Please note that this conference is being recorded. I now hand the conference over to Mr. Chintan Shah. Thank you, and over to you, sir. Yeah, thank you, Sagar. Good afternoon, everyone, and welcome to the Q4 FY24 results conference call for South Indian Bank. We have with us from the management, Mr. P. R. Seshadri, Managing Director and CEO, along with the management team. Without further delay, I would now like to hand over the floor to the management. Thank you, and over to you, sir. Thank you. Thank you, Chintan. Good morning to all of you, and thank you for joining us for the South Indian Bank Limited Q2 FY24 earnings call. We are joined by my colleagues, Mr. Thomas Joseph K, EVP and Chief Business Officer, Mr. Anto George T, CGM and HR and Operations, Mr. Sanchay Sinha, CGM and Head Distribution, Ms. Chitra H, SGM and CFO, along with other, like, senior executives. Let me start with the key highlights of financial performance for the quarter ending December 2023. Total deposits grew by 10% to INR 97,085 crore, from INR 88,477 crore. Gross advances grew by 10% to INR 77,947 crore from INR 67,963 crore. Net profit for the quarter grew by 23% year-on-year, from INR 223 crore to INR 275 crore. CASA amount increased by 2% year-on-year, to INR 31,100 crore versus INR 30,548 crore. Interest margin for the quarter improved by 10 basis points to 3.31%. Provision coverage ratio, excluding write-off, improved by 948 basis points on a year-on-year basis to reach 66.77%. Overall, gross NPA reduced by 71 basis points from 7.56% to 4.96%. Net NPA reduced by 81 basis points from 2.51% to 1.70%. Improvement in ROA occurred during the quarter to bring us to 0.97%, as against 0.85% same time last year. ROE improved to 15.38% against 14.17%. Recovery and applications for NPA accounts increased from INR 374 crore in the prior year to INR 475 crore this quarter. CRAR improved on a year-over-year basis to 16.69%, of which Tier 1 is 14.22%. Total business of the bank increased by 10% and is currently standing at INR 172,022 crore. Advances grew by 10%, as I mentioned earlier. Total disbursement for the quarter was INR 21,353 crore, of which 15,697 crore was corporate, which was largely A-rated entities and above. Gold was INR 2,792 crore. Our MSME segment was INR 1,335 crore, and other retail, which includes housing loans, personal loans, and other products, was INR 1,599 crore. We continue to grow out our gold loan business. Our disbursements year to date were INR 5,675 crore, with an average ticket size of roughly INR 1.56 lakh. The gold book has grown very significantly, by 16% year-on-year. Personal loan is another segment where we see good traction. Since the launch of the pre-approved personal loan, targeting our own liability customers in December 2021, the PL book is roughly INR 2,100 crore. Credit card is another area of growth. This product was launched in April in FY 2022. At the end of September 2023, we had issued roughly 332,000 credit cards, with an average monthly spend per card at INR 25,015. The total book, as on September, stood at INR 1,164 crore. Liability portfolio continues to be strong for the institution. Our core deposits grew year-on-year to INR 93,448 crore. NRI deposits continue to be an area of strength and it now stands at INR 28,785 crore. It contributes to about a third of our total deposits. Low-cost NRI deposits stand at INR 9,116 crore. Our investment book was at INR 27,296 crore, with an HTM book of INR 20,858 crore, and AFS and HFT book of INR 6,478 crore. The modified duration on the investment book continues to be conservative, at about 2.79. The fresh slippage for the quarter stood at INR 312 crore, and is within the guidance provided by my predecessor. The overall restructured book stands at INR 1,169 crore. The The bank holds standard asset provisions, including standard restructured and FITL related provisions, INR 476 crore. Net interest income for the quarter increased 13% to INR 831 crore. Our core fee income increased 13% to INR 170 crore. Treasury profit for the quarter was about INR 61 crore, excluding provisions that we had to make on SRs, which we can come to subsequently. Overall provisions decreased by 71% year-on-year to INR 51 crore. The reduction in provisions is mainly due to lower slippages and better recoveries. So with this, we open the floor for questions, ladies and gentlemen. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Jai Mundhra. Please go ahead. Hi, sir. While we wait the question queue, I would also request, if you can also include in your opening remarks, you know, your initial, view on the institutions, on the institution, now that you have, almost completed three weeks. Your, initial thought process, how do you look at the strength and, you know, probable weakness, of the bank? Your initial view on product, processes, people, and positioning of the bank. And then, you know, maybe that will help so- set the tone for the, further discussion. Thank you. Thanks, Jai. That is a overarching question I think that touches on every aspect of the business. So let me try and answer that. I mean, while I've been here from the October 1st, you know, I'm getting to know the business and getting to meet the people, getting to understand the financials. And I've, you know, spent most of my time getting to get to grips with how our balance sheet looks, how our people view the world and how you know, we are positioned with service composition, et cetera. So a few comments leading from Jai's question. The first is that you know, the portfolio is in decent shape. I think a great deal of work has already been done by Murali in the last three years to clean up what was, you know, historical problem part of the portfolio. I think there's a great deal of work that's happened to improve the margin at the institution. So margins, which three