AU Small Finance Bank Ltd — Q4 FY26

AU Small Finance Bank Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=112b8t76a8A Published: 2 weeks ago

0:02 2 seconds Ladies and gentlemen, good day and welcome to the AU Small Finance Bank Q4 FY26 earnings conference call. As a 0:10 10 seconds reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation 0:17 17 seconds concludes. Should you need assistance during this conference call, please signal an operator by pressing star and then zero on your touchstone phone. 0:27 27 seconds Please note that this conference is being recorded. I now hand the conference over to Mr. 0:32 32 seconds Prince Dwari, head of investor relations. Thank you and over to you sir. 0:38 38 seconds Thank you Sag and good evening everyone and warm welcome to AU small finance bank's earnings call for the fourth quarter of financial year 202526. 0:47 47 seconds We thank you all for joining us this evening. On today's call from the management we have our founder MD and CEO Mr. Sanjay Vualal, deputy CEO Mr. 0:56 56 seconds Mr. Utamal, executive director and chief credit officer Mr. Vive Praati, our CEO Mr. Yogish Jen, CIO Mr. Ankur Jan, and 1:05 1 minute, 5 seconds our newly appointed CFO Mr. Gorov Jan and the IR team. As we made the announcement today, Mr. Gorov Jan has 1:12 1 minute, 12 seconds been appointed as the CFO of the bank and I take this opportunity to congratulate Gorov on his appointment. 1:18 1 minute, 18 seconds We'll start today's call with a 15 to 20 minute opening remarks from Gorov highlighting the bank's performance, positioning and outlook. We'll then 1:27 1 minute, 27 seconds follow it up with a open a Q&A of 40 to 45 minutes from the participating analysts and investors. For the benefit 1:34 1 minute, 34 seconds of all participants and so that we can take everyone's question, we would humbly request everyone to keep the number of question restricted to two per 1:43 1 minute, 43 seconds participant and join back in the queue in case you have any further questions. 1:47 1 minute, 47 seconds With that, I now request Korov to kindly take us through his opening remarks. 1:53 1 minute, 53 seconds Thank you, Prince. Good evening everyone and thank you for joining the call. It's a pleasure to welcome you all to our earnings call for the fourth quarter of FY26. 2:03 2 minutes, 3 seconds On 19th April, we completed nine years of our banking journey and I would like to take this opportunity to thank all of 2:10 2 minutes, 10 seconds our stakeholders for their continued trust and support. 2:14 2 minutes, 14 seconds As we enter the decadal year of our operations, we continue to focus on our core philosophy of sustainable growth and achieve our long-term objective of 2:22 2 minutes, 22 seconds building a forever bank. Coming to the operational highlights for the quarter. 2:27 2 minutes, 27 seconds Let me start with the operating environment. 2:30 2 minutes, 30 seconds Geopolitical tensions in West Asia continue to weigh on global energy prices, currency market and supply chain elevating overall risk sentiment. 2:40 2 minutes, 40 seconds Indian macro economic environment whilst relatively on a better footing did see volatility across currency yields and 2:48 2 minutes, 48 seconds business sentiment towards the latter half of March. 2:52 2 minutes, 52 seconds As a retail focused bank, we have no meaningful exposure to borrowers directly impacted by trade or supply chain disruptions. However, we remain 3:01 3 minutes, 1 second watchful of the second order effects, particularly fuel prices pass through into inflation, consumption, and credit. 3:09 3 minutes, 9 seconds Amidst this environment, we deliver a strong quarterly performance, helping us to finish the year on a high note. 3:15 3 minutes, 15 seconds Deposits growth remains strong at 10% quarteron quarter and 23% YI versus estimated private sector banking growth of 13%. 3:26 3 minutes, 26 seconds Loan portfolio grew by 8% Q and 21% YI versus estimated private sector banking 3:33 3 minutes, 33 seconds growth of 13%. Secure assets grew by 7% quarteron quarter and 23% yearonear. 3:41 3 minutes, 41 seconds Unsecured businesses also turned around with a 7% quarteronquarter growth led by MFI and personal loans. On a Y basis, unsecured portfolio declined by 1%. 3:54 3 minutes, 54 seconds Margins expended by 24 basis points quarteron quarter to 5.96%. 4:00 4 minutes led by a decline of 12 basis points in cost of funds. Six basis points benefit from lower grow gross slippages and 4:07 4 minutes, 7 seconds higher NPA resolution and around seven basis points seasonal benefit from lower day count in February. 4:15 4 minutes, 15 seconds Cost to assets ratio continues to improve despite ongoing investments in manpower, distribution, branding and technology. 4:24 4 minutes, 24 seconds Excluding CGSMU premium, cost to assets ratio for full year declined by 19 basis points to 4.1% from 4.3% in FY25. 4:35 4 minutes, 35 seconds Including CGFME premium, cost to assets ratio was lower by 16 basis points to 4.2%. 4:42 4 minutes, 42 seconds Asset quality saw continued improvement led by normalization in unsecured portfolio and seasonal seasonal 4:49 4 minutes, 49 seconds improvement in secured assets. Slippages declined by 17% quarteron quarter to 659 4:56 4 minutes, 56 seconds crores leading to G&PA ratio declining by 27 basis points to 2.03%. 5:04 5 minutes, 4 seconds Credit cost for Q4 declined to 0.6% whereas credit cost for full year came at 96 basis points of average assets. 5:13 5 minutes, 13 seconds Credit cost inclusive of CGFMU premium was around 1% of average assets for the full year. 5:20 5 minutes, 20 seconds Profit for the quarter grew by 25% quarteron quarter and 65% yearonear to 5:27 5 minutes, 27 seconds 832 crores with ROA improving to 1.8% for the quarter. Profit after tax for 5:34 5 minutes, 34 seconds the full year grew by 25% to 2,641 cr with ROA improving to 1.6% and ROE at 14.2%. 5:45 5 minutes, 45 seconds Now let me briefly update you on some of our strategic initiatives. First on the universal banking license. 5:52 5 minutes, 52 seconds Pursuant to the bank's request, the RBI has amended the NOFSC requirement which will now apply to the transition 5:59 5 minutes, 59 seconds universal bank only if the bank or its promoter group proposes to establish any group entity in the future. Following 6:06 6 minutes, 6 seconds this amendment, we filed the final license application in March uh 26 and await regulatory approvals. 6:15 6 minutes, 15 seconds Second on the succession planning the board and executive management continue to invest in increasing the leadership depth and we had made certain 6:23 6 minutes, 23 seconds announcements during last quarter in this regard. To further update RBI has approved the extension of our MD and CEO 6:30 6 minutes, 30 seconds Sanjay G's uh tenure for three years till April 2029. 6:36 6 minutes, 36 seconds Our deputy CEO Utam GI completed his term as full-time director in April. He will continue in his capacity as deputy 6:43 6 minutes, 43 seconds CEO leading the bank's retail business vertical and increase his focus on on ground engagement to drive growth 6:51 6 minutes, 51 seconds strengthen customer relationships and expand the bank's presence across newer geographies. 6:57 6 minutes, 57 seconds Our chief credit officer Mr. Vive Pipati has assumed the role of executive director for a term of three years following RBI approval. 7:07 7 minutes, 7 seconds Third on operating efficiency. 7:11 7 minutes, 11 seconds There is a great degree of focus on driving operating efficiency over the medium term through multiple structural interventions. One of the key levers is 7:19 7 minutes, 19 seconds agentic AI which provides an opportunity for us to completely reimagine our customer and employee facing journeys 7:26 7 minutes, 26 seconds and we have systematically integrating agent AI capabilities into our core operations to make it exciting and easier for our customers to bank with us and faster for us to service them. 7:39 7 minutes, 39 seconds We're also realigning our organizational structure by consolidating businesses, eliminating parallel hierarchies and 7:45 7 minutes, 45 seconds reducing redundancy. For example, Agri business is now merged with business banking and home loans and MBL 7:53 7 minutes, 53 seconds businesses have started sharing back-end teams. We're also working to flatten our sales hierarchy, expand managerial span 8:00 8 minutes of control enabled by real-time data visibility. 