The Federal Bank Ltd (FEDERALBNK) Q1 FY23 Earnings Concall Transcript

The Federal Bank Limited  (NSE:FEDERALBNK) Q1 FY23 Earnings Concall dated Jul. 15, 2022

Corporate Participants:

Anand Chugh — Marketing & Investor Relations

Shyam Srinivasan — Managing Director and Chief Executive Officer

Ashutosh Khajuria — Executive Director

Shalini Warrier — Executive Director

Venkatraman Venkateswaran — President & Chief Financial Officer

Analysts:

Mona Khetan — Dolat Capital — Analyst

Mahrukh Adajania — Edelweiss — Analyst

Aditya Jain — Citigroup — Analyst

Prashant Kumar — Sunidhi Securities — Analyst

Nitin Agarwal — Motilal Oswal — Analyst

Kaushik Poddar — KB Capital Markets Pvt. Ltd. — Analyst

Rakesh Kumar — Systematix Shares — Analyst

Pranab Mukherjee — Rare Enterprises — Analyst

Abhishek Murarka — HSBC — Analyst

Renish Bhuva — ICICI Securities — Analyst

Jai Mundra — B&K Securities — Analyst

Mahesh — Kotak Securities — Analyst

Pritesh Bumb — DAM Capital — Analyst

Vipul Kumar Jain — Avar Capitol Partners — Analyst

Sameer Bhise — JM Financial — Analyst

Anusha Raheja — Dalal & Broacha — Analyst

Presentation:

Operator

[Operator Instructions].Now I’d like to turn the conference over to Mr. Anand Chugh from the Federal Bank Limited. Thank you, and over to you, sir.

Anand Chugh — Marketing & Investor Relations

Thank you so much. Good afternoon everyone and thanks for joining us on this call to discuss our FY23 Q1 numbers. I am here to officially hand over the baton to [Indecipherable] with whom most of you would have interacted by now just as you would have had a chance to go through our numbers and investor deck for the quarter gone by. This has been a good quarter for the bank, with everything from NIM to asset quality to cost to income ratio to ROA, ROE improving on a sequential basis. We have on the call. Shyam, Ashutosh, Shalini, Harsh, Venkat, along with other senior officials of the bank. And without further ado, I would hand over the mike to Shyam for his opening remarks and we follow this up with Q&A.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Thank you everybody and good afternoon and thank you, Anand for great job and all the best in your new role, and welcome to [Indecipherable] the new role. Like Anand mentioned, yes, Q1 was good, it was very much along the plans that we laid out for the financial year. And I’m happy that we’ve made a good start. I do think all of you had a chance to look at our numbers. So, I’ll keep it very short and open it up for question and answers.

The high points that we wanted to talk about is through all this, the asset quality continues to be strong and we believe that that momentum will continue through what may look like a tough period even going ahead. Credit growth has started picking up. We did see good growth in Q1, definitely better than many years. Quarter one tends to be sluggish; I am happy that Q1 this year bucked that trend and started seeing a meaningful growth both sequentially and Y-on-Y and it was quite broad-based as you may have observed.

Our liability franchise continues to be very granular and growing quite well in areas that we want to be focused on, and I’m hopeful that the environment that we’re in today actually advantage Federal in terms of deposit growth and that sets us apart for the year and the years ahead. Many of the platform enablers we’ve been putting in, be it some of the new businesses like credit cards, personal loans, micro finance, gold, business banking, commercial vehicle, commercial equipment have all started seeing traction through the COVID period.

Some of you may recall in February of 2020, we held a pretty much, almost a full day conference, in Mumbai and shared our plans. And some parts of the last two financial years that had to go onto slightly slower gear given the environment that we were operating. Happy that that period is cleared and all these businesses have come back to trajectory and particularly microfinance, commercial vehicle, commercial equipment and credit cards are giving us good feel about the opportunities ahead. And over the next two to three years, those should become a meaningful incremental path parts of the growth of the bank.

For the quarter that went by, you would have seen sequentially revenue grew, so does Y-on-Y. And these are — the quarter saw no one-off, either on the upside or on the downside. If at all, the treasury — and the bond market rates had an impact on treasury to some extent, but equally, we benefited to some extent on the employee provisioning costs. So there were no significant upsides or downside and we could smoothly end the quarter quite well and happy that we’ve entered the sixth handle in our net profit, and more importantly our ROE touched 1.1 and this is the third quarter sequentially ROE is trending up. And we are hopeful [Technical Issues] should see this progress.

So I won’t belabor much on this environment. I’m sure all of us are living through it. I don’t have any unique commentary differently from the market gurus who have a better view. I tell myself and the team, let’s behaves like bumble bees. We don’t have to believe that the market is tough and start to hide behind anything. We just have to make sure we flap our wings and we will fly. We are well positioned to do that. So I’m going to say that our opening remarks are that we said what — at the end of the March quarter that we do believe this year mid teens or higher growth is possible and we will course along to make sure that our ROE commitments are honored and our credit quality remains as strong as it always has been and liability growth will be pretty granular in nature. And of course, fee income trajectory is strong. So barring anything like a treasury gain or a treasury loss, which has not much that you and I can do, we are on course to making sure that FY23 is along expected lines or hopefully even better.

So with that, I’ll pause. Once again, thank you very much to everybody and happy to take questions. Like Anand mentioned, our entire senior team is on the call. I’m sure all of them will chip in and share their insights as and when required. So allow me to just open the call, operator. And we’re happy to take questions.

Questions and Answers:

Operator

Thank you very much sir. [Operator Instructions]. We have a first question from the line of Mona Khetan from Dolat Capital. Please go ahead.

Mona Khetan — Dolat Capital — Analyst

Yeah, hi sir, good evening, and thanks for taking up my question and congratulations on a good set of numbers. So, I have two questions. Firstly on the margin front, so, with about 90 bps rise in repo rate so far, have the yields for EBLR loans also raised to that extent, because on the saving account side, the increase has been much less at about 25 bps.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yeah. You said two questions. Anything else.

Mona Khetan — Dolat Capital — Analyst

Yeah. The second one was what’s aiding such healthy growth trend in Q1, which is, as you mentioned a seasonally weak quarter. So your thoughts on the demand scenario and also sustainability of the current growth trends.

Shyam Srinivasan — Managing Director and Chief Executive Officer

On the first part, I think the answer is the rate transition has happened. In terms of that, which is linked to repo, is transmitted almost the day after the repo increase or whenever — during the next day, T plus 1. And anything linked to any other benchmark has on reset date automatically happened. So all of the book is getting repriced as and when the reset date happened. And like you pointed out, on the deposit side, we have had a modest increase. We are now caught up with many of the bank, which had much higher — we at least matched up with SBI to get to 75 on savings. Otherwise we haven’t increased and there for term, we have quite — priced quite competitively. [Technical Issues]. May I request others to go on mute please. Those who are not speaking, please go on mute.

