Ladies and gentlemen, good day, and welcome to CSB Bank's Q2 FY 2025 conference call, hosted by YES Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. 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, Siddhant. Good evening and a warm welcome to all those who have joined the call. The CSB Bank management is represented by Mr. Pralay Mondal, Managing Director and CEO, Mr. Satish Gundewar, Chief Financial Officer, and Mr. B.K. Divakara, Executive Director. We specifically thank the management of CSB Bank for giving YES Securities the opportunity to host their results 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. Pralay, over to you. Thank you, Shivaji, and good evening to everybody. I would like to specially thank everybody for joining our call today, because there are so many results today, including BFSI. So people have taken time out to join our call. We are very thankful for that. So I will give a very brief understanding of what's happening globally and in our domestic market, and then quickly move into our results. So globally, the economy is heading towards the year-end, with unexpected tailwinds as slowing inflation clears the path for a soft landing. However, the impact of geopolitical hurdles that lie ahead is a key monitorable. Globally, oil prices have also eased a bit despite the ongoing global tensions, and U.S. ten-year yield has also gone back about 4%. Gold prices are touching new highs and is trading reasonably above $2,700 per troy ounce levels in dollar terms. The biggest support for the dollar over the last few weeks has been a shift in the Federal Reserve policy expectations to a more moderate easing phase after a slew of solid U.S. economic data, and markets are widely expecting Fed to further cut rates by 55 basis points in November. On the domestic side, after the Fed rate cut of 50 basis points in September, dovish outlook had limited the financial markets in India as well. However, RBI maintained the status quo on the rates while changing the policy stance to neutral. Though retail inflation in India has been volatile and industrial output was marginally negative, growth outlook remains steady. With such economic and geopolitical background, an immediate rate cycle by easing by RBI is not expected, and we have to wait and watch for any reduction by RBI in the next three MPC meetings. The recent statement by RBI Governor probably leads to status quo for some more time. However, the surplus liquidity condition may prevail for a while. Coming to CSB specifics, highlight of performance of Q2 FY25 are on the profitability. Net profit INR 138 crores, up by 22% Q-on-Q, and 4% YoY. Bank continued with the accelerated NPA provisioning policy on making provisions over and above the RBI requirements and holding the contingency provisions intact. Margins sustained at four point three percent for the quarter, despite the cost of funds going up universally and regulatory guidance on penal charges. ROA was around one point five percent. On the liability side, we improved the funding base significantly. Deposits grew by 25% YoY, as against the industry growth of around 12%. CASA ratio stands up marginally above 24%. Asset growth and advances grew by 20% YoY, against the industry growth of approximately 14%. Whole portfolio registered growth of 28% YoY. Yield on advances for Q2 FY 2025 is at 11.21%, with an improvement of thirty-three basis points from Q2 FY 2024. On the asset quality metrics, I think it has remained reasonably flat quarter on quarter on most of the parameters. Those slippages has been significantly lower compared to the last two quarters. GNPA has been 1.68%, NNPA has been 0.69%, and almost sustained at the June level. PCR now stands at 81.49% and 115% if we consider the PWO, and if we don't consider, it's 59.45%. Bank is holding a provisioning buffer of around INR 183 crores over and above regulatory requirements. This is a very key point because we, I mean, there are ways and means by which we could have used some of these things to improve our PCR, but we decided that we will have a conservative policy on this, and we continue to hold the additional provisioning in addition to what we are doing on the provisioning side. On the robust capital base, we sustained that. Our CRAR is 22.74%, and Tier- 1 is 21.37%. Low proportion of risk-weighted assets has been sustained compared to the industry. On the shareholder valuation side, book value per share is at INR 229. EPS for the quarter is INR 13.65, and ROE [audio distortion] we almost touched close to 15% at 14.53%. On the distribution, we have a network of hundred and two branches, eight hundred and two branches and seven hundred and seventy ATMs as of quarter end. We have added 23 new branches during the first half year, and on a year-on-year basis, I think we have added more than ninety branches in the last twelve months. On the branch expansion side, I think for the fiscal, we are on track, and the same will be completed as a plan in the second half, because generally, second half is heavier in terms of branch expansion, like it happened last year. In conclusion, I would like to say that the good thing about this quarter gone by is we are back on track as far as the guidance on the business growth is considered, which is growth of 30%-50% higher than the system trend. Actually, we are significantly higher than that this quarter. The strenuous effort taken towards maintaining a balance in terms of various regulatory ratios like CRAR, LCR, NSFR, et cetera, and keeping sufficient liquidity for advanced growth have paid off. Borrowings are also resorted to an additional window of fundraising based on cost considerations. So while we actually didn't need to have more borrowings, but we did it just to ensure that we have a long-term sustainable growth on the trade side, because we cannot keep looking at the rear window and keep seeing that how much we need to grow, because that way we cannot build a franchise. That's why I said that even if it is cost inefficient, we'll continue to have a lesser liquidity risk in the bank for the long-term growth perspective of the bank. On the profitability side and asset quality numbers, ratios are pretty stable. Though the liquidity conditions have improved a bit, the interest rate on deposits continue to be at elevated levels, and we believe that that will continue for a while more at a systemic level. The attractive term deposit rates and an inclination towards other investment opportunities, like mutual funds, stock markets, gold, et cetera, continue to put pressure on the cost of funds of the banks at a systemic level, and we are no exception, and we are not able to fully pass on the same to the borrower, given the competitive environment in the market. This, along with the regulatory guidance on the penal interest, continue to impact the NIM this quarter as well, but I personally believe we have sort of bottomed out for us, okay, and we should start seeing better days maybe Q4 onwards on the NIM as well. We expect NIM, which is almost sustained at June 2024 level. All other critical ratios like ROA, ROE, EPS, credit cost, book value per share, registered improvement in Q2. Growth in other income was also good to negate the quantum inclusion OpEx, resulting in better operating performance. The build phase progress is going to accelerate in the coming quarters with the planned implementation of CBS migration and resulting improvement and stabilization in the product, process, systems, et cetera. You'd see one slide in the