Indian Bank (INDIANB) Earnings Call Transcript & Summary

Thank you, sir, for providing us the opportunity to host this call. Good evening, everyone. Today, we have the entire management of Indian Bank where we will basically discuss the Q2 results call as well as the outlook on the growth margins and asset quality going forward. We first welcome Shri Shanti Lal Jain, MD and CEO; Shri Imran Siddiqui, Executive Director; Shri Mahesh Kumar Bajaj, Executive Director; Shri Ashutosh Choudhury, Executive Director; and Shri Bajrang Singh, Executive Director from Indian Bank. Request, sir, first to briefly give us the highlights of the results -- Q2 results. And thereafter, we can take some time basically for the outlook on the growth margins and asset quality going forward. Over to you, sir.

Thank you. Good evening, all analysts and investors for post results con call for Q2 FY '24. Our business has grown by 10% and reached to INR 11.33 lakh crore in September '23. And our business deposits has grown by 9% and reached to INR 6.41 lakh crore, and credit has gone by 12%. Under deposits, the saving deposit has grown by 8%, and the term deposit has grown by 10%. And we could maintain the domestic CASA more than 41% in the current quarter. In a credit side, our all component, REM has grown by 12%. Corporate has grown by 12%. Under REM, retail has grown by 14%. And under retail, housing loan has grown by 13%. Auto loan has grown by 36% and personal loan by 49%. Likewise, in the agri side, we have grown by 16% and 75 -- crop loan has grown by 17%, and 75% of the crop loan is a gold loan which is growing by 28%. The SHG has grown by 41%, agri allied by 46% and investment credit by 11%. MSME has grown by 5% and Corporate has grown by 11%. But in case of a standard corporate has grown around 14%. Likewise, the mid-corporate has also grown by 11%. So this is a business side. As far as our profitability is concerned, our operating profit has grown by 19% on a Y-o-Y basis and sequential by 4%. Our net profit has grown by 62% and sequentially 16%. The operating and net profit has grown on the strength of NII, which has grown by 23%. And the noninterest income has also grown by 9%. And under the noninterest income, our fee-based income has grown by 11%. Processing -- under fee-based processing has grown by 17%. PSLC income has grown by 52% and INR 336 crores is unamortized, which we'll consider in the remaining Q3 and Q4, and bad debt recovery has grown by 6%. As far as our asset quality is concerned, the gross NPA has come down from 5.47% to 4.97%, 50 bps reduction and the net NPA has come down from 0.7% to 0.6%. PCR improved from 95.10% to 95.64%. We maintained the trend of recovery more than the slippage. In the current quarter, the slippage was around INR 1,976 crores, and the recovery was INR 2,265 crores. So last year also slippage was INR 6,642 crores and the recovery was INR 8,504 crores. In the last half year, total slippage about INR 3,730 crores and the recovery is INR 4,272 crores, which is -- as a result, all asset net has come down. As far as our SMA 1 and 2, it has come down slightly more than INR 5 crores, and we are maintaining the collection efficiency of 95%. As far as restructured book is concerned, it has come down to INR 9,980 crores, COVID restructuring, and we are having around 27% provision there against. So asset quality, whether SMA 1 and 2, NPAs and restructure book, all is coming down. As far as capital is concerned, we are at 15.53% We have not added the 6 months profit. If we add a 6-month profit, it will improve by around 1% to 16.53%. We started from 16.49% in March and up with profit 16.53%, which shows that our generations are adequate to take care of our growth, because in spite of around INR 12,000 crore or INR 13,000 crore growth, our capital adequacy is intact. As far as our treasury is concerned, we have added around INR 13,000 crores in the treasury in the last quarter. And as a result, our holding on yield, which is on an AFS book is around 7.30%. And virtually, we are protected up to 7.27%. And here around modified duration of AFS and HFT is 2.84%. And out of around INR 2 lakh crores of treasury book, INR 147 crores is HTM and INR 56 crores is AFS. As far as digitization is concerned, our digitization, I now request my colleague Bajajji to talk about digitization, what we are doing. But besides this, we have opened around 38 branches in the first half. Overall RRBs are doing exceedingly well. Their business has grown by 21%. Their operating profit is 16%, and the net profit is 36% in half year, and all 3 are having net NPA 0. And our joint venture, Sompo is also having a profit of INR 123 crores in the first half as against INR 85 crores of the last year. Likewise, our subsidiary, Indbank Merchant Bank, is having a profit of INR 3.87 crore as against INR 1.16 crores. So all our joint venture, subsidiaries and RRBs are doing good. Now I request Bajaj sahab to discuss about that, digitization, where we are -- digitization business, where we are focusing and all.

Thank you, sir. Good evening, everyone. As far as the digital transformative initiatives are concerned, we started almost 18 months back. So till 30th September, we have done almost 63 journeys. Out of that more than 45 journeys are pertaining to the digital lending platform. And it has started yielding results also. Last half year, we did close to INR 376 crores of business. And this half year, we have closed INR 29,000 crores business.

INR 376 crores to INR 29,000 crores.

