Ladies and gentlemen, good day, and welcome to the Union Bank of India earnings conference call for the period ended June 30, 2024. The bank is represented by the Managing Director and CEO, Ms. A. Manimekhalai. Executive Directors, Shri Nitesh Ranjan, Shri Ramasubramanian S., Shri Sanjay Rudra, Shri Pankaj Dwivedi, 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. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. Now, I hand the call over to Mr. Ajay Bansal, Deputy General Manager. Thank you, and over to you, sir. Thanks, sir. Good afternoon, ladies and gentlemen. I, Ajay Bansal, Head of Investor Relations, welcome you all for Union Bank of India earnings con call for the period ending June 30, 2024. The structure of the con call shall include a brief opening statement by respective MD and CEO, and then floor will be open for interaction. Before getting into the con call, I will read out the usual disclaimer statement. I would like to submit that certain statements that may be discussed during the investor interaction may be forward-looking statement based on the current expectations. These statements involve a number of risks, uncertainty, and other factors that cause the actual results to differ from the statement. Investors are therefore requested to check this information independently before making any investment or other decisions. With this, I now request our respective MD and CEO for our opening remarks. Thank you, and over to you, ma'am. Good afternoon to all of you. I welcome you to Union Bank financial results announcement for the first quarter ended June 30, 2024. Thank you for joining us today. I trust you have reviewed our results. Let me provide an overview of our performance and key highlights for this quarter. The first quarter is typically a slack season, compounded by election impacts and annual staff transfers, resulting in not so good, you know, business growth. As far as the banking industry is concerned, the credit growth has been outpacing deposit growth, increasing competition for liabilities. We are mindful of this fact and implemented several strategies to address this challenge, which I will discuss in detail later. The guidance was as the actual performance. Let me just give you a brief with regard to what the guidance that the bank had given and the performance of the bank. The deposits has grown by 8.5% YOY, advances by 11.5%, largely in alignment with our guidance range of 9%-11% for deposits and 11%-13% for advances. Our NIM is at 3.05%, surpassing our guidance of 2.8%-3% for FY 2025. On asset quality, we are showing consistent improvement in the past several quarters. In line with our guidance, gross NPA reduced to 4.54%, with gross recovery at INR 3,368 crore, and slippage is restricted to INR 2,318 crore. With regard to my growth, we aim for a sustainable growth, balancing top line and bottom line performance. As per latest RBI data, as of June 2024, SCBs reported 10.6% YOY deposit growth and 13.9% growth in credit. Vis-a-vis, our bank reported 8.5% and 11%, 11.5% growth in advances. Both on YOY and QOQ basis, the deposits and advances of the bank are positive. We are not growing our top line at the cost of our bottom line. CASA and retail term deposits form 72% of our total deposits, and we are maintaining this ratio consistently for a long time. Now, with regard to my QM highlights, total business of the bank reached INR 21.36 trillion, with deposits of INR 12.24 trillion and advances at INR 9.12 trillion. While our SB deposits registered a YOY growth of 4.6%, CASA on a whole grew by 3.7%, and term deposits registered a growth of 9.5%. We grew better under RAM, advancing by 14.5%, while large corporate advances grew by 7.8%. Higher growth, we have seen under gold and in education loan and also vehicle loans. Net profit of the bank has reached INR 3,679 crore in June quarter, a growth of 13.7% YOY and 11.1% QOQ basis. Operating profit of the bank is at INR 7,785 crore, with 8.5% YOY growth and 9.1, 19.1% QOQ basis. GNPA has reduced by 280 basis points. Net NPA has come down by 68 basis points to 90. PCR has improved by 263 basis points to 93.5%. The credit cost improved to 0.73%, grew by 24 basis points YOY. ROA has improved to 1.06% and ROE to 15.7 as of June 2024. The implementation of the new investment norms has positively impacted our portfolio. With regard to CASA growth, we have taken a lot of initiatives, and we hope to increase our CASA base based on the various initiatives that the bank has taken. During the quarter, the major achievements that the bank has achieved is S&P Global Ratings has revised our outlook to positive, aligning with the sovereign rating of the bank of the country, sorry. India Ratings and Research upgraded our rating to AAA/Stable, one notch up. We have opened the first branch in Lakshadweep, Agatti, and also opened 12 premium branches in the rural and semi-urban locations. We also have a plan to raise capital to the extent of INR 10,000 crore for FY 2025. It has been approved by the board, of which INR 6,000 crore will be equity and INR 4,000 crore through AT1 and Tier II instruments. In conclusion, I want to emphasize that the bank has been very consistent in performance. Our balance sheet is quite strong, stable and sustainable. The key initiatives, we have taken with regard to underwriting capabilities, centralization, verticalization, HR transformation, and robust assurance framework are all, are yielding good results for the bank. Before I conclude, I want to address yesterday's, you know, outage regarding the Microsoft, system. I want to emphasize that the bank has not been impacted with regard to the outage. I conclude here, and now we are open for questions. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of CA Dr. Ashok Ajmera, Chairman, Ajcon Global. Please go ahead. Yeah, thank you for giving me this opportunity. First, compliments to you, ma'am, and the entire team of the Union Bank. Thank you, sir. For yet another very good quarter, that is the first quarter of FY 2025. On almost every front as regard the profitabilities are concerned, various parameters. My only little observation and concern, ma'am, is on the credit and deposit growth, especially in this quarter, which is totally, I mean, muted. You know, 0.59% domestic credit grew and the deposits rather decelerated, reduced rather, from INR 11,96,168 crore to INR 11,90,197 crore as far as the domestic deposits are concerned. This is my first question that in the remaining quarters, like when we have to grow our credit books, even as per your target of almost about INR 1,10,000 crore, that is almost about INR 36,000 crore per quarter minimum. How do we plan to grow that credit book and equally the deposit also? And which are the areas from where, because our agri