Central Bank of India (NSE: CENTRALBK) Q4 FY22 Earnings Concall dated May. 09, 2022
Corporate Participants:
Prabal Gandhi — Investor Relations, Antique Stock Broking Limited
Matam Venkata Rao — Managing Director and Chief Executive Officer
Mukul N. Dandige — Chief Financial Officer
Analysts:
Amit Mishra — Indus Equity Advisors — Analyst
Sohail Halai — Antique Stock Broking — Analyst
Vidhi Shah — Antique Limited — Analyst
Ashok Ajmera — Ajcon Global Services Limited — Analyst
Mahrukh Adajania — Edelweiss — Analyst
Sushil Choksey — Indus Equity — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Central Bank of India Q4 FY ’22 Earnings Conference Call hosted by Antique Stock Broking Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Prabal Gandhi from Antique Stock Broking Limited. Thank you, and over to you, sir.
Prabal Gandhi — Investor Relations, Antique Stock Broking Limited
Thank you. Good afternoon, everyone. Thank you for joining in. On behalf of Antique Stock Broking, I welcome you all to Central Bank of India’s fourth quarter earnings call. From the management side, we have Shri M.V. Rao, MD and CEO; Shri Alok Srivastava, Executive Director; Shri Vivek Wahi, Executive Director; Shri Rajeev Puri, Executive Director; Shri Mukul Dandige, CFO and other senior members on the team.
Without further ado, I’ll hand over the call to M.V. sir, for his opening remarks, post which we can open the floor for question and answers. Thank you, and over to you, sir.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah, thank you. Good afternoon and once again, thank you for sparing, rather, investing your time on our presentation and taking part in interaction. I’m confident your investment will yield a good dividend. You must have gone through our presentation, which is already uploaded and I will be presenting key highlights and then I will rush through the presentation.
Before that, let me share whatever the results and whatever the presentations we’re making just around the outcomes of the measures what we have taken for the past year. And we have taken various steps in strengthening the system, cleansing our credit book, protecting the investment book, improving the underwriting standards and diversifying into the new lines of business acquisition, re-skilling and upskilling of our manpower. All these measures, not only made us to record a net profit after a drought of six years. See, earlier, we recorded first loss in financial year 2015-’16. Now in 2021-’22, now we are recording a net profit, that too INR1,045 crores.
So all these measures has helped us and also, more importantly, the sustainability is ensured now. And going forward, I’m confident this bank is going to deliver the numbers on sustainable and consistent basis.
Coming to the key highlights. Total business has increased to INR5.32 lakh crores from INR5.06 lakh crores, registering a growth of 5.03% on-Y-o-Y basis. And CASA, it is at INR1.72 lakh crores, which is 50.58% of my total deposits, which is our most USP and strong pillar and which is giving the pricing power to our bank that has enabled to increase our exposure to assets. And total advances increased to INR1.89 lakh crores from earlier INR1.76 lakh crores that is registering a growth of 7.23%. And coming to the net NPA, which was 5.77% in March ’21, now it has come down to 3.97%. There is a reduction of 180 bps in our net NPA, 3.97% which is the lowest for this bank recorded till now.
And operating profit, it has increased 25.40%. Now, it stands at INR5,742 crores against INR4,579 crores on year-on-year basis. Net profit, I already told you, that is INR1,045 crores. In the previous year, we have recorded a loss of INR888 crores.
Coming to the efficiency part on the NII. There is an increase of 15.07% from INR8,245 crores to INR9,487 crores. And cost to income ratio, there is a reduction from 59.70% to 53.90%. Slippage ratio, which was 3.20% in ’21-’22 — which was 4.40% in ’20-’21, now it has come down to 3.20% ’21-’22. And credit cost, which was 2.95% in ’20-’21, now it has come down to 1.41%.
And the CRAR, now it stands at 15.75%, but in between, there was a RBI direction to reckon the recapitalization bonds on NPV basis. With that calculation, our CRAR stands at 13.84%, which is quite comfortable for our bank, where we have the lendable resources, almost INR31,500 crores. Provision coverage ratio, now it has improved from 82.54% to 86.69%.
This is the key highlights. Just I will rush through the presentation because you must have gone through our slides in our uploaded version, where, just I would like to highlight CD ratio, which was 53.79 in March ’21. Now it has moved up to 55.63. And in the deposit mix, 49.24% was CASA in the earlier year. Now it stands at 50.58% and there was a conscious decision on our side not to move the deposits because of the deployment issues. So now we have coming out of whatever the restrictions that we may have, that we will have a larger field for the exposures.
And coming to the credit, the way we have guided earlier, our RAM is at 65.89% and remaining is our corporate book. Earlier also we have guided all of you to that market Saying that 65% to 70% will be my RAM and the 30% to 35% will be the corporate. Now we have stabilized at 65%-35% and going forward, it is not only the RAM will be the focus, it is the entire credit book in a balanced credit growth in all the segments, including corporate — RAM and corporate and we would like to maintain the balance of 65%-35% here.
And we have a very diversified loan book catering to all segments and which is also very much required for further risk diversification. And as far as the sanction and disbursements, in this year, because of certain measures, what we have taken, which has given a lot of confidence to the field functionaries in taking the credit decisions. So with that, disbursal percentage has gone up, sanctions percentage has also gone up.
