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

Ladies and gentlemen, good day, and welcome to Q4 FY 2024 Earnings Conference Call, hosted by Karnataka Bank. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Srikrishnan H, Managing Director and CEO from Karnataka Bank. Thank you, and over to you, sir.

Thank you so much, Zico, and good evening, ladies and gentlemen. This is Srikrishnan, MD, CEO of Karnataka Bank. I'm joined here by Sekhar Rao, who is our Executive Director; CFO, Abhishek Bagchi; COO, Balachandra; and Chief Business Officer, Gokuldas Pai. Welcome to this Karnataka Bank Q4 FY'24 Annual Results and Q4 call. We have had an excellent financial year with growth registered across all the key metrics. As I've mentioned in the last couple of quarters, the key metrics that are critical to us that will define the bank's performance for the entire financial year would be growth in advances, aggregate deposits, improvement in quality of our advances book; favorable ROE and ROA for the stakeholders; and we are glad to present that we are on the right growth path as we are moving forward. I'm also pleased to announce that we completed our capital raising program, an ambitious program of INR 1,500 crores in a record 6 months' time, and this was concluded prior to the financial year ending March 31, and this is by way of preferential allotment of INR 900 crores and INR 600 crore QIP, which was very overwhelmingly subscribed, and we have had some very good quality institutional investors in the bank. We also had the opportunity to do the call option on Tier 2 bonds and we exercised this in the entire financial year between November and February, totaling INR 720 crores, which was at a coupon of 12% interest rate. So it was very beneficial as we will go forward with this benefit when we start this new year. So a brief comments on the numbers, which have already been uploaded to the website as well as -- this is a stock exchange as well as our own website, which is the investor presentation. We have had the highest business turnover in the history of the bank. We have crossed INR 171,000 crores, we are up by 15% on year-on-year basis from March '23. Our profit after tax, PAT, has been all-time high again INR 1,306.29 crores as against INR 1,180.24 crores in last year, an increase of 11%. And it is also to record that during the last quarter, we have had a onetime provision, which is basically the actuarial provision for long-term retirement benefits due to the revision in the 12 Bipartite Wage Revision agreement that was amounting to INR 152 crores. So this is a onetime, it's not a recurring issue. And the other thing was we celebrated our centenary year in February, a couple of months ago. And during the centenary year a lot of celebration at our branches and regions. So this was again a onetime expense of about INR 11 crores. So if you total this up, our total onetime expense, which is not going to recur, is INR 163 crores. So the bank recorded a profit of INR 274 crores after taking into account this onetime expenses of INR 163 crores, which would have been higher [Technical Difficulty] 274 plus 163 is what we need to really count in terms of the running rate as far as the bank is concerned. This is, by far, very encouraging as far as our entire growth path is concerned. The good part is about the key metrics that I'm going to call out right now. One is about gross advances. Our advances book grew by closer to 20%, 19% and plus. Our gross advances as of March 31, 2024, stood at INR 73,001.66 crores as against the last year of INR 61,302.78 crores, recording, as I said, a 19-plus percent growth. Now this is much more than the market, is ahead of the market. The market is believably growing at about 15% to 16%. So this is good news in terms of making sure that we are growing our overall book. Our aggregate deposit to support the growth in the advances also grew very well. We closed the year with INR 98,058 crores as on March 2024 as against INR 87,368 crores, a jump, which is again at about closer to 12%. And this is, again, with a very good ratio of CASA, which stood at about 32% of the aggregate deposits. So between the retail term deposits and the retail CASA and the overall corporate deposits that we have had, which is actually very, very minimum. We've been growing this book very well. All the branches are kicking in and it has been an all-around growth in terms of our deposits as well as advances. I will also talk about the constitution of each of this. Because of this healthy growth, our CD ratio has been enhanced to 75%. It's a continuously improving ratio. And quarter-on-quarter over the last financial year, we have been growing in this area. The good news is also on the stressed assets. The net NPA has improved to 1.58% from 1.7% in March and gross NPA has improved from 3.53% from 3.74%, but this is not all. The gross slippages has come down to 2.8%, which is a major improvement from the last financial year, which was standing at 3.31%. The overall standard restructured advances and also the GNPA, if we total it up, and this is without the related accounts, our