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Yes Bank Ltd
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Ladies and gentlemen, good day, and welcome to Q4 FY '22 Earnings Conference Call of YES Bank Limited. Under management panel, we have with us today, Mr. Prashant Kumar, MD and CEO, YES Bank; Mr. Niranjan Banodkar, Chief Financial Officer; Ms. Anita Pai, Chief Operating Officer; Mr. Rajan Pental, Global Head, Retail Banking; Mr. Ravi Thota, Country Head, Large Corporates; and Mr. Akash Suri, Country Head, Stressed Assets Management.
[Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Prashant Kumar, MD and CEO, YES Bank. Thank you, and over to you, sir.
Very good afternoon, and thank you for joining YES Bank's FY '22 and quarter 4 FY '22 financial release call. With me, I have top management of YES Bank with me.
We are very happy to report that YES Bank has become the sixth largest private sector bank in terms of total assets during the year and has also returned to profitability, with a full year profit of INR 1,066 crores for FY '22. This is the first full year profit since FY '19. As against a loss of INR 22,715 crores in FY '20 and INR 3,462 crores loss in FY '21.
As the brand is a go-to digital bank, with nearly every third digital transaction of the country is being powered by YES Bank. This dominance enable us to be a banker to majority of the fintech and e-commerce companies in India. The bank continued with its leading market share position in UPI, our [indiscernible] business services, [indiscernible], NEST and [ micro business ], it is #1 position in UPI and NEST. It is also a leader, with more than 1 million business correspondent and the third largest player in micro ATMs after launching them in March 2021.
Now, coming to FY '22 and quarter 4 financial result. We are pleased to report consistent improvement across all our core operating metrics as well as the setting objectives. In the year and quarter gone by, the brand has achieved the following. On the profit and loss side, as I've already shared, the bank has reported a net profit of INR 1,066 crores for the full year and INR 367 crores in quarter 4, which is 38% up quarter-on-quarter. The operating profit stands at INR 2,916 crores for the full year, and INR 770 crores in the quarter 4. And again, this is 6% up quarter-on-quarter.
The NIM stands at 2.3% for FY '22 and 2.5% for quarter 4. And continuing to trend upward 5 basis points quarter-on-quarter, and this is supported by 10 basis points reduction in cost of deposits, which stand at 4.8% now. The core fee income driver continues to show significant traction, with sustained momentum in retail banking fee, the corporate trade and cash management business and increased digital transactions, resulting in higher interchange income. The noninterest income currently at INR 3,267 crores, is up 8% Y-o-Y and INR 887 crores for quarter 4, which is up 29% Y-o-Y. The normalized noninterest income for FY '22 has improved by more than 40%.
The operating expenses are at [ INR 5,844 crores ], which is 18% increase value-wise and INR 1,927 crore for quarter 4, which also has gone up by 19% Y-o-Y. The increase in operating expenses is due to provisioning for variable compensation of employees and corresponding headcount increase of 2,000 plus employees.
On the advances side, the mix between the retail MSA and corporate has improved by 300 basis points. And currently, this is 60-40. 60% on the retail and MSME and 40% on the cost of it. During the financial year, we have also sanctioned [indiscernible] INR 70,000 crores of loans across wholesale, SME, retail and rural segments. Our 3 segments, retail, SME and medium enterprises has shown a strong advances growth of 31%, 16% and 32% Y-o-Y respectively, and -- which works very well for our growth activation as well as our guidance for FY '23 and beyond.
On the deposit side, last 2 years, our deposits have doubled to INR 2 less crores. The CASA ratio currently at 31.1%. And the component of CASA and retail TD has also improved to almost 62%. Currently, we are acquiring 1 lakh -- more than 1 lakh CASA customers on a monthly basis. And the most important part that growth in liability has also come despite reduction in the industry, which is a reflection of the trust and the confidence of our stakeholders and also, due to our superior customer service. Our cost of deposits continues to reduce and is currently at 4.8% for the quarter and 5% for the FY '22. Both cost of deposits and cost of funds have come down by 100 basis points since last year.
