Equitas Small Finance Bank Ltd — Q4 FY26

Equitas Small Finance Bank Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=ZR5Zv5lcdFU Published: 9 days ago

0:00 Ladies and gentlemen, good day and welcome to the earnings call of Equitus Small Finance Bank Limited financial performance for Q4 FY26. 0:12 12 seconds We have with us today Mr. PN Vasu Devan MD and CEO Mr. Balaji N executive 0:20 20 seconds director and head of operations and information technology Mr. Sridharan N CFO Mr. Mr. Jagis J head of assets Mr. 0:31 31 seconds Murli Vyanatan senior president and country head branch banking liabilities 0:38 38 seconds product and wealth Mr. Gopala Krishnan G head treasury Mr. Suresh head strategy 0:46 46 seconds and business intelligence Mr. Sundaram D head investor relations Mr. Abhishek, specialist investor relations. 0:56 56 seconds As a reminder, all participant lines will be in the listenon mode and there will be an opportunity for you to ask questions after the presentation 1:04 1 minute, 4 seconds concludes. Should you need assistance during this conference call, please signal an operator by pressing star then 1:12 1 minute, 12 seconds zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over 1:19 1 minute, 19 seconds to Mr. PN Vasu Devan. Thank you and over to you sir. 1:24 1 minute, 24 seconds Good morning everyone and thank you for taking the time to join us today. 1:29 1 minute, 29 seconds Building on the sign of resilience demonstrated in Q3 of the last financial year. Q4 continued to be a good quarter 1:38 1 minute, 38 seconds for the bank marked by strong performance across business growth, asset quality and profitability. 1:45 1 minute, 45 seconds The NIM increased for the first time in the in Q3 after many years of decline and in Q4 the NIM continued to show an 1:54 1 minute, 54 seconds upward trajectory. This was led by higher levels of income due to growth, lower reversal of income due to lower 2:03 2 minutes, 3 seconds net slippage and a simultaneous reduction in cost of funds and credit 2:09 2 minutes, 9 seconds cost at 1.11% for the Q4 came in lowest compared to the previous eight quarters. 2:17 2 minutes, 17 seconds The combined effect of the above has enabled us to deliver a pat of rupees 213 crores for Q4 which is the highest ever pat achieved by the bank so far. 2:29 2 minutes, 29 seconds This translates to a reasonably healthy ROA of 1.46% and an ROE of 14.1%. 2:38 2 minutes, 38 seconds This is in spite of the fact that micro finance portfolio only contributes to around 10% of the advances and going 2:46 2 minutes, 46 seconds forward we expect to maintain micro finance portfolio contribution to this similar levels of 10%. 2:56 2 minutes, 56 seconds In terms of sustainability of this performance of Q4, the income levels are expected to maintain the report 3:03 3 minutes, 3 seconds trajectory given the visibility on sustaining growth in advances of about 20%. 3:09 3 minutes, 9 seconds It should be however impacted by any increase in G&P slippage which may result in reversal of income. Further, 3:18 3 minutes, 18 seconds we have increased our interest rate on TD and SA during March 26 and this is expected to increase the cost of funds 3:27 3 minutes, 27 seconds going forward. Credit cost at 1.11% represents the traditionally strong Q4 3:34 3 minutes, 34 seconds performance that we normally see. Going forward, this is expected to normalize to our guided range of around 1 and a 3:42 3 minutes, 42 seconds half% for the full year. Given the above, we expect to end the current 3:48 3 minutes, 48 seconds financial year with a Q4 exit ROA of about 1 and a half%. 3:54 3 minutes, 54 seconds Macroeconomic factors, the ongoing geopolitical tensions in West Asia do present certain risk particularly 4:03 4 minutes, 3 seconds particularly through their potential impact on global supply chains and in turn on broader GDP indicators. 4:11 4 minutes, 11 seconds The customer segments that we serve are at a level two and level three order of dependency which substantially limits 4:19 4 minutes, 19 seconds the direct transmission of such external shocks to the cash flow of our borrowers. As a result, the immediate impact of these developments on our 4:28 4 minutes, 28 seconds portfolio remains contained. However, if the government decides to pass on the increased cost of gas and fuel to 4:35 4 minutes, 35 seconds consumers, this could have an inflationary impact. In small business loans and affordable housing, we believe 4:42 4 minutes, 42 seconds our borrowers may be able to pass on the increase in cost to their customers since our borrowers largely deal in daily use products and services. 4:53 4 minutes, 53 seconds However, in commercial vehicles, freight rates may take some time to adjust upwards and during such interim period, our borrowers are likely to be affected. 5:04 5 minutes, 4 seconds We will continue to closely monitor the situation and remain vigilant. In the unlikely event of any emerging risk, we 5:12 5 minutes, 12 seconds are well prepared to respond with calibrated and timely actions which include tightening credit norms 5:19 5 minutes, 19 seconds moderating leverage levels along with other prudent underwriting measures. Our focus in case of such eventuality would 5:28 5 minutes, 28 seconds remain on preserving quality of asset over growth. 5:34 5 minutes, 34 seconds On the advanced side, I'm happy to share that all products have turned profitable now. Products introduced during the past 3 four years such as affordable housing 5:43 5 minutes, 43 seconds and MSC finance have turned positive during the previous year and expected to improve their contribution to the bottom line during the current financial year. 5:51 5 minutes, 51 seconds In terms of deposits, the overall deposit growth was 8% yearonear. We believe this relatively muted growth is largely transitory. 6:02 6 minutes, 2 seconds We have introduced new products such as Elite Ara, Elite Epic, Elite Light and FCNB deposits during the last quarter 6:11 6 minutes, 11 seconds and we are en we are enabling I mean these enable us to cater to different customer segments while creating incremental deposit opportunities. 6:21 6 minutes, 21 seconds Alongside this continued enhancement of our technology platforms for strengthening customer experience and supporting better customer acquisition 6:28 6 minutes, 28 seconds and retention. Importantly, we remain firmly focused on building a stable granular diversified deposit franchise 6:36 6 minutes, 36 seconds anchored around retail deposits, CASA and non-callable wholesale deposits where we believe the bank is well positioned on the deposit front. Muri will elaborate further on this aspects. 6:47 6 minutes, 47 seconds Capital adequacy, we ended the last year with a capital adequacy ratio of about 20.3%. 6:53 6 minutes, 53 seconds We continue to pursue multiple initiatives to conserve capital including increasing central government guarantee coverage for our eligible 7:00 7 minutes loans IBPC and focus on lower risk weightage products such as affordable housing and gold loans. To sum up, we 7:09 7 minutes, 9 seconds believe that with micr finance collection efficiencies coming back to normal with all lending products lines turning profitable, sustainable 7:16 7 minutes, 16 seconds improvement in collection efficiencies across products, we should look forward to continued good performance in the coming quarters. Thank you and with this I hand over to Srian. 7:31 7 minutes, 31 seconds Good morning everyone. Thank you for joining us today for the Q4 FI26 earnings call of EUA Small Finance Bank. 7:38 7 minutes, 38 seconds I appreciate your continued interest and support. Let me take a few minutes to walk you through the financial performance for the quarter. Most of 7:46 7 minutes, 46 seconds these details are also available in our investor presentation. We reported a net interest income of 980 crores and other 7:54 7 minutes, 54 seconds income of 259 crores bringing our total net income to,239 crores for the quarter. Total net income 8:02 8 minutes, 2 seconds grew by 18% Y on Y and 9% on Q on Q. NIM has significantly improved by 57 bits Q1 8:10 8 minutes, 10 seconds Q2 7.29% in Q4 FY26 as compared to 6.72% in Q3 FY26. 