Equitas Small Finance Bank Limited — Q3 FY26

Equitas Small Finance Bank Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=0kVSCWTkaDc Published: 3 months ago

0:01 1 second Ladies and gentlemen, good morning and welcome to the earnings call of Equitus Small Finance Bank Limited Financial Performance for Q3 FY26. 0:11 11 seconds We have with us today Mr. Pn Vasuan MD and CEO Mr. Shriharan CFO Mr. Jagd head 0:20 20 seconds of assets Mr. Murali Vinatan senior president and country head Ranch Banking Liabilities Product and wealth Mr. Mr. 0:29 29 seconds Gopal Krishnan GI head treasury Mr. 0:31 31 seconds Suresh head strategy and business intelligence Mr. Sundar Ramandi head investor relations and Mr. Shake 0:40 40 seconds specialist investor editions. As a reminder, all participant lines will be in the listenonly mode and there will be an opportunity for you to ask question after the presentation concludes. 0:51 51 seconds Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone telephone. Please note that this conference is being recorded. 1:04 1 minute, 4 seconds I would now like to hand the conference over to Mr. P and Vasu Devan. Thank you and over to you sir. 1:11 1 minute, 11 seconds Thank you. Good morning to all of you and thank you for taking your time out to attend this call. I'm happy to start off by saying that many of the 1:18 1 minute, 18 seconds initiatives we had talked about a couple of quarters back have started yielding results. In micro finance, initiatives such as rolling out the monthly 1:27 1 minute, 27 seconds repayment mode with EMI till the 15th of the month which forms around 63% of the book today focus on acquiring new to 1:35 1 minute, 35 seconds credit and new to bank customers who have lower leverage and reducing case load per staff combined with improved 1:42 1 minute, 42 seconds lending discipline in the industry and strict implementation of infant guard drills by all the players have resulted 1:50 1 minute, 50 seconds in significant improvement in performance of this book the X bucket collection collection efficiency on a 1:58 1 minute, 58 seconds POS basis has moved up to 99.4% in December and the percentage of book slipping into NPA over the last few 2:06 2 minutes, 6 seconds months has seen a sharp reversal. Micro finance today contributes about 8 and a half% of the total advances excluding 2:14 2 minutes, 14 seconds the direct assignment purchase of MFI agri poolool that we did in Q3 and we keep we aim to keep this uh micro 2:24 2 minutes, 24 seconds finance at around the 10% of the advances level on an ongoing basis. All other businesses have shown continued 2:32 2 minutes, 32 seconds improvement. Small business loans which showed some stress in Karnataka specifically 2:40 2 minutes, 40 seconds maybe about two to three quarters back uh has seen a significant improvement. 2:45 2 minutes, 45 seconds Overall delinquency in SBL has come back to near normal. Dispersement also has been picking up and portfolio quality 2:53 2 minutes, 53 seconds across all parameters have shown good improvement over the last quarter. This enables us to continue growing this book 3:01 3 minutes, 1 second strongly on an ongoing basis. Other businesses are also doing well and Jagdish will cover those more in detail. 3:09 3 minutes, 9 seconds On liability, we had a 18% growth in deposits in Q1. We had to take the pedal off the deposit growth to prevent excess liquidity in the system. 3:21 3 minutes, 21 seconds But we [clears throat] ended up with just 7% growth in deposit in Q3 and now need to increase the momentum on deposit 3:28 3 minutes, 28 seconds growth to support the increased advances growth. MLY would cover steps being taken to bring the deposit growth back 3:35 3 minutes, 35 seconds to the earlier levels. The cost of funds has been coming down and presently stands at about 7.13. 3:43 3 minutes, 43 seconds It's expected to go further down before stabilizing as more of the old deposit gets replaced with lower lower price new deposits. 3:53 3 minutes, 53 seconds In terms of capital adequacy, we are placed comfortably at about 20.47% 47% uh capital adequacy ratio. During Q3, we 4:03 4 minutes, 3 seconds took some initiatives to conserve capital such as increasing the IPCC outstanding from 1250 crores to 2,000 4:10 4 minutes, 10 seconds crores as well as getting about 1690 crores of vehicle finance covered under CGMSSE guarantee scheme. This not only 4:19 4 minutes, 19 seconds supports us in terms of credit cost in the future but also releases capital to the extent of the guaranteed portion of 4:26 4 minutes, 26 seconds the principle. With these initiatives continuing into the subsequent quarters along with better internal acrals that 4:34 4 minutes, 34 seconds we expect to generate going forward. We do not expect a capital expansion requirement in the first half of the 4:42 4 minutes, 42 seconds next financial year. We will review the situation in the second half and take an a call at an appropriate time. We have 4:50 4 minutes, 50 seconds delivered a better than expected ROI of 65% for Q3 after taking into account around 29 crores of impact 4:59 4 minutes, 59 seconds [clears throat] due to the new labor code implementation. 5:02 5 minutes, 2 seconds But for this one-time impact, the ROA would have been in the range of around8% and cost income would have been at about 5:10 5 minutes, 10 seconds 70% level. We have guided for a 1% exit ROA for [clears throat] the fourth quarter and we believe that we are in 5:18 5 minutes, 18 seconds line for delivering that. On advances growth, we have guided for a 15% growth for the year against 12% growth in Q3. 5:27 5 minutes, 27 seconds That is I'm talking of without taking into account the DA purchase in Q3. You know along with the DA purchase advances 5:34 5 minutes, 34 seconds growth has been 16% in Q3. But if you remove the DA purchase, it is 12% in Q3 5:41 5 minutes, 41 seconds and we have guided for a 15% fullear year growth and we believe that we should be in line to deliver that 5:48 5 minutes, 48 seconds overall with the impact you know we had a big impact in the income in the last two years uh because my MFI portfolio 5:56 5 minutes, 56 seconds mix uh which was 20% in March 24 uh was dropping over the last two years to 6:03 6 minutes, 3 seconds reach 8 and a half% now. So there has been a drop in income impact that we have seen over the last you know maybe 6:10 6 minutes, 10 seconds six quarters or so but with that kind of coming to an end and the micro finance uh 8 and a half% expected to stabilize 6:18 6 minutes, 18 seconds around the 10% uh contribution level and the rest of the portfolio seeing all round improvement we believe that we are 6:26 6 minutes, 26 seconds well positioned to deliver consistent and improving performance going forward. 6:31 6 minutes, 31 seconds Thank you. And with this I hand over to Sza. Thanks also. Good morning to everyone. 6:41 6 minutes, 41 seconds Thank you for joining us today for the Q3 FI26 earnings call of our bank. I appreciate your continued interest and 6:48 6 minutes, 48 seconds support. Let me take a few minutes to walk you through the financial performance for the quarter. Most of these details are also available in our investor presentation. 6:59 6 minutes, 59 seconds We reported a net interest income of 852 crores and other income of 285 crores 7:05 7 minutes, 5 seconds bringing our total net income to 1,137 crores for the quarter. Total net income 7:11 7 minutes, 11 seconds grew by 8% Y on Y and 14% on Q on Q. NIM has significantly improved by 43 BIPS Q 7:20 7 minutes, 20 seconds on Q basis to 6.72% in Q3 FY26 as compared to 6.29% 29% in Q2 FI26. 7:29 7 minutes, 29 seconds The bank reported a PT of 90 crores, a growth of 36% Y on Y and 273% Q1 Q. This 7:38 7 minutes, 38 seconds is after making a one-time incremental provision of 29 of crores due to the implementation of new labor law codes in Q3 FI26. 7:47 7 minutes, 47 seconds Return on assets and return on equity for Q3 FI26 were at 0.65% 65% and 6.1% respectively. 7:57 7 minutes, 57 seconds In terms of asset quality, gross NPA reduced by 20 bits Q1 Q at 2.62% in Q3 FI26 as compared to 2.82% in Q2 FI26. 