Thank you. Good evening, all. Thanks for coming short notice. We have a few things on the agenda. We'll go through... We have something prepared, very short presentation. We'll go through that, and then we'll open it up for any conversations, any discussions around these things, and we'll take it from there. Okay. So if you go down to the first one, this is important in terms of how to think about what has happened to the net worth in its moment. You see, this is erstwhile HDFC Limited's net worth. You all know, anchoring with the March 2023, what has happened, that INR 1,33,034 crore or INR 1,340 billion that you can see there. Couple of things: one is, there is a normal activity, corporate actions, whether it is in ESOPs or warrants, or whether it is, the income for the quarter and so on. So that's the INR 62 billion that you are seeing, right? It is an addition compared to what you have seen in March. Then comes the few adjustments that we will talk in detail, but then here I'll cover a few things, and then we'll go to respective pages to go into the details of that. The first one is the alignment to the Indian GAAP accounting, moving certain Ind AS to Indian GAAP. There are a few things here, like, bringing the investments book to cost, where there has been an adoption to have it at a fair value. Now we bring that to cost. That's one item. And then there are a few more items, which is, deferred acquisition cost that, that's held on the balance sheet we charge off, or the excess interest spread on the assigned loans we charge off, and so on. So we'll go through the detail. There is a page to cover that, but that's... In summary, that's the INR 118 billion or INR 11,800 crore, which is there, right? The second one is the, credit policy harmonization, which is, again, we'll go into the breakup of that in a page, but at a high level, to take away here is that INR 7,600 crore or so, is something that is both from a specific reserve point of view, as well as a contingent provision, a combination of that. Adopting the bank policies in line with the minimum RBI regulation standards and harmonized for the bank policies, that's the impact of that. And as you would imagine, both of these we'll go through that, either they are timing or non-economic, so when we go into the detail, we'll do. The third item is important, and we can talk about the deferred tax liability reserve. This is something I don't have a page, so I can cover a little more in detail into this, because this is the 36(1)(viii) reserve that is required. Now, profits coming from mortgage business, right, when you set up a reserve, gets a concessional tax rate, right? There are some conditions. One of the conditions is that you need to appropriate it from your profit and loss or a general reserve and set it up into a special reserve account, right? That's a prerequisite. Once you set it up, then you get special tax treatment on that. That's one. Two, in order to continue with the tax treatment, you should not be utilizing that reserve, right? And if you utilize that reserve, then in the year in which you utilize it, the tax gets taxed. And HDFC Limited, for their part, until now, what they've done, they've passed, they've gone through their board to emphasize that it will not be utilized, right? So that means, once it has not been utilized and at the board level, a decision has been taken, this is what we'll do. So there is no question of, utilizing it to lose out on any future clawback of the tax, right? So that's why there was no, deferred tax liability set up there. There's a reserve appropriated, but not, a liability set up. However, the same thing is available to the bank, too, so there's no different in the bank. Bank also will be setting up on these reserve. The loans have to be more than five years, and, you'll be able to set up, profits on those, to a reserve. We will set it up. We will also be, claiming that in the tax. So this is the cash tax benefit we get, and at this moment, we don't intend to utilize it either. But however, RBI regulation says, I think it's a 2013 circular, RBI regulation says that, you should not just leave it at that, you need to set up a deferred tax liability on that, right? It's essentially a cash tax benefit received, however, not recognized from a capital or from a reserves and surplus point of view. That's what, as simple as that, right? So it moves away from there into a deferred tax liability, which is not a payable liability at any time, but according to the regulation, we need to set it up, so we set this up. This alone, if you look at it, the INR 49 billion, is about 22 basis points to capital ratio, right? That's what this is. However, deferred tax liability, by definition, gets an offset against the deferred tax asset when you reckon for the capital. So essentially, when you offset this against the deferred tax asset, the net impact of this turns out to be about 10 basis points to capital ratio. That's. So it, it comes down, it dilutes down to 10 basis points, not the 22 that you would see there, because, in the process of computation, you will net it against the deferred tax assets. That's, that's the impact on this one. Then the tax effects on all of that, other than the tax item, the rest of them have to be tax affected. That's the 40 that you are seeing, offset. Then we've shown separately the dividend, because the dividend is a timing paid, paid to shareholders. HDFC Limited paid an interim dividend before first July. The bank will pay the dividend, I think the AGM was held in August, and so the dividend was paid in August. So it comes subsequently when we close the September quarter, you will see the full picture of the bank also coming in. But at least here, we just wanted to show you, segregate and show you that separately, not a net worth movement, but not because of any of these. It's because of a cash payment for dividends. Now- Sri, on this 49- Yeah. Because we are not going to discuss that. Excuse me, excuse me. Can you also pick up the mic? Mic, mic, yeah. Yeah, so if anyways not intended to use the special reserve, and you are also going to follow the same, accounting- Benefit, benefit. Benefit, sorry, then why deduct it through the reserves? See, see, this is part of the RBI Regulation 2013 circular says that you should do it like that. That is why on day one, this is about INR 19,000 crore or thereabout, is the special reserve already set up by HDFC Limited. We'll continue to have that special reserve, and this is the tax benefit that is accrued on that. There is no deferred tax liability, so we are trying to... So essentially, this is taken out of the equity and put it as a deferred tax liability on the balance sheet. That's what is happening there. The cash realization of the tax benefit is, is either happened or is in the process where assessments are pending. So this is only a balance sheet segregation from equity into a DTL. So that is the 22 basis points impact, but once you net this off against the DTA, that's how the capital reckoning happens, it's a net impact of about 10 basis points there. The INR 62 billion of accretion includes Credila in it? No, Credila is not... Please take the mic and ask again so that we are clear. So the INR 62 billion of net accretion of profits during the quarter includes Credila, gains on Credila, or this is just pure accretion? The gains on Credila has not happened, as of first July, nor has it happened as of date. When it is done and closed, it will, it will be reckoned at that particular time. So that is completely, outside of this. Because the reason I asked is the run rate