Ladies and gentlemen, good day, and welcome to this Q3 FY 2022 earnings conference call of IDFC FIRST Bank hosted by ICICI Securities. 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. With that, this conference is in progress. I would now like to hand the conference over to Mr. Kunal Shah from ICICI Securities. Thank you and over to you, Mr. Shah. Thank you, good evening everyone present on the call. Today we have with us Mr. V. Vaidyanathan, Managing Director and CEO, Mr. Sudhanshu Jain, CFO and Head Corporate Center, and Mr. Saptarshi Bapari, Head Investor Relations from IDFC FIRST Bank to discuss their Q3 and nine months FY 2022 earnings. Congratulations for good set of numbers and over to you, sir. Thank you, good evening, everyone. It's really a good pleasure to talk to all of you this evening. I'd like to just say that we had a good quarter and we thank all of you for your goodwill. I'd like to just take you, give you a quick brief about how the last few years have been and then I'll come to the particular quarter. Now, it's been exactly three years since the merger, so three years is a good round number. I thought I'll just tell you quickly three years how much distance we've covered. We've tripled the number of bank branches from 206 to 599. We've grown the ATMs to 6x or little more than 6x from 112 to 727. The CASA as such has grown from only INR 5,274 crore at the time of merger to INR 47,000 crore. That's a growth of INR 42,000 crore in three years. I think by any standard that's a good number. The CASA ratio increased to 51.6%. We dropped rates a few quarters ago and, you know, still stable at 50% plus, so that gives us a lot of confidence. You know, the core deposits, what we call the core, CASA, retail CASA and retail term deposit, that's grown by INR 54,000 crore in three years. The short point out of these five data points to you is that, I think now it is beyond doubt that our bank is able to raise very significant amount of retail deposits from the market, from the public and that comes from a good product, good pricing, good brand, very customer first philosophy, very service-centric philosophy and so on. I think these, all of these factors have played a big role and therefore now we feel very confident that really if the bank starts growing again at 20%-25% per annum from here on, which we believe we will, the kind of deposits we will need will be about INR 20,000-25,000 crores a year. But since we've done that, we just feel that we're able to do that comfortably now. Now the second part of the work we've done over the last two, three years is that we have substantially brought down you know the infrastructure loan. Infrastructure loans has come down from INR 22,000 crore at the time of merger to just about INR 8,000 crore now. I think that's a big drop. I'll later in the conversation try to give you a break-up of this INR 8,000 crore also. We brought down certificate of deposit from INR 22,000 crore to INR 7,000 crore, that's also very comfortable now. All kind of you know issues with you know the top ten borrowers you know concentration was 12.8%, it's only 4.3% now. Basically again, we worked on, you know, de-risking the balance sheet both on the liability and asset side, and I think we've done that. Now, coming to this particular quarter, let me just say that our wholesale funded assets, basically wholesale loans, the funded side, grew sequentially from INR 20,822 crores last quarter to INR 21,641 crores. Let me just say it's a sequential growth in wholesale loans. We always maintain that, you know, while retail is our big mainstay, wholesale too is important to us and if we find good quality credit we will do it. I'm happy to say that, you know, it's been three years since the merger, the quality under wholesale loans is simply excellent. We haven't had any significant, even a single account to talk about which is of any significance. Including non-funded assets, our wholesale loans is now INR 44,000 crore. Now, another data point is that, during the last one year, A and above rated exposure on that side has now grown from 74%-79%, so broadly that story on the wholesale side is fine. Now, we would like to give you a bit of a break-up as of this quarter end about of the total funded and non-funded assets, basically of the total funded assets, what is the composition of the book. If you go to composition, basically home loan is 10%, low-risk property is 14%, wheels is 8%, consumer loan is 13%, rural finance is 10%, commercial finance, basically business loans, small business working capital, business installment loans, this kind of stuff, that's 9%, and corporate and other loans is about 23%. You can see that, you know, we are now diversified over 10-11 businesses. No single line of business is more than 15%, so it's rather diversified. Even the only thing, the one that's greater than 15% is corporate, but like I said, we are now feeling broadly comfortable on an incremental basis. The unsecured are 7%. Now, next is about the disbursal. On disbursal, basically a simple reminder is that disbursal is back to pre-COVID levels and we don't worry about that anymore. Next point is that, you know, of the retail book itself, this time we have segregated between two parts. What we used to call as retail until the last quarter, you know, we tried to do a bit of comparison with the system assets, and we find that a lot of these small entrepreneur loans and business loans and SME loans, usually the banking system calls it commercial finance. We were calling it retail finance and wholesale. We were too blunt about our classification. This time we have further segregated it. We call the retail book as retail book, and then we, the business finance, we now call it commercial finance. The breakup is that now our retail book is INR 75,000 crore growth and the commercial book is INR 10,000 crore growth. Together, you can call it like INR 86,000 crores. Our restructuring as a percentage of the book was 2.6%. Last point is about asset quality, then I'd like to stop, then I'd like to just make it open to questions, and maybe Sudhanshu can say if he maybe has a few inputs to give. Now, back to the numbers on asset quality. Now, as far as we are concerned, you know, we track our book by many criteria. We check what percentage of our checks when we present for clearing return. That's usually a very good indicator because end of the day, later you have to, those customers flow into delinquent buckets if they bounce. That is one indicator we track, how many customers bounce their checks as a percentage. We tracked that over the last 12 months, and we can say that it's almost like back to pre-COVID levels. It used to be at 12% earlier. It's now 12.1. Let me just say it's like just almost fractionally. It's almost as good as before. Number two, we check of the loans booked the previous month, in the subsequent month, what percentage of customers return their checks. Basically, it gives us an instant sense about how the quality of the incremental booking is as compared to what it was say 12 months ago or 18 months ago. That number is literally at an