Ladies and gentlemen, good day, and welcome to Bajaj Finance Ltd Q1 FY 2023 earnings conference call hosted by JM Financial. 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 Mr. Sameer Bhise from JM Financial Services Ltd. Thank you, and over to you, sir.
Good evening, everyone, and welcome to the conference call of Bajaj Finance Limited 1Q FY 2023 earnings. First of all, I would like to thank the management of Bajaj Finance Ltd for giving us the opportunity to host the call. Without much ado, I would like to hand over the floor to Mr. Rajeev Jain, MD and CEO of Bajaj Finance Ltd. Mr. Sandeep Jain, CFO, and the entire leadership team of Bajaj Finance and its subsidiaries is also with us on this call. Over to you, Rajeev, sir. Thank you.
Thank you, Sameer. Good evening, good morning, or good afternoon, depending on which part of geography you're in. I'll take you through the quarterly results. The presentation is on the investor section of the website, and I'll be referring to that. Let's jump right in. Let's go to panel four quickly. Principally, I would say an excellent quarter. The word excellent I'm using after a long time. Last two years have been hard. We've gotten to good. We've finally gotten to excellent across balance sheet growth, portfolio quality and profitability. Highest ever new customer acquisition in Q1. Overall strong, very strong start to the fiscal, I would say.
As our previous vice chairman used to say that a good first quarter, if your first quarter is good, then in general, your year is good. We've seen that happen over time over the last 15 years. In general, back to all long-term guidance metrics for the last three quarters in a row now. On track to go fully digital across all products and services, on app by January 2023, across all products and services, and on web across all products and services by March 2023. Core AUM came in at INR 204,000 crore. Core difference being IPO financing, which still used to sit till third quarter, depending on the quarter ending. Core AUM came in at INR 204,000 crore. It's a 31% year-on-year growth.
OpEx to NII came in at 35.9. PAT came in a tad below INR 2,600 crore- INR 2,596 crore. ROE annualized 23% and net NPA came in at 51%. Let me just take you through some of the highlights. Let's go to panel five. As I said, core AUM just a tad below INR 12,000 crore growth. Quarterly run rate that principally gives us anywhere between INR 50,000 crore-INR 54,000 crore of net balance sheet growth in the current year is really how we are looking at it. AUM growth was secular across all lines of business. I'll cover that. Company did 7.42 million loans. It's just about the highest ever that we've ever done as a company.
The last was 7.6 million, but at that point in time, we used to have wallet loans and REMI loans, which we've stopped. Wallet loans we stopped in 2020. REMI loans we curtailed to less than 25% of the volumes. If I knock that off, it's the highest ever loans that we have done in a quarter as a company. B2B disbursements were up 83% year-on-year. Year-on-year numbers are not that comparable given that last year was Delta, but still refer to them on and off. Overall, INR 16,000 crore of disbursements. That gives us a INR 60,000 crore-INR 64,000 crore run rate on overall B2B disbursements for the year. We launched our non-captive two-wheeler financing business on July 6.
First month we should land up doing INR 3,000 crore-INR 3,500 crore two-wheeler loans in the first month of launch. Comes with a two-wheeler marketplace at a stack level. Comes with pre-approved limit for 30 million of our customers. Out of 33 million EMI Card customers, we've pre-approved 30 million customers for non-captive two-wheeler and full point-of-sale infrastructure that we built over the last 15 years in the B2B space. We added 2.73 million new customers to the franchise. Pretty comfortable with 9-10 million new customer addition on a full- year basis. Overall franchise came in at 60 million.
The cross-sell franchise, which we are willing to do multiple products cross-sell to, is 30, just a tad below 35 million. Added 82 new locations from an omnipresent standpoint. Total geographic presence now 3,700 locations. Competitive intensity continues to remain elevated across products. We continue to focus on margin rather than growth. Margin first, growth second. We've so far managed to deliver both. Started increasing pricing across all the products gradually from June 2022. We took first action in June. We're taking second action in August, and so on and so forth. Cost of funds came in at 6.64%.
