Thank you so much. Wish you all a very happy new year, and welcome you all to a discussion on Axis Bank's financial results for the third quarter of financial year 2021. Apart from me and Puneet, I also have Rajiv Anand, Executive Director and Head of Wholesale Banking; Amit Talgeri, Chief Risk Officer; Ravi Narayanan, President and Head of Retail Liabilities and Products; and Sumit Bali, President and Head of Retail Lending and Payments, also with me on the call. Domestic economic momentum has continued to improve in quarter three. Economic indicators we track indicates a faster than expected recovery. These include, among others, GST collections, electricity demand, freight, transportation, and vehicle sales. In December, activity seems to have almost recovered to pre-lockdown levels.
Demand in crucial sectors like housing, cement, steel, even automobiles, have turned out to be surprisingly strong, and the rural markets have continued to perform very well. There are, of course, the sectors we all know, that have weathered the pandemic and built upon their strengths, such as pharma, healthcare, retail, ITES, but the broader ecosystem seems to be quite resilient. We expect this momentum to continue into financial year 2022, and the forthcoming budget should look to build on these trends. We in Axis believe that we are very well poised to support, grow, and benefit from this recovery. We continue to be guided by the three vectors of our GPS strategy, and have made considerable progress over the last 24 months, and the execution seems to be coming through quite well.
The improving economic backdrop, coupled with benefits of our sustained efforts to transform the core operations, bring digital to the forefront, and work as a much more cohesive and focused organization, is reflected in the continued improvement we see in granularity of the deposit franchise, advances, fees, wealth management businesses, and subsidiaries. Let me dive into deposit franchise and its premiumization. During the quarter, we opened 1.7 million new liabilities accounts, taking the overall number of new liability accounts opened so far in nine months financial year 2021 to 4.8 million. The bank's savings and current account acquisition grew by 11% and 9% quarter-on-quarter during quarter three over quarter two. It includes digital acquisition for quarter three, which was 2.5 times that of quarter two numbers.
On a QAB basis, total deposits grew 8% year-on-year, but current account, retail savings, and retail term deposits grew 15%, 19%, and 17% respectively. Thus, it shows that the stable granular segments, CASA plus RTD, continues to grow at a healthy rate, and as a proportion of total deposits improved by 574 basis points and 175 basis points year-on-year and quarter-on-quarter. Our strategy of premiumization and deepening of deposit franchise remains on track. Proportion of premium segments and overall SA mix improved to 37% from 34% year-on-year. Deepening resulted in existing retail savings balances improving by 24% year-on-year. The salary and NRI segments within savings deposits on a QAB basis grew by 24% and 22% year-on-year respectively.
On the advances side, we have seen highest ever quarterly retail disbursements during quarter three, led by secured products, which grew 11% year-on-year, which has been our strategy. Quarter three loan disbursements, retail loan disbursements, were up 37% quarter-on-quarter, over 4 times of quarter one this fiscal, and surpassed the pre-COVID levels. Secured segments like HL, LAP, and SBB grew 23%, 11%, and 35% year-on-year respectively. Our home loan logins and disbursements for December 2020 touched highest ever quarterly numbers. Our Digital strategy continues to progress well, with 44% year-on-year growth in quarter three disbursements. 84% of these loans are secured. Rural loan book grew 9% year-on-year, driven by commodity, crop, gold, and farm equipment loans.
Retail asset fees, excluding cards, grew 35% quarter-on-quarter, and third-party distribution fees continues to grow strongly, and was up 28% year-on-year and 6% quarter-on-quarter, driven by insurance products. In our corporate and commercial banking segment, we continue to deepen our engagement with better-rated corporates, focus on transaction banking products, and leverage on the One Axis platform. Our sustained focus and investments in people, products, and efforts in the MNC, mid-corporate, and government segments resulted in year-on-year growth rates of 54%, 39%, and 16% respectively. Within the FIG group, deepening of relationships along with new customer acquisitions in FIG have resulted in CA growth of twenty percent and advances growth of 29% in this segment. We have added 452 new relationships during nine months of financial year 2021, spread across various segments of our wholesale banking franchise.
Again, if we include our market-leading participation in the TLTRO space at the beginning of this fiscal, our corporate loan book grew 11% year-on-year during the quarter. We are quite clear in our minds that our focus is to get the NIMs in the business up to a certain level. We do not want to chase asset for the sake of growth. We want the right pricing. So the point I'm trying to make is that the growth in the wholesale franchise reflects our desire to balance NIM versus growth. We continue to strengthen our position as a transaction bank, and our fee performance in this segment further substantiates our steady progress in this business. Share of transaction banking and Forex fees stood at 60% of corporate and commercial banking fees, highest in the last 11 quarters.
This was possible with segments like current account and cash management services, growing by 25% and 74% year-on-year, respectively. We've also been focusing on growing our wallet share of credit and healthy business, and that has helped Forex fees to grow 18% year-on-year. We created the Integrated Commercial Banking Group last year to have greater focus on needs of the SME customers, which is one of the most profitable segments of the bank with high PSL coverage. We embarked on a tech-driven transformation project called Sankalp. It helps in data-driven credit decisions with minimal documentation, offering simplified products and unlocking value using data for effective customer interactions. Benefits of the same are helping engagement levels improve with clients, with RM interactions up three times, and new relationships added during the quarter up 71% year-on-year.
RMs are now getting a 360-degree view of the client on the field and are thus able to fulfill the client needs versus just selling products. SME loans grew 6% quarter-on-quarter. The focus is to grow the high collateral-backed business with strong borrowers. The benefits of the One Axis platform is reflecting very well in the strong year-on-year performance of our subsidiaries, too, which I'll discuss later. On credit cards, overall credit card spends grew 31% quarter-on-quarter, with retail spends up 26%. Festive season has helped spends recover sharply. Further, we see the share of travel, dining, and entertainment expenses gradually inching back towards pre-COVID levels. We continue to focus on growing this segment profitably, with share of affluent business and overall mix increasing to over 10%.
Our new-to-bank strategy and partnerships with major players like Flipkart and Google have resulted in 101% quarter-on-quarter growth in new-to-bank sourcing during the quarter. On wealth management business, Burgundy continues to be among the top wealth management franchises in the country, with assets under management of INR 1.95 trillion across the regular and alternate investment solutions. Burgundy Private continues to scale up very well, with combined AUM of above INR 43,500 crore across 1,415 families, up from 372 last year. On the digital side, over the last few years, we have been silently undergoing a digital revolution within Axis, while external attention has been focused on regular business and asset quality issues.
If you all refer to slide 32 of the analyst presentation, you will find the digital bank in numbers, of which many rank in the top three. I will call out a couple on year-to-year basis in the first nine months of financial 2021. Savings accounts sourced digitally improved to 31% from 59%. Proportion of personal loans dispersed digitally improved to 56% from 43%. In the UPI space, we continue to be one of the leading players, with 19% market share by transaction volume for nine months financial year 2021. Going forward, our focus is on reimagining end-to-end journeys, transforming our core, and becoming a partner of choice for ecosystems. Our approach to reimagining customer journeys is OPEN. OPEN stands for O, which is zero-based redesign, putting customers at the center and rebuilding the entire journey with a zero operations orientation.
P is around building proprietary in-house capabilities. We believe distinctiveness and differentiation will come from having something proprietary to us, so we insist that in everything we build, we have a proprietary edge. E is ecosystem capable. Everything we build is built keeping both Axis Bank and partners in mind, and N is all about numbers. We are metrics-oriented, and our focus is on numbers. We understand fully that digital takes time, and many strategies will actually not deliver. However, we will set up and track key metrics from the get-go so that we can steer products in the right direction. We have made good progress in delivering some digital outcomes, with 17 live products, of which 12 products were launched in the current financial year so far. Many products are in the final stages of testing and will come live in the coming months.
