Ladies and gentlemen, good day, and welcome to the Q1 FY 2024 Earnings Conference Call of LIC Housing Finance, hosted by Axis Capital. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Praveen Agarwal from Axis Capital. Thank you, and over to you. Thank you, Yashashwi. Good day, everyone, and welcome to the earnings call of LIC Housing Finance. Today we have with us, Mr. Tribhuvan Adhikari, MD and CEO. He has been appointed as the MD and CEO as of yesterday. We have, Mr. Sudipto Sil, CFO. I would request, the MD to share his initial remarks, post which we'll open the floor for Q&A. Over to you, sir. Yeah. Good morning, Praveen, good morning to all of you. Welcome to the post-earnings conference call of LIC Housing Finance Limited. As you are aware, LIC Housing Finance declared its Q1 of financial year 2024 results yesterday. As Praveen has already mentioned, I've taken over as charge as MD and CEO of this company just yesterday. Board has approved my appointment yesterday. Of course, I had joined LIC HFL on the 22nd of June, a few weeks back this year as COO, Chief Operating Officer. In the few weeks I've been here as COO, this has given me the confidence that we, we are in the beginning of a new cycle of growth. In the past few months, the company has undertaken a series of transformational changes, which include a change in our technological platform, implementation of SAP, restructuring the marketing setup by opening up 50 new offices and 44 cluster offices. This is a new addition to our structure. Improving the credit process by creating specialized credit appraisal clusters. This is what I was talking about. All this has been done to deliver a superior growth, both qualitative and quantitative, with a significant improvement in TAT and customer service. More so, since the company is now the largest HFC in the country. Some teething issues since we have changed over to the changed our technological platform, some teething issues were witnessed in the initial part of the quarter, specifically in the months of April and May. They could have, they must, they have led to a transitory impact. However, things are improving fast and I am pretty sure that we will deliver positive results in the coming weeks, months, and quarters. In terms of the external environment, RBI's rate pause decision in April and June MPC meetings have led to stability in both borrowings and lending rates. This has brought back customers into the market. Demand across all sectors is witnessing buoyancy, and is likely to remain that way for most of the coming quarters and coming quarters. Now, I'd like to share the key financial highlights of the quarter of LIC Housing Finance. Our total revenue from operations were INR 6,746.51 crore, as against INR 5,285 crore for the corresponding quarter of the previous year. This is up by 28%. Outstanding loan portfolios stood at INR 276,440 crore, against INR 255,712 crore as on 30th June, 2022, this is a growth of 8%. If I bifurcate this, the individual home loan portfolio stood at INR 231,087 crore, as against INR 209,599 crore, up by 10%. Now, the individual home loan portfolio comprises 84% of the total portfolio, up from over from 82% a year ago, so there's a, there's a 2% uptick. Total disbursements for the quarter was INR 10,856 crore, against INR 15,201 crore. Out of that, disbursements in the individual home loans were INR 9,419 crore, as against INR 13,133 crore. Disbursements in project loan were INR 251 crore as against INR 309 crore for the same period previous year. As informed in the last conference call, our aim for the current year is to expand our geographical presence through opening up of new offices, which we have done. As a part of the strategy, expansion strategy, 50% new offices have been opened in the current quarter. We are also targeting a 25% growth in the number of MIs or Marketing Intermediaries, or if I may call it, our feet on the street. Net interest income rose by 39% to INR 2,209.44 crore, as against INR 1,592.48 crore for the same period in the previous year. Net interest margins for Q1 FY 2024 stood at 3.21% as against 2.51% of Q1 FY 2023. This is largely as a result of better liability management and the impact of passing on the rate hike in PLR in Q4 and Q1. Our profits before tax in the quarter was INR 1,648.99 crore, as against INR 1,140.36 crore in Q1 of FY 2023, registering a growth of 45%. Profit after tax for the quarter stood at INR 1,323.66 crore as against INR 925.48 crore for the same period previous year. Here, we are showing a growth of 43%. In terms of asset quality, Stage three Exposure at Default as on June 30, 2023, stood at 4.96%. This is the same as it was in the June quarter of FY 2023. Total provisions as on June 30, 2023, stood at INR 7,590.68 crore, reflecting a provisioning coverage of 42%, as against the provisioning coverage of 40% as on June 30 last year. There has been some increase in stage three, which is largely transitory, as earlier witnessed in Q1, and also due to some technical issues resulting out of the implementation of a new technical package and software. However, the positive outcome is that there has been a marginal decline in the stage three of project loans. Visibility on the recovery, visibility on the recovery in that area has also improved. On the funding side, our cost of funds stood at 7.62%, as compared to 7.63%, as on March 31, 2023. Incremental cost of funds stood at 7.69% for Q1 FY 2024. With this brief introduction, I would like to invite you for queries. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to only use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, we request you to restrict your questions to two per participant. In case of a follow-up, you may join back the queue. We'll take our first question from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead. Yeah, thank you, and good morning, everyone. Sir, firstly, if you can help us understand, what is leading, leading to this kind of a margin trajectory? Sir, you yourself have gone through multiple interest rate cycles. I mean, from what I understand, this is not really, a, a 3.2% kind of a margin business model. If you can help understand, while, while in the opening remarks, MD sir said that these are the impact of PLR hikes that were taken in the, in the first quarter. I mean, the kind of spreads, the kind of margins that we're seeing today, generally is not, not adding up. If you can help explain that, first. Sir, on, on the asset quality front also, MD sir, said in his opening remarks that there has been a marginal decline in the Stage three of project loans. This 60 basis points of increase that you've seen in your gross Stage three, have... if they've not come from, from project loans, have, they've not come from wholesale loans, is it predominantly retail which is leading to this kind of a increase? Sir, lastly, a data keeping question. In every earnings call, you share the Stage three numbers, this is your product, I mean, if you can just share that. Thank you so much. Yeah. Yeah, because the NIM, 3.21 NIM which you talked about, is purely purely operational. The PLR hike and liability management has led to this. I, I, I could not get you when you said this is not what you expected. We, if you remember, last year, we passed on the rate hikes to the customers starting June, then some of it was passed off in the September quarter and in the December quarter. The full impact of that rate, passing on of the rate hike, has come in Q1 of this year. There is an increase in the NIM. As regards your asset quality, yes, the project loans, our Q3 has come down. Basically it is the impact of 60 basis points is due to our individual housing loans. Primarily the reason for this, there is nothing extraordinary. Primarily the reason for this, let me be upfront, I think the technological change which we undertook in the month of March, that did create some technical glitches, as a result of which, our collections from our our collection of EMIs from our lenders was slightly hit, in the sense, if I may further clarify. In the case, most 85% of our EMIs are collected through the ENACH and NACH mode. There were some technical glitches in our software, due to which, the presentment of demands could not happen in the months of April and May. That did result in increase in stage three. Everything has been taken care of now. In the, for month of June and July, the presentments have been perfect, and our collection efficiency is near normal. Coming forward, I see that this, I, I would call it only transitory, and I'd say I'll use the word an aberration. In the coming quarter, I'm sure, our NPAs, if I may call it, stage three NPAs, will definitely, will definitely come down from what they are as, as of now. Yeah. Abhijit, if I may just add to what MD sir said. Just coming back to the query on NIMs. You are aware of the construct of the liabilities, where a good amount of a good portion, almost 50% plus of the liabilities, are on the fixed rate side. Whereas on the asset side, a large number, almost 95%, 97%, is on the floating side. The rate, when the rate hikes were passed on, there was not a commensurate increase in the cost of funds, which we were able to hold back. That actually led to the expansion of margins, more so because the full impact was felt in the first quarter. Whatever increases we had done in the from the period beginning first of January and the one that we had done from first April, the full impact has now been felt. Got it. Will it be then fair to say that given that there are no one-offs that you are suggesting in the interest income line item, given that, I mean, by now on the asset side, all the PLR hikes that you've taken have been passed on, and as we move along, your liability side will get a reprice. The margins have peaked out and should start maybe coming down from here on. Will that be a, a fair, fair thinking? No, I will, I will not, say that it will, I mean, I will not directionally comment on whether it will come down or, things like that. Only thing is that if you recollect here, last year we had, given a clear indication that margins are going to expand, as also in the, call beginning or call at the end of the fourth quarter. We believe that there will be substantial improvement in the margins for this financial year on a full year basis. There will be substantial improvement. That much is certain, given the, the kind of strong, set of numbers that have been given in the Q1. Okay. Lastly, if you can share that, data question that I asked, the Stage three basis. I can repeat it. I will just share the details. Can you please repeat the query? Yes, sir. So typically every quarter in the earnings call, you share the stage three numbers. Yeah. basis different product segments. Categories, segment-wise, right? Yes, sir. Yeah. So, as far as the individual home loans are concerned, the stage three is around INR 5,000... little less than INR 5,100 crore, and the percentage is 2.2%. In the NHI, that is the individual, non-individual, non-housing individual, sorry, non-housing individual, which is basically the retail LAP, et cetera, there the stage three number is INR 2,100 odd crore. The percentage is 7.8%. Coming to the non-housing corporate, the stage three is INR 1,630 crore, the percentage is 24%, and the project is INR 4,874 crore, and the percentage is 42.12%. Sir, essentially 42.12 that you said has gone up, right? Quarter-over-quarter was 40% last quarter. Outstanding has come down. The outstanding has come down by almost INR 400 crore. Got it. Got it. Whereas the EAD has actually come down by about INR 20 crore, so there's a marginal decline, but there has been a INR 410 crore reduction in the outstanding. Got it, sir. Got it. So lastly, what is the status of your restructured pool now? Yeah, as far as the restructured pool is, now, we have, If you recollect, we have done about INR 7,100 odd crore or INR 7,200 crore of OTR cumulatively, out of which, about less than INR 100 crore still remain to go out, which will be going out in the next quarter. Almost everything has gone out. Out of that 7,400 or 7,300 