Jul 31, 2015
Executives
N.S. Kannan - Executive Director & CFO
Analysts
Mahrukh Adajania - IDFC Securities Gaurav Agarwal - E&R Advisors Roshan Chutkey - ICICI Prudential Sagar Kapadia - Anvil Share and Stock Kaushal Patel - IndiaNivesh Securities Anand Laddha - HDFC Mutual Fund Adarsh Parasrampuria - Nomura MB Mahesh - Kotak Securities Amit Premchandani - UTI Mutual Fund Manish Karwa - Deutsche Bank Mayank Bukrediwala - Goldman Sachs Anurag Mantry - Jefferies Nilanjan Karfa - Jefferies Anish Tawakley - Barclays Mangesh Kulkarni - Almondz Global Securities Vishal Goyal - UBS Securities
Operator
Good day ladies and gentlemen, and welcome to Q1 2016 Results Conference Call for ICICI Bank. As a reminder, all participant lines will be in a listen-only mode.
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 Mr.
N.S. Kannan, Executive Director of ICICI Bank.
Thank you and over to you, Mr. Kannan.
N.S. Kannan
Thank you. Good evening and welcome to the conference call on the financial results of ICICI Bank for the quarter ended June 30, 2015, that's the first quarter of this fiscal year 2016.
In my remarks today, I will cover for the macroeconomic and the monetary environment, then we will move on to our performance during the quarter, including performance on our 5C strategy, then we’ll talk about performance of our subsidiaries as well as the consolidated results of the bank, and finally the outlook going forward. So let me start with the first part, on the macroeconomic and monetary environment.
On the growth front, the International Monetary Fund has lowered the global growth forecast for 2015 from 3.5% to 3.3%. IMF has revised the forecast downwards for both the advanced as well as the emerging market economies.
The three key global developments that we saw; one is the focus on the timing of increasing interest rates by the U.S. Fed.
Two, the sovereign debt default by Greece, and the third bailout package being negotiated with the Eurozone; and three, moderation in growth and stock market volatility in China. At the same time, we saw global commodity prices subdued during the quarter.
So coming to the trends in the domestic economy, the industrial activity as measured by the Index of Industrial Production, IIP, recorded a year-on-year increase of 3% in April-May 2015, compared to a growth of 3.3% in Q4 of 2015. Growth in capital goods production was positive, while consumer goods production remained during April-May 2015.
Retail inflation measured by the Consumer Price Index, CPI increased from 5.3% in March 2015 to 5.4% in June. The increase was largely on account of food prices and the impact of increase in service tax rate on service sector inflation.
The Wholesale Price Index, WPI, has been negative since November of 2014. The Reserve Bank of India reduced the repo rates by 25 basis points to 7.25% of June 2nd.
Following on that earlier [indiscernible] of 25 basis points each in January 2015 and March 2015. RBI mentioned that it had front-loaded the rate cuts in June 2015 and highlighted the risk to inflation on account of the possibility of below normal monsoons, increase in crude oil prices and volatility in the external enrolment.
On the progress of monsoon, the cumulative rainfall from June 1st 2015, to July 29, 2015 shows a deficit of only 3% compared to the long period average. Moving on to the performance of financial markets, the S&P BSE Sensex declined by 0.6% during the quarter.
The yield on government securities was 7.86%, as of end June 2015, compared to 7.69% as of May 22nd, 2015, when the new benchmark bond maturing in 2025 was issued. The yield on the old benchmark bond maturing in 2024 increased to 8.04% as of end June 2015 from 7.74% as of end March 2015.
So there has been a movement of about 30 basis points upwards. The exchange rate depreciated by 1.9% during the quarter to INR63.8 per U.S.
Dollar as of June 30th, 2015. Coming to the banking sector, the non-food credit growth remained moderate at 9.5% year-on-year as of June 26, 2015, compared to the 13% year-on-year as of June 27, 2014.
Growth in total deposits was 11.4% on a year-on-year basis as of June. Demand deposit growth was 8.7% year-on-year.
We also saw a reduction in lending rates and continued reduction in deposit rates with major banks during the first quarter. With this overall background, let me now move to other performance during the quarter, including the progress on our 5C strategy.
First, with respect to the credit growth; the bank's domestic loan portfolio grew by 17.4% on a year-on-year basis as of June 30th, compared to the 9.5% growth in non-food growth for the system as of June 26th. Loan growth for the bank continues to be driven by retail segment, which grew by 24.5% year-on-year and constituted 42.8% of the total loans as of June 30, 2015.
The mortgage and auto loan portfolios grew by 26% and 21% respectively on a year-on-year basis. Growth in the business banking and rural lending segments was 19% and 33% on a year-on-year basis.
Commercial business loans declined by 6% on a year-on-year basis, reflecting primarily the run-down of the bought out portfolio. On a sequential basis however, commercial business loan increased by 2% and were at about INR110 billion as of June 30th.
We expect growth in commercial business loans to gradually improve with their recovery in economic activity. The unsecured credit card and personal loan portfolio at INR116.82 billion; as from June 30th, 2015, continue to remain a small portion, about 2.9% of the overall loan book, so obviously the growth rate is high due to the low base.
The domestic corporate portfolio growth was 8.8% on a year-on-year basis as of June 30th, 2015, compared to 9.6% growth as of March 31, 2015. The bank continues to focus on lending to higher rated clients.
The SME portfolio grew by 12.4% year-on-year, to INR173.5 billion, driven by granular, collateral based lending. Growth in net advances of the overseas branches, in U.S.
dollar terms, was 2.8% on a year-on-year basis, as of June 30, 2015, compared to a 0.6% year-on-year growth, as of March 31, 2015. In rupee terms, the net advances of overseas branches increased by 8.7% on a year-on-year basis, due to movement of exchange rates.
On a sequential basis, the net advances of overseas branches, increased marginally by about 0.8% in U.S. dollar terms.
As a result of the above trends, total advances of the bank increased by 15.2% on a year-on-year basis from INR3.47 trillion as of June 30th, 2014 to INR4 trillion as of June 30th, 2015. Let me now move on to the second C, on CASA deposits, the bank continued to maintain healthy CASA ratios on a period end basis, as well as daily average basis.
Savings account deposits grew by 13.7% year-on-year to INR1.17 trillion as of June 30, 2015. On a period end basis, we saw an addition of INR19.05 billion to savings deposits, while the current account deposits decreased by INR39.71 billion during the quarter.
On a daily average basis, we had a robust growth in both current and savings account deposits. Savings deposits were higher by about INR44 billion, and the current account deposits were higher by about INR18 billion in the first quarter, compared to Q4 of 2015.
As a result, the daily average CASA ratio increased from 39.9% in Q4 of 2015 to an all time high for the bank of 41.1% in Q1 of 2016. The period in CASA ratio was 44.1% as of June 30, 2015, compared to 45.5% as of March.
Moving on to the third C on costs, the bank's cost income ratio was 37.8% in the first quarter of fiscal 2016, compared to 38.4% in the first quarter of fiscal 2015. During the first quarter, operating expenses increased by 8.6% on a year-on-year basis.
