State Bank of India (SBIN) Earnings Call Transcript & Summary

A warm welcome to all joining us today on SBI Q4 FY '21 Earnings conference Call. On the call today, we have with us our Chairman, Mr. Dinesh Kumar Khara; Mr. C.S. Setty, Managing Director, Retail and Digital Banking; Mr. Ashwani Bhatia, Managing Director, Corporate Banking and Global Markets; Mr. Swaminathan J, Managing Director, Risk, Compliance and Stress Asset Resolution Group; Mr. Ashwini Tewari, Managing Director, International Banking, Technology and Subsidiaries; Mr. Alok Choudhury, Deputy Managing Director of Finance; and Mr. Charanjit Attra, Chief Financial Officer. Before I request our Chairman to give a brief summary of the bank's Q4 FY '21 performance and the strategic initiative undertaken, I would like to read out the safe harbor statement. Certain statements in these slides are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainties and changes in circumstances. Actual outcome may differ materially from those included in these statements due to a variety of factors. Thank you. Now I request our Chairman sir to make his opening remarks.

Thank you. Thank you very much, Mohan. Good evening, ladies and gentlemen. Thank you for joining this conference call. I want to start by thanking the support of all our stakeholders during these challenging times. Our employees have worked tirelessly to support our customers. We also, of course, appreciate the support of our customers. In financial year '21, the bank has delivered a ROE of almost 10% with a slippage ratio of 1.18%. The net NPA is at INR 36,810 crores, which is 0.5x of our financial year '21 operating profit. In addition to a PCR of 70.88%, the bank has additional provision of INR 25,376 crores at the end of financial year '21. I would like to highlight that the bank has delivered it -- almost a 10% ROE in a year when the credit deposit ratio is at a cyclical low, and while the incremental credit deposit ratio was only 26% due to various one-off factors. The bank has demonstrated its resilience in this challenging period. In the long term, the commitment of the management remains to demonstrate that this institution can deliver sustainable ROE of 15%. While challenges remains due to the COVID-19 and its resultant impact, we believe that the bank can weather the disruptions and come out stronger. We won't give a time line for our ROE target in the current uncertain environment. However, we remain confident that the bank has enabled us in place to deliver 15% sustainable ROE over the long term. In our view, the recent past from '16 to '20 is only a small period for a bank of our heritage of more than 215 years. We believe with the efforts of our team, we have put up that the period behind us should be a history now. We have used that period to further insulate the bank against visible and invisible risk, further strengthened our processes and have put in place long-term value drivers, like digital banking and stress assets the resolution skill sets. We remain well capitalized with a CET ratio of 10.02%. Given the dynamics of our business, our competitive positioning, and our value drivers, we believe our current capital and future internal accruals will be sufficient in helping us achieve our long-term growth and return targets. Further, we remain conscious that the cost of equity is a value driver of our bank, and we intend to minimize the sale to maximize the value of our existing long-term shareholders who have supported the bank in very challenging periods. We believe at our scale and the resultant complexities. We have been successful in balancing the requirement of all the stakeholders. Concluding my opening remarks, I would like to thank you all for the support to this institution. We remain committed to reward your trust in us with superior sustainable returns over the long term. My team and I are now open to taking your questions. Thank you very much.

[Operator Instructions] The first question is from the line of Mahrukh Adajania from Elara Capital.

Congratulations. My first question is on your invest reversal. So what was the total interest reverse in Q4, including interest on interest?

Yes. As far as the interest reversion is concerned, we reversed about INR 2,127 crore during the quarter as the performance of previous quarters were stamped as NPA. So -- and also interest on interest component is somewhere around INR 830 crores.

Okay. So both together, around INR 30 billion?

Yes.

Okay. And the other question is that in the...

Actually, if we recon that, that component, the number, which actually is the NII for the quarter, will actually look to be an improvement of 4.18% sequentially as against a decline of 6.08%, which apparently is looking like.

Correct. My other question is on inter-quarter netting. So in the third quarter, we had recoveries of the second quarter performance slippages of around INR 60 billion. So, was there any such inter-quarter netting in the fourth quarter in the gross slippage number? The reason I'm asking is -- okay. Yes, sorry.

Yes. Yes. Actually, this was a year-end closure. And so there is no question for us to account for any such recoveries as on 31st of March.

Okay. So this is the complete gross number without any inter-quarter netting?

Absolutely.

Okay. Because the reason I'm asking is because if you try to subtract 9-month agri slippage from full year slippage, then it's kind of a negative number.

Yes. Mahrukh, these numbers -- actually, the aggregate NPAs have come down.

Okay. Okay. Got it, sir. And my third question is on April collection efficiency. Firstly, what is the total number of infected employees currently in the bank?

Well, of course, the number would not be there with me rightly, but -- right now, but we have made some efforts. We have -- as far as our own infrastructure is concerned, we have tried to convert them into the quarantine centers. Almost about 1,000 parts such number of beds have been created as the quarantine centers. And we are ensuring that our employees stay protected, and for that, we have also got the vaccination done. Almost about 110,000-plus employees have already been vaccinated in the bank. So that's what the situation is.

And sir, April collection efficiency and even any color on May collection efficiency that you could give? Because the problem started after the fourth quarter.

April collection efficiency is around 95, 96. So May is, we have not yet looked into it. It could be -- looks like to be around the same as of now.

But March would be what compared to this 95, 96 in April?

I think March was a little better than this 90...

20 basis points.

20 basis point more it was in March.

Okay. So there has been no impact of the second wave on your collection efficiency?

No. See 20 basis point impact, which is there -- and moreover, there's always some kind of a lag between the event and the actual collection. So that is something which has to be -- we'll have to wait and watch.

