South Indian Bank Ltd (NSE: SOUTHBANK) Q4 2025 Earnings Call dated May. 16, 2025
Corporate Participants:
P R Seshadri — Managing Director & Chief Executive Officer
Analysts:
Hardik Shah — Analyst
Darshan Deora — Analyst
Arvind Datta — Analyst
Himanshu Upadhyay — Analyst
Jai Mundhra — Analyst
Aryan Jain — Analyst
Unidentified Participant
Vidhi Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the South Indian Bank Q4 and FY ’25 Post-Earnings Conference Call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Hardik Shah from ICICI Securities Limited. Thank you, and over to you, sir.
Hardik Shah — Analyst
Yeah. Thanks, Navia. Hello, everyone. Good afternoon. On behalf of ICICI Securities, we welcome you all to Q4 FY ’25 post Earnings Conference Call of South Indian Bank. From the management side, we have with us MD and CEO, Mr P.R.; Executive Director, Mr Dolphy Jose; Mr Anto George T, Chief Operating Officer; Mr Vinod Francis, CFO; and Mr Jimmy Matthew, GM and Company Secretary and other officials of the Bank.
I now hand the conference over to the management for the opening remarks, post which we will have a Q&A session. Over to you, sir. Thank you.
P R Seshadri — Managing Director & Chief Executive Officer
Thank you, Hardik. Good evening to all of you and thank you very much for joining us at the South Indian Bank Limited Q4 FY ’25 earnings conference call. I’m joined by a set of my senior colleagues as was announced a little earlier. I’d like to start by updating you on the key highlights for the performance that we had in the quarter that just gone by and for the last financial year.
So as a bank, we are quite pleased that our net profit ended at INR1,303 crores for the FY ’24, ’25, registering a growth of 22% when compared to INR1,070 crores in the prior fiscal. Total deposits grew by 6% to INR107,526 crores from INR101,920 crores on a Y-o-Y basis. Retail deposits, excluding bulk deposits, grew by 7%. So as an institution, we did a moderate the total quantum of bulk deposits and bulk deposits as a percentage of our total deposits is now close to about 2.5% or thereabouts.
So retail deposits grew to INR104,750 crores from INR97,743 INR37,743 crores. Gross advances grew by 9% to 87,579 crores from INR80,426 crores. And this — at this juncture, I’d like to point out that this includes the impact of technical write-off to the extent of INR900 crores. So if you were to add-back the assets written-off technically, the total growth would be closer to 10%.
The total business for the bank grew by 7% to conclude to reach INR195,105 crores. Net interest margin for the year was at 3.24%. The bank was able to show a healthy growth in the average balances during the period with a growth of 10% to. The bank declared a return on assets of 1.05% and a return-on-equity of 12.9% for the financial year. Net interest income for the year was at INR3,486 crores.
The capital adequacy ratio of the bank at the end-of-the year is at 19.31% and the Tier-1 ratio stands at 17.98%. CASA amount increased by 3% year-on-year to INR33,730 crores from INR32,693 crores. Provision coverage ratio, excluding write-off improved by 311 basis-points to reach 71.77% 1.77% and PCR excluding write-off improved to 85.03%.
Overall, gross NPA reduced by 130 basis-points from 4.5% to 3.2%. Net NPA reduced by 54 basis-points from 1.46% to 92 basis-points. Slippage ratio for the year was at 1.31%. Now allow me to take you through the financial performance of the bank in the quarter that just went by. The bank’s net profit for the quarter was INR342 crores compared to INR288 crores during FY — Q4 FY ’24. Net interest income for the quarter was INR868 crores.
Operating profit for the quarter was INR683 crores as against INR434 crores, an increase of 57% on a year-on-year basis. Net interest margin for the quarter was at 3.21% and the return on assets was 1.11% and return-on-equity was 13.74% for the quarter. Slippage ratio for the quarter was at 24 basis-points. We continue to grow most of our business lines.
Our gold loan business now stands at INR16,982 crores with an average LTV of 61.88%, including buyout, and this number includes buyout and an average ticket of about 1.88 lakhs. Gold loan book grew by 9% year-on-year. Home loans and auto loans are another major area of focus in the retail segment. On a Y-o-Y basis, we are able to achieve 55% growth in-home loan and 24% growth in auto loan. We will continue to maintain the momentum in disbursement and collections in the coming quarters to achieve our desired — desired targets.
