Bank of Maharashtra (MAHABANK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 and 9 months FY '24 Conference Call of Bank of Maharashtra Limited. [Operator Instructions] Please note that this conference is being recorded. We have with us from the management, Shri. A.S. Rajeev, Managing Director and Chief Executive Officer; Shri. Asheesh Pandey, Executive Director; and Shri. Rohit Rishi, 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.

Thank you so much. First of all, welcoming all of you to this conference call. Today, our results is approved by the Board of Directors. We would like to brief of the financial results. This quarter, bank was able to reach different milestones in different areas like operating profit -- closing operating profit of INR 2,000 crores per quarter, net profit more than INR 1,000 crores per quarter, ROA above 1.50, that is 1.55; ROE around 25%; cost-to-income ratio lower of 36%, et cetera. And in case of operating margin, it has improved to 34.5%, where the net profit margin improved to 18%. The net profit of the current quarter is up by 33.61% to INR 1,036 crores as against INR 775 crores corresponding last quarter. The same is up by 12.58% on sequential basis quarter-to-quarter. Operating profit has shown a growth of 27.32% on a year-on-year basis to INR 2,012 crores as against INR 1,580 crores in Q3 FY '23. The same has improved on a quarter-to-quarter basis by 5%. . Net interest income grew by 25% on a year-on-year basis to INR 2,466 crores as against INR 1,980 crores for Q3 FY '23. The same is on quarter-to-quarter basis, up by 1.39%. Net revenues, net interest income plus other income for Q3 FY '24 improved 20% from INR 2,620 crores to INR 3,146 crores as of Q3 FY '24. The same is up by 1.5% on a quarter-quarter basis. Cost-to-income ratio improved to 36.04% as against 39.69% corresponding last quarter. The same was 38.04% quarter ended 30/09/23. Return on assets improved to 1.55% as against 1.3% Q2 FY '23 and 1.37% for Q2 FY '24. Return on equity also improved to 24.51% as against 24.4% for Q3 FY '23 and 23.25% for Q2 FY '24. The total business grew by 18.89% to INR 434,000 crores. Total deposits grew by 18% to INR 246,000 crores. Gross advances increased by 20% to INR 188,670 crores. CD ratio stands at 76.78%. Gross NPA declined to 2.04% and net NPA reduced to 0.22%. Provision coverage ratio improved to 98.4%. CRAR stood at 16.85%, of which Tier I is 12.92%. If we add the 9 -- 3-quarter profitability, the CRAR stood at above 19%. For 9 months ended, net profit up by 61% to INR 2,837 crores as against INR 1,762 crores for 9 months ended 31/12/2022. Operating profit has shown a growth of 37% to [ INR 5,796 crores ] for 9 months as against INR 4,244 crores for 9 months, 31/12/2022. NII growth was 31% year-on-year basis for 9 months to INR 7,237 crores from INR 5,544 crores. Fee based income increased by 13% on year-on-year basis to INR 1,048 crores for 9 months ended 31/12/2023. Cost-to-income ratio for 9 months ended is 37% as against 39% corresponding 9 months' period. ROA for 9 months is 1.42% as against 1.02% for 9 months. ROE improved to 22.7% as against 18.5% for 9 months. In case of advances, Net Advances grown by 21%, where [indiscernible] from RAM sector. Retail is grown by 22%. MSME advances grown by 29% and Agriculture grown by 35%. For the current quarter, we have reduced our corporate exposure, as it was earlier 41.5%, reduced to 39% and thereby increased the RAM sector that much quantum. During the period ended 31st December, the bank has raised equity capital for the 9-month, INR 1,000 crores is reduced -- INR 1,000 crores is raised, and Tier II capital is INR 774 crores. Earlier, whatever the provision held by the bank is continued to hold the provisions to INR 1,200 crores. And for the current quarter as well as provisioning, additional contingent provision of around INR 300 crores to INR 350 crores bank has made consequent upon the prevalent agriculture growth and other issues concerned. And revised the guidelines of investments is applicable from next year. So for that purpose also, we have contingent provision of around INR 1,000 crores in case of valuation if it is [indiscernible]. So these are the main areas which are the -- bank which wanted to share with you. So I think that now we can take up question-answer session. Then whatever the queries is there, we are ready to reply that.

Already we have uploaded...

We have already uploaded the -- our presentation. Thank you so much.

[Operator Instructions] The first question is from the line of Suraj Das from Sundaram Mutual Fund.

Congrats on a good set of numbers. Just 2 questions, sir. One, on the staff cost, I mean, Q-on-Q, your staff cost has reduced. However, if I see the wage provision, I think that has increased. Earlier you were providing something like INR 55 crores per quarter. This quarter I think you have provided something like INR 100 crores. And also, if I see the [ GFC], I mean that is broadly stable on a Q-o-Q basis. So I just wanted to check, I mean what has led to this decline in staff cost?