portfolio is already grown much. So this is just my first, and later on I will have certain points of information, ma'am. Yeah, good afternoon, Ajmera, sir. Rakesh Kumar here. If you are looking at our, actually our growth, if you are looking at it, we are what with the banking industry is presently undergoing the liquidity crunch, that deposits are not are very difficult and there is a high cost. It involves a large cost for increasing the deposits. But at the same time, if you are looking at it, our retail, we have there is a steady growth of around INR 3,000 crore we have increased in the quarter, despite being one of the flat quarters normally in the banking industry being the first quarter. As regards, if you are looking at it, we are also, as madam has already informed that, we are taking various initiatives for increasing our deposits. There will be a special focus on CASA. We are taking a project where we are reaching out to our ETB and also new to bank clients for increasing the balance in their CASA accounts. We are also, as ma'am told, we are also open to some premium branches catering to these clients. The premium branches will be only catering to the CASA clients, so that there will be a steady growth of CASA in the coming days. So already the bank is aware of the situations, and we have already initiated many projects in this regard to keep our market share at the existing levels. As regards to credit, as to it is very clearly that we are if you are looking at the last quarter also, our RAM sector growth is 14%, which is in tune with the market. There is a, we have reduced growth in the corporate sector where actually, because some of the low-yielding advances have been, we have shut down during the last quarter. And our CD ratio also, we want to maintain between 73%-76%. So bank is very well aware of it. Once we are in the... If you are looking at the credit, once the private capital come into full force, bank is ready. Already our, if you are looking at it, we are having an excess liquidity of around INR 65,000 crore. So bank is ready to increase the portfolios in the coming days. ... I think, ma'am, just due to the change in the classification and valuation norms of the investment, our AFS, there is an increase of INR 1,702 crore in the, which has gone to the general reserve. But if you take it, our net worth, you know, which was INR 87,601 as given in the result, and if you add the profit of INR 3,678, the total should come to INR 91,279 crore, but it is INR 93,748 crore. So net worth has gone up by INR 2,470 crore, versus the AFS increase in the valuation of the general reserve is of INR 1,702 crores. So about INR 700 crore has gone further into the results. If you look at the net worth difference between the March end and the June quarter. So what is the component of that INR 700 crore, the additional increase in the net worth? Is it zero coupon bond from calculation? Hello? Good afternoon, Ajmera. As far as the investment new norms are concerned, which has been implemented from 1 April onwards, whatever the impact on that general reserve is there, INR 1,702 crore after tax, which has been added in the general reserve. In addition to that, around INR 20 crore whatever the June quarter addition is there, that has been added to AFS reserve. Total addition is INR 1,722 crore on account of changes in the investment guidelines, which they will detect from 1 April 2024 onward. Ajmera, this is Avinash Prabhu. Basically, the INR 700 crore that you're talking about is a reduction in DTA. So because there's a reduction in DTA, you're seeing that differential of INR 700 crore. So that's- That is why the net worth has gone up by that another INR 700 crore. Yeah. Yeah, point well taken. Ma'am, ma'am, certain on the notes to the accounts, there is a fraud in the note number nine. The fraud is reported INR 465 crore. The outstanding is INR 341 crore in this quarter, in 128 cases. So number one, it's a very high number in the first one, one quarter itself. Secondly, how much is of the, these frauds are on the borrower accounts, and how much is the, on the digital and other cyber frauds? And what are the chances of recovery out of this INR 341 crore outstanding, which has been fully provided for? Ajmera, in terms of the Reserve Bank of India guidelines, now all the frauds, even though if the bank is not responsible for that, but it is on the digital platform, it has to be classified as fraud. And we have taken this up with the RBI in this regard. So many of these are all almost like 70%-80% of these frauds are digital frauds are small in nature, and of course, the remaining are credit and credit frauds that is happening. So yeah, the bank has taken a lot of initiatives with regard to this. We have opened a separate transaction monitoring department in the bank. We also have reconciliation department. We have put a lot of steps with regards to, you know, arresting the digital frauds as well as, you know, with regard to the various transaction frauds that's happening. Real-time monitoring of all the transactions are happening in the bank. We have also put in velocity checks and customer profile AI and ML we have taken this. So we are taking up lot of measures to arrest the fraud, and you also must be aware that the bank is operating a 24 by 7 cybersecurity operations center also at Hyderabad. So with these initiatives, we hope to reduce the number of digital frauds that's coming up in the bank, plus also the transaction frauds that's happening in within the bank. Okay. Ma'am, just last one in this round of PSLC commission. Just, just allow me one- Follow-up question. Thank you. We will move to the next question, which will be from the line of Mahrukh Adajania from Nuvama. Please go ahead. Yeah, hello. Ma'am, firstly, on PSLC income, while of course it's always strong in the first quarter, it has kind of doubled. So who would be the main buyers? Would it be foreign banks, private banks? Who are the main takers of PSLC? Because the demand this quarter looks to be significantly higher than last year, right? Where last year's first quarter also there was good income, but this time it's even better. And what is it that sells the most? Is it agri gold or what? That's my first question, and then I have a question on cost of funds as well. Ma'am, as far as PSLC is concerned, it is traded on the platform, which is open to all the buyers. We are not able to understand who is the buyer and who is the seller. It is a platform where it will be dealt on the based on the demand-supply. But usually on observation during the last quarter when the sale took place, the major buyers looked to be private sector banks who are in the that segment, madam. Sorry, who is it? I did not hear the last question. Private sector banks. Private