With this, allow me to open the floor for questions.
Questions and Answers:
Operator
Thank you. Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Darshan Diora from Investe Group. Please go-ahead.
Darshan Deora
Yeah. Thank you for the opportunity. So my first question was regarding the other income line-item within the non-interest income for Q4 FY ’24, it seems to be on the higher side. So any additional color can you can give on this other income line-item?
P R Seshadri
Sure. Thank you very much for the question. The — during Q4 ’25, we were helped by strong revenue accruing from our treasury operations. So the treasury side, we got some very significant growth in revenue. We also got income on account of the recovery, which amounted to about INR177 crores during that quarter. So these are the two big lines where there was an uptick in revenue.
Darshan Deora
Okay. Got it. I just wanted to ask you with respect to the MSME loan book. So I know the bank has put into place a lot of initiatives and we really appreciate that, especially on the — trying to reequip the branch managers and the staff at the branches to handle MSME customers. But in terms of the loan growth that you have outlined in the presentation, it seems a bit on the lower side. So any color you can give on the MSME book specifically? Yeah.
P R Seshadri
So the MSME book actually after a long-time, we stabilized the book. We didn’t grow very much during the year, but we stabilized it. There was no shrinkage. The reason why the numbers in the deck seem as though you appear optically as though the book has actually shrunk is that approximately INR560 crores of that was written-off technically.
So if you were to add it back, it is closer to where it should be and there was some reclassification the — of these assets out. So for the — we are quite happy with what happened during the year. We’ve put in-place the distribution architecture that enables us to get these accounts. We’ve now got a reasonable method of onboarding them. The rate at which we are able to onboard them increased quite considerably as we went through the last year, you know from 1/4 to the other, quarter-four was our best.
Obviously, it’s also the busiest season in the Indian calendar. So we are actually quite happy. We think that this year, you will see a very significant growth. As far as we are concerned, we think that this is the year of growth for us as an institution. We put in-place the underlying tools that we need for us to grow and we are reasonably confident that you will see a substantial growth in the MSME balance sheet as we go through this year.
Darshan Deora
Okay. Got it. And any guidance you can give for the bank as a whole for FY ’26 in terms of the advanced growth as well as the profitability or the ROA. S O with respect to, you know, the last year when we were asked this question, we told people that we would be at the 10% level and we ended-up at that level. We think that our growth — we will be growing faster than last year. The environment is an important imponderable that we are not entirely sure as to how it is going to behave. But I think that, 20% 30%, maybe 40% increase in our growth rate is feasible and we now have the tools to get there. So I would say that we would be north of 12% of growth assets for the year. Our hope would be that we beat that number by 3 or 4 point percentage points. But as of now, we are targeting north of 12%, but with a change in the asset mix, the growth coming largely from MSME and retail and other such asset categories. Got it. So that we have a — I mean effectively higher yield essentially for higher levels. That’s right. That’s right. Got it. In terms of NIMs or ROA, if you could give any guidance? NIMs, you know, I’m a little hesitant to give guidance on NIMs because the full impact of all the changes to the reference rates and how they will impact us is a little difficult for us to compute at this stage because it’s not known when those changes will occur. Roughly 40% of our balance sheet is exposed to external factors. I mean in the sense that they are linked to either repo or to T-bill.
P R Seshadri
Got it. And therefore, the impact of all of that is very hard to estimate. So I don’t want to give a view on what the NIM will be because it’s difficult for me to do that. The point that I’d like to make is in Q4, we actively manage NIM. I mean in the sense that we decided to prioritize NIMs over balance sheet growth, we could have grown the balance sheet very easily more than what we finally ended.
We finally ended at, but we chose not to and that’s why our NIMs expanded in the last quarter. So we do have tools to manage the NIM. So therefore, I don’t want to give a number and then miss it. With respect to return on assets, we think we’ll be in the 1% ballpark. I think we have other revenue sources that we can manage. There will be stress coming in because of the fact that the NIMs will be a stressed at least to begin with.
I think over a period of time, the cost of funding will also drop and the basis risk that we are dealing with at this point in time will play-out. So we are reasonably confident that we should be in the 1% range as we go-forward with respect to return on assets. On the NIM front, little harder to predict. Got it.
Darshan Deora
Thank you so much for answering all my questions. Really appreciate it and best of luck.
P R Seshadri
Thank you.
