sbi investor presentation q4 2023

SBI Q4 Results: PAT zooms 83% YoY to Rs 16,695 crore; NII up 29%

India's largest bank State Bank of India (SBI) reported an 83% growth in standalone net profit at Rs 16,695 crore for the quarter ended March. It was Rs 9,113 crore in the same quarter last year. The Board declared a dividend of Rs 11.30 per equity share (1130%) for the financial year ended March 2023. The date of payment is fixed on June 14. Net interest income for the fourth quarter rose 29% to Rs 40,393 crore, compared with Rs 31,198 crore in the corresponding quarter of last year.

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NIM expansion, loan growth: Top 5 things to track in SBI's Q4FY23 results

Sbi q4 result preview: according to bloomberg's consensus estimate, sbi may see net profit growth of 66.6 per cent yoy/7 per cent qoq to rs 15,186 crore.

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State Bank of India Q4 2023 earnings beat forecasts, net profit +83%

India’s largest lender posts fourth quarter net income of $2.0bn

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State Bank of India Q4 2023 earnings top analyst forecasts with net profit ahead by 83.2% y-o-y to INR167bn ($2.04bn).

The quarterly net profit for the lender for the three months to end March is a record for SBI.

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State bank of india.

For the full fiscal 2023, net profit rises by 59% y-o-y to INR502.3bn.

SBI’s ROA and ROE for the financial year stand at 0.96% and 19.43% respectively. The ROA at 1.23% for the quarter improves by 49 basis points y-o-y.

Net Interest Income for the full fiscal increases by 19.99% y-o-y. The bank’s domestic net interest margin rises by 22 basis points to 3.58% for fiscal 2023. The same metric for the fourth quarter rises by 44 basis points y-o-y to 3.84%.

State Bank of India Q4 2023 credit, deposits growth

Domestic Advances rise by 15.38% y-o-y. Domestic advances growth is driven by retail personal advances (+17.64 y-o-y) followed by SME advances up by 17.59% y-o-y. •

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Bank deposits rise by 9.19% y-o-y, with low-cost CASA deposits ahead by 4.95% y-o-y. An improvement in asset quality results in provisions and contingencies more than halving to INR33.2bn. Digital growth results in 64% of SB accounts and 35% of retail asset accounts being acquired digitally.

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At SBI, customer-centricity is of paramount importance, and we have a proactive and flexible approach to meet the changing financial demands of our customers. We employ cutting-edge technology and new solutions to offer seamless and efficient banking experiences, keeping our finger on the pulse of market developments. We aspire to surpass expectations and establish long-term relationships with our valued clients by providing responsive customer service, multi-channel accessibility, and customised solutions.

We adhere to the highest standards of corporate governance, ethics, and openness while operating with uncompromising integrity. To limit risk and safeguard the interests of our stakeholders, we comply with regulations and employ responsible lending practices. In addition to this, we promote environmental responsibility by sponsoring initiatives with favourable social and environmental benefits. Our committment to corporate social responsibility helps strengthen communities, allowing for inclusive growth and societal progress.

We have always stood resolute in the face of challenges, fortified by a robust framework, that ensures resilience across operations. We maintain a strong capital base, diligent risk management practices, and diversified business portfolios to withstand market fluctuations. Our strategic focus on digital transformation equips us with the agility to adapt swiftly to changing landscapes, ensuring uninterrupted banking services and fostering financial stability.

Over the period of more than 200 years, we have been able to cement SBI's position as the largest bank in the country. We have been able to successfully redefine the banking landscape in India through the introduction of various industry-first products and services for all our customer segments.

Transparency

Sustainability

Be the Bank of Choice for a Transforming India

Committed to providing Simple, Responsive and Innovative Financial Solutions

*As on 31st March 2023

Dear Shareholders, It gives me immense pleasure to place before you the highlights of your Bank's performance during FY2023. Details of the achievements and initiatives taken by your Bank are provided in the Annual Report for FY2023. “ Dinesh Kumar Khara

At SBI, our focus has always been on ensuring to offer a wide range of banking products and services to all our customer segments. Through our various branches and outlets, joint ventures, subsidiaries and associate companies, we are able to meet the requirements of all our customers.

Personal Banking

HOME LOAN PROVIDER IN INDIA

Rural Banking

LENDER TO FARMING AND AGRICULTURAL ACTIVITIES IN INDIA

International Banking Group

INDIAN BANK TO EXPAND ITS PRESENCE GLOBALLY

SME Banking

TOTAL SME CUSTOMERS

Corporate Banking

One Stop Solution

FOR FINANCIAL SERVICES AND PRODUCTS TO TOP-RATED CORPORATES AND THEIR FOREIGN ASSOCIATES AND SUBSIDIARIES

Government Banking

MARKET SHARE IN CENTRAL GOVERNMENT BUSINESS

Preservation of the natural environment has always been a priority for SBI, which is also reflected in sustainability being one of your Bank's core values. However, the manifestation of climate-related risks and opportunities has given further impetus to your Bank’s efforts to strengthen and formalise its natural capital management.

• ESG Financing Framework
• Syndicated Social Loan
• Renewable Energy Financing
• Recycling and Environmental Observances
• Electric Vehicle (EV) Charging Facility
• Green Building and Renewable Energy Initiatives

SBI's Carbon Disclosure Project (CDP) Ratings

Awarded score for FY2022 is two notches higher than previous score

Highest score since inception

The fact that we have been able to establish ourselves as the largest bank in the country is largely due to our customer-centricity and constant dedication towards improving the experience of our customers.

• CLIC (Customer Liability Identification Centre)
• Town Hall Meetings

CENTRES WHERE OPEN HOUSE INTERACTIONS WERE CONDUCTED

CUSTOMERS PREFERRED DIGITAL CHANNELS

CUSTOMERS PREFERRED OTHER CHANNELS

At SBI, we are fully aware that our employees are the focal point of our growth engine. We are always striving to create an environment and integrate processes that would not only enhance employee productivity and experience, but instil a sense of pride in being a part of the SBI family. We are always in the process of reviewing our HR policies and making relevant adjustments with regard to the present context. In order to enhance productivity, we have embraced the digital wave and are integrating it across all functions to ensure a seamless experience for our people.

• Gender Diversity
• Training and Development
• Embracing Digitalisation
• Reservations and Equal Opportunities

TOTAL EMPLOYEES

SUBORDINATE STAFF AND OTHERS

We believe that our success is intertwined with the prosperity of the society we serve, and therefore, we actively engage in initiatives focused on education, healthcare, environmental sustainability, and community development. By embracing corporate social responsibility, we strengthen our bond with stakeholders, foster inclusive growth, and contribute to building a better and more equitable future for all.

OUR KEY CSR INITIATIVES

• Environment
• Women Empowerment
• Armed Force Veterans
• Protection of National Heritage
• Swacchhata Pakhwada

SBI concluded a Landmark US$ 1 Billion Syndicated Social Loan, which is Asia Pacific’s largest and second largest globally led by a commercial bank

₹ 316.76 Crore

CSR SPEND IN FY2023

CSR BENEFICIARIES

IBA 18th Annual Technology Award 2022

Awarded “Best Performing Bank under CLSS” from Government of India, Ministry of Housing & Urban Affairs under PMAY-U Awards-2021: 150 Days Challenge”

Awarded “Special Jury Award for Consistent Transformation" from BT-KPMG Best Banks & Fintechs Awards 2022

Awarded "India’s Best Annual Report Awards-2022"

Awarded “Best Security Awareness Award” and “Best Security Operations Centre of the year” from NASSCOMDSCI Excellence Awards 2022

Awarded "The Best Bank Award 2022" from Global Finance Magazine

ET BFSI Best Brands 2022 and ET BFSI Best Brands 2023

ICAI awards for excellence in financial reporting for year 2021-22 Gold Shield, category I – Public Sector Banks

SBI SHINES GOLD. Honoured With 3 Gold Awards at ET Human Capital Awards Ceremony.

• HR Leader of the Year – Large Scale Organisations
• Excellence in Business Continuity Planning & Management
• Most Valuable Employer during COVID -19

Awarded “Issuer of the Year - Private Placement” at the 5th National Summit & Awards on Corporate Bond Market 2022 by the Associated Chambers of Commerce and Industry of India (ASSOCHAM)

ET HR World Future Skill Awards: Awarded Gold under the category ‘Best Learning Management System’ for Gyanodaya - “e-learning” and askSBI, and the Silver under the category “High Impact Certification Program” for Role Based Certifications

Dear Shareholders, It gives me immense pleasure to place before you the highlights of your Bank's performance during FY2023. Details of the achievements and initiatives taken by your Bank are provided in the Annual Report for FY2023.

