Ladies and gentlemen, good day and welcome to the Bandhan Bank Limited Q3 FY 2023 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vikash Mundhra. Thank you, and over to you, sir. Thank you, Inba. Good evening, everyone, and a warm welcome to all the participants. It's our pleasure to welcome you all to discuss Bandhan Bank's business and financial performance for the quarter ending December 2022. We will take this opportunity to update you on the recent developments in the industry, as well as on Bandhan Bank during the quarter. To discuss all this in detail, I've got with us our Founder, Managing Director and CEO, Mr. Chandra Shekhar Ghosh, our Chief Financial Officer, Mr. Sunil Samdani, Head Retail Banking, Mr. Shantanu Sengupta, Head Housing Finance, Mr. Suresh Iyer, Head High Value Housing Finance, Mr. Subhash Samant, Head Commercial Banking, Mr. Suresh Chandran, Head Retail Lending, Mr. Hirak Joshi, and myself, Vikash Mundhra, Head of Investor Relations. I would like to request our Founder, MD and CEO, Mr. Chandra Shekhar Ghosh, to brief you all about our bank's operational and financial performance, along with developments for the quarter ending December 2022. Over to you, sir. Good evening and Namaskar to all of you. Firstly, on behalf of Bandhan, I extended to you and your loved ones best wishes for the New Year, 2023. I am pleased to state that the September quarter, September to December quarter of this financial year has been on expected lines. Rather it is slightly better than expectation. It has been yet another quarter of a decent business growth trajectory. The first half of the financial year was not as expected. We had to see more unexpected shocks in terms of NPAs, especially in the microcredit book, especially its restructure books. The bounce back in the economy is visible across businesses and among consumer sentiment. We have seen good festive buying by all section of the society. As a result, credit growth of the bank has been encouraging. For the first time in the history of the bank, it has crossed INR 200,000 crore in business. The overall advances recorded a 14% year-on-year growth in quarter three, financial year 2023. The significant growth for the bank has come from the Retail segment, including housing and MSME. Including the write-off, the advance growth will be 11% year-on-year. The housing finance book has registered a growth of about 28% year-on-year and 4% quarter-on-quarter. We have seen good demand for housing loans across the country, we are planning to grow our housing book by more than 25% year-on-year. The Retail loan book, other than the housing finance book consisting of personal loan, gold loan, two-wheeler loan, and auto loan, has grown by 133% year-on-year and 22% quarter-on-quarter. The commercial banking vertical consisting mainly of NBFC, SEL is a Small Enterprise Loan and SME with 87% growth in year-on-year and 12% growth in quarter-on-quarter. One important point I would like to highlight is that when we look at loan book growth, other than the EEB loan book, we have seen a growth of 48%, which is very encouraging for the bank. The growth in these segments is a welcome sign for the bank as this is in line with the bank's portfolio diversification agenda, and also in line with the trend of increase in business with the onset of the festive season. We are confident that quarter four, like each year, will continue to further trigger business growth. As stated earlier, the second and third quarter of the current financial year coincides with the festive seasons and has seen stable momentum in economic growth as many businesses return to normalcy, given the significant increase in the confidence among the population of managing COVID. We are happy to see signs of strong demand for credit in most of the business in the third quarter, including the EEB. During the quarter in review, deposits have grown 21% year-on-year. We are looking to build a robust and granular deposit franchise. However, during the quarter, the bank has seen the movement of deposits from customers maintaining savings balance above INR 2 crores to bulk deposits. The same has been classified as a bulk term deposit. Due to the festive season, we have seen some impact of consumption on the deposit base. This is also in line with other banks as per the trends and progress reports released by the Reserve Bank of India. Our CASA deposits have seen a de-growth of 3% year-over-year to INR 37,212 crores, and the CASA ratio is still at a healthy 36.4%. The Retail to total deposit ratio stands at 69%. We do not expect any further movement from savings account to the bulk deposits. We will definitely see improvement in CASA deposits from Q4 onwards. A few numbers shows a strong momentum in our portfolio diversification agenda. The share of housing loan book to total loan book has increased from 24% to 27% year-over-year. The share of group loans to our total loan book has come down from 52% to 37%. Our share of commercial banking loans has grown up 22% to 33% in the total loan book year-on-year. Along with the business growth in advance and the deposits, we have also seen very encouraging collection efficiency trends during the quarter. We have seen good improvement in the overall collection efficiency. For the bank, overall collection efficiency excluding NPA stood at 98% in the month of December, up from 93% in the month of December of the preceding year, and 97% in September month of this financial year. The collection efficiency for the month of December in the EEB, which is called the microcredit vertical, excluding NPA, improved 98% from 97% in December for the financial year 2022. Even while comparing to September month, we have seen the collection efficiency improving from 95% to 98% in microcredit. With the people's livelihoods coming back on track, we have observed an eagerness among our customers to standardize their accounts in order to continue to enjoy the benefit of formal credit by maintaining a healthy credit record. Our collection efficiency in Assam and West Bengal for EEB customers has improved significantly over the last quarters. It remains at 96% in Assam compared to the September, 87%. West Bengal it is now is 98.4%, which was in September, 95%. An important point here is to note that our collection efficiency in West Bengal is higher than our national average. Bank has also received a sum of INR 917 crore as a part of CGFMU recovery from the government. We expect another up to INR 1,700 crore to come as a recovery in the first half of next financial year, that is financial year 2024. This quarter, bank has also sold written off loans INR 8,897 crore at an aggregate value of INR 801 crore. Out of that, INR 387 crore has been issued as SR to the bank. The rest of INR 414 crore has been reflected in the P&L of the bank. Our net profit for the quarter at INR 291 crore against a net profit of INR 859 crore in the last financial year, same quarter. Our net interest income has shown a minor dip of 2% year-over-year. It has come down INR 2,081 crore in Q3, financial year 2023, from INR 2,125 crore in Q3, financial year 2022. This is mainly because the higher reversal of interest income