gross advances number compared to March '22 was 9.51% as a percentage of GNPA plus restructured. And as of March '23, it was 7.14%. And as of March '24, we have come down to 5.31%. So this is a very healthy trend as far as the bank is concerned because all the concerns that we had about the historical book are more or less coming under control, but there is still some way to go, which we are working very hard and we'll make sure that we are on the right trajectory as far as this ratio is concerned. We have had a good recovery here. We recovered almost INR 277 crores and this is more or less in line with what has happened in the last year also. So this is, again, a reflection of the fact that the collateral-based lending that the bank has done has yielded results even when it came to recoveries. Our PCR, the provision coverage ratio, is standing at 79% at a similar level compared to the last year. So we maintained the same. And the core provisions without technical write-offs stands at about 56%. It's improved by 100 bps compared to March FY '23. Our NII stood at INR 834 crores for the last quarter, it's marginally increased. And our NIM, which is a more important metric, we stand at about 3.51%, which is in line with the guidance that we have given of 3.5% to 3.7%. Now despite the increase in cost of deposits across the banking industry for the last 2 quarters, obviously, that had put a pressure on NIM. We are happy to report that our loan yields have continued to be at the same level at 9.9%. So the NIM, which has [Technical Difficulty] of a couple of bps has really not been impacted because it has been more out of the cost of funds, which has increased from 4.74 to about 5.22 in March '24. Now we have launched a lot of initiatives to gain the benefit of CASA. So we are a bank, which can collect direct taxes, which can collect GST and also customs duty. And we have also inducted a whole lot of, over 650 sales offices with feet on street for covering key markets and target segments. So the strong retail franchise of over 935 branches in Karnataka and across the country have definitely provided the access to low-cost deposits. We are not in the bulk deposit market. And that, again, is a reflection that all our term deposits, 90% plus are lesser than INR 2 crores, which is again a good metric to have. And we are by far comfortable on this. Our credit cost has improved to 0.84% compared to 1.48% last year. And again, here, this is a reflection of the fact that our overall efficiencies have increased and our cost of delivery has also impacted positively. Our cost-to-income ratio, I had reported this in a couple of quarters ever since we took charge saying that there will be a temporary increase, which has been reflected, so it has increased to 53%. But our guidance for this financial year -- by the end of the financial year, 4 quarters from now, we should see sub-50 or closer to 50, which, again, would be due to a lot of rationalization, a lot of digitized processes and we make sure that our cost is under control. But this is a temporary blip, which is primarily due to recruitment of people, investment in the technology platforms and infrastructure. Our ROE is very healthy despite an increase of INR 1,500 crores of base, we are about 13.71%, obviously lesser than the last year, 15.42%. But again, this will improve as this is a onetime impact due to this capital raise that has happened in the last quarter of the financial year. The ROA has been maintained about 1.22%. Our guidance has been 1.2% to 1.4%, we are sticking to that guidance. So this is, again, good news as far as the investors and the stakeholders are concerned. The capital adequacy ratio stands at 18% with a breakup of 16.17% in Tier 1 and 1.83% in Tier 2. And this is, again, very clearly reflected due to our capital raise. It's a substantial improvement, giving us good headroom as far as the growth is concerned. So the capital that we have raised will be used for funding growth in the book via advances because of the fact that we need to be maintaining a very healthy capital adequacy ratio. The rest of it is going to be primarily for investments into digital, technology and all of the infrastructure along with the people that are required for repositioning this bank. And as you are aware, we launched the campaign in the last quarter, coinciding with our centenary year to reposition our bank as "Aap Ka Karnataka Bank, Bharat Ka Karnataka Bank." So this is something where, despite the fact that we have 2/3 of our branches in Karnataka and the interior locations in Karnataka, we are very well covered nationally with 22 states and 2 union territories being represented. And these are all mainly urban branches. We believe that in the next couple of quarters and years, we would actually have a 50-50 mix between Karnataka and non-Karnataka business. So on this note, I would like to conclude the initial commentary and introduction from the bank related to the results and would request our coordinator to pass on any questions, calls that would already have got queued. Thank you once again for joining, and over to you, Zico.