8:11 8 minutes, 11 seconds Net NPA reduced by 7 bits Q1 Q to88% in Q3 FI26 as compared to 95% in Q2 FI26. 8:23 8 minutes, 23 seconds Credit cost also has reduced to 1.88% in Q3 FI26 as compared to 2.16% in Q2 8:32 8 minutes, 32 seconds FI26 and 2.65% in Q3 FI25. Our provision 8:38 8 minutes, 38 seconds coverage ratio remains healthy at 61.1% and we expect credit costs to taper down by Q4 FY26. 8:48 8 minutes, 48 seconds Moving to the advances book, gross advances grew by 16% yearonear to 43,268 crores driven by robust dispersement. 8:58 8 minutes, 58 seconds The dispersement for the quarter stood at 6,557 crores with a strong momentum in across all verticles. On the 9:06 9 minutes, 6 seconds liability side, total deposits grew 7% yearonear to 43,668 crores and our CASA ratio remain stable 9:15 9 minutes, 15 seconds at 30% and retail deposits now constitute 73% of the total deposit base. As of December 31, 2025, our capital ratio stood at 20.47%. 9:29 9 minutes, 29 seconds This is handing over to Jagdish. 9:34 9 minutes, 34 seconds [clears throat] 9:43 9 minutes, 43 seconds Good morning to you all. 9:46 9 minutes, 46 seconds On the asset business for the quarter three, we had demonstrated a notable improvement compared to the performance in the preceding two quarters. This 9:54 9 minutes, 54 seconds positive momentum was predominantly driven by the growth in non-micro finance segments and a strategy of risk-calibrated expansion and also the 10:01 10 minutes, 1 second shift towards the certain product segment contributed significantly to the overall better results for the quarter. 10:07 10 minutes, 7 seconds Let me walk you through some key highlights. 10:11 10 minutes, 11 seconds On the advances sprint, we have grown 16%age yearon year and 11%age quarteron quarter. This is primarily driven by the healthy uptick in dispersements. 10:20 10 minutes, 20 seconds Micro finance and microloan advances includes purchase of agree assets and direct assignment deal of,343 crores. 10:27 10 minutes, 27 seconds Excluding this direct assignment deal, overall bank advances grew by 12%age year and 7%age quarteron quarter. On on 10:36 10 minutes, 36 seconds the dispersement front, we have delivered the highest ever quarterly overall dispersement of 6,557 crores, which is a growth of 28%age year and 10:45 10 minutes, 45 seconds 22%age quarteron quarter. and micro finance dispersement have surged 72%age quarteron quarter 10:53 10 minutes, 53 seconds to,173 crores in this quarter helping us to maintain a MFI portfolio at around 9%age of our overall advances mix. On 11:01 11 minutes, 1 second the non MFI front we have delivered our highest ever quarterly dispersements of 5,385 crores in quarter 3 which is a 11:08 11 minutes, 8 seconds growth of 35%age yearon year and 15%age quarteron quarter. 11:13 11 minutes, 13 seconds Our non MF5 which is a secured book now stands at 38,108 crores marking a 19%age yearon-year 11:20 11 minutes, 20 seconds growth. Our small business loans which is continues to be a largest contributor growing at 14%age year-on-year and 11:28 11 minutes, 28 seconds notably the secured business loans saw a robust 22% year-on-year growth. And on the vehicle finance, our strategic focus remains on the used CVS and used cars. 11:38 11 minutes, 38 seconds Our used commercial vehicles grow at 23%age yearon year and used posted a strong 36%age year-on-year growth and on 11:47 11 minutes, 47 seconds the affordable housing we grew at 17%age year on year and 6%age quarteron quarter at 5363 11:55 11 minutes, 55 seconds crores and on the MSE book we grew at 35%age year on year and crossing 2,000 crores 12:02 12 minutes, 2 seconds micro finance portfolio excluding DA stands at 3,800 crores and it expected to driven by the improved dispersements. 12:11 12 minutes, 11 seconds On the yield and asset quality front, the yield and gross advances declined by 10 bips quarteron quarter to 15.63%age 12:19 12 minutes, 19 seconds primarily due to the lower contribution from the MFI mix. On the nonfi yields, it's declined by 9 bips quarteron 12:26 12 minutes, 26 seconds quarter to 14.97 mainly due to the portfolio recalibration. On the asset quality, net sleepages significantly 12:35 12 minutes, 35 seconds reduced to 2.52 in quarter 3, down from 3.78 in quarter 2. We reported the lowest net slip pages for the bank in 12:43 12 minutes, 43 seconds the last six quarters. Credit costs saw a sharp decline to 1.88%age compared to 12:50 12 minutes, 50 seconds 2.16 in quarter 2 of the financial year 26. 12:55 12 minutes, 55 seconds In micro finance 1 1290 DPD improved significantly to 2.14 down from 5.40 in quarter 2. This is driven by the 13:04 13 minutes, 4 seconds enhanced collection efficiency. As stated earlier for the current financial year we are with our stated advances growth of about 15%age yearon year. This 13:13 13 minutes, 13 seconds is excluding the DA driven by the improved dispersements. Thank you and I will now hand over to Mr. Mley. 13:28 13 minutes, 28 seconds Good morning. Thanks to you all for joining this call. Uh while the numbers are there, let me take you through some 13:35 13 minutes, 35 seconds uh uh numbers which is uh very important for all of us uh to uh get a grip of 13:42 13 minutes, 42 seconds things. Last quarter we did um uh rate tweaking strategically because that was the opportunity available for us as we 13:50 13 minutes, 50 seconds strengthened the proposition across mass affluence affluent and HNA as a segment. 13:55 13 minutes, 55 seconds So our cost uh efficiency in terms of interest payout came through three different things. One is on savings 14:02 14 minutes, 2 seconds rate, second is on TD rate and then uh duration shifting from triple 4 to 8 as an opportunity. So that has helped us to bring the overall cost of funds down. 14:11 14 minutes, 11 seconds That is one side. But absolute s which was at 6.08 as we started the year on April is today somewhere at 5.1 as we 14:21 14 minutes, 21 seconds exited uh uh uh quarter 3 and TD which was uh at 8.48 48 today is at 7.3 which 14:30 14 minutes, 30 seconds means close to 95 bits on TD on repriced book of 65% of the portfolio and importantly shifting the consumer from 14:38 14 minutes, 38 seconds triple 4 to 8 last quarter we did close to 1 lakh 10,000 customers who had you know triple 4 in last 6 months to be 14:46 14 minutes, 46 seconds very precise month on month migrating into 8 so there's a conscious effort to build the quality in terms of duration bringing down the price enhancing the 14:55 14 minutes, 55 seconds proposition has been our core driver and our family banking proposition which we spoke about we have now close to 30,000 15:02 15 minutes, 2 seconds families of elite and to expand that elite as a into next level we are creating a product for mass affluent 15:10 15 minutes, 10 seconds which is called elite light which has gone live and we are also getting into HNI program called Ara which should go 15:17 15 minutes, 17 seconds live uh today tomorrow so the important message what we want to tell is we want to strengthen our relationship 15:23 15 minutes, 23 seconds management we want to move from only rate conscious approach to value proposition and third important thing is how what more can I do to the consumer. 