Operator
Thank you. We take the next question from the line of Arvindatta from. Please go-ahead.
Arvind Datta
Hi, good afternoon and thanks for the opportunity. My question is related to the retail consumer business. What’s the cross-sell opportunity available to you in your portfolio currently? And what’s your current cross-sell ratio for the consumer business? That’s my first question. And second question relates to, are there any plans to distribute third-party products like mutual funds to your existing clients? These are the two questions from my side.
P R Seshadri
Thank you very much. So on the retail side, cross-sell so-far, we do have an active cross-sell program. Our personal loan book is about 90% of the book is cross-sell. So it’s to our own existing savings account base that the product has been sold. On the housing loan side as well, we do periodic campaigns to try and sell people housing loans.
Of course, a housing loan will only be attractive when somebody is actively looking to buy a house, which is not every day and personal loan is a more appropriate product to be you know, targeting them so on the as a cross-sell, as a feature is something that is now embedded in the DNA of the institution. We do it all-the-time. I — we’ve not given you details of exactly what proportion of this balance sheet is actually cross-sold. We’ll try and give those details as we as we go-forward.
I’m sorry, I’ve forgotten your second question, if you could just repeat it, maybe I can answer that as well.
Arvind Datta
Related to distribution of third-party products like mutual funds to your existing savings account or other loan product customers.
P R Seshadri
So right now, we offer these on a — on a completely self-service platform, which — and we have an AUM about INR1,000 crores or so. We are in the process of, you know, thinking through whether we should set-up a — an arm of the institution that actively makes available wealth products to our customers. So this is something which is in the works.
Our first area of focus last year was on the asset side, where we thought that we had to do a lot of work. We have done that. This year is when we will be focusing on liabilities, stroke, wealth. Those products are areas that we will be spending a lot of time on. Our intent is to make available all the products that our customers will need and not have to hand them over to other people, so to try and satisfy them as much as possible. So this is something that we will do this year. I trust that answers your question.
Hello? Have we lost them?
Operator
Sir, we move to the next question from the line of Himanshu Padhi from Bugal Rock PMS. Please go-ahead.
Himanshu Upadhyay
Hi, good evening. Am I audible? Hello. Yes, you’re audible. Yes, you’re audible. Yeah. So there is this question. In the previous call, we talked about automation given on lab products, okay. So can you just explain what gets automated because what we understand valuation of property, physical verification, documentation, these all are manual processes and which are generally takes a lot of time, okay. Yeah. So what processes get automated here?
And secondly, are we doing cash-flow bad loans where collateral is security in form of property and not just doing loan against property. So is that understanding right now? And the ticket size and average loans as a percentage of property value means what you are targeting in that segment what we stated on lab in last quarter. So some more idea on that product and how is it scaling up will be the lending?
P R Seshadri
Okay. Thank you. So to answer your second question first, we do not use collateral as a crutch to lend. That is our first principle of lending. Everywhere we do cash-flow based. The only exception being gold, where we are doing gold loans where it is principally driven by the collateral that is accepted. So All LAP loans are based on the cash flows of the individual and all LAP loans are underwritten as term facilities. So no LAP loan is underwritten as a overdraft. So overdrafts tend to have a relatively lax underwriting standard when compared to term. So these are underwritten at the — the scrutiny of these loans is the highest that we can bring for a product of this nature. With respect to loan-to-value ratios, the — on an average, the loan-to-value ratio would be in the neighborhood of 60% to 70% on average and the average ticket size would depend upon the segment that we are targeting. So there are two segments. There is the mass-market segment and then there is a segment which is the higher-ticket segment in places like Bombay, Delhi and so on and so forth, where property valuations are higher. So we are on — our minimum ticket size would be in the neighborhood of approximately INR50 lakhs of rupees and it will go upwards from there. So we don’t operate on the lower-end of the market. These are all full — the paperwork associated with these loans is a full document and the underwriting, they’re all underwritten as term facilities, which means that the individual must-have the ability to service both interest as well as principal. So I trust that answers your question.
Himanshu Upadhyay
And how much the growth is visible in that product or are we seeing now the product stabilizing and growing because it is one of the important products for — on MSME side and we have been working a lot on automation.
P R Seshadri
So some thoughts so with respect to automation, with respect to automation, what we’ve automated is the credit underwriting piece, which is basically to understand the income and cash flows of the individual and figuring out the income and cash-flow of the individual can support the loan in question. That bit is automatable because information sources are available. We can hit the tax department and pull the tax returns and all the other details associated there with, including the balance sheet and P&L and we can look at it in an automatic fashion. We can hit the bureau automatically.
