Ladies and gentlemen, good day and welcome to the Axis Bank conference call to discuss the Q1 FY 2022 financial results. Participation in the conference call is by invitation only. Axis Bank reserves the right to block access to any person to whom an invitation has not been sent. Unauthorized dissemination of the contents or the proceedings of the call is strictly prohibited, and prior explicit permission and written approval of Axis Bank is imperative. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions at the end of the briefing session. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. On behalf of Axis Bank, I once again welcome all the participants to the conference call. On the call, we have Mr. Amitabh Chaudhry, MD and CEO, and Mr. Puneet Sharma, CFO. I now hand the conference over to Mr. Amitabh Chaudhry, MD and CEO. Thank you, and over to you, sir. Thank you, everyone. Thanks a lot for joining the call. We welcome you all to a discussion on Axis Bank's financial results for the quarter ended June 2021. Apart from me and Puneet, we also have on the call Rajiv Anand, Executive Director and Head of Wholesale Banking, Ravi Narayanan, Group Executive, Branch Banking, Retail Liabilities and Products, Sumit Bali, President and Head of Retail Lending and Payments, and Amit Talgeri, Chief Risk Officer. We started the financial year on the back of strong momentum generated in quarter four financial year 2021. The intensity of the second wave of COVID infections caught everyone by surprise. The resultant health crisis and subsequent lockdowns in various states had an impact on our business and collection activities. We are grateful to our employees and partners who demonstrated great commitment in serving our customers through this quarter while braving the second wave. We prioritize the safety of our employees and customers during this wave. As we speak, about 97% of all our employees have received at least one dose of the vaccine. We are also thankful to the healthcare and frontline workers who served the nation selflessly during this time. The macro picture suggests India has taken this wave in its stride. The lead high-frequency indicators indicate economic activity has largely returned to pre-second wave levels by mid-July. Having said that, the second wave has tested us all. Firstly, like I said, it limited mobility and the collection efforts of our teams on the ground. Secondly, in the near term, the repayment capabilities of a few customer segments were impacted due to medical exigencies or lockdowns. We therefore expect a greater impact in the retail segment than the corporate bank across the financial services sector because of the second wave. We also believe this stress will be transitory, with normalcy returning quickly as economic activity revives, supported by accelerated vaccinations. The robust coordinated policy response between the RBI and government has helped to keep the system stable. We expect it will continue to support growth in a calibrated manner. Coming to the bank's progress on its strategy and performance in this quarter, we continue to strengthen the five focus areas as part of GPS strategy we started two years back: granular risk-calibrated growth; strengthening the balance sheet; technology and digital leadership; focus on profitability; and One Axis. We have made significant strides in each of these areas as we get ready to get on to the next cycle of our GPS strategy. The results are visible across the bank's different businesses, which I'll get to in a moment. We have also received multiple Indian independent validation of our progress. In the Greenwich Banking Survey, Greenwich is an independent global research agency, Axis Bank was rated number one on the quality index for both large corporate and middle-market banking segments independently. The bank was also recognized for ease of doing business, knowledge of transaction banking needs, coordination across specialists, and timely follow-up. The retail banking franchise received multiple awards in The Asian Banker's Bank Quality Consumer Survey for 2021. These included the Most Recommended Retail Bank in India and Most Helpful Bank during COVID-19 in India. On the corporate banking side, we have three tribes and about 30 pods working on agile mode, building a corporate digital bank that's benchmarked to global standards. We are winning complex cash management mandates and gaining market share in trade and forex business. The fee performance also has been strong on back of this, with 67% growth in granular transaction banking fees. Our market share in foreign LC issuances has increased by 210 basis points year-on-year to 9.7%. We continue to have strong positioning in GST / NEFT payments with market share of over 9% and 9.7% respectively. Slide number 28 in our investor presentation outlines the progress in the transaction banking space. We identified mid-corporate as an area to gain market share a year back. Our investments here are bearing fruit, with strong year-on-year growth of 36% in this segment. The SME business is the other area where our tech-led transformation Project Sankalp is making a difference in the lives of our customers. Our SME loans grew 18% year-on-year. On retail banking, increasing digitization of journeys, personalized services to our customers, and the strong rhythm and rigor in our distribution and sourcing engine are getting clearly reflected in our acquisition numbers. We opened 1.8 million new liabilities accounts in quarter one, financial 2022. Our analytics and digital banking capabilities are further enhancing our deepening and cross-sell for our existing bank and known to bank customer portfolio strategy. We have been working on premiumization of our franchise over the last two years. The wealth management business, Burgundy, has seen very strong growth with an AUM that is now over INR 2.3 trillion, up 48% year-on-year. Burgundy Private, our full-service private banking proposition for our ultra HNI customers that was launched 18 months back, has grown exponentially despite the pandemic. We now manage wealth for over 2,000 HNI families, up from 986 families in June 2020. The total assets under management is now in excess of INR 63,000 crores, up from INR 19,018 crores in June 2020. We are now more than hundred Burgundy Private partners serving the needs of these families across 26 cities. We have added one new city every month since launch. Each partner is a seasoned professional with the average experience over 15 years. We go beyond the wealth management requirements and support banking, lending, and business needs of our private banking customers. We bring One Axis to them, and this is seen as a clear differentiator in the market. While Puneet will take you through the numbers in detail, I will stress on a few key metrics. Strong growth in quarterly average balances. Axis deposits grew 19% year-on-year, 7% quarter-on-quarter, with CASA deposits 19% year-on-year, 4% quarter-on-quarter. Overall deposits were up 11% year-on-year, 7% quarter-on-quarter. Business in the quarter was impacted because of lockdowns, and we prioritized the health of our colleagues. Retail disbursements grew 231% year-on-year and declined sequentially by 48%. However, the better preparedness of our teams is reflected in the quick bounce back we have seen from mid-June onwards. For last few quarters, our loan growth has been steady in all the three segments, with retail growing at 14%, SME by 18%, and corporate book by 8% year-on-year respectively. This balance book growth is a good indication of our ability to find deposit pools across segments. The other metric I'd like to highlight is on granularity. We have seen huge increase in new customer additions across segments. A 143% year-on-year growth in number of new retail savings customers, 69% year-on-year growth in number of new current account customers, 85% year-on-year growth in number of new corporate relationships, and 39% year-on-year growth in number of new SME customers added during the quarter. Like I mentioned earlier, collections and recoveries got impacted during the quarter. We had to be cognizant of obviously health and safety of our customers and employees. This meant our field teams were constrained for part of April and most of May. As lockdown restrictions eased, June saw a quick recovery, and July looks better than June. We saw higher than expected retail [inaudible] during the quarter, but we believe it is transitory. We expect moderation in the second half of the year. I want to highlight the significant progress we have made on core technology and our digital banking capabilities. Since the beginning of the pandemic, we have accelerated our digital journey and made few significant moves on our tech stack. We are ahead of our plans on our core modernization program. We have among the largest set of open banking APIs for external internal partners, and we are the leaders in cloud adoption in the banking sector. Subzero, a proprietary design platform, a cutting-edge developers portal with over 120 additional APIs, went live during the quarter. Over thousands of technology and digital resources have been hired since the start of the pandemic, with about 60% increase in technology spends during the same period. We are running a twin engine approach. One, our legacy IT stack is being upgraded, replatformed or hollowed out to make it digital ready. Two, we have built in an in-house end-to-end digital stack that is on par with the best digital platforms anywhere. Our recent product launches and digital offerings like buy now, pay later, multi-currency forex card, small ticket bullet loans, are