Ladies and gentlemen, good day, and welcome to the Kotak Mahindra Bank Q3 FY 2024 earnings conference call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing Star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashok Vaswani, Managing Director and CEO of Kotak Bank. Thank you, and over to you, sir. Thank you. Thank you so much. I'm absolutely delighted to be here with all of you for the first time as the CEO of Kotak Mahindra Bank. As you all must be well aware, I've been in this assignment for only about 17 or 18 calendar days, and I'm still, you know, working my way, getting my arms around around the place. But I am very cognizant that these are incredibly special times, and that Kotak is in a particularly special place, which I will come back to. If we just take a big step back, globally, we've had unprecedented volatility over the last few years. Starting with the COVID pandemic, significant injections of liquidity by virtually every government across the world, which then led to very high inflation, which was only previously seen in maybe the 1980s, and then unprecedented tightening by the central banks across the world to fight inflation. Central banks will have to continue this fight to bring down inflation to a sustainable level, but yet protect growth. As if all of this was not enough, the geopolitical situation has made it extremely difficult. With this kind of backdrop, actually, India has been, relatively speaking, protected and resilient, with strong economic growth, business optimism, continuous rise in public expenditure, and a pickup in private sector CapEx. As I look out, India actually looks like quite a shining star amongst the various other economies in the world. The other thing about India, which is really truly transformative, is the digital stack that has been built here. I believe that the digital stack has transformed the country in more ways than just meets the eye. This will continue to be a very significant opportunity and a change agent for the country and for us. In this context, Kotak occupies a very special place. Kotak is a very strong brand, has a very strong reputation, very well capitalized, and is an incredible platform offering the full array of financial products and services. Kotak has done very well, and really, the challenge and the story from here on is how we scale. Scaling is not just for the sake of size. Scaling is for remaining and becoming relevant as India steps up to become the third-largest economy in the world. For today, let's focus on the Q3 numbers, and I'll turn to Jaimin to help us walk through the numbers. Thank you, Ashok. Friends, just to take you through the October-December 2023 numbers, which we disclosed earlier today. Let me start with the consolidated numbers first. This quarter, we closed the quarter with a post-tax profit of INR 4,265 crores, which was compared to INR 3,995 crores the same period last year. If I take the nine-month period, which is April-December 2023, we brought in INR 12,876 crores versus INR 10,359 crores, same period last year. The bank's contribution this quarter was INR 3,005 crores. The bank did take some hits on a couple of counts. I will talk about that as we get into the details of the bank. On the other entities, the securities business brought in INR 306 crore of profit, which is about 27% higher than what they did in the same period last year. Securities also improved its market share from 5.8% last year to 10.3% this quarter, with a significant increase in the derivative market share. Kotak Prime contributed INR 239 crore this quarter, versus 225 in the previous year. The vehicle loan booked in Prime has grown sharply it, on a YOY basis. Our Kotak Investments, again, on the back of a 35% growth on advances, has taken its post-tax profit for the quarter, up from INR 86 crore last year this quarter, to INR 157 crore. The microfinance business correspondent entity, which we have called BSS, brought in INR 104 crore of post-tax profit for the quarter and for the nine-month period, 307 crores. The life insurance entity this quarter had a post-tax profit of INR 140 crore, and was hit on account of the change of commissions, which happened. I'll have the management talk about that. The mutual fund entities, the domestic mutual fund, brought in INR 146 crore... last year, same quarter, we had some one-time capital gains, which had taken that number up. Our overall group-wide assets under management have grown 32% on a YOY basis and are now in excess of INR 500,000 crore. Our overall customer assets at the consolidated level at INR 450,000 crore, which is about 19% higher than what we did with what we were a year ago. The capital position across the group is very healthy. Overall, our net worth at INR 125,000 crore. Apart from the bank, the two NBFCs having capital adequacy is in excess of 25%. The life insurance entity having solvency of 2.66%. Capital adequacy at the overall consolidated level with a CET1 of 21.2%. Among the subsidiaries, the other notable thing during the quarter was the fact that in November, we did announce a signing of an agreement with Zurich Insurance for them to take initially a 51% stake in Kotak General Insurance, which would be through a combination of primary and secondary transactions, and over a period of time, to increase that to 70%. Let me come to the standalone bank. This quarter, we took a profit of INR 3,005 crore as against INR 2,792 a year ago. For the nine-month period, we clocked INR 9,648 crore, which is about 30% higher than the nine month in the previous period. As I mentioned, two hits we got this quarter. One was a INR 190 crore pre-tax provision on investments in alternative asset investment funds. This is pursuant to the RBI circular, which was of December 19. Must say there is no evergreening, which we have is against the INR 190 crore of provision, which we have taken, which is the quantum of money invested in specific funds. The outstanding exposure, which we have on, on the, investments which are common, is all of INR 65 crore. Plus, the bank has no investments which are in subordinated units with priority distribution at all. The other hit, which we got this quarter, was on trading an MTM loss on the fixed income book net of OIS, which is this quarter taking a hit of INR 168 crore. A large part of this is on the OIS book. Now, this is a book where the bank is locking a spread on the security through OIS for the life of the asset. This quarter, we had the OIS curve, saw a sharp change resulting in the mark-to-market. While this we've seen volatility during interim periods, over the life of the security, the spread remains protected, and