Ladies and gentlemen, good day and welcome to the Q3FY2023 earnings conference call of Aditya Birla Capital Limited. 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 the 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 Ms. Vishakha Mulye, CEO, Aditya Birla Capital. Thank you, and over to you, ma'am.
Thank you. Good evening, everyone, welcome to the earnings call of Aditya Birla Capital for Q3FY 2023. Joining me today are my senior members of the team, Bala, Rakesh, Tushar, Ankar, Kamlesh, Mayank, Pinky, Vijay, Ramesh, and Sanchita. Together, we will present the business performance and financial results and take any questions that you might have. I'd like to welcome and introduce two senior colleagues, Sanchita Mustauphy, Chief Risk Officer Designate, and Ramesh Narayanaswamy, Chief Technology Officer, who joined us recently. Our current Chief Compliance and Risk Officer, Mr. Dhananjay, will be superannuating on March 31st, 2023. Sanchita will work closely with Dhananjay and then take over as the Chief Risk Officer from April 1st, 2023. She joined us from Tata Capital and has more than 27 years of experience in risk management, including credit and market and liquidity risk.
Ramesh will be leading technology transformation across Aditya Birla Capital and will strategize, design, and deliver a One Technology organization with a key focus on building capabilities across core technology, digital, processes automation, and data. He has about 25 years of experience in technology domain across financial services, e-commerce, and logistic and payments product development. He has experience working in various fintechs and large organizations such as Citi, Standard Chartered Bank, among others. Let me now begin by giving a brief perspective on macroeconomic environment. We continue to see a strong demand and improvement in industrial and service activity in the Indian economy. This is reflected in the lead indicators. Service PMI increased to 58.5. Manufacturing PMI increased to 57.8 in December 2022. GST collection crossed INR 1.5 lakh crores in January 2023.
We are currently experiencing volatility in the global economy and financial markets, geopolitical tensions, and high inflation interest and exchange rates. Concerns remain due to these headwinds, the Indian economy is expected to perform well in the current fiscal year, driven by sustained domestic demand. At Aditya Birla Capital, we follow One ABC One P&L approach while continuing to focus on quality and profitable growth in order to maximize our share of opportunities in the financial service space. We have a strong presence across protecting, investing, financing, and advising that is key for our offerings. We have adopted a customer-centric approach with an aim to provide holistic solutions to our customers and their ecosystem to suit their life stage and their business needs. Our strong parentage and extended ABG and ABCL ecosystem provide us multiple opportunities to accelerate our growth.
We follow an omni-channel approach towards distribution. We believe in giving complete flexibility to our customers to choose the channel through which they wish to interact with us. Our endeavor is to provide a one experience across channels to enhance seamless delivery of our products. Based on the fast and dynamically evolving digital landscape and the consumer needs, we have embarked on all-inclusive platform strategy for customers, businesses, and our channel partners to bring the power of One ABC to them. I will cover our value proposition for each of these stakeholders in detail. First, customers. Our customer franchise continues to grow well. In the last quarter, we acquired 1.4 million customers, taking our active customer base to about 43 million as of end December. We added 62 branches during the quarter, and our total branch count now stands at 1,220.
Our branch expansion is targeted at driving penetration into tier three and tier four towns. Our board today approved the formation of wholly owned subsidiary to develop an omni-channel B2C platform. The purpose of this platform will be to serve our existing customer and acquire new customers and act as a one-stop solution to deliver FIFA to all our customers. This platform will have various touchpoints such as app, web, branch, and virtual engagement. As a first step, our customers at more than 400 branches across 113 locations will receive assistance to achieve their financial goals. We will also be integrating payment stack and value-added services through this platform, which will enhance customer experience and brand recall and enable us to become a full-stack financial service provider. Second, in businesses.
We had mentioned in our previous quarter's earning call that we would be launching a comprehensive B2B platform for our MSME ecosystem. We are happy to announce that we have launched the platform in a closed user group, and it will go live in the next 20- 30 days. It provides an SME ecosystem with lending and value-added services to manage and grow their businesses. The platform will enable the cash flow link financing by using alternate data such as GST returns and transaction data in addition to the traditional data sources to improve the turnaround time and customer experience. It will also offer deeper solutions and value-added services to cover the full ecosystem of all, which is promoters, owners, directors, and authorized signatories of our MSME customers. Third, channel partners.
We have more than two lakh channel partners, and we deeply value the vital role that they play in distributing our products. The next nine months, we will also be rolling out a B2B digital integrated platform for our channel partners, which will provide them opportunity to grow their business volumes and enable them to fulfill the lifecycle needs of our customers. It will help our channel partners to enhance their customer servicing and track status of their application, business volumes and payouts. It will help us to increase our product penetration among existing customers and also provide us with an opportunity to expand our customer base. The B2C platform that we are working on will build an interoperability stack which will be leveraged by both B2B and B2C platforms to provide deeper solutions to our customers.