The performance on the digital front remains encouraging. On liability accounts, we see a significant improvement on customer metrics. Time to open an account is down 75%, customer satisfaction is up 31%, documentation is down to zero. The FreeCharge platform continues to focus on payments, but also has started introducing financial services products focused towards the millennials and small and medium businesses. We are offering fixed deposits, credit cards on the FreeCharge platform, which act as a digital customer acquisition engine, and the plan is to keep introducing new products and offerings through this platform. On asset quality and conservatism, we have consistently adhered to our prudent and conservative approach when it comes to provisioning norms, accounting policies, and rating downgrades.
Similarly, in this quarter, too, we have made provisions on 90+ DPD accounts not classified as NPA due to Supreme Court judgment, at rates that would have applied in the normal course for such portfolios. Further, fee and interest income on the same have also been reversed from the respective fee and interest income lines. GNPA and NNPA numbers are down on a year-to-year basis, even if we reported as per IRAC norms. The bank has also not realized any COVID-19 provisions, held as on September 2020, in the current quarter. On an aggregated basis, specific, additional, plus standard, plus COVID, our provision coverage ratio stands at 116% of IRAC GNPA at December 31, 2020, as against 74% in December 2019. Improved coverage on restructured loans now at 26%, compared with 19% in previous quarter.
We are well capitalized with total CAR of 19.31% and a CET1 ratio of 15.36% as at 31st December. On the ESG front, I'm happy to share with you that Axis Bank's CDP and MSCI ESG ratings have improved, and CSR Axis Bank Foundation has reached almost 0.9 million households as on December 2020, as part of its mission to reach 2 million households by 2025, under its sustainable livelihoods program. Our financial inclusion and literacy program has also reached close to 0.9 million participants in 23 states and union territories. Please see Slides 44-46 for more details. Our primary motivator for launching GIG-A-Opportunities during the second quarter as an alternate format, was to access talent pools that we are unable to access in a full-time traditional model.
We received tremendous interest from over 60,000 applications for the 50 pilot positions, but had to expand to 100 roles across the Axis Group. The pool of candidates who have joined us are highly skilled individuals. The demographics are promising. 45% diversity in gender and age, 54% have never worked in the banking sector before, 44% of them are outside of metro locations. We will be scaling this over the next 12-18 months to a mainstream channel within our overall workforce strategy. As part of the future of work initiative, we have also stated that we will continue to work hybrid and committed to no corporate real estate investment in the near term.
This, of course, excludes branches and distribution, and the five-, in the past few months, as health concerns have improved, we have successfully launched hybrid working in our large office, with our leaders and middle management coming in twice a week. Moving on to subsidiaries. Our subsidiaries have continued to deliver superlative performance for many quarters now, and the nine-month profits of domestic subsidiaries stand at 113% of total financial year 2020 profits. If you, all of you refer to slide 48, you will see that the bank's investments in key operating subsidiaries stood flat at around INR 1,800 crore over the last two years, while the CAGR growth in net worth and earnings of these subsidiaries stood at 14% and 64%, respectively. Hence, the value created in the subsidiaries continues to compound for us at a very healthy rate.
All this performance is driven by industry-leading performance by the respective subsidiaries. Let me highlight some of them. Axis Capital remains one of the top investment banks in the country. It has completed 37 transactions in nine months, financial year 2021, comprising 31 equity capital market transactions. It's flat for 9 months to INR 88 crore. Axis Securities has now evolved into a full-service broker, focused on building an advisory model with customer acquisitions for the quarter up 99% year-on-year, with highest ever broking revenues in quarter three of INR 111 crore. Axis Securities' nine months PAT was INR 118 crore, over seven times its full year financial year 2020 PAT. Axis AMC remains one of the fastest growing AMCs in the country across debt and equity core categories, with average AUM growth of 44% in the last 12 months.
Axis AMC today is the second largest equity AUM house in the country. Axis AMC's nine months PAT was INR 164 crore, up 140% year-on-year. Axis Finance. For quarter three, overall ROE for Axis Finance stood at 17.5%, with one of the highest ROEs of 24%, and one of the lowest cost income ratios of 9% in the industry for wholesale versus NBFCs. Share of retail in the overall book continues to scale up and now accounts for 30+% of incremental disbursements. No accounts were required to be restructured in our Axis Finance NBFC, and the NBFC arm remains suitably poised to gain market share and grow faster than peers once things start to normalize, with one of the highest CARs of 21.7%. Net NPAs stood at 1.7%.
Axis Finance nine months PAT was INR 139 crore. A.TReDS, during the quarter, Invoicemart, who has, has a 37% domestic share in trade receivables discounting system, became the first entity to have discounted INR 10,000 crore worth of invoices. Since its inception in July 2017, it has facilitated funding for close to 600,000 invoices of MSME vendors. While Amit and Puneet will provide you all the- with all the more details on the portfolio risk and provisions, let me just make some brief remarks. Restructuring requests remain lower than our initial expectations, which leads us to believe that the credit loss pain emanating from COVID-19 should be transient with moderation in financial year 2022. This outcome will be predicated on the future economic recovery, as all of us are researching today.
We expect the second half of this financial year performance will reflect most of this transient pain across the banking and financial services space. As discussed in prior quarters, we have always preferred to upfront the issues related to stress, in line with our conservative stance, and let our collections and recovery teams do their job, which, by the way, has been improving every passing month. Over the past few months, bounce rates have continued to improve, and our demand resolution in December stood at 98%, in line with some of the best in the industry. We may need to make provisions in the near term, but we will recover over the medium term as economic momentum comes back and overall economic activity levels improve across all sectors, especially service-oriented industries. To conclude, the quarter earnings performance was punctuated by expected rise in retail privileges.
At the operating level, performance has been improving steadily quarter-over-quarter. Asset growth across focused product segments remains strong, and retail deposit franchise continues to improve. Our digital banking is gaining from strength to strength as our product launches intensify in coming months. We continue to build on our conservative stand and now have a standard assets coverage ratio defined as all non-NPA provisions to standard assets of 2.08%. This, along with our strong capital position and comfortable liquidity position, makes us one of the better, better placed banks in the current economic environment. We expect credit demand to pick up in the next couple of quarters once economic momentum improves... further post-budget and corporate start making investments.
In such an environment, large banks with healthy operational performance, strong balance sheet and capital position, superior operational capabilities, and digital powers are better placed when growth comes back. We are confident of emerging from this crisis stronger and remain committed to achieve our medium-term aspirations. With that, let me hand it over to Amit to take you through the risk segment in more detail.
Thank you, Amitabh. Good evening, everyone, and wish you all a very Happy New Year. Thank you for joining us today. Let me now give you some risk insights into the portfolio. We continue on our journey of prudence, which we have embarked on since early 2019. The risk management framework revolving around risk appetite, prudent policies, tightened underwriting standards, and efficient collections, has been further strengthened through the pandemic period. As the markets open up, we are pursuing balanced and quality growth within the risk framework. Proactive and preemptive strategies around collections developed during the peak of the lockdown, has helped us in improving efficiency parameters across products, and I will talk about this a little later in detail. Let us now look at each of the business segments, starting with wholesale.
The wholesale banking portfolio continues to see significant change since early 2019, with focus on the right customer selection and tightened underwriting outlook. Almost 83% of the standard book continues to remain in the rating category of A-minus equivalent and better. We have maintained this approach through the last quarter, with almost 94% of incremental sanctions in the last quarter having a rating of A-minus and above, with almost 71% having rating of AA and above. We continue to be selective in lending and focused on lending to top-rated corporates. Moving to the commercial banking group or the SME-led segment, while we continue to adopt a cautious approach in lending due to the external environment, we have capitalized on opportunities within the risk parameters in growing the portfolio last quarter. The portfolio continues to be well-diversified and granular, targeted at better-rated SMEs.
