Ladies and gentlemen, good day and welcome to IDFC First Bank's Q2 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation conference. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touch-tone phone. I now hand the conference over to Mr. Saptarshi Bapari, Head of Investor Relations. Thank you, and over to you, sir.
Thanks, Darleen. Thanks, everyone, for joining the call so late in the evening. First of all, I wish you the best for the upcoming festivities. Today we have Mr. V. Vaidyanathan, the MD & CEO, and Sudhanshu Jain, our CFO and Corporate Center Head. We'll have, first of all, the update from Sudhanshu on the business and financial performance of the bank, followed by some comments from Vaidya, and then we can open the floor for the Q&A. Sudhanshu, up to you.
Thank you, Saptarshi. Good evening, everyone. Thank you for joining in. I'll start with certain key numbers for the quarter. I'll try to keep it crisp, and maybe I'll start with total customer deposits. That has grown at a healthy pace at 23.4% on a YoY basis. This has now touched about INR 2.69 lakh crores, and the average customer deposits grew by 24% on a YoY basis. If we look at retail deposits, that's there also the growth has come quite strong, and that has grown at 24% on an average basis and about 21.4% on a YoY basis. The bulk of the deposit growth is also contributed by CASA deposits, which has grown by 26.8% on an end-of-period basis and by 32% on an average basis.
Period-end CASA was at 50.1%, and average CASA ratio stood at 48.6% at the current quarter end, and this was 46.3% at the same time last year. We opened about 25 branches during the current quarter, taking the total branch count to 1,040 branches. If I quickly move on to loans and advances, that also grew by, I would say, at a steady pace. It increased by 19.7% on a YoY basis to touch INR 2.67 lakh crores. We saw a healthy growth across the mortgage segment, the vehicle loan segment. We saw some growth coming back in consumer loans. We saw a healthy growth in business banking, wholesale loans, and so on. We did see some increase in disbursements in Q2 over the last quarter. Microfinance portfolio, if I talk about that, however, slightly degrew to INR 7,300 crores from INR 8,300 crores in the previous quarter.
Here also, while we have seen some increase in disbursements in Q2, but the runoffs were higher, which led to this decrease. MFI book is now about 2.7% of the total funded assets. Also, happy to report that the insurance coverage on the outstanding microfinance portfolio has now touched 77%. If I talk of credit cards, that, I'm again happy to report here that the total credit cards issued by the bank have crossed the 4 million mark during the current quarter, and the book has now touched INR 8,600 crores. The spend on the credit card was quite healthy, and it grew by about 30% in H1-2026 on a YoY basis. We also launched a credit card in partnership with Indigo in this quarter.
If I talk about wealth management, then here the AUM continues to grow at a steady pace, and it grew by 28% to touch about INR 55,000 crores. All in all, if I take into account customer deposits and loans and advances, then the total customer business has now touched INR 5.35 lakh crores and grew by 21.6% on a YoY basis. If I move to asset quality, I would say that we have seen a sequential improvement in NPA and SMA positions. Let me start with NPA numbers, to give a perspective. On the NPA numbers, the gross NPA of the bank improved by 11 bps to 1.86% from 1.97% in the previous quarter. Similarly, net NPA of the bank improved to 0.52% from 0.55% of the previous quarter. If I talk of the retail, rural, and the MSME segment, the gross NPA improved by 11 bps to 1.73%.O
Similarly, net NPA on the retail, rural, and the MSME book improved to 0.63% as compared to 0.66% as of the previous quarter. We continue to maintain a healthy PCR, and that stood at 72.2% as of September 30, 2025. If we now see the flows, then the gross slippage has come off during the current quarter. That reduced by roughly 9%, and net slippages improved by 13% sequentially. While this was largely on account of microfinance, the gross slippage ratio for the other portfolio was lower by 15 bps during the quarter at 3.39%. In terms of collection efficiency, we see a stable performance at 99.5% for Alibaka's XMFI, and for microfinance, it marginally improved from 99%- 99.1%. If I talk of SMA positions, then here also we saw an improvement. The overall SMA improved from 1.01%- 0.90% during the current quarter.
If we see here, excluding microfinance portfolio, the SMA improvement was about 7 bps. In microfinance portfolio also, we saw a significant reduction in the SMA position, and that reduced by 88 bps. The reduced SMA positions also indicate that the asset quality could be much better in the ensuing quarters. If I talk about profitability now, we have reported a profit after tax of INR 352 crore and INR 815 crore for H1 of 2026. Net profit grew by 75% on a YoY basis on account of core growth and the reduction in provisioning. On Q2 basis, it degrew, however, by 23.8% due to much higher trading gains in Q1 2026, which was not there in this quarter. If I further break some of the components of profitability, then NI grew by 6.8% on a YoY basis and improved from a YoY 5.1% growth registered in Q1 2026.
Net interest margin on AUM of the bank reduced by 12 bps on a sequential basis to 5.59% from 5.71% in the previous quarter. This was largely due to the impact of repo changes in Q1 2026 and asset mix changes, including further decline in the microfinance business, which I talked about. We feel NIM has largely bottomed out in this quarter. If I talk about cost of funds, that improved by 19 basis points on a sequential basis, and cost of deposits also improved by about 15 basis points in the current quarter. Moving on to fee and other income, that grew by 13.2% on a YoY basis. Growth here also improved from 8.5% YoY growth shown in Q1 2026. As I said earlier, trading gains were much lower. That was at INR 56 crore in the current quarter versus INR 495 crore in Q1 of 2026.
As a result, total operating income, including trading gains, grew by 7.5% in Q2 2026, and operating expenses grew by about 12.5% in Q2. If you see the H1 YoY OpEx, that is about 11.8%, while the total customer deposit, as I said, grew by 21.6% in the same period. This clearly indicates operating leverage playing out. If I now talk about operating profit, happy to report that excluding trading gains, the core operating profit has improved by 4.6% sequentially, and this was largely led by, as I said, improvements in the income levels and hence this increase. If we take into account with trading gains, however, this reduced by 4.2% on account of the higher treasury income, which I just talked about in Q1, which we had in Q1 2026. Moving on to provisions, that reduced by 12.5% QoQ from INR 1,659 crore to INR 1,452 crore.