and also increase the cost of fund. Our net interest margin for the current quarter is 6.5% compared to the 7% last quarter. Even after the dip, we are still amongst the highest in the industry. I would like to mention a few points here. First point is that we have high interest rate by nearly 2.5% in the last few months on advance. This quarter we have also set up a separated team of current account mobilization. Till now it is working very good with the branch network. We expect a lower interest reversal from next quarter onwards. The impact of all these things will be seen as an improvement in NIM from the next quarter onwards. We'll also consider further rate hikes if required. Total credit cost for the quarter was at a 6.4% compared to 3.7% in the previous year, and 5.3% in the last quarter. This is largely due to the increase in provision coverage for the stress during the quarter. Our gross NPAs stood at 7.2% versus 10.8% in the previous year. Our net NPA stood at the 1.9% versus the 3% in the previous year. During quarter three, the gross and net NPA ratio has remained flat compared to the sequential basis. Here we have to keep in mind that the majority of the slippages during the quarter are from the already declared stress pool. We are also used data science and analytics for the purpose of NPA management and recovery and also the business growth. It has already shown positive result for the bank. With the initial trends and reports from the growth, we are confident that quarter four will see good improvement in the performance of the bank. We have already seen our SMA book coming down by about a percentage point. We have also seen improvement in our DPD book across buckets, which gives us confidence that the worst is terms of slippage is over. Many of our customers have been paying regularly and are showing their intent to regularize their overdue account. Until the entire overdue amount is not recorded, they cannot be categorized as a non-NPA customer. In the third quarter, number of full-paying customers have increased from 88% to 92%. The amount-wise it is 92% to 96%. If I just go to this, the number of non-paying customers have decreased from 6% to 5% quarter-on-quarter. If I say that the amount-wise it is coming non-paying customer 2% to 1%, which have been shows to the bank on that the customer is coming to this regularize their account, and future credit growth and quality will be better. From the recovery perspective, we have seen that the total recovery and upgradation for this quarter is INR 622 crores. We are engaging with our customers on a regular basis to encourage them to ensure timely payment and recovery wherever needed. We are confident that it is only a matter of time before these customers regularize their account fully, after which we expect to see a significant drop in the gross NPA in the next couple of quarters. The bank has also seen the total fresh slippage has come down INR 700 crore from the last quarter, which is this quarter has been slippage fresh in the INR 3,265 crore. In the last quarter, it was at INR 3,954 crore. The majority of the slippage is from the already disclosed stress pool of COVID. Within this, our fresh slippage in the EEB segment was INR 2,846 crore in the quarter, which was in the last quarter, INR 3,624 crore, which is INR 800 crore is in down. We have made provision of INR 1,542 crore, including NPA and standard asset provisions in this quarter. We are also more than covered in terms of our provisions. The total provision of the bank stands at INR 6,257 crore. We have seen 1 percentage increase in our PCR at 75.4%, which has increased from the 74.4% in the last year. Bank has done a write-off of INR 2,533 crore in this quarter. Coming to the outlook for the last quarter, as you all know, we are seeing economic activity picking up and business coming back to the normal across the country. Bandhan has always had an ear to the ground, given its the distribution reach, we have observed that our customers' businesses have been gaining traction once again. We remain confident that this will have a positive impact on our business operations. We have started new streams such as commercial vehicle lending, loans against property for business. You know, we have been also started the government business operations in the bank. Among others, this will add further revenue streams over the next few quarters. We also go live on our IT transformation project in the next financial year, first half. We expect it to grow our advances and deposits by 20%-25% CAGR over financial year 2025, with our focus remaining strong on the Retail segment and diversification. With our continuous effort in diversification, investment in technology, people and processes, Bandhan growth stories remain strong and promising. We have added about 9.4 lakhs in new customer in last quarter. It is also showing that the how business is growing. I wish you, your family, and all the very best. Please take care. Stay safe. Thank you to all of you. Thank you, sir. I would like to request our CFO, Mr. Sunil Samdani, to give you more details on financial parameters during the quarter. Over to you, sir. Thank you, Vikash. Good evening, everyone. 1st of all, let me take this opportunity to wish you all a very Happy New Year. While Mr. Ghosh has mentioned most of the highlights of the quarter, I just want to particularly focus on few aspects, which I think is important for everyone to understand what went in this quarter. Let me start with the asset quality, particularly on the EEB side. This was the quarter where we have seen the slippages from the restructured pool happening. As per our estimate and the guidance which we had given on the 1st of December, we are pleased to inform that we have done better than that across all comps, whether it is NPA, whether it is stress pool, and the provision coverage ratio around that. This, I'm talking without considering the write-off effect. On a like-to-like basis, we have been better by INR 2 billion- INR 3 billion across all the sides, whether it's NPA stress pool and the provision coverage. Secondly, I would want to highlight slide five of our presentation, where it is pleasing to see that our collection efficiency, excluding NPA customers, have gone back to the pre-COVID level. This improvement is across pan-India, including our core geographies of West Bengal and Assam. While West Bengal stands at 98% for the month of December, Assam has improved substantially from 87% to 98%, 96%, and rest of India at 98%. What is more important is the customer behavior and the paying profile. We now have a situation where 96% of our EEB customers pay full installments, which means 3% of them are partial paying installments and 1% is non-paying installments. This gives a comfort that the flow going forward will be contained because it's only these 4% of the customers within which three are part-paying, the forward flows will be visible. On slide six is another important messaging, which is the improvement on our delinquency buckets. It is heartening to see that across all buckets we have seen an improvement. Even if I don't consider the benefit of write-off, we have seen an INR 3 billion reduction in the overdue pool. What this gives us an assurance is that the flow forward has stopped and there has been an improvement or rather rollback from the delinquent customer base. This gives us the confidence that going forward, we should see a much lower slippages in line with our guidance. Lastly, on slide seven, here we typically guide the reader on the stress pool that we have on our EEB portfolio, which got built on account of pandemic, and how are we addressing them. It is heartening again to see that at the end of September 2022, we had a stress pool of INR 95 billion. Against that, we had a provision of INR 53 billion and a CGFMU expected recovery of INR 25 billion, which effectively means 82% of our stress pool was covered and the rest we have to work on the recovery side. This ratio of 82% has improved to 91% as on December 2022. 