The second part of your question on credit growth. We saw as you noticed fairly all-round growth. I think there is an inherent shift to banks as lenders has increased visibly combined with I think the demand for credit based on inflationary requirement and also the fact that maybe large capacity utilization is probably at peak in most instances. I think there is a demand increase of banks and we are participating more aggressively. Our share gain is visible. Our outreach has improved quite substantially.

I think this trajectory will continue. We are at about 1.2% share of the credit, but on incremental credit, our share of market is closer to 2%. So, I think we will be able to grow this quite meaningfully and therefore — thereby achieve or exceed some of our growth aspirations.

Mona Khetan — Dolat Capital — Analyst

Sure. Thank you. But just coming back to the first question. So you mentioned that almost the entire 90 bps has been passed on or the entire thing has been passed on to borrowers. So is it fair to assume that for a large part of EBLR book at least for half a quarter, which is probably 1.5 months because the rate rise happened post May — the entire benefit is already reflecting in the margin for Q1?

Shyam Srinivasan — Managing Director and Chief Executive Officer

About 40% of the book will have a 40 day gain and rest of the book will be sort of measured across periods in time.

Mona Khetan — Dolat Capital — Analyst

40% of the EBLR book?

Shyam Srinivasan — Managing Director and Chief Executive Officer

40% of the book is linked to repo.

Mona Khetan — Dolat Capital — Analyst

Okay, okay. Sure. Got it. And just one clarification. So there has been some reclassification in loan book between commercial banking, business banking and retail. What does this reclassification pertain to?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Every year, based on the year, we reset in terms of businesses that move to corporate, commercial or business sanction depending on ticket size. So some reclassification would have happened within the [Technical Issues]. At the beginning of the year, we reset the account focus changes.

Mona Khetan — Dolat Capital — Analyst

Sure. Thank you. Thanks a lot.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Can I just comment just to make it clear so that even subsequent questions if there are on this particular –the EBBLR linked book is 48% –47.9%. The fixed is 26% and MCLR is 17%. So that’s broadly the distribution.

Operator

Thank you. We have next question from the line of Mahrukh Adajania with Edelweiss. Please go ahead.

Mahrukh Adajania — Edelweiss — Analyst

Yeah, hello sir, congratulation. Sir, my first question is on slippage to the Retail — and Business Banking slippage is higher Q-o-Q. Is there any [Technical Issues] restructured in ECLGS or earlier restructured account that has led to it? What explains the higher Q-o-Q slippage in Retail and Business Banking. That’s my first question, sir.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Did you have a second one, mam?

Mahrukh Adajania — Edelweiss — Analyst

Yes, I do. I just wanted to get your thoughts on this whole CPI ban and how it affects you, positively or negatively? That’s my second question.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Sure, so let me go with the retail one. [Technical Issues] for the quarter reported is about INR200 odd crores. Normally in the pre-COVID, we were running at about INR140 crores, INR150 crores depending on the quarter and we believe that for the quarter that went by and maybe for the next two quarters, you will see roughly about 20% increase from the INR140 crores, closer to INR200 crores or INR180 crores, largely because the restructured book, the demand is — the demand for the restructured portfolio was on the customers to repay and certainly there is an element of at least between 15% and 18% slippage on the restructured book on retail. And that’s where we are seeing it and it’s very much along our guided lines or our expectations and our provisions.

If you recall,last year when we added up almost INR530 crores of provisions, we had done a reasonable amount of restructuring on retail, and we said, we are building up for a 20% to 25% slippage on the restructured portfolio and yet keep the 65% coverage. So, it’s almost to script and we don’t see anything that at this juncture differently from what it is. If anything, it may improve. On ECLS, thankfully almost nil and at this point in time, it’s in lakhs.

Mahrukh Adajania — Edelweiss — Analyst

Got it sir, sorry

Shyam Srinivasan — Managing Director and Chief Executive Officer

You want to complete something?

Mahrukh Adajania — Edelweiss — Analyst

No, no, sir, please go ahead. Then, I will ask.

Shyam Srinivasan — Managing Director and Chief Executive Officer

On PPI, I think as you probably know, we don’t do prepaid cards or anything to do with that. So, we see that it may shift to demand to credit cards and that’s an area we are putting a meaningful focus. So I expect credit card to be advantage and therefore we may have an opportunity.

Mahrukh Adajania — Edelweiss — Analyst

Got it, sir. Sir, on your repo book, reprice is in the month of the increase or after every three months?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Repo book is instant, T plus one.

Mahrukh Adajania — Edelweiss — Analyst

Instant, alright, T plus one. Okay, that’s so helpful. Thank you so much, sir.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Thanks.

Operator

Thank you. We have next question from the line of Aditya Jain from Citigroup. Please go ahead.

Aditya Jain — Citigroup — Analyst

Hi, I just wanted to confirm, sir, the EBLR would change on the day or T plus one, but individual loans might have their own reset date, which as per regulation could be up to three months. Is that understanding right or are you saying that even the individual loans have T plus one repricing

Shyam Srinivasan — Managing Director and Chief Executive Officer

And is it individual [Speech Overlap].

Aditya Jain — Citigroup — Analyst

Individual, I mean any loan as per its own contract might have some reset period. So that reset period itself is one day, effectively. Is that what you’re saying?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yes, all repo linked are T plus one, and anything else is contracted and the reset is based on the contract.

Aditya Jain — Citigroup — Analyst

Got it. Thank you.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Welcome. If I may add, entire EBLR is not repo linked. There is T bill linked also, which has defined periodically, so three months or annual or whatever it is, That is T bill linked book. So EBLR has two books, one is repo linked; the other one is treasury bill linked.

Aditya Jain — Citigroup — Analyst

Great. Got it. Thank you. Thank you. We have next question from the line of Prashant Kumar from Sunidhi Securities, please go ahead.

Prashant Kumar — Sunidhi Securities — Analyst

Thanks for the opportunity, sir, and congratulations for the good set of numbers. My question is just on the accounting side. On provisioning for the quarter, there is INR167 crores books and in which loan loss provision is INR150 crores and other standard accounts. So in this quarter, I think so the banks are hit by M2M provision. So, where has been shown this [Technical Issues]?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Venkat, you want to go? [Speech Overlap]. He is saying where is the M2M provisions. Ashutosh, you want to go, please. Ashutosh? MTM provision is separately taken as a provision on investments, not loan loss provision. Loan loss provision is INR150 crores [Indecipherable]. See in MTM, that amount itself is very small and is netting of your appreciation versus depreciation, which is what is the regulatory direction. So, we did not have much of investment-related depreciation because our AFS and HFT book was very, very thin.

Prashant Kumar — Sunidhi Securities — Analyst

So, it means that M2M provision has not impacted during this quarter, right?