cutting-edge offerings that have been launched on this platform. We intend to blitz scale these offerings, even as we have a pipeline of newer digital first products that are already ready. We are adopting a combination of approaches for the digital ecosystem, build our own capabilities, partner with fintechs where there is complementarity and invest in areas that have adjacencies. During the quarter, we entered into a multi-year deal with Amazon Web Services to power our digital transformation agenda. Our tie up with AWS will enhance our agility and resilience to manage two key features that define our digital business, rapid scale and high velocity. We have taken a cloud first approach for our digital banking platform, having deployed all new customer facing applications on cloud platform since last year. Today, 15% of the bank applications are already on the cloud. We aim to take this number to 70% in next three years. We have deployed mission critical applications on cloud, including our BNPL product and the new loan management system to support it. The account aggregator platform, our video known or know your customer journey and WhatsApp banking is also on this platform. Separately, we were the first to set up a dedicated cloud-ready infrastructure to exclusively handle UPI transaction volumes. This has meant we have consistently had amongst the lowest transaction failures in this space. The cloud center of excellence will accelerate our cloud migration and support the growing pipeline of digital bank offerings. We continue to work with multiple cloud partners to maintain our leadership position in cloud. On the digital side, our relentless focus continues as we make progress on the capability front as well as on the business side also. We have around 4 million non-Axis Bank customers using our Axis Mobile and Axis Pay Apps. These are customers using our apps for convenience despite not having a deposit relationship with us. This is a strong testimony for our mobile banking apps, which has the highest rating from users among banks in India. With the retreat of wave two of COVID, we launched GrabDeals Fest, offering customers attractive discounts and offers on all purchases on our partners Amazon and Flipkart. The festival was a great success, with us achieving 25x growth both in number of customer transactions and GMV on the platform. GrabDeals is a scalable multi-brand platform for offering our customers great year-round offers and deepen our same in the town relationships with them. Our existing digital products continue to scale. We introduced video KYC on multiple new journeys this quarter, including salary account opening and credit cards. Our share of accounts sourced via this channel has grown to 20%. During the quarter, 69% of our fixed deposits by volume were opened digitally, while the user transaction value grew 3x year- on- year. On WhatsApp banking, we now have over 1.2 million customers on board within six months of launch. A 65% of service requests by volume served in the branches are now available fully digitally through our Branch of the Future initiative. We have seen very good traction in the adoption of these services by customers, as well as great improvement in straight-through processing and first time right rates. With the launch of service data lake, we expect further personalization and speed in response to customers in this year. Separately, I would like to update you on the recent developments due to restrictions imposed by RBI on Mastercard from onboarding new domestic customers. This ban does impact our card business. Over the last few days since announcement, teams have worked to mitigate the impact. While we will explore and keep all our options open, it will take some time to move to an alternate network, thereby impacting new issuance in the short term. In the last one year, the bank has significantly scaled up the integration of ESG into its overall business strategy and agenda. ESG as a topic is now integrated at the board level and is directly overseen by a whole time executive director and the relevant committees. Additionally, the bank has set up an ESG steering committee at the management level to guide the ESG agenda. We are making public our commitment to the ESG targets, developing policies for sustainable lending practices, investing in environment management, diversity, equity, and inclusion within the bank. Our corporate lending portfolio over INR 10,000 crore in green sectors as on March 31st 2021, which was up 50% year-on-year. We have 1.5+ million live customers under Axis Sahyog Microfinance program as on March 31st 2021. We are committed to increase share of our green lending portfolio going forward, reduce our carbon emission intensity by 5% year-on-year, and fulfill the target of touching 2 million households by 2025 under the Sustainable Livelihoods Program. We are embedding environmental and social risks into our lending decisions and internal capital adequacy assessment process. We're making a public announcement on some of these things very soon. Coming to the performance of subsidiaries. In mid-June, we presented the progress of our One Axis journey, providing details and insights on our three subsidiaries. They continued to deliver industry-leading performance during this quarter, with total profits over these INR 245 crore, up 98% year-on-year. If we analyze the quarter one earnings of these subsidiaries, it will be touching nearly INR 1,000 crore figure. The net worth and earnings of these subsidiaries have grown at a CAGR of 18% and 61% respectively in last two years, even as the bank's investment in these subsidiaries stood flat at around INR 18,015 crore. Our employees have been our greatest asset during the pandemic. The management team would like to reiterate its gratitude to our colleagues and their families for standing firmly with the bank during this period. We have created an employee care benevolent fund as an additional measure of security for our colleagues, their families, to protect their financial future in case of a contingency. Despite wave two headwinds, we have made strong and visible progress this quarter. There is a positive cultural change within b ank, reinforced by the steady upward movement of metrics across all the lines of businesses. Our investments in technology, data, and multiple business transformation initiatives have set us on the right trajectory. We are optimistic and confident about our future. I'll now request Puneet to take over. Thank you, Amitabh. Good evening, ladies and gentlemen. Thank you for joining us this evening. I'll discuss the salient features of the financial performance of the bank for Q1 FY 2022, focusing on our operating performance, capital and liquidity position, growth across our deposits and loan franchise, journey of becoming a more prudent and conservative franchise, assets quality restructuring and provisioning. Our operating performance continues to be strong as reflected through increasing YoY NIMs, growth in granular fees, and operating profits and PAT. NII for Q1 FY 2022 stood at INR 7,760 crores, growing 11% YoY and sequentially growing by 3%. Net interest margins for Q1 FY 2022 stood at 3.46%, representing a YoY growth of 6 basis points. Sequentially, the NIMs was impacted by product mix change, interest reversals, CRR increase, market pricing pressure in the wholesale segment and our mortgage business. We have substantially completed the computation of interest on interest as per the RBI and IBA directives. We maintain that the provision made in Q4 FY 2021 should be adequate to cover the reimbursement cost. On fee income. Our fee income stood at INR 2,668 crores, growing 62% YoY, 62% of our fees comes from our retail business, 38% comes from our wholesale franchise. Granular fees comprised 92% of total fees as against 86% a year ago. Transaction banking fees, including FX trade and FI payments, grew 57% YoY Commercial banking fees grew 19% YoY. Fees from cards and our liability franchise grew 78%. Trading income stood at INR 499 crores, de-grew 20% on a YoY basis. Other income stood at INR 421 crores, grew 34% YoY. The recoveries from written-off retail assets pool improved 26% on a YoY basis. This gives us some comfort that recoveries could hold up even on fresh delinquencies go with the lag. Operating expenses for the quarter were INR 4,932 crore, de-grew 8% sequentially and grew 32% on a YoY basis. Staff costs increased by 32% YoY. The YoY increase in staff cost is not comparable, as Q1 FY 2022 has impact of increments for two years. In FY 2021, we gave increments to staff from Q3 FY 2021. Further, we've added 5,000 people to our staff strength over the same period last year. Gratuity cost increased due to the increments in change in interest rates impacting staff costs. We have continued to top up gratuity expenses for the Social Security Code, the prudent stance we had taken last year. Other operating expenses grew 33% YoY and are mainly attributable to higher business volumes, collection expenses. Our investments in IT continues. Our IT expenses were higher by 63% on a YoY basis. Statutory costs, including PSLC and DICGC premium, were higher YoY by 30%. Operating expenses to average assets was 2.05%, higher 5 basis points YoY, and higher 9 basis points on a sequential quarter basis. The adverse impact of netting of the balance sheet, which I will discuss subsequently on this call, has resulted in a cost to assets impact, adverse impact of 2 basis points. The cost to income stood at 43% for the quarter, lower by 38 basis points on a sequential quarter basis and higher by 4.52% YoY. Core operating profit was INR 5,896 crores, growing 