all-time low, and we feel very, very good about that. It's like 8% something. Now, that is really good by any standards and going by any historical benchmarks we had. Number three, when we say that of the customers who return their checks, the third analysis we do is about how many of them, what is the collection percentage on those customers? Even those collection percentages, we track it by, you know, bucket X, bucket one, bucket two, bucket three. Every bucket we track. In every single bucket, we find that the recoveries are actually kind of exceeded what it was pre-COVID. You can take that as a good data point and a good trend. The fourth thing we then check is, of the customers who go into delinquent buckets, what is the recovery you get? I mean, assuming you've taken a provision against the customer base, but what about provision doesn't mean the customer doesn't owe us the money. You know, the customer still owes us the money. On that is what we call recovery. We don't call it collection. We call it recovery. Again, that's the fourth data point we track and you know, numbers are looking pretty good. The fifth thing we track is vintage analysis as to how is our portfolio booked 6 months ago behaving vis-à-vis what is booked 12 months ago vis-à-vis 18 months ago versus 24 months ago and so on. Again, that data point. You know, we have done enough analysis on our portfolio and we've studied day in, day out, and now we feel very confident to start guiding the credit loss numbers for the next year as well, assuming of course there is no fourth wave and you know, there's no crazy things happening. All that is assumed. Now, assuming that things are going on as things are going on right now, we believe that next year we can now start guiding for credit loss of just 1.5%. That's a huge statement from our point of view because we feel that we've never had it this low before. I want to just take you back a little in time that you know, when we used to do business in Capital First, our credit loss used to be more like about 2.6%-2.7% on a yield of about say 16.5, 16.6% or a little more than that. For this year, that is in 2021-2022, we had guided for credit loss of 2.5%, which I'd say it will be pretty good considering that the wave two happened this particular year. Let me say we're broadly trending on that track. You know what was 2.5, we then guided for 2% thinking that we'll definitely achieve it, but now feeling a little more confident to guide for 1.5%. All in all, we're feeling pretty good about our asset quality. The other good thing from our point of view is that the wholesale book, you know, we've had all of you have been quite concerned about our wholesale book issues and, you know, what we call legacy or whatever. Those accounts, we've had a few infrastructure accounts, some road accounts, some toll road accounts, you know, the Dewan Housing, the Reliance Capital. We've had many of these issues. I'm happy to say that we now feel that most of those accounts are behind us. Maybe, and one or two accounts may be there, but they're not going to materially move the bank's P&L in any subsequent quarters, that we ever have to call out and say, "Oh my God, this account has happened. I was gonna post a loss." You won't hear those statements from us again. The other significant event that has happened in our lives is that the core, let me say the core operating profit, what I mean core I mean net of not having any treasury or one-time kind of incomes, like core NII plus the core fees minus core OpEx. Now, that number for the bank was literally at the time of merger used to be like INR 285 odd crore. Pre-merger was maybe 90 or 190 odd crore for the half year. That number, what was INR 289 crore is now, you know, INR 650 crore +. Therefore, we are pretty confident that, even though the balance sheet just grew by 17% since the merger, the operating profit has grown by 100%. Now if book growth 17%, profit growth 100%, you know that the incremental income dynamics are really very powerful. That frankly, I'm not surprised because we know that if you do a business at 5.8, 5.9% NIM, you know, value has to get created. It all comes back to credit loss. We feel this. Comment on credit loss. Once NIMs are strong, trade-off is good. We just believe that profit's only around the corner, it has to rise. Personally, of course, I've seen this cycle before. You know, it starts with a loss and it comes to breakeven, and then it starts getting the profit. We've also come through that two, three stages in this bank for the last three years, but I'm feeling reasonably good about the whole thing. The last thing is about what happened on the telecom account. In this year, in this quarter, we had a INR 2,000 crore funded exposure, as all of you know. That money has come back this quarter. We had decided to take an additional exposure of roughly INR 500 crore from them. It is part of an overall request made by the company, and it felt probably comfortable considering that they were coming back and government was increasing equity and promoters increasing equity and all that stuff. That's about what we have to give as the opening talk, and I just hope that helps. Thank you very much, friends, and thanks for being here today with us, and thanks for showing interest in our organization. You've been patient with us for many years, like two, three years now. We thank you for that, and I think it's time, it's our time to pay back. Thank you. Thank you very much. Ladies and gentlemen, we will now begin the question-answer session. Anyone who wishes to ask a question may press star and one on your telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hand raise while asking a question. Ladies and gentlemen, we will wait for a moment while the questions be assembled. We take the first question from the line of Kunal Shah from ICICI Securities. Please go ahead. Yeah, sir, just to take it forward. Anything in terms of the cost to income, because across the board for all the private banks, we have seen a significant rise coming in terms of the OpEx, both on quarter-on-quarter as well as year-on-year. Particularly it's more related to customer acquisition, the retail assets, you know, rollout investments in digital and all. We are also focusing on all these aspects. Finally, in terms of cost to income, how should we say and what would be the guidance out there? It should come down. You know, as you know, we had start-up costs for these branches in ATMs in aggregate. After all, we had to raise that kind of liabilities quickly, so we had to go through the cost structure. Then even our asset products are relatively higher cost of products. Not the recent ones that we started, home loans, et cetera, but the other businesses of ours were relatively high cost. Yeah, our cost structure is pretty high. But I think that the cost to income from now on should begin to come down for us. Sure. Secondly, in terms of how has been the slippage run rate overall? We had seen a decline, but both in terms of the retail in particular, corporate, I think there is one account, but otherwise on retail, how has been