is higher than the Q4 reported profits for Limited. Yeah, it will be- Equity warrants and other- Equity war- yeah. It's, it's warrants and ESOPs are there. Yeah. Sri, Rahul here. Sorry, I walked in late. This, can you just explain again what's driving this DTL reserve? What items are driving this 49- DTL? Yeah, reserve. Okay. There's only one item there. See, Section 36(1)(viii) of the Income Tax Act provides concessional tax rate to profits derived from funding for housing, right? As a, housing infra, et cetera, few categories, housing, right? A few things. One, it has to be more than 5 years of lending, so that's one. Two, you have to set. In order to claim that benefit, you need to segregate from your normal P&L or general reserve to a special reserve. You have to segregate. So if you do that, you get a concessional rate, right? If you look at HDFC Limited's tax rates, it would be about 20-something, 19, 20 or so. That you get at the concessional rate there. Now, we will also, bank also gets that concessional rate going forward, right? We will, we will have a segregation, and we will do. However, under 41, Section 41 of Income Tax Act says that this particular tax benefit will be reversed when you utilize that special reserve, right? So HDFC Limited made an affirmation through a board and other processes to say, will not be utilized, the reserve will not be utilized, right? And so thereby, didn't have in the, in the Ind AS accounting, did not have a need to set up a deferred tax liability. However, the bank is required to set up because RBI regulation through the circular of 2013 says, that although you will get these benefits, segregate and keep a deferred tax liability. That's the reason it is there. So cash benefit on tax realized or realizable, the assessments gets done. However, per the regulation, circular, that you're setting it up as a reserve. Yeah. Simply moves from one reserve to a deferred tax liability, not intended for a cash payment liability. Yeah. Keep, go, go to the next one. Yeah. So this, this particular thing now tries to bring it into the bank, right? The bank, as you know, closed the 30 June or 1 July opening at INR 293,000 crore or a book value of INR 525. That's, that's how the bank started, right? And we saw that, in the prior page, that 1,199, if you go back to the prior page, that's the, that's the number. Before the dividend, because we'll show the dividend separately, is the incoming equity that comes in after all of those adjustments. Then you have a, a share swap elimination. After that, you see a book value that is INR 530, right? INR 525 goes to INR 530 there. Then the dividend has already been paid in for the HDFC Limited shareholders in the past, so that's the impact which is here. And then that gives the net of INR 519 on the day zero as we open, right? On a consolidated book value beginning of the period is INR 543, and with all of these things, it ends at INR 536. Essentially, about INR 13,000 crore-INR 14,000 crore of net worth gets added in, and that moves that book value on a standalone INR 519 to a consolidated INR 536 for INR 754 crore INR 1 face value shares outstanding. So now getting into details of some of those, either IGAAP alignment or the credit policy harmonization, we'll start with the top to say, deferred acquisition cost. In the Ind AS accounting method that HDFC Limited followed, the acquisition costs are capitalized and amortized over a life, right? Long life, that it gets amortized. In the IGAAP accounting, it will be taken upfront, right? So now when we adopt IGAAP, we need to whatever is hanging in on the balance sheet and will come to P&L over the life of various loans, now we need to take it upfront. So that's part of the INR 38 billion or INR 3,800 crore that we charge up. So again, as you know, that this is not a cash charge, this is a timing, right? This is not economically anything different, except instead of bringing it over time, it brings it upfront. That's one. Interest spread on assigned loans is when a loan is assigned or sold in this case, there is a gain recognized under Ind AS in HDFC Limited, that the interest spread that gets capitalized gets amortized over time. That's the INR 228 billion or so, right? Again, there is no particular cash impact this. What is on the balance sheet, it's an accounting adjustment that moves and charges to the equity upfront, rather than coming through the life of the loan. Now, fair value adjustment. These are about 75%-80% are listed equities, which are carried at fair value. We bring it down to cost, right? And so that's the INR 4,300 crore. Again, there is no economic loss as such here, right? It is subject to market fluctuations, of course, what gets realized ultimately whenever it gets realized. But the point here is that it is simply moving what is carried at fair value, which is at a INR 4,300 crore, higher investments and higher equity in HDFC Limited books. In our books, we just take down the investments value and take down the equity. That's the adjustment here, and nine is various other things there, right? So that's, that's in terms of INR 11,800 crore of various IGAAP adjustments that happen. Now, coming to the credit policy harmonizations, there are two, two things here. I'll start with the last one, which is the specific provisions on NPAs, right? That is the INR 3,800 crore or the INR 38 billion. Essentially, HDFC Limited, if you notice, have a method of how they will do reserving under Ind AS. That reserving takes into account the expected loss. That's the Ind AS method, takes the expected loss, not the realized loss historically. Essentially, future recoveries are not reckoned, right? In the IGAAP method and RBI regulation, RBI regulation specifies the minimum required for reserving, right? There's a formula, there is a minimum reserve that is required. And then every bank adopts, and our bank adopts certain policies as approved by the board in terms of how we set up reserves. So which means when an account gets into an NPA, what do you provide for? And as the account moves through various buckets to 120 or 150 or 180 and so on and so forth, how much do you reserve, and at what point you are fully provided? That's every bank has got, and we have a policy. So this is harmonizing that policy. So here, HDFC Limited has got about 42% is the provision coverage ratio, as the book before the day zero comes into us. And as we do adopt our methods and in terms of the provisioning and reckoning of reserving, it takes this specific provision coverage ratio to about 74%-75%. So essentially, ramping up the provision. Again, as you know, that this is, in terms of how the bank adopts and processes it, this is noneconomic, but more timing in terms of how we take it upfront in terms of what we do, right? To adopt the methods that they and the policies that the bank has adopted. Then coming to contingent provisions, the bank has a policy of reviewing various accounts and then setting up certain reserves on a contingent basis. So, HDFC Limited do not have such policies, so we are harmonizing that to say that, if it were in the bank, this is how we would have reviewed and had certain contingent provisions. This INR 39 billion or INR 3,900 crore is about 70 basis points. If you think about in the bank, coincidentally, we do have about 69-70 basis points of general reserve and floating reserve in the bank, and so this harmonizes into that, that aspect of it. And as we go into the next page, it captures that, particularly the credit it captures. The first two blocks of numbers you see are the bank that you are used to seeing. In