15:33 15 minutes, 33 seconds So as a proposition we are strengthening the product distribution and relationship and focused on three clear specific segment on NR. Our SCNR has 15:42 15 minutes, 42 seconds gone live. We have crossed 20 22 million worth of dollar and we will be launching our pound- based FCNR next week and we 15:50 15 minutes, 50 seconds are seeing a good trajectory at this point of time and we predominantly at this point of time we are only focused on giving it to our existing customers 15:58 15 minutes, 58 seconds and so is our inward remittance gone live. So 81 almost through in terms of that and we specifically launched a product for seaf fareres and this is 16:06 16 minutes, 6 seconds meant for only shippies and which is started well last quarter and we launched it and this quarter we have launched a program for NR also which is 16:14 16 minutes, 14 seconds specifically an elite. So elite as a proposition is going to be we what we want to call as house of elite entry for mass affluent affluent and then hna. 16:24 16 minutes, 24 seconds This is going to be our approach in terms of our specific focus on s car we have some distance to cover we are 16:32 16 minutes, 32 seconds coming out with a merchant program as well as uh assetcentric approach which we will elaborate later on uh next quarter. Now last but not the least gold 16:41 16 minutes, 41 seconds loans from the branches signs are very encouraging. Uh in line with markets I think we are 16:47 16 minutes, 47 seconds dispersing close to 100 to 120 crores a month on a steady state basis. This should only go up. Presently we are 16:54 16 minutes, 54 seconds focused as a crossell activity and uh at some point of time in the next year we will have it as a focused activity in 17:02 17 minutes, 2 seconds terms of new to bank sourcing also. With this uh I hand over the phone to uh Gopy uh who will give some treasury insights to us. Thank you all. 17:15 17 minutes, 15 seconds Thank you Mi. Good morning everyone. Uh markets remain extremely volatile dominated by global trade and 17:22 17 minutes, 22 seconds geopolitical uncertaintity. Indian equities and rupee markets have underperformed versus global peace. This has mainly been caused by foreign 17:29 17 minutes, 29 seconds investors exiting equity investments with the further pressure on account of returns being impacted by rupee depreciation. Domestic CPI is expected 17:38 17 minutes, 38 seconds to remain within the MPC inflation target. Upcoming budget will be closely watched with the market seeking further cues for government stimulus to 17:45 17 minutes, 45 seconds strengthen growth. Government bonds market saw the benchmark 10-year yields stay roughly flat during the last quarter and closed at 660 with overall 17:54 17 minutes, 54 seconds system liquidity remaining tight and pricing in no further rate cuts. 17:57 17 minutes, 57 seconds Benchmark yields further went up during current month. More recently, RB has announced steps to infuse system liquidity with borrowing rates for banks 18:04 18 minutes, 4 seconds and corporates spiking in the past few weeks. We continue to be watchful in the near term with heightened volatility becoming the new normal. Coming to 18:12 18 minutes, 12 seconds Equita specific uh treasury income stood at 34 crore in Q3 FI26. Thank you. Back to operator. 18:23 18 minutes, 23 seconds Thank you very much. 18:25 18 minutes, 25 seconds We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to 18:34 18 minutes, 34 seconds remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while 18:40 18 minutes, 40 seconds asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. 19:08 19 minutes, 8 seconds The first question is from the line of Chaitan from Mahendra Manul Life Mutual Funds. [clears throat] Please go ahead. 19:16 19 minutes, 16 seconds Yeah. Uh hi sir. Uh thank you for the opportunity. Uh so my question is uh uh in the other income line item do we have 19:24 19 minutes, 24 seconds any income from uh uh sale of ERC uh sale to ARC or any other uh oneoff income uh could be there because sequentially it has jumped quite a bit. 19:37 19 minutes, 37 seconds Yeah this here yeah other income includes the onetime of ARC income of 28.25 sorry 31.52 crores. 19:48 19 minutes, 48 seconds Okay. Okay. 19:51 19 minutes, 51 seconds And uh with respect to credit costs, if it is uh possible to share any sort of guidance, how do you uh look at credit 19:58 19 minutes, 58 seconds costs uh for us in Q4 and the year ahead? Uh because the slippages and most of the book for us including SPL and NFI 20:07 20 minutes, 7 seconds have started performing in line with your expectations. So uh any light you can share on that? So uh as you clearly 20:15 20 minutes, 15 seconds stated the net slip pages was the lowest among the last six quarters and it was on the downward trend. So uh it clearly indicates that even the credit cost will be on the downward trajectory for Q4. 20:29 20 minutes, 29 seconds Okay. Okay. Got it. And uh TD with lastly with respect to TD repricing. So uh how much of a total book would have 20:37 20 minutes, 37 seconds repriced as of now and uh what quantum of book is left to repric and how much in terms of cost of fund one can further 20:45 20 minutes, 45 seconds expect and sort of decline from yeah 60% of the existing book has got repriced and another uh 20 is due for 20:55 20 minutes, 55 seconds this quarter balance will slip into the next quarter and we are going with already as I said we have tweaked the rates in line uh 21:03 21 minutes, 3 seconds with uh you know better than market and at the same time in line with RBI we are one cycle behind as of now we have saved 21:11 21 minutes, 11 seconds 98 bits as I said earlier on the new price book of the existing portfolio 21:19 21 minutes, 19 seconds got it thank you and all the thank you the next question is from the line 21:27 21 minutes, 27 seconds of Rahul Kumar Mumbai Korea fund please go ahead yeah hi uh just one question uh what is 21:35 21 minutes, 35 seconds the PCR coverage ratio which you are comfortable with and uh what is the trajectory of NIM uh over next few 21:42 21 minutes, 42 seconds quarters so the [clears throat] 21:50 21 minutes, 50 seconds uh PCR ratio uh it's around 67% today uh we are reasonably comfortable 21:57 21 minutes, 57 seconds at those levels around that level is something that we are fairly comfortable with as far as the names are concerned uh So you know we did have a sharp jump 22:05 22 minutes, 5 seconds in the name uh basically because micro finances stopped degrowing and for the first time I think actually it grew quarter on quarter from a portfolio 22:14 22 minutes, 14 seconds perspective um [clears throat] but now micro finance about 8 and a half or 9% of the total book we expect that 22:22 22 minutes, 22 seconds to uh remain at that 9 to 10% level that's uh that's our stated objective and because of that uh we do not expect 22:30 22 minutes, 30 seconds a downward pressure on name any longer because of MFI by going down and the rest of the book continues to grow well. 22:38 22 minutes, 38 seconds So we should expect our NIM to be uh I mean I think our NIM is more or less where it will be. Maybe it may marginally tick up a little bit but uh 22:47 22 minutes, 47 seconds somewhere around this range is where we expect it to be. 22:52 22 minutes, 52 seconds Okay. Okay. And uh other expense uh in this quarter has increased pretty sharply uh versus last quarter. So what has driven that? 23:04 23 minutes, 4 seconds Uh is it a labor code stuff? So there are two things. One is that there's been an increase to dispersement happening uh 23:12 23 minutes, 12 seconds in the quarter which uh there is a certain amount of uh cost associated that dispersement and second is that 29 23:19 23 minutes, 19 seconds cr of one impact uh because of the labor code. Okay. Okay. Okay. 23:27 23 minutes, 27 seconds Yeah. So if you see the cost to income is 72%. 23:31 23 minutes, 31 seconds Uh but if that labor code impact is uh kind of netted out it would have been 70% actually. So that was a big impact in the quarter. 23:43 23 minutes, 43 seconds Okay. Okay. 23:46 23 minutes, 46 seconds Thank you. Thank you. The next question is from the line of Partham from 361 Capitals. Please go ahead. 23:56 23 minutes, 56 seconds Yeah. Hi uh thanks a lot for the opportunity. Uh so my question is again on uh margins uh given that uh uh you 24:05 24 minutes, 5 seconds know uh the cost of funds should trend downwards from here on because you know we have repriced our term deposits uh 24:12 24 minutes, 12 seconds and also rationalized our s uh and and you just uh in your previous comment you uh uh guided that you know 24:22 24 minutes, 22 seconds there shouldn't in uh uh uh uh Yeah. Hello. 24:34 24 minutes, 34 seconds The voice is unclear. Yeah. 24:37 24 minutes, 37 seconds Can you please repeat? The voice was not clear. 24:40 24 minutes, 40 seconds Yeah. Hi sir. So, so sir my question was on margins uh uh given that you know we have 24:46 24 minutes, 46 seconds rationalized our uh deposit rate uh uh shouldn't uh you know the margins expand from here at least in FI27 24:55 24 minutes, 55 seconds because uh you know we'll we'll still have the cost of funds uh benefit that was my first question and my second question was uh in in terms of SPL when 25:05 25 minutes, 5 seconds you say uh that you know it is normalized so should we expect the slippages around these level within the SBL portfolio. 