Bank of Maharashtra (MAHABANK) Earnings Call Transcript & Summary

Ladies and gentlemen, good evening, and welcome to the Q4 and FY '23 Earnings Conference Call of Bank of Maharashtra. [Operator Instructions] We have with us from the management, Shri A.S Rajeev, Managing Director and Chief Executive Officer; Shri A.B Vijayakumar, Executive Director; Shri Asheesh Pandey, Executive Director and all general managers of the bank. I now hand the conference over to Shri A.S Rajeev. Thank you, and over to you, sir.

Good afternoon to all. Today, our Board of Directors adopted the results of financial results for the Quarter ended and the year ended, 31st March 2023 of our Bank of Maharashtra and we are happy to share our results with all the investors and the results. And this year, particularly the quarter, it was one of the best quarters as far as bank is concerned. And for the full year, the result is comparatively good. The total -- I'll share some of the results at a glance, then we can share our question-and-answer session. And the total business grown by 21% to INR 410,000 crores, and the deposit increased by 16% to reach INR 234,000 crores, and the gross advances increased by 30% to INR 175,000 crores. As of now, the C/D ratio is improved to 75% and gross NPA 2.47%, net NPA 0.25%. With this provision coverage ratio is raised to 98%. For the current quarter, net profit increased by 136% to reach INR 840 crores and operating profit grown by 57% to INR 1,855 crores. Net interest income increased by 36% to INR 2,187 crores for the current quarter and NIM improved to 3.78% as of the 31st March. Cost-to-income ratio improved to 38% and ROA improved to 1.32%. Our return of equity improved to 26%, and CRAR improved to 18.14% of which Tier 1 is 14.25%.

Ladies and gentlemen, we've lost the connection of the management team. Please stay connected. We will rejoin them. Ladies and gentlemen, we have the management team back online. Please, go ahead, sir.

And return of equity improved to 26%. And the CRAR improved 18.14%, of which Tier 1 is 14.25%. For the full year, net profit increased by 126% to reach INR 2,602 crores as against INR 1,152 crores for the year last year. Operating profit has grown, shown a growth of 26% to INR 6,099 crores, against INR 4,848 crores for the year ended March 31, 2022. Net interest income for the full year grown at 28%, and fee-based income is increased by only 6%. The main reason was during the current year because of the shift in interest rates, right? Profit on sale of securities was not there. Instead of that, we may have -- we have given around INR 180 crores MTM provision for SRs more than 5 years, like 100% provision we have made. If the provision was not there, there was a growth of around more than 20% growth was there. So onetime measure, we have given SR provision of 100%. Cost-to-income ratio, for the full year, it is 39%, averaged 44% last year. ROA for the full year is 1.1% as against 0.55% for the year end, March 3, 2022. Return of equity improved to 20% as against 11% for the last year. So we have RAM sector is the major growth happen and retail was grown by 23%, MSMEs grown by 27%. Agriculture also grown by around 25%. So the total RAM sector is gone by around 24% to 25%. Net advances is grown by 31%. So last year, up to last quarter, we have kept INR 1,200 crores provision, COVID-19 provision we have kept it, so that provision we have not utilized and it is kept as it is. It is not considered for capital adequacy purpose also. It is like floating nature. As and when required, that may be able to utilize that. So these are the major area of the financials are concerned, and I will give my mic to Mr. Pandey ji regarding digital area, what is initiative we have taken for the current year, if it is okay, Madam. Thank you.

