Ladies and gentlemen, good day and welcome to Aavas Financiers Limited Q2 FY 2023 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sushil Kumar Agarwal, MD and CEO. Thank you, and over to you, sir.
Yeah. Good afternoon, everybody, and thank you for participating on the earnings call to discuss the performance of our company for quarter two and H1 FY 2023. With me, I have Mr. Ghanshyam Rawat, CFO, Ghanshyam Gupta, Investor Relations officer, and other senior member of the management team and SGA or Investor Relations advisor. The results and the presentations are available on the stock exchange as well as our company website, and I hope everyone has had a chance to look at it. I am happy to inform you that during the quarter, the company's long-term credit rating was upgraded from double A minus positive outlook to double A stable outlook by CARE in line with the ICRA. I take this opportunity to thank all our stakeholders for their continued trust and support.
After witnessing 90 basis points increase in the repo rate in first quarter, RBI has further increased the repo rate by 100 basis points during the second quarter. Consequently, we have also increased our prime lending rate by 75 basis points during H1 FY 2023, and a further increase of 50 basis points will be there from 5th October 2022. For quarter two FY 2023, we disbursed INR 1,146.7 crore, registering a 27% year-on-year growth and achieving 89% of the disbursement done in seasonally strong Q4 last year. We continue to grow in a calibrated manner and registered AUM growth of 24% as of September 2022. By maintaining our operating metrics, we have delivered AUM growth of 29% year-on-year for H1 FY 2023.
With our continued focus on collection, 1+ DPD stood at 4.45% with an improvement of 22 basis points from first quarter. Ninety-day past due stood at 0.93% in September 2022, but we have also categorized 0.17% of up to 90-day past due asset as gross NPA or gross stage three following RBI notification dated twelfth November 2021 to harmonize IRAC norms across all lending institutions. As a result, total gross stage three is 1.10% in September 2022. We continue our strategy of controlling borrower delinquencies and strive to maintain 1+ DPD below 5% and ninety-day past due below 1%. I would now hand over to Ghanshyam Rawat, CFO, to discuss various business parameters in detail.
Thank you, Sushil.
Good afternoon, everyone, and a warm welcome to our earnings call. During the quarter, company borrowed an incremental amount of INR 9,467 million at 7.55%. As of September 22, our average cost of borrowing stood at 6.99% on an outstanding amount of INR 109,711 million. During the quarter, our long-term rating was upgraded by CARE from double A minus positive to double A stable, while ICRA continue to maintain long-term credit rating double A stable. Despite the highest short-term rating, A1+, we continue to maintain zero exposure to commercial paper as a prudent borrowing practice. IGAAP to Ind AS reconciliation has been explained in detail for profit after tax and net worth on slide number 31 and 33 of our presentation. Key parameters.
As on 30 September 2022, total number of live accounts stood at 1,63,639. That is 23% year-on-year growth. Total number of branches was 321. 24 new branches added in last 12 months. Employee count 5,702, 23% year-on-year growth. Assets under management grew 24% year-on-year to INR 1,24,447 million as on 30 September 2022. Product-wise break-up, home loan 70.9%, other mortgage loan 29.1%. Occupation-wise break-up, salary 39.8%, self-employed 60.2%.
Disbursement increased by 27.2% year-on-year to INR 11,467 million for Q2 FY23 and 64.2% year-on-year to INR 22,402 million for H1 FY 2023. As on 30 September 2022, average borrowing cost 6.98% against an average portfolio yield of 12.85% resulted in a spread at 5.86%. Borrowing access to diversified and cost-effective long-term financing. A strong relationship with the development financing institutions. During the half year, we borrowed INR 18,451 million at an average rate of 6.62%.
Overall borrowings as on 30 September 2022 is 41.8% from term loan, 23% from assignment and securitization, 20.5% from National Housing Bank, 14.7% from debt capital markets. Now asset quality and provision. One day past due stood at 4.45%. Gross stage three stood at 1.1%. Net stage three stood at 0.84% as on 30 September 2022. Gross stage three of 1.1% includes 0.17% up to 90 days DPD. Assets which has been categorized as GNPA following RBI notification dated 12 September 2021. During FY 2022, re-resolution plan was implemented for certain borrower accounts as per RBI resolution framework two dated 5 May 2021.