Okay. Sir, my last question is on express loans. We already have a book of INR 1.9 trillion. It's grown 8% quarter-on-quarter and 36% year-on-year. It's a very sizable book. So can you give some more color in terms of number of accounts over which these loans are split, and total percentage of government employees who avail these loans, including defense and all? So all government and government-related employees percentage and also the number of total accounts.

It could be majorly government employees only. These are salaried accounts only, and also a very significant portion of that is I would say that as about 95% would be -- no, I think these are salaried accounts 95%...

Yes, 95% salaried accounts.

95% salaried accounts. As far as government employees, about -- yes, around 50% of that would be the government employees.

And 50% rest of the corporate employees who [indiscernible] account, corporate salary. And other part, Mahrukh, I think earlier also we had clarified, our focus on express credit would be on the salaried class and particularly those employees who have salary accounts with us under corporate satisfactions. And today, we have about 1.6 crore customer CSP accounts. And our penetration, if you think only our expected rate, it's just about 19%. So we believe that there's a potential to grow this both quarter. But yes, we are mindful that we have raised certain base number now. We may not be having 36% growth rate. So slightly could be moderated to 30%, 31%. That is our target for the current year.

Okay. So around 19% of 1.6 crore would be the total number of accounts in express loans?

No, there could be some outside the corporate salary package also. When I'm talking about salary account, there are 2 types of salary account where we have a tie-up with the corporate where corporate salary package is offered to them. There are other people who have salary accounts with us. They're based on, their salaries, scale and all, we offer the express credit. So there -- yes. There would be much better potential even beyond the CSPs, that is what I want. Even CSPs, as a group, if you consider my potential target group, at just about 19% penetration now.

The number of accounts, Mahrukh, we can reach to you separately.

Yes. We can separately give you how many express data are there.

[Operator Instructions] The next question is from the line of Adarsh Parasrampuria from CLSA.

Congrats on a great numbers. Question is on the top overall expenses. I see that as we had mentioned that the provisions on employee will now go down, but then the salary jump that we have seen from INR 7,000 crores to INR 9,400 crores is materially higher. So can you clarify, is this the run rate? Or are there some one-offs in the salary expenses?

So -- just for the lot of the details.

Slide 29.

Yes. When it comes to -- the salary is concerned as far as -- one-off, of course, we have paid the areas this year. So that is something which has gone out. And, yes. So apart from that, we have got a significant proportion of a retiral benefit, which is pension, gratuity and other benefits, which is there. And if we look at that number on a Y-o-Y basis, we have actually seen growth in -- wage revision is a major component in this, which is 78.50%. And overall, the growth on a Y-o-Y basis is 12.26%. So the pension has witnessed a growth of about 2.55%, and -- which is, again, a function of the interest rate movements. So that is something we have to go by the actuaries advice. And other benefits have gone up by about 5.91%. So that is how they really stack up. And when it comes to -- the salary person has witnessed a growth of about 10.85% and the provision for employees have witnessed a growth of 12.28%. So that's how it is.

Got it. But sir, I'll just stick to -- if you break up the staff expenses, again, when we try and do that, the core cash component of salaries moved up from about INR 6,900 crores to INR 9,400 crores, INR 2,500 crore jump. Some of it was expected as cash payout after the wage revisions have increased. But I believe this was not the increase that was expected, right? So I think, if I remember correctly, in the last quarter, it was indicated that we'll see INR 1,000-odd crore quarterly increase in the salary number. So I just -- just curious if there is anything more or should INR 9,500 crores be the cash salary component going forward?

INR 9,500 crores. In quarter 4, the arrears got paid.

In quarter 4, we have paid the arrear. So I think it would have some kind of a carryforward in terms of if at all provision should have been short of something, that would have been accounted for.

About INR 1,500 crores.

So on a dividend share, the increase in salary bill is expected to be around INR 1,500 crore.

For a quarter?

For a quarter as compared to what it was in the past.

Got it, sir. And sir, the same question on overhead, there is a meaningful increase in overheads in the fourth quarter. We usually had a very tight lease over the last few years on the overhead number. In this quarter, that kind of jumps. If you can just explain that as well.

Yes, sure. In fact, as far as overheads are concerned, the major jump is coming from the DICGC premium, which has gone up, because our deposits have gone up and the DICGC premium rates have also gone up. So that is the reason why there is a growth in the insurance component, which has gone up from INR 3,213 crore in the previous year to INR 4,348 crore. The other important area where it has gone up is business acquisition and development expenses essentially, our BC-related expenses. It used to be INR 2,548 crore in the financial year '20. And in the year '21, it has gone up to INR 4,107 crores, so -- which means that about 61% growth is seen there. So that is -- that's what is explained here.

And just to understand this better, the full year impact of higher premium in insurance -- deposit insurance has come in the fourth quarter only. All of it gets paid in this quarter. Is it that...

It's something it would be as and when. The charges went up this year, but -- which -- at what point of the year?

Yes, it is paid half-yearly. So you will see the impact in September and March.

Got it. Sir, last thing, I wanted to check, which has been a very big positive surprise has been the how retail has held up for the bank, right? We've made a point over the last few quarters as through COVID, that a good part of our bouquets salary to government employees, but type of that, the quality of the book has been 0.4% slippage in a pandemic year is extremely strong numbers. I just wanted to understand, would you consider this a sustainable trend? Or how should one look at it? Because this is -- you're already very good on retail asset quality. And this year, in a pandemic, it's been even better. So if you can just throw some light on that.

Of course, when it comes to slippages, but it is a function of the underwriting. And second, it is also a function of the effort to recover. So I think when it comes to underwriting, we are not likely to dilute our standards. So that is something which will give us edge. And going forward, we'll certainly maintain our efforts for the recovery also as we have been doing in the past. So I think going by these 2 major components, we hope that we should be in a position to maintain this quality going forward also.

