Note that this conference is being recorded. I now hand the conference over to Mr. Shingankar from InCred Equities. Thank you, and over to you, sir. Thank you, Mike. Good afternoon, all the participants. Good afternoon to the management of South Indian Bank also. We have Mr. Murali Ramakrishnan, Managing Director and CEO; Mr. Thomas Joseph, EVP and Group Business Head, Sales; Mr. Anto George, Senior General Manager; Mr. Sanchay Sinha, Head of Retail Liabilities; Ms. Chithra H, the Chief Financial Officer; Ms. Minu Moonjely, General Manager, Credit; Mr. Senthil Kumar, General Manager, Collection and Recovery; and Mr. Vinod, General Manager, Head of Treasury. So we have the entire vertical heads of the South Indian Bank also present. Let me take this opportunity to hand over the call to Mr. Murali Ramakrishnan for his opening remarks and take you through the presentation. Over to you, sir. Hello? The management, can you hear us? Good morning to all of you, and thank you for joining us for the South Indian Bank Limited Q2 FY 2023 earnings conference call. We are joined by my colleagues, Mr. Thomas Joseph, EVP and Group Business Head, Sales, Mr. Anto George, CHR, Head HR and Administration, Mr. Sanchay Sinha, Head, Retail Liabilities, Ms. Chithra, CFO, Ms. Minu Moonjely, GM, Credit, Mr. Senthil Kumar, GM, Recovery, and Mr. Vinod, GM, Treasury. Let me start with the key highlights of financial performance for the quarter ended September 2023. The Bank had declared quarterly results with a net profit of INR 223 crore, as against a loss of INR 187 crore during the corresponding period of the previous year. CASA amount increased by 14% year-on-year from INR 26,773 crore to INR 30,548 crore as of September 2022. CASA ratio is improved by 370 basis points year-on-year to 34.53% from 30.83%. Provision coverage ratio, PCR, including write-off, improved by 777 basis points year-on-year to reach 72.79% in Q2 2023, against 65.02% Q2. Overall, gross NPA reduced to 5.67% from 6.65% as at September 2022. Net NPA reduced to 2.51% from 3.85% as at September 2022. Following the robust collection drive, our SMA-2 portfolio has come down by 58% on year-on-year basis. Built new book of INR 33,768 crore, with better underwriting reflecting in GNPA close to 0.03% and SMA-2 book of 0.32%. This is excluding INR 4 crore of FLDG and INR 4 crore of gold, where there is zero LGD. CARE Ratings and India Ratings and Research have revised our rating outlook for our bank from negative to stable. Let me now take you through the other operational and financial performance of the bank. The total business for the bank increased by 8% and stands at INR 156,440 crore as of September 30, 2022. Advances grew by 17% year-on-year to INR 67,963 crore, backed by total disbursement of INR 26,089 crore during half year ended September 2022. The details of disbursement are as follows: Corporate, INR 15,384 crore, predominantly to A and above rated corporates; gold, INR 5,746 crore; business segment, INR 2,713 crore; other retail, INR 2,246 crore. The share of A and above rated large corporates has improved from 75% as of September 30, 2021, to 88% as of September 30, 2022. We have nil slippages to NPA in our new corporate book. Gold is a segment which has been consistently growing for us. Our disbursements year-on-year was INR 10,610 crore, with an average LTV of 79.69%, with a buyout, eighty-eight point two one percent, and a ticket size of about 1.57 lakh. Gold loan book grew by 36% year-on-year to reach INR 12,913 crore. Personal loan is other segment where we are seeing good traction since the launch of pre-approved personal loan in September 2021. As on date, our PL book has crossed 1,400 crore mark. Credit card is another growth area which we launched during FY 2022. As on date, we had issued more than 150,000 credit cards, with monthly average spends of INR 22,111. The total book as of September 2022 stood at INR 497 crore. As far as SME is concerned, we are seeing good uptick in disbursements month-on-month over past few quarters. We are cautiously growing this segment with monthly disbursements of more than INR 450 crore, as against an average of INR 185 crore for Q2 FY 2022. A healthy economic growth and government spending towards infrastructure sectors will help to create uptick in the coming years. Our aim is to grow loan book by double-digit in FY 2023. Coming to liabilities, our total deposits grew by 6% year-on-year to INR 87,111 crore. CASA deposits increased by 14% year-on-year to INR 30,548 crore, predominantly due to continued improvement in SB business, which grew by 14% year-on-year to INR 25,538 crore. CASA ratio continued to improve and increase by 370 basis points year-on-year to reach 34.53% of the total deposit as of September 30, 2022. Bulk deposits declined by 69% year-on-year to INR 1,366 crore, in line with our strategy. NRI deposits continue to be our strength and now stands at INR 27,500 crore. It contributes to 31% of our total deposits. Low cost NRE, NRI deposits grew by 11% year-on-year, INR 9,127 crore. The bank saw a robust growth of 18% year-on-year in our NRI remittance business during the quarter. Our investment book was at INR 26,152 crore, split into HTM of INR 19,308 crore and AFS and HFT of INR 6,844 crore. Last year, Q2, the end duration of the investment book was at 2.98, which we cautiously reduced to 2.44... as of September 2022. The bank booked an income upfront during the last year first quarter, and as of now, the opportunity does not exist. The fresh slippages was reduced by 34% year-on-year, from INR 531 crore during Q2 2022 to INR 350 crore during Q2 2023, which was within the overall guidance. The overall restructured book stands at INR 1,997 crore, of which business segment is INR 1,279 crore, personal segment is INR 308 crore, and corporate is INR 410 crore. The bank holds standard and restructured provisions of INR 594 crores. Gross NPA reduced by 98 basis points from 6.65% as of September 2021, to 5.67% as of September 2022. During the quarter, the bank recovered or upgraded INR 291 crores worth of NPAs. The net NPA ratio improved by 134 basis points from 3.83% as of September 30, 2021, to 2.51% as of September 30, 2022. Our endeavor is to bring GNPA below 5% and net NPA closer to 2% in FY 2023. The bank reported net profit of INR 223 crores in Q1 2023. The bank reported net profit of INR 223 crores in Q2 2023, mainly due to improvement in net interest income and reduction in provisions on account of lower slippages and better recoveries. Net interest income for the quarter increased by 38% year-on-year to INR 726 crore. Net interest margin improved by 72 basis points year-on-year to 3.21% in Q2 2023. The sequential growth in CASA has led to improvement in cost of deposits by 61 basis points year-on-year to reach 4.23%. We endeavor to reach NIM of 3% in FY 2023. Non-interest income was INR 255 crore, as against INR 157 crore during Q4 FY 2022. Our core fee income increased by 22% year-on-year to INR 142 crore. Overall, provisions decreased by 57% year-on-year to INR 179 crore in Q2 2023. The reduction in provisions was mainly due to lower slippages and better recoveries. Our PCR improved by 777 basis points year-on-year from 65.02% to 72.79% as of September 30, 2022. Our aim is to further improve PCR to 75% in FY 2023. PCR, excluding write-off, improved by 13.63% year-on-year basis from 43.84% as of September 30, 2021, to 57.29% as of September 30, 2022. Our overall capital adequacy ratio continues to be robust, with 16.04% as of September 30, 2022. The Tier I stands at 13.42% as of September 30, 2022. We are hopeful that the momentum in disbursements and collections will continue in the coming quarters to achieve the desired targets. With this, we open the floor for questions. Thank you. 