that's what we are playing with. If you notice the previous quarter itself, we actually had a profit of INR 150 crore on the mark-to-market scenario. We, of course, continue to have a significant portion of our investment book in AFS and HFT, which is 81% as of December. The net interest income for the bank showed closed at INR 6,554 crore, which is about 16% higher than what we'd done a year ago. We also seen a 27% growth in fees and services, both on account of distribution as well as on general banking fees. This quarter costs INR 4,284 crore, which is 14% higher than what we had a year ago. The employee costs tended to be a little higher this quarter because of higher retirement costs, as well as, some stock-related, hits, which we end up taking up. And the other operating expenses were significantly higher, spent on promotion and marketing, during the festive period in quarter four, well, in quarter four calendar. The pre-provision profit, therefore, INR 4,566 crore, which is 19% higher than what we had, INR 3,850 crore, on in quarter three last year. Provisions to advances, INR 324 crore, which gives us a pre-tax profit of INR 3,987 crore. Our credit costs at 40 bps versus 47 bps in the previous quarter. Our advances overall, which is before IBPC, BRDS, stood at INR 372,000 crore, which is about 19% higher than what we had, which we were a year ago. After including credit substitutes, we grew customer assets at 17% YOY and 5% QOQ. Our unsecured retail, including retail microfinance, is now at 11.6% of our net advances. Net interest margins, we closed at 5.22%, which is the same as what we had in the immediately preceding quarter, versus 5.47 a year ago. We had 4.8 crore customers, as of this period, which is about 0.9 crore higher than what we had a year ago. Our asset quality remains fine. We had a GNPA of 1.73% against 1.90% a year ago, with a net number at 0.34% against 0.43% a year ago. The coverage ratio therefore is at over 80% now. Our slippages this quarter were about INR 1,177 crore, whereas at net level, we would come to about INR 888 crore. Our fund-based restructured standard, COVID and MSME resolution aggregates to only about 0.13% of our advances. Our CASA at 47.7%, and about another ten odd percent comes from ActivMoney, which is the quasi, TD which we have. Our capital adequacy, again, at the bank, healthy at 21.3, with CET1 itself at 20.1. Broadly, those were the highlights of what we did this quarter. I'll give it to Manian to take for the corporate bank. Thank you, Jaimin. I'll quickly take you through the highlights of the wholesale business in the bank. This quarter, our corporate advances grew at a rate of 3% QOQ and 13% YOY. But overall, our funded assets book, including credit substitutes, grew at 7% QOQ. As we have always been talking about, we manage the funded assets, advances and credit substitutes in an interchangeable manner, depending upon the movement of interest rates and pricing that is available on each of those. This quarter therefore saw a reasonable pick up in the investment book, which grew actually 21% QOQ. Among the various segments, we saw strong demand for credit offtake from our mid-market and SME segments. Both these segments have grown much faster than the rest of the wholesale bank. The mid-market segment ramped up well and grew in double digits QOQ. Growth in this segment is consistent with our philosophy of growing the granular book in the corporate bank. Majority of the mid-corporate book is working capital, intensive, and we'll continue focusing on faster onboarding of new clients in this segment. SME book saw a growth of 5% QOQ and 18% YOY. Our focus on NTBs and rollout across more locations has ensured good overall growth in the business. In fact, the business witnessed its record number of NTBs getting onboarded this quarter. SME book quality remains healthy, however, we do continue to see pricing-related challenges in this segment. We see even more intense pressure, pricing pressures in our traditional large corporate segment, and this has impacted growth of that book in the long-term book, as well as the short-term book. Both advances... But advances growth was relatively healthy in the conglomerates and the multinational segments. We have been cautiously building our infrastructure financing book in a selective manner. We have seen some traction in this side of our business, with deals being closed across renewables, roads, hospitality, and other allied sectors. Our overall portfolio metrics remain excellent, with negligible credit costs. We are seeing somewhat subdued growth in the fees in the current year, while we have seen a growth in throughput in FX volumes, spreads have been competitive and have put pressure on the fee growth. Even though DCM has a healthy pipeline, we have seen some challenges in deal closures during the quarter, and therefore, the income was somewhat subdued. On the liability side, the current account balances were muted this quarter. The lumpy upside that we saw in Q2, arising out of custody flows, has moderated a bit in Q3. We continue to focus on garnering higher share of the customer flows and transaction banking in the corporate segment. On an average basis, the core corporate segment has shown a reasonable, reasonably robust QOQ growth. We have been investing significantly in improving our technology and stability of our systems. Our digital offerings through fyn, and our offerings on tax remittances continue to show good adoption rates. Tax payments through the bank grew at a healthy 35% QOQ. This quarter, we also successfully completed migrating all our CMS payments customers to our new CMS platform. Overall, the business remains in good health and with healthy ROE and robust profit growth. Our philosophy that our profit growth should grow faster than our asset growth, remains our abiding principle in this business, and we continue to manage it in that manner. I'll now hand it over to Shanti to take you through the commercial bank. Thank you, Manian. The commercial banking business saw reasonable growth in this quarter. I'll start with commercial vehicles. While the industry in this quarter saw muted and a little bit of de-growth, our overall disbursement grew at 35% YOY in new unit volume terms, and we continue to outpace the industry growth, leading to an improvement in market share. Demand for passenger car segment continued to witness significant growth, whereas the goods segment remains relatively flat. At the industry level, freight demand, viability and availability of return loads continues to be stable. We will continue to increase our SOW and market share in this segment, with