8:19 8 minutes, 19 seconds The bank reported highest quarterly pat of 213 crores. A growth of 46% Y on Y 8:26 8 minutes, 26 seconds and 136% Q on Q. Return on assets and return on equity for Q4 FI26 were at 8:33 8 minutes, 33 seconds 1.46% and 14.1% respectively. In terms of asset quality, gross NPA reduced by 13 8:41 8 minutes, 41 seconds bits. Q1Q at 2.49% 49% in Q4 FI26 as 8:48 8 minutes, 48 seconds compared to 2.62% in Q3 FI26. Net NPA reduced by 20 bs Q1 Q to 8:57 8 minutes, 57 seconds 68% in Q4 FI26 as compared to 888% in Q3 FI26. Credit costs are significantly 9:05 9 minutes, 5 seconds declined to 1.11% in Q4 FI26 as compared to 1.88% 88% in Q3 FI26 and 2.74% in Q4 FI25. 9:17 9 minutes, 17 seconds Our provision coverage ratio remains healthy at 73.03% including technical rate of PCR stands at 86.81%. 9:27 9 minutes, 27 seconds Moving to the advances book, gross advances grew 22% yearonear to 46,165 crores driven by robust dispersement. 9:36 9 minutes, 36 seconds Dispersement for the quarter stood at 7,347 crores with strong momentum in across all verticals. On the liability 9:44 9 minutes, 44 seconds side, total deposits grew 8% y on y to 46,533 crores. Our kasa ratio at 26% retail 9:54 9 minutes, 54 seconds deposit now constitute 68% of the total deposit bill. As of March 31, 2026, our capital ad ratio stood at 20.31%. 10:04 10 minutes, 4 seconds Thank you. So handing over to Jagi. 10:17 10 minutes, 17 seconds Good morning everyone. 10:19 10 minutes, 19 seconds We closed the quarter with gross advances of 46,165 crores delivering 22%age yearon-year and 7%age 10:27 10 minutes, 27 seconds quarteron-quarter growth which is driven by the strong dispersement momentum. 10:32 10 minutes, 32 seconds Excluding DA, our overall bank advances grew 19%age year on year. I will cover three things. One is on the growth 10:39 10 minutes, 39 seconds momentum, product performance and asset quality. Firstly, on the growth momentum, we deliver our highest ever quarterly dispersement at 7,347 crores 10:48 10 minutes, 48 seconds in this quarter with a growth of 72%age year on year and 12%age quarteron quarter. Within this our microf 10:55 10 minutes, 55 seconds dispersement increased to,512 crores in this quarter up 326%age yearon-year and 29%age quarteron quarter. On our secure 11:05 11 minutes, 5 seconds book we also delivered our IST quarterly dispersements of 5,835 crores up 49%age yearon year and 8%age quarteron quarter. 11:15 11 minutes, 15 seconds Our nonmfi secured book stood at 40,49 crores which is growing at 21%age year. 11:23 11 minutes, 23 seconds Secondly, on the product performance, our small business loans remain the largest contributor at 18,559 crores, up 11:30 11 minutes, 30 seconds 13%age year on year. Within the small business loans, the secured business loans uh growing at 26%age year on year. 11:39 11 minutes, 39 seconds And on the vehicle finance segment, our focus is on the used segments. Our 11:45 11 minutes, 45 seconds used commercial vehicles at 5,899 crores which is grown by 25%age yearon-year and 7%age quarteron quarter and used cars 11:54 11 minutes, 54 seconds grown by 31%age yearon year and 7%age quarteron quarter. Our new CV declined 12:00 12 minutes 20%age year on year to 2270 crores. On the housing finance we grew to 5782 12:08 12 minutes, 8 seconds crores up 21%age yearon year and 8%age quarteron quarter. and MSE finance we 12:14 12 minutes, 14 seconds grew up to 290 crores up by 25 24 percentage yearon year on the MFI 12:21 12 minutes, 21 seconds excluding DA we stood at 4,667 cr at quarter end and we expected to grow in a calibrated manner supported by improved 12:29 12 minutes, 29 seconds dispersement and collection trend and coming back to the asset quality our net slip pages reduced to 79 in this 12:37 12 minutes, 37 seconds quarter from 2.52 in the previous quarter which is lowest level in the last 10 quarter On the SBL front, our net slipage has 12:45 12 minutes, 45 seconds reduced to.11%age from 1.53 in the previous quarter. On the credit cost, it has declined to 1.11 12:54 12 minutes, 54 seconds compared to 1.88 in the previous quarter and 2.74 in Q4 financial year 25. On the micro 13:02 13 minutes, 2 seconds finance, our 1290 DPD improved to 1.34%age from 2.14 compared to the previous quarter supported by strong collection efficiency. 13:12 13 minutes, 12 seconds And looking ahead for financial year 27, we remain aligned to our stated advances growth guidance of 20%age plus year on year supported by improved 13:20 13 minutes, 20 seconds dispersements. Thank you. I will now hand over to Mr. Morti. 13:31 13 minutes, 31 seconds Good morning. Thanks for joining the call. While the ratios as well as growth details are given in the PPT, I would 13:38 13 minutes, 38 seconds like uh dwell upon four things. uh what is planned what is happening at this point of time. First let me start with 13:47 13 minutes, 47 seconds savings account. Savings account we have strengthened our proposition covering from Mars to HNI through house of elite 13:54 13 minutes, 54 seconds as a proposition. Which means earlier we had elite as a program for HNI. Today we have three different categories within 14:01 14 minutes, 1 second the HNA. One for Mars affluent, one for affluent and third for HNI which we call it as ARA, elite light and elite. Now 14:08 14 minutes, 8 seconds this categorization is very important because we are moving towards the direction of family banking and product holding as a key thing which is uh you 14:15 14 minutes, 15 seconds know shown in our key liability strategy slide. So today we have close to 28 29,000 families. Our aim is to double in 14:23 14 minutes, 23 seconds this coming year and also to add ARA customers close to 3 to 4,000 and start of ARA is really encouraging. So based 14:31 14 minutes, 31 seconds on this categorization of customers we have categorized branches where set of 100 branches is going to focus only on 14:38 14 minutes, 38 seconds house of elite and manning is planned as per that. So strengthening RM channel enhancing the product proposition and more importantly this year you will see 14:46 14 minutes, 46 seconds more and more value added services within the account along with a reasonably good uh pricing at the entry point. In terms of current account, 14:54 14 minutes, 54 seconds current account we are shifting it at this point of time into three different categories. One is we have now got our soundbox our pause and QR ready 15:03 15 minutes, 3 seconds operational in the market CG done. So increasingly branches will source transaction and payment current account. 15:10 15 minutes, 10 seconds We are launching a specific current account product uh which is with backed by unsecured based on our own norms. So which means assetled approach and third 15:19 15 minutes, 19 seconds is high variant only to focus on debt-free and uh payment uh non-cententric companies. This is on current account and current account last 15:28 15 minutes, 28 seconds quarter showed a reasonable growth but to sustain that we need this proposition NR we already launched our SCNR we have crossed 30 million so we are seeing a 15:36 15 minutes, 36 seconds good appetite we have gone live on three more currencies and most importantly full range of AD1 product we have gone live and here again our focus is going 15:45 15 minutes, 45 seconds to be elite that is HNI and most importantly family banking and we have launched a specific product last quarter 15:52 15 minutes, 52 seconds which we called it as explorer for seaf farers as a segment which the initial days are good so this should help us inward and outward remittance in terms 16:01 16 minutes, 1 second of RTD retail TD we had a huge last year renewal in terms of uh yearly pricing on triple 4 days which we have focused and 16:10 16 minutes, 10 seconds converted 70% of that into 8 today our 70% of the book is durationcentric with 8 and we are planning to add 30,000 16:18 16 minutes, 18 seconds customers internally and externally and this will help us to enhance the PH proposition also In mobile banking, we 16:25 16 minutes, 25 seconds have crossed our uh five and a half to six lakh closer to mobile bank downloads on our equitas 2.0 which is on par. I 16:33 16 minutes, 33 seconds think this is one of the few app where one can do entire payments as well as related that is secondary market when it 16:41 16 minutes, 41 seconds live we are ready and primary market they can do and investment and insurance proposition. So this is a year it's going to be clear segmentation 16:48 16 minutes, 48 seconds categorization resource management through RM and most importantly driving transaction center. We will cover as and 16:55 16 minutes, 55 seconds when questions arises. Thank you. I'll hand it over to Gopy. 17:05 17 minutes, 5 seconds Thank you Mi. Good morning everyone. The quarter went by was very challenging given the virtually hour by hour change 17:12 17 minutes, 12 seconds in geopolitics and attendant fuel price global supply chain impact. Financial markets continue to exhibit volatility with effects of geopolitical 17:20 17 minutes, 20 seconds uncertaintity continue to impact asset prices across the board. All Indian asset classes continue to underperform. 