Shyam Srinivasan — Managing Director and Chief Executive Officer

The resultant number which is marginal.

Prashant Kumar — Sunidhi Securities — Analyst

Okay, okay. And only the treasury income that is the part of..

Shyam Srinivasan — Managing Director and Chief Executive Officer

Income is impacted because [Speech Overlap] and you would be aware, there is a permission — I mean there is a tradition of shifting from HTM to AFS — inter category transfer I would call it — [Indecipherable] inter category transfer is permitted in the beginning of the year. So, we have not made any inter category transfer this year So our book is — our AFS HFT book is very, very slim.

Prashant Kumar — Sunidhi Securities — Analyst

Okay, thank you so much, sir. That’s it from me.

Operator

Thank you. We have next question from the line of Nitin Agarwal with Motilal Oswal. Please go ahead.

Nitin Agarwal — Motilal Oswal — Analyst

Hi, good evening, everyone, and congrats on a steady quarter. My first question is on the restructured assets. If you can share some color as to what proportion is now under moratorium and any color on SME overdue of these accounts? I think about INR1,300 crores of the restructured book has already been in the demand. Therefore they are..

Unidentified Speaker —

43% has emerged out of moratorium and it is spread across till 2024, it is spread across. In Q4, INR1,000 crores that emerged and coming three quarters, it is INR700 crores, INR300 crores, INR300 crores. So that is the split.

Nitin Agarwal — Motilal Oswal — Analyst

Okay. So when we say that 25% is that the outlook that we carry on on the slippages that can happen from this. They can lose mounting — of course mounting accounts also and do we have — some, do we have like good degree of confidence on these accounts, again of the moratorium.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yeah, I mean we have to rely on the experience of the last two quarters. Roughly has been between 10% and 15%. So at the top end, could be 20. That’s where the trend line.

Nitin Agarwal — Motilal Oswal — Analyst

And the other question is on the order book growth this quarter. If I look at the loan composition, the corporates has gained shared marginally, but order book growth looks to be a tad higher, which is helping the fear on consumption also [Indecipherable] 10 odd basis points. Now that we are looking at a much stronger growth in FY23 versus what we’ve seen in prior years, how do you look at this consumption, as well as any thoughts around the capital raise — like how do you see that?

Shyam Srinivasan — Managing Director and Chief Executive Officer

On the second part on capital, I will hold that answer because we will see how the next two, three quarters shape up and how the environment is. In terms of capital consumption, this quarter if you break, you mentioned about 100 odd basis points, but 70 basis point RWA increase for the credit growth and there were elements of credit growth, which had businesses that are short-term loans to companies which have greater than INR10,000 crores borrowings from the market. As you know, that our RWA goes up. Even for highly rated company, the RWAs goes up to 100%. So to that extent, the increase in RWA is on consequence of that. And in terms of our unsecured growth, particularly credit cards, while balance sheet growth is yet to sort of pick up, we have seen good line extension already happening, and that also consumes capital. So two parts, one both the credit quality and the credit extension for the segments we want are going well. In terms of how much consumption and what we were able to add back as the end of financial year, we will see. If we dip below say 13, 13.5, we may consider, but at this point in time, it’s too premature.

Nitin Agarwal — Motilal Oswal — Analyst

Right. And lastly, just one clarification on the earlier answer that you gave around the loan mix [Indecipherable], how is the mix of floating loans. So, [Indecipherable] on advances on a sequential basis is pretty sort of static despite the T plus one repricing of repo. And we have also grown across segments. So why is that so? And how do you see the repricing playing out in the coming quarters?

Shyam Srinivasan — Managing Director and Chief Executive Officer

It will come through. There are some businesses like agri where the slippages also means that revenue offset, right. So to that extent, you will see that playbook, but over two quarters, that should stabilize. We have guided for somewhere in the 325, 327 NIM and we think we’re at 322. Another 5, 7 basis points will happen.

Nitin Agarwal — Motilal Oswal — Analyst

Okay, sir. Thank you and wish you all the best.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. We have next question from the line of Kaushik Poddar with KB Capital Markets Private Limited. Please go ahead.

Kaushik Poddar — KB Capital Markets Pvt. Ltd. — Analyst

Yeah. Shyam, your advance growth has been good, but deposit growth was not keeping pace. So to that extent, what’s your strategy for upping the dividend — sorry deposit growth — I’m talking deposit growth. Your deposit growth was not keeping pace with your advance growth. So how do you plan to up your deposit growth.

Shyam Srinivasan — Managing Director and Chief Executive Officer

I think currently the deposit growth elements we have to see. We can pay more and grow term and very price elastic. So we are focused on growing the granular retail CASA, which has grown 15% Y-on-Y and CD ratio being at about 82%, we are reasonably comfortable even if it went up to 84, 85. That said, in Q2, you may see that our deposit rates now for both domestic and NR deposits are in top quartile. So you will see pickup on deposit. Deposit to some extent dial-up dial down depending on how the CD ratio is and what do you want to do with growing term. If you notice in FY22 end, consciously we didn’t grow term because there was no great point in pricing up and taking term. As we see opportunities, we are doing that, but our more structured CASA is growing quite well, domestic and NR.

Kaushik Poddar — KB Capital Markets Pvt. Ltd. — Analyst

What you just now said is that you have upped your term deposit rate, is it?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yea, in Q2, you may have noticed our deposit base in the top quartile.

Kaushik Poddar — KB Capital Markets Pvt. Ltd. — Analyst

Okay. Okay. And about the relaxation that RBI has made regarding that FCNR deposits. So do you see some opportunity there also.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Materials, again there we have very, very competitively priced, probably amongst the better banks and we are 7% of India’s non-resident deposit market share; about INR10 lakh crores is the deposit share of non-resident deposits. We are about INR80,000 crores as Federal Bank, right. So we’re about 7%, 7.5%. So if India gets $2 billion, which is what most people believe will come in the next two, three months or through the window of this dispensation given, we should get our share or higher.

Kaushik Poddar — KB Capital Markets Pvt. Ltd. — Analyst

Okay. And as far as capital raising goes, I mean you’re holding it back by another three quarters or something; that’s what you said.

Shyam Srinivasan — Managing Director and Chief Executive Officer

No, I said there is no plan at this point in time. When people said, there is a likelihood of consumption of capital and therefore the need to go to the market, again we’ll wait to see how the year shapes up and then we’ll decide timing, opportunity, and price. At this juncture, there are no plans.

Kaushik Poddar — KB Capital Markets Pvt. Ltd. — Analyst

Okay. And on this ROE, what is your target rate. I mean if I remember correctly, you were aiming for something like 1.25. Is that what you have in mind and if that be so, when do you plan to reach that?

Shyam Srinivasan — Managing Director and Chief Executive Officer

So we said we will exit FY23 between 1.10 and 1.15. Happily, we at 1.10. We will make that 1.15. We said exit FY24 will be 1.25. I think we are on course for that at this point in time unless something dramatically changes.