INR 376 crores to INR 29,000 crores. Whereas in the retailer side, we have done close to INR 2,500 crores; agriculture INR 18,700 crores; MSME INR 3,000 crores; and liability business INR 5,000 crores. So put together, even the last year -- entire last year, it was INR 5,600 crores, and this year first half itself, it's close to INR 30,000 crores. We have already done more than 45 journeys. And this quarter, we are planning to launch another 12 journeys pertaining to this digital lending platform. We as already have told the business has quarter-on-quarter -- this quarter itself, we have INR 20,000 crores. Where at the last quarter, we did INR 9,000 crores business. On the DLP and omnichannel, the omnichannel last quarter also, we are telling that we are going to launch. On the 15th August, we have launched our omnichannel for the closed-user group so that we are testing the ground before going to the public. So next 3 to 4 months, we'll be doing the regress testing, and then we'll go to the field. On the digital channel business, the Y-o-Y growth on mobile banking is close to 47%. Transactions on the mobile banking have grown up by 17%. UPI users have grown 34% Y-o-Y. UPI transactions have gone up by 65%. Netbanking user also Y-o-Y growth is 37%. Debit card users grown 16%. Credit card users grown 10%. And the -- as for the UPI QR code, it has gone up from INR 4 lakh to INR 39 lakhs. And the UPI QR code transactions have gone up the last half year was 108 lakh and this year it is 998 lakhs. So close to 10 crores. With that, now we are open to questions.

Okay. I'll add 2, 3 points basically, which is very important, one is the margin. So the margin -- domestic margin is 3.52% as against 3.61% of the last quarter, with reduction of margin of 9 bps. This is because of increase in the cost of deposit first point. And second one is that there is interest reversal of some KCC account around INR 261 crores, impacting margin by 12 bps. At the beginning of the year, we said that we will be able to protect our margin of 3.41% for the -- which was a FY '23 margin. We are presently at 3.57%. We told 3.41% plus/minus 10, 15 bps, and we are near to that. The deposit, we told at the beginning that we'll grow between 8% to 10%. So we are 9%. All our guidance advanced 10% to 12%, we are at 12%. GNP below 5%, we are at 4.97%. And NPA lower than 0.9%, we are at 0.6%. ROE, we said that 1%, we had at 1.01%. And that cost to income ratio, we said 44%, we are at 44.29%. And credit cost, of course, we said 1.25%, we are at 0.81%. And the slippage ratio, we told about 1.5%, we are at 1.67%. So majority of our guidances, we have -- the results are in line with the guidance. Now we are open for questions.

Thank you for the elaborated guidance, sir. So before we start with the call, I just wanted to understand your thoughts, particularly on the credit growth front and deposit growth front. So our deposit growth seems to be pretty on the lower side. Our CASA also has come off a bit during the current quarter. Any strategy that you have to protect your CASA going forward?

Yes, we have done a number of steps in this regard. What happens, the deposits comes from salaried customers or existing customer, deposits comes from FI customer, deposit comes from NRI customers, deposit comes for the institutions. So deposits come from various -- deposits come from the government business, right? So what we have done from last about 1.5 years, we have created R&GR sales, which we call they were liability vertical, which government resources so 6 or 7 center, which is at Lucknow, at Chandigarh, at Calcutta, at Chennai, at various centers. So we are getting a good business -- government business, government deposits. FI is a one channel, which is also giving us more than 20% growth in the CASA. We have started our remittance business, NR business. We have recruited the people, and the results will start coming on that. The third one. Fourth one is what happens, we analyze 200 centers where our deposit growth is substantial in the system. We have already opened around a 51 retail acquisition center and deployed manpower. We have also came out with the various schemes like insurance free or some charges reduction on a deposit anybody will give from the institutions or from the organizations. We have developed various product for religion institutions or cooperative societies, for a number of sectors. So we are working on various sectors, and that is why we will be able to maintain in this increasing interest scenario at domestic CASA more than 41%. And we'll continue to work on that because going forward also, we need to maintain that regime.

What is your broader guidance on credit and deposit growth for FY '24, sir?

So I'll stick to that 8% to 10%, which I've given at the beginning. So we are at 9% number. And even the advance is also 10% to 12%, we are at 12%. Generally, we are conservative in giving guidance. So we'll achieve the target.

Sure, sir. We can start with the Q&A now. First question we have from Mr. Ashok Ajmera.

Sir, as usual, rich compliments to you for the fantastic results on almost every parameter and achieving almost every target given. Having said that, I've got just a couple of questions and some observations. One is, sir, on the treasury operations, our AFS book is increasing from -- has gone up to originally from INR 44,000 crores, INR 45,000 crores to INR 49,000 crores in last quarter to now INR 57,000 crores. And modified duration also which used to be generally 1.8 to 2.25 has gone to 2.84. Maybe last quarter also, it was 2.88. So can you give some color on our overall treasury? What is the thought process behind it? And how much are we making the money and whether it is a good idea to give a conservative statement for the credit growth of just 10% to 12% and putting more trust on the -- deploying the money in the treasury?

