Welcome to CSB Bank Limited earnings call for Q4 FY 2026 financial results hosted by YES Securities Limited. Please note 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. Please note that this conference is being recorded. With that, I hand over the call to Mr. Shivaji Thapliyal from YES Securities. Thank you, and over to you. Thank you, Swapnil. 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. B.K. Divakara, Executive Director; and Mr. Satish Gundewar, Chief Financial Officer. 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. Pralay, over to you. Thank you, Shivaji, and thanks everybody for joining our annual and Q4 analyst call. To start with, we'll start briefly on the global economic scenario. As we all know that the West Asian crisis has been continuing for more than two months now, and with probability of further escalations looming large, though de-escalations cannot be ruled out altogether. Higher crude prices for an unduly long period definitely pose inflation risk. Consequently, Federal Open Market Committee, BOE, and EU have kept the rates on hold cautiously with the guidance that they may have to increase it subsequently. Global growth forecast remains subdued, and financial markets are likely to remain highly volatile. As a result of higher crude price, Indian growth is expected to reduce by 50 basis points as per certain estimates. The inflation forecast has been revised upwards. RBI expects the inflation for the next year to be around 4.6%. The deposit growth continues to lag the credit growth, raising the bulk deposits and CD rates in Q4. Surplus liquidity since then has reduced the rates slightly. They are likely to remain elevated due to uncertainties in the economic conditions. The G-Sec yield curve has also moved up sharper due to inflation and CAD concerns. We expect the banking sector NIM to remain under pressure due to rising cost and unabating volatility. We expect the liquidity to remain easy. RBI to stay on hold for longer in this financial year in the wake of impact of domestic and global. Coming to CSB specifics. First of all, I want to apologize that my voice is little bad, you know, it's little difficult, but hope you can hear me properly. On CSB specifics, highlights on profitability, net profit for FY 2026 stood at INR 633 crore with 7% growth over FY 2025. Q4 2026, net profit of INR 202 crore was registered with a sequential quarterly growth of 32%. Operating profit of the bank grew by 19% on a FY basis and stood at INR 1,085 crore as on 31/3/2026. Net interest income grew by 17% on a full FY basis, INR 720 crore. NII grew by 25% for FY, Q4 FY 2026 versus Q4 FY 2025. Other income grew by 21% and constituted 21% of the total income for FY 2026. Proportion of risk-weighted assets continue to be lower compared to the industry. on, in terms of, valuation, book value per share stands at INR 272. EPS for the year is 36.5, wherein in Q4 it was 47.12. ROE for the year stood at 14.14%, and for Q4 FY 2026 it was 17.66%. The cost income ratio for FY 2026 stood marginally lower than the previous FY at 62.53%. NIM for FY 2026 stood at 3.76%, where Q4 FY 2026 NIM was 3.83%. ROA for the quarter ended 3/31/2026 stood at 1.53%, being the highest among the quarters in FY 2026. ROE for FY 2026 stood at 1.29%. Contingency provisions were a huge impact in the bank, is continuing with the accelerated non-provisioning policy, which will aid the bank in transitioning towards the same claim. On the liability side, the funding base continued to grow. The deposit registered a robust growth of 20% YOY and faster than the industry growth of 13.5%. CASA ratio stands around 20%. To aid the liquidity, we also availed both domestic and FCNR borrowings based on cost considerations. On the liquidity side, bank managed liquidity risk reasonably efficiently. CD ratio stood at 91%. Average LCR for the quarter is at 109%. NSFR ratio was around 1.2%. Asset growth was quite robust with 27% YOY, as against the industry growth of 16%. Yield on advances for FY 2026 stood at 10.8%. On asset quality metrics, I think it was a fantastic quarter for us. GNPA and NNPA ratios for the quarter stood at 1.66% and 0.4% respectively, with both ratios being the lowest across the last four quarters. PCR now stands at 76.38% without PWO. Again, on this PCR, there is a significant improvement. Bank is holding a provisioning buffer of around INR 210 crores over and above regulatory requirements. On the capital base, CRAR continues to be well above regulatory requirement and stood at 20.66%. Tier one ratio as on 31 3 stood at 18.93%. On distribution side, we have network of 862 branches and 832 ATMs as on 3/31/2026. These are key numbers. We'll deliberate this through the call. In conclusion, I'd like to say that we conducted FY 2026 on a strong and positive note, delivering consistent growth despite facing significant external challenges and going through a massive takeover all internally. This performance gives us strong confidence as we enter the final and exciting scale phase of our SBS 2030 vision, which will play out in the next four years, and we are fully aligned to our strategic vision. For the fourth consecutive quarter, we outpaced growth of the industry, both in deposits and advances. During FY 2026, we recorded 20% growth in deposits and 27% growth in advances compared to the industry average of 13.5 and 16.1 respectively. While our corporate portfolio has progressed as envisaged and planned, our calibrated and cautious approach adopted to our SME/BLG business and unsecured portfolio amidst an adverse operating environment, along with liquidation of the loan against security. Here, the security has been primarily gold as a collateral. As per regulatory prescription, this portfolio had to be run down quite a bit, this resulted in a relatively higher share of gold loans during the year. We'll discuss this as we go through the call. Importantly, our gold loan portfolio has managed to be pretty risk-free with strict oversight on parameters such as LTV, price sensitivity and risk metrics, ensuring a healthy and profitable growth. We have successfully migrated to the new core banking system with OFSS, OGL and all 50 surround system around it on the Oracle side. With technology advancement, bank is now in a better position to scale up its activities more meaningfully. We are also, actually, we are implementing in the next 3 to 4 months the entire transaction banking systems in form of Vayana, Orient Pro on the CMS side and trade side on the core itself, on the Oracle we are implementing. With all of this together and with the ServiceNow platform, now we are building various systems around it. With LMS, LOS, a huge investment in our data center and various other initiatives on the digital side, OBDX on the core, I think we are firmly in place to really now meaningfully scale the bank as a full service bank, justifying our for a full service and scaled bank over the next few years. As we now are leveraging the capabilities of the new core system and surround systems to launch the full retail product bouquet, both on the deposit and assets front. With the new revamped products, we plan to