Some of such accounts with an outstanding amount of INR 1,012.5 million as on 30 September 2022 has been classified at stage two and provided for as per the regulatory guideline. The initial provisioning including that of COVID-19 impact as well as resolution framework 2.0 at 649.1 million as on 30 September 2022. Liquidity of INR 28,370 million as on 30 September 2022. Cash and cash equivalents of INR 13,270 million. Unavailed CC limit of INR 1,100 million. Undrawn unavailed sanction limit from other banks, INR 14,000 million. Profitability. That increased by 29% year-on-year to INR 1,962.6 million for H1 FY 2023. ROA was 3.42%.
ROE was 13.44% for H1 FY 2023. As on 30 September 2022, we are well capitalized with a net worth of INR 30,314 million. Book value per share stood at INR 3,383.6. With this, now I open the floor for Q&A session. Thank you.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question at this time may enter star then one on their touchtone telephones. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Abhijit Tibrewal. Please go ahead.
Yes, thanks for taking the questions. Good afternoon, Sushil and Ghanshyam. I hope both of you are doing well. First thing that I wanted to understand is the absolute increase in your stage 3B, which is greater than 90 DPD and is now up 50% in the last two quarters. Just wanted to understand are these loans which have slipped from your restructured pool or are these customers who have defaulted because their EMIs have increased when you increased your PLR? If a related question here is, from your past experience, do you think that there is a need for the industry to be worried about higher delinquency in the affordable housing segment when the EMI of the customer is increased?
Abhijit, if I am correct, you are asking from Q4 last year to Q2 this year?
Yes.
Yeah. Abhijit, I think we are normally in 1% here and there. Now from April 1, we have stopped marking cases AFS, which was earlier whenever any asset we purchase in the third AC, we used to mark AFS. We thought that we should be more conservative on that aspect and revise this number something like this.
Understood. Sushil, you mean now we don't classify any assets that we repossess as assets held for sale. They are still classified as stage three loans.
Yeah. Yes.
Understood.
That amount is INR 12 crore.
Got it. Sir, I mean, the related question that I asked, I mean, when the EMI of the customer is increased, is there a reason to be worried that it can lead to higher delinquencies in the affordable housing segment?
I think it's a cycle.
Understood. My second question was on the OpEx. Just trying to understand that, I mean, this elevated OpEx or cost-to-income ratio. Is it really a function of higher wages since the attrition in the industry, especially at the field level, is really high? Or is it more a function of your investments in branches and technology which you've not really officially opened yet, and ones which will be officially opened in the second half of this fiscal year, but the expenditure you have already incurred in the first half itself.
Abhijit, I have already mentioned in the last call also that for this year, OpEx will be a little high and going forward in coming years, then the leverage will come in into the balance sheet. This year we are spending a lot amount on the digital transformation. Last quarter we started implementing LOS, which is SFDC, and now we have signed up for LMS, which is core banking system. We are moving core banking system Flexcube, which is run by the large bank like SBI and AU, and for accounting software also, which is now called ERP in the banking parlance. We are shifting to Oracle suite, Oracle Fusion, which is used by the large banks like Kotak and Canara Bank Coco Plus kind of balance sheets.
Once this will be implemented, I think we have already given 6-9 months horizon, it will take for implementation all of this. Secondly, we continue to do investment. Like, this year again, we will open 35 branches. First half, the branches which have reached an opening position is around seven, eight. Now second half, most of the branches will also be open. Thirdly, we are also investing in manpower and leadership, keeping in mind 5-7-year horizon. Also for now, since we are at stage of like INR 12,500 crore in next three years, if the balance sheet gets doubled. We are also spending money for leadership development.
Like, this year we have tied up with IIM Ahmedabad, where our 35 officers got the training and, certification, and this will be a second line, third line creation in the organization. I think, continuous investment in people, process and technology. Technology, the one big change which will complete in next 6-9 months, I think from next year onwards, the OpEx trajectory will also help us getting the optimization.
Thank you, Sushil. Very good to hear that we are spending or investing in manpower and furthering the career progression of the leadership team. The last question that I had, I mean, is that, have you availed any NHB borrowings in the first half of this fiscal year? And looking at the sanctions that you have or you're expecting from NHB, what is the impact on spreads and margins that you foresee in the second half of this fiscal year? Sushil, what I'm trying to understand is today there are two schools of thought. One which says that it's okay if there is some spread and margin compression, but we want to focus more on growth.
While another school of thought is, I mean, we kind of want to maintain the current spreads and margins that we have. How are we thinking about these two things?