17:26 17 minutes, 26 seconds This has largely been caused by foreign investors seeking safe heaven bets and rebalancing in favor of indexes with AI constituents and high technology access. 17:35 17 minutes, 35 seconds Rupee depreciation pressure continues. 17:37 17 minutes, 37 seconds However, there have been active interventions by RBI to better manage volatility. In the immediate term, CPI is expected to broadly remain within MPC 17:46 17 minutes, 46 seconds inflation targets. However, the effects of imported inflation, impact of extreme weather events such as the current heat 17:53 17 minutes, 53 seconds wave, expected impact of super elino on this year's monsoon are likely to see some upside risk materialize against 18:00 18 minutes current RBA projections. Government bonds saw benchmark 10ear significantly harden during the quarter and close at 18:07 18 minutes, 7 seconds above 7% against a 6.6 six at the beginning of the quarter with the market beginning to price in possibility of rate hikes this fiscal RB actions will 18:16 18 minutes, 16 seconds be keenly watched for further cues given the overall pressure on domestic economy and consumption coming to equitas uh income from investments was a loss of 18:24 18 minutes, 24 seconds 7.3 crores for this quarter for the full year treasuries income stood at 179.9 cr with heightened volatility becoming new 18:32 18 minutes, 32 seconds normal we approach the coming quarter with caution thank you back to operator thank Thank you. We will now begin the 18:41 18 minutes, 41 seconds question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. 18:49 18 minutes, 49 seconds If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies 18:58 18 minutes, 58 seconds and gentlemen, we will wait for a moment while the question Q assembles. 19:05 19 minutes, 5 seconds Our first question comes from the line of Res from ICICICI securities. Please go ahead. 19:12 19 minutes, 12 seconds Yeah. Hi sir and thank you for the opportunity. Uh sir my first question is on this F27 19:19 19 minutes, 19 seconds ROA guidance right. So uh we are looking at 1.2% ROA versus 1.5 in Q4. You also 19:26 19 minutes, 26 seconds mentioned that say cross is likely to normalize you know maybe from 1.1 or percent to 1.5 uh but in that case uh 19:36 19 minutes, 36 seconds are we not expecting any margin expansion from uh 19:46 19 minutes, 46 seconds um see as I mentioned uh uh this is here as I mentioned in my opening comments uh 19:53 19 minutes, 53 seconds we have a name of 7.29 29% in Q4. Um while we should continue to look at a 20:00 20 minutes 20% plus uh you know growth in advances which will lead to a higher level of income. However uh we have two issues. 20:08 20 minutes, 8 seconds One is that our uh our net slipage was the lowest in Q4 which means that income reversal on G&P again is obviously the 20:17 20 minutes, 17 seconds lowest but uh that is that because Q4 is seasonally is the strongest always. Now Q1 and Q2 are seasonally is the weakest 20:24 20 minutes, 24 seconds and Q3 Q4 will again pick up. So there's a likelihood of a higher G&P slippage resulting lower I mean higher income 20:32 20 minutes, 32 seconds reversal in Q1 and Q2. Second thing is in March we have raised our rates on TD and savings savings accounts and that is 20:40 20 minutes, 40 seconds expected to have a increase in the cost of funds. So these two together uh might moderate the NIM from 7.29 29 and uh 20:49 20 minutes, 49 seconds that is one at the top line and at the bottom line the credit cost of 1.11% is um is is probably again the lowest given 20:58 20 minutes, 58 seconds the Q4 seasonality issue but it is more likely to be at around 1 and a half% for the full year. So if you kind of take 21:06 21 minutes, 6 seconds all of this into account that's where we are uh we we believe that we should be able to deliver a 1.2 to 1.25% 7 to 5% 21:13 21 minutes, 13 seconds RA for the full year while we should exit the fourth quarter at uh at around 1 and a half%. 21:20 21 minutes, 20 seconds Got it. Got it. So I mean just to follow up on that so you know so basically precrisis our name uh you know used to be anywhere between 8 and a half to 9%. 21:31 21 minutes, 31 seconds And now you know given our name at 10.299 you know we are not expecting any 21:38 21 minutes, 38 seconds improvement from here on. So uh so does that mean that name at this level would be a new normal name for our business mix? 21:48 21 minutes, 48 seconds Yes absolutely because uh our micro finance which used to be around 50 45 50% uh in the past now it's come down to 21:56 21 minutes, 56 seconds 10%. And uh so as in fact if you see our NIS over the last maybe uh 3 years or 22:04 22 minutes, 4 seconds four years if you see the trajectory of our NIS it's been coming down quarter after quarter largely because micro finance has been coming down as a 22:12 22 minutes, 12 seconds percentage of the portfolio and MFI we all know has the highest yield and as it was coming down the NEM was also coming 22:19 22 minutes, 19 seconds down uh and uh now today we have reached a level where MFI is just 10% of the book and we should expect that MFI 22:27 22 minutes, 27 seconds continue to remain around the 10% level and that's why we believe that our NS are more or less bottomed out and 22:34 22 minutes, 34 seconds somewhere around 7 to 7.1 is where we believe it should kind of stabilize on an on an ongoing basis. 22:41 22 minutes, 41 seconds Got it. Got it. My last question uh on the corporate uh book side right so this book has actually become a 3x in past 22:51 22 minutes, 51 seconds one year and I'm assuming it will be one of the lowest uh yielding book for us. 22:56 22 minutes, 56 seconds Uh so when we are you know seeing the definite pressure on name then what's the strategy of growing corporate book 23:04 23 minutes, 4 seconds so aggressively uh you if you are meaning by corporate if you're meaning the NBOC 23:12 23 minutes, 12 seconds yeah yeah right so NBC for us is u a filler you 23:20 23 minutes, 20 seconds know it's not a it's not a product where we have a target to lend it's a filler so wherever Ever we have surplus money 23:28 23 minutes, 28 seconds we we lend with to the NBS because otherwise we would have to park it in government securities. 23:34 23 minutes, 34 seconds So last year we had some excess liquidity at some point. In fact our CD ratio had gone down as low as 79% at 23:41 23 minutes, 41 seconds some point in time during the last year and we were stuck with some excess liquidity. So we just deployed short-term uh loans to especially gold 23:49 23 minutes, 49 seconds loan NBC's because they have short-term assets and so that's where the the the numbers reflect. 23:57 23 minutes, 57 seconds Got it. Got it. Uh can I ask last question? Yeah please. 24:02 24 minutes, 2 seconds Okay. So ju just on this CV portfolio right I mean uh you did mention about uh you know there is uh we don't foresee 24:10 24 minutes, 10 seconds any near-term pressure. driving level two level three on the impact. Uh but uh in your assessment you know what kind of 24:18 24 minutes, 18 seconds a fuel price hike uh do you think uh CV operator will not face challenges and at 24:25 24 minutes, 25 seconds what fuel price hike do you think you know uh we as a company should be cautious uh in terms of uh civil portfolio behavior. 24:36 24 minutes, 36 seconds See, it's all very very very open-ended at this point in time. But the latest news report that we are seeing is that 24:45 24 minutes, 45 seconds uh the the oil marketing companies are actually out of pocket by as much as rupees 100 on per liter of diesel. 