '19 results of the bank.We have with us on the stage our Chairman, Shri Rajnish Kumar at the center. To his right, is our Managing Director, Retail and Digital Banking, Shri Parveen Kumar Gupta; and to the left of Chairman, is our Managing Director, Global Banking and Subsidiaries, Shri Dinesh Kumar Khara; our Managing Director, Commercial Client Group and IT, Shri Arijit Basu, is seated next to Shri Parveen Kumar Gupta; and our Managing Director, Stressed Assets, Risk and Compliance, Smt. Anshula Kant is seated next to Shri. Dinesh Kumar Khara. Our Deputy Managing Director and Chief Financial Officer, Shri Prashant Kumar, is seated next to Shri. Arijit Basu. Our Deputy Managing Directors heading various verticals and Managing Directors of our subsidiaries are seated in the first row of this hall. We are also joined by our Chief General Managers of various verticals and business groups. Without further ado, I request our Chairman to highlight the bank's F '19 performance and strategic initiative undertaken. Thereafter, we shall straight away go to question-and-answer session.Before I hand over to the Chairman, I would like to read our -- read out safe harbor provisions. Good evening. 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 results may differ materially from those included in these statements due to a variety of factors. The figure, ratio and parameters relating to March '17 are for the merged entity, unless otherwise stated. Thank you.Now I request our Chairman sir to make his opening remarks. Chairman sir, please?
Good evening, and a very warm welcome to all of you. I think it is already 3 hours we declared our results. You would have gone through the presentation, analyzed, dissected it. So there are 2 ways.[Technical Difficulty]whatever you prefer. So we go straight away for question and answer.
Sir, just 2 slides...
Yes, 2 slides you show. So, no. I will, like, just let me give just some comments. One is that I would say it has been a satisfying year in terms of the performance on all fronts. And the biggest concern has been and still remains is all about asset quality. So if I look at the bank performance on various fronts, asset quality, we have done very well. We have controlled fresh slippages, that is very important. And for all the past legacy accounts, we have made more than required provisions. So that is a point to be noted. It is reflected in provision coverage ratio. It is reflected in net NPA ratio, which is more relevant. The slippages, fresh slippages, slippages in the second half, which are the better indicator, credit cost [ when it is ] 2.66%, but out of this, the credit cost for these slippages which happened in the financial year '19, it is just 0.52%. Rest is all legacy credit costs.So that gives the confidence that when we talk about that going forward, our legacy cost -- not legacy cost, the fresh slippages, the credit costs related to the fresh slippages will be less than 1%, so that is very much achievable. And the legacy cost also, now the corporate book net NPA is now just INR 34,000 crores. Out of which my stressed-asset department tells that they will be able to recover 15 -- 50%. So on that remaining corporate book of INR 34,000 crores, what we need is just INR 17,000 crores this year and it becomes 0. So all the NPS which we created in the past, they would have been taken care of within this financial year. And if you're able to control the asset quality going forward because of the series of measures and, in fact, they've been very sweeping in nature in terms of reorganization, in terms of rewriting the loan policies, the early warning system monitoring, monitoring [ on ] the funds flow, shift towards cash flow based lending for almost all sectors creating a department, which has become some sort of a gatekeeper for the credit, credit review department. That department is doing a fantastic job in the bank and where the impact is visible. Stressed Asset Resolution Group's in a very focused manner, which sector specialization, the recovery of INR 37,000 crores in this year, and out of which INR 13,000 crores came out of IVC process. So same recovery, I think it is possible to achieve because INR 16,000 crores is -- and can happen anytime. It can happen in this quarter, it can happen in the next quarter. But I'm very, very confident that it will happen in this calendar year for sure. So 3 accounts itself will give INR 16,000 crores. So if I'm putting a number of INR 35,000 crores or INR 38,000 crores even for this year, so that is a very, very feasible and achievable number.So the credit growth, we're back in growth, domestic growth was 14%, overall growth 12%. IBG, the net NPA is 0.8%. Our corporate accounts group, the NPA is 0 and will remain 0. So if we have a scenario where the credit growth is back, 12%, 14%, the yield on advances is going up, you will see in the presentation how it is moving. The cost of deposit is going down. So the NIMs are better, not only because of this factor, but also the fact that the share of the performing loans is going up. So that improves our NIMs. And the other income also we are doing very well. Costs are under control. The credit cost I've already spoken about. Even the operational or operating costs [ or ] overheads, the -- they were always under control. Last year only distorting factor was huge provision which were made towards wage revision and pension benefits gratuity. So that will also get moderated.So digitization, I think all of you would agree that bank is a clear leader today in digital and payment space and use of technology. On HR front, tremendous work has been done for motivating the staff at the branch level, which are the first customer touch point. And in a bank like ours, a massive task every year of promoting people and then placing them in new position, so as we speak today and we declare our results, all the promotion results were declared yesterday. And in next 10 days or 15 days, everyone will be in their new position.So this is also a gigantic exercise, which the bank has very successfully completed. And the engagement either with the investors, customers, government, all stakeholders, that engagement levels have gone up. So competitive scenario is in favor of the bank. And that is what gives me the confidence that earlier we were talking about 1% ROA for FY '21, but now it seems in sight that we will achieve it in financial year '20, unless there is some unforeseen shock, which is not visible to us.So this is the commentary. Going forward 12 months -- I've already outlined what work has been done. Going forward, the same work will continue. In the area of innovation and digitization, YONO has already established itself as a market leader and the results are so encouraging, and its scope is being widened, already widened, in fact. So far as retail customer journeys are concerned, more or less, they will be completed in next 3 months. And then YONO Agriculture, which will be a unique system for the farmers of this country in 12 languages, that is being developed and will be rolled out. YONO Global, we are already doing UAT in U.K., that is the first market we have chosen for YONO Global. And YONO Business, the work has started. So in next, I believe, 18 months, we will have a complete ecosystem, which will be unique in the country.You would have already experienced the benefit of YONO Cash, where like without a debit card and it has been made possible to withdraw the cash, which is a very innovative product, which bank has come up. And this year, we have brought data analytics into focus and in a big way the potential of the data analytics. Bank is very data rich. And using that vast data, which the bank is sitting up on, how do we use it for revenue enhancement, cost-cutting, fraud prevention, underwriting of loans, so many areas have been identified and very systematically we are moving to monetize or to derive benefit out of this stuff. So this is the scenario for the bank, and I consider it to be a very fierce, very good scenario. Or we are in a very sweet spot, but yes, there are certain challenges at macroeconomic front. So if the situation remains under control, then there should not be an issue.So these are my opening remarks, and you are please welcome to raise your question. Are you following any order in that -- this thing?
