THE KARUR VYSYA BANK LIMITED (NSE: KARURVYSYA) Q3 FY23 Earnings Concall dated Jan. 23, 2023
Corporate Participants:
B. Ramesh Babu — Managing Director and Chief Executive Officer
Ram Shankar — Chief Financial Officer
Analysts:
Renish Bua — ICICI Securities — Analyst
Anand Dama — Emkay Global Financial Services — Analyst
Rohan Mandora — Equirus Securities — Analyst
MB Mahesh — Kotak Securities — Analyst
Jai Mundhra — Batlivala and Karani Securities — Analyst
Pranav Tendulkar — Rare Enterprises — Analyst
Hrishikesh Oza — RoboCapital — Analyst
Prakhar Agarwal — Elara Capital — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY’22-’23 Earnings Conference Call of The Karur Vysya Bank. We have with us today the management team of KVB represented by Mr. Ramesh Babu, MD and CEO; Mr. Natarajan, President and Chief Operating Officer; Mr. Ram Shankar, CFO; and Mr. Srinivasa Rao, Company Secretary and Compliance Officer. [Operator Instructions]
I now hand the conference over to Mr. B. Ramesh Babu, MD and CEO, to take us through the highlights of the quarter gone by, after which we will open the floor for questions. Over to you, sir.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Thank you, ma’am. Good evening to all of you. Welcome to our banks earning call for the quarter three of the financial year 2023. Trust that you, your colleagues and family members are keeping well and in good health. My heartiest new year greetings and wishes to each and every one of you. I also would like to thank you all for taking time in joining this call.
I am pleased to share that for the third consecutive quarter our performance in terms of growth, profitability and asset quality are in line with the indications given during our previous interactions. In fact, we have crossed the indicated numbers under some parameters much ahead of the timelines earlier envisaged. While I am sure that all of you have gone through our quarter period end numbers in our presentation, I would like to brief you on the highlights of our performance.
Our ROA continues to improve consistently over the eight quarter, it has moved upwards by 39 basis points from 0.93% in quarter three of the previous financial year to 1.32% in the current quarter as against our guidance of 1.2% in the exit quarter of 2023. Our concerted effort is stimulating the various levers of ROA has yielded positive results and ended up — and enabled us to achieve this parameter well ahead of timelines. We are now confident of reaching ROA of 1.35% in the exit quarter and continue the growth trajectory in the coming years.
Operating margins further increased to 4.32% for the quarter and sequentially expanded by 25 basis points. Going forward, our normalized NIM after adjusting lag effect of FX and liability pricing would be in the north of 4%, considering our business model and subject to normal market conditions. Fee and other income continues to grow in tune with the business growth, higher number reported during the current quarter includes an amount of INR85 crores accruing from the recoveries made in technically written-off accounts.
Operating expenses are under effective control and are in tune with our guidance. Thus, evidenced higher fee-based income, recoveries and written-off accounts and containment of expenses aided the increase in profitability. PPOP has increased by 72% to INR689 crores over last year and sequentially by 20%. During Q3, a provision of INR250 crores was made towards NPA book on account of aging as well as to improve our coverage ratio. We have front-loaded some provisions with an aim on optimized balance sheet and tax planning. Hence, even though the credit cost appears slightly elevated at 1.02% during the nine months of the current year, our credit cost commencing from quarter one of the next year will be considerably lower. A provision of INR102 crores was made towards SR as per latest RBI guidelines on valuation of SR. With this, the entire outstanding SR book under investment portfolio of INR491 crores is fully provided.
Our net profit has been consistently growing for the past eight quarters and for the current quarter, it is grown by 56% over last year and 67% for the nine months period and sequentially by 16%, and the trend will continue to improve on account of increased PPOP and lower credit cost. Our gross slippages during the quarter continue to be under control at INR162 crores and for the nine months at INR345 crores, which is 0.55% of our loan book. Our digital underwriting, eyeballing of proposals by risk team, better valuation method by technical team, collections setup and the credit monitoring have helped us to keep control on the slippages.
During the quarter, we have recovered a sum of INR190 crores from NPA book besides INR85 crore from the technically written-off accounts. This is a sixth quarter where our recoveries and upgradation other than write-off are higher than gross slippages. Due to lower slippages, better recoveries and technical write-off, our gross NPA is now below 3% and stands at 2.66% consequently and also as a result of optimization measures, our net NPA is now down 0.89%. Going forward, we intend to keep our gross NPA at below 2% and net NPA at less than 1%. With this, we now confidently say that the asset quality issues faced by us in the past have been successfully amounted and consigned to history. Incidentally, I would like to recall, late, Sri Rakesh Jhunjhunwala, always asking us when would the bank reach less than 1% net NPA. Our heartfelt respect to his thoughts and insights. Bank would endeavor to keep this number below 1% of our loan book.
We will continue to focus our efforts in early recovery of technically written-off accounts. Our SMA-30 plus loan book, including jewel loan continues to be less than 1% of our loan book. Again, we are confident of keeping this book at below 1%, considering our improved monitoring and collection systems. In tune with our guidance, loan book without considering technical write-off, continues to be inclusive and grew at 16% Y-o-Y and sequentially by 3%. As indicated earlier, bank has strategized to grow inclusively at the existing loan mix. Accordingly, we have initiated various measures in the past to reach best possible growth in line with the industry. Unlike in the past, where branches was the only for growing the loan book, we have now created business banking units, corporate banking unit, transaction banking unit, NEO, precious metal division, co-lending with NBFCs, etc., besides a smart banking group which will be operational from first-quarter of the next financial year and fintech tie-ups. It is a mix of our own team, supported by outsourced sales force. The smart banking what I mentioned is, it is a mix of our own team supported by outsourced sales force for the SME business, particularly the CBG business. Now, we are translating these initiatives into business and are going forward — going forward, we will be in a position to derive value by scaling up our numbers with better management control.