Digital-first approach is at the core of our business strategy for product innovation, direct acquisition, seamless onboarding, and best-in-class service delivery. We leverage data and analytics to maximize wallet share through cross-sell and up-sell. 79% of our digital lending business happens using machine learning scorecard. In life insurance, cross-sell and up-sell now contributes 35% of our individual first year premium. In our health insurance business, 24% of our retail fresh premium originates from cross-sell. About 78% of our life insurance renewals happen digitally, and 88% of our life insurance customer requests are serviced digitally. In our health insurance business, all our distributors are now onboarded digitally, and 85% of our business is delivered by auto underwriting. We will continue to ensure that our tech architecture is robust, flexible, scalable, and resilient.
We will build and nurture a culture which is agile and uses adaptive and collaborative approach to build digital products and journeys for our customers. Going forward, we will continue to follow our One ABC, One PNL approach to accelerate our growth trajectory and continue to build scale and drive market share in each of our businesses. We will leverage our digital capabilities, innovative products, and our one team approach to drive cross-sell and deliver superior transaction experience for our customers. I will hand over to Vijay to give us a summary of the results for Q3 FY 2023.
Thank you, Vishakha. Good evening, everyone. Our consolidated profit after tax for the company grew by 27% year-on-year to INR 530 crore in Q3 of FY23. This excludes gains from stake sale in ABSL AMC in Q3 of FY22 and fair value gain related to investment in Aditya Birla Health Insurance Company in Q3 of FY23. The consolidated revenue for the same period grew by 31% year-on-year to INR 7,699 crore. In our NBFC business, we continued with a strong momentum of disbursements and granularization of our book. Disbursement for the quarter grew by 98% year-on-year to INR 13,099 crore. This helps the loan book to grow 47% year-on-year and 12% sequentially to INR 72,994 crore.
Loans to retail MSME, SME, and SNI segments now constitute 66% of our portfolio. NIM increased by 41 basis points sequentially and 77 basis points year-on-year to 7% in Q3 of FY 2023. We continue to maintain strong focus on asset quality, with gross stage two and three assets reducing by 156 basis points sequentially and 491 basis points year-on-year to 6.49% at December end. The provision coverage ratio on stage three assets was 49.3% at December end. In our housing finance business, disbursements increased by 12% sequentially and 25% year-on-year to INR 1,387 crore during Q3 of FY 2023. The loan portfolio grew by 3% sequentially and 11% year-on-year to INR 12,874 crore.
NIM of the housing finance business increased by 22 basis points sequentially and 106 basis points year-on-year to 5.35% in Q3 of FY23. Coming to our AMC business, the average AUM was INR 2,81,717 crore, of which equity AUM was about 43% in the current quarter. We continued our focus on building retail customer franchise with addition of about 0.5 million portfolios in the nine months of FY23. The total active portfolios now stand at 8.0 million at December end. With our continued focus of growing passive and alternative asset segment, passive AUM grew by 28% sequentially and was about INR 21,620 crore at the end of December.
The growth momentum in our life insurance business continued with 25% year-on-year growth in retail first year premium, which was significantly higher than the industry growth in the same period. Group business premium grew by 41% year-on-year in nine months of FY2023. Renewal premium grew 14% year-on-year to reach INR 4,870 crore in nine months of FY2023. Our VNB margin was 15.5% in the nine months of FY2023, and we are well on track to deliver over 18% net VNB margin in this financial year. In our health insurance business, our unique and differentiated Health First model helps us to deliver industry-leading growth of over 59% year-on-year in nine months of FY2023.
ABHI expanded its market share by 220 basis points year-on-year to 10.4% amongst standalone health insurers in nine months of FY2023. With that, I'll now hand over the call to my colleague, Rakesh, to take us through NBFC business performance in detail.
Hi. Thanks, Vijay. Thanks, Vishakha. Good evening, everyone. In our NBFC business, we saw strong momentum across all segments, contributing to a overall loan book growth of 12% quarter-on-quarter and 47% year-on-year, taking our loan book to nearly INR 73,000 crore in Q3 . Our retail and SME segment book grew 59% year-on-year. We grew faster than competition and at a double the rate which we had guided for overall loan book growth for FY23. Referring to page 16 of the presentation, let me call out a few key highlights. We added 1.35 million customers this quarter, taking our active customer base to 5.9 million, doubling the customer base from 2.3 million last year.
