Ladies and gentlemen, good day, and welcome to the IDFC First Bank Q3 FY23 Conference Call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode, and there'll be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kunal Shah. Thank you, and over to you.
Thank you, and good evening everyone present on the call. This is Kunal Shah from ICICI Securities. Today we have with us Mr. V. Vaidyanathan, Managing Director and CEO; Mr. Sudhanshu Jain, CFO and Head of Corporate Center; and Mr. Saptarshi Bapari, Head Investor Relations from IDFC First Bank to discuss their Q3 and the nine-month FY 23 earnings. Over to you, sir.
Good evening, everybody. Hi, this is Vaidyanathan.
Yeah. Good evening, everyone. Sudhanshu here.
Hi, this is Saptarshi Bapari.
Hello, everybody. Thank you very much for joining us on this earnings call. Just want to give a few comments from my side. Sudhanshu can bring up the numbers. Number one, as all of you know, that for the first few years we were trying to set right the liability side. I'm happy to just announce to everybody that we are feeling very strong about what's going on in the liability side with our bank. You know, deposits are up over 40%. We feel that we have a very strong traction on that front going by what we are seeing in the market and talking to our employees and seeing the deposits simply swelling at our place. That being firmly in place now we're beginning to grow the loan book.
On the loan book front, our book is, of course, growing right now about 25%. Number two is that, what I do believe is a highlight about our bank is the way we are building the bank, not so much about the numbers as such because numbers will all fall in place in due course. The more important thing is how we're building it, and we think we're building it very clean. Not just accounting that every bank is and every institution is, but what I mean is that the way we are keeping our customer practices, the way we are dealing with the making our product services, the way we're setting the, the meter on charges, fees, et cetera.
We're keeping it very, everything very reasonable with the customers and in fact, as low as possible, which we do. All that is of course winning us a certain amount of goodwill in the marketplace, we believe some way or the other. Third thing is about assets. As the assets are concerned, really on the, on the, on legacy accounts, et cetera, we announced last quarter, but I think some of you believed us, some of you didn't, I don't know. We are once again reiterating that we don't have any legacy issues that is going to bother us anymore. All clean and no problems there. On the assets retail, on retail side, asset quality is never the issue. Even today it's not the issue.
I'm happy to say that our gross NPA has come down to 1.87%, and the net has come down to something like about 0.7%. To us it's not a surprise. To some of you might feel it's, you know, it's low, but it's been like this for a very long time for us, eight or ten years. Not a surprise to us. It's all, let us say that COVID was a bit of a blip, but that has sorted itself out and we are absolutely feeling very good. Since we have a really fantastic retail lending machine, which is of delivering of a good asset quality, we feel confident to keep powering it up going ahead.
That's the unique ability the bank has built. As far as the capital is concerned, the bank is well capitalized. We have capital running over 16% at this point of time. Fifth is about unit economics of the bank. Unit economics frankly are quite good now. As you might have noticed that the pre-provisioning operating profit of the bank has risen by about 70% in the nine-month period compared to the nine-month period of last year. When the loan book has grown only 25, how can really operating profit grow so strong when loan book is not growing at that pace? It's coming because of operating leverage and incremental unit economics.
We feel good about that, and we just have to keep pressing the pedal and the bank will keep getting more and more profitable. It's become a reasonably relatively simple model to run from here on. As our fee income is concerned, it's looking pretty good for us. Our fee income is retail fees constituting over 90% of the total fee income. Finally, on profitability, I think bit by bit ROE is rising at the bank. We are quite proud that we already touched double digits. We had varied for double digit end of the year, I think last quarter we did it, this quarter kind of reaffirmed it. We watch next quarter.
We're not very concerned now because we feel that we're firmly in the double digits now. We don't think we'll dip below that. Last of course is, you know, corporate governance, technology, ESG, et cetera. That we will talk about in course of discussion. That's a very quick brief of all courses reasonably clear to us. I'll request Sudhanshu to make his comments about the numbers. Thank you.
Thanks, Vaidya. I'll start with the balance sheet metrics and then move to asset quality and profitability. The balance sheet size of the bank has grown by 27% on a year-over-year basis to reach INR 2,21,375 crore at December-end. We continue to see a healthy growth on our lending book and in deposit mobilization. Customer deposits for us has grown strongly by 8.4% on a QOQ basis and 44% on a year-over-year basis. Within the same, CASA deposits increased by 39% and term deposits grew by 50%. CASA balances even during the quarter grew by 5%. We also saw strong mobilization in TD as due to increase in the overall systemic rates.
CASA ratio was stable at 50% for the quarter and even, average CASA ratio was at 50% for the quarter. CASA and term deposits less than INR 5 crore was about 83% of the customer deposits, which points to the granularity of deposit mobilization. Moving on, we opened about 37 branches during the quarter, and the branch count now stands at 707 branches. The bank also maintained an average LCR of 122% during Q3 as against 131% in Q2. While the ratio moderated and the excess liquidity got deployed, we are still well above the regulatory requirement of 100%. We also saw a reduction in high cost legacy borrowings, which we have been reporting, by INR 1,687 crore during the quarter.
The residual amount is now at INR 18,762 crores, which will run down in the course of next 2-3 years. We have given more details around this in the presentation on slide number 28. Moving on to the assets front, I am happy to report that overall funded assets have crossed INR 150,000 crores, and it grew by 25% on a YoY basis. The retail and commercial book grew at a faster pace to reach INR 116,680 crores. We saw strong growth across all product segments. To give some more color, home loans grew by 48% on a YoY basis. We saw disbursements holding up well in this segment in the current quarter despite increase in the interest rates.
Wheel segment, which includes two-wheeler and car, registered strong growth of 50% on account of the festive demand and our increasing distribution. Happy to state also that we have a 55% share on the EV finance in this year in that segment. Consumer loans comprising of consumer durable, personal loans and cross-sell books grew by 27% on a YoY basis. The rural book also grew by 36% on a YoY basis. Credit card, which is relatively a new book that grew by 89% on a YoY basis to reach INR 3,146 crores. The bank has issued more than 1.3 million cards since launch in January 2021. The number of cards which have been sourced have doubled in last one year.