focused approach on risk-adjusted returns and increasing our distribution footprint. Collection efficiency continues to be stable. Coming to construction equipment, thanks to the steady and improving demand on the infrastructure side, the industry grew as well as we grew. Our disbursements grew at 38% YOY in Q3, which helped us gain the market share. Earthmoving equipment, road and material handling equipment, segments like mining, roads, urban, semi-urban housing, saw a lot of demand for construction equipment, and also aided by the significant improvements in the macroeconomic scenario. We expect to retain our growth momentum in this segment in the last quarter, and we expect industry also to continue to show a good rate. Tractor. Tractor industry actually grew, de-grew 4.2% on YTD December because of the delay in harvesting and rain impact. However, we continue to grow our disbursements and market share in this very important segment for us. The used tractor business has seen strong growth in current year and helping us strengthen our existing customer relationships, as well as acquire new customers in the early stage of farm mechanization. Our focus on this segment will continue, and we will deepen our presence in Bharat. Collection efficiencies were better than the previous year. Some stress is visible in rainfall-deficit states, predominantly Maharashtra and South India. Microfinance business. Our microfinance business continues its growth momentum in Q3, with a healthy growth in advances of 56% YOY.... There has been some relative slowdown in growth due to control measures implemented by us for better hygiene. Our current outreach in 12 states is through a network of 800 BC branches, with an active base of 1,800,000 women. Marginal increase in parts, but that is because again, of certain excess rainfall deficit states, as we talked about in the earlier tractor finance business. We will look to strengthen our investments in technology, bring about greater control, and improve our customer experience as we continue to build our presence in this largest underserved segment. Agri SME continues to be subdued in terms of utilization of limits due to lower stocking by many traders, given the volatility in the pricing. We expect this business to pick up in the coming quarter and utilization to improve. Remains a core focus area for us and will continue the growth path. I now request Virat to take you through the highlights of the consumer banking. Thanks, Shanti. As I start with consumer assets in, within the consumer bank, our mortgage lending business continued to grow well at 50% YOY, in spite of the pricing pressures. We see strong traction in the loan against property segment, which has been traditionally area of strength for us. This book continues to hold well on all parameters of risk and collections. Our unsecured products in consumer bank continues to show positive traction, with a growth of about 40% YOY and 9% QOQ. Our growth is well-balanced and well-diversified between personal loans, business loans, and credit cards. We continue to invest in our cards franchise, with overall credit card advances growing by about over 50% on a YOY basis. Our focus on creating a differentiated customer value through strategic ties and sponsorship is paying dividends. Overall, risk metrics for the unsecured business is holding stable. Some emerging risks seen in the credit cards due to leverage built up by customers, leading to diminished repayment capability. However, it is absolutely under control, and we believe our unsecured portfolio is appropriately priced to deliver the targeted risk-adjusted return. Now I move to the business banking assets within the consumer bank. Again, this has seen a good growth of about 20% on a YOY basis. While on QOQ, the growth was slightly muted due to repayment of utilized limits originating from the post-festive season cash realizations. Formalization in the micro-enterprises segment over the recent period, along with our geographical distribution, has resulted in micro-enterprises segment book, which gives better limit utilization, growing much faster than the small and medium enterprises book. Fueled by market demand and partnerships, the unsecured business loan segment witnessed a healthy growth. Of late, we have seen demand for CGTMSE-backed loans from our customers. Our delinquencies on both the secured and unsecured business banking book remains stable. Looking ahead, we expect to reap benefits in efficiency and enhancing customer experience from technology investments we have made in the recent period. Moving on to the liability side, the total deposits have grown 19% on YOY basis, with major contribution coming from term deposits. However, savings account balance is returning to show some positive traction on a YOY basis. In line with bank's objective of building a granular and stable deposit franchise, the bank introduced a special offering for its senior citizen customer segment, which was received well on the ground. ActivMoney, which was launched in May, continues to scale up significantly. bank continues to scale up sourcing of savings and current accounts using assisted digital journey. This has helped us to reduce the account opening time, resulting in better customer onboarding experience. This digital onboarding journeys also allows customers to choose other financial products offered by the bank. This eventually will help us better cross-sell at the time of onboarding. To drive growth of business customers, we have launched a value proposition for SME and MSME segment. We also launched a new global service account to meet the unique banking needs of service export sector. We saw significant traction in our customers using our digital platforms for payments of statutory taxes in quarters. Thank you. I will now hand it over to Milind for digital update. Thank you, Virat. I'll take this opportunity to explain our strategic thought process on core technology and digital focus areas. It's a three-pronged strategy, where firstly, we have to ensure the basics on customer experience and platform. That is, we must provide technology that works fast, that works reliably all the time, while protecting customers' assets and transactions with the highest level of security and privacy. Secondly, straight-through processing is a concept we relentlessly go after, where the goal is to design and maintain processes that are simple, fast, and paper-free. Thirdly, we are also investing for a future that is getting shaped with Software 2.0. A key aspect of Software 2.0 is that traditional software engineering, which was about engineers writing code based on user