the past, we have shown you that first two blocks, where the June it is 1.2% NPA. And we have given you also the breakup of the retail CRB and CRB ex, Agri, and so on and so forth, right? We have given. And the net NPA is about 0.3%, with a specific provision coverage ratio in the bank. I'm just recapping to anchor ourselves where the bank was as of June 35%. Contingent and floating provisions were about 70 basis points, and the total provisions were 200 basis points or excluding the specific, it was about 110 basis points, right? So move to the right. After we do all of this harmonization, the GNPA as we open is 1.4. Everything in the bank is the same, and then if you can look at the incoming, the individual NPA is 1.0, and the non-individual NPA is 6.7, as we take on the book, right? So that's... Then against this, there are specific provisions, and so the net NPA is 0.4. It's actually 0.36 or 0.37, I'm told, but it rounds to 0.4 here. Specific coverage, I talked about that additional 38 or 39 billion or 3,800 rup, crores that is added to augment the coverage in accordance with the bank policies and how we assess that without considering the recovery that is potentially possible there. So that's the provisions that go to 74 basis points. And the contingent provisions, which didn't exist there, we add it up, and so before and after, we are more or less at that kind of level on the contingent provisions, right? So similarly, the total provisions specific is about the 110 basis points. 6.7 that we are seeing as non-individual GNPA is higher than the June number, rather, March number for HDFC Limited. Yes. Because of the denominator effect or it's a function of both numerator and denominator? That is, I'm just asking whether the absolute number has gone up. It has, it has gone up. It is both. I think the March number was 3.7 or 4, thereabout, three point-- reported number of HDFC Limited in March was that. 4%, non-individual. No, non-individual, right. Now it's 6.7. So it's a consequent to two things, right? One is that there's some amount of accounts that have gone into NPA, and the second is that from a bank, there are certain accounts that the bank wouldn't do and would force certain actions to be taken, and that's part of the actions that have been taken, right? That we do not want, and so it is an NPA. We get that to be an NPA. That's part of 6.7. Okay. The restructure- The COVID Restructuring is the usual, nothing. Yeah. That's the usual, there's nothing specific on the COVID Restructuring. So that stays as restructured? That's it, yeah. Whatever is in accordance with that COVID Restructuring plan will be there, but that's part of the overall. There's nothing significant in terms of the overall here. Yeah. Sir, and the other part was, in terms of when we look at it, the stage two would have actually slipped into stage three for HDFC. What you are talking about, say, 3.7 getting towards 6.7, because stage two already had 53%-54% coverage for them, then maybe it would not have actually resulted into a extra provisioning requirement. Yeah. Some of that would be Stage 2 going to Stage 3. So from a P&L point of view, there may not be much, but from an NPA, you will see that coming in. Okay. And secondly, when we look at it in terms of the absolute number, it was like half of, if say, it was INR 9,000-odd crore as of March, half was retail and half was non-retail. So whatever extra provisioning coverage was there, maybe from 42%-75%, that was more towards retail or that was more towards non-retail? I would say that it's 40/60, I think. 40 retail, 60 non-retail. That's the kind of the movement between those two types- 40 retail and 60 non-retail. From a policy harmonization and Yeah adjustments, that's about 40/60 or so. Okay. Retail versus non-retail, yeah. Sir, the Stage One and Two provisions at HDFC Limited, which used to be there, that has got referred into this- The Stage One and Stage One and two, which is not on this page, it is part of the either the total provisions or part of the provisions specific, which is included there, is about 45 basis points or so. The bank's general reserve, so to say, is about 44 basis points as of June. Here also, as we take, and as of day zero, if you see, the general reserves are about 44-45 basis points. Essentially, that is the Stage One and Stage 2, which is there, and remains at that about 44-45 basis points. Second is this, markdown you have done of investments that you're holding in, the HDFC is holding in Yes Bank, on the level, and the markdown of HDFC Life to fair value. No. Subsidiaries are not carried at fair value. Subsidiaries are carried at cost. So none of any of the investments adjustments has got to do anything with subsidiaries. Life is a subsidiary, Ergo, Credila, they're all subsidiaries, so that is not it. These are either listed securities, which I said 75%-80% are listed securities. I don't want to name them for obvious reasons, listed. And if it's not listed, then there will be some breakup value used for certain, non-subsidiary investments. That's the balance. 75%-80% is listed, the rest is non-listed with the breakup value, accounting. Just to understand, you would have now not changed any mark-to-market hit on those investments because you've taken directly at cost? Correct. We will not face mark-to-market on those investments now. So as per the new regulations which have come, on investment balance sheet and everything, so this will be held in what category? HTM, AFS, or the fair value through profit and loss? Excellent. Excellent, excellent point. The point is that we, we have time until April 1 to reckon one of the other methods. We can hold it in AFS and determine that it will be held at fair value, through P&L or fair value through equity. We have an option to determine which way we want to go, and, we have another, call it, six months to seven months to determine how we want to handle it. Yes, we have to... You are, you are right in thinking that, will it- there will be a reckoning that will happen on first April 2024, according to that circle, yeah. Yeah. My question, you mentioned that there are certain, rating actions. Sorry, there are certain actions which you probably didn't want to take on accounts. Is that what you mentioned for the NPLs rising? We didn't want to take it? No, no. There are certain non-individual accounts that the bank's risk assessment is not comfortable in holding, if that's your question. ... No, but they are classified as NPL. Yeah. You classified it as- Yeah, if it is non-performing, it is NPL. If it is performing perfectly, then it is not an NPL. Okay, but they were performing earlier, now they are NPL. They are NPL as on the day that we took, right? Yes. If it was paying, everything was happening according to schedule, then even if the bank doesn't like, it is not an NPL, it will be part of various actions we take to run it down lower. That's what you are seeing, the portfolio, I think somewhere we are going to talk about that. The portfolio keeps going down to some extent before we assess and start to grow that. Okay, thank you. So just, with a reference to this, you know, RBI notification on the investment classification. So there are two questions what I have. So one is thing, like in the, you know, initial recognition in the chapter four, the first line says that all the investments should be fairly valued. That is the first line what RBI is saying. Then in the subsequent chapter number five, subsequent recognition, they are saying that, again, you know, in the HTM, they are saying that after the first recognition, you know, HTM