[Operator Instructions] The first question is from the line of Sandeep, who is an investor.

Thanks for the excellent result and thanks for your leadership. I really appreciate the way you are taking the bank forward. Sir, my question is with regard to the celebrations of 100 years, why did you not give investors the chance to celebrate with the bonus, sir?

Sandeep, we have considered this, and we are also happy to announce that the Board has recommended a dividend of 55% today, and this will be recommended to the shareholders for approval, and this is much more than the 50%, which was declared last year. And this is on the higher capital base that we have actually enhanced now. So this is indeed a way to celebrate with our retail shareholders and along with the other new shareholders, the institutions who have come in. So this is the first gesture from our side related to 55% dividend today.

Just one more question in terms of the net NPA. You did mention that it has come down to 1.53%. Is that correct?

Yes, please.

And sir, in terms of recovery, are there any large recoveries expected in the next 2 quarters?

So what we have done, just to correct you, it is 1.58% on the net NPA. Yes, as you are aware, about 35% of our entire book is on -- the NPA book, I'm talking about is covered with collateral. So -- sorry, 75% is covered with collateral. So as a result, the recoverability is very high when it comes to this. In terms of some other larger recoveries the last year, we had sold to a couple of ARCs, and we had also done many onetime settlements, which was in excess of INR 50 crores and INR 70 crores and so on. But our average ticket size in terms of either OTS or recoveries or whatever as the sweet spot has always been up to INR 50 crores and granular. So the data related to this is being uploaded in our website, along with our investor presentation.

I think the participant has dropped out, sir. Maybe go to the next question?

Yes, please.

The next question is from the line of Darshan Deora from Indvest Group.

A great set of results. Just wanted to get some more color on the NIM. So I see that our NIM has changed a little bit downwards between Q3 and Q4. Just wonder also to get your guidance for FY '25 on the NIM.

Just to kind of reiterate, there are 2 parts, which is our overall loan yield as well as our cost of funds. Cost of funds because of lack of liquidity rather than the market as you are aware and there are lots of this bulk deposits and flight into other opportunities on investments because of the interest rate scenario. So the bank deposits, it's not only us, but across the banking system has been under pressure. So our cost of funds was no exception. So it has moved up as far as our overall cost of funds, but it is under control at 5.33%. That's one. Secondly, the good news is that our loan yield has not come down. We were always at the 9.9% to 9.99% in the last couple of quarters. So even in this scenario, we believe that we have done well as far as the loan yield is concerned. Going forward, the constitution of our gross advances, there's going to be a lot more focus on retail, and which is obviously high yielding compared to what otherwise was done. And also our focus on RAM, which is retail, agri and MSME, again, all the 3 will continue to have the same ratio along with SME, this constitutes almost 2/3 of our book. And we have been definitely firing all our engines, which is the region, the clusters and the branches. So we believe that we'll continue to grow and the NIM would continue to be at the same 3.5% to 3.7% range, Darshan.

Got it. Got it. And just -- obviously, congratulations on the loan growth, I mean, 19% is a very tangible number, and it is completely in line with what you had said at the start of the year. Most of this growth has come from which sector though? Is it more from retail? Is it from big corporate or large corporate?

So we have maintained the ratio more or less at the same level, Darshan. So about 46% of our book is basically retail and agri and another about closer to 20% has been this SME and midsized corporates, and about 1/3 of our book is large corporates. Again, this large corporates we have institutions as well as corporates who are banking with us. But going forward, the growth will continue to be more or less at the same kind of mix. But having said that, the retail growth and the MSME growth is something which is looking more promising. And we also believe that there will be some substitution in the large corporate deposit where it has been more opportunistic lending because of the fact that our CD ratio had some headroom. And we would probably replace that with midsized corporate lending and we'll also have the opportunity to throw multiple products, and that would have a positive impact on the ROA. So the churn will be there more at the large corporate end and the rest of the 3 major focus sectors, RAM sectors, would continue to grow. So our growth path, if we continue the same way at about 18% to 20%, which has been the stated objective. So we believe that somewhere between the 18% growth, we would be anywhere closer to about INR 90,000 crores as of the year-end FY '25 -- exit FY '25.