or four or five years ago used to be sub-3%, are now, you know, comfortably above 3%. There's been a lot of work that's been done in segregation of duties and ensuring that credit quality is maintained. All of that is visible. But we continue to be predominantly dependent on the on three product sides on the asset front, which we'll come to in just a bit. But, before I go there, I think the key strength of the institution remains, a very strong franchise on the liability side, both domestic liabilities as well as the NR liability franchise. I think it's perhaps a little underemphasized, you know, the quality of this franchise. Our liability base continues to grow in spite of the fact that we are not priced, at the margin, as aggressively as some of our larger competitors, including Kerala-based competitors. So that is indicative of the very strong relationship that we enjoy with our liability customers. On the asset side, as I said, we have three current engines of growth. One is corporate, the second is the gold loan business, which I mentioned in my inaugural comments. And the third are the personal loans through credit card products that were launched relatively recently. Given the reliance on corporate and the fact that the corporate is mainly targeted to extremely highly rated institutions, the margin of the organization tends to be a little lower than some of our competitors in either in Kerala or outside of Kerala. And you know, as a direct consequence of that statement and in continuation with what my predecessor was doing, our aim is to try and figure out how to get growth going both on retail as well as on the MSME segment. Now, MSME has been the historic bedrock of the company, and it's an area of significant strength. I mean, our current portfolio, which is roughly about INR 16,000 crore or so, is a reflection of the fact that we have a deeply embedded MSME business, but in recent times it's not been growing. So those are areas we would like to focus on the consumer side, and this is a continuation of the strategy that we had adopted earlier as well. So I don't know, Jai, if that answers the rather expansive question from your side, but it's an attempt to provide an overview of, of you know, what we are thinking at this point. Sure, sir. Maybe we can, we can keep... I'm sure there will be a lot of questions on this. So maybe we can start the Q&A, and I will come back. Thank you. The first question is from the line of Rahul from Ambit. Please go ahead. Hey, am I audible? Yes, you're audible. Please go ahead. Thank you for the opportunity, sir. Firstly, congratulations, Mr. Seshadri. It is very nice to, you know, hear you after almost three years now. So congratulations on that. So I have two strategic questions. Mr. Murali undertook a lot of changes to bring in sales culture in the bank. So now what is your sense of the culture that is currently in the bank? And how you, and how do you see that in context of your years, three years versus this out in terms of the sales push or the sales culture? And have you identified any areas which can enhance the sales proposition for us? That would be my first question. Thanks very much for that question. So from, you know, if I may paraphrase your question so that I don't answer the wrong question, because you're not extremely clear, you know? So we're not able to hear you very well. What you were saying was, you were asking, you know, what my views were on the culture of the organization with various, various aspects, including sales. Again, it's a, you know, expansive type of question. I find that- So just on sales, Mr. Murali took a lot of initiatives to bring in sales culture in the bank, which was missing three years back. So how do you read that now, and how would you, how would you like to accelerate the process? Let me... You know, it's a little early for me to answer that conclusively as to whether, you know, the sales culture in the bank requires a dramatic change or not. You know, this is a traditional branch-based institution, which has, you know, serviced its customers through the branches. Murali, my predecessor, had, you know, created a whole network of non-branch sales architectures that were aimed at acquiring customers on the MSME as well as on the retail side. Those architectures continue. And, our focus is to continue with the erstwhile strategy till such time as, you know, I get a better understanding of the organization, and we work out changes that we need to do to continue the growth path, you know, that the organization wants to be on. So at this stage, I would, you know, request that you give me a little bit more time for me to come back and tell you what I think about the culture of sales-related culture in the organization. Because I've spent most of my time at the headquarters level, getting to meet people, understanding the balance sheet, understanding large-ticket customers, and so on and so forth. So I've not had too much time to meet people at the front end, in the branches, meet people who are actually driving our sales architecture, and so on and so forth. So I'm not in a position to answer your question to the degree that you would like me to answer at this point. Thank you. Just a clarification, on page 7, slide 7, there's a mention that, in the first half of this year, you have done INR 60,000 crore of disbursements in the corporate segment. Is that the right way to look at it? Yes, that's the right way to read it. Majority of our disbursements in the first half have been to corporates. So balance sheet, as you can see, hasn't grown very much, I mean, in the first half. There is a INR 2,000 crore of assets that have been realigned from the MSME side onto the corporate side. So effective growth is roughly about INR 5,000 crore or thereabout. And but there is INR 32,000 crore of disbursement, which