the run rate and how would you guide for that, yeah? Maybe I'll take that. We have seen an overall net slippage coming down by 25% as compared to the previous quarter. On the retail front and on the overall, as we mentioned, that there was a total account which slipped into NPA during the current quarter. That was already part of the identified stress asset pool. Hence, if we exclude that, the slippage has come off by 25%. Okay. Thank you. Thank you. The next question is from the line of Mahrukh Adajania. Before you come in, Mahrukh, you know, I'd like to give a little more color on the slippage. You know, the key point towards slippage is what happens in SMA. On the SMA front, we find that, you know, SMA as a percentage of the previous quarter as a percentage of the book, in our core retail book, in our commercial book, in our wholesale book, we find in all three of them it has come down to less than pre-COVID levels. That gives us some indication that future slippage should be lesser. In the rural book, of course, it increased compared to pre-COVID, but that's because of the ALM book and that has to play itself out. Yeah, hi. Sorry, just a clarification from your opening remarks. Now the funded exposure to the telecom company would be INR 500 crores. Is that correct? Correct. Okay. The non-funded would be? Twelve forty-four. Okay. What is the proportion of external benchmark rate linked loans? External benchmark linked loans. We don't have that number specifically, which we have called out to the market. On the corporate front, we have been pricing loans which are linked to MCLR as well as external benchmark linked rates. On the retail front, again, we have been pricing it based on repo rate as per the regulatory guidelines. Okay. Okay. Thanks a lot. Thank you. Thanks, Mahrukh Adajania. Thank you. The next question is from the line of Ishan Agarwal from Erevna Capital. Please go ahead. Hello. Thank you for the opportunity. First of all, many congratulations for such a superlative performance on all fronts, and also on the large telecom account ambiguity being resolved. The questions for the quarter are, firstly, if I see the NII for this quarter, just wanted to clarify that, does this interest income include the interest income for this telecom account for the prior periods or, this is the core, net interest income? Yeah, maybe I'll answer that. Sudhanshu here. So the interest income for that quarter includes income on the telecom account for the prior period, and that is what we have also specifically called out when we, you see, our NIM disclosure that the normalized NIM for the quarter is 5.90%. What would be the quantum of the prior period income that has been added in the NIM for the NII? It would be about INR 100 crore. Let me clarify that even in the previous year in the same quarter, we had received interest on this telecom account on a cash basis and we were accounting it on realization. It's sort of a comparable from an NII point of view on a year-on-year basis. No, actually, I was making a comparison on a quarter-on-quarter basis because on a quarter-on-quarter basis, I have seen a substantial jump in your NII. That's not comparable. That's why we are calling it out also. If you notice that we are calling out our NIM. If you go technically, if you compute the NII and divide by the average book, you'll find it 6.18%. Right. We are calling it as only a 5.9, if you notice. Right. We are never claiming our NIM for the quarter 6.18%. We are claiming it 5%. Right. Yes. Because we are subtracting what does not belong to this quarter, it's a prior period number. We subtract it because we don't want it to color the expectations of people, nor do we want it to show up as a NIM of this quarter. Right. Increase on a sequential basis is 14 basis points, if we exclude that income. Right. Secondly, when you guide for a credit cost of 1.5% for the total average asset book for FY 2023- Yeah. Will it be fair on my side to assume that the retail credit cost would be 1.8%-1.85% and the blended retail plus wholesale would be 1.5%? Could be. Hopefully less. Okay. Okay, great. Thirdly, if I look at the RBI data on debit cards and credit cards, our debit cards issued are up 9.22%, in Q3 as compared to Q2, which is the highest increase for any universal bank in the country. However, the SA value growth doesn't reflect that. Is it right to infer that average SA ticket size is becoming smaller and hence more granular, and once this transition of outflow of large ticket size SA is done with, SA growth will again reflect the volume growth? That would be correct. Okay, great. This point has been verified. Okay. And what was our blended retail yield for this quarter? You mean from incremental booking or the stock or? For the retail book for this particular quarter. We don't have the number offhand, but you can probably guess it about 15%. We have not been calling out that number, but you can assume that incremental yield is about 14.5%-15% on the retail. 14.5%-15%. That I would, can I assume that that number would be slightly lower for 2023, 2024 because our focus is now on home loans? Yeah, I mean, that's factored already, no, because we're already doing good home loans. Right. Right. You mean the prime home loans. We're already doing home loans. Right. Right. We're doing more of the prime home loans now. Yeah, it does bring down yield, but, you know, we also have other portfolio which is giving us a good yield. There we have a specialization in, say, 10 years, so they all mix up. You know, just to be safe, you can go to even 14.5%, but I think it leaves a pretty good margin considering our cost of funds. Um- Again, the interest rates are expected to go up in the system in general, right? I'm thinking next year it could be that the interest rates go up, right, and both the assets and liabilities sort of get reset. Right. It's sort of difficult to comment per se in terms of where these yields will sort of move on. This range could be somewhat, I would say, range bound. It could be range bound around 14%-15%. Even if it came down by a few basis points, frankly, it doesn't trouble us too much because of the fact that home loans is a good asset to have, and also because of the fact that the margin are still pretty strong. Okay. Regarding the non-funded exposure to the telecom account, when does that bank guarantee get released? Is there a date for that bank guarantee to be released? We hear from the market and from media and from whatever we hear from the company also that that should come up for release. We are hopeful. Okay. Lastly, is the management confident of crossing the 6% mark on NIMs sooner? I mean, it should inch up even from here, from these numbers. It should inch up, yes. Okay. Thank you. Congratulations once again. As you know, between 5.9 and six, it doesn't take too much to get there. Okay. Thank you. Thank you. Thank you. Thank you very much for this call. Yeah. The next question is from the line of Pranav Agarwal from Edelweiss. Please go ahead. Yeah. Hi, sir. Just a couple of data points to start with. What would be your gross slippage number recovery