The past year has been another turbulent year with the global economy marred by profound shocks and unprecedented uncertainty. The global economic growth has moderated amidst the prolonged Russia-Ukraine war, even though the effect of the pandemic has receded. Food and energy price shocks affected the general prices, with wage- price spiral leading to elevated inflation across countries. The recent failures of banks in the United States are a reminder of the challenges posed by the interaction between tighter monetary and financial conditions and the build- up in vulnerabilities. Though inflation has receded with central banks raising interest rates, underlying price pressures are proving sticky, with labor markets being tight in several economies. In parallel, debt levels remain high, limiting the ability of fiscal policymakers to respond to new challenges. Commodity prices have moderated, but the elevated geopolitical tensions are the key risks. However, earlier than expected opening of China is easing supply chain disruptions and renewing hopes for moderate economic recovery. As per IMF projections, world growth will bottom out at 2.8% this year before rising modestly to 3.0% in 2024.

Against this backdrop of global uncertainties, Indian economy has remained resilient with robust agriculture and services sector. Meanwhile, on the external front, exports of goods and services reached new heights supported by strong demand of Indian services. India’s GDP in FY2023 grew at 7.2%, driven by buoyant investment and private consumption. Looking ahead, real GDP growth is projected at 6.5% in FY2024 (RBI), with economic activity backed by improving rural demand, the Government’s thrust on infrastructure spending, revival in corporate investment, healthy bank credit, and moderating commodity prices.

During the year FY2023, your Bank’s business grew at a faster pace than the banking industry, both in deposits and credit.

In FY2023, the whole Bank deposits grew by 9.19% YoY to ` 44.23 Lakh Crore, of which domestic deposits increased by 8.50% to ` 42.53 Lakh Crore and foreign offices deposits by 29.60% to ` 1.70 Lakh Crore. CASA deposits grew by 4.95% to ` 18.62 Lakh Crore and CASA ratio of your Bank is at 43.80% as of March FY2023. Current account deposits grew by 7.47%, while saving bank deposits grew by 4.51%. Your Bank has opened 1.24 Crore Regular Savings Bank Accounts, of which 64% accounts were acquired digitally through YONO during FY2023.

Your Bank’s gross advances grew by 15.99% to ` 32.69 Lakh Crore, compared to a growth of 11.0% in FY2022. While domestic advances grew by 15.38% to ` 27.76 Lakh Crore, foreign offices advances grew by 19.55% to ` 4.92 Lakh Crore. You will be happy to know that your Bank’s domestic advances growth (15.38%) is higher than the banking industry’s growth of 15.0% in FY2023, led by robust growth in all the sectors. Among all the business segments, retail personal loans registered the highest YoY growth of 17.64% touching ` 11.79 Lakh Crore followed by SME advances which grew by 17.59% to ` 3.59 Lakh Crore. Agri & Corporate loans registered a YoY growth of 13.31% to ` 2.58 Lakh Crore and 12.52% to ` 9.79 Lakh Crore, respectively.

The 3-year CAGR of retail personal loans indicate a 16.0% growth and now accounts 42.5% of domestic advances in FY2023. Among the retail personal loans, Xpress credit loans crossed the ` 3 Lakh Crore mark, with YoY growth of 22.72% to ` 3.04 Lakh Crore in FY2023. Home loans and Auto loans, grew by 14.07% to ` 6.41 Lakh Crore and 23.22% to ` 97,523 Crore respectively during FY2023. As on March 2023, your Bank’s market share in Home loans and Auto loans is at 33.1% and 19.4% respectively.

With the interest rate hikes across the globe to tame inflation, your Bank’s prudent investment decisions helped contain the impact of rising interest rates on the investment portfolio. Your Bank’s investment portfolio increased by 6.3% to ` 15.87 Lakh Crore in FY2023, of which 96% are domestic investments. Within the domestic investment portfolio, 62.94% is in HTM category while the rest is under AFS & HFT category. The yield on investment at 6.51% is in line with the interest rate scenario of FY2023. Your Bank’s liquidity position remains comfortable, and it is well-placed to handle any moderation in liquidity.

Profitability

During FY2023, your Bank optimally leveraged the opportunities inherent in the resurgent and resilient Indian economy. Buoyed by relentless pursuit of best practices and strategies across niche segments, the standalone net profit during FY2023 rose by over 58% to ` 50,232 Crore from previous year’s net profit of ` 31,676 Crore (FY2022). Your Bank has registered significant improvements on the asset quality front, provision coverage ratio, RoE/RoA, NII and NIM, while also giving highest standalone profit in FY2023 by any listed corporate, domestically.

The Net Interest Income (NII) of your Bank registered a robust growth of 19.99% over the previous year at ` 1,44,841 Crore in FY2023 ( ` 1,20,708 Crore in FY2022). Lending book grew across all segments and remained adequately diversified with traditional bastions like Xpress credit and Housing loans growing handsomely, all contributing to higher interest income. Control in slippages and moderation in credit costs showed marked improvements. Credit costs further improved by 23 basis points to 0.32%, continuing its momentum. Total provisions made during FY2023 stood at ` 33,481 Crore, falling 7.51% ( ` 2717 Crore) over FY2022 level. The operating profit of your Bank during FY2023 stood at ` 83,713 Crore, a marked improvement of 11.18% over FY2022 ( ` 75,292 Crore that had grown by 5.22%). The cost to income ratio increased by 56 basis points in FY2023 (over FY2022), though standing a little elevated at 53.87 for the FY2023 against 53.31 (FY2022) due to higher provisions on account of wage hike negotiations.

Return on Assets (RoA) for Q4 FY2023 stood at 1.23% (0.96% for the full FY2023 against 0.67% for FY2022), signalling that the journey towards guidance of ROA of 1%+ was on track with continuous improvement in ROA from FY2020 onwards. Return on Equity (RoE) showed marked improvement of 551 basis points, rising to 19.43% for the FY2023 against 13.92% during FY2022 (as against improvement of 398 basis points displayed in FY2022).

The capital ratios of the Bank continued to improve during the financial year on the back of better planning, plough back of profit, and efficient risk management of the banking book. The CET-1 ratio improved by 33bps to reach 10.27% as of March 2023.

The overall Capital Adequacy Ratio (CAR) as at the end of March 2023 stands at 14.68%, improving by 85 bps YoY. With healthy profits in FY2023, the capital position of the Bank remains comfortable to tap future growth opportunities.

I am happy to announce that the Board of your Bank has declared a dividend of ` 11.30 per equity share (i.e. 1130%) for the financial year ended March 31, 2023.

Asset Quality

The focus on asset quality and containing risk has been an area of continued attention for the Bank. There was a broad-based improvement in the asset quality of your Bank in FY2023. The gross non-performing assets (NPA) of the Bank dropped by 119 bps YoY and stood at 2.78% as of March 2023. The net NPA ratio accordingly stands at 0.67% as of March 2023 down 35 bps YoY.

Slippage, which indicates the incremental fall in credit quality during the year, was down by 26.38% compared to FY2022 and as a result, the slippage ratio for FY2023 improved by 34 bps YoY reaching 0.65% as of March 2023.

The proactive management of risk during the year resulted in improvement in Provision Coverage Ratio (PCR) by 135 bps YoY, standing at 76.39% by the close of financial year.

Customer Centricity

At SBI, customer-centricity is of paramount importance, and we undertake a proactive and flexible approach to cater to the changing financial needs of our customers.

We employ cutting-edge technology and new solutions to offer seamless and efficient banking experiences, keeping our finger on the pulse of market developments. Our objective is to significantly increase our presence across the country and penetrate deeper into new regions to ensure that all our customers have access to our services.

Our multichannel delivery model – digital, mobile, ATM, internet, social media and branches, offer customers a wide choice to carry out their transactions, as per their convenience at any time and place. Your Bank has one of the largest ATM networks in the country, with 65,627 ATMs, including Automated Deposit and Withdrawal Machines (ADWMs), as on March 31, 2023. On an average, ~1.3 Crore transactions are recorded every day at your Bank’s ATMs/ADWMs and 5.66 Lakh cash deposit transactions at ADWMs.

Your Bank has established a centralised dedicated cell, CLIC (Customer Liability Identification Centre), across all 17 circles. This cell expedites the resolution of complaints related to unauthorised electronic debit transactions (UAED), ensuring a swift and efficient customer experience.

To ensure optimal service quality, incognito visits were carried out at various branches. These visits assessed various aspects such as infrastructure availability, staff readiness, and overall branch activity.

To improve customer convenience and ease of banking, your Bank is extending doorstep banking services through agents to all customers at the top 100 banking centres. Senior Citizens more than 70 years of age and differently abled persons are being extended doorstep banking services at all banking centres.

With a presence across all time zones through its 235 points of presence in 29 countries, your Bank has gradually spread its wings globally and has become a pioneer of International Banking among the Indian banks. During FY2023, your Bank has opened one India visa application centre at Khulna (Bangladesh) and 5 branches and 3 extension counters through its overseas subsidiary in Nepal.

Technology & Innovation

Your Bank uses technology in every aspect of the value proposition - from business, designing products, streamlining processes, and improving delivery, to monitoring. Your Bank has taken several initiatives to build a quality SME portfolio in a risk-mitigated manner and has implemented significant changes to ensure ease of banking.

YONO Business combines all corporate banking needs by being a one-stop solution for the customer. Your Bank deploys the most advanced technologies like artificial intelligence, machine learning and business analytics, among others, to augment its product offerings to enhance customer delight each time, without exception. Under YONO, Pre- Approved Business Loan (PABL) has recorded a YoY growth of 1076% to ` 3,605 Crore in FY2023.

