South Indian Bank Ltd (SOUTHBANK) Q3 FY23 Earnings Concall Transcript

South Indian Bank Ltd (NSE: SOUTHBANK) Q3 FY23 Earnings Concall dated Jan. 25, 2023

Corporate Participants:

Murali Ramakrishnan — Managing Director and Chief Executive Officer

Analysts:

Sreesankar R — InCred Equities — Analyst

Rohan Mandora — Equirus Securities — Analyst

Nilesh Jethani — BOI Mutual Fund — Analyst

Sonaal Kohli — Bowhead Investment Advisors — Analyst

Renish Bhuva — ICICI Securities — Analyst

Priyesh Jain — HSBC — Analyst

Tushar Sarda — Athena Investments — Analyst

Pujan Shah — Congruence Advisers — Analyst

Ankur Kumar — Alpha Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Q3 FY ’23 Earnings Conference Call of South Indian Bank hosted by InCred Equities. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Sreesankar R from InCred Equities. Thank you and over to you.

Sreesankar R — InCred Equities — Analyst

Thank you, Yashasvi. Good afternoon all the participants. Good afternoon, Mr. Murali Ramakrishnan and his entire senior management team for taking time out to do this analyst call for investors and analysts. Without wasting much of our time — everyone’s time, rather, I request Mr. Murali Ramakrishnan to give an overview of the results and then take the question-and-answer session.

In line with what he has been projecting, what he’s been giving guidance, the company has still come out with a good performance. I hope that his good performance continues. Over to you, sir.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Good afternoon to all of you and thank you for joining us for the South Indian Bank Q3 FY ’23 Earnings Conference Call. I am joined by my colleagues, Mr. Thomas Joseph, Executive Vice President and Group Business Head; Mr. Anto George T, Chief General Manager and Head of HR and Admin; Mr. Sanchay Sinha, Senior General Manager and Head of Retail Liability; Ms. Chithra, Senior General Manager and Chief Financial Officer; Mr. Sony, Senior General Manager and Chief Information Officer; Ms. Biji, Senior General Manager and Head of Corporate Banking Group; Mr. Senthil Kumar, Senior General Manager, Recovery; and Mrs. Minu Moonjely, Senior General Manager, Credit; Mr. Vinod, who is the General Manager, Treasury; and Mr. Nehru Singh, General Manager, Credit Policy and Monitoring.

Let me start with the key highlights of financial performance for the quarter ended December ’22. Bank declared quarterly results with net profit up INR103 crores as against a loss of INR50 crores during the corresponding period of the previous year. CASA amount increased by 9.9% year-on-year from INR28,229 to INR30,660 crores as of December ’22. CASA ratio improved by 186 basis points year-on-year to INR33.81 crores [Phonetic] from INR31.95 crores [Phonetic] — 31.95 percentage. NIM improved to 3.52% against 2.64% on a year-on-year basis. Provision coverage ratio, including the write-off, improved by 643 bps year-on-year to reach 74.51% in Q3 FY ’23 against 68.08% during Q3 FY ’22. Overall gross NPA reduced to 5.48% from 6.56% on year-on-year basis. Net NPA reduced to 2.26% from 3.52% on year-on-year basis. Continuing our focus on collections, our SMA2 portfolio has come down by 48% on year-on-year basis from INR1,330 crores to INR697 crores. Built new book up to INR37,748 crores from October ’20 with better underwriting reflecting GNPA close to 0.06% and SMA2 book at 0.22%.

During the quarter ended December 31, ’22, Bank had provided additional provision for depreciation on security receipts related to SR acquired prior to March 31, 2017 amounting to INR311.74 crores pursuant to clarification on Master Direction of Transfer of Loan Exposure 2021 published by RBI on December 5th, 2022.

With regards to status of sale of master CART [Phonetic], we carry a balanced SR of INR1,455.73 crores and provision as per aging of assets amounting to INR1,241.16 crores. However, the provision as per NAV is INR750.11 crores indicating INR491.05 crores additional provision in the books. With this outstanding, SRs is INR214.57 crores. For this outstanding INR214.57 [Phonetic] crores, the expected aging provision by March ’23 is INR48 crores and INR15 crores for next full year ending March ’24. If this one-off provision related to SR acquired prior to March 31, 2017 is not netted off, the bank would have registered a profit before tax of rupees INR474 crores and profit after tax of INR306 crores recording the highest-ever quarterly profit declared by the Bank. Significant improvement in ROA at 0.56% as against negative 0.31% and ROE at 9.22% against negative 5.4% on year-on-year basis. Excluding this one-off SR provision, our ROA is at 0.82% and ROE is at 13.05%.

Let me now take you through the other operational financial performance of the Bank. The total business for the Bank increased by 9% and stands at INR1,60,789 crores as of December 31, ’22. Advances grew by 18% year-on-year to INR70,117 crores backed by total disbursements of INR36,957 crores during the nine months ended December ’22. The details of disbursements are as follows: corporate INR20,413 crores, predominantly to A and above rated corporates; gold, INR8,269 crores; business segment, INR4,735 crores; and other retail at INR3,541 crores, which includes PL of INR1,609 crores, credit card of INR670 crores and INR1,218 crores of loan against deposits. The share of A and above rated [Technical Issues] 82% as of December 31, 2021 to 95% as of December 31, ’22. We have no slippages in our new corporate book.

We continue to grow our gold loan business. Our disbursement, year-on-year was INR11,081 crores with an average LTV of 81.42% and a ticket size of about INR1.52 lakh. Gold loan book grew by 32% year-on-year to reach INR13,053 crores. Personal loan is another segment where we see good traction since the loss [Phonetic] of pre-approved PL in December ’21. As on date, our PL book had crossed INR1,646 crores. Credit card is another growth area which we launched during FY ’22. As on December ’22, we had issued 1,87,694 credit cards with monthly average spends of rupees INR24,561. The total book, as of December ’22, stood at INR670 crores.

As far as SMA is concerned, we are seeing good uptick in disbursement month-on-month-over the past few years. We are cautiously growing this segment with average monthly disbursement of more than INR525 crores for the nine months ended December ’22, as against the average of INR200 crores for the corresponding period last year. The healthy economic growth and government spending towards infrastructure sectors will help with credit uptick in coming years. Our aim is to grow loan book by double-digit in FY ’23.

Coming to liability portfolio, our core deposits grew by 5.5% year-on-year to INR88,660 crores. CASA deposits increased by 9% year-on-year to INR30,660 crores, predominantly due to continued improvement in our SA business — savings account business, which grew by 7% year-on-year to INR25,316 crores and CASA ratio improved and increased by 186 bps year-on-year to reach 33.81% of total deposits as of December 31, ’22. Bulk deposits declined by 52% year-on-year to INR2,012 crores in line with our strategy. NRI deposits continue to be our strength and now stands at INR27,964 crores. It contributes to 31% of our total deposits. Low-cost NRI deposit grew by 10% year-on-year to INR9,235 crores. The banks saw robust growth of 14% year-on-year in our NRI remittance business.

Our investment book was at INR24,287 crores, split into HTM of INR18,916 crores and AFS and HFT of INR5,372 crores. Last year, Q3, the M duration of the investment book was at 3.2 which we cautiously reduced to 2.47 as on December ’22. The fresh slippages were reduced by 17% year-on-year basis from INR387 crores during Q3 FY ’22 to INR320 crores during Q3 FY ’23, which was within the overall guidance. The overall restructured book stands at INR1,781 crores, of which, business segment is INR929 crores, personnel segment is INR277 crores, and corporate is at INR526 crores, agri is at INR49 crores. The Bank holds standard and restructured provision of INR568 crores.

