Ladies and gentlemen, good afternoon, and welcome to HDFC Limited Q4 FY 23 earnings conference call. 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 this conference is being recorded. We have with us HDFC's Vice Chairman and CEO, Mr. Keki M. Mistry. Managing Director, Ms. Renu Sud Karnad. Executive Director, Mr. V.S. Rangan. Member of Executive Management and Chief Investor Relations Officer, Mr. Conrad D'Souza. Additional Senior General Manager, Anjalee Tarapore. I would now like to hand the conference over to Mr. Keki M. Mistry. Thank you, and over to you, sir. Thank you. Thank you very much. Good afternoon, everyone. At the outset, I would like to welcome all of you to HDFC's earnings call for the current financial year. The board of directors at its meeting held earlier today approved the financial results for the year ended March 31, 2023, which were subjected to an annual audit. Let me start with outlining a few developments in the economy over the last three months, which have a bearing on the corporation. The Monetary Policy Committee at its meeting held in February 2023 increased the policy repo rate by a further 25 basis points to keep inflation expectations anchored. The aggregate increase in repo rate since May 2022 has been 250 basis points. During the quarter, there was a further uptick in interest rates, consequent to which we have increased deposit rates as well as rates on our loan products. In its April 2023 Monetary Policy, RBI has paused the rate hikes. RBI will, however, monitor price stability in determining further rate action. The momentum in the economy was strong right through the financial year ending March 2023. This is reflected in a significant pickup in individual loan disbursements and a 17% growth in the individual loan book on an AUM basis. During the year, the loan book crossed INR 6 lakh crores and the AUM crossed INR 7 lakh crores. March 2023 witnessed the highest ever monthly individual disbursements in HDFC's history. Asset quality has continued to reflect improvements. Stage two and Stage three loan assets have reduced from a peak of 9.2% in June 2021 to 6.7% in March 2022. Now are further down to 5.0% in March 2023. Over the next few minutes, I will give you a summary of the key highlights of the performance for the year and the quarter ending March 31, 2023. Let me start by summarizing the progress of our business through this period. Our individual loan disbursements for the year ending March 2023 grew by 16% over the previous year. Housing disbursements constituted 93% of individual disbursements in the current year. Growth in home loans were seen in all segments of the market. 94% of new loan applications were received through the digital channels. During the fourth quarter, we sold individual loans aggregating to INR 9,340 crores. The individual loans sold during the last 12 months amounted to INR 36,910 crores. These loans were assigned to HDFC Bank pursuant to the mortgage sharing agreement with the bank. Individual loan book growth on an AUM basis was 17%. If the loans amounting to INR 36,910 crores had not been sold during the preceding 12 months, then the growth in the individual loan book would have been 24%. On a balance sheet basis, our individual loan book increased to INR 4,99,496 crores. In addition to this, the individual loans sold by the corporation and outstanding as of March 31st, 2023 amounted to INR 1,02,071 crores. HDFC continues to service these loans. Individual loans outstanding on an AUM basis amounted to INR 601,567 crores, a growth of 17% over the previous year. As at March 31, 2023, our non-individual loan book on an AUM basis was INR 122,421 crores. As mentioned in an earlier calls, construction finance loans, unlike lease rental discounting loans, have a longer disbursing period as they are dispersed based on progressive construction and after the developer has brought in his equity. Over the last few quarters, we have seen some scheduled repayment of earlier facilities and resolution of some stressed assets. We have also a maturity rundown exposures in the loan book to ensure compliance with HDFC Bank's norms in view of the pending merger. Such loans aggregated to around INR 18,000 crores. The total assets under management as at March 31st, 2023 amounted to INR 7,23,988 crores as compared to INR 6,53,902 crores in the previous year, a growth of 11%. If no loans are in the preceding 12 months, then the growth in the total loan book would have been 16%. Prepayment on retail loans amounted to 11.3% of the opening loan book. The average size of individual loans for the year ended March 31st, 2023 stood at INR 36.2 lakhs as compared to INR 33.1 lakh in FY 22. The contribution in value terms from customers with an annual family income of INR 18 lakhs or more has increased during the year to 53% from 45% during the corresponding period in the previous year. During the year ended March 31, 2023, 23% of home loans approved in terms of number of customers and 9% in value terms were to customers from the economically weaker section and the lower income group. The average home loan to customers in the economically weaker section amounted to INR 10.7 lakhs, and to customers in the lower income group segment amounted to INR 19.4 lakhs. If we break up the loan book outstanding as of March 31, 2023 on an AUM basis into different categories, then individual loans constituted 83% of the total loan book as compared to 79% in the previous year. Construction finance constituted 7% of the total loan book. Lease rental discounting loans constituted 9% of the total loan book while corporate loans constituted 4%. If we were to look at the incremental loan book growth, then for the year ended March 31, 2023, the entire growth is from individual loans. 