8:05 8 minutes, 5 seconds While striving these interventions, we continue to invest in scaling our franchise by adding to the sales team, expanding our distribution and investing in our brand. 8:16 8 minutes, 16 seconds Fourth, on our tech initiatives, we are embedding AI decisively into our core operating model. This is not an incremental adoption. It requires us to 8:25 8 minutes, 25 seconds fundamentally reimagine how we operate, scale and serve our customers by delivering superior customer experience, 8:32 8 minutes, 32 seconds higher productivity and scalable growth without proportional increase in cost or headcount. 8:39 8 minutes, 39 seconds Our tech roadmap focuses on adopting an enterprisewide agent AI platform, developing AI use cases on our data 8:47 8 minutes, 47 seconds platform, driving process automation, and lastly keeping our core architecture model. 8:54 8 minutes, 54 seconds First on the agentic AI platform, we have implemented a deter deterministic rule-driven agentic AI platform built 9:01 9 minutes, 1 second for high speeded personalized customer engagement with full end-to-end traceability and auditability 9:08 9 minutes, 8 seconds by removing the friction of fixed digital workflows. This platform empowers our team to serve our customers needs more effectively and expand 9:16 9 minutes, 16 seconds product reach at lower cost. Our first AI native loan origination system built on this platform went live last week for 9:25 9 minutes, 25 seconds our gold loan business. We're now actively expanding this agent platform to mortgages, commercial banking, 9:32 9 minutes, 32 seconds wheels, personal loan and credit card loss journeys. 9:37 9 minutes, 37 seconds In parallel, we are building a model agnostic multilingual platform for customer service, enabling deeper customer understanding, end-to-end lead 9:45 9 minutes, 45 seconds management, and enhanced crossale efficiency. 9:49 9 minutes, 49 seconds To sustain and scale this transformation, we establishing a center of excellence bringing together internal talent, global partners and cutting edge 9:57 9 minutes, 57 seconds capabilities to identify and implement AI use cases across the bank. 10:03 10 minutes, 3 seconds Second key initiative on the tech side is around data engineering and AI based analytics use cases. The bank has built 10:11 10 minutes, 11 seconds a unified data platform wherein most MIS and dashboards have migrated to this automated platform and our internal 10:18 10 minutes, 18 seconds meetings are in increasingly being conducted leveraging this platform improving timelines and decision- making. 10:27 10 minutes, 27 seconds Building on this foundation we are deploying AI and ML across credit underwriting, fraud decisioning, collections and customer service. 10:36 10 minutes, 36 seconds Multiple credit underwriting scorecards for new to bank and existing to bank customers are live for credit cards and personal loan enabling rapid decisioning. 10:46 10 minutes, 46 seconds Scorecards for personal cars, taxi, small CV and vehicle refinance are under development on AML monitoring. 10:54 10 minutes, 54 seconds Approximately 60% of alerts are reviewed and resolved through AI based models with the majority identified as false 11:01 11 minutes, 1 second positives within acceptable risk thresholds. 11:06 11 minutes, 6 seconds Beyond dashboards and analytical models, a customer 360 view and customer level profitability model covering both retail 11:13 11 minutes, 13 seconds and commercial customers has been built to facilitate cross-ell and faster decisioning. 11:20 11 minutes, 20 seconds Now we are adding AI layer on top of this data platform which can be used for querying any business KPI dynamically by just writing prompts in plain English. 11:31 11 minutes, 31 seconds Our AIdriven corrections bot is live improving engagement and resolution speed. On customer service, inbound calling was launched as the bank's first AI initiative across multiple languages. 11:43 11 minutes, 43 seconds Outbound AIE campaigns are underway across businesses with a target to scale up to 25% of total calls over the next two quarters. 11:52 11 minutes, 52 seconds The third area of focus is technology transformation and automation. On the customerf facing side, our 0101 retail 12:00 12 minutes app has been revamped with a more intuitive customizable interface. Our website has also been refreshed this 12:07 12 minutes, 7 seconds quarter. On the asset side, our business runs entirely on Salesforce LOS. 12:13 12 minutes, 13 seconds Personal loans are now live on the same platform and credit cards will follow shortly. 12:19 12 minutes, 19 seconds On liabilities, our branch banking account opening journeys are are now fully STP with cross cell embedded natively within onboarding process. On 12:28 12 minutes, 28 seconds HR, we have migrated to Darbox and consolidating our HRMS, employee help desk and internal communications on a 12:35 12 minutes, 35 seconds single platform. Across back office functions, we are migrating to a workflow-based operating model with over 12:42 12 minutes, 42 seconds 10 workflows being built across audit, RIF, IT, compliance, and secretarial functions. reducing email dependency and strengthening audit trail. 12:53 12 minutes, 53 seconds Lastly, to update on our core architecture, migration of Finare's core banking system was completed in April. 13:00 13 minutes With this, the integration of Finare into AU is complete. 13:04 13 minutes, 4 seconds Now, let me give some color on each of our businesses. 13:08 13 minutes, 8 seconds Our deposit base now stands at 1.52 lakh cring by 10% quarter on quartarter and 23% yi. 13:18 13 minutes, 18 seconds Kasa deposits grew by 9% quarter on quarter and 20% yearonear with kasa ratio broadly stable at 28%. 13:27 13 minutes, 27 seconds Our deposit strategy is anchored on three pillars granularity, stability and cost of funds. On granularity, we 13:34 13 minutes, 34 seconds continue to grow our branch banking deposit book, which constitutes around 60% over the overall deposits. Newcastle 13:42 13 minutes, 42 seconds account acquisition for FY26 grew by 62% yearonear, crossing the milestone of 1 lakh monthly acquisition in December, a run rate which we have since maintained. 13:54 13 minutes, 54 seconds Strengthening and scaling our deposit franchise remains one of our top focus areas. We are opening 80 to 100 newer 14:01 14 minutes, 1 second branches every year, investing in our brand and expect significant benefits to acrew over time from the anticipated transition to universal banking license. 14:12 14 minutes, 12 seconds On stability, our focus within wholesale deposits has been on non-qualible deposits in order to strengthen our 14:19 14 minutes, 19 seconds resilience. Total stable deposits which includes CASA retail and non-coliverable 14:25 14 minutes, 25 seconds wholesale term deposits was stable at 79%. 14:31 14 minutes, 31 seconds On cost of funds, we saw meaningful improvement. Fullear cost of funds declined by 32 basis points year to 6.75% versus 7.07% in FY25. 14:43 14 minutes, 43 seconds Q4 cost of funds was at 6.49% down by 12 basis points during the quarter. Our 14:51 14 minutes, 51 seconds average LCR for the quarter was stable at 119% versus 118% last quarter. Also, 14:58 14 minutes, 58 seconds the bank carried 15% additional liquidity in the form of nonLCR investments. 15:06 15 minutes, 6 seconds Now moving on to our assets franchise. 15:09 15 minutes, 9 seconds Retail secured assets which includes wheels, mortgages and gold loan formed 66% of our portfolio and grew robustly 15:17 15 minutes, 17 seconds at 21% yearon year. Within retail, our wheels book grew by 27% yearonear to 15:24 15 minutes, 24 seconds reach approximately 46,400 crores driven by improving affordability across segments. 15:31 15 minutes, 31 seconds Go loan business has doubled this year from a low base to reach approximately 4,000 crores. Our mortgages business 15:38 15 minutes, 38 seconds comprising micro business loan and affordable housing grew by 11% yearon-year to to approximately 42,400 15:46 15 minutes, 46 seconds crores in a highly competitive market warranting discipline pricing and underwriting. 