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. We have the first question from the line of Rohan Mandora from Equirus Securities. Please go ahead. Yeah. Hi, good afternoon, sir, and good afternoon and good set of numbers. Sir, first question was on NIM. You indicated that for 2023, we'll still continue with the guidance of 30%, whereas for 2Q, we have lost it to around 3.2% and now we are making 3.6% per month. So if I, - Mr. Rohan, your audio is not very clear. Request you to kindly go off the speaker phone and address the management. I am on the handset mode. Yes, now we can hear you better. Okay, all right. Good. So I was saying that, on the NIMs, the guidance that the management is giving, for FY 22-23, 3.2%. And increasing, most likely we could have a NIM in excess, in excess of 3% at least. Sorry, Rohan, but your voice is again very muffled. Let me, let me disconnect from the landline. Thank you. Thank you. We have the next question from the line of Renish Bhuva from ICICI Securities. Please go ahead. Yeah. Hi, sir. Good afternoon, sir. Good afternoon. On great set of numbers. So sir, my first question is on, on our strategy, you know, so not specific to Q2 results. But, if I remember correctly, you know, we have been always been saying that, you know, incrementally, we want to grow the retail book. But when we look at the last, one year of incremental growth, you know, it is pretty dominantly driven by the, corporate book. And within corporate book, when we look at it, it's mostly driven by the, INR 100 crore plus, you know, kind of a corporates. So sir, and how one should, read this, data directionally? Yeah, good question. See, you are right that we were talking about, you know, wanting to diversify the risk by spreading, by growing the retail and SME book. This was the strategy which was laid down in September 2020, and that was the period when, if you recall, we were in the midst of COVID, and COVID-1 was still there, and COVID-2 wasn't even known. And, if you look at the history of the bank, the predominant reason as to why the bank had a problem in the quality of the book was due to corporate book, and also particularly due to the concentration risk which was there in the corporate book. The bank anyway started taking action in 2015 to move away from, concentration risk by getting into retail and SME. But, unfortunately, in the SME, and retail, during the two years of consecutive floods in Kerala, and subsequently in 2020 with the COVID, panning out, quite intensely after that, if you look at the way the, slippages were happening, the slippages were happening predominantly from retail and SME book during COVID one and two, and that's the reason why you would have seen during our Q2, Q3 results also, we talked about how much of slippage is happening and how we are excessively providing in order to beef up our PCR. It's not to say that we don't want to grow retail or we don't want to grow SME, but our focus continues to be growing retail and SME. And as you know, I'm sure you know that retail takes a lot of time to build. It's a granular business, so for an INR 100 crore business to get built in a PL, it takes easily two to three months if you start from scratch. Therefore, we need to invest time, we need to invest technology, we need to invest the skills to do all these businesses the right way. So when, when you are experiencing SMEs to have 9% NPA, when you are experiencing 11% NPA in the, as to a legacy book, it means that we need to completely revamp the way the businesses need to be done in terms of processes and products. And that correction and the team's ability to source the right kind of proposal to do the underwriting of such proposals and to build a book which has, which will take a lot of painstaking effort granularly, and that's what where we are today. While doing all that, as a bank, I need to be conscious of my ratios, I need to be conscious of the slippages which I'm experiencing. So the two years of COVID actually made the bank to have a slippage of close to INR 4,200 crore, if you were to look at our numbers. So I, because of my strategy saying that I'll grow only retail and SME, if I don't grow my book in the right fashion with a high quality book, wherever it comes from, my degrowth will only exacerbate my slippages, and that's the reason why you would have seen that our NPA reach as high as 8%. But I was, all through the, all through the journey, I was very clear that incremental business which you want to add should be of high quality, and it should not create any more new NPA issues to my book. And all my NPAs, which I'm experiencing today, were from the legacy book, and how do I correct those legacy NPA book and incrementally churn my portfolio so that I get better and better quality? While doing that, how do I build my retail franchise and SME franchise to deliver what it is set out to do? Therefore, I’m sure you know as an analyst, that every building a home loan business, it is to bring in stability. When you are building gold loan, it is to reduce your credit risk. When you are building SME, you are granularizing the book. When you are building PL, you are getting yield. So each business serves one purpose. And as a bank, I think we need to be really putting our fingers on what are all the issues faced by the bank and what levers do I move rightly so that the bank is moving in a stable fashion. It is not to say that I am losing my focus on building what I needed to build. I am very, very clear that over a long period, stability in continuously getting retail and SME is going to be the mainstay of the bank, because corporate business is lumpy, corporate business is volatile. But the way we have built our corporate business, if you look at it very carefully, which I have articulated also in my earlier calls- Yes. When we were not disbursing due to quality proposals being very scarce due to COVID, we were using our excess liquidity to really go in and tap well-rated corporates, where we got a beginning. Now we are getting more and more traction with those corporates, and we have started doing medium and long-term businesses with them. That's the reason why, if you look at our ROE, it has shown a substantial jump because your capital consumption for A-rated and above are far less. Today, when I am adding incrementally 90% of my corporate book with better-rated corporates, my provisioning impact is so low and my ROE and ROA both are improving. While I am consciously building my retail book, if you look at the disbursement happening in SME, it has really shown a traction from what we used to have, INR 150 crore per quarter to now on a monthly, we are now touching almost 600, 650 crores. And I'm sure, and this book is also giving impeccable quality. There is hardly any delinquency in the new SME book also. So with all that, I, I think we are steering in a way that bank has to not only compromise, not only reach its objective in terms of the NIM and ROA and ROE, et cetera, and the CRAR, most important, my capital I need to conserve. I can't... So, this is a complex issue which you need to tackle by looking at your strategy, not by sticking to strategy in a stone fashion, but to be flexible in your strategy by looking at what is working for