Given the strong ALM that we managed, the overall strong treasury management, the impact of recent interest rate hikes on the overall cost of funds in the current fiscal will only be gradual. Even if you see sequentially, we've dropped, is it? I think sequentially we've marginally dropped. I don't recall right now, but we've dropped sequentially. 7 basis points you've dropped. Overall, I think we managed treasury quite well. As we plot over the next three quarters and do simulation and sensitivity, we are reasonably comfortably placed here. Our deposits book, we think it's a great time to gather deposits. We continue to grow that rapidly.
Net growth was in a way sequentially 10%-11%, 10 odd percent, 20% of overall borrowings. We did four deposit rate hikes. Sequentially, we increased deposit rates by between 55 and 70 basis points, depending on the maturity. We are accelerating retail deposits. We think it's a great time, and we think in a three-year horizon, we can take this to 25% of our overall liability profile. OpEx to NIM, 35.9%. Now we continue to invest in teams and technology. Given the deep investments that we are making in our omni-channel/omnipresence strategy, which is Geo, app, web, and payments, we expect OpEx to NIM to continue to remain between 35% and 36% for FY 2023.
Hopefully, we should start to see some tapering as we exit the year. Our loan losses came in good. INR 755 crore included a INR 190 crore impact on full provision and write-off of a commercial account. Adjusted for that, the management overlay came in at INR 1,000 crore. INR 60 crore in a way was consumed from the management overlay towards this account, and INR 130 crore was a one-time provision in Q1. The flow basis loan losses and provisions were actually INR 625 crore. That's really the run rate that as we're looking at the risk metrics across portfolios is what we're seeing.
GNPA and NPA came in at one of the historic lows at 1.25 and 55 basis points. This number will, as it seems at this point in time, continue to trend downwards for the next two-odd quarters. Stage two came down by INR 300-odd crores. Stage three came down by INR 600-odd crores. 10 portfolios are green, one is yellow. This was the same view even in Q4. PAT, while it grew 159%, as I said, year-on-year metrics are not really comparable, but INR 2,596 crores was the PAT for the quarter. Capital adequacy quite strong at 26%. Tier two capital, tier one capital was 23.84.
Mind you, this includes INR 2,500 crores of capital infusion that we did in BHFL, you know, on seventh of April. Total headcount stood at just a tad below 38,000 people. Bajaj Housing Finance, we now started to cover, provide a little more texture and color on Bajaj Housing Finance. AUM was up 40% at INR 57,500 crores. Home loan AUM grew 41%. Loan against property AUM grew 33%. LRD grew 43%. DF grew 68%. The mix, however, is as you see on point number 25, 63% home loan, 11% LAP, 13% LRD, 4% DF, and 3% rural. So read the growth in the context of the portfolio composition.
Approvals grew 127%, came in at INR 16,000 crore. Disbursements grew 118%, came in at INR 9,255 crore. Geographic footprint was 158 locations. Overall, a pretty strong position. BHFL delivered a post-tax profit of INR 316 crore, a growth of 96%. OpEx to NIM came in at 26.8%. Loan losses and provisions were only INR 7 crore for the quarter, and we are very well covered there. Gross NPA, net NPA came in at 27 basis points and 11 basis points. Overall, stage two for BHFL was INR 492 crore, came down. As you can see sequentially, INR 105 crore-INR 110 crore. Stage three came down by 12 odd crore.
Total end headcount in that company stood at 3,567 people. Bajaj Financial Securities, 36,000 customers they added. As I had articulated in Q3 and Q4, we are re-pivoting towards customer who uses the account rather than customers just for the sake of it. We have sufficient number of customers. We have 60 million customers. We don't need customers. We need active customers. We are re-pivoting. Total franchise stood at 370-odd thousand. Margin trade financing book is now INR 740-odd crore and made a profit. They are new kid on the block, and as I said in the AGM just now, that next year should be year that should belong to them.
The last year anyway and the current year would belong to BHFL as a subsidiary, and by next year, BFSL should also be ready. Very quickly, omnipresence, we have now changed the format. I'm providing you an update. I'm not gonna spend too much time on it. This is more for from a disclosure standpoint where we are headed. More importantly, we've now started to provide data, and we'll keep adding on this data as we go along in the balance of the year. More products will get added more in the process, more metrics will get added. Just on the panel ten, what is relevant and important is the phase one platform is live, as you're aware. Phase two will have three sprints. We last provided an update on this in November.