During the quarter, we added about 2,300 employees, primarily in the front-line roles in the retail banking business. The bank continues to focus on further enhancing the productivity and efficiency of the employee base, as well as the expanded distribution network, so that we can drive profitable growth.
Let me now move on to the fourth C, on credit quality. The bank's net NPA ratio remained stable compared to March 31, 2015 and was at 1.4%.
The gross NPA ratio declined compared to March 31, 2015 and was at 3.26% as of June 30, 2015. During the first quarter, we saw gross NPA additions of INR16.72 billion, including slippages of INR2.92 billion from the standard restructured category to the non-performing asset category.
Deletion [ph] from NPA during the quarter was INR5.44 billion and the bank has also a return of INR5.64 billion of NPAs. We also sold NPAs aggregating INR5.2 billion to asset reconstruction companies during the quarter.
During the first quarter, we had gross additions of INR19.62 billion to restructured loans. Addition to restructured loans in Q1 of 2016, include restructuring of loans in line with the criteria permitted by RBI guidelines, and where referral or restructuring application occurred before March 31, 2015.
After taking into account deletions, including the slippages mentioned earlier and the required specific provisioning thereof, the net restructured loans for the bank were INR126.04 billion as of June 30, 2015, compared to INR110.17 billion as of March 2015. We currently have no pipeline of cases to be restructured.
Provisions for Q1 of 2016 were at INR9.56 billion compared to INR7.26 billion in the first quarter of 2015, and INR13.44 billion in the last quarter of 2015 fiscal. As a result, credit cost as a percentage of average advances, where as 99 basis points on an annualized basis for the first quarter.
The provisioning coverage ratio on non-performing loans was 58.2% as of June 30, 2015. If you include the cumulative technical and Prudential write-offs, like some other banks report, the provisioning coverage ratio was 69.7%.
Now on the 5th C on customer centricity; the bank continues to focus on enhancing the customer service capability and leveraging on the increased branch network to cater to the customer base. As of June 30, 2015, we had a branch network of 4,052 branches and 12,811 ATMs.
We continue to introduce new digital initiatives during the first quarter. Our initiatives in recent years have shown promising results, and have received positive feedback from the customers.
We recently upgraded our mobile banking application iMobile, taking the total number of services available on the application to over 100. We are the first bank in India to introduce features such as, direct calls to our call center; option to track frequent transactions as leverage for bigger payments; [indiscernible]; convenience of choice of log-in between PIN-based access and Internet Banking user-ID and password basis access, depending on the option chosen by the customer; and iWish flexible recurring deposit using the mobile app.
[Indiscernible] of all ICICI Bank relationships with the customer, facility of alerts and notifications through Google Now, and in-app chat functionality for quicker resolution of customer query. iMobile has a range of options for transfer of funds, including transferring through phone contacts, and allows cash withdrawal by beneficiary at any ATM of ICICI Bank without using a card.
Operator
Ladies and gentlemen, the management line has been disconnected. Request you to kindly stay on hold, while we reconnect the management.
Thank you.
N.S. Kannan
Yeah I am sorry we go disconnected briefly. I was talking about our iMobile initiative.
I want to say that it has a range of options for transfer of funds, including transferring money to phone contacts and allows cash withdrawal by the beneficiary by any ATM of ICICI Bank without using a card. Customers can also apply for loans and pay utility bills.
iMobile is available on all mobile platforms including Android, iOS, Java, Windows and Blackberry. Customer response to the new app has been very positive.
We have seen the monthly activation of iMobile by customers growing by close to 60% and the monthly value of transactions increasing by about 50%, since the launch of the app. Our digital mobile wallet, Pockets, has seen over 1 million downloads, with significant interest from non-ICICI Bank customers.
The e-wallet is amongst India's most comprehensive wallets, which can be used to pay on all websites and mobile apps in the country. We are the largest provider of online remittance services to India, and the first to offer remittance service via mobile phone.
We are the only bank in India today, which offers NRIs, the facility of remittances through Facebook. We have also focused on providing self-service options to our customers at our branches in recent years, our fully automated 24/7 Touch Banking branches, now see over 1 million transactions per month The 1,000 self-service kiosks, as well as the cash acceptor machines which we deployed in our branches, during fiscal 2015, have resulted in a significant pick up in automated transactions and branches.
Our initiatives and payment solutions include contactless card payments, transit card solutions for metro and bus transport, and electronic toll collection. We are focusing on scaling up each of these initiative in the payment space.
During the quarter, we also launched a voice recognition service at our call centers, which authenticates our savings account and credit card customers based on their speech patterns, and allows them to execute banking transactions in a quick, secure, as well as convenient manner. Our Facebook page continues to be appreciated by customers with over 3.7 million fans, the largest fan base on Facebook among Indian Banks.
As a result of our constant focus on digital channels, currently close to 60% of our total transactions for the savings account customers are done through new age digital channels, and less than 10% of the transaction currently are done through our branches. We are also offering comprehensive and customized payment solutions through our corporate, institutional and government customers.
Our mobile app for business customers, iBill, provides access to banking services through mobile devices to our current account customers. We have partnered with Alibaba.com, for the launch of the trade facilitation center, a single window facility to get quick access to an array of integrated business services from ICICI Bank.
We will continue to launch new digital banking propositions in the days ahead. Having talked about the performance on the five Cs, let me move on to the key financial performance highlights for the quarter.
The net interest income increased by 13.9% year-on-year from INR44.92 billion in the first quarter of fiscal 2015, to INR51.15 billion in the first quarter of 2016. The net interest margin improved to 3.54% in the first quarter of 2016 from 3.4% in the corresponding quarter last year.
The domestic net interest margin was at 3.9% in the first quarter of 2016, compared to 3.8% in the corresponding quarter last year, and 3.99% in the preceding quarter. The sequential decrease in domestic margins, is largely on account of reduction in the base rate during the quarter.
We reduced our base rate by 25 basis points in April 2015, and a further five basis points in June 2015. International margins were at 1.88% in Q1 of 2016, compared to 1.63% in the corresponding quarter last year, and 1.71% in the preceding quarter.
The improvement in the international margins is largely on account of decreasing cost of borrowings. Net interest income in Q1 of 2016, includes interest of about INR1 billion on income tax refund received during the quarter, which is similar to the preceding quarter.
Moving on to the non-interest income, the total non-interest income increased by 4.9% from INR28.5 billion in Q1 of 2015 to INR29.90 billion in Q1 of 2016. If you look at the different components of the non-interest income, the fee income grew by 9%, from INR19.36 billion in Q1 of 2015 to INR21.10 billion in Q1 of 2016.
The year-on-year growth in fee income has improved from 6.8% in financial year 2015 to 9% in the first quarter. While retail fees continue to grow at a very healthy rate, the growth in overall fee remains impacted by subdued corporate activity and the consequent decline in corporate fee income.
Retail fees for the bank constitutes today 63% of the overall fees. During the first quarter, treasury recorded a profit o INR2.07 billion compared to INR3.88 billion in the corresponding quarter last year and INR7.26 billion in the fourth quarter of fiscal 2015.