Gross spend on credit card increased by 19% sequentially and 86% on a YoY basis. More details are given on slide 31 of the presentation. On the wholesale banking front, the non-corporate infra loans grew by 17%. The infrastructure book continues to come down. It's now 3.7% of the total funded assets as compared to 6.6% a year earlier. Moving on to asset quality. The gross and net NPA of the bank further improved by 22 basis points and 7 basis points respectively, QOQ, and stood at 2.96% and 1.03% respectively. PCR gross of technical write-off stood at 76.6% at end of December quarter.
If we exclude the binding infra book, NPAs, GNPA and NPAs at bank level stood at 2.11% and 0.6%, and provision coverage goes up to 83%. Even on the retail front, GNPA has improved sequentially by 16 bps to now below 2% and was at 1.87%, with the net NPA being just 0.7%. The corporate non-infra book continues to be well provided with a PCR of 99%. The overall restructured book as a percentage of total funded assets has further reduced to 0.9% as compared to 1% last quarter.
The SMA-1 and SMA-2 book on the retail book was stable at around 1% and much lower than 3.2% a year ago, which is a good indicator of a better portfolio being built. Even in the corporate book, the ratio of SMA-1 and SMA-2 is sub 0.2%. Slippages for the quarter were marginally lower than the previous quarter despite the increase in the overall book. Moving on to profit sensibility. Our profits for nine months this year was INR 1,635 crores, as against a loss of INR 197 crores last year reported in the same period. This is on account of increase in pre-provisioning operating profits by 70% and also lower provisions by 57%.
Profit after tax for the current quarter is increased to INR 605 crores versus INR 281 crores in Q3 last year, which is an increase of 115% on a YoY basis and a sequential increase of 9%. This has been driven by strong growth in the operating income. On a quarterly annualized basis, the ROE continues to expand. As of Q3 FY23, it stood at 1.1% and ROE has reached 10.72%. Net interest income grew by 27% on a YoY basis to INR 3,285 crores. Fee and other income also saw a strong increase of 50% YoY to INR 1,117 crores. Even on a sequential basis, fee income saw strong growth.
We have given more details around the fees breakup in the investor presentation on slide 57. The bank had a trading gain of INR 36 crores in Q3 as compared to a trading gain of INR 25 crores in Q3 last year, and a trading gain of INR 116 crores in Q2, previous quarter.
Core operating income, excluding trading loss, increased by 32% on a YoY basis, aided by strong NIM income growth, as I mentioned before. Operating expenses grew by 23% on a YoY basis. Cost-to-income ratio, excluding trading gains, improved to 72.2% in Q3 from 77.6% in Q3 last year and was also about 1% lower than Q2. As a result of the above, the core operating profit, excluding trading gains, grew by 64% on a YoY basis and 16% on a Q-on-Q basis. Provisions increased by 16% on a YoY basis and stood at INR 450 crores. The credit cost for the quarter was stable at 1.2% as a percentage of average funded assets.
For the full year, credit cost was low at 1.13% against our guidance of 1.5%. Moving on to the last section, the bank has maintained strong capital adequacy, and its CAR, including profits, was at 16.06% and with a CET ratio of 13.49%. We have mobilized Tier 2 of INR 1,500 crores in the December quarter, which also improved our capital adequacy during the quarter. The bank is well above the regulatory threshold and looks forward to continue the growth in a profitable manner. With this, I conclude my remarks, and we can move on to the Q&A.
Thank you. We will now begin the question answer session. Participants who wish to ask a question may press star one on your touch-tone telephone. Participants who wish to ask a question may press star one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star two. Participants are requested to use answers while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. We have the first question from the line of Ishan Agarwal from Abeona Capital. Please go ahead.
Hi, thank you for the opportunity. First of all, many congratulations on a superb performance on all fronts this time around. Very happy to see core ROE excluding trading gains at 10.2% and appreciate the management finishing the commentary within 15 minutes, leaving more time for Q&A. I have a few questions regarding the numbers and the outlook ahead.
Yes.
Yeah. Firstly, we have seen that the bank is engaging a lot of marketing activity with the tag Zero Fee Banking since its fourth foundation day, that is 18th December 2022. I've been a customer of the bank since 2019, a majority of the services mentioned in the Zero Fee Banking promotion were already free. Is it just that we have started marketing a benefit aggressively which previously existed?
First of all, thanks so much, Ishan, for your comment. With regard to, yes, I think our bank was giving most of these things free. By the way, they're not all free in the market, just for your information.
Sure.
Our bank, thanks to the last three, four years, they were all free. We were charging on maybe a few items of those. We thought to ourselves that anyway giving everything free, we might as well, you know, remove the three, four items we're charging on and make it a much more straightforward statement and give peace of mind to customers. Yes.
Sure.
We just packaged what we were doing and added a few more to it.
The addition of these few services, which you made free, will it have an impact on the future fee income for the bank, like in terms of if you can quantify that?
No, we don't quantify that. Well, as you know, banks make a lot of money in fees through these 25 items. Whether it is NEFT or RTGS or IMPS or home bank charge, non-home branch charge, you know, cash deposit, cash withdrawal, the banks do make fees. Obviously they, by not charging it, we are giving up something. We just, you can think of it that this is how we built the bank from the beginning, so it's already factored in the way we've done our business thus far. There's no material movement that we will believe that will happen just because of this move.
Okay. Okay.
Thank you.
In one of your interactions, I think, you had mentioned that cost to income will trail down to 65%, should trail down to 65% by Q3 FY24, that is December 2023. Looking at the trajectory and the slightly slow pace of reduction in cost to income from the last three quarters, like if I have to give you a number, 72.98 in Q1, to 72.93 in Q2, to 72.17 in Q3, do you believe the bank can achieve 65% by Q3 FY24?
Well, first of all, I think, if you recollect the last time's call, we had corrected you on this front and said, look, you know, looks like 25 you will get towards this number. We're just setting the record right on that. Number two, you know, now you will see that year-on-year on year, the cost to income, or the ratio of the bank will come down. This, we don't think this need doubt on that front. We are more tying ourself down to return on equity because end of the day, everything has to boil down to ROE.
What is our target for return on equity for 2024?
2024. We have not specifically given a guidance on, but if you recollect the original guidance we put out at the time of merger of the bank, and it's there in the last page of the presentation. We actually.
13% - 5% is what you...
Yes. Exactly. We said 13-15. You know, of course, five years is a long time to take such a long shot and get the prediction right. Good news is that we are getting it right, we feel.
