Ladies and gentlemen, good day, and welcome to Q1 FY25 Earnings C onference Call of City Union Bank, hosted by Ambit Capital. 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 will now hand the conference over to Mr. Prabal Gandhi from Ambit Capital. Thank you, and over to you, sir. Thank you, Rituja. I welcome everyone on the First Earnings Call of City Union Bank for Fiscal 2025. From the management side, we have Dr. N. Kamakodi, MD and CEO, Mr. R. Vijay Anand, Executive Director, and Mr. J. Sadagopan, CFO. Without further ado, I'll hand over the call to Dr. Kamakodi for his opening remarks, and then we can follow it up with Q&A. Thank you, and over to you, sir. Good evening. Hearty welcome to all of you for this conference call to discuss the unaudited financial results of City Union Bank for The First Quarter of Financial Year 2025. Board approved the results today, and I hope you all have received the copies of the results and the presentation. As you are aware, RBI wide its letter dated 28th May 2024, given approval to appoint Mr. R. Vijay Anand, Executive President, as Executive Director for a period of three years. Subsequently, he was co-opted as Additional Director, Executive Director by the board at its meeting held on 24th of June 2024. You might also have seen the announcement of our annual general meeting to be held on 22nd August 2024, which will be happening through virtual mode. On behalf of our board, I invite you all to participate in the AGM. During the Q4 financial year 2024 call, we had stated, below our expectations for financial year 25. With all new digital initiatives together, with the strengthened top and senior level management, we could see some visibility in the growth front growing forward. Post MSME digital lending model will be expanded to secure retail lending, such as housing LAP, micro LAP in Q1 financial year 25. On asset quality front, we will continue with the trend of reduced slippages, coupled with the improved recovery for the current year. We have restored our ROA to our long-term average of 1.5%, and it will continue. We will see the benefits of, digital lending process in the coming quarters. Since we are taking the cost up front, our cost-to-income ratio will be slightly higher than the current year, and once full benefits of the digital lending and other initiatives transfer into growth, the cost-to-income ratio will start to come down. By and large, the numbers are in tune with our expectations. Historically, if you see our credit growth in the first quarter of every financial year, we used to have a negative growth compared to the last quarter of the previous financial year. But this year, we had registered a marginal increase in advances growth in the first quarter of financial year 2025 compared to Q4 financial year 2024. We are seeing these positive numbers after 10 years. We have registered 10% advance growth in Q1 financial year 2025 year-on-year, and our advances closed over and above Q4 financial year 2024. That is, INR 46,481 crore, and increased from INR 42,405 crore in Q1 financial year 2024 to the INR 46,548 crore in Q1 financial year 2025. BCG have completed their assignment with respect to MSME lending unsecured products in June 2024, and now we could see the implementation of digital lending starting to give initial results. Apart from our core strength of MSME, now we are slowly spreading our avenues in secured vertical, like secured retail, micro LAP, housing, et cetera. We have piloted the digital unsecured lending only for existing customer, predominantly salaried and yield around 13%-14% with the complete digital workflow application. We have just built a small portfolio of INR 3-4 crore on this particular pre-approved credit. So, we'll, we'll, we'll just wait to see the behavior before we do any scale-up or what it is. It is in a, in a... We have made a very small beginning in this. Our deposits stood at INR 54,857 crore for Q1 2025, as compared to INR 51,655 crore in Q1 2024, registering a growth of 6%. Average CD ratio of first quarter financial year 2025 stood at 84%. Theoretically, we can grow advances by about INR 3,300 crore with existing deposits and surplus funds. On asset quality front, we had stated that we will continue to have recoveries over and above the slippages. For the current quarter, the total slippage is INR 178 crore, while the total recoveries is two hundred and twenty-six crore, consisting of INR 192 crore from the live NPA account and INR 44 crore from technically written-off accounts, resulting in recoveries more than the slippages. As a result of this, our gross NPA percentage has sequentially decreased from, let's say, 4.91% in Q1 financial year 2024, 4.66% in Q2 financial year 2024, 4.47% in Q3 financial year 2024, 3.99% in Q4 financial year 2024, and now further reduced to 3.88% in the current quarter. Similarly, our net NPA number has reduced from INR 853 crore and net NPA percentage to 1.87% in Q1 financial year 25, from 2.51% in the Q1 financial year 2024, and 1.97% in the Q4 financial year 2024. Our interest income had grown by 10% in Q1 financial year 25, compared to the corresponding period Y- on- Y, and increased to INR 1,389 crore from INR 1,266 crore in Q1 2024. Our yield on advances stood at 9.59% for Q1 financial year 25, as against, 9.53% for the same period last year, and it was 9.85% in the Q4 financial year 2024, and NIMs stood at, 3.54% for the current quarter. Generally, earlier banks were permitted to charge the penal interest on term loan accounts, and the same was discontinued from April 2024. Further to the changes