We can do all of that and we can run scorecards automatically. The point that you made that title papers and other such things are by definition of requiring manual intervention, that is true, but that’s the second step. So we’ve automated the first step. The second step is a process that unfortunately is manual and along with the rest of the market, we have to do it manually till such time as the environment changes. But the first step for us was also manual for us, which we have now automated. Thus that answers your question.’
And yes, the volumes have increased. In fact, they’re on an increasing trend. We think that they will continue to increase because we are on a very low-base. So I think if you were to hold this question and ask me this question two quarters from now, I think the numbers by then would have reached a level where it would make material difference to the balance sheet of the bank.
So as of now, we have approximately only INR3,000 crores or so of LAP assets on a balance sheet of INR88,000 crores. So as an institution, we are very underrepresented in this asset category.
Himanshu Upadhyay
Okay. Yeah, that’s helpful. And secondly, if you want to grow, okay, over last few years, the thought was of, we wanted to maintain decent margin and low-cost of deposits, okay. And what we have seen is that our CAR has not at all grown last year and SAA also has grown very marginally. So are we trying to now get more into deposits or faster growth on deposits so that it helps us in growing our liably assets or do you think you — the deposits will remain at a low-growth? The first focus would be moving from low-margin corporate loans to a SME or a price, the, let’s say, the personal loans segment. So what would be the strategy on that side and it will be major — so some thoughts here will be helpful. Thank you.
P R Seshadri
So our view is that last year was an unusual year for you know, on the liability side of the house, essentially because interest rates were very-high and consequently, the desire of customers to move from current or savings accounts into those deposit accounts was higher. As the reference rates start dropping and interest-rate regime in the market drops, then the difference between CASA, CA and I mean SA and time deposits will also drop. And therefore, the — some amount of inertia will come into customers who are — the opportunity cost of not moving the money is not as much.
So our view is that the market will grow CA NSA faster than this year than it did last year. So the fact that our CASA balances did not grow more than what they did right now is because of two factors. We had one particular account which had at the end-of-the prior year, a very large balance, which went out. And then we had to claw our way back and cover all of that and then grow by 3%. So none of those challenges exist this year for us and we expect next year to be significantly better from a CASA growth perspective. So we are not changing our mix.
We are not saying that we will give up our low-cost strategy and go into only deposits. That’s not it. We want to grow CASA much as we wanted to grow CASA in the past. We think that we’ve hit a bottom as far as the CASA percentages are concerned and we have a strategic view as to how to maintain this year as well as try and grow — grow this as we go-forward.
Himanshu Upadhyay
Okay. So can we expect the liability side to now increase by 10% overall also because even if we look at the TDs, okay, or retail term, that increased by 9% type of thing. But overall, do we expect now the overall deposits on the retail side can grow by 10%, 12% in near-future so that we maintain our margin.
P R Seshadri
The answer is, yes, it will grow. I mean, there is a natural limit to how much we can grow our assets. So if our assets are going to grow north of 12%, our deposits will have to grow north of 10% at the very least, because otherwise the CD ratio will move adversely against us. And we have no desire to be an active. We don’t — at this juncture, we don’t think that tapping the CD market or other such markets are appropriate. So we’d like to fund ourselves from retail deposits.
Himanshu Upadhyay
So and we are not thinking of reducing our large corporate loans, which are a pretty large proportion, low-cost, large corporate loans what we have, short-term large corporate loans currently. So they will continue to grow.
P R Seshadri
Yes. No, they — the rate of growth of those will be much slower. So the whole thing is to cycle out of those and cycle into the new — I mean into the higher-yielding retail and MSME, which we need to do properly. So we need to get this MSME and retail to come in large-enough quantities and then gradually bean ourselves off the low-yielding corporate book that we have. We will have — you know, luckily for us, most of those are in the nature of very short-duration assets. So we should be able to manage that.
So the first order of business is to get retail and MSME to grow very considerably so that most of our growth challenges are addressed from those two engines. And at that point in time, we have the optionality as to how much of the corporate we retain and how much we give up. So that’s how we are in playing this. We are not height bound and saying that we will reduce the corporate first and grow the other later.