That too after doing an equity raise twice, because of COVID or like once because of COVID. It's actually very commendable that...
Thanks so much. You know, really, frankly, when people put out a five-year plan, that too, you know, from... If today you would put out, put out a five-year plan, there is a reasonable clarity that we'll get it right. Remember at the time of merger, there were so many swinging balls all over the place. The ball is swinging all over the place and meanwhile... We were just peeping out in the future and thinking what the bank could look like or should look like. To top that up, there was COVID. Who, who could think of COVID and the kind of stuff it brought on us? Then there was, you know, those few bad loans that knocked off some INR 2,000 crores-INR 3,000 crores from our...
Over INR 2,000 crores from our P&L on network got knocked out. After all that also, we feel that we will be somewhere in zone there. I feel that things are on track.
Say we raise, because we formed a capital raising committee and we will be raising capital in, this financial year, sorry, the next financial year. In spite of the capital raise, we'll be able to achieve 13%-15% ROE?
Yeah. We talked about FY 2025 just for information. You'll see the in this presentation that spot. I mean, that particular page, you can have a look at it.
Okay. Okay.
Yeah. Yeah, I mean, yeah. There are no ifs and buts around this. Even if we raise capital, we want to get there. We want to keep our eyes there, fixed there.
Okay. Okay. There is an amazing trend on the way our fee income is growing. I mean, if I just look at quarter-over-quarter, it's 18.2%. First of all, is there any one-off for this quarter?
No, there's no one.
Sir, there are no, one-offs as such in this.
Okay. How do you see the trend of fee income? Should this trend continue going ahead?
Yes, it should continue.
Okay. I think the next question will not be that significant, but just wanted to know, because of the news on the market. What was our exposure to VI as on thirty-first December 2022?
We haven't called out a number, but you can say that at that time we gave them, INR 500 crores and we had made it a quarterly repayment over a four-year period three year.
Over a three-year period. Exposure is down by already one-third and the average residual maturity is now less than one year.
Okay. Now if you think about every quarter, we're getting about INR 45 crores back of principal. Then, things are broadly headed downwards, yeah.
Okay. Thank you so much for the opportunity.
Yeah. Yeah.
Thank you. We have the next question on the line of Sagar Shah from PhillipCapital. Please go ahead.
Good evening, sir. Thank you so much for the opportunity. First of all, many congratulations for another, superb set of numbers actually in this quarter.
Thank you. Thank you.
Yeah. By, you can say maybe sorry to stretch on that, operating on your OpEx actually. My question was related to your OpEx. In this quarter also, we saw almost a double-digit growth in your, in our operating cost. Next year you are guiding for a 13%-15% ROE. Although we have set a very, your NIMs are very healthy at around 6.36 if we annualize for this quarter. Already we are at 707 branches.
Can you give some, at least a flavor that in the, in FY 2024 and FY 2025, what kind of branch addition are you seeing so that our, we can at least we can have a review that, what kind of operating cost or growth actually are you factoring in your entire cost base for this?
See, we are almost coming to the end of 2023. This for 13%-15% ROE guidance we had given for 2025. That's why I pointed out just so that there's no confusion on this front.
Okay. Okay.
That gives a two-year window as per our original guidance to move from the current number of, call it 10.5 to that number. We will, we think we will work towards that. With regard to your other question about branch, we should be adding what, about 150 a year?
Yeah. We, yeah.
About INR 150 a year.
150 per year, you're going to add your branches?
Correct.
Okay. sorry, I didn't get your point previously about the 10.5 that you were referring to.
Yes. We reached 10.5 and you, I hope you'll agree that it was a rather swift swing into the 1% ROA league banks.
Absolutely. Absolutely.
I mean, actually internally, we are feeling very happy about the way this bank has swung into profits and has swung into like solid 1+, 1+ ROA. That has taken us into the 10%, 10.5% ROE. Now 10 point?
10.2.
10.2, sorry. 10.2 ROE. That number, we feel there should be nothing that should stop us in this direction. Of course, it's not that we're not exactly assuring, guaranteeing that every single quarter things will keep inching, you know, there are. A quarter is a three month. Sometimes a small swing happens this way or that way. You know, directionally, we should definitely moving in that direction.
Okay, okay. Sure, sure. Got your point. Second question was on your NIMs actually. You have clocked around 6.4% NIMs for this quarter if we analyze it. Going forward in FY 2024 and in FY 2025, do you visualize that our NIMs will likely face some pressure actually? Or are you comfortable holding at around this figure for the next two years?
Somewhere here. It's running a little more than what we had initially guided it for. Let's play it by the year. Broadly speaking, we are already in the zone that we would like it to be at.
Okay. Sure. My last question, sir, is would be on our cost of funds. In this quarter, in this quarter also, we have around 40 basis points hike we saw in, I think, the first week of December in the repo hiking that I'm mentioning to. Have we, the cost of funds, have we factored in all these in our yield and advances? Also, have we factored in in our deposit rates? In the coming subsequent quarters, are we going to witness some little rise in cost of funds and little even more better yields from now? Can you give a flavor on that?
No, no, no. You are getting too greedy, I think.
Okay. Okay.
Yeah, yeah. Already factored, already passed on. I don't think we should expect anything more than this. You know what? Frankly, the game is not so much about increasing NIM and all that. The game is now.
Mm.
-is about improving cost-income ratio, which-
Mm. Right.
Which will happen because, see, it's a very simple game of leverage. Very simple game of operating leverage, actually, not just leverage. Operating leverage.
Mm.
It will just, you just watch this game. I think most people haven't figured out our bank yet. The way this bank is fundamentally structured now in a financial sense.
Mm.
you know, the income at these levels should continue for a while because there's no reason for it not to. After all, this is a product mix is giving a certain yield. There's certain.
Right.
from a particular offering we are giving to the market.
Mm.
any case, there's a little bit of buffer still for us to. We are sitting on a little bit of buffer because of that, INR 18,000 crore?
INR 18,000 legacy borrowing.
INR 18,000 legacy borrowing, which are paying about 8.9% or so.
Sure.
Yet to come to the P&L. Once we replace them with today's cost of money. We, let me say, just say that there is enough on the income line for us now. Automatically, when we just grow, you see the margins that are coming. If you're, if the bank is having the kind of margins we have, and you just grow the book from here on, then automatically income will grow. Certainly expense is not growing at the pace that the income is growing. It's so simple, it's so mathematical. You just put a spreadsheet and just extrapolate the bank for one or two years, you will automatically see it will come down. It will not take any superhuman effort from us anymore from here on.
