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

I'm Pawan Kumar, General Manager, Performance Planning and Review Department of the bank. On behalf of State Bank of India, I'm delighted to welcome analysts, investors, colleagues and everyone present here today on the occasion of the declaration of the financial year '25 results of the bank. I also extend a very warm welcome to all the people who are accessing the event through our live webcast. We have with us on the stage, our Chairman Sir, Shri C S Setty at the center; our Managing Director, Corporate Banking and Subsidiaries, Shri Ashwini Kumar Tewari; our Managing Director, Retail Business and Operations, Shri Vinay M. Tonse; our Managing Director, Risk, Compliance and SARG, Shri Rana Ashutosh Kumar Singh; our Managing Director, International Banking, Global Markets and Technology, Shri Rama Mohan Rao Amara; our Deputy Managing Director Finance, Shrimati Saloni Narayan. Our Deputy Managing Directors heading various verticals and Managing Directors of our subsidiaries are seated in the front rows of this hall. We are also joined by Chief General Managers of different verticals and business groups. To carry forward the proceedings, I request our Chairman sir, to give a brief summary of the bank's financial year 2025 performance and the strategic initiatives undertaken. We shall thereafter straight away go to questions-and-answer session. However, before I hand over to the Chairman sir, I would like to read out the safe harbor statement. Certain statements in today's presentation may be forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual outcomes may differ materially from those included in these statements due to a variety of factors. Thank you. Now I would request Chairman sir, to make his opening remarks. Chairman sir, please?

So good evening, ladies and gentlemen. We thank you all for taking some time out to join this analyst meet post announcement of FY '25 results of the bank. The financial results for FY '25 highlight continuity, consistency, profitability and SBI's significant long-term strengths. At the outset, I would like to thank all of our stakeholders for their support and helping us in creating sustainable value, not only for the bank but also for the economy as a whole. Over the years, SBI has remained focused on strengthening the key components that contribute to this sustainable value. We have prioritized our liability franchise, refined our processes, continue to improve our underwriting standards and aim to deliver value to all stakeholders while positioning ourselves as a reliable financial services brand. I will first start with a brief description of the present global and domestic economic scenario and then discuss bank's performance. Escalation of trade and tariff tensions and the resultant financial market volatility have raised concerns regarding the weakening of global growth in the near term. As per IMF, the estimated global growth is projected to drop to 2.8% in 2025 and 3% in 2026, much below the historical, that is 2000 to 2019 average of 3.7%. As per the WTO, world merchandise trade volumes could expand marginally by around 1.7% in 2025. The dampening global economic outlook could impact India's economic growth through weaker external demand, even though the domestic growth engines, consumption and investment are relatively less susceptible to external headwinds. Prospects for the farm sector have been boosted by the forecast of an above-normal Southwest monsoon for 2025, which could augment farm incomes and keep food prices under check. Given the exacerbated uncertainties due to recent trade tariffs, RBI has reduced its real GDP growth projection for FY '26 by 20 basis points, to 6.3% in the April policy. Separately, India's CPI headline inflation has now significantly moderated, and we believe average CPI headline forecast for FY '26 could stay below 4% now. During FY '25, [ ASCBs ] credit growth declined to 11%, which was 20% last year, and deposits to 10.3%, which was 13.5% last year. Term deposit growth continued to outpace growth in savings deposits. Consequently, the share of term deposits in total deposits rose to about 62%. CASA declined to below 40%. Asset quality of SCBs improved further with their GNPA ratios declining to 14-year low of 2.4% in December 2024. CRAR stood at 16.4% in December, which was much higher than the regulatory minimum ratio. RBI has deployed a strategic mix of interventions, including open market operations, daily variable rate repo auctions and dollar/rupee buy-sell swap auctions. These proactive measures have helped stabilize market liquidity conditions, ensuring financial resilience in an unpredictable global environment. Coming to SBI, once again, the results for FY '25 demonstrate the bank's ability to operate profitably at scale due to our substantial long-term strengths. These advantages stem from our institutionalized framework, which is guided by structured processes and a commitment to fairness for all stakeholders. The net profit for the year was INR 70,901 crores, up 16.08% year-on-year. At the end of the year, our whole bank credit growth was 12% year-on-year with domestic credit growth at 11.56%. Deposit growth was 9.48% year-on-year, while the CD ratio, domestic, was 69.71%. We maintained stellar asset quality with slippage ratio of 0.55%. Retail personal slippage ratio was at 0.48% and credit cost at 0.38%. PCR was at 74.42%. Some details about these numbers. The total deposits have grown by 9.48% to INR 53.82 trillion. As I mentioned, term deposits have witnessed robust growth. They have grown by 11.48% year-on-year. Our current account deposits have grown by 27% year-on-year, and CASA deposits have grown overall by 6.34%, and CASA ratio was close to 40%. Importantly, the current account growth has continued to remain strong for the bank during the year despite competitive market environment. The credit growth continues to be good across all segments. Our domestic advances have grown by 11.56% year-on-year, driven by 16.86% growth in SME, 14.29% in agriculture, 9% in corporate and 11.4% in retail personal segments. Our foreign offices advances have grown by 14.84% year-on-year. The domestic credit deposit ratio is 69.71%, indicating sufficient headroom to address future growth requirements of the economy. The bank continues to demonstrate industry-leading asset quality at this scale. The slippage ratio for FY '25, as I mentioned earlier, was 0.55%, while the credit cost stood at 0.38%. Net NPA improved by 10 basis points. We have a well provided net NPA book with PCR at 74%. The asset quality of the bank has continued to remain strong over the last 5 years, which demonstrates the quality of our loan portfolio, the robustness of our underwriting processes, effective collection efficiency and the leadership of the bank across business lines. Our capital adequacy ratio is at 14.25% and the CET1 ratio is at 10.81% and are well above the regulatory requirements. Based on the current profitability and growth profile of the bank, we believe we have sufficient headroom to take care of business growth requirements. I'm glad to share the progress we have made in digital banking, which is an ongoing journey. More than 8.77 crores customers have been registered on the YONO, with 64% of regular savings bank account opened through YONO technology in FY '25. Our subsidiaries are consistently performing well and continue to create significant value for all the stakeholders. We will continue to nurture these subsidiaries and maintain leadership position in the respective businesses. We are glad to advise that the bank continues to report ROA and ROE greater than 1% and 19%, respectively, at the end of FY '25. A key point regarding these metrics is our operation at a substantial scale. We reported total assets worth INR 66.7 lakh crore, total advances at INR 42.2 lakh crore and total deposits amounting to INR 53 lakh crore. When we mention scale, it indicates the bank's extensive investment in workforce, training, procedures and compliance to maintain this level. Sustaining our growth rates implies that our bank's infrastructure and personnel are equipped to support continued growth at this magnitude. SBI continues to be the leader in all the risk-adjusted profitable leading and liability pools in India -- lending and liability pools in India. Consequently, SBI's ROA above 1% is derived from the scalable fundamentals of banking, a stable NIM, controlled operating expenses and maintaining credit quality. While we are happy about the outcomes in FY '25, we are also mindful of areas for further improvement and also challenges emerging from various developments taking place across the globe, which may impact Indian economy. On the liabilities side, we continue to focus on increasing our share in current account while maintaining our leadership position in savings deposits by further strengthening our customer service and branch network. Although the bank's cost base is substantial, it highlights our commitment to compliance and efficient operations. We intend to reduce our cost-to-income ratio by concentrating on increasing income. The bank's ROE profile is currently higher than its credit growth, implying that CET1 accrual in the future. From this strong position, our goal is to consistently achieve a ROE of over 15% through the business cycles. The Board has granted approval to raise equity capital up to INR 25,000 crores, with the authorization being valid for a period of 12 months. This is an enabling provision -- resolution. Although we are open to capital raising, such plans will be contingent upon the business needs and market conditions. Wrapping up my initial comments, I express my gratitude for your ongoing support to the bank. As the bank advances its objectives, it also plays a role in driving the progress and economic development of the surrounding ecosystem. We are dedicated to upholding your confidence in us by delivering superior, sustainable returns over the long run. My team and I are now open to taking your questions. Thank you very much.