Next question is from the line of Nitin Aggarwal from Motilal Oswal Securities Limited.

A few questions. Firstly, again, on the OpEx, when you aim for 15% ROE, what levels of cost to income on cost to asset ratio are you looking at in the medium term?

Well, I have been maintaining that there are certain cost rigidities, which we have in our system. We'll have to live with those rigidities. But nevertheless, income is something which is a major focus for us, and we have already started working on it. And hopefully, going forward, maybe in 6, 8 months' time, you will probably get to see some kind of an improvement in the income lever, which will help us in reducing our cost to income ratio. Ideally speaking, we would like to bring it below 50%, and would like to keep it at below 50% levels.

Okay. And secondly, sir, on the cost of deposits, while cost of deposits have been coming off quarter -- every quarter, but this time, the decline is a little more moderated. So -- but our cost of deposit though still remains higher than some of the other large private banks. So what is the reason behind this? And what sort of repricing benefits are we expecting there over the next couple of quarters?

See, as far as cost of deposit is concerned, you will have to probably acknowledge the fact that when it comes to India, there is -- deposit is a major source for many of the retirees also when it comes to the income flows. And it is always a function of the inflation also. So I think for all purposes, we have come to a situation whereas to my mind, as far as deposit rates are concerned, they have already bottomed out, perhaps it may not go down anymore. But when it comes to franchise value, we have to keep that in mind, and we have to also keep in mind, overall at a very large community of the depositors were actually retirees. So with that in mind, there are certain considerations which you have to keep in mind. We'll try to keep the deposit rates at this level for some time now. W e have already -- when it comes to our term deposit rates, we have already bought it down significantly already to retain at that level, and you'll see that how long we can stay on at that level.

Sure, sir. And sir, lastly, like our SA numbers have been largely different from our closest peers to peers, while this has been so far very long. But I just wanted to understand, is this only a function of the customer profile underwriting or the way we do on monitoring collections, which ensures this like the borrowers pays up in time. So I'm just asking was the gap is just too wide between us and the next best peers to peers.

In terms of asset quality, you mean, the retailers?

On the SMA numbers?

SMA numbers? Okay. SMA numbers. Yes, sure. Just one second. No. SMA numbers involve a very close follow-up, and it involves the follow-up at different levels. So we have the follow-up teams, which are there in each of the circles when it comes to retail. And in fact, on the large corporate book, we don't envisage much of a challenge. Nevertheless, in the retail, particularly in agri and SME, we have a situation where we ensure that people in the circles are in a position to follow-up and ensure the upgradations of customer tools.

But sir, any reason that comes to your mind why the difference is so big between us and the next peers to peers?

We'll not be in a position to comment about other peers to peers. But nevertheless, we are maintaining -- making all possible efforts to see that we contain these numbers and bring it down at the earlier, so -- which essentially means that a close follow-up is something which is very much integral part.

The next question is from the line of Suresh Ganapathy from Macquarie.

Sir, 2 questions. One is the RBI recently fined SBI for payment of commissions to employee. Can you just highlight what exactly was the issue? That's one first question. And the second is on growth -- credit growth, I mean, how much of that do you think this is a demand versus supply issue in the sense that banks like you becoming a bit more conservative and therefore, not willingly disbursing credit? And also, is it a function of the fact that demand is very weak in the economy and therefore, the credit growth is so weak?

Yes. Right. The first question relating to RBI fine to bank for giving commissions to employees. I think that probably needs to be clarified a bit. We are the corporate agents and are distributing products of our JV companies. And in view of that, we get commission, corporate commission. And out of the corporate commission, we have got a system in place where we are incentivizing our employees. And that incentivization is not only for corporating of [indiscernible] JV products only. That actually is a very comprehensive metrics which we have, which covers the bank's own product recovery efforts, and also third party sales, which is actually our JV products. So based on the evaluation through that mechanism, this kind of a, I mean, incentivization used to happen. Nevertheless, since the regulator has fined us, we have -- we pleaded before the regulatory, but nevertheless, they decided we have honored and paid for that. But as far as we are concerned, we have done it as per what the overall regulation and the boundary conditions were at the material point of time. But nevertheless, they having fined, we have stopped doing any such kind of incentivizations over it.

Sir, just, other banks also do this, right? They give incentive for cross-selling and third-party distribution.

I will not be a patient to comment on that because this is a view taken by the regulator for us, and I can only convey the viewpoint and the standpoint taken by us in this matter. But -- so we respect the regulatory decision, and accordingly, we have started working in this point. Second question was relating to...

Credit growth.

Yes, credit growth. See credit growth, I would like to mention here the corporate credit growth almost that we had unutilized lines to the extent of 70% in the working capital. And also, when it comes to the term loan sanction, almost 28% of the term loans were not disbursed. So when it comes to utilization of lines, to my mind, it is a function of the demand and then when the demand picks up, the corporates also start away these units. That is one factor. The other very important factor is as far as large corporates are concerned, they have got options available to raise money from the debt capital market and the equity capital market also. And since these markets had the flush with funds, the corporates could find it easier to raise money on these options. So if at all we capture the evolution of our bond book, I would say that the corporate credit growth is almost around 6%.

The next question is from the line of Aakriti Kakkar from Goldman Sachs.

Congratulations to you and your team [indiscernible] quality. I've got 3 questions now. The first one is on the research -- okay. So sir, first on the restructuring -- potential restructuring of loans, which RBI has allowed. What do you think -- I mean, what could be the potential the pool of restructuring that we need to do, particularly in the MSME portfolio?

