The conference is now being recorded. On your telephone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Prince Tiwari, Head of Investor Relations. Thank you, and over to you, Mr. Tiwari. Yeah, thank you, Ranju. Good evening, everyone, and welcome to AU Small Finance Bank's Earning Call for the Financial year and quarter ending March 2025. We thank you all for joining the call this evening. On today's call, on behalf of the management, we have our Founder, MD and CEO, Mr. Sanjay Agarwal, our Executive Director and Deputy CEO, Mr. Uttam Tibrewal, our Deputy CEO, Mr. Rajeev Yadav, and other senior members of the management team, along with the IR team. Like last quarter, we'll start today's call with a 15-20 minute opening remarks by Mr. Gaurav Jain, President, Finance and Strategy, highlighting the bank's performance, positioning, and outlook. We'll follow the opening remarks with 40-45 minutes of questions and answers from the participating analysts and investors. For the benefit of all participants, so that we can take everyone's questions, we would humbly request everyone to keep the number of questions restricted to two and join back in the queue in case you have further questions. For any data keeping questions, you can always reach out to the IR team, either post the call, and we can always come back to you. With that, I'll now request Gaurav Jain, President, Finance and Strategy, to share his opening remarks. Gaurav, over to you. Thank you, Prince. Good evening, everyone. I extend a warm welcome to all participants on this call. We thank you for your continued trust in AU as we close FY 2025, a year marked by continued transformation and resilience. FY 2025 unfolded against a backdrop of challenging macroeconomic conditions. India's GDP growth, while still among the highest globally, moderated to around 6.4% as per latest RBI estimates. The monetary policy environment remained tight for most of the year, with the RBI maintaining a cautious stance amid persistent core inflation pressure. Elevated interest rates weighed on both credit demand and cost of funds. Additionally, systemic liquidity remained tight for most of the year, leading to increased competition for deposits across the banking system. Evolving regulations also added to the complexity of the operating environment. For a young and relatively smaller bank like AU, with a growing but still maturing liability franchise on SFB platform, these conditions are particularly demanding, testing our agility and strategic focus. Yet, despite these macro and structural headwinds, AU delivered a strong and well-rounded performance across key financial and operational metrics, reaffirming the strength of our retail-centric and granular business model and execution discipline. We delivered strong growth, with our deposit book growing by 27% year-on-year versus banking sector deposit growth of 10.1%. Our loan book grew by 20% year-on-year versus banking sector loan growth of 10.8%, despite degrowth of 18% in our unsecured book. We delivered an ROA of 1.5%, despite significantly higher credit costs in MFI and credit cards, and after strengthening our provision coverage by making an accelerated provision of INR 150 crore. Our EPS grew by 19%, and book value per share grew by 23%. Now, let me talk about our business in some more detail. Our deposit base crossed INR 1,240,000 crore this year, growing by 27% year-on-year. If we take into consideration the fact that we also replaced fintech deposits of around INR 4,000 crore, which were at higher cost, underlying deposit growth comes to 30% plus. This growth was delivered whilst optimizing a number of other variables, including managing our cost of funds, which came in at 7.07% versus our initial guidance of 7.2%-7.25%, and controlling our OPEX and marketing costs. Our branch profitability improved with 49% of our branches, which were in existence in December 2023, becoming profitable in Q4, versus 25% a year back. All the other parameters like CASA ratio, LCR, and CD ratio remain in good shape. We have also reduced our peak deposit rate by 25 basis points, both on term deposit as well as on savings deposit post the last rate cut by RBI. I think this performance by our deposits business in a tough environment is a testament to the potential of our growing deposits franchise, which we have developed over the last eight years. We have invested in all the key aspects. We established a strong segmented product proposition backed by cutting-edge digital channels. We have all the cross-sell products capability, including our recently launched 81 remittance products and comprehensive wealth and insurance distribution platforms. We have pan-India distribution with the inclusion of fintech deposits branches in the south. In FY 2026, we plan to open around 70-80 new branches, mostly in the top cities, and enable around 75 existing asset centers in district and tehsil headquarters to start taking deposits. Now, moving on to our asset franchise. Credit demand was slower during the year, and the banking system's credit growth dropped to 10.8% in 2025 from the highs of 16% last year. In this backdrop, we have performed well, with our loan portfolio growing by 20% year-on-year, reaching INR 115,000 crore, which is around 1.8x of the system growth rate. Our growth was led by continued strong traction in our secure segments, which include retail secured assets and commercial banking, and form 87% of our total loan book. Retail secured assets grew by 21%, and commercial banking grew by 32% year-on-year. Both these businesses performed strongly in 2025 with continued strong growth and sound asset quality, and we have a long growth runway as we expand these businesses to South India, utilizing fintech touchpoints. Our retail secured assets book, which includes wheels, mortgages, and gold loans, has a vintage of over two decades and is a unique combination of scale, growth, high yield, and strong asset quality. We have a very strong right to win in this business with our deep distribution and underwriting expertise in informal segments in semi-urban and rural areas, strong operational processes and correction framework, and robust people practices. In commercial banking, we have developed a full product suite and tech capability over the last 8 to 10 years, and book has scaled consistently with strong growth and asset quality. Commercial banking business is important from liability franchise perspective as well and generated around INR 12,000 crore of deposits. We are moving this business to Mumbai this year, which will provide an opportunity to stitch this business even more closely with our deposit franchise and other asset businesses. On the unsecured book front, our unsecured book degrew by 18% for the year. Microfinance segment continued to face industry-wide deleveraging, and our MFI book declined by 17%. However, we believe we are nearing the end of this corrective cycle with continued improvement in collection efficiency, which touched 99.2% in March and 98.7% for the full quarter. There could be some impact from Anfin guardrails coming into effect. However, the industry has been tightening for almost three to four quarters now, and it is a short tenure loan, so we expect positive momentum to continue in the next year. On the regulatory front, the Anfin guidelines around responsible lending practices and borrower indebtedness gaps are structurally positive for the industry and will increase industry discipline. Additionally, the CGFMU credit guarantee scheme provides a critical backstop for eligible MFI loans, enabling us to lend more confidently to the underserved segments whilst mitigating downside risk. Nearly 100% of our Q4 disbursements would be covered under the guarantee, taking our overall portfolio cover to 36% by the end of this year. Going forward, we