Thank you, sir, and good afternoon to all the analysts. A warm welcome in this meet. You would have already seen the bank performance results. So accordingly to each of further both because bank you would have seen almost say, for last one year or so, so bank is adding up the business in the range of say, INR 60,000 crores to INR 80,000 or INR 90,000 crores. So that is very much imperative to augment its technology. So first of all, the Board has already adopted and directed to have a budget of more than INR 1,000-plus crores to augment this technology and various accounts. So bank is working upon the 3 important pillars. One is the digital operations. So it means whatever banking operations we are doing. So converting it to more and more technology, whether it's a reconciliation -- whether it is reconciliation even not T+1, but whether more frequency within the day. So that is one sort of thing. And so second is what sort of operations can be converted to digital journeys? So bank, you would have seen the two press release, which has come on our Commencement Day, 8th of February. And another last month because the bank has also taken a decision that each month, there will be a digital launch day. So many of the things pertaining to these 3 pillars and the third pillar is digital compliance. So because the compliance is one thing, when it becomes a legacy, it takes a lot of time and the resources as well. So that is what we are thinking to invite all those sort of compliances within the journey itself. So within these 3, we are banking upon, amongst others, basically on the 3 cases. The one is the artificial intelligence that we are very on the verge of finalizing so that we will be directly taking up. The robotic process automation long back, we have already started deploying. So almost 10 processes we have concluded and the 62 approval we had. Around 100, we have already identified. So that business process finalization and all is happening. And the third is machine learning, which is analytics or deep learning, I should say. It is in place with the analytics team in the bank and that we are using for our soft collections, also for the upsell, cross-sell and also some of the areas where we have to strengthen or to understand where our stress book will be. So I think under these 3 pillars, which we are working, the 4th is that already, which is in our website, we have come with almost, I think, more than 50 RFP for our various collaborations and IT initiatives. And going forward, within this month itself probably we'll be seeing some of the biggest RFPs, which we are coming on the lifestyle banking and other things. So in this, again, what we proposed and the Board which has deliberated is that on the business acquisition side, we are thinking for starting with the 5%, not only on the asset and liability, but even on the third-party products. So with starting from, say, 4% to 5% this year to increase it to almost 25%, 30% in the next 3 years' time. So this is what we are looking from the technological side. And secondly, we have done some very big collaborations on the [ CI Pro ]. Second is the CRISIL, which is already in the press release and it is corpus history. So we have strengthened our system of appraisals in the bank. And the third [Technical Difficulty] where we are using AI. So in brief, this is the total -- the vision that the Board is having and on which the entire bank, all of us, we are functioning. This is the brief on the technological or the digital initiative, which bank is aspiring and the areas which we want to cover. Thank you.

Should we begin with the question-and-answer session, sir.

There is 1 point I forgot to tell you and Board has already recommended 13% dividend of also for the current year as against the last year, it was 5%. Yes, now we can take up the question-answer...

[Operator Instructions] We have a first question from the line of Ashok Ajmera from Ajcon Global.

Thank you for giving this opportunity. My compliments to you, sir, very rich compliments to you, Rajeev sir, Vijayakumar ji, Asheesh ji for the fantastic performance. I mean, it's not that only one quarter or two quarter, quarter after quarter and in the whole year, you have given one of the best performance taking the bank total business beyond INR 400,000 crores. And I think you can be ranked as one of the best banks, if you look at least 8 to 9 parameters out of 10 parameters we have excelled exceedingly well. So my compliments to you all. And especially even on the dividend front, going from 0.5% to 1.3%, I mean, 13%, is also another -- I mean, big achievement for a small bank like -- I mean, small in the sense their business if you compare with other banks, the overall business like Bank of Maharashtra. Having said that, sir, and even on the operating profit, you have performed well INR 1,855 crores this quarter as against INR 1,580. On the provisioning side, sir, the provisions have increased, even though the provision for NPA is not increased much hardly INR 7 crores. So these other provisions which have increased. Will you elaborate on that? And whether it is going to be the feature in the coming years, too, this is one. Secondly, after growing so fast, even in the last quarter, I think the credit growth is almost 29.5% or so, where do we see the bank going forward that are we going to -- because still our base is low. So are we going to go on the same pace in percentage terms? And making it almost totally 100% provided bank with the ROA of, say, 1.5 or so. So what is our basically, the plan for the future for the FY '23, '24. And one, sir, on this Asheesh ji's digital journey, I mean, he has taken through the digital initiative, out of this 1,000 crores, which has been approved by the Board, how much has already been spent until now and how much do we plan to spend in '23, '24? This is just a few observations and questions in the first round. And I think I'll get only chance for the second round.