Kaushik Poddar — KB Capital Markets Pvt. Ltd. — Analyst

Okay. Okay, thank you. Thank you. Thank you, Shyam.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. We have next question from the line of Rakesh Kumar from Systematix Shares. Please go ahead.

Rakesh Kumar — Systematix Shares — Analyst

Yeah, hi, sir. Thanks for the opportunity and very good set of numbers, quite a lot surprises on treasury operations through we had close to around one fifth of investment in AFS and HFT. So this is a quite surprise there. So some queries that I have. Firstly, related to the PSLC and like overall PSL shortfall that we have. So like just calculation I did that you know what the purchase w have done of the PSLC investment in RIDF and the [Indecipherable] that we have on the net basis, this like for year FY22. That is quite sizable number of the total PSL notwithstanding, so why that we have so much dependence on PSLC.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Ashutosh, you want to go?

Ashutosh Khajuria — Executive Director

May I come in sir.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yeah, please.

Ashutosh Khajuria — Executive Director

See PSLCs were available at one basis point. 0.01%, one basis point towards end of the previous quarter. So I think that’s one part. So whatever shortfall was there, we have fully taken care of that and there is something called average PSL and all for every quarter and all. So whatever earlier quarter shortfalls were there, those also were taken care of in the March quarter, but we are not into PSLC in this quarter. You would not have seen this time because it has quick mortality. On 31st March, it all expires, becomes zero. So in this quarter, you would not have seen that.

Rakesh Kumar — Systematix Shares — Analyst

Sorry, I was referring to

Ashutosh Khajuria — Executive Director

Are you talking of PSLC certificates.

Rakesh Kumar — Systematix Shares — Analyst

Yeah, so I was talking about what we have done in FY22 — entire FY22 as per the annual report. So what purchases that we have done. So, I was referring to the annual report numbers, not this quarterly number.

Shyam Srinivasan — Managing Director and Chief Executive Officer

That’s exactly what Ashutosh said.

Ashutosh Khajuria — Executive Director

That’s what — I was telling about the FY22. FY22, we had the shortfall — cumulative shortfall going on for the first three quarters. In fact, most of it was H1. The third and fourth, we took care of it — mainly in fourth by having the PSLCs done and PSLCs were available at a very — I mean the least possible price — one basis point — that’s at least. You don’t have a price below that. So it was a good economics also to do that.

Rakesh Kumar — Systematix Shares — Analyst

Got it.

Ashutosh Khajuria — Executive Director

Rather than acquiring portfolios and other things, vis-a-vis other options, this was the cheapest option available.

Rakesh Kumar — Systematix Shares — Analyst

So based on the industry weighted average premium, would we have spent close to INR170 crore on the entire year FY22 for PSLC purchases.

Ashutosh Khajuria — Executive Director

I don’t think our number is that?

Shyam Srinivasan — Managing Director and Chief Executive Officer

[Speech Overlap] the cost of acquiring PSLC?

Rakesh Kumar — Systematix Shares — Analyst

Cost of it.

Shyam Srinivasan — Managing Director and Chief Executive Officer

No, no, not even a fraction of that.

Ashutosh Khajuria — Executive Director

Not even a fraction of that. That’s what..

Shyam Srinivasan — Managing Director and Chief Executive Officer

No where close to that. No.

Rakesh Kumar — Systematix Shares — Analyst

And secondly, sir. In the annual report, we have discussed about expanding our branch network, which has been so far kind of a stand at still. So what is the change in strategy there We have?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yeah, long.

Ashutosh Khajuria — Executive Director

Shyam, before just complete the question — the earlier question, I just want to add that in this financial year, month-on-month, we are on target. PSLC, there is no shortfall.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yeah, so let me just answer the question on branch expansion. For about almost five — almost six years, we added only 20 branches and the objective was in my first five years, we added almost 750 branches. We wanted to make sure they’re all productive and performing. Happy that at the end of March 31, 2022, there was only one loss making branch in the bank. So that said, we confident that our traction on leveraging that franchise is working and we also said we will focus on digital and do digital quite successfully. While we did that, we said we move from branch light distribution heavy to light branch heavy distribution. So light branch means smaller and compact branches in locations where we don’t have that right. So even in Q1, we added 10 branches this financial year. We are committed to adding about 65 branches this financial year and over the next three financial years, including this one, we think we’ll add about 200 to 250 branches. That was very much included in all our guidance in cost, income, revenues, and plans around that. So, we are — we believe that these will be — will create two to three more geographies where we are quite potent and dominant.

Rakesh Kumar — Systematix Shares — Analyst

Sir. We have like, you know total written off loans closer around INR3,000 crore as on end March, fiscal year-end 2022. So what kind of recovery that we are expecting for this year FY23. We did very well in previous year. So any guidance on that front.

Shyam Srinivasan — Managing Director and Chief Executive Officer

I’m not calling anything specifically out of that to achieve our overall credit cost factor and the ins and outs. But yes, there are opportunities. But that said, the bulkier opportunities we may not be the primary lender or the only lender. Our strength is when we are one or the main lender. Then, we have opportunities. When it’s part of a consortium, part of a much larger platform, then there are too many elements to play and legal processes take endless time so, I am not in a position, but we made full provisions. So therefore [Indecipherable] engage as and when they come.

Rakesh Kumar — Systematix Shares — Analyst

Sir, just one last question. There is a government security –is the non-SLR portfolio. So what is the characteristic of that non-SLR government securities.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Ashutosh, you want to go?

Ashutosh Khajuria — Executive Director

Yes, there are certain government bonds, which are issued by government, but they are not SLR securities. I’ll give you one example. These are you know when this SCB restructuring was done, you had the State Government bonds issued, but these State Government bonds in lieu of the liability of SCB, these bonds were not given SLR status. Similarly, I mean, whether it was oil bonds given to oil marketing companies, bonds given to banks for recapitalization, these are all central government securities, but these things do not have the SLR status.

Rakesh Kumar — Systematix Shares — Analyst

Got it. Thanks for — thanks a lot for taking my questions. Thank you. Thank you and all the best.

Operator

Thank you. We have next question from the line of Pranab from Rare Enterprises. Please go ahead.

Pranab Mukherjee — Rare Enterprises — Analyst

Hi, thanks a lot for the opportunity. Sir. I have three questions. First of all, the loan growth was very good. And can you just elaborate factors that are leading to it and sustainability of the same. Second is in terms of slippages, so as you mentioned that there will be some slippages uptick because of restructured book, so this will continue — this is happening in both retail and other categories of restructured and is there any other so something like inflation or economic slowdown leading to retail restructured book? That is second question. And the third question is. Sir, how you are looking at now employee expenses because have given guidance, I think, of 200 basis points of cost to income improvement. So how are you looking at employee productivity going forward and how are you measuring it, tracking it. Thanks.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yeah, credit growth, I mentioned we looked at and the outlook is quite positive at this juncture. We grew sequentially at a rate of about 18% and that should we are around for FY23. There are some businesses that may do 25, some businesses, maybe it 12 and 14; blended will be about 18 odd percent growth, which we are confident will happen. Don’t hold me to 18, it will be 16.5, 17.5, 18.5, 19.5, but that is all. And that’s what we’re working on and it’s broad based, it’s not just one business.