will aim to have most of our incremental disbursements covered under this scheme, and coverage on the overall book will increase to more than 75%. This will greatly reduce volatility of credit costs. MFI remains an important book, fulfilling our SMF obligations. While we will remain disciplined in growing this book, we see potential to cautiously scale as the operating environment improves. Our credit card book has gone through a period of recalibration in FY 2025, declining by 19%. We believe the corrective actions we have taken, tightening underwriting, rationalizing credit limits, and sharper portfolio monitoring have laid the foundation for more sustainable growth. The segment offers strong product economics and cross-sell potential as we scale our deposit customer base. We see the credit card business as a strategic lever for both fee income and long-term customer stickiness and remain committed to building it sustainably over the medium term. However, we need to be patient as it will take one to two years for our credit card franchise to turn around. In terms of our strategic initiatives, we continue to stay committed to our strategy of building a retail-focused bank primarily serving self-employed and SME customers, with a largely fixed-rate book and a strong deposits franchise. We have consolidated all the businesses except credit card under the leadership of our Executive Director and Deputy CEO. Both commercial banking and MFI business will now operate out of Mumbai, which will become the base for all our key business lines over the next couple of years, with Jethur focusing more on back-end operations. We will continue to focus on grant expansion, attracting urban deposit customers, and driving cross-sell. Tech and digital will continue to be an important driver, both as a channel as well as a tool to drive productivity. Over the years, we have already built tech infra to process customer data available through various digital public infrastructure like account aggregator and DigiLocker. We are now working on adding AI layer on top of our data lake to roll out various use cases at scale to drive workflow automation and cross-sell. This will help drive long-term structure, increasing efficiency. Finally, as you know, we have applied for universal banking license in September. Our application is under review by RBI. We remain in regular touch with the regulator, and we are hopeful for a timely evaluation. In terms of profitability, we delivered profit after tax of INR 2,106 crore for the year and ROA of 1.5%, despite significantly higher credit costs driven by stress in MFI and credit card books. In Q4, we also made an accelerated provision of INR 150 crore, primarily in unsecured, to strengthen our provision coverage. This provisioning was over and above our provision policy, and our coverage on unsecured businesses is now almost 100%. We also did a lot of work this year in improving our operating efficiency, and our cost-income ratio reduced from 64% in FY 2024 to 57% in FY 2025. This was driven by tight control on overheads and marketing costs, lower credit card issuance volume, and synergies from fintech mergers. As we look towards FY 2026, we see benefits of policy tailwinds with interest rate cuts, better system liquidity, and change in policy stance from neutral to accommodative. Credit growth outlook is also improving, and stress in unsecured segment is reducing. However, we are in a new normal environment where post-COVID gains are over, GDP growth is likely to be range-bound, and some sort of macro or geopolitical uncertainty could be business as usual. In this uncertain environment, we are watchful and are not providing any specific guidance for FY 2026. That said, based on our performance in FY 2025, which was a really difficult year, we are confident of continuing to do well next year. The second half of the year is likely to be stronger than the first, as credit costs in unsecured subtypes and cost of funds begin to move downward. Over the medium to long term, we believe our franchise has the potential to sustainably deliver ROA of around 1.8%, with business growth of 2-2.5 times of nominal GDP. In closing, FY 2025 was a tough year, but we stayed the course. We grew, we corrected where needed, and we continued to strengthen the foundations of a forever bank. As we have said earlier, it takes about 10 years to build a bank. We have completed eight years, and we are confident that the foundations we are laying today will create a stronger and more sustainable AU tomorrow. As a young bank, our business model is well-established, our team is vintage and stable, and we are present across the spectrum for our retail and MSME customers. In this uncertain macro environment, we may have small hiccups here and there, but we will navigate these challenges and continue to do what is right in order to build a strong and sustainable forever bank. Sanjay Ji, would you like to add anything? No, Gaurav, I think thank you, Gaurav first. Good evening, actually. No, I think you have summarized well. I would only add that tough time, navigated well. Throughout the year, last financial year, GDP was under pressure, inflation was there, the broken momentum, liquidity issues. I would say very low business confidence. At AU, I would say our deposits franchise really done very well in terms of building up the liability, the cost around it, the OPEX around it. The only missing item would be around granularity, where our CASA would have dipped, but that is a general industry phenomenon. I would say our secured retail asset also performed very well in terms of growth, in terms of ROA, in terms of credit costs. A little elevated because of the whole GDP not performing up to the expectation. OPEX level and everything, I think it's one of the books that we all are very proud of. Commercial banking, again, has gone to the size and scale now, and they're also performing well in terms of every aspect. I would only say that microfinance business, again, a right business, maybe at the wrong time, but it's a very, I would say it's fulfilled our whole inclusive agenda of banking. It gives us SMF book. It has not negatively impacted us, but of course, we had a high expectation around that book, that book should deliver 3%-4% ROA. I think it's gone to its own cyclic, I think, cycle. This year, I would say quarter three, quarter four, we're all hoping that it will come back to its old numbers. Credit card is more, we have taken a lot of corrective actions. We want to understand it more granularly. We have hired a very senior guy to underwrite, to understand the portfolio and all those things. Maybe this year we want to go to that learning curve, but we are very serious enough to build that whole unsecured portfolio, which is so high-yield kind of numbers. Other than that, integration is going very well. I would say we also want to focus on gold because fintech has done that business very well over the years, so we want to capitalize on that business. Of course, recent RBI circular and the whole narrative around is that it's a favorable bank, so we want to capitalize that whole positioning. Our ROA is 1.53, which is maybe lesser than what we guided you last year, but we have done the accelerated provision of 10 basis points. Somehow we really don't want to be very, I want to play around our balance sheet. We want to be very honest on our numbers so that it does not color, we don't want to get it colored by the whole aspect around it. Idea is to really communicate to you people very honestly that this 10 basis points is on the NPA so that our provision coverage goes up to a 70% level, and its NPA on this unsecured asset gets 100% covered, right? We don't want to do anything one-off. That's the way we are thinking at AU. We want to treat everything, we want