you. Got it. No, no, sir, this is very, very helpful. I mean, thanks a lot for such a detailed answer. But just to, you know, sort of in continuation to that, I mean, in that journey, where do we stand currently? You know, in terms of, let's say, over, if I were to look at over, next, couple of years, considering, you know, the most of the legacy pain has been already recognized, and, when we look at PCR, it also suggests that, we are adequately provided also. So incrementally, should we assume that, the growth will be, let's say, retail 50 and wholesale 50, or it will be for a couple of quarters, it will be still skewed towards the corporate? No, there is. See, See, there is nothing sacrosanct about, you know, proportion of what businesses each one has. Quality doesn't differentiate which one, quality comes from everywhere, right? So, I mean, in my earlier avatar, I have seen where when a bank had 60% corporate, it, when it had good run also, it had a bad run also. When the bank had 60% retail, it had a good run also, it had a bad run also. So it's not to say that percentage of contribution is critical. As I said, each business comes with its own flavor, so you need to balance your portfolio by focusing on which one is going to be appropriate at that point in time. So to come, going back to your first question, where are we in this journey? See, clearly, the INR 67,000 crore of new, with the book, which is currently, which we are having today, 50% churning has already happened. We have already done about INR 34,000 crore, which have replaced the old book. Now, this, this 50, obviously, as we keep disbursing in the second half of this year and the next year, I'm sure the entire legacy book will be churned. Obviously, the good book where in legacy will continue to stay, and the bad book either will be recovered, or collected, or it will be settled, or it will be replaced with a new book, with a quality book. So we are in the journey of churning the book, and we are well on our way, so 50% done already, and I'm sure as we go along, we'll be churning more. With respect to all other parameters, you look at ROE, ROA, NIM, whichever I am articulating, I gave a milestone which we wanted to chase when we came out with the strategy document. And if you can look at the way we are progressing, many of them, we have progressed much more than what we thought we should, we would be, and probably we are reaching some of those numbers even this year itself. So, so this journey will continue, and I'm sure we would, like, like I keep saying, we would want to underpromise and overdeliver. That's what we are doing. So I think that's a good strategy. So sir, just last question from my side, on the, margins, okay. So when we look at, you know, the yield on advances, grow, expanding sharply, exponentially, so if we try to assume that, you know, whatever the 190 basis point, repo rate hike had been happening in last six months, is entirely passed on, on the advances, through the PLR, or, you expect this, you know, improving, trajectory in yields to continue? No, it is... See, See, this 190 increase in repo rates, obviously, not every corporate or not every SME customer, not every retail customer will be accepting. It depends on their appetite for taking this increase in risk. So there are there are individuals also who come back and say, "You cannot pass it on," because they are super prime individual customers to who you cannot pass on the entire increase in repo rate. Similarly, AAA and AA corporates at times will come and negotiate hard because they won't be able to take such high increase in their costs. So, so I think these, all these are dependent on how you look at the relationship. See, there, as you know, money doesn't get made only by credit. You actually have to have a comprehensive view on the customer, and therefore, what all can you do with the customer so that your penetration with the customer increases and your overall value, which comes from the customer towards the total wallet share which you are getting, is what is going to decide the relationship strength. So we will, wherever it is, clearly, we are perceiving, that the corporate is a, or a corporate or a SME or individual is worthy enough in our, to be in our books, we'll have to compromise little bit on the rates, and we need to keep them in our books. Wherever we feel that the risk-return equation doesn't permit us to hold them, and we don't foresee any more income coming from such customers, I think we'll have to take the, you know, swallow the pill, and we need to say enough is enough and move on. So that's the approach. Okay. Just a follow-up on that. So, you know, so when we look at the deposit growth, you know, it has been muted since the last, you know, three, four quarters, and when we are expecting the credit to grow in a double digit, you know, ultimately tells me that second half for deposit growth has to pick up. And once that journey start, of course, you know, the downward trajectory, what we have seen in the cost of deposits, ideally, that should reverse in second half. So, sir, the 3.2% NIM, you know, which we have seen in September quarter, and with 0.8% ROA, because, you know, both these go line by line. So how one should look at the NIM trajectory in second half, considering the deposit growth or the cost of deposit will outpace the credit growth and the yield expansion? Excellent question. See, this is what you said is exactly what one needs to play both this thing very carefully. See, if I keep, but we want to grow my deposits blindly by offering rates much higher than what competition is offering, clearly, I'm playing on my cost of funds to go up substantially, which will affect my NIM and which will affect all my profitable parameters. At the same time, if I price it to too unattractive, then I will lose my existing customers also, who might prefer to go to somebody else. So on liability side, I need to be cautious on what rate band I am operating, and we need to see which band of this is elastic, where I can play with my rates and which one is elastic, which one is inelastic. Therefore, that's on one side. The other side, how much can you pass on the increase in cost, et cetera, to what kind of customers, and how, you are going to shape your portfolio quality going forward? That's the reason, though the earlier speaker couldn't ask his question, but I think his question was more on that line, saying that when you are saying 3.2% is the NIM for this quarter, why are you giving guidance of 3% for the full year? Precisely for the same reason which you said. We need to actually play with these factors, both on cost side as well as on the yield side, to ensure that we don't, downplay anything or we don't overdo anything. Mm-hmm. Mm. So that's how we need to play. So you are right that the cost of deposits will start showing an upward change in trend, because the cost of deposits will definitely need to be factoring the market-determined rates in order to keep your customers with you. At the same time, you need to see how you can pass on this increase in cost to the customers and how you play your overall. It's not just about yield on advances, it's also associated about the relationship back. Correct, correct. Absolutely right, sir. Thanks a lot, and apology for taking so much time, sir. Thank you. Bye-bye. Thank you. We have the next question on the line of Yash Agarwal from JM Financial. Please go ahead. Yeah, hi, so good afternoon. Congrats on a good set of numbers. Just to