Bank of Maharashtra Ltd. (MAHABANK) Q1 FY23 Earnings Concall Transcript

Bank of Maharashtra Ltd. (NSE: MAHABANK) Q1 FY23 Earnings Conference Call dated Jul. 18, 2022

Corporate Participants:

A S Rajeev — Managing Director and Chief Executive Officer

Unidentified Speaker —

Sankpal Dinkar Baburao — General Manager

A.B. Vijayakumar — Executive Director

Analysts:

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Mahrukh Adajania — Edelweiss Securities — Analyst

Shahid Ahmed — Esquare Financial Services — Analyst

J.K. Jain — J.K. Jain & Company — Analyst

Sreesankar — InCred — Analyst

Dixit Doshi — Whitestone Financial Advisors Pvt Ltd. — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Bank of Maharashtra Q1 FY ’23 Earnings Conference Call. We have with us from the management, Shri. A S Rajeev, Managing Director and CEO; Shri. A.B. Vijayakumar, Executive Director; Shri Asheesh Pandey, Executive Director and all general managers of the bank. [Operator Instructions]

I now hand the conference over to Shri. A S Rajeev. Thank you, and over to you, sir.

A S Rajeev — Managing Director and Chief Executive Officer

A very good afternoon to all. I’m Rajeev. So today, we had our results are approved by the Board of Directors. And our results for the quarter ended June ’22, it was one of the best results for the current quarter. A number of areas, the bank has improved its results and a number of figures are actually one of the best in the banking — our bank’s results are concerned when comparing with the past.

The total business grew by around 18% to reach INR336,000 crores. Total deposits up by 12% with INR195,000 crores. CASA stood at level of 56% of the total deposits. Gross advances increased by 27% to INR141,000 crores. CD ratio increased to 72%. Gross NPA improved to 3.74%. Net NPA improved to 0.88%. Provision coverage ratio improved to 95%. Net profit up by 117% to INR452 crores. Operating profit improved to INR1,202 crores. Operating profit is INR1,202 crores in spite of the banks as per the revised accounting policy, depreciation of investments of around INR200 crores, we have debited to other income account. And another one item as corresponding to last year, our profit on sale of investments was around INR240 crores. This year, because of the market movement, real profit was only INR75 crores to INR80 crores. So that also the reduction has happened. And the third point is, last year, PSLC certificate bank would be able to get around INR75 crores to INR80 crores in Q1. This year because of the market availability, only INR2 crores to INR3 crores profit we could be able to get it. So around INR500 crore reduction.

Operator

Sorry to interrupt Mr. A S Rajeev. Your audio is not that great.

A S Rajeev — Managing Director and Chief Executive Officer

I think now it is okay?

Operator

Sir — yes, I would request you to kindly speak — come closer to the microphone and speak.

A S Rajeev — Managing Director and Chief Executive Officer

Now it is okay?

Operator

Yes, sir, please go ahead.

A S Rajeev — Managing Director and Chief Executive Officer

Okay. So this operating profit of INR1,200 crores, which has come slightly — is not up to the mark where basically last year, Q1, our operating — profit on sale of investment was around INR240 crores, which has come down to INR75 crores for the current year. That means almost around INR160 crore reduction in profit on sale of investments.

In addition to that, around INR200 crores depreciation has happened during the Q1 because of the movement in prices. Second point is that other income is reduced by around INR75 crores as compared to Q1. PSLC last year, we could able to sell it around INR75 crores PSLC certificate. But the current year, we could not able to do that because of the market movement. In spite of that, our operating profit was improved to INR1,202 crores. That is basically the main core operating profit and increasing net interest income of 20 percentage growth rate, bank would be able to grow the operating profit. And net interest margin improved to 3.28% and cost-to-income ratio improved to 40%. ROA improved to 0.81% and a return on equity improved to 16.75%. CRAR improved to 16.15% of which Tier 1 capital is 12.16%.

So these are the major profitability ratios. As regards asset quality is concerned, our SMA numbers are improved a lot, in case of the SMA 2, those numbers above INR1 crore, it’s only INR569 crores, of which SMA 2 is INR230 crore and SMA 1 is INR339 crores, which constitutes only 0.40%. That means SMA 1% is of the total gross advances is 0.24%. And SMA 2 is 0.16% in case of INR1 crore and above.

In case of slippage, slippage during the current quarter was INR697 crores. Out of that, one account was around INR280 crores, one account, single account, that is UP-based sugar account, so 100% provision we have made. Barring that, all the asset quality ratios, especially in case of growth and net NPAs are reduced.

As regards recovery is concerned, during the current quarter, around INR400 crore recovery has happened. In addition to INR120 crore prudential trough [Phonetic] account recovery. So the next slippage was around INR100 crores was there. As you are aware that during Q1, there will be little disturbances regarding transfers and the recoveries would be able to do that. And the current year’s recovery targets, we have kept at INR3,000 crores, and we are confident that we will be able to do that.

And during the current quarter, some of the big accounts like NARCL transfers or ILFS or like that, some of the accounts were in the pipeline. And we are expecting that this will happen around INR400 crore recoveries in pipeline in different stages and that will happen during the current quarter. All other ratios regarding key ratios, all the ratios are improved. And we feel like that this is one of the best results as far as the Bank of Maharashtra is concerned, and we will continue to do that. Thank you.

Operator

Thank you. Sir, shall we start for the Q&A session?