98% of the loans were sourced through distribution channels. However, this is largely through HDFC Sales and HDFC Bank. HDFC Sales accounted for 51% of the loans sourced, while HDFC Bank accounted for 31%. Third-party BFIs accounted for 16%. Thus, 84% of HDFC's individual business was sourced directly or through our associates. The Emergency Credit Line Guarantee Scheme was extended to mitigate the economic distress caused by the COVID pandemic. Under ECLGS 1.0, 2.0 and 3.0, the corporation has disbursed an aggregate amount of INR 1,883 crores till March 2023, which amounted to 0.3% of the loan book. Amounts disbursed under this facility are guaranteed by the central government. The Reserve Bank of India permitted a one-time restructuring of loans under its resolution for COVID-19 related stress. As at March 31, 2023, the outstanding loans under OTR 1.0 and OTR 2.0 amounted to INR 3,889 crores, which is equivalent to 0.6% of the loan book as compared to a peak of 1.4% in September of the previous year. 98% of the OTR loans are in the individual loan category. The average collection efficiency for individual loans on a cumulative basis, this is not for the month, this is for the full year, over the last full year is over 99%. The corporation has continued to report NPAs in accordance with the revised RBI circular of November 12, 2021. December 2021 was the first quarter when we were required to report NPAs under the new norms brought in by RBI. Since then, we have re-engineered our recovery mechanisms and processes and I'm happy to report that as of March 31st, 2023, gross non-performing individual loans calculated under the new norms stood at 0.75%, down from 0.99% in March 2022 and a peak of 1.44% in December 2021. Effectively, the decline has been from 1.44% to 0.75%. Similarly, gross non-performing non-individual loans stood at 2.9%, down from 4.76% in March 2022. As per the new regulatory norms, the gross non-performing loans as at March 31st, 2023, stood at INR 7,246 crores. This is equivalent to 1.18% of the loan portfolio, which is down from 1.91% in March 2022 and a peak of 2.32% in December 2021. Effectively, over this period of time from December 2021 to March 2023, I'm sorry, we've seen a decline from 2.32% to 1.18%. The improvement in credit quality is also reflected in the credit costs, which I will cover later. As at March 31, 2023, the corporation carried a provision for loans of INR 12,145 crores. Under Ind AS accounting, both asset classification and provisioning have moved from the incurred loss model to the Expected Credit Loss model for providing for future credit losses. Based on the model, the total EAD, that's the Exposure at Default, of INR 6,19,798 crore is broken up as under, Stage one constitutes 95% of the EAD, Stage two is 3.6% and Stage three is 1.4%. We have seen a 4.2 percentage point reduction in the aggregate of Stage two and Stage three assets from 9.2% in June 2021 to 5.0% of the Exposure at Default over the last seven quarters. In fact, in the current financial year itself, we have seen a 170 basis points reduction in the aggregate of Stage two and Stage three assets from 6.7% in March 2022 to 5.0% in March 2023. During the quarter, we have charged a profit and loss account to the sum of INR 438 crores towards provisioning. The aggregate charge to the profit and loss account for the year is INR 1,795 crores. The ECL to EAD coverage ratio for stage two assets is 27% and for stage three is 53%. The provisions carried as a percentage of the EAD amounted to 1.96%. As a result of the improvements in asset quality over the last 8 quarters, annualized credit costs for quarter four were 25 basis points. Credit costs for the year is 27 basis points compared to 33 basis points in the previous year. We have stated in our earlier earnings calls that as asset quality-related issues get resolved, we should, over a period of time, be able to normalize the credit costs to pre-COVID levels on a sustainable basis. This, in turn, will have a positive impact on the return on equity. We continue to hold all our investments in HDFC Bank, HDFC Life, HDFC Asset Management, and all other subsidiaries and associate companies at the original cost of acquisition, which is the price we have paid while making those investments. These investments are not accounted for on a fair value basis. If we were to mark-to-market the listed investments as at March 31, 2023, the unrealized gain, which is the difference between the market price as on March 31, 2023, and the carrying cost, would be INR 2,31,392 crores. This unrecognized gain is not part of our net worth, nor has it been considered in our capital adequacy calculations. Our capital adequacy ratio on March 31, 2023, stood at 24.3%, of which Tier I capital is 23.8% and Tier 2 capital is 0.5%. The capital adequacy is well above the regulatory requirement. Risk-weighted assets stand at INR 4,75,567 crores. At this stage, as we've done it in the past, in the past earnings call, it is important to talk about the return on equity. Under the Ind AS accounting norms, net worth includes certain items which do not form part of Tier I capital under the prudential regulations. These include Ind AS transition reserve, deferred tax liability on special reserve, fair value gains on investments through OCI, investments in subsidiaries and associates in excess of 10% of net worth, and securitization gains recognized upfront in accordance with Ind AS requirement. These items aggregate to INR 20,725 crores. Hence, Tier I capital is INR 1,13,260 crores as against the reported net worth in March 2023 of INR 1,33,985 crores. A more appropriate way of calculating the ROE would therefore be on regulatory Tier I capital as against the conventional method of completing it on total net worth. The return on equity based on Tier I capital for the year ended March 31, 2023, is 16%. As of date, 3,600 warrants were converted into 3,600 shares of the Corporation at a price of INR 2,165 per share. The last date for conversion of warrants is August 10th, 2023. As at March 31st, 2023, the Corporation's total borrowings amounted to INR 568,222 crore. Term loans, including the external commercial borrowings of $1.5 billion equivalent drawn in the current year and refinanced from the National Housing Bank, accounted for 28% of the borrowings. Market borrowings, that is NCDs and commercial paper, accounted for 45% of the borrowings. Deposits as at the year-end amounted to INR 152,111 crore and constitute 27% of the borrowings. It is very important to mention here that whilst the deposit level has remained steady, retail deposits now constitute 73% of deposits as compared to 62% in March 2022. We continue to encourage retail deposits, which constitute 16% of the incremental borrowings during the year. With the introduction of the liquidity coverage ratio in December 2021, the corporation is required to maintain liquidity in high quality liquid assets. The corporation's HQLA, which is high quality liquid assets, is largely government securities. The government securities holding as at March 31st, 2023, is around INR 63,000 crores. The average LCR for the last quarter was 128%, significantly higher than the regulatory requirement. I will now move to the profit and loss account. The year has seen a volatile interest rate environment and therefore some of the numbers of the current year are not strictly comparable with the previous year. There are three