Central Bank of India (CENTRALBK) Q1 FY24 Earnings Concall Transcript

Central Bank of India (NSE: CENTRALBK) Q1 FY24 Earnings Concall dated Jul. 17, 2023

Corporate Participants:

M.V. Rao — Chief Executive Officer

Mukul Dandige — Chief Financial Officer

Raju Barnawal —

Analysts:

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Sushil Choksey — Indus Equity Advisors — Analyst

Akash Jain — Ajcon Global Services Limited — Analyst

Narendra Khuthia — Robocapital — Analyst

Presentation:

Operator

Ladies and gentlemen. Good day and welcome to the Central Bank of India Q1, FY ’24 Earnings Conference Call hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Raju Barnawal. Thank you and over to you sir.

Raju Barnawal —

Thank you, Aman, Good afternoon, everyone. On behalf of Antique Stock Broking Limited, I welcome you all to the Central Bank of India Q1 FY ’24 earnings conference call, and I thank the management for providing this opportunity to host the call. From the senior management side, today, we have with us Mr. M.V. Rao, MD and CEO; Mr. Vivek Wahi, Executive Director; Mr. M. V. Murali Krishna, Executive Director and Mr. Mukul Dandige, Chief Financial Officer.

Now without further delay, I hand over the call to MD sir for his opening remarks, post which we will have a Q&A session. Thank you and over to you, sir.

M.V. Rao — Chief Executive Officer

Yes, thank you, and good afternoon to all the participants, and let me thank wholeheartedly for your time investing in our analysis part. And this I will give the brief highlights of our performance for this June quarter, and detailed financial presentation will be done by our CFO.

And coming to the highlights, let me share the happy news that this is ninth straight quarter where banks have reported the net profit, and this net profit has jumped by 77.87%, now it stands at INR418 crore compared with June ’22, amount of INR235 crores. And coming to the gross NPA, which was 14.90%, now it has come down to 4.95%. So net NPA stands at 1.75%, and then provision coverage ratio now stands at 92.23%, and operating profit grew by 50.53%, now stands at INR1,838 crores. Net Interest Income, NII increased by 48%, now at INR3,176 crores. NIM improved to 3.62%, registering a growth of 74 bps, and return on assets — there is an improvement of 16 basis-points and now stands at 0.43%. And return on equity is 1.63 [Indecipherable] 0.98% of financial year ’22, and CAR, that is Capital Adequacy Ratio has improved to 14.24%, of which tier one is 12.13%.

Coming to the other ratios like the yield on advances, now it stands at 8.29% which is 195 basis-points higher than the previous June ’22, which was at 6.34%, and the yield on investment is at 6.50% which is 37 basis-points more than the previous June ’22, after funds slightly increased because of the increase in the rate of interest in all the deposits, now it stands at 4.42%. Cost of Deposit is okay.

Coming to the NIM, now it stands at 3.62%, which is 74 basis-points more than the June ’22, which was at 2.88%. And coming to the credit cost, now it stands at 0.45, and in the previous June ’22, it was 1.78%. Coming to the ROA, already I told you, it is at 0.43%. These are all the financial highlights. And regarding the detail, anyhow, we have uploaded our presentation in the website, probably you must have gone through. But anyhow, our CFO will explain with little bit details. Thank you.

Mukul Dandige — Chief Financial Officer

Thank you, sir. So, the total interest income has improved by 30.75% on a Y-o-Y basis, and it stands at INR7,225 crores. The total interest expenses have gone up by 19.65% at INR4,049 crores, and the net interest income, as MD sir said, it has registered an increase of 48.27%, and it stands at INR3,176 crores now. The operating profit, which is a significant part has improved by 50.53%, and stands at INR1,838 crores, and the net profit improved by INR77.87 crores, and it stands at INR418 crores as compared to INR235 crores for this last quarter of the ’22 year. The fee-based income has remained more or less the same at INR401 crores, compared to INR406 crores for the previous quarter. The major part of fee-based income is our — I mean, service charges, which is at INR276 crores, with treasury income, which is at INR282 crores.