Yield on advances is at 9.04% and has increased by 49 basis points sequentially and we expect that there will be a further increase of 20 basis points in the fourth quarter. As indicated earlier, about 86% of our loan book is linked to MCLR EBLR, and we expect that about 38% of our loan book will be repriced on the respective reset period in the coming quarters. Considering the need to grow term deposits, we have activated our operating teams for aggressive marketing efforts, supported by increase in deposit rates, campaigns and publicity. We have grown by 18% year-on-year and 6% sequentially in term deposits. Demand deposit growth continues to be a challenge under the rising interest rate scenario and grown by 6% year-on-year and the muted growth sequentially. As indicated earlier, we have recruited resources from the market, having expertise to support our operating team and strengthened our sales force for better sourcing and a deepening of liability products.
The team has started working with brand channel on acquisition, CASA acquisition particularly, customer engagement and deepening, besides focusing on institutions, government business and task, and will be fully operational from Q1 of 2024. With these changes, we are focusing to take our CASA mix to 40%, in the years to come. Cost of deposits increased to 4.26% for the quarter and sequentially increased by 18 basis points. We expect that there will be further increase of 30 basis points in the fourth quarter.
Our core lending business with three leading NBFCs is doing well and we are in the process of rolling out the service to one more NBFC during this quarter. During the quarter, we have implemented micro finance tie-up with a leading FinTech in 16 locations covering two states. We have also tied up with one more FinTech for micro finance in Tamil Nadu and will be operationalized from the first quarter of next year. Our CRR continues to be comfortable at INR17.86%, and the nine months profit has not been included there and the liquidity coverage ratio is maintained at a prudent level of 200%.
To conclude, the business numbers indicate that our asset quality issues are an item of the past, slippages are under control and earnings are improving. Our focus is now oriented towards inclusive growth and recovery from written-off accounts. I’m sure the bank is on the right path to maximize value to the investors.
Once again, I thank you all for participating in the call. The forum is now open for the questions. Over to you, ma’am.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We have our first question from the line of Renish Bua from ICICI Securities. Please go-ahead.
Renish Bua — ICICI Securities — Analyst
Yeah. Hi, sir, and congrats on a great set of numbers. Just two questions from my side. One is on the commercial Banking division. So if you look at the pie chart which we show in the PPT, the share of loans between INR10 crore to INR25 crores has gone up pretty sharply in last four quarters. So sir, what is happening there. I mean, what kind of a customer we are acquiring? From where we are acquiring this customer? And maybe if you can give us the ROA profile of this customer will be helpful, sir.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Yeah. Fine. Thanks, Renish. One thing is if you can recollect, two years to two and half years back we have started an initiative called business banking unit. So it seems to be a part of the CBG. So now what we did is — so we have strengthened that. We have provided them the service RMs and business RMs, likewise analysts. All these what all are required we have provided them That’s the first thing. And that way that unit is stabilized. Second thing what we did, earlier up to last year March the limit what we have given them is up to INR10 crores — up to INR15 crore. So INR15 crore and above we were asking the CIG, that is corporate, INR15 crore to INR25 crore we were calling it as EMCG emerging market, and we were doing.
So now that the BBU has matured and stabilize. From April 1st of this year onwards what we did, we have shifted that emerging market group to BBU. So that way now BBU’s can book business up to INR25 crores. So that way these people once they mature they started growing and all. So, that growth has come in the BBU, that is the reason for the shift.
Renish Bua — ICICI Securities — Analyst
Got it, sir. Got it.
B. Ramesh Babu — Managing Director and Chief Executive Officer
And throughout the country, 15 locations these BBU outfits are there and each one they have there relationship manager, sales, service, all of them they are moving around and they have become one of the active units for the bank to mobilize the business in a particular segment.
Renish Bua — ICICI Securities — Analyst
Got it, sir. Got it. Sir, my next question is on the rating profile of the corporate book. So, sir, when we look at the rating profile as on December, the BB and below book is still at 30% of the total corporate book. So sir, what sort of confidence we have that whatever guidance we are giving in terms of slippage and credit cost, we’ll be able to deliver as per the guidance and there will be no negative surprise from this 30% corporate book, which is being below?
B. Ramesh Babu — Managing Director and Chief Executive Officer
Good question, Renish. You see, the same table you start looking at December ’21, where 37% plus 8% comes to 45%. December ’21, 45% is BB and below and now it has come down to 30%. When it is 45%, for the last six quarters we are able to maintain negative slippages. When they have come to 30% don’t you feel that we are better off compared to earlier position?
Renish Bua — ICICI Securities — Analyst
Yes, yes. No-no, definitely, sir, definitely.
B. Ramesh Babu — Managing Director and Chief Executive Officer
That way, if you look at it, our SMA also, not to say rating profile is one part. But if you look at our SMA also, in general also, otherwise we have able to put it in this control because one more thing what we did is, we have strengthened last six months back our collections team and we have a senior executive under collection, and call center we have brought under him, Freetown street we have created, their brand channel. Otherwise earlier in a distributed way everyone were doing the collections and all. Now we have brought a focus here and analytics also extensively we are using for predictive modeling, what can go wrong, all these things and all. With this, we are able to bring some sort of a control.
And one more thing what we did is. For last two years, we have done enough effort in weeding out where weaker account are there. Suppose there was a lot of competition, pressure is there. Whenever this weaker accounts are there, when someone was trying to do it and all, jolly well we were giving it. So that way we could clean up our balance sheet also to some extent at the cost of top-line, but we are able to protect our portfolio.
