South Indian Bank Ltd (NSE:SOUTHBANK) Q1 FY23 Earnings Concall dated Jul. 27, 2022
Corporate Participants:
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Analysts:
Prabal Gandhi — Antique Stockbroking Limited — Analyst
Aditi Doshi — Chanakya Capital — Analyst
Ravindra — The South Indian Bank Limited — Analyst
Suraj Das — B&K Securities — Analyst
Rajeev Agarwal — Sterling Capital — Analyst
Sushil Choksey — Indus Equity Advisors — Analyst
Mayank Gulgulia — SBI Life Insurance Company — Analyst
Sagar — AnandRathi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to South Indian Bank Limited Q1 FY ’23 Earnings Conference Call hosted by Antique Stockbroking Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Prabal Gandhi from Antique Stockbroking Limited. Thank you, and over to you, sir.
Prabal Gandhi — Antique Stockbroking Limited — Analyst
Yes. Thanks, Nishal. I welcome everyone. On behalf of South Indian Bank management, we have Mr. Murali Ramakrishnan, Managing Director and Executive Officer; Ms. Chithra, Chief Financial Officer; and other senior management on the call. Without further ado, I’ll hand over the call to Murali sir, for his opening remarks. Post which, we can open the floor for Q&A. Thank you, sir. And over to you.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Good morning to all of you, and thank you for joining us for The South Indian Bank Q1 FY ’23 Earnings Conference Call. We are joined by my colleagues, Mr. Thomas Joseph, Executive Vice President and Group Business Head, Sales; Mr. Anto George T, Head Human Resource and Admin; Mr. Sanchay Sinha, Head Retail Liability; Ms. Chithra H., Chief Financial Officer; Ms. Minu Moonjely, General Manager Credit; and Mr. Senthil Kumar, General Manager Recovery; and Mr. Ritesh Treasury. Let me start with the key highlights of financial performance for the quarter ended June ’22-’23. Bank had declared quarterly results with a net profit of INR115.35 crores as against INR10.31 crores during the corresponding period of the previous year. CASA grew by 17.92% year-on-year from INR25,725 crores to INR30,335 crores as of June ’22. Provision covering ratio increased to 70.11%, which was 60.11% last year. Overall, GNPA improved to 5.87% from 8.02% as at June ’21.
Net NPA improved to 2.87% for this quarter from 5.05% as at June ’21. Following the robust collection drive, our SMA-2 portfolio has come down by 48% on a year-on-year basis. We have built a new book of INR27,787 crores with a better underwriting, which is reflected in the GNPA close to 0.02% for the new book and SMA-2 book of 0.24%. Let me now take you through the other operational and financial performance of the bank. The total business for the bank increased by 7% and stands at INR1,50,900 crores as at June 30, 2022. Advances grew by 10.95% year-on-year to INR64,704 crores backed by total disbursements of INR12,548 crores during quarter ended June ’22.
The details of disbursements are as follows: corporate, INR7,595 crores, predominantly to A & above corporates; gold, INR2,978 crores; business segment, INR939 crores; other retail, INR1,036 crores. The share A & above rated large corporates has improved from 56% as at June 30, 2021 to 88% as at June 30, 2022. We have 0 slippages to NPA in our new corporate book. Gold is the segment that has been consistently growing for us. Our disbursements year-on-year was INR9,653 crores with an average LTV of 77.8% and a ticket size of about INR1.32 lakhs.
Gold loan book grew by 28% year-on-year to reach INR11,961 crores. Personal loan is other segment where we are seeing good traction since the launch of pre-approved PL in September ’21. As on date, our PL book has crossed INR1,100 crores mark. Credit card is another growth area, which we launched during FY ’22. By June ’22, we had issued more than one lakh credit cards with monthly average spend of INR21,344. The total book as of June ’22 for credit cards stood at INR330 crores. As far as SME is concerned, we are seeing good uptick in disbursements month-on-month over the past few quarters. We are cautiously growing these segments with monthly disbursements of more than INR300 crores as against average of INR175 crores per Q1 in FY ’22.
We expect the economy to pick from the current situation. A healthy economic growth and government spending towards infrastructure sectors will help credit uptick in coming years. Our aim is to grow loan book by double-digit in FY ’23. Coming to liabilities. Our core deposits grew by 8% year-on-year to INR86,460 crores. CASA deposits increased by 18% year-on-year to INR30,335 crores, predominantly due to continued improvement in SA business, which grew by 18% year-on-year to INR25,457 crores. CASA ratio continued to improve and increased by 399 basis year-on-year to reach 34.39% of the total deposit as at June 30, 2022.
Bulk deposits declined by 63% year-on-year to INR1,736 crores in line with our strategy. NRI deposits continued to grow and is at INR27,598 crores, which contributes to 31% of our total deposits. Low-cost NRI deposits grew by 10% year-on-year, INR9,086 crores. The bank saw a robust growth of 22% year-on-year in our NRI remittance business during the quarter. Our investment book was at INR23,489 crores split into HTM of INR19,122 crores and AFS and HFT of INR4,367 crores. Last year Q1, the M duration of the investment book was at 3.13%, which we cautiously reduced to 2.57% as of June ’22. The bank book to income upper end during the last year’s first quarter. And as of now, that opportunity doesn’t exist.
The fresh slippages was reduced by 48% on year-on-year from INR879 crores during Q1 ’22, to INR435 crores during Q1 ’23, which was within the overall guidance. The overall restructured book stands at INR2,198 crores. Of which, business segment is INR1,319 crores, personal segment is INR308 crores and corporate is INR571 crores. The bank holds standard and restructured provisions of INR590 crores. Gross ratio improved by 215 basis points from 8.02% as at June 30, ’21 to 5.87% as at June 2022. During the quarter, the bank recovered and upgraded INR235 crores worth of NPAs. The net NPA ratio improved by 218 basis points from 5.05% as at June 30, 2021 to 2.87% as at June 30, 2022.