In terms of absolute loan book growth, we added INR 8,020 crore of loan book growth in Q3, which is more than what we added in entire of H2 of last financial year. Personal and consumer loans contributed significantly to this growth, comprising over 40% of this net addition in Q3, making it the highest contributor across all product segments. 30% of the incremental book has come through digital channels. We continue to expand our physical footprint and added 51 new branches in Q3, taking our footprint to 272 as of December 2022, and we have a target of 325 branches by March 2023 of this year. Our retail and SME segment mix is at 66%, which is ahead of the guidance provided for FY24 in Q3 of FY21, when we had given this guidance.
As a result of this continued improvement in segment mix, we have achieved the highest ever quarterly NIM of 7%, which is 77 basis points higher than previous year and 41 basis points ahead of previous quarter. This has led to our NI growing by 50% year-on-year and 20% quarter-on-quarter. Q3 was also a strong quarter in terms of profit delivery, with a profit before tax at an all-time high of INR 540 crores, registering growth of 40% growth year-on-year and 11% quarter-on-quarter. The year till date PAT grew by 36% year-on-year. The ROE for the quarter was 16.2%, which expanded by 351 basis points year-on-year and 153 basis points quarter-on-quarter.
On page 18, we have shared our overall disbursements for the quarter. We disbursed INR 13,099 crores in Q3 , which is by far the highest for a quarter, and we disbursed twice of what we did in Q3 of last year. While 73% of disbursement was to the retail and SME segment, all product verticals contributed to this momentum. Let me share further color on the disbursement. We disbursed INR 4,649 crores in the personal and consumer loan segment. This was up 4.7x compared to last year, taking the segment book to INR 12,812 crores. Here we focus largely on salaried professionals in the emerging income segment. 79% of this segment comprises of personal loans, which is nearly 56% have been sourced digitally.
The balance, 21%, comprise of consumer loans, which we finance various end users such as lifestyle, healthcare, and education. Nearly 36% growth in our digital portfolio was driven by personal loans cross-sell compared to 32% last year. Last quarter we did 36% of cross-sell compared to 32% in Q2 . Both unsecured and secured business loans vertical recorded a very strong growth as well. In unsecured business loan segment, we registered a loan book growth of 73% year-on-year, taking the segment loan book to INR 7,254 crores. In the secured business loan segment, which majorly comprises of loan against property and working capital solutions to self-employed and MSMEs, we disbursed a total of INR 3,894 crores, an increase of 29% year-on-year.
As a result, the segment book stood at INR 29,186 crore in Q3, clocking a 30% growth year-on-year. I had mentioned in the last quarter earning call that the next leg of growth in business loans vertical is going to be driven by a unique and differentiate unified platform we are building for MSME customers to enable digital journeys for our products as well as value-added services for MSMEs to transact seamlessly. Vishakha covered it in detail, and we are looking at a quarter four launch for the platform. Now providing some details on asset quality on page 24. We have seen consistent improvement over last year with stage two plus stage three book coming down from 11.4% in Q3 of last year to 6.49% in Q3 of this financial year.
This has been driven by a strong pullback in stage two book of INR 1,279 crore. Owing to superior collection and collection efficiency across product segments and better resolution, we have reduced our stage two book. Gross stage three book has reduced to 3.1% compared to 3.9% in Q3 of last year. We continue to maintain our stage three provision cover at nearly 50%. Our overall collection efficiency is at 99.6%, consistently better than pre-COVID levels. 99.8% of the restructured book is already banked as on 31st December 2022. Collection efficiency on the restructured pool is healthier than the last quarter.
As part of the regular process, we reviewed our ECL policy, due to which there is a one times higher ECL provisioning during the quarter. Majority of the ECL cost increase for the quarter has come from stage one provisioning. To conclude and reiterate the Q3 performance, not only did we have a strong quarter in terms of growth, but with progressive increase in retail and SME portfolio mix, we have tracked well ahead of our FY 2024 guidance on all parameters. We expect this strong growth momentum to continue for the rest of this financial year. With this, now I hand it over to Pankaj for housing update.
Thank you, Rakesh. Good evening, everyone. I will cover the performance of ABHFL. In Q3, we experienced continued momentum in disbursement and book growth. Robust financial performance and focus on portfolio quality resulted in consistent improvement across all return metrics. Some of the key highlights are disbursements of INR 1,387 crores in Q3, which is our highest disbursement in the last 16 quarters, an increase of 12% QOQ and 25% YoY. Loan book as of Q3 is INR 12,874 crores, an increase of 3% sequentially and 11% YoY. We have now witnessed growth for the last two consecutive quarters. This is encouraging, especially considering muted growth in the period FY 2020 to FY 2022. More importantly, the quality of origination continues to be very healthy.