investor presentation when you have an opportunity to look at it, that we have put one slide on technology, which is basically giving clearly the rollout plans and the dates, because that is our biggest story, how we are rolling out the technology piece and how businesses from the current business mix, how it will go to the 30/30, 20,20, which we keep talking about. How it will transform will depend on this technology rollout. That's why we deliberately put one slide on the technology rollout piece for the first time in our investor presentation. While these investments will have an impact on the cost in the near term, which we can see, and we have been able to sustain around 65%, and in the long run, I have said that we'll bring it below 50% by 2030. Our endeavor would be to ensure results to accrue in the long term run, in line with the period estimated for each of these initiatives. With the continued cooperation from all stakeholders, we'll strive to deliver quarter on quarter in line with the expectations. So here I stop. This is broadly where our quarter went. Look forward to your questions from all of you. Thank you very much. Over to you, Shivaji. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Our first question is from line of Chinmay Nema from Prescient Capital. Please go ahead. Hi, sir. Thank you for taking my question. Just a bookkeeping question from my side. If I look at the retail book in your presentation, it's at Rs. 5,332 crore. But in the last quarter, it was at 3,541 crore, so that's a delta of about Rs. 1,700 crores, so the disbursement number is at Rs. 300 crores for the quarter. So, am I reading something wrong? Just want to check that, sir. So there is a little bit of echo. If I understood your question right, what you're saying is, while disbursement on gold has been little lower, but book growth has been faster. Is that your question? Yes, sir. On the retail book. Yeah. On the gold loan or retail book? Which you are talking about? The retail. So, in the retail book, also includes the LAS portfolio. Heretofore, this LAS portfolio that is loan against securities, whether the security is gold, was part of the gold loan book. From this quarter, we have included that as part of the retail book, and that's the reason that we are finding that difference. ... Got it. So, could you share the breakup of the retail book between gold loan and the unsecured portion? And, what's the asset quality trend that you're seeing on the unsecured side? If you could share the stage three numbers, please. I mean, in our retail book, you know, break-up trend gave, but typically, we have de-grown our three businesses over the last one year. One is personal loan, one is two-wheeler, and one is microfinance. These are the three businesses, and hence, some of the stress which you are seeing in the environment now, we saw it coming more than a year back. That's why we have this year consistently de-grown these three books. Where it has grown is we have grown CV, we have grown CE, we have grown, as they said, that we have reclassified the loan against security, which mostly is gold security, as a security collateral. We have grown healthcare, and we have grown little bit of a credit card that's on a partnership basis. Also we have grown inventory finance. So these are the businesses which are pseudo-SME kind of businesses which have grown. Pure play retail, we have definitely not ventured in troubled waters right now, because as a new entrant, we didn't want to be taking unnecessary risk. So we have done businesses which you understand and which our franchise can do at taking relatively lesser risk. In spite of that fact, we slowed down these businesses, but whatever business we did, we have seen little bit of a slippage on the MFI side and on the non-secure side. But while for the system, it may not be picking up, for us, it will be picking out sooner because we had started de-growing these businesses quite some time back. Got it, sir. Got it. Thank you. I'll join the queue. Thank you. Our next question is from the line of Mona Khetan from Dolat Capital. Please go ahead. Yeah, hi, sir, good evening. So firstly, on the margins, so for H1, we have seen margins of about 4.3%. Do you still believe that we'll be able to maintain the guidance for this year, which is 4.5%-6.3%? Or, and if at all, what will drive this improvement in H2? Hi, Mona. Very relevant question, so what has happened is, I mean, we knew that cost of deposits are going up in the ecosystem, so this is not happening to us only, it is happening to the entire system with the other banks also, but and we have not been able to pass on the, this thing, yields to the, asset side of the business as much, but in spite of that fact, we could have done 4.5%, which we had guided, but the, penal interest, which is impacting us by somewhere around 25 basis points, has continued to impact us, so if we add that, 4.3% plus another 25, we would have been 4.55%. So I think, that's going to permanently impact us to a great extent because we are not seeing... And even if we are able to recover, that will come back in, with a lag on the fee side. So, technically, NIM will have this impact. Having said that, if we are able to recover some of our NPA portfolio over the period, we can't commit that, but we, we'll continue to try that. And if we are able to reprice some of the books here and there, I think we can try and come closer to four and a half, but I think, we have sort of bottomed out in NIM, but I am not seeing too much of upside from here as well. So I think I will say that guidance will be between 4.3%-4.5%, primarily because of the penal interest. I mean, simple, thing is, 225 basis points has been shaved off because of the penal interest reason. That's why it's not that the guidance was wrong, but the guidance has to be relooked at in view of the regulatory reasons. So, not just for this fiscal, but even going forward, you feel that 4.3%-4.5% will be your fairer assumption for margin? I will reserve my comment on that right now because I'll tell you I'm hoping that, come next financial year, we should be able to do better on the NPA compared to this year. Because either some of the NPA which we have booked in the Q4 and Q1, either we'll recover some of that or we'll write off some of that. Okay? And if we do that, so, we will be probably able to get some NIM back into the system. But yes, I think 4.5%-4.8% looks to be difficult unless it can happen only sometimes mid of next year onwards, once the interest rate starts coming down, and coming down faster than the yield going down. We have one advantage because I see for another 16-18 months, gold loan continuing to be more than 40% of our book, and gold loan yields is not elastic. Our EBLR-linked book is not very high, and hence, as and when the interest rate cycle reverses, probably banks like us will be able to retain larger NIM compared to banks which are more wholesale-oriented kind of bank, where EBLR-linked or MCLR-linked businesses are higher, and even retail businesses, even if they are fixed loan, but new businesses gets booked at lower prices, but businesses like credit cards, gold loans, et cetera, the elasticity is lower. And to that extent, we hope that once the interest cost starts coming down, if at all, sometime middle of next year, we should be able to get some benefit out of it in our name. Sure. And so, with the margins right grow up by 20-30 basis points, how would the ROA guidance stand now, which was between 1.5%-1.8%? Would