Then the expense part, if we come to interest, expenses have moved to INR4,049 crores, registering an increase of 19.65%, and the interest paid on deposits, which is the major component, has registered an increase of 20.07% and it is at INR3,930 crores. The operating expenses have increased by 31.11% at INR2,297 crores. Major portion of that is the staff cost which is now at INR1,490 crores, registering an increase of 31.98%.

As far as the provisions and contingencies is concerned, the provision made for NPAs is INR244 crores, which is lower by 70.39% on a Y-o-Y basis. The standard asset provision has increased to INR632 crores from write-back of INR38 crores. The tax outgo has increased to INR607 crores compared to INR73 crores during the same period last financial year. So, the total provisions are at INR1,420 crores.

The asset quality, as I mentioned that the gross NPA has moved from 14.90% to 4.95%, and the net NPA has moved from 3.93% to 1.75%. In absolute terms also, the net NPA amount has come down from INR6,785 crores to INR3,718 crores.

If we see the sector-wise NPA, there also there is a substantial improvement during this quarter, and the net NPA — total net NPA is 1.75% with retail at 0.74%, agriculture and allied at 4.58%, MSME at 3.13% and the corporate and others at 0.38%.

The capital adequacy ratio is at 14.42% compared to 13.33% in June ’22, wherein the CET has improved from 11.41% to 12.13% now. And similarly, the leverage ratio has improved from 4.32% to 4.94%, this is after reckoning the net present value of the recapitalization bonds which the Government of India had issued.

Thereafter, if this performance if we see — this special mentioned accounts, if we see, the above five crores book, if we see the — outstanding was at INR1,200 crores in June ’22, that has gone up to INR2,750 crores in June ’23, because of one major account under Corporate category where it has come under stress.

Thereafter, if we see the business performance, our total business has improved by 8.55% and stands at INR5,83,261 crores. The deposits have shown an improvement of 6.05% and stand at INR3,63,398 crores. CASA grew at 3.17% and has crossed INR1,80,000 crore mark. And the total advances growth was 12.95%, and the total advances standard at INR2,19,863 crores. RAM, which constitutes almost 66% of our total advances has grown by 13.15% and it stands at INR1,44,477 crores.

Deposits — within deposits, the total constitution is — current has slightly degrown by 2.76%. Savings has grown by 3.81% and the core term deposits have grown by 9.07%.

The retail, which is one of the focus areas of the bank has grown at 17.11%. MSME has grown at 15.46%, and agriculture has grown at 5.51%. So that comprises the — that constitutes the total growth in advances at 12.95%. The credit risk-weighted assets also have remained more or less the same, and we continue to be under 65% of credit risk-weighted assets to total gross advances ratio.

The bank has got a very diversified loan book with, and risks spread across various sectors, housing loan, auto, personal loan and education loan comprising the total retail, I mean, book of INR63,641 crores [Phonetic]. Agriculture comprises INR40,812 crores, 19% of the book, MSME is INR40,024 crores, which is 18% of the book and corporate credit is INR75,386 crores, which is roughly about 34% of the total book.

The total composition of the retail book is — home loan constitutes almost 62% of our total retail portfolio, and the growth in home loan was 24.37%. Auto loan is roughly 5% of the total loan book, the growth was 2.65%. Education loan — we have done a lot of education loan for the elite institutions of IIT and IIMs, and the growth there was 8.04%.

The personal loan segment, because of a very low base, has shown us good improvement now at 26.7%, and it constitutes only 5.96% of the total retail advances.

Rated standard advances as the bank has got a policy of, I mean, because of the advantage in CASA that we are enjoying, so we have that luxury of getting good rated corporate accounts. So, we have continued that journey, and AAA, AA and A-rated advances have shown an increase in the total rated advances book. Out of INR78,094 crores worth of eligible accounts and rated accounts, INR66,423 crores comprises of BBB and above rated [Indecipherable]

The sanctions and disbursements under normal and also co-ending have shown a very good uptick, and our co-lending book, where we had the first-mover advantage, we still continue to hold onto that advantage, and the co-lending book has touched INR7,178.50 crores as of 30th June of 2023.

