Ladies and gentlemen, good day and welcome to the Kotak Mahindra Bank Q3 FY 2022 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Uday Kotak. Thank you and over to you, Mr. Kotak.
Thank you and good evening, colleagues. I wish you all a very happy new year, and hopefully our 2022 calendar will see the end of COVID from being a pandemic to an endemic. I'm very happy to share with you the financial results of Kotak Mahindra Bank consolidated business. We have had a profit after tax growth of 30% year on year. I'm extremely happy to share that our business model of concentrated India diversified financial services is working well. As you know, we are in a broad range of financial services, which includes banking, securities, asset management, investment banking, insurance and financing. We've seen a very strong growth across the different segments of financial services. As you are aware, our group also owns 100% economic interest in all these businesses.
If you look at the mix of our consolidated profits, the bank contributed 63% of Q3 FY 2022 consolidated profits. We look forward to a broad continuing performance of the overall consolidated profits of the bank. Coming specifically to standalone banking, I'm happy to share that we are going for growth. Growth in our advances is 18% year-on-year and interestingly, 8% Q-on-Q. Our consumer bank grew at 29% YOY and 10% Q-on-Q, which is nearly 40% annualized. The overall advances engine is now working well. Another significant step in our growth trajectory is the step up in our customer acquisition. We added INR 21 lakh customers in Q3 2022 versus INR 8 lakh in the same quarter last year. A nearly 3x growth in new customer acquisitions.
As you can see from above, we are focused on growth even if it puts some pressure on operating expenditure in the short run. Another very important aspect is.
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Hello?
Yes, sir.
Hello, [Praveen]. Yeah. Another important aspect of our performance is asset quality, and we are quite enthused with the outcomes at the end of quarter three. At the bank standalone, our annualized credit cost on advances is now 35 basis points, of course excluding the reversal of COVID provision. The slippages for the quarter are down to 0.3% of advances. In fact, recoveries and upgrades are much higher than the slippages. The standard restructured fund-based outstanding under all frameworks, COVID one, two, MSME resolution framework is 0.54% of the advances. We are actually seeing a significant improvement in the asset quality and the quality of our balance sheet. Next, this is an important item as we see interest rates moving up.
The overall duration of our fixed income bond book is at a low of around one and a half years. Having said that, we have a very large part of our fixed income book, which is not in HTM. As a result of which in the Q3 we have taken a mark-to-market provision through the P&L of INR 284 crore on this account. Going forward with a relatively low duration of our fixed income bond book in a rising interest rate environment, we feel our bank is very well positioned from a risk matrix point of view. Further, as interest rates move up, we believe strategically a high CASA ratio of 60% will be very, very handy. All this is in the backdrop of our NIMS now at 4.6%.
Also important, if I go back to the consolidated numbers, our return on equity is now at 15%. Keeping in mind, despite a high capital adequacy of twenty-four percent, including the profits of course, for this current year. Therefore, at a very high capital adequacy of 15% ROE. Also if you look at the nature of risk we carry on our balance sheet, we think it's a very measured and well moderated and structured risk we are carrying. All in all, we think we are well geared for 2022 and beyond, and happy to continue with the strengthening of our broad financial services model, and we believe different engines will fire at different points of time, and that is the core strength of our business model.
With that, I will now hand over to my colleague, Jaimin Bhatt, and thereafter to other colleagues, to take you through the various aspects of our financial performance. Over to you, Jaimin.
Thank you, Uday. Let me start with the consolidated numbers. As Uday mentioned, we closed this quarter with post-tax profit of INR 3,403 crore, a 31% growth on a YOY basis. As we can see, the bank contributed for this quarter 63% of the overall profits of the consolidated entity, which is down from 71% in the same period last year. As Uday mentioned, we own 100% of our subsidiaries, and a number of our subsidiaries actually do not need the capital which goes with the growth of their businesses. Nevertheless, each of the segments in the subsidiaries have actually grown pretty well in this period.
The lending entities, which includes Kotak Prime, did pretty well on the back of improved collections, also coming in after taking the hit on account of the increased provision requirements, thanks to the RBI change. Kotak Prime ended the current quarter with a profit of INR 254 crore as against 149 a year ago. The other NBFC, KMIL, also again clocking in a profit of INR 100 crore. The capital market entities, going on the back of buoyancy in the markets, Kotak Securities recording a INR 270 crore profit. The investment bank, which is KMCC, bringing in a record INR 103 crore profit. They've been engaged in several market deals during this period, both on the IPOs and the advisory side.
Life insurance, which had a negative first quarter this year, has clocked in INR 247 crore this quarter compared to what it did a year ago, which was INR 167 crore. The mutual fund businesses bringing in close to INR 150 crore post-tax profit this quarter. To an extent helped by some investment gains in the trustee company, which is at pre-tax level of INR 46 crore. As Uday mentioned, we end the period at the consolidated level with a capital adequacy of 24.5%, which includes Tier One itself of 23.7%. A pretty healthy ROA of 2.6% at the consolidated level.
At the bank standalone level, as we spoke about, the post-tax profit ended with INR 2,131 crore, which is about a 15% growth on a year-over-year basis. Our net interest income grew about 12% on a YOY basis and about 8% on a QOQ basis on the back of advances growth, which came at 18% YOY and 8% QOQ. If we add the credit substitutes, the total growth of credit has been at 20% on a YOY basis. The growth has come across the board in the consumer segment, the commercial segment and the wholesale segment, which my colleagues will take you through as we go forward.
The net interest margin, on the back of a high CASA of 59.9%, again continuing to be pretty healthy at 4.62%. Our fees and services has continued to be a good growth area. A 33% rise on a year-on-year basis, coming on the back of improved revenues, both on the distribution front as well as in the general banking area. Uday talked about the mark-to-market book. We have our bond book duration is at 1.58 years, but a large part of our book is in non-HTM. Our HTM portfolio is 38%. As a result, the non-HTM book, we have to take a mark-to-market hit, as of the end of December on the back of the rise in interest rates.
That has meant that we've taken a knock of INR 484 crore on the MTM loss for this quarter. We have seen the employee costs go up this quarter on the back of family pension provision, which came out of the bipartite settlement which the IBA entered into with the bank unions. That has been a hit of INR 100 crore for this quarter. Again, as Uday talked about, we have continued our push for growth, and that has meant continuing to have expenses in certain areas. Apart from growth of employee costs, this has meant rising costs on the customer acquisition side, both on the liabilities and assets. We also had increased advertisement and promotional costs, as well as cost increase in the whole tech spend.
