ICICI Bank Ltd (IBN) 2017 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the ICICI Bank Q3 FY2017 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. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Ms. Chanda Kochhar, MD and CEO of ICICI Bank. Thank you, and over to you, ma'am.

Good evening to all of you. I'll make some brief opening remarks, and then Kannan will take you through the details of the results. On the previous Analyst call, I had summarized the bank's strategic priorities for FY17 in the form of four-by-four agenda covering portfolio quality and enhancing franchise.

So just to reiterate, on portfolio quality, we said we will focus on four key things: Proactive monitoring of loan portfolio across all businesses; improvement in credit mix, driven by focus on retail and lending to higher rated corporates; third, reduction in the concentration risk; and fourth, resolution of stress cases.

On enhancing of franchise, we said we would focus on sustaining the robust funding profile, maintaining digital leadership and customer franchise, continued focus on cost efficiency and largely focused on capital efficiency, including unlocking value in subsidiaries. So, we continue to focus on this agenda and move in line with the direction that we set out for ourselves as per this agenda.

Coming specifically to this quarter, the key development, of course after our previous call, was the withdrawal of INR500 and INR1,000 currency notes, that is the specified bank notes or SBNs as legal tender. This movement resulted in an increase in formal financial savings, which has also given us strong impetus to digital payments.

The growth in total deposits for the banking system has actually increased to about 15.2% year-on-year by December 23, 2016. So, in this context, the few key trends for ICICI Bank was, firstly, we saw a very robust attrition to CASA deposits. There was an attrition of INR267.04 billion to CASA account deposits during Q3 '17.

The year-on-year growth in savings deposits was 30%. The bank CASA ratio has increased from 45.7% September 30, 2016, to 49.9% on December 31, 2016. The Bank took a number of initiatives with the focus on servicing customers after the announcement of this demonetization. But because it was not just on customer service, we also continued to be at the forefront of offering technology-enabled services to further increase convenience to our customers. So, during the quarter, we continued to enhance our focus on launching new technology-based offerings, as well as increasing communication and activation of digital channels for our customer accounts.

One of the very important and powerful launches that we made during the quarter was Eazypay, and this is India's first mobile app for merchants, where merchants can accept payments on mobile phones through multiple modes, whether it be UPI, credit cards, debit cards, Internet banking, Pockets, et cetera. And we are seeing robust trends in merchant addition through both point of sales terminals as well as through this Eazypay application.

During Q3 FY17, we witnessed growth trends in our digital transactions. The activation rates for our iMobile application was higher by 84% in December compared to October 2016. The volume and value of mobile banking transactions in December 2016 was 52% higher and 35% higher, respectively, compared to October. The activation of Internet banking by customers in December almost doubled compared to October. And our digital wallet offering, Pockets, also witnessed a huge increase in activation rates and usage. These growth trends coming on in existing large base of digital transactions, even prior to demonetization, actually underscore the strength of our bank's digital offerings.

The bank has also seen robust trends in use of UPI. Over 2.4 million accounts have now the virtual payment addresses or the VPA handle created using our bank applications, which I think is amongst the highest for the banks here.

The volume and value of debit card transactions has also increased. In December, the volume was 128% higher and value was 100% higher compared to October 2016. Similarly, there has been a good increase in the credit card transactions as well.

ICICI Bank was also India's first bank to implement interoperable electronic toll collection. We are the largest player based on the number of RFID tag issued for electronic toll collection.

So in these nine months ended December 31, 2016, the non-branch channels accounted for close to 95% of all savings account transactions, and within that, the digital channels like Internet, mobiles, POS, et cetera, account for about 73% of our savings bank transaction.

Coming to loan growth, the non-food credit growth for the banking system actually decreased from 10.6% year-on-year at September to 5.3% by December 23. And within this, the growths in retail credit also decreased to about 15.2% by November 25, 2016, based on the latest available RBI data. But I'm very happy to say that for the bank, the overall domestic loan growth is 12% year-on-year basis, which is more than double the rate of growth in non-food credit for the banking system.

The growth for the bank continues to be driven by retail business, and our retail portfolio has grown by 17.8% year-on-year. We also had a reduction in our international book, which has reduced by about 16%. So, overall, you will see our portfolio growing by 5%, but within that, as I said, domestic loan growth is 12% and retail specifically is 17.8%.

We continue to focus on reorienting our balance sheet towards lower risk and more granular portfolio. The share of retail loans and total loans has now increased to 48.9% as of December 31, 2016. In addition, our aggregate exposure to the identified industries, such as power, iron and steel, mining, cement and rigs has decreased from 16.2% on March 31, 2012, to 13.3% on March 2016 and further to 12.4% in December 2016.

We continue to focus on resolution and exposure reduction in identified areas, and we had reported our exposure to companies that were internally rated below investment grade in these key sectors. On the previous call, we had shared the deduction that was achieved in these exposures and mentioned that based on the transactions announced in the public domain, we expect further resolution in this portfolio, subject to necessary approvals and completion of transactions.

So, on that basis, during Q3 of FY17, we saw further net exposure reduction and rating improvement in this portfolio to the extent of INR20.12 billion, taking the overall reduction in exposure and rating movements during the nine months to INR44.73 billion. We also further expect resolution in this portfolio going forward, subject to necessary approvals and completion of the announced transactions.

With respect to the profit and loss, I'd like to mention that the domestic net interest margins have increased compared to Q2 2017. The domestic margin was 3.51% in Q3 FY17.

The growth in fee income has also improved substantially. The fee income, which was growing at about 3.8% year-on-year for the first half of FY17, has improved to 10.3% year-on-year in the third quarter of FY17. The profit before provisions and tax, excluding the gains on shareholding and ICICI Life in Q3 and Q2, increased by 3.9% on a year-on-year basis and 11.1% on a sequential basis.

So, as you know that in Q3 of FY16 and also in Q2 FY17, we had gains from stake sale of life insurance. So, if we remove that, we have actually seen an increase in profit before provisions and tax.

So we believe that we are well positioned to leverage the growth opportunities in the coming years. We have a strong deposit franchise, we have robust capital levels, we have significant value in our subsidiaries. We continue to make investments to strengthen our franchise, even on the technology side, and we also continue to work towards resolution and reduction of stressed exposure.

I'll now hand over to Kannan.

Thank you, and good evening to all of you. I'll now talk about our performance on growth and credit quality. I'll then talk on the P&L details, subsidiaries, as well as capital.

First, on growth. The retail portfolio grew by 18% on a year-on-year basis. Within the retail portfolio, the mortgages and auto loan portfolios grew by 17% and 13% on a year-on-year basis, respectively. Growth in the business banking and rural lending segments was 12% and 20% on a year-on-year basis, respectively. Commercial vehicle and equipment loans grew by 15% year-on-year. The unsecured credit card and personal loan portfolio grew by 40% year-on-year to INR199.16 billion rupees and was about 4.4% of the overall loan book as of December 31, 2016. We continue to grow the unsecured credit card and personal loan portfolio, primarily driven by our focus on cross sell.

Growth in the domestic corporate portfolio was 4% year-on-year basis. We continue to focus on lending to better rated clients and work towards reducing exposures in sectors impacted by the challenging operating environment.