Thank you Chairman sir for your opening remarks. [Operator Instructions] And the first question is from...
Ashok Ajmera, Ajcon Global. Sir, first of all, compliments that you have remained with the profit, maybe at INR 900 crores odd, which is a good sign, though last quarter was exceptionally good from the profit point of view. And -- but against the almost INR 6,500 crores of loss in the whole of the last year, it's a very welcome sign that we're at INR 863 crore or INR 865 crore overall net profit. So this is a good sign. And even PCR, I mean, I don't know, provision coverage ratio has been shot up like anything. It's now almost about 79%. Now having said that, only a few questions on this 4, 5 accounts, like, which are in the news and on which, like IL&FS last time it was told that about INR 900 crores provision has been made NPA. Only those subsidiary [ companies' ] NPA of about INR 1,800 crores, INR 2,000 crores provision was made and 50% was provided for out of those NPA. But now with this new things happening, I mean, have you taken the complete hit and incorporated in this quarter because of the other accounts, also now IL&FS itself going NPA? Then same thing now with the Jet Airways, what is happening? With the DHFL, is there anything or the view is the same that it remains standard and because it is downgraded now rating wise, last time it was said that the rating is good and everything. And one more thing is on the D2, D3 where we out of INR 11,000 crores, INR 5,500 crores provision was made as for the dispensation. So what is the status of that, whether the whole thing has been covered? And other one was that INR 904 crores of MSME, which was -- restructuring was permitted and you were on the verge of restructuring those, so what is the status on this? What is our experience on that? So some of this -- I mean, this will give a better information about other things. Okay, the numbers are good, okay, you performed very well. I'll come back, again, in case anything else is there.
As far as the NCLT1 is concerned, we have now provided 99% and which includes the 3 accounts: Essar Steel, Bhushan Power and Steel and Alok Industries. And in this quarter, we have made a provision of INR 10,800 crores on these 3 accounts itself. So the position is that the recovery prospects for these 3 accounts are that bank will recover INR 16,000 crores in this calendar year. Let us not go quarter-by-quarter because every quarter, I have hope that I will recover and that hope gets dashed. But at least, I'm very hopeful that this time, my hope that we will realize in this calendar quarter -- in this calendar year will not go wrong. So that much [ question ] we can keep. So this INR 16,000 crores is which will be recovered. There may be INR 500 crores short or we may have to share something with operational project but it is not in doubt. About IL&FS, 40% on the -- PCR on NPA is 40.1%. And this is the breakup. Our total portfolio is 3,480 -- go back. So this is the position. And that makes it very clear where we are in terms of provision.And Jet Airways, of course, it is a substandard account. And we have provided more than what the regulatory requirement is for a substandard account. But whether it is Jet or it is this group, we will look its relation to the size of the loan book. So Jet Airways, I was telling in my press meet also that it adds to 7 basis point to your gross NP. That's all, that is the impact. And already taken in March '19. And the same thing with this IL&FS group of companies where the recovery in SPVs will be much better, but that classification also we have given. That is what the classification, which has been given by the group to the NCLT. And that is where like, it's not something which is a huge worry for the bank. And the NBFC sector, DHFL, still it is a standard account. There's no default, but that is something, which is an account under watch. And if you look at our SME 1, 2, it has come down from INR 17,000 crores to INR 7,000 crores. So this quarter, you can -- at least this quarter, you can breathe easy, June quarter. We'll see after that.
Next? Yes.
Ramesh Bhojwani from Mehta & Vakil. I saw your presentation as well as when you were presenting to the press. Your provisions this time has gone up by INR 16,000 crores. And your gross NPA have come down by INR 16,000 crores. So what was the necessity of making such a large provision and keeping a PCR at 78% when it was already 74%? That was the first question. The second question is arising from what you just mentioned. In this full year, you have recovered almost INR 37,000 crores. Going forward, can we maintain this level of recovery or better? And you answered one question, that we will return the ROA to 1% in this financial year. So just thoughts on that.
So it is very obvious that this quarter, we have made INR 11,000 crores for these 3 accounts: Essar Steel, Bhushan Power and Steel and Alok Industries because their asset classification is D3. D3 requires 100% provision. And the rules are such that there was no need, I agree, for making this provision, but you have to follow the regulatory regime. For 2 quarters, Reserve Bank of India gave a special dispensation, but every time we also cannot go to Reserve Bank of India and ask for dispensation. So we said, it's all right. We provide in this year and we recover next year. So INR 37,000 crores was a recovery last year. So this year, it can be easily INR 37,000 crores because INR 16,000 crores is already almost recovered. We have to just see that day when the money flows in the accounts of the bank, for which we are very eagerly waiting.And about ROA of 1%, it seems to be very feasible. It's not a [ future accountancy ] , you have already [ been ] given that disclaimer, but the calculations, if I can share with you, of our core preprovision operating profit this year is estimated to be INR 70,000 crores. You add INR 16,000 crores of these 3 accounts, it becomes INR 85,000 crores. If I do some share sale for 2 subsidiaries, which are on the radar, we're looking at INR 90,000 crores. Right? And whatever provision your DHFL, Jet, IL&FS, whatever you want to take, take. We will still be at a profit of INR 35,000 crores, INR 40,000 crores. So on a balance sheet of INR 40 lakh crores, the maths is very clear. It is INR 40,000 crores. Take any shocks, the return on asset becomes 0.75%. If things go better than expected, you can have a scenario better than even 1%. So this is what our aim is, that in normal circumstances, bank should have ROA of 1%. If there is any shock, which can always happen, we have a huge loan book, you never know that what will happen there. And in such a scenario, your ROA should not go below 0.75%. And in a good scenario, you go above 1.10 -- 1%. So that is what the future looks like. But future is future. So you can only hope that things will go your way, but what happens next nobody knows.
