Union Bank of India Ltd (UNIONBANK) Q4 FY23 Earnings Concall Transcript

Union Bank of India Ltd (NSE:UNIONBANK) Q4 FY23 Earnings Concall dated May. 06, 2023.

Corporate Participants:

Sunil Jadli — Head of Investor Relations

A. Manimekhalai — Managing Director and Chief Executive Officer

Nitesh Ranjan — Executive Director

Prafulla Kumar Samal — Chief Financial Officer

Analysts:

Jai Mundhra — ICICI Securities — Analyst

Ashok Ajmera — Ajcon Global — Analyst

Rakesh Kumar — B&K Securities — Analyst

Raju Barnawal — Antique Stock Broking — Analyst

Ashlesh Sonje — Kotak Securities — Analyst

Sushil Choksey — Indus Equity Advisors — Analyst

Chintan Shah — ICICI Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Union Bank of India Earnings Conference Call for the Period Ended March 31, 2023. The bank is represented by the Managing Director and CEO, Ms. A. Manimekhalai; Executive Directors, Shri Nitesh Ranjan, Shri Nidhu Saxena, Shri Ramasubramanian S; and other members of the top management. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

Now, I hand over the call to Mr. Sunil Jadli [Phonetic], Deputy General Manager. Thank you, and over to you, sir.

Sunil Jadli — Head of Investor Relations

Yeah. Thank you, madam. Good afternoon, ladies and gentlemen. I, Sunil Jadli, Head of Investor Relations, welcome you all for the Union Bank of India earnings con-call for the period ended March 31, 2023. The structure of the con-call shall include a brief opening statement by respected MD and CEO madam, and then the floor will be open for interaction.

Before getting into the con-call, I’ll read out the usual disclaimer statement. I would like to submit that certain statements that may be discussed during the investors’ interaction may be forward-looking statements based on the current expectations. These statements involve a number of risks, uncertainties, and other factors that cause the actual results to differ from the statements. Investors are therefore requested to check this information independently before making any investment or other decisions.

With this, I now request our respected MD and CEO madam for her opening remarks. Thank you, and over to you, madam.

A. Manimekhalai — Managing Director and Chief Executive Officer

Good afternoon. It is my pleasure to welcome the analysts and the investors. We are grateful for your continued support and feedback that has helped us in taking informed decisions.

Let me just give you a brief on the broad macroeconomic environment before I go to the performance of the bank. In the midst of the global uncertainty, Indian economy is showing a strong momentum. The economy is expected to continue to perform well and will remain as the fastest-growing economy in the world. The banking sector has also shown improved performance, led by a broad-based economic recovery. Our bank’s business and financials registered strong growth during Q4 FY ’23, and we have achieved good set of numbers in terms of profitability, asset quality, and capital adequacy, among others.

Now, let me give you a brief on the highlights of our bank’s performance. The operating profit of the bank reached INR25,467 crores, with a growth of 16.4% during FY ’23. Net profit of the bank has increased by 61.2% Y-o-Y to INR8,400 crores during the year. Net interest income grew by almost 18% Y-o-Y during FY ’23. NIM has also improved to 3.07%, almost improving by 13 bps from FY ’22. Gross advances have increased by 13.1%, while deposits have grown by 8.3%.

Bank has registered good growth in the RAM portfolio also: 17% growth in retail; 14% in agriculture; 13% growth in MSME advances. RAM’s share to the total advances is 54 — 56%.

Gross NPA of the bank has reduced by 358 bps on Y-o-Y basis to 7.53%. Net NPA has reduced by 198 bps on Y-o-Y basis to 1.70%. CRAR improved 152 bps to 16.4% [Phonetic]. The PCR, also, we have increased to 90.34% as of March, 31, 2023.

Our overall cash recovery and upgradation has crossed INR20,000 crores. Slippages has been moderated at INR12,518 crores as against the guidance that we gave to the market at INR13,000 crores.

During the FY ’22-’23, the bank has taken many important structural changes, which has yielded positive results. One among them was the large-scale digital transformation exercise that the bank has taken.

Before I conclude my opening remarks, I would like to invite my ED, Mr. Nitesh Ranjan, to speak on the various digital initiatives the bank has taken during FY ’23 and also what we are going to do in the current year.

Nitesh Ranjan — Executive Director

Thank you, madam. Good evening, everyone. So like we have done very well in terms of business and financials for FY ’23, as well as the Q4 of F ’23, in the area of digital and technology also we have taken several initiatives to further improve the customer service, increase the revenue and optimize the cost.

If you look at our aspirations for the digital, and that is in line with the consumer preference shift towards more and more digital services, also given that currently the penetration of digital services per se in the entire ecosystem is very low, so which gives an opportunity for us to do more and more into digital. We have set an aspiration of having 50% of RAM loans origination over the next three years coming through the entirely digital channel, which will translate into around 15% of RAM loan book coming — being fully digital-sourced loans.

And on the liability side, around 1 trillion quality CASA accounts we’d like to acquire fully STP on the digital side over the next two years to three years. And the third associated objective and aspiration of the bank is to create a great customer satisfaction score and customer experience through the digital and technology. For that, we have been continuously been building capabilities in the recent past in the core IT, digital, analytics as well as the cyber security. We have continuously been augmenting the IT hardware infrastructure to meet the requirement of increasing number of transactions in the system.

