Ladies and gentlemen, good day and welcome to SBI Cards and Payment Services Limited Q3 FY 2023 earnings conference call. As a reminder, all participant lines will be in the listen- only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rama Mohan Rao Amara, Managing Director and Chief Executive Officer of SBI Cards. Thank you, and over to you, sir. Thank you, Simon. Good afternoon, everyone. First of all, let me wish you all a very happy new year. I would like to thank you for joining us today for Q3 FY 2023 earnings call, the first earnings call of the new calendar year. With continued geopolitical tension and COVID upsurge in China, the world economy is still on unstable ground. In this turbulent macroeconomic environment, India continues to be a shining beacon as one of the fastest growing major economies, standing as fifth largest in the world now. It is reassuring to note that RBI's measures to reduce inflationary pressures have started yielding results, as evidenced by CPI inflation in December cooling to 5.72%, with the WPI inflation at 4.95%. India's GDP for FY 2023 has been projected to grow by around 7% as per government advanced estimates. The festive season that started from September 2022 has seen the strength of India's domestic consumption. From strong consumer spend during Diwali season two, with the holiday travel season in December, India's consumer spend have improved further. India's consumer confidence has been improving, which is an encouraging sign of the country's future consumption prospects. Talking about the digital transactions, they've continued to exhibit robust growth in the country. According to a recent report by Worldline India, digital payments grew to over 23 billion transactions in Q3 2022. This shows an 88% increase in volume as compared to Q3 2021. Among other digital payment instruments, credit cards have also registered a very healthy growth. Credit card base has expanded from 67.6 million in November 2021 to 80.6 million in November 2022. Since March 2022, industry has been witnessing monthly spends of over INR 1 trillion, reaching an all-time high of INR 1.29 trillion in the month of October 2022. Growing customer base and increased usage, along with the new and favorable regulations, especially linking of UPI and credit cards, will help the industry maintain an upbeat momentum. Given the low credit card penetration and favorable demographics, I would like to reiterate that future growth potential for the card industry is immense. Let's now look at SBI Card's business overview in Q3 FY 2023. At SBI Card, we leveraged this upbeat market momentum in Q3 to build scale, both in our new card sourcing and spend base. This helped us partly absorb the impact of changes in the credit card industry. This quarter saw some of our traditional revenue streams being impacted. However, the steps taken by us to reset, reinvigorate, and build business for the future have strengthened our acquisition caliber and added revenue generating avenues for the future. We will see the positive results of these measures accruing quarter on quarter in times to come. Specifically, the quarter was marked by three key developments. The first one is implementation of more RBI Master Direction guidelines. It has put the onus on the issuers now to make their systems and processes more customer centric, leading to timely resolution of customer issues. While these regulations have brought in many benefits for the ecosystem, the industry has seen some adverse impact on the revenue during the quarter. Example, the changes leading to credit limit increase and non-capitalization of unpaid charges, levies, taxes, etc. SBI Card had anticipated this and has already taken mitigation measures to largely offset them. Second point being continuation of festive season. We continue to invest in initiatives and offers aligned with customers' preferences, including national, regional and hyper local offers, with a special focus on EMI transactions. Focus our efforts to grow our EMI loan portfolio is yielding results, and we are striving to improve the NIM and interest revenue over the next few quarters. These customer engagement initiatives required larger marketing spends, as reflected in our results too. Third point being interest rate hikes. As guided in the past, due to increase in the interest rates, our cost of funds has also increased. We have taken measures to transmit the increase in the cost of funds where possible by dynamically revising the pricing of our new EMI loan disbursements. Coming to specific details on our performance during Q3 FY 2023, I am happy to share that SBI Card continued to deliver robust business performance. The performance was a result of a sharp focus on key priorities. The first one, well-calibrated and strong customer acquisition to improve market share. We added about 1.6 million new accounts during Q3, achieving a 62% year-on-year growth, the highest ever during a quarter. Average monthly sourcing this quarter was at 5.4 lakhs per month versus 4.3 lakhs in the previous quarter. SBI sourcing was at 49.4% versus 37% in the previous quarter. We reached 15.8 million cards in force with a healthy 21% year-on-year growth. The market share for cards in force stood at 19.3% as per RBI November 2022 data. This is the result of well thought through investments in scaling up our traditional and digital acquisition. The results are visible both in terms of overall numbers and the economies of scale that we have achieved. Two months back, we had piloted an entirely digital acquisition platform, SBI Card Sprint. This pilot has shaped well on expected lines, and we plan to harness its potential in a much bigger way in future. Our traditional open market and banker channels too have reached a steady state. Compared to 3 lakh cards per month a year, our card acquisition per month now is 5 lakh cards, and we plan to maintain this run rate provided the environment is stable. This is expected to give us a net addition of 0.9-1 million cards in a quarter. Second, steady and sustainable spend growth. Our spend growth has been steady during the quarter. Overall spends have grown by about 24% year-on-year in Q3 FY 2023, reaching at another highest ever spend milestone in a quarter at INR 68,875 crores. Daily average retail spends is 2x that of pre-COVID period, that is December 19, January 2 to February 20. Retail spends have also shown strong 29% year-on-year growth at INR 54,562 crores in Q3 FY 2023. Online spends continue to be strong and constitute over 57% share in our retail spends. In points