15:53 15 minutes, 53 seconds Increasing growth rate in this business remains a key focus area and we're working to increase our productivity in newer geographies like Andra, Karnataka, Telangana, Tamil Nadu and UP. 16:06 16 minutes, 6 seconds It's important to note that in the last two years we have nearly doubled our retail asset distribution to about 900 to 1,000 branches for each of our retail 16:15 16 minutes, 15 seconds secured businesses. This expanded distribution is expected to support growth over the next few years. Moving 16:23 16 minutes, 23 seconds on to commercial banking. Commercial banking forms 22% of our lending business and grew by 29% yearonear and 16:31 16 minutes, 31 seconds 12% quarteron quarter to reach around 31,000 crores with an additional lawn fund based book of approximately 11,000 crores. 16:41 16 minutes, 41 seconds We have carved out renewable energy as a dedicated dedicated dedicated segment within commercial banking reflecting opportunity in this space. 16:52 16 minutes, 52 seconds A strategic priority for commercial banking is self-sufficiency on funding. 16:57 16 minutes, 57 seconds Currently, commercial banking sources approximately 56% of their funding requirements. 17:02 17 minutes, 2 seconds Combined with transa transaction banking and CMS, our intent is to progressively run this as a full fully self-funded business. A model that strengthens both 17:11 17 minutes, 11 seconds margin resilience and customer stickiness. Now moving on to unsecured businesses. 17:17 17 minutes, 17 seconds Our inclusive banking franchise which primary primarily includes MFI saw a strong sequential growth of 8%. 17:26 17 minutes, 26 seconds Non-overdue collection efficiency in MFI has normalized to 99.7% for the current quarter compared to 99.3% for the previous quarter. 17:37 17 minutes, 37 seconds 92% of the MFI book is now covered under the CGFMU guarantee scheme. Our digital unsecured portfolio comprising credit 17:46 17 minutes, 46 seconds cards and personal loans grew by 4% quarter on quarter. Personal loans portfolio witnessed a resumption in 17:53 17 minutes, 53 seconds growth this quarter with a healthy 19% sequential increase from a low base. 17:58 17 minutes, 58 seconds Credit card business broadly stabilized this quarter after nearly five quarters of degrowth and should start seeing gradual growth going forward. 18:07 18 minutes, 7 seconds Moving on to P&L, our profit after tax for Q4 grew by 25% quarteron quarter and 18:14 18 minutes, 14 seconds 65% yearonear to 832 crores with ROA of 1.8%. 18:20 18 minutes, 20 seconds For the full year, profit after tax increased by 25% yearonear to 2,641 crores with ROA of 1.6%. 18:31 18 minutes, 31 seconds Net interest income increased by 10% quarteron quarter on the back of strong growth in loan portfolio. Lower cost of 18:38 18 minutes, 38 seconds funds and seasonally strong margins in the quarter. Full year NI growth was at 14%. 18:45 18 minutes, 45 seconds Core other income saw 7% quarteron-quarter growth driven by higher business volumes. Full year core other uh full year core other income growth was at 13%. 18:57 18 minutes, 57 seconds Operating expenses for Q4 increased by 6% quarteron quarter, primarily reflecting higher business volumes. 19:06 19 minutes, 6 seconds Provisions were down 19% quarteron quarter on account of normalization in unsecured businesses and seasonal recovery in secured assets. 19:16 19 minutes, 16 seconds Pulia provisions were also down 10%. The board of directors has recommended a dividend of rupees 1 per share for FY26 subject to requisite approvals. 19:29 19 minutes, 29 seconds To conclude, FY26 has been a year of disciplined consistent execution true to our long-term vision of building a 19:37 19 minutes, 37 seconds forever bank. Our priorities remain unchanged. growing our core core asset franchises, scaling liabilities 19:45 19 minutes, 45 seconds franchise and driving structural efficiency through AI and technology. We enter the next phase as a stronger, more 19:53 19 minutes, 53 seconds diversified and more efficient institution with products, technology, distribution and people all firmly in place. 20:02 20 minutes, 2 seconds We are inducting AI in our core operating model which can lead to a complete reimagination of our customer journeys and provide a sustainable 20:10 20 minutes, 10 seconds operating leverage over the coming years. We believe our franchise is capable of sustainably compounding at two to two and a half times of India's 20:18 20 minutes, 18 seconds nominal GDP growth rate delivering consistent predictable and long-term value to our shareholders. I thank our 20:26 20 minutes, 26 seconds teams for their dedication and all our stakeholders for their continued trust. 20:30 20 minutes, 30 seconds With that I will now hand over to Prince for Q&A. Thanks Gorov. Uh we can open the call for Q&A. 20:39 20 minutes, 39 seconds Perfect. Thank you. 20:41 20 minutes, 41 seconds We will now begin with the question and answers session. Anyone who wishes to ask a question may press star and then one on the other phone. If you wish to 20:50 20 minutes, 50 seconds remove yourself from the question queue, you may press star and then two. 20:55 20 minutes, 55 seconds Participants are requested to use handsets while asking a question. 21:00 21 minutes Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press star and then one. 21:16 21 minutes, 16 seconds Our first question comes from the line of Res from ICICI. Please go ahead. Uh yeah. Hi sir. 21:24 21 minutes, 24 seconds Uh just two things. one on this contingency provision creation of 21 cr day in Q4. Uh so you have mentioned that 21:33 21 minutes, 33 seconds we have built this towards some specific accounts. Uh can you share some more details around this account like you 21:40 21 minutes, 40 seconds know what segment BFC registrate commercial banking or maybe what is the aggregate exposure at bank level and 21:48 21 minutes, 48 seconds that's my first question here. 21:55 21 minutes, 55 seconds Yeah, this is these are normal uh you know these are not some high value specific cases. These are normal business banking working capital cases. We assess the 22:04 22 minutes, 4 seconds risk you know assuming that uh the uh risk assessment whether what amount is covered through our uh security and 22:12 22 minutes, 12 seconds other thing uh through recommendation has been provided. So there's nothing specific to it, right? 22:18 22 minutes, 18 seconds Okay. No, because in PPD basically just basically internal risk assessment. Uh okay. 22:24 22 minutes, 24 seconds Yeah. I mean there will be like number of accounts not maybe two three accounts. 22:32 22 minutes, 32 seconds Yeah. Yeah. These are like under account this is the risk assessment we just 22:39 22 minutes, 39 seconds got it. Got it. uh and my second question is on you know behind hiking 22:46 22 minutes, 46 seconds interest rate uh in account and KD of the industry. So are we uh experiencing 22:53 22 minutes, 53 seconds some challenges in raising in deposit or it is that we anticipate growth going ahead and to maintain ratio maybe we are 23:01 23 minutes, 1 second hiking this uh rates to remain competitive. 23:06 23 minutes, 6 seconds Yeah. Hi Sanjay. So you know in terms of liability you know u we are not focusing 23:12 23 minutes, 12 seconds on one one data point or you know one way of building it up right it is it is a combination of uh three four variables 23:21 23 minutes, 21 seconds like you know one is how much you want to raise the cost of money you know how you want to play your kasa how you want to play our retail versus wholesale you 23:30 23 minutes, 30 seconds know the overall CD ratio but if you see our whole last year performance you know our kasa remains stable it is around 28 29% %. Our stable money is around 80%. 23:40 23 minutes, 40 seconds Our cost of money, you know, we we were anticipating, you know, maybe a drop of only 15 to 20 bips, but we actually 23:47 23 minutes, 47 seconds dropped it by around 20 22 32% 32 bips, right? Our ALM is perfect match, you 23:55 23 minutes, 55 seconds know. So, if you ask me, I think we want to play it like this only this year too, you know, and it's in every month 24:02 24 minutes, 2 seconds working, you know. uh you can't predict you know you can't have a specific one rule for entire year right there's elco 24:09 24 minutes, 9 seconds at every end you know and there's a two month RBI monetary so so we need we need to play with the environment and but 24:17 24 minutes, 17 seconds focus will remain on two three things one we want to build a very stable liability franchise the focus of bank is 24:24 24 minutes, 24 seconds entirely on that be it uh you know uh the quantity the quality you know and and we I'm very happy that being an SFB 24:33 24 minutes, 33 seconds you know we don't have a right to win so much but still the the team is doing phenomenally good job you know they are 24:40 24 minutes, 40 seconds building it uh quality quantity overall cost of money you know so we are not playing a profit uh game right you need 24:48 24 minutes, 48 seconds to build it somehow somewhere right so I I would say that our 9-year-old journey has taught us that liability is their 24:56 24 minutes, 56 seconds day-to-day business right and we need to play every day got it got it Okay. So there is no uh 25:02 25 minutes, 2 seconds let us say a structural trend one should assume uh you know based on this it is nothing. 