This was primarily on account of lower provisions in the microfinance book. Overall credit cost percentage improved by 45 basis points to 2.25% during the quarter. Excluding microfinance, the credit cost for the overall loan book was around 2% in H1 2026 and broadly stable at numbers which I had reported in the previous quarter as well. The bank has utilized a microfinance provision buffer of INR 75 crore during the quarter on account of the reduced stress, which we have seen in MFI, and we continue to carry about INR 240 crore as a contingency provision. Moving on to the last section, which is on capital, the capital adequacy ratio, including profits for H1 FY 2026, was at 14.34% with CET1 ratio at 12.28%.
If I take into account the conversion of CCPS, which will happen into equity pretty soon, the CRAR and the Tier 1 would be 16.82% and 14.75% respectively if computed on the financials as of September 30, 2025. Average LCR deposits were at 115% for the quarter and broadly around our guided range. With this, I broadly conclude my opening remarks on certain key numbers and hand over to V. Vaidyanathan for his opening remarks.
Good evening, everybody. Thank you very much for joining us this evening for Q2 results, Q2 2026 results. The way we broadly look at it, things are getting brighter for quite a period of time. As you knew, the credit in the country was going at a pretty tepid pace. I think, you know, with a lot of releases from the RBI, CRR, the 100 basis point of repo cut, even ECB norms, easing of the IPO market, etc., has boosted the flow of funds, and we are hoping that this will start releasing up and opening up credit markets more in the country. At the same time, as all of you know, the government gave the income tax rate and the GST cut, and CapEx is going strong. Some indications that construction numbers are looking good and cement numbers, electricity, GST, EBIT bills.
All of these things are beginning to look better. We are finding that the rural markets are consumption is looking a bit better. The urban market, as you know, durable financing, two-wheelers, etc., was quite tepid. They were not even growing at 3%, 4%, but during GST, suddenly grown a lot more. We have to wait and watch whether this is a one-time bump that's happening or is it more permanent. A quarter from now, two quarters from now, will show whether the GST lift can sustain. Nevertheless, at our bank, the way we look at it, since we are coming off a relatively low base, we are not exactly indexed to the growth of the Indian market. That's probably more an issue or more to think about if you're a really, really large bank, which we are not.
For example, our own book has grown from about INR 40,000 crore. Our book, meaning the retail, rural, MSME book, has grown from INR 40,000 crore at the time of merger in 2018, December. In fact, less than that. It's about INR 35,000 crore. Today, it's already touched about INR 2,10,000 crore. It's like 5x . It's not that the market has gro wn 5x during this period. This is an example of how the base effect does make a difference. We believe that because of a low base effect, we can grow. We've already grown by 20-odd percentage. If we need to grow more, we can, of course, open more markets, etc. The good thing is that, so where am I focusing upon?
I'm really focusing upon building capabilities at the bank, because building capabilities is a fundamental thing, because the Indian ecosystem is opening up so much, with, I mean, the digital ecosystem is opening up so much. It's only of good use to us if we can participate in it and leverage that play. Building capabilities, digitization, building the necessary aesthetics, design, building necessary capabilities within the organization. For example, right now, you'll be happy to note that our bank is now developing the ability to give out 1 million loans a month. That includes consumer durables, two-wheelers, about 600,000 consumer durables, about 120,000- 130,000 two-wheeler financing, about 150,000-odd credit cards. Imagine giving out close to a million loans in a month. Obviously, human beings cannot be sitting and underwriting a million loans.
Our ability to have the necessary scorecards for underwriting, for fraud, and for fraud management, for collections, these are the kind of capabilities being built at the bank. Similarly, the second big focus for me is the ability to bring ourselves together as a universal bank. When we say universal bank, at that point of time, we're also, while most of you think of us like somebody who's raising current accounts, savings accounts, and lending out money and giving out a million loans a month, that's probably your image of us, which is because that's what you see most of the time in many of our customers. You can comment upon our service levels and all that. In parallel, we are building a really good cash management business at the bank. That requires capabilities. That requires builds. We are building out a really good wealth management business at the bank.
It started off at INR 1,000 crore in 2019. Today, it is INR 50,000 crore. We believe as India, Indians are getting richer or a certain class of Indians are getting richer and they all have some investable surplus, it becomes a big opportunity. We want to grow this to INR 200,000 crore, INR 300,000 crore, and we certainly think it's possible that we'll be building the foundation blocks. The third thing we're building as a universal bank is we're still launching out while we're doing well on assets. We're still launching out product after product on the lending side because we don't want to be complacent. We're rolling out gold loans. We're rolling out tractor financing, rural financing. The list is long. The KCC. We need to build proper practice sector capabilities at the bank. We need to make sure that credit quality continues to hold and all that.
Basically, these are capabilities being built in the bank. That's what I pointed out to you, that these are really the capabilities that we're building in the bank. The third thing that I'm focusing on is being able to build the structurally built it right. That's very important. For example, even now, our credit-deposit ratio is 94%. 94% is not great. I'd say it's below par. We started at 169% if you add back credit substitutes. Now, 169 to 94. This 94 I'm saying is including credit substitutes, by the way. Maybe the real numbers are something like less than that. Still, the point is still that 94. Now we've come a long way, but 94 is 94. It's not mid-80s. Therefore, now we are still focusing on building deposits franchise. We still have about INR 25,000 - 30,000 crore of borrowings that we still need to repay.
As a bank, we are raising money for two purposes. One is we want to grow our loans by 20%. We need money for that. If a loan book is about INR 2.5 lakh crore, grow by 20%, you need to grow the loan book by INR 50,000 crore. We need to raise INR 50,000 + crore the CRRSR on top of it. It doesn't stop there. We need to also raise the money to pay off the bonds, which are still maturing at us. Therefore, and this is important, we are not replacing this money with fresh borrowings because then our credit-deposit ratio will never get fixed. These are structural things. That's what I mean by saying that my third big focus area is to build it correctly. For example, we are borrowing as a composition of our loan book. Now we have come down to 8%.
I'm really happy about that because we were 48%. Now at 8%, it looks kind of respectable and league of the big banks. The fourth example of this, and it's an important example, is how do we, even when we get deposits, how do we get it? I'll give you a really material proof of how much progress we have made. The best way to understand the retailization of deposits is the LCR retail because there are two ways of computing what is the amount of retail. One is what the retail branches are originating. Theoretically, they could also be going to an SME and originating a INR 20 crore or INR 30 crore account or a INR 10 crore account. If you, for a minute, leave that aside, on that count, we are 80%.