As we saw the customer increase this quarter at INR 21 lakh is significantly higher than what we did a year ago, which was INR 8 lakh. Our asset quality has improved over this period. Our absolute GNPA went down from INR 7,068 crore to INR 6,983 crore. Our slippages during this quarter was all of INR 750 crore. Whereas against that we saw recoveries and upgrades of over INR 1,000 crore. This is the second quarter in succession where we've seen slippage is lower than recoveries and upgrades. Our credit cost down to 35 basis points without taking the COVID write back provision. Our SMA too continued to be low at INR 298 crore.
Our overall restructuring again, we're being careful and if I look at the standard restructured book, whether it was through COVID 1, COVID 2, MSME resolution framework, all put together is 0.54% of our overall book. On the back of realization on the problem assets, we took stock and we have written back COVID provision of INR 279 crore. We continue to carry INR 1,000 crore of COVID provision on our books still. Our overall provision numbers today are higher than what we see as the GNPA number.
After all this, we end the quarter in the bank with a post-tax profit of INR 2,131 crore, which is about 15% higher than the same period last year. I would request Manian to take up the corporate bank assets, you know, update please.
Hi. As we usually do, let us look at the corporate assets in two parts, the SME part and the regular corporate bank side. On the SME side, as you can see, the momentum of growth continues. With YOY growth is about 21%. Our NTB acquisition remained robust through the quarter, and we can see this momentum carrying forward. On the corporate side, you need to look at the number along with credit substitute figure that is reported there. If you look at a combination of the two, the assets have gone up from INR 77,581 crore to INR 86,659 crore, the sum of the two. That's close to 15.5% kind of growth.
Overall, the segment, the corporate and SME together have grown at about 16.5%, YOY. In the case of SME, while the NTB was good, we also saw some small uptick in the utilization numbers. However, we have not yet seen any pickup in term loan kind of products, and we are still seeing traction on the working capital side. At the top end of the corporates, which is the conglomerates, growth has been driven more by credit substitutes than by advances purely. Advances growth is muted, but the combination of the two was quite healthy. Even there we are seeing growth driven more by working capital than by long-term loans.
Even the next rung of corporates, what we call large corporates, they seem to be following the trend that the top end corporates and conglomerates followed. Relatively, we have seen uptick in the credit substitute side there as well. In times like this, when pricing pressures are high, we find credit substitutes as a better method to do some of these lending. Overall, within corporate bank, NBFC as a segment saw some uptick again, probably because mutual fund credit funds were not available as a source to them, and they came back to banking sector for borrowing. On the CRE side, while we remain cautious on the commercial side, we have seen very good traction on the residential real estate.
As you can see, the QOQ on this has been significantly better than the YOY on the residential real estate side. It is more than 80% of our new disbursements are on the residential sector. Between the sub and the bank, I think this segment credit has revived and we see growth going forward. Of course, we are keeping our focus on the top end, and there are a lot of new customers we are able to add in this segment. Apart from this, our focus on transaction banking continued. We went live on our online trade portal. We created a new CMS platform and migration of customers onto the new platform is in progress and is progressing quite well.
Several new features were launched during this last quarter. Overall trade, FX, CASA and DCM fees, all the non-interest revenues have done quite well through the quarter. Our custody business during these times when there has been a stream of IPOs has also done extremely well to help our CASA growth. Overall, the health of the business remains good. The ROE and risk-adjusted returns, RAROCs remain good. The asset quality, of course, Jaimin already talked about, remains quite healthy and in all segments of the business. We look forward to a good momentum carrying forward from here. Thank you. Can I hand over to Kannan? Kannan, will you please take over?
Mr. Kannan, please unmute your line from your side.
Thank you, Manian. I will start with the heavy commercial vehicle financing business. Heavy commercial vehicle sales further improved during the quarter as compared to the previous quarter. Capacity utilization in the goods transport segment was better than the previous quarter. Cash flows for the transport operators was better due to a combination of better utilization, lower fuel prices, as well as stable freight rates. Our disbursements are in line with the better performance of the vehicle sales. Passenger transportation, staff transportation, and school bus segment continue to be impacted. Collection efficiency on demand in this business has been good during the quarter and it's been better than even the previous quarter. Demand for construction equipment is good both in the roads and the mining segments. It continues to be good driven by government contracts.
Demand for smaller equipment at the retail level has been a bit muted during the quarter. The retail customers or smaller customers have been impacted by the long receivable cycle and hence addition of new equipment is a bit slow over there. Capacity utilization of equipments again has improved over the last couple of months, which should lead to improved cash flows for the entire industry as a whole. Collection efficiencies on demand again here has been good, and it's as good as normal times. Tractor sales during the quarter has been better than the previous quarter, though lower than the same quarter last year. Rural cash flows continue to be strong, though a bit delayed in parts of the country due to the prolonged monsoons.
Our disbursements on the tractor finance segment have been good, and we continue to maintain our leadership position in this segment. Strong cash flows should lead to continued good demand in the coming quarters. Collection efficiency on demand has been good again in this segment. On the agri finance segment, demand for credit both working capital and CapEx in the agri SME and the agri value chain continues to be good, aided by good monsoons and increasing commodity prices. Collections during the quarter has shown an improving trend as compared to the previous quarters and is closer to normal times. Our microfinance disbursements have grown as compared to the previous quarter. Demand for credit from micro and small entrepreneurs continue to be strong in the markets in which we operate.
Collections in the market we operate are improving, and collection efficiencies are as good as normal times. I will now hand it over to Shanti to take us through the consumer finances.
Thank you, Kannan. In continuation, I will start with lending. Consumption saw a good uptick in the quarter being a festival quarter. All our retail lending businesses showed robust growth in Q3. This helps us gain market share in many products. At a consumer asset aggregate level, we grew 29% YOY and 10% QoQ. This is on the back of a 10% QoQ growth in Q2. Mortgages. We had our best ever quarter on fresh volumes for home loans. Our price leadership campaign of 6.5% during the festival season helped us acquire quality customers and strengthen our market share across all the customer segments. We continue to strengthen and widen our distribution in this very key focused business area. As the business momentum picked up, we also saw good volumes in LAP.
We saw a pickup in some commercial, but more on industrial property purchase for self-use. We continue to consolidate our market share in LAP. Mortgages grew at 38% YOY and 12% quarter-over-quarter. Unsecured retail. I'll start with cards. We had one of our best quarter on cards with acquisition at INR 3.9 lakh cards. Bulk of the sourcing has been from existing customers. We rolled out attractive offers to our customers in marketing alliances across e-commerce and physical partners across the country. Our Khushi Ka Season campaign and brand ties with Apple and OnePlus has helped us deepen our engagement with our customers. We operationalized our co-branded partnership with IndiGo. We continue to invest in technology distribution and strong product propositions to grow in this space. Personal loans. We had our best ever quarter with monthly originations at 1.7x of pre-COVID levels.
A large part of the new loans was sold digitally. We saw increased demand as normalcy returned from segments like weddings, home renovation, travel, et cetera. We have scaled up our new acquisition in both traditional and data-led digital space. We migrated to our new Salesforce platform for origination in this quarter. With phase two, our DIY and FTP journey will go live in the upcoming quarters. Consumer finance, one of our best quarters thanks to the festive season demand across physical and digital distribution. We continue to scale in this space through widening distribution and relationships with key partners and a strong data-led digital business. Overall, unsecured retail business saw a YOY growth of 12% with a strong quarterly growth of 16% on the back of 12% QoQ growth last quarter. Working capital and business banking.
This quarter saw an increase in credit demand due to better business volumes and CapEx demand from select pockets. Export segment continued to see demand from specific market clusters. We focused on new quality client acquisition, both in the secured and unsecured space in the MSME segment. 85% of the book qualifies for our priority sector. We will continue to grow in the MSME space by expanding distribution footprint, multiple and deeper channels, and technology enablement. Collection. Our bounce rates and resolutions continue to be better than pre-COVID levels. As we shared last time, we launched our digital customer, I mean, collections platform, where we saw higher customer adoption and over time this should help us reduce our collection costs. We have invested significantly on the customer and consumer assets business across distribution, technology, data and analytics, and aggressive customer offers and propositions.
We will continue to invest in this space. Now to deposits. Average savings deposits grew year-to-date YOY 11%, current account at 32% and sweep term deposit 20%. The focus on acquisitions, as you saw, aggressive customer acquisition continued on granular retail customer growth across digital and physical channels, and 811 continues to contribute successfully to our digital customer acquisition. The bank had 30.7 million customers as at December 2021, versus 25 million last year. Our CASA ratio was at 59.9% as at December 2021. Our CDs below CASA and CD below INR 5 crore comprised 88% of the deposits. CD sweep deposits was at 7.6%. Our cost of SA was at 3.5% this quarter versus 3.81 in Q3 last year.
Our asset cross-sell in Q3 through the channels were very strong across all retail products, both in consumer and commercial asset space. Fee income showed good growth, including in insurance investments and brokerage. We have increased our market share in issuance of FASTag to 10% for December 2021 on a monthly incremental basis. We launched a co-branded debit card with PVR during the quarter, and we are seeing increased customer engagement. Now to the digital part of our strategy. As outlined in the previous quarters, our digital strategy and initiatives are centered around our customers across acquisition, engagement and service, and across our value proposition of saving, lending, payment, investment protection powered by AI and ML. We continued on each of the aspects of technology, infrastructure, applications and DIY customer journeys towards scalability, agility and reliability.
In the digital channel, we will be going live with all our key consumer asset DIY and STP journeys in the coming quarters, providing a seamless, frictionless and convenient experience for our customers. This investment in our tech stack will be a continuous journey and the backbone of our digital strategy. Mobile first has always been a key strategy. The last two years we upgraded our mobile app significantly by providing customers more functionalities and a greater choice across banking, payments, loans and cards. In Q3, we launched many functionalities across assets, payments, lifestyle, protection and risk. Our customer-centric experience and functionality has allowed us to be consistently amongst the top-rated banking apps in both iOS and Android. We have seen significant increase in monthly average users, which has grown 37% YOY.
Transaction volumes, which has grown 126% YOY in value, 53% YOY through our mobile banking channel. In retail assets, we have been working on enabling mobile first and in Q3 launched several functionalities across home loans, cards, and revamped the entire loans module in the app, making it easier for access to customers. On the payment side, UPI transactions have grown 3x December 2021 over April 2021, including P2P and P2M transactions. Pay to contact continues to see rapid adoption, and we saw a 6.6x growth in transaction in December versus April this year. That was when we had launched this. In merchant acquiring, we embarked on the path of delivering a complete bouquet of key services with the launch of our merchant app, Kotak Biz in Q2.
This helped us onboard merchants for payment and collection services digitally, serve them digitally and deliver targeted offers on multiple banking and value-added services. In Q3, we enriched the digital onboarding by extending it to our existing current account customers and added new features. We have gone live in our partnership with Ezetap to increase our merchant acquisition footprint and service their merchants. To help our merchants in managing their cash flows better, we have introduced the same-day settlements in this quarter, and we in this quarter continued to leverage our partnership with FinLab for new acquisition ecosystem. The strategy on ecosystem is in three parts: orchestrate, partner, participate. In Q3, we added four new partners in KayMall, including Myntra in the in-app shopping mall. In Q3, we continued building on our API stack for partners. We have 391 APIs live.
As of now, we have 298 registered partnerships. Some key names include FinLab, VisiFi, Setu, among others. We are rapidly expanding our FinTech partnership network and are experimenting use cases in business models. We plan to leverage the regulatory network of account aggregator and open for retail and SME lending in the upcoming quarters. Now to the corporate and business banking stack. We have upgraded our transaction banking tech stack towards transforming customer experience in trade and cash management products. Trade portal, we launched a paperless end-to-end seamless trade portal, creating significant differentiation to meet our customers' unfulfilled needs. Customers can transact for outward remittances, import LCs and collection, export LCs and collection. We will be going live with an inward remittances pre- and post-shipment finance soon.
We have seen active adoption by customers and have received very positive views. We migrated 14,000+ customers to our new CMS portal, which is simple to operate with superior interfaces and customer experience. We offer first-class digital capabilities on host tools and API solution basis, which again has created a significant differentiation in meeting our customers' needs. On the transaction banking side, we introduced many services with enhanced user. Our corporate mobility app 2.0 saw INR 17+ lakh transactions, which is a 46% year-over-year growth for YTD December end. We introduced BBPS ClickPay, a new feature in BBPS which speeds up the transaction processing with a one-click journey. We introduced CMS 24/7 for corporates via APIs and with advanced payment architecture, allowing them straight-through processing. We introduced paperless supply chain financing on e-Way Bill data verification.
We partnered with a fintech for international acquiring bill sponsorship for cross-border transactions, which has helped us provide a superior international payment gateway to key e-commerce customers. We will continue to invest in the tech stack for a superior experience for our business banking customers. Digital transactions through mobile and continue to grow across deposits, lending services and transactions. 97% of our savings volume transactions were in digital or non-branch mode even in this quarter. I now request Gaurang Shah to take you through the insurance business highlights.
Yeah. Thanks, Shanti. Let me take you through the financial performance of Kotak Life this quarter, a quarter with more normalized environment for life insurance business. Our gross written premium for the quarter increased to INR 3,108 crore from INR 2,223 crore in the previous year, showing an increase of 18.5%. We continue to maintain a balanced product mix between participating and non-participating products, channel mix of agency and bank assurance, and also between the individual and group business. Individual APE growth for the quarter was 31.6% against the private industry growth of 27.5%. Group business for the quarter was up by around 28% on the back of protection business growth of over 60%.
Overall claim experience continues to be in line with the excess mortality claim we estimated in June 2021. We carry adequate provision to cover future expected claims if something arises out of Omicron. Overall, INR 600 crore excess mortality hit for the year net of reinsurance. That has been the hit which we have taken. Our net worth has crossed INR 4,000 crore with strong solvency margin of 2.50% to 2.60% . Now I hand over to Jaideep to take the presentation forward.
Thank you, Gaurang. The top line for Kotak Securities is INR 656 crore for the quarter ending 31/12/2021. This is comparable to INR 613 crore for the previous quarter and INR 474 crore for the same quarter last year. The profit before tax for this quarter is at INR 359 crore. This is again comparable with INR 325 crore for the previous quarter and INR 245 crore for the same period last year. The tax for the quarter ending 31/12/2021 is INR 270 crore. This number was INR 243 crore for the quarter ending September 2021. For the quarter ending December 2020, it was INR 184 crore.
We clocked a market share of 10.4% in the cash segment for the period for the quarter December 2021. This is a tad lower than 11% which we got in September of 2021. Some sense of the market ADTV. The total daily volumes for this quarter was at INR 3,875,000 crore. Out of this derivative, the options market was at INR 3,730,000 crore, cash at INR 51,000 crore and future at INR 92,000 crore. The growth has been the biggest in the options space, whereas cash and future have seen marginal or flat kind of numbers. I'd also like to share some information on some of the digital initiatives taken at Kotak Securities. The DIY journey of account opening for accounts in Kotak Securities has been enhanced significantly.
We've reached a level of an account being opened in close to six minutes. The second big thing which we introduced in the quarter was a pre-login application of IPOs which were allowed to be done, which was not there in the previous quarter. This made a reasonable difference to our market share in the IPO space, and we see this going ahead as well. For derivative trade, the launch of the next platform has helped a lot in the stability of the platform and a reasonably large enhanced customer journey and experience. We launched our new trading website with the latest technology stack with cutting-edge UI and UX. From a service initiative, a multilingual chatbot in nine languages, a 15-star service option were launched.
We migrated our telephone into cloud with again multilingual IVR capability, enhancing customer inbound call experience. With this, I'll hand over to Manian to talk about the investment bank.
Hi. Yeah. Kotak Mahindra Capital Company got for the first time in its history a profit after tax of over INR 100 crore this quarter. It was involved with marquee IPO transactions in the market, and we remained a go-to banker, go-to investment bank on in the ECM side of the business. What is more, even more important is that our advisory business is also in very good shape and we have built a good franchise on the advisory side. In fact, even on advisory, we should end this year at close to record levels. Last year was a record year. This year again, we could end almost at the same levels.
The investment banking business, both on the ECM side as well as on the advisory side, seems to be in good shape. We have mentioned some of these marquee transactions there for all of you to see. Coming to Kotak Mahindra Investments, this is a company which is largely into real estate lending business, corporate real estate lending business or structured corporate lending transactions. As you can again see, this has grown significantly. I made an earlier comment on good momentum on the real estate lending side. Part of the real estate lending gets done in the bank and part of it gets done here. As you can see, a robust growth here of close to 30% in the asset book.
This is driven by residential real estate transactions as well as some other structured corporate lending business. We have also been able to maintain balance sheet quality here and as you can see, the net NPAs have dropped to 0.4%. Basically, our lending policies in terms of focusing on cash flows and the right security and choosing the right projects has really shown results here. In this NBFC, we've been also able to reverse COVID provisions to the extent of INR 7 crore, given the fact that some of our assets which were at risk have actually been recovered. I'll now hand over this to Kannan to take you through Kotak Mahindra Prime.
Thanks, Manian. Kotak Mahindra Prime had a profit after tax of INR 254 crore this quarter as compared to INR 149 crore in the same quarter last year. Disbursements during the quarter has been better than the comparable quarter of the previous financial year, but continues to be slightly impacted by supply constraints faced by the manufacturers. Collections during the quarter has shown further improvement and its collection efficiencies on demand are closer to normal times. During this quarter, Kotak Mahindra Prime acquired the retail car finance portfolio of Ford Credit. I'll now hand it over to Nilesh to take you through the presentation.
Thanks, Kannan. Good evening, friends. Let me take you through our asset management business for December 2021 quarter. Our total average AUM grew 32% year-over-year to INR 2.87 trillion. Our equity average AUM supported by market bounce back grew 67% year-over-year to INR 1.41 trillion. Our total AUM market share increased to 7.4% and our equity AUM market share increased by 40 basis points to 5.4%. Our SIP registrations as on December 31st, 2021 were INR 9.1 billion and SIP inflows for the month of December were INR 6.65 billion. Our SIP book and average AUM growth continues to outpace industry.
We continue to serve investor requirements by launching active as well as passive funds focused on local as well as offshore markets across debt, equity and commodities. We also remain focused on ESG investing as India's first signatory to United Nations Principles of Responsible Investing. Consequently, our profit before tax has grown 20% year-on-year to INR 146 crore, excluding non-recurring gains of INR 46 crore. Our total AUM across mutual funds, PMS, offshore, insurance and alternate assets grew 23% year-on-year to INR 3.386 trillion. Our relationship value across wealth, priority and investment advisory grew 73% to INR 6.49 trillion. I will hand it over to Jaimin Bhatt.
Thank you, Nilesh. Friends, any questions, clarifications, explanations? The whole team is here.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The first question is from the line of Rahul Jain from Goldman Sachs. Please go ahead.
Yeah, thanks. Good evening, everyone. Just a couple of questions. First on the provisioning policy. So the reversal that you have done, can you just elaborate and explain the thought process? Is it led by the recoveries and upgradation that we had or you generally feel that you know, the kind of worst is behind us and from here on it should be a more normalized provisioning, you know, in the future?
Jaimin, you wanna go?
Sure. Rahul, it's like this. Yes, as we saw, the realizations have certainly continued to improve. The gross accretion of NPA has slowed down and, actually, the realizations, upgradation continuing to increase, quarter on quarter. The restructuring requests coming lower, as well as the fact that as we saw the SMA-2 numbers very much under control. We followed a process and if you look at the background of how the provision on COVID was created, it was based on a set of accounts which had gone for moratorium and whatnot. A lot of those accounts which were under stress actually are no longer with us. They've actually paid up all they are due into what was due at that point of time.