and write-off, for this quarter and subsequently last quarter as well? That's what I thought Sudhanshu was calling out. I had mentioned that the net slippage was about- No, I needed gross number. That's why you mentioned about net slippage, which will have recovery and write-offs in place as well. I just wanted a gross slippage for the quarter. Okay. The gross slippage includes that one sole account which sort of came in during the quarter, which was about INR 248 crores. Excluding that, the gross slippage was about 1,200-odd crores. INR 1,200 crores. Any predominant segment from which this because consumer finance is seeing around INR 1,200 odd crores. Any predominant segment that we are seeing this number coming from? No, we find that it is basically JLG that. We have noticed that among all our portfolios, it's almost like I said. I read our numbers to you earlier in the opening remarks, that things are almost heading back to the pre-COVID. I think JLG is the only one that still has, you know, more amount of SME by an order of magnitude. Perfect. Just a second part in terms of telecom clarification there. You said INR 500 crore of fund-based and non-fund-based of around INR 1,234 crore. What is the outstanding provision that we are carrying on that, as of now? On what? On telecom exposure, what is the provision that we are still carrying on? We have no provision. We have released the entire provision. Entire provision is released. Perfect. Yes. Then lastly, on this credit card, so while it's too early to gauge a trend, but what would be your revolver percentage with that? While we are reporting a loss in that particular aspect or in that particular book, is it largely to do with OpEx or anything to read into your credit losses into that segment? No, no, no. It's nothing to do with credit losses. In fact, the credit is doing very well there. Anyway, it's largely to cross-sell to existing customers and all that. It's basically startup costs because a credit card by nature of the business is such that it's got a huge amount of technology expense and system expenses and set up costs for call centers and, you name it's got all those expenses that come with it, reward points and all that. Basically, that's how the credit card business works. At this point of time, this is largely the book is not yet built up to scale, but the OpEx is still there. That's how any business starts, I guess. You know, you start with expense and income comes later. Our book is, I think, about INR 15 million crores now. Yeah. I think once that book scales up, we have no doubt in our mind we'll make lots of profits there. Just to add, sorry. In terms of spends, we are seeing a very healthy increase in spends on credit cards. In fact, this quarter because of also the festive, because it was a festive season, we have seen a very healthy increase and spends were up almost 50% as compared to the previous quarter. Prakar, let me tell you, if you're not using your card, our card, you're missing something. I don't want to know the name of your card you have in your pocket, but chances are that your APR is 22%. Your default charges are probably 48%. Probably you build a few lots of fees here and there, and maybe you're also given a fee waiver subject to spending X or Y. Ours is a very simple, straightforward card. We don't, you know, take money from your pocket this way or that way. It's really people like, if you spend, you get a good amount of reward points. If you go over the limit, we probably call you and tell you, "Don't go over the limit. We'll have to bill you fees." It's a very honest, nice, good quality card you should have in your pocket. Please own one. I'll try that, sir. Just one last clarification. In terms of consumer loans, what all is included in that? INR 16,000 crore of portfolio, what all is included in that? Yeah. I see you evading my question on credit cards and I agree. On the consumer, it is largely personal loans to salaried people, even digital loan, consumer durables, and those kind of products. Perfect. That answers it. I'll try the credit card for sure. Thank you. Thank you for that. Appreciate it. Thank you. The next question is from the line of Vivek Ramakrishnan from DSP Mutual Fund. Please go ahead. Congratulations on excellent performance. Sir, I can already see you're doing cross-sell even during an analyst call, which is brilliant. Sir. Okay. My questions were two. One was on the growth of the liability side. The deposits, if you see quarter-on-quarter, retail deposits were flat. When you say borrowings and legacy borrowings going off, are you going to replace them with CDs? Or how is this traction going to happen, is the first question. The second question was what is this- Hold. Just ask one question at a time. It'll be easy for us. Let me answer that one. Yeah, basically, see, after we dropped the rates, there were a number of customers who had simply more money to us because we're paying 7% or 6%. They just found it an easy way of managing their liquidity and so on. A lot of those customers who were just, you know, you know, let me say some of those customers who withdrew their money, they got easily filled up by the new customers who came in even at the current rates. That phenomenon's been playing out the last two or three quarters. In any case, we never wanted more deposits the last two or three quarters because of the fact that we are already running a Tier 1 of 170%. There was a huge amount of negative drag. The refinance lines are available at cheaper rates, even cheaper than fixed deposit rates. We were happy to manage the liquidity like that. Like I said in the opening remark, if the books start growing, we'll start growing this deposits again. It's not a problem, sir. I told you the numbers earlier. We feel it's a lever we presently take. Okay. Would that be because you've already invested in the branches and you just need to kick in the operating leverage? Would that be a fair thing to say? Absolutely. Because believe me, we have a really good brand. We may not be in the league of those Big Fours, but we are, let me just say, close in terms of respect that the brand enjoys among our customers. Really, I'm not being a double sales pitch only. Vivek, what I'll just tell you that our fee structures are really very fair and, you know, there are lots of fee structures which we are not charging, like, you know, non-home bank charges, IMPS charges, then, you know, it's free. And, you know, SMS banking charges and digital banking charges. You know, there are a lot of things we don't charge. People who bank with us are very few of them leave us. We hope that... Therefore we believe that customers are with us and stay, new customers keep coming in. Yes, it's a large market. That's how you think about it. To say that think about the branch structures where deposits can come the way we want it, no problem. Okay, sir. The second thing was, returns that we made on the JLG book, which you said is still running very high. Have you seen any sequential improvements, in that book, given the fact that, the Omicron wave, lockdown seems to have been, you know, it seems to be slowing down? Yes, yes. Despite Omicron, we've seen month-on-month for the last, I think three months or so, our what we call the SME 0-89 buckets. We are finding that even in the JLG, that number is coming down. We are not like very, very from JLG. We of course, numbers are much higher than the rest of the businesses. Slippage is more than other businesses. All that is true, but we feel it'll be okay. I mean, it's not like a crisis. Thank you very much and good luck, sir. Thank you very much, Vivek. Thank you. The next question is from the line of Subrat from SBI Life Insurance. Please go ahead. Hi, sir. Thanks for taking my question. Hi, Subrat. I know that you don't disclose how much is the triple B or below triple B numbers in the wholesale account. If there is any color on that, it'll help. We can share with you. It's not a big deal. I think people follow the numbers. Maybe if I can just start on that one. On the wholesale, the book, as Mr. V. Vaidyanathan said earlier that the book is very pristine. The new book which is getting sourced and that's also getting reflected in our improvement in the rating mix. On an external rating basis, more than 75% of the book is rated A and above. Actually 79. Actually 79% is rated A and above. Based on internal rating, about 80% of the portfolio is rated A and above if we exclude the infrastructure book. We'll give you one more number since you asked for it. As Subrat was speaking, I got hold of it. A and above is at 79% and triple B and below is 21%, if that helps you. Okay. This includes wholesale and intra both? This is, That's correct. Yeah. Okay. Thanks a lot, sir. Thank you. The next question is from the line of Yogesh Singhvi from Sky Investment. Please go ahead. Good evening, Vaidyanathan sir. Good evening. Hi. Actually, I have no question, just a sincere feedback. Numbers are all good, so there is no question left and already you have answered the question. Sir, actually, I just wanted to give a feedback. Since the very last few quarters, I am seeing that you are publishing numbers on the weekend, sir. Any particular reason about that? Because normally banks or other companies, they declare results in the market hours. Yeah. Think about that. We just felt safer with regards to confidentiality and so on, so forth, saying that, look, you know, these are- Okay. You know, because the market Actually, why I'm saying, sir, because normally bad results are published on the weekend and good results are published in the market hours. That is one thing. Because our results are so good since many quarters, but we are publishing on the weekend. Okay. That is a simple feedback from a shareholder side. Even the two largest private banks have disclosed on weekend only. We will be still taking note of the tradition. We'll think a little deeper about that. Sometimes we feel that it's a little safer in terms of confidentiality because in the last few hours or before the results are announced, you know, a lot of information flows back and forth between the key managements who have access to that information. If that is done after Friday, after results, books are closed, after markets are closed, we just feel a little safer. That actually is the thing that goes on back of our mind. Anyway, we'll think a little deeper about that maybe. Thank you so much for listening to this addition, sir. Thank you. Congratulations once again. Thank you, sir. Thanks very much. Yeah. Thank you. Thank you. The next question is from the line of MSJ Ashish Krishna from MSJ Capital. Please go ahead. Thank you so much for the opportunity and for the great set of numbers that you posted. My question is on the reverse merger with IDFC Limited. Is there anything that you can share currently, and on when the timeline would be for the completion of the reverse merger? Hard to say. I think whatever is there in public domain will be there, so I would like to add too much to it. Thank you, sir. That would be it. Thank you. The next question is from the line of Aditya Singhania from ENAM Holdings. Please go ahead. Thank you. Congratulations on great results, Mr. V. Vaidyanathan. I just wanted to get a breakup of the provision line item and the income, if possible. Like, it would really help if you get that, you know, in the presentation itself. If you can share that, on the call, that would be useful. Yeah. In terms of provisions, as we have- No, no. Yes. Both. Yeah, both, actually. Okay. In terms of provision, as we have mentioned in the presentation that provision for this quarter was INR 392 odd crores. During the quarter, certain items to note is that we have released provision of INR 487 crores on Vodafone. At the same time, if you see that we have improved the PCR from 52% to 57%, and for that we have made certain additional provisions. We have also called out that we have made provisions of about INR 250 crores on legacy infrastructure and corporate accounts. Further into the presentation, if you see that PCR on the corporate books is now close to about 82%-83%. Even on the infrastructure account, where if we exclude that one large toll account which has slipped into NPA in Q1, if we exclude that, because we expect no material economic loss there, at the same time we are calling out for this exclusion, then the provision cover on the infrastructure book is again 85%. So the main point which we want to say is that the provision cover is quite healthy on the corporate and the infra book barring that one large toll account, which is at about 19% odd. If we include technical write-off and exclude this large toll account, the PCR cover is actually 75%. So that's broadly on provision. Because provision number you usually see gross of technical write-off because, you know, it has a direct bearing on provision. That, if you take gross of technical write-off, that number moves up from 57% to 67%. Yeah. 67. No, no. I got the information in the presentation. What I was looking for is a break up of the provision line item into loan loss provisions, any investment related provisions, standard accounts, any other items, if possible. Yeah. I I see. All are pertaining to, I would say, loan loss provisions are largely there. Okay. During the quarter. In terms of investment provisions, as we have said that we have released provision on the bonds, right, of Vodafone, which were in the process of improvement. Okay. That has given release in terms of investment provision. Basically think of it, just to summarize, you might ask, "Listen, you released Vodafone, now where is the money?" Let me answer the question. Supposing we say that Vodafone release of INR 487 crores. We thought that, you know, it's a good thing for us to use this opportunity to increase the provision coverage ratio and strengthen the balance sheet. We increased the PCR from 52% to 57%. That is, net of technical write-off. I told you gross it would be 10% higher. We used that to increase provision coverage. Then we also provided for, you know, fresh movement of wholesale accounts to NPA, like the new toll account of INR 240 crores that moved in, and so on. That consumed about INR 250 crores. About INR 250 crore was there for PCR increase. That's where that is there. The money is there. We hope that as and when those clients pay back, and by the way, on both the toll accounts, we eventually expect to get the money back. That money comes back, it'll come back to the P&L. Sure. As of now, the P&L is more fortified, stronger, better PCR and all that. Awesome. The total gross provision for loans is about INR 875 crore this quarter. There is nothing else in terms of other types of provisions. That's what I just wanted to clarify. Yeah. Largely it's the normal provision that comes with the retail book. Then like I told you, the Vodafone account, I'm calling the name out because everybody knows it. Yeah. That release, we used it for, let me say, for wholesale accounts that slipped this quarter and for increasing the PCR. That's a very simplest way we can reconcile it for you. Sure. Like I said before, those two wholesale accounts, infrastructure accounts, we are actually hoping to get the money back. Okay. Today or tomorrow, hopefully this money comes back, and then, hopefully it comes back to the P&L someday in life. I just wanted to clarify this in the context of the guidance you gave on credit costs. Was that for the current year or for the next year? Next year. 1.5%. 1.5% next year. Oh, okay. Got it. Thank you. All right. Just the breakup on the fee income, if possible. As we mentioned that our fee is quite granular, so the total fee for the quarter was INR 744 crore, out of which 82% was retail fees and about 35% of the fees was linked to loans which were disbursed during this quarter, and the rest is fees linked to your cash management, related, linked to your third party products and so on. Okay. We also do toll business. Some fees we also get from credit cards. It's quite a granular fee stream which we have. Yeah. You know, I mean, most of your peers actually give up quite a detailed break up of fees. It would really help if you gave a break up of both fees and provisions on a quarterly basis. It would just help, you know, unnecessary data questions being asked on the call as well. No, thank you for that. We'll give more granular data on fees as we move forward. Thank you, and congratulations once again. Thank you. Thank you very much. Thank you. The next question is from the line of Mohit Jain from Tara Capital. Please go ahead. Yeah. Hi, good evening. Sorry, I missed a bit of the call, so if this question has already been asked, please excuse me. Just wanted to know, the improvement in NIM, was it driven by, lowering of funding cost or was it driven by increase in the lending yield? No, no. We discussed before you came on the line that this included a certain amount that came because of prior period of the telecom account. I mean, the telecom paid-in account paid that interest this quarter, but we were accounting for it on a cash basis. A portion of the money actually pertains to prior quarters. We report our NIM net of those prior period money. Even net of that, I think it's 5.8% which has improved sequentially, right? Yeah, yeah. 5.9. Yeah. Yeah. That 5.9 is all real. There's no. That's what I wanted to know that sequential improvement, even if one considers that 5.9, what is that driven by? Is it driven by lowering of funding cost or is it driven by an improvement in lending yield? It's a 10 basis point hard to pick this or that. Let me just- No. I'll tell you why I'm asking that question because a lot of the growth has been driven by increase in your mortgage lending, and this has you know is pretty much a very competitive segment of the market. One would have intuitively thought that that would have an adverse impact on the NIM, but the NIM has actually gone up. That's what I'm trying to square in my mind as to what has driven the sequential improvement in the net interest margins. No, no, your question is fair. I'm not dismissing it. I was trying to say that 10 basis points was not an amount that we applied so much to. Our way of thinking about it that the, you know, it's not just home loan, we also have so many other businesses give us pretty strong yield. As long as the mix keeps improving, you know, 10 basis points increase. If your mix There's still an improvement in mix happening all the time. You want to say something? To, I think you're looking for some numbers. I'm saying in terms of yield, that yield has been broadly stable. As we compare it to the previous quarter, it came down on a blended basis by about 10 basis points, whereas the cost of funds came down by 20 basis points during the quarter. Okay, perfect. The second more structural question that I had, and I think I've asked it before also on earlier calls, is your bank is operating at a very high NIM of 5.9%. In my history of tracking different banks, even the ones that have the, you know, best cost of funding, the NIMs generally have stabilized around the 4%-4.5%, where you are in the sweet spot of risk versus return. Is there not a risk that I mean, right now, as I said earlier, we are in a great retail credit cycle and all of that is good, but how sustainable is a bank operating at a NBFC like NIM of 5.96%? Okay. Now we think about it. First of all, our business model is becoming more and more like a mainstream bank as far as the incremental book business is concerned. Like if we're doing new car loans, we're doing home loans and all that. Still to your question about the margin. Now think of any of the mainstream banks in the country today and remove the wholesale book from their books. Now, what do you think the NIM would be? It would be much higher, right? No, I mean, that's the whole question is that there is a merit to having a diversified book. I know, I mean, right now you are running a retail heavy book, but that is what I'm coming to, that is that a sustainable business model? Hold it. What I'm trying to explain to you, I think you jumped a little ahead of that. I was just saying, think of a bank which has a relatively lower share of a wholesale funded credit. As you know, wholesale funded credit or top profits grow at really fine prices. We think that we could have more of, currently home loans is growing at a 44% per annum. Last quarter was 47% growth. This quarter is 44% growth. Our home loan book, the prime home loan book is a really big opportunity and as I hope all of you will agree that there's no limit to how much that business can grow. As that business begins to grow, as our new car loans begin to grow, I think there could be some sort of a tapering off from these numbers. But as things stand right now, you know, the fact that we're guiding for credit loss of 1.5% next year, it must tell you that we are feeling pretty good about the asset quality. No, as I said, I'm not talking about the next one year. It's more of a medium-term question. You said that there could be some tapering off. Hold it. Sorry. Let me add one more thing. If you think about it, think of a Muthoot or Manappuram. Okay? You may say it's gold loan. Nevertheless, we'll talk about that later. You could think of the very large Indian NBFC, you know, which is there in this market right now. It could be lending at 16%. It could be having a NIM of 11%. It could go on and on and on for 10 years, maybe in the other case of other gold company, maybe 20 years, 30 years, 50 years. Basically it is a specialization that companies have developed in their respective spaces. It would be purely theoretical to say that, okay, high NPA, high credit, you know, credit loss. It's basically a specialization that we have built. That's why I'd like to think about that. Actually, if you think of many of the lines of businesses we do, our credit loss is really very low, and even at 1.5%, I hope you'll agree it's very low. No, I understand that, but I really struggle to understand if you really compare, let's say, yourself with a Muthoot. I mean, I know you just used it as an example. It's not exactly the right comparison because that's a monoline business, where growth is determined by, you know, whatever factor it is. As you've also said, you're becoming more and more a mainstream bank, and I guess that's the way forward as well. I mean, what is that area that you are specializing in that is very different from, some of the other mainstream banks if your aspiration is to be more like a mainstream bank? It is a mainstream bank, because apart from within corporate banking, and we like it because, like I told you, three years have gone by, we've not had a single blow-up on wholesale credit, of a single loan given after, merger. We like that business. We'll grow that also. We like mortgages. We'll grow that. We like new car loans. We'll grow that. We like the loan against property. We'll grow that. We do like loan against property. We'll grow that. You see, the point is that you get all of these businesses are fantastic businesses. They've all been in India for 30, 40, 50 years. And forget even private sector banks like ours or other big boys, big players. Think of even a, you know, state-owned banks, even smaller state-owned banks like an IOB or a UCO. They don't seem to have any problem in credit in any of these sectors. I mean, not had one for the last 30, 40 years. We should not forget that in India, the whole ecosystem has very much become supportive for good credit because of four bureaus, because of data, because of analytics, because of cash flow evaluation, because of a number of factors. I mean, we won't have time to go through all that now. The point is that the ecosystem, the guardrails in the country have become very, very strong. We should not get purely theoretical about it. We should be more about having really good controls. Let me just say that you know we run this for 10 years even in a previous avatar. 10 years is not like a joke. It's not like a year or two flash in the pan. For 10 years, we've never had a credit loss problem dealing with all these segments. Let me leave it at that. I mean. once in a while. Let me just leave it at that. Maybe if you have a concern, then you can also introspect. We will also introspect about that. Okay, fair enough. Thanks a lot. Thank you. The next question is from the line of Premkumar from B&K Securities. Please go ahead. Yeah, hi, sir. Thanks for the opportunity. Few questions. One is, sir, as I see your credit card spend share, you have already you are closer to 1% of the system credit while you have just recently launched. I just wanted to check what would be your aspirational level for the next two to three years in this as a market share? We haven't put out any specific number like that. We'll go with the flow. We don't want to start with the end in mind on this. We've got to do it very carefully, build a good brand, build a good experience for customers and build good credit quality and all that. Whatever it comes, we'll go with the flow. Understood. Sir, on your deposits, if you can share some more details, maybe, you know, what is the share of top 20 depositors? Or maybe what is the average ticket size in CASA and TD? And is this like 100% sourced from branches? Or do you also source DSA channels for deposit sourcing or any other non-branch sources? On deposits, we largely do sourcing through our own employees and also open accounts digitally, where it's a DIY process. A customer comes and opens an account. It's not through DSAs to answer specifically on that. In terms of CASA, as we mentioned, that has grown by 18% on a YOY basis. In fact, average CASA grew by 29%. In that, the proportion of CASA has increased at a faster pace at about 65% on a YOY basis. Of course, for us, CASA related to CASA is currently a smaller percentage, just about 15% of the total CASA. We see ample opportunity of much of the faster growth sort of continuing in that segment. Any comment on the question? No, it does in part. But any comment on the, you know, ticket sizes here, maybe on SA or TD? Because the higher ticket tells me, say we are a slightly upper middle-income-ish, middle upper-income-ish customer profile for retail. That probably gives the color maybe about 150,000 or maybe 80,000-100,000 many people have opened accounts with us. A little more than that. Sure. Understood. Any color on the retail within TD? What could be the bulk TD and retail TD, or if it is there? I think you have already given that side, so okay. That is good. Yeah. Could be. Yeah. I think it is there, right, in your presentation, retail deposit and wholesale deposit, including CD. Yeah. Deposit numbers are mentioned on slide 50 of the presentation. In terms of TD book, we have given that CASA plus TD less than INR 5 crore. That book is as granular in the source and deposit base, and that ratio stands at greater than 85%. Sure, understood. Sir, I had missed your initial comment wherein you said that the telco exposure was fully repaid, the bond exposure, and you have created a recent exposure of INR 500 crore. You also mentioned something that, you know, I mean, the color of that exposure, as in why do you need to not have any provisions there? Can you just repeat that? I mean, why don't you want to continue the provisions, I mean, despite having some exposure there? See, as part of this process of, you know, the company expected the banking system to come forward, and that is because I think every company would have lines of credit going with the banking system. Their representation was that, listen, end of the day, government is putting certain stake in our company, and they have, you know, the promoter supporting in equity and, you know, we'll be a good up and running, proper good quality going concern. You know, we are a large group, and they are a large group with so many businesses across. It's not, we didn't think it appropriate that, you know, we want to pull the plug completely on them. After all, we want to respect that institution. We felt that, you know, in its earlier avatar, of course, we won't take any credit. In the new avatar with the government equity, promoter equity, all that coming through, and all that, we felt comfortable participating in the process. Then once they're giving this fresh facility, we felt we really don't need to take any more provisions on that. Understood. Lastly, on 2 data keeping questions. If you have the ECLGS outstanding for your bank, as of third quarter, and have you seen any slippages from that book? The ECLGS outstanding book is about INR 1500 odd crores. We have not seen any significant credit deterioration there. Sure. The last question, sir, on your stock of provisions. I see your specific provisions is somewhere around INR 2,500 crore. Is it safe, I mean, this, the provisions that you carry on your stressed but not NPA watchlist kind of a thing, INR 800 crore, that is over and above that, right? What is the stock of non-PCR provisions as on December? I think the number is there, no? 1,080 crores, something like that. That book has actually really come down, 1,083 crores. 