Please note that this conference is being recorded. I now hand the conference over to Mr. Shivaji Thapliyal from Yes Securities. Thank you, and over to you, sir. Thank you, Yusuf. Good evening and a warm welcome to all those who have joined the call. The CSB Bank Management is represented by Mr. Satish Gundewar, Chief Financial Officer, and Mr. B. K. Divakara, Executive Director. Mr. Pralay Mondal, Chief Executive Officer, could not join the call due to health issues, and as far as we are aware, these issues are not serious in nature. In his absence, Mr. Gundewar will be leading the call. We specifically thank the management of CSB Bank for giving Yes Securities the opportunity to host their result call. The management will first be making some opening remarks, after which we will throw the floor open for questions. I now invite the management to make their opening remarks. Satish, over to you. Thanks, Shivaji. And good evening to everyone who has joined the call. And Pralay couldn't join this call due to health reasons, and he has apologized to all the investor committee. He wanted to be part of this call, but due to health reasons, he couldn't join this call. So initially, I'll make certain opening remarks about the global economy, the market that we are seeing, as well as some of the key numbers for the quarter, and then we will open this call for question and answer. The global economy is currently witnessing the changes in political leadership in major economies of the world. UK and France have already seen a change in leadership, whereas India has chosen a continuation albeit at a coalition government. With Mr. Biden withdrawing from the contesting again, the US is also poised for a close contest. We have seen rate cuts in the Eurozone and lowering of inflation globally. We do not expect the U.S. to cut rates anytime soon. However, a start of a rate cut cycle cannot be ruled out in the year 2024. Coming to the domestic market overview, the systemic liquidity moving back to surplus is a welcome change. It has reduced the stress in the short-term money market, thus lowering the short-term rates. The systemic credit growth is still robust, so we do not expect the chase for deposits to abate. However, the surplus liquidity, if it persists for a couple of more months, it will prevent the deposit rates from going up any further. The monsoon has begun well through. The rainfall distribution is not symmetric across India. It gives us hope that the inflation will continue to ease. The fiscal deficit path towards 4.5% augurs is well for the country and the financial markets. The overnight rates will remain between 6.5%-6.75%, and tenure is likely to range between 6.8%-7.05% this quarter. Now, coming to CSB specifics, highlights of our performance are as follows: Profitability: The bank reported a net profit of INR 113. The bank is holding a provision buffer of about INR 182 crore over and above the regulatory requirements. Net interest margin was 4.36% for the quarter, impacted by higher cost of funds and regulatory guidance on penal charges. Return on asset was at 1.27%. Coming to liabilities, we are improving our deposit base. Deposit growth has been 22% year-on-year, as against the industry growth of around 11%. The CASA ratio stands at 24.9%. Asset growth: Net advance growth of 18% year-on-year. Industry has grown at about 14% year-on-year. Gold portfolio registered a growth of 24% year-on-year. Yield on advances for Q1 FY25 was at 11.25%, with an improvement of 7 basis points from Q1 FY24. Coming to asset quality metrics, gross GNPA ratio was at 1.69%, net NPA ratio was at 0.68%, and provision coverage ratio at 82.53%. Continuing with the accelerated NPA provision policy of providing higher than RBI requirements and holding the contingency provisions intact. We have a very robust capital base. Our Capital Adequacy Ratio continues to be strong at 23.61%, with a Tier 1 ratio at 22.23%. We have a very low proportion of risk-weighted assets compared to the industry, so the RWA to our exposures is very limited, near about 43%-44%. In terms of the shareholder value creation, our book value per share as at the end of this quarter is INR 217. Earnings per share was INR 26.2 per share. Return on equity was 12.69%. Coming to distribution, we have a network of 794 branches and 757 ATMs as of 30th June. During this quarter, we have added 15 branches. We'll moderate our branch expansion plans a bit this financial year, and expansion will help us to create a pan-India presence and reduce the concentration risk. In conclusion, the quarter gone by was somewhat a soft quarter. On the deposit front, costs continue to be at elevated levels. The signs of policy rate reduction are clear now, and it is anticipated that the cost of funds will level off in coming quarters. On the advances, regulatory guidance on penal charges and a couple of slippages have impacted the yields. The elevated cost and reduced yields resulted in NIM compression during the quarter. The quarter also witnessed continued investments for