Gross NPA ratio reduced by 108 bps from 6.56% as of December the 31, ’21 to 5.48% as of December 31, ’22. Recovery and upgrade for the quarter amounted to INR426 crores and reduction in GNPA during the quarter on account of recovery and upgrade was INR319 crores. The net NPA ratio improved by 126 bps from 3.52% as of December 31, ’21 to 2.26% as of December 31, ’22. Our endeavor is to bring GNPA closer to 5% and net NPA closer to 2% in FY ’23.

Net interest income for the quarter increased by 44% year-on-year to INR825 crores. Net interest margin improved by 88 bps year-on-year to 3.52% in Q3 FY ’23. The sequential growth in CASA had led to improvement in CASA deposits by 40 bps year-on-year to reach 4.27%. Our cumulative NIM stands at 3.17% and we endeavor to reach NIM of 3.2% in FY ’23.

Our core fee income increased by 10% year-on-year to rupees INR140 crores. The Bank reported net profit of INR103 crores in Q3 FY ’23 due to improvement in net interest income and reduction in provisions on account of lower slippages and better recoveries. But for the one-off event of additional SR provision, our net profit would have been at INR306 crores.

Treasury profit for the quarter was at INR29 crores excluding the SR provisions. Overall, provisions had decreased by 88% year-on-year to INR41 crores in Q3 FY ’23. The reduction in provisions was mainly due to lower slippages and better recoveries. Our PCR improved by 643 bps on year-on-year basis from 68.08% to 74.51% as of December 31, ’22. Our aim is to [Technical Issues].

Operator

Sir, can you repeat that last line, please? Your voice was not audible.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Our PCR improved by 643 bps on year-on-year basis from 68.08% to 74.51% as of December 31, ’22. Our aim is to further improve PCR to 75% in FY ’23. PCR, excluding write-offs, improved by 12.19% year-on-year basis from 48.01% as of December 31, ’21 to 60.2% as of December 31, ’22.

Our overall capital adequacy ratio continues to be robust with 16.25% as of December 31, ’22. The Tier-1 ratio stands at 13.71% as of December 31, ’22. We are hopeful that the momentum in disbursements and collections will continue in the coming quarters to achieve the desired targets.

With this, I open the floor for questions. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] We have our first question from the line of Apurv Parikh from Equirus Securities. Please go ahead.

Rohan Mandora — Equirus Securities — Analyst

Hi, sir, good morning. Rohan here from Equirus. And congrats on good set of numbers.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Thank you.

Rohan Mandora — Equirus Securities — Analyst

To understand, if we look at the current environment, what are the measures that we’re taking to ensure that the retail deposit growth keeps pace with the asset growth incrementally, if you could highlight?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

See, it’s a continuous effort and as you know liquidity is certainly an issue in the market and every bank, as you know, they are trying to revise the interest rates which is offered to the customer for the right reason because inflation is high and therefore for real interest income to come to investors, banks need to increase their fixed deposit interest rates. So we are continuously holding our ALCO every 10 days and for the past few months and we are very closely looking at the rates which are offered by the market as against the rate offered by us. And we are also continuously looking at the flows in each bucket, and take a conscious call on how we want to price these deposits. On one hand, we need to certainly be concerned about passing on the interest rates to consumer — to deposit holders, at the same time, we also need to see how we can continue to pass on this increase in cost to our customers, because, as you know, our cost of funds will keep mounting up if we continue to raise deposits to higher costs and for us to continue to keep the NIM at certain level, we need to pass on the interest rates to the customer. So while doing all of this, we need to be conscious of the quality of the customers who we are onboarding. So it’s a — I would say it’s an equation wherein we need to look at all these individually and at the same time, how they come together collectively.

So the one — the two benchmark which I use basically to decide on this is, how is my credit to deposit ratio at any point in time and how is my liquidity ratio. These are the two things which I — LCR, liquidity ratio, which I continue to — liquidity coverage ratio, which I continue to look at. So these two and at the same time, we are also very clear in the geographies where we handle. Obviously, each geography has its own dynamics and we are also having a very significant presence in Middle East. So we continuously look at even our deposit rates on foreign currency.

Rohan Mandora — Equirus Securities — Analyst

And sir, on the asset side, are we getting requests for renegotiation of the yield and on the spreads basically over the benchmark? How was the experience in the last two, three months?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Yeah, if you see, our NIM has been continuously growing. So that goes to prove that we are able to pass on. Our NIM, today, in this quarter, for the delta, this quarter alone is at 3.52%. So clearly, we are seeing growth in NIM and growth in the interest rates which are linked to references. Clearly, the ability of this increase in cost to be absorbed by all the segments is not going to be easy because if you look at the repo rates, it has gone up by 2.25%. Clearly, not everyone would be able to absorb this increase in cost. So, particularly large corporates and large SMEs which are doing well and even prime and super prime customers won’t take this increase in cost that easily. So it’s a continuous effort put in by the team to put across the view that the cost — overall cost is going up and therefore it makes sense to pass on some of this to the customers, so that we have a win-win strategy. Customers also get the benefit of not necessarily the higher cost, which otherwise would have been, as against the bank not charging very low interest rates, because they are unable to pass on.

Rohan Mandora — Equirus Securities — Analyst

What will be the cost of funds on NRI deposits currently, blended cost of funds?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

NRI specifically, I don’t want to share that number. Basically, what we do look at is our total cost of deposits that has gone up by 40 basis — that has gone up by 4 basis points compared to Q2.

Rohan Mandora — Equirus Securities — Analyst

On the asset side, in the personal segment, the growth is primarily coming from the others because it almost doubled in last year. So which are the products which are there in this and which are showing growth?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

I read about the growth which I’ve shown in personal loan. Even in my statement, I mentioned about the growth in personal segment. Anyway, I’ll just give you the numbers. Just hold on a second. Yeah, personal loan is — book currently stands at INR1,609 crores of book which was at — corresponding period of last year, it was at INR571 crores. So INR571 crores to INR1,609 crores is the growth in personnel loan. Credit card, which — the time we started credit card business around that time. So credit card book at that point in time was INR36 crores. Today that stands INR670 crores. Loan against deposits used to be at INR1,150 crores, that’s today at INR1,218 crores. Rest all are very minor ones. So predominantly it is, I would say, PL, credit card, which has grown and which is still very insignificant portion of our overall book.

Rohan Mandora — Equirus Securities — Analyst

Lastly, from my side, there were gold price increase in the last quarter, but the gold loan book has not increased. So what’s the trend there? Is there a demand weak from the customer side? How should one look at it?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Why do you say gold loan book has not grown? It has grown.

Rohan Mandora — Equirus Securities — Analyst

Sequentially, sequentially.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Our gold loan, let me just tell you the number. If you had to really look at the year-on-year growth for gold is 5.43%, that’s a year-on-year gold — retail gold, I’m talking about, which has grown from INR2,716 crores to INR2,864 crores when you compare December to December quarter. Other retail — sorry, not other retail, the agri gold, let me just tell you. The gold loan total portfolio value, if you were to look at, we were at INR10,147 crores as of December ’21. That is today at INR13,398 crores, we have shown a year-on-year growth of 32%. Even Q-on-Q growth is from INR13,226 crores to INR13,398 crores, which is about 1.3% growth Q-on-Q — quarter-on-quarter.