25:11 25 minutes, 11 seconds No no no I I believe we need to play every day. We need to build it every day and uh the more deeper we are going into 25:18 25 minutes, 18 seconds a banking franchise more stable and more predictable we are now. Got it. Got it. Okay. 25:26 25 minutes, 26 seconds Thank you and better. Yeah. Thank you. 25:30 25 minutes, 30 seconds Thank you. Your next question comes from the line of Kunal Sha from City Group. Please go ahead. 25:37 25 minutes, 37 seconds Yeah. Uh thanks and uh congratulations for good set of numbers. Uh so uh firstly with respect to our we are 25:44 25 minutes, 44 seconds almost at 1.8% now on exit level. So what would be the focus? Maybe would we still uh try to drive it up further or 25:54 25 minutes, 54 seconds sustenance of that will be critical and what would be the levers available to drive it? No doubt there would be some levers on opex but would it get offset 26:01 26 minutes, 1 second by the uh other measures and we will just try to sustain it at 1.8 26:09 26 minutes, 9 seconds so so canal obviously you know uh we know that Q4 is always seasonally strong right so that 1.8% 8% also uh you know 26:17 26 minutes, 17 seconds reflect that strong seasonality u you know our goal would be to maintain this ROA or achieve this ROA on a 26:26 26 minutes, 26 seconds fullear basis for next year and u and you know the the levers on that clearly you know as we mentioned earlier as well 26:35 26 minutes, 35 seconds we're doing a lot of work on our operating efficiency so we should see continued uh improvements year on year 26:43 26 minutes, 43 seconds on the opex to assets ratio. So that's one. Second is uh you know we are coming out of some 26:51 26 minutes, 51 seconds targeted level sorry any targeted no no so there's no target I'm just giving you uh you know directionally 26:59 26 minutes, 59 seconds what we are working on it's difficult to guide you on a line by line basis on on the ROA tree uh and second is on the 27:07 27 minutes, 7 seconds credit cost uh front right as you know we are coming out of somewhat of a you know crisis in MFI and the uh credit 27:16 27 minutes, 16 seconds cost has normalized ized. Uh similarly in the credit card business as well the credit cost is normalizing. So we expect 27:24 27 minutes, 24 seconds on a full year basis next year these two uh things in particular to drive our cost uh credit cost lower than the full 27:31 27 minutes, 31 seconds year uh in the current year. Right? So I think these are the two uh levers to watch out for next year and we'll see how we perform against these two. 27:41 27 minutes, 41 seconds Sure. And uh on margins you've indicated some break up uh uh with respect to uh 27:48 27 minutes, 48 seconds uh to what you mentioned say six uh six bis benefit because of the lower slippages and seven due to lower uh uh 27:56 27 minutes, 56 seconds uh day count. Uh so but there is element of it refund as well as well as some recoveries which is indicated in that uh 28:04 28 minutes, 4 seconds paragraph. So how much if you can quantify that because there would be some pressure on ease as well as so so I think on this side right so 28:13 28 minutes, 13 seconds there was some it refund I would not say that was material to the overall movement it helped by a tiny bit but 28:19 28 minutes, 19 seconds nothing specific to call out there uh but in terms of you know overall uh outlook on on the margin 28:28 28 minutes, 28 seconds um you know we've seen sort of uh you know strong improvement in our cost of funds continuing for the last two quarters But with this rate increase we have 28:37 28 minutes, 37 seconds taken we think you know cost of funds may have may have bottomed right and some of the seasonal factors which I spoke about uh which were there uh in 28:46 28 minutes, 46 seconds this quarter won't be there for uh the next quarter or two right so so I think to that extent there will be an impact on on margin 28:54 28 minutes, 54 seconds got it perfect yeah thanks and all the best thanks thank you thank you your next question comes from 29:03 29 minutes, 3 seconds the line of mitaral from Modila Los ahead. Hello. Yeah. Hi. Uh good evening. 29:12 29 minutes, 12 seconds Congratulations on strong performance. 29:17 29 minutes, 17 seconds So I have two questions. One is on the technology like we have spent a good time on technological progress that the bank is building including investments 29:24 29 minutes, 24 seconds in Gen AI, authentic AI. How do you see this translate into our business volumes and what kind of cost ratios um will you 29:33 29 minutes, 33 seconds now target over the next 20 years as the bank transitions to the bank? 29:38 29 minutes, 38 seconds Yeah. So second question yeah no second is I have more on similar lines like because as an SSB the range 29:47 29 minutes, 47 seconds on crosses is generally like very tight and it's very narrow across the banks or most are like operating around 850s to 29:54 29 minutes, 54 seconds somewhere in 30s and but as a universal bank the range is very vast there are banks of below 40 or so and so where 30:03 30 minutes, 3 seconds like which generally has been different class on any parameters as an SB How will you want to position yourself 30:10 30 minutes, 10 seconds on on cost is now uh as you undertake this transformation? 30:16 30 minutes, 16 seconds Nothing. So, so let me answer first you know. So I think why we have given you 30:21 30 minutes, 21 seconds the more elaborate uh you know uh uh I think description from in our uh uh 30:29 30 minutes, 29 seconds presentation and of course by our CFO Goro because we are investing lot in our tech you know and you know about that we 30:37 30 minutes, 37 seconds have around seven eight asset classes we need to build our liability franchise we want to build it pan India you know and 30:44 30 minutes, 44 seconds there is lot of challenge in terms of language in terms of making everybody understand product process you know and 30:51 30 minutes, 51 seconds making everybody align with one goal you know uh when you want to become a pan India franchise something need to be stitching everybody right and we believe 31:00 31 minutes at AU that tech is that medium that you know that can connect you know all our 60c people with all the diversity on the 31:07 31 minutes, 7 seconds ground you know be it product be it uh distribution channel uh you know uh the the processes the policy you know so 31:16 31 minutes, 16 seconds there is lot of friction honestly you know you might want to do lot many things from top but you can't do it on the ground because it's very very very 31:24 31 minutes, 24 seconds highly I would say friction at every level so I think now tech is actually solving it you know uh much has been 31:32 31 minutes, 32 seconds solved over the years but I think now AI is really helping us lot into that and we are not saying that AI is only will 31:39 31 minutes, 39 seconds be helping us in backend automation or backend processes or backend policies you know all those things we want to take it to the front end you know and 31:48 31 minutes, 48 seconds I'm so happy to uh say you all that we have launched our first AIEL loss in gold loans and we actually have uh you 31:56 31 minutes, 56 seconds know given two three loans on Saturday today also which is a 5 10 minute journey frictionless right so we believe 32:04 32 minutes, 4 seconds that AI will allow us to connect with people internally and externally seamlessly their own comfort language 32:12 32 minutes, 12 seconds you know so in my opinion if you if there is a even a 10th class uh employee you know they can also be given job and 32:21 