The Karnataka Bank Limited (KTKBANK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to The Karnataka Bank Q3 FY '20 Earnings Conference Call hosted by Monarch Networth Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Aalok Shah from Monarch Networth Capital Limited. Over to you, sir.

Yes. Thanks, Aisha. Good evening to all. On behalf of Monarch Networth Capital Limited, we welcome you to Karnataka Bank's Q3 FY '20 Earnings Call. From the management side today we have with us the MD and CEO, Mr. Mahabaleshwara M.S.; the CFO, Mr. Muralidhar; the COO, Mr. Balakrishna Y. V. (sic) [ Balachandra Y. V. ] and other senior management team. Without taking much of your time, I would now hand the call to MD sir for his opening remarks, followed by Q&A session. Over to you, sir.

Yes. Good evening to all of you, and also welcome to the Q3 earnings call -- concall of Karnataka Bank. I'm Mahabaleshwara Bhat, MD of the bank. I'm joined by my COO, Mr. Balachandra and CFO, Mr. Muralidhar Krishna Rao and also one of my general managers, Mr. Vadiraj. First of all, to begin with, let me wish you all a very Happy New Year 2020. Of course, the previous calendar year, 2019, what we saw was Sensex is at a record high, but sentiments were not matching, the sentiments were low, but even then Sensex had seen a record high. That was something unusual also. But nevertheless, if you look at the macro level economic conditions, the economic slowdown was quite evident as could be seen from the lower GDP numbers, increased CPI and WPI numbers as well as the lower credit growth in the banking system. But for us, in Karnataka Bank, of course, even though it was really a tough quarter, eventually, it turned out to be a good quarter for us as could be seen by the numbers that we have already put in the public domain, which we have already submitted to the stock exchange as well as a detailed analysis is also published in our website. So you might have observed that operating profit has gone up by 25.33% during this quarter from INR 400.37 crores to INR 501.79 crores. This was mainly on account of a decent interest income growth at 7.07% and a trading profit -- a robust trading profit growth at 69.42%, and a very, very sustainable fee income growth of 13.65%. So as a result, our total income grew by 11.45%, and the expenditure was also very well contained, and expenditure grew by 7.52%. So this sums up the overall operational efficiency of the bank. So however, since the operating profit was decent and NPA-wise, certain NPAs, especially in the NBFC sector, we had recognized about INR 247.36 crores as fresh NPA. And the MSME also nearly around INR 58.22 crores. Agricultural sector also we have recognized NPAs at around INR 80.58 crores, hospitality sector around INR 18.16 crores. All put together, the fresh slippage was in the range of INR 637.54 crores. And as a result, the slippage ratio also went up to 1.23. But there was reduction to an extent of INR 454.35 crores. The net slippage was INR 183.19 crores. As against September 2019, net slippage of INR 156.74 crores. But we had provided more during this particular quarter. So last 1 year back, our provision during the quarter was INR 184.35 crores. September 2019, it increased to INR 291.45 crores. And this time, INR 303.67 crores of fresh provision, especially for the NPA it was provided. As a result, credit cost also went up to 0.55 for this quarter. And last concall also I had shown the intention of improving the provision coverage ratio. And we have further improved it to 59.34% from the [ original ] 57.20% about a year back. And going forward, by March 2020, we are most probably will be in a position to have a PCR of above 60%. I said that total expenditure, cost, everything was contained. It could also be seen in the cost-to-income ratio, which was at 49.28% about a year back, now it is at 44.85%. SMA-II still there. We had INR 588.37 crores of SMA-II during September '19. And of course, it has slightly moderated to INR 479.31 crores during the current year. Security receipts has some recoveries there. It was at INR 434.99 crores about a year back, now it is at INR 390 crores, 3-9-0 point 5-2 crores. Of course, the growth numbers, the turnover, it grew by 7.83%; deposits 9.54%; and advances, it grew by 5.68%. One interesting thing about advances is that if you look at the retail advances growth that is less than INR 5 crores, it went up by 12.62%. The year-on-year growth in the retail portfolio