supporting the build phase. However, the other income growth helped to offset this partially. We have done a detailed analysis of the numbers, and required efforts are made to deliver consistently in line with the stakeholder expectations. We are confident that the cost-to-income ratio, the GNPA, NNPA, and credit cost have peaked out for this financial year, and net interest margin will go back to the trajectory upwards of 4.5% from Q2 itself, and ROA should be upwards of 1.5% from Q2 onwards. We should be able to deliver a much better Q2 performance, and overall year should be in line with our past commentary. The build phase is progressing on the expected line, and executing this right will help us to initiate the scale phase and achieve the CSB 2030 vision set for the bank. So these are the opening remarks, and now we can open the floor for Q&A. 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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Participants to ask a question, you may press star and one. First question is from the line of Mona Khetan from Dolat Capital. Please go ahead. Yeah, hi. So good evening. So firstly, on the cost of funds, we saw interest expenses increasing by about 15% quarter-on-quarter. And within term deposits, also, the share of bulk has been on the rise consistently over the last one year, much higher than what we're seeing for industry. So how do you look at this cost of deposit profile? Okay. Let me give a little background in terms of the composition of our deposits. In the savings account, almost 90% plus of our deposits are granular deposit less than INR 3 crore. In the term deposit, it is 65% is retail granular deposit less than INR 3 crore. On an overall deposit basis, we will be around 25%-26% as the bulk deposit, and the rest will be granular less than INR 3 crore kind of a deposit. These term deposits will go through repricing, and as we have talked in our opening remarks, the liquidity is tight throughout the last couple of months, and that has had an impact on the cost of deposit and that we have seen across the industry as well. To augment our entire deposit base, we have been using refinance. We have been doing borrowings through overseas borrowings so that our growth is not impacted. So from that perspective, our overall cost of funds is still reasonable, considering that our overall cost of CASA is also in the range of 3%. So that helps us in maintaining our overall cost of funds. Sure. So we earlier were guiding for margins of 4.5%-5%. Where does that stand now with the impact on cost of funds that we are seeing? So last year, when we were giving commentary to the investors, we had said that the current year's guidance in terms of the net interest margin will be in the range of 4.5%-4.8%. So this quarter, thanks for asking the question because that will be the question in quite a few people's minds, so I think I should clarify on that. So this quarter had some of the multiple things. One was a regulatory change in terms of the penal interest, which was there earlier. Now it has gone to penal charges. So earlier, that was part of the gross interest income, and that was considered in the NIM calculation. But when it comes to penal charges, it has gone into the fee income. And also, we have seen a marginal reduction in our overall SMA book also. So to that extent, the incidence of penal charges or penal interest has also come down. So almost 40 basis points kind of an impact has happened on account of this regulatory change which has happened during this quarter. This was implemented from 1st of April 2024. The other impact was in terms of marginally higher slippages, which has led to interest suspension on those accounts. So that is anyway covered in terms of our increased GNPA ratio. Our slippages during the quarter have been elevated, and that has also impacted the gross interest income. Cost of funds anyway for the industry as well as for us, we have seen an increased trajectory, and that has impacted. But our overall guidance for the full year remains intact in terms of we will be closing the year in the same guidance that we have been given in the earlier quarters. That overall NIM will be in the range of 4.5%-4.8%. Okay. How about the ROA? If I remember it right, the earlier guidance was between 1.5%-1.8%. Does that change with slightly lower margins here? So in my opening remarks, what we said is that all these parameters in terms of cost-income ratio, GNPA, NNPA, credit cost seems to have peaked out for us in the first quarter itself, and we will see a better trajectory from Q2 onwards. So overall, full year guidance remains intact. The ROA will be in the range of 1.5%-1.8%. That is the guidance that we have been giving even last year. Also, we have been giving that guidance. And not only in terms of we will have an improved net interest margin from Q2 onwards, but if you look into our fee performance for the last three to four or at least five quarters, what we have seen is a very robust fee performance. Even for this quarter, fees