And one more line, what we have explored in this previous financial year is the co-lending and we feel we are having the highest portfolio among the public sector banks in the co-lending portfolio. Now outstanding stands at INR1,500 crores, almost 13,272 accounts we have catered through this co-lending model. And as far as the mandated targets, whatever the norms that are there in respect of agriculture, total priority, weaker section, and small and marginal farmers, that we have not only met, we have exceeded. And in this priority sector, almost INR15,528 crores we have sold PSLCs in the market. Almost INR208 crores that we have booked from this portfolio.
Regarding the standard advances, this investment grade, this rating 78.15% earlier we used to have, now we stand at 83.65%. Most notable feature is there is a good increase in our exposure in the AAA accounts where earlier we used to have only INR6,546 crores, this time we have INR14,916 crores in AAA accounts.
And regarding the SMA, I’m very happy to share with you, we have given the entire spectrum of the SMA accounts, even below INR5 crores also we have given. So total, it was 9.85% that was there in March ’21, it has come down to 8.24% in December ’21. In March, it is 7.87%. And if you see the SMA 2, even in the March ’22, we have only 0.61%, that is INR1,158 crores in SMA 2 in March ’22.
And coming to the COVID support and we have given whatever the release that are required to be given as per the RBI guidelines and government guidelines. Regarding the restructured book, let me share with you, this is one of the most crucial book which you would like to have and to have the insights in this. Total restructured book, what we have is INR8,794 crores, of which INR2,245 crores is the standard restructured book and COVID resolution framework restructured book is INR6,549 crores. So it is not too high, and it is very much sustainable portfolio. What we have going forward the way, once you see the slippages, the percentage of slippage in the restructured book is almost — I can say, it’s very less when compared to the slippages from the actual credit book. So that means that restructured facilities, the COVID release, whatever has to be given, it is given in the genuine cases where that units are now performing well and whatever the weaknesses are, some deficiencies that were there, those accounts are already taken care in the March ’21 and they have slipped into NPA at that time itself.
Coming to the NPA classification. And in this total net NPA, now it stands as 3.97%. We have only INR6,675 crores as net NPA. And you are all aware, the gross NPA which is around 14%, unless until this NARCL comes into force and some resolutions — big resolutions happens at the NBFC level, this gross NPA may not come down. However, our PCA is almost 86% now. So we are not worried on that front. Now we are more focusing on the net NPA which is 3.97% which is a very good figure and also the efforts what we did towards the recovery and the war room, which have constituted at the head office for the past one year has given the good results in the recovery.
And coming to the NPA movement, opening balance was INR29,277 crores where slippages has happened to INR4,473 crores and upgradation and recovery, this is INR4,741 almost neck to neck and we have closed with INR28,156 crores, which is almost INR1,000 crores less than the opening balance of the gross NPAs.
And provision coverage ratio, that’s what I was sharing with you, it was 86.69%. Coming to the slippage ratio, which was 4.40% in March ’21, now it has come down to 3.20%. Regarding the NIM, now it stands at 3.21%. Regarding the capital ratios, this was at 15.75% we have right now and the leverage ratio of 4.98%. And in that CRAR, if we have taken the NPV of the recapitalization bonds issued by the GOI, it stands at 13.84%.
And coming to the investment portfolio, which was INR1,10,414 crores [Phonetic] in March ’21 now — and the SLR, now it stands at INR1,05,841 crores. There is a reduction because of the credit off-take has increased and also certain securities we have sold and also certain redemptions also took place in between.
And one notable feature. I would like to share with you, which is after the March, the securities, what we have shifted, that shifting positions was squared off by 8 April itself. So whatever the spikes that you have observed afterwards have not affected and we are in the positive territory and we are maintaining the same modified duration and P.V. 01 even in the new portfolio in this month of April. So further, we will be giving you further insights about the modified duration in our AFS book going forward and digital transactions have picked up.
And as far as PCA, last but not the least and most important, and being only one in the industry, now I would like to share with you all the parameters, which are required to be met that we are meeting all the benchmark for the past all the quarters in this year and we have recorded good profit in the March and we will be submitting our audited figures to the RBI to consider our request of moving out of the PCA. This is from my side.
And only the guidance which — what we would like to give to the market. Deposit growth, we’d like to be around 10% to 12% and advances growth, we would like to be between 12% to 14%, and business growth almost 10%. So RAM credit portfolio, we will be maintaining the same of 65%-35% and the NIM will be around 3%. CASA, we’d like to maintain around 50% and the gross NPA, once this NARCL comes into play, definitely we will be less than 10%. And net NPA, we’d like to keep around 3% to 3.25% as per the conditions that emerges, but our confidence level will be between 3% to 3.25%. And the PCR, definitely we will be in between 88% to 90%. Slippage ratio, in between 2.25% to 2.50%, it will be range bound. And the credit cost annualized will be around 1.50% to 1.6% [Phonetic] and return on assets will be 0.50% to 0.60%, and cost to income ratio, definitely, we will be pushing below 50%.