25:14 25 minutes, 14 seconds Yeah, those were my two questions. 25:16 25 minutes, 16 seconds Okay. Okay. So on the first point, uh let me take that. Um yeah, I mean there 25:23 25 minutes, 23 seconds are certain drivers uh in place for expansion of NIM. One is that the cost of funds is is expected to trend down a 25:32 25 minutes, 32 seconds little bit more over the next two to three quarters because of the repricing of old deposit to the new deposit. So 25:39 25 minutes, 39 seconds that the the cost is definitely expected to go down which could be one uh one driver for NIM expansion. Uh the second 25:48 25 minutes, 48 seconds driver for NIM expansion is that micro finance is 8 and a half but we want it to be around the 10% level. So that 1 and a half% increase in the MFI 25:57 25 minutes, 57 seconds portfolio mix could be another uh contributor to NIM expansion. Uh but on the other hand uh NIM contraction 26:06 26 minutes, 6 seconds perspective if you look at it uh our lending uh yields the disbbursement yield uh is likely to come down a bit uh 26:15 26 minutes, 15 seconds given the overall interest rate uh uh scenario in the market. Uh so we may also have to fall in line with that and 26:22 26 minutes, 22 seconds there may be some little bit of uh you know uh disbbursement drop. So that will be the uh the negative side from a n 26:30 26 minutes, 30 seconds perspective. So if you combine all of this um uh that's what I said in the earlier uh question asked uh that you know from 6.7% that we are in currently. 26:42 26 minutes, 42 seconds We may expect it to move marginally up a little bit but right now we are not actually in a position to guide exactly where it will go and where it will stop. 26:53 26 minutes, 53 seconds Uh but definitely we don't see it going down that's for sure. it might marginally go up uh in the next few 26:59 26 minutes, 59 seconds quarters on the SBL I as Jagi to yeah um so on the net slip pages for SBL 27:09 27 minutes, 9 seconds if you look at between Q2 and Q3 itself it has gone down from 2.49 to 1.46 46 in uh Q3. Okay. U so the Nestle PL is an 27:19 27 minutes, 19 seconds indication of both Xbucket and 1 to90 DPDS. If you look at the uh XBucket efficiency of SBL we are at 993. 27:27 27 minutes, 27 seconds It has improved from 99 from Q2 to Q3. 27:30 27 minutes, 30 seconds Similarly on the 1 to 90 DPDS also almost close to 100 crores we have reduced in actual value and 27:40 27 minutes, 40 seconds in terms of the percentage it has gone down from 7.53 to around 7.3. So u based on a combining both these factors the net slip pages will go down in Q4. 27:54 27 minutes, 54 seconds Sure. Thanks. And just on my uh last question uh the portfolio your PCR is around 27%. How comfortable are you uh with that PCR? 28:07 28 minutes, 7 seconds PTR. 28:10 28 minutes, 10 seconds How comfortable are you? It mean substandard sir because we did soand 28:18 28 minutes, 18 seconds we are very comfortable with this one because the substandard is the um one thing actually and we did some uh arc 28:27 28 minutes, 27 seconds sale and because of that come down actually okay and uh in addition to that we are not 28:35 28 minutes, 35 seconds only in terms of the comfortable we we are not even um putting the provision based on Iraq norms we have even um 28:43 28 minutes, 43 seconds let's say an example in certain DPDS between um up to 455 we just require a 28:50 28 minutes, 50 seconds 25%age PCR coverage whereas we are we are putting almost close to 75%age if it ex 455 so we are comfortable with that 28:59 28 minutes, 59 seconds being a secured book sure sir thanks a lot thank you 29:07 29 minutes, 7 seconds thank you the next question is from the line of Pakpadar from Safia Capitals. Please go ahead. Yeah, I'm audible, sir. 29:15 29 minutes, 15 seconds Yes. Yes, you're audible. 29:16 29 minutes, 16 seconds Yeah. Um, thank you very much for this opportunity, sir. Sir, I missed one number you mentioned. So, uh, in third quarter, what was the ARC income you mentioned? 29:25 29 minutes, 25 seconds 31.52 crores. And in the other it's included in which line item 29:33 29 minutes, 33 seconds just included in line number 34. 29:47 29 minutes, 47 seconds It's slide number 34 asset fee income. It is included in that. 29:51 29 minutes, 51 seconds Some again slide number 34 asset fee income. No, I'm saying which which P&L line item I mean it's it's a part of other income. 29:59 29 minutes, 59 seconds Yes. Yes. Yes. Yes. 30:01 30 minutes, 1 second Okay. Okay. Understood. And uh you mentioned 31.5 crores, right? 52 31.52 crores. Yeah. 30:07 30 minutes, 7 seconds Okay. Understood. And um on the PSLC, I think this quarter we were close to around 34 crores, right? PSLC income. So how should one look at going into fourth 30:15 30 minutes, 15 seconds quarter? Generally in fourth quarter PSLC uh income is generally higher. 30:20 30 minutes, 20 seconds Oh, that is treasury and PSLC income. So it's largely treasury income PSLC income there during the quarter. 30:30 30 minutes, 30 seconds We have not done any PSLC sale. A so so so there was none. It's only treasury income. 30:37 30 minutes, 37 seconds Okay. And fourth quarter any PSLC income we are expecting? 30:41 30 minutes, 41 seconds Doubtful because you know Q3 we actually had to buy uh agri portfolio from some 30:48 30 minutes, 48 seconds of the MFIs to meet our PSL agree requirement. 30:52 30 minutes, 52 seconds uh so we had to actually buy because we are in shortfall but with micro finance dispersement picking up we expect that 30:59 30 minutes, 59 seconds in Q4 our own internal uh business generation should be enough to meet our PSL requirements uh doubtful that we may have excess 31:08 31 minutes, 8 seconds which we will be able to sell doubtful okay I understand and and in terms of your deposits uh I mean 100% of your 31:15 31 minutes, 15 seconds deposit the transmission has been done on your cost of fund or or is there anything left 31:22 31 minutes, 22 seconds see we are close to 65% in terms of repricing of deposits as above uh as on December 31:31 31 minutes, 31 seconds and maybe uh Q4 exit will be close to 85% levels. So that's the outlook 31:38 31 minutes, 38 seconds 85% Q4. So that's the reason you're you're mentioning that there can be an upward bias on your NES. 31:45 31 minutes, 45 seconds Yeah, slight. So it's a one of the levers. Yes. 31:49 31 minutes, 49 seconds Okay. Okay. Understood. and and and given I mean the the the market is doing well and and even improvement in MFI. So 31:56 31 minutes, 56 seconds anything on FI27? How should one look at your growth and ROAS? 32:04 32 minutes, 4 seconds Yeah. So uh [clears throat] as we mentioned we should end up with about a 15% growth for this year and again I'm assume I'm excluding the DA 32:13 32 minutes, 13 seconds right? The if [clears throat] I add the DA part of it it might be about 17 18% growth but for the minute I am taking 32:20 32 minutes, 20 seconds the DA out because it's just a one time oneoff transaction. So without that we should be ending up this year at about a 32:28 32 minutes, 28 seconds 15% growth. But uh historically we have generally grown between 20 and 25% growth you know on a on a yearly basis. 32:36 32 minutes, 36 seconds So going forward next year we should look at anything between 20 and 25 20 and 20 and and and ROA you are 32:44 32 minutes, 44 seconds talking about exit ROA of 1%. So how about FI27 ROA? So uh we should uh expect the next year fourth quarter exit at 1.5%. 32:56 32 minutes, 56 seconds Fourth quarter exit. Okay. Okay. Yeah. 33:00 33 minutes Okay. Understood. Um okay. Yeah. That would be it from my side. That's very helpful sir. I wish you all the best. Thank you. 33:09 33 minutes, 9 seconds Thank you. The next question is from Ashishval, an individual investor. Please go ahead. 33:16 33 minutes, 16 seconds Hello. Yeah. Am I audible? Yes, I audible. 