Ladies and gentlemen, good day. Welcome to the Kotak Mahindra Bank Limited Q4 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 0 on phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Uday Kotak, MD and CEO, Kotak Mahindra Bank. Thank you. Over to you, Mr. Kotak. Good evening, friends, and welcome to the conference call after the full year accounts of Kotak Mahindra Bank have been declared by the board of directors earlier in the day. Let me first give a little bit of perspective. At a time when we are seeing a lot more turbulence in many other parts of the world in the financial sector, the Indian financial sector, particularly the Indian banking sector, is going through a phase of what I would call as Goldilocks. The outlook as things stand today looks quite positive and promising, despite the fact that there are risks to Indian growth coming because of factors external to India. Because of a global trade and economic slowdown leading to an impact on our exports of goods and services. Subject to that, the domestic situation is much better, much better. Our macroeconomic fundamentals look good. Our current account deficit is looking much more under control, and India seems to be at a reasonably good spot at this point of time. That is reflected in terms of the numbers of Kotak Mahindra Bank for the full year as well as for quarter four. I'm happy to come back to you and report for the fourth quarter on a consolidated basis, an ROE of close to 17% on a overall capital adequacy in excess of 23%. With much higher capital, we have a decent ROE at that level of capital. We also see our credit costs as overall for the year at historic lows. That goes back to a very fundamental approach on risk-adjusted underwriting as a core to our culture and philosophy. We are ready to take the risks. We will always like to have fair returns for the risk in the interest of all our stakeholders. We are also very focused as a financial institution on our number one responsibility, which is sustainability and resilience of the financial institution over long periods of time. Therefore, the approach is to build a very strong, resilient, fortress-like approach to the nature of our balance sheet, which can sustain shocks from various directions in times of turbulence. At the same time, we continue with our broad commitment to growth at 1.5 to 2 times India's nominal GDP. If we look at the year ahead, if we take the RBI estimates, the growth expectation, real growth expectation is 6.5. Even if we take a range of 6%-6.5% in GDP growth and an average inflation of around 5%, we're talking about 11.5% nominal GDP and multiplied by 1.5-2 times that as what we think is our current estimate for sustainable growth as we go forward. I also believe that India is also getting significant advantage of its geopolitical positioning, leading to economic benefits, particularly in the area of oil and energy. That is a benefit which is crucial for India because of its significant dependence on energy on external sources. In terms of domestic situation, the economy continues to show great resilience, and I feel that we are at a pretty good spot in the cycle. Having said that, we need to be aware about significant turbulence around the world, and every day we get some news, including the one last night, about another banking institution in the developed world getting into trouble. Therefore, Indian financial institutions like Kotak would continue to be focused on financial stability at its core, even as it pursues growth. From the point of view of all our stakeholders, including investors, on behalf of my team and the board, I'm happy to say that we believe in growth while keeping stability and risk management as the core to that future. We are also very focused on the transforming landscape in financial services with technology and digital becoming a bigger and bigger part, and we continue to invest heavily in it. At the same time, we are also clear a significantly higher customer focus to our future is key. We look forward to this as a very significant goal for us in the days to come, which is managing stability, managing growth, continuing down the path of transformation of Kotak on the technology and digital platform, and a Arjuna's eye on looking at the customer's interest. With that, I will now request my colleague, Jaimin, to take you through all the aspects about Kotak performance for the current year. Thank you, Uday. Let me start with the consolidated numbers, which we disclosed at the earlier today. We ended this full financial year with a profit of INR 13,925 crores, which is 23% higher than what we did in FY22. Profit for the quarter at the consolidated level was INR 4,566 crores, which is about 17% higher than last year. Our overall consolidated balances at about INR 3,39,000 crores, roughly 18% higher than last year. As Uday mentioned, our capital adequacy at the group level, 23.3%, and which includes CET1 of 22.3%, is largely equity. Both these have gone down by just about 40 basis points or what the numbers were a year ago. On that, we've got a ROE of 16.9% for the quarter and 14.5% for the full year. For this quarter, the bank brought in INR 3,496 crores of post-tax profits, and for the full year, the bank had INR 10,939 crores. Kotak Prime, which is in the customer business, had a lower profit this year compared to last year. As we had explained in Q1, we had up-fronted the brokerage cost and that figure is about INR 163 crores this year, compared to what it was in the previous period. Plus there were COVID reversals last year, which is a very tiny number this year. The microfinance business correspondent entity, which we had acquired in 2017, which is BSS, has ended the year with a post-tax profit of INR 297 crores, as against INR 83 crores in the previous period. Our Kotak Mahindra Investments bringing in INR 100 crores versus INR 86 crores in the previous year. Capital markets had a slowdown this year, resulting in both Kotak Securities and Kotak Mahindra Capital Company have got lower profits in FY 23 versus FY 22. Kotak Life ended this year with a profit of over INR 1,000 crores as against INR 425 crores in the previous year. Kotak Life has continues to be having good solvency numbers, with an overall solvency of 2.83%. 