And with this, again, just as a conclusion, bank has turned the corner and registered a decent profit and gross NPA, net NPA substantially, it has come down. Provision coverage ratio has improved to 86.69%, and we are complying with all the PCA parameters and our presence across the spectrum across the GDP sectors and across the geography is uniform and we are looking forward for the better growth and consistent performance in this financial year also. Thank you. Thank you very much.
Questions and Answers:
Operator
[Operator Instructions] The first question is from the line of Amit Mishra from Indus Equity. Please go ahead.
Amit Mishra — Indus Equity Advisors — Analyst
Good afternoon, sir. Thanks for the opportunity.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah, good afternoon.
Amit Mishra — Indus Equity Advisors — Analyst
Yeah, thank you sir. Sir, there was a news article few days back in the closure of 600 branches. So any comment on that? Are we trying to reduce the cost by closing branches something like…
Operator
Excuse me, sir. Hello? Hello? Participant dialed-in with the PIN 57599, can you give me your name and company name? Hello?
Matam Venkata Rao — Managing Director and Chief Executive Officer
Here in the first two months, definitely we gauged into the viability and also contribution made by the branches across. So there was a communication from the central office to the field saying that these are all the branches which are not performing as per the benchmarks what we have set in, kindly review it and come back to us, what is that to be required to be done. And decision yet to be taken and more so background for this is if any small brick-and-mortar branch having a lot of the expenses is not contributing, as per the RBI, we can deploy a banking correspondent, which is also taken as a banking outlet for the competition. So there is nothing that it is a big one, it is a routine exercise what we carry out on a yearly basis.
Amit Mishra — Indus Equity Advisors — Analyst
Okay, sir. Sir, next question is, you just spoke about co-lending, so with how many partners are we doing co-lending and how is the asset quality of the book that you talked about INR1,500 crores of book?
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah. See, right now, we have seven partners with us and our books stands is INR1,500.525 [Phonetic] crores. So that is the book and till now, there is no irregularity, no SMA accounts that has come in this portfolio.
Amit Mishra — Indus Equity Advisors — Analyst
Okay, sir. My last question, we have a relatively large investment book as a proportion of total assets. So how do we plan to optimize this book since we are targeting a growth of 12% to 14% in advances? So can we see some change in this?
Matam Venkata Rao — Managing Director and Chief Executive Officer
No, that’s what I explained in my submission. Already we have taken care our investment book and then the possible hit normally people think once the way market has moved right now. For that I have given you how we have acted in the first eight days itself, whatever the shifting that has happened from HTM to AFS, we have 80% of the securities we have exhausted. And then we have booked decent numbers, which not only squared off my shifting loss and also has given the markup in that. That is one. Number two is, I think this is one of the very few banks which have gone from the hedging of the AFS portfolio and where, with the increase of the yield on the other side as contributing to the appreciation in my [Indecipherable] instruments. So going forward, as far as my investment book is concerned, this is well-protected and the P.V. 01, it is right now is — how much under SLR?
Mukul N. Dandige — Chief Financial Officer
3.33.
Matam Venkata Rao — Managing Director and Chief Executive Officer
3.33. So it is very much in our — and the duration is 1.05. So with this, you can evaluate the efficiency of the treasury what we are operating.
Amit Mishra — Indus Equity Advisors — Analyst
Okay, sir. Thank you, thank you, sir.
Operator
Thank you. [Operator Instructions] The next question is from the line of Sohail Halai from Antique Stock Broking. Please go ahead.
Sohail Halai — Antique Stock Broking — Analyst
Yeah, good afternoon, sir. And congratulations on a good set of numbers and thank you for the opportunity for us to host this call. Sir, I have a few questions if you may allow.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah, please go on.
Sohail Halai — Antique Stock Broking — Analyst
So first in terms of your growth aspiration and your growth delivered so far, so if I look at in terms of your growth construct, then probably in terms of most of the segments, we are growing in the range of 5% to 6% on a year-on-year basis excluding corporate, which is a tad higher at around 10%. So when you are talking about a 12% to 14% kind of a growth for next financial year, what would it be driven by?
Matam Venkata Rao — Managing Director and Chief Executive Officer
Okay. Next, any other question? As far as the growth part is concerned, yes you are right, 5% to 6%, that was what the growth we have recorded in the previous financial years. And I also shared with you the measures what we have taken for improving the business at the field level. And the way the balancing that has to happen in the credit book already we have achieved, that 65%-35%. And as far as the corporate is concerned, I’m sure that whatever the repayment that has to happen in the month of June, September, December and next March, it is very much visible and also we have already zeroed in on what type of assets with what risk weight we have to acquire. This is on the corporate side, so to balance that 35%. Regarding the 65%, retail, agriculture and MSME, this is also very much worked out on a granular basis and then we have very much confident whatever the numbers we have given to achieve the growth of 10% to 12%, and the 12% to 14% that it is in our radar. Whatever we are giving, it is only the floor level figures we are sharing with you.
Sohail Halai — Antique Stock Broking — Analyst
Okay. Okay. And sir, correct me if I’m wrong, our loan to deposit ratio is low right now. So in terms of even if RBI has rising repo rate, would we be in a hurry to raise the deposit rate or how should we look at basically the liquidity in your balance sheet? These are the deposit rates that you offer over a period of next, say, six to 12 months?