33:20 33 minutes, 20 seconds Okay. So, uh one was uh regarding this uh our bank looking at the universal bank license. What is our outlook on that? 33:30 33 minutes, 30 seconds Uh well, you know, we have mentioned this in the past also. Uh by March 26, we hope to be uh you know, meeting all 33:40 33 minutes, 40 seconds the requirements of the guidelines of RBI for that conversion. So based on that March 26 financials once we know 33:47 33 minutes, 47 seconds that we are in compliance with the guidelines then subsequent to that we may probably end up applying. 33:53 33 minutes, 53 seconds Okay. Thank you. The other thing is that our still the our 90% plus of loan book is concentrated to the south India. So 34:02 34 minutes, 2 seconds what is the plan to geographically diversify and any timelines for that? 34:12 34 minutes, 12 seconds So sorry uh we our TN as a geography meaning 90% so what is that south so all the states in south India right 34:20 34 minutes, 20 seconds you have mostly concentration in Tamil Nadu Karnataka AP Telangana so that and 34:27 34 minutes, 27 seconds we wanted to expand it across India so any strategy and uh you know timelines around that [clears throat] 34:34 34 minutes, 34 seconds um if you if you look at the past uh um um uh two years we reduced our contribution from TN okay which was at 34:43 34 minutes, 43 seconds around close to more than 50% it has now come down to 44%age even we have a clear 34:50 34 minutes, 50 seconds uh strategy to reduce further maybe in the next 3 to four years it will come down to around 36%age and south we don't have a 90%age book so 35:00 35 minutes um if you see only Tamil Nadu we have 44 okay and um south it's on 62%age okay 35:10 35 minutes, 10 seconds and Maharashtra is the third biggest state for us in terms of the contribution. So it's not 90% it's around 60% that will further come down. 35:19 35 minutes, 19 seconds Okay. 35:20 35 minutes, 20 seconds And this M uh MFI book that we have got will it be covered by the upcoming 35:26 35 minutes, 26 seconds central government uh 8,000 K MFI credit guarantee scheme that they're talking 35:32 35 minutes, 32 seconds about to be coming in April. I believe we are already covering our micro finance portfolio under the CGFMU credit 35:41 35 minutes, 41 seconds guarantee scheme of the central government and uh currently what percentage around 50% around 50% of our existing micro finance 35:50 35 minutes, 50 seconds book is already covered under the guarantee uh and this 50% is the one which is generated after we signed up 35:57 35 minutes, 57 seconds with the guarantee trust and going forward we will continue to be getting the incremental dispersements in micr 36:04 36 minutes, 4 seconds finance guarant guaranted under that scheme. As far as this 8,000 cr scheme is concerned, of course the details are not in public space just now. They have 36:12 36 minutes, 12 seconds not released it. So we'll have to await for the uh details. But uh in our view uh it is not meant for guaranteeing the 36:20 36 minutes, 20 seconds individual transactions. It's actually a guarantee cover provided to the banks for lending to NBCIS. 36:27 36 minutes, 27 seconds I think that's that's what people talk about. Anyway, we'll have more details as the government publishes it. But that is not meant for individual MFI 36:35 36 minutes, 35 seconds transaction guarantee that is already available under the CGFMU scheme. Okay. 36:42 36 minutes, 42 seconds And in the commercial vehicle space uh do you see what is your foresight about uh increase in this segment because of 36:49 36 minutes, 49 seconds the uh signs of tailwinds coming in the uh CV space. 36:56 36 minutes, 56 seconds Um we we don't see any kind of tailwinds. 37:00 37 minutes Even if you look at the uh um current quarter, we has shown a good amount of traction in our used segment which is 37:08 37 minutes, 8 seconds our prime focus. So we'll be growing on that. Even the asset quality is been better compared to the previous quarters. 37:15 37 minutes, 15 seconds Okay, that's it from my side. Thanks. Thank you. Thank you. Thank you. 37:21 37 minutes, 21 seconds Thank you. The next question is from the line of Sharal Doshi from Aquirius Capital. Please go ahead. 37:29 37 minutes, 29 seconds Hi sir. Uh thank you for giving me the opportunity. My first question was on the NFI portfolio. Uh so uh with with 37:36 37 minutes, 36 seconds with the headwinds behind we've seen uh disbburments ramping up. Uh however we were looking at keing it at 8 to 9% uh 37:46 37 minutes, 46 seconds where it is already reached 12%. So will we be a little practical here and look at maybe it expanding to 15 16% given 37:54 37 minutes, 54 seconds the kind of uh momentum that we are seeing or the credit demand that we seeing in that segment. 38:01 38 minutes, 1 second See the 12% is because of the addition of the direct assignment purchase of agri poolool. So we'll have to for all 38:09 38 minutes, 9 seconds our purposes keep that uh on the side because uh obviously you know that comes at a lower rate and it's supposed to be 38:16 38 minutes, 16 seconds a one time we just did it because we had a shortfall in the agri PSL and hopefully we should be able to generate our own PSL going forward so we may not 38:25 38 minutes, 25 seconds do DA further. Uh so that's just a one-off transaction. So if you for a minute remove that our micro finance contribution is about 8 and a half% uh 38:34 38 minutes, 34 seconds 8.8% 8% of the total advances and uh we want to keep it around the 10% level. So it may marginally go up uh in the next 38:43 38 minutes, 43 seconds few quarters to reach the 10% level. Uh as far as uh the thought of increasing it to 1415 or uh anything above that uh 38:53 38 minutes, 53 seconds we do not have a thought on those lines fundamentally because uh you know we you know micr finance does come with its own 39:00 39 minutes plus and minus and every time it comes with a minus it has a impact which is quite disproportionate to its 39:06 39 minutes, 6 seconds contribution and uh so we are basically wanting to build a bank which is lot more stable and uh steady in terms of 39:14 39 minutes, 14 seconds its financial returns and not having too much of volatility around that. Uh a 10% we believe is something where we get the 39:21 39 minutes, 21 seconds benefit of uh you know better yield. Uh but at the same time if there should be any further trouble in the future uh it 39:28 39 minutes, 28 seconds the impact should not be too high on the bank and the rest of the book which is 90% of the book which is a non-micro finance. Actually most of our products 39:37 39 minutes, 37 seconds practically all our products are quite uh old in the system. they are not really new products and so either they are now fully profitable or they are on 39:46 39 minutes, 46 seconds the way to being fully profitable in the next few quarters. So that way we don't see any you know issue as far as profitability is concerned because 39:54 39 minutes, 54 seconds almost all the products are now quite mature in the system. 40:00 40 minutes Got it. And so sir since you highlighted about the profitability so even the housing uh vertical is uh is profitable 40:09 40 minutes, 9 seconds like let's say housing and uh used car vertical that we have which is contributing almost 8 8 10% of the 40:17 40 minutes, 17 seconds overall portfolio summing up the two two segments. 40:21 40 minutes, 21 seconds Yeah. Yeah. Use car is quite profitable and affordable housing uh you know which is actually one of the newer products. 40:29 40 minutes, 29 seconds It's about four four year four years old but it went through the corona phase of non uh small growth. So it's practically 40:36 40 minutes, 36 seconds a 3 year old product now you can say post corona uh and uh affordable housing was loss making last year this year it 40:44 40 minutes, 44 seconds has turned the corner and it is now contributing profitthuh to the bank and uh maybe next year and thereafter it 40:51 40 minutes, 51 seconds should become fully contributing from an ROI perspective. 