If we exclude NPAs, restructured loans and loans to companies included in the drilldown exposure, growth in the domestic corporate portfolio was higher. The SME portfolio grew by 6.6% on a year-on-year basis and now constitutes 4.6% of our total loans. In rupee term, the net advances of the overseas branches declined by 16.1% on a year-on-year basis as of December. In US dollar terms, the net advances of the overseas branches decreased by 18.3% on a year-on-year basis as of December 31, 2016. In the overseas branches, loans against FCNR deposits of about $870 million matured during the third quarter.

Moving on to the funding side, total deposits grew by 14.2% year-on-year to INR4.65 trillion rupees as of December 31, 2016. Of the FCNR deposits mobilized in Q3, deposits aggregating to about -- actually -- of the FCNR deposits mobilized in Q3 of 2014, deposits segregated to about $1.75 billion matured during the quarter.

There was an accretion of INR185.12 billion to savings account deposits and INR81.93 billion to current account deposits in Q3 of 2017. On a period-end basis, current and savings account deposits grew by 26% year-on-year. On a daily average basis, current and savings account deposits grew higher by 29.2% on a year-on-year basis. On a daily average basis, the CASA ratio improved significantly from 41.5% in Q2 of 2017 to 44.8% in Q3 of 2017.

Moving on now to the credit quality. During the third quarter, the gross additions to NPAs reduced to INR70.37 billion from INR80.29 billion in the preceding quarter. The gross additions to NPAs in Q3 of 2017 included slippages from restructured loans of INR2.9 billion. Slippages out of loans to company's internally rated below investment grade in key sectors was INR29.43 billion and devolvement of non-fund based exposure relating to accounts already classified as non-performing loans in the prior periods that we have been disclosing for the past few quarters was INR17.99 billion rupees. That's about 75% of the corporate and SME NPA additions comprised to these categories. The retail portfolio had gross NPA addition of INR4.29 billion and recoveries and upgrades of INR4.34 billion during the third quarter of 2017.

During the quarter, aggregate deletions from NPA due to recoveries and upgrades were INR6.25 billion. The bank sold gross NPAs aggregating to INR0.87 billion during the quarter. The Bank's net non-performing asset ratio was 3.96% as of December 31, 2016, compared to 3.21% as of September 30, 2016.

Moving on to the restructured loans, the net restructured loans were at INR64.07 billion as of December 31, 2016, compared to INR63.36 billion as of September 30, 2016. While announcing our results for the quarter ended March 31, 2016, we had stated that there were continued uncertainties in respect of certain sectors due to the weak global economic improvement, sharp downturn in the commodity cycle, gradual nature of the domestic economic recovery and also higher leverage.

The key sectors identified by us in this context were power, iron and steel, mining, cement and rigs. The bank had reported the exposure comprising both fund as well as non-fund-based outstanding to companies in these sectors that were internally rated below investment grade across the domestic, corporate, SME as well as international branches portfolios, and to promote entities internally rated below investment grade were the underlying partly related to these sectors.

On slide 33 of our presentation, we have provided the movement in these exposures between September 30, 2016, and December 31, 2016. The aggregate fund-based limits on non-fund based outstanding to companies that were internally rated below investment grade in these sectors and promoter entities decreased from INR324.9 billion as of September 2016 to INR275.36 billion as of December, reflecting the following:

One, there was a net reduction in exposure of INR21.23 billion; two, loans with exposure aggregating to INR1.11 billion were downgraded to below investment grade during the quarter; and three, loans classified as non-performing during the quarter were INR29.43 billion. As I said, please refer to slide 33 for further details.

Based on the transactions announced and in the public domain, we expect a significant further resolution in the above exposures going forward, subject to necessary approvals and completion of transactions. The Bank continues to work on the balance exposures; however, it may take time for these resolutions given the challenges in the operating and recovery environment. Our focus will continue to remain on maximizing the bank's economic recovery and finding optimal solutions.

The exposure to companies internally rated below investment grade in key sectors and promoter entities of INR275.36 billion includes non-fund-based outstanding in respect of accounts included in this portfolio where the fund based outstanding has been classified as non-performing. Apart from this, the non-funded outstanding to borrowers classified as non-performing was INR15.84 billion at December 31, 2016, compared to INR32.86 billion at September 30, 2016.

Further, the exposure to companies internally rated below investment grade in key sectors and promoter entities of INR275.36 billion excludes net exposure of INR5.31 billion to a central public sector-owned undertaking engaged in gas-based power generations. These details are disclosed below the table in slide 33.

As of December 31, 2016, we had outstanding loan of INR34 billion, where strategic debt restructuring, that is SDR, had been implemented, of which about INR28 billion were loans already classified as non-performing or restructured or to companies that were internally rated below investment grade in the key sectors that is power, iron and steel, mining, cement and rigs.

The outstanding portfolio of performing loans, for which refinancing under the 5/25 scheme have been implemented, was about INR33 billion as of December 2016, of which about INR24 billion were loan to Company's internally rated below investment grade in the key sectors mentioned above. The bank had not implemented the scheme for sustainable structuring of stressed assets, that is S4A scheme, for any account as of December 31, 2016.

Moving on to the provisions, the provisions were INR27.3 billion in the third quarter of 2017 compared to INR70.83 billion in the preceding quarter, which had included additional provision of INR35.88 billion. Provisions were INR28.44 billion in the corresponding quarter last year. For this quarter, there was a drawdown of INR5.27 billion from the collective contingency and related results. There was no drawdown or addition to floating provisions during the quarter.

The provisioning coverage ratio on non-performing loans, including the cumulative technical prudential write-off and floating provisions made, was 57.1%. As we had mentioned earlier, we expect NPA additions to remain elevated for the next quarter as well.

Moving on to the P&L details, net interest income was INR53.63 billion in the third quarter of 2017. The net interest margin was at 3.12% in the third quarter of 2017 compared to 3.13% in the preceding quarter. The domestic NIM was at 3.51% in Q3 of 2017 compared to 3.41% in the preceding quarter.

The international margins were at 0.83% in the third quarter of 2017 compared to 1.65% in the preceding quarter. The international margins were impacted by higher non-accrual of interest income on NPAs in the third quarter of 2017. There was interest on income tax refund of INR1.39 billion in the third quarter compared to INR1.11 billion in the preceding quarter and INR1.23 billion in the corresponding quarter last year.

Going forward, the yield on advances would continue to be impacted by non-accrual of income on non-performing assets and implementation of resolution plans for stressed borrowers. There has also been some moderation in the loan growth in the banking system. Incrementally, there would be some impact of reduction of MCLR in January 2017, which will be partly offset by the declining in funding costs. Total non-interest income was INR39.3 billion in the third quarter of 2017 compared to INR42.16 billion rupees in the third quarter of 2016.

Looking at the components of this non-interest income, the fee income improved, as I said, the growth in fee income improved and it was driven by a pickup in retail fees, which grew by 18% on a year-on-year basis. Growth in retail fees was driven by higher transaction banking fees from liability customers, increase in credit card fees, fees relating to distribution of third-party products and higher ForEx fees.

Retail fees constituted about 71% of the overall fees for the third quarter. Treasury recorded a profit of INR8.93 billion in the third quarter. In the corresponding quarter last year, treasury had recorded a profit of INR1.98 billion, excluding the gains of INR12.43 billion rupees relating to the sale of shareholding in ICICI Life in the corresponding quarter last year.