If you leave that aside and you compute the retailization, which is LCR retail, which is what we report and every bank discloses, we were 12% in 2018. This was a big problem for us because we were basically sitting on 88% of bulk money. Now we have already reached 67%, which is the league of the big banks. Big banks, meaning the large four private sector banks, maybe a little more than them, so are probably in that zone. Now we are as retailized on the deposit side as the big banks. We feel happy about that. On the lending side, we are as retailized, probably more. We are now 80% of the book is - retail. That gives us some stability. These are the things that are on my mind that build it right. I told you one is build capabilities. Third thing I'm saying, build it right.
If you build it right, then we can continue to grow year af-ter year after year for the next 5 years, 10 years, and life can go on. If you don't build it right, then somewhere along the way, we have to apply brakes. It won't be happy even for anybody. This amount of time has gone in building this kind of structural things. It's really good things happen at the bank. The other last example of building it right is capital. We have raised enough capital now, and that makes us feel very comfortable. We are pretty sure by the time we come to the market with the next round of capital, the numbers, our ROA, ROE, etc., will be smelling quite good, and we can raise from a position of strength.
The other thing that we are focusing upon is keeping the rank and file of the organization entirely, entirely, entirely focused on the customer. I really hope any of our customers and you of our customers, and you might just see how the quality of the app we have built or how the quality of digitization we have done or how the customer experience journeys are or how our employees talk to you when they talk to you in branches or from the call center, etc. I personally focus a lot on that. I really sometimes get upset if any of our people have not dealt with customers well or they are giving a runaround to customers and all that. It really bothers me. We focus a lot on that.
Very few times I get upset, but this will be probably the most important reason which I do if I do. We really focus on customer service, and I personally, you know, I'm very keen on launching really good products. That's the other thing that I focus upon to see that every product that comes to the market, you know, there is something special in it. We have for six years or seven years, we built this philosophy that IDFC First Bank products are very good, whether it's a savings account or whether it's a credit card or whether it is personal credit. We came out with zero prepayment fee option in personal credit if taken digitally from us if it's not sourced to DSA because we don't do that for DSA-based listeners because we pay the DSA upfront.
If we gave it for prepayment fee off, then it's a straight loss to the bank. We don't do that. Come to us digitally and take the loan digitally, no prepayment fee. On savings account, again, we came out with a zero fee offer, et cetera. The point I'm trying to say is that we try to, I focus a lot on building a product. Lastly, I'd say that, you know, technology, to simply the cutting of technology. I mean, you know, our Senior Management is all focused on technology. Everybody understands it. That helps us building a good bank. Let me just say that we've done all of these things. Now looking ahead based on these few things I talked about, capabilities, I talked about a way of building it. Looking ahead, our own sense is that there's microfinance issues behind us.
It's really taken a lot out of us in the last five or six quarters. Many of you may have almost begun to lose confidence in us. I can understand that because you don't see the full visibility of what we can see. We can see next two years, three years, five years, we can see this bank can grow at 20%, 20%. You can't see that. I can understand if you felt disturbed over the last six quarters when we were going through the microfinance crisis. If you remember, we always used to tell you during the microfinance crisis issue that it was only a microfinance issue. That is very important. You might have seen our SMA numbers, NPA numbers, which we'll talk about later. We take pride in the fact that for every single business line, we now disclose trailing five quarters. Please note this, not this.
Trailing five quarters. We disclose the gross NPA, we disclose the net NPA, we disclose the SMA one and two, and then trailing five quarters. If you're going wrong somewhere, we'll spot it. For example, in the mortgages business, you might have seen, I don't know the number offhand, but the numbers have had slightly gone up. Yeah, I got it right now. It's gone up from 0.39%- 0.54% if you take a five-quarter trend. I don't think you'd find this kind of data, you know, maybe others give, but I can tell you that with this kind of depth of data, we feel very clean because we put out everything in the public domain. It is for you to judge the good and the bads.
We are quite happy to note that the vehicles, you know, NPA now, sorry, SMA for five quarters in a row is at 0.96%, which is very, very good, very, very good. Our SMA number last quarter has gone up from 0.16% -1.27%, but that's kind of marginal. It's not like very material, but five quarters has been stable. A consumer durable is stable at less than 1%. Credit cards is like 1.5%, but for a credit card business, 1.5%, 1.7% is considered quite good. We put out this number of SMA. We put out a number of gross NPA. They're all stable. You can see it somewhere in the presentation. Our net NPA numbers are all stable. The point I'm trying to say is that our issue was only MFI. We called it out. We are through with it.
We believe that quarter on quarter, we have, we don't believe we're going to disappoint you, frankly, because we don't see any red flags. We should look out, I should say, for red flags because this Trump tariff issue is there and, you know, some part of the we should watch out. Really, when we are seeing it right now, it looks stable to us when we've done our internal analysis. Coming back to the point, it was only a microfinance issue. We've been like 15 years in this business. If most of you tracking 15 years, you must have never seen a credit issue from us. Microfinance happened to happen. That's all I can say, except that things are looking quite good. Let me close with that point that we are frankly looking ahead with good optimism.
It is our biggest pride that our asset quality is held very well for 15 years. We don't want to spoil that record, and we are very cautious about that. Now, in terms of the key thing for us to, in a financial performance sense, improve, is the cost-income ratio, which will come. You have to trust me on this. It will come. The reason why it didn't come in the last two years, and it's a pretty open secret. It doesn't require great much to know. The reason it didn't come is that actually our cost itself came down. You can see that cost growth is not more than 12% or 13% now for a book growth of 20%. You can see operating leverage is building up positively. Why is the cost income didn't come down?
It didn't come down because, you know, because of the same microfinance issue, we degrew the book from like INR 13,000 crore- INR 7,000 crore. We lost INR 6,000 crore. Imagine you're earning 24% on INR 6,000 crore, and it's gone like INR 2,000 something crore. That kind of income reduction happened from the gross income sense. Even net of credit, net of interest cost is still a big amount. That amount of income got affected. The fee got affected. It is more an income level issue that happened to us, not the cost issue. Cost is coming down, and next year onwards, the book starts growing and income starts coming back.
If we can maintain our OpEx less than 13, which is what we are guiding for or which is what we're trying for, and if the book grows 18 and OpEx grows 13, you can do the maths and you can see that it will start coming, you know, the operating leverage will play. By the way, if you take the last year also, the income, the book grew by 20% odd, OpEx grew only 16. This year also, book is growing by 20, OpEx grew only 13. You should see that the bank is truly coming good on this front, and cost income will come down. If you do the maths on a spreadsheet, you'll spot it. We can see it from within. That's all I have to say, and let's take it from here from questions.