40:56 40 minutes, 56 seconds Got it. So the second question was on the vehicle finance segment. So there our strategy is on to to scale up the 41:03 41 minutes, 3 seconds used CV segment and used car and not do new commercial vehicle broadly. Uh however if you look at that segment was 41:11 41 minutes, 11 seconds going through turbulence um in terms of asset quality trends. How are you seeing uh that shaping up uh in the coming 41:19 41 minutes, 19 seconds quarters with respect to set quality trend as well as on the business momentum from our end. 41:25 41 minutes, 25 seconds So if you if you see the um um u vehicle finance both on all parameters the Q3 41:34 41 minutes, 34 seconds has been good and we expect the same in Q4 even if you see the um um X bucket it 41:39 41 minutes, 39 seconds has improved from um 97.5 to 98.5 and also the uh DPDS a considerable 41:47 41 minutes, 47 seconds reduction has been done and uh the same is with the GMP as well as the credit cost. So we don't see any kind of uh stress as far as the vehicle finance has been concerned in Q4 also. 41:58 41 minutes, 58 seconds Got it. So will we look at uh increasing our dispersements uh in this category or like especially in the used CV and used cars? 42:08 42 minutes, 8 seconds Yeah, that's our main focus. We'll be increasing our dispersements in used commission and used car segments. 42:13 42 minutes, 13 seconds Okay. Just one last question to add here. What is your uh broad uh range of 42:19 42 minutes, 19 seconds yield in used CV and used car around 17%age? 42:29 42 minutes, 29 seconds So that is for used CV. 42:31 42 minutes, 31 seconds UCV is 17 and uh used is also in the same range. 42:36 42 minutes, 36 seconds Got it. Got it. Thank you so much for answering my question. So good luck with the next question. Thank you. 42:48 42 minutes, 48 seconds Thank you. 42:50 42 minutes, 50 seconds The next question is from the line of Alish from Kotak Securities. Please go ahead. 42:57 42 minutes, 57 seconds Hi team, good morning. Ash here from Kotak. Uh firstly on your opex uh how are you internally thinking about OPEX? 43:06 43 minutes, 6 seconds Uh what should be the drivers from drivers from here on? Uh what are you internally budgeting for it? 43:16 43 minutes, 16 seconds So, opex uh you know is something that we have discussed in the past. Uh the you know most of our cost I think we 43:24 43 minutes, 24 seconds have mentioned in the past also is all of a fixed uh nature. Uh there's only some small amount of the cost which is a 43:32 43 minutes, 32 seconds variable link to the business to that extent. Yes, the cost is kind of um you know it's a given and our cost to income 43:39 43 minutes, 39 seconds will come down as the business grows and the bank grows. Uh the cost to income will come down as we leverage the existing investment in cost by doing 43:48 43 minutes, 48 seconds better business. Uh so as we have mentioned uh you know this quarter it was around 70% but for that uh 29 cr 43:56 43 minutes, 56 seconds impact of uh labor code uh minus that it would have been 70 uh and we expect uh next year uh maybe by third fourth 44:05 44 minutes, 5 seconds quarter we should expect this to go down to around 65% level. Uh that will principally happen just as uh the driver will principally be basically the growth 44:14 44 minutes, 14 seconds in the the business of the bank. So the growth should be the driver to bring down the cost. 44:20 44 minutes, 20 seconds Understood. Um secondly on the cost of SA and cost of term deposits just a clarification I think you indicated that 44:29 44 minutes, 29 seconds the incremental cost of SA is 5.1 and TD is 7.3. Is that correct? Correct. 44:36 44 minutes, 36 seconds Correct. As of now as of now SA is 5.1. 44:40 44 minutes, 40 seconds So we will go through one more iteration in coming February. So it is a continuous exercise. 44:47 44 minutes, 47 seconds Okay. But the disclosure on the presentation says cost of TD is 8.1%. 44:52 44 minutes, 52 seconds That that is on the full book. This is on the repriced book. 44:56 44 minutes, 56 seconds So you expect that 8.1 to eventually decline closer to 7.3. Is it correct? As you renew the existing book. 45:03 45 minutes, 3 seconds Normally renewals happen at 60% levels. 45:06 45 minutes, 6 seconds 30 40% move into alternate assets. So as it reprices the same book will become into 60% level at this pricing point. 45:14 45 minutes, 14 seconds Understood. And lastly this micro finance direct assignment which you have done. Can you just walk us through what the what were the evaluations which you 45:23 45 minutes, 23 seconds have done at the time of the transaction? What is the quality of the book? What is the regional mix etc. 45:30 45 minutes, 30 seconds Okay. So we did it with about uh six counterparties. So fundamentally all the portfolio that we purchased will have to 45:37 45 minutes, 37 seconds be Min guardrail compliant which is all that three lender two lakh rupee all that norms plus they should not have any overdue at the time that we purchase 45:46 45 minutes, 46 seconds that asset. So it should be in X bucket and it should have had a you know on 2year loan it should have completed at least 3 months on a three-year loan it 45:54 45 minutes, 54 seconds should have completed at least 6 months of uh uh term. Um so those were the criteria that we used for acquiring that 46:02 46 minutes, 2 seconds asset. uh the yield on that asset I can give you an idea on that the yield is approximately 1075% 46:09 46 minutes, 9 seconds on the uh that asset I think we purchased about 1,350 crores or so around 1,350 cr is what we 46:18 46 minutes, 18 seconds purchased the overall yield is around 10.75%. 46:23 46 minutes, 23 seconds um and none of the portfolio includes uh any exposure from Karnataka. We just ensured that uh we excluded Karnataka 46:32 46 minutes, 32 seconds and also Gujarat uh because Gujarat traditionally has been always having issues. Karnataka recently you know that it's been going through issues. So these 46:40 46 minutes, 40 seconds two states we excluded. So these are the parameters that we use for that. 46:46 46 minutes, 46 seconds Understood. Just last clarification this one the collection uh responsibility does not lie with you on this book. 46:53 46 minutes, 53 seconds No, it doesn't. We have a collection agreement with the originating company and they will continue to do the collection and pay it to us. 47:01 47 minutes, 1 second Wonderful. Thank you, sir. Thank you. 47:05 47 minutes, 5 seconds Thank you. The next question is on the line of Vive Ramak Krishnan from DSP Mutual Fund. Please go ahead. 47:14 47 minutes, 14 seconds Sir, my question is partly answered. Uh so in terms of turn deposits we've of late seen a scramble for deposits 47:22 47 minutes, 22 seconds happening across the system. So but your cost of deposit is 8.1% means even if the rates go up a little you still 47:29 47 minutes, 29 seconds having cushions in terms of reducing deposit rates. So is my understanding correct? Number one. And number two are all your deposits uh non-callable when it comes to bulk deposits? 47:40 47 minutes, 40 seconds Correct. 47:42 47 minutes, 42 seconds Okay. uh close to 92% of the bulk deposit is 1-year duration and non-allable in terms of book see if you 47:49 47 minutes, 49 seconds see last two years we have been totally going um heavy on triple 4 days now we are replacing it that triple 4 days with 47:56 47 minutes, 56 seconds triple 8 days with a lower as I said total book arbitrage is 90 pips so this will continue in that direction only and 48:03 48 minutes, 3 seconds anyway uh the projection is there is one more rate cut either it may not happen in Feb but April so as and when the rate cut happens we'll follow and catch the 48:12 48 minutes, 12 seconds grass Excellent sir. So the other question is on capital. I mean as of now you're comfortable on uh as far as regulations 48:20 48 minutes, 20 seconds go with 16.6%. But if growth were to come and you were to uh maintain your credit ratings as well, you may have to raise fresh capital. So is there any 48:29 48 minutes, 29 seconds thought on timelines for that or is there a minimum capital adequacy that you'll go to and then have to definitely raise capital? 