Later in the conversation, I will share with you details on the parameters of quality of origination. NIM has increased to 5.35%, 22 basis points sequentially and 106 basis points growth year-over-year. Profit before tax for Q3 is INR 78 crore, an increase of 4% sequentially and 16% year-over-year. Portfolio health has improved, where the gross stage three loans have reduced to 3.5% at the end of December 2022 from 3.60% in September 2022. Stage two plus stage three loans have reduced by 60 basis points quarter-over-quarter and 158 basis points year-over-year. You can see that we are improving on every front, whether it is book growth, asset quality, or core profitability. Let me take you through each one of these pillars in more detail. First pillar, growth.
We are leveraging depth and width of our distribution network and enhancing digitalization throughout the customer life cycle. As I had mentioned in the previous quarter, we have launched a digital index that helps us to measure our digital penetration to provide a seamless onboarding experience to customers. I am happy to inform you that the digital index has improved significantly from 19% in April 2022 to 37% in December 2022. We are very confident to exit at a 50% level by March 2023. We recorded accelerated growth in disbursements across both value and growth segments for the quarter. You can refer to page 31 of the investor presentation for the detailed segmental contribution. We continue to focus on granularity with average portfolio ticket size of 23 lakhs.
We opened seven branches in Q3, and all these branches have been opened in tier two and tier three cities. We have 127 branches across 20 states and UTs with a truly pan-India presence and a well-diversified portfolio. The customer base is about 55,000 and has grown by 5% QOQ and 35% YoY. We continue to build capacity and enhance productivity through investments in talent, technology and analytics. The cost to income ratio is 41% as of Q3 FY 2023. Pillar two, portfolio quality. The moratorium on all the COVID restructured cases has ended. All the numbers which you are seeing on page 33 of the investor presentation are including the performance of restructured cases and 100% of the cases are now presented for collections.
We have incorporated the RBI circular dated 12th November 2021 on NPA recognition from September 22nd onwards. Our gross stage three has reduced from 3.6 in September to 3.5%. We are maintaining stage three PCR of 33% and additionally carrying a management overlay of INR 56,000. With robust debt service framework and pre-delinquency management, the collection efficiency is consistently at 99%+. We continue to emphasize on quality of origination. The salaried and self-employed professional segment now contributes 55% of disbursements in Q3. 94%+ disbursements in Q3 are towards customers with 700+ CIBIL or due to credit. You can see the detailed breakup of the same on page 32 of the investor presentation. I'll move to the third pillar, which is robust financial performance and liquidity management.
We are ALM positive across all the buckets and 22% positive on a 12-month basis. You can refer to page 34 of the presentation for more details. We are rated AAA by ICRA and India Ratings and continue to focus on diversified long-term borrowings. The contribution of NHB borrowing has increased to 17% in Q3 from 8% in Q3 FY22. We have a 25% liability book and a fixed rate, which helps us to mitigate the cost and increasing rate cycles. We are confident of maintaining competitive borrowing mix considering our growth trajectory and improving asset quality. As you can see on page 35 of the presentation, we have been able to sustain NIM at 5.35%.
Going forward, however, I think our NIM will be range bound between 4.7%-4.9% considering the lagged impact in borrowing cost and competitive intensity. The PPOP is highest ever at INR 104 crores in Q3 FY23, with a growth of 8% QoQ and 27% YoY. The PAT for Q3 FY23 is INR 61 crores, an increase of 3% QoQ and 15% YoY. The ROA is 1.9% for the quarter and ROE is at 13.7%. To summarize, we continue to invest in long-term growth while maintaining robust profitability and a quality portfolio. With that, I now hand over to Bala, MD and CEO of our asset management company.
Thank you, Pankaj. As I presented in the analyst call of AMC for a few weeks back, and just give a quick rundown on the performance of AMC for the quarter ending December. Our overall quarterly average assets under management for the quarter ending December 2022 stood at INR 2.9 lakh crores. Our mutual fund quarterly average AUM was about INR 2.88 lakh crores, INR 2 lakh crores with a market share of about 7.9% excluding ETF. Our equity mutual fund AUM for the December 2022 was about INR 1 lakh crores with a mix of about 42.6% in the overall asset mix. We have witnessed an increase of our monthly SAP book from INR 892 crores in December 2021 to INR 942 crores as of December 2022 from around 332.6 lakh live SAP account.