Other income was INR5.51 billion. The dividend from the subsidiaries was INR4.56 billion, including INR1.38 billion of dividend from ICICI Life. The bank had exchange rate gains of INR0.82 billion in relation to overseas operations in third quarter compared to gains of INR1.42 billion in the corresponding quarter last year.

ICICI Life, along with its Q2 2017 results, had announced that the Company's Board will consider dividend proposals on a half-yearly basis going forward. Accordingly, the bank will not receive dividend income from ICICI Life in the fourth quarter of 2017.

On operating expenses, the bank's cost income ratio was at 40.6% in the third quarter of 2017% and 33.7% in the nine month of 2017. Excluding the gain on sale of shares of ICICI Life, the cost income ratio would have been 41% in the nine months of 2017.

Operating expenses increased by 21.5% on a year-on-year basis in Q3 of 2017. The increase was mainly due to a 23.4% year-on-year increase in employee expenses, which among other factors includes the impact of decline in yields on provision for retirement benefits in the third quarter of 2017.

The bank added 6,803 employees in the nine months of 2017 and had 80,899 employees as of December 31, 2016. Non-employee expenses increased by 20.4% on a year-on-year basis in Q3 of 2017. We would continue to focus on cost efficiency while investing in the franchise as required.

The bank's standalone profit before provisions and tax was INR55.24 billion in the third quarter. I've already discussed the provisions for the quarter. So moving onto the standalone profit after tax, it was INR24.42 billion in third quarter of 2017 compared to INR31.02 billion in the preceding quarter and INR30.18 billion in the corresponding quarter last year.

Moving onto subsidiaries, the profit after tax for ICICI Life for the third quarter of 2017 was INR4.5 billion compared to INR4.35 billion in Q3 of 2016. The new business margin on actual cost based on Indian Embedded Value or IEV methodology was at 9.4% in the nine months of 2017 compared to 8% in FY16 and 5.7% in FY15. The improvement in margins was driven by an increase in proportion of protection business from 1.6% in FY15 and 2.7% in FY16 to 3.9% in nine months of FY17.

The Company continues to retain its market leadership among the private payers with the new business market share of about 13% in the nine months of 2017. The profit after tax of ICICI General increased from INR1.3 billion in Q3 of 2016 to INR2.2 billion in Q3 of 2017. The gross written premium of ICICI General grew by 33.5% on a year-on-year basis to INR82.5 billion in the nine months of 2017 compared to about 31% year-on-year growth for the industry.

The company continues to retain its market leadership among the private sector players and had a market share of about 8.8% during the nine months of 2017. The profit after tax of ICICI AMC increased by 61% year-on-year from INR0.82 billion in Q3 of 2016 to INR1.32 billion in Q3 of 2017. With average assets under management of about INR2.3 trillion for the quarter, ICICI AMC continues to be the largest mutual fund in India.

The profit after tax of ICICI Securities was at INR0.88 billion in the third quarter of 2017 compared to INR0.55 billion in the third quarter of 2016. The profit after tax of ICICI Securities primary dealership was INR1.82 billion in the third quarter of 2017 compared to INR0.63 billion in the corresponding quarter last year.

Let me now move on to the performance of our overseas banking subsidiaries. The Bank's total equity investment in ICICI Bank UK and ICICI Bank Canada has reduced from 11% of the network as of March 2010 to 4.4% as of December 2016. ICICI Bank Canada's total assets were CAD6.45 billion as of December 31, 2016, and loans and advances were CAD5.75 billion as of December 2016.

ICICI Bank Canada reported a net loss of CAD34.6 million in the third quarter compared to a net profit of CAD5.4 million in the third quarter of 2016. This is on account of higher provisions on existing impaired loans, primarily India-linked loans. The net NPA ratio for by ICICI Bank Canada has decreased from 2.29% as of December 31, 2015, to 1.22% at September 30, 2016, and further decreased to 0.4% as of December 31, 2016. The capital adequacy ratio of ICICI Bank Canada was 24.7% as of December 31, 2016.

Moving on to ICICI Bank UK, the total assets were $3.42 billion as of December 31, 2016. Loans and advances were $2.34 billion as of December compared to $2.51 billion as of September 2016. The decrease in loans and advances in Q3 of 2017 was on account of repayment of loans against FCNR deposits during the quarter.

The profit after tax in the third quarter of 2017 was $1.7 million compared to $0.6 million in the third quarter of 2016. The capital adequacy ratio was 19.8% as of December 2016. The consolidated profit after tax was INR26.11 billion in the third quarter of 2017 compared to INR31.22 billion in the corresponding quarter last year and INR29.79 billion in the preceding quarter.

Moving on to capital, the bank had a Tier 1 capital adequacy ratio of 13.33% and total standalone capital adequacy ratio of 16.73%, including profits for the nine months of 2017. The Bank's consolidated Tier 1 capital adequacy ratio and the total consolidated capital adequacy ratio, including profits for the nine months of 2017, were 13.5% and 16.2%, respectively.

The capital ratios, as you can see, are significantly higher than the regulatory requirements. The bank's pre-provisioning earnings, strong capital position and value created in the subsidiaries give the bank the ability to absorb the impact of challenges in the operating and recovery environment for the corporate business while driving the growth in the identified areas of opportunities.

To sum up, during the third quarter of 2017; one, there was further improvement in our funding profile, driven by deposit flows after announcement of the demonetization of specified bank notes; two, there was further strong momentum in the use of our digital offerings; three, we selectively grew our loan portfolio; four, we continue to focus on resolution and recovery in the corporate segment; and five, we continue to maintain healthy capital adequacy ratios.

With this, I close my remarks, and we will now be happy to take your questions. Thank you very much.

Thank you very much. We will now begin the question-and-answer session. (Operator Instructions) Mahrukh Adajania, IDFC.

Just a couple of questions. Firstly, what was the slippage from restructured this quarter?

The slippage from restructured was about INR2.4 billion during the quarter.

INR2.4 billion?

Yes.

Okay. From the watchlist, it was around INR29 billion?

That's right.

And what was it from -- what was the slippage outside the watchlist?

Yes. So, as I mentioned, Mahrukh, there is another big component which is the non-fund-based outstanding in respect of NPL devolving and becoming fund-based, and that amount was about INR18 billion. So that's why I referred to Slide 33. The Slide 33, we had drilldown list, and below that, we have some notes. In the note number one, we had talked about INR5 billion of net exposure to that central PSU entity in the power generation. And in the last bullet point there, we had talked about the net non-fund-based outstanding to borrowers classified as non-performing loan. That as of December is INR15.8 billion. This number was close to about INR34 billion as of the previous quarter.

Got it. And just if you look at your watchlist, it's in public resolutions of two accounts there are in public domain. So, can we expect that by March, around INR80 billion to INR90 billion of the watchlist will anyway go away, as in get upgraded?

We have not given a particular amount or time period. I can only say that the resolutions which are in the public domain are well underway, and we hope to complete the resolution as we go along. Again, as I said, the resolutions can lead to a significant reduction in the watchlist or the drilldown list, were soft there in terms of our approach. But rest assured, we are working on not just those cases which have been quoted in the public domain, we also are working on the rest of the cases in the drilldown list.