Rohan Mandora — Equirus Securities — Analyst

I was more talking about the Q-on-Q because the prices have increased recently. So from INR12,900 crores to INR13,000 crores, not much growth there. So that was…

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Yeah, yeah. But these things keep happening. I mean, there is no trend or there is no systemic this thing. Obviously, see, one thing which you should also notice is that gold loan is one business where if you really look at the market, the entire players reduced the gold — the rate of interest for gold loan to even as low as 6.7% [Phonetic] sometime back. So now with the way cost of funds are going up, all the banks have also started increasing the rates. And earlier the arbitrage which customers used to have as against NBFCs to banks, obviously, all the banks were showing good growth. Now with the rates, which are also firming up in the bank, even though banks are continuing to grow, but the delta difference which a customer probably would have got in either the NBFC or roadside gold lender, probably will be much less today. So that’s the reason probably people are — but overall, we don’t really see that as a trend. We are continuing to see good traction in gold.

Operator

Thank you, Rohan. Does that answer your question?

Rohan Mandora — Equirus Securities — Analyst

Thank you.

Operator

Thank you. We have our next question from the line of Nilesh Jethani from BOI Mutual Fund. Please go ahead.

Nilesh Jethani — BOI Mutual Fund — Analyst

Hi, good afternoon, sir and thanks for the opportunity. Few questions from my side. I’ll just brought down all the questions and then probably you can reply to each one of them. So first is, broadly when seeing our growth, we are largely driving the corporate side growth at a much higher pace. So, psychologically or internally, do we have any targets that we will reach X percentage of corporate and then we’ll focus on a diversified growth? Or going ahead, if corporate is seeing a huge growth, well continue to see — we’ll continue to capture that amount? That is first. Second is on the NIMs. Since our AAA and AA share is increasing, can you help me understand what is our pricing strategy on the corporate side since AAA and AA won’t be leaving us much scope to drive the yield growth over there? Third is on the core fee income. So when I see your core fee income, it has been largely stable over the last four to five quarters despite a strong growth in the advances. So are we undercutting any upfront fees etc., to attract growth? And last question is, say, from a two-year perspective, going ahead, where do you see our NIMs and ROA to stabilize? And for that, if you could help us understand the breakup between what are typical yields we make on corporate and what is the yields and ROE we typically make on the retail side? So these are the questions from my side.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Yeah, let me first start with saying, if you ask me whether we are focusing on corporate [Indecipherable] the segment, the answer is no, we are actually focusing on all segments and our endeavor is to grow in every segment and the endeavor is to build a high-quality book. If the quality book is possible to be built in SME, I think we’ll be the happiest to do because in SME, as you know, it can come at a much better yield also. So the endeavor is to build a quality book across the segments, and therefore, we focus on all of them and that’s a stated strategy, we continue to grow our retail, as well as our — all other SME as well as the corporate book.

See, what you are getting to see is the book. As you know, book is a composite number, book is a number of what your opening stock is, whatever you are adding as a fresh disbursement, whatever you are getting rid off by way of run-downs, and then what you are forcibly exiting because of the quality or due to monitoring, we want to get rid of bad customers who are part of your portfolio and there will also be some poaching, which will happen because customers might get lured by a lower rate by the competition. So what you get to see is a composite number as a book. If you were to really look at disbursements, in all — every segment, our disbursements have [Technical Issues] substantially. In nine months of this year compared to nine months of last year, if you see, every single business has grown quite well.

So to answer your question, are we focusing on one segment? No, we are focusing on all segments and we are seeing good growth happening in all segments. But are you seeing that getting reflected in the book? What you get to see in the book will be dependent on the nature of that book. For a product which you are starting afresh, for example, a PL or a credit card, where you never had a historical book, whatever you are disbursing will get added to your book. So you will see a delta growth happening there. Whereas for a seasoned business like SME or corporate, there will always be run-downs happening, there will always be a forced exit, which we’ll be doing and then obviously some kind of poaching which will keep happening. So therefore, my suggestion is, look at disbursements and look at the book growth together in order to conclude anything about the focus of the entities because that gives you the complete picture of what the institution is trying to drive. So this is as far as first question is concerned, and we don’t have any specific benchmark or percentage of each business contribution to the overall Group. We’ll continue to see opportunities in all the segments. And wherever we are seeing good growth coming, wherever we are seeing opportunities we would want to exploit that. So as I’m talking to you, we are currently at about at 30% 31% is our total corporate book as total portfolio.

You know that many of the banks have corporate retail — corporate and non-corporate proportion even as high as 50-50 or 60-40 kind of thing. So we are nowhere near any of those benchmarks. So — and also if you are carefully monitoring the economy and the kind of discussions which keep happening in [Indecipherable] and various other forums, there is a huge pipeline [Technical Issues] Investment which is going to come from both private as well as from government. So we are seeing good investments keep coming in the corporate area and as a natural corollary, SME investments will also keep going up. So once we get to see, I’m sure we will have more opportunity to tap in this segment. This is as far as the business outlook is concerned.

As far as the rate is concerned, yes, large corporates definitely demand — I mean, good corporates definitely demand very fine pricing. But you should always remember which I keep telling in every analyst call, we are not looking at corporate only for credit income. Corporate is actually a source for — view to actually increase the total wallet share which you can earn as an institution because corporates deal with lot of vendors, lot of dealers, lot of [Technical Issues]. They have a lot of employees and their ecosystem is full of opportunities. So when you are targeting — when you’re talking to a corporate, for example, they might be having 3,000, 4,000 dealers in each state in the country. If you’re talking to a retail FMCG giant, they will have some 3,000, 4,000 dealers in each state. So the opportunity which you have is phenomenal.

So we don’t look at that credit income which we earn from corporate alone for the Bank’s benefit. We look at what we can earn as a bank in the overall [Technical Issues] actually the trend which you’ve been seeing in the banking industry for good number of years now. I mean if you are tracking big banks, this is one of the approaches they’ve always followed as an ecosystem. Ecosystem Banking is what is made popular a few years back and that is exactly what we are trying to do. So it throws up lot of opportunities for you to expand your business, not only in corporate, but in many other areas, including the retail because many of the executives working for a corporate would need a home loan or a auto loan or any of those. And you will also get lot more references through them. So it’s a good conduit to do many other businesses. So that’s how we see a corporate relationship. That’s number one.

Number two, how are we actually — are we seeing the full passing on of benefit of the increase in costs? This I had answered in my first question. Obviously, we cannot expect them to absorb all the costs. Therefore, we need to price our thing in order to ensure that we continue to deal with them and many of the corporates also don’t give you opportunity right upfront. You will have to probably enter through a subsidiary or a associate company, which could be a smaller entity and then through interaction with them, they get to understand and you get to understand them, then you get into construction [Phonetic]. That’s when you actually get to see all the deals at least shown to you before it is shown to anybody else. So we look at it holistically and that’s what we would want to grow our business.

As far as NIM is concerned in each of this business lines and the rate of interest which we charge, obviously, it’s all dependent on the ecosystem in which that particular segment operates. In the business segment, for example, you will find well-rated SMEs demand finer rates compared to not-so-well-rated SMEs. But our underlying filter is the quality. If it’s a good quality SME, which is reflected in our appraisal and also validated by the CMR rating of that SME customer based on CIBILs score and also individual promoter scores, etc., and we find that cash flows are good enough, then we don’t mind them acquiring at a little lower cost, but with a very clear objective that again there will be opportunities which we can make use of as the entity grows. So this is how we are looking at each segment.