Okay.
That will translate directly to the P&L, and that's how it will play out.
That exactly my point was that, your main driver for your ROE is nothing but only your OpEx actually. That's why I asked about the branch addition. Right from the merger, we have moved from 206 to almost 707 branches as on December, as on the third quarter FY 2023. Going ahead, subsequently if we, the branch addition, if it goes, the branch addition, if it goes on a declining level, automatically your operating expenses and the operating leverage that you talked about will flow in. Unless we don't stop our this growth of OpEx, actually it will be a little difficult for us actually.
Maybe we have to stretch it, maybe our ambition ROE maybe by one or two years, maybe even more actually. That exactly my point was.
No, no. Absolutely. You're making a very absolutely fair comment. The thing is that, you know, frankly, the way we are building the bank, we are really not looking at this, that look whether this quarter will become this or that quarter will become, you know, we'll touch in precisely in the four, in eight quarters from now or nine quarters from now. If I have to put branches, I'll put the branches. If I have to reduce the rate, I'll reduce the rate. If I have to increase the rate, I'll increase the rate. Basically, it's a very dynamic and fluid place. All I know is that directionally we are set at a pretty good economics in this bank. You know? Supposing I told you 150 branches, you can see like I'll make it 200 or I'll make it 125.
What I meant to say is that these are all directional stuff. We day-to-day run the bank and we are somewhere we are operating in the corridor of what we say. Therefore, we are building the bank for a long run. Let me call it many years from now. A quarter here or there, I'm not particularly bothered.
Absolutely.
Short point is therefore that our game from here on is simple, actually not cut cost. Our game from here on is actually grow the book, which it will happen. That will just feed to the, as long as incremental income is strong, it will just feed to the ROE and profit.
Correct. Okay. Thank you so much, sir. Thank you so much for your opportunity. I'll come back again with you.
No problem. Thanks, Sagar. Suman, your turn.
Thank you. Thank you. We have the next question on the line of Ritika from Ocean Dial. Please go ahead.
Yeah. Also congratulations on a great set of results. Would like to first hear your views on the outlook on credit growth for the industry.
Well, it's quite strong. As the market's growing very well. Basically, I think a bit people are coming off a low base, as you know, last year with COVID and all that. It's all looking good. What I feel is that when I look around and see the market, I feel that most bankers have become, reasonably conservative now. It's not just us. I see people following fairly good practices. I don't find anybody crazy or aggressive out there. It's, it's a general approach in banking. I think people have burned their fingers, learned their lessons, through the COVID period, et cetera, et cetera.
The way I'm looking at it is that there are certain structural guardrails also that have come to the country these days, which are also putting credit growth on a little more safer path than before. If we have later time in the discussion, and if you're interested, I'll expand on it. I feel that that is probably the basis of credit growth. Basically, that's the foundation that growth is coming from. I feel that this 70% odd growth that has happened now, in this range, at least for a few quarters, it should stay and we'll take it as it comes.
Sure, sir. Can I maybe see these the results for this particular quarter? You know, it is a, it's a great set of credit growth across the, you know, portfolio. Just, you know, your thoughts on maybe the rural microfinance which has done, you know, a good set of growth this particular quarter. We see that like you had guided that, you know, corporate has bottomed out and would start seeing growth and that is visible. Just your view, outlook on or other views on what are we seeing in these two portfolios?
See, in our case, the home loan business of course is doing very well. The YoY growth in home loans is 40%. Our MSME business is doing really very well. Some businesses for us, for the bank is also new, relatively newer for the bank, like gold loans, digital loans, et cetera, or credit cards. They're also, they're of course newer businesses. Obviously newly launched businesses grow at a relatively more pace than the other. These are our machines that are firing home loan, SME and, the other three businesses I talked about.
Oh, sure sir. Sir, obviously the, you know, the outlook on asset quality has been improving, and just wanted to hear your views on the infra book. How do we see that? You've mentioned it that it will run down. Secondly, the asset quality aspect on the infra book is where I want you to, you know, share the views on.
Yeah. I'll take that. Thanks for the question. Infra book, if you see, is already down to INR 5,500 crores, right? In fact, NPA in this segment is relatively high at 23%, right? That is because we had certain cases which we have recognized in the past. In fact, there are no new additions which are happening on this front. There is one toll account which is part of this number, which is in NPA, where we expect some positive outcome to sort of come in due course. In per se, we don't see any incremental stress on this portfolio. In fact, there could be some positives which could come in due course in terms of recovery.
Even in, on this toll account which I mentioned, the entity continues to pay because it's an operating toll road, right? Our exposure has come down by about, INR 20 crores in this quarter itself. In previous quarters also it sort of came off. We feel that of course, we are not writing any incremental exposure. The existing exposure should continue to sort of come off, basis, scheduled maturity and so on.
The 53% coverage that we hold there, we obviously appear to be comfortable with that?
Yeah, we are. We feel we are quite comfortable there.
Sure, sir. Just one last question. The CASA actually was a little different than what we saw for the industry. Now everybody is showing quite a moderation. Have we taken any further increases on the rate side? Or how should we rather see this play out?
It's a fair question, I know. No, we have not done any movement on the rate front. They are what they are. Or they are what they were. Somehow we are, I told you, we are getting a very strong inflow of deposits. Our bank, I don't know how, but we are a, the big beneficiary of public goodwill in a major way. You do a spell check in the marketplace and talk about a bank, most people will tell you that the bank is a good bank. You talk to customers of our bank, we are getting very positive feedback from customers.
By the way, lots and lots of people in my own building are our customers, so I often get to hear what's going on around the place or when we visit our branches, et cetera. Service is great. Pricing is, let me say, in the middle of the band. If you think of, you know, if you think of the top-tier banks, ICICI, HDFC, Axis, Kotak, let me just think of them as one category of A category banks. Think of the next category of, say, IndusInd, Bandhan, Yes, ourselves, maybe one or two more. We are in the bank at the center of the pack. Somehow we are But our deposit growth is disproportionate to the price we pay. Yeah. That's all it is.
Okay. Wish you the best and congratulations again on the 1% + ROA mark. Thank you very much.
Thanks so much, Ritika. Did I answer your question or was I just, you felt I was being?
