Punjab & Sind Bank (PSB) Q2 FY23 Earnings Concall Transcript

Punjab & Sind Bank (NSE:PSB) Q2 FY23 Earnings Concall dated Nov. 05, 2022

Corporate Participants:

Swarup Kumar Saha — Managing Director and CEO

Ram Jass Yadav — Executive Director

Analysts:

Ashok Ajmera — Ajcon Global — Analyst

Unidentified Participant — — Analyst

Presentation:

Operator

On behalf of Punjab & Sind Bank, a very good afternoon, ladies and, gentlemen. I would like to thank you all for taking out time and joining us today. I welcome you all, again to the Virtual Analyst Meet on the announcement of the Punjab & Sind Bank’s Quarter Two Half Year Ended September 2022 [Phonetic] Financial Results. [Operator Instructions]

Before we begin, I would like to introduce the management who would be addressing today’s Virtual Analyst Conference. On the panel from Punjab & Sind Bank’s management we have Shri Swarup Kumar Saha, Managing Director and CEO; Shri Kollegal V Raghavendra, Executive Director; Dr. Ram Jass Yadav, Executive Director; and Ms. Mahima Agarwal, CFO.

Following the management’s address, we will conduct a question-and-answer session. We have placed all microphones on mute. At the end during the question-and-answer session we will be coordinating for unmuting members for asking questions. I would take you through this process before the Q&A session begins. However, the management will continue to remain unmuted throughout the session.

I would now request our Managing Director and CEO, Shri Swarup Kumar Saha, to address the gathering. Thank you. And, over to you sir.

Swarup Kumar Saha — Managing Director and CEO

Thank you, Diksha. And good afternoon to all the participants in this Q2 analyst call of Punjab & Sind Bank. I will mention some of the highlights of the results that were declared today. The total business at the bank is INR1,78,977 crores, showing a growth of 5.60%. The deposits was at INR1,05,238 crore, showing a growth of 3.27% and advances was at, INR73,739 crores, showing a growth of 9.12%. The CASA grew by 13.89%.

In net profits of the bank, significantly improved on a Y-o-Y basis to INR278 crores, that is a Y-o-Y growth of 27.51% and. 35.61% on a sequential basis on a Q-on-Q matter. The NIM of the bank has also shown improvement to 3.06%. The gross NPA has been significantly brought down by 487 bps on a Y-o-Y basis to 9.67%. The net NPA has also shown a similar trend and has been reduced to 2.24%. The provisional coverage ratio has been increased by 472 bps to 89.16%. The cost-to-income ratio as shown both sequential and quarter-on-quarter downfall.

The RAM advances has grown by 16.18%. The breakup of the growth story of RAM is, retail has grown by 18.95%, agriculture at 11.86% and MSME at 17.46%. The net interest income has also shown a satisfactory improvement of 25.61% on a Y-o-Y basis. The return on assets was at 0.84%, showing an improvement of 12 bps. The return on equity also has shown an improvement of 483 bps. The yield on advances stood at 7.67%. The operating profit has shown a sequential growth of 26.19%. These were some of the highlights of the Q2 performance of the bank.

And now I am opening the floor for question and answers. Thank you.

Questions and Answers:

Operator

Thank you. Mr. Shah. Everyone, you will notice a small icon next to your name on the screen, a hand sign. Once you press this, it will alert us that you would like to ask a question. We will go-around one-by-one. The analysts asking the question will be unmuted. Upon your request to unmute a mic, I repeat upon our request to unmute your mic, you will have to click on accept to speak. May I please request you to identify yourself and your firm before asking the question.

But those of you who have joined us through the audio call, I request you to kindly WhatsApp me your questions. We will ensure that your question is taken. Also if anyone is having trouble sending a direct message to our chat group, then please forward your question to our WhatsApp numbers and we will ensure that your questions are read-out loud to our panelists. We’ll also put our numbers on our chat group for your reference.

Mr. Ashok Ajmera, I see your hand raised and I’m unmuting you so that you could speak. Kindly accept my request to unmute and please speak.

Ashok Ajmera — Ajcon Global — Analyst

Thanks for this opportunity. Good afternoon to all of you. While, on year-on-year basis or the quarter last year, ’21 to ’22 basis, the performance is, seems to be good. But sir, on as compared to Q1 to Q2, I mean on most of the parameters, especially the credit growth, when the whole industry is growing very fast now for last two quarters, our bank in spite of being comparatively having a small base, which has lot of opportunity to grow faster than other banks, peer banks, has grown only 1.39% on credit. So, this is my first that why are — is it that our policies are very rigid? We are to overcautious or because of the past happenings which has made us overcautious that we are not growing our book because you are CD ratio is still only I think 70%. So, this is my first question and observation. If you may please answer, then I can go far my another questions.