88% rather. Of the total stress book of INR 76 billion, we now have a provision which is recorded. What is important here is, while my stress book has come down from INR 95 billion-INR 76 billion, my provision is consistent at from INR 53 billion-INR 50 billion, which means we have not utilized our provisions fully. We've continuously created buffers and strengthened. Given our experience and the, of the CGFMU recovery and the slippages that we have seen from the portfolio which is covered under CGFMU, we now expect another INR 17 billion to come in the first half of the next financial year. With INR 50 billion of provisioning and INR 17 billion of the CGFMU expected recovery, we've almost covered 88% of the total stress pool. As always, we are not considering the Assam relief scheme, which is an added positive as and when it comes. What is also important here to mention is on the NIM side, if I have to talk, right? Optically you may see that our NIMs have come down quarter on quarter from 7% to 6.5%. But that has largely to do with the large slippages into NPA that we've seen in the month of October and November. If we look at December month, the NIMs have already improved to 7.3%. As the repricing of the interest rate increase that we have taken over the last 3 months factors in or kicks in, we should see a further improvement here. On the slippages side, as envisaged, we've seen a lower slippages quarter-on-quarter. The numbers have already been discussed by Mr. Ghosh, so I will not repeat them. That gives us the confidence, given the lower DPD pool and the improvement in collection efficiency and the paying profile of the customers, we expect slippages in the month of October to be materially lower, in line with our expectations and hopefully on a steady state, what we have guided, it should come in line with that. I know you will still have few questions. Happy to take them. Thank you. Thank you very much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may enter star and one on their 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 a question. Anyone who has a question may enter star and one. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Mahrukh Adajania from Nuvama. Please go ahead. Yeah, good evening. sir, if you could give us a color on what the steady-state SME pool would be, like a completely normalized SME pool on the EV side. That's my first question, and I have a few more. There again, you know, steady state is all depend on the environment. If you talk about pre-COVID levels, that's where we used to have a gross NPA of about 1.5% and another delinquent pool, you know, the stress pool that we call it, of about 3%. Right? In the new scheme of things, we say that, you know, the steady-state credit cost, you know, or rather the collection efficiency for the microfinance or the EEB business should be taken as 98 instead of 99. You can add another percentage point to a steady state that we used to have historically. Okay, makes sense. My other question is on the new ECL norms. How would they impact you? Would they? Are you filing any mock runs with the RBI already? Any sense you can give on if the cease or feel about to be effective soon? I know it will not be. What would be the impact between Ind AS and in days? As far as banks goes, you know, the, at least Indian banks have been, you know, submitting the pro forma India financials, which includes the ECL calculation as well, to RBI on a quarterly basis for the last two years. We keep filing on a quarterly basis the India financials. If we take that as a reference, you know, there is no material difference between the provisions that we carry and the provisions that we are required to make under the ECL provisioning norms. This of course is based on the India's definition of ECL. If there is a tweak to that definition which RBI brings in in their final recommendation, that needs to be factored. If you go by the standard India's way of calculating ECL, there is no difference. Okay, got it. Would that be lifetime ECL or just like, say, two-three-year loss model? Any idea? Here in as far as India goes, you know, we take last seven years, that's our life, lifetime span and the experience, and basis that we file it with the RBI. More importantly, you know, it is a factor of your probability of the default and the provisions that you carry in your book. Since we've always been carrying adequate provisions in our book, right? Even if I have to take a 7-year or a 3-year precedent or the average, I don't think that will have a material impact on or rather any impact on our ECL or provisioning requirement. Got it. Just one last question, your outlook on deposit growth, for FY 2024, given that there is a lot of competitive intensity is increasing in deposit-taking, so your outlook on deposit growth and margins for next year? I'll request Mr. Shantanu Sengupta to take this question. Shantanu? Yeah, sure. Thank you, Sunil. Good evening and thank you and thank you Mahrukh for the question and wishing all of you a very Happy New Year. The question on deposit outlook is we are quite optimistic, given despite the fact that we see intensity in terms of competition because of few reasons. One, I think the focus for the bank has been to grow our organic book, and as we move forward, the granular book is growing, you know, steadily. That's one comfort that we have. We've also invested a lot of effort in terms of, you know, creating some new initiatives for the bank. We are expanding our branch network. We are investing in digital. We are seeing opportunities that carve out as, you know, as triggers of growth going forward. To answer your question, our outlook for deposit growth remains positive. Just to add on the margin side, you know, if today till December quarter, our rates on TDs were in line with the rates offered by other banks. We believe with a 25 basis point premium, it should not be a problem to garner deposits for our growth that we are looking and going forward. Okay, thanks a lot. Thank you. Thank you. Thank you. We'll take our next question from the line of Krishnan ASV from HDFC Securities. Please go ahead. Happy New Year. Yeah. Go ahead, sir. Yeah, hi. Wish you all a very Happy New Year. Thanks for taking my question. I just wanted to understand you made an announcement