is indicative of the fact that these are fast amortizing or bullet repayment, short-tenor bullet repayment type of facilities done to very highly rated corporates. But in context of the corporate loan, the INR 30,000 crore, don't you think this number is on the higher side, INR 52,000 crore disbursement in this first half? That's what I was trying to tell you. This is the sum of all new disbursements. So if you do a disbursal for 14 days or you do disbursal for 30 days and then redisburse after 15 days, after 30 days, it's counted twice. So as a consequence, while my corporate loan book post the reallocation from our commercial book has grown, growth during the half year is only INR 5,000 crore, but the disbursal is amounting to INR 32,897 crore. So I wouldn't put too much, I mean, I wouldn't look at this and then say that, you know, we're disbursing too much. It's basically the short-term general nature of the exposures that we are taking as a risk mitigation strategy. Sir, what is your view on cost of funds and margin going there? Sorry, could you repeat that, please? What's your outlook on cost of funds and margin going at Net Interest Margin? Cost of funds, inevitably, we are going to. You know, cost of funds is dependent upon how, the interest rate regime, you know, behaves as we go forward. Assuming the current upward bias remains, at the, you know, a significant chunk of our, liability book will get repriced upwards. So we expect approximately a third of our term deposit book to get renewed over the next six months. And, obviously, the quantum and the impact on, on our cost of funds will depend upon, A, external environment as to where the rates are at that point in time, and, B, our own, you know, strategic decisions on how we reprice our own deposits. But there is a bias, you know, towards increasing of the cost of funds, as is being reflected, I think, in every, every bank on the street. Thanks. Okay. Thank you. All the best. Thank you very much. Thank you. The next question is from the line of Rohan Mandora from Equirus Securities. Please go ahead. Good afternoon, sir. Thanks for the opportunity and congrats on the appointment as well as the numbers. Sir, I just want to understand, in the opening remarks, you alluded to NIMs for the bank being among the lowest as compared to competition. So, what would be your strategy with growth and profitability? And will we look to run down the corporate portfolios to have an update in NIMs? So, what's your thoughts around that? And also, is there any portfolio that's marked for rundown right now because of risk issues? With respect to strategy, I think as of this moment, as I mentioned, we are continuing business as usual. I mean, it's a little early for me to change strategy. The bias, I'll tell you where my biases are. The bias is to build a more granular, higher-yielding book. So the bias is to try and grow, commercial and the retail side, because we think that we are underrepresented there, and that there is a significant opportunity for us to gain market share. By doing so, we think the spread that we currently enjoy can increase. The spread that we have, which is reflected in the NIM, is to a degree, suggest also by the fact that a fairly large chunk of these assets are very short-term, highly rated corporate assets. So as we are in a position to acquire other asset classes, we will be able to substitute the highly rated, shorter duration exposure that we have. With those exposures, consequently, NIM should rise. So I think we are reasonably well-positioned. As long as we can get our sales engines working and we can get reasonable product propositions out through the door on those two product sets, we should be in a position to move towards NIMs that are closer to our sister private sector bank entities. Sure. And on any portfolios marked for rundown due to credit reasons? We don't have any explicit portfolio that's marked for rundown. There are, in the overall portfolio, there are portfolios that have higher current NPAs and delinquencies, but they're not specifically marked for rundown at this point in time. We are watching it very closely and not growing those portfolios, but not explicitly mark them as exit at this juncture. In my next call, you know, it's a little early for me to make those comments. As I said, we are continuing with the strategy that we already had, by and large, because it has been working all this while. As I get a better understanding of the bank, and we will, you know, give you greater visibility as to the changes in the strategy and the portfolios that we're trying to actually work actively downwards. Sure. And, sir, on the estimate slippages on it that we are seeing right now, INR 400-odd crore, should it reach any normalized run rate, or we can expect some improvement there? INR 300-INR 400-odd crore. Yeah, we, the slippages were approximately INR 290 crore for the quarter. This is extra credit card slippages which are not included here. That's because we, you know, just covered by our first loss default guarantee. The slippage ratio should be in this ballpark. I mean, what we can see, that of, we, we don't think that it should aggressively increase. If anything, as some of the older stuff flows through, it should over a period of time start decreasing. At this point in time, this 42 basis points that we have in the presentation seems to be a number that we are reasonably comfortable with. And that is also in line with the INR 1,500 crore kind of number that we had written at the beginning of the year. Sure. And so lastly, this is slightly more expensive, kind of a question. So as an external entity, when you were being evaluated, by the bank or the position, what were your top three thoughts as to what is the improvement area required for this bank? Let me answer it differently. I mean, I'll