Over 80% of this portfolio is SME 3 and better, which is equivalent of A- and above for SME. We see a similar rating mix reflected in the incremental sanctions, which had over 84% new borrowers in SME 3 and above in the last quarter. The portfolio is spread over 35 broad sectors and geographically well-diversified in over 120 locations, with the average ticket size of INR 3.5 crore. As Amitabh mentioned, we have built a new lending platform called Sankalp for CBG, which effectively combines multiple phases in credit processing digitally under one umbrella, ensuring quicker turnaround times and simplification at the front end. Let me now give you some color around the ECLGS funding that we've done.
Under the government's ECLGS program, we've sanctioned funding to over 25,000 customers, with a sanctioned value of INR 10,583 crore and disbursements of INR 8,875 crore to SMEs, individuals, and small business owners. This is broken up into two parts. Under ECLGS one, we have disbursed INR 8,289 crore, and under ECLGS two, we have disbursed INR 586 crore. The funding under this scheme has been provided selectively based on the eligibility under the scheme, due diligence and approval criteria of the bank. The scheme, as you would probably know, is valid till March 31, and borrowers can still avail of this facility. Let me now move to retail.
Amitabh mentioned the pivot to secure retail and new acquisitions, with over 83% of incremental retail sourcing coming from secured products, primarily mortgages in the last quarter and so far this year. The scoring models and policies have been recalibrated to incorporate variables like moratorium, payment behavior during the last nine months, and bureau performance. Most of the new acquisitions during the quarter are in mortgages to credit-tested customers, with average LTVs being around 58%. We continue to remain cautious in the unsecured segments, and sourcing is largely restricted to existing bank customers based on tightened risk framework. At a portfolio level, 81% of the portfolio continues to be secured, consisting of mortgages, the wheels portfolio, and rural lending. Our retail unsecured portfolio is around 10% of the bank's portfolio and 19% of the retail portfolio.
Just to reiterate, unsecured portfolio here is targeted at salaried, credit-tested, and existing customers of the bank, with salaried and existing customers contributing over 80%, which historically have seen lower default rates. We are also actively leveraging analytics to capitalize on our strategic partnerships, which provide good risk insights for new acquisitions, especially in unsecured. Let's now turn our focus to collections, restructuring, and stress test outcomes. We have followed a four-pronged strategy around a focused approach to managing the portfolio. One, early identification and rectification of the problem and recognition, structure and analytics-based targeted collections, three, selective approach to ECLGS and restructuring, and four, finally, making prudent provisions based on slippage.
We had mentioned during our earlier calls that as part of the collection strategy, the team has adopted several strategies, including contactless and digital options, along with advanced analytical and risk segmentations to prioritize collections and effectively reach out to the delinquent customers. Our resolution rates in December across products and buckets have improved significantly from September levels and are at par with pre-COVID levels. In fact, in some of the segments, collection efficiencies are trending better than pre-COVID levels. To provide you a sense of our efficiencies, the demand resolution across retail segment, which broadly defined as current month resolution versus current month demand, is currently at 98% in December. This was 94% in September and around 97% in pre-COVID.
As mentioned earlier, we had significantly beefed up our collections infrastructure by adding more agents and staff, over 10,000 strong now, to handle the incremental volumes, and this is paying off now with demand resolution back to pre-COVID levels. While bounce rates still remain at slightly higher than pre-COVID levels as customers adapt to post-moratorium payment habits, improving demand resolution and collections efficiency provides a clear indication of reduced slippages going forward. Collections have doubled from customers who have crossed 90 days in our books, but not classified as an NPA due to the Supreme Court directives, and we see this improvement from December to September. Similarly, recoveries from written-off accounts have increased by 70% when we compare December to pre-COVID levels.
If we now look at restructuring, restructuring was offered in line with the regulatory guidelines under the resolution framework for COVID-19 related stress and a board-approved policy to borrowers impacted by the pandemic. In line with our commentary in the previous quarters, the bank has been judicious and selective around restructuring loans. The restructured loans at December 31, 2020, stands at INR 2,709 crore, which is 0.42% of the gross customer assets. We are not granting fresh COVID-19 related restructuring approvals, and hence, our overall restructuring at a bank level, under the COVID-19 resolution framework, will not exceed 0.42% of our gross customer assets, as mentioned above. So based on this assessment, we'd like to give you a quick update on the stress testing we've done on the various portfolios.
As most of you are aware, we did a stress test exercise at the start of the pandemic with periodic refresh based on the evolving situation. Just to recap, scenarios were built considering various factors like spread of the infection, time to peak infection, lockdown duration, policy action, and time to economic normalcy. The model was subjected to an external review for design comprehensiveness and sustainability, and further enhanced based on additional insights like moratorium, restructuring, and collections efficiency. The results of the updated stress tests have been encouraging, and we have seen an overall reduction in stress estimates for slippages for the year in the range of 45%-50% from our original April estimates. So in summary, we have chosen to identify the stress early in the portfolio, use ECLGS and restructuring very selectively, and hence recognize the slippages this quarter with lower residual impact in Q4.
Efforts around collection strategy are paying off with better efficiencies and demand resolution and recoveries back to pre-COVID levels. The stress models and scenarios indicate a significant overall reduction in stress slippage estimates to previous quarter. We continue to monitor the portfolio closely based on the changing environment. With that, I now hand over to Puneet for the financials update. Thank you.
Thank you, Amit. Good evening, ladies and gentlemen. Thank you for joining us this evening. I will discuss the salient features of the financial performance of the bank for Q3 FY 2021, focusing on our operating performance, capital and liquidity position, growth of our deposit and loan franchise, journey of becoming a more prudent and conservative franchise, and more specifically, asset quality, restructuring, and provisioning. Before we get into the detailed commentary on the financial results for the quarter, it is important for me to clarify that the financial results of the bank for the quarter, insofar as the profit and loss line items are concerned, have been prepared in accordance with the extant IRAC norms. While determining the impact on income recognition and provisioning, we have considered asset classification at a borrower level and not simply at a facility level for loans that crossed 90 DPD.
This means that the interest reversals per IRAC norms, including on assets not classified as NPA, as per the Supreme Court judgment, have been reduced from the interest income line. Fee reversals per IRAC norms, including on assets not classified as NPA per Supreme Court judgment, have been reduced from the fee income line. Provisions on loans, including on assets not classified as NPA per Supreme Court judgment, have been made at rates as per bank's internal policy, which is equal to or higher than RBI stipulations and are recorded on the provisions line. The bank has not used any overlay whatsoever in determination of the income recognition and provisioning for the quarter. The Supreme Court dispensation on asset classification has been used for financial reporting only for the limited extent of reported GNPA and NNPA.
We have also discussed the GNPA and NNPA ratio per IRAC norms as part of our commentary and investor presentation. In addition to the above, we continue to strengthen our balance sheet, and our prudence journey continues. The reported profits for the quarter are adversely impacted to the extent of INR 1,400 crore on account of prudent choices exercised during the quarter across expense and provision lines. Please note that these provisions are over and above what we needed to do as per IRAC norms. Further, this includes the impact of changes in accounting policies implemented in Q1 FY 2021. Our net interest income before reversals for Q3 FY 2021 stood at INR 7,987 crore, representing a YOY increase of 19% and a sequential growth of 8%.
