Ladies and gentlemen, good day and welcome to the IDFC First Bank Q1 FY25 earnings conference call, hosted by ICICI Securities. As a reminder, all participants in line will be in 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Chintan Shah. Thank you, and over to you, sir. Yeah, thank you, Cyril. Good evening, everyone, and welcome to the Q1 FY25 earnings conference call for IDFC FIRST Bank. We have with us from the senior management, Mr. V. Vaidyanathan, Managing Director and CEO, along with the senior management team. So without further delay, I would now like to hand over the floor to the management. Thank you, and over to you, Vaidyanathan. Hello everyone, good evening. This is Vaidyanathan here. Good evening, everyone. This is Sudhanshu Jain, the CFO. Hi, this is Saptarshi Bapari, the Head IR. This is Saptarshi, Sudhanshu, myself. First of all, thank you very much for joining us on a Saturday evening. We put out the results maybe a couple of hours ago. We hope you have had the opportunity of going through the presentation. We would like to definitely talk about all the key items of this quarter, and certainly later in the conversation, we'll come to a cost-to-income ratio. We'll talk about credit cost, which has gone up this quarter, and I'm conscious of that. We'll go through that. But just since the sequence of this presentation, which we put out for you to review, let's just go through some numbers which we think are important, and then we'll definitely come to the points that are more critical items. Now, the way we look at it is that for any bank, and certainly for our bank, raising deposits is the key capability that we need to have because this is just raw material. And I'm very happy to say that our deposits momentum continues through this quarter. And just to run you across some numbers, now our deposit numbers are now touching about INR 200,000 crore, which we think is pretty much a landmark number for us because we started with a pretty low base. And even last year itself, our deposit YOY has grown by 38%. Then when we look to the retail deposits, that's also coming very strong for us. Our retail deposits have grown from March 2023 to, pardon me, from June 2023 to June 2024, have grown by 44%. In fact, we got rather emboldened by this kind of deposit inflow that is coming to our bank, and that we actually reduced the interest rate just now on our retail deposits on the savings front. We reduced it to straight 3% for up to ₹5 lakh because this was about maybe 8 or 10 days ago. The benefit of this, I guess, we'll begin to see a little more in the coming quarters. The deposits are still coming for maybe multiple reasons. We should talk about that. We think one of the key reasons is customer service levels and the way we build the brand and the positioning and digital capabilities. But the thing is that it is coming so strong. The third thing is CASA. As you know, CASA is a hard-fought item in this market. Our CASA YOY has grown by 36%. We are now reaching some INR 97,000 crore. Fourth is the CASA ratio continues at around 46.6%. Just for context, I think last quarter it was a little higher, maybe around 47%. So that's about that. The fifth thing is in terms of retailization. Now, 80% of our deposits are retail. It gives us a lot of peace of mind because retail customers get used to transaction ID, password, relationship managers, branch managers, branch services, auto-debit, standing instructions, mutual fund investing. So they get used to a number of services, so it becomes very sticky. And I think this is one of the hardest things to build in business rather than building wholesale deposits. So that's 80%. Now, the fifth thing is that certainly in the last five years, we've had success, as you agree. And we have repaid legacy borrowings and certificate deposits of INR 65,000 crore since merger. So all such monies were maturing, and I'm happy to say that our bank has been able to raise retail deposits of this order of magnitude that we could pay off and we could settle all those dues on the respective due dates, which is obviously expected of us. But the fact that they raised it is still a moment of happiness for our organization and our team members. And that is something, again, calls back to the ability to raise deposits. Now, the next thing is the credit deposit ratio. On the credit deposit ratio front, our incremental credit deposit ratio from June 2023 to June 2024 is just 72.1%. And this is one of the things that, as you know, is being talked about. Our credit deposit ratio has come now below 100%. Maybe by the end of the year, we'll go to 92%-93%, and next year we'll go to the 80s%. So this is coming really, really strong for us. Now, on the lending side, I'm happy to say that our portfolio continues to be highly diversified. We are close to about 25 business lines, and we have an issue in the joint liability book. We called it out in the last quarter also, but now later in the conference, we'll have more specific numbers for you. But barring that, let me say that all the rest of the business are doing well and online, roughly in line with what we discussed last time or last quarter. Now, one key thing that may have kind of in all the may have missed your attention, but I'd like to point it out to you because it's a very key capability our bank has built and all our shareholders will be happy to note, is that we had close to about INR 3,500 crore of RIDF investments. I am really happy to say that since we're meeting our PSL requirements now, it's wound down. It comes down to close to about INR 1,840 crore. And more importantly, we were buying PSL certificates to meet our private sector needs for the last three or four years. I'm happy to say that last year we broke, we turned the corner. We are now developing our own private sector in the sense we are generating our own organic PSL, which is a key capability built. In fact, last year we actually pushed a small profit because we sold PSL certificates. Now, I'd like to quickly come to the collection percentages and how the asset quality is behaving. Now, on the asset quality front, there are two things. One is the core business. In fact, in our investor presentation, we have actually given a step-by-step process about how we are underwriting loans. The first step after giving a loan is basically what we see as what we call the first EMI returns. The first EMI return is basically an indicator of how good a loan you booked last month. Basically, if you book, say, 100 loans last month, this month is the first checks going to clearing or standing instruction or e-NACH, and we see how many of them are returning. So on this front, earlier we were getting about 7% returning, and now only 5% are returning. So that is down 30%. So that is a clear indicator that incremental booking of the bank over the last many years is obviously better than the past. The collection percentage continues at around 99.5%, meaning excluding Joint Liability Group business. We'll talk about it in a moment. So it continues at 99.5%. In April of 2024, we saw collection dip to 99.3%. That's it came down, but it's back to 99.5% in May and June. There is an impact of the 99.3% because to that extent slightly it affects the SMA, but this element is, these are just events that even out over time. Now, on the Joint Liability Group, while we are saying that we are collecting 99.5%, and frankly, just for definition, I want to share with you that these numbers are excluding prepayment collection, and they're excluding areas. I was calling to verify JLG's actual numbers sir. So that's excluding prepayment, excluding areas, etc. It's still coming in 99.5%. That's not the issue. In joint liability group, we saw this number come down from 99.7%, which is the number we were used to in the past. It's come down to 99.2%. So this time, we are—you'd imagine that many of you would be concerned that, "Look, why is the provision? Why did we have to do so many provisions this quarter?" Even sequentially it's gone up, but certainly YOY has gone up. So what we have done is that we have in page 29 and 30, we have specifically called out two very, very important slides. We have, for the first time, publicly put out a proper vintage chart of the loan bookings that we are doing right now. So how this works is that basically we draw up a chart of the loan bookings, the vintage analysis of loans booked, let me say, pre-COVID. And then we see that what is the 30 days past due, 30 days past due, after, say, 6 months, 9 months, 12 months, etc. Then we take the bookings done last month or last year, and then we see at the same vintage for the same 6 months, we see how much we are doing currently, how much became 30 days past due. So we have put it out, and you can see from the chart that in sixth MOB, 6 months on books, both series of transactions being after 6 months. So if you book a loan in January 2020 and then see it after six months, so