A S Rajeev — Managing Director and Chief Executive Officer

Yes, please.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Ashok Ajmera from Ajcon Global Services Limited. Please go ahead.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Thank you, sir, for giving this opportunity. And at the very outset, please accept my compliment Rajeev sir, Vijayakumar ji and Asheesh Pandey ji, and the entire top management team of the bank for giving such fantastic good results even in this difficult times of so much of volatility and uncertainty happening around.

Sir, having said that, I have got a couple of few observations and some questions. One is sir, you said about the fresh slippages at one account of INR280 crores, the sugar account slipped and you made 100% provision. What is the status of this account? And what are the prospects of recovery in this account and the asset coverage NPV of this account, sir? Can you give some color on that?

And then we are having the recovery target you said of INR3,000 crores. And in the coming quarter, that is the July to September quarter, you said you lined up NARCL and ILFS about INR400 crores and some — so it’s still — there is a long gap in the remaining three quarters. So from where this recovery will come?

My other observation, sir, is on the credit side, comparatively a slower credit growth and that to whatever credit growth has happened is more in the corporate. So what are our plans and targets of this, like our bank having — our base being a minimum lower base, we can still achieve higher target. So what are your thinking on that?

And my last question, sir, is on investment losses which we are having now instead of the profits or lesser profit. So going ahead, what do you see in your AFS portfolio? Because you’ve transferred about I think INR3,000 crores to HTM, but this AFS, what are your views on that, sir? So these are my few questions and observations in this first round of questioning, sir.

A S Rajeev — Managing Director and Chief Executive Officer

Yes, your first question regarding the recovery of that sugar account, I think our recovery GM is here, he can give a color on that.

Unidentified Speaker —

Yes. This is UP-based sugar account. So that has been slipped this time. So we have made 100% provision on this. So we — this to come, we’ll see that any regulation is possible or we’ll take the account to NCLT. That plan has to — yet to be decided. So consortium will take a call. But we prudently made 100% provision so that we are protected from future losses.

As far as this total recovery target was referred to as INR3,000 crores, this is a full year target. It’s not a one quarter target. And the current quarter, of course, in the next quarter, we expect NARCL to happen because that is long awaited. Everybody knows that. So this time that transfer will happen in this quarter.

IL&FS is already the court order has been given. So that distribution, whatever is realized is going to take place. Religare is one big account where we expect a resolution. It is already under the pipeline. So like that, there are certain big accounts are poised. And our retail recovery is also — we are continuing our efforts. So that way, we are confident that we’ll achieve this target.

A S Rajeev — Managing Director and Chief Executive Officer

And what I was telling that actually, we could be able to only recover INR400 crores, but this INR400 crores, what I was selling in the pipeline, it should have been happened in Q1 itself, because that was the plan earlier because money is in the collection account, only credit has to come or transfer of the account, that definitely it will happen. So this Q1 recovery of INR400 crores is postponed to Q2, but Q2 whatever is there, that recovery will happen there. So INR3,000 crore recovery definitely, it’s according to me much more than we will be able to recover that, number one.

And regarding the credit area, what we were talking, our credit growth is around 27% to 28%. And I think that, that will be a good figure. I think further, it may be difficult to increase that even our expectation that 22%, 24% only it may happen, credit. That is the corporate target is given only 20% to 22% credit growth only.

And so credit is growing at a rate of all segments, about 20%. Of course, in case of corporate credit, it has happened 33% because 5,000 to 6,000 because the corporate is almost 40% to 41%, with a band of 2% as with a Board direction. So INR4,000 crore only the corporate is grown, because that is why the ratio is slightly high. Out of these INR4,000 crores also, around INR2,000 crores is added basically is not really big corporate, it is a mid-corporate INR100 crores, INR120 crores or something between INR100 crores to INR150 crores range, mid-corporate accounts. And balance is already sanctioned pipeline was there that we have released during the current quarter. So the corporate credit is only and other growth rates, all segments, for example, MSME, retail, housing, all are growing at a rate of 22% to 25%. So that growth rate will continue.

Third point is regarding investment AFS. AFS quantified duration is 1.4. So for the current quarter, our depreciation was INR200 crores when the rate is moved around 70 basis points. So as of now, and afterwards we have the portfolio, we have rebuilt the portfolio and the same modified duration will continue. If the same rate is continuing this — in Q1, the rate was around 7.5 to 5.3 level. As of now, again, 20 basis point rate has already come down. Now we are sitting in positive appreciation only, we are sitting.

So even if it is increasing by another 25 basis points via maximum market express. But market [Indecipherable] RBI reports under that things, inflation, all these things are peaked and expectation is there may not be much increase in the interest rates. So even if it is increasing at 25 basis point, bank is protected from the yield. So we don’t have any issue as far as AFS is concerned. So I think that is this point, anything I missed out?

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Yes, sir. Yes. No, there was —

Operator

Mr. Ashok, do you have any further questions?

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Yes, yes, yes. Sir, our CASA overall has come down in this quarter from INR117,000 crores to INR109,000 crores. Is it a conscious decision or only because in March, it is increased because of certain regions of the government deposits or something that the CASA came down —

A S Rajeev — Managing Director and Chief Executive Officer

No, it is not a conscious decision because when the CASA, it was mainly it has come down in terms of current account. And you are knowing that there was a little instability, the government during that last quarter, afterwards this CASA has come to some of the transfers of these transfers from other funds [Indecipherable] this has not happened during the last week because of the change in the government of Maharashtra, some of the funds was there, it was held up.