NIMs before interest reversal for Q3 were 3.89%, up 17 basis points on a YOY basis, and 27 basis points on a sequential quarter basis. The sequential and YOY increase in NIMs before interest reversals are attributed to normal business activity and better liquidity management. Interest reversal for the quarter was INR 614 crore, representing a 30 basis point impact on the NIMs for the quarter, as compared to 4 basis points in Q2 FY 2021 and 15 basis points in Q3 FY 2020. This was partially offset by a one-time interest on income tax refund, aggregating INR 153 crore that the bank received during the quarter. We've not utilized the NII reserve held by the bank at the end of the quarter, and we have not incrementally created an NII, any incremental NII reserve in Q3.
Reported NII for Q3 was INR 7,373 crore, growing 14% YOY and sequentially Q1Q growth of 1%. Reported NIMS for Q3 FY 2021 stood at 3.59%, compared to 3.57% for the same quarter last year, and 3.58% for the immediately preceding quarter. Hence, NIMS, despite the large interest reversal, grew by one basis points and two basis points, respectively. Our fee income before interest reversals stood at INR 3,040 crore, grew 10% YOY and 10% Q1Q. Our reported fee income stood at INR 2,906 crore, growing five percent on a sequential, growing five percent YOY and six percent on a sequential quarter basis. The growth in reported fees is impacted by fee reversals, mainly account and slippages in our cards business.
64% of our fee is from our retail franchise, and 36% of the fees comes from the wholesale franchise. Amitabh, as he stated earlier, the granular fee across third-party products, transaction banking, and Forex grew sequentially and YOY. We've discussed that, so I won't dwell on that further. We have been cautious and not followed a strategy of aggressively monetizing the MTM gain on our SLR book. Trading income stood at INR 367 crore, representing a YOY decline by 29% and a 52% Q1Q decline. The decline in trading profits on a YOY basis is attributed mainly to a one-off sale of strategic investments aggregating INR 237 crore in the same quarter last year. There is no similar item in the current quarter.
Other income stood at INR 503 crore, growing 1.1% YOY, an increase of 76% on a sequential quarter basis. Collection efforts of the bank are showing early results. Recoveries from the written-off pool for the quarter, increasing 17% on a YOY basis. Collections on retail assets written off pool improved 72% on a YOY basis, and this gives us some comfort that recoveries could hold up even on fresh slippages, though with a lag. For the nine months of the current financial year, operating expenses stood at INR 13,017 crore, growing 5% on a YOY basis. Operating expenses to average assets stood at 1.96%, as compared to 2.07% as of December 2019.
Sequentially, the cost to average assets ratio declined by 1 basis point, and on a year-over-year basis by 11 basis points. For the nine months of the current financial year, cost income stood at 41%, flat on a year-over-year basis. Operating expenses stood at INR 5,053 crore for the quarter, representing a year-over-year growth of 12%. On a sequential quarter basis, the cost increased 19%. The increase in the costs are attributable to the following: Staff costs. Our staff costs, our headcount as at December 31, 2020, stood at 77,015, an increase of 6,425 from the number as of December 31, 2019, and 804 from September 30, 2020.
The key reasons for the growth in the staff cost is we decided to roll out increments for our employees effective October 1, 2020. This increment was not reflected in the previous quarter. Further, we have accrued, on an estimated basis, the liability that would arise on notification of the rules pursuant to the Social Security Code. This impacts our overall cost income adversely by 131 basis points, and cost to assets ratio adversely by 1 basis point, and contributes to 3% increase in costs on a YOY and Q1Q basis. Please note that this accrual of expense was not mandated and has been done purely from a prudence perspective. The non-staff costs increased on a YOY basis by 8% and on a sequential basis by 20%. The increase in non-staff costs is attributable to normalization of business volumes.
We've earlier discussed this when Amitabh and Amit spoke about disbursement growth, leading to higher sourcing costs, promotion expenses, collection expenses for the quarter, and our continued investment in technology. Our operating profit for Q3 FY 2021 was INR 6,096 crore, representing a YOY growth of 6%. The core operating profit was INR 5,054 crore, growing by 10%. The provisions and contingencies for the quarter were INR 4,604 crore, growing 33% YOY, flat QoQ. Important to note, of this, INR 1,264 crore are purely driven by the bank's prudent practices. This constitutes 27% of the provisions made in the quarter. Further, the bank has provided all loans that would have been NPA as per IRAC norms per the extant NPA provisioning policy. The bank has not utilized any COVID-19 provisions held at September in the current quarter.
The reported credit cost for the quarter ended 31 December is 65 basis points, as compared to 2% for the same quarter last year. This represents a decline of 135 basis points. However, the credit cost, including provisions made on 90+ DPD, not classified pursuant to the Supreme Court judgment, stood at 3.3% for Q3, compared to 2% for Q3 FY 2020, and 51 basis points for the previous quarter. After factoring the above, the net profit after tax stood at INR 1,117 crore. This profit is after considering an adverse post-tax impact of INR 1,050 crore on account of prudent choices for the quarter. The strength of the balance sheet is reflected through the cumulative non-NPA provisions of INR 11,856 crore, as compared to INR 4,200 crore at December 2019.
The key components of the non-NPA provisions are COVID-19 provisions of INR 5,012 crore and restructuring weak assets and other provisions of INR 6,844 crore. The standard asset cover stands at 2.08%, as compared to 0.78% a year ago, an improvement of 130 basis points YOY. Our provision coverage, quantified as all provisions, NPA plus non-NPA, divided by GNPA per IRAC norm, stands at 116%, compared to 74% December 2019, a YOY increase of 4,200 basis points. Our capital adequacy is 19.31, and our CET1 is 15.36, improving 59 basis points and 103 basis points, respectively, on a YOY basis.
The provisions made by the bank pursuant to IRAC norms on the Supreme Court standstill accounts are accounted for as other liabilities instead of netting off from advances, as is the presentation convention for NPA provisions. This has temporarily adversely impacted our overall capital adequacy and CET1 by eight basis points. This value should accrete back to capital upon final decision from the Supreme Court. The structure of the balance sheet enabled us to manage our excess liquidity and wins better. We optimized the wholesale funding on the liability side of the balance sheet, repaying, retiring, borrowings, and lump deposits. Average LCR for the quarter stood at 106%. Our exit LCR was at 119%. Our excess SLR stands at INR 51,886 crore. Moving on to our deposit franchise, most of the points have been discussed by Amitabh.
I will focus on three key items. If you decompose the growth in deposits, then on a quarterly average balance basis, our SA grew by 14% YOY and 4% QOQ. Our retail SAAR grew 20% YOY. CA grew 15% YOY and 4% on a QOQ basis, and CASA grew 14% YOY and 4% on a QOQ basis. Our CASA stood at 42%, improving 200 basis points YOY and QOQ. Our overall loan book, including TLTRO, grew 9% YOY, 1% sequentially. Granular retail assets and high-quality large borrower relationships were the key drivers to our loan growth. Retail disbursements grew 7% YOY and 34% on a sequential quarter basis, driven largely by our secured business.
If I just evaluate the December 2020 number versus the December 2019 number, the disbursements growth was 11% on a month-on-month basis. Wholesale disbursements were better, grew at 34% YOY and 13% sequentially. Commercial banking grew at 25%, and a large part of these disbursements were secured. Prudent and conservative franchise. In H1 FY 2021, we had taken actions across accounting policy changes, reserving NII, additional provisions around COVID, provisioning for estimated probable restructuring pool. On accounting policy changes, the net impact on operating profits on account of policy changes implemented in Q1 for the current quarter is INR 123 crore. This impacts comparability to same quarter last year. NII reserves have not been utilized, and we have not created an NII reserve in the current quarter. COVID provisioning, we have not utilized COVID-19 provision.
