- Net Profit: INR 880 crores, up 110% YoY from INR 418 crores.
- Total Business: INR 6.35 lakh crores, growth of 8.97%.
- Total Deposits: INR 3.84 lakh crores.
- CASA Deposits: INR 188,863 crores, 49.19% of total deposits.
- Gross Advances: INR 250,615 crores, up 13.99%.
- CD Ratio: 65.27%, improvement of 452 basis points.
- Gross NPA: 4.54%, down from 4.95% YoY.
- Net NPA: 0.73%, down from 1.75% YoY.
- Provision Coverage Ratio: 96.17%.
- Net Interest Income: INR 3,548 crores, up 11.71% YoY.
- Net Interest Margin: 3.57%, up from 3.43% YoY.
- Return on Assets: 0.82%, up from 0.43% YoY.
- Return on Equity: 3.14%, up from 1.63% YoY.
- CRAR: 15.68%, with Tier 1 at 13.36%, improvement of 126 basis points.
- Interest Income: INR 8,335 crores, up 15.36% YoY.
- Total Income: INR 9,500 crores, up 16.08% YoY.
- Operating Profit: INR 1,993 crores, up 8.43% YoY.
- Provisions: INR 1,113 crores, down 21.62% YoY.
- Interest on Advances: INR 5,402 crores, up 19.94% YoY.
- Interest on Investment: INR 2,463 crores, up 8.03% YoY.
- Fee-Based Income: INR 425 crores, up 5.99% YoY.
- Service Charges: INR 292 crores, up 5.80% YoY.
- Miscellaneous Income: INR 56 crores, up 43.59% YoY.
- Treasury Income: INR 402 crores, up 42.55% YoY.
- Recovery and Write-Offs: INR 338 crores, up 22.46% YoY.
- Interest Expenses: INR 4,787 crores, up 18.23% YoY.
- Staff Cost: INR 1,714 crores, up 15.03% YoY.
- Other Operating Expenses: INR 1,006 crores, up 24.66% YoY.
- Retail NPA: 0.15%.
- Agriculture & Allied NPA: 1.74%.
- MSME NPA: 1.53%.
- Corporate NPA: 0.17%.
- Slippage Ratio: 0.34%.
- Credit Cost: 2.13%, 0.63% excluding prudence basis provisions.
- Restructured Book: INR 6,038 crores.
- Special Mention Accounts: INR 15,402 crores, 6.14% of total advances.
- Leverage Ratio: 5.48%.
- Retail Credit Growth: 13.87%, reaching INR 72,469 crores.
- Agriculture Credit Growth: 15.36%, reaching INR 47,080 crores.
- MSME Credit Growth: 30.20%, reaching INR 52,111 crores.
- Housing Loan Growth: 15.50%, reaching INR 45,393 crores.
- Co-Lending Book: INR 12,355.08 crores.
Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net profit increased by 110% year-over-year to INR 880 crores.
- Total business grew by 9%, reaching INR 6.35 lakh crores.
- Gross advances increased by 13.99%, improving the CD ratio to 65.27%.
- Net NPA reduced to 0.73%, showing a significant improvement from 1.75% a year ago.
- Provision coverage ratio improved to 96.17%, indicating strong financial health.
Negative Points
- Interest expenses increased by 18.23%, impacting overall profitability.
- Higher provisioning on NPAs, with INR 1,321 crores allocated, which could affect future profits.
- Staff costs rose by 15.03%, adding to the operational expenses.
- Other operating expenses increased by 24.66%, indicating rising costs.
- The bank's cost of deposits increased, which could pressure net interest margins.
Q & A Highlights
Q: What is the total composition of the higher provisioning on NPAs compared to the January-March quarter, and how much of it is related to GoAir?
A: The slippage ratio is just 0.34%, and the required provision was INR 523 crores. However, we provided INR 1,321 crores, which includes an additional INR 710 crores as a proactive measure. This has nothing to do with the GoAir account, which was fully provisioned in the previous financial year. The tax write-back is due to the fair value transfer through P&L and additional provisions, resulting in a tax write-back of INR 78 crores.
Q: What are the targets for credit growth and deposits for FY '25, and how will the bank maintain capital adequacy if deposits do not match credit growth?
A: We aim for a 14% to 15% growth in advances and a CD ratio of 69% to 70% by the end of FY '25. Despite market competition, we are not aggressive in time deposits due to sufficient liquidity. We plan to maintain a deposit growth of 8% to 10% this financial year.
Q: What is the status of selling the collateral security of GoAir, and when is the expected recovery?
A: The process is ongoing, with SARFAESI notices issued. If everything goes well, we expect to recover a significant amount by March.
Q: Can you explain the INR 250 crores profit from revaluation of investments this quarter?
A: The majority of this profit comes from the equity portfolio, which is now kept in the HFT category. The rise in equity markets contributed to this profit, and it is accounted for in the P&L.
Q: What is the impact of the RBI's draft circular on project finance provisions on your portfolio?
A: The impacted portfolio is around INR 4,800 crores, with a required provision of INR 247 crores. We have enough pockets to cover this without affecting our P&L figures.
Q: What is the outlook on the cost of deposits, and what helped in its reduction this quarter?
A: The cost of deposits decreased from 4.73% in March to 4.66% in June due to the non-renewal of bulk deposits. We expect the cost of deposits to plateau as other banks have aligned their rates with ours.
Q: What are the bank's plans for new products or initiatives in the current or next year?
A: We plan to pilot BC max branches in 438 PIN codes where we currently have no presence. This hybrid model will help us garner additional business without traditional brick-and-mortar branches.
Q: What is the segmental breakup of slippages for the quarter?
A: Slippages were INR 106 crores in agriculture, INR 66 crores in corporate, INR 297 crores in MSME, and INR 180 crores in retail, totaling INR 650 crores.
Q: What is the outlook on the treasury market and the impact of potential rate cuts?
A: We expect a couple of rate cuts in the current financial year, which should bring the yield to around 6.75%. This will positively impact our treasury operations, especially with our equity portfolio now part of the HFT category.
Q: How is the bank leveraging technology investments to improve performance?
A: Technology investments have significantly reduced our slippage ratio to 0.34%. We have also launched digital lending products and VKYC for account openings, which are showing good traction. We expect to reap more benefits from these investments in this financial year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
