Ladies and gentlemen, good day and welcome to the Q2 FY22 earnings conference call of LIC Housing Finance hosted by Axis Capital Limited. As a reminder, all participant lines will be in listen- only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Praveen Agarwal from Axis Capital. Ladies and gentlemen, over to you, sir. Good day. Thank you, Steven. Good morning, everyone. We welcome the management of LIC Housing on this call. We have with us Mr. Y. Viswanatha Gowd, MD and CEO, and Mr. Sudipto Sil, our CFO to take us over through the results. Mr. Gowd, we request you to share your key highlights for the quarter gone by and thereafter we open the floor for Q&A. Over to you, Mr. Gowd. Thank you, Praveen. Very good morning to every one of you, and I welcome to this post earnings investor call of LIC Housing Finance Limited. As you are aware, LIC HFL declared the Q2 FY 2022 results yesterday. Before beginning, I wish you and your near and dear ones a very good health and safety. With gradual improvement in the pandemic situation and increased pace of vaccinations, it is heartening to note that normalcy is returning to our lives, which is also reflective of the pickup in business activities and the economic growth. With greater relaxations of restrictions, sentiments have also improved very significantly. It is in this backdrop that our business was conducted in the Q2 of FY 2022. The key highlights of these quarterly results are as follows. The total revenue from operations INR 4,708 crores against INR 4,969 crores for the corresponding quarter of the previous year, with a decline of 5.25%. Outstanding loan portfolio stood at INR 237,660 crores against INR 213,349 crores as on 30th September 2020. It is reflecting a growth of 11%, out of which individual home loans have reported growth of 15% and now it comprises a little more than 79% of the total portfolio. It is up from 76% a year ago. The total disbursement for the quarter was INR 16,110 crores. The disbursements in the individual home loans were INR 14,330 crores against INR 10,373 crores with a growth of 38%. Disbursements in project loans were INR 353 crores. The net interest income for the quarter was at INR 1,173 crores as against INR 1,238 crores. Net interest margins for the Q2 FY22 stood at 2% as against 2.2 for the Q1 of FY22. Profit before tax for the quarter stood at INR 308.95 crore as against INR 1,009.26 crore. Profit after tax for the quarter stood at INR 247.86 crore as against INR 790.90 crore for the same period previous year. Loan disbursements during the quarter was extremely robust, with total disbursement at INR 16,110 crores, recording growth of 29%. Individual home loans too continued its strong growth and posted INR 14,330 crores against INR 10,370 crores in the Q2 of FY21, a growth of 38%. Growth was uniformly spread across all geographies and across both large and smaller centers, especially Tier 2, Tier 3. It is extremely encouraging to note that we have achieved 132% of the pre-COVID levels in terms of our Q2 disbursements when we compare it with Q2 of 2020. On the portfolio growth front, the total portfolio recorded growth of 11%, and now it stands at INR 237,660 crore. With increased focus on the home loan segment, the growth recorded in the home loan portfolio was at 15% for the quarter. In terms of asset quality, Stage 3 exposure at default as on 30th September 2021 stood at 5.14% as against 5.93% as on 30th June 2021. In our earlier interaction with you after Q1 results, we had assured our stakeholders that we strongly believe that a peak has been marked and subsequently asset quality would improve. It is very much heartening to note that Stage 3 assets have declined by over INR 1,500 crore from Q1 of FY22 levels on account of strong effort put in by all the concerned. We have now a very strong confidence and conviction that the coming quarters will show greater improvements. This quarter, despite reduction in Stage 3 assets, the provisions have been increased to reflect higher PCR. Total provisions as on 30th September 2021 stood at INR 5,354.9 crores, reflecting a provisioning covering ratio of 43.72% on Stage 3. It is up almost all by 9.72% as of June 2021. OTR during this quarter stood at INR 2,141 crores, lower than Q1 of INR 2,350 crores. We have been very closely focusing on the collection efficiency. That has also shown improvement and now stands at 99% for regular accounts, the highest since the pandemic broke out in March 2020. On the funding side, we have witnessed a reduction in the overall cost of funds by 12 basis points during the Q2 of FY 2022, despite a hardening in the bond yields during the same period. Incremental cost of funds has come down by 13 basis points and stood at 4.9% for Q2 FY22. Net interest margins for the quarter stood at 2%, as against 2.2% over the last quarter. The decline being attributable due to income reversals on OTR accounts. Incremental spreads continued to remain at healthy levels and stood at over 230 basis points during the six months ended 30 September. During this quarter, the company completed the preferential issue of equity to its promoters, LIC of India, amounting to INR 2,335 crores. This will add to the Tier-1 capital of the company. During the quarter, the company also tied up with the India Post Payments Bank for distribution of its home loan products. With this brief introduction, I would like to invite you for your queries. Thank you very much. Thank you very much. We will now begin the question and answer session. The first question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead. Yes, sir. Thank you for taking my question. Sir, I have two questions. The first one is on your NIMs. You reported a 20- basis-p oints QoQ decline, and sir also suggested that these were income reversals on OTR accounts. Please, sir, if