32 minutes, 21 seconds with the help of AI tools uh in their hand they can be as productive as anybody else you know on the ground 32:28 32 minutes, 28 seconds because AI will be doing lot you know as the main uh I would say communicating with the customer and the boy will be 32:36 32 minutes, 36 seconds only doing the necessary things you know so we want to invest lot on those things and and I'm not able to imagine that 32:44 32 minutes, 44 seconds what kind of cost uh reduction that AI will do us because uh it's a very early stage but you know if you ask me uh 32:53 32 minutes, 53 seconds being an uh uh I would say retail physical oriented franchise where the cost would always be high I think AI 33:02 33 minutes, 2 seconds will help us in two two sides one our productivity will go up our channel distribution can go up our scale 33:10 33 minutes, 10 seconds management will be lesser in terms of risk and all those things so eventually the cost will get addressed right but uh 33:18 33 minutes, 18 seconds to get to some number is difficult in this call uh maybe down the line one year you we will able to figure out that 33:27 33 minutes, 27 seconds you know how much it will help us but there is a clearcut advantage uh to the franchise then we do AI 33:36 33 minutes, 36 seconds acquisition or AI assistance in in so many cases uh then I'm seeing clear clear differentiation in times to 33:45 33 minutes, 45 seconds And I don't want to say that EU will be the first AI native bank but we want to be in that category you know and we'll 33:52 33 minutes, 52 seconds put lot of focus money people to achieve that you know so but I'm sorry you know it's not able to build it around cost 34:00 34 minutes but overall the focus on cost is is huge if you ask me uh you know we have gone 34:07 34 minutes, 7 seconds from 4.3 to 4.1 in this year itself you know I believe uh next year you know this current financial year we should be 34:15 34 minutes, 15 seconds lower than 4%. you know so this will be done organically right but if you want to disrupt it I think it has to be 34:22 34 minutes, 22 seconds techdriven you know and that we are on the course and I believe u you know because once you get about the the the 34:30 34 minutes, 30 seconds the universal and other banks the scale is very different you know so I can't compare myself to the level of 2 and a 34:37 34 minutes, 37 seconds half or 2% kind of uh you know uh the expense on the asset you know rather I would would say that the first benchmark 34:45 34 minutes, 45 seconds should be that can I do around 3.5 you know and and that in three to four three to five years right so but I think you know it's so difficult to reduce your 34:54 34 minutes, 54 seconds cost you know somehow but I think the tech is is able to give us that hope that if you start building it more on 35:02 35 minutes, 2 seconds tech you know and and allow people to work on tech you know this can be achievable you know faster than what we are projecting in this call also 35:11 35 minutes, 11 seconds don't Adam something no I I think I think you've captured it all right Yeah. 35:18 35 minutes, 18 seconds Yeah. Thank you Sanji for such an uh detailed answer and very good credit that you provided on it. And uh the one 35:26 35 minutes, 26 seconds more question that I have is around uh asset quality. U it's very heartening to see that the bank has delivered 1.8 8 35:32 35 minutes, 32 seconds what it guided for FI27 right in in the fourth quarter itself and uh uh but from here now u looking at how the asset 35:41 35 minutes, 41 seconds quality is is shipping up this quarter was particularly very strong should we benchmark our estimates around uh credit 35:48 35 minutes, 48 seconds cost basis this quarter number because if I look back we used to like have much lower credit cost versus what we have seen in this year and now we are 35:56 35 minutes, 56 seconds approaching closer to that number in 4Q now so should let two three disclosures or I want to 36:04 36 minutes, 4 seconds say having very well articulated that this is a seasonal quarter always quarter 4 36:12 36 minutes, 12 seconds remains very strong for in every sense I would advise anybody that you should actually build a this quarter credit 36:19 36 minutes, 19 seconds cost as an overall cost for next year you know uh and uh if you ask me uh you 36:26 36 minutes, 26 seconds should build it around 90 pips or maybe in that range so that you know which allows franchi to to have some kind of risk takingaking capability. You know we 36:35 36 minutes, 35 seconds want to write we want to uh drive too tight in terms of uh credit cost estimation and in in in the in the in 36:42 36 minutes, 42 seconds the in the field in the market which we operate it is it is not good for the organization right because we need to take risk in our in our market in our uh 36:51 36 minutes, 51 seconds business so I would say know build it around 0.90 if you save something it's all of us to share you know and uh I 36:59 36 minutes, 59 seconds don't think that 1.8 eight this quarter uh ROA should be also should be seen as the permanent ROA because there are 37:07 37 minutes, 7 seconds external challenges which we all know about it but I think at AU missing we are building it as foundation where we 37:14 37 minutes, 14 seconds can build a long-term very solid franchise you know be it people be it distribution channel geography products 37:22 37 minutes, 22 seconds you know we are investing in every every side of the business you know and you've seen how how we are building our tech stack also but I can tell you that AU 37:31 37 minutes, 31 seconds will be very sustainable in their in their uh results you know because we are working on lot of inputs you know and uh 37:40 37 minutes, 40 seconds I think this year is our 10th year of our working and I already said you maybe a couple of years back that it takes around 10 years to build a very strong 37:48 37 minutes, 48 seconds foundation and there's a lot of learnings coming up you know uh from last maybe couple of years so we are taking every learning uh to really build 37:57 37 minutes, 57 seconds AU a very in a sustainable franchise Right and I'm very happy that the way the team is you know taking the ownership team team is learning and 38:05 38 minutes, 5 seconds building it up so beautifully you know so I believe that you know uh you people should not judge us from our this 38:14 38 minutes, 14 seconds quarter number I think if you see the whole year number and and and last two year number I think we remain very strong in our performances 38:23 38 minutes, 23 seconds right right got it got it thank you so much and wish you all the best yeah thank thank 38:30 38 minutes, 30 seconds Thank you. Your next question comes from the line of Jiant Karote from Access Capital. Please go ahead. 38:37 38 minutes, 37 seconds Uh thank you for the opportunity. First of all, congratulations uh on a great set of members. Uh first thing on the credit cost. 38:46 38 minutes, 46 seconds Uh we also have RBI norms coming through this week. So any impact on steady state credit cost for us given the entire book 38:55 38 minutes, 55 seconds experience uh in recent years since we are growing that book again. So in regards to the 90 bits guidance uh how 39:04 39 minutes, 4 seconds should that look with the new ECL guidelines guideline has just came in right and we haven't 39:12 39 minutes, 12 seconds it's exactly the same it's exactly the same old draft and I'm so sorry to to give any any guidance around it you know you have to 39:20 39 minutes, 20 seconds take us give us some time and I've been told that uh we as SMB is not covered under that ECA program is right 39:28 39 minutes, 28 seconds yeah I know I was talking after you transition to so let us let us become to that but I don't think you know of course V is on 39:36 39 minutes, 36 seconds the call you know V can you comment on that no sir uh then it's too too early to comment on it uh let us understand 39:45 39 minutes, 45 seconds that right uh you need to understand just one underlying factor that 90% is 39:52 39 minutes, 52 seconds our retail secured asset plus retail I would say secured commercial banking group so it has a very different 39:59 39 minutes, 59 seconds connotation to it. uh any any uh guideline or any uh credit cost calculation would eventually work on the 40:07 40 minutes, 7 seconds uh logs given default and you know uh probability of default right so for us law given default in retail asset has always been low I just want to give back 40:16 40 minutes, 16 seconds credit and MFI is 100% of my incremental book is covered in senior view and 90 as 40:26 40 minutes, 26 seconds we speak 92 close to 92% book is covered uh you know So to that extent right any 40:32 40 minutes, 32 seconds guideline uh even the draft guideline had this provision that any government coverage would continue to get benefited out of it right. 