of sale too, we have seen a healthy growth across key spend categories, including consumer durables, apparel, furnishings and jewelry. Travel related categories have grown at 32% year-on-year, driven equally by online and cards. Corporate spends stood at INR 14,273 crores in Q3 FY 2023 with around 10% year-on-year growth. As per RBI November 2022 data, our spend market share stands at 18% for FY 2023. The third pillar, engaged and active customers to build earning assets. Our strategy of offering free basic card has been vindicated during the past few months. Today, we have a strong base of engaged and active customers. Our spend activity continues to be at 50%+. Spend per average card has grown to INR 1.79 lakhs in Q3 FY 2023 from INR 1.72 lakhs in Q3 FY22. Receivable per card has grown by around 10% to INR 24,318 in Q3 FY 2023 from INR 22,133 in Q3 FY22. Our gross credit cost percentage for the quarter is at 5.6%, down from 6.2% in Q2 FY 2023. Our receivables have grown by 33% year-on-year, reaching INR 38,626 crores as of December 2022. Recently, as a result of changing consumer behavior on seeking attractive lending options, we have focused on increasing EMI assets, resulting in high interest bearing assets, comprising of both EMI and revolver in Q3 FY 2023 at 61%, compared to 59% in the previous quarter. We continue with the expansion of our credit card portfolio and partnered with Punjab and Sind Bank to launch three co-brand variants for millions of Punjab and Sind Bank customers. We are exploring many such customer centric partnerships and opportunities which will flow over the next few months. Coming to financial performance in Q3 FY 2023, SBI Card continues to focus on sustainable and profitable growth, showcasing utmost resilience despite the dynamic environment we are navigating. As I said earlier, this quarter, we have consciously invested to build scale with an eye on future revenues. Even though it has moderated few of our metrics in the short term, we have continued to keep our eyes on the overall long-term potential of the Indian market. Our total revenues stood at INR 3,507 crores and has grown at 21% year-on-year during the quarter. Our cost of funds has increased this quarter as a lag effect of transmission of market rate increases caused by fails in Q3. We have shared our daily average cost of funds in slide 16 of our presentation. As indicated in our last earnings call, our cost of funds has increased by 50 basis points quarter-on-quarter. The operating costs were higher this quarter, 15% increase year-on-year, driven by perpetual spend and higher acquisition. The company has issued a PAT of INR 509 crores in Q3 FY 2023, which is marginally lower than previous quarter. The business model is resilient and we absorb the impact of increasing costs and changes in level of ECL through business growth this quarter, which is sustainable for the future. We do expect our earnings to be impacted with a residual lag effect of increasing rates next quarter as well. Cost is expected to increase by another 30- 40 basis points in Q4, which can be largely offset through judicious pricing of new loan disbursements. On asset quality, our GNPA inched up slightly to 2.22% from 2.14% previous quarter. However, our gross credit cost percentage for the quarter is stable in our target range at 5.6%, down from 6.2% in Q2 FY 2023. Return on average assets for the quarter ending December 2022 is at 4.8%. Our liquidity position continues to be strong and the capital adequacy is at 23.3% for the period ended December 2022. We maintained the LCR at a healthy 85%, much above the regulatory minimum throughout the quarter. In conclusion, the global economy is still dealing with uncertainty and environment continues to be volatile. Thankfully, domestic economy has proved to be resilient as the macroeconomic indicators are encouraging. We at SBI Card have taken measured decisions and initiated actions to ensure meaningful and sustainable growth by ensuring that we continue to generate value for all our stakeholders, including customers, investors, and shareholders. Sujan, now we are open for questions. 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 use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The first question is from the line of Dhaval from DSP Mutual Fund. Please go ahead. Yeah. Hi. Sir, thanks for the opportunity. I had three questions. First is relating to your comment on, you know, the cost of fund increase of 30- 40 basis points, next quarter. Could you just give some perspective on margins as well? We reported about, I think 11.6% margin, this quarter. Do you think they have bottomed out? And I mean, I didn't get exactly, your comments on yield. That was the first question. I'll ask the other two. Yeah. I mean, given the nature of funding what we have, where 65% of the funding happens through short term, the last repo revision of 32 basis points will have an effect in next quarter. That's the reason we are guiding for a 30-40 basis point increase. This, during the last quarter also, we have actually changed the pricing of EMI loan disbursements. Whenever there is an opportunity, we are transmitting and particularly when there is increase in our costs, we are able to transmit for the new disbursements. You know, like a current portfolio, unlike banks where it, wherever it is linked to the external benchmark, it gets reset, repriced automatically. That benefit is not available to us. To the extent of new disbursements, slowly the color of the portfolio changes. That's the reason we are saying like, next quarter we are very confident of minimizing this compression. Whatever compression we have seen, which was at 50 basis points, that we are confident of minimizing that compression. It will hover around 11.3. I cannot say like, where it will be. At least, we are very confident of managing this compression given the kind of increase what we have seen month-on-month. Understood. The second question is relating to the revolve portfolio. You know, last quarter we sort of talked about, you know, the festive season sale being there at the end of the quarter and hence optically the revolve rate percentage had come down to 24%. You said that we need to see about 45 days-60 days, you know, timeframe to see, you know, how the trends sort of play out. Could you just give some perspective as to why the percentages have not gone up? Some color around that. I see the, you know, the incremental mix being shifted. At what point do you see, start seeing uptick in your revolve share? That's the medium term