2.83 times, as against the regulatory requirement of 1.5. Kotak Life has also seen a rise in embedded value by 17%, and we are now at INR 12,500 crores of embedded value there. We've also seen the VNB margin at Kotak Life at 38.8% as against 31% in the previous year. The domestic mutual fund entities, which is both the AMC and the trustee company, bringing in about INR 555 crores of profits this year, slightly helped by investment profits, which we have booked in the current year. At the group level, the FY 2023 saw a close to 30% contribution from the non-bank entities. Both our NBFCs, Kotak Prime and Kotak Investments are pretty well capitalized and have capital adequacy in excess of 28% each. At the bank, we, as I said, we clocked the year with a INR 10,939 crore profit. The NII for Q4 at 35% over the same period last year. We had a record NIM of 5.75% in this quarter, whereas if I look at for the full year, we clocked 5.33%. Fees and services were contributed both from distribution and syndication income, as well as from banking fees. We saw growth of 25% in FY23 versus what we did a year ago. Employee costs in the current year. In the current quarter, you see a small negative compared to the previous year, previous quarter, largely coming from a reversal or a benefit which we got from a drop in annuity rates and benefit from interest rates. Resultantly, the retirement cost in this period is significantly lower than what we had in the previous quarter. For certain businesses which like POS or eCom or card transactions, we've actually netted off some expenses, and we've made adjustments on a similar basis for the previous quarter, previous period numbers. Our non-employee costs in quarter three had a large number of promotional spends, which have been much lower in this quarter, resultantly the non-employee operating expenses are also lower in quarter four compared to quarter three. This year we added 8.5 million customers, 2.2 coming in the last quarter. Our operating profit at the bank for quarter four at INR 4,647 crore, which is about 39% higher than what we did in the previous year. This year, this quarter, we also saw a favorable order which we got with respect to income tax, and this enabled us to reverse some provisions, which is about INR 100 crore in this current quarter. At the bank, the asset quality remains extreme. Our GNPA has come down from 2.34 a year ago to 1.78. In absolute terms too, GNPA has gone down from INR 6,470 crore in March 2022 to INR 5,768 crore now. Net NPA at 0.37% with a provision coverage now at 79.3%. Our slippages this quarter at about INR 823 crore, about 0.26% of our advances. Of this, we already had INR 218 crores getting upgraded during the quarter itself. Our fund-based restructured advances, COVID and MSME resolution framework currently at INR 718 crores, which is about 0.22% of our advances. Our estimate to the as of March 31, which is fund-based borrowers exposure of over INR 5 crores, is about INR 204 crores. Our CASA now at 52.8%. At the bank standalone level too, we have a capital adequacy now at 21.8%, of which pure equity CET1 is at 20.6%. For the quarter, the bank clocked an ROA of 3%, with 2.5% for the full year. That's largely what we were the highlights of the current period. I'd request Manian to take you through the key results. Thank you, Jaimin. My short commentary first on the asset growth in the wholesale business. Due to the asset sell-down of the DCM book that I had alluded to my in my previous quarter call, and exit from some of the low-yielding short-term assets to optimize quarter-end PSL costs, the book has been shown NOP growth. Based on averages, the assets have grown in the mid-teens for the year, also driven by our intra-quarter assets. We continue to focus on credit substitutes to combat irrational pricing pressures and optimize our PSL costs. The spread compression continues due to competitive pricing pressures in this business. SME and NBFC segments have both grown in the high teens on a YOY basis. We are also seeing good uptake from conglomerates. The large and mid-corporate segment and the CRE segment have seen challenges in growth. In SME, the credit quality remains excellent. The number of NTBs acquired in the year have grown even faster than the asset growth that you see. In with good capitalization, demand pickup and collection efficiencies, NBFC sector also seems in good shape, and we remain focused on this opportunity. We have kicked off our new initiative on mid-market by forming a separate focus team on this segment effective beginning of this year. We have had a great track record in the CRE business with minimum losses over the years. Strong sales and collections of projects financed by us have resulted in significantly accelerated repayments, suppressing the growth of the book. Lending rates on vanilla products such as LRD remain extremely competitive, and we remain very choosy on that. We are beginning to see good traction on the structured finance side. We have built a strong team with requisite skills in this area. Our fee incomes continue to grow well. The fee growth is well distributed across processing fees, FX, trade and CMS. The DCM business performed well, even though it came off marginally from the peak seen in FY 2022. We have continued to build a very strong franchise in the DCM business, having done some unique and marquee LBO, structured loans, bond and infrastructure transactions. Credit costs continue to be very low. ECLGS portfolio continues to remain stable. Strong recovery from our old NPAs amounting to close to 300 crores, especially in our SME business and LC business, further suppress our credit costs for the year. On the liability side, we see healthy growth in the non-custody current account balances significantly outstripping the asset growth. While we continue to add new clients in the custody business, the balances were impacted due to challenging capital market conditions. On the digital front, our corporate portal, Kotak fyn, has scaled up really well. Kotak fyn is an integrated corporate portal with single login, and it has received very positive response from our clients. Post receiving agency license, we have also started offering our statutory tax payment as a product and have seen a good uptake from our corporate clients on this. I'll now hand over to Shanti for taking you through the rest of the presentation. Thank you, Manian. I'll take you through the highlights of our commercial banking business, which showed strong growth trends during quarter four as well. Start with commercial vehicles. The CV industry volumes continue to grow at a healthy pace with a FY 2023 YOY growth of 34%. Freight demand and availability of return loads continue to show improving trends signifying stable operator economics. However, some segments that depend upon exempt traffic and e-commerce businesses have showed some slowdown. Within commercial vehicles, demand for all passenger bus segments has more than doubled YOY, and all verticals such as staff, schools, tour and travel are displaying increase demand. Collection efficiency continues to be stable and back to pre-pandemic levels, resulting in significant recovery. has grown the commercial vehicles business quite strongly during the year. Our disbursements continue to outperform the pace of the industry with a 68% YOY growth that helped us improve our market share. We will continue to