We have achieved all the mandated targets under the priority sector, and not only achieved, we have surpassed those targets.

As far as the other important ratios are concerned, the provision coverage ratio is at 92.23%. Our net interest margin as MD sir has told, it is at 3.62% for the current financial year — this current quarter.

So those were the other highlights of our performance. Now I can request for any of the questions, we are open for the questions.

Investment book, because it comprises almost INR1,43,500 crores of our book, so investment book has remained almost same, but it is very, very well spread out, and government securities are at INR1,06,125 crores, the debentures and bonds are at INR31,009 crores, and the others are at INR2,819 crores.

If we see, the yield on investment has shown an uptick at 6.50% and the yield on investment if we include the trading profit, it has crossed 6.81%, all these keeping the M duration under check at 1.93%, whereas the 10-year benchmark yield is at 7.11%.

Operator

Should we open the line for Q&A, sir?

Mukul Dandige — Chief Financial Officer

One second. I will also tell you about the distribution across HTM, AFS and HFT of the treasury book. So, under HTM, we have almost 74.05% of the total book, at INR1,04,712 crores. AFS is INR36,431 crores at 25.76%, and held for trading is only INR261 crores, this was June ’22, vis-a-vis we see now in June ’23, out of INR1,43,500 crores, the HTM book is INR1,06,097 crores, which is almost 74%. AFS book is 25.73% at INR36,924 crores and HFT is INR479 crores, which is 0.33% only. The modified duration, if you see during this financial — I mean, comparable period, now the modified duration stands at 1.93% and the modified duration only for the SLR portfolio is also at 1.62% only.

So that is all I have to say. Now we are open for any questions that analysis may be having. Thank you.

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 for giving me the opportunity. Before I start, let me congratulate Mr. Mukul Dandige for his name having been cleared to be appointed as the Executive Director. My complements to you sir, and complements to Mr. Rao and the entire team for very good set of numbers. If you compare these numbers with the corresponding figure regarding last, even one year also, the bank has really performed very well. Having said that, on this particular quarter, the June quarter, sir, I have got certain observations and some questions and some few clarifications. One is that our — we have done a major write-off in this quarter, in fact of a huge amount of almost about INR8,000 crore as against INR9,500 crores of the entire year last year. So, what the strategy? And I mean, what was the planning went behind it and what is the reason? Of course, it is a very good thing that we have come — our gross NPA has come below 5% for the first time after so many years.

Secondly, on-net advances, I am talking mainly on the quarter, sequential, had gone up to INR2,12,680 crore against INR2,02,980 crores, so about almost about INR10,000 crores or INR9,500 crore increase — increment in the net advances, where does this come from? I mean, is this a sector? And again, if you can give some color on that?

And third thing is around the SMA book for this quarter. I think the book has gone little bit deteriorated, if you compare with the last quarter, above INR5 crores, it has gone up to INR2,715 crores, and in fact SMA-2 has gone up INR180 crores against INR40 crores only. Similarly, below INR5 crore, it has gone to INR3,581 crore, against only INR267 crore. And if you check these, here also, the SMA-2, I’m talking about mainly, and even SMA-0, SMA-1 — SMA-1 of course has come down, but SMA-0, SMA-2 and overall. So, what do you read in it? I mean, are there more delinquencies? and what is the future, I mean, in the coming quarter? What are we going to see? Are we going to see some pressure on that?

And other one is on the income front. We have done well on the profit before tax at INR1,025 crores as compared to INR903 crore in the last quarter, but because of the higher tech provision of INR606 crore against INR332 crores, so this INR606 crore on a profit of — I mean, is there any other element other than the direct tax and whether the tax is payable or the DTIs, all those adjustments are taking care, so the net amount payable is maybe less or some things on the tax front, if you can get — highlight.

I have got a couple of more questions also on the investment book, but then I will come later once you please give the answer to this session. Thank you.

M.V. Rao — Chief Executive Officer

Mukul, give the clarity on the tax issues.