should not be mark-to-market. So does it mean implicitly that they are saying that, you know, security sitting in the HTM at the time of initial recognition should be mark-to-market? No. You are talking about the new circular? Yeah, new circular, sir. No. While this call is not strictly for this discussion of the new circular, but I'll just cover this briefly. All investments are required to be valued at fair value at the time of initial recognition, and any subsequent measurement will be based on whether it is HTM, AFS, or FVTPL. In the case of AFS or FVTPL, they have to be recognized at fair value on each subsequent reporting date, with the MTM changes going either through the equity or through the P&L. For HTM, it will continue to be carried at the day one fair value, which has been recognized at the time of initial recognition. On day one, there will be a fair value recognition. Correct, no? So, like, just to, you know, because, like for the majority of banks, like, you know, yield on investment total, like, you know, it's much lower as compared to the similar, you know, residual maturity paper. So the current yield and investment book yield, there is a lot of gap. So it means that there is a, you know, there is a loss in the HTM book sitting for the, for the banks in general. So if that is mark-to-market, then, like, you know, would there be a loss that is to be taken through the P&L? You have to wait until thirty-first March or first April, because that is based on the interest rate curve that exists on that day. So if you do today, if there is, the HTM book today is carried at fair value is below cost, there will be a, an unrecognized, loss which is there. So if you do that accounting today, there may be that, but you have to wait until first April to see how the interest rate curves move, so thereby what the fair value is. I'm referring only to the level one investments, not level two or level three. Where we have a price readily available, for those, there should be a mark-to-market even in the HTM on the initial recognition date. On the initial recognition, yes, but that is depending on the curve that is existing on first April. Got it. And secondly, on the security investment, which is like, you know, like listed L1 investments, again, if we mark-to-market, like, for, like, you know, for the banks like us, ICICI Bank, you know, the number would be in some trillion, the market value for the share of investment that we have. So there would not be any kind of a loss. There would be a- Non-subsidiaries. For subsidiaries, you don't do that. Sorry, sir? For subsidiaries, that is not the method. For non-subsidiaries only. No, so because in the subsidiaries, like, you know, there's a change in the bucket also. For subsidiaries, you don't need a fair value. No, but if it is a L1 investment, then? Even then, if it's a subsidiary, there is nothing. It is a subsidiary. No, but if it is, like, it's a listed securities and we have a price for that, should not it be fairly valued? No. So, listed subsidiaries, there is no fair. Okay, got it. Subsidiaries means it is out from there. Okay, got it. Got it. Okay. Hold it at cost, yeah. Okay. Okay, thank you. Thank you so much. Thank you. Okay, so that's, that's on this provisions that we, that we talked about on the harmonization. Then if you go into, kind of give you an indication of how to think about this is HDFC Limited, certain numbers here. FY 23, you all know the Ind AS, which is already there, right? Which is there. FY 23 is there. And when you convert that, Ind AS to an IGAAP, on a pro forma basis, if you start from ROA, it's about, call it, 75% or so, right? There is a 25% that goes away. 75% is what is sustained there, right? And what does it mean? How to think about it. About half of it is to do with the dividends, the bank dividends that HDFC Limited gets, gets eliminated there. Half of it is that, right? Out of the other half, it is equally between, the deferred acquisition cost that gets taken upfront and the tax rate change that happens, the impact of the tax rate change. So essentially, that's the kind of the way you can think about the ROA movement, ROA movement from, Ind AS to IGAAP, is about half of that, is to do with the dividends of the bank that will go away there. You have to eliminate that dividend, because for the bank it is below the line, and here it is above the line dividend that goes away. And then out of the balance half, it's somewhere, between the tax impact, tax rate impact, and the, and the acquisition cost charged off upfront impact. That's what. So you see the cost to income, 19% or so there, right? So that's the kind of how you can think about that. Then I took you to one column to the right, where you can see where certain levels of liquidity and certain levels of loan pricing that takes the margins to 2.7 there, and an ROA to 1.8. This is on a pro forma basis, on an IGAAP pro forma basis, right? And more important is on the right, to the top right, that you see day zero incoming day zero, that includes the impact of additional liquidity that HDFC Limited carried and brought in. So that takes that margin, net interest margin, to about 2% there. Is there a computation difference because HDFC Limited, HDFC Limited used to report a margin of 3.4, and you guys are reporting 2.9 as of FY 2023? Yeah. See, I'll tell you, if you look at the HDFC Limited's net interest income, it's about INR 19,000 crore. That's also reported by HDFC Limited. I've done this margin based on DuPont basis, right? Not based on loans or not based on, not based on interest earning assets or anything. Okay, based on DuPont. Total. Nineteen thousand crores is the numerator of net interest income, and the denominator is the loans, which is slightly above 6.5-6.7 trillion, I think is the balance sheet for that year. That's how that is computed. Right. Yeah. So if you just... I did a simple reported numbers math and got there. Srini, the excess liquidity, Q1 2024, closing balance sheet will have that excess liquidity, right? So from 30th June to 1st of July, margin is changing from an average of 2.7% to 2%. Correct. Day one, incoming. Yeah. So from an average of 2.7, just one day, you're saying that the delta, so the entire excess liquidity was added towards the end of the quarter? Toward the end. To have a large impact of 70 basis points. That is correct, yeah. That is the 70 basis points. So that's the 70 basis points, and when you reckon that for the bank, it's about 25-30 basis points when you do that at the bank level. What does the 70 basis points do to the bank? It's about that 25-30 basis points in the bank, yeah. So how does this reconcile to the fact that you indicated that on this excess liquidity, margin headroom will not be very high? So now you're saying 25 basis points lower at the bank level. The earliest answer will be excess liquidity, which will be coming from HDFC. For HDFC, the margin impact on our forward account, the bank should not be very high on a going forward basis. No, I don't know where I might talk about that. This is to do- You're not aware of the fact that you raised the lakh growth- Ah. Yeah, okay. Yeah, okay. So we did have an additional liquidity. If you think about the LCR as such, on a combined basis, we are about slightly above 125%. The bank is used to running LCR at about 115. Ah. So, at any point in time over the last 4 quarters, if you see 112, 113, 115, that is the LCR ratio. So we ramped it up, right? And, thankfully, that has given us a good hand. When the ICRR came in, on a Thursday to be effective from a Friday, it gave a good hand in