Thank you. Chairman sir. We now invite questions from the audience. For the benefit of all, we request you to kindly mention your name and company before asking the questions. To accommodate all the questions, we request you to restrict your questions to maximum 2 at a time. Also, kindly restrict your questions to the financial results only. And no questions will be asked about specific accounts, please. In case you have additional questions, the same can be asked at the end. We now proceed with the question-and-answer session, please.

Yes. I'm Ashok Ajmera. Sir, compliments to you, sir. In one of the meeting -- recent meeting, I had said that our operating profit, we are capable of crossing INR 1 lakh crores, INR 1,10,000 crores now, exactly that same figure I said and you have achieved it, compliments for that. Phenomenal numbers, good growth in spite of a little difficult time in the both deposit side and as well as credit side. Having said that, sir, I've got a couple of questions, some observations and some data points. One is that, sir, on the credit growth. Like we have been maintaining last year that our target was 15%, 16%. And I think, a quarter back, I had only had raised this point that we have achieved only 8%, I think, till December, 8.2% or something. How are we going to achieve it? And our confidence was that, yes, we have got a strong pipeline, and definitely, we will try and achieve the given targets. But finally, it came down to 12-point-something. So on that, I mean, what has gone wrong just in 2, 3 months that as against our targeted numbers, which was very good, encouraging and good pipeline, in spite of that, also we couldn't achieve that number. So that is one. My second question is, sir, that all the TV channels are streaming that net profit of State Bank is down by 10%. Now they are just looking at Q4 '24 of INR 20,698 crore and now INR 18,643 crores. If you look at it, the operating profit has gone up by almost 9%. So -- but because of the higher provisioning in this quarter, this net profit, and they got the chance to say that SBI profit has gone down. Could we not have used some of that buffer provision, which we have got more than INR 30,300 crores or INR 30,500 crores, something out of that? And what was the need of almost about this INR 6,000 crores of provision in this quarter itself, which has given the opportunity for others to say that the profits are down, though, it is not actually in fact. So this is the second of my -- some observation and your response on that. Thirdly, sir, if you look at the segment-wise results, there is a very deep variation. There is a strong variation in that in segment numbers. The treasury numbers are haywire from INR 891 crores to few thousand crores. And wholesale banking, retail banking, the numbers have gone down by a few thousand crores. So is there any change in -- because segment also gives some impression proper this thing that how is the bank is moving in which direction and under which segment. So if you look at it, there are quite large variations in that. So on that also, if you can throw some light on that, that -- is there a change in the method of calculation? And lastly, having -- you only have said that now another 50 bps point reduction may come, some people are saying even 75 bps, and we have got a strong investment book. So do we expect huge bumper profits on the treasury account this year in FY '26, which may take up our bottom line also to a great extent. What do you say? I mean, what color you would give to our treasury operations, both in the trading profit as well as the profit because of the mark-to-market, part of which comes to the profit, but AFS goes to the reserve, but still what we expect into FY '26 because of that rate cuts?