around the fact that people who have been in default don't get money back you know, until they are able to completely pay back and then there is a certain sunset clause, et cetera. I just wanted to understand how or is it possible for you to share any disclosures around the fact that money is not going back to these same borrowers at all? Just to create more confidence among stakeholders. Is there anything that the bank can do to demonstrate that, look, this money is not being given back to the same... It's not that this money is coming back because we have got new money to give you and all that. Krishnan, firstly, you know, let me clarify that we don't give a new loan unless the earlier loan is repaid, right? It's never a case that we offer a loan with an earlier loan outstanding or the customer is still delinquent. All right? That's point number one. Point number two, our change in credit norms was that after the customer repays the earlier loan, if the customer has flown into NPA, despite repaying the earlier loan, we would still wait for 90 days and only then give them a fresh loan. This was because as we mentioned in the previous call, we don't want customers to be opportunist, right? Because they want a new loan, they come and repay us, but during the tenure, they were not disciplined and moved to NPA. It's a messaging that we want to give to our customers that if you are not regular throughout the loan, you are not eligible for a new loan. The change here is despite customer paying, we don't extend a new loan. Right. Understood. Now, I mean, while you made this fairly, I mean and is there anything that the bank can do to demonstrate this, in any way at all? Just to. Let me explain that, right? We made this policy starting, you know, first of October or first of August, September sometime, right? To that we should not extend loan. During the quarter, we saw some 400-500 customers receiving the loan after paying the earlier loan. We proactively took provision against those and asked our team that not to take any, you know, not to extend any further loans. It has been a very strict policy that we are following because we want the messaging on the ground to be very clear. It was a small amount of 20 lakh INR, but still the messaging has to be very strong that once there is a policy, we can't deviate from that policy. Understood. Understood. My second query is around just the pivot that you are now making to go from a relatively sub-prime customer base more towards prime across most of your customer segments across most of your, I mean, businesses as well. Purely in terms of the acceptance of, I mean, Bandhan, I know, you know, there has been some chatter around this. Just wanted your thoughts around acceptance of Bandhan as a brand in some of those businesses. How have you found the early evidence thus far in? No. Krishnan, if you had asked me this question on the deposits, I would have still said there is, you know, that's something that we discuss here. You know, in a lending, clearly it doesn't matter so much that who is a lender as long as the customer gets the right money at the right rate. Right? In our case, even on the deposit side, our momentum is strong and we've got that branding and the image to get that customer trust. I don't think that's an issue that we face and that we discuss. Our endeavor is to continuously improve our customer service and customer experience. That is what we focus on. That helps us building trust and confidence. Okay. Got it. Got it. Thanks. I'll come back in a few. Thanks. Thank you. We'll take our next question from the line of Adarsh from CLSA. Please go ahead. Hi, Sunil. The question is on the slippages, right? If you could give me. Sorry to interrupt, Adarsh. If you're on a speakerphone or a hands-free, switch to handset and speak. Yeah. Hope this is better. On the slippages, Sunil, just wanna understand, what was the slippages in the quarter, and if you could highlight what are the slippages if you remove the spillovers from any kind of stress which was there, right? The slippage from the standard book in the MFI portfolio in this quarter. For the MFI book, my gross slippages for the quarter was INR 2,846 crores. There was a recovery and upgrade of INR 376 crores, right? This recovery and upgrade I'm talking is from the NPA, not from the written-off accounts. That is additional. Just from the NPA is INR 376, and from the written-off portfolio, which is a non-ARC portfolio, it is INR 140 crores. That's on the numbers of gross and net slippages. You know, within this INR 2,846 crores of slippages, 90% of them is from the stress pool which is already identified. You're saying that only, INR 300 crores was the slippages from the non-stress pool? Less than 300. Got it. Got it. Got it. Just the second element, right? You all mentioned the margins of 7.3%, right? Which is adjusted for all the interest reversals. Just wanna understand, if you take a 2-year view, there's a drastic change in business mix that will happen. You all have taken a rate hike that will come in. What's the fair margin that you would expect as you have some of these yields kick in, but also at the same time, the share of MFI go down? There again, you know, firstly, let me explain how this shift would look like, right? When we say the share of MFI goes down, it's the group loan which goes down, right? The SBAL customers, which are at the same yield, gets reclassified as commercial loan, right? Between SBAL and MFI, we would still be around 55%, right? Which is at the similar rate of interest, right? The impact of change in mix for the next two, you know, one to 1.5 years will not be more than 50 basis points. From which rate 50 basis point is the question, right? We expect our steady-state NIMs to inch up from 7.3 that we clocked in the month of December. We expect this to go up to 7.75 and from there, we should see the impact of change in mix to come in over the next two years. Got it. So the yield change that you had to 50 bp was in when was this implemented? Just trying to get a timing of when does the margins improve on the MFI book. The 250 basis point increase that we took in EEB, 200 basis point came in November 1st week, and 50 basis points was sometime in September, end October. You moved from 19 to 21 and a half, is it? 21.95. Got it. The previous whole thing that, Bandhan, it's a bank, people look for, you know, We've offered them a lower cost of fund benefit. When you became a bank, you lowered your rates to closer to 19%. What happened to that? I mean, I'm just trying to understand as to, would that not be the expectation, that would prevail? No, that continues, right? The differential between the Bandhan rate of interest against, you compare it with the industry, it is still 250 to 300 basis points lower. That continues. It's an interest rate environment, the credit cycle environment which has to be considered. Perfect. All the best, Sunil and team. Thanks. Thank you. Thank you. Thank you. Our next question is from the line of Saurabh from JP Morgan. Please go ahead. The question is more on credit term. In the analyst meet you had guided, you know, around INR 3,400 crores of credit