Bank of India Limited (BANKINDIA) Earnings Call Transcript & Summary

Hello. Ladies and gentlemen, good evening, and welcome to Bank of India Q3 FY '24 Conference Call. I would like to thank you all for taking out time and joining us today. We have with us: Shri Rajneesh Karnatak, MD, CEO; Shri M. Karthikeyan, Executive Director; B. Kumar, the CFO of the bank; and other top management from the Bank of India. [Operator Instructions] Requesting Mr. Rajneesh Karnatak to address the gathering.

Yes. Thank you, Maimuna. You are -- am I audible there?

Yes, sir.

Yes. So good afternoon to all the dignitaries, ladies and gentlemen present in today's analyst meet. It is my pleasure to welcome you all for the interaction post publication of the financial results of the bank for Q3 FY '24. Despite prevalence of geopolitical overhang affecting global growth, Indian economy exhibited optimism on the back of strong macroeconomic fundamentals and financial stability. The real GDP growth rate has been revised upwards to 7% by RBI for FY '24. The bank is focusing on customer service excellence and improving connect with the customers for increasing low-cost deposits. To further the advance growth, SMA management and slippage containment remain high priority areas on the bank's agenda with continuing measures for improving collection efficiency and NPA recovery. On the digitization front, new cloud technology adoption framework is introduced to improve data security, privacy, control and corporate governance. There are certain initiatives taken by the bank during this period, which I would just like to highlight. Number one, being launching of the Nari Shakti Savings Account aimed at catering to the women aged 18 and above with an independent source of income. Number two, introduction of upgraded saving account with improved features and insurance coverage. Savings products are rationalized to 8 products now like SB General, Pratham, Pension, Rakshak, Government Salary, Private Salary, staff and institutional accounts. Number three, green deposit and financial framework policy for promoting green initiatives for deploying funds in green activities, projects based in green taxonomy. Number four, launching of Bank of India Star Export scheme to onboard and provide quick financial solutions to the export units. Number five, Star MSME Welcome Offer revised with wider coverage and to increase customer base in up-country centers. Number six, Star Energy Saver scheme revised under the renewable energy, where maximum loan amount is raised to INR 10 crores from INR 1 crores. Number seven, formation of 10 new asset recovery branches to have more sound approach for resolution of NPAs. Number eight, being RFP floated for onboarding consultant for IT and digital transformation. We have published and shared the financial results of the bank for Q3 FY '24 on 2nd of February '24. However, the main highlights are as under: number one -- on the business side, number one, Global Business increased by 9.6% Y-o-Y from INR 11,61,000 crores in December '22 to INR 12,72,000 crores in December '23 with an incremental growth of INR 1,11,000 crores. Global Advances increased by 11.29% Y-o-Y from INR 5,07,000 in December '22 to INR 5,65,000 crores in December '23 with incremental growth of INR 57,000 crores. Global Deposit increased by 8.28% Y-o-Y from INR 6.53 lakh crores in December '22 to INR 7.07 lakh crores in December '23 with an incremental growth of INR 54,000 crores. Domestic CASA increased by 5.92% Y-o-Y to INR 2,61,000 crores in December '23 with incremental growth of INR 14,000 crore and CASA ratio at 43.88%. Domestic Advance increased by 11.34% Y-o-Y and stood at INR 4,75,000 crores in December '23 with an incremental growth of INR 48,000 crores. RAM Advances increased by 13.61% to INR 2,62,000 crores in December '23 with an incremental growth of INR 31,000 crores constituting 55% of the advances as on December '23. As regards profitability and asset quality. Number one, bank's net profit for Q3 '24 improved both sequentially and on a Y-o-Y basis. Net profit increased from INR 1,458 crores in Q2 FY '24 to INR 1,870 crores in Q3 FY '24. Global NIM stood at 2.98% for 9 months and Domestic NIM stood at 3.35% for 9 months of the current financial year. Net interest income has come down by 2% on a Y-o-Y basis for Q3 FY '24 over Q3 FY '23. However, on a 9-month basis, it has increased from INR 14,700 crores for the period ended 31 December '22 to INR 17,100 crores for the period ended 31 December '23, showing a Y-o-Y growth in net interest income of 16%. As regards noninterest income, it has come down to INR 1,193 crores. That is a fall of around 17% in Q3 FY '24 over Q3 FY '23. However, on a 9-month basis, it has grown Y-o-Y by 9% from INR 4,000 crores for the period ended 31 December '22 to INR 4,344 crores for the period ended 31 December '23. Operating profit for 9 months has grown Y-o-Y by 14% from INR 9,200 crores for the period ended 31 December '22 to INR 10,500 crores for the period ended December '23. Though the Y-o-Y basis, that is from Q3 FY '23 to Q3 FY '24, it has come down due to increased provisions on account of expected wage revision and depreciation on the investment, which is in the standard category. There has been improvement in asset quality with a reduction in gross NPA ratio and net NPA ratio. The GNPA ratio has been brought down to 5.35% in December '23 from 5.84% in September '23 and net NPAs to 1.41% in December '23 from 1.54% in September '23. The GNPA has come down by INR 8,600 crores Y-o-Y basis in absolute terms. In line with the GDP growth, we expect credit growth to be around 11% to 12% for FY '24 and domestic deposit growth of around 10% to 11%. There has been compression on margins due to increase in cost of deposits. But by focusing on RAM and mid-corporate credit, we aim to maintain NIM at around 3% level for FY '24. With bank's consistent focus on improving asset quality via better credit underwriting and containing fresh slippages, we expect GNPA to be around 5.10% and credit cost to be around 0.50%. We will continue to work towards improved customer service, broad-based growth and better profitability for enhancing our CASA and retail term deposit book. In consonance with the measures announced in the interim budget for 2024, India is poised to become the third-largest economy in the world in the next 3 years with a GDP of USD 5 trillion. And it will be a catalyst in achieving the guidance as given above for our bank. I would again thank you all for the continued support. The floor is now open for any discussion and question-and-answers. Thank you.