The second question was around, sorry?

Pranab Mukherjee — Rare Enterprises — Analyst

Retail slippages.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Retail slippages.. Yeah, I did mention that I think the best way to look at this financial year 2021, financial year 2022 and I said this in the March call also, our overall slippages for the year were about INR1800 crores, both the years. And I also said, I think FY23 will mirror that. And if you saw, Q1 was about INR444 crores, that’s exactly on course to where it is

Now within the quarter, within the product, there will be some mix up and down, but I don’t see it to be wildly varying. Thankfully, our corporate book is holding very well. For many quarters, there is no — nothing even in the SME book. So that will continue. Commercial banking, business banking tend to be sometimes you have on account of INR30 crores, the next quarter, nothing at all. So between commercial banking and corporate banking, there is not much of a threat on that count

Business banking, retail, SME, agri, you will see some impact driven by the COVID restructuring — coming out of COVID restructuring and the current slowdown in the economy in some pockets. But on balance, the number that we pointed out looks quite possible. And that’s how we have given our full-year numbers around INR1800 crores plus-minus a few crores here there as the slippages. And credit cards.

Pranab Mukherjee — Rare Enterprises — Analyst

Sir, my question is that, is it just restructured book or is it economic slowdown or anything else like inflation affecting retail calling business,

Shyam Srinivasan — Managing Director and Chief Executive Officer

I think restructuring hit too because we saw some stress in the environment, and they were hoping things will work in favor. If the environment continues to be a bit sluggish, their recovery — their ability to repay may take a little longer, but these are secured books, right, because large part of our retail long run are loan against property. So, I won’t call out specifically saying recession or slowdown or inflation. Those are already built into the statement that the restructure guide may have [Indecipherable]. That’s why we said roughly putting 18% or 20% or whatever that number is may see slippages in FY23 and that’s how the number of giving a full year slippage guidances.

Within quarters, it may swing little bit here and there. Q1 was INR200 crores retail. Q2 maybe less. Q3 maybe be a little more. So and order of magnitude won’t change materially. And these are largely fixed..

Ashutosh Khajuria — Executive Director

Just to supplement that, I think there may be because of the need for restructuring and all that, if the probability of default, there could be 10% to 15% or whatever it is, because this is yet to be tested or so, the loss given default here is going to be very, very low, because these are all mortgage books.

Pranab Mukherjee — Rare Enterprises — Analyst

Right.

Shyam Srinivasan — Managing Director and Chief Executive Officer

And third question is employee cost. I think what we’ve said we get misunderstood for the fact that as a productivity issue. And I’ve said this many times Pranab. it’s not a productivity issue. it’s issue of cost that we have to carry for pensioning and unfortunately last year, there was a family pension for people who even retired, right. We can’t make an old man who is retired to make productive. But that’s a cost — the cost of doing business. Thankfully, when yields sort of gone up, while treasury doesn’t get the gain, there are some gains that come on the employee cost because the actuarial pension requirement comes down as you saw that this quarter.

So we think we are — we are in the INR500 crore employee cost for FY23 first quarter if it is in and around this region, somewhere this number. If we’ll starting tending lower, it may go to 530, 540, but we think the full-year employee cost would be about INR2500 to INR2200 crores.

Pranab Mukherjee — Rare Enterprises — Analyst

Great, thanks a lot, sir.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Welcome,

Operator

Thank you. We have next question from the line of Abhishek Murarka from HSBC. Please go ahead.

Abhishek Murarka — HSBC — Analyst

Yeah, good evening, and thanks for taking my question. So I just have one question, how much of your deposits are repo linked and what is the repricing timeline there? And also what percentage of your incremental deposit mobilization is typically repo linked? So just wanted to know that.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Our savings book is repo-linked, right. Our savings book is repo linked. We are not obliged to pass on the entire gain as we didn’t in the Q1, you would have noticed. It went up from 250 to 275 at rate [Speech Overlap] repo minus something. That minus is our choice.

Abhishek Murarka — HSBC — Analyst

Okay. So if, just to clarify — if I have repo linked saw and repo goes up by 40 basis points, it’s not necessary that my saw rate will go up by 40 basis points.

Shyam Srinivasan — Managing Director and Chief Executive Officer

No, not necessary because of the spread.

Ashutosh Khajuria — Executive Director

Immediately Mr. Murarka but only thing is, in case bank revises the spread, which is done by ALCO and all, then it would not be — entire thing would not be passed on. If it is not revised by ALCO — that spread is not revised, then entire thing would be passed on because it’s [Indecipherable].

Abhishek Murarka — HSBC — Analyst

Exactly. So that’s what I wanted to understand. So if I have a repo linked saw and the repo goes up 40 basis points, then the next day it goes up by 40 basis points until the ALCO comes up with revised spread.

Shyam Srinivasan — Managing Director and Chief Executive Officer

ALCO meets the same day.

Ashutosh Khajuria — Executive Director

ALCO meets the same day. Yeah.

Abhishek Murarka — HSBC — Analyst

Okay. Okay. So they may revise down these rates. Okay. And have you seen any revision in those spreads after this 90 bps cumulative repo hike? Yea, that’s why our rates 275, gone up from 250 to 275. Okay, sir. 20 bps effective, got it.

Shyam Srinivasan — Managing Director and Chief Executive Officer

25.

Abhishek Murarka — HSBC — Analyst

Right, right. Got it. Thank you. Thank you. That’s were my questions.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Welcome.

Operator

Thank you. We have next question from the line of Renish Bhuva with ICICI Securities, please go ahead.

Renish Bhuva — ICICI Securities — Analyst

Yeah, hi, sir. congrats on a great set of numbers. So two questions; one on the, again the slippage side. So of around INR400 crore of slippages, how much of this has from flown from restructured book?

Shyam Srinivasan — Managing Director and Chief Executive Officer

About INR110 crores of the entire INR444 is from the restructured book.

Renish Bhuva — ICICI Securities — Analyst

Okay and if I try to assume mostly from the retail side. I mean, retail restructured book?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Retail and business banking, the two large ones.

Renish Bhuva — ICICI Securities — Analyst

Got it. And sir, second, again on the deposit side, so in our presentation, we highlighted that around 4.5 lakh accounts are being opened every month by

Fintech partners. So on the aggregate basis, what is that done date of new account opening on the liability side.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Roughly about 12,000 to 14,000 accounts a day.