is 12.62%. And in the mid corporates, that is INR 5 crores to INR 100 crores, the growth rate is 10.48%. This being the case, the overall advances growth was at around 6% only. That is mainly on account of the fact that we have been reducing our exposure to the corporate clients. So more than INR 100 crores, there is a degrowth to an extent of 9.51%. So a robust growth in the retail and mid corporate. And of course, this is as per our plan. And a degrowth in the corporate advances has eventually ended up in the advances showing 5.68% growth. Of course, CD ratio terminal, it is at 77%, that is 76.95%. CASA also, it is at 27.39% of the total advances. And during the current year, the year-on-year growth in the CASA is 12.61%. Yield on advances, it remained at the same level as that of the last year. Last year, it was 9.46% yield on advances. Current year, it is 9.45%. Cost of deposit also we have been able to contain. Last year, it was 6.03%, and now it is at 6.02%. Restructured advances, which was at INR 901 crores has now come down to INR 503.74 crores. And the external rated advances. Of course, we have given this in our website, the upload. So the number of borrowers, we had 297 number of borrowers who were external rated. This year, it is 328. But amount wise, the -- about a year back, it was INR 19,137 crores, now it is INR 17,943 crores. Of course, this explains why I said that there is a degrowth in the corporate advances. And your -- last time also some of you had expressed -- wanted to know about the stress in the BB, B, C, D rated accounts. So as mentioned therein, in the D rated external category, INR 1,258 crores is the present balance outstanding, and this offset INR 713 crores is NPA. And the number of accounts is 13. And in this D category, apart from this INR 713 crores of NPA, we also have a few accounts under SMA-II, amounting to INR 73.17 crores. That is under the D category. Under C category, my exposure is INR 26.43 crores. The entire INR 26.43 crores is -- that is, of course, only one account. So that entire amount is treated as NPA, and there is no SMA-II under the C category. Under the B category, the exposure is INR 658.50 crores. Of that, INR 95.72 crores is treated as NPA. And as of now, not a single account is under the SMA-II category. Under the BB category, we have INR 1,801.85 crores, of that INR 87.40 crores is treated as NPA and I have INR 10.25 crores under the SMA-II category. Under BBB category, INR 1,789.25 crores is the outstanding. The NPA in that category is 0 and SMA-II also 0. So if you look at the BBB, BB, B, C, D, the NPA is at INR 922.25 crores. And the SMA-II, that is under BB and D category, INR 83.42 crores. So this is about the business numbers as well as the earnings. And as far as our transformation initiative is concerned, we have started doing -- I mean, we have started digital sanction of the loans in the home loans, in the auto loans and in the personal loans, where now bank has equipped itself with the capability of digital sanction of the loans, which happens in just 5 to 20 minutes. So that is the capability that we have acquired through our digital center of excellence, which we started in Bengaluru. And I'm going to extend this digital sanction process through my MSME portfolio also. So with that further improvement, especially in the staff-related improvement is being contemplated also. And as far as -- 1 second. Yes. As far as productivity is concerned, see I have now the operating profit -- of course, we have 845 branches as of December 2019. Total number of employees is 8,240. And the operating profit per employee, it was at INR 13.58 lakhs about a year back, now we improved to INR 15.35 lakhs. Operating profit per branch, which was at INR 135.78 lakhs about a year back, now improved to INR 149.73 lakhs. Business per employee, which was at INR 14.13 crores about a year back, now improved to INR 15.32 crores. And business per branch, which was INR 141.26 crores about a year back, now improved to INR 149.43 crores. And of course, as I said, cost-to-income ratio has also improved. So these are the points which I just wanted to share with you. And any other points that you want clarification, we will be happy to give those clarifications. Over to you.

[Operator Instructions] The first question is from the line of Kishan Gupta from CD Equisearch.

Please -- Madam, please be louder.

Sir, how would you explain fairly reasonable growth in your mid-corporate book?