That's great to hear, sir. And one last question on the CD ratio. So we have slowly inched our way towards 75% rising every quarter. Have you sort of reached the optimal level? Or can we also aim for like maybe something along the lines of 80%, especially given that -- we have ambitious targets for advanced growth and the deposit environment still seems to be a little bit challenging.

So our deposit engine has started firing well. In fact, we are monitoring this across all our 14 regions on a daily basis and accretion has been very healthy. So given that, we believe that the 75% is good, but we do have headroom. Technically, we can go up to about 80% also. And that 80%, it is not a stretch at all. It will be very comfortable. And there is also the deposit engine, which is funding the growth on advances. So it's a very calibrated growth on both sides.

Great, sir. One last suggestion. Point taken about the onetime expenses. It would be great if in the future, you could incorporate a slide where you sort of give us the pro forma financials and the ROA and ROE numbers excluding the onetime expenses. So just that as analysts becomes a lot easier for us to have that data.

Point taken. And in fact, this time, even in our investor presentation, we have called it out very clearly in the slides. But yes, we have not done a scenario which is with and without because technically, we will check it out. But yes, point taken. And with analysts, we are explaining this, and this is a one-off nonrecurring expense, as I mentioned earlier. This is due to the wage settlement and actuarial provisioning that has been made. We could have done it in multiple quarters like many other banks, but we thought that it is prudent to have this done because we have done well in terms of our strong financials. So we thought that it would be prudent to do it in this quarter itself.

The next question is from the line of Prakriti Banka from HSBC Mutual Funds.

Sir I would just request you to publish your results and give us enough time in the future to sort of go before we come for the call, so that it is more fruitful for you and for us as well.

Point taken, ma'am, surely. Prakriti you can always reach out to us.

No, no, sure it's just that -- I mean, right now, I'm on the road sir, even the questions just probably going to be something that I could have gotten -- will be getting out of the presentation as well. So it's just a better use of all our time.

We understand.

Yes. Just quickly, I mean I'll probably join once I've had a chance to go through the numbers better. But within retail, what are the segments that are driving your growth?

So within retail, on the asset side, primarily speaking gold loan and housing loans, these are 2 flagship products, which has resulted in a good growth rate. Middle Market, which is comprising of MSME also has been kicking in well. So the ratios, if you really look through, these are the 3 main sectors which have contributed to the growth on the asset side. On the deposit side, 90% of our deposits are INR 2 crores and lesser. So this is something which we believe that is very healthy. And one more product that the bank is looking at, and since we do not have a credit card product from the retail assets. And as you are aware that 90% of our book has been collateral based on the advances side. So for the first time, the Board has approved a policy for unsecured, and this will be primarily driven by the credit line on UPI as a product. And we are engaged with one of the leaders in this space, large fintech NBFC. And we believe that with that will be the beginning of our launching of retail asset program, including unsecured.

Got it. MSME how much did you say that word because you were also in the process of revamping your risk assessment, et cetera, of MSME, right? So maybe what I thought that was going to be coming a little later. Are we ready with that right now?

No. We -- that is still WIP. But the growth in terms of the overall MSME business has been about 18% to 20% so far. And our Investor presentation has the sector-wise growth in terms of both advances and asset quality, which is, again, for the first time we have divided that by sector in both the cases. So that will give you an idea. But just to call out now, MSME is about 24.7%; retail is about 24.4%; and agri is about 13%. So if you total these 3, we are closer to 63%, as I said. And if you add the SMEs, like a little more. And then that leaves only the larger corporates and the others, NBFC.

Got it. Got it. Also just this mix, the main drivers that you mentioned in retail, are these going to be the main drivers? Because I mean, housing -- from what I understand, what is the competitive scenario like? And would that be a bit, say, really dilutive from where you are right now?