This is the second update I'm providing. I'll provide final update in January quarter. By the time we would have gone live with two major sprints, which is the 31st August sprint and November 15th November sprint, a very small residual less than 10% work would be left on sprint three, which is on 31st January. Actually, by then, even that would be close to going live. That is really when we'll provide the next update. Three, four, five are some texture and color on how the UI and the UX will look as the new phase come in. Principally, three, four, five mean it's a significant expansion in the way the asset is being organized. Payments phase one features are live, as you're aware.
I gave some texture and color even in the AGM. Just now, we are continuing to move along. Sprint two on payments will go live by 15th November. It's a big sprint. It'll allow a whole lot more features and much better experience on UPI registration and so on and so forth. On web platform, two phases. Phase one will go live on 1st of October and phase two on 1st of March. As I said in AGM, that fundamentally, by March 2023, we will across all our products and services, products that we manufacture and products that we distribute, end-to-end, journey to journey, we would have actually fully gone digital.
Our digital transformation, as I would like to call it, would have actually completed by first of January 2023, or if I say including app equal to web by March 2023. We'll provide the next update on this by January. The reason I'm also saying we'll not provide update after that, because as I've said, that this is a means to an end. This is the way we will conduct business from here on, or we are conducting business. If there's a big change in UI, UX, if there is a full refresh that we're doing, that's when we provide update. Otherwise, after January, this is the way we run business. Move.
What I want to spend two to three minutes on is in this panel, which is panel number 12. We now start to provide some data on our omnipresence strategy. I'll go a little slowly so that we're all on the same page. Just to provide the format of it, locations you're aware. Gold loan branches now, we have 155. Just on omnipresence, we'll have 232 standalone gold loan branches by end of the year. These are. We have 650 branches from where we offer gold loans, but 155 are standalone branches. They will get another. We will do another 75 more branches in the current balance of the fiscal to get to 232 standalone branches.
Now, on app metrics, there are four blocks between Panel 12 and 13. There are app metrics, there are app payment metrics. More. There are app business metrics, there are marketplace metrics, and digital EMI Card metrics. This is really how we'll provide data. What we will keep expanding the scope of these lines or rows as phase two gets delivered and has more data, we feel has reached a level of maturity for us to start to share this. When I say maturity, I mean stability of the data rather than anything else. Let's just quickly cover app metrics. Downloads in the quarter, we had 11 million downloads. We forecast that we'll have 53-55 million downloads of the new app platform by end of the year. Net installs are 23 million now.
We'll end the year with between 35 and 38 million. In-app programs are 62. We'll have 100+ in-app programs by end of the year. In terms of wallet accounts, we added 9 million. We expect that we'll have 18.5 million cumulative wallet accounts. UPI handles, we forecast 12 million UPI handles. We added 3.6 million. We have 3.6 million UPI handles as of now. We had 2 million bill pay transactions. We forecast that on a full- year basis, we'll have 12 odd million. QR deployment has gone live for P2N, 18,000. We think we'll have 100,000. The P2P QR will go live in another one-month time.
That will be a separate line, just to give you texture on what I mean by as to how more lines will get emerged. Moving to digital card. Now, these are app business metrics. As I said, technology is a means to an end. This app was never supposed to be anything else but help us do more business, help us grow our AUM, help us eventually reduce our cost, help us manage credit better, risk better. Digital EMI card acquisition overall came in at 522,000, but from the app came in at 70,000. Now, overall, we expect 300-325,000 digital EMI card acquisition through the app. Personal loan disbursements were INR 2,109 crore in the quarter. We expect full- year to be between INR 9,000 crore and INR 10,000 crore. Credit cards were 30,000.