meaningfully kickstart our retail franchise journey by Q4 FY 2027 and Q1 FY 2028, because that's where we'll start seeing the portfolio growing on that side. Growth in BLG book is also expected to resume once the ecosystem turns favorable, I mean, the global ecosystem. We remain firm on achieving the targeted portfolio mix, which was envisaged under SBS 2030, which we'll continue to strive towards this objective. As advanced growth outpaced deposit growth, as was the case for most of the banks during the year, liquidity management and regulatory ratio maintenance remained challenging, further compounding by tight systemic liquidity conditions, which has eased now, of course, little bit. Despite this, we navigated the environment effectively through prudent management of deposit cost and tenors, along with optimization of borrowings. We continue to maintain adequate liquidity buffers and comfortable regulatory ratios with both cost of deposits and cost of funds declining sequentially. From a profitability perspective, FY 2026 witnessed a strong operating performance with 19% growth in operating profit over the previous year and a 7% increase in net profit. Q4 FY 2026 was particularly notable, marking our best performance in terms of slippage control and recoveries. We closed the year with lowest NPA levels compared to previous quarters, with GNPA of 1.66 and NNPA of 0.4%. Non-interest income, supported by sustained growth in core fees, increased by 21% over last year, despite significantly lesser traction in treasury income due to higher bond yields and constituted 20% of the total income. Net interest income growth remained robust, registering a 25% YOY growth on a quarterly basis and 17% for the full year. All key financial ratios remain stable and well above regulatory thresholds. Delivering this performance in a year marked by significant infrastructure build-out and a large scale technology transformation further reinforces our confidence as we transition into the scale phase of our journey, with a clear aspiration to become a mid-sized bank by 2030. We have also revamped our organizational structure with a sharp focus on customer acquisition across verticals, which will be critical to the success of our vision. Leveraging the capabilities we have built, we look forward to a progressive and sustained delivery quarter on quarter and year on year. If I can highlight primarily two points here before we move into the Q&A. There are two primary key things which two or three key things which really make us very confident about the future. Number one, the entire technology transformation which happened with such seamless ability with almost zero challenges as we move into the advanced core system with so many surround systems. It has been really a fantastic experience. As we talk today, we have almost zero issues impacting the transition. I think this is like a once in a lifetime experience for us. The entire team came together and did it. I think congratulations to the team. The second thing is that we have sort of every time performed what we had predicted, and that requires a lot of confidence on what we are doing and in terms of execution, what we have done. For example, when in Q2, I think, we are talking about NIM compression, and I said that we will improve it in Q3, and we did it. In last quarter, there were significant questions, and rightly so, about the quality of the portfolio in terms of GNP and NPS slippages and other things. I gave exact explanation why it happened and how we will ensure that we take care of it, and we have done it, and in a very credible fashion, the way the numbers have come out today. I think the critical part is that what it says, in our view, is we know what we are doing, and we are progressing on the right path. Most of the predictions which we gave through the year, we have been able to achieve. With that, I end my initial comments here. Over to you for Q&A. Thank you so much. Ladies and gentlemen, we will now begin with the question- and- answer session. Anyone who wishes to ask a question may click on the Raise Hand icon from the Participants tab on your screen. We request participants to restrict to two questions and then return to the queue for more questions. To rejoin the queue, you may click on the Raise Hand icon again. We will wait for a few minutes until the question queue assembles. We have our first question coming in from the line of Suraj Das of Sundaram Mutual Fund. Suraj, please go ahead. Yeah. Hi, Pralay. Thanks for the opportunity. I hope I'm audible. Please go ahead. Yeah, sure. Sir, I had a few questions. First, sir, on LCR. It has been declining over the past 2 quarters, and probably now in the lowest quartile in the sector. What is the rationale, I mean, why it is declining? Also, how do you see the impact of new guidelines on the LCR? More broadly, I think, how should one think about this in the context of growth? Because, especially in your case, the deposit growth is lagging, not just for you, but also for the system as you highlighted. In your case, the deposit growth is increasingly, you know, driven by wholesale bulk deposit, which is now almost hitting 50% of the term deposit versus 20 years a couple of years back. It has also cost implication, right? I mean, in terms of this, what is your expectation that, you know, the share of wholesale deposit will continue to go up and probably will continue to deliver maybe 20%-22% kind of a loan growth? That is question one. Question two is, sir, on the gold loan portfolio. The number of accounts on the gold loan portfolio is declining consistently over the past, I mean, not just this quarter, but also over the past two years, coming down from, let us say, INR 6 lakh-INR 7 lakh to now INR 4 lakh. Tonnage growth is also hardly there for the industry also. It looks like that the growth is largely driven by the higher gold prices, rather than, you know, underlying volume expansion. While you have a LTV cushion, but want to know what is your strategy in terms of maybe incremental customer acquisition front here. The last, sir, if you can comment on the NRI deposit flow. I mean, how it is trending, let us say, during the March quarter, and then, if you have seen any slowdown post-March, particularly because of this West Asia crisis and so on so forth. Yeah, those are my three questions. Thank you, Suraj, for the questions. Let me cover one by one. On the LCR, we ended average at around 109%. What I can say is that, as we are talking today, well, I can't give that number. It is significantly better compared to that at that point of time. We all know that March being a year-end quarter, the kind of deposit rates which were in the ecosystem. As you rightly said that our bulk deposits are around 50% and our CASA ratio is slightly on the lower side. We had to play tactical on this one and said that what is the LCR level on an average you are comfortable with? We could have easily taken it to 115%, but cost we have to pay for that. This service, when you balance it out and you know that the same deposit if you take it in next quarter, you have to pay a lower cost. Given that, we said that