Ladies and gentlemen, good day and welcome to City Union Bank Limited Q1 FY26 Earnings Conference Call 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. J ignesh Shal from Ambit Capital. Thank you and over to you, sir. Yeah, thank you, Amshad, and good evening, everyone. On behalf of Ambit Capital, I would like to thank the management of City Union Bank for allowing us the opportunity to host Q1 FY26 Earnings Call. We have along with us Mr. R. Vijay Anandh, Executive Director, Mr. V. Ramesh, Executive Director, and Mr. J. Sadagopan, the CFO. I will now hand it over to Mr. R. Vijay Anandh, Executive Director of City Union Bank, for opening remarks. Over to you, sir. Thanks, thank you, Jignesh. Good evening, everyone. A hearty welcome to all of you for this conference call to discuss the unaudited financial results of City Union Bank Limited for the first quarter of FY2026. The board approved the results today, and I hope you all have received the copies of the results and the presentation. First of all, we are very happy to share that for the first time in history, we have crossed INR 300 crore PAT. I hope all of you have received the notice of ensuring the annual general meeting to be held on 13th August 2025, which will happen face-to-face at Kumbakonam after six years, along with a virtual mode as well. On behalf of the board, I invite you all to participate in the AGM. One of our directors, Sri N. Subramanian, had retired from the board with effect from 19 June 2025 after completing eight years tenure. During Q4 FY2025 conference call, we have stated the expectations for FY26 as follows. We did achieve double-digit credit growth in all the quarters of FY25, and we stated that we will be back to double-digit growth. With our efforts, our deposit growth is also back on track, and we said that we will align with the credit growth. We have reached our long-term average number with respect to credit growth, PAT, ROA, and NIM levels. We said that the positive momentum will continue. We also committed that NIM will be in the range of 3.5% in FY25/26. Largely, we are in line with expectations conveyed on the last quarter call. No surprises. During the last financial year, we had seen positive credit growth in the first quarter of the year, the first time in the previous 10 years. With that momentum in growth, we have achieved double-digit growth in all the four quarters of FY25. For Q1 FY26, we have achieved 16% credit growth quarter on quarter, the highest credit growth in June to June, and our advances have increased from INR 46,548 crore to INR 54,020 crore in Q1. As stated in our earlier calls, with increased efficiency level aided by the digital lending process, we have restored our consistent credit growth, and we hope that the current trend will continue. Deposits. Our deposits stood at INR 65,734 crore for Q1 FY26 as compared to INR 54,857 crore in Q1 FY25, registering a growth of 20%. During our last conference call, we have stated that concentrated efforts were given to deposit strength to support our credit growth. With our efforts, our deposit growth surpassed our expected levels for Q1 FY26. The average CASA increased by 6% from INR 15,757 crore in Q4 last year to INR 16,478 crore in Q1 of FY 26. Asset quality. On the asset quality trend for the current quarter, the total slippages is around INR 196 crore, while the total recoveries is INR 187 crore, consisting of INR 143 crore from live NPA accounts and INR 44 crore from technically written off accounts. It is almost equal, and we are confident of maintaining recoveries more than slippages for the year as a whole. Our gross NPA percentage had reduced to 2.99% in Q1 FY 26. Both gross NPA and net NPA, in both percentage and absolute terms, is reducing quarter by quarter for the last nine quarters continuously. For the past eight quarters, our gross NPA has shown a sequential decrease starting from Q2 FY 24, where it stood at 4.66%. Compared to Q1 of FY 25, the G NPA has reduced from 3.88%, which is an 89 basis points reduction. Similarly, our net NPA number has reduced to INR 635 crore, and net NPA in terms of percentage is 1.2% for Q1 FY 26. In Q1 FY 25, our net NPA was 1.87%, which is a reduction of 67 basis points on a year-on-year basis. Overall, our estimated total advances stand at 1.59% in Q1 FY 26 as compared to 2.22% in the similar period last year. Our estimated slippage numbers have shown substantial improvement in the last financial year. It is stable in the current quarter as well. While we are hearing from multiple financial institutions about building stress in asset quality trends, we are closely monitoring the situation, and so far, we have not seen any sudden spike in the stress as of now. PCR. In FY 2025, we increased our PCR without technical write-off to 60% to bring it closer to the industry level. For Q1 FY 26, PCR without TW had increased to 61%, which had improved from 53% last year. Similarly, PCR with TW stood at 79% for Q1 FY 26, which has improved from 73% last year. Interest income. Our interest income had grown by 16% in Q1 FY 26 and increased to INR 1,605 crore from INR 1,389 crore in Q1 FY 25. Our yield on advances stood at 9.81% for the current quarter, as against 9.59% in Q1 FY25. Our NIM for Q1 FY 26 stood at 3.54%. During