Ladies and gentlemen, good day and welcome to the IDFC First Bank Q1 FY22 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kunal Shah from ICICI Securities Limited. Thank you, and over to you, sir. Thank you, Faizan, and good evening everyone present on the call. This is Kunal Shah from ICICI Securities. Today we have with us Mr. V. Vaidyanathan, Managing Director and CEO, Mr. Sudhanshu Jain, CFO and Head of Corporate Center, and Mr. Saptarshi Bapari, Head, Investor Relations from IDFC FIRST Bank to discuss their Q1 FY 2022 earnings. Over to you, sir. Okay. Good evening, everybody. Just a great pleasure for me to speak to all of you today. I haven't had analyst conference calls for 10 years in a row. In Capital First, we started that at 2010, it got the name of Capital First in 2012. 8 years went by. We were giving out our quarterly results and then we spoke to television channels, and that was it. After the merger of the bank in 2018 till today, again, we've not had any conference calls. For me, let me just at least after 10 years, it's re-entry into this process. I hope I can do justice to your expectations. Now, with regard to our bank, I think we came into being in a new avatar as IDFC First Bank in December of 2018. At that point of time, we made certain very specific guidance as what we will achieve in five years. The key thing was that at that point of time, Capital First was something like about INR 27,000, INR 28,000 crores of loan book, INR 30,000 crores of AUM. IDFC Bank was about INR 75,000 crores of loan book, and together it is coming to about INR 100,000 crores. At that point of time, we were just a startup bank. Two years ago, we had got a license. Really we didn't have much of deposits. We really didn't have a really good picture about how the P&L of the merged entity would roll out to be. I mean, we had a plan, we had a thought when we did the merger. As all of us know in life, as it turns out over the next four or five years, there could all be lots of variances in our plans and thoughts and all that already factored for. We didn't have much of a but we had a reasonable picture. We gave a five-year picture with the limited visibility we had. That five-year picture, I'm happy to say that we are broadly on course on every one of the parameters that we set out at that point of time. I'm happy to say also that we haven't wavered one bit from the original direction we set for ourselves. Along the way, we never got excited by saying, "Oh my God, I want to do insurance, so let me do mutual fund. Let me start doing corporate banking in a big way. Let me start doing infrastructure. It's very profitable." We haven't moved this way or that way. We made a plan, we announced it to all of you, and we stuck to it. Let me just say that the guidances we gave at that point of time were broadly on 5 parameters with the limited visibility we had. Number 1, we recognized that the key issue the bank had at that point of time was the fact that on the liability side, we had, let me say about INR 5,200 crores of CASA deposits. On the lending side, we had close to like INR 100,000, INR 3,000 or INR 4,000 crores and including other liabilities probably even bigger. Therefore, including on the liability side, I'm saying it was even bigger than INR 100,000. It was like INR 140,000 or INR 150,000 crores. This is a very, very low CASA%. The key call we took at that point of time was that we don't want to grow the loan book. We have to first get the liabilities in order. I've been in banking circles long enough to know that the key issue that can really put a bank under risk is really not the asset side. The liability side is probably even more important than anything. The first two years, I think in a very single-minded, focused way, we focused on the liability side. Coming back to the guidance front, we gave a CASA guidance that we will be 30% in five years. We've gone past that number now. Second thing is that we said that we'll put out close to about 800-900 branches in five years. It was just a number that we thought would be right. It was no science to it. We've come to close to about 600 branches now. We've given 2025 for 800, 900 branches I think should not be difficult if we want to put that many branches at all. Along the way, as we're figuring out, digital is becoming a big play and all that. The third thing that along the way we figured out that the customer deposits, we just don't want customer deposits because let me again go back in time because it's important. We had close to about, say, INR 30,000 crores of corporate deposits, about INR 28,000 crores of certificate of deposits. All of you know that both of these can be brittle if taken in very high measure. That's when we had to pay down these deposits. Before a crisis strikes, not after suddenly there's a liquidity problem. One of the things we came up with was that we want a top 20 depositors concentration to come down dramatically because we just don't want to be beholden to top 20 depositors bank who might just call and ask for the money. At that point of time at merger, we had 40% as the top 20 depositors. 40% of our deposits came from 20 depositors. At least in a strategic sense, we saw this as a big issue. We said that we got to bring this down. We gave a guidance that we want to bring this down to 5% in 2024, 2025. I am really happy to say that we've come up to 9% already, and really at 9%, we feel very safe. Of course, in due course, we'll take it down to 5% there. The other thing was the certificate of deposit. We gave some guidance on that front. We said that our certificate of deposit in March was INR 28,000, not in December. December is INR 22,000. We said INR 28,000 had to bring it down. Now we are hovering around maybe INR 5,000 crore-INR 6,000 crore. Frankly, we are comfortable even at INR 10,000 crore and it's pretty inexpensive. The reason we are not taking it is not because of any reason, just because we don't have the need for it. Anyway, it's already come down. The first is that along the way, we introduced one more requirement in terms of guidance. That is in terms of average liquidity ratio. Again, what does a bank in is not anything else, is basically liquidity and diversification or lack of it. Therefore, the average liquidity ratio, we say we want to be greater than 110%, but really right now we are running upwards of 166% last quarter. The next set of guidance we gave. All that I described to you was on the liability side. Now I move over to the asset side. On the asset side, at merger, our retail book was INR 36,236 crores, and we had guided that we will take this to INR 1 lakh crore in 5 years. Frankly, we have to say we are on track because it's only June of 2021. It's just 2 and a half years, and we already touched INR 72,766 crores. INR 1 lakh crores is just a hop, skip and jump. We should count it as achieved for all practical purposes. The next thing we set for ourselves as a goal as a retail, as a percentage of total assets because we really feel that our capabilities clearly are on the retail side in a very significant sense. One, because from the network point of view, maybe the big banks, like the big four, have network of maybe INR 1.5 lakh crore or INR 2 lakh crore or INR 2.5 lakh crore, and with our network of INR 17,000 crore, INR 18,000 crore, INR 20,000 crore, we really could not believe or we did not fancy ourselves being any serious players in the corporate banking side with a relatively mid-sized bank network. It couldn't have been very smart to go head up against them or try to take them on in terms of pricing and things like that. We didn't call that a strength. We said that we will do it in an opportunistic way. Really it is not a big game for us. We said that, okay, if focused on retail side, frankly, INR 20,000 crore is really a lot of capital and we could really achieve big things. The second thing, of course, is very diversified. I've personally done this for close to about 25-28 years. I just find that with all my experience, I just find that you have an odd cycle here or there, in the longer run, these are end net. These are end of the day, individuals are borrowing, individuals bother about the credit bureau. Individuals, they don't have a cover or a shell of a company which can have some limited liability, they don't have escape routes. They have the personal, in terms of the size of the relationship, the strength of the relationship with the individual customer is much stronger. For many reasons, we wanted to retail. Therefore that we set as a target of about 30. At that time, it was 35% at merger. Pre-merger, standalone bank was some 39%. Because of the merger with Capital First, which was like 90% retail, the blend became 35%. Then we said