State Bank of India
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State Bank of India
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And good evening, ladies and gentlemen. My name is Sanjay Kapoor, and I'm the General Manager of Performance, Planning and Review Department of the Bank. On the occasion of the declaration of the FY '23 Results of the Bank, it gives me immense pleasure to welcome the analysts, investors and our colleagues for an in-person meeting. I also extend a warm welcome to the analysts, investors and colleagues who have joined this presentation to a live webcast.
We have with us on the stage our Chairman, Shri Dinesh Khara, at the center; our Managing Director, International Banking and Global Markets and Technology CST; our Managing Director of Corporate Banking and Subsidiaries, Shri Swaminathan J.; our Managing Director, Risk, Compliance and Ashwini Kumar Tewari; our Managing Director, Retail Business and Operations; Shri Alok Kumar Chadi [ph]; our Deputy Managing Director of Finance, Srimati Saloni Narayan; 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 CFO and Chief General Managers of different verticals and business groups. To carry forward the proceedings, I request the Chairman Sir to give a brief summary of the bank's FY '23 performance and the strategic initiatives undertaken. We shall thereafter straight we go to question-and-answer session.
However, before I hand over to the Chairman, sir, I would like to read out the Safe Harbor statement. Certain statements in these slides are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual outcomes 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. Chairman Sir, please.
Thank you. Thank you very much. Very good evening to all of you. Thank you very much for joining this analyst meet post the announcement of our financial year '23 annual results of the bank. As you are all aware that the global economy is passing through various uncertain times with the cumulative impact of adverse shocks of the past 3 years. most notably covered 19 pandemic geopolitical situations in Ukraine manifesting in unforeseen situations. Superb [ph] pent-up demand, lingering supply disruptions and commodity price spikes. Inflation reached multi-decade high last year in many economies, nudging central banks to tighten aggressively to bring it back towards their target and keep inflation expectation incurred. As a result of all this, the baseline forecast of the global growth is to fall from 3.4 to 2.8% and then rebound to 3% in 2024.
I -- in the backdrop of all this, India continues to remain resilient to various adverse external environment going to large domestic market. Despite all the headwinds, India's GDP in financial '23 is estimated to grow at 7%, driven by investment and private consumption. And going forward, the economic activity would be supported by improving rural demand and the government's thrust on infrastructure spending. We also expect the revival in the corporate investment, which will give us opportunities of the healthy bank credit and also will lead to moderating the commodity prices. Despite the increase in interest rate and is transmission, credit growth has continued to grow in double digit and has been broad-based across all the sectors in financial year '23.
During financial year '23, due commercial bank credit grew by almost 15% on a Y-o-Y basis as against 9.6% Y-o-Y in the financial year '22. Aggregate deposit of Commercial Bank grew at about 9.6% compared to the last year growth of 8.9% Y-o-Y. In the union budget for financial year '24, several steps have been announced to push up the capital investment in the country, which will actually boost the credit demand in the economy. And we expect the credit growth to continue in financial year '24 also, though with some moderation, which can perhaps happen. And the backdrop, let me now share with you the bank's numbers for financial '23 as well as for the quarter four of the financial year I'm happy to share with all of you that the bank has for the third quarter and running have posted the highest ever quarterly profit at INR16,695 crores.
And for the full year, our net profit has crossed the landmark number of INR50,000 crores, which is the highest ever by any bank in India. Net profit for financial '23 increased by 58.5% Y-o-Y. While operating profit at INR83,713 crore increased by 11.18% Y-o-Y. RBI Bank [ph] for the year improved by 29 basis points on a Y-o-Y basis to 0.96% and ROE improved by 551 basis points to 19.43%. Here, I would also like to mention that for 3 quarters in a row, our ROE has been more than 1%. For the quarter four of ’23 net profit stands at INR6,675 crore, which is higher by 17.2% sequentially and 83.18% on a Y-o-Y basis. Most other core profitability metrics have also improved over the previous year as well as sequentially.
Net interest income for the year has witnessed a growth of 19.99% on the back of improvement in yields and continued credit off-take. Domestic NIM also improved by 22 basis points on a Y-o-Y basis. Noninterest income declined marginally by 9.73% essentially attributed to the MTM loss of more than INR7,000 crores, which is suffered in the first quarter. Other than that, our core income streams fee-based incomes have remained intact and have improved by almost 6.4% Y-o-Y. Operating expenses increased by 13.68% Y-o-Y as we have started building provision for the wage reason, which has fallen due effective from November 22. There is some increase in the overhead expenses, which is essentially attributed to the higher tech-related expenses like expenses on IT, development, mobile banking, ATMs and also higher DICGC premium because of the growth in deposit, which we have witnessed in the last financial year.