Matam Venkata Rao — Managing Director and Chief Executive Officer
See, as far as liquidity part is concerned, I am comfortable because my CD ratio is only 55.3%. We have — and if you see my investment book, all the liquidity is moving on to the deployment side. So as far as liquidity for funding purpose on the credit book side, I’m not worried. As far as the rate of interest is concerned, because of the increase in the repo and all those CRR increase, we have already calculated — we have taken certain decisions just day before yesterday as far as this external benchmark related and RLR are concerned that we have passed down those increase to the asset side customers. And coming to the liability side, customers who are very much aware that there is a room to increase the rate of interest, but just, we are in the wait-and-watch mode. Maybe in the next ALCO meeting, we will be taking the decision on that.
Sohail Halai — Antique Stock Broking — Analyst
So probably, can it not be that you would delay the raise in deposit rate because you’re already sitting at excess liquidity and probably the rate of deposit growth is not that high in the bank, so in the interim phase, till the time you reach a reasonable loan to deposit ratio, you can keep your rates lower, right? So just wanted to understand that dynamic, sir, in terms of the compulsion of raising rates and liquidity.
Matam Venkata Rao — Managing Director and Chief Executive Officer
You’re right in your conjecture. You’re very bang on that. Leave whatever the time, what we are taking is only evaluating how things will pan out. Because, see, I am going to protect my stuff at any cost where that 50% of CASA has to be there. And even if you see in the previous financial year, the term deposit growth we have discouraged it as disincentivized in many ways, that’s why my growth is only 2% to 3% in term deposits. But my growth on the [Technical Issues] is still robust just because my presence in the rural and semi-urban is very strong and they are contributing to the CASA. So going forward, definitely, we will be waiting how things will come up. And at the same time, we are not going to wait for a long period till my credit book picks up. In between, we will take a call so that there should not be any lag or our own customers, our depositors should not feel that they are getting less than what they are getting from — in other banks. That also we will balance.
Sohail Halai — Antique Stock Broking — Analyst
Sure. Sir, final two questions from my side. Probably you are doing a good job in terms of asset quality and your NPA guidance of 3% — around 3% also is encouraging. But sir, I just wanted to understand what is happening in terms of your below-INR5 crore ticket exposures, because if I look at basically in terms of the entire SMA, that is 0, 1 and 2, probably that is still little sticky at around INR13,000 crores. So in terms of — how do we look at it, whether in terms of their specific [Technical Issues] at the ground level in the small-ticket housing — in the small-ticket fees or probably we are still away?
Matam Venkata Rao — Managing Director and Chief Executive Officer
No, no. See, as far — that’s why we have made all the figures open or transparent to the market. Above and below, whatever the numbers that are there, we have given. And as far as the handling of this question — this portfolio of the high-volume low-value accounts, would have that expertise and if you see the previous year also, this is the SMA numbers that were prevailing in the below-INR5 crore level. But yes, slippage ratio was less. So there is a firm stand efforts that are happening towards the regularization of these accounts. And then going forward also because of the expertise that is available at the field level, that we will take care, and that’s why the guidance what we have given slippages, that is for the entire book that will be maintained.
Sohail Halai — Antique Stock Broking — Analyst
Right. And sir, a final question in terms of the priority sector lending certificates sold, which you did around INR15,500 crores-odd. Could you actually tell us how big is this market and what is the kind of fees that you earn? So is the fees going up or actually coming off?
Matam Venkata Rao — Managing Director and Chief Executive Officer
No, sir. This is — again, it’s the market dynamics and more so, this time, we may not be getting the demand what we got in the previous year because of certain change in the priority sector and also many of the private banks and also foreign banks they have their portfolios in those segments where RBI has given that they can be reckoned for the priority sector. So there demand may be — may not be there to the extent what we have experienced. But here most important aspect is the timing when you are going to hit the market, that is more important. See, you know very well that, as a whole, all the banks put together, whosoever the purchases this PSLCs, all of a sudden, they cannot even with the reclassification also they may not be reaching their sector percentage. At what time you’re going to hit the market and how you are you know studying and then putting your portfolio for the sale, that determines your return. When demand is high, you can go up to 2.08 or 2.12. And if you leave it and if you enter into the market in the month of January or February, definitely this will come down. At times you may have to shell it down by 80 basis points also, which is a wide variation is there in that.
Sohail Halai — Antique Stock Broking — Analyst
Sir, in terms of, if I actually look at the private banks, which are growing much faster, I’m quite sure that their agricultural portfolio would not be able to catch-up to that 18% agricultural portfolio or the book of that which we still are in excess, that will continue to generate demand and would be at a higher fees.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Exactly, correct.
Sohail Halai — Antique Stock Broking — Analyst
Okay. And sir, what was the PSLC fees that we generated this year. And if you could bifurcate into non-agri and agri if that is possible.
Matam Venkata Rao — Managing Director and Chief Executive Officer
But what overall figure I can give IN208 crores we have warrant in PSLC.