Thank you very much. We will now begin the question-and- answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Akshay Jain from Autonomous. Please go ahead.
Hey, hi, sir. Thank you for the opportunity and happy Diwali to the team. Starting with margins, as you mentioned, I don't know if margins have bottomed out this quarter, but how should we see margins moving in the next two quarters? Should we place 4Q 2026 margins to somewhere near the 6% number of 4Q 2025?
Yeah, thanks, Akshay, for the question. In the last call also, we had said that we expect margins to definitely improve in Q3 and Q4. My sense is by the end of Q4, the margins should be definitely upwards of 5.8%. We are also penciling in one more repo cut when we are giving this guidance.
Understood. Okay. Number two, CASA ratio has now touched like around 50% odd. Should we expect you to use the lever of SA rate cut? You see kind of highest amongst the larger banks on SA. Is the SA rate cut on the cards, which should also improve the NIMs?
See, that is one lever we can press any day. Now the question is, do I want to press it now, press it one year from now, two years from now? The reason why I'm using this kind of horizon to you is that our credit-deposit ratio is still 94%. We don't want to jump the gun too fast. We want to raise the deposits. I know if we did it, if we cut the SAR rates, we'll get some straight-away benefit to the P&L and all, and everybody will be happy. I can give you happiness a little later also when we do it. For now, we are more focused about building the, I told you, one of the key things at the top of the mind always is building it right. One of the items of building it right is bringing credit-deposit ratio to mid-80s.
We'll take it as it comes.
On asset quality, you know the microfinance portfolio slippages have halved this quarter, but the non-microfinance portfolio slippages continue to be around INR 20 billion. Any sectoral color on where this slippage is coming from and how should we look at the non-microfinance portfolio slippages going ahead? Even on the microfinance portfolio, should you assume that this was the last quarter of pain, everything will be back to normal from next quarter and we should start seeing growth in the book and resultantly a good X-ray scores for H2 and FY 2027?
Akshay, as you rightly said, MFI slippage has drastically come down. For other than MFI, if you see in terms of a slippage ratio, that has in fact reduced to 3.39% from 3.54% in the previous quarter. You would have noted the SMA positions have improved at September. We definitely feel that this would be on a downward trajectory into Q3, Q4. Our overall guidance on credit cost still stays around that 2.05%, 2.1%, which we had guided in the previous quarter. H1 credit cost, if you put C together, it's about 2.45%. We are anticipating a lower stress going forward, so the credit cost in H2 will be much lower to increase that number of 2.05% to 2.1%.
That is one thing. Sometimes just take this number of 2.1 we say and we say that, you know, second half we are saying will be better. Frankly, last quarter itself, we told you that our numbers will be better this quarter, and which they are. Now we are saying it will be even better next quarter. You watch the numbers, it will be. Rather, we feel confident about that. We feel Q4 also will be good. We are feeling quite, because see, at the end of the day, it's very simple. It's very mathematical. If your SMA is good, credit costs will be low. As simple as that. Our SMA is low. SMA is a feeder bucket for NPA. I just want to make one important point here that when we call out the numbers, we take it as a percentage of loans and advances.
Some institutions report as a percentage of assets. We feel that, you know, if you did that, then our number will come down to maybe 1.4 or 1.5. Just want to flag it so that you don't, so that you're comparing the right thing. You know, when we divide by assets, the whole assets, and we divide by loans, it's loans and advances. We feel that loans and advances are a more representative way because you lose on loans. You don't lose on assets. That, that's that. Just keep that picture in mind when you put the number.
Okay. On ECL impact, have you done any impact analysis for IDFC First Bank? Larger banks have a big provision buffer which they can use, but IDFC First Bank doesn't have that big provision buffer. How do we look at ECL implementation?
I would say it's early to sort of quantify an impact here, but in my view on quick assessment is that there would be a provisioning increase which will happen for stage one and stage two assets vis-à-vis the current standard asset provisioning norms. RBI has also suggested certain floors. This could get partly offset by the lower provisioning requirement on stage three assets. As you know, because the bank has been following very conservative provisioning norms, right? Our PCR is at 72%. Hence, while on an overall basis, there could be some increase on overall provisioning levels on transition, as I said, the quantitation will still need some time to sort of give some guidance on that front.
The bank has already started working on transitioning to the ECL framework through, I would say, three work streams because it involves data management, it involves model development, and it requires finally a system implementation. One more thing I would want to bring to your notice is along with ECL, there would also be an application of effective interest rate which comes into force where acquisition costs and net of processing fee will be amortized over the residual life of loans. This would be, I would say, slightly benefit for positive for us. We have to see both of these things in conjunction. That's how we are currently looking at the ECL framework.
Understood. Lastly, again, on the draft credit risk, have you done any analysis on the benefits which you'll get from that framework?
We should marginally be positive. Yeah. I'm saying like all of these are expected to kick in from April 1, 2027, right? I just spoke about ECL. Even on credit risk RWA, there will be a net positive to overcapital issues. Third thing which I want to bring to the notice is in the RBI governance, he also did make a mention that the final guidelines, while they have been sort of there for the revised operational risk capital charge, that still needs to be notified. If we go by the maths or the formulas which were given in that proposal, that could be quite a positive for us in terms of implementation. My sense is that could also sort of come in around the same time.
Taking all of this together, maybe ECL, then the credit risk RWA, and the operational risk RWA, I think we will be broadly neutral on the capital front on transition.
Okay, sir. Fine. Thank you. Thank you for the detailed explanation. Happy Diwali to us.
Yeah, same to you. Thank you. to 2.1%.
Thank you. The next question comes from the line of Param Subramanian from Invest ec. Please go ahead.
Yeah, hi. Thanks for taking my question. Just to go back to how we are looking at the exit for this year. What are we broadly looking at in terms of, you mentioned on NIM 5.8%+ , we were talking about 0.9% to 1% ROA by Q4. Does that still stand broadly? In terms of credit cost, if you could just broadly talk about where we will be looking at by Q4.
I'm not sure I can exactly pin 0.9% or 0.1%. We got to see as it comes because there are so many moving parts. Directionally, we can say that the credit cost should come down. Margins should go up. We are feeling like more positive about next quarter and quarter after that. Sequentially, we feel that QoQ next two, three quarters or maybe next, you know, should look good. Just to add, even on the core income, as you would have noted in my NI fee, that all has shown an improvement in Q2 vis-à-vis Q1. We expect that the trajectory could continue.