[Operator Instructions] We have first question from [ Marsel ].

Just before I get my question, like there is a section over here. In the press release in the key highlights, you have just compared the Q3 versus Y-o-Y. I think it would be most ideal if you compare Q3 with Y-o-Y as well as over Q2 FY '24 also, the way you have done the ratio. So I request that like -- so otherwise, you have to jump up, like this year -- like this quarter press release, last quarter press release to see that where do we stand. So kindly in the next quarter, kindly in the key highlight also, please make key data for Q3 this -- like Q4 of March this then the Q4 of March '23 as well as Q3 December also so that there is Y-o-Y as well as Q-on-Q comparison.

Okay, noted. Your suggestion is noted. We'll take care in the next presentation in the March quarter.

My first question is regarding this, we have been disappointed rather to see the result of our bank. Because if you see that all PSU bank results, every bank has done fantastically both in terms of -- like I will say majority of the bank in terms of NII, in terms of NIM, in terms of operating profit. But in our case -- again, I'm comparing Q-on-Q. So yes, in our case, NII has reduced from INR 5,740 crores in second quarter to INR 5,463 crores. NIM has compressed from 3.47% to 3.21%. And similarly, our operating profit also reduced. So can you please say that what action you are taking now so that in Q4 at least we can recoup the level of Q2, number one? And then how much of this like NCLT or how much [indiscernible] you expect to recover within the Q4?

Yes, thank you. So as regard net interest income, so I would like to say over here is that, see, if you see our interest income, interest income has gone up by 20% on a Y-o-Y basis. From INR 12,700 crores in December '22, our interest income has gone up by INR 15,200 crores, which is a 20% increase on a Y-o-Y basis. However, if we tell you the 9 months Y-o-Y improvement, so December '22, our interest income was INR 34,000 crores. It has improved to INR 44,000 crores in December '23, which is a growth of 30%. On the interest expenses, the increase has been by 37% on a Y-o-Y basis. And on a 9-monthly basis, it has gone up from INR 19,000 crore to INR 27,000 crore. Because of which there has been some pressure on the net interest income. So as you rightly observed that the net interest income has gone down, but it has gone down by only minus 2%. From INR 5,596 crores as on December '22, it has come down to INR 5,463 crores, which is a negative of only 2%. However, if you see the 9-month results of the bank, as on December '22, our net interest income was INR 14,752 crores. It has improved to INR 17,117 crores, which is an improvement of 16% on net interest income. So Q3 has been an aberration, I would say, for the bank, wherein the net interest income has come down on a sequential basis and on a Y-o-Y basis. The main reason for that, as you are aware, is because of the pressures which are there on the margin because of which this is happening. As you already said that the NIM has also compressed. However, on the NIM side, I would like to clarify that in the September quarter, our quarterly NIM, which was at 3.08%, has, yes, come down to 2.85%. But on a half yearly basis, it was 3.05%, which is now on a monthly basis at 2.98%. To further clarify, our NIM as on a 9 monthly basis in December '22 was 2.96%, which has now improved to 2.98% on a 9 monthly basis by 2 basis points. So this is the thing which we want to tell. Though there is some pressure because of the tight liquidity situation, which was prevailing in the market in the quarter of December Q3, which is also prevailing in this quarter also, it is a slight tad, which has come down is because of that only. However, we are confident that on a global NIM basis, we will be able to protect our NIM at around 3% for Q4 also. Just to give further flavor on the NIM side on the domestic side, our NIM has improved much better. On the domestic side, on the Q3, our quarterly NIM was 3.21%. And on a 9 monthly basis, it was 3.35%. And it has -- it is well above 3%. And on that side also, we are saying that our guidance will be at 3.20% for the 12 months in December -- this one, March '24, for the Q4 and the annualized. As regards operating profit, let me clarify that operating profit has come down from INR 3,652 crores to INR 3,004 crores. It is a decrease by 18%. However, for the 9-month period, it was INR 9,200 crores in December '22 and it has improved to INR 10,500 crores in December '23, which is a Y-o-Y increase of 14%. So basically, there are 2 basic items because of which the operating profit has come down, one being the provision for the wage revision. So provision for the wage revision in this quarter was INR 448 crores in Q3, which included provision at the rate of 2% for 11 months because that MoU signed for the wage revision was at 17%. And earlier provisions, we were making at 15%. Because of that delta, the increase is INR 129 crores. Fresh provision for Q3 at the rate of 17% comes to INR 219 crores. Retirement benefit and pension payment provisions, which is again on an ad hoc basis, is at INR 100 crores. So INR 448 crores has gone for that provision. Just to further clarify on the wage numbers. So we have already taken a provision of INR 1,091 crores till date. So up to December, all wage costs plus pension has been provided for. Apart from that, the second item, which has impacted was with respect to the depreciation in the book, our investment book, which was there in one of the NCLT NPA accounts, which has come and another account on the Dharani Sugars side, where the amount is INR 383 crores. So if you add up INR 383 crores and INR 448 crores, it comes to INR 800 crore-plus. And if we add this one-off item of INR 800 crore-plus, which we had to provide in this quarter, our operating profit comes back to INR 3,800 crores, which is well above the run rate which we are having of INR 3,756 crores in September and INR 3,652 crores in December. So we are very much confident that on a -- in the next coming quarter in Q4, we will be able to come back to the run rate of around INR 3,600 crores to INR 3,700 crores for the operating profit in Q4 because these being around INR 800 crore being one-off items for the bank in this quarter's balance sheet.