in the RBI guideline, now banks are permitted to charge the same as penal charges. If we add back this portion of the penal interest compared to what we were doing for the earlier quarters, our yield on advances would have been 9.61%, and our NIM would have been 3.6%. Our cost to income ratio for financial year, I mean, Q1 financial year 2025, stood at 49.34%, as compared to 51.26% in the Q4 financial year 2024, showing a sequential decrease. The charges paid to the fees paid to BCG for the digital lending implementation was over by Q1 FY25, and the cost of the new avenues of retail business will take at least six quarters to get adjusted with the increased business volume. As explained in the earlier quarters, so this year there will be, let's say, all the expenditure are taken upfront. Income will start picking up only towards the end of the year. Next year there will be break even, and, like, after that only we will be having profit getting added because of these, like, initiatives. Because of this, as we discussed in the earlier quarters, our cost to income ratio will be in the same range of 48%-51% for the next 4-6 quarters. As per our expectations, our ROA stood at 1.51% for the Q1 financial year 2025, compared to 1.40% for the corresponding period last year. Our PCR has improved to 73% with the technical write-off and 53% without technical write-off in Q1 financial year 2025, as compared to 70% with the technical write-off and 50% without technical write-off for the corresponding period last year. Overall, SMA 2 number of the advances also currently stands around 2%, as explained in the earlier quarters. We have achieved a PAT growth of 16%, and our PAT stood at INR 264 crore against INR 227 crore in Q1 financial year 2024. That is 16% growth year-on-year between first quarter last year and first quarter this financial year. To sum up, with the help of the, like, say, digital lending and better and efficient underwriting methodology, we hope our advance growth will be back on track. We are exploring various avenues of advance growth in addition to our core, core strength of MSME. We are putting our best efforts to reach the industry level growth as soon as possible. So in the last con call, many questions were asked, about the, like, what is the, guidance and all. I refrained from giving any guidance, and I said, you have to make a call from the numbers, and now we are able to see some amount of increase in the numbers, and we are working hard to ensure that, there is a stable growth, going forward. We have, as we have seen, we have reached, like say, double-digit for 30th June to 30th June, and also first time for us, like a positive growth in the first quarter, after about 10 years, which is giving us sufficient confidence that things should be better as we move forward. ROE is expected to remain at our current level of 1.5%+. We should achieve our PAT growth with the help of reduced slippage and provision requirement. As you have perceived, because of the other upfront, like, say, expenditure and all, what we are taking, so, we have to wait for, maybe, two, three more quarters to see the operating profit, showing a corresponding increase compared to the business growth. Our cost to income ratio should remain in the range of 48%-51% for the current financial year. So, as discussed in the previous con call, once again, we are building our capacity both in human resources and technology infrastructure for future growth engines, particularly retail. So there will be a drag in the, like, say, as we have seen, like, say, in the profitability, as explained earlier. So it will be reaching break even only next year and probably adding to the profitability by next, like, say, beyond that. So with this opening remarks, I open the forum for questions. Thank you very much. ... We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Harshada Gite from Prabhudas Lilladher. Please go ahead. Hi, sir. Good evening. So we see that the fee income has increased the Q-on-Q. So what are the drivers? Does it improve the PSLC income? No, I, as explained, some amount of incremental fee income has come through your both, let's say, the asset, the interest income, which had to be booked as other income for the SME accounts, and also some amount of, let's say, positive momentum we are seeing in the insurance front. So these two are adding some amount of, let's say, push for the other income growth. Okay, got it. And my second question is, what are the drivers for the decrease in the other operating expenses Q-on-Q? See, I'm not saying that. Let's say, you basically have the other expenses are by and large. Let's say, there is a sequential, what you call, from 369- 363. But year-on-year, there is a growth of 21%. We don't expect any major decrease in that going forward. In fact, our annual income annual increments will be coming only in the second quarter and all. So, like, there will be a, let's say, we don't expect any drivers, but the once the productivity picks up, as we said, which is a few more quarters away, let's say, the increase in the income will be there. With the stable cost structure, there will be a reduction in the cost-to-income ratio. So we don't expect any sequential decline in the cost drivers, in the other expenditure. Got it, sir. Thank you. Thank you. Ladies and gentlemen, who wishes to ask a question may press. Hello? Hello? Hello. Hello. Yeah, can you hear me? Yes, sir, I can hear you. Okay. Yeah. The next question is from the line of Rahul Malani from Sharekhan BNP Paribas. Please go ahead. Hello. Yeah. Yeah, hi. Good evening, sir. This