Swarup Kumar Saha — Managing Director and CEO

Can we have the second question also so I can answer them back-to-back.

Ashok Ajmera — Ajcon Global — Analyst

Okay, sir. So now, these are slippages also as compared to the last quarter of INR321 crore has gone up to INR377 crore and cash recovery has gone down from INR305 crores to INR192 crores. So, sir, I want to have your view on the future next two quarters of the FY ’23 that how are we placed as regards the total overall slippages and cash recovery’s target party FY ’23? This is my another on the recovery front and slippage of NPA movement front. This by another observation.

Third one is that on the treasury front, we seem to have done little better because in the — if you look at the treasury income, INR7 crore as against INR50 crore of losses. So, going forward with interest rate still hardening up, US Fed has also increased again 70 basis point and there is a chance of RBI also increasing, maybe 50 basis point to 60 basis point. Where do we stand on our treasury book and treasury trading operations and how are we going to close this FY ’23 and what is the outlook for that? So, advance, credit and treasury. These are my first three questions and some observations, sir.

Swarup Kumar Saha — Managing Director and CEO

Okay. Thank you, Mr. Ajmera for your questions. First of all, on the credit growth at — the concern that you have raised regarding the growth of the bank vis-a-vis growth of [Technical Issues], I would like to mention here, yes, on a sequential basis, maybe our growth doesn’t seem to be showing a positive trend to a large extent but if you see the trend of the bank over the last three quarters, in the March financial year of last year, FY ’21-’22, we had a year-on year growth of 3.8%. In Q1 of the bank results, our growth was above 7%, we have brought the growth to the level of 9.12%. We may still argue that this growth is not as per the growth of the system, primarily because the bank has taken a conscious call of rebalancing its portfolio within the corporate and the RAM segment when the bank was going through a rough patch due to mounting losses and a lack of adequate capital.

So, there was a direction on which the bank has decided that we will be concentrating more on the retail, agri, MSME segment and and reduce our percentage exposure to the total advances in the corporate sector bank. We are conscious of the fact that we need to grow and for that matter, if you see our RAM segment growth has been over 16% still in the system with a healthy growth of retail in 18.95%, agriculture at 11.86% and MSME 17.46%, which is more or less in-line with the systemic growth in this segment. So, we are conscious of this fact that we will try to increase our credit growth in line with the system, but because of the legacy that we had carried for a long-time, we are slowly pacing ourselves to that level. So, 7% Q1, 9% Q2, maybe around 12% Q3 and we are giving a guidance of above 15% for the financial year end. So, we will like to bring that — pace it up in a gradual manner.

And if you ask me on what — what would be the composition of the growth story. We expect that as, I said earlier also in my earlier Q1 interactions with all of you that we expect 20% to 22% growth in the RAM segment and we are looking at 7% to 8% growth in the [Technical Issues]. And to that extent at least on a Y-o-Y basis we have moved a bit positive on — we were at a negative trend, so we have reversed the trend a bit and we have grown 2.53% on the corporate segment also. So, we are going to take — move that upwards and maybe at around 7% and 8%. So, my overall mix of RAM and corporate would be between 54% and 46% with a bias towards RAM segment. So, that was as far as the credit side.

On the asset quality side, our sequential slippages though has shown increase of around INR55 crores from INR321 crores to INR377 crores that was mainly due to one mid-corporate chunky account of around INR75 crores. But what we can tell you that we have recovered that additional slippages beyond Q2 of INR54 crores already during the month of October and in fact I’m happy to share with you that during the month of October itself, we have already had a recovery and upgradation of over more than INR200 crores. So, our gross NPA and net NPA has been — gross NPA has come below 10% now. Now it is at 2.24%. So, we are conscious of the fact that our asset quality has to improve.

And as far your points are regarding recovery and upgradation in the Q2 vis-a-vis Q1, if you refer to slide number 27, you will find that actually our recovery and upgradation has increased to INR505 crores compared to INR383 crores in the first quarter. And if I see a half year comparison and if you see my slide number 28, my half year slippages is INR538 crores compared to INR835 crores last year in the same period. So, we are moving in that direction. As I said, certain accounts, one of the chunky account had slipped into the NPA category, but for that we have already provided 50% in that account upfront and we have provided INR210 crores of additional provisions beyond the requirements in this Q2 itself. So, that by provision coverage ratio has now increased to 89.1%. So, that will give me a cushion of my — in my going forward on my asset quality front.

And on the treasury front, yes, things do not look — it has tapered a bit but still it is not that bright and as far as the treasury income is concerned, we have reversed some for negative trend in Q2 as you said, but with a hike, which is likely to happen but I feel that the hike of 50 bps to 60 bps as you are estimating has already been discounted in the market, but we are — we have brought down our modified duration and we will monitor the situation further and bring down the duration consciously, so that we don’t have too much of impact on our portfolio. But going by the current trends, we feel that we have a fairly comfortable position in terms if further something — unless and until something drastically moves in the market due to the global situation that we are in.