sector banks who are having the shortfall in that segment. Okay. Okay. And, Actually, it was traded at a range of INR 180-INR 2 during the quarter. Okay, that's so helpful. Thank you. And then what would be the amount of recovery income or dummy interest in NII and any swap-related income in NII this quarter? INR 607 crores. Yeah, dummy ledger income for the last quarter was INR 607 crore. And what you ask about the second question, ma'am? No, you get some, in NII, you have some swap-related income every quarter, right? So what was it this quarter? Yeah. It will be around INR 700 crore-INR 800 crore, madam. It is on par with the year-on-year and quarter-on-quarter basis. Similar income. Okay. There is no. Okay. Okay. And, just one last question on cost of funds. Obviously, there's no business growth, given that it's the first quarter, and it's a dull quarter for the banking sector. But as liabilities are challenging, you, yourself, pointed out deposit growth being lower than loan growth, and that there are special offers given by all banks, you know, on term deposits. Do you see an upward moment in the cost of funds, in the quarters ahead? This quarter, it has somewhat declined. Yeah, cost of deposits of, you know, actually, if you look at this, for our bank, QOQ, the cost of deposits is slightly reduced by five basis points, over March 24, 2024. It is because of the, you know, we did not take much funds in the market, and we have got enough of liquidity with us. That's the reason the cost of deposits have fallen in this quarter. But going forward, you know, looking at the increase in advances, we would like to, you know, borrow funds or, you know, raise more term deposits, and that is the time that we will be looking at increasing probably our rate of interest. And as of now, we are very competitive in the market with regard to deposit rates. We look at the tight liquidity position and the, you know, dividing gap between deposits and the credit growth. Plus, we also have quite a good excess SLR in growth. So we were not looking at, you know, increasing the cost, cost of deposits to a great extent. Okay. Ma'am, thank you so much for all your detailed answers. Thank you. Thank you. Thank you. Thank you. The next question is from the line of Suraj Das from Sundaram Mutual Fund. Please go ahead. Yeah. Hi, ma'am. Thanks for the opportunity. Couple of question. One is on the yield on advances that has declined on a QOQ basis. If you can shed some light, I mean, what is the rationale behind that? And has there been any impact because of this revised penal charges, you know, guideline? Yeah, yield on advances has declined by about 15 basis points, primarily due to the fall in our DL recovery. About 11 basis points impact it had because of the DL recovery compared to the previous quarter. We also saw a small increase in the average advances. That's about INR 10,000 crore in an increase in the average advances. That's the reason there has been a decline. And plus, if you look at this, you know, we were able to pass on the MCLR reset of only 25 basis points during the year. So that is the reason that, you know, if you look at the YOY, there is a decline in the yield on advances. Sure. Understood. The second question, ma'am, on the standard advances provision. So this quarter there has been, you know, Suraj, the line goes, sounds slightly muffled. May I request you to please switch modes on your device? Okay. Is it better now? Better. Yes. Okay. So the second question is on the standard asset provision. So I think this quarter you have provided something like INR 1,300 crore. And similarly, I think if I see the, let us say, SMA zero, that book has also increased. So if you can shed some light here, and what would be the total quantum of standard- We have done to the extent of about INR 1,296 crore. It's increased to that extent. This increase is due to an anticipated distress or potential restructuring in a couple of accounts. That's the reason that we have done this additional provisioning. Okay. Then the rationale of increasing SMA 0. SMA zero. That's the reason that our SMA zero numbers have also gone up. Okay. Understood. And then the last question would be on the NBFC growth. I think in your corporate slide that you have given, the NBFC amount, exposure to NBFC has grown substantially on a QOQ, YOY, both basis. So, I mean, how you are looking at this growth probably in coming quarters? The QOQ. No, NBFCs, you know, if you look at QOQ, there is not much of an increase in NBFC, but YOY, of course, from 107 to 120, that's how the NBFC book has grown. But we have shared lot of numbers on the NBFC book, plus our other low-yielding advances book, also. Close to INR 15,000 crore is what we are... To add to that, if you are looking at the other banks' growth in NBFC, it is more from the RBI data. We find that it is about 16% growth is shown, whereas our growth is around 14%. Still, we are having a room, we will be taking. So we have shared almost INR 5,000 crore- Yes. in our NBFC book. If you look at December 2023, it was at 125. Today, we are at 120. ... Okay, sure. And ma'am, what are the, what would be the rates here? I'm assuming these would be, you know, double A or triple A rated NBFCs. Yeah. My NBFC portfolio, if you look at almost like, Ninety-nine. - 99% is, A and above. Okay. 1% is BBB and lower. Okay. Sure, understood. Thank you. Thank you. The next question is from the line of Dixit Doshi from Whitestone Financial Advisors Private Limited. Please go ahead. Yeah, can you hear me? Sir, you are audible. You may proceed. Yeah, yeah. Thank you for the opportunity. So I have three questions. Firstly, as you have mentioned that, the standard asset provisions we have, this, anticipating some, loan accounts defaulting. So, also, do you feel that we will increase the standard asset provisions, going forward also, or it was, maybe one of this quarter and, this will be not be such high provisions, in the future quarters as well? Yeah, this is a one-off provisioning, a certain, you know, couple of accounts, and that's the reason that we have done this. From next quarter onwards, this amount will be lower? The line for you is not very clear. It keeps moving in and out. No, but I do understand the question. Yes, this quarter it may not come up. Okay. My second question is regarding this recent Telangana government farm loan waiver. So firstly, will it impact us? And also secondly, so how this will be, you know, recorded in the books of accounts? Will it be like moved to those accounts moved to the NPA and the government will pay us at a later stage? Or, I think the amounts are transferred to the farmers' account. So, can we do the auto-debit kind of a thing? Yeah, it's done usually. The amounts are credited to the farmer's