We continue to hold INR 5,012 crore, despite the improvement in the stress models Amit spoke about. Probable restructuring was significantly lower than our estimates, and provisioning coverage on the said loans has improved. On thirty-first December, we carry a provision of INR 631 crore against a regulatory minimum of INR 40 crore on accounts restructured, translating to a cover of 26% of restructured loans. More importantly, 100% of unsecured loans that have been restructured have been provided for. Asset quality trends. At thirty-first December, our reported GNPA and NNPA were 3.44% and 0.74%, as compared to 5% and 2.09%. Absent the standstill to asset classification, post thirty-first August 2020, pursuant to the Supreme Court judgment, the bank was required to-...
If the bank was required to report GNPA as per RBI's extant IRAC norms, the GNPA would have been 4.55, and the net NPA would be 1.19%. Even with this addition, this reflects a decline of 45 basis points and 90 basis points on a YOY basis. The bank's reported provision cover is 79%. The IRAC provision cover is 75%, compared to the 60% last quarter. Every segment of the bank has improved provision coverage on a YOY basis. We have not sold any NPAs to ARCs in the current quarter. Reported slippages for the quarter are not reflective of a normalized quarter. The reported gross and net slippages picture during the quarter has two compensating effects: moratorium coming to an end, resulting in asset aging-based slippage, offset by Supreme Court standstill.
We've adjusted the Supreme Court standstill impact by reporting numbers pursuant to IRAC. Gross slippages during the quarter per IRAC was INR 6,736 crore. The slippages composition was, the wholesale business was 10%, CBG was 6%, and retail was 84%. The net slippages without availing benefit of standstill was INR 5,831 crore. The asset quality at Axis Finance is holding up well, with the GNPA at 3.8% and NNPA at 1.7%, no accounts restructured. As we have indicated, the impact of COVID slippages would be visible in Q3 and Q4. Based on collection trends and macro data visible to us today, when compared on an IRAC basis, we believe Q4 FY 2021 will be better than Q3 FY 2021 on the slippage front. Restructuring.
The overall restructuring is 0.42% of gross customer assets of the bank, compared to 1.7% that we had estimated last quarter. In value terms, INR 2,709 crore have been restructured, compared to our estimate of INR 11,000 crore for all fund-based loans. Implemented as, at the end of the quarter is INR 396 crore, which is 15% of the approved restructuring. The linked non-fund based exposure on which there has been no change in original terms, stands at INR 869 crore. We are not granting fresh restructuring approvals under COVID-19 scheme, and hence the overall restructuring number at the bank level will not exceed 0.42% of gross customer assets. On a segmental basis, 62% of the approved COVID restructuring is from the wholesale bank and 38% is from the retail bank.
It is pertinent to read slippages and restructurings cumulatively, because different banks would have adopted different approaches to both these items. We have a slide in our investor deck which sets out the segmental composition of slippages of restructuring on a loan book basis. We would request you to look at that slide for further details. The salient point I'd like to point out is the commercial banking restructuring is near zero or 0.0% of the CBG book. The fund-based double B and below book as a percentage of gross customer assets stands at 1.37%, down from 1.42% as of thirtieth September. The double B book has declined across all three categories: fund-based, non-fund based, and investments.
The decline is INR 396 crore on fund-based, INR 132 crore on non-fund based, and INR 188 crore on investments. In the current economic environment, the bank has not upgraded any borrower who was downgraded into the double B pool based on expected probable restructuring. Technically, we could have upgraded. These borrowers have not availed restructuring, aggregating to INR 408 crore, and these could have been upgraded, but we continue to hold them in the double B pool. During the quarter, we've collected INR 1,130 crore from the double B and below pool and upgraded INR 612 crore from the double B and below book. Slippages from the double B and below book per IRAC norms to NPA for the quarter were INR 819 crore compared to INR 3,345 crore for the same period last year.
Downgrades into the double B and below book for the quarter aggregated INR 1,844 crore, as compared to INR 3,243 crore in the same quarter last year. In the current quarter, the fund-based downgrades were INR 1,543 crore, non-fund based were INR 113 crore, and investments were INR 189 crore. Important to note, after the downgrades in the current quarter, the average ticket size of fund-based loans across triple B plus, triple B, and triple B minus is INR 60 crore, with no individual fund-based exposure that is four-digit crore. We request you to look at slide 40 of our investor presentation for greater details on net NPA. To conclude, the overall stress in our book comprises our net NPA, double B and below, and restructured loans not included in double B and below.
The overall stress of the bank aggregates 2.7% on that computation methodology, and we have a provision coverage of 69% on the pool. Hence, net of provisions, the overall stress book stands at 0.9% of net customer assets, declining from 2.3% for the same period last year. As I close, operating performance was robust, reflected through our NII and core operating profit growth. Capital position remains the best that the bank has had in years. We carry adequate liquidity buffers. Our retail deposit book continues to remain resilient, with granular deposits growing 16%. Our corporate book mix is improving, with significant new origination for better-rated corporates. Our prudence is demonstrated through choices we continue to make on de-risking the balance sheet, demonstrated through declining NPA and additional provisions and proactive recognition of stress.
The cumulative non-NPA provisions are INR 1,856 crore. Our NPA coverage stands at 116%. Standard assets are 2.8%. Last but not the least, our subsidiaries have shown significant traction over the last 9 months. Axis Finance has been restructuring. The profits of the subsidiaries are growing. Axis Finance continues to be well-capitalized. We reinstate our stance of stopping specific guidance. I would conclude by stating that based on the strengthening of the balance sheet and improving trends in data available to us today, we expect FY 2022 to be a look forward year for the bank. With that, I come to an end of my comments. Thank you for your patience, and we'd be glad to take your questions.
Thank you very much. Ladies and gentlemen, we will now begin the question 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 handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mahrukh Adajania from Elara Securities. Please go ahead.
Yeah, hi. My first question is on outlook. You mentioned that fourth quarter will see lower slippages. You also have standard asset provisions of over 2%. Then why would you—why did you say that credit costs you will continue to have higher provisions in the near term? That was the comment in the opening commentary in the opening remarks. So if you have such a big standard asset provision, why wouldn't you draw from it, and why do you continue to guide to higher near-term provisions? That's my first question.
Mahrukh, thank you for your question. Puneet here. The point Amitabh was making is, we are following a path of prudence of strengthening our balance sheet. The excess provisions that we have continues to lend strength to the balance sheet. The point he made was for slippages, we will continue on our prudence journey in the next quarter. And for slippages that may arise in Q4, we will continue to provide such that FY 2022 is a look forward year. Please read his comment in that context.
Okay. My second question is that you did mention about balancing growth with wins, but that could mean that your growth would be in line or maybe even below overall industry average, if a similar growth path continues in the near term. So would you be comfortable with that? Because if you grow 3%-4% sequentially in the fourth quarter, your overall loan growth may just be 6%.
I think again, you're misunderstanding what I said. What I said was that, firstly, it was directed at wholesale, not for the entire book. Secondly, what I meant was that we do not want to chase growth for growth's sake at prices which don't seem to make sense or give us a very low NIM. There are enough opportunities in the wholesale book. We believe as the economy opens up, those opportunities will arise, and we'll be able to capitalize them. So I was trying more to say why our wholesale book is showing the growth it's showing, because right now, the demand for loans is coming from corporates who are demanding an extremely low price, and we just don't want to chase that. That was the only limited point I was making.
Okay, thanks. Just one last question: What would be the overlap between pro forma slippage and double B?
Sorry, Mahrukh, could you give me that question again, please?
What is the overlap between pro forma slippage and double B?
The slippages from the double B pool in the current quarter was INR 819 crore. If I look at the pro formas, if I look at the pro forma slippage of INR 6,700 crore, INR 819 crore would have come from the double B pool.
Okay. Thanks a lot.
Thank you. Before we take the next question, a reminder to the participants. If you wish to ask a question, please press star, then one on your touchtone telephone. The next question is from the line of Adarsh Parasrampuria from CLSA. Please go ahead.