So those accounts on the — what our aim is to that, average though it has reached to 58% March. Average CASA of the bank is, we are keeping 56% to 57%. So average CASA is more important than the terminal figure. So our average CASA is about 56% as of now also. So today, also, CASA is around 56.5%. So as far as CASA is concerned, we are very comfortable. And there may be a small shift from SB account to because of the rising interest rate scenario all around INR1,500 crores to INR2,000 crores is shifted from SBI — SB accounts to other term deposits area, it has happened in some of the rural area. But — this percentage is continuing at the same level and that will happen during the current year.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

No, sir, that is, of course, the complements to you for having one of the largest amount of the CASA among the public sector bank. Only in one quarter, I had observed some fall. That is why I asked the question.

A S Rajeev — Managing Director and Chief Executive Officer

One thing is very clear that we are also very cautious that any bank keeping at 50%, 60% CASA is slightly difficult that. So what we wanted something above 55%. That is appreciated that, because we also know that it may be once if you reach 58%, 59% in the competitive world because keeping the CASA at the rate of, it will be slightly difficult. So the average CASA, we are keeping at above 55%. But we will strive hard for improving further that.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Yes, sir, point well taken. And my last question is around NBFC exposure. I think your NBFC exposure is only 6.23 comparatively very low as compared to other peer banks. So what are your views on NBFC credit — direct credit for onward lending and also on the co-lending front, sir?

A S Rajeev — Managing Director and Chief Executive Officer

So direct lending, and that is the cost shift decisions where we have taken by the board last year, one or two NBFCs having difficulties. So that time, Board has taken a decision that to exposure and — when we are able to expand — bank is more consummating on mid-corporate and MSME sectors, mid-corporate is a major area where looking after some sectors Board has given some kind of directions, some hospital sector, pharma sector and some kind of manufacturing sector and infrastructure, some of the areas.

So NBFC, we will continue to lend, but in a cautious way, selective basis based upon the fully rating because as per the internal policy, AA and above only, and pricing also, we may have to see for NBFC lending is concerned. Otherwise, there is no problem when NBFC lending is concerned, our — all assets are very good, there has not been any problem. So since that we are — other areas are growing. So we have not gone very aggressively. It is true that not gone very aggressively in this sector plan.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Okay, sir. Thanks a lot, sir. I will come back again, if time permits. Thank you, sir.

A S Rajeev — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Mahrukh Adajania from Edelweiss Securities. Please go ahead.

Mahrukh Adajania — Edelweiss Securities — Analyst

Yes, hello, sir. Sir, congratulations. I just have one question on your loan growth. Basically your corporate loan growth has been strong, like Mr. Ajmera also mentioned. Q-o-Q sequential loan growth is 8%. So what are the segments or the sectors that have seen this pickup in growth?

Unidentified Speaker —

In this corporate growth, mainly some of the airport assets we have taken. In addition to that, some infrastructure also we have taken and NBFCs small exposure is there. Some exposure since the industries are doing well, some small exposure to steel, petrochemical, metal industry, we have taken the export. And textile also, we are very keen on taking some exposure there also have taken some exposure.

So overall exposure in the conference is a mixed bag, not only on one sector we have won, we have a diversified portfolio. And one more thing which I would like to inform that our overall related investment-grade rating exposure has also improved, earlier it was 43,519, which has improved in this to 44,242, and similarly, also the government guaranteed advances, which was 10,857 has increased to 11,446 [Phonetic]. So our book is granular as well as well-related book and well-guaranteed book. This is the composition of our [Technical Issues].

Mahrukh Adajania — Edelweiss Securities — Analyst

Got it, sir. Sir, and what would be your incremental loan to airport this quarter?

Unidentified Speaker —

Sanction amount is around INR1,300 crores.

Mahrukh Adajania — Edelweiss Securities — Analyst

Okay. To airports during this quarter?

Unidentified Speaker —

Yes. Yes, ma’am.

Mahrukh Adajania — Edelweiss Securities — Analyst

Got it, sir. Sir, in infrastructure, what would it be roads or in general?

Unidentified Speaker —

No, no, it’s mixed bag between, in infra it is road is there. Other infra is also there, some of the water projects are there, then affluent treatment plants are there and Namami Gange project is there. So mixed, it’s not any concentrated to any one infra, all mixed infra projects we have taken.

Mahrukh Adajania — Edelweiss Securities — Analyst

Right, sir. Sir there is a — I know this may be a difficult question to answer, but there’s a lot of talk and media report on M&A and state-owned banks. Do you think this is a far such stretched idea or it could actually be a possibility, given your experience in the sector?

Unidentified Speaker —

Can you repeat, ma’am?

Mahrukh Adajania — Edelweiss Securities — Analyst

No. So basically, there are a lot of articles in the media of state-owned banks likely to be privatized.

Operator

Ms. Mahrukh, sorry to interrupt. I would request you to use your handset while asking a question.

Mahrukh Adajania — Edelweiss Securities — Analyst

Okay. Let me do that.

Operator

You are not audible.

Mahrukh Adajania — Edelweiss Securities — Analyst

Yes. Yes.

Operator

Thank you.

Mahrukh Adajania — Edelweiss Securities — Analyst

Hello. Can you hear me?

Operator

Yes. Please proceed.