Following initiatives have been implemented during the year:

1. New digital products under development in collaboration with Fintech/ AA/ GST

MSME SAHAJ Seller’s Invoice Financing on Yono Business providing digital loan and financing of GST invoice Seller’s Invoice Financing Scheme under GST Sahay, a GoI initiative, provides digital loan through GST Sahay app, which is a marketplace.

2. Contactless Lending Platform (CLP):

Your Bank is one of the stakeholders in SIDBI-led PSB Consortium, which offers SMEs quick and simple access to loans through CLP platform psbloanin59minutes.com. Eligible proposals receive instant in-principle approval based on GST returns, IT returns and account statements.

For FY2023, your Bank has already sanctioned 6,342 leads worth ` 2,940.24 Crore, with ticket size ranging from ` 1 Lakh to ` 5 Crore.

To facilitate digitalisation and streamline the issuance of credit, a new mechanism for the auto-renewal of leads obtained from CLP has been launched. This approach will guarantee the prompt renewal of accounts considered good and financially satisfactory, with minimal need for manual work. It allows Relationship Managers (SME) to concentrate on sales and marketing activities.

3. Assisted Journey for ETCB/ NTCB/ NTB Customers

The Assisted Journey allows operating functionaries such as RM (SME) team, field officers and Branch Managers to initiate the CLP journey on behalf of the customer without needing them to input any details. These can be uploaded directly on the portal.

4. Supply Chain Finance

By leveraging technology and branch network, your Bank has been a major player in supply chain finance while strengthening corporate relationships across sectors. During FY2023, supply chain finance was extended to 34,592 dealers with total sanctioned limits of over ` 44,565 Crore e-DFS (Electronic Dealer Financing Scheme) and ` 16,437 Crore e-VFS (Electronic Vendor Financing Scheme) respectively.

Your Bank entered into 16 new e-DFS and 37 new e-VFS tie-ups during the year. Your Bank has already implemented CLP for e-DFS and e-VFS. Your Bank has also simplified the e-VFS processes and built a new digital interface “psbloansin59minutes.com” on CLP for improved customer experience. It has also introduced Supply Chain Finance Centralised Processing Centres to reduce TAT for proposal processing. To ring-fence the supply chain portfolio, it has implemented suitable risk mitigation measures and risk-based pricing. Your Bank is also launching various campaigns for onboarding dealers/ vendors and broadening the channel finance base.

Your Bank is the first Public Sector Bank to register as a financier on the TReDS platform and is present on all the three TReDS platforms in the country -RXIL, M1 Exchange and Invoicemart, to provide finance to MSMEs. In FY2023, your Bank has discounted 26,973 bills amounting to ` 9,800 Crore, registering a YoY growth of 144%.

To further penetrate the agriculture and rural market, your Bank has floated State Bank Operations Support Services (SBOSS), which is expected to help your Bank reach out to a larger populace, coupled with improved efficiency in sourcing and renewal of KCC loans.

Your Bank is actively looking to partner with agri-techs and start-ups to cater to the financial needs across the agriculture value chain. Your Bank has opened specialised Start-up branches at Bengaluru, Mumbai, Delhi and Chennai to offer one-stop solutions to Start-ups.

In order to make banking more convenient for customers, your Bank has introduced the V-CIP digital process, which allows account opening from home, eliminating the need to visit branches. During FY2023, 4.70 Lakh customers joined us through V-CIP.

As a result of the various initiatives taken by your Bank, 64% of total Regular Savings Bank Accounts have been opened digitally during FY2023.

Your Bank has ensured customer convenience and portfolio growth by offering a comprehensive range of products on multiple platforms, with higher profit margins. YONO offers digital loans in real-time, eliminating the need for physical documentation or visiting a branch. Additionally, real-time pre-approved personal loan eligibility by sending SMS has been introduced.

Key initiatives during the FY on ATMs/ ADWMs front chiefly include:

• Implementing Enhanced cash dispensation logic for small denomination notes at all Bank’s ATMs.
• OTP based Cash withdrawal – addition of new feature – 30 sec Timer display on ATM screen to make customer aware about the time available for entering the OTP and avoid time out.
• Pro-active reversal of failed transactions to customers.
• Installation of 15000 new GCC machines.
• Cassette Swap has been implemented in 12907 Branches managed by CAPEX ATMs/ ADWMs
• 49,719 sites have been covered under electronic surveillance solutions (eSS)
• SMS is being sent to customers for availing free Balance Enquiry & Mini Statement from SBI ATMs and the above services are also available on WhatsApp banking.
• Replacement of 3,250 old SWAYAM machines has been completed.
• Display of “Cash not available” on ATM Screen whenever the ATMs are out of Cash (Before the transactions are undertaken by the customers).

Your Bank has deployed 20,137 Barcode Based Passbook Printing Kiosks (SWAYAMs) at 17,643 branches and 13 lakh transactions are processed on daily basis, migrating ~3.65 Crore passbook printing transactions every month from branch counters. Your Bank has also deployed 33,077 GCC terminals at 21,446 retail branches for transactions through debit cards to promote Green Banking. To combat the Cybercrimes, Ministry of Home Affairs has rolled out cybercrime reporting Portal with dedicated email (www.cybercrime.gov. in) and a helpline number 1930 to report the cybercrime incidents by the victims. Cybercrime cells at 17 circles of your Bank work in multiple shifts to attend to customer complaints concerning cyber frauds.

As on 31.03.2023, a total of 3,04,450 complaints have been attended, and an amount of ` 51.50 Crore has been put on hold.

Financial Inclusion

Your Bank has taken significant steps to promote financial inclusion through a vast network of Business Correspondents (BCs)/Customer Service Points (CSPs). As on 31st March 2023, your Bank has 76,089 CSPs, providing access to 32 banking products and services in unbanked areas while reducing footfalls in the branches. The BC/CSP channel has recorded around 53.32 Crore transactions amounting to ` 3,30,389 Crore during FY2023. On an average, around 25-30 Lakh transactions per day are routed through the BC/CSP channel.

The BC/CSP channel has opened 14.69 Crore BSBD accounts with ` 50,091 Crore deposits and has brought the unbanked / underprivileged sections of society within the ambit of the formal Banking system by promoting various social security schemes, low-cost microinsurance products (PMJJBY, PMSBY) and pension schemes (APY).

Your Bank is the undisputed market leader in customer enrolment for government-sponsored social security schemes viz, PMJJBY, PMSBY and APY. The share of banks in PMJJBY, PMSBY and APY are 43.83%, 40.85% and 31.78% respectively, among all Public Sector banks. During FY2023, your Bank has achieved 27.88 Lakh APY enrolments as against the target of 17.90 Lakh allotted by PFRDA (~156% of the target), simultaneously winning major awards from the PFRDA under various APY campaigns.

Environmental, Social & Governance (ESG) Practices

We believe that our success is intertwined with the prosperity of the society we serve, and therefore, we actively engage in initiatives focused on education, healthcare, environmental sustainability, and community development. By embracing corporate social responsibility, we strengthen our bond with stakeholders, foster inclusive growth, and contribute to building a better and more equitable future for all.

For FY2023, an amount of ` 316.76 Crore has been allocated for undertaking CSR activities by your Bank. Out of which, an amount of ` 194.78 Crore is allocated to SBI Foundation for undertaking CSR activities in project mode.

Your Bank has developed an ESG financing framework aligned with sustainable finance guidelines and principles. This framework serves as a guide for our future bond and loan issuance programs, ensuring that proceeds are used to finance or refinance eligible assets and projects with environmental or social benefits. It has received a Second Party Opinion to validate its robustness and adherence to policy prescriptions.

To promote ESG and to underscore the Bank’s longstanding commitment to supporting green and social projects, your Bank concluded its largest inaugural Syndicated Social loan of $1 billion ($500 million + green shoe of $500 million) making it the largest ESG loan raised by a commercial Bank in the Asia-Pacific market.

Taking cognizance of the importance of managing the efficiency of our owned facilities, your Bank is making continuous efforts to develop a green ecosystem. Under this initiative, your Bank’s prominent establishments viz Corporate Office, Global IT Centre and 6 of the Local Head Offices (LHOs) have shifted to green power through green tariff policy or through open access channels via solar/wind.

In line with the country’s vision for scaling up Renewable Energy (RE) power generation, your Bank is also facilitating RE financing in a big way. Your Bank has availed lines of credit from multilateral agencies viz. the World Bank, KfW German Development Bank etc., for onward lending to RE power developers.