Retail, as you know, it’s a fixed-rate which we charge and the home loan is anyway linked to reference rates. So as we keep going — moving the reference rates, we’ll continue to deal with them. Again, home loan, like corporate, is a big conduit because typical home loan customers you find them very stable, good income and if you — pricing, if you are giving a good FOIR, you have a good scope to be with him for longer periods for his other consumer requirements, etc. So it’s a lifelong relationship with the home loan customer. So — and home loan book also brings in lot of stability.

So this — so each business has its own objective in your overall portfolio. So long answer, but suffice to say that we are clearly understanding what we need to do, how we need to do and what we need to price in each of these segments with a very clear objective that we want to onboard quality assets through to build our portfolio, which should be profitable.

Nilesh Jethani — BOI Mutual Fund — Analyst

Got it, sir. So just two questions…

Operator

Mr. Jethani, I request you to come back in the queue, sir.

Nilesh Jethani — BOI Mutual Fund — Analyst

Okay.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Sonaal from Bowhead Investment Advisors. Please go ahead.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

Hello, sir, this is Sonaal Kohli. How are you? And congratulations for good set of numbers.

Operator

I’m sorry, can you use your handset please? You are not clearly audible.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

I’m using in handset only. Am I audible now?

Operator

Yes, please go ahead.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

Sir, am I audible to you?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Yeah, yeah yeah. Yes.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

So, sir, I have a couple of questions. Firstly what was your SMA1 in standard ECLGS books ex-NPA?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Our total portfolio is INR70,117 crores. So SMA1 and — SMA1 is INR1,200 crores and SMA2 is INR697 crores.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

And sir, what is your ECLGS book?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Sorry, come again?

Sonaal Kohli — Bowhead Investment Advisors — Analyst

What is your ECLGS book? Emergency credit line book?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

ECLGS book? INR2,007 crores.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

How much, sir?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

INR2,007 crores. INR2007 crores.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

Okay. And this is all standard number are you telling me?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Yeah, this is the gross advances as of 31 December 2022, yes. Out of this, we have a NPA of — no, no, it’s not — all is not standard. Out of this we have NPA of INR141 crores.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

Sir, two further questions. Firstly, any further hit on restructured book you expect, and outlook for gross and net slippages? Second question, outlook on NIMs in the immediate term and more from — immediate term as in like coming one or two quarters, and from a one year perspective? Also, your NIMs on old book is relatively much lower than the new book. So is it because the quality of the loan book and the mix vary substantially or is it largely because of higher GNPAs on your old book while new book does not have GNPAs and therefore there’s no interest write-offs? Thank you.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Yeah, first let me — I’ve not understood your second question, because very long question. Let me first answer your first question, where you talked about what is the outlook on the slippages which we’re anticipating. See, this year, if you are closely tracking what I have been communicating is, for the full year, we gave a guidance of INR1,600 crores is the slippage for the full year, of which, INR1,000 crores was to come from my regular book and INR600 crores was to come from 25% of my restructured book, which was INR2,400 crores as of Q1. So 25% of Q1 — INR2,400 crores was INR600 crores and INR1,000 crores from my regular book which was adding up to INR1,600 crores. As again, INR1,600 crores, which I gave as a guidance as for the full year, we are at INR1,105 crores as of Q3 end and we expect approximately another INR400 crores to come in Q4. With this, we expect the total slippages to be INR1,500 crores, around that, which is well within the guidance INR1,600 crores which I’m — which I’ve given as guidance. Next year, we are expecting slippages in the range of INR1,800 crores is what we are anticipating for the next full year. However, we will get to know the — we will come back with a more closer number as we move towards Q4 and if we get to see the performance of the portfolio as of Q4. So this is as far as slippages is concerned.

Second thing is, NIM for the full year, I gave a guidance of 3.5% for the year ended March ’22, and — I’m sorry, 3.2% and as of Q3 end, we are at 3.17%, so I’m pretty much closer to the guidance, which I gave which was 3.2% by March. And as far as NIM for the next year, that is by March ’23 — March ’24, this will be as per the strategy document which we had circulated earlier wherein we had indicated NIM of 3.5% for the year ended March ’24. This is what we give as guidance. Obviously, our endeavor is to probably surpass that much before March ’24. This as far as NIM is concerned.

Sorry, your last question, I didn’t understand. It was a very long question. Can you repeat it again?

Sonaal Kohli — Bowhead Investment Advisors — Analyst

Sir, I’ll come to the last question, but just one clarification of a number you gave. Did you say your slippages expectation for next year is INR800 crores to INR1,000 crores or did you say INR1,800 crores.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

INR1,800 crores.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

INR1,800 crores.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Yeah.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

Sir, why do you expect your slippages to be so high next year, considering you would have recognized most of your stress by now, and it was only INR1,500 crores this yea?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

No, no. Let me — if you know the mechanics of how the slippages happen, typically, there is a standard book and there is a restructured book, okay? If you look at standard book, even for the best of banks, you can go and verify this number with even HDFCs and ICICIs of the world, even in the best of banks, large banks who continue to grow at a very, very faster pace of adding huge delta to their advances book, you’ll always find them slipping by 1% to 1.25%. This is the ratio which you would see in large banks. So obviously, these book — these banks have — some of them have cleaned up their balance sheet much before. Therefore, you will continue to see very stabilized slippages happening from those books.

Banks like us, our concern, if you look at it, what you should be concerned more about is not slippages, how we’re actually covering ourselves with the PCR, because what actually matters is PCR. So PCR today, excluding write-off, I’m at 60% and I’m expecting it to close — move closer to 65% but 62%, 63% is probably what I’ll end up by March. Our endeavor is to reach 65% and our endeavor is to reach net — I mean, PCR of 70% definitely in the coming year — coming financial year. So the way I look at it is, this 1% to 1.25%, which is what we get to see in good well-run banks, probably would be 1.5% to 1.75% or maybe even 2% for bank like us, which carry some legacy book, which continues to be there. If you were to look at my GNPA numbers, still we carry a GNPA quantum, which you must have noticed it, it is still continuing to be closer to — I’ll just tell you the number. Though he have come down marginally this quarter, but then still we are carrying INR303,843 crores is my gross NPA. My net NPA is INR1,529 crores. So if you get to see these numbers, obviously, we need to clean this up through an effective recovery and effective closures. So that is what we need to do going forward also.

So the way I look at it is, our slippages, we are estimating it to be INR1,800 crores. This will probably come from the fact that our portfolio, which is currently standing at INR70,000 crores, which has got a new book of INR37,000 crores which will obviously get built up in the coming year also, that book, irrespective of the quality you build, you can assume that, over a period, 1% to 1.25% slippages will happen from those book. This is what we get to see even in large banks. And then you can anticipate some 25% or 30% kind of slippages happening from your restructured book. So my restructured book is coming down. It was INR1,997 crores as of Q2 end, and currently it has come down below that also, I think it’s — INR1,780 crores is what we had said. So we continue to say that maybe 25% slippages will keep happening from there and 1%, 1.25% to 1.3% [Phonetic] slippages will happen from your regular book. With all that, we have done an estimate of INR1,800 crores. As I said, I will come back with a number much closer to Q4.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

So thank you for this elaborate answer. Sir, my question, which was pending was…

Operator

Mr. Kohli, can I request you to come back in the queue?

Sonaal Kohli — Bowhead Investment Advisors — Analyst

Sir, I’m saying what the MD sir asked me to repeat the question, I’m just answering him.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Okay, it’s okay, let him just finish this question, last question.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

So sir, you gave a guidance on the NIM side. Thank you for that. What I was trying to understand from you is, the reason why NIM is high on the new book, is it because the loan book is materially different or lower in quality or is it because you had high GNPAs on the previous book and the new book is clean of that and therefore you don’t lose any interest on your NPAs? And on the slippages side, what you said INR1,800 crores, I think a relevant number because of the reason you told us would be a net slippage number, including the recovery. So if your gross slippage is INR1,800 crores, any rough estimate of what kind of net slippage, which is really material for people like us, do you expect in next year? Thank you so much.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Other way of asking this question, I would say is, what is the expected upgrade and recovery which you’re anticipating for the next year, if I were to rephrase this question. So just to tell you the number, INR600 crores is what we did as of March ’21, INR1,500 crores is what we did as of March ’22. We will — we are expecting it to be — we’ll be exceeding that number, maybe closer to INR1,600 crores, INR1,700 crores is what we anticipate by March ’23. Next year, our endeavor is to do INR2,000 crores of upgrade and recovery for the next year. These are all estimates. Obviously, we’ll have to work out these numbers, go to our Board, get their consent before we officially announce it.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

And on the NIM, sir?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

NIM, as I said, we’ll be — it’s as per strategy 3.3%.

Sonaal Kohli — Bowhead Investment Advisors — Analyst

Sir, new book versus old book, the question was why the NIM is high on the new book versus the old book?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

I don’t think that is very material. I mean I don’t think you need to be really knowing about new book old book etc., because as we keep growing our book anyway the book will get churned and you will find — this new book old book I just want to give you a perspective that we continue to carry INR33,000 crores, as [Indecipherable] INR70,000 crores, I’m saying INR37,000 crores is the new book and we still carry the old book and the old book is also, as you know, since it’s a book which you are talking about built before ’20, obviously, performing ones are continuing to perform and non-performing ones anyway will slip off, and that is what we get to see in our GNPA, net NPA and recovery, all that which I talked about. So it doesn’t really matter. Overall NIM and overall slippages, overall recovery, I think is what should be the concern.

Operator

Thank you. We have our next question from the line of Renish Bhuva from ICICI Securities. Please go ahead.

Renish Bhuva — ICICI Securities — Analyst

Yeah, hi, sir, and congrats on a great set of numbers.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Thank you.

Renish Bhuva — ICICI Securities — Analyst

Sir, I have two questions from my side. So one is on this new book, not in terms of the originated, but the new products, like, say, PL, credit card, the vehicle [Phonetic] book etc. So just wanted to understand that, given these are the new products which might not have seasoned yet, so what kind of collection efficiency we are witnessing in this new product? And also just to understand from the proposition perspective, whether these loans has been actually ATB customers as of now or we are also sort of offering this product to NTB customers?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Good question. See, clearly, the new book which we’ve added today is showing impeccably higher — good quality, therefore, there is no — honestly, there is no feedback on recovery and those kind of — because the new book, as far as these products are concerned, clearly, their overall delinquency itself, as on top is only 0.06%. So to that extent, it is still quite low. But if you — to your question where, how — are you offering these to new set of customers? As far as PL is concerned, we definitely have a pre-approved personal loan, which is basically doing the data analytics on existing customers, arriving at a rule of who we want to provide and cross checking with their credit history etc., we’re offering a pre-approved personal loan. The experience which we are seeing, these products since they are unsecured, we need to continuously monitor them, we need to continuously keep close track of them. We also have a product called Imputed Income, which — where the customer might be our existing liability customer, but he may not have a great liability relationship with us, but he might be an existing customer of some other bank, where there is an opportunity based on imputed income you can come with a pre-approved offer. Though he’s an existing customer, but we may not be the primary banker for them. So these kind of customers also we keep offering them pre-approved products, whether it’s a personal loan or a credit card or those kind of things.

So I think the key to get the unsecured right is to, A, get your overall risk appetite very clearly defined and continuously sourcing high-quality cases, continuously monitoring them using vintage curves. And I’m happy to say that we do very regular reviews of all these new products which we’ve launched music vintage curves to see any corrective action to be taken. Since all these are model-based offerings, we can quickly pick wherever we are going wrong. So I can tell you that we have handled — I mean, I have handled much larger books with this kind of a methodology, so I really don’t see any issue at all.

Renish Bhuva — ICICI Securities — Analyst

Sir, what is the average tenure for this product, I mean, just to understand the seasoning of this book?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

It’s all three years, four years, like what every other bank offers. That’s the [Speech Overlap]

Renish Bhuva — ICICI Securities — Analyst

Okay. Okay. And sir, my second question again on the advance split in terms of the regions. So we have seen that rest of India is doing at a much faster pace of around 40% Y-o-Y basis. I understand that most of this could be coming from the corporate book, wherein the head office will be in Bombay or Delhi. But just to understand how the other books, let’s say, MSME retail books, whether these books are also gathering pace in rest of India region?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Yeah, yeah, I think we have given in our investor — this presentation we have given even product-wise, if I’m not wrong. So, I think we are getting to see opportunities in all these products. See, again, let me just reiterate, I am not hung up on region. I am hung up on quality. If that comes from anywhere in the country, we would want to tap it. So it’s not — if you’re getting to see more of rest of India, probably the way we are — today, we are getting to seeing opportunities there and we are — and those are those cases which are — which we’re spotting or maybe meet our quality standards, therefore we are onboarding them. Other than that there is no deliberate strategy to say that we are specifically focusing on rest of India, not looking at Kerala, nothing like that. There is no — at least in my mind, there is no differentiation. I mean we are looking at quality and this quality, wherever it comes from, we would want to grow it.

Renish Bhuva — ICICI Securities — Analyst

Got it, just to further on the split side. So again, when we look at the ticket size-wise breakup, it appears that INR5 crore to INR25 crore segment has been de-growing. So what is happening there? I mean, why that segment is not growing from last three, four quarters?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

See, this is — let me put it this way. See this — I think you’re referring to the slide which is presented in our analyst presentation. See, I have a completely different view on this slide, probably we’ll take this slide off in the future presentation because it doesn’t really make any sense to me. See, you are doing — see, you look at what kind of products we are offering. We are offering products which are basically retail today, which is our focus, where we are looking at INR5 lakhs, INR3 lakhs. Obviously, these are all sizes which are going to be far, far lower than the crores which you’re talking about. INR5 crores to INR25 crores, you have to really look at that segment. This is a segment which we can offer either from SME or from corporate. These are the two segments where we can offer this product.

Today, you look at the SME, for SME to have a high ticket size of, let’s say, INR8 crores, INR9 crores, INR10 crores, INR15 crores, this is the band — if you know, this is the band which normally doesn’t give you great collateral because these companies, if your exposure alone is, let’s say, INR10 crores, for example, you will be in a multiple banking or consortium banking where at least you will have a limit of, let’s say, five banks giving INR10 crores, so, let’s say, INR50 crores. Therefore his turnover would be close to INR200 crores to INR250 crores. The INR200 crores, INR250 crores company doesn’t give you collateral. And SME — and the banks which have actually had a focus on this segment, higher-ticket SME, invariably, they all had issues because the moment SMEs — let’s face it, SMEs don’t have the wherewithal to get out in case of a adverse situation in the economy because their resources are limited. Therefore these — and you don’t also have a collateral to really reduce your loss, given default. So this is a segment which typically gives you lot of default. Having said that, it is not that you cannot use good credit tools to underwrite good quality cases here.