We are approaching this in a slightly different way, this entire [ season ]. So what we are trying to do, we have a lot of builder relationships in the key cities. So particularly in Bangalore, Mangalore, Chennai and a couple of other places, we have this huge builder tie-ups. Now construction level financing, which leads -- if it is retail into housing loans and construction financing in the commercial side, which will lead us into an LRD product is something that is being promoted at the branch level. So between Sekhar and I, we have been going to all the regions and doing reviews with the branch heads to that level of granularities what we are doing ourselves. And we are promoting the relationships as well as the business, which will be like package so that we have a continuous relationship not just ending with a construction loan, but which will gradually become a longer-term relationship with multiple counterparties associated with them. And just to give you the sector-wise on this credit portfolio also, as I was saying, even on the quantum, retail up to INR 7.5 crores is almost like 67% of our portfolio within retail. And INR 7.5 crores up to INR 100 crores is the balance, which is the 33%, which is comprising of the mid-corporate and the SME level, yes.

Ladies and gentlemen, the next question is from the line of Sarvesh Gupta from Maximal Capital.

Again, as a suggestion, it would be great if you can follow the best practices of some other peer bank like federal, et cetera, for presenting this because, a, there is no time which has given for the analysts to understand what has come in the presentation. There's hardly any time between the disbursal of the result and the analyst call. B, they're barring one slide, sir, all the other slides are pertaining to financial year. So it is not -- we are not able to make out what has happened in the quarter. It is more like a financial year presentation.

Sarvesh, point noted, and apologies on this. This is a day which was very important from a Board perspective because we handle many more other progressive, few of you know, and very developmental kind of agenda items. Yes, we will give you more time and we'll ensure that this is not repeated again. And we are available for any calls later on. If you do want to ask questions, after looking at our investor PPT, which has been uploaded to our website, we are happy to answer calls later. You can reach out to us.

Yes. Okay, sir. And sir, on the questions part, so last financial year, in 4Q, we had shown a degrowth because we had gone on a strategy to increase our retail mix. This year, overall, if I see the mix has actually gone again in the favor of large corporates, and we have also seen a steep decline in the NIM. So this is something which is slightly contra to our understanding of the bank's strategy.

I think that if you look to our growth in the advances portfolio, it is not what you are seeing because our growth in retail on enhanced book of closer to INR 13,000 crores. If we have maintained the same mix of business at 2/3 coming from retail and MSME and agri. So we believe that we have done well because we have not gone into the corporate side. That is one. The second is the large corporates. Out of that, there is a portion which is large corporate, which is very, let's say, high-end PSU, opportunistic treasury kind of lending. And there is a portion which is the longer-term corporate lending, but without products. So this is where we are going to do a churn as a strategy this year to develop a midsized corporate business, and we have recruited midsized corporate wholesale banking head from -- he comes from [indiscernible] and Standard Chartered Bank. He was running this business in those banks. And we believe that the relationships that along with him and the bank we'll be able to focus and grow that. So between the growth that we have already demonstrated this year, last year, just to kind of call it out, there was a very clear decision to get out of very high-cost deposits and in the process to kind of get some of those loans repaid, but this has not happened this year. So deposit is growing in excess of the -- whatever the liquidity which we have deployed is what we are doing this, and these are all short-term loans, which are more market rate base. So the last point, which you asked about was NIM. For a growing bank and for a bank which is embarked on a transformation journey like us, we believe that anywhere 3.4% to 3.7% is a very, very good kind of a range. We have actually exceeded that range to be about 3.51%. The last year was different because it was a limited size book. But in the enhanced book and despite the huge pressure on NIMs across all banks on deposits because this is actually deposits, which is impacted us and not the loan yield, as I said earlier. So we believe that we should be able to take this even better because even if deposit and the interest rates are not very favorable, we believe that the growth in retail would give us a kicker in the yield and would improve this current loan yield from our 9.9% to probably a little more. So we believe that maintaining NIM and growing this within the range that we have guided, which is 3.5% to 3.7% is possible, and this is good for us from our perspective.