Sir, congratulations on a good set of numbers. This is Srijan Sinha from Future Generali India Life Insurance. So my question is with respect to the pension liability. So recently there was a Supreme Court judgment, which said that the contribution to the EPS, Employee Pension Scheme, should be based on the full salary rather than INR 15,000, which was prescribed by the EPFO till now. And this should be applied retrospectively from 1995. Subsequent to that, one of the public sector company, which is a oil major, they came out with a BSE filing and said, the hit to them is about INR 1,800 crores, which is about 9% of their market cap. So just wanted to understand, is there some hit that we can anticipate for us as well? Anything to do with us?
We have not honestly discussed this matter with our actuarians -- or you have? So just tell, Prashant?
Basically, this particular judgment which you are referring, this is related to pension payment made by the EPFO. Okay? Our bank, the pension payment is not made by EPFO. It is the State Bank of India pension rules.
So you're an exempt organization is what you say?
It is not a question of exempt. This is not applicable. For EPFO. EPFO is not applicable for us, there is a separate pension calculation, and this judgment is not applicable to us, SBI.
Okay. And sir, second question is on the SME 1 and SME 2 book. There is a significant decline quarter-on-quarter. So any color on that? Is it a single account, which got upgraded or there were multiple accounts which were upgraded?
No. Accounts got upgraded, and it was a large power sector account, so -- which was constantly appearing in SME 1 and SME 2. But now, it is not even SME 0. It means, all payments are up to date till 30th June.
And this SME 1 and SME 2 is only for the corporate accounts or the entire?
INR 5 crores and above. INR 5 crores and above. CRILC data. It is data which is reported to RBI.
So it includes noncorporate also. Corporate is less than half of this. Corporate is less than half of the INR 7,000 crores.
So everything, INR 5 crores and above.
Sir, just on the NBFC sector, what would be your incremental disbursements during the quarter? And what would be your internal sector cap to NBFCs? Because even for the banking sector as a whole, proportion of NBFCs to total is around 7% now. So is it in line with your internal sector cap? Or has it already been...
Very much. Very much. It is in line and all industry exposures now we have linked it to our CET 1? CET 1. Tier 1. So any industry, our exposures will not exceed our Tier 1.
Okay. And what would be the incremental disbursements?
That is what we will show. This is -- the next slide, I think.
During the quarter?
NBFC.
No, this is the slide.
This is the slide. I think quarterly growth is not there, but during the year, the growth is about INR 77,000 crores? How much is that?
That's right, yes.
Industry exposure is slightly more. So quarterly also we will give you. But we have bucketed NBFCs into 4 categories. One is government-owned. Second is banks and institutions owned. Third is large corporate houses.
Page 27.
So PFC, REC, IRFC, this is all government-owned. PNB Housing Finance, Can Fin Homes, PNB, all -- this is...
So if you see the last block, NBFC growth is 71 -- INR 70,599 crores and this is how it is broken up. 72% is from NBFC backed by government, 37% is the large private sector NBFCs. By that, we mean all the good quality ones like HDFC, Bajaj and all that. And in fact, there is a degrowth in the more riskier ones. I think this gives a very ample clarity on how we have dealt with that portfolio.
And what would be your view now on portfolio buyouts given that [ pools ] are also being downgraded?
NIM [Foreign Language] portfolio, downgrades [Foreign Language]. There's not -- it has no relationship with that. And the way it works is that there is a pricing of the portfolio based on the risk profile of the portfolio. And out of which something that's shared on the commission business for collecting those. So the NIM, we don't calculate NIM on the portfolio.
But would you continue to buyout portfolios from NBFC?
Like NBFC is a very big chunk. So if the question is will you buy the portfolio, we will buy the portfolio. Has there been any dilution in the due diligence when you buy the portfolio? There was no dilution in due diligence and there will not be a due diligence dilution. So if the quality of portfolio matches the standards which bank has set, so there's no decision that we will not buy the portfolio.
No, so most of the portfolio pools that have been recently downgraded, they continue to do very well. So there has been no issue about their performance, but they're still being downgraded. In view of these downgrades...
Not the portfolio. Portfolio has not been downgraded. The originator's rating has been downgraded, so there's a difference. So that's what I'm saying, that if there is a portfolio, which meets the bank's due diligence standards, so there is no bar on buying the portfolio, but definitely we have to take into account that because bank is dependent for collection on the originator, are there any issues or safeguards need to be taken, then we will take.
And sir, what would be your non-fund exposure to the aviation sector? Is that a risk [ appetite or it's... ]
[Foreign Language] Aviation sector [Foreign Language] 7 basis point.
Right. There is no non-fund issue there at all, right? Ok, sir.
Just 2 questions. One, you have got contribution to the employees, which is very high this quarter. What is a sustainable run rate and what is your outlook on the margins?
On the?
Net interest margins?
Net interest margin, we have reached for the quarter at 3.02%. And hopefully, Prashant, we should target 3.25% or?
3.25% minimum.
3.25% we will target.
And sir, on the employee costs, what kind of wage hike you had factored in while providing ...
10%.
10%. And the employee cost quarterly run rate sustainable one because this quarter has seen...
It depends on 2 things. One is, of course, last year, in 3 quarters, we provided INR 2,700 crores for the gratuity. So from last quarter onwards, that cost is not there. And rest depends upon the movement of the bond yields also, actuarian valuation and for wages addition and this thing, there are some numbers here.
So basically, we have -- if you see this particular year, it's additional almost INR 6,000 crores, which we have provided for the employees and INR 3,800 crores was on account our provision for the pension and INR 2,100 crores for the gratuity. Now this year, there is no need for any gratuity. So this is a gain for us, INR 2,100 crores. And similarly, this INR 3,800 crores what we have provided for the full year, we need to provide only INR 1,900 crores this year. So there would be a gain of almost say INR 4,500 crores. So it will come down.
Got it. And one final question sir. In terms of third-party distribution, especially in the general insurance, what kind of penetration you were seeing for SBI General while dispersing the auto loans?
Dinesh?
When it comes to general insurance, penetration level through the banking channel is, actually as of now, it is only 40% through the banker channel. And there is a huge scope for improving this penetration level. But apart from that, [ their ] other channels are equally vibrant, which is agency channel. They're doing very good.
So just to understand it better. Out of the total general insurance what you are underwriting, 40% is banker and it's primarily SBI. So turning the tables around sir, for SBI auto loans itself, what kind of penetration you use for SBI General?