Abhijit Tibrewal, in Q1 we have borrowed around INR 400 crore. Q2 we have not borrowed any money from NHB. But recently we have got sanction of around INR 900 crore from NHB for the next fiscal year. As a CEO, maybe we want to attain both. If we can achieve growth also and we can maintain our spread. I think we are achieving the growth in our narrative trajectory, 22%-25%. We are already at 24%. At the same time we are able to maintain our spread and profitability. As in the ALCO and board meetings, we continuously review what impact we will have. Because there are three kind of liability risk in asset liability risk.
One is tenure wise, one is fixed and floating wise, one is earning at risk wise. We forecasted that next three to six months how much price impact we'll get on our borrowing. In accordance with that, we have allowed that from fifth of October we are raising our funding rate by 30 basis points. I think next till thirty-first December, whatever things we were able to envisage as a board and as a management team on the borrowing side, we have taken into account and accordingly price the liability or price the assets on the variable side.
This is very, very useful. That's all from my side. Thank you, Sushil, and wish you and your team a very happy Diwali.
Thank you very much. Our next question is from the line of Karthik Chellappa from Buena Vista Fund Management. Please go ahead.
Yeah, thank you very much for the opportunity. Good afternoon, Sushil and Ghanshyam. I have three questions. The first one is, what would be your labor attrition rate in the second quarter? Across the industry it seems that the attrition rate, especially at the field staff level, has remained high. You talked about a few measures, as far as, let's say, tying up with IIM Ahmedabad, et cetera. But at the field staff level, what initiatives are you planning to improve this attrition level? That's my first question.
Karthik, thankfully, Anshul joined us around six months back. As an organization, we have kept one of the key operating metrics which needs to be tracked is employee attrition. We took the target that can we reduce it by 50%. I am happy to announce that Q2, we are able to significantly reduce our attrition rate in comparison to Q1 this year and half year last year. The measures which we have taken at the ground level in terms of trainings, in terms of incentive level changes. Now we are focusing and we are creating a vision of contribute rather than performance. Everybody should contribute, and we are going for an incremental performance increment. Earlier maybe we used to see everybody on a bonus scale.
We are seeing if somebody is 50, can we move him to 75 level? If somebody is 75, can we move him to 100 level? If somebody is doing 100, can we move to 125 level? I think that has helped as an organization, though we are not at the range where we wanted to be, but we are happy with the success we got in last 4months-5 months after our effort on this particular piece.
Got it. Just one clarification, Sushilji. You said the second quarter, the labor attrition rate is down significantly. Could you give us some number or a range by how much is it down?
Around 20% down.
Okay. Around 20%. Okay. The second question, Sushilji, is as far as your payment medium mix is concerned, have you noticed any notable change, let's say, away from mediums like NACH to either wallets or using UPI in the last couple of quarters?
No. Karthik, when we give the loan, we ensure that it will be repayment through NACH only. Any customer which bounces, then we give the customer option either to pay through UPI, wallet, check, cash, online, website, different options. Over 100% incremental lending is supported by NACH funding, NACH as a repayment option.
Even when it bounces, you have not noticed any change in payment through UPI, is it? Like when your bounce rates go up also people opt for UPI immediately. You have not noticed any such pattern yet?
Because, say, anyway OnePlus number is very less. I think, wallet to UPI, yes, there is a change, but overall number is so less, so that is not significant to talk about.
Okay, got it. My last question, Sushilji, is basically on the economics of the sector itself. What we noticed even for Aavas as well as other industry participants is in the last few quarters the OpEx growth has been higher than the AUM growth. In your case, of course, there are very specific initiatives, whether in IT platforms or training, et cetera, but this is a trend that we generally observe. Now, given where spreads are and given the interest rate outlook, would it be fair to say that going forward the PPOP growth will to some extent lag the AUM growth? And if not, what are the other levers that you have to actually ensure that that growth is more or less in sync?
Karthik, I'm in sync with what you are saying, but I want to throw some number here. Q1 to Q2 income has increased 15%, OpEx has increased 12%, and profit has increased around 20%. The Jaws chart or increase in income was usually increase in OpEx. We are already in that trajectory that thing is coming up. Once we have seen cumulative number as well, I think it is looking like this. At Aavas, we are confident of this. Though we are investing in people, process, and technology, and with a huge amount, but still, I think Q2 is showing that we are already in that what you can say Jaws chart favorable for the Aavas.