On the business front, the credit growth has been robust across all the segments. Domestic advances grew by 15.38% headlined by retail personal advances, which grew by 17.6%, and corporate segment grew by almost 12.52% Y-o-Y. SME and agri segment advances also posted healthy double-digit growth at 17.59% and 13.31%, respectively. Domestic deposit grew by 8.50% Y-o-Y, driven by the growth in savings bank deposit and term deposits. Our foreign offices have continued to perform well with good growth in advances as well as in deposits. With regard to the asset quality, our gross NPA ratio has come down by 119 basis points and stands at 2.78%, which is its lowest level in more than 10 years. Our net NPA ratio has also declined by 35 basis points and stands at 0.67%.
Slippage ratio for the year stands at 0.5%. The consistently improving asset quality is also reflected in our credit cost, which stands at 32 basis points for the year and is down by 23 basis points on a Y-o-Y basis. We have a well-provided stress book with PCR showing improvement by 135 basis points at 76.39%. PCR, including OCA improved by 171 basis points Y-o-Y and stands at 91.91%. On the restructuring front, our total exposure under corporate resolution plan, 1 and 2 stands at INR24,302 crores as at the end of quarter four of financial year '23. The restructuring book has behaved well. And when we look at our SMA 1 and SMA 2 also in this category, the much within the range of about 11%.
As against this book, we have already provided 30%, as you are all aware, as compared to the 15% requirement of RBA. So we actually have insulated our book from any potential threat from the restructuring, which might happen, which have already been restructured book has already been taken care of by additional position, but the book is behaving much better than what we have seen in our SME book otherwise or in the stress book overall. The bank has remained very well capitalized, and we have sufficient headroom to take care of the normal business growth requirement. Our capital adequacy ratio has improved by 85 basis points Y-o-Y and stands at 14.8%. CET1 ratio has also improved by 33 basis points to be at 10.27%, and both the ratios are well above the regulatory requirements.
Digital continues to be an important customer acquisition engine for the bank across assets as well as liability products. During the year, we have sourced 64% of our savings with account and 35% of our retail asset accounts digitally through Euro. We have embarked upon a journey of creating a digital bank of choice within the bank when we have launched our EURO2.0. Our subsidiaries have also consistently performed well and continue to create significant value for all the stakeholders and most importantly, the customers of the bank. Most of our subsidiaries are leaders in their respective segments. We will continue to nurture these subsidiaries and see them creating value for their own shareholders as well as the shareholders of SBI.
Before I conclude, I thank you all for the continued support to the bank. We consider it as a privilege to be able to contribute towards the growth of our economy. We remain committed to rewarding your trust in us with superior sustainable returns over the long term. I wish everyone here the very best.
And now the floor is open to all of you for the questions.
Thank you, Chairman, for your opening remarks. [Operator Instructions] We now proceed with the question-and-answer session.
My question, I'm taking from your comment about the credit growth will continue with some moderation in FY '22. So for the bank, what is our expectation of great growth for the bank for the FY '24? And secondly, in terms of the positive growth and the pricing of deposits for the year, do you see a material increase or risk to our margin, domestic margin?
The first one; as far as the credit growth is concerned, we expect that we'll have an opportunity of growing at -- as far as the loan book is concerned, we should be growing somewhere in the range of between 12% to 14% overall. As far as the deposit is concerned, in the current financial year, we have seen an increase in our deposit cost to the extent of about 16 basis points 16 basis points. And much of it has come in the last quarter. We have seen from last quarter until now, it increased about 9 basis points. whether to support this kind of a credit growth, whether we will be required to go aggressive for the deposits, perhaps no. The reason why it is that we still have excess SLR to the extent of about $4 trillion. And we have increased our interest rate on the deposit essentially because we always perceive that deposit or a franchise and to the extent possible, we will take care of the interest of the depositors provided our overall cost of sources don't go up much. So we have some elbow which is always available. So we try to calibrate the deposit interest rate within that.
So you don't see any risk to the margin to us -- you don't see margin down [ph]?
In fact, we still have some kind of a cushion available for our MCLR to go up. and we have kept it essentially to really take care that our margin should not undergo much of a loss.
Second question on the -- can you bring your mic close to your...
Yes. Second question on the -- when you're talking about operating metrics for the year, a 96 basis point ROA and the 3.5 net interest margin domestic side, the only scope only metrics where we can see some improvement because other metrics are top notes and the best of -- in decades. So the cost-to-income ratio, operating efficiency basically…
Sorry, operating...
Operating efficiencies.
As far as operating efficiency is concerned, the important component is cost-to-income ratio. And cost-to-income ratio also essentially, we have seen what we have seen in this quarter some around 53% is our cost-to-income ratio, and this is essentially because we have already started providing for the major reason, which has followed due in the month of November. So INR500 crores is the allocation which you are doing every month, INR500 crores. So last 5 months, we have already provided for INR2,500 crores. But at the same time, if we ignore this particular increase and also whatever PLI, which you'll be paying now, because as for the arrangement for 10% increase in operating profit, we are required to pay 10% of the wages as a PLA and that is something which you'll be required to do, which will require some kind of person worth about INR600-odd crores. So we have already provided for all those things. So these are the expenses, which will take place in the next financial year.