Strategic New Initiatives

During FY2023, your Bank has continued undertaking strategic initiatives to achieve the long-term objectives set by the Bank. Some of the important initiatives are:

• In line with government policies on electric mobility, your Bank has partnered with Tata Power to set up EV charging facilities at various identified premises, including our corporate office, local head offices, and residential premises across the country. This initiative promotes sustainable mobility and encourages the use of electric vehicles among our employees.
• As a part of its commitment to sustainable development, your Bank has incorporated rooftop solar photo voltaic systems financing as a component of the home loan project cost. This, coupled with an extensive micro market study and the opening of 133 processing centres across India have enabled greater penetration of home loans in Tier-II and Tier-III cities.
• Furthermore, IT has developed ‘SBI- Easy ride’, an end-to-end digital product which enables two-wheeler financing without the need to visit any branch for sanction or disbursement.
• In case of personal loan products, your Bank has integrated Digital Document Execution into Xpress Credit loans, utilising e-stamping and e-signature for real-time document execution to make it customer-centric.
• For the benefit of its NRI clientele, your Bank has launched a number of services in FY2023 including tie- up with ‘Remitly’ to facilitate swift remittance to India, remittance facility using UPI Application, launch of NRE non-callable deposit scheme, increase of daily limit for forex outward remittances through FX-Out (INB Channel) from NRE Account to US$ 25000, among others.
• Your Bank has introduced SBI e-Forex facility in the YONO Business - Android app to enable customers to book foreign exchange rates on the go. The same is expected to be rolled out shortly for the iOS platform as well.
• External benchmark (T-Bill Rate) linked interest rates have been rolled out to WCL and LC Bill Discounting facilities to incentivise top-rated borrowers and encourage the utilisation of their limits. To stay competitive, this option is even offered for Rupee Export Packing Credit facilities.
• Project Kuber was launched in your Bank, which is driving a special focus on marketing of current account deposits and various transaction banking products in CCG vertical.
• Your Bank recognises the contribution of its ex-employees, whose dedicated lifelong services brought your Bank to its present height. It initiated ‘Project SBI Cares’ for automation and streamlining of various pre-retirement and post-retirement benefits and processes through its HRMS portal.
• Further, your Bank has adopted a branch-based model for manpower planning linked to productivity parameters at the branches.
• Your Bank has been at the forefront of launching various innovative solutions. Some of the initiatives taken during the year include development of Internal Financial Controls over Financial Reporting (IFCoFR) Portal, a dashboard for monitoring of gold retention limit, and new features in SBI Digi Vault Application.
• Your Bank has launched a Fund Management Solution to meet the requirements of Government of India pertaining to Centrally Sponsored Schemes (CSS) under Single Nodal Account (SNA) covering 433 schemes of 23 States/UTs and Central Sector Scheme through Central Nodal Account (CNA) mechanism covering 124 schemes.

Subsidiaries

Through its subsidiaries, your Bank provides a complete bouquet of financial products and services to its customers.

On a consolidated basis, SBI Capital Markets Limited has posted a profit after tax (PAT) of ` 725.39 Crore for FY2023 as against ` 635.42 Crore in the previous year. SBICAP Securities Limited (SSL), a wholly owned subsidiary of SBI Capital Markets Limited and broking arm of the SBI Group posted a net profit of ` 308 Crore during the year ended FY2023 as against ` 233 Crore in FY2022.

With a total Gross Written Premium (GWP) of ` 10,888 Crore and a YoY growth of 18%, the SBI General Insurance Company Limited achieved the milestone of ` 10,000 Crore GWP in FY2023. SBI General increased its market share from 4.15% in FY2022 to 4.21% in FY2023. The company’s presence has grown from 17 locations in 2011 to over 141 branches across India. The company has served over 34 Crore clients to date, with claims of ` 22,000 Crore handled.

SBI Life Insurance Company Limited has proven its market leadership in the year ended March 31, 2023, with numero- uno position in Individual New Business Premium, Individual Rated Premium, Total Rated Premium and Total New Business Premium among the private insurers. The company witnessed growth in Individual New business premium of 26.7% vis-à-vis the industry growth of 15.4% with a private market share of 24.3% & Industry market share of 14.5%. The company generated a PAT of ` 1,721 Crore in FY2023 against ` 1,506 Crore in FY2022.

SBI Cards and Payment Services Limited registered PAT of ` 2,258 Crore in FY2023 as compared to ` 1,616 Crore in FY2022, an increase of 40% YoY.

SBI Funds Management Limited is the fastest growing AMCs with a growth of over 10.83% against the industry average of 5.55% in FY2023. It has one of largest investor bases with over 121.80 Lakh live investor folios with about 27 Lakh new investor folios added in FY2023. The company posted a PAT of ` 1,331.20 Crore for FY2023 as against ` 1070.65 Crore earned during FY2022.

SBI Global Factors Limited, a leading NBFC factor providing both Domestic and Export Factoring services under one roof, registered a turnover of ` 5,544 Crore for FY2023 as compared to turnover of ` 4,773 Crore in FY2022.

SBI Pension Funds Private Limited has earned net profit of ` 53.51 Crore for FY2023. The total Assets Under Management (AUM) of the company as on 31st March 2023 is ` 3,39,006 Crore (YoY growth of 20.01%). The company maintains lead position among 10 PFMs in terms of AUM with market share of 37.71%.

Awards and Recognition

Your Bank’s efforts in various areas of banking were acknowledged and many awards and recognitions were received during the year. Your Bank was awarded ET BFSI Best Brands award for 2022 and 2023. The Global Finance Magazine also awarded "The Best Bank Award 2022".

Your Bank has been awarded by ET HR World Future Skill Awards, ‘Gold’ under the category ‘Best Learning Management System’ for Gyanodaya “e-learning” and askSBI, and ‘Silver’ under the category “High Impact Certification Programme” for Role Based Certifications. In HR policies, your Bank received 3-Gold Awards at ET Human Capital Awards, namely HR Leader of the Year - Large Scale Organisations; Excellence in Business Continuity Planning & Management and Most Valuable Employer during COVID-19.

Your Bank was adjudged the “Winner”, for the fourth year in succession, in Best Digital Financial Inclusion category among Large Banks in IBA Annual Banking Technology Awards 2022. In home loans, Government of India awarded “Best Performing Bank under CLSS” under ‘PMAY-U Awards 2021: 150 Days Challenge’.

ICAI recognized your Bank’s financial reporting standards by awarding the Gold Shield-Category-I for Public Sector Banks- FY 2021-22. Additionally, your Bank also bagged “India’s Best Annual Report Awards 2022.

For its ESG initiatives, your Bank has been awarded CDP score of “B”, the highest score in the last 5 years by CDP (formerly Carbon Disclosure Project), the global disclosure system for companies to manage their environmental impact. The score of B represents that the organisation has addressed the environmental impact of their business and has ensured good environmental management.

Your Bank was awarded “Issuer of the Year Private Placement” at the 5th National Summit & Awards on Corporate Bond Market 2022 by Associated Chambers of Commerce and Industry of India (ASSOCHAM). Further, NASSCOM DSCI Excellence Awards 2022 awarded “Best Security Awareness and “Best Security Operations Centre of the year”.

Way Forward

Overall FY2023 has been a good year for the Bank. Despite the geopolitical headwinds, resurgence of COVID-19 in China, Indian economy showed remarkable resilience and the same reflects in your Banks financials.

Nevertheless, last financial year was not without its share of surprises. The episodes of financial instability in the US and European banking took markets by surprise but did not impact the Bank. However, vulnerabilities may emerge as interest rates normalise from their ultra-low levels. This warrants proactive identification and mitigation of risk in the current financial year.

Your Bank has had a healthy run of reporting robust financial results successively for the last three years. Despite the challenges, your Bank’s ability to absorb unexpected losses has improved. Healthy internal accruals reinforce its ability to tap capital markets, if warranted, in future. Risk management practices have been strengthened over the years and incremental improvements remain a perpetual work in progress.

Accommodating environment induced financial risk in the bank's overall risk management strategy is the next milestone that the Bank will aim for in FY2024. It is widely expected that RBI will make tangible progress in this direction during this financial year. Your Bank remains committed to incorporating principles and practices that promote sustainable banking operations and the same reflects in our CDP score of “B” for FY2022, highest in last five years.

The conscious strategy to structurally transform your Bank through digitisation of systems and process has progressed well. The Bank’s flagship digital offering SBI YONO has shown growth across products and business lines. The Bank aims to be agile and imaginative in respect of its digital offerings so that YONO becomes a “Primary digital bank of choice” in coming years.

The use of business analytics and AI/ ML in decision making and operations will be taken to the next logical level by deploying NextGen Data Warehouse and Data Lake. Mutually beneficial partnerships with fintechs and NBFCs under RBI’s co-lending framework will be explored.

Your Bank is comfortably placed in terms of growth capital in the current year. With declining credit cost, opportunities for lending in sunrise sectors such as sectors identified under PLI scheme, renewables as well as electric mobility will be explored to diversify the portfolio. The RBI’s guidelines on green deposits opens new opportunities on the liability side to green the Bank’s balance sheet.

Summing up, despite the economic headwinds, your Bank has innovated well to respond to the challenges posed by the operating environment. I am more than hopeful that the performance achieved in FY2023 will continue in FY2024.

“Innovation is the ability to see change as an opportunity- not as a threat”

Yours Sincerely,

Dinesh Kumar Khara

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Categories Finance , Latest Earnings Call Transcripts

SBI LIFE INSURANCE CO LTD (SBILIFE) Q4 FY23 Earnings Concall Transcript

Sbilife earnings concall - final transcript.

