Punjab National Bank (PNB) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Punjab National Bank Q1 FY '23 Earnings Conference Call hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded. Participants in this conference call is by invitation only. Punjab National Bank reserves the right to block access to any person to whom an invitation is not sent. Unauthorized dissemination of the content or the proceedings of the call is strictly prohibited and prior explicit permission and written approval of Punjab National Bank is imperative. Please note that this call is only for investors and analysts. I now hand the conference over to Mr. Suraj Das from Batlivala & Karani Securities India Private Limited. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and thanks for joining the call. On behalf of Batlivala & Karani Securities, we welcome you to Punjab National Bank's 1Q FY '23 Post Results Conference Call. We have with us today the management team of Punjab National Bank, represented by Mr. Atul Goel, MD and CEO sir; Mr. Sanjay Kumar, Executive Director; Mr. Vijay Dube, Executive Director; and Mr. Kalyan Kumar, Executive Director; and other senior officials of the bank. I would now request MD and CEO sir to start the call with his opening remarks on 1Q FY '23 post results. After which, we will start the Q&A session. Thank you, and over to you, sir.

Thank you very much, Suraj. Good evening to everybody. I welcome all the analysts to this quarter call. I'm happy to present the quarterly result of the Punjab National Bank for the quarter ended June 2022. As far as business of the bank is concerned, global gross business increased by 6.21% on Y-o-Y basis to INR 1,93,000 -- INR 19,36,923 crores at the end of the June 2022 as against the INR 18,23,685 crores in June 2021. Global deposit grew by 3.56% on Y-o-Y basis to INR 11,36,747 crores as at the end of June 2022 against the figure of INR 10,97,649 crores in June 2021. Global gross advance grew by 10.21%, healthy growth on the advantage on Y-o-Y basis to INR 8,00,177 crores as at the end of the June 2022 as against the INR 7,26,036 crores in June 2021, and the first time we have caused the advanced business of the INR 8 lakh crores. Domestic CASA share improved Y-o-Y by 119 bps to 46.34% in June 2022 from 45.15% in June 2021. Savings deposit grew Y-o-Y by 6.61% to INR 4,47,258 crores, although as I told you, global deposit grew by 3.56%, but savings grew by 6.61% Y-o-Y. Retail credit increased by 10.77% Y-o-Y and 4.82% on quarter-to-quarter basis to INR 1,46,321 crores at the end of the June '22 in retail segment. Core retail credit means without the -- including any IBPC or the pool is there, increased by 9.10% on Y-o-Y basis to INR 1,21,349 crores. Housing loan increased by 5.25% on Y-o-Y basis to INR 74,565 crores. Vehicle loan increased by 34.25% on Y-o-Y basis to INR 13,446 crores after the pandemic is over, so everybody prefers to travel their own vehicle. This is the region there is a growth of 34.25% in the vehicle loan. Personal loan increased by 25.52% on Y-o-Y basis to INR 12,938 crore. MSME advance increased Y-o-Y by 3.15% to INR 1,24,947 crores. Agriculture advance increased Y-o-Y by 3.78% to INR 1,33,237 crores, that's Q-o-Q growth on the agriculture advance of 7.20%. CD ratio improved by INR 425 bps on Y-o-Y basis to 70.39% in June 2022 from 66.14% in June 2021. As far as the profitability of the bank is concerned, net profit for quarter 1 financial year 2023 was at INR 308 crores and grew 52.48% on quarter-to-quarter basis. Quarter-to-quarter, there is a growth. But if you compare from the last financial year June '21, there is a dip. Operating profit was at INR 5,379 crores during Q1 of the financial year '23 and grew by 2.17% on the quarter-to-quarter basis. The reason of the -- if you compare the operating profit of the June 2022 from June '21, there is a dip because in last June 2021, the operating profit was INR 6,400 crores. I will give the reason of the dip in the operating profit as compared to the June 2021 to June 2022 because on account of the increase in the interest rate in the G-SEC. There was a decline in the trading profit. Trading profit in June 2021 was INR 1,118 crores, which has reduced to in the quarter ending June 2022 to INR 573 crores. It means there is a dip around INR 500 crores plus in the trading profit. And second another factor is MTM losses because on an account of the increase in the G-SEC, which was around 6.18% in March '21, 6.84% in the March '22, increased to 7.45% in the March -- June 2022 on account of increase in the interest rate in G-SEC. INR 1,409 crores was MTM loss, which we have booked in the June 2022. And not only this, in June 2021 quarter, there is a reversal of INR 301 crores in the MTM. In June 2021 quarter, there was a gain. And June 2022 quarter, there is a loss. So if you add both, so INR 1,700 crores is the total loss applicable compared to the June '21. So