build our book and market share in this segment and focus on risk-adjusted returns and deepening our presence across geographies. Construction equipment has seen a strong and consistent YOY growth of 29% at the industry level. Our disbursements grew in line with the industry. Overall collections of this segment has been stable, which helped improve delinquency levels. Given the healthy allocation of capital spending by the government, we expect the demand in this segment to continue in this year. Tractor finance. The tractor industry grew at 12% YOY, backed by industry tailwinds such as healthy monsoons and labor shortages. Collection efficiencies improved significantly and are at pre-COVID levels. We grew our disbursements quite strongly across both new and used tractors and have grown faster than an industry with a disbursement growth of 42% YOY, leading to a step-up in our market share, which is now close to 11%. We will remain focused in this segment as we look to deepen our distribution and improve our market share. Microfinance business. Our microfinance business continued its strong growth momentum in Q4, with disbursements growing at 70% YOY. The overall FY23 advances for this segment grew almost 100% vis-à-vis industry growth of 20%. We expanded our presence from five states in March 22 to 10 states in March 23 and added 252 BC branches. Collection efficiencies in this segment continued to be strong and have reached pre-COVID levels. We see good credit demand in the rural economy, and our microfinance business is well poised to leverage that in the current quarter. Agri SME. During the year, most of the prices of essential agri commodities like basmati rice feed continued to increase to their highest levels due to lower stock. Farmers in India have shown capacity to hold on to their harvest. I think demand for traders and processors remain positive. Overall quality of credit in this segment showed improvement with fast default recoveries and reduced fresh impairments. It will continue to be a focus area for us. I will now request Virat to take you through the consumer banking highlights. Thanks, Shanti. I'll begin with consumer assets. Our strategy to gradually build our market share in unsecured business continues. Our unsecured products in consumer banking are moving at a faster clip, and we have shown growth of about 65% YoY in 9 months Q12. Our numbers reflect our continued focus on growing unsecured portfolio. Our mortgages lending business continues to grow well at 22% on a YoY basis, and we see good traction both in home loans and loan against property segments. This book continues to hold well on all parameters of collection, in spite of increasing EMIs linked to repo rate hikes. We continue to invest in our card franchise with our overall credit card advances growing by 81% on YoY basis. Our market shares has been steadily growing both on spends and cards in force. We are strengthening our co-brand product suite and have gone live with Indian Oil for fuel-centric cards. We have also launched our NTB DIY journey, which is gaining traction. With focus on SME segment, we have also relaunched our METRO co-brand card that would enable us deepen our penetration in various segments of customers. Our story on digital acquisition continues and significant proportion of personal loans and credit cards continue to be sourced end-to-end digitally. I'll move to business banking. Bank continues to focus on growing business banking franchise both on assets and liabilities. Our strategy to create a dedicated team for sourcing small ticket secured working capital loans across our branch network has shown good traction and going forward it would help us garner higher market share in this segment. The demand for unsecured loans by business customers showed robust demand. However, the working capital limit utilization remains subdued in certain segments. Digital current account opening assisted for small businesses has improved resource level productivity and customer NPS. The traction on ActivMoney current account saw encouraging adoption by the customers. We believe this will not only help us in acquiring newer customers, but will also assist in building balances of our existing customer base. With the aim of supporting SMEs in managing day-to-day needs of the business, we have curated offers for the non-banking needs across various categories under our offers beyond banking on our website for our customers. We launched instant settlement on UPI, which helps current account customers to get instant credit. This will ensure traction in current account book. I'll move to liabilities. The total deposits have grown 16% YOY with major contribution coming from fixed deposit. However, SAR deposit growth still remains subdued in quarter four, as we saw some customers moving SAR balances to debt mutual fund and life insurance to capitalize on tax benefit. The traction on granular retail savings book, that is with balances less than 10 lakh, continued to grow, and it grew by about 10% on year-on-year basis and 3% on quarter-on-quarter. This denotes the core strength of the saving franchise in the bank. In Q4, we launched a couple of initiatives aimed at building our SAR franchise. The first one was floating rate SAR product aimed at stemming the outflows from the interest-sensitive relationships. A new do it yourself journey that allows customers to open all SAR variants covering mass, premium and salary segments and an all new Silk Savings Programme, which was launched for women customers, which comes with a host of features and exclusive benefits. We were successful in building our term deposit book, which showed a growth of around 40% on a YOY basis. I'll pass on to Dipak to take it forward. Thank you, Virat. On the tech side, the transformation on the digital and the IT landscape continues. As we mentioned earlier, we have, you know, two key talents here. Milind, our CTO, and Bhavnish, our Chief of Customer Experience, and they've been driving the entire tech charge. From a strategy point of view, they are basically driving what we call the six S's in technology: satisfaction, speed, skills, security, stability and scalability. As a first step towards each of these six S's, what we are really in the process is investing significantly in upgrading the technology backbone. That's really on the architecture side, the infrastructure side. Very significant movement on the talent side. We've gone out and recruited very interesting senior talents on various aspects of infrastructure and architecture now on the security side and of course on the data analytics and journey automation side really. Each of these has had a very significant impact, and we can see progress on the entire digital and IT landscape. Insourcing of platform work is a very significant activity which we are driving. All