Sohail Halai — Antique Stock Broking — Analyst
And that is for the full financial year, sir.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Full financial year.
Sohail Halai — Antique Stock Broking — Analyst
Okay, sir. Thanks a lot, and best of luck. I’ll come back in.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah. Thank you.
Operator
Thank you. The next question is from the line of Vidhi Shah from Antique Limited. Please go ahead.
Vidhi Shah — Antique Limited — Analyst
Hi, thank you for the opportunity. Sir, sorry for harping on the loan mix, but sir we have a strong cash CASA ratio of 51%, but our growth in retail and MSME space has been quite subdued. So are we looking for any initiatives which can accelerate the growth in these segments. And also, this segment has become quite competitive though. So how do we ensure any adequate risk pricing while keeping the credit costs in check.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah. Madam, as far as your observation is concerned of the previous financial year, it is right that the growth in retail or MSME is low. Going forward, this is going to be a good contributor to total credit book. Besides my entire field outlet, now we have gone further co-lending model where already we have achieved a book of 1,500 crores and this year we have a very aggressive target on the co-lending model where all your retail MSME these advances will be taken care and to cater to the needs and also to evolve and then bring the modification changes as fast possible, we have already created a new vertical in our bank as is headed by the General Manager as emerging businesses. So this particular vertical is going to take care all our co-lending, tie-ups, partnerships, collaborations and also trends platform and pool buyout. These are all the segments that what we are bringing under this vertical and definitely, this is going to give us a lot of growth in the retail and MSME.
Vidhi Shah — Antique Limited — Analyst
Okay. So sir, are we also exploring in the FinTech partnerships for boosting the business momentum in this space.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah. For that only that a separate vertical is there. A lot of interactions are happening. Almost seven who have enrolled and business is happening. Another six to seven are in the pipeline in the next 15 to 20 days for negotiations and also to go into the nitty gritties of those fintechs for shortlisting.
Vidhi Shah — Antique Limited — Analyst
Okay. Sir, what will be the technology spend as a percentage of overall operating expenses and the target for cost to income ratio in FY23.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Madam, right now I’m not having this number. Definitely we will share with you because it’s all — we have to call-out this.
Vidhi Shah — Antique Limited — Analyst
Okay. No problem, sir. And sir, lastly on the asset quality. Sir, can you share the breakup of slippages during the quarter and for FY22.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Slippages for?
Vidhi Shah — Antique Limited — Analyst
For the quarter and financial year 2022.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah. Madam, this is total for 4,473 slippages for the entire year ’21-’22.
Vidhi Shah — Antique Limited — Analyst
Yes sir. Sir, I wanted the breakup actually. Retail, MSME.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Agriculture is 1,684, corporate is 1,527, MSME 197, retail is 365.
Vidhi Shah — Antique Limited — Analyst
Okay, thank you. And sir, what would be the guidance for the next year. How do we see that shaping up and also have we recognize any retail account in this current quarter.
Matam Venkata Rao — Managing Director and Chief Executive Officer
See, as far as the slippages, already we have given you the guidance of 2.25 to 2.5, that will be our range for the slippages. What is that your second question.
Vidhi Shah — Antique Limited — Analyst
It’s whether we have recognized any retail account in the current quarter.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Retail account means, this is small accounts that will be there. That is a continuous process, something will fall and then some upgrades happen and then that is the thing. But at the end of the day, it is the slippages in the total portfolio what happens that we measure.
Vidhi Shah — Antique Limited — Analyst
Okay sir. Thank you for the opportunity. I’ll come back in the queue.
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, sir. Good afternoon and thank you for giving me this opportunity. Congratulations to you, Rao and the entire team for the fantastic results and in fact as I see, and you also said that after six years of continuous losses of almost about I think INR16,500 crores to INR17,000 crores, your bank has come in the profit of and that to over INR1,000 crores, INR1,045 crores, that’s absolutely creditable. And for the first time the gross NPAs also come below 15% and net is below 5% and not even 5%, below 4%, commendable. Sir, having said that, and also expect that now our bank will come out of PCA and you will go on full throttle because your CD ratio is only 55.63% now and you have a lot of scope. I have got some specific questions, sir. One is on the profitability, the employee cost which is covered under Note Number 19. Now this is only INR382 crores as against the last quarter of INR1,297 crores and the yearly spent of INR4,000 crores, that is INR1,000 crore a quarter. So this is based on the changes as per the leverage allowed by the Reserve Bank of India, but will somebody will run through the entire calculation of employee cost of INR382 crores, because even if you take those numbers, it doesn’t come so low as compared to the normal quarterly expenses.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah. Just Let my CFO explain figures part because a lot of cushioning what we did in between the quarters that he will explain.
Mukul N. Dandige — Chief Financial Officer
So majorly if you see, I mean the employee cost because financial year wise, if you see the overall financial year, the cost is almost same, there is no much difference. So what we have done is in the Q3 we had build-up some cushion. And I mean, some write-back has happened as far as the actuarial valuation for the terminal benefits has happened and that is why this cost has come down in this quarter, because the bond deals also increased. So because of that the write back has happened as far as the terminal benefits provision is concerned.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
Has it some re-correlation with bond —
Mukul N. Dandige — Chief Financial Officer
Yeah, because — the funds that are available with the investor. I mean the bond yields go-go up then I need to provide for lessor, it will be just revert to what in treasury happens.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
Sir, will you give the guidance that in the normal quarter, I mean without this differentiation, now you’ve got only small amount left INR277 crore to be provided, balance in the new pension out of INR122 crore, what we’ll see normal quarterly employee cost suppose on the next quarter that is April to June.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Every quarter roughly around agent INR800 crores to INR900 crores is the total outgo as far as the employee cost is concerned, but because of —
Ashok Ajmera — Ajcon Global Services Limited — Analyst
We assume that in the June quarter we will have a hit of INR500 crore if you compare with quarter four only.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Right.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
So profitability will get affected accordingly. And sir, this exceptional income is also there of INR352 crore. Some part of that has come from this Note Number 19 as you have explained. What is the other part of again INR172 crores, INR352 crores. What is this exceptional item.
Matam Venkata Rao — Managing Director and Chief Executive Officer
In this presentation, it is not there. In your notes, it will be there.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
Note number 19 sir. INR180 crore has come from there. That’s the additional pension liability on account of revision of the family pension is considered as an exceptional item and disclosed separately in an account. But this is not full. The entire amount is INR352 crores.
Matam Venkata Rao — Managing Director and Chief Executive Officer
INR352 crores is March 31. Okay, I’ll provide that detail to you. See INR353 crores towards this terminal benefits only for this quarter March quarter, then INR172 crores is what we have already paid in December 2021. So put together for the financial year, this amount has come to INR545 crores.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
Okay. So you taken INR352 crore in this quarter [Speech Overlap] except that INR277 crores, nothing is left now are provided for.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Right.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
Okay, sir. Thank you. And now I come to some other questions. Like you said that the gross NPA will come down to almost 10% if the NARCL works out from 13.5% or so. So what is your guess now. We have been hearing for last two quarters, September-December also then January-March also, what is happening in this NARCL. And sir if in the one first branch, how much gross loans will go from your branch.
Mukul N. Dandige — Chief Financial Officer
See, earlier, whatever the working that they have done, we were expecting, around INR3,400 crores to INR3,600 crores have to move out. Now yet to hear from them whatever further any tweaking that has happened in the accounts and what is that. Most probably I think within 10 to 15 days we may hear something from their side. We are also eagerly waiting. See, this is only a way what we have to reduce our gross NPA though it is not affecting any of the financials, because almost 90% is provided for.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
Sir, my next question is on the note number 17 on ASR. ASR rating is INR2,484 crore and INR155 crore rating has been withdrawn. So where do we stand as far as this ASRs are concerned, and how much total provision has already been made.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Sir, our treasury in-charge will tell you, but one thing I will tell you in all the public sector bank this is the bank where highest provision is made in ASRs. He will give you that numbers now.
Mukul N. Dandige — Chief Financial Officer
Sir, we have provided around 96% of the outstanding ASRs up to March 2022 and the remaining will be provided way forward in June quarter sir.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
So you mean to say that rating withdrawn of INR155 crores is fully 100% provided for.
Mukul N. Dandige — Chief Financial Officer
Yes sir.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
Coming to sir your segment reporting. Though of course it is out of the overall results only, but the figures are little away from the normal like treasury you have an income of INR393 crore in this segment as against INR38 crores, whereas in the retail book you have a loss of INR377 crores whereas the provision fees are to that extent. Wholesale Banking again has gone up the profit of INR452 crore against INR72 crores. So how does — is there any major —
Matam Venkata Rao — Managing Director and Chief Executive Officer
We will give you reconciled with this one sir, because right at this moment we are having that material not on this segment. We have overall presentation with us and anyhow this only thing we can share the information, it is all perfect one, no issues. Variations in the retail and corporate on the profit side what you are saying.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
I was just trying to connect it with the treasury operations. As you said, that we have done very well and we don’t expect to do all this rate hike is not going to affect us so much because the AFS transfers are there and you utilized a lot of money for the advances. So where do you extend now in this coming quarter and onward, will we not have the treasury will not have the pressure is still with such a larger treasury investment.
Mukul N. Dandige — Chief Financial Officer
Sure. Our AFS portfolio has tuned down considerably. And right now, my modified duration has come down to 1.05 and PV01 has come down to 3.33 as against March 2022 numbers. We are making concise efforts to prune down the AFS and only filling the gap in HTM for coupon.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
Okay. All right sir. Sir, last question is on NBFC space and the co-lending. You’re doing extremely well in co-lending and your outstanding is between INR1,500 crores. Out of, the retail is INR1,300 crores and MSME is INR195 crores, how much of the security coverage out of this INR1500 crores. I believe that retail must be 100% covered.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah. All co-lending is fully secured. No unsecured portfolio we are anchoring. It is only totally secured portfolio we’re doing.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
And what is our target for ’22-’23, going INR5,000 crore or something.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah. We have very aggressive target. Whatever the number you are taking, you can take it as below floor level.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
And sir —
Operator
Sorry to interrupt, Mr. Ajmera.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
Yes, last question.