that also be lowered down by the same extent, or some of it is recovered in other income and effects? Yeah. So if you see our other income has retained around 80-90% of our overall income. So to that extent, I believe that... And also, in spite of heavy cost investment that is going into technology and distribution and people and everything, in spite of that fact, we have been able to increase our ROA this quarter to 1.5%. My feeling is that we should be able to do better than this, and hence, in the range of 1.5%-1.8% the guidance sustains, because we'll be able to build up other income, and we'll be able to manage costs better. So between these two, I think we should be able to maybe lower end of this in this range. But I think in this quarter, we could go to 1.5%. I think we should be able to do better than this. I'm not making a forward-looking guidance, but I'm just going to push the system for that. Right. Got it. And, while you partly touched on it, just wanted to check on this, the profit slippages that we had last two quarters. What are the recovery prospects? Would it be possible to recover them this year? Or, I mean, generally, what are the prospects with it? See, if you look at our slippages, trending on a quarter to quarter is looking better. The March slippages was INR 122 crores, June was INR 103 crores, and September is INR 62 crores, and even if you add additional NPA and all that, it is INR 64. So from that perspective, I think the slippages are coming down, and some of the slippages which has got added now in this quarter, I can see, are something which is trending downwards, like retail loans, Agri, MFI. There, the books are shrinking, and if books are shrinking, shrinking means the portfolio which is leading to slippages is unsecured MFI, Agri, those kind of businesses, they are shrinking. So to that extent, I see slippages coming down. Some of the slippages also don't lead to necessary costs, because that's the kind of arrangements we have. You know, some of the businesses have those arrangements. So given that, it will be net ROE accretive neutral. So some of the slippages do not lead to NPA also in our bank. So given all of that stuff, I see from an NPA perspective, unless there is something which is a surprise, which is not known to me today, I should be, we should be able to retain at this level. And once we start booking the migration provision for some of the slippages which has happened or recover them, we should be able to see a slight downward trend on NPA over the next one year. Again, this is not a forward-looking statement, this is something which we'll work towards. But I don't see, and I've always said that gross NPA will be below 2%, net below 1%, and credit cost below 0.4%, we'll be well below that. That much I can say with a lot of confidence, we'll be well below each of these three. Because you saw that this quarter we have reached credit cost 15 basis points. This was around more than 20 basis points last quarter, 24 or something like that. 22, I think. So, and also, I want to tell you that unlike last year, we never we have made one small change, which is the standard provision we have added into the this thing credit cost. The last year data, which was the standard, now that can be not too much, but I'm just saying that we have been more conservative in reporting on our credit cost now. So in spite of that 15 basis points, which is well below what we have been giving guidance on. So I think on a slippage, on a NPA, on a credit cost, we are looking good, and I hope that what you are asking me question, we can recover some of that, it will even look better. Got it. And just one last question. So it looks like we've had some reclassification in the book this quarter. You know, so if you could give like to like loan mix for Q1 as well, for reference, between corporate, SME, growth, and other retail, that will help. Yeah. So I'll tell you, I'll give you detailed answer on this. So more than what you are asking, I'll give you. The wholesale book has shown degrowth primarily because the DA portfolio is running off. A small portion is left, around close to INR 300 crores is left. That will also run off in the next four months. So some LCBD businesses has come down, and we have also exited we are exiting some of the large corporate accounts which we don't like. They're not NPA accounts, but we don't like them, so we're exiting. In fact, as we're talking, we have just exited one this quarter, a large account. So given that [audio distortion] In spite of the fact, wholesale book is kind of flatish. They are around 23% of our overall book, okay? Which was, I think, 26% or 25%, 26% before. But now all that is done. So now next two quarters, now last quarter, which is Q4, you will see wholesale books starting to pick up from there because fresh disbursements are happening significantly in wholesale and the kind of businesses we want to do, because now we have built up a good team with a good coverage team across the country. And you will see next year, wholesale book will grow at a significant pace. On the SME side, we have sustained the kind of growth which we are doing, which we had committed last year. That all cleaning up we have done already. So they'll continue to sustain. They're growing somewhere around 23-25%, in that range. I think they will sustain or do better, but on a conservative basis, I think SME book should be able to grow around 25%. Gold is growing around, year-on-year, around 28%. Last quarter itself, it has grown by 10%. So if I extrapolate that, it is much higher than 28%, and I think we should be able to grow by around 25-30% on the gold loan side. Retail, we are being conservative, so, as you rightly said, there have been some reclassification. And it's not done for any other reason, it is done for regulatory and other reasons, that, loan against gold, which had taken a security, okay, it has been classified as LAS business and not kept in the gold business. But effectively that collateral is gold, but this is not gold loan business. That is the way. So whatever we said that is collateral gold, but it is not gold loan business, we have reclassified under retail, and that portfolio size is somewhere around, how much? Six hundred crores. So I'm giving full disclosure so that there is no confusion. This six hundred crores have moved out of gold loans. If we had not moved it out, gold loan business would have been, somewhere around 50% of the book, 52% or something like that. Just add 16 crores to that. But it is not done for doing anything else. It is just done to be on better side of the compliance, okay? and rest is our MFI book is around 2%, Agri book is around 3%, and 15% is retail. And 15% of this retail includes this 6,000 crores of loan against security. So this is the full disclosure. Yeah, just one thing, so on this kind of disclosure, what is the sequential growth in each of the four portfolios that you just said, between Q1 and Q2? Yeah, I'll tell you that. So, on gold, we have grown by Q-on-Q, we have grown by 10%. Wholesale Q-on-Q, we have grown by 5%. Okay, I'll give Q-on-Q and the YoY both together. That will help you. Gold, Q-on-Q have grown by 10%, YoY we have grown 28%. Wholesale, we have grown Q-on-Q, 5%, YoY, -1%. And hence you can see already in, wholesale, we are reversing the trend. You will start seeing it from next quarter onwards. SME, MSME, 5% Q-on-Q and 26% year-on-year. Retail, 7% Q-on-Q, 45% year-on-year, but there is a noise in this, as I said before, because here we have, the loan against security as gold. Agri, 4% Q-on-Q, -5% year-on-year. MFI, minus 6% Q-on-Q, minus 13% year-on-year. Got it. Thank you so much. I'll come back in this. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press Star and One to ask a question. Our next question is from the line of Sonal Minhas from Prescient Capital. Please go ahead. Hi, sir, this is Sonal Minhas. Am I audible? Yes, please go ahead. Yeah, yeah, absolutely, yeah. Okay. Sir, I am looking at your GNPA movement table, and two things around this. Wanted to request you that if, from a disclosure perspective, if going further, you can actually classify these additions by the four sectors that you're primarily working in, which is gold, corporate, SME and retail, so that we get a sense of incrementally where these additional slippages are coming from. So that's one. And the second one is linked to this, that if we consider last quarter, this quarter, you could throw some color on where largely these additions are coming from, from the segments that you talked about, from the Retail and Gold segments. That will be great. That will just help us understand the business GNPA movement. Yeah, yeah. Now, to answer your question, I don't think any bank gave that level of details. That is not in public domain in mostly. But to give you a color and a flavor, because this is a call which is open to all, is, we had little bit of an extra slippage on one account in Q4 and Q1, for the same customer, in wholesale. But after that, it has been pretty much consistent. See, gold doesn't slippage happen much, right? Gold SME happens, but then eventually it recovers, it doesn't slippage. So Gold is very limited. Wholesale, after that, nothing much has happened. In SME, SME varies, this thing. There has been little bit of a slippage which has happened on the retail and Agri and MFI, but that is going to be on a declining trend from now onwards for us. Given the arrangements we have on the MFI and the credit cards, I will leave it at that, that the slippages does not necessarily always lead to NPA, but it doesn't lead to loss, okay. Given all this perspective, I'm not so worried on slippages on credit cards or MFI. Yes, some of the retail loans and Agri what slips will lead to loss, but that is sort of stabilizing. It will stabilize from next quarter onwards. To that extent, I'm pretty confident of my slippage number and the GNPA and NNPA and credit cost number from now onwards. I feel that this is where we will be, unless there is a some big ticket which hits us, which is not today, we don't know of that, okay? So that can happen always, one case here, one case there, and on a small balance sheet balance sheet we have, one case can create some noise, but right now we are not aware of anything right now. Understand that, sir. Sir, the second question is a little bit longer term, two, three years out kind of a question, which is linked to your CASA. Because, if you understand better than that, if the deposit franchise is largely deposit, from deposit link, there is a incremental level of criticality in your business compared to large banks which do CASA. And, so just wanted to understand, like, what does it take on the ground for CSB to mobilize that? Is that a part of the agenda? And, where are the constraints? Just trying to understand the subjective part of it, as you see yourself growing and becoming like a universal bank growing for the next two, three years. Now, thanks for the question, because I try to respond to this on, in almost all the calls, and this is the biggest part of the strategy of the bank. So, if you look at it, our growth in SA has been around 9%. Our growth in deposits is well above 30%. Sure. So 9% is not bad, but it is bad when it comes to looking at the overall deposit growth of 25% when we have taken, and hence the CASA ratio do come down. So but, none of this is franchise business, if you ask me. Franchise business will start, and I would, after this call, most of the questions are answered, I would like our technology head, CTO, to come and, spend five minutes on giving what we are doing in technology, because now we are definitive about what we are doing and how it will help us, the bank. Because we are creating a new bank, what we are doing right now is, managing the bank as it is. From FY 2027, 2026, mid of 2026 onwards, will be a completely new bank, okay? And that's the time what you're asking is exactly will go to play out. And most of the people who are in the bank right now or who have joined the bank in the last one or two years, they've all been part of building large franchise in very large organizations like HDFC, Axis, and things like that, ICICI. So we know what it takes to build that franchise. And the reason I'm saying that our retail, which is today 20%, but not really 20%, because what question Mona asked, that loan against security, which is gold, if you take that out, it is not even 20%. That has to go to 30%. So effectively, a 15% has to go to 30%, and that can happen when you build a CASA franchise. CASA, retail assets cannot be built without a CASA franchise because you need customers, and that is something which will happen FY 2026, 2027 onwards, where significant focus on customer acquisition will be there, and that's why we know that the larger franchise has to be built pan-India. That's why we are creating distribution, and a lot of those branches are not still fully productive because we don't have the systems which is required to be making them productive in building the CASA franchise, but we have to put all investments together so that all of this has to culminate into results FY 2027 onwards, so we are putting all of that investment in today: people, technology, leadership, products, and distribution. So once the CASA franchise starts picking up FY 2026, 2027 onwards, and then retail assets will start picking up, then payment products will start picking up, granular fees will start picking up, and then the real retail franchise will start building up. So that's the plan, and we are just waiting for our, you know, I'll not PM this. I will like Rajesh Choudhary, who's our head of technology, to give a briefing on this, that what we are doing on the technology side, and what we need to, but we are keeping the entire readiness for the rest of the bank to leverage the technology to build that retail franchise and the CASA franchise. So I'll give you the roadmap. So the reason that the retail franchise and retail businesses will pick up from 15% to 30% will be little back ended from FY 2027 onwards. Wholesale is a relationship business. We of course need technology there. We of course need transaction banking there. We need lot of products, fees and everything, but still it is a relationship business. So next year onwards, we will see the wholesale side will start picking up faster because even without full play technology, they can build businesses. SME business already without full play technology, they can start business because they are already picking up. Retail, we are keeping for the last, not only because we are not fully ready on the technology, also we want the picking of the cycle to happen in retail, and that can only happen when the overall growth in the system comes down below 10% on retail. That's the time we will enter the market in a big way, and that will happen in a 6-60, you know, in both in terms of liability, customer acquisition, retail assets and all of that. Because we don't want to go out and build businesses through DSS and purchasing asset businesses and all that. That's not the way we'll build it, and gold business will chug along the way it is going, around 10%-20% growth. As a mix, it will come down because the rest of the businesses will grow much faster. The picking of retail asset businesses will happen in the end of the decade, last two, three years. Wholesale will start picking up from next year, SME will chug along, and gold will chug along. That's the way the entire franchise is going to be built. Got it, sir. So I have a follow-up question on CASA, just fitting with this into, as you were talking, wholesale doesn't require technology. Fitting CASA, do you also require heavy lifting on technology for CASA? Or because you are fairly ingrained in the south market, in the Malabar markets you have been, so that's one. And of course, same is for CASA, because you, you've been in Kerala for more than hundred years, so but I, I thought that the deposit side is more a trust-based business than a technology business. So correct my understanding on that if I'm wrong on that, just on the liability side. Yeah. So let me tell you, you can either buy business by giving higher rates in CASA, okay? Or you can build businesses by making CASA as a float, based on various activities he's doing with you. So the first is not the best way to do business. The second is something which we'll attempt. That's why you'll see our savings account rates are lower than, are not very high. I mean, effective rates are also not very high, somewhere around 3%, net, net rates, across the portfolio. So given that, our thinking is the second model is what we'll build. And it's just not trust-based, it is usage-based, it is globe-based. It has to be, you have to have your EMI, you have to have usage of that account. And for that, we have to launch salary accounts, we have to launch various payment products, we have to launch various asset products, we have to get those EMIs through it, we need to do all those transactions through it. In a way, CASA is no different, because you need technology, because you need CMS, you need supply chain, you need transaction banking, you need the rationale for usage of those accounts by a customer, and you have to have those kind of franchise, those kind of customer penetration. That will happen through wholesale and SME. Of course, we'll have retail kind of a CASA also in branches, but unless we are able to give a better service, unless we are able to give a better turnaround, unless we are able to give a better transaction banking kind of products, be it retail or SME or wholesale, it's not sustainable. So that's the way the CASA businesses are always built and will be built. We'll not play the price game ever in CASA. CASA, anyway, CASA, you cannot play the price game, but CASA will not play the price game. Because CASA is just not a liability. CASA is a franchise which helps us in building the asset business. Otherwise, we have to go out and buy businesses through DSAs, which I will not do. So customer acquisition is going to be the biggest play in this bank, starting FY 2027 onwards, 2026, 2027 onwards. The start will happen in 2026, and 2027 onwards, it will take off like anything, you know, in terms of customer acquisition. And then onboarding those customers, deepening those customers, for that, we need the right solution, right products, right systems, right turnaround time and right products, okay? So that is something which is the CASA franchise, which you are probably asking the question, and CA is no different to CASA. It's just a different kind of a segment which you need to focus on. So that's what the strategy is. We don't want to take a shortcut route to any of this right now. That's why we are saying that we'll do businesses, what we understand, what we can do, and hence, wholesale will start picking up next year. SME has already picked up. Gold, we understand, will continue to do well, and retail is something we'll pick up only when you have the CASA franchise momentum picking up. Got it, sir. If I may just ask a short question, the last one: Who is your credit card partner? You specifically mentioned your partner in the... Yeah. We started doing it with both OneCard and Jupiter. Right now, we are servicing the portfolio which we have done with OneCard. We are not adding any more cards with OneCard right now. And with Jupiter, we are continuing to add more cards, but it's not a huge portfolio. Let me tell you, credit card, microfinance and MSME and personal loan, all products together is somewhere close to INR 1,000 crores, okay? So, it's a very small business for us, and we are not growing any of these businesses that much. Understandable. Okay, I'll call back into you. Thanks for answering my question. Sure. Thank you. A reminder to our participants that you may press star and one to ask a question. Our next question is from the line of Shivaji Thapliyal from YES Securities. Please go ahead. Yes, good evening. So I just had some basic questions around guidance, you know, because I think basic numbers are always helpful to learn about. So just wanted to, you know... I mean, we've already got sense of the margin, but what would be the overall loan growth guidance, number one, for FY 2025 and, if possible, for FY 2026? And, you know, these are all, you know, sort of near to medium-term guidance that I'm seeking. So firstly, on loan growth. Secondly, you know, credit cost obviously is evolving and, you know, some of the loan books are not seasoned. So, you know, just wanted to understand where the number do you think will end up for FY 2025, and if possible, if we can get a sense of FY 2026. And, thirdly, on cost to income ratio also, of course, again, very, so you know, number that is evolving as we speak. But this year and next, your sense on these three aspects: loan growth, credit cost, and cost to income. Yeah. So, Shivaji, first, let me start with... Thanks for your question. Let me first start with what guidance we, not guidance, but what ballpark strategic vision which we have in the bank. Sure. I'll give you this and then answer your question. The strategic vision is that what we are aiming to is GNPA 2%. And this is by 2030, GNPA 2%, NNPA 1%, credit cost 40 basis points. Credit cost to income below 50%. Then SME, wholesale, gold and retail, I've already said 30/30/20/20/30, retail 30, wholesale 20, gold 20, SME. NIM, I've always said that medium term will be between 4.5-4.8, and longer term will be 4-4.3. Okay? I'll tell you the reason for this. But now, based on Mona's question, I've said that because when we gave this guidance, we didn't know the impact of the penal interest. Because of the impact of the penal interest, we have to wait and watch how this plays out, and hence, it could be coming down between 4.3% to 4.5% or 4.6%, because of this reason, so we have to see how this plays out, now. Similarly, in the long run, it should be remaining between 4% to 4.3% or something like that, and the reason for that is business mix will change, because as we move towards from our wholesale 23% today to 30%, obviously your NIM will start coming down on that, so will cost to income start coming down. Our healthy good portfolio will be somewhere around for, for us, our kind of franchise by 2030, will be 4-4.3, cost to income below 50%. And then, ROA will retain the same thing, 4.5-4.8, because whatever they do, the ROA and ROE has to be sustained. ROE between 15%-17%, ROA between 1.5-1.8. But some of the components within the ROA