1,083 crores on which we have a provision of 877 crores. Sir, I'm so sorry to interrupt. May I please request you to rejoin the queue for your follow-up, as we have people waiting for turns? Yeah. Thank you. Yeah. Okay, short answer is that, out of 1,083 identified stress account, provisions is 877, PCR is 88%. Okay, let's move on. Thank you. We take the last question from the line of Anand Bhavnani from White Oak Capital. Please go ahead. Thank you for the opportunity. Quick couple of questions. One is, clarification on the credit quality. INR 487 crore of provisions for the telecom account which were reversed, how much of it was in the current quarter? This quarter, everything. Adjusted for that, then if I were to understand our P&L provisions would have been around INR 879 crores, INR 391 + INR 487, right? No. We need not. There is nothing pressing for us to really take the PCR from 53% to 57%. This was an amount that kind of came to us in this quarter. We actually thought that why not strengthen the balance sheet to take it. You can't really assume that if this had not come, then probably PCR would have been lesser, but the bank will still be quite profitable. Let's try to understand better. Assume had it not been done and you had kept the PCR same, what would have been the credit cost? Because I want to do like to like comparison, have a sense of how the cost is evolving. Two things have happened. Had both not happened, what would have been the credit cost? I mean, it's not so easy to do a quick counterfactual on a slip of the pen and paper like this because even the wholesale account that we've taken provisions on the wholesale account, some proactive provisions we've taken, you know, the INR 250 crore we talked about. Theoretically, they could also have a counterfactual. Let me just say that the simple way of explaining it, this is what I told you earlier, that the INR 250 crore is for corporate accounts that we have taken this quarter. Rest we've increased the PCR from 53-57. We got to just go with this number as it is. Okay. I'll just repeat. That INR 250 crore is for some corporate additional provisioning. Yes. PCR increased from 53%-57%, these two. What was the last, sir? That's it. These two. Okay, fine. These two and took additional provisions, and the release came from the corporate telecom account INR 487. You can think that INR 487 crore came and then kind of got, you know, used up in this. Like I said, you know, that we wanted to strengthen the balance sheet. Let me put it very simply, that we want to use the opportunity to strengthen the balance sheet, you know, and we did. Tomorrow, for example, you have provided for that particular infrastructure account where the INR 240 crore account we have taken significant provision. Now, let me say that, you know, some quarters go by and the money comes back, and this money can still come back to the bank. But as of today, you feel safer, we feel safer, everybody feels safer that look, there's not much more hits yet to come. You see, one of the big issues that people have always had with our bank for the last three years has been, look, how much more to come? I mean, the people are almost short of using the word said, "Listen, for how long can this legacy wholesale account go on, story go on?" Yeah, I mean, we used the opportunity, we took it out, and we believe that no major legacy accounts issue is pending in front of us. Sure, sure. That's very helpful, sir. Listen, it's a couple of data keeping questions. One is, in our microfinance book, if you can give me the PAR 30 as of December and as of September so that I can get a sense of how the microfinance book has evolved. Number of times. I don't think they have a number of times, but like I told you that that had a relatively more delinquency than the rest of the book by an order of magnitude, more delinquent. Like another member asked earlier, a participant saying that how's the trend looking like? That trend is also improving every month for the last three months. Still, short answer is it is more delinquent. Noted. Restructured book, what will be the absolute amount of restructured book, OTR 1 to MSME restructuring, absolute amount as of December 31st? 2.6% of the book we said. Okay. Thank you, sir, and have a nice weekend. Yeah. Thank you very much, ladies and gentlemen. That was the last question for today. I would now like to hand the conference over to Mr. Kunal Shah for closing comments. No, no, before Kunal comes on the line. First of all, I want to just make a closing comment. I'd like to just say that, thank you, every one of you who've been with us for the last three years and tracking us so closely. You know, we've been through a lot, you know, merger issues, you know, legacies this that, wholesale account, infrastructure account, COVID, we've been through a lot. The good thing is that I must safely say that the balance sheet is now pretty strong. Not pretty strong, very, very strong. The key thing is that, I think one conversation got lost in the whole story is the operating profit. I think that operating profit reaching this sort of order of magnitude is a very big event. If you now start taking normalized credit loss, which comes in a normal book of under INR 20,000 crore, that we can begin to say that operating profit is higher than a normal credit loss. By that logic, barring some really unfortunate circumstances, which I hope not, our bank should not have to you know ever post a loss again, hopefully. That's what I'd say, and that's why I call it a very flip inflection moment. Really, we've covered a lot of ground. Let me just say that people who believe that this story is set for a significant change, either you'll believe us today or you'll believe us two quarters or you'll believe us four quarters from now, but believe you will. Because that's how I think the game is changing now. Thanks so much for the call. Do watch this space for the next two, three quarters and you'll get more convinced. Thank you. Yeah, thanks a lot, sir, for such a I think patiently answering all the questions and also giving the insights around the business strategy as well as the future and all the best. Thank you all the participants for being there on the call. Have a nice weekend. Thank you. Thank you very much. On behalf of ICICI Securities, that concludes this conference. Thank you all for joining. You may now disconnect your lines.