question, sir. Yeah, Dhaval. When you look at our revolver and perhaps comparing with other peers as well, I think our revolver share at 24% constitutes roughly around 65% of the level what we used to see pre-COVID. I think, at least our estimate, our information says like this is in line with sort of major players as well. Having said that, we have taken several measures. It's a fact that actually some of the that were the self-employed customers who used to contribute to the revolver share, higher revolver share, that 9% of the portfolio was washed out. The remaining certain portion was actually that hardship was extended, which now hardly constitutes any kind of a percentage of the overall share. Last couple of years, we have been increasingly lending higher risk appetite. Particularly, we are increasingly targeting segments like MPC, MPCC. We are also targeting younger and self-employed segments that we have given in the tech as well. 36% of the new sourcing is coming from a younger population with the age of up to 30 years. Similarly, self-employed constitute around 34%. We are confident that the things will improve in future. Within the quarter when we have seen like October month was a further decline compared to September, November, December again, the revolve rate, this is the metric for which we watch closely internally, that has come back to pre-festival, what we used to see. This is giving confidence that this will improve in the times to come. As Rajat said, we are of course leveraging the EMI portfolio that continues in order to optimize the interest revenue, we will continue to harp on further increasing the share of EMI loans. Dhaval, just to add, increase in revolver is looking stickier at this point of time because after festival we were also looking at the customer behavior that the incremental asset has, spends have happened and how do you get them converted into a interest-bearing asset. Obviously, there was action at our end also where we also pushed and did lot of programs for the customer to convert into a installment lending asset, and you can see the results of that. If you look at, and this is just to give you some numbers. For example, if you look at a year-on-year basis, if your, our asset has increased by, let's say, almost I think interest-bearing asset overall has increased by almost 35% or so, okay? On a year-on-year basis. Right. When you look at it is, as the majority of the asset growth interest bearing has happened in the installment lending, which is almost close to around 48%-50% growth is what is seen there. The balance is when you are looking at even the revolver asset or the transacting asset, the revolver asset is growing to almost close to 19%, 20%. That's the range that it is growing. Now, that is the range in which the transacting asset is growing maybe a couple of percentage points more. In the growth of asset, if you take out the whatever we have put into the installment lending, the balance revolver and transactor are broadly growing at the transactor maybe a couple of two, three base percentage points higher. The way that we are looking at is that we find interest-bearing asset from the installment lending far more stabler. It causes lesser amount of losses that are low. It gets us more sticky customers. If it continues to happen and we push for it, we are quite okay with it. Our view is that we would push more for this installment lending asset to go with. Yes, it has a gearing cost because it doesn't come at a 42% interest rate, so you will look at the interest income from that perspective, but this is how we are looking at the portfolio growth. If revolve comes on, or during the due course of time it comes, if it comes very good, but we are looking at it like this. Got it. Thanks. Just last question is on the cost to income. You know, like, you mentioned in the previous call that given the rise in cost of funds and the other, you know, hits relating to RBI, you know, circular change changes, the cost to income was supposed to move to about 57.5%-58.5% for FY 2023. Do you still hold the guidance? I see the first nine months is about 59.3. Just wanted to reconfirm on that. Dhaval, on that one, we do expect the numbers to be below 60%. Obviously as you were seeing year-over-year, the festival quarter does see a higher cost to income ratio. Okay, thanks. I think that one element we need to take into account is, let's say if we compare the overall spend composition vis-a-vis 18 months back or one year back, the share of absolute amount of corporate card spend has increased substantially. I mean, the share is always like around 22%-25% of the overall spend. The absolute amount, because of increase in the B2B volume, it has increased. It has an effect of increase in the cost to income. While it will not hit the bottom line because if the you have both top line as well as impact on the expenses almost to the same degree, it elevates the cost to income. If you normalize for it, we are trending lower than, much lower than 60% for the pure retail kind of our acquisitions. Got you. This quarter the absolute new acquisition has also been higher. There is that incremental spend which has happened on that also. Right. Sir, sorry, just a very quick clarification. Normally in Q4, we see about 5%-7% kind of sequential decline in cost compared to Q3 because of the seasonality. Do you see that happening this time given the higher originations, or do you see things changing compared to your usual trend? I mean, very, very simple. We do see a moderation in the cost to income ratio. I think there are two elements that both Dilip and sir have called out. One is the corporate spends have been gone up in terms of absolute value. Therefore whether we'll I don't think we'll see a 6%-7% drop. Definitely the fact that it is gonna be a non-festival quarter, the, you know, the cost of acquisition, wouldn't stay, some of that element will stay, still stay in quarter four. The festival spend being now with one-off signal spend being down, we do see a moderation in the cost to income. Got it. I I was referring to absolute cost, but I get the point. Thank you and all the best. Okay. Thank you. Thank you. The next question is from the line of Ajit Kumar from Goldman Sachs. Please go ahead. Thank you for taking my questions. First one is recently you have made few changes in terms of reward points and charges. Reward points have been reduced by half on online spends done on Amazon. Processing fee has been increased on all mostly EMI transactions, and processing fee has been introduced on all rental