So staff cost as against -- as of now, as per RBI guidelines -- as of now, it is expecting that around 17% increase in the staff cost for the latest bipartite settlement. As against 17%, I think we have already provided 20% to 22% provision is already made. In addition to regular provisioning, we have -- for the current quarter, we have made around -- INR 150 crores provision we've already made. So that is why we have -- now last quarter, it was not stabilized what was the rate of increase expected. So that was finalized at 17%. So we have not provided, but instead of INR 75 crores, we have made only INR 50 crores for the current quarter. That is why the small amount of difference has happened.

Okay. But I think, sir, last quarter, you provided INR 55 crores on the wage settlement bill. This quarter, you have provided something like INR 100 crores. So that is there is increase but overall staff cost has decreased. So that was my question.

I will tell you that. If you remember that earlier we provided staff cost at the rate of 15%. And for 2 quarters, we have made additional provision of INR 145 crores in addition to that 15%. Now since we raised the wage settled at 17%. So accordingly, we have made out about INR 145 crores, some amount when we made a 17%, we have taken from the previous quarter. So now that over and above 17%, the amount is roughly INR 100 crores additional amount is there. That is why that you see in Q3 staff cost has come down.

Okay, okay. Understood. Clear. And the next question, the last question, there is increase in the SMA 1 book. I think you have mentioned excluding 1 account, the book behavior is normal. So just wanted to inquire about that 1 account. I mean, what has happened there? Is it your sold account? Or what is the reading there? If you can give some idea where is -- I mean which sector this account pertains to?

Sir, that was the government account. It has already been recovered. It has come out of SMA 1 now. So as of now, our SMA 1 and [ 2 ] is 0.15%. Today, it has come out.

Okay. And is this your sold account, sir?

No, it's not a sold account.

The next question is from the line of Rohan Mandora from Equirus Securities.

Sir, just taking out from that SMA 1 question. In one of the slides, the number of accounts in SMA 1 has gone up from around 70-odd to 700-odd. So just want to understand like, while these are granular accounts, but which sectors are these SMA 1 coming from?

What you are telling -- can you repeat again?

Sir, if you look at the presentation, in one of the slides, the number of accounts that are there in SMA 1, that thing has gone up from 70-odd accounts to 700-plus accounts.

That we have given the amount, amount in percentage. Earlier that was 736, it was the amount, not the number.

So 736 is amount, okay, okay. So that was 1 account which has got recovered, that's why it was declined. Okay.

Yes, yes.

So out of that INR 736 crores amount, one account was there [indiscernible]. So because of the change in the government, there are some delay was there. Now it is clear and now it is not under SMA 1.

Sure, sir. Sure. And sir, second was that the increase in yield on investments is largely because of the quarterly averages because the investment book declined towards the fag end of the quarter? That understanding right? And that's also the reason for increase in NIMs for the quarter?

Yes, if you see that some of the investments, which were carrying low yields, there are -- matured or sold out. So it has improved yield. And that -- for last 9 months, we have added the high-yielding [indiscernible]. So overall, it has impacted increasing the yield on investment. That's why it has come up to 6.53 for the quarter and for 9 months it is 6.40.

Sir, just to reconfirm the calculation of yield on investment is on the quarterly average or on a daily average?

It is a fortnightly average.

Fortnight average, okay. And sir, if we look at the last 12 months, the AAA-rated corporate accounts, that count has almost halved. So which sectors are we exiting these clients from? And what were the reasons for this exits?

Yes. Actually, it is not -- you also know the competition which is there in the market. So actually, we are very clear in the bank like which pocket we have to, so that we maximize our returns and be safe as well. So that is why if you see the entire portfolio from AAA to AA, A and BBB as well, so you will see that we're very cautiously and very prudently and thoughtful that it is being invested. So what happens now? Because since the deposit rates also gone up. So if you are carrying with the same very, very competitive terms, then certainly it will hit. So it was a very cautious decision to come out. So it is not an exit, I would say, but it's an exit on the commercial terms.

Sure, sure. And sir, lastly, if you can just talk about the new customer acquisition trend in the liability side, like especially on the CASA, what is the new customer acquisition run rate? Within the last 3 quarters, that number on the absolute which has been broadly flattish in terms of balances?