we'll keep it somewhere around 110%. We targeted 110, we ended with 109 because in the last moment something happened. Because we wanted to be efficient. Okay. At the same pace, let me tell you, LCR is not our concern at this point of time because we are significantly higher than these levels at this point of time. NSFR is around 122%, which also gives comfort that we are on track on that front. Coming to a related question on wholesale deposits. It is around 50% of our overall term deposits. It is a tactical play because we all know, and I'll talk about it a little bit, that how we are building our liability franchise now. Because without a core system, without all systems and solutions, building something is difficult and will carry a cost of building that, so which we didn't want to do that. Now we'll do it in a proper organic way. Tactically it played out because these are tactical stuff. On the wholesale side, if you look at our year-on-year deposit cost coming down is significant, higher cost reduction in wholesale deposits versus retail. If I remember it correctly, our deposit cost came down by 8%-9%. On the wholesale side, it came down by more than 20-30 basis points or even more. Effectively, tactically it plays out. That cannot be a strategy, but these are all tactics. We locked in ourselves only for short period of wholesale. We are not locking ourselves for 5 years, 4 years, 3 years. We have not locked in too much, I don't think at all beyond 1 year, and it has been between 6 months to 1 year. To that extent, this tactical play will play out. Yes, the wholesale deposit cost is slightly higher than the retail cost deposits, but incremental cost reduction in bulk deposits is better than the retail deposits. This has helped us in our management of cost of funds in the short term in a tactical way. This has not played against us in our execution strategy. Yes, we have to build the liability. Before I move to the gold loans, let me tell you what we are doing on the liability side. Because eventually the main job the bank has is to build a good liability franchise, which will help us in our quality asset growth as well. With the core system falling in, now almost every quarter we are launching three products on the liability side itself. As we're talking, we launched Smart Save current account, Smart Save savings account with, you know, very good features, and it has already started doing for us. We launched Freedom Account. Okay. There are various products which we want to launch every quarter because now we have the system to launch. So far, we didn't have the system to launch. On the current account side, with the transaction banking, CMS and supply chain and trade, all of this coming together, it will help us in going to both wholesale as well as SME customers and also to TACS customers, which will help us in building our granular, long-term customer franchise. What we are doing is, so far we didn't do it because it didn't make sense, but now with these products in our arsenal, we will, we are launching the sales machinery for, especially for current accounts and also for savings accounts in the metro markets. This is the strategy which will play out. Effectively, the liability franchise build-up process starts now. Okay. Also, as you know that CRAR new guidelines, one of the guidelines which is going to favor us actually is the guideline on the TACS, Trust Association Clubs and Societies. In that, because of that 40% new regulation, TACS will also be CRAR friendly. To that extent, we have created a separate vertical on TACS headed by a very senior person who will work across wholesale, retail, and SME. You will also see a significant growth in this TACS segment now. Other guidelines because of CASA itself is very low and now the penetration is still very high levels. I'm not saying that's a good thing to happen. This is something we want to improve significantly from here. Again, tactically, it has not taken away too much of LCR from our side at this point of time. To that extent, tactically we are on the right place. Having said that, the main job will be to build the liability franchise now. Next question on gold loans. Very relevant point which you have mentioned. Number of accounts gone down and tonnage growth not happening. Let me tell you, these are two different points for us. Number of accounts went down before and tonnage growth was also going down. The reason for that is on the regulatory guidance before, there was some challenge which has been now changed again favorably. There's regulatory guidance where, below INR 2.5 lakh, okay, there are some challenge in getting gold customers because of the collateral issue. That has been clarified, no problems. Once we moved into the larger ticket size, we realized that overall for the bank, that is better in the long run. Also the risk with respect to LTV, etc., is much better there. There what we have seen is that high value customers only take the loan they need. If you give INR 100 loan, you will give that tonnage what is relevant for you. Hence, typically when prices goes down, tonnage will go up, and when prices goes up, tonnage will go down as the ticket size increases to beyond INR 10 lakhs and things like that. Given our cost and other issues, et cetera, we also move slightly on the higher end of the curve on the gold loan side, and hence our number of customers have come down. The tonnage growth, of course, it has gone down because as I already explained that people takes what they need, because we are not attempting that segment where they're giving their last kind of a savings on the gold to take some consumption loans. Most of our loans go into productive usage. From that time, from that perspective, I think tonnage growth will go up once the gold prices, if at all, if our gold prices will come. That's on that. There is no risk at all in the gold loan portfolio. We have done our analysis while you will ask the question, while you are touching gold, I'm just saying that our LTV is pretty low, especially because a very large portfolio is on the agri side, which is not governed by the 75% LTV. Given that perspective, I think we are sitting on fair bit of margin in terms of risk. Even another 10% fall in gold prices will do nothing to the portfolio. To that extent, we are fairly convinced. Having said that, I said before, again, I'm saying this is a tactical play. Our eventual play is to bring gold down to 30% of our portfolio by 2030. Out of that, at least 5% of that 30% will be working capital loan. We have just launched a product which is for targeted towards working capital SME backed by gold as a collateral. This should be around minimum 5% of our portfolio as we go to 30%, and hence it will be 25 plus 5 by 2030. Rest, around 30% plus will be on the wholesale side. Around 18% will be on the SME side, and rest will be on the retail side, which will be between 20%-24%. That we are firmly at that game. One of the other things, because you didn't ask that, but let me answer that question also, because that question may come later on by somebody, that our gold portfolio increased to by around 7% in the mix