- Total Business Growth: 11.46%
- Deposits Growth: 7.39%
- Advances Growth: 17.64%
- Savings Deposit Growth: 5.47%
- Current Account Growth: 22.79%
- CASA Share: Improved by 52 bps to 38.62%
- Retail Advances Growth: 21.84% YoY
- Home Loan Growth: 20.37% YoY
- Vehicle Loan Growth: 33.33% YoY
- Agriculture Advances Growth: 19.64% YoY
- MSME Advances Growth: 14.04% YoY
- CD Ratio: Improved by 628 bps to 72.07% YoY
- Gross NPA: Reduced to 3.32%, down by 116 bps YoY
- Net NPA: Reduced to 0.78%, improved by 40 bps YoY
- PCR: Improved by 88 bps to 95.76%
- Tangible PCR: Improved to 77.05%, up by 257 bps YoY
- SMA Portfolio: INR 700 crores in one and two category, 0.36% of total standard advances
- Restructured Book: INR 3288 crores (INR 2191 crores COVID restructuring, INR 1097 crores general restructuring)
- Net Interest Income Growth: 12.2% YoY, 3.05% QoQ
- Domestic NIM: Improved by 26 bps to 3.29% YoY
- Global NIM: Improved by 23 bps to 3.09% YoY
- Yield on Advances (Domestic): Improved by 13 bps to 8.76%
- Yield on Advances (Global): Improved by 22 bps to 8.46%
- Operating Profit: Increased by 9.81% YoY to INR 1321 crores
- Net Profit: Improved by 147% YoY to INR 551 crores
- CRAR: Improved by 24 bps to 17.09% YoY
- Cost of Deposit: Reduced by 12 bps to 4.79% over six months
- Yield on Funds: Improved from 7.94% to 8.36% over six months
- Yield on Advances: Improved from 8.46% to 8.72% over six months
Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total business grew by 11.46%, with deposits increasing by 7.39% and advances by 17.64%.
- Retail advances saw a significant growth of 21.84% YoY, supported by home loans (20.37%), vehicle loans (33.33%), and agriculture loans (19.64%).
- Gross NPA reduced to 3.32%, a decrease of 116 bps YoY, and Net NPA decreased to 0.78%, a 40 bps improvement.
- Net interest income grew by 12.2% YoY and 3.05% QoQ, with domestic NIM improving by 26 bps to 3.29% YoY.
- Net profit increased by 147% YoY to INR551 crores, and CRAR improved by 24 bps to 17.09% YoY.
Negative Points
- Provision for NPAs remains a concern, with fresh additions in slippages amounting to INR479 crores.
- The SMA portfolio more than INR1 crore stands at INR700 crores, which is 0.36% of total standard advances.
- The cost of deposit has only slightly reduced over the last six months, indicating potential challenges in managing deposit costs.
- The bank's CASA ratio, although improved, is still below the industry benchmark at 38.62%.
- The yield on advances declined sharply on a QoQ basis due to the absence of a significant recovery from written-off accounts in the previous quarter.
Q & A Highlights
Q: Are we still expecting more provisions for NPAs despite improved asset quality and underwriting norms?
A: (Ashwani Kumar, CEO) Yes, we are maintaining provisions as a precautionary measure, especially for assets in the Doubtful 2 category. We have provided 100% for assets over INR1 crore in this category and 50% for Doubtful 1 assets. This is to prepare for potential future guidelines and to improve our provision coverage ratio.
Q: What is the total written-off account book of the bank, and do you expect the same trend of recovery in the coming quarters?
A: (Ashwani Kumar, CEO) The total written-off account book is around INR27,000 crores. While the recovery trend may not continue at the same pace due to the low-hanging fruit already being recovered, we have introduced a special OTS Scheme from July 1 to boost recovery from the field.
Q: Can you explain the INR751 crore decrease in the general reserves due to the RBI's new policy on investment classification?
A: (Rajendra Saboo, Executive Director) The decrease is due to the fair valuation of zero-coupon recap bonds, which were previously taken at face value. This adjustment does not impact the overall net worth or CRAR of the bank as it was already accounted for in capital calculations.
Q: How do you plan to address the deposit growth problem while targeting 13-14% credit growth?
A: (Ashwani Kumar, CEO) We are focusing on CASA and retail term deposits while reducing dependence on bulk deposits. We are also utilizing excess SLR securities and refinance facilities to manage the credit-deposit gap. Our target is to reach a 75% CD ratio.
Q: What is the reason for the sharp decline in yield on advances during the quarter?
A: (Ashwani Kumar, CEO) The decline is due to a previous quarter's recovery from written-off accounts, which included around INR100 crores in interest income. This quarter, the absence of such recovery resulted in a lower yield on advances.
Q: How is the bank preparing for the SEBI clause on reducing government holding to 75%?
A: (Ashwani Kumar, CEO) We have Board and AGM approval to issue INR400 crore equity shares. We plan to raise INR2,000 crore in the first tranche and have sought government approval for this. We will come to the market at an opportune time for raising capital.
Q: How is the international book shaping up, and are we benefiting from any arbitrage income?
A: (Ashwani Kumar, CEO) The international book is growing, with deposits increasing by 48% YoY. We monitor daily opportunities for cheaper deposits, including hedging costs, and focus on primary and secondary syndication for advances.
Q: What is the status of the NARCL portfolio and expected recovery?
A: (Ashwani Kumar, CEO) One account has been settled with a recovery of INR4 crore. Six accounts are under various stages of discussion, with two in advanced stages and three on hold due to NCLT or OTS discussions. The total exposure in these accounts is INR850 crores.
Q: How do you see the growth of the solar and renewable energy credit portfolio?
A: (Ashwani Kumar, CEO) We have launched schemes to promote funding for renewable energy projects and expect significant traction in the field. We believe this will benefit both credit growth and the economy in the next six to nine months.
Q: How are you addressing the impact of agricultural loan waivers by some states?
A: (Ashwani Kumar, CEO) Our exposure in states like Telangana and Maharashtra is limited, and the impact on our portfolio is not significant. We continue to monitor the situation and adjust our strategies accordingly.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