Our endeavor is to bring GNPA below 5% and net NPA closer to 2% in FY ’23. The bank reported net profit of INR115 crores in Q1 ’23, mainly due to improvement in net interest income and reduction in provisions on account of lower slippages and better recoveries. Net interest income for the quarter increased by 11% year-on-year to INR603 crores. Net interest margin improved by 19 basis points year-on-year to 2.74% in Q1 ’23. The sequential growth in CASA has led to improvement in cost of deposits by 61 bps year-on-year to reach 4.35%. The endeavor to reach NIM of 3% in FY ’23. Noninterest income was INR246 crores as against INR204 crores during Q4 FY ’22. Our core fee income increased by 41% year-on-year to INR128 crores. Overall, provisions decreased by 72% year-on-year, to INR139 crores in Q1 FY ’23. The reduction in provision was mainly due to lower slippages and better recoveries. Our PCR improved by 10% on year-on-year basis from 60.11% to 70.11% as of June 30, 2022.
Our aim is to further improve PCR to 75% in FY ’23. PCR, excluding write-off, improved by 13.63% year-on-year from 38.97% as at June 30, 2021 to 52.6% as of June 30, 2022. Our overall capital adequacy ratio continues to be robust with 16.25% as of June 30, 2020. The Tier one ratio stands at 13.62% as of June 30, 2022. We are hopeful that the momentum in disbursement and collections will continue in the coming quarters, touching the desired targets. With this, we open the floor for questions. Thank you.
Questions and Answers:
Operator
[Operator Instructions] The first question is from the line of Aditi Doshi from Chanakya Capital. Please go ahead.
Aditi Doshi — Chanakya Capital — Analyst
Hello, Thanks for the opportunity. Good set of numbers. First, my question is regarding, we have reported in segmental reporting that we have booked a loss of INR81 crores in wholesale book. So just wanted to understand what led to that? Second, there are lot of private — large private banks have been talking about mispricing or dislocation of pricing in corporate book, and we have had some growth in our corporate book across major segments of more than INR100 crores — INR25 crores to INR100 crores. So just wanted to know if you could give a qualitative color on that. And third, we have a good run rate in other banking operations segment. So just wanted to know what led to that growth. These are my questions. Thank you.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Yes. The first question — first, I want to take that some banks have reported about the mispricing in corporate, etc. Frankly, I — we need to get into details of what exactly they are talking about. But as far as we are concerned, we knew exactly what we were doing. So for each of our corporates, we — whenever we negotiate for any transaction, we look at the credit rating of the customer, the kind of facilities they have with the existing banks and the kind of facility which they are seeking from us. And whether we are in a position to price it appropriately and whether that pricing would be acceptable to them. So every single transaction which we have done have been done with the discussion — combined discussion of business team with the treasury team.
And since we had — for a major part of the year, we also had a lot of surplus funds with us because, as you know, when we are restructuring the entire advances book as well as the bank, we were going slow on asset growth. We were wanting to grow quality assets only, therefore, we had surplus. Since our liability franchise continues to fire and our CASA franchise was continue to firing, we had surplus funds. So we were always looking at the opportunity cost of deploying these funds in the next best avenue available. Therefore, for some of the short-term products like in three months, six months kind of thing, which anyway is based on building whenever it comes to large corporates. So if we price it appropriately, if we win to get that bid, then we get to take part. If we don’t win the bid, we don’t get to take part. So our pricing is clearly based on the opportunities available.
And every pricing decision has been taken after thorough discussion on the alternate avenues available. So this as far as the pricing of corporate book is concerned. And the reason why we continue to pursue the opportunities in the corporate space is that, we see a lot more opportunities which can come up once you start engaging with the large corporates because there are enough and more businesses to come through them in terms of lender financing, dealer financing, funding of their key resources, funding of the wealth of the top executives, etc. So there is a whole lot of benefit which comes by dealing with the corporate. Therefore, we’ll continue to see this as a big area because this year, I believe that the opportunities will be more in the corporate banking space. Since the post-COVID, SME and retail are still recovering from these shocks and also the rates are pretty low for both these segments, not really priced to the risk.
Therefore, we are cautiously building them, especially the last as well as the higher end of SME segment. Therefore, we will see the opportunity panning out, and we will do appropriate action. This is as far as the question on the pricing is concerned. You are — overall, operating guidance as we continue to articulating, we would want to grow the overall — see, last year, we had a growth of only 4% in our asset book. And year before last, it was a degrowth. So we are — and we also had more than INR4,500 crores of slippages over the last two years. The whole endeavor was to set the processes right, check the products right, to put the teams in place, to make the teams get equipped with the skills to handle these products. All these has taken time, and we have — now we are in a position to sort of settle down in this, and we are now looking at growing each of these business line.
Therefore, we have set ourselves an ambitious target of double-digit growth, which is in tune with what market would grow for this year. So our growth, we would want to grow in all the segments. The only criteria being quality assets across all product segments, irrespective of whether it is from retail or corporate or SME. However, having said that, if there are opportunities — one-off opportunities keep coming in any of the segments, we will definitely tap those opportunities to make use of the available funds. Your first question, I didn’t get the question. Can you repeat your question?