Continuing to carry some provisions on that was something which we were not necessarily required, especially on the back of, you know, what's happening on the market with respect to collections. We looked at the overall thing, and we've not taken back all of what is possibly detailed at this stage. Also considering the fact that there is the Omicron wave, which is the third wave, which is going around in the market, though it is less virulent, we did keep a cushion for that. As we've seen, as against what we had INR 1,279 crore, we will continue to keep INR 1,000 crore at this stage. Of course, we'll keep taking stock of this every day.
Thanks, Jaimin . Given that, you know, now we are focusing even on the unsecured businesses which generally have a higher loan losses, through the cycle. You know, let's say a year out or two years out as this book starts to become more meaningful, subject of course your, you know, growth trajectory. Would we then, you know, take provision as and when it sort of happens? Or you think, you know, building a buffer from now on would be sort of, you know, relatively more prudent?
Now looks like this. If while we are growing the unsecured book, the unsecured book even today like the unsecured retail, which is your cash credit, cash credit cards and personal loans, business loans, consumer durables, it's still about 5% of my advances book. Even that, while that is growing on a lower base, if that, if a newer thing goes bad, we certainly end up providing that and our provision requirements or as a policy on the unsecured is far more aggressive than what the regulatory requirements are. We take those hits if it comes, but right now it's looking fine.
Great. Thanks. Can I just squeeze in one more question, more on the franchise side? So the customer addition has been pretty impressive. Can you just talk about the customer profile that you're onboarding? And also in the home loan business, you know, is it all organic or you've had some, you know, balance transfer business also, you know, coming into the bank? That is it from my side. Thanks.
Shanti?
Yeah. As far as the customer acquisition is concerned, we continue to attract a lot of millennials, and people in, let's say from 25-40. We are not restricting any customer. Across our channels, whether it's physical, digital, 811, we go and look for customers who, you know, across all segments. We are seeing a flow, like I said in private report, 25-40 is a good range to sort of look at the customer profile. On the home loan side, I don't know what you call inorganic as balance transfer, but that is also acquisition for us. Yeah, balance transfer has always been about, you know, 30% of our business, historically as well as now. We continue to see the primary market business flow is very strong.
Manian had talked about the fact that, you know, residential sales are being really good and we see that in the demand in our home loan business. We have a combination strategy of primary market, customers buying readymade property, secondary market sale and balance transfer. It is a mix of all of these.
Great. Thank you so much, Shanti.
Thank you. The next question is from the line of Sumeet Kariwala from Morgan Stanley. Please go ahead.
Yeah. Hi, team. Congrats on a strong quarter. I wanted to get some perspective on loan growth in the current cycle from a two-tier perspective. There are two sub-segments that I'm trying to get some views on. First is on corporate banking. If I look at Kotak Bank, this time it's very different, it's very differently placed in the sense that there's a sharp improvement in funding franchise and one is better placed to accelerate growth in corporate banking. Also, digital capabilities will be a key differentiator. Should one expect that as the pricing normalizes, which should happen as retail returns, at this time Kotak Bank would see much more market share gains in corporate banking. That's part one of the question, please.
Okay. Manian?
Yeah.
Is that? You said that's part one. Is there a part two?
Yeah. Which is on unsecured loans. Maybe I should do it after the plans. That's fine.
Okay. Okay, fine. Manian, you wanna go for this first?
Yeah. Sumeet, we have always stated that as if risk-return trade-offs work well, we are always open to growing the corporate book at a pace that the market offers the opportunity at. Our key metrics has always been the right risk-return trade-offs. Our relationships are fairly wide. We have fair presence in most corporates, right from the top end to medium-sized corporates. Our coverage and presence is fairly wide, and we are fairly confident that if you know, secular growth in the corporate credit requirement goes up, we will be able to capitalize on that. As I mentioned, our transaction banking franchise is also growing very well.
Shanti also took you through a couple of slides wherein the corporate we have used our new digital products, new online portal, new CMS platform. All of that is making a lot of difference, and we are quite confident that we can grow this franchise if the market opportunity allows us to do that. Yes. Sumeet, second question you asked?
Second is on unsecured loan growth. If I look at Kotak Bank's market share in unsecured retail loans and cards, there's some moderation over the past two years and maybe rightly so because the macro was not good. How should we think about this loan mix, unsecured loan mix going forward? If I compare this to some of the large private banks, Kotak is relatively lower. Over the next three, four years, should we expect a meaningful jump? That would be my second question.
I'm gonna ask my colleague Dipak Gupta to really specifically answer on unsecured retail and the mix overall as a part of our strategic going forward. Dipak, would you wanna give a shot at it?
You know, Sumeet, there is no number which one has. Yeah. All one is trying to do is, there is a great opportunity within our existing customer base, we have engaged with at this point of time only a small percentage of that customer base, and there is massive opportunity for us to use analytics and expand that base through the unsecured side. That is what we are after, and it will be progressively done. Remember, on the unsecured side, there are two separate sides. You know, one is your unsecured, which is really the personal loan and the consumer durable financing and the business loan. That's one type of unsecured. The other side is really the credit card side. That's a very different opportunity. Yeah.
Because that is not just a pure lending opportunity, it's a very significant payment engagement and for some of them an unsecured opportunity. Yeah. It's a very significant engagement opportunity. We drive all of that and I'm sure we are using a fair amount of analytics combined with some amount of experimentation to you know drive that aggressively.
Okay. Got it. Maybe I should stop there. Thanks a lot, Dipak.
Thank you. The next question is from the line of Adarsh Parasrampuria from CLSA. Please go ahead.
Hi, again, Dipak. Question is on growth again. Just wanted to understand the last few years we've consolidated and now we have benefits of cost of funds and lower SLR. Would system credit now be a constraint for us or we are at a point where that 1.5 times or whatever the multiple is, you'll be comfortable consistently growing above that? Under what circumstances would you want to pump the brake again?
I think, I'll take that question. We feel actually we are in, coming into a sweet spot. I think, our base case is we are moving into an endemic from a pandemic. We are very light, in terms of the current risks we are carrying on our balance sheet. We don't have baggage. We've finally, begun to get our analytics pieces in place. Our digital engines and a lot of the technology initiatives which were started are coming in place actually in the first half of calendar 2022. Between now and June 2022, a lot of our technology and digital initiatives on the lending side are also coming into place. We actually feel that, it's a good place to be. Our risk management skills, are something we have got reasonable confidence in.
As this cycle moves, as inflation comes back steadily, as interest rates start moving up.
With the positioning on our cost of funds and everything else, we have the ability to have an accelerator going. I want to very clearly say that we are not constrained by the market size or the credit growth in the marketplace. We will be constrained by our, what we think is the right parameters. For as long as those parameters of our matrix get met, we will go for whatever it takes to grow our loan book and assets.
Got it. No, that's useful. The second question is on the OpEx side, right? If you just observe most large banks, including yours, there's been a pickup in OpEx, partly due to the low base, partly due to business momentum coming back. But there's some accelerated tech spends as well, right? If you take two to three years' time with added tech and spends and various projects and with accelerating growth, would you still expect cost income to moderate or we've come to a point where cost income for industry, for us remains where it is in spite of better growth?
No, I think ultimately cost to income will get corrected. We are very clear at this stage, there are three clear engines which we are growing. First is on retail loans. Okay? There are front-end acquisition costs. Just think about a home loan, right? There is a fee for acquisition or distribution to be paid. A home loan which has, say, average life of six, seven years or eight years. Though the loan may be 15 years, average life is seven, eight years. You're paying the fee cost upfront. Under banking regulation, you have to take the full distribution hit at the point of time you underwrite the loan. That doesn't bother us because we are driven by underlying value creation, not necessarily what it does to my pre-operating profit in a quarter.
That is not something which is the basis on which we take decisions. If we believe substantively it is gonna add value, we are ready to take those costs upfront. That is one. Second, I think you got to keep in mind we have dramatically increased our customer acquisition from INR 8 lakhs in the last year, same quarter, to INR 21 lakhs in this quarter. We see that engine continuing to fire. Again, that takes front-end costs. We of course are very focused on unit economics of our acquisition cost on customers. We think the acquisition cost up front is not something which is gonna deter us as long as we believe underlying unit economics are strong. That is point number two.
Point number three is with the opportunity in the marketplace, which is coming in with our overall balance sheet matrix, we will drive growth and we believe the cost to income ratio will be an outcome rather than a target. We think about getting the right outcomes which will improve the cost to income ratio because a lot of our costs are front-end. Also keep in mind that as we get more and more digitized, the actual straight-through processing digital lending transactions will ultimately reduce the effective intermediation cost as well. These three or four parameters are what is going to drive us. In simple language, first is really, I think the front-end costs for asset growth are something we are ready to take.
Second is we are growing our customer base at a very high speed, keeping in mind unit economics, versus front-end costs. Digitization will ultimately make straight-through journeys significantly lower operating cost. Fourth, cost to income for us is an outcome, not a target.
Thanks Uday, and I'll just squeeze in one last question. The lasttwo to three years as our liability franchise has improved and cost of funds has, like, drastically come down, we've kind of had an advantage of growing slowly. The pressure on branches to raise resources, financial resources has been low, right? When you get to high growth and we give now branch rates is north of 20% growth, we need to raise more money, right? It kind of puts more pressure, offer more NPDs at some point. How does that equation change from almost zero growth, no growth, getting to 20%-25% growth that adds to some pressure on margins or cost of funds, both on absolute and relative basis.
No, I think we are confident about our liability franchise and the strength of it. That does not mean we can afford to be complacent. We are driving the liability engine. We know where are the gaps as I speak to you. There is a significant internal focus, energy and introspection going on how we get that liability engine firing much faster, as we go forward. We are quite confident that we will get our execution on that as well, including digital is a very key part of our medium-term strategy even on the liability side.
Got it. This is very useful. Thanks, Uday, for all your comments.
Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.
Yeah. So in terms of the growth, maybe in terms of the capital allocation or in terms of the opportunity, now almost home loans and LAPs is equivalent to where the corporate banking is, and both of them are equally competitive. Okay, we were hearing that larger part of growth is coming from NBFCs and most of them are doing it. When we get to ROA or maybe even in terms of the cross-sell opportunities in corporate banking as well as with the home loan customer, which would be the preference and where should we see a relatively higher growth? No doubt it's coming in from the home loans and LAP, we have scaled it up. Here on, how should we balance it between both these product segments?
Kunal, let me just reiterate to you. Yes, home loan and LAP in absolute stock terms is high, but on a growth rate basis, there are other pockets which are also catching up significant pace. If you look at our unsecured retail, though off a small base, is growing at about close to 15% Q-on-Q. That's on a very small base, but that is catching up pace. Yes, the mix is still very low, which enables us to grow at a much faster rate. That does not mean we don't like home loans. We like it a lot. We like the wholesale banking business, and you have to look at horses for courses, risk-adjusted returns. With our mix of 60% CASA, our cost of funds is a significant competitive advantage I would like to believe probably best in class.
We will hammer that cost of funds advantage to get significant customer engagement and produce our risk-adjusted returns in totality. Keep in mind that, in the COVID period, 2020, a lot of our assets were actually in treasury assets, which were earning 4%-4.5%. As that mix changes to even 6.5%, 6.6%, 6.7%, it's still a significant mix change in favor of improving NII and NIMS. We think we will be able to get the right mix. One of the most important things we have learned in risk management is if you get your risk-adjusted matrix on a well-balanced portfolio with high focus on individual product segments, the outcomes can be significant and sustainable while being dramatic as well.
Sure. Currently, which one would be giving us a better return if I were to look at, say, home loans and corporate banking at this juncture on a ROA basis?
Home loans and corporate banking, Kunal, let me also give you this. Say, on corporate banking, when we look at returns and home loans, we look at customer returns. For example, in corporate banking, as Manian mentioned, in addition to the spread in the lending business, we make significant flows on foreign exchange, transaction banking, deeper customer engagement, translating into broader relationships, including with our investment bank. So there are a whole host of linkages in the corporate banking business beyond just the lending product. Trade is another very major part. Current account growth, all that is deeply interconnected and integrated to the lending piece in the corporate banking. Therefore, I would request look at some of these as engines for customer returns.
Similar for home loans, we think home loans is one of the most sticky products in a customer's journey, and the ability to cross-sell a variety of products to a home loan customer is also a significant opportunity. A home loan customer who has got a core mortgage is a much safer customer to add a credit card or a personal loan. A home loan customer who has an engaging bank account, that again, gives us a deeper engaging relationship with that customer. We look, we are getting significantly more focused on customer engagement and customer returns in addition to making sure that the product makes economic sense.
Sure. And second, in terms of ECLGS pool, how the behavior has been, so it's been nine to 12 months. If you can highlight and any risk or we are seeing a much better collections, equivalent to the overall portfolio, how is the overall behavior out there?
Manian, do you wanna go for this?
Yeah. No. The ECLGS portfolio, we are not seeing any significantly differential behavior compared to our normal portfolio. There is, therefore, no perception of any enhancements coming out of the ECLGS portfolio.
Sure. One last question in terms of investment portfolio. Given the size and the movement in yield, the knock seems to be slightly on a higher side. So have we protected ourselves for any further movement or maybe have we reduced the duration during the quarter and it was relatively higher in Q3? How should we look at it? Maybe any further movement of 30-50 basis, how could be the impact now on?
Kunal, we've put down on paper what our duration is. We have put down on paper what our HTM is. Okay? We have put down our balance sheet in front of you. It is pretty straightforward that the pain is behind and we are actually in a pretty comfortable zone as we go forward. Of course, it depends on the amount of yields. Therefore, even in a one-year paper, if the yields move up 150 basis points, there will be some impact. At duration of around 1.5 years, we think we are in a very sweet spot in a rising yield environment with a CASA ratio of 60%.
Sure. Thanks. Thanks a lot.
Thank you. Ladies and gentlemen, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The next question is from the line of Gaurav Kochhar from Mirae Asset. Please go ahead.
Yeah. Hi, good evening. Thanks for taking my question. Just extending the question that Adarsh asked earlier, you know, regarding pressure on NIMs if the growth comes back. Just wanted your thoughts around, you know, SA balance, especially in the last 18 months ever since we've cut down on rates. I mean, the SA traction has slowed down a bit. Given that we have been spending on tech and on liability acquisitions for the last 18 months, what kind of outcome do you expect from this given that in the last 18 months the SA traction hasn't been, you know, very. I mean, or the growth has tapered off a bit. Outlook on SA in the next maybe two years.
In that context, you know, if I look at the growth in overall balance sheet was just 2.5%. It seems optically because, you know, the overall growth in interest earning assets has been lower than, you know, loan growth. There was a positive uptick on margins. Going ahead, given that some part of excess liquidity is gone, how should we look at margins? Should we assume that the deposit growth would broadly mirror the loan growth and hence could have some impact on margins? Just wanted your thoughts around it.
I mean, I'll answer the second first and then ask the first to be answered by Shanti. On the second question, it's a... The way you need to look at it is we have gone for what I call as a asset mix change in the last 12 months. The asset mix was first when COVID hit us in April 2020, we loaded up on fixed income government securities assets. Okay. Of course, they were lower yielding, and we were carrying huge amount of surplus liquidity. We are now with a very clear mix change. It has gone into customer assets and loan assets from treasury assets. That mix change has taken place.
You may not see the same level of growth in the balance sheet as you've seen advances because it's a mix change in the asset profiles which we are carrying. That is point number one. That actually is a big positive for our earnings and spreads because even if you take the lowest yield asset in that sense on the retail side, which is the home loan, a 4.5 asset is moving to a 6.5 asset as a very simple mix change which is happening. We are still carrying, as you can see, 130%-140% LCR. We are still in a very comfortable liquidity position even now.
Now, as far as your first question is concerned on savings accounts, I will ask Shanti to answer that, and give you a perspective of what we are doing as we go forward. Shanti.
Yeah. Thank you, Uday. You know, when we dropped off six segments, we sort of dropped it off in a relatively short period of time, and it has taken us time to replace the value proposition for the customers like many other banks have. If you saw some of the OpEx, we have sort of stepped up our engagement through, you know, our propositions, ties with Apple, Flipkart, Amazon, et cetera, which is increasingly the engagement layer for the customer. The increase in engagement layer is something that we have, you know, stepped up. It has taken us the last six-odd months to build it, and we are well on that journey. Yeah.
Last year, our new to bank customer acquisitions was impacted because of COVID, but that has stepped up and we have again, you know, gone for very aggressive acquisition, which is what gives you the kicker. We missed out the kicker we would have got last year on the NTB, as I call it, which we have restarted the program. The third thing is that, you know, we are still very largely retail-focused, and we don't have a large institutional business, right? Particularly the government business. As you now know, you know, agency bank has been extended to all. We have got approvals for GST, for CBDT, for, you know, PFMS and a lot of other things. So we are building the whole government business model, including at the wholesale and the retail end, to be able to sort of, you know, support the group.
Three parts to the strategy. Our retail model continues with aggressive acquisition, but deeper engagement to replace the 6%. Second is really the aggressive NTBs, which will build value over a period of time, focusing on building the institutional business now with the agency business having opened up. These are some of the steps that would sort of focus on getting us back to SA growth, which has been relatively slower in the last three quarters.
Understood. Okay. My next question is on the MTM loss. Just wanted to clarify, is there any provision regarding security receipts or markdown of security receipts in this quarter? Because that number of INR 484 crore, you know, taking 62% AFS with a duration of 1.5 doesn't add up to the investment portfolio.
Jaimin?
Sorry, I was on mute. No, the INR 484 crore doesn't really have any SR-related hit. That's entirely coming out of the non-regular and SR one book.
Okay. Because if I look at FY 2021, the entire profit from treasury was INR 270-odd crore. In this quarter, the loss is around INR 484 crore, which is almost 2x the profit last year. This number seems a little high. Has the modified duration changed versus FY 2021 for this book, as a result of which the loss seems high, or just wanted to understand?
I think we have definitely moderated duration. That is clear. Okay? We have moderated duration.
Okay. No, my question was, if the duration was high in FY 2021 and moderated, ideally the loss should have been lower. It has been moderated over time in the last few months.
Obviously the rates started going up as you know, October, November onwards. We have moderated the duration. We have taken that call. Second, I think you got to keep in mind that there is a concept of pull to par. That if I bought a security, say, originally government-issued security of 7% coupon, and which last year was trading at 4.5%. There's a pull to par impact while the NII on that comes in my top line. That pull to par impact is also a part of the MTM provision. I hope you get the point. Because that security was bought at a premium. Therefore 7% security, if it's bought at a 4.5% yield.
Okay.
The security is bought at a premium to par. The premium to par has to be marked down on that security, which is also a part of the reason why INR 484 crore has happened.
All right. Understood. Okay, thanks. That's it from my side.
Thank you. The next question is from the line of Abhishek Murarka from HSBC. Please go ahead.
Yeah, good evening, everyone, and congratulations for the quarter. Two questions. The first is on NIM. Maybe starting with the cost of SA that you've reported, it's down 19 basis points QoQ. I'm assuming this is the impact of the SA rate reduction that you probably did around October. But how much more repricing is there to go in the SA book? That's one. The second part is, you know, you've raised your TD rates a bit, and generally your concentration of deposits is more in the less than one year and one to three-year buckets. How soon or how much time can pass before, you know, it starts showing up in your cost of funds and your cost of funds starts going up?
First of all, on SA now, the rates we have are a uniform 3.5%.
Yeah.