So that[Technical Difficulty]
[Technical Difficulty]for funding any credit growth which is higher than what we have -- just we have projected. So up to 12% credit growth, we can easily fund from the accruals which will come in this year. So there's no need for raising the capital, but if there is a requirement and there is an opportune time and you give us a good value, only then we will do it, otherwise, no way. If you don't give me a value of INR 400 per share, I'm not going to do it. So that is what. Second is -- second was?
Deposits.
Deposit growth, maybe. Some banks, they're paying, so they can pay, they can afford to pay. I can't afford to pay that kind of rate. But our growth in deposits, even if lower, is good enough to fund the advances. Because there's a base difference. If we would deposit, on INR 28 lakh crores, they grow at 7% net advances, so we can fund the growth. And CD ratio of the bank is 70%. Right? So our target is 75%. I don't have to worry till I start crossing 75% for this thing. So our entire focus and strategy on the liabilities side is focus on the CASA, current account and current account more than savings account. That is where the resources will come. And the third question about the account, I didn't create it. What we have to realize is that there are assets in that company and there are liabilities. But the situation in my assessment is much, much better than the other NBFC group which went down. And there is as on date, no immediate threat to any default, but even if such an eventuality arises, we have sufficient cushion to bear any such shock.
Kunal over here from Edelweiss. Two questions. Firstly, as you mentioned in terms of the focus on savings, but again we have linked it to the external benchmark rates and post that we have seen that RBI has highlighted that it's not the right time. So now how we are approaching it? Maybe, would we continue to link it to the benchmark rates? Or maybe since the other guys have not reacted to it and RBI has also said that there is no need, so we're looking at a change in that approach?
So we have taken the decision, and it was that because there was always an issue around the transmission. And always SBI has maintained that transmission cannot happen only on one side. We cannot expect transmission to happen only on the asset side. It has to[Technical Difficulty]We will watch the situation that how does it impact flow of funds into our savings accounts. And we can always moderate the spread that is when -- within the banks, like ALCO, whenever we meet, we review. And that spread is not sacrosanct that we can't increase or decrease, but it will continue to be linked to Repo rate for the time being, till such time any other guidelines or benchmark is decided by Reserve Bank of India. And effective transmission, I think this was the only way from 1st May, our rate of interest on the cash credit and overdraft, which is almost a INR 5 lakh crore portfolio, it has been reduced from 8.50 to 8.25. So there cannot be a better transmission than this. And MCLR, of course, we have reduced by 10 basis points since the last rate announcement was made, 5 basis points, we have made it effective from today itself and 5 was done previous month. And for the time being, we will continue with this approach, but if it requires any change as a result of RBI coming out with some guidelines, then we will follow those guidelines.
Okay. And secondly, in terms of write-offs, so write-offs have been quite high this particular year, almost INR 59,000-odd crores. So out of the maybe the starting pool of GNPLs, which were like INR 2,23,000 crores, how much would have been the write-off from that pool and how much would be from the corporate? And any of the NCLT accounts wherein we would have completely written off given that it's 100% provided?
Anshula?
See, out of the total write-off, the corporate write-off would be about -- bulk of it would be corporate write-off, about INR 45,000 crores of the transfer to OCA done through the whole year. And most of the write-off that we do, it is not for accounts which become NPA this year, you don't write off. It is for accounts, which get fully provided or largely provided, then you start thinking of transferring them off your balance sheet. So these are not recent slippages. The other thing is in NCLT also, we would have some accounts, which are partially written off [ early ] . [ Hardly ] -- there would be some accounts, yes, [ Shetty -- where is Shetty ] ? Yes, [ Shetty ] , you can say, in OCA also, we would have NCLT filed accounts, quite a large number. Because we have an OCA of about INR 100,000 plus crores, which is with my Stressed Assets Resolution Group and many of them are now under NCLT.
Okay. So any number in terms of NCLT accounts, which would have been written off particularly from list 1 and 2?
Basically, this is not written off. I think this is a technical transfer to the advances under collection.
See, if you see in the whole of last year, 12 months, the total cash recovery for the bank has been INR 38,000 crores. Out of that, INR 8,300 crores has come in OCA loan. INR 8,300 crores. So there is no difference. [ Even if ] today, if we have provided 100% for Essar Steel, technically you can put everything in OCA, remove it from the balance sheet. There is no difference, it's not as if we're not going to continue [ following up ] for Essar Steel.
Yes, just -- so just wanted to check, so the written off account, maybe the higher write offs which were there in this particular quarter, it was not related to few of the NCLT accounts, which were 100% provided. Just wanted to cross check that.
Not yet. But the thing is, as your provision cover keeps going up and up and up, it gives you more flexibility to remove it from your balance sheet on both sides. That's all.
Rishabh from [ quant Money Managers. ] I just had 2 questions. One is, what is your total exposure to the Reliance ADA Group and your outlook on the same? And the other one is that, we have a considerable advantage on cost of funds. So what is the outlook on growth moving to maybe where other private banks are, like 20%. So these 2 questions.
[indiscernible] very well within the manageable risk tolerance limit. And about, yes, cost of deposit is low for the bank. So on the lending side also, this will enable us to select credit, of course, selectively, but we are better placed to grow our loan book, both on the retail and corporate side because NBFCs, their growth rate has slowed down and corporate, many private sector banks and other banks, they have gone into shell, but we have not. So we will take advantage of the situation.
May I just add one point to that. See, today our PCR on corporate NPA without OCA is above 70%. So whatever our exposure, small, medium, it is now very well covered to the extent that we believe it will enable us to resolve and write back also.
This is Abhishek Jain from BP Equities. What will be the impact of cyclone Fani? And what is our exposure to the Orissa right now? So do you see any impact on your asset qualities going forward?
Parveen?
I don't really think that directly, we'll be impacted. See what has happened is that right now, for us the challenge is to restore the banking services there to make all the branches, ATMs operational. I think what I'll tell you is that most of the branches are already operational. ATMs, there are slightly bigger challenges because of the resets and all those, connectivity has still to be restored. So directly, the impact would be on -- onetime and we had suffered our branches, our ATMs, that will be reasonable. Most of the other customers, so they would be normally covered by the insurance. So I don't really think that the direct impact of that will come. And moreover, this is not something that has happened first time. These cyclones do happen. I don't think in any case, as a bank, we have taken hits on account of these cyclones, which would be substantial. There will be very minor expenses as a bank we will have to incur.