Aditi Doshi — Chanakya Capital — Analyst
Sure, sir. Got it. In the segmental results, we can see there is INR81 crores reported loss in wholesale banking.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
INR81 crores. one second — just a second. The INR435 crores of slippages, which we experienced this quarter, this includes two specific corporate accounts. One under the retail outfit and other one is a Delhi-based company. For both of these, there is a provision which we had to do. And that is amounting to INR81 crores. If you actually — these two are taken off. If you look at it, look at the slippages, it’s close to INR310 crores, which is very much in tune with what we did — what we had experienced even for Q4.
Aditi Doshi — Chanakya Capital — Analyst
Yes, yes, sir. Thanks, got it, sir. And sir, third question regarding where good run rate in our other banking operations even in this year compared to year-on-year. So just wanted to know what’s the traction going on there.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Sorry, in comparison to what?
Aditi Doshi — Chanakya Capital — Analyst
If we see the segment-wide results, that the other banking operations, we have reported INR94 crores compared to last year’s INR54 crores. So what led to that growth?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Can we get back to you because this is — these are all specific things which we — probably we need to — we can’t give it in one single answer. We will get back to you specifically on this because we need to give you proper details. So right now, that requires some work to be done.
Aditi Doshi — Chanakya Capital — Analyst
Ok sir. Thank you sir. Thank you for the color.
Operator
Thank you. [Operator Instructions] The next question is from the line of Ravindra an Individual Investor. Please go ahead.
Ravindra — The South Indian Bank Limited — Analyst
Hi. Congrats for the wonderful results. So we can see the turnaround, but we need the clarification saying like can these provisions remain in the similar lines? Or is it chance of increase or not? This is my first question. And so initially, there was a lot of churns in the corporate loans bank promote the strategy from corporate to retail loans. And again, due to the COVID, again, we are moving to the corporate. So how often this — why frequent change in the strategy and all? What is the guarantee that we will not get the — again, the corporate loans challenges again? And what is the underwriting standards which are changing from the previous thing to the your things. We can see the new book is performing very well. But what are the challenges earlier and what was the credit rising standards which have changed, sir?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Yes. So first one is with respect to…
Ravindra — The South Indian Bank Limited — Analyst
Provision.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
With respect to provision, see, quite frankly, the expected — we expect the slippages to be — we are conservatively saying that it will be 2% — 1.9% to 2%. Provision, we would want to curtail it within INR1,000 crores for the full year. This is much lower compared to what we actually had provided for in the last two years. So this is more a guidance than anything. We would obviously endeavor to provide as much less as possible by doing good recovery and collection. As far as the — see, there is no shift in strategy or anything. We continue to — I’ve been saying that we will continue to work on quality assets, irrespective of these segments, etc. Clearly, what gave this bank in the past was lumpy exposures to corporates, and where these corporates are also not that well-rated corporates, and there were — and also probably the period — the economy — the period in which these lendings have been done were also the period when many of the banks which are focused on corporate ’22 problem. So — but how are we taking care of that?
We have been continuously reiterating that. Whatever we are onboarding today are all very well-rated corporates. And my composition of the corporate book, if you look at it, it is 85% is A & above. So to that extent — and we go by rating given by the very well-reputed rating institution. To that extent, we’ll continue to be focused on onboarding quality assets. So therefore, while — having said that, definitely, this being one of the — I mean, since the exposures typically in the corporate will be of a larger quantum, we will continue to experience caution to closely monitor as how those accounts are behaving, etc. I’m happy to say that in the INR27,000 crores of new book which we added, of which the corporate is also a substantial portion. I must say that there is hardly any slippages into NPA. So zero slippages into NPA as of now. But having said, it’s about 21 months since we started building a new book. We’ll continue to exercise caution. And in the corporate book also, the nature of the corporate book is some of them will be short term, some of them will be medium term.
And to that extent, short term, as you know, we’re discounting those kind of things and so were well-rated corporate probably of default in three months or six months or nine months is not going to really alter much. So — and they had an impeccable track record. We deal such corporates where the track record has been impeccable. So therefore, we are pretty sure of who we are lending to and how we are lending. Wherever it’s a long-term exposure, we also look at the kind of players who are taking part, the kind of appraisal which has happened, and we look at the end use of the funds for which it is going and what is the track record of the corporate in terms of how well has executed the projects in the past, etc and what has been their track record in completing projects in time. All that is factored when we assess the project loan for any corporate. So the way we have tightened our underwriting, we have done tightened underwriting across all product segments, including corporate. To that extent, if you look at specifically if you want me to quote a few things, for example, in SME, we closely look at DCMR ranking of SME, which is a new CIBIL — not new, it’s about two years old now — 2, three years old, where they give a ranking of CMR for SMEs from one to 10, one being the best and 10 being the worse, and they constantly come out with data to say what is the probability of default for CMR one to five and what’s the probability of default for six to 10. So the — whenever we onboard any SME customers, we closely look at what is the CMR ranking apart from doing our own appraisal.
We have a — criteria. We have an appraisal criteria, and we do a proper analysis of whether the cash flows are sufficient for — can take into service out. As far as retail is concerned, we have used credit models to build with the help of bureaus. And we are using benchmark probability of default which you would want to have. And we are also continuously monitoring this portfolio by drawing vintage close to track how well the portfolio is performing as we age the book. So yes, as far as corporate is concerned, detailed appraisal keeps happening, and we do a benchmarking. We do peer comparison. We do the market news about this. Every quarter our risk team does an industry outlook of which are the industries which are stable, which are growing, which are degrowing. So whenever we take exposures in our industry, which is stable or growing, we give a higher weightage in the rating criteria. Wherever it’s a degrowing industry, obviously, we carry adverse weightage in the rating criteria. So all that we factor when we look at exposures for corporate. So overall, I would say that heightened focus has been given on onboarding quality cases. So that’s a way I would probably put it. Yes. Sorry, what’s your next question?