Renish Bhuva — ICICI Securities — Analyst

12,000 to 14,000 accounts a day. Okay. So large chunk of these accounts are opened by Fintech partners.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yeah this a two account open by our partners. I mean when we do [Speech Overlap] everyday. And sir and what is the, let’s say, average balance of accounts opened by Fintech partners versus Saurus organically? [Indecipherable] but it’s lower than our normal balances return on assets. These are people who are younger, new to category. So, the balance will take time. I think the book is about INR500 crores now.

Renish Bhuva — ICICI Securities — Analyst

Okay. Okay. And sir, just last clarification. So on the, again on the investment side, so we highlighted that we have not transferred anything from AFS to HTM in Q1, is that right?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yes, no, no transfer.

Ashutosh Khajuria — Executive Director

That’s right. Other than the regulatory ship, which has to be done in case of your PE and venture capital investments or so, which is a very small amount, there you can keep it in HTM only for three years. So in fourth year, you have to shift it to AFS. So that’s a regulatory transfer. Other than that, we have not done any interim category transfers.

Renish Bhuva — ICICI Securities — Analyst

And maybe just again follow up on that. So I was — just one thing despite a sharp increase in the [Indecipherable], why we have not been impacted on the treasury side? I mean why it is just eight INR8 crores, maybe you can take it offline also.

Shyam Srinivasan — Managing Director and Chief Executive Officer

If you keep your investments in HTM, you are not required to mark to market, number one. And number two, if you are having a very small, say treasury bill,mainly treasury bills and AFS and all that, which are taken at cost, there would be no need for marking to market. There would be no differentiation.

Renish Bhuva — ICICI Securities — Analyst

Right., sir. Even if I look at the credit substitute portfolio, I think we have roughly INR2000 crore of that portfolio. So there also, I mean even if you consider the corporate deals going up, of course I mean we would be factoring all this thing. So net-net, it is INR8 crore and we don’t see any further hit or how one should look at this?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Actually for your information, that portfolio is appreciated. Had it been in this, we would have booked some appreciation there. Okay. Okay, sir. Thank you, sir. It has always netted off — your appreciated bonds is netted off, that depreciation is netted off against depreciation.

Renish Bhuva — ICICI Securities — Analyst

Correct, correct,, sir. I was just wondering why there was no depreciation, but maybe we can just take it offline.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yeah, thank you.

Renish Bhuva — ICICI Securities — Analyst

Thank you, sir. Thank you, sir.

Operator

In the interest of time and fairness to all participants, ladies and gentlemen, please restrict to two questions per participant. We have next question from the line of Jai Mundra with B&K Securities. Please go ahead.

Jai Mundra — B&K Securities — Analyst

Yeah, hi, sir. Congratulations, sir. During the quarter, we had raised the card rate of saw by 25 basis point and the overall cost of deposit is actually down by 8 basis points. If you can help explain what is the — where did you gain actually?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Ashutosh, please.

Ashutosh Khajuria — Executive Director

Sorry, please come again.

Jai Mundra — B&K Securities — Analyst

So I’m saying, sir, on your staff, the total cost of deposit is down 8 basis point quarter-on-quarter, whereas we are in general, we are in rising rate environment and you anyway head upped your saw cost by 25 basis point during the quarter. So which — where is the — which area did you actually benefit which would have offset such increase.

Ashutosh Khajuria — Executive Director

The term deposits which are there for three to five years, you know — the higher value so called deposits and all, they mature and get repriced. So when you have something in 7 series getting mature, if it is a five-year deposit, it will be s carried because it’s a fixed deposit. You have to carry it. So your higher yielding deposits. I mean rather where the cost is higher, when they get repriced, you get the benefit. So right now, this is just a coincidence that it has just stabilized, number one.

Number two, the CDs and all which you I mean if you see during the quarter and all that have also got matured and all. So, overall, the impact on that had been some five, six basis points, but that’s not going to be the trend. You would see the cost of deposits moving up in the following quarters. So I mean, let me now give you a picture when the cost of deposits still have scope to fall [Indecipherable]. This is the earlier ones which are longer tenure deposits maturing and getting repriced at a lower rate.

Shalini Warrier — Executive Director

If I can just add to that, this is Shalini here. I think to add and to Ashutosh has summarized it correctly. Normally, when there is an interest rate change, obviously liabilities lag in terms of catching up with the interest rate as assets we pass it on, on a repo basis as we explained earlier, that is one. Two, the savings account rates actually were changed in two tranches in May and June. So you’ve not seen the full impact of that for the quarter because they were changed in May and then in June.

And term deposit rates in the month of April until the repo started increasing, we had very strict control on our term deposit rates. So I think it’s a combination of all that. There is a lag impact. Clearly, the forward-looking view will be different because next quarter for example, we will see the full impact of the savings account interest rate. Term deposit rates have been raised by us as Shyam alluded to in the earlier part of the call. So this is just a question of catching up and it will happen in the coming quarter.

Jai Mundra — B&K Securities — Analyst

Sure, mam

Venkatraman Venkateswaran — President & Chief Financial Officer

Jay, this is Venkat here. Just to clarify and recollect you mentioning cost of deposits, savings going down. Actually savings has gone up, but the overall cost of deposits has come down 8 bps between last quarter to this quarter. The savings has gone up by 12 bps, but the overall is down by 8 bps, that’s for the reason which Ashutosh mentioned. Ashutosh and Shalini both mentioned reasons.

Jai Mundra — B&K Securities — Analyst

Yeah. Right. Secondly, sir. If you, I mean I think the number is very small, but just to get this correct, if you have the bifurcation of MTM hit and TW recovery. I think both things are clubbed together so as to arrive at that number. If you have that number, it would be useful.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Which one, sorry.

Jai Mundra — B&K Securities — Analyst

The MTM hit during the quarter and TW recovery. I think both of them.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Oh, in the other income line, is it, you on that?

Jai Mundra — B&K Securities — Analyst

Yes, yes.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Usually, we don’t share that. So, these things tend to be..

Venkatraman Venkateswaran — President & Chief Financial Officer

So, we just net it off, and give the net.

Ashutosh Khajuria — Executive Director

It changes every quarter. There is some quarter, we have a remarkable gain of 1 lakh. so the blended number is a more appropriate number.

Jai Mundra — B&K Securities — Analyst

Understood. And lastly, sir, from my side, if you have the ECLGS outstanding or disbursement and any NPA number there. Thank you.

Shyam Srinivasan — Managing Director and Chief Executive Officer

ECLGS like I mentioned is in lakhs. Thankfully, there is nothing to report in terms of the NPA. Outstanding if I remember right about INT3,000 crores. Rah, is that number right, INR3,000 crores?

Raj —

Sir, it’s INR4,000 and odd crores sir.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Okay.