This is Sachin Shah from Emkay Investment Managers. You did mention that on the corporate lending side, the competition is kind of withdrawing or is less. So do we see that the overall growth on the corporate lending will be much higher than the overall bank lending book growth? That's one. And second, do we see this growth coming from largely from the project finance or on the working capital side? I mean where the higher growth is -- where do you see that coming from?
There will be any substantial change in the portfolio mix of the bank? Currently, we're 58% retail, 42% corporate. That mix, we're not going to disturb. There may be some variation that 58% becomes 57% or it becomes 59%. And as far as the growth is concerned, so mostly even last year, it came from highly rated corporates. If you look at bank's credit risk-weighted assets, they have reduced. So there isn't growth in credit, but the CRWA has gone down. And the overall strategy of the bank is focus on the high-quality corporates. Project finance, again, where the projects are being put out by good sponsors. Say for example, HPCL Rajasthan Refinery, we have taken or underwritten an exposure of INR 15,000 crores, so maybe that disbursement will start, Mumbai-Nagpur Express, which is largely guaranteed by Maharashtra government. We have taken an exposure of INR 8,000 crores out of INR 28,000 crores. So unless the corporate or the sponsor is very strong, then we're not going to take any large exposures in the project finance or wherever. And all the internal [ prudential ] exposure limits, they have now been linked to the quality of the credit. So earlier we used to say that above INR 2,000 crores, we will do consortium [ or this thing, ] our share will not exceed, but that INR 2,000 crores could be BBB and that INR 2,000 crores could be AAA. So that distinction now we're doing on the business of the risk-weighted asset. Same for industry exposure limits, same for group approach. So a lot of changes have been made. And that is where bank will continue to be selective. And even if we are selective, there are ample opportunities to grow.
Yes. Also, the question was also to understand little bit from the economic perspective that where is the demand all coming from? Are we seeing large demand coming from the project finance side?
Project pipeline is much, much better than what used to be. Parikh is there. What is your project pipeline, if you can state?
Sir, right now, it is INR 25,000 crores. And last year, we did almost INR 52,000 crores.
INR 52,000 crores. But the project size, other than what I have mentioned, mostly it is much smaller in terms of ticket size.
This side, yes, sir. Just wanted to understand, sir, our agri loan growth, sir. Our agri loan growth has been slower than our balance sheet loan growth overall for the last 2, 3 years. So if you can give some color on the PSL side how much shortfall do you have, how much RIDF investment we have on the balance sheet?
130.
See, actually on the agri growth, if you see this year, it's slightly better than the last year. In fact, we are doing much, much better again on the portfolio, but this is on the agri side, is something which we were not doing in the past, we have started doing it, so that has also led to some of the growth in the agri segment. On the overall PSL, again we have been investing some money in the PSLC certificates we have buying and some RIDF investment that has happened. So with that, right now we're at 39.56%. So we're basically meeting the PSL requirement of 40% as of now actually.
And sir, what's the outstanding investment in RIDF we have?
RIDF, we don't have the exact number.
We don't have the figure.
INR 1 lakh crore. We can give you separately.
And sir, on the margin side, sir, you guided for 3.25% NIM. Given that our CD ratio is likely to improve, the environment is such that where we have the pricing power and in the press meet, you also indicated that cost of funds will come down further. So in that event, do you think 3.25% should be sufficient or it can improve further from that level?
No. I think for the estimate purposes or feasibility to achieve it, 3.25% is a good estimate. Things can always be better. So whenever we give or speak of any numbers, we keep cushion so that when next quarter I meet you, then you can say, you said 3.25%, but you have not achieved it.
And sir lastly, on the gross NPL, if you can just disclose what's the nonfund-based exposure we have on the gross NPL?
That number you can tell, but not much.
It is INR 8,700 crores, the nonfund-based. And somebody had asked the written-off portion in the NCLT list 1 and 2, if you want, I can share that with you now.
Yes, but [Foreign Language] number [Foreign Language] Aggregate.
Number [Foreign Language]. Sir, [Foreign Language] list 1 [Foreign Language] in NPA balance sheet is INR 24,000 plus crores written, in OCA it is INR 8,800 crores. So total of actually INR 33,000 crores in list 1 is still remaining. And in list 2 INR 14,000-plus crores is in the balance sheet and in OCA, it is INR 11,000 crores, so total of INR 25,000 crores remaining in list 2.
Sir on the power sector, if you can give some color like in the next 1 or 2 quarter power sector, what sort of resolution we're expecting.
Not many because most of the cases are now in NCLT. And one asset we resolved last quarter, where we have got the money and it is like INR 4,500 crores resolved, 2 more, Shivan?
[indiscernible]
Two more maybe within this week or within this month. So...
Two more by the end of this month.
Two more by the end of this month. And 1 or 2, where SBI is not the lead, but there is a possibility that there can be some sort of a resolution or onetime settlement.
OTS...
OTS is what is also [ in ] again advanced stage of negotiation. But our NPA in power sector is now INR 25,000 crores, and 50% we have provided or 45%. So...
Sir, you just mentioned 2 accounts, what could be the quantum, sir?
Quantum will be, this is about Jaypee NPAs are how much?
[indiscernible]
Quantum amount...
Shivan?
On 2 accounts, which...
[indiscernible]
No, your...
[Foreign Language] Ours would be about...
INR 1,800 crores.
INR 1,800 crores. That's all. Yes.
And in 3 cases, actively OTS is being considered.
Considered, but we are not the lead bank in those cases.
And in fact, sir 1 account, we have actually resolution has happened, it'll get upgraded after 1 year.
Yes.
Sir, this is Saurabh from Trivantage Capital. On Slide #18 where you talk about the fee income breakup.
About the?
On Slide #18, where you talk about the fee income breakup.
Right. Right.
Slightly sharp rise in the LCBG commissions. What is driving this?
That was one like last time because amortization rule came in, so there was a mistake. Earlier, we were putting everything upfront, then it came during the currency of that exposure. So that was amortized. So there was an impact there, but now that impact is gone and apart from that, the higher volumes and the third thing is that in terms of pricing also, we are now pushing for a higher pricing and it's a combination.