from around 45%-46% to around 53%-54%. The funny thing here, they will see that on the retail side, the retail portfolio has exactly decreased by that mix. That is basically what we did is the loan against security, which was nothing but gold, has moved from this side to that side. Hence, if you add it up and say that what is our portfolio mix, where gold is a collateral, it has remained below 50%. Okay? Because this is regulatory reasons, we moved that business from this side to that side, more on the retail side. From that perspective, I think the gold growth, which we are seeing around 53% year-on-year, is slightly artificial from that perspective, and obviously we don't see that growth next year. If we continue to grow at the levels that we are growing at a bank level on the asset side, provided we can grow that deposit franchise, you will start seeing some of the other businesses will grow much faster. On the NRI deposit flow, which you asked that question, very relevant question for us, because I think we are around 15%, 16% of our deposits is in NRI. At this point of time, it's not good. We can do better. We have created a very clear, strong vertical with a very senior person driving it right now. We applied for our rep office, representative office in Dubai. By now it would have probably been operational also, but because of the West Asia crisis, we have asked for an extension because we are not able to do anything there at this point of time. We have finished most of our legal paperwork, et cetera, and we have finalized the CRO also. CRO means Chief Rep Office Officer. We have created a separate vertical within the bank now focusing primarily on NRI business. Obviously, in the short term, there has been little bit of a disruption flow on the NRI flow, remittances and NRI flow in the bank right now. These are short-term kind of things. In the long run, we think that we should be at least 20% of our deposits or liability must come from NRI, and we have created a separate vertical structure for this. I hope I could answer most of your questions, Suraj. Yeah, yeah, sir. I think that was very elaborative. Just one follow-up, sir. This LCR coming down is because of wholesale shorter ten-year deposit, you know, impacting the denominator of the LCR? Yes. Also what we are saying is first, Kate, we are, you know, having higher LCR. It also, not margin activities ... where the cost of funds was very high in the last 20 days, 15 days, 1 month of the year. We know that cost will come down post-March, no point, right? That's the reason we tactically said we targeted 110, but we achieved 109. Somewhere something slipped. Right. Right. Sure. Thank you so much, sir. They're much higher right now than just. Got it, sir. Thank you so much. Thank you. We'll take our next question from the line of Akshat Agrawal of SMIFS Institutional Research. Akshat, please go ahead. Good evening, sir. Thank you for the opportunity. Sir, my first question is on your scale strategy. Sir, as we enter into a scale phase of SBS 2030 strategy from this year onwards, could you please update on the progress of the retail transformation on the asset side? When do you expect growth to meaningfully pick up in retail and SME? What kind of numbers should we expect in FY 2027? Sir, my second question is on fee income side, which picked up strongly. I wanted to understand the key drivers. Like last quarter, PSLC income was missing. Has this come back this quarter? Was any syndication fee in this, in the numbers, this quarter? A related question on costs, sir. Were there any material PSLC related costs which were largely absent in 3Q, which were charged in 4Q? Did you see any headcount reduction? How should we think about the cost-to-income ratio trajectory? Can we see it move below 60% in FY 2027? Those were my 3 questions. Thank you. Thanks, Akshat, for the questions. Starting with the retail assets, we are first focusing on retail liability because we, our retail strategies is very, very clear that for assets which are earning assets, and the way we define them are businesses like commercial vehicles, commercial equipments, healthcare, so these, and some extent inventory funding, okay. This also goes in and to some extent auto loans, but that's a consumption business, but at least it's secure. These are the products where we would grow beyond our liability franchise, which means to dealership through various places, including our internal customers, of course, okay. Any other product which is on the consumption side, we'll do it on the back of our liability franchise, and primarily it will happen by cross-selling to our existing customers. We have limited set of scored existing customers, we are primarily focusing on new customer acquisition this year onwards to have a meaningful growth on that side of the book. We have been very cautious on the unsecured side of the business for the last 2-3 years, and this has helped us well, because there our delinquencies are same as the markets, but because our portfolio is coming down, it is helping us in managing our slippages and thus managing our credit costs. Prudent decisions were taken. Simple strategy is build the retail assets on the productive assets, and this year you will see that those products which has grown and what has de-grown are products which are unsecured in nature. There was a cycle on MFI, and with the monsoons not being predicted very well for this year so far, whatever we have seen, we will not take the risk on agri business also that much. Given all this, I think you will not see a meaningful growth on the retail asset side, but we'll create the dry gunpowder there by creating a good liability franchise, which means basically more customers to whom we'll sell the retail assets. Our meaningful growth with retail assets will start from FY 2028 onwards. I've already explained it, but I'll casually mention it that our retail assets growth this year has been negative primarily because of the loan against gold security. As we say, loan against security backed up by gold. That portfolio has come down from more than INR 2,000 crores to around INR 300 crores. That was a regulatory mandate, and that we compensated on the gold loan side, which I've already mentioned. That's why you're seeing a negative growth, but core retail assets have not grown negatively. In addition to this, we have launched two products in retail assets. One is the school fee financing, which is a very good product. The second one is, again, it's called LAS, but Loan Against Security, but this security is now mutual funds. Eventually, we'll do PPF and other things, insurance and all of this, okay. These two products also are very safe products at this point of time, and it requires capability which we have built already. These two products will also see some traction in the bank going ahead. That is about retail assets. Coming to your question on fee income, I confirm there has been no syndication fee in Q4, okay? Frankly, PSLC premium was very, very low in Q4, I mean, this year, which is exceptional actually. We never felt it will be so low. We didn't book much. I mean, we booked some, but