I think we'll have to wait and watch for some more time to come because whatever -- our last year's experience is, when it comes to restructuring book with our total researching applications worth about INR 17,852 crore. So how will it really -- how will the corporates or maybe the SMEs will really respond, we'll have to wait and watch. But nevertheless, we are in readiness to offer them the support, if at all, they need it. And we have already put in place our structure. That policy is already approved and also put in place the structure. We'll be reaching out to all those who are eligible through various SMSs and emails, et cetera. And based on their response with relation to take stock of the situation. So we are about to begin that particular stage. So it is too early for us to visualize what is the likely book which will go through a restructuring.

Okay. But sir, if you look at last year's experience and this number of [ INR 17,500 crores to INR 18,000-odd crores ], how much of this would be on account of MSMEs? And I guess we had also done it last year also something because of SME restructuring has been there for sometime.

Last year, out of the INR 17,852 crores, INR 2,000-odd crore was an SME. So -- but the last year and this year, situation seems to be a little different. But I think we'll have to wait and watch because normally, what happens is that SMEs are also very mindful of the fact that, if at all, they avail the restructuring, it will have an impact on their ability to raise resources at cheaper rates. And so I think we'll have to wait and watch and see that how situations are, and maybe then only we'll be in a position to give some kind of color on that.

Got it. Sir, as this SMA 1 and 2 data that you gave, which is for loan more than INR 5 crores. Would you also be able to share some sort of a DPD breakdown for the retail and the MSME portfolio less than INR 5 crores?

I think below that would be -- the collection efficiency should be a good indicator. And I don't think..

We don't share that.

We will not be in a position to share below that below INR 5 crores. Collection efficiency being around 95%, 96% could be a derivative number, which can give some particular color on the book.

And also this is [indiscernible] arising. Our collection and efficiency is based on the fact that we consider 7-day overdue...

DPD.

89 DPD. So the whole gamut of DPD is covered in this one single number what we are giving. And I would say it covers up across the business segment. So I think that's a better indicator, as you said, instead of actually getting into the DPC. And we've been consistently giving this number every quarter.

Sir, just to understand, so you're saying this is -- 95%, 96% is based on 89-day DPD?

Whatever account is...

7 days to 89 days.

7 days to 89 days.

7 days to 89 days. Okay. And this would also include agriculture, I guess.

Other than agriculture.

Other than agri. Agri is a seasonal repayment. Whenever there is a harvest, then only there is a repayment.

Yes, cost cycle. Sir, one more question on the NARC, which has been traditional in the media article. Can you share with us what would be the broad controls? How much of portfolio that you will look to transfer? I guess, already carrying provisions. So will you need to take any market or there'll be recovery -- cash recovery in the back of this? Any color you can share on that?

We are in the process of finalizing the accounts. But as far as any more provisions will be taken, I don't expect. That is one. But yes, of course, we'll certainly be transferring the accounts, and we are quite convinced with the concept. And we are quite hopeful that it will be a very positive development when it comes to the resolution of, as just as I said, in the economy.

Sir, I've got 1 more question. But I'll come back in the queue. But if you allow me, I can ask?

Yes, please go ahead.

Sure, sure. Sir, this is with regards to the investments in technology. So based on the NCCI data, our technical decline seems to be on the higher side compared to the peer bank. So how would you view that? And would it mean that we need to up our investment significantly in the technology side, including hardware and data centers, et cetera, et cetera? Any color you can share...

So we are -- it's an ongoing process that we are quite confident of the fact that we have to keep on investing into technology and we have to make a very robust database and also very robust items and platforms. That is something which we are quite, I mean committed, and maybe I'll ask Mr. Ashwini Tewari to comment, who looks after technology and...

Complement to what the Chairman said, actually, he's right that the investment is a continuous thing. And we are all mindful of the fact that a digital transaction, especially UPI has really been getting all records in terms of number. So therefore, there was a lag of investment to India infrastructure, which has now been done. And if you notice the latest figures, which have come out in February and March from RBI, there, our technical declines have come down significantly from what they were in November, December. So the improvement has already taken place. And we are hopeful that with this continued investment and monitoring, we'll be well into better than the years.

Sir, the reason why I ask this question is because one of the large private sector bank, of course, all of us know, they were banned to onboard new credit card customers plus launch any more digital businesses. So given that the number is on the higher side, do you think this is something that can perhaps impact us also? And in that regards, what measures can we take?

Yes. I get your point. Actually, if you talk about our core channels, which is YONO and the Internet banking, so we had some issues in November, December, where we had problems. But I can give you the data of May, which is not in public domain yet in the sense that we had 0 downtime in Internet banking till 20th of May, and we had about some 13 minutes in YONO, an unplanned downtime. So therefore, a lot of improvement has already happened in these channels. On UPI also, the technical defines have come down to below 1% for the last -- latest data available data. So we have seen improvement. Of course, we have to see whether it's sustained. So we are continuously working on this. And hopefully, they will not have an occasion were...

Our effort is to ensure that it remains sustainable. And whatever we have done in the recent past for tendering these delivery platforms, we'll continue to be very focused on ensuring a delivery, which is without any disruption.

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

Just 2 questions from my side. What would be the -- this year, if you look at the recoveries, you have had about INR 17,000 crores of recoveries from the interior line and about INR 10,000 crores of recovery in the noninterest income line. If you could just give us some color outside of the one NBFC, which is sitting there, what are you seeing in terms of your recovery from the NPL/written-off pool?

We -- I don't think we would have much of chunky accounts left out now. But we will be actually resorting to -- NARC, we'll be resorting to the compromised settlements, et cetera. So -- but maybe I'll ask Swaminathan if at all he can give some color on that.