factors which have affected the profits of the current year. These are: One, the impact on Net Interest Income due to the transmission gap between increase in funding costs and increase in lending rates. Two, due to volatile equity market, we had a significantly lower gain on fair value of investments through the profit and loss account as compared to the previous year. Fair value gains for the current year was lower at INR 362 crores compared to INR 938 crores in the previous year. Thirdly, the expense ratios are higher as we incurred expenses upfront on staff, IT, and branching to meet the increase in demand for housing loans as well as some merger-related costs. There was also an increase in legal expenses due to an increase in business as well as resolution of some of the stress assets. Needless to add, whilst these expenses have been incurred upfront, the benefit of the expenses incurred will accrue over the coming periods. Let me first of all speak of the issues which have had an impact on the Net Interest Income. In the year financial year, in the current year, we have had rate actions which have had an immediate impact on borrowing costs, which in turn have not been simultaneous with the transmission of rates on the asset side. This we had mentioned in the previous earnings calls also. This has had a short-term impact on Net Interest Income. We, however, overcame this by passing on the rate hikes so as to maintain Net Interest Margins and spreads. During the financial year, RBI increased the repo rate 6x in all aggregating to 250 basis points. In the run up to the expectation of the rate hikes, market rates and swap rates increased. This had an immediate impact on our borrowing costs, while our lending rates increased with an increase in policy rates. Whilst we had an almost immediate impact on borrowing costs, the lending portfolio has had a slight short-term impact on the NII growth for the year. The proportion of the book has increased to 83% over the last few quarters. Return on equity on both the retail and the non-individual business is more or less the same. However, the spreads on the non-individual loans are higher due to, one, higher capital allocation, and two, higher credit costs. Net interest income largely on the basis of interest without taking cognizance of the profits on sale of loans during the quarter stood at INR 5,000 crores compared to INR 4,601 crores in the corresponding quarter of the previous year, up by 16%. For the year ended March 31st, 2023, the net interest income amounted to INR 17,119 crores in the previous year. Because of one time impact of the transmission lag in passing on the rate hikes to the customer, as well as the impact of the swap benefits in the previous year, the NII growth for the year would have been 17%. It is important to note that credit costs are lower as a result of improved asset quality consequent to a larger proportion of individual loans. As we've mentioned several times in the past, we've always targeted a net interest margin of between 3.3% and 3.5%. The net interest margin for the year ended March 31st, 2023 stood at 3.6%. This is an improvement over the year and reflects on our ability to manage the transmission lag. Net interest margin for quarter four was 3.7%. The spread on loans over the cost of borrowings for the year ended March 31st, 2023 was 2.29%. The spread on the individual loan book was 1.92% and on the non-individual book was 3.62%. Income earned from deployment of surplus funds in cash management schemes of mutual funds and government securities was much lower at INR 245 crores as compared to INR 561 crores. Average levels invested this year in liquid funds at INR 453 crores as compared to INR 11,840 in the corresponding period of the previous year. There was no profit on sale of investments in the fourth quarter current year as well as the previous year. There was a profit of INR 184 crores on sale of investments compared to INR 68 crores in the previous year. Dividends for the year, during the quarter, I'm sorry, was to INR 128 crores against corresponding previous year. Dividends received from our group companies during the course of the year, we earned a total of INR 2,735 crores by way of dividend as compared to INR 1,511 crores in the previous year. During the quarter ended March 31, 2023, for investments classified as fair value through profit and loss account, which is FVPL. There is a gain of INR 273 crores as against rupees crores in the corresponding quarter of the previous year. For the full year, the net gain on fair value changes stood at INR 362 crores, which is significantly lower when compared to INR 938 crores in the corresponding period of the previous year. This is entirely due to the volatility in equity markets. Under Indian accounting standards, the stock options granted to employees are measured at the fair value of the option on the date of grant. This fair value is accounted for as employee compensation costs over the vesting period of the options. Accordingly, employee benefit expenses for the year amounts of INR 205 crores, towards employee benefits, towards stock option costs. For the year ending March 31, 2023, the cost-income ratio stood at 9.2%. For the quarter ending March 31, 2023, the standalone profit before tax was INR 5,398 crores compared to INR 4,622 crores in the fourth quarter of the previous year, a growth of 17%. Tax provision for the was INR 973 crores compared to INR 922 crores in the fourth quarter of the previous year. The standalone tax for the fourth quarter stood at INR 4,426 crores compared to INR 3,700 crores in the fourth quarter of the previous year, a sub-growth of 20%. For the year compared to INR 246 crores in the previous year. Tax provision during the year ending March 31, 2023, stood at INR 3,000. The standalone profit after tax for the year stood at INR 16,239 crores compared to INR 13,742 crores in the previous year, a growth of 18%. Pre-tax return on average assets for the year were 3.0%. Post-tax return on average assets was 2.5%. The basic and diluted EPS on a face value of INR 2 per share were INR 89.20 and INR 88.50 respectively. The consolidated profit before tax for the year stood at INR 32,131 crores as compared to INR 28,252 crores in the previous year. After providing INR 4,431 crores for tax, the consolidated profit after tax for the year stood at INR 27,700 crores as compared to INR 24,042 crores, a growth of 15%. The profit attributable to the corporation was INR 26,161 crores as compared to INR 22,595 crores in the previous year, a growth of 16%. The board of directors, after