We have implemented the state-of-the-art SD-WAN technology across all our branches and units. Currently, we are in the process of adopting the SDN, software-defined network. We are amongst few large banks in the country who have got PCI DSS certified for the payment channel. We are aware that every payment player has to be compliant with the PCI DSS, but bank has gone a step forward to get certified with a PCI DSS, which gives a lot of comfort to us as well as to our customers.

Similarly, on the security side, we have one of state-of-the-art cyber security operation center today, and we are taking into next level into Cyber Security Centre of Excellence and we are working with top class advisors and consultants and we’re collaborating with many all-India level institutions to take it forward.

Thirdly, we are building a digital platform, which will be microservices-led, API-based infrastructure, and which will be aiming at creating, as I said, for the customer, a seamless journey, omni-channel experience, hyper-personalization for various segments and sub-segments of the customers, as well as using the modern AI, including the conversational AI technology for creating convenience to our customers, and also investing in creating a data lake, an analytics center of excellence, which will help us leverage our digital capabilities to offer good services to our customers.

For customer satisfaction and customer convenience, we recently adopted and implemented the CRM solution which has been developed in association with Zoho Corp. And now, we have decided to invest in digital contact centers, which will also be using the conversational AI and it will be a one touch-point solution for customer service as well as sales.

Now, if you look at FY ’23, what all we have done, and I would like to just highlight certain numbers, that we launched our revamped mobile app, Vyom, in November 2022, which today offers not only the banking services, but it has plethora of insurance, mutual fund, as well as lifestyle services available on our mobile app, and we are continuously adding more and more features based on the market demand as well as the customer feedback. So far, we have already developed 10-plus journeys into retail, agri, and MSME segments for our customers. And these 10-plus journeys are completely straight through processing. So, four of these are in — four or five of these are in MSME segment, three is — three segments of the Mudras, Shishu, Kishor and Tarun. Then there is a Union Nari Shakti scheme and the GST Gain scheme up to INR25 lakhs of loans, and all these five are completely straight through.

Then in agriculture, again, we have Kisan Credit Card loan, KCC, which we have implemented in association with the Reserve Bank Innovation Hub. We have been among the first banks to do that. Today, we are doing the pilot in the State of Madhya Pradesh and Karnataka in association with RBIH, and that is a completely straight through journey. Similarly, on the retail loan side, we have the pre-approved personal loan. We have again the pre-approved personal loan for the specific segment of customer, that is the pensioners. We have launched the straight through loan for — education loan for the premier educational institutions in the country. And as we speak today, we are looking at many more journeys in retail loans, including the housing loans and vehicle loans, also in tie-ups with the — tie-up with the OEMs, which will create a lot of convenience to our customers and they can do the banking services from their comfort and convenience.

So over the last 12 months in FY ’23, we have serviced more than 32 lakh customers. And when I say these 32 lakh customers, these are not the branch-based, these are completely digital service customers, and we have generated a business of INR48,200 crores through these customers through the digital routes, which includes new loans to 1.48 lakh customers aggregating around INR2,200 crores of sanctions and deposits of over 30 lakh customers aggregating around INR46,000 crore of loans.

You are also aware and we have been sharing with you in the past that for the review/renewal of the existing loans in the RAM segment, which has been a very tedious, friction-full, branch-based process, we have changed this into the straight through process digitally, where there is less intervention from the branch as well as hardly a click or two requirement from the customer. And these renewal journeys on the digital, again, is available for various segments of retail, agri, and MSME customers.

Over FY ’23, we have renewed digitally over 8 lakh loans aggregating to INR42,000 crores of our RAM portfolio. So, this is just the beginning. And as I shared, through the investment that we are [Technical Issues] and we are almost at the final stage of onboarding our system integrators and vendors and partners who will work with us, we are very much hopeful that our aspiration of 50% acquisition of RAM as well as 1 trillion new CASA customers to the digital channels straight through could be possible.

In fact, in FY ’23, due to our efforts, bank was ranked Number 1 into IBA PSB Reforms Agenda, which is under the title of EASE. And EASE is currently running into its fifth version. So the quarter three FY ’23 results of EASE, in that Union Bank has secured first rank amongst all public sector banks. And you are also aware that EASE has actually five broader themes, and in four of these five themes, Union Bank has been ranked Number 1. And three out of these four themes actually relate to the area of technology, digital, cyber security, and we have been ranked Number 1 due to our [Indecipherable] initiative.

Even the — one of the coveted awards, which is given by the Indian Banks’ Association in the area of IT, last year, we have received six IBA awards, which include Best Technology Bank as well as Best IT Security, amongst all the large banks in India. When I say large, it includes private as well as public sector banks. So, the recognitions are also coming, which motivates us to further invest and do more and more for creating customer convenience for the more than 14 crores of our customers using and leveraging the technology and digital.

Thank you very much. I’ll take a pause here, and we will discuss them. If you’d like to know anything specific on our initiatives, we’ll be happy to interact.

A. Manimekhalai — Managing Director and Chief Executive Officer

Yeah. We are now open for interaction.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We have a first question from the line of Jai Mundhra from ICICI Securities. Please go ahead.

Jai Mundhra — ICICI Securities — Analyst

Yeah. Hi, good afternoon, everyone, and thanks for the opportunity. Ma’am, first question is on NIM, net interest margins. So this quarter, the loan yields are still rising Q-o-Q, but the cost of deposits have risen faster and hence, we have seen a dip in the NIMs. Now, going ahead, as we understand that the rates have almost peaked, so yields may still rise, but cost of deposit could still be rising faster than the loan yields. Then ideally, there should be pressure on the NIMs, right? So we are saying that the NIMs — our guidance is almost flattish. So, just wanted to understand the thought process here.