13% YoY and declining sequentially. Core operating profit margin improved 8 basis points YoY. Provisions and contingencies for the quarter were INR 3,532 crores, declining 20% YoY. The bank made a prudent provision of INR 155 crores for restructuring that has not been invoked or implemented as at reporting date. The bank has not utilized any of its COVID-19 provisions in the current quarter. The reported credit cost for the quarter is 1.88%, representing a YoY decline of 38 basis points and a sequential [quarter-on-quarter] increase of 18 basis points. Annualized Q1 credit cost net of recoveries from the written-off pool stands at 1.7% compared to 2.11% for Q1 FY 2021 and 1.48% for the previous quarter. Profits before tax was INR 2,884 crores, representing a YoY growth of 102%. Profit after tax, INR 2,160 crores, representing a YoY growth of 94%. Annualized ROE for the quarter stood at 9.11%, a 1.59x growth on a YoY basis. The strength of our balance sheet is reflected through the cumulative non-NPA provisions at June 30th, which stand at INR 12,425 crores. The key components of the provision are COVID-related provisions at INR 5,012 crore, restructuring provisions of INR 703 crore, weak assets and other provisions of INR 6,710 crore. The standard assets cover, defined as all non-NPA provisions by standard advances, stands at 2.05%, improving 10 basis points over March 2021 and 49 basis points over June 2020. Our provision coverage, all provisions NPA plus non-NPA divided by GNPA, stand at 118% as compared to 104% for June 2020 and 120% as at March 2021. The bank is well capitalized, is carrying adequate liquidity buffers and provisioning buffers, which place us in a strong position. The RWA of the bank as at June 30th stands at 64% as compared to 68% on June 2020. This improvement RWA is reflective of the quality of business being done by the bank. Our total capital adequacy ratio is 19.01 and our CET1 was 16.42, improving 154 basis points and 192 basis points on a YoY basis. The prudent COVID provisions that we carry as at June 2021 provide us with a capital cushion of approximately 67 basis points over and above the reported capital adequacy. Our average LCR ratio for the quarter was 115%. Excess SLR was INR 74,974 crores. The bank was reporting structured collateralized foreign currency loans extended to customers who also placed deposits with the bank on a gross basis as advances and deposits, respectively. For improved presentation, we have netted off loans from deposits received in India. This has resulted in the balance sheet reducing by approximately INR 1,700 crores. Prior period numbers have been regrouped where appropriate. Our liability strategy driven through premiumization, granularization, and deepening has started to show early results. The focus on customer acquisition, leveraging the corporate relationships and deepening the government liabilities business, and the customer connect established by the bank through COVID has not just yielded us the recognition of the best retail franchise during COVID, but also improved all liability metrics. Total deposits on a closing basis grew 16% YoY and 2% [quarter-on-quarter]. We prefer to focus on quarterly average balances instead of month-end balances for our liability franchise. On a QAB basis, CASA grew 19% YoY and 4% [quarter-on-quarter]. CASA ratios stood at 42%, improving 342 basis points on a YoY basis. CASA grew 19% YoY and 7% [quarter-on-quarter], and CASA grew 17% YoY and de-grew 0.39% on a quarterly average balance basis. If you look at the different savings account segments on a QAB basis, salary segment grew 13% YoY and 5% QoQ. Government segment grew 25% YoY, 18% [quarter-on-quarter]. The NRI segment grew 17% YoY and 5% [quarter-on-quarter]. Our term deposits on a quarterly average balance basis grew 7% YoY, of which retail deposits grew 11% YoY and 2% sequentially. The growth in our NRTD business is reflective of the quality of the wholesale franchise we are building. Our corporate customers park their surplus short-term liquidity with us, resulting in the growth. A large part of the incremental NRTD deposits over March 2021 are LCR accretive and non-callable. Further, as was seen in the CASA balances, 30% of the incremental NRTD deposits are from government client group reflecting traction in that customer segment. Our overall loan book grew by 12% on a YoY basis and was flat sequentially. Granular secured retail loans and SME business and high-quality large corporate businesses continue to be key drivers of our loan growth. Our loan book continues to remain balanced with retail advances constituting 54% of the overall advances, corporate loans at 36%, and our Commercial Banking Group at 10%. The book represents healthy characteristics with 80% of the retail book being secured, 85% of the corporate book being rated A- and above, and the CBG book being diversified across geographies, industries, 96% of that book is secured and 67% is of shorter tenor. On a segmental basis, retail disbursements grew 3.3x YoY but declined 49% sequentially. The growth in disbursements and book are largely driven by transformational and digital projects underway across the retail product segment. Our Axis Virtual Centre is helping us deepen customer connect and improve cross-sell. The secure to unsecure retail disbursement mix has started trending back to pre-COVID levels. Our branch sourcing of retail loans was at 50% in Q1 FY 2022. Retail loan book grew 14% YoY, 80% is secured. We continue to see strong traction in the retail loans across secured products like HL up 14%, rural book up 18% YoY, and our small business banking book up 35% YoY, aided by the team's cadence, digital initiatives, and higher productivity. We have been expanding our coverage to rural and semi-urban geographies through our DTO strategy while strengthening partnerships with agri corporates and OEMs. During the quarter, we included 488 branches to our DTO strategy, taking the total count of DTO branches to 2,065. As a result, DTO disbursements grew 211% on a YoY basis. Corporate book. We are progressing well on our endeavor to build a profitable and sustainable corporate bank. Corporate disbursements grew 63% YoY and de-grew 52% on a sequential [quarter-on-quarter] basis, 94% of the incremental sanctions were A- and above. Our corporate book customer assets grew 4% YoY, with corporate loans up 8% YoY and 1% [quarter-on-quarter]. We remain focused on delivering higher growth from our chosen segments. The mid-corporate segment grew 36% on a YoY basis. Our commercial banking segment grew 18% on a YoY basis. These segments will help bring greater granularity, reduce risk while meeting our ROIC criteria. The growth in our overseas corporate loan book is primarily driven by our GIFT City branch. Exposures, 95% of the overseas standard corporate loan book is India-linked and 92% is A and above rated. Of our total standard fund, non-fund and investments outstanding to NBFCs is INR 31,534 crores, 99% of the same is rated A or above with none of them having been granted moratorium. MFI book is a negligible amount of INR 3,684 crores and real estate is INR 17,563 crores, 60% of which is defend discounting. Our wholesale products banking business team remains focused on simplification and driving innovation across CIR, CMS, Forex, and trade. During the quarter, we became the first bank to execute an entirely paperless import transaction with a host-to-host connectivity for one of the largest auto ancillary manufacturers. This has been a culmination of over six months journey with the cross-functional teams across coverage, products, IT operations, coming together to make this possible. This digital offering will help the bank to further lift the growth trajectory of trade and FX flows business. The building blocks of our CBG business are now in place. Commercial banking disbursements grew 157% on a YoY basis. Within CBG, the small and medium enterprises grew 18% YoY. Early results of our tech-led transformation in commercial banking is measurable through higher RM productivity and nearly 70% reduction in login to sanction taps. The number of new customers added on the asset side increased 39% on a YoY basis. CBG current account and deposit now contribute 25% of our overall current account balances, grew 20% YoY and 2% sequentially, reflecting the quality of the CBG franchise we are building. Non-asset-based fees in the CBG segment grew 45%. The depth of our CBG relationships are also demonstrated by the fact that CBG contributes to 20% of our Burgundy Private and Burgundy account acquisitions. Prudent and conservative franchise. COVID provisioning. We hold COVID-related provisions of INR 5,000 crore as at June. We believe that this places us well for emerging or residual risks from wave two. We reiterate that this should not be construed as a sign of relative weakness of the quality of our loan book. We have provided for all restructured assets as if they were classified as NPA. We carry a provision of INR 703 crores against these assets, against a regulatory minimum of INR 238 crores. This includes a prudent provision of INR 155 crores made in Q1 FY 2022 for approved but not implemented restructuring. The overall provision cover for restructured loans stands at 23%, with 100% covers on all unsecured retail loans. The gross slippages for the quarter were INR 6,518 crores, lower than Q3 FY 2021, higher than Q4 FY 2021. At a bank level, 22% of the gross slippages are upgraded in the same quarter. Additionally, 7.5% of reported gross slippages represent linked accounts that continue to remain standard through the quarter. A 19% of the retail