Okay. Also if you read recent press articles, there are many papers who talk about some resolution in SR, and then Bhusan JSW has made a public statement, so that's in the press, and then if you talk to banks, they are not too confident of these resolutions happening anytime soon. Whereas, if you read the press articles or if you read by what JSW is seeing, you get a different picture. So where do we stand on this, do we expect resolution in some of these accounts in the next five to six months or because of the Kingfisher case and (inaudible) banks probably now going slow, it'll take longer?

See, we've always said that the recovery as well as the decision-making environment has been quite challenging. Not just now, even over the last year or so, we have made that statement. We continue to navigate the environment, and we continue to press forward on all the resolutions. So the challenges in the decisioning and the recovery environment is the key reason why we are not specifically giving you a timeframe or the amounts, but again, I can only reiterate that in each of these cases, in the public domain resolution as well as not in the public domain, we press forward in terms of our recovery efforts. But we keep talking to other bankers, we keep looking at various ways, including the several tools which have been given by RBI, to arrive at case-specific resolutions. That effort is on.

Okay. But just one more follow-up question on that, because in between, there were articles on IBA meet of bankers to hasten up the whole resolution process because it was going quite slowly through the JLFs, banks were taking longer time to reach resolutions. So, has that changed and do you think that, relative to say, last quarter, things have improved in terms of cutting short the timelines on resolution or they haven't?

See, my sense is that, that effort has started, a few meetings have been held, but clearly, that has helped in arriving at the common understanding among the top management of the relevant institutions involved. But it is too early to say that it will yield much faster results or early results, that we'll have to wait and see. But I can just say that, that has helped in arriving at a common understanding on key large cases in terms of the path forward.

Pavan Ahluwalia, Laburnum Capital.

My question relates to sort of net interest margin going forward. So, you had said a couple of quarters ago that you expect to be able to keep the net interest margin north of three. Is that still an aspiration that you're sticking to? Obviously, this quarter, net interest margin looks pretty elevated, and I don't think anyone expects that, that will be maintained. But what's a safe range where you feel comfortable you could maintain net interest margins factoring in likely pace of interest reversals and the various other factors you talked about?

So, I think, as we have been saying through the year that the key impact for us in the current financial year is coming from the non-accrual of income on the NPAs and cases where SDR and all has been implemented. So that in fact will definitely continue in the current year and maybe a couple of quarters into the next financial year. But we have been doing pretty well in terms of the funding cost. So that is kind of providing us some buffer. Of course, with the developments in the December quarter, our CASA went up a fair bit, and we have to see going forward how much of that CASA is retained and how much of it drains out over time. The other key thing which has happened is the sharp reduction in lending rates that we are seeing because of the much lower loan growth in the system. Indeed, the competition has increased in terms of the pricing of loans. So there are quite a few moving parts, which are there around it, and what we can say is that in terms of the funding cost and incremental lending that we are doing, we are kind of ensuring that the margins are pretty healthy for us on that basis. So the only impact which will come in is from the non-accrual of loans, and at some stage, that negative impact should start reducing into the next financial year.

So does that mean you'd be confident of maintaining, medium term, at least a 3% NIM?

So, we have not talked about any specific numbers, but yes, it's definitely that is something that we will --.

That will be the endeavor. Just to supplement to what Rakesh said, if you just look at the presentation slide number 36, the rate at which the cost of deposits has been coming down, that has been quite nice, and we are at 5.3%. So that has really helped us in terms of withstanding the pressures, both on account of non-accruals as well as the lending pricing pressures of the market.

Okay. And just one more question, which is we are seeing an increasing number of larger corporates accessing the bond market directly and basically bypassing banks. A lot of these corporates have historically been anchor clients, customers, core clients of ICICI Bank. As you see, that portion of credit move away, how should we think about what your corporate book is likely to look like? Is it likely to be more mid corporate, smaller companies that got access the bond market as easily, and given that you will see this headwind of the larger corporate credit moving away, what kind of growth rate can we expect on the corporate side?

Yes. So, if I first look at the environment, and you're absolutely right that some of the larger corporates who have the ability to access the bond market have been moving towards bond market, our approach to tap this part of the business has been to run an active treasury, which we have been doing. And if you look at ICICI Group, there are two entities who are extremely active in the origination and syndication and sell-down market, which is ICICI Bank itself as well as ICICI Securities' primary dealership. And if you look at ICICI Bank alone, in the league table rankings, we'll be in the top two or three, depending on which year you look at, and both ICICI Bank and (inaudible) will be in the top five in the market. So our approach here has been that be careful about which credit we pick up, but play a very active role in retaining these clients through participating in the bond market. Now, if you come to the loan market, even in this quarter if you look at it, our corporate growth, we would say that has been very robust and had met with our expectations, because sometimes when I look at total corporate book, which includes various types of assets, not just the desirable segment of the corporate which you would like to grow, it also includes the restructured portfolio, NPLs and so on. If you really knock it off, we do believe that we have a very good play across the segments of the corporate, mid as well as large corporate. I think that effort will continue, subject to our concentration risk, which we have talked about in the previous calls. So my sense is that whether it is loan market or the bond market, we believe that we are ideally positioned to tap this market, which we are doing in good measure already. So that is what I want to assure you.

And that is (inaudible).

Yes. So if I really look at the kind of growth we have seen in the desirable segment of corporate, it is actually in mid-teens even now. So, we do believe that, that approach will continue.

Vishal Goyal, UBS Securities.

Congratulations on a good set of numbers. I mean, a pretty strong fee income in this quarter despite disruptions, and we were on a lot of things. So it seems that this look sustainable, but you think there were anything one time or anything which may not occur in the next quarter?

No. Let's see, if you look at the fee income, I talked about the bigger component of growth has been retail, and retail has grown at 18% plus levels on a year-on-year basis. And within retail, if you look at it, as you said, despite the pressures we have seen in terms of MDR fees or ATM fees, because of demonetization, net-net, we still could put out an 18% growth. This was also been made partly because of the third-party distribution, which had gone quite strong. And in terms of the ForEx fee, we have been able to activate a larger number of branches over the few years now. So, it is just that we are getting into a situation where we had talked in the past about growth in the fee income, and we are getting to a situation from here where we feel that the growth can be sustained. Of course, we'll have to wait and see how it moves. But just to assure you, there is no big one-time thing here, which has changed the numbers. It has been granular all the way.

So, basically, double-digit growth, we can expect going forward. That's what I was just trying to --.

See, we have said that before, that has always been our aspiration, so we're getting closer there now, and that's what I would say. And I want to assure you that there is no one-time here, and hopefully, we'll see it moving from here.

Okay. And another question actually is on the watchlist and outside watchlist. It seems a lot of things are in pipeline right now within watchlist, but what is outside watchlist -- the portfolio, and we are still -- we are seeing around 20%, 25% kind of NPA formation from that watchlist. So, I mean apart from NPA, how is that watch list moving? You think there is -- in last one year, there is incremental deterioration or you think that portfolio is improving only?

So outside of the drilldown list, which is there, the stress which is there is more company-specific, and it's not really anything which is sector specific, maybe aside from, say, something like construction where the reason for us not including it into the key sectors was that a higher part of that portfolio already was kind of either non-performing or restructured. Other than that, it is set of companies which is pretty spread across sectors, and the other key difference compared to the drilldown exposure is that these exposures outside the drill down list are less lumpy than the exposure that we have in the drilldown list. Of course, given that it is corporate exposure, there are, I would say, a few cases which are reasonably lumpy outside of the key sectors also, and that is what we are kind of monitoring closely. So as we have said from the beginning of the year that we expect a higher part of the incremental NP additions to come from the drilldown list or the restructured portfolio or linked through the existing NPA book, and that kind of thing will still continue. So I think going forward for the next couple of quarters also, we see some pressure coming in from outside of the drilldown list.

