Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
South Indian Bank Ltd (NSE: SOUTHBANK) Q4 2026 Earnings Call dated May. 07, 2026
Corporate Participants:
P R Seshadri — Managing Director and Chief Executive Officer
Unmesh Shah — Unidentified Participant
Vinod Francis — Chief Financial Officer
Analysts:
Aman Singh Singhani — Analyst
Jay Mundra — Analyst
Darshan Deora — Analyst
Parth M. — Analyst
Neeraj Jalan — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, Good day and welcome to the South Indian Bank Q4FY26R hosted by ICICI Securities Limited. As a reminder, all participant lines will be on listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr.
Aman Singh Sahij Singhani from ICIC Securities. Thank you. And over to you.
Aman Singh Singhani — Analyst
Thanks. Good afternoon everyone. And thanks for joining the call. On behalf of ICICI securities, we welcome you all to Q4FY26 post earnings conference call of South Indian Bank. From management side, we have with us Mr. P.R. Shashadri. Managing Director and CEO Mr. Dolphy Jose, Executive Director Mr. Ento George. Chief Operating Officer and Executive Vice President Mr. Vinod Francis, SGM and Chief Operate Financial Officer Mr. Jimmy Matthew, SGM and Company Secretary along with other senior executives of the bank.
I’ll now hand over the conference to management for their opening remarks. Post which we can start the Q and A session. Thank you. And over to you, sir.
Operator
Sir, you’re on mute.
P R Seshadri — Managing Director and Chief Executive Officer
Sorry. Good evening to all of you and thank you very much for joining us. I’m sorry, sir.
Operator
Can you speak a bit louder? Come near to the microphone.
P R Seshadri — Managing Director and Chief Executive Officer
Is this. Is this better?
Operator
Yes, sir. Please go ahead.
P R Seshadri — Managing Director and Chief Executive Officer
Okay. Thank you very much. Good evening to all of you. And thank you very much for joining us for the South Indian Bank Limited Quarter 4 FY26 Earnings Conference Call. I’m P R Seshadri, the Managing Director and CEO. I’m joined here by my colleagues that were introduced earlier and two others. Mr. Senthil Kumar who’s our Head of Credit and Mr. Soni who is our Chief Information CIO. See at the outset. Let me once again thank you all for being here with us today. We greatly appreciate it. Let me start with the key highlights of financial performance for the financial year 2025-2026.
The bank declared its highest ever net profit for the year at 1455 crore. For the financial year 2025 26, which implies growth of 12% compared to 1303 crores in the prior year. Total deposits grew by 15% to 1 23,346 crores from 1 7,526 crores. Retail deposits excluding bulk deposits grew by 15% to a lakh. And 20,116 crores from a lakh and 4750 crores. Gross advances grew by 14.5% to 1, 274 crores from rupees 87,579 crores to during the last financial year we have done a technical write off to the extent of 1,163 crores excluding which the year on year growth would be at 15.8%.
Total business for the bank grew by 15% to Rupees 2,23,620 crores. Net interest margin for the year was at 2.91%. The bank was able to show a healthy growth in the average advances during the period with a growth of 14%. The bank declared a return of 1.03% and a return on equity of 12.76% for the financial year. Net interest income for the year was at 3437 crores. The capital adequacy ratio of the bank at 19.66% with the tier 1 ratio standing at 18.76% and the entire tier 1 component is basically common equity.
Tier 1 TASA amount increased by 17.5% year on year to 39,621 crores. Division coverage ratio excluding write off improved by 810 basis points year on year to reach 79.87% and PCR including write off reached 94.10% at the end of the year. Overall gross NPA reduced by 177 basis points from 3.2% to 1.43%. Net NPA reduced by 63 basis points from 90.92% to to 0.29%. Slippage ratio for the year was at 72 basis points. Let me take you through the financial performance of the bank for the quarter ending March 31, 2026.
The net profit for the quarter was 408 crores compared to 342 crores during Q4 FY25. Net interest income for the quarter was at 915 crores. Operating profit for the quarter was 581 crores. Net interest margin for the quarter was 2.95%. The bank’s return on asset for the quarter was 1.17% and a return on equity for the quarter was 14.49%. Slippage ratio for the quarter not annualized was 15 basis points. Credit cost for the bank for this quarter was low at 3 basis points. During the last financial year our gold loan business grew by 46% and now stands at 24,729 crores with an average LTV of 57.18%.
This number includes those portfolios that have been purchased by us and an average ticket size of approximately 2.71 lakhs. Mortgage loans and auto loans are other areas of significant focus. On a year on year basis we were able to achieve significant growth in mortgage loans, significant growth in auto loans and our focus on MSME loans has ensured that our book has grown by approximately 15% for the year. We continue to maintain the momentum in disbursements and collections and we hope that the trend lines that we’ve seen thus far, assuming that the environment is conducive, ensures that we reach the outcomes that we would like to see.
Our areas of focus as an institution remain Portfolio quality. We are very happy to Note that the SMA1 and SMA2 numbers have continued to improve. Slippage is at an all time low shift from corporate to MSME and retail is visible in our balance sheet. CASA balances have grown very, very significantly demonstrating the quality of our liability franchise. There’s a material increase in branch productivity that we are able to see and which is reflected in the fact that retail and MSME businesses are growing.