Hello. Yeah, hi, and congrats on great set of numbers. I had a question on how do you look at the risk on these three parts, right? Because retail, as you mentioned, there is recognition in this quarter and some more in the next quarter. Does one say that majority of the COVID gets recognized by fourth quarter? In SME, there would be a lot of, and say, LAP, there would be a lot of ECLGS loans where they've been given extra funding. So the debt servicing of that actually gets tested only next year, right? So and even your NPA build-up there has been pretty low, and that's true for the system as well. And for large corporates, surprisingly, things have held up pretty well, so are there any risk there, right?
So if you can just talk about what kind of recognition, say, by the end of FY 21, like, would we, would we be left with, say, only credit testing for the SME book going forward, or how do you look at it?
Let me try to answer, then I'll ask my colleagues to, you know, obviously add to it. As we do want to say that we expect the fourth quarter provisions, and as Puneet just clarified, that we'll continue to provide for slippages and maintain the excess provisions we have. We do expect the slippages to come down in the fourth quarter based on whatever we can see today. As far as ECLGS is concerned, we have, I think, stated it a couple of times, that we have given ECLGS loans selectively. We've been quite careful. We have adopted a stand that we will give it to only those borrowers, maybe they might be corporate or individuals, where we believe that they can survive and sustain the loans and actually come out of it.
We do not want, and we have not given these loans to people where we believe that we are kicking the can down the road to some extent. So if you look at the amount of ECLGS loans we have given in comparison to some of our friendly competitor banks, it is low and it is lower, comparatively quite low in comparison to some of the others. So, our strategy there has been slightly different. We have also said in our, I think Puneet said in his remarks, that we expect next year to be a look-forward year. So that frankly means that we expect all the COVID-related issues to be provided for at a level of conservatism where we don't have to look back and, you know, end up making some, like, provisions at, you know, in, in the next financial year.
So we are hoping if the economy revives, that's the case, and that's why we are making that statement. We are being very cautious when we make that statement, but we do hope that's exactly what will happen. Puneet, anything you want to add?
I think that's absolutely fair. Right. Right.
Just to give you a sense, if you heard what Amit said in his presentation, that the demand resolution was 94% in September. Essentially, if INR 100 was due, INR 6 went forward. That number in December is 98, so only INR 2 going forward. It gives you a sense directionally where we are headed for them. And recovery continues to be on the upswing, so both numbers are favorably indicating that how we are-
Recoveries in this quarter were even higher than what we were seeing in the pre-COVID levels. So, from that perspective, you know, the numbers which we are seeing and numbers which our teams are showing, appear to be based on whatever data is available to be best in class.
Got it. Amit, just to follow up on this, when you say a look forward to year, I understand you're broadly saying that things should normalize as economy picks up. Just wanted to understand, given how much conservatism we've built in the provision, I believe, what's the risk that you are seeing to this, right? Like, because the portfolio on corporate has changed drastically. Retail, we are cleaning up in the first, you know, in this quarter. So what's the risk to a normalization? Like, why still very conservative on, and still not able to guide to say, "Yes, we should be normalizing to 100, 110 basis points next year?
So, Adi, let me, let me try and answer that question, and then I'll, I'll request my colleagues to supplement. So I think the approach we are following is two parallel paths. There is a path of strengthening the balance sheet consistently and sustainably, and the additional provisions that we are creating is to consistently and sustainably strengthen our balance sheet. With insofar as new slippages are concerned, we will continue to provide for them. We expect slippages to be lower, which is what we are saying in Q4 compared to Q3. We expect FY 2022 to be a look-forward year. But if your question specifically is around, will we guide a specific credit cost at the moment? We- that's not what we are doing, but we've qualitatively told you what we see our book looking like and where we head to.
The last point I would like to leave with you for consideration is, please don't equate prudence and conservatism with an implied impact on asset quality on my book. They are two parallel journeys that the bank is on. We will continue to remain prudent. That is not a reflection of my asset quality.
Perfect. Thanks, Puneet. The last sentence was helpful. Thank you, Amit.
Thank you. The next question is from the line of Abhijeet Sakhare from Kotak Securities. Please go ahead.
Hello?
Hello, we can hear you. We can hear you.
Hi. Sorry, thank you. Two questions on my side. One is that, this presentation, between slide number 41 and 42.
Excuse me, sir. Your audio is not clearly audible, sir.
Mm-hmm.
Can you please use the-
Sorry. We could hear you. 41, 42, yeah, go ahead.
... Yeah, uncertain, I just wanted to check, what is the amount of provisions that you've used on account of COVID in those two slides?
We have used nil provisions on account of COVID on those two slides. We've not used any COVID provision in the current quarter.
Now, when you have declared these pro forma slippages, there is an increase in the total provision sitting in the... I'm just trying to understand, have you used any part of the INR 11,000 crore in this?
The answer to the question is no, we have not used any of our COVID-19 provisions. The level of COVID-19 provisions in the previous quarter stand equal to that as at 31st December. No utilization.
Even in the pro forma numbers?
Even in the pro forma numbers. I'd just like to clarify, my pro forma numbers are my actual numbers. So insofar as my P&L is concerned, the provision that you see on slide 41, pursuant to IRAC, has been routed through my P&L for all practical purposes. So INR 4,604 crore is gone through my books as we stand.
Okay. So second question, this is to Sumit. Just trying to understand these slippages that you've reported this quarter on the retail. You indicated about 85% coming from, retail this quarter. If you could just give us some color, where is it coming from, and how comfortable are you on the recovery front on this book?
So I'll just give you an indication. So, see, moratorium got over in September. So since September, the flow-through on the unsecured side, as expected, has happened. On the secured side, I think both is well within what we had guided. So is also actually on the unsecured side. And as I said earlier, I think given the kind of uptick in collection, efficiency, and resolution we are seeing, we do certainly see that things in Q4 will be far better. Amit, would you like to add?
Yeah. So just to add to that, Sumit, you know, retail slippages that we've talked about, that Puneet mentioned, 84% of the overall slippages are equally split between unsecured and secured, with most of the post-moratorium being absorbed this quarter. The other thing which I think Puneet also mentioned, that 100% provisions have been made on the unsecured slippages as per the rule-based policy that we have. Last point on this one is that in secured products, like mortgages, where we've seen slippages, the inability to enforce legal action, especially around, you know, effective tools like SARFAESI, for example, due to the Supreme Court directive over non-classification of the NPA, has had an impact on recovery.
The good part there is that the average LTVs for that secured mortgage book is around 60%, so which provides us a strong comfort around the fact that recoveries, once things normalize, will get us back on track. The last part, I think you mentioned about recoveries. Yes, the recoveries from the written-off accounts are actually increased by 70%, if I were to compare December to pre-COVID levels, and that's really what gives us comfort around the retail book.
Perfect. Thanks. Puneet, just one clarification. The moratorium ratio that you have reported last quarter, and the number that you give it to RBI, is there a difference on that? Thanks. That would be all.
The moratorium that we reported as part of our Q2 results, sorry, yeah, the moratorium that we reported as part of, yeah, Q2 results, the reference date of that was different from what the reference date for RBI is. And effectively, we had clarified that on the last call as we stand. In any case, in our view, moratorium is not relevant since we are proactively recognizing any stress that we are seeing today.
Got that. Okay, thanks.
Thank you. The next question is from the line of Anand Laddha from HDFC AMC. Please go ahead.
Hello, sir. So just wanted to understand, sir, we are carrying significant provision in terms of prudent provision. Is there a number, is there a thought we have in our mind, like how much floating provision or a prudent provision as a percentage of loan, do we wanted to carry or we wanted to maintain, across cycle all the time on next year? So what could be the trigger point when we intend to use this floating provision? Is there any thought on that? And then some bookkeeping questions, like, we had reversed some fee income also on the credit card business. If you can give some color, what could be the quantum of that fee income?