We expect 200,000 on a full- year basis. Flexi Loan transactions were 866,000 transactions, pay in and pay out, both. Now we expect between 3.6-3.8 million. DMS receipts, clients came and paid 644,000 in the quarter. We expect on a full- year basis, 3-3.2 million. Bajaj Mall visits, 32 million in the quarter. We expect 140-150 million visits to Bajaj Mall to Bajaj Mall loans, and so on and so forth. I mean, you know, either I'll just provide a drift to the frame, and as I said, we'll keep adding more rows, may not be columns, as we continue to provide more disclosure.
Let me just jump right on to panel 46 now, so that I can leave time for questions. This is the consolidated AUM. As you can see, what is relevant is on the right-hand side, which is what was the AUM composition 30th June 2021 and AUM composition 2022. 7% was auto finance is now down to 5%. Rest of the lines are all remaining plus minus very similar. 7%, 8%, 20%, 21%, 2%, 8%, 13%, 4%, 5%, 2%, zero percent. Of course, IP financing's gone away. That's the conversation on core AUM. Commercial lending, 6%, and 31, 32. Product mix remaining same, largely as you can see, other than auto finance business. This is the provisioning coverage. Overall, Gross NPA, Net NPA sequentially continues to go down.
1.73 in December quarter, down to 1.6, and it's at 1.25. Net NPA down from 78 basis points to 68 to 51 basis points. Move. This is consolidated ECL provisioning. We are pretty strongly placed there. Move. Just on the last portfolio quality section. As I said, out of 11 businesses, 10 are green. Better than pre-COVID, I would say at this point in time, in most of them. While two-wheeler looks to be better than pre-COVID, as you can see in February, it was 86. But even in February 2020, we had marked this as yellow because 86% is not what the current portfolio ought to be.
It used to be 89%-90%. As and when it gets back to 89%-90%, that's when we will, you know, principally, make this green. That's really the quarter. Happy to take 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 a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from [audio distortion] . Please go ahead.
Hi, Rajeev. Congrats on a good set of numbers, and thanks for the additional disclosure. I had two questions. First one was related to the cross-sell rate. I've been seeing that it's been improving in the last few quarters. If you look at, you know, adjusted for the wallet loans that we used to offer pre-COVID and also the REMI business, I know you scaled it down. Even adjusted for that, you know, it used to contribute about 7% pre-COVID. Still the cross-sell rates are not, you know, back yet. There's significant, you know, scope for normalization.
I just wanted to understand, when do you see, you know, this, sort of playing through? Also, you know, is it a value proposition issue or a risk filter issue? If you could give some more color around that would be useful. That's the first question. The second question
What do you mean by?
Yeah. Okay.
What do you mean by cross-sell ratio of 7%? Because we are not able to correlate.
No, no. What I was referring to, you know, if you look at wallet loans and REMI, they used to contribute about 7% of loan bookings, pre-COVID. Today, if you scale them down to zero as well, still the current cross-sell rate is, you know, materially lower than, pre-COVID run rate. That's where I was coming from that, when do you expect this normalization? And, is it a value proposition or a risk filter or any other factor that is driving, this behavior?
The second question was related to, you know, we've seen on NII to OpEx, so cost to income, basically. So we've seen, you know, conversion, the EMI tool improving. We've seen share of digital EMI cards increasing. So, you know, all the metrics seem to be operating in the right direction. But just, I wanted to understand as we complete our, you know, transformation journey, at the end of 2023, what could be a realistic, you know, expectation of OpEx to NII, maybe in FY 2024 or beyond? If you could give some, you know, sort of perspective around that would be useful. Yeah. Thanks.
Yeah. On the cross-sell rate, Jain, in fact, if you were to adjust the wallet loan and REMI loan, the cross-sell rate is up versus where we were, let's say in quarter three of FY 2020, which was a pre-pandemic period that we are referring to. Maybe again, we can reconcile the number, but we added, I think, 2.5 million customers in that year, in that quarter. In the current quarter, we added 2.74 million new customers. Number of loans are by and large same. If I were to remove REMI and wallet that we used to do earlier, which would get counted as cross-sell, the ratio has actually improved.
Okay.
OpEx will.
Go ahead.