Just to supplement to what Chairman said, as far as the recovery is concerned, more or less, the numbers would remain in line with what we had achieved last time, but the only difference will be that we were -- in the last couple of years, there was a chunky accounts which got resolved. But today, the recoveries for this year and going forward will have to happen across many accounts. So we are working on those granular details, but also it will depend on how fast the second wave settles down so that our require efforts can get intensified. So at this point in time, we are not giving a specific number for recovery that we are budgeting for this year. But maybe over the next 4 to 6 weeks, we'll come up. Maybe as part of the Q1 call, we may be able to give you a guidance in this matter. Thank you.

So just 1 clarification here. This commodity rally that you're seeing out there, has it resulted in a better interest for those distressed assets? Or do you think it is an over expectation given the fact that these assets may have significantly deteriorated on the top?

Absolutely. In fact, we have seen renewed interest with this cycle getting better. We are -- we, in fact, got better realizations in a few accounts. And we are hopeful that this will -- this upside cycle will be beneficial to us in terms of improving the recovery percentage out of these test accounts. And there are interest coming in the brownfield assets. We are working on this. And I would like to make full use of this upside that is now visible.

And my second question is on the net NPLs. Today, your corporate book is carrying approximately 90% coverage. Could you also tell us what would be that in terms of absolute amount for net NPL, which is in...

Net NPLs in corporate book is almost down to INR 8,000-odd crores. As a total net NPL is out of INR 36,000 crore-plus, the corporate book is about INR 8,000 plus.

So this said, you would expect most of the slippages -- most of the provisions only for your retail and MSME/agri book. Is that a fair assumption?

SME/agri would be a major. Retail is also not much.

Yes. Retail is also holding on well. It will be MSME and agri will be just space to watch out, and that's the space, we are also very mindful in terms of [ leaving ].

Perfect. And in that context, can you give now a guidance to provisions for next year? Or you think it's going to be challenging?

Too early at this point in time. Maybe it will take -- we need to size up maybe another 4 to 6 weeks' time, it will take for us to estimate the impact.

We don't want to give any estimation or guidance, which we rather believe in under -- as far as pharmacist is concerned, I would like to deliver better than the pharmacist.

The next question is from the line of Aditya Singhania for Enam Holdings.

Sir, I actually wanted to clarify on the provisioning question that Mahesh just asked. I understood from your TV interview that you guided that credit costs could be similar in [ FY '22 to FY '21 ]. And in that context, your credit cost mentioned in the presentation is 1.1%, which is the loan loss provision number.

No, no. I mentioned that it will be within 2%. This has been my guidance even in the third quarter. This has been my consistent guidance always. So I think our effort would be to keep it at 1.12%, but nevertheless, to keep it below 2%. Ideally speaking, we would like to keep it at 1.12%, where it is in this quarter. But in any case, less than 2% by all means.

Okay. So sir, just in that context, if I could ask, you're already sitting at 70% provision coverage ratio and an additional buffer due to COVID with the strong corporate net NPAs, the low corporate net NPAs as well. So where would you expect such a large provision number to come from, if at all?

As just mentioned that SME and agri are the areas to watch, and that is something which we are ensuring that the quality suit the holder. So the very important aspect is we are a little unsure about the current COVID wave, how will it really pan out and what all impact will it leave. It may so happen that it may not leave much of impact. But nevertheless, I think we should go -- better prepared for any kind of eventuality.

Right, sir. And just one more clarification. If you could talk about any plans for listing of your subsidiaries, the general insurance and asset management?

We do have plans, but much of it will depend upon how the capital market continues to evolve, and we will be very mindful. And at the appropriate time, we will be coming to market.

The next question is from the line of Jai Mundhra from B&K Securities.

Sir, a, if you can share the ECLGS loan that the bank has, which the bank has disbursed? But more importantly, if you can share the outstanding loan, which is linked to this ECLGS disbursement book, in a way, if you are keeping a track of the principal as well if -- and how that has moved? So a, the ECLGS amount, and the b, the principal, which is linked with ECLGS disbursement.

INR 25,000 crores is the ECLGS book which we have created last year.

No, a, if you are talking in terms of the overall exposure, which is linked to the GECL, we don't have the numbers as of now. But you must also remember that GECL repayment has not begun. So that will be from June onwards. So how the GECL-linked principal outstanding will behave, probably, we'll come to know from June onwards.

But ECLGS is 20% of the exposure. So if it is INR 25,000 crores, you can do a reverse work, but that's not the -- that's not a concern at this point in time. That will have to be looked at later.

Right. But so broadly, that number should be 5 sets of the disbursed amount, right, assuming there is no significant repayment as yet?

Yes. Repayment has not started.

Not started.

Some of them might have availed it later.

No. no. Some -- see, it was maximum of 20%. So some people would have gone only 10%, 15%. But if you want the ballpark figure, I think you are -- will be around 20%, et cetera, by facts of it.

Sure, sir. And second question is, sir, on staff cost, I think I will -- this question was asked earlier, but just to be very sure, I think we had also seen that PSU banks, it looks like there has been some performance-based incentive that has been driven by at least a few banks. Is that the reason why the salary cash component has risen from INR 7,000-odd crores to INR 9,400 crores or just the arrear as per mentioned earlier?

So this was because, if at all, that has to be paid, that is the fate based on this year's results, and we would have only made a provision for it. It would not have been cashed out. So that would not have been booked like that. But nevertheless, as was mentioned, that INR 1,500 crore is a quarterly expense, which is expected.

Right, sir. And the last thing, sir, on SMA book again, can the retail below INR 5 crores SMA, I mean -- because other banks data suggest that the overall SMA, including INR 5 crore number is running into double-digit number. I mean, is that -- I mean, for SBI, you had clarified that you are not looking at the below INR 5 crores number, but somehow, any perspective, sir?

Perspective on what...

I mean how -- yes. So I mean, broadly, as you have said that 1 minus collection efficiency is a derivative. But just to be confirming that it cannot be a double-digit number, right, for SBI?