Around INR 2.3 lakh new SAP registered in December 2022 quarter. Customer acquisition remains an integral part of our strategy. We added close to 8 lakh new folios in Q3 of FY 2023. This is overall folios for about 8.1 million. Coming to alternate business, which has been one of the focus areas for us, build alternate business from overall growth point of view as well as from profitability point of view. Our passive product offering has grown four times to INR 21,690 crores as of December 2022. On the PMS and AIF front, we have raised the commitment of INR 350 crores in India Equity Services Fund in Q3 FY 2023 and have more products in pipeline under the AIF product offering.
On the offshore front, we have been granted approval by International Financial Services Centre, which is GIFT City, to act as a registered fund management entity and for non-retail at the GIFT City, Ahmedabad. Prospective for AIF engagement fund has also been filed with GIFT City. On the real estate front, our collaboration with the Bengal Green Works have already started making some progress by way of starting the roadshow in the overseas market, and soon we should see some outcome on this. On the digital front, we continue to enhance our cost efficiency and build volume and increasing the overall transactions through the digital platform. In fact, we have onboarded 70% new customers digitally. 80% of overall transactions are digitally done today, and 18% of the customers are onboarded and serviced by the digital platform.
Moving on to financial numbers, as Vijay mentioned, in Q3, revenue from operation is at INR 714 crores versus INR 711 crores in Q2 FY23. Operating profit before tax stood at INR 171 crores versus INR 170 crores of Q2 of last year. For nine months ending December 2022, revenue from operations is at INR 930 crores as compared to INR 916 crores for nine months ending December 2021. Operating profit before tax for nine months ending December 2022 is at INR 518 crores as compared to INR 516 crores for nine months ending December 2021. Our effort to build scale and size continues to remain a big focus area in the competitive AMC industry that we are discussing today. With this, I'll hand it over to Kamlesh Rao, MD and CEO of Aditya Birla Sun Life Insurance.
Thank you, Bala. Good evening to all of you. I'll cover the life insurance business. The consistent journey of ICICI Life growth bettering the private industry continued for the nine months ending December 2022 in both the individual as well as the group life insurance business. Individual life insurance grew at 25% against the private industry at 19%. You can see slide number 49. This business growth has come out of a combination of both increased productivity as well as the capacity that we invested last year. New products launched were key to our success with our newly launched power product under the brand name Akshay collecting INR 100 crore premium in less than a month.
We also launched an industry-first immediate income guarantee product under the Nishchay brand, which did its first 5,000 policies in 17 days flat. Our new product success, combined with our PARSA contribution of 20%, were hallmarks of the business done in Q3 of this year. The individual business has come with a very healthy product mix, as you can see in slide number 51. Traditional business at 77% and the ULIP business at an all-time low of 21% has boded well for the gross margins of the firm. This, combined with the fact that 29% of our business comes from upsell to our existing customers, has helped productivity growth in both the proprietary as well as the partnership channels.
The group life insurance for the private industry saw a growth of 16% in Q3, against which ABSLI registered a growth rate of 41%, as you can see in slide number 49. We continue gaining market share in this business. We continue maintaining our second position in the profitable group ULIP segment. Within the group business, we continue our focus on credit life business, which is growing at more than 100% over last year. Our total premium at INR 10,114 crores, as seen in slide number 47, has registered a growth rate of 25% over last year. A two year CAGR of 24% is evidence of the consistency of our business growth. This has come on the back of new business growth as well as renewal premium growing at 14%.
The digital collection composition of our annual premium is now at 78%. We see growth across all persistency buckets from 13th month to the 61st month. In 13th month now at 86% and 61st at 54%. We continue maintaining upward bias in our forward guidance for these persistency numbers. Our AUM under management, as seen in slide 53, now stand at close to INR 68,000 crores with a YOY growth of 15% and year again. A two year CAGR of 17% is demonstration of consistency of our growth. 24% of this AUM is in equity and balance 74% in debt. Investment performance seen either from a one year lens or from a five year perspective, we'll see ABSLI having done better than the respective benchmark across all three categories of equity, debt or even balance point.
Our digital adoption across various areas is demonstrated in slide number 54. 98% of new business is now sourced digitally. We continue our guidance of 60% of this sourcing being auto underwritten by year-end. 83% of all our services are now available digitally, which covers about 55% of our customer transactions. Our customer self-service ratio now stands at 88%. We continue to manage the net margin story well, as you can see in slide number 55. Last year same time, we managed net VNB of about 11.2% and closed for the year at 15% net VNB margin. We have shown a growth of 430 basis points in our net margin as compared to last year.
We now have a 15.5% net VNB margin for the first nine months of this year, which gives us the confidence of closing the year at greater than 18% net VNB margins, which once again will be ahead of our guidance provided for this year. Our approach, as seen in slide 48, will continue to be, we continue the growth trajectory of this business ahead of the industry, backed by both productivity as well as capacity. Our forward guidance is that the quality of our book will get better across the 13th and the 61st month persistency from the current levels.