this is the major reason. If you add INR 1,700 crore plus INR 500 crores, INR 2,200 crores. If you will add this amount in the INR 5,379 crores, so our operating profit will be much more what we have achieved in June 2021. So total income of the bank for the quarter 1 financial year '23 was at INR 21,294 crores, grew by 0.94% on quarter-to-quarter basis. Operating profit of the bank for quarter 1 financial year '23 was at INR 10,080 crores and grew by 3.34% on quarter-to-quarter basis. Total interest income of the bank for quarter 1 financial year '23 was at INR 18,757 crores and grew by 0.60% on the quarter-to-quarter basis. Net interest income grew by INR 4.27% on Y-o-Y basis and also 3.27% on quarter-to-quarter basis in quarter 1 of the financial year 2023 to INR 7,543 crores from the figure of INR 7,234 crores in June 2021 quarter. Other income increased by 3.55% on a quarter-to-quarter basis to INR 2,537 crores in quarter 1 financial year 2023 from the INR 2,450 crores in quarter 4 financial year 2022, despite MTM loss of INR 1,409 crores in quarter 1 financial year 2023. The trading profit for quarter 1 financial year 2023 increased by 47.23% to INR 573 crore in quarter 1 of the financial year '23 from INR 389 crores in the quarter 4 of the finance year 2022. However, Y-o-Y declined from INR 1,118 crores, which I just told you in June 2021 quarter. Fee-based income increased by 25.68% Y-o-Y, 34.13% quarter-to-quarter to INR 2,055 crores in quarter 1 financial year 2023 from INR 1,635 crore in quarter 1 of the financial year 2022 and INR 1,532 crores in the last quarter of the last financial year 2021-'22. Total expenditure of the bank for the quarter 1 financial year '23 declined by 3.05% to INR 15,915 crores. Similarly, the total interest paid registered a decline of 4.1% on Y-o-Y basis to INR 11,214 crore in quarter 1 financial year '23 from INR 11,694 crore in quarter 1 financial year '22. As far as efficiency ratio of the bank is concerned, global NIM improved by 5 basis points to 2.79% in quarter 1 financial year 2023 from 2.74% in June 2021 and 3 basis points from 2.76% in March '22. Global cost of deposits improved to 3.79% in the first quarter of the current financial year June 2022 from 4.08% in June 2021 and 3.90% in March 2022 quarter. Yields on advances at 6.49% in the June 2022 quarter. Yield on investment at 6.36% in June '22 quarter. Business per employee improved to INR 1,914 lakhs in June 2022 from INR 1,854 lakhs in June 2021 quarter. Asset quality. Asset quality, there is an improvement in asset quality Y-o-Y as well as in last quarter also. Gross nonperforming assets were at INR 90,167 crores as of June 2022 as against INR 1,04,076 crores as on June 2021, declined by 13.36% on Y-o-Y basis and 2.46% on the quarter-over-quarter basis because the number of the gross NPA was INR 92,448 crores in March 2022. Net -- similarly, the net nonperforming assets, NNPA, were at INR 31,744 crores as of June 2022 as against INR 38,581 crores as on June 2021, declined by 17.2% (sic) [ 17.72% ] Y-o-Y and 9.06% on the quarter-to-quarter basis. Net NPA in March 2022 was INR 34,909 crore. GNPA ratio improved by 306 basis points to 11.27% in June '22 from 14.33% in June '21. There was an improvement of the -- by 51 basis points from the 11.78% in the March 2022. Similarly, the net NPA ratio improved by 156 basis points to 4.28% in June 2022 as against 5.84% in June 2021. And 50 basis points improved from the March 2020 quarter, which was 4.80% in March 2022. PCR, including TWO improved by 278 basis points to 83.04% in June 2022 from 80.26% in June 2021. And further, there was an improvement by 144 basis points from 81.6% in March 2022. Slippage ratio declined by 192 basis points to 3.75% in June 2022 from 5.67% in June 2021. And there was an improvement of 272 basis points from 6.47% in March 2022. As against the original restructuring amount in OTR 1, 17,952 accounts with INR 6,253 crores. OTR 2, 2,14,537 accounts with INR 12,640 crores. The present position is INR 3,086 (sic) [ 3,866 ] crores in the resolution 1 and INR 10,083 (sic) [ 10,832 ] crores in OTR 2. SMA account above INR 5 crore has reduced from INR 12,524 crores, 1.77% of domestic advance in June 2021 to INR 2,027 crores, which is coming around 0.26% of the domestic advance in June 2022. Capital adequacy, as far as capital adequacy is concerned, the capital adequacy improved to 14.82% in June 2022 from 14.50% as on March '22. And Tier I capital is 12.1%. And CET-1 was above -- at 10.94%, AT1 was 1.16% And Tier II at 2.72% in June '22. As far as digitalization is concerned, Internet Banking Service users increased to 347 lakhs as at June 2022, growth of 32.44% Y-o-Y basis. Similarly, the Mobile Banking Service user increased 38.24% Y-o-Y to 347 lakhs as at June 2022 from the figure of 251 lakhs in June 2021. UPI transaction increased by 106% to 74.97% (sic) [ 74.97 crores ] as at June '22. So this is about the