See, related to the CASA, we will give you 3 points, which are the basic: the first is certainly we [indiscernible] that around 200 branches we have opened. So we keep our target with all the -- last 2 months before opening a branch, we keep a target of INR 10 crores to INR 15 crores branch opening business right from the day 1. That is the first point. Second is the salary account, which we are really targeting very high, 1, 1.5 years. So I think that is the second point. Now third thing is that like CMA and SMA accounts or the corporations, so that also with the help of the software integrations, because today, everybody wants ease of doing business. So we integrate. We have specific solutions for various corporates, not only, I would say, the government corporation, but even in the corporates. So we give so that their entire -- the internal -- their software is integrated. They didn't do anything manually. And the collections or the MIS and everything is given to them. So actually, these are the 3, 4 points which is giving the accretion in the customer base. So we have run the campaigns as well almost for the 9 months on addition of the case if a new customer coming into the bank's fold. So it has good -- it has nicely yielded results. That is why you see the customer base has also increased and the CASA, I would also say, increased.

We have the next question from the line of Rakesh Kumar from B&K Securities.

Yes. Sir, in the opening remarks, you mentioned that the provisions that we have of INR 1,200 crores, some portion of it you're holding it to use for this new guideline on the investment valuation classification which came this year and applicable from April. So can you -- so are you anticipating some provisioning requirement for this investment part because of the new guidelines, RBI guidelines?

Yes. We have made INR 100 crore provision in respect of the provision of the standard investment. As you know that the new RBI guidelines on investment has come, and it is going to be a bigger [indiscernible]. And some of the issues which are concerned issues and where that we have sought the clarification of RBI. One of the issue is that fair valuation of the recapitalizing bond, which we got from the government. As per that, it has to be fair valued from the date of allotment. So pending that clarification, we have made -- prudently, we have made INR 100 crores provision. And once we get the clarification, accordingly we will take this provision, whether to write back or whether to use it.

So is this provision like final or complete amount? Or going ahead, we would require to make additional provision for the same reason? Or this INR 100 crores number, what we have done is like kind of a complete number?

It is an estimated provision. We cannot say it is a complete provision. But looking into the investment guidelines, we have made the provisions.

Okay. And so recapitalization bonds, which are sitting in the bank's PSC bank book, so this provision is specifically for that, correct, sir?

Yes, sir. Yes, sir.

Okay. So what is the calculation, if you can slightly elaborate? We're not able to understand, so what is the calculation that...

As per RBI guidelines that recapitalization has to be fair valued at the date of allotment. So suppose the government has allotted INR 100 at the time the fair market price of such types of bond is INR 97, INR 98, so then INR 2 you have to fair value. And accordingly, that value has -- there will be MTM depreciation. Okay, sir? So in this regard, we have sought clarification of RBI because it is under HTM securities. So once we get the clarification, and there are some other issues -- ad hoc basis, we have made INR 100 crores provision.

And there is no other provision that is required for the similar guideline?

No, they have given the classification of investment where they have added a new category, [ FTPL ]. So that we are assessing that overall -- the security where it will go -- because we have to do reclassification. But based on that, roughly we've made INR 100 crores provision.

The next question is from the line of [ Rakshak Jain ] from Kotak Securities.

[indiscernible]

You are not audible. Can you speak loudly?

[indiscernible]

Still not audible.

Mr. Rakshak Jain, can you hear us? We will proceed to the next question, which will be from the line of Jai Mundhra from ICICI Securities.

Sir, I have 3 questions and clarification. So first one is on wage provisions, right? So what you said is that the bank was providing at higher rates than 15%. And now, right now, you are providing at 17% but over and above, you have INR 100 crores of extra provision. Is that understanding right?

Yes.

Okay. So sir, when you were providing at the beginning of the quarter, did you say that you are providing a 20%, 22%, assuming 20%, 22% kind of a hike?

At the time that we were not knowing what would be the hike. So on that estimate, we provided. So 15%, we are expecting wage revision. And over and above INR 145 crores we provided because there is no sanctity whether it would be 15% or more. Now that it is clear that wage revision would be settled around 17%. That's why we are telling 17% we have provided. Overall, if you see the -- take into account additional [ provision ], it is 22%.

Still we are keeping 20% to 22% from higher provision. And if it is finalized as 17% to 18%, we will take it, and the remaining we will write back.

Right, sure. So sir, when we say 17% wage hike, does it also mean that you are providing, let's say, 17%, but you -- have you also provided adequately on the pension provisions? Or this is only for the non-pension part of the wage bill?

No, this is actually a total load actually. So [indiscernible] amount we have already provided, including pension. Including pension -- if any kind of arrears, it is already provided.

Right. But sir, the load for pension can be different, right, from 17%, 17 % is the median number...

17% -- 20%, 22% also, we don't have any issue because we kept it 22%.

Right. So this will take care of your pension provisions also, the entire retirement liability, which will go up because of this hike?