follow up on this NIM question, so this, in, the-- we've seen a 20% QOQ increase in your NII. Is there any one-off in this, as in, is there any recovery from NPA or interest refund or anything that we've got, or this is a sustainable absolute number, you know, that we've reported? See, this is also a reflection of the NIM of the overall portfolio. If I look at my NIM of my new book alone, it's 3.6%. Mm-hmm. So therefore, it's. So I really wouldn't say that it's one-off because I've been maintaining that my new book, I am very clear that we are growing our book profitably, and therefore, we need to ensure that the profitable growth through quality credit is what I'm driving. Therefore, though there could be, I mean, we can't really say that it is, there may not be any one-off. Even if one-off is there, one-off can be there in one quarter, one-off may not be there in another quarter, but something else will be there. But we are very. We are not looking at them to really be giving a boost or a NIM. We are constantly working to increase the value of each customer by working with them, by penetrating with the customer for offering more and more products, and obviously, focusing on the growth of each businesses, where we are now monitoring not only the yield, rate of interest, but also the ROE coming out from each deal, and each business, it drives the PNL with that focus in mind. Sure, sure. So basically, there's no major one-off in the number that we've seen, but yeah, there could be some cool off because of increase in deposit rates, as we mentioned before. Right? Correct. Yeah, correct. Got it. And also, you know, at the end of the first quarter, you've given a rough guidance of about INR 1,000 crore of provision for this entire financial year, okay? But now, as I see with the first half passing by, and we have, obviously, we are only at INR 320 crore for the first half, along with improvement in the economy, especially, you know, consumption picking up and a lot of PSU banks, everyone seeing good recoveries. Would you want to sort of change that, or at the moment, you know, your guidance on the provisions or, you know, your assessment, even if not a guidance, but what is your assessment on, you know, provision costs going forward, given the fact that our PCR is also touching almost 75%? See, PCR touching 72% as of now is including write-offs. So clearly, as analysts would see, we would want to obviously improve on PCR excluding write-off, which is currently at about 57%. We would want to take, reach a milestone of 60% to first and then probably aim to work towards 65%. To your earlier question, we had given a guidance of INR 1,600 crore of slippages for the full year. Yes. This is basically from my restructured book, which was INR 2,400 crore at that point in time, where 25% of the book was expected to be slipping. So INR 400 crore coming out of INR 600 crore coming out of that, and INR 1,000 crore coming out of my regular book slippages. Therefore, 1,000 + 600 is what I had given as a guidance, INR 1,600 crore for the full year. Pretty much we are in tune with that, we are in line with that, probably will be aiming to be within that INR 1,600 crore, which I pointed out. As far as provision is concerned, clearly, we even this quarter, for example, we have provided some INR 43 crore over and above what we needed to provide as a cushion. So we'll continue to do that in order to improve our PCR, at the same time, also to keep a buffer. See, you, you... It's not just about, the quality of the book, it's also to do with some of the sub-segments in the businesses. For example, business like agri, et cetera, where we have, there is a KCC book which is there, where you are, you are giving them 360 days or 720 days, et cetera, to make their interest payment. So we need to see how well they respond. Similarly, ECLGS 2.0, where some portion of it has already been fallen due for repayment. Some more will start falling only in the next couple of quarters. So it's, we need to factor all of that so that, you know, we don't overpromise, we don't underpromise. We need to be fairly realistic. So if it is... Yes, if it's going to be lower than that, obviously, we'll be happy about it. But then at the same time, we need to see how they pan out, and we'll have to keep looking at the guidance accordingly. How is the restructured book behaving, as in, you know, do you yet have INR 2,000 crore of restructured book now, what could be a rough collection efficiency on this book, you know, for the- So, slippages from this book, I continue to maintain 25% of this will be expected to slip into NPA. We are holding on to that only. Oh, okay. And just to tell you, restructured book actually has come down below INR 2,000 crore for the first time. Right, right, right. I just want to... I don't want you to just pass it saying that, you know, it's still INR 2,000 crore. It's come down below 2,000 for the first time. We were at about 3,000+, 3,500 crore+, all this while. Sure, sir. Fair enough, sir. Thank you, and best in luck. Thank you. We have the next question on the line of Mahesh M.B from Kotak Securities. Please go ahead. Hey, good afternoon, sir. Congratulations on a good set of numbers. Just a question on asset quality to continue the previous question. When you look at the recoveries and upgrades, how do you see the second half of this year? And if you're looking at the recoveries environment on the ground? Could you just give us some qualitative feedback as to whether borrowers' business profile has improved, or you've had to kind of unwind the collateral sitting against it to claim your dues? See, it's obviously a combination of both. I mean, I'm sure you will, you'll be knowing that a bank will have to focus on- Hello, you had lunch? No, no. Just go for starters. Starters, lunch Lunch Are you serious? I don't know. Someone said, no. Hello? Hello. There are crosstalk. I think we need to cut the call and maybe connect again. There appears to be a cross connection. Yeah, I think, maybe cut it off and come again. Yes, I'm reconnecting you back on the call, sir. Pardon, please stay connected as we reconnect the management. Ladies and gentlemen, we have the management reconnected, so you may go ahead. Yeah. So I hope the Kotak Securities person is on the call. No, actually, the question was, obviously, we need to resort to... When we are doing recovery and collection, we need to explore all possible ways to recover money, not only by engaging with the customer for recovering more and more, but also get into sometimes getting into one-time settlement with the customer or disposing of the securities, which we have to realize money. So, as we've been telling that the overall recovery and upgrade, for the year ended March 2022, we ended up for the full year doing almost INR 1,600 crore, INR 1,500 crore, compared to INR 600 crore for the year before, the year ended March 2021. So as again, INR 1,600 crore, INR 1,500 crore, which we did for last year. If you look at the first half also, I think we are, recovery and upgrade are, almost close to, if you look at, it, it was INR 234 crore in June, and it's now INR 291 crore in September. And overall, I think it's about INR 662 crore for the first half. So I think we are fairly, sure that it will be touching similar numbers for this year also, maybe INR 1,400 crore kind of number for the full year in terms of recovery and upgrade. But one thing which we need to, factor is in the first two, first two, quarters, we have not had any