terms of the ability, and the flexibility for the bank to place as required. So that's part of... Srini, assuming that no excess liquidity would be required to maintain, we go back to 2.7%, hypothetically speaking? Yeah. If we don't need it, if we don't make, keep any additional liquidity and we manage through, that, that's where we should go. Just hang in for a slide, I'm coming to that point right here. Okay. So if you go here, for example, this is where I want to anchor you. The bank, you have seen the first, similar to that other page, two pages ago, that I showed in terms of the credit. We showed to you here the bank, what you have seen in the past, right? On an interest earning assets or on a total asset basis, you see the margin, which is there. And similarly, when you go into the ROA, the 2.1 or so, the ROA, which is what you've seen, and in between all of those ratios that you have seen there. I gave there for information, the earnings per share or the book value also is indicated there, INR 21 of the book value, INR 525 or the INR 543 on a consolidated. We saw in the first page or the second page also there. That's just anchoring ourselves to what the bank had previously given. Now, if you move to the right, this is simply a IGAAP pro forma, which means just trying to say, "Hey, on a pro forma basis, with all of that, where does that go, right?" That goes to the second row on a total asset basis, if you see the 3.7 or the 3.8, that's where. The cost to income simply is about a 300 basis points impact here. But if the numerator changes, the cost to income, since it's a ratio of a numerator, denominator, changes, too. The credit cost, you can see, goes down because you've got 0.7 in the bank and a lower number, that I showed you in the prior page in 0.3 or so in HDFC Limited. So that goes to 0.6, with an ROA of 1.9. That in a normalized world, that is what you would see, right? If everything were performing to how it was performing, go to the prior page. If everything was performing how it was performing in FY 2023 or even to some extent, FY 2024 first quarter, go to the next page, this is what you would be seeing, right? But, but the life is slightly different, which is what we've been talking about to say that the, the additional liquidity entails some cost. And so thereby, there is some variation that happens, and we need to see how the quarter turns out. But at least I wanted to point out that this is the kind of a pro forma if you use the, prior quarter. And then the similarly, the EPS and the book value, I want to leave the thought on that with you, too. Yeah. Hi, Srini. This is Shantanu from BNP. Just clarifying one thing. In the merger number, the NIM that you're stating out there, the pro forma NIM, this, this does not factor in the excess SLR, CRR? It does not factor in. There is no additional SLR, by the way. There is an additional CRR. Yes. The additional SLR or securities that we carry is our own, because we are consummating a big merger, that on our own volition we carry additional reserves, but not necessarily mandatory. The ICRR is mandatory. Everything else is our own approach to keeping reserves as we transition to a merged entity. No, I'm talking about the SLR requirements on the NDTL component that has come in from the HDFC. That is the business as usual, and yeah, that's- That's included in that? Yeah. HDFC Limited also carried enough good amount of reserves on a normal business as usual basis. Right. 509 book value- Yes. Is net of dividends for both the entities, right? No? Um- No. 5 and 9 is only- Only HDFC Limited has paid out as of that day. Bank is not- The bank has not paid as of that day. This ROE 16% is on the revised network, which is after all the adjustments done. The base already takes into account all the hits that you have taken, and then you have arrived at it. Not the additional liquidity, that is all. No, that's not- For any other consideration. Liquidity is not a factor, but denominator fully on the exit. So that boosts up because... And as a part of merger accounting, you can pass all these thing, all these entities through, all these entries through the reserves, right? You don't need to make anything through the P&L. Correct. That's what I meant. That is correct. That's why it has already gone through the reserves, all of the one that I showed you there. But maybe there's a. The next page actually lays it out for you. There's the opening balance sheet right on the top that you see there, right? That INR 39,391,000 crore takes all of that into account. All those harmonization or the IGAAP adjustments, the dividends and the tax effect on those, on the DTL, everything is incorporated there. The 3.7-3.8 margin range that includes the excess INR 1 trillion of liquidity on- No. Limited? No, no, it does not. With that, it's going to be back up on the next? It's about... That, we told you that the additional liquidity that we carry could be 25-30 basis points, in fact. Okay. Okay. Actually, this is Rati Pandit from Nirmal Bang. I have another query on the FIOCI investments. No, you just speak up, that's all. That is only for record. I have a query on the FVOCI investments of erstwhile HDFC. They had stakes in Yes Bank, Bandhan Bank, and other quoted and unquoted investments. So same would be classified under AFS reserve, or it could go into FVTPL? Yeah. In the bank, those investments have been taken and marked to cost. Okay. That is part of the equity adjustment that we did. We took the investments value down and the reserves equity also down. That's the INR 4,300 crore of adjustments that we have done. There are two categories broadly, which is where it is listed, and price available. All we have to do is take it down, and where it is non-listed, break-up value, whatever has been elected to be used, we have brought that also down to cost. Okay. Okay, that's it from me. Thank you. Yeah. Hi, Srini. Jai from ICICI Securities. And the cost to income, therefore, merged the entity at 40%. This is like to like, I mean, HDFC Limited, the way under Indian GAAP would be 19%, right? So 19% and 43%, this is like to like with what we had shown earlier, right? Absolutely, yeah. That includes the impact of amortization of, you know, some of the, Correct ... up-fronted cost, et cetera. Right? Correct. Yeah. Sure. And the- Sir, this extra liquidity that we have of INR 1 trillion, in how much time, like in how many quarters, we can, you know, exhaust it, we can use it, or we will have to run down, or we can have that kind of a credit growth? So how, like, how much time would it take, basically? See, there is no definitive time, but it is. I would call it a few quarters. Few quarters, 2, 3 quarters, 4 quarters, I would say that we will take to utilize that. There is a purpose for which we built it up. As such, a big merger is coming, we and the teams, the treasury teams thought it fit to carry certain additional reserves, which is what happened. And we will run it down progressively. Both, it's a combination of both, growth on the loans as well as paying down certain borrowings as it comes up. So we'll utilize both of those angles to do it, but it will take a few quarters to go there. So margin, like this 25-30 BPS margin, which is a drag because of that, that will automatically get reset at the higher level? At the higher level, over a period of time. Thank you. The credit cost, 60 basis points is the benchmark from your own. That's the pro forma number, so asking. You're asking me for future, how it is going to look like? No, I don't want to give you a guidance, but all I can tell you is that the credit conditions