Sir, like in the Q4 also, do you expect to have this kind of hit like Dharani or Srei kind of thing?

No, no, these were only one-off items. I'm again clarifying...

No, no, I understand, sir. Sorry, sir. No, no, I understand, I was saying similar to this, similar to this.

No, no, there won't be any similar to this item. We don't foresee this -- such kind of item. As of now, when we are speaking today on 5th of February, there has been no such entry in our books till 5th of February also. That I can clarify. So at present, we are not foreseeing any kind of this additional provision because of depreciation on the investment side because of the NPA investment coming back to the standard category. And as regards the provision with respect to the wage revision, yes -- and there is additional provision of INR 219 crore will be coming for Q4, which will be at the rate of 17% to take care of the Q4 quarter of FY '24.

So you are saying that like in this quarter, we made the provision of INR 448 crore. And like what will be the provision next quarter, INR 219 crores total including 2% and like this -- and the fresh provision also?

So this 2% provision will not be there. This is a one-time provision because that is the gap between the 15% and the 17%. So this number will not be coming again. So fresh provision of INR 219 crores for the wage revision will be coming in Q4 also. So that is the number. And on the retirement benefit and the pension payment side, around INR 50 crores to INR 60 crores will be coming. That is the provision which will be coming in the Q3 -- Q4.

Sir, like to increase the NIM, I think like you are the veteran, so you will know it very well that what is required to have this low-cost deposit of current account and savings account. But we don't see digital aid coming from the Bank of India in any of the like online to like canvas or like to campaign for this opening of current account or, for example, this opening of savings account. So what action at the divisional level, at the branch level, at the zonal level are being taken to increase the CASA deposit, sir? That's very critical for the bank.

Yes, yes. So let me clarify. See, Bank of India has a very strong franchise as far as the retail deposits are concerned. So we have 5,200 branches, 8,400 ATMs and CRM machines and 19,000 of BCs, which we have delivery points of nearly 32,000 -- 31,000, 32,000 in the field for giving customer service and better customer efficiency. So as regards the CASA numbers, see, we already have a CASA number of around 44%, which is one amongst the best among the public sector banks. Another part is that 44% of our term deposits is retail term deposits and only 12% of our deposits is bulk deposit, which is again one of the best in the system. So 88% of our deposits are retail term deposits. Another point where you said that the accounts that we are concentrating on CASA saving accounts and current account, let me clarify to you the total number of saving accounts. Other than BSBD accounts, which are basic accounts, we have opened in this financial year from 1 April till 31 December is around 13 lakh accounts. So that is the kind of accretion which has happened in fresh saving accounts during this period of 9 months during the audit period. So there is a lot of focus, which is going from our side from head office. Both on the physical side and also on the digital side, the accounts are getting opened and targets have been given to the branches and the zones and the NBGs for opening these saving accounts and the CASA and the SA accounts. Another thing that we have been doing of late is we are entering into a lot of tie-ups, organizational tie-ups both at the PSU level, at the corporate level and also at the central and the state government level for organizational tie-ups for getting the current account and the savings accounts of the staff. That is another thing. That is why if you see our cost of deposit, which is there, which was 3.72% as on December '22, is increased to only 4.62% as on December '23. And on a 9-month basis, it is only 4.44%. So cost of deposit for Bank of India, 4.44% on a 9 monthly basis, is one of the most competitive cost of deposit among the public sector banks. This is what I would like to submit.

We'll take the next question from Ashok Ajmera. [Operator Instructions]

The bank has performed well, one in this quarter also. Sir, you were talking about the operating profit. Now it has come down by 18%. So can we have the -- like you said that wage revision of INR 448 crore impact, including the 2% plus the quarter. But if you look at the employees' cost, it has increased by only INR 37 crore in this quarter as compared to the last quarter. So either this quarter's employee cost was much lower, which has absorbed this extra cost, or this extra cost has gone somewhere in the profitability statement. Am I clear? I mean, the difference in the...