Fair. Thank you. Broadly, you're saying that in terms of credit cost, since you're holding on to that guidance of 2.05%- 2.1%, which means credit cost in the second half should be, say, 1.6%- 1.7% is what you're talking about, and more or less that level in Q4.
Even if you take it at 2.1. Last call, we talked about 2.1. When we do our modeling for Q3 and Q4, we do expect the credit cost to come down. Such that blend, it should come down to this number we're talking about. Again, I wanted to caution it's percentage of loans, not assets. I mean, I guess maybe second half should be like 1.8 or so. I don't know if the blend takes you to 2.1 or so. We can do the maths again.
Fair enough. Very helpful. Now come back to that point on.
That basically means that the credit cost of next quarter should look good to trend downwards. That should, yeah, and maybe Q4 will flatten out from there. That's where the arise when we do the modeling. I just want to put a word of caution so that you do the modeling correctly. Sometimes, you know, models can go a little bit off by a few basis points here or there. Broadly, what we talked about in that zone should be in the zone. I've done business long enough to know, to just say, to put that caveat into it, to know that because life does just throw surprises here or there, some 10 basis points here or there. Anything can happen in life, generally speaking.
Fair enough. Thanks, Vaidya. All things being equal, you would think that because that's a comment I picked up earlier, you would think that the non-MFI slippage, which actually picked up in Q1 and has stayed with that absolute number, should start declining from Q3, Q4, right? Basis what your estimate?
I think you should not focus so much on slippage, etc. You should focus more on credit cost because at the end of the day, it all comes down to credit cost because something slips, something comes back, right? You have a gross, you have a net, and all that. Net, net, three numbers are the best numbers. You know, actually four, I'd say. SMA, gross NPA, net NPA, credit cost. Within this four, literally, you will see the credit quality of any book, I guess, and for us also. You would track us for credit cost because that's the end of the day, that's what touches the profit and loss account. Overall, see, because the thing is that we don't exactly know how much the repo will come. Who knows how much it'll come now? Maybe 25, maybe 50, God knows. Therefore, there are so many moving parts.
What you should expect from us, though, is that quarter on quarter, our profitability should look better, like into next quarter as well, into Q4 as well. Just think about it directionally than picking a specific number.
Fair enough. Thank you so much. Now coming back to that question on.
Let me add that we still have not, you know, Sudhanshu, I don't know if you mentioned, we've not fully utilized this INR 320 crore provision that we had created. We used only INR 75 crore. The balance is still with us. We plan to use that up because now microfinance issues are behind us. That also will give us that kind of cushion for us going forward. That's factored in the numbers you were talking about.
Fair enough. Thanks, Ajay. Now, coming back to that question on SAR rate cuts, potentially, if you see most of your peers, the larger balance sheets, names like IndusInd Bank, Yes Bank, have actually cut very aggressively on their savings rate. Even some of the smaller balance sheets have cut on the savings rate, and talking about the mid-sized banks, why can we not use the lever at least to the extent of where the market is, which is at least 50 bps below you? You would still be a market share gaining entity, which you are very aggressively at this point in time on CASA. If you could give us a sense around when you will really use this lever, because we appreciate the LDR comment that you need to bring it down, but CASA can still grow even at a lower rate, right?
If you could give some color around that.
See, listen, you're giving this, Param, right?
Yeah.
Param, you're Param, right?
Yes, yes.
Listen, yeah, Param, I said you're giving Sudhanshu unnecessary handle to beat me up all the time because he's had my throat all the time to cut it, and I'm the only one who's holding up this rate, okay? Let me give you my logic because Sudhanshu will be more in your camp, okay? The reason, my logic, and I'm quite firm about this now, the reason is very simple. At the end of the day, if we do this, let's remember that SAR rate will, SAR is even now coming down, coming to us at like 5 point something. Let me call it 5.8 or something, 5.6, right?
5.8.
Yeah. Now, that's still cheaper than fixed deposits. It's coming at, say, 7%. If you cut this and you need money, where will you go? You'll go and raise it on a fixed deposit. You will get a temporary joy because profitability will look up straight away and, you know, there'll be cheers all around. You'll go back to the market and start raising a fixed deposit at higher rates. I have a choice to make whether I make everybody happy today or make people happy tomorrow. I choose to make people happy tomorrow. This is how I think about it. Therefore, we are holding back this card. I can use the card any day. What happens if, you know, if we take one year forward, right? If we did the same thing one year forward, that joy will appear then. Why use up all the cards today?
That's my thinking. My thinking is that you keep the CASA here, fix our fixed deposit, you know, our loan-to-deposit ratio, get the credit-deposit ratio under control, bring it to mid-80s. When everything is aligned and lives look good and pay off all the bonds, at that point of time, there will come a time, today or tomorrow, maybe tomorrow, when all the bonds will be paid off. The only need for growth will be to fund deposits, you know, sorry, to fund loans. That's when the pressure will be less on us to raise money. The fixed credit-deposit ratio would be fixed. Maybe some more branches also would have come that will give us, if you notice, we don't have enough branches today. We have just 1,000 branches. For the kind of deposits we're raising, 1,000 is a really high productivity branch for the bank.
Maybe we'd like to have some more footprint in the country so that we're much more broad-based in terms of reach. When all these things come, then it's the time to cut the rates so that we can do it with peace of mind. Today, if we cut the SAR rates, I'll be a little on the edge, not knowing which new problem will come next, you know, six months from then. I just want to be safe and conservative about this issue.
Fair enough. Thanks, Ajay. Thank you and all the best to the team.
Thanks. Thanks.
Thank you. Our next question comes from the line of Sameer Bhise from Dymon Asia. Please go ahead.
Yeah, hi. Thank you. I'm going to congratulate you on a steady quarter. Just had an observation that if you kind of look at some of the banks and where we started this quarter around the previous earnings call, obviously, the margin performance has been quite better than what we thought at that point in time. Some of the peer banks probably have kind of even reported expansion in margins. I think how would you kind of look at it on a comparative basis? Obviously, we haven't cut CASA rates, but that just gives us additional ammunition. Have we kind of seen a relatively slower decline in cost of funds? If you could elaborate on that.