Yes. And therefore -- and they have pension provision because of arrears, if any, other retirement benefits like gratuity or leave encashment, all this we have considered.

Right. And have you taken actuarial ballpark numbers also? Or this is on an ad hoc basis?

Every quarter, we are taking actuarial valuation. And based upon the actuarial valuation only making the provision. Not on an estimated basis. It is based on actuarial valuation.

Sure. And sir, out of your total staff, how many would be on, let us say, on old pension and new pension? I mean, people who had joined before, I think, 2003 or something.

6,000 is the staff which are eligible for the old pension.

Okay. So 6,000 people are eligible for old pension, right?

6,000? I think....

3,800 is the correct figure who are eligible for the old pension.

Okay. And out of total staff, sir, if you could roughly....

13,400.

Okay. So your proportion of old staff is actually relatively low -- much lower than industry. Is that understanding right, sir, 33% kind of a number?

But some impact will come for pensioners also. Already existing pensioners, around 13,000 to 14,000 pensioners are there. There are also some growth will come, not corresponding to the existing employees.

Right, right. But this INR 311 crores, which is the cumulative provision that we have, this will take care of all this retirement liabilities, right? Is that understanding right?

Yes, yes. It will take care. And we expect that some amount will come back as write back.

Right. Understood. So that is clear. The second thing is, sir, on this investment book and what you mentioned, that INR 100 crores provisioning that we are carrying on contingent kind of a basis. On this zero-coupon bond, I thought that during divergence, last year when we had made this instrument as a part of our capital, the discounted value was already -- we had knocked down our CET1 by that amount, right? So we would have taken that amount into P&L. So why again the provision?

We have not received any zero-coupon bond. Whatever the [indiscernible] bond we received from government, it is carrying coupon. In our case, it's not applicable.

Okay. Right. Understood. Okay. So that is a different instrument for you. Okay. And sir, then in this quarter also, we see that out of total loan loss provisions of INR 977 crores and INR 943 crores, we still have INR 250 crores of standard assets provisioning. What is that? And what is the thought process behind creating this standard assets provisioning or restructured provision? I mean, what is the PCR that we have on restructured. And could this be a recurring thing because we still have [indiscernible] standard restructured loans?

So restructured provision is already -- INR 400 crores to INR 450 crores restructured provision is already in our books. And in addition to that, INR 200 crores additional provision we have kept for agriculture loans, if anything as a contingent [indiscernible] agriculture growth and other areas if it happens. And if everything is okay, we can write back the provision. Otherwise, we have kept as a cushion for agriculture loans.

Okay. Sorry, sir, your restructured standard advances INR 2,700 crores, INR 2,750 crores received. How much is the restructured provisions that we held, standard assets restructured provisions?

It is roughly INR 450 crores . And if you see the -- where we can [indiscernible], that is the MSME. The figure is roughly INR 387 crores?

INR 378 crores.

INR 378 crores. So what we are expecting, maybe 5% slip. So INR 15 crores to INR 20 crores may slip. Against that, the balance sheet has more than adequate cushion since we are holding restructuring provision of INR 450 crores.

Right. So sir, this INR 450 crores, this provision on a loan book of, let's say, INR 2,750 crores which is roughly about 20%, right? So 16%. How high can it go? I mean, over the 2, 3, 4 quarters, would you aspire for a 40%, 50% kind of a provisioning? Or 15% is where you think you are [ decently ] provided?

Going forward, we will see the trend, actually it is sufficient provision what we feel like. But if we see the trend, accordingly, we can make the provision.

Initially we made [ 10%] provision for the restructuring was roughly INR 4,000-plus crores. And we did not reverse even though the restructuring quantum has come down.

So my only confusion is that we have a net NPA at 22 basis points, and we have a credit cost which is 120 basis points, right? So I don't know, I mean, this looks very, very weird that last quarter, we had 23 basis points net NPA and this quarter we have 120 basis points credit cost. So...

Please complete, sir.

Yes. So what I'm saying here what is the outer limit? So part of this is, of course, you are maintaining PCR and whatever is splitting, you are providing as much as 85%, 90%. But on the restructuring, what would be your comfortable provisioning level, right now, we are, let's say, 15%, 16%?

See that we are actually at the lowest level of net NPA now. Going forward, we don't find that we'll improve the same. So the challenge is to maintain that level from 0.20 to 0.25. So not much provision will be required, subject to we are controlling our slippages also. And the standard positions we are keeping as a cushion if something happens, especially in agriculture sector, I've told you about that. So accordingly, we are willing.

So the total contingent provisions that we have is INR 1,200 crores COVID provisions, plus INR 450 crores of restructured standard assets provision. Is that right? I mean -- or this is a part of [ that ] only?