Renish Bua — ICICI Securities — Analyst
Got it, Sir. And just, sir, last question from my side. Sir, on the ROA thing what we have said is that our exit ROA will 1.35 in Q4. But in for both full-year FY’24 considering there’ll be some NIM compression happening in FY’24, would — one should consider this 1.35 crore as a new normal or there will be some, let’s say, downward trajectory, maybe 5 to 10 points in 24?
B. Ramesh Babu — Managing Director and Chief Executive Officer
I feel will be able to maintain that1.35 crore I feel Renish. Though, in fact, we are yet to do our homework — our homework because you are asking. So with the confidence what we have gained over a period of time with these things, we will be able to maintain that, not an issue.
Renish Bua — ICICI Securities — Analyst
Got it, sir. Got it. I have few more questions, but I’ll be back in queue, sir. Thank you very much.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Renish, thank you.
Operator
Thank you. We have our next question from the line of Anand Dama from Emkay Global Financial Services. Please go ahead.
Anand Dama — Emkay Global Financial Services — Analyst
Yeah, sir. Thank you for the opportunity. Sir, one is that you talked about your yields will grow up by about 20 basis points, that will benefit from CRR migration. So what is your outlook on the cost front?. And similarly, what would be the impact on the that see for a [Indecipherable]
B. Ramesh Babu — Managing Director and Chief Executive Officer
Yeah, through, simultaneously what I, in fact, I mentioned that I support 20 basis points when we are expecting cost side also, because you know the time deposit, what all we are booking, because if you do not book the time deposits there can be a slide or our CASA to other banks also. So that is the reason we are actually mobilizing and marketing the time deposits, in the process the cost is going up.
What we feel is maybe during this quarter there can be a spike of around 30 basis points can be there up to for the deposit and a 20 basis points in the yield. But whatever it is, we feel that. So with the yield, the NIM what we have. So overall, we will be able to maintain a NIM of 4% plus north of 4% during this quarter, we’ll be able to manage that one. There should not be an issue.
Anand Dama — Emkay Global Financial Services — Analyst
Great, sir. Sir, secondly, the micro-finance book that you talked about now, so you have tied up with some micro finance institution. So, one, what is your thought process over there? And if you can talk about which is the lending institution that you have tied up with? And so whether it will be a more of a, I mean, why not going for a BCR, rather than going for a lending institution all together?
Renish Bua — ICICI Securities — Analyst
I’ll tell you. If you look at our overall unsecured book, it is pretty small actually. If you look at it, hardly INR500 crores, INR550 crores, something like that. We never ventured into this one. But what we understand is Tamil Nadu offers, you would go for micro-finance and many banks who have come from other states they are doing very good business here, and we made our own homework also regarding the delinquency, stress levels and all. We found it to be quite reasonable and it’s a matured micro-finance market compared to many other states.
So instead we entering directly into that one, we have entered into a partnership with one of the agencies. So it’s a BC. More or less like a BC only. As you said, the BC arrangement. And what they will do, they will have the setup and combinedly with KVB they’ll have the staff and the finally when that — sanction will be through us only also. Finally, through the end to-end digital we’ll be working. Once they key in and all, it will come to us. And once we accept the norms what all we have, its passes through, then only it will be accepted and we we’ll have a surveillance of these locations.
Intention is not to go aggressively in these micro-finance, to make a beginning through an established partner who has the better understanding in the area of operation where we are or in and around our other states that way, so that at least we’ll be knowing where we are and what we can do, and progressively to take it forward. Otherwise, it will not be a thrust area for the Bank. So in the beginning what we are making with a decent partner who has an experience in this.
Anand Dama — Emkay Global Financial Services — Analyst
But, sir, what are the internal capabilities that they’re building? Are we hiring somebody naturally to know about the current business?
B. Ramesh Babu — Managing Director and Chief Executive Officer
Absolutely. In our agriculture department, we are taking the people to monitor this one. But, the other side the partner whom we have onboarded, they are already dealing with similar arrangement for more — with more than 10 banks for the last 10 years.
Anand Dama — Emkay Global Financial Services — Analyst
Sir, how do you rely on them? Basically, the partners would always want to dump some bad portfolio in some other banks, etc. I think you — what are internal susceptibilities that you have? I mean, you said that agriculture department you have [Speech Overlap] so these are the old people who have never done micro-finance or you have hired somebody from outside for the bank?
B. Ramesh Babu — Managing Director and Chief Executive Officer
No,-no. Actually, currently the expertise what in the agriculture these people are doing and we will be taking people also from the market. But what we did is, when we looked at it, the portfolio of the other banks, this partner who is handling we have seen that. And the question is not the question of any dumping because it’s not a pool purchase from any brand. So afresh we are going to start. When we are going to start also, the districts where we are going to start, in those locations we have seen what the delinquency level of the other banks what all is there. We have chosen those districts where it is relatively much, much better and we spoke to the state government also because state government has a very good setup for a micro finance. With these things, baby steps we are taking to see how it turns to work.
Anand Dama — Emkay Global Financial Services — Analyst
Because sir, you are spreading — you also seem like you are entering into multiple new businesses altogether and without hiring the people internally it you get into bit of [Speech Overlap] Vehicle loan business is also what you are looking at.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Vehicle loan, I never told also in my inaugural remarks. Vehicle loan, when we are talking the vehicle is the normal four-wheeler what in the retail segment we do, not the commercial vehicle.