No, sir, you did. No, sir, you did. I am a customer myself, so I know, sir. I can understand.
Thanks so much, Ritika. Thanks so much.
Thank you, sir. Thank you.
Thank you. We have the next question from the line of Mohit Surana from CLSA. Please go ahead.
Hi, sir. Congratulations on a good set of numbers. First question, if you can, just break out the NIM improvement, the factors contributing to the NIM improvement for the quarter. Secondly, in terms of loan growth, the way you see it now, has it changed materially from what you would have thought, you know, on the loan growth outlook, maybe let's say one or two quarters back. In your mind, has the growth outlook changed any bit on the loan side? Those are the two questions.
Yeah. Thanks, Mohit, for the question. I'll take both of them. On NIM, yeah, NIM increased during the quarter and the factors contributing to that increase I think are three to four, which I want to sort of call out. One is, of course, the repo repricing benefit which sort of came in, I would say the full impact which came in Q3. Also there was an increase in repo which was done by 60 basis points on October first. Even that sort of benefit came in on the repo linked book which we have. That is broadly about 40% of our book, which is repo linked. That was one factor.
Second was even on the investments we had an increase in the yield because the churning of the book which happened, particularly T-bills, right? Where the old T-bills were retired, which were at lower rates and got replaced with slightly better yields. Third, I would say is even the excess liquidity which we were carrying got deployed. I had mentioned earlier that our LCRs have moderated, while we still continue to carry a good LCR. All of these factors sort of led to an increase in on the yield front and even the incremental loans which we have leased, which we have sourced, right? There also the rate transmission has happened. While foster funds also increased by 20 basis points, but net-net on the interest earning assets, the increase was sharper.
All of these factors have led to a NIM increase for the quarter. On the second question, on the loans front, of course, we are seeing strong buoyancy sort of continuing on that front. We have guided that we should be comfortably able to grow the loan book into for foreseeable future, I would say by 22%-25%. We feel quite comfortable and a strong sort of demand holding up on the loan front.
Got it. Thanks a lot for your response. Thank you and all the best.
Thanks, Mohit.
Thank you. We have the next question on the line of Asutosh Mishra from Ashika Stock Broking. Please go ahead.
Congratulations, sir, for a very good set of numbers.
Thank you.
FY 2023 we have seen, basically, lot of positive things happening on the loan front, especially, because of the repricing of the repo rate. FY 2024 everyone is indicating that it will be the year where we need to focus on, how we will garner the deposits to fund these loans. How do you see the, you know, deposit side of the story in the industry panning out in FY 2024?
This is, you mean for the industry? If you see historically the industry, if you take a data point from 2010 to today, I plotted it once. I found that actually on average grown at 10% all through this whole period of 12 years. If you ask me to take a guess what next year is going to look like, maybe 10, maybe 11, maybe 12. You might argue then how it's going to grow deposits as we'll credit to the market by about, say, 17% or whatever it'll grow at. Maybe banks will also raise through some borrowings because a lot of banks have more borrowing headroom. We don't want to go the borrowing route because we're already high on borrowings and we'd rather take the money from deposits.
If you say industry-wise has probably raised borrowings, I'm sure banks will also raise some equity, which is, if nothing else has hatched a little bit of the liquidity. you know, there are other sources as well. Maybe where banks have some excess SLR also that will also come back as liquidity back to the marketplace. Maybe banks have raised Tier 2 bonds also. I would imagine all that will also come to the mix. you know, if you notice, many banks have pretty low credit deposit ratios.
Yes.
Other banks have more headroom I'd say.
What type of increase in the cost of fund, Or do we see other than the infra book, the repricing of, if I take out the infra book part of it, what type of increase in the cost of fund do you see in FY24?
No. I forgot for industry. No, for us it's. If your question was more on the deposit front earlier.
Yeah. Deposit front. yeah.
Okay. On the deposit front, we are very clear. We want to grow our loan book through deposits.
Yeah.
You will re-see that every quarter we would have funded ourselves entirely by deposits. Of course, we never say no to good money. If we found a really low cost money for a long period for a good quantum we got, probably still take it because after all, that even if it came through borrowings, it's low cost, it's P&L. In general, in spirit, our approach is to fund it through deposits. As I answered to one of the earlier, we see absolutely no problem. You can take this from me. We see absolutely no problem raising deposits. Meaning like, we don't even worry about it because it's coming.
On cost front, what type of increase do you see in that deposit cost?
Well.
Rough figure.
No, no. I'll answer the question, but I'm not dodging it. We have no plans to increase it as we speak, you know, at this point of time.
Uh.
We'll always be watchful, and if we see there's any need for it, we'll always touch it. As we speak, if you ask us, are you planning to raise interest rates tomorrow morning? The answer is no.
Okay. Got that.
We'll see as it comes, right? I think depending on how sort of the competition reacts to those rates.
Yes. Yeah. Is it fair to assume that including infra book, we will not see any significant increase in the overall cost of funds, including.
What do you mean? I don't know. You repeated infra book again and again in context of liabilities. I'm a little confused.
No, no. I was trying to separate the liability side into two parts. One is infra book, separate repricing of infra book, which is expected to take place later.
Oh, okay. Sorry. My apology. I think when you mentioned infra, it went on the bond side, actually. Okay, I got that. That will run itself off in due course.
Yeah.
In fact, we'd say that will add to the P&L. That will add to the P&L, meaning that we'll replace them with lower cost, obviously.
Correct.
We are not factoring that in when we're talking of the fact that our NIMs will stay strong. Our NIMs will stay strong by itself. We are not depending on that. That will be a bit of a bonus actually.
Okay. We got that. Okay. We are also, you know, in our advertising, we are putting a lot of emphasis on the ZERO Fee and other, you know, charge. Does it will have any impact on our fee income growth trajectory? From where we will compensate what we are losing on the, you know, customer acquisition front?
These things, thinks of concepts of compensating X for Y, et cetera. Many people think like that, but we don't think like that. Jo karna hai karna hai bas. We don't have to... Everything does not have to be matched pie for pie. Simply, we talked of some fee, we forgot about it. That's it.
Okay.