you can kind of briefly explain why these income reversals on OTR accounts, what was the nature of these restructurings which warrant income reversals? What was the quantum of income reversals that were taken during the quarter? Can you come up with your second query so we can address both of them together? Yes, sir. Sir, maybe in the next two weeks, I understand we briefly discussed during the last earnings call as well that employee expenses will go up. What is the nature or what is the run rate of employee expenses that we can kind of expect going ahead? Lastly, on your provisions during the quarter, while we highlight that our stage 3 numbers have actually kind of improved on a QoQ basis, but what is it that kind of warrants an increase in provision cover? I understand we used to run a high provision cover during the past quarters. Sir, why I ask this question is, during every earnings call, when we kind of ask you, we typically get to understand that based on your assessment at that point in time, that the provisions were adequate. What has changed during this quarter that you think that there is a need to improve the PCR while asset quality has actually improved? Should we think of it like this, that because we were still working on that preferential equity capital raise we were not able to take provisions and which we have taken during this quarter? No, one thing just I would like to, I think your questions were two, three questions were there. As far as the provisioning is concerned, I would like to clarify you that every quarter, of course, last quarter, if you see the provisions were higher side, maybe around more than INR 800 crores. This quarter, it is slightly less to INR 600 crores. Here, what happened, the OTRs, especially where our OTR is nearly 3.5%, almost all, it is more than 3% of our loan book size, if you look into that. Mostly now in this quarter, it has happened only retail segment. Nearly INR 2,100 crores were added this year after this quarter compared to earlier quarter, it has come down. Overall, the provisioning of even 10% minimum required to be made on the whole, the OTR thing. Moreover, the Stage 3 OTR were taken care of full. What happened, we are adequately provided for, so no need to have any, what do you call, future, any some sort of, what do you call, uncertainty. Our NPAs now, we are very comfortable that compared to last quarter, actually, what do you call, the NPA amounts have come down by more than INR 1,500 crore, if you look at in the retail segment itself. In the project, mainly in the developer side, our loan book is only 6% and odd, so there what happened, more or less, not much addition to the NPAs are there. We are very comfortable now as far as the, what do you call, the asset quality is concerned. Last time also, we told you very clearly that the worst was behind us. The similar way now it has been proved that, yes, the recovery now we have improved, our teams are still under, what do you call, improvising our even all the levels at our collection efficiency also. Now, if you look at the regular cases where our collection efficiency is more than 99% also. I'm very sure that the provisions what we have made are adequate enough so that what happened, the provision coverage ratio also will be more than 43% now. As far as the other two items are concerned, I think CFO will tell you. Yeah. Yes, Abhijit Tibrewal, actually two things. Of course, what our MD Sir mentioned about the provisioning also, if you see there has been a secular improvement in the GNPA, of course, there has been an increase in the provisioning cover. As a result of that, around INR 600 crores of provision has happened. The other thing is that your query was regarding the margins. See, actually, margins, if you look at it, there has been a reversal of interest. What happened, I'll explain to you. At the end of September, the total amount of loans under one-time restructuring one and one-time restructuring two put together is around INR 7,300 crores. For that INR 7,300 crores OTR, because of the OTR given, there is a recalculation of the IRR and the effective interest rate. Because of which there has to be an interest reversal which happened. This is a notional entry that has happened because of the OTR impact and the impact of it to the tune of around INR 250 crore for the quarter ended September. The corresponding figure as of end of June with INR 1,300 crore of OTR was around INR 116 crore. Around INR 135 odd crore of extra reversal of interest has happened in the Q2 itself. Now what is the impact of it on the margins? For every INR 100 crore of loss of net interest income, the impact on NIM is to the tune of around 16-17 basis points. For INR 135 crore of such reversal, the impact on the net interest margin in terms of basis points will be clearly in the range of around 20-23 basis points. What is also to be noted, very important thing is that sequentially there has been an improvement in spreads. As our MD mentioned at the beginning of the discussion, that there has been a reduction in the cost of funds, both on the incremental side and both on the cumulative side by around 12 to 13 basis points between 1st July and 30th of September, despite the fact that interest rates have been hardening in the system. Sequentially, there is a drop in the interest cost, which has resulted in an improvement in spreads. Because of this reversal of interest income, that is the reason why there is a drop in the reported net interest margins. Third question regarding expenses. Your third question was regarding the expenses. I think expenses, there have been a couple of one-time, which has happened in Q1, last quarter, that we had explained because of the payment of arrears. This time also there is an impact of actuarial valuation on retirement benefits to the