Anand Dama — Emkay Global Financial Services — Analyst
But I think particularly micro finance is that we are seeing what has happened with many other companies and that is where actually building some internal capabilities is more.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Anand, actually, I agree — I agree with your point. See, what we are trying to do is, we are not going to scale it in a three-digit number and all. So what we are trying to do it because of our digital capabilities and these two partners, they are also having very good digital capability. Through API we have connected and we have created a good digital underwriting model specifically for this, and then we are trying to test it. So, it’s a — initially we will test and then based on our review, probably we will scale it further. Sir, we understand that in Tamil Nadu the delinquency is low and the yields are also better. So some sort of a cream layer is available here. So why not be interested, that is the intention.
Please be rest assured, we will not go overboard on that. And second point, we are also on the job to internally equip ourselves with the capabilities by taking people from the market and this absolutely, as I said, it will be only a baby step. We will test the waters and all, then only we will take a call on this, okay.
Anand Dama — Emkay Global Financial Services — Analyst
Sir, third you talked about recovery from return of account, I believe four odd accounts were recovered this quarter. Is it possible to give some color, as you like, are these loans which have been talked about and making the added group or somewhere where you have done some recovery in the current quarter? And is there any pipeline — is there any pipeline for more recovery in the quarter?
B. Ramesh Babu — Managing Director and Chief Executive Officer
Anand, you would have noticed during the past four — three quarters we did some — a lot of technical — prudential technical write-off. So today the portfolio has become slightly larger and then we expect the consistent recoveries will be coming from this portfolio. In fact, we have created a separate team exclusively for this and the see that we are maximizing the value at the earliest possible time. But if you ask specifically account — many accounts are in the final stage. So some things are matured last quarter and this quarter also something is definitely it is coming. So like that many cases, particularly NCLT cases also it is in the final stages, but they are not able to give any specific numbers and commitment. But going forward, there will be some numbers in this recovery from the technical write-off, Anand.
Anand Dama — Emkay Global Financial Services — Analyst
Okay. Sure, sir. Thanks a lot.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Thank you. Thank you.
Operator
Thank you. [Operator Instructions]. We have our next question from the line of Rohan Mandora from Equirus Securities. Please go ahead.
Rohan Mandora — Equirus Securities — Analyst
Good evening, sir, and thanks for the opportunity, and congrats on good set of numbers. Sir, just wanted to understand in the opening remarks you mentioned that you have recruited dedicated resources for sourcing liability products. Sir, just wanted to understand how will they operate differently from what the bank was already doing up till now?
B. Ramesh Babu — Managing Director and Chief Executive Officer
Yeah. Currently, majority of the focus for the liability mobilization is from the branches. The branches, they’ll be mobilizing the liabilities when making from the existing and known are these sort of things. Now the current revised model what we’re doing is absolutely through sales and marketing and feet on street. Entire end-to-end structure we are creating, wherein the feet on street will be there and they will be mobilizing. It can be a state level or territory level. That way they will be focusing more on the CASA acquisition as well as the third-party distribution, everything 360-degree what we can do. So that’s what is going to happen. Once they mobilize and bring it and nurture the account for few months or few quarters, after that the branches will take over those accounts and all. They will do the deepening. But then it becomes an ETB existing to bank customers and all branches will deepen.
In the process, the branches can focus on the existing customers, how to service them, how to engage with them rather than doing both the jobs of going out and mobilizing and bringing them and within the bank servicing them. So we are bifurcating this. So that way, good resources, we’ll have the expertise, we started recruiting them and all. So by the end of March most probably we will be able to complete a major part of that one, so first week of August onwards. If these two sets in tandem they’ll be working. One, for the sourcing and the nurturing and keeping, a second one deepening. So we can think of having a good traction in the liability.
Rohan Mandora — Equirus Securities — Analyst
Sir, just to understand, this team will have the TRF primarily on liability origination and will not have any asset target?
B. Ramesh Babu — Managing Director and Chief Executive Officer
No, no asset targets will be incidental to this assets as well as the cross-selling will be doing. So overall, the main focus will be the hook will be asset, sorry for reliability. CASA will be the main focus and all along with the related assets as well as the third-party also they’ll be doing, but the main product will be CASA — retail asset — marketing, retail Assets.
Rohan Mandora — Equirus Securities — Analyst
Sure, sir. And these — just to understand how much is the lead generation of new products, but they will be coming from the existing customers or how will the lead generation work for them?
B. Ramesh Babu — Managing Director and Chief Executive Officer
Yeah, that is for the existing customers as well as from other sources. That is the reason we are have taking the theme — feet on street including everything from the market. Those who are already in the market who are stablished who knows this methodology and all, those sort of things we are taking. So that way, so they need to hit and run.
Rohan Mandora — Equirus Securities — Analyst
Got ii, sir. And, sir, second was income from that incremental spreads that people who are making on new assets originated and new liabilities originated. If you can share some color on how is that incremental spread right now? Just ignore the back book pricing which is happening on the asset side.
B. Ramesh Babu — Managing Director and Chief Executive Officer
If you look at the repricing of the assets if you look at it, EBRR, major part of the EBRR hike we are able to pass on in every segment, more or less we are able to pass on accept in few accounts where we have the pricing pressure and competition will be there because other things what we’re getting from the customer and that relationship also we need to see. So that way if you look at it, the pricing — currently our EBRR book is around 49%.
Rohan Mandora — Equirus Securities — Analyst
Sir, sorry to interrupt. So what I was just trying to understand is the existing book is repricing because of the EBLR. But what I wanted to understand is the new loans that we’re originating, are we able to get a similar yields at what is on-book yield for that’s lower, higher than than the existing book yields on the newer loans that we are originating. So just wanted to get some sense on that.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Well, mew organization, for example, if you take agriculture predominantly you loan is something around the 8.9%. And if it is a commercial is more than a 10%, 10.10%, 10.15% And again, the corporate around 9%. So the consumer it is 9.74%. So like that, it’s more or less the matching with our the currently yield.