When we build a good franchise, build good customer goodwill, all that, they all pay back in due course when they pay back, maybe one year or two years. Management is played broadly in judgment only. It'll pay, if it pay, it'll pay back. If it doesn't pay back, it doesn't. The, we haven't accounted for these things pie to pie. Basically, anyway, independent of this little bit of fee income, the bank is doing really well on, I can't say really well, but I'd say that beginning to do well, let's say, on, let me say, cross-selling products to the customers. Now our branches are a little more active on cross-sell than before. There is a very good amount of goodwill with customers. You know, we...
customers notice over a period of time that this bank is being clean with them. They bring more business. You know, these brands are built and experience are built bit by bit over, like, decades for an institution to get that goodwill.
Yes.
It'll take time for these things to play out maybe for next generation. Surely directionally, we will get that kind of customer goodwill in due course. Let me say, I hope, I'd say.
It will be fair to assume that fee income growth will be somewhat in line with balance sheet growth?
Yeah. No, no. Fee income will grow more. No. I was meaning to say that when you said how will you compensate, I said we can't exactly do a pie for pie compensation. With regard to fee income growth, that's the easy one, no? There are so many other business lines that are still growing, like our wealth management business is growing by 50%. Naturally, fee income will also grow 50%. Credit card business is growing faster. That'll give us fee. you know, cash management has got no connection with all these things. That is growing on its own steam. There are so many lines of businesses for the bank on fee income. They don't have to be all, you know, taken from the customer on the deposit side.
There are so many ways to earn fee income by selling products to customers, and that our bank is beginning to do well.
sir, on, any progress, any an incremental development on credit card, how do you see that playing out?
Doing well. Sudhanshu, what's the number? 1.3?
Yeah. As I touched upon in my opening commentary, we are seeing a strong growth, right? In fact, the credit card issuances have doubled in this quarter vis-a-vis last year. Even spends are growing very, in a healthy manner, right? It's a growth of 86% on a YoY basis. I think we are making a good sort of a market inroad on that product.
That is also fee income to your previous question, by the way.
Yeah. That will sort of also add up to the fee income in a big way, even into the coming quarters.
Okay. There are a lot of discussion again start happening on the one of the telecom exposure which industry keeps on talking. Do you want to give any update that what where we are on that and or whether we see any incremental risk coming from that negative or negative side?
Your opening batsman who spoke to us, I think it was Ishan or somebody.
Yeah.
who opened us up on that account already, right?
Yeah.
Who said that our exposure is initially INR 500, but now it's probably come down to about INR 350 or so. Every quarter it'll keep coming down. If you ask us to our view, how we feel about it, well, everything's in public domain. You're hearing news from them. Hopefully it should, it should be fine and hopefully our-
On non-funded, how much we have exposure to, rough exposure approx?
To that entity?
Yeah.
No, we don't have non-funded.
Okay. Thank you. Thank you. A very good set of numbers on all of that front.
Thanks.
Yeah.
Asutosh, thanks very much for your good words and for your encouragement. Thanks.
Thanks, Asutosh.
Thank you. We have the next question on the line of Ronak Daga from BNK Securities. Please go ahead.
Hi, sir. Congratulations on a good set of numbers. Can you provide me the pro-total provisions figure?
Total provisions for the quarter is INR 450 crores.
Okay. What will be the breakup of specific contingent and restructured provisions?
We have not called out that number separately, but it's a combination of largely provisions on NPA, right? Some bit of provisioning on restructured. As we have increased the loan book further during the quarter, there's some bit of standard asset provisioning which also sort of comes up. If you see from the previous quarter also, the provision has been quite stable, right? The previous quarter was INR 425 crores. The numbers are quite holding up well.
The good news is actually that you should always see provisions in the context of the size of the book. If you recollect, we always guided for the credit cost on retail to be, earlier we used to guide for 2%. This year we are guiding for 1.5%. Not somehow, let me just say that because of the way things are playing out and our book quality is really good now, credit cost numbers are, if you annualize the 450 divided by the book that we have, probably 1.3% now.
1.4.
1.4%. We are in the right corridor actually, and we don't see, if you were to ask us to give you an outlook what next year is, quarter of that look like, et cetera, I'd say that will probably be in the corridor.
Okay. you mentioned that 40% of.
Yes. The important thing is the way the credit cost is now coming. If you see the last eigth quarter trend on credit cost, it's been continuously contained. Continuously. Therefore it gives us a lot of confidence in our own book now. What we do, just for your information, is that Ashutosh you're speaking to?
Ronak.
Ronak, if you look at our stuff, the way we do our math in our bank and try to predict the credit cost is that we calculate what is the collection percentage we are getting on different buckets. Buckets like 0-30, 30-60 and so on and so forth. Then we extrapolate the number from there and then we estimate what credit cost in the future is going to be. The good news for our bank is that we are in the Bucket X. If you're a technical person of the bank, retail banking, you'll probably know what Bucket X is. Basically the current bucket, which is the dominant bucket, is a source of credit flow from there on.
That bucket, our collection is running at 99.6% or 99.5%. Now, 99.5% is the amount without taking prepayment amount. It is pure EMI due and EMI paid divided by EMI due, no prepayment considered into it. That number at that, if we, if we sustain that number at that rate, and there's no reason we should not because it's been there like for 12 months now. If we sustain that then the only 0.5 flows to the next bucket and then there is a formula that works from there on. We feel that that formula is really very, very well controlled and contained and we should not give any surprise or shock there because we'll come to know early enough.
Okay. Got it, sir. You mentioned that the repo-linked book is 40%, if I'm not wrong?
Yes. Yes.
Can you also provide the breakup of NCI and fixed rate book?
No, I think this 40% included both.
Yeah. The 40% is floating rate book. Out of which 60% is repo-linked and balance is largely linked to MCLR.
Okay. Can you provide the timeline for the capital raise?
We haven't put out any specific number, new data point than what we discussed last time. Last time we had said that we'd like to raise INR 4,000 crores by in the next one year. That next one year will probably be September. There's no new data point on that front per se.
Okay. Got it.
That means that between now to then, whether now or whether anytime in the next four quarters, we do intend to raise that capital.
Okay. Got it. Just last question. Can you provide the restructured number?
Yeah. Restructuring book is 0.9% of the total funding assets, and it has come off by 1% which we had reported in the previous quarter. It's roughly around INR 1,200 crore kind of number.
Okay. Just last one data keeping question. What is the slippages number for the quarter?
Slippages for the quarter is, around INR 1,150 crores. Raw slippage. However, net slippage is about INR 570 crores.