tell you why I decided to join the bank. The top drivers were saying that, "Hey, this is an area, this is a bank that makes sense, you know, it's attractive." From my point of view, the liability franchise is an important franchise, and very often very difficult for you to grow, keeping costs reasonable, because liability relationships take a long time to set up. And if they are not to be entirely price-driven, they need to be anchored in human relationships. And only, you know, long-term institutions that have been around for a long time can actually build that. So, I think the South Indian Bank, a key area of strength that is very often not talked about so much, is the liability side. And if you were to go and compare the rates that this institution is offering versus some of our larger peers from Kerala itself, you'll find that we are actually lower than them. And in spite of that, the liability book is holding. And that's a great area of strength. My own view was that assets can be built. Assets are about understanding risk and building appropriate processes and systems, which should be doable over a period of time. But having the liability side stitched up is very, very important in the long term for the bank. I hope that answers your question. Yes, sir. Yes, sir. Thanks. Thanks. Bye. Thank you. The next question is from the line of Kunal, from Bowhead. Please go ahead. So thank you. Part of the question has been answered, but just, you know, what are your thoughts, you know, initial thoughts on the asset quality, in case you got a chance to look at that, you know, across various categories? And, you know, do you suspect that, you know, you would like to slow down the growth part, you know, which Mr. Mundhra had taken, or you think, you know, based on whatever guidance you had given, you know, you don't see a challenge in meeting that guidance? And, you know, do you think you need to recruit a lot of new people, or is this too early for me to ask you that question? Thank you very much for that question. With respect to asset quality, I think, if you were to look at our numbers, the SMA numbers, SMA two numbers are in check. I would much rather have an SMA two number, which is sub 0.5%. Currently, we are close to 1% on the SMA two side. If SMA two is higher than my, you know, the number that I would like, obviously, SMA one is also going to be higher than what we would like. So on the portfolio side, I think there is some work that we need to do to improve the portfolio that we have on the book. But you know, that, that's a mixture of originating new, good, better quality, new origins, new assets, which is something that the HDB has been doing for a while. Then also working through the historically delinquent accounts, but which are either in SMA one or in SMA two, which we intend to do a little bit more aggressively than we've done in the past, so that the SMA one, SMA two numbers can become smaller, and the predictability of NPA increases. As far as growth is concerned, as I said, we have three engines of growth. One is the corporate side, the second is gold, and the third is the card stroke PL program. Our bias, and my own personal bias, is to be more granular. But in the short term, given the fact that these corporate assets are of high quality, we'll continue with the current method of acquiring assets and growing our balance sheet. And as time goes on and as our systems and processes adapt to being more focused towards this, you know, MSME segment as well as the retail segment, the balance sheet structure will shift. Sir, as a follow-up on that, and, you know, one of the questions remained unanswered, you know, on hiring of employees, in the future, is it too early to ask you, or do you think you'll be bringing quite a few people? Secondly, you know, when I was asking you asset quality, my question was more near term. You know, you know, Mr. Murali, had guided for almost INR 300 crore net recoveries. You know, which implies INR 550 crore of recoveries in the next six months, if the guidance also hold true. Do you think you're in a position to, comment on that? You know, your asset quality, if I look at, you know, the combined of, net slippages, delta in restructure and delta in SMA-1 and SMA-2 have declined 80 basis points Q on Q. Do you think what is leading to that as well, you know? Okay. Our recoveries for the quarter, including interest recoveries and recoveries from write-off, et cetera, were roughly about INR 475 crore. My team seems to be reasonably confident that, these numbers are, if anything, if, if not repeatable, they are, they're at least, in part exceedable. So I, I think that the trend lines that you're seeing on the, on the GNPA and the net NPA numbers, at least on the basis of information that is available today, should continue in the same portfolio will improve. That's essentially because of the, you know, great deal of work that's been done on the, on the corporate side. With respect to hiring of people, too early for me to comment. I think we do have both a large cadre of people who are internal to South Indian Bank and a fairly large pool of people who have come from other institutions over a period of time, and we have a talented set of people here. So what we need to do is understand where there are gaps and how best to fill them. So, you know, if you would permit me, I would rather hold the question for the present and come back to you with an answer in the next call that we have. Sir, in terms of the growth which you are looking at, you know, you know, do you really like to slow down the growth in the immediate near future or you think, you know, because the growth slowed down this quarter, so we're just wondering, is 10% the new norm or, you know, we can go back to 12%-15% kind of growth where the full year is concerned, you know? I am not responsible. While I am, you know, presenting on these results, I joined the organization on the October 1st, and since these results are of the September 30 th, these do not represent any action that I have taken so far. I see no reason to slow down the growth at this point in time, and the mixture that is coming through seems to be performing reasonably well. So there's no crying need, you know, on the basis of the 15 odd days that I've been on the job effectively, for us to change direction. So business as usual as far as we are concerned. We were hoping to end the year at INR 82,000 crore or thereabouts. I see no reason why we wouldn't get there. Over a period of time, we will architect in the direction that you know the organization anyway wanted to go. So, I trust that answers your question. Great. Thank you so much, sir. Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address the questions from all the participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, you can please join the queue. The next question is from the line of Umang Shah from Kotak Mutual Fund. Please go ahead. Yeah, thanks for taking my question. Sir, congratulations on your appointment and the quarter. Sir, just one question which I had now. Thanks for articulating your thoughts. Clearly, we do understand that it's a little too early for you. I just want to understand one thing that from a momentum perspective, right? I mean, clearly, a lot of effort and work has gone through in terms of research and value, PNL, and the outcomes that we are seeing today, maybe in terms of ROEs, ROEs, the provision coverage. Probably we are looking at some numbers which are best in a decade for the bank, right? So just want to understand that, is it safe to assume that the momentum kind of continues? Clearly, a lot of changes will be made, by you as well, which will take some time to show up in terms of results. But is it safe to assume that the momentum kind of continues in the interim, while the bank continues to invest and build, over and above what is being currently delivered? Yeah, I just wanted to hear your thoughts on that. Thank you very much for that question. So I want to reiterate, I mean, it's business as usual as far as we are concerned. There is a strategy that was instituted by my predecessor. The strategy has clearly yielded results. So as you rightly mentioned, the numbers that you're seeing are the best in a quarter or best in a decade. So if that is the case, there is no real reason for us to change anything in a tearing hurry, and we don't intend to do that. And the momentum that you're seeing in the business will continue. If anything, we'll work hard at improving momentum in the segments that we think we should grow and where we are underrepresented. Understood. Perfect. That answers my question. Thank you so much, and wish you good luck. Thank you. Thank you. The next question is from the line of Sukriti Jiwarajka from Laburnum Capital. Please go ahead. Yeah, hi, please go ahead. Please go ahead. Hi. So I just have one question. So I noticed you didn't mention mortgage in one of the growth segments that you spoke about. While it has been a declining book, this is one of the verticals that Mr. Murali spoke about as having revamped and just a couple of more months left for all the processes to be in place. I just want to understand your aspirations for the mortgage piece, specifically. So you're making a distinction between home loan and mortgage. Home loan is an area that, you know, Murali was trying to grow aggressively. Mortgage, perhaps a little less so, given our historical, loss trend in the product. But our, our bias is to, you know, at this point in time, continue, as I said, with Murali's strategy, and we want to aggressively double down on the home loan, proposition. On the LAP side, I think there are, there are opportunities. On the mortgage side, there are opportunities that we need to relook. We need to, you know, work on our own underwriting standards so that we can reenter that market and participate in that as we go forward. So that is an element of strategy that we need to discuss internally and agree upon. That is, at this point in time, that has not been taken up at the board and agreement has not been sought. Got it. Got it. So home loans is a big focus area, but mortgage, there will be agency. That is true. Got it. Thanks a lot. Thank you. The next question is from the line of Bhavin Shah from Sameeksha Capital. Please go ahead. Yes, so first of all, you know, really heartened to see the progress that the bank is making. I have just a couple of quick questions. One is that I see in the presentation, your FY 2025 targets, which you already met in Q1 FY 2024 with respect to ROA, ROE, and other targets. So, I think, shouldn't you set some more, you know, ambitious targets? You know, otherwise... And, because, you know, it doesn't make sense the fact that your older book is running down and the newer book is much more, has a much higher operating metrics, matrices than, you know, why would you have the same targets, same numbers in FY, you know, in 2025? Second is, how do you sustain the cultural shift in the organization that has happened in the last few years, which has resulted in this phenomenal performance? What is to be done to sustain? So with respect to your first question, I agree, we will have to recast those targets. You know, now that we've achieved them, and hopefully we will continue to consistently achieve them, we will have to relook at our numbers and our ambition as we go forward and recast them. So I would urge your indulgence so that I can do this in the quarter that comes next, at perhaps the next meeting, we'll come back to you with a number as to where we want to go. With respect to the cultural shift, as I said, all the practices that were being