Yes, Mr. Ajmera, thank you so much. And first query is regarding provisioning. The total provision for March 23 is INR 945 crores as against INR 582 crores for December and INR 365 crores for corresponding March. You can see that the script we have given in this 17 -- Page 17 of the presentation, that provisions for standard assets is given -- INR 545 crores is the provision for nonperforming assets. It is in tune with other quarters also. And basically, 0.47 was the NPA for last quarter and additional INR 200 crores, INR 300 crores requirement was given for the reducing the NPA. So otherwise, provision may not be required for in coming years, coming quarter also because there is nothing to reduce now because the 0.25 range, we may have to continue as net NPA ratio, that will continue. So that here, I think, INR 200 crores, INR 300 crores provision -- excess provision we have made. Second point is that regarding INR 280 crore provision we have grown for standard assets. The standard assets is 2 components ar there. One component should increase in the growth corresponding to December '22. From December '22, INR 10,000 crores to INR 15,000 crores, standard asset has increased. On an average, it is coming around 0.5% if it comes around INR 70 crores, INR 75 crores will come for standard asset provisioning. And the remaining provision we kept for cushion little of floating provision we kept it because when the bank is coming for ECL nature, then next year is RBI is given that from 2024 onwards bank has to give importance for conversion from the percent provisioning to see expected credit loss methodology. So we are creating certain provisions for standard assets provisioning for moving forward because once the expected credit loss has to be classified under standard asset provisioning, not from NPA provisioning. So some INR 150 crore is kept for that, is a floating type nature. So INR 167 crore nonperforming investment is given, INR 167 crore is given. That is basically for SR provisioning because we have some SR that is below 5 years or 3 to 4 years, above 5 years. So that 100% provisioning we have made. So with this, I think we don't have any SR. Now the provision is to be given 100%, we have provided. So otherwise, provisioning in future also there may not have much impact requirement for provision is concerned. Second point is regarding the growth. Current year, the growth was 30% growth was in advances and 16% to 17% for deposit growth. Deposit growth we have not taken much deposits because wherever possible, we have gone for our borrowing window we have utilized. So that slightly deposit growth rate has come down. And the second one was the interest rate -- the market interest rate was also slightly high. So we have not utilized that window. So in the coming years, '23, '24, bank may be able to as per the direction given by the Board, 20% to 22% is the growth rate envisaging by the credit. And 15% to 16% is the growth rate for deposits. The growth rate of deposits of the current year will continue for next year also. But the advantage growth is likely we are bringing down because last year, 30% growth rate was there and the base also year after year, base also is increasing. Definitely, 2% to 3%, we have to bring down the growth rate. So otherwise, there is no such problems, and we will continue to grow. And we kept INR 500,000 crores business target of financial year '24. Last year, we have kept -- this year, we have kept INR 400,000 crore business target, instead of INR 400,000 crore business target. Super achievers target of INR 410,000 we have reached. So INR 500,000 crores target is kept for financial year '24 and with these growth rates, we may be able to reach that. Regarding the digital, I think our Pandey ji will tell you that correctly...

Yes, Ajmera sir actually the correct -- for every year, we are thinking INR 1,000 plus. And it generally starts from the August, September to the next August. So in this already, we have spent, I think, more than INR 600 crores. And the -- some of the RFPs are already floated, which are on the way for the closure. Some are already closed and some we are going to float another, say, 1 month time. So I think, as we said, the budgeted more than INR 1,000-plus crores that we will be going to inch up and end up with in this year as well as the next year.

Okay. Sir, if I'm permitted, we had certain accounts that are allocated for 13 accounts, I think, about INR 2,700 crores, shortly said. So what is the status there in NARCL...

This NARCL account list is, of course, dynamic. It keeps changing every time because some accounts are getting added, some accounts are getting deleted. At present, it is INR 2,400 crores now. We feel that this -- it is shortlisted for NARCL. Some accounts will come in the first quarter and remaining in the current financial year. One account has already been -- 2 accounts have already been received in Q4. One is JP Infra and another is Mittal Corp. Of course, though it was NARCL bid, actually, it was won by another ARC in Swiss challenge. And finally, the account was transferred. So 2 accounts finally done for our bank and remaining will happen now in the current financial year.