So just to clarify, Vishal, now that we are on the topic, the drilldown list movement has been given in slide 32 of presentation, not 33 as I mentioned in my remarks.

Yes, got it. Last quarter, I think somewhere we said that NPA should peak by quarter four. So you -- I'm assuming we continue to believe that.

I think we have said that for the year as a whole in FY17, the NPA additions will continue to be elevated and so will the trade cost be, and I think that is how it has turned out to be. So there is no real change in that kind of an expectation, and these exposures are indeed lumpy. So on a quarter-on-quarter basis, it's very difficult to kind of say as to when it would peak.

Veekesh Gandhi, Bank of America Merrill Lynch.

Just had one quick question on your -- so if I look at your SME book and business banking, which probably make up more or less the same, I mean, the size might be different, but they add up to like 8%, 9% of your total loan book. I mean, if I look at your few other competition banks, they are like close to 15%, 17%. So I just wanted to get your thoughts on how you're looking to grow this book or probably it'll be in this range for some time, because I would like to believe that obviously, the risk-adjusted margin in this books are far better than, let's say, your AAA corporate lending.

So if I look at the SME book, the growth was somewhat muted during the quarter because we had some repayments happening in this portfolio. Otherwise, in terms of our strategy, we have been incrementally doing more disbursements in this portfolio. The approach to this portfolio has been to further granularize the book in terms of ticket sizes, that is why it is taking a little longer. But our -- these two, both business banking, as you mentioned, and SME, both the segments are growth segments for us, and I agree with you that on an risk-adjusted basis, from here on, they do present us a good opportunity. It is just that it is coming up because we're granularizing the portfolio in terms of ticket sizes further as we go along.

So, aside of the repayments that you would have seen, which the SME grew by some 6.5% and business banking were 12%, but on a, let's say, medium to longer-term business, can we expect like 15%, 20% growth combined?

Yes, it should be there. So even if you look at the SME portfolio, Veekesh, actually if you look at the last couple of quarters. Now on a sequential basis, the portfolio has been growing well. As Kannan mentioned, there were some exposures overall, which we had kind of brought down in the portfolio. So if you look at you from last December 2015 till June 2016, the portfolio had declined actually, and from there on, it has been growing, and it will definitely be growing in the region of 15% to 20% going forward. Of course, if there are some disruptions overall in the economy, that I'm keeping aside. And similarly, on the business banking side, the reason that the growth slowed down this year was because of the overall environment. Otherwise, again, there the growth should be closer to 15% to 20%, and that's what our plan is.

Perfect. And just one small data point. Your retail home loan book is 54.6%. In this, how much will be lap?

54.6% of the retail book.

Of the retail book.

Sorry.

Yes, we're just --.

(inaudible) we were clarifying that it's 54% of the retail book.

Yes, ma'am. So, basically, 55% of your retail book is home loans. I just want to know if you have --?

Yes. Sorry. Veekesh, within the home loan portfolio, the lap around is 17%.

Okay, 17%.

That's correct, yes.

Nilesh Parikh, Edelweiss Securities.

So, Kannan, you mentioned that the Q4 also will see elevated slippages. Now, just wanted to kind of two months to get into the new year -- financial year, I just wanted some color in terms of will you still have about INR27,000 odd crores of these drawdown list still remaining to be resolved. And on top of that, there is obviously about 1,500 of the non-fund-based limits also, which are still standing there. I just wanted to get a sense, when we talk about the Q4 being elevated and from there on, do we expect higher pace of resolutions coming through or we may have to look at something similar in terms of the slippages going forward there?

So, you're saying the slippages going beyond Q4, is that your question?

Yes. Given that we still have about 27,000 of the drawdown list which needs to be resolved, yes.

So, in terms of the -- the resolutions is something which we, of course, are working along with all other banks. As Kannan described in detail earlier that there are challenges there and the progress has been slow. So we would be hoping that in the next financial year, that pace of recovery should improve, but it's very difficult to be sure of that, given the trend that we have seen in the last year or so. So while in a couple of larger exposures, we have been able to make significant progress, but there are other exposures where similar progress has not been made. So the effort will definitely be there to improve recoveries, and we are hopeful of that happening, but we can't be certain on that. Of course, we will give a much better sense of the FY18 numbers in terms of our expectation of slippages when we come out with our full-year results. Overall, I think from a year as a whole, again as we have said earlier, that given the numbers at which we are running in the current financial year, the overall additions in FY18 will definitely be lower. But how sharp that reduction is something that we can talk about once we announce our March quarter results.

And these non-fund-based limits, right, I mean, is a part of the NPLs. Now, how should we -- bulk of that has already flown through in terms of the NPLs. What was the balance like, given that are we seeing any kind of positive movement on the balance or it's just a matter of time that slips into NPLs there?

It is actually a mix. Some of it would be something like a financial guarantee which more likely would get invoked at some stage and some of it could be performance kind of guarantee, which may not get invoked. So I can say that it would not be as lumpy as what we have seen in the current quarter, but there would be some of this which gets converted into fund-based going forward on a quarter-on-quarter basis.

Okay. And these are just from the existing NPLs, right?

Yes. This (multiple speakers) to the non-fund exposures that we have in the drilldown list, in addition to that, we have INR15.84 billion of non-fund in the NPL portfolio.

So this, we have been disclosing for the last two, three quarters. In slide number 32, if we see the fifth footnote, it talks about the non-fund-based outstanding of borrowers classified as non-performing at INR16 billion. This number was close to INR32 billion, INR33 billion rupees in the previous quarter. So that is where you have seen the slippage happening in this quarter. And as Rakesh mentioned, this will be a combination of performance-type guarantees and financial guarantees. And financial guarantees are more likely to get invoked and performance guarantee, as long as the company is running and then they are performing on the contract, they may not get invoked. So that will be the difference. It will be a mix of those two in the balance.

Parag Jariwala, Religare Capital.

What is our non-fund-based outstanding to the restructured asset, and is that a part of watchlist number or how do you classify that?

So we would have non-fund-based limits to restructured loans. It's approximately INR20 billion, I can confirm that number in a way, but it will be approximately INR20 billion.

And it's not been included in the below-investment grade category, right? So that can potentially also -- once the funded or something divided into NPAs, it can also flow into the addition numbers, right?

It can flow into the restructured loan outstanding number that we give, it can flow into that. These are standard restructured loans, which have the non-fund-based limits like any other borrower. So that's about INR20 billion.

Manish Karwa, Deutsche Bank.

I just wanted to understand on the NPLs which have happened, are you getting interest? What is the quantum of NPLs on which you are still getting some cash interest and has that trend changing for the better in this quarter versus the previous quarters?

I've not given you such --.

No, no, just a qualitative thing. Are you seeing better trends like steel companies in this environment are doing reasonably well. So I would assume that a lot of steel NPLs that you would have, they would be paying you some cash interest.

Yes. That is true. It is really a case-to-case basis, and steel case, yes, we are getting because EBITDA is being generated, and some other cases (inaudible).