Okay. Got it sir. Yeah, that's it from my side. Thanks a lot and all the best.
Thanks. Thanks Ronak.
Thank you.
Thanks Ronak for your comments. My general comment on the context of what all the questions you asked, All our flows indicate to us that this, that we should be in a position to contain and to keep our provisions somewhere in the zone. Then you can have a good guess about whether the credit, whether PPNR is gonna look like over the next few quarters. Hopefully.
Okay sir thank you.
Okay.
Thank you. We have the next question on the line of Bhavin Gala from Marine Capital. Please go ahead.
Thanks for the opportunity, and taking the question. Sir, with each passing quarter, our performance has been improving, and I must compliment the management efforts. you know, pursuant to which, we have come a long way as we speak today, and it has been a commendable effort from each one of the team out there. The way I see our bank is, you know, when it comes to asset profile or our margin profile, we are akin to a NBFC. When it comes to, you know, the trust that we, you know, get from the people due to our banking franchise, we are like a bank. Given that we are already in a, such a sweet spot wherein, you know, our asset profile is more like an NBFC and our margins are very healthier.
The only thing that I see in our, you know, PNL and the earning profile, which is, you know, acting as a very, very big dent is the provision. I know my fellow speaker already touched about it, but I also wanted to know while we have been within the, you know, 1.5 kind of guidance, can at any point in time we can aspire to have a moonshot wherein we can look forward to achieving 60, 70 basis points of, you know, the credit cost? That would materially change our profile, earning profile. That is my first question. I have another question.
No, no. Let's take one question at a time. Now, well, you see, if you take provision numbers around 1.5, they are like as good as any bank. You know, the really good thing about a bank is, you know, it's not actually an NBFC. Now, we've become a prime player of the respective segment. I'll give you a perspective. Let's think, let's take loan against property. Now, when Capital First was doing loan against property, we were probably lending at about 100, 150, 200 basis points more than what an ICICI Bank, HDFC Bank, Kotak, et cetera, would do. Which means that Let's take today's market conditions for simplicity. Supposing today loan against property rates are going at, say, 9%. We're probably lending at 11.
The top banks are lending at nine in today's context. Therefore, why were we doing that? Because our cost of funds is high. Obviously if you lend at a little 210 basis points more, obviously you are flirting at the edge. Now, in every segment we are operating in, we are playing prime. If you give a loan against property, our pricing is similar to like any other top bank. Therefore, the short point is therefore we are, you cannot... I mean, the way I think of ourself, I don't think of us like a... I think of us like a prime player of the respective segment. Let me put it like that. Which we are.
On the credit cost front, obviously because the mix of a product is different and a specialization is there, sometimes people tend to think that, "Oh my God, if your, if your yield is high, you must be taking riskier business." I mean, though such people are often, I'd say, they haven't understood the model. It is the specialization that we have built is what is so special about our bank. If you think of, let me say, rate. You know, let me say even a top nationalized bank will give a gold loan probably at 9%, but there's also Muthoot and Manappuram is also giving a gold loan, maybe say 15%, 16%. That doesn't mean Muthoot and Manappuram take risky business. They just have a specialization.
They're sitting the roads, near roadside corner where customers can access them. They're giving them great service. They can turn around a gold loan in 10 minutes, whereas, where a bank may take two hours. There are some people who have done specialization, which is giving them those benefits. Our bank has also grown specialization. Our risk is similar to banks. Risk cost, credit cost, but yield is higher. This is our specialization.
Yeah sure sir I can't agree more with you on this. The later part of my question was also, you know, at some point in time, can we also aspire to, you know, further curtail this cost? Because that is the material delta, you know, that can fetch us material delta in our earnings profile.
I told you, we should not never be greedy. We should be conservative in our estimation of a credit cost. We never want to put fancy numbers like that. If we do a particular business, we should factor for such credit cost. We should factor for a little more. That's why we always guide for, we used to guide for 2% credit cost when the reality was running 1.5%. Now we're guiding 1.5%, reality is less than that. We should be conservative and factor for a little more credit cost, not less.
Yeah. Point noted, sir. My second question was on the scalability. You know, I would here taken liberty of, you know, comparing our bank to another similar kind of an banking franchise. Though they are an SFB and we are an universal bank. The run rate in the segment that we operate and they operate, they've been able to make little higher disbursement. For example, our net, while we have been growing 25% year-on-year, the net addition to our loan book has been INR 8,500 crores at a given quarter. Whereas, you know, similar player operating in similar segment have been, which are very lesser in our, in the size compared to us, have been adding assets in the north of INR 10,000 crores in a given quarter.
Are we playing conservative? Are we, you know, still trying to fix certain things so that the ground is clear for us to scale at, when we go to a next orbit? Your views on this, sir.
No, it's again a good question. Just because it's a market, we should not play all our shots all the time. We have a steady model. Our loan book is growing by INR 8,000 crores-INR 9,000 crores a quarter. Very happy with that. It is, you know, as you know, we have to factor this in the context of our capital. If we run ahead of ourselves, then we'll run out of capital and ahead of time. As a management, we have to we should pace our growth. If you remember the first three years after the merger, We paced our growth in such a way to grow only 5%. Bhavin, do you remember that?
We paced ourselves at that way. Now we're pacing ourselves at 2025. We believe at this pace, the accrual of our profits will be such that our ROA, ROE will get fixed appropriately. If you grow too fast and run out of capital, you've got to come to the market earlier than planned. It has its own implications. We are pacing ourselves accordingly.
Sure, sir. Thank you very much for that.
Yeah.
Thank you. We have the next question on the line of Sarvesh Gupta from Maximal Capital. Please go ahead.
By the way, moderated the one hour. I thought we have one hour call. If there's anybody else who have... Yeah Sarvesh.
Good evening sir congratulations on a good set of numbers. Sir, first question is on the loss-making businesses. Earlier, you used to allude to the run rate of certain businesses as well as infrastructure bonds that is sort of hurting the PNL and that should sort of normalize in the coming times. If you can provide an update of the current run rate of some of these. Second is was related to the INR 4,000 crore fundraising. I think that is already answered. Third, I think on the provision side, it looked a bit higher. I'm just looking at the other bank's provisions. Normally, we have seen a lowering trend in the overall provisions, although the credit cost as a percentage is lower, but I think it trended slightly upwards in the absolute amount.