payments. Any calculation that you have done internally, how much positive impact it would have on the bottom line? Would it be sufficient to overcome the decline in fee income coming from reduction in overlimit fee? Actually, two changes that you said are correct. The third one I'd like to clarify. The Amazon Pay next has come down to 5x, but that is only on SimplyCLICK card. Not on rest of... That change does not impact any other card. SimplyCLICK is a large portfolio. We have more than a million-plus cards there, but that is one portfolio where there's an impact. The second that you rightly saying we have put processing fee and we have put some other changes in the reward points. Those are changes where we are basically where we were looking at either discouraging double-dipping of benefits by the customer. The essential moot point there is wherever. wherever the customer was getting for the same spends, different kinds of benefits together, and it was becoming more, that is where the double-dipping is being stopped. Apart from that, there is no other changes that we have made. This will give some benefit on the bottom line, but not sufficiently to compensate for that. Yeah. To compensate for the entire loss that we have on the changes around the reward points. Okay. Thank you. The second question is on the new sourcing mix. Proportion of new sourcing coming from category within salaried segment has jumped substantially in last few quarters. What is the profile of these customers, their income level, et cetera? Along with this new sourcing coming from Tier 3 city under 30 age bracket has also increased. Do you think this will lead to higher credit cost later on compared to 67% that we have seen in steady state? A lot of the Category B and all that is just an expansion that you see. The banker proportion goes up, we see a lot more of those. However, in terms of delinquency, the criteria takes more of that into account. Just because they're from tier three doesn't mean that the delinquency of that portfolio is higher. I think the one thing that changed is that the collection abilities are fairly in line. Whether it is tier one or it is tier three, it is the customer's own score and profile that drives delinquency, not so much the fact that it is tier three. Okay. Thank you. Thanks a lot. Thank you. The next question is from the line of Mahrukh Adajania from Nuvama. Please go ahead. Yeah, hello. My first question is on your EMI. You said that, yes, you know, you have enough offset to probably offset the rising cost of funds. What has been your strategy of pricing EMI loans, given that in general, you know, there's a lot of talk about, you know, charging the customers fair and not overcharging. There are statements coming from ministry. How, I mean, by what rate has your EMI interest on new disbursements gone up, compared to, say, your cost of funds? Say, over the last three months or over the last six months, what has been the increase in EMI yield on new loans? See, I think RBI has been encouraging NBFCs to adopt a risk-based pricing. Now I think actually everybody has fallen in line. It is we compared with the regulation during the year. This is more like. You look at the intrinsic risk of the customer and align the pricing to the inherent risk of the customer. That way, for a customer having a very good score or otherwise in terms of the low-risk customer, definitely the pricing will be attractive, comparable to what alternatives he has outside, whether it's a bank or other NBFCs. While it will slowly increase for the medium to high risk when they come our way. That way, we look at the risk, we look at the cost of funds, we look at the, our ability to collect. All these efficiencies will automatically translate into the related compensation, the pricing. Got it, sir. How much would your yield have increased in the last three months and in the last six months? I think our debt covers the whole portfolio. It's not. We're talking about very specifically about the yield of the EMI loans. That way it gets camouflaged, but it can be calculated in a reverse way, right? Can I check on that? Between quarter two and quarter three, our yield has largely remained the same because some of the higher yielding assets from the previous quarter are running off, given that our book is actually largely a 9-12 month average CHLA kind of. The new booking is actually happening with the implementation of the risk-based pricing that we introduced in quarter two. The yield quarter to quarter has been steady at about 15.0% overall. Got it. Perfect. The other question I had is on your credit cost. What do you see as a normalized level of credit cost? Are we there or is there Or a normalized level of delinquency? Because this, these are now the best times for the sector as a whole. I think we've been talking about it. It's better to look at a credit cost on a mean basis because there are some quarter movements that will happen. I think that's the number we've been giving in the past, that we should be around 6%. We used to be 6.5% pre-COVID. Around 6%, 5.75%, 6.05%. That range is what we are comfortable with. Got it. Perfect. Thank you so much. Thank you. The next question is from the line of Piran Engineer from CLSA. Please go ahead. Yeah, hi, thanks for taking my question. Firstly, on rentals and since we started charging 99 INR, just wanted to understand, you know, how the experience has been in terms of customer stickiness. Have you seen a decline in spend? Does that come in your spend-based fee or instance-based fee? It's this monthly fee we started charging from the 8th of November. This quarter you have half a almost 45 days benefit of it into it. We have not seen any impact by charging this fee as of now. In fact, some people have been gone through almost now 75 days because it's been 25 days after month end also. We've not seen any change. It goes into instance-based fees. What explains the higher in change in this quarter? If I take spend-based revenue divided by spend, is it just because corporate spends have gone up? Two fees are there. There is one of the online spends have also been higher in this quarter, but it is similar to the last quarter. That way, online spends will give you higher interchange. Corporate is higher, so that corporate has also increased and added to the interchange percentage. Thirdly, the travel has also gone up, which we have been talking about. Q3, you may have seen an increase in the travel side in the months of November, December. These three have led to the increase in interchange. It's not very