Yes. Can I respond, Ashok-ji?

Yes, sir, on this, sir, please, first.

Yes, yes. So let me clarify that, see, whatever the employee cost you are seeing on the P&L, that is the cost which we are taking on the P&L. So this is the number which is based on the wage settlement, so provision is going. It is not going to the P&L as on date. So this number of INR 448 crores, which we have made, this is all provision. so INR 129 crores is the provision on account of the 2% for the 11 months, last 11 months, and fresh provision of 17% for Q3 FY '24, which comes to around INR 219 crores, and INR 100 crore provision is because of the retirement benefit and the pension payment. That is the number. So to give overall view, that INR 1,091 crore we have totally provided till 31 December on account of the wage settlement, which is all under the provision head and is not debited to the wage settlement -- wage establishment cost as of now.

So does it mean that this has already been -- has hit the P&L earlier, isn't it, like debiting P&L and then providing for? So there won't be any further hit on this...

Yes, yes. So on this INR 1,091 crores, there will not be any further provision or debit to the P&L.

Yes, okay. So you are already adequately provided for by debiting. That is why the impact has not come here in this. So sir, when the impact of this has not come in this quarter's P&L, which are the other items which have brought down the operating profit of the bank so substantially low by almost about INR 750 crores...

So this is one item -- Ashok-ji, this INR 448 crore is one item which has brought down the operating profit. Because this is a number which is above the line. So it hits before the operating profit, INR 448 crores. And apart from that, this INR 383 crore is the depreciation in the investment on the standard book side, which has come to the bank on account of the resolution of couple of NPA accounts, which got into the standard category post the receipt of the account amount. Though NCDs have been issued, so depreciation on those NCDs have been made, INR 383 crores. So the total impact comes to INR 383 plus INR 448 crores, which comes to around INR 800 crores. So this operating profit has come down. And this being a one-off item, so operating profit, INR 800 crores, if you add back to INR 3,004 crores, it comes to around INR 3,800 crores for December quarter.

Point well taken, sir. Sir, similarly, the impact on P&L, like our net profit is showing a substantial gain from INR 1,458 crore to INR 1,869 crores. The main factor, other factor is taxation. So the taxation, which was in last quarter of INR 1,480 crore, has come down to INR 633 crores, which is disproportionate to the reduction in the profit. So can you elaborate what is the way we calculate the tax? In every quarter, it defers substantially.

Yes. So as you rightly observed, Ajmera-ji, our net profit was INR 1,870 crores and it has gone up by 62%. And it is on the back of the 2 facts. One is the taxation. Now our taxation is because we have shifted to the new tax regime, our taxation from this quarter is at the rate of 25% as against earlier, 35%. That is the first impact. And the second impact is with respect to the provisions, which we have to make before the taxes. So as regard provision is concerned, there has been a reduction in provision, which is basically because of some factual things. Number one, the slippage has come down. If you see our fresh slippages, our fresh slippages have come down from the earlier number of INR 1,000 -- presently to INR 1,313 crores from the earlier number of INR 2,400 crores. So the slippage has come down, because of which, naturally the provision number has also come down. That is one part, the other part being the aging side. So provision, because of the aging side, which was in 9 months, these are the exact numbers I'm telling you. For the 9 months FY '23, the aging provision was INR 4,313 crores, which was required at only INR 2,226 crores for this financial year, this 9 month of FY '24. So this is the impact which has happened. So if I give you the total of that, including the slippage provision and the aging provision, the total amount, which we had made the provision in December '23 -- '22 was INR 5,300 crores. And now the requirement was only INR 3,300 crores. So that is the reduction in provision which is happening on account of lesser slippage and also because of the aging. As regards recovery also, the provision has been released because of recovery. In the last 9 months of December '22, the provision release was INR 9,900 crores. And in these 9 months of December FY '24, the provision release is INR 10,400 crore. Here also, we got a release of nearly INR 500 crores. So all in all, the release of provision is happening in a natural process because of slippage reduction, aging and also the recovery process, because of which the less provision had to be provided. And naturally, the operating profit, though it did not impact the operating profit, definitely it has helped improve the net profit of the bank.

Next question we have from Mahrukh. [Operator Instructions]

Sir, my first question is on margins. So when do you think the deposit repricing stops, as in by when will your deposits, term deposits now get repriced? And what is the outlook for margins in 4Q and in FY '25?

So margins for FY '25?

Yes. What will be your outlook for margins? They fell in the third quarter. So what is the outlook in the fourth quarter? Will you see more deposit repricing in the fourth quarter? Where will margins settle in the fourth quarter? And then if at all you can -- you would be in a position to give guidance for FY '25 on margins?