Little more I add along with our GM. Acutally, I'm Vijayakumar here. Total number of accounts short listed NARCL 43, Bank of Maharashtra has got 12 accounts, amounting to INR 2,673 crores. And as rightly, JP infra that one account is in a discussion state, remaining level in the process.

Sir, the way we are going, the gross NPA is also expected to be reduced considerably in '24 because there's still -- I mean, as compared to what we have provided, net NPA has come down considerably to 0.25, but gross NPA are still, I think, 2.47 or something. Is there any major reduction scope in the gross NPA in this year, coming year '24, I mean, '23-'24?

We will try to bring down below 2.

[Operator Instructions] We have a next question from the line of Akash Jain from Ajcon Global Services.

Sir, congratulations for a fantastic set of numbers. My question is regarding the gold loan book size. What is your target for the gold loan book? How is the book behaving in terms of delinquency? And what is the yield of the gold loan book and the means that you are enjoying? That is my first question. And my second question is your outlook on the restructured loans. So how is the MSME restructured book behaving? And what is the percentage of MSME restructured book to total advances as on date? That is my second question.

Yes, gold loan book -- total gold loan portfolio of the bank is around INR 7,000 crores, and we have kept a very competitive pricing for the gold loan because the risk weight is 0. But our average yield on the gold loan is around 7.25% with a zero delinquency. So that is one good sign of our gold loan portfolio. This comprises both on the retail side segment also and the agriculture segment also. Regarding the restructured book, we had only INR 4,200 crores of total restructure, which are most likely to be come out from the current year because the prayers are getting over. Accounts are more or less working fine. There is not much delinquencies are observed. Even in our total SMAs, you see, it is almost 0.45% of our total advances book. So restructuring book is performing nicely, and there is not no major risk on the restructure book also.

Okay, sir. Another question is considering the accumulated losses that you're carrying on your book. So what kind of taxation we can expect in FY '24 and your comments on the DTA reversal going forward?

Sir, we do not have any accumulated loss in our accounting book. In the income tax, we have an accumulated loss. Accordingly, we don't need to make any tax provision for that. But whatever the DTA we have created earlier against our losses that also is already reversal is done. Now not much DTA is available. It is only the timing difference DTAs are on book of a small amount.

And overall carryforward loss is roughly INR 8,000 crores and it will give us benefit for another 2 years.

Okay. And with regards to credit cost, what would be your guidance since the provision requirement seems to be less now and slippages are also under control. So can we expect credit cost below 0.5% for FY '24?

Yes, it will be around 0.5% to 0.75% range, we can keep it.

Okay. For FY '24.

Yes.

That is on account of additional provision we have made in order to bring down the net NPA. The goal what sir told, that it will below 0.5%.

And your outlook on the treasury book?

Treasury book that whatever that back page we have already seen and you know that now the RBI this time has paused the rate also. And going forward, we are expecting that softening of yield. So with this, that we are expecting not only the yield of the treasury will go up. As well as that, we will book the trading profit and there will not be any MTM deposition. So overall outlook is good in expectable treasury.

Yes. And with regards to corporate credit growth, which are the sectors that have led to this kind of good growth in the corporate book. Earlier, we were focusing on different clusters like pharma cluster, textile cluster, also infrastructure projects, especially Namami Gange. So going forward, now which sectors are we focusing? Are we continuing the same focus, the sectors we discussed earlier?

Yes. I think we are continuing...

Yes, this is the same sectors what we have grown that because earlier bank has not grown some of the sectors like pharma. This is LRD area where bank was not having any exposure, little exposure. We have taken LRD and other manufacturing sector. And the corporate sector, the growth is, though it is classified under corporate, the major component is coming from it's corporate sector that we are looking for now. Not this bigger corporates, we are not looking for...

And sir, what is your sanctioned pipeline as on date for the corporate book?

Around INR 7,000 crores, we already have in sanctioned pipeline.

And fund-based, non-fund-based?