So we are not -- we can only reiterate what was said already. Retail is typically asset quality. Our DPD is depicted in the collection efficiency. INR 5 crore and above as per the prelim data.

You want to confirm, we can confirm that this is not the case.

The next question is from the line of Manish Shukla from Citigroup.

The loan processing charges for the full year are up 20% when loan growth is 5%. So why that disconnect?

Sorry?

No, no. The loan loss -- I think fee has gone up by 20%, slide #28. Why the loan growth is 5%?

See, the point is that loan growth is actual availment. Loan processing fee is a limit.

Sanctioned.

Limit sanctioned, which I mentioned also that there is a element of just about 70% of the limits have been utilized. And similarly, when it comes to term loans also, almost about 28% is an unutilized portion. So that is the reason that why the loan growth is appearing to be muted as compared to the loan processing charges.

Yes. One more thing also, if I can add, is that loan processing charges are also collected on the renewal means without any new facility being given, even if the annual renal is there, but also the loan processing charges will be there.

But sir, in case of an annual renewal, the fees would have been there in your base last year also, right? Unless you're charging more on the same loan...

[indiscernible] we recover. It will not be as much as what we recovered the first in TAM [indiscernible] in a way, yes. I think what Chairman has said makes...

That is the reason.

Typically in term loans, it's paid upfront, while the availment will be over a period of time. These 2 numbers cannot be necessarily related to each other.

These would always be independent. It will be all. Growth is actual drops, and that's a limit sanctioned.

Okay. In -- going to overheads, what is your exact nature of this business acquisition and development expenses because that has gone up 60% for the full year? For quarter, it is up 2.5x Y-o-Y and Q-o-Q.

Yes, because we have significantly ramped up our BC network. So that is the reason why this has gone up significantly.

Is this for origination for collection? Or -- I mean, where does -- I mean, on the business side...

BCs are for carrying out operations. And since we have got a huge network of BCs, which we have added in the last 1 year, and that is something which -- and also now we have started using them for collection purposes also. But that has been started only very recently.

And this also includes the home loan sourcing fee. So this is what we are reflecting in home loan. Fees of street has been increased.

Okay. Other question, sir, is on the loan book. Now your retail loan book as of March '21 is larger than corporate. Obviously, retail has grown at a very fast pace over the past few years compared to corporate. So how do you see the incremental shift happening for you between retail and corporate over the next few years?

So if at all, the economy will start growing at about 10% plus -- 9% is something which is being talked about by various economists, and we have a chance to grow at about 10%. The growth will come from SME and corporate.

Okay. But in the absence of that, retail will still continue to grow faster than...

Retail will continue to grow because there is a scope. There is an opportunity which is available, and we would like to tap all that opportunity.

Okay. The last question, in your opening remarks, you talked about capital requirement over a medium term, but where things stand right now for the next year or so, how do you see your capital requirements?

So if at all, it's a 10% of the asset growth, perhaps we can live with the current situation. But we will probably assess the situation once the COVID 2 is behind us. And maybe that will be a point of time when we'll have a better visibility of growth, and that will be a point of time when we'll decide about the capital.

The next question is from the line of Saurabh from JPMorgan.

So 3 questions. One is why is the current account number so high this quarter, both quarter-on-quarter and Y-o-Y? The second is on this provisioning slide, I mean, on the standard asset provision, there is INR 4,900 crores of other provisions on the standard assets. What does it relate to? And generally, do you have a policy on how will you draw down on your standard asset provisions? I mean, can we expect a drawdown in fiscal '22 against the SME slippages? And thirdly, can you just quantify the technology spend in the bank, both OpEx and CapEx?

Sure. First, I will take your question relating to this current account. We have opened -- there was a sharper focus on opening up new current accounts in the bank, and that is something which has paid off in a way. And we are seeing the kind of growth that you have seen. The second question was getting to -- can you please repeat the second question?

Sir, this was on the INR 4,900 crore...

Yes, standard asset provision, actually, we have got a -- we maintain 0.25% of our standard asset as a provision. So that is something which is there. And to use that, if at all those standard asset turns into impaired assets, then only those provisions are used. Otherwise it stands as it is.

No, sir, my question was on INR 6,300 crore and the INR 4,900 crore. The additional provisions you've made over and above the company.

INR 4,900 crores, INR 6,300 crores. Okay. Fine. That is additional COVID-19 provision of INR 6,300 crores and -- which we have kept. That is essentially to meet the contingencies, if at all, it arises. Now post-COVID 2, that is one. And INR 4,900 crores, again, they are the other provision...

It's a big standard provision plus the restructured provision to be kept under COVID restriction that is implemented so far.

Okay. So this will be deep standard assets plus the restructured?

Yes. Stranded assets, as per the regulatory requirement, various rates are maintained. We also maintained an additional provision in spite of identified as stressed. And then also now the new addition during the quarter is the restructured assets under the COVID package.

Okay. Okay. And sir on the technology spend?

Technology spend, just 1 second. Yes, we will give you the figure. Give us a few minutes we will just get the figures.

Okay, sir. And just on the current account one, sir, was there a benefit because of this RBI circular in October or?

No, no, not really so. Not really so. It was a change in the effort, which was initiated for some time. And we have strengthened our CMP also, cash management product facilities, which we're offering. So current account is a function of various add-ons. That is something which we have.

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

Please accept my compliments on the fantastic number of results. In fact, you have brought the whole sentiment in the entire banking stocks and the financial stocks up today, which is kind of result where the NIM growing 3.26, CAR is 13.74 and some profit. Good ROA of 0.48%. So my compliments to the entire team. Having said that, sir, I have got a couple of information points and some data points. Sir, in our Note #13, INR 830 crore is the interest reversal as per the Honorable Supreme Court's order. So this entire INR 830 crore has been in this quarter only naturally because the order came in March '21. So it will be interest which was charged up to the last quarter, that is December quarter also. Everything has been reversed now in this quarter, isn't it?