cost. Sorry to interrupt, Saurabh. We can't hear you clearly. Please switch it to handset FP. Is this better now? Yes. Thank you. Yeah. At the analyst meeting you had guided to around 3,400 crores of credit cost. Now, plus the Retail recovery, would you fall into that 350-400 crore numbers now? This is the guidance. We were, you know, we had earlier guided that in H2 we will look at INR 1,500 crores of credit cost, you know, which will be divided as INR 1,000 crores in Q3 and INR 500 crores in Q4, broadly, right. If you look at our numbers now, it is still in those lines, right. While it looks INR 1,500 crores, it's because we got that INR 414 crores of ARC sale upfront, which we took as provision, right. Increased our coverage. You know, what we discussed earlier, that my stress pool coverage has gone up from 82% to 88%. Right. That's where this INR 414 crores was utilized, and that's why this looks higher. otherwise, if you remove, for this, it's in line with our guidance that we had given. The 4Q should still be around that INR 500 crore mark, basically, provisions. Yes, ± INR 100 crores. Okay. Got it. The second set is essentially just on this. You know, you've given some disclosures on your OpEx. There's a CGFMU provision you've done for 9 months at about INR 90 odd crore. Will it be fair that this will run off next year? While it will not entirely run off, it will come down materially because my outstanding book has reduced materially. All right? Next quarter we expect this number, quarterly number to be... Since I will be claiming in the next financial year, I still need to pay the premium in the next financial year. That's point number one. That quantum of premium would come down substantially from INR 90 crore a quarter to about, INR 20 crore a quarter. Okay. Got you. Just last question, sir. This SMA-0, which you don't include in your stress book, it's about 3.4%. Will it be fair that since your collection efficiency is 98, this number will not realistically go down below 2.5%? Sorry, Saurabh, can you repeat the question? Can you please be a little closer to your microphone? just on this SMA-0, this 3.4% you have, which is not considered in the stress pool. will it be fair that this number does not go below two- Saurabh, your voice is breaking. Sorry to interrupt. Okay. I'll take this offline. Thank you. Okay. Thank you. We'll move to our next question. That's from the line of Nitin Aggarwal from Motilal Oswal. Please go ahead. Yeah. Hi. Thanks for the opportunity. Couple of questions, like, Sunil first is around, we have seen a good, like a progress in the month of December. Margins have also been improved in this month. Can we say that the probability of default now from the SMA number that, we have reported will be much better than what we have seen in the prior quarters now? You mean the slippages? Yeah, the slippage rate from the outstanding SMA pool now, is it likely to decline pretty sharply now that the December was a pretty strong month for us? Yeah. Slippages, as we said, I think my SMA pool has come down, and most of my restructured book has already flown, you know, almost 95%. Slippages has to come down and will come down. And it will come down materially. It's not what we saw between Q2 and Q3. There will be a marked improvement there. Right. That is evident, you know, if you look at for the month December, the way NIMs have moved. Right. That's what I was looking at. Yeah. Secondly, on the SA side, wherein we have reported a decline in CASA, and that probably we indicated that is largely because the customers migrating to term wherein the ticket size is more than INR 2 crore, and we also had to classify them as bulk. What is the total quantum of SA above INR 2 crore? Because that will tell us as to will this number go down further or not. If you are a rate sensitive customer, you will not wait for six months. Right? while I'll take your question, the point I want to make here is a customer who's a rate sensitive and who was earlier not getting a differential between a term deposit rate and a CASA rate, you know, because I was offering 6% in savings and 6.25% in term deposit, they chose to keep it in savings. Now there is a difference between 6% to 7.5%, 7.75%. Right? They have moved. So that's the movement we saw. To your question on what is the proportion of SA above 2 crores in our book, it should be around 10%, a little less than 10%. Okay. you think that vulnerability may remain on that? On that 10% we may see more vulnerability as probably the rate increases further? No, not at all. As I said, you know, if these customers had to move, they would have moved by now. Since these are high ticket customers, you know, they have a relationship officer and they are continuously in touch. We have a fair sense of their behavior. About 90% of our customers continue to be in the individual segment. Yes. As the records they keep in the savings bank is below INR 2 crores. Yeah. Right. Lastly, any discussion going on in respect to recoveries from some relief scheme? What can be the ballpark number that we can get from this? As always, you know, this is a crystal ball which I don't want to gaze, right? Because it is not something which is my right. It's a scheme of a government. While they have started distributing the checks to the delinquent customers, it is still not material enough to talk. Okay. Okay. Fair. Thanks so much. Thank you. Thank you. We'll take our next question from the line of Rahul from Goldman Sachs. Please go ahead. Yeah. Thanks. Hi, Sunil. Hi, Mr. Ghosh. Am I audible? How are you doing, Rahul? Thanks. Sunil, just, you know, on your slide seven, just wanted to understand these numbers a bit better. INR 76 billion is the EEB stress pool. You're expecting CGFMU recovery in the 1st half of INR 17 billion, so that comes down to roughly about INR 60 odd billion. That against provision plus estimated recovery of INR 60 billion, would be almost like negligible pool, right? There is no incremental provisioning that is needed, you know, but for the new stress information that might happen on the portfolio. Is that a fair understanding? Yes, there could be timing difference, right? Let's say this money comes in September, right? You are assuming that they are like to like in terms of time. Other than that, yes. If you talk about a six-month period, your understanding is absolutely right. Nine months period from today. In that context, the fourth quarter provisioning of INR 5 billion, would that also be needed, apart from of course the vintage movement? It will be. If you see even in this quarter, while my stress pool has come down from 95 to 76, my provisioning has not come down, right? From INR 53 billion, I am still continuing to hold INR 50 billion. If I have an opportunity, why not, you know? In line with my guided credit cost guidance, I will want to strengthen this. Okay. There was an element of write-off also, right? I mean, so that's fine. Yeah. That also took some time. Yeah. Great. Thanks. Just, just on the active MFI customers, so you give total and active, whereas the ratio has, you know, kind of reduced quite a bit of active to total, I think by about 10 percentage points in the last year or, and maybe even more if you compare last couple of years. This reduction is, I presume, mainly because of write-offs that we may have done of these customers? Therefore the improvement in this number, how should we think about? No. You are right. A part of it is because of write-off. Once this write-off stops, which we believe is the time, you know, unless we optically change the gross NPA numbers, all right? This number should start, going back to that original ratio. The growth in MFI book will be more driven by therefore ticket size, is it? No, not really. Not really. It's both, right? My new customer acquisition doesn't stop. Yeah, those customer would be like at what ticket size? INR 30,000, right? MFI is up to INR 50,000 and then there is SBAL. Understood. Of the total number of customers, active one that we have, how many are in, SBAL, the small business loans? INR 17 lakhs. INR 17 lakhs. Got it. Just, you know, one last question on the disbursements. You know, in EEB pool, it's down quite a bit, I guess understandably so. I'm looking at slide 12. Slide number 12. It's down from INR 200 odd billion to INR 152 billion. In the fourth quarter, as Mr. Ghosh also articulated, should we expect a big recovery in this number from INR 152 to maybe, you know, north of INR 200 billion-INR 50 billion of disbursements? It's a very difficult thing to, you know, quantify that in today. Clearly, historically, Q4 is the best quarter for us, so it should be higher and it continues to be higher. One should also factor the tightening that we have, the change in policy that we have done, which would slightly impact on the disbursement side if you compare it Q4 versus Q4. I'm not comparing Q3 versus Q4. Q4 will clearly be a best quarter in terms of disbursement. That much I can assure you. Okay. Just one last question I want to squeeze in is the discussion with RBI on PSL. Any updates there? No updates. Hopefully we'll restart this in next financial year. Understood. Great. Thank you, Sunil. Wish you good luck for the subsequent calls. Thank you. Thank you. Our next question is from the line of Kunal Shah from ICICI Securities. Please go ahead. Yeah. Hi. Congratulations on improvement on the stress pool. Firstly, in terms of the write-off, I think that's still continuing. Last quarter, we saw some sale to ARCs of the return of portfolio. Would we be evaluating further sale to ARC or with the same ARC wherein we have contracted? How would that be over next couple of quarters? And any recovery expectation from this? Because last time it was 10 odd%. How would that behave? Yeah. Let me take your second point first, right? When we did the deal at 10 odd%, that is not the expectation that we have on the recovery, right? Because that valuation depends on the structure of deal. In our structure, we have assured IRR to the ARC, and beyond that, any further recovery comes to us, right? We don't want to, you know, part away with the recovery of all our customers in the same ratio. That is how we valued that transaction, because we believe that our customers are loyal and as things improve on the ground, there is a good scope of recovery and that's how we valued that deal, right? Effectively, the point I'm trying to make is that's not our fair estimate that we would recover. We expect a better recovery than that. That's the point. To your first question, whether this is something that we will actively look at, well, it's a commercial decision. If we get a good value, why not? If we feel that the, if I have to do the net present value, I'm better off, I will look at it or else. Ultimately it's me who is doing the collection, right? Yeah. Nothing changes there. It all boils down to a commercial decisioning, and if it works in our favor, we'll do it. Okay. Okay. That can still be evaluated. Yeah. Secondly, in terms of this, housing finance disbursements, okay, how should we look at the quarterly run rate? Maybe there was some moderation out there in this particular quarter. Any reasons for that? Eventually, over the next, 4 to 8 odd quarters, what kind of a disbursement fraction can we look at it, the kind of franchise, which we are trying to build? Suresh, you want to take that question? Yeah, sure. Thank you. Thank you, Sunil, and good evening, everyone. In the housing, there has been, you know, the main factor why there has been a slight between slowdown or whatever or stagnation is because this quarter we've experienced a very high increase in the rate of interest for the customers. The EMI and eligibility is actually coming down. That's the main reason why we've had it. But with the demand still being strong and too with the rates almost stabilizing and likely to come down, in fact, it should again pick up. Again, Q4 is going to be, is always the best quarter. We definitely expect that it will pick up and this was probably just because of the rate revision that it is there. Otherwise, it will definitely pick up. Okay. on a quarterly run rate basis, we can get towards the INR 2,000, INR 2,500 odd quarter, INR 500 odd growth. you're talking about the disbursements or the? Yeah. Disbursement. Disbursement. Disbursement, definitely we should be, you know, touching at least, crossing INR 2,000 crore in a quarter, definitely. It could be. Normally, as I said, the Q4 is the best quarter, so it is likely to be better than that. Yeah, 2,000 definitely should be possible and will very soon happen. terms of the deposits, given that the Retail proportion is coming off, and there has been some reliance on the wholesale deposits as well, what would be our stance with respect to the increase in the rates now? Deposits, I think we are still at 25-30 odd basis points premium to the other leading banks. Would we want to have maybe a higher gap and try to mobilize more of Retail deposits? It's a combination of both. In fact, we are watching the market closely. We do believe that interest rate cycle is coming to a peak, so we are watching that closely. We do believe that there could be one more rate hike as we, as we look forward. Yeah, it's part of the strategy, in terms of how we sort of go on the deposits. Any increase can be expected. Maybe lending, we have seen that kind of a pass on almost like 250 odd basis points. On deposits, if we have to look at it, say from March till over here, it's been almost like, say, 150 odd basis points kind of an increase for us from 5.75 to almost 7.25. Update to what is happening in the market and RBI rate increase. On that basis, it will be common. Okay. As of today, we are not feeling on that. If some one tranche will be again increased this, the repo rate increase, maybe that will be like to impact on that. I hope that this is not coming much more on that as per previous record. No, the question only was maybe, when we look at the bulk deposit proportion that's significantly up, okay, even on a year-on-year basis, and every quarter we are seeing a huge build-up. Like last time it was 25, now we have seen like almost INR 31 odd thousand crores. Not able to understand maybe should we continue with that kind of a bulk deposit proportion in the overall pool, or there would be a real Retail deposit