SBIN — earnings call
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Prepared remarks
MR. SWAMINATHAN J · Management
MANAGING DIRECTOR (CORPORATE BANKING & SUBSIDIARIES) MR. ASHWINI KUMAR TEWARI MANAGING DIRECTOR (RISK COMPLIANCE & SARG) MR. ALOK KUMAR CHOUDHARY MANAGING DIRECTOR (RETAIL BUSINESS & OPERATIONS) MRS. SALONI NARAYAN
DEPUTY MANAGING DIRECTOR (FINANCE) · MR. CHARANJIT ATTRA
MR. CHARANJIT ATTRA
CHIEF FINANCIAL OFFICER · MR. SANJAY KAPOOR
MR. SANJAY KAPOOR GENERAL MANAGER (PERFORMANCE, PLANNING & REVIEW) State Bank of India February 03, 2023
Moderator · Conference Operator
Ladies and gentlemen, good day and welcome to State Bank of India's Q3 FY'23 Earnings Conference Call.
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 the conference call, please signal an operator by pressing ‘*’ then ‘0’ on your touchtone phone.
Please note that this conference is being recorded.
I now hand the conference over to Mr. Sanjay Kapoor, General Manager, Performance Planning and Review from State Bank of India.
Thank you and over to you.
MR. SWAMINATHAN J · Management
Namaste and good evening, ladies and gentlemen.
My name is Sanjay Kapoor and I'm the General Manager, Performance Planning and Review Department of the Bank.
On behalf of the top management of SBI, I extend a warm welcome to all of you joining us today
On your exposure to a large group, in press, you made some comments that is 0.86% of total exposure.
But, what is the total exposure, because we get to see only gross advances and your –
Dinesh K Khara
0.88% of our loan book, which is Rs.31 lakh crores-and-odd.
MR. SWAMINATHAN J · Management
This includes all the sanctions across all offices?
Dinesh K Khara
It's outstanding exposure across all outstanding.
MR. SWAMINATHAN J · Management
But sir, you wouldn't talk about your sanctions?
Dinesh K Khara
I think as of now what is material is that only.
MR. SWAMINATHAN J · Management
Because like PNB disclosed their sanctions, right, so –
Dinesh K Khara
It is their prerogative and normally we don't entertain questions relating to a particular account, because there's customer privacy issues involved.
MR. SWAMINATHAN J · Management
What do you think is the outlook on deposit growth and therefore margins?
Operating performance has been phenomenal.
Deposit growth is not great, but you don't even need it, because you have been running the lowest CD ratio amongst the lowest CD ratio in the industry on the domestic front.
Do you think margins sustain at the 3Q levels, do they drop, when do they drop, how does deposit growth accelerate?
Dinesh K Khara
As of now we're having excess SLR to the tune of about 3.2 trillion.
And we are very mindful… I've said it in the past also, deposit is a franchise and we always remain mindful of the depositors interest.
So, in the buckets where we feel that we can attack the retail deposit, we are ensuring that we must be in line with the market trends.
And that's the policy which we have adopted, and we'll continue to follow that.
So, based upon that, since you are also acknowledging the fact that we still have one of the lowest credit deposit ratios, depending upon the need, we will be calibrating our interest rates.
But I would also like to mention that about 74% of the loan book is linked to either EBLR or MCLR and out of this 74% I would say about 40% would be on account of MCLR.
If at all, we increase the deposit interest rates, that will also give us elbow State Bank of India February 03, 2023 room for increasing the MCLR which will help us in ensuring that the NIM should not get adversely affected.
MR. SWAMINATHAN J · Management
So, more or less stable NIMs from here on?
Dinesh K Khara
I expect that, hopefully.
Moderator · Conference Operator
We have our next question from the line of Rahul Jain from Goldman Sachs.
Please go ahead.
MR. SWAMINATHAN J · Management
Just a couple of questions. #1, on the provisioning bit, we've seen a jump in standard asset provision in this quarter and I think outstanding standard asset provisions are about Rs.23,000 crores.
So, just wanted to understand why are we carrying such a large provision here, is there an element of contingency also that has been factored in here?
Dinesh K Khara
Yes, there is one of course is our loan book has grown, that has also led to an increase in provisioning because we are required to maintain standard provision for the standard assets also.