40:41 40 minutes, 41 seconds Yeah. 40:43 40 minutes, 43 seconds Uh thank you. Second question was regards to the geographical uh liability expansion so to say uh next two two 40:52 40 minutes, 52 seconds years as we transition to university bank. I do understand on the asset side you have some focus areas in the south. 40:58 40 minutes, 58 seconds uh if you can help us understand what would be your strategy on liability geographically. I do see some higher contribution from markets like UPA. 41:09 41 minutes, 9 seconds So how why would their asset side not match up equally? I mean just trying to understand the strategy. 41:16 41 minutes, 16 seconds No. So I think uh if you ask me uh the the most important strategy which we work on daily basis 41:25 41 minutes, 25 seconds u or maybe in exhibition or any meeting or any reviews around library franchise and uh and I think you you would have 41:33 41 minutes, 33 seconds seen that you know at this level also without having a right to win in those markets you know we are able to grow our 41:40 41 minutes, 40 seconds liability franchise this year too by 23%. Right? And if you ask me you know we have all the uh faces there you know 41:49 41 minutes, 49 seconds it's retail bank which is around uh 60% of overall deposit franchise then we have a government business and the property bank then we have a 41:57 41 minutes, 57 seconds commercialled uh deposits then we have a fake then we have a CDS you know then a treasury led deposits you know so all are if you ask me internally we know 42:06 42 minutes, 6 seconds that all are building up very nicely and the focus remain to build all four five CCF solid liability franchise so that 42:15 42 minutes, 15 seconds you know uh we don't miss anything right retail franchise also there is sub sector line and our there is task you 42:23 42 minutes, 23 seconds know there is special markets you know and we are building all product line all channel you know and and nowadays we are 42:30 42 minutes, 30 seconds also focusing to cross-ell more as the franchise is becoming more mature and immature you know as of now our liability franchise is not talking to 42:38 42 minutes, 38 seconds the asset franchise largely so we want that to happen from this year onwards So that uh uh when we acquire a liability 42:46 42 minutes, 46 seconds customer it's not only a one transactional right it is more relationship right and we want to become a pan India franchise we have want to 42:53 42 minutes, 53 seconds open around 800 branches every year we want to build a brand uh around it once we become universal you know then the 43:01 43 minutes, 1 second then the whole I would say the uh the value of franchi will go up you know the people will understand us more and more 43:09 43 minutes, 9 seconds our visibility will move more more and more so I this year or maybe the next year we'll have a double down approach where we 43:17 43 minutes, 17 seconds want to build it you know more faster more granular you know more impactful you know and and I can assure everybody 43:24 43 minutes, 24 seconds here that uh we became to build a liability franchise right we know that we have a strength in our assets you 43:31 43 minutes, 31 seconds know but our our our our core uh expertise or core leadership or core 43:38 43 minutes, 38 seconds acceptance of our as individual is around our leadership are a liability franchise you know so you will see us 43:45 43 minutes, 45 seconds more and more visible in times to come p than India you know and I'm I'm I'm sure that you know uh being so successful on 43:52 43 minutes, 52 seconds SAP platform you know if you want if you want a on a better platform you know our performance will be far far better 44:00 44 minutes I'm safe to assume sir since you're building this franchise we shouldn't be building a rate cut on the SD side at least in 44:09 44 minutes, 9 seconds sorry sorry rate cut on the piping of deposits. Since we are in the buildout phase, we should assume that we are comfortable here or is there any more uh 44:18 44 minutes, 18 seconds opportunities on the STD cuts that you see in the next two three quarters? 44:22 44 minutes, 22 seconds Uh I can't tell you any guidelines around it as I already commented uh in my earlier uh answer that uh liability 44:31 44 minutes, 31 seconds franchise at our level at our franchise is a daily business. You know we have to take the convergence of of market or 44:40 44 minutes, 40 seconds reality on a day-to-day basis. We have ELCO every month right and there we take decision that how much we can go up how 44:48 44 minutes, 48 seconds much we can go down you know which sector you want to build you know which how much you want to build it you know so it's very operational in my opinion 44:57 44 minutes, 57 seconds so but if you see the overall result this year too you know our cost of money has gone down by 32 pips our kasa is 45:05 45 minutes, 5 seconds around 29 28 you know our retail and stable money is around 70% our LCR is around 118% you know So we remain so 45:13 45 minutes, 13 seconds well in in all match sales right and so idea is to not to have one side or two side to remain very holistic in our liability buildup. 45:23 45 minutes, 23 seconds Definitely sir once again on a great number and all the benefits all the Thank you. Thank you and 45:30 45 minutes, 30 seconds thank you. The next question comes from the line of Pesh Kum from Dam Capital Advisers. Please go ahead. 45:38 45 minutes, 38 seconds Hi uh good evening team. Congrats on a great set of numbers. A few questions uh is on the asset quality side. So as we 45:46 45 minutes, 46 seconds have now uh come out from the asset quality cycle uh how are we looking to send in the residual uh asset quality 45:54 45 minutes, 54 seconds metrics like PCR contingency provisions and ACL as we go along 46:03 46 minutes, 3 seconds I think uh you know uh if you look at our Q4 numbers it will tell you the exact story we we've always been very 46:12 46 minutes, 12 seconds very strong on retail assets commercializ you know assets have been rainbound large part of that was coming from our unsecured piece which was 46:20 46 minutes, 20 seconds credit card and MFI. Now both businesses are settling down right and and and the you know I would say obviously there was 46:28 46 minutes, 28 seconds a seasonality impact but overall uh you know things looks very different right from the days where these two portfolio 46:35 46 minutes, 35 seconds had a bit of a stress right so from and PCR is not a defined number it goes by 46:42 46 minutes, 42 seconds the provisioning policy there is no change in the provisioning policy right and the ECL guideline as it would come 46:50 46 minutes, 50 seconds and we need to follow from first uh you know April 2027 obviously uh some of it 46:58 46 minutes, 58 seconds uh you know will have a uh impact on stage one stage two but uh then your accelerated provisioning at stage three 47:05 47 minutes, 5 seconds might get released so that working is yet to be done right I'm saying that you know the precise uh what are the final 47:13 47 minutes, 13 seconds guideline the underlying that's very difficult to commend at this point in time we need to go through it we need to put it in our model and we need to perfect our model first right and then 47:21 47 minutes, 21 seconds we'll be able to commend it. But to add on to uh Vive you know we have the 47:28 47 minutes, 28 seconds provision policy but uh at every quarter you know the risk committee meets and assess the any uh you know more 47:37 47 minutes, 37 seconds provision they require. So this time also if you really see our uh PCR you know which if you take the credit 47:46 47 minutes, 46 seconds guarantee book out of it you know then we around 70% right. So I believe uh you should see us there only and I can 47:54 47 minutes, 54 seconds assure everybody on the call that our focus always remain uh to to to secure any kind of probable loss through this PCR. 48:04 48 minutes, 4 seconds So that is there you know what what was the other number? 