IDFCFIRSTB

[Regulatory cover note] IDFCFIRSTBANK/SD/222/2022-23 January 22, 2023 National Stock Exchange of India Limited BSE Limited Exchange Plaza, Plot No. C - 1, G - Block Phiroze Jeejeebhoy Towers Bandra-Kurla Complex, Bandra (East) Dalal Street, Fort Mumbai 400 051. Mumbai 400 001. NSE - Symbol: IDFCFIRSTB BSE - Scrip Code: 539437 Dear Sir / Madam, Sub.: IDFC FIRST Bank Limited – Audio Recording of Earnings Call (Q3-FY23) This is to inform you that pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the audio recording of earnings call with analysts and investors held on January 21, 2023 on unaudited financial results of the Bank for the quarter and nine months ended December 31, 2022 has been made available on the website of the Bank under following link: https://www.idfcfirstbank.com/content/dam/idfcfirstbank/pdf/financial-results/ICI0420230121144981.mp3 Request you to take the above on record and acknowledge receipt of the same. Thanking You, Yours faithfully, For IDFC FIRST Bank Limited Satish Gaikwad Head – Legal & Company Secretary IDFC FIRST Bank Limited Corporate Office: IDFC FIRST Bank Tower, (The Square), C-61, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. Tel: +91 22 7132 5500 Fax: +91 22 2654 0354 Registered Office: KRM Tower, 7th Floor, No.1, Harrington Road, Chetpet, Chennai 600 031; Tel: +91 44 4564 4000; Fax: +91 44 4564 4022 CIN: L65110TN2014PLC097792; E-mail: bank.info@idfcfirstbank.com; Website: www.idfcfirstbank.com [Investor-call recording transcript] Ladies and gentlemen, good day and welcome to the IDFC First Bank Q3-F523 conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kunal Shah. Thank you and over to you. Thank you and good evening everyone present on the call. This is Kunal Shah from ICICI Securities. Today we have with us Mr. V. Vaidyanathan, Managing Director and CEO, Mr. Sudhanshu Jain, CFO and Head Corporate Center and Mr. Saptarishi Bapri, Head Investor Relations from IDFC First Bank to discuss their Q3 and 9 months FY23 earnings. So, over to you sir. Good evening everybody. Hi, this is V. Vaidyanathan. Yeah, good evening everyone. Sudhanshu here. Hi, this is Saptarishi Bapri. Hello everybody. Thank you very much for joining us on this earnings call. Just want to give a few comments from my side and Sudhanshu can bring up the numbers. Number one, as all of you know that for the first few years we were trying to set the liability side, but I'm happy to just announce to everybody that we are feeling very strong about what's going on in the liability side with our bank. You know, deposits are up over 40% and we feel that we have a very strong traction on that front going by what we are seeing in the market and talking to our employees and seeing the deposits simply swelling at our place. So, that being firmly in place, now we're beginning to grow the loan book. On the loan book front, our book is of course going right now about 25%. Number two is that what I do believe is a highlight about our bank is the way we are building the bank, not so much about the numbers as such because numbers will all fall in place in due course. The more important thing is how we're building it and we think we're building it very clean, not just by counting that every bank is and every institution is, but what I mean is that the way we are keeping our customer practices, the way we are dealing with the making of product services, the way we're setting the meter on charges, fees, etc., we're keeping everything very reasonable with the customers and in fact, as slow as possible, which we do. So, all that is of course winning us a certain amount of goodwill in the marketplace, we believe, some way or the other. Third thing is about assets. As for assets are concerned, really on the legacy accounts, etc., we announced last quarter, but I think some of you believed us, some of you didn't, I don't know, but we are once again reiterating that we don't have any legacy issues that is going to bother us anymore. All clean and no problems there. On the assets retail side, asset quality is never the issue. Even today is not the issue. I'm happy to say that our gross NPS has come down to 1.87% and the net has come down to something like about 0.7%. So, to us, it's not a surprise. To some of you, you might feel it's, you know, it's low, but it's been like this for a very long time for us, eight or ten years, not a surprise to us. So it's all, let us say that COVID was a bit of a blip, but that has sorted itself out and they are absolutely feeling very good. So since we have a really fantastic retail lending machine, which is of delivering of a good asset quality, we feel confident to keep powering it up going ahead. That's the only capability the bank has built. As far as the capital is concerned, the bank is well capitalized. We are capitalized running over 16% at the point of time. First is about unit economics of the bank. Unit economics, frankly, are quite good now. As you might have noticed that the pre-processing operating profit of the bank has risen by about 70% in the nine-month period compared to the nine-month period of last year. So when the loan book has grown only 25, so how can really operating profit go so strong when loan book is not growing at that pace? So it's coming because of operating leverage and incremental unit economics. So we feel good about that and we just have to keep pressing the pedal and the bank will keep getting more and more profitable. It's become a reasonably relatively simple model to run from here on. As far as P income is concerned, it's looking pretty good for us. Our P income is retail fees constituting over 90% of the total P income. Finally on profitability, I think bit by bit taro is rising at the bank. We are quite proud that we already touched double digits. We are guaranteed double digits end of the year, but I think last quarter we did it, but this quarter kind of reaffirmed it. You watch next quarter. We're not very concerned now because we feel that we're firmly firmly in the double digits now and we don't think we'll dip below that. Now, last this course is, you know, corporate governance, technology, ESG, etc. But that we will talk about in the course of the discussion. So that's a very quick brief on all courses reasonably clear to us. I'll request Suzan to make his comments about the numbers. Thank you. Yeah. Thank you, Mr. Jeff. I'll start with the balance sheet metrics and then move to asset quality and profitability. The balance sheet price of the bank has grown by 27% on a yoy basis to reach rupees 2,21,375 crores at December end. We continue to see a healthy growth on our lending book and in deposit mobilization. Customer deposits for us has grown strongly by 8.4% on a Q&Q basis and 44% on a yoy basis. Within the same, CASA deposits increased by 39% and term deposits grew by 50%. CASA balances even during the quarter grew by 5% and we also saw strong mobilization in TD as due to increase in the overall systemic rates. CASA ratio was stable at 50% for the quarter and even average CASA ratio was at 50% for the quarter. CASA at term deposit less than 5 crores was at 80% of the customer deposits which points to the granularity of deposit mobilization. Moving on, we opened about 37 branches during the quarter and the branch count now stands at 707 branches. The bank also maintained an average LCR of 122% during Q3 as against 131% in Q2. While the ratio moderated and the excess liquidity got deployed, we are still well above the regulatory requirement of 100%. We also saw a reduction in high cost legacy borrowings which we have been reporting by rupees 1687 crores during the quarter. The residual amount is now at rupees 18762 crores which will run down in the course of next two to three years. We have given more details around this in the presentation on slide