financial position of the bank. Treasury profit, I have already told. Recovery in the written off account has also improved in the -- in current quarter. Current quarter means June '22 quarter in -- to INR 1,246 crores. This recovery in the written off account in the June '21 quarter was INR 837 crores. And also in the March '22 quarter, it was INR 871 crores. And as regard to family pension, total liability of the family pension was INR 394 crores. And as per the RBI disposition, it can be amortized in the 5 years, 5 year means INR 154.70 crores per quarter in the financial year. We have provided this family liability up to March 2022, INR 1,573 crores. The balance was left INR 1,521 crores as on 31st March 2022. I'm happy to inform you the entire liability of the INR 1,521 crores has been provided in the last quarter means June 2022 quarter. As far as NCLT cases are concerned, as on date, 561 account, which is admitted in the NCLT for an amount of INR 66,845 crores. And there is another 61 accounts, which have been referred to the NCLT was amount of INR 4,606 crores, but that is still to be admitted. So total number will be INR 622 crores, and the total amount will be INR 71,451 crores. As far as position of the RBI List 1 is concerned, the outstanding is INR 3,802 crores and the second list was INR 4,572 (sic) [ 4,592 ] crore. Total -- makes a total of INR 8,982 crores, provision against this 99.1% for the list 1 and list 2. And for the entire bank in NCLT cases, total provision coverage is 97.8%. As far as sector-wise slippage is concerned because slippage for the current quarter -- current quarter means the first quarter of the current financial year, it was INR 6,468 crores. But if you see the composition of this slippage, the sector-wise slippage agri was INR 2,310 crores; MSME INR 1,606 crores; retail, INR 826 crores; and large and other was INR 524 crores, respectively. And one of the accounts, which was slipping in the figure of the INR 525 crores out of this INR 423 crores, which was slipped in the June 2022, fully have been recovered in July 2022. So there is not a single account. There is not a -- in my opinion, there is not the account big corporate account, which we have to recognize. Entire big account has already been recognized. Why I'm telling this, if you see my SMA-2. SMA-2 as of June 2022, it was INR 11,730 crores for total bank. Out of it, this number has reduced as of date, INR 8,438 crores. And SMA, out of this amount, more than INR 5 crore is INR 1,618 crores. And out of this, more than INR 5 crore, the maximum amount in single account is INR 162 crores. So only there was -- I told in the last time also, there was some stress in the small account also, main sector also. And we have taken a lot of new initiatives to improve the collection efficiency as well as the underwriting standard. On account of this, we have also reviewed our portfolio for the last 2 years where we have sanctioned and what about the slippage. The loan which has been sanctioned from the June 2020 to June 2022, outstanding amount is around INR 1 lakh crore. I mean out of this 1 lakh account -- INR 1 lakh crore amount, only slippage is 0.59%. So this is the one of the composite bank is what was the slippage in the rare sector. Last 2 years, there has been net [indiscernible] on account of the better underwriting standards as well as the better collection efficiency also. One more thing I would like to tell you also. Because this is the first time, I think, because in the last 3 con call also, I have told you, accord of the bank is, we will increase the recovery -- finally, the recovery number will be much more than the addition. So I'm happy to share to all of you our fresh addition was INR 6,468 crores for the June '22 quarter. But total recoveries, total recovery means, because there is 2 type of recoveries. Some recovery in the NPA accounts, some recovery in the -- recovery from the TWO because recovery from the TWO is not coming in the part of the movement. It is coming directly to the operating profit and part is coming to the interest income also. So total recovery is INR 7,057 crores as against the slippage of INR 6,468 crores. If you see the slippage number also, slippage number in the March quarter, it was -- March '22 quarter, INR 10,506 crores. And June 2021 quarter, it was INR 8,972 crores. So slippage has also been reduced. As far as credit cost is concerned, credit cost was 2.45% in the March 2022 quarter. And it is only same like 2.46% in the credit cost for the June 2022. And our guidance is, we will try to reduce this credit cost by 2.25%. So this is from my side. I think I have covered most of the points. So whatever the question of the -- will be from the analyst side as well, I would like to answer you all the questions. Thank you. Thank you very much. Once again, I welcome all of you for attending this con call and giving your precious time. Thank you very much.