But yes, definitely we would want to do that, but we would definitely want to do that and tap that as we go along, but let’s get the ask right in the areas where today you are seeing more opportunities. More opportunities we’ve seen in SME, where your ticket size, on average, is INR80 lakhs to INR1 crore, where we see lot of potential, there you can actually pretty much use your model, pretty much use your underwriting techniques to onboard good quality cases where you will also be able to back your exposure with good collateral, where your loss, given default, is going to be low. So as a segment, that segment is preferred in relation to a segment where you have a high ticket size. So — but having said that, yes, we will definitely tap that segment too. But it will come as we go along.

Today in the corporate, for example, you can also come down to the segment from the corporate side. Today, the focus on corporate is to, first, build a high quality corporate book, therefore, invariably, we are using rating as a synonym for quality, therefore we use external rating, plus we also do our own appraisal to ensure that we onboard good cases. Through them, we would want to tap their suppliers, dealers, etc. Probably, these are the SMEs who will be in INR250 crores, INR200 crores kind of topline, where we will also have a linkage with corporate, so corporate-linked business which is one of the good businesses to do because you can get support from your corporate to — or shop supplier for enabling us to recover money in case of a problem, etc., where you also — you can arrive at the linkages between them to know that you are indeed handling a good set of customers. That segment definitely we’ll be focusing. But we would want to come down to that segment after we really do a good job in both lower end of SMEs, as well as in the higher end of corporates.

Renish Bhuva — ICICI Securities — Analyst

Got it, got it. So basically, sir, this is what I wanted to understand. Strategically INR5 crore to INR25 crore ticket size is — basically, we are not preferring as of now, rather than we are preferring low ticket size and the maybe a little high ticket size.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Yeah, if a large corporate wants a INR15 crore loan, I’m not going to say no.

Renish Bhuva — ICICI Securities — Analyst

Got it, got it.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

If a corporate wants a INR10 crores loan, I’m not going to say no. It’s not that I’m not focusing on that ticket size. I am looking at customer. If the customer is of good quality, it doesn’t matter whether I give INR1 crore or INR5 crore or INR10 crore so long as he has the ability to pay me. So it’s not by choice that if somebody comes and says, I want INR8 crores, no, no, this is not a segment — I’m not — I’m not approaching from that segment. A INR1,000 crore corporate customer might also want a INR15 crore loan. And why would I not give him a loan? Such opportunities probably are not much today, I mean, at least in the segment where we [Technical Issues]. We will definitely [Technical Issues] focus on that.

See, for that — let me just also take two minutes to tell you the way forward. How you want to tap this product, there is a methodology to do it. We should get our model right, when you look at higher ticket sizes. So today we have a credit model for SMEs to handle up to INR2 crores. We need to build a model where we can handle SMEs, as well as the lower end of corporates to give a ticket size in the range of, let’s say, up to INR30 crores, for example — from INR2 crores to up to INR30 crores. If you build a model and if that is the model which are goods and bags, and if you can arrive at your risk appetite and calibrate your sourcing accordingly, you can make a — build a very good portfolio there also. And you will be able to get a decent rate in comparison to your large corporate rates. So — but it requires some amount of work and some amount of technology thing which we need to do. We’ll also be able to do that once we have a platform in place. SME platform is still to come. We are hoping that it will get commissioned by Q4 or maybe Q1 of next year. Once that comes in, we can completely digitize SME business and the retail platform is also expected to come by Q4 or max by Q1. We’ll completely digitize the retail businesses. Once you digitize, then your model can be easily integrated with your platform with which you will be able to underwrite very comfortably.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Priyesh [Phonetic] Jain from HSBC. Please go ahead.

Priyesh Jain — HSBC — Analyst

Yeah, good afternoon, sir. As you mentioned earlier that the cost of — sir, that your cost of deposits have gone up by 4 basis points. But we see that the other banks have — their rates have gone up by about 25 to 30 basis points. So sir, could you throw some light as to why SIB has not seen a similar increase in the cost of deposits? And my second question is related, like, can you also give a quantum of how much has the Bank’s FD rates moved in the last six months?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

If you were to ask the second question, probably, I may not be the best person to give you that. Maybe you will have to do your secondary research on comparing deposit rates of various banks and arrive at a conclusion. As far as the first question is concerned, which is specific to us, we are — we don’t want to say blindly that other banks are raising by 40 basis points, therefore we’ll also raise 40 bps, because each bank journey is very different, each bank’s position is very different. A bank which has got a NIM of 5%, 5.5% may not mind going and acquiring a deposit at, let’s say, 7.9% or 8% because they might be lending to a microfinance or they might be lending to STPL where you will be able to get 25%, 23% kind of IRR. We are not in that segment. Why are we not in that segment? We don’t want to be in that segment at this point in time when I have a GNPA which is still at about 5.4% and where I know that I need to get that act in right and I need to bring them down before I embark on risky segments. See, high-risk high-return segment is something which we need to go as a strategy. Today, we don’t want to play that strategy. Therefore if I’m in those businesses, then it gives me lot of leeway to go and increase my deposit costs without worrying about it, because even if I increase my cost by 1%, 1.5%, I know that I can increase the lending cost by 3% to 4% in such segments.

Today, we are going after quality customers where the appetite for passing on the rate will not be that much To that extent, so that we can pass on, negotiate and we can make good sense out of them, I will continue to play that game. And today, just because I’m not pricing — I’m not passing on my 40 bps or 100 bps increase in my deposit costs, I’m not losing out heavily, I’m still at a comfortable CD ratio, I’m still at comfortable LCR and I’m still comfortable with my overall deposit growth and overall CASA growth. So I’ll — and we hold three ALCOs every month and we continue to monitor this and we will formulate our strategy as per what is right for our Bank.

Priyesh Jain — HSBC — Analyst

Thank you.

Operator

Thank you. We have our next question from the line of Tushar Sarda from Athena Investments. Please go ahead.

Tushar Sarda — Athena Investments — Analyst

Yeah. Thank you for the opportunity and many congratulations for fantastic turnaround in the performance of the bank.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Thank you.

Tushar Sarda — Athena Investments — Analyst

What I wanted to understand, sir, was on this security receipts, you mentioned that it is before 2017. So if you can just update on the recovery process and when do you think it will actually materialize?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

I’m glad that you asked this question because I was actually anticipating this to be the first question from any of you. Anyway, so let me actually — it will be a long answer, so please bear with me because I want to give you a complete picture. I want to completed dispel any wrong interpretation of any of the analysts because this requires little more in-depth understanding of how the whole process works. See, let me start by saying that, banks in order to manage their portfolio quality, we sell our NPA assets to ARCs. Okay? This is the process, every bank does it in order to manage their GNPA numbers, etc., so that it goes out of their books. Okay? So this Bank has also done that and we have been doing that right from 2004 — from June 2004 onwards we have been selling assets. Of course, the first — one asset got sold in ’04 and after that, the next set of assets were sold in ’14 — 2014. So as I’m talking to you, from 2004 June, which was one pool, then from ’14 onwards, we have sold one pool in ’14, two pools in ’15, three pools in ’16, one pool in ’17, one in ’18, one in ’19, two in ’21, and one in ’22. These are the number of pools we have sold. In all, we have got — and as you know, when you sell it to ARCs, as per the regulations now, ARCs are supposed to be paying 15% by way of cash and the balance 85% of the recoverable amount, which will be an estimate from the ARC side, as how much they can recover from the NPA which you are selling to them, they will operate by way of SRs. And these SRs are owned by both by ARC and bank in a certain proportion. We own, let’s say, 80%, they own 20%, that could be one ratio, or it could be 85-15, depending on how we want to do it.