So thank you, Ajmeraji. First, you rightly observed that our AFS book has increased. This was intentionally, we have increased our investment book because there's a time to increase your durations because we know that going forward, the interest rate will come down, and this is the right time you can invest at a 7.3% to 7.40%, between this, right? And we have invested this money. And as a result, our holding on yield has improved. So what happens, this investment will continue to give us a good return. We are adequately liquids. We are liquid. Even our LCR 131%. So we are liquid for the credit growth as well. But I'm very margin conscious, wherever we are getting good proposal. And at good margins, we are moving ahead with this. So wherever the asset quality and margin, both combination will happen, we have wins. And you rightly said 2.84 -- it has become 2.84%. So we have built up.

Sir, the other question was coupled with that only. On the credit gross side, our bank has got, I mean, such an efficient management led by you and the entire -- very, very good underwriting standards, very good credit bottom to top line. But if you look at the growth on the domestic book, it's only INR 8,000 crore on a book of INR 4,58,000 crore. Whereas the overseas book has gone up by almost about 16%, 17% to INR 4,837 crores, which gives a very small yield comparatively. So some of the other banks, of course, one -- small 1 or 2 banks are giving even 20%, 22%, 24%. I will not say that. But can we not go for at least 14%, 15% -- 14% to 16% and make some good money on that because I understand your AA -- AAA rating has gone -- percentage-wise has gone down because there you don't get the proper NIM or yield. Whereas -- even there are scope for even A and some of the good BBB-plus accounts also with a good underwriting standard which you have. I think something on that can be thought and this conservatism should be reduced, and we should come to some realistic level of the credit growth.

No, sir, we are open actually. That is why I'm telling you 14% to 15% in corporate. Virtually, what happens, our NPA has come down substantially in the corporate book as well. And mid-Corporate 2 is growing around 10%, 11%. And we are open for all even BBB, A, AA, AAA, all these accounts provided we get a good margin. In market, there is no point of giving credit or rate [indiscernible] which you can see our NII growth is at 23% as against the...

No, no, of course. Looking at that only, I'm saying that if the book further expands, it can...

We are open for expansion, sir. We are actually growing in a planned way. So our risk is spread. Our return continuously -- bank can give the results on a sustained -- continuously good result on a sustainable basis.

Coming on that only, sir, in the unrated -- other than government unrated almost, what, INR 10,000 crores -- INR 9,962 crores. So those unrated other than the state government and the central government accounts, which are those unrated accounts and whether agree, I mean, what is the composition of that?

I'm telling you what happens, our 74% is a BBB+ above, right? 15%, 16% is a PSU, 90%. Remaining 10% is basically the HAM project where after completion, you get a rating or an educational institution or hospitals or contractors or LRD exposures and all, where you will not get a rating. These are all -- majority of these are all cash flow-based lending.

Sir, just a small amount, but a question on this PM SVAnidhi, it's a new product, which is being, of course, aggressively marketed by all the banks, almost about 4.5 lakh accounts with outstanding of INR 586 crores. What is your experience even for us to know that on SVAnidhi how are we going and what is the -- basically, our experience on these accounts?

No, from the banking perspective, I'm telling, this is a committed disbursement, not outstanding. So disbursement is much, much lower because there are 3 variants of PM SVAnidhi. First is INR 10,000, then INR 50,000 and then beyond this, right?

INR 20,000.

INR 20,000 and then INR 50,000. First, suppose you pay INR 10,000 then you are eligible for INR 20,000. If you pay INR 20,000, you are eligible for INR 50,000. So there are 3 things here. First is the interest rate, you are getting good returns, 13% or so. Government of India is giving 5% or 6% subvention. Government of India is guaranteeing you. So from -- as a bank's perspective, your asset quality is guaranteed. Your return is guaranteed. You will increase your customer base. So from the banking perspective, they have protected us from all angles.

Okay. So on that my last question in this round, sir, is on our overall recovery prospects, if you combine with NARCL, some of the disposals coming forward, NCLT and some -- to the other ARCs, some scheme -- some plans for selling some assets or some accounts. So where do we -- I mean, can you give us some color on that, how do we look the next 1 or 2 quarters in this year remaining?

So Ajmeraji, 2, 3 things. We are continuously giving the improvement in recovery. We decided that our recovery should be INR 8,000 crores. So in 6 months, we are at INR 4,300 crores. So we are going on that. Second one point is that your recovery, NARCL, what happened in NARCL, around a 41 account of INR 8,900 crores has been identified. We shifted around a 3 account to NARCL and book balance of INR 1,959 crores. And some of the money we received, some of the NCD, OCD we will receive. And remaining 8 accounts there, we have received a bid. So what happens when you receive a bid, it go to the Swiss challenge. Anybody can offer a higher rate, then whosoever gives a better rate we will give to that. So this 8, first we take from them and go for Swiss challenge. This is all second is going on. Third is, where we think that we can recover more so this can keep on hold -- some transactions we are keeping hold. So we are working on that, but I'm telling you, we will have a recovery more than what we planned in the current financial year.

The next question we have from [ Minish Jethani ].

First of all, congratulations on the great set of numbers. So my first question is on the asset repricing. Considering majority of our book, which is MCLR-linked. Just wanted to understand what percentage of overall advances is currently reflecting the existing MCLR rate? And the balance, when can we expect the repricing to happen?