book, 37% of the corporate book, 41% of the CBG book on a segment basis represent accounts upgraded on the same quarter. In that backdrop, which is 22% + 7.5%, 29% that I've explained, it's better to focus on our net slippages. Asset quality for the wholesale bank is holding up well. Net slippage ratio on an annualized basis for this segment in the quarter stood at 0.27%, amongst the lowest that we have had in the last 11 quarters. We see similar trends in our CBG portfolio as we called out for the wholesale book. Net slippage ratio on an annualized basis for this segment stood at 0.55%. We have negligible restructuring under COVID one and two for this segment. Retail collections were most impacted due to our cautious stance on exposure of our employees and collection agents to the virus, coupled by access restrictions in place by local governments. The net slippage ratio on an annualized basis for this segment stood at 4.53%, 55% of the slippages for the quarter come from secured products, where the LTVs are in the range of 35%-50%. The demand resolution for the retail portfolio was 98% through Q1 FY 2022, a tad lower than Q4. Demand resolutions came down in the first two months of the quarter due to mobility restrictions, which impacted field collections. However, it was heartening to note that June 2021 demand resolutions reached 99.5% of March 2021 levels. Check bounces remain marginally elevated in Q1 FY 2022, July check bounce rates were back to March 2021 levels. They, however, remain higher than pre-COVID levels. Early bucket resolutions in June 2021 continued across all asset classes in retail. Credit cards are either at par or slightly better than March 2021. Recoveries from written-off retail accounts have picked up in June 2021 and are 85% of March levels. Recoveries during the quarter were more than 3x as compared to the same quarter last year. Given the inventory build-up, the positive outcomes in the collection efforts discussed, visibility of asset quality and early improvement should be seen in Q3 FY 2022, subject to no COVID wave three. The bank has been judicious around restructuring loans. Implemented fund-based restructuring COVID one and two as a percentage of GCA is 0.33% of the book as at June 2021 and compared to 0.3% as at March 2021 on invoked pool. In value terms, the implemented fund-based restructuring, fund-based outstanding of loans under COVID-19 resolution scheme one and two stands at INR 2,192 crore. Linked non-fund-based facilities where original terms have not been changed is INR 992 crore. A 95% of loans restructured under COVID one and two have security. The LTV of the secured retail loans range from 40% - 60%. On a segmental basis, the restructured loans were 0.62% of the Wholesale Banking Group book, 0.21% of the retail book, and 0.03, I repeat, 0.03% of the Commercial Banking Group. In addition to COVID one and two restructuring, the standard outstanding restructured loans under the MSME scheme stand at INR 332 crores. The GNPA, NNPA of the bank have improved 87 basis points and 3 basis points on a YoY basis. The bank has a healthy PCR of 70%. As compared to March 2021, the GNPA and NNPA increased by 15 basis points each. The bank wrote off INR 3,341 crores, in the current quarter as compared to INR 2,284 crores in Q1 and INR 5,553 crores in Q4 FY 2021. Th e NNPA, GNPA and PCR ratios of the bank and segmentally for retail SME and corporate are provided on slide 42. The asset quality of Axis Finance remains stable with a net NPA of 1.8% and near nil restructuring, i.e., Axis Finance has near nil restructuring. ECLGS, our overall approach to ECLGS was conservative. Total amount disbursed under all ECLGS schemes is approximately INR 12,100 crores, lower than our loan market share. We have only granted ECLGS to our existing customer set, post the full credit assessment. ECLGS was given to approximately 28,000 customers across the bank. A 99% of these customers by number were sanctioned under ECLGS 1. ECLGS 1 and 2 disbursements represent 97% by value with nil disbursements in ECLGS 4. We continue to track the behavior of this portfolio as repayment moratorium ends Q2 FY 2022. The BB and below book as a percentage of customer assets stands at 1.19% as of June. A INR 2,800 crores, i.e., 21% of the BB and below book is rated better by at least one external rating agency. A INR 330 crores representing 3% of the BB and below book could have been upgraded as borrower did not seek restructuring. During the quarter, we collected INR 440 crores, 6% of the fund-based book outstanding at the end of the previous quarter. Investment and non-fund-based BB and below book also declined in the current quarter on account of recoveries. The cumulative addition to the pool is INR 159 crores, translating to 11%. The balance represents downgrade into the BB and below pool. All accounts downgraded in the current quarter were less than INR 100 crores, and the average ticket sizes of accounts downgraded were INR 16 crores. A INR 188 crores slipped from the BB and below pool during the quarter. The average ticket size of our fund-based BB B +, BBB and BBB- book is INR 10 crores. I repeat, INR 10 crores, with no individual fund-based exposure in four-digit crores. We request you to refer slide 43 of the investor deck, which has the summary of the net NPA BB and below on restructuring pool. Our segment results are not comparable given the change to segment classification and a revision in the internal FTP framework. Therefore, current quarter is not comparable to previous quarter same year. In summary, we've acted consistent with our commentary and chosen to identify stress early in the portfolio, used ECLGS and restructuring selectively, and hence recognized largest slippages upfront and provided for the same. As I close, allow me to re-summarize the salient points for Q1 FY 2021. Our operating performance improved, reflected in core PPOP growing 13%, PAT 94%. Legacy asset quality is being proactively dealt with. Early signs in the form of net slippages in the corporate book being amongst one of the lowest in 11 quarters. Our prudence and strength of balance sheet is demonstrated through our precautionary COVID provision of INR 5,012 crore, cumulative non-NPA provisions of INR 12,425 crore. We maintain that this is not reflective or indicative of underlying asset quality and provide a cushion. We have steadily improved our liability franchise performance with granular retail deposits book, CASA + RD growing 15% YoY and 3% [quarter-on-quarter]. Our subsidiaries continue to improve on their industry position and profitability. The domestic subsidiaries reported a profit of INR 245 crore for Q1 FY 2022, growing 98%. The return on investments on subsidiaries stands at 54%. We continue to monitor progress on current and future COVID waves across India. We believe our businesses are resilient and are well equipped to capitalize on opportunities and deal with contingencies that the pandemic may pose. We reiterate our stance of stopping specific guidance. We would be happy to take questions now. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone 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 questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mahrukh Adajania from Elara Capital. Please go ahead. Question is on slippage. You did give the net slippage ratio for retail, can you give the absolute number for retail and corporate? Then within that, some color on what would it be for housing and other secured loans? Like just a gross slippage ratio or some quantitative color. Mahrukh, we don't provide data on a product-by-product basis, but the answer to your first question, the absolute value of net slippages for the retail book is INR 3,741 crores, which will be roughly about 93%-95% of the slippages for the quarter. Like I said, the wholesale segment has performed well, and so has CBG. The cumulative slippage across those two segments will be about INR 235 crores on a net slippage basis. And the gross slippage would be for retail? The gross slippage for retail would roughly be about 84% of our gross slippage number. That would be about INR 5,400 odd crores. Thank you. My next question is on your credit cost. In the fourth quarter, you had highlighted that the credit cost was higher than what it should be because of a provisioning policy change and some write-offs. That is what kept the 4Q credit cost elevated. If I remove those one-offs from 4Q, then the rise in credit cost is quite sharp in the first quarter. We know about the second wave, but what would be the outlook on credit cost? Anyway, the sequential credit cost has gone up quite sharply, excluding one-offs. I mean, are you being extra conservative or? Mahrukh, I think we've explained that we have provisioning policies that are entirely rule-driven. Just to recap, I provide 100% on unsecured retail loans on the 91st day. In a quarter where slippages are elevated because of the pandemic, provisions will come through, and like I said earlier, the early collection trends are looking positive, subject to a COVID wave three. We should see collections impact on slippages giving us benefits starting Q3 FY 2022. I also just want to recap for you a comment that I made earlier. When you look at our gross slippages, you must look at the fact that 22% of our gross slippages are upgraded in the same quarter, and this is a like-for-like account basis. 