accretion strategy as well, yeah. No, Kunal, sorry, Shantanu, go ahead. Yeah. Please. Kunal, I think, you know, as I mentioned earlier, see, the whole deposit growth strategy is a mix of, you know, growing your organic book, growing through some specific segments, looking at interest rate, looking at the strategy, looking at what the market is, you know, as is currently, positioned at. I think the answer to your question is, yes, we will look at it. You know, the point is that it's not something that we wanna commit right now. We are not close to raising rates. I mean, you've seen that. You know, the point is that we are looking to grow the non-individual, you know, the individual book more than the non-individual as we sort of, you know, try and balance out the steadiness of our organic growth. As of now, that's the outlook that we have. We are seeing some good trends coming in. Hopefully, you know, as we go down the coming quarters, the reliance on, you know, large bulk deposits will obviously come down as we grow the organic book. I hope that addresses your question. Sure. Okay. Yeah. Thanks and all the best. Yeah. Thank you. Thank you. Our next question is from the line of M. B. Mahesh from Kotak Securities. Please go ahead. Hey. Hi, Sunil. Just a few questions. One is, how have you accounted for both the Security Receipts income as well as the CGFMU balances? CGFMU of INR 917 crores, we have adjusted INR 785 crores from the provisioning. Right? The balance still continues to stand as liability because that's the recovery we have done on the last, from the cutoff date. Right? When we filed, which is October end till December. INR 785 crores is the income which has gone into the NPA line, is it? Right, as a reduction. My NPA provision has come down to that extent. Okay. INR 785. you also added, INR 440 crores against it from the receipt of, SRs. Correct. Okay. Let me tell you the maths, Mahesh. If you see my flows to NPA for the quarter is INR 2,644 crores. The increase in NPA for the quarter pre-write-off, right? How have we addressed these INR 2,644? It is INR 785 crores of the CGFMU money, the INR 414 crores of ARC sale money, and the rest is the provision that I have booked, which is about INR 14, 15 crores. The requirement was less, we took more provision to improve the coverage ratio. That's why you see despite the stress pool coming down from 95 to 76, my provision still continues to be similar level of September and despite the write-offs of INR 2,500 odd crores. On the other hand, what will be the movement of this, INR 917 crore in your gross NPA line? Nothing. It only reduces my provisioning. That's it. It doesn't change my gross NPA. These were not in the gross NPA line itself in the first place. It was written off earlier. There will be loans against it, right? Like the INR 1,300 crores of loans which were sitting against which you got INR 920 crores. Correct. these are. There will be. which is part of my NPA book. As write-off or. Against which I have received the claim and as per the CGFMU circular, this can be used to adjust the provisions required. That's right, Sunil, how would you adjust it on the outstanding loan book? For that, I have taken the prudential write-off. You took a write-off. Okay. Yeah. Okay. Perfect. I would assume that you also made a similar, INR 414 crores, or in other words, can you give us a breakup of your other income? Okay. I shall. Let me explain for the benefit of others also on the INR 414 crores. INR 801 crore is what we received from ARC, right? As the valuation of that loan that we sold to them. Of that INR 801 crore, INR 387 crores worth of SR was subscribed by Bandhan and INR 414 crores of SR was subscribed by ARC and another investor, right? To the extent of the SR that we have subscribed, which is INR 387 crores, we have taken a provision against that INR 387 crores. The book value of those SR in my books is 0, right? While there is an SR on the asset side, there is a provision on the liability side. The balance INR 414 crores which I received from a third party, which is ARC and investor, that I have taken it as other income, non-interest income, which was utilized for creating provisions. That's how the accounting of the INR 801 crore was done. As far as the break up of the non-interest income goes of INR 1,033 crores, if I have to list down the four or top five or four elements there, clearly INR 414 is the biggest, which is the ARC sale income, followed by processing fees of INR 212 crores. The bad debts recovery of INR 140 crores. Typically we used to recover about INR 70-80 crores every quarter. It has gone up to INR 140 crores because as customer realizes that we are not gonna pay or lend to them unless, you know, that discipline is coming back. That is INR 140 crores. The other large piece is the third party distribution of insurance and mutual fund, which is INR 90 crores. Okay. Thank you. Thank you, Sunil. Thank you. Thank you. Our next question is from the line of Manish Shukla from Axis Capital. Please go ahead. Yeah, good evening, and thank you for the opportunity. Sunil, you said that as of December, roughly about 10% of your Retail customers would have been more than INR 2 crore. What would this number have been in March 2022? Sorry, sorry, Manish, I could not hear your question. The share of Retail customers with more than INR 2 crore deposits, you said that's about 10% today. What number would this have been in March 2022? The proportion. That would be much larger, because, we've seen the movement from saving bank to term deposit this quarter. So earlier in March 2022, there was no big difference between my Retail rate and the term deposit rate, so they prefer to keep it in the Retail. Unfortunately, I don't have that March 2022 number ready available here. Sure. Clearly, this would have been much larger. Mr. Shukla, I'm sorry, but we are not able to hear you clearly. Please switch it to handset mode and speak. Please wait up. Your voice keeps breaking up, so I think you're on your earpods or something. Just switch it to handset. Give me one second. I'm talking about the slippages numbers for the quarter. You said INR 2,846 crores of slippage, of which roughly 90% was from the existing stress pool. That makes it INR 2,500 crores. The QOQ decline in stress pool is about INR 300 crores. That essentially means there is an additional INR 660 odd crores of addition to the stress pool. Is the math right or am I missing something? No, no. Stress pool I've already given, right, in my presentation. Yeah. If you need to adjust it pre write-off, you can do that because the write-off numbers are already available, INR 20 million, INR 24 million, which is also mentioned below that. Okay, fair enough. If you look at the slide seven, you will see the stress pool and how it has come down and what has contributed how much. Okay, fair enough. I'll maybe take it separately. Lastly, at the bank level, can you please provide the movement of NPA again, slippages, recovery, and write-off for the entire bank? The slippages for the entire bank was INR 3,265 crores gross, recoveries of INR 622 crores, and the net addition of INR 2,644 crores. The total write-off at