What is -- we have got certain rigidities in our structure when it comes to costs. And part of the rigidity is coming from the fact that almost about 18%, 19% of our cost is on account to the retiral benefits. So that is something which is a function of what the -- how the interest rate moves, we have to make the actual provision, so that is something which happens. But other than that, our effort and endeavor is to improve our income. And with that in mind, what we have seen in the current financial year, if at all, we improve our income and also we keep the NPAs in check, quality of assets remain the best, then perhaps we're in a position to address these challenges. And of course, other income continues to be a major focus. We have already seen decent traction in the ForEx income in this year. And also, the cross-selling income has gone up by almost about 26%, 27%.
So I think going forward, these are the levers which we are working on, and it will certainly help us in improving our income at this stage when it is a normal year, perhaps even now also, if at all, we ignore the impact of the additional provisions that you have made, we would have been somewhere around 50% in our cost-to-income ratio. So I think as a strategy, we are very clear in our mind that the rigidities will have to live with, and we'll have to only think in terms of improving our income and cost, we are trying to contain and control with the help of our digital engine. This year, we have already underwritten more than 1 trillion worth of assets through the no -- so naturally, eventually, when this number goes up, this will also help us in reducing our overall cost. So I think we are on a very clearly stated trajectory in terms of how should we address this cost-to-income ratio, and that will be insured.
And the other very important lever for a bank like us when it comes to efficiency is what matters is the ROA and the ROE. ROA, we have been exceeding 1% for -- now for last 3 quarters on a sustainable basis. This quarter, I think we had an ROA of 1.27. 1.2, 1.3 billion -- so hopefully, with the kind of focus which we have brought in, I'm sure there will be a point of time when our cost to income will also come down. Apart from this, this year, we also had another event of MTM, which has about INR7,000-odd crores. When we look at the yield movement that is behind us. And even at the end of the financial year also, the impact of that remained. So that is also having an impact on the cost. So these are some of the factors which have an impact. So there are some factors which are one-off. Those one-offs will go away. So that will also have a bearing in terms of improving our cost to income ratio.
I appreciate the rightful answers and conciliation to the SBA team for the extraordinary performance and execution, all the best for the sustaining the metrics of FY '23.
Complements Sir, for the yet another good quarter and the whole year of the very good performance. you exceeded in most of the numbers, the net profit going beyond INR50,000 crores, the operating profit of more than INR83,000 crores. And the bank is cushioned very much for any future eventuality in case anything slow down or something is there. Sir, I've got some numbers which I would like to just like we have the non-NPA provision of almost about INR35,000 crores means our total provision held in the books, including everything, is INR24,000 crores. And if you include this INR35,000 crore and INR27 INR9,000 crores is the provisioning in the entire book, if you take 100% of the ACA provided for.
Now going forward, sir, 2 things are there. One is that there was some odd amount of some 2,500 something of extra provision for some other corporate-related accounts, corporate accounts or something. So is there any specific account in mind for that? Or it was -- so this is just one. Secondly, with the ECL now going to come. I mean, the guidelines are getting finalized, and everybody knows that it is going to come. How much have we prepared ourselves for that? And is there any specific provision already has been made in this year in this quarter for that? And what is your assessment on that on the ECL vis-à-vis the extra provisions which we are holding.
So well, of course, what you mentioned in terms of there is some number which is INR2,600-odd crores. I would like to elaborate upon the process which we follow. There are certain accounts, which may not really qualify to attract any provision. But in our own assessment, these are the accounts which can potentially be a threat going forward. As a matter of prudent practice with the bank, we have taken a call that we will ensure that our balance sheet stays protected and we start providing for them. And these provisions are done on a dog basis. And as and when there is an eventuality which materializes, then these poses are crystallized. The second question relating to ECL. Well, I think to my mind, until such time the RBA regulations are announced on the subject. It's more of affection. And to really address that friction, let me assure to this whole house that we are very well prepared. The number which you are seeing as our non-NPA provisions, we have done some back of the envelope calculation, which, of course, I cannot disclose until such time I go to my board. But my own assessment is that number is much below this number. And that it will be spread over 5 years.
So considering the fact that if at all, it has to be spread over 5 years, and that is a kind of a number. And in that context, I would also like to draw your attention to the fact that you would recall, last year, for family pension, we provided for more than INR7,500 crores in 1 quarter in single go [ph].
In 2010.
And even this year also INR7,000 crores.
Quarter one of this year, INR7,400 crores?
No, no, I think…
That was December 21.
Yes. Yes, in financial year 2022, you're right. That's why I not didn't touch.
So INR7,000 crores MTM also we absorbed in 1 quarter. So I only want to assure all of you that this is something which none of you should bother for and we have got the ability to take care of that and without any impact on the earnings of this bank. And let me tell you, I just want to assure all of you. You need not worry about that.