number, only about 5,600 are still outstanding. The others have been repaid or closed. The NPS, there is about 18%-20%. NPS, so non-performing loans, you said? Yes. What was this 18%-20% you said? NPA, sir. Stage three. Stage, stage three from the restructured pool? Yeah, yeah. Got it. Thank Thank you so much, sir. This is all from my side. Thank you. We have our next question from the line of Avinash Singh from Emkay Global. Please go ahead. Yeah. Good morning, sir. Couple of questions. The first one, again, a bit on the asset quality. If we recall, this match or glitch was sort of, you had highlighted in your last quarter call. If I go by stage by stage, the stage two has seen increase in the absolute term as well as the ratio, and of course, stage three. Just if you can help, I mean, what sort of, you know, portion you can attribute to this next? Because stage two and stage three both have seen a sort of a jump. Also the provisioning coverage side, typically, I mean, you had like, you were around 49% GS3 coverage at December, that you brought down around 45% odd to March. Now we are at sort of a 41%-42%. What is sort of driving, and what sort of your comfort you have that is sort of, you are taking this provisioning coverage progressively down? Thank you. Well, when collections get delayed or interrupted, both our stage two and stage three will naturally increase. That is precisely what has happened in the months of April and May, as I said earlier. This technical glitch did affect us from collecting the normal collection efficiency which we normally have. That was affected. Because of that movement, stage two and stage three were witnessed. As far as the overall PCR is concerned, I think there is only a marginal decline, but more importantly, directionally, the visibility on the project loan portfolio in terms of recoverability and collections. Just to give some numbers, there was also a collection of more than INR 100 crore during the quarter in terms of actual money collected in the project cases. That is actually giving some level of visibility regarding the quality of assets on the project side, which is the most sticky and most difficult portion of the entire portfolio. Yeah, but I mean, that project side NPAs are still, I mean, a reasonable sort of, you know, almost like INR 5,000 crore. There, actually, the provisioning coverage has not declined at all. Instead, in play, in place of 36.88, the stage three has increased to 37.61. Okay. Okay. Sir, what sort of explains your relatively, I would say, higher NPAs or GS3 in your individual LAP? Because if I recall, the LAPs are a lot into salaried class, I mean, and there, I mean, again, 8%, closer to 8% of stage three in, again, a LAP category. Again, is this something, I mean, where you expect improvement, or is this the broader trend line that you are okay with? See, structurally, the product is a slightly higher delinquency product, and that is the reason why the pricing is also done in that manner. Having said that, the fact is that this also has got impacted because of the technical glitches that we discussed few minutes back. If you see, for example, in the NHI category for the March ending quarter, it was around 6.5%. From there it has increased. There also, the total increase in amount term, net amount terms in stage three itself is about, say, INR 300 crore. Okay, sir. Thank you. Thank you. Thank you. Thank you. We have our next question from the line of Kunal Shah from Citigroup. Please go ahead. Yeah, thanks for taking the question. Firstly, on the margin side, given that we are at the 3.2 now, and you mentioned, like, this is more of a operational, how confident we are in terms of sustaining it? Because I think we have been highlighting in terms of 2.5%, 2.7% odd% margins. Now what would be our view with respect to the margin trajectory? If we see in the previous call, I think we had said around 2.5% or 2.55%. Now, probably we will be more looking at a range of between 2.6%-2.75%, kind of a band, on a full year basis. Okay. The way it would come off in the coming quarters, to settle at, say, 2.6-2.75, that would be largely because of the catch-up on the borrowing side? No, we could... I mean, there could be some reduction on the rate front, by, by RBI towards the end of the financial year also. That is also possibly, what we are, trying to factor in. Just assuming that the rates stay at, where they are, in terms of this yield on advances at 10.15, how should that ideally move? I think incremental cost of borrowing is something which you have mentioned, yeah. Incremental cost of borrowing, if you see right now, there is a decent amount of stability on the rate side. Though the yield curve continues to be quite flattish, it has come up in terms of incremental cost. In the March quarter, we were clocking around 7.84. From there, it has come down to around 7.69, which is very close to the average that we are having at around 7.62. I mean, I would say cost line, by and large, will remain here only. There could be some exits of low-cost liabilities, so to some extent, few basis points up or down, there could be a movement. Otherwise, on the, on the pricing side, I think there could be a little bit of reduction in the lending rates going forward, owing to the stability in the interest rates indicated by Reserve Bank at this point in time. Sure. One last question with respect to growth. Obviously, a lot of efforts have gone into the transformation agenda, but still, in terms of the disbursements, it's not been that strong all through. How is the run rate currently? Finally, what is the kind of outlook which we would have with respect to disbursement and the loan growth? Well, as I mentioned, there, a major restructuring took place in the months of March and April also, regarding number one, change in this organizational structure and also our technological platform. So as I said also, we had some glitches in the technology platform. So, partially the degrowth in our disbursement space, I would attribute partially to this, number one, the technical