Yes. See, as I said, we have been focusing on the retail and the mid corporates, so in that mid corporates, the growth rate is 10.48% and going forward, we will be able to sustain this growth because the lining up of the new proposals is very strong. And that same growth in the retail sector at -- as of now, we have been able to achieve 12.62%. This also we will be able to sustain. So in all, I think, overall, our advances for the current year, we will be poised to have a double-digit growth, overall advances portfolio.

Okay. And also, how would you explain decline in your corporate loan book in the last few quarters?

Yes. See there, especially our NBFC portfolio exposure has come down. And other fresh exposure more than INR 100 crores, we have been very selective. So that is the reason the overall exposure to the corporate sector, so there is a degrowth by 9.51%. And if you look at the total exposure under the corporate sector, I had 29.73% of my total exposure under the corporate sector as of December 2018, now it is at 25.73%. Similarly, in the mid corporates, that is INR 5 crores to INR 100 crores, my exposure was 26.27% about a year back, now it has slightly improved to 27.46%. Similarly, in the less than INR 5 crores, that is the retail sector, our exposure was 43.50% about a year back, now it has improved to 46.34%. Going forward, by March 2021, our aim is to have 50% under the retail, 30% under the mid corporate and bring down the corporate exposure to a level of 20%. So 50%, 30%, 20% is the goal by 2021 March as against the present level of 46.34%, 27.46% and 25.73%, respectively. And to sustain this, what fundamental changes that we have made across India is, I have 14 regional offices, in all the regional offices we have placed executive level -- I mean, this sales RACs -- yes, regional sales executives, we have placed in all the 14 regional offices, a dedicated sales team is also provided to him. And that is the reason why this type of shift is you can -- you are seeing. This is mainly in tune with our transformation agenda. So hereafter, we will be emerging as a strong retail and mid corporate advances bank rather than focusing on the corporates. Corporates also I'm not saying I'm totally withdrawing from that, around 20% of my exposure would be confined to the corporates. But of course, we will be very choosy and selective while taking that type of exposure.

The next question is from the line of Bhavik Shah B&K Securities.

Sir, can you highlight the breakup of slippages again?

Yes. Slippages, I have told, no? See, especially in the NBFC sector, I had -- yes, NBFC sector INR 247.36 crores. Of course, you know which are all those accounts, I need not repeat that here. But whatever that in the industry, those accounts are making buzz and all those 4 accounts, we have recognized the stress and treated it as NPA as per the IRAC norms. And of course, in the MSME sector, so some restructuring, all those things are happening in that sector as per the government decisions and all. There also we had observed certain stress, INR 58.23 crores. Agriculture also some stress we have observed. Hospitality -- agriculture around to INR 80.58 crores. Hospitality sector around INR 18.16 crores. And in some residential this -- residential builders, of course, their exposure is very small, INR 10 crores, INR 1 crore, INR 4 crores like that, around INR 18 crores stress is also recognized there. So that is -- those are the major sectors.

Okay. Sir, just to clarify, in the NBFC book, sir, 2 companies would be from the same group, right?

Hello, I didn't get your question.

Two companies in NBFC would be from the same parentage group?

You can draw your conclusion. Account specific, I will refrain from making any comments. Because these informations, you people have very well in your things, you can make your guess. But for this, whatever that -- see, our overall NBFC exposure is also now around 14%. At one time, it was at 16.35%. All other NBFCs, even the December interest rate is also duly serviced. So the remaining book of 14%, whatever that I have, so as of now, not a single -- I mean this stress account we have. So -- because these are all -- good promoters are also there. So we hope...

And government backed also.

Yes, government-backed NBFCs are also there. So hope, I think, this portfolio would eventually be a promising portfolio and stress-free portfolio hereafter.

Okay. And sir, last quarter, under the BB and below book, we had a couple of stressed accounts. So I just want...

Which book?

In the BB and below book, we had an HTM account which was stressed, not [indiscernible] account. Sir, any update there?

What question? What is that you want?