Other income was INR6.73 billion in Q1 of 2016 compared to INR5.26 billion in Q1 of 2015, and INR6.33 billion in Q4 of 2015. The bank continued to receive healthy dividend streams from the subsidiaries, the net exchange rate gains relating to bank's overseas operations were at INR3.47 billion in Q1 of 2016, compared to INR1.03 billion in the corresponding quarter last year and INR1.82 billion in the preceding quarter.
I have already spoken about the trends in the operating expenses and provisions, while speaking about the 5C strategy. As a result of these trends, the bank's standalone profit before tax increased by 7.7% from INR37.91 billion in Q1 of 2015 to INR40.82 in Q1 of 2016.
The bank's standalone profit after tax increased by 12.1% from INR26.55 billion in Q1 of 2015 to INR29.76 billion in Q1 of 2016. The return on average assets was at INR1.91% in Q1 of 2016 compared to 1.82% in the first quarter of 2015.
The bank's capital adequacy as per Reserve Bank of India's guideline for Basel III norms, continues to remain strong at 16.37% overall capital adequacy ratio and 12.26% Tier-1 ratio as of June 30, 2015. In accordance with the guidelines, the profits for the quarter are not considered in the reported capital adequacy ratios.
Including the profits for the quarter, the bank's overall capital adequacy ratio was 16.75% and the Tier-1 ratio was 12.64%. In March 2015, RBI issued amendments to Basel III capital regulations, which included a change in risk weight from 1,111% to 1,250% for certain categories of risk weighted assets.
The guidelines are effective April 1, 2015, the impact on Tier-1 ratio on account of change in risk weights is about 20 basis points. I now move on to the performance of subsidiaries and the consolidated results; the profit after tax for ICICI Life in Q1 of 2016 was INR3.97 billion compared to INR3.82 billion in Q1 of 2015.
The profit before tax of ICICI Life grew by 13.2% year-on-year in Q1 of 2016. ICICI Life's strong profitability, enabled it to wipe out its entire accumulated losses during fiscal 2015.
The new business annualized premium equivalent increased from INR6.59 billion in Q1 of 2015 to INR9.10 billion in Q1 of 2016. The retail weighted received premium for ICICI Life grew by 39% on a year-on-year basis in Q1 of 2016, compared to about 2% year-on-year decrease for the industry.
The company continues to retain its market leadership among the private players, and has seen an improvement in its market share to about 11.7% in Q1 of 2016. The new business margins, based on Indian Embedded Value, or IEV methodology was at 13.8% in Q1 of 2016, compared to 13.6% for fiscal 2015.
During the quarter, the gross return premium of ICICI General grew by 14.9% on a year-on-year basis to INR21.22 billion in Q1 of 2016, compared to about 13% year-on-year growth for the industry. Profit after tax for ICICI General increased by 61.1% from INR0.72 billion in Q1 of 2015 to INR1.16 billion in Q1 of 2016.
The increase in profits was driven by increase in gross written premium, as well as higher investment income. The company continues to retain its market leadership among the private players, and has a market share of about 8.9% in Q1 of 2016.
ICICI Prudential AMC and ICICI Securities have continued to see strong performance. The profit after tax for ICICI AMC increased by 31.1% from INR0.61 billion in Q1 of 2015 to INR0.80 billion in Q1 of 2016.
ICICI AMC sustained its market position as the second largest mutual fund in India, during Q1 of 2016. The profit after tax for ICICI Securities was at INR0.61 billion in Q1 of 2016, at a similar level compared to Q1 of 2015.
Let me now move on to the performance of our overseas banking subsidiaries; the bank's total equity investments in ICICI Bank U.K. and ICICI Bank Canada has reduced from 11% of its network as of March 31, 2010, to 5.4%, as of June 30, 2015.
As per IFRS financials, ICICI Bank Canada's total assets were C$5.9 billion as of June 30, 2015, compared to C$5.94 billion as of March 31, 2015. Loans in advances were C$5.21 billion as of June 30.
This was compared to C$5.17 billion as of March. The increase in loans and advances was largely on account of higher securities insured mortgages as of June 30, 2015, compared to March.
The profit after tax for Q1 of 2016 was C$7.8 million, compared to C$14 million for Q1 of 2015, and C$7.5 million in Q4 of 2015. The capital adequacy ratio for ICICI Bank Canada was 27.7% as of June 30th.
Moving on to ICICI Bank U.K., the total assets were $4.19 billion as of June 30, 2015, compared to $4.13 billion as of March. Loans and advances were $2.93 billion, as of June 30, 2015 compared to $3.03 billion as of March.
The profit after tax for ICICI Bank for Q1 of 2016 was $0.5 million compared to $6.3 million in Q1 of 2015 and $0.9 million in Q4 of 2015. The lower profits in Q1 of 2016 were on accounts of higher provisions on existing impaired loans.
The capital adequacy ratio was 18.5% as of June 30, 2015. The bank and the overseas banking subsidiaries do not have any exposure to Greece.
Let me now talk about the overall consolidated profit; the consolidated profit after tax grew by 14.1% from INR28.32 billion in Q1 of 2015 to INR32.32 billion in Q1 of 2016. The annualized consolidated return on average equity was 15% in Q1 of 2016 compared to 14.6% in Q1 of 2015 and 14.5% in Q4 of 2015.
The bank's capital adequacy on a consolidated basis as per RBI guidelines on Basel III continued to remain strong. Including the profits for the quarter, the consolidated total capital adequacy ratio as of June 30, 2015 was 16.88% and the Tier-1 capital adequacy ratio was 12.71%.
Excluding profits for the quarter, the consolidated total capital adequacy ratio was 16.52% and the Tier-1 ratio was 12.36%. So in summary, we have continued to pursue our core operating strategy during the quarter.
In line with our focus areas, we have one, sustained the net interest margin; two, maintained a very healthy non-interest income; three, sustained the operating efficiency; four, we have seen continued healthy trends in the average CASA ratio; five, maintain the strong retail portfolio of growth; and six, closely monitor the asset quality. Apart from this, our non-baking subsidiaries achieved a very strong performance in Q1 of 2016.
Moving on now to the outlook for the financial year, our outlook remains similar to what we had articulated in April 2015, when we announced our fourth quarter results. We expect the domestic loan growth to be in the range of 18% to 20%, driven by about 25% growth in the retail segment.
In the domestic corporate portfolio, we expect a growth of 10% to 15%, driven primarily by increasing lending to higher rate at corporates. The bank would continue to calibrate corporate loan growth to the trends in the environment.
With respect to overseas branches, the bank would focus on selective lending opportunities, and will continue to calibrate growth to conditions in the funding markets. We expect the loan portfolio of overseas branches to grow by 8% to 10%.
We would aim to maintain average CASA ratio in the range of 38% to 40%. We continue to target to maintain overall net interest margins in financial year 2016, at a similar level as that was in 2015, despite the declining interest rates.
We continue to target double digit growth in fee income in financial year 2016, led by retail fees. The overall fee income growth would depend on market conditions, particularly activity in the corporate sector, as well as regulatory measures with respective various components of fee income.