it was significantly lower than what we do booked in Q4 of last year. Significantly means significantly, okay? Also, as we all know, which is a market phenomena, happened with all banks that the MTM gain which we had in Q4 of last year in fees was significantly higher, and this quarter obviously there was nothing, okay? If at all there was on a HFT, there had been some, something we had to compensate for. Given all this, if you look at Q4 last year on fees and Q4 this year on fees, overall fee is actually lower. The core fees, what I mean by core is non-PSLC and non-treasury. Our fees are higher, which is the core fee, which is more critical for us because that's sustainable over a period of time. In a very worst case scenario, we have done well, and 21% still is not a bad number. When we did that syndication, we didn't have much from PSLC, and we didn't have we had only negative on the other side, on the debt side. Given all this, I think fee income is a good story here, like our announced credit cost line that saying. Coming to the cost, yes, there was a significant increase in Q4 over Q3. Again, this is very tactical in nature because most of our CSR initiatives played out in the last quarter of the year. Hence, that is a one-time kind of a cost which happened, which generally gets distributed over the year. This time it got little bunched up in the last quarter of the year. That's why from Q3 to Q4 cost went up. It was not for any other reasons. On the headcount increase, we had a increase of around 525 people in the headcount over a base of 7,700. It's not even 8% increase in headcount. The cost increased little more than that. Clearly, I mean, because this year we invested into high cost and high quality resources in wholesale banking. Our wholesale banking franchise moved from a barely double-digit number of relationship team to a 80-plus relationship team. We're also now investing in the transaction banking franchise. All of these things together, the cost of some of the people who we have got, and they are expected to obviously reduce the cost to income of the bank because they're supposed to get much more income. Hopefully this will play out for us. On the CTI, I'd always said that we need to be between 60-65 till FY, end of FY 2027. FY 2028 onwards, the operating leverage will kick in because all said and done, the technology thing has just come in now. 2025, 2028 onwards, we'll start seeing the operating leverage across branches, across products, and across the technology investments which we have done. Till FY 2027 end, our CTI will remain between 60-65, and we are somewhere in the midway, around 62% there. That's what your 4 questions. Thank you. Very well, sir. Thanks for the detailed answers. Just a follow-up on the SME growth. What kind of growth we expect this year? When should it pick up meaningfully? Yeah. SME and Lab together we call BLG, which is Business Lending Growth. That grew around 2%-3% last year at year-on-year basis. This is something we did very consciously because we saw a very strange year last year. The first half of the year actually, and it's still going on, is the tariff-related issue. The tariff-related issue got overpowered by the West Asia crisis, which also impacts in a way, the not only exports now anymore, it's also supply chain. Not always the SMEs have the kind of a staying power a large corporate or even sometimes the mid corporate has. Given that, given the size of our balance sheet, we didn't want to take a risk. We always did it, whether it was in personal loan, whether it was in MFI, and then we did it in SME last year. We deliberately didn't focus on SME portfolio growth, but the same team worked very hard to get the portfolio quality better, and that has helped us in the Q4. Coming this year, till we get clarity on this West Asia crisis, and hopefully it can come in this quarter or maybe next quarter, who knows. That will clearly decide what is the level of acceleration we want to put on the SME. As we are talking, we are investing more into people in SME because this thing will come and go, but eventually the 2030 commitment of around 18% of SME portfolio into the book remains, right? It is now around 11%. A significant roadmap is there for SME. We will accelerate only when we feel comfortable in terms of risk. Whatever happens, single digit growth is given. Hopefully it will be back to that 28% growth in the next two years. Thank you very much, sir. I will rejoin the queue. Thank you. Thank you so much. We have our next question coming in from Parth Motka of 360 ONE Capital. Parth, please go ahead. Yeah. Hi. Can you hear me? Yes, please. Yeah. Yeah. Yeah, Yeah, Parth. Yeah. Yeah. Hi. Thanks a lot for the opportunity, sir. First, what is the impact of ECL, on the day of transition? Yeah. Is this our only question, or can we answer it? yeah. I have one more. I'll take it up after this. Okay. I will give a one-line answer to this. Yeah. I will say for Satish to respond in details. At a high level, what we understand is, you know, there are various smaller components there, but the large impact items are the stage 2, especially on the SME side, where there are 2 parts. One is the 5% and one is the 1.5% in the gold loan. Okay? Mm-hmm. Also that is on the large impact item on the negative side. On the positive side, we'll be able to, or we have to now write back the contingency provision of INR 105 crores and this entire INR 210 crores, which I said, which are well above regulatory capital, that can be subtracted from or that should be subtracted from whatever is going to come additional because of these provisions which you have to take. At the margin, there could be some very marginal impact. The calculations are being done, and on that I'll hand over to Satish to answer this question technically. Parth, we already have a ECL model in place because we report our numbers as per IFRS for the purpose of Fairfax. However, that model we are reviewing completely based on the revised ECL guidelines. That work is currently underway. However, because our model was prepared some time back, maybe over a period of time our business model has also changed to have impact on that model. We do not know what happens once this entire model refresh happens. It is still one or two months away when we have the full model. Nevertheless, basis the model that we are using currently for our IFRS reporting and, basis the portfolio which we had as at December 25, concluded what is the impact, and that probably we can call it as a transition impact, because as per the guidelines, the transition impact will have to be taken on April 1, 2027, whereas the benefit of capital adequacy ratio we can defer for a period of 4 years. That transition impact is not a significant number for us at the moment. This considers the fact that, and we had that advantage because, not only on NPA that we have been making aggressive provision, but even on standard assets, we had this additional provision created at the time of COVID, INR 105 crores, which will now get subsumed into the overall provision that we hold. That benefit we have got, and because of that, the transition impact