I've got some couple of just data point and just explanation on some P&L account, expenditure account income and expenditure account. The machines income in this quarter has gone up to INR4,187 crore as against INR114. The breakup of miscellaneous income has not been given. So what is this INR4,287 crore in this quarter comprises of...
Latest income would have one component...
Written off...
Recovery I think we'll get you the number.
No, no. No issues, Sir.
Secondly, sir, this employs...
Are good.
Employee cost is understood.
Just one second.
Can you -- I mean, can we get the breakup of that? How much is the recovery -- we'll give you the...
Second area, by the way, Bara auditors to sorry. just for our information, I would say a consolidated auditor. Yes, this is a very unique example in the banking system, one bank has been audited by more than 12 auditors.
There is nothing to be that -- so I think as far...
You should not have any doubt on the number...
Is not there at all. There's no question of any doubt. Sir, secondly, the employee cost is understood. It's increased from INR14,700 crores to INR17,000 crores in this quarter. But even the overall operating expenses have also gone up by almost about INR2,500 crores to INR3,000 crores in this quarter. So that is also -- if there is any one-off thing in that or it is going to be a trend in the subsequent quarters. This is -- this was my slide [ph].
Next slide, the call.
Yes. So if you see that…
Is the next...
I think I must have make.
Next led during the entire breakup of operating it.
These are the total expenses...
And third, sir, on the capital adequacy, okay, we are above the regulatory norms. But now when our deposit growth -- I mean, the credit growth is still we are targeting 14%, 15% or 14.5%, 15%. But the deposit is still, I think, 8% or so.
So deposit growth is about 9%.
8.5% [ph].
But I also mentioned that we have got excess SLR of 4 trillion -- excess as a lot of trillion [ph].
Money will be put out off…
Which we can always unwind and support the loan book growth.
Can you this next person...
Yes, sure.
So as far as the expense is concerned, to an expense also they were asking, sir. So under the overheads, the biggest contributors are tech expense, insurance expense and expense on GST. Sequentially, overheads have increased by 26.3%, which is the usual phenomenon in the last quarter because all the bills are paid or other accounted for. So these are the reasons.
Yes, please.
Rameshji from Matane [ph].
Sorry.
Ramesh Bhojwani from Mehta [ph]. Can you bring the mic closer to you?
Yes. First and foremost, not only for State Bank, this full year has been the best in the banking industry for all the banks. And it comes once in a decon or even once in 15 years. Going back 15 years, we saw the worst scenario where gross NPAs at 14.5% today, your gross NPLs are 2.7 -- so the cycle -- economic cycle has turned, and 2 thoughts come to my mind. As you also mentioned it in a subtle way that going forward, this trend, this tempo will continue, maybe at the same rate or a little lesser. That is number one. And the number two is, sir, 2 days back, wholesale price inflation came negative minus 0.92 basis points. And the CPI is below 4.9. I personally believe in June when RBI will come. I am seeing a cycle of rate reduction to start with 25 basis points, if not 50. And monsoon is expected to be 94% to 102%. So it's a reasonably average or a reasonably expected rainfall. So going forward, the rate cycle -- the rate down cycle will start, maybe 25 basis points this time and subsequently 50-50. So in such a scenario, how do you see the whole banking metrics and parameters playing out?
See, I would say that what you mentioned was something which I always had in mind. And that is one of the reasons when the rest of the market was only increasing the deposit interest rates -- we did not increase the interest rates. Excellent, isn't it? And then I knew that from this call to this poll, let there be aberrations let others face those abrasion. We are the largest bank, let us stay cool. We remain cool. So this is something which we were expecting to happen.
This is like a foresight which you are now seeing playing out.
So this is something which we were very mindful and we did not. You would have observed that we started increasing interest rates somewhere in November, December quarter because we were feeling that our depositors interest is getting compromised. Those have stayed with us all this while. We should take care of them. And that is why you would have observed that I also mentioned that we increased the deposit rate in some buckets so that we should take care of our depositors interest. But keeping in mind the overall cost of resources should not go up. So that is something that is what I also believe. So if at all, if that happens, what you are saying, what we believe will turn out to be correct. And when it comes to interest rates, even if it comes down, we have not increased our interest rate to the hilt already. We still have algorithm there [ph]. So will not be required to reduce our interest rate. So, the picture which you are seeing today will probably stay [ph].
Brilliant.
You have put it very beautifully. So that is what my sense was -- and secondly, you ought to mention in terms of what we saw 15 years back -- and it's a similar -- it's a once in 5 years kind of an event which happens when the banking sector does well. But yes, of course, banking sector banks and banking sector, there are the institutions; even if they face accidents, they internalize those learnings.
Yes. But great resilience is there in the banking sector in India, thanks to our RBI.
Thanks for the regulator, and thanks to the practices adopted and the risk management practices adopted by the banks.