It is right.

Also the total provision is INR 1,200 crore plus INR 450, right?

Yes. Yes.

So INR 1,650 crores is the total standard asset provision that we have.

And if you see that we were talking about credit cost, you see, as far as I know if we are making progress, we require only -- the credit cost would be below 0.5. Same -- to maintain a net NPA below 1%, 0.22, whatever slippage 100% you have to provide. So [indiscernible] credit cost this is not because of that, as far -- we require higher provision margin.

No, that is clear, sir, That you would not provide too much, but still that is still coming. Okay. And last question. Sir, why are we -- I mean, the tax rate which we pay is very, very miniscule this quarter as well as last quarter. So any details there?

Yes. So it's not the actual income tax liability because we have been carrying the losses -- income tax losses, roughly INR 8,000 crores. So whatever that actual profit is going, it is netted against that. So there is no actual income tax liability. It is simply the reversal of the DTA. Because when you are writing off out of the disallowed provision, you have to write off. So a small portion has come in the form of DTA reversal. So actual income tax liability is nil.

So for full year, what could be your tax -- liability tax rate?

If you see the actual income tax liability for this year it will be 0 because of the carrying forward losses.

And next year, sir, would that be normal? Or you would still have some benefit, which is still left to the next year?

It will continue in next year.

I think it is to continue for another 2 years, sir, because carryforward loss is around INR 8,000 crores to INR 5,000 crores, carryforward loss is there. So another 2 years tax liability will be 0.

Okay. Understood. And last question, sir, our loan-to-deposit ratio, right, is around 75%, 76%. Is there any informal guidelines from RBI to keep LDR within a certain threshold? Or you think that is only -- I mean, right now, you are 73%, 75% range. But is there any guidelines from RBI to keep a tab on the LDR ratio across bank?

There is no guidelines. We have not received any guidelines.

The next question is from the line of Niharikaa from Anand Rathi.

My question is already answered.

The next question is from the line of Ashok Ajmera from Ajcon Global.

Sir, compliments to you for yet another good set of numbers to the entire team of Bank of Maharashtra. And I start with the your award slide. You've been receiving several awards, Best Public Sector Bank award, National MSME award, Technology Award, Best Nationalized Bank in Agriculture, Retail Bank, so compliments to the entire team, sir. So I've got some broad, in fact, macro questions and some observation and wanted to seek your comment. Sir, our growth in terms of you take it business or advances, has been -- I think, over the period has been slowed down, if you don't compare the corresponding year last year, but if you look at the 9 months of this year, and only one quarter is left now. So when we were expecting the total business of this bank crossing almost the landmark of this 5 lakh crores, I think we are lagging behind a lot on that. Even credit growth in the entire 9 months is only 7.7% and just 3% in the last quarter. Of course, you have achieved good results. Good net profit, operating profit, good NIM. This is one that -- what is your plan to continue to grow at the pace at which you are growing over last 1.5, to 2.5 years. which is keeping Bank of Maharashtra standalone amongst the entire banking fraternity. So this is one. Second one is our CASA also, which used to be 55%, 56%, It's sliding from March 53.38% to 50.71% to now 50.19%. So there also what is our strategy? I mean, are we going to keep some lesser targets of the CASA also? So these are my first question. These are the broad kind of observations, if I can get the answer of that.

Yes. What you have observed is correct. Earlier, bank was growing at the level of 24%, 25%. Mainly one was that -- one of the reason was the low base was one of the reasons the growth rate was very high. And second point is that where the sectoral growth. If you see that, now the base has come to almost 2 lakh crores and slightly base is increased. So it's difficult for the banks to be at the level of 24%, 25% growth rate. And even if it is growing, the quality credit has to be considered. Second point is the pricing. So when the growth rate is coming, we are giving [indiscernible] bottom line than the top line as far as growth is concerned. So if you see the current quarter also, our RAM sector -- last quarter, our RAM sector was 58% and the corporate sector was almost 42%. Within one quarter, we have changed the strategy to provide that 62% RAM and balance 38%, corporate sector. So 3% to 4% corporate sector we have reduced, mainly because of the pricing. But our Mr. Pandevji has told us correctly, why we have not gone for [ AAA ] rated accounts. Because when it is coming for pricing, [ AAA ] rated and corporate loans, the pricing is very sensitive when the deposit rates are increasing. Bulk deposit rates are increasing at the level of 7.5% to 7.80% level. With the present pricing of the deposit -- with the [ AAA ], rated with the lowest cost, it will not -- nothing will contribute to the bottom line of the bank. So the Board also has already advised that instead of going for prices, of course, it is required secondary. But the growth rate of advances we will continue to be around that 18% to 20%, that is possible because we have already sold some of the IBPCs in the market it is there that will come back to us, the first quarter. And the deposit will grow at the 13% to 14% growth rate. That Is number one. And regarding CASA, you are well aware when the market interest rate is increasing, it is an industry practice that industry, all the industrial constituents, the CASA rates have come to 3% to 4% deduction as offset. So the same thing has happened in case of Bank of Maharashtra also, but we could be able to sustain at the level of 50% that we will try to continue with the 50% level. So for that 50% to 51% CASA level, the main -- one of the reason is that we have not grown much in high-cost bulk deposits. So when the bulk deposit is increasing, it will impact the bottom line. So our strategy is to keep the bottom line intact and the profitability margin, NIM, you can see that last quarter, most of the banks are affecting the NIM and NII growth. We were able to increase the NIM by 5 to 6 basis points. So at least even if in future, we may not be able to increase too much. But we have to be in the level of 3.8% to 3.4% range, we have to continue with this NIM. That is a strategy adopted by the Board. I think my answer is clear?