7.5% of our slippages, as reported, are linked accounts, which continue to remain standard through the quarter. So please look at the gross slippages in that context also. Sure. And just one clarification, that your total standard provisioning that you have mentioned, that would include the mandatory provisions, correct? The mandatory standard provisions? Yes. The INR 12,425 crores includes the regulatory standard asset provision. Okay. Thanks a lot. Thank you. The next question is from the line of Sumeet Kariwala from Morgan Stanley. Please go ahead. Hello. Hi. I just had a question on LCR. The liquidity coverage ratio is broadly flat [quarter-on-quarter]. When I look at the average deposits growth sequentially, I'm trying to back calculate, it's quite a meaningful one and loan growth is not that much. You also explained that the wholesale deposits are non-callable, et cetera. I know there are multiple other factors which impact LCR. I just wanted to understand why did the LCR not improve significantly? Am I clear? Hello? Sorry, Sumeet. Sumeet, I couldn't get your question. Could you just come again because we lost you in the static? Yes. Sorry. I had a question on LCR. If I look at your liquidity coverage ratio, it's probably flat [quarter-on-quarter] at 115%. Now, when I look at the growth in deposits on average basis, sequentially, it's quite meaningful. Loan growth has not been that high. You explained that the deposit growth, which has come from the wholesale deposits is also non-callable. I just thought that the LCR ratio should have improved sequentially. What am I missing? Composition. No, thanks for the question. I think it's a matter of the composition of how we are looking at the deposits. So there is a stock and then there is an incremental, you know, run rate which comes in. Therefore the stock plus run rate is how we calculate the overall fee. I think it is something which will be a glide path towards trying to improve the LCR. What we are trying to say is that as we speak, our approach has been to start looking at LCR accretive deposits, whether it be non-callable or whether it be granular retail. Combination of that, hopefully as we go along, the calibrated glide path will work to our advantage. Okay. The reason why I was asking this is I wanted to check whether the margin decline sequentially, has that to do anything with higher excess liquidity on the balance sheet this quarter versus last quarter? I don't have the average number, which is why I'm trying to ask this question. Sumeet, just give me a moment. I'll come back to you with a response to your question on the surplus liquidity. I know for the current quarter, our excess SLR stands at INR 74,000 crores. If I reference that to the prior numbers and the average for the prior quarter, that should explain the answer. Why don't we continue in the interest of time? I will respond to your question in the course of the call. Okay. No, that's okay. I was just trying to understand why those margins came down. Q2, I understand the interest was so high, but is it to do with liquidity? I'll take this offline from here. Sumeet, let me complete that answer. I have the number. Our surplus SLR was INR 58,000 crore compared to INR 74,000 crore in the current quarter. That itself should explain part of the surplus liquidity and the NIM pressure that we have. Second is, the bigger impact on our NIMs has been our product mix. As you realize that we have had an increase in the better quality foreign exchange book that provides us a better NII. It's NII accretive, but from a spread perspective, it's decretive. There's a product mix impact in the NIM that's played through. The last impact on our NIMs is the CRR increase, which is a regulatory cost that has come through in the current quarter. Those are the three key variables that have impacted our NIM for the current quarter on a sequential basis. On a YoY basis, you would note that we have a NIM improvement by 6 basis points. Okay. Got that. If I may, just chip in 1 last question. How should I think about margins for the next one to two years? What kind of improvement is possible? Some guidance range drivers would be very helpful to me. Sumeet, I think we don't guide margins, directionally, if I was to tell you, there is a part, since you've asked this from a longer timeframe perspective, you would note that there's a couple of structural actions we are taking on our balance sheet. One is the RIDF PSL compliance that we explained through. As our RIDF balances decline, we should see a structural improvement in our NIMs. It's about INR 48,000 odd crores on our balance sheet, those clearly deplete NIMs for us. That's one structural improvement in NIM. Second is you would see the first action that we started taking for a large part of last year. About 83%-84% of our disbursements were secured. In Q1, we started getting comfortable in reopening, 79% of our disbursements were secured. As we open up and change our product mix back to the historical secured-unsecured mix that we had on the retail side, we should see a margin uplift. As the domestic book grows compared to the overseas loan book that we have at GIFT City, the book composition, which is proportionality, should help improve NIMs. Those would be the directional comments I would offer you. We don't provide a guidance range on NIMs. Sorry, I won't be able to offer. Sumeet, just to add to that, sorry I won't be able to offload, you know, as you saw, the granularity of our CASA growth is gradually, slowly moving in the right direction. Hopefully, if we can continue the way we're executing, that should also feed into our NIM story over a period of time. Again, we're just trying to point to the things we can look at. Again, not trying to guide in any way. Okay. That's helpful. Thanks for the answers. Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead. Yeah. Sorry, the first question was on employee cost. I don't know if you have addressed that in the opening remarks. Last time you said that we are providing for this employee cost, and there was some one-off during the second half. When we look at Q1, again, the employee cost trajectory is quite high. What could be the reason for that? If you look at our employee cost on a YoY basis, Kunal, the first impact is last year with the onset of wave one. We had deferred increments for our staff, and our staff did not receive increments in Q1 of last year, but increments were made available to all our teams in Q3. So, Q1 does not carry the increment effect of FY 2021, whereas Q1 of FY 2022 carries the increment effect of FY 2021 and 2022 itself. There's two increments versus no increment impact on the YoY number of Q1 FY 2021 to Q1 FY 2022. The second increase in staff cost is we've added 5,000 people to the franchise as we are a growing business. As we get more granular, we keep adding people based on our internal productivity metrics. Therefore, that's the second impact on staff cost. The third effect is we did take a Social Security Code provision last year. As I mentioned earlier, because there is an interest rate change in the current quarter, and there is an increment on staff cost in the current quarter, we've topped up the Social Security Code provision in order to be consistent with the prudent position we had taken. That's the broad three reasons why staff costs have increased YoY. Okay. Quarter-on-quarter again, like 10, 12 odd percent? The quarter-on-quarter increase will typically be attributable to increments for the period and gratuity cost increase on account of interest rate changes between last quarter and current quarter. Sure. Overall, in terms of the fee income, I think we have been taking several measures in each of the verticals to shore up the fee income. How should we now look at the overall traction once we see the overall situation normalizing? There is a breakup in terms of the overall retail fee as well as in terms of the corporate and the commercial banking. Which segments would drive it relatively higher? Finally, in terms of the overall balance sheet growth, how should we see the traction on the fee income side? Kunal, I think couple of things I would say, without giving you a number. Very clearly, our focus is to build granular fee. You would note that our granular fee proportion in our total fee has increased on a Yoy basis. Our granular fees is now 92% of our total fees, compared to 86% of the fees last year. We will continue to drive our fee growth, which is granular, both on the retail and wholesale side. On the wholesale side, our transaction banking business is gaining traction, and you will see the fee growth that is coming through, which is set out on the slide that you were referring to in terms of fee growth. That fee growth is driven by a couple of things. One is a market share increase both in the FX flows business as well as the LC business. As we build our franchise out and deepen our relationships, we expect that granular fee to continue to grow. On the retail side, clearly subject to any regulatory headwinds that may hit us, our granular retail fee both on the liability and asset side would be linked to the growth in the businesses that you have seen in the current quarter. I hope that answers your question. Yeah. Lastly, actually, you made INR 155 crores of the provisioning on restructuring approved but not implemented. That is correct. Maybe that additional, if we are making 10% kind of a provisioning, can we assume that another INR 1,500 odd crore is there in the pipeline? Kunal, that would not be a correct conclusion to draw because my restructuring provisions, as I told you earlier. Okay. Yeah. My provisions as per my NPA rates. On unsecured, I would have made 100% provision, and on secured, I would have made provisions as per the [inaudible]. Direct imputation would not be correct. If you directionally want to look at that number, the provision cover on the