Mahrukh Adajania — Edelweiss Securities — Analyst

Hello. Can you hear me now?

Operator

You are audible. Please proceed, ma’am.

Mahrukh Adajania — Edelweiss Securities — Analyst

Hello?

Operator

Ma’am, you’re audible. Please proceed.

Mahrukh Adajania — Edelweiss Securities — Analyst

Yes, yes, yes, yes, yes. So I just wanted to see — my question was that there’s a lot of media reports on privatization of state-owned banks, state-owned stakes in state-owned banks like D2B sold to private players. So any feedback on these articles?

Unidentified Speaker —

There is no feedback madam. I think only what we have also seen only is media reports.

Mahrukh Adajania — Edelweiss Securities — Analyst

Okay, sir. Thank you so much. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Shahid Ahmed from Esquare Financial Services. Please go ahead.

Shahid Ahmed — Esquare Financial Services — Analyst

My complements to MD sir, both the ED sirs and all the general manager sirs, because the kind of outreach program that we have conducted, I believe it was completely unparalleled. So my complement to the entire Bank of Maharashtra team who has been on their toes, which we have seen in the last four years — four months and which is reflected in the numbers. Just a small question I have, especially in the — on the digital initiatives that we are conducting initial — staking, actually, because still, I believe some teething problem or some fine-tuning is needed to be an enabler for the users. So I just wanted to understand what digital initiative our esteemed bank is taking on that for, sir?

A S Rajeev — Managing Director and Chief Executive Officer

Yes. Am I audible?

Shahid Ahmed — Esquare Financial Services — Analyst

Yes, sir, you are audible sir.

A S Rajeev — Managing Director and Chief Executive Officer

Yes. Thank you. Thank you so much for the all compliments. Yes, on the digital initiatives, bank is working on the, we say, the two pillars. The one is on the customer journeys, wherever — where the digital footprints are there. So if you see particularly our — the analyst presentation as well, so at least four to five parameters like the QR code and the transactions in the QR code, even if you see on the WhatsApp, the increase in the onboarding of the customers on the WhatsApp, as well as on the mobile banking. Particularly, if you see the transactions which has happened from quarter-to-quarter on the mobile platform, you’ll see it indicates two important things. One is, it is reducing my operational cost. The second, it is giving a very —

Shahid Ahmed — Esquare Financial Services — Analyst

Hello? Hello?

Operator

Sir, your audio went. Could you please repeat what you were saying please?

A S Rajeev — Managing Director and Chief Executive Officer

Yes. So I am just repeating that bank is working on the two pillars. One is on the customer journey. So the transactions like if you see the first quarter transactions and the onboarding, which is already there in the presentation, I think, last — the 4th and the 5th slides from the last. So that is on the one part bank is now working. The bank is building the STP journeys, total end-to-end, no bank is having the STP till in principle and furthermore.

But second, the bank is also looking to strengthening the internal the processes and systems. So this is the second journey, which this bank is looking into. Now the third part, which bank is looking on both the sides, which will help the bank to strengthen its own internal system efficiencies as well as customer journeys onboarding fintechs. So almost many of the fintechs are evaluated as per the policy adopted by the bank. And there are a few areas like artificial intelligence or the voice AI or maybe bringing AI into the underwriting STP part.

So bank is working upon that. The purpose of intervening the technology into the bank process is only two. The first is to give more convenience to customers and at the same time, reduce operational cost, the third very importantly to building the compliance during the journey itself. So these are the three priorities which bank is looking forward in the current FY also.

Shahid Ahmed — Esquare Financial Services — Analyst

Just wanted to have one like STP that we are implementing — sorry — couple of minutes, actually. So STP will be primarily for the means the renewal of the existing accounts as well as it will get implemented in paid finance as well. So because one of our peer bank is already at a very advanced stage of implementing what they have implemented also?

A S Rajeev — Managing Director and Chief Executive Officer

See, the building of the STP involves two, three factors. The one is your own integration of internal and external database. The second is bringing into your appraisal process. Now the third thing, the policies which has to be building with the bank own PD and LGD. So with these three pillars, any bank would first like to do the beta testing with the review renewal. So our strategy is also the same. We will deploy and do the back testing with the review renewal case within the existing portfolio then certainly now because the account aggregator is going to be increase [Phonetic] very, very soon, your JanSamarth is going to be in very, very place very soon. And certainly, the low ticket size is also increasing in the market, if you see. So going forward, this digital lending platform, STP end-to-end is going to be the key area and focus and the backbone of the bank.

Shahid Ahmed — Esquare Financial Services — Analyst

Thank you so much for answering my questions, and my best wishes again to MD sir, both the ED sirs, general managers, sirs and madam and team Bank of Maharashtra, we have been bang on in the last couple of quarters continuously and my best wishes to you for the future quarter as well, sir. My best wishes to the entire team Bank of Maharashtra, sir.

Operator

Thank you. [Operator Instructions] The next question is from the line of J.K. Jain from J.K. Jain & Company. Please go ahead.

J.K. Jain — J.K. Jain & Company — Analyst

Congratulations on the very good set of numbers. Actually, I had not seen — this is the first time I had seen your numbers. In fact, the numbers for the year ending March ’22 was also very fantastic because on the ratios, if I see that your net NPA was just less than 1%. This time, it was — it is hardly 0.88% and your — your provisioning is also INR600 crores, and the net NPA is right now is only INR1,200 crores. So it means if you carry on this provisioning in this same system, your net NPA will be zero by the year-end. If I am correct or no as a layman, please clarify me.