this quarter, the bank has passed the benefit to customers in line with the repo rate cuts. During the last call, we said though there will be fluctuations in the annual NIM, we will be around 3.5%. That expectation continues. Even though the rate reduction was front-ended and happened much earlier than expected, we continue with our expectations. As suggested earlier, there will be a minor impact in Q2 as bulk of deposit repricing happens in Q3, but annual expectations continue to be around 3.5% as discussed in the last quarter conference call. On the liability side, we have reduced the ROA on term deposits during April, in tune with the industry levels. The slab of S3 accounts undergone changes in the month of June, which will give reductions in overall costs going forward. The cost of deposits stood at 5.95% in Q1 FY26 as compared to 6.02% for Q4 FY25. Other income. The total other income for the year has increased by 27% from INR 192 crore in Q1 FY25 to INR 244 crore in Q1 FY26. The major contribution for this growth is from the treasury profit of INR 64 crore. For the current quarter, our operating profit had grown by 21% and stood at INR 451 crore compared to INR 373 crore in the corresponding period last year. We have achieved a PAN growth of 16%, and our PAN stood at INR 306 crore for Q1 FY26 as against INR 264 crore in Q1 FY25. We have crossed the INR 300 crore mark as I said earlier in PAN for the first time in our history. Cost to income. Our cost-to-income ratio for Q1 FY26 stood at 48.12% as compared to 48.21% in Q4 FY25. As we had discussed earlier, our PAR will be in the range of 48- 50 for the next few quarters. ROA. As per the expectations we shared, the ROA is at our long-term average and stood at 1.55% in Q1 FY26 compared to 1.51% in the corresponding period last year. Our ROA is over 1.5% consistently for the last five quarters. To sum up, with our best efforts, we have accelerated to mid-teens. We will continue to explore various avenues of our growth in addition to our core strength of MSME. With our growth engine up and running, we could see visibility in achieving mid-teen growth at least 2%- 3% over and above that of the industry. Our deposit growth is also back on track and aligning with the credit growth. Expecting NIM in the range of 3.5% for the year FY25/26, as discussed in the last conference call. ROA is expected to remain at our current level of 1.5%+. We will achieve our PAIA growth with the help of better asset quality. Our cost-to-income ratio will continue to be in the range of 48%- 50% for the financial year 2026. Thanks a lot. Open to 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 their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants may press star and one to ask a question. The first question is from the line of Anand Dama from Emkay Global. Please go ahead. Thank you for the opportunity. Our growth has been trending very, very at about 16% year on year. Whereas you said that you want to grow about 2%- 3% above the system. That's more of just a statement than you would continue to grow at more than 15%, perhaps in the 16% range. Or you believe that this growth run rate will actually come down during the year? Sir, we will continue to grow at the same level what we are growing, subject to the market conditions are conducive, and our overall numbers of SMA 012 on track, as I said in the call, as I said in my note. Till that time, we don't see any risk. We will continue to grow at the same pace. Do you really see any micro-disruption or any asset purchases from the MSME space, to say that you know there will be some risk on the growth trends in the next six to nine months? We could hear this from other financiers. As of now, we have not seen this. Our metrics are holding. Hence, from our side, we don't see that risk as of today. Great. Secondly, if you can talk about your retail strategy, how are you setting up now? Secondly, on your Gold Loans front, the Agri Gold Loan portfolio in the quarter on quarter, which is a larger strategy. Is it because of the PSL guidelines that you have slowed down the growth in that segment, or is it just seasonal? I will try to answer the retail first before we go to the Gold Loans. Broadly, our retail strategy is on track. We said that LAB, HL, Affordable, and MicroLab, yes, the retail engine has started giving us the good numbers from both branch as well as from the DSA side. We did around INR 825 crore for the last quarter, combining all these three. Hence, our retail, whatever we have planned, has taken off well. With respect to Gold Loan book, our Gold Loan agricultural portfolio is INR 76,198 million. If you see the presentation, page 15, slide number 30. If you see slide number 30, there are details on page number 15. I saw that, but that was largely flagged on a quarter-on-quarter basis. I'm just wondering whether this will remain different for a while because of the impact of PSL guidelines, or this should pick up? This is seasonal. Agri is a seasonal business fluctuation, so this will move based on the seasonality. Okay. In terms of margins, you guided for a 2.5% margin for the first full year. How many? 3.5%. How do you see your cost moving? Any specs that you have done on the TV trend or anything of the SA trend that you have done for your panel? I will give you the broad math. My advances have brought down the yield by INR 135 crore. My reduction in deposit rate has given me INR 64 crore. This means I have INR 135 crore on the left side and INR 64 crore of deposit on the right side, which is giving me a net impact of INR 71 crore. If you recall, my NIM used to be around 3.6% earlier. This INR 71 crore impact will give me an 11 basis points, 12 basis points reduction. We will be around 3.48%, 3.49%. We are confident of maintaining this 3.5%. That was the math behind this. Also, just to add, our repricing is happening on deposits in the month of Q2. We should have this 3.5% on track. Okay. Sir, I think RV audit was on. Any observations over there from RV side just now? It's currently happening, sir. RV audit is currently happening for us. That's very helpful. Thank you, sir. Thank you. Thank you. The next question is from the line of Mona Khetan from Dolat Capital. Please go ahead. Yeah, hi, sir. Good evening and congratulations on a good set of numbers. Firstly, on the margin front, of the 100 basis points of repo cuts that have happened, how much is reflected in the yield reduction currently? How much is factored in the margin? We have passed the repo rate cut to everyone, to all the customers. 9.93% in Q4 2024-2025 9.93% has moved to 9.81% in Q2 2025-2026. Q1 from 9.93% moved to 9.81%. Right. Of the 100 basis points, is the first 50 basis points fully reflected and the next 50 basis points yet to reflect in the subsequent quarter? We have done it in June, so we are more or less there in this. It' s on a strong footing. That's the math I gave in the first question. My advances repricing has brought down INR 135 crore to me. My deposit repricing has given me a gain of INR 64 crore. INR 135 minus INR 64 is INR 71 crore with my net impact. Over and above that, I will have the Q2 repricing happening for my deposits. Broadly, we were in the range of 3.6%. This would give me a 3.5% margin for us. Got it. I'm just trying to understand, despite having a large share of EBLR loan, why is the yield reduction very limited? I mean, what is helping you here? If we have given the final pricing earlier, reduction will be low to that extent, number one. Number two, to answer your question, our EBLR is currently at 48%, fixed is 30%, and MCLR is 70%. Our EBLR is only 48% of my book as it speaks today. Okay. Got it. Just secondly, on the SMA 2, you mentioned what is the current number? I missed that. What was it last quarter? One second. SMA 2 to total advances at 1.59% in Q1 FY26 as compared to 2.22% earlier. In Q4? In Q1. What was the same in Q4? I can see. Give me a minute. We have come down for the... We were almost in the same range, more or less. Okay, all right. Thanks and all the best. In fact, we have come down a little bit, which is very marginal. Thank you. The next question is from the line of Habib from ICICI Securities. Please go ahead. Hello. Yes, hi sir. Am I audible? Yeah, hi. I don't think it was okay. How should we think, look at your margins for the next quarter? Like just a 6 basis points margin declared for account and probably 50 basis points of repo rate cut should be, you know, for two months, it should be pending, right, to be reflected. For the next quarter, how should we look at your margin? Overall, we have said that we will be around 3.5% for the year. Next quarter, we should be around 3.45%- 3.5%. That's the number which we are looking at. Probably in Q3, we will be around 3.55%, and Q4, we should be around 3.55%- 3.6%. Okay, that's helpful. Was there any run-off in net interest income in this quarter? Nothing, sir. Okay. Sir, the final question is, sir, how do you look at your PCR? I understand that you have increased it, but you know it's still at around 60%. What is your PCR target for, let's say, like FY26 or FY27? That will not be much. We will be around 61% now. We could move to 63%, 64% max because you know it's completely a secured business, whatever we are doing. We have net legal unsecured in our group, so probably 63%- 64% we can look at. Okay, thank you. Thank you. Thank you. That's all. All right, thanks. Thank you. The next question is from the line of Sonal Minhas from Prescient Cap Investment Advisors. Please go ahead. Hi, I'm Sonal Minhas. I wanted to understand the reason for increasing the provisions in this particular quarter. Anything specific, or is this just specific to Q1 provisions being on the highest range? Actually, the provision flow is where this got reduced from 78 to 70 for the current quarter, whereas the tax provision remains in the range of 75. We made 145 for the current quarter. Okay, nothing to read on the back end in terms of provisions. No, no, sir. No worries, sir. Okay. I wanted to understand the segmentation of the advances growth. Is this incremental growth of team from early teens to mid-teens largely attributable to the new verticals you've entered, or is this largely working capital cash and trade loans that have basically seen a higher rate of growth? What can we attribute the higher? I think I did give my number on retail. We did around only INR 825 crore in retail, and mostly it is the MSME growth, what we used to do before and the JL. JL and MSME. Our hard remains same. The JL is around INR 700 crore. Retail is around INR 825 crore, and the rest is MSME. Got it. Okay, that's it for myself. Thank you. Thank you. The next question is from the line of Partham Gutta from BNK Securities. Please go ahead. Yeah, hi, sir. Thanks a lot for the opportunity. Sir, my first question is, what is the credit cost guidance for FY26? This is in the light of because we are hearing that, you know, southern regions, you know, there are some delinquencies coming up in MicroLab and Lab portfolio, and you know, both within secured and unsecured. Can you just throw some light on that, you know, what are we hearing on the ground? Yes, sir. Sir, we have just launched retail, you would be aware, and this is our second full quarter. It is too early for us to comment anything on the delinquency because as of now, we are not seeing anything. To answer your question for the credit cost for the year, we should be somewhere between 0.2%- 0.25%. Okay. Okay. Thanks, sir. Thanks a lot. Thank you. Before we take the next participant, we would like to remind the participants to press star and one to ask a question. The next question is from the line of Himanshu Taluja from Aditya Birla Sun Life AMC. Please go ahead. Sure, sir. Thanks a lot for the opportunity and congrats on a good set of the numbers. Sir, can you just throw some perspective on your, on the MSME segment? Are you seeing any signs of stress in the segment? Is there anything to read from a southern because we got to hear from some of the conference calls that probably some of the southern states are showing some bit of the higher delinquency trends. Can you put some perspective around that? It would be very helpful. Sir, if you talk about MSME, we are completely secured. We don't give any unsecured MSME, number one. Number two, as of now, our SMA 012, as we speak, is currently holding, and we don't see any issues as of today. Whatever the commitment I'm giving is based on today's numbers. As I said, SMA is to 1.59% of my advances, which is down from 2.22%. Even from Q4, it is more or less flat or marginally down. We don't see much issues on MSME security trend, whatever we are. Sure, sir. Thanks a lot. Thanks. Thank you. The next question is on the line of Krishnan ASV from HDFC Securities. Please go ahead. Many thanks. My questions have largely been answered. I've just got one query. This is pertaining to just a demand environment within MSME. There's generally been a feeling that working capital requirements are pretty low because inflation is pretty benign. Just wanted to understand what you are hearing, what you are sensing from the ground, what your RMs are actually telling you. The market as of now is flat, I would say. When we say existing customers, some of the industries are doing well, and some are looking flat. Basically, the requirements, we are also analyzing, and we are taking the exposure or the call. Even for the new-to-bank customers, we are looking at the business prospects and what kind of industry is operating, how it is going, what is the demand, and really is there a need for working capital and what is going to be its CapEx because we are taking the panel call. As of now, the message from my existing-to-bank customers, we have not seen anything very, very, what do you call? Unusual. Unusual. It looks like it's stable and small branch. Yeah, I guess I'm asking you because you kept highlighting that retail is relatively new only in the second quarter. Loans remain where they were. A bulk of your credit growth has come on the back of MSME. Given that we are in a benign, I was just wondering, are there any early signs about this growth beginning to taper off? That's what I said a couple of minutes back, sir. The metrics is holding. Okay. Understood. unusual pattern in our metrics, whether it is SMA 0 or 1 or 2. Probably something is not working as per our prediction or as per our plan. We could have switched off the engine. We did not see anything as we speak as of today. Our monitoring is very close and very frequent. Probably every month we go back and check whether things are looking fine and it's well within the budget. We don't see anything for your question, sir, as of now. No, sir. Thanks. I I think probably I can get in touch with you offline with your team offline because I was trying to address the growth component, not the stress, but anyway, I'll come to that later. The second issue was around all the tariffs. The noise that we are hearing around tariffs generally seems a lot centered around the textile industry. Given our exposure to that industry, what is the sense you're getting there, sir? We came to know last night, last evening, and we immediately reached out to our customers. We have quite a good exposure there in textiles, as you rightly mentioned. A few of our customers are more Europe-oriented, and out of my total exposure, only 20% of the customers seem to be with the U.S. Having said that, their version is their profit margin could get compressed by 2%, 3%. That's the number which they are saying on this tariff. Nothing alarming. We have around INR 1,000 crore, INR 1,200 crore in our total exposure. Out of that, even if I take 20%, and their margins, they are telling when we did have a discussion in the morning with a few of the seasoned guys and who does a decent exposure, their version is 2%, 3% compression, nothing beyond that. Most of the players have started focusing on European segments now to diversify the risk. I think it's broadly, I would say, flat and nothing much to worry because materially, it is not a big number for us. Understood. Understood. Thanks. This answers my question. Thank you. Thanks. Thanks. Thank you. Participants who wish to ask a question may press star and one at this time. The next question is from the line of Himanshu Taluja from Aditya Birla Sun Life AMC. Please go ahead. Sir, thanks for the opportunity. Again, just one question. If you put some perspective over the retail portfolio that you are building, currently, what I can see is the housing and the personal loans. Can you put something on how much is the pure housing loans and the LAB portfolio, and what is the blended yield of your housing portfolio? Sir, no personal loan. We do only home loan and LAB. No personal loans. Okay. Hello. There There is no personal loan. Yeah, I can see unsecured loans. We don't do unsecured. We do only home loan and LAB. I have not taken it separately. Probably when I meet you, I'll give it to you in person, or probably I'll send it separately and send it across. What is the blended yield that you have on the home loans and the LAB together? Home loan and LAB put together, we could be around 9.85, 9.8, 9.85. Okay. Are there any other plans to get into any of the other retail segments that you're trying to look at? No unsecured, sir. We might get into, we have a huge presence, you know, in rural and UBL branches. We want to get more active there in terms of affordable housing or home loan because basically, we are doing branch-driven sorting. As they said earlier, my DSA business is only 20%. 80% is coming from my home branches. That strategy is still there. We have not changed our goalpost. 80/20, as we speak, out of INR 825 crore, INR 160 crore alone has come from DSAs and direct. We will also get into affordable and M icroL ab to our home branches. Yeah, sure. Thanks a lot. Thank you. The next question is from the line of Param Subramanian from Investec. Please go ahead. Yeah, hi, sir. Thanks for the opportunity and congrats on the quarter. Sir, I just wanted to understand from your MSME exposure, how much of the book is exposed to, say, exporting MSMEs? Do you see any signs? Textiles is one of the biggest sectors for us. Do you see any pressures that could come through from some of the announcements that are coming through today, for example? Yeah. I think we just discussed INR 1,000 crore, INR 1,200 crore is my total exports. 20% is broadly with the respective U.S., majorly textiles. We did have a candid discussion with our good customers who do a very decent business. Their version is most of them have regular, I mean, moved their risk to European markets. 20% who are doing with the U.S., their view is that 2%- 3% there could be a margin compression. Beyond that, they don't see anything big negative in this. Anyway, our numbers are quite less, by the way. so INR 1,200 crore is the total exporting? Correct. Exposure. Correct. Business. Out of that, 20% is focusing on U.S. market. Is this within textiles or is this across your MSME? Probably textiles, sir. Textiles is major for us. Others would not have any? Very, very less. Very less. Very less. Maybe carbon kind of stuff, very, very less. Not a big number. Okay. Fair enough. That's all I wanted to ask. Thank you and congrats for the quarter. Thank you, sir. Thank you. The next question is from the line of Bunty Chawla from IDBI Bank. Please go ahead. Congratulations, sir. Thank you for giving me the opportunity. Can you share some thought process on freshly paid off INR 196 crore, from which segments have come? If you can give some bit of a light on that. Okay. Yeah, the one line, see, MSME is 148. 75%. MSME. Out of 196. The rest will be? Rest, we have Agri around 3%, CRE around 2%, educational loan around 0.7%, which is again, and all are very, very negligible numbers after that. Wholesale trade around 0.96%. Okay. As for what we are observing, net addition has been negative up to 2, 3. From last two quarters, we were seeing some bit of an increase in net addition. For example, last was 20%. How much is that number? Because we are targeting 600 and upwards should be higher than the slippage is as such. I will answer in two questions, two parts of this here. For the current quarter, the total slippage is around INR 196 crore and the recovery is INR 187 crore. We are talking about a INR 9 crore difference. As we said before, on an annual basis, our recoveries will be more than slippages. This is number one. Number two, if you see our slippages, our slippages have come down from INR 259 crore to INR 196 crore. From what quarter? From Q4 March to June, from INR 259.49 to be presented, we have moved down to INR 196.28. Which is INR 50 crore reduction? Yeah, which is INR 50 crore reduction. Okay. Lastly, on the PCR, if you calculate, it has quite drastically improved from last many quarters to 51% to currently 60.76% or roughly 61%. Where is our purpose to bring by end of FY26 this number? We would be around 63%. 63%. Yeah. Oh, it was very helpful, sir. Thank you and congratulations, sir. Happy sir. Thank you. The next question is from the line of Pritesh Bumb from DAM Capital. Please go ahead. Good evening. Can you hear me, sir? Yeah. Go ahead. Yeah. A few questions. One is on the yield perspective. Basically, I wanted to check, what is the position time for our working capital loans? I mean, just wanted to check how much passed on has happened, how much? The rates are fully passed on. My EBLR is at 48%, my fixed is at 30%, 78%, and remaining is MCLR. My yields are passed on. Can you note that one? Sir, you are breaking now. Sorry, we are not able to hear you. Sir, we are not able to hear you, sir. We are not able to hear you, sir. Sorry. Sorry to interrupt, sir, but could you go to a better reception area? Yeah, now? Yes, sir. Go ahead. Sorry, sir. Just wanted to check, although they are on EBLR, is there any reset or is it happening on T plus one? The passing is based on the final pricing. The passing will happen based on the pricing we have given. To answer your question, our repo rate passing has finished and we have done with the customers. Net net, that's what I've been giving the maths. In terms of advances, my negative is INR 135 crore. My deposits, because of my reduction in rate, positive is INR 64 crore. My net impact is INR 71 crore as of now. My deposit repricing, again, is happening in the Q2 end. Effectively, I will have an 11 basis points, 12 basis points cut. That's the reason why we are saying we will be maintaining at 3.5% for the year. Got it. Sir, just on that question which I asked, basically, what I wanted to check is generally the loans are for one year, right? Or some working capital or cash credit can be for one year. The reset happens immediately. Is that correct? See, I have a comment on here. If it is based on the EBLR, the passing on will happen, let's say, immediately. For example, if we had already given finer pricing earlier, let's say, some amount of discount given in the past, based on that, that much amount of, let's say, say for example, whatever related to that risk rating, EBLR-related rating is, say, for example, 10%, which is I have already given 50 basis point 10% to the associated risk. When 1% reduction in the EBLR happens, the net impact to that customer will be only 50 basis point. You understand what I'm trying to say? Yeah. Finally, whatever that is, EBLR will come down by whatever percentage, but some amount of first measures will be depending upon the, let's say, consistence given in the earlier period. Also, because of the, let's say, composition of advances, say, for example, close to 30% of our loan book is from the gold alone, which is at the fixed rate. You also have MCLR. Because of that, even if you have 1% reduction in the overall EBLR, net impact will be only, let's say, to that extent lesser, and that is what it has happened. Some amount of extra, let's say, maybe 5 basis points, 10 basis point extra can happen because some of the rate passing happened only in the June. They may not have impact for the entire quarter, but they will be having full impact for the second quarter. That's why, in fact, we had given the question repeatedly came in the fourth quarter at the phone call was that, how are you certain that your rate reduction will be, let's say, I mean, you will be able to maintain the margin of 3.5%? We repeatedly explained this calculation, and we are sticking with that calculation even now. Even after having the 50 basis point, I mean, the last rate cut, which was front-loaded, which we actually expected only in the, let's say, towards the end of the current calendar year, even though it got, let's say, implemented much earlier, we are still sticking with the, let's say, expectations, which we shared during the last conference call. We expect because we have a higher amount of repricing of deposits because of the maturity in the third quarter. The repricing of assets will be more in the second quarter, and that's why we say there will be some reduction in the, let's say, maybe a few basis point incremental reduction. Here as a whole, whatever expectations we shared in the last conference call that we will be having 3.5%, I mean, 3.6%+ 10 basis points to be priced as whatever we said. We still stick with the, let's say, the margins predictions or expectations, whatever we shared during the fourth quarter last conference call. It is very difficult to get into the individual basis point, those calculations and all. We gave you a broader categorization calculations based on the composition of the loan and how they pass on. What I can say to you now is that the MCLR reduction, I mean, the EBLR reduction that needs to happen because of the rate reduction, whatever that has happened so far, has already been given full effect to all our existing customers currently. Got it. Sir, the second question was on branches side. We've not added any branches. We added only one branch this quarter, and we have announced some branch additions in this quarter. What kind of a branch addition should we see in this full year? On an average, we have been doing 75 branches per year, and we should continue this. In Q2, Q3 will be more. In fact, as we speak, in Q2, we have opened quite a substantial number of branches in the first week. We have already done with, I think, 8, 10 branches, and we will continue with that. We will be around 75 branches- 80 branches for the year. Okay, the follow-up on that is, will we see some OpEx increase because we'll have to add Q2 maybe because the grants cross operational and all? Once we open the branch, a portion of the expenses will be there. 15%. 15%. Yeah, 15% expenses will be there, and fine. That's very normal, whatever we do in terms of branches. Got it. Okay. Thank you so much. Thank you. Thank you very much. Thank you. The next question is from the line of Gaurav Jani from Prabhudas Lilladher. Please go ahead. Thank you, sir. Congrats on the quarter. Just a question on the fee income. Last quarter, we had some bumped up fees because of, I think, a banker, and that has actually probably come off this quarter. That is number one. As to why has there been a reduction, and then could we revert back to the previous levels is my question. I'll just come to the next part later. Sir, bancassurance income is always very high in Q4, if you see. That is normally going to happen. With respect to the bancassurance income, we are on target with what we have stipulated for Q1, Q2, Q3, Q4. I think this quarter, we have done around INR 15.74 crore to be precise, which is, you know, the quarter overall, we moved from INR 12 crore we were at in Q1 last year, and we have done INR 15 crore this year. Last year, again, we moved from INR 12, 18, 16, 51. We expect the same trend to continue this year. We do not see anything. Sure. Sir, the next part is FY25, right, versus FY24 because obviously of the kick-off from the banker. Our fee to assets has improved by 10 basis points. What sort of a trend do you see shaping up over the next or over the near to medium term as to fee to assets as a percentage? We moved from INR 54.64 crore to INR 97.56 crore, sir. This is always directly proportional to the business. From INR 54 crore, we have moved to IINR 97 crore. Now that we are having a 16% growth, we should exit with a decent number for the year. Understood. No, sir, what I meant is the fee to asset ratio, as to how do you see that shaping up overall from a near to medium term. Sir, this is not a materially big number for us. We did INR 54 crore in 2023, 2024. As I said, we did INR 97 crore in 2024, 2025. This increment is always vis-à-vis my business, what I'm growing. No, I'll probably take it offline. One minute. I just want to add, earlier, we had our relationship with only one insurance company, LIC. Last year was the first year when we had, for the whole year, a tie-up with multiple insurance companies. We had a quantum jump last year. It cannot be just extrapolated year after year. Normally, the bancassurance income will be growing in proportion to the business growth and branch growth, and that usual growth, we hope, will be continuing for the current year also. Sure. I'll probably take it off. Thank you. The next question is from the line of Ajit Kabi from BNP Paribas. Please go ahead. Hi. Congratulations for a good set of numbers. I have the first question from the line item in provisions. The provision number this quarter is around INR 700 million, out of which the write-off made in this quarter is around INR 744 million. In the provision stock, there is hardly any movement. In last quarter, it was INR 985 crore. Now it came to INR 982 crore. Is it fair to assume that whatever provisions made this quarter was towards the write-off and no additional specific provisions have emerged in this quarter? No, sir. Actually, we have written off probably in Q2 and D2 and D3 accounts, for which we made an earlier provision towards 50 and 70%- 80%. The balance amount only to be provided for the current quarter. Whatever the addition happened, around INR 180 crore in the quarter, mainly consists of SSD, which needs around 15%- 25% of provisions only. It's all based on the IRA clamps and whatever the requirements we provided. Okay. Can you give a little idea of, you know, we are getting the restructuring, the provision towards the restructuring effects? Any idea about the standard asset provisions and any contingent provisions we were making earlier? Any idea or can you give the numbers for those, the contingent provisions and the standard asset provisions? The provisions for finance. See, whatever the provision we made towards the MSME restructuring, also non-MSME restructuring earlier two years back, now after completion of successful 12-month period of repayment, the provisions are now we are getting back, so that we don't need to provide any additional provisions towards standard assets, and whatever the requirements that already provided off. Okay. That's nice. The second question is from that Gold Loan. The Gold Loan has seen a significant sequential jump this quarter. You can see the gold loan has improved around 11% sequentially. I just want to know these loans, whatever you have disbursed or sanctioned in this particular quarter, are they to the existing customer or any new customer has already added? In this season, you see the high gold rate and gold prices already moved to an upper level. I just need to know whether those particular loans are over-leveraging or the new customers are going to add it in this quarter. It is a combo of both the existing-to-bank and new-to-bank, and broadly, it will be 85/15, 90/10 kind of stuff between ETB and NTB, number one. Number two, in terms of LTV, it is very clearly documented regulatorily. We cannot give more than 75%. That includes even the interest as well. When we start, we do with 67%, 68%. We have been doing this for the last so many years, so it's not new to us. Hence, the portfolio is also holding, and LTV is also well below the threshold limit. The last question for me is in the personal loan that we have around 3% of the entire loan book. Which, what carries in this personal loan? I just understood that personal loan is not a secured loan. What are those sort of segments of loans which are included in this particular segment? Whatever we would have given to the existing MSME customers, we normally have a holistic relationship. We don't want them to go to some other bank if he is married to us because we are the full banker. We would have taken the calls only for my existing-to-bank MSME borrowers. We don't do personal loans for new-to-bank customers. Okay, that's it from my side. Thank you. Thank you, sir. Thank you. The next question is from the line of Chinmay Neema from Prescient Capital. Please go ahead. Good evening, sir. I just have one question. Could you talk about the competition that you've seen from the large private banks on the MSME side? The competition has always been there, and they will always be there. With all the competition only, we also need to thrive, which we had been doing from 1994. Sir, in terms of service quality metrics, like turnaround time, typically, how do you differ from other banks in the U.S.? See, as I had been repeatedly saying in my multiple conference calls, this is basically a commodity business, and you have to, let's say, you need to continuously convince the customer that you are providing service for whatever price he is paying. Oh, got it. Understood. Thank you. Thank you. The next question is from the line of Jai from ICICI Securities. Please go ahead. Jai, are you there? As there's no response from the participant, I now hand the conference over to the management for closing comments. Thank you all for attending the conference, the camaraderie here. When I was hearing, the bulk of the questions were particularly on growth, whether we will be having mid-teen or plus two or whatever it is. These things are always, till last minute on 31st of March, we will be finding it extremely difficult to exactly do what it is. We are just giving a broader expectation. What I have to clearly say is that as of now, everything is looking pretty good for the acceleration in the growth, it is pretty visible. Profitability, for the first time, we have crossed a INR 300 crore mark for the quarter. The slippage also has sequentially reduced from the fourth quarter. Even though you listen from multiple corners that there are issues, so far, we have not faced that, but we are very closely monitoring the situation. It gives us sufficient comfort that we should be able to maintain the growth rate and probably maintain the profitability as we move forward. The margins should stabilize from the third quarter, and also we have to increase the CD ratio, and also you have the TRR rate cut. To that extent, if you are able to move, there will be further strengthening of the margins. There are enough levers to improve the margins if you are able to increase the thing. Earlier, there were issues of the LCRs and a lot of constraints on the liability side, which have been removed. Many uncertainties in the gold loans have also been taken out from the recent circular. There are enough opportunities now. Moreover, currently, Gold Loans particularly are looking extra lucrative because yields are also supporting, and it's also coming in the fixed rate and not getting affected by the decreasing interest rate scenario. Considering everything, I think the financial year should be progressing with a lot of positive hope. We are anticipating because of the 25% tariff now announced by the U.S. or the other caution given by a few finance companies, particularly on Karnataka and all. I mean, we have a little exposure in Karnataka, but overall, things look extremely positive, be it in terms of growth or be it in terms of the profitability. We hope to complete this year in a decent way, both in terms of growth and also in terms of the quality. If at all, any changes in the pattern, we will be continuing to, let's say, discuss with you during the forthcoming conference calls. In that background, to some, let's say, things are even shared better than what we anticipated maybe six months back. Things are turning out to be much positive, and we hope this positivity will continue for the foreseeable future. With these words, I once again thank you all for participating in this conference call and hope to meet you all with better quarters in the, let's say, future, be it in after September or December and March onwards. Once again, thank you all, and thanks to Ambit for arranging this conference, and thanks to all of you for attending this. Once again, we welcome you for attending our annual general meeting. Thank you all. Thank you. On behalf of Ambit Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your line.