to communicate everything so that it remains a business as usual, right? Overall, very happy. I would only say that this year, this financial year looks more, I would say, more in control in the sense that interest rate cycles are now coming down. Credit costs, of course, remain around 1.3, including the extra provisions, but should be now on a normalized basis this year, which we are thinking in the range of 75 basis points to 85 basis points. Next year, it may be on the higher side of the curve, maybe 85 basis points. We will get advantage in our credit costs next year, but NIMs can be in pressure because still the real benefit of interest rates coming down will only get materialized maybe in quarter three, quarter four. We have to handle that headwind around names. Overall, very happy to see the entire ROA tree. Our OPEX is in well control. Last year, it was a phenomenon, honestly, because from 63%- 56%, it's not easy. We had some kind of, I would say, low-hanging fruits, but we really want to build more distribution. We want to do some kind of marketing activity. Idea is to really keep it below 60%. We'll see how we do it during the course because we're all expecting that this financial year we should get promoted to Universal One, so there can be an especial effort for marketing around that. Very, I would say, tough time. I played well. This year, we look more confident. Thank you so much, Gaurav. Over to you. Yeah. Yeah. Thank you, sir. Thank you, Gaurav, and thank you, Sanjay Ji. We can go to the Q&A now, Ranish. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question comes from the line of Ranish with ICICI Bank. Please go ahead. Yeah. Hi, sir. Congrats on our successful conference under this challenging time. My first question is actually on the names, right? Post the 50 basis point of rate cut, we have already seen a large interest bank sort of rationalizing the rate. Are we not planning to cut rates in line with the system? Ranish, hi, good evening. We already have cut down on our term deposit rates by 25 basis points. We already have rationalized our savings account buckets. We are not giving now the peak rate around savings is now 7% instead of 7.25%. To further go down, we will require some more action from some of our competitors because our CASA is below 30%. We are not enjoying a space of around 40%-45% in that book. It is not easy for us to cut rate below 7% as of now, but let's see how the entire industry plays their whole game in this year, and then we will take the action around it. Okay. I mean, is it fair to assume that we might use this scenario, I mean, in terms of providing higher rates to sort of accelerate CASA acquisition rather than rationalizing rates? I mean, is that the strategy? No. No, I think at AU, we do not want to be driven by a lot many things which is one-off. We want to build on our star and CASA basis the product, basis the brand, basis the services which we offer to our customers. We have not played last year also, to be honest, because many banks are pricing their savings account better than us, but we played our whole strategy that we will play around more around acquisition, building the relationship, cross-selling it. We want to be in that zone than anything else. Got it. Got it. Again, just to follow up on that, maybe a cost of fund might not come down, but the 50 basis point of reported cut will eventually impact our floating rate book in near term, right? Broadly, our NIM should sustain between 5.5% - 6% in FY 2026, or how should we look at it from the current level of 5.8%? If you ask me as of now, if you ask me as of now, the next year, the lever is on the credit cost. The challenge is on NIMs. As of now, it's so difficult to predict whether we'll go down by 10 basis points or 20 basis points or 30 basis points. There will be a challenge on the NIMs, but you want to add on something? Yeah. Thanks. Yeah. Just because this question is generally, I'm sure, Ranish, this is the top of the line question for everyone. Maybe I just wanted to put some more context into it. Ranish, if you see our Q4 margins, now primarily as far as the components of the margins are concerned, our cost of fund went up by about 7 basis points, right? We started the third quarter at about 706, and we ended up at about 714 on an average from Q3 to Q4. There was also an impact of number of days, right? To that extent, that got negated in this particular quarter. We did not really see any impact on the cost of funds. That is the cost of fund side, but on the asset side, we did have a mix change that has been going on, given that our unsecured has gone down by 17% in the full year and 10% in the quarter. MFI is typically a high-end asset. Due to that mix change, we had about 5-6 basis points of impact, right? As far as the rate cut on the asset side, on the mix because of the NIM side, right? As far as the rate cut impact is concerned, as you rightly said, 30% of the book broadly is variable rate book. That impact we have not seen as yet because typically it takes about a quarter for the entire impact to come through, so maybe 1 basis point, but otherwise. That is the breakup of the NIM for Q4. If you see, we have gone down from about 5.85 - 5.79, right? Now, as far as next quarter is concerned, again, or next financial year is concerned, again, the same factors are going to play out. So 30% variable rate book does get impacted in terms of repricing of the repo rate. Currently, 50 basis point cut is something more happens in harder impact, right? As far as cost of funds are concerned, we have taken a cut on 16th of April, 25 basis points, as Sanjay Ji said, on savings as well as on the term deposits, right? You know that we are a price taker in that business, given our small finance impact. We are not a universal bank. To that extent, we obviously have to depend on how the market leaders are doing. Given that, we got some space. We have brought down our peak TD rate from 8% - 7.75%, and we have brought down our peak saving rate from 7.25% - 7%, right? Going forward, we'll have to see how the market reacts. In cases that, we can take a call. To summarize, one, is there a yield pressure? The answer is yes, right? Now, it also depends on how quickly we can turn around on the MFI side, on how the business mix changes on the positive side going forward, and how quickly the flow-through happens through the deposits on the rate cut side, right? When the rates started going up about three years back, we had guided that it takes about 12 - 15 months for the full impact to pass through. Same way in this cycle also. In this cycle also, typically you will see maybe 6 - 9 months when you start seeing the impact, as Sanjay said, Q3, Q4. For the full impact to go through, obviously, we take 12- 15 months. That is the broad story on names. We don't want to put a number out there because a lot of factors are, as I said, it'll also depend on how quickly the rates get transmitted through the system on the deposits. Got it. Also, I mean, just a broad calculation, let's say 30% of variable book debt requires a 50 basis point lower, so we'll have 15 basis point of impact. And we have already cut our star rate by 25 basis points. In a way, we have already neglected that. Ideally, cost of 26, there should not be any major name impact. Am I missing anything here? It's not a direct calculation, Ranish. Obviously, there's the impact of the daily averages, right? How the portfolio is moving, how the deposit is priced. We are not, I mean, we have, as we said in the opening remarks also, we are not putting out a guidance because there are variables. We have told you all the constructs of the NIM, right? Now, it is up to you for agreeing. We will come back and report to you as we have more data point. Got it. Got it. Just a clarification. Sanjay sir has mentioned about credit cost remaining at 75-85 basis points. That number is for 2026 or 2027? That is the long-term average that we are talking about, that as a bank, we want to position ourselves given the change in the asset mix. That 75-85 basis points is on the total average assets, right? It is not on loans. It is on total average assets, right? 