And another thing you have said that there will be recovery of INR3,000 crores. So that INR3,000 crores means that is the gross recovery. Out of that INR3,000 crores, what amount will come to your kitty [Phonetic]? So that is as a layman, if you can clarify this, so it will be a good thing. And another thing is there is a good amount of tax provision of about INR200 crores in this quarter itself. The bank must have brought forward losses. So how this INR200 crore tax provision for the quarter as well as INR800 crores for the year ending March ’22 was built, kindly clarify.

A S Rajeev — Managing Director and Chief Executive Officer

So this first question is regarding the recovery. Recovery this current year also, we are expecting at least INR2,000 crores to INR2,400 crores slippages for the current year, because on an average, we are expecting around INR500 crores to INR600 crores slippages — new slippages for the current year. And the recovery we’ll see around INR3,000 crores and net kitty will come maximum INR500 crores to INR600 crores. So the reduction will come.

Second point is that regarding taxation, INR200 crores, what we have made is, we have enough because the last March, we have switched over to new tax regime with 25% and the next two to three years, we may not be requiring any taxation provision for the year. And this is where we have done that we have a little more — profit is more. So we have given INR200 crores for DTA reversal of that because bank was earlier around the INR600 crores to INR700 crores loss, DTA is created. Out of that, last March, we have already released somewhere around INR150 crores. So INR200 crores, we have released for the current quarter. So this is the position of that.

So in future for the coming quarters, this taxation provision another INR300 crores to INR350 crores loss, deferred tax assets is there, that we will release that. And one point is that when we are able to release the deferred tax assets, it will improve our capital adequacy ratio without raising for any capital. So you can see that in last quarter, 16.45% was the after declaring dividend. It was 14 — 16.45%. And in spite of INR5,000 crores to INR6,000 crores addition of these advances, we could be able to keep this capital adequacy ratio of 16.15%.

So for keeping the capital adequacy ratio, we may be the deferred tax assets we may have to write up. I think these are the two questions you have raised.

J.K. Jain — J.K. Jain & Company — Analyst

Yes, this is a question. So that means going forward —

A S Rajeev — Managing Director and Chief Executive Officer

One point I have not told you that regarding net NPA, net NPA is INR1,206 crores is the net NPA figure. So we need not wait for next year for write-off because we have already INR1,200 crores COVID provision is kept for that. It is not charged with — it’s a floating provision we have kept and we have not returned back. So at any point of time, we may be able to utilize the INR1,200 crores — in fact, as of now, we don’t have any NPA at all because if you consider that INR1,200 crores, it’s a fact.

J.K. Jain — J.K. Jain & Company — Analyst

You mean to say INR1,000 crore is the excess provision.

A S Rajeev — Managing Director and Chief Executive Officer

INR1,200 crores last year, we have provided for COVID provision that is continuing that. That is not that —

J.K. Jain — J.K. Jain & Company — Analyst

That means the bank, whatever the result is being shown, the bank has a very rosy picture, if I’m not wrong, because that’s my feeling because I have not seen any bank, any PSU Bank or even the HDFC, their net NPA is something like 0.4 or 0.5. And the CASA ratio, I think you have the highest CASA ratio even the HDFC is near about 50%. So how does — well, that’s not the question you can give a reply, how the share price is just at — just 2 times of the face value, that’s a retail perplexing. It looks as if there is something beneath it or we are not able to understand or things like that?

A S Rajeev — Managing Director and Chief Executive Officer

I think generally you see share price and book value all these things. And generally, investors will look into that, the consistency and other areas. I think we are also the same opinion like you that in future, I think things will improve.

J.K. Jain — J.K. Jain & Company — Analyst

Okay, okay, sir. Thanks a lot. Thanks a lot.

A S Rajeev — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line from Sreesankar [Phonetic] from InCred. Please go ahead.

Sreesankar — InCred — Analyst

Yes, I have just a couple of questions. The first question is, your cost of deposit has seen a sharp decrease. That during an environment wherein things have been moving up. What is the leading do you think because of your sharp jump in your current assets?

A S Rajeev — Managing Director and Chief Executive Officer

Whether, you can — sorry that I could not able to —

Unidentified Speaker —

Cost of deposits is decreasing.

A S Rajeev — Managing Director and Chief Executive Officer

Cost of deposits is decreasing, but one of main reason is that CASA ratio is one of the major reason. And up to last year, it was reducing investment and [Indecipherable] deposit cost is increased. So there is a large effect in case of — in case of deposit is concerned. And slightly —

Sreesankar — InCred — Analyst

Sorry, sir, I’m not referring to last year. If I look at — look from December ’21 onwards, which is to say 3.69 has sharply reduced to 3.43, the last six months.

A S Rajeev — Managing Director and Chief Executive Officer

Yes, yes. Cost-to-income, you are talking. Yes, Cost-to-income mainly —

Sreesankar — InCred — Analyst

Not cost-to-income, sir. Cost of deposit.

A S Rajeev — Managing Director and Chief Executive Officer

So cost of deposit is the share of our CASA has increased. You see that it has gone up from 46% to 58% around the 10% to 12% CASA ratio is increased out of that. The main increase has happened in case of current account. So current account is that we could be able to raise government funds and other current accounts, good corporates also.