Secondly, of course, we are always very mindful of, if at all, we get to see any kind of stress on the ground in any of the accounts, we do make some provision which are floating in nature, and much of it will depend upon what is the trajectory of the account, and accordingly, we crystallize those provisions.
So, partly, it is on account of our increase in the loan book and partly it is on account of our policy in terms of making the provisions proactively as against after the occurrence of the event.
MR. SWAMINATHAN J · Management
This translates into roughly about 75 to 80 basis points of the loan book.
Fair to say, 30 to 40 basis points may have been built just for any future contingencies?
Dinesh K Khara
Yes, could be like.
As I mentioned that if at all we get the visibility of any kind of stress in our loan account, we rather believe in making provision afront.
MR. SWAMINATHAN J · Management
Standard asset provisioning?
Dinesh K Khara
Yes.
MR. SWAMINATHAN J · Management
Just on this provision for employees of Rs.5,429 crores in this quarter, what is the element of one-off here or this is going to be the recurring quarterly number?
Dinesh K Khara
No, we have a provision relating to our wage revision which is about Rs.996 crores is on account of that.
And other than that, the provisions which have been made based on the actuarial assessment for our retirement liabilities, etc., So, it is as per the –
MR. SWAMINATHAN J · Management
So, this additional provision of Rs.996 crores, would you be making this every quarter?
State Bank of India February 03, 2023
Dinesh K Khara
On an average, it is for every month, it comes almost about Rs.500 crores, that will be the provision which will be required to make to meet the liability relating to the wage revision.
MR. SWAMINATHAN J · Management
I missed out on the number.
Can you please repeat?
Again, going back to the exposure, that is of course in the public discourse, can we get some more color as to the exposure –?
Dinesh K Khara
Towards the end of this meet, I mean, after I complete all your answers, I will make some comprehensive statement relating to the exposure to that particular group.
Moderator · Conference Operator
Our next question from the line of Ashok Ajmera from Ajcon Global.
Please go ahead.
MR. SWAMINATHAN J · Management
Given the asset quality has improved tremendously, overall performance of the bank is so robust, that even if there is any problem concerning to this large group, which may not be even in the top-15 group of yours as far as the exposure is concerned, I don't think the bank like State Bank of India will have any kind of problem when you are operating profit itself is Rs.26,000 crores per quarter.
So, having said that, sir, we will wait for your final comments on the total overall exposure to the fund base, non-fund base, bond, equity, foreign bonds, which you have assured that you will give the statement at the end of the question-answer.
Having said that, sir, I have some data points and some information.
We have gone slow in this quarter on the corporate credit.
So, what is our ratio which we'll settle down if you take the whole FY'23, by March the composition between the RAM and the corporate?
Dinesh K Khara
I think it will be more or less where it is in the month of December, it will be a marginal movement for many of the segments.
MR. SWAMINATHAN J · Management
If we go on the income side, the other income has gone up to Rs.11,467 crores from Rs.8,874 crores in the last quarter.
And I think the major part of is the income from the treasury, the profit and sale and revaluation of the treasury is Rs.2,937 crores as against Rs.457 crores in the last quarter.
Whether this trend is going to be continued in the coming quarter January-March also?
Now, with the interest rate almost picking up, maybe another 25 basis points, where do we stand on the treasury side, sir?
Dinesh K Khara
As far as the treasury side is concerned, there are two components; one, of course, is the improvement in yield on investment; and secondly in this quarter, we have booked some MTM gain which is about Rs.2,200-odd crores which is more of a write-back, if you recall in the first quarter we had made MTM loss which was about Rs.7,500 crores.
We had some MTM gain last State Bank of India February 03, 2023 quarter also which we did not book, for the reason that we had seen the yields were somewhere again shooted.
So, that is the reason why we did not book at that stage.
But we have seen that yields are now coming within the range and that's the reason why we have done this.
So, I think that is the major reason when it comes to the kind of movement you're observing in the treasury net results.
Other item is, we had some derivatives which are again rupee-dollar swap which we have done.
Some loss component is there on those derivatives.
So, that is also booked in that particular head.
MR. SWAMINATHAN J · Management
Our credit cost and cost-to-income ratio both have improved tremendously.
Do we see this trend to continue like cost-to-income coming down even to this low level?
Dinesh K Khara
I think for the quarter-ending March '23 I can say for sure.
And I think we will be in a position to give some guidance as we move further.
It has also been a function of how in general macro economy will be moving.
