Ladies and gentlemen, good day and welcome to IndusInd Bank Limited Q4 FY22 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sum ant Kathpalia, Managing Director and CEO, IndusInd Bank. Than k you, and over to you, sir. Good evening. Let me start with some macro commentary and then get into the bank-specific details. Over the course of quarter four, the economy was hit by a third wave of pandemic, which ended by March, helping by improving pace of vaccinations. Latest official estimate suggests the economy surpassed its pre-pandemic size by end quarter four, with real GDP growth of 8.9% over financial year 2022 as major components of GDP went past its pre-pandemic level. However, pace of recovery got impacted by Russia-Ukraine conflict, which sent commodity prices, including of oil, spiraling upwards. India, however, is much better positioned to deal with the negative external spillovers. An improved macroeconomic stability profile, government capex push, external sector buffers, and a broadly supported fiscal and monetary policy environment would help sustain recovery momentum. Much improved health of the banking sector, significant de-leveraging by the corporate sector, and gradually improving capacity utilization reinforce the case of an investment cycle over the next 3-5 years. Coming now to the bank's performance. We completed second year of Planning Cycle 5 strategy in quarter four. I will spend a minute on PC-5 update before going into our quarter-specific developments. We have also added a few slides in investor presentation, providing a status update on PC-5. The financial year 2022 proved to be a challenging year due to internal as well as external factors. While we saw spread of COVID's second wave during the first half of the year, we faced whistleblower allegations in the second half, followed by a COVID th ird wave. The bank responded with measures to address these concerns comprehensively through slower growth in first half, focus on collections, building conservative contingent provisions ahead of the slippages, conducting internal and external review on microfinance operations, and maintaining traction on consumer, corporate, and digital initiatives. With these concerns getting behind us, we steadily pivoted towards growth with loan growth improving every quarter from 3% in March 2021 to 12% in March 2022. We also progressed on our key initiatives for PC5. Retail liabilities surge. Momentum on retail liabilities were maintained with a share of share of retail as per LCR increasing from 37% - 41%. CASA ratio improved from 41.7% - 42.7%. Top twenty deposit concentration fallen from 22% - 17%. The COD at 4.6% is at the lowest level in our journey over several years. Fine-tuning corporate bank approach. Corporate bank saw growth of 20% after last year's sell-down and net slippages of around 60 basis points, witnessing one of the best years in recent past. We have seen improvement in average rating from 2.76 - 2.69, granularity in fees, and reduction in long-term loans as shown in the investor presentation. Holistic rural banking. Rural banking franchise saw a scale-up Bharat Super Market stores, agribusiness, along with the recovery in vehicle and microfinance. These improved shares of rural loans from 19% - 20% this year. Our domains contributed 43% of the loan book and have outperformed the industry during COVID wave. Our disbursements in vehicle finance and microfinance have picked up well after a brief slowdown due to COVID too. Diamond portfolio too participated in the strong growth in exports. New growth boosters. We progressed well on scaling up our new initiatives such as affluent banking, NRI, tractor financing, small corporates with less than INR 500 crore turnover, merchant acquiring, affordable housing, and Digital 2.0. Overall, we navigated an otherwise turbulent year with outcomes broadly in line with our communication throughout the year. We had consistent improvement in return ratios as well as growth metrics every quarter, and our balance sheet continues to be at its strongest levels in the last several years. Coming to the quarter-specific developments. Acceleration in loan growth. We achieved 5% quarter-on-quarter growth, driven by 5% quarter-on-quarter growth in consumer, 4% quarter-on-quarter growth in corporate segments. The year-on-year loan growth book improved to 12% from 10% previous quarter. All retail products, including vehicle, microfinance and consumer, saw one of the healthiest disbursements ever during quarter four. The corporate book has been maintained steady momentum driven by small corporates. This broad-based disbursement growth was a key outcome for the quarter. Our deposit mobilization continues apace driven by granular customers. Our deposits grew 3% quarter-on-quarter and 15% year-on-year, including CASA growth of 5% quarter-on-quarter and 17% year-on-year. The growth in retail deposit as per LCR accelerated to 6% quarter-on-quarter and 26% year-on-year. The growth of deposit is achieved along with the reduction in cost of deposits by six basis points quarter-on-quarter and 43 basis points year-on-year. Digital 2.0. During the year, the bank created digital center of excellence, investing in building new capabilities and talent base. We launched IndusEasy Credit, merchant acquiring and vehicle finance portfolios and are being scaled up. The other two individual and SME offerings are planned for the launch in the current year. The digital transactions continue to grow, now forming 92% of the total, with strong growth in mobile transactions up 33% and WhatsApp banking 2x YoY. Asset quality. We saw a reduction in both gross and net slippages during the quarter across consumer, vehicle and microfinance business. Our net slippages have come down from 0.9% - 0.6% quarter-on-quarter. Our restructured book has reduced from 3.3% - 2.6% quarter-on-quarter and continues to perform well, specifically in vehicles. While we saw slippages from corporate restructured book, we have not written back any provision from contingency buffer. Our GNPA was down from 2.48% - 2.27%, and net NPAs reduced from 0.7% - 0.64% quarter-on-quarter. Our contingent provisions are at INR 3,328 crores, with total loan-related provisions at 152% of gross NPAs. Healthy profitability continues to remain. Strong retail disbursements and falling cost of deposits aided in improving our net margin to 4.2%. Our client fees continued momentum growing at 8.8% quarter-on-quarter. Our costs accelerated due to business revival as well as investments in technology and distribution resulting in cost to income ratio of 42.6%. Overall, our operating profit remains healthy at 5.8% for the quarter. Steady improvement in return