Sir, we indicated that there was an export account which was under stress last quarter?

I didn't get your question, sorry. What is the question that you have?

Sir, classified under BB and below book...

Yes, BB and below, correct.

There is an export account around INR 60 crores, which was stressed. So I just wanted an update, how is the account performing now? Has it already been slipped?

No, that is what I said. See, BB, I have 3 accounts, which is stated as NPA and 95 -- no, no SMA-II is INR 10.25 crores. So already NPA is INR 87.40 crores under the which category -- BB, okay? And...

[indiscernible] actually individuals and proprietary concerns [indiscernible]

Yes, mainly that type of accounts.

The next question is from the line of Satish Kumar Sharma from Choice Broking.

Sir, my question is on net interest margin. Sir, you had bank asset around 3% net interest, but your target...

Yes. By March 2021 I had said, we will be still holding on to that number. By March 2020, it may slightly improve. Because as of now, we are at 2.83% that is December '19. So for the 9 months ended, it would be 2.82%. So we may be somewhere in between 2.8% and 2.9% for the current year. And March 2021, we have definite plans to take it to a level of at least 3%.

And sir, we have noted that cost of deposit has surpassed 6% over the last 2 quarters, so any measures to rationalize the cost of deposits?

See, cost of deposit, September 2019, it was at 6.17%, now it has come down to 6.02%. In fact, December 2018, it was at 6.03%. Going forward, the cost of deposit would further moderate in our favor because we had subsequently reduced the rate of interest on the term deposit. That is number one. Number two, you might have observed that a significant growth in the CASA. CASA is growing at 12.61%, we would definitely sustain this growth. And as a result, now overall, it is -- the CASA percentage, about a year back, it was at 26.65%, now slightly improved to 27.39%. So these 2 factors, I am expecting that it would act in favor of us in further reducing the cost of deposit.

[Operator Instructions] The next question is from the line of Sneha Ganatra from Subhkam Ventures.

Sir, on this...

Madam, please be louder.

Yes. Sir, just wanted to know on the asset quality, what would be the run rate of the slippages are we expecting for the fourth quarter as well as for the next fiscal? And then what is the target for the gross and net NPA by the end of FY '20?

Yes, yes. See, next quarter, the slippage, as per our internal assessment, would be lower than what the slippage we had during the current quarter. And as far as the gross NPA and net NPA is concerned, so most probably, it would -- definitely, it would be less than what it has been for the current quarter. The exact number, it may be too early to tell, but it would be definitely less than the present numbers. And going forward, our aim is to bring down the NPA to a level of around 3%. So it may take about a year or 2 from now. So that would happen because why I'm optimistic is that our intention is to improve the PCR. So as I said, by March 2020, our PCR would be above 60%. So we are inching towards that 59.34%, so we would further improve that.

Okay. And your target which you're saying, ROA of 1% by FY '21 is still intact or any changes?

This one, I'm still holding on to that. Let me be optimistic because some of the fundamental changes what we have done, that has started reflecting in our operational efficiency. That is why I'm optimistic.

And the rationale is because of the operational efficiency or any other more of the decline in the credit cost also?

No. See, there is a shift in our advances portfolio and the advances, delivery efficiency has also improved. In this, I will just quote you one example. See, look at the housing loan delivery system. Earlier, I was taking about 7 days to give a credit sanction, now, as I said in the digital era, it is happening in 20 minutes, of course, excluding the valuation and the legal opinion. So that may take another couple of days, but the manpower required, it is now 50% of the earlier manpower. So that would definitely add to the operational efficiency across India. And I'm not confining it just to 1 sector. Now we have started this digital sanction to the personal loans, auto loans, that is the car loans and very shortly, maybe within a year -- 1 month, we will be extending this facility to the MSME loans also. Because around 20%, 23% of my total portfolio is MSME. So that would definitely get benefited by this type of automation. So that is the reason the shift in this particular thing. And of course, now our bank has also repositioned itself towards the sales and marketing. You people might have observed my staff getting into the market, canvassing the business all such things. So that type of change in the overall bank that is being quite visible. And a lot of lead generations are happening in all the sectors. And lead conversion, everything is on the expected line as of now.