We have SLR and CRR, which combined becomes 21% -- in a country like U.S., they are only 4% CRR. And what we are seeing today, we are not even seeing the tip of an iceberg or a beginning of a storm.
So I think on this particular account, whatever learnings which got incorporated, they have been very well practiced in the system. We have significantly strengthened our risk management practices over the years -- and we're in a patient to ensure that the underwriting should be of excellent quality, not only underwriting, even controlled follow-up should be of the highest order. And also, the ecosystem has also got developed over the period of time; today there is a situation where it is there. There is a situation when IBC is in place. So borrowers are also responsible. Banks have also strengthened their risk management practices. So overall, this is nothing but a reflection of an economy transition from developing to the developed state.
Thank you very much. All the best.
Next question? Excuse me.
So here at the last bench.
This is Vishal from UBS [ph]. So 2 questions from my end. One on Express Credit, which is now almost 9%, 10% of our loan book and actually has grown at a very express rate as well. So how do you derive comfort on this book? And also what would be the lead indicators before you start worrying about this book. Right now, the gross NPA is 0.6% only. But generally, how do you track that book...
I think I have said in the past analyst meets also, and I will again repeat the same thing. When it comes to our excess credit book, away give it only to our corporate package [ph] customers and also perhaps our experience is that it is -- thought is unsecured, but it is better than the secured book. And that is something which we have already demonstrated and the NPA ratios we have already seen 8 -- more than 83% of the customers are either employed in Armed Forces or government employees. And apart from that, more than 12% of the customers are employed in the reputed corporates with very low incidence of default. So this is the kind of a book which we have. 95% of the book, if at all, people are going to get their salaries will be a patient to recover the loans. I have not seen a single default from the defense forces in terms of payment of salary in my 38, 39 years of my service life. So I don't think it will ever happen in this country. So I think we do not very much about it.
Okay. And the other question which keeps -- I'm sure coming to you is capital -- so clearly, you have increased the cushion. Now what would trigger a capital raise from here?
See you have from UBS now?
Yes.
So I would like to ask you a question in an economy like ours. How many entities can raise INR40,000 crores worth of equity in a year?
I think we can answer that but SBI can raise?
No, no. You answered my question. How many entities have raised INR40,000 crores worth of equity in the last 5 years strength, SBI would have -- we have not raised. We have plowed back that profit, man. And this is something which I have been saying for last 6 months plus. We have created value for our existing shareholders diluting our return on equity. I think you people -- if at all, you are -- you have invested into State Bank of India stock, you should be rather happy -- and also when it comes to capital, unless rental, we set that capital right -- it is not really a number. You need to understand this. This 14.68% is something which is our capital adequacy ratio. And today, with 14.68% capital adequacy ratio, I can support the loan book growth to the extent of INR7.10 trillion without any impact. That 7.10%, if at all, I underwrite well. That will only give me an opportunity to probe. So I think this is a machinery which we should salute if at all, we only ensure that we underwrite properly, and there are no NPA provisions, there are no aging provisions. We do not look at market for raising further equity -- we should only generate profit and deploy it back [ph].
I think that would be great, sir. I think we've not seen that in the last 15, 20 years. This is for the first time we are seeing that the...
I think you have not seen it for -- maybe you might not have seen for the last 3 years, we are very clearly focused on this, that we will only plowback profit, and we will create value for our existing shareholders. Those who have stayed with us through the Tecon then. We will work for them, we will create value for them. And that is one of the reasons why today when we went to the board, we have declared a dividend to the extent of 1,113. 1,113%. Last year, we had declared a dividend of 77%. How many corporates are there in the country we have raised this kind of a dividend?
Thank you, sir.
I'll love it. This side gentleman, please. Yes.
Jay Mundra [ph] from ICICI Securities. A question on your fee income, sir. So maybe fourth quarter has a seasonality. So if I look at full year, our core fee ex treasury, it is around 60 to 70 basis points of the assets, right, which has been more or less stagnant. It is growing more or less in line with the loan growth, but it has been stagnant at that level, 60 to 70 basis points of the assets as compared to the, let's say, other peers, which are 1.5% to maybe 2% of assets, they clock that kind of a fee. We are very well placed on the OpEx to asset and of course, NII and credit cost. So I wanted to understand, sir, do we have any internal target or aspirations to raise fee-to-asset ratio [ph]?
See that context here to -- of course, it was a very conscious call, which we took in terms of waving off of a processing fee in the last quarter. So these are all -- these are the competition-related dynamics, which will always be at play. But yes, of course, for a bank like us with IDR 32 trillion worth of asset book. Loan processing will continue to be one of the major earning points when it comes to our fee income. Apart from that, the cross-selling is another area because we are leveraging our distribution channel, and we have seen a growth of about more than -- almost 27% in the cross-selling income. On this, we have got a very clear target in the medium term, we would like to make it a $1 billion plus. So today, we have reached about INR3,600-odd crores. We would like to see it -- this number is somewhere around INR7,000 core to INR8,000 crores. The other major area is going to be the ForEx income, which will -- which we have already seen a growth of almost about 25% to 26% in this year. So these are the major levers of growth in fee income, loan processing, cross-selling, ForEx. This will be the mainstay for our fee income going forward.