As on date our 64% book is on MCLR. Last quarter also, it was 64% we are maintaining, and around 31%, 32% is on a repo. So what happens this book is keep on coming for repricing, maybe around INR 40,000-odd crores will come in the current quarter for repricing. What happens today my 1 year MCLR is 8.70% and prior to that it was less than 8%. So this will come for repricing. In the meantime, some deposit will also come for repricing. So it keeps on happening, but our endeavor is that we should be able to protect our net interest income and the margin.

You said INR 40,000 will come for repricing in Q3. And what could be expected in Q4 then?

You see, 64% of the book is there. So INR 5,64,003 lakh crores, right?

INR 46,500.

INR 46,000 currently is coming. So virtually, what happens -- Q4 is INR 46,500 crore.

Got it. Got it. Sir, second question was directionally since large part of our book is MCLR linked and with interest rates now largely being stable, so wanted to understand deposits will continue to reprice at their own pace. So what gives us confidence in maintaining the NIMs going forward?

So you see, RBI has increased the repo rate, right, from May last year. We too have started increasing our deposit rates, right? So what happens, majority of the deposits have bracket of 1 year to 1.5 years, majority of them or in fact, our duration of our liabilities is 1.62. So majority of the book has already been repriced, first. Or entire your CD book, your wholesale book, your less than 1-year book, even the 1-year book has been repriced. A small portion is, again, 2 year, 3 year, 5 year, it will come for repricing at a very, very small percentage. So when your majority of book has already been come to repricing, some may also come, but this MCLR will take care of all these issues, first. Second, you see our treasury yield is also increasing. So all this give us the confidence that we should be able to protect our margin. And the way we are doing, sir, our NII is growing.

Got it, sir. That was helpful. And my last question from my side. I wanted to understand the recovery number target expected for FY '24. And also wanted to understand, since the PCR is in a much higher range today, so that contribution to other income will continue at the same pace or we can expect some decline on that side?

So your point is that recovery we have -- at the beginning of the year, we said INR 8,000 crores is our recovery target, right? So today, we are at INR 4,272 crores in the 6 months. So we are confident that we will be able to achieve this INR 8,000 crore number. And majority of this recovery naturally will come from the NCLT, SARFAESI, OTS, ARC, compromises. This all will happen at this -- because we are having close to INR 40,000 crores of PWO book and around INR 25,000 crores of gross NPA. So a huge number we are running. So I'm sure that going forward, this number will continue to appear.

Got it. And on a broader basis, this 1% ROA, so on a sustainable basis, if one has to take out the recovery number, will we be able to still maintain a sustained 1% ROA, say from FY '25 and beyond perspective? Since decent portion on the ROA is contributed by the recoveries also. So I wanted to understand sustainability of the same.

Sustainability, you can see that our 1.06 is ROA for the last quarter and then an average of 1.01. So whether NII is growing and then your net NPA has come down 0.60. So where is the baggage you are having? And we are having a standard asset provisions and all this. So we are optimistic that we should be able to maintain this ROE more than 1%.

So next question, we have from Dixit Doshi.

Congrats for the good numbers. A couple of questions. Firstly, if I see from last couple of -- from last almost 3, 4 quarters, in the provisions, we are doing provisions for the standard asset as well, just to make the book much more stronger. And now our PCR is also reached 95% plus and our net NPA is hardly 0.6. So -- and also we are holding a lot of provisions for standard asset and excess provision. So can we assume that the provisions for standard asset and as well as NPA will continuously coming down over the quarters -- coming quarters?

It should come down, sir. Point is that 0.6 is a net NPA, INR 2,800 crores. So naturally, we are not carrying any baggage. And this is standard advances also, we are making provisions based on our own assessment portfolio based in asset-specific base, right? So should take care of any kind of eventuality will come. So the bank is virtually fully protected to my mind from that asset point of view at this point of time. If nothing substantially go wrong, that's a different issue. But otherwise, we are sure of our asset quality and provisioning parts.

Yes. So this provision for standard asset, we are doing it from many quarters, and we are holding a lot of excess provision. So is it fair to assume that, that provision will not increase substantially. If you may continue doing the standard asset provisions, but it will not be significantly increased.

Because as a bank, we should always be making buffers, but not substantial because based on what is happening in the economy, right? And various parameters are there. Based on that every quarter our RMC decides what kind of risk we are seeing in future and all which sector, which industries, which business. But all this keeping in view, I think there should not be a substantial increase, sir.

Okay. And my second question was regarding the QIP. So if you can mention that till what period we have the permission from the SEBI to bring down the government holding? And are you planning the QIP anytime soon or we may wait for that time till the SEBI have given the extension?

So our shareholders and our board has given approval to come out with a QIP up to INR 4,000 crores anytime during the current financial year '23, '24. And we are accordingly working with that. And so our endeavor to approach to the market at an appropriate time.

So till what period we have an extension from SEBI?

That extension is with us. So I think that extension is August '24, that is extended by 1 more year.

The next question we have from Mona.

So my first question, I just missed your guidance on margins. So where does that stand, the margin outlook?