[Operator Instructions] The first question is from the line of Ashok Ajmera from Ajcon Global.

Complements on one major front that is controlling the slippage and also comparatively a good recovery in the difficult circumstances and situations. Having said that, sir, I got a couple of observations and a question. Sir, you said that additional family pension charged to P&L of INR 1,520 crore in this quarter only, June quarter. But our total employee cost still remains only INR 2,547 crores. So what is the factor by which the employee cost has gone down because if you reduce this INR 1,520 crores, then the employee cost remains only INR 1,000 crores as against INR 2,158 crore of the last quarter. So this is one question of mine, which can be answered. My other observation is, sir, on the treasury, we are mainly concerned now for the future because you've got a very large treasury. I think total investment is more than INR 4 lakh crore. So going far, I mean, you have justified the income that why the income has gone down operating as compared to the corresponding existing INR 5,379 crores now. Okay, we have expected that explanation. But going forward, where do we stand? Because our modified duration is still a little higher, I think it is 2.14%. And our AFS book is also almost about INR 80,000 crores. So from the treasury, can I know what is our outlook on the treasury income coming forward or the losses? Where do we stand? Because treasury income is only INR 1,251 crore as against the revaluation of the investment is INR 1,409 crores. So net-net, we are down only. So this is my 2 major observation and question. And once you answer, I have got a couple of more questions, please.

Yes, yes, yes. Ajmera ji, your observation is okay. I will give you the answer of the first question. As I told you, the family pension, which was the remaining to be provided from the March 2022, INR 1,521 crores we have provided in the current quarter itself in the June 2022. But your question is why this is down, because down was this -- because on account of the reversal of the AF provision. AF provision from the pension, from the gratuity, from the investment, there was a reversal of INR 1,682 crores. So against the INR 1,682 crores reversal, we have already provided INR 1,521 crores, which is the answer to your first question. Regarding your second question, regarding how it will behave. Because Ajmera ji, you are also a chartered accountant, and you are saying to keep duration 2.14%. Normally, G-SEC is a 10-year G-SEC we are seeing in the market, what is a 10-year G-SEC. So normally, if you see the portfolio of the entire banking industry, total duration considering the HTM as well as the AFS will be in the tune of the -- around 5% to 5.5%. But I think you should complement to the bank to maintain the modified duration of 2.14%. If I will make the duration less than 2.14%, it means for [ 1/4 year ], it means I have to invest on the treasury bill. If I will invest in the treasury bill, tomorrow, you will make the question how you are managing the treasury by investing the treasury bill where the return is very low. So I think 2.14% is the very appropriate duration. But further. Our endeavor will be, therefore, to reduce further to 2%. As far as what is your [indiscernible] plan unless and until rate will not come down, I think there is no chance - no treasury can make the profit. But our treasury is very active. We are taking the position in the HFT as well as the AFS. And we are -- if the market is volatile, we are trying to make the profit out of debt from this current investment. But as far as earlier investment, which already exist in the treasury, I am very transparent to you, it is very difficult to make the profit out of that particular stock.