Okay. And what is your growth outlook for the next fiscal? Because current quarter growth was being little bit less.

Yes. Current quarter growth -- because of this shift, especially in the advances portfolio. So definitely, I said, overall, it would be in double digits.

Okay, okay, okay. And my question is like on the IBC accounts or any -- could you share your exposures? And what are the recovery status over there?

IBC, the -- Hello, can you hear me?

Yes. Yes, I'm hearing you.

Resolutions are happening, which are not under our control, but one account with an exposure of INR 68.76 crores I think resolution is very much within our vicinity. And in this case, I'm not expecting any haircut also. That's a great news. But this should happen by March -- this March 2020. Rest of the things I'm not sure what is in the pipeline. If it happens, definitely, it would help in improving our bottom line also because majority of these accounts, we have already provided fully.

Okay. What is the total exposure of the total and the IBC account would be?

IBC -- see, around INR 1,284.91 crores. INR 1,284.91 crores is the total exposure under the IBC.

Okay. And sir, when you are expecting that INR 68 crores...

See, of that INR 1,284 crores -- I think you didn't ask the second question, how much is the provision held there.

Yes. Yes. My -- I was about to ask this question only.

Yes. See, for INR 1,284.91 crores, I have a provision of around INR 1,130 crores provision we have.

Okay.

Okay? -- Oh, no. No, sorry, INR 1,049 crores, not -- INR 1,049.12 crores provision we have. Okay?

Okay. Got it. Got it. In this quarter, can you give me the breakup of how much is your recovery upgrades and write-off?

In this -- that right now I don't have, subsequently I'll share because I have already given you the provision held and all such things. So we are further strengthening our provision in these accounts. So whenever we are getting back that, that would come in big amount to the bank.

The next question is from the line of [ Sudhir Mahajan ] from -- he's an individual investor.

Anyway, congratulations on a nice result.

No. Thank you. Thank you, [ Sudhir ]. We will try our level best to come up to the expectation of all of you. Some fundamental changes we have made, I'm seeing the result of those changes. Yes, please, go ahead, Mr. [ Sudhir ].

Yes, we're seeing it. But everything else Karnataka Bank does is very good for all stakeholders, the depositors, the employees, everyone, but somehow the shareholders have been let down. I think we need to...

Yes. No, they will support us. I am optimistic.

No, no, we are supporting you, that is no doubt about it. You are doing a wonderful job.

Yes, yes. And you will also get huge reward in due course.

Jokes aside. The -- sir, this -- some of these cases which last time you were talking about, including your NPAs which you had provide for the finance companies and all the NBFCs, have -- what level have you provided for, number one? Number two, you had a case in fintechs where the -- this thing had been -- ICA had been signed, what is the this thing on that? And you had another big veil of NBFC account of about INR 650 crores, and you were saying that they were planning to close it down by -- clear it back by about March, is it on track?

No exposure of INR 650 crores to any NBFC in my books. That is not a correct statement because we had not lent more than INR 499 crores to any of the NBFCs.

Okay. I stand corrected.

And as I said, we have thoroughly identified the stress in the portfolio and that is recognized. And as per the IRAC norms that provision is also provided upfront. The rest of the NBFC portfolio, this is now what constitutes around 14% of our portfolio. So we are fully convinced about their ability to service the debt. And that is taken into account and as of December also, it is fully serviced. And the one of the good old, I mean, NBFC, that is ILFs related, we have provided 100%. 100% not only for our credit exposure, we have investment exposure of around INR 25 crores, that also during this quarter, I have fully provided. So that is the reason when the operating profit was very good, you were seeing just net profit of INR 123 crores. Of course, compared to September '19, INR 105.91 crores, it was slightly better. Because we thought that it was under salary provision also, whatever the IBA has offered at 12%, full provision we have made. So the future, the provision requirement we have loaded during this Q3. So that is why we are optimistic Q4, but something sudden may happen in the industry, which we may not have any control. But as of now, we are very closely watching all those and preparing ourselves for that type of eventualities.