high, it's marginal, but it has increased. Got it. Okay. My second question, last year our instance-based fees were about 1,800 crores. If you could just give us broad breakdown. We know that 400 crores or so is OVL. What about the remaining 1,400 crores? What does that look like? We have not given the breakup of instance-based fee, but it was. They have major fee components. Their late fee is also one of the components in that one. You have Forex conversion fee. There is a processing fee which is levied there, which is also a component. OVL, as talked about, was also a component. There are other such fees. As we just talked about, the processing fee on rentals is a component. I think E-EMI processing fee will also go there. There are other components to it. There are multiple of those. We have not given a breakup of these items. Got it. Fair enough. Okay, that's all from my end. Thank you. Thank you. The next question is from the line of Param Subramanian from Macquarie. Please go ahead. Yeah. Hi. Thanks for the opportunity. My first question is, sir, this quarter we've seen an increase in the NPA, without seeing, you know, corresponding increase in the revolvers. Could you explain how that is happening? Because logically one would assume that, you know, the customer should revolve first. Why are we seeing an uptick in NPAs, without seeing a corresponding uptick in revolvers? Param, first becomes a revolver, then becomes an NPA. You're right. Some of the transactors also move into NPA by not paying up. That's just the route by which it becomes NPA. I think, and that's what we think. We have to look at it from a range perspective, okay? Our numbers pre-COVID, when our revolve rate was very high, was in the range of 2.5%-2.6%. I think in the fourth quarter we were only 2.7%. The number to look at is right now, again, look at NPA also from a range perspective. Don't look at it as an absolute number. If you look at it, we are still with the increase of 2.2%, which is much lower than what we used to be. You have to look at the credit card, the NPA and the ECL all together. Okay? If you look at our ECL, which is more like the quality of portfolio metric, which is my expected credit loss, if you look at it, that again is down to 3.3%, and that's actually sequentially better from last quarter as well. Again, that number pre-COVID was in the range of 3.6%-3.7%. Overall the portfolio is trending in the way that we are comfortable with. Quarter movement between 2.14%-2.2% is just that. It is at the end of the day, we look to operate within a range. Like we said, the range is to allow us to be able to optimize the credit card. We are using this buffer to go out, test a few segments. You see that the self-employed has gone up. You see that some of our Tier 2 salaried has gone up. We are using that to test and learn a few segments, because in reality we have to go back and start learning some of how to lend to some of these segments again. Yeah, I got that. you know, what I was getting at was, is there a higher NPA that we're seeing in the EMI bucket or is there some behavioral change which is resulting? you know, you're saying that there's none of that. Is that correct reading? No, it's not like. In fact, normally the way it works is the customers who take EMIs. There are two types of EMIs, right? There are one which the customers convert their purchases to EMI. That is within their line. There are some good customers who we give them a loan over and above the line also. The second one anyway is given only to the better customers. That performance is actually very well. EMI customers actually tend to behave better because they're slightly more savvy customers. They choose to convert it rather than revolve. In terms of behavioral, we are not seeing any significant behavioral shift. Got it done. Thank you. My next question was on the over-limit fee. I think you're showing in your profit walk that, you know, INR 81 crore of. Tax impact is due to the over-limit fee. This is a post-tax impact, right? At a fee level it's higher, right? Is it right that we've lost the, you know, largely almost the entire over-limit fee? Are we going to recoup this amount of some amount of this going forward? Is this, you know, on a quarterly basis, is this something that the, you know, this INR 80 crore of, you know, bottom-line impact, is this something that we are going to work with going forward as well? Recovery, and you're right, I will try to. Majority of the over-limit fee seems to have got, it has not come back. Yeah, recovery is hardly anything. We have tried a lot of action in terms of taking consent from the customers and other things. However, as of now for last two quarters, because this particular impact has started to come in from first of October itself. When we see the impact for the full quarter and even January, the recovery is not much. Got it. Thanks. One last question, if I can squeeze in. Is it right that rental spend would be 10%-12% of your total spend? Is that ballpark number correct? Thanks. Thanks, Param. We've not given the weightages, but it is slightly larger than the number that you said. Oh, okay. Thank you, Girish. Thank you. The next question is from the line of Shubhranshu Mishra from PhillipCapital. Please go ahead. Hi, sir. Thank you for the opportunity. Couple of questions. The first one is on the total number of cards that you've been issuing, either on a monthly basis or on a quarterly basis. Is this largely to do with the activity regulations that we have been put in? Actually the net issuance would come off by a huge margin, which is why we are issuing close to 5- 6 lakh cards. That's the first point, sir. Second is, can we please give the average balances for EMI revolver and transactors? Thanks. To answer your first question, whether it's, we're only aligning this increase in the volume to take care of attrition. We have also stated like we would like to continue this run rate, right? We said like we would like to continue to operate at INR 5 lakhs. We have such a natural attrition. In fact the target is like in the past we guided the, I mean, the guidance was to say like we are targeting a INR 300,000 net addition per month. Rather we are now increasing it to INR 1 million. We'll operate in a broad range of INR 0.9 million-INR 1 million of net card addition in a quarter. That will be the broad range in which we'll work. Thank you. The second question, sir? While we have not declared exact balances, average balances, but I can tell you the people who are revolving, their average balances are higher