Rohan Mandora — Equirus Securities — Analyst
Sure, sir. And sir, lastly, if you look at on the slight uptick in the SME number sequentially. So what’s driving that? And also we have seeing a 8% sequential increase in the textile loan portfolio. So what is driving this growth in the textile sector? Working capital utilization of expansion?
B. Ramesh Babu — Managing Director and Chief Executive Officer
No textile is concerned, for the last two quarters majority of the exposures what we have taken is for the renewables — renewable energy. Because three of them they have gone for solar or green power so that they can save the cost on the power, then depreciation benefit also will be there. Otherwise if you look at it, a majority of them that didn’t go for any expansion, our customers I’m talking, they didn’t go for any expansion and that’s why term book has not grown well under the expansion because they have not gone for that.
Second thing also, we did not worry much on the working capital also because many of them, the cotton prices oscillation these things are there. The working capital utilization is also relatively low. So it may be 8% is there the book. These people they have seen ups and downs over a period of time. So they are reasonably matured in this business. We don’t see any much issues out of that.
Coming to SMA book, what you’re seeing. Here and there these sort of things will be happening because few accounts, what all were there in the
–either in the corporate, commercial, these sort of things. So we are — supposed it is going to flow into that one, we are allowing it to flow. The reason is instead of keeping it and tomorrow having this burden, it is better we do it and all. And over a period of time if you can recover sooner the better, we’ll be able to recover that. So that’s why we allowed fewer accounts to flow into SMA. So that should not become an issue. Even if something is there, we will be able to start the revaluation process much faster, and it is not a major issue that’s what I feel.
Rohan Mandora — Equirus Securities — Analyst
Sure, sir, thanks. And if I can key in one more question. So if you look at last three quarters, our annualized slippage has been around 1%. So would it be fair to assume for FY’24, we can have slippage below that number because GMPs have also come down and the SMAs are also under control relatively?
B. Ramesh Babu — Managing Director and Chief Executive Officer
Agreed. But ’24 along with the March numbers, 1, 3. Take stock of whole thing and all will come back, but ideally what you said is correct. We’ll also aim on those lines, having got the maturity, both on the collections as well as quality of the portfolio, we will also aim for those sort of numbers only.
Rohan Mandora — Equirus Securities — Analyst
Sure, sir. Thanks a lot.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Thank you. Thank you.
Operator
Thank you. We have our next question from the line of MB Mahesh from Kotak Securities. please go ahead.
MB Mahesh — Kotak Securities — Analyst
Sir, just one question. When you are now speaking to your borrowers. If you could just kind of give us a little bit of color on, are they still looking to take more loans? Are they looking to slow down a bit? Just trying to understand what is the general feedback of panelists on that we are having with you customers, sir?
B. Ramesh Babu — Managing Director and Chief Executive Officer
Mahesh, I think good question. But this it depends on the industry. Suppose few industries where actually the demand is slightly slowed down, so the utilization levels are low, but there are few sectors where actually the demand is there. It can be [Technical Issues]or construction or these sort of contractors and infrastructure. These sort of things are there. The demand is still there. So that is the reason this people are approaching.
So, it shifted from maybe textile. Textile is just a lot of demand now. From textile it moved to other sector. So once the textile normalcy restores here and all, again the textiles utilization will start. So that way the requests are there and some requests are coming from the renewable area also, because Tamil Nadu, as you know, is a hub for this renewables and solar as well as windmills. So those requests are also coming. But trading and these things are concerned. So the demand is there and absolutely we are able to go ahead on those wholesale and retail trading.
MB Mahesh — Kotak Securities — Analyst
So, sir, in your understanding would be able to actually raise growth from here or you think that the growth is more has gone to be around 15% kind of a margin?
B. Ramesh Babu — Managing Director and Chief Executive Officer
So what we feel is, let us see, because these current growth rates whether it will sustain or not for the banking system also. In fact, I have my own distinct and all. So that’s the reason this year we thought that let us see 15%. Once the budget is out, we’ll have other indications also. Then we will take a call on the growth path for the next year. But you must be knowing earlier when single digit growth was going on for the bank for 7%, 8% and all. So we could scale it up to 15% and 16% now. So that way the opportunities are a plenty. So we will be able to increase it further and we will not miss any opportunity, but it will be too early now to commit for any number beyond 15%. But this March will be able to do it 15% plus. And the ones budget and these things are out, we will — what’s the size of our thinking and all and we will be able to come back.
MB Mahesh — Kotak Securities — Analyst
Got. Thanks a lot.
Operator
Thank you. We have our next question from the line of Renish Bua from ICICI Securities. Please go ahead.
Renish Bua — ICICI Securities — Analyst
Yeah. Thanks for the opportunity once again, sir. So, sir, my question is on the return of pool for this quarter. So INR600 crores what we written-off during the quarter in the corporate segment, I mean, is there any couple of big accounts or let’s say these are 10, 15 quarter per accounts put together we have written-off?
Ram Shankar — Chief Financial Officer
Not any big account. That is big account Renish at all. These are all number of accounts because it’s solve prudential provision. And if you notice, our our NPA or corporate has drastically come down to INR20 crores.
B. Ramesh Babu — Managing Director and Chief Executive Officer
No, o, not only that, even the gross NPA of corporate, Renish, if you see the slide, it is INR102 crores. So that way not as big account. All big accounts have earlier itself gone. Here other small account water are there, it is optimization and clean up process we have completed, not any big accounts this having issues. Those sort of things are not there.
Renish Bua — ICICI Securities — Analyst
Got it, got it. And sir, I missed that number from the recovery from the written-off account for this quarter.