you say in June 2020, or you book a loan in, say, January of 2023 and see it after six months, that is June 2023. So it's just like the vintage line. So that number has come down. It used to be 2.39%. Now it is coming at 0.83%. If you take 12 months on book, it is 3.87%. Now it is 1.74%. So this is a very important slide. If you have time, I request you to, of course, to use it. It gives you a comfort about the longer-term picture because some of you might be concerned what will be like one year from now, how do we model 2027, and how do we get a comfort that the credit quality will hold well? Now, this chart will tell you that if this is what the value is at the end of this graph, so this will give you a longer-term picture about how credit will behave. And we believe it will continue to behave well because these numbers are holding up so well. Now, I want to come to the Joint Liability Group, which is the key subject that we want to talk about today. Now, if you recall, in the last quarter, we brought out to all of you that our credit cost for the year is expected about 1.65%. Now, for—and we had kept a check on the JLG saying that, "Look, we'll have to watch out for the JLG business," JLG meaning the microfinance business. And we had told you that we will come back to you and we will look through it and all that. Now, during the quarter, we have assessed it properly. We believe there is an impact of the joint liability book basically that we have a portfolio of joint liabilities largely in Tamil Nadu, and Tamil Nadu had massive floods. So that portfolio did get impacted. And that book, the delinquency on the book has gone up in the joint liability book. Normally, pre-COVID, sorry, pre the floods, our credit loss in the JLG book used to be about 1.6%. It frankly was quite low as compared to even industry. Industry used to be running at 2, 2.5. We are running 1.6. Now, our estimate of credit cost for this year on the joint liability group, because we are 60% concentrated in Chennai or Tamil Nadu, it is expected at around 5% or a little short of it. So that impact of about maybe 3.2% has come on the microfinance book. But fortunately, it is only 6% of the book. And the impact of that amount is giving us about 20 basis points more. So we'd imagine that about 1.85, including the impact of the JLG book, is what we are expecting. But we will be more front-loaded for Q1 and Q2 because of the reason I talked about. So this is it. The only thing I'd like to point out, the floods really are a one-off episode. It comes with both. And in fact, fortunately, the JLG book is only one or two years in life. So in a quarter, two quarters, this will go away through the books. But we want to just point out to you so that you don't feel that the whole book has a problem. It's the joint liability group, and we point out to you the rest is behaving at 1.65 as we said earlier. Now, I want to further tell you how we will deal with this because, of course, one thing is to take it to the clinical load in this quarter and next quarter. But the issue is more about how do we deal with it in the future. What we've done is that since January of this year, we've been insuring our joint liability loans. So we pay up our premiums of about 1% to CGFMU. And then, therefore, if any situation were to come in the future, the book will stand insured. Now, coming to the also we've kind of tapered this book. The book is about INR 12,700 crore, which is kind of flat over March of 2024. Now, if you look at SMA and SMA II, that's not materially moved except for the joint liability group, maybe a little bit of here and there. Now, let me just sum it up therefore by saying on the asset quality that we had a bit of an issue on this microfinance book, which we called out, calling out most specifically now, but last year, last quarter also we called out. And we will, like any other episode, episodic event like COVID is an episode. COVID went, but portfolios have normalized like this too will normalize. Now, but it's not affected the fundamentals of the business, which we'll talk in a moment in terms of cost and cost-to-income ratios. Now, I'd like to move quickly to the cost-to-income ratio at the bank. Now, on the income front, let me tell you that income is holding up quite strong. Fee income is really, really diversified, coming out quite well. Now, the issue that many of you would like to know on the cost-income ratio is to say that how does this 72.9% cost-income ratio, which we had last year, how does this trend for the future? Now, first to tell you that the bank has done massive, massive digitization in all our businesses, and that is really helping us reduce cost-income ratio. To give you an idea, on the deposit front, we are now, and I'll tell you how it helps. For example, we are now getting INR 212 crore per branch in our balances. On an incremental basis, we are getting close to about INR 55 crore-INR 60 crore per branch per year. This is obviously not fully generated by the branch. Our digital capabilities are helping us and therefore helping us in our overall equation. So same logic holds for loans and all that. But let me come back to the cost-income more specifically. So our cost-income ratio, the key picture we want to give is because we had given a picture for 2029, and then we said that we expect the ROA to start becoming quite respectable, probably meeting the best of the industry or probably beating the industry norms. But we did get a sense that, okay, but still an interim picture of 2027 could help rather than why wait till 2029 looks like far away. So what we've done is we have tried to estimate how our cost-income ratio will play out for 2027. And that is what we'd like to present to you. Now, I'd like to take you to some numbers so that you can understand them better. Let me take the assets business, which is both the wholesale assets and retail assets, all put together. Now, there, our cost-income ratio in FY 2022 was 60%. Now, last year, that is FY 2024, it was 53.2%. We believe this will comfortably come below 50% over now with 2024, 2025, 2026, 2027, we're talking about three years. Frankly, 1% a year is comfortably doable in this space just because of scale. So I don't expand too much on it. Maybe if you need help Q&A, I will take it there. Our next—so basically, on the core franchise of lending, we are doing pretty well. At a 50% cost-income ratio, life will be good. Now, let's talk about retail liabilities. On the retail liabilities, we discussed before grants, ATMs, all that. I don't want to expand on that. But I can say that because we're a new bank, our cost-income ratio is high. It's running 193%. Now, it is 193%. It has come down from 226% in 2022. Now, over the next 3 years, something very important is going to play out in our respective lives. What's going to happen in our lives? I mean, the difference is that in the next 3 years, the requirement of deposits in the bank is going to come down. As we speak, in the last 5 years, we've been handling a double burden in the sense one we fund our loan book growth also, plus we are also already paying INR 50,000 crore or INR 60,000 crore of past liabilities, which was bonds and all that. Now, in the next 3 years, since that bonds will be almost paid off, we need money only for growth of the bank. So we need only one, not two. And that is a big one. And therefore, our need for branches is going to come down. So our branches, our branch requirement is going to—we are going to grow branches only by 10%, sorry. We're going to grow branches by 10% annually. But we are expecting deposits to grow by at least 25% annually. Currently, it's growing 39%, so 25% should not be difficult for us. So if the branches grow 10% and deposits grow 25%, automatically, the cost-income ratio of branches will come down. It just has to come down automatically. So this number in FY 2027, we expect this to be 140%. Now, I want to move to the credit cards. In the credit card business, the first year of operation, we were running 240%. In FY 2023, we came down to 164%. FY 2024, we came down to 116%. This trend will continue with scale. This will just happen. By FY 2027, we expect this to be 75%. Retail liabilities have told you dipping from 193 to 140. Credit cards have told you dipping from 116 to 75. Assets have told you dipping from about 53 to 50. These three combined put together, we've done the math. The combined combined, which is currently running 72.9, will come down to 65. That would be about a 700 basis points reduction on cost-income. All of you know how the math works out if you cut the cost by that order of magnitude. So these were the key things I wanted to share with you so that you get a picture about how the story is headed in a more clear way rather than our earlier conversation when we just used to tell you that it'll go up, cost-income will come down by scale. Many of you would scratch your head and say, "Fine, logically, it sounds okay, but what? How much?" So today, we put some numbers for you because we model it internally. So that's what we are heading towards. So finally, of course, I believe we've built a really phenomenal technology stack in the bank. And people who are experiencing the—I hope many of you using the bank app would hopefully testify or will agree that it's really one of the fantastic apps. Just to tell you that we are a Google Play Store rating of 4.9. Very, very, very few banks have achieved something like that. Apple is really good to get 4.9 there. On App Store, we are 4.8. As per Forrester, we are among the only few, we've only been ranked 15th among the top 15 global banking apps. So these are some really good things we're doing. But at the end of the day, it matters because the customer experience matters. And that's where we get the deposits and loans and all that. But to step back for a moment, this is our strength. But you will be able to convert finally. You'll want to see it in ROA/ROE. And if you meet the cost-income ratio the way we're guiding it, which we think we will, then things will fall in place. And this joint liability group will be an episodic thing, and the episode will pass. So that's my quick comment to just open the discussion. 