Yes, that's fine and well taken. Sir, I've got a couple of questions on the credit side. Our energy portfolio has gone up to INR 44,792 crores as against INR 41,000 crores in the last quarter. So what kind of this power sector or energy sector is almost about INR 4,000 crores credit has gone? Second one is on the...

This is normally 2 bps, like [ NTPC ] or their subsidiary like this year.

Good, sir. On the chemical, sir, there is a downside of INR 2,500 crores. I mean the portfolio has come down to almost INR 8,000 crores from INR 10,500 crores. So is there any repayment of some account or some slipping into NPA or what is it about, sir, in the chemical sector? Is has comes down by...

If slippage will be there, so our outstanding will remain in the books of the bank. Because whatever we are giving, that is not only for the standard account. That will be to both [indiscernible].

Mr. Ashok, we may request that you return to the question queue for follow-up questions as there are several participants waiting for their turn. [Operator Instructions] Next question is from the line of Dev from Horsepower Securities.

Sir, I have a query regarding the wholesale banking segment. It's still in loss. And how many quarters would it take to recover the losses, I mean, to turn into black? And what would be your comfortable provision coverage ratio at this point of juncture?

Dev, it is not an actual loss. It is a notional loss because we are making the provision against the corporate book also. This is the reason our PCR has improved from 81% to 83%. The moment we will be in a position to make the recovery out of it, it will be automatically turn to the profit. It is not actual loss, it is a notional loss. Of course, probably, it is coming under this segment on account of the higher provision made on the corporate book.

And sir, what is the, I mean, comfortable provision coverage ratio for you at this point of juncture?

83% is a very good for the management like us also. We will try to make the net NPA zero 100%, but 83% is very appropriate.

But do you intend to take it to -- forward to 86% or something like that or not?

Why not.

And sir, what is the, I mean, the reason for this muted loan growth? I mean loan growth is -- I mean, in this condition, are you optimistic about the whole year that the loan growth would be 6% to 7% or something like that or still you are facing difficulty in that front?

No, no, Dev ji, it is not 7%. If you see the growth on the Y-o-Y on my gross rate, it is 10.21%. And if you see further rate of this 10.21% in the total growth and more than 10.77% in the retail. So there is a lot of traction in the market because a lot of -- there is a demand on the NBFC side, there is a demand from the road sector also and infra, there is a demand from the civil supply also. There is a demand in the projects which are coming from the ethanol because that is also as per the priority of the government. And the hospital also after this COVID-19. So there is a lot of demand. We are not -- this 10% is a growth as of date, and still we will try 11% or 12% also. We are giving the guidance on the 10%. We will revise our guidance also because there is a traction in the market. Demand is coming. We have reached to the pre-pandemic level.

Sir, for the full year, you are going by the figure 11%, right?

Yes, 11%. Yes.

Okay. And I mean in this competitive scenario, how do you feeling about the business situation right now? I mean when your peers like SBI is also present, I mean, they are going all cylinders firing. So how is the situation you are facing at your end?

Healthy competition is always welcome. That is not a challenge. Healthy competition is always welcome. If you see my rate on the MSME financing, if you see the rate on the liability side or the asset side, we are at par with the market. We are providing the loan at a very competitive rate, which is in cue with the market. Similarly on the liability side, if you see -- visit my website also, the rate of interest, which we are giving on the deposit, it is also in line with the other banks, which they are giving.

Mr. Dev, we may request that you return to the question queue for follow-up questions as there are several participants waiting for their turn. [Operator Instructions] Next question is from the line of Mahrukh Adajania from Edelweiss.

Sir, I had a few questions. You haven't -- have you transferred any securities from AFS to HTM?

Yes, indeed. We have also -- in the first quarter of the current financial year, we have also shifted the security from the AFS to HTM as well as from the HTM to AFS also.

And was there any transfer loss?

Yes. There was a transfer loss also, yes. It is included in the INR 1,409 crores also, which I told you.

Yes. What was the transfer loss?

It was around INR 275 crores.

Okay. And would you have sold any portion of HTM in this quarter?