Yes, sir, yes, definitely. Sir, my second question is on the new initiative on the information technology slide you have given and also the digital footprint of the bank. I would just like to know, I mean, real business-wise, like if you look at the entire delivery of the business, whether be it credit or collections or credit card and this thing, how much actually has become operational? And in terms of some value numbers, some figures, that where do we spend today on the digital front, sir?

Mr. Pandey will briefly explain the digital initiative, that we used to do that.

Actually, this related to the digital products and STPs. See, we will tell you that it is not only and only business, it is something directly to business and something very indirectly to business. So what we are doing in our bank is the all the digital initiatives are actually having the three pillars. One is the direct business, which our STP like now we have done STP in the Mudra , we have done PM SVANidhi, PAPL. So almost around 15 to 17 STPs we have launched. So one is in the business. Second, which we have done is in the operations side, and I would say like video KYC, which is also on the business, both are asset and liability. The second is on the operations side. And the third will be on the services side. So like the nomination, which we have done, which is totally STP. Now even the third party we have done with the 5 products in the health insurance, non-life insurance and life insurance. So basically, what we are doing is that whenever the digital initiatives we talk about, we talk about in the 3 areas. One is the business, second is the operations and third is the compliance side. So like the robotic process automation. So as of now, we have already implemented 27, which is live in Bank of Maharashtra and another 10 which we're going to make live in another 10 days. So around 35, 36 will be live in this, and we aspire to cross 50 by 15th of March. So what we mean to say on the direct business impact, yes, we have launched very recently PAPL on a very risk mitigation basis on the POC basis as well. So within 10 days, we could do almost INR 10 crores of the business within the POC level, I'm saying, not on the public level. The second one is, certainly, you know, which is also the talk that on the asset quality side. So what we observed when PM SVANidhi we launched, which is totally all the real good algorithm and back testing with the other parameters. Our SMA book on the vis-a-vis comparison is very less. So this is the second outcome of that and where the people are involved. In the video KYC, we have crossed almost 125 to 150 accounts per day. So I think -- and the quality, the average balance is very good. So what I just wanted to give you a color is that the business is coming, we are actually monitoring and now the things are implemented. So on another down the line 6 months, you will see and our digital business zone which is created for only digital journeys is having the internal aspiration of around INR 3,000 to INR 4,000 crore in a year.

The next question is from the line of Gaurav Sharma from HSBC.

Just a small question on fee-based income. So we just observing a decline in fee-based income, sequentially by 10%. Sir, just wanted to understand the reason on this quarter. We have taken some cautious calls that you have some -- received some directives from our regulators to go slow on insurance or mutual fund-based income. Because I think in insurance recently the EOM guidance is revised and [indiscernible] said that they have increased the commission [indiscernible] just wanted to understand the reason for this decline.

Decline in fee-based income.

A decline in the fee-based income is 3 aspects there. One is regarding fee income connection with advances. So some -- one area where during the quarter, we have reduced the corporate advances by 3% of the total advances and thereby slight impact has happened regarding processing charges, processing fees, all these things. And some of the sanctions, we have given already there that is yet to happen, that will happen during the current quarter. So this current quarter whatever shortage is there will come in the next quarter. Second point is that regarding profit on sale of investments. This is the one area where slightly has come down because of the benchmark rates are constant and we have not much profit on sale is not happened. Third one is our prudential return of accounts recovery. So that also, there is -- scope is there. So some of the -- 1 or 2 accounts are there that is in the final stage and thereby the fee-based income will improve. There is no such a regulatory guideline regarding commission or like that, nothing is come to us. So that's the fee-based income is a point-to-point basis. Now it is 6% to 7% growth is there. So at least double-digit growth we are expecting in the next quarter.