Ravindra — The South Indian Bank Limited — Analyst
Yes, sir. Sir, final question is, so gold loans are pretty much they are risk-free, right? And so banks, including The South Indian Bank, I think we’re charging around 8% or less than 10%. But how the similar gold loan is charged more than like 15%, nearly 20% by the NBFCs and all? And why can’t we increase our yield on those gold loans by doing better marketing and onboarding the more customers on the gold loan? And also sir…
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
This discrepancy will always be there. There are segments where NBFCs will have a humongous advantage. They’re all single product entities. And obviously, their ability to, therefore, garner the customer or the ability to quickly turn around, their ability to accept a few deviations. All that is quite possible when it comes to dealing with NBFCs, which are focused on single products. So this is a differential. If you look at it, it existed since ages. So I mean if you look at many, many business segments, there will always be differences. There are commercial vehicle, used commercial vehicle, charge the NBFCs at 22%, 23%. There are banks which charge it to 13%, 14%. There are NBFCs charge the used car at about 20% to 23%. There are banks which charge 11%, 12%. This differential will always exist. See, if the single product NBFCs has the ability, they are regionally strong players. They will put more people. They don’t mind putting some 15 people in the street. We cannot afford to put such people in a bank with given the cost structure, etc. So there’ll always be this territory, which is clearly earmark for where NBFCs can play a role, where banks can play a role. I mean, we should not think that we can compete with them and we need to compete with them by putting that many resources. It may not be viable and also there is a risk also in that.
See, as a universal bank, we don’t want to get stuck with only one product also firing for us. We need to be diversifying our risk and we need to ensure that we grow in all segments. Because economy at the end of the day, as gives options for opportunities in various segments. So therefore, I would not really like to compare ourselves with the NBFCs and say, why can’t we charge more? I mean, they play their game, and we need to play our game. As far as we — as long as we are concerned, if we are clearly pricing our product correctly and if we are taking care of the fraud risk, which is inherent in the gold business and operation risk, which is also inherent in the gold business, so long as we take care of that, I think we are running our book fairly well. And we are happy with the way we are growing. Currently, my gold loan book is growing quite well. And we — as the price keeps increasing in the market, we are also continuously repricing our goal book. And we are seeing whether it has got an impact on the elasticity of the volume. That also is holding now.
Ravindra — The South Indian Bank Limited — Analyst
Fine, sir. Finally, sir, can we expect a double-digit ROE in this financial year, sir? Or at least like near to 1% ROA? Can you guide on that? I think you guided for 3% NIM. I don’t know if we cross that. How about ROA and ROE, sir?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
No, ROE and ROA, if you recall my strategy document, I said that we will reach double-digit in 2024 March and ROA of 1% in 2024 March. This was even before we experienced the COVID-one impact and COVID-two impact, etc. The — after our impact of all this, we actually shifted the entire strategy by one year. So technically, we were wanting to reach these levels by March ’25. But I’m sure I will reach all these levels much before. As I’m talking to my ROA has improved to 0.4% now, and our ROE has improved to 7%. So we will certainly — our aim is also to reach double-digit ASAP. But in the hurry to do price it aggressively, we should not lose the purpose for which we — the STED route, which we are taking to really build a solid book, which is quality. And quality assets don’t come cheap. So they need to — you need to price them appropriately. So we will have to maneuver both these very well to ensure that we create a good solid performing book, which continue to earn more and more money for the bank. That’s the — so I will definitely make use of the opportunity to reach ASAP, but it’s important to put the building blocks right and grow it correctly while working on these benchmarks.
Ravindra — The South Indian Bank Limited — Analyst
Fine, sir. Fine, sir. Because these parameters are very much necessary to raise the capital because at current price, we cannot raise the capital, if you want to just raise some INR1,000 crores, we need to dilute it like equity 100%, right, so this is not at all good price to this capital. So fine, sir. All the best.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Well said. Thank you. Yes, I do agree with you. Well said. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Suraj Das from B&K Securities.
Suraj Das — B&K Securities — Analyst
Hello sir. Thanks for the opportunity. I have a couple of questions. The first question, sir, if you can give us the breakup of the new book in terms of various segments such as corporate, retail, business loan and agri. What would be the rough breakout of the new book?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
I think it was — I read it as part of the thing. 64 — corporate, for this quarter, we have disbursed a total of INR12,548 crores, of which corporate is INR7,595 crores. Gold is…
Suraj Das — B&K Securities — Analyst
I was asking more from the outstanding point of view disbursements that you have mentioned in the slide, I can see that. But out of INR27,787 crores, which is the outstanding new book, let’s say, as of June 30, 2022, what will be the breakup there, and if you have it handy?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
If you ask me, see, INR27,000 crores. I’ll just give you a rough number. INR27,000 crores is the new book, which we’ve added. And so it’s about 40 — my total asset book is about INR64,000 crores, so it is constituting about 47% of the total, so the book is about roughly 47%. Just hold on for a minute, I’ll give you the breakup of this composition. Just a second. What I’ll do is we have — it up but right now, it’s not handy with me. I will — we will send it to you.
Suraj Das — B&K Securities — Analyst
Sure, sir. And sir, the second question was, I mean, as you were saying that your focus, I mean, even obviously, quality names or quality exposure rather than any segment particular. And there, I mean, I think you are also, I mean, the large corporate is growing and you don’t find any challenge here. I just want more flavor in the large corporate book in terms of let’s say, sir, how much would be your working capital exposure there with this term loan? And what would be the average ticket size here vis-a-vis, let’s say, previous low? Or what are the key industrial segments where you are seeing a good traction in the large corporate book? If you can give any color or flavor here, that will be great.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
No, before that, I’ll first answer your earlier question. We just got the break up. So out of INR27,000 crores of new book, agri is about INR9,557 crores, which includes gold also. Business segment is about INR2,400 crores. Corporate is about INR9,927 crores. Retail is about INR5,459 crores. Adding up to INR27,342 crores. This is the composition of the new book in terms of breakup. So your next question is basically on — you are asking about term loan and working capital. Is that the question which you are asking? Breakup of that?
Suraj Das — B&K Securities — Analyst
Right, sir. So what would be the rough breakup there?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Yes, yes. I’ll give you. See, the total, if you look at the total corporate loan, we have about INR18,600 crores is the corporate book as of quarter one end. Of which, CC is about INR2,200 crores, term loan is about INR13,000 crores, pre-shipment is about INR945 crores, post shipment is about INR314 crores, domestic bill is about INR2,038 crores, adding up to INR18,603 crores. This is a breakup of the corporate book. And as I’m talking to you, the — I’ll give you also the breakup of the SMA book.
Just a second. As far as SMA book is concerned, the total book is about INR18,372 crores. Of which, CC is about INR9,018 crores. Term loan is about INR6,200 crores, pre-shipment is INR284 crores, post-shipment is INR31 crores, domestic bill is about INR2,680 crores. So this is the breakup. And I can only tell you that in terms of incremental growth in both the corporate and SME. SME, as you know, is more and more of granular. Our average ticket size in SME continues to be less than INR one crore. To that extent, we are continuing to focus on granular segment. If you recall, I have always been saying that SME has got two segments, one up to INR100 crore of turnover where the average ticket size would be up to INR two crores.
And the one above INR100 crores to INR250 crores of turnover, where the average ticket would be about INR eight to INR10 crores. We are going a little slow on the higher ticket because that can — you need to do a good appraisal and any slips there will cost sort of damage. Whereas on the lower end, given the fact that we have built a credit model using McKinsey, we are using that model to underwrite fresh lower-end SMA cases. So with that, the new book of SMA is also behaving exceedingly well. So the challenge is to continue to work on the gold book and build our overall book which is of good quality.
Suraj Das — B&K Securities — Analyst
Understood, sir. Understood. The second question is on the treasury side. So sir, on the slide eight, the treasury and ForEx income is INR four crores while as the breakup of the treasury and ForEx income that is there in slide number 10 is INR36 crores. And we can exclude the depreciation on investment. So if I calculate it, sir, that will be roughly INR32 crores for NPA and that you have received — we have to get it in this quarter. Is my understanding correct?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Yes. SR provisioning, yes, was there, which is, you know that the SR book or whatever assets which we sell to ARC, the SR which get issued that they are all booked as investment book. To that extent, there will always be SR provisioning, which will keep happening depending on the rating institutions assessment on the ARC’s ability to recover. So I’ll just give you — you are right that the net final listing is INR four crores is what we had shown. If you look at the breakup of the income, we made INR10 crores in GSEC. We made about INR four crores in MF and equity put together. We made an exchange income of INR18 crores. Therefore, total ForEx, we have done about INR18 crores. And there is a depreciation investment of INR32 crores, which is towards SRs.
Suraj Das — B&K Securities — Analyst
Okay. Understood, sir. Understood. And sir, how much…
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Compared to previous quarters, etc, we have actually started seeing good traction in SRs also. Now with the ARCs are working on recovery, we believe that the traction will happen more and more in the SRs.
Suraj Das — B&K Securities — Analyst
Understood, sir. And sir, what would be the rough breakup of the loan book by benchmark, let’s say, how much on the loan would be linked to EBLR, how much would be linked to MCLR? And what would be retail frequency for the EBLR as well as the MCLR book?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Yes. See, out of the — we have got — this is — one second. See, out of the INR64,000 crores asset book, which we are talking about, MCLR linked is about INR21,250 crores, base rate linked is about INR587 crores, fixed rate is about INR19,557 crores. EBLR linked is about INR19,000 crores and others are INR4,218 crores. In all, it’s about INR64,000 crores. When it comes to MCLR, etc, we do the revision as on MCLR revision date, which we keep for holding ALCO at regular intervals. And as far as the benchmark creates are concerned, reference is concerned as and when there is a change among the regulators, we hold ALCO.
And the increase in rate gets passed on to the customer from the first of next month. Earlier, we had it for the first of next quarter, but then we subsequently looking at the way the frequencies are going to happen, we sort of move it to first of next month, it will get implemented. And so that — and also, obviously, the new pricing, etc, we are ensuring that we could with the expectation that if the disbursement happens within so and so time, it will be this rate. After that depending on how much — extra get increased based on regulators’ guidelines, we will suitably alter the rates. As far as the passing of the rates in terms of deposit is concerned, we obviously — as part of ALCO, we discussed that also. And we continuously reprice our deposits, and we have repriced even our FCNR deposits due to the — to make use of the opportunity available for next four months where SLR and CRR won’t be applicable.
We have also increased our FCNR rates, etc, for these mobilized funds. So this is something which we’ll anyway continue to keep doing. And I believe that over the next one year, we expect the rates to be further increased by regulators at least to the tune of 70 bps to 100 bps going forward. So we will carefully watch them, and we will also price our thing accordingly. But what we are doing — what we do experience is in that higher-rated corporates, especially AAA corporates, etc, they clearly renegotiate. They don’t accept the full passing on of the rates. So there is a renegotiation, which keeps happening. So if you want to be in the transaction, then you need to price it appropriately, which is in line with what other banks are offering to them.
Suraj Das — B&K Securities — Analyst
Possibly from that point of view, I mean, your guidance of…
Operator
Sorry to interrupt Mr. Das
Suraj Das — B&K Securities — Analyst
Sorry, sorry
Operator
I would request you to rejoin the queue, please. The next question is from the line of Rajeev Agarwal from Sterling Capital. Please go ahead.
Rajeev Agarwal — Sterling Capital — Analyst
Thank you for the opportunity. Good set of numbers. Hello.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Thank you.
Rajeev Agarwal — Sterling Capital — Analyst
Yes. Sir, we are primarily a South-focused bank, so what is the strategy going forward to expand in other parts of India? Can you just elaborate on that?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
See, as of now, the strategy as far as the brick-and-mortar office is concerned, we will definitely be going slow on that because for two reasons. One is we believe that the future of banking anyway is more and more towards digital, therefore, digital offering, clearly has no boundaries. In that sense, so long as we are able to service the customer and we are able to collect and recover, clearly, geography is not a big constraint coming in the way. Having said that, we continue to keep looking for opportunities to open brick-and-mortar offices in the areas where we have not represented. This comes out from the some of the branch consolidations, which we keep doing.
Whenever we have two branches, which are very close to each other, when we feel that businesses can be consolidated, we release license from there and use that license for opening up a location where we are not represented earlier. So in the full year of FY ’22 — March ’22, we opened about nine new locations across the country. And this is something which we do it as more like not as a strategy, but more like to ensure that we are represented well across the locations. But once this year probably will be the defining year for us in terms of stability in our performance, etc. We will definitely look for — wanting to be present in more and more locations once we get to see how the traction for the full year goes.
Because we have just come out of a negative growth of year before last and 4% growth in the last year to double-digit growth this year. And you know that our capital position was also not that great 2, three years back. Now we are fairly comfortable at 16.23%. So my thought was not to really fritter away capital by investing in newer and newer branches when we can get more and more from the existing branches and we get more and more from the resources. So that’s a continuous process. We will do that, and we will evaluate it maybe during the year to see whether we need to open more in the coming years.
Rajeev Agarwal — Sterling Capital — Analyst
So sir — and one more question in that. These nine locations are in new cities, which are those cities?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
I can send you that.
Rajeev Agarwal — Sterling Capital — Analyst
Okay. Okay. And I will mail you on that. And sir, this collection efficiency, this again has dipped in this quarter. So where we are seeing less collections in this segment here please?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
No, no. Collection efficiency has not dipped. See, the more and more you recover from the bad cases, there at least what is due for the month only you need to collect, right?
Rajeev Agarwal — Sterling Capital — Analyst
Okay. Okay. So…
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
It will only be 100% maximum. Therefore, to that extent — yes, that extent it will be — I’m not saying that we have reached that stage, but I’m saying that, see, you should also compare quarter-to-quarter. See, quarter four recovery and collection cannot be compared with the quarter one recovery and collection, number one. If you look at quarter one of last year to quarter one of this year, we have definitely shown improvement. And I’m also happy to say that with the more and more of our overall portfolio book getting churned with high-quality book, the customers are expected to pay on due date.
We don’t want the collection team to accumulate some dues and then go and show 100% plus collections. That’s not the objective anyway.
The objective is to collect the dues. Even before we ask for the due, the money should come. That should be the quality of the customer. But even if that is not happening with a little bit of a soft follow, we should be able to collect the money. So that’s the endeavor. So obviously, we will improve our collection. I’m not saying that 90% is ideal, we should definitely collect whatever is due. So we will definitely — you will see that improvement anyway in the coming quarters. But Q1, in my view, has always been a little lower than the rest of the quarters.
Rajeev Agarwal — Sterling Capital — Analyst
And sir, this INR3,799 crores — this INR3,000-odd crores NPA — gross NPA in the old book. So roughly how much would we have recovered money? That’s it.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
So that’s a difficult question to give a full number. What we are actually — see, the way we work it out is that you have a gross NPA today of 5.8%. So we would want to continuously work on improving the gross NPA and the net NPA and PCR. These are the metrics by which we measure how well the traction is happening in the impaired quality book. So as I’m telling you, we are at about 5.87% in gross NPA, which we would want to move towards 5% by the end of the year. Net NPA, which we are currently at about 2.8%, we would want to move towards 2% by the end of the year. PCR, which we are currently at about 70%, which we have improved by 10% over the last one year, we would want to reach 75% by the end of the year. So these are the — this is including write-off. Excluding write-off, which we are currently at about 52%.
We would want to cross 60% by the end of the year. So the endeavor is to keep working on those. And many of these resolutions — some of these cases also dependent on environmental factors. It’s a legal system — depends on legal system in India. It depends on courts going. It depends on IBC resolving few cases, etc. So these are many things. And therefore — and even where it is sole banking, etc, we need to see whether we will be able to sell out those assets, which has collateral at a price which is acceptable to us. So it’s a continuous effort, which keeps happening. What I can tell you is in terms of recovery and collection, we ended the year of March ’22 with 250% growth over the collection and recovery for the year before last. And that’s the same level of collection and recovery is what we want to do this year. In the first quarter, we have done close to INR230 crores of recovery from NPA, another INR70 crores, INR80 crores of resolution, which has happened, but this is without any big account getting dissolved in Q1.
We expect some resolution of big accounts to happen in Q2, Q3, etc. With that, we hope that, for the full year, we would want to work at least INR1,200 crores to INR1,500 crores of upgrade and recovery. And that’s the way we would try to clean up. If you look at SMA-2, that’s another indication to look at. If you look at SMA two for one year back to what it is today, we have brought down by almost 48% of SMA-2 book. So our endeavor is to pull back SMA-2 to SMA-1 and then to 0 and also not to let the SMA-2 slip into NPA. So I do a weekly review of this collection and recovery to ensure that we pull back the bad accounts, and we also not let bad accounts slip into NPA. So it’s a combination of many things which will work at play. So — and you will see the improvement of that happening. We have already seen increment from 8% to 5.8%, we would want to certainly work towards improving further to 5% at a first milestone. Then hopefully, we’ll bring it below 4% over that period.
Rajeev Agarwal — Sterling Capital — Analyst
That is this improvement is showing. And one thing — one last question…
Operator
Mr. Agarwal, I would request you to rejoin the queue as there are many other participants who are looking for their turn.
Rajeev Agarwal — Sterling Capital — Analyst
Ok, Thank you.
Operator
The next question is from the line of Sushil Choksey from Indus Equity Advisors. Please go ahead.
Sushil Choksey — Indus Equity Advisors — Analyst
Congratulations for a stable result, sir.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Thank you, sir. Thank you so much.
Sushil Choksey — Indus Equity Advisors — Analyst
Sir, what is the aspirational CD ratio if I take a 12-month or a 24-month outlook in the bank?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Sir, we are currently at about 72%. My first milestone is to reach 75%. I would want to reach it by the end of the year through aspirationally. That would be the first milestone. I don’t want to endeavor going beyond that right now because, as you know, it depends on how we manage both the liability and asset franchise. And at the same time, the stable growth of asset is also required and the stable growth of liability is also needed to be in place. So I would be — we were at about 68%, 67%, 69%, we have now crossed 70%. We were at 74% also. But as I’m experiencing this year that with the rates increase, etc, happening, we’ll have to really see how the absorption of assets happen as the economy pans out. So my goal is to reach 75% by the end of the year.
Sushil Choksey — Indus Equity Advisors — Analyst
Linking to that, where do you see CASA and your outlook on investment book in view of the volatility with the Fed meeting outlook, which will be announced today? How are we placed on that? And secondly, government’s new scheme on NRI deposits, major banks are trying to drive a big base. South Indian Bank and mainly southern bank have a good hold on NRI deposits. So what kind of measures to attract reasonable cost money to increase our CASA as well FCNR deposit?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Excellent. Excellent question, sir. Sir, as far as CASA is concerned, we have got — I just want to tell you that we have four channels which we fire for CASA. One is retail, the second one is task, third one is government banking, and fourth one is NR. Sir, first, let me touch upon government banking. We have got the agency license, we got it last year. And in fact, among the banks which were issued licenses last year, we were the first one now to make it operational. We have already are up and running in our custom duty collection, etc, and we have started seeing traction happening. I mean, this is just the beginning. Of course, the endeavor is to clearly move towards collecting direct taxes and collecting GST. All that will hopefully help us to get one day slot, etc, for fairly large sums of money in government.
Task, if you look at it over the period, during COVID period, many of the institutions had challenges in connecting fees, etc, from the students. That traction we have started. In fact, we are quite seeing good traction happening in task contribution to CASA. So that, again, is a firing for us very well. As far as retail is concerned, CA, current accounts continue to be a challenge for us because that clearly, like every other bank, we also face ups and downs some volatility there. Savings bank clearly is on the rise, it’s growing. And NR these is a very strong franchise for us, 80% of our NR businesses have consolidated in Middle East. But I’ve been recently in Middle East and met with all the exchange houses, met with our team, met with the high net worth customers, etc.
The way we have created our image in terms of service and in terms of our presence, etc, is very much appreciated there. And we are also in talks with a couple of very leading exchange houses to improve our remittances from Middle East, etc. Having said that, 20% of our NR business also comes from rest of the world. And we are in June with the new regulations to say that whatever we can raise through FCNR will not attract SLR, CRR. We have also repriced our FCNR deposits. The endeavor is to capitalize on this window opportunity and see how we can beef up our ForEx resources. Having said that, this also would help us in sort of pricing our loans, especially for large corporates where there is a pressure on pricing and the foreign currency linked to pricing, wherever there is a natural rate available for corporate, it will help us to be in the market and continue to do transactions with them. So that’s how I see the overall thing.
Sushil Choksey — Indus Equity Advisors — Analyst
So what percentage of our balance sheet spend would be utilized towards digital transformation of the bank over a period of 2, three years?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
So right now, I won’t endeavor a percentage. But what we are actually seeing is that, we have already completely digital in credit card offering. It’s a end-to-end digital, right, from acquiring customer to fulfillment to issuance of card to transacting card, everything is happening digitally. Clearly, we’ve already enabled everything to happen digitally. Home loan also, we have enabled everything to happen digitally. But we need a platform for doing end-to-end fulfillment of this. The platform we have engaged with the Nucleus to set up the platform. That is getting a bit delayed due to attrition issues in the IT industry and due to other factors.
So we hope that it will come into force in — by end of Q2 or early Q3. Once that is in place, anyway our rule engines, credit engines are ready. So then the entire offering can be done from sourcing into up to collection and monitoring, etc, we can do completely platform. This is retail platform, Nucleus. Same way we have engaged with the NuGen for SME platform. And again, SME, we have used McKinsey to develop a credit model for us. And once the platform is in place, we will offer the end-to-end offering of the loan through NuGen platform. Already supplier and vendor financing, we are using a platform for doing those businesses. And with the new treasury system coming in, we can offer variety of our treasury products also digital. So all in all, the products which we are focusing on currently, all of them can be done once these platforms are in place.