contributing almost 1.92% of my average assets, which is also a very good number to have. Overall, full year guidance remains intact. ROA will be in the range of 1.5%-1.8%. Sure. And just lastly, what is our LCR currently, LCR ratio, and what is the impact from the changes in the recent guidelines by RBI? For the quarter, our average LCR was about 118%. The guidelines, of course, will apply to the entire industry to apply to us also. Ballpark, at least 10% impact will be there on the LCR, but then we still have a lot of time to take corrective measures. These are implemented from 1st of April from next year. Most of the banks will have some impact on that, but we'll work out because we have at least three quarters to work on that. Okay. Just on the slippage as well, so if you could just give some color as to what were these and if there was any large-sized exposure on the corporate side or anything. Yeah. So on the slippages, we had a couple of accounts, not a couple, just a handful of accounts in the SME space which have slipped during this quarter, and one account in the corporate banking space which has slipped during the quarter. Like we have explained earlier also that this year, that is the current financial year, will be a complete rejig of the entire corporate banking business for us, and we will be looking at all the exposures that we have. And to that extent, there could be certain we are exiting not only just the accounts which are not good, but even good accounts we're exiting which are standard accounts and giving good income to us. But from a coverage perspective, relationship management perspective, if we're not comfortable with those exposures, we'll be exiting those accounts. So this year will be a kind of a complete rejig of the corporate banking portfolio. And full year-wise, probably on a corporate banking book, we will be flat to last year. And in SME space, similarly, if you see last two years back, we did a similar rejig in our SME business also. We had certain legacy book which we exited. And now if you see our SME trajectory for last two to three quarters, we have been delivering good growth. Even this year, first quarter, it has grown by 28%. Our expectation is that a full year SME will show a growth of almost 35% over last year. So same thing we can expect going forward from the next financial year onwards for corporate banking. So this year will be, I would say, largely a cleanup year for the corporate banking, and from next year, we will see a steady state growth in the corporate banking book as well. What is the size of this corporate slippage? We generally don't talk about specific accounts that way. Sure. I mean, last quarter, the one corporate slippage was about INR 70 crore. So if you could just let us also know what the quantum of the corporate slippage is? I think the overall slippage, what we have seen for the quarter that is there in the investor presentation, is about INR 100-odd crore. It is not just that because some amount of slippages have happened in the agri and MFI space also. That is, again, an industry-wide phenomenon. A handful of accounts in SME and one account in corporate banking has slipped. It is a mix of all. Sure. That's all from my side. Highest slippage, you can take it as INR 33 crores. That is the highest slippage what we had witnessed. This quarter? This quarter, yes. Sure. Thank you. Under INR 3 crore. So that is the only major accounts. The rest are all a combination of so many other accounts. Got it. Thank you so much. Yep. I'll come back. Thank you. Before we move to the next question, a reminder to the participants to ask a question. You may press star and one. Next question is from the line of Pruthul Shah from Anubhuti Advisors. Please go ahead. Yeah. Hello. Am I audible? Yes, you are. Thank you for the opportunity. Sir, my question was with respect to the NIM. Basically, on a QOQ basis, we are seeing a dip of 50 basis points. And as per your commentary, 40 basis points out of that is attributed because of the penal charges recategorization. Is this understanding correct? And broadly, because of the actual yield or advances, there is only 10 basis points dip for this quarter. So on a like-to-like basis, because the 40 basis points has gone on account of this regulatory change, and plus there was interest suspension because of the slippages during the quarter. So if you do a like-to-like basis, we would actually have marginal improvement in the gross yields on the portfolio. However, because of these two factors, the gross yield has seen a dip, and that has impacted on the NIMs also. So if you remove these one-offs, in which case the gross yields would be largely flat to positive. Okay. Got it. Sir, with respect to one account which became NPA, and we have I think provided 25% in the last quarter. As per the commentary on last quarter, we are hopeful to get reverse within FY25. Is there any update with respect to that specific account in this quarter, or is it same? Generally, we don't provide specific customer or client-wise kind of