account, and from there it is, you know, credited to the loan account. It has just started, so we will not know the current, you know, the impact, because we are doing it in two phases. The second phase will be completed by August fifteenth, so we will know the exact same. So, since the amount will be transferred to loan account, so we don't anticipate a significant jump in the GNPA because of this, right? No, no. Okay. And, just for one last question, so, our capital adequacy is quite strong at 17%, and, we are targeting a growth of 11%-13%. So, this INR 6,000 crore equity raise, is it, you know, is it, just a provisional, approval we have taken, or do you really feel that we will require this much fund? Yeah, we are quite comfortable, as you say, with regard to the capital adequacy is concerned. We have enough capital for to take care of our growth, but we have taken a board approval to raise capital. You know, in case there is a capital cycle revival, and then the growth prospects of the bank also increases and the ecosystem also increases, we would like to have more capital to take care of that. Okay. Okay, that's it from my side. Thanks. Thank you. Thank you. The next question is from the line of Jai from ICICI Securities. Please go ahead. Hi, good afternoon, ma'am, and congratulations on a good set of numbers. Thank you, Jai. Yeah, ma'am, so my question is on, sorry, again, on this standard assets provisioning of 1,200+ crore. Is this entirely due to the some, you know, rise in the SMA that you have seen? Or, you know, this is like, this is also includes the usual higher provision on standard assets, sorry, restructured assets? Because of those couple of accounts that we are finding a potential stress, that's the reason that it has been done. Okay. And then, what could be the... What, these are like large corporates, right? Usually, yeah, yeah, so, if you can mention the sector, are they like overseas account also, or this is more like typical industry? These are, you know, domestic ones only. Okay, sure. And the amount, ma'am, even if I look at SMA, right, it is only INR 5,000 crore. Usual trend of INR 1,000 crore, so it looks like that the increase is more like INR 4,000 crore. Yeah, exactly. Yeah, and, and against that, you have taken a, like, 25%, kind of a provisioning. Yeah, yeah, yeah. But, but, Jai, you know, the, it's not necessary that these accounts have to be in SMA. So, you know, we've looked at the overall book, and we've identified, like ma'am said, a couple of, you know, cases where we could need additional provisioning, and that's why. So it's not necessary that it has to tie up with the increase in the SMA book. Right. And, sir, if you could mention the sector of these, you know, these potential accounts, just to understand the, you know, any sector that, just to understand the sector color there? It covers, Jai. I mean, unfortunately, you know, it covers a few sectors, so... And we don't want to get into those details at this stage, as... No, Jai, these are, as I told you, these are potential, you know, numbers that we are looking at. We have been, you know, upfront about it. So we do not know how those accounts are going to behave, but as a prudent governance method, we have already provided for this. ... Sure. No, no, that is very helpful. And then a question, then there's a question on this AFS new guidelines, right? So, and in conjunction to that, there is a sharp cut in the AFS book also in absolute amount, in both SLR and non-SLR. Very sharp reduction in the absolute amount. And, and similar to that, you know, I was under the impression that treasury income may decline because of this new guidelines. So two questions here. One is why there is so much sharp cut in the AFS and non-AFS book, AFS and the non-SLR book in the AFS category, why not too much impact on the treasury income? Yeah. Yes, from treasury. As far as treasury is concerned, after the new guidelines, our AFS book will be treated, not treated as a trading book. It is a banking book. So whatever the trading position to be taken, that should be taken in the HFT book. So we have taken the position in HFT book instead of AFS book. And we strategically done the exercise, and we could able to book a similar amount of profit, which even otherwise, annual shifting, other activities are not there. Still, we were, we could able to generate a year-on-year equivalent profit. That is the main reason for generating the equal amount of profitability in the treasury during the current quarter. Right. And, sir, there is INR 150 crore of positive impact in the PNL, right? Because of this treasury, because of these norms. If you could explain, sir, what is that? That, that's a mark to market. That is a mark to market gain on that. Which is not booked. It is accounted for daily basis and even quarter end also. No, in this INR 150 crore, which has come into PNL. Value and daily impact on all, all those portfolios to be taken into account, in the PNL account. Since our HFT portfolio is having a position, which is having a positive gain, that has been added to the PNL. Okay, understood. And last question, ma'am, is... Avinash Prabhu, I mean, see, basically, this is the consequence of the new guideline, right? So you see this across the banking sector where, you know, because there's a split in the held to maturity, AFS and FVTPL, you see that these moments would happen in the first quarter, but obviously, you may see lesser volatility in subsequent quarters. Right. Right. Ma'am, in your opening remarks, you mentioned, you know, initiatives in CASA, and I think you mentioned a range of the loan-to-deposit ratio also. So, is that fair to say that, you know, loan growth in the near term, for next 1-3 quarters, you know, would be similar to deposit growth, right? I mean, as you grow deposit, you will be, you will be able to lend as well. Is that a fair understanding? Yes, yes, that is our strategy. We want to grow our deposits in line with our advances growth. But we have given our guidance for the year, and we will keep, we will be keeping to the guidance that we have given. But however, we have taken a lot of steps with regard to increasing the liability portfolio of the bank. And, as I told you in the very beginning, that, we've also taken a consultant on board to increase, you know, to give us, guidance on how to increase deposits. Plus, we also have opened, we are opening new branches, and we are also opening new, you know, premium branches at busy locations to see that our deposits are growing. We have also established a customer service excellence cell for better service and complaint management and to take care of our existing to bank customers. So there are many strategies that the bank has implemented during the last half year, and we hope to see good results, and the gap between the deposit growth and advances growth will be reduced. Okay, okay. And last question is, ma'am? Sure. See, there are a lot of questions. So hi, this is Kanika, CA. So there are a lot of questions coming on, wedge between credit and deposit growth, and this whole issue around cost of deposits. While for our bank, this quarter has been favorable, overall for the system, we've seen on a macro basis, if you actually see the RBI itself, in the latest financial stability report, has come up with an analysis which shows that in high growth phases, typically the wedge between credit and deposit growth lasts for 2-4 years. Now, in the current cycle, which has started from April 2022, this wedge has been initiated between credit and deposit growth. 