We will focus on sustaining the gains we have made in operating efficiency, to maintain the cost income ratio for financial year 2016, at a similar level as in financial year 2015. Coming to asset quality, for the full year, financial year 2016, we continue to expect that the aggregate additions to restructured loans and NPAs will be lower than in financial year 2015.
The additions to restructured loans were significantly front-loaded in Q1 of 2016. Given the restructuring of loans, where the referral or restructuring application occurred before March 31, 2015; we currently have no pipeline of cases to be restructured.
Based on the above, we expect provisions to be in the range of 90 to 95 basis points of average loans in fiscal 2016. Finally, we believe that our strong and diversified franchise, large distribution network and technology capabilities, give us the ability to leverage opportunities for profitable growth.
We are well placed with regard to capital required to support the growth, and given our current capital position, we believe that we do not need to raise equity capital, at least till March 2018, based on the current regulations. With these opening comments, my team and I will be very happy to take your questions.
Thank you very much.
Operator
Thank you very much, sir. [Operator Instructions].
The first question is from the line of Mahrukh Adajania from IDFC Securities. Please go ahead.
Mahrukh Adajania
Hi. Just a couple of questions on Life.
Have the margins now bottomed out?
Unidentified Company Representative
Yeah the margins, if you see actually, there is a small improvement in the margins vis-à-vis the fourth quarter, of about 20 basis points. So our goal is to improve the margins from here, by increasing the mix of protection in the business, as well as by continuing to be, very cost efficient.
Mahrukh Adajania
All right. And what would be the dividends on life insurance this quarter?
Unidentified Company Representative
Would be about --
N.S. Kannan
Bit lower, INR2 billion.
Mahrukh Adajania
Okay. And on the main bank, we heard on TV that the amount of 5/25 is less than 1,000 crores.
What is the actual amount and number of cases?
Unidentified Company Representative
The actual amount is less than 1,000 crores.
Mahrukh Adajania
700, 600, 500, what is it?
N.S. Kannan
The number of cases, it is amount which is less than INR10 billion. There is nothing really to talk about much there, because there are few cases and the aggregate amount is less than INR10 billion.
That's why its not a big amount really for us.
Mahrukh Adajania
And you know, some banks have a big pipeline of 5/25, as in that the cases they are working on. So would you have any such pipeline or any such number, which you think would go under 5/25 over the next few quarters?
N.S. Kannan
There is nothing like -- there is a pipeline to be implemented today. But we will have to say that, as the economic conditions develop and the project environment develops during the year, we will have to wait and see.
But as of now, there is nothing we are implementing, apart from what we have said just now.
Mahrukh Adajania
Got it. Okay.
Thank you.
Operator
Thank you. Next question is from the line of Gaurav Agarwal from E&R Advisors.
Please go ahead.
Gaurav Agarwal
Hello sir. Good evening.
Sir, this less than INR10 billion of 5/25, was it earlier a part of restructured book, or it is a standard book?
Unidentified Company Representative
It’s a standard loan.
Gaurav Agarwal
It’s a standard loan?
Unidentified Company Representative
It continues to be standard. The 5/25 refinancing can be done for completed viable projects.
So it is a standard completed project, in which refinancing has been done to extend the maturity of the loan, in line with the economic life of the project.
Gaurav Agarwal
Sure. And sir, the ARC number of INR5.2 billion, have I got it right?
Was it a net number or a gross number?
Unidentified Company Representative
That is the gross value.
N.S. Kannan
Gross number.
Gaurav Agarwal
Sir may I have the net number please, excluding provisions?
Unidentified Company Representative
We don't really give that number. I mean, we have explained the movement in NPAs in terms of the additions, deletions, write-offs and gross sales to ARCs.
So its in that context that we have given the INR5.2 billion, as we consistently give every quarter.
Gaurav Agarwal
Sure. Thank you.
Operator
The next question is from the line of Roshan Chutkey from ICICI. Please go ahead.
Roshan Chutkey
Thanks for taking my question sir. What is the sequential growth in your SMA-2 exposure?
Unidentified Company Representative
We do not make disclosures on the SMA-2 loans.
Roshan Chutkey
Not even sequential growth?
Unidentified Company Representative
No.
Roshan Chutkey
Please qualitatively comment whether its --
N.S. Kannan
Qualitative comment I can tell you that during the quarter, as I mentioned, one of the clear focus for us has been closely monitoring the corporate asset quality. I would say that during the quarter, things have been stable in terms of the asset quality environment.
They have not really deteriorated for us. So that is the color I can give you on a qualitative basis, and that is why you have seen the numbers that develop.
And some of the restructuring, as I mentioned during my opening remarks, clearly are front-loaded, because all the cases which are referred to before March 31, had to be completed. So that spillover was really what was done.
So that is being done. So beyond that, as I said, there is no immediate pipeline for restructuring, and the credit environment has been quite stable, and we have also been focusing a lot on monitoring those assets.
So that is the qualitative color I can give you.
Roshan Chutkey
Sure. Thank you.
And what is the percentage standard in your restructured book?
N.S. Kannan
Sorry, I didn't the question?
Roshan Chutkey
I mean, how much of your restructured book is standard, what percentage?
N.S. Kannan
We disclosed the ARC --
Unidentified Company Representative
Number we have disclosed, which is INR126 million of net assets, is indeed standard restructured loan.
Roshan Chutkey
Thank you so much.
Operator
Thank you. Next question is from the line of Sagar from Anvil.
Please go ahead.
Sagar Kapadia
Hello.
N.S. Kannan
Yeah, hi.
Sagar Kapadia
Yeah hi. I would like to know, for this quarter -- I was a bit late on the conference call, what was the amount that you have done for restructuring?
Unidentified Company Representative
About INR19.62 billion.
Sagar Kapadia
The slippages were how much for this quarter, total?
N.S. Kannan
INR2.92 billion of slippages from restructured loans to NPAs for the quarter.
Sagar Kapadia
For the quarter? And total slippages, for this quarter?
Unidentified Company Representative
INR16.7 billion.
Sagar Kapadia
Okay, so 1,600 crores. See I would like to understand sir, one thing; actually last time you were mentioning, that 8,500 crore you had given the guidance, for the total stressed assets.
Now just tell me, whether I am right, this guidance means, slippages from restructure, slippages from the standard, as well as the restructuring? Out of that --
Unidentified Company Representative
So we have not given any 8,400 crore number. What we have said and what we have again said today is, that we expect the additions to restructure and -- non-perfomring loans this year to be lower than last year.
Sagar Kapadia
Lower than last year. See sir, just assuming that they will be lower than last year.
So you mean to say, these all [indiscernible] together, right? Slippages from restructured, slippages from the standard as well as the restructuring?
Unidentified Company Representative
Yes. There is some mobile noise disturbance in the line, so let me clarify; what we had said was that the NPA additions and the amount added to the restructured loans for financial year 2016, will be less than what we had for financial year 2015.
Sagar Kapadia
Okay. NPA additions for 2016?
Unidentified Company Representative
Will be less than -- based on our current estimate, let me clarify, that we have had the NPA additions in the first quarter of INR16.72 billion. This number for the year as a whole last year, INR0.78 billion [ph].