updates. Of course, those efforts in terms of recovery, everything will be ongoing. Of course, we will have security in our hand, and all those recovery efforts are ongoing. Let's see what happens in the current financial year. Of course, our efforts are on. Okay. Okay. Got it. That is the answer. Thank you. Thank you. Next question is from the line of Parag Jariwala from White Oak Capital. Please go ahead. Yeah. Thanks for taking my question. Regarding the slippages of INR 100-odd crores, I mean, if I just see the annualized slippage ratio is around 1.7%. I know you did mention that being a first quarter and also some problems with microfinance and all, some of the agri and microfinance, you did see some of the slippages with respect to those sectors. But how should we see this INR 100 crores in the overall context? I mean, for the quarters to come by, I mean, are we expecting some recoveries out of there, or what is built into our annualized slippage for the remaining quarters and correspondingly our credit costs for the full year? So if you see the slippages only for the last quarter as well as this quarter, we are seeing elevated slippages. But if we go back a couple of quarters, then our slippage ratio was less than 1% on an annualized basis. Only for the last two quarters, we have seen because of a handful of such accounts which have slipped into an NPA. But going forward basis, we don't expect elevated slippages to come in. And in terms of the recovery also, we have a large pool of written-down accounts for which recovery every quarter we see recovery, and we see that momentum picking up from quarter to onwards. So that will also help us in terms of the overall credit cost. In spite of these elevated slippages and provisioning that we have done, our overall credit cost for the quarter was 22 basis points. That is very much in line with the kind of guidance that we have been giving to the market that overall microcost will be in the range of 20-30 basis points. To that extent, it has not really altered the overall story because of one or two quarters. So even if the credit cost is returned, that is based on the accelerated provisioning than what we have created. So, as you are aware, we are going for this accelerated loan provisioning policy. So more than what is required to be provided as per RBI guidance. That is why, by knocking off that, if you are going strictly as per RBI norms, then it could have been still far less than this. Regarding the slippages, I mean, you also mentioned that the largest account is around INR 33-odd CR. So are these a kind of technical in nature? Like in first quarter, you do see some bit of higher delinquency. In the second, third quarter, probably there are chances of recoveries or upgradation and all. Or you will take them as a one-off or a normal course of business, and there won't be any meaningful upgrades in the quarters to come by. So I would say that on a normalized basis, you wouldn't see this kind of slippages, and there will be significant improvement in the slippages going forward. That will also get reflected in the overall credit cost going from Q2 onwards. As I said, right from the Q4 of last year plus the current financial year first quarter, we are doing a kind of a rejig of the entire corporate banking, and maybe it is the result of that kind of exercise that we are doing. But I would say that it is one-off, and that is one cannot say that this is the trajectory going forward. It is, I would say, these two quarters has been a one-off. Okay. And is this exercise now? It's an operation. So I don't think it is it's an operation only, but it is expected to be get rectified during the course of the year. Sure. And. We know the major accounts are under threat, even as per our SME portfolio. Okay. These changes to the corporate book and all, which we are trying to do for last two quarters, is this fully done now, or it is an ongoing process currently as well? Can there be a surprise in second, third quarter as well then? No. Okay. As I said, this year, in the corporate banking, the entire DA book that we have is also in a downward trajectory. So we will have a dip in that DA book. March 2024, we had almost INR 900 crore of a DA book, which is on a downward trajectory. Incrementally, we are not doing any DA kind of transactions. So on a year-on-year basis, we will have a flat corporate banking book. But I don't think that there will be any major such kind of surprises going forward in the corporate banking book. Understood. Okay. Thank you. Thank you. Ladies and gentlemen, to ask a question, you may press star and one. Next question is from the line of Suraj Das from Sundaram Mutual Fund. Please go ahead. Yeah. Am I audible? Yes, you are. The pitch is a little low. Okay. Sure. Yeah. So thanks for the opportunity, sir. Just a couple of two questions. One, again, going back to that cost of fund, cost of deposit trajectory, I think last quarter you had guided that 10-15 basis points would be the increase from last quarter run rate, and then that