than average. Even the installment lending is close to the average balance that you see there. That is where it is. Transactor balances are slightly lower, so that's how this is what weightage it works out. We've not given the exact numbers, declared exact numbers on this. Right. And if I can squeeze in one last question, sir. On slide number 10, where we give out the spend categories, is it that the online spends have higher ticket sizes, which is why despite the POS spend growing, slightly faster, the total spends are not growing, as much? No. You are making that estimate because you don't have the weightages of these categories. Okay? It is not so. There is a difference on ticket size on online versus point of sale. If an offer is running, when you run those 10% cashback offers, then you get a higher ticket size on online spends because there the minimum qualification level itself is 7,500-8,000 or so. Okay? That skews the whole thing. Otherwise, in a normal day when no offers are running, it is broadly similar. That is point 1. Second thing is when you see this number here, it is actually in... The interesting part here is that I wanted to highlight was that in Q, in last quarter, because festival season was, divided into Q2 and Q3, the online spends on an overall basis are broadly at the same value. The increase has majority come from the point of sale spends. Right. Sure. Thank you. That's enough. Thank you. The next question is from the line of Gaurav Kochhar from Mirae Asset. Please go ahead. Hi, sir. Good evening. Couple of questions. Firstly, I think this question one of the earlier participant also asked, just wanted to cross-check. The Interest Reversal fee is down around INR 80 crore quarter-on-quarter. And on a gross basis, I'm assuming the impact of over-limit charges is about INR 100 crore. Is it fair to assume that all the new fees that you have introduced during the quarter amounted to around INR 20 crore-INR 25 crore? We can't give the exact number, but what mathematics tells you that. What is the breakdown? Because there are other components to Interest Reversal fee that released INR 20 now. There is a late fee component. There is other fees, processing fee, et cetera, which has gone in. There is a plus minus, a non-line item. I think OBR, if you see, we've clearly called it out. I don't think you need to derive anything. That number is right there on the page. but it's not really a simple calculation of X minus Y, whereas, A, B, C, D add one another. Right. The reason I was asking was I wanted to understand whether these new initiatives, how much of that can recoup this INR 100 crore of gross expenses, gross quarterly revenue that we have lost. Some of these initiatives have already launched in middle of the last quarter. While we do have an estimate as we're building up our plan for this quarter and for next year as well, it's difficult for us to give you any guidance at this point in time. Sure. Fair enough. My next question is with respect to provisions. This quarter we had about INR 5.3 billion provision. Going forward now, given that stage two is already down to 6%, prior to COVID, if I look at that number used to be in that 8%-9% range. Now, I mean, given that stage two is falling, the vault book is not building, it's about 24% plus/minus 1 or 2 percentage points. Don't you think the credit cost should actually be much lower than the historical 6%-6.5% range that we are speaking about? One, the 8%, 8.5% that you think that we've also included the RDI, ROE also. A lot of what came by COVID is anything that is RDI, ROE, we were considering that as stage two. You're right, our stage wide balances now are fairly healthy. The number is generally exactly the way that we want to. I think the point to look at is there is a range at which we want to operate, and like I said, pre-COVID, the range was much higher. We were comfortable even with a 6.5%, 6.6%. That is not where we are heading right now. We do want to be 6% and then mostly to be in the range of 5.7%, 5%, 6%, 6%. That's the number that we are aiming for. The way to look at it really is at the end of the day, this is an unsecured business, and here is a business which will dip. I'm not aiming to do anything like open up the gates and start looking everybody. The idea is to use this buffer that we get in the credit card to test segments. The reality is that there are some fairly large cuts that we made during the COVID period in terms of self-employed, in category salaried, PIN codes, some of the outer locations that we didn't want to. The idea is to use this to test a few segments, and that is why we've been saying that look at us on a full year basis in a range. We would be anywhere between 5.75% to maybe a 6%, 6.15%. We are not aiming to be that much lower also because, you know, then we are not utilizing that money there. Sure. Just mathematically, if the stage two falls to, let's say, 5%, in the next couple of quarters, will that not contribute to lower credit costs? Just arithmetically. Arithmetically, yes. Definitely. Sure. If you could give break up of the OpEx into acquisition cost and the corporate spend related cost, you know, the cash back that you give to corporates with relatively higher MDRs. If you can call out or maybe as a percentage of spend, how much would that be? Just one again, you want the break up of the OpEx between the acquisition cost and? The corporate spend related OpEx. We don't share this number. Sorry, Guarav. Oh, okay. Just the acquisition cost if you can- Yes. In a corporate first spend space, it will be safe to presume that whatever you get will be most of it will be pretty private on that. Okay. Corporate. As we always make it's more of a top-line game, rather than a bottom-line game. Based on that you can model it. Okay. Understood. Just last question on RuPay credit card on UPI. I mean, what would be the MDR eventually over there? What is the spend contribution of RuPay cards in our overall mix right now? On the RuPay cards, we have close to almost 1.3 million-1.5 million customers. Out of- our overall portfolio. Okay. Spend ratio would be slightly lower on this one, but in modeling that range, it will affect overall things. On the MDR side, because we are, the conversation was as we, you would have seen, NPCI also declaring about it. Less than INR 2,000 for small merchants as defined by RBI, it is in only in those cases that the interchange will not be available. Rest they have stated, and it will be as per the normal credit card scenario. This is how it's going to be. However, once we start