the bank level? INR 2,533 crores. Okay. Thank you. Those are my questions. Thank you. Thank you. Our next question is from the line of Jai Mundhra from B&K Securities. Please go ahead. Mr. Mundra, could you please unmute your line and go ahead with your question? There seems to be no response from this line. We'll take our next question from the line of Param Subramanian from Macquarie. Please go ahead. Hi, thanks for taking my question. My question was on the steady state or the near-term margin outlook, that you guided, Sunil, of 7.75%. A little color on that. If we, you know, just do a rough math, you know, 250 basis point hike if we take on the overall microfinance book, shouldn't it be materially higher than that? Considering also the housing book will reprice along with the increase in funding costs. You know, just some outlook on the near-term margin. Yeah. Param, what we are discussing is the next two quarters. You know, how do we define near term, right? We are saying that as of December end, we are at 7.3, and this will keep improving as the repricing impact and the slippages impact, lower slippages impact starts get factoring in. By next two quarters, I am saying that it will reach at that level, and that is when we will have to reassess and think how is the deposit cost environment going or if there is any further increase on the lending rate. On a steady state basis, let me tell you, let's assume that. Yeah. you know, the, the ticker stops here on the lending and the deposit rate side. We expect this to move to 7.75%-8%, and with the change in mix happening, it will further come down over the next 1-2 years to 7.5%. Got it. Sunil, actually, yeah, as in I was looking at it more from the perspective that, you know, we expect slippages also to normalize from next quarter onwards. You know, is there some amount of margin downside that you're building in from, for next quarter as well? Some softness because of the reversal still? No, I don't think so. See, clearly we have to... There would be... There can't be a scenario of 0 slippages, right? There will be few slippages, as we discussed, in line with our guidance that we have given earlier. We are building for that as well. We will have to take it, you know, because my cost of fund, you know... The point I'm trying to make here is 70% of my book is a fixed rate loan, right? Mm-hmm. 30% is a variable rate loan. The repricing of that 70% will come with a lag. Yeah. My cost of deposits have moved, have increased faster than the yield on advances. That gap and as the timing changes, you know, this 7.75 can also improve. Got it. Yeah. That part is understood, Sunil. Yeah. just, you know, one more follow-up, if I could, again, on the disbursement outlook. The disbursement, if I just compare the number, YOY in the microfinance book, it's down pretty sharply. And of course, there has been a change in how we are, you know, giving out incremental disbursements, the change in the underwriting. Any outlook in terms of the near-term growth in this, in the microfinance book, considering, you know, the YOY? Is this more of a steady state or is this going to pick up substantially from here? Yeah. There is always a seasonality on disbursement. Q4 will always be better. You know, longer term, midterm, you know, we have already guided, right? At a bank level, we are looking at 22% around + advances growth, of which microfinance should be 17%-18%. Okay. We are sticking to that. Okay. Thanks. Thanks, Sunil. Yeah. Thank you. Thank you. Our next question is from the line of Jai Mundhra from B&K Securities. Please go ahead. Hi, sir. Good evening. If you can provide a weightage average tenor of, let us say, group loans and individual MFI loans? What is the tenure of that? The group loan is a majorly 1 year, and the individual loan is a 1.5-2 years. Sure. Secondly, on the stress pool, right? If I were to look at SMA zero plus one plus two, last quarter to this quarter, the dip is around, if I were to calculate, is around INR 28 billion. Let's say INR 25 billion-INR 26 billion has been slippages out of this. More or less, I mean, the understanding that there is virtually on a net basis the forward flow has been more or less negligible. Is that, is that the math right? Yes. That's what it looks like. That's how it is. Right. Okay. Lastly, on deposits. You had mentioned that part of this deposit QOQ decline is because of the bulk rate or the rate differential between TD and SA has reduced dramatically. In the analyst meet right in the first week December, the bank had presented that, you know, SA should be growing by at least 16%, 15%-16% YOY. It has actually quarter to date or maybe YOY it actually declined. Just wanted to double check, is this the only factor or that has also changed something which is apart from just the rate differential? No, it's a rate differential. We were a bank which was always offering a premium rate on SA, right? Unlike large banks who still work on a 3% SA rate. It is very natural that we will have a rate sensitivity, and it's an impact of that. Right. Sure, sir. Yeah. That is all from my side. Thank you. Thank you. Thank you. Our next question is from the line of Kaitav Shah from Anand Rathi. Please go ahead. Good evening. Thank you for taking my question. I just wanted to understand more about the Housing Finance book. You can talk more about the average ticket sizes and if, within the disbursement mix, if you can give us, colors more on the premium segment class that you were kind of, alluding toward here. What sort of proportion have you reached there? Ashish, you want to take that? Yes, sure. I'll take it. Thank you. Yeah. In the, in terms of the, you know, composition of the incremental business, we are seeing a good traction in the prime segment as, which is now contributing almost, you know, 16%-17% of the incremental business. In terms of the overall book composition, we still have, you know, majority of the book being the affordable segment only. Almost INR 18,800 crores is in the affordable housing segment only. The majority continues to be there, but we are seeing a good traction in this segment of prime home loans. Okay. Sir, some color around the average ticket size of the housing finance book. Over two years, how would it have moved? Two years, one year, whatever. Yeah, sure. In the last two years it has moved from about average ticket size of the incremental business being to around INR 11 lakhs. Now it has moved to close to INR 14 lakhs in the, if I look at the overall full year. You know, on a month-on-month basis it is kind of increasing. INR 14 would be the average of the entire year, but probably incremental, if I look for the month of December, it's around INR 17 lakhs. Okay, sure. Thank you so much. That's it. All the best. Thanks. Thank you. Thank you, ladies and gentlemen. That was the last question. I now hand the floor back to the management for closing comments. Thank you, ladies and gentlemen. Thank you for your time. Wish you a very Happy New Year again. Thank you. Thank you to all. Thank you very much. Thank you, members of the management. On behalf of Bandhan Bank Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.