SBI LIFE INSURANCE CO LTD (NSE:SBILIFE) Q4 FY23 Earnings Concall dated Apr. 26, 2023.

Corporate Participants:

Mahesh Kumar Sharma  —  Managing Director & Chief Executive Officer

Prithesh Chaubey  —  Appointed Actuary

Avinash Singh  —  Emkay Global — Analyst

Supratim Datta  —  Ambit Capital — Analyst

Shyam Srinivasan  —  Goldman Sachs — Analyst

Madhukar Ladha  —  Nuvama Wealth — Analyst

Dipanjan Ghosh  —  Citi — Analyst

Sahej Mittal  —  HDFC Securities — Analyst

Sanketh Godha  —  Avendus Spark — Analyst

Neeraj Toshniwal  —  UBS India — Analyst

Akshen Thakkar  —  Fidelity — Analyst

Nischint Chawathe  —  Kotak Institutional Equities — Analyst

Sneha Sharmilee Das  —  Star Union Dai-ichi — Analyst

Presentation:

Good day, and welcome to the SBI Life Insurance Company Limited Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Mahesh Kumar Sharma, MD and CEO, SBI Life Insurance. Thank you, and over to you, sir.

Thank you very much. Good evening, everyone, and we welcome you all to the results update call of SBI Life Insurance for the year ended March 31, 2023. The update on our financial results can be accessed on our website, as well as on the websites of both the stock exchanges. Along with me I have S. Veeraraghavan, Deputy CEO; Sangramjit Sarangi, President and CFO; Ravi Krishnamurthy, President – Ops and IT; Abhijit Gulanikar, President – Business Strategy; Subhendu Bal, Chief Actuary and Chief Risk Officer; Prithesh Chaubey, Appointed Actuary; and Smita Verma, SVP Finance and Investor Relations.

Today’s numbers are the direct outcome of the scale, quality, and spread of SBI Life business across the regions and the fundamental requirement of maintaining high-quality consistent and sustainable business model.

Now, let me give some key highlights for the financial year 2023. New business premium registered a growth of 16% over the previous year, and stands at INR295.9 billion, leading to private market leadership. Individual new business premium stands at INR209.1 billion, with a strong growth of 27%, and private market share of 24.3%. Gross written premium stands at INR673.2 billion, with a growth of 15%. Protection new business premium grew by 19% to INR36.4 billion. Profit after tax stands at INR17.2 billion, with 14% growth over last year. Value of new business is INR50.7 billion, registering a strong growth of 37% over the INR37 billion in March 2022.

VoNB margin is at 30.1%, with an improvement of 420 bps over 25.9% in March 2022. Embedded value stands at INR460.4 billion, registering a growth of 16% over the INR396.3 billion in March 2022. Embedded value operating earnings stands at INR90.5 billion, and operating return on embedded value stands at 22.8%. Assets under management grew by 15% to INR3.07 trillion. Robust solvency ratio of 2.15 against the regulatory requirement of 1.5.

I will now update you on each of these elements in detail. So, let me start with the premium. Individual new business premium has grown to INR209.1 billion with Y-o-Y growth of 27%. Single premium contribution is 30% of individual new business premium, which is mainly attributed to growth in our individual annuity product. The Company gained private market share by 92 basis points to 24.3%. On individual rated, rated new business premium stand to INR152.2 billion, with a growth of 18% over the previous year, while maintaining our leadership position with private market share of 22.3%. Group new business premium stands at INR86.8 billion, with a share of 29% in new business premium. We have collected total new business premium of INR295.9 billion, registering private market share of 21.3%, but renewal premium grew by 13% to INR377.3 billion, which accounts for 56% of the gross written premium.

To sum up, gross written premium stands at INR673.2 billion with a Y-o-Y growth of 15%. In terms of APE, premium stands at INR168.1 billion [Phonetic], registering a growth of 18%, out of which Individual APE stands at INR153.8 billion [Phonetic] with a growth of 19%. Total 21.98 lakh new policies were issued, and registered a growth of 14% over the previous year. Since 2010, the Company has maintained its leadership position in number of policies issued, and consistently delivered year-on-year growth for the last 10 years. This reflects the clear goal of the Company to increase the penetration and achieve holistic growth.

Individual new business sum assured registered a growth of 13% over the corresponding last year, as compared to growth of 12% at private industry level. Let me give you details about the product mix. As on March ’23, our guaranteed non-par savings products are contributing 18% of individual new business. And on individual APE basis, this comes to 24%. Non-par guaranteed products new business has registered Y-o-Y growth 116%, mainly due to the new business contribution of Smart Platina Plus of INR27.35 billion in the year ending 31st March, 2023.

Individual ULIP new business premium is at INR111.4 billion, which now constitutes 3% of the individual new business premium. Individual protection new business premium is at INR10.10 billion, registering a Y-o-Y growth of 6%. Group protection stands at INR26.4 billion with a growth of 25%. Credit Life new business premium has grown 23%, stands at INR20.7 billion.

On APE basis, protection contributes 11% of new business and registered growth of 16%. Annuity business is at INR49.7 billion and contributes 17% of new business premium. Under annuity, the Company is offering immediate as well as deferred — deferment option. Individual annuity business is growing at 134% over last year. This is mainly due to the new business contribution of Smart Annuity Plus of INR38.1 billion. Total annuity and pension new business underwritten by the Company is at INR84.2 billion, registering a growth of 16% over the same period last year.

In terms of the distribution partners, with strength of more than 58,000 CIFs, SBI and RRB bancassurance business contributes a share of 67% and grew by 31% in individual new business premium. And on individual APE basis, it stands at INR104.2 billion with a growth of 19.3%. Agency, one of the strongest channels, registered new business premium growth of 19% and contributes 19% in the new business premium. Agency channel individual APE stands at INR42.3 billion, with a growth of 15%. As of March 31, 2023, the total number of agents stands at 2,08,774, a growth of 43% over the previous year. During the year, the Company added a net of 62,717 Agents.

During the year ended 31st March, 2023, other channels, including direct, corporate agents, brokers online and web aggregators grew by 45% in terms of individual new business premium and 32% in individual APE. Protection new business premium through other channel registered growth of 25%. Partnerships like Indian Bank, UCO Bank, South Indian Bank, Punjab & Sind Bank and Yes Bank registered a growth of 26% in individual new business premium. These partnerships have contributed 3% of the individual new business premium. During last quarter, we signed corporate agency agreement with Karur Vysya Bank. We are confident that these partnerships will further enable us to expand the insurance market across the country.

On profitability, the Company’s profit after tax for the year ended March 31, 2023, stands at INR17.2 billion with 14% growth Y-o-Y. In the month of March, the Company had declared and paid an interim dividend of INR2.5 per share. Our solvency ratio remains strong at 215% as on March 31, 2023. We are happy to share that we have more than doubled the VoNB span of three years. Value of new business is INR50.7 billion, with growth of 37% as against INR37 billion in the last year.

VoNB margin is at 30.1% for the year ended March 31, 2023, as against 25.9% in the previous year, showing an improvement of 420 basis points. Growth in VoNB and VoNB margin is driven by product — a change in product mix, predominantly in the non-par segment. Embedded value stands at INR460.4 billion, a growth of 16% over the previous year. With our growth target and the product mix shift, we expect to maintain the healthy and sustainable VoNB growth rate.

Operational efficiency, our opex ratio stands at 5.1% for the year ended 31st March, 2023. Our total cost ratio stands at 9.6% for the year ended 31st March, 2023. With respect to persistency of individual regular premium and limited premium paying policy, 13-month persistency stands at 85.5%. Company has registered a significant improvement in the 37-month and 61st month Persistency by 236 basis points and 612 basis points, respectively.

As mentioned in my opening remarks, assets under management stands at INR3.07 trillion as on March 31, 2023, having a growth of 15% as compared to March 31, 2022. The Company continues its efficient usage of technology for simplification of process with 99% of individual proposals being submitted digitally, 45% of individual proposals are processed through our automated underwriting.

To conclude, we continuously endeavor to maintain our leadership position and continue to further increase our market share by offering products that meet the evolving needs of our customers, with our widespread robust distribution networks, complemented by digital technology, our innovation strength and above all, our people power. We are pleased to make the most of abundant growth opportunities offered in evolving insurance sector company, as well as other industry players are in line with the regulator’s vision of increasing penetration and offering insurance to all.

The Company is committed to enhancing the digital experiences of customers, distributors and employees and offer right products to the customers. Further, we will continue to explore new partners, leverage existing partnerships, and launch new products that meet customers’ needs and provide seamless customer experience.

Thank you very much for a patient hearing. And now, we are happy to take any questions that you may have.

Questions and Answers:

Thank you very much. We will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Avinash Singh from Emkay Global. Please go ahead.

Yeah, hi. Good evening. Great set of performance, I mean, strong numbers all across. Couple of questions. The first one is more around the growth outlook for FY ’24, considering what has happened or what is happening around the regulatory front or tax front and how your sort of a quarter four has gone by, so — because if I recall correctly, last year, we started with a strong growth momentum, but growth to other end has slowed. So, in this backdrop, some kind of a directionally the growth and margin trajectory for FY ’24, again, I am not going to see quarter-on-quarter. That’s one.