Thank you, Ajmera saab, for the compliments and also the critical questions which you have raised. The -- yes, we did given a guidance last year. Not guidance, I think we have expected credit growth to be 14% to 16%. In the Q2 guidance, I've said this. And in Q3, I moderated that to the lower end of 14% to 16%. So there are -- obviously, we expected the year to close at 14%. If you see, most of the segments, you can see on the screen, we have done -- [Foreign Language] you are not able to see. I think the presentation it is shown on Slide 16, which shows that in many segments, we have done well, except in the corporate. Corporate is a bulky and chunky credit. And we have had an unusual prepayments in that segment. So while we have had a good pipeline, which I mentioned earlier also, even now we have around INR 3.4 lakh crore pipeline in the corporate side, the unanticipated prepayments definitely had impacted us. It is nothing to do with any of the segments not doing well. Many of the large central PSUs have utilized their equity funding to deleverage. And that we could not cover in the short tenure of 1 quarter. So that is the major reason. Otherwise, we still have the visibility on the corporate side. And that is the reason, while we are not saying that it would be 14% to 16%, but 12% to 13% is quite possible, while the industry is growing less than 12%. This is on the credit growth side. On the net profit, I think -- I mean, the numbers have to be understood by everyone. But our idea is -- our focus is always to strengthen our balance sheet and also create a consistency in our performance. It's not about 1 quarter we try to ensure. But our preference is that if any costs are visualized, let us take it them upfront. If you have seen, it is not only this time, last year, INR 7,000 crores of pension provision we have taken in 1 quarter. We could have taken it in 4 quarters. I think that was permitted. So front-loading the costs has always been our strategy. And you're right, I think the ideal way of looking at is the 12 months performance on an aggregate basis. And in many parameters, we have done extremely well, either on asset quality, in terms of ROA, ROE guidance, we still stuck to it. So the PAT has been -- I think, has not been our -- we didn't want to show that we can make the similar profit what we have made. And we know for sure, these costs are likely to happen. So some front-loading of provisions have happened definitely that has resulted in this. Yields -- moderation in treasury yields definitely would help the markets to perform better. And I think our treasury will do. While we are not willing to give any guidance on this, Ajmera saab, we will believe that with the rate cut cycle kicking in, the yields will definitely moderate, providing an opportunity for us, both on the MTM side as well as on the trading profit. So -- but we will be a little more objective in terms of any guidance on the treasury side. Thank you. You asked something about segment-wise, I...

Yes. Because you see in treasury operations income from INR 843 crores to INR 8,891 crores. Corporate, okay, [ INR 74,284 crores ], but retail banking from INR 17,311 crores to INR 9,325 crores. So either we remove this, giving it segment-wise numbers only if it is -- if they are not relevant, or we do some working, which is consistent.

We will ensure that. You're talking about from the balance sheet side...

Yes, segment results. In the results.

You're talking segment result, just have a look at it.

No, it's okay. I mean if it is...

We will have look, Ajmera saab.

All right. Okay.

So sir, I have a couple of questions. Firstly, on the provisioning, if you see the breakup -- breakdown of provisions, then there's another provision of INR 16 billion or so. So what is that about? Because it looks too big for that line item. So maybe there's some one-off there. That's my first question. And then on asset quality, so when I go through your movement of NPLs, there are some banks that have seen recovery from a very big account, right? And it's visible in their recovery line. So maybe it was written off for you, I don't know. But we don't see any recovery from the movement of NPLs of a large account. And that large account, the lenders are public. So you're one of the largest lenders there. So it was not -- it's not a recovery, it is transferred to NARCL. So I'm talking about that account, where would that have been booked because other banks have disclosed where it's booked and roughly how much has been booked from there and where. So that's my second question.

You can answer on the second question. The first question. Yes, go ahead.

And my third question is in employee expenses. This time around, I'm not talking about the pension provisions. I'm not talking about the provisioning of benefit part. But in employee expenses, the actual wage cost also looks higher sequentially this time. So how do we budget or how do we like forecast wage costs for next year? Year-on-year, of course, for the full year, it's 6% growth. But just in the fourth quarter, the wage cost, so those are my questions.

Let me first answer the wage cost. So I think Q4, we take a lot of provisions, the PLI and many things which are added to the staff expenses which are not in the earlier quarters. It will appear only in the fourth quarter.

Got it. So 6% growth is next year also, right?

Yes. That's all. And on the account, which you mentioned, though, we don't talk about specific accounts, but I think the accounting can be mentioned by Ashutosh.

So without naming the account, the account you mentioned, I think everybody knows this. So roughly INR 3,300 crores was the component we got and INR 500 crores plus roughly went to the NPA reduction, you can see it will come in their recovery piece. Remaining 85% essentially is the treasury income, as that RBI circular, which came on 29th. So somewhere in the treasury side.

Sorry, sorry.

Provision. So INR 500 crores roughly. The 15% will come into NPA reduction. Recovery, you can see that number in the NPA reduction. Remaining will be on the SR revaluation, which circular came in the last week of March. That will go in the treasury side.

On the other income side?

Yes.

And has anything been booked into the NII, no, from this, net interest income, no?

INR 500 crores will go into -- not NII, it will go into the NPA reduction.