doing this business, we will also see the how the mix of customer spending from which categories and how that mix is coming to come to a weighted average MDR. Whatever be the case, it should all be incremental because these customers we have already incurred all the costs. We have given the card to them, the customer acquisition is already incurred. All the gains should be marginal gains. There should not be any cost in this one. It should be just extra spend from that customer coming to us. Thank you, Mr. Kochar. May we request that you return to the question queue for follow-up questions. Ladies and gentlemen, please limit your questions to one per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The next question is from the line of Puneet Balani from Nomura. Please go ahead. Hello. Yeah. Firstly, on the employee expense bit, we have also witnessed a hike there around 10% QOQ. You know, do we expect to continue seeing, firstly on the total number of employees, you know, what is this? Have you added much? You know, should I expect this trend to continue since, you know, we are scaling up in Tier 2, Tier 3 cities? Firstly on that, second bit on the credit cost bit. You highlighted in 2Q that, you know, you will be replacing some reversals in the stage one assets, you know, on account of, you know, in the last seven days there was a higher increase in the receivable book and accordingly I mentioned that. Has that happened? Because the numbers seems to be in line with the 1Q levels on credit costs. Yeah, those will be my two bits. Sorry, we didn't get the first question. The voice wasn't clear. We got the second question about the credit cards. Right. On the first one. Hello? Yeah, on the first. Yeah, the first question. Yeah. Yeah. That was on the OpEx bit, like, even the employee expense has, you know, increased around 10% QOQ. On the trend basis should I continue to factor in this like because we are continuing to, you know, hire for, scaling up in Tier 2, Tier 3 cities? Was this a non-recurring one because we have just, you know, hired, scaled up now and we wait? Any color on that? I'll take the second question first by... and we come to the first question later. If you recall one of the things we had said about the last quarter 6.2% is that a large part of the spend happened towards the end of the quarter, and there wasn't enough time for it to get billed, get converted to EMI and get paid off. That's why we have seen a sudden increase in the stage one in terms of that. Overall, if you look at that number, we are actually down to 5.6%. What we've seen this time is the way that the NRE has grown is a little bit more even in this one. You know, the spend happens, it gets billed, it gets paid off, and that's why you see a little bit of that normalization of the credit cost. I think the stage one will not come down because as the NRE will increase, majority of that will go to stage one. Okay? Our distribution is what we try to manage. Like I said earlier, the 92% of our hooks and diners is sitting in stage one, okay? That is one of the best distributions we've had with this policy. Okay. The first question, if I get it right, your question is that employee cost has gone up 10% quarter on quarter. You are asking us will this continue to grow in this quarter as well, in quarter four? Is that the question? Yeah. Our employee cost is really you know, I think it's dependent on the number of cards that we are acquiring because that's where the large population of our employee cost sits. I've already guided you in terms of how the card acquisition is gonna be in quarter four for us. I think that should give you an indication that we're more or less kind of, you know, at a level where the number of resources we need for that kind of an acquisition is there with us. Okay. Yes. Right. Okay. Yeah, that's it from my side. Thank you. The next question is from the line of Shweta Daptardar from Elara Capital. Please go ahead. Thank you for the opportunity. I have two questions. My first question is while we have buffers on credit cost, then why still the emphasis on EMI segment versus revolver? Secondly, if you could throw some unit economics on the newly launched CASHBACK SBI Card. You know, how it must have translated into potentially new customers and if there is any ROI dilution seen now. Thank you. Shweta, we couldn't get your first question either. You had a question on the, on the EMI credit card. Cashback card. Cashback card which you launched- The second question. Gather that Yeah, that was the second question. First question is, while we have ample buffers on credit cost, we are still lower than the anticipated levels, then why the emphasis on EMI segment versus revolver? Shweta, an EMI is something that if you tell the customer and he will take the EMI offer. Okay? Revolver is a behavior that the customer chooses to do. Okay? What we can do, and that's what I said when we said we use the buffers, we try and test new segments. We're trying to get in self-employed. We're trying to get in some of the thin file customers that we were not getting in. We are getting some of those customers whose propensity to revolve is higher. Again, the point is its propensity to revolve. I cannot guarantee that they will revolve or they won't revolve. What we have done is we've taken a conscious decision to say rather than having no interest income, at least we will sell them an EMI product and get some degree of interest income. It's a zero one thing. I... You know, revolve is something that can happen over a period of time. The customer chooses to revolve. I can only bring in those kind of customers. EMI is something that I can actually and get customers to convert to. Yeah, fair point. Second question. On your second question on the Cashback card. We are building a portfolio as I raised this topic last time. For the first 50,000 accounts that we have got on Cashback card, we have seen excellent. Spends, they're upwards of INR 25,000-30,000 per month. We are also seeing very good activity behavior with customers. We see almost 80%-85% of the customers using the card every month. They are using the card both for online as well as point-of-sale. While ROA and ROE and those metrics are slightly into the future, but all the early metrics that we have seen for these customers are wonderful. We will keep an eye because we also want to see how the in-installment lending behavior and the asset building behavior of these customers is going to be. We will keep you people posted. Sure. Thank you. Thank you. The next question is from the