Mukul Dandige — Chief Financial Officer

Tax part, sir, I can clear. See, If you see, sir, the provisions majorly have gone up on standard assets, where I do not create any DTA. So, because of that, the tax outgo has been there. So that is why it appears that the effective tax rate is almost like 69%, so because on standard asset also, I have to create — I mean tax outgo will be there at 34.59 [Indecipherable] so it is INR3,642 crores, that provision is made on the standard asset. [Foreign Speech]

And, Ajmera sir, regarding this SMA accounts, your observation was very much in the right perspective. Just, I would like to give a clarification. This is the bank where we give the entire SMA book that gives [Indecipherable] above INR5 crores below INR5 crores put together, it is not just above INR5 crores we give. It is the entire SMA book we provide to all our investors because to maintain the transparency and to have a clear insight of the SMA [Speech Overlap].

Having said that, regarding the above INR5 crores, there is an increase in what you observed, is it just because of one big account of the aviation industry that is coming to the [Indecipherable]

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Go Air?

Mukul Dandige — Chief Financial Officer

I do not want to give the name, that what you are saying must be in the similar line, okay. Because of one account, that has gone up about INR5crores. We have enough buffer in that which we have given to stock exchanges when the items came up with the newspapers just the one and half, two months back.

And coming to the up to INR5 crores. There is an increase. In that increase also when we have analyzed, the majority is from the GECL book. Actually, when we have seen the GECL, total sanctions what we have in the GECL is around INR6,900 crores. And right now, outstanding is only INR2,932 crores, in which total SMA book in this GECL is INR1,257 crores. So, this is the actual SMA granularity spurt where that spurt is there in that up to INR5 crores bracket.

This is the SMA analysis, and to give that confidence to all my participants here, let me make it clear that our slippage ratio is 0.53%, and going forward also we have the full grip on the regularization of these accounts. Even if something extreme happens because GECL book is completely protected in terms of the coverage — guarantee coverage that is available, but this is not the point for complacency for the bank, but recovery efforts will continue, and our endeavor at this point of time is to ensure that these units start working and they continue to work. If something happens, it comes into NPAs that recovery measures will continue.

This is limited submission if something extra details are required, we are ready to provide. Thank you.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Sir, on that credit, the net advances increased by INR9,786 crores, that was my first question. What is the component of that, I mean, the segment?

Mukul Dandige — Chief Financial Officer

Ajmera sir, retail advances, if you see, retail, there is a growth of 17.11%. MSME, there is a growth of 15.46%, and agriculture, there is a growth of 5.51%, corporate has grown by 12.58%.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Sir, I am talking only for this quarter, sir. [Speech Overlap] INR2,12,698 crores advances versus INR2,02,984 crores [Indecipherable] where does it come from?

Mukul Dandige — Chief Financial Officer

See, net advances, basically [Foreign Speech], because of the technical write-off also, there will be [Indecipherable]. So, because the provision held earlier, earlier quarter was comparatively higher. So, the net advance was comparatively lower. Now, this time around, because of the technical write-off of INR7,804 crores, the net advances have increased.

M.V. Rao — Chief Executive Officer

You want the details of this [Speech Overlap]

Ashok Ajmera — Ajcon Global Services Limited — Analyst

No, no, no. What point I am deriving is that in this quarter, they advances then indicate, real advance, real credit is mute, maybe 0.5% or 0.6% isn’t it?

Mukul Dandige — Chief Financial Officer

No, it is reverse, sir. Actually, whatever the increase that you’re seeing from March to June, add the technical write-off also to that, the actual increase in advances will come to 16%, 16% to 17%.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

So, that’s what only I’m saying, sir, that if it is a real credit in this quarter, where does it come from?

Mukul Dandige — Chief Financial Officer

You want the retail, how much of this was sanctioned in this quarter? Yeah, I will give you the detail.

M.V. Rao — Chief Executive Officer

Because it’s net-to-net.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Yeah, we understand. The growth I can understand because of the technical write-off [Speech Overlap] Anyways sir, I will pass this question, we will — I will take it offline. Then my question is on, sir, another one is on co-lending. Co-lending, we have performed very well, and our book is now more than INR7,700 crore. Can you give some color on that sir? What kind of yield are we getting? What is the slippage or NPA situation there? Is there any particular problem in some of the accounts or some segments?