assessing the capital buffers and liquidity levels, have declared an interim dividend of INR 44 per share. This is a face value of INR 2 per share. This compares to INR 30 per share in the previous year. The dividend payout ratio was 49.7%. The record date for determining the shareholders entitled to receive the interim dividend for the financial year ended March 31st, 2023, is May 16, 2023. As at March 31st, 2023, the corporation had 4,006 employees. Total assets per employee stood at INR 175 crores. Net profit per employee was INR 4 crores. Let me start spend a few minutes to give you an update on the merger. As you are aware, on April 4th, 2022, the board of directors of HDFC Limited and HDFC Bank Limited approved a Composite Scheme of Amalgamation of HDFC with HDFC Bank, subject to regulatory approvals from various authorities, statutory authorities, regulatory authorities, care takers, creditors, et cetera. Upon the scheme becoming effective, the subsidiaries associates of the corporation would become subsidiaries or associates of HDFC Bank. HDFC Bank will then be 100% owned by public shareholders, and existing shareholders of HDFC will own 41% of it. The final hearing of NCLT was held on February 27, 2023, approving the Composite Scheme of Amalgamation. You may also be aware that clarifications and requested for variances have been provided entirely. We are in the process of obtaining all the residual approvals from the respective regulators in respect of the subsidiary and associate companies. We expect the expected merger to be around July 2023, based on the current progress. HDFC's distribution network spans 737 outlets, which include 214 offices of HDFC's wholly-owned distribution company, HDFC Sales. HDFC covers additional locations through thousands of others. We continue to engage with all our stakeholders on ESG. In accordance with the SEBI requirements, the Business Responsibility and Sustainability Report for the year will be uploaded on our website shortly. For further information on ESG related queries, you may engage with our investor relations team, Anjali and Conrad. The Corporation's corporate responsibility activities focus primarily on healthcare, education, persons with disabilities and environmental sustainability. CSR activities were conducted either directly or through the H T Parekh Foundation. The CSR spend during the year was INR 214 crore. The above are some of the highlights of the results for the year ended March 31, 2023. We may now proceed to question and answer. I would request you to kindly mute yourself and I and my colleagues who are sitting here will try your questions. Thank you. Thank you. We will now begin the question and answer session. Anyone who wished to ask a question may press star and one on their touch-tone. If you wish to remove yourself from the question queue, you may press stars and two. I request you to limit the questions up to two per participants. If time permits, you may join the queue for any follow-up. We have our first question from the line of Suresh Ganapathy from Macquarie Capital. Please go ahead. Yeah. KT, my first question is on the warrants which are expiring on tenth of, What happens to that if suppose the merger happens in July? The warrant holder would have got HDFC Limited shares will now get HDFC Bank shares in the same proportion as the merger, which is 1.68. Okay, fine. That's clear. Now on the. Let me complete that. In other words, if you are entitled to, let's say 100 shares of HDFC, instead of getting 100 shares of HDFC, you will now get 168 shares of the bank. On the LCR thing, you're saying your LCR is 128% and your government security is holding at INR 63,000 crores. In other words, INR 63,000 crores divided by the net cash outflow is equal to 128%. Is that the way we should look at it? I mean, I mean, I'm just wanting to understand what is the excess cushion that you hold because once you go into the bank you need to have an LCR of 100%. Will I calculate that excess 28% SLR? If I do that, it comes out to be INR 15,000 crores. Suresh, that amount actually keeps fluctuating because it all depends on the next 30 days outflows, okay. As I mentioned to you last time also, depending upon how the liability profile is actually shaping up, the next 30 days outflows will keep fluctuating. As you are talking today based on that, our, and also the way the LCR is computed for NBFCs and the banks are different because the run rates for some of the liabilities are different for the bank and different for the NBFC. If you consider all that, if you were to apply this 128, roughly, this is just a rough number. This 128 will probably convert back into something like 70 odd% of the bank, 70-75% LCR for the bank in a banking model, actually. The Corporation doesn't carry any excess liquidity, right? On the contrary then the banks will have to scale it up on day one as per the RBI requirement. No, you know there are two parts. One is you are talking about SLR CRR or you are talking about LCR. Yeah. I mean, look, I mean, the point is if you guys don't carry any excess liquidity because it goes to 75%, that means there is no excess government securities which is sitting on the HDFC Limited balance sheet which will be counted. I mean, what we are arguing here is that there is no cushion being provided by HDFC Limited whatsoever to the bank on the effective date of merger. As I mentioned to you, it is not, this figure is not going to be constant till the date of merger because as the liabilities are getting replaced with longer term liabilities, the LCR will automatically go up and it will result in a higher this thing in the banking system also. Okay. I'm sorry, I'm just going to push myself another two quick couple of questions, because this is important for everyone. Can you tell me based on your ALM pattern, how much proportion of term loans, deposits and bond market borrowings will mature in the next 12 months? Roughly about, if you take, this is a rough number. Every month, monthly there are maturity, the scheduled maturities of all the various borrowings are somewhere in the range of INR 10,000-INR 15,000 crores. Per month. Okay, fine. Okay. So that's the scheduled maturity. Okay. My final question is the future for HDFC Credila. We will engage with RBI and to sort of try and see whether we can get this onboarding of new customers resolved. Once we have some clarity, we will certainly come back to you. We've already announced that we would look at willing, we're willing to look at reducing our stake in the company from 100% to 10%. You know, a variety of people are