restructured book is 23%. You can make an estimation of that number. Sure. Got it. Okay. Thanks a lot. Thank you. The next question is from the line of Adarsh Parasrampuria from CLSA. Please go ahead. Hi. Thanks for taking the question. Amitabh, Puneet, couple of questions. On the SME side, obviously post-COVID, because of many dispensations available, the net slippage numbers have been negligible. When do you expect the true litmus test when the dispensations are getting over and, what's the outlook there as you track those portfolios? Hi, Adarsh. Thanks for the question. I think the true litmus test for that. First let me set context to our book and then our assessment of the true litmus test. One is, our ECLGS book is not large, and we do ECLGS to customers after the full credit assessment. We don't believe that at least for what we have funded through ECLGS, there should be an impact because we did a full assessment of material impact. To your question on when do we see ECLGS impact play out through asset quality? Absent further dispensation, the one-year period runs out in Q2 FY 2022. Therefore, assuming a 90-day recognition cycle, you should start seeing something on the slippage front early Q3 from an industry perspective. That's helpful. My second question goes back to costs, obviously, I have explained why staff cost went up, but for most banks that we would track, cost income is settled, you know, while it dipped in the first half of last year as activity was low. It actually settled at a lower level than pre-COVID. For our bank, I see that we are at or a little at pre-COVID levels and you see the top two, three banks, they are 3%-4% + lower. We are catching up on some investments. We are seeing that fully explain why the gap is there. Adarsh, again, thanks for the question. I won't be able to compare and contrast why a certain bank has a certain cost income ratio. I'll probably highlight to you two effects. One is the cost income ratio has a cost impact and an income impact. It is public information that the NIMS of the other banks that you referred to are higher than us, and we said we have a clear trajectory to improve our NIMS. The income effect on cost income plays out through our financial statement. Therefore, a better way to look at our ratios and the progress that we are making on the cost side is to look at cost to assets. Cost to assets has gone up in the current quarter. I just want to call out for you that 2 basis points out of the increase is on account of the asset shrinkage because we reclassified or netted off advances against deposits. On a like-for-like basis, my cost to assets ratio would have been 2.03%. This is primarily driven by the fact that we continue to make our investments in growing the franchise. I called out earlier, the IT costs were higher by 63% on a YoY basis and so were my commission expenses. That's the reason why my other expenses other than staff were up. I still maintain that we will be on a cost to asset basis, 2% or thereabouts on a full year basis, and we should be able to pull this back. I would like just to add to what Puneet said. It's very important to understand that during the pandemic, actually, we have doubled down on our IT digital analytics expense because we believe that this presents a perfect opportunity to actually gain market share. As Puneet very rightly pointed out, the income should come through the next couple of years. Please also understand and appreciate that we have very large transformation projects on in almost every part of our business. We have mentioned in our call about, you know, Sankalp, which was our, you know, SME-led transformation initiative. I talked about the fact that we've launched a best-in-class transformation program for our Wholesale Banking products, which is again, an 18-24 month program, which will take us well into a completely different orbit in terms of what we can offer to our Corporate Banking clients. We have similar projects on in other businesses. We've not talked too much about it. As you go through these transformation projects, these expenses tend to be upfront and obviously the benefits come later. As again, Puneet pointed out, we are confident that we will maintain the benchmark we have set for ourselves, that will be below 2% cost to assets, and that has not changed. I'm just trying to put all of that in perspective. Keep all that in mind and so obviously as a bank, we are very, very committed to some of those numbers. Okay. Thanks a lot, Amitabh and Puneet. All the best. Thank you. The next question is from the line of Prakhar Agarwal from Edelweiss. Please go ahead. Yeah. Hi, sir. Just a couple of questions from my side. One is on this statement that you made on slippages that probably from Q3 we may start seeing some sort of benefit. Given the fact that large part of second wave happened in Q1, do we expect that Q3 numbers will be aggregated before start? Second, even if we see some sort of reversal in slippages, may we also see that probably the buffer that we have created, our COVID buffer that we have created, utilization starting Q3? Let me answer the second question. I will ask Puneet to answer the first. Boss, we have worked very hard in taking a lot of pain to build up this additional cushion. I know, this cushion does not reflect on our belief on the asset quality, but I think, by the way, we create this cushion based on certain rules which we have set up, which have been signed off by our board, our audit committee, and the statutory auditors. We are not going to run back to all of them and say, oh, by the way, we want to change the rules because, you know, exercise that has happened. The risk in the system remains. All of us are talking about the potential of a third or a fourth wave. We will think 100 x before we start reversing any of those provisions which we have created. So my answer, I think I'm giving a long answer, what we're really saying is chances of it getting reversed in a hurry are quite low. Puneet, you want to add? Sure. Prakhar, thanks for the question. I think to your first question on normalization, couple of positive trends we are seeing in June and July, which is demand resolutions have gotten back to about 99.5% of March 2021 levels. Our overall recovery efforts are also strong. I think the way to look at the number is when there is an inventory buildup in the system because of pandemic-induced stress, the inventory rundown does not happen instantaneously. This is not something that will pop up and play out in a month or so. I think given the inventory buildup that we have, coupled with the positive outcomes and collections that we are currently seeing, we think Q3 FY 2022 will be the period where normalization will take place for the system and for us. Just one more question. In terms of the pool that would have availed moratorium last year, have you done some analysis as to how much of that has already slipped or restructured or would have taken in years to just clean to some extent? Just wanted to get a sense of those customer base who took a moratorium, what is already in some shape or other has been a second pressure point. Prakhar, we do a lot of internal analytics. We don't call out the effective impact of what the moratorium customer did because there are multiple routes that a moratorium customer could have taken. It's something that we track, but we don't publicly disclose what percentage of the moratorium pool would have slipped. Okay, just one last thing. You made certain comments about recovery this quarter, about retail quarter. If you could just repeat those comments as well. Sorry, Prakhar. I missed your question, please. In your opening statement, you made some certain comments about recovery in this quarter. If you could just repeat about where the recovery comments and annual growth comments? Couple of things that I called out. I said 22% of the gross slippage got upgraded within the same quarter on a same named account basis, and 7.5% of the gross slippages are linked accounts that continue to remain standard. An account will continue to remain standard if it pays and is below 90 DPD across the quarter. Those were the two call-outs that I made for the gross slippage number. In terms of INR crore recovery, INR crore recovery is not as strong as the previous quarters, given collections was not accessing customers for a meaningful part of April and May and early parts of June. That's it from my side. Thank you so much. Thank you. The next question is from the line of Rahul Jain from Goldman Sachs. Please go ahead. Yeah. Hi, good evening, Puneet. Just two questions. Number one on the write-offs. You know, this quarter again, we've written off almost about 0.5% of the loan book. Last year we wrote off 2.2%. Can we just understand, you know, what's the write-off policy? What's driving this? Numbers stand out, you know, successively. They've been writing off pretty significant amount of loans. Just wanted to understand this bit a bit better. Rahul, thanks for the question. The write-off policy is codified and the way our policy works is retail gets written off basis a predefined quarter after which the account is 100% provided for. If an account is 100% provided on in quarter X, it will be written off on a predefined frequency after quarter X's completion. No discretion at my hand, no discretion at anybody's hand in the system. It will just get written off in due course. We continue to retain our right to recover. These are prudential write-offs, and obviously the recoveries start reflecting in other income in due course. To your question on what has impacted the current quarter's write-off, if you recollect