remained benign in the past, and as we see, there are certain pockets of credit that you see in the market, you hear about it, which is the small ticket unsecured loans or in certain category of SME loans that you are hearing and we are seeing. Not necessarily in our book as such, because our book, those portfolios have done very well, and we're not doing any small size as such. And our SME is more an integrated offering in terms of across security and as well as the relationship offering that it does, so quite comfortable. But, yes, but over a period of time, if you think when will the credit cost revert to mean, if that's your big question, it's... We all like to know that, too, right? When will the credit cost revert to mean? And what is the mean of credit cost- Yes. When it reverts what it is, right? In the pre-merger, the mean was somewhere around 0.9%-1%, thereabouts, pre-merger. Post-merger, maybe 10 basis points lower than that. That's the kind of mean. When does this revert to mean? That's part of what is the opportunity we have taken to use to ramp up some of the investments, too. And once the investments lap its comparison, then we'll be in a position, even if it's reverting to mean progressively, we are there to cover that well. Got it. Thanks. So of the roughly INR 700,000 crore investment book on day zero, how much is SLR? SLR non-investment and non-SLR investments you have readily there? We'll try and check. We'll try and check, but, you know, as of quarter end, you will have it anyway, so. No, but quarter end is some time away for us. Sri, just one question. If you go to the merged balance sheet, if you do investments by total assets on, pre and post, the number post is actually lower. Why do you say it is, you're carrying excess balance sheet? Hmm? If I do, 5658 divided by 25,017- Okay. 6,984 divided by 32,546- Okay. It is 21% here and 22% here. Why are you saying there is excess here? Yeah, it is not about that. It is, when we say excess, it is about the liquidity reserves that are there in excess in relation to the profile of the assets. So our LCR ratio, what would have been at 115% and 125% from our overall. So you model this not just based on the investments alone, it is based on how the inflows and outflows are assumed. No, but in a normalized scenario, will you go back to where you started? Because the balance sheet will always be carrying excess investments at any given point of time, right? Not required. Why, what is the basis why you have to make that assumption that we'll carry excess investments? For a normal business and usual, you are carrying... Let's assume that pre-merger, you were carrying a balance sheet of approximately 22%. Why do you say that LCR becomes a determining point and not the SLR at which you are carrying? Well, so if I may. So two things. One, that includes the cancellation of investments of HDFC Limited and HDFC Bank. Mm-hmm. You have to adjust for that, because that's sitting in investments, right? If you're looking at purely just from a math perspective, correct? Second, incoming book is not a bank book. As an incoming book, which is not a bank book, does not need to carry investments at a level that a bank requires. So your question would be absolutely correct if you're- if I was buying another bank who was coming in at a level which needed to meet a certain level. Right? You did your math, and I think you mentioned 21%-22%. The requirement is only 18% of SLR. Everything else which is coming in, even what's coming in, would be at a higher rate than what was coming in required. That's why, if you look at it from that perspective, it's not necessarily that the entire investment book should continue to be my 23 at a standalone level should go up. See, HQLA divided by the outflow, that's what determines the ratio. Correct. There are certain haircuts taken on the HQLA, and then the outflow is a net outflow of what happens on the liability side, net of certain expected inflows on the asset side. So it's only one line in the balance sheet will not determine what sort of reserves and the ratios that move on. What would be, Sri, what would be the CET1 ratio? You've given the cap at of 19.2. CET1 and, did we get any benefit on RWA? The RWA density is about the 65% or thereabouts. RWA density is 65-66. That hasn't changed? That hasn't changed, because the RWA on the, mortgage book will be lower, the non-mortgage book will be higher. So on a combined basis, it is very similar level. This does not include 1Q profits, right? Or does it, 19.2 cap at? It will include. It will include. It will include. It will include? It will include, yeah. So 18.9 also included and 19 point- Yeah. Like for like. Correct, yeah. Just on Mahesh's point, if you are borrowing more to deposits over time, your LCR will automatically come down, right? So you will need to maintain those investment levels. When the borrowings move to deposits. Deposits, because the propensity for an outflow is higher in a deposit than a borrowing. Over a period. Yeah, correct. Over a period of time, it will, and that is why it is very important. In a few forums, we have talked about it. Our goal is to see how do we maximize retail deposits, where the LCR value is pretty high, and so thereby the requirements are low. If you do non-retail, right, if the LCR value could be anywhere from runoff of. Runoff for LCR could be anywhere from 40% to 100%. So there are certain wholesale deposits where the runoff could be 100%. There are certain wholesale deposits where the runoff could be 40%, right? And so there's pretty high kind of an LCR requirements, which are there, for the non-retail. Our goal is, as much as possible, that's why we are trying to focus to say retail is where, granular retail is where our interest is in terms of the growth. But even if it moves to retail, you will still be able to reduce the investment? Yeah, it will. It can grow itself, because the retail can have anywhere between 5%-10% from an outflow, outflow point of view. Hi, this is Rikin from IIFL. I just wanted to check whether Credila sale gains are included in the pro forma number or not? No. Credila sale, potential sale, and thereby the gains on Credila are not included because it did not happen before 30th June, nor did it happen on day one, and has not happened as we speak now, right? It's still in the works. It's in the process. It'll happen at some point in time, but there has to be certain regulatory and other due diligence process that are in place. Yeah, hi. Any change in the way contingent liabilities were looked at before and now? It largely remains same. Yeah. Yeah. And, and some of the, I mean, contracts on, hedging contracts on borrowings, et cetera, no changes there? So they have all been weighted and taken in the bank, right? To the extent that it is required, the bank runs those derivatives book or the hedging book as we speak now. Thank you. Hi, Srini over here. You said that basically in the non-corporate book for HDFC Limited, you have already recognized the NPAs which were there, but is there any further stress which is there and, I mean, any stress pool that you can talk about? See, maybe there is one page in the appendix. There's no stress pool as such, but I can point to you to some place. If you go down to the appendix on the loans. Here. You're talking about this non-individual book, which is there, right? Which is the second row from the top that you're seeing. You're seeing that it is having a reduction sequentially or year-on-year. These are year-on-year numbers, that you can see that as of June, it is a minus 18% year-on-year. So to the extent that some of these need to be run down or have happened, and your question is whether anything more will happen. The short answer is, there will be some. How far? Our credit is undergoing that assessments. You'll have to wait for a couple of quarters before it can stabilize and get back to that zero, and then start to get to that positive as we go. Is that the book that we will continue to have? Yes, we will have that book. There are broadly three categories: the developer book, the LRD book, and certain other corporate loan category book, right? We would have them, and we will work with them. There are certain things where some of the exposures we may bring it down, not necessarily take it out, bring it down, moderate it down, and we will take a couple of more quarters to see where that will come to stabilize. And the- That's part of the assessment that happens. Yeah. And the contingent buffer that you have? Any NPA, that's the... If an account is part of non-performing as of June or as on day zero, July 1, it's part of the reckoning- Yeah, that's- In terms of the provision, right? Yeah, exactly. That's part of the specific provision. And if it is not, there are certain assessments that we do, and we carry certain contingent provisions, right, at any point in time to say that things that we don't see it now, right? But can happen at any point in time, something. So it carry part of the contingent provision, but not necessarily an account to account or at that kind of a level. So if can anything become an NPA in three months time, six months time? We'll have to wait through to see. That's not our hope, and that's not what we want to drive to. We want to drive to good performance on that. But if inevitable, something happens, we will face it, and we will handle it. If it does happen, will you consume the contingent buffers? What we utilize the contingent buffer, we'll—that's for another day to work on, but that's not the thought process right now. Thank you. The fair value adjustment and investment book is about INR 43 billion. What is the total size of that investment book, which you have fair valued? The size of the total investment book, only this is the equity book you're talking about? Yes. Yeah. I'm just curious because you- The total book is there in that other balance sheet, the differential that includes securities and non-securities. Yeah. The reason I ask is you've gone from market value to book value, and it has resulted in a loss of INR 43 billion. Not a loss. Loss. This is a derecognition of a gain. Yeah. Of course. Okay. Derecognition. It's not a loss. Yeah, yeah. ... Yeah, so if you can give the size of that book, and this INR 700,000 crore, if you can tell me what the SLR numbers? I don't have it readily right now. Hi, Srini. Param here from Nomura. Go to slide 6, where you're showing the margin of HDFC Limited. There is a decline of 20 basis points, FY 2023 versus first quarter on an IGAAP basis. Can you explain the reason for that? As part of additional liquidity cost, there is some cost which is there. The second thing, which is because it didn't happen like, like on the last day, somewhat it happened in the quarter. That's one. Two is also the loan mix. There are certain additional non-performing loans that have added there, where the interest wouldn't happen or the reversal have happened. Okay. And one more question again on an ongoing basis on the P&L going ahead. So when HDFC Limited had previously in 2018, they moved from IGAAP to Ind AS, there was an impact on the P&L as well. There was a negative impact. So now going ahead, is there any positive impact on the P&L? I think last time it had come lastly, largely from the ESOP cost, which I think have now been normalized, IGAAP versus Ind AS. ESOP costs are there, normalized, which is there. For us, I told you that from Ind AS to IGAAP, there is a 25% reduction, right? That's about half of it is due to the dividends, HDFC Bank dividends and HDFC Limited. On the other half, roughly half of or so is between the tax rate changes as well as the acquisition cost charge off. Okay. There's no incremental positive impact? No, not nothing material, which is there. Okay. Thank you. Just one more on this. PCR went from 42 to 75 on the provision coverage on the HDFC book going from 42 to 75. So is there a change in assessment of these pools, which you thought were underprovided with HDFC Limited, or is just at the bank level, you just want to manage? See, so one thing is that, when, when you look at it, in the Ind AS method, you look at cash flows, net cash flows that recognizes incoming cash flows. In the IGAAP, we have not changed our assessment of when the incoming cash flows can come. It is simply the method in which you make the provision. That is, that is what. So that means if you think even our own book, if you go to the next page, we do get recoveries. We do get recoveries of about 20 basis points. When, when I report it every year or every quarter, that's a 20 basis points recoveries that we also get, right? Because you recognize it, and then you get a recovery at another time. Yeah. It's not for a change in thought process on the recoverability of the asset. It's just one accounting standard requires a different thought process, the other requires a different thought process. That's just the way you think about this. In other words, assuming the economic value of the asset remains, eventually you will have quarters where you will have credit costs dipping below 60 basis points, because you'll actually recover those assets, because that's the true economic value of that asset, right? So you can have that buffer- Yeah. and then when it comes in. We believe the economic value has not changed. Yeah. Prakhar from Jefferies. Just wanted to check, you know, for the long-term bonds that you have inheriting from HDFC Limited, have you got the clarification from RBI whether it qualifies as the housing book or? No. The incoming book, per the definition two, it doesn't, right? It is an exception, that if anything, that we need. We continue with that dialogue, but there is no, there are no exceptions that are granted, yeah, any of those. Does that make any changes to, you know, the PSL? Like, I think that was a central assumption at some point of time that the PSL may not be complied and, you know, some of the borrowings was also targeted, in that fashion. But does it make any changes to- No, no. Through another kind of a concession, the PSL is phased in with one-third, one-third, one-third. Okay. The relief is through another kind of a thing that has come in. Got it. And, you know- The, the- Anyway, incremental borrowing is anything that we do, and, from now on, and we map it to, affordable housing, as an example, we'll get that relief on an incremental basis. It's only the stock that we are talking about for exceptions here. Since you mentioned that, you know, the 2%, ex- entry or exit margin that HDFC Limited is making, will basically normalize through 2, 3, 4 quarters as you deploy that liquidity, on asset side. From a FY 2024 perspective, you know, you were generally indicated that the ROAs will be, you know, 1.8, 1 or 2% in that range. With the exit margin on that book being that much lower, would that guidance still hold up? See, it remains to be seen. One, if, you know, one is, by the way, we have... As a guidance, I just want you to go to this page. I just want to take this page, right? What we have talked in the past is that our ROA remains in a steady band of 1.9%-2.1%, right? This is over a decade, if you see, this is what we have said. And all of the