it'll be 70% in five years, but we already touched 68% as we speak today, including the PSL book and the PSL buyout book. It is as good as on track. The fourth thing is we said is on the wholesale side, we said we want to bring ourself down below INR 40,000 crore because I don't fancy ourselves, like I said, being a very large corporate banker. We'll still be relevant with the customers we want to serve, but in size and proportion as relevant to our network. Our target at that point of time we said was less than INR 40,000 crore and happy to say we're already at INR 32,000 crore. On the wholesale side, we also said that our top 10 borrowers as a percentage of total funded assets, we wanted it to be, at that time was 12.8%, really to give 13% of our, if top 10 borrowers are going to have 13%-14% of our funded assets, it doesn't feel very comfortable. We wanted to bring it down below 5%, already reached 5.8%. We gave certain guidances in growth and net NPA. We said that our wish list is to keep our gross NPA around 2%-2.5%. Net NPA is 1%-1.2%. As of now, as we speak, the gross NPA is 4.61% and net is 2.32%. Really 2024, 2025 is long way away. I have no doubt in my mind that we will get there to the numbers of 2% gross and 1% net we talked about. The next thing was, all the stuff, the second set of stuff I talked about was all about assets. The third set of sets we talked about is earnings. Again, we were at a merger situation. The earnings on Capital First, the yield on the book was close to about 16.5%. Cost of funds was something like about 9-ish odd percent, or maybe a little less than that. We had net worth all put together, we were making a NIM of 8.5%, 9%, and we were making a return on equity of about 15%. 15% was on stock. If you go to the last page of the presentation, if you got an opportunity to go through the presentation, basically quarter on quarter on quarter for close to about 5 years at a stretch, our return on equity was growing on the whole book, which means that the incremental return on equity we were getting, not the return on equity of 15, which by itself was not bad. The incremental return on equity we were getting every quarter on our book was upwards of 18%-20%, which means the incremental capital consumed and the incremental profit we were making out of that incremental capital. We were frankly very, very happy that, look, if Capital First had been a standalone entity and theoretically if it had got a bank license or something, then you would just keep pressing the same lever again and again and keep pushing yourself towards that sort of a ROE. That would have been a kind of a desired ROE where we feel that it's an annuity institution by itself, and you can raise some capital from time to time, but you really don't have to depend on it for growth. That is a broad plan. Anyway, that is on one side. On the other side of the equation on IDFC Bank side, it was a good institution, and I'm quite proud that this is the institution we merged with and all things good in terms of brand and the governance and all that. On the earnings front, I think it was a big challenge because it was an infrastructure DFI, and the DFI, by definition, actually borrows at high rates. For example, like 8.5%, 8.75% was common to borrow. There's the infrastructure loans to it. If it is good infrastructure, it gets repriced itself downward quickly. If it's a difficult asset, it stays on your books forever, nobody buys it from you. Set up cost of a new bank, which was incurred by the bank. There were these set of challenges that the bank had at that point of time because it was also a new bank, setting up, set up cost and all that. Blend, there's a slide somewhere inside, but there's a blend of the half-year merged pro forma financials of the two institutions shown somewhere, but it wasn't very pretty on merger. It was kind of negative. From that situation, we said, "Okay, what does the story look like?" From that situation, we gave a pretty clear guidance that we will touch 15% in 5 years. I know most of you are quite concerned or maybe are concerned about our return on equity, because the numbers in terms of earnings have not kept pace in terms of the pre-provision operating profit. Of course, as we've seen in history, where we started from. Still, I think we may have your concerns and talk to me about it today. At that point of time with the limited visibility, we gave a guidance of 15%. I am happy to say that broadly, we are very much on track on that and later in the time, if we get an opportunity, we'll describe to you how. This is it. These were the five or six, not five, actually, to be very precise. There were about maybe 15-odd guidances that were given, but they belong to four categories, which is liabilities, assets, earnings, diversification. Of course, a fifth one, which we haven't talked about, which is important, is capital. The truth is that we did not give any specific guidance on capital. Maybe it didn't occur to us at that point of time. I can't recollect. Basically, when we look ahead from here on, we can make some very specific guidances on the capital front also. Right now, our capital is INR 20,170 crores. Our capital adequacy is 15.56% as we speak. The guidance we'd like to give, of course, is that our capital adequacy will not go below 13%. That would be our broad guidance and wish, the way we run a bank. Therefore, if you see that our capital is dipping below that level, you can know that we are coming to the market for capital. This is the broad stuff. You can think of it like a guidance given now, not then. You can track it from here for the rest of the three years that are left into 2025. That is a very quick brief I'd like to give you about what has progressed during the last few years, let me say two and a half years. Really in two and a half years, I really think we've come really hell of a long way. I really don't think that anybody really guessed that we'll get to 50% CASA in two and a half years. That too, for a large bank to get there. That's how we are playing our cards. We're very straight about how we do our business. In fact, you may recall that the first 4, 6, 5 quarters after the merger, not 1, not 2, 5 full straight quarters, every quarter we discovered a problem. 1 quarter it was B1 housing, another quarter it was Reliance Capital, another quarter it is a telecom company, another quarter it was a DPA which got reworked, another quarter it was an infrastructure company. Really, I tell you, it's not an easy job for any CEO to come out there and say, "Look, okay, this man, this quarter we made a loss." It's just not a pleasant thing to do at all. No matter what the pressure was, we just looked straight into the eye, straight in the camera and said, "This is what the numbers are." Most of it, I guess, came from legacy, but that's not the point here. We do play straight and we want to play straight going forward also. I think it has given us a lot of confidence in the way we would do our business. With the way we look at our incremental economics, I really personally don't get so rattled about what the current economics of any institution are. I didn't get rattled even with Capital First when it was loss-making for 3 years, even after I had touched it. Basically, I always look at incremental earnings. It's very important because at the end of the day, the incremental earnings become the book when you grow it faster than the rest of the book. Incremental earnings for a bank, we feel, are pretty strong. Our incremental cost of funds is now coming down below 5. Our lending on the retail side is pretty strong, we'll talk about it. Incremental return equity is, according to me, really very good. When that incremental becomes the book, then you know that this bank is headed for a really good, let me say, into a good space. I'd like to really, with that very quick brief, I'd like to stop here and I'd like to open it up for a discussion. Thank you, friends, and nice to talk to you. I've got with me Sudhanshu. Sudhanshu Jain is the CFO and the Head Corporate Center for the bank. I've got Saptarshi Bapari, who many of you may have interacted with. He's the Head of Investor Relations with us. Sudhanshu Jain, you might want to say hello. Yes. Good evening, everyone. Thank you for joining this call. It's a pleasure taking this call and having this conversation with all of you. Saptarshi? Yes. Thanks, everyone, for joining. We look forward to your questions. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Pritesh from Prabhudas Lilladher. Please go ahead. Hello. Hello, Pritesh. Hi. Good evening. Sir, I had couple of questions. First is, I wanted to ask what will be our average SA rate now? If you can give the same for last year and last quarter as well, if you can share that number. You mean interest rate? Yeah. I mean the interest rates is obviously there on the website, the average rate, SA rate for us right now will be what on the book? Yeah. About, let me say, 4.8%. Four point eight? And the same- 4.8%. Yeah. The same for last quarter will be? We reduced rates by about 100 basis points last quarter. Think about 5.8. Fair enough. Can you also give a breakup of CA size, possible? Yes, we can. I can take it later from Saptarshi maybe. No problem. Sudhanshu, what's the CASA number right now? Yeah. 65. CASA ratio is. Not ratio. CASA in absolute terms. Yeah. CA and SA breakup, sir. I have the SA. Sorry. You're asking about CASA deposit? No, I have the CASA deposit. The breakup between CA and SA, current account and savings account, the breakup of it. About INR 6,000 odd crores. INR 6,000 crores is the SA? Yes. Okay. Sir, just strategy. Just wanted to ask, in the presentation, I could see the corporate book is growing. We've seen some of the segments growing by about 20% year on year or quarter on quarter. There's some growth. What is the strategy there now? We've been reducing exposures there. From here you see that at least the non-infra wholesale book growing or do you see still, you feel it is cautious? You made some comments on it, but can you just little bit give a high how you think about it? See, in the corporate side, like I said, corporate banking belongs to someone who really has very low cost of funds straightforward. The big banks like ICICI, HDFC, Axis, they are naturals into it because they pay 3% up to INR 50 lakhs and 3.5% above that. They really sit on very low CASA rate. I mean, cost of funds. Large corporate really asks for really fine prices. It kind of naturally belongs to the, let me say, the big folks. As far as we are concerned, we like corporate banking. Like I said, in proportion to our network. Secondly, with regard to our ability to get a reasonable risk reward. We really are very sensitive not to have a blow-up of corporate banking on our hands. Now, I can tell you I'm very sensitive about that. It would be a very fair estimate if you were to think that. Let me just say that we're very careful about it, and therefore, we do corporate loans. We feel that fundamentally there is a good risk available. Good risk meaning that we feel comfortable with the risk, and it's coming at a reasonable price. We don't want to be priced out of the market, but at a price that is appropriate to our cost of funds. That's one thing. Secondly, by the way, in corporate banking, we are also pretty strong. We have really fantastic corporate banking solutions in terms of technology. We are good in cash management solutions. We provide fantastic trade facilities across the country, and because we are a universal bank, we get fee income from Forex, the transaction banking fees. We like the business for its wholesomeness, but like I said, we want to do it in the proportion to our size and network. Sure. Lastly, yeah. The last comment on corporate banking, to give a specific guidance on how the book will evolve. Given a choice, we'd like to maintain the book. We don't want to run it down any further. That's not our wish list. If you tell us that, would we like to keep it INR 35,000 crore for a while? Yeah, of course, we'd like to keep it. This is not a rundown book like infrastructure book is. We like it, and we like the team, and we like everything. If we're not able to do it, you can think of it like our inability to spot a deal which meets our risk, reward, and networks criteria. We'll probably keep it there. There is a last question. Just wanted number on slippages, if you can provide that as well. By slippages, for the quarter. Slippages for the quarter was about INR 2,800 crore. This included one large lumpy exposure on a total account, where the slippage was INR 850 odd crore. This account was already part of our identified standard list. Unfortunately, it has slipped into NPA during the current quarter. We see payments happening on this account, but a bit delayed. We expect recovery to happen on this account in due course. On the retail front, out of this INR 2,800 crore, the slippages were about INR 1,800 odd crore. At the same time, we had recoveries and upgrades during the quarter, which was roughly about one-third of this number. Net slippages is about 1.5%, 1.6% in retail. Thank you, sir. That was great. Thank you. All the best. Thank you. Thank you. The next question is from the line of Rohit Jain from Tara Capital Partners. Please go ahead. Yeah. Hi. Am I audible? Very much, Rohit. Yeah. Hi. Thanks for doing the call, much appreciated and much needed. Just 1 question on asset quality. I see that your retail gross NPA and net NPA actually came down sequentially. In a quarter where the best of NBFCs, like Bajaj Finance, Chola, everybody reported a decent sequential jump, and so did the best of banks. I'm just a bit intrigued as to how our NPA in the retail segments are coming down sequentially. Can you please throw some light there? Basically, you see provisions and write-off, they go off the balance sheet. That's how this comes down. In reality, we've had provisions to take through the P&L. Basically, the provision doesn't go off, but write-off goes off the balance sheet, so we had write-offs to take this quarter. Can you please help us understand how much were the write-offs? Thank you. Yeah. Write-off on retail was about INR 1,400 crores during the quarter. Okay. Basically, we had slippages of about INR 1,800 crores, recoveries of about INR 600 crores, and write-offs of about INR 1,400 crores in the retail segment. Yeah, that's correct. Got it. Another related question on retail is, I know we haven't done too much of a restructuring as yet, but is there anything in the pipeline? What's the outlook there? B, do we envision any further write-offs in the current quarter? On your restructuring, we have disclosed that number in the press release that we have restructured outstanding standard pool of 1.8% on retail, and this was about 0.9% in the previous quarter. Incremental is about 1% during the quarter. Okay. Is there anything more in the pipeline? Not significant restructuring we expect in Q2. As far as the first question on write-offs are concerned, the best way to assess the quality of our portfolio, I guess of any portfolio for that matter, is to see 3 numbers together. The gross NPA, the net NPA, and the provisions. All of you are seasoned bankers, so seasoned people, you'd know that if a bank were to take provisions, to that extent, the net NPA comes down. Having a low-end gross or net is not a measure of success. It is the measure of success what provisions we take. Our guidance for this year is as follows. Our estimates are that credit loss, including the write-off that has happened in the first quarter. The credit loss for this financial year, we are targeting at 2.5%. For our kind of healthy yields, frankly, 2.5% will be quite comfortable. I must tell you that even pre-merger with the bank, Capital First always had close to about 2.75% of credit losses. As long as the yields were commensurate and this 2.75% was consistent, life was fine. As of now, for this financial year, we're targeting 2.5%. For next financial year, we are guiding for 2%. If we can get that number, at a gross and net NPA or whatever you're seeing, I think it's a pretty comfortable number. Okay, thanks. One last question on NIMs. Given that you have already reduced your savings account rates and the rates market-wise have sort of bottomed out, do we expect NIMs to keep inching up from here? Is 5.5% a level where we think we are comfortable from a risk reward metric? It will be here, but it could still inch up from here because basically the incremental economics of the bank are earning us more NIM than 5.5%, at least in the retail side. Basically, retail, the incremental borrowing rates are something like under 5%, and the incremental lending rate are currently upwards of 14%. We are getting incremental of, it's pretty strong, you can do the math yourself. This is showing the retail side. The wholesale, of course, doesn't give this kind of NIM. Blend, it could still inch up from here. Okay. I'll come back in the queue with further questions. Thanks. Thank you. The next question is from the line of Prakhar Agarwal from Edelweiss. Please go ahead. Hi, sir. A few questions from my side. First, can you help me understand where this INR 1,800 crore slippage in retail coming from? Which segment are we seeing this sort of number? If I analyze that number, probably 10% of run rate on slippage on retail, that is quite a lot. Where is this segment, which segment of retail is this coming from? We have seen 3 segments