So basically, it is more of a fund-based only, non-fund will be extra.

[Operator Instructions] Thank you. Ladies and geophone. We have a question from the line of Ashok Ajmera from Ajcon Global.

Thank you. I think Akash is also from my company and we have been only asking the question to the management. Most of the points have been covered. I would just like to know something about the NBFC exposure of the bank and how are we placed on overall limit on that and co-lending and where are we heading? What kind of yield are we getting from the NBFC business? And what is our outlook on that, sir?

Sir, regarding NBFC sector, we are continuously assessing our sanction exposure. And based on that, we are taking decisions as and when required, and we are taking exposure in top-rated NBFCs only with a focus of having good return also. That is prime sir. And regarding co-lending, after having gained experience we are poised for good growth in co-lending, and we are working on that front, along with the digitalization of that co-lending process.

What is our total book size of NBFC loan book?

It is approximately 10,000 crores.

Thank you. I request you to come back in the queue for a follow-up question. We have our next question from the line of Himanshu Taluja as from Aditya Birla Sun Life AMC.

Just a few small questions. Actually, most of the questions have been answered.

I'm sorry, sir. Can you use your handset, please? There's some disturbance from your line.

Just a few small quick questions. Firstly, given we have seen a margin expansion of 18 basis points in this quarter as well. And as the deposit pricing is catching up, how you see the margin outlook. Do you see any still further scope of margin expansion? So that's my first question. Second question is around, are you seeing any signs of withdrawal of the sanctioned limits of the corporate because of any nature of slowdown in any of the sectors. So that's my second question. And my third question is, how is the pricing competitive intensity at this point from the corporate pricing? So that's a small quick questions 2, 3.

The first one is regarding the margins. I think now as of the present quarter, it is 3.78. I think we will be able to continue with the same range of margins with a plus or minus 20, 25 basis pointoday's here and there. Something -- it will be -- definitely it will be about 3.5%. We may be able to keep that. Regarding that pricing is also connected with the margin and the pricing is concerned, and we are looking for pricing only. And even if corporates also, highly competitive corporates, we are not looking for. So the pricing and a reasonable profit or reasonable pricing that type of corporates only we are looking for that. So the pricing part, as of now, no competition is there in spite of competition. And our cost of deposits and CASA ratio is high. So slightly we can go with the lower pricing in the market with highly rated customers. That is what we are looking for that. As you are aware that our pricing in housing loans, 8.40 is the lowest in the industry actually. So the kind of pricing -- differentiated pricing will be due for highly qualitative customers. That is a strategy which we are adopting. The portfolio also -- for example, in housing loans and other things, to reach a portfolio of our housing loan portfolio or that type of retail portfolio [Technical Difficulty] above 800 is coming, double digit is coming back, 15% to 20% is coming, above 800 number is coming. So the quality is improved. So the strategy of the Board is to improve the quality above the operating profit level, so that's the provision has to be nill. That is the strategy we are adopting there. The third point is regarding sanction withdrawal, there is no such issues. And we have enough cushion, but we are on a selective basis only, corporate selections are doing only selective basis with reasonable pricing. So there is no such issues or concerns, still there is good flow of corporate is coming and selective basis, we are picking up that.

Okay. Sure, sir. Sir, just one small last final question. When you mentioned that you are expecting the margins to range between plus/minus 25 basis points in the coming fiscal year, I understand that downside triggers for the margins, if decelerated to 25, what would be the margin update trigger according to you in the coming year?

So why I am keeping that 25 basis margin plus or minus because as you are aware, when the 48% to 50% of the RLLR is based upon the external benchmark. So RBI has already paused the rates and we don't know maybe one more quarter, they may pause and chances are there, the interest rate cycle is coming down, then definitely, the rates may come -- start coming down 25 basis points or 50 basis points each. Definitely, it this impact the RLLR. So that's when -- then when the prices are coming down, definitely, the transfer pricing has to be happen. So that is why I use that 25 basis points here and there we told, but with 3.50 range bound is kept at the margin. We feel that 3.50 to 3.60 is one of the good margin, actually. That is why we have used that grading set.