followed in the past, all the systems and processes that had been put in place continue. There has been no change as of this moment. If anything, the control environment that we currently have will be strengthened by using technology and by ensuring that the control elements are placed in such a manner that we get outcomes that we want while being business-friendly at the same time. So that's the kind of change that we would like to make, but not at the... The change that we are intending to do is not a philosophical change, but more an operational change that makes it easier for us to achieve what we want to achieve. So I think given that, it should be reasonably simple for us to continue with the cultural shift that has been initiated over the last three years, and that will be our endeavor to ensure that that does not slip back. Thank you and all the best, for, you know, future, further success. Thank you. Thank you very much. Thank you. Next question is from the line of Darshil from Crown Capital. Please go ahead. Darshil, your line is on mute. Please go ahead. Hello? Yeah, hi. Please go ahead. Okay. Thank you. Good afternoon, sir. Thank you so much for taking my question. So just wanted to know in terms of our ROE, you mentioned in a presentation, but what would you feel would be maybe a longer-term target? What would be an ideal profitability that you are looking at? Maybe not one year, maybe two, three years. Where do you see the outlook that you feel that of Bank Bazaar should be doing? So, as I was mentioning earlier, I mean, it's a little early for me to actually comment on this. Let me, let me try and give you some directional information. So we, we are an institution with a stable liability base and a liability cost, which is comparable to some of our larger institutions. If anything, our, our landed cost of liability is actually lower than some of our larger institutions, or, you know, institutions operating in the same geography. Given that, we have a clear liability advantage. On the asset side, we are currently operating on very high quality, concentrating on very high quality corporate assets with shorter duration, which means that the net landed interest that I earn is much lower than if you were to participate on the SME stroke retail space. So therefore, in the long term, there's only one place for the net interest margin to go. As we shift from this and have a more balanced book, net interest margin only has to expand. And that is how fast it'll expand, and where it will go, depends on how well we can make this transition from being dependent on the three product legs that I mentioned earlier, to a more balanced, place where MSME can grow as well as other retail grows. It depends on that. But having said that, we've hit 1% here, and if things were to grow for us and come to the early 4s, then, you know, I don't think there is very much incremental expense that we need to look at. We are fully staffed to do all of this, and much of it will flow through into the bottom line. So I think, all I can say is directionally, that's the way, you know, it looks to me at this point in time. If credit holds and we can make this transformation, there's a very significant increase in the return on assets that should be possible. So what would be a result timeline for such as? Like maybe, from what I'm hearing of, like, you just started this journey, so maybe a two or three or journey that you see, what would the timeline be to increase the state, like, increase, as you said, maybe early 4% or something like any. We don't need a firm thing, just a very more qualitative side, or how would you—what would you put as your own internal target for your own self? So I, I hesitate to answer that question. I would, you know, say that, we try and present a more, articulated plan in the next call that we take. Okay. Until then, you know, I'd like to reserve my comments and give you these numbers as we meet the next time around. No worries. So thank you so much. Yeah, yeah. Thank you so much, sir. All the best. Yeah. Thank you. So the next question is from the line of Pallavi Deshpande from Sameeksha Capital. Please go ahead. Yes. Thank you for the question. I just wanted to understand on the, you know, cost of deposit side, what's the increase we expect in the second half, from here on? I think that's a very good question. Our, our cost of deposits are roughly about 5% today. So I think that compares quite well with our competitors. But we, we have roughly a third of our time deposit book coming up to repricing over the next six months. So by March of 2024, a third of our book will get repriced. And the rates that we offer at that point in time will be driven by the market. And the current bias is on an increasing side, i.e., the view is that pricing that we offer today will probably be lower than the pricing we expect to offer three months hence or four months hence, because that seems to be the interest rate trend that we are in. So we do expect a fairly substantial increase in cost of funds on account of repricing of the existing time deposit book. But this is something that we manage quite aggressively, and as you can see, we've managed quite effectively so far. We are hoping that even with that repricing, our total landed cost continues to be competitive. I don't want to give you a number at this stage because there are a lot of imponderables, which we need to work through as to, you know, where the rates will be in the market at that point in time, and so on and so forth. But currently, the view is that there will be a reasonable growth, and you are seeing it, you know, quarter-on-quarter, it's grown from 485 to 5, and that trend line is perhaps not going to change very much. So you can extrapolate from these numbers to where you think it would go. All right, sir. It's been