actually, which have contributed more to this. 1 is the wheels segment, basically, vehicles. Let me say our 2-wheeler business had more slippages. Second was the commercial vehicle business, the used car business, basically the vehicles category of stuff. Second was the JLG business, which is a microfinance book that we have in our rural areas. Okay. When I look at write-offs, INR 1,400 crores is a significant number. What is the thought process behind writing these assets off? Which segment is this 1,400 coming from? Predominantly JLG business or wheels and JLG combined? All put together. Even on the other businesses, which are supposedly secured businesses, we've had slippages. Whether is it, frankly, for that matter, all of wheels is secured only. See, I think in due course, of course, we're hoping to collect the money. I think one very important thing I think all of us should note is as follows. How do we take provisions? Our provisions are very formula-based. We say, look at 90 DPD, we got to take so much%. At 120, we take off so much, and at 180, we take off 120, 150, and so on, so forth. There's a provision policy. Now, this is a quarter when throughout, let me say, April and May, country was on lockdown. Debt collectors could not go, customers were doing no business, and they were not earning income. At that point of time when that situation occurs, then the whole portfolio, I mean, not the whole, but except the people who cleared their checks, the people who returned the checks, that set of portfolio tends to slide 1 bucket forward. A bucket meaning a stage, 0 to 30, 60. I'm calling each 1 of those a bucket. It moves 1 bucket forward. When that happens, we have a formula and then we take it to the P&L. This is a pretty straightforward approach, and that's 1 of the reasons you see that our provisions are high. I want to point 1 very important thing to you. Just because the customer has moved over to 90 DPD and we have to take, say, 33% provision, doesn't mean we're going to really lose 33%. No. It's just the customer moved to that bucket. The customer also had a COVID problem just like we had a COVID problem. When the business recovers, customer will pay, and that money will come back. That is the reason we are guiding for this year. If you see, this INR 1,400 by itself looks like a large number. See the guidance we are giving for the full year. It's only 2.4% of average book. Why? These customers who go into the bucket continue to pay subsequent to sitting in that bucket. We are definitely believing that these customers for whom we are taking charge of to the P&L on a conservative basis today, a lot of them will pay in due course. Sure, sir. That I understand. That's why I'm saying is what is the rationale for write-off? If you are so confident that they will be repaying, what was the rationale of writing it off at the first place? It's a very good question. Write-off is a formula for us. We have a defined formula that we write off something at 360 days or 240 days. There are some different products, depending on ticket size, et cetera, have a different formula. It's a formula. The formula doesn't distinguish you had a problem because of COVID, or because of any reason the customer couldn't pay, whatever the reason is. Formula is a formula is a formula. We just take it as a P&L. That's the end of the matter. The important thing to note during the COVID situation is that customers are delayed, but they will pay. If somebody has moved to 4th bucket. 4th bucket is 90 to 120. We take 30%. Customer will stay back in that bucket, will continue to pay us maybe for 3 months, 5 months, 7 months. Some of them will pay 2 EMIs and come back to 30 or to 60. Some of them will pay 2 EMIs and come down to maybe 0 to 30. This is an accounting item, and for now, taken in a pretty straightforward manner. Customer will still pay, and we will recover this back to the P&L, and it is very possible that what we charge off to the P&L today will come back to us, say, 2 quarters, 3 quarters, 4 quarters from now. Remember, there's a real customer sitting out there. There's a real customer, there is a bureau, there is a rule of law. The customer has dues payable to us. The moment customer cash flow comes, customer will pay us. This COVID-related provisions and COVID-related delinquency has to be treated a bit different than what was going on in pre-COVID times. Okay. Sir, just 2 more questions. First, on your stress book that we have highlighted. Now, when I look at your stress book, the 3 assets, which is 1 wind power and 1 logistic company, and 3rd one is solar project. There is no movement at all in these sort of projects. In 2 of them, in solar projects, we are not carrying any provisions, and on wind power, we are only carrying 25% provision. Why is there, first, no repayments in there? Are we comfortable with this sort of provisioning, given the fact that there is no repayment at all? No. We've got to pull out the piece of paper so that we can give you a more straight answer. Just give me 10 seconds. Can you pull out the sheet? Are you referring to the stress list that we put out over and above the NPA? Yeah, stress list that we put out. I was just comparing your last quarter number and this quarter number, and there was no movement in the exposure for these three assets. Okay. Within these three, for two of them, we are not carrying any. Yeah. If you see the stress asset page, we haven't named the clients, but we kind of given some clues or given some names, and given some description. Without getting the specific name, because maybe Mr. Sudhanshu Jain can help with that specific question, let me just say that overall, if you see, this number is INR 1,371 crore. Against INR 1,371 crore, just for the benefit of others who are hearing the program, let me explain the question to them, otherwise they'll be confused. One is an NPA, that is what we disclose. We have taken our provisions and all that. Over and above what is disclosed in pure as a bank, as in given in page 100, I think in the report, we also have. Not 100, sorry. In page 48, we also define the entities which is on our books, where we see stress, where we have taken provision that is not yet NPA. That's what this gentleman here is referring to. Let me say that on that front, our outstanding exposure is INR 1,371 crore. Our provision is already INR 915 crore. That's like only INR 400 crore uncovered on a exposure of INR 1,371 crore. We feel overall pretty good about that. Now let me just add one more input and then that will tell you the direction we are headed. In March of 2019, our identified stressed assets, i.e., over and above declared NPA, identified stressed asset was INR 4,138 crore. See the direction. Today, that number is only INR 1,371 crore, and at that time, the provision was INR 957 crore on INR 4,000 crore. That is a provision cover of 23%. Today, on INR 1,370, we have a provision of INR 915 crore. The short point is that not understanding the specific account you flagged because we understand that account a little better, overall, let me say that whatever is outstanding there is well provided. No, sir. The only point in asking this question was that even if there is a timing difference and couple of these projects wherein we have not provided to an extent of 67% looks good from overall perspective, when I look at 2, 3 assets wherein there has not been any repayments, the coverage over there is essentially next to nothing. There could be a quarter or so wherein if this stress continues. No, we got the question. As we speak, are you referring to the account where you've shown outstanding exposure of INR 251 crores? No. Wind power, which is showing an outstanding of INR 157 crore, and solar project, which is showing a outstanding of INR 83 crore. If I look at provisions, wind power has 25% provision and solar project has nothing in sort of PCR that we have created for that particular project. The short answer is that for this one, on the solar project, though we have put in the stressed list because the group is stressed, the fact is that projects are performing well, and they are servicing the debt regularly. Thank you. The sponsor is undergoing a resolution process, we've put it as a stress. As we are concerned, we're getting paid on the INR 83 crore. Similarly, on the wind power of INR 157 crore you're talking about, this account servicing was earlier delayed, but now it is showing improved financials. They are servicing debt from cash flow of the project. If this was truly a stressed account where they were not servicing the cash flow and they were troubled and all that, we would have probably taken more provision, but it's not so. They're paying us. Thank you. It's 83, yeah. Thank you. Mr. Agarwal, may we request that you return to the question queue for follow-up questions? Thank you. The next question is from the line of Seshadri Sen from Alchemy Capital. Please go ahead. Hi, Rajan. Hi. Great to have you on the call. It's good practice to start. 