number 28. Moving on to the asset front, I am happy to report that overall funded assets have crossed rupees 150,000 crores and it grew by 25% on a VIOI basis. Detail and commercial book grew at a faster pace to reach rupees 116,680 crores. We saw strong growth across all product segments to give some more color. Home loans grew by 48% on a VIOI basis. We saw disbursements holding up well in this segment in the current quarter despite increase in the interest rates. B-segment which includes two-wheeler and cars registered strong growth of 50% on account of the festive demand and our increasing distribution. Happy to state also that we have a 55% share on the EV finance in this year in that segment. Consumer loans comprising of consumer durable, personal loans and cross sale book grew by 27% on a VIOI basis. The rural book also grew by 36% on a VIOI basis. Credit card which is relatively a new book that grew by 89% on a VIOI basis to reach rupees 3,146 crores. The bank has issued more than 1.3 million cards since launch in January 21. In fact, the number of cards which have been sourced have doubled in last one year. Growth spent on credit card increased by 19% sequentially and 86% on a VIOI basis. More details are given on slide 31 of the presentation. On the wholesale banking front, the non-corporate infra loans grew by 17%. The intrastructible continues to come down. It's now 3.7% of the total funded assets as compared to 6.6% a year earlier. Moving on to asset quality, the gross and net empty of the bank further improved by 22 bips and 7 bips respectively, few on few and stood at 2.96% and 1.03% respectively. PCR gross of technical rise off stood at 76.6% at end of December quarter. In fact, if we exclude the winding infra book, NPAs, GNPAs and NPAs bank level stood at 2.11% and 0.6% and provision coverage goes up to 83%. Even on the retail front, GNPAs improved sequentially by 16 bips to now below 2% and was at 1.87% and with net NPA being just 0.7%. The corporate non-intra book continues to be well provided with a PCR of 99%. The overall restructured book as a percentage of total funded assets has further reduced to 0.9% as compared to 1% last quarter. The SMA-1 and SMA-2 book on the retail book was stable at around 1% and much lower than 3.2% a year ago, which is a good indicator of a better portfolio being built. Even in the corporate book, the ratio of SMA-1 and SMA-2 is sub 0.2%. Slippages for the quarter were marginally lower than the previous quarter despite the increase in the overall book. Moving on to profitability, our profits for 9 months this year was Rs.1635 crores as against a loss of 197 crores last year reported in the same period. This is on account of increase in pre-provisioning operating profits by 70% and also lower provisions by 57%. Profit after tax for the current quarter increased to Rs.605 crores versus Rs.281 crores in Q3 last year, which is an increase of 115% on a bio-wide basis and a sequential increase of 9%. This has been driven by strong growth in the operating income. On the quarterly annualized basis, the ROE continues to expand and for Q3, FY23, it stood at 1.1% and ROE has reached 10.72%. Net interest income grew by 27% on a bio-wide basis to Rs.3,285 crores. P&O income also saw a strong increase of 50% bio-wide to Rs.1,117 crores. Even on a sequential basis, P income saw strong growth. We have given more details around the P break up in the investor presentation on slide 57. The bank had a trading gain of Rs.36 crores in Q3 as compared to a trading gain of Rs.25 crores in Q3 last year and a trading gain of Rs.116 crores in Q2 previous quarter. Core operating income excluding trading loss increased by 32% on a bio-wide basis aided by strong NIMP income growth which I mentioned before. Operating expenses grew by 23% on a bio-wide basis. Cost to income ratio excluding trading gain improved to 72.2% in Q3. From 77.6% in Q3 last year and was also about 1% lower than Q2. As a result of the above, the core operating profit excluding trading gains grew by 64% on a bio-wide basis and 16% on a QLQ basis. Provision increased by 15% on a bio-wide basis and stood at Rs.450 crores. However, the credit cost for the quarter was stable at 1.2% as a percentage of average funded assets. For the full year, credit cost was low at 1.13% against our guidance of 1.5%. Moving on to the last section. The bank has maintained strong capital advocacy and its car including profits was at 16.06% and with the CEC ratio of 13.49%. We have mobilized CO2 of Rs.1500 crores in the December quarter which also improved our capital advocacy during the quarter. The bank is well above the regulatory threshold and looks forward to continue the growth in a profitable manner. With this, I conclude my remarks and we can move on to the Q&A. Thank you. We will now begin the question and answer session. Participants who wish to ask a question may press star and 1 on your touch-tone telephone. Participants who wish to ask a question may press star and 1 on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants that request to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have the first question from the line of Ishaan Azharwal from Eravna capital. Please go ahead. Hi, thank you for the opportunity. First of all, many congratulations and a super performance on all the funds this time around. Very happy to see Core ROE excluding trading gains at 10.2% and appreciate the management finishing the commentary within 15 minutes leaving more time for Q&A. I have a few questions regarding the numbers in the outlook ahead. Yeah. Yeah. Firstly, so we have seen that the bank is engaging a lot of marketing activity with the Tag Zero Fee Banking since its fourth foundation day that is 18th December 2022. I've been a customer of the bank since 2019 and a majority of the services mentioned in the Zero Fee Banking promotion were already free. So is it just that we started marketing a benefit aggressively which previously existed? First of all, thanks so much Ishaan for your comment. Now with regard to, yes, I think our bank was giving most of these things free but by the way, they're not all free in the market, just for information. For our bank, frankly, last three, four years they were all free. So, but we were charging on maybe a few items of those. We just thought to ourselves, anyway, giving everything free, we might as well, you know, remove the three, four items they're charging on and make it a much more straightforward statement and give peace of mind to customers. So, yes, so we just packaged what we were doing and added a few, added a few more to it. So the addition of these few services which you've made free, will it have an impact on the future fee income for the bank in terms of if you can quantify that? No, we don't quantify that, but well, as you know, banks make a lot, a lot, a lot of money in fees through these 25 items. Whether there's NEFT or RTGS or IMPS or home bank charge, non-home branch charge, you know, cash deposit, cash withdrawal, that banks do make fees. So obviously by not charging it, we are giving up something. But we just, you can think of it that this way we built the bank from the beginning. So it's already factored in the way we've done our business thus far. So there's no material movement that we will believe that will happen just because of this move. Okay, okay. And in one of your interactions, I think you had mentioned that cost to income will trail down to 65 percent, should trail down to 65 percent by Q3 FY 24, that is December 23. Looking at the trajectory and the slightly slow pace of reduction in cost to incomes in the last three quarters, like if I have to give you number, 72.98 in Q1 to 72.93 in Q2 to 72.17 in Q3. Do you believe the bank can achieve 65 percent by Q3 FY 24? So first of all, I think if you