48:37 48 minutes, 37 seconds See, see we have um an internal guideline that as soon as we touch 20%, we should start looking at how to beef 48:44 48 minutes, 44 seconds up capital. Generally [clears throat] generally we do not want our capital 48:51 48 minutes, 51 seconds adequacy to go below 18%, against the regulatory requirement of 15%. We we really do not want it to go below 18%. 49:00 49 minutes Um right now it is 20.47% 4 7% or so. Uh so as we mentioned uh in the 49:08 49 minutes, 8 seconds presentation as well as in my opening uh comments uh you know there are various ways of uh conserving capital uh other 49:16 49 minutes, 16 seconds than just raising fresh capital. So we are working on all of that like IBPC where you shed assets in favor of other 49:24 49 minutes, 24 seconds banks and then we do the CGTMS especially the vehicles we have done that we are think I think we have done 1650 49:32 49 minutes, 32 seconds crores or so of vehicles which we got guaranteed under the CGTMS under that scheme I think what percentage of 49:39 49 minutes, 39 seconds principle gets released from capital uh almost 80% of the principle of uh the 49:47 49 minutes, 47 seconds transactions covered under CGMS MSSE gets released from capital requirement. 49:52 49 minutes, 52 seconds So we did that and going forward we will continue to keep getting the vehicle finance incremental portfolio also covered under CG MSC based on whatever 50:01 50 minutes, 1 second is eligible. Uh so that will again release a good amount of capital going forward. Our gold loan now is started to 50:08 50 minutes, 8 seconds pick up now we know in four in third uh in second quarter we had a gold loan book of 400 crores. It's almost come to 50:15 50 minutes, 15 seconds 600 crores in the third quarter and that is something again we are pushing for growth by introducing it in more branches going forward. So that will 50:24 50 minutes, 24 seconds come again with the no capital requirement. 50:27 50 minutes, 27 seconds Our affordable housing is growing and again that has a much lower risk weightage compared to every other business. So there are various uh par 50:36 50 minutes, 36 seconds various drivers for capital conservation and that's something that we are focusing on and at the end of it in our 50:42 50 minutes, 42 seconds view uh first half of next year we will not require capital we will be comfortable with uh uh with whatever we are doing and second half we will review 50:52 50 minutes, 52 seconds it you know based on our internal acrals and what's the level of capital adequacy we are sitting on we'll do a review probably in the second half uh the 51:00 51 minutes objective from our side clearly is to postpone capital raise as long as possible. Uh given our current market 51:08 51 minutes, 8 seconds price uh scenario, we would like to postpone it as far as possible and try and ensure that we do not compromise [snorts] on growth but manage capital 51:17 51 minutes, 17 seconds through a variety of instruments available to the to the bank. 51:22 51 minutes, 22 seconds Yes, I I can see that in fact even the last quarter despite the growth your capital CT1 ratio has just actually 51:30 51 minutes, 30 seconds improved. Um so in terms of the CT one ratio you talked about total capital see1 do you have any uh um uh kind of 51:40 51 minutes, 40 seconds guidelines in terms of where you won't go below see regulatory requirement C1 is 7 and a half% you know 50% of the 15% so that's 51:49 51 minutes, 49 seconds a regulatory u but I think we'll be fairly comfortable on C1 we'll never go anywhere near that regulatory floor 51:58 51 minutes, 58 seconds right sir I was looking more at the rating rational which said 15% was one of the rating rationals which said in terms of credit rating. So that that was my angle. 52:07 52 minutes, 7 seconds Yeah because our internal acral also should start coming in you know we you know last year and the first two quarters of this year was very poor on 52:15 52 minutes, 15 seconds internal acro that's also expected to start generating you know P&L from this quarter I mean third quarter itself we 52:24 52 minutes, 24 seconds have delivered some 90 crores going forward that should also help. So overall I think we should be comfortable on C1 also. 52:32 52 minutes, 32 seconds Okay. All the best sir. Thank you. 52:38 52 minutes, 38 seconds Thank you. The next question is from the line of Jignial from Ambit Capital. Please go ahead. 52:45 52 minutes, 45 seconds Yeah thank [clears throat] you and uh thanks for the opportunity sir. Just a couple of questions. First uh as I understand it correct we our deposit 52:54 52 minutes, 54 seconds repricing will be gradual. So we expect this to fall down. How do we see yields moving up because 53:02 53 minutes, 2 seconds uh obviously we have we not want we don't want to do more of uh MFI loans which have been the uh I mean high yield 53:10 53 minutes, 10 seconds category. How how do we see yields moving or or the I understand this time it is also because of the buyout portfolio but anything on the yield side if you can guide us. 53:20 53 minutes, 20 seconds Yeah. So if you look at the u advances um 53:28 53 minutes, 28 seconds yield um um because of the um portfolio recalibration you can see the uh small 53:35 53 minutes, 35 seconds reduction bits but if you look at the dispersement yield okay uh which is going to be a significant factor u in Q2 53:43 53 minutes, 43 seconds um our dispersement yield is at 15.78 whereas in Q3 our dispersement yield is 16.22 where overall asset book. 53:55 53 minutes, 55 seconds So overall book in Q2 is 15.78 whereas in Q3 is 16.22 even after the recalibration whatever we have done. So 54:03 54 minutes, 3 seconds it's almost close to 43 bits increase in the dispersement each that is also because you had seen an MFI surge right dispersement had picked up 54:12 54 minutes, 12 seconds for MFI which you want to cap it below 10%. So if incrementally if if the overall growth will be you know your diseasement growth will be in line with 54:20 54 minutes, 20 seconds your MFI growth will be more or less in line with other businesses growing then do we see this kind of movement happening in yield again for Q4 on onwards. 54:29 54 minutes, 29 seconds Yep. Uh not only on the MFI book even if you look at VF we had a increase of 22 54:35 54 minutes, 35 seconds bibs and SBL five bibs and AHF which has been a growing book it has been increased by 25 bibs. So uh fairly I can 54:44 54 minutes, 44 seconds I able to say maybe we will be maintaining or it will be on the upward side it will not go down. 54:50 54 minutes, 50 seconds Okay understood. uh secondly on the SBL side now if we see that sequentially the 54:57 54 minutes, 57 seconds disbbursement had more or less remained flat right if I see it correct y there is a 1% kind of a decline how and 55:06 55 minutes, 6 seconds obviously we had seen this trend happening for almost like similar number for almost like last five quarters I see it in your PPD so how do we see so can 55:15 55 minutes, 15 seconds you give some color on uh what is this SBL loan which which geographies are you doing it further. It is unsecured piece 55:24 55 minutes, 24 seconds right it's not secured one it's not lab right so how are we seeing traction happening in SBL can you give some color on that that will be helpful and 55:32 55 minutes, 32 seconds obviously coverage remains very low on this so any volatility in this can impact our provisions and all just some 55:41 55 minutes, 41 seconds clarity on overall as a portfolio yeah uh first I would like to give a clarification um uh on the overall book 55:49 55 minutes, 49 seconds we have only that micro finance it's on unsecured otherwise All other books is a secured book. Small business loan it's 100% secured by the property. Okay. 55:59 55 minutes, 59 seconds Okay. 56:00 56 minutes If you look at uh small business loans quarteron quarter if you see in the current financial year our dispersement at Q1 is at on an average per month is 56:09 56 minutes, 9 seconds 440 whereas in Q2 is 575 whereas in Q3 our average dispersement is 612 crores. 