Provision. Got it. Got it.

Because it was a fully provided account. So it will impact the provisions and the SRs we used to hold at INR 1. So subsequently, on 29th March, RBI has given a clarification that if you have SRs which are governed -- guaranteed by the government guarantee -- I mean, backed by the government guarantee, we can revalue the SR. So you see in our global market, I mean our treasury profit, the revaluation profit also is shown there. Some of the recovery is related to what your -- account you are talking about also is appearing there.

Got it. And how much would that be ballpark?

We will give you that.

Okay. Okay. Okay. And sir, this INR 16 billion of...

Where is that INR 16 billion. Is it provisions?

There's another provision. Maybe I'm getting the figure wrong, but -- yes. So if you look at the breakdown of provision, you have loan loss and then you have standard and then you have other provisions as well. So is there -- is it related to just loans or something else?

Yes, this is INR 1,636 crores, right, in the Q4.

Yes.

Yes, this is loan -- other provisions, this -- any clarity on that?

Other provisions, basically, they have increased because the received provision for other receivables and contingent liabilities includes INR 700 crores of CDS -- the PLI that...

This is again PLI related.

This is PLI related.

For the employee provisions.

It has nothing to do with...

Loan loss provision, no.

A couple of questions. Before that, excellent results, excellent INR 110,000 crores operating profit, excellent asset quality, growth. The whole Board deserves a great, great party. Yes, and not only from the analysts, but also from the capital market -- stock market. Now a couple of questions. One is a clarification. Now that I'll come to later. First is the foreign branches growth is much higher than domestic by a couple of percentage points. Now how sustainable is it? And because we often link the growth with the GDP and CapEx cycle, now which are the countries where the foreign branches growth is higher than domestic growth because we have a widest network of foreign branches operation, if you can highlight that and also the outlook in the year ahead because there's a transformation in the economy on foreign economy, particularly. Second is our valuations. We have often talked about valuation. And of course, we are among the very, very undervalued bank. And compared to the run-up in the bank NIFTY at the highest and others are going much higher, we deserve maybe a valuation of INR 1,200, if not INR 1,000 immediately based on operating profit and the numbers. Now one clarification, most of the analysts and the databases, they look at valuation basically not in terms of P/E ratio, but in terms of price to book, right, bank. Now when we look at our slide here, Slide #10, the valuation per -- book value per share and the book value per share in Moneycontrol, which claims to be among the top 10 capital market websites in the world in terms of unique visitors and viewers, there's a big discrepancy, and we feel Moneycontrol is far -- number is correct. They talk about price to book of 1.57. And here, Slide #10, for -- after a long time, we saw the slide, book value per share, it shows historic book value based on last year. Today, we are 2. Of course, it needs to be updated with the current one. I would like to know how you calculate because when people compare all the banks, they go for Moneycontrol book value per share. We can just see from mobile, on the way itself, I was reading it and seeing it just for chance, how can the book value be below INR 400 for FY '24. So I would like you to clarify here and now because bank analysts will just prepare the reports today evening and shoot it off or maybe tomorrow morning, and I wonder how different ones they will calculate and they need not take from this slide. It's very, very important. Next is we mentioned about this resolution for INR 30,000 crores. It is -- I wonder it is enabling or all the banks now are raising money, huge money is coming, private banks and public sector banks, almost all public sector banks are raising money. Even the private ones, they are going for accelerated raising of QIPs and all. So what is the thought process on it? Are we going to raise money in equity seriously because we don't require as per our capital adequacy. And often, this has an impact on valuations also, and it should be at the right price. So your thought process, it's only enabling or we are looking at it seriously. And of course, the bank, what steps the bank will take to ensure it's at the right valuation. And with this, all the best. I hope, particularly as some point was discussed, this year, what is coming now comes often -- when we say once in 10 years, treasury income, there will be a lot of opportunities for our treasury team. And I hope they are agile as usual. And to see that we will break records in terms of net profit also, I wonder if we'll cross INR 1 lakh crore net profits exceptionally for contribution by the treasury team. Thanks and wish you all the best for the coming year. Look forward to the detailed reply to the question, which you always do as usual. Thanks.

Thank you. Thank you very much. And..

My name is [ Manoj Alimchandani ].

Yes, yes, of course, I know. Thank you. So 4 questions -- 3 questions and 1 observation. Of course, treasury gains, we hope that treasury continues to perform well. On the foreign branches, I request Mr. Rama Mohan to respond on your question, and I'll supplement after his response. Similarly, price to book value, I request our team who is sitting in the audience to clarify that position. I'll start with my response to this resolution related to -- it's not INR 30,000 crores, it is INR 25,000 crores, enabling resolution for equity raising. This resolution, of course, as you notice that every year, we take this. And our effort is to balance our growth requirements and also the need for augmenting the CET1 capital. You're right, today, we don't need growth capital. We mentioned that with 14.2% capital adequacy, we have enough firepower to cover [ 8 lakh ] credit growth. So we don't need immediately in terms of the CRAR requirement for credit growth. But we still feel that if there is an opportunity to raise the equity capital, we will definitely access the markets. The timing is uncertain. As you said, we need to get the right value. While we cannot time the market absolutely but we will look for an opportune moment. And we -- always in the beginning of the year, we take enabling resolution so that we have an ample time to plan our equity raising if needed. On the foreign offices, Ram, you can respond.