Ram Shankar — Chief Financial Officer
INR85 crores.
Renish Bua — ICICI Securities — Analyst
INR85 crores. Okay, okay. That its, sir. Thank you, sir.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Okay, Renish. Thank you.
Operator
Thank you. [Operator Instructions] We have our next question from the line of Jai Mundhra from Batlivala and Karani Securities. Please go ahead. Mr. Jai Mundhra, please go ahead with your question.
Jai Mundhra — Batlivala and Karani Securities — Analyst
Yeah, yeah. Hi sir. Thanks for the opportunity and congratulations on a great set of numbers. First question is, sir, on SAA your growth, right? So while we appreciate that you intend to raise CASA to 40%, but at the same time the SAA growth has been very muted n the last one, two quarters, your card rate has also been one of the lowest. So when you — when you aspire for 40% CASA growth, is there any risk on that pricing also?
B. Ramesh Babu — Managing Director and Chief Executive Officer
I agree. Jai, if you can understand. Thanks for the complement. Now if you look at it, during the COVID lot of buildup was there for the SAA. And once relaxing and all, people started using either for their business or for the real estate or for investments in the capital market. Something like that people are there for personal consumption. So that way SAA has come down. Now consciously we also took a call internally if you leave the SAA like that, then the interest rates in general in the market have gone up, there can be a tendency to move this SAA towards the time deposits of other banks also. So that is the reason many of our banks also who are susceptible for moving these to other banks. So we have moved them to time deposits also so that we can lock in. So this a transitory phase which can come up.
But if you look at our acquisition what is happening, new accounts, these things and all. That process is on. Agreed, what you said that 40%, it may look at astronomical number at this stage when the things are pretty difficult now, but with the new setup what we are planning to do with the feet on-street and full fleet channel going that and all, and we feel that we need to aim for the sort of a number, maybe pricing here and there it can be here. But overall we will look at our NIM, whether we are making money out of this and ROA, all these factors will be kept in mind. Suppose there can be a case if pricing here and there if you are not paying and if you are not even able to get a resource at all, if you are unable to land, that will be much more detrimental than not giving a higher pricing. So that way we will see a commercial call will be taken, how much we need to pay, how much we are earning, overall it makes commercial sense or not. Based on that only we will take a call.
Coming to CAA also, agreed. So CAA first quarter we had a good build-up and all over a period of time, which has come down because started using and all. So now with the setup we have created for the task that also will be fully functional from 1st of April of next year. So we will be focusing on this the task and that the government also we have got the permission, but we are hopeful that we need to intensify our efforts under the task segment for the CAA. So that way both engines if they start firing, slowly we need to go up and because 40% when we say that time deposits are also growing it will be a challenge, but we wish to have the status and aim so progressively we’ll move forward. The main hope for us is the new set of what we have created.
Jai Mundhra — Batlivala and Karani Securities — Analyst
Right, right. Okay. And sir, what would be your deposit growth targets when you target 15% plus loan growth because your LDR ratio is now 50% plus 81%. So how should we look at the deposit growth?
B. Ramesh Babu — Managing Director and Chief Executive Officer
You are right, because then this is more or less to the CD ratio is running. So we need to grow hand-in-hand both deposits and advances together. So that way. — so suppose 15% we are planning, more or less deposits also 15%, 16%, we need to plan, then only we will be able to move forward. Here end there except SLR, for lot of SLR is there, we’ll will be able to get out of that. But over a period of time these two will have to move in tandem. Deposits cannot be much lower than the advances at float rate.
Jai Mundhra — Batlivala and Karani Securities — Analyst
Right. So incontinuation, sir, business is growing at more or less 15% plus. But on opex side, so far the opex growth has been, so, let’s say, very calibrated, 10% to 15% kind of a Y-o-Y growth. In this quarter I think you would have started providing for bipartite also and still the staff cost is single-digit kind of growth Y-o-Y, and even the other opex growth has been barely 10%. Would you — does this kind of current opex growth, current investment would help you to gain because your business growth is around 15%, but opex growth was still behind so. I mean, what kind of an opex growth one should assume going forward in ’24 to help sustain 15% business growth?
B. Ramesh Babu — Managing Director and Chief Executive Officer
Opex growth — one more thing you need to keep in mind. Last year because of the family pension when Reserve Bank of India wanted the banks to provide, they have given dispensation for both three and four years or five years. We took a call in providing that in the three quarter. So that way for each quarter INR27 crores additional provision we have made it, that is not there this year. So that way if you take it out, opex growth will be normalized. That is first thing.
And second thing, I fully agree with you. When the operations are growing and our business estimations are also much higher and all and that too there are teams what we are going to have for the liabilities and all, opex cost will be going up. But we are planning in such a way, there can be a lag of six months and initially we may have to spend, the teams and how to come, stabilize and they start mobilizing the liability. The liability is what we mobilize will start earning also.
So that way the cost what we are going to incur will be offset with your earnings what we are going to have. That is the reason overall the cost-to-income ratio also, we are planning to have around 45% to 47% which used to be 54% something. So that way this quarter it may be an aberration. It has come to 42% odd. Otherwise, we will try to maintain between 45% to 47%, and there can be a small lag. Investment if you do not make on these sort of initiatives what you are mentioning, over a period of time we will not be able to reap the benefits. So we are not short-sighted as far as the investment and cost is concerned for the next six months, but we are looking at the long-term where we are going to yield the benefit of it.
Jai Mundhra — Batlivala and Karani Securities — Analyst
Great. No, so just to understand that, sir, would you be — what would be your branch expansion and headcount, because both these things are more or less stagnant. So would you be doing this 15% business growth without adding too much of branches or headcount or there should be — one should start seeing some traction on the headcount in the branches?
B. Ramesh Babu — Managing Director and Chief Executive Officer
Yes. Good question. Now you see, branches we were opening around 15 branches per annum. So next year we plan to open around 25 branches and we will go with that particularly and then more a period of time we will see how to scale it up. Second thing what we are planning is the branches basically if the need to mobilize the resource, so the new setup what we created here. So we are going to have tie-ups with the business correspondent. Currently, our business correspondents are around less than 150.
So with these tie-ups if we setup our own business correspondents there, so they will start testing the waters first and the business and the liability business is coming up and they will also be mobilizing and marketing the retail assets. If these things are coming down, so we can think of opening a branch in that particular location. The cost of operations of the business correspondence is relatively a much, much lower compared to a branch because there is no extra cost there. It will be an operational cost, variable cost per transaction we had to pay. So we are planning to go for a number of visits correspondents in 25 branches and three sets of people will be going up. One, on the liability side, as I said, feet on street will go up. Second, side for the home loans as well as LAP also, the feet on street we are going to mobilize and those marketing teams are going to come into play. And the third thing the carry these smart initiative we have given and named recently on the SME portion that is CBG. So we have created setup under the subvertical under the CBG, wherein we are creating the relationship managers, feet on street for the SME business. All these will be in addition to the branch channel. There also we will be taking some people. Definitely the staff cost will go up on account of all these three verticals, liabilities and retail assets what we are going to create under the SME. These three are going to have some sort of a costs. As I said, it can have a lag effect also of six months, but we will try to even it out during the next year itself by earning. But whatever it is, our intention is to maintain between 45% to 47% with the cost-to-income ration also.
Jai Mundhra — Batlivala and Karani Securities — Analyst
Right. And last question on opex, sir. What would be the wage revision and absolute amount that we would have done for the two months this quarter?
Ram Shankar — Chief Financial Officer
We have done INR15 crores, Jai.
Jai Mundhra — Batlivala and Karani Securities — Analyst
For two months, right?
Ram Shankar — Chief Financial Officer
For two months, yeah.
Jai Mundhra — Batlivala and Karani Securities — Analyst
Okay, secondly, sir, on your — you given NIMs guidance assuming normalized environment going ahead. On your net slippages, right? So for the last six quarters we have been seeing the negative net slippages and you have utilized the entire thing on bringing down net NPAs. How should one look at the net slippages number going forward? Maybe one quarter is still, I think you can still manage, but how should one look at from a, let’s say, four five quarter perspective, how should one look at the net slippages number net of recoveries?
B. Ramesh Babu — Managing Director and Chief Executive Officer
Jai, in fact, the perspective from now onwards and then they had to change, because earlier the recoveries what all are there from the NPAs and we were looking at the slippages, because a part has — now more majority has moved to the right of bucket, in future we need to look at the normal recovery from the NPAs as well the write-off together what is earning and the actual slippages, we — our intention is still to maintain net negative slippages as far as possible that is our orientation, and we are proceeding on those lines only.
Jai Mundhra — Batlivala and Karani Securities — Analyst
Good to have those intentions, sir. But I’m saying do you have the visibility for the next two-three quarters that including TWO recovery?
B. Ramesh Babu — Managing Director and Chief Executive Officer
Yeah, yeah, we have — we the visibility.
Jai Mundhra — Batlivala and Karani Securities — Analyst
Great. Sure, and just last small accounting thing, sir. The tax rate for this quarter looks very low. Is this because of the write-off and it should not matter for a full-year perspective or how should one look at it? I mean, the way we calculate tax rate is around 10% only.
B. Ramesh Babu — Managing Director and Chief Executive Officer
So you are right, Jai, actually. Because of the the write-off some changes happened. Otherwise, if you take the nine months period and the entire year, it will be normalizing.
Ram Shankar — Chief Financial Officer
For nine months it has come to 23%. If you see first quarter, almost we had — 29% was our effective tax rate, okay, from 28% in Q2. So, on an overall basis, the same [Indecipherable] will be maintained.
Jai Mundhra — Batlivala and Karani Securities — Analyst
Sure. Great, sir. Thank you so much, sir, and wish you all the best.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Thank you. Thanks, Jai. Thank you very much.
Operator
Thank you. [Operator Instructions]We have a question from the line of Pranav Tendulkar from Rare Enterprises. Please go ahead.
Pranav Tendulkar — Rare Enterprises — Analyst
Hi, sir. Thanks a lot for the opportunity and congratulations on a great operating metrices. Sir, I just have one question, about that there is one provision on the slide number, I think 29 or 30. Well, there is a NPI provision of INR102 crores. So what does this exactly is for?
B. Ramesh Babu — Managing Director and Chief Executive Officer
Yeah, Pranav Thank you, thank you, Pranav. It is difficult, Pranav, that is SR. What all balance is there we had to provide as per the RBI dispensation.
Pranav Tendulkar — Rare Enterprises — Analyst
Right, right. So that is that is the same thing that you alluded in the opening remarks.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Yeah, in the inaugural, yeah, correct, correct. Your are right.
Pranav Tendulkar — Rare Enterprises — Analyst
Right, sir. Also, also or can you just explain us — can you just spend one minute on what is driving the credit growth currently for you and will this credit growth continue? Thank you.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Credit growth, I feel that. So for this quarter, it should not become a problem. Basically, the commercial if we look at it, so impact is there. Actually, many of these smaller units and business banking as well as up to INR25 crores, they are able to get a good traction. That is not a problem at all. And retail is only one thing, There the acquisitions are there. The disbursements are concerned, quarter-on-quarter more or less happening the same way, but a few prepayments these things and you people those who have money and all, those prepayments have come.