Operator
Sir, may we request wanted to return to the question queue. There are participants waiting for their turn.
Ashok Ajmera — Ajcon Global Services Limited — Analyst
But you see — anyway. Okay, thank you.
Operator
Thank you. We’ll move onto the next question. That is from the line of Mahrukh Adajania from Edelweiss. Please go ahead. Mahrukh, your line is in the talk-mode. Please go ahead. Mahrukh, we are not able to hear you clearly.
Mahrukh Adajania — Edelweiss — Analyst
Can you here me now.
Operator
No. Your voice is sounding very soft.
Mahrukh Adajania — Edelweiss — Analyst
Hello.
Operator
Yes, ma’am. We are not able to hear you clearly.
Mahrukh Adajania — Edelweiss — Analyst
Can you hear me now.
Operator
Please proceed.
Mahrukh Adajania — Edelweiss — Analyst
Yeah, hi. So sir, my first question is that what is holding up the transfer to NARCL. Why is this happening.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Madam, this particular issue is not in our domain. That much only I can say.
Mahrukh Adajania — Edelweiss — Analyst
Okay. [Technical Issues]
Matam Venkata Rao — Managing Director and Chief Executive Officer
Madam, your voice is so feeble. Unable to have clarity.
Mahrukh Adajania — Edelweiss — Analyst
I will come back. Thanks.
Operator
Thank you. We’ll move onto the next question. That is from the line of Sushil Choksey from Indus Equity. Please go ahead.
Sushil Choksey — Indus Equity — Analyst
Congratulations to team Central Bank for a stable result.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Thanks.
Sushil Choksey — Indus Equity — Analyst
Sir, you’ve give a guidance on more or less every parameter. Now, I just wanted to know that when we are doing very well on co-lending, what is our internal target of INR1,500 crores outstanding and number of partnership and what kind of businesses, which you would partner for.
Matam Venkata Rao — Managing Director and Chief Executive Officer
See, now in co-lending, we are exploring further niche areas where these NBFCs though their size is small, if they are efficient and let us say in medical equipment line of business that we are already shortlisted and maybe in two or three weeks that agreement may be signed up. So like that we are exploring the niche areas where traditionally bank was not having exposure and then were good business is prevailing to our understanding that it makes great sense for us to move in those areas. So like that we are picking up the NBFCs in certain areas.
Sushil Choksey — Indus Equity — Analyst
Currently as per my understanding what I see between the presentation I hear it will be more of housing loan and MSME as outstanding and gold loan by the portfolio. So if I look at medical is one thing which you highlighted. Any other domain, which the bank would like to pursue on.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah. Where certain things were vendor financing or supply chain operators are there, all those things we’re exploring here. It’s not that the traditional only housing vehicle or some MSME backed with certain collateral. That is okay. That is first mover in this co-lending space to get the confidence and also the way NBFCs are operating and their collection mechanism and their monitoring mechanism. The way we are getting the confidence in that, then we are slowly expanding to other emerging businesses now.
Sushil Choksey — Indus Equity — Analyst
So keeping in mind on co-lending and with CASA at 50%, I’m sure the bank now one year of the entire new team has completed, what kind of initiative between digitization and retail are we taking to energize the bank as our thinking is more towards ramp in retail.
Matam Venkata Rao — Managing Director and Chief Executive Officer
No. Sir, that’s what I was saying. It is not just we will be focusing on the ramp side this time. We have already achieved our objective of balancing the credit book 65-35 and we will continue to maintain that 65-35. It’s not that we are only focusing on the ramp and we are neglecting the corporate or we are working on corporate, neglecting the ramp, it is not like that. It will be the balanced growth that we will be pursuing in this financial year. That is number one.
Sushil Choksey — Indus Equity — Analyst
No. Sir, possibly my question was not understood well what I said. Sir, what kind of digitization will be pursued to achieve the target as what we —
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah, that’s what. I am saying coming to your next second question of the digitization. Now we have tie-ups with PSB-59 that is certain low-value, high volume MSME segments are being taken care. In the similar lines now we are going for the API integration for the other loans. So that is another platform, which is available in the market already our technical team has zeroed in and then API integration negotiations are going on. So that is on the digitization part. Larger picture what we’d like to give on the digitization front is our LLMS what we had earlier, now we’ve made it very robust. And then a lot of push and then acquisition through these digital channels now started happening. Besides this for our bank, we have already shortlisted two consultants to bring entire transformation on the digital front. That most probably in 10 or 15 days, one will be selected on this and then further what we will be doing on this. So there are lot of — work is going on the digitization. Going forward maybe by October, November, lot of good business will be acquired through these digital channels only.
Sushil Choksey — Indus Equity — Analyst
Sir, if I ask you in a simple manner, we have 50% CASA which is 50% of our deposits in CASA, how many customers would be utilizing some facility on a direct manner of Central Bank of India whether it is other than CASA how are they connected with bank or have we mined any kind of data that they can be a customer of Central Bank, which are not as of today.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah, sir. Already my data analytics and MIS team is working and we are getting good business also through analytics. What we did from our database we called out those customers, which are availing certain services from the other banks or financial institutions and we have taken over good accounts also. So that is happening.
Sushil Choksey — Indus Equity — Analyst
Okay. Sir now subsidiaries, what is our plan and on the associate banks, what is the thought process.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Subsidiary is our home finance, now it’s the headquarter already shifted from Bhopal to Mumbai and lot of work is going on and as NBFC we are energizing with new softwares and also new way of working for that NBFC and probably we expect by September that NBFC will be in the market with full steam.
Sushil Choksey — Indus Equity — Analyst
And sir, on the associate banks specifically, Uttar Bihar and Gramin Banks and Indo Zambia.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Indo Zambia is doing well and on yearly basis, we are getting the good dividends and whatever our initial investment of around INR47 crores, almost 75% of that initial investment has come back to us as dividend. That is doing well. As far as two Gramin Banks are concerned, yes, there were issues regarding their terminal benefits provisions are to be made as per the Supreme Court order. Now these two banks have already provided, of which one bank already moved into profit by in this March 2022. Another we are expecting by September, it will be turned around.
Sushil Choksey — Indus Equity — Analyst
Sir, moving to the bank now. Sir, where do you see the benefits accruing on the entire financial year basis. I’m not going quarter-on-quarter. Let’s say, I am taking outlook of 12 to 24 months, where do you see the bank gaining out of all your efforts of last 12 months, which would fructify into the bottom line of the bank.
Matam Venkata Rao — Managing Director and Chief Executive Officer
There are lot of things that are happening. If you say that prioritize those things, I can only tell as far as the priorities what we have given to my rural branches that is on the agri, not only on the crop loans. We will be moving on to the investment part in agriculture. As far as the semi-urban and urban is concerned, our focus is on the MSME and clusters base of the financing where their niche areas we have worked out and entire those branches, which are in that cluster areas will be increasing their businesses. Coming to the Metro, we have the segments where these corporates are there and also even in the corporates now we are going for the end to end. That means we are exploring to finance their debtors and creditors so that entire value chain we can have that benefit from the good corporates that we are doing. And coming to the individual borrowers as retail and these things, whatever our brick and mortar branches that are working and now we have empanelled DSAs and we have a digital marketing DSAs also we have empaneled. And then a lot of projects clearances we are giving, so that housing can be ramped up, housing portfolio. And today, we have taken one more a decision that our ex-employees. For them also we have given some type of leeway to contribute for the business growth. That type of things are happening now.
Sushil Choksey — Indus Equity — Analyst
Okay, sir. Where do you see your cost of deposits in March 2023 from current 3.86.
Matam Venkata Rao — Managing Director and Chief Executive Officer
See, March 23 is too long to predict right at this moment, but definite indication because of my CASA what I have from the rural and semi-urban, it should be in the range of around 4.20 or 4.25. It should not move beyond that.
Sushil Choksey — Indus Equity — Analyst
Sir, with NIM stable at 3% and above as what you are saying, yield on advances also which is at 6.57, I assume —
Matam Venkata Rao — Managing Director and Chief Executive Officer
It will also move up automatically.
Sushil Choksey — Indus Equity — Analyst
Yeah, it will move to 7%. Sir, on your treasury with CASA at 50, do you see a reasonable profitability because you manage AFS and held to majority book well.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Sir, in this, see, we have floated the entire movements of the economy and treasury performance across the banking industry for the past 18 years, okay. So in that whatever the cycles what we have observed, this is one of the cycles, where we are experiencing where there is a larger gap between the repo and inflation and also the growth, the GDP that we are plotting and accordingly, we have decided this year, we are not much interested in booking large profits in treasuries rather than protect the portfolio from the M2M losses.
Sushil Choksey — Indus Equity — Analyst
Okay, sir. Second thing is our government holding is at 93%. Do you estimate or do you expect that government holding would fall in the current financial year towards second half.
Matam Venkata Rao — Managing Director and Chief Executive Officer
I have no clue on that sir.
Sushil Choksey — Indus Equity — Analyst
I mean there is no — what I’m asking is, is there any direction or compulsion that we have to reduce the government holding.
Matam Venkata Rao — Managing Director and Chief Executive Officer
No, nothing. But definitely we have suggested certain things where you know we want to bring much of the equity in the market so that the trading volumes have to go off. Some suggestions we have given and it is for the government to ponder on that.
Sushil Choksey — Indus Equity — Analyst
Okay. Thank you and congratulations and all the best for the new financial year.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Thank you.
Operator
Thank you. Ladies and gentlemen, due to time constraint, we will take that as the last question. I now hand the conference over to Mr. Prabal Gandhi for his closing comments. Mr. Gandhi, we are not able to hear.
Prabal Gandhi — Investor Relations, Antique Stock Broking Limited
Hello, am I audible.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Yeah. Please go on.
Prabal Gandhi — Investor Relations, Antique Stock Broking Limited
So thank you. On behalf of Antique Stock Broking, I thank MV sir, entire Central Bank team and all the participants for joining in. Thank you and have a good day. Bye everyone.
Matam Venkata Rao — Managing Director and Chief Executive Officer
Okay. Thank you very much. Thank you all the participants.
Operator
[Operator Closing Remarks]