Jai Mundra — B&K Securities — Analyst

So this INR4,000 crores is outstanding, right, not the disbursement. Yeah, it’s outstanding.

Venkatraman Venkateswaran — President & Chief Financial Officer

It is simply balance outstanding, yes.

Jai Mundra — B&K Securities — Analyst

Sure. Great, thank you, sir. And all the best.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Thank you. We have next question from the line of Mahesh from Kotak Securities, please go ahead. Hey, just one question. The change in lending views as compared to the sensitivity of the book, I still did not get the answer that you explained. Why has it been so small despite it being repriced immediately? You are seeing in the quarters ahead because there have been ins and outs. We had some higher slippages in retail and agri, which is — there would have been a reversal of interest income on that count, right. And also this increase, you know this repo increase has happened over to come in two tranches. The second one was only for 22 days, 8th June. And first one happened on 4th may. So the first part, which was 40 basis points and second one, which was 50 basis points, that happened in the middle of the quarter. I mean first part was 40 basis points, which was available for nearly two months. The second one was available only for 22 days. Okay. And in your assessment, the direction of margins simply because of the change in yields will be a positive one for at least the three quarters or it reprices much closely given the way you have repriced the deposit side. So, as mentioned that our blended margin NIMs, we are looking at 325 to 327, which means another 5 to 7 basis points or so in the coming quarters.

Mahesh — Kotak Securities — Analyst

Oh, you keep despite much probable appreciation of the lending, is it?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yeah ins and outs of everything, book profile, slippages, cost of borrowings — I mean, cost of deposits going up, blended we think between 5 or 7 basis point improvement in NIMs is what we’re talking on.

Mahesh — Kotak Securities — Analyst

Okay, sir, last question, sir. When you speak to your business head sir, let’s say in [Indecipherable] on the retail side, is the business environment continues to remain quite positive despite all what we are hearing outside? So the stock market is in a slightly different world right now.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Like I told you at the top of the call, I said, we believe in the bumble bee. We shouldn’t get too swayed by either great news outside or bad news outside. Just focus on doing the right stuff. Things will happen. This is not a profound answer, but it’s the truth.

Mahesh — Kotak Securities — Analyst

Okay, perfect. Thanks a lot.

Operator

Thank you. We have next question from the line of Pritesh Bumb with DAM Capital. Please go ahead.

Pritesh Bumb — DAM Capital — Analyst

I just wanted to check our goal in the gold loan yields has been down by 64 basis points quarter-on-quarter. Anything there? Any incremental lowering, anything you can [Indecipherable].

Shyam Srinivasan — Managing Director and Chief Executive Officer

We have some attractive entry pricing for loans for short tenure and that is priced more attractively.

Pritesh Bumb — DAM Capital — Analyst

So it’s like a teaser right now.

Shyam Srinivasan — Managing Director and Chief Executive Officer

It’s a teaser with the belief that some of them is all over. Some of them will play out, but I have to be honest, a larger number of people are paying off.

Pritesh Bumb — DAM Capital — Analyst

Okay and how much time this will continue? Any talk on that?

Shyam Srinivasan — Managing Director and Chief Executive Officer

I think it goes on this quarter, till July or August of this quarter.

Pritesh Bumb — DAM Capital — Analyst

Okay and then after that, it moves to a normal rate, I would assume.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yes, yes.

Ashutosh Khajuria — Executive Director

Just to add, these are given very selectively, whether LTV is much better, it does attract a lot of new customers [Indecipherable] building a large customer base with a repeat value component. Secondly, there are still many competitive offers by other players — we had offered very competitive pricing. So, it was to kind of continue and maintain our share. So it was done, but I guess the complex pressure on NBFC players has increased with increasing interest rates. So we see the pressure leasing off over here, margin improvement.

Shyam Srinivasan — Managing Director and Chief Executive Officer

But one point, everybody, on gold, I do want to state. We should not assume gold equal to what it was two years back when it was a high yielding product. It is suddenly higher, but no longer in the mid-teens to higher teens. It’s comparatively priced though thankfully in Q1 of this year, some sanity came. It’s not as low price as n Q4 and Q3 of last year. Some banks and NBFCs took the market to a very low rate, maybe other forms of credit were not growing. So it almost became like a home loan at market level. Some sanity is coming now.

Pritesh Bumb — DAM Capital — Analyst

Sure. Thanks. And second question was on the credit substitute, which I think we’ve seen a sharp rise of 50% quarter on quarter. Any strategy there? I thought in an increasing rate environment that anybody will not go on back of credit substitutes, anything there?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Ashutosh, you want to add anything there.

Ashutosh Khajuria — Executive Director

Yeah, yeah, I will. The credit subsidy increased both short and in long term. We have largely been in the short end of the curve with increased commercial paper. So, the increase in pricing is already pricing over there. That’s number one.

Number two strategy, many of the corporates need to tap a bit capital market because [Indecipherable] issued by RBI. So on the those guidelines, many corporates needs to the tap market. Then, we as a bank contribute entire future products including subsidies. But all these products are priced in as for current levels and never done at the cost of margins.

Pritesh Bumb — DAM Capital — Analyst

Sure, sir, The last question was on personal loans, I think Shyam,,you were mentioning from last quarter that we were slow — we’re not pushing personal loans, but do you still see environment little difficult in terms of not pushing personal loans to our — especially to our ATV customers.

Shyam Srinivasan — Managing Director and Chief Executive Officer

It’s beginning to pick up. We did delay the reset of parameters to the erstwhile pre COVID. In the middle or towards the last month of this quarter, we saw pickup. I think from here on, we will see some pickup. We may do about INR100 crores a month kind of run rate on the ATV basis, but it has started seeing pickup.

Pritesh Bumb — DAM Capital — Analyst

So it will be — [Indecipherable] in a range of 15% to 20% is what we can see ahead?

Shyam Srinivasan — Managing Director and Chief Executive Officer

In terms of growth?

Pritesh Bumb — DAM Capital — Analyst

Yeah.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Full year, we are still looking at a growth. We ended the last year at about 1700 something. We think we will get it to 2,300, 2.400. Sure, thank you so much. That’s it from my side. Thanks.

Operator

Thank you. We have next question from the line of Vipul Kumar Jain with Avar Capitol. Please go ahead.

Vipul Kumar Jain — Avar Capitol Partners — Analyst

Thank you sir for giving the opportunity. My question, I need clarification little. When all the — most of the banks are saying that there will be treasury loss because of the rising yield, so how this Federal Bank is able to come with the profit. That is my question, sir?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Maybe you didn’t get what Ashutosh explained. I would request you to connect with Ashutosh offline and he’ll explain it to you maybe in a little more elaborate fashion.