Significant improvement in processes and systems have been realized. Our focus on digital channels are helping us improve our business and operating efficiency. This is the second year in which we’ve delivered positive operating leverage. Our focus on costs continue. So whilst the environment has been difficult and growing revenues have proven to be difficult, we’ve managed to ensure that jaws that from an operating efficiency point of view the jaws have opened up. With this we’d like to open the floor for questions.
Questions and Answers:
Operator
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 the Touchstone telephone. 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’ll take a first question from the line of Unmesh Shah, an individual investor. Please go ahead.
Unmesh Shah
Yeah, thank you very much sir for the giving me opportunity to give this concord to attend. And congratulations once again for the good set of number. Your car and PA all have come to a very good set of numbers, sir. And also this, you know, capital and everything is in line, sir. My question is now sir, that you know, you have decided not to go for, you know, for the second term or extension. Is there any search operation going for succession plan for the bank or what is the new, you know, thing going on or how much time will it take?
Or it may be internal person or some outside search is going on. If you can, if you can elaborate or if I’m not to increase it, I’ll be happy if you can throw some light on this.
P R Seshadri
The board is actively engaged in the search process. I can confirm that the search process is on and the board is fully cognizant of the need to ensure that this is done expeditiously and names communicated to RBI within the time frame that is required. And I am certain that the board would be updating shareholders as well as investors and others at the appropriate point in time once an outcome has been reached. So I guess the process, to reiterate the process is underway and we should expect communication from the bank, you know, from the board through the bank at an appropriate point in time.
Operator
Thank you. Before we take the next question, would like to remind participants to ask a question. Please press star n1 on your phone. Next question is from the line of Siddharth Golapudi, a retail investor. Please go ahead.
Aman Singh Singhani
Hi sir. Thank you so much for the opportunity to, you know, ask a question. First of all, congratulations on the great numbers. Sir, I had the similar question to what the first questioner asked, but I also have another question. I saw that in the numbers the other income had some significant decline this last quarter. So I just want to know what, what is the reason and is there any, like, you know, in future, what are we going to do to ensure that the other income is also consistent to the previous quarters?
Thank you sir.
P R Seshadri
I’ll request my colleague, our CFO to answer that question. Post his answer. I’ll give you context on how we think that we can regrow or start growing that revenue stream. So what you’ve been offering. Thank you sir.
Vinod Francis
Am I audible?
Operator
Yes. Can you come closer to the microphone please?
Vinod Francis
Yeah. Hope I am audible now.
Operator
Yes, please go ahead.
Vinod Francis
So the deep in the other income is mainly because of the Treasury. Because in Q4 due to the market conditions we were not able to generate much income on the treasury segment. So in Q3 we had an income of around 77 crores. So that is almost nil in Q4. So that is a major element of lift in the other income.
P R Seshadri
We are. Thanks Vinod. To further, you know, address your query, we are branching out from corporate into the retail and MSME side of the house and we are doing a lot of work to broaden out the fee base that we have as an institution and the revenue stream that you can get, non interest revenue that you can get on retail and MSME is significantly larger than what you can actually get on the corporate side. And as that goes out, we think that automatically the revenue streams here will improve.
Operator
Ladies and gentlemen, we’ve lost the management connection. Request you to stay connected please while we reconnect them. Ladies and gentlemen, thank you for patiently holding the line. We have the management team back on the call.
P R Seshadri
Thank you. My apologies for the fact that we inadvertently had left the call. I was trying to explain that the non interest income drop that you saw was largely on account of the fact that treasury revenues were very minimal during this quarter. And I think that has been the feature across the industry. And I was also trying to tell you that the change in mix that we are looking at automatically increases non interest. And we’re also working on a whole bunch of new solutions which will increase our revenue streams.
There’s been very substantial increase in our FX revenue streams and in order to make that even more buoyant, we are working on a new solution called TF Online which enables our corporate and MSME customers to engage with us for all export.
Operator
Ladies and gentlemen, sorry we’ve lost the management team again. We’re reconnecting them. Thank you. Sam. Foreign. Ladies and gentlemen, thank you for holding the line. We have the management team back on the call, so please go ahead.
P R Seshadri
Thank you. I don’t know where everybody lost me, but I just want to reiterate that you know, the, the reduction in non interest income is largely a one off which is coming from the fact that treasury revenues have been less than buoyant during the quarter which is something that has impacted not just us but has been a generic impact across the board and that the bank has, you know, A changing its product mix will enable us to increase revenues on this, on this front and B there are certain specific actions that we are taking with respect to our FX and trade platform which we are enhancing very considerably which will enable us to engage with our customers on a non funded basis.
Such that we get significantly enhanced revenue streams.
Operator
Thank you. Take a next question from the line of Jay Prakash Mundra from ICC Securities. Please go ahead. Mr. Mundra, you can go ahead with your question.
Jay Mundra
Yeah, hi, am I audible?
Operator
Yes, yes,
P R Seshadri
We can hear you.
Jay Mundra
Yeah, sure. Sir, just a question. On, on. While you mentioned that the board is, you know, has taken the succession thing, but any timelines are as to what are the timeline and what are the processes? I mean when does the search completes and when does the name go to rba? Any broad timeline, sir.