Got it. That's all from my side. Thank you very much, Sushil and Ghanshyam, and wish you and the team a very, very happy Diwali, and all the best for the remaining quarters.
Thank you, Karthik. Wish you so.
Thank you very much. Our next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.
Yeah. Good afternoon, Sushil and Ghanshyam. Firstly, with respect to the repricing, so as we clearly see in terms of almost INR 7,500 odd crores, INR 7,200 crores is a floating rate loan and INR 5,300 on a fixed side. When we increase this lending rates by say 75 basis points and another 50 odd basis points, when do we see this repricing getting reflected in the INR 7,200 crores book?
Look, Kunal,
Yes. It will be a monthly reset or maybe a quarterly one.
As we announced, we publish the date of effective also, like this 50 which is going to get announced fifth October is effective, so it will have an impact on fifth October itself on a floating loan book. As for a fixed rate book, we have a contractual agreement for each and every borrower. Every three years, the fixed rate contract also get repriced. Like, in the month of October, around 1,300 fixed rate loans which was sanctioned three years back got repriced. So every year, certain fixed rate book get repriced.
It would be fair to say that this INR 7,200-odd crore of disbursements which have been done in this quarter or maybe the last quarter. Besides that, the entire book would get repriced by 125 basis points from fifth of October. Cumulatively.
No, no. 5th October, we have announced 70, 50-
50. Yeah. Earlier 75. Yeah.
75 basis points we announced earlier. 25 basis points and then 50 basis points, those go effective those days.
When we are seeing this, maybe this, behavior of this 7,200 because we are relatively on a higher side with respect to passing on the rates compared to that of, other affordable housing finance companies. Any change in terms of, the BT outs or something, maybe when we did the 75 basis points? Because many players have not yet increased it.
Kunal, on that side also there is a positive news. Our BT out has come down. Earlier it was around 0.6% per month, which has reduced to now 0.5%. Point six percent counts as a 7%-8% on a yearly basis. Now, the current run rate is going 0.5% or below. That's significant for the next 12 months, if everything will be in control, it's less than 6%. There also we are on a positive side.
Sure. Lastly, again, touching upon maybe in terms of the growth. I think when we look at it in terms of the traction, it still seems to lag with the industry peers. Okay. There is huge amount of investment which is happening. When do we actually see the productivity improvement as well? Okay. Maybe given the kind of branch network, employee network that we have, in fact, we should get back to in terms of the disbursements per branch, we could see a significant improvement. Yeah.
Kunal, as a company, we are okay with growth of 20%-25%. We are already on 24%+ trajectory. I don't think so, there is a challenge on that side. I don't see, from industry peers also. When we were at the size of industry peers, our growth was more than 40% when we were at that, AUM size. At the current AUM size, we are okay with 22%-25% growth consistently year-on-year with maintaining asset quality and maintaining operating metrics.
Okay. Sure. One last question was with respect to securitization. We have adequate liquidity, but, maybe, I think in terms of the securitization momentum compared to that of, maybe, the previous years, it seems to be on a higher side. Would we see this, maybe in the second half? Should we assume that the run rate could be relatively lower if I have to look at on a full year basis? Is it like?
So, so, uh-
A similar run rate might continue?
Ghanshyamji will reply. As a company, as a organization, I think overall ratio has not changed. Overall, 20% of book is a tied as a organization, and I think we are into that trajectory as a company as of course, H1 FY 2023 also. I don't think so there is a challenge or big change in strategy from the company on that side.
Okay.
Yeah, yeah. Now
That cannot go to 23, 25 also, yeah.
Yeah. Now Sushil has covered, I think, very well. What last year we've done a full year basis INR 780 crore. This year, whatever we see growth in the AUM, similar growth you can see in assignment also. Nothing, any strategy changed. It's only one quarter, two quarter here and there that becomes because of what opportunity, what price we get from banks and institutions, and then we accordingly execute the deal.
Okay, got it. Yeah. Thank you. Thanks and all the best, and wish you a very happy Diwali.
Thanks.
Thank you very much. Our next question is from the line of Shreepal Doshi from Equirus. Please go ahead.
Hello, sir. Good afternoon, and thank you for giving me the opportunity. My question was firstly on the yield side. We've already taken three rate hikes. That is, I think 25 basis point was in June, 50 was in August, and recently we took 60. Like, we'll be taking 60 basis point. But just wanted to understand what are the rates that would be prevailing for HL and LAP. You know, if you could give some range there, and what would be the differential between the two?