is Vijay Purohit from Sharekhan. My question is, could you give us some more light on your digital expenditure and how this will benefit across the board? Yeah. In fact, we had a detailed discussions in the last conference call. Mm-hmm. We appointed BCG last year for one year, let's say, contract, which got ended on the thirtieth June. Mm-hmm. Using them, they helped us to build the digital lending processes, API integrations, and all such things. Some of our peer banks had earlier done that, and we were waiting for them to settle. After that, we started. So now, almost our, let's say, we started with less than INR 3 crore, then we extended it to INR 5 crore. And currently, as per the RBI's definition of regulatory retail portfolio, is INR 7.5 crore. So from all the, let's say, proposals, less than INR 7.5 crore go through this digital software now. It basically automates starting from the KYC to Aadhaar number check, to PAN number check, to, let's say, your CIBIL check too. Then it analyzes your what you call GST returns on an online basis. Then it analyzes the account statement through Perfios software. Then it analyzes the, let's say, account operations, after that, your income tax and other financial returns. It then fits into our policy, and then distinguishes the proposals, whether it can be, let's say, given or it cannot be given, or it has to be referred to the credit for the manual check, if at all, it any deviations are required, but proposals are by and large doable. So, the first product was put on track way back in, let's say, November. So after that, let's say, subsequent products were, let's say, changes were done. Similarly, let's say, both for MSME and also for retail products like housing loan and the LAP and all. So all the basically fundamental checks and putting into the system are automated. And that process has, let's say, by and large complete, with, let's say, after completion, the BCG also completed their assignment, and this is where we are currently. Okay. Just my one follow-up question is: How much expenses you have made for this digital lending project? And- Yeah, we discussed it in the last con call. Mm. We gave about INR 25-30 crore to, like a total, fees to the BCG, which works to about 2%-3% of our overall fact. Okay. This is apart from the, like say, the software cost and the implementation, APIs. Most of these API charges are on the pay-per-use basis. Mm. So the for the software comes about INR 10-INR 15 crore or something like that. So this is the overall expenditure on this particular project. Okay. Thank you. Thank you. Thank you. Ladies and gentlemen, who wishes to ask a question may press star and one. Participants may press star and one to ask a question now. The next question is from the line of Punit from Macquarie. Please go ahead. Yeah. Hi, sir. Am I audible? Yes, absolutely. Go ahead, please. Yeah. So first one is on the growth front. It's been disappointing. Like last year, like, I remember FY 2024, we were heading towards a double-digit growth. I know there is a seasonality in 1Q and all that stuff, but still, it's, you know, flat on low base, it's very disappointing. So are we still targeting the double-digit growth? What are the reasons for a lower growth this quarter? If you could elaborate on that. See, as I told you, cyclically, first quarter, we always used to have a negative growth, and after 10 years, for the first time, our Q1 figures are more than Q4. And, like say, we are able to see some initial momentum after whatever investments, whatever practices we have done on all the things we have been discussing so far. So, like say, from as I explained in the last con call once again, the December 2022 to December 2021, we had a 14% growth. But that fourteen came to, let's say almost flat or 1%-2% for December 2023. So now, after that, once again, the growth has started in a slow and steady fashion. You have already started seeing 10%, first time double-digit growth after multiple months. And we are working our best to ensure that this momentum is taken care and get to the next level. Yeah. Yeah, so the double-digit target remains, right, for the end of FY 25? Yeah. Already, yeah, that's what. Already we have reached that, and it has to... We are working to ensure the growth rate further accelerates from where we are. Okay, okay. Also on the ROA target, it will remain 1.5%, so it, that also holds there, right? Continues, the ROE target that is- Yeah. Yeah. About two quarters back or so, we got back to that 1.5- Mm. percentage trajectory. Mm. So some amount of, as I told, some amount of upfront expenditure we are taking and some increase in the cost is there. Mm. So there is some amount of impact on the operating profit, but we are still able to make 1.5% because of like say favorable conditions with us in terms of the asset quality. Now, the slippages are, let's say, less than the, let's say, recoveries. Right. So because of this, we are getting benefit from the asset quality, I mean, credit cost, which is helping us to maintain this. And we have enough elbow room in this factor for at least another, let's say, 4, 5 quarters or so. With this, only like, we are talking about, let's say, maintaining the 1.5% ROE. Right. So these 4-5 quarters, you expect the strong recoveries to continue, right? Another 4-5 quarters, if I can take it in that? Yes. Right. Okay. So that's it from me. Thank you so much. Thank you. Participants who wishes to ask a question may press Star and one. The next question is from the line of Shreyas K from Equirus Securities. Please go ahead. Hi, sir. Am I