75-85 basis points. As you said, that is a long-term average. For next financial year, we are expecting that we might be on the higher end of that curve, given that there is some more credit cost that has to flow through on the unsecured business in the first half. Sir, what is the corresponding number for this year? 1.3. 1.3. Okay. Got it. Basically, we are expecting maybe 30-40 basis points of improvement in credit cost in FY 2026. Yeah. On ROA 3. On ROA 3. Yeah. Yeah. Yes. Okay. Thank you. Best of luck, sir. Thanks, Ranish. Thank you. Next question comes from the line of Kunal Shah, Citigroup. Please go ahead. Yeah. Thanks for taking the question. Firstly, sorry, again, on credit cost front. When we look at the accelerated provisioning, that seems to have been done largely towards the GNPs and making 100% provisioning on the unsecured. When we look at it overall in terms of the SMA pool, as well as when you indicated that MPIN 2.0 guardrail is also getting implemented, and there is a proportion of book which is linked to it. Would that mean that credit cost over the next couple of quarters will still continue to be elevated? I think you made that comment in Q4, post the Q3 earnings, that credit cost will be elevated in MFI for almost like three odd quarters. Any change in that guidance post this accelerated provisioning? Rajeev will ask Kunal. He is the Deputy CEO. I think he can comment on this. Kunal, fundamentally, no year change. As I said last time, we expected that the Q3 and Q4 of last year would be the highest level of credit cost as a quarter basis. They will gradually decline from a Q1 to a Q2 perspective. Obviously, some degree of excluded provision that we have taken will be helpful in those quarters. Fundamentally, MFI will take two more quarters to reach near normalcy as we would see. I think that should pretty much come from a credit cost perspective in Q3 to Q4 kind of a time frame. Operationally, what we drive as a team is we saw that the Q2 and Q3 were the worst quarters operationally, and Q4, as we expected in a typical cycle of microfinance, which typically goes from 9 to 12 months, we saw Q4 improving. The only delta in the Q4 quarter was Karnataka, which happened out of a sequence. First nine months, Karnataka was perfect. Even that has been handled well and pretty much is now on its path to normalcy. As you can see from data, we had a very reasonable quarter four, with March being exceptional. We believe that quarter one and quarter two operationally will be stronger. From a credit cost perspective, we should see that in Q3 and Q4 of this financial year. Kunal, just to add on here. Yeah. What we have done this year is around 1.3 kind of credit cost on total asset, and we are expecting that our credit cost can be around 85 basis points for next year. It is basic that first two quarters will have an elevated cost on microfinance and credit card, but quarter three, quarter four, we are expecting strong pullback. That is why the overall cost of credit has gone down. We should go down for the year, right? We expect our real book, the secured asset book, commercial banking, largely in the same range, but better than this year. Better than last year. Sure. Yeah. Yeah. Yeah. Got it. Got it. When we look at it for full year, maybe the MFI credit cost was almost 7.75, and credit card was almost 11. Now we know that SMA pool is 3.7, maybe almost like, say, 70 basis points improvement compared to that of Q3. This SMA pool will still flow through. If we look at maybe the collection efficiency from the SMA bucket, what is the kind of slippage and what is the kind of, if we have to particularly touch upon these two particular segments, not the overall credit cost, then how would it pan out maybe compared to 7.75 and 11? I think we have collection efficiency improving across the buckets, right? As Rajeev Ji mentioned, March was particularly strong. We are expecting this positive momentum to continue in the new years as well, right? Depending on where we end up with that, that will determine the trajectory of improvement in maybe sort of Q2 onwards. Yeah. Yeah. Kunal, just to clarify, credit card, like you are seeing around 11%- 12.86%, right, for this year. It should be around 6%-7% for next year. MFI also should be around 3.5%. Just to add to that, another variable in the mix is the percentage of book which is covered under CGFMU, right? We would probably have about 35%-36% of the book as on March already under CGFMU, with all of the Q4 disbursements being covered under CGFMU, right? This percentage will only increase going forward, and we expect more than 75%-80% of the book to be covered under CGFMU. As I mentioned earlier in my opening remarks, this will reduce the volatility around credit cost. We will incur some cost for the scheme, but we will benefit in bad times by the downside protection afforded by the scheme. Got it. Got it. One more question if I can squeeze in. Yeah. Sorry. Yeah. No, go ahead, Kunal. Go ahead. The other one was on the universal license. You indicated that you are in communication with the regulator. What is the kind of timeline which we can draw? Obviously, now the committee said they are evaluating. When can we expect the universal bank license? I would say this calendar year. This calendar year. Yeah. Okay. Got it. This should not happen, right? This should not happen in this calendar year. Yeah. Okay. Got it. Got it. Thanks. Thanks a lot. Yeah. All the best. Yeah. Thank you. Next question comes from the line of Piran Engineer with CLSA. Please go ahead. Yeah. Hi team. Congrats on the performance in this turbulent environment. Just two questions from my end. Firstly, out of this INR 894 crore with which this quarter, how much would be from the Wheels portfolio? And what was it versus, say, last quarter? We do not give individually portfolio-wise data. Like you have said in the presentations as well, Q4 was a strong quarter and followed the historical trend. Every business saw reductions in slippages, barring maybe one or two on the unsecured side. Wheels also definitely saw a very strong fourth quarter. Okay. Okay. Also, just a clarification in the initial comments, opening comments, Gaurav said it will take one to two years for the credit card franchise to turn around. By that, you mean breakeven or what exactly did he mean by that? Yeah. No, no. Of course. I think the expectation around that credit card or maybe unsecured business is to generate at least maybe 4%-5% ROA, right? The first level to get to that is to have the breakeven. I strongly expect to breakeven by next year, which is 2027. From 2027 onwards, it should start giving us some money. Of course, not to have a 4%-5% ROA in 2027-2028, but at least give us some kind of positive profit from that year onwards. Thank you. Mr. Engineer, please rejoin the queue for more questions. Next question comes from the line of Pritesh Bumb with DAM Capital Advisors. Please go ahead. Yeah. Hi. Hi. Good evening, team. Two, three questions. One is on the bulk deposits. What I see as a trend is that we have grown strongly on bulk deposits despite CD ratio being comfortable. Any strategic intent there? Not really. I think the whole system was like this. The CASA and CASA remain under pressure, right? We also have grown our retail deposits, right? I think the heavy lifting has been done through wholesale deposits. I think our ALM, our CD ratio, LCR all remain very strong. Nothing specific. I think it was a flow