Our HL pricing is around 11.7%-12%, and non-HL rates are from 14%-14.25%. Average new business rate.
Okay. These are the latest ones, right?
Yeah, new business.
Okay, got it. With respect to this asset held for sale, that line item that we had in the balance sheet, so I guess in the annual report that gross number was INR 30 crore. Now, like, I think you highlighted to one of the participants that you have already incorporated to the stage three number, this asset held for sale. So that number has come down significantly or is it like?
Yeah. 30 has come down to 13.
Forty-seven.
As of February month it was 29.21%, and after provisioning it was 24%. Now this is 19% after provisioning.
INR 19 crore we have.
We have not many cases EMD received. I think we will see a significant reduction this quarter also in this number. Hopefully, my feel by year end this will be mostly 25% of the opening pool. The rest everything will be disposed of.
Okay. Sir, you said that this number has been added to stage three?
No. New from first of April.
Okay. Gotcha.
Whatever AFS is doing, we are not marking that as AFS. Only opening pool will come down and new AFS is as H3.
Okay. Got it. Sir, just wanted to understand the, like, the logic behind this, that why do we have it as a separate heading in the balance sheet? Just wanted to understand the logic behind this.
It's nothing as anything big any aspect. It's a normal accounting policy which we adopted six year back. Now new regime we become like as Sushil mentioned in early remarks, we become more prudent, more conservative accounting policy. We are keeping any AFS new assets as NPA. Under old one is, as Sushil mentioned, we are accelerating our disposal of those assets from today to 6-9 months timeframe it will be get disposed of.
Got it. One last question. What is the employee base number that we have for the 2Q end? And just another question in relation to that is that we have something called manpower contracts, which is part of the other OpEx, if I'm right. Why do we have contractual employees when our entire thought process is to sort of, you know, source internally and also collect internally?
There are two kinds of people with their own contract. One is the admin office boys.
Uh-huh.
Telecall and stuff. Second, in the sales side also.
Okay. Got it. The employee base number, if you can share.
Yeah. 5,702.
Okay, sir. Thank you so much, and happy Diwali to the entire team, and good luck for the next quarter, sir.
Okay, thank you.
Thank you. Our next question is from the line of Shweta Daptardar from Elara Capital. Please go ahead.
Thank you, sir, for the opportunity. A couple of questions. If I look at disbursement trends, the first half itself you have put up INR 11.5 billion overall kind of number. I remember you mentioning last time second half tends to be seasonally stronger. Do you see, you know, the overall growth metrics favor climbing up? Also, I mean, although you've mentioned the growth target to be in the range of 20%-25%, how do you view it in terms of leverage as well? My first question.
Shweta, over last year, we disbursed INR 3,600 crore and this year, in the first half itself, we have already disbursed around INR 2,300 crore. Mostly, in a normal year, 40%-45% is first half and another 55%-60% in second half. If you go by the trajectory, the numbers will be. You can calculate. I think it's significantly higher than the last year's numbers. This kind of growth is appropriate for our 20%-25% kind of AUM growth journey.
Sure, sir. Also if I look at your provision, if you could throw some color on how to normalize in the first phase, you know, the run rate of provisions on quarterly basis, because you know, the number is looking lower since last quarter now. How do you see this going forward?
Shweta, you're asking for minus number?
Yes, I'm talking about provisions.
Uh, we-
Overall provisions.
This provision you are talking of that thing?
the P&L provisions.
I think you didn't give complete question, but let me. I will try to elaborate. I think, quarter one to quarter two, risk provisions, yes, overall provisions are up because of in early years, you know, last year we've seen a COVID-19 period, certain extra provision was built up, and those assets now has a normal life like COVID-19 one has was, in September 2020 was a large date when the normal cycle was started. Those pool are now shown a maturity over the last two years. After that, now those provisions are going in a normal cycle, basically. We as such, NPAs around, gross NPA around 1% and one-day past due is already less than 5%.
We have adequately created our provisions, and we don't see any much change in our provisioning trend.
Fair point, sir. One last question, sir. In one of the previous participant replies, you mentioned that out of the INR 5,300-odd crore fixed side, INR 1,300 crore is something which is on the verge of reset for this year.