Is there a sectoral difference between how you price the facility?
Sectoral difference means NFB you're talking about?
Yes.
NFV depending upon the credit risk.
Okay. There's no sectoral breakup?
Sector, then it will be agnostic to FB and NFB. In certain cases now, like we have again modified our policy and we have now introduced the concept of industry risk premium. So if we charge industry risk premium on any sector or any account, it will cover both fund-based and nonfund-based.
Basically on the quality of the credit.
No, so he is also talking about industry risk premium...
Yes, industry risk premium.
So there are basically 2 layers here. One is the credit risk and the other is the industry risk?
Industry risk premium, yes.
And secondly, same slide, you also talk about the account maintenance charges, which have sharply fallen.
Which one?
Same slide, Slide #18
Account maintenance charges, media, you raised lot of [ hue ] and cry [ so we said that we've slashed. ]
Sir?
That RIDF outstanding is INR [ 1,30,000 ] crores.
My question was with regards to our retail book. So a couple of things. Firstly, with regards to our YONO app and the way we've actually grown our book over the last 3 quarters, some of the other private sector banks are actually a little cautious when it comes to -- coming to the personal loan piece. So is there anything that you all are worried about with the pace of growth that's happening in personal loans? And the other thing was with regards to your other retail books, I mean I'm strategizing in terms of what you all want to grow faster, what you'll want to grow slower, where you all aren't very comfortable in that sense?
I think if you look at our entire personal loan piece, actually, so there are 3, 4 components. One is the housing loan component that is fully well secured and we very strictly follow the EMI/NMI ratio, loan to value. All of this are very carefully followed and the stress level in that portfolio continues to be very low. The second part is the auto loan. That is 1 segment, which has actually seen a little bit of a slowdown. That is something, which, as a bank, we are also not pushing very aggressively. So I think whatever normal growth happens in this particular segment that I think is something we can live with and we have very strict standards also. The Xpress credit is the one, which has been growing very fast. We have seen 40% growth year-on-year, but if you look at the NPA levels, they are only less than 0.5%. Now most of this is [ due ] to the salary package accounts to our customers. So all of them have salary accounts with us. So that is where we do a lot of analytics, that is what we have started also. Look at the CIBIL score, look at whether the salary is coming regularly. So this we believe is a very safe segment. So why we have seen this much growth is that we have been able to now deliver this product digitally. Earlier somebody wanted this loan, he had to come to a bank branch and apply for it. Now through the YONO app, we are able to send a message to the customer saying that this is available; if you want, you can actually take it on the click of a button. So that is what has driven it. So we are, at this point of time, quite confident that we will not have any stress coming out of this portfolio because a lot of analysis has gone into this product before the product itself is made available. The salary package accounts that we have, we have more than 1.4 crore accounts. And we believe that there is still a large segment of customers to whom this facility can be made available and this segment we think can continue to grow. The other retail segment, which includes bit of [ gold ] loans plus education loans, education loan is something, which we're going a little bit slow, but there within that segment, the segment which we are growing is the large value loans where people are going into the higher end institutions. So there, again, our recovery rates have been very good. For some overseas studies loan also we have seen some growth, but that is again all fully collateralized loans. So the retail segment on this particular area is growing quite well, but we're quite confident that we'll be able to manage the risk in this.
My question is with regards to auto loans. Sir, you spoke that auto loans have come down. So other banks have told that according to them, they have slowed, but they're expecting more -- slowness to continue till December. And after December, they're expecting new impact with regard to BS VI norms. So what is your opinion? You expect loans to continue subdued or your -- it is after December, any idea, sir?
What I said, as of now, you've seen all the data, the sales itself have declined, okay? So that is having some impact on the growth also. But at the same time, the question is from the bank side, are we aggressing -- pursuing it very aggressively? I don't think we are very aggressive in pursuing auto loans at this point of time. So whatever as a normal course, we will get. A lot of our customers itself who have salary accounts, they want to buy auto loan, so that is what we will continue to offer. So the customers who come in. So we're not going to go out aggressively offering huge kind of dealer commissions or insurance paybacks and things like that. That is something which we are not doing.
We have to be responsible towards the environment also.
Sir, question will be on your housing home loan market, INR 4 lakh crore portfolio, is the average LTV and ticket size both grown year-on-year or it's a normal growth, which you see?
LTVs average around 60%.
50% something.
So there would not be much change in that LTV ratio. And what was the ticket size, I think it is now INR 28 lakh or INR 27 lakhs, in that range, so that has gone up, ticket size.
So you moved into a larger ticket that's what it seems.
We do everything. We do small, big, very big. So SBI can't avoid. So we do small loans, medium size, large loans.
Sir, your view on this currency swaps, [which RBIs ] and being the largest treasury in India, how do you see -- position yourself on that?
[ Genav ] [Foreign Language] he's our expert.
At the first instance, I think market anticipated that there would be a fall since RBI is going to receive the premium. But subsequent swap, we have seen that the market has widened quite a bit. So there is volatility, but all these trading positions are getting transferred. The balance sheet transfers have not taken place until unless that comes to a level which is at least compatible with the domestic interest rates. That part has not come in. And so for the liquidity part is concerned, this is a semi-durable liquidity, which is being provided to the system. Durable liquidity, of course, will come through the OMOs.
But I think it's a question of your need for Rupee funds. If you need Rupee funds, that is one way of doing things. I don't think that [ from ] the [ bank's ] point of view, we have enough liquidity, we don't really need these funds. But to answer your other question, our average ticket size is INR 28.89 lakhs, which has improved from INR 25.66 lakhs last year. And our average LTV is INR 53.74 lakhs, which is almost the same as last year.
Thank you for the data. And on the currency swap, I was asking more from a point of view of our offshore balance sheet and domestic balance sheet if you're managing the liquidity both ways?
We can do it if we need funds in the rupee. See ultimately, you're swapping dollar funds into rupee funds, okay? So the question is if my cost of funds is 5.1%, do I need to raise funds, that's 7.5% actually.
Sir, this side. Sir, it'll be very helpful if we can get a breakup of BB and below book on the corporate side?
BB and to?
Proportion of BB and below book?
Yes. So our BB and below, so unrated, that is basically the new projects, which are coming up, is about 9% and BB and below is about 18%.