three can make a change based on the business needs that will change. Your question on near term, next two years, I think next two years, nothing much will change, because none of these mixes are making so much of a diff change right now. So given that, I think our NIM will be somewhere closer to 4.5. Once the interest rate starts coming down, the deposit interest rates, as I said, explained before, the elasticity on our asset side, we are less inelastic, so we don't have to pass on everything, given our book. And our fee businesses will keep going up. I think we'll do even better than today on the fee businesses. And hence, I will not be surprised if we go to 19%-20% of our overall income as fee, and that's what we're targeting. And on the NPS side, I said that we'll not touch 2.1 and 0.4. We are now around 15-16 basis points. I think we'll retain below 20 basis points on the credit cards for a while now. GNPA, I think sort of we are peaking out GNPA and NPA. We are peaking out. That's where I think we should be remaining the next two years. Longer term guidance, because once your retail starts picking up and all that, credit cost will also start going up little bit, but it will give other businesses, because in retail businesses, what happens is your, for the same customer, you get lot more businesses, and hence the ROA is sustained between 1.5-1.8. It is really sustainable. That's the way we are planning our overall strategic ratios. Thank you. What I'll do, Shivaji, if there are no further questions, is I would request our CTO, Mr. Rajesh Choudhary, to, because we have put one slide on the investor presentation on technology transformation at CSB Bank. So, very quickly, if you can, if we can just take two minutes for Rajesh to explain what you are doing on the technology side, because this is the biggest story going ahead, what we are trying to build in the bank. So can I hand it over to Rajesh for two, maybe three, four minutes to give a brief on the technology side? Sure. Yeah, over to you, Rajesh. Thank you, Pralay. Good evening, everybody, this is Rajesh Choudhary, I'm the CTO for the bank. In March 2022, we put the IT strategy to the board, and since then, we have been executing that strategy. What we are trying to do is, we are replacing almost all the systems in the bank, and the slide which we have put across, there are four different dimensions over there. One of the dimension on the top left talks about the entire technology infrastructure that we are changing in the bank. As part of that, we have built four data centers, two in Mumbai and two in Chennai. All the data centers are ready and operational. We have also set up private cloud for the bank, which is also ready for use now. All the bank branches across the country are running on a high resilient bandwidth, which means that if something goes down, there is a resilient bandwidth, and the business will keep on happening. As part of the transformation program on infrastructure, we are replacing all the hardware for all the servers in all our data centers with the modern cutting-edge technology, which very few banks in the country have. We have also set up a very modern technology command center in our new Tulsi office in Navi Mumbai, which is monitoring the entire bank, the entire technology estate of the bank. So that's our tech transformation from the infra perspective. Now, coming to the core systems, which is the big story, which are the, and we also spoke about, we have invested in one of the most modern new core banking system from Oracle, which is called Flexcube. We started implementing this from January this calendar year, and we are currently halfway and sometime in Q1 FY 2026 this system will go live. Along with the system, we are also setting up new payment systems, new digital channel system, which includes mobile banking, new internet banking, all of this. We have got a very, very old database in the bank, which is almost like seventeen-year-old, similar to the core banking that we have, and that has got significant limitation in doing business today. So we are replacing that with a modern database from Oracle that will also help us in going ahead significantly. Along with this, a new trade finance system, we are setting up a new finance management system from Oracle, which is called Oracle General Ledger, which will also go live by Q1 FY 2026 2026. And the new risk management system called OFSAA, that will also go live in the first quarter of FY 2026. So we spoke about the infrastructure, then we spoke about the core system, but there are a lot of systems which are surrounding the core system, and we are replacing almost all of those. Some of those have already gone live. So we are setting up lending systems for all the various products, so gold, two-wheeler, LAS, these systems are live and remaining are under implementation. Our lending system for corporate and SME is already live. We have lot of systems for various support functions, so our new HR system has already gone live, new compliance system is live. We have set up a digital customer onboarding system, which helps our customers to have better experience while joining the bank for any of the services. And we have set up new digital call center in the bank, which is ensuring that our customers are being serviced in a better way. We have set up very sophisticated ServiceNow platform in the bank. This is one of the leading enterprise in the world, and we are the first bank in the country to implement finance FSO module from ServiceNow, which gives us immense ability to launch new capabilities, new system on this platform. This platform has gone live, and we are setting up one by one, multiple systems over here. There is another capability, which is API ecosystem. So API ecosystem, combined with enterprise service bus, this gives us enhanced capability to work with our fintech partners or any other partners which will partnership strategy is one of the key part of the SBS 2030, as our MD spoke about. API ecosystem and enterprise service bus will ensure that we are able to integrate our partners in a very seamless and efficient way. And all our systems will also talk to core systems in an effective and efficient way through these integrations. Then, of course, while all of these business systems are in place, infrastructure has been transformed, cybersecurity is sitting at the center of all of this. So we have invested significantly in various areas of cybersecurity. We have got our new security operations centers already installed and implemented, from where we are monitoring the entire bank and also checking if there are any threats coming from the external world. Various systems on the perimeter level, on the internal level, we are checking the dark web, if there are anything from the bank-related information sitting there. Very, very intense focus on cybersecurity systems to modernize the bank. This is a very summary, very high-level view on the technology transformation in the various areas that we are doing right now. So this is in a summary what Rajesh covered, but actually we can have a full day on what we are doing on technology, because I really believe the bank has to be built on the back of a very strong technology for better efficiency, cost, and scaling the bank in a faster turnaround time with a better service. So with that, Shivaji, if there are any further questions, we'd be happy to answer. Sure. Thank you, sir. Our next question is on the line of Mona, Mona Khetan from Dolat Capital. Please go ahead. Yeah, I just have three follow-up questions. So firstly, if I could get the mix of loans between EBLR, MCLR, and fixed rate? Roughly, I remember that, our fixed rate is around 70, roughly, very roughly, but I'm getting around 70/30. 