3 questions I had. First is on asset quality. The road project which has become an NPA, if I get it right, I think you had an 18% coverage on that. According to your last quarter's presentation, was there any incremental provisioning on it when it slipped into NPAs? No, we did not take any incremental provisions. Understood. The INR 1,800 provisioning was largely on your retail book because of COVID. Is my broad understanding right? No. This includes some advance COVID provisions we have taken. Understood. That's about INR 300 crores. All of it is not retail. To the earlier question on the INR 874 or INR 854 crore account, you can see that now displays NPA. Let me just tell you what that account is so you'll get some comfort. Frankly, we feel that there will not be any material loss on it as of today. That INR 850 crore is showing as NPA. Technically, it is an NPA. That account for the last many years, ever since the merger happened and even prior to pre-merger days, this account has always been delayed as an SMA-2. This is an operating road toll project in Mumbai and they have cash flow, and they have been servicing for 2 and a half years now. Therefore, we believe that even if it is NPA, so be it's a timing issue. I mean, not so be it. Of course, we wish it not happen. The fact is that this money will come back to us. Right. This is academically an NPA, technically an NPA, but eventually when we wake up a few years from now, all this money will come back because there is a real cash flow for the project. You had an 18% provisioning on that going into the end of the fourth quarter. Nothing to worry. Eventually, the money will come back. Understood. The large telecom exposure that you have, is that something that could mean you guided for 2.5%? If something happened to that, I presume then that is a risk beyond the 2.5% or that you're expecting this year. Which one? The Vodafone. The telecom company. Yeah, that telecom company, we didn't refer the 2.5 because this 2.5, we're referring to normal course of business. If you take the total provisions we take last year, then you divide by the last year's average book, then you take total provisions we're expecting to take this year, we've already taken INR 1,800 crores and then our own internal guess is probably somewhere about INR 2,900, INR 3,000 crores, is the total provision for this year. Understood. means that, let me just say this 18 is, let me say, we've already taken a substantial portion in the first quarter. If you take that number and divide by this year's average book, you will get that number at 2.5%. Next year, our expected based on how our book is behaving, our indicators are showing, we take that and then you divide that by next year's average book. We believe that next year it will come to 2% or so, or maybe a little below that. Understood. Our broad philosophy is that we've taken quite a few hits in our lives in the last two years. This is not the first one. We've taken Zee, Reliance Capital, there was a large infrastructure, you name it. There's an unfortunate incident of that case in Bangalore. We have powered through with a core model. It is very important to think about it like that. That you have some issues on the side, you deal with the issue, then they go away in time. They become small objects in the rear mirror. The core incremental business model is very important. If we can grow the bank from here on 20% year on year on year, and then get the incremental economics the way I'm saying on the retail side, then it solves, I mean, according to us, it will turn out to be a terrific bank. I appreciate that and I appreciate that you recognize everything upfront rather than kick the can down the road. Switching tracks, I saw that your CASA in absolute amounts quarter on quarter has not grown. Is that an impact of your cut in your savings bank rates and do you think that's a short-term thing and over a little bit of time, your customer base will get accustomed to this lower rate? Has there been a flight when you initially cut rates? Just shed some color on how your CASA base responded to your cuts and would that slow down your growth over the rest of the year, or you think it will come back later? No, it's a good question and relevant to the situation. We frankly have a fantastic franchise on the liability side, and I do think that customers stay with us and stick with us for our service. We have a very genuine approach towards this customer first. We are insanely fetish about that. All that has actually helped us grow our CASA. Of course, on a very attractive interest rate we paid, all that combined to grow our CASA, I think, quite fast over the last 3 years. When we started the quarter, we just had a lot of cash and all of that cash was lying, earning us pretty low rates in reverse repo and all that. We actually took a call that even if some deposit comes off as a result of this rate cut, it's probably a good thing in the short run because we wanted, not short run, but we wanted some amount of deposits to flow out because that kind of excess liquidity was bothering us. We planned it well, and this was very much factored for. Our belief is that, factor for me, it's not come down by the way, it's still grown from INR 45,000 crore to INR 46,000 crore. It's still up, but marginally up. Yes. Going forward, the short point is it doesn't bother us because it was planned. Going forward, we feel this will start growing again. Maybe in the next quarter again, we don't need very much because we still have just too much cash, which is deployed at very low rates. Therefore, even if it grows marginally in the quarters, i.e., July, August, September, we're quite happy with that. After that, this machine will grow again, there's no doubt. It'll grow enough to feed our asset needs. Your growth aspirations. Yeah. Thanks for that. If I could squeeze in a third question on costs and your cost. I don't know how you look at costs, whether it's cost income, cost to assets or just simple of OpEx growth. I know you're investing in technology in a very big way. If you can give some color as to both, in FY22 and 2-3 years out, how your costs will shape up, because that said, if your cost income is much higher than your peers, which is in part an opportunity as well, it will be useful to understand how you think about it both in the short and the medium term. Cost is important. The way we think about it is the cost income ratio, actually, to give you a simple answer. Yes. As far as our cost is concerned, it is basically, as you can well imagine, our bank started just maybe five years ago and it's been just two years since the merger. If you start with a INR 5,000 crore CASA and you're staring at a liability base you earlier, like INR 150,000 odd crores. If you're the CEO of a bank, I don't know what you'll do. You'll really run for the door and just quickly get the money in. Yes. Our strategy is very simple. At that point of time, we said, expense or no expense, just go and put the branches here and now, get the money in and retire the bulk deposits, like here and now. This was the broad thinking. In the first 2 years, we went and put out our 350 odd branches. Something like that. 350 odd branches, and they're all costing us money. Of course, we are also investing in technology, it costs us money. Any new startup bank, I'd imagine, starts first with expenses and income comes in due course. Actually, let me say any business for that matter. Our expenses are kind of front-loaded because we had to put up the branches and all that. In due course, as the branches will become profitable, this cost to income will start looking better. That's why when we gave a 5-year plan, we said we'll bring it down to 55%. I think it'll happen. A quick clarification as to your cost structures, because your loan book is also high-yielding, I have found that some of this, that also becomes a high variable cost business. When your growth is very high, you see a slight pressure on your cost. When your growth slows down, you get some benefit. Has that also played out? In your context, your branch costs are so high that that really doesn't matter? You're bang on. It's absolutely plays out because imagine you're doing a business like, say, two-wheeler financing. These are all very expensive businesses because you got the salesperson out there, you pay some commission to the dealer. These all come with their own variable expenses as well. You're right, it's both. It's not only branches. Even the way our lending side has grown, you might have seen the numbers. At merger, we were just INR 36,000 crore of loan book, today, we are INR 73,000 crore. Imagine in terms of disbursements, probably it's doubled since the time we merged. All that, you pay the DSA, you pay the market, you have more variable cost and all that stuff. The point is that, you have the variable cost of even running a or growing a lending business, it happens. It's also cost of branches. All that is bunched together when it comes right now the last 2 years. The fact is that as we look ahead, let me say 1 year, 2 year, 3 year from now, the same cost structure tends to get leveraged on a much larger base. Let me make an example. If there's a branch that we set up and today the running cost of the branch is, let me make it up, say INR 3 crores a year. Suppose the deposit with the branch is, say, INR 50 crores. Your OpEx is INR 3 crores and INR 50 crores. Tomorrow, the same INR 50 crores become INR 200 crores because just the passage of time and more customers come and all. It's a deposit. Your cost doesn't go from 3 to 3. Maybe marginally more. That's how the operating expenses play out. The last thing why our cost income ratio will come down, actually second last, is that, let me say that suppose this is the head office where I am right now sitting and talking to you. The cost is a cost is a cost. Whether the balance sheet was INR 1 lakh crore or INR 2 lakh crore or INR 3 lakh crore, the cost is the same cost. There are certain fixed costs that gets leveraged over a much larger book, so you'll see the percentage growing. I call this second last because the last item is still on digitization because we are doing our significant efforts on digitizing the bank and removing all the useless processes that come with making things straight-through journeys, doing imaging and doing all that stuff, so which helps cut costs as well. Thank you. Mr. Sen, may we request that you return to the question queue for follow-up questions. The next question is from the line of Anand Bhavnani from White Oak Capital. Please go ahead. Thank you for the opportunity. Sir, just first to confirm the number, if I heard it well. Of the CASA, 6,000 is CA, and then 40,000 would be SA. Is that what I heard? Other way around. Yeah. Okay, fine. INR 40,000 is TA and INR 6,000 is CA. Fine. Sir, in terms of capital adequacy, you mentioned in opening remarks you may keep it above 13%. You are currently 16%. It seems like mathematically you would need to raise money. Any guidance, like I presume by the end of the financial year, you would be in the market. Is that the right expectation? No. Maybe 18 to 24 months, maybe 18 months. It doesn't look like we'll have that much need for capital that soon, because we have still a lot of headroom to raise Tier 2 if we really wanted to. I can't say wanted to, because we've got to watch out the price and all that, but we can. Also there is headroom yet. Sure. Sir, in terms of retailizing the book, given the experience during the two waves of COVID, how do you see the relative proportion of different segments, the JLG, vehicle finance, home loans? Going forward, how would you want this breakup to trend? If you can give us some sense, maybe two, three years out, how would you want these sub-segments of retail to be in various proportions? The way we think about it is that there are a certain set of businesses where we have very natural advantages and a good 10-year track record and scale and all that. Let me say, our natural capabilities. Those businesses are, let me say, two-wheeler finance, consumer durable financing, let me say loan against property, even affordable home loan, business loans, and so on and so forth. These kind of businesses, it's a pattern of 10 years have gone by by our side. We know that if you do the business, at least at our kind of underwriting we were doing in Capital First, we knew that it was predictably giving us 2.75% as a credit loss, give or take a little bit here and there. Because you play in those waters, you have those kind of losses. It just goes as part of that trade. You had the yields to support it, and as long as this 2.75 was a stable number, we were always happy. You lend at 16, you have OpEx of say 6%, you have credit loss of say 2.7% or 3%, and you have ROA of 3-odd%, and you multiply by 7 times and you make 18 ROE. That is how that game played. Of course, you have to add fees. You have to add that. Now, as we become a bank, what we have started doing is there's a subtle change in our strategy. The core model and the intellectual property we built on those businesses, that continues. We developed it 10 years, we're not going to let go just because we became a bank. What we have started doing is that we have started playing more in the safer segments, like the traditionally safer segment, like the prime home loans. In the prime home loans, for example, now because our cost of funds has come down so much, we are also right out there in the prime home loan market lending at 6.9%. In this segment, they don't give much yield, but they don't have much credit loss at all. In fact, I'd say that hardly anything at all. Therefore, the blend of this book, which was giving 2.75% credit loss in Capital First, more because of the fact that we are more price competitive, we are playing the safer part of the respective businesses we do, our blended credit loss should now come down to 2%. I hope that explained to you why we believe 2% will come down to 2%. It is not just a number we are giving as a guidance without thinking through. We thought it through. We've done our mathematics. We've done our analytics. We've done our flow analysis. We've seen our check bounce data. We've seen our vintage analysis. We have enough data points to quadrangulate and come to the conclusion that we are comfortably headed to below 2% in credit loss. In fact, below, I should say. Okay. Sir, is the implicit then assumption here is that we will no longer ever be going back to the CASA rates, saving rates that we earn from here on? Like that's history. Our saving rates will incrementally either be at zero or they will, in terms of the desire to garner CA is now no longer at the cost of the rates, right? See, I don't think any leader will ever try to box themselves in a position that they will never do this or never do that. We'll always play to the occasion. Playing on the merit of the ball, we play our shots. The direction, if you ask me, which is the way I'd like to take the bank to, yeah, the chances are that we'll not like to go there. Sure, sir. Thank you. I'll I'll come back in a few. Thank you. The next question is from the line of Rohit Jain from Tara Capital Partners. Please go ahead. Yeah, hi. Thanks for taking my questions again. Just wanted to get back to the write-off discussion that we had earlier in the call. I understand you said that you're confident that you'll recover the money eventually, and at the same time, you said that the write-offs happen in a formulaic manner when, let's say, somebody's 240 or 300 days past due. My question is that, the COVID second wave may be impacted someone for 60 days, but a customer who had already been delinquent for about 200 days, what difference does it make? The fact that you have taken a write-off, it's not something that automatically we can assume that it will come back because the customer was, even if we leave aside COVID wave two, anyway he was delinquent for about 200 days, which is a long period of time. Absolutely. No doubt. We're not saying every customer is going to pay you back, but we are talking of a timing issue. Customers who were always traditionally good customers for 3 years or 2 years have been paying you, suddenly, just because of COVID, they moved to bucket 30-60 or 60-90 or 90-120, they'll pay. A customer who's already sitting on maybe 180 DPD and moved now to 110, well, there's a pretty low chance that customer will pay. No, no. Let me clarify. I was not talking about the other GNP. I was talking about the discussion on the write-offs, and the customers who are getting written off are not sitting in the 30, 60, 90 days past due bucket. They are, as you said, sitting in the 200, 240 days past due bucket. I am specifically talking about that write-off of INR 1,500 odd crore that you have taken. From where I see it, the chances of recovering anything from them should be absolutely remote because they were, even before the COVID times, completely, let's say, their track record was not satisfactory at all. No, it's a good question. The thing is that First of all, our write-off policy is more conservative. If you see a provisioning ratio, it's 50%. It's not today. If you go back in time, like any time for 10 years, there's some disclaimer in somebody's line that non-starters can go on 0 DPD. If you think of our provisioning ratios have always been 50%, 55% because of gross is always 2 and net was always 1. Now, what does that mean? Basically, it means that our write-off policy has been conservative for extended periods of time, and the earnings in the business are strong enough to make a neat return on equity. That's a broad thinking. Now, here also, for right now, both our provisioning policy as well as write-off policy is quite conservative. It's not that these customers are all sitting at 1 to 360 DPD or 400 DPD. Many of these customers are even earlier buckets. Second thing is that when we talk of charge-off, I want to simplify it for you. If you think of when I say that we expect 2.5% of the average book to be charged off to the P&L. What does it mean? It means that that portion of the portfolio has slipped to 90+ or 120+ or 150. It slipped into those respective buckets, and we have taken provisions of that amount. It's the provisions effectively that hits the P&L. Our provisions, let me just say, start very early. No, I understand. Therefore, to correlate the whole thing, the write-off is not correct. Think correlate it to provision. The provision starts early. Our own experience is, by the way, not just in COVID. We believe COVID money that we're providing today, a good portion of it will come back. I can't say good portion, to be fair to my responsibilities. I would like to edit it to say that a reasonable proportion. Let me just step back from COVID. Even before COVID, continuously what we charge off, a portion of that keeps coming back. Our experience has been typically about 1%-1.5% of the written-off pool keeps coming back every month, even in normal days. No. Mr. Vedanathan, what I wanted to ask is, this quarter, the credit cost was INR 1,800, and when you say that for the overall year, it's going to be around INR 2,900 odd crores. Now, surely that does not include write-offs because if you include write-offs, that would itself become INR 3,200. No. don't form part of the Include write-off. No, I am not getting it. The provision of INR 1,800 that we have, it includes INR 1,400 write-offs. The net incremental provision except for the accounts written off is only INR 400 crores in this quarter. Yes. Rohit, I will answer that. A write-off is generally followed by a provisioning first, right? When there is a 100% provisioning done on an account, then it goes into a write-off mode after certain specified days, right? When you write off an account, it gets charged to P&L. At the same time, your provision gets released because there is no incremental impact in the subsequent quarter. No, I- Rohit, I think we're really confusing a lot of 200 odd people on a simple, very simple concept. No, it's enough. You can check, but I'll just keep it simple because I don't want to confuse everybody at the same time. Let me just give you a simple answer. When a customer goes to, say, 90 DPD, and supposing the provisioning policy of that customer base is, say, 25%. That 25% at that DPD is taken to the provisioning line. Similarly, when the same customer goes to, say, 120 or 190 or 150 or 180, there is a certain provisioning policy. We take it to the P&L. That's a formula, end of matter. That is what hits the P&L. Out of that money, subsequent to it being provided, maybe a few months from then, it comes for write-off. Write-off comes from the provisioning pool. Don't double count it and I fear it'll confuse everybody. Just leave it at that. If you have any specific doubt, you can check, but I have explained to the best I could in a quickest sort of way. No sir, I'll take it offline. Yeah. Yeah. Think of it like a provision divided by average book is what we call, in a simple sort of way I can say, is the provision divided by average book is what is a credit loss. Think of it like that. Provision credit loss. Yeah, provision credit loss. If I can just make a last point, as you said, sir, the written off is only on accounts that are 100% provided, which means that the INR 1,800 incremental that we are providing. Rohit, can we spare everybody's life on this one technical item? Hard to solve it on a call. Last question is a strategic question more on the strategy of growing in retail. What I wanted to understand is a lot of banks are incrementally focusing on retail. We have a lot of fintechs who are targeting spaces which were earlier targeted by NBFCs, and a lot of NBFCs themselves are trying to become fintech. In the backdrop of all this, I just want to understand what is the consumer base that still remains attractive? How far do you think we have headroom to grow our retail book in a manner which is going to keep our yields where they are? Just wanted to understand, strategically, where do you see retail heading given the, let's say, a lot of fintech and also the fact that some of these bigger banks are now focusing on the retail segment. See, first of all, we are also a reasonably digital company. We work at it. Secondly, let me just say that the businesses we're building are, I can go on and on beyond my life and your life, it's never going to end. This is as of now, for us, the feeling is that for us to grow at 25% year on year on year on year, like for long time, it's not a problem at all. Basically, there are two big games being played out in India. One is the extent of formalization of the economy is happening. People who are not borrowing from the formal market are now coming to the formal market and they're taking from the market. Secondly, a set of people who don't take credit at all are also coming and taking credit because of they're coming of age or they're coming with a working pool or whatever. This game is not going to stop. At least for our bank, I can put that to rest. I think we can grow at 25% really for a long time. You think of a really good bank like an ICICI Bank or an HDFC Bank or think of any other good bank in India and look at them. They are like INR 5 lakh crores is ICICI Bank's retail book or little more than that and it's still growing at 20%. You look at SBI is maybe INR 30 lakh crore, still growing. We are only, by any standard, INR 70,000 crores is nothing. Just the start of the game. Fair enough. This growth, I'm assuming, is purely, let's say, driven by your own gains, and not so dependent on GDP growth? Is there also an element of 25% being contingent on growth being around, let's say, 7% or something like that? It depends on how big you are. If you are really India's largest bank with that sort of a market share of having that size of a book, then you'll say, "Look, I depend on economy." When you're coming on a really small book, I call 70,000 really small, by the way. It's nothing. When you're coming off this book, for you to grow at 25%, 30% is nothing. You see the large NBFC in India, which is probably INR 1.5 lakh crore, they're also growing. It depends on the size. We are still very small. For us, growth is not the issue. Our bigger thing to watch out for is to make sure that our credit quality is consistent. We've had a long track record of having very stable asset quality of gross NPA of 2 and net NPA of 1. It's like 10 years. It is our response. Our wish is to hold it at, again, back except when the COVID wave goes through, to bring it back to 2 and 1 and sustain it back for like ever and ever. That would be a wish. Credit quality is a criteria to watch out for. The second thing for us to watch out for in this game is to keep our unit operating cost economics in a way that it consistently generates return on equity of, let me say, high teens, like 18, 20-ish. Actually from the retail side and lending side. Those kind of things and of course, those kind of things. Really, growth is not the issue for us. Fair enough. Thanks a lot. Appreciate it. Thank you. The next question is from the line of Anand Dama from Emkay Global. Please go ahead. Yes, sir. Thank you for the opportunity. Sir, on your retail portfolio, when we really look at our retail portfolio at this point of time seems to be little on a higher risk side as well as for it is giving us good margins as well. I understand that basically we are getting some benefit on the cost of fund side. How do you see the portfolio mix changing going forward in terms of products? Going forward, we have already launched cards, and we are also doing PL, but not in a big way as such at this point of time. How will this very portfolio product mix will look like over next 2-3 years? If you can just talk about that will be great. Particularly now that we have the experience of COVID as well. The way we think about it that our big growth area will definitely be home loans. Home loans, even before we were