Understood, sir. And sir, regarding the commission.

Sir, you're sounding a little muffled, I request you to please use the handset while you're speaking, sir.

Am I clear now?

Yes. Please go ahead.

Yes, yes.

Sir, on this revision of expense of management guidance by insurance, so have you seen an increase in your commission cost from the insurance companies?

What exactly.

Commission on insurance.

Yes. See, the commission on insurance is actually increasing because of the 2 cause. Because there is a -- earlier, there was some cap sort of things and the bank has also now taken, as you would have seen in the earlier press release. So 2 more -- 1 more we have taken in life, 1 more we have taken in non-life and 1 in the health sector. So I think the business is increasing. And secondly, as you mature in the life insurance business, so if persistency is good, in our bank which is good, so persistency the renewal commission which accrues to you as well as the new commission, first year premium, I would say. So I think both put together -- and not only this, the bank is also doing various other tie-ups and other things. So on the third party, I would say the [ posture ] and the color is good.

We have the next question from the line of Deepak Poddar from Sapphire Capital.

Sir, just wanted to understand on your credit cost. I mean, you did mention that we are providing majority of the slippage during the quarter, in that particular quarter itself. But I think in the past, we did spoke about maybe credit cost of normalized trade cost of 1% plus/minus somewhere 10 basis points, whereas current credit cost is much higher than that. So how do we see the credit cost going forward?

Credit cost, we want to keep it up to 1% only. If you see the additional provisions which we are doing, That is why the credit cost is going up. Otherwise, it is below 1% only that we are keeping as a cushion as and when required.

Okay. So also going forward, we expect credit cost to be around 1%, right?

Yes.

Okay. And that factors into this -- the policy of, I mean, providing majority of -- in the provision bucket, the one that would have slipped during the quarter.

That -- if you see that net NPA is 0.2 to almost 0. So that's because you have to provide almost 100% if you want to keep ratio and net interest within that band. So -- and going forward, we did our grain monitoring. And slippage will cut off and recovery, some of the -- the recovery will take care of some of the slippages. Even we provide 100% of that slippages credit costs will further come down.

But we do intend to, I mean, provide around 95% to 100% of...

Yes, yes. If you are to maintain ratio between 0.20 to 0.25, almost you have to provide everything.

Okay. Fair enough. And in terms of ROA, how do we see that? I mean, currently, this quarter, ROA of 1.55% is that sustainable? And going forward, what sort of ROE range we might be looking at?

Yes, we are expecting that it could be around 1.5% level.

1.5%. And FY '25 as well, I mean, next year?

Yes, yes.

The next question is from the line of M.B. Mahesh from Kotak Securities.

Just 3 questions. On the -- on Slide #19 with respect to cost of deposits, if you could just kind of tell us when this ratio would probably peak at current levels of interest rates.

I think the market expects that [ interest rate ] peak, it will continue up to this year-end. And by next to second quarter of next year I think it starts declining. So the same level of cost of deposits or slightly it might increase by 5 to 10 basis points, next 1 or 2 quarters. And then chances are that it may come down.

So you're saying at the next quarter, we can see a trend of around 4.5%, is it?

Yes, another 5 to 10 basis point cost of deposits may go up quarterly basis.

Okay. And sir, what have you done on the changes with respect to the NBFC guidelines -- sorry, risk-weighted assets for NBFCs and unsecured loans? What have you done to your borrowers? How are you approaching?

Pricing part, we have taken care because risk-adjusted capital-based pricing, we have done. And in case of NBFC, the pricing is passed on to NBFCs. And 1 or 2 NBFCs were not be able to take up so that we have not sanctioned that. So the pricing we have passed on to them.

Sorry, if I were to go to Slide 20. Currently, your yields are at about 9.01 on the yield on advances side. Where do you see this kind of going after making these adjustments?

So that will come around the 9.10 level quarterly basis.

Okay. And sir, on the second question with respect to the -- what is the impact on account of the recent guidance on the CET1 side?

Regarding [indiscernible] NBFCs as well as personal loans?

Yes.

We touched around 46 basis points.

46 basis points, okay. My final question, there has been some conversation in the media that the government has been asking you to step up recovery on the stickier corporate loans, which has been there from the last cycle. . Do you see any kind of strong visibility of that happening? Do you see any more recovery pending on that previous NPL cycle? Or are we largely done with it?

Now large corporates, more or less, as far as our bank is concerned, mostly very less remain. But 12 accounts are now poised in NARCL, they are large accounts. So -- of INR 1,600 crores. So we expect that some sale to NARCL will acquire those in the current quarter. So that reduction will happen in last quarter.