Yes. In the beginning of the year, we said the 3.41% was the margin. And our endeavor will be to product that margin with plus/minus 10, 15 bps. Today, it's against 3.41%. We are at 3.57%, right? 3.52% the last quarter because of that interest reversal and all happened and KCC launched and all. So whatever based on the MCLR book, credit, that repricing -- majority repricing has already been happened, we are hopeful that we'll able to maintain our guidance which we have given at the beginning.

Sure. And how much was the impact of interest reversal on the margin this quarter?

Around 12 bps.

Okay. Got it. Secondly, on the -- if I look at the breakup of provisions, you have made some INR 574 crores to standard asset. What exactly is that?

This is basically provision we made on a portfolio basis and even in some accounts on account specific basis. So on a portfolio basis, based on the certain parameters we have, we are making provisions.

Okay. So if I have to understand ex of NPA provisions, how much do you hold on the balance sheet, what would that number be?

You are interested in...

Total provision...

Standard asset provision which we are having?

Yes.

Our CFO, Sunil Jain, standard asset provision that we are having.

For this quarter, sir, net...

What is -- as on date standard asset provision?

Yes, sir.

We are having total amount.

As on date, we are having total standard asset provision of INR 7,405 crores.

That you have to exclude this 7 June, because some of this may be the NPS. So standard asset provision, how much we are having? So calculate and tell, right? We'll let you know, madam.

Sure. Just -- and just finally on the restructured book, if you could share the outstanding including the MSME book and how much slippages we have had so far?

So in a restructure book, basically, we are having INR 9,980 crores. Now INR 9,000 crores -- and we are having 27% of provision. Now, I'm telling you the entire restructure book. What happens, we have done a total COVID restructuring close to INR 18,400 crores, right? And today, balance is INR 9,900 crores. So close to INR 10,000 crores. So reduction of INR 8,000 crores. Out of INR 8,000 crores, INR 2,500 crores is -- gone to NPA, remaining we have recovered. So INR 5,500 crores we have recovered. So today, virtually, 54% is outstanding remaining restructure book. You understood what I said?

Yes. Yes. Got it, sir. And just if you could share the standard asset provisions on the balance sheet.

Yes, we'll tell. We'll tell.

Next question, we'll take from [ Darshil ].

Congratulations on a great set of results. I think most of my questions have been answered, sir. But just wanted to know if any guidance we could give on FY '25? Maybe can we have a higher growth because I think we are being a bit conservative in terms of our growth. So anything color on FY '25?

FY '25, we will give the guidance on FY '25 when we complete FY '24, sir. Because visibility of having 1.5 years from now is weak.

Yes. Okay. Okay. No worries.

But we will continue to grow absolutely. Because you see this is a bank which is growing more in retail than the corporate. It's very easy to have a good growth when you do a corporate lending. But here the retail growth is more than the corporate growth. This is a big point. And this shows that our branches are able to create asset. And when you -- all branches are able to create asset, your customer base increases. So in the future also, you can grow. So bank will continue to grow. The business model is like this, sir.

Okay. And sir, just like it would be right to state that we are being a bit conservative in terms of our guidance and we can maybe over-deliver, under promise, would that be fair?

It is always better to give guidance and cross that guidance, rather than giving a higher guidance and then...

Congratulations once again. All the best for future results.

So we had one -- we have basically one question from the chatbox from MV Mahesh. So basically, sir, the question was that there is a corporate slippages of about INR 570-odd crores during the current quarter. Any color that basically you can give on that corporate account?

Yes, yes. There are basically 3 accounts, right? One account of around INR 372 crores is Odisha-based group, right? We are a member. One account is a EPC contractor and one small account is a textile. So all put together the 500-odd crores.

So basically, is it a trend that you want to see going forward as well or it's like one-off stress that you have seen during the current quarter?

This is an account actually, what happens in this accounts, they are supplying power cables and to the discoms, there's a cash flow mismatch. As a result, what happens that LC get resolved. So already, we signed ICA with them and been working on the resolution plan. In the meantime, we are having around a 60% provision there, I guess.

Okay. So during the current quarter also, we have made some additional provision on those accounts?

We are having more than provision, but we'll take a call when the quarter ends. Otherwise, presently, we are having 60% provision.

Sir, one more question is that there's been an RBI nudge, which market has been talking about to increase the SA rate. What's your view on that?

Which one, please come again?

RBI nudge on increasing the savings rate?

No, no. Interest rates are deregulated.

Yes. So I mean because there was chatter that RBI is actually nudging the banks to increase the savings rate.

No, RBI on records have deregulated, sir. Deregulated the interest rate on deposits and advances payback.

So you don't think that's going to happen?

The point is only the monetary transmission should be perfect, right? So monetary transmission of course we too have increased the deposit rates. What happens, the deposit we used to take 5% in the corona time, now we are taking at 7% plus. So the deposit side, it is gone and what happens to the credit side also 40% in CASA and 60% is converted into MCLR. So MCLR, which used to be 7.30 is today 8.70, 150 bps. So 250, 60%, 150 bps, more or less, you are transmitted, sir.

Next question will take from Sushil.

Congratulations Team Indian Bank for excellent performance. Sir, my majority questions are answered. My basic question is, sir, you are making your bank future digitally and otherwise also enabled on various parameters and you are known in the marketplace for a TAT on large tickets. Can you throw a color how well you will do on retail on a similar account? And how soon you would be ready for all the digital initiatives and the initiatives you've taken to bring down your cost of income on a drastic basis?