recollect the last time's call, we had collected you on this front and said, look, you know, looks like like 25, you will get towards this number. So we're just setting the record right on that. And number two, you know, now you will see that year on year on year, the cost to income of the ratio of the bank will come down. This we don't think this need out on that front. So we are more tying ourselves down to return on equity because end of the day, everything has to boil down to ROE. So what is the target for return on equity for Q24? Q24, we are not specifically given a guidance order, but if you recollect the original guidance you put out at the time of merger of the bank and it's there in the last phase of presentation, we actually... How to do 15 percent? Yeah, exactly. So we said 30 to 15. And, you know, of course, five years is a long time to take such a long shot and get a prediction right. But the good news is that we are getting it right, we feel. And that too after doing an equity raise twice because of COVID or once because of COVID. So it's actually very commendable. Thanks so much. No, you know, really, frankly, when people put out a five-year plan, that too, you know, from if today you would put out a five-year plan, there is a reasonable clarity that we'll get it right. But remember the time of merger, there were so many swinging balls all over the place and the ball was swinging all over the place. And meanwhile, so we were just peeping out in the future and thinking what the bank could look like or should look like. And to top that up, then there was COVID, who could think of COVID and the kind of stuff it brought on us. Then there was, you know, those few bad loans that knocked off on 23,000, over 2,000 quotes from APNL on the network got knocked out. After all that also, we feel that we will be somewhere in zone there. So I feel that things are on track. So say we raise, because we formed a capital raising committee and we will be raising capital in this financial year, sorry, the next financial year. In spite of the capital raise, we will be able to achieve 13 to 15 percent, are we? Yeah, we talked about FY25 just for information, you can see the investor presentation in that spot. And in that particular page, we are going to have a look at it. But yeah, I mean, yeah, there are no Ips and Butts around this. Even if we raise capital, we want to get there. We want to keep our eyes there, fixed there. Okay, okay. And there is an amazing trend on the way our C income is growing. I mean, if I just look at quarter on quarter, it's 18.2 percent. So first of all, is there any one-off for this quarter? No, there is no one-off. There is no one-off as such in this. Okay, okay. And how do you see the trend of C income? Should this should this trend continue going ahead? Yes, it should continue. Okay. And I think the next question will not be that significant, but just wanted to know because of the news on the market. What are the exposure to VIA as on 31st December 22? We haven't called out a number, but you can see that that time we gave them 500 crores and we are made at a quarterly repayment over a four-year period or three years. Over a three-year period. So exposure is down by already one-third and average residual maturity is now less than one year. So now you can think about every quarter we're getting about 45 crores back of principal and then so things are broadly headed downwards. Yeah. Okay, thank you so much for the opportunity. Yeah, yeah. Thank you. We have the next question of the line of Sagar Shah from Philippe Capital. Please go ahead. Good evening, sir. Thank you so much for the opportunity. First of all, many congratulations for another superb set of numbers actually in this quarter. Thank you so much. Yeah, so by you can say maybe sorry to stress on that operating on your OPEC actually, but my question was related to your OPEC. So in this quarter also we saw we saw almost a double-digit growth in your in our operating cost and next year you are guiding for a 13 to 15 percent ROE. Although we have set a very your NIMS are very healthy at around 6.36 if you annualize for this quarter, but already we are at seven seven and seven branches. So can you give some at least a flavor that in in FY24 and FY25 what kind of branch addition are you seeing so that our we can at least we can have a we can have a we can have a review that what kind of operating cost growth actually how you factoring in your entire cost of the year. See we are almost coming to the end of 23 and this for 13 to 15 ROE guidance get given for 25. That's why I pointed out this so that there's no confusion of this front. So that so that gives a two-year window as per original guidance to move from the current number of call it 10.5 to that number. So we will we think we will work towards that now with regard to your other question about branch. We should be adding what about 150 a year. Yeah, yeah about 150 year. 154 year you're going to add your branches. Okay, and sorry I didn't get your point previously about the 10.5 that you are referring to. Yes, we reached 10.5 and you I hope you'll agree that was a rather swift swing into the 1% ROE league banks. Absolutely, absolutely. I mean I actually internally we are feeling very happy about the way this bank has swung into profits and the swung into like solid one plus one plus ROE that has taken us into the 10% 10.5% ROE now 10 point 10.2 sorry 10.2 ROE now that number we feel there should be nothing that should stop us in this direction. Of course, it's not that we're not exactly assuring guarantee that every single quarter things will keep inching as you know, there are a quarter just three months sometimes a small swing happens this way that way but you know, but directionally we should definitely moving in that direction. Now second question was on your NIMS actually you have clocked around 6.4% NIMS for this quarter if we analyze it. So we're going forward in FY24 and FY25 do you visualize that our NIMS will will likely face some pressure actually or are you comfortable holding at around this figure for the next few years? Somewhere here somewhere here it's running a little more than what we had initially guided it for so let's play it by the year but broadly speaking we are already in the zone that we would like to like it to be at. Okay. And my last question sir would be on our cost of fund. So in this quarter in this quarter also we have around the 40 bits height we saw in enacting the first week of December in the repo heighting as I mentioned in too. So have we the cost of funds have we factored in all these in our yield and advances and also have we factored in in our deposit rates or in the coming subsequent quarters are we going to witness some little rise in cost of funds and little even more better yields from now. Can you give a flavor on that? No, no, no, no. You're getting too greedy. I think already already factored already passed on I don't think should expect anything more than this. But you know what frankly the game is not so much about increasing in them and all that the game is now it's about improving cost income issue bit by bit it will happen because he says very simple game of leverage and and very game of operating leverage actually not just leverage operating leverage. So it will just just it just watch this game. I think most people haven't figured out a bank yet. The way this bank is fundamentally structured now in a financial sense. You know the income at these levels should continue for a while because there's no reason for it not to because of after this is a product mix is giving a certain yield the certain cost of a particular offering are giving to the market. So and any case is a little bit of buffer still for us to be a setting a little bit of buffer because