A. Manimekhalai — Managing Director and Chief Executive Officer

Yeah. Mundhra, thank you. As far as FY ’23 was concerned, we have improved our NIM from 2.94% to 3.07%, about 13 bps of increase. We have seen better credit uptake in RAM sector. And so, faster asset pricing has helped the margins to improve. Going forward, there will be a slight pressure on the margins due to the liability repricing and slower deposit growth. That’s what we feel. But however, we will be seeing — it looks like there will be a fall in the deposit rates. We have already seen that. CD rates have also come down by almost 40 bps to 50 bps from the mid-March levels after RBI took a pause in the interest rate.

Going forward, what we feel is our NIM will be — we will able to sustain our NIM to — at 3% level. If you look at the portfolio of the bank, almost 50% is MCLR based. Out of it, just about 40% to 50% has been repriced, and the remaining 50% is to be repriced during the current year. So be assured that we will be able to maintain a NIM of at least 3%.

Jai Mundhra — ICICI Securities — Analyst

And just a follow-up, ma’am, there. On this MCLR book, right, so this is essentially the corporate book, right? And it should be repricing once in a year, right? The — at least the reset period should be one year, if not lower. Then in the last one year, the entire book should have been repriced. Is that understanding right?

A. Manimekhalai — Managing Director and Chief Executive Officer

Yeah, that is correct. So — but I will tell you, bank’s 50% of the domestic advances is classified as MCLR, as I already told you. If I can tell you that during ’23-’24, Q1, we have got about INR47,000 crores of our loan book to be repriced. And totally, we have got about INR2,80,000 crores. That’s the kind of numbers that we are looking at for repricing. So, every quarter, we have some numbers. And so, the repricing — the reset will be happening every month, as you said, or a quarter. So, we are seeing that this MCLR will be translated, loan book will be repriced. And so, we will have a better NIM.

Nitesh Ranjan — Executive Director

Madam, if I may add. Mr. Mundhra, what happened was, actually, it has — not last one year. Actually, from September onwards only the rates have gone up very high. So, what madam was trying to say was, even from here to September, we have which are the assets which are going to be repriced. So, we will be able to maintain the NIM of 3%.

Jai Mundhra — ICICI Securities — Analyst

Right. No, no. So, I’m not asking that, sir. Maybe — I mean, you can do, there are lot of variables. But what I wanted to ask is that RBI started the rate hike in May of last year. And then in your, I mean, the cost of deposit — I mean, the — your MCLR would have also started to reprice. So, the entire corporate book should have been repriced, right? It looks like that there is a bit of a pressure on pricing also in corporate. Is that — I mean, even if the…

Nitesh Ranjan — Executive Director

No, no. See, that is what I’m trying to say that, see, our MCLR is the marginal cost on the rate which our cost there we are getting it. So if you’re looking at it, the northward movement of rates in the deposit has happened from the second half of the last year.

Jai Mundhra — ICICI Securities — Analyst

Okay. Okay. And sir, now, when, let’s say, this INR47,000 crores of book comes for repricing in 1Q, considering there is a lot of competition, while the MCLR, the card rate may, let us say, rise up by 100 basis points or X basis points, do you think that the competition intensity allows you to pass on that risk — pass on that rate hike?

A. Manimekhalai — Managing Director and Chief Executive Officer

So, out of 250 transmission rates happening, the MCLR has grown by about 140 — 140 bps only. That is the competition, the market pricing, everything has already been taken into account accordingly.

Nitesh Ranjan — Executive Director

So just to add, the MCLR rate would be in a rise in all the banks. So we don’t see the difficulty in pass on the increasing rate, because, right now, if we — every bank has increased more or less around 140 bps or 150 bps.

Jai Mundhra — ICICI Securities — Analyst

Right. Okay, understood. The second question is, on your notes to accounts 16, right, so this pertains to a previous June 7 circular disclosure that we disclose every time. I just have a small doubt, so I wanted to clarify. The exposure is around INR4,000 crore, of which around INR2,500 crore has already slipped and the bank has made a reasonable provision there. I wanted to check that what is the nature of the INR4,000 crore minus INR2,500 crores or INR2,600 crores that these accounts are still standard, and can they slip in future quarters?

Nitesh Ranjan — Executive Director

Jai-sab, these are perfectly standard loans. You are talking about the portfolio, which are on our June 7 circular, right?

Jai Mundhra — ICICI Securities — Analyst

Yes, yes.

Nitesh Ranjan — Executive Director

These are — these are perfectly standard loans and well performing. Only thing is that there is a — sometimes, a delay in the resolution plan. Therefore, that additional provision is addressed. But when the resolution plan, rectification, whatever, that’s put in place and satisfied with their performance, no default in six months, those provisions get reversed.

We will see a few accounts also this quarter. Earlier, we made provision. These provisions got reversed. So, absolutely, there is no such thing. We don’t find any reason that any of such account will be slipping. In fact, our corporate book portfolio is behaving very well, and we don’t see — foresee any kind of accounts going to — slipping there.

Jai Mundhra — ICICI Securities — Analyst

Sure. And how much was the family pension that we absorbed in this quarter? I think we have done for the — I mean, we have done…

A. Manimekhalai — Managing Director and Chief Executive Officer

Yeah, we did. Mundhra, we did — about INR1,100 crores we have absorbed during the current year, which — actually, we had a dispensation of five years. We have absorbed everything during the current — during the FY ’23 last quarter.