See, it's very simple, Sameer. Very simple. Now, we have, for example, we had a choice, like many other institutions have done, of cutting CASA rates by 50 basis points straight off, okay? And cutting term deposits by 50 basis points, they've done that. Many have done that. We have taken, so what does that do? That gives straight cash to the P&L. Of course, you know, they go and they fund themselves subsequently through maybe other means in the sense that maybe they fund themselves through term deposits and savings or whatever they do. In our case, instead of exercising that choice of going 50 bps and 50 bps, we have chosen to go 100 bps into term. If you wake up one year from now, the net effect to the P&L is the same because CASA is 50, so 50%.
Therefore, net effect to the P&L one year from now will net net be the same. I would still be sitting on this huge, let me say, you know, this lever, which we can press. It's like an Indra Danush. I can use it any day I want. Why should I use it today only? I'm playing the long game. As you know, every decision we've taken for five, eight years, we've been long. Why suddenly become a short-term play today? We're playing long. We say, okay, let the benefit come to the P&L over quarter after quarter. Let it take four quarters. Let it take it. No problem. At least it'll be more firm. We'll be, I mean, we'll be on steady footing. The way others have done it, they've got some upfront, not upfront, sorry. They've done it in the best judgment done in the right way.
They've taken it the CASA route. I've taken the FD route. Mine takes one year to give results. They're giving instant benefits. It's a choice different people have made.
Got it. Secondly, just to pick your brains on the ECL plus EIR combined impact, would it be fair to assume it should, even if the net outcome is marginally negative, not be meaningfully impactful on the ROA, maybe say single-digit basis points? Would that be a fair assumption?
Sudhanshu just explained, no, it's marginally positive for us. That's our assessment.
Including the EIR impact.
Let Sudhanshu explain. Yeah.
I'm saying I explain from a capital point of view on transition, it should be marginally positive. In terms of flow, of course, there could be some impact, but as I said, it would, to a great extent, get negated by the EIR, which sort of comes in.
To your previous point, just to make one comment, Samir, just to close to put a proper lid to it. The thing is that other organizations are not, we should remember this very clearly. There are many other organizations have been banks for 20, 30 years, okay?
Absolutely.
Even if they are, even if they become an NBFC, there are some NBFCs which became banks. They did not start with a huge book to deal with on the corporate side or infrastructure side. They just became a bank overnight, and then they dealt with it. Our story is different. For us, this loan deposit ratio is a big issue. Number two, having to pay off bonds. Even if an NBFC became a bank, they did not have huge bonds to repay off some legacy of somebody, some other institution. I request all shareholders to be patient because this is a different starting point. You're sitting with INR 56,000 or INR 60,000, INR 55,000 crores of borrowings, which the bank starts with at merger. Nobody else that I know of started with that.
I have to pay off every one of the INR 36,000 crores, and I have to pay off two deposits. I still have to pay INR 25,000 crores. The strategies that are anybody who thinks long, we have to factor for this, factor for this. Maybe you have to pay it off, and that's why we're playing this game differently, saying that bring the deposits in. Because of this reason that we've got to pay off, again, a loan deposit ratio, I told you, mentioned earlier, we've got to bring it to the 80s. Maybe others won't have these issues. That's why they cut SAR rate and went ahead with the breeze through it. We'll take our time, but that's how we build institutions.
Agreed. Agreed. Appreciate it. Thank you so much. All the best and happy Diwali.
Thank you, Sameer.
Thank you. Same to you.
Thank you. Our next question comes from the line of Zhixuan Gao with Schonfeld. Please go ahead.
Hey, thank you for the opportunity and congratulations for the quarter. Just so I understand, on the vehicle loans, this quarter went down very well, almost 11%-12% quarter on quarter growth. You know, what's driving that growth? Did we buy some portfolio growth? Previous quarters is more high single-digit sequential growth.
Of course, on two-wheelers, as we've seen in the past also, I'd say we have been gaining market share there. We have been expanding in that business, so that is definitely giving us more volumes. During the last, I would say, last part of the quarter, we also saw some pent-up demand, typically in the last 10 days because of the GST announcement which came in. That has given us this lift. We expect some bit of distraction could continue in Q3 as well.
This is only Sudhanshu who uses these words market share, by the way. Just to make it clear to you, I tell everybody in the bank never use these words called market share and all that stuff. We are small players, so small players don't use these big words. Rather, not big words, but we don't use these terms internally. Broadly, because we are thinking, we are frankly, you know, I'm commenting because Sudhanshu used that word, that term market share. The reason I don't normally look at that is that we just feel that we are relatively a small player and whether on savings or current account or loans also for that matter. We think more in terms of the opportunity that is there and the capabilities we build, the digitization we build, the journeys we build, the assisted capabilities we build.
We build that, we believe that we build all these things, then whatever share comes, comes. That's how we think about it.
That is very clear. Just a data-keeping question. What's our microfinance portfolio credit cost before the buffer reverse on rupee scores this quarter?
Yeah, give or take, like I said, our experience through this cycle was like something like about 10% after the crisis started. Before that, it used to be 1.9%.
No, sorry. By this quarter, the INR crore credit cost for the microfinance portfolio.
We are not calling any, I would say, portfolio-specific numbers here because then we'll have to go down the path of calling out every account, and that involves another level of detail. Frankly, our level of detail is already quite high. I told you roughly in percentage sense, depending on quarter to quarter, sometimes it is 6%, sometimes it's 10%. That is the kind of zone that we experienced in this whole episode.
Got it. Understand. Sorry, I may have missed that. For the raw microfinance portfolio credit cost in % terms this quarter, you were saying how much was that?
Yeah, it was broadly stable around the 2% mark, which was even there in the previous quarter. For H1, the credit cost ex-MFI is about 2.03%.
Got it. Thank you so much. All the best for the next quarter.
Thanks. We have been in the zone now for like 13, 14 years. You go back and pull all the records of capital costs, also credit costs, and divide the average book of those days, you'll find roughly the same. It used to be more like 2.5% because those days we were lending at 18%. You know, when we were lending at 24% odd, it used to be like 2.53%. Then it came 18%, was about 2.5%. Now, of course, our lending yields have come down quite a lot, but we're running at about 2%. That's why we always guide the market, like not now, if you remember, if you pick up your first annual report of IDFC First Bank after the merger, first two, both times, and even the latest one, I have again reiterated that we are running a formula of 2-1-2.
We run a guard race in a way that we run a gross of 2, net of 1, and credit cost of 2. That's the broad number we shoot for broadly in the bank.
Got it. Thank you.
Current numbers are a little less than that, yeah.
Thank you. Our next question comes from the line of Jai Mundhra from ICICI Securities. Please go ahead.