Ashok Ajmera — Ajcon Global — Analyst

Thank you, sir. What is our modified duration period now on the…

Swarup Kumar Saha — Managing Director and CEO

2.6 [Phonetic]. Yeah, Diksha, over to you.

Operator

Thank you, Mr. Saha. Manju, I can see your hand raised for a long-time. I’m unmuting you so that you could quickly ask your question. Manju, please accept my request to unmute yourself and go ahead, ask your question.

Unidentified Participant — — Analyst

Good afternoon. Can you hear me?

Swarup Kumar Saha — Managing Director and CEO

Yeah, yeah. We can hear you.

Unidentified Participant — — Analyst

I wanted to ask you about the asset quality. You were saying that there is a recovery of about INR200 crore in October. Can you please explain that bit?

Swarup Kumar Saha — Managing Director and CEO

Yeah, because some of the accounts which were — because in the last week of September we had certain unexpected slippages, so we got very strongly and we moved through the field strongly and from that respect we have already recovered in the MSME segments and in the middle ticket accounts, we recovered around INR55 crores from that segment and we had one or two good recoveries in the corporate segment, which has made a total of around INR200 crores plus.

Unidentified Participant — — Analyst

Okay. So, the corporate recovery, is that the consortium lending or it’s just your single lending?

Swarup Kumar Saha — Managing Director and CEO

No, it is multiple consortium, all mixed.

Unidentified Participant — — Analyst

Okay, so it’s not a resolution through the NCLT or anything like that?

Swarup Kumar Saha — Managing Director and CEO

No, no. It is not an NCLT resolution.

Unidentified Participant — — Analyst

Okay. And what is your SMA 1 and SMA 2? How does that look?

Swarup Kumar Saha — Managing Director and CEO

We have shown in our slide of this number is…

Unidentified Participant — — Analyst

I just wanted to know like if there’ll be any unpleasant surprises going forward considering that the interest rates are also rising?

Swarup Kumar Saha — Managing Director and CEO

I know, I know. Yeah, see my SMA book, in SMA 2 book is — SMA 2, above INR5 crore, is INR288 crores and that we have already reduced to nearly INR219 crores by October 31. MY SMA 1 book, which I’ve shown above INR5 crores as INR542 crores has been reduced to [Technical Issues]. So — and we have a one mid-corporate type account, which has been — which is technically NPA as per the regulations but there is a litigation case going on in a High Court wherein the court has put a stay on classifying the account as NPA, so we had not classified that NPA, but we are holding much above the required provisions. We have already provided for around 40% to that extent. So, we have covered that well enough and we have provide as, I said earlier, additional INR210 crores of additional provisions has been already kept in this, which is due to aging and some one or two corporate accounts.

Unidentified Participant — — Analyst

The SMA 1 you said has been reduced from INR542 crores to…

Swarup Kumar Saha — Managing Director and CEO

INR340 crores.

Unidentified Participant — — Analyst

INR340 crores. Okay.

Swarup Kumar Saha — Managing Director and CEO

SMA 1.

Unidentified Participant — — Analyst

Okay. And what is your outlook for the asset quality? I mean will there be any surprises considering that the interest rates are rising, so quite fast and…

Swarup Kumar Saha — Managing Director and CEO

Yeah, but we think, yes of course there’ll be some stress in the SME book because of the accounts, which were restructured under various schemes and all that. But we feel that the for our bank of our size the portfolio that we carry, we are well in control of the things and there will be no — of course, on the corporate side, there’s no surprises. And on the small value — small ticket loans, we are monitoring this very closely and we have created war rooms, we have declared war existing NPA, the field functionaries are on the field, on their toes, going after each and every borrower so let us see how it pans out, but as of now we have nothing too much to worry about on the — on that front.

And if you see our recovery upgradation, I think I missed out that answer of Mr. Ajmera there, that we are giving a guidance of recovery of upgradation of over INR2,000 crores for the current year. And already in the first half year, we have done INR729 crores. So, those things that we have lined-up sudden NARCL accounts also, which will help us in this process.

Unidentified Participant — — Analyst

NARCL, how much will you transfer?

Swarup Kumar Saha — Managing Director and CEO

We are — the process is on — as you are aware the process is all on, but identified accounts is seven for us. Totally amounting to, INR1,579 crores, roundabout INR1,600 crores. These includes the two [Indecipherable] INR1,400 crores.

Unidentified Participant — — Analyst

And NARCL, but that I think will take some time to transfer this.