The saving bank balances have grown by 48% Y-o-Y and 11% quarter-on-quarter. While current account balances have grown by 39% Y-o-Y and 8% quarter-on-quarter. The average daily current accounts have grown by 50% Y-o-Y, mainly on account of our digital solution to the e-commerce and fintech there. On the asset quality front, our GNPA ratio is currently 13.9% against 15.4% last year and 14.7% last quarter. Similarly, net NPA number has also improved to 4.5% against 5.9% last year and 5.3% last quarter.
The [indiscernible] of level exposure on rent profitability has significantly reduced Y-o-Y, which is a continuous factor for the net profitability for FY '22. And this is mainly driven by rise in the recovery and upgrades and lower slippage. The slippage continues to trend lower. This is INR 5,795 crores for FY '22 against INR 12,000 crores in FY '21. And for quarter 4, INR 822 crores and sequentially has come down from INR 978 crores in quarter 3.
There has been a significant reduction in the overdue loans of more than 30 days bucket by INR 1,500 crores quarter-on-quarter. The resolution momentum continues to be very strong with total recoveries and upgrades, at INR 7,290 crores, against INR 5,782 crores in FY '21. And this also involved cash recoveries and upgrades of INR 1,828 crores in the quarter 4. The process to form the ARCs and complete the transfer of legacy [indiscernible] is on track, and we expect to conclude this exercise by June 2.
On capital trend, our CET ratio has improved by 40 basis points during the financial year and currently at 11.6, with total capital adequacy at 17.4. The risk-weighted assets in total assets has also improved to 73% against 84.4% last year. We also had capital of almost 260 basis points sitting in our DTA, which will come back to the capital over a period of time.
On the people front, we have added net addition of more than 2,000 employees during the financial year. We have also taken a number of steps for maturing an inclusive culture and investing in the right [indiscernible]. The program on the U.S. professional bankers and [ esports ] Have been launched in quarter 4. These programs, which are actually based on the sold, train and higher model will help we build a robust selling pipeline across various functions.
For top and senior management leadership, we have conducted a 360 degree [indiscernible], which would help them identifying their strength in the area of opportunities based on the feedback received. We have also conducted an employee survey, which we are named as Voice of Yes to understand the views and opinions of all employees and the input coming from the survey would be integrated into action plans that would help in making YES Bank a great workplace.
We continue to focus on new customer products and the proposition. Recently, in Mumbai, we have launched a mobility card with Chalo, which is known as the best Chalo YES Bank RuPay card. So this is a partnership between Chalo, RuPay and YES Bank. And currently, 1 lakh commuters of bus are using this. And the plan is that it would be 10 million commuters in Mumbai. So I think the customers in Mumbai, over a period of time, would be using the same mobility card for buses, for metro, for the local train and even [ fourth quarter ].
We have also launched an annual start-up enabler program, YES BANK Agri Infinity, which seeks to co-develop digital financial solutions for the food and agriculture ecosystem by venturing ventures renewal ventures in the fleet. We continue to focus on the physical presence in new geographies in some parts of [indiscernible], Telangana and [indiscernible]. The bank has opened 50 branches and added more than 2,000 new YES Banks during the financial year.
Because of the continued concern on the cybersecurity side, I think we have been very focused to protect the interest of our depositor, and the bank has won the best IT risk management and cybersecurity initiatives and cloud adoption in the medium bank category in the 17th IBA Awards. We have also been included into the [indiscernible] during the quarter.
Now on the [indiscernible] demonstrated really strong momentum in the buildup of a good quality franchise. Our progress over the last 24 months has also been validated by external stakeholders. In addition to CRISIL and Moody's, the [indiscernible] has upgraded the bank to BBB+ from BBB, and maintain a positive outlook.
Looking ahead at FY '23, we would like to share our strategic objective guidance, which includes CASA ratio at 25%, the mix between the retail and SME and corporate will further improve by 400 basis points. We are targeting a total advances growth of more than 15%, contributed by 10% growth on last corporate and more than 25% growth in retail, MSME, and medium enterprise. We'll continue to sustain a CD ratio of less than 100%.
For the third year consecutively, we would be calculating recoveries and upgrades of more than INR 5,000 crores. We are very confident to achieve an ROA of 75 basis points by the end of FY '23, and some of the recovery, if that happens, as per our expectations, then we would also be in a position to such an ROA of 1% by the end of FY '23.
With this, I want to thank all of you, once again, for taking the time off for joining this call and wish all of you and your families good health and prosperity. And we can now open the floor for your questions. Thank you.