Sir, what sort of growth guidance will you be factoring in? Because this time, we have got 19%, but that is on the back of 4Q '23, which was a degrowth quarter. So now going forward, what sort of advances growth rate are you penciling in?

So we are targeting technically anywhere between 20% to 21% as far as the growth and advances is concerned. And this is on the book, which is at INR 73,000 crores. And we believe that anywhere between INR 15,000 to INR 16,000 crores more if we add we are growing much ahead of the market. And this was my stated objective when I took charge, saying that 3 years, which was way back in June '23, before we even settled down in the bank, I said that we should be looking at INR 100,000 crores advances book, exit March '26. And I think we are sticking to that, and we are very well on track as far as the run rate is concerned.

Sir, on cost to income, now if I adjust this INR 153 crores plus INR 11 crores, then we are already at the 50% cost to income. So now last year, we had also sort of put in a lot more resources to increase the retail mix and all. So going forward, are you expecting any sort of benefits flowing in from the cost to income going down from this 50% that is there in FY'24?

So there are 2 parts to this. One is that we have to limit our costs; and the second is to increase our income. Now both are the strategies that we are adopting. So the cost part of it, over the last 8 to 10 months, we have brought in lateral leadership teams. We have a new CIO. We have a new Chief Product Officer. We have a new wholesale and a midsized corporate business head. We have an IR and a partnership head. We have all such very specialist kind of recruitments already done. The second is that our baseline technology we have added. So we have embarked on a project, which is to make sure that our entire digitized platforms, our analytics-driven platforms are all fully in swing. So basic investment, baseline investments related to that and the architectural part to scale up in terms of volumes, reliability and scalability has also been done from a technology perspective. Last one is that we were focusing a lot on process. So there are a lot of process improvement that have been done, including centralization. We're setting up our national back office in Mangalore, and we believe that, that would result in a lot of cost efficiencies as well as operational efficiencies by releasing bandwidth at the branches for doing more sales. Last part is about investment into people, sales teams. As you are aware, we are a bank where the feet on street and the sales team have low fixed costs and higher variable costs. So we have rolled out a variable pay program, which is based on performance, basically increasing in business even at a branch level. So over and above the pay scales that are currently there, whether they're IBA-based or whatever, we still have this variable pay program which we have launched, which are linked to targets and which are linked to performances. And this includes group targets, which is a branch target also. So we want to make sure that all of the distribution outlets that we have are all meeting targets and actually becoming more and more productive. The last one year, we have made sure that the contribution, which is the business contribution volume by employee, has improved significantly, and we want to increase that even further.

So sir, are you expecting this 50% to go down materially this financial year?

There are other -- earlier, this was asked by someone, so I had also committed saying that we will bring this cost to income closer to sub-50 by the end of this financial year FY '25.

Okay, sir. And sir, finally, now our credit cost has come at 0.8 odd percent. So how do you see that playing out in the coming year? What would be the gross credit cost? And have you seen a lot of recoveries this year, which has helped this partially? Or how do you see it coming...

So banking industry works around 1%. So obviously, we have done well this year, but we believe that even anywhere within up to 1% is good. But we do have a good recovery rate even now as I speak to you because this is working very well because the overall GNPA numbers, the slippages have come down and recoveries have been very, very healthy. And we believe that this quarter and the following quarters this year also, we would have some healthy recoveries, which would have an impact. So I guess we would be hovering around between 0.85 to 100 [ bps ].

The next question is from the line of Sushil Choksey from Indus Equity Advisors.

Congratulations to team Karnataka for having an excellent year in terms of fund raise and various aspirations. The first question you answered to the first question about the aspirational growth to INR 90,000 crores to INR 1 lakh crores between '25 and '26. To sustain that kind of credit growth, how are we working towards human resource and trade deposit mobilization?