would be the peak. However, this quarter, we have seen probably more than 20 basis point increase. And then I think till last quarter, you were also publishing this savings account cost and term deposit cost. So it looks like that your term deposit TD cost is something like more than 7%. So my question is, if I see your term deposit offering, maybe only a couple of buckets have more than 7% card rate. So would it be fair to assume that whatever incremental deposits are getting mobilized would be in those buckets only? Savings cost, which was in the range of 3%, does not change materially. It is in that same range. We have changed the format of our investor presentation probably. So that's the reason that is not visible now. And in terms of term deposit, if you see, most of the deposit that we get will be in that 12 months to 18-month kind of a range. And so largely, it will be at that kind of a card rate. But if you look at the overall deposit structure, considering the savings deposit as well as the term deposit, almost 25%-26% will be only bulk deposit that is more than INR 3 crore, and 74%-75% will be granular deposits. So of course, we participate in the bulk deposit market as well. And the overall CASA book is largely flat. And that's the reason to support our growth. We have been making use of term deposits as a tool, and that we can see for other banks as well. From a funding perspective, we have been also using refinance because quite a few of our portfolio becomes eligible for refinance. In refinance, the kind of rates that we get, again, they are CRR, SLR-free, and they are CRR efficient money. We are using that. We are also using overseas borrowings like FCY borrowing and converting into INR at attractive rates. We have done that as well. In the last 12 months, almost we have borrowed INR 1,000 crore through the FCY borrowings. The same thing goes for CD as well. We have borrowed CD during the year, and close to INR 900 crore is our CD book. We have multiple sources of funding. To that extent, we are able to manage the overall cost of funds much better, I would say. Sure. And these special schemes, sir, like 401 days or 750 days, you want to continue these schemes? I mean, given that probably cost of deposit is peaking, and there could be no rate cut somewhere 6, 9 months down the line? We are managing that effectively. Our general objective is not to lock ourselves in a very long-term kind of borrowing or long-term deposits. It is managed in terms of the requirement at that point in time. We will never be borrowing for a very long period of time and locking ourselves in higher cost deposits. Sure. Last question, sir, on the OpEx side, was there any one-off in the staff cost? The second question would be, these other OpEx have seen QQ jump and as well as YUI. Is this the normal trajectory now, given that we are continuously investing in the franchisee? Yeah, that would be my last question. Thank you. Last year, there was some one-off in the staff cost. This year, there is not much of one-off in the staff cost. However, from the OpEx side, I would like to address that in two or three fronts. Last year, we opened 75-78 branches. This quarter also, we opened 15 branches. When we open branches, there will be a CapEx involved in terms of refurbishment that gets capitalized. As you are aware, that we are making significant investment in technology. Some bit of that investment gets capitalized every quarter, and that will start getting the depreciation. Depreciation, both for the non-IT OpEx as well as IT OpEx, will, and this is very well articulated by us in earlier calls as well, that we are making significant investment into technology. To that extent, our overall capital fixed asset based on the technology perspective is also increasing, and that results into depreciation on those assets. So I would say largely, this is a growth OpEx. And some of the OpEx items are directly linked to the business also, like any kind of BC cost will be linked to the BC collection business and all that. So from an OpEx perspective, that is on our expected lines. However, the current year, because current quarter, because the income growth impacted, and we have spoken about that earlier part of the call, our cost income ratio for the quarter is elevated. But however, we feel that from Q2 onwards, this cost income ratio will also get rationalized and will come within the guidance that we have been providing to the market. Sure. The staff cost is almost flat, actually, as compared to Q1 of FY 2024. Staff cost is almost flat. Right. Right. Sure. Understood. All the best, sir. Thank you. Thank you. Ladies and gentlemen, to ask a question, you may press star and one. Participants, if you have any questions, you can press star and one on your touch-tone phone. Next question is from the line of Prabal from Ambit Capital. Please go ahead. Yeah. Thank you so much. So just one question. Our cost of fund is already closer to 6% now. Is the pursuit of growth not hurting our competitive advantage? Because at 6% cost of funds, if you are trying to get, say, maintain a margin of 4.5%, you are essentially looking for a 10.5%-11% retail customer. So while you can maintain the margin for a few quarters, but eventually, that will also translate into higher credit cost. So why not slow down the growth, build a more robust deposit franchise, have competitive advantage, and then move forward? Okay. So Prabal, if you see our investor position, almost 50% of the book is gold loans. And there our yields are pretty good enough in the range of 11.7%-11.8% kind of range is the yield that we get on the gold loan book. In the SME space, we get close to 11% is our yield. In the retail, it is also in the range of 10.5%-11%. In retail, we are present only in a handful of products like CV/CE, inventory funding, credit cards. That is the kind of growth engine currently in the retail banking space. Corporate banking yields will be in the range of 9%-9.5%. So from an overall yield perspective, our gross yield will still be pretty healthy. This quarter was impacted for the reasons. But otherwise, from Q2 onwards, we will be going back to that same trajectory of 11.6 kind of yields. From that perspective, we should be able to maintain the NIMs of 4.5%-4.8%. From a cost of funds perspective, I explained earlier that we have multiple sources of funding, and we use judiciously the various instruments available at our disposal so that the overall growth is not impacted by non-availability of funds. And to that extent, I think we will manage the NIMs appropriately. Okay. But as we are moving from this year onwards, since our target is to move away from gold towards more retail and other products, that could have some bearing on our yield ramp. At the same time, if cost of funds are going up, then we have to move down the risk curve in order to maintain our margin. So for the current financial year, we don't expect gold as a in the overall pie of my advances, we don't expect gold to significantly reduce. So it will continue to be in this range of 47%-50%, and that gives us a good yield. So I don't think that it will have impact for the current financial year. For the next financial year, as the year progresses, we'll start giving guidance in terms of what is the mix that we are looking for the next financial year. Got it. Thank you. All the best. Thank you. Thanks. Next follow-up question is from the line of Mona Khetan from Dolat Capital. Please go ahead. Yeah. Hi. So I just want to check on this loan mix. When we look at other retail, which is retail except gold, there has been a sequential decline of about 12% in the book. So if you could just highlight which segments or what is contributing to that? Mona, where are you able to see a dip? So if I could refer to your presentation, the loan mix, which is on slide 15. So the INR 3,541 crore of retail book, if I compare it with what you had shared in the Q4 FY 2024 presentation, which was about 12% lower, essentially. So what has led to this? So last quarter, this quantum was about INR 4,029 crore. And it has fallen to INR 3,500 crore. So what has led to this decline sequentially? What segments are contributing to it? So this Agri and MFI book, which was about INR 1,500-odd crores in Q4, that has come down to INR 1,300 crores. So that is the one reason. So from a percentage perspective, it looks larger because overall retail composition is small. But within that, only this Agri is the book that has fallen. And we had earlier also spoken that we are not doing any incremental disbursement in any unsecured personal loans and things like that. So whatever book we will have, we will have some downward trajectory, especially on the unsecured book. Okay. It's fallen by about INR 500 crore. The INR 200 crore you explained is because of the Agri and MFI book. What about the rest of INR 300 crore? Is it mainly the other unsecured pieces like credit card PL? Those are too small to be having such a sharp decline. There is some reclassification that we have done in terms of the LAP that we have now taken into the SME. Earlier, it was getting reported as a retail. So the entire LAP has now been converted into the SME space. That's the reason. There's a reclass; actual fall is not there. Got it. So how much of the book has moved from other retail to SME? Just to understand this better. No, I don't have that specific number with me at the moment. Okay. Okay. And just one more. So on the loan-to-deposit ratio, what is our comfort level as on today? CD ratio, if you see it as currently, it is pretty comfortable because overall, our deposits for last two quarters have been growing better than the advances. So we are currently at a CD ratio of 83.89%. So our guidance was also earlier that we are comfortable up to 85% of the CD ratio and will continue with that guidance. Okay. So 85% would be the peak on this run because earlier, I think at some point, it was also 90%. Just wanted to understand this better. Yeah. Last 2 to 3 quarters, we have seen a moderation in the CD ratio, and that has been our stated intent as well. But 1 or 2 quarters, aberrations can happen, but our general intent is to be in the range of 85%. Got it. Sure. Thank you. Thank you. Ladies and gentlemen, to ask a question, you may press star and one. Next question is from the line of Dhawal from DSP. Please go ahead. Oh, yeah. Thank you for the opportunity. Sorry, I joined a little late and I missed the opening comment. But I just wanted to understand what's the path that from the current levels, you will be able to reach 4.8 guidance that you have given on the upper end of the band. I'm able to understand 4.5. But just where we have started the year, what will be the path to that 4.8 that you have as the upper end of your band? Yeah. So Dhawal, I explained this in the initial part of my call that current quarter has got impacted because of the regulatory changes in terms of the penal interest moving to penal charges. So that had almost 40 basis points kind of an impact for us on the gross interest income. Apart from that, we had elevated slippages in the current quarter compared to our normalized trend. So both these factors probably will not be there from Q2 onwards. And whatever interest suspense has gone because of the slippages will not be there Q2 onwards. And that will bring our gross yield to the normalized state that we were reporting earlier. And that will help us to reach to that 4.5-4.8 kind of a guidance that we have been given. So in this next quarter, we should be the yield has to move closer to 11.6 or so. Is that the normalized level that you talked about? What's the normalized yield adjusted for these two factors? Yeah. Generally, it has been in the range of 11.6, 11.7 at an overall portfolio level. And we don't see that there will be any major change in the mix of the portfolio in quarter or the full year also. So to that extent, we should be able to deliver that kind of a gross yield for the portfolio. Okay. So basically, from where we are, we are looking at about 40 bps of jump in the yield and cost of funds remaining around these levels directionally. Cost of funds, of course, because there will be deposits which will be getting repriced and things like that. So to that extent, there will be a marginally upward trajectory in the cost of funds. However, from a yield perspective, what you said is right that because the 40 bps went only because of regulatory reasons. Plus, we may not have that kind of a slippages in the next quarter. Not only that, the other lever that we have is in terms of the recoveries from the return of accounts, which is also likely to improve going forward from Q2 onwards and which will also have an impact on the overall provisioning. So from a perspective, there are multiple 2, 3 things which actually have impacted this quarter. Probably from next quarter onwards, we won't have those one-offs. Hence, we should be able to go back to our earlier trajectory. Understood. Just one last thing on this is the upper end for that to play out. So I mean, you have to see cost of funds to stabilize. Otherwise, mathematically, I'm unable to see 4.8. Even assuming these 40 basis points of normalization and some bit of cost of fund increase, the 4.8 looks very elusive right now. So would that be a fair it is, as you predicating the fact that the rate has to peak. Is that a broad thought process that you have in the 4.8 guidance? The entire book also gets repriced also because the major product that we have is Gold Loan, which is largely not a very long-term kind of a product. If we see elevated interest costs, then we also have the ability to reprice our advances both in SME as well as gold. To that extent, for maintaining our NIMs, that will help us in terms of repricing. Understood. Thanks. Thanks and all the best. Thank you. Participants, to ask a question, you may press star and one. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Next question is from the line of Neel Mehta from Investec Capital. Please go ahead. Yeah. Hi, sir. Good evening. Thanks for the opportunity. So just a simple question following up from the previous one. If we are structurally going to stop recognizing penal interest as part of gross interest income, shouldn't our NIM settle 40 basis points lower on a structural basis going forward because we are no longer recognizing that as interest and that's getting parked in fees? So Neel, 40 bips is a ballpark number that we are given, but the overall penal interest is dependent on multiple factors, largely being the SMA book. Okay. So if the SMA book falls down, then that incidence of the penal interest also will actually in the normal course of business also will fall down. And if the SMA book finds a lower trajectory, that is good from an overall bank perspective. But what you say is right in terms of that incidence of income, which was part of the interest income, now will be part of the fee income. But from an overall P&L perspective, it will get shifted from, say, the net interest income to my fee income. And ultimately, it will be part of my ROA. Overall, from an ROA perspective, it will help me because it will not help me, but it doesn't get impacted adversely because it will just move from one line to other line. But looking at that, we will also look at the product construct as well and see that how we are studying this closely, all the businesses in terms of this movement of penal interest to penal charges. And possibly, we will make certain changes in the various product construct so that overall NIM is maintained. Got it. So broadly, ROA neutral, but from a NIM perspective, could be structurally lower if your SMA accounts are depressed, basically. So if my slippages are reduced, in which case it will be NIM accurate because all the interest income is suspended, that will come back. So NIM is actually a very complex thing. There are 7, 8 factors which actually impact the NIM. So it's very difficult for anybody that way to really say that exactly what is going to be the NIM. However, the guidance that we give is on a general basis based on what is our business model, what is the general yields on various businesses that we generate, what is our expectation about the SMA as well as slippages. And based on that, the kind of guidance that we give, what we are talking about is that on an overall basis for the 1 full year, that is, all the 4 quarters, we should be in the range of 4.5%-4.8%. Got it, sir. Thanks. Thank you. Thank you. Next question is from the line of Chinmay Nema from Prescient Capital. Please go ahead. Hi, sir. Thanks for taking my question. Just wanted to double-click on the slippages. Not getting into the specifics of the loans, but because the elevated numbers are driven by few loans. So is it that you are seeing some kind of stress building up in a certain industry, or are these from a particular vintage? Is there anything to read into it? That's the first question. And the second thing is, if you could talk about what kind of early warning signals do exist for such loans? What kind of visibility do you have on the asset quality of such large loans, or if they come as a surprise to you as well? So there is no pattern as such. So I don't think that one should read that if there are elevated slippages. It is an overall question on the overall portfolio. These are only a handful of accounts, especially on the corporate banking, as I said, that we are rejigging this entire business. So one or two such accounts will fall into NPAs. But there is nothing that overall structurally as a portfolio, whether we are looking at any kind of a trend like that, it's not like that. So a handful of accounts in SME and a handful of accounts in corporate banking that are slipped into NPA, which will get normalized going forward in Q2 onwards. So we don't see a trend as such emerging. We have small slippages in the Agri and MFI book also, but our book is not very large enough to really cause any dent in the overall profitability or NPAs. Understood, sir. Got it. Thank you. Next follow-up question is from the line of Prathool Shah from Anubhuti Advisors. Please go ahead. Yeah, sir. Just want to directionally understand that now that the penal interest is not categorized within the interest income and it is in the other income. But directionally, whether the amount that we are going to earn, whether that is remaining same or that is getting impacted and to how much extent, if you just give a broad color on the same. It is too early to really say that whether on an overall basis, it will be a negative impact on the overall P&L. It is too early to say. We are analyzing these because it's just the first quarter where these regulatory changes happened. A similar kind of a trend for other banks also we are seeing. We are studying that in terms of the overall penal charges collected versus what was the penal interest, trying to study that basis the SMA trends, what was our trajectory of earning penal interest and versus that what is the penal charges that we are collecting. We are analyzing that very much. If required, we'll make respective product changes or changes into the penal charges structure so that we don't lose as such any income. Okay. So broadly, the understanding is in case we are losing, we will reprice the products and gain back the profits that we are earning in the earlier period, right? Yeah. So overall, it will not be on a full year basis. We don't expect that this will be a negative kind of a surprise for us. So this is just the first quarter. So that's the reason that we will study that product by product, segment by segment, and we'll do course corrections in that. Okay. Got it. Thank you so much. Thank you. As there are no further questions from the participants, I now like to hand the conference over to Mr. Satish Gundewar for closing comments. Thank you everyone for joining this call and patiently being part of this call for all through one hour. It's very nice to speak with all the analysts every quarter. We'll see you again next quarter. Thank you very much. Thank you. On behalf of Yes Securities, that concludes this conference. Thank you all for.