of that 18,000 crore 18,000 18,000 legacy borrowing which are paying about 98.9% or so. So that is yet to come to the P&L. So once you replace them with today's cost of money. So we let me say just say that there is enough on the income line for us now automatically when we just grow you see the margins that are coming. If the bank is having the kind of margins we have and just grow the book from here on then automatically income will grow and certainly expenses not growing at the pace as income is growing. So it's so simple. So mathematically just go to spreadsheet and just extrapolate the bank for one or two years. You will automatically say it will come down. It will not take any superhuman effort from us anymore from here on and then and that will translate directly to the P&L and that's how to play. Actually that exactly my point was that your main driver for your ROE is nothing but only your OPEX actually. So that's why I asked about the branch edition because right from the merger we had moved from 262 almost 707 branches as on December as on the third quarter of 2023. So going ahead subsequently see the branch edition if it goes the branch edition if it goes on a declining level automatically your operating expenses and the operating leverage that you talked about will flow in but unless we don't stop our growth of OPEX actually it will be a little difficult for us actually and maybe we have to stretch it maybe our ambition ROE maybe by one or two years maybe even more actually. So that exactly my point was. No, no absolutely you are making a very absolutely fair comment. The thing is that you know frankly the way we are building the bank we are really not looking at this that look whether this quarter will become this or that quarter will become you know will touch in precisely in the four in eight quarters from now or nine quarters from now. If I have to put branches I put the branches you have to reduce the rate I will reduce the rate I have to increase the rate I will increase the rate basically it is a very dynamic and fluid place. All I know is that directionally we are set at a pretty good economics in this bank. You know so therefore supposing I told you 150 branches if I feel like I will make it 200 so the or I will make it one thousand twenty five. So what I am going to say is that these are all directional stuff we day to day month run run the bank and we are somewhere we are operating the corridor of what we say so so therefore we are building the bank for a long run. Let me call it many years from now and a quarter here or there I am not particularly bothered. So the first point is therefore that is that the our game from here on is simple actually not cut-crossed our game from here on actually grow the book which it will happen and that will just feed to the as long as incremental economics are strong it just feed to the ROE and profit thank you so much sir thank you so much for your opportunity I'll come back again. No problem, thanks Sagar. Division of the Line of Hrithika from Ocean Dial please go ahead. Congratulations on a great set of results. I would like to first hear your views on the credit growth for the industry. Well it's quite strong. The market is growing very well. Basically I think people are coming off a low base as you know last year was COVID and all that. It's all looking good and what I feel is that when I look around and see the market I feel that most bankers have become reasonably conservative now and it's not just us I see people following fairly good practices I don't find anybody crazy or aggressive out there. It's a general approach in banking. I think people have burned their fingers, learned the lessons through the COVID period etc. But I think the way I'm looking at is that there are certain structural guardrails also that have come to the country these days which are also putting credit growth on a little more safer path than before. So if we have later time in the discussion and if you're interested I'll expand on it and I feel that that is probably the basis of the foundation growth is coming from. So I feel that this 70% growth that has happened now well in this range at least for a few quarters it should stay and then we'll have to take it as it comes. Sure sir. So can I maybe see the results for this particular quarter. So you know it's a great set of credit growth across the portfolio. So just your thoughts on maybe the rural microfinance which has done a good set of growth this particular quarter and we think that you had guided that you know pathway has bottomed out and we'll start seeing growth and that is visible. So just your outlook on or other views on what are we seeing in these two portfolios. See in our case the home loan business of course is growing very well. The YOY growth on home loans is 40%. So our MSME business is growing really very well and some businesses for us for the bank is also new relatively newer for the bank like gold loans, digital loans etc. or credit cards. There are of course newer businesses. Newly launched businesses grow at a relatively more pace than the other. So these are our machines that are firing home loan, SME and the other three businesses I talked about. Sure sir. So obviously the outlook on asset quality has been improving and just wanted to hear your views on the infra book. So how do we see that you've mentioned that it will run down and secondly the asset quality aspect on the infra book is where I want you to share the views on. Yeah, I'll take that. Thanks for the question. So infra book if you see is already down to 5500 crores right and in fact NPA in this segment is relatively high at 23% right. That is because we had certain cases which we have recognized in the past. In fact there are no new additions which are happening on this front. There is one toll account which is part of this number which is in NPA where we expect some positive outcome to sort of come in due course. So in per se we don't see any incremental stress on this portfolio. In fact there could be some positives which could come in due course in terms of recovery. Even on this toll account which I mentioned the entity continues to pay because it's an operating toll road right. Exposure has come down by about 20 crores in this quarter itself and in previous quarters also it sort of came off. So we feel that of course we are not writing any incremental exposure. The existing exposure should continue to sort of come off the basis of the scheduled maturity and so on. So the 53% coverage that we hold here we obviously appear to be comfortable with that. Yeah, we feel we are quite comfortable there. There was just one last question. So the CASA actually was a little different than what we saw for the industry. So now everybody is showing quite a moderation. Have we taken any further increases on the rate side or how should we rather see this? That's a fair question I know. No, we have not done any movement on the rate front. They are what they are or they are what they were. But somehow we are, I told you, we are getting a very strong inflow of deposits. Our bank, I don't know how, but we are a big beneficiary of public goodwill in a major way. You do a spell check in the marketplace and talk about a bank. Most people will tell you that the bank is a good bank. You talk to customers of a bank. We are getting very, very, very positive feedback from customers. By the way, lots and lots of people in my own building are customers. So I often get to hear what's going on around the place or when we visit branches, etc. So there is goodwill. Service is great. Pricing is, let me say, in the middle of the band. If you think of, you know, if you think of the top tier banks, ICS, HTFC, Access Quota, let me just think of them as one category of A category banks. And then