Q1 21/22

Jul 26, 2021

Ladies and gentlemen, good day and welcome to the Axis Bank Conference Call to discuss the Q1 FY 'twenty two financial results. Participation in the conference call is by invitation only. Axis Bank reserves the right to block access to any person to whom an invitation has not been sent. Unauthorized dissemination of the contents or the proceedings of the call is strictly prohibited, and prior explicit permission and written approval of Axis Bank is imperative. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions at the end of the briefing session. Then 0 on your touchtone phone. Please note that this conference is being recorded. On behalf of Axis Bank, I once again welcome all the participants to the conference call. On the call, We have Mr. Amitab Chaudhry, MD and CEO and Mr. Puneet Sharma, CFO. I now hand the conference over to Mr. Amitabh Chaudhry, MD and CEO. Thank you, and over to you, sir. Thank you, everyone. Thanks a lot for joining the call. We welcome you all to a discussion on Axis Bank's financial results for the quarter ended June 2021. Apart from me and Puneet, we also have on the call Rajiv Yaman, Executive Director and Head of Wholesale Banking Ravi Narayanan, Amit Bhalghari, Chief Risk Officer. We've started the financial year on the back of strong momentum related in quarter 4 financial year 'twenty one. The intensity of the 2nd wave of cold infections caused everyone by surprise. The resultant health crisis and subsequent lockdowns in various states had an impact on our business and collection activities. We are grateful to our employees and partners who demonstrated great commitment and serving our customers through this quarter while braving the 2nd wave. We prioritize the safety of employees and customers during this phase. As we speak, about 97% of all our employees have received at least one dose of the vaccine. We are also thankful to the healthcare and frontline workers to serve the nation selflessly during this time. The macro picture suggests India has taken its ways in its stride. The lead high frequency indicators indicate economic activity has largely returned to 3 second wave levels by mid July. Having said that, the 2nd wave has tested us all. Firstly, like I said, the limited mobility and the collection efforts of our teams on the ground. Secondly, in the near term, the repayment capabilities of a few customer segments were impacted due to medical excellencies or lockdowns. We therefore expect a greater impact to the retail segment than the corporate bank across the financial services sector because of the 2nd wave. We also believe the stress We'll be transitory with normalcy returning quickly as economic activity revives, supported by accelerated vaccinations. The robust coordinated policy response between the RBI and government has helped to keep the system stable. We expect it will continue to support growth a calibrated manner. Coming to the bank's pockets on its strategy and performance in this quarter. We continue to strengthen the 5 focus areas as part of GPO's strategy We started 2 years back, granular, risk calibrated growth, strengthening the balance sheet, technology and digital leadership, focus on profitability and 1 Axis. We have made significant strides in each of these areas as we get ready to get on to the next cycle of our GTS strategy. The results are visible across the bank's different businesses, which I'll get to in a moment. We have also received multiple Indian Independent validation of our progress. In the Greenwich Banking survey, Greenwich is an independent global research agency. Axis Bank was rated number 1 on the quality index for both large corporate and middle market banking segments independently. The bank was also recognized for ease of doing business, knowledge of transaction banking needs, Coordination of our specialists and BANDI follow-up. The retail banking franchise received multiple awards in the Asian Bankers Bank Quality Consumer Survey for 2021. We've included the most recommended retail bank in India and most helpful bank during COVID-nineteen in India. On the corporate banking side, we have 3 clients in about 30 pods working on agile mode building a corporate digital bank that's benchmark to global standards. We are winning complex cash management mandates and gaining market share in trade and finance business. The fee performance also has been strong on back of this with 63% growth in Granular Transaction Bank increase. Our market share in foreign currency issuances has increased by 210 basis points year on year to 9.7%. We continue to have Strong position in GFT and NFT Payments with market share of over 9% and 9.7%, respectively, Slide number 28 in our investor presentation outlining the progress in the Transaction Banking space. We identified mid corporates as an area to gain market share a year back. Our investments here appear improved with strong year over year growth of 26% in this segment. The SME business is the other area where our tech led transformation project, Sankalp, is making the difference in the lives of our customers. Our SME loans grew 18% year on year. On retail banking, increasing digitization of Journeys, personalized services to our And the strong rhythm and rigor in our distribution and sourcing engine are clearly reflected in our acquisition numbers. We opened 1,800,000 new liabilities accounts in quarter 1 financial year 'twenty two. Our analytics And digital banking capabilities are further enhancing our deepening and cross sell for our existing bank and known to bank customer portfolio strategies. We've been working on premigration of our franchise over the last few years. The Wealth Management business, Burgundy, has seen very strong growth With an AUM that is now over RMB 2,300,000,000,000, up 48% year on year, Balindi Private, Our full service private banking proposition for our ultra HNI customers that was launched 18 months back has grown exponentially Despite the pandemic, we now manage wealth for over 2,000 HNI families, up from 986 families in June 2020. The total assets under management is now in excess of INX63,000 crores, up from INX19,018 crores in June 2020. We are now more than 100 Burundi credit partners serving the needs of these families across 26 cities. We have added 1 new city every month since launch. Each partner is a citizen professional with the average experience over 16 years. We go beyond the wealth management requirement to support banking, lending and business leads of our private banking customers. We bring 1 Axis to them And this is seen as a clear differentiator in the market. While Puneet will take you through the numbers and details, I will stress on a few key metrics. Strong growth in quarterly asset balances, asset deposits grew 19% year on year, 7% quarter on quarter with carpet deposits 19% year on year, 4% quarter on quarter. Overall deposits were down 9% year on year, 7% quarter on quarter. Business in the quarter was impacted because of lockdowns And we prioritize the health of our colleagues. Retail disbursements grew 231% year on year and declined sequentially by 48%. However, The better preparedness of our teams is reflected in the quick bounce back we have seen from mid June onwards. For last few quarters, our loan growth has We've been steady in all the three segments with retail growing at 14%, SME by 18% and corporate book by 8% year on year, respectively. This balanced book growth is a good indication of our ability to find deposit pools across segments. The other metric I'd like to highlight is on generalality. We have seen huge increase in new customer additions across segments, 143% year over year growth in number of new retail Customers, 69% year on year growth in number of new current account customers, 85% year on year growth in number of new corporate relationships and 79% year on year growth in number of new SME customers added during the quarter. Like I mentioned earlier, corrections and recoveries got impacted during the quarter. We had to be cognizant Of obviously, health and safety of our customers and employees, this meant our fleet teams were constrained for part of April And most of May, as lockdown restrictions eased, June saw a quick recovery and July looks better than June. We saw higher than expected retail synergies during the quarter, but we believe it is transitory. We expect moderation in the second half of the year. I want to highlight the significant progress we have made on core technology and our digital banking capabilities. Since the beginning of the pandemic, we have accelerated our digital journey and made Few significant moves on our tech stack. We are ahead of our plans on our core modernization program. We have among the largest set of open banking APIs Our external and internal partners and we are the leaders in cloud adoption in the banking sector. Subzero, our proprietary design platform, Our cutting edge developers portal with over 120 additional APIs went live during the quarter. Over 1,000 plus technology and data sources As we hired since the start of the pandemic with about 60% increase in technology spends during the same period, we are running a twin engine approach. One, our legacy legacy IP stack has been upgraded, replatformed or hollowed out to make it easier. 