of business. Also, the follow-up question was on, say, example, REG. We have grown about 16% quarter on quarter. It looks like that we've done wholesale borrowing in terms of deposits, and we've linked to REG where there is slightly lower spread. Just trying to think why will we grow a little higher in some of these businesses where the market is so tight? No, no. My friend, REG business is only 3% of our overall assets. Growth perspective, I think it's no, no. I know. I know. Overall, it's just 3% of our overall asset, right? We never had an intention to grow REG out of the context, right? That business is doing well. If you ask me, the real estate is doing well. Our home loan book, we've also had them perform well. It's a linkage kind of thing for us. It's very granular. We don't do INR 100 crore-INR 200 crore kind of funding, right? This is very maybe around INR 40-50 crore kind of funding. We are doing from last 10 years. It is very well-established franchise, and we just want to be like this. I think the correlation between wholesale deposit and wholesale lending, I do not think it is that way. Thank you. Mr. Bhum, please rejoin the queue for more questions. A reminder to all the participants, please reserve yourself for two questions. Next question comes from the line of Anand Swaminathan with Bank of America. Please go ahead. Thank you. I have a couple of questions. The first question, when you get your universal bank license, does this guidance around 2-2.5, the system growth still hold? Why I ask this is none of the other universal banks are growing beyond 20%-21%. There is no doubt about your capacity to grow. Just wanted to understand, will there be any self-imposed limit or regulator is okay with you growing 25% plus even after becoming a universal bank? Number two, when do you next expect to raise capital? Will there be this financial year or next financial year? Just wanted some clarity on that. Thank you. Anand, there is nothing as such rule or compulsion from anybody to grow in that kind of numbers. Neither the regulator has stopped us. It is based on the, as of now, positioning of us that we are around INR 1.5 lakh crore of assets. We are not too small, not too big for next two-three years. We can grow in the range of 25%, right? It is not related to universal, to be very honest. It is related to our size. Once we reach maybe around INR 3 lakh crore or INR 4 lakh crore, we might say that we want to grow in the range of 20%. I think it depends on the size and the opportunity. I personally believe that last three years remained very tough for all of us. Now, the entire narrative from the regulators, from the government of India, entire, I know there are short-term uncertainties, but I see a lot of money things coming back to Indian economy in the next maybe 18 - 24 month period. We are well settled, and we have built up our franchise pan-India. Our CD ratio, everything has remained so good, honestly. In this time, if opportunity is there and it's under our entire matrices, then we will want to grow in the level of maybe 20%-25%. That's our, I would say, endurance, right? This year also, we told you that we want to grow around 25%, but if market never permitted us, we just have grown 20%, right? Our capacity is there, capability is there, approach is there, product is there. It just depends how the market behaves. That is the whole overall strategy. It is nothing that somebody is pushing us or there is an agenda to grow like this. We will always grow sensibly and reasonably. Anand, just to add, the 2-2.5 times is not that of system credit growth. That is of the nominal GDP growth. Sure. Sure. No problem. Yeah. No, thanks, Sanjay. I appreciate the clarification. Just wanted to make it clear, and I think it helps the investor base as well to fully appreciate kind of there are no restrictions. It's your capacity that is driving growth. And by the fact of the capital raise, Anand, we want to, I think we want to relate that with our universal license decision. Yeah. So it will be after universal bank license you get? That's when you will decide? That's what you mean? That's our desire. Okay. Fantastic. Sanjay, just in this context, since you're talking about the macro as well, what is the on-the-ground feedback you are feeling? Because you speak the most on the ground to the business community, the underlying macro in India is weak as well, and there is a lot of uncertainty with global exports, tariffs, etc. What are you hearing from the ground? What is the feedback you're seeing? How do you expect kind of the decisions to be made in the next few quarters? Will it help us kind of gauge kind of how things are on the ground? Thank you. Anand, it's mixed. It's mixed feeling. If you ask me, things have looked good from last maybe two months. I'll give you reasons. One, I think the regulator has become more, I think, more growth-oriented. Their body language, their narration has helped us a lot. Their action is speaking louder than what they were telling. You can see the retail norms. You can see the entire liquidity positioning. You can see that they are saying that growth has to come back. The government of India is also pushing a lot many things. I think in last March, their capex has gone up. I think overall, I would say things have come now to a normal level, first of all. Second, I think anything which we were expecting that India will shine and India will grow in the range of 7.5%-8%, it is not there. People have now become more rational. People have become more cautious, right? In this time, whoever wants to build business is sure about the entire spectrum, right? That is why in our opening remark, Gaurav, we very categorically commented that any kind of euphoria has gone away. When euphoria goes away, the realistic is there, right? The reality is there. In my opinion, in this sense, we are more safe because we know the reality. That is coming up. I would say some sectors like real estate, the tourism, the hospitality, I would say the entire tech-related businesses are doing phenomenally well, right? Now, as a banker, we need to figure out our zone, our positioning that we want to be in, right, and build our business. It is not that it is very gloomy or nothing is happening, but neither is it very growing or it is very rosy, right? We need to play our inning well. Overall, I am optimistic than looking for some excuses and all those things. That is my sense. You want to add on something, any of you? Otherwise, that is my sense, Anand. Thank you. Mr. Swaminathan, please rejoin the queue for more questions. Next question comes from the line of Nidhesh Jain with Investec Bank. Please go ahead. Mr. Jain, please go ahead with the question. Hello. Am I audible? Yeah, Nitesh. Good evening. Hi. Hi. Good evening. The first question is on credit card. What all changes we have made on the credit card in the last 12 months, and when should we start seeing increase in new credit card sourcing? Yeah. Nitesh, we have taken complete course correction. As we commented earlier that we were doing digital underwriting for lending the credit card. Now we have put in a lot many gated conditions to understand customers better in the sense that what is his income level, what is his identity, address, kind of stability, and all those things. We also have not allowing customers to misuse the card on many of the expense like rent or utility and all those things. That also has not allowed our customers. That is why our spend has come down from INR 1,900 crore or INR 2,000 crore level per month to now INR 1,000 crore level per month, right? We have also brought in the specialized credit guy from the industry to help us to build underwriting and the portfolio there. We also have not wanted to source through the DSA channels and all those things. We want to