significant, big accounts getting resolved. So therefore, we hope that in the coming one or two quarters, we might be looking at one or two big accounts getting resolution, in which case, probably we'll be performing better than what we are anticipating. Hello? Mr. Mahesh, can you hear us? Mr. Mahesh, can you hear us? Mr. Mahesh, are you able to hear us? Hello. Yes, well, did that suffice your question? Yeah, you did. I just wanted to ask one thing. When you say about corporate recoveries, is it the corporate recoveries that you're talking about when you're talking about these large accounts that is likely to be resolved? Yeah, 1 or 2-3 large accounts, which are where we are expecting resolution for the last 2-3 quarters, probably might happen in this or, I mean, in this quarter or maybe in the next quarter. Just to conclude, in general, when you are seeing the situation on the ground with respect to both the SME as well as the self-employed, the situation is back to where they are pre-COVID, or, there is still a lot of spaces where things have to still recover before you're confident to step up the pedal? No, there is nothing which is stopping us to step up the pedal even now. Quality proposals, wherever they are there, we want to do it. So it's not that we are withholding anything to really ramp up. So it's just a question of the team, you know, getting to understand the exact quality which we want to source. Therefore, there could be some rejections happening if they are not sourcing as per the quality. And as they learn, they will probably source, be sourcing more and more. If you ask me whether it has reached a pre-COVID level, I, I don't think it has reached pre-COVID level in terms of the health of SMEs, because if you look at many of them, they have started reviving only in the last six to nine months. If you look at their GST numbers, et cetera, they have started now increasing month after month, which was not the case in the last two years. But having said that, we are looking at good quality SME customers who have been able to even survive or do reasonably well, even during COVID time. So we are targeting such customers and whose rankings, CMR ranking is one thing which we look at, which is brought out by TransUnion CIBIL. So these are the other indices which we use also to check whether the quality of sourcing is right as per what we want. Of course, we have developed our own scorecard, we have developed our own credit models, which we are using for underwriting these cases. Perfect. Thanks a lot. Thank you. Thank you. We have the next question from the line of Bajrang B from Sunidhi Securities. Please go ahead. Congratulations, you know, for great set of numbers and coming back on, you know, a fairly growth track, which we are seeing, you know, after a long period of time. So, you know, sir, as per my understanding, you know, now your legacy book is, you know, under control, and where you have 50% new book, which is not, you know, giving the shocks which the legacy book given for last couple of quarters. So now you have grown 16% during this quarter, and can we expect, you know, the growth momentum to sustain in the foreseeable future? You know, and you know, going into future when you know, probably in FY 2024, when the new book, which is totally performing well, will see significantly lower you know, slippages, which is the trend that we are seeing maybe this year also. So if you guide on that line will be really helpful. Yeah, good question. So, first thing is, when we are looking at, giving guidance for the year growth for the full year, so I continue to see that we will, aim for double-digit growth, and it will be lower range, not 15%+ kind of growth. So I am looking at 12%-13% kind of growth for the full year. The reason why I'm saying that is, it's not that we don't want to grow at 16%, 17%. Definitely, we'll be happy to grow. But having said that, I don't... As I keep saying, I don't want the quality to be compromised for growth at any point in time. So, there is no, especially when all the external as well as internal institutions were predicting about the GDP growth for the country, they have been downwardly re-revising the GDP of the country. As we are talking, there are people who have given us a growth of only 5.5%. IMF has given us 5.5%, and somebody is saying 6.5%, somebody is saying 7%. So anyway, the best number we have heard is 7%-7.5%. So as a bank, I am looking at growing at, at least 2 times the growth at which the GDP is growing. Therefore, 14, 12-14% growth is what I think is a reasonable growth. And if I am trying for that kind of growth, then I can push the quality which I am expecting from my teams. If I start pushing the pedal for more and more growth, just for the sake of growth, there is a possibility that the teams might compromise quality for growth. I don't want that to happen now, especially when we are trying to correct the situation. See, while I agree with you that the growth wasn't there in the past and which started growing, et cetera, and therefore, is it the time that we are fully ready now to really go and full in full steam? I would say that the legacy book is still about 50% of my total book. I'm not... If you look at my NPA composition as I'm talking to you, still it's the composition contains predominantly from the legacy book, because as I said, the new book has got negligible delinquencies. Therefore, we need to clearly address those issues. That's what we are trying to do through our recovery and collections and upgrades, et cetera. So we will have to keep looking at cleaning up that on one side and at the same time, looking for more and more quality deals to be sourced across businesses, which brings in stability as well as profitability. That's the way I see. For the next year, you are right. If you are able to churn the book faster than what we are envisaging, and if the quality of the new book prevails next year, definitely the prospects of profitability will be far better than what we have seen till now. But all this probably will be more clearer when we go near the January-March quarter. That's when we will get to see how much we have cleaned up and how much is still left, and how that much of traction has happened across various businesses which we are driving now, and what kind of economic growth rate which we can envisage for the coming year. Got it. And just, sir, my last question pertains to fintech, preparedness, because if we see the competition, you know, which is closer to you, I don't want to name it, but, you know, there is a substantial, movement that is happening on the tie-ups to the fintech companies and, you know, the growth on the higher trajectory, and it is working for them, the effort that has been taken for last two, three years. So how are we preparing, you know, to tackle, you know, this fintech move, which is happening and, and, and garnering the growth from either, you know, co-partnering with NBFCs or, you know, different tech partners? So just some guidance on that one, sir. Yeah, yeah. Good question. See, I don't want to compare us with any other bank for the simple reason that each bank's evolution is very different, and there are banks which are at a stable stage, which they can then grow from that stable base. And there are banks which have got issues to tackle, and while tackling issues, how they are preparing themselves for the future. So there is no doubt that the bank clearly needs to be getting into completely digital way of doing banking, and