2, we have built in an in house end to end digital stack that is on par with the best digital platforms anywhere. Our recent product launches and digital offerings like buy now, pay later, multi currency Fox card, small ticket bullet loans Our cutting edge offerings that have been launched on this platform, we intend to bridge scale these offerings even as we have a pipeline of newer digital first products that are already ready. We are adopting the combination of approaches for the digital ecosystem, build our own capabilities, partner with Fintech's regulatory complementarity and investing areas that have adjacencies. During the quarter, we entered into a multiyear team with Amazon Web Services to power our digital transformation agenda. Our tire with AWS will enhance our ability and resilience to manage 2 key features that define our digital business, Rapid scale and high velocity. We have taken a cloud first approach for our digital banking platform, having deployed All new customer facing applications on call platform since last year. Today, 15% of the bank applications are already on the cloud and we aim to take this number to 70% in the next few years. We have deployed mission critical applications on cloud, including our BNPL power and the new loan management system supported. The account aggregator platform, our video known Know Your Customer Journey and WhatsApp Banking is also on this platform. Secondly, We are forced to set up a dedicated, crowd ready infrastructure to exclusively handle UPI transaction volumes. This has been We have consistently had amongst the lowest transaction tailors in the space. The cloud center excellence will accelerate our cloud migration and support the growing pipeline of Digital Bank conference. We continue to work with multiple cloud partners to maintain our leadership position in cloud. On the retail side, our relentless focus continues As we make progress on the capability front as well as on the business side also, we have around 4,000,000 non Axis Bank customers Using our Axis Mobile and Axis Pay apps, these are customers using our apps for convenience despite not having a deposit relationship with us. This is a strong testimony for our mobile banking apps, which has the highest ratings of users among banks in India. With the retreat of day 2 of COVID, We launched GrabDeals Fest, offering customers attractive discounts and offers on all purchases on our partners, Amazon and Flipkart. The festival was a great success with us achieving 25x growth both in number of customer transactions and GMV on the platform. Gradleens is a scalable multi brand platform for offering our customers great year round offers and deepen Our same with our relationship with them. Our existing data products continue to scale. We introduced leadership IP on multiple new journeys this quarter, Including sales the account opening in credit cards, our share of accounts sourced via this channel has grown to 20%, during the quarter, 69% of our fixed deposits. I warned you we opened recently while the UK transaction value grew 3 times year on year. On Whatsapp Banking, we now have over 1,200,000,000 customers on board within 6 months of launch. 65% of service requests by volume service in the branches are now available fully digitally to our branch of the future initiatives. We have seen very good traction in the adoption of these services and customers as well as great improvement in straight to processing and first time With the launch of Service Data Lake, we expect further personalization and speed in response to customers in this year. Separately, I would like to update you on the recent developments in the restrictions imposed by RBI on Mastercard from onboarding new domestic customers. This ban does impact our card business. Over the last few days, this announcement, teams have worked to mitigate the impact. While we will explore and keep all our options open, it will take some time to move to an alternate network, thereby impacting new issuances in the short term. In the last one year, the bank has significantly scaled up the integration of ESG into its overall business strategy and agenda. ESG, the topic is now integrated at the Board level and is directly overseen by the whole time's director and the relevant committees. Originally, the bank has set up an ESG study committee at the management level to drive the ESG agenda. We are making public our commitment to the ESG targets, Diversing Policies for Sustainable Lending Practices, Investing in Environment Management, Diversification, Equity and Inclusion within the Bank. Our corporate lending portfolio would be INR 10,000 crores in green sectors as on 31st March 2021, which was up 50% year on year. We have 1,500,000 plus live customers under Axis Perio microfinance program as on 31st March 2021. We are committed to increase share of our green lending portfolio going forward, reduce our carbon emission intensity by 5% year on year and fulfill the target of 32,000,000 households by 2035 under the sustainable livelihoods program. We are embedding environmental and social risks into our lending decisions and internal capital adequacy assessment process. We're making public announcement on some of these things very soon. Coming to the performance of facilities, in mid June, we presented the progress of our One Axis journey, providing details and insights on our key facilities. We continue to deliver industry leading performance during this quarter with total profits that will be INR245 crores, up 98% year on year. If you analyze the quarter one earnings of these subsidiaries, it will be touching nearly 1,000 growth figure. The net worth and earnings of these subsidiaries have grown At a CAGR of 18% 61%, respectively, in last 2 years, even as the bank's investment and industries stood flat at around INR 18,015 crores. Our employees have been our greatest asset during the pandemic. The management team would like to reiterate the gratitude To our colleagues and the families who are standing firmly with the bank during this period, we have created an employee care benevolent fund As an additional measure of security for our colleagues, their families to protect their financial future in case of an exigency, Despite these 2 headwinds, we have made strong and visible progress this quarter. There is a positive cultural change Within the bank, reinforced by the study upward movement of metrics across all the lines of businesses, Our investments in technology, digital and multiple business transformation initiatives has set us on the right trajectory. We are optimistic and confident about our future. I'll now request Sumit to take over. Thank you, Amitabh. Good evening, ladies and gentlemen. Thank you for joining us this evening. I'll discuss the salient features of financial performance of the bank for Q1 FY 'twenty two, focusing on our operating performance, capital and liquidity position, Growth across our deposit and loan franchise, journey of becoming a more prudent and consolidated franchise, asset quality, restructuring and provisioning. Our operating performance continues to be strong as reflected through increasing Y o Y, NIMs, growth in granular fees and operating profits and PAD. NII for Q1 FY 'twenty two stood at INR 7,760 crores, growing 11% y o y and sequentially growing by 3%. Net interest margins for Q1 FY 'twenty two stood at 3.46%, representing a YOY growth of 6 basis points. Sequentially, the NIMs was impacted by product mix change, interest reversals, CRR increase, market pricing pressure in the Wholesale segment and Amortices business. We have substantially completed the computation of interest on interest as per the RBI and IPA directives I maintain that the provision made in Q4 FY 'twenty one should be adequate to cover the reimbursement costs. On fee income, our fee income stood at INR2668 crores, growing 62% line to line. 62% of our fees comes from our retail business, 38% comes from our wholesale franchise. Granular fees comprised 92% of total fees as against 86% a year ago. Transaction banking fees, including forex, trade and FI payments, Grew 67% y o y. Commercial Banking fees grew 19% y o y and fees from cards and our liability franchise grew 78%. Trading income stood at INR499 crores. We grew 20% on a Y o Y basis. Other income stood at INR421 crores grew 34% y o y. The recoveries from written off retail assets pool improved 26% on a Y o Y basis. This gives us some comfort that recoveries could hold up even on fresh certificates go with the lag. Operating expenses for the quarter were INR 4,932 crores. We grew 8% sequentially and grew 32% on a y o y basis. Staff cost increased by 32% y o y. The y o y increase in staff cost is not comparable As Q1 FY 'twenty two has impacted increments for 2 years. In FY 'twenty one, we gave increments to staff from Q3 FY 'twenty one. Further, we've added 5,000 people to our staff strength over the same period last year. Graduity cost time increased due to the incremental change in interest rates impacting staff costs. We have continued to top up gratitude expenses for the Social Security Code, the proven stance we had taken last year. Other operating expenses grew 33% Y o Y and are mainly attributable to higher business volumes, Collection expenses. Our investments in IT continues. Our IT expenses were higher by 63% on a Y o Y basis. Statutory costs, including PSLC and DICGC premium, were higher Y o Y by 30%. Operating expenses to average assets was 2.5%, higher 5 bps YOY and higher 9 bps on a