56:17 56 minutes, 17 seconds Why we couldn't able to see the year on year growth which the underlying reasons is because of our Karnataka and Satine product segment where we have 56:25 56 minutes, 25 seconds recalibrated in SBL in the um between the Q3 and Q4 of the last financial year. Now it's almost coming back to 56:33 56 minutes, 33 seconds normaly. We can see the upurge in the dispersement in SBL as well and the number that I have mentioned if you look at it will be on the upward trend. 56:45 56 minutes, 45 seconds Okay. So do we can we expect this that Q4 this 600 crores quarterly what kind of trend? So not only Q4 overall for 56:53 56 minutes, 53 seconds next year say so what what monthly trend or annual I mean that we talk about that disbburusment for SBL that we will be comfortable with. 57:06 57 minutes, 6 seconds So the numbers that I mentioned first of all is the monthly average. Okay, on the next year we are looking at advances 57:14 57 minutes, 14 seconds growth of at least 20 plus in SBL. So automatically the displacement number will be on an upward moment compared to the current numbers. 57:23 57 minutes, 23 seconds Understood. And this will be so as I understand now this is a lap loan. So your uh re what will be the tenure of this loan overall? Around 57:32 57 minutes, 32 seconds average it would be around uh 7 to 8 years. 57:36 57 minutes, 36 seconds Understood. Understood. Fine. That's that's helpful. And finally on OPEC side as you said the neither of the expenses are remaining fixed in nature very 57:45 57 minutes, 45 seconds limited amount in in variable one. So how do we so you're gradually planning to bring it down from say uh 70 which is 57:53 57 minutes, 53 seconds excluding that one off of labor code thing. So 65 is the target that you are you're you're target I mean for over 58:01 58 minutes, 1 second a what over what period are you targeting the 65% kind of cost to income? 58:07 58 minutes, 7 seconds Yeah. Yeah. So for Q exit next year we should be there around 65% mark. 58:13 58 minutes, 13 seconds Okay. Okay. So this for the year itself we are targeting this right for the next year itself. 58:18 58 minutes, 18 seconds Next year. Yeah. And also and finally yeah as also MD clearly said no when the 58:25 58 minutes, 25 seconds most when the fix actually the income goes up no the percentage will come down. That's the Yeah I understand. Yeah that's what I was I was asking you. I got that point. 58:34 58 minutes, 34 seconds And finally on credit cost what what kind of trajectory are we looking for I mean for next year because as I understand our major ROI improvement or 58:43 58 minutes, 43 seconds 1.5 exit what we are talking about 4Q obviously credit cost decline will be one of the major driver so what kind of credit cost trajectory are we looking 58:51 58 minutes, 51 seconds for say FI27 this broad range if you can give some color on that between 1.5 to 1.7 58:59 58 minutes, 59 seconds 1.5 and currently we are at what 1.8 right 1.88 date for the quarter. Okay. In Q4 it will be 59:06 59 minutes, 6 seconds uh around less than 1.5 but what I mentioned is for the year entire year entire year should be some somewhere in the range of 1.5 to 1.7. 59:16 59 minutes, 16 seconds Yes. 59:17 59 minutes, 17 seconds Perfect. That's that's quite helpful. So thank you. Thank you so much and all the best. Thank you. 59:24 59 minutes, 24 seconds Thank you. The next question is from the line of Anand Dharma from MK Global. Please go ahead. 59:31 59 minutes, 31 seconds Uh yes sir. Thank you for the opportunity. My question was related to our CV books. Uh a lot of players are actually talking about uh that there is 59:39 59 minutes, 39 seconds a noise there is a stress which is emerging into the CV portfolio. Uh are we uh seeing any signs of that in our new or maybe used CV portfolio. 59:50 59 minutes, 50 seconds So uh I've uh clearly indicated even in the on my earlier response we are seeing a improved asset quality compared to Q2 59:59 59 minutes, 59 seconds to Q3 in all aspects not only on the u uh netly pages or the credit cost but also on the 1 to90 DPD as well as on the 1:00:08 1 hour, 8 seconds X buckets. So we hope the uh things will be better in Q4 also. 1:00:15 1 hour, 15 seconds So then the the players who are actually witnessing that kind of a stress operate into a different segment or a different geography altogether. 1:00:28 1 hour, 28 seconds Um see in our case as Jagi mentioned a large part of our book is the use commercial vehicle. I think the used 1:00:35 1 hour, 35 seconds commercial is doing quite well and in our case used commercial vehicle also uh we are really the the focus is only on 1:00:44 1 hour, 44 seconds the small operators and uh so I think at that level this the small commercial vehicle light commercial vehicle uh no 1:00:53 1 hour, 53 seconds individual owner or owner with just one or two vehicles I think that segment is doing quite well and we are not seeing any stress on that segment. If you want 1:01:01 1 hour, 1 minute, 1 second to compare with the market and other players, their portfolio might have a lot of u you know a different profile of 1:01:08 1 hour, 1 minute, 8 seconds borrowers uh new could be a good contribution to them possibly and uh maybe the heavy commercial could be 1:01:16 1 hour, 1 minute, 16 seconds again a large contribution to them possibly. I mean those might be the differences that you might probably see but in our case the focus is largely on 1:01:24 1 hour, 1 minute, 24 seconds the small and light commercial vehicles and in the used uh category and in that segment um you know we we see the 1:01:32 1 hour, 1 minute, 32 seconds experience is pretty good not only now I mean we have been doing used commercial vehicle now for almost 15 years and uh we've never really had a serious issue 1:01:40 1 hour, 1 minute, 40 seconds on the portfolio quality in the use commercial vehicle segment. 1:01:49 1 hour, 1 minute, 49 seconds So secondly you know I just wanted to understand how should we look at our overall credit growth and deposit growth for FI27 uh now that the micro finance has also 1:01:58 1 hour, 1 minute, 58 seconds started turning positive and I think the HPL the vehicle financing book is delivering strong growth um so should we 1:02:05 1 hour, 2 minutes, 5 seconds get into a 20% kind of a zone of growth next year so next year as we mentioned our growth 1:02:12 1 hour, 2 minutes, 12 seconds should be in the range of 20 to 25 So it should be definitely above 20 that's for sure and the depositive growth will be in line with that you know typically it 1:02:21 1 hour, 2 minutes, 21 seconds should be about 2 to 3% higher than the advances growth. 1:02:26 1 hour, 2 minutes, 26 seconds Okay and third s uh any retail uh impact that you have uh uh uh worked on and uh 1:02:33 1 hour, 2 minutes, 33 seconds because I think your PC is still below 70%. You used to have 70% then you brought it down to about 66 67%. Uh so 1:02:41 1 hour, 2 minutes, 41 seconds any ECL working that you have already done uh how you going to take that impact if you can just talk about that. 1:02:48 1 hour, 2 minutes, 48 seconds So we have done ECL working based on the draft this one of RBI and most of our secure book and other thing we'll have a 1:02:56 1 hour, 2 minutes, 56 seconds positive this one on the ECL not on the negative as compared to the Iraqs. 1:03:04 1 hour, 3 minutes, 4 seconds Thank you. Thank you sir. Thank you. 1:03:11 1 hour, 3 minutes, 11 seconds Thank you. Well, ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Pia and Vasu Deans for his closing comments. 1:03:21 1 hour, 3 minutes, 21 seconds Yeah. So, [clears throat] thank you. 1:03:22 1 hour, 3 minutes, 22 seconds Thanks all of you for dialing in and giving us a good insight of uh what's happening in the market and also asking us questions which will help us to think 1:03:31 1 hour, 3 minutes, 31 seconds as we go forward. uh uh as we sign off, I can only reiterate that I think the the the issues of micro finance is 1:03:39 1 hour, 3 minutes, 39 seconds clearly behind not just us but the industry and going forward let's hope for uh you know better times for all of us. Thank you and wish you all the best. 1:03:48 1 hour, 3 minutes, 48 seconds Bye. 1:03:49 1 hour, 3 minutes, 49 seconds Thank you. On behalf of Equida Small Finance Bank Limited, we conclude today's conference. Thank you for joining us. You may now disconnect your license.