P R Seshadri
Jay, I think we are aware of the fact that RPI requires certain amount of time for the approval processes. The board is cognizant of that. And I am sure that the outcomes will be, you know, the, the process will conclude and letters will be written to the, to the RBI in due, in time for, you know, RBI to make its decisions and convey them to the board in such a fashion that the new incumbent can be in position when required, which is, you know, my term ends on the 30th of September and I expect that all of this will happen in such a fashion that the new incumbent can be in position before or, you know, immediately after the end of my term.
So I think that’s the, that’s the best I can do at this point in time. There is little further information that I can provide in this context.
Jay Mundra
Sure. No, no, I think that that is what I wanted to know. So thanks for that. And secondly, sir, on gold prices and the portfolio impact, right. While the LTV I believe is very comfortable, but that is on the blended level, right. So I mean a 20 fluctuation in gold prices is not a not uneven, unusual thing. So how do you control the LTV on let’s say if the gold is 15,000 or 16,000 per gram and then suddenly or over the month it comes down to maybe 13,500 types. So on the, I mean what is the risk mitigation on the gold loan at the higher end of the, when the gold prices are higher than.
P R Seshadri
I think it’s a very good question. So during the year we’ve had to understand how to measure this risk in gold. The risk is basically price volatility of gold itself is the risk. So as a bank we put together, we are using the value at risk framework and we built a mechanism by which we actually measure this risk. And using value at risk, we can see periods of volatility. And if we were to stress test our portfolio for that period of volatility, what is the portfolio that gets exposed as a consequence?
And we have set gaps on that as well. And that’s the mechanism by which we are actually managing gold loan risk. Now we’ve had a situation, I think it was either in January or in February where gold prices came down all the way down to about $4,100 per ounce from a peak of 5,500. And at that point in time we had an opportunity to test the various processes that we had set up. Actually a, the process of Figuring out who are these customers whose margins have been eroded be a process by which we communicate with these customers and ask them to repay or make margin payments to us so that they can restore the margins on the gold loan.
I’m glad to say that you know, a very large number of customers made payments very, very promptly. Of course we didn’t have to follow through and ask the rest of the customers who were impacted essentially because gold prices recovered thereafter. But having said that, these are all tools that we have in place. Our experience on the margin calling front has been good and that is how we are managing it. So at a portfolio level we have a value at risk metric which tells me how much risk I am running.
So if we take to trough movement of gold is X in the last eight years or 10 years that in a 30 day period, 30 day war has been X, then we ensure that we set a cap and do not exceed that cap. Now of course if the price of gold were to dip by more than that, then there will be some incremental hit to the bank. And that is what we think can be addressed by the fact that we are in a position, we have a mechanism by which those accounts can be isolated, margin calls can be made and our history is that we’ve been able to get margins to be refurbished in a very substantial number of these customers.
I trust that answers my your question.
Jay Mundra
Yeah, no sir, it does partially. I was also thinking that a few banks have told us that either they cap the ltv, not the LTV percentage but LTV rupees crore. Rupees thousand let’s say. So even if the gold prices were to go 16,000 per gram, they will cap at 11,000, 12,000 or they will take moving average of 30 days. Anything of that sort. Or you know, you have like what you mentioned, var sort of an approach for risk mitigation.
P R Seshadri
So we all already take a 30 day moving average.
Jay Mundra
Okay.
P R Seshadri
And we also in addition we apply something called a standard deviation. So we apply a proportion instead of applying one full standard deviation. We either apply 50% or 25% standard deviation to partially mitigate this risk. So to address volatility we’ve tried to figure out some statistical method of doing it. But what I was trying to tell you was how we manage risk at a portfolio level. But ultimately if the price of gold goes from 15,000 to 10,000 and that is what it has historically done, historically let us say the maximum peak to trough has been 30% then we can then try and model how much of my portfolio will be at risk and then cap it at a bar level.
We can say that I don’t want more than let’s say 10% or 8% of my total capital should ever be at risk. That kind of measurement system is already in play. Now of course, the real life movement in gold can be very different from historical movement. And these metrics that we have used may or may not really hold out, but it is a, it is the only substantive method by which we can do this. And we are quite, you know, we are tracking this very on a constant basis and thus far our experience has been reasonably good.
Jay Mundra
Right. Well, thank you so much sir for answering the question. I’ll come back in the queue. Thank you.
P R Seshadri
Thank you.
Operator
Thank you. We’ll take our next question from the line of Darshan Deoda from Invest Group. Please go ahead.
Darshan Deora
Yeah, thank you for the opportunity. So my first question was on the write off. That 1163 cross of, of write off, how is this accounted for? Can you just explain that briefly please?
P R Seshadri
Sure. I’ll turn this over to our CFO, Mr. Denote Francis to answer this.
Vinod Francis
Yes sir. With this regard to this write off 1163, so these, all these accounts have already been 100 percentage provided solutions has already been created. So we are doing the technical write off. It is not the actual bad write off, but a technical write off so that there is no impact in the pnl, but the only impact that comes in the pcr.
Darshan Deora
Got it. So this reduced your gnp, gnpa, but your NPA was not affected by this,
Vinod Francis
Not affected by the technical write off.
Darshan Deora
Okay, I’m probably gonna ask, take this offline with you because I have some more questions around that. The other thing was regarding the gold loan book. So. So 25,000 crores currently is your approximately the gold loan book size, including retail and agri. How much of this would be organic and how much of this is like portfolio buyout or co lending?
P R Seshadri
Vast majority is organic portfolio buyout and co lending. I don’t have the exact number, but I suspect it will be about 15%. But we can give you the exact numbers subsequently it’ll BE let’s say 10% or about less than 10%. 8, 7, 8%, 8 to 10%.