sequential quarter basis. The adverse impact of netting of the balance sheet, which I will discuss subsequently on this call, has resulted in a cost to asset impact, adverse impact of 2 basis points. The cost to income stood at 43% For the quarter, lower by 38 bps on a sequential quarter basis and higher by 4.52 percent y o y. Core operating profit was INR5896 crores, growing 13% y o y and declining sequentially. Core operating profit margin improved 8 bps YOY. Provisions and contingencies for the quarter were INR 3532 crores, declining 20% YOY. The bank made a prudent provision of INR155 crores for restructuring that has not being invoked or implemented as at reporting date. The bank has not utilized any of its COVID-nineteen provisions in the current quarter. The reported credit cost for the quarter is 1.88 percent, representing a Y o Y decline of 38 basis points and a sequential Q1Q increase of 18 bps. Annualized Q1 credit cost net of recoveries from the written up pool stands at 1 point 7% compared to 2.11 percent for Q1 FY 2021 and 1.48% for the previous quarter. Profit before tax was INR 2.84 crores, representing a YOY growth of 102%. Profit after tax of 1.59x growth on a YOY basis. The strength of our balance sheet is reflected through the cumulative non NPA provisions at 30th June, which stands at INR 12,425 crores. The key components of the provision are COVID related provisions at INR 5,012 crores, restructuring provisions of INR 703 crores, weak assets and other provisions of INR 6,700 and 10 crores. The standard assets cover defined as all non NPA provisions by standard advances Stands at 2.05 percent, improving 10 bps over March 21 49 bps over June 2020. Our provision coverage, all provisions NPA plus 1 NPA divided by GNPA stand at 118% as compared to 104% for June 2020 and 120% as of March 21. The bank is well capitalized. It's carrying adequate liquidity buffers and risking buffers, which place us in a strong position. The RWA of the bank, as of what we assume, stands at 64% as compared to 68% of June 2020. This improvement in RWA is reflective of the quality of business being done by the bank. Our total capital adequacy ratio is 19.01 NRC 81 was 15.42, improving 154 bps and 192 bps on a YOY basis. The proven COVID provisions that we carry as of June 2021 provide us with a capital cushion of approximately 67 basis points over and above the reported capital adequacy. Our average LCR ratio for the quarter was 115%, excess SFR was 74,000 INR974 crores. The bank was reporting structured collateralized foreign currency loans extended to customers who also placed deposits with the bank on a gross basis as advances and deposits, respectively. For improved Presentation, we have netted off loans from deposits received in India. This has resulted in the balance sheet reducing by approximately INR8,700 First, prior period numbers have been regrouped where appropriate. Our liability strategy driven through premiumization, granularization and deepening has started to show early results. The focus on customer acquisition, leveraging the corporate relationships and deepening the government liabilities business and the customer connect established by the bank through COVID has not yielded us has not just yielded us the recognition of the best retail franchise during COVID, but also improved all liability metrics. Total deposits on a closing basis Grew 16% YOY and 2% Q on Q. We prefer to focus on quarterly average balances instead of month end balances for our liabilities franchise. On a QAD basis, CASA grew 19% YOY and 4% Q on Q. CASA ratio stood at 42%, improving 3 42 basis points on a Y o Y basis. SAAR grew 19% Y o Y and 7% Q on Q and CAR Grew 17% Y o Y and we grew 0.39% on a quarterly average balance basis. If you look at the different trading account segments on a QAD basis, salary segment grew 13% Y o Y and 5% Q o Q. Government segment grew 25% y o y, 18% q1q and the NRI segment grew 17% y o y and 5% q1q. Our term deposits on a quarterly average balance basis grew 7% y o y, of which retail deposits grew 11% y o y and 2% sequentially. The growth in our NRTD business is reflective of the quality of the wholesale franchise we are building. Our corporate customers passed their surplus short term Liquidity with us resulting in the growth. A large part of the incremental NRTD deposits over March 2021 are LCRs Accretive and non callable. Further, as was seen in the SAAR balances, 30% of the incremental NRT Day deposits from Government Client Group, reflecting traction in that customer segment. Our overall loan book grew by 12% on a y o y basis and was flat sequentially. Granular secured retail loans in SME Business and high quality large corporate businesses continue to be key drivers of our loan growth. Our loan book continues to remain balanced with retail advances constituting 54% of the overall advances, corporate loans at 36% and of Commercial Banking Group at Penn. The book represents healthy characteristics with 80% of the retail book being secured, 85% of the corporate book being built is A minus A and above and the CDG book being diversified across geographies, industries, 96% of that book is secured and 37% is of short tenure. On a segmental basis, Retail disbursements grew 3.3x y o y, but declined 49% sequentially. The growth in disbursements and book are largely driven by Transformations and Digital Projects underway across the Retail Products segment. Our virtual Axis virtual channel is helping us deepen customer connect and improve cross sell. The secure to unsecured retail dispersion mix has started trending back to pre COVID levels. Our branch sourcing of retail loans was at 50% in Q1 FY 'twenty two. Retail loan book grew 14% YOSI, 80% is secured. We continue to see strong traction in the retailing Loans across secured products like HHL up 14%, rural book up 18% y o y and our small business banking book up 35% YOY, aided by the team's cadence, digital initiatives and higher productivity. We have been expanding our coverage to rural and semi urban geographies through our BTO strategy, While strengthening partnerships with agri corporates and OEMs, during the quarter, we included 488 branches to our Deep Geo strategy, taking the total account of BTO branches to 2,065. As a result, BTO disbursements grew 2 11% on a Y o Y basis. Corporate, we are progressing well on our endeavor to build a profitable and sustainable corporate bank. Corporate dispositions grew 63% y o y and we grew 52% on a sequential Q on Q basis. 94% of the incremental sanctions were A minus and above. Our corporate book customer assets grew 4% y o y with corporate loans up 8% y o y and 1% qonq. We remain focused on delivering higher growth from our chosen segments. The Mid Corporate segment grew 36% on a Y o Y basis. Our Commercial Banking segment grew 18% on a Y o Y basis. These segments will help bring greater granularity, reduce risk while meeting our ARO criteria. The growth in our overseas corporate loan book is primarily driven by our Jitsi branch. Exposes, 95% of the overseas Standard corporate loan book is India linked and 92% is ANMR rated. Of our total Standard fund, non fund and investments outstanding to India fees is INR31,534 crores, 99% of the same is rated A or above, with none of them having been granted moratorium. MSI book is a negligible amount of INR3,684 crores and real estate is INR17,563 crores, 60% of which is Lease and Discounting. Our Wholesale Products Banking business team We remain focused on simplification and driving innovation across car, CMS, Forex and Trade. During the quarter, we became the 1st bank to execute an directly paperless import transaction with a host to host connectivity for 1 of the largest auto ancillary manufacturers. This has been A culmination of over 6 months' journey with the cross functional teams across coverage, products, IT operations coming together to make this possible. This digital offering will help the bank to further lift the growth trajectory of trade and FX flows business. The building blocks of our CDG business are now in place. Commercial Banking disbursements grew 157% on a y o y basis. Within CDP, the small and medium enterprises grew 18% Y o Y. Early results of our Technet transformation in Commercial Banking is measurable through Higher RN productivity and nearly 70% reduction in log in to sanction pets, the number of new customers added on the asset side increased 39% on a y o y basis. CPG card deposits now contribute 25% of our overall current account balances, Grew 20% y o y and 2% sequentially, reflecting the quality of the CVG franchise they are building. Non asset based fees in the CDG segment grew 45%. The depth of our CDG relationships are also demonstrated by the fact that CDG contributes to 20% of our Burgundy Private and Burgundy Account acquisitions. Prudent and conservative franchise. COVID provisioning, we hold COVID related provisions of INR 5,012 crores As of June, we believe that this places us well for emerging or estimated risks from Phase 2. We reiterate that this does not which should not be construed as a sign of relative weakness of the quality of our loan book. We have provided for all restructure assets as if they were classified as NPA. We carry a provision of INR703 crores against these assets against a regulatory minimum of INR238 crores. This includes a prudent provision of INR155 crores made in Q1 FY 'twenty two for approved but not implemented restructuring. The overall provision cover for restructured loans stands at 23% with 100% covers on all unsecured retail loans. The gross slippages for the quarter were INR6518 crores, lower than Q3 FY 'twenty one, but higher than Q4 FY 'twenty one. At the bank level, 22% of the gross liquidates are upgraded in the same quarter. Additionally, 7.5% of reported gross slippages represent linked accounts that Continued to remain standard through the quarter. 