think of the next category of say, Indusind, Bandhan, yes, ourselves, maybe one or two more. So we are in the bank at the center of the pack. But somehow we are beneficiary, but our deposit growth is disproportionate to the price we pay. But that's all it is. We wish you the best and congratulations again on the one percent plus. Thank you. Thank you. Did I answer your question or was I just, you felt I was being run through? No, sir, you did. I am a customer myself, so I know, sir, I can understand. Thank you. Thank you. Thank you. We have the next question from the line of Mohit Surana from CLSA. Please go ahead. Hi, sir. Congratulations on a good set of numbers. First question, if you can just break out the name improvement, the factors contributing to the name improvement for the quarter. And secondly, in terms of loan growth, the way you see it now, has it changed materially from what you would have thought, you know, the loan on the loan growth outlook? Maybe let's say one or two quarters back. In your mind, has the growth outlook changed any bit on the loan side? Those are the two questions. Yeah, thanks Mohit for the question. I'll take both of them. So on NIM, NIM increased during the quarter. And the factors contributing to that increase, I think are three to four, which I want to sort of fall out. One is, of course, the repo repricing benefit, which sort of came in, I would say the full impact, which came in in Q3. And also there was an increase in repo, which was done by 50 ribs on October 1st. Even that sort of benefit came in on the repo linked book, which we have. That is broadly about 40 percent of our book, which is repo linked. So that was one factor. Second was, even on the investments, we had an increase in the yield because the turning of the book, which happened, particularly T-bills, right, where the old T-bills were retired, which were at lower rates and got replaced with slightly better yields. Third, I would say, is even the excess liquidity which we were carrying got deployed. I had mentioned earlier that our LCRs have moderated while we still continue to carry a good LCR. So all of these factors sort of led to an increase on the yield front. And even the incremental loans, which we have, which we have sourced, right, there also the rate transmission has happened. While cost of funds also increased by 20 ribs, but net-net on the interest-earning assets, the increase was sharper. So all of these factors have led to an increase for the quarter. On the second question, on the loan front, of course, we are seeing strong buoyancy sort of continuing on that front. We have guided that we should be comfortably able to grow the loan book into a portable future, I would say, by 22 to 25 percent. So we feel quite comfortable and a strong sort of demand holding up on the loan front. Got it. Thanks a lot for your response. Thank you and all the best. Thanks, Mohit. Thank you. Line up Ashutosh Mishra from Ashutosh Top Broking. Please go ahead. Our solutions are for a very good set of numbers. FY23, we have seen, you know, basically a lot of positive happening on the loan front, especially because of the reciting of the repo rate. But FY24, everyone is indicating that it will be the year where we need to focus on how we will garner the deposit to fund these loans. So how do you see the deposit side of the story in the industry panning out in FY24? Well, basically for the industry, you know, historically the industry, if you take a data point from 2010 to today, I plotted it once. I found that actually on average grown at 10 percent all through this whole period of 12 years. So if you ask me to take a guess what next is going to look like, maybe 10, maybe 11, maybe 12. And then you might argue then how it's going to grow deposits as a little credit to the market by about, say, 17 percent or whatever it will grow at. You know, maybe banks will also raise through some borrowings because a lot of banks have more borrowing headroom. We don't want to go the borrowing route because we're already high on borrowing and we'd rather take the money from deposits. But if you say industry-wise, that probably means borrowings. I'm sure banks will also raise some equity, which is if nothing else has crashed a little bit to the liquidity. You know, there are other sources as well. Maybe there are banks have some excess SLR also that will also come back as liquidity back to the marketplace. Maybe banks have raised TO2 bonds also. So I imagine all that will also come to the mix. You know, if you notice, many banks have pretty low credit deposit ratios. So they have other banks have more headroom, I'd say. Okay. So how we are going to play in that? What type of increase in the cost of fund? No, do we see other than the infra book, the repricing or take out the infra book part of it? What type of increase in the cost of fund do you see in FR24? No, I thought you asked for industry. So, no, for us, if your question was more on the deposit front, the earlier concept. On the deposit front, we are very clear. We want to grow our loan book through deposits. So you will see that every quarter we would have funded ourselves entirely by deposits. And of course, we never say no to good money. If we found a really low cost money for a long period, a good quantum we got, probably still take it. Because after all, even if it came to borrowing, if it's low cost, it's P&L. But in general, in spirit, our approach is to fund it through deposits. And as I answered to one of the earlier speakers, we see absolutely no problem. You can take this from me. We see absolutely no problem raising deposits, meaning like we don't even worry about it. In the sense it's coming. And on the cost front, what type of increase do you see in the deposit cost? Well, as of now, we have... No, no, I'll answer the question, but I'm not talking it. So we have no plans to increase it as we speak at this point of time. But we'll always be watchful and if we see there's any need for it, we'll always touch it. But as we speak, if you ask us, are you planning to trust Interstate tomorrow morning? The answer is no. We'll see as it comes, right? I'm thinking depending on how sort of the competition reacts to those rates. Yes. And this is fair to assume that including Infrabook, we will not see any significant increase in the overall cost of funds, including of... Oh, you mean... I don't know, you repeated. Interbook again, again, in the context of liabilities. I'm a little confused. Are you meaning to say... So I was trying to separate the liability side in the two parts. One is Infrabook, separate replacing of Infrabook, which is expected to... Oh, okay, okay, okay, okay. Sorry, my apologies. I think I meant on the... Okay, I got that. That will run itself off in due course. In fact, we'd say that that will add to the P&L. That will add to the P&L meaning that we'll replace them with lower cost, obviously. But we are not factoring that in when you're talking of the fact that a NIMS will stay strong. A NIMS will stay strong by itself. We are not depending on that. That will be a bit of a bonus, actually. Got it. Okay. And we are also, you know, in advertising, we are putting a lot of emphasis on the zero fee and other, you know, charge. So does it will have any impact on our C income growth trajectory or from where we will compensate what we are losing on the, you know, customer acquisition funds there? Think of concepts of compensating X for Y, et cetera. When people think like that, but we don't think like that. So, kardiyan kardiyan bas. We don't have to... everything does not have to be matched pie for pie. We're finished. We've talked up some fee. We forgot about it. That's it. Okay. When we build a good franchise, build good customer, goodwill, all that, they all pay back in due course