Second is, again, more around your key distribution channel, that’s SBI. So, now, with all sort of regulatory changes happening, particularly on the commission front and all, so the some kind of a doubt or question in mind about exclusivity of the channel and also the kind of any sort of a place around payouts, if at all that has sort of a impact on either growth or margin trajectory? Thank you. These are my two questions.

Yeah, thank you very much, Avinash. So, the growth outlook, if you ask me, we expect what we were expecting last year, so the growth will continue and we will have a 20% to 25% growth this year also. So, we ended up with slightly less than 20%, but then, that is largely on the back of various other factors. But if you ask me, the outlook remains similar because the demand is there. Insurance is a product which needs to be distributed and with all the regulatory changes, I think it will become easier to create better products, distribute them across, and with all these regulations, which the commission regulation changes that you have, all these things will lead to creatively designed products which can be beneficial for both the customer and the distributor, and obviously for the Company, because that ensures sustainability. So, we look to continue the trend of growth.

And as far as the commission payouts, etc., are concerned, we will definitely be looking at all our distribution partners, and how we can increase the distribution of insurance products. The regulator has a vision of insurance for all by 2047, but then the aspiration is that it should happen before that. And to do that, we need to actually expand the market. You will notice that we are probably one of the few companies which is actually selling more number of policies. So NOPs, if you look at the NOP growth, we have a very healthy NOP growth at 14%, and I don’t believe anybody else has got a strong NOP growth, it’s all mostly like. So, in the industry if you see, we are the ones which is growing the NOP.

And on top of that, if you look at the kind of products that we are distributing, and the principle behind our distribution, we keep the customer at the center, and therefore anything that will be value-accretive for the customer, which will be the guiding principle for us as always. The customer has to like the product, he has to need the product, and then, we’ll be distributing that. So, obviously every distributor will have expectations of some good returns for the distribution that they do, but then, what we would like to see is that the value that we create for distributors who actually sell products with — need-based products to the right kind of customers with more persistency, where value is created for the customer as well as for the Company. So, there, we may look at some kind of a new creative products which can then share a higher amount with some of the distributors. So that is something which we believe we will be definitely looking at, with the new flexibility that are available to us.

Okay, sir. So, I mean, SBI and SBI Life relationship premiums as it is?

Well I — what I would like to say is that, like I said, we will design products that will be good for the customer and which can be distributed well, and there if we see that the value is increasing, and we are able to penetrate the market much faster, then, obviously, distributors will also be rewarded, without losing the customers’ value proposition.

Okay. Okay. Thank you.

Thank you. The next question is from the line of Supratim Datta from Ambit Capital. Please go ahead.

Thank you for the opportunity. So, I’d like to start off on the protection side. So, your individual protection overall for the year has grown, for the quarter four it seems like it has declined slightly compared to PCP. So, could you tell us what’s going on there because the other peers appear to be reporting a strong growth on the retail protection side. So, just wanted to understand what’s happening with SBI Life.

Yeah. So, our protection has been growing year-on-year. So, every year we have grown, so this time we have grown 6% for the year. Yeah, you are right, quarter four we have seen a slight decrease about 5%, but then, if you look at the general mood around the last quarter, so I think there was a little bit of talk — more talk about tax and things like that, and therefore, there were some of the things that did not sell as much as the others. The focus definitely is around what is happening around people’s minds, the customer should be thinking about it, but we feel that going forward, protection being one of the areas which we feel is a very good product for the customer. So, we will continue to have our focus on protection and that it’s a win-win for everybody. The customer gets maximum protection for the minimum outlay, and we also — the value that it gives to the Company is also good. So, therefore protection focus will be there going forward. It’s a good customer value proposition.

Got it. A second question from my side. So, SBI, as it can be seen from the numbers, hasn’t really benefited from the high ticket size policy demand, which gives you a much cleaner base in FY ’24, but from the government’s perspective, it looks like we are also moving away from a old tax regime to a new tax regime, which will have — has no deductions. So, could you let us know what proportion of your customers will really be benefiting from the ATC benefit, and what could be the impact if that goes away?

Sir, we don’t know about how many customers are claiming ATC. Our only anecdotal thing is, the seasonality of the insurance business is coming down every year. So, ATC according to us is not such a big driver of insurance business as compared to past.

Yeah. So, one of the other things is that, earlier there were only a few instruments which actually gave the ATC benefit. So, that was the time when people used to either go for a NSC or an insurance policy, but I think now the people are realizing the need for insurance and most of the people who buy insurance are people who want to buy insurance. So, more and more — I mean more and more you’ll see people buying insurance because they want insurance, and may feel the need for insurance, and not to save taxes. And in any case, there are many avenues for ATC savings, but insurance is a unique product which gives — it is the only product which gives you insurance.

Got it. And last point, one data-keeping question, could you let us know within your ULIPs product basket, how many people have a premium or ticket size of more than INR2.5 lakh, and how many will be lower than INR2.5 lakh?

So, right now, we don’t have the information. I mean, I can’t give you the information at this point. So, I’ll let this pass.

Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.

Yeah. Good evening, and thank you for taking my questions. Just the first one on ULIPs in general, two parts to it. [Indecipherable] any growth for ULIP this fiscal year, and I’m looking at alternative channels as well, which is either banca, agency, others, we have seen a decline to all. So, our significance of ULIP in our overall AP has also come down. So, just want to understand the thought process around ULIP being our top product, and how should we look at it for next year?

So, ULIP is — continues to be a very good product offering that we have. We have a very wide choice of products and if you see, it’s flattish. At best if you see, it’s not really a decline or something like that. It is rather flattish. But then, you will also see that we have some other product offerings which we didn’t have earlier, like, for example, the Smart Platina Plus. That has got very good traction last year. So, the emphasis especially from some of the customer side, given that the markets have not been setting things on fire, has been towards some kind of guaranteed products, and the COVID effect is also there. A lot of people were worried about the future and so they would rather go for guaranteed products. So, really speaking, it’s not a very large shift.

But, yeah, there is a significant shift that we can see, that is because we have these other products also. So, the product range that we have, overall, we have a growth in our business, and it’s only a question of interface. There has been some shifting here or there, but ULIP continues to be strong and going forward, I don’t see that ULIP will lose its relevance or something. It is a very good product. These are very good products that we have for various segments, and therefore, probably this year we should see some growth in ULIP as well as, of course, the strong growth in other products.

Got it, sir. And my second question just is on the — now the VNB margin at 30%. Can you comment a little bit about the ULIP margins as well, where are they tracking up, and do we have further levers for margin expansion for next year, given that we have not seen any growth in this product? So how should we think about margins for next year?

Margins, we feel that margins are a question of what the — like I said, the customer value proposition. So, really speaking, the margins are, you can take margins only up to a particular point. And that is as far as the margin growth is concerned. So, we expect margins to be around these levels. We’ve been saying this for some time now. So, it could be 29%, it could be 30%. I’m really not bothered about that, because as far as — as long as my VNB is actually growing, value of new business is growing, as far as my EV is growing, I’m not really bothered about the exact number that comes out there. To the question about ULIP, we have a significant positive margin for ULIPs, and we will continue to sell ULIP profitably, and also give a good value proposition to the customers.

Okay, sir. And last question, just I will be very quick about it. ULIPs you typically had like a debt-to-equity ratio of 52%, 48% kind of percent. In this whole changes related to debt, mutual funds, indexation going away, does this value proposition of the way we have used to sell our product, does that change going forward?

See our — what we have noticed is that our equity-to-debt in terms of ULIPs has actually increased. So, we used to have a 60% debt, 40% ULIP equity kind of thing. Now, we are more like 52%, 48% in terms of equity to debt. So, I think it’s — there may be some changes here, there, depending on the time, exact time when if the rates are going up or down, or the markets are performing better or not. But given that we are giving very strong long-term returns on all our products in ULIP, I think the equity story is definitely likely to continue for some time.

Got it, sir. Thank you and all the best.

Thank you. The next question is from the line of Madhukar Ladha from Nuvama Wealth. Please go ahead.

Hi, good evening. Thank you for taking my question. Sir, I see on a quarter-over-quarter basis, there is a lot of volatility in the product mix. So, for example, the share of ULIP was about 51% in Q2, which went to about 65%, and it’s back to about 52% in Q4. What exactly sort of has played out? Is it by design that you operate in a certain way or — I mean, just wanted to understand better as to how you do your planning and what sort of products are actually — how sales is actually generated?

And second, I know that this question has been sort of asked before, but do you have any broad product mix in mind, and or are there any sort of limitations as to how much non-par you can sell? So, that would help us understand what sort of product mix we should be modeling and where margins could actually come up at.

Yeah, you said it right. It’s an old question. I’ll answer your second question first. It’s an old question and I’ll give you an old answer, that we sell according to the customer’s need, and not what we want to sell. So sometimes ULIP will be in demand, sometimes non-par guaranteed will be in demand. And as you will see, the proportions are largely within a particular kind of range. And as we have said earlier, our non-par pickup was mainly on the back of a product which we didn’t have in the portfolio, which we introduced last year — year before last, in fact in March, and actually worked very well for our customers. So, that would be one of the things which you can see.