tune of around INR 45- 46 crore. If you net it off, the normal increment in the other expenses should be in the range of around 15%-20%. That should be an ideal run rate. Got it, sir. This is useful. Sir because this interest income reversal on the OTR book is notional in nature, would you say that because interest kind of continues to accrue, you will maybe see some interest income right back in the coming quarters? As and when these accounts come out of OTR. Correct, sir. Thank you. Sir, lastly, if you could. More important to note is that now the OTR has ended. Yes. When these accounts come out of OTR, we can expect some interest income right back from these OTR accounts. Correct. Sir lastly, if you could share some color on the segmental asset quality which you kind of typically share during the earnings call. Yeah. Like individual home loans. Yeah. Developer NPAs. I will read out the comparatives. Our MD will just give the comparatives. We'll request everybody to note so that we don't have to repeat it again. As far as the position as of end of September is concerned, IHL segment, stage 3 comes to 2.25%. In the non-housing commercial, it is 14.83%. In non-housing individual, it is 9.76%. This is as far as individual total is concerned. In the project, that is the developer book size, there the NPA levels, sorry, the stage 3 is at 23.94%. Overall if you see our total gross NPA compared to last quarter, from 5.93% it has come down to 5.14% now. Sir, which is to suggest there were no resolutions during the quarter in your developer book. Developer book resolutions were not there, because developer book, maybe small one or two, they not have much impact. All right, sir. Thank you so much, sir. I will come back into question if you have time for me. Thank you. The next question is from the line of Aditya Jain from Citigroup. Please go ahead. Thank you. Could you tell us the current classification of the restructured loans? The total outstanding restructured loans, about INR 7,300 crore, where are they classified now in phase I, II or III? Most of it is either in stage 1 or stage 2. Because when we are doing OTR, the condition of OTR is that they have to be standard assets. Got it. Is it okay to assume that it's largely in phase I as you had said in the last quarter, or is there a sizable amount of stage 2? Got it. Okay. Like you've done in this quarter, in stage 3, increasing the coverage, is there a view on the stage 2 assets that the coverage there, is it enough, or would you take another chance to beef that up also to create more security cushion? No. In stage 2, the provisioning coverage is adequate. Considering the underlying valuation, it is adequate. Got it. Thank you. Thank you. The next question is from the line of Zuan from Point72. Please go ahead. Hey, thanks so much for the opportunity. Just on the yields, as a yield part, it seems like quarter-over-quarter decline, if my math is right, about 35 basis points. Increasing interest reversal this quarter is INR 135 crore, which accounts to about 20 odd basis points, 20 basis points of that decline. Is there any kind of calculation and also, what accounts for the remaining 15 basis points also of decline quarter-over-quarter? No, I think, Zuan, what I understand from your observation, this quarter, the NIM is 2%. What it was in June was around 2.20%. What I mentioned in my earlier discussion is that for INR 135 crore of interest income reversal, the impact is around 22 to 23 basis points. That actually takes us notionally adding back to more than last, what it was in the June quarter. What is to be also noted is that the total impact of reversals in totality is INR 250 crore. The increment is INR 135 crore. If you add back a INR 250 crore notionally, the number actually is much higher. Right. Got it. Understand. Right. Just on the home loan yield side, do you mind give us some color on what's our current average home loan yield versus, because I think our yield rate is at 6.6% or something. Just want to understand how much repricing is potentially in the future, or is there more soon now? No, as far as the rate is concerned, now the 6.6 is the entry level what we're offering really going on well. I think even the volumes are picking up very well in the last quarter, you can see good growth rate is there. In the disbursements also, I think we have shown more than nearly already where is the pre-COVID levels as far as the quarter is concerned. That way, good traction is there across. The 6.6 is also to give because it is linked to the, what you call, CIBIL scoring. Our actually selection will be very, very sound enough to take care of the 6.6 is what we are offering only to the selected customers, to the best customers based on the credit score. Okay. got it. Understand. last thing is on this coverage, provisioning coverage. Are we comfortable with current level of coverage or given the capital raise, we are more comfortable to continue to increase that coverage going forward? if that's the case, do you have a target or ballpark number in mind? This coverage, I think now it is very much adequate what at this level, going by the valuations. It is, I think earlier was only 34%. Now it has come to 43%. Almost a 9% increase is there. Mainly it will take care fully what we have now at this level. I think from our side, it is almost well fully provided for. With the NPAs also you see now they have reduced. Another favorable point is over the last quarter, the volume of even non-performing assets also have come down by nearly INR 1,500 crores. That also added to this. It's a very good positive trend. Further provisioning may not be much on the higher side. Got it. Understand. We have adequate cover right now. Sorry, just a follow-up. Sorry to come back to the leading question. Maybe I'm missing something or I