26 months have passed. We still have a year to go, and the RBI itself is acknowledging that even in the next 12 months, there is, going by historical examples or experience, this wedge may persist between credit and deposit growth. So similar issue for our bank is actually for the system as a whole, and it's reflecting in our guidance too. The second point is, you know, everybody is talking too much about CASA cost of deposits. Cost of deposits today for the banking system as a whole is witnessing upward pressure. We'll be lucky in this quarter, but broadly, the risk is on the upside, purely because CASA as a segment is witnessing a structural slowdown. So there are two points. One is, of course, the structural slowdown, because households are shifting their savings mix from deposits to equity, small savings, and they are anecdotally facing that, and the money moves back to the banking system in the form of a TD or a bulk deposit. So CASA is facing structural slowdown, and in- ... high rate period, CASA usually, CASA ratio usually comes down. So that's true for our bank as well, and in fact, it's true for every bank on stream, especially in this quarter, where Q1, Q2, there's been negative CASA growth. Last but not the least, what we'll actually see is that CASA is facing a structural slowdown. The spread between credit and deposit is persisting, so the fight for deposits is real in this financial year. They are posing some upside risk to cost to deposits as well. Thanks. Yeah, sure. That, that's very helpful. Ma'am, last question is on, you know, restructuring provisions. So we have a restructuring book of around eleven, twelve thousand crore. How much is the restructuring provision that we have? And it looks like that, you know, we may be seeing ECL implementation very soon. Do you envisage any additional provisioning, A, on the total loan, and B, specifically on the standard restructured book? Thank you. Restructuring, huh? Provision for restructuring. With regard to in the meantime that we get the numbers for restructured book, ECL, we will not be having much of an impact. We have looked into that portfolio. ECL will not be having you know, a major impact on the bank's numbers. You know, the banking sector is in a relatively better position now in terms of asset quality, capital adequacy, and profitability. We will be able to absorb the impact implementation of the ECL. And I know the timelines will be given for one-year timeline to implement the ECL norms after the final guidelines. And we are, you know, the news is that it would be implemented for 2026, 2027. In this scenario, we will not have a substantial impact on our balance sheet with regard to ECL. So there, restructuring book is very small. So, you know, we'll get back to you on the- Numbers. amount, but it's only about INR 22,000 crore, and we, we'll come back to you in terms of how much, so you know, about 39% of that is NPA. Thirty-six percent. We'll come- 36% of the restructured book is NPA. Correct. So we'll come back to you on the amount provided, but it would be significantly covered in terms of provisioning. Great. Great. Thanks a lot, and all the very best. Thank you. Thank you. Ladies and gentlemen, in order that the management is able to address questions from all participants in the queue, you are requested to please restrict yourselves to two questions per person. You may rejoin the queue for follow-up questions. We have the next question from the line of Prabal from Ambit Capital. Please go ahead. Yes, thank you for the opportunity. Ma'am, just a clarification first. This reversal of penal charges that amounted to 11 basis points on that from maybe, is that the correct understanding? You're not audible. Hello, am I audible now? Yeah. Yeah. I was asking for clarification that the reversal of penal charges that amounted to 11 basis points on advanced fees, is that the correct understanding? Yeah. Okay, and, and this was for how many quarters prior? How many? Meaning how many last, how many quarters prior penal charges have been reversed in this? No, if you are referring to the penal charges which were introduced by RBI, so instead of penal interest in penal charges, guidelines you are referring? Yeah. So there is no significant impact of that movement because, all charges are generally collected again when it is applied. So compounding has anywhere, has a very limited impact, so it will not have any, significant impact in terms of amount. Okay, so would it be fair to say that next, from next quarter, this 11 basis point will get added to your loan use and it will continue thereafter? Yeah, in fact, basically, the 11% interest yield on advances has come down, primarily because INR 850 crore. Last quarter, we recovered the dummy ledger interest around INR 850 crore. As against the INR 850 crore, this quarter, the dummy ledger interest recovery is around INR 607 crore. About INR 243 crore shortfall is there because that has impacted 11% reduction in the 11 basis interest reduction in the earn on advances. And in fact, talking of penal interest and penal charges, it has not a major impact on the bank's earnings. Oh, got it. Okay, my second question is on the agriculture book that's growing pretty strong at 23%. So what is driving that? Okay, agriculture book is primarily we have grown in around 23% year-on-year basis in the last quarter. In that, we have both the KCC and infrastructure lending, investment credit towards the major focus. But that has also, our gold loan portfolio has also helped in increasing our agriculture advances. So, Agri book, you know, yes, as AD said, its gold loan increase was also there. Plus, Agri SHG, that also has grown substantially to about 30% growth we have seen in Agri SHG. Investment credit, food and agro, and all this has, you know, helped us in increasing the Agri in Agri book. Also you must be also aware that 59% of our branches are in the rural market, so that's the reason that we are having a healthy growth in