problems which we had. And number two, since the organization got restructured, we opened 50 new area offices, we opened 44 new cluster offices. So there was a lot of, I would say, transition of manpower also, movement of manpower from places here and there. Naturally, as is normal when a new person comes into a new office, takes time, so the marketing effort could have been hit a bit. This was only witnessed in the months of, as I said, April and May. From June onwards, we are back on track. July has been up to expectations, and going forward, I see that I think we should be recovering fast and month-to-month improvement will be seen. Month will be seen by us. Yeah, sir, run rate for June would be? Run rate for June approximately would be about INR 5,000. Oh, out of 10,800, 5,000 is in June? June, yeah. Yeah. Okay. Okay. Yeah. Thanks. Thanks a lot. Yeah. Thank you. We have our next question from the line of Saurabh from JP Morgan. Please go ahead. Hi, sir, just one question on this NPA, you know, that INR 4,000 crore in the project book. Could you just break up as to where are these recoveries being pursued? How much will be in NCLT? How much, you know, you're trying to do just one time settlement? Any color there will be great. Thank you. Saurabh, actually, NCLT, we have received some positive or decrees and orders in our favor. About say maybe around INR 80 crore of positive order has I mean has come in our favor, but the payment is yet to come. Total NCLT cases is close to 2,300. Okay. INR 2,300 crore of the INR 44,000 odds, yes. INR 2,300. Okay, how many projects will this be for you, sir? Around 20 odd accounts will be there. 22. 22 accounts. Okay. Thank you. Thank you. We have our next question from the line of Aniket Kulkarni from BMSPL Capital. Please go ahead. Yeah, good morning, and thanks for the opportunity. I had a broader question regarding the trend of your performance, right? When we look at the last couple of years, the financials have been a bit volatile, going in out of the quarters. Now, looking at the types of numbers that you have stated in the last two quarters, can we see some stability going ahead? I mean, how, how do we see at profit, at the profitability and ROE numbers from now on? Well, could impact the, could impact leading to volatility, especially in the, with respect to the provisions. COVID, COVID. Hello? Hello. Yeah, yeah. See, actually, what volatility you had seen, especially that was in the year FY 2020, little bit of it in FY 2020, more pronounced in 2021, 2022, and 2023. A large amount of that volatility was pertaining to the ECL provisioning that has been quite fluctuating. That probably was the reason because of the COVID impact on the asset quality. Now, if you see asset quality has remained stable, barring, of course, this recent quarter, where there has been an uptick because of some technical matter. Apart from that, the quality of assets in the most sticky portion, that is the project loan, which actually is lumpy and led to the volatility, that has come down significantly. If you remove everything, if you remove the ECL portion and you focus on the operational aspect of margins, you will see that margins have been fairly stable in the 4.3 range, 4.3-4.35 range, for the last three years. Last year, especially, it was around 2.41. Margin stability on the operational side, despite intra-quarter volatility on a year-on-year basis, has been fairly stable. The one thing which had resulted in the reported number volatility was the impact of ECL provisioning, which I agree with you, has been quite volatile moving from quarter to quarter. That is now likely to stabilize. Okay, okay. Another question is, you know, Could you talk a bit about your, you know, efforts regarding diversifying your liabilities? I mean, you had said previously that these efforts will help you tackle the interest rate volatility in a better way, right? Can you just give some color on this? Yeah. Diversification of the liability profile, as I mentioned, is a part of our last three, four years, we have been striving towards it. Four, five years back, there was a huge amount of dependence on the wholesale debt market. From there, we have reached a stage where we have more or less put the, I mean, diversified the liability in different pockets. The wholesale debt market continues to be the dominant portion, but apart from that, we have moved into the bank loans market. We have done an ECB, geographically also we have been able to diversify. We have put a large amount of focus on our retail deposit franchise, which I'm still telling that we have not even scratched the surface of the possibility. There to diversify between the wholesale and the retail. Largely, if you see, we have tried to more structure the liability profile in such a way that 50% roughly remains on the floating rate side, and approximately 50% or 60% remains on the fixed rate side. That interest rate movement also gets more or less hedged by this. This will be a continuous process. Of course, the wholesale debt market, bond market, NCD, will be a dominant one. More so because now you are aware that we are getting a space opened up because of the fact that one large player is moving out of the bond market, so there will be an improvement in the yields. There will be some benefit that we'll be getting there. Okay, thank you. Just one last data point question, if I can squeeze in then. Can you give any sort of, you know, estimation on the expected provisions for the entire year, given that you have seen a slight spike in the NPAs in Q1? For the entire year, can you give some idea on the provision number, which you can see? Well, 40 to 50 basis points, the current cost. That would be the indication, that would be the indication. Okay. Okay, okay. Okay, thank you so much for answering your questions, and best of luck for the coming quarters. Thank you. We have our next question from the line of Rizwan Gao from Schroders. Please go ahead. Hey, sir. Thanks for the opportunity. I just want to clarify something, because I was looking at your slide on the yield and cost of fund slide. It says that, you know, for the first quarter, the yield is at 10.15%, and the cost of fund is at 7.62%, right? Then I was just looking at the fourth quarter, 2023's full year number in your previous slides. For the full year of, you know, 2023, the yield is at 10%, and the cost of fund is at 7.63%, which is, you know, broadly similar to what we are seeing in the first quarter. Our margins went up from 2.4% for the full year of last year to 3.2% for the first quarter of this year. So I'm just wondering, you know, what, what, what am I missing here? Because our, our cost of fund is the same versus full year of last year, and our yield went up 15 basis points versus the full year of last year, per your disclosure, but our margin went up by 60 basis points. Yeah, actually, you know, what you're looking at is a spread between the cost of borrowed funds and the yield on a particular date. It is not based on monthly averages. When you're talking of margins, it is actually derivation on the net interest income on each and every day of interest expended and its interest collected. That actually is what explains the difference. If you look at, there's been sequential improvement in the margins also from 2.90 to 3.21. That is how it should be seen sequentially, not year-over-year. Yeah. Okay, so how Let's say if I look at the number of 10.15% yield advance, on advances on portfolio, right? How do you guys calculate that number? Is it like last day of the Last date of the, last date of the quarter. Okay. That is the weighted average yield on advances on the last date of the quarter. Okay. Understand. Got it. Thanks so much. Yeah, just want to clarify. Thank you. We have our next question from the line of Ketan Gujarati from Quantum Advisors. Please go ahead. Hello. Congratulations on the appointment, sir. I wanted to understand that when you were... Hello. Yeah. Congratulations on your appointment, sir. Thank you. I wanted to understand that when you were appointed and, so what kind of strategy were you were asked to pursue on the front of, let's say, a LAP, for example? I take your point that this year your NIMs are pretty much safe, around 2.5%+. Going forward, I think, and again, the pressure will come on the home loan side, wherein we'll be even, you know, hungry for yield. At that time, will you be able to, you know, grow your LAP book, and what will be your strategy? Yearly I see the last seven-eight years, the NPA numbers were much higher than, you know, regular home loan book. Can you just give me color on how you plan to protect your NIMs going forward, and also the LAP strategy? Well, the strategy is going to be, we're going to focus on retail, of course. Yes, on the project front, we'll be choosy as we have been in the past. We'll be picking, we'll be looking at because, we have been facing, pressure of, NPAs on the, project loan front. We'll continue to be picky and, choosy on the project loan front. The other categories, quality focus along with profitability, we'll be looking at the other categories on that, basis. That will be the overall strategy for this year. Okay. One more question on the NPA front again. We see that, I'm purely comparing based on peers. Lot of peers, they have also reported a very high number, probably higher than us as well. Either they have taken some correction measures, either a write-off or a resolution or a recovery, but our numbers are still very sticky. I am saying even barring the technical glitches, let me assume. Let me take FY 2023 numbers. We are still at a very elevated level of NPA. Can you just give us a guidance? At the end of the day, when we are valuing your company, we need to understand how do I treat these assets? If I take you at face value also, the GNP numbers are not really, you know, coming forward as, you know, predictable. They have been same as it is, even if our asset base is growing. Just can you give, help me understand, because I'm thinking from a two-year out point of view. Just, can you give me some comfort in, you know, understanding how we are going to move forward? Yeah. Ketan, as regards the NPA front, let me confess, we have not been very aggressive on OTS or roping in ARC so far. That is one area we are definitely going to look at this year. We'll be exploring all avenues. So far, our focus has been on going through the normal channels of convincing the borrower to repay or at the most, the SARFAESI action, et cetera. These two areas of OTS and ARC need to be explored. We have come out with an ARC policy within the organization. That is one. The other, we'll also be looking at, we have not written off much in the past few years, so we will also be looking at write-offs in the coming quarters. Technical write-offs. Technical write-offs, that is. Okay. Thank you. That's it from us. Thank you, sir. Thank you. Ladies and gentlemen, we request you to restrict to one question at a time. You may join back the queue for follow-up questions. We'll take our next question from the line of Deepak Poddar from Sapphire Capital. Please go ahead. Hello? Hello. Yeah, hello. Yeah, thank you very much, sir, for the opportunity. Sir, I just wanted to understand, I mean, in terms of your NIMs and ROA, so what sort of sustainable range we are looking at in both this front? See, I think we've just given some kind of an indication that around 4.6, sorry, 2.6- 2.7- 2.8, that can be a broad range. That is, as far as the margins are concerned on a full year basis. Correct. Correct. ROAs generally will be in the 1.3-ish- 1.4-ish on a blended all assets basis. Okay. Clearly, I mean, the NIMs are 3.25% this quarter, and even ROA of close to 2% is not sustainable, right? I'll not use the word not sustainable, but only thing when we are talking about numbers, I'm, I'm focused only on the full year numbers. Understood. On the growth part, I think we are up 8%, right? Now with the problem-solving and June onward, I think you're seeing improvement in disbursement. What sort of loan book growth you are targeting this year? I mean, what, 10%-15% or somewhere in that range? Around 12 to 15, broadly. Fair enough. Understood. Yep, that's it from my side, sir. Thank you. On a full year basis, yes. Yeah, yeah. Understood. All the very best. Thank you. We have our next question from the line of Raghav Garg from Ambit Capital. Please go ahead. Hi, thanks for the opportunity, sir. Just two questions from my side. One is, when I look at your presentation for this quarter, the... You've given a blended cost of bank borrowings and NHB. So could you please split between what was the cost of bank borrowings and what was the cost for NHB borrowings? Then I'll take up my next question. Thanks. The NHB borrowing cost is around 5.8%. Balance you can find out. Sure. Thanks. Sir, the second question is that I see that from the bond markets, you're picking up money at around 7.7%-7.8%, and your outstanding cost of NCD borrowing is somewhere around 7.5%. You also just highlighted that there will be some maturities in this year. Is my understanding correct in saying that the kind of maturities that are coming up in this year are costing somewhere around 6.5%? To the extent that there is a differential of 90-100 basis points, that is going to get repriced, and that will be the impact on the overall cost of borrowings? See, your first assumption of the rate at which we are borrowing, I think, we have done 10 years at 7.65. Yes. 7.8. Sure. Yeah. Sure. Yeah. That is one thing. As I mentioned, some improvements can be seen once the yield curve stabilizes and because right now the yield curve is flat. Five year, 10 year, everything is almost selling at the same price. There could be some, I would say, normalization of the yield curve, which will give some, could give some benefits. Yes, of course, there will be redemptions which will come up, and redemptions of past debt, including debt at raised at higher levels and at lower levels, will be coming up regularly, in fact, throughout. There could be some differential which could get added. On the other side, there is a portion of the floating rate book also in the liability side, which might give us some benefit once there is a little bit of visibility on the, I would say, topping off of the yield curve. Right. Sir, on the whole, how would you expect your cost of liabilities to move? I mean, would there be any significant expansion? In the beginning, I mentioned. Yeah. right now we are borrowing very close to the weighted average cost of funds on the book side. I would say, I would feel that it will largely remain stable within a, a band of, say, maybe 10-15 basis points. Right. Fair enough. Thank you. That's all from my side, sir. Thanks. Thank you. We have our next question from the line of Shubhranshu Mishra from PhillipCapital. Please go ahead. Hi, sir. Sir, just if you can speak about this organizational structural change that happened in March? Sir, please put you on handset mode. Hello? Yes, please go ahead. Yeah. Yeah. Sir, if you can speak on the organizational structural, structural changes that happened in March and April and the technical glitches. It just seems that a large organization is not geared up and doesn't have any backup plans for any kind of technical glitches which led to a slow disbursements. One question, sir: Why do we always want a CEO from LIC who's nominated, who may or may not have the requisite skills for housing finances? Why don't we get a professional CEO who knows how to run a housing finance business, and we can have the LIC nominee on the board? If you could answer these questions. Thanks. Well, as you know, the LIC CEO, that has been the norm and the tradition, and I think LIC would, being the largest shareholder, I think, wants to have its nominee as MD and CEO. So that is all I can comment on it. They take the call. They take the call. So it is on LIC to consider what you are suggesting. As regards the restructuring, well, the restructuring was felt was necessary so that we could go down to the last mile, reach the customer. Expansion of offices, 50 new offices opened, mostly in Tier two and Tier three towns, again, to increase our reach. And also, the restructuring of the cluster offices, as we call, again, was taken with a view to streamline our basically loan sanctions and disbursement operations so that they happen faster, TAT is reduced, customer satisfaction improves. So that was on the restructuring front. Whenever, naturally, when an naturally, whenever a change changes do take place in an organization, there is bound to be some amount of distribution. On the technical, technological front, technology is a boon, but sometimes things do go wrong. Yes, we've learnt our lessons. We've learnt our lessons. I'm very sure about that, and we have stabilized. As I said, we have stabilized June onwards. We're totally stable on the technology front. Going forward, I see that, whatever we have done, whether on the technological front or on the organizational restructuring front, that is going to yield us, excellent dividends. This credit cost guidance of 40 to 50 basis points, when we have a large proportion of our book for salaried segment, seems totally out of whack, sir. Is this mostly done to cater to the project loans and LAPs and so on and so forth, sir? Yes, you are right. Okay. It is likely to, probably come down. Come down to what, sir? I, I cannot give a number right away, but it is likely to come down. Yes, we are, the, the trajectory is of a declining trend. Sir, decline by how much, sir? 50%, 10%, 20%? How much will it decline? If you look at the current quarter credit cost, it is around 5%. It is around 50 basis points. Last year, it was 78 basis points for the full year. I think the trend is quite visible. Right, sir. Thank you, sir. Thank you. We have our next question from the line of Vipul Kumar Shah from Sumangal Investment. Please go ahead. Hi, sir. I have a question regarding the tenure of our CEO. I can understand that LIC can nominate its own CEO, but tenure of CEO is generally two to three years in our organization. Every two to three years, you get a change in CEO. Don't you think that disturbs the organization and the CEO should have a longer tenure? Well, as I said, this is a call, which LIC has to take. This is a, a norm, you can call it, that they have said that they, they nominate their own, MDs and CEOs. The MD and CEOs being LIC employees, of course, as you would have seen the nomination is for a period of 5 years, but, depends on the superannuation of the nominated, MD and CEO. If he superannuates in two years, three years, whenever he superannuates, he has to leave. Again, as I said, this is a call which, LIC needs to take. No, for the, for a large organization like LIC Housing Finance, you will take at least one-two years to get accustomed to the entire, nitty-gritties of the business, and when that happens, the CEO gets transferred. I think it is affecting the performance of the company. I am a shareholder, I'm not an analyst, so just please convey my feelings to the [audio distortion] LIC. Sure, sure. Point taken. Point taken. I will be, I will be conveying your feelings. Sir, another question is regarding your OpEx. If I see the slide, in 2019, it was 2.74%, and now it is 4.36% for the last financial year. What is the reason for such sharp jump in the OpEx over the course of four years? How do you plan to correct it? See, the OpEx is largely because of the IT intervention, which we have done. As you would be aware, in the last one and a half years, a lot of investments have gone in, the IT, in, as part of the Project RED, which we have done in association with the Boston Consulting Group. How the OpEx gets rectified? Of course, with higher volumes, better margins are, and, better profitability. That it's an investment rather than an expense. Can you quantify what was the one-time impact of that expense? Going forward, what should be the range of OpEx we should expect? The OpEx, going forward, it will be more or less on a trend. You have to see on a three - four-year basis, because obviously, when there is a large investment and large intervention done, it obviously can distort a particular quarter or a particular year. It has to be seen on an average of, say, last three years. Whatever is outcome of the last three years, that is going to be a stable number going forward. No, you have not quantified it, sir. What, what should be the OpEx going forward for next three years? Cost to income ratio, if you, if you see, I think that is more important being a, a finance company. It all depends upon the, the cost to income ratio. Cost to income ratio largely is in around 15%-16% range. It will come down, but it will take maybe couple of quarters or couple of years to establish a trend. Lastly, sir, regarding project loans. Over the years, we are facing a lot of difficulties in this area. Isn't it better to leave that segment altogether, where we've, I think we do not have the necessary expertise? What are your views that will be high? That has been articulated at the beginning of the call. Regarding our, our strategy in each of the product segments, it's already been articulated. I, I fail to understand what you are trying to communicate, sir. Sir, what we already articulated, that yes, all segments will be approached with caution in mind, considering the fact that whatever is the benefit or whatever is the returns, that is always a risk-adjusted return. I don't think we have got any returns from this particular segment, vertical. All we have got is NPA only, and that has negatively impacted the results of the overall company over three years. What is the point in continuing the business which is giving you negative return? The overall share of project loan, for your information, is less than 4%, and it has been actually coming down from 8% to 4% in the last three years. three -four years. Okay? Thank you. Thank you. Thank you. We have our next question from the line of Nilesh Jethani from BOI Mutual Fund. Please go ahead. Hi, sir. Thanks for the opportunity. Two questions from my side. First is the repayment rate seems to be slight lower in Q1 at 13%. Is this the new normal or it is one time, and what sustainable number we can assume? Second question is on the direct loan sourcing. The share seems to be little higher at 17%. How to look at this number going forward? Yeah. Thank you. I think for all practical purposes, the Q1 numbers may not be exactly reflective because the business volumes have been on the lower side. As far as the repayment rate is concerned, it, and repayment, that's actually the prepayment, I think, what is, you are referring to. That is a function of liquidity in the external market. It generally is between, say, 11-13 or thereabouts. Can we expect this number to inch up? No, this depends upon the liquidity situation of the, in the economy. Normally, the variation is not much. Okay, loan, direct loan sourcing of 17%? Yeah, that, as I mentioned, the first quarter numbers themselves were muted in terms of disbursement, probably that is not a trend to build upon. Okay, got it. Thank you. Thank you. We have our next question from the line of Lalita from Anvil. Please go ahead. Hello? Yes, please go ahead. Yeah. Thank you. Thanks for the opportunity, sir, and congratulations on the quarter and your appointment also. Just one thing. Our yields have moved more smartly in Q1, so I would appreciate if you can- I'm sorry, sir, can you use your handset mode, please? You're not clear. Yeah, sure. Hello, am I audible? Yes. Yeah, yeah. First of all, thank you for the opportunity, sir. Just wanted to understand, our yields have moved up very smartly in Q1. If you can please share the current yields on the non, individual home loan part, which comprises around 16% of the home loan book, of the total loan book book. What is the, you know, yields that we are currently enjoying there, and what is the outlook that you are expecting for FY 2024? Thank you. You are asking about the Non-Housing Individual? Yes. Non-housing individual incremental yield in the quarter was around 9.75%, and on the non-housing corporate it is around 11.88%. Okay. Okay. Fine. The blended comes to around 10.15, and if I am taking, you know, the rate that you are giving, 8.5% for the on your website, then somewhere, you know, we some segments we are seeing a very healthy kind of an yield. Am I reading that correctly? I'm not able to understand it very well. Basically, I want to understand that, you know, if I am saying, 83.6% of our book is individual home loans, which, on a ballpark number, if I see the rates to be 9% yields, then, to reach at a 10.15% yields, the rest of the book should be somewhere around, you know, 13%-14%+ yields. No, not at all. In fact, I don't know where you have actually got the numbers from. If you see, the website, it very clearly mentions that the starting yield is a particular number. It goes according to the CIBIL score. Yeah. That is to be seen, number one. Number two, you have to annualize it, then you'll get a proper number. A mix of portfolio on the retail side also doesn't mean that every loan is being sold at the lowest rate. Right. Correct, correct, correct. Okay, fine. I'll take this offline. Thank you. Thank you. We have our next question from the line of Umang from Edelweiss. Please go ahead. Yeah. Hi, sir. So firstly, I just wanted to understand this cost improvement that you talked about, that you are being the largest player. That's true, and you will have some bond benefits. I wanted to understand this benefit. We are already looking at this kind of benefit or we are hoping for this kind of benefit that will happen? I think it has already started happening. That's why we are looking at rationalizing our cost of borrowing, and probably move to a better linear portion, right? Yeah. Okay. Sir, secondly on the yield, I understand that there were some glitches, but still disbursement. I mean, I understand there was some reorganization that has happened, but disbursements, are they still happening at the original yield or, again, we are, we are going to compete with the market now that we are the largest player? Probably, we would have a benefit over here. I just wanted to understand on the yield front also. No, can you kindly be a bit more clear because not able to. Oh, sure. Can, can you hear me now? No, I can hear you, but if you can explain your query, I, I- Okay, sorry. What I'm trying to ask is that the yield portion. Whatever incremental disbursement that have happened in June month, almost 50% of our entire disbursement. If this was happening at par to industry or are we the ones who are now setting up the benchmark? As you rightly mentioned, that now you are the standalone housing finance biggest service model from the standpoint of competitive standpoint. No, yields, as far as yields are concerned, I think we have to be competitive. We are in a competitive business. Yes, HDFC Housing has exited the space, but it is still there in the lending, home loan lending market. Yes, as a large player, we, we would, we would be looked upon to set the benchmarks. Again, yes, we have to be competitive. We have to look at all our, all our peer, peers and ensure that we are competing on the yield front also with them. Okay, sir. Perfect. Great. Thank you so much. That's helpful. Thank you. We have our next question from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead. Sir, thank you for allowing me a follow-up question. Just one clarification I wanted, given that your reported yields today, which I recall was 10.15, versus that when I look at the calculated yields for the full year. What we've seen over the past few quarters that the calculated yields somehow try to catch up with your reported yields, which Sir explained is as on the last day of the quarter. Is there further room, even without taking more PLR hikes, which I'm guessing you have not done any more PLR hikes after the one that we did in April? Is there more room for further expansion in yields from this, some, some repricing from the bad book, which can come in? Which maybe can-. I think on the asset side as being more or less complete. going- Even, even from the bad book. We are not expecting any rate hikes further. Some bad book repricing can be on the lower side also, some rewriting could be there. On the higher side, the repricing, unless there is further repo hikes, it is probably. At this point in time, I think there's a pause. Got it. Just one, one clarification here. Given that there are no more rate hikes on the annual, and from what I understand, typically when newer loans get originated, they are usually at a 40- 50 basis points lower rate than, than the bad book. Fair to say that, I mean, at least the yields in terms of this 10.15% number that we are seeing, has peaked out and should be incrementally at least start coming down? No, Abhijit, I'm not able to understand. If you can kindly clarify? Yeah, yeah. All I wanted to understand is, given that, I mean, the yields to be is 10.15, again, blended, and given that what we are given to understand, the incremental home loans that happened are, are usually at a rate which is anywhere around 40, 50 basis points lower than the bad book. Would it be fair to believe, as you keep building your home loan book over the next 1 year, this yields can start coming down from here? No, still not able to understand. Generally, it is all a market- No problem. No problem, sir. I'll maybe reach out to you again. Thank you so much. Best wishes to you. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to management for closing comments. Over to you, sir. Yeah. Thank you, all. Thank you all for the interaction. In conclusion, I would like to assure you that we are now on a new path of growth. All the structural changes are in place. Our techni- new technology platform is up and running. Lot of activities have already been done in Q1, and the total focus is on growth. This will continue, and I'm looking forward to decent growth in the coming quarter, Q2. I look forward to your support and continuous interaction. Thank you, all. Thank you. On behalf of Axis Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.