Right. And sir, a question on your deposit cost, right? So a, the deposit cost that we report in our presentation is, I believe, the cumulative number, right, which is, let's say, 1Q and then first half, then 9 months and then full year. So if possible, I want it.
Say deposit cost at a point of time.
Correct. So, I was looking at if you have the quarterly number because in a rising rate or so far.
Exports bank asset or deposit cost retaining up on [indiscernible]. I'm certain data, you have further us relaunch yet; the second is deposit costs?
Because you are giving of course.
We are giving they have orbital [ph] which on any?
Okay, sir. And just lastly, would it be safe to say that the card rates on deposit, right? If I look at SBI term deposit rates, they have not changed barring very few 5 basis points here and there since Feb, would it be safe to say that the card rates on TV have almost peaked...
I would only like to mention since you have come from the CSA, I should say that very clearly. Bulk deposit may have market [indiscernible] or actual deposit remits?
Can you move to the next year?
With the -- please go back.
Mangal from Motilal Oswal [ph]. Congratulations on a good year and reaching the milestone of INR50,000 crores profit this year. One question on wherein like it is contributing 64% of the savings bank account that you are opening. So how do you look at the cross-selling gas strategy for the accounts, the customers that you're gaining through this channel? And if you can also share some color on the value of the balances, like in terms of the customer behavior over the past couple of years, how are you seeing the progression in terms of the deposit balances in these accounts?
Well, as a strategy when it comes to -- I think for a bank like cost, we have to have -- we perceive as a distribution channel. So there are a set of customers who can perhaps be serviced only through this channel. And there are a set of customers who can be served through the physical channel only. So physical [ph] is a reality for us, and we will continue to work on this Well, when it comes to Juno, we have blended it with analytics also now. And by virtue of analytics, we're in a patient to have a much better assessment of our customer behavior, customer profiling. And that helps us in going for the targeted marketing also. The question which you have asked in terms of value and all that, I would not have it right now with me. Maybe I can share with you separately. But yes, of course, the intention is to -- we are targeting a specific customer segment with the help of -- and we are going ahead in terms of upgrading this essentially with that in mind because the kind of customer base, which has been targeted, they would like to experience frictionless banking, and that is something which we are offering through here.
Right. And sir, second question on the deposit rates. Apparently, it looks like that the overall rate environment has built out. RBI has taken a pause for now and inflation data points are coming quite benign. So by when we can expect the interest rates, the deposit rates to start to moderate, will you look from the RBI to change the stance and reverse the trajectory for -- to take that step or that can be pretty much in advance prior to RBI, like reducing the reports.
See, moderation in deposit will be a function beyond the report also. There are many banks in this country who are running into a credit deposit ratio or as a year 85%. And if at all, they have to remain relevant in the loan book side, then they'll have to continue to increase their deposit rates. So I think to my mind, report is just one indicator, which will be put to use to arrive at the deposit rate. But other than that, there would be -- so again, it would be a function of the market in terms of borrowing. But if at all, they are increasing their interest rates and our underwriting loans, then I'm sure they will very soon start providing for it also. So it's a very fine balance, which you have to keep in mind while doing the real-life bases in the banking sector.
Sure.
We take one last question from gentlemen, yes.
Can you bring the mic here?
You have a lot of questions received to online webcast also. We'll take last question.
Congratulations to Team SBI. Sushil Joe from India Sec [ph]. Sir, do you expect that credit growth will be more front end in the first half of this year in view of election, infrastructure spend and various other factors?
I would say that it should be all through the year because today, we have to be very mindful of the fact that for the system as a whole, the significant portion of the credit growth is coming from the retail -- and the retail demand is all season, all season demand. So at the other piece is infrastructure-related spend, et cetera, I think the infrastructure project normally have got long gestation period. So the sanctioning might happen at a point of time, but the available might get spread over the period of time. So I think to my mind, it should happen throughout the year. These projects can carry credit for 2, 3 years because this would be big projects.
Okay. Second question, sir, you've spent...
Also, by the way, apart from the infrastructure spend, a sharper focus on renewable sharper focus on solar, sharper focus on battery EVs, et cetera. These are actually new growth levers in the economy.
Wouldn't it be linked to your green deposit scheme, which RB is rolling out Green deposit scheme [ph]?
In respect to the green deposit or otherwise, actually speaking, it's a bit of a dilemma -- grid deposit to spot the green deposit, we expect better returns. And wherever you want to lend the green deposit you have to give concessions. So how to really strike out this balance. So I think it will probably stabilize over a period of time, irrespective of the color of the deposit, green or black, whatever be the color of the deposit, the opportunities will be supported.