Sir, about your taxation level, we are doing them on 33%, have you anything to bring it down? And what is the rationale for not doing it coming to the lower level?

No. See, there, as per that law, we have to take decision either during this year or the next year. So now, we are closely evaluating that. So we will take a decision. Because I have to go to the appropriate committee. So whether to give effect to this or to the next year, so whatever is in the best interest of the bank, we will be able to take that decision. There is no need for hurry because time is there. So at appropriate time, definitely, we will take a decision on that because at -- all the options have to be evaluated, and we are now in that process because I have to take into confidence the central strategy auditors, what is their view and also such things that consultation process is going on. We will take a call on that.

Sir, another question is, how many accounts of more than INR 50 crores you have now?

More than INR 50 crores, I think -- 1 minute, very specific question by Mr. [ Sudhir ].

No, most of the problems come...

Yes, yes, yes. See, more than INR 100 crores, I have this number, 246. And more than INR 50 crores, yes, I should be having somewhere here. See, above INR 50 crores, I have -- I don't have, but INR 5 crores to INR 100 crores, I have 4,090 accounts, INR 5 crores to INR 100 crores. Above INR 100 crores, 246 accounts. We will carve out this number and share this number with you, above INR 50 crores, okay?

So now if you say more than INR 100 crores, you have got INR 200-odd crores -- 200-odd clients.

246.

So that comes to about INR 20-odd crores, that's nearly about 40% to 50% of your book is in these 200-odd customers?

Yes. So that means outstanding, as I said, this is INR 14,021 crores and that constitutes 25.19% of the total loan book above INR 100 crores.

Okay. But is it not a little high risk for a bank like us?

No. That is why we are reducing it, no? So that is the thing. So this was at 29.36% about a year back -- 29.73%. Now it has come down. So that is why I said going forward, we will be further reducing it. And risk in this portfolio, but for 1 or 2 accounts with an exposure of somewhere around INR 100 crores to INR 150 crores, all others are in a very performing category itself, not even in the -- under the SMA-II.

The next question is from the line of Kislay Upadhyay from Abakkus Asset Manager.

Sir, we have reduced our exposure in corporate. Has it been a mix of some prepayments and selling off the loan? Or is it just that we have limited our further disbursements to the existing or...

No. No selling of the loans. It was all recovery. And we have also prevailed upon some of the NBFCs for advanced recovery also and to a certain extent, we have been successful. That was mainly in the area of the NBFC. And the other also, our earlier exposure, it was not for a longer period. So it was all given mainly for a shorter period, 1 month to 12 months like that. So on completion of that period, we didn't opt for the renewal. That was also one of the reasons. And fresh exposure, we are very, very choosy and selective.

Okay. And sir, on the existing corporate book, what would be the average tenure?

Average tenure, this are all -- see, I think, not more than 24, 25 months. So these are all short term in nature. So only few accounts like NTPC -- like 2, 3 public sector we had given for a longer period, 5 years, 10 years like that. Otherwise, majority of these exposures are for a shorter period. We call it as short-term loans. So average tenure could be around 2 years, 24, 25 months.

Okay, sir. Sir, also with this shift in -- with the shift to 50%, 30%, 20% in retail, mid corp and corp, what change do we expect in yield and credit cost on a steady state once...

Very good question. We have been very closely tracking this. And that was one of the reasons why we made this shift. The yield on this particular portfolio was slightly above our comfort level, both in the retail as well as the mid corporate. And in the corporate, it was very much on the expected line, in the sense the corporate short-term exposure when we took, it was just an option other than investing in the treasury, that is the investment, we prefer that we will go for this type of advances because I was at that time having an interest rate -- I mean, advantage of about 100 to 200 bps. That was the reason. So definitely, here, the yield -- yes, yield on advance is as per our expectation. And other than that, the benefit that I have is huge cross-selling opportunities of our various other products. So that would definitely help us in improved fee income because all along, our aim is to sustain the fee-based income. So that is the advantage now we are reaping in that particular area. So fee income also you might have noticed. So during the current year also, that is the current quarter, it is at around 14%, 13.65%. For the 9 months period ended, it is at 20.26%.