We have a next question from the line of Vikran Damani from Damani Securities.

Congratulations on a good set of numbers. I just had a question with relation to taxes. Year-on-year on a percentage basis, it's fallen significantly. And even on a quarter-on-quarter basis, there doesn't seem to be any sort of consistency in terms of percentages. So if you could throw some light on it. I understand you said you had INR 8,000 crores worth of carryforward losses. But going forward, what can we expect? If you can just explain this a little bit.

Regarding taxes, what figure you are seeing in the profit and loss, this is not the outgo of any tax liability. This is the reversal of DTAs that we have done. You know what, we are writing off the account, an over-the-top provision, whatever detail you have created on the -- these are not provision, that has to be reversed once you are writing off that. So because of that, there was a tax liability in the form of DTA reversal. And since because we are holding INR 800 crores carryforward losses, so even though the taxable income may come, but it will be adjusted by the whatever losses we are having.

We have our next question from the line of J.K Jain from J.K. Jain & Company.

Congratulations for a very good set of numbers. One question when we have got a capital adequacy ratio of 17%, 18%, then where is the need for further capital infusion. Is it just a resolution to be in hand because it was said that in the first quarter, about INR 1,000 crores of equity will be raised. And second question, what will be the price of the equity because the company is now just looking very good. So if you dilute the capital already about 2 years back, the capital was diluted and the equity was doubled. So bank of your size having an equity of INR 6,000 crores looks a little embarrassing while you are showing a very good set of numbers, but if capital is diluted, so it will affect few orders. So your view on this, please?

This capital adequacy ratio is now 18.14%. And what you told is correctly -- it is correct that ratios will be affected because of the high equity of INR 6,000 crores. But that is already -- what has already happened and the government of India's equity investment is already done. But for this growth is concerned. Now the percentage rate is low, it is 18%, when the bank wanted to grow at the 20% to 22% range if you grow then same profitability profit itself may not be sufficient to keep the pace of the growth. So what we thought it should be 50-50 that whatever the growth rate is coming 50% growth rate will -- that growth will take care of from the additional net profit generated -- profit generated during the year. And the remaining has to be funded, the capital through either borrowing or for equity. So over a period of time, this INR 7,500 crore umbrella provision given by the Board is only for 2 to 3 years, growth capital is concerned. The government of India, and we don't want to have any kind of capital from government also. But when the equity, when we are raising that, this is only for growth capture. But you can see that ROE, if you think the bank is able to grow at the rate of 20%, 22% ROE. It is one of the best returns for the equity holders also. So for the time being, to reach -- the second point is regarding SEBI guidelines, one has to follow it. It is a compliance issue. By '24, we have to bring down 75%. So this capital raising process is mainly for reducing the shareholding of the Government of India to below 75% over a period of time.

So you can do one thing that Government of India disinvested their percentage instead of floating the equity capital of the bank of your size and which is progressing so fast and so good because I don't think there is any other bank in India, which has got virtually a negative NPA and such a good profitability and all these things. So why -- because I have seen that in all the PSUs, capital is so high, like your bank and Canara Bank and all this, so it's high time that when the conditions of bank has improved because of the very good work done by people like you and in other banks also. So you can impress upon the government that if they want the money and they want to keep it below, say 80%, they disinvest. Why the banks suffer?

I think the government will also look into that. You will see that because they are also getting the opinion from different sites. I think how they may think we will, have to -- I think already some of the market participants have already what you have suggested, they have already suggested to the government. And they may look for that. That is my feeling.

In any case, what will be the rate of -- if suppose you issue shares in the first quarter, what is your expected rate for this year? I think at least maybe INR 40, INR 45 something like that?

No, that depends upon asset valuation, availability, so that depends upon the value, we have to see that. This issue, actually, we have planned for last quarter also because the value was not there, so we have postponed actually. So postponement any time, it can happen. That is now -- if it is not good, definitely, it will postpone definitely that.

So would you say that the results which you have shown in this quarter -- this fourth quarter, it will be better in the first quarter of '24? We can jolly well accept feel that.