19% of the retail book, 37% of the corporate book and 41% of the CBG book on a segment basis represent accounts upgraded on the same quarter. In that backdrop, which is 22% plus 7.5%, 29% as we explained, it's better to focus on our next business. Asset quality for the Wholesale Bank is holding up well. Net CapEx ratio on an annualized basis for this segment In the quarter, it stood at 0.27 percent, amongst the lowest that we have had in the last 11 quarters. We see similar trends in our CBG portfolio as we called out for the wholesale book. Net slippage ratio on an annualized basis For this segment stood at 0.55%. We have negligible restructuring under COVID-one and 2 for this segment. Retail collections were most impacted due to our cautious stance on exposure of our employees and collection items to the virus, coupled by access restrictions in place by local governments. The net slippage ratio on an annualized basis For the segments to that 4.53%, 55% of the slippages for the quarter come from secured products, where the LTVs are in the range of 35% to 50%. The demand evolution for the retail portfolio was 98% through Q1 FY 'twenty 2, a tad lower than Q4. Demand resolutions came down in the 1st 2 months of the quarter due to mobility restrictions, which impacted fees collections. However, it was heartening to note that June 'twenty one demand resolutions reached 99.5% of March 'twenty one levels. Check bounces remain marginally elevated in Q1 FY 'twenty two, but July check bounce rates go back to March 'twenty one levels. They, however, remain higher than pre COVID levels. Early bucket resolutions in June 'twenty one continued across all asset classes in GTL, credit cards are either at par or slightly better than March 21. Recoveries from written off retail accounts have picked up in June 21 and our 85% off March levels. Recoveries during the quarter were more than 3x as compared to the same quarter last year. Given the inventory buildup, the positive outcomes in the collection assets discussed, Visibility of asset quality and early improvement should be seen in Q3 FY 'twenty two, subject to low COVID-nineteen-three. The bank has been judicious around restructuring loans, implemented funded restructuring COVID-one and 2 as a percentage of ECA is 0.33% of the book as of June 'twenty one and compared to 0.3% as at March 21 on Invoke 2. In value terms, we implemented fund based Outstanding of loans under COVID-nineteen Resolution Scheme 12 stands at INR2,192 crores. Linked non funded facilities, which are not where original terms have not been changed is INR 9.92 crores. 95% of loans restructured under COVID-one and 2 have The LTV of the secured retail loans range from 40% to 60%. On a segmental basis, The restructured loans were 0.62 percent of the Wholesale Banking Group book, 0.21 percent of the retail book and 0.03%. I repeat, 0.03 percent of the commercial banking group. In addition to COVID-one and 2 restructuring, the standard pending restructured loans under the MSME scheme standard INR 332 crores. The GNPA and NPA of the bank has improved 87 basis points on 3 basis points on a MYOB basis. The bank has a healthy TCR of 70% As compared to March 2021, the GNPA and NNPA increased by 15 basis points each. The bank rose of INR 3,341 crores in the current quarter as compared to INR 2,284 crores in Q1 and INR5553 crores in Q4 FY 'twenty one. The NNPA, JMP and TCR ratios of the bank And segmentaries for Retail, SME and Corporate are provided on Slide 42. The asset quality of Axis Finance remains stable with a net NPA of 1.8% and near rail restructuring, I. E. Axis Finance has neared in Lui Strangsel. ECDLF our overall approach to ECDLF was conservative. Total amount disbursed under all the ECDLS schemes is approximately INR 12,100 crores lower than our loan market share. We have not granted ECGL as to we have only granted ECGL as to our existing customer set post the full credit assessment. TCJLS was approximately was given to approximately 28,000 customers across the bank. 99% Of these customers, the numbers are sanctioned under ECJLS 1. ECJLS 1 and 2 disbursements represent 97% by value with nil disbursements in ECDLX-four. We continue to track the behavior of this portfolio as repayment moratorium ends Q2 FY 'twenty two. The BB and below book as a percentage of customer assets stands at 1.19% as of June INR 2,800 crores, I. E, 21 percent of the BBN below book is rated better by at least 1 external rating agency INR330 crores, representing 3% of the BBN playbook, could have been upgraded as borrowers did not seek restructuring. During the quarter, we collected INR 440 crores, 6 percent of the fund based book outstanding at the end of the previous quarter. Investment in non fund based BBN delivered also declined in the current quarter on account of recoveries. The cumulative addition to the pool is INR 159 crores, translating to 11%. The balance represents downgrade into the double 2 and below pool. All accounts downgraded in the current quarter were less than INR 100 crores, And the average ticket prices of accounts downgraded were INR 16 crores. INR 188 crores slipped from the BBB and below INR 2 during the quarter. The average ticket size of our fund based BBB plus BBB and BBB- book is INR10 crores, I repeat INR10 crores with no individual fund based exposure in 4 digit crores. We request you to refer Slide 43 of the Investor Day, which has further summary of the Net NPA BB and below on restructuring pool. Our segment results are not comparable given the change to segment classification and a revision in the internal FTP framework. And therefore, current quarter is not comparable to previous quarter same year. In summary, we've acted Consistent with our commentary and chosen to identify stress early in the portfolio, U. S. ECDL essentially stopped hitting selectively and hence recognize Lardis Liqub is upfront and provided for the same. As I close, allow me to re summarize the salient points for Q1 FY 'twenty one, our operating performance improved, reflected in core PIPOC growing 13%, back 94%. Legacy asset quality is being proactively dealt with early signs in the form of net slippages in the corporate book being Amongst one of the lowest in 11 quarters, our proven strength of balance sheet is demonstrated through our precautionary COVID provision of INR 5,012 crores, cumulative non with NPA provisions of INR12,425 crores. We maintain that this is not We have steadily improved our liability franchise performance with granular retail deposit book, Casa plus RTV were 15%, YOMA at 3% Q on Q. Our subsidiaries continue to improve On their industry position and profitability, the domestic subsidies reported a profit of INR245 crores for Q1 FY 'twenty two, growing 98%. The return on investments on subsidies stands at 54%. We continue to monitor progress on current and future COVID rates across India. We believe our businesses are resilient and are well equipped to capitalize on opportunities and deal with contingencies that the pandemic may close. The EI data starts for stopping specific guidance. We would be happy to take questions now. Thank you very much. We will now begin the question and answer session. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Marukarajanya from Elara Capital. Please go ahead. Question is on slippage. So you did give the net slippage ratio for retail. So can you give the absolute number for retail and corporate? And then within that some color on what would it be for housing and other secured loans, Like just a gross slippage ratio or some quantitative color? Maruk, We don't provide data on a product by product basis, but the answer to your first question, the absolute value of net slippages for the retail book It's INR3741 crores, which will be roughly about 93% to 95% Like I said, the wholesale segment has performed well and so has CBT. The cumulative slippage across those two segments will be about INR 235 crores on a net slippage basis. And the gross slippage would be for retail? The gross slippage for retail Would roughly be about 84% of our gross to this number, that would be about 5,400 odd crores. Thank you. And my next question is on your credit cost. In the Q4, you had highlighted that the credit cost was higher than what it should be because of provisioning policy change and some write offs. So that is what kept the 4Q credit cost elevated. If I remove those one offs from 4Qs and the rise in credit cost is quite sharp in the Q1. We know about the second wave, but what will be the outlook on credit cost? Because anyway, the sequential credit cost has gone up quite sharply, excluding one offs. I mean, are you being extra conservative? Or So, Maruk, I think we've explained that we have provisioning policies that are entirely rule driven. And just to recap, I provide 100% on unsecured retail loans on the 91st day. So in a quarter where slippages are elevated because of the pandemic, Provisions will come