audible? Absolutely, sir. Go ahead. Yeah. Sir, I wanted to ask if the competitive intensity on SME loans has increased, given the recent digital push by bigger players on SME loans? See, as we have been saying that, it's not that competitive intensity, which is going through a major thing and all, because this competitive intensity is in place for almost a decade, which perhaps started, as I have been repeatedly saying, when ICICI Bank took over one of our peer banks, Bank of Madura, two decades back. All new generation banks are with us for almost more than a decade in every places. The competitive intensity is pretty much there, for almost a decade, if not more. More than anything else, in fact, let's say, last year, or maybe about, let's say four, five quarters back, you had, what you call, some amount of, insane pricing and all. Those things also cooled subsequently. Sanity was restored back in the pricing front and all. So it is, in fact, things have improved in the last one year... and over a period of time, the competitive intensity is like this only, and there is no major change, whatever. Got it, sir. Thank you. Thank you. Ladies and gentlemen, who wishes to ask a question may press star and one. Participant who wishes to ask a question may press star and one. The next question is from the line of Krishnan A.S.V. from HDFC Securities, please go ahead. Yeah, hi, sir, good evening. Thanks for this opportunity. If you could just throw some light around this entire BCG exercise. More importantly, what percentage of your existing customer base, according to your own analytics, becomes eligible for this end-to-end digital journey in terms of being just pre-approved so that they can go through the pipe, right? I mean, have you had some initial assessment around this? What is your assessment of where we are today? You said you had built a INR 300-400 crore portfolio already. Just wanted to understand your early experience in this portfolio and what's the kind of addressable market that you think within your own, because it's meant for ETB. So I was just trying to understand that, yeah. See, so fundamentally speaking, like, every one of my existing customers whose exposure is below INR 7.5 crore, they have to go through the pipe in the future, even for the renewal. So this, let's say, once they are entering into my system, after fulfilling their KYCs and after, let's say, giving their GST return or P&L or account statement, which is once again, if they are existing customer, my own existing statements. Based on... And even if it is for new clients also, based on our policies and our track record, what is the, let's say, quantum they will be eligible, the system will be throwing. So in other words, 100% of my existing customers who are, let's say, who have taken less than INR 7.5 crore, they, both existing and also new to the bank, they have to necessarily go through this particular, software only. So the software, let's say, makes multiple, let's say, recommendations, whether they are eligible for credit, whether we can give. If, if we can, if we decide to, let's say, if we give credit, what is the risk rating? What is the, let's say, range of pricing that should be, let's say, they should be eligible for this. This is what the system looks into. This perhaps, let's say the earlier turnaround time, which used to take at least two to three months for taking a credit call, now, if the customer gives the OTP and the documents in the required format, he will be getting a decision within two to three working days. If he gives everything, once the entry is done, in the same day, he will be in a position to release it at the best. If one or two, if it comes under the, let's say, amber category, where some manual deviations have to be taken, at the best in two to three days, they will be getting a credit. This is, they will be getting a decision. This is where things are at this point of time now. Right. Yes. One more thing, on unsecured front, in a very small way, we are. It's almost zero. It could be like a potential product, maybe three years down the line or four years down the line. We have just made a small beginning. We, let's say, ran an analytics and took about, let's say, 2,000 customers. In that, we got a hit rate of about 10%, and overall, the book built through this scheme is hardly about INR 4 crore-INR 5 crore or whatever it is. And two to three months, we are watching, and we don't have any delay in the repayment or whatever. So it has been started in a very small way, though it is, let's say, the amount is insignificant today. It will give us some experience to look into this, maybe over the period of next five years to come. Understood. Understood. And purely on this unsecured piece, which is meant for retail, retail unsecured, just wanted to understand how, so is that also meant predominantly for ETB customers who we have already been banking with? Or, does that book also expand into NTB customers? No, it is currently only ETB customers who are having salary account with me, and we worked out based on their average balance, monthly credit, their CIBIL score, and so many factors were taken into account, and we just took a small sample of 2,000, sent them messages that they are eligible for the pre-approved credit. And the entire journey was digital, let's say, do it yourself more. So we wanted to just test whether it is working okay. So it worked okay. Once we crossed the 10%, we are- we just closed the funnel. Almost, let's say 2-3 repayments cycle is over. So far, all those accounts are, let's say, without even any, let's say, DPD or days past due or whatever it is. So once we get a grip, like, how to expand that to my other broader, existing customers, we maybe like. But this particular segment, as we have explained in the past, this is not in our immediate priority. So our first priority is to, like say, go ahead with the MSME lending, then followed by the secured retail portfolio, like housing loan and car loan. So that, and this particular unsecured thing for existing customers we have started, but this unsecured thing may, let's say, show some amount of next level, improvement over a period of time, maybe in the next, let's say a period of three to five years, as explained. Got it. Just one last question. You mentioned about the first piece, which was around the INR 10.5 crore limit, for the regulatory retail classification. How much of your existing to bank business would actually be eligible below the INR 10.5 crore? See, we have about, say, INR 30,000 crore, around INR 30,000 crore of MSME book. In that, like say, 30,000 crore, which works out about 75%, because you have another 10,000-12,000 crore of gold loan. Leaving the gold loan part and greater than 10.5 crore away, we should have at least about 60%-70% of our total loan book, and about not less than 75%-80% of our non-gold loan book should be eligible to go through this digital process. Understood. This is very helpful. Thank you. Thank you. Thank you. Ladies and gentlemen, anyone who wishes to ask a question, may press star and one. The next question is from the line of Jai Mundhra from ICICI Securities. Please go ahead. Yeah. Hi, good evening, sir. Two questions, sir, from my side. One is, there was an RBI regulation that suggested that, you know, the banks now have to charge interest only from the period of disbursement and not from the date of sanction. Have we implemented? Is there any impact in this quarter or maybe going into second quarter? Yeah, for us, it, it, this one, we had been in compliance even before the arrival of the circular. This is basically happened, particularly for the, whenever, let's say, predominantly for the retail lending where, let's say new to the bank, where dispersal, dispersal happened through the checks or whatever, where there could be difference between the time of sanction and the time of, what you call, actual deduction from the money withdrawal from the bank account. But for us, we never had this particular issue right from the... even before the arrival of the circular. Okay. That is very good to hear, sir. Secondly, sir, in terms of the new products that we were, you know, that we had started under the leadership of Mr. Vijay, if you can just update, sir. Sorry if this question was repeated. I had joined the call a little bit later. If you can highlight the progress there, and by the end of the second quarter, should we start to see the book building up, or how is the progress there? Yeah, we are in the process. Mr. Vijay is here. He will be explaining how the progress is being made in terms of assembly of people and how the, let's say, technology infrastructure and other things. Vijay will be explaining to you. Yeah. Yeah. Hi. Am I audible? Yes, sir. Yeah. We should be there by September, as communicated in the last call. We are looking for a launch, pilot launch by September. Our digital process is getting ready. Predominantly, again, we are getting into classifications of basis risk score and one which can be immediately decision and one which should go to underwriter for decisioning. Our team is also joining. We expect the team to be here by August, September. The systems are also broadly in place. Hence, we should start our pilot disbursements by September, last week, second week to third week. And full-fledged, we expect this to happen in Q3 and Q4. This is what the broad progress on this. And we intend to do loan against property, home loans, affordable and micro loan. Right. And, Kamakodi sir, so in that context, now we have delivered a 10% YOY advances growth in flattest QOQ, which is better than last, let's say, four, five, six quarters on a YOY basis. I mean, is it, like, fair to say that, you know, we would still, we would, we would now be double-digit growth trajectory? I mean, we'll not fall back to single digit trajectory. And if there is anything you want to update here. See, this is what we are working hard for, and we wish you see that consistency as we move forward. Right. Thank you, sir. Thanks a lot. Thank you.... I will take the next question from the line of Punit from Macquarie. Please go ahead. Yeah. Hi, sir. Thanks for taking my question again. Just on the OpEx bit, our growth has been like not in line with the OpEx. OpEx has been sequentially. I understand you mentioned that the technological expenses have been high, but even the employee expenses have been high. I'm sorry if I missed this. Could you comment why is that? Yeah. As I explained, let's say, last time, we are taking some expenditure upfront, both in terms of technology and building the team. Let's say, and it will take some time for that engine to give the business. So, as I... that's why our cost-to-income ratio also has shown some increase. So, initially, there will be some drag in the profitability. Next financial year, we will be breaking even, and it will be adding to profitability only beyond that. So, that's where we are in this particular item. And one more item, let's say, our annual increment cycle will start from the first of July. So there will be some, let's say, increase in the, let's say, salary expenditure, expenditure sequentially. So overall, as I explained, for