Mukul Dandige — Chief Financial Officer

Let me tell you sir, in co-lending, we have a total outstanding of INR7,178 crores. In this, SMA is around INR218 crores. And actual NPA what have slipped is INR2.79 crores, this all comes into decimals only. I cannot put it in percentage because out of INR7,178 crores, it is only a fraction that has gone into the NPA and the very small amount, less than 1% or 1.5% will be under total SMA.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

That is greatly commendable sir. What is…

Operator

Mr. Ajmera, sorry to interrupt you. May I request you to join the queue for any follow-ups, as we have several participants waiting for their turn. Thank you. The next question is from the line of Sushil Choksey from Indus Equity Advisors. Please go ahead.

Sushil Choksey — Indus Equity Advisors — Analyst

Sir, congratulation to Central Bank team for the very sustainable result and very growth-oriented outlook for the year on the guidance side. Sir, my first question, I’ll take it from Ajmera where he has left, you’ve done remarkably well where co-lending is concerned, on INR7,000 crores. Can you just break up what sectors? is it more on housing or MSME or what is it starting?

M.V. Rao — Chief Executive Officer

Maximum is in housing. And in that, it constitutes around INR4,600 crores, and followed by the MSME it is INR2,552 crores.

Sushil Choksey — Indus Equity Advisors — Analyst

Sir, seeing our book at INR39,000 crore on housing currently, and where our MCLR stands, do you foresee that our net advances on the annual basis in FY ’24, almost 25% of our advances or almost nearing 27% to 30% will be housing loans in the book?

M.V. Rao — Chief Executive Officer

Yeah, it should range in the similar way. See, one thing, so what we are doing here is consciously we are maintaining the balance of 65-35. I’m always I’m explaining this 65-35 part. Even in that 65, RAM segment, retail agriculture MSME almost it contributes 30%, another 30% remaining is 40%, so in that similar proportion, whatever the divestment we are making, we are consciously seeing that growth should be in such a way that this broader ratio should not get disturbed. In that way we are acting, and come to the nitty-gritties of exact housing, your observation will be right that we will be reaching a growth of 25% to 27% in housing.

Sushil Choksey — Indus Equity Advisors — Analyst

Sir, my next question is more on treasury outlook. Mr. Wahe last year had forecasted very well, and we were the first of the block among all the banks, whether it is private or public on forecasting. What’s the outlook of the bank and Mr. Wahe on the quarter and the year to come by on treasury?

.

M.V. Rao — Chief Executive Officer

See, treasury forecast more or less continues to hold what I expressed in the quarter of march. There could be miniscule rate hike possible in Indian context. In U.S. economy of course, we are eyeing at least one or two hikes, but almost Indian bond market, again, 725 continues to be a toppish level. Presently it is 710. So, from Q4 or now, of course, it is a dynamic situation. From Q4, we are seeing some reduction in the duration as well as we also — that is why we are building a little bit on our duration book also. So, this is our forecast and we are still holding on to that.

Sushil Choksey — Indus Equity Advisors — Analyst

Couple of questions I am combining. One is what is outstanding sanction limit? Secondly, what is the outlook on subsidiaries? I see great profit achieved in all the Gramin banks and some of the subsidiaries, and third is do you estimate our advances growth much higher than the system because based on our CASA matching advances, we have much higher and better potential on a sustainable CASA to garner at least retail advances higher than the system.

Mukul Dandige — Chief Financial Officer

Sir, as for as growth in advances, we will be very, very conscious that we will never put the accelerator on that lever very aggressive. Having said that, since our [Indecipherable] ratio is 60% and to achieve a reasonable bottom-line we should reach at 70%, but what our forecast we have given for the March ’24 will be, we will be reaching around 66% to 67%. So, in the similar way our activity will be there.

Sushil Choksey — Indus Equity Advisors — Analyst

But will it be led by retail or you will lead [Speech Overlap]

M.V. Rao — Chief Executive Officer

That’s what I am saying.

Sushil Choksey — Indus Equity Advisors — Analyst

You will maintain the ratio.