But nevertheless, as of now, it looks like that for the quarter ending March '23, we should have similar kind of a credit cost.
MR. SWAMINATHAN J · Management
How much provision is on PLI the bank has made for the nine months?
Dinesh K Khara
PLI provision would be in line with what the number is likely to be, it would not be a very significant amount and it would be a very small number which is there; so, the 5% increase it is five-days salary and for 10% it will be 10-days salary, so it would not be a very significant component.
MR. SWAMINATHAN J · Management
But we have already made the provision for this?
Dinesh K Khara
That's always there.
We have so many pockets where we are keeping so much of provision; non- NPA provision is as high as about Rs.33,000 crores.
MR. SWAMINATHAN J · Management
Yes, sir, I think the concern of the market is absolutely unbounded.
But anyway, all the best to you.
I think the sooner or later the market will understand the economics of the bank's financial.
Moderator · Conference Operator
We have our next question from the line of Anand Dama from Emkay Global.
Please go ahead.
Anand Dama
We've heard about a lot of resolutions in the pipeline right now, like SKS Power and all.
Do we have any resolution pipeline, particularly for the fourth quarter and over next six to nine months?
Dinesh K Khara
There are so many resolutions are in pipeline, but when it will get crystallized, because it is always a process which is carried out in all these matters, and how much time it will take at each of the step is actually at times is not very certain.
So, that is one of the reasons why saying it so much of certainty that in the last quarter we'll have so many resolutions coming through, it will not be in order for us, but nevertheless I will ask Mr. Tiwari if at all, he can give some color in this direction.
State Bank of India February 03, 2023
Ashwini K. Tewari
There are many cases which are at final stages, but we cannot be sure, since it's in various legal proceedings, tough to give a timeline or a date… I will give a high level number going forward.
Anand Dama
Secondly is the outlook on margins.
I think this quarter also, we have seen a meaningful margin uptick.
We still have some room in terms of LDR improvement, and as you said that MCLR also would increase as basically the cost increases.
Dinesh K Khara
I would suggest that as guidance part is concerned, I would like to keep the guidance at this level.
If at all, there will be room for improvement, we will certainly ensure that.
Incidentally, this NIM also, it would have been even better, because in the last year we had the interest on income tax refund which was as high as about Rs.2,400 crores, this year we have got income tax refund, which is just about Rs.800 crores.
So, that is other reason.
It will have an impact of about six, seven basis points overall, but yes, of course, if at all we do apple-to-apples comparison, change can be even better.
So, this is just for information.
Anand Dama
Yes, sure, I think that should also play out in the fourth quarter, right?
Dinesh K Khara
Hopefully, let's hope for the best.
Moderator · Conference Operator
We have our next question from the line of Abhishek Murarka from HSBC.
Please go ahead.
Abhishek Murarka
Actually, just one request when you make your comment on the large conglomerate.
If you could clarify whether this Rs.27,000 crores include the LCBG, non-fund based and overseas loans, at the cost of repetition just requesting that?
And also, if you also clarify that if there's a refinance opportunity within that?
Dinesh K Khara
Sorry, I missed out the second one.
Abhishek Murarka
The second one is if there's a refinance opportunity, given that your large exposure framework while is there a lot of headroom and the group like several projects appear to be credit-worthy, then would you do it.
So, just these two things if you could cover in your comments, maybe now or later, whatever, that would be very useful?
Dinesh K Khara
I think second question I can answer you right now, that is if at all any refinance opportunity is always evaluated on merits.
So, for me to say that anything right now will not be in order and as and when such demand will come, we have not received any such demand.
If at all, any such request will come, it will be evaluated only on merit.
And while evaluating, we are always very mindful in terms of the stake of the promoter or of the entrepreneur and the kind of risk which it is and based on that very comprehensive assessment only views are taken.
It is not merely simply one request comes and we grant the facilities, let me just clarify.
Abhishek Murarka
My second question is actually on the international loans.
I think a couple of quarters back, we were talking about being a little aggressive there looking for opportunities outside.
What is the State Bank of India February 03, 2023 outlook there, sir – in next one year, are we looking to grow that maybe to a higher percentage of loans, what's the strategy?
Dinesh K Khara
In terms of dollar, our international book has grown by about 9.15%.
When we converted on the RALOO rate, it looks like that it is at about (+20%), in terms of dollar, it is just about 9.15%.
And now, our focus is for improving the NIM as far as our international book is concerned.