Thank you, sir, for the compliments. And yes, this is the next phase of growth. So basically, what we have done is that we have set us the baseline in terms of setting ourselves up for growth in the advances as well as for the deposit side. So there are 3 parts as far as the deposit is concerned. One is that there is a franchise which is through the branches. The second is through the sales teams because we've created a sales organization. The third is that for our existing to bank ETBs, we have a data-driven analytics platform, which gives a lead generation on the basis of transactional behavior of each of our clients. And this has kicked in very well. So on a regular basis from the back end from the Analytical Center of Excellence, we are pumping in data to say that who are our target for FDs, who are our target for third-party products like insurance? Who are our products? Who are our targets for converting dormant account into an active account and so on. So basically, this has been on the deposit side. As far as the loan engine is concerned, we have very clearly done some verticals. We also got it in the investor presentation. So we have already made an offer to a retail asset and the MSME business head. He's joining us shortly. And we already have our midsized corporate business head who has been in the system for about last 45 days. And we already have started a lot of process transformation specifically on the credit processes by deploying one of our world-class Singapore-based agency who have got a lot of banking experience in India. So they are all professional risk and credit managers who have been in larger banks. So they have -- this is a 12-month project. So between the new people coming in, the coverage team between strengthening credit sanctions and credit processes through this transformational study and also the technology, which I called out for on the deposit side. We believe that we have the capital. We have strengthened the key management and creation of the sales customer-centric organization. We have increased our product range. We have launched 18 new products in this financial year. And these are all CASA and some more are coming in, as I was telling the earlier caller about something on the retail asset side also. So this is going to be a continuous process for both the retail and the MSME advances and on the deposit engine.

Okay. What is the sustainable employee cost? Because this year, I suppose IBA would have impacted in the annual payout. So what is our sustainable employee cost on a year-on-year basis?

So last year, if you look through, we have accounted for it, ever since November '22, we have been providing for this, and it is something that -- which has already been boxed there. The second thing was that because of the pay scales, which were announced just now, we had to do actuarial provisioning for increase in leave, increase in the pension, increase in a couple of other retiral benefits and so on, which is the onetime that we have incurred.

What is the number on onetime?

The number on onetime is INR 152 crores on just this actuarial provisioning in this quarter. The running rate as of March '24, our overall staff, which is including salary plus superannuation benefits is closer to INR 1,372 crores. So if you want to know the number, yes, it will be anywhere between INR 1,300 crores to INR 1,400 crores on the overall number.

And to the previous questioner you spoke about financing home loans and construction loans and LRD. Are we targeting more of an affordable segment for a higher yield? Or are we going to do normal home loan products like any other bank?

We'll do both, sir, and we want to consolidate in markets where we are present. So as I was mentioning earlier, Bangalore, we have over 100 branches. Obviously, we want to take advantage of that, and we are trying to set up a retail digital factory there, which will basically be the unified kind of retail hub. If we succeed here, then we would want to kind of replicate it in major T2, T3 locations also because this is the way that the retail business is going, and that's where the process transformation part happens. Affordable housing, we have been funding directly to a couple of NBFCs. And if we believe that we could get into some kind of strategic arrangement based on our experience, we will definitely be considering that also.

What kind of TAT are we targeting in this segment?

Sorry, repeat your question?

What kind of TAT are we targeting on the segment of housing loans, gold loans. Gold loans are less than a few hours, but then a housing loan or a consumer loan?

So what we are trying to do is that if we have this builder tie-ups, which is what we are aiming, then the whole project gets approved. And then other than your Aadhaar and your income verification with the individuals, we do not have to repeat anything related to that documentations and approvals. So we believe that we would want to get into a T plus one TAT as far as the housing loan is concerned on these kind of pre-approved projects.

Sir, the entire banking industry is benefited by RBI dividend and inclusion in the bond index, JPMorgan, Bloomberg. What is comforting Karnataka Bank Treasury on an outlook for the current year? And will we monetize our treasury for gains and look for more credit growth by booking profit if you get 675, 685 range?

So Sekhar is here, our Executive Director. He will take on this question because he is actively involved in managing treasury. But more from an overall perspective, let me tell you that we are managing about close to INR 26,000 crores to INR 30,000 crores treasury book, and that's not small. Secondly, we do have positions, which are very favorable if the interest rate movement also become favorable. So at any point of time, opportunity wise, we will definitely encash. But Sekhar, would you be able to take on this?