Darshan Deora
And generally speaking, like you know, this quarter, for example, what would be your total portfolio buyout? You would say like across products.
P R Seshadri
A total portfolio buyout across products is roughly in the order of magnitude of about 2000 crores at the end of the last quarter. And frankly from our point of view, you know, our learning has been that we would prefer pass through certificates to portfolio buyout. There was a point in time where we privileged portfolio buyout for the reason that, you know, we had to demonstrate growth in the portfolio. But now that we have our missionaries working and all of that is happening, we are more inclined to do PTCs as opposed to portfolio buyouts because of the credit enhancement and the fact that, you know, some of the attendant problems that come with this are not present in that.
In that structure.
Darshan Deora
Got it. And you know, just that kind of leads me to your. My next question which is on the msme. So any update or any anything else you would like to share on the msme in terms of the progress that we are seeing or the traction we are seeing,
P R Seshadri
The MSME has grown 15% year on year and we are quite happy with it. But to give a more detailed answer, I will turn this over to my colleague Gaulfi Joe, the executive director on the board.
Darshan Deora
Yes.
Unmesh Shah
Hi Darshan. This is the primary narrative for the time we have started this MSME progress progressively directionally going towards acquiring more and making a more substantial in the MSME segment. We continue to focus on better yield, better mix, better pricing discipline. So we have gradually progressed towards building MSME segment in growth supporting geography and market and that quite visible in the shift. If you look at the recent book and how it has developed that will continue and we intend to have concentrated resource allocation and avoid bit and go off the depth in the geographies where we have moved recently and develop market and we are investing on infra, we are investing on manpower etc.
That is the way forward for nfme. Deeper and not wider.
Darshan Deora
Got it. Got it. I appreciate that. That’s all from my side. Thank you so much and wish you all the best for FY27.
Unmesh Shah
Thanks.
Operator
Thank you. We’ll take our next question from the line of Sandeep Joshi from Unified Capital. Please go ahead.
Vinod Francis
Hi sir, thanks for the opportunity and congratulations.
Operator
Can you use your handset mode please?
Vinod Francis
Hi sir, thanks for the opportunity. I had a couple of questions focusing on the loan growth. So we have grown our loan book at a healthy rate of around mid teens during this financial year despite the write off about more than 1000 crores and the heavy lifting was done by gold loans. So in this context at what rate we intend to grow our loan book in FY27 A Human Goal might not contribute so significantly the way they do. 5.6. So that’s the fourth question.
P R Seshadri
Yeah. Okay. Thank you Sandeep. We think that we at the very Least we grow at the industry rate. So I mean, going forward, our aim is that if the industry grows at X, we’ll grow at X, but we are a smaller institution and therefore, you know, whatever be the vicissitudes of the industry, we should be able to carve a path for ourselves which is different. So I understand that the current view is that next year’s loan growth may be a little shallower than last year’s loan growth. But having said that, we are still aiming to get between 15 and 16%.
But if the industry were to do higher than that, we will match industry.
Vinod Francis
Okay, fair enough. And so my second question is on the employee expenses. So employee expenses declined materially during this quarter. So was there any one off? If yes, what was the nature and amount of that one off?
P R Seshadri
Yeah, it was a one off. Let me, you know, hand this over to Vinod Francis or cfo.
Vinod Francis
Yes, Andee. So this is the one off item I had come up. That is mainly with regard to the write back, what we obtained based on the actual valuation. So that amounts to around, say close to 80 crores. So this is mainly at the year end we go for the actual valuation, compliance with the accounting standard. So based on that we got a Write back of 80. Course.
Aman Singh Singhani
Okay, fair enough. Next question is on the operating cost line item. I mean, over the last eight
Vinod Francis
To ten quarters you’ve done a commendable job in terms of keeping the operating costs largely flat over the last eight to ten quarters. So how we should think about the same line item over the next couple of years, can we expect a moderate growth in the operating cost line item or will it grow in line with the business growth?
P R Seshadri
I think it’s a very good question, Sandeep. I think basically what our strategy so far was that we sort of sweat all our assets as much as possible so that we can become more profitable and we become much more efficient. But there is an efficiency frontier. I mean, once you get closer to that efficiency frontier, beyond that, efficiency growth becomes more and more difficult. So I think we’ve reached a point where expenses cannot be kept at this level indefinitely. And we will have to start doing a little bit of investment, both in distribution, a little bit more investment in technology, and so on and so forth.
So you will see expense growth coming forward. But we are hopeful that that will be more than compensated for us by revenue growth. So our aim is to ensure that we continue to have positive operating leverage. We are very, very thrilled that we’ve had positive operating leverage 2/4, 2 years running. And we’d like to make that a third year as well, which will then open up our pre provisioning operating profit and you know, profit before and after tax as well. So I don’t know if that answers your question.
If they have anything else in particular I’d be able to have happy to answer them.
Vinod Francis
Yes, that does answer my question. My last question is on the credit cost. So your slippages are trending down and your net NPA is now below 30 basis points. So in this backdrop, how should we think about credit cost on a sustainable basis over the next couple of years?