So, that is the reason you might have observed that our NIMs have improved significantly; we have moved towards 1.67 as far as our international NIMs are concerned and it is on a quarter-on- quarter basis an improvement of about 23-24 basis points.
So, that's how it is.
And when it comes to the composition of the international book, it is essentially local lending in those markets which is not necessarily to the Indian corporates only, it is even to local corporates.
And we are participating in the local syndications.
And also, when it comes to India linked loans, they are majorly ECBs, and they are ECBs to either AAA or AA rated entities only.
And that's how this whole complexion is.
Apart from that, the last component is trade finance.
Trade finance book wherever we are getting the margins, we are participating on the platforms, wherever we are inefficient to get the margins, there we are actively involved.
Abhishek Murarka
And margins in the international book should hold up around current levels.
Dinesh Kumar Khara
I hope that we should be in a position to maintain at this level, if not improve.
Abhishek Murarka
And just one question I squeeze in on SME.
Now for several quarters that book was not really growing, and this quarter there is about I think 10% QoQ jump in that book.
So, if you could share just, you know, know what has changed?
Is it a change in product geography, you know, customer, focus?
What has really changed over?
And whether this is sustainable?
Dinesh Kumar Khara
Yeah.
In SME, we have invested well in terms of structures, in terms of capacity building, and also in terms of focus.
That is something which has been important for the last about a year plus, and the results we are now in a position to see last quarter also, we saw a decent growth in SME book, and this quarter also we are seeing a decent growth in SME book.
And herein I would like to mention that we are having a focus on the distributor finance, vendor finance, balance sheet- based lending, and also we have come out with another known product which is essentially run through YONO, which is a preapproved business loan where we are looking into the transactions in the current accounts, and based upon their transactions we are in a position to offer the loans to all such entities also, which are actually small in nature.
But this is something which is becoming very popular.
So, these are some of the contributing factors, and we have grown SME by almost 43,000 crore on a year-on-year basis, and these are some of the contributing factors.
Moderator · Conference Operator
Thank you, sir.
We have our next question from the line of Kunal Shah from Citi Group.
Please go ahead.
Kunal Shah
So, firstly, sorry, just to touch upon in terms of the recoveries and upgrade, so ex of the resolution which you have highlighted, maybe the run rate which is there for this quarter of 1,700 odd crores, should that be the normalized one or this is relatively on the lower side?
Dinesh Kumar Khara
No, actually, recovery if you are seeing here also, we have to keep in mind that last year about 1,692 crores was on account of a particular account.
It was one account.
So, if we ignore, if at all we have to do the apple-to-apple comparison, then perhaps our growth in recovery this quarter is as high as about 18% to 20%.
So, I think we expect that going forward, we don't have chunky accounts, which are awaiting resolution.
And perhaps it might take little longer also, but nevertheless, I mean, the kind of efforts which have been put in in terms of OTS, in terms of NARCL, and those kind of things have helped us in sort of ensuring that it always happen faster.
And we expect that we should be in a position to maintain this kind of a number at least in this quarter also.
Kunal Shah
So, compared, like when we look at it say in Q1, Q2, it was somewhere around 5,200 odd crores.
Last whole year it was 21,000 crores in terms of recoveries plus upgrades compared to may be almost like 1,600 crores kind of a number for this quarter.
So, you are saying maybe ex of the any resolutions this can ideally be the run rate even though focus is there in terms of improving it.
Dinesh Kumar Khara
Actually, since, you know, you would have observed that the stock has come down quite a lot.
The NPA itself is now less than 100,000 crores.
So, that itself will leave the, I mean, these are also the amount is also small in each of the cases.
So, each of the resolutions, when it comes to efforts, it takes almost the same amount of effort, but the recovery may not be as commensurate to the efforts.
So, that's why, you know, the number may look small, but in terms of the recovery, it will be a sustained effort.
And normally, we get to see some kind of a better recovery in the last quarter.
We hope that there will be a marginal improvement over whatever we have done this quarter.
Kunal Shah
And secondly, in terms of the corporate exposure and say getting into infra, there is some rundown of almost 15,000 odd crores say in telecom and even in power.
So, is it more of a State Bank of India February 03, 2023 repayment of the account?
Or is it a refinancing at the lower rate by the competitor what is actually leading to that?
And what would be the overall outlook on corporate trade growth?