Did I understand it right that there won't be much change in yield because of this, but interest -- noninterest income...

Yes. Yield, if at all even if it is there, it would be in our favor.

Okay. Sir, same for credit cost and OpEx, if you could mention?

Yes. Credit cost, of course, during this Q3, it is at 0.55%. For the entire year, that is 9 months ended, it is at -- already at 1.50%. We'll try our level best to minimize this. It may not exceed that level. Of course, originally, first 2 quarters, I was expecting it to have at below last year's 1.39%. But this year, since we had recognized the stress in the -- mainly in the corporate -- I mean, NBFC amounting to around INR 247 crores, it has slightly gone up. And again, in this credit cost also for the Q4, I have very little provision to be made for the migration of the accounts, migration provision, we call it as, that is migration from SS to DS category or to loss category, that type of provision we have almost front-loaded during the first 3 quarters. So that pressure is not there during the second -- this fourth quarter. So definitely, the credit cost it will be well within whatever that we had shown during the Q3 of the current FY.

The next question is from the line of Bhavik Shah from B&K Securities.

Sir, broadly, sir, what kind of guidance do you expect slippage guidance for next year, FY '21?

FY '21, especially the credit growth would be in the range of 14% to 15%. So this year, it could be double digit, 10% or 11%, in that range. But as I said, this growth would come from the retail and the mid corporates, we would be very selective and choosy, that is as far as the credit growth is concerned. And FY '21, our intention is to have the net NPA at around 3%. So that also we have properly, I mean, planning in that direction. And NIM, we would have -- we have planned to take it to a level of 3%. And ROA may be around 0.9% in that range. And ROE, definitely, double digit, maybe around 12% or so. I mean, reasonable optimism we have for the year '21, and of course, going forward, '22 also. It all depends on how the economy would behave in the ensuing 2 years. So what we have planned is that you plan conservatively, work hard and try to surpass the numbers that we have internally planned.

Okay. And sir, 2 more questions. Sir, I understand you gave net NPA guidance of around 3%.

Yes, 3 -- I said 3.2% for '20 -- I mean, '21, I think. Yes. We will be definitely able to hold on to that.

Sir, broadly sir, how do we assess the stress still left in the corporate book? As in what kind of slippages do we expect?

No, corporate book stress, we have almost recognized. See, NBFC, I said whatever the corporate book I have, I don't see any account showing any signs of stress in the balance portfolio. And other corporates also, so I gave that number of around 200 plus, except a couple of accounts, maybe around INR 150 crores or so, stress is not being seen as of now. So that is the thing. And of course, we have put in strict monitoring and recovery mechanism also. So in fact, as of now daily morning huddle to review the stress in the portfolio, stress in the sense whether this account is showing any symptoms of further slipping to SMA-0, SMA-I or SMA-II or further slipping to NPA, that type of review is happening daily under the leadership of my COO, Mr. Balachandra, our credit monitoring department. We have credit -- I mean, hub at -- credit monitoring hub at all the regional offices, that type of institutional mechanism we have put in place. So that should help us to improve the quality of the advances also going forward.

Sir, you mentioned couple of accounts of INR 150 crores are under stress. Can you broadly tell me which sectors would they belong to? And sir, NBFC exposure...

Infra, infra.

Okay. And sir, our outstanding NBFC book, how many accounts would broadly be there?

It is around 14.06% now.

No, sir. How many number of accounts like 3, 4 accounts?

One minute. 20 -- no. Yes. Number of accounts is 55, but borrowers may be around -- yes, around 40.

Sir, above INR 100 crores, I mean.