P R Seshadri
Very difficult to answer that question, Sandeep. My own view is that we’ve seen the trough when it comes to credit costs. Credit costs for this quarter were three basis points. I don’t think the credit cost can be lower than this on an organic under normal circumstances. I think if anything both slippages and credit costs should trend upwards, especially given the geopolitical pressures that we see emanating from the Middle east and elsewhere. How much it will be, what the impact will be very hard for me to have a view on.
In fact, I’ll be honest with you, these are unknown unknowns and I, I can’t really tell you what they will be and if there is somebody who is able to predict all of this, then I think I would love to understand how they are doing it and what mechanism they are using. But, but right now we are not seeing any material change in customer behavior so far. Obviously the crisis is still young and it takes time for these things to flow through. But our hypothesis is that both of these parameters will deteriorate for us, not improve.
Vinod Francis
Sure, thanks. This is from my side.
Operator
Thank you. We’ll move on to our next question from the line of par gutka from 361 Capital. Please go ahead.
Parth M.
Yeah, hi sir, Thanks a lot for the opportunity. So my first question is what would be the NIM drivers going into FY27? You know, so considering, you know, we see a rate hike maybe at the, you know, fag end of the calendar year or the fiscal year,
P R Seshadri
The NIM drivers for us are largely change in asset mix is the biggest driver. So if we can get more larger proportion of our book to be retail and MSME automatically NIMS open up because on the corporate side we are dealing with very, very high quality corporates and there the NIMS are very, very low. So product mix change is the biggest driver of nim. The other driver of NIM for us is going to be rate hikes. So on the Way down we were the most impacted institution essentially because of the fact that we give effect to an RBI rate change on a T plus 1 basis.
The repo rate changes today, we give effect to it tomorrow, and so on the way down we hurt more. But it also makes us, you know, more responsible in trying to understand how to address that going forward. So, you know, so. But we’ll also be the biggest gainers when on the reverse side. So if rates were to be hiked, and we are hoping that they are sooner rather than later, we will be a large, fairly substantial beneficiary of any such move. The other thing that we are doing on the NIM side is basically changing the way we measure and task our folks.
So we will be more biased towards the headline numbers in our goal setting methodologies. In the past, essentially because we used to be growth challenged at one point in time and now that we are growing quite nicely, our target setting and goal setting mechanisms have been changed to include revenue goals as a specific goal. Which means that there is pressure at the front end to also, you know, price these assets more appropriately. So I think these are the two or three things that we are doing which will enable us to widen these NIMs.
So over the last two quarters our NIMs have improved by what, 15 basis points, I mean 6 basis points in Q3 and 9 basis points in Q4. And we don’t, as far as we are concerned, these NIMs will continue to widen. I mean we don’t see any reason why they should actually stop widening.
Neeraj Jalan
I also
P R Seshadri
Request Vinod Francis to add his colors.
Vinod Francis
Yeah, Parth, so in addition to what our MD was saying, another one more factor that can come in favor for us is the repricing of deposits because we have almost a 60 to 65 percentage of our deposit is due for repricing during this financial year considering the average tenor of our deposits. So that will also come in favor of us because of majority of these deposits having a higher prices which has been contracted earlier. So that we expect to come in favor of us in addition to the diverse what our MD was mentioning.
Parth M.
Yeah, so, so sure sir. So you mean to say 60 to 65% of the deposits will come for repricing. But this quarter if I observe, you know, your cost of deposits have gone up by 2 to 3 bips if I’m not wrong.
Vinod Francis
Yeah, correct.
Parth M.
So, so what is actually happening? Because you know, still the deposits are yet to reprice and our cost of deposits is inching up. So just trying to understand here.
Vinod Francis
Yeah, so here in this current quarter what happened is that we have slightly more the deposit rate concerning the deposit growth. So if you see our deposit prices compared with the market rates we were little lower than the other competitors. So considering that to have in some buckets to have the growth we have slightly repriced the deposit rates and this has slightly resulted in the growth of cost of deposits by three basis points. But going forward what we expect is that the deposits which have already been contracted at a higher rate in the earlier years, that is yet to reprice so that will be at a lower price in the current running rate.
Parth M.
Sure, sure sir. And so my second observation was the, the non resident deposits which you give in the investor deck, you know, if I calculate that as a percentage of total deposits, you know that has been coming down. So are you losing you know, sort of market share in the non resident deposits.
P R Seshadri
Our total staff strength, you know we do have a representative office in the Gulf. Staff strength there is small and their productivity has actually been inching up quite considerably. And I think we were. The rate of growth of our non resident deposits has stepped up quite considerably during the last year. So we grew non resident deposits 12% last year as against 7% the prior year. So the way we see it, we are actually growing year on year. If we’ve lost market share and I don’t have the market share statistics with me, the SLBC will give us Kerala and so on and so forth.
But I don’t have it readily available. But it is quite feasible that we were losing market share at one point in time. But I think our performance during the last year has been significantly better. I don’t know whether there’s a material change as a consequence of that in our market share but rate of growth has stepped up quite considerably and that is visible in the numbers that we’ve shown you in page 21 of the deck.
Parth M.
Sure. And my last question is sir, the impact of the one time transition impact of ECL and do we hold any buffer, buffer floating provisions for the Sikhs?
P R Seshadri
I will ask our cfo. We know the chances to respond.