Yeah, hi. Good evening, sir. I have a couple of questions. First is on the microfinance portfolio, right? I think that we have that disbursement is higher versus last quarter, but the book has run down by around INR 1,000 crore. How do you see this book shaping up in terms of would you believe this will keep running down? Or do you think at some point of time it will start growing in rupees crore and in percentage of zones?
Our own guess is that by the end of this year, it should stabilize, like it should taper off on the low bottom side by the end of this year and then grow from there. We want to grow it, just to be clear. We want to grow it because it has many benefits like we talked about. There should be no doubt. It has private sector, it has weaker section private sector requirement. It makes money. The industry has learned its lessons. Hopefully, this lesson will be still learned at least for five, six, eight years or more before the next crisis comes, we don't know. At least for a reasonable period of time, these memories stay on people.
We think that we'll want to grow it again after once this, actually, we want to grow it already, except that since the runoff is so fast, it should taper during the end of the year and pick up from there.
We see the pace of decline to be much lower in Q3 and Q4, and the book to start growing from next year.
Right. Sir, secondly, on MSME, in your entire INR 2.66 lakh crore loan book, you have given consumer loan, then there is a business loan, then there is a wholesale loan. Have you done any sensitivity of how much could be the SME into export and particularly to the U.S., if you have any? A lot of banks have quantified the absolute crore portfolio which is there predominantly to the U.S. If you, or you will not be very, or this will be very negligible for you.
See, there are two types of businesses we have. One is a corporate business. We have about five or six clients who do export to the U.S. and are affected. We saw the list. They are rated well. We talked to those clients, and they are fine. They are the largest kind of corporates who have cash flow and have a name and have a brand and who also have some come out of domestic markets. That's on the corporate side. We are fine there. The rest is some of our customers on the loan against property could also be exposed there. Our loan against properties, these people have security, we have the security there. We've done the analysis. We feel things are comfortable as of now.
I have to be very careful when I use the word comfortable because the truth will tell after one quarter, two quarters, three quarters if any of our customers are affected. For now, as far as our eyes can see from whatever we've talked to some of our clients in that segment, sample, etc., we've done our work, looks okay. That leaves the third segment, which is the unsecured MSME segment. There is a category called BIL, business installment loans, where we give EMI-based loans to corporates. We are tracking that segment also closely. Maybe by next quarter, we will have better color to give you because if any of those customers return their checks more, because one of the numbers we track, as you know, is the first EMI bounce, right? On presentation, how many checks return? We call out the number also. It's 4.5% for the bank.
If that number starts going up, then we call it 5% or 5.5% or something like that. I hope not. You can also see for yourself what are the numbers, the impact, if any.
Right.
It is showing up. Yeah.
Sure.
It's not good, but we're hoping for now that things are broadly in zone.
Sure. The SMA 1 + 2 portfolio that we show, that has mortgage, vehicle, MSME, this MSME corresponds to which line item in slide 39, which has retail, mortgage, vehicle, consumer? Because there is no MSME, just to pardon my ignorance. I mean, how should I, which is the INR crore for this MSME corresponding number?
No, I think if you see the small print of that, if you read below, it actually calls out what is, I think it must be calling out what the numbers are. I mean, what the businesses are attached to that business are. Just to further sort of clarify on this, this would essentially include business banking segment. This would include business installment loans, which they talked about. In our disclosure, it largely corresponds to business banking we have given out separately. There is an other component on the business finance, which would include largely bill and some of these loans.
Okay. Understood.
Normally we don't take, just to be clear, normally we don't take loan against property as part of MSME. I guess a large part of that business will be our small owners. Just as a convention, convention means that there's a convention in the industry, if you notice, every bank has something called mortgages, where they combine home loan and loan against property as one family, as a convention. That goes away as mortgages. This MSME is largely something called business banking, where the business banking basically gives working capital to small entrepreneurs, typically with properties collateral. That's business banking. We give something called business installment loans, where we give some unsecured credit to installment-based, EMI-based to small entrepreneurs, and then some similar connected businesses. Just to add, on the MSME path per se, we are seeing a credit cost, which is broadly similar to the overall portfolio.
While, as V. Vaidyanathan said, we are watchful of this portfolio, we would see if any second-order impact could come in on a primary front. Most of these MSMEs are more domestic-oriented, and hence our assessment is the impact may not be that much.
Thanks for flagging. Maybe next time, Mr. President, we'll give a little more color of what is MSME because there are four or five businesses that are combined to become one family here. We'll break it up and actually we'll tell you what specifically they are.
Sure, sir. If you have the number separate for current account and savings account, that will give a clear picture because, of course, the CASA as a block is doing very well. If you have the numbers separately for current account and savings account.
We can share now also. Our current account is not great. It's one of our weak points, one of our areas for improvement. We have about INR 1,230,000 crore of CASA, right?
Yeah, yeah.
How much is CASA?
Current account would be about, I would say, 14% of the total CASA deposits. As I said, on an average basis, CASA did grow by 32% on a YoY basis. We have seen even a CA growth to be about 30%. OOf course, in terms of the total proportion, our endeavor is to improve the CA in the overall pack.
Right. Right. Last question, sir. How much of the business is driven by, let us say, partners, right, partnership? It looks like the new guideline, there may be some disruption, not disruption, but you may have to change something when you source business from some other partners under CLP 1 and 2. Is there any risk in terms of the origination or the way you acquire loans through partners? Or are you already in compliance with, I mean, are you already, let us say, up to date with the CLP 1-2 regulations?
What is CLP 1, sir?
Call ending, sir.
No, we don't do much of co-lending in our loan.
Okay. Sure. Sure, sir. Thank you.
That is helpful, sir.
Yeah, yeah. To your previous question on current account, like I said, we are growing that and you know, building a current account proposition requires lots of builds, lots of solutions, working capital solutions, and all that. I'd imagine that we are about INR 20,000 crores of current accounts on our book or something like that, somewhere in that zone. It's growing, by the way. It's growing, but we would like it to grow more. Right. You.
think that the blended cost of savings account is around 5.8% for this quarter?
Yes. Yes. Is that so?
Yeah, about 5.85%.
5.85%, 5.8 something.
Still, remember, people were chasing me down to cut the rate on something with ratio. Remember that this is still cheaper than fixed deposits, by the way. If I cut this, listen, there's no free money in earth. If I cut this, then I've got to raise money through fixed deposit, and that'll come at a higher rate. We are using an optimal mix, and we need to grow our distribution. Like I said, I feel we are a little thin on distribution. We need more distribution, and then it'll give us more confidence, particularly after the 6th of April.