Sagar Kapadia
Sorry, repeat it once?
Unidentified Company Representative
INR80.78 billion for the year as a whole. Based on our current assessments and estimates, we expect this number for this whole year to be less than last year.
Sagar Kapadia
So this number -- okay, this 8,000 crore slippages would be less than last year. I got it.
Unidentified Company Representative
From current estimates; similarly on the restructured loans have done about INR54 billion of incremental restructuring in the last year.
Operator
Sorry to interrupt. Mr.
Sagar may I request, if you have a mobile phone, please keep the phone near to you; because there's static coming in from your line.
Unidentified Company Representative
The restructured loans, in the last year, we added INR54 billion to restructured loans incrementally. In the first quarter, we have added about INR20 billion, that is INR19.62 billion.
So that whole year number is also expected to be less than last year, a little bit of frontloading has happened in the first quarter because of the regulatory guidelines. So this is what we have said and this is what we are seeking to achieve this year.
Sagar Kapadia
I got it.
Operator
Thank you. Next question is from the line of Kaushal Patel from IndiaNivesh Securities.
Please go ahead.
Kaushal Patel
Thank you so much for taking my question. First question is, regarding your branch expansion plans.
As you have discussed, digital and electronic transactions from retail side has been increasing. So like going forward, what will be your strategy, as far as branch expansion is concerned?
N.S. Kannan
Given the overall level of branches we have currently we do believe that for the next two, three years at least, we will be adding anything between 300 to 400 branches per year. So that branch expansion strategy will continue, and we will look at establishing those branches in places which make sense for us.
Kaushal Patel
Okay. And sir, within that, like what will be the mix, like rural/urban?
Unidentified Company Representative
It will be broadly balanced. I mean, we are roughly 50% metro/urban, 50% semi-urban and rural.
So that mix may not really change, too meaningfully.
Kaushal Patel
Okay. And one more sir, what is your outstanding as of June?
Unidentified Company Representative
INR11 billion. You asked security receipts, right?
Kaushal Patel
Yes sir.
Unidentified Company Representative
Yeah. INR11 billion.
Kaushal Patel
Okay. One more question, regarding that stressed assets, as we have been discussing so much of NPAs and restructuring, if we exclude like all this restructuring cases and NPAs, so how do you see stress from the standard assets?
What I mean to -- I would like to ask you like, how do you see stress into economy? Is there any improvement within economy and you see that there will not be any incremental stress from -- even in the sectors which are not right now in the stress?
So how do you see overall macro picture?
N.S. Kannan
Yeah, the macro pictures -- before that little bit of macro pictures, I talked about the incremental additions expected for restructured loans and NPLs, that I have already articulated, we are trying to work towards that. On the macro side, we believe that the credit environment has clearly not deteriorated during the quarter.
We do believe that things are inching up slowly. Several indicators to look at, whether it is on the infrastructure side, the kind of efforts which are being taken to clear the stalled projects, or if you look at some of the indicators such as the dispatches by Coal India.
Those kind of indicators give us a belief that things could only get better from here on. So our sense is that, I mean, nobody can predict clearly what is going to happen, but the general sense we have is that things can only get better than here.
The pace can be something which can be debated from our side. Having said that, our focus on asset monitoring, especially on the corporate assets, will really continue.
Kaushal Patel
Thank you sir.
Operator
Thank you. The next question is from the line of Anand Laddha from HDFC Mutual Fund.
Please go ahead.
Anand Laddha
Hello sir. Sir, two questions on my side.
Just wanted to understand, this quarter, 60, 70 crores [ph] to purchase. If you can give some color on this, how much was from the corporate sector, how much was from the SME?
What could be the quantum of the largest account?
Unidentified Company Representative
So as we have said in the earlier quarters, the slippages into the entry book, it is spread across largely the corporate and SME segment. So of course, unlike the last quarter, we did not have a very large account slipping into the NPA book.
But it is still mainly coming in from the corporate and SME segment. The retail segment has largely been stable.
Anand Laddha
Okay. Also if I am not wrong, last time, you have been indicating that there is a gas-based exposure you had to a power project in Maharashtra.
That has been a [indiscernible]. So can you update us what's happening on that project?
It will continue to be a standard asset?
Unidentified Company Representative
That is a standard asset for us. So what is -- as we have said it -- earlier, that's the only gas based power exposure that we have.
So during the quarter, we have seen some positive movement in that exposure, in the sense that, given the gas subsidy scheme which is there, plus we have got a contract from Indian Railways. So we believe that over the next couple of quarters, there are developments that can happen, which would kind of held this exposure for the banks.
So as of now, there are two things that banks are working on; one is in terms of getting the plant to start operating, based on this contract that they have got. Plus, we are also looking at the terminal, this is being split out as a separate business, and there, a part of the loan exposure of banks can be transferred, which will be independently a viable set up.
So I think over the next two quarters, you will get clear visibility on the way forward on this exposure. So as of now, it is a standard exposure that we have.
As you would recollect in the past, we had restructured that loan, but since then, it had got upgraded about three or four years back. So it’s a standard asset for us.
Anand Laddha
Okay. That's all from my side.
Thank you.
Operator
Thank you. Next question is from the line of Adarsh P from Nomura.
Please go ahead.
Adarsh Parasrampuria
Yeah, hi. Couple of questions, first one on the overseas margin, you mentioned cost of funds have come down in the rated [ph] margins.
So just wanted to check, is it just a bit of a short term gap in ALM that has led to this, or do you think this trend is sustainable there?
N.S. Kannan
Yeah. If you look at the liquidity conditions in the overseas markets, they are very benign today.
And our sense is that, 1.7%, 1.8% kind of a net interest margin on the overseas book would be a sustainable level of margins there. You have seen it in the past as well.
This time it was a bit of an extra margin we got, because of the cost of borrowing coming down quite sharply during this period.
Adarsh Parasrampuria
And based on the repricing that would happen on the asset side, you don't have to pass this on. The benefit will come more on the funding side, which doesn't need to get passed on.
N.S. Kannan
Our strategy for this book is that, you know, whatever incremental lending we do; A, it will be calibrated to the funding and the ability to raise funds as well as the cost of funds. And secondly, we would like to do the lending, so that we prefer the margins at about 1.7%, 1.8% levels.
That's how we will operate it. And having said all this, the outlook for growth of that book will be -- the percentage growth would be lesser, compared to the domestic book, which will also come up.
Mixed perspective will help the overall margins of the bank, which we expect to maintain, same as last year, despite domestic interest rates decline. That is the way we are looking at the margins.
Adarsh Parasrampuria
And can you kind of just qualitatively talk about how the risk nature of that book would be -- some part of this stressed asset maybe financed there as well so? Can we sort of understand, if there is no need to pass on, lower funding costs, is it because the customers there don't have the bargaining power or?
Unidentified Company Representative
I think that -- Kannan mentioned the improvement in the margin that you have seen YOY is one, because of deployment of excess liquidity, and second, because we had some opportunities to reprice our existing borrowings downwards. There is not much of incremental lending, which has happened.