Jai Mundhra — ICICI Securities — Analyst

Right. Okay. So the entire has come in last quarter, right? Okay.

A. Manimekhalai — Managing Director and Chief Executive Officer

Yes, yes.

Jai Mundhra — ICICI Securities — Analyst

And last question, ma’am.

Operator

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

Jai Mundhra — ICICI Securities — Analyst

Sure. Thank you very much.

Operator

[Operator Instructions] We have our next question from the line of Ashok Ajmera from Ajcon Global. Please go ahead.

Ashok Ajmera — Ajcon Global — Analyst

Thank you very much for giving this opportunity to me. And good evening, ma’am and the other executive directors and general managers of the — CGMs and GMs of Union Bank of India. Ma’am, at the outset, yes, my compliments to you for the overall good performance of the bank for the FY ’23, if you take the year on the whole. My only concern is that, in the last quarter, this Q4, our results are not that very — like, our growth — credit growth is almost muted, 0.29% on the domestic. And even on the other front also, if you look at the profitability and other thing, because the recovery from the written-off account has come very high in this quarter. That is why we could increase our operating profit too. Otherwise, there was a pressure on our margins and our entire operating profit.

You have done very well in the bank for last nine months. You have set up 126 MSME loan points, 105 MSME first branches, 160 retail points, 1,331 gold loan points, and I’m sure they all will give the benefit in the time to come to the bank. Having said that, I have got some specific pointers, some questions and some data point.

First of all, sir, Nitesh Ranjan-ji, on the digital journey you’ve taken and it’s really commendable, sir. You have put in a total capital employed. If you go on the segment-wise result, INR3,538 crore has been capital employed on the digital initiative, which has been now made compulsory for presentation by the Reserve Bank of India. And if you look at that asset segment, you have created INR42,263 crore asset and liability of INR38,000, so net capital employed is INR3,539 crores, whereas the loss on the digital, which is reported for the first time, is INR102 crores.

So this loss of INR102 crores, because this pattern is going to be set up for future, this is not to be included in the capital employed for the digital initiative. This will be in the normal overall the banking operations going forward, loss or profit in the segmentation-wise report, or a focal clear picture will be given where the loss is added to the capital employed and the profit is reduced from the capital employed? So what is the strategy on that? This is number one.

My second question is on the — on our DTA and MAT side, that we have a DTA reversal of INR3,632 crore and the MAT credit of INR2,269 crore, which you have taken. So, how much is the DTA balance left and the MAT credit left for the bank so as to assess the future numbers of the bank?

If I may continue asking some more questions, ma’am, or will you answer this first and then I come back again for the second?

Nitesh Ranjan — Executive Director

Ajmera, before we forget what you asked, so let us answer that first. And I’ll request our CFO to take on both the questions.

Prafulla Kumar Samal — Chief Financial Officer

Yeah. Ajmera, first thing is that, regarding the capital employed and loss you have mentioned in the digital segment, okay, it’s not actually a loss. This is retained in the bracket, because this was within the retail banking segment. It’s a sub-segment within the retail banking. That’s the reason it is retained within the bracket. It’s not a negative figure, okay? So, there is no loss, as such, okay? It is profit only.

Okay. So, regarding the capital that has been allocated for digital segment, it is basically the assets which have — the bank has created through the digital mode. Of course, the loan asset and others, we have to maintain the capital as the per capital adequacy norms. So, as far as only the necessary capital has been allocated, okay?

The second question, you were asking about the DTA and the MAT credit that the bank has taken. It’s basically, we have also discussed in earlier quarters, the bank is contesting the question of applicability of MAT on the public sector banks and the matter is sub-judice. It is going to a special branch of the IBA. See, the hearing have been started. So we are quite confident there, the — we are — because the past decision has been taken in favor of the bank. So we are confident that still the case will be in favor of the bank. So, there will be no impact in the terms of the MAT credit reversal or whatever. So, that is one part.

Second part is about the DTA assets. So after the INR3,600 crore kind of reversal this year, we will have another INR8,500 crores of DTA that will remain in our books. So, since you know the DTA created out of the timing differences, out of the provisions and all, it will accordingly get nullified in the due course of time.

Any further clarities you want on this matter?

Ashok Ajmera — Ajcon Global — Analyst

Yeah. How much is the — as per income tax, the carry-forward losses, if at all, for the past?

Prafulla Kumar Samal — Chief Financial Officer

No, there is no carry-forward losses. The bank doesn’t create any DTA on carry-forward losses. So, that is not there. The DTA is created on the timing difference on the bad debt provisions and all. In the entire bad debt provision, which you’re making the books, is not allowed fully in the taxes also. Therefore, there is a difference. There is no carry-forward loss.

Ashok Ajmera — Ajcon Global — Analyst

Okay. Ma’am, coming back…

Prafulla Kumar Samal — Chief Financial Officer

[Speech Overlap] on the carry-forward loss.

Ashok Ajmera — Ajcon Global — Analyst

No, no, it’s all right. INR8,500 crore is the DTA still the balances there, according to you. Isn’t it?

Prafulla Kumar Samal — Chief Financial Officer

Yeah, yeah.

Ashok Ajmera — Ajcon Global — Analyst

Yeah. And how much MAT credit is left?

Prafulla Kumar Samal — Chief Financial Officer

So, MAT credit, as I told you, is basically whatever MAT we have paid, that equal amount is taken as a MAT credit. But since we are saying that MAT is not applicable to us, so it will be nullified. So, there is no implication in — on this.