Ashutosh Khajuria — Executive Director

In short, I can say there has not been much of a profit booking [Indecipherable] because that opportunity was not there as the interest rates have moved up. But what was there was prevention of loss and all. So the book was very slim, thin, and therefore the provisioning requirement was less and that provision lies against other income. So I just wanted to clarify that because somebody was saying breakup of 167, 150 is loan loss provision and 18 is — 17.5, 18 is about standard assets. Yes. Only NPI provision goes there. And there was no NPI there. And the rest of it, the mark-to-market thing goes against other income above the line.

Vipul Kumar Jain — Avar Capitol Partners — Analyst

But there is separate head now for treasury investment income?

Ashutosh Khajuria — Executive Director

If the interest is there, separately given, income on — interest income on investments, which is a separate line, which is INR629 crores for this quarter. And there is other income. In that, you have the mark-to-market depreciation, which is required. But because the book was quite slim, the amount also has been quite less as against some banks who would be carrying larger books. If you carry a larger book, you will have a larger hit.

Vipul Kumar Jain — Avar Capitol Partners — Analyst

Okay. Thank you.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Operator, we should start beginning to wind down. Maybe two questions more and close out.

Operator

Thank you, sir. We have the next question from the line of Sameer Bhise with JM Financial. Please go ahead.

Sameer Bhise — JM Financial — Analyst

Yes, hi. Congrats on a good quarter. Just one question. The sequential drop in Tier 1 is primarily got to do with operational risk requirements largely?

Shyam Srinivasan — Managing Director and Chief Executive Officer

No, I mentioned three things, right? Credit growth, the risk weights related to that. In fact, credit growth, some growth coming from corporates who have borrowing greater than INR10,000 crores. So there’s a higher risk weight on that. And growth in unsecured credit. If the line of credit is established, then the risk weight is on the full line. So these are drivers. In addition, operations risk is not significant.

Sameer Bhise — JM Financial — Analyst

Okay. And just to reiterate, did you say that potentially 18%, 20% of the retail restructured book may be — I mean, you’ve considered that it could potentially slip in the INR1,800 crores guidance?

Operator

Ladies and gentlemen, kindly stay connected. We lost the line of the management. We will be connecting back soon. Please stay connected. Thank you for patiently holding. Ladies and gentlemen, we have the management line back in the conference. Sir, you may please proceed. Mr. Bhise, you may please repeat your question.

Sameer Bhise — JM Financial — Analyst

Yes. Hi. So just to reiterate, you said that the slippage expectation, which probably will remain similar to last year’s level, probably includes around 18%, 20% of the retail restructured book, which probably could slip. Is that a fair assessment?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yes. I said the overall slippages guidance for the full year is around INR1,800 crores, plus/minus a few basis points — a few points, will be all inclusive.

Sameer Bhise — JM Financial — Analyst

Okay. Thank you and all the best.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. We take the last question from the line of Anusha Raheja with Dalal & Broacha. Please go ahead.

Anusha Raheja — Dalal & Broacha — Analyst

Yes. Congratulations, sir, for a great set of numbers. I just want to ask what is the share of non-retail deposits in your total deposit book?

Shyam Srinivasan — Managing Director and Chief Executive Officer

92% is retail, Anusha.

Anusha Raheja — Dalal & Broacha — Analyst

Okay. And I just missed on to that, 48% you said is EBLR-linked loans and 26% is the fixed part, right?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yes. Yes.

Anusha Raheja — Dalal & Broacha — Analyst

And 28% is MCLR. Is that what you said?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yes.

Anusha Raheja — Dalal & Broacha — Analyst

So what is the percentage for the current fiscal, you feel that would get repriced at higher rates?

Shyam Srinivasan — Managing Director and Chief Executive Officer

No. The floating rate book, which is, if you take EBLR plus MCLR at floating rates at different points in time in the financial year, you get repriced.

Anusha Raheja — Dalal & Broacha — Analyst

Will some part of the fixed part might be probably in the later part of the year?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Depends on maturity.

Anusha Raheja — Dalal & Broacha — Analyst

It depends on the majority, yes. Okay. Sir, lastly, closer to around 70%, are you seeing that would get priced at a higher rate?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yes.

Anusha Raheja — Dalal & Broacha — Analyst

And I just missed on to that, what is the full year credit cost guidance that you’ve been giving?

Shyam Srinivasan — Managing Director and Chief Executive Officer

Roughly about 50 basis points.

Anusha Raheja — Dalal & Broacha — Analyst

50 basis points. And there is no capital raising plan in the near future? Is that right?

Shyam Srinivasan — Managing Director and Chief Executive Officer

At this juncture, we are not looking at anything.

Anusha Raheja — Dalal & Broacha — Analyst

But the Board approval has come in, right?

Shyam Srinivasan — Managing Director and Chief Executive Officer

We have taken Board approval as we did last year also. We’re going to the shareholders. The AGM is on 27th. Hopefully, we will get the shareholders’ support. It’s an enabling resolution, allows us 12 months till we go to the next AGM, if there’s an opportunity for us to raise.

Anusha Raheja — Dalal & Broacha — Analyst

Yes. Sorry.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yes. No, no, I said we took similar approval last year and the previous year, but we are quite judicious in the use of capital.

Ashutosh Khajuria — Executive Director

Last year, we did our Tier 2 ones INR700 crores. That’s all.

Anusha Raheja — Dalal & Broacha — Analyst

But if I just look at the Tier 1 capital, you are comfortably placed at 14% plus, I guess.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Yes. At this juncture, yes.

Anusha Raheja — Dalal & Broacha — Analyst

Okay. Just one last thing on this. How is the pricing of the FCNR deposits being done currently?

Shyam Srinivasan — Managing Director and Chief Executive Officer

We have just taken up our FCNR rates to a very competitive rate, one year $350.

Ashutosh Khajuria — Executive Director

It is commensurate to how the U.S. treasury yields are moving through and plus competition, what is the competition quoting. All these factors are taken into consideration, deliberated at ALCO. Right now, what Shyam has said, that is the number.

Anusha Raheja — Dalal & Broacha — Analyst

Sir, don’t you this can impact your margins negatively because I mean —

Shyam Srinivasan — Managing Director and Chief Executive Officer

Dollar deposits, if you have dollar lending opportunity is important. Second, there’s no CRR, SLR — CLR.

Anusha Raheja — Dalal & Broacha — Analyst

Yes. Okay. Thank you, sir.

Shyam Srinivasan — Managing Director and Chief Executive Officer

Thank you very much. Are there any — we can bring it to a close.

Operator

Thank you very much, sir. Ladies and gentlemen, that was the last question. I’d now like to hand the conference over to Mr. Souvik Roy [Phonetic] for closing comments. Over to you, sir.

Unidentified Speaker —

I thank you. And thanks to Shyam sir for welcoming me into my new role, and thanks to everyone for joining the call. See you on the other side of Q2. And I hope to see you with a better set of numbers. So best wishes, and a great weekend ahead. Thank you, everyone.

Operator

[Operator Closing Remarks]