We are trying to manage the balance sheet dynamically. So if more-and-more retail and MSME come in, we will start figuring out what to do with the corporate at that point in time.
Himanshu Upadhyay
I trust that answers your question. Thank you. Okay. Yeah, that’s helpful. I have few more queries. I’ll join back-in the queue. Thanks.
P R Seshadri
Thank you.
Operator
Thank you. We take the next question from the line of Jay Mundhra from ICICI Securities Limited. Please go-ahead.
Jai Mundhra
Yeah. Hi, sir. A couple of questions sir from my side. The first is, sir, on MSME, right? So you have given a new disclosure . I mean, you have said that there is some group remapping, etc., and there is a write-off also. Yeah. So what is — what is the like-to-like growth? I mean, it is not very clear. So I just thought of asking that INR13,464 crores as of April 1, ’24, is that comparable to INR12,686 or there is some adjustment here? And what is this others because what is this others in MSME, SME?
P R Seshadri
Yeah. Thanks, Jay. Thanks. So MSME was — we ended the year marginally up. That was the number that we had in the internal MIS structures. It was a marginal growth and then subsequently, we did this cleanup of our balance sheet. As I said, we wrote — technically wrote-off INR900 crores of assets. A majority of those were actually MSME assets.
So in the number that you’re seeing in this page, which is page 15 of the deck, it is, 12, 686, you have to add 546 and then there were some other remapping exercises which are carried out. The exact number is not with me. We’ll come back to you with it if at an appropriate point in time. So net-net, the message is that we were flat. We didn’t grow very much. But as you know, Jay, we’ve been shrinking this book for a long while.
It’s been slowly, you know, reducing. That has stopped. The quantum of business that we booked in Q4 was the highest that we have ever done in the history of the bank, our history in the near — in the recent past, that is. And we think that we are on the right path to get MSME growth going very considerably. Now the division between MSME and others is, you know, the others refers to a book which is a low low-yield bills book.
So this is LC-backed bills that we discount for our customers which historically is driven more by yield than by anything else. So if you offer a good price, you can get more business. If you offer a higher price, you lose business. So we took the decision that we wanted a particular rate below which we are not doing this business during the last quarter. And as a consequence, INR700 crores of those assets were lost. They were all paid back.
The existing assets paid back because our risk is on the other bank, which is the LC issuing bank. And what you see in MSME, SME, that is core MSME SME lending, where we’ve lent money directly to the MSME and SME and that’s what we intend to grow. And the INR546 crores of write-off that you see is also pertaining to that line, MSME, SME lending. So I trust that, that answers your question.
Jai Mundhra
Yeah. Yes, sir, that does. Secondly, sir, I mean, this quarter INR900 crores write-off, that seems a bit accelerated, right? Of course, the PCR is same and hence, you know the credit cost uptick that one can see is I mean that is because of the accelerated write-off. But is there any policy change? Is there anything you know that has caused this write-off because nine-month write-off was lesser and even on a full-year basis, I think FY ’25 write-off is much higher versus FY ’24, even though the slippages have come down. So view on — is there anything to read into write-off, higher write-off and maybe the slippages, how do you see the slippages?
P R Seshadri
There is nothing to read into this. Effectively, you know, we started our balance sheet cleanup a little later than other banks. And as a consequence, the gross NPA for us was higher. Now we’ve done a very good job of recoveries as you can see. But having said that, we still had elevated GNPA numbers, while our provision coverage ratios kept rising. So over the last few years, we’ve been providing as much as possible and taking those numbers up, we had come to a point where we had very-high provision coverage ratios and also very-high GNPA.
So we took the call during this quarter to actually write-off a bunch of assets that are 100% provided and ensure at the same time that the provision coverage ratio without technical write-off is maintained at the level at which it was earlier. So in order to do all of this, we had to provide a little bit more on the — on the assets that we currently have, which is on the NPA book and also, you know, so the outcome was optically that the PCR hadn’t moved, but the GNPA came off very sharply. These assets were anyway 100% provided. So there is no policy change. Going-forward, we intend to continue to do technical write-offs and bring the GNPA numbers down as and when the opportunity provides itself.
Jai Mundhra
Right. Thank you. And sir, on gold loan, I think last call, there was an RBI circular and there was a bit of uncertainty in case, I mean, we may have to tweak the product, et-cetera. This quarter gold loan growth is more or less stable. How do you see this gold loan book? Is there anything that you need to change or this is more or less settled? How should the gold loan growth be similar to loan growth? How should one look at it?