that is where—that's something which I have been articulating, and we are well on our way to do that. For that, there are basic prerequisites which are required. For digital banking cannot be offered if you don't have the basic prerequisites in terms of your platform, in terms of your models and fully tested, proven models. And also, you need to, wherever you're talking about the co-lending, et cetera, you need to be associated with the partners who share the same kind of risk appetite. Because at the end of the day, if you are taking 80, 70, 80% of the exposure, and if you are partnering with somebody who is not aligned to your thoughts, then your, the book can behave much adversely from the book which you are wanting to create. So we can definitely. We are well on our way, and I'm sure you will see some progress getting shown in Q3 as well as in Q4. We are working with a few partners, and I'm sure they will all see the light of the day in the next two quarters. And we don't want to. See, there is no rush to do this, and there is no great hurry to do all this. Because when you are building an institution, I don't think we should just keep comparing with somebody and keep doing things which are not good for your own institution. So I would strongly resist my urge to just keep looking at somebody and doing for the sake of doing. We need to see our own preparedness, our own infrastructure, our own capabilities, our own competencies, all this we need to see before we try to imitate anybody. So I'm not saying that it's not worthy of emulating. Definitely, it's worthy of emulating, but there is a time and, situation when we can emulate such, practices. It's not just banks neighboring to us. I think, nothing stops us from, emulating anybody who is the best in the country or best in the international scenario. So there is nothing. Today, when I'm talking about my new book having INR 34,000 crore book, giving 0.02% NPA, and I, I know that it's one of the best books in the country, where I'm not trying to emulate anybody. I'm setting my own benchmark, and I want to chase that. So in the same fashion, I would want to chase what I would think is right for my institution. So definitely, we are, see, we are a technologically very strong bank. I'm sure you would have seen the kind of awards which we keep bagging in every area. So it's not that we have lacked anything in the technology area. But we need to put all the paraphernalia which is required for running this business correctly. If you just end up doing it in a hurry, and if you don't get your act right, then you will be working in some other... Trying to address some other issue. Instead of this issue, you will have some other issue to address. I don't want to rush these things in a hasty way. Having said that, are we showing sense of urgency? Of course, we are showing sense of urgency. We want to... You will see the fraction of that happening in next two quarters. It's very aptly put, sir. Very aptly put. And thank you very much, and all the very best for good performance going ahead, sir. Thank you. Thank you. We have the next question on the line of S onaal from Bowhead. Please go ahead. Thank you for this opportunity. Am I audible to you? Yes, yes. So firstly, you know, how much of this slippage in the first half was from the restructured book? Just hold on. I'll just check. It's, I think I would say that it is, it's pretty much in tune with what we have been giving guidance. So almost 25% of the structured book is what is... Let me just tell you. You know, your structured book is down by INR 420 crore. Yeah, yeah. It is, it is, as I said, it is below INR 2,000 crore now. 1,997 crore is the- Yeah. So this quarter, I'll have to probably tell you, this quarter, from the restructured book, we have given a provisioning of INR 73 crore, of which COVID is about INR 54 crore and others is INR 19 crore. Sir, I'm not talking about provisioning. I'm asking you, out of your gross slippages, how many, how much portion was from the restructured book? Your restructured book, to give a context, in last six months- I'll just tell you. I get it. Just a second. Just hold on. Let me just take out that. One second. I'll see you. Sir, shall I ask my second question? Yeah, yeah, please go ahead with the second question while I... I'm trying to take the data, because since you're asking about the number, I need to get it. You can ask the second question. Maybe I'll answer that, and then meanwhile we- If I heard you correctly, you said for this year, you're expecting a gross slippage of INR 1,600 crore and recovery of INR 1,400 crore, and therefore a net slippage of INR 200 crore. Is my understanding correct? Sorry, come again. Repeat your question. Sorry. Sir, for this year, you are expecting a gross slippage of INR 1,600 crore and a recovery of INR 1,400 crore, so a net slippage of INR 200 crore. No, this INR 1,400 crore is, I would say it's, both are, obviously estimates. We can probably, we'll be probably overshooting in recovery and maybe under, contain, containing within INR 1,600. But yes, you are right. If you are, if you are, saying, this thing, yes, you can say, you can take it that way. INR 200 crore is the difference between the two. If we really hit the number of 1,600 in terms of slippages and 1,400 in terms of recovery and upgrade, yes, there will be a difference of INR 200 crore. But I think in both, we, I would probably tend to think that we will probably overshoot in our recovery and upgrade and probably curtail it within 1,600, not really reaching that number. So, sir, considering our net slippage is already, you know, for the first half is INR 200 crore, which means that even if I take the scenario which you are, which you're saying, you know, you are going to better that, you know, still your net slippage for next two quarters will be zero or less, or there should be net recovery. Is my understanding correct? No, I don't think... I mean, come again, I'm... Your question is not very, very clear to me. What are you asking? I mean, you are talking about credit-related provisioning for this year? Is that- No, no, sir. You are talking about- No, sir, I'm not asking about that. Sir, for the first two quarters, you have a net slippage of INR 200 crore. For the full year, you are saying that your net slippage will be less than INR 200 crore. Yeah, yeah, yeah. Correct. Yeah, yeah. You'll have a net recovery. Yeah, it's possible that we'll be able to recover more than... See, we have done that in the previous quarters also, where our recovery has been more than the slippages.... Yeah, it can happen, yes. As I said, if a couple of big accounts get recovered where we have fully provided, where recovery and upgrade will be far more than the slippages, which—because slippages will have to happen from the existing book and the new book which you are creating. Recovery can happen from the entire legacy book, so it can be more also. Sir, how is your ECLGS and, you know, the book behaving, and, you know, what kind of, you know, when would you have a clarity on the fact that, you know, it is not slipping significantly? Has it already started? Some repayments have already started in the ECLGS book. You're talking about the repayment in the restructured book, you are saying? No, I'm not talking only... Okay, I'm talking about the restructured book as well as your ECLGS book. The new book, as I said, from October 2020, I'm talking about. So the, obviously, all of them have come into repayments long back. I'm talking