Dinesh Kumar Khara
No, corporate credit growth we have got proposals in pipeline is about 1.9 trillion, and the availment is yet to be taken both in term loan and working capital and the utilization.
That would be about 1.10 trillion.
So, overall, about 3 trillion is the number in the corporate book which we are having some possibility of converting into at least.
Unutilized will certainly happen.
I mean, one positive trend which I must mention is relating to the availment of term loans and the non- availment of term loan has come down quite a lot, and that is normally it augurs well because generally, after that, the working capital improves.
So, I think with that kind of a scenario, I expect even working capital utilization will also improve.
It has come down from about 56% to 54%, but we have also seen the increase in credit growth.
Sanctioning has gone up by about 24% as far as the large corporate credit is concerned.
So, I think overall I expect that will have a good visibility of opportunities coming in here, and also the quality loan we should be in a position to extend.
Kunal Shah
And on telecom exposure and power, anything specific, particularly in this quarter?
10,000 crores of rundown in telecom?
Dinesh Kumar Khara
This is actually year-on-year rundown.
This slide #10 carries the year-on-year prediction.
And this is usual repayment as well as the reduced utilization in couple of accounts.
Kunal Shah
So, compared to like September, September also it was almost 43,000, 44,000 crores, and that's down to 20.
Dinesh Kumar Khara
Some of the PSUs also there would be some repayment which would have come.
Ashwini Kumar Tewari
Compared to bonds as well.
Kunal Shah
So, these are the repayment.
It's not like refinancing and maybe some kind of rate competition and losing out to the competition.
Dinesh Kumar Khara
No, not at all.
Moderator · Conference Operator
We have our next question from the line of Jai Mundra from B&K Securities.
Please go ahead.
MR. SWAMINATHAN J · Management
Sir, last time you had given a loan growth range of around 14% to 16% for '23.
In this quarter, as you said corporate growth usually have some seasonal uptick in the fourth quarter.
And you mentioned a decent amount of pipeline which is there, which could be disbursed.
What would be your, you know, outlook on the loan growth for the full year and for '23 and maybe beyond, if possible?
State Bank of India February 03, 2023
Dinesh Kumar Khara
I expect that the loan growth should be somewhere in the range of 14% to 16%.
I still maintain my expected indication, which I had given last time also.
MR. SWAMINATHAN J · Management
And sir, you had mentioned your SLR at Rs.
3.2 trillion, and within which, sir, how much would be the scheduled redemption?
Because that is what possibly will help you offset the deposit thing?
I mean, what was the scheduled redemption amount out of this?
No, because, sir, your loan to deposit ratio is now 73, right.
It is lower relatively, but it is still…
Dinesh Kumar Khara
If at all we put the IBG also.
If at all we look at domestic, it would be somewhere around 66, 67 only.
IBG funding is very different.
You know, for IBG funding, we run our international banking group more like a corporate bank, and there the loans are not necessarily funded from the deposits.
Ashwini Kumar Tewari
Predominantly borrowing, market borrowing.
Dinesh Kumar Khara
They are predominately market borrowing clients etc., etc.
MR. SWAMINATHAN J · Management
So, speaking on overseas thing, sir, this quarter, the book has been flattish on QoQ basis.
So, how should, I mean, and you mentioned that the dollar term growth is only or, let's say, around 9%.
How should we look at the growth in overseas book, sir, specifically going around assuming in dollar terms you may give?
Dinesh Kumar Khara
We are very mindful in terms of the NIM, which we are generating there, and that is the reason.
It was a conscious effort.
It is not that we are not having opportunities.
Since we are trying to maintain the NIM, improve the NIM, that is the reason why we are at this level.
And considering the kind of economy which you are seeing across the globe, 9.15 in the international space is a decent number.
And today this group is comparing, is actually contributing 15% of total loan book of the bank.
MR. SWAMINATHAN J · Management
And sir, one question on your agri loan growth, right.
So, your agri loan growth has been consistently lower than overall loan growth, right.
In this quarter, this is like 11%, 12%, 11%, and the overall loan growth is 18%, 19% or 18%.
And as of FY '22, we were PSL deficient.
Now so what are you thinking in terms of PSL compliance, especially on the agri side, because that growth has been very lackluster whereas the overall growth has been reasonably strong?
Dinesh Kumar Khara
There are, in fact, the way we started working on SME, we have already started working for agri also.