70 will be around fixed rate and... Okay, so we have floating rate is around 38.2%, 61.2% is fixed rate. Out of the 38.2, EBLR is 10.2%, MCLR is 24%. So 24, 10, 61. 24% MCLR? MCLR is 24.41, EBLR is 10.22. Base rate, T-bill, MIBOR, LIBOR, so far, all these are around 3.84. All these totals up to 38.20. Got it. Balance, which is 61.80, is fixed rate. Got it. But I would like to also say, wait, Mona, here I'll also say that it looks like fixed rate, but, you know, gold loan is a slightly shorter-term product. So, so you have to take it with a pinch of salt. Having said that, gold loan prices also even in a, when interest rate goes up, it doesn't go up, interest goes down, it doesn't go down that much. So to that extent, it remains fixed only, even if it is a shorter term approach. So that's why you can call it a fixed rate only. And just secondly, while you mentioned that, you know, the penal interest impact is still there on the margin, but when it comes to incremental gold loans, are we able to reprice it at a higher rate, or- Mona, what happens typically is this is a customer cycle, you know, I mean, it will, it's a competition, right? So if everybody says that, okay, it is impacting me by 25 basis points, and hence we'll raise our rate by 25 basis points, but market doesn't operate like that, right? So if the whole market does it, we'll also do it, but ultimately, we're in a competitive market. So I think it is a permanent damage to the NIM of around, 25 basis points, for banks with our kind of a business mix. But we will figure out a way to manage the ROA by improving our fee businesses. But increasing because of these rates, I don't think the whole market will operate like that. Got it. And what is driving such strong fee lines in your case? It's now almost 1.8% of assets, which is, like, very, I mean, on the higher end of the industry and very comparable to large private banks. So, what's driving this fee income? At least some, at least somewhere we should be in the best in class, no? So, when I joined the bank, you remember, Mona, that we were core fees used to be below 5%, so we have now taken it up to 17%, 17%, 18%. I think we can go up to 19%, 20%. You can give some credit to the leadership team which we have built, who understand these businesses very well, and still some more to come, because once the retail asset businesses start picking up, you will see more fees. Wholesale business, generally, you know, good wholesale business run by good banks, and we have all worked in good I mean, large banks, can be up to 1.8%-2%, comes on the fee side, right? But, I mean, we actually did a syndication last quarter, okay? I mean, you may or may not believe this, but this is the kind of expertise we are building in the system, on the wholesale side. So, some of these fees, whether it's transaction banking fees, syndication fees, processing fees, insurance fees, has been doing very well. I mean, there are four such large companies between ETLI, HDFC Life, ICICI Pru and now Max. There's a reason that they are tying up with us or they are choosing us, because we are doing well. They are seeing the kind of a process which we are following to do all this. Believe it or not, we have only four complaints which we resolved in insurance after doing so much of business within turnaround time, and we have zero pending complaints right now. That's the level of... Our persistency ratio is one of the best in the system. Given all these things, we know how to run these businesses. We know how to run many businesses, but till Rajesh delivers all the systems, we are not able to do it. At least these things, we are leveraging somebody else's systems to do it. To do some of these businesses, we don't need our systems, right? When we do insurance businesses. At least where we can do well, we are doing well right now. I think that's how it is. I see it sustaining, take the core fee business. Core fee business for us is around 15% of the total income. I see it sustaining, if not growing, growing ahead. Mm-hmm. And just one final question. So when it comes to, you know, the corporate book, you mentioned that, you know, there's some reboot going on, which led to slippages in the past quarter. So could we have some more of this, these, in the ensuing quarters, or you believe that this is done with, the details and related slippages related to that, you said? Mona, I wish I could say that, you know. Nobody can do a crystal ball gazing, but whatever we can do, we are doing. So we can always have a surprise item, but I think we are doing whatever best we can, and that's the reason I said that last two quarters we have been exiting relationships which are perfectly, you know, regular, businesses, and they are not NPA, not even SMA. We just exited a very large, very, very large relationship, just because... And there is no NPA, no SMA there, but we just exited, maybe once it came to SMA, but we exited just because we think that that's not the line of businesses we want to follow. So we are completely changing our wholesale franchise business in a different way. Having said that, a legacy book where something will fall, we don't know. That's why we are granularizing. I mean, any large businesses in wholesale which we have done in legacy, we are gradually reducing that, and hence the shock, if at all, if there is anywhere, which we don't know of, is going to be very low. I would like to also add one more point, that we have INR 183 crores of contingency plus non, you know, beyond regulatory mandate provision. Out of that INR 106 crores, INR 105 crores, we have taken under COVID provision. Now there's no COVID, so we have put it under contingency of INR 105. And what we did is, wherever we thought stressed accounts, now, stressed accounts does not necessarily mean that they are NPA accounts or they are SMA accounts. Anywhere we didn't feel good about it, we kept those accounts under those. Out of that, one big account is one, but we are trying to put some more accounts into that to retain that. So we are taking a very conservative provisioning policy. Otherwise, we could have written back a large amount and improved our PCR. We are not taking that route. We are doing in such a way that we will add some more so that if there is an accident somewhere, which we don't know yet, we have already provisioned that. So that's the way we are following a very strong, a very conservative provisioning policy. Beyond that, who knows? I mean, somewhere something happens, we can't, we can't say anything. But, truthfully, we don't know anything which can just, hit us anytime. If we know, we will exit that relationship. Sure. Got it. That's pretty clear. Thank you so much. Thanks. Thank you. Our next question is from the line of Sonal Minhas from Prescient Capital. Please go ahead. Hi, sir. Thanks for taking my question again. I have two questions. First one is relating to PCR. I wanted to understand, like, what is the steady state PCR that you target, or where is the direction there that you want to head to? Because given your charts, given how we see this, PCR excluding write-offs, has been coming down. So if you could just explain that a little bit, that will help to understand this. See, PCR, our targeted PCR is somewhere between 70% - 72%. Okay? Mm-hmm. We'll