is not a significant number at all. Subject to, in case there are any significant changes which happen to the model. I would not completely say this is the impact and this is what will happen because the work is currently underway. Once we refresh that model and then run that model on 31st March to turn 26 numbers, we'll have. All along, we have been undulating the numbers, and that impact is not very significant for us. Sure. Sure, sir. Thanks a lot for the answer. My second question is, on the gold loan portfolio, the yields had been coming off over the last, at least from Q4 FY 2024 to, you know, Q4 FY 2025, the yields had been coming off. Over the last three, four quarters, you know, again, you know, the yields have increased by around 30 to 40 basis points, at the portfolio level. Is this largely because of the gold loan that we have been, you know, or, or the new vertical, that's the working capital against gold loan that we have started? Is that the right understanding? Yeah. Let me explain this. We are not aggressively pursuing gold loan the way we were doing before because we are now looking at larger ticket sizes. Okay? Hence we said that we must maximize returns to a great extent because we realized that a lot of these customers who are coming to us are coming from various NBFCs and other institutions where they are paying higher than what we were asking for. We said that, you know, this is an opportunity where we do not want the growth, and we are getting the growth. Let us try and maximize the returns in terms of yield until we ask for the yield. That means we are actually underpricing ourselves so far in this business. It is more of a discovery for ourselves. Okay? It's not that it happened only in that portfolio which you just talked about, the working capital, but also, in the other portfolio as well. Overall that has worked out well for us. Sure, sir. Sure. Thanks. Thanks a lot for answering my question. Thank you, Parth. We'll take our next question from Vibhor Talreja of Nest Amplifier. Please go ahead. Hi. Thank you for the opportunity. Am I audible? Yes, please. Yes. Yes. Okay. Thanks. Hey, this question is more from a long-term perspective. Probably, this is probably your sixth year in CSB. From the start, I think the idea was to grow liabilities, which somebody asked and you answered, that it has taken its time. On the retail assets, the business has done well, and we have been beneficiary of gold prices. On the retail, et cetera, I look at the last four years, five years, it has been a fairly tepid growth than what we would have thought through or planned for. Even now, if I understood correctly, what you said was that this will pick up in the Q4 FY 2027, Q1 FY 2028. If you can give me a color of why exactly it is taking so much time. Is it because the market exists, there are NBFCs who are able to capture at that small base, reasonable pool of assets and profits, but somehow, despite our liability advantage, we have been able to do fairly little on the retail side, except the gold loan where, which has been a meticulous execution benefited by the increase in gold prices. Yeah. Yeah, Vibhor. I will just explain. We are a bank. As a bank, we don't want to address a retail assets business like NBFC, because I have also been on the board of NBFCs before, like HDB and Axis Finance. The way NBFCs does business is little different to how a bank does business. There was a time when I used to handle both the bank and NBFCs together when I was in HDFC Bank. The whole approach is different when you're in a bank. Here, we are not here to build asset book. Here, we are to build a franchise where liability comes first and assets follows. In the process, liability also grows because EMIs and the other things happen in that account. That's the approach we are taking, and hence even if it takes a high road, in the long term, eventually what it does is, eventually it builds a franchise which is a compounding growth story. In a NBFC kind of a framework, it is a slightly different strategy, which is different to how a bank operates. A bank operates based on liability process. Given that perspective, you are right that we took little time, and there's a reason for that. The reason is that our core system migration, for whatever reasons are, have got little delayed in terms of decision-making which core system we'll go for and when we'll go for that. We started the core system migration for various reasons, internal reasons, only in FY 2025, okay? FY 2024, the decision got taken. FY 2025, we got delivered by May 2025. We are along with the sound systems, and then in a very quick and record time, we are able to roll this out. Primary reason is, and look at it this way, without a proper core system, because we are on Marvel which can't do much, I also realized over a period of time you know, the shortcomings of Marvel where we used to run before the core system, where you really cannot launch new products, you cannot have various functionalities. Hence, our entire story of the bank from a retail franchise is starting now, frankly speaking, because the core system only is now stabilizing or stabilized. Now we can launch products. We will launch sales team. We tried launch sales team before then we realized in the absence of products, customers comes back, they don't give keep balances, and those accounts becomes inactive. There's no point, and definitely you cannot cross-sell them anything. Given this, the retail journey is starting now. That's the honest answer. We know how to execute it and take it forward, so I'm pretty confident that we are not shifting the goalposts from FY 2030 to FY 2032 or FY 2033. We are saying that if we have lost two years in taking the decision on the core system for whatever internal reasons, we will work harder to make up for that time, and by FY 2030 we'll deliver what we had promised. That's the real answer. Hope this clarifies. Thank you. All the best for that. Thank you so much. We'll take our next question from Puneet Bailani of Dolat Capital. Puneet, please go ahead. Yeah. Hi, sir. Am I audible? Yes, please. Yeah, Puneet. Go ahead. Thank you. Sir, just on your NIMs, the reported NIMs were flat QOQ and advances growth are 9% QOQ on deposit growth. The NII growth is only 2%. Is this some take-home convention or what am I missing here, sir? That's the only question I have. NII growth, year-on-year was quarter-on-quarter is lower, but year-on-year is 25%. Your question is more on quarter-on-quarter, you're saying? Yeah, quarter-on-quarter. Like, how do I reconcile this? The loan growth has been 9% and NII growth is only in the range of 2%. Something I'm missing or what is it? No, if NIM has dropped by two, three basis points, okay? Right. Quarter-on-quarter asset book has grown by how much? Quarter-on-quarter asset book growth is 9% growth with a NIM drop of 2 basis points. Okay? Right. I mean, there is nothing here which will act differently, right? I'm sure mathematically it will not look like that on a quarter-on-quarter basis, this thing. On a year-on-year basis, it's 25%. Maybe we can do the maths once. Okay. Okay, sir. Yeah. Thanks. If you