Yes, okay. So as regards the repricing of the term deposit is concerned, most of our term deposits had already been repriced. The new term deposit which we are taking, say, in the last 4, 5 months, that obviously will get repriced at the end of their term. Maybe it is 2 years, 1 year, 6 months, 9 months, whatever. But whatever the increase has happened on the term deposit side, it has already happened. So we can safely say that whatever the term deposit we are holding today, it is on a higher rate of interest. Low-cost term deposit won't be there much in the book apart from those term deposits, which are for long period, 4 years, 5 years, 7 years, which may be at around 4%, 5%, otherwise. So one important thing I would like to say on the margin side, Mahrukh, is that typically what happens in the banking system is that when the interest rate on term deposits starts rising, the shift happens from CASA deposits to term deposits. If I tell you about Bank of India, we are offering 2.9% rate of interest on our savings deposit for any saving account, which has an average balance of INR 1 lakh and above in a quarter. And what we are offering on the term deposit side for 1 year is 6.5%. So the differential here is 3.60%. So that is a very healthy differential for any depositor to take a call whether he wants to keep his money in the savings account or he wants to put it in a term deposit. And if it is for a senior citizen, we give additional 1%. There, the difference becomes 4.6%. So that is why there is a shift in the entire banking system these days from the CASA side to the term deposit side. This is one thing which is happening because of which there is pressure in the margins. Apart from that, the pressure is also because of the fact that as per the latest RBI data also, if you see for the fortnight of January '24, the credit growth is around 20% and the deposit growth is only 13%. Because the incremental delta of the credit growth is higher, there is definitely liquidity issue. And the rate of interest is going high because of the reason that this issue is there. So as regards to the guidance, which we can give, the guidance, what we can see is that the rate of interest according to us have already plateaued. So the rate of interest or the margin pressure, which was there in December quarter will continue at the same level. I will not say it will go much higher. It will remain at the same level in Q4. But post 1 April, this tightness in the liquidity and also the interest rate increase will definitely get muted and the rate of interest will start softening in the next financial year. So -- and we are also expecting that the Reserve Bank will also reduce the repo rates in the ensuing quarters in the next financial year. So there also, the margins will start improving and the pressure on the NIMs will be lesser.

Got it, sir. Sir, I'm sorry, again, back on the wage provisions. So I think Mr. Ajmera asked this that if you see the net increase in your wage bill, your total wage bill, it's only -- it's not the amount that you mentioned, right? It's around INR 22 billion minus INR 21.8 billion. So though you made provisions, so it's because last time, the provisions were higher, is it, in the second quarter?

Yes, yes. So INR 1,091 crore is the total provision that we have made on account of the wage bill, Mahrukh, out of which INR 448 crore of provision we have made in the Q3 FY '24. The remaining provision has already been made. INR 643 crores was already held till 30 September. So this is the number which it is.

Correct. But there was no write-back of any old excess provision or any such thing, correct?

So I will request my CFO, Mr. Kumar, to pitch in if he has further clarification on this. Mr. Kumar?

Sir. Madam, yes, that is [indiscernible] write-back with regards to -- as far as the wage is concerned. Actually, what our MD sir was telling is correct point that we have made a provisioning of INR 991 crores plus INR 100 crores. INR 1,091 crores has been already made and is debited to the P&L. And whenever it comes, so we'll be using this particular provisioning. So that is a normal course. Whatever is there, it has been kept. There is no any write-back also.

Okay. Sir, and I wanted to squeeze in just one last question again on investment depreciation. You mentioned two accounts or one? You mentioned a sugar account and you mentioned one more, right, or...?

Yes, there are actually 4 accounts, 2 accounts of one NPA NBFC, wherein the resolution has happened and we have been issued NCDs, so which are standard NCDs. But as per the RBI guidelines, we have to provide depreciation that we have fully provided. Apart from that, 2 other accounts are there, which are very small accounts. So the significant amount in this INR 383 crore is with respect to 2 NPA NBFC accounts, where resolution has happened.

Next question we have from Rakesh Kumar.

Sir, a couple of questions. Firstly, on the credit yield, so what was the reason for this quarter that credit yield has fallen sequentially?

Yes. So credit yield, if you see our credit -- just 1 second, yield on advances, it is at 8.37% on a quarterly basis and 8.34% on a 9-month basis. So it has come down from 8.54% in September on a quarterly basis, though it has improved on a 9-month basis. But however, if you see on the yield on advances on a yearly basis, Y-o-Y basis, in December '22, our yield on advances was only 7.67%, which is now at 8.37%. On a 9 monthly basis also, it was 7.17%, which has now improved to 8.34%. So the yield on advances has come down. Only the fact is that sequentially, it has come down for the simple reason that there were certain -- some large corporate borrowers, we had taken certain calls and funded them, which is project financing. And it is on the AAA-rated asset side where the margins are thinner.

Okay. So like because this quarter, we also had lower recoveries. So either in the written-off loan or in the movement of gross NPA, recoveries are also lower. So what is the contribution of this lower recovery on the interest accrual in Q3 and Q2?