And third thing is, last quarter we didn’t go for any pool buyout because the pricing what all has come up in the market, RBI repo and all. Few of them are not willing to take it and all. We didn’t take it. Otherwise, the growth also would have been there. So that way this quarter is concerned, that trend will continue and we will be able to meet the guidance what we have given.
Pranav Tendulkar — Rare Enterprises — Analyst
Right, sir. Thanks a lot, sir.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Thank you. Thanks, Pranav. Thank you.
Operator
Thank you. We have our next question from the line of Hrishikesh Oza from RoboCapital. Please go ahead.
Hrishikesh Oza — RoboCapital — Analyst
Hello, sir. Thank you for the opportunity. Could you please indicate on credit cost for the coming quarter Q4 and also for FY’24?
B. Ramesh Babu — Managing Director and Chief Executive Officer
Yeah, FY’24, it is too early for me. As I said earlier, let the budget be over and all. In the meanwhile, we’ll mull over and all, we’ll have a clarity on that. Otherwise, Hrishikesh, you would have known that for this year we have given a guidance of around 15%, the growth will be there for the credit, and we will stick to that and all, maybe 15% plus we will be able to grow. That way the gap what all is there, so we will be able to do it and slightly a shade above that we’ll be able to do for the quarter four.
Hrishikesh Oza — RoboCapital — Analyst
It is the credit cost you are talking.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Sorry, I thought credit growth. Credit cost is concerned. So 1% we are told, but if you can look at it, 1.02% what all is there. So that is majority it has come from the prudential provisioning what we have made. When last six quarters our slippages are negative net slippages are there, the need for providing has literally pretty, pretty small, maybe for the aging provision we had to make. So that way we feel that nothing much will be there. Organic credit cost not too much will be there. If at all for the purpose of balance sheet we had to make because the funds are there. So we may have to do. Otherwise, credit cost is not a worrying factor for this quarter also.
Hrishikesh Oza — RoboCapital — Analyst
And for FY’24, sir, any indication?
B. Ramesh Babu — Managing Director and Chief Executive Officer
For ’24, we will try to maintain between 1.75 and all. We’ll have to work on that. Once this year is over. So we’ll work on that. It will be — w’ll try to be lower than this year.
Hrishikesh Oza — RoboCapital — Analyst
Okay. Thank you.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Thank you. Thank you.
Operator
Thank you. We have our next question from the line of Rohan Mandora from Equirus Securities. Please go ahead.
Rohan Mandora — Equirus Securities — Analyst
Sir, thanks a lot for this again. I just want to understand on the provisioning side, since we have accelerated and provided for most of the NPAs, we have a healthy PCR. For incremental slippages and incremental like, the aging provision component on the oral provision will be lower. So for the incremental slippages, will we look to grow it as per the RBI definition for will we we look to accelerate some provisioning on the incremental slippages?
Ram Shankar — Chief Financial Officer
So. We go with only the IRR provision norms. Only thing is the prudential provision instead of making 15%, we’ll provide 40% or 100%. In that way only it will be a underlying accounts will be there for each and every provision we make.
B. Ramesh Babu — Managing Director and Chief Executive Officer
But, Rohan, if you look at it. The slide for the NPA, the net NPA of the Bank is just INR550 crores. So that way, so even if here and there something made also, it doesn’t make any difference that way because if it is INR5,500 crores, then the question of all these things will come up. The net NPA has come down drastically to INR550 crore so incrementally even if some INR50 crores covered also it’s not worth to have much bearing on the bottom line.
Rohan Mandora — Equirus Securities — Analyst
I agree. The thought process that I was having was that in case you incrementally provide as per the RBI guidelines, only we could see some drawdown on the PCR reducing and better profitability and ROA expansion. And if you probably choose to maintain a PCR of 65% percent 70% even though the incremental slippages to be ready for the indirect things that may come up, then probably credit cost could be higher, and, but then it would be a balance sheet strength that is there on that. So that [Indecipherable] understand how it will play out?
B. Ramesh Babu — Managing Director and Chief Executive Officer
I agreed that that we cannot take it at this stage because RBI guidelines whatever all have come draft paper, they have given time up to 28 of February that to study and go ahead. Till such time we have a clarity, we’ll be going ahead with the IRAC norms only. Once we have some sort of a clarity what we need to build up and all, a call will be taken at that stage. Otherwise, we will go with the IRAC norms.
Rohan Mandora — Equirus Securities — Analyst
Sure, sir. Thanks a lot.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Thank you. Thank you, Rohan.
Operator
Thank you. We have our last question from the line of Prakhar Agarwal from Elara Capital. Please go ahead.
Prakhar Agarwal — Elara Capital — Analyst
Yeah, hi sir. Thanks for this opportunity. Just one question and follow-up to what last participant asked. We will be submitting our NDAs pro-forma to RBI. Any sort of deviation that you probably see based on the numbers that we have been reporting are to RBI that we have to make a transition today?
B. Ramesh Babu — Managing Director and Chief Executive Officer
This all Negligible. Not much any big difference we see. Couple of items where there is a gap between our NDAs and gap, but it’s all negligible. Its not any big numbers.
Prakhar Agarwal — Elara Capital — Analyst
Okay. That answers it. Thanks a lot. Thanks.
Operator
Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. B. Ramesh Babu, MD and CEO, for closing comments. Over to you, sir.
B. Ramesh Babu — Managing Director and Chief Executive Officer
Thank you. I thank you one and all for the interest what you shown in he bank and all, and I wish you all the best in your endeavor. Thank you very much. Thank you all.
Operator
[Operator Closing Remarks]