through. And like I said earlier, the ODi collection trends are looking positive. Subject to a COVID wave 3, we should see collections impact on slippages giving us Benefits Starting Q3 FY 'twenty two. I also just want to recap for you a comment that I made earlier. When you look at our gross slippages, you must look at the fact that 22% of our gross slippages are upgraded in the same quarter and this is a like for like account basis. And 7.5% of our slippages As reported, our linked accounts, which continue to remain standard through the quarter. So please look at the gross lippages in that context also. Sure. And just one clarification that your total standard provisioning that you have mentioned, That will include the mandatory provisions, correct, the mandatory standard provision? Yes. The 12,425 growth includes the regulatory standard asset provision. Okay. Thanks a lot. Thank you. The next question is from the line of Sumit Kariwala from Morgan Stanley. Please go ahead. Hello. Hi. I just had a question on LCR. So the liquidity coverage ratio is probably When I look at the average deposit flows sequentially, I'm trying to back calculate, it's quite a meaningful one And you could call that much. You also explained that the wholesale deposits are non comparable, etcetera. So and I know there are multiple other factors which impact SG and A. I just Sorry, sir. Vanessa, couldn't get your question. Could you just So I had a question on Yes. So if I look at your equity coverage ratio, it's probably flat QoQ at 115%. Now when I look The growth in deposits on average basis sequentially is quite meaningful. The loan growth has not been that high. You What am I missing? Thanks for the question. I think it's a matter of the composition of how we are looking at the deposits. So there is a stock and then there is an incremental run rate which comes in. And therefore, the stock plus run rate is how we calculate The overall piece, so I think it is something which will be a glide path towards trying to improve the LCRs. What we are trying to say is that as we speak, Our approach has been to start looking at NCR accretive deposits, whether it be non callable or whether it be granular retail. So combination of that, hopefully, as we go along, the calibrated glide path will work to our advantage. Okay. I was asking this is, I wanted to check whether the margin decline Sequentially, has that to do anything with higher excess equity on your balance sheet this quarter versus last quarter? And I don't have the average number, which is why I'm trying to Sumit, just give me a moment. I'll come back to you with a response to your question on the surplus liquidity. I know for the current quarter, our Axis EBITDA stands at INR74,000 crores. If I reference that to the prior numbers and the average for the prior quarter, that should explain the answer. But Why don't we continue in the interest of time? I will respond to your question in the course of the call. Okay. I first, I was just So Sumit, let me complete that answer. I have the number. So our surplus Okay. So that was INR58,000 crores compared to INR74,000 crores in the current quarter. That itself should explain part of the sector liquidity and the mini structure that we have. 2nd is the bigger impact on our names has been our product mix. So as you realize that we have had an increase in the better quality Foreign exchange book that provides us a better NII. So it's NII accretive, but from a spread perspective, it's decretive. So there's a product mix impact in the NIM that's played through. And the last impact on our NIM is the CRR increase, which is the regulatory cost that has come through in the current quarter. So those are the 3 key variables that have impacted our NIM for the current quarter on a sequential basis. On a Y o Y basis, you would note that we have a NIM improvement by 6 basis points. Okay. Got that. And if I may just chip in one last question. So how should I think about margins for the next 1 to 2 years, what kind of improvement is possible? Some guidance range drivers would be very helpful to So Sumit, I think we don't guide margins, but directionally, if I was to tell you, there is a part And since you've asked this from a longer time frame perspective, we do you would note that there's a couple of structural We are taking on our balance sheet. One is the RIBS CSL compliance that we've been playing through. So as our RIDF balances decline, we should see a structural improvement in our gains. It's about INR48,000 crores on our balance sheet And those clearly repeat names for us. So that's one structural improvement in names. 2nd is you would see the first action that we've started taking. For the large part of last year, about 83%, 84% of our disbursements were secured. In Q1, we started getting comfortable in reopening, and 79% of our disbursements were secured. So as we open up and change our product mix back to the historical secured unsecured mix that we had on the retail side, We should see your margin uplift. And as the domestic book grows compared to the overseas loan book that we have at Kid City, The book composition, which is for post standard T should help improve news. Those would be the extra comments I would offer you. We don't provide a guidance range on news. So sorry, I won't be able to answer. Sumit, just to add to that Sumit, just to add to that, Anadarko, you know And as you saw, the granularity of our CASA growth is gradually slowly moving in the right direction. Hopefully, we can continue to execute the way we've been executing. That should also feed into our men's story over a period of time. Now again, we just So I was just trying to point through the things we can look at. Again, I'm not trying to guide any way. Okay. That's helpful. Thanks for the call, sir. Thank you. The next question is from the line of Kunal Shah from ICBC Securities. Please go ahead. Yes. Sorry, the first question was on employee cost. I don't know if you have addressed that in the opening remarks. But Last time, we said like we are providing for this employee cost, and there was some one off during the second half. But When we look at Q1, again, the employee cost trajectory is quite high. So what will be the reason for that? If you look at our employee cost on a quarter on a Y o Y basis, Kunal, The first impact is last year with the onset of Wave 1, we had deferred increments for our staff, And our staff did not receive increments in Q1 of last year, but increments were made available to all our teams in Q3. So Q1 does not carry the increment effect of FY 'twenty one, whereas Q1 of FY 'twenty two carries the increment effect of FY 'twenty one and 'twenty two itself. So there's 2 increments versus no increment impact on the YOY number of Q1 FY 'twenty one to Q1 FY 'twenty two. The second increase in staff cost is we've added 5,000 people to the franchise As we are a growing business and as we get more granular, we keep applying we keep adding detailed basis on internal productivity metrics. Therefore, that's the second impact on staff cost. The third effect is we did take a Social Security Code provision last year. And as I mentioned earlier, because there is an interest rate change in the current quarter and There is an increment on staff cost in the current quarter. We've topped up the Social Security Code provision in order to Consistent be consistent with the prudent position we have taken. That's the broad three reasons why staff costs have increased year on year. Okay. And our Q1 quarter again like 10%, 12 odd percent? The quarter on quarter increase will typically be attributable to increments for the period And the last city cost increase on account of interest rate changes between last quarter and current quarter. Sure. And overall, in terms of the fee income, I think we have been taking several measures in each of the verticals to show up the fee income. So how should we now look at the overall traction once we see the overall situation normalizing? So there is a breakup in terms of the overall retail fee as well as in terms of the corporate and the commercial banking. But which Segments would drive it relatively higher. And finally, in terms of the overall balance sheet growth, how should we see the traction of the fee income side? So, Kunal, I think couple of things I would say without giving you a number. Very clearly, our focus is to build granular fee. And you would note that our granular fee The portion in our total fee has increased on a Y o Y basis. Our granular fees is now 92% of our total fees compared to 86% of the fees last year. So we will continue to drive our fee growth, which is Granite, both on the retail and wholesale side. On the wholesale side, our transaction banking business is gaining traction, And you will see the fee growth that is come through, which is set out on the slide that you were referring to in terms of fee growth. Net fee growth is driven by a couple of things. One is a market share increase, both in the FX loans business as well as DLC business. And as we build our franchise out and deepen our relationships, we expect that granular fee to continue to grow. On the retail side, clearly subject to any regulatory headwinds that may hit us, Our granular retail fee both on the liability and asset side would be linked to the growth in the businesses that you have seen in the current quarter. I hope that answers