Swarup Kumar Saha — Managing Director and CEO

Yeah, it will take but the pace in which it was earlier moving that pace has really moved very fast now. And the news already coming one resolution is going to happen, there’s another resolution of Meenakshi, which is very closely being done. So, we are adding seven accounts. We feel that one or may have impact have some conclusion in the current quarter but in Q4, we expect some more of them.

Unidentified Participant — — Analyst

And which other one, under NARCL is close to resolution?

Swarup Kumar Saha — Managing Director and CEO

We have Jaiprakash Associates, Pioneer Gas Power, GMR, Rajahmundry and future retail, we have a very small component. I’m just mentioning the name only. It is a very small component of about INR5 crores, but the major ones are Srei and Jaiprakash, Pioneer, Meenakshi and GMR.

Unidentified Participant — — Analyst

Okay. And on the deposit front can you tell me like what are your preparations to? How are you preparing yourself?

Swarup Kumar Saha — Managing Director and CEO

Yeah. As you are observing the market here again with the inflation rising and the credit offtake happening in a big way, the bank, all banks are now actually in the market for mobilizing deposits and our offering quite competitive rates in the retail segment now. So, to match them or to be competitive — to remain competitive in that market, we have also designed products of 601 days and 300 days. On the 601 days, we have — we already started publicizing the rate of interest now and we are giving to a level of 7.85% on the super citizen — super senior citizen category, so that is the highest level and the senior citizen and the normal. So, we are prepared, we have taken out a product on the 300 days also.

And and one more thing that is we have now started is mobilizing of salary accounts. What we are going to do is that because of our low CASA base, we need to mobilize not only savings account, but we need to mobilize more and more salary account. So, what we have done in recently two — is that with the municipal corporation of Chandigarh, we have opened 10,000 plus accounts, salary accounts for their employees recently with a under package and we have also opened more than — yeah in the process of opening, we have already opened around 50%. In the process of opening 14,000 salary of for Naga Nigam employees of now. This is an area which is giving us a lot of traction and we have given competitive rates in some of the higher categories of savings account also. We are mobilizing S&A deposits, So overall, we — on the term deposit side, retail side we are aggressively in the market for in terms of rates and on the CASA side, we are on also trying to generate more and more salary accounts for the bank.

Unidentified Participant — — Analyst

Okay. And you are also in the bulk market?

Swarup Kumar Saha — Managing Director and CEO

Yeah. Bulk market, we are in the market to the extent of my credit requirement. So, that is a balancing factor we do. But we — because sometimes bulks rates are now, in fact, certain times, lesser than segment but we are conscious on what is the requirement? When is our deployment going to happen. Accordingly we will claim our policies or take because it is…

Unidentified Participant — — Analyst

No excess SLR you have, — no excess SLR?

Swarup Kumar Saha — Managing Director and CEO

How much excess SLR we have.

Unidentified Participant — — Analyst

You have — okay.

Swarup Kumar Saha — Managing Director and CEO

12%. 12%.

Operator

Thank you, Manju, Majnu was from Indian banking news. Will get right back to you. Please allow me to take questions from others. I’ll get right back to you.

Unidentified Participant — — Analyst

Yeah, thank you.

Operator

So, we have questions in our chat box from others. Mr. Shah, I’ll read the questions out to you one-by-one.

So, Manoj from Pioneer, has asked regarding NPA? He has asked what is the status of NPA in this term and if there is any improvement from last term? If not what steps bank plans for better improvement of NPAs.

Swarup Kumar Saha — Managing Director and CEO

Yeah. I think I’m happy to share that my asset quality has continuously shown improvement when we started in March ’22, we were at, gross NPA was at 12.17%, we reduced it to 11.34% in Q1 and now we are at 9.67%. And if I my 9.67% is compared to 14.54% in September 21. So, there is a good improvement in my gross NPA. We have been able to bring it down to a single-digit figure. On the net NPA side, we are at now 2.24 and against the 3.81 in September ’21 last year. So, that shows significant improvement also. As I said earlier, my recovery upgradation has improved from INR383 crores to INR505 crores in sequentially my PCR has improved to 89.16, my credit cost is at very low at 0.09 and my slippage ratio is at 0.58. So overall, we have given a guidance that our gross NPA should be below.

We had earlier given below 9%, now we are revising the guidance and we are saying that it will be below, sorry, below 10% we had given earlier, now we are saying that it will be below 9%. Our net NPA our guidance still remains at below 2%. We had given earlier guidance of PCR of over 88%, now we have marginally improved it and we are saying that it will be over 89%. And my credit cost will remain below 1% and my slippage ratio below 1.15. Overall, I think the asset quality will continue to show improvement in the current — in the future quarters of the current financial year.

Operator

Thank you Mr. Saha. Our next question is from Vedanta Lahiri from EKO of India, Kolkata. His congratulations for good RAM growth of 16.18% and what are the reasons for such good numbers and what are bank’s projections for quarter three?