Growth will come from a diversified mix of both proprietary as well as partnership channels, and we will continue to be best in class in our digital infrastructure, cutting across prospecting and onboarding in sales at the front end, underwriting at the middle end, as well as all customer touch points in service as well as claims. With this now I hand over to Mayank, who will give you details of the health insurance business.
Thank you, Kamlesh. I'm now happy to present the performance of our health insurance business. We had another strong quarter in terms of revenue growth, enabled by what I've shared in the past, a very strong foundation of a differentiated Health First model. As we have said, this part of this proposition, which is more inclusive and importantly relevant, continues to find a lot of acceptance by our consumers and intermediaries both. We continued our growth leadership this year and we are pleased to inform that with 1,459% YOY growth in the first nine months of this financial year, we are the fastest growing health insurer in the country. Well ahead of the industry growth at 20% and TAI growth rate at 26%.
The growth was powered by our retail franchise, which grew at 30% YOY. This has helped us take our TAI market share to 10.4%, a 220 basis point increase YOY. Overall, we have acquired 6 million net new customers during the nine months, taking our customers now to 25 million at 33% YOY growth. Our corporate business continues to do very well for us and has grown at a staggering 151%, powered by a huge focus on cross-sell and upsell, and also opening up new categories like corporate OPD. Our corporate business is modeled on right risk, designed to capture market opportunity targeting new age companies, and has delivered a less than 100% combined ratio. We believe we have set up one of the most profitable corporate business in the industry.
On the overall profitability front, our combined ratio has come down to 114% for the nine months, a reduction from 136% over the same period last year. The nine-month loss has reduced to INR 217 growth from INR 283 in previous. On the claims front, we saw a continued increase in the retail claims that started early this fiscal. This experience is in line with the industry experience and is attributed to final treatment of delayed medical intervention due to COVID, and also some impact of long COVID-linked diseases and some impact of provider inflationary pressure. To manage this impact, we are monitoring this extremely closely and take suitable steps, including further review of our sourcing guidelines, engagement with providers, and increasing price for most of our flagship products.
We will continue to closely monitor the situation, including collaborating with the industry where required. Overall, the higher scale will continue to create operating efficiencies as we move ahead. We have the most diverse distribution footprint in the industry. We're now happy to announce our partnership with two PSU banks, namely UCO Bank and Punjab National Bank last quarter. We were chosen by these banks as their HI partners over all other more tenured players, demonstrating the superiority of our business model. This takes our total bank partnerships to 18 and strongly supplements our growth aspirations.
Our digitally enabled distribution mix, being the most diversified now with the agency being the single largest channel at 21% in our retail business. We are continuing to grow our agency franchise with more than 80,000 advisors with us today across 200 plus branches, leveraging the One ABC branch strategy completely. On the digital front, our digital business has now, through allied partners, grew 80% YOY, becoming a sizable 15% of our retail mix. To take our differentiated model first, we continue to launch new range of offerings. We've launched Activ Fit industry-first product mainly for millennials early this quarter. This is already constituting a very good proportion of our new sales in less than a quarter.
We continue to invest extensively in our tech and digital capabilities with a clear focus on superior customer experience and scale hyper-personalized engagement given our model. At 96%, we have one of the highest claim settlement ratio in the industry, a testament to our focus on the moment of truth for our consumers. Our latest brand campaign on the theme of "" showcasing our business model and its impact through the lens of the experiences of our actual customers that they have had with our proposition, an industry first yet again. To further know our customers and their health, we are the first AI company to integrate into the Ayushman Bharat Digital Health Platform, providing the opportunity to our customers for creating their ABHA health ID. We will continue to enhance our digital health and wellness ecosystem, and it has now got more than 60+ partners.
We have just, in the previous quarter, released the premium version of our leading consumer app, Activ Health, to further increase the engagement levels with our consumers. Looking ahead, we will continue to grow on the franchise aggressively with the clear tailwind that the category has, especially powered by the enablement that the regulator is providing. We keep a very close eye on the best-in-class unit economics. We're now confident of surpassing our guidance of the 40% growth aspiration that we had for the year, we will continue to work on opening newer white spaces for the industry. Thank you, I'll now like to pass it back to Vishakha for her closing comments.
Thank you, Mayank. This concludes our comments on Q3 FY 2023 performance. Now we will be happy to take any 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 their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking your question. Please reset gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Avinash Singh from Emkay Global. Please go ahead.