our agriculture portfolio. Correct. And how do you look at their growth going ahead? Yeah, we would be growing. I think consistently we have been growing at 21% or 22% in my agri book. So it will be increasing in the same level. In the interim budget, you know, the FM also talked about, implying, you know, the growth that is, you know, rural also was the main focus of the present government, so we are looking at growth in those regions also. Agri insurance is one portfolio that we are very aggressively looking at. So my portfolio will have a good growth in the agriculture. Right. And then prior to you, agriculture book had a lot of NPAs, so after you taking charge, have you made any strategic tweaks in the way it is getting underwritten and, Yeah, agriculture, you know, NPAs are there, of course, but we have a very robust OTS system there, where we are able to immediately settle the, you know, the agriculture NPAs and also give loans apart from that. We've also seen some, you know, debt waiver schemes from one or two states. So this is, you know, reduced the NPA agriculture. We started off with almost, like, 10% in June 2023, which today we are at 8%. That's the kind of sectoral NPA that we have seen in our agriculture. It's coming down, you know, year on year. Supplement to what ma'am said, we changed our strategy for the agriculture also. Our major focus now, if you see for the last one or two years, we have focused more on the SHG fund lending also, where we are growing at a 30% and the delinquency rates are very low. Mm-hmm. In addition to that, the major NPA which was seen over a period of time was in the farm credit. That also we have changed mostly from the farm credit to investment credit also. So with all these strategy, our overall NPA percentage has come down, and it is in fact further improving with recent debt waiver, which has been announced by few of the state. There also we are finding not much, but some positive impact on our recovered debt also is happening. All right, ma'am. Thank you. All the best. Thank you. Thank you. The next question is from the line of Rakesh Kumar from B&K Securities. Please go ahead. Yeah. Yeah, thanks a lot for the opportunity. Ma'am, first question is with respect to this INR 1,296 crore, you know, standard asset provision that we have made. So, so what is the, you know, the outstanding number against which we have, you know, made this kind of provision? Very good, sir. So, Rakesh, we will not be able to tell you the exact number against which we have created. These are the general provisions we have made. But, as you will find that, some of the accounts are already appearing under the SMA zero category also, and some are not, still not appearing under the SMA category also. So there are a couple of accounts, for which we have made the, additional provision on this, the standard, provisions we have made. Correct. But, sir, generally, like, whenever we see such scenario, we generally start with 50% provision. Sorry to interrupt, Rakesh. We're not able to hear you. No, I was saying, I was saying, ma'am, that generally, whenever there is such occurrence, we have start with making 15%-20% provision. Right, ma'am? Yeah, yeah, it will be a similar line only. Twenty percent? Twenty percent. Yeah, 15%-20% provisions. Correct. Correct. Correct. Ma'am, can you tell me, this, the interest income coming into the, NII line, this quarter it is INR 607 crore. Last year, FY 2024, we had, three thousand sixty-five crore. So, so would we, like, you know, reach similar kind of a number of INR 3,100 crore in FY 2025? Yeah, yeah. This being the first quarter, we were aware that this quarter we had election and all transfers and has happened. So there was slightly, the recovery itself was slightly muted because of the various factors. One of that majorly is because of the election also. So we hope that enough, that as we have already projected INR 16,000 crore of recovery in NPA, so we'll be able to meet, meet INR 3,100+ crore of recovery in the, the major interest. Okay. And, ma'am, this, the small and marginal farmer, now we have 11.3% as against requirement of 10%. So, like, this quarter, we have sold quite a lot of, like, you know, and we have gained quite good gain also of around INR 950 crore. So what is the sustainability of that number, considering that now we have a new base of, uh, uh, ANBC as compared to fourth quarter, we had 13% similar number. So, like, like, you know, what is the prospect of this, you know, this PSLC still remaining, uh-... winning quarters also? Yeah, PSLC usually we gain in the first quarter. We do not do this in the next quarters also. But the small and marginal farmers, we will be able to sustain those group. As I told you earlier also, that our growth in agriculture is quite substantial, you know, it's quite good, and we will be able to meet this requirement of MSMEs on a quarterly basis. Thank you. Thank you so much. Thank you so much. Thank you. The next question comes from the line of Sri Karthik Velamakanni from Investec. Please go ahead. Thank you. I have a question on the AFS book. You mentioned our excess liquidity is roughly INR 65,000 crore, whereas the AFS book itself aggregates to INR 25,000 crore. So how do you intend to really deploy this excess liquidity, because largely locked in the HTM portfolio? We have kept the AFS portfolio after the new guidelines. It will be treated as a banking book, not a trading book. Whatever the excess liquidity we provided, depending upon the requirement, we have taken strategic position in the different segment to generate additional gain on account of fluctuation in the bond yields, as well as expectation of the rate cut. Accordingly, we have positioned ourselves in various segments to take the advantage of the market movement during the current fiscal. Yes, sir, but, part of the liquidity will have to be sold from the HTM book also, right? We kept, depending upon the requirement, 60, 20, 20%, and it can be easily accessible and can be disposed of as and when required, liquidity requirement. It will be in short instruments, which can be disposed of as early as possible, which will not be kept in HTM portfolio. Understood. And on a, in this quarter, what is the percentage of recovery in our net interest income? Recovery. The recovery is around INR 607 crore for the June quarter. All right. Thank you. Yeah. Non-interest income. Just to clarify, your question is on the recovery and written-off accounts. In the non-interest income, it's INR 954 crore. Yeah, no, this was a dummy, dummy ledger coming there. Okay. Thank you. Thank you. Thank you. The next question comes from the line of Nikhil Agarwal from VT Capital. Please go ahead. Nikhil Agarwal, the line is yours. Please proceed with your question. As I