On the OpEx to Jain, I think we had guided even in the last quarter. Given that we continue to invest in technology teams and resourcing for propagating the omnipresence business model, the OpEx to NIM for the current year may remain elevated. 35.5%-36% is the corridor that we are looking at from a full- year perspective. Quarter one, you would see. Quarter one, we have seen the number. I have reason to believe that quarter two could be flattish, and then after that you will start to see some gradual reduction.
Separately, I mean, because he's asking actually more so 2024. Look, fundamentally, we do believe that we've reached a level of inflection point on investments. We have taken that decision. Mainly our investments is people and technology. We've actually taken a pause from 1st of July till 31st of December at a design level to not add incremental resourcing on additional investments.
Because we also want to see the investment start to pay off. Plus, rising interest rates environment, plus expected demand slowdown in Q3. Between both these areas, one being prudent about make an investment pause from approach standpoint, and two, given headwinds on potential demand slowdown in third quarter, rising interest rates. That's where we are, and Sandeep guided on where we think it'll go in 2023, 2024. We're also, let me be honest with you, still trying to find the sweet spot. Because the fact is, it's a significant investment committed by us to build out both the app and web. The fact is, will operating leverage emerge? The answer is yes.
As we start to see it, I think we can guide better rather than make a point. Lastly, 35, 36 with geography, app, web, and payments all firing, it's a great number. That's a second-order point, but I'm not the judge for that, you are. Is the point I would make.
Yeah. Thanks. Thanks, Raju. This is very helpful. Thank you. All the best.
Thank you. Next question is from the line of Bharat Shah from ASK Investment Managers. Please go ahead.
Yeah, Rajeev, congratulations. If I have to put it graphically, soon as the pandemic clouds have receded, Bajaj Finance sun has come out blazing. Delighted to see these results that one has been waiting for. When I looked at the asset quality, there seems to be dramatic improvement on GNPA. Is that actual improvement or write-offs have occurred?
Actually, write-off for the quarter are not. Of course, we have written off the commercial account. That's one part of the conversation. Actually write-offs, if I take the last three quarters, is at flattish.
Flattish.
Other than the INR 390 crore account that we've written off. There is structurally significant improvement in asset quality whereby at a design level, I just said it even in AGM that if I take, of course, leave 2021 and 2022 aside, 2019/2020 was a slow year. We ourselves, if I take till February, went 260 odd basis points of average credit cost to AUM. Because it was a slow year in general for the economy as well. 2018/2019 is a right number to benchmark. We'll probably look closer to 2018/2019 at this point in time. Four months of the year are over. Maybe even lower if the current momentum was to continue.
There is marked improvement is what I would say.
Oh, that's delightful. Given that our philosophical stance always has been a trinity of superior growth, superior capital efficiency and controlled superb asset quality, all angles seem to be kind of now firing appropriately as soon as challenges have kind of receded. Given the fact that people, technology, products, medium through which we enhance our footprint with the distribution and products and all that, what would you say will be the most important priorities from the next year onwards? What is it that you will be watching most closely?
One, I'll make a philosophical point. I said this in AGM that our business of retail is about everyday improvement. We cannot let that guard down in all direct dimensions of our business. I think that's an important point I must make. I think there remains tremendous opportunity in all our lines of business from a growth standpoint. Other than I would, if I may say so, in the sales finance business because we are very, very dominant there, and more people are getting into the business. Every new incremental guy, whatever he does to himself, but does chip away something from our end. Other than that, I think the growth opportunities in every line of business remains structurally from a medium-term standpoint quite large.
We are investing in each one of the areas. I think as we get to next year, Atul Jain is here with me as Managing Director of BHFL. I think mortgage will fire much more. As they complete their fifth year of transformation, will fire much more. BFSL should start to fire more. We as a parent, BFL, should continue to fire more. Overall, we need a cleaner runway. A country needs, I would say, for a little while, a cleaner runway. I think two years have been very hard. I am not seeing. Of course, is interest rate an issue? Is demand, potential demand slowdown an issue?