calling and making bids, so we are still recalculating all that. You can do this before July, or you can. I mean, it is flexible. I mean, it can be done even after. To my mind, it can be done in the next couple of months because we've received a lot of bids. Hopefully by the end of June we'll be able to arrive at some finality on how to close this. Okay. Theoretically, assuming that there is no, you know, no extension from RBI in terms of onboarding new customers. Okay. Very clear. Thank you so much. Thank you. We have our next question from the line of Mahrukh Adajania from Nuvama. Please go ahead. Hi. What would have been the gross liability mobilization during the fourth quarter? Fourth quarter. Okay. While Rangana is looking for the numbers, can you come to your second question? Yeah. My second question is that what would be the contractual maturity of these liabilities, right? When you see the current, you know, exchange file means we've been doing, you'd have seen that a lot of incremental borrowings that we've been doing in recent times have all been long-term liabilities. We raised 10-year bonds a month ago. We raised recently. We are elongating, increasing the tenure of our liabilities. Also, if you look at our deposits, and I mentioned this in the call, that we are reducing the level of corporate deposits and increasing the level of individual deposits because individual deposits typically have a longer term. Rangana will answer your question. The last quarter gross mobilization, this is a gross number, not the net. Gross mobilization of liabilities across all products is INR 85,000 crores. Okay. The total maturity of the book will be what now? The contractual maturity. I know that the newer borrowings are at a higher maturity, but any ballpark number? I mentioned it in the last one. This is ranging from about INR 10,000 crore-INR 15,000 crore every month. Okay. on the Okay. It's purely payment in terms of. Schedule. Scheduled maturity. Okay. There is a when a scheduled maturity, for example, you take a deposit. A significant portion, more than two-thirds, probably much more than that, 70% plus of our deposits end on maturity. When you look at this when you ask what is the scheduled maturity, it will be included as part of scheduled maturity, even though the amount will get reduced. While 10,000 might be the scheduled maturity, in reality, this number turns out to be lower depending on the quantum of deposits that are maturing the month. Got it. In terms of classification of infra bonds or classification of long-term bonds as infra, that should be easy to combine, though I do know that it requires RBI approval. Well, this is something we will seek clarity from RBI and come back to you. Okay. Just have one final question. It happens in many quarters, but just trying to understand the logic behind it. How does it direct the income from assignment move? Because sometimes it looks too high. So. What happens is at the beginning of the year, it is based on certain estimates. Estimate has regardless by the end of the year and our estimates of pretense. By the end of the year, we have the exact number and therefore there will be some adjustment that would happen in the last quarter. Got it. Thanks a lot. Thank you. Thank you. We have our next question from the line of Mansi Sajeja from SBI Funds Management. Please go ahead. Sir, the liabilities that you have raised in last year is amounting to INR 78,000 crore. In this current financial year, we have seen another couple of bond issues. What is from that is, you know, all mainly long-term. But from an interest rate sensitivity perspective, what is the, you know, how are you managing the interest rate risk now that they're going to be transferred to a bank? For all the approval, fundraising approval that you have taken for the current financial year also, how would you do that? On the interest rate sensitivity, I think we mentioned it the last time also that if you look at the total liabilities, there are swaps which are done to manage the liabilities from converting from fixed floating. They are roughly about INR 2 lakh 20 or INR 1,000 crores. In over and above that, the other liabilities like a bank borrowing and others which is another about INR 1 lakh crore, that would also be more or less linked to the market benchmark, whether it is repo rate or whether it is linked to the. In total, find out about INR 2,20,000 plus another about INR 1,000. For INR 3 lakh 50, INR 3 lakh would be liabilities which are sort of linked to benchmarks or some sort of, you know, banking benchmarks. You would have seen in all these quarters that interest rates go up, interest rates go down. You generally see that our spreads remain within a very narrow band because of our ability to hedge these risks. Okay. Just one last thing. In terms of various exemptions needed from various, you know, in-debt investors, you know, there is classification of bonds as housing finance and there is classification of CP as a different category. Any representations again done from your side or it is depending investors classification? Can you please repeat? Sorry, we are not clear on the question. We are not clear. We, you know, you are classified as a housing finance company, all these bonds will be grandfathered in a bank which may have a different kind of a classification. obviously we have, spoke. We have represented to all the respective regulators, we will obviously hear from them in due course. my sense is grandfathering is something which we would, logically think that they would be able to grant us. Okay. Thank you. Thank you. We have our next question from the line of Adarsh Parasrampuria from CLSA. Please go ahead. Hi, Keki and Rangan. first of all- Sir, you are sounding very low. Can you please use your headset? Okay. Hopefully this is better. Hi, Keki and Rangan. Question is on your rundown of loans on the corporate side. Are we largely through or is there still some more to go before you get to merger? I would say we are significantly done. Very, very significantly done. There might be a little bit more left, but I don't think it's much. Okay. sir, on your PSL compliant book, right? I just wanted to understand what could you quantify by March and where we stand today, what could be the PSL compliant book that would be on our balance sheets? INR 0.011 crore. About INR 110,000 crores. Okay. Lastly, you did respond in terms of maturity per month, but if you could just provide some more color on especially the bank loans and bonds deposits might, you know, you can renew that. Term loans and bonds, what kind of maturity increase that one would have seen? Because we've seen you issue many long-term bonds and probably would have done something similar on the bank loans as well. What kind of duration increase have you seen through the last six months or 12 months? You would have seen, Adarsh, that all the borrowings we've been doing through the bond market have all been long-term bonds. We did a INR 25,000 crore issue a couple of months ago of 10-year bond. Recently we did a bond issue of again 10-year bonds. It's all largely long-term bonds. Ever since this LCR requirement came in, we have been trying to raise more of long-term funding because short-term funding brings with it a certain element of cost because of the LCR requirement. Adarsh, if you have to look at the current year borrowing, whatever we have done on a gross basis, the NCDs have come for close to almost 100 months, which is almost close to a 10-year type of a borrowing. The bank loans on an average has been about 15 months. What is happening is, as the bank loans are maturing and all, we are also negotiating it for a longer period. By the time I think the merger happens, some of the borrowings would have been actually converted into longer term. Similarly, if you look at, we raised an ECB, which is close to about 40-43 months, and then the deposits are close to about three and a half years. Got it. just on bank loan part, given that it's been more like 15 months in the last 12 months, would the stock be also like a 15-month bank loan or, the efforts would be to really. Because this probably is the largest refinancing pressure as you move into the bank. The bank loan book, right, which is about INR 150,000 crores. That book, what on a stock basis would be the duration? Typically the, you know, the, if you were to take the total bank book, they will be of, on a stock basis as they exist today on 31st March, they would be somewhere at about 10-11 months, depending on the, the quantum of the amount by various other guys. What is happening is the maturities and also some of the loans we are already talking to the banks, so they will probably be getting moved to a three-year type of a duration as we get into, you know, in the next few days or in the next one month. Got it. As we move the stock, the stock mostly about 60%, 70% of the stock will get moved to about a three-year period. Because that's, Got it. This has been helpful. Thanks a lot for this. Adarsh, just to clarify, the INR 150,000 crores that you mentioned as bank loans, out of that roughly INR 100,000 crores is bank loans. The balance are, that number of INR 150,000 also includes. Yeah. The other term loans, which is- Number. ECBs and refinance, which is actually long term. Bank loan is only about INR 100,000 crores. Bank loans are only about INR 100,000 crores. Got it. Broadly the way to understand is this INR 1 lakh odd crores which would have been on a, on a stock basis today having a refinancing in the next 12 months. That's where the efforts will be to like, renew it and have it for a longer tenure. Absolutely. Got it, sir. This has been super helpful. Thanks a lot and all the best. Thank you. We have our next question from the line of Shalini Vasanta from DSP Mutual Fund. Please go ahead. Sir, hi, this is Vivek Ramakrishnan. My question was on SLR. You'll have to build a SLR book from what I understand by at the time of the merger. HDFC Bank has excess SLR. I just wanted to know how much SLR you have at this point of time and how much you'll need to build up, by the time of the merger. That's my only question. Thank you. Broadly, the SLR, as Keki mentioned, is about INR 63,000-64,000 crore. That is the GSEC plus the cash which we have. From a requirement perspective on our balance sheet, it is about INR 1 lakh crore. You know what is the excess at the bank level, and also you can compute the, The bank is holding a higher this thing, because our LCR is about 110%, which automatically translates to a close to about 22%-23% from an LCR perspective. Okay, sir. Thank you very much. That was very useful. Thank you. Thank you. We have our next question from the line of Sri Karthik Velamakanni from Investec. Please go ahead. Thank you so much. I just wanted to confirm the disclosure around LCR that you mentioned that the 127 under an HFC translates to a 75% under a bank hood. Is that the right interpretation? Sorry. 120 translates to 75 under- Yeah. It works out around 75%-80% in the bank format because the bank format is different. You also indicated some glide path as to how this 80% moves to 100% eventually. Could you please elaborate on that again, please? Thank you. Basically what is happening is some of the, as Keki mentioned, the corporate deposits which are there, the growth on the deposit has been lower. We have been replacing some of these maturities into longer term. Automatically that changes the color of the LCR. Secondly, some of the, you know, sort of, deposits where there is the runoff actually is higher. We are trying to get consent from some of the higher value depositors to make it, you know, 31-day type of a notice type of a product where they can, they will actually give a 31-day notice prior to taking any premature withdrawal. That basically brings down the or that basically increases the LCR component. Sir, lastly, the interest rates swap book that you currently carry, could it be transferred into a bank, as these, and what would be the implication from a regulatory perspective, of because of this particular portfolio? Our understanding is that, we have, I mean, the entire swap book will go into the bank. There is no regulatory restriction from there. From an accounting perspective also it will remain pretty the same. The same hedge accounting which we follow here will continue to be followed at the bank level also. There is no change as far as either the accounting is concerned or the regulatory position is concerned. Thank you so much. Thank you. We have our next question from the line of Pooja Kabra from Sahasrar Capital. Please go ahead. Pooja Kabra, we have unmuted your line. Please ask your question. Hello. Yes, we can hear you. Yeah. Please go on. Yeah. Yes, yes. You can hear. Yes, yes. You can hear. Thank you for the opportunity. I just wanted to ask that what is your attrition rate in the management level and one step down level? Zero. Okay. Zero. Management level zero. Okay. What is your ESOP working ratio? I'm sorry, what is your what ratio? ESOP. ESOP. Provision for that. Provision costing. That we mentioned. I think it's some INR 200 crores or something for the year. Okay. Got it. I mentioned in that. The next question is like digitalization improvement idea. Do you have any plan in it? Digital improvement. What, what? On what? Digitalization. Do you have- Yes. Any digitalization ideas? Yes. We are continuing to, you know, continue to what we are doing on digitalization. As we move ahead and we, you know, as we mentioned earlier that we've got a new LOS and Salesforce and we are trying to have the whole journey different. You know, this is an ongoing process. It takes, you know, a few months or maybe a year or so. As we go ahead, things are getting added on more and more. I think in another six months with the whole process most probably will be through. It's going on and it's going on very well. Just 2 things to add. One is that the employee benefit costs you wanted to. We We talked about the ESOP cost. It is INR 205 crores for the whole year compared to INR 390 crores in the previous year. Ninety-four percent of the new loans we've done have been digitally onboarded. Thank you so much, sir. Thank you. Thank you. We have our next question from the line of Saurabh Kumar from JP Morgan. Please go ahead. Sir, just wanted to confirm 3 numbers. One is for the NDTL calculation. The SLR number will be INR 4.7 lakh crores and for CRR INR 3.6 lakh crores. Is that assumption right? Sorry. I will, you're talking from HDFC Limited perspective, right? Yes. Yes. Yes. Okay. I'll just come back to you on that. Okay. The, you know, adjusted net bank for PSL should be about INR 5 lakh odd crores. The numbers you've given, I just wanted to confirm. Yeah. Yeah. Yeah. Yeah. Yeah. Tha-thanks. Thank you. We have our next question from the line of Rakesh Kumar from B&K Securities. Please go ahead. Yeah. Hi. Thank you. Just from this, you know, longer term, you know, borrowing that we are doing. Is it to do with, you know, maintenance of SLR for banking, for the HDFC Bank post-merger? Or is it, you know. It doesn't look like that it is for short-term liquidity. It's not a short-term liquidity thing, but even if you look at the interest rate today, it is pretty flat, whether you borrow one year or whether you borrow 10 year. The assets are typically longer term, so you need to fund these assets with longer term liability. As Keki mentioned that, when you borrow short term, then it also hits into your LCR. The total SLR, we gave the number of, can you repeat the number, sir, please? Our SLR, we said, is about INR 64,000 crores. We are holding about INR 64,000 crores of common securities. Even in the case of HDFC Bank, though it has the excess security, but you know, the LCR is, you know, just around 10% more than what is the mandatory requirement. Like, how would it, would it add up, like, you know, post-merger? Basically these two numbers actually the LCR and the SLR number. When you convert that 110% LCR into a SLR number, the SLR actually moves up from 18 to, my guess is about 20%-23%. To that extent, from an SLR perspective, there will be a surplus which will be coming in there. Okay. Okay. Okay. Okay, thank you, sir. Thank you. We have our next question from the line of Anand Dama from Emkay Global. Please go ahead. Thank you for the opportunity, sir. This quarter we have seen the deposits book actually running down quarter-on-quarter. Is it more strategic or basically it's or it's primarily from the customer side? I mentioned that to you. I mentioned that when I originally spoke, that we have not been encouraging or not been looking out too much for corporate deposits because generally these tend to be of a shorter term. As I've been saying repeatedly on the call, when we get short-term money, there is a higher cost because of the LCR requirement. We prefer to take the individual deposits, which have a longer tenure, and the proportion of individual deposits as a percentage of the total deposits has gone up quite sharply during the year. Individual deposits has constituted about 16% of our incremental funding during the year. Corporate deposits has gone down. Individual deposits has gone up quite sharply. The proportion of individual deposits to total deposits has also correspondingly increased. Sir, what will be the average cost of this deposit book that you are carrying right now? I mean, I'm giving a spread. The spread is 2.29%. Now, deposits will it varies from time to time depending upon how much deposits you're carrying. Broadly the same in whichever segment you look at. Okay. Sir, lastly on the wholesale book, I think, HDFC Bank said that we are going to seek the permission from the RBI in terms of the land funding book as such. I'm sorry, sir, can you use your headphones? I can't hear you. We can't hear you. Yeah, yeah, sure. Sir, on the wholesale book that, like, we carry on our books. Within which basically we have a lot of this construction developer financing book. What's going to be the status of that once the merger happens? Of course it continues in the bank. Of course it continues into the bank. Okay. As we do more construction finance loans. See, let me explain this. I explained this in the past several times, that when you do a corporate loan or you do a lease rental discounting loan, your entire loan gets disbursed in one go. When you do a construction finance loan, the disbursement is linked to the stage of construction. The developer first puts in his equity, he gets, and then after that you start disbursing as he constructs. For construction finance disbursements come over a longer time frame. It's just that, as we've been saying quarter after quarter, it takes a while before these disbursements happen. There would be a fair amount of disbursements that have happened this quarter also, and there will be more as the time, as time goes by. All these finance loans will move into the bank because these are bank of banks. Can you just elaborate what specifically is the land funding book? HDFC Bank in their call said that there is a land funding book basically where they will need to seek the RBI permission. Land funding book? I mean, yeah. They said something about that. I think they said that you will have to seek permission from the RBI to carry on to HDFC Bank's book. Some of the dispensation on the non-individual book they have Those were, whatever is there will not, is not material at all. We, you see whenever a merger happens, there is always a grandfathering of assets and liabilities which is sought. In the grandfathering, there would be a whole lot of items which would have got included, which could have included some elements of what you are talking, but that portion would be insignificant. Okay. Sure, sir. Thanks. Thank