this new high-skill engineering talent which we are recruiting will help us achieve that faster and gain control of our platforms and businesses in a bigger way. On the digital side, most of the metrics are up there. They are looking good. I'd particularly like you to see the lending ones. Each of the lending ones has been inching up significantly now, and we're seeing a reasonably high share of digital now in most of the new product offerings. The transaction volume on the FAR side continues to be practically 100% now through digital. We're at 98%. Digital channels, again, Virat mentioned the activity which we're seeing really on the do-it-yourself channels and assisted channels, both on the asset side as well as the liability side. Mind you, this is beyond what we are doing on the 811 side. On the commercial and business banking side, Manian touched upon the activity on fyn as a platform, the single login over there. We've gone live with phase 2 now, where we have import/export data processing. We have, you know, inward modeling and end-to-end fee mapping now in place. Again, similarly on the commercial merchant side, a lot of activity and a lot of developments on the digital side. With that, I hand it over to Jaipreep now to take you through securities. Thank you, Deepak. Kotak Securities reported a total income of INR 581 crores for Q4 of 2023. This is against INR 661 crores for the same period last year. The total income for FY 2023 is at INR 2,474 crores versus INR 2,502 crores. PBT for Q4 is at INR 242 crores, which was against INR 335 crores for the same period last year and INR 319 crores in the preceding quarter. The full year PBT is at INR 1,150 crores versus INR 1,334 crores. The PAT reported for this quarter is INR 182 crores versus INR 252 crores of, for the same period last year. The PAT for FY 2023 is INR 865 crores versus INR 1,001 crores. The cash market share for Kotak Securities for FY 23 is at 10.5% versus a 10.6% in FY 22. The options market share closed at 5.6% for FY 23 versus 3% in FY 22. The lower profits have predominantly been because of a sharp fall of close to 30% in the average daily cash market volume which one had seen. On the digital front, a couple of points worth mentioning. 64% of cash market volume and 97% of option volume is actually done by the customer himself or herself. 78% of customer service requests are now processed with zero human intervention, and close to 30% of accounts opened are without, again, any kind of intervention happening at the DIY journey end. I'll now hand over to Nilesh to take you through the MC book. Thanks, Jaideep. Let me take you through our asset management business. Our total average AUM grew 5.2% in FY23 to reach INR 2.87 trillion. Our equity average AUM grew 17.6% to INR 1.53 trillion. Our active equity AUM market share grew to 6.47% in fourth quarter FY23. Our AICI yields for March 2023 grew 21% year-on-year to INR 8.7 billion. Our retail AUM stands at 55% of total AUM. We continue to serve investor requirements across active as well as passive funds, focused on local as well as offshore markets across debt, equity and commodities for retail and institutional investors. Our profit after tax was up 88.2% in fourth quarter FY23 to INR 192 crore, led by profit on investments. Our total AUM across mutual funds, PMS, offshore, insurance and alternate assets grew 10% YOY to INR 4.21 trillion, led by 127% growth in alternate assets. I'll hand it over to Dipak Gupta. Nilesh has touched upon the growth in alternate assets. That's been a very significant one in the last one year. We've grown from AUM of about INR 20,000 crores to practically now about INR 36,000 crores across multiple strategies. The strategic firm really, the real estate fund, the private equity fund, the data center fund, a lot of new funds. Of course, this figure is not funds already outlaid, but includes committed funds. Moving on to Prime, FY 2023 has you'll recall being a pretty good year all over. You know, overall car demand grew practically by about 25%. Of course, this was aided a lot by the previous year, Q1 being a poor year post-COVID really. March also was very good because not just because of March ending, but it was helped significantly by the change in emission norms which fall in place from first April on to BS VI. All segments have done well in the month of March. However, this month is pretty slack actually and it doesn't seem as if it will pick up very quickly. Primarily, one is seeing inventory levels go up across most car segments. The expectation at this point of time, of course, is that FY 2024 may just be marginally up in numbers and maybe marginally up in value terms. We've grown across the year really, including in the last quarter, not just in line with the car segment, but also the two-wheeler financing piece has practically doubled in size during the year. The lap business which we do out of Kotak Prime, has grown. Overall, if you see from a quarter-on-quarter basis, profits have been flat, but on a year-on-year basis, profits are down because remember, Jamin explained earlier that we took a hit of about close to INR 162 crores on account of one-time booking of brokerage income. Net of that, it seems pretty good. Moving on to Kotak Life. Again, Jamin took you through most of the financial metrics. The solvency is 2.83. That's now significantly higher than the minimum required. Our margins are pretty strong amongst probably the best in the industry, significantly aided by our share in non-participating products really. The last quarter, of course, like it has been for everyone else, has been pretty good, aided by the expected change in tax laws. Overall, from a profit point of view, FY23, like Jaimin took you through, is about INR 1,000 crores, significantly higher than the INR 425 crores which we saw in FY22. FY22 was a lot of hit on account of COVID modalities really. With that, I'll hand over to, back to Jaideep. Thanks. Before I open for Q&A, just thing to the analysts on the call. Last year we had an analysts meet on the 811 launch and it was at the 5-year launch of 811. We had talked about the fact that time that we'd provide an annual update. With the current earnings update, we've attached the update for 811 for this period. With that, I just request opening up for Q&A, please. Thank you very much. We'll 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 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. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. First question is from the line of Mahrukh Adajania from Nuvama. Please go ahead. Yeah. Hi, congratulations. My first question is to Uday, sir. You again pointed out to Goldilocks, and that does suggest a good growth outlook with benign credit costs. How does that translate into earnings given where rates are, given that rates are peaking to, would Kotak be confident of, about a high teens growth? How do margins play out, right? Because your EBLR book is very high, so what are the downside offsets to margin? That's my first question. Madhuk, last time it was Cinderella. This time he's changed it to Goldilocks, by the way. Yes. Yes, yes. Sorry. My bad. Thank you, Maruk. I think we got to watch the situation on inflation and interest rates. The key question is there are two competing forces. One is a significant global slowdown. On the other hand, in the Indian situation, inflation trajectory post the monsoons. On that, on the monsoons, again, El Niño is an issue. I was talking to one of our directors today, and the view at this stage is there are counter wind forces which can ensure that Let me put it this way. This is what he said very interestingly. In every time India has had a drought, it has, there has been an El Niño. Every time there has been an El Niño, India has not had a drought. We have to wait how the El Niño effect plays out and whether India gets impacted or not impacted. We will get a clearer picture on inflation post clarity on the monsoon outlook. Maybe by sometime in August we will get a sense of how the inflation trajectory is playing out. You know, just if you think about it, we have been in one of the most significant interest rate increase cycles. The increase in interest rates is not just from repo rate of 4% to a repo rate of 6.5 now. The increase in interest rates effectively has been from 3.35% because we were operating at the lower end, which is the reverse repo rate all the way to 6.5%. You had a 315 basis points increase in interest rates between May 2022 all the way through March 2023. We are at a rate where currently it looks like we are at a real interest rate of give or take around 1 percentage point. Sustainably, where does Indian inflation stop and what is the real interest rates India would live with? I think the trajectory on interest rates depends on that. If the monsoons go well, I think there is a probability, in my view, towards the second half or later part of the second half of the year to see some moderation in repo rates. If the monsoons do not go as well, then I would be surprised if you saw any reduction in repo rates. The trajectory of the interest rate curve is very much dependent on that. Having said that, at Kotak we are very focused on having a well-balanced book between fixed and floating and between EBLR, that is the repo rate link and the MCLR link. We are also having a reasonable book in addition to what is linked to repo on the MCLR side. Our view at the bank is depending on the nature of the assets, we will have a mix of that and at the same time some of our assets like tractors, unsecured retail, commercial vehicles are all the fixed rate books which is or even microfinance which are all growing reasonably well as well. We are well balanced and we are not taking any extreme position in one direction. I mean we do see this last FY 2022, 2023 as an extraordinary year for our margins in banking which are reflected in our numbers. Got it. Sorry, let me add one other point. Assuming the repo rate trajectory is not dramatically lower, our average NIM last year was 5.3% while fourth quarter is 4.75%. 5.75. Sorry, 5.75%. Average NIM was 5.3%, end of last quarter was 5.75%. At this stage there is nothing which tells us that at this stage and therefore I'm not making any commitment. There's nothing which tells us that our NIMs need to be lower than 5%. Now whether it's 5.2%, 5.3%, 5.4%, I'm not in a position to give you an exact number. Currently the, our margin numbers look reasonably healthy. As I've always said at every call and that Kotak is very focused on risk adjusted return. For the levels of risk we take, we must make fair returns for all our stakeholders. Got it. Just in terms of credit costs, the sector is sustaining at historically low credit costs. Would it be fair to assume that, you know, 20 basis or below 20 basis points credit cost can sustain at least for the next 3 to 4 quarters? Is that what we should be building in? you know, I will, at this stage, you know, Mahrukh, right now the book is looking good. We are not seeing anything which is dangerously spotty. The bank will give you update every quarter on how the bank sees the macroeconomic and the micro situation. Currently the balance sheet is, Kotak balance sheet I can say is squeaky clean and looking pretty good. I'll actually return to the question queue for follow-up questions. We'll take the next question from the line of Adarsh from CLSA. Please go ahead. Hi, Uday and team. Congrats. Great numbers. On the deposit side, right, our deposits are treated by about INR 60,000 crore. A large part of it was bulk, right? Even within the term deposits you mentioned. From a more sustainable perspective, and we've seen some bigger brands and bigger banks really getting a lot of retail deposits, at least on the difficult. How should one look at that because that's probably going to be a fuel for sustainable growth as you build the balance sheet in the next couple of years? I think I'll give it to Virat, but I just must mention to you that between second half of March and now, there has been a little bit of softening in the wholesale deposit rates as well by about 30 to 40 basis points, as reflected in the one-year CD market. With that background, I'll request Virat to take it. Yeah. Look, in terms of the deposits, just now as the interest rates pan out, retail, which we call less than 2 crores, have also shown growth. With this kind of interest rates, the high net worth individuals also want to lock in for their money in that term deposit as a, what do you call, variation to their investment strategy, and hence you find a lot of them coming between 2 to 5 crores as well. We have seen good traction in that sense on the retail side. It's, what do you call, the customer, retail customers means who were earlier not getting engaged on the fixed deposit side with the current in the last year have seen bringing in money into the fixed deposit. Mani, wholesale dependence of the balance sheet here. You know, like Uday just mentioned, I think wholesale rates, through last year were high, but we have also seen softening of that. There is just now an opportunity to optimize cost by scoping, wholesale. Our strategy to grow granular and increase the retail content in the deposits will continue. In fact, like, Virat said, on the, even in the, savings side, our zero to one to five to ten, all those buckets and amounts continue to grow. Granular deposits continue to grow well. Let me just add one other point. For the scale of our balance sheet, we see no problems in funding the balance sheet. No, and on the incremental basis also, means as far as the consumer bank is concerned, we are 50/50 on, wholesale versus