On the IBG side, I think your observation is correct. We grew at a faster clip. Traditionally, we have that ability to play a complementary role to domestic. So whenever we feel like the domestic growth is slightly lower, we can always ramp up the IBG growth or the international banking growth because we use the 3 levers evenly, like we have exposures to trade finance. We have exposure to the local corporates, whether in the U.S. or U.K., et cetera. Well-rated corporates, most of them are listed entities. And their debt is also available in the market, we can always pick up. And of course, we also cater to the larger Indian companies which want to raise ECBs. In fact, if you see, like, while traditionally, all the 3 components are equally balanced, 33%, 34%, we had a slight uptick in India-linked loans where second half of last year, we have seen a higher demand from the Indian corporates for raising ECBs because of the cost arbitrage, even on a fully hedged basis, their cost was slight -- better-rated companies, they had a cost advantage as compared to rupee lending. So this is very -- I mean, we are always look at the opportunity. Whenever there is a need, we can ramp up or whenever we don't need, we can ramp down. That is the ability of the IBG portfolio.

Yes. So in terms of the local credit, what do you see here, it is predominantly coming from the markets in U.S. And a little bit on Bahrain. Bahrain, of course, is not local credit, but across the UAE and other jurisdictions. But local credit is -- the India related is essentially ECB, external commercial borrowings. We park those assets in the branches where the advantage of cost of funds is there. We are also extensively using the GIFT City now to -- because of the tax benefits as well as GIFT City's ability to raise resources also has improved. So predominantly, the local loans are in the U.S. and ECBs are in the GIFT City, Hong Kong and DIFC, Dubai. These are the jurisdictions where we park the ECBs. Anything else we left out?

Book value is most important.

Price to book value, yes.

How we have calculated is, the net -- first of all, it is of our stand-alone banking business. And the net worth divided by number of shares, that's how we calculate. And the net worth is [ 3,89,071 ] and the number of shares is [ 892.46 ]. That is how we have arrived at [ 435.95 ]. Also, this is also adjusted for the revaluation reserves, that is the methodology that we have done.

And we mentioned stand-alone and consol and also see how Moneycontrol does it because the customer or the viewer, stakeholder looks at the -- this databases like Moneycontrol, there are many others which we're not mentioning.

But this result is for SBI, consol is only on the last page, rest is all about SBI.

Yes. So that book value is not there, I calculated it myself, which was much higher. And even the Moneycontrol needs to be updated. So when you take a comparative one.

Yes. Please engage with them.

We can do that.

We'll engage with them. Yes. Thank you.

This is Nitin Aggarwal here from Motilal. Sir, I have a few questions. One is again on the OpEx part, wherein, if you look at the overheads also this quarter, we talked about the staff costs, but even the overheads, if you look at the miscellaneous number, that has more than doubled Y-o-Y. So anything specific that has caused this increase? And related to this, now that the bond yields have come off, do you think that there is a risk on the pension provisioning that we may need to make to beef up the plan assets?

So on the overheads, see, there are 3 performance-linked payouts, which we make to the staff. The primary performance-linked initiative is -- the incentive is the industry agreed upon incentive, that is 15 days' pay once we reach certain levels of operating profit. So that is generally shown in the staff expenses. There are 2 other PLIs. One is where 1% of our profit we allocate to the performance-linked incentive based on the grid, grid related, in the sense, AAA, AA and all these things. That also is shown in the staff expenses. The third element which has come now from this year would be a PLI scheme introduced from the Scale 4 and above, Chief Manager and above. which is not 15 days' pay as agreed on industry basis. It is specific to the Chief Manager and above grade. That PLI is payable on approval of the government. That expenditure we have shown under the overheads. It could have been shown in the staff provisions, but since it is not to be booked and we have shown -- I think -- please correct me if I'm -- yes. So that is also appearing in the overheads, which is showing the jump in the overheads. Otherwise, this element of PLI, we could have taken in the first quarter also. But since we know broadly that what could be the expenditure. And our assessment shows that the bank is qualifying for the PLI even as per the Government of India scheme. That is how the overheads have got elevated.

Right. Okay. And second question, sir, is on the Bhushan Power & Steel. Now in light of the Supreme Court judgment, how are we looking at the impact on the banks? And what is the impact on SBI from that? Any color around that will be helpful, sir?

Nitin, you know our stance, we don't call up on -- comment on the individual accounts. So I restrain in terms of the impact. But I can tell you that we are studying the order. Obviously, the counsels for the lenders and counsels for the company, counsels for the RP, we all will sit together and see the impact of this order and what could be the potential options available to us. Beyond that, we will not be able to comment on this. Thank you.

Okay. Sure, sir. And third question, sir, is on the NARCL sale because now that the RBI has allowed the SR provisioning write-back and we have availed some of that in this quarter. So are we looking at a more like higher number of sale this year? And what could be the potential write-back that we may see in FY '26?

Our transfer to NARCL was never guided by what is happening on the provisions. I think RBI clarification is more in terms of the differentiated approach towards the SRs guaranteed by the Government of India. Otherwise, any SRs, which we get where asset is fully provided, we normally carry that SRs at the rupee, INR 1 value. But here, the situation was different because SRs are guaranteed by Government of India. And RBI has taken decision that if it is backed by government guarantee, you can have a differentiated approach. And if you're showing at INR 1 value, please, you can -- you have an option of revaluing those SRs. So that is how the revaluation has happened, and you can see that gains also in the treasury side. So I don't think either it will depress or it will increase the movement to the NARCL. The transfer to the NARCL so far have been significant. It's more than -- INR 150,000 crores worth loans have been transferred to NARCL already. So which means that this enabling provision was not there, despite that the transfers have happened. It will be purely based on what is the right strategy for resolving an account. If we think that aggregating the bad debt into NARCL for a better resolution, I think the asset will move there.