last quarter, we had explained the fact that on our commercial banking business, we had enhanced our provisioning policies, and the provisioning policy resulted in a set of accounts being fully provided. We also codified the write-off rules on Commercial Banking, and pursuant to those codified write-off rules, the write-off of part of the CBG portfolio has taken place in the current quarter. As we stand today across our Commercial Banking business and across our retail business, there is no discretion available in our system insofar as write-offs are concerned. They're automated and will get processed with a time gap after the account is 100% provided for. The current quarter is materially impacted by the CBG write-offs basis the change last quarter. Are we done with that? It might still continue for a couple of more quarters? No. Can you comment? Rahul, since it's a rule, whatever fulfills the rule got written off. I will not have discretion of— Okay. parceling the write-off across quarters. Okay. So far as the CBG policy change was concerned, the rule got applied to the stock and the stock got taken care of. Understood. Essentially what you're saying is predominantly it's come from CBG portfolio. Understood. The second question is on building the high-yielding portfolio, starting with microfinance, corporate action you took. Just trying to understand over the next couple of quarters or next few years, how do you think about building the high-yielding portfolio. Microfinance is one of the portfolio. What other areas you're focusing on? You've talked in great deal about your digital initiatives. Any new products that's going to come out, what kind of scale and size you can build up over there. Just some color on that will be useful. Thank you so much. Rahul, thanks for the question. I think just want to clarify, there is no corporate action to report or speak of on the MFI portfolio at our end. There's nothing there. When there is something to report, we will formally report as per due process. The MFI book for us stands at INR 3,684 odd crores, which is a small proportion of our book. Yes, it helps us meet our PSL requirements, and therefore, it is a business that we will look at as part of our retail and agri business. I hope that answers your question. If I missed something, happy to take a follow-up. I'll just add, Amitabh here. Obviously, this is our endeavor, as we look at various possibilities and opportunities out there to go after opportunities which make sense from a risk-reward framework. For example, in the wholesale, we've been talking about how we want to expand our mid-corporate portfolio, and we've been doing a pretty good job of it, and we have seen that grow in a very big way. Similarly, we've done for priority private. We talked about a big geo strategy on our retail side, where we have extended it to now more than 2,056 branches. We continue to intend to expand it as we move forward. You will hear more from us as and when we are ready or we have anything substantial to report in terms of some of the choices we have made or we will make. We'll obviously share it with you. We are a bit cautious about, you know, announcing it till we have achieved something and we achieve something substantial, and something substantial which is better than what others offer. In that sense, as and when we are ready, we will share it with you. You can expect, obviously, we are not going to let some of these opportunities go. You referred to MFI and some of the other things. As and when they happen, we'll let you know. I'm not talking about a corporate action, I'm talking about general opportunities that may exist. Sorry. Sure. Thanks, Amit. Just put differently, some new business opportunities that you may be considering perhaps on the high-yielding side. Of course, MFI, I get your message very clearly. What about some of the other unsecured products? You know, what can come out of your digital capabilities that you have, you know, spent a lot of money over the last couple of quarters? Yeah. You have heard us talk about, at least on the retail side, some of these things. We have talked about BNPL. I think we are one of the first banks to come out with a product of that nature. Feedback was limited. We are obviously learning along the way. It has already started inching volume, which, yes, we are quite happy about, but we will come and share that volume with you when we believe we are ready and have something to announce to the market. It has already, in the last couple of months, reached a volume size and more importantly, what we are collecting, which is satisfactory to us, and we are quite happy with it. We have done something similar on small denomination loans. We are working on that too. And you know, again, I don't want to overdo it or overstate it. As and when we are ready, you know, we will share it with you. We do want to work under the cover and only when we have reached a certain shape and a size and certain market presence will come and talk to you about it. We will not do it the day we announce the launch of it. We'll be very careful. Understood. Thank you so much, both of you. Thank you. The next question is from the line of Antariksha Banerjee from ICICI Prudential Asset Management. Please go ahead. Yeah. Thank you. I just wanted to run through some numbers and see if the numbers are correct here. In your slide, you report your retail portfolio breakup and 20% of the retail portfolio is unsecured, which gives a INR 66,000 crores kind of book. Is that number right? Hello? That should broadly be correct. Yes, Antariksha, that should broadly be correct. You also reported your gross slippage in retail to be about INR 6,400 crore and you said that secured constitutes 65%, which means 45% of this INR 6,400 crore is unsecured. Is that the right number? Yes. I think the way you need to look at it is because 55% of net slippages is what I called out. You're not getting them 55% to the [audio distortion]. Okay. Therefore, you'll have to change the reference point please. Got it. No, because this was giving a very scary picture of the unsecured retail slippages. Is there anything that you see in the unsecured retail, which is grossly different from last year? I can do the numbers again, how would you compare it to last year in your unsecured retail book? This quarter was a particularly severe quarter in terms of impact on the unsecured business. Going forward, June has been better than May and July has been better than June. Things are improving and as Puneet also alluded earlier that we should see a full-fledged recovery if this trend continue at Q3. We do not see a repeat of last year provided there's no third or fourth wave of COVID. Sure. I think at the margin you're also more positive on growing unsecured, right? If I look at your mix. Hopefully the trends are better than last year and the weaker customers have been weeded out. The last point you made is absolutely correct. Weaker customers have been weeded out. If you look at our overall book composition, it still remains about 80/20 and on the margin it may be slightly that unsecured is higher, but I think we are comfortable being 80/20 or 70/20. That kind of number is what we will be holding on to. If I just compare the slippages or delinquency, whatever you now want to talk about between salaried and self-employed in the unsecured portfolio, is there an order of magnitude difference or is it largely comparable? It's largely comparable between both the unsecured SME and the unsecured salaried customer. Okay. Sure. Thank you. That's all. Antariksha, I just want to supplement Sumit's answer. I think since your question was asked in the context of personal loans, I just request you to look at slide 18 of our presentation. Effectively, you will see that 100% of our personal loans are to salaried segment and therefore, Sumit's answer generically applies to the portfolio, but in the PL, our PL is all salaried. I mean, that implies that the credit card numbers, I mean the proportion to credit card self-employed numbers is that much larger, right? That's the concern. I mean, if I look at your credit card growth [quarter-on-quarter], I know the percentages there could be some rounding off errors as well. The growth has started again, right? I think you are ultimately more positive on growing credit cards. Bulk of that comes from salaried or are you still doing self-employed growth as well? I just wanted some sense on that. Antariksha, I'm happy to work the numbers with you offline. Sure. I'd like to understand the math that you're doing before I respond to it. I think the limited point I was making is to Sumit's point that 100% of our PL is salaried. But happy to spend time with you working this number offline. Sure. Thank you so much. Since you asked on the credit card, as Sumeet said, I think that portfolio is in very good shape. Whether you look at all the metrics there in terms of revolves, slippage, et cetera, it's doing pretty well. We are very keen to grow that portfolio. Sure. Okay. I connect with you. Thank you. Thank you. The next question is from the line of Abhishek Murarka from HSBC. Please go ahead. Good evening, everyone. Just a couple of quick questions. When you called out that of the retail slippage is 55% was from secured, is there a predominant segment over there? Which part of secured is that coming from? Is it home loans or LAP or auto? Just some qualitative color there would be helpful. I can come back to my second question. To start with, I think a predominant portion of this is actually mortgages, I think when Puneet gave his opening statement, he actually mentioned the fact that a large