48:10 48 minutes, 10 seconds Oh yeah please. Yeah. Uh the second question was uh SA just wanted to understand uh the philosophy 48:19 48 minutes, 19 seconds for the approach on home loans from law it's been um mostly flagged for some time now. Uh will we focus on asset 48:26 48 minutes, 26 seconds duration than M in the next few years or anything on that? 48:32 48 minutes, 32 seconds Home loans. So home loan you know honestly they are doing more affordable right and uh they are I would say again 48:40 48 minutes, 40 seconds I think in last call also or a call before I highlighted that that market has become too competitive and every new 48:48 48 minutes, 48 seconds NBFC or HFC is coming and building their book there only and I don't think that now there is a riskreward left there 48:57 48 minutes, 57 seconds right so we are not going irrationally and we don't want to just do it to build up have growth there you know because we 49:04 49 minutes, 4 seconds have not much to on table to really grow so let's not look for one data point you know because we actually said that we 49:12 49 minutes, 12 seconds want to grow around two times or maybe 2.25 25 or 2.5 from the nominal GDP and which will be clearly delivered right so 49:20 49 minutes, 20 seconds so it will be always like this there you know some book will be growing some book won't be you know but overall you know we know that we are very divers 49:29 49 minutes, 29 seconds diversified ourselves in asset classes you know and uh and we want to play a riskreward game every every year and 49:36 49 minutes, 36 seconds whenever we feel that it's better to go with this book we want to double down there and whether and we feel that this is not the right time to push this book. 49:46 49 minutes, 46 seconds We don't want to do that. Right? So I think you have to see us that overall our growth is protected which we are 49:53 49 minutes, 53 seconds promising. Right? And but we'll play around uh wherever the risk wall is there. 50:01 50 minutes, 1 second Sure. That was clear. And the last question sorry to interrupt uh sorry to inter request you return to the view for followup questions. Sure. Thank you. 50:09 50 minutes, 9 seconds Thanks. Thanks. 50:11 50 minutes, 11 seconds Your next question comes from the line of Pam Subramanan from Invest. Please go ahead. 50:18 50 minutes, 18 seconds Hi, good evening. Uh, thanks for taking my question and congrats on a great quarter. Uh, firstly I just wanted to understand again the how we are how we 50:25 50 minutes, 25 seconds should think about margins going into next year. Um, so I heard you call out that you know there is a day on benefit 50:32 50 minutes, 32 seconds this quarter and reversals as well. uh benefit of lower reversals but uh benefit of lower reversals should stay 50:40 50 minutes, 40 seconds right uh because slippages are say moderating here on there. So basically how to think about that going ahead. 50:47 50 minutes, 47 seconds Um so I think on this uh specific thing margins right so I'll repeat what I uh said earlier right on cost of funds I 50:56 50 minutes, 56 seconds think uh we've said that you know this uh quarter cost of funds may have bottomed out with the rate increases we 51:03 51 minutes, 3 seconds have taken right um then on your point around the seasonality in in Q4 so that six 51:13 51 minutes, 13 seconds bips for lower slippages so that had two elements one is your lower gross slippages. So that's a quarteronquarter 51:20 51 minutes, 20 seconds improvement from Q3 to Q4 and second is your higher NPA reversals right within within that number. Now to the extent 51:29 51 minutes, 29 seconds that you know Q4 is strong seasonally and and Q1 is weaker you won't see this benefit in the next quarter. 51:39 51 minutes, 39 seconds Okay. Okay. Yes. So basically these these one-offs will not be there and cost of funds are more or less uh bottomed out and and from yeah and and 51:49 51 minutes, 49 seconds your asset asset yield will reflect whatever the asset mix is right that line is a bit difficult to call out. 51:57 51 minutes, 57 seconds depends on what is the mix of growth uh um within the asset verticals right where your unsecured even with the 52:05 52 minutes, 5 seconds recovery will probably grow at a pace slower than the rest of the book right so on on a net basis you may have some 52:14 52 minutes, 14 seconds uh asset mix related uh pressure on gain got it got it thank you uh secondly on 52:22 52 minutes, 22 seconds on fees right so uh generally you know we in fourth quarter there is a sharper seasonal uptick uh I think it's in the 52:30 52 minutes, 30 seconds loan assets and in the general banking fees that you call out in your slide so is there something that is uh you know 52:37 52 minutes, 37 seconds uh that is not there at this time that was generally there no I I I think it's there's nothing specific to specific to call out there 52:46 52 minutes, 46 seconds on that time okay this is normal is it okay yeah yeah okay okay lastly if you could just call 52:54 52 minutes, 54 seconds out uh Um so uh you know your your provision coverage is up and I think last call you had talked about something 53:02 53 minutes, 2 seconds about how you um you know provide for uh CGFMU which is that you know you you uh assume the recoveries will come through 53:11 53 minutes, 11 seconds uh on the covered portfolio. So but we think PCR has gone up again. So has anything changed there or you know we are completely status quo and this is what the PCR is. 53:20 53 minutes, 20 seconds So so Pam as Vive mentioned right PCR is a function of accounting uh policy right. So that uh and and and where is 53:28 53 minutes, 28 seconds your NPA coming from right which asset class and what is the provisioning policy for that particular asset class uh determines what your uh PCR is. So 53:37 53 minutes, 37 seconds it's an outcome rather than an input if you will. Perfect. Perfect. Thank you so much. 53:44 53 minutes, 44 seconds Congrats on the great quarter again. Thank you. Thanks. 53:49 53 minutes, 49 seconds Thank you. Your next question comes from the line of Ashai Jane from Autonomous. Please go ahead. 53:56 53 minutes, 56 seconds Thank you sir. Thank you for the opportunity. Uh so I have uh one question on uh loan mix in the subject 54:03 54 minutes, 3 seconds geography. How can you look at the incremental growth coming from geography and what often 54:12 54 minutes, 12 seconds uh coming from geography say next to five years and 54:19 54 minutes, 19 seconds lift can you voice is not coming very clear to us. If you could just speak daily. Is it better now? 54:27 54 minutes, 27 seconds Bit better. Yeah. 54:29 54 minutes, 29 seconds Yeah. So uh my question was you know uh how should we look at growth area from the south and you know what proportion 54:37 54 minutes, 37 seconds of your incremental growth should come from south in say 3 to 5 years and which segments will be driving this growth and 54:44 54 minutes, 44 seconds second related question is that in 2 years since the merger the performance of the nonfi segments often you know 54:51 54 minutes, 51 seconds gets clouded due to the mfi weakness so how has been the early stage delinquency trends in the nonfi segment in the 54:58 54 minutes, 58 seconds sudden geographies now that we two years of growth data from so uh you know I would I would say that 55:07 55 minutes, 7 seconds it's too operational now you know we have become one bank and uh it's not about southern market or north market 55:14 55 minutes, 14 seconds you know certain uh branches perform southern branches doesn't perform that is why you know our overall growth uh 55:23 55 minutes, 23 seconds growth estimation which we have linked to our nominal GDP which is makes you two times or 2.25 or whatever right in 55:30 55 minutes, 30 seconds the range uh we want to be on that uh guidance in that some product will work some won't you know some geographies 55:40 55 minutes, 40 seconds will work some geographies won't you know that's the reality of the situation but I think the way we have built ourselves overall you know uh as a 55:49 55 minutes, 49 seconds franchise where we have built uh I think 10 12 product line in asset classes 55:55 55 minutes, 55 seconds around you know 2,500 touch points you know we want to grow our distribution and we want to grow our team we want to grow more and more into the market right 56:04 56 minutes, 4 seconds and there would be also a change in our customer segment once you want to crossell more to our existing base you 56:12 56 minutes, 12 seconds know so I think it's not so it's not relevant because you you want to judge our overall growth rather than some 56:19 56 minutes, 19 seconds market growth you know so I think I would say that from here onwards you really want to focus on overall growth 56:26 56 minutes, 26 seconds metrics you overall name overall other income you know the credit cost so that 56:33 56 minutes, 33 seconds uh we remain solid in terms of overall performance you know because they start picking one market one product one 56:40 56 minutes, 40 seconds things you know at the at the call level then I think the o overall uh I would say the fragrance and franchise get lost 56:48 56 minutes, 48 seconds you know but as I uh already communicated that you know I'm so happy that the way we are building oursel the 56:56 56 minutes, 56 seconds next big thing in the banking franchise where we want to become a pan India franchise with lot of product offering 57:03 57 minutes, 3 seconds you know liability and asset you know uh with the physical distribution and with the techled capabilities you know with 57:11 57 minutes, 11 seconds one data matrices which overall looks very good you know so I mean that's our approach and I think and there is no 57:19 57 minutes, 19 seconds perfect world you know honestly you know and we have learned that in last nine years that there won't be any perfect day we have to go every and build 57:27 57 minutes, 27 seconds yourself uh in this whole imperfection but the way we have understood the market that in the end in the end it it 57:35 57 minutes, 35 seconds it all becomes you know good so I would rather say that you know this rem this year remain one of the again uh more of 57:44 57 minutes, 44 seconds a learning year for us and let's see how the next year uh goes into it but I think after 10 years you know I would 57:52 57 minutes, 52 seconds say that we become more predictable in every sense Understood sir and just on the ROA target of 1.8%. 58:02 58 minutes, 2 seconds Uh so uh from what I can get from the call is that you know your margins uh might stay flat to maybe a slightly down 58:11 58 minutes, 11 seconds because of mix shift credit you are asking us to build around 90 basis points versus 60 basis points uh in the 58:19 58 minutes, 19 seconds current quarter. So should we assume that you know a large portion of the 1.8% 28% ROA uh should come from cost. 58:28 58 minutes, 28 seconds So I think I think what said you that we want to work on our cost we really want 58:35 58 minutes, 35 seconds to work on our credit cost you know uh one is uh your own model where you we want to you know say that project has 90 58:44 58 minutes, 44 seconds but our performance should be better than that but it's an outcome right so again difficult to comment uh in this 58:52 58 minutes, 52 seconds kind of time where you know last year when we were there it was so difficult environment but in the end uh we have performed well. So I believe that uh 59:01 59 minutes, 1 second once the external environment becomes uh I would say uh more predictable or that vulnerability goes out I think 59:09 59 minutes, 9 seconds internally India looks very bright internally India looks very sharp and we believe that we are building this band for Indian or India you know and we will perform. 59:21 59 minutes, 21 seconds Understood. Thank you. Thank you for the answers. Thank you. Thank you sir. 59:28 59 minutes, 28 seconds Your next question comes from the line of Ashes Sonj from Kotak Securities. Please go ahead. 59:34 59 minutes, 34 seconds Hi team, good evening. Uh first question is on deposits. Uh so there is good progress on kasa deposits especially on car in FI26. 59:42 59 minutes, 42 seconds Uh the question is on cost of funds. I understand that there will be uh intermittent pushes and pulls from the rate cycle and competition but more 59:50 59 minutes, 50 seconds through the cycle. Do you have an internal target of where uh this cost of funds should be let's say relative to the banks with the lowest cost of funds 59:59 59 minutes, 59 seconds uh after you get the universal bank license that is one along with that if you can also share the amount of retail deposits on the balance sheet on March 26. 1:00:09 1 hour, 9 seconds So I think the long-term target or the long-term I would say uh the way we are pushing internally 1:00:17 1 hour, 17 seconds that our rate should the our cost of money should be around the repo rate prevalent at that time. So if you ask me 1:00:25 1 hour, 25 seconds uh at this time the repo rates are 5.25 and my cost remain around 6.75 you know and if you see the midsize banks they're 1:00:34 1 hour, 34 seconds around 6.25 and old three four banks are around 5.25. 25 right so ideally uh once we 1:00:42 1 hour, 42 seconds become very mature in our universal banking afar then then my cost should be around uh the report rate at that time 1:00:49 1 hour, 49 seconds that's a long-term dream and target you know but can't comment that when we we reach there because you're asking me so 1:00:56 1 hour, 56 seconds that I'm giving the that that the view of us internally you know second question you are around is retail retail TV Sorry, second question. 1:01:10 1 hour, 1 minute, 10 seconds Amount of retail term deposits sir as I'm not sure. 1:01:16 1 hour, 1 minute, 16 seconds So um Ashish I I think we've covered that in our commentary right in terms of how we are looking at the deposits with 1:01:24 1 hour, 1 minute, 24 seconds branch. So you know maybe I'll just add a bit more color around this. So we have uh created you know four sort of focused uh segments for our deposit business. 1:01:35 1 hour, 1 minute, 35 seconds One of them is branch banking which is primarily targeting retail deposits. 1:01:40 1 hour, 1 minute, 40 seconds Branch banking's uh contribution to the overall deposit uh is about 60%. Right? 1:01:46 1 hour, 1 minute, 46 seconds So that's one uh and then the other uh segments are wholesale uh government and FIG right second uh data point we've 1:01:54 1 hour, 1 minute, 54 seconds disclosed is on the stability of our deposit base where when we when you look at uh kasa retail TD and your 1:02:03 1 hour, 2 minutes, 3 seconds non-colable wholesale that ratio we have disclosed is 79% which is uh you know uh 1:02:10 1 hour, 2 minutes, 10 seconds sort of stable versus uh the last year right so those are the two data points we've disclosed in our uh presentation. 1:02:18 1 hour, 2 minutes, 18 seconds Okay. Sir and secondly on on the growth outlook uh given the uncertainty on the macro when do you expect to take any 1:02:25 1 hour, 2 minutes, 25 seconds action uh on let's say curtailing risk or pulling back credit? Yeah. Or do you intend to do that? 1:02:32 1 hour, 2 minutes, 32 seconds Yeah, it will happen automatically. 1:02:35 1 hour, 2 minutes, 35 seconds It will remain because uh we want to remain very risk aware and where we'll find the indicators which is as of now 1:02:44 1 hour, 2 minutes, 44 seconds is not there but we believe that uh and we already have said in our opening remarks that wherever we felt that uh 1:02:53 1 hour, 2 minutes, 53 seconds this market this product this customer base you know might get affected because of this challenge you know we don't want to onboard them. So but it will happen 1:03:02 1 hour, 3 minutes, 2 seconds automatically because we have built our credit underwriting model around this. 1:03:10 1 hour, 3 minutes, 10 seconds Thank you. Yep. 1:03:14 1 hour, 3 minutes, 14 seconds Thank you ladies and gentlemen. We will take that as the last question for today. I now hand the conference over to Mr. Prince Diwari for closing comments. 1:03:25 1 hour, 3 minutes, 25 seconds Thank you Sar and thank you everyone for joining the call and your questions and for all your support. In case you have any further questions, kindly do reach 1:03:32 1 hour, 3 minutes, 32 seconds out to the I team. Good evening and good night. 1:03:36 1 hour, 3 minutes, 36 seconds Yeah, thank you so much. You know, have a good time. 1:03:41 1 hour, 3 minutes, 41 seconds Thank you. On behalf of AU Small Finance Bank, that concludes this conference. 1:03:47 1 hour, 3 minutes, 47 seconds Thank you for joining us and you may now disconnect your lines. Thank you.