In terms of the portfolio, as such, it is quite similar to what we have in India, in terms of largely the corporates would be the same names that we have in the domestic book. So there is no real difference in that context.
And the margin improvement is mainly on an existing borrowing, we had some opportunity to reprice, and which has given us that 10-15 basis point kind of an improvement, which is there.
Adarsh Parasrampuria
Perfect. Second question was on the slippage from the restructured book.
Last year, it contributed more than 50% of these slippages. We have seen some bit of respite there.
I know these things can be lumpy, so I just wanted to qualitatively get your sense on how the performance of the standard restructured book is? And if there is any difference from where it was, like three-six months back or you can see lumpy slippages going forward from that book?
N.S. Kannan
Yeah see, if you look at our outstanding restructured book of INR126 billion, there over a period of time, the concentration risk has really come down. In Q4 of last year, where there was a blip, I had mentioned that, that the lumpy accounts get restructured, this ratio gets skewed, depending on which quarter that happens.
But going forward, if you want me to give a general color of the restructured book, the maximum exposure would be probably about 5% also, of the total restructured outstanding. So the kind of volatility we have seen in a couple of quarters in the past and the kind of volatility you're talking about, that will be much more muted going forward because the overall concentration risk in terms of the lumpiness has really come down in the restructured book.
Adarsh Parasrampuria
Okay. So the largest account you're saying, maybe 500 crores, 600 crores, so it can't add to that lumpiness, or will not cause such lumpiness?
N.S. Kannan
Exactly what I am saying. And also, that's about -- as I said, 5% of the restructured outstanding would be the largest account today.
Adarsh Parasrampuria
Okay. That is pretty helpful.
And just one last clarification on what [indiscernible] said. So 5/25, you all indicated refinancing that has been less than 1,000; because systems still has a lot of pipeline, just to clarify, your exposure in accounts that you may not be the lead bank is also -- as of now, on all the pipelines, for accounts being referred, you would not have any exposure, or is that a fair statement to make?
Unidentified Company Representative
As I said that, during the quarter, we have implemented a few cases which account for less than INR10 billion of outstanding loans for us. So going forward, we will have to see.
If there are any more cases as and when that happens, we will see that.
N.S. Kannan
But there would be section [ph] balances in terms of ascertaining the viability, looking at their independent viability study, all the vendors agreeing to move forward. So I think, there will be enough section balances to ensure that it is done in a very prudent manner, rather than using it wherever a single bank wants to use it.
So I think, that is the color we can give, standing here, this year, and then we will see, as we go along, what are the project delays and what are the kind of things and what are the -- the cases where you have to implement this, we will look at it as and when the situation arises in the future.
Adarsh Parasrampuria
This is helpful, thanks a lot Rakesh and Kannan.
Operator
Thank you. The next question is from the line of MB Mahesh from Kotak Securities.
Please go ahead.
MB Mahesh
Yeah. Good evening sir.
Couple of questions; first is on the loan book; if you look at the Basel disclosures, this time around, there has been an increase in the power exposure on a QoQ basis by a good amount? Just trying to understand from 29,000 crores to about 32,000 crores.
Just wanted to check, any specific reason for such a large increase in the specific quarter?
N.S. Kannan
I will just answer that question. As I mentioned, one of the strategies in the corporate portfolio for the last couple of quarters and going forward as well, would be to focus on some of the better rated corporates, in terms of expanding our book.
So as a part of this core strategy, we would be looking at both private sector units as well as public sector units, which are well rated. So while I don't want to name a particular client, but I can tell you that this would be operating well rated public sector kind of a unit, there we would have [indiscernible].
MB Mahesh
Okay. Thanks.
Just a subsequent question on the retail side, on the growth side. So nearly about some six, seven quarters, we seem to be growing the retail book in a very tight band between 23% and 25%.
Any specific reason that you're kind of either controlling yourself the moment you reach 25, or you do not -- you feel that this is the threshold limit, the one we should not want to increase?
N.S. Kannan
No, no. It is a completely derived number arising out of our strategy.
So I don't think, we have a particular band in which we want to grow. We would like to grow it, in a sensible manner, plus keeping the asset quality under control and then carefully look at the policies and procedures and expanding our locations and so on.
So our focus, as the articulated strategy, is to expand on the secured credit, which comprises mortgages and automobile loans. Look at commercial vehicles as soon as the opportunity arises, and do it within strict asset quality parameters; and on the unsecured loans, to look at predominantly our own customers, and see how we can upsell and cross-sell.
So that has been the articulated strategy on the retail side. In doing this strategy, and also our branches sticking in, in terms of sourcing.
If you remember, five, six years back, predominantly we were relying on direct marketing agents, and our own reliance on them has come down over a period of time, and branches are contributing a lot in terms of incremental sourcing. So as it kicks in, this is the path it has taken us to.
Our estimate is based on that, we would continue to put over the 25% kind of growth. And we also do a profiling in terms of what is the repayments out of the past firms, and what is the incremental disbursements.
Based on that, we sort of derive that number, and then that is what we have told you.
MB Mahesh
Okay, thanks. And then my one last question, this is the first quarter we have seen an increase in the gross NPL and the retail portfolio, its up from INR33 billion to about INR36 billion?
N.S. Kannan
Again I would like to just say that, these incremental numbers, you will have to look at the context of the overall retail book. This is more than INR1 trillion; more than INR1.5 trillion.
And then, that constituting 43% of the loan book. But I can tell you that, in terms of the quality of the portfolio, as well as the credit costs, it is doing extremely well.
So there shouldn't be any confirm, regarding the asset quality of the retail book.
MB Mahesh
Sure. Thanks a lot.
N.S. Kannan
Thank you.
Operator
Thank you. The next question is from the line of Amit Premchandani from UTI Mutual Fund.
Please go ahead.
Amit Premchandani
Good evening sir, and thanks for the opportunity. There were some news reports on one of the PSU banks, have actually qualified one of the coal block asset purchase of Indian corporates in Australia as an NPL.
And our understanding is that, you had also funded some of the coal block assets, of the Indian corporates. So if you can help us with the status of that account or generally the coal block assets that you had funded in Australia?
Unidentified Company Representative
As we have said already, we will not be able to discuss individual exposures per se. I do not know, which bank you are talking about or which asset you would be talking about, it’s very difficult to comment on that.
So indeed, we have financed a couple of overseas acquisitions for coal mine in the past. And there have been some challenges there, but overall, we are monitoring those assets very closely, and we believe that those assets should be doing fine going forward.
N.S. Kannan
We have a clear path going forward.
Amit Premchandani
And sir, also there was one news report about -- you can skip the question, but generally, there was a report about the default of one of the large corporates in one of the bonds I think. And one of the bonds I think, [indiscernible] rating agencies have put it as a default.
And that corporate has also sold out lot of assets. So generally, how is the progress in that corporate?
Is everything as per schedule in terms of asset sales, and has any money come to the banks after the asset sales?
Unidentified Company Representative
In this case, I assume that you're talking about the JP exposures? So there, as they have also commented and there has been a technical default in a small amount of debentures that they have outstanding.
And they believe that should get corrected over time. From the bank's point of view, we really don't have much change in our view, on the exposure compared to where we were a couple of quarters back.