The current account growth for the past two years, it was around INR15,000 crores. So that is zero interest rate and around the INR15,000 crore SB also our interest rate is only 2.75%, so one of the lowest. And we don’t have any differential deposits and only INR4,000 crores to INR5,000 crores deposits all retail deposits above INR2 crores without differential deposits — bulk deposits we are having. But bulk deposits also interest rate is much below the CASA rates. That is the reason for keeping the cost of deposits.

Sreesankar — InCred — Analyst

Your sharp increase with current account — current deposits, etc., in the CASA part, how much you think is going to be maintainable and how much will not — will start to deplete? That was my first question. Second, your yield on advances also have boded [Phonetic] very sharply. But the NIM if I actually look at it, it has not seen a significant increase in line with the kind of increase in your yield on advances and the decrease in your cost of deposit. I’m trying to figure out where exactly that has gone.

And I’ll ask my questions fully and then you can answer, sir. The second part is we have also seen a sharp growth in your credit outlook and in advances, how much is the growth that is sustainable for you as a bank over the next few quarters? And that’s my question sir.

A S Rajeev — Managing Director and Chief Executive Officer

So CASA sustainability is around 55% to 56% will be the sustainability. And credit outlook sustainability will be at any cost, we may be able to grow at the rate of 20% to 22%. And regarding the NIM, what you have referred, NIM is a combination of not only the yield on advances, it is investments also. Because our 40% to 45% of — if you see that, yield on investments have come down by around 60 basis points as corresponding to last year. Though the yield on advances is increased by 50 to 60 basis points, correspondingly, around 45 basis points to 50 basis points, yield on advances — sorry, yield on investments have come down. That is why likely this has affected the NIM.

So going forward, these investments yield, it may continue like this or it may grow by 10 basis points to 15 basis points, but we will be able to continue this yield on advances same way. And we will continue the NIM above 3.25 range. That is our plan.

Sreesankar — InCred — Analyst

Okay. And do you think the advances should grow around 20% plus?

A S Rajeev — Managing Director and Chief Executive Officer

20% to 22% is our target is kept because the situation — as of now, our growth rate is very good that there is no doubt in that case, but conservative approach is 20% to 22%, it may go up to 25%.

Sreesankar — InCred — Analyst

Okay. Fair enough. And the next question is on your SMA, sir. And you’ve given the SMA numbers that extremely lower SMA numbers that you have at INR569 crores SMA 1 plus 2. This is for the accounts which is INR1 crore and above. Can we get some color on the SMA figure for the lower number less than INR1 crore?

A S Rajeev — Managing Director and Chief Executive Officer

You can talk. As General Manager, Monitoring, Sankpal, will give you the numbers.

Sreesankar — InCred — Analyst

Thank you.

Sankpal Dinkar Baburao — General Manager

Our SMA 1 and 2 position for — in absolute term for June 2021 was 4,637 [Phonetic] and — though in absolute term, it is increased from 7 — in percentage in 7.16% and quarter-on-quarter basis. But Y-o-Y, it is improved 10.16%. The Y-o-Y figure for June ’22, it is 4,166 [Phonetic]. So improvement is there.

Sreesankar — InCred — Analyst

That is SMA 1 and 2 put together. Can you give you the breakup, please, sir?

Sankpal Dinkar Baburao — General Manager

Just a minute. You are asking for below INR1 crore. This is including SMA 2 also. So below INR1 crore or INR2 crore. At present, we don’t have, we’ll give you.

Sreesankar — InCred — Analyst

Okay. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Dixit Doshi from Whitestone Financial Advisors Pvt Ltd. Please go ahead.

Dixit Doshi — Whitestone Financial Advisors Pvt Ltd. — Analyst

Yes, thanks for the opportunity and congratulations on a very good performance. I have three questions. Firstly, can you give any guidance for the credit cost going forward? My second question is, if I see your other operating expenses that has come off very sharply. I mean almost INR950 crores was the average for per quarter last year. And in this quarter, it is only INR800 crores. So what was the reason? And is this INR800 crores is sustainable or will come back to over INR950 crores? So that’s my two questions.

A S Rajeev — Managing Director and Chief Executive Officer

So this is one — operating expenses, INR940 crores. And this quarter, INR800 crore is coming down because in case of AS 15 valuation because of the increase in burn rates, it has impacted around INR50 crores to INR60 crores. So otherwise, I [Technical Issues] around the maybe —

Operator

I’m sorry, sir. Could you please repeat — could you please repeat that because your audio went off in the middle?

A S Rajeev — Managing Director and Chief Executive Officer

Okay. Okay. In case of operating expenses, last year, it was around INR950 crores for the corresponding last quarter. And this quarter is INR800 crores. This INR800 crore is likely come down because of the AS 15 valuation has slightly come down for the current year because of increasing bond rates because that investment of the yield on investments of the AS 15 has slightly improved. So this has reduced by INR50 crores to INR60 crores. So it is not going to much impact on this, maximum, it may be around INR75 crore difference backup. So otherwise, they will not have any impact.

Credit cost is concerned. This quarter going forward, the credit cost will come down further because we — for reducing that net NPA this year, additionally INR250 crores provision we have made. So the coming quarters, that may not be there. But around the — to the remaining credit cost, we’ll continue that.

Dixit Doshi — Whitestone Financial Advisors Pvt Ltd. — Analyst

Okay. And my last question is regarding the capital requirement. So looking at a strong profitability and capital adequacy at almost 16% plus. Are we looking for any raising of capital this year?