24:54 24 minutes, 54 seconds Rupees 100 per liter. Practically the cost of today's diesel is also about 100. So practically it looks like uh 25:00 25 minutes they they out of pocket by as much as 50% of what they are selling at. 25:07 25 minutes, 7 seconds So we don't know exactly how far the government will try to recoup this cost from the consumers. But it all depends 25:14 25 minutes, 14 seconds on how much they want to pass on the f diesel costpeci especially the diesel cost to the pump uh purchasers. So we 25:23 25 minutes, 23 seconds don't know. No, I mean frankly it's very very open-ended very difficult to put a number or anything around it. Uh but anything normally we have seen in the 25:32 25 minutes, 32 seconds past over the last so many years that we have been financing commercial vehicles we have seen in the past that anything up to 10% uh increase in diesel prices 25:40 25 minutes, 40 seconds has no effect on the performance of the portfolio. When it goes beyond 10% then then we start seeing some effect. 25:48 25 minutes, 48 seconds Yeah that's exactly what I wanted to check. Uh this is very helpful sir. Thank you and the support. 25:56 25 minutes, 56 seconds Thank you Resh. 25:59 25 minutes, 59 seconds You the next question comes from the line of Pratesh Bum from Dam Capital Advisors. Please go ahead. 26:07 26 minutes, 7 seconds Yes sir. Good morning and uh congratulations. Uh one is on uh the savings account. 26:15 26 minutes, 15 seconds There's a sharper decline in this quarter. Generally this is a stronger quarter but uh any reason for that and 26:21 26 minutes, 21 seconds what is the strategy for the same see uh we have analyzed our book we have seen where we have lost the book is 26:30 26 minutes, 30 seconds between 5 to 10 lakhs and 10 to 15 lakhs that is why in March we calibrated those accounts with slightly higher interest 26:38 26 minutes, 38 seconds rate because primary market asbar was also weak during the quarter we had close to 35,000 customers who were on this bucket using savings account for 26:46 26 minutes, 46 seconds asbar So we have enhanced the rate in that particular segment moving up. 26:51 26 minutes, 51 seconds Earlier it was at 3% levels. Now it is at competitive level of double what other competition can offer. This is on one side. Second thing we are enhancing 27:00 27 minutes as I said in my presentation the proposition by itself house of elite focused more on program and specific targeted segment and branches. So these 27:08 27 minutes, 8 seconds are the two approaches by pricing by program expansion and offerings. So you will see the takeoff from this segment. 27:16 27 minutes, 16 seconds Sure. And also in continuation for the same we've seen also our budget deposit move up significantly this quarter. Any any particles on the theme 27:26 27 minutes, 26 seconds bulk we got it non-allable. If you see year on year till quarter three we were shredding it and building a retail portfolio and there was a opportunity 27:34 27 minutes, 34 seconds available at bulk and non-allable across segment government insty and uh financial institution. It is not skewed towards one segment. So we leveraged 27:43 27 minutes, 43 seconds what we had at that point of time and built it up. But our entire strategy for insty as always is hold and grow. So 27:50 27 minutes, 50 seconds that 70 to 75% of the portfolio remains always retail. 27:56 27 minutes, 56 seconds Sure. Sure. And uh just just in continuation from the previous question on front what is our sustainable limbs 28:04 28 minutes, 4 seconds for our business where now we are going to candidate mix and mix on the both side of manita. What can be the 28:11 28 minutes, 11 seconds sustainable limbs if you look at it from three perspective? 28:18 28 minutes, 18 seconds Yeah. So, um I think we should be looking at a sustainable 7% name uh give or take a few basis points largely 28:27 28 minutes, 27 seconds because of uh as I mentioned two factors. One is that our cost of funds might start seeing an upward trend because we have increased the rates in 28:35 28 minutes, 35 seconds the month of March and uh second thing is that our CD ratio is slightly over 90%. So we will be trying to bring it to 28:42 28 minutes, 42 seconds slightly less than 90%. So that could again mean some level of uh impact on uh interest income. So so I think uh 28:51 28 minutes, 51 seconds broadly we should be able to look at about uh around 7% give or take some basis points uh this way. 29:01 29 minutes, 1 second So for the concentration side so now as we are uh 29:08 29 minutes, 8 seconds like thinking about you're not uh you're not quite audible. 29:15 29 minutes, 15 seconds Uh could you be a little louder and use your phone on the handset mode in case if you're not using it on the handset mode? Thank you. 29:26 29 minutes, 26 seconds Ladies and gentlemen, the participant has got disconnected. We will move to the next participant. 29:32 29 minutes, 32 seconds The next question comes from the line of Ashley Sonj from Kotak Securities. Please go ahead. 29:38 29 minutes, 38 seconds Hi team, good morning. Uh the first question is on the SPL business and particularly the microlab side. uh 29:45 29 minutes, 45 seconds assuming that over the next year the global tensions don't worsen from here how comfortable are you with growth in the Mlab segment in context of the 29:54 29 minutes, 54 seconds challenges which you experienced last year and along with that if you can share uh in FI26 you made total 30:01 30 minutes, 1 second provisions of about 1140 crores how much of that went towards micro finance and how much went towards microlab 30:10 30 minutes, 10 seconds yeah uh this is Jag u so um we don't see any kind of impact due to global 30:17 30 minutes, 17 seconds tensions for microlab or the micro finance book. Okay. So microlap uh if you look into that uh even the current 30:25 30 minutes, 25 seconds year we have been growing in that particular segment. Okay. But not at the high level because our focus has been more on the 30:32 30 minutes, 32 seconds uh business loans which is about 10 lakh segment which we have grown at 26% yearon year. But microlap within the um 30:41 30 minutes, 41 seconds available opportunities and with good credit quality customers refining our credit norms um we are growing at a double digit growth in micron lab. Okay. 30:51 30 minutes, 51 seconds So does that answer your question? sir if 31:00 31 minutes you can. So this microlab growth today is around 30 odd percent. You think that can uh go closer to a 20% number 31:21 31 minutes, 21 seconds it's a small business loans is growing at a 13%age which might go up to a level of 20%age. Okay. They're not given on 31:29 31 minutes, 29 seconds the microlap 13%. It's a overall small business loan uh segment. 31:35 31 minutes, 35 seconds Understood sir. I was calculating based on the mix which you share in percentage terms but that answers the first part of my question. Anyway, uh if if you can 31:43 31 minutes, 43 seconds also share the provision breakup for the full year FI26 that would be helpful. Uh then I can ask the next question. 31:54 31 minutes, 54 seconds Yeah. um micro finance we made a provision of 588 crores in the last year and on the micro 32:02 32 minutes, 2 seconds lap it's 42 crores uh friends the next is on the liability 32:08 32 minutes, 8 seconds side uh for muri sir uh so what would be the incremental cost of term deposits and savings account for you uh in the 32:17 32 minutes, 17 seconds last quarter see uh we brought it down from 6.3 to 5.98 now with the increased 32:25 32 minutes, 25 seconds uh uh you know slabs what we have anticipated based on present slab static is close to 7 to8 only on savings 32:32 32 minutes, 32 seconds account sorry this 7 to it will be 6.06 it will go 5.98 to 6.06 32:41 32 minutes, 41 seconds or 6.07 incremental cost on uh the uh savings account 32:48 32 minutes, 48 seconds cost is 9 bits savings will go to 6.07 07 total cost cost of will go up to 7.1 32:55 32 minutes, 55 seconds plus understood and this was for 4 cube is that right 33:04 33 minutes, 4 seconds understood sir uh perfect and lastly if you can share that uh the provisions which you have made in 4Q 33:12 33 minutes, 12 seconds uh have you utilized any standard asset provisions and are there any standard asset non-N provisions which are still outstanding on the balance sheet That was my last question. Thank you. 33:23 33 minutes, 23 seconds Yeah. Uh see we had uh in micro finance know 7 75 crores brought uh brought forward of which 30 crores we used 29.6 33:32 33 minutes, 32 seconds we use in Q4 and we are carrying for 46 crores out of transportation. 33:40 33 minutes, 40 seconds Understood sir. Thank you for the detailed answers. 33:45 33 minutes, 45 seconds Thank you. The next question comes from the line of Shesh Kanani from Asian market securities. Please go ahead. 33:53 33 minutes, 53 seconds Yeah, good morning everyone and congrats on a good set of numbers and thanks for the opportunity. Uh so just wanted to understand uh we have in one of the 34:01 34 minutes, 1 second buckets uh that is 5 to 10 lakhs we have in the saving account we have increased the rate by around 200 bs. So just 34:09 34 minutes, 9 seconds wanted to understand what is the contribution in of that bracket and uh the hike seems to be quite steep. It is even higher than the JAN numbers if my 34:17 34 minutes, 17 seconds data is correct. Can you just put some light on this? See our principle uh or our focused uh sourcing is through elite 34:26 34 minutes, 26 seconds and we are elite is for HNI as a segment. So 5 to 10 lakhs today contributes to close to 13% of my entire 34:34 34 minutes, 34 seconds book. So 13% of the entire book actually today doesn't have any secondary uh offering because of ASBA market still 34:41 34 minutes, 41 seconds SIP market came into a standstill and second thing we are pushing through family banking as a proposition. So it is a conscious decision because earlier 34:49 34 minutes, 49 seconds it used to be three and a half%. And we saw there was a bleed inside this. So to grow the customer to a reasonable level 34:56 34 minutes, 56 seconds within that uh cost of funds not going up to this level we have taken this bucket as a key approach which helps in sourcing deepening and most importantly 35:04 35 minutes, 4 seconds getting retail participation that is why in SA as I said it came down up to as low as 5.98 from 6.1 35:15 35 minutes, 15 seconds just one clarification this is 13% of the total deposits right 10 lakh yes 35:21 35 minutes, 21 seconds okay thank for that. Uh so uh another thing sir we I have I have noticed there is a jump in the disbbursement ATS of 35:31 35 minutes, 31 seconds SDL is it primarily because of uh we have stopped lending in less than three lakhs bracket or anything else we can 35:38 35 minutes, 38 seconds read into and also if you can specify what is the current sweet spot and impact if you can is visible on the 35:46 35 minutes, 46 seconds macro uh on the because of the micro on this portfolio. Yeah. Uh this is Jagdesha. Um so u we don't want to 35:54 35 minutes, 54 seconds depend on any specific uh product segment. Okay. Earlier we have been focusing more on the microlab and Gab which is a sub 10 lakh segments. Now we 36:03 36 minutes, 3 seconds have diversified our product segment into various categories. Okay. That's what you can able to see that the recalibration of the product mix shows 36:11 36 minutes, 11 seconds that the ATS has been increased. But if you look at the growth, we have been focusing on all the segments. Even the previous question on the microlap as a 36:18 36 minutes, 18 seconds segment alone, we have grown by 16%age and our primary focus would be ma majorly on the BL which is about 10 lakh segment which we have grown by 27%age. 36:28 36 minutes, 28 seconds So we do the recalibration based on the available opportunities but we don't want to specifically focus on any specific uh customer segment. 36:41 36 minutes, 41 seconds Fair enough. Uh just a last question if you can squeeze in. Uh sir just I to notice the there's a sequential drop in terms of number of employees right 36:49 36 minutes, 49 seconds despite we have having higher sever disbburment volumes. So how should we think about this and uh uh any uh benefit we had in the employee expenses 36:57 36 minutes, 57 seconds in terms of one-offs or anything on the asset part if you see we have 37:08 37 minutes, 8 seconds reduced the employees to close to uh 600 numbers between Q3 and Q4. This is basically integration of the supporting 37:16 37 minutes, 16 seconds functions. We have not reduced our uh sales or the uh collection numbers because we integrate the affordable 37:24 37 minutes, 24 seconds housing and SBL within the same branches. So we can able to leverage the supporting functions which effectively can able to uh demonstrate better 37:33 37 minutes, 33 seconds productivity and efficiency on the uh employee cost numbers. 37:38 37 minutes, 38 seconds So this is share on the oneoff in Q4 in employee expenses we had a reversal of around 14 crores in graduity and uh 37:47 37 minutes, 47 seconds leave and catchment though we have provided 29 crores with regard to new labor law code in Q3 37:56 37 minutes, 56 seconds uh just one clarification that uh employee decrease is predominantly can be considered as an operating thing right it's it's a structural change 38:04 38 minutes, 4 seconds right yes yeah okay thanks Thanks a lot sir. 38:08 38 minutes, 8 seconds Thanks uh thanks for answering my questions and best of luck. 38:12 38 minutes, 12 seconds Thank you. The next question comes from the line of Shrial Doshi from Equirious Capital. Please go ahead. 38:20 38 minutes, 20 seconds Hi sir. Uh thank you for giving me the opportunity and congrats on a good quarter. My question was again on the deposit side and its implications on 38:27 38 minutes, 27 seconds margins. Uh so if you look at uh we've already taken some rate height we've already taken some rate hikes on the deposit side. incrementally if the 38:35 38 minutes, 35 seconds systemic rates further go up we would also take a rate high then in that case do you see uh the margin contraction for 38:44 38 minutes, 44 seconds the year to be higher especially when I don't think we we plan to change the loan book mix uh broadly so in that case 38:52 38 minutes, 52 seconds do you see the the margin uh contraction being relatively higher than what we are advertising today 39:00 39 minutes uh okay so I'll take that uh see as for the cost of funds is concerned, interest rates and deposits is concerned, we will 39:08 39 minutes, 8 seconds have to keep it tuned to what's happening in the external market and uh we need to ensure that deposit flow continues to be strong into the bank and 39:17 39 minutes, 17 seconds the rates will be aligned from that perspective. Um so going forward if RBA raises the rate and the market rates go 39:25 39 minutes, 25 seconds up of course we'll necessarily follow suit. We have to follow suit even if uh the RBA does not raise the rates. uh we 39:32 39 minutes, 32 seconds have seen that some of the banks have actually started raising the rates in the last one to two months and we don't know how this will go forward happen 39:40 39 minutes, 40 seconds because uh that as you know sectoral deposit growth is less than the sectoral credit growth. So somewhere along the way banks might start increasing the 39:49 39 minutes, 49 seconds rates on their own even if repor rate does not really change. If such a thing happens we'll also have to follow suit and our cost of funds will go up. uh the 39:58 39 minutes, 58 seconds only advantage we have in the system is that uh the segments to which we lend to is largely the underserved to unserved 40:06 40 minutes, 6 seconds segment of the uh you know borrowing uh borrowing segment and because of that uh 40:13 40 minutes, 13 seconds a 2 or a.1 or a 2% increase in cost of funds by and large you can say we should 40:20 40 minutes, 20 seconds be able to pass it on maybe with some little bit of a timing gap but it should be possible and so that around that 7% 40:28 40 minutes, 28 seconds nim that we are talking of is something we should be able to maintain even if cost of funds does go up in the future. 40:37 40 minutes, 37 seconds Okay, got it sir. That was helpful. Uh and the second question was on uh I mean our espiration on the universal banking 40:44 40 minutes, 44 seconds license uh as well as uh a visibility on the capital raise plans if we have uh in the near in the near term. 40:53 40 minutes, 53 seconds Okay. So on the universal uh bank license uh uh you know RB has a guideline for SOBS to convert to 41:01 41 minutes, 1 second universal bank and uh so now we have completed uh the uh this year's financials are now completed. So we'll 41:09 41 minutes, 9 seconds be doing a full analysis and uh then we'll have to take it up with RBI and see whether we comply with the with the 41:16 41 minutes, 16 seconds various requirements of that guideline and if there's a consensus feeling that yes we do qualify then we'll end up applying. So that's something that we 41:25 41 minutes, 25 seconds will dialogue and uh come to a decision and uh do it you know on that basis. As far as capital raise is concerned, uh 41:33 41 minutes, 33 seconds you know our our approach has been consistent over the last one year that we will try and uh manage capital 41:41 41 minutes, 41 seconds conserancy approaches as much as we can conserve capital as much as we can uh through various forms. So we have 41:48 41 minutes, 48 seconds started getting lot of our qualifying assets guaranteed under the central government various fund schemes like our vehicle finance under CGTMC micro 41:57 41 minutes, 57 seconds finance under CGFMU. So all those release capital to the banks. Uh second thing is that our affordable housing and gold loans have been growing growing 42:05 42 minutes, 5 seconds quite strongly. So they are all lower risk weighted assets. And um third is IBPC is a tool that we use from time to 42:13 42 minutes, 13 seconds time based on uh you know demand and supply appetite from the other banks. 42:19 42 minutes, 19 seconds And so all of this is something we continue to do. Now our tier 2 we raised about 1,000 crores last year. out of thousand cr by September I think around 42:28 42 minutes, 28 seconds 300 crores will run out from the tier 2 classification uh and so somewhere by 42:34 42 minutes, 34 seconds end of uh this calendar year we are looking to raise another maybe 4 to 500 crores of tier 2 we will be putting up a 42:42 42 minutes, 42 seconds suitable resolution into the AGM at some point in time and uh so all of this we hope will enable us to keep our capitaly 42:51 42 minutes, 51 seconds you know at a comfortable level and RBS come with the draft guideline on capital adequacy. Uh there are a few factors which might actually uh support our 43:00 43 minutes capital equacy if those guidelines uh become uh uh an applicable guideline from being a draft guideline. So we'll 43:07 43 minutes, 7 seconds keep monitoring it and um if at all required we will try and raise tier one capital towards the end of uh fourth 43:15 43 minutes, 15 seconds quarter maybe or first quarter of next year maybe. uh but our objective is to try and see how do we manage capital through various other uh instruments and means. 43:25 43 minutes, 25 seconds Got it sir. Got it. Thank you so much sir for answering all my questions and good luck for the next question. 43:33 43 minutes, 33 seconds Thank you. The next question comes from the line of Nitan Agarwal from Motil Oswald Financial Services. Please go ahead. 43:41 43 minutes, 41 seconds Hello. Yeah. Hi. Good morning everybody. Uh audible. Yes Nathan. Please go ahead. 43:48 43 minutes, 48 seconds Thanks. Uh so sir I have two questions. 43:51 43 minutes, 51 seconds One is on the gold loan book. Uh last two quarters we are seeing pretty strong like 45 50% sequential growth. In the past we uh have not been I will say so 44:00 44 minutes successful in scaling up this portfolio and uh but but now the the traction is really quite evident. So how what is the 44:08 44 minutes, 8 seconds game plan here like how much uh mix do you see this book shaping up to in the next 2 3 years? what all underwriting 44:16 44 minutes, 16 seconds changes have we made to drive uh this kind of growth and uh any color around the ease also that we are making in this business. 44:24 44 minutes, 24 seconds Hi Miy here see conceptual changes three things one is we did the uh data mining and we first found out how many of our 44:33 44 minutes, 33 seconds existing customers are having gold loan outside and we went you know behind those campaign and that campaign has 44:40 44 minutes, 40 seconds yielded numbers. Second thing is we focused our activity to the largest markets which means we actually bought in resources closer to those markets 44:49 44 minutes, 49 seconds where gold loan naturally exist and we targeted if you see with the new RBI norms up to 2 and a half lakhs 85% and 44:56 44 minutes, 56 seconds on so our entire ticket ATS went up campaign went up and we added resources in those branches where there is a opportunity so these three things 45:04 45 minutes, 4 seconds actually helped and now we have started using asset branches to cross-ell gold loan that has stepped in and that should add more and more cross-ellled as an 45:13 45 minutes, 13 seconds opportunity in coming days and we have the entire range of gold loan products from bullet payment to gold loan odi now every line of product actually expands 45:21 45 minutes, 21 seconds the market so while gold loan odi today is less than 5% it would should help in coming days uh current accountled 45:28 45 minutes, 28 seconds acquisition so overall it is a mix of campaign understanding data mining allocating resources and focused on 45:36 45 minutes, 36 seconds branches that is the reason right and any color found the yield also and the mix that you see this portfolio gaining in the next two years. 45:46 45 minutes, 46 seconds See today we are predominantly cross-selling to uh you know asset into liability based customers. So our yield is anything anything around closer to 45:54 45 minutes, 54 seconds 14. So moment we start expanding it through asset branches the yield should shoot up because here the ATS is high requirement is non-seasonal but for 46:03 46 minutes, 3 seconds consumption or uh emergency purpose. So it comes up to 14 and it should start looking up as we expand into asset branches. 46:12 46 minutes, 12 seconds Okay, got it. And the other question is around like LCR ratio which is fairly high for us. Uh so while we talked about 46:20 46 minutes, 20 seconds NIS to kind of start uh kind of seeing some moderation after this sharp rise this quarter and we have raised deposit rates but do you plan to like use LCR as 46:28 46 minutes, 28 seconds an lever to deploy additional liquidity and so as to support margins? What what is the thought process there? Yeah. 46:37 46 minutes, 37 seconds Hi, this is Gopy here. Yeah, you are right. Our LCR is high. One, if you look at it, what we focus is also on the 46:45 46 minutes, 45 seconds quality of deposits. So, naturally, what we look at is the quality of deposits naturally tend to be LCR friendly. That is the primary reason why our LCR 46:53 46 minutes, 53 seconds remains high visavi market. Uh second thing is with respect to the surplus liquidity we are while we carry this surplus in the balance sheet it is adequate for the immediate growth plans. 47:05 47 minutes, 5 seconds So uh there is no massive liquidity being carried in the balance sheet which may cause a drain on interest income. 47:15 47 minutes, 15 seconds Okay. Okay. And uh so one data point also on the interest reversal uh because we talked about that next quarter it may not be there as much level. So any any 47:24 47 minutes, 24 seconds one-off beside interest reversal that is there in this cotton number that you would want to call out? 47:32 47 minutes, 32 seconds Nothing nothing as such nothing special. 47:36 47 minutes, 36 seconds And how much is this number and 27 crores for the quarter is there? 47:43 47 minutes, 43 seconds Okay. So that's the only like kind of measurable oneoff meaningful oneoff. 47:52 47 minutes, 52 seconds Yeah. And sorry if it doesn't. 47:55 47 minutes, 55 seconds So this is Yeah. Yeah. So basically 27 cr is the only meaningful oneoff in this quarter. 48:00 48 minutes It's not a oneoff. This is a reversal for the quarter. 48:05 48 minutes, 5 seconds Every quarter to have it for this Q4 it is 27. Got it sir. 48:11 48 minutes, 11 seconds Thank you so much sir. I wish you all the best. 48:15 48 minutes, 15 seconds Thank you. The next question comes from the line of Raji from Yes Securities. Please go ahead. 48:21 48 minutes, 21 seconds Yeah. Hi, good morning. Congratulations on strong numbers. Uh firstly, I want to understand uh you know the walk between I mean you're exiting at a credit cost 48:29 48 minutes, 29 seconds of 1.1 but you're trying to indicate is that for the whole year by 27 uh your guidance is kind of building in 1.5 as a 48:37 48 minutes, 37 seconds credit cost number. So I'm just trying to understand we're at a PCR of 73%. 48:43 48 minutes, 43 seconds uh we are seeing strong trends which is structural in terms of slippages and we also have a leftover standard asset 48:50 48 minutes, 50 seconds provision of 44 to6 cr uh on the MFI uh so what makes us uh you know guide for 48:58 48 minutes, 58 seconds 1.5% trade cost uh given the trends as we see right now uh things are looking uh pretty strong so are we building in 49:06 49 minutes, 6 seconds any geopolitical risk of uh you know higher slippages coming through in Q1 or are we building uh that your LDDS may 49:15 49 minutes, 15 seconds increase possibly. Are you seeing something like that already? Uh you know that's that's the first question. Yeah. 49:23 49 minutes, 23 seconds Um yeah so uh you know Q4 traditionally is the best for in terms of performance for us probably for the rest of the 49:32 49 minutes, 32 seconds system also. So that 1.1 is not something which we can assume to be a repeatable uh number. Um now if you look 49:41 49 minutes, 41 seconds at uh Equitas specifically our micro finance is now back to complete uh under control the X bucket collection 49:48 49 minutes, 48 seconds efficiencies are totally back to normal and so we expect micr finance credit cost to be back to the normal range which used to be anywhere between 2 3%. 49:58 49 minutes, 58 seconds So the credit cost of micro finance could be in that range and the rest of the business all of them have actually been improving over the last two three 50:05 50 minutes, 5 seconds four quarters and performance of them have been good. Um so we expect the credit cost across the board to be you 50:14 50 minutes, 14 seconds know kind of comfortable going forward but we really don't have much of an idea what is the entire effect of the this 50:23 50 minutes, 23 seconds war that's going around is going to have we don't really know and uh that's one thing second thing is that first and 50:31 50 minutes, 31 seconds second quarter traditionally the collection efficiencies will be lower because of the fact that uh April to June is seasonally ly the weakest and 50:40 50 minutes, 40 seconds July to September there'll be a lot of rains all over the place which will have an impact on customers uh you know cash flows so so all this is what we are 50:48 50 minutes, 48 seconds factoring in when we are guiding for that 50:56 50 minutes, 56 seconds does that answer your question Rajie I'm sorry to interrupt Rajiv we are not 51:03 51 minutes, 3 seconds audible am I audible Yes, now it's better. Please go ahead. 51:09 51 minutes, 9 seconds Now it's better. Yeah. Yeah. I think my question is on the product level ROAS sir spoke about in the initial remarks that uh uh the new products have turned 51:18 51 minutes, 18 seconds ROA profitable uh in the last year. So how further you see the RO needle moving for affordable MSC bold loone uh you 51:26 51 minutes, 26 seconds know in the current year and also could you share uh you know ROAS exit ROAS for some of the existing products like 51:34 51 minutes, 34 seconds vehicle SBL and MFI uh can you give some color on the ROA of the vintage products also 51:42 51 minutes, 42 seconds okay so uh in Equitas you know we do a 100% transfer pricing to the the the lending divisions which means that uh 51:51 51 minutes, 51 seconds the entire cost of the rest of the bank is transferred price to the asset side. 51:57 51 minutes, 57 seconds Uh so when an asset does an ROA uh it's actually an ROA if the let's say we take the ROA of the different lending 52:06 52 minutes, 6 seconds business divisions and you sum it up it should actually come equivalent to the ROA of the bank u because the entire rest of the cost of the bank is transfer 52:14 52 minutes, 14 seconds price to the asset side. So that's how we do it. So when I say that all products turned profitable last year, it 52:21 52 minutes, 21 seconds is on a fully loaded cost basis and uh so the the new products like affordable 52:27 52 minutes, 27 seconds and MSE turning black for the first time last year and uh hopefully with increased volumes and better leverage of 52:36 52 minutes, 36 seconds their cost uh they should become more more and more contributing from a bottom line perspective. uh we haven't and we 52:44 52 minutes, 44 seconds don't want to really give the ROI at different product levels. Uh at this point in time we are not really wanting to give that um but uh broadly we can 52:53 52 minutes, 53 seconds say that micro finance when the collection efficiency is good will be uh will be very high from a ROA 53:02 53 minutes, 2 seconds perspective. Microlab on an ongoing basis microlab is probably one of our best products from an ROA 53:09 53 minutes, 9 seconds perspective. The SBL as a whole including microlab is again a wellp performing uh product from an ROA 53:17 53 minutes, 17 seconds perspective. Vehicle finance uh maybe just marginally lower than SBL from an ROA perspective and other products we should see them catching up soon. 53:29 53 minutes, 29 seconds Yeah. Can I just ask one more one last question please? Yeah. Okay. 53:34 53 minutes, 34 seconds Yeah. just uh just comparing Q4 to Q4 ROA. I mean you exited this Q4 with 1.4% ROS. Now you're guiding that your exit 53:43 53 minutes, 43 seconds FI27 ROA will be 1.5. Uh so what is the difference? What will change between these two years in 12 months? Are you 53:52 53 minutes, 52 seconds saying see the credit cost number is already lower at 1.1 you are exiting at a higher name. uh then would be uh you know cost scale efficiencies and the 54:01 54 minutes, 1 second growth efficiencies and the cost efficiencies try and overcome whatever dips you see in the niches or are you also building in some lending rate hikes following some deposit rate hikes. 54:12 54 minutes, 12 seconds Um see what we are saying is that uh the the NIM might contract a bit compared to Q4 of this year to Q4 of I mean last 54:20 54 minutes, 20 seconds year to Q4 of this year and credit cost uh at least at the Q4 level credit cost may not be very different to the Q4 54:28 54 minutes, 28 seconds credit cost of last year. Um and uh the other thing is that our operating cost 54:34 54 minutes, 34 seconds cost to assets which is about 5.8% 8% uh at this point in time should come down a 54:42 54 minutes, 42 seconds bit uh because of the growth uh basically the growth in the advances and overall asset growth. So if you see uh 54:50 54 minutes, 50 seconds NIM contracting uh little bit credit cost will remain more or less at similar levels on Q4 to Q4 base. I'm not talking 54:56 54 minutes, 56 seconds of full year just Q4 to Q4 and operating cost cost to asset should come down a bit. So the NIM reduction and operating 55:05 55 minutes, 5 seconds cost reduction should hopefully net each other out and if Q4 of uh this financial year credit cost is similar to Q4 of 55:12 55 minutes, 12 seconds last financial year that's why we are saying that this 1.45% 45% of this year exit ROA should be around 1 and a half% for uh the current financial year. 55:24 55 minutes, 24 seconds Thank you. Thank you. 55:29 55 minutes, 29 seconds Thank you. The next question comes from the line of Park Goutka from 361 Capital. Please go ahead. 55:37 55 minutes, 37 seconds Yeah. Hi. Uh thanks Mike for the opportunity. Sir, what is the comfortable level of PCR that you would like to operate at? you know our PCR has 55:45 55 minutes, 45 seconds gone up substantially over the last couple of quarters. Uh so what is the sustainable or what is the target PCR that uh you know that the bank would 55:54 55 minutes, 54 seconds like to operate at around 70%. 55:59 55 minutes, 59 seconds Okay. Okay. Fair enough. And uh the second question is uh what uh what segments of your uh on on the asset side are covered under CGTMS? 56:11 56 minutes, 11 seconds So under CGTSME two type of businesses are getting covered. One is on our MSSE loans where it is where we don't take a 56:21 56 minutes, 21 seconds collateral and that part of MSSE loan which is non-colateralized is uh something that we cover under CGMC. 56:29 56 minutes, 29 seconds Second thing is that vehicle finance the commercial vehicle finance uh you know a large part of our commercial vehicle 56:36 56 minutes, 36 seconds finance are eligible for cover under feed MC which gets covered. 56:42 56 minutes, 42 seconds Okay. Okay. Thanks and and just just uh trying to squeeze in one more uh you know considering you know it's around one and a half month that the West Asia 56:50 56 minutes, 50 seconds conflict is going on are we seeing any you know any signs of stress on the ground or the early bucket delinquencies 56:58 56 minutes, 58 seconds and have you guys you know tightened the risk filters uh uh uh you know in March and or somewhere in you know early part of April. Yeah, that's my question. 57:10 57 minutes, 10 seconds Hi uh this is Jag. U u so u as we early clearly indicated we didn't going not going to have a direct impact due to the 57:20 57 minutes, 20 seconds uh west Asia conflict okay so even in the uh month of March we have seen a 57:27 57 minutes, 27 seconds excellent collection efficiency in terms of all parameters and even April we don't want to comment immediately but looking at the micro finance as such we 57:35 57 minutes, 35 seconds didn't see much of the impact on that we need to see whether any kind of impact maybe 57:44 57 minutes, 44 seconds a month or so. As of now, we don't see any kind of impact due to West Asia for for our client segments. 57:52 57 minutes, 52 seconds Okay. Thanks a lot. Thank you. 57:55 57 minutes, 55 seconds Thank you. The next question comes from the line of Deepak Podar from Safaya Capital. Please go ahead. Yeah, I'm audible, sir. 58:04 58 minutes, 4 seconds Yes, please. 58:05 58 minutes, 5 seconds Yeah. Um, thank thank for this few clarification first sir. Um now this cost of fund you mentioned is in uh is 58:13 58 minutes, 13 seconds likely to increase due to higher saving rate and higher term deposit rate and and that's right right 58:23 58 minutes, 23 seconds hello yeah yes it is and and it's effective from what 1st April see we have done uh this uh change from 58:32 58 minutes, 32 seconds March affect only okay yes yes okay and and and and and the limb 58:40 58 minutes, 40 seconds pressure is largely because of higher cost of fund and u and and lower CD ratio that you're expecting. 58:52 58 minutes, 52 seconds Yes. Those are the couple of factors which will have an impact on the name as we move forward. 58:58 58 minutes, 58 seconds Understood. And and the limb pressure will be visible from first quarter uh from marginally yes from Q1. 59:08 59 minutes, 8 seconds Mhm. Okay. and uh further as we move forward full impact by 2Q and 3Q. 59:14 59 minutes, 14 seconds Yes. Yes. Q3 uh and Q4. 59:18 59 minutes, 18 seconds Okay. Um understood. And and so you borrower profile I mean I mean getting 59:25 59 minutes, 25 seconds impacted uh due to this macro scenario and and you are looking at a tightened credit norm with focus more on quality 59:34 59 minutes, 34 seconds of asset overgrowth. So, so can you throw some more light? I mean, how much percentage of your borrower um is is is 59:41 59 minutes, 41 seconds being impacted due to this and and what sort of credit norm tightening and I mean this 20% growth that you have mentioned is after factoring in 59:48 59 minutes, 48 seconds tightening right and and what sort of impact do you see it on on the slippage front? Yeah. 59:55 59 minutes, 55 seconds uh see as I mentioned uh in my opening remarks the the inflation uh which is 1:00:02 1 hour, 2 seconds the most likely outcome of the West Asia war right there the inflation may actually go up uh but uh in our small 1:00:11 1 hour, 11 seconds business loan and affordable housing we do not expect that to have any effect from a borrower perspective because our 1:00:19 1 hour, 19 seconds borrowers are dealing in daily use products and services you know like let's say that she's having a provision store or she or he is running a saloon 1:00:28 1 hour, 28 seconds barber shop or a saloon or eery or something like that. Now these are not discretionary consumption by people. 1:00:36 1 hour, 36 seconds These are just the daily use products and service. I mean if uh uh an idli cost you you know 25 30 rupees today and 1:00:43 1 hour, 43 seconds if that 30 rupees has to go to 35 rupees or 38 rupees uh tomorrow people will still have to just consume that idli you 1:00:52 1 hour, 52 seconds can't just stop it right so most of our borrowers use are dealing in daily use products and service and that is where 1:00:59 1 hour, 59 seconds uh not only now historically in the last say 15 years that our SPL has been operating we have never seen inflation 1:01:07 1 hour, 1 minute, 7 seconds we never seen GDP movements up and down affecting the borrowers's ability to repay because they actually are able to 1:01:15 1 hour, 1 minute, 15 seconds adjust their selling prices in line with what's happening in the econ economy. 1:01:19 1 hour, 1 minute, 19 seconds The area where I mentioned we might see an impact will be our commercial vehicle borrowers because if the diesel price 1:01:26 1 hour, 1 minute, 26 seconds goes up uh freight rates will also go up but there's always a lag time there's always a lag period uh and during that 1:01:33 1 hour, 1 minute, 33 seconds lag period the operator's income cash flow comes down and obviously during the time they may struggle to repay. Um for 1:01:41 1 hour, 1 minute, 41 seconds us uh your commercial vehicle customers on our total advances should form about 1:01:49 1 hour, 1 minute, 49 seconds uh 12% 12%. So about 12% of our total advances represent commercial vehicle borrowers 1:01:57 1 hour, 1 minute, 57 seconds and that's a segment where if the diesel price goes up let's say beyond 10% or so if the diesel price moves up yes those 1:02:05 1 hour, 2 minutes, 5 seconds people are the ones who are likely to feel an impact till the time that the freight rates get adjusted. Um so any tightening of credit norms and all that 1:02:14 1 hour, 2 minutes, 14 seconds will be primarily in that segment. the rest of the business we don't see really much of an issue because we have seen this over the last 15 years GDP 1:02:22 1 hour, 2 minutes, 22 seconds movements have been going up and down and inflation has been going up and down but we have never seen that having an impact on our customers so it's this 12% 1:02:30 1 hour, 2 minutes, 30 seconds business that we'll we'll have to continuously track from a uh credit tightening if if uh the the diesel price 1:02:37 1 hour, 2 minutes, 37 seconds starts going up that's very helpful sir and and what does it mean for slippage I mean are you seeing right now I mean we are already I 1:02:46 1 hour, 2 minutes, 46 seconds mean 30 days into the month of April in terms of increased slippages in these segments. 1:02:52 1 hour, 2 minutes, 52 seconds April has been um good. I mean uh you know last year April compared to last year April this year April has actually 1:02:59 1 hour, 2 minutes, 59 seconds been much better. So we are keeping our fingers crossed. 1:03:04 1 hour, 3 minutes, 4 seconds Okay great great. Um that would be from my side. Wish you all the very best. Thank you so much. 1:03:11 1 hour, 3 minutes, 11 seconds Thank you ladies and gentlemen. And that was the last question for today. I would now like to hand the conference over to Mr. P and Vasu Devan for the closing 1:03:19 1 hour, 3 minutes, 19 seconds remarks and uh and uh putting a lot of questions 1:03:27 1 hour, 3 minutes, 27 seconds to us always they enable us to keep us on our feet look at what the market looks for and ensure that we deliver a all round performance. So look forward 1:03:35 1 hour, 3 minutes, 35 seconds to seeing again next quarter and we hope to continue to be able to deliver a good performance. Thank you. Bye-bye. 1:03:43 1 hour, 3 minutes, 43 seconds Thank you sir. Ladies and gentlemen, on behalf of Equitus Small Capital Small Finance Bank, that concludes this conference call. Thank you for joining 1:03:51 1 hour, 3 minutes, 51 seconds us. And you may now disconnect your lines.