get there sometime next financial year. We were there, but there is. I talked about that one account slipped, okay, which is a legacy account which led to this problem. Either we'll recover or we'll write off. So naturally, mathematically, this will go back to somewhere close to 70%. We had choice, as I just explained before, from a contingency provision, because one of the accounts we have just exited. We could have written back some of the provision we had taken against this, but we'll add some more provisions, and we'll remain, we'll gain it at contingency. Because if we move from contingency to incremental provision, you know, conservative provision, we can improve our PCR very easily. These accounting principles are there. But from a bank, from a board perspective, we have said, "No, we'll not use those routes to artificially raise PCR. We'll raise the PCR only by either collecting or provisioning, which is not under the contingency provisioning." So we have a very easy method of doing it, but we are not doing it today. So, I think our model is around 70-78, without PWO, 70-73, somewhere around that we will be there. But we will take little time because we hope to recover some of this. If we can't, anyway, we will do a provisioning or accelerated provisioning and move on. So that's the way we'll plan it. Got it, sir. Thanks, thanks for explaining. So second question is, regarding the LTV for the gold loan. I see this is coming down over time, but just asking you subjectively from an operational perspective of risk assessment or assessment of, let's say, creditworthiness of the customer, what the gold is given as collateral. Basically, are we there in terms of systems and processes and technology for gold loan, or there are still, like, some hoops to cross for us to say that our systems are at par or better than, let's say, the other large gold loan players in the market? Just trying to understand the systems basically. Yeah. No, thanks for that question. Let me put it this way: given that Gold Loan is anywhere within 44%-50% of our bank, depending on you take, where you take that loan against security business, but effectively it is like a Gold Loan business. It will be only prudent to ensure that we have the best systems and processes, and it's an unbelievable amount of work we have done in the last two years in Gold Loan business, from being an average Gold Loan player to probably we think we are one of the best compliant Gold Loan business right now. That's the reason I said in the beginning of the call, or maybe it's one of the media where I say. I don't remember that we have put so many things in place in the gold loan. This thing that when this other circular came, we found we tick most of the boxes proactively, okay? That's the kind of work which is happening in this bank on the gold loan side. Being a very touch and feel, physical distribution-oriented business, you can never say that we are 100% there, because where somebody is sitting, somewhere, what he's doing, we don't know. We can only find it through proper audit process and proper review mechanism, which we are expanding, and we are expanding our scope of audit everywhere a lot more. Let me put it this way. From an intent perspective, we are 100% there. From a process perspective, we are 100% there. From an execution perspective, maybe we are 70, 80% there. Rest 20%, it can never be 100%, so we are trying to see how we can inch it little bit more over a period of time. Having said that, on your question on LTV, let me say that, actually, we are close to 70% on LTV right now. It varies every day. I see a different number, 70, 71, 72. But, we also do a sensitivity analysis constantly. What if kind of a scenario on the gold loan price? And that data I see every day. And of course, the detail and everybody else, CRO, everybody sees this data. We see two data every day. One is this, and one is the LCR data we see every day. Given that, our tonnage increased by around 10%, and our this thing growth was around 28%. So obviously, you can understand that we focus on tonnage because that's the real growth, and gap between 10% and 28% is because of the value of the gold. Now, one can argue that given what's happening globally, next one year there are no risk, next one and a half year there are no risk, but who knows what is going to happen? Given that perspective, I think we continue to do the sensitivity analysis, and we will take action as and when we require proactively, in case we see there is a risk on the gold price. Because we have to be sensitive to that 10% versus 28%, that this gap of 18% is because of nothing much we are doing. It is happening because of the environment, and it can happen the other way around also at some stage when the gold price starts falling. Hopefully by the time that phase comes, we will be ready with our other businesses by FY 2026, 2027. So to that extent, we are a such product at this point of time. Understand. And sir, on the gold loan business integration side, at the branch level, let's say if the loans are being given against the right collateral or, let's say, hypothetically, we're saying that the value is actually not what the loan amount basically commensurate to the value of the gold that is given to you or deposited with you. What are the systems basically to just check that? What is the periodicity of those systems? Because it probably highlight, and I don't want to take too much of your time, but probably just want to understand. Let me put it this way, that I understand your question fully what you are asking. Okay, that is exactly what we have worked in the last two years. So it starts with intent. It starts with compliance, it starts with what we want to do. And then next part is what is being done on the ground, right? So if we take action on anybody who's not following the process right, if we have a very strong audit periodicity in every branch, if we have a science of saying that where we have more, fraud-prone or, this thing, and if we take staff action the way we need to do it, then you have a much better control. So let me put it this way: I think we have very, very strong controls in our gold loan business at this point of time. Obviously, the kind of pedigree which our management has, intent will never be an issue. The kind of board we have, the kind of promoter we have, we have, from an intent perspective, we are 150% there. From a, process, policy, taking action, controls, audit perspective, we are 100% there. Still, can I commit that there will be zero fraud or there will be scale of finance, there will be something where something is going wrong in some branch here, some branch there? In a distributed setup, that can always happen. But our view is that we catch that and we take action, which deterrent that. Deterrent is the biggest thing, which deters people from doing wrong things. But if management looks the other way when something is happening, then there's a problem. Our bank don't believe in that. So that's the best way to handle this business, and we're doing it that way. Understand, sir. Thanks a lot for explaining. Thank you, sir. Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for closing comments. Thank you, Shivaji, and thank you everybody for asking very relevant and very, very good set of questions, I must say. We are very excited the way the bank is turned around in this quarter, and, we are very committed to hopefully show even better performance next quarter. Thank you very much, and have a good evening.