Yes, that's right. Apart from that, there is unrealized interest also, which are about INR 2,100 crore, which was also reversed.

Yes. So that is, again, in fact, a plus point as far as this quarter, otherwise, the results would have been. Sir...

Yes, I will give you the number. Interest reversal was INR 2,127 crores during the quarter, apart from INR 830 crore, which was interest on interest component.

It is on interest now.

That is that. Then the NII for the quarter has improved by 4.18% sequentially, instead of a decline of 6.08%.

All right, sir. Sir, this RBI as recently has announced one COVID loan scheme of INR 50,000 crore for taking at the repo rate and then getting that benefit of 0.40, 40 basis points if you again put the money back to the extent of the loan given. So whether the bank has come out with its policy for this COVID loan for the medical purposes? And if yes, whether it is implemented and how much has already been sanctioned under this scheme? Or what the bank plans to do for the remaining period?

Ajmera, first of all, thank you very much for your compliments. And now the other piece is relating to this health infrastructure-related COVID book, which is expected to be created. And we have -- internally, we have thought of that we can create a book of somewhere around INR 10,000-odd crore. We already have got some exposure to pharma sector, which is to this extent already. But we will be very aggressively supporting the hospitals and nursing homes are augmenting their oxygen facilities. And also in the pharma sector also, if at all, there would be demand, we're more than happy to support...

Sir, would you be considering the NBFCs also for the onward lending to be in particular area?

Yes, we are quite open because RBI schemes permit us to do that also. So we'll be quite keen to support any such initiative. And what you mentioned was in terms of who we may not avail the facility and the repo, but we'll be happy to avail the reverse, repo facility and also the most important factor for us is the priority sector component. The priority sector is something, which we are very happy to look at it.

Yes. Sir, now coming towards this credit growth of 10%. Sir, the corporate book asset is not growing much. I mean, the overall, I think, was just 6%. In the personal loan, the slippages have come down from INR 4,507 crore to INR 3,287 crore in this year as compared to '20. But at the same time, the personal loan book have already grown. I mean, all the retail partners, they were already growing and every bank is chasing. So where do you see the -- basically the loan growth coming now in '21, '22? And how are you so hopeful of growing your book?

I'm hoping that SMA would be a good opportunity. Apart from that, even in the corporate sector also -- see corporates, all these years had an option to go to the debt capital and the equity capital market because the markets are flush with liquidity. For the reason that the west was not looking as good. Now having -- in the fact that in the west, practically, all the economies have vaccinated themselves well, so I expect that there will be huge growth opportunities there. So perhaps some money which used to flow in here, it may not be available. So that kind of a liquidity may not be available in the system and corporates might come back to the banking system for growing the fund. So that is how I look at it.

[Operator Instructions] The next question is from the line of Nilanjan Karfa from Nomura.

Probably repeat a few questions. So on the ACA this quarter, can you confirm that we basically took in the Busan recovery then?

Busan recovery was INR 4,032 crores. 4 0 3...

That is accounted for in this quarter, right?

Yes.

Yes. Yes. Yes.

Okay. Okay. Good. And just a small clarification. So in the Note 17, that table is basically what we have implemented, right? And what is -- in -- under application is that INR 17,000-odd crores. So that's a broad difference, right?

INR 6,215 crores is implemented.

Right. Correct. And related, sir, I mean, you have already talked about the wave 2 impact and that you don't want to hazard I guess. I can understand it. But every new flow does seem to suggest that Tier 3 onward impact has been particularly severe. Any initial fillers you have in terms of -- while it's such a humanitarian crisis, but any initial filler about, can things -- specifically that agri and agri-related retail, can that get really bad? And in that context, I mean, we had such a great performance. Why are we just carrying about a 60 basis point additional other than standard provision, just a 60 basis point additional provision? Would we -- I mean, should we not have taken in maybe another [ 60-odd ] basis points. I mean, it would have given a lot of confidence around the balance sheet, sir.

No, mostly, the point is that the wave 2 is a bit of uncertainty, which we are living through, and with what is being talked about is the wave 3 also. So I would say that there is -- we have booked up on the learning curve. But nonetheless, the variety of the wave 2 is something which has actually hampered the life for many. So that is something which is -- so we are actually sort of going through a very, very uncertain phase right now. So because -- if at all, we have got such kind of uncertainty, the better way out is to keep as much cushion as possible to really tie it over such uncertainties. I think as I mentioned that maybe by end of June, we'll have a much better visibility. So that is a point of time when we can probably take a call. And in any case sense, as a philosophy, we believe in strengthening our balance sheet. We don't want to compromise on that principle.

Sure, sir. So sir, broad feedback is that in June, we'll probably take that call?

Yes, June, we will take a call.

Okay. And a quick data point, sir. Out of the INR 25,000 crore ECLGS, roughly, how much was the ECLGS package 2?

ECLGS Package 2. Just give me a minute. We will revert back to you.

We'll tell you.

We'll just let you know. But in the meanwhile, there was one gentleman who had asked me about questions relating to IT, CapEx and OpEx. IT CapEx spend is about INR 1,300 crore. The OpEx is about INR 5,800 crores.

[Operator Instructions] The next question is from the line of [ Mona Sultan ] from Dolat Capital.

So I have 2 questions. Firstly, in the corporate segment, your 9 months pro forma plus reported slippages were around INR 3,000 crores. And that has now increased to about INR 7,700 crore in the current quarter. So is it fair to say that the large part of slippages during this quarter came from the public segment? And if so, could you just throw some light on whether it's related to potential restructuring or in terms of the size of those accounts in the sector?