P R Seshadri
The RBI’s most recent draft circular has a few points that we need clarity on and we have written to RBI and we have sought some changes to the new draft circular. If the draft circular were to be implemented in total as-is, it would require pretty substantial change at our end. So we are hopeful that would not be the case and we are awaiting feedback from RBI.
So it’s a little early in the day for us to comment. As of this moment, a business-as-usual continues. But if RBI circular were to come in with pronouncements which are in-line with what was there in the September — I mean the more recent circular there, there will be some changes that we will need to make. So we are waiting and watching.
Jai Mundhra
Okay, sure. And last question, sir, you have added this branch value-added same-store sales, right? So I was just thinking that the number shows that Q4 is now 50% higher than last year, whereas the NII growth is flat and other income, if I remove this INR170 crores of TWO recovery, that also looks flattish. So while you have mentioned that you know this number is of course, includes some estimates and some assumption, but I mean, the revenue number does not seem to imply this 50% growth. So what is the — and there is no material addition in the branches also. So I mean, how to look at this 50% growth in the SVA and where would it be reflecting when will it start getting reflected? Thank you.
P R Seshadri
Thanks. I think that’s a very good question because that’s a slide that we added this time around.. We started trying — we were trying to figure out how to measure our branches and understand how much value addition is happening in the branch. The way we see it, the branch does two things. The branch does service to existing customers and the branch sells new products to existing and new customers.
The sale of new products could also include things like getting new balances into current accounts, existing current accounts or new balances into existing savings accounts. So we started looking at — we looked at our historical trends. Every time we sold a new product, how did it behave? So we went back, our decision science people looked at the historical trends and tried to compute for a particular type of product, what is the net present value that it generates historically.
And we set-in place a system that every time the branch sold a new product, we computed the expected value over its lifetime and the net present value thereof. And over-time, we kept saying come correcting it because we’ve been doing this now for the last five quarters. Every quarter, we get some additional information and we are able to correct it. And then we recast for the prior quarter using the new knowledge that we got. So this has helped us to look at how much value addition is happening in the branch in rupees terms actually.
This represents the net present Value of future cash flows. So if I give a housing loan today, we are going to get a set of, you know interest receivables, which are over a period of time, the net present value of that is X today. This will drip through our P&L. So it won’t come through our P&L all at-once. These are future cash flows that will come piece by piece by piece over-time. So as the SBA increases, the cash flows that are coming through to us will increase as well. So this is the only way to do it in a bank. In any other retail kind of chain, it’s much easier to measure this because all you have to do is tally up the sales for every day and say how much are you selling in a particular branch or store. It’s the same thing, but in the bran — in the bank, we have to do all of this complex jugglary because all our assets have a time dimension to it as well. So to answer your question as to why our net interest income did not grow, while the sales have grown, the answer is that we’ve had a very significant impact on our NIM during this period. Our cost of funds went up, the yield on these assets came off. And the — even though our assets grew by 10%, NIMs shrank to such an extent that the — that the total net interest income did not move. So we have to grow faster than this. We have to add different types of assets, which we sell at the branch. So I need significantly more throughput to come through the branches. And over a period of time, that will start impacting the total revenue and that’s the — at least that’s the logic that we’ve been using. I trust that answers your question. Yes, sir, surely. Thanks a lot. So I mean, the meaning — I mean if I were to conclude isn’t you are saying that these are the value-added, which of course, you have approximated given that any product that you sell has an inherent duration the quarterly number captures only the current quarter, wherein this SBA captures a lifetime maybe value addition broadly.
Jai Mundhra
That is the that’s right. That’s right, absolutely right. Okay. Thank you so much, sir.
P R Seshadri
Thank you.
Operator
Thank you. We take the next question from the line of Arian Jain from Lotus Wealth. Please go-ahead.
Aryan Jain
Thanks for the opportunity. Am I audible?
P R Seshadri
Yes, you’re audible.
Aryan Jain
Yeah. So I’ve noticed that there is a change in other income from about 14 — to 120 cr mainly on the treasury side. So is this a one-off sort of gain or do you see some growth coming from the treasury segment going-forward? Hello?
P R Seshadri
No, no, we are just looking at it. The treasury has been a particularly we’ve had a good year in treasury last year. We had a reasonable year in the prior year as well. Between last year and the prior year, the difference is perhaps 15% incremental revenue for this year. So as far as the way we see it, the treasury revenues are reasonably — at least for the last two years have been pretty consistent.