As of date, I think we have not sold. As the limit is available for the 5%, I think we have not used this loan. We have not used this option at least now.

Got it. Got it, sir. And my other question is that your restructuring under OTR 2, it has risen over the disclosure in March, correct? Why would that be?

I will tell you, that is not a problem, that is a disclosure. If you see the -- that was the outstanding because that was the outstanding in the March and if you see my current provision as of date also, this is INR 3,866 crores as of date. INR 6,253 crores was the total implemented [ sales ], but outstanding was INR 3,866 crores. In March 2022, we have also given the outstanding.

Next question is from the line of Bhavik Shah from Morgan Stanley.

Sir, I wanted to understand what would be your outstanding total restructured amount for this quarter?

Restructure. Okay. Okay. Restructure, there is a 2 type of the restructure. I will give you the data. This restructuring books. In RBI resolution 1, we have done total restructuring of INR 6,253 crores. There is 2 types, personal, other exposure and the MSME. I will give you the total. Out of this INR 6,253 crores as of on date, outstanding is INR 3,866 crores. Now come to the RBI that you referred to. RBI resolution 2 implemented. Implemented means center amount. Center was the -- or restructured amount was the INR 12,648 crores. It includes the individual borrower, it will include the small business as well as the MSME. Against the implemented amount of this INR 12,648 crores as on date, outstanding is INR 10,832 crores.

Okay. Sir. And any MSME restructuring?

MSME restructuring, I can give you the data also. MSME restructuring in the resolution 1 was INR 856 crore against which outstanding as of date is INR 506 crores. And within resolution 2, MSME restructure amount was INR 6,047 crores, which is outstanding INR 4,783 crores.

Sir, I meant MSME outstanding restructuring outside COVID restructuring?

Outside the COVID restructuring? I think the -- because some of these -- because they have not answered -- I think we don't have any other outstanding as of date also.

Okay. Okay, sir. And sir, what is your LCR this quarter?

LCR?

Liquidity coverage ratio.

Liquidity coverage ratio? It was around 150 -- because it keep on changing, it was in the range of 150% to 160%, yes.

Okay. And sir, for the slippages of INR 6,500-odd crores, sir, how much -- was it from the restructured book?

Restructured book out of this, you are asking for the current quarter only or the out of the total restructuring? I can give you for the total rate. In resolution 2, as I told you, implemented was INR 6,601 crores. There was a slippage of INR 552 crores. It is not only from this quarter. I'm giving the total figure. Similarly, in the MSME also, the total restructuring was INR 647 crores (sic) [ INR 6,047 crore ] in the resolution 2, out of which, INR 1,264 crores was a slip.

And sir other segments?

Yes?

Other segments.

Other segments, I've already given. This is for the entire. This is not only for the MSME. I have told you both OTR 2, INR 6,601 crores were the other and where the INR 552 crores was the NPA. And the MSME 6,047 crores was the total restructuring and INR 1,264 crores was the NPA. This is OTR 2.

Okay. Okay. And sir, OTR 1?

Hello, can you repeat?

Sir, slippages on OTR 1?

OTR 1? OTR 1, INR 5,396 crores was the restructuring. Out of which, INR 2,037 crores was the NPA and MSME, it was INR 856 crores, where the NPA was around INR 351 crores.

Next question is from the line of Jai Mundhra.

Sir, can you tell us what is the PV01 of the treasury book?

INR 13 crores.

1-3.

1-3, INR 13 crores.

Sure. Secondly, sir, you have mentioned the OTR 1 and OTR 2 restructuring. Is there any legacy CDR 5/25s, et cetera, also there outstanding?

[indiscernible] Already because of CDR, I think no case is pending. Whatever the CDR existed, already credited to the NPA.

Any 5/25, et cetera, sir, which is...

No, no, no. As on date, nothing is outstanding.

Understood. Secondly, sir, on your ECLGS, right? So you have given decent disclosure there out of -- there is some INR 18,400 crores is the amount disbursed. What is the outstanding or NPA there as of June?

Okay. Okay. The total sanction was INR 20,918 crores. Outstanding as on date is INR 13,749 crores, out of which NPA is INR 758 crores, which is coming around 5.52%.