when they pay back. Maybe one year, two years. So management is played broadly in judgment only. So it will pay back. If it doesn't pay back, it doesn't. But we haven't accounted for these things pie to pie. But basically, anyway, independent of these little bit of fee income, the bank is doing really well on... I can't say really well, but I'd say that beginning to do well, let's say, on, let me say, cross-selling products to the customers. Now our branches are a little more active on cross-sell than before. There is a very good amount of goodwill with customers. We customers notice over a period of time that this bank is being clean with them. They bring more business. But these brands are built and experience are built bit by bit over decades for a foreign institution to get that goodwill. So it will take time for these things to play out in the next generation. But surely directionally, we will get that kind of customer goodwill in due course. I hope, I'd say. So it will be fair to assume that fee income growth will be somewhat in line with balance sheet growth? Yeah, no, no, fee income will grow more. No, I was meaning to say that when you said how will you compensate, I said we can't exactly do a pie-per-pie compensation. But with regard to fee income growth, that's the easy one, no? Because there are so many other business lines that are still growing, like our wealth management business is growing by 50%. Naturally, fee income will also grow by 50%. Credit card business is growing faster. That will give us fee. You know, cash management has got no connection with all these things. That is going on its own steam. So there are so many lines of businesses for the bank on fee income. They don't have to be all taken from the customer on the deposit side. There are so many ways to earn fee income by selling products to customers and that our bank is willing to do well. Any incremental development on credit card? How do you see that playing out for you? Going well. Sulhanshu, was the number 1.3? Yeah, as I touched upon in my opening commentary, we are seeing a strong growth, right? In fact, the credit card issuances have doubled in this quarter. This was last year. And even Spence are growing very in a healthy manner. It's a growth of 86% on a worldwide basis. So I think we are making a good sort of a market in road on that product. So that is also a fee income to your previous question by the way. And so that will sort of also add up to the fee income in a big way even into the coming quarters. And there are a lot of discussion again start happening on the one of the telecom exposure, which industry keeps on talking. Do you want to give any update that what where we are on that? And we have no whether we see any incremental risk coming from that negative or negative side. Your opening back then who spoke to us, I think it was Ishaan or somebody who opened us up on that account already, right? He said that our exposure is instantly 500. But now it's probably come down to about 350 or so. So every quarter it will keep coming down. And if you ask us to our view, how we feel about it, well, everything is a public domain. You're hearing news from them. Hopefully, it should it should be fine. And hopefully, I mean, and on non funded, how much we have exposed to that entity. Yeah, no, we don't have non funded. Okay. Thank you. Thank you. And then a very good set of numbers on all of us. Thanks very much for your for your for your good words and encouragement. Thanks. Thanks. Thank you. We have the next question on the line of Rona Daga from BNK securities. Please go ahead. Hi, sir. Congratulations on a good set of numbers. Can you provide me the total provisions figure? Total provisions for the quarter is 450 crores. Okay. And what will be the breakup of specific contingent and restructured provisions? We have not called out that number separately. But so it's a combination of largely provisions on NPA, right? Some bit of provisioning on restructured. And as we increase the loan book further during the quarter, there's some bit of standard asset provisioning which also sort of comes up. But if you see from the previous quarter also, the provision has been quite stable. Right. The previous quarter was 425 crores. So the numbers are quite folding up. So the good news is actually that you should always see provisions in the context of the size of the book. So if you recollect, we always guided for the credit cost on retail to be earlier, we used to guide for 2%. Now this year we are guided for 1.5%. But somehow the credit cost numbers, not somehow, it makes us say that because of the way things are playing out and our book quality is really good now, credit cost numbers are, if you annualize the 450 divided by the book that we have, probably 1.3% now. 1.4%. 1.4%. So we are in the right corridor actually. And we don't see if you were to ask us to give you an outlook what next year quarter of that look like, et cetera. I'd say that will probably be in this corridor. Okay. And you mentioned that the important thing is the way the credit cost is now coming. If you see the last eight quarter trend on credit cost, it's been continuously contained, continuously. So therefore it gives us a lot of confidence in our own book now. And what we do just for your information, is that Ashutosh is speaking to? Ronak. Ronak, okay. So Ronak, if you look at our stuff, the way we do our math in our bank and try to predict the credit cost is that we calculate what is the collection percentage we are getting on different buckets, buckets like 0 to 30, 30 to 60, and so on and so forth. And then we extrapolate the number from there and try to get, and then we estimate what credit cost and future is going to be. The good news for our bank is that we are in the bucket X. If you're a technical person of the retail banking, you'll probably know what bucket X is. The current bucket, which is the dominant bucket, is a source of credit flow from their own. That bucket, our collection is running at 99.6% or 99.5%. Now 99.5% is the amount without taking prepayment amount. It is pure EMI due and EMI paid divided by EMI due. No prepayment concerned into it. So that number at that, if we sustain the number at that rate, and no reason we should not because it's been there like for 12 months now. If we sustain that, then the only 0.5 flows to the next bucket. And then there is a formula that works from there on. So we feel that that formula is really very, very well controlled and contained. And we should not give any surprise or shock there because we'll come to know early enough. Okay, got it sir. And you mentioned that the repo linked book is 40% if I'm not wrong. Yes, yes. So can you also provide the breakup of MCLR and fixed rate book? I think 40% included both. Yeah, so 40% is a floating rate book out of which 60% is repo linked and balance is largely linked to MCLR. Okay. And can you provide the timeline for the capital raise? We haven't put out in a specific number new data points than what we discussed last time. Last time we had said that we'd like to raise 4000 crores by in the next one year. So that next one year probably be September. So there's no new data point in the front equation. Okay, got it. But that means that between now to then, whether now, whether anytime in the next four quarters, we do intend to raise that kind of money. Okay, got it. And just last question, can you provide the restructured number? Yeah, so restructuring book is 0.9% of the total funding assets and it has come off by 1% which we had reported in the previous quarter. It's roughly around 1200 crore kind of number. Okay. And just last one data keeping question, what is the slippages number for the quarter? Slippages for the quarter is around 1150 crores. Draw slippage, however, net slippage