Ashok Ajmera — Ajcon Global — Analyst

All right. Ma’am, coming back to the credit growth in our books because we were expecting it to continue the momentum which was set up in the earlier two quarters. How do you see — where do you see the credit, number one, coming from? Why is the — that our growth is muted in the last quarter? Is there any specific reason? And if you are, again, having the target of 12% to 14% of the credit book for the FY ’24 or 15%, where is the credit going to come from the loan [Technical Issues]?

A. Manimekhalai — Managing Director and Chief Executive Officer

Yeah. Ajmera, the overall credit of the bank has grown by 13.3%, while the average credit registered a Y-o-Y growth of almost 16.74%. And the CD ratio of the bank has also improved to 73%. It’s not a muted growth, of course, because we — the base figure was lower and that’s why the figures [Technical Issues]. As per the system, we are at the same growth rate of 13.3%.

We are looking at — the system growth will be about 14% to 15%. Even in RAM portfolio, we have done well. Retail has shown a growth of 17%, agri at 14%, and MSME at 13%. We have also grown very well in the gold portfolio, which is about 48%. Education loan, 25%, and vehicle loan at 31%.

Now, what we are looking at is 10% to 12% growth in the coming years. The majority of the research report also says that the — if you look at the GDP growth of about 6.5%, credit growth may hover around 12% to 13%. And that is the guidance that we are also taking. We are taking 10% to 12% growth on the credit portfolio for the year ’23-’24.

Ashok Ajmera — Ajcon Global — Analyst

Okay, ma’am. Just last question in this round. On the SRs of INR2,233 crore, which is fully provided for two SRs are added of INR342.68 crore. So, if the SRs are added recently, number one, what kind of — is it from private ARC, NARCL and [Speech Overlap] — and if it is a new SR, what —

Nitesh Ranjan — Executive Director

These are all NARCL, which is fully provided.

Ashok Ajmera — Ajcon Global — Analyst

What was the need of providing 100% if it is a fresh SR?

Nitesh Ranjan — Executive Director

So, the — these — Ajmera, this is SRs through the NARCL sale, which we have done. The two accounts for which NARCL sale has taken place, where 85% in SR form. So — and it’s backed — though backed by government guarantee, but still it is 100% provided.

Ashok Ajmera — Ajcon Global — Analyst

But sir, since it is 100% provided by the government, it must have taken in the recovery or the investment book.

Nitesh Ranjan — Executive Director

No, but the value has right now been taken as [Indecipherable].

Ashok Ajmera — Ajcon Global — Analyst

Okay. As well, this is as good as a very — I mean, extra cushion for the bank, because this money is guaranteed by the bank in any case [Speech Overlap]

Nitesh Ranjan — Executive Director

Five year plus three years part of guarantee and right now, bank has taken a call to take a provision on the additional — you can take it as an extra cushion on behalf of the bank.

Prafulla Kumar Samal — Chief Financial Officer

Yeah. Ajmera, one correction. One small correction. On the digital segment, what you have mentioned is that the loss on digital, I want to make a correction, which is, you are right. The amount of figure mentioned there in — on the segment digital, loss on digital operation is right. This is mainly because of the initial capital and revenue expenditure, because the bank is now building lot of IT infrastructure and all, therefore, the initial expenditure has been high. That’s the reason why is the loss, but sure — because we are very sure, the output is going to — the volume is going to increase in future, so that will be recognized in capital. But as of now, it is a loss. So, sorry for the correction.

Jai Mundhra — ICICI Securities — Analyst

Yes, sir. That’s what — that’s why I raised this question that our revenue is 169 — I’m just clarifying, ma’am. I’m just on to the point. Please permit me.

Operator

Please go ahead, sir.

Ashok Ajmera — Ajcon Global — Analyst

Yeah. So, what I was saying that — sir, that our revenue is INR169 crore and the loss is INR102 crore. It means INR271 crore is the expenses for earning the INR169 crores, which I can understand, because it is a initial stage of the digital — the entire segment-wise reporting and total digital initiative, which has to be reported separately. What was my point is that this loss, today it may be INR100 crores, tomorrow there can be INR500 crores or a profit of INR1,000 crore. Whether it should be adjusted on the capital employed on that particular segment? So that was one point, which I had raised, and another one for the loss. Anyway, you can take it — the cue from that and can decide accordingly. Thank you very much for giving me this opportunity. Thank you.

Operator

Thank you. We have a next question from the line of Rakesh Kumar from B&K Securities. Please go ahead.

Rakesh Kumar — B&K Securities — Analyst

Yeah, hi. Thanks a lot for the opportunity. So, sir — ma’am, one question was pertaining to the total stress book or the restructured book, which is pertaining to your notes of accounts number 14, 15, and 16. So number comes to — which is standard number, around INR18,000 crores. So, if you can indicate what are the total provisions that we are holding against this outstanding, so non-NPA, standard, of INR18,100 crores?

A. Manimekhalai — Managing Director and Chief Executive Officer

Now, restructured book, as you said, is about INR17,826 crores, and we are holding provisions to the extent of 10%.

Rakesh Kumar — B&K Securities — Analyst

10%?

A. Manimekhalai — Managing Director and Chief Executive Officer

Yes.

Rakesh Kumar — B&K Securities — Analyst

So, this 10% number, ma’am, INR1,800 crore number, it has not — you are not clubbing it with general standard provisions. So, it is separate number, correct?