Yes. So 2, 3 points, sir. One is basically, digital journeys. So digital, we are working a number of things from the core side as well as from the journey side and also from the CISO and also from the operations point of view. I'm telling you, first journey, Bajajji has told, we have came out with the journey, the retail, agri, MSME, operations, even in third-party products, in retail housing loan, auto loan, personal loans, PAPL, gold loans, likewise now we are coming out in the agriculture gold loan, SHG loan. And again, MSME, small loan, GST-based loan, cash flow based. In a third party, even the renewal of insurance, right, loan against insurance, loan against insurance policies. So a number of things we came out on that side. Even I'm telling you from the cost point of view also, we came out of the server centralization when I came we discussed and then just rolled out around a few months back, around 3,500 branches. Today, it's 5,000 branches have rolled out in a server centralization. But what is service centralization I'm telling you, where earlier we used to have server at all branches. Now all is centralized at our data center. So earlier what happens, you need to have a AC for these servers 24x7 5,000 branches, 10,000 ACs, and the 25% of the space is being occupied by the servers. We have shifted all this. At the same time, we are also working on DMS, document management system. So where we are taking -- scanning the copies of document, whatever available and shifting to the godown. So as a result what happens, 50% of the space of the branches is being vacated, so that we are renegotiating. We are going for other nearby branches to save cost, one point. In the IT side, we have come on middleware. So now, we are using even middleware for our other income because you say suppose you do Google Pay, they are not bank. The transactions are being routed through the bank. So we can use our middleware. So we have started using for various customers for our middleware. In likewise these journeys. Even ForEx also we have changed a number of things. In our subsidiary also already we have finalized. Today, their memorandum articles, initial subscription, everything, we are going to approach to the RBI to allow us. So there are a number of things going on. In HR side also, we have done a number of things. Entire performance management system has come. We have given training for ForEx. We have recurrent people from the market, lateral recruitment at all levels even up to the GM level. So we have done number of things to improve the operational efficiencies to bring that new plan, to bring the new experience in the bank for our future. CMS also we started, already finalized that. Vendor is already finalized. Software is in place. So a number of things we do, so results have started coming, sir. You see Bajajji has told that in a short span, INR 30,000 crores. So without INR 30,000 crores, your OpEx has come down. You see the 28% growth in gold loan happened only because of the digitization. Otherwise, it would not have been possible. So that the efficiencies will come through digitization in a time to come as well. I think I replied to your question, anything more you want, sir?

Yes. Yes, sir, you replied. Only thing is this is going to have a big impact on income of the bank and margins and profitability. So are you being conservative where cost to income is concerned? And do you see a far greater improvement by the quarter when you end the year? Or you see it next year?

You see our profitability has -- net profit has grown. Earlier, we were getting tax benefit. Even after paying 28%, we are growing 60%, 70%. So these all results have started coming, sir.

Okay. Sir, second thing, our outlook on treasury is indicating that you are seeing treasury purchase to give you a benefit maybe in the last quarter or next year. So the interest rate cycle may peak out by December or March, I'm not predicting. But you are taking a view that for next year, you will have rich reward in treasury. So any particular...

You see, sir, we keep on churning our portfolios. Actually, when the interest rate started increasing, we churned our portfolio and you see the interest -- holding yield of the portfolio has increased. So we keep on doing our -- churning our portfolio to get better and better.

Low yielding we sold.

And low yielding even we sold even prior to this U.S. bank failure and all.

In terms, do you expect profitability in treasury in Q3 and Q4?

Sir, there should be some profit. But you see treasury is -- volatility of the market is also one factor.

I take it on board.

But we keep -- our endeavor is always to answer, sir. And wherever the good opportunities come, we take.

All the best to Indian Bank Team for future.

Next question, we'll take from Mayank.

My question is again on provisioning line. So INR 574 crores we provided on this quarter against standard assets. So do we see stress in that portfolio, that is the reason we have created this provision? Or this provision is created with the purpose of ECL?

No, provisions are always -- buffers are always created in good times. So we are passing through a good time. We have created buffers and -- but these are based on the portfolio, based on studies and all.

So it's not based on any incremental step, these are more prudent...

And prudence is also there.

Got it. And what will be total outstanding excess provision like which we created like this quarter plus provision which we are holding on restructured portfolio?

We too are having around INR 5,000 crores of provision, sir. Total standard asset provision we are having.

This is excluding regulated general provision?

That includes regulatory as well.

Excluding that, what would be the amount?

Maybe 80 -- 75%, 80% can we had. Like said, we have to work out.

Next question we'll take from Jay.

Congratulations on good quarter. Sir, I wanted to check on your cost of deposit, right? So if I see your card rates, they are very competitive. And you are -- you have a decent scope on loan-to-deposit ratio also. But the cost of deposit has gone up significantly in this quarter. So how -- I mean, what is the key reason for such a sharp rise in the cost of deposit?