Yes. As of now, it will be better. As of now because we don't know that we have things. The present point of view of the results, I think that we can have a better result. That is what we are expecting.

Okay. Another question, a very small question. It's out of my curiosity. Because we generally see that NIM is usually 4%, 5%, 3%. But I usually talk to people, and I say that the banks are having a margin of 60%, 40% because if you are landing at INR 9 and getting fund at INR 6, so I will say we have got a margin of 50%. Why you banks people are saying that we have got a NIM of 3% only? What is the statistical calculation? Can you highlight this? Or can you tell, just throw some light, why don't you say if percentage operating profit, that should be the percentage of gross profit. When we talk about any industry also, you say this company is earning a profit of 30% gross margin. Why banks all over the world, they go about 3%, 2%, it looks very low. If you start saying that we are adding a margin of 40%, the prices of shares and stakeholders will go up like anything. Your view.

Yes, that we may have to look into that. I don't have any -- because the market practices are there generally. But we will -- if you have any suggestions, we will look into that if any kind of disclosure is required, that we will do that.

It is a question not to you, but question to the general fraternity of the banking sector, particularly from the American side.

On the other thing is that, it seems that major income of the bank is from the interest income. Other perimeters are also measured in that -- based on the interest income. That's why the NIM, et cetera, is coming into picture. And one thing we should not forget that there are still costs there. That can be also factored in percentage terms.

We have a next question from the line of Jayesh Shah from OHM Portfolio Equity Research. Please go ahead.

Big congratulations for excellent results. I just wanted to clarify. I don't know if I heard it right. Did you say you have INR 1,000 crores of CapEx -- of expense budget for digital infra. And how much of this you said you spent from INR 600 crores. So is this INR 600 crores coming into P&L or it is capitalized?

No, it is -- the total budget -- total budget both capital and revenue, and we used to calculate in that way that how much we are going to have an IT spend, IT and digital now put together. So actually, both it is collective only.

I see. Can you give a breakup of capital and revenue expense of the INR 600 crores that you spent in FY '23?

I think you can take it around, say, I think, 60-40 right now. Because, not many RFPs are already floated in last 1 year, and the -- some of the RFPs are going to be floated in the next 1 or 2 months. So that is the reason that since you are going to acquire the software, so the first year, what is the license cost and other things will go into the capital. And then ATS AUCs, other things will go into the revenue.

I see. So 60% will be the capital expenditure and 40% will be revenue.

Will be in between 60-40 or 70-30 range, it will come mainly for AMCs and other things. Then depreciation also in one of the parts, it will come because within the 3-year period, we may have to write off. That means 1/3 you have to write off that, yes.

I see. And the INR 600 crores will go to INR 1,000 crores for the next 2 years, each year?

Yes, yes.

We have our next question from the line of Akash Jain from Ajcon Global Service.

Sir, my question is the recovery from written-off accounts. So as on date, what is the accumulative return of accounts amount? And what is the recovery target from that? And my second question is since we are taking many initiatives, especially on the process front, making it digital. So is there any scope of improvement in cost to income as. We are already having one of the good cost to income ratio, we have one of the most efficient banks. But is there further scope of improvement?

Yes. I think -- recovery written off accounts -- at present, it is INR 1,000 crores, it's almost 5% of what is the stock and we expect same 5% to 7% in current financial year also, around INR 1,200 crores.

Okay. I think last quarter, it was around INR 18,000 crores, total written off in last year.

The write-off top, rightly said by you, INR 18,000 crores. It is growing also. Now it is INR 20,000 crores.

Out of that INR 1,000 crores, we have recovered. I think the same, 5% to 6%, the range will continue for future years also. It's a continuous process, okay. And last quarter also, we had a discussion regarding excess SLR. I think it was -- last quarter, it was around INR 5,000 crores to INR 6,000 crores. So as on date, what is the excess SLR we have? Would it be used to improving C/D ratio?

A 4% to 5% excess SLR still it is there. So that around -- INR 12,000 crores excess SLR is there that we can utilize for borrowing or it can be converted to -- for credit purpose.

Okay. Okay. And what is the target we are having for C/D ratio?