[Operator Instructions] The first question is from the line of Mahrukh Adajania from Edelweiss.
Congratulations.
Thank you very much.
Congrats. Sir, so I have a few questions. So just one clarification that the bad loans will be transferred to the ARC by June. Is that what you said?
Yes, exactly. We would like to conclude this within that time frame.
So -- okay. So basically, then you will be like a 0 GNPA bank? Or how does it work as a 0 corporate GNPA bank? Is that the way it go? Or...
No, it is not only corporate. I think the entire NPA stock, both from corporate and retail, would be transferred to the proposed ARC in a transparent manner. And then the bank would be exactly without any GNPA.
And who will manage the -- I mean, how is the ARC, P&L or recoveries are all reflecting our mortgages [indiscernible]? So once it -- I mean, how does it work?
No, it would be like any other ARC, where there would be a sector of proceeding we file. And whenever the ARC would make the recoveries, it would come to liquidating our [indiscernible] stocks, okay?
And you would have taken a -- sorry.
And similarly, since we would be having a stake in the ARC, so the profitability of the ARP would also be shared in proportion to our equity rule.
God it, sir. So -- but you would have taken a very hard look at the provisioning, and you think that whatever provisions are carried against this asset as of March asset is adequate, correct?
I would be just qualifying it. It is more than [indiscernible].
Okay, sir. Sir, my second question is that basically -- so I have a few earnings-related question, but this is a very broad strategic question. That off and on, there are enemy or rumors in the bank. Obviously, I don't expect management to comment on M&A rumors. But all I want to know is that what would be the long-term strategic goal of the bank? Is it to clean up adequately and over the long term, be part of an M&A transaction? Or have a standing of its own, what would be a more appropriate way to think of this?
So one of the appropriate way of look at strategically that after cleaning, we would like to become a very strong player on the private banking side. And during our journey, if we see the opportunities for inorganic growth, we would be definitely looking at that.
So you want like to have a look at some other players for inorganic growth, that way? Not the other way around, right, sir?
Right. Absolutely. We wanted a very, very strong franchise, very strong on that retail. And I think today also, we are contributing very significantly in the digital history of new ideas. So I think this kind of inorganic growth, we would be able to contribute much better.
Right. And your capital raising plan, sir?
So Mahrukh, if you see currently, we are at 11.6% on CV and -- which would take care of our growth requirement for the current financial year also. But at the same time, we also appreciate that due to the uncertainties in the environment, it is always good to have some buffer. So I think we would explore those opportunities and whatever would be the right fit and the right way to raise some capital to just build a buffer, I think we will do that.
But sir, has your LCR decline during the quarter?
Can you repeat that?
Why has your LCR gone down Q-o-Q during the quarter?
No, LCR is not something which has to go up or come down. There is a regulatory requirement of LCR to be cash around 105%. If you keep LCR very high, it would impact your profitability. So I think it is better to have a LCR, which takes care of the regulatory requirement and your liquidity, but at the same time, you need to work for the both properties.
Mahrukh, just to clarify, the regulatory requirement is 100%. And...
Yes, sir. I just have one last question. In terms of the personal loans that have been growing very well, so what kind of loans are these? Are these largely to salaried employees? Or...
Yes. So this is absolutely what you said is right. It is largely standing and 65% of these loans come from the salary of around 35,000 [indiscernible] plus. And business one is a very small substitution of this. It is approximately 7% to 8%.
Sir, how much, 7% to 8%?
At the same time, the credit rating of all these customers, it means that credit scores are also derived.
Got it. And sir, would you be able to share the yield on these loans like incremental or any participate on these personal loans? Would you be like to share the yield? Would you be able to share the yield...
Yes. The personal loan is around rating is 12.75% to 13.25%. And then, it would be over [indiscernible] actually, 12.
So 12 is the yield?
Yes.
Okay. And sir, my very, very last question is on your digital team. I didn't quite understand when you said that you are the third on digital or -- sorry, you follow every third transaction. So if you could elaborate on that?
No, absolutely. If you see the UPI transactions, we are having a 42% market share, okay? Now UPI transaction in the entire digital space of the country is almost 50%, okay? So we are 41% market share on this. On the [indiscernible] enabled payment services, our market share is 18.2%. On the MFT, we are ranked #1, and our market share is 14.3%. So if you just take the average of the entire digital payment space, including UPI enabled [indiscernible], then we are contributing [indiscernible], which are supported by the YES Bank [indiscernible].