Vinod Francis
Yes. So with regard to this ECL transition currently we are not holding any floating provision in our books. So what we expect is that based on the current estimate we don’t estimate any material impact over that mainly because of few factors that if you see our numbers, SMA numbers that is one of the is on a declining trend and is close to 0.6 percentage of our total book. So that’s only the total SMA 1 and 2 numbers to the total portfolio, the total loan portfolio. And another factor is that if you can see that our portion coverage ratio which is currently at close to 80%.
So considering the existing credit quality and the recovery pattern, what we follow for the last two to three years, we don’t expect any material impact due to this transition.
Parth M.
Sure sir. Thanks a lot for answering my questions.
Operator
Thank you. Next question is from the line of Neeraj Jalan from Bob Cat. Go ahead.
Neeraj Jalan
Thanks for the opportunity. Congratulations on a good set of numbers. So my first question is like we note that the old book accounted for around 12% of the gross advances as of FY26. So when do you expect the old book to completely run down?
P R Seshadri
Some of these loans are I think working capital facilities with no. I mean they do annually renew. The way we are seeing this today is that the old book has become quite a small proportion of the total book and therefore maybe the distinction between the old and the new is perhaps outliving its utility. So we are internally debating whether we need to do this segregation at this point in time or not because our losses across the board are so low. I mean our slippage rate for the quarter was only 15 basis points while a substantial sizeable portion of that did come from the old book.
But on an aggregated basis the slippage is so low that this distinction may or may not be really important. So to answer your question, we don’t. I can’t really predict when this is going to run off because some of these are longer duration facilities. The term facilities will anyway amortize to term. But I suspect that a large proportion of these are now working capital facilities and consequently it’s harder for us to estimate. The way we deal with this is that we reclassify an old facility as a new one.
If you are giving enhanced limits to them, but in the event we are just maintaining those lines, then we just continue to plot them in the old. So it’s an area of some debate within the bank as to whether we need to continue this distinction or whether to, you know, look at the whole thing as one, one, one bucket.
Neeraj Jalan
Yeah, got it sir. And sir, in the gross NPM movement the reductions have increased to around 13 billion in Q4 versus 3 billion in Q3. So what would be the breakup between recovery and write off?
P R Seshadri
I will give this phone to my colleague Vinod Francis to answer it.
Vinod Francis
Yeah, Neeraj. With regard to the reduction in the gross npa, one major factor is the technical write off. What we have done in the March quarter, that amounts to 1048 crores for the March quarter.
Neeraj Jalan
Okay.
Vinod Francis
And balance is the recovery.
Neeraj Jalan
Okay. And this write up is basically technical. Technical write off. Right? It’s
Vinod Francis
A technical write off. Technical write off.
Neeraj Jalan
Okay. Okay, understood. Answer. As you pointed out that there is, there is hardly any impact like it’s not material, the ECL function pack. But on a steady state basis also as per your internal estimates, there won’t be much of a material impact. That’s correct.
Vinod Francis
Sorry, can you come again?
Neeraj Jalan
So ECL transition impact, There are two kind of impact due to ECL transition. One is the one time impact and the other is on a steady state basis. What would be the impact? So I think you answered in the earlier call that of the one time impact would be not material. On the numbers. Yeah.
Vinod Francis
So what we expect is that our asset quality will continue to hold these levels. Maybe, maybe slight changes may happen in the future depending upon the market condition. But we don’t expect any drastic change over there. So by depending upon that we don’t expect any material back to over there. Also some of the study run also.
Neeraj Jalan
Okay, understood. And so with respect to the MSME segment there was a sequential decline in the numbers close to 2% or there was a decline on a sequential basis. So any stress you are witnessing on the investment portfolio?
P R Seshadri
I think the decline is on account of write off. It is not decline in account or anything else. We are not seeing any current, no material stress that is visible at this point in time. In the MSME segment our write off was 554 crores and the dip is roughly about 230 or 40 crores. So there’s actually a growth quarter on quarter. But having said that, you know we are not seeing any significant stresses at this point in time.
Neeraj Jalan
Understood. And the last question from my side, around 2830 of the total deposits are from the NRI deposits of this, I believe the deposits from the GCT region was close to 80% in FY23. So what would be that number as of FY26? And are you also witnessing any stress due to the West Asia conflict on the NRI deposits per se? Yeah, that is my last question.
P R Seshadri
We are not seeing any stress with because of the NRA conflict. If anything we are seeing a slightly enhanced level of activity when it comes to inward remittances and deposits. The exact number as to what proportion of our NRI book is West Asia and what is not is not available with me right now and we will make it available subsequently. I mean I don’t, I’m not carrying this information at this point.
Neeraj Jalan
Sure sir. Thanks. Thanks for answering my questions. Thank you.
P R Seshadri
Thank you.
Operator
Thank you. Next question is from the line of Varun from Bandar Life. Please go ahead.
Vinod Francis
Thanks for the opportunity and again, congrats on good set of numbers. So first question is basically, you know, if I see last few years, bulk of the growth has basically come from our existing branches. So from next leg of growth perspective, do we need to add branches or would we look to continue optimize our existing network? How do you see it?
P R Seshadri
It’s a very good question. We’ve been, you know, we started out with high cost to income ratios and our view was that we need to become more profitable by sweating assets that we have and make them more efficient. Our view is that we have now, you know, our total value addition from the branches have doubled over the last eight or nine quarters. There is still some Runway there and we can get more. And that requires us to redo our processes and ensure that our systems are, you know, even more efficient so that ease of doing business improves.