line of Manuj Oberoi from YES Securities. Please go ahead. Sorry. yeah. The first question is on the receivable mix. You've given the receivable mix on a closing period basis. Can we get it on a average basis for the quarter? average basis the receivable number? Yeah, the mix between EMI revolvers and trans actors. I take your feedback, Manuj, but let us look into it. Okay. Just the second part is on, you know, on the corporate spend, right? The last quarter we called out that we will be selective here and we will avoid non-remunerative, less remunerative business. In this quarter, we have seen corporate spends, you know, coming back quite strongly. What is our stance here? See, look at it like this. Even now, the corporate spends are close to 20%-21%. Okay. We have always stated that 20... We will not go beyond 25 and stay between 22%-25% to maintain market share as well as the overall significance in that space. While we continue to look at more profitable segments in that, wherever we are able to make some margins, look at some large customers, wherever we have more relationships so that we can get more actual travel and entertainment spends, and where we have deeper relationships with our customers, that is where we are looking at all those customers, and we will continue to maintain it between this ratio. Okay, thank you. Thank you. The next question is from the line of Anand Dama from Emkay Global. Please go ahead. Okay, thank you, ma'am, for the question. Basically one first question that I had was that, I think ICICI Bank has a tie-up with Amazon and lot of other players also have tie-ups with lot of these large e-com players, where you tend to get lot of these EMI transactions, onboarded. Any plans to have such tie-ups with the e-com players? See, while we are open to some of these conversations and we participate with all the RFPs as and when they come out, even if the RFPs don't come out because of being a large player in this space, almost all the e-com players they did that with us also. We will participate, but we also want our profitability metrics to be met on some of these counts. Okay? We already, as you know, we have launched a CASHBACK card, which is a proprietary card for us, specifically targeting these segments. The data here was that if we have to give it to our partner, then might as well share that benefit with the customer itself, so that customer comes on to our STP journey and applies on their own. That is the model that we would look to follow. However, if we get a partnership which is at the right profitability, matches our customer profile and bank, we would definitely take it. Okay. Do you suggest that with the tie-ups that basically some of these banks have with the e-com players, the overall profitability on those cards is relatively lower than what typically you have for your CASHBACK SBI Card? I won't be able to comment on that portion because I don't know what they are doing. One thing is definitely there, that when we had looked at some of these partnerships in the past, at least with the large player, large e-commerce player, it was very difficult to find profitability there. Okay. Sure. Lastly, we have seen a series of attrition in the top management. Any new development over there? Any hiring that you are doing, to replace those people? Yeah, yeah. As I said last time, the selection process is on and at an appropriate time we will make announcement. I mean, as we have filled the position of CFO, so will be the case with any other vacancy. We will update you as and when we get it appropriate. Sure. Should we expect at least a CRO replacement in next three months or so? Yeah, the endeavor is to get the new person much early. It all depends upon how we get transferred. We will let you know. We will let the larger ecosystem know as and when this is appropriate with time. Okay. Thank you, sir. Thank you. We'll take the next question from the line of Sagar from Anand Rathi. Please go ahead. Hello. Yeah, thank you for the opportunity. My first question is on the opening commentary where you said the traditional revenue streams have been impacted. Rather consciously build scale with eye on future revenue. If you could, you know, throw some color on that. The second question is some data keeping question with regards to the overall mix, overall in terms of cards and posts mix, split between salaried and self-employed. Thank you. I think the first aspect we have elaborated, you know, where we talked about like a major portion of OVL we haven't seen as a fallback or anything. At least for the near future, it looks like a major part of it we'll now be able to reclaim. We also talked about a couple of other measures which are kicking from the middle of last quarter, in terms of some introduction of processing fees, the rental transactions, and then processing fees, if it was some EMI transactions for a particular channel. Also cost rationalization or reward point rationalization where it makes sense. That is what we said. Of course, I mean, these are not deterring us from focusing on leveraging the opportunities available because that's the reason we stay invested and we are making investments for the future. We found a good opportunity to grow last quarter because Banca again started contributing very well. I think they came back to us because we always desired a contribution of 50/50% from both the channels and that we were able to accomplish last quarter. Of course, this focus being increasingly on acquiring the customers through the digital channels. For this, whatever products need to be launched will be launched and whatever the marketing we need to do, we will do. That is what we said, like with growth-focused strategy, we will try to overcome all this headwinds. That is all. Okay. Just some data keeping. Well, second question was what? Breakup of cards and posts, in terms of? Salaried and self-employed. I think even in terms of from a fifth perspective also, the self-employed will be around 20. 20%. The self-employed from a fifth perspective would still be in the range of INR 20,000. Okay. Actually lower. Okay. I'm talking about interest. It may be more than 20%. Okay. Thank you. This data seem to be missing this quarter, I think. That's why. Thank you. That was all. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Rama, MD and CEO of SBI Card for closing comments. Thank you all for attending this and Q3 FY 2023 earnings call. All the best. Thank you. Ladies and gentlemen, on behalf of SBI Cards and Payment Services Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.