about from October 2020 onwards, whatever book we have created, we have had a delinquency of only 0.02%. It's about close to 34,000 crore book out of my 67,000 crore book, that slippages, the NPA level is 0.02%. So, therefore, in the portfolio, this is the information. If you ask me about the restructuring, yes, as I said, the COVID one, ECLGS one, obviously the repayment has already started. In ECLGS two, part of it is still to start, and part of it has already fallen, started falling due, and we are seeing recovery also, we are seeing some of them slipping also. So just- Overall, the sense is that 25% of the restructured book will... 25% of the book will slip into NPA. So this ECLGS book, you know, what is the total size and what was the amount in phase one and phase two? I'll tell you. Just hold on. See, if you look at my total restructured book, as I'm talking to you, it's INR 1,997 crore, okay? INR 1,997 crore is the total restructured book, of which my COVID one restructuring book is about INR 607 crore. COVID two is about INR 1,025 crore, and others is INR 365 crore. These others include MSME restructuring and floods, et cetera. That is about INR 365 crore. So INR 1,997 crore has this composition. If you look at the slippages, which, I mean, slippages which have happened from this restructuring, let me just give you that. It's about, in Q1, 37. Q1, Q1 was INR 187, Q2 was INR 73. Totally INR 260. Yeah. Correct, correct, yeah. So slippage during quarter one was INR 187, and two, during quarter two was INR 73, correct. Totally 260. Correct, correct. Absolutely, correct. Total INR 260 crore for the first half? Sorry? You said total INR 260 crore for the first half, if I heard you correctly. Yeah, yes. Correct. Sir, how much of your Kerala book gets impacted by tourism, directly or indirectly? That will be very... I mean, I, we don't want to really look at sector-wise, but overall, we are, we are not differentiating in our efforts or in sourcing with respect to geography. So we are, as I said, flood is the only unique factor to Kerala, and as I said, out of the total restructurings, flood-related restructuring is, is about 365. Total is 365, of which flood is anyway now almost nil. There is nothing there now. So flood restructuring, as is, after 2021, last one we had was in June 2021, 14 and after that it's zero only. Sir, I'm trying to understand how is the Kerala economy getting impacted because of revival of tourism and how does it indirectly impact you? No, that I don't think we'll be able to. We are not that big enough to be really talking about the sector revival and talking about recovery from there. We all know that, yes, there is a recovery which is happening, and hotels have started getting more and more booking, and airports are getting more and more crowded. Beyond that, I don't think we have enough data to tell you about Kerala. Understood, sir. Thank you so much. Thank you. Thank you. Participants are requested to kindly restrict your questions to two per participant. Participants are requested to kindly restrict your questions to two per participant. We have the next question from the line of Rohan Mandora from Equirus Securities. Please go ahead. Yeah, hi, sir. Thanks for the opportunity again. So just, assuming that the NIM discussion and the cost of deposits getting repriced, as per the maturity profile that comes in the annual report, almost 70% of the deposits are in greater than five-year bucket. So just want to understand, like, over the next one year, what proportion of our term deposits will come up for repricing? Oh, that number, we'll, we'll get back to you with that number. I don't have that number ready-made with me now. We'll get back to you with that number. But just to tell you, we will obviously will have to reprice based on the rates which we are prevalent at that point in time, and we will... As I said, as a reply to other participant's question, we'll have to play as per our need, and if you feel that we really need to keep deposits, we need to really mop up deposits to meet up with our liquidity requirement, we will definitely price it suitably in the band which where there is elasticity. Sure, sir. Just, on the CD ratio, which has moved up from 65 to 75, till what level will we be comfortable before we'll see a deposit growth matching the loan growth? This level is 73-75 is what we want to keep it at. ... Sure, sir. And sir, this was on the home loans, while you had indicated in one of the earlier discussions that home loan will be a focus area, but we have seen decline in both year-on-year and Q-on-Q trends. So just want to understand what's happening there, and how should one look at it incrementally? Yeah. See, home loan, as you know, it's a business which requires, which is amongst the retail business, is one of the complex business. Therefore, we need to get many things right for the home loan business to really grow. And it's, since it's a long-term book, we need to be really sure about the quality of sourcing, quality of underwriting, et cetera. So, and it also requires a lot of working together with the builders and with the other infrastructures needed for building this book. So as a fairly, I would say, new entrant to in the market of home loan, because predominantly the home loan loans which were done in the past were towards, you know, building houses in a plot, et cetera, which was more... Which is very, very, probably unique to, states like Kerala and a few other states. But then if you look at the overall growth of home loan book across the country, it's all predominantly, funding of flats, et cetera, with, with the various, in various states, where you need to have a very good tie-up with the builders and where we need to have a good traction with the builders. So, this, it requires a lot of efforts to build relationship and also requires a lot of efforts in making the team to source the right kind of, customers, et cetera. So we are, you are right that we are, not growing as much as we should be growing. In fact, the book is de-growing. It is due to the fact that home loan pricing in the market has also been very, very fine. All the, banks, large banks, as well as medium-sized banks, offer rates which are extremely competitive, and it may not make sense, for us to operate at those rates. Though our rate is not very, far away from there, but still, that will not help us to really build a, a profitable book. In that sense, we need to get these things right. Therefore, we need to reduce our... We need to really ramp up the business in the right fashion with right sourcing from good quality builders and good quality customers, and also do our underwriting and pricing it appropriately so that it makes sense for us. So we are relooking at this business, and we have identified a few areas for correction to be done, and we will probably do all that, and you will probably see growth happening from then on. Actually, in terms of sourcing quality, we are very much there in tune with the quality expected from the market. But in terms of number of cases getting sourced, we're really using the branch network to source many, many home loan cases, all that requires a lot more tie-ups, et cetera, to be done with the various builders. We are in the process of doing that. We also probably need to revisit the kind of people and quality of people we need to maybe beef up the business. So we will do... We need to do some of those key things before we really start seeing traction in this business. Sure, sir. And