M.V. Rao — Chief Executive Officer

Bigger picture always remains the same on the credit book. So, whatever the percentage that is required, accordingly, we will tweak and we will accelerate our activities in that particular direction.

Sushil Choksey — Indus Equity Advisors — Analyst

Is the brand, Central Bank is attracting lot on RAM and specifically on retail and including co-lending. So that was the question pertaining. Sir, before too many questions come on the airline account, how much provision and assets we have as security. I understand that there is not going to be any liability on the bank, where this account on provisions are required. I mean, provision may be required but NPA is not likely to happen in absolute terms.

M.V. Rao — Chief Executive Officer

See, in absolute terms, almost we are holding 67% of the provision. So, we are not much worried on this account because we have already built up enough buffer for the extreme scenario.

Sushil Choksey — Indus Equity Advisors — Analyst

No, but is my understanding right that we hold sufficient assets where other than airline in terms of guarantee, personal guarantee and others to back the loan program which we have originated for the…

M.V. Rao — Chief Executive Officer

Yeah, yeah, I think in the entire industry, this is upon where we have good collateral.

Sushil Choksey — Indus Equity Advisors — Analyst

Sir, on the subsidiary, you didn’t answer the profitability as well.

M.V. Rao — Chief Executive Officer

Just a minute. Both are profit making. Both the RRVs are profit making. Well, what is that specifically you want on the RRVs?

Sushil Choksey — Indus Equity Advisors — Analyst

Is the profit sustainable because that can add to [Speech Overlap]

M.V. Rao — Chief Executive Officer

Because, see these two RRVs, already they have presented to us three-year roadmap for their turnaround, and already one year is over, and they’re on the same track, and wherever that is required, our bank is also providing hand-holding for them, so they are on track and they are showing the profit, and whatever the liabilities that were there regarding the pension liabilities as per the Supreme Court, that is also fully provided for. Now there is no amortization or anything in that book.

Sushil Choksey — Indus Equity Advisors — Analyst

So, our share of profit based on the numbers provided is sustainable for the year, that is what you assume based on the economy.

As you build-out the economy.

M.V. Rao — Chief Executive Officer

Yeah, yeah.

Sushil Choksey — Indus Equity Advisors — Analyst

Sir, my last question on the government holding. I think, we have reached a state that we maybe a taking a little positive flight much faster than the system. What is your outlook on the holding pattern sir?

M.V. Rao — Chief Executive Officer

That is. Let me not divulge the things which right now under discussion with the government. Let us wait for some more time.

Operator

Mr. Choksey, may I request you to join the queue for any follow-up, as we have several participants waiting for their turn.

The next question is from the line of from [Indecipherable] from Thinkwise Wealth Managers. Please go ahead.

Rusty, your line is unmuted. May I request you to please proceed with your question? Please unmute your line, Rusty. It seems there’s no response from the current participant. And hence, we will move to the next question that is from the line of Akash Jain from Ajcon Global Services Limited. Please go ahead.

Akash Jain — Ajcon Global Services Limited — Analyst

Congratulation, sir, on a good set of number. My question pertains on the outlook on credit cost. What is the outlook for credit cost by FY ’24, and what is our recovery target from written-off accounts?

M.V. Rao — Chief Executive Officer

As far as the credit costs for the FY ’24 is below 1. That is the guidance we have given, and we will continue to hold on to that.

Akash Jain — Ajcon Global Services Limited — Analyst

Okay, and with the cost-to-income ratio also going down, right now the ROE is at a subdued level, so what is our expectation in terms of improvement in ROE?

M.V. Rao — Chief Executive Officer

See, the ROE, last-time, last financial year, the ROE was at 6.42%, right. So, we expect that this time around, it should be in the range of 7% to 8% minimum.

Akash Jain — Ajcon Global Services Limited — Analyst

Okay, And your target for recovery from written-off accounts?