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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You know what? After nine, Sudhanshu had some key points to make. We'll request him to keep him quick so that we have time for Q&A. But Sudhanshu, if you can take them to your key points. Yeah, thanks. In fact, you have touched quite a bit of numbers. So I'll try to restrict myself to only some incremental stuff. Yeah. So one of the numbers which I want to call out was that the CASA ratio was quite healthy. In fact, the average CASA deposits have also increased by 34% on a YOY basis. The average CASA ratio for the quarter was around 45%. So we continue to see a good traction on this front. Even on term deposits, we all know rates have a factor to play in there. Retail term deposits have grown at 54% on a YOY basis. Our branch count now stands at 955 branches. We have added about 11 branches during the current quarter, and maybe we'll add a few more in the year to pass by. Another good point to note is that our high-cost legacy borrowings have now come down to about INR 10,000 crore. About 50% of this will further run off in the balance year. At the end of the year, we'll be left with just sub ₹5,000 crores on this front, which will definitely help us to look for lower deposits and other benefits that will kick in, which Vaidya already touched upon. The credit-to-deposit ratio is quite good for the quarter. In fact, the incremental was only 68% for the quarter if we exclude one short-term deposit outflow, which we had called out from a government account during Q4. That is coming quite healthy. On stock, the credit-to-deposit ratio is now down to 98.1%. In this aspect, the cost of funds, if I have to touch upon, that increased marginally by 4 basis points to 6.47%. And the deposit cost was higher by about 11 basis points to 6.38%. The increase in deposit cost was primarily due to the repricing impact on equity. Moving quickly on to assets, you would have noted that the growth on a YOY basis was 22.0%, and on a sequential basis, it was 4.2%. We have given a detailed breakup product-wise inside slide 84 of the investor presentation. On the non-corporate book, that also increased by 14% on a YOY basis. The infrastructure book is now down to 1.3% of the total funded assets. By the end of the year, we expect this to come more around 1%. Talking of credit cards very quickly, we have now issued more than 2.7 million cards. The book size is about INR 6,000 crore. The gross spend on credit cards has increased by about 49% on a YOY basis. Very quickly, moving on to asset quality, the gross NPA stood at 1.9% at June, and net NPA is down to about 0.59%. It's broadly stable if you compare it to the previous quarter. In fact, if we exclude the infrastructure book, the GNPA would be more around 1.6%, and net NPA would be more around 0.43% at bank level. We have increased the PCR by about 60 basis points during the current quarter, and it now stands at 69.38%. Again, here, if we exclude the infrastructure book, the PCR would stand increased to 73.5%. The GNPA in the retail, rural, and MSME segment put together saw a slight increase during the current quarter, and it was at 1.46%. But the net NPA here is only at 0.46%. Moving on, the standard restructured book that continues to come down, that has come down from 0.31% in last quarter to now 0.26% of funded assets. It has to be noted that around 95% of the restructured book is secured in nature, and we hold around 20% provision on the same. Vaidyanathan already talked about SMA numbers, so I'll skip that. But the increase during the quarter was largely led by JLG. Gross slippage for the quarter was ₹1,657 crores, and net slippages were ₹1,132 crores. We saw some moderation in recoveries and upgrades during the quarter, and that number stands at ₹526 crores in Q1, as well as ₹623 crores in Q4 FY 2024. Moving quickly to profitability, NII saw strong growth. It grew by 25% on a YOY basis. The net interest margin for the quarter was at 6.22%. On a sequential basis, NII was lower by 11 basis points. As we have mentioned in the presentation, that a primary part of this reduction was because we were carrying slightly higher investment book in the form of T-bills, which had an impact of about 8 basis points. The rest of the impact was due to slight increase in cost of funds, as I mentioned earlier. Fee and other income for the quarter increased by 9% on a YOY basis and 19% on a YOY basis. The growth was largely led by retail, which grew by 21% on a YOY basis. The trading gain for the quarter was around INR 24 crore. Operating expenses increased by 21% on a YOY basis and was, in fact, flat on a sequential basis. As a result, the cost-to-income has come down to 70.45% for Q1 from 73.15% in the previous quarter. Core operating profit, as a result, also increased by 30% on a YOY basis to ₹1,858 crores for the quarter. As you would have noted, provisions came in slightly higher at ₹994 crores for the quarter and were higher by 38% on a sequential basis. This was largely led because of normalization and some uptick which we saw in the JLG portfolio. Credit cost for the quarter was at 190 basis points. But if we exclude JLG, then it is more around 170 basis points. P AT for the quarter is at ₹681 crores. This was lower by 11% on a YOY basis. But if we exclude trading gains from both the periods, then the decline was more around 7%. Provisions in this quarter were higher in JLG relative to Q1 of last year by about INR 132 crores. This also led to a lower PAT if we apply the tax rate by about INR 100 crore. Moving on to the last piece, which is on capital adequacy, the bank now has a capital adequacy of 15.88% at June 2024, with a CET1 ratio at 13.34%, including the profits over the quarter. We had a benefit of about 14 basis points due to the transition to the new investment circular with effect from April 1, 2024. However, if we take into account the capital which came in in July 2024, then the CET1 ratio at June 2024 stands increased to 14.67%, and the total capital adequacy will stand increased to 17.21%. Last point from my front before we open up. LCR, we have maintained about 118%. This has increased from 114% in the previous year, and we have been maintaining healthy liquidity levels. 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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking 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 Bumb from DAM Capital Advisors. Please go ahead. Hi, sir. Good evening. Sir, two questions. One is that the industry has seen a bit of NPAs in the unsecured piece, and we are one of the significant players. What is the reading from the early indicators if this can move up further, any geographic concentration? And is this driven more by the early age group of borrowers? Our unsecured retail is 15% of the book, which is the key focus area for the bank and key focus area anyway in terms of people observing the book, so to speak, for performance. Not the focus of the bank, but the area that it's focused upon for credit quality. Now, on this front, roughly, we are seeing that it's varying broadly normally. That is why we are able to stick to a credit guidance of 1.65% overall at the bank level. No material movement at this point of time. But like everybody knows, that we've got to be very careful here, and we'll keep an eye out. But any age group which is driving for the industry? Because a lot of millennials and everybody's raising money from or borrowing money from even the fintech lenders. So anything there we can call out? Yeah, yeah, yeah. We can call out if you want to go deeper. So in the sense that when we analyze our credit card business, for example, I don't mean overall unsecured. I'm not talking uniformly for the entire 15%, but I'll take one sliver of credit cards and talk to you. So on that, we find that people in the age group of the 50-60 are the best performers of credit. The 40-50 are maybe the 30-50 are the 30-40, 50 are the next best. And the youngest borrowers, the 20-30, their billing points are relatively higher. So we do see a definitive age pattern. But I think it's not news in that sense. People always know that youth are a little less responsible. So that's one. And the other thing is that on the comment on fintech that you talked about, we also experienced that in the buy now, pay later business. We did find that our delinquency, especially the one-month kind of loans that we were doing, we were one of the earliest players in that game. Then we were tying up e-comm companies and doing buy now, pay later businesses, where somebody could come to an e-comm, set up a pre-set line, and they could draw, and they could pay one month later. Now, again, small ticket, age group is usually low. The delinquency is relatively high for us. So we dealt with all that. But nothing that's not disturbing us because we're taking it to the, it's like normal course. Part of the same 1.65 we're talking, 1.65 we're talking about. Got it. So the second question was on the LCR impact from the recent guidelines. So we are at 118% in Q1. So any impact assessment on that? And as you mentioned in the opening remarks, that our deposit raising intensity moves down and also the resultant cost to income. So any thoughts on this one if that will slightly delay or do something on our end result? No. So on the LCR, as I said, once these RBI guidelines have come in. And if you see that we have been maintaining a very high solid base on the retail deposits. That is one of the highest in the industry. If you see yesterday's LCR disclosure, that is at 58%. And because now the runoff factor is suggested to be increased, we would have some impact on that front. But we've been quite confident because deposits are coming on very strongly. In addition to that, we feel that we have not grown much in the form of borrowing, right? So we have lines available in the form of refinance. We have a very small portion currently utilized in the form of certificates of deposit. Then FX borrowing is also an option. So we feel that if we have to meet that ratio on April 1, we will be able to mobilize through some of these sources. Incrementally, if you ask me, there would be some additional ask which could come in. But we feel that our deposit machinery is quite strong enough to mobilize some additional deposits. Great. Thank you. Those were my questions. All the best. Thank you. Thank you. The next question is from the line of Ishan Agarwal from Erevna Capital. Please go ahead. Hi. Firstly, we would want to appreciate the customer service and the mobile app of the bank, superb as compared to other banks that I have experienced. I'll move on to my questions. So my first question is, you had guided for a cost-to-income to be stable at 72% for Q1 and Q2, and then start dropping off and break the 70s by Q4. This quarter, the cost-to-income is at 70.5%. So how does that trajectory look like for the coming quarters of this year? First of all, we're very thankful that you said what you said about our app. We go crazy building it. We're just loving it. All of us are doing user testimonials every day. So it's built on a really super platform. So we're very happy that you liked it. So thanks. Now, on the cost-to-income ratio for this, see, we'd like to actually really guide for a 27%, one quarter, maybe a little up and down. So sometimes it can give me it can give signals one way or the other. But directionally, of course, this year, we expect to grow OPEX only by 20%. Last year, our OPEX grew by 30%. 33. 33%. So we are definitely slowing down OPEX growth in this bank. And that is, as you know, once you slow the OPEX growth, straight away it feeds into cost-to-income. So we expect that this year we'll grow OPEX only by 20%. Even first quarter, I think OPEX grew only 20%. 21%. 21%. So this quarter also, OPEX grew only by 21%. So you should expect of us that when you track us Q1, Q1, Q for the next four quarters, we should not grow OPEX more than 20%, let me say. Income, of course, should grow by maybe 23% or so. 23%-24%. 23%, 24%. So automatically, the jaw opens. So that's what we should expect from us. And that's what should. Reduction. But more importantly, the picture that we've given for 27, where we have done our work, done our modeling, that should give you a better glide path. Okay. So moving on to my next question, you had guided. Ishan, just before you continue, just one quick feedback from you. It will help us. This picture that you gave about how the credit card cost-to-income ratio and retail liabilities and assets will come, how they'll come together into the overall bank, you can be honest with us. Did that help clarify? Or you still feel the doubts? If you have doubts, please ask us. Because. Actually, for me, as an analyst, tracking a bank for a long time, for me, what really helps is the blended number. Because for me to see from outside the internal moving parts does not really help me, to be honest. Okay. Thank you for the feedback. Yeah. Yeah. Now, my question, my second question is, you had guided for our ROE touching the lower end of our guidance by Q4 of this year. Now, with the increased equity capital base and increased JLG provisioning, which we did not anticipate, say, two quarters or one quarter back, do you believe you can still achieve that? And if so, then what ROE number can we look at by Q4 of this year? We got to see the number. What looks like it's difficult because there is capital. I think the and also the extra provisions that are coming because of the microfinance book, to an extent. I think that the ROE, let's talk ROE, Ishan, if that helps you. ROE is just a multiple on that number. Let's talk ROE. Our estimate is that we will get to 1.4% by we'll probably plate this year. Next year, we'll plate over 24. Next year, probably 1.2, and by 2027, 1.4. That's how things are moving in our estimates. Ishan, just to add, we continue to sort of hold that profits in H1 could be slightly lower because of the JLG impact which has called out. H2 profits should be much better than that. You would see an ROE uptick as we move on during the quarter. Yeah, yeah. That's excellent. So basically, see, for us, our profits will be more back-ended this year because the JLG impact is coming the first two quarters. And maybe a little bit of tail will come in the third quarter, but not so much. But next quarter, you must expect that the numbers on the platform, though we do expect the deposit growth to be very strong. We expect the loan growth to be well moderated, and that should be fine. NIM and cost and everything will be fine. But provision will be more elevated next quarter also. But then that's for the reason we already said many times in this session, so I don't want to repeat it. But then Q3 should be okay, and then Q4 will look good. Okay. And one last one, with respect to the reverse merger with IDFC Limited. IDFC Limited recently declared an interim dividend of INR 1. So was this a part of the merger, or was this capital going to flow into the bank, or was this already discussed with the parent? No, it is clearly discussed with IDFC Limited because basically, there is a project that that entity had invested in in their project financing hat. And that project was still sitting with IDFC Limited. So when we had done the work, there was a clear understanding between the two parties that that cash flow, outflow of cash from that entity will belong to them. And there was structurally contracted like that. So this is part of that contract. And there were some timing issues on the front, but we felt in good spirit that they should get what is theirs, and they paid the dividend. It's fully in with our understanding, with our support. As per the agreement, we are two parties. It does not affect the cash. It doesn't affect the economics of our transaction. Okay. Thank you. Thank you. All the best for the future quarters. Thank you. Thank you very much, Ishan. Thank you. The next question is from the line of Shubhranshu Mishra from Philip Capital. Please go ahead. Hi. Good evening. Thanks for this opportunity. I've got two questions, actually, both up on two different asset classes. One is a digital personal loan. The second one is personal loan. And the other one is on digital consumer loans and consumer durable loans. Just wanted to understand what is the difference in terms of ticket size, the cost of acquisition, the customer segment that we are targeting in both these segments, and what is the sourcing difference here. My last question would be, what kind of zero plus are we seeing in salary PL and digital PL now versus, say, two quarters ago? Let's take one by one. If you meant to say, what is the credit consumer durable different than digital consumer credit? Is that what you asked? Yes. Yes. Yes. Correct. Okay. So the consumer durable business is how, let me say, you go to a bigger sales and regular consumer durables, you go to a Reliance Digital store and you buy goods. So these are offline purchases, like physical purchases, where usually our employee, one of our representatives is sitting there. They are engaging with the customers, and they're onboarding customers. So they're providing them instant credit on the spot to customers. So that business, maybe once you can confirm to me, but close to about INR 4,000 crore-INR 4,500 crore of loan book we have on the front. No, no. On the 7, INR 6,000 crore. INR 6,000 crore. About INR 6,000 crore of loan book is there on the consumer durable business. So that business pretty much works like how the other large NBFC in India is operating. And let me say that that player and our player are the two very. Ladies and gentlemen, we have lost the connection for the management. Please stay connected while we reconnect them. Yeah. That got interrupted. You can continue. So that is how consumer durable business is. So our book is about INR 6,000-something crore. And we've been doing the business now for 14 years. We are, let me say, number two player in the country after the number one. Got really fantastic capabilities at the store point. It's a very, very difficult business to do because of the economies of scale. Ticket size is small. Tenor is small. And just a difficult business to do. But we are happy we did that and we learned that this business, it takes a long time. And scorecards and technologies and all that. Now, the second business that we are referring to is the digital consumer, is what we do on the online stores. If you go to any of the large e-comm companies and go to check out there, then we could finance a product for you just on the fly, just as you would have done it on the physical store. That's what we call the digital consumer durable. And the average ticket sizes and the customer segment, in one segment, my sense is that in offline, we would be doing a lot of NTB versus the other format where we would largely do a ETB. Is that a fair assessment? So I imagine the ticket size would be more like about INR 50,000-INR 60,000 on the consumer durables. So see, even the digital consumer durables we talked about, it comes in two types, actually. One is the one that comes with a one-month kind of product. One month. You pay back in a month. Now, I told you earlier in the call that in answer to somebody's question, probably a pretextual question, that we do find more delinquency in that. But we do continue to do the longer term. So if you buy as a consumer, buy a mobile phone on Flipkart or somewhere, or let me say any other this one. So we do finance them for a longer period, like six months or nine months. That we continue to do. That we like our business also. So these are two things. But frankly, what is really good about our bank is that we have developed really fantastic capabilities. You try doing this business at scale, it just has a lot of tech involved, a lot of scorecards involved, a fraud scorecard and credit scorecard and identity checks and collection capabilities. Everything is required for this business with a digital and we build those capabilities. Understood. And the question on personal loans, there's a digital personal loan and then there's a salary personal loan. So what is the difference in the ticket size, customer segment? There are two types. One is a regular, when you say salary personal loan, this is a regular personal loan, like how your employee of any of the large A-Cat, B-Cat companies, and you apply for a loan and take a maybe INR 2 lakh, 3 lakh rupee personal loan, or maybe 4, 5 lakh, and then you pay back over 2 or 3 years, or maybe 4 years. So that is one kind of personal loan. But those are typical uses that could be like really personal use, could be medical or whatever. Now, the thing is that the other kind of personal loan that we have started doing now is for customers who come to so the former is regular. It's been going on in India for 20, 30 years. The second one which I'm going to describe now to you, to more specific questions from you, is that if you are an existing savings account customer of our bank, and then we saw that we are consistently seeing that your salary credit is coming to our account at, say, maybe INR 2 lakh or INR 1 lakh per month, and we are continuously crediting to your account. And then we see that you are constantly making, say, INR 2 lakh or INR 3 lakh in your bank balance in your bank. Let me make it up. So then what we do is that we assess that flow of cash, and then we set up a limit for you. So then you can come to our app, and you can draw that money literally in a few seconds. So we set up a limit for you. What we do is we set up a limit of, let's say, INR 2 lakh. You can come in tomorrow, draw INR 30,000 out of that limit, and start paying in only INR 30,000. And we allow anytime prepayment. And best part is we don't charge for prepayment fees at all. So we can just close it any day you want, anytime, no prepayment fee. So we do this facility, and this is also being pretty much loved by customers. That's the difference between the two because this one can go in multiple tranches with no prepayment, the digital personal loan, versus the other salary loan are like regular ones with a prepayment fee because it's offline originated and all that. And what is the difference in the ATS? Sorry to interrupt you, sir. May I request you to please rejoin the queue for your follow-up question? Sure. Sure. Sure. Thank you. The next question is from the line of Nishant Shah from Millennium Management. Please go ahead. Hi, sir. Congratulations for a very good quarter. And well appreciated on the cost to income kind of trajectory going on. So I just had one question. You've answered one on the LCR already. Just on the merger consummation, when can we expect that merger consummation? And a related question to that, does that have any network accrual benefits to it? About maybe INR 600-odd crore of network accrual. Yeah, about INR 500 crore-INR 600 crore. INR 500 crore-INR 600 crore. And it looks like a Q2 item. Q2. Okay. So basically, anytime in this month or next month or so? This quarter, I think there was an NCLT hearing here yesterday, and they pushed it out. Yeah. So there's an NCLT hearing which has slightly adjourned while we are still awaiting the official date, but we are hopeful of this getting concluded by end of Q2, more around end of September. Okay. Sure. Okay. Sure. Got it. Thank you so much. And just you've already addressed this a bit on the LCR front. So what do you anticipate the NIM impact could be from this? Is it just the simple dumb act of, okay, HQLA goes up by a certain percentage, and whatever the cash drag there is the NIM impact? Or is there some more nuance to it than what we understand? See, since the norms have been so tightened by now and made more conservative, then we got to watch out for the rest of the industry also as to how much is the new benchmark of extra you want to hold over the 100. We haven't yet come to sort that through because earlier, it was a norm to keep 116, 118, 120. We don't know. Maybe we will keep 110. I don't know. We've not yet made up a number because we've got to see the emerging protocols. But let me just say that the extra you keep could be, suppose you have a certain number. So our own estimates are something like you might have to incur 1% of a drag on the incremental amount that comes our way. So we've got to see what the number turns out to be. Yeah. And some part of the cost, we could also talk about. So we'll see in terms of how the industry also reacts to it. So when they're saying 1%, it could be more around 75 to 1 in that zone. So we don't see a major impact out of this, but we feel that we need to see how this expands. But let's simulate it for a moment so that we get some clarity. Let us say that it's like INR 10,000 crore. And then you say that, "Look, it's 80 basis points." Let's call it INR 80 crore. I'm just giving you some picture. So don't take this as a final word from me, but I'm giving you some colors so that you can get a sense of what numbers are printing in our mind. Got it, sir. All right. Thank you so much for the time. Thank you. That's it for me. Thank you. The next question is from the line of Nitin Aggarwal from Motilal Oswal Financial Services. Please go ahead. Yeah. Hi. Thanks for the opportunity. Hi, sir. I have three questions. Before that, firstly, thanks for the additional disclosures and the FY27 projections on cost income ratio. This really helps to understand the glide path on the cost income. So first question is on the bulk, if I see the bulk of the improvement in cost income is likely to come in from the retail liabilities because on assets, we are broadly there at 53%. On cards, it's a very small part of the total business. So now that as if you work with large banks also and would have a sense about how the industry data moves on this, so if you can talk about how the cost income ratio will be for bigger banks and how this generally evolves as such because IDFC FIRST Bank, if I look at it, it's like in the fifth or sixth year of its operations post-merger. So how does it really evolve over the longer period? How do you see that? No. Thanks for that, Nithin. See, the thing is that just see that our retail deposits in December 2018 was INR 10,000 crore. Okay? So think of it like practically, it is zero-based in the context of INR 2 lakh crore. When you say INR 10,000 crore, put in a zero-base. So let me say it's been five years. Now, it's not exactly zero-based because the teams have been working on it two, three years before that also, but just for context. So before, it's been five years. So now, if you think of other organizations, I'd say that it would be like 14-15 years for banks to completely break even on this space and start making money because if you start from zero-base, because it does have a drag, similar experiences at other large DFIs that converted, etc. Liabilities took a long time to break even from what we know. But in our case, there is one very positive thing coming in our favor because of the new winds of change of digital technologies that have come and something that we have really gotten a grip of. And I hope if you check out informally in the market, they'll probably tell you that we are one of the best banks in terms of digital capabilities. So because of the digital capabilities used by us and the brand we built and the image the bank enjoys, etc., we are getting our deposits quicker than anybody would have anticipated. Therefore, that period when this negative drag will zero out may not be that long, like 5 more years in our estimate. So in 5 more years, it will drag out and by the fifth year from today to be zero in our estimates. And by sixth year, it should be starting making money. And that's our estimate. Maybe the sixth year will kind of break even. Think of it like a year here or there. So definitely, we are one thing is pretty certain the way we're looking at it. We are running ahead on the cost to income, at least on the liability side because it's not going to be that long drawn for any other startup DFI converting, no. The reason also, sorry to just add one extra point to that, the reason is also easy to see. I bet, Nithin, even you would not have imagined that this bank is going to raise INR 2 lakh crore in five years. Did you imagine? I don't think so. Nobody imagined. That amount of the so imagine in the next five years, we think that it's INR 6 lakh crore. So the book is going to grow by INR 4 lakh crore, but they're going to add only maybe INR 500 crore, 500 branches more. Right? So maybe 500, 600 in that order of magnitude. So think of the efficiency of the incremental model coming up. Right. Got it. Second question is, have we taken some portfolio actions and tightened the writing in our retail business other than JLG? Because we are writing for unchanged credit cost and all the impact on the guidance is arising because of the JLG, while most banks and other large NBFCs also are reporting an increase in credit cost already. So what is really driving that stability in the rest of the retail business? Nithin, we have been watching the portfolio on a continuous basis. In fact, we have also taken a lot of policy interventions. Of course, we all know that if you take some intervention in a particular quarter, it takes a bit of time for it to play out. We have been watching this. We have been also taking cues that things have been normalizing. We are constantly monitoring the portfolio. We gave an example of a vintage analysis for one particular product. This is something which we do and assess on a continuous basis for all the products, right, including check balance, including correction efficiency, how things are moving, as I said, on a vintage basis. So a lot of interventions we have taken in a few other products. And hence, we are guiding that credit cost could start normalizing more so in H2. So these interventions could be more around leverage related, could be that we reduce our disbursement in the bottom of the pile. So there could be many factors which we sort of look into and take into account. So I'll give you some examples if you're looking at. Now, in some businesses, we chose that customers below a certain CIBIL leverage because what we take on CIBIL is not exactly the score only. That's one data point. We actually go and take the underlying criteria. So we tightened in one product, say, in our cross-sell product. What we do is we cross-sell too. I'll give you a color for one product. For example, we cross-sell personal loans to consumer durable customers who have been on our books for a period of time and who have performed well. And that's part of the profitability of the consumer durable business. Now, in that business, some months ago, we tightened the credit leverage, how much leverage the customer could have. Then we cut the lower end of the deciles. For example, if the cutoff was, say, X, we tightened it to cut 10% of the lowest end of the customer base. Then we do stuff like that. Basically, we identified those kind of businesses and taken some actions. For example, in another business, we cut out certain PIN codes. In some other business, we figured out some phone locking model where there was some fintech that was giving us the capability of locking a phone if a customer doesn't perform with the customer's permission. So that we introduced, and that we think is a nice control. In another business, in some cities, some smaller cities, we cut out below a certain cutoff. For certain dealerships, we cut out the volumes. So that kind of work, we do keep doing all the time. And also, said that BNPL also has a product. We were seeing slightly higher delinquency. So that product also, we have shut down. So we are not disbursing there on that product. Right. Right. Got that. And sir, lastly, just one housekeeping item. Also, if you can share the NPA recovery and upgrade and write-up data also. Thank you, sir. May I request you to please rejoin the queue for your follow-up question? Okay. Sure. I will join that. Thank you. The next question is from the line of Manish Shukla from Axis Capital. Please go ahead. Yeah. Good evening, and thank you for the opportunity. If I were to look at the vintage analysis slide, there's graph A and graph B of your outstanding book. What proportion would be graph A and what proportion would be graph B? See, let me say this graph is retail rural. SME is about INR 150,000 crore. That's a very, very good question. So the graph A would have become much lesser by now because graph A pertained to pre-COVID booking, and that was basically a 18-19 slide. So, 18-19, frankly, the book would have been the book itself at that point of time used to be, I'd say, about maybe INR 35,000 crore. So INR 40,000 crore would have gone up by now. So it's largely the new book. Okay. Perfect. Thanks. Moving to the next slide, it would largely be Graph 2. Understood. Understood. Yeah. Because Graph 2, just to be technically correct with you and so that we're all talking on the same page, Graph 2 represents the booking done between April 1, 2022, to 31st March 2024. Okay. Very clear. Yeah. Thanks. Moving to the next slide, Slide 32, overall SMA has gone up by 16 basis points. And considering that JLG is only 6%, it has contributed only 3 basis points to this increase. Balance 13 basis points has come from the rest of the portfolio. So clearly, there is stress beyond JLG as well, right? No, no. First of all, it's not only 3 bps. I think it's more than that. But let me just say that, of course. So that's straight math, right? 85 going to 1.01, and it's 6% of the book. We'll come to that. We'll come to that, of course. We wanted to do that. Basically, the core book is about 0.91%, right? Or 0.95%? 0.95%. 0.95%. So just to get the math right, so you can do the math offline, but we're telling you the numbers. So 0.95% is the SMA excluding the JLG impact. And that is 10 basis points over March 2024. And this is because if you went back to the slide in collection efficiency, you saw the April number at 99.3%. Remember I called it out when I was speaking to you? Yes. We were normally running on 10.5. So that is some amount of money because that period of April, May, elections are on, holidays are on. So it is a small thing. But frankly, some slight movement comes there and seasonal things, they go away. Collections have recovered after that. It's back to 99%. So it's nothing that we should really like to, it's not like. For example, if you see May 2024, it's already back to 99.6%. June is back to 99.5%. So these things happen in the industry. If you see last year, for example, you go back to the same slide, page number 27, we have clearly shown that April 2023 also we reported 99.3%. Though, of course, there was no election that time. I don't know what happened. I mean, I got to go back in time and see what happened then. But by some good coincidence, even April 2023 was also 99.3%. But the good thing is that now a bank is continuously achieving this 99.5 for a long time. Okay. Yeah. It looks like an April phenomenon every year. I don't know. In fact, I requested my team members to actually go back and check what April 2022 also was. Oh, yeah, it's there already. April 2022 also has 99.3. Yeah. So 2022, 2023, 2024. So three times in a row, April has shown a 20 basis point dip. All right, sir. Thank you. Those are my questions. Thank you. Thank you. The next question is from the line of Raghu from Trellis Capital Private Limited. Please go ahead. Hi. Thank you for the opportunity. I just want to come back to the cost to income ratio again. Sorry for raising it so many times. The FY27 guidance, what you have given, is it for the start of FY27 or the end of FY27? For FY27. For FY27. Yes. Okay. So the reason why I was asking, I was a bit disappointed by the 65%. I'll tell you why I was. Because the Capital First, the exit cost-to-income ratio was something around 56, 57%. 48. So 48. Okay. So yeah, at least the March end of the year, I saw for the March FY17. So even after 8, 9 years of operation of the bank and we doing so well with deposits, we still are about 10, 15% higher than when we were as an NBFC. Does it sound it somehow doesn't fit? So can you please explain why is it that way? No, it's a very fair question. The thing is that you're right. By FY27, this would be 10 years of the bank. Now, just to be honest, you see that this was running 95. 95. Yeah. So we started with a big sandbag on the back. And then on top of it, then after that, one second. Let me open my slides so I can have a good conversation with you. So yeah, my slide in front of me. Now back to you. So therefore, when we look at the number, it started with that sort of a situation of having a high cost-to-income ratio. So it rapidly came down. By the way, to move from 95 to 72 in 5 years is really not a joke. I can tell you that it's been very, very, very hard at our end to achieve this. I mean, you are not happy with the numbers, even at 72. I understand that you're an investor and you would have other areas to invest, and therefore you have choices. But from our point of view, even 72 has been very hard because we were investing in branches, ATMs, people, technologies, tech stacks changed. Everything changed. Now, therefore, and people, we have the branches, etc. So the thing that so it did come down. Now, therefore, when we look ahead, well, at 65, should we be unhappy or happy? Depends on what your expectations are. Because even this movement of 700 basis points from 72 to 65, it is coming because there is very concrete action being taken on each of the three subcomponent businesses. Really, for a bank, bank fundamentally is heavily more loaded. There is 30% of the book goes away earning nothing. An NBFC, every penny earns. And it's a very big difference, by the way. CRR, SLR, this track, compliance costs. Now, even LCR. So it's just 30% of your money just doesn't earn anything at all. So I just imagine that's probably one of the reasons. But still, at 65%, frankly, the CD ratio last year, it did not drop. I concede that. But generally speaking, the CD ratio is moving down from 95% to 65%, let me say, 30% drop, and if we achieve this for 2027, I'd say that from our point of view, it would be quite a movement. Thank you. The next question is from. So wait a minute, madam. Just one second. Let me just confirm with him because I'm not sure if he's aligned with me or not. So what would you think? Would you think Raghu is a fair comment or the reason I gave you 30% of the money in a bank doesn't earn anything at all? Maybe that's the reason or I mean, would you agree with that or you would disagree with that? Sir, the line for the current participant got disconnected. Oh, okay. Got it. Yeah. Let's move it. Let's move on to the next participant. The next question is from the line of MB Mahesh from Kotak Securities. Please go ahead. Oh, hi. I just had this question on slide 27. Historically, you kind of indicated that it's a good reference point to understand what credit cost looks like. But if you go back and see this quarter, it doesn't seem to be showing that representation because the increase in credit cost seems to be much higher. You also asked us to look at 2023 and 2022 data as an example of the same. But if you go back into those quarters also, you don't see such kind of a credit cost increase. Just wanted to understand, does this chart actually give you a reference point of credit cost in the first place? Well, this is a, as you know, this is a current bucket. And by the time it moves to credit cost, it's six months after this chart. But it's a good indicator because under the rate of collecting 99.5% of the current bucket, it is a really good indicator. Now, number two, the credit cost itself, as you know, Mahesh, and you're tracking financials, and you're really good at it. We think that there is a normalization happening this year. What is normalization? So this will benefit everybody. Normalization meaning that, look, when the COVID was going on, there was a certain amount of charge-offs and provisions people took. Now, some part of the money kept collected through 2022, 2023, 2024. So that kind of reduced the amount of impact people were taking on the credit cost until last year. Now, this year, it's that kind of the portfolio, whatever we had to recover, it kind of recovered. So that normalization is happening. And of course, on top of it, the JLG happened. So that normalization, frankly, I'm not very disturbed about because, Mahesh, I hope you'll also agree, 165 without JLG. Would you agree with me, Mahesh, that even if you think of the other large institution, which is also in very similar lines of business like ours, and it's almost very similar, and they're also talking of 185? Yeah. That is true. Isn't that a fair comment, Mahesh? That is fair. That is fair. If they're running 185, and we are talking of 185 with the impact of JLG, and without JLG, we're talking 165, would you not agree that it's really best-in-class performance, Mahesh? No, it is. I'm just trying to reconcile the way you're presenting the information to see whether this slide has any predictive power. That's it. Yeah. Eventually, it does because end of the day, this translates to this is current bucket, but eventually, it translates over to the bucket. So just one question. This INR 720 crore going to, let's say, INR 995 crore, the provisions and contingencies. You've kind of alluded to the fact that this quarter, recovery from written-off, previously written-off assets was on the lower side. But from a delta perspective, nearly about INR 250 crore has essentially gone towards the MFI book? INR 180 crore, no? Or is the number closer? How much has gone to provisions and MFI book this quarter? I'm just trying to understand the delta. Yeah, yeah. Between the delta. Yeah. So provisions, you're saying for over the sequential quarter? No, no, no. Yeah. No, the sequential quarter is better for me because that helps us to understand the numbers. It should be a bit easier. No problem. No, no. On sequential quarter also, we saw increase in JLG as well. While we have called out INR 130 crore is the impact over Q1 and this Q1. But in this quarter also, we saw some bit of increase coming from JLG. As Vijay alluded, the plan came in December, right? And there were additional impacts which came in because of heat wave and some of, I would say, seasonality elections and so on. So we saw some effect on the collection efficiency overall, particularly in April and some bit of in May. So increase has come in JLG plus in some other portion of the book. We had, in fact, in Q4, when we had called out that H1 credit cost could be slightly higher, right? And it could come down into H2. We had also called out one factor like an FLDG, where we have done some disbursement, right? Which was not to the FLDG route, where we are getting some NCL, and we'll get some NCL in H1. And that will sort of not be there in H2. But it's not that just to be clear, that is not an NCL that is out of the ordinary. It's like a normal course of business. Except that it won't come in H2 because let me just say it is secured by the counterparty. It's a default guarantee. But this, so FLDG, we shouldn't bother too much about it because, I mean, even we take it as part of normal business because you're booking it, you're getting the income, and we have the credit