C/D ratio is now around 75%. So 75% to 78% target, we have kept it. 78% is ideal according to us at process.

And any plans to rationalize branches.

Yes. Branches -- this is a continuous for. Last year also, we have rationalization done by 30 to 40 branches either merge or we have closed and another 200 branches we have opened, new branches in different districts. So this year also, this is a process same way because loss-making and those branches where compounded annual growth is below 5% for -- continuously for 5 years, so especially rural branches all these things. Those branches will -- either will be closed or it will be merged or if it is a loss-making branch. And correspondingly, we will open 200 branches, permission is already given by the Board for the current year. So now as of now, 2,203 branches are there. So by FY '24, I think we may be able to reach around 2,400 branches.

Any comments on NCLT? Any recovery expected through NCLT resolution?

NCLT, one big account of three is there where now we are expecting in the current financial year. DSKDL is there. Two, three small accounts are also there, but three is one big.

So when are you expecting recovery from this?

It should happen in current quarter or at the most up to September.

[Operator Instructions] We have a question from the line of Ashok Ajmera from Ajcon Global Services.

Thank you for giving the opportunity, once again, sir, I would like to discuss a little more on the treasury side now because it can give another good flip now to the profitability of the bank after having seen in this quarter the losses in both if you see as a segment, also the treasury this quarter has given the loss. So now since the rates are stabilized and the RBI has taken a toll, now how do we see the treasury operation going ahead and giving us what kind of roughly the profitability so that other profitability being intact, this will lead further to that. So any color on that? I mean, how much are we estimating and our modified duration also has come down. So I think we should have a good operating profit from the treasury operations.

Yes. So you rightly said, during this period when the yield was on higher side, we have appointed INR 10,000 crores securities where the yield is above 7.5%. So now with the RBI has paused the rate and going forward, that it will further soften. So this would be the right time to earn profit. Secondly, in previous year, we suffered more because of the MTM. With this softer year, the MTM was not there. And one thing is that if you see our overall duration, it is below 1.25. So this will also help in keeping the check on the MTM. So going forward, there will not be much MTM or the MTM will be nil and by selling the securities when the yield is soften, the bank will earn good profit, so you can expect good contribution from treasury side in the current financial year into profit and loss account.

Are we looking to park, if we have proper liquidity, the funds into the CP where the rates are comparatively higher, which means you are getting, especially 6 months, 9-month CPs, I think you're getting anything from 8.75 to 9.25 in A-rated, well-rated companies, are we looking at that opportunity?

It will depend on -- what is the lending demand. If the lending demand is there and we are getting good rate, so we'll prefer to put the fund in this lending instead of the putting in treasury. You know the treasury rate you will not get what you are going to get in lending. Having said that, we will explore the good opportunity and in opportune time we will purchase security and sell it. so that getting profit, we are going to do. And a good thing is that, if you see the -- this financial year, in quarter, you will see that treasury yield has also gone up -- from 6.04 it has gone up to 6.34. So with this accumulation of the securities, not only the yield will go up, we will have more opportunity to unwritten profit.

Sir, a little observation. I was just going through one note on that fraud account where the total amount of last year -- I mean INR 933 some-odd crores has come down to INR 735 crores or something. I don't exactly remember the figure. So is that the recovery from the fraud account or -- I mean, when it was already 100% provided for -- what is that exactly and where it does stand in the profits quarter or this year?

No, no. The fraud, which has been identified of INR 933 crores. This includes also the unrecovered interest. But basically, we mean the provision only for the balance, which is outstanding. So INR 735 crores is that balance which is outstanding. Against that, we have made 100% provision.

This provision has not made during the current year. We are holding the provision and that since it was declared fraud, same provision is carried out.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Shri A.S Rajeev, Managing Director and Chief Executive Officer for closing comments. Over to you, sir.

Thank you so much for all support given by you -- and once again, thank you, Madam. And if any further questions or any clarifications you would need, please let us know that. You can send the query, and we will respond that immediately. And once again, thank you.

Thank you. On behalf of Bank of Maharashtra, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.