M.V. Rao — Chief Executive Officer

See, written-off accounts, let me tell you, major chunk of written-off, that is what I’m saying is that technical write-off, it is not the regular write-off. Regional write off, it will only be a miniscule part that comes, and whereas in the technical write-off, unless until there is some resolutions whether if accounts are taken by the NRPL [Phonetic] or some resolution happens in the MCLC, then we will have some kind of positive movement in the recovery. As far as March ’23, earlier, we had INR1,200 crores in this segment. Let us wait for the developments what is going to happen, because in the June quarter, we had only INR190 crores only till now. Unless until major chunk, major accounts are — resolution happens, we can’t expect anything in this TW [Indecipherable]

Akash Jain — Ajcon Global Services Limited — Analyst

Okay, thank you sir. That is all from my side.

Operator

[Operator Instructions] Next question is a follow-up question from the line of Ashok Ajmera from Ajcon Global Services. Please go ahead.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Yes, sir. A little more dwelling on that airline account only, GoAir account only. Sir, I believe that our total exposure including fund base, non-fund base altogether is around — in the range of around INR2,000 crores. Now, our provision are also you said is sufficiently provided by 60%, 65%. But what is my question is that, provisory is one thing, which is an accounting thing, but actually if something goes wrong, how much out of this INR2000 crore our bank will be because Bank of Baroda is also there. They also got substantial exposure, little lesser than us.

M.V. Rao — Chief Executive Officer

Let me give the figure, it is almost INR1,930 crores, that is the total amount exposure of which almost INR620 crores is guaranteed by the government under GECL. So our actual exposure comes to INR1,400 crores, and against which already we are holding around INR800 crores provision. And whatever the collaterals we have, we are sufficiently secured, and we are not seeing any type of haircut or loss even in the extreme situation. Having said that, let us be aware that this company is admitted under Section 10 of the IPC, not for the insolvency or bankruptcy purpose, it is to preserve and then to take-up the operations once again. So, in this direction, it got admitted and then necessary inspections that is also happening from the DGCA, and there is some positive movement in the arbitration, final arbitration at the Singapore arbitration also. So, in all possibility, we are optimistic as far as this particular company activities are concerned.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Okay sir, thanks a lot sir for giving a great insight. In fact, that gives lot of comfort, and you are always very transparent, and because this was one major account which suddenly came up like otherwise, even our profitability and bottom-line also would have been much better than — because of the provision, it has affected the basic target which we were making not you. Anyway, my second, which I couldn’t ask in the last time is on the overall treasury uplifts, little bit explanation has been given about the treasury book and the modified duration period. But just going forward, with the citing yielding is around 7.1 or 7.11 [Phonetic], and our modified duration is 1.93 or 1.75 in some [Indecipherable] we have are comfortable, AFS book and very small look for the sale. So, what is the future outlook on treasury now going forward, because our rates are almost stable here. In the U.S. still some pain is there. So, considering that [Speech Overlap]

M.V. Rao — Chief Executive Officer

Let me tell you sir, our philosophy for our treasury is very simple. When we have seen our credit book and investment book, the principal on which we are operating is, let us not have any losses from the treasury book. And we don’t expect the profits also. We expect only reasonable written for the amount what is being invested in my investment book. For that only, we took a very drastic decision in the previous year so that we could bring this modified duration almost from 6.5 to 1.9 now, and then, PV01 which was hovering around 17 to the existing price. So, this is the principle on which we operate. We do not want to get hit because of any circumstances in the money market or in the broader macro-economic circumstances. At the same time, we expect the reasonable retail our investment in the investment book on which we operate.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

No, that’s very good during especially these times. It’s a very good strategy which you are adopting and, even the treasury income is also quarter-on-quarter it’s becoming good only as against INR128 crores. Besides, treasury income worth INR282 crores [Phonetic] So definitely, and thanks for giving your perspective on that. And having said that, sir, I just wanted to know the overall restructured book including the GECL, and how much percentage as per our experience we feel or we think can they slip.