A S Rajeev — Managing Director and Chief Executive Officer

So honorable Board at the AGM has already permitted up to INR5,000 crore umbrella permission is already given for raising capital, all the kind of equity, Tier 1, Tier 2 all these things. So as of now, at present, our position is comfortable and additional INR1,200 crores COVID provision also, we have not computed for the capital adequacy, but that also is eligible.

And the current year profit also comparatively in future also we are of the opinion, it will be good. So — and above 15% capital contingencies that Board direction. But however, looking at the situation for the current year, if it is requirement, we may be able to raise some Tier 2 capital or Tier 1 capital during Q3 or Q4.

So equity also if the situation is good means maybe INR500 crores to INR600 crores, we may be able to raise that because Tier 1 common equity, if it is coming down because our growth rate is coming 20% to 25% advances is growing. So we may be required — for the current year, we may not require any capital requirement. But in future ’23-’24, ’24-’25, we may require some common equity even if good profitability comes also.

Dixit Doshi — Whitestone Financial Advisors Pvt Ltd. — Analyst

Okay. My last question is, so as you have pointed out that we may not require the capital in the near future, pure equity capital and thing. So our President of India holding is almost 91% in our company. And as per SEBI, the promoter holding requires to be below 75%. So do we have any exemption? Or if you can broadly or maybe government looking for OFS at some point of time. Any idea you can give?

A S Rajeev — Managing Director and Chief Executive Officer

Yes, yes. That is already exempted. I think up to ’23 October is given the permission and as and when it is required, they will do usually. We are also aware that every year, one year, one year extension, they keep on giving that. So we expect that, that will continue.

Dixit Doshi — Whitestone Financial Advisors Pvt Ltd. — Analyst

Okay. Okay. That’s it from my side. Thanks.

Operator

Thank you. [Operator Instructions] The next question is from the line of Ashok Ajmera from Ajcon Global Services Limited. Please go ahead.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Thank you for giving this opportunity again. Sir, I’ve got some — couple of again some questions. Sir, this NARCL, now the things are getting now clearer. And I think we had worked down those numbers about a year back that how much — nine months back that how much will go. Can you give a fresh, I mean, color on the — what is our status in NARCL accounts, like total, how many accounts are identified and how many are going in the first branch out of that INR50,000 crores of this thing. Can somebody give a little more color on the NARCL, sir?

A S Rajeev — Managing Director and Chief Executive Officer

Yes, our GM recovery will respond to that.

Unidentified Speaker —

Yes. In the first list of INR50,000 crore, we have three accounts shortlisted around INR660 crores. So that will be going in the first list.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

And what is the overall that the — initially, the earlier assessment was made for the first tranche of INR2 lakh crores, which was given the figure. In that, what is our status or we are still standing on the same old number only?

Unidentified Speaker —

See that discussions are going on. They have finalized only the first list of INR50,000 crores. So as and when this is over, then the next tranche will come. Then again, the discussion will take place.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Okay. So even if suppose it is say 20%, INR120 crores and out of that 15% cash. So we will get about INR20 crores — INR18 crores, INR20 crores, something when just INR660 crores materializes, isn’t it? Which will come directly in the income.

Unidentified Speaker —

Cash will be that another SR component that is government guaranteed SR. So that is as good as cash for me.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Sir, still there is a doubt whether you will take it as an income or a discounted income or anyway, I mean, that’s a different issue that we will — of course this is for the entire banking industry. And sir, this — just one small observation. I observed in the expenses when we are looking at the expenses your Slide 8, that you made a provision of audit fees for INR8 crore only in one quarter, this quarter. So out of the total INR17 crore of audit fees last year in the entire year, INR8 crore is made only in June ’22 in one quarter only now. So is that — is it going to be like almost a 50% increase in the overall audit expenses? Or it is one-off, some provision has been made?

A S Rajeev — Managing Director and Chief Executive Officer

It is some kind of provision only, sometimes you see some of the effects from figures, they will give some provision. So when the profit is good, then some provisions may happen in some of the sets.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Because INR8 crores looks to be in one quarter little higher number. Generally, it used to be INR4 crores, INR5 crores per quarter. And overall, in a year is around INR17 crores [Phonetic] last year it was.

A S Rajeev — Managing Director and Chief Executive Officer

So that some portion may take care of the current quarter also audit fee.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

And sir, we take provisioning of INR637 crores, INR280 crores, you said is the 100% from — on the sugar account, that entire INR280 crores has come in this quarter only or there were already the provisions made earlier on that?

A S Rajeev — Managing Director and Chief Executive Officer

No, that was a restructured account some INR40 crore was earlier restructured was there in standard that is reversed. So net was around INR240 crores additional outcome.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

In this INR637 crores?

A S Rajeev — Managing Director and Chief Executive Officer

Yes, yes.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

And sir, this additional buffer provision, which we are getting, you said of INR1,000 crores, what are your plans to — in the current now next three quarters? Are we going to — I mean, do you see that it will be required looking at the current situation or you will start taking the benefit of that by reducing the provisions in the future quarter?

A S Rajeev — Managing Director and Chief Executive Officer

That we have around INR3,000 — INR3,900 crores restructured book is there for that purpose only, we have kept it that. You may be knowing that 10% provision is already made in the books by restructured accounts as per regulatory. So last two years, there was some confusion in the market that whether this [Technical Issues]

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Your voice is dropped, sir.