We believe that if you look at some of the larger banks, they are at 2.75% and 3% at less than INR 50 lakh.
Mm-hmm.
We believe that as interest rates start moving up, we don't need to increase our SA deposit rates, particularly since our lowest is 3.5%. There are banks at 2.75%, there are banks at 3%. We think the pressure on SA in terms of just rates will not impact us for a while. That is point number one in terms of our need to be doing anything on SA. I think on TDs, we are quite comfortable with you know I mean our view is that a 10-20 basis points pricing difference, and you start getting a reasonably good flow on TDs when we need to open the tap and appropriately.
We've also, I mean, just to share with you, we've taken significant fixed rate refinance on some of our liabilities in the last three months. At about average maturity oftwo to three years, so from some of the institutions. We've actually taken a conscious decision in the last couple of months to step up on our refinance, our fixed rate refinance from the institutions on the book. Simultaneously, the duration of our bond book is also got significantly lower. We think we are reasonably comfortable on managing margins and getting growth. Also keep in mind that even if there is some shift in the mix of our loan book, one from treasury assets to customer assets, and second is some change in the mix on unsecured retail, that will also be thicker to our NIMs.
What you're essentially saying is that you've got enough levers to keep NIM at 4.6%, and that should be a sort of standard.
I'm not saying that. I'm saying that we have enough levers to have a very good NIM management ability.
Okay. Okay, understood. My second question is on fees. I just wanted some granularity on this other fees, you know. The reporting is minus INR 132 crore, and the loss in MTM was INR 484 crore. That gap of INR 350 crore, what are the components of that gap?
Jaimin?
I'm sorry. I mean, yeah, if you want the...
No, what are the components of that? One thing you want to explain is that provisioning.
Okay. I'll come to that. There would be things like, you know, there'll be prop activity relating to the whole area of fixed income as well as the derivative side. That's the fixed income side. The other income would also include what we sell on the priority sector certificates. There are pockets where we have excess and we actually trade in PSLC. When we buy, there would be an expense item, but the entire gross amount of what we sell is sitting in the other income. That would be a positive number. Also there are our stress asset division buys and sells assets. There is some income coming from the stress asset division.
If you look at the corresponding number in the previous year, the INR -132 crore was something like INR +170 crore. INR -132 crore is after the hit of INR 484 crore, which is a bad count.
Does dividend also sit there?
There is no dividend from subsidiary in this quarter.
Yeah, it would come in that line. It will come in that line, yes. I mean, there will be something if you look at a nine-month number in quarter one, but not in this quarter.
Forex and derivative income also comes there?
That would come, yeah. That's correct.
Okay. Got it. Thank you so much, Jaimin, and all the best to everyone for the next quarter.
Thank you.
Thank you. The next question is from the line of Nilanjan Karfa from Nomura. Please go ahead.
Hi. Thanks. Brought two sets of questions. One is on IPO financing. Now that's something that's gonna go away from, you know, March onwards, right? Could you talk about how I'm guessing that's a usable part of the book and definitely gives you both margins and income. How are we trying to sort of mitigate that impact, if any? Does that also have some kind of impact on your overall deposits or average deposits? That's one.
Manian, you wanna answer that?
Yeah.
You said you have one other question, so go ahead, sir.
No, I can take it later.
Manian?
Yeah. As you know, RBI had asked bank-owned subsidiaries to not do loan against shares and IPO financing for that. Therefore, there is no IPO financing profit built into these quarters' results. They have been stopped in the main bank or its subsidiaries. The associate company, Infina does IPO financing that comes in the consolidation as part of the Infina's profit being consolidated into this. Otherwise, the main bank and its subsidiaries have no IPO financing business.
It's not there currently at all?
No, not at all.
Okay. Does it impact the deposit side also, or because of the way it is easily structured?
No, not too much. No, nothing significant.
Okay. Right. Second one.
As you know, IPO financing business had moved to term deposit model, if you know.
Yeah.
The money is lying in term deposits and very short-term term deposits, so it doesn't have too much implication on the deposit side.
Right. Okay. Second question goes back to the unsecured piece that we are talking about. I mean, look, I think we are a reasonably smaller player, but the market is also very well penetrated, right? How do you think we are going to gain, you know, market share? Is it going to be more organic? Is it going through more penetration? And already we are, you know, taking a lot of costs. So is that something that will continue over the course of next two, three years?
Once again, I'll ask Dipak Gupta.
Yeah, I mean, that's pretty easy. Given our small base, I think it is pretty comfortable to grow from that small base. Like I said, earlier, we are really looking at the whole unsecured piece essentially from our existing customer base. Within our existing customer base, our penetration on the unsecured side is practically negligible. Yeah. It basically means that we don't really have to go out to get the growth which we are in for now. I don't think it's a problem really. Yeah.
Dipak, I just want to clarify. I mean, it is generally said that our salary franchise is a little less, or at least the market perception is the salaried unsecured piece is something where you know earn your margin and have lower losses. Are we sort of disadvantaged from that front?
That's a misconception. We have reasonable new salary accounts which keep coming in, and the stock of salary accounts is pretty large. The unsecured is not only to, you know, corporate salary customers of, which are acquired through that route. There are large customer acquisitions which are happening, which are salaried customers with their corporate salaries with other banks also.
Okay. Fair enough. A quick question to Jaimin. Jaimin, could you clarify at least, you know, either now or any time in the call, the items of, you know, MTM provision on AFS, the trading or treasury gains and recovery from written-of f items. These three items for the last, you know, let's say at least on a year-over-year basis or at least previous quarter as well, net interest margin and total deposits on a consolidated basis. Thank you.
Hello? Jaimin?
Sorry. I can share that with you separately in a link that should be-
Sure. Sure. Thanks.
Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to Mr. Uday Kotak for closing comments.
Thank you very much. Colleagues, you've spent nearly one and a half hours. I really appreciate your time and a very frank and candid discussions. I do look forward to hopefully a better situation in the post-Omicron period as most people seem to be getting it and the current lethality of that is much, much lesser than any other earlier forms of COVID. I do feel that we are getting into 2022 with new risks and new opportunities. There are some things which are changing. From a Kotak point of view, if there are three most important things in terms of us driving for the future, it is customer acquisition and customer experience, which is point number one. Second is significant investment and growth in the technology piece.
The third, and I think the most important, is getting the right talent for a new future in financial services. All three are very major focus areas, and I would like to share with you that we are moving in all these three areas at great speed. Thank you very much and have a wonderful weekend, and goodbye.
Thank you. Ladies and gentlemen, on behalf of Kotak Mahindra Bank, that concludes this conference call. Thank you for joining us and you may now disconnect your lines.