ULIP like I said, is a very good basket of products that we have, and these products will find favor with people who are aware of the financial markets, people who are looking for good returns, and we have given good returns in the past. And therefore, that demand is going to be there. We have a plan overall for the year and it has played out largely according to our plan.

So, coming back to your volatility, so that is the whole thing. That is why the volatility that you may see a little bit of ULIP selling more here or there. So, it will depend a lot seasonally, geographically, depending on where people are having the demand, where people get the money, where people are thinking of doing their investments along with the insurance. We should not forget the insurance proposition in all these products. So, that insurance need is right and then there is a savings element along with it, and whichever way they want to take it, we are there to provide these products because we have all these products. Right now, we don’t have any limitation to the amount of what we will sell, so the non-par, I don’t think I have a number limit on how much I’m going to sell non-par.

Understood. And you mentioned that you’re targeting 20%, 25% APE growth. Would you say that your VNB would also track that kind of a growth number?

Obviously. VNB is definitely a product of volume, one of the things is volume, one of the things is the product mix. So, obviously, VNB is going to be there.

All right. All the best.

Thank you. The next question is from the line of Dipanjan Ghosh from Citi. Please go ahead.

Hi. Good evening. Few questions from my side. First, if you could just break up the investment variance number into the sub parts for the year? Second, if I look at your real-world assumptions over the last few years as a percentage of your investments, it seems that from FY 2021 onwards, it has increased a bit, so just wanted to get some idea of how confident are you on some of these assumption. And lastly, on your non-SBI Banca partnerships, if you can give some color on the counter share that you have across some of this open architecture partners and how do you intend to scale those partnerships up over medium-term?

Yeah, so non-Banca, I’ll take your last question first. As far as the non-SBI partners are concerned, they are growing. The bases are smaller, but the growth is good. The need is there. The customers are there. And they are the ones who need insurance and if they have not bought insurance earlier, obviously, this is the time to sell insurance to them. And I think a lot of the partners are also feeling the need to provide all the financial services to their customers, and this is an opportunity for them to increase their stickiness also and also to provide a customer with the need, which otherwise you would have to satisfy from some other stable. So, that is likely to grow and continue to grow and we would also like to have new partnerships as we have already said. We are taking in new partners and we are doing pretty well in terms of the existing partnerships that we have. And we will continue to grow those partnerships, especially because the customers are there, they need the products. So, that is the answer to your third question. Now, coming back to one and two, I’ll request Prithesh to give you a color on those numbers.

Sure. So on your other question, when you are referring to the real-world scenario, basically, you’re looking to the unwinding rate. I think which is, unwinding rate is basically expected to have a portfolio, it’s a portfolio weighted yields, which is a function of basically composition of the — your portfolio and yield curve. So, if you look into that, in the recent three years what you are referring to, we are moving, our competition is also moving towards the non-par business, so there is a mix coming in, which is longer durations, and you’ve also seen the yield curve is also going up.

As a result, you see the expected unwinding yield has gone up. But if you see — if you compare, it’s not a significant change, so ’21, we are having 7.85%, last year 8.17%, this year 8.60%. You see the composition is coming — increasing and the — so the yield curve. So, we are very sure that what we are assuming, these are things, this is no assumptions coming, it’s your actual portfolio, actual yield curve and your locked in it, so there is no assumption that we need to be worried about.

Coming back to the — your economic variance, I think you’re referring to, which is around 2,418 [Phonetic], I think in my view, it should — if we are not showing economic variance, I think you should be asking more questions. If we are showing lesser, you should be asking more questions because it’s a reality. If you see today, there is a lot of economic volatility and this economic volatility really reflecting to the — resulting into this economic variance. Nothing — we should not worry about those things. We should worry more about the ALM aspects and cash flow making prospect.

So just one small follow-up on the second question. Just wanted to get some idea on whether you have changed your expected equity return assumptions for the back book.

No, no, no, nothing.

Okay. Sure. Thanks and all the best.

Thank you. We have the next question from the line of Sahej Mittal from HDFC Securities. Please go ahead.

Hi. Good evening. So, one of the questions is on the VoNB margins. So, based on result, what is this [Technical Issues].

Sorry to interrupt, but there’s a lot of disturbance from your line.

Is it better now?

Sir, we’re still getting a lot of disturbance. We can’t hear you clearly.

I’ll join back in the queue.

Yeah. Thank you.

[Foreign Speech]

The next question will be from the line of Sanketh Godha from Avendus Spark. Please go ahead.

Thank you for the opportunity. It was reflected in 1H numbers too, also in FY ’23. But our EV sensitivity to the interest rate seems to have gone up because that number in FY ’22 was less than 2%. Today, it is 4% — closer to 4%. And if I look along also the economic variance number, which is almost 6% of the opening EV, which for others who have put in the numbers is less than 4%. Sir, just wanted to understand, it seems that we have — SBI Life as a company has become more sensitive to the macro environment compared to the peers. Is it to do anything with respect to the hedging strategy what we are using or something we need to read in between these numbers, basically?

I think economic variance, I’ve already explained. This sensitivity which increase is happening only on account of the network. So, if you see that, we have the network, and our network is –there is no corresponding liability, so you see the sensitivity is going up. You also look into that, we are writing some more non-par orders as compared to ULIP [Phonetic] things. Now what has happened in non-par is you reserve — your reserving measure we have and your best estimate liability and then you have the excess assets. So, this excess assets will have some volatility in the income of the interest rate.

And also, you rightly said that we are having the par. So, our objective is to do the cash flow matching, which is a real-world matching, thus we try to do that. In that process, you do hedging and then you get some economic higher interest rate sensitivity. So, I would — just to give a comfort to you that because it is a product of two things. One is that you try to do as much as close hedging in the real world, so that our economic balance sheet and real balance sheet should not get impacted. And secondly, instead of the excess network, which is not having liability that is giving some of the sort of higher sensitivity. So there is no — we should not be worried about the asset liability matching, it’s very perfectly matched, and liability is adequately provided for.

Sir, just a follow-up to it because the network issue was even there in FY ’22, but the sensitivity was just 2%. It has almost doubled in the current year. Actually, the concern comes from there. And I understand that network doesn’t have any liabilities and they are exposed and the market impacts those investments. But given the number has doubled compared to the last year, so — and on a bigger base, so that’s the reason I was just trying to understand.

So, let me explain other thing. What’s happened, you look into those both the part, one is the portfolio mix. So, in non-par portfolio, when you are writing non-par portfolio, you are having the reserving requirement more than unit-linked because unit-linked your asset equal to liability and you are having — you need not do any excess asset in your book. In case of non-par distributing products, you keep excess assets to manage those strategy liability. As this excess assets that we are keeping as a part of strategic balance sheet, this giving higher sensitivity, nothing else. So this is a function of two things.

Sir, can you quantify that excess assets in the non-par book, how much portion we have?

See, what has happened is — it is not because what’s happened there is a best estimate liability. There is a requirement that you work out the — you put some prudence. So, if we’re writing high margin product, you have to have additional prudence and then there is a regulatory requirement you need to [Indecipherable] and other aspects. So, difficult to quantify, so I’m not going to quantify that.

Got it, sir. And the last one on margin. As you know, as you guys do that, that every fourth quarter, you change the assumptions with respect to operations. So, that led to 80 bps improvement in the margin. So, I just wanted to understand this 80 bps, what was the biggest contributing factor, whether it was opex or persistency or something else which led to that additional benefit?

So, it is a mix of all. What’s happened, if you see this in all operating fronts, that you can see that my economic EV or AUM, we make them operating variance in all the fronts, be it mortality, be it expenses as is. What we did that is a mix. So we — some part of those, we have capitalized. So, in this 80 basis point, there is some element of the expenses, some element of the persistency, and some element coming from the reinsurance side because we get a better term on the reinsurance, that we have included there. So, that’s the reason we get 80 basis point of a new business.

Got it, sir. And last one. See, we reported 30% margin based on 22% non-par mix. So, sir, is it fair to assume that going ahead, not to significantly deviate from our margin guidance, is the non-par contribution to remain in this range, or are you expecting it to come down or go up if demand picks up? I know you answered this question, sir, but just wanted to understand that still we try to tackle the business so that non-par will continue to contribute around 22% plus kind of a number?

I understand your anxiety to understand the whole way the margin will go up or remain the same or whatever, but we don’t have a magic crystal ball to see that thing. What I have said still stands. We will sell the products which the customers want. These are products which the customers really seem to like. The ULIP products, the non-par guaranteed products that we have, we have some very good protection products, that ULIP [Phonetic] products. So, the mix will change slightly here, there. And I am not going to be able to guarantee to you that this will be at some particular percentage or the other. So, if that will answer your question.

Okay, sir. Thank you. That’s it from my side.

Thank you. The next question is from the line of Neeraj Toshniwal from UBS India. Please go ahead.