And we are trying to actually work in terms of the realignment of the agri book, and that State Bank of India February 03, 2023 process is already on.
Earlier we were into low value or small value working capital loans only.
We have already done about 40% of this book has become agri gold loan, and the remaining book also we are looking at it how can, in fact, we are already working on it, high value agricultural loan as well as getting in to the agri finance for the agri techs and agri infrastructure.
So that is something which we are working on.
And this is the result of that conscious effort, which has been put in.
And hopefully, we will be in a position, we have set a target of 3 trillion for the financial year '24 for this book to reach, but we are quite hopeful that in this quarter also, we will get to see a decent growth, and we are much on course as far as our internal target is concerned.
Ashwini Kumar Tewari
PSL is also contributed by SME and affordable home.
So, there are other contributors for the PSL, not only agri.
Moderator · Conference Operator
We have our next question from the line of Adarsh Parasrampuria from CLSA.
Please go ahead.
Adarsh Parasrampuria
Sir, my question was on the exposure.
So, I will wait for your comments.
Moderator · Conference Operator
We have our next question from the line of Prakhar Agarwal from Elara Capital.
Please go ahead.
Prakhar Agarwal
Just two things and one data keeping.
What is the SR outstanding on our book?
Dinesh Kumar Khara
SRs have already been provided for whatever SRs were there, we have 100% provided for those SRs.
It's about 7,000 odd crores.
Prakhar Agarwal
So, they were provided during this quarter or they were already provided earlier?
Dinesh Kumar Khara
I think last quarter, last to last quarter.
Last year itself we had provided for it.
Prakhar Agarwal
Secondly, when I look at the margins, you probably said that we will be able to sustain the margin.
So, when I move into FY '24, should there be a cognizance that we should be essentially be equal to average of what we have reported in FY '23 because we have seen a sequential uptick State Bank of India February 03, 2023 in FY '23 at every quarter?
So, to that extent, if I were to average that out despite the cost which will happen, we probably will be maintaining a similar NIM in FY '24?
Is that fair to assume?
Dinesh Kumar Khara
Our effort, that is where our effort.
Prakhar Agarwal
And just last bit on this your trading.
So, probably you said that around 2,200 crores of unwind that we have probably seen this quarter.
Now in Q1 we had around 7,000 odd crores.
So, when do we expect the balance to get unwind over a period of two, three years?
Or how we should look at it?
Dinesh Kumar Khara
No, we have already provided for that 7,500 crore we had already provided for that no?
Prakhar Agarwal
No, sir, of that around 2,000 crores you said that this is that quarter NIM and this quarter.
So, the balance…
Dinesh Kumar Khara
It's a MTM part only.
How the yield will move, it will be a function of that no?
Moderator · Conference Operator
We have our next question from the line of Manish Ostwal from Nirmal Bang.
Please go ahead.
Manish Ostwal
I have only one question on the short-term liquidity in the market, intermediate market has tightened recently, and because of that the CD rate has also increased.
So, how do you see the funding environment in the wholesale market given the busy season in quarter four?
C.S. Setty
See, I think as we keep saying, you know, our funding of the credit growth, we use various instruments.
Deposit, of course, is the mainstay.
And market borrowings is one.
But our ability to borrow from the market at very competitive rates continues to be available for us.
And in terms of the deposits, I think there would be some small uptick on the bulk deposit side, and based on our requirement, we align the market rates.
I think, broadly, we were able to contain the cost of repo rate.
I think we expect that in Q4 also that trend will continue.
Dinesh Kumar Khara
The other thing which I would like to add here is what Mr. Setty has mentioned, you would have observed that in the current financial year, we have already gone to market and raised infrastructure bonds, and that is very, very competitive rates.
So, I think that also is one of the source, and since we are having a reasonable portfolio of our infrastructure assets, that's the source which is available and which actually becomes much more competitive in terms of cost.
So, already 20,000 we have raised, and that is something, that will be the strategy going forward also.
Manish Ostwal
And one small point on the equity capital raise plan for the bank.
So, any plan for that to raise the capital to support the growth?
Dinesh Kumar Khara
We are as of now, I mean, once the profits will be brought back after the March quarter, our rough estimation is that as far as the Capital Adequacy Ratio is concerned, we will be at about State Bank of India February 03, 2023 14.5.
And at 14.5 we have made some rough assessments, and it indicates that we can support the loan growth of at least 7 trillion.