Now Treasury by definition need not always be consistent because the opportunities will come and go. In the — in the case of other income this time around, there are — there is the impact of recoveries, which is also flowing through into the other income line. No, no, I’m looking at the other line. Below treasury and ForEx, there is a line called other with an asterisk, right? And that has a impact of recovery, which is flowing through into the interest line, which needs to — needs to be taken into — taken into account. Okay. Does that answer your question?
Aryan Jain
Yeah, exactly. Definitely, definitely. I just had another question. Currently, I think we’re standing at a return on asset percentage of 1.05, so do you think that we can maintain it till 2027 or what’s the guidance about the return on assets by 2027?
P R Seshadri
And the interest-rate movement in the environment is adverse at this point in time. And so our cost of money is not reducing as fast as the — some of our assets are repricing. So I think the entire industry is facing some amount of NIM pressure. So we think that that’s a temporary phenomenon, which will be felt during the first-half of this year. We think that we have enough levers to ensure that our return on assets is in the neighborhood of 1%.
We had hoped that we had in the — we think that with reasonable — we have reasonable expectation of it being in this 1% range in the near-term. And then as the environment changes and the interest-rate cycle moves in the opposite direction, and as our retail book grows, both retail and MSME book grows, we expect that to widen. So we expect that to become one — you know, go closer to 1.15, 1.2, but that’s in the future. Right now, this year, we have reasonable expectation of being at a 1% ballpark.
Operator
Thank you. We take the next question from the line of Aditya from Securities Investment Management. Please go-ahead.
Unidentified Participant
Yeah, hi, sir. Thanks for the opportunity. Sir, if you could just share the mix of and fixed-rate loans for us.
P R Seshadri
Can you repeat the question because we have some background noise from your end.
Aryan Jain
So if you could share the mix of fixed-rate loans and floating-rate loans.
P R Seshadri
Fixed-rate is roughly a third. The floating-rate loans are roughly about 40%, then the rest are all other references like MCLR, different other product categories, you know. So credit card is not any — credit card can probably be classified as fixed-rate. So we’ve got fixed-rate, which is roughly a third excluding credit card. So we have credit card, which is roughly about 2% of our balance sheet, I guess, which is fixed-rate.
So if you add that, you get to 35% fixed-rate. Then you have MCLR, MCLR then you have the old base rate, all of that put together comes to closer to about 8%, 10%. And then you have foreign currency loans, et-cetera, etc. So the variable-rate loan here is roughly 40% of the book is variable.
Unidentified Participant
So now for the corporate loans, how does the interest reset happens since we are shorter-term loans hello.
P R Seshadri
We have we can’t hear you very well because we are hearing somebody else in the background. So we are just asking the operator to put the — put the other people on-mute while we speak. So to answer your question, the shorter-duration loans, we basically set the rate at every disbursal. So if a — if there is a — if money has been given out for 30 days when it gets repaid after 30 days, at that point in time, there is an agreement between us and the borrower as to what the new rate will be. Be and that you know that is the new rate at which the disbursal happens. I have some further color on the earlier question that you asked. Our fixed-rate book is about 44% of the total. And the variable-rate book is about 42% of the total, right? So that’s — that’s it. And then we have MCLR and other such things, other asset categories, dollar linked, et-cetera, et-cetera, which make-up the rest.
Operator
Thank you. Next question is from the line of Shah from CR Kothari; Suns. Please go-ahead.
Vidhi Shah
Okay. Hello, sir. Can I get a guidance on your revenue — on your revenue from deposits for the next year, I mean the Deposit growth?
P R Seshadri
Will be north of 10% ma’am, deposit growth. Total deposits, CASA as well as time deposits, we think we’ll be north of 10% next year. Okay. And in terms — and for loans, okay. We’ll be north of 12%.
Vidhi Shah
Thank you.
Operator
Thank you. Next question is from the line of Himanshu Padia from Bugal Rock PMS. Please go-ahead.
Himanshu Upadhyay
Yeah, hi. Any idea on how has been the attrition rate at lower level employees because last quarter we said that we have lost the front-facing employees and which had led to lesser truth to nail ratio. So any numbers there? And what are we doing to retain the people at customer-facing level? And how that program which we launched of branch level incentives and branch internally deciding the incentives or not the incentives, but the bonus pool, etc impacting the morale and all these things. Some thoughts on the branch level and how are you doing or changing the branch activities will be helpful. Thank you.