ratios. Our profit after tax grew 13% quarter-on-quarter and 51% year-on-year to INR 1,401 crore. Our return on assets improved to 1.51% and return on equity was at 11.9% for quarter four. Continuous improvement in return ratios and lower risk density has ensured healthy capital adequacy ratio at 18.42% versus 17.38% YoY. Now coming to individual businesses. Vehicle finance. Our vehicle finance disbursements for the quarter were at INR 9,986 crore, reflecting 13% quarter-on-quarter and 19% year-on-year growth. Our full disbursements at INR 32,000 crore surpassed previous COVID levels despite weak quarter one due to COVID second wave. Within vehicle categories, we saw healthy disbursements across commercial vehicles, construction equipment, utility vehicles, tractors and cars. Disbursements in two and three-wheelers remained subdued. We have gained market share in light commercial vehicles, construction equipment, tractors and cars during the year. We have seen activity levels across our customer base increasing during the quarter. The vehicle supply constraints have ensured adequate capacity utilization for existing vehicles. This has also helped customers to pass on increasing fuel prices burdens without considerable impact on their viability. The small road transport operator segment has seen good freight demand during the last couple of quarters. The segment refrained from exuberant vehicle purchase since pandemic, resulting in near normal capacity utilizations now. This should pave way for fresh demand once fuel prices ease out. Two of our weak product segment, that is bus and three-wheelers, have also seen utilization improving as COVID restrictions are withdrawn to a large extent. Three-wheeler segment is quickly getting back to normalcy, including demand for fresh vehicles after a long time. Bus segment too is expected to see fresh demand couple of quarters down the road. As a result, our vehicle finance restructured book has reduced from INR 3,769 crore to INR 3,298 crores quarter- on- quarter. The collections from the restructured book improved further to 90% during the quarter. Collection efficiency from the rest of the book is back to normalcy. Overall, we remain optimistic about the vehicle finance business outlook for the current year. The segment has withstood increased fuel prices till now. We continue to add to our distribution, invest in our digital ecosystem and maintain rational pricing to ensure growth and risk-adjusted returns across the cycle. Microfinance. We were cautious on microfinance disbursements in quarter three due to potential third COVID wave. Focused on collection and completion of business reviews. As you know, we shared findings of independent review in March. With these issues getting behind us, our microfinance disbursements bounced back nicely during the quarter. The microfinance book grew to INR 30,612 crores with 16% year-on-year growth. Our standard book collections, excluding restructured loan book, improved further to 99.1% in March 2022 compared to 97.5% in December 2021, while the collection efficiency of new client sourcing during financial year 2022 was at 99.5%. The net slippage during the quarter was INR 696 crores, and cumulatively for financial year 2022 was INR 2,547 crores. This was broadly in line with our slippage expectations for the year, and we saw severe impact of COVID second wave specifically in rural India. We are carrying over 90% coverage on gross NPAs. Our 30-90 DPD book has fallen from 5% - 2.6% during the quarter. With this reduction in overdue book, limited impact of COVID third wave on the portfolio and focus on collection, we believe the credit cost in microfinance should get back to normalcy soon. Our merchant acquiring business managed by BFIL has scaled up impressively during this year despite multiple macroeconomic challenges. The loan book outstanding grew to INR 1,943 crore from INR 1,463 crore quarter-on-quarter. The number of borrowers under this book increased to 324,000 from 260,000 quarter-on-quarter. The merchant acquiring book has been consistently reporting net collection efficiency of more than 98% for the past three quarters, and the credit cost has been less than 1.5%. IndusInd Bank, through BFIL, has been taking banking to the doorstep of its customers, and we feel there is a large untapped potential in terms of liability sourcing in rural India. While still small, we still are happy to re-share that we are able to mobilize INR 1,400 crore from the clients served by Bharat Financial. We are looking at various means to reach the last mile, and efforts are on to make IndusInd the primary banking customer of our valued customers. Overall, we believe microfinance business is steadily coming back to normalcy after a severe second wave. The activity levels are consistently improving, and with expectation of another year of good monsoon, the business is expected to show steady performance in the coming year. Global diamond and jewelry business. The Indian diamond cutting and manufacturing industry had a healthy growth recovery during financial year 2022, showing a 50% growth in exports. Our diamond book too grew by 29% year-on-year on the back of strengthening exports and diamond prices. The business so far has not seen any material impact except for reduction in business volume due to ongoing Russia-Ukraine conflict. As you know, we are a working capital provider at the top end of the diamond and diamond studded jewelry manufacturing customers in formal economy. We are engaged with all stakeholders and monitoring the situation closely. On the base case remains that the conflict may result in slower growth in diamonds business, which although may not create an asset quality issue, but may impact growth in assets and income in the short term. The business however is only 4% of the loan book, and thus overall impact on the bank should not be material. There has been no NPAs or restructuring in this segment. Corporate bank. Our corporate loan book has maintained a steady performance growing around 5% quarter-on-quarter consistently throughout the year. We had realigned the stock as well as flow of the corporate book towards revised underwriting framework. This has played out well during the course of the year. The growth was driven largely by large and mid corporate growing by 20% year-on-year. The growth was backed by increased disbursements and working capital trends, specifically in our strategic customer group. This quarter was categorized by high activity levels with good disbursements as well as payments due, prepayments due to de-leveraging. Small corporates grew 26% year-on-year, albeit on the small base. There are corporates with turnover. These are corporates with turnover less than INR 500 crores, especially in SME supply chain finance program. The proportion of A and above rated customers has also improved from 68% - 71% YoY, with weighted average rating improving from 2.76 - 2.69. During the quarter, our corporate restructured book reduced from INR 17 billion - INR 9.6 billion. We saw restructured exposure in the construction segment of INR 5.8 billion being repaid. We also saw restructured exposure in our retail book of INR 1.4 billion slipping into NPA and fully provided for. The restructured book also includes around INR 4 billion from other entities in the same group which are performing as of now. The bank is carrying provision towards the restructure as well as NPA accounts from the retail books. Our exposure to stressed telco was at INR 30 billion as of March 2022, with subsequent to the quarter, and saw a meaningful reduction of INR 1,150 crores in April. Our exposure as on date stands at INR 18.5 billion, including fund-based exposure of 10 billion and balance non-fund-based exposure. Overall, we remain confident on the outlook for the corporate sector credit growth. Our interaction with corporates does indicate rekindling interest in private CapEx. Government spending on infrastructure, manufacturing boost through production linked incentives, rising new economy companies, stronger balance sheet, etc, are all point towards likelihood of a fresh CapEx cycle across the country. We having weathered challenging times over the last one to two years are now well-positioned to capitalize the market opportunity. Other retail assets. Our retail assets loan book accelerated to 6% quarter-on-quarter, driven by secured as well as unsecured assets. The retail asset business saw recovery in disbursement post-COVID quarter three, which was further strengthened in quarter four. Credit cards continue to deliver strong performance and with spending of INR 13,800 crore for March, reflecting 42% year-on-year growth. Our business banking segment has shown 5% quarter-on-quarter growth. We have been cautious on this segment due to COVID as well as loan pricing issues. We are now comfortable on both the fronts, resulting in strong disbursements. Our new customer acquisition run rate nearly doubled from financial year 2021 as COVID impact receded and distribution-led strategy picked up. The loan against property book also grew 2% quarter-on-quarter after being stagnant for a year. The growth was achieved by increasing disbursement and easing competitive pressure on prepayments. We expect growth momentum in retail business to continue in the current financial year. We, however, remain watchful of inflationary economic conditions, particularly on the unsecured consumption spends. Now coming to liabilities. Deposits grew 15% year-on-year and 17% year-on-year growth in current and savings accounts respectively, and retail deposits as per LCR grew by 26% year-on-year. The growth is achieved along with the reduction in cost of deposits. Our cost of deposits reduced to 4.60% from 4.66%, showing a decline of six basis points during the quarter and 145 basis points cumulatively in two years. We reduced concentration of top 20 deposits from 22% - 17% year-on-year. The certificates of deposit have remained a small component of 3% of our overall deposits. Affluent segment total AUM stood at INR 60,000 crores, including deposits of INR 35,000 crores. Affluent business also contributed to fee of INR 325 crores for the current year, growing 50% year-on-year. Deposits and NRI segment have been holding up well at INR 26,800 crores, despite weak fresh NRI deposit inflows in the country. We resumed branch expansion after COVID to ease in second half of the year, taking branch count to 2,265 from 2,015 from September. We plan to add another 200-250 branches during the year. Our savings account was also recognized as the best savings product by Financial Express Best Bank Awards 2022. Our seamless client servicing with minimal client disruption throughout the pandemic was recognized by the Digital Banker Award for outstanding response to COVID-19. Our retail deposit mobilization has been a cornerstone of PC5 strategy. We have seen a sea change in deposit franchise from deposit attrition in March 2020 to massive surplus in March 2022, coupled with strengthened deposit profile. Overall, we remain committed to liabilities-led growth strategy with emphasis on retail deposits. The deposit mobilization is likely to see increasing competition due to tightening liquidity as well as potential pickup in credit growth. Our investments in physical as well as digital distribution should help us maintain deposit momentum. The growth will also be aided by increasing market visibility as well as new segments such as agency business. Digital traction. The bank has created a digital center of excellence and is taking a comprehensive view to deploy new-age digital platforms and build end-to-end digital client value propositions. We have built new capabilities and infused a lot of specific talent in digital. We have set up a digital factory which is now a 100-member team across digital products, advanced analytics, digital marketing, digital partnership, digital revenue and growth roles. Across driving our digital agenda along with our technology partners. As mentioned at the beginning of the year, we are focused on five areas, namely IndusEasy Credit for unsecured retail loans, IndusEasy Wheels, particularly in the used segment, Indus Merchant Solutions, differentiated payments and fintech and finance solutions for individuals, SME, trade and credit segment. During the year, we launched three of these five initiatives as follows. IndusInd's IndusEasy Credit for individuals is one of a kind end-to-end omni-channel digital journey. This solution provides instant sanction and disbursal capability, enabling superior client, employee and channel partner experience. We already have close to 200 offline partners live on the platform and several online partners in the process of integration into the stack. Consequently, 84% of the card origination business is now digital, up from 37% a year ago. The cost of origination too is down by 60% versus traditional model. The stack will be soon extended to personal loans as well. IndusEasy Credit for business owners provides digital journey for MSME clients seeking secured, unsecured loans up to INR 2 crores. It's a completely digital process where we are leveraging advanced analytics to give an in-principle sanction to a MSME client within 15 minutes for loans and up to INR 2 crores in the form of unsecured term loans or secured overdraft. The stack will be extended to other MSME offerings as well. Indus Merchant Solutions app is all-in-one stack for retailers with to bring their payments, lending and banking needs together under a single umbrella. We went live in quarter three and are seeing good traction already with close to 60,000 user base and 75% of the users being new-to-bank. Another 20% of existing clients of the bank wanting to avail payment proposition on the back of digital merchant stack. Vehicle business launched IndusEasy Wheels portal, which hosts ancillary services like roadside assistance, mechanic services, insurance, which is the first of its kind in the market. This portal also hosts the repossessed vehicle of the bank for auction and provides a smooth user experience for anyone who are looking for pre-owned vehicles. We are proud to share that the IndusEasy Credit was recognized as the best new product launch of the year loans by The Digital Banker and at the Global Retail Banking Innovation Awards, and Indus Merchant Solutions was awarded Outstanding Digital CX SME award in the recently concluded Digital CX Awards 2022. The other two initiatives of Digital 2.0, millennial and SME offerings are planned to launch in the current year. During the year, we also strengthened the partnership, adding new strategic partners to our platform. Our mobile app continues to see strong user penetration growing by 20% year-on-year, and our monthly active users and mobile transactions increased by 33% year-on-year. On WhatsApp banking, we continue to see healthy traction with monthly active users and transactions increasing nearly 2x YoY. Overall, 92% of our transactions are digital and nearly 70% of the service requests are processed digitally. Now coming to the financial performance for the quarter. Net interest income for Q4 was at INR 3,985 crore, grew 13% year-on-year and 5% quarter-on-quarter in line with our loan growth. Net interest margin improved during the quarter from 4.10% - 4.20%. The improvements were driven by continued reduction in the cost of deposits from 4.66% - 4.60%. Other income grew 7% year-on-year and 2% quarter-on-quarter. Core fee excluding trading income grew by 8% quarter-on-quarter and 9% year-on-year. Share of retail fees have improved from 58% - 64% of total fee. Operating expenses grew by 15% driven by recovery in retail business, investment in technology and distribution growth. Our branch network saw addition of 162 branches during the quarter, taking our branch count to 2,265. Our overall cost to income ratio increased to 42.6% versus 41.6% quarter-on-quarter. On the asset quality and the provisioning front, our stress pool has seen meaningful reduction which includes gross and net slippages have come down quarter-on-quarter, driven by reduction in microfinance and vehicle finance. Net slippages for the quarter were at 0.6% of loans versus 0.9% for previous quarter. Our restructured book has seen a reduction of INR 1,359 crore and moved from 3.3%- 2.6%. Around 53% of this book originates from vehicle finance, where performance has been as per our expectation with collection efficiency of 90% for March. The microfinance collection efficiency on standard book, excluding restructured, was at 99.1%. The collection on new loans in financial year is healthy at 99.5%. The restructured book carries contingent provisions. Exposure to stressed telco has now come down from thirty billion to 18.45 billion, along with multiple positive developments in the telecom industry. Overall, gross NPAs for the bank has moved down from 2.48% - 2.27% quarter-on-quarter, and net NPAs were down from 0.71% - 0.64% quarter-on-quarter with a PCR of 72%. While we saw slippages from restructured book during the quarter, we have made fresh provision through P&L rather than using contingent provisions. Overall, our contingent provision excluding specific provision remained constant at INR 3,328 crores. Our loan-related provisions are at 3.5% of loans or 152% of the gross NPAs. Our SMA one and SMA two book was at 43 basis points and 16 basis points respectively. Collectively, SMA-1 and SMA-2 have reduced from 84 basis points to 59 basis points quarter-over-quarter. Net NPAs reduced marginally from 85 basis points to 83 basis points quarter-over-quarter. Profit after tax for the quarter was at INR 1,401 crores, growing 13% quarter-over-quarter and 51% year-over-year. Our CRAR including profits remains healthy at 18.42%. Return on assets crossed 1.5% mark during the quarter and return on equity improved to 11.9%. In conclusion, we completed the second year of the three-year strategy cycle. We closed the year putting behind most of the external and internal concerns and steadily pivoting towards growth. While the operating environments remain volatile due to Russia-Ukraine conflict, we are committed to achieving our planning cycle five ambitions. Our priorities for the coming year would be maintaining disbursement momentum. Our areas of domain expertise, that is vehicle microfinance and diamond, have seen good recovery in disbursements. The impact of increased fuel prices has not been evident yet, including this month so far. Our corporate and consumer-to-business too are contributing towards growth. Overall, we would aim to achieve our PC-5 growth ambition about 15%-18% compounded growth for the financial year 2021-2023 period. Retail liabilities. We continue to believe and execute on retail liabilities-driven growth strategy, particularly through retail deposits. We are investing in our physical as well as digital distribution to maintain our liability momentum. Digital. We launched three out of the planned five initiatives. IndusEasy Credit, Indus Merchant Solutions, IndusEasy Wheels. These will be scaled up during the year. The other two, millennial and SME offerings are planned for launch in the current year. Launch and scaling of new initiatives. We are adding new growth vectors across assets and liabilities business. Asset side should see launch of home loans, scale up of tractors, affordable housing, merchant acquiring and small corporates. Liability side should see scale up of affluent NRI agency business and wealth management. Improving financial metrics. We have aligned our balance sheet towards rising interest rate scenario. We will strive towards maintaining a healthy NIM and operating profit margin. The provision should come down with COVID impact getting behind us. We believe that the coming year should see underlying profitability of the franchise with improved growth. We can open the floor for questions. 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. Participants, you may press star and one to ask a question. The first question is from the line of Arup Kataria from Edelweiss Financial Services. Plea se go ahead. Good evening, sir. Good evening. Arup, sorry to interrupt you, but your audio is not very clear. Sir. Hi. Hi. Hello, sir. Sir, I just wanted to check on your outlook on margins. Arup, we believe we've always given a guidance of two margin guidances, which we've given. One is on net interest margins. We've given 4.10%-4.25%, and that's where we are overall for the year. We've given a PPOP guidance of greater than 5%. We ended the year at 5.8%. Got it, sir. Irrespective of the rate cycle, that should be the margin guidance, correct? Yeah, that's what I said. I think, we believe that, we will be range bound in these two margins, irrespective of the rate cycle as of now, because we have the ability to change our product mix or the portfolio mix. Got it. Sir, just in terms of credit cost, obviously you are strengthening the balance sheet by providing more and not drawing up. At what point in time will you start drawing down? We have to wait for the right opportunity. I think, we've not done it this quarter. Who knows that we may once we see that the flows are happening from the restructured book, at that appropriate time we will take a call. It's not necessary that we may drop. We may just keep the contingent provisioning holding on. It depends on how we are seeing the flows. We've given a guidance on the floor on the credit cost of 120-150 basis points. I think you will start seeing that range bound activity from us going forward. Got it. Sir, just the last question. You are sounding constructive on private CapEx, which is not the case with other banks. I mean, when do you see that kicking in? We've said that it will happen over a period of time. We've not said it will happen immediately. While we see some green shoots coming up here or there, but I think the public CapEx will come up before the private CapEx. We do see in private sector also some one or two proposals keep on coming to us. We have Sanjeev Anand here. He can answer that question. Sanjeev, would you? Yeah. Actually, we have been speaking to a lot of our clients and everyone over the last 4, 5 months. I would say at least 60%-70% of the large strategic clients we spoke to have talked about CapEx now because they're pretty much reaching their, you know, capacity utilization. Definitely in the coming 5, 6 months we will see a big boost out there. Okay, sir. Thanks a lot. Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead. Yeah. Congratulations for good set of numbers. Firstly, in terms of the entire deposit, okay, the way the environment is shaping up, liquidity is going to be tight and in fact many of them are raising rates as well. How should we look at our retail plus CASA? No doubt you have validated in terms of affluent NRI to be the focus segment, but how should we look at the overall retail and CASA and should we see like there will be reliance on the bulk deposits in case we get towards our growth guidance of 18 odd%? Yeah. We are very clear, Kunal. We want to get our retail franchise correct. We've given a guidance on PC-5 to be between 45% and 48% on retail SPS, SL. What do you call? LCR. LCR ratio. I believe that we are holding. If you look at our current deposit rates is still higher than the four private sector banks. I think we will continue to be at that range. I think while people may catch up, I think we will. We've also positioned ourselves correctly in the two-year-plus, where we're mobilizing deposits in the two-year-plus bucket to make sure. I think we've got some initiatives behind it to make sure that our retail growth and liabilities is enough to catch up. Our bulk deposits are today at 21% of our overall portfolio, and we want to continue to believe that we don't want to raise that. In fact, maybe it should go down, and we believe that we can manage the margins and the NIM in the range which we have set. Overall, even in rising interest rate environment, the way our book is more skewed towards, say, the fixed rate given the vehicle, plus maybe on the MFI, still we would be confident in terms of no impact in terms of the lagged repricing being there. See, what happens is if the interest rates are rising and we are rising, also the MCLR or the external benchmark rate does rise. There may be a 30-60-day gap, but you may catch up with that, with that over a period of two months or three months. That's number one. Number two, the new fixed rate book, we are also seeing in the vehicle as well as we are seeing a rate increase and cautious rate increase happening in that segment. What was gone down to 7.5% is now at 8.5% happening already on the commercial vehicle side. Number three, the mix from the fixed rate book is also changing. On the vehicle side, for example, used vehicles and used cars are coming up to make up the mix change. In microfinance, you diversified the microfinance into merchant acquiring business where INR 2,000 crore is now at 23.6%. You continuously change the mix to make sure that your margins are taken care of. Sure. In case the environment gets tight in terms of deposits and mobilization of the deposits, what would be our priority? Would it be in terms of sacrificing some growth, retaining the margin or maybe investing more in terms of the scaling of the franchise and still try to get towards the growth guidance which is there? I think we are looking at long term. I think we will continue to scale up our franchise. We'll continue to invest in our franchise. We are going to launch a new initiatives on the liability front, which is on the digital capability completely and hopefully we should be able to launch in the next seven months, which should give another impetus to our growth in the liability business. We are consciously doing a lot of things to make sure that we are ahead of the curve in liabilities as we go ahead, because we've been a little bit behind. Sure. One last question in terms of MFI. So, how is the leadership out there now, post maybe we saw the change which has been there, and how should the entire business be now driven going forward, yeah? I think I've answered this question before also, and I've said that we had a very strong succession planning in place to take care of any leadership issues which may have come in the microfinance segment. Like I said, I think we have put an Executive Vice Chairman J. Sridharan there, who's managed the business very, very well sitting there, and I think we've been able to not hire a CEO, but each business has a distinct CEO and has been able to manage. We are still contemplating whether we need a CEO on top of the three CEOs and another executive vice chairman. I think the way the business has stabilized, we've not felt the need for it right now, though we have two external candidates. Secondly, I think on the processes and the governance side, we had our internal resource, Sreenivasan Ghulam, who was actually from the microfinance industry, who brought stability into the operations and the whole financial accounting and the operations bit of it. The third thing which we did was, I think we in-housed the senior management team into the bank, and I think that created a lot of stability in the workforce and there is an opportunity for others also to move inside the bank without taking the agility of the microfinance industry. Having said that, I think if anything to go by this quarter has been a representation of how microfinance industry will look. We've seen very good growth quarter- on- quarter and year- on -year on this business. We believe that this business will continue to grow at about 27%-28% year-on-year and we believe that the issues of quality of the portfolio are behind us and we should come back to 2.5%, 2%-2.5% on the credit cost. Having said that, also I must compliment and I must inform that M.R. played a very constructive role with us as a consultant. He guided us during this time and his term ended with us on March thirty-first. He continues to be available if we require him to be, but with mutual consent, we said that now that the work is done, we can continue and create a new organization. I think, that's where we are and I think, the organization is now pivoting towards what it was supposed to be, a process-driven, technology-led group as we go forward. Okay. Thanks. Thanks and all the best. Yeah. Thank you. The next question is from the line of Manish Shukla from Axis Capital Limited. Please go ahead. Yeah, good evening. Firstly, on credit deposit ratio, you are significantly below where you were earlier and much below your PC-5 target also. How do you see credit deposit ratio moving for you? This is a cautious call. I think at one point we were 116%-118% and we were beaten down. I think we should move. We've always said our target is to be between 88%-92%, and we will get there. As the credit growth comes back and we are pivoting towards growth, you would see us moving to 88%-92%. Yes, sir. What part of the asset book would be floating in nature for you today? Around 50% is fixed rate, as you know, the vehicle finance, microfinance and parts of credit cards. Balance 50% is in predominantly corporate, which largely is a variable rate book. Within that also there is a short-term book which, by nature, is a floating rate. Broadly, 50% of the book is fixed rate, balance is variable. The fixed rate book, what will be the average tenor? Fixed rate, you know, vehicle finance business, the average tenor would be around 24-26 months. Microfinance is typically a one year book. Okay. Last question, is the fresh additions of NPA of INR 1,742 crore in consumer. Can you split it across segments, please? Yeah. I'll let me just give you the slippage. I think the slippages on consumer are INR 553 crores, which happened from CFD business. Secured retail was about INR 212 crores. Unsecured was INR 162 crores and MFI was INR 815 crores. The net numbers were INR 239 crores in CFD, INR 148 crores in secured, INR 116 crores was unsecured and INR 696 crores in MFI. Okay. All right. Thank you. Very good questions. Thank you. The next question is from the line of Nitin Aggarwal from Motilal Oswal Securities. Please go ahead. Yeah, hi, Sumant, congratulations on good results. Carrying over on the slippage numbers, like, in the MFI, we still had pretty elevated slippages. Just wanted to understand if this decline is done and are we going to see a normalized slippages from FY 2023 beginning or is it still going to take time? No. We've said that we should be in the range of 2.5% on the credit cost as we move along. That's what our guidance is, and this is where we will be. Just wanted to understand if this is going to be back-ended improvement or. No. From quarter. See, what you saw in quarter three was the maximum. In quarter two, you saw half. Quarter four, you saw half of it. In quarter two, you will see another half of it. I'm just saying you will just see it going down because there's no. The 30+ bucket is INR 800 crores only. It's just going to go down as we move forward. Right. Secondly, on the vehicle business, how do you see the growth trends over FY 2023? We have been running flat, covered up the, like, the loss that was going on earlier in terms of growth. How is this position going to go forward? See, I'll tell you what has happened on the vehicle, if you go back four quarters or maybe two quarters below, we were not growing at all in the business. I think, we were actually having an issue of, you know, excess, you know, running down of the book. I think what we've seen now is disbursements catching up on quarter three and quarter four. Of course, the quarter four was a 2% growth. Going forward, I think, I have Sriram here, who heads our vehicle finance unit. He's taken over from Partha. Let him just answer this question for you. It will help you get the answer correctly. Yeah. Yeah. Sorry. Yeah. Commercial vehicle, we had what do you call it, COVID two, which was very fatal and people had very difficult time running the vehicles. Post that, people are running the vehicle quite well, like even despite the diesel price increase, people are able to run the vehicle and people are able to pay more than one month installment, though they are not able to like come back from the entire three months deficit, what has been like which has happened during the COVID two scenario. They have been paying more than one installment and the portfolio is looking good. Month-on-month, like, the overdues are coming down. For commercial vehicle, the rest of the field like LCV, construction equipment, they are doing very, very well. Even the recovery is good and also the people are looking at new purchases and we are also looking at improving our market share. Presently we are looking at also affordable housing as a good unit and we are trying to invest, like, more money in that segment. Thank you. Sure. Thanks. Lastly, on the liquidity coverage ratio, now that has declined almost 20% over the past few quarters. Sir, sorry, we are losing your audio. We are not able to hear you properly. Sorry, am I audible? Yes. Yeah. Yeah. I was asking on the liquidity coverage ratio, that has declined almost 20% over the past three quarters. How do you see this and can this limit the overall balance sheet growth in FY 2023? We are at 127% on average on the LCR right now. I think it's a question of how much of retail liabilities are we able to mobilize. I think we said that we've got initiatives and we've done our. In fact, in a bad year where the NRE flows were down, we've still been able to grow our LCR. We are able to maintain our LCR. I think we will continue to grow this. The second thing is, please understand, if you look at our balance sheet, we have an excess cash sitting there of INR 50,000. I think we are able to manage our business well, and I think we should be able to manage the LCR as we move forward. Yeah. Regulatory requirement is 100%. If you see all peers, banks also, I mean, they have come up and, you know, this is an average, so it may not translate to the 50 or 1,000 that you see as excess cash because this is done on an average basis. If you see the ENR LCR, it will be like 137%. That's where we are. Like to like, yes, we are around 15%-20% down as what you rightly said as per disclosures. I think, yeah, that's a level that I think consciously we are seeing how to utilize our excess cash. Sure. Thank you so much, and wish you all the best. Thank you. Thank you. The next question is from the line of Jai Mundhra, from B&K Securities. Please go ahead. Yeah, hi sir. Thanks for the opportunity. I have a couple of questions. First, on liability, I think we had earlier stated that loan growth will be preceded by deposit growth. If you can just refresh the guidance on both loan growth and deposits, sir. Do you see a case for higher competition in deposit given the largest private banks, you know, going to get more aggressive in deposit mobilization? Sir, I think there will always be. It's a big market. I don't assume that, you know, there will not be enough size for everyone. Our asset growth, even if we grow at whatever percentage we need to grow. Yeah. At 20% we come from a very small base. I think we don't need so much of a, you know, growth. I think we are doing enough initiatives to back the retail deposit growth, in my opinion. In my opinion, if we are looking at 15%-18% CAGR growth on the loan, our deposit growth will actually be more than the 15%-18- Retail. Retail liabilities will be greater than 15%-18% CAGR, year-on-year. We will continue to grow at that level. Sure. Understood. Okay. Sir, on asset quality, especially on real estate, would you say that real estate is also a bit of a domain of the bank? Because in terms of size, maybe on relative basis, that is also as big as gems and jewelry. Of course, you have not put out that as a domain of the bank, but I just wanted to check your view. Are you comfortable growing in that segment? How would you assess the riskiness of that book at present? It depends on what you call as real estate. A lot of people define real estate differently. We don't have a mortgage portfolio today, so a lot of banks are much bigger than us on the real estate business. If you are defining real estate as commercial real estate, I think we are very selective on that real estate book. I think it has done very well for us, withstood the test of time. It has stood and given us very profitable growth. We continue to believe in that segment. I think we have internal yardsticks and parameters on where, what our portfolio would be, and that's defined in our board policy as well as our internal risk guidelines. Right. Sir, on slide 11, you have put real estate commercial plus residential, which is 4.05%. Yes. I believe is your real estate developer, because LRD is clearly the second line item of 2%. Correct. I wanted to check out of this real estate book, which as per last balance sheet was around INR 8,000 crore. How much is restructured at present? How much is NPA? And is there any other portfolio which is under some sort of a dispensation? Not at all. There is nothing on the restructure, nothing on the NPA on this book. I don't know about the restructured. Is there any? Yeah. No, on restructure, there's none. There was, you know, only one account which had become NPA, which you recognized in the past. Other performing actually during the last one or two quarters, it's been robust that we've been able to reduce exposure, get prepaid in some accounts. We've been able to book better new accounts because there is enough activity and positive activity. We closely monitor the overall concentration across the different parts, but we have not seen any signs of stress. It's actually been a bit of a robust period. You would have seen rating upgrades in some of the larger real estate companies itself. You know, some of them have gone to A category and better because of the large collections they've achieved. You know, just to add, whatever our book was on April 20 when COVID hit us, today as we talk, around 75% of that book has been churned, repaid, or whatever it is. It just shows the quality of the book. Okay. I mean, we have a very good mix. We have some 110-odd projects across residential and commercial, and they're all doing pretty well. I mean, there's no real concern out there. No concentrations really. Yeah, no concentrations. They're across different regions, different good builders, and that's very good. Sorry, I missed the bit on churn. What did you say? From April twenty to now? I wanted to say is, you know, our book when COVID came in in April 2020 when there was this whole conc ern on that. Since then till now, in the last two years, around 75% of our real estate book, both on the commercial and the residential side, has been churned. Churned means either repaid, prepaid, or we have sold it down, added some new, this thing. Because, you know, we have an active sell-down strategy in our real estate portfolio. Basically what I'm saying is it's a very good quality book, which we had onboarded at that time also, and it stood the test of time, and today also it's a pretty well-diversified good quality book. Right. Sir, on LRD exposure, would it be fair to assume that all of the projects, exposure here would be operational and none of them would be under any dispensation sort of a thing, right? Oh, yeah. We have two types. We have a construction period loan with a right to take up the LRD, but LRD being a highly competitive market, depending on the lessee, the rates, they don't work out, somebody else may take it over from us and our construction loan gets repaid. On our LRD book, which we have closely monitored, we did see initially some delays and vacancies, but the portfolio is performing very well. Tenants are back, rentals are back, and there's no account which is in any stress. The promoters have also supported during this period when rentals were lower, but now the rentals are back at full swing and there is a demand. Actually, we are seeing fresh leasing at better rates. You would have read about that in the, you know, Embassy had given a rent guidance that you're reading. There