don't really understand this well, but if I look at the increase in OTR, last quarter is, I think, 1 percentage point or so of the book. This quarter, we have about 80 bps of increase in OTR. Although that will be just this quarter. Why would the income reversal this quarter be higher than the last quarter though? The reason is that the income reversal is on the total outstanding OTR, which has increased by 50%. Earlier, the interest was only for three months on INR 5,300 crores. Now it is for the six months, and for the six months, it is INR 7,300 crores. I see. Got it. That means that the pressure on the income reversal may not increase quarter-on-quarter going forward, since our restructuring is peaked. Yeah. The income reversal absolute amount, it will still be there going forward. Is that the right way to understand? No, the OTR scheme has now ended. No more additions will be there, one thing. Secondly, the OTR things also may be coming out of that. Yeah. Now, we are after all the borrowers so that what happens, people can avail. Who are now actually the income levels are better off. Now, people are getting salaries in time. Definitely, our portfolio is mostly on the salaried structure. We are very sure that many borrowers will come out of the OTR in this quarter. Certainly, because they are in that stage 2, even stage 3 also definitely come to stage 1. That way, there will be an improvement. I think we don't see much of the requirement of the reversal on the higher side. Yeah, I understand. Just to understand perfectly, some of the accounts are in the OTR, it will still have income reversal. Once they start to come out of the OTR, i.e., OTR starts to decline, the income reversal during that quarter will start to decline. Is that the right way to understand it? Yeah, I think, see, what we mentioned is that there will be no further addition to the OTR pool. It is actually coming down. Got it. Okay, sir. Thank you so much. Thank you. Thank you. The next question is from the line of Shubhranshu Mishra from Systematix. Please go ahead. Hi, sir. Mr. Mishra, sorry, your voice is breaking up, sir. I am audible? Now you are. Yeah. I just want to understand this interest reversal. I think it will only do interest reversal after Ind AS in stage 3. Most of our OTR is in stage 1 and stage 2. No. That is not correct. Whenever there is a restructuring which happens, it changes the term, the total tenor. The moment that happens, the EIR, effective interest rate and the IRR also changes. When that happens, obviously, there is a de-recognition of the income which has to happen to reflect that change. Right. As per Ind AS. That is Ind AS only. I'm talking of Ind AS only. Okay. This has happened not because of a stage 3 impact, but it has happened because of the fact that the effective interest rate has changed, because of the elongation of the term. Got it. Sir, what is the split of the book between the top seven cities and other cities, sir? See- If you look at our portfolio also, mostly even in the traction now where we are seeing in the last quarter, nearly 50%, more than 50% is coming from the Tier 2, Tier 3. If you look at the metro cities and all top seven cities, it is around 58% of the portfolio. The number of offices and the split of the book is similar. You will find in the presentation. If you want, I can just repeat the number. You want the number of offices? No, not number of offices. Just giving you, there are 85 offices in the top seven cities and 197 offices in the other cities. Top 7 cities are the Mumbai Metropolitan, the NCR, Mumbai, Pune, Chennai, Hyderabad, Kolkata. Add to that, our recent tie-up with IPPB also will make our reach far better in Tier 2, Tier 3, especially. What I'm trying to understand is what is the split of the book, not the offices in top seven cities and the others. Our book size, if you look at geographically also, top seven cities account for nearly 58%. 58%. If you look at the present year, what happened now, 43% of the business has come from top seven cities and 53% has come from the others. Sure, sir. Just one clarification from the notes that there are 248 accounts which are from OTR 1, which have been again put in the OTR 2. In fact, actually the average ticket size there is roughly around INR 72 lakhs, which means that the average ticket size in OTR 2 would be around INR 35 lakhs. What is the difference here, sir? Why is the ticket size higher in OTR 1 and why is it lower in OTR 2, sir? See, actually, if you look at the way the OTR has happened, majority of the corporate account OTRs have happened in the fourth quarter of last year and the first quarter of this year. Whereas in the second quarter, the large ticket project loan cases were very small. Hardly some four or five cases had come, whereas good amount of retail loans had come for OTR in Q2, under the OTR 2. Right. Sure, sir. One minute. I'll come back in a minute. Thank you. The next question is from the line of Kunal Mehra from MLP. Please go ahead. Good afternoon, gentlemen. Thank you for the opportunity. One question, given the incredible step-up in OTR 2, would you be willing to share with us how the OTR 2 and 1 book split between the individual housing, commercial on individual non-housing? See, we have got the details of the individual and the project. I do not have the individual home loans, non-housing corporates, and other breakdown. If you want quarter wise, I can give you quarter wise. First quarter, about INR 2,070 crore was under the builder loan category. About INR 275 crore was under the retail category, which comprised mostly of the non-housing commercial and the non-housing individual and home loans. These are the three categories there. In the second quarter, the project loan was only INR 62 crore, whereas INR 2,078 crore was in the individual category comprised of all the three sub-segments. That is NHC, non-housing commercial, NHI, non-housing individual, and IHL, which is individual home loans. That's really helpful. Thank you. If I was to qualitatively ask you about this INR 2,078 crore split in the individuals between the non-housing commercial, non-housing individual, and individual housing. Directionally, which one would be the largest contributor to this? I'll be transparent. The reason I'm asking is I'm trying to handicap the odds that roll forward, and we have another one of these slip on account of the nature of the underlying asset versus the stress they're experiencing in the real economy. This is mainly due to the retail only. All our INR 2,078 crore what you have mentioned now, the OTR 2 in the last quarter is only from the retail segment. The ticket size may be around INR 25 lakh-INR 30 lakh is our better average size. That is it. Got it. Therefore, sir, given that the dominant share is retail, it is INR 25 lakhs. It is arguably non-salaried retail. May not be not salary. It will be salaried retail also. Our loan book, if you see in the individual housing loan also more than 75% of our individual house loans are all salaried class only because all are CIBIL-based, all things are there. Moreover, our teams are working to bring out these people also out of OTR. With the facility of this, some concessions given, going forward, actually, these numbers will come out of the OTR suddenly give lot of relief. If you look into the collection efficiency also now, for the regular accounts already it is 99%. The best we have seen is, I think even pre-COVID level like that. Just to give a little bit more color there. Your query is that probably you would like to know why there has been so much of people going in for OTR 2. Let us look at the backdrop on which the OTR 2 was announced. It It was at the time of the second surge, second wave of the COVID. That point in time is something which we had shared earlier also. At certain times, it is from the customer, individual customer, or even from the commercial customers. What is more important at that point in time is to preserve cash. As and when an OTR offer has come from the government through the regulator, they have opted for it. What is the probability that they will come out? If you look at last year, the moratorium. 80% plus of people who had opted for moratorium at that point in time have come back on full recovery, on full updated mode. As and when the external situation improves, and it has already started improving, more and more people generally come out of these kind of OTRs. Even if you look at the Q1, Q2 movement also, actually all those accounts which are there in moratorium in Q1 as they have come out. Some of them have come out and updated even in Q4. That is also possible. Got it. Of those accounts that came out between Q1, Q2 from the OTR, was there any accompanying write-back of the notional income reversal? No. As of now, if you look at the statutory disclosures that we have made, total amount of exposure that was out of INR 7,398, right now, because the OTR 2 was mostly invoked towards the end of the quarter, there has not been much scope for people to come out of the OTR 2. Implementation. As of 30th September, only the implementation was going on. Now progressively, we will see the outstanding as compared to the invocation coming down. It will happen mostly in the individual segment, it will happen definitely. There is a positive on that. Okay. Thank you again, gentlemen. Appreciate your time and patience. Thank you. Thank you. Before we take the next question, a reminder to the participants, please limit your questions to one per participant. Should you have any follow-up, may we request you to rejoin the queue. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead. Yeah. Hi. The question is with respect to the stage 2 breakup. Last time you highlighted in the corporate developer, it was INR 2,400 crore odd out of INR 12,000 crore. How has been the momentum in stage 2 between the corporate and the non-corporate? Also if you can share the non-individual, non-housing breakup of INR 35,000 crore, how it has moved this quarter. First of all, the non-housing individual and non-housing commercial. In June, the non-housing commercial total was INR 14,300 crores and non-housing individual was INR 20,501 crore. It was around INR 34,800 crores. As of September, the non-housing commercial is INR 13,600 crores, so it has come down by INR 700 crores. Whereas the non-housing individual has remained more or less at that level, slight increase of INR 200 crores, INR 20,500 to INR 20,700 crores. Total, if you see, there has been a decline in the non-housing commercial and non-housing individual. Yeah, sure. between June and September. stage 2 breakup. Stage 2 breakup for I'll give you comparables. First of all, is that in stage 1, in the non-housing commercial, more or less it has remained the same. In stage 3, there has been a decline, as we mentioned beginning. Stage 2 also, there has been a decline from INR 1,362 crores, it has come down to INR 1,292 crores in stage 2. I'm talking June to September figure. From INR 1,927 crores, it has come down to INR 1,507 crores. There is a INR 400 crore reduction in the stage 2 also, and consequent increase in stage 1. Sorry. Stage 2, there was a decrease? It's come down. Yeah, it was decreased by INR 400 crores in the non-housing individuals. Non-Housing Individual. Yeah. Okay. The corporate. Non-housing corporate also, there has been a reduction by almost INR 70 crore-INR 80 crore in stage 2 itself. Okay. That's it. On the. Yeah. Stage 3 and stage 2 both have come down in both these categories. Okay. Just again to clarify in terms of this restructuring, the provisioning on this restructuring impairment? I missed out on the project. Project also, stage 2 has been reduced. Stage 3, as we mentioned, has come down marginally. Stage 2 has come down from INR 2,490 crores to INR 1,553 crores. Yeah. Stage 1 INR 9,500 crores to a little more than INR 10,000 crores. Perfect. INR 2,490 is becoming INR 1,500 in stage 2 on the corporate developer. Yeah. Okay. Overall provisioning on the restructure is routed through impairment allowance even in this quarter? Yeah. As you, the disclosure Yeah. Okay, good. It is that, as we mentioned last couple of times, it is an appropriation. Yeah. Okay. Thanks. Thank you. A reminder to the participants, please limit your questions to one per participant. Next question is from Dhaval Gada from DSP Mutual Fund. Please go ahead. Yeah. Sorry, two questions. one, Sudipto, can you just give the absolute stage 3 for NHC, NHI and IHL? I just wanted to reconcile the numbers. Stage 3. We have given in the beginning of the call. Percentage, absolute, if possible. You want us to repeat the same numbers? No, the absolute number. I think you gave the percentage. I am just trying to reconcile the absolute for non-housing individual, non-housing commercial, and individual home loan. Stage 3. From 2.6% it has come down to 2.25%. Absolute, if possible. I'll take it offline, if that's okay. Yeah. We have already given all these numbers so many times. Yeah. The second question was regarding margin. Just to sort of summarize, you're saying that next quarter, I think most of the accounts are out of OTR. We should, on an underlying We didn't say it is out of OTR. We said that there is no further OTR scheme available. Okay. On margins from next quarter 2.2%-2.23%, based on the interest income reversal. How should one think about underlying margins next quarter? The underlying margins, what is more important is to see the trend in the spreads, because that is what will be reflective of the overall efficiency in profitability. Spreads have increased sequentially. There could be some notional entries of reversal of interest, but if you see the operating spreads have improved sequentially. Right. My question is, when should we see margins to normalize to pre-Q2 FY2021 levels, if you will? Sorry? Pre-March 2021 levels. When should margins normalize is the underlying question. We've seen a couple of quarters where OTR has impacted Correct. Before that, whatever was the margins, say around in the range of around 2.25%-2.35%, that was the ballpark range. Correct which we had been holding before this implementation of the OTR. We should, in a couple of quarters, certainly see those levels come back. Understood. Okay. Thank you. There will be stability in spreads and improvement in spreads to the extent of the interest rate movements, but overall, there will be stability of spreads. Understood. Thanks. All the best. Thank you. Thank you. The next question is line of Nischint Chawathe from Kotak Securities. Please go ahead. Yeah. Just to take it up from the earlier question. What you're saying is that this INR 250 crores is going to be a ongoing impact till these loans come out of OTRs. No, it will come down. See, because outstanding loan of the OTRs are also going to come down slowly. Okay. Now confirmation will not be there. Now overall it is closed now. OTR is now. No, that's why. INR 250 crores is the base impact that we can see this quarter. This is the highest. Probably next quarter it goes down to It will start reducing. Yeah, that's it. When do you think this kind of completely gets over? Maybe in a couple of quarters. It will significantly recede over the next couple of quarters. On the expenses side, of the staff expenses of around INR 147 crores, is that a one-off over there? There is a one-off around INR 47 crores, which has happened because of the actuarial evaluation of the retirement benefits. Total of INR 47 crores is the amount which is there. Okay. The INR 100 odd crores establishment expenses, I think that sort of will remain. Between 90 to 100 will be the ballpark. Perfect. Thank you very much, and all the best. Thank you. Thank you. The next question is from the line of Viral Shah from Credit Suisse. Please go ahead. Yeah. Hi. Just a follow-up on the previous question. In fact, actually more of a clarification. You are saying this reversal impact in the P&L, which is impacting the margin, is something which will continue every quarter, but the quantum will reduce. It will keep on coming down, yeah. Okay. Understood. All other questions are answered. Thank you. The next question is from the line of Piran Engineer from CLSA. Please go ahead. Yeah. Hi. Thanks for taking my question. I just wanted to understand why would the effective yield change because of the elongation of the term of the loan in restructuring? Because of the change in IRR. No, sir, if you're extending by, say, six months, wouldn't you charge the same IRR for that? No. IRR impact will be completely different. Ind AS reporting is based on effective interest rate. No, I get that. In that sense, if you are extending, let's say, for three months for an OTR, it would not be an interest-free extension of three months, would it? No, it is not interest free, but there is no cash flow. There is extension of term. The term which was 17 years will become 19 years, the term which was five years will become seven years, like that. It's sort of a loss of interest on interest, in a way, because of those no cash flows. Correct. Okay. Just to clarify, I know this has been asked many times. We reversed INR 135 crores this quarter. INR 115 was the sum of 4Q and 1Q? 1Q, there was nothing almost. The OTR started actually towards the end of 1Q. Okay. What about the interest write-backs from the reduction in NPL? That would have actually positively helped our interest income. In Ind AS, it doesn't matter. No, sir. Sir, we will not get into so much of technical discussion. If there is any specific, you can ask. Okay. That's fine. No, that was all I had. Thank you. Thank you. The next question is from the line of Saurabh from J.P. Morgan. Please go ahead. Yeah. Just 1 clarification on this note 6, this corporate restructuring of INR 5,000 crores, that's entirely developer loans or- No. It is developer plus the IHL plus NHC. Okay. Of that, developer is about INR 2,078 crores, as you pointed out earlier. Sorry? Of this developer loans is INR 2,078 crores. Of the INR 5,000. 2,078 crores was in. Q1 in the- Q1 Q2 itself. Only Q2. Okay. In Q1 it was very low, right? The total is about 21. Sorry. INR 2,078 was the retail in Q2. INR 2,074 was Q1. Yeah. of this, the total developer- I gave out all the numbers. You are on project. No. There is a total developer book restructure will be about INR 2,100 crores is my question, despite that or not? No. INR 2,100 crores. Where you got? The INR 2,100 crores is the OTR done in the Q2. Under OTR Q? Plus Q1. 1,041 crores. Okay. All right. Okay, fine. You will find the disclosure given in the published numbers. Very clearly it is mentioned the category-wise. Well, thanks. It is there in notes to the results. Point number 6C. Full table is given. Thank you. The next question is from the line of Umang Shah from Kotak Mutual Fund. Please go ahead. Yeah. All my questions have been answered. Thank you. Thank you. Thank you. you. The next question is from the line of Susmit Patodia from Motilal Oswal Asset Management. Please go ahead. Yeah. Hi, good morning. Sir, if you can speak a little bit about the competitive- Sir, request to please stay connected. Can you hear me? Yeah. Request to please stay connected while we reconnect the management, sir. Ladies and gentlemen, the line for the management is reconnected. Mr. Patodia, you may please proceed with your question. Hi. Good afternoon. Good afternoon. wanted to know the competitive scenario. Are you seeing balance transfer out? I just wanted to understand how is it looking? Is there a lot of BT out that's happening or vis-a-vis the earlier trend? Yeah. Now, because this quarter you have said that our traction is very good, especially in the disbursements in individual home loan segment, we have seen tremendous growth. Nearly INR 16,000 crore have been the disbursement in this quarter itself and showing a growth rate of almost 132% over the, what do you call, last one. We have already reached the pre-COVID levels there also. If you look at the portfolio also there is a 15% addition. That growth rate is very good. It is very good, especially in the individual housing loan segment. The way forward, actually, now the rates are at the lowest level, 6.66%. Even the offers given by some builders here and there in some states. After that, even the property rates also more or less maintained. With all these things now, the initiatives by the government for vaccination drive really has helped us a lot. People are now in a position to move out very freely, then select the properties after visiting them, especially on weekends and all. We are having lot of, what do you call, positive mood also. We are highly hopeful that the next quarter will be the best one or tougher better than this quarter. Of course, the last quarter also has been the best in the history of our company. That also was there as far as the disbursements are concerned. Sir, how much balance transfer have you had in the last six months, if I may ask? From our side, I think must be not more than maybe within 1%-1.5% range maybe there, not more than that. Okay. Now the rates have come down everywhere. We also have given rewriting facility and all. That is capturing mostly that. Okay. Sir, any progress on the SWAMIH resolutions? It's now been nearly 3-4 quarters. Where is it? What is the status? They are more or less same stage only. There is not much of traction we are seeing there. Okay. Sir, thank you and all the best. Thank you. Thank you. The next question is from the line of Kushan Parikh from HSBC Securities. Please go ahead. Hi, sir. Thanks for taking my question. I had one question. Just wanted to understand what the outstanding provisions are there currently on the restructuring book of INR 7,000 crores and what would be the incremental provisions coming over there, as well as how are we looking at overall credit costs going forward? Overall credit cost last year was around 60 basis points. Year before that was around 48 basis points. Current year it is more than 100 basis points. What we believe is that with the further expected reduction in the NPAs going forward in the next two quarters, it should again rationalize and we should reach somewhere where we were towards the end of this year to wherever it was, by and large, last year. That is as far as the credit cost outlook is concerned. As far as the provisioning is concerned, this provisioning is on the IRAC. As per the IRAC norms of the Reserve Bank, 10% has to be provided on restructured book. Fully it has been made. Further provision on restructuring book, we should assume will not come in unless the asset flips into lower bucket. No. As of now, since there is no change in the NPA position, there will not be any further restructuring required on that book. Overall OTR now ended. It is not operating. Okay. Understood. If you could just let us know, is there an increased level of prepayment on the LAP book in this quarter? Any particular reason for that? No. There is no such any pronounced trend only in the LAP book or anything of that sort. Okay. That particular line of business is disbursement is not happening as it used to happen earlier. Okay. Understood. Are we looking at any further improvement in incremental cost of borrowing coming in future quarters or this would be the bottom pretty much, the current quarter? See, overall, if you look at the interest rate scenario in the country, you will note that the yields have already started bottoming out and bond yield, G-Sec yield has actually gone up. Despite that we have been able to show some improvement. Some little bit of elbow room is still left and of course depends upon the stance taken by the central bank on the interest rate scenario. Sure. Understood. That's all from me. Thank you. The next question is from the line of Hitesh Gulati from Haitong Securities. Please go ahead. Yes, sir. Thank you for taking my question. Sir, of the OTR book 3.5% that you mentioned. Sir, is there any overlap with the Stage 3 assets? First of all, it is not 3.5%. It is INR 7,300 crores, so it will be around 3.1%. Number one Number two is that there could be some overlaps, but it is generally on the lower side. Most of it will be in stage 1 or 2. Okay. Sir, last quarter, at the result time, you had mentioned that there was some resolution of INR 100 crores in July in some developer books. Has that been taken care of when you mentioned there are some small resolutions? Yes. What is the state of it? Yes. That was INR 100 crore is happening. Yeah. It has come. INR 100 crore come, but that is not from the developer book, that is in the non-housing commercial. Okay. Developer- In developer there is no major. Very small accounts are there. Very insignificant. Very small 2 digit amount will be resolution. Okay. Sir, thank you so much, sir. Thank you. The next question is from the line of Kunal Shah from Carnelian. Please go ahead. Hi, sir. Most questions have been answered. Just one question, sir. With the kind of capital adequacy ratio we have, and I understand you're looking at good momentum on the growth aspect, how do you see any requirement of capital or how should one look at that? As of now, capital is adequate. After the promoter infusion, as of now, the capital is adequate. Okay. We don't believe there's going to be any further need for capital. That we have not said. We have said that at this point in time it is adequate. Okay. Just one additional question on the employee expense part. You said there is some actuarial impact of INR 45 crore-INR 46 crore that is there in this quarter. This will continue for the coming quarters as well, or how should one look at this actuarial impact? I said it's one time. It's one time. Okay. Thank you, sir. Thank you. The next question is from the line of Mahrukh Adajania from Elara Capital. Please go ahead. Yeah, hi. Sorry to harp on the same thing, if you look at your interest reversal of INR 250 crore on a book of INR 7,300, it roughly works out to 3.5%. If we annualize it's 7%. Is the reversal rate right? No, sorry, your voice is breaking. Not able to hear. We are losing your audio. Adajania, are you able to hear us? No. As there is no response from the current participant, we move to the next question from the line of Shashank Verma from Axis Mutual Fund. Please go ahead. Hi, sir. I had one query on this cumulative number of provisioning, this INR 5,354 crores. Does it include the provisioning on restructured book of approximately INR 700 crores as well as the COVID-related INR 300 crores provision that we have made? The COVID-related provisioning is there, INR 314 crores is included in the ECL provisioning. OTR provision is made under IGAAP, under IRAC norms of Reserve Bank of India under IGAAP. Okay. It will not be included in the INR 5,300 odd crore number. It is there. It is reflected there, and the balance is transferred to the impairment reserve as an appropriation. Got it, sir. Thanks a lot. Thank you. Thank you. We take the next question from the line of Chandrasekhar Sridhar from Fidelity International. Please go ahead. Hi. This is just to complete, I think, Aman's earlier previous question. If you look at the interest reversals, it was INR 250 crores, which on an annualized basis works out almost a 7% interest. Have you given a one-year waiver? There is no waiver. There is a moratorium. Moratorium and waivers are completely different things. Right. Okay. You're saying in that case then there should be a write-back which will come sometime later, right? That is precisely what we are saying. Okay. There is no waiver. Please make it very clear. There is a difference between moratorium and waiver. Right. Okay. Just secondly, can you just remind me on just over the next 12 months, how much of your bond book is up for repayment? Not able to hear. Can you please repeat? Just over the next 12 months, the bond book which is up for repayment. Approximately around INR 22,000-INR 23,000 crores. Requirement. Thank you. No, you are saying redemption? Repayment. Yes. Yes. Bond redemption. Thank you. Yeah. Thank you. Thank you. Ladies and gentlemen, due to time constraint, we take one last question from the line of Mahrukh Adajania from Elara Capital. Please go ahead. Yeah, hi, sorry. Can you hear me now? Yes. Yes, hi. Just finally on this restructuring thing. What will be the average tenure of restructuring? I mean, average moratorium in restructuring, one year? Two years. Six months? Two years. Two years. Oh, so that is why the interest reversal looks a bit high, that way? Because it's two years. It is on a valuation based upon the effective interest rate. Got it. Okay. Thanks a lot. Thank you. I now hand the conference over to the management for their closing comments. Over to you, sir. Thank you, Praveen. Thank you for having the calls and our best wishes to all of you. Looking forward for a great innings in the days to come and especially in this quarter. I also wish all the members and also you, our people all, a very, very happy Diwali to all of you. Thank you. Ladies and gentlemen, on behalf of Axis Capital Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.