said, we will move to the next question, which will be from the line of Kunal Shah from Citi. Please go ahead. Yeah. So on gold loan, what is the quantum of gold loan out of this INR 190,000 crore, and what was it year prior to that? And what would be the GNPA out there? Seventy-eight thousand. Hmm. Yeah. Yeah, so the portfolio of Agri gold is about INR 67-68 thousand, and out of that, INR 66 thousand is in agri. Okay. So in agri, it is and, this 66 compared to last year? 43,000 Okay, so 43 growing to almost 60- INR 43,000 in 2023. Okay. Okay. And, in terms of the GNPA out there, how would be the GNPA proportion in that portfolio? In gold. In gold? Yeah, in agri gold. GNPA is around approximately 0.02%. Okay, okay. So assuming that, INR 66,000 crore is almost zero, so when we look at the agri GNPA at, maybe almost 8.13, then ideally on the other proportion, it should be relatively on the higher side. So what improvement we are seeing from 9.92 to 8.13, that's primarily coming because of almost like zero, GNPA on the agri gold loan. Yeah, that is one area. Similarly, in the SHG also, the NPA, GNPA is very low. Exact number is less than 2% in the SHG portfolio also. And when we move towards the investment credit, there also the GNPA is low. Primarily, the GNPA was high on account of the farm credit, which is gradually we are not increasing much on the farm credit, but on in other area, we are increasing our portfolio. So not only the gold, even the SHG and also the farm investment credit has helped the bank to improve the reduction in GNPA in the agriculture portfolio. Okay. Okay. In terms of the standard asset, you mentioned, like, it could be 15%-20% provisioning on the outstanding on an average, and there would be only couple of accounts which would be there in that provisioning.... So that, that's true. And any, and, Yeah, that's right. Yeah, and, any impact on interest income because of that? Currently, no impact. Okay, so interest is still getting recognized on that? Yes. Yeah. Okay. Okay. Yeah. Thank you. Thank you. The next question is from the line of Rahil Shah from Crown Capital. Please go ahead. So, me? Sir, you may proceed with your question. You are audible. Yes. There is just one, I'd like to know, where is our return on assets and cost to income headed, ahead? So if you have any guidance or outlook for FY 2025. The cost-income ratio, you know, we are in the 44% range, forty-four point zero eight percent. So, in terms of guidance for cost-income ratio, while we, you know, not formally given out any guidance, we expect to be in the range of about 45%-45.5%, somewhere there. So it will be between that 42% range to the 45.5% range. The reason why we say this is because, you know, if you look at, our peers, they have a much higher cost-income ratio, so we have room for investment. And that's the reason why we don't... We're not actively looking at, you know, bringing this down further. ROA, you know. ROA, we have given a guidance that will be above 1%, and, you know, that's what we've achieved in Q1. Any further room for improvement on ROA expected ahead? We will obviously, I mean, you know, I think, you know, ma'am, in her opening remarks also said that we will not chase growth for the sake of growth, and we'll obviously keep in mind the metrics. So, obviously, we will look at opportunities to improve the ROA, but we don't want to give any specific guidance on that. Okay, okay. And any branch opening targets? Have you released that as well? Branch opening targets. Yeah. Branch opening, yes, we are looking at opening branches at rural and semi-urban locations and other locations also. We have also rationalized about 25 branches in the current year, last year, of course, and this year we would be opening about 200-250 branches. And basically, these branches will be in the premium kind of a branch. We opened 28 premium branches in this year, and these branches, we've also taken lot of analytical tools to and digital tools to see that you know, the branch locations are properly done, and especially in high-growth centers, we are looking at opening of branches. Okay. Okay, ma'am. Thank you. Thank you! Thank you. The next question is from the line of Ashesh Tandon from Kotak Securities. Please go ahead. Hi, team. Good afternoon, and congratulations on the good numbers. First question is on the fee income front. The growth in fee income was quite strong in this quarter. Are there any exceptional items here? Yeah, you know, like we covered earlier on the call, PSLC fees, we've got about INR 955 crore. That is generally a Q1 event, so we, we would not see that recurring in subsequent quarters to this extent. But I'm referring to just the fee-based income, which is INR 2,868 crore for the quarter. I believe PSLC is separate from that, no? No, that's included in that. Okay, perfect. Secondly, if I look at the provision on investments, there has been a reversal in the last couple of quarters. Can you elaborate what is causing this? First half year on was new accounting guidance taken place. Earlier, whatever the MTM gains are there in AFS portfolio, that will be taken in the P&L account. But during the current quarter onwards, the AFS book will not be a trading book, it will be a banking book. And on a daily basis, mark-to-market with the fair value will be happening, and whatever the impact will be there, that will be taken into P&L account. Accordingly, current quarter, there is very limited scope. In the earlier quarters, that option was available. Now, in the new guidelines, the MTM gains on the AFS books were not available. That's the reason it is showing that. Thank you, sir. I was referring actually to the provision on NPA, non-performing assets, that has been negative in the last quarter. As far as the non-performing investments are concerned, we will provide 100% provision. Due to a variation in the market value of those equity instruments, which has resulted into gain, that has to be reversed back. That is why there is a INR 300 crore reversal is there in that segment, which is shown as a reversal of MTM gain on the NPI item. Lastly, on the recoveries from return of accounts, which goes into non-interest income, that item was also fairly strong in this quarter. Given that this was an election-related disruption quarter, were there any one-offs in this INR 955 crore number? No, no, these are, mix of various, accounts. It's not, one-off item is not there. On an average, we recover around INR 1,000 crore plus, in technical write-off. Last year also, it was INR 4,000 plus, for the entire year. This year also, we expect a better recovery, because we have kept a higher target for, overall recovery, and accordingly, our PW recovery also will be, four thousand plus, which, earlier also we have discussed. ... Thank