[Operator Instructions] The next question is from the line of Jai Mundhra from B&K Securities.
So, sir, on ARC formation again, if you can tell us where are we in terms of the regulatory approvals for setting up that ARC? I heard that you intend to sell all the transfer of the assets by this quarter end. But any -- I mean, where are we in terms of regulatory time lines or approvals from RBI or maybe, some other competitor parties?
So Jai, I think selling are set to ARC is already within the regulatory guidelines. We don't need any new guidelines. The issue would be only in terms of the becoming part of ARC, okay? So I think once we are able to identify the partners, then we putting our equity into the proposed ARC, we would see the regulatory guidelines.
Right. And you do not see any hurdle in you selling your assets to an entity in which you, of course, have 20% or some equity stake?
This would be a [indiscernible] and meeting all the regulatory guidelines in terms of transferring profits, okay?
Right. Okay. And sir, any ballpark estimate that once you transfer your proposed quantum of stress loan to debt, what could be the -- let us say, is there any a change in the balance sheet on that day? Or it would only be once you -- once the ARC starts realizing those stressed loans, right? And on the day 1 of our transfer, you will just get the SR and 15% cash of the quantum transferred, right? Is that understanding right?
Yes. Yes, absolutely. Like any of the normal transition with ARC, you would not be having an NPA sitting on your books, and you would be adding 15% cash and 85% [indiscernible].
Right. And sir, just correct me, if you -- let's say, your 85% SR that you get is, let us say, higher than your book value of that stress -- of the stress loan, will the gains that arise out of SR, which is a notional gain because you have got the security receipts, which is higher than the net book value of that bad loan. Can you -- I mean, what happens to that notional gain? And can it be routed through P&L? Or it just remains a notional yield?
This is Niranjan. No, you will have to -- you cannot recognize into P&L unless you have recovered the principal.
Right. Understood. Second question, sir, is on your guidance. So clearly, as of now, we have around -- a full, year this year, we have around 1%, 100 basis point of operating profit as a percentage of assets. I assume it will keep improving. But for us to achieve greater than 75 basis points of ROA, it implies that there is almost 0 credit cost going into FY '23 because 100 basis point of operating assets and even if you have 0 credit cost, we will have around 75 basis points ROE. So I mean, how does this work? Or is it okay to assume 0% kind of a credit cost going to FY '23?
So Jai, you have to look at it in 2 ways. One is clearly, if you look at this year, this was on the back of a COVID year, so even if you look at the trending of slippages for first half this fiscal and compare that in the second half of this fiscal year, actually meaningfully lower in terms of the slippages and therefore, consequently also the procuring costs that would have come out of it.
So the extent of provisioning costs that will come out of the new slippages is expected to be lower next year as compared to what we have actually seen this financial year. That's number one.
Number two is that when we look at [indiscernible] assets, clearly, we expect an expansion in the margins. We will expect an expansion in the [indiscernible] assets as well and at the core level, which would mean that our top 2 assets will also expand 40 to 50 basis points as we go through the fiscal '23. So both a combination of expansion of [indiscernible] assets and provisioning that will be lower as compared to what we saw this year on account of lower slippages is what we will result into the ROA [indiscernible]
Right, right. No, I understand that. But I'm saying, could it be, let us say, possible to have almost negligible kind of a credit cost for [indiscernible]? I mean would there be a possibility?
Yes, absolutely. I think that is the possibility. It is encouraging us to reach at [indiscernible].
Right. Okay. And the last question, sir, if you have any guidance on GNPA and NNPA -- or maybe, NNPA, GNP could be subject to your -- whatever you transfer to ARC. But do you have any aspiration level of net NPA by year-end?
No, I think if we are transferring our NPA as oppose ARC, then we would not be having these issues on the GNP and the [indiscernible].
Net NPA should not change, right? Even if you transfer those loans to a large extent? So I was asking if you have any number for net NPA by the fiscal end.