So, we will be very closely evaluating the situation, and wherever required, whenever required, we will certainly raise all kinds of resources.
Not only equity, we will also be looking at AT 1, Tier 2 whatever is required to be done.
Moderator · Conference Operator
Thank you.
We have our next question from the line of Manish Shukla from Axis Capital.
Please go ahead.
Manish Shukla
So, when you said about wage revision, monthly run rate was about 500 crores.
That assumes what rate of wage inflation?
10%?
12%?
15%?
Dinesh Kumar Khara
10%.
Manish Shukla
10%.
Okay.
Second question, sir, on the standard asset provision of 23,000 crores that you are carrying, roughly how much is it that you think is additional or extra?
And under what situation will you be dipping into it?
Dinesh Kumar Khara
This provision which we are carrying I would say, roughly, one is this additional provision for restructured standard accounts.
This is essential for the restructured book which we are carrying on the balance sheet.
So, it is about 30% of our restructured book which is about 24,000 odd crores.
And the remaining one is 23,116 crores, which is for standard assets as I mentioned that part of it is on account of our standard assets as it is.
And part of it is on account of the whatever visibility of stress we had on ground.
So, how long we will carry, we normally take stalk of the situation quarter-on-quarter basis and based upon that we will take a call.
It may or may not happen.
It may or may not crystallize but depending upon the situation which we will be obtaining at the end of the quarter, we will be taking the call.
Moderator · Conference Operator
We will now have the address from the Chairman.
Please go ahead, sir.
Dinesh Kumar Khara
As far as the exposure relating to a large conglomerate is concerned, we have seen over the last 5 to 6 years the share of exposure with the Indian public sector banks as a percentage of the total debt has consistently declined from 55% in 2016 to 31% by the end of 2022.
During this period, the debt to EBITDA, which is the key moniterable, has been improving for the better, demonstrating the Group's ability to complete and generate cash in a timely manner from project which we undertake.
As is known most of the recent acquisitions have been financed through overseas borrowing and market instruments.
And so we don't envisage any risk build up to the Indian banks on this count.
As far as we at SBI are concerned, our Group exposure is well below the large exposure framework, and the loan outstanding exposure stands at 0.88% of our SBI's total loan book as on 31st of December '22.
The majority of the SBI loan outstanding are towards operating assets and projects that have been completed and generating cash accruals.
The projects that are under construction are on schedule as of now.
The loan extended by SBI are secured by the project assets, and there is no facility granted on unsecured basis.
The cashflows are routed through the designated accounts as the mechanisms are in place to ensure timely servicing of the dues, and there has been no record of any delay or default till date.
We have not extended any finance against pledge of promoter's equity.
Whenever shares have been pledged in favor of SBI in certain entities, they are in the nature of additional collateral security.
The non-funded exposure of SBI is mostly towards letter of credit, bank guarantees, both performance and financial.
Non-guarantees issued towards securing their other financial obligations are not there.
No guarantees have been issued.
There are no concerns on the Group's ability to service the loan book at this point in time.
Moderator · Conference Operator
Thank you.
Ladies and gentlemen, due to paucity of time, I would now like to hand the conference over to Chairman sir for closing comments.
Dinesh Kumar Khara
Thank you very much to all of you for taking out time and to be with us on this weekend evening.
I take this opportunity to wish all of you the very best and have a great and enjoyable weekend.
Thank you very much.
Moderator · Conference Operator
Thank you.
On behalf of State Bank of India, that concludes this conference.
Thank you for joining us, and you may now disconnect your lines.
END OF TRANSCRIPT
Questions and answers
Moderator · Conference Operator
We will now begin the question-and-answer session.
We have our first question from the line of Mahrukh Adajania from Nuvama.
Please go ahead.
MR. SWAMINATHAN J · Management
Sir, a couple of questions.
Firstly, the write-offs are slightly higher this quarter.
So, if you could explain?
And also the profit on the treasury bit, why does it look close to high this quarter?
State Bank of India February 03, 2023
Dinesh K Khara
Yes, write-off is in the normal course of business, there's nothing very unusual, I think it is about Rs.10,000-odd crores is the write-off amount.
MR. SWAMINATHAN J · Management
Sir, it was Rs.3,000 crores last quarter, right?
Dinesh K Khara
I think normally we undertake write-off towards the third quarter and the fourth quarter.
So, that is why kind of extent you have seen this year and it was not there in the past.