And in some other cases also, it's been increased.

Yes. That is happening. Steel cases, it is happening, but it is really case by case, Manish.

But would you say that it's only for the steel sector and it's not happening for other sectors on the NPLs that you're -- I'm just trying to gauge what kind of recoveries that you could potentially get if things get better in some of these sectors, especially in steel as we are seeing.

During the quarter, if you look at our NPL collection, we have been getting in smaller cases, they've been getting, trickles of money is coming in smaller cases that we have seen happen not just steel, but other smaller cases also, we have seen some recoveries happening.

Okay. But that trend apart from steel probably has not changed in any other sector?

That's right.

Okay. And in your drilldown list that you give, what will make you upgrade sectors like, say, cement, promoter entities where we know that deals have almost consummated, and at some stage, you probably will upgrade it, but what is the trigger that you're looking for?

(inaudible - microphone inaccessible).

So those cases, I think effectively, the whole deal will have to get completed. In cases where it is being sold off, those assets are being sold off to another better entity. It'll get upgraded when it really becomes that entity's exposure. So really that has to be consummated. So that is why in the intermediate, it'll continue to be shown in this list.

Okay. And lastly, Rakesh, I just wanted to the reconcile the standalone with the consolidated numbers. If I just add all the profits that you have for all the subsidiaries and just subtract the minority interest, it doesn't work that way. Is it something which I'm missing in between?

Have you looked at the dividend? See, these are two big items for the dividend calculation and the minority interest.

But in this quarter, there wasn't any dividend, right?

Well, we had significant dividend. It was about -- as I mentioned in my remarks, about INR4.5 billion has been the dividend from the subsidiaries during the quarter.

Okay. So that would be the main thing?

Yes, that, and you'll have to really look at our current holding in those companies, minority interests. We have had some sales in those subsidiaries, sale of stake, so we'll have to adjust for that in terms of the current stake. So those would be the two reasons.

And if you're looking at the nine months number, one additional reason would be for in Q2 when we sold our ICICI Prudential share in the IPO, in the consolidated financials, it will be -- the cost would be different than in the standalone financials. So we have disclosed at that time the (inaudible) were lower by about INR5 billion, INR5.5 billion.

Adarsh P, Nomura.

I had a question on margins. You mentioned the overseas margin fell to 0.8%, was it right?

Yes.

Yes, it is correct, and I also mentioned that it is on account of -- primarily on account of stopping of accruals on the slippages into NPL of foreign currency loans.

Sorry, if I missed that, but what's the NPA percentages like or what's been the movement in the overseas book?

So when we disclosed the overall number of INR70 billion of slippages, that includes both domestic as well as overseas branches, which has been let in the form of foreign currency loans to those borrowers.

And is it safe to say that some part of this will mean revert because it'll be more interest reversals rather than just an NPA increase there? So, you will see some of it come back. What's the most sustainable overseas margin number now?

So it will definitely mean revert, but in the near-term, as we have said that because the NPA additions would still be there, there would be some more incremental impact which would be there. So to that extent, it will not go back to the earlier level immediately. So, the sustainable margin on the overseas book should definitely be closer to 1.4%, 1.5%. But given the level of NPAs which have happened over the last year or so, it will take some time to get back to those levels.

Rakesh Kumar, Elara Capital.

Sir, first question is related to the watchlist thing. So in the starting of the year, like, we had INR525 billion of watchlist, and in the nine months, we have seen slippage of close to INR233 billion, out of which INR121 billion is from the watchlist and remaining from RSA and non-funded devolvements. But all the remaining slippages has actually come from non-watchlist that is close to around 30%. So going ahead from here, like, how do we see that, how much slippage would come from the non-watchlist thing because the percentage number of 30% of the total slippage coming from the other areas is relatively large number actually.

To be more precisive, it's something in the region of around 24%, 25%, because a part of the NPAs have come from the retail portfolio as the normal run rate which is there. So, I think one thing is that you know from the beginning of the year when we said that a large part of NPAs will come from the identified sectors, it is around these kind of levels which we talked about. So even going forward, there will be additions which will come from outside of this drilldown list and the restructured loans and the NPA-related portfolio. And overall, there is clearly still some stress in the economy which is there, and these are borrower-specific companies, specific kind of issues which are there. So, these are not really a single sector specific thing which we have covered in the drilldown exposure list.

We have always said we are getting a drilldown of the below investment grade companies in these specific six sectors. There could be stress outside these sectors as well.

And secondly, the recognition of the NPL in the Canadian subsidiary, was that related the Indian steel company and the loan given in the US?

Actually, in the current quarter, there was no significant addition to NPAs in the Canadian subsidiary. This was more provisions taken on the existing NPAs which were there in the Canadian subsidiary.

Yes. It is India-linked, Indian borrower group linked and not a steel company, and it had already become NPL in the past, and the good news there is that, as we say, so if you look at the asset quality numbers, the net NPA has come down to 0.4% now as of December. So it is more like providing for something which has been already recognized, that has happened in Canadian book.

Suresh Ganapathy, Macquarie Capital Securities.

Yes. Just a quick question. Are you with the RBI differentiation for small value accounts?

Yes. We have gone by the circular, and we have availed of that dispensation. The amount is about INR1 billion, it is not a big number in the overall context of the bank.

Okay. And any qualitative feedback on how SMEs are doing because we are hearing a lot of negative development, even I heard of GSP and also because of demonetization, quite a lot of stress in that sector. So, do you think there can be some negative surprises from that segment?

So, as we have discussed earlier, Suresh, that SME portfolio itself as a percentage, it has come down to about 4%, 4.5%, and it's a much more granular book. So we don't see any disproportionate stress going forward. Some of the very small cases, we also got some prepayments as well. So, we don't see any significant negative impact going forward due to demonetization or otherwise.

Okay. Finally, the growth in, of course, ICICI Prudential (inaudible) has been pretty good. I mean, what explains this because it's quite surprising in a demonetization quarter, we have got such a large premium flow. Has there been cash deposits which have been accepted at the life insurance company and therefore, the premium sales have been strong. What explains the (inaudible) which has happened?

See, it is completely based on the Company's strategy and the bank's distribution which has worked very well. If you look at the Company itself, they stopped accepting cash for premiums two years back. So that is -- probably, it's one of the few companies which has stopped accepting premium by cash. So I don't think that would have made any difference. It is overall distribution working well, and that Company set also customer friendly products, they're doing well during this period. So I do not see any other factor really coming in which has led to the growth.

And also, overall, there was a growth in the (multiple speakers).

(multiple speakers) As you know the (inaudible) ICICI Bank is a largest distributor, the bank assurance mix of this company is ranged between around 60%. This is lower in some quarters, may be little higher in the others. This quarter, I think it would like towards, there has the most -- all the channels have grown as broadly the same.

Okay. And what about the Company's view on the open architecture model, will you guys be pretty receptive towards it or are they both thinking of considering such a pace in the future? I mean, any such feedback on that?

The open architecture -- the option to go open architecture is already there. The bank has so far not emphasized it.

Alpesh Mehta, Motilal Oswal Securities.

Congrats on the good set of numbers. Just two clarification. In between of the quarter, RBI had come out with the guideline related to SDR and S4A interest accounting. Any impact of that in the current quarter margins?