really build more on our ETB, right? So existing bank customers. These are the things we have already done. That is why the issuance has come down from 40,000-45,000 level to now 10,000 per level. You will see that issuance coming up to be maybe around 20,000 per month maybe post-September, right? We want to take another two quarters to really make it completely repaired, right, and then build it. Sure. Sure. Second question is on cost to income. Last year, we have done a phenomenal job on cost to income, and probably we would have curtailed a lot of cost. We would not have invested the way we were investing in the past. How do you see cost to income panning out from a medium-term perspective? Do you see that when you get leeway from a P&L, you will start investing for future in terms of branding, etc., the way we were doing in the past? Nidhesh, largely, we have not stopped any kind of investment, to be very honest. I would only highlight three key items. One, maybe marketing cost. We deliberately hold it because we want to now tie it up with our universal license there so that it helps us there. Second, expansion. Last year, we got the expansion from Fincare. We want to build more businesses through that distribution. Third, of course, tech. We have taken some pause in our tech expansion so that we really understand because a lot of many things are coming in tech on a daily basis. Other than these three, we haven't had any kind of specific, I would say, actions to really manage our cost. Rather, we were very, I would say, this year onward. That's why I was so open to tell you that my cost to income might not be around 57% this year, but should not go above 60% also because we want to build more distribution. We want to do some kind of tech investment so that we remain future-ready, right? Other than that, I think on marketing, again, we'll be tied up with our universal license zone. Thank you. Mr. Jain, please rejoin the queue for more questions. Next question comes from the line of Nithin Agarwal with Motilal Oswal Financial Services Limited. Please go ahead. Yeah. Hi. Good evening, everyone. I have a few questions. Yeah. Hi, sir. A few questions. Firstly, on the ROI guidance that we have for FY27, so Sanjay, you gave this guidance last year, and we had a very turbulent FY25, and there will be some impact of new guardrail in 1H, as you mentioned. How comfortable do you feel to meet this guidance? Do you foresee any risk to this, or do you think that the risks are evenly poised? What is your assessment on that? This is a good question. Last financial year, which is now 2024-2025, we struggled with both the credit cost and the inning. Still, I would say our performance is as per the guidance. We have escalated our provisions by 10 basis points, which was much required. Of course, we're lending at 1.53 instead of 1.6. We really performed last year also as per the guidance, in my opinion. Second, this financial year, I believe credit cost will be more in control. Rather, we can have challenge on inning, right? I think you know that interest rate cycles are now coming down. We are well prepared in terms of anticipating the Indian economy and its effects. Next year, which is 2026-2027, I'm pretty sure that whatever we have guided you in a year back should get utilized. I don't want to, again, hold myself to around that guidance. It's our endurance, right? These are the things because if you see our ROA sheet, we're around 5.7-5.8 this year too. We are around, our other income is around 1.8, 1.9. It will go further up because we are extending our cross-sale ability through other product lines. Our cost to income is around 4.25. It might stabilize here, right? It might not go down for a couple of years. I am seeing huge, again, I would say, reduction in my credit cost from 1.3 - 0.85, 0.9 next year. We are further going down, 0.75 maybe in 2026, 2027. I think put all together, if you put all the math in place, we are above 1.8, right? Of course, now there will be market challenges. There would be a lot of many things, which may be unknown, which we do not know as of now. We need to play our inning, right? I think we have to appreciate that whether the bank has the capability, bank is on the right track, bank is not under any kind of pressure or any kind of issue which we are not able to solve. It is our business number, which 10 basis points here and there. We largely remain on course. Of course, the universal license. All right. Sanjay, second question is, any color as to what would our LCR be factoring in the revised LCR guidelines that came in yesterday? I am asking because AU Bank is relatively lower, and should any benefit on that should be very significant. A new guideline, I think we have not done our working, but it is close to 120. Sorry. Yogesh, you want to get on? Yeah. These guidelines are better than RBI guidelines, and I think we are just evaluating, but it should be neutral to positive impact on us. We are fine with that LCR because, again, we are doing our business. Many of our banks know their own risk management. For our risk management, anything around 115-120 is good enough for us. For me, Nithin, because we need to build our own risk management around that, right? We are not expecting any negative impact. Yeah. That is from the guidelines, right? The entire LCR expectation from AU Bank is around lower than what market operates, right? Yeah. Thank you. Mr. Agarwal, please rejoin the queue for more questions. Next question comes from the line of Rohan Mandora with Equirus Securities. Please go ahead. Good evening, sir. Thanks for the opportunity. Sir, firstly, the 30 basis point P&Q decline and incremental yields that we have seen, did it have any component of year-end discounts in the secured business, or is it purely a function of changing loan mix? Whatever. But that's on the disbursement, right, Rohan? Yes, on the disbursement. Yes, on the disbursement. That's more a function of mix, nothing else. There is obviously some amount of year-ending on the secured side. Why is my voice? Yeah. There might be a slight bit element of that, but I think it's largely a function of mix. Sure. Okay. Secondly, on the wheels, the growth that we have seen in this quarter, just want to understand how did the growth shape up across subsegments on wheels? I think this quarter, we saw some strong uptake on the tractor side, given that seemingly the range has been good. I think this quarter, the tractor definitely outperformed. Even on the used vehicle segment side, I think we have picked up. Yeah, I think everything else broadly was there. New car sales were a bit sluggish, but I think on the used side, on the tractor side, two-wheeler, we have gone deliberately slow, so we have not really pushed that product. What else do you want to add in? Overall, Q4 was flat, but the second half of March, there was some traction towards vehicles, as you saw in the industry. That has contributed. Otherwise, Q4, as such, what we expect from Q4 as a buoyancy, it was not there. It was sluggish. We saw the all-sales numbers also, but I think second half of March was some traction was there. That is the reaction. Sure. Sure. Thanks for asking. On slide 11, the credit cards that we are given segment-wise, what is the denominator used here? Because if you have to compare it across the last three, four presentations that you have given, how should we look at that number? Rohan, everywhere we have used the gross loan portfolio or the AUM, which you can, the average of that, the average AUM for the period. Quarter. Right? Yeah. For the quarter or for the year. The AUM or the GLP, gross loan portfolio, you can find on slide number 38. Every quarter. For FY2025, when you're giving this as 11% for credit cards or 10.75% for MFI, it would be average of March versus March or