Nitesh Ranjan — Executive Director

Yes. Separate numbers. Yeah.

Rakesh Kumar — B&K Securities — Analyst

Okay. Thank you. Thank you for this, ma’am. And secondly, ma’am, like, we have seen quite a strong growth in overseas credit book this quarter. But if you look at the provision what we are holding for the unhedged foreign currency exposure, that number has actually come down. So, like, number is not significant at all, but just wanted to understand the thought process or maybe what is happening in the business. Like, is that the case that in this quarter, even after having such a strong growth in overseas book, foreign currency exposure, has it come down? That is why the provision in this quarter has come down from INR26 crores to INR17 crores?

Nitesh Ranjan — Executive Director

This — good afternoon. This is — actually, the two different things. As far as the overseas advances are concerned, it is advances given at the two branches. We have one at Sydney and another one is at Dubai. As far as the other one is concerned, it is the domestic exposure — forex exposure that we have given.

Rakesh Kumar — B&K Securities — Analyst

Okay. And after this shifting loss that we have done, like, we had around INR97 crore, INR98 crore of shifting loss this quarter. So, how are we placed now? Because the modified duration is, still we have less than one year for AFS book, especially on the SLR side, and we are not changing it from the last quarter number. So, what is the view that we are holding on the interest rate movement? As you said that certificate of deposit rate has come down, and that is the fact of the matter, and short-term T-bill has also come down. But we are not changing our modified duration on the SLR in the AFS book. So, it is not — things are not appearing to be in line. So why don’t — why did not we change our duration on the higher side when we see that rates are coming down?

Nitesh Ranjan — Executive Director

Sir, shifting loss is pertaining to first quarter of ’22, ’23 which, has already been booked. Subsequent to that, whatever the investment portfolio we have added, which mainly consists of treasury bills and other short-term securities, which due to excess liquidity in the system, we have placed this in treasury bills, as well as one to three-year duration. That is why we are having a duration continually maintained at the similar level. Once that is over, we are having average duration of 3.66, which we will be able to encash over a period of time.

Rakesh Kumar — B&K Securities — Analyst

No, sir. Sir, question was basically on the AFS book, so total duration is same at around 1.3 years and SLR duration is at around 0.7 years. So if we have a — if we are seeing that rates are coming down, then are we changing the duration? Are we increasing the duration, or we are not increasing the duration?

Nitesh Ranjan — Executive Director

We are changing the duration over a period of time. This is mainly for portfolio consists of treasury bill, which is — due to excess system liquidity available, which has been kept. We — if we withdraw that, our duration will come to around 3.65 to 3.66 in AFS book itself.

Rakesh Kumar — B&K Securities — Analyst

Okay. And how much we are planning to shift in this first quarter — coming first quarter?

Nitesh Ranjan — Executive Director

To the extent of 5,000 to 8,000.

Rakesh Kumar — B&K Securities — Analyst

5,000 to 8,000? Okay. And the duration of that book would be like — would be two, three years — on the STM side?

Nitesh Ranjan — Executive Director

Yeah, 3 to 3.5.

Operator

Thank you. We have a next question from the line of Raju Barnawal from Antique Stock Broking. Please go ahead.

Raju Barnawal — Antique Stock Broking — Analyst

Yeah. Thank you for the opportunity. My question is on the corporate portfolio side. In the current quarter, we have seen a softer growth on the corporate side, while it has declined on a sequential basis. So what’s your outlook on the corporate portfolio going ahead?

Nitesh Ranjan — Executive Director

Yeah. So, we have taken a conscious decision to keep — as you know, that we are keeping our corporate book and RAM at a particular proportion. To have that proportion and we should not go beyond that, and to keep that ratio, we have remained the corporate growth at that level. That is one part. Second part is, if we see what is would be the growth next year, we have given a guidance of 10% to 12% and we will remain at that level, because we have got a lot of traction in different areas. So, most of the sectors are now opened up, and we are getting proposal from most of these sectors. So it is not a particular sector, but in all the sectors, there is a good growth, secondly. And thirdly, we have got a pipeline of — around INR30,000 crores, INR35,000 crores in the pipeline, which is under different stages of disbursement and which have — we have given the sanction. So this may be disbursed over a period of, say, 12 to 18 months. So that disbursement will happen. And along with that, we have got fresh sanction on PIM. PIM is a sanctioned approval of around INR15,000 crores, INR20,000 crores, which will come over a period of time, which would be sanctioned in the year. And again, those proposals that we are concentrating in different branches will be coming to us. So, that they have not taken, only have taken this part. So we see corporate book move to grow decently during this year.

Raju Barnawal — Antique Stock Broking — Analyst

Okay. Thank you, sir, for the answer. And some data-keeping questions. Can you please provide a breakup of the provision during the quarter between NPA provision and others?

Prafulla Kumar Samal — Chief Financial Officer

Yeah, sure. Yeah, the total provision during this quarter was INR4,000 crore. Out of that, INR3,567 crore was the NPA provision.

Raju Barnawal — Antique Stock Broking — Analyst

Out of? Sir, can you please repeat?

Prafulla Kumar Samal — Chief Financial Officer

[Speech Overlap] was INR4,041 crore. Out of that INR3,567 crores was towards the NPA provision that we have for NPA for the Q4.

Raju Barnawal — Antique Stock Broking — Analyst

Okay. And what was the forex-based income during the quarter?