So that thing we will continue to do. We are also building out alternate distribution mechanisms. So earlier we were not working with market participants like DSAs and all of that and now we’ve started and our digital offerings have also improved very considerably. So we launched a new digital offering called Sib Red which is a full fledged digital bank in and of itself towards the end of March. And we continue to work on more of those kind of offerings. So our and we are building out fairly substantial digital assets which we didn’t have in the past.
So for instance, we have something called fincredibles and we have a very active blog. Fin Credibles I think is one of those entities which has a very large number of followers. I mean, sometimes I wonder as to how we’ve got so many followers when some of the larger institutions don’t seem to have, you know, such kind of offerings. So the idea is to build more digital assets which gets us digital friendly customers to come there and that we can use as a hook for originating business. So we are working on multiple things.
We may have to start increasing our branches. There are parts of southern India where our branch density is quite low. So we’ve been talking at the board level to grow branches in Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Maharashtra, Gujarat and New Delhi. These are the areas where we would like to increase branches. But we will do that very, very deliberately. And while ensuring that the efficiencies that we have been able to gain in the branches, we continue to work on that. So that we make our method of doing business easier for our people and we get significantly greater throughputs from there.
Because that’s the only way to grow in a manner where income and costs grow commensurately. So I don’t know if I’ve answered your question. If there’s anything else, I’d be very happy to answer.
Vinod Francis
I broadly understood the thought process. But would it be right to conclude that from near to medium term perspective, branch expansion is not going to be the focus area.
P R Seshadri
Branch expansion is not going to be the only method by which we’re going to grow business. I mean, there will be some expansion. If you see our numbers for the last seven, eight quarters, actually, branches have not grown, they’ve only shrunk. So we came down from 955 to 948. So there will be some growth, but at the same time we will use every other distribution mechanism that is available to grow in a controlled manner.
Vinod Francis
Understood. And my second question is, how do you see the, you know, the quality of customer franchise that we have today in terms of cross sell potential? And how do you, how do we see, you know, our preparedness today to sort of monetize this cross sell opportunity, especially in the situation that our share of distribution income is still fairly low in our case, how do you see it?
P R Seshadri
When you say distribution income, you mean income from.
Vinod Francis
Yes, third party product. Some
P R Seshadri
Of that is also because of, you know, our own reticence to push it very aggressively. And our belief is that we’ve been a very responsible institution, we’ve treated our customers well, we’ve tried to sell products that they actually need and consequently we’ve turned out to be a very high trust institution. That’s our belief. And we want to ensure that the trust that our customers have in us continues, which enables us to actually leverage our customer base and grow our balances quite nicely. And I think that is reflected in the fact that we got good CASA growth last year.
And this CASA growth has been, you know, generic growth across all our regions. All the states that we are operating in, we’ve had very substantial growth. So I think we are in a good position to leverage the customer set. We have a good quality customer set. Obviously there are certain types of customers that we wish we had more. Like for instance, salary savings type of customers who work in large corporations where we are underrepresented. That’s an area that we have started work on about 18 months or so ago.
And we are hoping that we will continue to grow, that we are leveraging this Base to sell internal products so we sell personal loans to them. Our total personal loan base is largely, you know, pre approved sale to our own customers. Our loss rate and loss experience on that book is very good. So you know we lose approximately 3.5 to 4% where the spreads are 11 or 12%. So I think we are feeling reasonably confident about the quality of our franchise and more importantly we are very happy about the fact that we’ve dealt with them in a mature manner and we have a relationship that we can exploit as we go forward.
Operator
Thank you. We’ll take a last question from the line of Deep Shah from NV Capital. Please go ahead.
Aman Singh Singhani
Thank you for the opportunity sir, for sleep, our applications and a great set of numbers. Deep,
Operator
Can you use your handset?
Aman Singh Singhani
Am I audible?
Operator
Yes, yes go ahead.
Aman Singh Singhani
Yeah. So sir my question is slightly broad based. You like mentioned about your emphasis on product loan exchange where you’ll focus more on retail segments. So firstly I just want to understand if you have, I mean a product mix target over like let’s say a medium term, let’s say 38% of our loan book is currently corporates right. So I mean do you have any target where you or SwitchPod that you’d like to achieve over a two to three year period?
P R Seshadri
We would like to bring our corporate book down to about a third of our total balance sheet. Within that also we have certain lower yielding assets which are basically you know, LC bills etc where we would you would like to bring that down. So we do have an internal target that we are working through. But I’m not, I don’t have it right here. But what I’ll try and answer is in broad terms which is basically you want to bring corporate down and within corporate there are some segments which are specifically even lower yield which is this very short duration monies that we give to very highly rated corporate that again we want to bring down a little bit more so that the corporate goes down from 38 to 33 and within the corporate the ultra short duration goes down from roughly 20 or 25% of our book down to perhaps 10% of the book.
Now the ultra short term assets have the advantage of providing liquidity buffers for us. But having said that the yield is so low that perhaps it’s a good trade off for us to have. Now the difference that 5% on a portfolio basis we want to move to retail, MSME and agriculture where the spreads are significantly larger. I don’t want to go into specific details of where, how much it will grow but we do have those numbers internally but broadly that is what we are trying to do in the near term.
Operator
Thank you. Take our next question from the line of Jay Prakash Mundra from ICICI Securities. Please go ahead.