Swarup Kumar Saha — Managing Director and CEO

Yeah. So, as I was saying earlier in a reply to earlier question that our bank will primarily try to grow in the RAM segment and have a mix of around 55 to 45, 55% RAM and 45% of corporate, so we are working towards that segment. The current RAM segment growth of 16.18% has been helped by a strong retail growth of 18.95%, that is approximately 19%, agriculture 11.86%, MSME 17.46%. Within the retail, our housing loan has grown nearly 10.81%, vehicle loan has been 19.76% and [Technical Issues].

I would like to submit year that the bank has brought out a new product on pre-approved personal loan category, which is a database, data analytical base and and it is on the digital front now, so that is also giving me traction. We have already done a portfolio of around INR130 crores up to September. It has increased further now, it is more than 150 now. So again, our new product has been brought in, so that is giving you traction. Gold loan, 92.58% of Y-o-Y growth. On the MSME front and on the housing loan front we are having co-lending tie-ups with various NBFCs. We have already build a portfolio of around INR500 crores. In fact, more than INR500 crores as of now and we intend to make it around INR1,500 crores to support INR1,000 crores by the end of the financial year. So, all-in all if I sum it up, my RAM segment we expect a growth around 20% to 22% and corporate growth around 7% to 8%. So, my overall credit growth, 15% growth still remains as per earlier guidance.

Operator

Thank you Mr. Saha. Our next question is from Hardeep from Ajit and he is asking if there are any special offers for benefit of customers?

Swarup Kumar Saha — Managing Director and CEO

Yeah, so as I said now just few minutes back that we have rejigged our deposit products and our loan products also. On the deposit front, we have taken out special products on the retail term deposit of 600 days and 601 days and 300 days with very, very attractive rate of interest. We have taken out salary products for the banks to garner more and more salary accounts. We have taken out current account, Smart Biz accounts, which has good attractive packages in terms of our — to augment our current account delivery.

And on the asset side also, during the festive season we brought out various schemes already we have process fees and very and our rate of interest has been very has become very attractive in the asset side on particularly on the retail and MSME side, so we are finding good traction in those segments also and we expect that whatever corporate goals are regarding our a good story on the credit side will be achieved by this such sort of measures.

Operator

Sure, thank you, Mr Saha. Also another question from Rajeev, who is from Hemtabad. And he has asked regarding new loan schemes for benefit of customers.

Swarup Kumar Saha — Managing Director and CEO

New loans schemes. Mahima, can you, I’ll just give the briefing. On the new loan schemes, as I said on the — on the on the asset side we have brought out a very attractive e-pledge scheme for warehouse receipts. This is a very, very attractive scheme. I think very few bands have the scheme wherein we are doing warehouse receipt financing through the e-visit methodology. So, that is an attractive scheme for the customers of the bank. We also took out the MSME various MSME schemes with attractive rate of interest for the new to bank customers. And the — we carried out a campaign in the name of SATKAR, MSME SATKAR Plus scheme and we gave very attractive scheme on that front.

We are also running a current campaign now also on the MSMEs and the housing loan front, so these — with attractive rate of interest and various concession in the processing fees and other fees. So, anything you want to add here. Of course another scheme which is very attractive is the pre-approved personal loan scheme. we will build this portfolio we have identified around 40,000 plus customers under this scheme where we have given them offers on a PAPL methodology and now digitally we are enabling them and these loans, or pre-approved personal loan will be done in three clicks only. We have have devised our systems and procedures will be coming out shortly in the market with this marketing of this scheme. However, the scheme was already on. Bow we have brought it on a digital platform so this will help me to augment our our in a big way. Thank, Mr. Saha. I’ll read out another question to you who is from be P Burban from UttamHindu. She has asked that in spite of, more than 40% branches in North of India, what is your plant specifically for this area? Yeah. What we have — as you rightly said that my concentration of my network is primarily in the northern belt of the country and we have more than 600 branches in Punjab itself. So, we have taken call on this and if things were to expand, we need to expand primarily to the other segments in the first phase. So, we have identified around 20 approvals we internally we have got for 50 branches. So, initially we will be — we have identified places of 25 branches pan-India, other than the Northern belt, particularly in the Eastern, Western sites and the Southern sites and we already opened two out of them in [Technical Issues] very recently in in October itself. So, we will be opening 25 branches in the current financial year and the next another round of 25 in the next financial year. One more area where we in terms of our delivery network, we like to increase our corporate VC network. So, we have floated an RFP for a corporate VC. So, we see so we expect to engage 2,000 to 5,000 in a very — in a period of over six months time so that will also enable my financial services delivery to the common citizens of the country.

Operator

Thank you M. Shah. Also Mr. Larry had a request to speak to you but Mr. Lehri, you will first have to accept my request to unmute yourself with only then that you could speak. Kindly raise your hands by clicking on the hand icon next to your name if you want to ask questions. Manju, I can again see your hand raised. I’ll unmute to you ask further questions. Hi, Manju, can you hear me. You’re unmuted you may please go ahead to ask.

Mr. Ajmera, I have sent you a request to unmute.

Ashok Ajmera — Ajcon Global — Analyst

Yes, yes, I have unmuted myself. I was waiting for long time.

Swarup Kumar Saha — Managing Director and CEO

Mr. Ajmera, we can hear you. Please go ahead.

Ashok Ajmera — Ajcon Global — Analyst

Sir, now my couple of again question in this round, one is on the IT front, on the digital front, I think we made some good progress and I think at the end-of-the last previous year also we have launched certain products and now you are saying that your personal loan is also digitalized and only on three clicks. So, will you elaborate little more on our IT digitalization or going in the digital way? Like for all the retail products or MSME product and how are we going forward and what kind of budgeting we hope for it and the timeline for it? This is one question.

Swarup Kumar Saha — Managing Director and CEO

Yeah, can I answer that?

Ashok Ajmera — Ajcon Global — Analyst

Yeah, please.

Swarup Kumar Saha — Managing Director and CEO

See as far as the IT technology platform is concerned, we are going through a process of upgradation from Finacle 7 to Finacle 10, which we intend to complete — started in May of the current year. So, any project of this size takes around 14 to 16 months time. So the technological upgradation of our Finacle 7 to 10, [Technical Issues] by June ’23 that is, number one. And number two, till then whatever physically, sorry whatever Finacle 7 is adaptable to in terms of improving my digital products we will be taking them one by one. And once the Finacle 7 to 10 migration happens by June ’23, we can take the digital agenda very strongly ahead in terms of — because any digital agenda has to have a strong technological platform.

Notwithstanding what about these technological platform, what I meant to say is that we are taking out new products on the digital side. Our — we first of all in March, we made us humble beginning, having a unique app, my mobile app. There were certain inconsistencies, there were some operative issues that had to be resolved, so one by one we have resolved them. So, my rating on my unique app, which was around 2.6 in the Google Play Store has slowly crept and moved up to 4.3, 4.4, so it has moved above 4. So, first of all, we had to address that issue but the operative issue for a customer user, discourage him or her for using my app. So, that is the first thing we did.

Second thing what we are doing we are trying to bring in more and more value-added services. As we will be bringing in the PALPL, the pre-approved personal loan through this product, we are also going to bring in the online account opening. We are in the final stage, the video KYC part has got to be the UAT and all that is going on so maybe in a month or so we’ll be able to bring that full fledged in the market — in the system wherein we will be able to open online accounts through the the app itself on the — and we will be upgrading. We have devised various products accordingly. We will be moving to WhatsApp banking, we will be moving to cardless cash withdrawal and customer acquisition via our digital platforms.

So, these are some of the areas we need to venture upon. And on the asset side also we like to be a bit focused on our digital part on particularly on the e-renewal, means renewal and digital process. So, auto renewal will also be implemented in accounts at least we will start with below 10 lakhs of MSME accounts. STP Mudra, we’ll also on the Mudra type accounts we also bring them on the digital platform and various other areas of products we’ll be bringing them one by one on the digital — on the digital platform. So, we have lot of what you call objectives in the digital area. I am very sure that once — this will move parallel to our technological upgradation project. So, once the total migration happens from seven to 10, I think we have a launch pad to go very big on our digital journey.

Ashok Ajmera — Ajcon Global — Analyst

Sir, my second question in this around is, what is our total restructured book, including the COVID restructured and the previous to COVID restructured book and what is the — can you give some color on that book that how much according to your experience may slip into NPA out-of-the restructured books are? Tendered, restructured.

Swarup Kumar Saha — Managing Director and CEO

Yeah under the COVID resolution, we have given in slide number 33, under the COVID resolution 1 and 2 we have 39 and INR39 crores plus INR1,090 crores so that is around 2,400 crores of our book and we find that yes out of that. INR1,276 crores which is outstanding under GECL, we find that in Q1, slippages was INR16.93 crores and Q2 there were slippages was INR14 crores. So overall, INR30 crores have slipped in Q1 and Q2 from the GECL book. So, that is the color.

Dr. Yadav, if you want to add something on this?

Ram Jass Yadav — Executive Director

I think it is absolutely okay, fine and we have very little amount other than these COVID and OTR framework announced by the RBI, it is, total is INR2,604 crores and [Indecipherable].

Ashok Ajmera — Ajcon Global — Analyst

Sir, coming on this our loan book, the interest rates have gone up, EBLR is 100% effective immediately, MCLR out of 190 basis points how much have you passed on to the customer in terms of the like 65 basis point or 70 basis point out of 190 points and what is the competition? Is there any fixed rate advances still there in our books and what is the percentage of EBLR, MCLR and others?