Right, sir. And sir, lastly, on the ROA, wherein you have like in the earlier quarters mentioned that the SBI will look to maintain 1%-plus ROA. Now that the RBI is cutting rates and there is a possibility of more repo rate cuts, which may impact margins, how confident do we feel to maintain 1%-plus ROA? Any risk do you see emerging on that front?

I think we still will be able to maintain 1% ROA. How quickly the further rate cuts will happen will determine on the net interest margins. There should -- there would be some realignment of the rates on the deposits because without that, the effective monetary transmission will not happen, particularly because significant loans which are linked to the MCLR correct? So MCLR readjustment will happen only when the incremental cost of deposits will come down. So we will ensure that the readjustment of interest rates on the deposits are aligned at least broadly with the repo rate cuts, so that the margin protection is there. But I'm unable to tell you when will it happen, how deep will be the rate cuts. So broadly, on annual basis, we may have some quarters where there will be much more pressure on the NIMs and impact on the ROA. But broadly, we are sticking to our guidance on 1%.

This is Bhavik, from InCred Capital. Sir, 3 questions. First on savings rate, deposit rate. Sir, we saw a large private bank cut 25 basis points. So what would be our stance in the immediate near term and maybe if RBI were to cut repo rate by 100 basis points, then would we still maintain the 25 basis point delta versus large private banks in our repo -- in our [indiscernible] rate cuts? Second question, sir, we saw very good recovery from written-off income this year. It was INR 80 billion last year, was INR 70 billion odd. Sir, as in how confident are we that it will sustain for the next year and onwards? And how many lumpy accounts are left in a recovery from [ TWO ] pool? Third question, sir, staff cost was on a Y-o-Y basis was very good this year, partly because we had taken like stepped-up provision last year on wage hike cycle, so on and so forth. Next year, AS 15 provision will also come. So can we expect like mid-teens growth in staff cost next year or that will be too far a reach? So yes, I'll stop there, sir.

So on the savings bank interest rate, there's no plan to cut any further on the savings bank rate cut. I think we'll maintain at this rate, while the ALCO will take a call on that. But broadly, I think we believe that the rate is stabilized at this level. Other banks have had a higher rate, so they had the room to cut that savings bank. But there's a -- as I mentioned, there will be some readjustment on the fixed rate -- fixed deposit going forward. Recovery in written-off accounts, we don't have any chunky accounts where the recoveries are coming from. It is broadly coming from the smaller accounts. And we have strengthened our recovery processes. In fact, we brought back our stressed assets management regional offices. We used to have [indiscernible] to monitor the low-value recoveries. And when the large-scale NPAs had to be resolved, we have slightly reduced the focus on the regional office. We have actually removed the regional offices. In the last 2 years, we brought back the regional offices. So there is a renewed focus in terms of the small value recoveries. That is what you are seeing. Much of this [ 2,000 ] run rate per quarter is essentially coming from the retail loans and small value loans, both in the stressed asset group as well as in the retail banking group. So hopefully, I think that run rate is expected to continue. Staff costs, any input from Saloni, staff cost...

So the staff expense has gone down from INR 71,237 crores to INR 64,352 crores. Basically, the provisions for employees has come down by 36.86%, which is because of the provisions that we made last year for the bilateral wage settlement. And coming to salaries. On a Y-o-Y basis, the salary has increased just by 5%. And that too the profit -- the PLI has been taken into consideration. Despite that, the increase is just 5.79%. Provision for pension also came down because of the MTM gains we made on account of the yield movement. Gratuity has gone up by 40%, but the amount is very miniscule. Other than that, I think no other numbers to call out. So from INR 25,816, this year it has come to INR 16,301 as regards salary is concerned.

Sir, last 2 questions. First, sir, we are still paying higher in the lower -- shorter duration of buckets in the term deposits. Sir, when would we kind of realign with the other banks? And now the system liquidity is good, so why then are we still paying higher in the shorter tenure buckets? Second, sir, our CET1 ratio, 10.8%. So out of that, and then how much would be AFS reserve? So in the revised investment guidelines, MTM gains on AFS is part of CET1. So that's it, sir.

So the interest rate will be relooked in the ALCO, coming ALCO this month. So we will definitely look at all the tenures. You're right. I think most of the short tenure higher rates are generally given in the last quarter just to ensure that the liquidity is available, but we will -- and also when the interest rates are coming down, none of us want to lock in at a long tenure interest rates. But we will review all of them in the ALCO. And what is the other one you asked.

AFS reserves, sir. Can I respond?

Yes. AFS reserves.

It is INR 6,600 crores.

This is Jai Mundhra from ICICI Securities. Sir, a question on your Xpress Credit growth, right? So the Y-o-Y growth has come down to almost less than 1%. The GNPA number that you show in that book is -- actually, it has come down from 1.11% to 1.07%. So how would you look at the growth in this book? I think 1 or 2 quarters back, you had said that we are looking for maybe early double-digit kind of a growth there. How do you look at that book growth?