Also, maybe we can do some hybrid, right? Like sweep in, sweep out. Maybe you can lower the threshold for savings and then have a sweep-in product, which is in between types.
Yeah, just think about it also. If we do it, we'll call, you can take some credit for it. We're thinking about those lines, by the way.
Thank you, sir. Thank you and all the best.
Thank you.
Thank you. The next question is from the line of Farhaan Wadya from HDFC Securities. Please go ahead.
Yes, hi. Firstly, happy Diwali to the management.
Thank you so much.
Secondly, I have one question. Other than the microfinance sector, is there stress in any other sector?
The answer is no. The short answer is no. We are not seeing any. In this business, we ask ourselves this question all the time, even internally. We are very watchful. We are seeing every business, trends, and signals. Like we just saw the, if you saw the numbers of every product on the SMA, broadly, I think they're all holding up well. We are not seeing any significant amount, but we will watch. If we see any signal, we will share with you. In any case, you'll see it immediately in the check bounce percentage, in any case.
Yes. Okay. Thank you.
By the way, just to be clear and honest with everybody here, when we're running a large business of 25 businesses, there are some businesses where something goes up also. Some credit cost goes up in one business, or S&P goes up. After only running so many businesses, so many cities, villages, locations, scorecards, something goes up also, but something comes down also. Since we're running a large portfolio of 25 business lines, so many cities, and all that, they usually tend to knock off with each other. We share the net number with you. On the net front, we are directionally looking.
Okay. Fine. Nothing changes for a third sector, right?
It doesn't mean that in no business, credit cost, there is, do not delinquency goes up. That's not the way, that's not, that wouldn't be true. Something goes up, something comes down.
Okay. Thank you. Thank you so much.
Thank you. Our next question comes from the line of Shailesh Kanani from Centrum Broking. Please go ahead.
Good evening, and thanks for the opportunity. Sir, my question was on slide 65, where the cost of income ratio on the asset side, asset is sticky. For the last three years, it is on the upper trajectory. I just wanted to understand reasons for that and any levers for improvement on that front. The second part of my question was on credit cards. Credit cards have seen a very sharp improvement in terms of cost of income. What drives that, if you can highlight that?
Should I take a first shot? I'll come to you.
Yeah. On the asset side, I would say the cost of income has gone up in the near term because of the income impact which we have seen, right? Because of the sharp decline in the microfinance portfolio, because of, I would say, the repo rate transmission which has happened while on the FD, that benefit will come with some lag. Directionally, while this may move slightly further into the next one or two quarters, we definitely see operating leverage playing out and this to bend down, right, into the next year.
Basically, once the microfinance book stops degrowing, because the more microfinance degrows, that amount of income goes away. Let's just break this up. When we say cost to income, it is cost divided by income. People often think of cost to income as cost. No, it's cost by income. Divided by income, income shrank. That is a well-known issue. We can't say it any more time. This microfinance book shrank. It is not that cost went up, it's just the income came down. Now then the.
Sorry. That is fine for the first half, FY 2026. What I was trying to understand is that since FY 2023, if we see that number, it has been kind of inching up from 52.7% to, say, around 56% in FY 2025 as well. Just wanted to understand in general.
Let's take very specific. Let's take the numbers. Say FY 2024 is 53.2, right? Correct? In FY 2025 is when the microfinance item hit us. That's when you saw the number jump up from 53.2 to 56.1. Even in this year, you've been seeing microfinance book shrinking, and that's why the mix is changing. You've seen it go up from 56.1 to 59.1. We put out the numbers publicly so you don't leave anything to imagination. Now we believe that we want this microfinance book should be behind us. Like Sudhanshu correctly pointed out, one year from now, or maybe six, nine months from now, etc., one year from now, the fixed deposit would have repriced all the fixed deposit downwards meaningfully. Cost should come down. Cost means interest cost should come down. Number two, the income line should stop degrowing, rather it will start growing.
Anyway, we have massive, not I can't, I don't want to use the word massive, but I'm saying it will be a strong operating leverage coming because we are very digitized. You may not be aware that we are like 98% or 99%, we are you know EKYC, 99% is e-mandate, 99% is e-stamping and registration. We are highly digitized. When we scale from there, the operating leverage does come to us. These are three factors in play. The repo hopefully will taper off at that stage. Like I said, the other two factors I talked about, which is the microfinance degrowth and all that. On credit card front, it's coming very well. It's been like our super successful launch. We are very, very, very happy when we look at the rollout of this business.
Frankly, every single product that we have launched in the bank, I mean, it's just amazing to even think like that, that every single launch at the bank, we've launched just so many products, like 25- 30 since the time the merger to happened. Every one of them have landed well. Every one of them. Credit cards is one of them. Credit cards is a jewel of the crown. Every product has landed well for us. This has also landed well. That's why the cost income has come down to below 100% in four years. We believe it'll come down to now from 95, which is what it is today, or 96, it'll come down to 75, we believe, in the next two years. I hope it gets there, plus minus some few hundred basis points.
Okay. Fair enough. Thanks a lot for the explanation, sir. Best of luck, sir.
Thank you. By the way, friends, it's already 7:45 P.M. Would you really want to continue, or we can sign off? Last question, okay?
Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to Mr. Vaidyanathan for closing comments. Over to you, sir.
We've said enough, so I have nothing more to add. I just want to say thank you for your support over many years. Our return on equity has been low over the last five or six years. Our book value per share addition has largely come from fresh capital raised at a premium to the book, rather than by internal accrual of capital. Nevertheless, it did come. That's how book value per share has gone to 54. The bank has, you know, you've been patient with us this while and provided us capital at a good price whenever we want to raise it. Thank you for that.
We think that the same zing and feel that you got about the bank when we were turning around, between 2020 to 2024, that the three or four years you got the zing, that things are turning around, you'll, I believe we'll begin to get that same feeling again once you see this quarter, next quarter, quarter after that, next year. I think next two or three years, you will get the same feeling again. I can fully understand if you want to watch us for a few more quarters before you get that confidence. I do believe you'll get it. Thank you so much for being with us all through this.
Thank you. That concludes the session.
Thank you, everyone. Happy Diwali and happy birthdays.
Thanks, everyone, for joining.
Happy, happy, happy, happy birthdays, everybody. Thanks once again from all of us at IDFC First Bank for best wishes to all. Thank you.
Thank you. Ladies and gentlemen, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.