a better than the years, I think the increase, the quarter-on-quarter increase. Just have a concern, are we going to see a, you know, do you have a lumpiness coming up in the third and Q4 in terms of the repricing? Actually, since only a third of it is repriced, I've... So I'm not able to answer this question because I don't have the number as to how much got repriced in the first six months. I was always forward-looking. The question I was asking the team was, "How much is repricing in the next six months?" I never asked them, "How much repriced in the first six months?" So I don't know whether there is lumpiness or not. Maybe we can answer this question subsequently, because we don't have the data just now. Right. This is secondly on FLDG. There was something in the Q1 that we couldn't include that income because we were waiting for some RGAP approval. So has that income been included in this, quarterly number? Sorry to interrupt, Deshpande. We request you to return to the question queue, as there are several other participants waiting for their turn. Okay, sure. Thank you. Thank you. I'll answer that question since she's asked it. Yes, the first loss default guarantee related monies have been applied to the account and they have accounted appropriately. Understood. Thank you. Thank you. Thank you. The next question is from the line of Namit Arora from Indg rowth Capital. Please go ahead. Thank you for the opportunity and, congratulations to you, Seshadri, and wishing you and your team all the very best. So my question was around strategy. You know, the bank has nearly a century old legacy, you know, and a very large customer base of about 22 lakh. So, you know, from your standpoint, given your enormous experience with these institutions, any initial thoughts in terms of positioning the bank and, you know, how you would like to leverage some of the historical strengths from a competitive positioning standpoint going forward? Thank you very much for the question. I mean, initial thoughts are, you know, as I said, I think very clearly the liability side is a strength, and I think going forward, that's going to be an area which is going to be deeply contested. And we want to strengthen the liability franchise even more, so that we turn that into some kind of a fortress for ourselves and have a low-cost liability base that is dependable and that is growing. So then we want to focus on the liability side in an era of expected liability shortage. On the other side, on the asset side, you know, there's been a lot of work that my predecessor has done. For the present, we are continuing with the asset side strategy laid down by Murali and all the other resident leaders that he had made to the organization. I will come back in the next, you know, in the next call, with a clearer view of where we are going. As I mentioned, my own personal bias is to have a granular portfolio, which implies that we would like to grow MSME and the retail a little bit more than where we are currently. I trust that answers your question. I'm... I do apologize, because I'm not able to give a fuller answer at this point in time, given that I've been here for a very, very short period of time. Any strategic decisions that you make has to be made in the context of the organization that you work for and in, and in the context of the strengths and weaknesses of that entity, and in the context of the environment and the opportunities that it provides. In my case, while I'm aware of the environment and the opportunities, I do not have a full handle on the organization and the strengths and weaknesses that the organization actually has for us to make a determination on what strategic elements should be followed at this point in time. Thank you very much, sir. Very helpful and completely understandable, and look forward to connecting with you in the next call, and all the very best. Thank you. Thank you very much. Thank you. The next question is from the line of Kunal from Bowhead. Please go ahead. Thank you for this opportunity. You mentioned about, you know, the pricing and how much it would happen over the next few months. You're not clear. We can't hear you, Mr. Kunal. I'm sorry. Can you speak a little louder, perhaps? Sir, am I audible now? Yes. Sir, you know, you did mention about not being exactly clear about, you know, how much of repricing has happened and how much more to go. But when you speak with your senior team, you know, who has- which have been the bank, you know, Mr. Murali, you know, was there, what is the sense you're getting on the direction of NIMs for next six months or one year, you know? Are we near the bottom or much more way to go down, or broadly, we are, you know, broadly we are there, you know, based on your understanding of the bank from your point? Okay. So here there are several drivers of the NIM. One is cost of funds, obviously, right? So as I say, the third of our time deposit book is gonna get repriced in the next two quarters. So that's a negative in the sense that as the time deposit reprices upwards, my NIM will drop. But the positive is on the asset side, a very large chunk of the assets are very, very short duration, right? So as you... You know, there was somebody who asked me questions about the INR 32,000 crore of, you know, disbursal we've done on the corporate, whereas the corporate book has only grown INR 5,000 crore. It's reflective of the fact that we, you know, if you were to assume it's the same asset that has, that has, been, dispersed multiple times, you are looking at a 30-day duration on, in effect, the asset. Which so the advantage that we have is that as our liability book reprices, we have, at least in theory, the prospect of repricing the asset, right? So the NIM compression for us, given the very short duration that, we have on our assets, is likely to be