cost. So that's normal. But let me come back to more about the credit cost as such. So therefore, even without the people have talked about heat wave, people have talked about lots of things. We said everything's subsumed in the numbers. And even everything's subsumed also, at least as far as our eyes can see right now, we are human beings. We can make as Q2, Q3, Q4 rolls out, God knows, maybe five, six basis points more or less. I don't know. I mean, it could be somewhere there. But as far as our eyes can see and the way we can model the book right now, it looks like 165, which, and including JLG, 185. Let's take upward bias. Let's call it 190 for a minute. Shall I? It's still much lesser than, let me say, or not lesser than, but this is the best-in-class performance of the industry in these customer segments. Understood, sir. Thanks a lot for this. Thank you. The next question is from the line of Jai Mundhra from ICICI Securities. Please go ahead. On this aspect only, in JLG, I mean, so the rise in delinquency has been because of the Tamil Nadu floods. But do you see any impact due to heat wave or maybe any disturbance due to general election? Or it should subside as you had expected last quarter by second quarter? Well, this number subsumes everything. So we don't have anything more to call out because of the reasons. But you're right. When we talked to our people, our people did give feedback. They said elections, so many people were on leave. It was safe, very safe, a long-term process. There were some states in which some politicians had called and said, "The waiver is happening and all that." So these kind of things keep on happening. These kind of cycles happen, come and go. But I mean, these kind of small incidents happen here and there. But our numbers are all broadly, it's all subsumed. Right. And so in JLG, is it the I mean, do you also run individual MFI book also or all the MFI is JLG? All the MFI is JLG only. Right. Lastly, the cost of deposit, I think, how should one look at cost of deposit when your ask rate for deposit is going to come down? Maybe for next two, three quarters, how do you see the cost of deposit panning out? Let's think cost of funds, actually. That would probably be a good benchmark because end of the day, that's what will translate to profitability. So our cost of funds right now running at 647. And we, out of this, closed about, as you know, INR 10,000 crore. It's still high-cost money sitting with us. So when the high-cost money goes off, we modeled it, and then we assumed for a minute that that INR 10,000 crore of high-cost money, let us say it is replaced with the normal cost of deposits at the bank. We found that this number of six quarters will come down to 636. We'll get an 11 basis points improvement. So think of, in other words, think of our bank at cost of funds of 6.36 today, as in the payoff of the bonds. It's like a year from now. And frankly, 6.36 is lower than at least the peer banks, peer banks meaning the mid-size banks. So we are probably lower compared to mid-size banks today at 6.36. So we are very proud, just to step away, just publicly digest for a moment, that our deposits are coming so strong because of the brand and many other things. But they are coming at this pace of a 39% growth or 30% growth, despite having cost of funds lowest in the mid-size bank group. So that's very important, and I hope you'll agree it's a very significant thing, actually. Right. Thank you and all the very best, sir. Thank you very much. Yeah. Thank you. The next question is from the line of Hardik Shah from Goldman Sachs. Please go ahead. Thank you. Thank you for the opportunity, sir. I have two questions. One is, for a couple of weeks, I think you tweaked your savings rate rule by offering 7.25% for more than INR 5 lakhs instead of more than INR 10 lakhs. Anything that you can share on how much can that have the impact on the cost of funds according to your model? No, we did two things at the same time. So as you know, we were paying 7%. Correct. But we were paying 7%, and we were paying, if I'm not mistaken, up to INR 1 lakh. We were paying 3%. Actually, up to INR 1 lakh earlier, we were paying 7% through. But now we have now dropped INR 0 lakh-INR 5 lakhs to 3%. 3. Correct. Correct. Correct. So is it going to be net neg positive because of this? Yeah. Yeah. Net neg positive. Yeah. So we're going to buy. So one interesting thing that we are observing is that this savings account is actually not interest rate sensitive. At least we are experiencing that. So whether we were paying 4% or 5% or 7% or 3%, it is INR 0 lakh-INR 5 lakh now. We've now emboldened and moved ahead and did and taken our call. Now we did it. I don't know. It's not sensitivity money. It's just money is coming to us. Brand, I don't know. It's hard to pick what is actually moving, but I think brand is strong now. And app is good. Service is good. I think these things are more material than the rate now. Interesting. Okay. Second question, sir. Is Hardik a little positive just for a second, if you don't mind. Now, if you were to take a—if I take a call now and say that, "Look, Vijay, 2 years, 2 quarters from now, you're going to struggle," or would you say, "No, you'll be fine"? What would be your guess as an analyst? For having dropped the rate to 3% up to INR 5 lakhs, what's your guess? I mean, I don't know what your bucket movements are, to be honest. That's why the question. No, no. When we drop rates so sharply, would you say that it would be we may find it difficult to raise deposits, or would you find that we'll be fine? As an outsider analyst, what would be your professional opinion for us? It's not clearly right because still the rates are quite high, more than INR 5 lakh with this 7.25%. So as a customer, again, I would say that the depositors are still rate sensitive, the ones that we are holding. So when you actually drop the rates on the entire CASA to 6%, that is when we will see the real impact. That's how I would view it. Got it. Thanks for that. Yeah. Okay. Your question. And second question is on the SMA, sir, if you could share the SMA 1, SMA 2 numbers for consumer loans and credit cards, the way you have shared for JLG. I don't think we have it ready offhand, explaining what the SMA for respective products are. But overall numbers of, I mean, maybe we can ask the next question, and I'll try to figure out if in the interim we can figure it out. No, this was the only qu estion I had. No, no. I'm saying maybe Sudhanshu can, if you have the answer, you can fill in. Otherwise, I'll try to. Yeah. So we generally don't give out product-specific numbers. While for JLG, we have called out for a reason, but we will give some of these numbers offline. No, no. Okay. Offline. I'll give it offline. But the thing is that if you have it now, you give it. Otherwise, you don't give it. So I don't have it handy, so we can give you handy. But hopefully, in the next maybe 5, 10 minutes, by the time any of the questions go through, if you find it, we'll tell it to you. Okay. Okay. No worries. Thank you, sir. Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Vaidyanathan, sir, for closing comments. We discussed long enough. I have no closing comments to make except to say that thank you very much for being with us and through this discussion. It's a long one. And number two, if you can see how the bank has progressed, at least over the last few years, you can hopefully see this as an episodic thing. And once a couple of quarters go through, then even if you feel that the numbers are weaker this quarter and next quarter, we come in in the painless sense. We don't expect balance sheet numbers to be weak. Okay? So even if you see it, I'll say that don't be very disturbed because Q3 will come at us. Q4 will come. And then things will normalize, and life will be good after that. I mean, good for the state of the bank as it is today. And then if you track us to 2026, we expect 2025 to be similar to the zone of 2024. But we expect 2026 to be a breakout year in terms of profitability. We expect 2027 to be a breakout year for profitability. So 2026, 2027, 2028, 2029, we see a good runway the way we are looking because of very simple fundamental logic that our costs will definitely slow down from here. I mean, cost increase will slow down from here. Maybe it's 20 this year, maybe it's 18 or 19 year after that, and so on, and further down from there. And then income should rise. So basically, we should see the jaw opening. 2026, 2027, 2028, 2029 should be very materially improving years. And those of you who are with us through the cycle will hopefully experience it with us. I have seen this before running Capital First and other organizations. So I'm expecting that cycle to come at us, the good cycle to come at us in that window. Thank you, everybody. We want to just thank you for being with us. Thanks. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.