So Jai, the net NPA, clearly, this year, we've seen about 140 basis points reduction in the NPA ratio. So next year, let's say, we substitute the NNPA ratio for because you might end up with security receipts that we will have. Now the value of security receipts will be lower on account of 2 things: one is the recovery that we have during fiscal '23. But more importantly, it will also be a function of what is the value at which we sell these assets at the time of sale to the ARC. On -- but just from an end perspective, we believe we should have a similar reduction in the NNP ratio as well for next year.
Right. Okay. Great. Sorry, I have one more question, sir, if I may ask?
Yes.
Yes. So just lastly, on this digital payment. So right, so it is very much visible that you have very strong presence. I really wanted to check how does this translate to profitability? I mean how and when you are thinking of monetizing this digital leadership there? And where would we be seeing this? I mean can you start monetizing this digital leadership either through fee or how should one look at it?
So yes, currently, Jai, if you see in terms of the fee out for this transaction, so I think there are regulations around it, okay? But maybe, going forward, when there will be some relaxation in terms of the fee to be charged for the transition, there will be significant gain for us. That is one part.
The part two is in terms of monetizing these transactions, can be in 2 ways. One would be in terms of acquisition of customers within the bank and do the process, okay? Now this is something which has already started, and I think gradually, every year, we would be building up. But in terms of this particular data being shared by others, I think there is an issue in terms of the data privacy, okay? So I think we are very, very careful in this. But definitely, we have already started working in terms of using this for the customer acquisition within the bank that would definitely help. But I think we need to explore in terms of what the data privacy will come in final shape. We'll see within those constructs how we can restructure this and for monetization.
Right, sir. If I look at your investment breakup, so BB and below, it has now reduced 2.4%, Slide 17, which I think last quarter was slightly higher number. So is it that -- I think some lumpy telecom exposure sitting here that has now out or -- has that been converted to more? Or if you can just explain what has happened there?
So Jai, you're right. The telecom exposure has been fully repaid.
The next question is from the line of Sri Karthik from Investec.
There is a sharp increase in the bank balances in the assets line. What explains that?
So Karthik, that sometimes, the -- let's say that short-term money deployment that happens, because we might be sitting on liquidity. So we do keep some of that deployed or overnight or short-term lending. But that really explains the balances there.
Okay. So it's temporary and I'm wondering because it could have a drag on your margins, so why would you attempt to do that?
No. No, I agree. I mean it's, in some ways, reflective of the CD ratio as well, if we just compare FY '20 to '21, that also come off. But it is temporarily the intent and idea is really to grow the loan book. Aspirationally, we did have a target of 15% at the start of the year. And once that is back, we will also see the pickup in the run rate on margin expansion will be faster than fiscal '22.
But anyway, on -- just on that note, if you just look at NII, too, as a percentage of risk-weighted assets, you would see a sharper improvement than what you would see on NII total assets.
There's a INR 580 crore provision on investments during the quarter. What is that pertaining to?
So one, I mean, it is a split between nonperforming investments and on security fees. You can broadly split it half and half. Clearly, from the perspective of provisioning that we wanted to take on the book in line with, let's say, the RBI aging, we thought it was prudent to set that up. That's why -- that's the reason we have taken the provision.
Got it. And just last bit is I saw in your press, [indiscernible] of INR 500 crore upgrade guidance. I'm assuming that's assuming ARC structure goes through, right?
Can you say that again? You're seeing the upgrade of gross INR 5,000 crores?
INR 500 crores guidance that was flat on television. That is assuming the ARC structure goes through.
No. So this is actual recoveries, resolutions of assets that you will see during the first of fiscal '23. I'm not sure -- sorry, 1 second, just hold on. INR 500 crores? Something flash on TV, you're saying for INR 500 crores is what you're referring to?
Yes.
No, I think then it must be something wrong. What we are saying that this year also, we would be targeting a recovery and a grade of more than INR 5,000 crores. And we have already done more than INR 5,000 crores in FY '21 and FY '22. And this is without ARC.
The next question is from the line of Kunal Shah from ICICI Securities.
Yes. So again, we get into the guidance, when you look at it in terms of delivering the ROA of 75-odd basis points. So with respect to the margins, how should one look at the margins? Okay, one is maybe, in terms of the deposit cost, that's been down to 4.8%, but we will be in a rising interest rate scenario. And at the same point in time, we are looking towards 25% plus kind of a growth on retail plus SME as well. So where do we see the stable profile of the margins?
And even in terms of the expenses, now, would we be incurring further cost there is some inch upon the [indiscernible] loan sourcing professional fees. But as and when we see this kind of a growth, would it require much more investments and OpEx to assets, so that should also inch up higher?
So Kunal, if you actually look at the net interest margin trajectory for fiscal '20, I'm just breaking this quarter-on-quarter, we've seen actually an expansion in the NII, NIM by about 40 basis points during the course of this year, right? We are [indiscernible] 2.1% June, and we've ended at about 2.5% for Q4. As we believe we enter into fiscal '23, the amount of margin expansion should actually be similar to even marginally higher next year, and we are confident because we expect that loan growth should actually also pick up, because we don't expect the CD ratio to now meaningfully get lowered from here on. I think the journey of correcting the balance sheet structure is actually behind us. And therefore, to that extent, we believe if we are at 2.5% at least the exit for fiscal '23 should be a 3% plus margin for fiscal '23.
On the cost side, if you see the other operating expenses actually -- and if we do a year-on-year comparison. So if you look at the quarterly run rate for March, year-on-year and actually grown by 11%. And that is actually lower than what the franchise growth would have been on the retail side. So if you see the disbursement, quantum has grown more than 11%. You've had deposit acquisitions under it's actually being much higher, happening as well.
So we are conscious of that. And therefore, we have already been saying we should look at cost to assets as a proportion. We would possibly look at a 2.4 [indiscernible] cost to assets. We will continue to invest in our retail distribution, but we don't see that cost of assets will actually deteriorate more than maybe 10, 15 basis points. And that also will be a function of do we see, let's say, our run rate on recovery is actually being higher than what we have seen, but we're finding recovery income coming through, maybe we will continue to accelerate the expansion more than what we have planned.
So that's really clear about 40, 50 basis points expansion on the margins is what we expect driving our operating profits next year.
Sure. And lastly, in terms of this 3 borrower broad accounts. So this has been directly taken from results, INR 4 70-odd crores kind of? Or no?
So Kunal, the requirement is that it needs to be taken in 1/4 quarter and balance, 3/4, you can spread over the remaining 3 quarters, which is what is getting still lower to next year. So we will take it in fiscal '23. So about INR 150 crores we've already taken in Q4.
So INR 475 crores is the gross number, and we have considered INR 150-odd crores in the network at this moment. And there will be further, which will come in FY '23?
Small correction. We have INR 633 crores, let's say, in the total provisioning required, of which, about INR 150 crores -- INR 160 crores is something we have taken in Q4. The balance, INR 475 crores, is being deducted directly from reserves and surplus, which means, the entire INR 630 crores provisioning has been injected in the capital. But the P&L has had a INR 150 crore impact.
Okay. Okay. So 1/4 impact in P&L and 3/4 impact taken from results.
That's right.
Sure. And in terms of the [indiscernible] list on the corporate side, is it anything which is there? Or we are largely done with in terms of the recognition for provisioning, everything is more or less now sorted here?
So I think the [indiscernible] in terms of resolution, it is only right if you see our SMA-1 and SMA-2, that is also coming down now significantly, okay? So we don't see any exposure base, which is an area of concern or pain point.
[Operator Instructions] The next question is from the line of Mahesh M.B. from Kotak Securities.
Question to Niranjan. This provisioning that we've been discussing out there, if assuming that the sale happens or not happens to an ARC, provisions continue as per the current norms, right? Is that understanding right? Because you will be the single largest owner of the trust in which the ARC assets are sitting. So the norms currently stands as to whether it doesn't matter whether it is sitting in your books or in the books of the ARC, right?
That's right, Mahesh. So the rules say that, in effect, if you are the dominant subscriber to the security receipts, then you have to follow the [indiscernible] as if the account would have been an NPA in [indiscernible].
To the other question that you had answered to, so saying that look, the provision for FY '23 could be low, how would you tie that up? I believe Jai had asked this question earlier. So just trying to understand, it's unlikely that you see full resolutions coming through in FY '23, right?
So the way we look at this is -- so there is -- the provisioning is a combination of 2 aspects. One is the new slippages, the second is the aging-related provisioning that will play out during the course of next year. And against that, what is the offset coming in from the recovery income? So clearly, our expectation for the recovery resolution income is higher than, let's say, the aging provisioning that I will have to take or the provisioning I will have to take on the slippages during the course of next year.
Okay. And would you be able to share the data on what will be the aging provisions, assuming that there is no resolution at this point?
So Mahesh, it's a bit premature for us to be saying that, because some of the aging-related provisioning, there is also a prognosis of recovery or resolution that play out. And therefore, when we look at the full portfolio in terms of what the P&L flow happens, we believe that we should be able to have a better run rate, net run rate than this year, number one.
Number two, in many ways, let's say, acceleration in recoveries, also, allow us to keep reducing the carrying value if we are finding that we are running ahead of the [indiscernible]. So in many ways, helps us plan for the subsequent year later.
Okay. So just one additional question on the same topic. When you look at the recovery rate that you have done for FY '22 and you had kind of indicated a particular rate on your overall portfolio, how has the run rate been with respect to the value of recurrence?
Sorry, if you can just repeat the question.
Okay. The question is, see, you would have assumed a certain recovery against specific assets, right, at the start of -- when this entire resolution started. And you are now, let's say, into the second year of this performance -- of the bank. How has been the performance in terms of recoveries that you have received today as compared to the expected recovery that you had placed on those assets?
So I think this is much better than what we were expecting and what the market was expecting. So I think like, Mahesh, you would be doing like a lot of entities when looking at our portfolio and the people who are looking, maybe, not like more than 25%, 30% kind of thing. And we have been able to recover to the extent of 55% to 60% in those kind of things. So on an average, I think the kind of recoveries which we are seeing, and that is exactly healthiness of recovery is helping us in the P&L. We are seeing much better than what market was expecting. And also, what we are expecting.
And Prashant, as you go forward, you get into the more stickier or the difficult assets? You think it will still hold good, this estimate?
So this [indiscernible] cannot be like that, applicable to the entire, definitely. But I think still we have some juice left there. And I think there are more than INR 5,000 crores in the current financial year, and maybe, say, around INR 4,000 crores to INR 5,000 crores in the next financial year also, is something which there is a possibility.
Perfect. Sorry, you didn't answer this. I just wanted to clarify, did you also give an estimate of how are you looking at slippages for this year as well, given that we don't have that bigger grip on what the corporate slippages will look like?
So not more than overall on the corporate and retail. I think we are not looking at slippage more than 2%, and 2% -- it would be less than 2%, but I think we are taking that estimate of at least.
The next question is from the line of S. Agarwal from Max Life Insurance.
I have 2 questions on ARC. So that entire [indiscernible] asset will be transferred to the new ARC? Or will there be a Swiss challenge method where other ARCs will also be invited to bid for those assets?
And the second question is some of the stressed assets would be nearing resolution, maybe, in the next 1 year. What is the thought process of transferring those assets to the ARC?
So I think there are 2 things. One is in terms of -- as per the regulatory guidelines, everything has to be done in this after [indiscernible] process. And once we're able to identify a partner and whatever would be the bid, we definitely need to go for a sustaining, where the other ARC would also be able to participate, right? So that is one thing.
And secondly, is difficult to change this call that you can't be choosy. Because if you start choosing your asset where recoveries possibilities are much higher and you don't transfer to ARC, then the other partner will also be choosy in terms of your assets, okay? So then, it becomes very, very difficult. So you need to decide like all your assets on a particular date has to be done.
The next question is a follow-up from the line of Mahrukh Adajania from Edelweiss.
Would it be possible to share your gross provisions or your aging provisions for FY '22.
No, I think it will be very difficult. Because the Indian provision also have some implication in terms of security valuation in other parts, okay? So at this point of time, it will be difficult.
Okay. But you have provisions, that has shown it of recovery. So would it be possible to share the gross number?
No, I think that is -- we had every year almost 81% provisioning, that was given in our presentation.
Mahrukh, if you actually look at our presentation, we would have possibly have a P&L benefit of -- and it's actually mentioned in the slide. Yes, there you go, I think it's on Slide 18, where there is interest recovery of INR 97 crores. There is also asset recovery for about INR 1,400 crores, and there's also P&L write-back from the provisioning. So I think it's something we can make some investment from that. Thank you.
[Operator Instructions] As there no further questions from the participants, I now hand the conference over to Mr. Prashant Kumar for closing comments.
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