Now, the total SRs which the bank is holding, out of the various pools which I had mentioned, as of today is INR1,955 crores, okay? In this INR1,955 crores what actually happens is when ARCs go and engage with these customers, they will go and negotiate with the customer, go for one-time settlement, go for all kinds of resolution, go to the court, get a resolution done, etc., etc. Once they recover money, they set up their own costs, their own fees etc., and then SRs will get redeemed. That is when you, as a bank, get back your SRs given to you by way of cash coming from ARCs. So this is what we call SRs getting redeemed. Total SRs which got redeemed is INR500 crores out of these many pools which I talked about.

So out of INR1,955 crores of original SR, SR redeemed is about INR500 crores. So net-net, we have a balance SR today of INR1,455 crores. So once an SR gets formed, what actually happens is, when the resolution keeps happening, every quarter, ARC is supposed to tell their net asset value based on their own estimate of the SR value, depending on their predictability of how much money can they recover from each of those cases. But obviously, one can’t go by ARCs version alone. So typically a rating agency will have to look at independently and ascertain whether the recoverability assumed by ARC, is it right or not. So they generally do it by way of giving a band on which the recovery happens. So depending on the band in which the recovery is happening, the banks are expected to provide if they have assumed higher recovery than what rating agencies are now telling that the recovery is only this much. So that is what comes back and hits you as a provisioning — additional provisioning which every bank does it at the end of every quarterly results.

So this rule till 2017 was based on the NAV independently clarified by credit rating agencies, based on which banks are providing provisioning. In 2017 March, regulations came up and there they said, prospectively, from ’17 — ’18 onwards, prospectively, you will have to provide in your book higher of the two things. One is either the NAV as declared by the ARC based on the rating agencies confirmation or the aging provision. If that book were to stand in your own books, how it gets aged depending on which you are provisioning keeps going up. Whichever is higher, you’re supposed to provide for any — from 2018 prospectively. So all the banks, including us, we were also providing prospectively based on aging from 2018 onwards. That is what we continue to do in every quarter. Therefore from 2018 onwards, all the pools are basically provided as per aging.

Now with the recent guidance which regulators have come — clarification with regulators have come up with in 5 December, they said even for all the SRs which are outstanding as of 2017, the pools which got sold before 2017, for which you are holding SRs as of today, even for all of them you need to provide based on aging. So every bank which had sold some pool for which SRs are outstanding today, for the pools which were done in 2017 and prior, obviously, they will have to provide 100% of whatever they carry because it’s six years, five years since that event had happened. Therefore, everybody will have to provide 100% of whatever they carry.

That number for our Bank turned out to be INR312 crores. So good news is that, because of our exemplary performance in NII and in various other things which we talked about, we are able to absorb this one-off additional provisioning which happened due to the clarification given by regulator despite that hitting the bulk, still we came up with a number of INR100 crore-plus as net profit. If only we had — we were — if we had provided for based on regulator’s concession, let’s say, over a two quarter or over a three quarter or over a six quarter, if we had got that concession, probably you would have seen a very evenly spread out provisioning due to this event. But because it had to be taken in one shot, good news is that we were able to absorb it fully. And also, the good news is that it’s not going to hit you going forward because now, as I’m talking to you, I am sitting so comfortably because my SRs outstanding as of today is only INR215 crores. Okay? And I am carrying — provisioning as per aging is INR1,241 crores and provision as per NAV is INR750 crores. So I’m carrying excess provision of INR491 crores. But my outstanding SRs today is only IN214 crores.

So these INR214 crores SRs which I’m carrying, if I don’t do any collection from them and if provide based on aging, my provisioning will be INR48 crores and for the next full year, it’s only INR15 crores. So you can imagine from now till March ’24, I’m going to be — even if no collection happens, I’ll be loaded with the provision only of INR63 crores. Compare that with the hit which we’ve taken this quarter.

Tushar Sarda — Athena Investments — Analyst

I understood that, sir. But my question was on the recovery. So are you taking any steps…

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Recovery, I will address that. Sorry, I have not touched on recovery. I thought I’ll first explain the whole process then I’ll tell you about the recovery.

Tushar Sarda — Athena Investments — Analyst

No, no, thanks. Thanks for a very detailed explanation.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Recovery, what happens is that, we engage with ARCs and ARCs obviously, they also work in the same ecosystem. So they also need to go through the court process, etc., etc. So — and they also had the COVID issue hitting them etc., etc. But all that, if I were to really look at how much is the redemption which has happened in this book in the last period, let’s say, — let’s talk about from June ’21 onwards. June ’21, this is the period when we were in mid of COVID, you must recollect that, INR5.3 crores was the redemption. In September ’21, it was INR3.74 crores. In December ’21, it was INR23 crores. In March ’22, it was INR42 crores. In June ’22, it was INR42 crores. In September ’22, it was INR54 crores. In December ’22, it is INR39 crores. So in this year, for example, we have already redeemed INR135 crores, which was as low as less than INR20 crores prior to ’21. And all these recoveries which we are talking about, the numbers which I read about, are all coming from all these pools which I talked about.

Tushar Sarda — Athena Investments — Analyst

That’s fantastic, sir. I think this information is not there in the presentation. Maybe I missed it. I’ll have a relook at it.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

You’re right, but then we’ll be happy to share it with you. No problem.

Tushar Sarda — Athena Investments — Analyst

Okay. And sir, second question I had was, your new book you’re showing NPA is low, but your slippage rate is high. So is the slippage from the old book or is it that it slips and then it gets upgraded?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Why do you say my slippage is high? I didn’t understand.

Tushar Sarda — Athena Investments — Analyst

No, no. The slippage reported is around INR300 crore-plus every quarter, right? So, that’s around…

Murali Ramakrishnan — Managing Director & Chief Executive Officer

INR320 crores and it is predominantly coming from — again from the old book only. So I’ll just give you the break up of that. Just hold on.

Tushar Sarda — Athena Investments — Analyst

That’s what I just wanted to reconfirm.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

I’ll just tell you, just a second, give me a minute. See, I’ll just tell you the NPA. NPA — gross NPA, which is standing as of today is INR3,844 crores. Okay? Of which, the old book NPA is INR3,805 crores. Okay? And INR39 crores is from the new book and in this INR39 crores if you notice, this also includes the FLDG, which we have on credit card, therefore the entire month, there is no loss there, and gold, where there is no loss for us. So this includes everything. So as such if you knock the top, my NPA in this is 0.06%, that’s my NPA. If you look at SMA2, SMA2 from the new book of INR37,000 crores is only INR84 crores. From the old book, it’s INR613 crores. So overall SMA2 is INR697 crores. So suffice to say that, in the total SMA2 book also, out of INR697 crores, INR613 comes from old book.

Tushar Sarda — Athena Investments — Analyst

Okay. And sir, my last question is, if we ignored this provision, which you have done on the security receipt, then your run rate is almost INR300 crore net profit for the quarter. Do we expect this to sustain going forward? I mean, it can vary by plus-minus few percentage point, but ballpark figure, would we expect this to continue?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Yeah, we’ll endeavor to reach — come to that kind of levels, definitely. I’ll leave it for your imagination, but then we don’t want to give a very, very prospective number. What we will endeavor to do, I’m telling you. Yes, we would be happy, more the merrier for us.

Operator

Thank you. We have our next question from the line of Pujan Shah from Congruence Advisers. Please go ahead.