your question. Yes. And lastly, if I How do you correctly? You made INR 155 crores of the provisioning on restructuring approved but not implemented? That is correct. So then maybe that additional, if we are making 10% kind of approach, can we assume that another $1500 crores is there in the pipeline? Kunal, that would not be a correct conclusion to draw because my restructuring provisions, as I told you earlier, Thank you. I need provisions as per my in periods. So on unsecured, I would have made 100% provision and on secured, I would have made provisions as per the secured Okay, great. So direct imputation would not be correct. If you directly want to look at that number, The provision covered on the restructured book is 23 per bank. You can make an estimation of that number. Sure. Got it. Okay. Thanks a lot. Thank you. The next question is from the line of Adarsh Parazamturiya from CLSA. Please go ahead. Hi. Thanks for taking the question. Amit, I will take a couple of questions. On the SME side, Obviously, post COVID, because of many dispensations available, the net slippage numbers have been negligible. When do you expect the true witness test when the dispensations are getting over and what's the outlook there as you track those portfolios? Hi, Abhijit. Thanks for the question. I think the 2 listeners test for that so first, let me set context to our book and then our assessment of the 2 listeners test. One is Our eCGLS book is not large, and we give eCGLS to customers after the full credit assessment. So We don't believe that at least for what we have funded through ECPLS, there should be an impact because we did a full assessment, of Material Impact. To your question on when do we see ECDLS impacts play out through asset quality, Absent further dispensation, the 1 year period runs out in Q2 FY 'twenty two. And therefore, Assuming a 90 day recognition cycle, you should start seeing something on the slippage front early Q3 from an industry perspective. That's it. Thank you. And my second question goes back to costs and obviously, you'll have explained why staff Cost went up. But for most banks that we would trust, cost income was scheduled So, Adesh, again, thanks for the question. I won't be able to compare in contrast why a certain bank has a certain cost income ratio. I'll probably highlight to you 2 effects. 1 is the cost income ratio has a cost impact and an income impact. It is public information that the wins of the other banks that you referred to are higher than us and we said we have a clear trajectory to improve earnings. So the income effect on cost income plays out through our financial statement. Therefore, a better way to look at our ratios and the progress that we are making on the cost side is to look at cost to assets. Cost to assets has gone up in the current quarter. I just want to call out for you that Two basis points out of the increase is on account of the asset shrinkage because we reclassified on net of advances against deposits. So on a like for like business, my cost to asset ratio would have been 2 point 3%. This is primarily driven by the fact that we continue to make our investments in growing the franchise. And I called out earlier, the IT costs were higher by 63% on a Y o Y basis and so were my connection expenses. So that's the reason why my other expenses, others and staff were up. I still maintain that we will be on a cost to asset basis 2% or thereabouts on a full year basis and we should be able to pull this back. I would just add to what Puneet said. It's very important to understand that during the pandemic actually we have doubled down on our IT, digital, analytics expense Because we believe that this presents a perfect opportunity to actually gain market shares. As Puneet already pointed out, the income should come through the next couple of years. Please also understand and appreciate that we have very large transformation projects on in almost every part of our business. We have mentioned in our call about Sankal, which was the SME led transformation initiative. I talked about the fact that we've launched best in class transformation program for our wholesale banking products, which is again 18 to 24 months program, which will Take us weekly with just completely different offers in terms of what we can offer to our corporate banking clients. And we have similar projects on in other businesses. We've not talked too much about it. And as you go through these transformation projects, these expenses tend to be upfront and obviously the benefits come later. But as Agail Puneet pointed out, We are confident that we will maintain the benchmarks we set for ourselves that will be below 2% cost to assets. And that is not changed. So I'm just trying to put all of that in perspective. Keep all that in mind. And So obviously, as a bank, we are very, very committed to some of those numbers. Okay. Thanks. Thanks a lot, Anupam. All the best. Thank you. The next question is from the line of Prakar Agarwal from Edelweiss. Please go ahead. Yes. Hi, sir. Just couple of questions from my side. One is on this statement that you made on securities that probably from Q3, we may start Given the fact that large part of second will happen in Q1, we expect that Q3 numbers will be elevated before start. 2nd, even if we see some sort of reversal of liquidity, maybe also see that probably the buffer that we have created or the COVID buffer that we have created Let me answer the second question. I'll ask Puneet to answer the first. You know what, we have worked very hard in taking a lot of pain to get our build up the traditional cushion. And I know this cushion does not reflect on our worries on the asset quality, but I think And by value, we created this cushion based on certain rules which we have set up, which have been signed off by our Board, our Audit Committee and the Strategy auditors. We are not going to run back To ask them and say, why do we want to change the rules because x, y, z has happened, derisked. And the system remains. All of us are talking about the potential of a 3rd or a 4th wave. We have we will think 100 times before we So my answer, I think I'm giving a long answer, Bobby is very saying is chances of it getting reversed in a hurry All quite low. Who do you want to add on this? Mr. Pekka, thanks for the question. I think to your first question on normalization, Couple of positive trends we are seeing in June July, which is demand reservations had gotten back to about 99.5% of March 21 records. Overall recovery efforts are also strong, but I think the way to look at the number is when there is an inventory buildup in the system Because of pandemic induced stress, the inventory rundown does not happen instantaneously. So this is not something that will pop up and play out in a month or so. I think given the inventory buildup that we have, Coupled with the positive outcomes and connections that we are currently seeing, we think Q3 FY 'twenty two will be the period where normalization would take place for the system and for us. Just one more question. In terms of the ARPU that we have available in the Rotating in last year, Have you been some understanding as to how much of that has already slid or restructured or would have taken in periods that have been taken this time? Just wanted to get a sense of those customer base in Kokomoto and what is already in some space or other has been a second pressure point. So Praful, we do a lot of internal analytics. We don't call out The effective impact of what the monitoring customer did because there are multiple routes that the monitoring customer could have taken. So it's something that we track, but we don't publicly disclose what percentage of the moratorium Food Board has yet. Okay. Just one last thing, you made certain comments about recovery this quarter about retail profit. If you could just repeat your queries as well. Sorry, sir. I missed your question, please. On your opening statement, you made some So couple of things that I called out. I said 22% of the gross slippage got upgraded within the same quarter on a same named account basis, and 7.5% Of the gross CapEx is our linked accounts that continue to remain standard. An account will continue to remain standard if it pays and is below 90 bpd across the quarter. So those are the two call outs that I made for the gross lupus number. In terms of rupee crorecovery, rupee crorecovery is not as strong as the previous quarters given Thank you. The next question is from the line of Akriti Kakkar from Goldman Sachs. Please go ahead. Yes. Hi. Good evening, Puneet. Just Two questions. Number 1, on the write offs. This quarter, again, we have written off almost about 0.5% of the loan book. Last year, we wrote off 2.2 So can you just understand what's the right of policy, what's driving this numbers stand out? Successively, we've been writing off pretty significant amount of loans. So just wanted to understand this bit a bit better. Rahul, thanks for the question. The right of policy is codified. And Hi. The way our policy works is retail gets written off, this is a predefined Quarter after which the account is 100% provided for. So if an account is 100% provided on in quarter X, It will be written off on a predefined frequency after quarter excess completion. No discretion at I hand no discretion at anybody's hand in the system. It will just get written off in due course. We