sir, lastly, in terms of the pockets of stress outside of the restructured book, are there any pockets where you think, can lead to elevated slippages for FY 2024? Or should we believe that 2024 should be more of a business as usual slippage year? I expect the behavior to be very similar. See, if something has to fall off, it will fall off soon, sooner than later. If the business model is not inherently right, see, restructuring predominantly has happened in the retail, I mean, in the SME and retail businesses. As you know, in SME or retail businesses, if things have not worked out for more than a year, it will definitely fall off. If it's worked out for one year, I'm sure it will continue in the next year also. So we expect 25% slippages to happen from that book, which means these are the businesses which are vulnerable, and their business models can probably give them trouble. But once they are through with this, I'm sure they will be able to manage. Because we are seeing that GSTs, profiling of these companies are on the rise, and it's a question of now the new business model or the revised business model is making sense for them in terms of doing more than what the break-even is required. Right now, many of them are just get to the stage of breaking even or bettering that, and we are seeing them servicing their loans, servicing their interest properly. But we are also seeing business models which have had a major, major hit. They are not able to survive, therefore, they slip into NPA. But good news is that many of them have got a good collateral backup, so we will continue to engage with those customers. Wherever it is required to dispose of the collateral to recover our money, we will keep doing that. Sure, sir. Thanks a lot. Thank you. Thank you. We have the next question from the line of Shailendra Mundra from Veba Financials. Please go ahead. Hello? Yeah. Yeah. Good morning, good afternoon, sir, and congratulations for turning around the bank and showing good set of numbers. Thank you. So my question is mainly towards the fact that, you know, there is tremendous competition in the market from the bank, from NBFC and from Fintech. So what are you doing in the area of branding, image management, and marketing and, you know, sourcing new customers? So what... Can you please throw some light on that? Yeah, yes, competition certainly is there, and obviously, this bank has seen competition over the last many years of its existence. Clearly, it is there, and each bank obviously works with their own strengths in trying to build a relationship with the customer. So as a bank, we have got excellent distribution network. We are present more than 925 branches across the country. With a very good prominent presence in southern India, and also we have got a good brand value, brand image. Many of the customers have stayed with us for many decades, and both in the liability side as well as in the asset side. But having said that, the bank is also recognizing that the future for banking is going to be in technology. Therefore, the bank has been investing quite a good sum in technology over the last several years, and the bank, the testimony is that the bank has been winning a lot of technology awards amongst the various banks, amongst the peer banks, even amongst all the banks in the industry. So technology and trust are two big things which is helping the brand. So that's exactly what our brand positioning is, trust and technology, and that is how we are trying to position. And clearly, this is helping us in a big way because all our initiatives today, which we are taking, are towards building these two fundamental factors. So even in terms of taking initiatives within the bank for providing customer convenience or providing products or services at a faster pace, we are clearly using technology. We have... In fact, we have been using all the latest available technology in terms of artificial intelligence, machine learning, robotic process automation, I mean, blockchain technology. We are using whatever is the latest in technology to really make a big difference in the way we are addressing the customer-related or the product delivery-related or service-related issues. So, and you must have also seen, for a bank of our size, we also need to be very conscious of how much money do we want to really splurge in really making the brand presence felt. So we have been given a budget on that. We discussed about it. We have been working within that budget to ensure that we leverage our limited budget using the various ways and means to reach out to the customer who we are targeting. We are going big time in the digital. We are associated with, we are associating ourselves in all the events and entities which are predominantly having a presence in the digital area, and we are reaching out to end customers. Our collaborations with the fintech partners or NBFCs, who have a dominant presence in their own market, so that we can leverage their brand image, their positioning. So long as their value system match with ours, and so long as their risk appetite matches with our risk appetite, we are very, very happy to work with those, and we will ensure, that, you know, our presence is felt. This is exactly how our credit card relationship is also working, where we have tied up with a company called FPL in coming out with, OneC ard, which is a co-branded card, South Indian Bank brand. I'm happy to say that we have already issued 150,000 cards from the time we started, sometime in September, October last year. It's a good quality book which we are building, and the card has positioning of the card is also, it's a metallic card, gives a lot of pride in somebody holding this card. We are also working closely with a few entities for co-lending relationships, et cetera. So you will see some of this panning out in the next few quarters. But having said that, we need to be conscious of how much do we want to really spend on these areas, because given that today I am limited in my capital, I need to really use it for the right end user. I need to be very, very fussy about using capital, and I should use it where I am getting a good return for my capital. Thank you, sir. Thank you for your response. Thank you. Thank you. That was the last question. I would now hand it over to the management for closing comments. Yeah, thank you so much. Thanks. I really thank all of you for taking part in this conference call. I know many of you would be tied up with many other conference calls, which might be happening across various banks, because many banks have come out with results yesterday. But despite that, I really appreciate all of you taking time to be part of this call. And as I keep saying, still, COVID has not completely gone away. Take care and play, be safe. And we will with our endeavor to be as transparent and as open as possible in telling you exactly where we stand in terms of our initiatives, in terms of where we are getting results, where we are not getting results. We are continuing to work on areas where we needed to show improvement. In the whole journey, I would continue to expect your support and patronage and participation, so that we get lot of insights from the way you question us. We also know what is important, and we work on those areas. To end the call, I wish all of you a very happy Diwali and a happy festive season. Thank you so much. Thank you. Thank you. Thank you, everyone. Thank you. On behalf of InCred Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.