a bank, we were very good at affordable housing at pretty low NPA. Even just because affordable doesn't mean it's high NPA and all that. It's not true. We had pretty low NPA, low gross, low net, not much credit loss, et cetera. Affordable. That was what we were doing. Now the moment we started entering into the prime home loan market, we are finding fantastic response. That made us very happy. Our core home loan will continue to grow. The other businesses, of course, if you ask us to pick which would be the fastest-growing, I'd say, home loan would be the fastest-growing. Second fastest-growing probably will be our SME loans and SME meaning business installment loans, maybe loan against property, these kind of loans. Our rural business is a big growth area. We are, again, I must say, we are really small. We are probably just about 13% of our book, of our INR 95,000 crore book is rural. Imagine the size of rural. Rural is going to be a big area for us. We are short of PSL and we hope to grow rural to meet our PSL requirements. Short of PSL meaning we're buying PSL in the market, we are not self-sufficient. To that extent, we will grow rural. Sorry, that should grow a little bit faster than our rest of the book. Our credit card book, of course, a newly launched book, so it could grow. These are a few businesses that could grow ahead of the rest. Of course, the rest of the business will continue to grow. Sir, will there be any top, yeah. Let us say mix sense will be more home loan and home loan biased, let me say. Will your home loan be somewhere about 30, 40% of the book? Yes, eventually in the long run, definitely. I think we'll become a 40% home loan bank in the long run. That's because home loan has a tendency, let me say, mortgages, if you want to be more safer than that. Yeah et cetera put together. Comfortably we'll be 40% and maybe 60% will be others. I think the key thing or dynamic about mortgage is that it tends to stay on your books for long because a long time loan and others have a pretty short run-off. You got to work harder and harder to grow the other books, and mortgage tends to just grow linearly. Yeah, sure. In that case, basically there will be a trade-off in terms of margins because now we have the peak margin that we are seeing at this point of time. Where do you think these margins will actually settle in next two to three years? It's a trade-off both sides, actually. Definitely you're right. In a margin sense, it's a trade-off where you have a lesser margin in home, but also have operating cost. You see the other business that we run, that is two-wheelers and consumer durables and credit cards and all the other business, they tend to, of course, give you a good yield, but the operating cost of the business is pretty high, 6%-8%, depending on business we're in. Home loan OpEx could be very low. Look at HDFC's home loan book when it fully evolved. Cost income of 17%. Can you beat that? You have a benefit, of course, in terms of a negative trade-off as far as yield is concerned, but there's a positive trade-off in OpEx to average book. Okay, sure. Yeah. Sir, secondly, in terms of your retail portfolio, you do give basically the new-to-bank customers and those kind of data. Is it possible for you to give more qualitative and granular details in terms of your retail customers? Be it customer scores as such. Because I think all of us, basically, we have concern about the portfolio that we bring on our books, particularly on the retail front, and we are seeing higher write-offs coming through. If you can give some comfort in terms of the customers that we have at this point of time, what kind of portfolio that we have actually built over the past 2-3 years, how it is going to really look like going forward? That will be very helpful. Okay. If that's helpful, I'll give a ready-made answer because the slide is in front of me. Let me just put it like that. Let me take you directionally where we are headed. Think Capital First is born, let me say in 2010 or 2012, and think that the borrowing cost is 14%. What do you do to lend, to make a living? What do you do? You lend at 24. You lend, yeah. You lend at 24. Who's borrow 24 from you? Yeah, certainly the risky customer. Exactly. At that point of time, when we started the business, at that point of time, in fact, remember, we're starting from an INR 94 crore book. Obviously we were lending to everybody. Almost everybody we were lending to were probably people who did not have any bureau score. That's where we learned our trade, let me say, by playing in those waters. Now, as the cost of funds kept coming down to 12, 11, and so on, we started the ability to play in the safer segment. I mean, safer compared to, everything is a relative, safer compared to what it was in 2010, 2011, 2012, 2013. Then we started lending about 25% of our book was new to credit. That is around 2017, 2018 or so. Approximately, maybe a year here or there. In January to June 2019, 17% of our book was new to credit. In June to December 2019, 16% of our customers are new to book. In January 2021 to June 2021, 10% of our customers is new to credit. If you see the end line, you can clearly see that as our cost of funds is getting better and we can be more competitive, we're taking lesser of new-to-credit customers. Anyway, as a bank, I'd say that it's expected of us to be a little more, banking license is a sacred thing, and it feels more comfortable moving to safer and safer credits. Directionally, you could see where the number has headed from the 20s to the 10. The second thing, if that helps you color in that, is the number of customers whose bureau score is greater than 700. Even as recently as Jan 2019 to June 2019, 61% of our customers had a bureau score of greater than 700, and 39% had a bureau score of less than 700. By the way, even that is a good portfolio priced for itself. It's not that it's bad portfolio, it's just that the economics, I described to you how it worked. When we're talking Jan to June 2021, as in the latest six months that have gone by, 83% of our customers is now greater than 700 score. This is, I'm talking all urban, by the way. 61 to 83 in two years. You can see that we are moving, as our cost of funds getting better, we are moving to safer credit. That doesn't mean our economics of ROE goes away. It's just that our cost of funds come down, yield is lower, credit cost is lesser. It's just the way it is. I hope that gave you a color about what we're doing. Certainly. Basically, if these customers who are there even existing to credit, if they are lending somewhere around 90% to credit. If these customers are of a weak profile, then certainly the tendency of them to turn into defaulters is very high. If you can put out some data in presentation and which can be tracked, I think, over a period of time, that will be very helpful, I believe. No, it's already there by the way, in page number 12, we already described the numbers what I've told you right now. It's already there. In terms of scores, if you can. The way you basically put out the scores for 700 above and that kind of data can be captured as well. No, I'm saying it's there. If you see page 12, you'll find it. The 60%-83% customers having score greater than 700 is there in the data. I will present the data going forward also. The short point is that as the years are rolling by, we are of course, becoming a little more, if you were to put it so, if that's an appropriate word, we're getting a little more conservative. I'd say it's a good thing for the bank in the longer run. That doesn't mean we want to let go of our capabilities built over 10 years, but we want to do it in moderation. Sure. Sir, lastly, if you can help us in terms of, we had this recent peaks where the holdco and the subsidiary can be merged. Any update on that front, how are you going to take it forward? Basically, if your question is, are we with regard to the holdco and the RBI- Yeah trying to come out, and if that's the question, there's absolutely no discussion at this point of time. Even at the holdco level? No. Okay. Sure, sir. Thanks a lot. Thank you. Ladies and gentlemen, due to time constraint, we will take that as the last question. I would now like to hand the conference over to Mr. Kunal Shah for closing comments. Thanks, Mr. V. Vaidyanathan and the entire senior management team of IDFC FIRST Bank for such a comprehensive and exhaustive explanation to all the questions on results as well as strategy. Thanks all the participants for being there on the call. Thank you, everyone. It was nice speaking to all of you. Thanks, sir. Thank you, everyone. Have a good weekend. Yeah, thanks. Have a nice weekend. Yeah. Thank you. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.