Of the total corporate book?
Of the total corporate book. That's right. Rest is all -- in fact, of the total corporate book, this will be even lower. This is, I'm saying leaving out the AAA and the AA of the best rated groups. So this is, we have divided into CCG, the CCG figure is 18%. For the bank, we'll give you the exact figure. My sense is it should be less than 15%, 10% to 12%. That's all.
So second question on the overall power book. We've seen if we compare it with the last quarter, the BB+ and below book has grown very sharply, almost doubled in absolute terms. Any major downgrades there? Because if I compare the presentation of the overall power book, BB+ and below has increased from 10% to 17% on an expanded base. That's almost...
No, I think the reason is also because it is about the private standard book. So this is 17.4% of INR 68,644 crores. So if that amount has shrunk and more NPAs have come, that's why the numbers haven't gone up absolute.
But the private proportion has also actually gone up from INR 59,000 crores to INR 68,000 crores.
Like there's no issue around that in terms of amount or anything?
No, I'm just asking if there's been a major downgrade on the private power side, which is already not an NPA.
This is not the downgrade. Sometimes what happens that if a loan gets disbursed in, say, project finance, so project finance would largely be unrated or it will not be very highly rated when the project is being executed. Or if you give a loan to the discom, the discom, the rating will not be good, but because they're all state-owned, so bank takes a call on those discoms. So it is not that something has slipped from A to BB+ or this thing. It is not slippage. It is just that in March, we might have disbursed certain loans to either projects under implementation or to the state distribution companies. Generation -- as far as generation is concerned, so there are not many projects, not many other than renewable, there are no projects. There is no thermal power project. So that's why this will all be relating to the state discoms or state-owned generation companies, where the rating would not be very high.
Sir, just on RWA, in your presentation also, there was RWA to advance/decline and also, the NBFCs based on the rating, your capital consumption would be get lessened as per the RBI circular. So going forward, your focus is more, as you told, would be towards the better rated corporates and also not to raise the capital. So how much capital consumption or capital saving in terms -- sorry, capital saving you can make in terms of RWA based on better credit rating profile? First question is this. And second, international overseas loans, which is 13%. How can going forward [ or ] in FY '20-'21, it can match to some of the benchmarks because on an operating metrics basis, the profitability is not as compared to the domestic? So what are the improvements or strategy to improve so that it can [ equal to ] the overall bank's level?
Dinesh?
Yes. When it comes to the international book, particularly on the credit side, we have really planned out in terms of how do we have to go about. And also, in terms of improving the NIM, in particular, we are trying to improve our cost of resources there in the overseas market. More so through various options like banker acceptances, et cetera. And we're also planning out in terms of different geographies where there is a possibility of improvement in the yields, there we're trying to have the credit enhancement through various international multilateral agencies, which will improve our EAD also, so that is something which we're working out. And -- but in any case, there is a rigidity because in the international market, you can probably not have the NIM as comparable to the domestic markets.
But any guidance in terms of profitability?
Well, of course...
This time, the profit was 500 million.
Yes, 500 million.
On the book of about 45 billion.
About 45 billion.
In terms of the -- if you look at the margin or the ratio, I don't think there's going to be any major change because you just divide 500 million by 45 billion, so 2.1...
Yes. We will have some basis point improvement, but not very significant improvement.
But this is giving almost 1%.
Yes, almost 1%.
So 1% ROA in IBG or international book, where the market is so competitive and the net interest margin is not as high. So I think if IBG or international operations continues to give us a 1% ROA, we are fine with that. And the same thing I need to do on the domestic front.
And sir, on RWA, can you say how much was...
RWA, like, the overall strategy of the bank, if you look at it, the focus is on, say, home loans. Home loans don't consume capital. Up to INR 75 lakh of home loans, it is very capital efficient. Same thing in the corporate, accounts grow where their mandate is that they take only AAA, AA, right? So that way, the strategy of the bank has shifted towards the risk-weighted assets when we pick up the credit. And that is what we're seeing.
Any targets sir?
No particular target. But the RWA, the reduction, which has taken place, now going further, it cannot come down very significantly. So this will remain as it is like if it is now 56.6%, credit risk-weighted, so this 56.6% cannot become 50%, right? Because 56.6% has come where in the last 1 year, we have been consciously picking up only the highly rated assets. So it will be somewhere near here.
Sir, Jai Mundhra from B&K Securities. Sir, we have given detailed breakup on the NBFC exposure. And last week, our Chief Economic Adviser, country's economic adviser, he has given a statement that this NBFC crisis has sort of moved from liquidity crisis to a solvency crisis. So I would just want to get your opinion how do you see this only as sort of liquidity thing or do you see this moving towards some solvency issues as well?
SBI's views has always been in this matter that it is the solvency issue and not as much the liquidity issue. Because even if funds are available today or the liquidity is available, the question is [ to ] what type of NBFC would you like to do? And NBFC also when we talk about the solvency, that is very clear in our sectoral exposure. That is a large universe of NBFCs, which are able to get the money. And wherever there is a little bit of doubt about any NBFC, so obviously, they are not able to raise them. And the problem is coming because the NBFCs were relying a lot on the mutual funds. So that cycle, there is a little bit of a jam. So that cycle needs to be broken and it's not going to happen very soon. That's where this issue about the solvency, it becomes more relevant than the liquidity. This is our assessment or SBI's assessment of the situation.
Sure, sir. And the last question is, sir, on commercial real estate, a couple of banks have highlighted rising stress there. What is our exposure and if you can provide some more color as to what is the rating wise, or any other kind of [ dissection ] that you can provide?
So one is that State Bank of India traditionally and historically has never been in the commercial real estate finance. If we have any exposures, they all are rent securitization. There are no large or any commercial projects which bank has funded. If at all we fund the real estate project, these are the residential projects, where bank would typically on the high-quality builders will take typically INR 200 crore, INR 300 crore exposure and then which is supported by the home loans from the bank. So that is something which is of least worry as far as State Bank of India is concerned.
This is Nitin Aggarwal from Motilal Oswal. Sir, you guided for an ROA of 75 basis points to 1% over FY '20. But does this includes like INR 16,000 crores of recoveries...
This includes?
INR 16,000 crores of recoveries that you're expecting from NCLT.
Yes, yes.
So what sort of operational ROA are you looking at for FY '20 and FY '21? Because this INR 16,000 crores will like post tax...
It will not be available. No. I agree. But that INR 70,000 crores then at least can become INR 80,000 crores in FY '21.
So right to say that operational ROA can be around 60, 70 basis points on a best-case basis even in FY '21?
So like if it is say for this year INR 70,000 crores and it becomes -- even if you take a growth of 10%, it becomes INR 77,000 crores, in FY '21. And suppose, this exceptional item, which is INR 16,000 crores will not be available in that year FY '21 unless our judicial process is such that it takes to that year. And so INR 75,000 crores and then depending upon what is your credit cost because if your credit cost -- legacy cost will be gone. We have just INR 17,000 crores, INR 20,000 crores of legacy cost, which we will take care of this year. So what will remain is that if bank's attempt is that our fresh slippages will not go beyond 1.4%, 1.5% and the credit cost will be around, say, 70 basis point or so on a portfolio of if we're talking about financial year '21, we're talking about a loan portfolio of INR 28 lakh crores. So INR 28 lakh crores and [ include x ] 70 basis points. How much basis points is there?
Overall balance sheet size...
[Foreign Language] we're talking about the loan book. So the 78 means INR 22,000 crores, INR 25,000 crores of provision and 75 minus 20, 50 and 50 and you take out the tax. So we're still looking at a profit of about INR 35,000 crores on a balance sheet size of INR 42 lakh crores. So that is how the maths works out. I think we are very close to what you're saying about 70 to 75 basis points. That is where -- our entire focus now is around improving the core reprovision operating profit. And that is where the strength of the bank is. And the balance sheet size of the bank is such that by -- do some portfolio modeling, both on the asset and liability side and keeping the costs, operational costs under control, which will happen. Because whatever digitization we have done, its impact on the cost is yet to come. So when that comes in, this normal 1% and 70% to 75% in a not-so-good scenario and above 1% in a good scenario, that seems to be a realistic assessment.
Sir, some color on these subsidiary companies, like especially when we were talking about mutual fund exposure now, so recently what's happening to the debt instruments of many of the mutual funds, they got into the problem. I have not studied the portfolio of SBI Mutual, but....
The person is sitting on your side.
Yes. I've seen. But is there any kind of such portfolio in our mutual fund?
Our mutual fund has taken full advantage of the situation. It is already #2. And Mr. Bhatia's eyes are set on becoming #1.
#1. Good. That's great. And in the percentage terms, the ROE in all the 4 subsidiary has gone down.
Gone down. But their business levels have gone up and like, say, for life insurance business.
Yes, in absolute terms, I mean the profit also has increased, but -- everywhere from 31.65% to 31%, 22% to 20%, 33% to 30%.
Right, right.
Part of it is also attributed to the fact that the ability of charging fee for the assets being managed that has come down from the levels...
SEBI [Foreign Language] mutual funds.
So regulated prescriptions have also played a role in that.
So now, I mean, this will be the numbers for future we can look at regarding?
Yes.
And madam, this advance under collection account, AUCA, last quarter, it was INR 1,31,000 crores. Isn't it? Now how much is it AUCA figure now and...
INR 1,37,000 crores.
INR 1,37,000 crores. So around 6% to 7% is the recovery?
Almost. Yes. Yes.
Average. So is it because of some particular account or this thing or we expect the same around 7% of the AUCA?
Across.
See, when you take the recovery, you should take it on the base of March '18 what we incrementally transfer to AUCA, so in that sense, it will be little higher because it will improve from the March around 9%, 10% here.
Yes. If period is taken like 3 months, 6 months, 9 months, then it may be 9%, 10%.
When we do AUCA recovery targets, what we take is the previous year's stock. So March '91 (sic) [ March '19 ], INR 1,37,000 crores.
Will become the base now.
So around INR 8,000 crores -- INR 8,800 crores.
It is still at INR 8,000 crores.
So next year it may be INR 12,000 crores or something.
[Foreign Language]
No. See, I read out the proportion of AUCA in NCLT list 1 and list 2.
Yes, that is INR 100,000 crores, you said.
It's a fairly large chunk. And like I said, as you keep providing more, it's only technical whether you keep it on balance sheet or keep it off. The recoveries will come either in AUCA or NPA, it's the same thing.
Sir, this is Anuurag from Ampersand, here, so on your right. Sir, I have 2 questions. Sir, what is the growth in Q4 in deposits? Deposit growth in Q4?
The deposit growth is between 7.5% to 8%.
In Q4 also?
Yes.
Okay. And another is...
Mostly in current account and savings.
Yes, CASA and everything. And another question is just about the liquidity situation. What is the liquidity situation in the bank and overall in the banking system, including NBFCs?
As of now, I don't see any problem as far as liquidity is concerned. What happens in April, the advances level goes down. And deposit does not go down as much. So for State Bank of India, [ Genav], I don't think we have any liquidity issue?
No, sir, not at all.
Not at all.
No liquidity issue.
No liquidity issue. [ In the system ] also I think liquidity is all right.
[ System, ] there is a challenge.
There is some challenge. [ Mike ] [Foreign Language]
[ System, ] there is a challenge.
The [ system ] liquidity is short, but it's not substantial. And the way the liquidity shortfall is computed by RBI, that is on the basis of the borrowing on the system. So sometimes that may not give the right picture, but otherwise, for the credit offtake, liquidity is adequate. And our liquidity position is very good.
Shall we close or...
Sir, we may take...
One last question.
So there are questions on webcast. So there are 2 questions, one is on the breakup of the slippage. So the breakup of slippage is that out of INR 7,505 crores during the current quarter, INR 2,284 crores is corporate slippage, INR 2,092 crores is the SME and INR 2,592 crores agri and only INR 537 crores from the personal loan side. And there's a question regarding the segmental growth in our advances. So corporate is 14.83%, retail is -- retail personal is 18.52%, SME is 6.93% and agriculture is 7.67%.
Any other questions? All right. Thank you very much. All the questions have been addressed. If we have no more questions, let me end the evening with thanking the Chairman and the top management team, the analysts, ladies and gentlemen. We hope all your queries have been addressed satisfactorily. To round off this evening, we request you to join for the high tea, which is arranged just outside the hall. Wish you all a very pleasant weekend. Thank you.