the whole year, we had a cost-income ratio of about 47% in the, for the year as a whole, for financial year 2024, and the last quarter, we had about 51% cost-income ratio. Overall, for the year, we should be having somewhere in between, and we had about 49 odd% for the current quarter. This is how the expenditure part looks now. Right. Sir, and secondly, on the unsecured loans, you just mentioned that, you know, the pilot process of LAP home loans, micro LAP affordable is going to start from September. Unsecured has already started, right? And, what is the mix you target? I know FY 2025 might be a short process, but by FY 2026 to get to a book mix of secured, unsecured. Currently, it's very small, but, any guidance there? Yeah. Please understand, the first priority on retail will be only secured. So as explained, first priority is for having this, let's say, housing loan, loan against the property and all. The expansion of that portfolio is what Vijay Anand explained, which will start, let's say, to show some light at the end of the tunnel after we start in the September month, Q3 and Q4, some amount of, let's say, growth you will be seeing over there. But unsecured retail funding is only a test case we have started, and it is not in our priority now. We hardly have about INR 4-5 crore currently. We are trying to learn the, let's say, to ensure that the particular portfolio works okay, what are all the things we need to learn and all. And it will be, like say, we will, we will look into the suitability of that in our portfolio, maybe beyond three years or maybe between three to five year thing. It will be, it will not be... we will not be expanding fast as we have done in the past. Our focus will be more on the secured lending. So earlier, we focused, we had always been on the, let's say, MSME and secured lending for the creation of businesses such. So some amount of extension we are doing into the loan against the property and housing loan, like what you call your secured retail lending. And don't expect much for, let's say, unsecured lending. It's only the proof of concept, and we are a very long way from building that going forward. Be very clear about it. Good that you asked that question. Okay. Okay, got it. Thank you, sir. Thank you so much. Thank you. The next question is from the line of Rahul Malani from Sharekhan BNP Paribas. Please go ahead. Hello? Hello. Yeah, go ahead, please. Some disturbance is there from your side. Is it fine, sir? It's better. Yeah. So my question is, credit cost is very low for this quarter, low, for this quarter as compared to, you know, yearly, on a yearly basis, and this is adding for the overall profitability. So what do you think for, whole year FY 25? Is this, this, and I think the lower credit cost would sustain and continue, and continuously, it will, add up for the profitability for the whole year? Our, like I say, in fact, if you had looked into the, let's say, two, three last two, three years, so, last year, we, we had a slippage of about INR 1,000 crore, and for the financial year 2023, we had about 1,300. So effectively, the slippage came down from 1,300- 1,200. This year, we expect about, maybe about INR 800 crore or, something like that, maybe even, slightly below that, is what, our calculations, look, let's say demonstrate. The recovery numbers are almost INR 1,000 crore plus is the, let's say, stable numbers, which we are, we have started seeing about, let's say INR 200 crore- INR 250 crore, let's say, both live and technical rate of accounts put together is the run rate which we are anticipating. So, as explained in the previous quarters also, this year also, there has to be a considerably, let's say, reasonable credit cost moderation compared to last year. Okay. Thank you. ... The next question is from the line of Rajagopal Ramanathan from Sundaram Mutual Fund. Please go ahead. Thank you. Thank you for taking my question. I just have one question, sir. What is your long-term, balance sheet growth aspiration and, steady state ROA? Because, you've been, a bank which has delivered, reasonably good ROAs over a long period. You've seen a long cycle, you've gone through the ups and downs. So do you think over the next five or 10 years, you would be anticipating that your ROA should sort of stabilize between, say, 1.20- 1.30, and your balance sheet growth aspirations would be anywhere between, say, 10%-12% or max 15%? See, we, as you explained, let's say, up to financial year 2019, we stabilized our ROA. We crossed 1.5 and started reaching about 1.6, 1.7, let's say, levels also. We started planning for our next level of ROA expansion, that is when the COVID came. Bulk of our calculations, let's say, were tested. We got back to 1%, then we increased it to 1.15, 1.35, 1.45, and 1.5, the pre-COVID level is almost demonstrated. We expect that once we start seeing the, let's say, delivery from the or productivity from the new growth engines, which we are trying to add, definitely, we can. There could be, let's say, expansion in the ROA beyond 1.5, whatever we are there. And, let's say, in this cycle, let's say, maybe for at least another, not less than, let's say, six to seven quarters or so, there is every possibility that current favorable credit cost environment may, let's say, prolong. Maybe we have to wait for the next cycle. On the growth part of it? It's, as you have, if you add, let's say, the data in 15 years, we demonstrated a growth at least about 2-3% over and above the growth of the industry. And we could, in a small way, see the, what you call, market share, almost doubling from, let's say, 0.2-0.4 or something like that. Then there is a post-COVID, there is a, let's say, a pushback, and we are still growing below the, what you call, industry level. So, our long-term, let's say, strategy over a period of decades, as you rightly said, we are a 120-year-old institution. Even though we are one of the bigger banks for a longer period of time, and for the most of the business cycles, we have demonstrated ourselves as the bank with improved efficiency and profitability metrics closer to the top 10% of the industry numbers. So our aspirations are to get back to... I mean, we don't, let's say, believe in having unnatural growth much beyond the industry level growth and paying the price later. So we take a, let's say, steady path, growing, maybe, a few percentage points over and above that of the industry growth rate is what we have demonstrated over a period of time, and it has proved good for us in terms of the long-term stability of the institution, which we think we will be, let's say, following that path, proven path as we had seen in the past. Okay. Which, probably, sort of if I infer out of that, then, where you are sitting with respect to capital adequacy at 21%, technically, you don't require any capital, for the balance sheet for another five years then. Because if we assume your, balance sheet growth to be calibrated, I don't see any reason why you are likely to see significant capital consumption. Would I be right in that assumption? Yeah, you might have seen our last major capital raising through QIP was 10 years back. We are not, fortunately, let's say, beyond, year 2000, be it in the Y2K, issue, or after that 2008 global economic crisis, or beyond that, let's say, AQR because of the infrastructure lending and, let's say, corporate lending, consortium lending, and all. In every cycle, we, let's say, survived without, any problem. And even COVID cycle, we survived with, a few bruises, not, much of issues, and we have not rushed the capital in the past. So that are the, only thing is that, like, we have to improve our, our own return on equity. Matching if our return on equity and the growth rate, by and large, matches, we should not be, let's say, requiring any additional capital or whatever. Okay. You may, you may, you may ask another question. In fact, you have, I mean, our notice for the AGM is released today. In that, once again, we are asking for the, let's say, QIP, but this asking for the permission of QIP is the permanent fixture of our AGM approval for the past 10 years. We have not—I mean, we have that even more than one and a half decades or so, we used it only once. But, if at all, any requirement comes in between, maybe for any strategic reasons or, any offer which we cannot refuse, we may have to, let's say, the process itself may be time-consuming and all. That's why-... After the arrival of, like, say, QIP regulations by the SEBI some 15 years back, every year in our AGM, we take, like, say, approval from the shareholder. We use enabling, it's purely an enabling resolution. We used it only once, and only when it is absolutely necessary or absolutely when the offer is, irresistible. So, the, this particular, asking for the shareholder approval had been a permanent fixture in our, AGM for the past, maybe more than 10 years or so. Yeah, I appreciate the clarification on that. Actually, I was not bothered about that, because I knew that if you're saying that you're essentially going to be shoring up your ROE over the next couple of years, then, and with what your expectations are, clearly you're not going to be seeing capital consumption, and therefore, it's quite unlikely that you will further tank up your capital and push yourself into an overcapitalized zone. So, if I'm permitted to ask just one question: So you said a possibility of a strategic opportunity. So would you be interested or... Well, I'm not putting words, but is it more from expansion of the lending business, which means a potential opportunity on the NBFC front or on the tech front? What is the type of strategic opportunity that you might be interested in? See, we don't have anything in hand, and we don't know what is in store for us. Okay. I will just give you one, let's say, answer, which will be making you some sense. Yeah. Say, where we were, let's say, asking for the shareholders' approval, and we were, I'm talking about pre-2014, which was the year when we went for the capital raising. Mm. Before that, when I had a lot of, let's say, pressures from the investors friend or investment bankers and things like that, I made a claim that I will be going for, like, say, QIP, when I touch, when I get an offer for 2x price to book. Mm. At that point of time, I thought 2 to 2 times the price to book was something which was unreachable, because- Mm ... when I started, the price to book was 0.5. Mm. when I made our first preferential allotment to L&T, LIC, Blue River Capital, Argonaut, and all, way back in 2008, it was at 1 price to book, which itself was about 25% premium to then prevailing market price. Mm. But suddenly, people were prepared to give premium and 2 times to price to book opportunity, came, which made me... You don't know what type of opportunity may come or whether it will be good and all. I mean, you are keeping all the options open. I mean, good that I'm not talking to any, press person, who will write, so like, say, a headline tomorrow saying that, something is there and all. I don't have any opportunity now. I don't know what opportunity in store for me. It is a practice which we have been practicing over a period of, more than a decade, and we have been using it extremely, in a judicious fashion, and only once we have used it. So don't- Right. Take any... I mean, there is no reading between the lines. It is just a continuation of our past practices, nothing else. It's purely a, let's say, continuing the, let's say, practice, which we have been doing over a, over time, over a period of 10 years or so. Nothing more, nothing less. Thank you very much. All the best to you. Bye. Thank you. Thank you. Participants who wish to ask a question may press star and one. The next question is from the line of Gaurav Jani from Prabhudas Lilladher. Please go ahead. Thank you, sir. I joined a bit late, and, you know, congratulations on a good quarter. So just, you know, a couple of questions from me. One is on the yields, right? If the penal interest was not adjusted for the same, would yields have been similar to the last quarter? I, as I explained, the NIM would have been 3.6%. Okay, understood. No, but if you just please clarify on the yields, you know, would they have been stable or, or slightly lower? It's, I think, for sequentially speaking, the yield we would have closed with 9.59%. No, correct, but, If you add that, yeah, if you add that back, it will be about 9.65-9.7 range. Understood. So just a broader question, right? I mean, obviously this, the penal interest has impacted the entire sector. But otherwise, interest income is now, you know, free of all aberrations? I mean, last few quarters, we've seen a lot of aberrations. So now, it should be smooth, right? Yeah, hopefully. Okay, understood. So secondly, you know, on the LCR, so two parts of the question. One is, you know, you had mentioned last time that, you know, there was some discussion with the RBI on the LCR definition, and it was about 200% odd. So, do we, you know, is that number revised or is it higher? That's the first part. And the second is your initial assessment of yesterday's LCR circular. Thanks. See, I mean, based on those things, you, I think this is the news, I was actually expecting this question. What has basically happened is that you have now a draft circular, particularly on the LCR calculations and all. So which probably will make us to change some of the calculations or interpretations with which we have been calculating over a period of, let's say, since the concept of LCR came about, close to a decade back or whatever. And these changes, there are, I think the entire sector's LCR will converge around, maybe, 115-125 or 110-120 or so up. You, you won't be having aberrations. I mean, everybody will be now, let's say, getting to this range. And, there will be, let's say, requirement of, let's say, redeployment or reorientation of the resources. Even for us, we have some overseas deposits, which we, let's say, used to invest, for maybe some few basis point extra interest, and all. So we have to now get those things back from the overseas, let's say, on maturity, we have to bring them back to our fold. Once we get them back and all, we will also be stabilizing around that number. So basically, the non-callable deposits also, let's say, we have in that, we have about INR 2,900 crore, which we got that and all, which is getting eligible for this favorable calculations. So in, after some amount of, let's say, aberrations, ups and downs, things should be stabilizing around 115-125 for all of us and for us also. This is after considering the impact of yesterday's circular, right? That's, that's what you mean, or, or without that? Yeah. Yeah. Taking into consideration the latest circular. Yeah. Just, just one small question, sir, you know, extension of this. So do you, you know, do you expect, because of this redeployment towards excess liquidity, do you see further margin pressure because of this, or, I mean, you're, you're okay? Nothing material. It's these sort of things are done on a treasury basis for one or two basis point arbitrage and things like that. Nothing material will be happening because of this reorientation. Sure. And the last question to you, sir, again, squeeze one. One is, you know, the cost of funds have peaked, or you still expect, you know, further hikes? It's almost peaked, but, like, say, and we expected the reduction in the interest rate cycle will start, but now enough indications are that they are not going to be as quick as it was expected. So by and large, it looks the cost side, it is almost peaked. Understood, sir. Thank you so much, and all the best. That's it. Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments. Thank you, all of you for joining this press conference, and thanks for Ambit team to arrange for this. As explained, this quarter, for the first time after 10 years, we have, let's say, positive credit growth in the first quarter. Things are improving, and for the, let's say, we have got back to double-digit growth after multiple months. Hopefully, things should be getting better and better from where we are. If you have any specific questions and all, the contact numbers are given in the presentation. You have the contact numbers of Raghuraman, let's say, who is contact person for the investor contact, whose number and let's say email IDs are given. You may also contact any of our executives, be it CFO or our GMs, Mr. Jayaraman or Mr. Ramesh, or whoever it is, who will be in a position to explain you the numbers. Hope, let's say things get better and better from where we are going forward. Once again, thank you all for participating in this conference. Thank you. On behalf of Ambit Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.