No. We are definitely seeing some uptick on the Xpress Credit. In fact, Q4, we've had a net growth of INR 5,000 crores -- INR 5,600 crores. This growth rate on the year-on-year looks smaller because the earlier quarters have been not so good on the Xpress Credit. There are 2 reasons. One is that we -- as I mentioned in the last quarter also, we completely revamped the whole process of extending the Xpress Credit. We also looked at some of the lower segments of customers, though they are salaried class, the leverage is going up there. But we are confident that the growth will come back for 2 reasons. One is the NMI, EMI profile of many of these lower end customers in the salaried class would definitely improve with the revised tax structure. So hopefully, their credit profile will improve. And some of them whom we are either not lending or they are not borrowing will come back to the Xpress Credit. And on the asset quality front, asset quality in the Xpress Credit has never been an issue. I think it's just a movement of a few basis points. Otherwise, it is holding up very well. It is something what we are now -- have another potential area is that among the corporate salary package customers, the new customer acquisition in the last financial year was 6.5 lakh customers we have acquired under the corporate salary package. And as you know, most of the Xpress Credit is extended to corporate salary package customers who have salary accounts with us. So this 6.5 lakh new customer addition to the CSP also gives some amount of pipeline for the Xpress Credit.

Right. And sir, lastly, on domestic NIMs, right? So if I look at full -- I mean this quarter, the NIMs have been stable. While I can see that the cost of deposit is still going up at least that is what is being shown in the presentation. But on a full year basis, sir, I mean, if I look at the beginning of the rate cycle, FY '22, from there, we have lost around 13, 14 basis points margin on the domestic book, right. So now the rate cuts, I think the first rate cut was Feb -- in the early Feb and only, let's say, half of the quarter impact would have been there in fourth quarter. Now going ahead, I mean, remaining half will come and then the second rate cut that was announced that will come. How do you look at the overall NIM trajectory, sir?

No. First of all, I think there definitely will be pressure on the NIM. There is no denial of the fact. How much pressure will be there? The pressure will be relatively less on us because as we mentioned that our repo-linked loans are only 29%. Our book either is predominantly MCLR linked or fixed rate loans, almost 70% of that is MCLR plus fixed rate loans, 50%. And -- which means that the impact of any further rate cuts would take some time for us. But as I mentioned, there will be an imperative need to readjust the rates on the deposits. Obviously, the monetary transmission and MCLR impact will not be visible unless we readjust that. So the effort would be to protect the NIM at 3% level. But there would be some quarters where we will have some pressure on the NIM. I'm not able to quantify immediately because we don't know how the rate cycle -- while broadly, we believe that there would be another 50 basis point rate cut, how quickly and how much is unknown at this point of time. But the fact that the NIMs will be under pressure is something which we recognize and we'll see what kind of effort can be made in terms of adjusting the rates both on the deposits and the loans.

So sir, just lastly -- I mean if the NIMs were -- are under pressure, credit costs remain very excellent, right? From 38 basis points full year, they are as good as standard assets provisioning only, right? So what will sort of a cushion ROA at around 1%?

Treasury gains. So Ajmera saab said that treasury should perform well. No, I'm not looking at the treasury has to heavy lift. But I think the -- our focus is always on the core activities, how efficiently we run the core activities. But treasury is also a core activity for us because we run the largest treasury in the country. So obviously, we have the potentials as well as the downside risk on the treasury, and we'll have to play hard -- play on that.

Yes. Due to paucity of time, we will now take up a few questions coming in through the online webcast, which will be addressed by the Chairman, sir.