So yes, you are right that there has been lesser recovery in this quarter. So if you see our total recovery, it was the reduction in NPA, it is INR 2,795 crores, which we have shown in our presentation. Cash recovery is INR 1,248 crores and upgradation is INR 86 crores. So that is correct. But if you see, however, on a 9 monthly basis, so in the 9 months, we have done a total recovery of INR 12,960 crores during these 9 months, out of which INR 3,823 crores has been cash recovery, INR 969 crores is upgradation and the write-off is around INR 8,168 crores. So there has been a healthy recovery of INR 12,960 crores reduction during these 9 months. This is against INR 15,888 crores of total reduction, which had happened in the financial year '23 in the 12-month basis. So we are well on course of the guidance which we had given for the reduction. So we are anticipating a reduction of it around INR 16,000 crores in the entire financial year for FY '24 against which we have already done INR 12,960 crores. We are already at around INR 13,000 crores.

Okay. So this reduction you are talking about, the NPA recovery, upgrade and recovery on the written-off loan all put together, correct?

Yes, not recovery, writing off the accounts.

No, no. So you are including the loan write-off also number here or...?

So recovery from write-off comes in the noninterest income side of it. So if you see on the noninterest income slide of the presentation of the bank on Page 17, so this -- in quarter, December quarter, we have done a recovery in write-off account of INR 336 crores as against INR 290 crores in December '22.

Okay. So all these 3 numbers put together, you are giving these targets for FY '24?

Exactly.

Got it, sir. Just one last question, sir. Sir, our corporate advances composition has remained same, around 44% Q-on-Q. And the benchmark-wise distribution of advances, the others, composition has gone up to 12.3% from 10.3%, so -- and you said that we have done some corporate lending. So can you tell us that though there is no increase in the corporate credit composition, there is a decrease in the MCLR composition and there is an increase in the others composition? So if you can tell us what is happening here, I couldn't understand, sir.

No, see, if you see our corporate book, which is there on Page 7 of the slide, first, let me clarify our total book. There is 55% of the RAM, which is retail, agriculture and MSME, and 45% is the corporate book. This is our corporate strategy from the management side also that we want to put the RAM book at 55% and the corporate book at 45% because there are better margins and the risk also gets spread in the RAM segment. As regards corporate, which is there in the seventh slide, INR 2,12,000 crore is our outstanding in the corporate book as on December, which was INR 1,95,000 crores in December and it was at INR 2,01,000 crore only as on September. So there has been a Y-o-Y growth of 8.67%. And if you see incrementally, the increase has been around INR 17,000 crores. As regards the incremental sanctions that we have given, see, we have to understand in corporate that nearly 50% of our book is the term loans. And in the term loans, a lot of repayments happens on a regular basis, which are monthly repayments quarterly, half yearly or sometimes the annual repayments. So in order to meet these repayments, a lot of corporate loans have to be sanctioned continuously and get disbursed. So that is the thing which we are doing. So in spite of the repayments which are coming in the term loans, we are able to not only equalize those repayments but also incrementally increase our corporate book by INR 17,000 crores on a Y-o-Y basis.

Sir, we have a next question in the chat from Nishant Shah. Can you please mention if 1% ROA guidance is intact?

Yes. So as regards the ROA, even during the -- our QIP process and other times, we have said that the ROA, we will be able to do in FY '26, ROA 1% on a consistent basis, that we continue to maintain. As regards to presently, our ROA on a quarterly basis is at 0.82%. And on a 9-month basis, it is already at 0.72%, which has improved from 0.55% in December '22 on a quarterly basis and 0.44% on this 9-month basis in December '22. And further, it was at only 0.49% as on March '24 on a 12-month basis. The guidance for March '24, we are giving at 0.85% on the ROA on an annualized basis. And for the 1 year, we continue to remain -- give the same guidance. On a consistent basis, the ROA would be 1% and above in FY '26.

We have next question from Aditya Bagdia.

Sir, my first question would be on targeted LDR. So the LDR for the bank has increased sharply during the quarter. So what would you guide for LDR to be in the near term?

Can you come again, targeted?

What would be the target CD ratio for the bank in the near term?

CD ratio, LDR, okay, okay, okay. Loan-deposit ratio, yes, now it's clear. It was not audible clearly. So yes, so over here, what we are saying is that 79% of -- was our LDR in December. And as you are aware, the regulatory guidelines is 18% of SLR and 4.5% of CRR, which means 22.5%, we have to keep separately. So ideally, it has to be 77.5%. But for Q4 guidance, again we are saying that our LDR will be at around 79%, which will be below 80% for Q4 quarter. And another data I would like to share over here is that as regards excess SLR, we are having excess SLR of around INR 30,000 crores, which will help and aid the bank in taking care of any incremental increase in the loans and advances in case there is a shortfall in the deposit side because the credit growth is much higher than the deposit growth as is visible from the data.

The next question we have is from Sushil.

[ Congrats ] on a great QIP and performance after that. Sir, based on current environment led by FOMC's outlook and the interim budget, how do you see next 6 months, where domestic interest market is concerned? Have the rates peaked out? How do you see the pricing environment as rates would peak out, the corporate borrowing may shift to debt market rather than taking at an expensive rate from you?