continue to retain our right to recover. These are potential write offs. And obviously, the recovery starts reflecting in other income in due course. To your question on what has impacted the current quarter's write off, if you recollect last quarter, we had explained the fact that On our Commercial Banking business, we had enhanced our provisioning policies, and the provisioning policy resulted in a We also codified the write off rules on Commercial Banking. And pursuant to those qualified write off rules, the write off of part of the CBD portfolio has taken place in the current quarter. So as we stand today across our Commercial Banking business and across our retail business, There is no discretion available in our system insofar as writers are concerned. We are automated and will get processed with a time gap after we've come to 100 percent provided for. The current quarter is materially impacted by the CVT write off basis that changed last quarter. And are we done with that or it might still continue for a couple of more quarters? No, it's just a rule. So Rahul, since it's a rule, whatever fulfills the rule got written off. I will not have discretion of parceling the write off across quarters. So far as the CBD policy change is concerned, the stock the rule got applied to the stock and the stock got taken care of. Understood. And essentially what you're saying is predominantly it's come from CBG portfolio. Understood. The second question is on the on building the high yielding portfolio, so I think this microfinance corporate action you took. And just trying to understand over the next couple of quarters or next few years, how do you think about building the high linked So Microfinance is another portfolio. What other areas are you focusing on? You've talked in great deal about your additional initiatives. So any new products that's going to come out, what kind of scale and size you can build up over there? So just some color on that would be useful. Thank you so much. Rahul, thanks for the question. I think just want to clarify, there is no corporate action to report or speak of on the MFI portfolio at current. So there's nothing there. Our current and when there is something to report, we believe we will formally report as per due process. The MFI book for us stands at 3,684 odd crores, which is a small proportion of our book. Yes, it helps us meet our PSL requirements and therefore it is a business that we will look at as part of our retail and agribusiness. I hope that answers your question. If I missed something, happy to take a follow-up. So I'll just add, Amitav here. Obviously, it is our endeavor as we look at various possibilities and opportunities out there to go after Opportunities which make sense on the risk reward framework. For example, the wholesale, we have been talking about how we want to expand our mid corporate portfolio and have been doing a pretty good job of it, and we have seen that growing a little bit there. So really, we've done 2020 target. We talked about the Deep Geo strategy on our Retail side, we have extended it to now more than 2,500 sorry, 2,056 branches, And we continue to intend to have expanded as we move forward. You will hear more from us as and when we are ready All we have anything substantial to report in terms of some of the choices we have made or we will make. We will obviously share it with you. We are a bit cautious about announcing it till we have achieved something and we achieved something substantial And something substantial, which is better than what others are offering. So in that sense, as a man we are ready, we will share it with you. So You can expect obviously, you're not going to let some of these apologies go. You refer to different fire and some of the other things. As and when they happen, we'll let you know. I'm not talking about corporate action. I'm talking about general about these advantages. Sorry. Sure. Sure. Thanks, Amitabh. I mean, just put differently, So new business opportunities that you may be considering perhaps on the high yielding side. Of course, MFI, I get your message very, very clearly. What about some of the other unsecured products? What can come out of your digital capabilities that you have spent a lot of money over the last couple of quarters? Yes. So you have heard us talk about, at least on the label side, some of these things. We have talked about BNPL. I think we are one of the First, thanks to come out with a product of that nature, which I was just let it. We are obviously learning along the way. It has already started reaching volume, which Yes, we are quite happy about, but we will come and share that volume with you when we believe we are ready we have earned something we announced to the market. But it has already in the last couple of months reached a volume size and more importantly what we are collecting, which is satisfactory to us and we are quite happy with it. We've done something similar on small denomination loans. We are working on that too. And again, I don't want to overdo it or overstate it. As and when we are ready, we will share it with you. We do want to work under the cover and only when we reach a certain shape and a size and Certain market presidents will come and talk to you about it. So we will not do it the day we kind of announce the launch of it. We will be very, very careful. Understood. Thank you so much, Bhakti. Thank you. The next question is from the line of Antarik Shah Manjji from ICICI Prudential Asset Management. Please go ahead. Yes. Thank you. I just wanted to run through some numbers and see what am I if the numbers are correct here. So in your Slide 18, you Report your retail portfolio breakup and 20% of the retail portfolio is unsecured, which gives us INR66,000 crores kind of book. Is that number right? And you also reported your gross receipts in retail to be about INR 5,400 crores. And you said that secured constitutes 55%, which Yes. So I think the way you need to look at it is because 55% of net slippages is what I called out. You're looking at 55% of the graph space. Therefore, we'll have to change the reference pipe, please. Got it. No, because this was giving a very scary picture of the article details. So is there anything that you see in the article detail which is Grossly different from last year. I mean, I can do the numbers again, but how would you compare it to last year's in your unshaker details, sir? Particularly severe quarter in terms of impact on the unsecured business. Going forward, June has been better than May July has been better than June. Things are improving and as Neet also alluded earlier that we should see a full fledged recovery if this trend continue with Q3. So we do not see or repeat the last implied, there's no 3rd or 4th period of COVID. Sure. Because I think at the margin, you're also more positive on growing Ampekar, right, if I look at the salesperson mix. So Hopefully, the trends are better than last year and the weaker customers have been weeded out. So the last point you made is absolutely correct. Vehicle customers have been needed now. If you look at our overall book composition, it It remains about 80.20 and on the margin it may be slightly that unsecured is higher, but I think we are comfortable between 80.20 or 78.22. That And if I just compare the cheapages or delinquency, whatever you Now I want to talk about between Sajid and Tencent Lloyd in the Ancillary portfolio, is there an order of magnitude difference? Or is it largely comparable? So it's largely comparable between both the unsecured SME and the unsecured salary customer. Antrik, I just want to supplement Sumit's answer. I think since your question was As in the context of personal loans, I just request you to look at Slide 18 of our presentation. Effectively, you will see that 100% of our personal loans are to salary segment and therefore So it's answer generally applies to the portfolio, but in the PL, our PL is non salaried. So Amit, that implies that the credit card numbers I mean, the difference on the credit card self employed numbers is that much larger, right? So that's the concern. I mean if I look at your credit card growth q o q, I know the percentages there could be some right rounding of errors as well, but the growth has started again, right? I think you're ultimately more positive in growing credit Welcome back comes from Salveer or are you still doing on self employed growth as well? I just wanted some sense on that. Anshik, I'm happy to work the numbers with you offline. I think I'd like to understand the math that you're doing before I respond to it. I think the limited point I was making is to Sumit's point that 100% of us deal with salary, but Happy to spend time with you working this number offline. Sure, sure. Thank you so much. Since you As on the credit card, Sumit here. I think that portfolio is in very good shape. Whether we look at all the metrics there in terms of revolve, Thank you. The next question is from the line of Abhishek Murarkar from HSBC. Please go ahead. Good evening, everyone. Just a couple of quick questions. One, when you called out that Of the retail slippages, 55% was from Secured. Is there a predominant segment over there? Which part of secured is that coming from? Is it home loans or LAP or auto? Just some qualitative color there would be helpful. And I can come back to my second question. So to start with, I