stories, is getting replaced with designing of weights on neural networks. In order to be fortified on all three aspects of this strategy, we have to have the right skills in-house, and we have had a significant focus in 2023 on onboarding some of the best tech talent and establishing best practices, such as architecture review board and principal engineer reviews for our project designs. We plan to double down on these efforts in calendar year 2024. A short glance at the metrics on the digital page show notable improvements in digitization across both consumer and wholesale areas. Overall, we strive to see ourselves delivering technology that could be a key differentiator for our customers. That could be my short update on tech today, and I'll pass it now to Jaideep for the next topic on Kotak Securities. Thank you, Milind. I'll be talking the Q3 numbers for Kotak Securities. Then the overall cash market volumes saw a dramatic jump over the last two, two and a half months, which has clearly been fueled by the FIs and domestic mutual funds. Options volume have shown some bit of plateauing over the last quarter. We will have to wait and see how things pan out post this round of market volatility. Kotak Securities delivered a top line of INR 999 crore for Q3 of FY 2024. This was against a number of INR 784 crore for the same period last year. This top line resulted in a PAT of INR 306 crore, which was comparable with a INR 241 crore PAT of last year. The call taken by the firm on having Neo as the preferred app and web platform for our customers is working out reasonably well. Neo today accounts for nearly 90%, 90% of the firm's volumes, 80% of the traded orders, and 85% of the futures and options orders. It is being liked by our customers. It takes some time before all the customers' demands for all the features are met. The team continues to strive to ensure that it listens to every communication by the customer and tries fulfilling it. The institutional part of the business would be one of the strongest franchises of the group and shows robust growth in practically all categories. The overall market share has seen a healthy growth, and we will continue our endeavors to keep climbing on the market share. I will now hand over to Mahesh Balasubramanian, who is the CEO of Kotak Life Insurance. Thank you. Thank you, Jaideep. Kotak Life Insurance gross written premium grew by 9.7% year-on-year for the quarter. Traditional products contributed 78.9% of regular premium, with non-participating products contributing 46%. Our unit growth has been lower than some of our peers, as our focus has been more on the traditional products which deliver consistent margin. The overall protection premium stood at 36.6% of individual new business and group premium. Kotak Life profit after tax for the quarter stood at INR 140 crore, which was lower than the same period last year. This is mainly due to two reasons: higher guarantee rates to customers on the non-par products sold during the period, resulting in higher new business premium. Secondly, consequent to the change in guidelines wherein commissions have been deregulated, we now pay higher commission to a few partners, including Kotak Mahindra Bank. I'll now hand over to Vyomesh Kapasi to go through the results of Kotak Prime. Thank you, Mahesh. Auto industry witnessed good retail demand in Q3 due to festive season and attractive consumer offers in the year-end. This has also resulted in reduction of stock level at the dealership. So far, industry has grown 7.4% in the current financial year and 8% for the calendar year 2023. The demand is mainly driven by SUV segment, which is now more than 50% of the industry sales. Passenger car EV sales has doubled in the first nine months of the current financial year to 65,000 approx, against 30,000 last year. EV penetration in the industry is now at 2% as compared to 1% last year. This year, KMP car finance business growth is 2.5 times higher than the car industry growth. Overall, on the financials, profit after tax was INR 239 crore in Q3, against INR 225 crore in the same quarter last year, and 208 in previous quarter. KMP acquired Volkswagen and Ford portfolio in financial year 2022, which is running down. As a result, the contribution from this portfolio to PBT has come down this quarter compared to same quarter last financial year. The overall customer assets at December 2023 are at INR 32,944 crore, against INR 26,983 crore as at December 2022. Thank you, and with this, I'll hand over to Mr. Nilesh Shah of Kotak AMC. Thanks, Vyomesh. Let me talk about our asset management business. In third quarter FY 2024, our total average AUM grew 23% YOY to reach INR 3.54 trillion. Our equity average AUM grew 32% YOY to INR 2.10 trillion. Our equity AUM market share grew to 6.56% in third quarter FY 2024. Our SIP inflows for December 2023 grew 23% YOY to INR 10.9 billion. Our non-institutional AUM stands at about 59% of total AUM. Our PBT before other income grew 19% to INR 184 crore in third quarter FY 2024 on back of AUM growth. Our total AUM across mutual fund, PMS, offshore insurance and alternate assets grew 32% YOY to INR 5.33 trillion, led by domestic equity and offshore funds.... We continue to manage the largest India-dedicated offshore fund, Kotak Funds – India Midcap Fund, with AUM in excess of INR 3.9 billion. Now, I will hand it over to Jaimin. Darwin, we should be good for taking questions now. Certainly, sir. 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Chintan Joshi from Autonomous. Please go ahead. Hi, am I audible? Yes, sir, you are audible. You may proceed. Thank you. Thank you. So, I wanted to start off with understanding the sensitivity to your NIM for FY 25. So the way I see it, you have something like 35, 40 basis points of NIM improvement coming from the business mix shift towards unsecured. And also kind of your, you know, 57% of your book is EBLR. So if I think about FY 25, what do you think, see... How do you see the impact of RBI measures on unsecured impacting your book? And how does that flow into NIMs? And also, if there is a rate cut, you know, let's say at the end of FY 25, how should that impact your NIMs going forward? If you could give some color on that, that would be helpful. So let me just take that, Jaimin. Yes, the, you're right, 57%-58% of our book is linked to repo, and to that extent, it is directly linked to what's happening there. We had this year, you've seen repo rates flat. There has been effectively since the last increase in February 2023, we've not retained that number for all of this period, and likely to be at that level for some time. We don't know when it will