dynamics of the revenue, cost stacking up and the credit expectations that we have on all of that is what this is what historically we have done. So essentially, what we've been talking is that 1.9%-2.1%. Now, on top of this is what we talked about recently, is about the impact that this can give from the last column that you are seeing, the additional liquidity can give to that in this last column that you are seeing is still the 1.9 that you are seeing, right? It can happen. So your broader question is that, hey, FY 2024, when does this normalize to get there to be at your level? It is a few quarters away, 2-4 quarters, at least, away in terms of how we could get back. And there are two things: one, utilization of that liquidity towards loans or paying down of some of the loans or borrowings. And second thing is that there is a mix change that can happen because you know that our retail mix, which is a high-yielding book, is at a point where it touched a 45% low point. The total composition is now 47%, it's starting to move up. And, and at some point in time it was 54%. This is pre-mortgage, right? Goes up. So that part of that transition also needs to happen to get that margin. So it's a few quarters that we have to be patient there. Yeah. Okay. So basically, 25 is when you probably go back to the- Correct. normalized ROA Correct. How we should think about it. Got it. And, if at all, even at a later stage, since I have the mic, I'll ask it. If there is any update on, you know, the activity on the deposit mobilization, if you are actually able to share, that would be good, if that's possible. Especially the whole confusion around deposits versus, you know, you know, deposits versus bonds, and if you can clarify what you're doing. Okay, you know, this is a good point you're raising. So the way to think about what we have been talking about is retail deposits is about 80, slightly above 80% of total deposits. That is the go-to process our branch people stack the management approach is to get as much as possible the granular retail deposit without any kind of a rate that we try to incentivize through rates, right? It's simply how to get it through engagement relationship, right? That's, that's go to. That's what is that percentage out of the total deposits that we get, slightly above 80%, 80% round, it's 82 last quarter, 80% is what retail. We want to continue to get that. Once it comes to non-retail, also we want to get, but not at any cost. And I'll give you an example. Real, real, right? We have seen it in the recent times. A customer, a client, non-retail customer, who's got deposits with us, comes in and, there, there are some competitors, peers, right, who offer rates, one-year deposit, offer rates 7.8, 7.85. This non-retail customer is actually a 100% LCR runoff customer, so that means zero value to the bank, right? Offers 7.8, 7.85. Shows to us, "This is the offer I have. What do I do, right?" In order to take the deposits, which is a 100% runoff, any bank needs to borrow 4.5% from the market to place CRR, because this 100% needs to be in liquid securities. And if a bank is running at an LCR, call it 110 in their mind, or 115, they have to borrow another 10% to put another security on top of it, right? So this is the economics, so which takes that... And then there is a 12 basis points deposit insurance cost on this, right? And so if you add up all of this, this is north of 8.1% or thereabouts, for a year deposit. I'm giving you a real example that we have gone through in recent times, right? And it's quite a big customer, with a big amount, right? We are not going to go into that to say, "Hey, I have a deposit I need." The bond economics are very good for this type of a customer, right? Where we can go to a bond alternative. There, there's no deposit insurance, 12 basis points goes away. The yield curve is pretty flat, and so from a go down the yield curve to a 7-year, right? There is no premium on the yield curve, very marginal premium, right? You go to that bond for a 7-year, and an asset of an infra asset or a housing, affordable housing asset, gets you another 100-150 basis points relief from a PSL point of view. So the economics are far superior. That's all. That doesn't mean we don't want deposits. We want all retail deposits. More than what we want, we want to go get. On the wholesale deposits, we want it for relationship, but we will not be in the rate game. If you look at us, we publish rates for more than INR 5 crore. If you see, we publish the rates, right? One of the few banks or one of the only bank among, among the some certain top banks, we publish the rates, and we don't change, right? Certain other banks don't publish those rates, and then the next day they have an opportunity to outbid, which is I gave you an example of one, one example of the 7.885, 100% LCR. We said, "Thank you very much. It can go." Right? And so that's part of. So we don't want to be get caught with certain things when the economics don't work, and these are the economics. Thank you. Deposits, we need all the time, so I don't want you to go away thinking that, the bank is now not requiring. We do need. We'll not play that, non-retail rate game. We'll take one last question. Thanks. The prior slide, the margin slide. The 2.7 you indicated for Q1 include the 192% LCR built up at HDFC Limited pre-merger, which was indicated to be 125% on merger? ... So, that was indicated to be 125% already on a merged basis. So I was wondering, what would be the further liquidity overlay heading into the quarter, which led to such a sharp drop in margins? Yeah, that is a point in time. Yeah. Because towards the end of the quarter is where that came, and that is exactly what we have been saying, that was a buildup. 2 is period end and not period average. That's right. Yeah. Yeah. Understood. And also, from a grandfathering perspective, the INR 6.36 trillion that moved on to the bank, about forty- What, what, what is the 6.36? Total liabilities. Total NDTL. Oh, okay. On the liability side, you asked. Yes. Oh, yes. Of that, about 40% had a maturity into FY 2024, as of March. I mean, we do have the March balance sheet. So how has that been repriced into the longer maturity buckets? I think the maturity profile is, what? 15% or so? Yeah. About 15% or so in FY 2024. Yeah. I don't know where the 40 is, but it's about 15% or so. Yeah. Yeah. includes the deposit as well. Yeah, yeah. All of that has now been already moved into the longer buckets? No, no, it's not necessary, right? Some of this will come up for maturity. As it comes from maturity, we'll figure out a way to- The liquidity will be used to... Yeah. Okay. Understood. Thank you. This was very useful, actually. You put in a lot of effort to do this. Thank you. Okay. What is this, sir? Incoming SLR. Incoming SLR book? INR 112 thousand. Yeah, INR 1,12,000 crore, I think, is the SLR investment book. Somebody had asked for that. And the- Equity. Equity shares, is how much? One thousand. INR 1,500 crores at book. No, that INR 101,000 crore is merged in that book. No, no, no. Incoming. Incoming. Incoming. I'm saying the merged book that you showed is roughly INR 700,000 crore of total investment. I'm saying of that, how many is SLR? So that's, that's okay. Okay. That's okay. That is known. Okay. So that we will get. That we will get. Yeah. So with that, we thank you all for coming. One is, on a happy note, happy Ganesh Chaturthi, and thanks for you all showing up and talking to us. Have a safe journey back home. I know it is a tough traffic out there. I appreciate coming in person. Thank you. Thank you. Thank you.