you. We have our next question from the line of M B Mahesh from Kotak Securities. Please go ahead. Hey, hi. Good afternoon. Just 2 questions from my side. One is, if you look at the disbursement number, there seems to be over a period of time a little bit of a slowdown in the last couple of quarters. If you could just kind of highlight, how is the situation on the ground? The situation on the ground continues to be strong. I don't know whether you were there on the call right through or not, but I mentioned at the very beginning that March 2022 saw the highest amount of individual loan disbursements we have done in any month in HDFC's history. We said that the momentum we would expect would continue and I would hope that year ended March 2024 should see almost similar kind of a growth. Almost. How would you say that the impact of interest rates has on the ground? It is apparent, no? If the disbursements are strong and March is the strongest one, it is apparent. See, you must understand that a housing loan is a long-term loan. Yeah. It's not a one-year loan or a two-year loan. When you are taking a long-term loan on a floating rate basis, interest rates will go up and interest rates will come down. But the reality of the matter is that all these loans are floating rate loans. If rates are high today, when they come down, you'll get the benefit of lower rates. If they were low today, you'll get the benefit of higher rates. It has more a sentimental impact, if any, but not really an economic impact. On the other hand, shorter loans, shorter term loans probably would have a bigger impact because it's unlikely that in the very short term interest rates would come down. Just to clarify here, is that number right that we have that the disbursements in the month, in the fourth quarter would be about, INR 52,500 crores? Is that number right? Please. We don't get the absolute numbers, we just get the percentage, so we are back-. It's a little under INR 50,000 crores. Yeah, it's a little under INR 50,000 crores. That would translate to about a 10% growth on a year-over-year basis on disbursements for the fourth quarter. Is that number right? You have to look at it for the whole year because, you know. Sure. Each quarter has had its own challenges. The fact is, you know, if you look, as Keki M. Mistry mentioned, the March, which was the last month of the year, was the highest ever. You know, now if you go back to October and November, there was a relative lower number because of the holiday season between Diwali and Dasara and such and school holidays. I would really look at it over a longer period. And if you look at a longer period, I think the absolute disbursement growth between 23 and 16%, which I think is very healthy- Absolutely. Given the interest rate movements that have been here. How have borrowers managed the increase in interest rates in the sense that, is there an outside limit under which a loan tenor can be increased? Of course, there is an outside limit. Every case is evaluated on a case-to-case basis that automatically when rates go up, the term goes up. In a non-normal case, the term does go up. However, the system is identify cases where there is some degree of concern. In those cases, the customer is explicitly contacted, either the term is lowered by him making a payment or the installment amount is increased. Would you be able to quantify that as well, or do you think it's gonna be difficult? Quantify what? How have you addressed it? In the sense that how much of these loans may have seen, tenor extensions versus, EMI increases. In the normal course, if you understand the business, you would know that when rates go up, we tenor up the loan. When rates come down, we tenor up the loan. Roughly about 11% of the loans get prepaid ahead of schedule every single year. This is a normal trend. When you look at it by year, period, it all sorts of neutralizes. In the short term, you might find has gone up compared to what the original term, but it will not happen to a tenor. The term goes up so much that it causes any kind of a concern or discomfort. In such systems identifies such individuals and then on a case to case basis, the individual is contacted and either the installment is increased, part of the loan is the customer is requested to prepay faster. It's worked several times over the years, and frankly, it has never resulted in any kind of impact on recovery. Historically, and this is probably the third or fourth time probably, that we've seen this thing happen. Sure. Perfect. Thanks. Thanks, guys. Thank you. We have our next question from the line of Jay Mundra from ICICI Securities. Please go ahead. Yeah, hi, sir. Thanks for the opportunity. We can't hear you clearly. Please use your handset. Yeah, hi. good afternoon. sir, if you can share the indicative yield on your corporate LRD and construction finance book for fourth quarter. Look, I told you that the spread on non-individual loans is 3.62%. The spread on individual loans is 1.92%. The overall spread that we earn was 2.29%. Right. Sir, and the cost of deposit or the cost of funds that you use, is that similar for both these segments or that can be? Broadly similar. Broadly similar, you know, you can't pinpoint these things because you raise funds right through the quarter and during the course of the quarter, interest rate volatility is always there. There may be times when they're 20 basis points higher, and there may be times when it's 20 basis points lower. What we have to do is we have to manage our spreads carefully, and that's what we've been doing all these years. Sure. In the, during the call, I think it was mentioned that the absolute amount, which would be reckoned for SLR and CRR, calculation, if you have that number handy, I think it was told that you will come back to us. No, I think we mentioned that the total amount of government securities we carry is INR 64,000 crores. No, no, sir. I was asking for NDTL. NDTL, the total NDTL, I mean, as of FY 23. Okay, I'll just check it again. I think Rangan will give you a check. Hey, can you call separately? Sure, sir. Yeah. Thank you. Yeah. Okay. Mr. Mundra, are you done for now? Yeah, yeah. Thank you. Yeah, done. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you. Well, I'd just like to thank everyone for all your help and support all these years. If you have any further questions on the results or on the process of merger, then please get in touch with Conrad, Anjali, Rangan, me, whoever you like. Thank you, everyone. Thank you, sir. On behalf of HDFC Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect.