Ladies and gentlemen, good day, and welcome to RBL Bank Limited Q3 FY26 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. R. Subramania kumar, Managing Director and CEO of RBL Bank. Thank you, and over to you, Mr. Kumar. Thank you, ma'am. Good evening, ladies and gentlemen, and thank you for joining us for a discussion on our bank's financial results for the third quarter of financial year twenty twenty-six. We have uploaded the results along with the presentation on our website, and I hope you have had a chance to go through it in detail ahead of this call. As always, I'm joined by Mr. Rajeev Ahuja, Mr. Jaideep Iyer, and other members of our management team to address any questions you may have. Before we get into the details on Q3 operational performance, I would like to briefly touch upon the business trends of the quarter. Our advances grew 14% YOY, and deposits grew 12% YOY. This was after we reduced our IBPC outstanding from INR 4,500 crores to INR 1,500 crores. The CD ratio stands comfortable at 86.1%. The granular deposits, which remain our focus area, grew 15% and constitutes 51.5% of total deposits. On asset side, secured retail assets grew 25% YOY, while unsecured advances have now stopped degrowing and it grew 1% sequentially. In the wholesale segment, our commercial banking business grew 30% YOY, driven by calibrated investments in relationship and credit teams across existing markets, along with a selective expansion into the new geographies. The disbursement in JLG segment has reached monthly run rate of INR 700+ crore, with improvement in early bucket collection efficiency and reduction in slippages and SMA bucket balances. In credit cards, we achieved over 100,000 card acquisition in a single month for the first time, post cessation of our new sourcing through our Bajaj partnership. The cards in force grew sequentially after 6-7 quarters of reduction. The spends per month are comfortable at the run rate of INR 7,000 crore. The credit card slippages continue to be slightly elevated, and we expect this trend to continue for two quarters, two more quarters. On the interest rate front, the bank has absorbed 100 basis points of repo rate cut done till June twenty twenty-five. The rate action taken in savings and the repricing in term deposit rates has resulted in NIM increasing by 12 basis points sequentially this quarter. The bank expects term deposits to reprice further in Q4 FY twenty-six, and together with the improved disbursements and better yielding assets, we expect the margins to be marginally better in next quarter, even after 20-25 basis points repo cut in December twenty twenty-five. We have adapted a calibrated approach to deposit repricing, including savings account rates, and remain confident of continuing this gradual normalization in a measured manner. During the quarter, we accelerated branch expansion by adding 18 branches, and we'll sustain this momentum to strengthen our physical footprint and support growth in retail deposits. We have made meaningful progress in leveraging branches as a fulcrum for asset growth, with increased branch-led sourcing across gold loans, working capital, secured business loans, home loans and credit cards. While this remains a work in progress, we are encouraged by the direction of travel and expect the pace of traction to further improve. The disbursement from branches is at a monthly run rate of INR 400 crore. The gold loans disbursement has now reached a monthly run rate of INR 225 crore-INR 250 crore and has the potential to go significantly higher. Our wholly-owned subsidiary, RFL, as a sourcing channel for affordable housing and small business loans, is now gaining traction and has the potential to become a meaningful contributor to secured loan sourcing alongside JLG. Importantly, our retail secured businesses as a cohort have now turned profitable at the operating level, and as scale builds, we expect operating leverage to progressively translate into improved performance. On the progress of announced capital infusion by Emirates NBD Bank, we received shareholder approval in November twenty twenty-five for the overall transaction, including the proposed capital infusion and amalgamation of Emirates NBD's India branches with the bank. Applications have been made for approval with other regulatory authorities, including Reserve Bank of India, Government of India, Competition Commission of India, SEBI, et cetera, and they are in various stages of progress. In summary, our priorities remain focused on building granular liabilities with a narrower c ost of deposits gap versus larger peers, achieving a more balanced retail asset mix with change faster growth in certain products, strengthening branch-led customer acquisition and deposit mobilization, deepening customer relationship through higher product penetration across our large existing customer base, and improving operational efficiency in our chosen segments to deliver more predictable outcomes across our P&L. Overall, we believe we are firmly on the right trajectory with the multiple growth opportunities ahead and right engines well-oiled to capture these in a disciplined and a sustainable manner. Now I will invite Mr. Jaideep Iyer to take you through the financials in greater details. Thank you, Mr. Kumar, and good afternoon, everyone. Let me briefly touch upon some of the specific aspects of our financial performance. We grew our net advances 14% year-on-year and 3% sequentially to INR 1,03,086 crore. Retail advances grew by 10% year-on-year and 1% sequentially to INR 60,611 crore. Consequently, the retail wholesale mix is now at 59-41. As Mr. Kumar mentioned, this is net of the reduction of INR 3,000 crore in IBPC in the business loan and housing loan segments. Secured retail advances after the above reduction in IBPC grew 24% year-on-year and 1% sequentially. Adjusted for IBPC, obviously, this has grown faster. Within secured retail, business loans plus housing loans grew 34% year-on-year and 8% sequentially. Tractor finance grew at about 23% year-on-year and 7% sequentially. The disbursement rate, run rate for secured retail is well above 5,000 crores on a quarterly basis. For context, this number was approximately 3,000 crores in Q1 of this year. Wholesale banking advances grew at about 21% year-on-year and 5% sequentially, and within wholesale, commercial banking grew at a faster pace at about 30% year-on-year and 7% sequentially. The disbursement in the JLG segment is at a run rate of 700 crore per month versus 550 crores in the previous quarter. The good news is that the early bucket collection efficiency is 99.5. This is as good as one has got in this segment for a long time. The benefits of this has already been seen in lower sequential slippages, and we expect that trend to continue. Reiterating what Mr. Kumar said on cards, we've now crossed 1 lakh card acquisition in a month for the first time, post the Bajaj Finance sourcing stopped in November 2024. As a result of which our cards in force also grew sequentially. We hope this should now result in the receivables as well, growing on this sequentially, from the next quarter onwards. On deposits, our total deposits grew at about 12% year-on-year and 3% sequentially to INR 119,721 crore. CASA ratio now stands at 30.9%. Our primary focus area being granular deposits, as we have mentioned several times in the past. The focus is on deposits less than INR 3 crore, which grew faster at 15% year-on-year and 4% sequentially to INR 61,632 crore, and now constitutes 51.5% of the total deposits vis-à-vis 51% in the last quarter. Branch banking-led deposits grew 18% year-on-year and 3% sequentially, accounting for 66% of the total deposits of the bank. Average LCR continues to be healthy at 1.5%. CD ratio, as Mr. Kumar mentioned, is about 86.1. We are quite comfortable with the range of 83%-87% on the CD ratio. Our cost of deposits for the quarter was down to 6.2% versus 6.26% in Q2. Our savings account cost for the quarter was 11 basis points, down sequentially to 5.15. We've similarly, our cost of TDs is down 23 basis points to 7.29 versus 7.52, vis-a-vis last quarter. We've also taken a rate action in savings, where we've reduced the peak bucket down to 6% from 6.5%. We do expect cost of deposits to further decline in Q4 and therefore should help to marginally improve the margins, even though the full impact of the December repo rate cut will come in Q4 of this financial year. A little bit on our operating performance. Our NII was up 5% year-on-year, and more importantly, 7% sequentially to 1,557 crores. NIM, as a consequence, sequentially was up at 4.63% vis-a-vis 4.51%. Other income in this quarter was up 13% year-on-year and at INR 1,050 crore, and I think, excluding the one-off investment benefit that we had on a listing of a strategic investment we had in Q3 of the FY25. So excluding that, it was up 13% year-on-year. Core fee income grew 10% year-on-year and 3% sequentially to INR 959 crores. Our total net income was up 2% year-on-year and 9% sequentially to INR 2,708 crores. OpEx grew less than revenues at 8% year-on-year and 2% sequentially to INR 1,795 crores. Our cost to income ratio as a consequence is 66.3 versus 70.7 last quarter. Our PPOP, Pre -Provision Operating Profit was INR 912 crore, up 25% sequentially. As a result, our net profit for the quarter was INR 214 crore. We've also taken the gratuity provision due to change in the methodology of about INR 30 crore, which is a part of the reason for net profit to be at INR 214 crore. On asset quality, in terms of net NPA ratios and GNPA ratios, they are down. GNPA was down 45 basis points, quarter on quarter to 1.88, and net NPA was down 2 basis points to 0.55%. Provisioning coverage ratio is healthy at about 71.1%. Our total net slippages in the quarter was INR 711 crore, down from INR 918 crore in Q1 FY 26 and, Mm-hmm. Seven hundred and twenty-seven crores last quarter. Net slippages in wholesale was negative, which has been the trend for a while, aided by recoveries, negative of nine crores. Credit card slippage was, five hundred and thirty-nine crores, JLG was hundred and thirty crores, and the rest of the retail was fifty-one crores. So essentially, our major slippages, are pretty much from cards and, JLG, with a reduction, reducing, materially reducing trend in the JLG business. JLG is also further reduced at one twenty-four crore, in line with, improving collection efficiencies. We've also seen improvement in resolution rates in bucket one and bucket two. Also, we now have eighty plus percent of our standard JLG portfolio is now covered by CGTMSE. Hopefully, that is, helps us in good stead, if, if and when there is another cycle over the years. Our net restructured advances is very, very small, now at 0.16%. On provisionings, net provision on advances was about INR 634 crore, largely dominated by cards with INR 491 crore, JLG of about INR 60 crore and all other retail put together at about INR 70 crore, and wholesale was about INR 13 crore. Credit cost as a result for the quarter was 64 basis points. On capital, we continue to be fairly healthy, with the 14.94% total capital adequacy and CET1 of 13.45, including the profits for nine months. We burnt about sequentially about 7-8 basis points, largely due to growth. With this, we will now open the session for Q&A. 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 the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rikin Shah from IIFL Capital. Please go ahead. Hi, good afternoon, sir, and thanks for the opportunity. I I had four questions. First one was, you know, I just noticed that the balance with other banks on the balance sheet has jumped to INR 12,000 crore, sharp increase both QOQ, YOY. Partly it's a function of, I guess, you know, reduction in the CRR, but instead of deploying it elsewhere, it has again gone to other banks. So just wanted to get a sense, will this buildup continue, or do you intend to deploy that in either G-Sec or loans in the coming quarters? That's number one. The second one is on your provision coverage. It has now come down to 71%. So perhaps it means that the additional SMA loan provisions on MFI book are no longer being carried and it has normalized. So how do you expect PCR to kind of settle in the next one year? Is this the level where it will continue, or would you want to further increase it? So that's number two. Third one is on asset quality. So the slippages in credit card are elevated, and Kumar, sir, you mentioned it may remain elevated for next couple of quarters. I was just curious to understand why has it not normalized yet? What is it keeping at elevated levels, and probably longer than what we initially thought? And lastly, you know, pertaining to the fund infusion, so any initial thoughts how you would be looking to deploy once the capital potentially comes in 1 Q FY 27? So those are my four questions. Thank you. Okay. I'll take a couple of them, and I will ask Rajeev to get into that, the mathematical part of it. Okay. The first one, with regard to deployment of the funds, as I told you the last time also. With that, we have drawn a broad strategic points for deployment of that, and it is being discussed at the board level, and we will be able to give the precise way of doing it, because we have identified the growth within all the areas which we have been growing for the last one or two years. Second, will be some new areas, forays and new areas we'll be entering, which will be in terms of investment, part of it in wealth management, expanding our branch footprint and expanding our distributions, and some of the new products and services in retail, we'll be able to introduce it. And we have a GIFT City, we wanted to leverage it. These are the various things which I said earlier. We stand by that, and we are working on the different numbers on that. With regard to the PCR, if you look at it, we are normally comfortable between around 75%-78%. This is what we have been maintaining it earlier. Within a quarter to come, we'll be building up to that extent. And with regard to the bank balance, I'll allow Rajeev to give you the details. Yeah. Yeah, and just to add on PCR, you know, we have, you know, board-approved policies, so obviously there is not much discretion or changes that happen. So depending on the portfolio which is going bad, there is certain level of provisioning which is taken. So it's a little bit of a mathematical outcome than a target, but we've said in the past that we should definitely be 65 plus at most of the times. On credit cards, yes, we kind of, if I want to kind of divide the problem, I think we are kind of happy with the book that has been created over the last 18, 24 months, and we've seen progressively better outcomes on that. If you look at leading indicators like 6 months on book or 12 months on book, there are certain pockets of the portfolio which are exhibiting weakness, and we think that it will take us, as Mr. Kumar mentioned, a couple of more quarters for that to resolve itself, and therefore, conservatively, we are guiding like this. It's a combination of, you know, what underwriting, we had a reasonable jump in growth of cards post-COVID. So part of that could be related to that. Part of that is also related to some macroeconomic weakness. Some of that is also related to the fact that we are withdrawing from many pockets because we were fairly distributed on cards when we had a partnership with Bajaj. We are now wanting to kind of focus in more in the top, let's say, eighty, hundred and fifty locations, rather than being far more spread out. So as we withdraw from fringe geographies, there are some impact on collections that happen. So I think it's a combination of that. The good part is that we are quite confident of where we see this resolutions improving and what is, you know, the kind of risk underwriting that has happened over the last two years. So there is reasonable predictability on what we are seeing, and hopefully we'll be able to demonstrate that over the next, let's say, two to three quarters. Thank you. On the balance sheet front. Yeah, on the first question, it's actually a single day phenomenon. So if I look at daily averages, I don't think it'll be so stark. But you know, some deployment of excess liquidity in a manner which was more tactical at that point in time is more a consequence of that rather than anything from a structural to trying to read into that. Got it. And just one clarification on the PCR comment. Kumar sir mentioned 75%-78% being the comfort level, and you did mention 65% plus. So, how should we kind of build this going forward? So it's a consequence, it's a consequence of which goes bad, right? So for example, theoretically, let's say at some point, let's say there is a secured retail asset shows some increase, theoretically, that will continue at 15%, right? Because the recoverability there is very high. Sure. One of the other things that is happening is on the microfinance front. There is a catch-up of provision that is happening. We have got back to the 25% run rate. We will see a little bit of net NPA increase in microfinance from a legacy portfolio standpoint. Whatever went bad in Q2, Q3, et cetera, and Q4 will have a catch-up provision based on a 25% per month per quarter catch up. It has nuances around which portfolio at what point in time. I think based on the recoverability, we are quite comfortable with the provisioning guideline that we have. We are very aggressive, as you know, on cards. We are reasonably comfortable with the microfinance portfolio to be taken 100% provisioning over a year. We are, despite, you know, portfolios like tractor, we take 100% provisioning in two quarters, so despite it being secured. So, I think, depending on what portfolio exhibits stress, there can be some ups and downs. But broadly speaking, as I said, plus minus 70% is where we should be comfortable with. Got it. Very helpful. Thank you so much. Thank you. The next question is from the line of Jayant Kharote from Axis Capital. Please go ahead. Thanks for the opportunity. So two questions, one is on the cards business itself. While we do understand that you've taken corrective actions, but the quantum of slippages are or at least the provisioning seems to be continuing for much longer than the industry. And few more quarters, meaning a good run rate of the book is not growing. So even with that capital coming in, if a large part of the book doesn't accelerate, how do you see this business, not for next two, three quarters, but next two-year perspective? And when do you really start the issuance rate to go back to the lower levels? That is number one. And specifically, I want to understand why RBL card portfolio lagging the industry over here. I'll come back with the second question. I think, I mean, I think the way I have described it, I don't think I have much more substance to add here, Jayant. Basically, we are saying that when we look at incremental portfolio that has been underwritten over the last couple of years and the early trends that we are seeing on that, you know, those are coming quite under control, and there are, as I mentioned, there are certain pockets of portfolios which are exhibiting stress, and we expect that to resolve itself over the next two quarters. In terms of coming back to a run rate of issuance of two to two and a half lakh, I don't think we are necessarily chasing a specific number here. I think the bigger excitement that we have is how do we underwrite cards that have multiple products, you know, looked at cross-sell to the same customer base. So, we are hopeful to have a significantly higher overlap between our savings account and card customers over time. We are more hopeful of underwriting other secure products with the same customer base through more advanced analytical underwriting methods. So I think that is where even the methodology of which how we approach customers, how the customers can do DIY journeys for consuming multiple products, I think that is where the focus is. I don't think we are looking at cards as a standalone product to grow materially beyond... you know, I mean, we'll be very comfortable with a 10-15% growth in the book and 1 to 1.5 lakh. We should get to our 1.5 lakh new card acquisition in a few months. ... and, and I think that's a, that's a good run rate, as long as we are able to, you know, bank the customer for more products. Because one of the, ironically, one of the risk mitigants in this business is actually to have a more transactional relationship beyond cards with the customer. And, and that's obvious when you look at, you know, performance of card businesses across banks and non-banks. You will, you will see that difference. And, and I think we need- we want to progressively move towards, multi-product customer consumption on this, rather than a single product, business. Understood. It is very clear, actually, 10%-15% on the book is very clear, and like you said, you're not targeting the PM also. So just so to add on the asset quality, how many more quarters do you think you'll need for the card book to stabilize on asset quality? See, I just want this to be addressed in two parts of it. I mean, the acquisition which we are doing it in last, maybe around six months' time, is behaving normally, in a sense that we are in a position to go back to the quality of the acquisition, so that could check. The existing book, which is just showing the stress after we took over, as Jaideep made it clear earlier, it was operating on all the PIN codes. We have shrunk the PIN codes, so naturally, the PIN codes where we don't have the muscle to do this activity, is just showing a lot of stress there. Because this is one business where you have to be in the business for retaining the people at the end, and you have to keep on doing this business with all the PIN codes to do that. That stress, we made a very sharp assessment of it, and it will peak out in the June, and thereafter start trending down. So we will be by, by September, if you call it, it may be normalized number what we have been seeing it earlier. So the June is what it will peak out. And, Bikram, anything more to add? Yeah. So no, sir, I think you summarized it well. In terms of our customer selection criteria and our distribution strength, we are almost, you know, at a well-defined level, and from here onwards we'll continue to grow at about 10-15%. What we have identified in collection performance is that except, you know, the early trends and the new sourcing is behaving as per the plan. Except for a particular cohort, most of it is looking predictively coming within our risk appetite zone. And I think, in another two quarters we should see it getting back to the desired levels. Great. So just, to again confirm, by September, if it stabilizes, it means second half of FY 27, we should be looking at a normalized behavior of this book. Yes. on the card front. And the second question was on the growth after the capital and branch strategy. So if you could just help us with the timelines on both branch expansion, assuming hypothetically the capital is already in next one or two months. How do you lay out the branch expansion strategy over the next one or two years? And then, again, similarly, timeline on the growth, when do you see growth acceleration? See, our branch expansion strategy is very clearly laid out and it has been well consumed by the team across. We will exit March with around 600 branches, and by next March, as in a year after, it will be around 800, and by third year, we'll be around 2,000 branches. It is our own RBL branch bank. We have already identified 200 high growth locations across the country, taking into consideration the opportunity for us to make a high growth rate there in respect of the generalization of our focus. This is apart from the touch points, around 1,300, where we have an RFL, which we have started leveraging it from for last couple of quarters, where apart from doing a JLG business, they will be doing all that retail secured businesses also. So if you, for the simplistic understanding, you'll say that thousand branches will do all your retail asset, retail liability to the retail consumer business bank, branch bank, and RFL will be doing your retail assets also. So for the business growth opportunity, you'll be having around two thousand four hundred touch points by end of third year. Great. And on the timelines for growth, and the capital? So the capital is depending on the approval which is going to come. We don't have a precedent to say precisely that when it is coming, because it's the first of its kind. So we made our own assessment based on what are the conversations is going on with various, with various regulatory authorities who we are, applications that we made. We feel that maybe in Q1 will be the right time for us to say that approvals will come, thereafter the process will follow for getting that, infusion to take place. And post the capital, would you take time to start growing, or you think you already have the right plan in place? Right now, we are already growing on 25%-30% range. If you see it, my wholesale is growing at 21% and commercial is growing at 30%, and retail secured is growing somewhere around 30%, which all of them put together is somewhere around what 70%-74%, because of our unsecured and the JLG put together is 26%, remaining is this. This part is growing at a rate of around 25% given. So with the capital, with an expansion of the footprint, naturally it has to be much above the 25% what you're talking about. Then another 10% is. So the growth is something which is given and assured. With our current growth rate, our run rate will go faster. Instead of getting pushed, maybe that we will continuously reaching the boundaries much easier. Great. This is very clear. Thanks for the transparency, and best of luck. Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go ahead. Yeah, thanks for taking the question. So, two questions, particularly now getting on to the credit cost. So given that the pain on the credit card is continuing, now, how should we see the credit cost settling? And I heard that, maybe the credit card slippages would peak out in, maybe June. So do we see a much elevated level, even, compared to that of two Q going forward, or three Q going forward? Or maybe this is the level which can be sustained? And what would be the overall guidance on the credit cost side? Kunal, I think on slippages, we are not suggesting that this is going up. I mean, we are broadly talking about current range, which are obviously elevated from where it ideally should be. There is no suggestion that we will see anything more than the range that we've been in. I think on credit costs, maybe it's going to be two different halves next year, because cards will play a role. I guess the first half will be somewhat in the current range, maybe a little lower, because microfinance is coming under control. Second half should start seeing significant improvement on credit costs. Okay, so maybe this kind of a run rate of two point three to two point five should continue for few more quarters? No, I would say not few more quarters. I think, see, within this, I think microfinance is coming down. We are not seeing any material challenge in any other part of the business, whether it's wholesale or secured retail. And so if microfinance comes down, we should see some moderation on credit costs. But, you know, I'm not getting into precise number guidance here of 10 basis points or 20 basis points, but we should not go beyond this range, clearly. And, and as and when the card situation improves, which as I'm saying, as we are saying, it should start looking better from September. So second half of next year should start moderating in terms of credit costs, quite materially. Sure, got it. And, second question is with respect to the cost of deposit benefit. Maybe in fact, when we look at it, it's not coming through much. Even like this quarter, it's been down just six odd basis points. So when do we see this eventually cost of deposit benefit to flowing? When we look at it maybe from 6.53, it's still down to 6.2. So, maybe when we look at it, maybe when should a larger part of this benefit flowing? And, again, like maybe, savings is seeing the benefit. TD, we saw it like twenty-three odd basis points this quarter. So TD benefit should continue for another two quarters, given the average maturity? Yes. Yeah, so, Kunal, I think the TD trend is quite clear. The savings account reduction is calibrated consciously. I think where there is a little bit of a challenge is that the CASA ratio on a daily average basis is a little bit of a challenge, given the situation in the industry and the fact that we are also reducing CA rates. So, so if I look at TD rates, I think, yes, that trend will continue because repricing benefits will come over time. And therefore, effective cost of funds reduction will be a little moderated as compared to the TD cost reduction. Okay. Okay, got it. And one last question on ECL. Maybe if you have again recalibrated the impact and maybe gone into much detail about it, what could be the overall ECL transitioning impact now? So that's a little bit of work in progress. I think we are in that 10% zone of net worth. But we are, you know, RBI guidelines have recently come out, and we are in the process of... You know, we will also have to potentially start reporting IFRS accounts for consolidation purposes post the consummation of the transaction. So we are working on that with a lot more detailed orientation. And as and when we have visibility, we'll come back, but we should be plus minus broadly in that 10% zone of net worth. Okay, got it. Thanks, thanks, and all the best. Yeah. Thank you. Next question is from the line of Jai Mundhra from ICICI Securities. Please go ahead. Yeah, hi, good afternoon, and thanks for the opportunity. First question on RBI approval. So you mentioned that you've also sought approval for amalgamation of Emirates NBD India branch, and of course, there is an approval pending for the transaction. Are these two separate approval or they are like one approval only? are two different approvals. It has to be. The first one is in respect of consummating the transaction. The second will be the amalgamation of the branches into it. And we also made a statement, you know, during the intervening period. We also sought the permission for running the two entities. This is also the third approval, which is also gone. All the three approvals are independent of each other, and they will be considered concurrently because everything has a linkage to every other approval. It is not... Nothing can be given on a standalone basis, and it's sought in sequence. Correct. Maybe... Yeah. Okay, sure. No, that, that is very clear. And second question, sir, on credit card business. So you mentioned about the likely asset quality behavior, but I also wanted to check on the growth side, right? So if you believe that it will take over two quarters for portfolio quality to more stabilize, in the interim period, would you see the book outcome to be similar, wherein the QOQ YOY growth has been negative? Or you think that, you know, maybe the recent behavior makes you positive to at least start growing this book. How should one look at the credit card book growth over the next two to four quarters? So only one important point I'll tell, then I'll ask, our Bikram to talk about it in detail. The first thing will be that first it will become QOQ positive, then it will start working on YOY positive. Next quarter, it is going to become QOQ positive and the other YOY positive, because with the 10%-15% range, it will take, some time for it to become YOY positive. Bikram, you can give him further details. Right. ... So see, any mature credit card portfolio, you see erosion of about 20%, you know, annually, either voluntarily or involuntarily, which means that to sustain our growth of, say, about 10-15%, we have to do new cards equivalent to about 25-30% of our current base. Now, immediately after exit of Bajaj, we did a diversification of distribution, which has scaled up to 100,000 cards in December. We'll continue to now scale it up to drive a, you know, about 10-15% growth on a sustainable basis. In months of November and December after twelve, fifteen months, we have seen growth in the portfolio. So this is a point of inflection from where we will sustainably grow 10-15% annually, which means there’s about 5-7 to 10% quarter on quarter. That is the answer on growth. For driving this growth, we have already developed well-defined distribution within the bank, with no dependency on third party, which is giving us sustainable new acquisition on month-on-month basis. Did I answer your question? Yes, that helps very much. Then another question, sir, was on IBPC sell down. I was under the impression that, you know, the bank would need more growth even if it comes from IBPC, so why sell down IBPC when you know one or two quarters down the line you may have to again do IBPC only? Sir, I think it is not a sale of our asset. This is something IBPC, which has been taken by us over a period of time, and it got accumulated to INR 45 million. Then we said that our own muscle should contribute, so we have started saying that, instead of working, doing lazy banking, we wanted to I mean, hard work banking, which is one of the major reason for us to serve the IBPC. At one point at the time, you have to You can't depend on the third party. If, if you wanted, you can accumulate it for the growth. Minus this, our people are able to show the growth of from 24% in organic term. So that now they know that strength, which will go up to, let us say, 30-35. That is an idea. It is not our assets was sold out to IBPC. It's other way around. We should, or removed our, IBPC book, which we bought over a period of time. Correct, sir. Okay, and last question, sir, on LCR. If you can quantify from April beginning, you know, you may have to provide more run-off rates on MIB, and there could be some lower run-off rates on wholesale deposits. What could be the net impact because of these changes on your LCR? Could there be release or you may have to provide more liquidity? Sir, if I remember right, the cost is going to give you benefit of an LCR release, because it is going to move away from 100% outflow to the 40% outflow, and it is providing an opportunity for growth, plus it is going to give you release of LCR. I don't think there is going to be a problem of LCR. Yeah, marginal benefit only or the net release? Release situation. Release. Sure. The only thing is that you have to provide more on the mobile and internet banking, but that will be offset, right, by the lower run-off rates? That's correct. Okay. Sure. Thank you, and all the very best. Welcome. Congratulations, Jayant, for your elevation. Thank you. Thank you so much. Thank you. The next question is from the line of Piran Engineer from CLSA. Please go ahead. Yeah. Hi, team. Congrats on the quarter. Just few questions, some might be repetitive, but on this credit card slippages, so I understand that the new cohorts are doing better. Do you think it's also an issue with our collections infrastructure? Like, maybe when it was with Bajaj, they have a vast collections infrastructure across multiple products, multiple districts. Obviously, it'll be much bigger than ours. And now when we move to ours, that is one of the reasons. So it's not just the quality of the customer, but the ability to recover, which has impacted slippages. What do you think of that? Yeah, Jay, Bikram, you can answer. Yeah. Yeah. Hi. So, see, when we have done a very rapid transition in January, somewhere in last financial year, there definitely was a transition impact, which was there. But when we look at our collection outcome today, they are operating, you know, almost 5% better than what we used to operate in Bajaj's collection management days. Our problem is not, so our problem is not, you know, generally at a portfolio quality level. We have identified. There's a particular cohort which is giving us a little bit of a grief. If we were to see the collection performance outside that, we are doing little better than what we used to do even when Bajaj was there. So our collection muscle right now is fully developed and fully ready to manage a portfolio of this size with a reasonable growth. But the slippage is coming because of that cohort, which is giving little bit of grief. Otherwise, we are reasonably in control over the portfolio. Just, just to summarize the point what you asked about, whether the collection infra is weak when compared to the BFL, is a broader point which you brought about. The collection infra, at the end of the day, is always the collection agency which is working on the field, right? The collection agency is going to be with the X or it is going to be the Y, the same set of people. The supervisory team is what which has been taken over. This infra setup might have taken a little time, but the setup is as strong as that it used to be earlier. There's a, there's a broader sense I wanted to give you, and give you a comfort that it is not the collection infra. If the collection infra is weak, it is going to be terribly weak, so it isn't, it isn't so. So the initial setup and absorption period. ... the moratorium got extended a little because of that. The locations on which we have to work on is much beyond the pin codes where we have been set up our pin code. That creation has taken a little longer time. And we have, you know, accelerated the issuance only after fixing the collection infra issue. So, I mean, we have paused our growth until the collection infra was 100% in control and was delivering at the original level. So that is a thing that we want to submit. Okay, got it. Got it. Just secondly, on our secured retail slippages, are we happy with current levels? Is this built into our, you know, profitability matrix, et cetera, like, 167 crores a quarter from a 35,000 crore book? I mean, if you, if I look apple to apple with other banks, obviously, high, but we do understand that, you all have to take higher risk bets because of your cost of funds. Is this in line with your estimates or not, is my question. Look, Piran, so a couple of things. We have a very small agri portfolio, which is where we've had some couple of accounts of about INR 15-INR 20 crore this quarter. If I, if I divide the book into, let's say, two, three parts, if you look at mortgages, which will include, small LAP, micro LAP, housing, prime housing, prime LAP, all of that put together, I think we are in a relatively negligible slippage situation. So in, in, You should look at net slippage on this, because there are certain businesses where, because of the guidelines, you do have slippages, but then they get upgraded. Other than, you know, a couple of quarters back, we had an issue with our working capital business, and this time we had a couple of loans on agri, but these are not anywhere symptomatic of the portfolio. This is anecdotal, and I think we are other than tractors, which by definition goes at about 2-2.5% of the portfolio slippage or credit costs. We are quite comfortable with where we stand on this. Okay, got it. Got it. And just your fifteen thousand crores secured business loan book, that fixed rate, floating rate, what's the average tenure life? On the business loans, on LAP portfolio? LAP portfolio. The fifteen thousand crores secured business loans, so I presume that is LAP. Yeah. But I don't know if it's working or not. Yeah. Yeah, that's correct. That's correct. So, behaviorally, it should be about four to five years. Okay, and it'll obviously be floating rates then? Yes, yes. All entire retail is pretty much linked to repo and floating, other than cars and microfinance as well. And obviously. And tractors. Tractors, yeah. Yeah. Yeah. Basically. And gold also. Yeah, and gold also. Got it. So basically, mortgages and working capital. Got it. Just lastly, on CASA now, you mentioned industry-wide pressures, but is it just simply that your customers are moving from SA to TD after the rate cuts? See, we saw that assessment. Some of them have moved from one bucket, the people who are there in the higher bucket, has moved partly to that TD. But one thing I wanted to tell you, that TD, which my team is able to mobilize even after the cut, it just outweighs even that outflow which we have seen it here. If you look at the last, in the last 2-3 cuts, the total net outflow is somewhere around 200 or 300 crores only for the book of around 18,000 crores, which is a sign of holding the customers together. So, yeah, this one also not the one which left the bank, majority of that come to TD. Got it. it. Got it. Okay, yeah, left the bank, of course not, because all the other banks have also cut their rates, so you can't go anywhere else. But, moving to TD was my question. But yeah, that answers my question. Thank you, and wish you all the best. Thank you. The next question is from the line of Param Subramanian from InCred. Please go ahead. Yeah, hi. Thanks for taking my question. Firstly on... So I heard Mr. Kumar call out 200 branches per year, if I'm not wrong, for the next two years. What does that mean for our OpEx run rate for FY 27 and 28? Yeah, I tell you, on average, around INR 500,000 is what we do, OpEx. Yeah. So I think, INR 500,000. Let's say, simplistically, if you look at 200 branches for fiscal 2027, we will look at an average rollout impact from a P&L standpoint of 100. And one should assume a 60-70 lakh operating costs run rate per branch. Got it. And therefore, that will translate to INR 60-70 crore in FY 27. Naturally, the next INR 60-70 crore of that full impact will come in fiscal 2028. And then fiscal 2028, we'll add another 100 branches for the year average. This is a 200 full year. And so that's how the costs will pan out. But I think the reason we have confidence of visibility, one is obviously there will be, you know, capital coming in. Cool. Second, we will continue to improve profitability on our secured retail. Third, we expect a material change in- Got it. cars and microfinance profitability, by the time we exit our second half of fiscal twenty-seven. So, I think, Got it. When you put all of that together, I think we are quite comfortable in taking these expansion costs, because ultimately we'll have to balance at some level of growth, and it's easy to grow loans. We'll have to, obviously, if you have to grow deposits and that too, deposits are a cost which we are comfortable with, because we do have a stated intention- Mm-hmm. to reduce the gap. And along with that, if we impose a 25%-30% growth in deposits, naturally we will have to arm the businesses with disbursements, and that's the intent. ... So So maybe, yeah. With the branches distribution for retail, retail asset, we have a very calibrated plan of making the branches to become profitable on the eighteenth month. That means the branch which is opened in this quarter will become before FY 28, will become profit. And once that cycle sets in, and with your ability to reduce the cost, with your ability to borrow at a cheaper rate, that will get compensated. But while of course, when you wanted to expand on the liability side, the footprint has to expand, right? Right. So, INR 7,200 crore is your annual OpEx run rate. So you're saying only an INR 60-70 crore extra impact? Did I get that correctly? Yeah, for branches. For branches, yes. Yes. This is fully loaded. I think you're... This is fully loaded, branch expansion. So that should be the incremental lender. Okay. Okay. Correct. Correct. Okay. Okay, fair enough. Second question, again, on your margin, in this quarter. So on slide five, you show these movement, right? Between your cost of funds and yield. I can see the LCR is also broadly stable quarter on quarter. Your yield is down thirteen basis points. Your cost of fund is down by less than that. So how exactly is this NIM expansion, how is it played out over twelve basis point in this quarter? So part of that, Param, is CRR cut benefit of about maybe four basis points or so. Part of that- Right. Yeah, that I get. Yeah. Part of that is, on a daily average basis, the investment book to advances book was lower than historical trends. Some balance sheet efficiency, some improvement in short-term investments that we had. So it's a mix of factors. And yeah. Okay. No, I thought it should have reflected in your LCR, right? I mean, that is flat. You maintain that, okay. Average LCR, of course, is lower than the previous quarter, so we've used liquidity more efficiently, this quarter. Okay. Okay. Okay. Fair enough. Fair enough. Yeah, yeah, that's it from me. Yeah. Thanks. Thank you. Thank you. The next question is from the line of Rakesh Kumar from Valentis Advisors. Please go ahead. Hello. Yes, Mr. Kumar, please go ahead with your question. Yeah, hi. Hi, sir. So, first of the question, sir, on extension of DCCO, also how much is the provision that we are holding on those outstanding? Can you repeat? Any improvement? Understand the question. Can you repeat? Yeah. So with respect to offshore accounts, so where extended, so- I'm sorry to interrupt you, Mr. Rakesh, your voice is breaking, sir, we are unable to hear you. Is it fine now? Yes, please go ahead. Yeah. So I was asking, the amount of a standard asset provision that we have on the loan that we have, you know, where the DCCO has been extended. So, what is the provision that we have on those loans? So, total project loans that we have in our books, this is the new guidelines that kicked in, is about INR 40 million. Okay. On Saturday. Yeah. Okay. So what would be the incremental number? So like, because of this increase in the DCCO extension. Four crore is largely incremental because we would have had only around forty basis points before that, so roughly four crore is delta. Okay. And if you look at, you know, the constitution of your retail liabilities, like, you know, it has marginally deteriorated from, you know, from the June numbers. So if you have any color to add here? In what context? Sorry... Yeah. So if I look at your retail liability constitution-wise breakup, which is there in the slide number 16, and if I look the number from June to December number, so there is like, you know, individual and HUF number percentage has come down. Yeah, I guess that, that necessarily is not good or bad in itself. I think small business, if you, if you look at granular deposits, we are sequentially better. So it could be from small businesses, it could be, you know. So we would, we would typically not necessarily look at just individuals as a constitution, but look at the granularity. And on an individual basis, I think that the kind of sort of savings account anyway being a challenging time for the industry. So part of the reason would be that. Yes. Otherwise- Our retail- Oh, sorry, Narendra, yeah. Yeah. Our retail deposit is better, which is CASA and FD, and retail growth is growing faster at 16% as compared to the total deposit. Yeah. Our granular deposit is growing at 15%, which is better than total deposit. Yeah. Individual is showing lesser because of the star. Yeah ... we cut the rates from 6.5%- 5%, seven and a half to 6%. But on the retail deposit growth and granular deposit growth, we are growing at a faster rate. Got it. So just third question, lastly, TD has, like, you know, from the March number, it has fallen by approximately 40 basis points to now, considering that what is the, you know, fresh deposit, you know, fall that has happened in the system as per the aggregate number, what will be the, you know, acceleration in the, you know, additional fall in the TD cost? So would it be around 70 basis points or 80 basis points, assuming that there is a, you know, complete pass-through happening in the outstanding, TD number also, in line with fresh TD number? So, like, how do you think that, you know, would it complete in next six months, nine months or one year time? I think it should complete in a maybe a nine-month kind of a timeframe. The typical average maturity of CDs would be in the nine- to 12-month zone on a blended average basis. And the latest cut. See, I think the issue is that I don't know, maybe we have another 20 basis points to go in terms of incremental TD cuts, at least in this cycle. And therefore, I would not go to the extent of 70-80 basis points. I would say 30-35 basis points is what we would have broadly as some more room to go in terms of overall TD cuts, cost of TD coming down. In the next three quarters? In the next three quarters, right. Yeah. So from the liability side, that means we are safely, we are very safe on the margin front, on the liability side, is this it? Yeah, I mean, I think, I guess, you know, in our case, there are multiple plays on margins, right? So, I mean, we- Correct. We went through a period where there were rapid repo cuts, and there was a material reduction in our microfinance and card book contribution to total, right? So now, both seem to have bottomed out, and therefore, we are. You know, it's difficult to predict long term, but clearly over the next three months, maybe in six months, we should see margins improve a bit. Thank you. Thank you, sir. Thank you. Thank you. The next question is from the line of Shailesh Kanani from Centrum Broking. Please go ahead. Go ahead. Yeah. Good afternoon, everyone. Thanks for the opportunity. I have two questions. The first question is indicating- I'm sorry to interrupt, Mr. Kanani. We are unable to hear you, sir. Your voice is breaking. Is this better? Yes, please go ahead. Yeah. So my question is what Mr. Kumar indicated that the retail secured portfolio has become contributing to the profitability at the cohort level. So can you please provide a product-wise break-up in terms of profitable, breakeven and yet to breakeven products? Yes, sir. So Shailesh, I think we prime housing followed by prime LAP is, you know, tractors is already profitable. Okay. Gold loan is getting to be profitable. I think LAP is profitable. Yeah. Only prime housing is yet to catch up. Affordable housing and small LAP, given that it's a growth area, you know, acquisition costs are still a little higher. Maybe that is just about breakeven. So, two things will drive profitability. One is obviously there is a back book which keeps growing and therefore giving you interest income without cost of acquisition. Second, we are consciously keeping the mix in favor of small business loans and affordable housing, as you will see in the slides that we have presented, which has a faster breakeven time. Third, you know, we continue to expect productivity gains on origination, as well going forward. So I guess it's a combination of all of this, in terms of improving profitability. So if I'm understanding right, in terms of yet to breakeven, it is only prime housing is one segment which is yet to contribute to the breakeven. That is understanding, right? Yeah. Yes. Yes. Okay, fair enough. Sir, my second point is related to wholesale lending. Obviously, macro has helped and this quarter the numbers were good. But if you can throw some light, say, once the capital comes in, two years, three years down the line in terms of mix, we have been stable in terms of sixty/forty. How would that number be in terms of retail and wholesale? Let me tell you, this is precise number, we'll be able to say one once we finalize our strategy along with the board, and naturally, it is not going to be sixty/forty, it will be definitely trending towards, I mean, moderating in respect of the, in favor of wholesale. In favor of wholesale. Okay, fair enough. Sir, just one question. Sorry to harp again on credit card business. Because we have had some misses on that in terms, especially post our tie-up with Bajaj. Can you shed some more light in the sense what gives us the confidence that in next two quarters asset quality would improve? Because in the past also we had given similar guidance, but somehow because of the macro and other factors beyond our control, we were not able to kind of deliver on the asset quality on credit card. So if you can throw some more light. Yeah. So, Shailesh, as we said, I think if you look at, you know, portfolio originated over the last couple of years, leading indicators on, on that portfolio, underwriting changes that we have done and, and being demonstrated in terms of, X-flow bucket. We are seeing other than some, patches of cohorts, as we mentioned, we are looking at a significant improvement, in line with our expectations. So there is a clear visibility on, on improvement, which we see, from, September quarter, quarter onwards. I think, Yeah. Yeah. Sorry, go ahead. ... No, I was just listening. Yeah. Okay. So we are pretty confident this time around to deliver on a couple of quarters and the betterment in asset quality for credit card, right? Yeah, and I think, you know, in terms of profitability, it's not only credit costs, we are also significantly working on cost of collections and cost of business in general, which also got bloated because of higher slippages and higher collection costs. So, in terms of overall business outcomes, if I dial back three years, it was significantly higher on revenue. We are now the industry settling down to a, you know, structurally lower revenue business. And that has to be countered with both reduction in costs, cost to assets, as well as collection and slippages and credit costs. Sorry, Bikram, you want to add? Bikram, Shailesh is looking for a confidence from yourself. Yeah, hi. So Shailesh, you know, after the transition of collection from Bajaj to us, we have done significant investment in collection infrastructure, and we have paused growth from third party, you know, till the time we have full handle on collection, so as Jaideep has said, now our distribution muscle is ready, our refresh rate is ready, our collection infrastructure is also, you know, in place, and has been tested on scale. Our incidence of defaults are significantly lesser. I mean, we are right now at, I think, all-time lowest since we started the business. Our resolution rates are back in, you know, back in the required range. Now, what we are dealing with is a particular cohort, which we will, I think, sort over next, you know, two quarters or so, and then we should be back on in absolute full desired levels. That's very helpful, Bikram. Thanks a lot, and best of luck, everyone. Yeah, thank you. Thank you. The next question is on the line of Anchal from RSPN Ventures. Please go ahead. Hello, am I audible? Yeah. Yes, you are. Please go ahead. Other than JLG, I just do want to know the strategies about the wholesale and other secured retail banking. Like, how we see the other two segments of the bank going forward, not in the next two, six quarters, but I'm talking about after one, two years. You are talking about... If I understand right, you are asking about the growth of wholesale banking and the growth of retail secured. Is that correct? Yeah, yeah, yeah. Okay. We have been growing wholesale at around 21, so that is a minimum base, and it can't go below that, and it is going to go up. The near term, it will continue to be in the range of 20-25. In long term, it will be much higher. In respect of retail, we have been growing around 30%, 25%-30%. In near term, it will continue to be the same range. In long term, it will also go up by around another 5%-10% or more. Okay. And on the JLG front, will the growth be as high as we have in last one year, about four quarters back? Will it be possible for us to go back to that kind of growth in unsecured sector? No, unsecured, we have already come on record to say that we will not be growing disproportionately. I reduced it from 36%- 24%, 26%, which will come down somewhere in the range of around 22%-25%, in that range. If that is what you are looking at it, we will be growing in the range of around 10%-15%. Thanks. Yeah. Okay, thank you. Thanks for my time. Thank you. Thank you. Ladies and gentlemen, we now conclude the question and answer.