Sir, outlook on your foreign offices. And second thing, you spent a lot of money on creating digital and physical infrastructure, which may increase your salaries at the individual level because it's performance led and the kind of productivity they are going to lead. But this may lead to a lot of income, but the cost may freeze from an outlook on a long-term point because some initiatives are visible, some have not spoken so far.
Yes. Well, as far as the foreign offices are concerned, we are very mindful in terms of our NIMs in the foreign offices. And that is the reason why we started slowing down our growth in the last quarter of this financial year because there are a good number of opportunities which are available in the receivable finance, but that is available at a very, very low margins. So we sacrifice the top line for our profitability from the fund office. And that is the reason why you would have observed that our NIM in the international book has gone up from 1.32% to 1.69%, 1.70%. That is something which we are very clearly focused on. Foreign offices are more like our, I mean, corporate bank and being a corporate bank -- majority of the offices are into the corporate lending only. But we are very mindful in terms of the quality; we have become -- we participate in syndication; we are not as much into bilateral credit. We are there for ECB supporting large corporates of India. So this is the broad components of our loan book in the foreign offices.
Our effort is to -- now to move up from the lead syndicator also to assume the status of the lead indicators so that we should be efficient on the fee income as well. In some geographies, we have already started doing it, but increasingly, we would like to see it happening across. Your second question relating to branch network of 22,400 and with the increase in salary, where you might have a situation of the cost going up. You would have observed that the fee income, which has now -- we are seeing about 26% odd kind of a growth. Our effort is that our employees who are posted in the branches, we should use them for a high skill job, whether it is marketing or it is processing. In the rural segment, we have started getting into high-value agri loan book. And for that, we need the processing capacities. So we'll be utilizing our employee base. We have already put in place about 47 CPCs for agri 47 CPCs; we have already 45 CPC have already started functioning in the last second half of this financial year.
Going forward, we'll be doing that. We'll be doing quality waters. We'll be using our high-cost resources for underwriting quality wariness where we're using them for marketing cross-selling which have seen is not the ultimate. As I mentioned that we have got a very clear target for having a $1 billion earning from the fee income, which means that the distribution of our subsidies product from these up-country locations, where the penetration level is very low. We are leveraging the brand value of State Bank of India. We are leveraging the branch network as at Bank of India, and we are ensuring that it should be a most reliable product, which we should sell from those counters, those people who are being exposed to these products for the first time. That is something which our effort is. And we have already seen the result going forward, it will only multiply.
So what can be our digital spend on a sustainable basis?
I have not really applied myself on this job, but we are ensuring that we should -- we actually aim to become a digital bank of choice within State Bank of India. Even before the center bank comes out, whether it's regulation for the digital bank, we you want to be in readiness.
Thank you for answering all my questions and all the rest.
Thank you, sir.
Thank you. Sir, we have received a few questions from the online be.
Yes. Okay. I've got some questions which are received online. So I think I'll just take a few minutes to answer all of them. The first question is, please provide guidance on NIM credit growth and deposit growth in financial year 24, I've already answered this question. The next question is relating to from Sneha Ganatra [ph], any plans to list subsidiary. As of now, there is no such plan. Another one from [indiscernible] would you be considering increasing interested on savings and deposit, which has been rather segment? And if so, will it not affect your NIM. We don't have any plan to raise the savings to incite for the time being. So we have some other overall overseas lending portfolio, it is INR4,440 crores, and it has witnessed a rupee term growth of 19.5%. In dollar terms, it has grown by about 10%. Manish Dhariwal kindly share the reasons for depend corporate loan growth, no dip in corporate loan or corporate loan has actually grown at more than 12%.
Akash Agarwal, can I know the impact of wage revision and total employee costs. Total employee costs INR57,292 in '23. Wage revision is about INR2,490 crore in financial year '23. So it is 4.35% of the employed cost. Employee costs went up a lot this quarter driven by provisions. Can you break up the provisions. So wage reason poisons are INR498 crores, which has gone up. Pension and other retirement benefit, it has gone up at INR1,359 crores essentially on account of the moments. Vishal, from Red bales the question, what is the trend of NII Y-o-Y? And how are you looking for growth in first 6 months of the financial year '23, '24 in terms of NII. NII growth in the current year -- I mean in the financial year '23 was 19.9% and 29.7% in quarter four of financial year '23 over quarter four of financial year '22.
Yes, please.
I can take the physical question.
I trust all the questions have been addressed and we'll be happy to respond to other questions in offline mode and people can reach out to our...
Let us say somebody has any questions, let us...
Sir, in international book geographically, I mean, INR490 crores, INR1,000 crores. We have major -- I mean, almost about 26%, 27% in U.S. and then U.K. and some of the other European countries in Japan and other places. Now with this, whatever is happening globally outside and our lot of capital has been invested there. And the movement in the rupee and dollar, of course, for some time, it is stable. So how do you see -- I mean that going forward, as you already said that you are tempering the further growth...