is about 570 crores. Okay, got it, sir. Yeah, that's it from my side. Thanks a lot and all the rest. Thanks for your comments and my general comment on the context of what all the questions you asked. All our flows indicate to us that we should be in a position to keep our provision somewhere in the zone. And then you can have a good guess about whether the P&R is going to look like in the next few quarters. Thank you. Thank you. We have the next question from the line of Bhavin Gala from Marine Capital. Thanks for the opportunity and taking the question. Sir, with each passing quarter, our performance has been improving and I must compliment the management efforts. First of all, we have come a long way as we speak today. And it has been a commendable effort from each one of the team out there. So the way I see our bank is, when it comes to asset profile or our margin profile, we are akin to NBSP. And when it comes to the trust that we get from the people, due to our banking franchise, we are like a bank. So given that we are already in a such a sweet spot wherein our asset profile is more like an NBSP and our margins are very healthy. The only thing that I see in our P&L and on the earning profile, which is acting as a very, very big bent, is the provision. I know my fellow speaker already talked about this. But I also wanted to know, while we have been within the 1.5% guidance, can at any point in time we can aspire to have a moonshot wherein we can look forward to achieving 60-70% of the credit cost? Because that would materially change our profile, our earning profile. That is my first question and I have another question. No, no, let's take one question at a time. So now, well, you see, if you take provision numbers within 1.5, they are like as good as any bank. You know, the really good thing about a bank, you know, it's not actually an NBSP. Now we become a prime, prime, prime player of the respective segment. I'll give you a perspective. Let's think, let's take loan against property. Now, when Capital First was doing loan against property, we were probably lending at about 100, 150, 200 basis points more than what an ICSA bank, HTC bank, KOTAS, etc. would do, which means that let's take today's market conditions for simplicity. Supposing today's loan against property rates are going at say 9%. We were probably lending at 11. And the top banks are lending at 9 in today's context. And therefore, why were we doing that? Because the cost of interest is high. So obviously, if you lend at a little 200, 300 basis points more, obviously you were, you were floating at the edge. But now in every segment we're operating in, we are playing prime. So if you give a loan against property, our pricing is similar to like any other top bank. So therefore, the short point is therefore, we are, you cannot, I mean, the way I think of ourselves, I think of us like a, I think of us like a prime player of the respective segment. Let me put it like that. Now, which we are. Now on the credit cost front, obviously because the mix of a product is different and a specialization is there, sometimes people tend to think that, oh my God, if your yield is high, you must be taking riskier business. I mean, they, those such people are often, I'd say they haven't understood the model. It is the specialization that we have built is the, is what is so special about a bank. If you think of, let me say rate, you know, let me say even a top nationalized bank will give a gold loan probably at 9%, but there's also Mutut and Manopuram is also giving a gold loan, maybe 50, 16%. That doesn't mean Mutut and Manopuram is risky business. They just have a specialization. They're sitting the roads near roadside corner where customers can access them. They're giving them great service. They can turn around the gold loan in 10 minutes where a bank may take two hours. So there are some people who have done a specialization which is giving them those benefits. So our bank has its own specialization. So our risk is similar to banks, risk cost, credit cost. But yield is higher. This is our specialization. Yeah, sure, sir. I can't agree more with you on this. So the later part of my question was also, you know, at some point in time, can we also aspire to further curtail this cost because that is the material delta, you know, that can fetch a material delta in our earnings profile. Well, I told you, we should never be greedy. We should be conservative in our estimation of a credit cost. So we never want to put fancy numbers like that. If we do a particular business, we should factor for such credit cost and we should factor for a little more. That's why we always guide for, we used to guide for 2% credit cost when the reality was running 1.5. Now we're getting 1.5. Reality is less than that. So we should be conservative and factor for a little more credit cost, not less. Yes, a point noted, sir. And my second question was on the scalability. You know, I would here take a liberty of, you know, comparing our bank to another similar kind of bank banking franchise, though they are an SLB and we are a universal bank. The run rate in the segment that we operate and they operate, they've been able to make a little higher disbursement. For example, our net, while you have been doing 25% year on year, the net addition to our loan book has been 8,000, 8,500 crores at a given quarter. Whereas, you know, similar player operating in similar segment have been, which are very lesser in our, in the size compared to us, have been adding assets in the north of 10,000 in a given quarter. So are we playing conservative? Are we, you know, still trying to fix certain things so that the ground is clear for us to scale when we go to the next orbit? Your views on this, sir? No, it's again a good question. See, just because of the market, we should not play all our shots all the time. We have a steady model. Our loan book is growing by 8,000, 9,000 crores a quarter. We are very happy with that. It is, you know, as you know, we have to factor this in the context of our capital. So if we run ahead of ourselves, then we'll run out of capital and ahead of time. So as a management, we have to carry the bank along in terms of, we should pace our growth in, if you remember the first three years after the merger, we didn't, we paced our growth in such a way to grow only 5%. Bhavin, do you remember that? So we paced ourselves at that way. Now we're pacing ourselves at 25. We believe at this pace, the accrual of our profits will be such that our ROE will get fixed appropriately. If we grow too fast and run out of capital, we've got to come to the market earlier than planned. It has its own implications. So we're pacing ourselves accordingly. Sure, sir. Thank you very much for that. We have the next question from the line of Sarvesh Gupta from Maximal Capital. Please go ahead. By the way, moderator, it's been one hour. I thought we have one hour call. So if there's anybody else who has, yeah, yeah, yeah, Sarvesh. Good evening, sir. Congratulations on a good set of numbers. So, sir, first question is on the loss-making businesses. Earlier you used to allude to the run rate of certain businesses as well as infrastructure bonds that is sort of hurting the P&L and that should sort of normalize in the coming times. So if you can provide an update of the current run rate of some of these. Second is was related to the 4000 crore fundraising. So I think that is already answered. And third, I think on the provision side, it looked a bit higher. I'm just looking at the other banks provisions. Normally we have seen a lowering trend in the overall provisions, although the credit cost as a percentage is lower, but I think it trended slightly upwards in the absolute amount. So are there some one-offs or any extra provisions that we