You see the cost of deposit has increased because the known reason. Known reason is deposit costs increased with the lag, right? I'm telling you 210, 220 bps increase in the deposit, which we used to take 5, 10. Now we are taking 7, 20. 220 bps, 60% is your term deposit, naturally 120 bps will increase, right? 120 -- but some of the -- because some of the 3 year, 5, 4 years, so 100 to 120 bps, your cost will increase. This is natural, sir. This is natural. So with the repricing, this deposit cost has increased. But our endeavor is up to maintain that. So our MCLR has increased. Our yield on investment has increased because you can't say that deposit costs will increase. To remain competitive in the market, you should give a competitive rate. But my objective is to earn also.

Right. Okay. So sir, if you were to see that basis the repricing cycle, I mean, where do you think this cost of...

If you compare September '22 versus '23, 87 bps.

Right, right.

Right? So 87 bps means 150 bps [Foreign Language], 60% of 150 bps.

Right. So sir, I mean, where do you think considering RBI does not do anything further, right, let's say, RBI's status quo for the next 18 months. Where do you think your cost of deposits should be settling? I mean, do you think this like 250 basis point, at least, will pass on in the entirety on the...

No, no. Point is that majority of the deposit is already repriced. So whatever you see -- when they started? They stared in May. And around at 35 plus 20, 60, around 190 bps, they have increased till September. So we too have increased our pricing till -- from the September onwards, right? So we are in the month of October now. And our duration of the liabilities is this, 1.6. And you see 15% bulk in CD and all because they are always up to 1 year. So they have already been repriced. And majority of them are on short term. So maybe 10, 15 bps here and there or by the end of the March this entire repricing should happen. But we are having MCLR book, which is coming for repricing, I think. So we are ready, sir. We are ready. Actually, we thought -- planned 6 months or 1 year back to move to the MCLR because that repo is now virtually stabilized. Whatever increase is happening, happening in MCLR.

Correct. Correct. Correct.

1.5% we have already passed on in deposit also.

And 7.3% has become 8.7%, 1 year MCLR too.

Yes, yes. Almost stabilized.

And you see all banks are taking this deposit for 1 year, 400 days, 450 days, right? So the major increase is happening in this.

Right. Okay. Okay. Okay. And so sir, I mean you said that even the yield on advances, they are rising, and this is purely mostly on MCLR repricing, right?

Right.

And are you seeing any incremental resistance in when you were to pass on the MCLR because some of the banks are commenting that corporates anyway wants very finer prices, and they are letting go off such disbursements, which are at finer rates. What has been your experience?

The experience, they're selling right thing, sir. That is why you see corporate growth is less. So corporate is asking at a very, very fine rate, and then you can't make margin there. And suppose you take a money at 7.5%, 7.7% and put your DICC cost of this CRR cost, then it's not viable sometimes.

Okay. Understood. And lastly, sir, I mean, lastly, there was -- we had around INR 3,500 crores of MSME restructuring, which is outside of this COVID OTR 1, 2.

No, no, no. That's all put together. So that is a 3,000 tranche -- that has subsumed in the COVID.

Okay. So that has been subsumed...

Or maybe around INR 200-odd crores, which is outside this, nothing more than this. You are talking about the north zone accounts because which is giving based on that particular circular of the Reserve Bank, right?

Yes, yes. Sir, even earlier, I think...

That remains -- it is INR 200-odd crores, nothing more than this. We have decided this.

Sorry. Sorry. This is not MSME, but sir -- but yes. But this is pertaining to CDR and all those other cases. I think that was the residual of...

Whatever you have done restructuring some have become NPA even then you to go as per your RBI circular and all. So -- but that remains under those tranche A1, tranche A2, amount is INR 221 crores, as on date.

Right. But is there any other CDR or any other [ 5/25 ], which is outside...

No, no, no. They are all...

All gone. All gone. Total structured book is 9,000, everything...

Today, only 2 type of -- one is COVID. Sorry, the second, you have increased your DCCO beyond particular time.

Shall we take the last question from Mr. Ajmera.

Sir, one is that in your last -- I think in the last quarter or so you had said that for the CASA and the -- for retail deposit, you are working and giving main focus to institutional accounts, educational institutes, temples and also the relationship with in the Lucknow, Chandigarh, et cetera. So sir, any development? I mean has it given any fruits on this work on...

You see last quarter, deposit was 6%, now it is 9%, 10%.

So I mean we are continuing our...

Yes, we'll continue, sir. We'll continue. So this is reflecting in our numbers, sir.

We are maintaining our CASA at 41%.

And maintaining the -- even the cost of deposits as well, the margins and all. So not only your deposit, but your margins as well.

And sir, some color on the gold loan book, the gold loan and the yield on that? And what is the breakup of the actual gold, I mean direct gold loan and the agriculture gold loan?

Gold loan, we are having close to INR 70,000 crores of a book. INR 63,000 crores, INR 64,000 crore is in agriculture part, right? And what we have done -- how we are managing this business, we are now having 650 gold shoppes, where we have not only given gold champions, even assessor, even caratometers, securities, safeties, demo inspections, controls, insurance, everything is in -- digital also, because everything should -- so this is how we are doing this. Now what happens in here reality, I'm telling you that people are taking gold and -- even not taking gold back from us. So whenever they need, they come and take loan even. So this is like a loan against FDRs also for us. Because we are doing this business from the decades. So this is a good business, giving good return to us. Not only we are giving -- we are getting 1 year MCLR plus in this portfolio. And the portfolio is good and...