retail. Again, no concerns on funding the balance sheet. Got it, Uday. Just not related to this, but there have been news reports about Kotak's expression of interest to acquire IDBI Bank. Any rationale there would actually be more getting a fairly strong liability and retail, you know, granular liability base. Just on a standalone basis, could you comment about whether you would ever consider looking at a PSU bank, given that there can be cultural gaps, or is that okay if it adds to the liabilities of the bank? I can clearly not comment on a specific case as is, as you've asked, but I will make a more general point. We are sitting with consolidated capital of 23%. Our focus on any acquisition, and you have to go back to our history, is based on what will give us customers and customer segments where we think we will be able to add long-term sustainable value at appropriate valuations. You've seen our acquisition in the past of ING Vysya Bank in 2015, and we had a very specific logic of why we wanted to do it. We saw value in some of their businesses, and we believe we have a great strength as management to integrate significant banks, like we did in the case of ING Vysya Bank, into our fold. Therefore, execution of such transactions is something which we are always quite confident, as we have demonstrated in the case of ING Vysya Bank. We were able to fully... If you remember at that time, it was the bank to bank, it was almost the same size as us, ING Vysya Bank. And also, we had to deal with significant presence of unionized employees in ING Vysya Bank, and we have successfully done that in that case in a manner which has been non-disruptive. On culture, I believe culture is like water of an ocean. It has to evolve. It has to develop. It is about open mind. It has to be without bias. There has to be a sense of embrace, but surgicality of execution. As long as we can do all that, we are open to appropriate acquisitions across the financial services space with a clear view on sustainable value creation. Got it, Uday. This has been helpful. Thanks a lot to you. Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go ahead. Hi. First on the corporate banking side, in fact, you highlighted that there were some repayments as well as sell downs. The audio is not clear from your line. Please use the handset mode. Yeah, I'm on handset. Yeah. Is it clear now? Yeah. I was just checking in terms of the corporate banking side. When we look at it, there have been sell downs as well as chunky repayments. In terms of the spreads, when we look at it in terms of maybe the choice between margins and the growth, was, has that also impacted the corporate credit growth during the quarter? You know, while there is always a trade-off, having said that, if I, you know, if I, to illustrate my point, if I take you through a small math. At the time that CD rates for banks were close to 7.4%, 7.5%, banks were doing term transactions, that is 7-10-year term transactions on AAA assets at 7.8%-8% and at BBB, transactions were going at 8.2%. Any math will tell you that if your one year borrowing costs are at 7.4%, add on the SLR, CRR to that and add on the PSL cost to that, it doesn't make sense. Of course, those deals happen in the market. It's not about the trade-off in margin all the time. It must make sense fundamentally, right? There must be a risk premium over the sovereign rate. There must be a 10-year premium over a one year. These are fundamental to how you price transactions. If you see transactions which do not meet such fundamental requirements, we prefer to stay off. I can assure you one thing that there are no transactions in the corporate that we cover that we do not get visibility to. We get visibility to every transaction that happens, we choose to do some and don't choose to do others if they do not meet our fundamental requirement of risk-return trade-off. It's not only about. You can argue that cost of funds is 5.5%, therefore lend below sovereign rate to corporates. You can still make a spread, but that is not fundamentally correct. Mr. Shah, does that answer your question? Yeah, that's clear. Secondly, in terms of the deposits, again, last time you maybe you articulated that there would be a measured pace of branch expansion, but a few of the leading private banks have indicated to gather a significant pace in this particular fiscal. Any change in stance with respect to branch expansion? When we even look at productivity, given that we have a relatively higher proportion in metros, still in terms of from deposit per branch perspective, we are still in line or lower than the other private banks. How should we look at the productivity and when should we expect it to maybe catch up with the peers? Conceptually, I don't think there is any change in the strategy, the way in which we have carried out our branch expansion. Our focus on metro continues, means the proportion would be higher. In terms of other things that we are seeing is a lot of transactions are happening outside the branches. Perhaps you need branches for, basically, for the business customers. Keeping that factor in mind, we will lead our next round of expansion. We have done close to 100 branches in this last financial year, and going forward in the 2023, 2024, we would do close to around 150 more branches. Our strategy to do measured expansion on the network continues, keeping in mind how the things are developing on the digital front as per the bank branch transactions and the customer needs are concerned. Kunal, I want to put another point to you and all of us. How many branches does PhonePe and Google Pay have? Yeah. Maybe our focus is clearly there in terms of 811 Digital acquisition. Yeah. No, all that I'm saying is therefore all of us need to have a benchmark not only at what other horses are doing. We must also have benchmark on how the new cars are coming into the marketplace. Sure. Sure. Secondly, in terms of productivity, if you can highlight. Yeah. Huh? Sorry. Productivity. Based on this, when we say in terms of digital versus the physical branches, and given our relatively higher exposure on the metros, that seems to suggest that eventually our productivity per branches should be relatively higher than where the other banks are. Okay. Still maybe it's at par or it's slightly at a discount to them. How, what are the initiatives to scale that up? First of all, in terms of if you measure the way in which the classical method is CASA per branch, I think we are comparable to them. I mean, for the key competitors, as we may call it. As we go more and more digital, obviously the productivity will go up and we are using the analytics to a great degree to improve our cross-sell. From that perspective, I think going forward we will see a good improvement in the productivity. Right now, if I can add, Kunal, we are in the process of making a very significant transition on a lot of areas on technology and digital, which is work under process. Therefore, which will lead to significant productivity gains. In the short run, we run with a significantly higher manpower compared to the long-term productivity areas while the investment in technology happens in the next 12 months. We will see significant gains as we go forward through this period and beyond. Thank you. Mr. Shah, may we request that you return to the question queue for follow-up questions. We'll take the next question from the line of Roshan Chutkey from ICICI Prudential Mutual Fund. Please go ahead. Yeah. Now audible? Please go ahead with your question. Yeah. Firstly, sir, want to understand what your views are on we are seeing a broad-based slowdown in anything consumer discretionary, right? If that is the case, why is it that there is a massive growth at a system level when it comes to consumer loan books? Right? That is my first question. Second question is in the same, in a similar vein, when you look at the corporate books, I mean, corporates have very strong balance sheets now. Why is it that the corporate credit growth is slowing down so sharply, and what are your views on the outlook on corporate sectors? That will be my first question. Then I'll take the next set of questions. Virat, you to answer the consumer side, what is it the reason why we are growing faster, and then Manian on the whole sector. Look, the demand still is significantly higher. Means normally when with the interest rates going up, you see a slowdown on the demand, that's not happening. We see what you call a huge demand for both unsecured lending and credit card, hence perhaps we continue our focus on driving growth in that segment. From where it is the growth is coming in, I think it's difficult to pinpoint to a single reason, perhaps the wage structure in the country has gone up, people's mindset to what do you call... Today we have seen even people borrowing for holidays. Those change in behavior also is driving people to take more consumer loans, that's what we are seeing in the marketplace. On the corporate side credit, of course, even your RBI numbers, if you looked at the RBI numbers, the credit growth, if you take away the segmental growth of NBFCs, the growth is in single digits for several quarters. We are yet seeing significant turnaround in the corporate credit growth. I guess, as the private investment that is being talked about in terms of adding capacities happens over the next few quarters, one can see one could see growth there. Having said that, you know, for a bank of our size, I do believe that, like I said, even this year, if you look at the average growth, we have grown around 16%. Of course, quarter end figures don't show that. That kind of growth is still possible to achieve. When it comes to the MSMEs, right, particularly the ones which are related to exports, right? If you look at the data seems to suggest that exports of MSME-related industries have collapsed. How should one think about it for the system? Should we think about any stress emerging because of this? SME, you know, broadly if you look at SME, that's not the way we look at the SME growth number. You know, overall the SME, if you look at the credit data, CRISIL report, last CRISIL report on the SME sector, the average NPAs are 11%, but it's a huge segment, right? The ability of institutions to pick up the right credit there, because it's a very vast market and we have a small market share, we believe we can still pick and choose our credits there and grow that segment. That's why you can see that SME growth is at about 18% this year. Again, of course, there are some pricing pressures there, but I would say that segment is possible to grow irrespective of the secular growth of the sector. Sir, my question was not pertaining to particularly Kotak Bank. Kotak Bank is in a great shape, does very good risk-adjusted return assessment and fantastic credit evaluation. The question is more to do with the system and how should one think about the any pockets of stress emerging because of exports of MSME-related industries slowing down? I'm going to introduce one of my colleagues here who is part of our top leadership and management team, who heads our risk function, Mr. Paul Parambi. May I request Paul, and he's asking more from a system point of view, how do you see the risk outlook? See, when you see any risk in the sector, which is because of various external factors, whether it's global factors or local factors, 2 years back we had the pandemic. The sector which potentially can get more impacted or which is more vulnerable is the MSME sector because obviously these are smaller companies. Okay? Having said that, currently at least, look, you know, as Manian had said, if you're a player who's not a very large market share player, it is possible to actually play very well in this space without By actually avoiding the bullets and taking really good credit risks. Okay? One has to be watchful right now because as Uday had mentioned initially, the global situation is turbulent. There are challenges around. Interest rates are higher. Capital markets, of course, anyway, this segment doesn't have too much access to capital markets. One has to be watchful and make one's way through this. I'll just add something that, you know, through the last couple of years, I think the ECLGS scheme that was done for SMEs and MSMEs was really, very effective. It helped this sector see through the pandemic. Unlike the big corporate which raised capital, either in the form of debt or equity, this segment required some infusion of funds and that, the ECLGS scheme was a great scheme. It actually helped sustain this sector well. Right now we are not seeing any incremental stress coming in this sector per se, of course on our portfolio, not at all. Thank you, Mr. Chutkey. May we request that you return to the question queue for follow-up questions. Ladies and gentlemen, in the interest of time, please restrict your questions to one per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The next question is from the line of Abhishek Murarka from HSBC. Please go ahead. Good evening and thanks for taking my question. Just getting back to the growth question, you gave a guidance of 1.5-2x nominal GDP growth. Shouldn't you be at the top end of that range, somewhere around 20%-23%, given that, you know, the base is still small in several segments and, you know, you've built this entire franchise and you're gaining so much market share. Just trying to think why you should not be at the top end of the segment, of that growth range. I can assure you we will try very hard for that. That's something I can tell you. We will try very hard for that, and we will work on that while keeping return and risk parameters in mind. Subject to that, we will certainly want to be getting as much as we can for our stakeholders and for creating long-term sustainable value. That is something which is a deep ingrained commitment. We have also found ourselves sort of refocusing on things which we can actually add value and growth, and that we have seen over the last couple of years. Our outlook is certainly significantly more open to looking at growth opportunities across the board, and we will be committed to growing as fast as possible within the parameters of risk and return. Right. Just a sub-question to that. Specifically in corporate banking, what is the outlook on demand, possible substitution by the bond market as, you know, rates cool off and your participation in these? We don't, when we conduct our business, we don't see any difference between advances and credit substitutes. We will play both of them as appropriate depending on the pricing we get and, you know, optimizing, like I said, optimizing our PSL for some spreads. From our point of view, it doesn't matter whether the money, the growth happens in the bond market or the advances market. Sure. Sure. Thanks. Any update on, you know, the succession issue and, you know, when do we hear more about that? Look, what we have is the terms are pretty much there. We need to apply to the RBI by, you know, no later than 31st of August. The board as well as the NRC is pretty much seized of it. There is a, as is now known, there's a global search firm which has been tasked with getting that pretty much actively involved and we will be applying to the RBI well in time. Thank you. Abhishek, may we request that you return to the question queue for follow-up questions. Ladies and gentlemen, please limit your questions to one per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The next question is from the line of Jai Mundra from ICICI Securities. Please go ahead. Yeah. Hi, sir. Good evening and thanks for the opportunity. This quarter, we have continued to see strong growth in, you know, unsecured portfolio. But at the same time the staff, non-staff OpEx has reduced considerably. How would you look at both these things? I would have thought that both these things would go hand in hand, but there is a divergence in this quarter. Just wanted to get your views there. Jai, just let me just take that. you know, as I mentioned earlier in Q3, we had significant strength on commissions, both at an overall level and at product levels. That has been decently lower in Q4. The second one is in Q3, we had some one-time expenses which we had taken in, and we don't have as much of that in the current quarter. Yes, Q4 costs are marginally lower than what we had in Q3. Right. Just a data keeping question, sir. If you can give the RWA number for standalone bank and do we continue to have these 81 bonds of I think around INR 5 billion or odd number? RWA and 81 bond for the standalone bank. 81 bonds we had issued preference shares quite some time, about 5 years ago, that is the only amount of what we have there. The RWA, I might not have the overall number. 76%. 76% of RWA is about 76% of our total asset book. It is about, if I look at one quarter ago, it was 77%. Sure. Thanks. Thanks. Thank you. The next question is from the line of Manish Shukla from Axis Capital. Please go ahead. Yeah. good evening, and thank you for the opportunity. FY 2023, most banks are likely to exit at historically high margins and historically low period costs. What Manian alluded to on the wholesale banking, what is the risk that the pricing gets extremely competitive in SME and retail as well, and thus pressurizing either margin or growth for FY 2024 and beyond? I think we gave a clarification that if you look at our NIMs, fourth quarter is 5.75%, full year is 5.33%. Based on the current way the interest rates seem to be and our reasonable view currently, we would still like to believe that we will be at the 5+ handle average. Last year was 5.33%. We should be at the 5+ handle as the things look today. Therefore, this is not a guidance, but a judgment of how we see the situation currently. 5+ handle for 2023, 2024. Sure. Now going back to the question on branches, right? We see that data across banks that average balances, liability balances in branches are significantly higher than on digital accounts. In that context, and given the pace of growth at which you have been growing and where you aspire to, I just wanted to circle back on the branch strategy there because digital accounts don't necessarily get you the value. They definitely get you the volume. Viraj. Look, there are two aspects to this. One is when you acquire a customer digitally, yes, he may not have a value, but he is obviously available for us to do a cross-sell. That's where we have been capitalizing it in the recent past. We do see a value in acquiring a customer digitally because the cost is significantly lower and hence the focus on acquiring customers digitally is there. Whereas the physical branch, because today, just keep in mind that customers before starting a banking relationship, he does look at whether there is any bank branch in his close vicinity or not. To give them that kind of a confidence, we will need branches and hence we are doing a measured step in growing our network. Got it. Thank you. Thank you. The next question is from the line of Saurabh from JP Morgan. Please go ahead. Hi, sir. We thank you for the opportunity. Just one question. You've given a range of metrics on 811. Will 811 as per your internal PNL be profitable right now? Will that disclosure correspond to the BSE disclosure you've given on, you know, the digital banking unit? Thank you. Jaimin. Yeah. As we've given in the 811 disclosures, last year is not. If you look at the segmental disclosures there, it includes 811. It is not just 811. Okay. digital banking unit in that BSE will be 811 plus? Yes. The digital banking unit which we are there at the government has asked us, that's also part of this segment. Okay. Got it, sir. Thank you. Thank you. Ladies and gentlemen, as we have now reached the end of the call, I would now like to hand the conference over to Mr. Uday Kotak for closing comments. Thank you very much. We look forward to a good year ahead in terms of 2023, 2024. I think Jaimin and all my colleagues have taken you through the full analyst report. I will end this with just a quote which was made by Mr. Elon Musk to end this conference, and I'll just repeat it. It's there in your presentation. "When Henry Ford made cheap, reliable cars, people said, 'Now, what is wrong with a horse?'" That was a huge bet he made, and it worked. Thank you very much. Thank you. This is the release on behalf of Kotak Mahindra Bank Limited that concludes this conference call. Thank you for joining us and you may now disconnect your lines.