Yeah. Hi. good evening. A couple of questions. The first one on your NBFC business. I mean, FY23 growth is into a different trajectory, particularly because you are sort of, finding new, source of growth, particularly in the consumer and SME segment. Now, by the end of FY23, all of these, you know, new, growth engines will be sizable enough. Now, if you look beyond FY23, I mean like FY24 particularly, what kind of a growth, you know, or trajectory you are going to follow, on an overall basis, maybe in FY24? That is.
What sort of a credit cost trajectory you see considering that your business mix has been changing meaningfully towards more like a smaller ticket consumer loans. That's on NBFC. The second would be on life insurance with whatever has happened in yesterday's budget and its impact. I mean, what sort of impact do you see on your growth? If at all, if I can extrapolate it, say that, okay, if you want to maintain certain growth in that high ticket segment by making maybe your product more competitive by sacrificing margin. Where the sort of yesterday's changes leave you with the growth and margin trajectory? That's all. Thank you.
Let me just take the question on the NBFC on the growth. If you look at the last four, five quarters, the growth has been very strong across our segment, which is the consumer personal loans and the MSME. We are building our capabilities across the retail and MSME, and I also mentioned in my opening remarks that we are building a portal for B2B so that we can really reach out to our micro SMEs and all. That will be another lever of growth which we are looking at in the next 12- 18 months. That should play out. We have built our digital assets over the last two, three years, and that's been playing out quite well.
There's opportunity across these segments, especially the personal consumer and the MSME segment. There are opportunities for a player like us to grow and consolidate. Given the track record, given the opportunity which will be available in the market, we will continue to grow. What will be that range, I think we will try and calibrate that. Yeah, we see a good growth momentum going forward as well.
Yes, your question on,
ECL. On the credit cost, your second question on the credit cost. Yes, as we go more into the retail and the MSME, the credit costs will go up in line with the margins. If you see our margins have opened up by 77 basis point year-on-year and 42 basis points. This is on account of the product mix change. That will have a slightly higher credit cost. The way we look at it is a risk-adjusted return. If the margins are higher, the credit cost, it should be able to absorb. Once, I think the quarter three, we did the ECL revision. We think, in the near term, our credit cost should be in the range of 1.5, 1.6 levels.
On your question on life insurance, you know, you must refer to the fact that something happened like this last year. I think a similar thing happened on ULIP for greater than INR 2.5 lakhs. I think the industry and both us, I think we've moderated our product suite to make sure that nothing of that impacted the growth during this point of time. I think that has now come in the area of traditional products. I think the ticket size right now, as it is stated, is about INR 5 lakhs. We do about 15%-16% of our business in this area.
You must remember that a large part of this proposition is on account of the fact that you have the offering, which tells you what you will get for the next 30 years, 40 years, and most of these are guarantee products. Large percentage of them buy for the fact that they know that they get this for the 30, 40 years. Obviously, there will be some people who will be interested in the tax benefit also. We will get an impact of this over a period of time, like I said, the way we manage the portfolio during this year to take care of no growth, nothing impacted us with the ULIP change.
Our thinking process right now is, we continue maintaining our aspiration on the growth levels that we want to have, irrespective of this change that has been brought in the budget this time.
Let me just sort of a follow-up on this. I mean, ULIP, I mean, the good part was that, okay, the tax applicable on the accrual was on like, it was capital gain. I mean, particularly it's an equity amount, I mean, 10% in case of equity and the benefit of index in case of a debt-related fund. Let's make that tax impact was lower. That's on number one customer side. For insurance company also, ULIP's share in profit, I mean, the VNB would be much lower. Even if there is some kind of slower.
Here, this goes kind of a very extreme. Again, I'm repeating the amount project. It goes to extreme that all the gains will be clubbed in income from other sources and, you know, marginal tax rate to be applied. I mean, that leaves you in a situation where, I mean, it's very difficult to keep your product competitive because the tax is marginal tax rate. That is going to... Then the contribution of profit from this guarantee product particularly, because it's a profitable product for insurance as well. In your VNB pool, just not you, I mean, for the industry, it is very high. Situation is a, I mean, I would say a massively different vis-à-vis a ULIP scenario, that is why my question was.
Management members, we are not able to hear you.
Sorry. You can hear now? I, your question is absolutely fair, like I said, because the difference in the margin between the ULIP and the product that we are talking about on guarantee is different. Like I said, the cap is on greater than INR 5 lakhs. There's a sizable business that happens actually below INR 5 lakhs too. Therefore the industry and us will specifically ensure if you have a larger concentration of that. I think finally you have to make do with the loss of opportunity of about 10%-20% of our business. Also remember that during the same point of time, protection over the last 12-18 months' time, has been on a low ball or has been lesser for the industry per se.