look at it, our yields has fallen little bit in Q4, cost of deposits or cost of funds has gone up slightly, which has impacted the NIM. I'll tell you what has happened. In spite of a significant improvement on the quality of the portfolio, which is the GNPA, NPA and credit cost, okay. If NIM has fallen, then the difference between cost of funds and yields is little more than what it meets the eye based on only the 2 basis points on the NIM. I think that's where you will find the answer. Okay. Okay. I'll discuss this offline. Thank you, sir. Sure. Thank you so much, Puneet. We'll take our next question from the line of [Narendra Gandhi] of Nalanda Equity. Mr. Gandhi, please. Now- Yes, please. Yeah, hi. I just wanted to know if your CTO is on the call? CTO is not on the call, but you can ask me. I obviously will not know as much as he knows, but I'll try to answer. No, actually it was regarding this recent AI related cybersecurity threat that even our FM kind of, you know, came in, came online and spoke about. Just wanted to understand if there are any implications on the new update that we've just rolled out and, with regards to Anthropic and a lot of banking softwares are sort of already said to be under upgradations now in the next two years. Since we've just rolled out our software, I wanted to understand if you're up to date with that or not? Yes, certainly. Yeah. Any other questions, or I'll respond to this. I do. So we've been talking for the last two con calls and I'm really glad that you've been able to deliver on the 1.5 ROA and the 15% ROE. I think a lot of analysts were very skeptical in the last quarter about you delivering on those numbers, and you kind of told that you're gonna make sure, you know, you end the year above 15% ROE. I think for the quarter, you've done around 17-18% ROE, which is a great number. Congratulations on that. Other than that, just wanted to kind of understand what are we targeting for the next year in terms of loan growth. I think you said 25%, if I'm not mistaken. Please correct me if I'm mistaken. I think ROA and ROE wise, I would like to know, where are we targeting, because I think the cost to income should start coming down, from next quarter onwards, right? These are my questions. Sure. Sure, Mr. Gandhi. I'll just respond. Yeah. On the Claude, Anthropic, which you are talking about, the entire Mythos thing. See, advantage of working in a small bank is we all have to know everything. Okay? There's an April 27th circular from RBI, which gives us certain guidance to the banks. Within that, there has been an advisory of what are the things the banks needs to put together as directional inputs and update board within 2 months of that, which is by 27th June, and whenever the board meeting happened before that. Board meeting or ITSC. What is advised is either ITSC or SB or board. Okay? Right. We'll do it by ITSC most probably, because our ITSC chairman, Sharad Saxena, is a practitioner, and he is extremely good, and he understands the subject very well. Of course, our CTO understands this very well as well, including our security CISO also understands this very well. Between all of us, and I'll also be involved in this because this is too critical and too, I'll not say strategic, but too critical thing not to have an eye on and not to have a grip on this. Okay. We have started working on this based on the guidance. Also, I believe that some of the largest banks in the country is also, you know, working on seeing that how the entire guidance is there for the entire ecosystem, because this is not where, it's not a competitive landscape. It's about the banking ecosystem. Right not only for India, but for the whole world. I think different countries are talking to each other also to understand, because this not only the banking system, but the cybersecurity, there are much larger implications of this beyond this banking ecosystem. I think there is lot of clarity will evolve on this over a period of time. Right now, we are doing what the April 27th circular from RBI says, and we'll update the ITSC/board by before 27th of June. Sorry to cut. Just 1 question regarding this. Are we expecting, our, you know, our cost to income, which we're expecting to come down from next quarter onwards, are you going to say that might be delayed because of the cost that might come with regards to this particular notification? Because obviously, this is going to come with added cost, right? Let me put it this way. Right now, I think we are talking about frameworks and ways to do it, because I don't think that there is complete clarity in exactly what is to be done. Will there be a cost? What will be the inputs? How this will get shared, et cetera. We have to figure this out. It is evolving scenario both globally as well as in India, it is too premature to answer on this one. I just want to clarify one thing. I never said cost into income will come down from next quarter. I said it will remain for FY till FY 2027 at the range of 60-65, hopefully somewhere around where we are. FY 2028 onwards, it will start drastically coming down, by FY 2030, we should be significantly lower. I'm sorry. You think it'll stop going up, this year onwards, is what you said, right? What I'm saying, Mr. Gandhi, is we cannot respond on something where is no clarity to anyone in the world, forget about us or in the ecosystem. It's a evolving story. Let's figure it out, what it is and how it is to be worked out. It's too premature to answer on that, right? Understood. Yeah. On your second question, this one I can answer with more clarity, which is, On the loan growth, yes. The loan growth will completely depends on the deposit growth, what we have. We have the ability to grow at similar or even faster rate than what we have grown last year. Even if our gold loan growth comes down a little bit, which may happen, it all depends on at what cost, what deposits comes, and how the liability franchise picks up. This year onwards, we will significantly focus on CASA acquisition. The CASA acquisition will bring in customers. The balances will start growing only at one year after that. From that perspective, I think loan growth will be a function of our ability to build the liability franchise. Yes, I think 25% is something, we'll be disappointed if we don't do that part, that much at least. On the ROA, ROE, you're right. We have delivered what we promised in Q3. Same thing, we delivered what we promised in Q1 NIM. Same thing, we delivered what we promised on asset quality last quarter and this quarter. You can see we are consistent there. Of course. Coming to next year prediction, I think our overall range of somewhere around 1.5% and overall range somewhere around 15% of ROE, that will sustain. Thank you. I hope this answers. Thank you so much. We have a follow-up question coming in from Akshat Agrawal. Akshat, please go ahead with your question. Thank you for the opportunity again, sir. On margins, would you say, NIMs have largely bottomed out? What kind of trajectory do we expect, from here, if not quantitatively, at least qualitatively? What were the drivers of the, yield compression? Was it just