IDBI Bank (IDBI) Q2 FY23 Earnings Concall Transcript

IDBI Bank (NSE:IDBI) Q2 FY23 Earnings Concall dated Oct. 21, 2022

Corporate Participants:

Divya Purohit — Investor Relations

Rakesh Sharma — Managing Director & Chief Executive Officer

P. Sitaram — Executive Director & Chief Financial Officer

Analysts:

Sanjeev Kumar Damani — SKD Consulting — Analyst

Pranav Tendolkar — Rare Enterprise — Analyst

Nitin Bala — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the IDBI Bank Results Conference Call, hosted by ICICI Securities. [Operator Instructions] I now hand over the conference to Ms. Divya Purohit. Thank you and over to you ma’am.

Divya Purohit — Investor Relations

Thank you, Seema. Welcome everyone to IDBI Bank results call. Today, from the management we have with us Mr. Rakesh Sharma, Managing Director and CEO; Mr. J. Samuel Joseph, Deputy Managing Director; Mr. Suresh Khatanhar, Deputy Managing Director; and Mr. P. Sitaram, Executive Director and CFO. Thank you so much for the opportunity, sir. And over to you, Mr Sharma.

Rakesh Sharma — Managing Director & Chief Executive Officer

Thank you, Madam. Good evening, ladies and gentlemen. It’s a great pleasure to welcome all of you to this analyst meet for our second-quarter financial year ’23 result announcement. Thank you so much for attending this conference. I would also like to take a moment to wish everyone a great Diwali, which we will be celebrating soon. May there be an abundance of light in each one of our lives, both professionally and personally.

The Indian economy today is witnessing a significant growth across all sectors despite the inflationary hurdles and global headwinds. We are now the fifth major economy in the world and are performing better than many other major global economies. As we leave pandemic behind us, the banking system, along with our entire economy is looking forward to sustained growth end [Phonetic]. IDBI Bank continues to move on its growth trajectory with yet another strong quarterly performance. While our CFO will present the highlights of our quarterly results to you, let me brief you some of the key highlights of our performance and growth.

So first of all, the net profit. We have recorded a highest-ever quarterly net profit in the history of the bank while showing a profit of 828 crore, which has 46% Y-o-Y growth and 10% QoQ growth. So the other parameters also like operating profit, net interest income and net interest margin have shown substantial improvement. The CASA ratio, we have been able to maintain at 56.19% and there has been overall growth of 54 basis points QoQ. Similarly ROI, which we had indicated that it will be above 1%. The ROE for the quarter was 1.09%, growth of 30 basis banks y-o-y. And on the asset quality front, net NPA is 1.15%, reduction of 56 basis points y-o-y and 10 basis-points QoQ. We have the highest PCR of 97.86% in the industry.

We, like, — as we have been doing in the past, this quarter also we have made some proactive and enhanced provisioning which is not otherwise required by the regulator. So that is around — the total including accelerated further on NPAs, some provision, additional provision on [Phonetic] which are there in NPA. And some additional provision on restructured assets, aggregated — amounts to almost 36 crore. Other parameters like cost of deposit, cost of funds have also shown improvement and the capital adequacy ratio also is robust at 92.48%. So with this you know the parameters which are showing overall improvement. I will stop here and I will request our CFO, Mr. P. Sitaram to give the presentation and thereafter we can have the question answer session.

P. Sitaram — Executive Director & Chief Financial Officer

Happy Diwali to all of you and for joining this conversation. The bank has reported a BAT of 828 crores, which is the highest in it’s quarterly history. The PBT set 1,037 crores. Operating profit of 2,208 crore. NII of 2,738, and the NIM has come at 4.37. Overall, the ROE for the quarter was 1.09 on annualized basis and if we take the [Phonetic] it’s about 1.03%. The ROE is above 15, 15.2, Cost-to-income continues to be well under control 42.29. Capital is convertible at tier-one of 17, and total CRAR of 19.5, without taking the half yearly profit into account. Total RWA has gone up by about 4000 crore, 157,840 crores. Mainly on the back of growth in advances. Cost of deposit stands at 3.44 and cost of funds of 3.72, more or less in-line with Q2 and marginal increase Year-on year, slightly higher at 56%. The deposit have grown to 230,000 crores net NPA stands at 1.15. GNPA has come down due to recovery as well as a technical [Phonetic] that is about 16.5%. And PCI has marginally improved to 97.86.

Next slide, again, we have put this PAT growth of 828 crore is a growth of 46% y-o-y and 10% sequentially. PBT is a growth of 86% Y-o-Y and 32% QoQ. The gap between PBT and PAT is mainly because what MD mentioned that we have done some amount of additional provisioning, that it conservatively. Operating profit at 2,208 crore is a growth of 64% y-o-y and 8% sequentially. NII has grown by 48% and 10% sequentially. NII at 4.37 has improved by 1.35% Year-on year and 35 basis-points quarter-on-quarter. The cost-to-income, as I said,. is well under control, there is a reduction of one 1.15% sequentially. Now, the CASA continues to be high that CASA continues to be high at 56%. The retail to corporate, as we had guided earlier that it will remain in the range and it continues to be in that range. Overall, we can expect that the retail to corporate will remain in this within a range of plus or minus some say four –62 to 68 for retail and the balance coming from Corporate. Net advances growth is 78% year-on year and 6% sequentially. Net NPA, MD has already mentioned, there is a reduction of 10 basis-points from last quarter. And GNPA has reduced by 3.39% from last quarter on back of the recovery as well as TW. PCR has improved to 97.86. And capital adequacy, as I mentioned, is very comfortable.

Coming to slide nine. It conceives the component of the net interest income. NII, as I said, has grown by 48, out of which, interest income has grown by 20% year-on year and 7% sequentially. Interest expense has also contributed to NII. There is a marginal reduction of 3% year on year, and there is a small increase of 4% sequentially. If you compare the half year, it’s about 20% increase in the NII. Mainly on the growth of both interest income and also a reduction in the interest cost. The other income, again, in the other income, there is included a gain from the sale of our stake in the life insurance joint-venture that we had with AGS. That balance stake which we had has also been transferred and we have recorded a gain of 380 crores, which is included in the other income. In Q1, also, we had a similar gain from — of about 140 crores from sale of assets. So overall, the growth in other income is about 11% year over year, and a margin reduction of 5% from last quarter, mainly because of the non-repeat of the gains from sale of GSEC [Phonetic] which we had recorded in the first-quarter.

Now, the opex has increased by about 9% from last year and 3% sequentially, mainly due to increase in the employee cost. The employee cost has mainly gone up because of one is that account has started increasing. Now that we are out of PCA, we are allowed to [Phonetic] the business is growing. And secondly, the accumulation of leave for the employees has also gone up and the valuation is now at higher — the salary rate that we had settled last time. Some amount of variable pay component has also come in this quarter. So overall, therefore, the opex has grown by about 9% last — compared to last year, and 3% sequentially. Half year to half year about 12%. So after all this, so we are having a net profit growth of 64% to the announced 2,208 crores and 8 % growth sequentially. And the half year to half year if you compare, it’s about 1%. If we exclude this gains from strategic sale, the operating profit has shown a growth of 36% year-on year, and there’s a small reduction of 4% from last quarter, mainly because of that, capital gains from the GSEC [Phonetic] which is not there. And overall, for the half year to compare, it’s about 11% less.

So provision contingencies are higher by 35%, both due to statistically [Phonetic] required regulatory provisions, plus whatever we have voluntarily on a conservative basis made additional provision, both for NPAs, as well as for restructured assets under COVID, etc. PBT has shown a growth of 86% year-on year and 32% sequentially. VAT has grown by 46% to 828 crore, which is also 10% increase over last quarter.

If we come to the next slide, we have shown the breakup of each component, which has contributed to the growth of the PAT from 567 crores to 828 crores, in which you will see that there is a — all the components have contributed, however, increase in the tax requirement has taken away about 401 crores. Similarly, for the half year, from 117 to 01284 [Phonetic] again, mainly the NII has contributed to the growth in the bottom-left, but obviously the increase in the tax requirement has taken away some of that.

Now we come to the next slide, which is the breakup of NII. Here you can see that the contribution to the growth in NII has come from a healthy growth of interest on advances, that is about 21% growth year-on year, and 16% growth sequentially. And income from interest or investments has grown by 16% year-on year, but sequentially, it is at the same level. Other interest income, which includes some amount of interest on refund of income tax that has grown by about 30% year-on year and compared to last year, we didn’t have so much of interest on refund of income tax, so that reduced by about 31%. Overall, if you compare half year to half year, there has been a growth of 53%. And the interest expenses as total — have de-grown by about 3% from last — year-on year, and grown by about 4% sequentially, mainly because of the lag effect of the increase in interest rates that we have been affecting. And NIM, if we exclude this interest on IT refund, the NII stands at about 2,644 crores, which is a 43% increase Y-o-Y and 14% increase sequentially. And NIM stands at 4.22, which is an improvement of 1.2% compared to last year, and 50 basis-points sequentially.

Coming to the next slide, this is the breakup of the other income. As I’ve mentioned that, there is a one-time — there is a gain of 380 crores coming from the sale of our stake in Ageas Federal and last quarter also we had a gain of about 140 crores from RC [Phonetic] these are included under the head profit-loss on-sale of investment. Otherwise the commission exchange brokerage, that income has more or less we remained same compared to last quarter and grown by about 10% year-on year. And of the revaluation is subject to the movement and the quarter-end interest-rate. We had a total reduction in the revaluation hit [Phonetic] as compared to September 1. We have only 7 crores this time. And compared to 66 crores of June ’22 quarter, it is 89% reduction.

Other forex income has also slightly declined, it has come by about — it has come down by about 17% y-o-y, sequentially also 21%. Dividend income, all the three subsidiaries have contributed to this. And recovery from written-off cases, this is the principal component that we have yet. And here it is about 26 crores for the quarter, as compared to 137 crore in last year, that is 81% reduction, and 35% reduction from the last quarter. Overall, the miscellaneous income has also come down by about 63% from last year, and 82% from sequentially to 18 crores. Overall, the other income has shown a growth of 11% year-on year and 5% reduction sequentially.

Provisions and contingencies, here you can see that we have a provision for standard assets component, which is we have made about 339 crores on net, and the last quarter also we had done about 411 crores. Similarly, for the provision for NPAs, we have made, as I said, even additional provision, the slippages have been on a net basis, hardly about 20 crores. But as I said, we have made additional provision for NPA. The figure here is showing net mainly because, one, NPA has been converted to equity share, therefore the amount of provision that was held for that NPA has got transferred to depreciation on investment, that provision for investments. So therefore, there is not a net reduction. This is a movement from one head to other, otherwise we are continuing to make anticipatory and conservative provision for NPAs also. Then the — so net-net, the provisions total have gone up by 601 crores compared to year-on year, comprising both of regulatory requirement, as well as the additional voluntary provisions that we have made. This has also increased by about 85% if you compared serially [Phonetic].

The next slide shows the movement, yield on advances has improved, mainly because of, again, the impact of the changes in RLLR that we are doing and also the lag effect coming from MCLR revision. NIM has improved to, as I said, this 4.22 is without taking into account the interest on refund of income tax. The cost to the net income remained steady more or less at 43%.

The next slide, we have shown the — this cost of funds and cost of deposit, there is a lag effect here. We have increased the deposit rate, slightly behind the market, mainly because we haven’t — we don’t want to pay [Indecipherable] function here but the revision in the deposit rates will gradually have an impact on the portfolio. We would see some amount of increase in the amount of the cost of deposit but we expect that we’ll also see a corresponding improvement in the advances side. So that we’ll be able to maintain our NIM at the healthy levels that we have currently.

On. Slide 17, this is the balance sheet. You can see that we have grown to 309,000 crores approximately.

Now, going to slide 18, as I said, total deposits have also improved to 230,000. CASA has improved, the composition of deposits more or less remained same. We are looking to where we — they need additional requirement. We are strategizing to increase the deposit rate as to respond to the market moves made by other banks. Along with that, we would also be pursuing now to mobilize more bulk deposit. In the previous few the interactions, we had indicated that there is some scope to increase the composition of bulk deposits because we are at quite a low place here. So, we’ll look, wherever we find it competitive, we will be raising bulk deposits, and we can see that 5.5% even going up to say 8% or10% or slightly beyond that.

On the business performance, again, the net rate, that is that savings deposits has shown a growth of 5% year on year, but more or less on level with the last quarter. Retail deposit has also grown by about 2%. Current deposit has grown by 7%, but is slightly volatile. And bulk deposit, as I said, Q-on-Q we have grown by 11%. This is the strategy. So I think Q-on-Q sequentially [Phonetic] over the current year, you will see a little growth on this side. And on the business performance on advances, more or less, as far as in terms of [Inaudible] composition of the components of the advances, it has remained steady sequentially as compared to last quarter. Our strategy remains the same, that we’ll continue to pursue a differentiated granular approach to build-up more retail business, and we will follow a calibrated approach towards the corporate book. We are examining all types of revenues that we can exploit in terms of enhancing our relationships with both the existing Mid-corporate or those Mid-corporate that are there in our book earlier yet but had to exit during PCE [Phonetic] regime, as well as — also to generate business from elsewhere [Phonetic] Mid-corporate with whom we didn’t have relationship earlier. Last corporate also we’ll be looking that but that will be on a — with a lesser emphasis.

Now coming to business performance. This is how the gross advances have grown. Out of that, the standard component has also gone, you can see. On the back of mainly the growth in retail which has registered above 4,800 crores increase. Now, on the corporate retail, as I mentioned that this has always — now remain within a range. That has been our strategy. And the net advances have grown to one 146,752.

Coming to the next slide, this is the priority sector. We have achieved all the targets. The amount of PSLC deposits that we have are gradually coming down with the debts [Phonetic] repayment on the scheduled maturities.

Coming to slide 24, this is the investment breakup, AFS breakup. Again, there has not been much of a movement from the last quarter. We will, to the extent that we have booked gains from transfer of securities or direct sales from HTM, we’ll look to build back that thing to [Technical Issue] extent. So you will see some build up on that portfolio. Otherwise. I mean, the market duration of the AFS portfolio is quite under control at 1.27.

Next is, if we come to page — that is the slide 26. This is the provisioning we have on the COVID portfolio. Last June itself we had taken it down to two components. One was the 116 crore as required by RBI regulations, as well as 360 is also as required by RBI regulations for the FITI and other mandatory provisions for [Inaudbile] income for COVID restructuring. That’s total 476 that has marginally gone up to the 486, mainly because RBI has clarified in August that the percolation of these accounts also should be provided for. It came in mid of August and that provision also we had done. The contingency provision, which is something which we had done anticipating that some stress may emerge out of this portfolio that we have taken it a little higher this time, not because of there is an increase in SMA 1 or 2 but we want to see the year play-out fully. We would like to wait till March 23 before we feel that, okay, most of the path has been negotiated. The experienced in the first-half has been very encouraging. The slippages are not at all been to the extent that it was apprehended during the beginning of the year, yet we continue our conservative stand as far as provisioning is concerned. We announced that amount of provisioning to 980 crores. Therefore, about 1,000 crores additional we are keeping on a voluntary basis.

The next slide is on the PCR. Therefore, it has cropped up to 97.86% with the additional provisioning that we have made on the Doubtful-2 category. So now if you look at Doubtful 2, almost 50% is now fully provided and the remaining 50% is provided to about 64%. So, now the overall — therefore, we have both in Doubtful 1 — in Doubtful-1, we have about one-third of the portfolio provided at 100%. Doubtful-2, we have about 100%. And probably we have the highest PCR in the industry now for us at 97.86%.

On the NPA movement, slippages first time and the increase in existing NPA have come to about 663 crores. The settlements and upgradation aggregate to about 640 crores. And therefore, the net increase is only about 23 slippage this time. And we are proposing a write-off of about 5,200 crores, which has been — so overall, the closing balance is lower by about 5,200 crores. That is 28,722 crore. And the slippage ratio, after taking this into account, the slippage is coming to about 1.31%, Okay. This is for the — after taking — then the credit cost for the quarter has come to about 0.18 %. This, of course, is because, as I mentioned, this also takes into account that the movement of the NPA provision it is not likely to remain at this subdued level of 0.18%. But definitely, we are expecting that it will remain at about 1% or lower than that for the current year.

Next slide is on the NCLT, is a summary of the position. I’ll not go much into detail on this. As on — the next slide, on the SMA position, again, I will not dwell much on this. It’s quite well under control as compared to last quarter. It has marginally improved. The last slide on the capital adequacy, again, I mean I just mentioned that the increase in RWA, which I said earlier, has come due to increase in credit risk weight, slight increase in market and overall capital adequacy, all our figures are comfortable. Leverage ratio is 7.5%, which is quite comfortable.

And the last slide is on the shareholding pattern. Again, here, there’s nothing much to say. There’s not much any big change in the shareholding pattern compared to last quarter. So we come to the Slide 35. These are the customer included financial transactions on the digital basis. We have not yet set up any DBU to anticipate a person but we do have plans eventually to do that. As of now, this entire digital footprint is through the existing digital offerings that we have by way of both ATM, online, the banking, mobile app and all other alternate channels. So the — you can see that there is a significant about 95% of the customers into transactions are now going through the digital channel, out of which UPI has taken the lion’s share.

So next is just giving a breakup of the digital footprint. I will not take up your time on this, nor will I take your time for the next two slides. This is a report on where we stand as far as the financial inclusion is concerned. The next two slides are on the financial inclusion. Then you come to the subsidiary slide, all the subsidiaries have reported gain for this quarter.

And looking ahead for the guidance [Speech Overlap] MD I request [Speech Overlap]

Rakesh Sharma — Managing Director & Chief Executive Officer

Guidance part, of course, we had — like at the beginning of the year, we had given certain numbers. So as you will see from the presentation which our CFO has made, we have overperformed on almost all the parameters. As regards to the business growth, advances as against 10% to 12% target, we have grown by 17% in net advances, but the ROA is also above 1%. And the slippage ratio is well within control. It has against our estimate of 2.5%, it is 1.31%. And the credit cost also is lower than that. ROA and ROE also we have been able to improve. And the NPA level we had indicated that net NPA is at 1.25%. So it is — we have already reached 1.15%. As far as gross NPA is concerned, we had indicated that we’ll be below 15% by March 31, ’23. Now we have reached almost 16%. So that way, we — with the transfer of some assets to NARCL, which are identified for transfer. And now NARCL has already started giving some offers. So with that, we expect that some assets will be transferred to NARCL by March 31, we will be much below the 15% which is the number which we had indicated earlier.

NIM, as against 3.25, it is 4.37. Even if we exclude income tax refund interest, then also it is 4.22. And we are quite comfortable here. And the digital footprint also, we have started — a lot of initiatives have been taken. We have done a tie-up arrangement with — for supply chain finance also. And the cost-to-income ratio also is much, much below the expected level. So as we had indicated, so we have overperformed in all the parameters, and we are quite hopeful that this type of performance, we will be able to sustain it, rather, we will be able to improve our performance.

Now we can take questions, if any questions are there. And you can go ahead. Thank you very much.

Questions and Answers:

Rakesh Sharma — Managing Director & Chief Executive Officer

Thank you very much. [Operator Instructions] We take the first question from the line of Mr. Sanjeev Kumar Damani from SKD Consulting. Please go ahead, sir.

Sanjeev Kumar Damani — SKD Consulting — Analyst

[Foreign Speech] Sir, am I audible? So, I continue?

Rakesh Sharma — Managing Director & Chief Executive Officer

[Foreign Speech]

Sanjeev Kumar Damani — SKD Consulting — Analyst

[Foreign Speech]

P. Sitaram — Executive Director & Chief Financial Officer

Gross advances, once we deduct the provisions that have been made for nonperforming assets, that is net advanced.

Sanjeev Kumar Damani — SKD Consulting — Analyst

Gross advance is bigger and net advances are lower. Am I right, sir?

P. Sitaram — Executive Director & Chief Financial Officer

That is right. Gross advances minus provision for nonperforming advances is net advances.

Sanjeev Kumar Damani — SKD Consulting — Analyst

But here when I was seeing in the slide, the gross advances figure was bigger.

P. Sitaram — Executive Director & Chief Financial Officer

Yes. Gross advances minus provision for NPA is equal to net advances. So the gross advances will be higher.

Sanjeev Kumar Damani — SKD Consulting — Analyst

Okay. Got it. Got it, sir. The second, my question is regarding investment in the shares of national stock exchange. Are we still holding them or they are also disposed?

P. Sitaram — Executive Director & Chief Financial Officer

We have no holding in national NSE.

Sanjeev Kumar Damani — SKD Consulting — Analyst

You don’t have any. Okay. Okay, sir. Secondly, sir, you know that the company is going for divestment by government of India and [Indecipherable]. So in the process, I mean, have we identified certain assets which have very big value? In the sense that some of the building plans, etc., that IDBI is holding or having offices at various places all over India. So I mean, have we thought of this while recommending our divestment that these assets should be either taken out or realized before giving it to any third party?

P. Sitaram — Executive Director & Chief Financial Officer

First of all, that transaction is from the owner side that they want to sell shares to someone else. So the bank by itself need not do anything because of that. And secondly, we are following the accounting policy as per our Indian GAAP, which is presently there, which requires the revaluation of fixed assets on a periodic basis. So the last revaluation that we have done is once a year we keep doing. And so for the impact of the current valuation is already reflected in the balance sheet. Investments are also as per RBI announced mark to market. [Foreign Speech]

Sanjeev Kumar Damani — SKD Consulting — Analyst

Right, sir. We have shown certain investment of debenture 3,166 crores and some total 93,148 crores worth of investment has been there apart from deposits with RBI. So this 93 crore investment is at book value or it is realizable value in the presentation?

P. Sitaram — Executive Director & Chief Financial Officer

As I said that, see, the RBI, we classify the investment into two categories broadly. One is called [Indecipherable], and that is held at the value at which we have invested. And the other is comparison of either available for sale or available for trading. Together, these are the mark-to-market constantly. And when whenever we declare results, it is at the latest values we report.

Sanjeev Kumar Damani — SKD Consulting — Analyst

Okay. Thank you very much, sir. And sir, regarding NPA, when you refer to NCLT and matters are under obligation of NCLT settlement, so they are already written off from the books of account as it is?

Rakesh Sharma — Managing Director & Chief Executive Officer

No, no. Not Necessarily.

P. Sitaram — Executive Director & Chief Financial Officer

Not necessarily. They’re nonperforming. But how much provision we make and whether we write off all those are the voluntary additional [Speech Overlap].

Sanjeev Kumar Damani — SKD Consulting — Analyst

Sorry. Sorry. I’m very sorry. Actually, I should have said that whatever matters are disputed, referred to NCLT or are under negotiation, for that much value provision is already made as NPA in the books of account.

P. Sitaram — Executive Director & Chief Financial Officer

The provision for NPA is determined by the rates at which RBI has mandated. There — the calendar rate of provisioning, we make that, plus there are other rules. As per RBI, we make additional provision. And the third, over and above that, the bank can make an assessment and even make even higher provision as per [Technical Issue]. So these are the three components of NPI approval.

Sanjeev Kumar Damani — SKD Consulting — Analyst

You very much talked about this that you have made higher provisioning of 1,000 crores extra over and above the required one. Am I right, sir? You said this?

Rakesh Sharma — Managing Director & Chief Executive Officer

[Foreign Speech]

Sanjeev Kumar Damani — SKD Consulting — Analyst

[Foreign Speech] Okay. Actually, the data is already given, sir. Thank you, sir. Thank you very much. From my side everything — of course, [Foreign Speech]

P. Sitaram — Executive Director & Chief Financial Officer

No, we will not be able to make any comment on the divestment.

Sanjeev Kumar Damani — SKD Consulting — Analyst

Thank you, sir.

Operator

Thank you, sir. [Operator Instructions] We take the next question from the line of Mr. Pranav from Rare Enterprise.

Pranav Tendolkar — Rare Enterprise — Analyst

Hi. Thank you, sir, for the opportunity. Sir, from the publicly disclosed document of [Indecipherable], so they are saying that 22,500 crores is the minimum net worth required. So I am saying I don’t want any data that is [Indecipherable], but they have publicly said that in the document, divestment document. So can you just spend some time on understand — like explaining this 22,500 crores net worth, on a NOHFC level, that is nonoperating financial holding company. At that level, this network could be contributed by consortium or a single player? And also, is there a leeway to contribute that by debt. So for example, 22,500 crores is required to be invested — sorry, is required to be the net worth. And whatever is — say, today, there was a news that $7.7 billion is expected out of your value and 61% of that would be held by NOHFC or the bidder. So can this be contributed at a NOHFC level by debt?

Rakesh Sharma — Managing Director & Chief Executive Officer

Thank you very much for asking. But please forgive me for saying this, that: one, in that EOI itself they have clarified that if any questions, written questions, you require any queries are there on the offer document, so by 28th October, you can raise the queries to, one, Mr. Hitesh Sachdeva in KPMG. So I will request you to please direct these questions because this entire process is being held by [Technical Issue] by the transaction advisor. Thank you.

Pranav Tendolkar — Rare Enterprise — Analyst

Right. Perfect, sir. Sir, I’ll come back-in the queue after some time.

Operator

[Operator Instructions] We take the next question from the line of Nitin Bala, Individual Investor. Please go ahead, sir.

Nitin Bala — Individual Investor — Analyst

[Foreign Speech] So, sir, why the tax is so higher this time?

Rakesh Sharma — Managing Director & Chief Executive Officer

[Foreign Speech]

Nitin Bala — Individual Investor — Analyst

[Foreign Speech] And profit is increasing quarter to quarter? [Foreign Speech]

Rakesh Sharma — Managing Director & Chief Executive Officer

[Foreign Speech] Quite high in the industry.

Nitin Bala — Individual Investor — Analyst

[Foreign Speech]

Rakesh Sharma — Managing Director & Chief Executive Officer

[Foreign Speech]

Nitin Bala — Individual Investor — Analyst

[Foreign Speech]

Rakesh Sharma — Managing Director & Chief Executive Officer

[Foreign Speech]

Nitin Bala — Individual Investor — Analyst

[Foreign Speech]

Operator

We have another follow-up question from the line of Mr. Pranav from Rare Enterprise. Please go ahead, sir.

Pranav Tendolkar — Rare Enterprise — Analyst

Sir, could you spend some time on explaining where the credit demand is coming up? Also, will this credit demand increase or decrease going forward for two to three quarters? That is first question. Also second question is that, do you think that short-term rates will even spike from here? Because I think after a lot of time, banking liquidity that has lagged [Phonetic] has become negative in deficit. So can short-term rates spike even higher from here? And in that case, will it be more prudent to improved deposit rates before everybody else so that you can get incremental volume of deposits?

Rakesh Sharma — Managing Director & Chief Executive Officer

Yes. Credit growth is driven by different factors in the different segments. First, on the retail side, though there was a lot of fear that credit growth will be very tempered because of the increase in interest rates. I think we are all being proven wrong that despite increase in interest rates, a lot of pent-up demand in consumer financing, home loan financing is showing up, and there is no letup in the demand for retail credit growth as well.

Now coming to corporates, again, the drivers investment cycle seems to be picking up. But even before that, those projects are still in the drawing board. Drawdowns are to happen, sanctions are happening, but drawdowns are to happen. But the utilization of credit by corporates is going up mainly because of the inflationary impact, the commodity price is going up. There is an uptick in the capacity utilization levels also across the corporate sector across all industries.

Hence, there is a higher utilization of working capital limits already sanctioned. Also, some demand has come from the bond market to the loan markets now because of the prices because of the rates in the bond market having acted more sharper than the loan market. So there is a host of factors which is driving up the credit growth you would have seen almost all the banks. In fact, RBI’s latest published data sales, about 17% has been the credit growth in the last month’s reporting Friday. And we are also, if you look at our credit growth is also, we are also almost there. Going forward, the outlook, I think it should hold up — the credit demand should hold up because, as I said earlier, the investment cycle is, again, back in — the private sector investment, which was very low in the last three years is back on the table. So fresh capex and also both brownfield and greenfield investments are happening. So that should push up credit demand. So from the demand side, I think credit growth should be quite robust in the next two years going forward.

Now coming to the second part of your question on deposits — growth in deposits or the liquidity. I think there is — we are already seeing some actions from all the banks. Banks are increasing deposit rates. There is some chase for liability relationship deposits as well. But specifically about IDBI Bank, as CFO in his presentation said. To begin with, we started with a huge liquidity. Our LCR was about 140%. So to some extent, we have used up that excess liquidity. Even now, our liquidity is quite comfortable. So if need be, we can tamper the rate, we can increase the rate on the bulk deposits because the headroom to increase our absolute bulk deposit is much higher today. Three years back when our bulk deposits were about 7,000, 7,500 crores, we have brought it to about 10,000 crores now. So there is a lot of scope. We can increase. It’s a factor of — as you know, bulk deposits are a factor of the interest rate. We can play on the interest rate for bulk deposits and increase our deposit size also. So there is no concern as far as our bank is concerned.

Nitin Bala — Individual Investor — Analyst

Okay, sir. Thank you. Thank you.

Operator

Thank you very much. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments. Thank you, and over to you, sir.

Rakesh Sharma — Managing Director & Chief Executive Officer

Thank you, Madam. Let me conclude by stating that as we move forward, there will be a lot of pleasant surprises. Overall, IDBI Bank is posting good performance every quarter, and we are committed to enhance it further, sometimes bettering our projected number on select parameter as we did in the previous quarter. I again express my gratitude to all of you for your presence here and wish you a very happy Diwali. Thank you very much.

Operator

[Operator Closing Remarks]