The good thing is that, asset sales have happened and the cash from those sales would be coming into the company over the next few months. So that will definitely ease up some of the liquidity challenges that they have been facing.
And that should definitely be helpful. Going forward, I think they may need to look at further sales also.
So that's something that banks are kind of in dialog with the borrower group.
Amit Premchandani
But sir, whether the exposure of the banks through that corporate bolt-on [ph] because of asset sales?
Unidentified Company Representative
Going forward, the expectation, as the cash -- get the cash for the sales that have been consummated. That would be used to bring down the exposure that banks have to the group.
Unidentified Company Representative
So there is schedule for realizing those monies, and there could be temporary mismatches that probably [indiscernible] to handle it there. But beyond that, the expected proceeds of the sales are already done, as well as the expected future divestments, should really help the company as well as the lenders.
Amit Premchandani
Thank you, sir. That's it from my side.
Unidentified Company Representative
Thank you.
Operator
Thank you. Next question is from the line of Manish Karwa from Deutsche Bank.
Please go ahead.
Manish Karwa
Yeah hi, good evening. On the fee income front, you mentioned retail is now 63% of total fees?
And at what rate, retail is growing for us on the fee line?
N.S. Kannan
Yeah about 15 -- it has been growing at about -- depending on the order between 15% and 20%, it has been growing. So that is a number.
Manish Karwa
And we are confident that retail at least will grow at 15%, 20% this year as well?
N.S. Kannan
That's correct. And then we are targeting that, and then at some point in time, the corporate also will grow and as they have articulated earlier, the target is to first get to the double digit growth of fee income, some time as early as possible.
That is what we are trying to drive internally.
Manish Karwa
No. Then just looking at the pure math, it means that we will actually do double digit, because at 60%, its growing at say 20%, so you are already in double digit fee income category this year, plus corporate at least will grow some bit, because the base already has got corrected last year?
N.S. Kannan
See, while I don't want to put a number to it, clearly, the internal targets are higher than just saying it is a double digit growth. But given that where we are coming off, from 6.8% kind of a growth and 9%, I would probably wait for a quarter or so before I can clearly tell you that it will grow at a much higher rate.
So corporate, as I said in my opening remarks, has declined. So that is where we are currently.
But we are hoping that from here on, we should be able to grow it much better than what we have put out so far.
Manish Karwa
And just, on the corporate fees, which is a portion which is declining; is it the FX piece or everything has declined, or it’s these particular one or two elements which have declined?
N.S. Kannan
So our own sense is, that the transaction banking side, it has increased, it has not declined. On the FX, depending on the market conditions, quarter-to-quarter, there has been some volatility across banks.
But my sense is that, on the FX fees, we would have only increased our market share. So it is largely a lending related kind of an area or any lumpy kind of a fee income that is where the stress has been.
Manish Karwa
Okay. And you mentioned to one of the question that you expect stress to be lower this year.
So do you mean that both slippages would be lower and restructuring obviously would be lower? Do you mean even slippages would be lower compared to the INR80 billion of slippages last year?
N.S. Kannan
As we stand today and as we look at all the numbers, that is the expectation. Individually, it’s of this line item, that is NPA addition line item and restructuring addition line item.
Both of the line items, individually, you would like to do better than last year in terms of incremental slippages.
Manish Karwa
Okay, so that's clarified. And can I get a break up of this quarter provisioning?
Unidentified Company Representative
Standard provisioning -- general provisioning is about INR1.3 billion and the balance would be specific provisioning for NPAs and restructured loans?
Manish Karwa
How much would be for restructuring, if you can give?
Unidentified Company Representative
We don't give those numbers separately. It’s aggregated for the entire loans.
Manish Karwa
Okay, fine. Don't worry.
Thank you so much.
Operator
Thank you. [Operator Instructions].
The next question is from the line of Mayank from Goldman Sachs. Please go ahead.
Mayank Bukrediwala
Sorry. All my questions have been answered.
Operator
Thank you. Next question is from the line of Anurag Mantry from Jefferies.
Please go ahead.
Anurag Mantry
Good evening sir, just a couple of questions. Firstly on your other expenses, just wanted to know why there has been an uptick in that, given that there haven't really been any branch additions as such?
And if you can give any guidance on how that will look basically, when the branches etcetera, get added?
N.S. Kannan
Other expenses increase, we are largely looking at it on a year-on-year basis, that's why it’s sort of a double digit kind of a way. The better way to look at those other expenses other than employees would be the sequential numbers, and if you look at across the line items that you have seen, probably some areas like repair and maintenance have gone up somewhat.
That is also because, not just the branches added in the recent past, but also on the cumulative basis, we have a much higher branches than the physical [indiscernible] today. So apart from that, we don't see any one-off for a specific area, where we have seen any blip happening.
Our control on expenses will continue and we expect that our cost income ratio would be similar, if not better than last year. So that is how we are focusing on the cost control.
So we don't see any other patterns apart from what I have mentioned.
Anurag Mantry
Right. And the other question is, can you tell us the outstanding balance of provisions for NPA?
N.S. Kannan
Just a second.
Unidentified Company Representative
INR88.84 billion.
Anurag Mantry
This is the outstanding balance of provision for NPA?
N.S. Kannan
That's correct.
Anurag Mantry
Right. 88.4?
N.S. Kannan
88.84.
Anurag Mantry
88.84. Thanks.
Nilanjan Karfa
Hi Rakesh. Sorry, this is Nilanjan.
Just wanted to quickly check; in Q4, you were actually guiding to this impairment formation that is net of slippage from restructure at about INR89 billion. Given what you are seeing today, in terms of looking at individual items you want to, which is less than 80.78 and less than 54, are you getting a comfort situation that -- on the restructuring that probably, as you had highlighted in the past, because the lumpiness has gone, concentration has, it seems, gone, much more comfortable on your restructured book than you were three months back?
Unidentified Company Representative
That is correct, and as we had said in the previous quarter, in the March quarter we had a very lumpy exposure slipping from restructure into the NPA category, the number became so high at INR22 billion. So going forward, as we had said that we would expect that number to be lower.
So its not that we will not see any slippages from restructuring. There would be slippages that happen from restructuring, but the lumpiness of that will not be of the same magnitude that we saw in the last financial year.
So overall, the slippages from restructuring to NPA will definitely be lower than what we saw last year.
Nilanjan Karfa
Okay. But which number do you want us to track?
So do we look at the INR89 billion or should we look at this 80 plus 54 number?
Unidentified Company Representative
I think because the way people track -- some of the people are tracking this gross addition number which Kannan referred to, and they will be tracking it net of the slippage. So either ways you look at it, I think -- because each of the numbers you are looking at being lowest in FI 2016 compared to FI 2015, the NPA addition, the restructure addition as well as the slippage from restructuring.
So its fine, whichever way you look, but it should be lower than last year is what we have expected.
Nilanjan Karfa
That's very-very helpful. Thank you so much guys.
Operator
Thank you. Next question is from the line of Anish Tawakley from Barclays.
Please go ahead.