I think -- but it should be seen in a very different perspective. Yes, I got your question. See, the point is that today, India has already become the fifth largest economy in the globe. Our exports have gone to the extent of INR770 billion; very clear focus in terms of manufacturing and exporting from the country. And similarly, when it comes to we have got Apple coming into the country. They will also be exporting. We've got Foxconn, Apple, all the leading manufacturers are looking at India. So eventually, the way I look at the scenario is that we have got the potential to be, if not China at least 1. And to that extent, there is going to be a huge manufacturing export, which should happen from this country. There is a very clear focus on the government. And the PLI is something which is intended with that in mind. So eventually, when that kind of a situation comes, we have to have our global presence also.
We have been calibrating our business strategies from time to time depending upon the situation, which are obtaining in those geographies. But we have been a long-term player in the international market. And there's no other bank, which is a long-term player in international market, let me tell you. So it is more of a strategic move. We have completed 11 years in U.K. We have completed 50 years in New York. And we have -- deals also we have completed over 50 years. Colombo [ph] today perhaps maybe would be a surprise, more than 100, 150 years we have completed in Colombo. So this is the only bank which has got deep roots in the international geographies. And as and when the opportunity will arise, we are the one who all been a patient to take benefit of this.
And let me also bring back your memory to the year 2020, '21. That was the point of time when there was no take-up for deposit in this banking system of the country. We continue to mobilize the deposit. And then we went for the rupee dollar swap. We supported we created factoring as a product in the international market, and we made money on that. When the lending opportunities came up in India, we unwound those swaps. We brought that money back. And when all others are clamoring for deposit, we're only unwinding our swaps -- even if there was a loss on the swap, still the cost is not as a. So I think these are the strategic moves which we always make to take advantage of the situation.
And I always believe that the bank more than 200, 6 years old should not look at a year 2 or 5 years. It should look at 20 years, 25 years and 50 years end. By the time people will take time to really build up the organizations, we have already created. So, I think this is what our strategy is. Yes, please.
Maheshwari from Ambit Asset Management [ph]. Just as you in initial remarks said that the growth you are expecting 12% to 14%, can we expect whatever the metrics or the engines which you have?
Yes, you had [indiscernible].
My question is, can the gap between the private sector banks, fuel private sector bank and the PSU, which was very high in the initial years in the past, can that be bridged or even SBI type can grow much faster than the private sector bank -- looking at that.
Last year, the loan book for the system as a whole has grown as 15%, and we grew at 15.99%. People talk about elephant dancing. Elephant is racing rising faster than the system. It's not only dancing -- so I think the kind of potential which we have. And just so we have to watch -- and just second thing, as you said, we know a few of the banks only participate for the large corporates and the industrial loans, which are there as SBA is one of the prime this time, if the cycle builds for the CapEx, what are the internal metrics that will be taken care of that we don't see the past cycle, which in the GNPA that had taken place -- significantly strengthened our risk management. And we are very mindful. We actually prescribe our risk limits for each industry, and we draw upon our learnings from the industry.
What are the mitigants which are required to put in place, we ensure that they are already in place. And when it comes to the credit appraisal apart from the appraisal and the committees, we have got the non-beer who are there to non-banned were there to independently appraise the proposals. So I think these are enough mitigants as of now. Going forward, what else will be the need of the system, even that will to be taken care of. And just last, what is the port -- by the past, we are not having analytics. Today, we are using analytics in a very big way to build up our risk models.
And what are the projects in pipeline, the large projects in needed?
I would not like to name any one of them.
No, no. The quantum, can you give that what...
Almost $1.7 trillion worth of projects are in -- are in our work in process.
We'll take one last question from the lady there.
I just wanted to understand what would be our exposure to the NBFC sector?
Sorry, yes.
So our exposure to the NBFC sector this year and last year.
NBFC sector exposure is INR3.73 trillion [ph] is our NBFC exposure, but that exposes essentially to very well-rated corporates, these NBFCs, which are either into the public sector or supported by the leading corporate groups.
About 60% of that...
So the exposure is 3.57 -- sorry, 3.5. 3.5 Yes, INR3.7 trillion.
And what would it be last year?
How much was it last year? It has -- it has seen a growth of about 31%.
INR2.71 trillion [ph]?
Right.
And sir, lastly, on the slippages ratio, I mean this is for the industry also, right? Sorry, the slippage ratio, and this is for the industry also, will all the PSU banks have seen a low sage ratio. Can this continue the sustainability.
Okay. Okay. Slippage ratio, the sustainable. I think partly it is macro, but a significant part would be the underwriting and also the control and follow-up.
Thank you. We'll be happy to respond to these questions in offline mode now. Let me end this evening thanking the Chairman, sir, the top management team, the analysts, ladies and gentlemen. And to round off this evening, we request you to join us for the high tea, which is arranged just outside the hall. Thank you very much, everyone.
Thank you very much. Thanks to all the participants.
Thank you.