So as far as the provisions are concerned, most of the provisions which we are making are rule-based. Obviously, what we have done on the COVID and the restructuring side was based on a certain formula we had derived internally. And as you realize that based on that formula, our restructuring provision was higher, we reversed it. Obviously, we have improved the PCR from close to 18% to 26 on that. So most of our provisions are formula-based, except for some of these COVID and restructuring provisions. We will obviously take a call at the end of this quarter, fourth quarter, whether-
... some of these provisions need to be carried forward, or we need to look at some of our, anything else in terms of ensuring that our balance sheet is strengthened further. Otherwise, yes, you're absolutely right, that based on those formulas, our balance sheet has reached a size and a shape, and the provisions have reached a size and a shape where nothing further might be required in a significant manner, and that's where we stand today. These are not random provisions we make because we, you know, have certain numbers. These are audit committee and the statutory auditors are signing off based on formula and data which shows what kind of losses we might have taken in the past. Let me ask Puneet to add on the second question you had.
Yeah, I think I'll just supplement Amitabh's answer. Even the restructuring provision was rule-based, and there are guardrails around its utilization. The second part to your question was fee reversal. The fee reversal is INR 134 crore for the current quarter, accounted for as a negative on the fee line.
Sir, last one, if I may. So we have a guided path in terms of our ROA and ROE which we are looking for. Do we still believe that we remain on track for that guided path? Probably that still remains in the FY 2022, 2023, or it moves forward?
We are very clear in our minds that that is an important and a critical goalpost for us. Yes, COVID has delayed things a bit, but the entire bank's strategy is structured and will continue to remain structured around ensuring that we try to attain that aspirational goal of ROE. We have guided only ROE, ROE going forward in the future. We believe very strongly that that kind of number pushes us harder, makes us think differently, and so all the things which we've been doing and all the decisions we've been taking are for the long term to get to that number. So no, nothing has changed from that perspective.
Sir, is there any outer time limit where we can expect those, where we'll be closer to our guided range?
As we said, that financial year, next financial year will be a look forward year. Hopefully, once we show you the numbers of the look forward year, which is next year, you can start seeing the path to 18%.
Sorry, just to take this question, sir, further. Sir, historically, last few quarters you have been giving a chart on our average provision across cycle. This quarter, this was not there, that chart. So would that be fair, next year, we should move back to our long-term average provisioning cost number?
I would only suggest that since we stopped guidance, we don't want to put out a specific number or guide towards a data point. Our limited commentary insofar as our performance next year is concerned is FY 2022 is a look forward year, and Q4 will have lower slippages than Q3.
I mean, I would add, if you, if you read every comment which Puneet has made, or Amit has made, about, what our collection efficiency is, what is the kind of recovery we are getting on retail loans, how are we growing the book, what is happening on the wholesale side, how our BB book looks, what is the compulsion of the BB book, what is slipping from there? I think you have enough data points to be able to, allow a guess in terms of where things are headed, and, and that's all we're willing to say at this point.
Perfect, sir. Thank you, sir. That's enough.
Thank you. Before we take the next question, a reminder to the participants. If you wish to ask a question, you may press star and one. Requesting participants to please limit your question to two per participant only. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.
Yeah, so again, to touch upon the retail NPLs, so if you say, like, it was equally split, then on the unsecured portfolio, that seems to be reasonably higher in terms of the percentage term. So are we more or less done with that? And what was this entire write-off towards? This quarter, we had done a significant write-off equivalent to almost, like, 70-odd basis points. And if you look at the segment-wise, it is suggesting more towards the corporate rather than the retail. So if you can just say as to what that write-off was towards. And lastly, in terms of the provisioning, so INR 3,900 crore was towards the pro forma slippages.
But when we look at, so another INR 1,000 odd crore would be specific provisioning in terms of the coverage in this INR 4,900 odd crore. How should we read that?
Thanks, Kunal, for your question. I'll answer the second and the third part of your question, and then request one of my colleagues to take the first part of your question. Your first question was, write-off. The policy that the bank has is we don't exercise judgment. Our write-offs are rule-based and board policy approved. Pursuant to the rules that we have adopted, this portfolio was eligible for write-off and has been written off. These are codified. There is limited to no judgment involved in our write-off stance, and you will see this happening consistently.
Segment, if you can highlight.
The provisions point that you have of INR 3,900 crore, they are for the IRAC-related recognition. The INR 1,000 crore provision that you see on loan losses is for prior recognized NPAs, and this improves coverage for those said accounts.
... Just to add to Puneet, the first part of your question on slippages, just to reconfirm, retail, we had suggested that the split is equal between unsecured and secured. And for the unsecured slippages, we've done 100% provisioning as per our rule-based policy. The other thing which we also talked about was the fact that in the secured side, we have a large part, which is mortgages, which is impacted by the lack of effective legal tools like SARFAESI. So, effectively, the pain that we talked about was around both retail in terms of unsecured and secured. Most of the post-moratorium pain has been absorbed this quarter.
Sorry, so just to follow up in terms of write-off, any color on the segments wherein it has come? Yeah, it could be rule-based, but where is it largely flowing from? And unsecured, does it seem to be higher than your anticipation, or it was more in line? I understand it is 50/50 or 84% of 84%, but does it seem to be, like, higher than the anticipated lines in this quarter, or this is what we were anticipating?
So let me start with the first... the last part of your question. So if you recollect what we had looked at is, that when we started this whole exercise around stress test that we did, initially, when we started looking at it on a quarter-on-quarter basis from April, if we look at where we stand today, we are almost around at 45%-50% lower than our original slippage estimates. And this is across most of the product lines. So to that extent, is it anticipated as when we started off in April? I would think much better than anticipated in terms of where we stand today. Secondly, in terms of the pain, like we said, there is a residual portion which would still be there, which is in Q3 or Q4, which will probably be lower than Q4...
Sorry, residual portion in Q4, which will be lower in Q3.
Puneet, on the write-offs?
So, Kunal, the write-offs in the current quarter, basis the rule engine, is predominantly coming from the wholesale book. And I'd just like to also supplement the answer that we gave on the INR 3,900 crore provision under IRAC norms. Just want to restate that, as I stated in my opening remarks, that that's at a borrower level and not at a facility level. So even if there was another facility of the borrower that remains standard, we've classified that, it's counted as slippage, and we've gone ahead and provided for it.
Sure. Thanks. Yeah, this is helpful.
Thank you. The next question is from the line of Vishal from UBS. Please go ahead.
Hey, hi, everyone, and thanks for the opportunity. So I think the first question is, what is your 30-day DPD book now? I think it was last quarter, around INR 13,300 crore, you know, more than 30-day DPD.
Vishal, thanks for the question. The 30 DPD is not a number that, that we are discussing. Hence, that's not a number that we are disclosing at the moment, please.
So, I think it was more than 30-day, which is what you disclosed last time. Not less than 30, I think. I'm asking more than 30 day.
So, Vishal, the 30 DPD was disclosed in the last quarter in the context of the fact that we had just come off moratorium as at the end of August. We have, as a consistent practice, not discussed our 30-plus. That data point was provided in that specific situation. That situation does not exist as on date, and consequently, we are not providing that data or discussing that data.
Okay, no worries. And on operating expense, is there any, any one-off or any other potential, you know, stuff which you have done? If... I mean, it is gone up, but, you know, generally other banks are seeing either stable or some seeing actually decline as well, on a quarter-on-quarter.