Are there some one-offs or any extra provisions that we have made or is it, business as usual?
No, no. You should only look at it in context of credit cost as a percentage because, you know, in absolute terms there, they mean nothing. You got to see that, divide that by the average book and see if you are paying, if the credit cost is low or high. As of now, credit cost is quite low for the for the kind of business we're doing. It's pretty much lower than guidance and even absolute. If you compare this 1.2%-1.3% credit cost with the market, I'd say it's very attractive. That too for a yield that is relatively much higher. That's that. With regard to loss-making businesses, I think, yeah, I mean, they should taper off bit by bit in due course. Liabilities takes a long time. I don't know if you run liability businesses.
I have built that in one of my earlier organizations. It takes a really long time to taper off liabilities to become cost neutral. But the good news is that the asset side of this bank is so profitable that it's able to absorb those costs. Therefore, that drag will take time, but I think the credit card loss should fix itself with scale, maybe at about 2 million cards or so. It should kind of begin to break even.
Sarvesh on the provisioning front, just to add, while we saw we have seen a 15% increase, but at the same time, it has to be noted that we had made our provisioning norms more stringent in the previous quarter, right? We took some impact, right? So it has to be also seen in that context. Credit costs for nine and is just 1.13%, right? Just for the current quarter, it's 1.2%, right?
I hope you'll agree, 1.1.2, there is really nothing. I've been in the industry long enough. For our business segments, you know, we are not exactly doing prime, only home loan and car loan like some of the, you know, let me say, some other banks do. For us to have credit costs at this order, for a yield that is relatively higher, this is a very unique model. I genuinely believe, I don't know if you people are beginning to see it or not, but I genuinely believe we're building a really fantastic model in this bank. It's special because For our kind of low credit cost, and by the way, having low credit cost is again not a fluke.
Please go back and see the Capital First time also. They were very attractive. Our ROE had touched 15%. They were inching up quarter-on-quarter. It was heading towards a 20 ROE Capital First. Don't forget. It moved from zero to 15 in that window of five years. It was still inching up at the time of merger, as you will see the numbers are there in the presentation. We have a really unique model. Like one of the earlier speakers talked about the fact, people who questioned us saying that, "Look, your yield is attractive and you're getting the liabilities of a bank." I think it's very, very unique actually. Over time, people will begin to see, you know, you play this game year after year without hurrying it, without hurrying up growth.
I don't want to hurry up growth at all. It'll come. If I play it patiently, it'll come. People will see what is evolving here. I'm sure you will watch this game for next three, four quarters, you'll get very convinced.
Understood, sir. My final question, just in, you know, in terms of understanding of your NIMs. While you said that you are still playing that prime game, but our NIMs are still sort of more aligned to a SFB or a NBFC. As we scale, are we trying to just continue doing the same thing in terms of our NIMs and also letting our cost go proportionately higher, so our profits also grow in the same way? We are sort of have upfronted our cost and now in the coming years, we are going to look into lowering our NIMs and the NIMs resembling more like a universal bank, which with a lower cost will give you the same sort of returns on equity like a larger bank.
Sarvesh, If you were running a bank with some very unique capabilities like we have, would you want to really become like every other bank? Answer me. Would you want to become?
Yeah perhaps no. Yeah.
Perhaps not. Why? You're such a good model, getting good yield, very low credit cost. Historical 10-year credit cost is quite low, so likely the model works. We have actually displayed on our investor presentation, you know, in very minute detail how we underwrite loans. I think you should check that out. We've given step-by-step, 10 steps that we write, take on to underwrite a loan. It's working beautifully. It's so good. We don't want to become everybody else. We have a good lending model. We can scale up, finished. Just simple. You know, frankly, just keep things simple. You have a good lending model, keep it going. You have a good liability strategy, keep it going. Margins are good, they're good. We don't have to complicate it at all. We don't have to become somebody else.
We are what we are.
Understood. Thank you. Thank you.
Just as long as asset quality is good, as long as incremental asset quality indicators are good. I want to just point that out to you 10 seconds before so that you understand. In our business, we will come to know very much in advance if we are going to have a credit problem. Advance meaning what? If our credit, if our, you know, if our collections is not 99.5, if it came down to 98.5 for three months at a stretch, we know four quarters, you know, two, three quarters from now we'll have a problem. Because after all, what we collect in Bucket X is what spills over Bucket X is what goes next. Therefore, our objective is to make sure that our quality never suffers, our collection percentages continue to remain strong.
That will automatically give us low credit cost and simply scale the book from here on. We are really keeping it simple.
Understood. That would also mean that as we scale up and if you're playing the same sort of a NIM game, then at certain point of time you will have your cost exhaustion coming up, which will result in probably an ROE much higher than a typical large bank.
Yeah, I think so. I don't want to go, run ahead of myself. Certainly we believe that the business model is such that it will give a very strong ROE. You just watch this game. Just watch next four quarters, watch next eight quarters. I told you, we are playing a long-term game. You also play a long-term game with us. Don't hurry us up and don't hurry yourself also. Watch this game. You watch next quarter, next quarter, next quarter results. It's a very simple model. In fact, our commentary will become very, almost every quarter's commentary will sound the same from now on, actually.
Understood. Thank you sir and all the best.
The other thing is that, you know, on provisional results, none of you asked this question as to why we didn't put it out this quarter, but we'll call it out. We don't want to give provisional results anymore because anyway, around 23rd, 25th of the end of the next, of the, you know, quarter closing month, we are releasing the results. We don't want to put out two results. We just want to put out 1 result and reconcile it and put it out clean. Basically the process, you know, that was during COVID is when we started it, but now COVID uncertainty is also gone. We'll now straightforward announce the results and be done with it.
Thank you sir. That's all from my side.
Yeah anybdy else Prince? First of all, thanks so much for for being with us. I think you had many other concalls to hear. Thanks for being with us among the many other even options and larger banks that you were covering. We appreciate that. If there's anything you can always reach out to us from now on and even during the rest of the quarter, and Saptarshi is there to assist you.
Thank you sir.
Thank you so much.
Due to time constraint that was the last question sir.
Yeah.
We'd like to hand it over to the management for closing comments.
Closing comments made already from our side.
Thank you sir on behalf of ICICI Securities that concludes the conference. Thank you for joining us. You may now disconnect your lines.
Thank you.