Yes. For other questions, we are available offline. You can always reach out. So the online question, Abhishek Kumar Jain, the -- what would impact of repo rate cut in NIM? I think I have broadly explained in detail, so I'm not going to repeat on this. Mayur from Wealth Managers, what is the outlook on cost to income? When will we start seeing benefits of operating leverage plus digitization? Year-after-year, cost-to-income continue to raise. I think for a change, we have shown better number on the cost-to-income ratio. Yes, I do agree that we are -- we have -- obviously, have to take the leverage of digitalization, which has happened. Just for data point, our alternate channels are performing extremely well today, 98% of the transactions are conducted through the alternate channels. Some channels are expensive, like ATM and customer service points, but digital channels are cheaper. So we are trying to see how the digital adoption will progress and bring the cost efficiencies. Our focus would be mainly on how do we increase the income, while the cost rigidities, particularly on the employee side will remain. Staff expenses also moderated as we mentioned here, and pension provisions are also decreased. But these are some of the costs, which from time to time will get elevated. So our focus would be on increasing the operating income. So the guidance broadly is to keep it below 50% to 51% level. Puneet Shukla, what is the current status of bank customers? As on date where we stand in customer base? We have more than 52.33 crore customers as on March '25. Bunty Chawla from IDBI Capital. Xpress Credit segment has seen a decline in credit growth, outlook on the same. I mentioned. I think we have acquired a good number of CSP customers providing visibility on the Xpress Credit. And also, we have seen a good growth in the Q4. So we hope to continue that. Kunal Shah, when do we expect to conclude equity fund raise? And what would the preferred route? Other provision reversal of INR 1,600 crores, does this include any specific chunky corporate account provisioning? INR 3,900 crores in government guarantees are reflected in profit and revaluation of investments. ForEx income appears very volatile and has almost doubled. What is the normalized level? See, I think I answered the first thing. What is the normalized level of this income is very difficult to predict because the ForEx markets also play on the volatility. ForEx income obviously was helped by the volatility in the market. Government guaranteed SR reflected in the profit, yes, INR 3,900 crores. But at the PAT level, it is about INR 2,800 crores. Fund raise, INR 25,000 crores. I told you that it is an enabling provision what we have taken. We will see what is the appropriate time to access the market. Abhinav Gundluru, given the rapid evolution of AI technologies globally, can you share SBI's strategic road map for AI adoption, particularly in areas like credit risk assessment, fraud detection, et cetera? And whether SBI envision AI playing a operational -- role in operational efficiency and growth? We strongly believe that if SBI has a growth rate of 10% to 11% on the balance sheet basis, which means that SBI gets doubled. I think this is my favorite story. I keep telling everyone that SBI gets doubled every 6 to 7 years. And this cannot be handled. And we have doubled from 2018 to 2024 in our size. We were INR 30 lakh crores in 2018. We becomes INR 60 lakh crores in '24. And we have not doubled our branches. We have not doubled our headcount. But we brought the efficiencies through the digitalization. And we strongly believe that the new age technologies like AI, we were the early adopters in banking sector in the predictive AI modeling. Our preapproved personal loan, PAPL was a big hit, which is based on the predictive AI. So we are also using the GenAI and the new emerging technologies. Broadly, initially, we have used GenAI-based chatbot for deceased claim settlement. This was one of the most irritating problem for the customers. When somebody dies in the family, how do you settle that account. And we have used the AI tools to expedite and simplify this process. We also have GenAI developed -- GenAI powered askSBI. This we thought that is the use -- good use case to give the tool. This is a repository of all the information, circulars, SOPs, policies in one go, which is available to the employees. And the GenAI tools are deployed, we call it now Spark, where the employee not only searches for information, is able to get a standard operating step-by-step procedures to handle a query. We are further fine-tuning this. I think the knowledge-based activities and fraud risk management, CRM tools are also being fine-tuned using the AI. I think a lot of use cases we are experimenting with hopefully will result in the productivity gains. Akshay Jain, can you explain the large sequential movement in miscellaneous noninterest income and miscellaneous expenses? Q-on-Q basis, miscellaneous income has increased by 80%, mainly due to increase in dividend income of INR 1,645 crores. Expenses has increased by 110%. Major item is, as I mentioned, grade PLI provision of INR 1,300 crores for Scale 4 and above. This is as per the Government of India PLI scheme. Rohan Mandora, your cumulative yield on advances for domestic business has increased in Q4, as per Slide 23. We wanted to understand where we have taken yield hikes given that there was repo cut. In quarter-on-quarter basis, 4 basis point increase in the yield on advances is mainly an -- average advances level going up. There has been some uptick of benefit of the previous MCLR increases, which took some time for -- to gain that, and that has resulted in the 4 basis increase on the yield on advances. Provision for NPAs have been higher in Q4. As we mentioned, I think it's broadly because of the aging provision. Fresh slippages provision is very modest. Kahul Koshi, what was the reason for large provisioning this quarter? I've already explained. Where is the government backed SR provision reversal reflecting in P&L? The gross amount is getting reflected in the operating profit, INR 3,875 crores, and net profit increase is INR 2,900 crores after adjustment of tax of INR 975 crores. Rakim, our net interest income margin is squeezing because of raising deposit costs, how bank is thinking. I think I've spent considerable time in explaining how the NIMs will be protected. I hope you are able to follow that. And thank you very much for all of you.

Thank you, Chairman sir. I trust all the questions...

Yes, please.

Yes, [ Nitin Gandhi ] here. Within the diversified loan portfolio, if I see other industry classification is almost INR 5.4 trillion, that has the highest growth of 22% as compared to any other industry. Something is unusual. Some color can you share on this other...

22%?

22% growth in other industries.

Other industries. Okay.

It's INR 5.4 trillion of the portfolio.

So a lot of things which are not classified here, they all get into that other industries, but it's mainly coming from industries like data centers and all could not be put in anywhere. It doesn't fit in the real estate or -- so some of those items move in there. But it's a very diversified one. Maybe 5, 6 major industries, Saloni, you can give later to him, which constitute in other industries.

I will take it offline. And the second question is, can you share some thoughts on the sanctioned loan book? How is it behaving post March or current...

Sorry, come again?

Sanctioned corporate loan book. You said that towards March, central PSUs and everybody reduced. But now how are they behaving? What is your expected disbursement coming over the next 2, 3 quarters, if you can share some thoughts on that?

So we have good visibility on the corporate side, INR 1.7 lakh crores, which is sanctioned but not disbursed. Much of that growth will come from that segment. So there's a visibility. We only hope that nobody again decides to deleverage and prepay the loans. But broadly, we are sticking to our 12% growth rate on the corporate side also. You want to say anything?

I think one thing which our Chairman explained, in the last quarter, many of the central PSUs got lot of money from government. And with the clear instructions to pay all the lenders, which happened in our case, very, very large accounts were prepaid. So that brought down the corporate book. Otherwise, till quarter 3, the growth rate was pretty good. And we are not seeing this happen now because now the disbursements and the overall pipeline, as Chairman has already said INR 3.4 trillion, out of which half of it is sanctioned already. So we should see consistent growth in this corporate book, including the project finance. We're not seeing any other behavior which was seen in the quarter 1 -- quarter 4 last year at this point of time.

I trust all the questions have been addressed. We will be happy to respond to other questions in offline mode. Let me end the evening with thanking Chairman sir, MD sirs, DMD Madam, top management team, analysts, investors, ladies and gentlemen, we thank you all for taking time out of your schedule and joining us for this event. To round off this evening, we request you all present here to join us for high tea, which is arranged just outside this hall. Thank you. Thank you so much.