A part of it is you make up through higher protection business, which is what the industry will look at and we are looking at specifically with the fact that you already launched two new products of protection in the month of January. The margins of that are significantly higher. I'm saying if you put a strategy in place to be able to recover a part of that through selling more in the lesser than 5 lakh segment, bring your product mix to protection, I mean, there is a possible product mix structure where margins will get protected for sure. So.
Okay. Okay. Is industry looking to sort of communicate with the ministry or department, I mean, at least to give you some kind of a indexation or something to put a sort of a parity with other products because.
Correct.
At least indexation or something.
Our house view or the view of the council, which covers on the life insurance company is, of course, making a representation. If it is taxable, then technically at least should have indexation. If the spirit of the thing is, you know, HNI should not have the benefit of Section 10(10D), is INR 5 lakhs right or something more than that, more than that is appropriate. You know, you have to keep in mind that these products also offer 10 times of your premium is covered. There's also a mortality element that is built in, which is not available in any other product. See, based on that, of course we will make a representation for sure, but that time will tell you what the answer of that is.
Okay, thanks. Thank you. Thank you a lot.
Thank you. Participants, if you wish to ask any questions, please enter star and one. The next question is from the line of Nidhesh Jain from Investec. Please go ahead.
Thanks for the opportunity and congratulations for a good performance for the quarter. In the lending business, can you quantify the ECL, one time ECL impact, for the quarter?
It's 42 basis points on stage one, Nidhesh.
Okay. Sure. Current stage on provisioning has increased to 42 basis point, or 42 basis point is additional provisioning that we did in this quarter?
If compared to quarter two, it's 22 basis points and stage one is higher for this segment.
Okay.
Yeah.
Secondly, in the personal and consumer loans, how much of business, at the, what % of our disbursement at AUM is coming from Paytm? Partnership with Paytm.
We have, all, we have multiple partnerships. There is no one large partnership which we have. There's nothing, which is a concentration risk, which we are talking about here. We have multiple partners and we also have direct business, which we have on this digital asset. It's, and post the DLG guidelines, if you see, I think, all the businesses are now, which is as good as, our own business, which we used to do. Everything has gone back to our, the way we used to do personal and consumer loans. There's no difference. Yes, these partners can be, digital partners or digital partners.
Sure. Lastly, in this segment, how the collection infrastructure is stacked up. This ticket size of INR 32,000 unsecured is a difficult segment historically. What gives us confidence on the sustainability of credit cost and how the collection infrastructure in this is stacked up for us?
We have a collections infrastructure across our geographies where we are present. Before we launch a new branch, we have a collections infrastructure. If you look at majority of the collection is done by telecalling, by our automated dialing and all. Wherever it goes to the field collection, we have a field collections team, our in-house collections team, in-house telecalling team. We have a quite elaborate collections infrastructure which we have built over the last three, four years, which will take care of the growth in this segment. We continue to invest in the collections infrastructure.
Sure. Thank you. Thank you. That's it from my side.
Thank you. Participants, if you wish to ask any questions, please enter star and one. Next question is from the line of Sameer Dalal from Natverlal & Sons. Please go ahead.
Yeah, I missed this one number. You said that the business that, you know, the government has put a cap of INR 5 lakhs. What percentage of the overall business is that? Can you also give us some indication of what was that business as a percentage of new business that was going on in the, at the current times?
A better number is of when you conclude the year of last year, like I said, if you take the number of 5 lakh plus premium, it will roughly be in the range of 17%-18% of the business that year, of the new business that year. I mean, this year not having ended, you know, it will not be appropriate percentage because numbers change in January, February month. Like I said, like to like for the full financial year of last year, it would be about 17%, 18%.
Of the overall insurance business of yours, how much is that as a percentage as of today?
That's what I said. If you take the overall individual, new business premium.
No, I'm asking two questions. One is the overall percentage, which you're saying is then that is 17%, 18%. I'm saying last year, what was the percentage of sales of the new sales that happened in FY 2021-2022?
That's what I'm asking. Of the new business premium that we did in 2021, 2022 on the individual life insurance side, that greater than INR 5 lakhs is 17%-18%. Obviously, if I take the entire business, that number will be significantly small. On pure individual life insurance business, new business that you do is called new business premium. Adjusted APE business that is already published for 2021, 2022, if you take that and INR 5 lakhs plus, if you take as the numerator, that number will be 17%-18%.
Okay. Okay, thanks.
Thank you. Participants, if you wish to ask any questions, please enter star and one. Thank you. I would now like to hand the conference over to Ms. Vishakha Mulye for closing comments.
Thank you, all for joining us today evening. Look forward to keeping touch. Thank you.
Thank you very much. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.