Pujan Shah — Congruence Advisers — Analyst

Hi, sir. One of the broad questions who would be — so if we see on a historical side from the last few years, we have been — our branch expansion and so customer touch points has been hovering around 925, 926. Now let’s suppose after we have made so much of the new thing like introducing credit card, mutual funds and all that stuff, and doing cross-selling, we have not been — like we have been able to see business per branch has been like roughly around INR164 crores on that range. So what could be the — let’s suppose we are talking for the next two years of horizon, so what could be the range of the branch expansion we are expecting and what are the capex or opex that we have been expecting for the expansion of the branch? And due to this, what are the expectation on the cost-to-income ratio in next two year?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Yeah, see, first of all, as far as the branch expansion is concerned, I think the way banking is moving, as you know, banking is going to be more and more digital and every bank is talking about digitalizing the entire thing. Having said that, is the brick-and-mortar required? Yeah, of course, brick-and-mortar is required to continue to increase your contact point with the customer, etc. Therefore, we need to prioritize the capital expenditure which you want to do for a bank of our size. So when it comes to investing between tools which are required for digitizing, where you would be able to leverage your technology and get more data business as against building brick-and-mortar, definitely, we would prefer to leverage on our investment in technology. That is what this Bank is doing. We have been continuously investing INR180 crores to INR200 crores every year on technology, and you know that we have also been continuously winning lots of awards in technology area, and we are indeed using technology for growing our business.

I mean, case in point is our credit card business, case in point is our supply chain finance business where we are using our — leveraging our technology to get increase our business. So we — obviously, with the platforms coming in, which we’ve already invested, with the retail platform coming in, SME platform coming in, etc., we would definitely be going in for more and more digitization of all these businesses where the scope is phenomenal. So the way I look at it going forward, each business will be having multiple channels for growth. One of the channel will be brick-and-mortar. So as I could envisage, there are four or five rules by which business can be grown. One is your traditional distribution channel, which is your branch network. The second one is your outsourcing model, which is basically your own DMAs, DSTs, depending on the business, obviously, retail is more amenable for this. So you’ll have more channels to source from

Third one is digital sourcing where you will — where the places you are not really happy, you’re agnostic about the place, you have a good app and anybody from anywhere can get in and he can look at his offering and he can probably prefer to do. Only thing which one needs to be cautious is to ensure that your serviceability and collection ability is there in such geographies from where the customers are getting onboarded. That is the only thing which you need to ensure. So digital is a third way.

Fourth way is co-lending. There are many relationships which I’ve talked about today and each business today has got an opportunity to grow their business by getting into co-lending opportunities. So co-lending is another way by which you can grow your business. Many of them not only use the distribution channels today, they also use their own verticals for sourcing, which will be supplementing the distribution network to source more. And apart from that, you can also go out and acquire assets by way of buyouts and by way of securitization, or by way of [Indecipherable] all the NBFCs and many of the small banks which are present there, you have an opportunity. So today, when you look at opportunity, business can be grown through these five, six channels which I’m talking about. So brick-and-mortar is one such channel. Certainly we’ll be looking at investing in brick-and-mortar, provided we feel that the delta return [Technical Issues] invested is going to be much more from there in relation to others. Today, we find the leverage is much better in technology and technological investments.

Pujan Shah — Congruence Advisers — Analyst

Okay, sir, that’s quite detailed answer. Thanks. That’s it from my side.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Thank you.

Operator

Thank you. We’ll take our last question from the line of Ankur Kumar from Alpha Capital. Please go ahead.

Ankur Kumar — Alpha Capital — Analyst

Hello, sir.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Hello.

Ankur Kumar — Alpha Capital — Analyst

Thank you for taking my questions. Sir, on the NIM side, you are saying that we are currently at 3.2%, but we plan to go to 3.5% in the coming year. But given the pressure on the deposit side in the system, how do you think we can reach those — we can increase from the current levels?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Good question. But if you recall, when did this rate start going up? You notice that the market rates have started going up almost 2.25%, right? Repo rates had started going up from March of last year. Correct?

Ankur Kumar — Alpha Capital — Analyst

Yeah.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

So 2.25%, rates have gone up. So did it not bring pressure to everybody? Obviously, it brought pressure to everybody. So each bank is working with this pressure only and they are still showing whatever they are showing as performance. So we believe that we’ll be able to do. Whether it is easy? It is not easy, Whether it is challenging? Of course, it is challenging. But whether it’s possible? Yes, it’s possible.

Ankur Kumar — Alpha Capital — Analyst

Sure, sir. And on provision side, any guidance for the coming year you would like to give? And on asset side, you are saying we can go to 1%. So given improvement in NIMs that you are expecting, isn’t that ROA guidance is a bit conservative?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

No, all our estimates will be conservative only. I don’t want to give some number, which I don’t want to — which I’m not able — not going to deliver. So, I would rather be conservative in numbers and show it in my performance. So, that’s been my approach all these while. So wherever I am hearing also probably I would correct and come back and tell you that, this is what we anticipated, but this is not going to happen. So as far as provision is — see, I can give a guidance on — slippages, I’ve have already given you, INR1,800 crores is what we are anticipating as the slippage. That number we’ll anyway work it out more detailed and we’ll come back and share it with you. And our provision coverage ratio guidance I’ve already given you. We would want to reach — we are at 60% now, we would want to reach 62% to 63% by March. We would endeavor to reach 70% by the end of next year. So you can imagine that one is provisioning, which will happen as per slippages. Maybe we will also start providing much more than what we need in order to improve our PCR.

Ankur Kumar — Alpha Capital — Analyst

And you have also said that we expect this profit after tax of INR300-plus crore to continue going ahead in the coming quarter.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

That I leave it for your imagination. We can only tell you what we have done. I’ll leave it to you. I don’t want to say any number. We will continue to do what we’re doing and let’s hope that we surpass all your expectations.

Ankur Kumar — Alpha Capital — Analyst

And, sir, one clarification, in the presentation page number 5, where we’re talking about numbers without SR depreciation at with SR depreciation. So in this, profit after tax without is INR306 crores, with is INR103 crores. So basically 3 times profit after tax has — it would have gone 3 times. But our ROA there is showing as only marginal improvement from 0.56% to 0.82%. So I couldn’t understand basically. Are we doing correct calculations in this or not?

Murali Ramakrishnan — Managing Director & Chief Executive Officer

We’ll check on that. My understanding is 0.80% is our ROA. We’ll double check on that number. But your understanding is right that this SR provisioning — additional provisioning is that one-off which I had explained. If you knock that off, if you have not done that, your profit is what exactly what you said. We will recheck on the ROA number. ROA, we were at about 0.6% as of September end. We will recheck this number. My understanding is they would have done it correctly, but we will recheck this number.

Ankur Kumar — Alpha Capital — Analyst

Sure, thank you, sir. Thank you and all the best.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Thank you.

Operator

Thank you. I would now like to hand the conference over to Mr. Sreesankar R from InCred Equities for closing comments. Over to you.

Sreesankar R — InCred Equities — Analyst

Thank you, Yashasvi. First of all, thank you, Mr. Murali Ramakrishnan and his entire team for patiently answering a lot of questions which came your way. And I think the list — people were still able to ask questions, but we overshot our time by around 15 minutes. And thank you all the participants for engaging themselves in an interesting question and answer session. Thank you very much, sir. We’ll close the analyst call right now.

Murali Ramakrishnan — Managing Director & Chief Executive Officer

Thank you. Thank you so much. Thanks.

Operator

[Operator Closing Remarks]