Anish Tawakley
Thanks for taking my question. I actually wanted to ask the OpEx growth at 8%, it is actually fairly low.
And you are not adding that many metro branches. Its also a bit different from what the peers are doing.
So what's the thinking there, and when would you ramp up this growth? I mean is it --
N.S. Kannan
No. The operating expenses, we are extremely focused that in terms of investment expenditure, whatever is required to be done, we are not going to add to those expenses.
Our focus is on the productivity, as well as wasteful expenditure being cut. That is going to be the focus on OpEx.
I'd say, answering to the previous question, non-employee expenses is really growing at a double digit growth rate, tracking basically the kind of footprint we have expanded over a period of time. If you look at the employee expenses, the growth has been muted.
As you know, some of the retirement and those kind of provisions, there would be lesser growth there. In fact sequentially, this would actually be a lesser number, because of the fixed income environment, where the yields are high.
So that is how it is really happening.
Anish Tawakley
That's benefited on the pension side?
N.S. Kannan
Yeah it’s on the pension side. All the liabilities on a year-on-year basis.
If you look at it, those would really be muted. On the employees as I mentioned, on a year-on-year basis, there would be reduction in the number of employees, whereas sequentially, we are expanding number of employees.
So wherever -- and I also mentioned the 2,300 employees have been added in areas like retail, which should be focused on deposit growth. So we would focus on investment; definitely, wherever its required to be invested, we will invest.
Simultaneously, we would ask for more productivity, as well as cutting out any flab or wasteful [indiscernible] that gets created. So that is going to be the focus on operating expenses, and we will try to improve upon, if not hitting it at the same level on the cost income ratio compared to last year.
Anish Tawakley
And you don't feel the need to add more metro branches in particular? Because others have picked up there?
N.S. Kannan
As we have mentioned, we would add branches across. In metros also, there is a deepening opportunity, and as Anindya mentioned, the mix of branches to be added in the future would broadly mirror what we have currently.
So it will be across all the locations that we will add.
Unidentified Company Representative
Anish, Anindya here. If you look at -- while the pace of additions and different categories of branches may be different at different points of time.
I think the outstanding to our branch network, in metros is quite comparable. In recent years, we have front-ended some of the rural kind of branch openings, rural and semi urban branch openings.
And the mix of branch openings, we forward would probably be much more balanced, which implies a higher addition than you have seen in metro and urban.
Anish Tawakley
Okay. Thanks.
Operator
Thank you. Next question is from the line of Mangesh Kulkarni from Almondz Global Securities.
Please go ahead.
Mangesh Kulkarni
Thank you for giving me an opportunity. I just wanted to know, with many new banks -- couple of the new banks coming in, do you see some kind of pressure on this employee -- mid level as well as operational level attrition happening?
N.S. Kannan
No, attrition is very much under control. In fact, attrition is lower than what we would have expected.
We absolutely don't have any pressure right now. There is of course few employees here and there could get poached.
But overall basis, actually, employment enrollment is such that we have no pressure whatsoever on attrition.
Mangesh Kulkarni
Okay. And in terms of one media news which came, say around 15 days back about the housing loan subsidiary.
So what is the development there?
N.S. Kannan
Well the development is that, since we have this subsidiary which has been in this business for a long time; obviously there are people who are talking to us, in saying that whether they can bite off us. So there has been interest around that subsidiary, and people have been talking to us.
But we are yet to take a final decision in this regard.
Mangesh Kulkarni
Okay. In that case, are we looking for some kind of JV kind of this thing or complete exit out of --
N.S. Kannan
As I said, we cannot comment today, because we have not taken any decision. But just to look at the way we have operated the housing finance business, is that the bank has got excess capital as I mentioned to you, that is pretty much higher than the minimum capital adequacy requirements.
And incrementally, large part of the home loans is being booked at the parent. From a business perspective if you look at mortgages and we continue to expand that predominantly using the parent's balance sheet.
Mangesh Kulkarni
Right okay. Thank you, sir.
Operator
Thank you. Next question is from the line of Vishal Goyal from UBS.
Please go ahead.
Vishal Goyal
Hi. Thanks for taking my question.
Sir one question is on the rating profile of our corporate book. Any color on that?
N.S. Kannan
No, we don't make a disclosure on the rating-wise cut of the portfolio. But overall basis, I can tell you that the credit environment have been quite stable in the recent months.
So that's the broad color I can tell you. And then incrementally, as I said, on the corporate banking side there, we have seen some growth in the quarter.
Incrementally, bulk of the corporate lending has been to operating higher rated corporates, both in the private sector and the public sector. So the most qualitative color is that it is getting better, but we don't make any disclosure, in terms of rating wise cut.
Vishal Goyal
Okay. And then also, we -- when you compare your RWA to total assets, we obviously see your number higher, and I think -- is it because of project lending or higher proportion of corporate?
Unidentified Company Representative
There are various reasons, when you compare RWA to total assets, then the composition of assets, you have to compare across banks. We have in these, larger proportion of non-fund assets which are there.
On the loan portfolio, we have the overseas book, where typically from an external rating perspective, that will largely be unrated, given the nature of the loans which are there --
N.S. Kannan
Which is 24% of our loan book today.
Unidentified Company Representative
So because of those reasons. Otherwise there is no other difference which should be there.
N.S. Kannan
Specifically in the last quarter kind of -- if you look at, RBI has come out with specific guidelines, saying that for the market and operational risk, we increase the risk weight. But in line with what is [indiscernible] in the Basel III.
So all those things will have to be looked at, in terms of looking at the risk weight intensity of the balance sheet.
Vishal Goyal
Okay. And sir, can you share your -- domestic corporate book is fully externally rated, or there also you will have unrated?
Unidentified Company Representative
It will not be fully externally rated, because that challenge always continues for all banks. So all banks would have -- in the range of, I don't know, between 50% to 70%, kind of rating which would be available for banks.
We also would have, some of the portfolio which is unrated. Of course, we have a very robust internal rating mechanism, so all of these loans would be internally rated.
Vishal Goyal
Okay. And last question, on the housing finance subsidiary, what would be the motive, if at all, to basically sell it?
Because it’s a good arbitrage opportunity whenever you guys want to use that vehicle to book home loans. Is RBI forcing you to sell it out, or --?
Unidentified Company Representative
We have explained in the past as well, that subsidiary exists, it has its own model that it is following. But the bulk of the mortgage business is in ICICI Bank, which is also kind of known and evident.
And from time to time, people reach out to us, to say whether there would be an interest in divesting it, and I think one of such possible expressions of interest found is very into the media. But we have not taken any decision to divest a subsidiary, it continues to be a wholly-owned subsidiary of ICICI Bank.
Vishal Goyal
Thank you. All the best.
Unidentified Company Representative
Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question.
I now hand the conference over to Mr. Kannan for his closing comments.
N.S. Kannan
Thank you for being on the call. I think we have answered most of your questions satisfactorily.
Should you have any further questions, my team and I are available to clarify. Thank you very much.
Operator
Thank you very much members of the management. Ladies and gentlemen, on behalf of ICICI Bank, that concludes this conference call.
Thank you for joining us and you may now disconnect your lines.