P R Seshadri
Thank you. So with respect to the branch level incentivization program that continues. More in last quarter, a fair chunk of our branches qualified. The mechanism of sharing the reward amongst the workers within the branch continues, which means that they all sit together and decide you know-how they should do this without you know there being the incidents of rank, etc.
At least that is in theory, that’s what we want all of that is continuing we, we, we are seeing you know a gradual change in the mindset of our staff you know gradual increase in sales-related activities being performed by people within the within the within the system. All of that is happening. With respect to attrition, our attrition rate is actually quite low. Our total attrition is 4% or 5% a year. Our total headcount has dropped a fair bit since we’ve been — we deliberately have not hired incremental people for a variety of reasons.
That’s because we wanted to get a fix on our revenue expense ratio. We wanted to ensure that our costs were appropriate for the business that we are doing. So during the year, we’ve managed to reduce our costs or rather ensure that it did not increase very much. So I’m — I’m sure we are an outlier when you were to compare us with other banks, there’s been very tight cost-control. So while we’ve lost some front-facing people, our two-to-tail ratio has been kept at the level it was. So it hasn’t improved.
We are at 78% 22% by pulling people out-of-the back-offices and putting them into the front customer-facing offices. The fact that more people quit who are customer-facing continues to be the fact, but we are able to replace them from internal resources and our aim is to continuously work on training the front-office staff so that they can do a better job at whatever it is that they’re intending to do and equipping them with the appropriate tools so that they can discharge those duties better.
So I think over the last year, we’ve made a lot of progress on all of that. You can see that we’ve launched 12 new systems and processes. We are quite happy with the progress on that front. Now we’ve got to get our people to use it and get significant increased throughput. And we believe that once the throughput starts increasing very significantly, our attrition in the front-end will also reduce, right? So that’s what we are working at.
Himanshu Upadhyay
And one small thing about branch level distribution between the bonuses, so are we seeing a ratio of, let’s say, the lowest getting X and the best are getting around three or four times X in the same branch. So is the big variation what we were aiming for? Is it really happening? Any for anything you have seen, can you just elaborate on that or it is — you are saying it is I will pre-distribution.
P R Seshadri
I will — I’ll come back to you and-answer that question. We’ll do the analysis and come back. I haven’t been looking at it at that level of detail, but I will come back to you. We will respond to you and give you that information. We don’t want to hazard a guess without so we’ll leave that with us. We’ll come back to you.
Himanshu Upadhyay
Okay. Thank you from my sir. Thank you.
Operator
Thank you. We take the last question from the line of Rajiv Agarwal, an Individual Investor. Please go-ahead.
Unidentified Participant
Thank you for the opportunity. My question is regarding this slide number 35 GNPA movement. So in the — in this quarter, you have shown reduction of INR148 crores. So this is quite a large amount. So I wanted to know the breakup between upgrade and recovery in this. Hello.
P R Seshadri
Yeah, yeah, yeah, yeah. Yeah. I can hear you, sir. I can hear you. I was trying to find page 35, so I’m sorry. So sir, the — you are looking at the number of deductions of INR1,148 crores. Is that what you — what you’re talking about? Yeah. Out of that INR1,148 crores, sir, INR900 crores is write-off. Okay. Okay. And the rest is recovery, sir.
Unidentified Participant
Okay. And this recovery you are showing in other income, right, once out. So you show in other income, I think you mentioned INR177 crore.
Operator
That’s right. Yes, sir hello, I think we have lost. Hello, can you hear us? You there? Hello sir, we may have lost the participant. Okay. Ladies and gentlemen, in the interest of time, that was the last question. I would now like to hand the conference over to the management for closing comments.
P R Seshadri
Thank you. Thank you very much to everybody who joined the call. We really appreciate it. Thank you to ICICI Securities for organizing it. Just as a closing comment, we are very pleased with the results that we had during Q4. We think that we have — we have put in-place a lot of effort has gone into build new systems, new processes so that the transformation of this organization from what it was in the past to a more modern customer-focused entity can take place. So we believe that we are at a juncture where all the investments that we’ve made over the last 18 months or so should begin to start paying-off and we are looking-forward for a bright future ahead. Thank you.
Operator
Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines