Ladies and gentlemen, good day, and welcome to the Q2 FY 2024 earnings conference call of The Federal Bank Limited. 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 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. Souvik Roy, Head, Investor Relations, The Federal Bank Limited. Thank you, and over to you, sir. Thank you. And ladies and gentlemen, thank you for joining us on this, busy result afternoon. We hope, you've had a chance to review our latest quarterly figures. It's my pleasure to share that we've had an outstanding quarter, and I would like to highlight some key points. First and foremost, we have reported broad-based growth across all segments and businesses, which is a clear sign that our strategies are yielding positive results. In particular, our net profit number for this quarter is the highest we have ever achieved. Our ROA continues to trend well, and our ROA, certainly underscores, you know, our commitment to efficient and sustainable operations. We have also successfully completed a significant capital raise in Q2, which now bolsters our, you know, financial position and allows us to pursue growth opportunities more aggressively. I'm also pleased to report that, our NP numbers remained well under control, which is a testament to our proven risk management practices. Overall, we can confidently say that this quarter was a good one for us, and the positive momentum continues. To provide further insight and discuss, you know, these results in detail, we have our entire, senior management on this call, and I'll now hand over the call to our MD for a more in-depth analysis and to answer any questions you may have. Thank you again for being a part of this call, and please feel free to ask any questions that, you may have. And with now, over to you, sir. Yeah. Thanks, everybody. Good evening. This is Shyam here. Like Souvik mentioned, the entire senior team is there. We'll be happy to answer questions. I think the key messages, he did read them out, but I'd just reinforce the fact that, many of, many of our initiatives, I think this is a stigma of all our initiatives coming together quite well. Over the last 6-7- quarters, sequentially, every quarter has been strong performance. In Q2, environment continued to be challenging, as it is likely to be for the periods ahead in certain areas. We've seen good progress on all counts. Credit and deposit growth has been quite consistently good. I do believe structurally the deposits market has seen change, probably globally, certainly in India, certainly for us. Not daunted by that, we are reorganizing ourselves to make sure that through this period also, we will be able to grow and expand, both the balance sheet and also the quality of our assets. This quarter is a good, good testimony to the progress that we've had in terms of kind of businesses that we are ramping up on, with a keen eye on the credit quality being intact. Notable in Q2 are the features that Souvik just spoke, and the provisional results that we had shared early in the part of the quarter and the results that we announced today. The NII for the quarter grew quite smartly. In fact, it grew 7% sequentially. Credit grew about 5%. Evidently, the higher yield businesses are beginning to make an impact on the overall numbers, and we do think that will sustain. Fee income for the quarter and generally in the trend lines has been quite encouraging. And here again, our philosophy of being moving from being a pure lender to a banker, particularly as we seek out our business model, just at the cost of repeat, is about getting the better risk-rated clients, pricing competitively, but asking for more business from the same clients. And I think the last two, three quarters are beginning to show results. Earlier in the financial year, when we were meeting some of our potential investors, and I explained the theory of trying to migrate from being a pure lender and being a peripheral banker to a more important banker. We are seeing traction on that count. Fee as a share of assets is almost, you know, 1%, and we believe we are fast to get to 1.1% or better in the coming years. So the environment for deposits continues to be challenging. Our term deposits have grown remarkably well through the quarter, year-on-year, grew 33%. Domestic savings has grown reasonably well at about actual market kind of growth rate at 11%. What traditionally used to be a materially big part of our portfolio, NR savings, is seeing degrowth in some sense. We also quickly and constantly keep checking to see how the NR performance is. Remittances have moved up materially. Our share has gone up substantially. So there is a pivot from NR savings to NR term or NR business money going into consumption and/or investment and/or, setting up a new business and/or paying off loans. So there's some structural change happening, and we have organized ourselves to make sure that we get more prominent in the domestic business. We've seen good footprint expansion, and our fintech partnerships, particularly on deposits, are beginning to give us, some domestic savings increase. So on balance, Q2 has been good. We have seen progress on all counts. There are challenges in terms of growth in deposits at a price. We have organized ourselves for that.... and, at the beginning of financial year, we did say that H2, we will see better pickup in margins. We had also said that our dip in NIMs will be faster than the other, which it did. I do believe we've toughed out on NIMs, and the increase can happen here, too. So having said that, I must quickly add that the rate of growth of expectation in terms of NIM expansion will be more moderate. I don't believe some of our numbers that we visualize to get to 3.25 full year, maybe a touch. This is using the old compute. We have recomputed and present both the old and new formula. Our new formula assumes net earning assets, so you will see our NIMs showing a 3.22. But in the spirit of full transparency, we have showed the equivalent in both formats so that nobody needs to worry whether the bank is trying to outsmart and trying to show different formats. No, we are representing both formats. But hereon, we will present with net earning assets, which seems to be consistent with market practice. So this expansion from hereon, we do believe will be inching up, but the level of inching up, I'm not yet able to digest or comment, okay, because cost of deposit is yet to taper down. Though Q2 versus Q1, the rate of increase was consistent. It was not much higher. Even advances has moved up from 7 basis points in Q1 to 14 basis points in Q2. So that trend line is quite encouraging. So let me just pause here with the following messages: Growth, 18%-20% quite possible. Credit quality holding well. ROA and ROE expansion on track. We believe we will, we've been growing quite smartly on our net profit, and traction has been strong, and we believe that will consistently hold. And the pivot in some of our higher yield businesses is working well. Deposits continues to be a higher cost item, and we are organized for that. So let me just pause here, and, team and I will be able to answer questions or clarify anything that's required. Thank you very much. Hello? Shall we begin with the question and answer session? Please. Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask questions may press star and one on their touch-tone 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 questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Gaurav Kochar from Mirae Asset. Please go ahead. Yeah. Hi, good afternoon, team. Congrats on the quarter. I have three questions. Firstly, on margins, I think Shyam sir alluded to, you know, the movement in margins here, too. I just wanted some sense on the cost of funds repricing. In this quarter, we've seen around 20 basis points kind of repricing. So is it, is it done fully now, or there is still some repricing on the cost of fund side, which is yet to, yet to come in the third quarter? Venkat, you wanna go? Mr. Venkat is not yet connected. We are trying to connect him. Okay, fine. Okay. I think the rate of growth of deposit cost is a trend beginning to moderate, but I think, Gaurav, it will be a little more contingent on how the environment is shaping up. It is certainly not yet cooled off. So to that extent, we have to be ready for one or two quarters of more higher cost of deposits, because the bulk of... As you would have noticed, this quarter, we grew our deposits year-on-year 23%. Mm-hmm. 97% is core deposits of that, and a large part is in term, term grew 33% year-on-year. So there is money, but it's at a cost, and we are, given everything that we are facing in the market, we believe we should tank up when the money is available. Of course, we are finding alternate ways to ensure that the blended cost of funds is in control. I mean, that's why I caution saying that the increase in NIM that we've visualized may not fully play through, but certainly it is starting to grow. The trend line has reversed for us. In Q2, it improved, and we think it will improve in Q3 and Q4, too. Sure, sure. And just on the yield on advances bit, you pointed out that the higher interest-bearing assets are sort of seeing improved traction, and as a result of that, the yields have improved 14 basis points. So maybe taking, you know, a further step further, let's say the mix improves by 100 basis points, what is the delta we get on the margins? On one of the slides, you've disclosed that, you know, on a year-on-year basis, there has been a 300 basis point improvement in the yield on assets or interest income coming from that asset. So just wanted some context for every 100 basis points kind of, you know, improvement in mix, what is the delta on margins? We should see similar kind of traction, the higher yield businesses as they grow. But, here again, I'd caution saying, these are businesses that also have higher risk associated, so we've been quite watchful about it. But yes, the increase in NIM and the increase in yield on the advances, we saw sequentially seven basis point improvement. So we think that kind of momentum going into 20 into the second half also is the same. Got it. Got it. Thanks. On the OpEx, my second question is on the other OpEx bit. There was a sequential jump of around INR 100 crore. I see that you've added around 23 branches in this quarter, but just wanted to get some sense what was this INR 100 crore incremental about? Was it largely because of branch expansion? Or some of it was one-off? Just wanted some color on this. So no, there is no one-off in any large set. It is sequentially many things that have volume increases a material part. The branch expansion is only one element. All of the full year branch expansion cost will share in a cost play through. It's a mix of all the businesses that are growing and there is a volume-related expense. There is the marketing and spend increase that increased about 15-odd crore during the first season. We had some very aggressive field-related events. So it's a blend of a few things. I don't think there is any one-off expense sitting there. Yeah. I, I can come in here, Shyam, Gaurav, this is Venkat. This is largely volume-related increases in the OpEx, which you have seen. There are no one-offs in that, and like Shyam said, some element of marketing. Branch-related cost is not a significant sum in this increase. Okay, got it. So fair to assume this run rate would continue in 3Q14, something more than this, given the volumes, if it goes beyond what we believe- The same growth in credit and NII, we should continue to see similar increase in variable cost. Sure. Got it. And on the fee income bit, I mean, the last question that I have on this, we did about INR 660 crore in second quarter. Given the third party related fee and, you know, even generally the volume related fee is much better in second half, is it fair to assume that, you know, our fee income, because if I look at last four quarters before this, we did about INR 540 crore of fee income. This quarter it has jumped to INR 660. So just wanted to ensure that, the next two quarters also, can we expect a similar INR 660 kind of a run rate or more, given that second half is typically better? Yeah, there are no one-offs in this. The lender to banker strategy is playing through. Most of our corporate and retail customers are concentrating, are giving us a larger share of their business. So we are seeing... That's why if you see slide number 19 in the deck, it's quite explanatory in terms of its diversity and granularity, and that should sustain. Sure. And just on this, the cost to income in this quarter was 52.5. Earlier, I remember, I mean, you have guided that every year, probably 100 basis points kind of improvement. Let's on a full year basis, this year, can we see similar sort of, what we did in FY 2023, at least, on the cost to income side, given that we've seen some inch up in cost in this quarter? Yeah, I agree. There is some inching up of costs that have happened. So volume-related costs have gone up. Second is, some of the businesses that we do with our partners requires us to take, you know, the accounting requirement is some of the expenses, service charges come as a cost, and the interest income, the income comes to that extent. These are relatively higher cost income businesses, but higher ROA. So we made that conscious call, saying for a couple of quarters or for a period of time, we may carry some extra cost because these come at about 65%-70% cost income, but our ROA accretive. So we've made that call and it's visible. You'll see our ROA expanding, interest income expanding, income expanding, but unfortunately, the cost also does. So till that normalizes, we may not... We are struggling to pull back to the 50%, but that's what we are working towards. To back out some of these expenses, it's still tracking to the 50%. But yes, on a blended number, the 52 number that you see is a little higher than our original assumption. Sure. Very helpful. Thanks. Thanks a lot, Sham. Thanks. Thank you. Thank you. The next question is from the line of Mahrukh Adajania from Nuvama. Please go ahead. Yeah, hello, sir. So my first question is on credit costs. So you've done a good job, and credit costs are really low this quarter. Where do they normalize? As in, we were, I mean, last quarter it was around 39 basis points. Now it's much lower. So where does it normalize, and how long do they stay so low, given that high yield businesses are also increasing? Mahrukh, this is a question that I wish I had an answer very easy, because we certainly don't want to reverse the trend of improvement, right? That said, at 13 basis points is particularly low. We have said in the beginning of the year, somewhere 35-40 basis points, full year credit cost. First half, as you noticed, blended is, you know, in the 20s. 20-20 basis for second half may be little more challenging, but somewhere early, late 20s, late 20s, early 30s, it's better than where we had originally visualized the year to start. I'm happy that that trajectory will continue. We've had, you know, no corporate banking losses for long periods of time. I hope that it remains like that, but there can always be some challenges in the market. Second, on unsecured and granular credit, we are tracking well. Our SMA book is at its lowest in many quarters, SMA zero, one, and two. And we believe that, even through this period of growth in unsecured and higher margin businesses, it should not fall off. We are not doing new to bank aggressively on unsecured. We are doing existing to bank and pre-qualified databases. So for the next 2-3- quarters, this trend line will continue and we should be in the zone of 25-30 basis points. ... Okay, sir, makes sense. Sir, why has the recovery income dropped off so sharply this quarter? No, some parts of it is very, you know, if you have one good recovery, it plays out, so you can't quite model that. It's depending on when some charge off happened and when the opportunity comes. So I would not put too much attention to, you know, whether it's high or low, because these tend to be sometimes opportunistic. Got it. And sir, I just have one final question, which is that, sorry, you just mentioned that you would still end the year with 3.25 margin, which is kind of 3 basis points above the current level, correct? If you take the current formula of our computation of 3.22, we are working to that 3.25 margin. Okay. Okay. Thank you, sir. Thanks. Thank you. The next question is from the line of Nitin Aggarwal from Motilal Oswal. Please go ahead. Yeah, hi, good afternoon, everyone. So, congrats on good results. A couple of questions. First is on the fee income side, if you can talk about what is this para-banking really including, and there has been a strong growth that we have seen this quarter on a sequential basis. So, what has driven that, even on a YOY basis, the growth is very strong. How do you really see this? Yeah, I think para-banking is basically our insurance, investments, wealth management. Largely these three businesses are all tracking well. Basically, higher penetration, good distribution, and some level of product improvement and focus. And that's been the focus and will continue to be. Okay. And secondly, on margins, while there has been a similar rise in cost of deposit between the first quarter and now the second quarter, how do you compare this outstanding now portfolio deposit cost to the incremental cost, so as to, like, have a view as to how they can trend, the margin can trend in the coming quarters? How much is the gap opening now? Sorry, you have to repeat this question. It didn't come through well. So actually, I want to understand as to how much is the incremental cost of deposits now vis-a-vis the outstanding cost of deposits? Because CASA mix has been under pressure and may likely remain so. So given that, over the past two quarters, the rise in cost of deposit has been pretty uniform. So how much is the gap between the incremental cost of deposit to the outstanding deposit cost? Sir, like I mentioned earlier in the call, I do believe that, the cost of deposits, clearly in the last of the story, it remains quite elevated for the industry, and could remain so. If the new originations of deposits are also going to be at the higher price. So somewhere in the 18-20- basis point increase in the cost of deposits, we should factor for and work our other lines to ensure the margin expansion happens and the ROE expansion happens, which is what we are doing. Some of the selective businesses, recovery up, state improving, is being more high to reduce repricing existing assets and a combination of that, and of course, pursuing CASA, CASA growth more aggressively in the context of us writing better credit and becoming a larger lender to bigger banks and bigger customers, we are able to get some CASA also. So the lender CASA outcome will be through that. Right. And sir, on the asset quality side, we have seen a very strong recoveries and upgrades, and the things are going really strong. So what has really driven this in this quarter, the recovery number? Any one-off there? No, Nitin, I mentioned in the earlier response also, there are no, in this quarter, there is no one-off of any nature. In fact, this quarter, relatively, recovery was lower than the previous quarter. Upgrades were higher. Okay. Lastly, on the internal rating of the corporate book, there is a very sharp increase, almost 500 basis points. What has really driven this? How do you see the trend there? Yeah. Harsh or Ashutosh, you want to point out on that? Harsh, Ashutosh, Shyam? Please come on your- Am I audible? Go ahead. Yeah. Hello? You're audible. Yeah. Yeah. Yeah, there has been a clear focus on the A category, BBB+ and A category customers, which is what is shown over here, which is seen a high percentage uptick. So our very clear target is because AAA and AA customers, we don't get the yield. So there's a clear focus on the A category of customers, which is where you have seen the increase, and also an uptick in the yield resulting because of that part. All right. Okay. Yeah, that's right. Got it. Thank you so much. Wish you all the best. Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go ahead. Yeah, thanks for taking the question. So firstly, any impact of ICRR we saw this quarter, or it was hardly, maybe not even one basis points also? No, the impact of ICRR was offset with... The benefit of increased capital was offset by ICRR, roughly about, both ways, about 3 or 4 basis points. Okay. So 3-4 basis points on ICRR offset by? The capital increase we had, the QIP just came in the quarter. Yeah. Okay. So 34, 34 basis points getting offset largely. Yes. Okay. And, secondly, just in terms of, the overall cost to assets. So, maybe I think, you, highlighted that there is no one-off as such and more marketing related, but overall, where should cost to assets, settle when we guide for, say, ROE, ROE expansion as well? Because maybe margin is not too much of improvement, credit cost would also normalize. So, now, would there be any triggers for, ROA, ROE expansion here on? Kunal, I long said that we get to 1.4% ROA in FY 2025. Thankfully, we are well and well on course much earlier. I think the cost, and that gives us some latitude to allow for some of these banks and, you know, expansion in branch. We are up-fronting some of our branch expansion. This year, we may end up doing 100 branches or more, in the full year, or a little more actually. So to that extent, we are taking the, luxury of spending a little more to ensure franchise expansion happens. So I would think the cost to assets where we are today, can't be very much. There will be some growth, but not material. Okay. Okay. So should stay, largely here, maybe somewhere around these levels? Exactly. We are working to bring it to earlier, we thought 48% CI. Given some of the ROA expansion coming through higher cost income on our Fintech partnership, so we are allowing us that little latitude. Oh, okay. Okay. Yeah. Thanks. Thanks. Thank you. The next question is from the line of Saurabh Kumar from JP Morgan. Please go ahead. Hi, sir. Sir, just two questions. One is, what will be your LCR this quarter? What is the LCR? LCR for the quarter. LCR, sir? Yeah, yeah. 121. 121 or 124, I'm not sure. Okay. Okay, and the second is that this, NRE, NRE deposits not growing. I mean, do higher rates globally impact this growth, or will that not be sensitive to this NRE, to this- No, I think, there are two parts to it, Saurabh. When you met us, we did explain. So we are in the NR, there is FCNR, there is NRO, and there is NRE. Yes. The remittances-led businesses, which is our NR bread and butter business, remittances are growing very strongly, and our share is increasing even more visibly. However, the FCNR, we are not a big player, though we are slowly putting our foot in to try and grow that. We have not seen any dips in the NR remittances. In fact, it's growing. They are not converting into deposits either because savings. It's going into deposits certainly, it's becoming term, because the rate differential between term and savings is quite high. People are moving into term, or they are using it for consumption, paying off loans, starting businesses, you know, committing to expenses that they had held back during the COVID period. Now, whether this is a sustainable change, we have to see, but I think six quarter is a good period to understand that something structurally has changed. And we are watching this. Having said that, of course, and because we see this remittance share going up, which it is for us. The second and third part, which is the NRO and the FCNR, is not been our biggest strength we are working through. Maybe Shalini can also give some numbers in terms of deposit share in our, where we are gaining share. Shalini, maybe you want to add, please? Sure. Thanks. Thanks for that. So as Shyam mentioned, if you slice it into three parts, which is NRE, FCNR, and NRO, our focus has entirely been for very long on NRE. And there we are seeing significant market share growth, roughly about 8.32%, March of last year, 8.45% this year. FCNR, and that is sort of the, kind of addresses your question also. A lot of the customers who tend to put in FCNR are the ones who are now retaining their money abroad, and some of them are obviously using that as leverage to kind of get FCNR deposits in country. We don't play too much in that space of FCNR. So on FCNR, we've actually seen a reduction in market share. NRO is not something we've been kind of, you know, working on for a very long time because our bread, butter, jam has always been NRE. So the third point is FCNR and NRO is where some of the growth is coming, which we have not been playing in. Going forward into the next few months, we will be playing a large part of the, you know, the market in those areas also. We will work on... We will be working on this, but the bread, butter, jam really is NRE term, NRE, both term and savings. We find a lot of the movement is actually happening from savings into term, and that's because, you know, the differential in interest rates is high between the two of them. Yeah. Okay. Yeah, just to add, I think the FCNR segment of NRI deposits competes with the global rates and all. Yeah. Because there you have, you know, I mean, no exchange-related, you know, so-called gain or risk. So therefore, you know, I think with interest rates going up overseas, naturally, the impact on FCNR is there, unless you are ready to pay that type of cost or make it... Because it's a fixed rate, it's not floating. On the date of contracting for next one to three years, it's going to remain at that level. So I think, even banks are not probably pursuing that much of, you know, FCNR deposit growth. On the other hand, on the NRE term and NRE savings bank, interest differential, which used to be around 200 basis points, now is about 400 basis points. ... So as a result of that, you know, I think part of NRE savings is moving towards NRE TD, and also from, you know, while remittances are increasing and all, they are getting initially parked in NRE FD for our clients, and then they are being used probably even for physical assets and consumption. Okay. So FCNR will not, like, in the current rate environment, I don't think, I mean, your on-book TD, domestic TD will be cheaper than FCNR. Will that be a fair comment? Yeah. Off it and do it domestic lending it has like- On a fully hedged basis, yes. Okay. Well, thank you, sir. Thank you. Yes, I've said this three times already, just to reinforce the same message. Deposits are available at a price, and, we have to make a call at what price and how much you want. We saw significant growth this quarter, on deposits, and we'll see. We grew 10.3% this year, this quarter, sequentially, so Y on Y side. Next question, please. Thank you. The next question is from the line of Pranav from HDFC Bank. Please go ahead. Pranav from HDFC, you may go ahead with your question. Pranav must be busy recording his own numbers. His line numbers are just on the screen. There seems to be no response on the line of Pranav. We move to the next question. The next question is from Rakesh Kumar from B&K Securities. Please go ahead. Yeah. Hi, sir. Thank you. So, on the MSME loan, like, you know, we have seen some, you know, some reduction, some volatility is there on the sequential basis, so around INR 2,000 crore, like, you know, business banking plus commercial banking number. So could you tell us what is the reason for this, like, you know, this decrease from INR 33,000 crore to around INR 31,000 crore number? Especially in the commercial banking, I think this dip has happened. So any reason for the same, sir? Sorry, I have to pick up the slide. Where the slide are you referring to? So this is slide number 14. We have given MSME business banking plus commercial banking growth of 16%, INR 31,000 crore number, and similar numbers in the Q1 results, INR 33,463 crore. So business banking has grown this quarter also. Slide are you referring to? This is, ma'am. I think I got it. Harsh, fourteen. Harsh, I think what he's referring to is on slide number 14, regarding the MSME growth being at 19%. Business banking is growing at 18%-19% and commercial banking at 21%. The remaining portions are the non-MSME piece. What you're seeing is the MSME piece. CB, commercial banking, and business banking also a very small portion, which is non-MSME also. No, no. So firstly, this entire MSME book, which has come down to INR 31,447 crore, so what is the reason, firstly, so which part within that has come down, and why it has, like, is there any... What is the reason behind it, basically? I'm not getting it. The MSME piece has grown by 19%. So Q1 case, Q1 case. Q1 case. I think there's some confusion, Rakesh. If you look at our presentation on page 14, we have mentioned MSME book as INR 35,616. There's no reduction. Exactly. It's a 19% growth. Sorry, just one point here. Just referring at our website, we may have to update that slide in the website. It's showing a different number. That's already updated, sir. Okay, thank you. Maybe he's referring to that before the update. Okay. So, there was change in the slide number. Okay. Okay, so number hasn't changed. 35616, exactly. Okay. Okay, and sir, in this credit risk weight density, like, so, we see like, you know, there is, you know, some increase there, or like, you know, and especially in the market risk also, market risk number is slightly on the higher side. So is this because of the investment book growth? The voice is not coming through. You have to repeat the question. So this market risk number, which has gone up slightly, so is it because of investment book growth, or there is any other reason also, to this investment book, you know, growth and the market risk weight number? Damodar, are you there? Hello? Am I audible? Yes. Yeah. This is because growth in investments. We have certain growth in investments in MCLR book, bonds and debentures. Okay. Okay. Okay, sir, I will, maybe I will, I will, take it offline sometime. Okay. Thank you. Thank you, sir. Thank you. Thank you. The next question is from the line of Madhukar Ladha from Nuvama. Please go ahead. Hi. Congratulations on very good set of numbers. I have a couple of questions. To an earlier participant, you mentioned that you do not expect meaningful reduction in the cost-to-income ratio. And you also mentioned that you're targeting an ROA of 1.4% by the end of FY 2025. Is my understanding correct, first of all, on this ROA? Yeah, we had, if you remember when we started FY 2024, we had said over two financial years, we'll get to 1.4% ROA. Happily, we're trending much earlier, and certainly we now seek to do even better. Yes, I did say that the number of 1.4, that's what we had said at the beginning of the financial year. So thankfully, the traction is good, and we'll keep, hopefully keep this momentum going. Yeah. So my question is, given that the credit costs are extremely benign, you know, can't get better from here, and your net interest margin is also going to kind of stabilize, you know, the high yields getting offset by a high cost of deposit. So the only driver, a meaningful driver, could be cost-to-income ratio. So given that you are saying that it's likely to be sticky, are we to expect a more gradual or virtually very little growth, very little increase in the ROA going forward? Yeah, I would think the improvements that you have seen, we should sustain them. There is opportunity to increase our fee as a share of assets by another 10 odd basis points over the coming quarters. And, as we do that, by this window, we do believe cost of deposits will start trending down, which will again aid in expansion. The repivoting of some of our businesses will again aid in expansion. These three elements, higher share of fee as a share of assets, deposit costs trending down or flattening out over the periods ahead, and higher margin, higher yield businesses picking up scale, all are opportunities for expansion. And I'm sure over a two-year period that we're working through, we will see even more efficiencies kick in. And so the only reason we allow for higher cost income is only because it's ROA accretive. We are not doing businesses that are ROA decretive or on the same margin, not incremental. We won't do the higher cost income. So the blend is ultimately the ROA expansion is the driver, and we're working through that. So at this point in time, our guidance, which is we are not altering the guidance, 1.4 and looking up. Certainly, we try to improve that in FY 2025, but yeah, that's the trend line. So there are levers available, but yes, there is no one single lever. We are a few basis points and across all parameters, and that's how we've become from 0.78 to 1.35 very steadily and consistently over five years. Okay, got it. So is it, I mean, I'm not asking you for a guidance, but is it reasonable to assume that from FY 2024 level, given all the factors that you outlined, ten basis points, kind of an increase in ROA, is possible? Which is what we are working to, Madhu. Okay. You know, there are no external... Yeah. I got you on. I got the answer. Thank you very much and all the best. Thank you. Thank you. Thank you. The next question is from the line of Kaushik Poddar from KB Capital Markets. Please go ahead. See, your operating expenses in the first half, both the quarters combined, has gone up nearly 25%, and even your cost, cost-to-income ratio is at a high of 52.6% or 52.5%. So that seems quite high. So what's the road ahead? I thought that's what we were explaining also. I am allowing for that higher cost income because these businesses are ROA accretive. So we have to sustain the higher cost income because these are some of these partner-led businesses, which is like credit cards and personal loans and gold and microfinance. That's how the ROA expansion is also happening. If they were not happening and ROA is not expanding, we wouldn't be doing that. We would be going back to our 50-odd%, because some of these service charges that are hitting the expense line, there is a corresponding revenue. So the cost income is in the 60s or mid- to almost 70%. So, that said, our core is structured, performing on course, and we are spending on certain initiatives like brand and branch expansion, both of which are sustainable, good for the periods ahead. But having said that, getting to the 50% and improving in a year's time is what we will pursue. You'll be able to achieve in 50/50, I mean, cost to income of 50%? Yes. We were trending closer to 49, but some of these developments and how accounting needs to be done for partner-led businesses- Mm. is requiring us to take the cost income higher. But the only trade-off we're making is these are distinctly and definitely and compellingly ROA accretive. Now, including this incremental cost for this newer initiatives, so this 50% will be at the firm level, at the bank level, or you are- Yes, yes. At the bank level, yes. Going into FY 2025. Okay. And these people... I think I remember you mentioning something about, about the older employee pension coming off or something sometime later. Yeah, that started trending down quite substantially. Okay. By FY 2025, a large part of it will start falling off because the majority of the recruitments, and not all of the recruitments after FY, after 2010, have been on the new scheme. To that extent, the retirement age of most of the people prior to that is beginning to taper off. Having said, the last employee of that type will retire in 2037, but the bulk will retire, have retired, retiring. And, to some extent, this swings with yields, Kaushik. So every time there is a yield movement up, you will see a higher cost of pensioning, and that's partly playing to in this quarter also. We are fully funded on our pensions, so we don't have any lag on that. To that extent, it has some impact. But having said that, the incremental requirement for pensioning in the period ahead will start moderating. Okay, so this 50%, you're talking last quarter of this financial year, right? Cost income? We are working towards that. It's not last, it's first quarter of FY 2025. Okay. Okay, thanks. More towards FY 2025. Yeah. More towards FY 2025? Okay. Yes. But FY 2025 as a whole, right? That's what you're speaking of. Yes. Yes. Yes. Okay. Okay, fine. Okay. Thank you. The next question is from the line of Jai Mundra from ICICI Securities. Please go ahead. Yeah, hi. Good afternoon, and thanks for the opportunity, sir. I have three questions. First is if you can give the loan mix by benchmark. I mean, repo, EBLR, fixed rate, book. Venkatraman. Yeah, yeah. 51% on the EBLR. 26 is about 26-6, and for repo plus, 13 is MCLR. These are the big ones. And then we have FX link of three, staff 1.5, and IBPC, 1.85. Sure. And, sir, in this quarter, so the yields on advances have actually changed their trajectory. Earlier, they were moderating for the last three to three quarters, but this quarter there has been a rise at around 14 basis point. Apart from newer loans, which are high yielding, are you also seeing benefits on either fixed rate book or MCLR or, you know, T-bills linked repo? Or that benefit is not that much, and the benefit is coming from, you know, high-yielding book. So high-yielding book is only one element, chief. There are elements that are across the spectrum: renegotiation, pricing of existing assets, negotiating better, you know, price requirements from customers. So I think it's a combination. Right. Okay. And lastly, sir, on your CASA deposit, right? So you mentioned that, you know, deposits are available at a certain rate. So when you intend to grow at 18%-20% on loans, do you see a scenario where the retail card rates on deposit may have to be increased, or, or you think that is, that is an unlikely scenario in the near term? So lastly, on deposits, we won't lead the price increase, so we are tending to be comparative and benchmark against five, six banks which we compete with. And we won't be off, because I can't have a steep disadvantage in growth of deposits. So as long as we are comparative, we will keep growing. I will keep pricing appropriately. Right. Understood, sir. Yeah. Thank you so much. Thank you very much. We'll have to take that as the last question. I would now like to hand the conference back to Mr. Souvik Roy for closing comments. Thank you, and, look, I want to extend my gratitude to all of you for joining us today and, your interest in the bank and your, of course, insightful questions are greatly appreciated. So before we close, you know, to answer to Rakesh's query, you know, 35616 and what we have reported as MSME+ COB 31447, the difference of INR 169 crore has been reclassified, which is why it is not a part of BuB or CoB COB anymore. So which is why you see a 16% YOY growth, but, happy to connect after the call and explain further. As we discussed throughout this call, you know, the momentum is strong, and we are committed to further improving our performance, and we firmly believe that, you know, the future holds better and greater opportunities for us. If you have additional questions or need further clarification, any, any further clarification, please don't hesitate to reach out to us, and we'll certainly answer you. Thanks again for your time and attention. We look forward to a continued journey from here on. Thank you so much. Have a great day. Thank you. Thank you. Bye. Thank you very much. On behalf of The Federal Bank Limited, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.