Jay Mundra
Yeah hi sir, quickly on this ECLGS scheme so would it be fair to assume that your entire MSME portfolio will qualify? Because all our MSME and even I mean the non MSME I believe it is like MSME but those, those who are not registered with UDYAM Will, will that be fair assessment? Because I think the ticket size is kept at 100 crores so all, all MSME should ideally qualify. Will that be correct?
P R Seshadri
That is true.
Jay Mundra
Okay. And sir, if you can recall let’s say the ECLGS portfolio I mean is a great scheme and the results of you know, Covid scheme I think is very very clear but if you can recall your experience if you had to devolve any guarantee and how easy or difficult it is to redeem that guarantee from government that is number one in terms of procedure and in terms of did you claim any guarantee and did you finally get those guarantee. That is question number one and the slippages in ECLG ECLGs book earlier that was I mean let’s say similar to bank level slippages right in let’s say FY 2324 period or was it lower?
Higher that is the real question so a The slippages in ECLGs was it similar to overall bank level or lower? Higher. And how difficult or easy was it to claim the NPA or slippage is there?
Vinod Francis
Okay
P R Seshadri
Yeah before I hand over this to Senthil my colleague to. Oh he’s not here. Oh yeah, Central on the call line. Yeah okay. Wonder. Wonderful. So let me just sort of add to something on the, on the new scheme Jay, I haven’t gone through the scheme and the terms of that scheme in detail so whilst I believe that our entire MSME portfolio will qualify I cannot assert to that with 100% certainty since we’ve not you know done the full research associated with it. Now Senthil is on the call, he’s an expert on the ECLGS scheme so maybe he can answer your questions better than I can.
Senthil, over to you.
Unidentified Participant
So Jay, there are two parts to your question. One is with regard to whether the ECLGS portfolio behaves differently from the core portfolio of the bank we have to understand the ECGS was fundamentally an add on to the existing portfolio so case goes bad portfolio that is on the bank’s book plus the ECLGs go together. So there’s no fundamental difference between the portfolio behavior. Only those that are not eclgc availed clients. Probably they were at a better footing on day one Excel because they didn’t have the requirement to take the incremental credit.
But if you have to look at the portfolio per se, where there was a significant difference between those who never availed and those who took, I don’t think there was a significant difference. Now the second part with regard to ECI’s claim, see, there are. There are a set of processes that have been laid down which need to be followed with teeth. So Getting the first 75% I think generally has been easy. The second 25% have been bit of a challenge because there are a few guidelines that are there in the eclipses, which is, suppose you want to go for a settlement with a borrower that is not an allowed method of settlement under the ECLGS scheme.
So from the ECL scheme perspective, unless you complete the legal process, you’re not. It’s not possible for you to get the balance 25% in place. If you do a settlement with the borrower, the first 75% that you’ve collected also needs to be given back. So those I think are the other challenges. From the government credit enforcement perspective, if you had to look at the ECGC scheme or the other schemes, Otis is allowed as a settlement model. So there’s not been too much of a challenge. Ecigs per se, wherever we have to do settlements with borrowers, we have found it to be a challenge in terms of recovering from the guarantees.
Otherwise, I think from a process perspective, if you have followed the process right, I don’t think we have had challenges on the portfolio. I don’t think we have had too much of a difference between the portfolios that have availed ECGs. I’m saying way lower than what we thought would be the final hit that we’d have to take
P R Seshadri
Until. The only difference may be that the new scheme may be, you know, slightly different from the old ECLGs. So we don’t know. Yeah, we haven’t seen it fully.
Unidentified Participant
Sorry,
P R Seshadri
Sorry, sir. Go ahead.
Unidentified Participant
No, I was. That new scheme predominantly tries to target the airline segment and other than that, the MSME segment,
Aman Singh Singhani
We didn’t have
Unidentified Participant
That bit of a stress on the portfolio at this point of time. We are faced, when we had to look at ECLGS1, that was a phase when, you know, all the industries had a problem with regard to the business itself. There were significant draws, there were significant challenges that is when the first one came in. At this point of time, if you had to look at underlying borrowers and the stress levels, I think we are at a much better footing. So we don’t know how much of a requirement will come on the easy and just draw position itself.
Jay Mundra
Sure. And sir, if you have any data questions that I wanted from Vinod. Sir, the breakup of this 195 crores of other income and maybe for 760 crores which is there for the full year. The other in the other income. Thank you.
Vinod Francis
Yeah. J. One major item that comes into that particular bucket is that one bank assurance income and one another one is the recovery from. Technically I will give you the breakup separately or something. Yeah,
Jay Mundra
Sure, sure. No, no issue, sir. Thank you. And all the very best, sir.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. P R Shishaudri, MTN CEO for closing comments. Over to you, sir.
P R Seshadri
Thank you very much, ma’. Am. At the outset, allow me to thank all the folks who dialed into this call. We are very, very grateful for their time. We want to reiterate that we’ve had a very good year this year and a good quarter and you know, it’s been a period of consolidation. I think our balance sheet is in. Is in good shape. Our asset quality has improved very, very dramatically. And we are in a. We are well positioned to meet the challenges that the environment throws at us. And we think that from a growth perspective we are well positioned to actually achieve the growth numbers that we’ve set for ourselves.
And we are very thankful for all the help and support that each one of our investors have provided us and we wish them the very best going forward. Thank you very much.
Operator
Thank you. On behalf of ICIC securities limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines.