Ladies and gentlemen, good day and welcome to IndusInd Bank Limited Q2 FY 2023 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. Sumant Kathpalia, Managing Director and CEO, IndusInd Bank. Thank you, and over to you, sir. Good evening, and thank you for joining the call. I will start with some macro commentary and then go into bank-specific details. Indian economy continues to be among the best-performing economies, even in the wake of external disturbances and tightening monetary conditions. Global economic growth is expected to slow down with synchronized and aggressive monetary tightening, lingering uncertainty from geopolitical tensions, continuous supply chain disruptions and high inflation. India's external fundamentals, however, remain stable and external financing remains manageable. High-frequency data suggests demand conditions remained strong during Q2 and poised to expand further during the festival season. In current Q2, global economic and market developments will dominate domestic policy and market conditions. Improving domestic demand with an ongoing festival season boost and public capex push would help sustain growth while export demand is likely to contract. Overall, we expect India is likely to remain among the fastest-growing economies despite the confluence of global headwinds driven by macro stability remaining intact and inflation expected to ease over from H2 financial year 2023. Coming to the quarter-specific developments, the quarter saw continued improvement across our business, key business units, both in terms of growth and asset quality. The first half of the year is seasonally weak for vehicles and microfinance. We have nonetheless seen one of the best performances by all the three domains in the recent past. Corporate and retail businesses continue apace, growing at 20%+ with no asset quality surprises. The liabilities and client fees too maintained traction during the quarter. Overall, the salient highlights for the quarter were broad-based loan growth driven by all business units. Our vehicles business recorded the highest ever disbursement of INR 10,600 crores. Microfinance too saw disbursements of INR 9,700 crores, putting behind the blip from regulatory changes. Corporate bank maintained momentum while non-vehicle retail accelerated sequentially. Overall, we had a healthy 5% quarter-on-quarter loan growth with consumer at 4% and corporate at 6% quarter-on-quarter growth. Traction on deposit mobilization. We achieved 4% quarter-on-quarter and 15% year-on-year growth in deposits during the quarter. Our retail deposits as per LCR accelerated during the quarter, growing at 5% quarter-on-quarter. Our affluent and NRI business too saw acceleration in deposit mobilization during the quarter. Asset quality. Our gross slippages during the quarter reduced by thirty percent quarter-on-quarter, driven by a reduction in both standard as well as restructured slippages by 25% and 37% respectively. Our restructured book has now reduced meaningfully by INR 1,277 crore from 2.1% to 1.5% quarter-on-quarter. Our net NPA too reduced to 0.61% from 0.67% with a PCR at 72%. Our contingent provisions are at INR 2,653 crore with total loan-related provision at 140% of gross NPAs. Our credit cost has reduced from 50 basis points to 44 basis points quarter-on-quarter. Investment in the resources. We continue to invest in our physical and digital resources. We have added 55 branches this year along with 2,700 employees in the bank and additional 3,650 employees in the vehicles and microfinance distribution during this year. We are scaling up our digital launches and are on track for the planned launch of the individual and SME offerings in the year. High profitability of the franchise. Our net interest margin improved to 4.24%. Client fee income grew by 24% year-on-year, driven by healthy retail fees of 71% of total fees. Our cost to income was at 43.9% and our PPOP margin remained healthy at 5.7%. Our profit after tax grew by 11% quarter-on-quarter and 57% year-on-year at INR 1,805 crores. Our annualized EPS has now moved into the nineties at INR 93 per share. Our return on assets improved further from 1.73% to 1.8% and return on equity was at 14.5% for Q2. We also maintained a healthy capital adequacy ratio with CET1 of 15.95% and overall CRAR at 18.01%. Now coming to individual businesses. Vehicle finance. The vehicle finance business continued as one of the best runs in the last several years. The business has been achieving record disbursements every quarter and the first half of this year is no different despite the seasonality pressure. The disbursements have been improving across all vehicle categories, making this a diversified growth trajectory. Disbursement during the quarter were at INR 10,664 crore, up 6% quarter-on-quarter and 24% year-on-year. This is the consecutive second quarter where we have achieved over INR 10,000 crore of disbursement per quarter. Vehicle disbursements are typically weaker in H1 compared to H2 of previous year, with seasonal factors such as monsoon, festival, et cetera. This year, however, our H1 disbursements have been higher than H2 of previous years or for that matter, any half year in our history. Consequently, the vehicle finance loan growth accelerated from 8% year-on-year to 13% year-on-year over the quarter and 4% quarter-on-quarter growth. We have moved into double-digit loan growth after 3 years. Within vehicle categories, commercial vehicles, utility vehicles, cars and three-wheelers saw more than 220% year-on-year growth in disbursements. Disbursement growth in other segment, that is construction equipment, two-wheelers and tractors, was in mid-teens year on year. Vehicle asset quality remained steady and gross slippages during the quarter from standard customers improved from 0.8% to 0.6% quarter on quarter. The restructured book in vehicle finance reduced by INR 861 crore to INR 2,270 crore from INR 3,131 crore quarter-on-quarter. We are seeing restructured customers completing satisfactory performance and becoming eligible for upgrade to standard category. Upgrades and recoveries contributed 70% of the reduction in the restructured book during the quarter. The collection efficiency of the remaining restructured book was at 83% in line with our expectation of 80% collection as mentioned earlier. Overall, we are expecting disbursement momentum to gain further traction with festive demand in Q3 and new purchases reflecting income tax benefit-driven purchases in Q4. Microfinance. Our microfinance business too saw healthy recovery in disbursements growing 29% quarter-on-quarter to INR 9,740 crore, making it the highest ever Q2 disbursements. We also saw new to bank customer addition growing 33% sequentially. The new business lines of Bharat Merchant Store and Bharat Superstore too scaled up during the quarter. The slippages from the MFI book were lower quarter on quarter, resulting in Bharat Financial achieving growth at improved asset quality. Our MFI book at the end of Q2 at INR 29,617 crore was up 5% year on year and 1% compared to June 2022. The RBI direction on MFI issued in March 2022 has been fully implemented and the disruption in business costs in Q1 now is thus behind us. Household income assessment for more than 70% of our active and inactive clients has already been completed, and the rest will happen as and when the customers come up for new loans. MFI standard book net collection efficiency for Q2 was strong at 99.1%. The collection efficiency for new client source in the last 12 months, that is post-October 2021, remained healthy at 98.9%, which is closer to the pre-COVID level. Our 30-90 DPD book, including restructured customers, was at 2.0% on September 2022 compared to 2.2% at the end of June 2022. The gross slippages during the quarter reduced to INR 435 crore as compared to INR 560 crore during the previous quarter. Considering the recoveries, upgrades and write-offs, GNPA reduced to INR 885 crore, which is about 2.9% as compared to 3.4% at the end of June 2022. We continue to expand our merchant acquiring business under the banner of Bharat Superstore. Portfolio sourced through BFIL under this business has grown 20% sequentially to INR 2,675 crore with 4.2 lakh active customers. Moreover, we continue to make good use of Bharat Financial's deep rural reach to broaden the banking relationship with our microfinance customers. At the end of Q2 financial year 2023, the total liability book sourced from customers arose from near normal monsoons, government support, and through upward revisions in agri prices, etc., and diminishing COVID impact. Our business model remains focused on growth and diversified across geographies, new customer acquisition, low ticket sizes and scaling up new initiatives. Global diamond and jewelry business. The diamond business has achieved its highest ever loan outstanding as well as revenue contribution during the quarter. The asset quality remains pristine with low NPA or SMA-1/SMA-2 customers or restructured customers. Our portfolio saw a healthy growth of 29% year-on-year, aided by strengthening of diamond prices and stable demand from the largest market. The industry continues to work within the domestic and international trade norms, absorbing the impact of geopolitical conflict. Corporate bank. Our corporate business has been delivering steady growth with no asset quality surprises for the last several quarters, and this quarter was no different. We achieved a growth of 23% year-on-year, with standard book slippages of just INR 66 crore during the quarter. We saw growth across segments with large corporates growing by 10%, mid corporates by 1%, and small corporates by 7% quarter-on-quarter. Loan book growth has broadly driven by large corporate segments like strategic client group and financial services, and in mid and small corporates like SME healthcare. The sectors driving growth were NBFCs, real estate, steel, power and power generation. We continued to actively reprice the loan books. Our yield in corporate book improved by 40 basis points during the quarter versus 7 basis points improvement during the previous quarter. A portion of A and above rated customers remain healthy at 72% with overall weighted average of 2.65. The gross slippages from corporate book reduced from INR 603 crores to INR 179 crores. The slippages from a standard book were at INR 66 crores. The restructured slippage were primarily from a stressed retail group, and with this the entire exposure from the retail group has become NPA and fully provided for. Our corporate restructure book has now reduced from INR 5.6 billion to INR 4.7 billion. Exposure to stressed ALCO was reduced from INR 18.5 billion to INR 17.3 billion, including fund-based exposure of INR 10 billion and balance non-fund-based exposure. While there are anecdotal signs of CapEx revival by the private sector, the revival is skewed with select sectors and large players contributing to the bulk of investments in the economy. Broad-based CapEx recovery is yet to percolate to mid and small companies in the midst of domestic and global economic uncertainties. Overall, we do see corporate book to maintain a steady growth driven by mid and small corporates with active repricing benchmark to the market rate. We continue our journey of corporate growth driven by higher rated granular shorter duration loan book. Other retail assets. Our non-vehicle, non-microfinance retail book saw growth momentum by accelerating during the quarter with 5% quarter-on-quarter and 21% year-on-year growth. The growth was driven by both secured as well as unsecured assets. In secured assets, both our business banking and loan against property grew by 3% quarter-on-quarter, continuing the momentum from last quarter. With rising interest rates and tightening liquidity, we saw further rationalization of pricing in the market. Credit card spends continue to remain strong for us as well as the industry with spends of INR 16,700 crore for the quarter. As a result, our credit card loan book grew by 10% quarter-on-quarter. While the implementation of new RBI guidelines during the quarter impacted the outstanding card numbers for all players, our new acquisition continues to remain robust with 81,000 acquisitions in September 2022. We also started the pilot of our home loan product during the quarter in select cities. Home loans will strengthen our universe of product offerings for retail customers. We aim to build a sizable home loan book in the next 2-3 years. As the festival season sets in, we expect growth momentum in retail business to continue in coming quarters. Now coming to liabilities. Our deposits grew by 4% quarter-on-quarter and 15% year-on-year. Deposit mobilization continues to be driven by granular customers and our retail customers as per CASA grew by 5% quarter-on-quarter and 16% year-on-year. CASA book also grew by 15% year-on-year in line with the overall deposits. The deposit market saw withdrawal of surplus liquidity levels and heightened competition from peer banks. We continue to be selective in our rates action and focus on balancing between growth and cost of deposits. Contribution of certificates of deposit remains low at 3.2% of deposits. Our CASA ratio was at 42.3% versus 42.1% year-over-year and at 43.1% quarter-over-quarter. The current account saw a healthy growth of INR 8,900 crores, which almost half was due to a spike towards quarter end from corporate dividend mandates. The savings account saw a reduction quarter-over-quarter, primarily due to implementation of centralized treasury settlement in budgetary account. This removes intermediary banks from government budgetary allocations, and we had one such account wherein the balances move out. We only have this account and only have one account in the central allocation budget. Our new initiatives with affluent and NRI banking saw growth accelerating during the quarter. Affluent segment deposits grew by 7% quarter-on-quarter from INR 336,300 crores to INR 387,700 crores. Affluent AUM at INR 63,300 crores too grew by 7% quarter-on-quarter in line with the deposits. The segment also contributed the highest ever quarterly fee income of INR 101 crores. Pioneer, the flagship affluent brand, continues to gain prominence in the marketplace through campaigns and unique best in class Pioneer lobbies. Currently, we have 10 Pioneer branches and lobbies in six major cities and plan to launch five new branches in the current financial year. After remaining stable for last few quarters, we saw pickup in the NR segment deposits aided by easing guidelines by the RBI. Deposits from NR segment at INR 29,000 crores grew by 7% quarter-on-quarter. We have garnered about 2,000 crores of NRI funds so far through the RBI dispensation window. We continue to expand our distribution with opening of 34 branches, taking the total branch count to 2,320. We are aiming towards 2,500 branches by fiscal year-end and around 3,500 branches over the next three-year planning cycle. We had borrowing maturities during the quarter reducing outstanding borrowings by 3% quarter-on-quarter and 12% year-on-year. The borrowing mix has also moved towards long-term stable sources such as refinance from development finance agencies. We continue to maintain a healthy average surplus liquidity of INR 47,000 crores during the quarter. Overall, we continue to remain focused on retail liability mobilization amidst the heightened liquidity environment. Our physical and digital distribution strategy had been aligned toward retail deposits. We continue to scale up new initiatives like Affluent and NRI. Digital traction. Bank continued to scale up digital, direct digital customer do it yourself and partnership-led business, which nearly doubled year-over-year. Bank has an earn model and not a burn model, which is reflected in the digital customer acquisition costs, which have been reducing steadily with increasing business volume across our easy credit, savings online and merchant stacks. The new digital launches done by the bank are scaling up as well. IndusEasyC redit for individuals is now live for personal loans and is enabling us drive scale with efficiency in personal loans and credit cards. Indus Merchant Solutions has seen a strong organic growth since launch of more than 100,000 user base and monthly active user base doubling quarter-over-quarter. Indus Easy Credit for Business has digitized MSME unsecured and secured credit up to INR 2 crore exposure and nearly 50% of the up to INR 2 crore MSME business is now digital, which has unlocked process efficiencies and enhanced customer experience. Bank will soon be launching a new digital proposition for individual segments with several industry-first innovative features. On IndusMobile, during the quarter, the bank went live with card tokenization, mobile and UPI transactions continued to grow 2x YoY, and monthly active user base on the mobile app was up 28% year-on-year. WhatsApp banking chatbot continued to scale with user base increasing 2x YoY. WhatsApp banking now has a registered base of 5.3 million users. Over 93% of the bank transactions are now digital. Sustainability. At IndusInd, we have embedded sustainability as one of our strategic cornerstones and integrated it with the way we do our business. We already have a large sustainable portfolio in the bank supporting livelihood finance, and you will see us launch several new sustainable banking products. During the quarter, we launched EV financing program partnering with the leading OEM. We upgraded our ESG risk assessment framework and also onboarded a leading rating agency as knowledge partner for ESG risk assessment. We have also commenced forming strategic path towards achieving carbon neutrality by 2032. Climate risk management is now becoming an important agenda with regulators, and they have issued a discussion paper on the same. The bank has already integrated ESG risk assessment with its credit appraisal process, and we believe that we are well prepared for upcoming expected regulatory changes. The bank has been awarded as the best bank in India for ESG award by Asiamoney for financial year 2022 and acknowledged as the market leader in ESG in India by Euromoney. We are committed to maintain our leadership position in ESG space and contribute towards a sustainable future. Now, coming to the financial performance for the quarter. Net interest income continues to accelerate, growing at 18% YoY in line with the loan growth. Net interest margin improved sequentially from 4.21% to 4.24% quarter-over-quarter. Similar to the previous quarter, the net interest margin was aided by synchronized repricing of assets as well as liabilities. We saw loan book yields improving by 12 basis points quarter-over-quarter. Yield on overall assets improved further by 30 basis points due to lower drag from excess liquidity. The cost of deposit increased by 31 basis point, and the cost of fund increased by 27 basis point during the quarter. The core fees remains strong, maintains strong traction growing at by 24% year-on-year and 5% quarter-on-quarter. The treasury income was positive and stable quarter-on-quarter. The overall other income grew by 9% year-on-year and 4% quarter-on-quarter. Share of retail fees remained healthy at 71% of total fees. Our total revenue for the quarter was at INR 6,313 crore with 15% year-on-year and 4% quarter-on-quarter growth. Operating expenses grew by 5% quarter-on-quarter. Employee expenses grew by 9% quarter-over-quarter as we had rolled out our annual increments during the quarter and also due to a fresh hiring in the financial year. Our overall cost to income ratio was at 43.9% quarter-on-quarter. The operating profit for the quarter was at INR 3,544 crore, growing 10% year-on-year and 3% quarter-on-quarter. The PPOP margin to loans continues to be healthy at 5.7%. Our core operating profit grew by 18% year-on-year. On the asset quality and the provisioning front, our provisioning for the quarter has further reduced to INR 1,141 crore. The provision to loans are thus down to 44 basis points now. The gross NPAs are down from 2.35% to 2.1% quarter-on-quarter and net NPAs are down from 0.67% to 0.61% with stable provision coverage ratio of 72%. The improvement in the asset quality was driven by reduction in slippages from both standard as well as restructured book as disclosed in the investor presentation. We utilized INR 350 crores from restructured slippage in quarter two and contingent provision stands at INR 2,653 crores or 1% of loans. The net security receipts have reduced from 72 basis point to 67 basis points quarter-on-quarter. The loan-related provisions are at 3% of loans or 140% of the gross NPA. Our SMA-one, SMA-two book was at 15 basis points and 43 basis points respectively. Profit after tax for the quarter was at INR 1,805 crores, growing at 11% quarter-on-quarter and 57% year-on-year. Our CRAR, including profits, remain healthy at 18.01%. Return on assets continued upward trajectory from 1.73 to 1.80 quarter-on-quarter and return on equity improved to 14.45%. Overall, we continue to demonstrate consistent improvement in performance metrics every quarter, driven by all-round contribution across business units. We expect to maintain the trajectory on key metrics. We are comfortable with achieving our PC-5 loan ambitions as vehicle and microfinance disbursements are seasonally stronger in H2. The corporate and consumer businesses are scaling up every quarter along with the traction on new initiatives such as home loans and merchant acquiring. We remain focused on our strategy of retailization of deposits. We are investing in our distribution. Our new initiatives of Indus NRI too have gathered momentum and almost all these deposits are retail as per LCR. Our Digital 2.0 launched to further boost our retailization agenda. Asset quality trends are also as per our communication, and we expect the stress book to continue to fall. We will continue to maintain conservative contingency covers. The operating profit margins are expected to be stable, factoring in the near-term pressures from treasury and investment in the franchise, compensated by revenue building up from retail disbursements and retail fees. The ROA and ROE should thus continue to expand as our earnings scale up with annualized EPS now at 90. We can now open the floor for question and answer. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking your 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 Kunal Shah from ICICI Securities. Please go ahead. Yeah. Hi, Sumant. Congratulations for a good set of numbers. The first question is with respect to yields. As you highlighted, actually corporate yields are up 40-odd basis points and there is huge competition, and we are seeing more growth coming in on the large corporate side, which was up 10% quarter-on-quarter. What is actually driving this improvement on yield? And at the same point in time, when we look at consumer banking yields, okay, they are more or less steady on a quarter-on-quarter basis, despite slippages also being lower. Just want to get the sense in terms of the rate action on the retail products. And how do we see the momentum over here? You're absolutely right. I think our corporate banking yields are up 40 basis points. It is because of the, you know, the book which was linked to the external benchmark rate getting repriced in the quarter and the focus on the small and the mid corporates getting us the better yield and the repricing of that book which happened. That's number 1. Number 2, on the retail side, I think it takes time for the yield to come up. While our disbursement yields have gone up in the business, I think it's only a matter of time that you will see the yields going up in the business as we move forward. I think that's the only reason. In my opinion, I think you will see the yields in the consumer bank. Specifically, microfinance has already seen a 35 basis point yield increase. I think the CV is almost static on the yield right now, and I think the corporate bank, the non-vehicle part of it is also static and should start seeing the yield coming up. It's more a, you know, a fixed rate book out there. Oh, okay. Overall, MFI, we had still seen the improvement and this is on the book basis which you are highlighting or this is on disbursements? No. It's on the book basis because as you saw the NPAs going down on the book, you saw the yield coming up. I think we saw a yield. Last quarter we saw 20 basis points and this quarter we've seen another 20 basis points improvement in the yield. Okay. Despite that, this is flat, so other product segments would have been. Yeah. Slightly down, because of the competition. Yeah. It's not like that. I think the runoff of the book has to be taken into account. Some runoff which is happening in the book, which is three-year-old, which were at the larger, higher part of the yield is also running off. You have to take all that into account. Sure, sure. Secondly, in terms of CA and SA. You alluded in terms of the factors which have led to spike in CA and even maybe the rundown in SA. How should we look at it going forward? Maybe even though it was a quarter-end phenomenon with respect to CA, do we see it sustaining or maybe it should run down and there could be some pressure on CASA going forward? Because SA was quite down on a quarter-on-quarter basis. Yeah. Yes, you're absolutely right. I think our CASA should remain range bound between 40%-43%. We've always said between 41%, and I think we should come back to 41%-43%. I think yes, on the CA side, there was a dividend mandate which came in, INR 5,000 crore of a dividend mandate. I think you will continue to get such deals. Our SA was as a consequence of a change in the government strategy where I think the centralized depository, you know, they all send budgetary allocation accounts which are centrally allocated, go through the treasury account now, and they don't use the intermediary, the bank as a settlement center. I think that's what has happened. I think it's being. Just as it got implemented in the road or infrastructure road and transport, it will get implemented in the power, shipping as well as other industries. I think we have to watch out for that space. I don't think we have only one such account which is from the central and that has got impacted. In my opinion, you should see the CASA coming back. I think you should see us range-bound between 41%-43%. The only thing I can tell you, our NIMs will remain range-bound between 4.15%-4.25% as a consequence. Lastly, in terms of data points. If you can give the break-up of the outstanding restructured pool. You highlighted on vehicle, but what would be the other segments? Corporate is also down. I think if you can give the break-up of the risk slippages as well as outstanding restructures. See, what I'll do. Yeah. We will disclose this like last quarter in the commentary. Okay. Okay, cool. Yeah. Thank you. Thank you. Next question is from the line of Nitin Aggarwal from Motilal Oswal Financial Services. Please go ahead. Yeah. Hi, Sumant. Congratulations on strong numbers. A few questions like, firstly, on the credit cost now that, over the first half we have consumed almost 1% credit costs against our guidance of 120-122 basis points. Mm-hmm. How do you see this in context to the guidance? By when do you expect the slippages to normalize completely? I think the slippages are getting normalized. I think you will see us in the range of 120-150 basis points only for the year. I can only tell you this. I think it is what you have to see is the guidance is on ENR, not on ANR. I think that is where the guidance. I think we've always said our credit cost will be around INR 4,200-INR 4,400 crore. It was given in the overall ENR at the end of the year. That is where we will be at 120-150 basis points. Okay. Sure. Secondly, on the mortgage side of the business wherein we are like looking to grow quite rapidly over the coming years. What customer profile, geographies, any color if you can provide on the distribution strategy that we want to employ to grow this business? How much book size are we looking at over the next couple of years? I think you have to look at mortgage in two parts. One is the affordable housing and one is the normal mortgage. The affordable housing is in 23 cities already, and I think that book is about INR 1,600-INR 1,900 crore. We want to grow this book to about INR 5,000 crore, and that's our strategy on that. It comes at a yield of 11% and we are very fine with that. On the branch banking side, our strategy is to grow where Pioneer grows, number one. I think our Pioneer is in 10-11 cities. It has to expand to 20 cities. We will launch mortgage in 20 cities. Wherever Pioneer or our affluent grows, we will follow that cycle in the Pioneer for the Pioneer. The other thing is we have a home market strategy, and we are at 16 markets on the home. Pioneer would overlap with that. I think wherever Pioneer is not launched and there is home market and we want to expand to 25 cities, we will also launch mortgages in that city. Our segment is affluent plus a segment of branch banking, which is you don't, you can't call it mass. It's mass affluent or what you Mass affluent. Mass affluent. That's what we will focus on. We are not going at the lowest level. At the lowest level, at the affordable housing space, we are having our vehicle finance unit which drives that business. Have I answered your question? Yes? Line for the participant dropped. We move to the next participant. Mm-hmm. The next question is from the line of Adarsh. Please go ahead. Hi, Sumant. Congrats on good numbers. Sumant, just on obviously the macros look strong. Just if you can reflect on how do you expect to tide through liabilities? You know, there will be smaller banks which will give higher CASA rates. There are large banks which need to increase deposit mobilization. Wholesale deposit rates have moved up quite sharply. If you can just elaborate on the liability side, how you expect this to pan out over the next 12 months. Adarsh, we have our strategies very clear, and I've talked to you before, but let me just re-emphasize that. We have five playing fields which we will play our game on. One is we focus on an affluent and NRI, and you've seen the growth, and I think that's a business which we'll continue to invest in. We believe in the next 12-24 months, these books will double. I think our INR 25,000-30,000 crores of liabilities will come from this segment in a big way. The second is, we believe that branch expansion still plays in India a very important role, and we continue to expand our branches. We're going to 2,500 and we're going to 3,500. I think the difference is, I think the branch look and feel will be different as a process. I think what we are doing is we are going into a concept which we call as community banking. I believe we have selected 5 communities, I can't name it, and you will see our branches around those communities developing. We believe that when you are fighting in a very crowded market, you've got to find a niche for yourself. We believe we found a niche when we were, when we had come in and we launched a liability in the home market strategy, which we'll continue to expand. Now we believe in the client segment that the niche will come in the communities which we want to offer. I think, for example, we're very strong on diamond. We believe diamond is a community which has an end-to-end capability, and we will launch the diamond where there are 800,000 workers on the ground which get an average salary of INR 100,000 per month. I think there is an opportunity of a very different nature there, which we are going to tap. The second, I think can be a defense. We are very strong on the defense vertical, and I think some parts of the defense, and we believe that there is a very strong opportunity in the defense area in which we think that we can make a very good impact. I think the strategy around segmentation along with the branch expansion is the number two strategy. Third strategy is I think we are launching digital. I believe that digital will play a very huge role as we move forward in the client acquisition and scaling up of the client acquisition. You've seen the INDIE. The INDIE will get launched in the month of December or January. We believe that in the first 12 months or 24 months, 12-24, we will acquire 2 million customers with INR 15,000-20,000 crore of balance sheet. Now, that balance sheet is what we think will help us create a very differentiated. I'm not saying it will come from digital, but clients will be identified. We will start giving relationship management and everything through the INDIE proposition. I think that's a very, very big opportunity. Fourth, in my opinion, the Bharat Financial network has still not been fully exploited. I think we have 70 lakh accounts, but I think I believe that I think if we can start engaging with them in a different way, we are planning to take this book to INR 5,000 crore in the next 12 months. I believe that's a very, very big opportunity for us. Last, I think our client acquisition, specifically our current account proposition, is taking a very different shape. I believe that current accounts growth of around INR 10,000 crore in the next 12 months to 18 months will give the bank a CoD advantage. The last point is our rates will continue to be higher than the market and our pricing will be differentiated. We will continue to price basis selective segment and selective geography and bank. We will play a very differentiated game. Perfect. That was useful, Sumant. Just a clarification on the CASA. If you adjusted the large account, the government balances, would the core CA have grown or that. Yes. That is what we are saying, that it grew by 5% quarter-on-quarter. Our retail balance sheet is what we are bothered. I could have filled in this balance sheet. I could have got a bulk CA. I think the issue is I want to move out of the bulk CA, whichever is there in the book. I am saying retailization and granularization of liability is happening, and that's where the growth was 5% quarter-on-quarter on that book. Perfect. That's helpful, Sumant Kathpalia. Thanks a lot. Thank you. Next question is from the line of Hardik Shah from Goldman Sachs. Please go ahead. Yeah. Hi. Thanks. This is Rahul. Hi, Sumant and team. Hi. Sumant, just a couple of questions. You know, one is you know, on the loan book growth side. Just trying to understand the logic behind growing the large corporate book so significantly as well as the unsecured personal loans and credit cards. Can you just help us understand what's driving these two components so sharply? I think let me answer the point number two. If you would have seen, we've not grown the Bharat Financial book. I think the Bharat Financial book has remained and gone down as a percentage of our total to 11%. I think we have always said that we will not cross the 5% margin on the unsecured book. I think we've remained within that margin and the growth happened, and it happened during this period, and that is why the growth happened. I think we are well within the unsecured cap of the regulator, and I think there was an opportunity and we grew that book at a faster pace. I think we were at 3.5%. We have moved to 4.2%. We're still within the bar of the 5%. I think that's why we grew the book the way we grew. On the first part, I think on the corporate side, I think we're getting into very good A-rated paper and above relationship. It's about balancing the book and getting the risk density down. That is where we are working on the risk density. This was very good opportunities and very good fee opportunity also and cross-sell opportunities which came into us, and we did those businesses. What were the relationships? We got into new relationships and we got some very good deals. Got it. Just one more small point. Can you just help us understand the duration of this corporate book that we would have onboard? Is this largely working capital loans? What are your duration of these loans? There is 60-70% working capital, 30% term loans, but all these term loans are less than 5 years, 5-6 years. Okay. Got it. That's helpful. The other question is, you know, have we kind of changed our savings deposit rates, you know, in this quarter? Yes, I have changed the rates. We've changed it effective October 1. I think the rates are now at for INR 1 to less than INR 1 lakh remain at 4%. 1 lakh to 10 lakh remain at 5%, and 10 lakh to 100 crores remain at 6%. Got it. Understood. Just one last question, Sumant. You know, the CAR growth has also been very strong. Is there any interlinkage between the large corporate growth on the loan book side as well as the CAR growth? And do you also plan to kind of, you know, moderate this corporate loan growth as the retail, other pieces of retail picks up like Bharat Financial and CVs, et cetera? See, I've always said that the loan mix ratio for us is range bound. I think we've always said 55%-58% will be retail and 42%-45% will be corporate. That's where we will be. One quarter here or there doesn't matter, but I think that's where our loan mix will be to get an efficient NIM as well as our contributions. I think that's what we have decided and that's where we will be. Number two, the second question was? What happened on the liabilities thing? I think there was these due diligence warrants come from various undertakings from merchants. We've been in this business of transaction banking for a long time. These are our clients, and we win the mandate basis this as a process. These are mainly PSUs, and we have a very strong fixed interaction, which we have a INR 9,000 crore book. I think the yields on that book may not be very high, but these are the type of businesses which we get from them and we make an LC/BG business, and we do this business very well. That's why we continue to get these mandates. Why did we do the corporate bank? I've always told you that you've got to do your risk adjustment, and I think these are very good businesses and they have a lot of profile. As a consequence, we get a lot of fees and If you look at the FX revenue and the growth in the FX, if you go through, one of the reasons are we're doing this business. That's good. All right. That's helpful. Quickly on current account. I just answered you. INR 9,000 crores. INR 5,000 crores came as a consequence of different mandates which we got. I've written that in my speech. I think I missed it. Thank you so much, Sumant. That's helpful. Thank you. Next question is from the line of Abhishek Murarka from HSBC. Please go ahead. Hi, Sumant. Congratulations for the quarter, great numbers. One question again on yields. Can you give some sense of the yields on your large corporate, mid corporate and small corporate segment individually, and how they would have moved between last quarter and this quarter? We don't disclose it. That's something I could do. We don't disclose it. I can assure you the yields in the large corporate have moved by, moved the lowest. I think the yields in the SME and the small corporate have moved the highest. That's all I can tell you. Right. Could you give a sense of the kind of movement? 40 is your blended, but on an incremental, would it be higher by 100 basis points or so? Incremental? No, no. 40 basis points was the difference between Q2 and Q1 on the entire corporate book? What is your question? Incremental. Incremental I could On your incremental disbursement. See, incremental disbursements, let me tell you, are happening linked to an external benchmark rate and a margin. I think the yields will be higher because it's linked to the external benchmark rate. That's the answer to your question. If you are linked with the T plus three 91-day treasury bill, you will get a T plus three. What is the treasury? Or if you are linked to the CD rate or your. The rates will be higher accordingly. Right. The second question is on SME. Now, because of this increase in rates, right? A lot of it obviously has to do with the EBLRs. Are you looking or are you sensing any kind of pressure in SME or any kind of early delinquency indicators? How are they trending? Just wanted to get a sense of. I'll tell you my data. I have no delinquency on SME. 0% delinquency. I have a small book. It is about 4,008, for the 3,800 crore book. On the BBG side, we have taken a lot of losses over the last two years, what we had to take, and I think the flows have slowed down dramatically. What we have to arrest, you should ask me a question, are you seeing attrition in your book because of the rate change? I think we have to watch out for that space this quarter. Right. Got it. Finally, just a quick data point. In your credit card book, what is the revolver mix? It's about, I don't know why the revolving rates are not going up. We're still struggling at 27%-29%. It's not growing. The revolver base is not growing. What we do well is we do the EMI portion very well on the business. Okay. How much would that be? It could be around 25% of the book as of now. We have a book of INR 7,000 crore. INR 1,400-INR 1,500 crore will be that book. Okay. Okay. It will affect the yield on the book because the EMI book comes at a lower spread, while the revolver rate comes at a higher spread. The yield, your question should come, what is your yield on the credit card book? It fluctuates between 16%-18%. Yeah. Any sense of why or when the revolver rates would pick up? Just a broad sense, whatever. History tells you that when there is an inflationary environment, first the personal loan disbursements increases dramatically. If you go historically into the unsecured business, historically the personal loan disbursements will rise and then the revolving rates on the OD products starts rising. That's where the card revolving rates will increase. I think first you have to watch out for the personal loan disbursements in the banking sector. I think you're seeing already a spate of increasing personal loans. We are very watchful of that. You will see the credit card revolving rates going up. That is where the debt trap happens. Got it, Sumant. Thanks. Very useful and all the best. Thank you. Next question is from the line of Akshay Jain from JM Financial. Please go ahead. Hello. Yeah. Akshay. Yeah. Hi, this is Sameer here. Hi, Sameer. Just a quick question on fees. So, gradually fee as a proportion of assets is kind of inching up. You think it probably goes back to above 2% as it used to be long back? Because corporate balance sheet growth is also now coming back. So just wanted some thoughts here. Secondly, was on the OpEx trajectory. Some outlook there in terms of branch additions and spends. Thank you. Those were my 2 questions. Sameer, on the fee part, if you look at our fee composition, 71% of our fee comes from consumer. I think, what is more important is you must see how a client acquisition in consumer is scaling up and what is the product holding in consumer happening. If you look at 12 months ago or 18 months ago, we were at 3.6% product holding, and we've come to 3.9%-4% product holding. As a consequence, your fee composition is increasing. It's a composition of the product upfront measures rather than the downstream measures. The upstream measures are showing an improvement in the consumer bank, and as a consequence, its fees is increasing. It's not the downstream measure. I think as long as these upstream measures are doing, I think we were 68%, it's now moved to 71%, and I continue to believe that we will fluctuate between 70%-75% in the consumer bank fees as we move forward. On the corporate side, I've always said that our fee to asset ratio should be between 1.6-1.9. That is where good corporates are, and we will continue to be there. Overall, I see the fees between 1.8-2.1, and that is our guidance, that we should be in fee to assets at 1.8-2.1. 95% of the corporate fees is from trade FX and the normal processing fees. ID fees is very less. The second part of your question? Secondly on OpEx, yeah. On the OpEx. If you look at our OpEx, we've seen a gradually upward on the OpEx. I think we should, in a quarter or two, come back to 43%. I think it will take a quarter or two, and I think here, I think the revenues will start coming up. See, the problem is also, I think the OpEx, there are three. As long as you're investing in new businesses like mortgage, your cost is going to come up. As long as you're investing in new technology, the cost is going to go up. Digital, there is a difference. The employee cost. I think we have done our appraisal process in this quarter. I think what we thought will be the appraisal cost actually came out a little higher because I think the market had moved very dramatically at that point of time. So that's why 9% quarter-on-quarter cost increase. What you're seeing is not because we've taken upfront cost, but it's also of new hiring as well as we hired 6,400 staff. So as long as we are growing new businesses like in merchant, like in microfinance, we grew in businesses. I think the cost factor, I think the maximum we will go on our efficiency is 44%-44.2%, and then I see it settling down to about 41%-43% range. Fair enough. Thank you and congrats, again on the good set of numbers. All the best. Thank you. Thank you. Next question is from the line of Mahrukh Adajania from Nuvama Wealth. Please go ahead. Sure. Yeah. Hello. Congratulations. My first question was on MFI. Why has the book grown only 1% QOQ? Because of the Because of the reorganization? I mean, the new guidelines. No, it is. Yeah, and also the runoff factor which is coming in. You have now with this book, you have an INR 8,600 crores of runoff on an INR 9,400 crore book. That's the issue. Please understand that the book is very big and the runoff factor is coming into play. Got it. Yeah. We'll have to go to a disbursement of INR 10,500-INR 11,000 to achieve the growth thing. You know, you should push the pedal when it's required. It's not required as of now. Got it. Sumant, you very well explained about the Q3 demand, that the festive demand is picking up, it's strong. Q2 was also good. Would you have any slightly longer term outlook on how demand pans out beyond the Q3 in terms of loans and also, so deposits you explained, you know, community and your other strategies. Just in terms of loan growth, where do you see, where or when do you see demand peaking? I think, as long as public CapEx pick up, I think the demand for loans will pick up. I think that demand will come from the SME, MSME and the mid-market corporate side. I think we are seeing that public CapEx picking up, and I think that should create demand. There are demands which are coming, I think, from certain segments. I think real estate, the demand is very high right now. Cement, the demand is coming up. I think we see demand in the steel side. We're seeing demand in the power generation side. I think we are seeing demand and we are seeing some private CapEx one here or there coming up. I think, yes, as you rightly pointed out, I think we have to see how the macro plays out in the long run before we start pressing the pedal on the growth on all these vectors. I think, while Q3 and Q4 look set and we should see a very good demand, I think, we have to wait and watch. I can't give a projection for the long run because there are a lot of geopolitical as well as, you know, macro factors which are at play here. I don't think anybody can predict the next 12 months today. I can predict the next two quarters, and the next two quarters I feel India will see a very strong demand coming up. If the macro growth does not come back in the Western world, I think you can see exports going down. I think you have to see how the demand curve shapes up overall to say that what will be your growth in the asset. Though we have given a thing that this year we will grow at about 20%+, and I think we continue to maintain our stand that we will continue to grow at 20%+. Though we've grown at 18%, I think we should hit the 20% mark this year. Got it. That's helpful. Just one very specific question on your comments. Your power generation is private thermal or it's public only? No, it was one of the public entity which increased during the quarter. Okay. Okay. Yeah. Thank you so much. Thanks a lot. Thank you. The next question is from the line of Anand Dama from Emkay Global Financial Services. Please go ahead. Yeah, thank you for the opportunity. The question was, continuing with what Maru asked, and you said that you can predict for the next two quarters. Do you believe that the run rate we have seen in terms of growth in the current quarter, can we talk about 20-odd% growth for FY 2023, which you had earlier predicted about 18-odd%? Yeah, I think that's what we said. I'm very comfortable. Okay. Please understand this 18% growth has come in the background of no MFI growth. Yeah. Which happened in the H2. Sure. What's the outlook on the CV books? Do you see that book picking up in the second half of the year? See, the first, what we said is H1 of the year, we've never seen such disbursements. It was a record disbursement in the H1 of the year, which was higher than what we saw last year in the H2. I think as a consequence, we believe that 45% of the disbursements happen in the H1, and we see a very strong H2 for the vehicle segment. Okay. Do you believe that even the commercial vehicle books will contribute meaningfully in the second half of the year? Again, I would like to correct you. Pardon my saying so, but I think please understand, look at the vehicle categories which we are in. We are in seven vehicle categories. Commercial vehicle book is only 25%-30% of the book. The balance book is coming from somewhere else. You're seeing decent growth in UV as well. Yeah. You are seeing growth in personal vehicles, used cars, scooter loans, tractors, you know, construction equipment. Right. Small commercial vehicles. I think you should not only focus on the medium. We've also diversified into light commercial vehicles where we have a 10% market share. We're growing very fast on that. I think you should see it in all the segments where we are growing. Okay. Lastly, what percentage of your corporate book will be or corporate SME book will be linked to exim trade, like export-import trade? Sorry, I didn't get your question. It was a little garbled. Please. What percentage of your corporate and SME book is linked to exim trade, export or import trade? I think if you look at our export to import, I think I can't tell you about it, but I think 25%-28% of our clients. Not in the corporate. Not in the SME. He's asking for the SME book. SME book. That's very, very small. No, corporate, SME, both put together. 30% export. Huh? How much has trade export and import? Oh, consolidated, how much is it? Yeah. I think 70% of our clients do a trade transaction with us in the overall corporate book. Whether it's export, whether it's import. Let's not confuse. 70% of our trans-clients do transaction with us in the corporate bank. I think my question was the outstanding number that we have, fund and non-fund based books put together. Uh. On the corporate and the SME side, how much is linked to export trade? The corporate is engaged in some kind of export or import. That's what I said. Diamond is 100%. Uh. In demand, it's. Diamond is 100%. Which is around INR 11,000 crores portfolio. If you just go into the corporate, I had just told you 70% of the clients will have exim trade. Like for example, the diamond is 100%. Yeah. It is 70% of our client base. Okay. I'll take it off. Thank you very much. Ladies and gentlemen, we'll take that as our last question. I now hand the conference over to Mr. Sumant Kathpalia for closing comments. Thank you for joining the call. I wish you and your family a very happy Diwali and season greetings for the year. If you have any further questions, you can contact Indrajit or me, and we will be available. Thanks a lot and God bless. 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.