Swarup Kumar Saha — Managing Director and CEO

I think the entire question can be answered in one simple answer that EBLR, our component is 31%, MCLR is 51%, total is 82% in this component. So, the EBLR is automatically passed on immediately in a T plus one basis and MCLR, our ALCO decides from time-to-time depending on our cost of funds, etc. So, 82% of my portfolio is on a EBLR/MCLR.

Ashok Ajmera — Ajcon Global — Analyst

And how much in the MCLR like increase has taken place out of 190 basis point, which has been increased, our increase in MCLR, how much has been passed on?

Swarup Kumar Saha — Managing Director and CEO

I will give it you. As we discuss the other questions, I will give you the answer. Okay.

Ashok Ajmera — Ajcon Global — Analyst

No, problem. Sir, our cost-to-income ratio is still, but it is still higher, 65.30 as compared to some of the banks of even, your size, or little bigger than theirs. So, any plan or any targeted object about bringing it down to lower percentage?

Swarup Kumar Saha — Managing Director and CEO

Yeah. See we started the year at a — on a cost-to-income ratio of around 61%, right. So, due to the decreased income on the investment side from the treasury our cost-to-income ratio had increased substantially in Q1. But I’m happy to tell you that in Q2 we have been able in spite of having a lesser treasury income compared to earlier periods, our cost-to-income ratio we have been able to roll-back substantially from Q1 to 65.30, to 65.30. So, the strategy is to increase income as much as possible. So, income has to increase.

So, if you see our core fee income slide that is also showing some traction in terms of our Y-o-Y and sequential growth so that’s why we are bringing in new products on the third party side, we’ll be launching our co-branding credit card very shortly, we’ll be bringing out standalone health partner, RFPs also at the final stages, we’ll will be bringing out a wealth management RFP very shortly. we’ll have have wealth management. We will be focusing on our non-fund business of commission exchange and we have rationalized some of our income charges etc. So overall, we are very conscious of the cost-to-income ratio is absolutely you’re right, it’s the highest in the industry but will slowly bring it back. And by the March ’23 we expect it to be below March ’22. And going forward we have — we’ll try to bring it down to 55% on March ’24.

Ashok Ajmera — Ajcon Global — Analyst

That’s great. Sir, one thing on this pension — additional pension burden, which is their revised revision and also the wage revision, which is expected, like how much have we — I have not — because today three banks’ results were there, so I couldn’t go exactly in detail of every slide. So, what is the — how much is being amortized for future out of this amount and new wage revision again is coming up, so are we pushing for that? What kind of burden…

Swarup Kumar Saha — Managing Director and CEO

Yeah. We are adequately cushioned. And in our — in terms of pension, how much we have — INR48 crores yearly and INR12 crores per quarter. So, how much is still left? INR165 crores is still left. So, we are — as per the regulations we are doing it on a quarter-on-quarter basis on a — INR12 crores per quarter. And as far as the settlement is concerned, we are okay, we will — now the process is starting, but we are comfortable in that area. We don’t have…

Ashok Ajmera — Ajcon Global — Analyst

Sir, any kind of divergence in any RBI inspection or anything…

Swarup Kumar Saha — Managing Director and CEO

No significant divergence.

Ashok Ajmera — Ajcon Global — Analyst

Okay. The inspection is done and the report has come?

Swarup Kumar Saha — Managing Director and CEO

It is under process. It has not been formally conveyed to us. But we understand from initial discussions that there is no significant divergence. But we still have to wait for the actual report to come. But once we get the report will be able to position to comment granularly on it.

Ashok Ajmera — Ajcon Global — Analyst

Okay, sir, thank you. I just leave again thought with you all is increasing the credit book, the loan book, which is ultimately our business and which will only bring down all our ratio, making them attractive because if you — though I don’t want to name, but if you take the example of say, smaller bank, maybe just double of your size only, Bank of Maharashtra, the way they have grown and in spite and the entire gross NPA and net NPA, everything no further major slippages, 26%, 27% and a proper balancing of corporate book also. Corporate is as such is not bad.

You have to be selective. I mean you have to open up. You have to accordingly send the messages down the line to the people that yes, you are — I mean they are welcome. This is how with a proper composition we can grow a little faster and make some more money for the bank and make some of these ratios little attractive for everyone, for the investors also to come in in this bank and invest though the number of shares are very less the floating but still. That will boost the confidence of the people. Thank you very much for giving this opportunity and great interaction. Thank you. Thank you. [Operator Instructions] I can see Manju’s hand raise. I’ll unmute you Manu, please accept my request to speak.

Swarup Kumar Saha — Managing Director and CEO

Good evening, Diksha. Diksha, this is [Indecipherable] Kolkata. I have Mr. Vedanta Lahiri with me from EKO India. He want to speak to our MD, sir. Have some questions, kindly allow.

Operator

Hi, yes, good evening, please go ahead Mr. Lahiri.

Unidentified Participant — — Analyst

[Foreign Speech]

Swarup Kumar Saha — Managing Director and CEO

[Foreign Speech] For the benefit of all the listeners, for West Bengal, yes like in any other state, we will be focusing on expansion, we are lining up. [Foreign Speech]. And we are working towards that. [Foreign Speech].

Unidentified Participant — — Analyst

[Foreign Speech]

Swarup Kumar Saha — Managing Director and CEO

[Foreign Speech]

Unidentified Participant — — Analyst

[Foreign Speech]

Swarup Kumar Saha — Managing Director and CEO

Mehra, the question is whether the expansion in West Bengal is in line with other areas of states — countries. Growth in RAM is in line. [Foreign Speech]

Unidentified Participant — — Analyst

Okay sir. Thank you, sir.

Operator

Thank you, Mr. Lahiri. So, I think we are done with our conference. I don’t see any more hands being raised. [Operator Instructions] All right. So, we will conclude our today’s Analyst Meet. Thank you everyone for joining. Okay. I’m sorry, I think we have Manju. Manju I sent you a request to raise your hand to speak.

Unidentified Participant — — Analyst

Just wanted to ask Mr. Shah, like what is — what will be your — how will you know reshape the bank, what are your plans now that you’ve taken charge of the bank, I mean what will be your…

Swarup Kumar Saha — Managing Director and CEO

Yeah. The bank is historic bank of 114 years. And as any organization in any public sector bank in the country the bank has gone through rough patches, had its ups and downs. But the great part is that the last year in the financial year ’21-’22, the bank was able to make a historic turnaround and recorded the highest annual profit of INR1,039 crores which is the highest in the history of the bank. So, with that base as of March ’22, we now intend to make this bank a future-ready and a techno-savvy bank. We want to make this bank a bank which is the most efficient bank in the country. The bank maybe small but we will work to on the efficiency parameters of the bank and try to make it the most efficient bank in the country. For that, we have various projects in mind.

Number 1 is to get the technological platform up and running on upgraded version by June ’23, number 1. Number 2, bring the digital agenda in the bank very strongly, so we’ll be bringing the digital agenda. We have started taking steps on that. We’ll be working on FinTech collaborations aligning with fintechs, core lending with one of our key business areas. We have tied-up with various NBFCs. We are in — platform, we will be bringing in more convenience on WhatsApp banking, tap banking, so digitally will be one of the key areas. The third area of course would be the business growth. The bank due to various issues of the past could not grow in a desired fashion and had fallen back vis-a-vis the other banks. So, bring the growth back into the bank, not repeating the past mistakes with good underwriting skills, underwriting systems and processes. For that’s what we have done, we have segregated the sourcing and sanction in a complete way, the entire back-office, the entire processing above 10 lakh loans is now at the back-end, so we have done that part.

We are bringing in new products, we are working on succession planning, we’ll be opening up for as I said on the on the asset side and on the deposit side, various products. The bank need to give new products and customize them. Call center would be a big project for the bank. We’ll try to make the call center a profit center of the bank, both incoming calls and outgoing calls. The outgoing calls will be utilized not only for sourcing of leads, but also for collection efficiency. We will be trying to improve the collection efficiency of the call center. So, we have a host of measures lined up for the bank and as the bank progresses, as I said, the technological platform also has to be put in place.

We need to do technological what you call, collaborations on purchasing pool accounts from various NBFCs, so that opportunity is also on. So, we are conscious of the importance of technological integration. Our HR areas, we are trying to get be best of the people from the market on a contractual basis. We have already positioned Chief Risk Officer from the market, we are in the process of identifying various CXOs also and including our Chief Digital Officer also. So, we will be moving in various directions and on a quarter-on-quarter I’m sure you will find the changes coming in the bank gradually and will reveal those things as it comes and when it comes.

Unidentified Participant — — Analyst

Okay. Your Internet banking interface is very good I must say, very user friendly.

Swarup Kumar Saha — Managing Director and CEO

Thank you.

Unidentified Participant — — Analyst

It’s very user-friendly.

Swarup Kumar Saha — Managing Director and CEO

Okay, thanks. That’s nice to hear and we have created this omnichannel. I think one of the few banks which has a omnichannel experience, and mobile and Internet banking, so we are going to improve the digital platform in a very strong way and thanks for your feedback. It will encourage us to do better.

Unidentified Participant — — Analyst

Thank you so much and all the very best.

Swarup Kumar Saha — Managing Director and CEO

Thank you, thank you.

Operator

[Operator Closing Remarks]