Prafulla Kumar Samal — Chief Financial Officer

Forex-based income? Okay. Revenue from forex projection was INR217 crore during this quarter. [Technical Issues]

Operator

Mr. Barnawal?

Raju Barnawal — Antique Stock Broking — Analyst

Yeah, hi.

Nitesh Ranjan — Executive Director

During the quarter. During the Q3. And for the full year, the forex exchange income annual, INR813 crore.

Operator

Thank you. We have a next question from the line of Ashlesh Sonje from Kotak Securities. Please go ahead.

Ashlesh Sonje — Kotak Securities — Analyst

Hi, team. Just a couple of questions from my side. Firstly, on the recovery front, we have seen a healthy recoveries of about INR20,000 crores during FY23 against a guidance of INR15,000. But how is it for FY24?

Nitesh Ranjan — Executive Director

Sir, see, generally, we will try to maintain or we want to improve our performance in the recovery front. The processes are in place, so we will be more or less touching the same level.

Ashlesh Sonje — Kotak Securities — Analyst

And where do you think — so, these would be coming from any large accounts —

Operator

Sir, we cannot hear you clearly. Can you use your handset, please?

Ashlesh Sonje — Kotak Securities — Analyst

Is this better?

Operator

Can you speak?

Ashlesh Sonje — Kotak Securities — Analyst

Yeah. I’m saying, do you foresee any segments, any particular industry, sir?

Nitesh Ranjan — Executive Director

No, it is not like that. We have already launched a few schemes for — actually, for the one-time settlements, we had some aggressive schemes have been launched, which we are now able to get some of the accounts cleaned up. Not any big accounts, we are not enforcing on that. But it will be on a continuous basis, we will be able to do.

Ashlesh Sonje — Kotak Securities — Analyst

[Indecipherable] from corporate kind of —

Nitesh Ranjan — Executive Director

Not even recovery. If you look at it, we normally — most, we are expecting it by — from agri and MSME sector.

A. Manimekhalai — Managing Director and Chief Executive Officer

See, during the last year, that is 2022-’23, we did about 2,19,000 OTS accounts and about INR530 crores of recovery in that number. We also did quite a number of SARFAESI. Almost 4,000 and odd SARFAESI we have done during the last year and we — no, sorry, 8,000 and odd SARFAESI, and we were able to recover about close to INR3,000 crores in that. So, it is not that one particular sector that we are looking at. We are looking at recovery from every area. We have also something lined up with NARCL, and we hope to see some good recovery from those centers also.

Ashlesh Sonje — Kotak Securities — Analyst

Okay, understood. The second question is, again, on recoveries from the return of accounts, which we have seen in the fourth quarter. Can you shed some light on which were — any particular large accounts?

Nitesh Ranjan — Executive Director

See, the large accounts means, there were some of the accounts, which have been fully provided and written off, very old NPA accounts, which we have — on a cash basis, we have sold some of the accounts to ARCs fees on a 100% cash — upfront cash basis, which amounted to around INR930 crores, it has come on that. Other than that, as madam has also told, we were very aggressive with the old NPAs with OTS, some of the lower — there is a — small accounts have been cleaned up. That’s what around more than 2 lakh accounts, which are very, very — liabilities are very less. We had entered into a settlement, and we have the cleaned the bank this also so that we are able to do this write-off in the TW account, you could show a better result in the last quarter.

Ashlesh Sonje — Kotak Securities — Analyst

Okay. Understood, sir. And lastly, have you booked any recoveries in the interest income line during fourth quarter? In the last quarter, if I remember right, we had about INR685 crores in the interest income line.

Nitesh Ranjan — Executive Director

INR2,600 crore, no, Samal?

Prafulla Kumar Samal — Chief Financial Officer

Yes, sir. We have booked [Technical Issues]

Nitesh Ranjan — Executive Director

For the entire year, it is around INR2,600 crore.

Prafulla Kumar Samal — Chief Financial Officer

Yeah, I have the figure. I’ll tell you.

Nitesh Ranjan — Executive Director

Yeah. Quarter only he is asking.

Prafulla Kumar Samal — Chief Financial Officer

Sir, it is INR2,600 crores in the entire year, and INR682 crores in the last quarter.

Nitesh Ranjan — Executive Director

INR682 crores in the last quarter, 2,000 — around INR2,600 crores for the entire year.

Operator

Thank you. We have a next question from the line of Sushil Choksey from Indus Equity Advisors. Please go ahead.

Sushil Choksey — Indus Equity Advisors — Analyst

Good evening to team Union Bank. Congratulations on stable results. Listening to all the Q&A so far, I feel there is a change of heart and some strategy between a balance in corporate and retail. So can you roll out the strategy point for next 12, 24 months what Union Bank desires to do?

A. Manimekhalai — Managing Director and Chief Executive Officer

So, see, sir, we have a strategy that we will do 55% RAM and 45% of our loan book will be corporate. So we have got, as I — as we have told earlier also, we have put up some strategic verticals we have made, like the retail loan points, the MSME loan points, which we will aggressively look at, giving retail loans and plus education loan, gold loan, these are all the verticals that we have come up with. And with regards to even corporate advances, we are not saying that we will be limiting to 45% alone. If the projects that we get is better, so we are going ahead and doing it. Even in large corporates, we have set up about 14 LCBs and 56 mid corporate branches, which will fuel this growth in the corporate advances. We have also set up about 14 corporate relationship cells across the country, who will be also looking at building relationships with existing corporates for fee-based income and third-party products also.