Okay. And what is this INR 18,000 crores then? I mean the sanction is INR 20,000 crores, outstanding is INR 13,000 crores?

Yes. Our NPA is INR 758 crores.

Right. Then this amount of INR 18,400 crores, what is this amount?

We have disbursed that amount.

Sure. Okay. Secondly, sir, on your agri slippages this quarter, agri slippages, of course, have a seasonal pattern. But it looks like only PNB has shown higher agri slippages in this quarter. Any specific reasons or any specific geography where this agri slippages are coming from?

There is not any special reason. I think we should expect more recovery in the coming quarter also. This I can reply you. If there is a high slippage, there are chances of the high recovery in the subsequent quarters. No specific reason here.

And you said total SMA, including below INR 5 crore loans?

Yes, INR 11,732 crores is the total SMA-2 as on June 2022, which has reduced to INR 8,438 crores as of date. Out of INR 8,438 crores, SMA more than INR 5 crores is hardly about INR 1,618 crores. And out of -- which also maximum amount of a single account is INR 162 crores.

Understood. And lastly, sir, on your -- I think you had mentioned that there was a provision reversal on staff cost of some INR 1,600 crores.

Yes.

This is because of higher yields.

Yes.

But is this -- I mean, this -- of course, there is a negative correlation when yields go up, but is this after a statutory audit or this is your internal calculation because...

No, no, it is not an internal calculation. It is a calculation taken from the actuary. Every quarter, we are taking this calculation on the actuary. Every quarter we are booking, whether it is a reversal of the provision.

Because not -- no other bank has done this thing. But anyway, okay. Great, sir.

Yes, every bank has done this. It can't be -- it should happen. Even in March also, not only on this quarter, even March quarter also, there was a reversal.

Next question is from the line of Mahrukh Adajania from Edelweiss.

Sorry, I just want a clarity on a previous question asked. So you said in OTR 1, the -- sorry, the slippage in restructured is INR 551 crores -- non-MSME restructured is INR 552 crores. That's slippage? Or that was -- that is slippage, right? Slippage of the total restructured book other than MSME, correct?

Yes. I may correct you, Madam. There is a OTR 1, there is a OTR 2. The slippage in the OTR 2, which you are referring INR 552 crores, the outstanding was INR 6,601 crores. It was not INR 5,396 crores. INR 5,396 crores was the OTR 1.

Okay. Right. But INR 552 crores is the slippage or...

INR 552 crores is the slippage out of INR 6,601 crores.

All right. And then in terms of MSME, the slippage was?

Slippage in MSME OTR 2, it was INR 1,264 crores against the outstanding of INR 6,047 crores. But I may give a more thinking also for the benefits to you all. We have already -- because in the last call also I have told, this is a stress in the small account. Small account in the rare sector. Corporate, we have already recognized. A little bit stress in the [indiscernible], but I may tell you in the last 2 years sector from June 2020 to June 2022, we have reviewed our entire portfolio. Outstanding loan of around INR 1 lakh crores, the hardly slippage is 0.59% because we are taking a lot of new initiative underwriting -- highly underwriting standard as well as the correction efficiency and use of the digital and the technology available in the market as on date. So this is -- but Slippage wherever is coming, it is the loan which have been sanctioned before -- 2 years back.

As there are no further questions, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.

Thank you very much once again, and I am thankful to all the analysts who have attended this meeting and the cooperation, which you are giving always every quarter to quarter also. I must say only one thing to you, bank was on the very right track. We have already -- as I told you, we have already recognized all our big corporate clients also. There is a visualization happening. And whatever the guidance for the current financial year. As of date, our gross NPA, 11.27%, we are giving the guidance. It will come in the single digit by the end of the current financial year by '23. Similarly, my guidance to the -- all the analysts also, net NPA, which is as on date 4.28%, it should be around 3.5% because every quarter-by-quarter, there will be a reduction. So we will be in a position to achieve 3 point high percent. And the PCR, somebody had asked me, the 85% we are giving the guidance for this. The bank is on the right track and the healthy provision coverage ratio we have made. Our operating profit, I can give you the guidance on the operating profit, operating profit, should be -- there is an increase around 10% to 15%, yes, whatever we have given in the last year. Thank you. Thank you very much.

Thank you. On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

Thank you. Thank you very much to all.