Shweta, we are not getting your questions. I think it is not audible. Either you rejoin the call then again come in the queue. We are not getting your questions properly.
Shweta, if you'd like to, can you switch to your handset if you're using a headset or any other mode? We can hear you, but it's not.
Sure. Is it better now?
Sir, do you think you can hear her better now?
Yeah, it is better.
Okay. My question was on the INR 5,300 crore fixed side book. Is out of that INR 1,300 crore, which is, you know, getting reset this year? You mentioned that every three years your fixed book gets repriced.
Yeah, you're right. Whatever contract, I think we disburse three years back. Let's say I'll give you an example. If in the month of October 2022, the loan which is sanctioned at a fixed rate in October 2020, that book will come to reset in October 2022. On, so forth, it will continue.
This year, that amount is INR 1,300 odd crore?
I think simply you can't take one side. If 25% is better to assume, because in those years disbursement naturally be lower than what is there. 25% you can take fair side.
Understood, sir. Thank you so much.
Okay, bye. Thank you.
Thank you. Our next question is from the line of Rahul Maheshwary from Ambit Asset Management. Please go ahead.
Yeah. Good evening. Thank you for the question. Just two questions. Sushil, can you give some color on the OpEx side, the kind of growth that is taking place? Means when can we expect the same to start building in terms of the same growth for employee expense and the other OpEx? Where are the parts where the such kind of high growth of the investment is taking place? Second question on the MSME license, when can we expect? Can you throw some color on that part also?
Rahul, NBFC license is pending with RBI and we can't comment when it is going to come. On that part, we can't do any commenting. On the first part, on the OpEx side, we have already mentioned that this quarter itself again, the revenue increase versus OpEx increase is less. We are already in the positive jaws chart. We have already told that this year because of high investment in technology and some of the retention practices and leadership development, OpEx might be high. Since we are having, we are maintaining high spread, we thought we can invest.
Once all these things will be implemented in 6-9 months, you will see, again, the downward trend of OpEx to AUM and all those ratio. This quarter itself, we got positive jaws on that benefit number.
Just to break this, in case of percentage of mix where it's going in OpEx, compared to volume growth, technology spend and the branch expansion, can you break it down in terms of where the quality of investments or OpEx are going for Aavas?
Rahul, branch expansion is a normal phenomena. Every year we open 35 branches. Normally, we start building up from Q2 and the admin team starts giving delivery of its completed branches from Q3 and Q4. But that is a normal phenomena.
Mm-hmm.
Technology side, this is the very large investment after 7 years-8 years in the company. The range is approx INR 100 crore. We need to see what kind of amount we will be able to capitalize and what, because now most of the things are on cloud and annual subscription basis. So mostly will be there. At the same time, we are also building the capability. Now we are at almost INR 400-500 crore per month revenue and giving that number for next 3 years, visibility is already there in the system. We have successfully done the transition of business also. Business head, Ram left in June and Siddharth joined and entire process was smooth and business numbers are intact.
I think all these three aspects are there, but mostly it will be technology and leadership development side.
What is the attrition rate at the junior level, people who are at the branches which have just come after the transition of being into contract labor? Can you give specific range? What are the attrition levels?
Rahul Maheshwary, exact number I don't have at this point of time, but we'll get back to you on this number. Yesterday in the board, we have seen one presentation where our attrition rate has significantly dropped this quarter around 20% on that side.
Okay. Just a second question, which was asked on the NBFC license. Everything from our side has been represented to the RBI? Only the, it's where the gap is there means in terms of, the-
Now all those things, because everything is with the regulator, we cannot disclose at this point of time. Anything come from their side, we will either publish at the BSE, NSE, and everybody.
Cool. Thank you so much, and have a happy Diwali to the entire team.
Thank you. Our next question is from the line of Piran Engineer from CLSA. Please go ahead.
Yeah. Hi, good afternoon, sir. Congrats on the quarter. Just a couple of questions. We have loan yield between 4Q and 2Q is up only 20 basis points. 12.65%-12.85%
We've increased our rates by 75 basis points and, you know, 60-70% of our loan book is floating. What explains this? Yeah. Like we started 12.65, we now have a 12.85%, roughly 55% floating rates, so they immediately get passed on. If we take 75 basis points, as a 54, around 55 basis points floating rate, roughly increase to be, let's say, 37, 30 basis points. But 17 basis points obviously got lost in certain assets we put on retention, like assets comes for balance transfer. We found that these assets is worthwhile to retain these assets so we offer them competitive price. That also sometimes have to give us some reduction in overall AUM yield.