Operator

Sorry, sir. Ladies and gentlemen, we have lost the line of management. Give me a moment, I’ll connect them back. Ladies and gentlemen, we have the management connected now.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Yes, the voice was dropped. I think the line was dropped.

A S Rajeev — Managing Director and Chief Executive Officer

So this COVID provision for two years where we have given because of the restructure — we have restructured around INR3,900 crores totally restructured portfolio. So it is a cushion provided for this restructured portfolio for this INR1,200 crores. As and when this restructuring portfolio is coming down, then we can be able to utilize that provision that. It’s a conscious decision taken by the management.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Okay, sir. Sir, on this entire NCLT at least one, two, okay, almost 100%. But overall, the NCLT referred accounts and the admitted accounts, how much provisioning — provision are we having with the other banks and consortium also altogether NCLT? What is the —

Unidentified Speaker —

100% provision has already been done in NCLT cases.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

All NCLT cases?

Unidentified Speaker —

Yes.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

That’s great. And my last question, sir, is that on the CD ratio that we have improved our CD ratio to 71.75%, I think, from 66.85% in the last quarter. So how far you can go? I mean, as per your plan, if your credit growth remains the same. And —

A S Rajeev — Managing Director and Chief Executive Officer

At March end, we can go up to 75%, and our aim is to reach a minimum 80%.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Very good, very good. That’s great, sir. Thank you very much, sir, and all the very best. Thank you. Thank you, sir.

A S Rajeev — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Sreesankar from InCred. Please go ahead.

Sreesankar — InCred — Analyst

Sir, one update on — you mentioned about INR4,100 crores of SMA 1 and 2 accounts of less than INR1 crore. What is your expectations of slippages? How much is the slippage that you expect from [Indecipherable]

Unidentified Speaker —

SMA 1 and 2, below INR1 crore figure is actually not available at present with us. So I think it was discontinued in the last line. So we’ll come back.

A S Rajeev — Managing Director and Chief Executive Officer

SMA 2 figure as of today, it is around totally INR870 crores is there, including all figures as of now, as this is today’s figure what I’m talking. INR872 crores is our SMA 2 and SMA 1 is around INR1,700 crores is there as of now. So this figure, INR872 crores is actually even — it is not even coming even below 1% is coming actually. So what we wanted to tell that this is a comfortable position for the bank as far as the SMA is concerned.

Sreesankar — InCred — Analyst

Sir, point taken. My question is, I’m not disputing the fact that it is not comfortable for you, it’s comfortable. It’s quite enviable to be in that position. But what I’m asking you is, from your estimate, what is the expected slippages? And what is the credit cost? And I think somebody asked the question earlier, I missed it that you expect overall from this — what you call overdue account. That’s my question.

A S Rajeev — Managing Director and Chief Executive Officer

Yes. Expected slippages, INR500 crores to INR600 crores per quarter is our expected slippages.

Sreesankar — InCred — Analyst

Okay. INR500 crores to INR600 crores per quarter. Thanks. Really appreciate that. And credit cost?

A S Rajeev — Managing Director and Chief Executive Officer

Credit cost, it will be around 1.2% to 1.3% annualized.

Sreesankar — InCred — Analyst

Annualized 1.2% to 1.3%. Okay. Thank you very much. And final — one final request, sir. When you put the results also, it will be great if we can put that presentation also in the exchanges that will be great, not only in your website, please on the BSE, NSE also.

A S Rajeev — Managing Director and Chief Executive Officer

Okay, sure. We will do that. Yes.

Operator

Thank you. As there are no further questions, I would now like to hand the conference over to Shri A S Rajeev for closing comments.

A S Rajeev — Managing Director and Chief Executive Officer

Our executive director, Shri Vijayakumar ji, will be the closing —

A.B. Vijayakumar — Executive Director

Thank you, MD and CEO Mr. Rajeev sir and the ED, Asheesh Pandey Ji and my general managers. Thank you very much all the analysts for sparing your valuable time, quarter-after-quarter, we used to have precise whenever we come for the QPR and make rising of funds, you all always support it.

On behalf of Bank of Maharashtra, I would like to say a few words. If you kind of look at the last two years, over last eight quarters or nine quarters, consistently on top line growth as well as all the ratios in terms of quality, ratio quality of assets and in efficiency, profitability and every parameter, Bank of Maharashtra has been posting a healthy ratios, which has come from the support of definitely from the customers and workforce, and of course, the media and analysts.

On behalf of the Bank of Maharashtra, I convey my sincere thanks to each one of you, some of the questions you posed, when the ratios and the business growth is very fine, how the market is not taking into account and your share ratios. And the analysts have to come out with the positive report on us. So that I think that will also help us into the market share. This is what I tell to you, not only the overall growth in everywhere, and as a public sector bank, we are very much conscious about the national building and the [Indecipherable].

There was no question about anything about our priority sector lending this analyst, but in those areas also, we have done extremely well, and we have been conscious about the government of India schemes, which this current quarter also — current year also we are focusing it, perhaps very few banks in the public sector, continuously getting award from all the state government and central government. Recently, we’ve got a coveted award from the none other than the Honorable Prime Minister for MSME growth for the last year and SSG growth in the — from the Maharashtra state government through the NABARD.

So on behalf of Bank of Maharashtra once again, convey my sincere thanks to all the analysts for participating and your support. Thank you very much.

Operator

[Operator Closing Remarks]