That impact has been there for us. We actually have been not accruing on these loans from the earlier quarters itself. So there was no one-off impact which came for us in this quarter.

Okay. So we are not accruing interest on all these loans. And in terms of overlap order for the watchlist versus the SDR and S4A, I believe our entire portfolio is largely there in the watchlist, right?

I think Kannan gave the numbers that of the total SDR that we have done of INR34 billion, INR28 billion were loans already classified as NPA or restructured or in the drilldown list. So the balance INR6 billion is outside of it. And similarly on INR525 billion, of the performing loans, which we have implemented INR525 billion, INR33 billion, about INR24 billion is from the drilldown list and the balance INR9 billion is outside of it.

Okay. And lastly, what's the share of retail fees and the overall fees?

Slightly over 70%.

70%. Okay. And just last request, if you guys can send the PPT earlier because it was after the call started, we received it after 15 minutes.

I think we kind of delayed this time. We'll ensure that in future.

I'm sorry, we'll ensure that in the future.

Srinivasan R, IDBI Federal Life.

Just wanted to quickly check what is -- if we could get some sense in terms of what is the total proportion of MCLR-linked loans in your overall book, and more specifically, if you can talk about within the home loan segment of what it is and some trends, if you can, throw some light? Thanks.

Of the domestic book, about 20% is linked to MCLR for us.

And within home loans, is there anything that you could comment on?

Within home loans, it's largely floating, but it will be linked to the various benchmarks which are there.

And any sense in terms of how it has moved over the last two, three quarters? I mean, from what percentage it has increased to 20, if you could show some light?

I don't have the numbers. It started off from April 2016. So every quarter, it has been increasing in that sense. Whatever incrementally we are doing is MCLR-linked.

Nilanjan Karfa, Jefferies.

Just on the cost of funds. How low can we go, because when I look at the gone quarter, it looks like a large part of net flow has been the lower-cost funds. So as we move towards the next few months and deposits kind of move out, should we expect the MCLR starts going up or do we have the other four or five different variables that can be tweaked to keep the cost of funding lower, not just for you, but obviously in the sense of how the banking system would be thinking about this?

On the cost of funds, actually, they're not too many variables in the sense that one is the proportion of CASA deposits that we would have. Second is the interest rate on the CASA deposits itself, so that is the savings deposit rate. And then the term deposit rates, which are there.

Correct.

In the near-term, given the amount of liquidity which has come in the system and the overall general lack of credit demand, one would expect that on the deposit cost, the term deposit cost, banks should still have the ability to, at some stage, maybe lower interest rates further from the current level also. So that is something which could kind of keep the overall cost of funding on the lower side going forward also. So that is how we have to look at it. Of course, the overall CASA percentage, there will be a decline which will happen for the banking system as some of these deposits get withdrawn or deployed alternatively by the customers. But we'll have to see whether how gradual that decline is. But there is still some ability that the banking system would have in reducing the cost of deposits on the term deposit side just given the liquidity in the system.

Right. And quickly if I can, on the INR525 billion in SDR. If I'm wrong, I think last quarter, did we say INR525 billion outstanding, was about INR27 million and now it has gone up to INR33 billon?

Yes, yes, yes.

So, what has gone up, is it drawdown on the existing sanctions?

No. We would have done the -- implemented INR525 billion additionally in those cases.

Could we have the new additions please, the standard ones, the standard ones which are obviously not in watchlist or restructured?

So that is the number, which you said. So the INR27 billion of implemented went up to INR33 billion, so INR6 billion rupees was the implementation that we had in the current quarter for INR525 billion.

Right. And the same thing would be about 500 addition in the SDR portfolio as well?

Yes.

Yes. So, that's why they give the outstanding number on a quarter-on-quarter basis.

Right. Okay. And could we have the number of employees as of the December quarter end? And while you are searching, I just wanted to get a sense, what's the strategy of retaining the savings account? Current account, I'm sure will flow out of a very large extent or is it totally beyond anyone's control?

The employee count is 80,900 compared to it was about 80,475 at September.

And on the savings bank account, it is really continuing to enhance the franchise considering that it is the transaction account. The more and more we make it sticky in terms of giving all the benefits of transaction, including through digital channels to the customers that we have always said that rather than paying additional interest, that should be the way in which we should be adding to savings bank account, that strategy will continue. And in the opening remarks, that's what we had mentioned that even during this demonetization period, the customer franchise got further enhanced through our digital solutions. So, I think the key for us is that to make sure that we give more and more transaction capabilities through the savings bank account to a savings bank customers, including through the digital payment channels, various utilities payments and whatever the day-to-day management of funds, if we can manage it through the facilities that we give the savings bank account, that is the way we believe that we can enhance the franchise. That has been our clear approach and that is what we have pushed over years.

So what do you think -- a couple of other banks have said they would be able to retain 30%. Do you think that's a reasonable number to work with?

I don't think we're in a position today. They have come out of demonetization to predict really how much will stay, but our our endeavor would be to make sure that on an average basis, not looking at the period end so much, but on an average basis, we'll continue to focus on the CASA. So that focus will continue, but how much will stay, very difficult to predict, because we are just coming out of the demonetization period. So we'll have to wait for a couple of months before we can really make a statement on that.

Sure. Sorry, I had to ask one more question. When I look at the loan book, substantial increases happened in the personal and credit cards. It also looks like the proportion of financing in vehicle loans has gone up, I think, probably in historical sense as well. Should we be worried about it, and given demonetization, and obviously, we are still not sure how this is going to pan out, do you think some of this -- the CIBIL score itself are sacrosanct?

So far, our experience has been that they are indeed sacrosanct. So, if you look at our own month on book kind of curves compared to the vintage curves, we are well within our own estimates of development of any asset quality pressures in these books. Our own focus has been to cross-sell to our existing customers through our branches, be it personal loans, credit cards. I think as long as our focus is there, including usage of CIBIL scores, we do believe that this would be a robust portfolio. So, at this level, which is only about 4.5% of the overall loan book as of December, we don't have any concerns on this portfolio.

Manish Agarwalla, PhillipCapital.

Can you just give us some sense on the coverage issue. I've understand that a lot of large (inaudible) is on the verge of resolution, where we have to take some kind of haircut. So what kind of coverage issue do you think is a comfortable one for you?

No. We have said that around the existing coverage ratio based on our past experience through the last cycle, we said in the past that we are quite comfortable at the current levels. It is just mathematically that number will change depending on the incremental slippages, and you would see it going up only when there is some abatement on the incremental slippage in the quarter, because we do provide based on the IRAC norms of RBI. So we'll have to really wait for it to happen before the ratio can be taken out. But to answer your question specifically, we are okay with the existing PCR for the NPLs.

Yes. Second question is on the non-funded book for the balance drilldown list. So can you share what is the non-funded exposure for INR275 billion of balance drilldown list?

So that is already included in that actually.

Existing NPAs --.

Yes. So, just to clarify, the INR275 billion includes non-fund-based exposure in respect of those (inaudible). The other one -- these are all non-NPLs. So the other one we talked about is an NPL because their NPL ratios are calculated based on the fund-based outstanding in respect of them. We have disclosed separately the non-fund-based outstanding in respect of the fund-based exposures, which have been classified as NPL and put in the balance sheet. So, that number was about INR32 billion, INR33 billion earlier which has come down to INR16 billion now.

Okay. So the INR275 billion includes total exposure?