M.V. Rao — Chief Executive Officer

See, total restructured book what we have is INR6,400 crores, of which standard restructured book is INR4,400 crores. [Speech Overlap] COVID is INR4,447 crores. And in this, what will be the slippages as you are concerned, we do not have much bifurcated issues except we capture them under the SMA accounts only, because in this SMA, we have a restructured books accounts and also GECL stressed accounts also. So SMA slide will give you the right picture rather than the slides if you see of the restructured book or GECL book, because these are all the standalone slide, it is given just for the information for the analysts.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Is the SMA-0 about INR5 crores at INR1,773 crore versus INR253 crores, out of the INR1,773 crore, how much is that airline this quarter? It is around what INR500 crores, INR700 crores, INR1,000 crores? How much is SMA-0 because I believe this airline account is only in SMA-0 only.

M.V. Rao — Chief Executive Officer

It is INR1,300 — almost INR1,300 crores of airline out of INR1.773 crores.

173 yeah.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Do you think now it will slip to SMA-1 and then SMA-2?

M.V. Rao — Chief Executive Officer

Yeah, see in March quarter itself, we have cushioned foreseeing some type of stress in this.

Ashok Ajmera — Ajcon Global Services Limited — Analyst

Alright, thanks a lot, sir, for giving great insight into the bank operations and for the future guidance. I wish you all the very best, sir. Thank you.

M.V. Rao — Chief Executive Officer

Thank you very much.

Operator

Thank you. [Operator Instructions] The next question is from the line of Narendra from Robocapital. Please go ahead.

Narendra Khuthia — Robocapital — Analyst

Hello, congratulations on a good set of numbers. I just wanted to know if you could shed some light on the loan book growth for the year FY ’24 and also NIM targets that you might have for that.

M.V. Rao — Chief Executive Officer

For that credit guidance, what we have given is 14% for the ’23, ’24. And, definitely, we will be reaching, that you can take it as a floor level 14.

Narendra Khuthia — Robocapital — Analyst

Sure, there’s a chance to improve that too, right?

M.V. Rao — Chief Executive Officer

Yeah, there is a chance.

Narendra Khuthia — Robocapital — Analyst

And then the NIM?

M.V. Rao — Chief Executive Officer

NIM, already, previous year also, we have given the floor, we have when the three, and we will continue to hold on to the three, and over and above because of some of the things you know, one-off income also comes in between, but with the core operations, we always say we will be above three.

Unidentified Participant — — Analyst

Okay, Thank you so much sir. All the best.

M.V. Rao — Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of [Indecipherable] from Antique Stock Broking. Please go-ahead.

Unidentified Participant — — Analyst

Hello.

Operator

Yes, please go ahead.

Unidentified Participant — — Analyst

Sir, I wanted to ask you, the NIM decline for the quarter was highlighted in [Indecipherable] which was led by a sharp increase in the cost of deposits, right, and there was also hold on the [Indecipherable] as well. So what percentage of the deposit book on the [Technical Issues] and also what is your outlook on the NIM going forward.

M.V. Rao — Chief Executive Officer

See, as far as the NIM is concerned, because it is a cost of deposit, this is only — if you exclude the one-off item, there is a one basis-point difference on the March ’23 to June ’23. Why I’m saying March ’23 to June ’23 instead of taking June ’22 is that is a lag effect that what we had — you know — on the rate increase in the advances and the subsequent increase in the deposit rates. The deposit rate effect comes after a lag. So having said this, this point — one basis-point, that is the difference what we have in the NIM. But as far as our guidance growth, we always say that we will continue to be above the floor level up three that we are going to maintain. As far as the cost of deposits that the increase definitely in the market the way rates are being increased, though we do not have that much of necessity and also having a liquidity of almost INR35,000 crores, to be in the market and protect our cash, we have increased our deposits. That’s why growth is around 8%. So, I think in the next nine months, this is going to stabilize in the similar way, and we are going to protect our NIM the way guidance what we have given.

Unidentified Participant — — Analyst

Okay sir, thank you.

M.V. Rao — Chief Executive Officer

Thank you.

Operator

Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to the management for their closing comments. Thank you, and over to you.

M.V. Rao — Chief Executive Officer

Yeah, thank you for all the arrangements. What you people have did for this conference, and I thank you all the participants for their investing the time. And once again, I assure you that bank is on the sound footing. And then whatever the guidance we are giving that we are sticking to that, and we will continue to excel in the area. Thank you.

Operator

Thank you very much. [Operator Closing Remarks]