is good demand again. The concerns that it may all move towards work from home and there won't be demand for commercial assets doesn't seem to have played out as much from what you're seeing in recent times. It's highly competitive on rate side, so we will be selective on the kind of transactions we have done. Great. Last thing, sir, from my side, one is, I mean, if I see a large corporate book, clearly, in rupees, absolute rupees crore, it has moved from, let's say INR 44,000 crore, INR 40,000 crore to roughly INR 60,000 crore over the last four quarters. If I look at your credit rating, the risk profile, rating mix that you give, there is not too much of a change on slide 11. From YoY, you know, 26% of double B and below is only less by 200 basis points. What does it tell you that on incremental basis is the same as the outstanding basis or there is something else, which I might have missed? Yeah. No, sir. First of all, there is we have mentioned on the slide that there is a little bit of reclassification on the corporate side. As we have reorganized the business, the slide depicting large, mid, small is also reorganized. The growth rates, which Sumant mentioned in his opening remarks are adjusted for that reclassification. The large has grown 20% year-on-year. That's one. Secondly, the rating profile that we saw shown on the slide 11 includes both fund-based and non-fund-based exposure. During the year, we saw some cash back guarantees getting repaid. Plus combined to that, there is a growth in small corporate and gems and jewelry and real estate, which typically come in the triple-B side, while the inherent risk is quite low. Those two have, you know, contributed to the loan. The rating mix has been what it has been shown in the Slide 11. Understood. Sir, in this last data keeping question, we had shown this security receipt portfolio which is given in the BSE. What is the provisions that we are carrying against that? Net security receipt is 83 basis points against last quarter's 85 basis points. Okay, 83 is net number, right? Is that so? Yes. Okay, great. Thank you, sir, and all the best. Thank you. The next question is from the line of Nilanjan Karfa from Nomura. Please go ahead. Hi, good evening. Two questions. One is on DPD keeping. If you can also give the restructured loan break-up, whatever is outstanding referred to its side that we historically mentioned. Let me just give it to you. Our restructured book is about INR 6,172 crores as of now. CFD is INR 3,298 crores. Secured retail is INR 686 crores. Unsecured is INR 233 crores. MFI is INR 995 crores and corporate is INR 961 crores. 961. Okay. Okay, great. Thanks, Sumant. The second question, when I look at the movement of, you know, cost of deposits and cost of funds, at least this specific quarter- Cost of funds declined quite sharply by about 18 basis points. Could you highlight, you know, what exactly happened when compared to cost of deposits, which was down only six basis points? Yeah. We had some borrowings that were maturing, and they were contracted at abysmal low rates, the new borrowings that came in. For five-year tenors, just to give you an example, we got rates of SOFR plus 100 basis points for five years tenor. We had around INR 3,000 crores of maturities on borrowings which got financed at very low rates. I mean, the spread would have been at least 2% lower than what they were existing at. That's interesting, sir. Okay. On the asset side now, basically the yield on retail, which is basically flat at about 14.18%. If you look at, you know, the loan book, there is, you know, quite a sharp growth in microfinance, about, you know, 11.5% sequentially. Even the business banking piece has also grown, right? The other part, which also, I guess is a little higher yielding book, has also grown. Across other segments, are you seeing a higher, you know, pricing pressure? There is a pressure on loans against property which is there. I think that is also getting normalized because people are now getting back to normalcy at 8.5%. Which was going at 7-7.5%, and we did not participate so much in this. I think that's number one. Number two, in the commercial vehicles, medium and heavy commercial vehicles side, I think there were some competitors who were buying market share at a certain price, which we were not willing to do because risk-adjusted return did not make sense for us. I think that's all coming back to normal and we are seeing normalcy returning back and people getting much more aware of the rising interest rates. Okay. Okay. Microfinance business, as you know, does not have any, you know. If we do at 19.6%, and there is no problem in that rate at all in the microfinance book. Right. Okay, great. The final question, is there some resignations from top management team, but they're still, you know, yet to be disclosed or something like that? No, nothing of that sort. I just told you that one person, which is our advisor, M.R. Rao, did opt for a mutual separation because the work on the microfinance was done. Otherwise, we have not seen anything. Of course, Sanjay Malik, who was on sabbatical for the last one year, did decide not to join and he's moved on. That's what it is. Sanjay Malik was our investment advisor. Investor relations. Okay. Great. Thank you. Thank you very much. I now hand the conference over to Mr. Sumant Kathpalia for closing comments. Okay. Thank you for joining the call. I think, the bank, I just want to leave some messages. I think, the bank is progressing well on all performance metrics, including getting future-ready with investments in digital and distribution. The second message is the bank is. I believe the bank is well-provided towards asset quality and domains provide us a competitive edge. We've said that we will be in the range of 120-150 basis points. We will be in that range. Our competitive edge is the three domains where you say that big guys survive. We will be the big player in these three domains. The true earning power of the franchise will start reflecting from the current year. We've had two years where we've continued to do provisions and we've not shown our return on assets or return on equity. I think the true earning power of the franchise will start coming back. You've seen quarter four, we will be delivered on 1.5% ROA from 1.31. I think we are all set to what this bank was supposed to be, and I think the next year should see a lot of what we have committed to the market being delivered. Thank you so much for your time. Me and Indrajit are available if you need any clarification at any point of time. Thank you. Thank you very much. On behalf of IndusInd Bank Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.