higher share of wholesale, lending because, gold yields, increased on the portfolio level? Or was it, coming from the full impact of the December repo rate cup, flowing through P&L and the MCLR repricing? That was my first question, sir. I have one more. Please go ahead. Please finish everything. I'll answer it to you. Yeah. On the SME book, of the INR 10 lakh - INR 11 lakh accounts that slipped last quarters, how many accounts have been upgraded or recovered during this quarter? How many, I mean, are pending, which could affect asset quality or credit cost upside next quarter? Should we expect most of these to be resolved by 1 Q, or there's benefit to 2 Q as well? Lastly, sir, on the levers to ROA, ROE, we have talked about it a bit, but just to understand, like, because this quarter, 1.5 ROA was due to low credit costs. Are you done? No, we didn't hear the last line. Please, can you repeat? Yeah. Sir, just one more question on the ROA, ROE, medium-term levers. Where you did talk a little bit about it, but this quarter was due to a very low credit cost. Going forward, I mean, the credit cost will slightly move up, and because we will have better retail growth and fee income should. Akshat, Yeah, go ahead, sir. Yeah, Akshat, I think I've understood your question, though your voice is breaking, but I think I got a sense of your question, so let me try and answer that. If you don't get the answer, you ask again. Sure, sir. Thank you. Yeah. On the margins, the general guidance which I have given always, it will be 3.75% to 4%, somewhere in between. We are right in the mid of it, somewhere around 3.82% or something like that. I think it's very difficult to predict in basis points it will go up or go down, but it will remain in the range of 3.75% to 3.8%. Having said that, I am not so sure it has bottomed out or not because of 2 reasons. One is our own internal portfolio, the business mix will start gradually changing. I don't know whether it will happen in the next year or next quarter, but over a period of time, it will happen. Whatever business mix changes leading to any interim, really a transitory change in NIM, we'll get compensated on the ROA side by fee and cross-sell to those customers. Because in, unlike gold loan, having gold loan with a high ticket size, we are planning to do some cross-sell. In wholesale, SME, and some of these businesses where your yields are lower, because transaction banking, we are going big time into that. We expect cross-sell, and also we expect liability, which should bring down our on a long-term basis to bring down our cost of fund. There's some interim noise here and there, but eventually it is building up a franchise and hence, eventually we'll look at a NIM which is similar or higher, but interim, there could be some noise there. We'll remain, try to remain between 3.75%-4%. On yield compression, you're right. 2, 3 things happened, you only answered some of them, which is with a 150 repo rate cut. On the BLG portfolio, it immediately impacts, wholesale business, it impacts depending on the MCLR, how it is moving, and what is the tailor of the MCLR with the customers. Now everything is almost played out. BLG plays out in, instantly wholesale, it is sort of played out almost, hence we could see a compression both on the wholesale side as well as on the SME side in terms of yield compression, which has happened. I think that answers the yield compression side. Coming to your question on SMA book, we don't give this level of details in our past disclosures, so it is very difficult to give you answer because you have asked for a very granular question. But at a high level, for your comfort, I want to tell you that I was looking at the presentations on SMA. Almost every business and at a bank-wide level, our SMA group has constantly been improving. As we are talking on Q4, the SMA book is lowest in the last 5 quarters. Okay? Sir, just to interrupt. Sir, actually, I was asking about the 10 to 11 accounts, it slipped last quarter on the SME. That's not SME segment, sir. No, no. At that level of. No, no, it is not right from giving, from a customer perspective also and from a disclosure perspective. You can obviously understand that some of them will get upgraded, some of them will get recovered. Thankfully, some of them has got upgraded recessively because some of them were I said in last quarter itself that because we are going through a migration, some of the MIS, et cetera, we got little delayed because of which you happen and there is more technical issue. To that extent, yes, some of those accounts are related to that. Obviously, where else it will come from? Exactly how many, how much, where, we don't give that level of details, and we cannot appreciate that. Yes, you're right, it is obviously coming from the existing portfolio, or existing privileges. Right, sir. and in the medium term, and you mentioned that the gold loan portfolio comes down, et cetera. It's not coming down immediately in terms of percentage. Levers for ROE is basically cross-sell to lower-yielding product business. Why should we do a business where it is lower yielding if we do not have a visibility of ROE in that business, right? I mean, we are not doing here business only for top line. If we strategize to build a business, it's an entry strategy, whether it is in wholesale, SME or in retail. Eventually, the ROE fee will play out there. In the transition this way, that way, somewhere it can happen, and that will be managed because the gold portfolio is not coming down in just one year's time from a 54% to a 30%, and we'll get that time to manage this. I think we should be able to manage between ROE and ROE. You will see that, and this year also, let's not forget that we had to, we delivered this result this quarter in spite of the most difficult scenario on the fee business, especially on the treasury side. The upside on this, nobody can see the future, can predict the future. We had taken a large book on the AFS side, which we could do only one time during that period when RBI came out with that regulation from HTM to AFS, hoping that we will leverage that last year. Instead of leveraging it the other way, nobody predicted that from 6.6 it will go to 7.1. Everybody thought it will come to 6.1. Eventually, that will play out once the crisis gets over. Hopefully, on a full year basis next year, there's a significant leverage there on the ROA and automatically on the ROE side. Also with capital consumption going high, that's more technical and no more maths. Obviously, ROE naturally will improve, that thing, I think you guys will factor in. That, that's broadly the answer of your questions. Very well, sir. Thank you very much and all the best. Thank you so much. Thank you so much. Ladies and gentlemen, that was the last question for today. On behalf of CSB Bank Limited, that concludes today's conference call. Thank you for joining us, and you can now click on the leave icon to exit the meeting. Thank you all for your participation. Thank you very much. Look forward to everybody joining the call again in Q1, this financial year. Thank you. Have a good evening. Thank you so much.