you, sir. If you just allow me to squeeze in one more question. I request you to please rejoin the queue. Okay, thank you. The next question is from the line of Anurag Mantri from Oxbow. Please go ahead. Yeah, hi. Thanks for the opportunity. So two questions. One is on the credit cost. So I think this quarter is calculated as a percentage of the net loans, which is about 1.26%, and I think your guidance in general has been about less than 1% for the year. So do you see that you have levers to reach that less than 1% mark by the end of the year? That's number one. And the second question is regarding the ECL. In fact, if you can just quantify that amount and if you know the capital raise that you're planning of about INR 6,000 crore, is that related to, you know, the ECL impact, if at all? Thank you. Credit cost, what did you say? You said, impact is 73 basis points, and then, yeah, we've given a guidance of less than 1%. So yeah, we will, we're looking at sticking to that. So, as in the credit cost, annualized number for this quarter is 1.6% on net loans. That's higher than the 1% that you've guided for, is my understanding. So just wanted to get a sense of what the levers will be to, you know, get that 1.6 down to 1 through the year. And looking at the gross numbers, you know, ex the recovery. Our credit cost is a 73 basis. I know. Yeah. It's on the standard as well. Yeah. We're competing on net loan definition. Okay. So we, I mean, we look at it from the standard, you know, advances point of view. So that is what we are looking at in terms of guiding. So we would look at, you know, keeping a control on that, you know, unless there's any one-off event. But that is what we're guiding in terms of, you know, keeping it below 1%. Got it. And the second one on, the capital raise and the ECL? Yeah, on the capital raise, you know, like was mentioned earlier, you know, we've got a board approval for INR 10,000 crore. We will look at the opportunities in the market. Obviously, we currently have a very strong capital, you know, ratio, so we don't immediately see a need for capital. But if there is a growth in our advances book and an increase in our risk-rated assets, we will approach the market at the opportune time. But it is not ECL. ECL, ECL. Oh, it's not related to ECL, no. No. It does credit. Got it. Could you quantify the ECL impact, roughly? Thank you. No, ECL, no. So, you know, we have been monitoring ECL over the past, you know, few years. The gap between what is required under ECL and what's required under the, you know, the current accounting norms has narrowed down significantly. We obviously are waiting for the final guidelines on ECL because the governor has, I mean, the Reserve Bank of India has indicated that they may finalize the ECL guidelines this year. But the gap has narrowed down significantly. We are not in a, you know, position to, you know, publicly mention that number. Well, thank you so much. Thank you. Ladies and gentlemen, we will now take one last question, which will be from the line of Nikhil Agarwal from VT Capital. Please go ahead. Mr. Nikhil Agarwal, your line has been unmuted. You may proceed with your question. Right. So my question. I have two questions. One is with regard to the share of the standard accounts that may be potentially stressed. Like you said, there could be a 15%-20% provision. So assuming a 20% provision, the amount comes to INR 6,500 crore, and the SMA is 5,000 right now. So my question is how... Like you said, some of the accounts have come and some have not come into SMA till now. So what is the bifurcation, if you could explain that? And secondly, like you mentioned, the different efforts of shifting from farm credit to investment credit, which is helping in bringing AG NPA down. Similarly, what are the efforts in bringing MSME NPA down as well? Because that is also significantly higher at 8%. These two questions, please. Yeah. With regard to MSME NPAs, bringing it down, if you can see my, if you look at my NPA, sorry, the MSME book, almost 50% of my MSME book is in the micro advances and which is, you know, 170% collateral is available in the form of PDP MSME. So we are, you know, very mindful of that. And, of course, with the other sectors of small and medium, there is a robust mechanism to improve underwriting, and of course, the recovery mechanism also is good. Plus, we have got substantial collaterals in those accounts, so, we are not... That's the reason that if you see the NPAs in my MSME book is coming down. With regard to your question of SMA, you know, the total SMA book consists of about, if you look at the June 2024 book, it's about INR 5,144 crore, and that's differentiated between retail, MSME, agriculture, and the corporate. So that's the number that we have. Retail is close to about INR 200 crore, MSME, about INR 1,000 and odd crore. Agriculture is also to that extent. So it is equally distributed among the portfolios. No, no. No, no. No, but see- Yeah, yeah, yeah. Yeah. See- It's a long standard. No, yeah. The only thing is, you have to understand that, see, some of the things, maybe the interest, as already we are replied, the interest would have come, and but we may be entering into a ICA because of some default in somewhere else, where there'll be some restructuring will be going on. These are all in a very fluid stages. We are hoping to resolve it quickly. Otherwise, as a precaution, it has been done on it. Yeah, you know, like, like we mentioned in the most of the accounts, this, this is on a prudential basis, right? So, therefore, we have just looked at our accounts and we've said, "Okay, fine, you know, the INR 1,200 crore probably seems to be appropriate at this point in time, and will cover our risk." And that's what we've done. We're not getting into the further straight into how much is SMA, how much is standard, et cetera. That's the number that we have in mind in terms of what could be the right number for this quarter. Thank you. Thank you. That would be our last question for today. I would now like to hand the conference over to the management for closing comments. Yeah, good afternoon to all of you. So we are, as you can see that, despite the difficulties or the challenges happening in the banking sector, we are focused on only one thing, is that is on a sustainable and steady performance for our bank. And, as already explained in our opening remarks by Madam, that we have already taken a lot of initiatives to counter these challenges which are happening, and we will be more focused on that. We can assure you that the management is focused on the dynamic changes and the challenges happening in the market, and we hope to get the same amount of support and cooperation from all of you. Thank you very much. Thank you very much.