change. But yes, the book is somewhat sensitive to the fact that it is fifty-eight percent is linked to repo rates. So if the repo rate falls, yes, those advances do get repriced. And to that extent, it will, it'll depend upon how the mix on the asset side as well as the liability side is changing. Yes, the unsecured book, we, we have taken it now to about 11.6% of our overall net advances. We have talked in the past that we would be comfortable to take it to early to mid-teens. We are pretty much on that journey. At this stage, there is no reason for us to put the brakes on it. While RBI may have increased risk weights or not, we are quite comfortable with that, and that wouldn't really put the brakes on what's happening on that growth. So we'll keep growing that steadily from where we are today. Of course, keeping an eye on the collections and credit, but that will keep going on. So yes, if the repo rates drop, it will, it will kind of rebalance what's happening. The decision on going for higher unsecured will not be necessarily linked to because the repo rates are falling. It's a mix of how the credit book would look like. Thank you. And then the second question is, on deposit competition. You know, it seems to be tight, you know, competitive in the system. Liquidity is tight, which should be a headwind, arguably, to your cost of funds. The question I have is: do you see, room to move lending margins higher to offset some of these competitive pressures? Or do you think, you know, BAU, business as usual, is good enough for the moment? Look, they're two different things. Both sides are in the marketplace. So, while deposits we need, when all banks would go for deposits and pay what is the right and what the depositor will take. Similarly, the borrower is also in the marketplace, and you're not going to be able to price higher than what the market is willing to pay. So it will have to be played out in the market. Yes, there is a challenge in deposits, which we've called out in our investor presentation, and to that extent, yes, we will... We are taking all kinds of steps. We activated the sweep deposits. We call it ActivMoney. That happened about six months ago, and we've seen big traction on that. We had a reasonable growth, both in the previous quarter and in this quarter. Last quarter, I mean, just a month ago, we've activated the senior citizen scheme, so that's again we pushing that out. So that is a separate play, and what the market will pay you on the borrow- on the asset side is a completely different game. Okay. So, do you see any signs of lending margins increasing in face of deposit competition pressure? Not really. I think that will play it out. I think there are enough players on the lending side also, so- It's a competitive market, and each of the product segments and the customer segments we are in are very different pricing. So it is a very competitive market, and we sort of have a strategy in each of the segments. Okay, thank you. Finally, just wanted to say welcome to Ashok and congrats on the role. Thank you. Thank you so much. Much appreciated. Thank you. The next question is from the line of Mahrukh Adajania from Nuvama. Please go ahead. Yeah, hello. Hi. My question is, in general, a discussion, you know, on LDRs, because the presentation has talked about, you know, did you just mention the deposit challenge? So and then there are talks from some banks that RBI is monitoring LDRs more closely than it was earlier. How do I view this in the context of Kotak, especially in FY 25? Because if you take the third quarter, say third quarter loans grew 3.3. If you take, like, an annualization of 3.5, then you're talking about maybe 14%-15% loan growth. Is that the loan growth kind of loan growth that the bank will settle for? Or is there scope for LDRs to move higher? How does it pan out from here? Is there any guidance or, you know, any rough target that you could give on where LDRs should settle in FY 2025? So, Mahrukh, let me just put a couple of things there. One is what you talked about, the 3% odd as advances growth for the quarter is at the net-net level. If you look at the level before the IBPC, BRDS, and others, the number of customer asset growth is about 5.3% odd for the quarter. So that's, that takes it about 20%, thereabouts, annualized. So that's broadly the asset side growth, which is happening at this stage. IBPC, BRDS is like a way of funding that to keep that going. On the LDR, we... Yes, we are at 88% odd at the end of December. Let's also recognize the fact that, while 88 may be optically higher, we also have among the highest, tier-one capital in the industry, which is pure equity. Our CET1 today is about 21%, which is giving a lot more cushion to what we can do with it. Plus, look at the fact that on the LCR, we are at about 126%, overall at group level, about the same level as what we were a year ago. So there is enough liquidity there. And yes, we will keep looking at that. And we also, at times, fund, coming through other means. Take this quarter itself, where we did about 3,000 odd crores through borrowings, which were from refinancing from SIDBI. So there are other avenues which are available to fund the asset growth. We will keep looking at it. Of course, deposits is something which we are very focused on. Okay. So, we can still see high teens growth next year? Yeah. Yeah. I mean, if you, the standard, if you notice Kotak for the last 20-odd years, has been that if you take the nominal GDP, we would typically end up in the space of 1.75-2 times that growth, at the time when we want to grow. Of course, there are times when we hunker down, which is not the stage at this stage. Okay. So high teens should be possible. My last question is on basically again deposits only. With so much competition in deposits, do you think deposit rates are likely to rise or- Mm-hmm. -margin pressure, I mean, you could see margin pressure going ahead? Okay. So, Mahrukh, let me take that question. I'm saying that, you know, if you look at what we did, you have savings at about 13.5%. You have term deposits at about, give or take, 7.2%. And we introduced ActivMoney, which actually gives a cost in between savings and deposits, savings and TD. So we introduced another product that gives us another flow of deposits. We will have to keep on innovatively looking at sources of funding for the purpose of our balance sheet, and also look at how do you optimize cost of funds. We will do what it takes. I'm saying, if you see the market now, all the banks are raising deposits to fund their growth, because there is growth, and finding the various niches and strategies to play this game. So we are right there, and we'll be competitive in order to make sure we have adequate fuel for our balance sheet. Okay. Perfect. Thanks a lot. Thank you. Thank you. We have the next question from the line of Kunal Shah from Citigroup. Please go ahead. Yeah. So, first question is with respect to the provisions, and if you can just highlight in terms of- Sorry to interrupt, but the line for you is not very clear. I request you to please use the handset. I was just saying maybe if you can just highlight in terms of the COVID provisions outstanding. Last quarter, it was INR 320-odd crore. How much have you utilized this quarter, and where do we stand now? So, Kunal, that's an arithmetic which we are following, which is why I have not put that number this quarter. We are, we're following a, a formula-driven provisioning on COVID now. That was done long back in the period. Technically, we could take all of that back, but we've worked out a situation where we use a formula with the consent of the auditors and others. So in this quarter, we would have taken away a provision of about INR 26 crore. So out of that 321, which you talked about, 295 is still being carried. Okay, so 295 still continues. Okay. That's correct. Yes, sir. Okay. When we look at it in terms of the overall deposits, so these sweep deposits are now almost, like, INR 42,000 crore. Looking at where the savings pool is, maybe we have seen this shift almost, like, 35% out there into sweep. Obviously, this is more of a behavioral change, but where would it largely settle, looking at maybe your interaction with the customers, and how much impact could it continue to have in terms of the overall cost of funds moving up here, or maybe the combined cost of funds actually moving up here? ... Yeah. So you see, we launched this ActivMoney with a clear strategy that, okay, we get in more customers, and when we get more customers, they help us build both CASA and the customers, high-value customers, which were moving money to the places where there was a high-interest gain for them. We retained that money or got more money from the other places to build our CASA balances. I think that strategy has worked for us so far, and we will definitely continue going forward, is to get more customers, more CASA balances, and money moving into sweeps. So at least the money that we have as deposits keep on growing. Okay. Last quarter, in fact, you indicated when there was 35 basis points decline, that 20 basis points was spread impact and 15 was maybe one-off. Maybe this one-off would not unwind, but maybe it will not repeat this quarter. So if we just look at in terms of the maybe currently 5.22 staying as it is as Q2, if you can just give the breakup in terms of how much has been the impact on the spreads and how much maybe, if any of the unwinding, which was there, maybe which has helped this quarter. So that would have maybe because expectations were of a decline, yeah. So, I think, Kunal, it's not easy to put that into an arithmetical formula. But yes, just to give a thing, last year there was a CRR impact, which was a one-timer, which is not there this time. We had some hit taken internally last quarter, which is not there again, this time. So those would be about 3-4 basis points differential. Of course, there is the other thing, which was, which we have done start of this period is, now that we know the behavior, particularly of what's happening on ActivMoney and all, the proportion of money which is going into advances from the investable amount has gone up, and that does make a difference. Because what you earn on advances is significantly higher than what you would earn on just putting into liquid investments or whatnot. So that is the difference where the mix of the earning assets has changed a little more in favor of advances. And that's again continuing to be an effort, and we'll keep doing what it takes there. So then investment rise of almost INR 70,000 crore during the quarter away from the cash. So, in fact, investments also growing on a quarter-over-quarter basis from 120 now, it's gone up to 146. So maybe obviously some cash has been put into the investments, but if you look at between the advances and the investment, investments is also growing, and largely credit substitute is a part of it. That's correct. But that's the credit substitute growth, which is effectively by what we looked at as customer assets. Oh, okay. When it comes to names. Yeah. Okay. So you are saying not maybe mainly the, low-yielding one, but still getting into the credit substitutes and that's helping. Oh, okay. That's right. Okay. Good. Okay, yeah. Thank you. Thank you. Ladies and gentlemen, to ensure the management is able to address questions from all participants in the queue, please restrict your questions to two per participant. The next question is from the line of Saurabh Kumar from J.P. Morgan. Please go ahead. Hi there. Just one question on your ROA. So, you know, if you have... So historically, we used to be, you know, in the 1.8, 1.9% odd ballpark. Now, with this unsecured mix moving up, would you say this 2.2 handle should be the new normal at which Kotak operates at, given the mix change? The 2.2, actually, what you're saying, the 2.0 I presume you're talking about is that standalone level. The 2.0- Yes. Also got hit, thanks to the, the two hits, which we took, including the, the AIF hit, which is purely accounting, so, it could actually be higher. But the numbers which you're talking about, that 1.9 and odd, were in a different era. We've raised capital after that. Does help you on the ROA number, which effectively what? We raised about INR 7,000 crore in 2020, and that's taken up our, our CET1 ratio. So that does help on the ROA. But I think overall, the margins have tended to get higher. If you again, go back to that era of, 1.9, thereabouts, our NIMs were operating more in the 4.5 range. We're now talking about consistency in the 5+ range. Yeah. There's been a mix shift in the book that's a higher ROA book. So my question was, like, now we should expect Kotak to be now structurally above the 2%, 2.1%, 2.2% ballpark, right? Again, you know, that is the ROA is more of a consequence. And, yes, the mix change has helped on the asset side. And yes, the consistent thing of, you know, pushing the CASA numbers again. Okay, thank you. Thank you. The next question is from the line of Jai, from ICICI Securities. Please go ahead. Yeah, yeah, good evening, sir, and thanks for the opportunity. So my first question is on cost of deposits. And so last quarter, you know, we had said that considering our duration of term deposits, the TD cost would be more or less plateauing. So while you don't give the interest on deposits or the TD cost separately, is that a fair assumption that, you know, the TD cost would have been plateauing? And just a supplement to that is that, in the second of the quarter, SBI and maybe some other banks had raised their deposit rate. So how should we look at the cost of deposit for our bank, markedly? That's a market-driven thing, technically. Yes, you've seen if the big boys play the deposit game, some of us will end up having to raise the deposits. Yes, so I wouldn't say it's absolutely plateauing, but, yes, the range has been narrow. Yeah. ...... I'm saying that it's not just the, you know, repricing of deposits, which we have said 10, 11 months, more or less down. There's a mix change also, right? We talked about the fact now that there is SA, there is ActivMoney, and there is term deposits. The mix of deposits have also changed. So it's not just a function of repricing of the TDs, but the mix of deposits as you go forward. Right. Sure. And, so, yeah, so, so that is one. And secondly, on, you know, if you can also talk about, on PSL, criteria for PSL, fulfillment for our bank. I think there is some change, by the RBI in terms of then registration, et cetera, wherein they have made mandatory that registration for an entity. How is... is there any change in the PSL framework for our bank, and how are we doing? I think you can share some further. So let me take that. No, there is no recent change in the framework of PSL. Udyam registration has been the norm for a while now, a couple of years, actually, so there is no significant change. We by and large meet our PSL requirements, other than in the MSME category, where we need it through trading of certificates. And that has been a... We have a small shortfall there, which we make up. Otherwise, we meet the other sub-segments, we meet the PSL requirements prescribed by RBI. Understood, sir. Thank you so much. Thank you. The next question is from the line of Piran Engineer from CLSA. Please go ahead. Yeah, hi. Thanks for taking my question, and congrats on the quarter. Just firstly, wanted to understand industry-wide and for Kotak, what are the sort of rate actions on PL and, loans to NBFCs, post the risk weight guidelines? What is, what is the question? Can you- Can you just repeat that, please? Can you repeat the question, please? Sure, sure. Am I audible? Yeah, better. Yeah, better now. Yeah. So I'm saying that after RBI's risk weight guidelines for personal loans and loans to NBFCs, how much have we and the industry increased pricing in these loans by? Yeah. Yeah, so if you see our most of our unsecured loan segment, the they are largely fixed-rate products, and the pricing are already at reasonably elevated levels, and therefore, we haven't significantly increased pricing at that end. On NBFC, as a loan to NBFCs, yes, we have made our adjustment to prices that are required to get us the right ROEs on the products. Yes. Yeah. Keeping with the principle of the risk-adjusted return, yes, there is a slight increase on the unsecured personal loans that we are doing today. So, there is some increase that we have done. Is that, like, 10-20 bps or more like 40-50 bps, when you say? Yeah, it is exactly between that. Okay, so 20, 30. Okay, fair enough. Secondly, just wanted to understand, you know, festive demand for commercial vehicles was a bit muted. Couple of your peers have reported, but we've delivered, like, 9% QOQ growth. So what exactly are we seeing or, is there some sort of one-off in the base that we need to understand out here or some market share gains? Can you just elaborate on that? It's a distribution strategy as well as, you know, volume strategy that we are looking into, and also segment strategy. I think there's a combination of all these three, which is what I said in our opening. While the industry has seen muted growth, reverse in Q3, YOY muted growth. But, we've sort of been deepening our distribution and also looking at the segments where we are growing in certain segments. So it is a growth strategy focus in that segment. Market share. Is it, is it like some new segments that we have entered into within commercial? Like, started doing used commercial vehicles like this? Yeah. Yeah. Yeah. So we have done two things. One is, the proportion of used commercial vehicles has gone up slightly, and we are also, we have made some penetration into what we call the small commercial vehicle segment. Got it. Got it. And just lastly, in terms of, OpEx to assets, now, we used to be at 2.5% pre-COVID, now consistently north of 3%. Is that a consequence of our, you know, strategy of going more into, unsecured retail, which of course is a high-cost product, or how should we think about that over a 2-3-year period? No, right now, yes, there is some investment mode which is happening on the cost side, but yes, the effort over a period of time is to bring it down. I don't think we are wanting to be staying at 3+ overall. Got it. Got it. Okay, thank you so much, and wish you all the best. Thank you. Ladies and gentlemen, we request you to please restrict your questions to one question per participant. The next question is from the line of Abhishek Murarka from HSBC. Please go ahead. Yeah. Hi, good evening. So my question is on deposit costs. If you can share, what is the incremental cost of deposits or cost of term deposits, whatever you find, you know, easier to share? And also, LCRs, I think you mentioned 120% at the group level. Can you also share that number for the bank? No, the group level LCR is 126.9, and the standalone bank is at about 119.5. 120, yeah. Similar to last quarter? That's right. Yes. Yeah. On cost of term deposits, the incremental cost? ... I wouldn't have incremental, I wouldn't want to get into incremental, but our overall deposit, I think, as Shanti alluded to, would be about 6.5-6.7, there in that range. Would you- Term deposits. Term, term deposits, yeah. Deposit. Term deposits is 6.5-6.7. Is Is that correct? That's correct. Okay, okay. So basically in terms of deposits, the gap between your outstanding deposit costs and incremental, can you give an indication of how much that would be? No, I said I don't want to get into the incremental ones. What my book today would be in that range. Okay, got it. Got it. All right. Thank you so much. Thank you. The next question is from the line of Nitin Aggarwal from Motilal Oswal. Please go ahead. Yeah, hi. Thanks for the opportunity. One question on the unsecured business, particularly the credit card, where you talked about that you want to take the unsecured next to mid-teens, as earlier indicated. But there was a blip in the credit card sourcing in the quarter. So if you can talk about how the sourcing rate is trending and what is the strategy there? Look, strategically, we have been always focusing on issuing cards to our own customers. And as of today, if you ask me, about 85%-90% of the cards that are issued are to the existing bank customers. So from that perspective, at least on the issuance side, we are consistent with our strategy. So basically, I'm referring to the month of November, wherein there was a drop in terms of the net card addition versus, like 100,000 plus rate, that has been the usual trend. So anything to read into that? Low limit card, no reduction. Sorry. So, Nitin, what we did in the last quarter was that the low limit, lower-end cards with low limits, we rationalized our sourcing in that segment. Okay. Sure. And one clarification on the treasury loss that was quoted for the quarter. So what has driven this? Because across all the banks who have come so far, we have seen steady treasury gains. So both equity and bond markets have been, like, moving favorably. So what has really driven this loss this quarter? I haven't understood the question, but just to explain that, as I mentioned, it is broadly the bond swap strategy which we are following, where in effect, we lock the spread or the life of the asset, where the yield curve can move differently, and this quarter it had moved sharply. So we would have intermediate variations, fluctuations on the thing, but over a period of the life of the asset. So, I mean, do I need to repeat the answer again? Then I'll do that. So just to explain the treasury loss, which we took this quarter, it is basically a part of the bond swap strategy, which we do where, over the life of a security, the swap enables us to fix up a lifetime spread which we are protected on. While the swap curve moves, there could be volatility in the intermediate periods. We saw a profit in the previous quarter. We've taken a hit in this quarter. But over the life of the asset, the spread is protected and that's what we play on. So yes, we'll have to live with this volatility over periods, but I think over the life of the security, it's a game which we quite like and we'll continue that. Right. And, lastly, like on the ROA, while you talked about the sustainable ROAs that you look at, but how do you really look at the ROE in the medium term? Because that's one metric wherein Kotak has been really, like, behind other banks. No, I take the point. Just as the ROA is helped by the equity which we raised, it is a drag on the ROE because, at 21%, CET1, it's significantly higher than what, you know, we would need. So to that extent, yes, we would look at and we would take a look at, you know, what we do with that. But yes, the capital which we raised, 3-4 years ago, has effectively, the profits have been enough to keep the growth going. And, to that extent, we'll keep looking at what we do with the capital. Sure. Thanks so much, and wish you all the best. Thank you. The next question is from the line of Param Subramanian from Nomura. Please go ahead. Yeah, hi. Thanks for the opportunity. Just one data keeping question. So for the investment book, how is it split between G-Sec and non-G-Sec? Because the credit substitutes has gone up, and you mentioned you manage margins by moving cash into credit substitutes, but at the same time, we maintain the LCR. So if you could just explain how that happened? Yeah. Well, broadly, no, G-Sec book is about INR 108,000 crore out of the INR 145,000 crore. So while we've seen that, I think somebody asked earlier about INR 128,000 crore in the previous quarter going to INR 145,000 crore. A large part of that has gone into investing, which is in credit substitutes. Effectively, of the INR 145,000 crore, about INR 108,000 crore would be with respect to G-Secs and about INR 28,000 crore, which is the credit substitutes there. The balance will be including our investments in subsidiaries and whatnot. Yeah, could you explain how the LCR has been maintained, you know, despite, you know... You said that the margins have been managed, the 15 basis points drag on margins, which was there last time, has been managed, They're two different things. I'll talk about the margin. I'll let Paul take the LCR bit. The margin is there because of the fact that you have the proportion of advances to the earning investments has increased. And even a small change can, does make a difference, because what you make on your advances is in a, from a yield basis, higher than what you would make on investing or interbank funds. ... So that's how the margin was maintained in the quarter over the last quarter. In terms of LCR, you want to speak up? See, overall, LCR is good because, you know, we are fairly comfortable in our liquidity position, and therefore, that is really what is helping us to maintain our LCR. However, we sort of balance carefully balance how much, you know, our inflows and outflows in the short term. We manage some of that. We manage our HQLA, we manage our investments, and therefore, also try to optimize LCR using that. So it's a combination of these that helps us to manage our overall LCR. But I think the underlying factor is really that we're fairly comfortable on liquidity. Fair enough. Thanks a lot. Just one more question, if I can squeeze in. I think in this quarter, we increased the deposit rates in some of the higher tenure buckets. So what's driving that? Because, if we are, you know, at the back end of the, you know, and could be heading into rate cuts going ahead, you know, why, why are we increasing in higher tenure buckets? Yeah. In a higher tenure- Higher. That we have raised. Go. Go. Look, in terms of the opportunities in the market, plus an option to get higher, this is a time where the interest rates, people believe they are at the peak, and here, from here on, it will come down. And hence, there is an opportunity for us or for the customers to lock in the deposits at the higher end, and that's where we saw the opportunity. And in certain durations, we have raised that rate. And there, again, to be competitive with the three or four competitors whom we benchmark with. Okay, thanks a lot. All the best. Thank you. Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Ashok Vaswani for closing comments. Over to you, sir. Guys, just on behalf of the entire Kotak team, wanted to say a very big thank you and appreciate you doing this on a Saturday evening. With this, I call it to close for this quarter's results. Thank you. Thank you. On behalf of Kotak Mahindra Bank, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.