Yes, yes. For the (inaudible), both non-fund and fund included together.

Together.

(Operator Instructions) Nitin Aggarwal, Antique Stock Broking.

So if I look at the equity investment in subsidiaries, there is an increase in the equity investment in the Canadian subsidiary. So what is actually driven that, because I believe in the past, we have been looking to repatriate capital back?

You just check the number. There is no increase in equity in the Canadian subsidiary. We'll just look at the numbers, we have not infused any further capital. There is no increase.

Okay. This is on slide 58, if you look at. Sorry, I think this is my mistake. You are right, there is no increase.

No increase.

Yes. There is no increase, sorry. And secondly, if you can quantify the interest reversal that you've done on the overseas assets this quarter?

So, we don't disclose separately the interest reversals on (inaudible).

Pankaj Agarwal, Ambit Capital.

Can you share some details on how your retail loan disbursements are looking like in the month of January? Are they higher than December or still lower than December levels or equal to the December levels?

During the December quarter, in the month of November, the disbursements came down, and we saw some of that going back to a higher level in the month of December. For the current March quarter, we will talk about it once the quarter is done. It is too early to kind of talk about that. But overall, we do expect that from the much lower levels of disbursement that the industry and we saw in the month of November, there would be an improvement which we will continue to see.

But do you think that overall disbursements in March quarter could be at the level of pre-demonetization level or it could take more time before you reach those levels?

Difficult to say because interest rates have come down, so that should be good for the customers. So overall, we would definitely hope for it to -- we have said by the month of March, we'll expect things to go back to the earlier level. Weather for the full quarter, it is there or not, we'll have to just see.

And out of your total loan book, how much is floating rate loan book?

76% of the domestic book is floating rate.

Okay. 76%. So out of that 20% would be MCLR and 55% would be base rate, right? Is that the right interpretation?

Yes.

Abhishek Murarka, JM Financial.

I think most questions have been answered. So, just one data-keeping question, what is the outstanding SRs with you right now?

It's about INR28 billion. So, I'll just leave a slide on which it will be. It's about INR28 billion.

Okay. It's the same as the last quarter?

Yes, we didn't sell much.

Okay. And S4A I believe is nil anyway?

Yes. We have not implemented (inaudible).

MB Mahesh, Kotak Securities.

Just two questions. One, on the CASA ratio side, for the month of Jan, is this number on an average basis up or down? Just a qualitative feedback on how sticky the CASA ratio is as we speak today. And the second question is on the earlier question that you were asked, we had given on the coverage ratio, just trying to understand, on the resolutions that you're kind of discussing with various parties, what kind of haircuts are being kind of discussed out here and do you have sufficient coverage based on these numbers? And if specifically, if you can discuss on the power sector side, the reduction that you have seen this quarter, is it more driven by better performance of the Company, and if you could give your overall sense on the Power portfolio as well? Thanks.

So on the CASA side, I think we would not want to comment on the trends in January. I think as we earlier said, we will have to see during this quarter what is the overall trend in terms of withdrawals or reduction on the CASA deposits. It's too early for us to kind of have a sense on that. On the drilldown exposure, the movement which was there from the power sector was not really to do with an improvement in the Company's performance. So that is not the scenario there. Overall, I think, as Kannan mentioned, in terms of the coverage ratio that we have on the NPAs, we believe that given the past trends in the portfolio, that is something which would be adequate. Of course, it is lower than the coverage ratio that we used to have until a few quarters back, and that reduction is happened because of the increase in the NPAs over the last year or so. But overall, given the past experience, we would still be fine with the kind of coverage that we have. In terms of the various resolutions that we are working upon, the amount of sacrifice involved would vary from case to case, and the case itself it could be an NPA, it could be restructured loan, it could be a stressed loan, it is very difficult to kind of give an overall comment on that. But suffice to say that from our perspective, we would want to look at resolutions, and we believe that we hold adequate provisions to kind of progress resolutions as long as all the banks are also kind of doing that.

Sir, just one question on that, on the power side. In your overall portfolio, given that this particular portfolio has not seen too much of the impairment so far, where are you seeing this going in the next one year or so?

I think in terms of the overall power sector, if you look at the portfolio which is there in the drilldown list itself when we started the year, that is the portfolio which is the below-investment grade portfolio, so that definitely reflects the stressed part of the of the power portfolio. In addition to that, there is just this one exposure that we have, which is the gas-based power plant which is there, which we have given as a part of footnote on slide 32. So in terms of the overall stress, it is captured in the drilldown list. Beyond that, I don't think we have really any concern.

Okay, just one clarification. You're not seeing any additions at all in the sub-investment grade in these portfolios?

In these portfolio, again, as we had mentioned in the month of April that a very comprehensive exercise has been done by the risk team over the last couple of years to ensure that the internal credit ratings reflect the risk on that portfolio. So that is why we were pretty confident that we would not really be seeing any significant downgrades. We have seen some downgrades. You would see a small amount over the last few quarters. Otherwise, we have seen, for example, some downgrades outside of these sectors also. So it's not that we have not seen any downgrades, but in these sectors, we have not seen any downgrade.

(Operator Instructions) Rohan Mandora, Equirus Securities.

If you would just share how is the fresh sanctioning pipeline for home loans as well as other retail products post demonetization, how is the trend there and what is the outlook going ahead?

After the sharp slowdown in the month of November, we have seen an improvement, which has happened in the month of December. And as I said earlier, we will see this quarter, how it grows. The lowering of interest rate should definitely help, but there is, of course, an overhang of the expectation of customers on the property prices. So we'll have to see how this quarter progresses. We would expect, under normal circumstances, over the next two, three months, things should get back to normal level.

Okay. So the other (inaudible) of enquiries that are coming in, maybe geographically, if there is some trend that you could share?

There's an overall increase in December and further an overall increase in January. So, actually, it's not geographically very different.

Jinal Fofalia, Alpha Advisors.

Sir, could you just tell us the disbursement growth for the previous quarter?

We actually don't disclose this, the disbursement numbers.

Karthik V, Investec.

If you could mention the reason for the increase of our restructured book despite a slippage of INR240 crores.

We can't hear you, there is lot of echo from your --.

Karthik, may I request you to speak on the handset mode, please?

Sorry for that. The increase in our restructured book despite a slippage of INR240 crores and the increase in NPAs of home finance subsidiary?

On the restructured loans, there was a couple of small cases which got restructured during the quarter, which were projects and implementation. So that is why the number broadly just was marginally higher compared to the September level. And your second question was in the ICICI Home Finance company, there was one mid-sized real estate exposure which slipped into the NPA bucket during the quarter, and that is the reason why the NPA ratio went up for the Home Finance Company.

Just one last question. Overall, what would, from an overall economy or our bank performance perspective, give you confidence to come out with guidance in terms of metrics like credit costs or margins?

Actually, the whole impact on credit cost and margins will depend on a lot of factors around the ecosystem, including not just what changes happen in the economy or with specific industries, but how the ecosystems move around banks decision-making, around the legal processes and so on. So I think it's not very prudent to give quarter-wise forward-looking statements.

Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I'll now hand the conference over to Ms. Chanda Kochhar for closing comments.

Well, thank you. I think we had an extensive comprehensive set of questions and discussion. So thank you all for spending the time.

Thank you. On behalf of ICICI Bank, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.