Sushil Choksey — Indus Equity Advisors — Analyst

Okay. Now, just relating to that, so you’re not averse to that 55-45 as a fixation. It’s just a matter of thinking that we will drive retail and wholesale —

A. Manimekhalai — Managing Director and Chief Executive Officer

Absolutely. Yes, yes.

Sushil Choksey — Indus Equity Advisors — Analyst

And it is more of a initiative, because you spend so much on digital.

A. Manimekhalai — Managing Director and Chief Executive Officer

Exactly.

Sushil Choksey — Indus Equity Advisors — Analyst

So, I won’t elaborate on that question. Ma’am, second thing, some of the banks, which have declared results are guiding that the rates peaked in US and rates have peaked up — peaked in India also, based on RBI guidance. How do you position yourself, not only AFS and HTM, but bond rates are headed to 6.75% by the year-end as what is indicated, on pricing of your loans, MCLR and your — in treasury operations?

Nitesh Ranjan — Executive Director

Good afternoon. As far as treasury operation is concerned, already interest rates peaked up, as you told. However, depending upon the inflationary condition and US markets, there may be either cut or stagnant for a long period of time. That is the case. Accordingly, we have positioned our HTM and AFS book to take care of this requirement, and we will definitely able to generate a substantial and MTM fee position over a period of next one year, sir.

Prafulla Kumar Samal — Chief Financial Officer

And Choksey sir, regarding MCLR repricing, as in the earlier — earlier in the conversation, we have told that during when it is coming for the repricing time, it will be appropriately done, sir, considering the present market condition.

Sushil Choksey — Indus Equity Advisors — Analyst

Because I could sense from madam’s comment that deposit rates have already coming down, which means our MCLR has also peaked or the system MCLR has peaked, let’s put it that way. Am I understand — my understanding is right?

Prafulla Kumar Samal — Chief Financial Officer

Sir, yeah, the — you can say like that, but we are just waiting and watching, sir, because MCLR, the pricing mechanism, it also depends upon the competitiveness in the market also. So maybe — it may be there or some more, little more increase maybe excepted on that.

Operator

Thank you. We have a next question from the line of Chintan Shah from ICICI Securities. Please go ahead.

Chintan Shah — ICICI Securities — Analyst

Yeah, ma’am, first of all congratulations on good set of numbers, and thank you for the opportunity. So firstly, on the LCR front, I had a question. So in terms of — if we look at our — our LCR is roughly 193% against the regulatory requirement of 100%. So, any reason for carrying such excess LCR? And if we reduce the LCR, then should that help on the margins front? Any benefit on the margin front can be expected from that?

Nitesh Ranjan — Executive Director

Good afternoon. This is actually last day number. So that’s the reason it is 192%. But if you took the — if you take the average of the quarter, it is around 167%, and that is because we have a good chunk of excess SLR and that’s the reason it is at a comfortable position.

Chintan Shah — ICICI Securities — Analyst

Okay. Sir, do we plan reduce it or keep it around these levels?

Nitesh Ranjan — Executive Director

So, that will depend upon the market conditions and how is the opportunity in the credit market, how is the cost in the deposit market, as well as opportunity in treasury?

Chintan Shah — ICICI Securities — Analyst

Sure, sir. Secondly, on the — our term deposit rates. So, I was looking at the term deposit rate. So it is around — 6.5% is the peak rate, if I look at a term deposit rate. Also, sir, what would be this rate — the highest rate in the past five years of one year or one to two years range, our highest TD rate in the past. So sir, is it around the highest rate as of now?

Nitesh Ranjan — Executive Director

Current is the highest rate.

Chintan Shah — ICICI Securities — Analyst

Okay. So current would be the highest rate in the past five years, right?

Nitesh Ranjan — Executive Director

Yes.

Chintan Shah — ICICI Securities — Analyst

Sure, sir. And sir, any plans of increasing the SA rate just to garner more deposits that — given that there is quite a fight on the deposits front? So are we planning to raise any rate on the SA, since we are starting from 2.75? Any thoughts on that?

Nitesh Ranjan — Executive Director

So, the saving deposit portfolio is not rate-sensitive is what we understand and what that reality is also. We are rather looking at other initiatives to see how the saving portfolio can be enhanced in the bank. So, what we have seen, we have studied that the savings share — our salary share in the savings portfolio is lesser and we are far below the industry benchmark. So we are working on that part. We have come out with a improvised salary product and we have created a vertical for salary accounts mobilization in the bank. And with those kind of initiatives, with our mobile app having enhanced features — 350 plus features and having more engagement with customers, having more SB accounts where the Union Bank account becomes the operative account, these are the kinds of initiatives we are trying to take and increase our savings rather than the pricing part of it.

Chintan Shah — ICICI Securities — Analyst

No, sir, this is very helpful. Thank you. That’s it from my side. Thank you.

Operator

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to management for closing comments. Over to you.

A. Manimekhalai — Managing Director and Chief Executive Officer

Thank you, everyone, for your continued support. We assure that with great — the various initiatives the bank is continuously taking, we will be showing better results in the quarter — next quarter also. The bank has also taken many new initiatives. Especially, in the lateral recruitment side, we have created a lot of new verticals, like the wealth management, the digital marketing, transaction banking, call center management, and we are recruiting lot of people from — experts from outside to the bank. With all this and the digital, what Mr. Nitesh Ranjan has also spoken to you, we would like to be seen as a more digital-savvy bank in the future. Thank you all of you.

Operator

[Operator Closing Remarks]