Can you please repeat your question?

Yes. So when I look at your 9-month pro forma slippages for corporate segment, pro forma plus reported slippages, they were about INR 3,000 crore in the last quarter. And that now increased for the corporate segment to about INR 7,700 crore. So an addition about INR 4,700 crore in the corporate segment this quarter. What's the total slippages for the quarter at about INR 5,600 or thereabouts? So essentially, a large part of slippages during the quarter have come from the corporate segment. So just some color there.

Which slide are you referring to?

Into the 9 months...

Through 9-month slippage.

Okay. Okay. Got you. Last quarter, in the Q3, the corporate was at INR 3,003 crore. And this quarter, it is 7 -- quarter 4 is INR 6,558 crore. So about INR 3,000-odd crore. How much was -- do you have some color? I think we'll have to look into that. And as of now, we'll have to look into what is the -- what are the accounts which have contributed to this. But we -- normally, we don't give specific accounts, but nevertheless, what was -- whatever was there, have already taken care of. But nevertheless, let me -- I don't have the ready information on this.

Okay. And secondly, on the restructured book, what is the -- so we have a restructured book of about INR 18,000 crore, including potential restructuring. What is the kind of provisions that we hold against it?

For restructured book, our requirement would be -- we would be holding 15%.

No, the Note number -- already restructuring implemented. Note #17 carries the restructured book as well as the provision. 11 26 again. [ 6905 ].

[indiscernible]

No promotion. No, that's in my notes. And then for the remaining applications for which the process is on, we have made a 10% provision upfront. So they will become specific once the restructuring package is implemented. I hope it's clear to you.

See, just one on the restructuring again. So you've given a potential plus restructured total number of about INR 18,000 crore. So this includes the non-COVID-related MSME restructuring as well?

Yes, the INR 17,852 crores contains all types of restructuring. As -- segment-wise breakup is also available in Slide #18. So you will see SME INR 2,118 crores there. Out of the INR 17,852 crores, INR 6,125 crores is already implemented, for which separate provision is already created. That's there in the Note #17. For the remaining INR 11,000-odd crores, which is under process, the 10% provision is already created. That will become specific once the restructuring is implemented.

We take the last question from the line of Saumya Agarwal from Smartkarma.

Yes. Before Saumya, I think there was some question on the ECLGS. The ECLGS 1 we had disbursed INR 23,000 crore. ECLGS 2, we have disbursed INR 2,200 crore. Take together as well, it's INR 25,000 crore. Now Saumya can go ahead.

Just want to understand some trends here since SBI is the market leader in the banking space. It's been widely concourse that agriculture has been the largely resilient segment amid the pandemic. But if I look at the fresh slippages for FY '21, almost INR 9,500 crores or 33% is coming from the agri book. Even in terms of gross NPA, it is the more stressed segment at around 15% NPAs. So what explains this dichotomy? If you could shed some light on this?

See, the point is that, agri, we have -- traditionally, we have seen that this particular book is behaving. But when it comes to SME, yes, of course, we have seen a very different trend. And we are not -- as far as par is concerned, I would say that the trend is more in line with what we have seen in the recent past. But maybe I'll request Mr. Setty, to have better color on this.

Yes. I think your question, last quarter also, I think many of the analysts have asked. Is the rural economy is doing very well with that -- where the book is. If you see much of the slippages have happened in the first 2 quarters in the current financial year. We have also explained that the agriculture seepages happen for nonrenewal of the crop loan. So when you don't reduce the crop loan, it will be classified as NPA. First 2 quarters, we were not able to do, the slippages have been higher. Subsequent 2 quarters, not only that lockdowns have lifted, our people were able to offer the villager, farmers. And the renewal percentage has gone up. So aggregate slippages in the later 2 quarters has been much lower than the first 2 quarters. Again, it all depends on the composition of our agriculture portfolio. Out of INR 2 lakh crores, we have about 1 lakh crore crop loans and INR 70,000 gold loan, which is a safer portfolio for us. In these crop loans, it's a season and as well as debt relief measures announced by the state government, it will impact the renewal percentage. The moment that debt relief scheme, like for example, Maharashtra, we have received almost INR 5,000 crores of debt relief, where the NPA levels have dramatically come down during the current financial year. So it's all one quarter -- one year to another year, the agriculture portfolio [indiscernible] affecting. The last year has been that in the first 2 quarters, we had tough time in terms of crop loan renewal, which had contributed to slippages. We were able to pull back some. We are still working on that. And I think the improvement in the agriculture portfolio is visible in the last 2 quarters. Hopefully, that will continue. Only, as Chairman initially pointed out, because of the smaller centers and villages are also getting impacted by COVID, there would be some stress on the agriculture portfolio going forward.

Also, I would like to add the very structure of agriculture book is about INR 60,000 crore would be to [ SME ] also. And normally, they have got a very good repayment behavior. So actually, INR 60,000 crores plus INR 40,000 crores, which is gold loan, so there is not much of concern. The major concern is out of this INR 1 lakh crore. And there also, if at all, we succeed in doing the reviews and -- then the quality is not as much of a challenge. But yes, of course, COVID has restricted mobility. That is a fact which we need to keep in mind. And also, this happens soon after the harvest, when people have to go for spring. The review renewal happens around the same time. So actually, it is a seasonality. And if at all -- at the material point of time, if at all there are any restrictions on mobility, that causes problem in the agri book. Yes, please.

Regarding the earlier question on slippages in the corporate book of INR 6,558 crores, there was one account of INR 3,650 crores. That was purely on technical reviews. So that will get into standard within this financial year itself. There was another chunky account also. There also, I think we will be able to recover. So out of the INR 6,500 crores, INR 4,500 crores will move into standard within this year itself.

Due to time constraint, that was the last question.

Okay.

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