On that account, we lost around 10 or 12 basis point. Our new asset generation is gradually picking up and changing AUM yield basically. That also have a some basis point hit in the overall basis. 20 basis point is the increase in the AUM on account of increase and roughly 17 basis point we lost on account of the two factor.
Okay. Got it. Sir, 0.5% per month is our BT out. This is what actually happens. What would be like the BT out applications and how much are you able to, let's say, resolve by offering a lower rate?
No. Every time there's in BT retention, we always there might not be scenario where we need to reduce the rate. Sometimes customer comes for top up, sometimes customer come for some other problems also. Normally around 1-1.25% kind of applications comes in every month. We have a very strong team and DNA at the branch level, culture level, branch head level, and everybody's care is linked to that customer. Good customer should always be with us. Out of 1.25%, around 0.25%-0.3% customers where we want them to go because they will be either in continuous delinquency or their CIBIL score has already reduced between 300-600. Another half percent, maybe 60%, 14%.
60% we may need to offer the rate. 14% we need to offer either grievance reduction or maybe if they want top up, we provide that.
Got it. Just one very basic question. If I take a fixed rate loan or a floating rate loan at one point in time, is the rate the same?
No, rate is different. On a fixed rate product, roughly 200-300 basis points higher rate.
Achha. Irrespective of the cycle.
Yeah. Irrespective of cycle, yeah.
Okay. To aapne jo bola 11.7% home loan rate starting, that is for floating. If I take fixed, it will be around 13.5%-14%.
On variable side it is around 10%. On fixed side it is around 12%.
12%+.
For home loan.
Ha.
Non-home loan, it goes above 14 to 17, 18%.
Okay. Floating rate home loan starts at around 10%.
Floating rate starts at around 9%.
At 9. Okay.
Yeah.
Got it. Theek hai, sir.
10%.
Sorry?
Yeah. It will start at 9%, but it goes up to let's say at 10.5 or 11%. Average it works out around 10.25% for retail home loan floating book.
Okay. Aapne jo 11.7%-12% bola tha, that is for fixed rate. Is it?
Fixed rate. Nahi, nahi. Usme aap usi ne bola tha ki home loan ka book rate abhi hum quarter two mein 11.9% ke aas pass hamara rate aa raha hai. Woh total fixed aur floating dono mila kar ke hai. Average.
Okay. Outstanding. Okay. Got it. Theek hai, sir. That's all from my end. I wish you all.
Thank you. Our next question is from the line of Mona Khetan from Dolat Capital. Please go ahead.
Yeah. Hi, sir. Good evening. I just have one question. If you could share the break-up of your loan book by ticket size. What share of loans are sub INR 10 lakhs, share of loans between INR 10 lakh-INR 25 lakh ticket size and above INR 25 lakh ticket size?
One sec. Just give one second.
Sure.
I think around 72% customers are less than INR 15 lakhs. I give you the exact number in terms of number of customers. For more than INR 25 lakh and above, I think around 7%-8% customers for us.
Okay. Sure. Just to follow up on the previous question on fixed versus floating. Is it fair to say that for a certain customer profile, if one has to choose between fixed and floating, the differential on average would be 200-300 basis?
Yeah.
At any point of the cycle.
Yes. Yes.
Sure. Thank you. That's all from my side, and all the best.
This is a, let's say, as of now, adopted practice which we adopted. If interest scenario goes haywire, this policy is required change. ALCO can matter can be deliberated at ALCO level. The board can approve change of policy also.
Sure, sure. Thank you.
If the market dramatically change in a rising interest rate scenario, so obviously we are also bound to change our policy around that.
Sure. Got it. Thank you.
Thank you very much. Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to the management for closing comments.
Well. Thank you all for attending the call. I wish you very happy Diwali and festivity, and hope everybody keeps safety and health as a priority. For any further information, we request you to get in touch with Ghanshyam Gupta, our Investor Relations Officer, or SGA or Investor Relations Advisor. They would be happy to help you. Thank you all. Thank you for.
Thank you, everyone, and wish you happy Diwali.
Thank you very much, members of the management team. Ladies and gentlemen, on behalf of Aavas Financiers Limited, we conclude this conference call. Thank you all for joining us, and you may now disconnect your lines.