Fully growing, secured and all that...

Good and growing. And same customer base is also improved. So that's what gives us a CASA and all.

Sir, on this provisioning, you are -- I mean in the giving answer of our -- my colleague earlier, you were saying that -- I mean, it's prudent to be providing in the good times. But in some of the earlier quarters, you said that now our provisioning requirement is reducing. So we -- of course, prudence is required and the cushion has to be built in. But at the same time, on a current basis, the analysts or the investing community always looks for the enhancement or increment in the profit, the bottom line substantially. So now going forward, again, like this time, the provision was, I mean, of course, total provision was INR 1,550 crores. But out of that, against NPA, it was INR 917 crores as against INR 929 crores in the last quarter, just a small INR 10 crores less than the last quarter. So going forward, do we take it that since the provision requirement is coming down and we are very, very comfortable now on the net NPA, I think, which is less than now 0.7 something that the real profit will actually come in the books -- shown in the books as a net profit, without compromising much on the buffer?

Definitely, the profit will come in book only, sir. And the credit cost which is -- which was 0.79. Now our net NPA itself is 0.6. So credit costs will further come down. When your net NPA is 0.6, naturally, your credit cost will come down. Cannot be more than this, right? And when you are -- when your recovery is more than your slippage, given the situation when your recovery. So naturally, these all numbers will flow in the balance sheet, P&L.

But last year, sir, this fall in the ForEx income, is it -- I mean, fluctuating things?

Sir, earlier, actually, you see the difference between the Indian G-Sec and the U.S. G-Sec, they are at 5, we are at 7.38, 7.35 -- 2.35. At the time, SWAP ratio, the SWAP premium, which was 90 days premium, used to be 3.3. Today is 1.32. So margins have come down there, impacting the ForEx income. But we have -- such other avenues for our -- and other income growth. So you see our PSLC income was INR 479 crores. We have INR 320 crores, INR 336 crores, we have shifted to INR 650 crores. INR 300 crores we have earned there.

Yes, you had explained me once in detail. In fact, your GM treasury also, at that time when the ForEx income was coming very good. I mean the difference was quite attractive. So now going forward...

So our premium has come down drastically. That's why earlier we used roughly INR 38,000 crores interbank placement. Now that has come down substantially.

So based on the market or incomes. But we are having various revenue streams that we keep on working to have growth in our other income and all.

I'm sure you would, sir. We wish you all the very best. We still feel that the bank is still undervalued for the market and you should get the right price.

We are open for all questions all time.

So then basically, sir, with your permission, can we take 2 more questions? So Mr. [ Puneet Dagha ] would want to ask a question. Can't hear anything from Puneet. So we'll take a question from [ Mona Khetan ].

Just a small clarification. So you mentioned some time back that standard asset provision standard about INR 5,000 crores in your case, right, including general, restructured and other provisions. So if I remember it correctly, this number was about INR 6,800 crores last quarter. So has this...

Some of the provision -- yes, yes, yes. Please, please. Some of the provision we have excluded because here we are talking about the standard asset provision.

Okay. So I mean what is the -- so like to like against that...

Other provisions are 7 June provisions or -- so madam, otherwise, you send us a query, we will reply you, right? So you'll understand better.

Next question we'll take from Jay.

No, no. My question has been answered.

Sure. So basically, I think the question has come from Puneet. He wants to get the guidance on OpEx, number one. And second question is when can we expect the QIP to get completed.

Yes, good. So OpEx, OpEx is basically 2 components. One is the salary and other operating expenses, right? And salary itself has a 3 component. One is the salary, one is wage revision, third one is PLI. So you know that PLI is stable when your operating profit is more than 15% or 15 days. So we started -- earlier, we used to do these provisions in December or the March quarter. We started from the first quarter onwards based on our numbers and all. So there is a PLI part, one. Second part is that this wage revision has become due. So this year, this quarter we have bid around INR 271 crores of a base revision provisions. And presently, we are having around close to INR 689 crores of a base revision provision. The other overheads is basically slightly increased because of some ATM-related expenditure. It's because your digital transaction will increase naturally your operating expenses increased and your digitization is happening in such a large scale. So AMC charges, right? And even the card issuance charges, even the UPI charges, these are all stable. So this is all a normal business operations. If you are top line grows, naturally some expenditure part will also grow. So if you exclude this PLI and wage arrears, on a like-to-like basis on a salary only grown by 5%.

So basically for the wage revision, we are providing at 12% or we have started providing at 15%?

Percentage, we will be not able to tell you, but they are adequately provided.

I think that's it from the audience. So we can wind up the call. If you have any closing remarks to make, sir?.

Come again, please?

Sir, if you have any closing remarks to make?

Yes. So thank you. Thank you, all analysts and investors in a continuing interest in the bank. So we'll again meet next time with a better performance. Thank you once again.

Thanks a lot management, and thanks a lot all the participants. With this basically, we'll end the call. Thank you.