December versus March? Just on that. This is for the full year. Since this is for the full year, right, this spread cost is for the full year, so you would have taken the average of all the 12 months. Okay. Fine. Sure. Thanks. This was all from my end. Thanks, Rohan. Thank you. Next question comes from the line`` of Pranav with J.P. Morgan. Please go ahead. Hi. Thanks for taking my question. A couple of points. One is at what level will you be comfortable in growing your MFI book in line with your overall loan growth? Because if you're guiding for a 20%-25% loan growth, then starting from second half of FY2026, could we see MFI book growth materially pick up for the share to increase from the current 6% level? Also in that context, in FY26 in particular, how will you look to manage your PSL compliance on SMF and the vehicle section? That is the first question. The second one is that even with you doing CGFMU across most of the incremental disbursals, does that initial guidance that you had said that you would want to maintain a 3% coverage on your overall MFI book still hold on all incremental disbursals? Thank you. I think that is a very good question. I think we will continue to have 3% credit cost provision irrespective of our coverage under these government schemes. By this year, we expect 80% of our book to be covered under this scheme. By what Gaurav commented, we want to protect our future from any downside risk from the credit cost of this business. That is why we are more bullish now that this is not a very—I would say it is a very important strategic change, which we have brought in the microfinance book. That is there. Overall, we have already said that unsecured fees will not be going above 15%. In that, credit and MFI will not go above 10%. We want to be with those numbers maybe for the next couple of years. Yeah. Pranav, if you see the secured business, even in this year, has grown by 23%, right? The commercial doing 30% plus and retail secured doing about 21-22%. Honestly, even if the other businesses, the unsecured businesses which you mentioned, were down 17%, if they are just neutral also, we should broadly start scaling up, right? We do not really need to be very aggressive on those businesses to achieve a 20%-25% kind of range. Chris, just to follow up on that, if you are saying that your overall loan growth remains in that 20%-25% range and MFI, I am assuming, gradually goes from 6% - 10%, then you are saying that perhaps after second half, if you see the system stabilize, you are not against growing MFI credit card book at a 25%-30% range also given the system. Yes. With the cap of overall 10% of our overall book in MFI, maybe another 5% on unsecured. That is the overall cap. Yeah. It is a long runway, Pranav, because MFI currently is about sub 6, right? The other businesses are also growing at about 20%-25% cliff. For MFI to jump from 6% to 10%, they'll have to grow at like 40%-50% cliff, right? Which I'm not really sure is something that we are envisaging. I think the growth on the MFI will be very measured, if I can say that way. Okay. Got it. Understood. The PSL requirements, does this provide some? Yeah. We are compliant this year. We are compliant this year. FY2025, we are good on all our subsegments as well as on the overall PSL. Next financial year, it will be more a function of how the disbursements pick up and how the book behaves. Yogesh, how much percentage this year SMF has been done by macro finance book? 50%. Yeah. 50% SMF book obligation has been done by macro finance book. Okay. Got it. Understood. Thanks a lot. Thank you. Next question comes from the line of Rahul Jain with Goldman Sachs. Please go ahead. Hi. Thank you. Can you hear me? Yeah. Yeah. Hi, Rahul. Yeah. Hi, Sanjay Ji and team. I think congratulations. It's been a tough year for you all. And despite the numbers have been decent, just had a few questions. Maybe just to start with the credit cards, the loan loss provision guidance, which you said this is still some residual pain that you'll clean up in the first half. In this quarter, you already made INR 150 crore of provision. How much more is left on you to interest share more color on SMA 1, SMA 2 book in the credit card space? That's one. Second is another question on NIMF, but just discuss this first before I move to the second question. Yeah. Rahul, like this year, due to the accelerated provision on credit card book, it is around 12.5% kind of credit cost. I expect a credit cost of credit card on a very normalized basis should be in the range of 5%-6%. Next year, this financial year, 2025-2026, I expect my credit cost on credit card should be around in the range of 6%-7%. The idea is to bring my credit cost adjunction on a book level on a normalized basis from this year onwards. That is why we have done this accelerated provision so that the normalized credit cost should be there on our balance sheet from this year onwards. I do not think that any specific provision is required from here onwards to really address any additional credit card cost. The first half would mainly be any elevated credit cost that might be there would mainly be because of the MFI and lower recoveries in your secure retail asset business, which is seasonally nature. Is that a fair assumption? Yeah. Yes, yes, yes. I think already still our very early days, honestly, we are just talking on 22nd April. March has been very promising in all aspects, be it recoveries in around secured assets or be it recoveries around micro finance or credit cards. We as a team have pulled up a lot many good things in March. Still to I won't even to comment that how the quarter one, quarter two can be. On an overall yearly basis, Rahul, I strongly believe that our credit cost will be substantially lower what we have done in this whole financial year. Got it. Makes sense. According to the slippages that we had in this quarter, can we say that we are now at the peak and therefore the work is behind us? Even in the first half itself, we should start seeing the improvement because the selection efficiency in the MFI business has almost normalized as shown in the presentation. Credit cards is getting to the normalized run rate. Fair to assume that slippages have peaked in this quarter? Again, Rahul, honestly, I'd love to say that, and we'd all want to. As we said, it's a Q4 right now, and there is definitely always a year-ending phenomena that plays out. As you rightly said earlier in your question, Q1, Q2 typically has a seasonal impact. Honestly, I would like to reserve my comments on that and just wait it out. Definitely, I think in all the businesses, we have seen an improvement in slippages. Hopefully, we can come back to you. If there is no major heat wave or other things, then hopefully, we should be there. Let's just wait out for Q1, Q2. Some seasonality always plays out. I do not want to really comment. Makes sense. The third question is on the margins. Your wholesale deposits and your floating portfolio, by and large, is similar in terms of the proportion of your respective portfolios. You have seen a sharp reduction in the wholesale rates in the market. Your commentary still remains the same on margins that first half will be under pressure because of the EBLR in portfolio, etc. This is similar to what we had heard from you all in the fourth quarter, but since then the RBI has taken some serious measures to bring the rates down in the wholesale market. What is making us so cautious that the margins will still remain under pressure in the first half? Technically, the pressure should be easier, lower after the RBI measures and not the same as in the third quarter. I'm sorry. Also, as I said in the first question, primarily, there was an impact of higher cost of fund. The cost of funds moved by about seven basis points during this