So the operating expenses have a couple of items. One that is recurring but appears for the first time in the current quarter, which is the increments. But like I said earlier, there is a large expense that we've accrued for on account of potential liability under the Social Security Code, which was not required to be done, and that has been done in the current quarter. Therefore, that is out of the ordinary. If I basically net those items out, on a YOY basis, my cost would grow by 9%.
So, does that cost not expected now in coming quarters, or that will become part of the BAU cost?
So one is, let me clarify that insofar as I know, we are probably the only bank that has currently estimated social security expenses. The law is gazetted, the rules are not, and we've gone ahead and made that provision. Since it is a gratuity equivalent, the catch-up happens at one point in time, and then on a go-forward basis, you keep reassessing on actuarial. So the current quarter reflects the catch-up.
Okay. Thanks, Pruneet. All the best. I have more question. I'll, I'll come back in the queue. Thank you.
Thank you. The next question is from the line of Manish Shukla from Citigroup. Please go ahead.
Yeah, good evening, and thank you for the opportunity. The first question is on loan-to-deposit ratio. If you look at that number as of end of December, we are largely similar to where we were at end of March. Now, assuming credit growth improves into FY 2022, do you see reasons for start raising deposit rates aggressively? Hello, am I audible?
Yes, sir, you are.
Hi. Hi, Manish. Thanks for the question. The first part to your question, the loan-to-deposit ratio being flat, I think, needs a slightly detailed answer. We've actually gone ahead and repaid our wholesale term deposits as part of our balance sheet optimization, which therefore keeps the LD ratio at the number that you're currently seeing it at. At some point in time, once we're done with our balance sheet management, we could look to raise wholesale term deposits again. That will help balance it. And the entire reduction in the liability side on borrowings, NRTD and CDs, enables us to grow, but that's not a preferred route.
You will see that our retail side balances have grown 20% year-over-year, and we do believe that the retail franchise on the liability side should enable us to sustain the growth that we're planning in the future.
Sorry, you defined retail size less than INR 1 crore or less than INR 2 crore?
We define it as individual savings deposits.
Irrespective of the size?
Yeah.
Okay. The second question is continuing with Vishal's question on OpEx. How do you see the overall OpEx score trending next year, either in absolute terms or relative to balance sheet and the whole, cost to assets, optimization that you are focusing on pre-COVID?
So, Manish, I think we are not guiding, but since I've spoken about this in the past, we said a 2% cost to assets is what we were aiming for when we exited last year at 2.09. We are at 1.96. We do believe that the range that we've indicated in the past is the range that we will be within.
Okay, thank you. Those are my questions.
Thank you. The next question is from the line of Abhishek Murarka from IIFL Capital. Please go ahead.
Yeah, good evening, and thanks for taking my question. So I just have one question. If you could share the collection efficiency, or the resolution rate, or whatever you call it, between secured and unsecured retail. So I know you've given an overall rate, if you could split it between secured and unsecured. Thanks.
So, I think, you know, we've given out our resolution rates and collection and demand resolutions across the board, you know, as a part of the retail commentary that we gave. We don't have a segregation, which we don't disclose on secured versus unsecured. One thing which I can tell you is that the collection resolution rates that we talked about across the board are back to pre-COVID levels. And that just gives you a reflection of where we stand when it looks at, you know, each of these resolution rates. Some of the secured products are actually higher than pre-COVID as well.
Just between secured and unsecured, would your secured in general have a lower, ongoing, you know, steady state collection efficiency than 97 or 98 that you spoke about pre-COVID?
No, that doesn't imply that. Across the board in retail, we have seen demand collections, you know, at close to 98%, and this is across, you know, almost all the product lines.
Okay. Okay. There's no, there's no, differentiation on a steady state basis between, different product lines. That's okay.
Every, every passing month, obviously, we've been having a, you know, steady state increase. I think Sumit mentioned the fact that we started off at 94% in September. We've moved to 97%, and then now 98% in December. And this is, you know, equivalent to what we have seen in the pre-COVID days across most of our product lines.
Right. Right. Okay, got it. Got it. Thanks so much.
Thank you. The next question is from the line of Pankaj Agarwal from Ambit Capital. Please go ahead.
Hello, sir. Am I audible?
Yes, sir, you are. You may please go ahead.
Yes, yes, sir. So what's driving your high market share in UPI payment? And, if this mode of payment is not generating any volume, why are you submitting it?
My apologies, Pankaj, we couldn't get that question. Could you please repeat yourself?
Well, so what's driving your relatively high market share in UPI payment? And second, why are you promoting this mode of payment if it's not generating any revenue?
Well, I think we have been consistently and had high market share in-
... UPI, you know, ecosystem, we have formed the right kind of partnerships. We have continued to win mandates from various players who see Axis as having the right kind of technology and continuous investments that we have made. It's and we believe it has been an important, you know, a segment for us to continue to differentiate from the marketplace. And we've, given all the partnerships which we have and we are working on, we believe we'll be able to only continue to improve this market share as we go forward.
This, the way UPI has taken off and the number of transactions which are happening on that ecosystem, and not only just the number, but the amount of value of transactions which are going through, it continues to give us data on what the customers are buying, where, what kind of transactions they're doing on a day-to-day basis, and it potentially allows us to underwrite those customers in many different ways going forward in the future. So it's not just about a market share, it is also a lot about what kind of data sets which we are creating in Axis Bank. Please understand, I've been saying this for quite some time, that today Axis Bank has known or known to the bank customers, which reach almost 15 crores, where we have some data sets or data points on customers who have transacted on some platform of ours.
Over a period of time, as we get better and better at it, we believe it will position us very well to be able to underwrite these customers for all kinds of products. And UPI and what we're doing in UPI is a very important and critical component of that strategy. I hope that clarifies.
Yes, sir. Thank you.
Thank you. The next question is from the line of Sameer Bhise from JM Financial. Please go ahead.
Yeah, hi. Thanks for the opportunity. Just one quick question. Is it right to say that the pro forma corporate slippages this time are entirely from BB and below?
Yes, Sameer, that would be a fair conclusion to draw.
Yeah, that's it from my side. Other questions have been answered. Congrats for a great set of numbers. Thanks.
Thank you. We take the last question from the line of Amit Premchandani from UTI AMC. Please go ahead.
Good evening. Thanks for such a great presentation, and thanks for giving us 2 hours to actually go through it. It means a lot. I just need one clarification. You know, slide 41 and 42 have provision, including interest capitalizing, the numbers are different. One is INR 17,388 crore, and another is INR 21,695 crore. I just want to understand this INR 21,695 crore is against the pro forma NPL, and the INR 11,000-odd crore of COVID plus other contingent provision is completely separate from this INR 21,695 crore?
That is absolutely correct.
Thank you. Another question, just the last question is, you have given a breakup of market share and credit card income, retail and non-retail. What exactly happened in non-retail that led to such a sharp decline in market share? Was it voluntary? Was it to do with some asset quality headwind that you may have encountered?
So on the corporate card side, post-COVID, we have been rationalizing exposure. All the travel, entertainment itself has come down, so that's what is getting reflected in our overall numbers on the card side. Though, on the retail side, our share of spend is up from February levels. We are higher than that. On corporate side, that tends to be lower, which is in line with our philosophy.
Does it mean that generally you had a disproportionate share of corporate in credit card as compared to the industry, and it is normalizing now?
No, we... That's not a correct conclusion. So we had a similar mix, and, now it has even come down further.
Okay, thank you. That's it from me.
Thank you. Well, ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Puneet Sharma for closing comments.
Thank you, Janice, for helping us run this call. Thank you, ladies and gentlemen, for taking the time to speak with us this evening and better understand our results. We appreciate, your inputs and thoughts and questions. Please do feel free to reach out to us if there are any questions that remain unanswered at the end of this call, and we'd be very happy to, to pick those up and answer them to the best of our abilities. Thank you for your patience and spending the last two hours with us.