part of that is where the LTVs are in the region of 50%. These, what we would like to believe are probably temporary cash flow mismatches. Because of such low LTVs, we believe that we would see larger recoveries once the [audio distortion] do start flowing in. If I can just extend that. Most of, you know, across the sector, we are seeing a higher amount of restructuring or slippage in the mortgage book. In general, what is your feeling? Why would that be? I mean, it is generally an auto debit book, which can directly be, I mean, there's no physical restriction in terms of collection, et cetera. Why is slippage generally going up in that segment? Abhishek, I think the way to think about this is if I wanted cash flow relief, I would seek relief on the largest EMI payout that I have, just from a customer behavior perspective. Effectively, if you look at the loan portfolio across the industry, in rupee terms, the largest EMI would be for this asset. Sure. The reason we feel comfortable is the LTV values, and secondly, from a consumer behavior standpoint, people don't like losing their homes— Correct. they have a CBG asset. As things improve, this portfolio should come back. We'll have to see how long it takes to come back. That's probably the reason that the home loan EMI is the one where you're seeing some traction. Puneet, logically extending that, it means that in July at least, when things would have been much better than April, May, and you would have seen all your EMI cycles also by now. You should have seen a very strong rollback from these set of customers. Have you noticed anything like that? Because as you say that nobody wants to lose their house, so they would want to come back and the moment liquidity demand for cash is down, they would want to pay back or make up their arrears. You make a fair point. Unfortunately, the way the regulation is that once I become an NPA. For me to be reclassified outside of NPA, I have to clear all dues. Yeah, not for reclassification, sorry. Just generally collections from these accounts. Because you said we'll have to wait to see how it comes back. Yes. I was just thinking that it should have come back in July. Have you seen anything like that? Like I said, July collections on a portfolio basis has improved and is showing the right trajectory. That we can confirm to you is happening on our portfolio. Okay. Any particular trend on this portfolio which would have slipped that's not available, is it? I think what I would, Abhishek, tell you is about 99.5%— Okay. Sure. of March levels on demand resolution. Right. I think if you apply that across the board, roughly should play out across product portfolios. Sure. Appreciate that. Just second question on this corporate and commercial banking. Now, most of your loans are A and above, and that's where you're focusing. In general, I'd just like to know what would be the yields in that segment? You know, just a sort of broad indicative yield would help. Yields in this sector would vary between, for a AAA government entity would be, let's say, between 4%-5% for a year, to anything between 7%-9% for SME loans. Okay. Broadly the Commercial Banking Group there it would be roughly 7%-9%. Correct. Okay. Perfect. Thank you so much. Thank you. The next question is from the line of Nilanjan Karfa from Nomura. Please go ahead. Hi, Puneet. Let me ask a previous question on the retail slippages. I think you clarified 45% like 45%-55% breakup is on the net number on retail. Even that is showing up. If I can run again the number, out of INR 312 billion of retail, 20% is unsecured. It's about INR 62 billion. If we have a net retail slippage of what, INR 35 odd billion, let's take, it's a simplistic number, 45% of that is anywhere about INR 16 odd billion. A INR 16 billion upon 616, if you annualize it's 10% rate. You know, I mean, would assume that a large part of this should have gotten rid of even in the wave one. What is it that has slipped in the retail? Since you pointed out, and even as all the data on slide 18, you basically would point to that 31% of credit cards is probably a higher risk segment out there. Would that be the sort of a fair assessment of what things have panned out on the unsecured side? I think a couple of things that we need to look at. Unsecured is impacted by wave two of the pandemic more than secured. Couple of things that you would need to see that it's partially cards, yes, but I think our cards business is on the mend as Sumit spoke of. Annualizing a high slippage quarter, in my mind, is not the right way to look at the number because effectively what you're saying is wave two that hit us in Q1 of FY 2022 will keep impacting us in all four quarters of the year. One, arithmetically, I don't agree with the conclusion that annualization of the number is reflective of the risk because there's lumpiness in the slippages given the environment. And the next one correction I would like to offer to the ratio that's being tried to be computed on the call. The second is, like we said, there is a demand resolution number that we are seeing uptick, and that should help with recoveries in due course. Annualization, in my mind is incorrect. If I can interrupt, Puneet, sorry. The resolution number or the demand resolution you said is what, 99% of March? I thought you mentioned that number for the entire book and not for the retail. Effectively what I'm saying is that is reflective of our portfolio as a whole, and there isn't a material differentiation for me to call out between retail and wholesale here. Second point I would make is given that my net slippages on wholesale is exceedingly small, the demand resolution is effectively reflective of my retail book. I would again reiterate to you that annualizing a high slippage quarter number is not the most appropriate way to look at a portfolio because it assumes the same market scenario and the same pandemic scenario to run for the next 12 months consistently. I think that's where I'll pause and request you to talk about it in that manner. Sure. No, that was not the intention. I am just trying to know because we end up looking at annualized numbers always for every quarter. Technically on the secured side, I think there were questions around that also. If you can qualitatively comment on home loans and regular loans and whether there were gold portfolios, the gold lending portfolio, which also defaulted. If you can compare these qualitatively versus let's say the full year of FY 2021, that is home loan Q1 versus full year of FY 2021. I'll just add a couple of points to what Puneet said. The period from about April 15th to June 15th is where a lot of things were topsy-turvy and unsecured, which gets classified at 90 DPD, therefore you're talking almost two months out of three months gone there. Subsequently, for the month of July, what Puneet said in terms of demand resolution, our entry rates in terms of flow into delinquency bucket are the lowest now. Our 0 - 30 resolution is back to pre-COVID level. Mortgages, whatever slipped, we are pretty confident of getting them back on track in the second half of this year, just that it takes you to collect all the four EMIs to have them on track. As Puneet said, let's not annualize what we saw this quarter. This is a very severe quarter, and the bounce back also is very sharp. Gold, absolutely nothing to worry. There was dispensation in terms of LTV, which the regulator had allowed. We had chosen, and wisely in hindsight, that we would stick to our 75%-80% LTV. There's nothing there in terms of delinquency or provisioning. Largely it is the mortgage piece where if the LTVs are somewhere between 50%-60% and the affinity people have to home or whether the property, if it's a self-employed business where there's 40%, 50% equity, chances of recovery are pretty high. Thanks. Just one final question. This is from the annual report, which releases the March quarter. If I look at the split of the maturity tenure on the liability side, looks like we have built out a very large portfolio of a tenure which is three to five years plus. Is that a deliberate strategy? It has actually happened over the last, I think, one or two, three years. How does that pan out given the current interest rates environment? I'm happy to take it offline too. No. I'm happy to give you a first cut answer and then maybe discuss this with you offline again in detail. I think my first cut answer to that question is the maturity profile of assets are not reflective of the interest rate risk that we run because a dominant part of our portfolio is priced off a floating rate benchmark. The entire corporate book is effectively floating rate. Our mortgages book is external benchmark linked. If there is an interest rate cycle risk that comes through on the liability side, as long as the external benchmark moves we should be able to get asset pricing. The ALM position would be a liquidity driven, and on the liquidity side, I think our core deposits and our term deposits cover us for that bucket of asset creation. I hope that addresses your question. Yes. Thank you. Thank you. Thank you very much. We will take that as the last question. I would now like to hand the conference back to Mr. Puneet Sharma for closing comments. Thank you, ladies and gentlemen. Thank you for having spent the time with us and discussed our results. It's been a pleasure. I hope that you and your families stay safe. If there are any follow-up questions, please feel free to reach out to Abhijit, and we'd be happy to clarify. Thank you. Have a good evening. Thank you very much. On behalf of Axis Bank, thank you for joining us and you may now disconnect your lines.