quarter. As I said, that got negated for this quarter because of the number of days, right? There was definitely an offsetting factor there that might not be available in the next quarter. To that extent, that impact is still to play out, and that is where we are cautious. Otherwise, I completely agree with you that given the steps that the regulators have taken, the kind of liquidity measures that have been infused, and the fact that we have already taken steps on both the savings as well as on the term deposits, and hopefully, wholesale deposits start pricing much lower, we are confident or we are hopeful that as we progress further into the year, we will be in a much better position given that 70% of our asset side is still fixed rate and typically liabilities get priced earlier. As I said, we still need to—I would like to reserve, again, the guidance to see how the flow-through happens. Sorry. I just have a correction, right? On the credit card stuff, right? Next year, our credit cost is going to be elevated in the first half. In the second half, it will probably start approaching towards more normalized levels that Sanjay Ji mentioned of 6%-7%, right? As a result, my full-year credit cost on credit card will remain elevated above normalized levels. Thank you. Mr. Jain, please rejoin the queue for more questions. Next question comes from the line of Ashlesh Sonje with Kotak Securities. Please go ahead. Hi team. Good evening. Sir, first question is on asset quality. Last quarter, I remember you had indicated some elevated slippages in the small transporter segment within vehicle finance, especially in SUV and LCV. Wanted to check with you how is the situation there in that portfolio as of now. Secondly, if you can share some color on collections in the microfinance portfolio in the month of April, whether that 99.2% number in March has gone down to, let's say, 96%-97%, or it is still holding up, let's say, around about 98%. Yeah, I'm Uttam here. First of all, for the small transporters, small commercial vehicles, you can say that loading vehicles, the slippage has improved. The collections have improved throughout Q4. More of FAB, MOASH was a good collection and good efficiency there. Yeah. Even on the MFI side, whatever early trends that we have seen, I think things are holding up. Rajeev Ji, you want to comment? Actually, obviously, March is always one of the strongest months. As you know, this was coming out of a credit cycle, so it's not necessarily meaning that this is a normalized state. I am fairly confident that Q1 will be better than Q4 year of the breakup of all the numbers across quarters. Q4 was 98.7. I expect clearly Q1 to be better. We are tracking April quite well at this point of time, even to the earlier months. Okay. Thank you. If I can just squeeze in one more question. On the Saar 8 book, can you just break out what proportion of the Saar book is? Is it depositors who have balances below 1 lakh, below 3 lakh, below 5 lakh? If you can do that. Thanks. This is too official, yeah. Ashlesh, if you can—you can write to us, and we can respond to this because we do not have this data breakup as of. Okay. Sure. Thanks a lot. Yeah. Thank you. Thank you. Next question comes from the line of Shailesh Kanani with Centrum Broking. Please go ahead. Yeah. Good morning, everyone. Thanks for the opportunity. My question is with respect to MFI, first of all. We have around 16% of our book which is impacted by the end-to-end two guarantees. In cases that are regular in retail business, I am assuming they will load for us. As general industry is moving towards that, what is your view on that? Sailesh, you are not very clear or audible. Can you just repeat the question? Sure. My question is, is it better now? Yes. Yes. Hello. Yes. Yes. Better. Yeah. Yeah. Approximately 16% of portfolio is impacted by end-to-end two guarantees, right? In cases where these customers are kind of regular in repayments, are we considering transitioning them to an individual loan product? Because incrementally, industry is also seeing a momentum towards that. How are we viewing that? Sailesh, individual loans is something which we have to strategically debate and come back and see whether we sort of want to migrate to that as a general microfinance proposition because it is not just about the impacted customer. It is a broader construct. I would just say that we are working with the customers. These customers have been well educated over the last one or two quarters for the guardrails which have been launched and what we were transitioning to. My personal belief is that the people who are still good with us and not delinquent or NPA, even if they are impacted, a lot of them are having capability or conviction to repay their loans. Generally, we're not seeing, at least as we are tracking April, an impact on the industry guardrail changes at this point of time. Yep. Just to clarify further on that, Sailesh, we only do joint lending, JLG model today. We don't do individual model on the microfinance portfolio. Yeah. Yeah. I'm aware of that. I was just thinking—I was just wondering if we are considering that as a product. Not just to react to the situation, but improving business model thinking. Obviously, there is a learning and improvement that we need to make out of this over-leveraged cycle. The model will evolve. I would not say as a reaction to a guardrail impacted customer. Microfinance models typically evolve over a few years. They are not reactive to a situation because ultimately, there are a large number of workforce customers, and there is a lot of science behind what has been built over the last two decades. I would say some evolution would happen, and we will work that through over in this financial year. Thank you. Mr. Kanani, please rejoin the queue for more questions. Next question comes from the line of Pritesh Bumb with DAM Capital Advisors. Please go ahead. Hello. Can you hear me? Yeah, Pritesh. Nice. Yeah. One question was on the home loan NPA side. That has been inching up a bit. Now it is more than 1%. Anything on that? Because we have seen a little bit of NPAs there. Yeah. Some NPAs have come through the transition. As you know, we had a merger last year, and Fincare used to do this business. We have seen some transition NPAs. Hopefully, we should get back in control going forward. The yield is also very high on that book. It is a risk-reward kind of outcome. If I want to take a follow-up on that, are we seeing anything in terms of tenure, the mix, the approach to that business, or as you said? Which one? Which one? The home loan side. Are we seeing the transition there towards more higher ticket size, more better? No. No. No. We want to be the affordable housing sales. AU was doing as a structure, we were doing more of, I would say, a high-end customer in lower-income group. Fincare was doing more low-income group in the southern side. In this whole transitioning, you know that there is always a challenge around team retention and all those things. It is not that high. The shoot amount is very low. Not to worry. We will bring entire factors of AU in those markets also. Got it. Thanks so much. That was my question. Thank you. Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of question and answer session. I would now like to hand the conference over to Prince Tiwari for closing comments. Thank you, Ranju. Thank you, everyone, for joining the call today and for your questions and all the support through the years. In case you have further questions, kindly reach out to the IR team, and we will be more than happy to respond. We are signing off on behalf of AU Management. Good night. Thank you so much. Thank you. Thank you. On behalf of AU Small Finance Bank, that concludes this conference. Thank you for joining us. You may now disconnect the line.