Above INR 100 crores? Okay. I'll give you right now. One second, only one second. Around 20, 21 accounts above INR 100 crores.

And sir, these are like gold finance or asset finance or housing finance? Sir, can you explain...

[ We have ] well promoted and government, public sector...

Public sector also we have. And -- of course, it is a mixed portfolio, mix of the private sector, public sector, activities also well diversified. So I have every reason to believe that this is a healthy portfolio whatever that now we are having.

[Operator Instructions]

Yes, anybody else?

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

Just 2 quick questions, sir. Sir, one is that, you just said that with respect to 1 borrower which was having some coffee exposure -- coffee plantation, and it looks like so far they are doing well. So how are they managing to pay? Or is this you think they are getting stressed?

Yes. See, my exposure to that particular group is INR 153 crores. Now in debt, they have serviced their debt and there is operation in their particular account also. And we are in touch with them. I think they have also changed their business strategy, and they have also assured to further reduce this exposure gradually. And as of now, there is no stress. Even if there is stress, we will be able to -- security is there. It is -- 100% collateral security is there. But for the time being, there is no reason for us to believe that it would have any -- it would give any stress to us. We are closely watching that particular account.

And sir, your gain on sale of investment, does it include the sale of [ treasury ] -- the HTM book also?

Sorry, which investment?

The treasury sales looks very -- exceptionally low -- higher...

Yes, that also includes sale from HTM book.

Any quantification, sir? I mean how much you would have sold from HTM book? Or just to understand that granularity.

No, no. As per the extended guidelines, the bank has the [indiscernible] to sell even above 5% of the HTM book subject to disclosure. We have taken the guidance of that particular regulation, and we have sold the securities for the HTM book also. Majority of this profit is coming from the sale of that security.

The next question is from the line of Gaurav Jani from Centrum Broking.

Sir, firstly, some bookkeeping questions. What will be the provisions on the SR. Sir, the number you mentioned initially, is it including the provisions or is it the standard?

SR outstanding. As of now, SR outstanding is INR 390.52 crores and the provision held is around INR 21 crores.

21.38%.

No, 21.38%, sorry. For INR 390.52 crores of exposure, we have...

21.38%.

21.38% provision we are having as of now.

Sure, sure. Sir, secondly, can I know the -- I'm looking at the number, correct me if I'm wrong, the standard restructured book as of now is, is it INR 357 crore?

No, INR 503.74 crores, standard restructuring.

INR 503.74 crores.

Standard restructuring?

Yes.

Yes. It was at INR 501 crores about a year back, slightly come down to INR 503.74 crores.

That is right. INR 150 crores is the NPA there.

Sure, sir. So sir, I'm looking at the...

Yes, go ahead.

Yes. I'm looking at the derated book also. Would there be an overlap between the standard restructured and the derated?

No.

No, no, no [indiscernible] restructured.

See, not only that under the derated is any account. It is also restructure even some of the recent MSMEs are also coming under this category, not necessarily be the rated accounts only.

Okay, okay. Sir, lastly, if I may squeeze one. Our slippages barring the large accounts you mentioned of INR 247 crore are still at -- close to about INR 400 crore. One is, could you quantify how much are from Karnataka? And what is our expectation on the recovery going forward?

Right now, state-wise slippage, I don't have. Shall we give it? Is it possible? Yes. Please send an e-mail, we will publish it. Okay? Right now, I don't have.

The next question is from the line of Sneha Ganatra from Subhkam Ventures.

Yes. Madam, shall we restrict further questions to one because I have to leave, okay? Yes, Subhkam?

As there are no further questions...

Okay. Okay. Shall we conclude?

Yes, sir.

Okay. Thank you all, and we will strive hard to come up to the expectation of all the stakeholders. Thank you one and all. And once again, wish you very happy 2020. We will play -- we will perform during this year like a Twenty20 cricket game. Thank you one and all. Bye. Bye.

Thank you, on behalf of Monarch Networth Capital Limited that concludes this conference. Thank you for joining us, and you may now disconnect your lines.