less than some of our competitors... But again, this is, the outcome will depend upon market, market circumstances. It will, it will depend upon how aggressively our competitors bid for assets at that point in time, et cetera, et cetera. But structurally, we are reasonably well-placed to handle NIM compression going forward. Great. Thank you so much, sir. Thank you. Thank you. So the next question is from the line of Sheel Shah from Sameeksha Capital. Please go ahead. Yeah. Hello. Sorry, ma'am, we can't hear you properly. Yeah. Hello? Sorry. Can you hear...? Is it good? That seems... Good? Yeah. Yeah. So I just wanted to know, is there any one-off in our operating expense, and what's our guidance for cost inflation for the full year? I'll just turn it over to our CFO, Chitra, who can give you a more nuanced answer. See, operating expenses, of course, as you know, your value of company is done by yearly basis or- Quarter-on-quarter basis. So, I mean, Q1 come because of staff cost, but even Q2 it's high. Q1 to Q2, not much, it has happened. If it has, you know, the card expenses which have gone up, but then income also has gone up on the revenue side. So there is no big one-off. Of course, it is certain items like RTGS expense and all those things are, you know, now billed on a six-monthly basis. So those things have not come in the Q1, which is coming in the Q2. So it is not a one-off. Only the frequency has changed. Okay. So, I mean, are we expecting the same amount in the Q3, four? Q3, that is what. There is no one-off. I mean, if you, if you're talking about it- Okay, got it. Got it. It may not be much, you know? Yeah. Thank you. you. Thank you so much. Thank you. The next question is, from the line of Mr. Jai Mundhra. Please go ahead. Hi, sir. Probably the last question. Sir, just a few things. So, you know, given your reputation of a risk manager, maybe, if you can answer, you know, at this point of time, are the risks and business, are they clearly bifurcated to the extent you would have liked? And, you know, is there any... You know, of course, risk management is an ongoing thing, but, how, how satis- or, I mean, if you had a chance to look at the risk mechanism at the bank. So thanks, Jai, for the question. You know, risk management is a difficult thing. And in an institution such as ours, we'd like to be resilient. And which means that we should be in a position to take shocks that come from the external environment. And those shocks are not modelable, i.e., you can't predict when the shock is gonna come. But you need to be able to take those shocks and move forward. And clearly, this organization has been resilient because it's been around for 94 years. So without being resilient, it probably wouldn't have been around now. To be resilient, you need to ensure that event risk is managed appropriately, which means that any event that happens doesn't impact you to such a degree that it causes deep wounds to the organization. To manage event risk, you need a more granular type of book and various asset classes, and hopefully, if possible, non-correlated asset classes as well. Now, it's very hard for a bank to have non-correlated asset classes. But having said that, different asset classes hopefully will behave differently as we go forward. In the current book that we have, we do have a large corporate portfolio, which tends to have larger ticket sizes and is less granular than what I would personally like. But that, but that has behaved well over the last two or three years, and therefore, there's no reason for us to believe that it wouldn't behave as we go forward. But as I said, personally, in order to increase resilience, I would like to build a balanced book, I'm sorry, which is granular in nature of different asset classes that are as less correlated as possible. As I don't know if that answers your question, Jai. Yeah, no, no, it does, partly. Yeah. And sir, secondly, you said that commercial is one where bank is underrepresented. Right. So do you think you need to do some lot more revamp in the process, channel, maybe to incentivize lending with the branch KRA, employee KRA, et cetera? Or you know, think it is, it may not, it will just need a change of focus there. I think a little bit of everything will be required. It's a little early for me to have a view, Jai, on exactly what needs to be done. When I say that we are underrepresented on MSME, I'm saying that we used to have a larger book in the past, which has shrunk now. And obviously, you know, it's, it's an area where the spreads are better and, volatility, while it can be high, but it's at least granular in nature, and you have collateral security to help you tide through tough times. So it's an area we'd like to grow. What we need to do is something that I will come back to you, in the next call. You know, it would be, you know, it would not be right for me to make a comment at this stage, which may be inaccurate. So in the interest of being fully accurate and with full transparency, best that I answer this in the next meeting. Sure, sure. No worries, sir. Thank you so much, and all the best. Thank you very much. Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I now hand over the call to the management for closing comments. Thank you very much, Chintan. Thank you all for taking time to attend this call, and for listening to us very patiently over the hour and 10 minutes that we've been on this call. Many of the questions that you asked were very, very penetrative and interesting, and they give us a lot of ideas as to what we need to look at as we go forward. Thank you once again for being on the call. Thank you once again for taking time to spend time with us. Thank you. Thank you. On behalf of ICICI Securities, this concludes this conference. Thank you for joining us, and you may now disconnect your lines.