The next question is from Omkar from Vasuki India Funds.

Sir, for the last 2 weeks back, we saw that we reduced the interest rate on home loans and auto loans by around 15 basis points, while other banks have been increasing their NCLR in the last few months. So some light can you throw on this?

Yes. Last week, we have reduced -- that is only for a specific bucket of CIBIL score of about 800 and above. So the aim of the bank is to increase. At present, we have almost 10% under this bucket CIBIL score of 800 and above. So our aim is to increase under this bucket to 10 to 20 percentage, if possible. So that it was -- without risk-free assets, we have to create under this housing loan portfolio. That is the purpose of that.

The next question is from the line of Sushil Choksey from Indus Equity Advisors.

Congratulations on a very stable result and a good guidance. What's your view on the outlook on Bank of Maharashtra and banking in view of the current deposit scramble which is happening, the CD ratio, talk about RBI monitoring CR, banks where CD ratios are high. And what's in the treasury market?

Sir, as far as CD ratio is concerned, we have not received any guidance from RBI at what level we have to maintain. And going forward, we'll look to maintain it around 76% to 78%. And resources also will be mobilized. As far as CASA is concerned, recall in the beginning, that when interest rates rise, there is a tendency for fixed deposits to grow and CASA percentages to come down. I think we have stabilized around 50%. We'll continue to have that level going forward.

And where do you see CASA coming from, existing catchment or some new initiatives?

No, we have opened around 200 new branches, that also is a source of CASA. Then we have SMA accounts, G&A accounts. We have government deposits. We have high net worth individuals. There is steady growth from all the sources of CASA.

Okay. And your outlook on treasury?

Treasury, if you see treasury, the yield has improved. So -- and yield has gone down below 6%. Now we are hovering around 6.50 to 6.53. And that increasing trend will continue. You can expect that further -- that increase in yield in the March quarter.

Any focus on where tenure would be at March end?

My view is that it will hover around between 7.10 to 7.25.

So in view of that, how are you seeing the credit market and your treasury performing?

We will continue to see the opportunity in lending market as our [indiscernible] tool. We want to keep our CD tool, we are comfortable at 78%. So since that yield on treasury on the [indiscernible] lower side and we are having [indiscernible] securities. So you may see some switch over from investment to lending in order to have a better yield.

You are not expecting major treasury profits in the current quarter as well as in '24?

You know treasury profit it will depend on the market. So once an opportunity, definitely we will [indiscernible] we will try to keep the trade off between the yield as well as trading profit. But as I told that since the treasury is not having yield as compared to lending, and there is excess investment there, we'll try to switch over to lending in order to have a better NIM.

Yes. Go ahead, go ahead.

In order to have a better NIM.

Aerathu, sir, one question to you. Bank has done exceedingly well in your tenure and your management team. What is one thing which you would like to do in this bank in '24?

'24 I think we further -- our immediate aim is to cross the INR 5 lakh crore business, that -- which will happen during the '24. Second thing is high level of digitization that is already more than INR 1,000 crores CapEx is already -- budget is already given. So -- and BCG, we have already appointed, a consultancy is already there in the bank for the past 6 months. And the most of the area where digitization is happening end-to-end and STP is already done. By '24, I think this will be fully digitized bank. That is the expectation.

And to achieve all the goal digital expenditure all that is possible, what have we done towards human resource and transformation of the bank's entire top level and the middle level? And...

As of now 13,000 [indiscernible] and this year, we have opened -- and every year, we used to open more than 200 branches. And we are recruiting almost 1,500, 1,600 employees per year. Our -- so officers as well as clerical cadre, we are recruiting that. That will be sufficient to take care. So humans resource also, we are doing well. And recruitment process and the scale 2, scale 3 level or lateral recruitments we are doing. So HR area is fully taken care. And as we are trainings also, we are giving -- there is a good number of training. And all the chief managers and above employees this year has been trained in top 3 IIM Institute, top 3 management institute. And that kind of trainings, we are bringing down up to scale 1 level, that also parallelly we are doing that. So HR area, we will improve further. And the productivity, you know that this is one of the productivity area band we are #1 in case of total business per employee is concerned. So we will continue to do that.

The bank is future ready for digital and future ready with human resource, both on an integration basis. That is what I should conclude?

Yes, yes.

Thank you. Ladies and gentlemen, we will take that as a last question. I would now like to hand the conference over to Shri A.S. Rajeev for closing comments. Over to you, sir.

Thanks so much for having giving an opportunity to share with you, all of you and continue to support the bank. And I'm sure that this bank is having a bright future like this quarter and next quarter. This kind of results will continue. I assure you that. Thank you.

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