But having said that, we are not waiting for them. We are continuing to grow these businesses. But once these platforms are in place, and our ability to turn it around will be faster, the ability to price it will be much better. And obviously, our ability to monitor, etc, will also be much, much superior because we can take out the entire data and do our data science. Our data science team can do a complete analysis of the portfolio, etc, for better reviews.
Sushil Choksey — Indus Equity Advisors — Analyst
So you’ve been asking in the plan, the treasury, and secondly is aspirational cost to income of the last five years has been average around 50%. Do we get there in short term or the medium term?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Sir, that will be — that is one thing which will take some time for us, sir. Out of the six Cs, which I articulated, cost/income is one area which will take some time because this can work to the advantage of bringing it down from current level of 62% to 50% level, which is the aspiration level for me. That will happen only with the income really going up, and that — visibility of that will we get to see only this year because, this is the first stable year after two years of complete disaster in terms of economy and in terms of our own portfolio challenges.
Sushil Choksey — Indus Equity Advisors — Analyst
Congratulations. All the best on the financial year.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Thank you, sir. Thank you so much.
Sushil Choksey — Indus Equity Advisors — Analyst
Thank you sir.
Operator
Thank you. The next question is from the line of Mayank Gulgulia from SBI Life Insurance Company.
Mayank Gulgulia — SBI Life Insurance Company — Analyst
Hi Sir Thanks for the opportunity. So like out of our restructured loans, what would be amount which will be still under some kind of moratorium?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
See, out of the restructured book, COVID-1 — ECLGS one is the one where moratorium has been already over. ECLGS two onwards, the moratorium is still in place. We will get see the repayment of them only from this quarter onwards, quarter two onwards. So we have a total restructured book of INR2,400 crores, I mean, which includes everything. We include MSME restructuring, COVID-1, COVID to ECLGS etc, all that is part of this. And INR2,100 — I’ll tell you the correct number. INR2,198 crores is the — of which COVID-1 is about INR710 crores, COVID-2 is about INR1,032 crores and all others are about INR456 crores. So the INR710 crores the one where repayment has started. COVID-2, we will start getting to see the repayment from this quarter onwards.
Mayank Gulgulia — SBI Life Insurance Company — Analyst
Okay. That’s helpful. And we have SMA-2 book of INR1,100 crores. So whether there would be overlap between restructured loan and…
Operator
Mr. Mayank, we cannot hear you properly. Can you please repeat? And I would request you to use your handset.
Mayank Gulgulia — SBI Life Insurance Company — Analyst
Yes.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Yes. Sorry, repeat your question, please?
Mayank Gulgulia — SBI Life Insurance Company — Analyst
Like, we have SMA-2 book of — SMA-2 loan book of INR1,100 crores. So what would be overlap between restructured loan and SMA-2 book?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
No, no, no. SMA-2 book has got mix of everything, mix of retail, SME and corporate. I mean it’s a composition of the book. It’s a overall SMA-2 book of the entire portfolio, right? So it has got a mix of everything.
Mayank Gulgulia — SBI Life Insurance Company — Analyst
Is there any overlap between restructured loan and SMA…
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Just hold on I can give you the breakup of this. Just hold on. Restructured will not be part of that. Restructured anyway is standard restructuring. It will not appear in any of them. I mean, if that is your question, then it doesn’t come there.
Mayank Gulgulia — SBI Life Insurance Company — Analyst
Okay. And like we are working on like underwriting like using — having a rating model for SME and retail segment. So for SME, we are taking McKinsey models. So that is work-in-progress or that has already been implemented?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Already implemented. We have done a pilot and we scale it up to another regions. And the last rollout could happen now. And out of, I think, 18 regions, nine regions we have already rolled it out.
Mayank Gulgulia — SBI Life Insurance Company — Analyst
And on retail side, for non-gold retail loan.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
It’s done. It’s implemented fully.
Mayank Gulgulia — SBI Life Insurance Company — Analyst
Same McKinsey model?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
No, no. In retail, not McKinsey. It’s Experian.
Mayank Gulgulia — SBI Life Insurance Company — Analyst
Okay, okay. And last question, in our granular SME segment, what would be average LTV? The LTV, no, you’re asking average, I mean the ticket size will be about INR60 lakhs, INR70 lakhs. Our collateral cover generally, we — at the lower end, we generally take 100% plus kind of collateral cover apart from the primary security. It you are referring to installment loan, we don’t do much of the installment loan in lower end SMEs. It’s all working capital.
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Okay, Thanks a lot.
Operator
Thank you. The next question is on the line of Sagar from AnandRathi.
Sagar — AnandRathi — Analyst
Hi Thanks for the opportunity. Just some data keeping question. I missed the part where you gave the breakup of the loan book in terms of TBLR, MCLR, etc. If you could. Thank you.
Operator
Thank you. As that was the last question for today, I would now like to hand the conference over to Mr. Prabal Gandhi from Antique Stockbroking Limited. Thank you.
Prabal Gandhi — Antique Stockbroking Limited — Analyst
Thank you, everyone, for joining in. Murali sir, do you have some closing remarks?
Murali Ramakrishnan — Managing Director, Chief Executive Officer & Director
Yes. No, I would like to thank all the participants who took the time out, out of busy schedule. I know there is another conference today from a very large bank. And despite that, I think I really appreciate people who have taken part. And if any of your questions, which you could not have a chance to ask, please do not hesitate to write to us. We’ll be happy to share our answers with you. And we would like to give as much detail and we would like to be as transparent as possible in spelling out what exactly we are doing and what is working for us, what is not working for us. So thanks a lot, and take care. Have a nice day. Thank you.
Operator
[Operator Closing Remarks]