Yes. Thank you, Sushil-ji. So as regards what we see for FY '25 basis the interim budget and the RBI stance, which is there, so RBI has already said that the GDP would be around 7% for FY '24 and it would be much better for the FY '25. And as regards the interim budget, also the key takeaway being apart from the investment credit which will be coming, investment capital investment which will be coming to around INR 11 lakh crore and other opportunities there available for the banking system for funding, the fiscal deficit guidance has also been reduced. Apart from that, on the geopolitical side, also the -- internationally, the GDP forecast has been at around 3.1% globally. And for India, the GDP forecast of around 7% is one of the highest among the entire global economies. So there is a lot of scope for the banks to come. And with the already $3 trillion economy that we have already touched and as the budget says that we will be becoming a $5 trillion economy in the next 3 years, so there is huge opportunity in front of the bank, on the entire banking system. And definitely, we will grow along with the economic growth, which will be there. As regards shifting of corporate credit, see, definitely with the Morgan Stanley index and the Bloomberg index, which will be coming for the bonds, there will be definitely deepening of the bond market in the system. But that will take time for penetrating into the AA or A accounts. Definitely, AAA accounts will -- on the corporate side will benefit. But overall, on the credit growth side, if we see that greenfield expansion, brownfield expansions and other activities will all get funded from the banking system channel itself, apart from the retail, agriculture and MSME. So we see no reason why the growth will not be there in the banking system both on the deposit side and also on the advances side.

Sir, what is your pipeline in terms of anticipated credit growth in the current quarter?

Yes. So as regards pipeline, we have around INR 10,000 crores of pipeline in the retail and MSME segment. And apart from that, we have around INR 50,000 crores of pipeline on the corporate segment, which includes sanctions where we have given in principle approval sanctions given or where disbursals have to take place or documentation has to take place. So around INR 60,000 crores of pipeline is there available with us, which is the fund-based pipeline. Apart from that, we also have some pipeline in non-fund, where the -- again the disbursals and other things have to take place. So we have a very healthy pipeline available in front of us to guide us to a credit growth, which we have already given of around 11% to 12% for FY '24. And the guidance for FY '25, we'll be giving later on once we get it approved from our Board.

The next question we have is from Ashlesh.

Just a few data-related questions on the TWO book. Firstly, we had recoveries of INR 336 crores in this quarter from TWO. Can you give a breakup of this number between corporate, MSME, agri and retail?

Yes, okay. I will request my CGM, Recovery, Mr. Sinha-ji, to respond, if you have this data.

We will give it to you, Ashlesh-ji. We will give it to you. Because the presentation doesn't have that, we will give it to you. That's not an issue.

So we'll share it separately with you, Ashlesh-ji.

You wanted a bifurcation of the INR 1,336 crores?

No, no, no, that recovery from written-off accounts, noninterest income.

Written-off accounts, INR 336 crores. Yes, yes, yes.

INR 336 crores. So we'll give you separately, Ashlesh-ji.

Sure. And just a few more, on the overall TWO book, I think we have about INR 45,000 crores in technically written-off assets. What would be the breakup of this outstanding book across the same 4 segments? Would you have that?

INR 30,000 crores is corporate credit and INR 10,000 crores is RAM. Around INR 6,000 crores is international...

Within that, within that. INR 36,000 crores plus INR 10,000 crores, so INR 30,000 crores is corporate, INR 6,000 crores is international and INR 10,000 crores is RAM. This is the broad -- this breakup, back of the envelope.

Okay. Sir, and what was the interest income from the recoveries which we had in this quarter?

That is around INR 700 crores interest income totally, right?

This quarter, it is INR 287 crores.

9 months.

Sir this quarter was how much?

Come again, sir?

What was the number for this quarter?

Yes, Ashlesh. In this quarter, the interest income in the TWO segment is INR 232 crores.

Sir, we have next question from [ Chintan ].

Firstly, on these margins, sir, I just wanted to understand, so is there any kind of one-off in margins for this quarter? Or was there any one-off in the previous quarter as well since we see a sharp decline Q-o-Q? And in the previous quarter, there was a sharp uptick Q-o-Q. So any one-offs there?

No, no, there is no one-off over there in the margins. There is no one-off there.

Okay. And sir -- sure, sir. And sir, on the staff cost, sir, going ahead, since we have already provided everything whatever was required till December, what could be the steady-state staff cost run rate going ahead? If you could just throw a number, a rough ballpark number, that also will be helpful. Like INR 2,200 crores has been the usual number for the past 3 quarters' average. So would we continue with this rate for FY '25 as well? Or could there be a bump-up? Yes.

No, see, INR 219 crores is already the number which we have started providing. So INR 220 crores will be one number. Apart from that, there would be some pension and other numbers. So another INR 50 crores, INR 60 crores, you can add upon that on a quarterly basis.

We have next question from Bhavik.

So 2 questions from my side. Sir, you mentioned interest income from recovery -- from written-off accounts was INR 230 crore-odd this quarter. And for 9 months, it was INR 700 crores. So what was it for last quarter, the September ending quarter?

So last quarter was INR 540 crores.

INR 560 crores so recovery from written-off accounts in this quarter was, Bhavik, INR 336 crores...

No, no, sir, I'm talking about the interest portion from the recovery from written-off accounts.

INR 386 crores.

INR 386 crores was last quarter, right?