think a predominant portion of this is actually mortgages. And I think when Puneet gave his opening We actually mentioned the fact that the large part of that is where the NTVs are in the middle of 50%. These what you like to believe are probably temporary cash No mismatches and because of such low LTVs, we believe that we would see larger recoveries once the middle do start flowing in. If I can just extend that, most of across the sector, we are seeing a higher amount of restructuring or slippage in the mortgage book. In general, what is your feeling? Why would DAG see? I mean, it is generally a auto debit book, which can directly be I mean there's no physical restriction in terms of collection, etcetera. So why is the slippage generally going up in that second? So Abhishek, I think the way to think about this is if I wanted cash flow relief, I would seek relief on the largest EMI payout that I have, just from a customer behavior perspective. And effectively, if you look at the loan portfolio across the industry, in rupee terms, the largest EMI would be for this asset. Sure. The reason we feel comfortable is the LTV values. And secondly, from a consumer behavior standpoint, People don't like losing their homes because they have a gain the asset. So as things improve, This portfolio should come back. It's we have to see how long it takes to come back. But that's probably the reason that the home loan TMI is the one where you're seeing some traction. So for me logically extending that, it means that in July at least, when things would have been much better than April, May, And you would have seen all your EMI cycles also by now. You should have seen a very strong rollback from these set of customers. So have you noticed anything like that? Because as you say that Nobody wants to move their house, so they would want to come back. And the moment liquidity demand for cash is down, they would want to pay back or make up their arrears. So you make a fair point, but unfortunately, today the regulation is that once I become an NPA, For me to be reclassified outside of NPA, I have to clear all news. Yes, not for reclassification, sorry, but Just generally collections from these accounts had because you said we'll have to wait to see how it comes back. I was Just thinking that it should have come back by in July. So have you seen anything like that? So like I said, July collections on a portfolio basis Has improved and is showing the right trajectory, so that we can confirm to you what's happening on our portfolio. Okay. But any particular trend on this portfolio which would have been slipped, that's not available, okay? So again, I think what I will Abhishek, tell you it's about 99.5 percent of March levels on demand resolution. I think you could if you implied that across the board, roughly it should play out across product portfolios. Sure, sure. Appreciate that. And just one second question on this corporate and commercial banking. Most of your loans are A and above and that's where you're focusing. In general, I just like to know what would be the yields in that segment? Just broad sort of broad indicated yield would help. So yields in this sector would vary between for a AAA government entity would be, let's say, Between 4.5% for a year to anything between 7% to 9% for SME loans. Okay. So broadly, the Commercial Banking Group, there it would be roughly 7% to 9%. Correct. Thank you. The next question is from the line of Niranjan Karfa from Nomura. Please go ahead. Hi, Puneet. Let me ask a previous question On the retail sheet suggest, and I think you clarified 45% That 45, 55 breakup is on the net number on retail. But even that is So if I can run again the number, out of RMB12 1,000,000,000 of retail, 30% is unsecured, it's about RMB62 1,000,000,000. If we have a net retail keypad of about $35,000,000,000 metric, simply a tick number and 45% So, 16 is around 6.16. And if you analyze it, it's 10% I mean, you assume that a large part of this should have gotten You know, Rudolph, even in the wave 1. So what is it that has slipped in the retail? And since you pointed out, I mean, And the reason is I know that all the data on Slide 18, you basically would point to that 31% of credit cards It's probably a higher risk segment out there. Would that be the sort of a fair assessment of I think a couple of things that we need to look at. Yes, so unsecured is impacted by days 2 of the pandemic more than secured. Couple of things that you would Need to see that it's partially cards, yes, but I think our cards business is on the mend, as Sumit Spokov. Annualizing a high slippage quarter In my mind, it's not the right way to look at the number because effectively what you're saying is wave 2 that Hit us in Q1 of FY 'twenty two will keep impacting us in all 4 quarters of the year. So one, rhythmically, I don't agree with the conclusion that annualization of the number is reflective of the risk because there's lumpiness in the stupages given the environment. So that's one correction I would like to offer to the ratio that's being tried to be computed on the call. And the second is, like we said, There is a demand resolution number that we are seeing uptick, and that should help With recoveries in due course. So if I can interrupt you, I'm sorry. The distribution number, the grant distribution, which you said, is of 99% of March. I thought you mentioned that number for the entire book and not for the evening. So effectively, what I'm saying yes, apologies, sir. What I'm saying is that, that is reflective of our portfolio as a whole, and there isn't a But even differentiation for me to call out between retail and wholesale here. 2nd point I would make is given that my net The purchases of wholesale is exceedingly small. The demand evolution is effectively reflective of my retail book. And I would again reiterate to you that annualizing a high slippage quarter number is not the most appropriate way to look at the Because it assumes the same market scenario and the same pandemic scenario to run for the next 12 months consistently. I think that's where I'll pause. And if you want to talk about it in that manner. Sure, sure. No, that was not the intention. I'm just trying to because We end up looking at annualized number always for 18 quarter. Secondly, on the secured side, and I think Then I have questions around that also. Did we if you can qualitatively comment on Zenduos and Zenduos And there were gold portfolios which also the gold lending portfolio which also defaulted. And if you can compare the qualitatively versus listed at full year FY 'twenty one, that is from Q1, Q1 versus full year FY 'twenty one. So I'll just add a couple of points to what Puneet said. See, the period from about 15th April to 15th June is where a lot of things were Topsy-turvy and unsecured, which gets classified at 90 b2b, therefore, it's become almost 2 months out of 3 months gone there. Subsequently, for the month of July, what Sreed said in terms of demand resolution, our entry rates In terms of flow into delinquency bucket are the lowest now. Our 0 to 30 resolution is back to the COVID level. Mortgages, whatever, slipped, we are pretty confident of getting them back on track in the second half of this year, Just very quick, you could collect all the 4 EMIs who have them on track. So that's we're not as Puneet said let's not analyze what we saw this quarter. This is a very severe quarter and the bounce back also is going to be sharp. Gold, absolutely nothing to worry. There was dispensation in terms of LTV, which the regulator had allowed. We had Chosen and widely in hindsight that we would stick to our 75%, 18% LTV, so there's nothing there in terms of So largely, it is the mortgage piece where if the LTVs are somewhere between 50 to Thanks. Very good. So I've just seen one final question. I mean, if we look at and this is from that the annual report, Obviously, you said the March quarter, but if I look at the split of the maturity tenure on the liability side, Looks like you have built out a very large portfolio, which is of a 10 year, which is 3 to 5 years plus. Is that a deliberate strategy? And it has actually happened over last certain 1 or 2, 3 years. How does it pan out given the current interest rates, I mean, I'm happy to take it off line with you, ma'am. No, totally. I'm happy to give you a first cut answer and then maybe discuss this with you off So the entire corporate book is effectively floating rate. Our mortgages book is external benchmarking. So if there is an interest rate cycle risk that comes through on the liability side, as long as the external benchmark moves, We should be able to get asset pricing. The ALM position would be a liquidity of ALM. And On the liquidity side, I think our core deposits and our current deposits cover us for that bucket of asset creation. I hope that addresses your question. Yes. Thanks, Vinit. Thank you, sir. Thank you very much. We'll take that as the last question. I would now like to hand the conference back to Mr. Puneet Sharma for closing comments. Thank you, ladies and gentlemen. Thank you for having spent the time with us and discussed our results. It's been a pleasure. I hope that you and your family stay safe. And if there are any follow-up questions, please reach out to the Tel Aviv Thank you very much. On behalf of Axis Bank, thank you for joining us, and you may now disconnect your lines.