have made or is it business as usual? No, no, you should only look at it in the context of credit cost as a percentage because, you know, in absolute terms, they mean nothing. You got to see that divided by the average book and see if you are paying, if the credit cost is low or high. And as of now, credit cost is quite low for the kind of business we're doing and pretty much lower than guidance. And even absolute, if you compare this 1.2, 1.3 percent credit cost with the market, I'd say it's very attractive. That too for a yield that is relatively much higher. So that's that. With regard to loss making businesses, I think, yeah, I mean, they should taper off bit by bit in due course. Liabilities takes a long time. I don't know if you run liability businesses. I have built that on one of my earlier organizations. It takes a really long time to taper off liabilities to become cost neutral. But the good news is that the asset side of this bank is so profitable, so profitable that it's able to absorb those costs. So therefore, that drag will take time. But I think the credit card loss should fix itself with scale. Maybe at about two million cards or so, it should kind of begin to break even. And service on the provisioning plan, just to add, while we have seen a 15 percent increase, but at the same time, it has to be noted that we had made provisioning norms more stringent in the previous quarter. We took some impact. Right. So it has to be also seen in that context. Credit cost for 9 is just 1.13 percent. Right. And for the current quarter, it's 1.2 percent. So I hope you'll agree, 1.1, 1.2, it's really nothing. I've been in the industry long enough for our business segments. We are not exactly doing prime, only home loan and car loan like some of the banks do. And for us to have credit cost at this order for a yield that is relatively high, it's a very unique model. I genuinely believe, I don't know if people are digging their feet or not, but I genuinely believe we're building a really fantastic model of this bank. It's special because for our kind of low credit cost, and by the way, having low credit cost is again not a fluke. Please go back and see the capital first time also. They were very attractive. Our ROE had touched 15 percent. They were inching up quarter on quarter. It was heading towards a 20 ROE capital first. Don't forget. And it has moved from zero to 15 in that window of five years. And it was still inching up at the time of merger. Go and see the numbers that are there in the presentation. So we have a really unique model. One of the earlier speakers talked about the fact, the one who questioned us saying that, look, your yield is attractive and you're getting the liberties of a bank. I think it's very unique actually. So over time people will begin to see, you know, you play this game year after year without hurrying it, without hurrying up growth. I don't want to hurry up growth at all. It will come. If I played patiently, it will come. And then people will see what is evolving here. I'm sure you will. You watch this game for next three, four quarters. You'll get very convinced. Understood, sir. And my final question just in, you know, in terms of understanding of your names. So while you said that you are still playing that prime game, but our names are still sort of more aligned to a SAFB or a NBFC. So as we scale, are we trying to just continue doing the same thing in terms of our names and also letting our cost go proportionately higher? So our profits also grow in the same way, or we are sort of have up fronted our cost. And now in the coming years, we are going to look into lowering our names and the names resembling more like a universal bank, which with a lower cost will give you the same sort of returns on equity like a larger bank. So Saivesh, if you were running a bank with some very unique capabilities like we have, would you want to really become like every other bank? You answer me. Would you want to become? Yeah, perhaps not. Perhaps not? Why? You're such a good model, getting good yield, very low credit cost. Historical 10 year credit cost is quite low. So now it means the model works. And we have actually displayed on our investor presentation in very minute detail how we underwrite loans. I think we should check that out. We've given step by step, 10 steps that I take on underwriting a loan. It's working beautifully. So it's so good. So we don't want to become everybody else. We have a good lending model. We can scale up. Finished. And now just simple. You know, frankly, just keep things simple. You have a good lending model, keep it going. You have a good liability franchise, keep it going. Margins are good. They're good. Now we don't have to complicate it at all. We don't have to become somebody else. We are what we are. Understood. Just as long as asset quality is good, as long as incremental asset quality indicators are good. I want to just point it up to you 10 seconds so that you understand. So in our business, we will come to know very much in advance if we are going to have a credit problem. Advanced meaning what? If our credit, if our, you know, if our collections is not 99.5, if it came down to 98.5 for three months at a stretch, we know four quarters to three quarters from now we'll have a problem. So because after all what we collect in BucketEx is what what's built over BucketEx is what goes next. So therefore, our objective is to make sure that our quality never suffers. Our collection percentages continue to remain strong. That will automatically give us low credit cost and simply scale the book from here on. We are really keeping it simple. Understood. So that would also mean that as we scale up and if you're playing the same sort of a name game at a certain point of time, you will have your cost exhaustion coming up, which will result in probably an ROE much higher than a typical large bank. Yeah, I think so. But I don't want to run ahead of myself. But certainly we believe that the business model is such that it will give a very strong ROE. You just watch this game. Just watch next four quarters, watch next eight quarters. I told you we are playing a long term game. You also play a long term game with us. Don't hurry, but don't hurry yourself also. So watch this game. You watch next quarter, next quarter, next quarter results. It's a very simple model. In fact, our commentary will become very almost like every quarter commentary will sound the same from now on actually. Understood. Thank you, sir, and all the best. And the other thing is that, you know, on provisional results, none of you asked the question as to why we didn't put it up this quarter. But we'll call it out. We don't want to give provisional results anymore because anyway, around 23rd, 25th of the quarter closing month, we are releasing the results. So we don't want to put out two results. We just want to put out one result and reconcile it to put it out clean. And so basically the process, you know, that was during COVID is when we started it. But now COVID uncertainty is also gone. So we'll now straightforwardly announce the results and be done with it. That's all from my side. Anybody else, Prince? But first of all, thanks so much for for being with us. I think you had many other con calls to hear. So thanks for being with us among the many other even options and larger banks that you are covering. We appreciate that. So if there's anything, you can always reach out to us from now on and even during the rest of the quarter. And Saptarishi is there to assist you. Thank you, Mr. President. Thank you to the management for closing comments. Closing comments made already from our side. Thank you, sir. On behalf of IC's security, that concludes the conference. Thank you for joining us. Anyway, now disconnect your lines.