No, in the presentation, we have given recovery in written-off account, INR 336 crores in December quarter, INR 560 crores in September quarter and in December '22, it was...

Sir, there would be some interest component, right, from this, which gets added into the interest income line. Sir, I just wanted, how much was it added to the interest income line?

Yes, yes, our CGM, Recovery, he's just clarifying you.

Bhavik, when we gave number in cash recovery in TWO, that does not include the UCI. I meant whatever we recover over and above the outstanding, that is coming in cash recovery interest income that is for UCI, et cetera. For this quarter, that is INR 232 crores. Last quarter, it was INR 350 crores.

3-5-0, okay, sir.

Yes.

Okay. And sir, are we looking to pay a performance-linked incentive next quarter? So our PPOP growth has been good. And what would be your ballpark number on that?

So performance incentive is that scheme under the performance-linked incentive, which is presently based on DFS guidelines, which is there. So we are waiting for the DFS guidelines to come, only then we can substantiate further.

Okay. But sir, any estimation, how much can it be basis the current guidelines?

We do not know the metrics for what it will be coming. So at present, we can't tell anything on that.

Okay. Sir, just lastly, sir, what is the LCR ratio? And can you, sir, break up -- give the breakup of INR 480 crores again, the portion of expense taken for provisioning this quarter, INR 448 crores?

Yes. So for this INR 448 crores, the breakup, Bhavik, is that for provision at the rate of 2% for the last 11 months, 11 months means from first November 2022 to 31st -- 30 September 2023, it comes to INR 129 crores. Fresh provision for Q3 at the rate of 17% at which the MoU has been signed, that is INR 219 crores. And retirement benefit and pension payment, that comes to around INR 100 crores. So total aggregating, INR 448 crores has been provided specifically in Q3 FY '24 on account of the wage bill.

Understood, sir. And sir, as in would you have, sir, number handy on how much PLI, performance-linked incentive, we paid last year?

So last year, we had paid a PLI of -- how much was the PLI? That was 15 days of the wages that was amounting to INR 260 crores, 2-6-0. That was INR 260 crores.

And that was in fourth quarter itself, right?

Yes, that was for the entire year.

Now we have last question from Mr. Ronak Daga.

[indiscernible] the wage revision provision for fourth quarter will be INR 219 crores. So what will be the wage-related provision for FY '25?

So it will go like that only, sir. See, how it works is, presently, the MoU has been signed, Rohan -- Ronak. So what will happen is once it is approved by the DFS government, then it will be directly taken into the P&L account and into the establishment costs and no more provision will be required. But since the MoU already has been signed at 17%, the cost would be coming at the same number at around INR 219 crores for the regular wage bill plus around INR 50 crores to INR 60 crores on the pension and the gratuity and other liabilities. So INR 220 crores plus INR 60 crores, you can say around INR 280 crores per quarter should be the run rate approximately.

Okay, sir. And what will be the breakup of MCLR, EBLR and fixed rate book?

Yes. So 6% of our total book is only fixed rate, remaining of our book is all floating rate, which is into MCLR and other things. I'll just detail it out to you also on that also. So here -- so our base rate, if you see our MCLR, it is 33%. Our external benchmark is 48%, base rate is only 1% and others, 12%, and fixed rate is 6%. So majority of it is the floating rate mainly into MCLR and EBLR loans.

Okay, sir. And what is the other category in the credit lending benchmark, the others, that the 10%...

The other category?

Yes.

So these are the agri and the KCC advances and other miscellaneous things, which do not fall under the category of MCLR or the EBLR or the base rate. And that amount comes to around INR 54,000 crores, yes.

Sir, we have one question in the chat from Ashlesh. Can you please share the breakup of your employee base of minus 52,000 between old and new pension schemes?

Okay. At present, we are not having the data. But yes, so our CGM, Mr. Pathak, is having the information, please.

So out of 52,000 current, only 8,500 are under old pension scheme, all others are under new pension scheme.

Okay. Sanjay, you wanted to say something on that breakup? So other breakup, Maimuna, we are just clarifying.

This is linked to the other banks' MCLR which is INR 54,753 crores, major portion which is advances linked to the other banks' MCLR. So we have taken the other categories and not linked to the other banks' MCLR.

So sometimes when we are giving corporate credit, we link to certain accounts to SBI MCLR or, say, HDFC MCLR. So there, we have taken everything in others because that is not linked to our bank's MCLR. So that is the reason why this number is appearing at around 12%. That is the clarification.

All right, sir. I would now like to hand the conference to Shri Rajneesh Karnatak, sir, for closing comments. If there are any additional questions, request you to write to us, we'll be more than happy to help you. Sir, over to you.

Yes. Thank you so much. Thank you for the patience listening for everyone, hope we have answered all the questions with all the details. So we continue to give good performance and work to better numbers for Q4 also. So whatever the guidance we have given for FY '24, the entire team and the management Bank of India team is working on that. And definitely, the Q4 numbers will also be better. And finally, the FY '24 numbers will be whatever the guidance we have given. Thank you so much.

Thank you, sir. On behalf of Bank of India, I announce that this conference concludes. Thank you for joining us.