Hi sir. In the opening remarks, you mentioned that you must be 20% or you are shy of 20% APE growth because of some factors beyond your control. Wanted to know what were those factors and how confident we are on delivering 20%, 25% for the coming year, or for the FY ’24 rather?

See, I can’t point out a single factor or anything. There are many multiple things that have been taking place. So, as a Company, we try to grow, and if you can see my agency force. My agency force has increased a lot this year and we are, like, if you ask me, there are a lot of development things that we are doing, and based on that, we feel that going forward, we will be able to achieve this 20% to 25% that we are looking for.

This is payment, sir. My question is more into the strategy because the bank growth has been very, very weak if I look at the numbers. Our banca focus has been on the deposits, or how should one think about it? Because obviously if you — quarter four last year also it was weaker, but this time on a lower base also it is a weak outcome. So, anything to read there?

So, I look at the business as a whole year kind of thing. There are seasonal variations, there are variations geographically and all. I wouldn’t read too much into all these. 19% growth is very strong. I think on the kind of base that we have, a 19% growth, and then to keep a margin of 30.1% on the value of new business, and to grow new business, VNB by how much is it, 37%?

37% and the EV by 14%, I think all these things are a very good indicator of growth. I mean I can always look at a particular one week or something and say that the business was not there, or went up or down or whatever. March is one of those things that you will see, but there is growth in March, and it’s a minor point here or there. It’s been probably not as spectacular as we have been able to grow earlier, but then, that is also a factor of what happened last year. So, the growth over March last year, so the March was good. Then, obviously, we don’t expect spectacular growth over that all the time. But overall, I would still say that my own idea is that we — with all the things that we are doing in the Company, we should be seeing 20% to 25% growth.

Got it. And on interest rate sensitivity, coming back to that, how much would this have been coming from Group savings, because that wouldn’t have been properly, or might not be hedged as close to non-par saving business what we do. So, any color on that?

On interest rate sensitivity, wanted to know what has been the contribution or higher sensitivity coming from Group savings business?

Like Mahesh said, I think the — we don’t look at the [Indecipherable] line of business, right. So basically our objective is to look into in totality, so you have a balance sheet, total balance sheet, not a segmental thing, and we try to manage that. So in Group particularly, when you are referring to, we closely match our asset to the liability, and there is not much sensitivity coming from.

Got it. And on the Credit Life, do we have the numbers handy? How much would have been the share of Credit Life within the Group?

Yes. That I can give you. Credit Life…

In terms of APE?

INR200 crore APE.

And what’s corresponding last year? Same number?

Full year, you want full year numbers right. So, last year was INR1,600 crore, INR1,700 crore roughly. This year it is INR2,000 crore. This is not rated. So, rated you take one-tenth.

This is for full financial year.

Okay. I was actually asking for Q4, not the whole.

Q4 is INR54 crore — so INR540 crores last year, and INR620 crores current year. That is FY ’23.

Got it. Got it. Thank you, sir.

Thank you. The next question is from the line of Akshen Thakkar from Fidelity. Please go ahead.

Congratulations, sir, on concluding a great year. Just two follow-ups to the comments that you made earlier. One was around the growth. Could you just — you always targeted that high growth, but could you just help us understand what are the products, what are the channels that makes you hopeful for achieving the 20%, 25% growth that you outlined? That was one.

And second was, to the question on relationship with the SBI Bank, you did make a comment that you are sort of nimble to looking at new products which could be a win-win both for the customer, and also for the channel partners, but I just wanted to understand from SBI Life P&L or margin point of view, if you do these products or terms of trade with SBI were to change, one concern that investors do carry is that, does that land up impacting your VNB margins? Those two questions from my side, sir. Thank you.

So, one of the things which I always say is that, the whole idea of doing business is that it should be beneficial to the customer and the stakeholders. So, if you keep that in mind, then I think you’ll get your answer out there. We will make sure that the customer gets a good value proposition, and distributors are rewarded well for the kind of good selling that they will do. If they get good customers, if they get good persistency, if they get a good product mix, which then gives us a good margin, obviously, the distributor also gets a good proportion of that.

And as far as channels for growth are concerned, like I said, we have very strong channels. So, three channels that are very strong now are SBI, agency and other banks. Other banks is on a smaller base, but they are likely to grow very well because the customers definitely need all the products that we have. Agency, as I said, we have — today, we have — we are ending with March with 2,08,000 plus agents. And this is an increase of over 62,000 agents over last year. And when these agents are developed and activated and they will be activated over a period of time.

Some of them have become active, some of them will become active over time, and they will be more and more productive. We have one of the most productive sale — agency sales forces in the country. So, in the private sector, we have the most productive agency, and therefore, these are the — and of course, SBI as a channel, so we have the potential out there. There are a number of customers who need to be covered with insurance. So, going forward, I don’t see any dearth of avenues for growth.

All right. Thank you, sir.

Thank you. [Operator Instructions] The next question is from the line of Nischint Chawathe from Kotak Institutional Equities. Please go ahead.

Thanks for taking my question. I’m looking at your average policy term and I believe on the non-par side, your average policy term is closer to around 27-odd years for the last four quarters as compared to around 19, 20 in the previous year. So, what would be the reason for this? And do we expect this to sort of sustain?

So, when you see, this is a product change, so you have more of traditional non-par guaranteed. This is a longer-term product, so you…

It’s a out period, so earlier it was endowment where one-time [Technical Issues] getting paid. Now, it is getting paid or spread or…

Yeah. So, we have a product which goes, you pay 10 years and then after — from the 11th year or 25 years you’ll get returns, so overall it becomes a 35-year product.

And the margins between both the products would be substantially different?

Margins are…

Similar to the, I think, this is probably the income variant of the endowment. So, earlier, we are having only income endowment variant. Now, we have won the income variant, which is selling more. And margin is, you can see the margin because we are selling more proposals coming from this product and we’re growing the margin, so margin is similar to the both the variants.

Incrementally, do you see a challenge in kind of hedging this product as this kind of [Speech Overlap]?

Not at all because we restrict to the premium paying term matched to the 10 year and most of this is coming from 7 to 10 years. So, that prospective is easily getting its hedging, so we don’t see any challenge on that prospect.

Got it. Thank you very much.

Thank you. The next question is from the line of Sneha from Star Union Dai-ichi. Please go ahead. Sneha, the line for you is unmuted. You may go ahead with your question.

Yes, go ahead.

How do you see the overall on the distribution, so which are the focus area we’re planning to grow more over there, bancassurance and for other parameters, could you guide us?

Yeah. So, I think I already answered this question before and maybe you were not there on the call. What we have done is, we have more than 208,000 agents today. And this is an increase of 62,000 agents this year. So that is one of the things that we are doing. And the other is, of course, in SBI and the other banks, so we have a good number of customers out there who still need insurance. So, these are the main channels around which we will be selling. Obviously, we’ll be selling some people directly online and through other channel partners.

Okay. Got it, sir. Thank you.

Yes. Thank you.

Thank you. Ladies and gentlemen, that would be our last question for today. I would now like to hand the conference over to Mr. Mahesh Kumar Sharma for closing comments. Over to you, sir.

Yes. Thank you very much. In fact, thanks to all the participants on the call who have given us this — given us so many insights and given us the feedback and also asked very relevant questions. And we hope that all of you have a very good time investing and stay safe and have a good evening. Thank you very much.

[Operator Closing Remarks]

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Techno Electric & Engineering Company Limited

Ine285k01026, construction & engineering, techno electric & engineering : investor presentation 2023-24 q4.

Techno Electric & Engineering Company Limited

About Techno Electric & Engineering Co. Ltd.

TEECL is one of the most attractive company in Electro-mechanical works in India

Key Presence Areas

Key Milestones

Advancing with Experience and Expertise : EPC

Flue Gas Desulphurization Plant

Transmission & Distribution

Advanced Metering Infrastructure (Smart Metering)

Balance of Plant

Captive waste heat recovery and up to 200 MW of conventional power plant on a turnkey basis

Solutions for power-intensive industries

Less capital-intensive, high risk-reward ratio

Delivering Consistently

Key highlights for FY 2023 - 2024

Major Domains of Operations

Industrial Sector

• Power Distribution Systems to Power Intensive Industries
• Data Center
• Offsite Piping Systems
• Oil Handling Plant Process Industries
• Plant Electrical and Illumination System
• Water and Allied Systems
• Fire Protection System
• Naptha and Diesel based system for Turbine based Power Plant

DATA CENTER End-to-End Solutions

Utilising Corporate Strength

Strong Credentials in Project Execution

Growing Recognition

Awards and Certifications

Leveraging Opportunities

Current Order Book is Rs 4913 Crores

Current Order Book is Rs 1291 Crores

Transmission

23,672 Crores

71,424 Crores

Techno is targeting for

Rs 2000 - 2500 crores every year in this segment

Techno is targeting for Rs 1000 crores every year in this segment

Bids opened

Under various stages

Before bidding

Attachments

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Techno Electric and Engineering Co. Ltd. published this content on 05 June 2024 and is solely responsible for the information contained therein. Distributed by Public , unedited and unaltered, on 05 June 2024 07:20:05 UTC .

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