I tell people that we are used to interest rates going up and down as a country. I mean, we see over eight quarters interest rates go up over the last 15 years up by 225 basis points, then they go down 225 basis points and so on and so forth. We need not be as worried about interest rate rises and going down than as the West. We are used to inflation. I would say we are reasonably well placed, Varadrai, whether as a nation, I would say, or as a company at a micro level, and remain at it. That's the important dimension. Not let the guard down.
Fantastic. Just last point, as we run through our elevated investment in people, technology, creating other platforms, to satisfy our ambition and our kind of aspirations. It will be fair to say now that things are indeed beginning to look kind of normal in most respects.
Yes.
The next year should be once again a defining year, the way Bajaj Finance picture has always been. Even though pandemic has been a rude interruption, but I think we have shrugged it off beautifully. Therefore, now with all preparations highway being clear, 2024 should be a year of firing, I hope, on all cylinders.
I think so. We will go fully digital. I keep telling people that digital is like magic, until you get it's zero. Once you get it's one. It's a zero one. We are committed to get it. We as a management are behind it. In some, we would have found one. In some, we would still be zero. It's a matter of time before we will find it. As we find it, given the large franchise and the large product that we bring to the table, the entire products we do bring to table should be a stronger year. I hope so. We'll take quarter at a time, Varadrai, at this point in time, and a year at a time.
We deliver the next three quarters a stronger exit and a stronger entry into next year. Should make us stronger.
Thank you, Rajeev, and my big applause.
Thank you. Thank you.
Thank you. The next question is from the line of Archit Sharma from Assam Asset Management. Please go ahead.
Yeah. Thanks for the opportunity and congratulations on a great set of numbers, Rajeev. A couple of questions. One on the fee income side. Is there any, I mean, if the bank that we have tied up, I mean, RBL Bank, if there is a slowdown in terms of card additions, any impact on the fee income side? Rajeev, first question is that. Second would be on the gold loan. You mentioned that we are opening standalone gold loan branches. Just from a perspective that we've seen that gold loan yields have compressed for the system, does the gold loan product still make sense?
I mean, I'm just trying to understand, given that we have opened standalone branches. Some color on that would be helpful, Rajeev.
Sandeep, fees?
RBL.
RBL, yeah. I mean, we have a deep strategic partnership with them. In partnerships, we have ups and downs. We are not a partnership for up. We are a partnership for up and down. We remain committed to continue to partner with them. In a given year, they may be slow. Prior to that, for four years, they were strong. I think that's really the nature of partnership is. Parallelly, as agreed with them and given our ambition, we've kicked off the DBS partnership. That's gone live. We are now booking between 9,000 and 10,000 accounts. We think we'll exit with 30,000-40,000 accounts, between 30,000 and 40,000 accounts per month with DBS partnership as well.
That's the hedge that we wanted, and because we know in partnerships, things can, at times be up and down. I think this is really where having multiple partnership structures, deep and strategic, albeit, help. I'm hopeful with the changes in RBL Bank, and they have said, whatever I've seen in public domain, that they want to grow the microfinance and the card business. I'm hoping and we are well-positioned to assist them meet that objective and in the process help us grow as well. Parallelly, DBS Bank partnership should grow. I think that's really what. Now, Gold loan, it's interesting business. We've been at it for a while.
We have come to a conclusion that, as an adjunct frame, which means in the branch doing the business only takes you that far. We started a test with "standalone gold loan branches" the way a gold loan company would do, and we've seen significant results. We've seen that it exactly works out then for a leading gold loan player. That's really what we are chasing. Behind it, we put the power of digital. I mean, one of the metrics that sometime in Q3 or Q2 we'll start to release is how much business is coming digitally from a conversion standpoint from our franchise on gold loan, just to give you texture. It's one of the metrics sometime in Q3 or Q4 we would start to release.
We are quite satisfied with the return profile. It's not dilutive to Bajaj Finance shareholders at all or to us as a company. There's opportunity to improve that profile as we go along. Only thing that business did very well in FY 2021, then 2022. Gold loan rates came down and went through a shock, I would say, because it's commodity linked. Right now it's again looking up. Overall, we are quite positive and optimistic about the business. We think in a two to three-year horizon, this could be a reasonably large business.
Great. That's helpful, Rajeev. Just lastly, on BHFL, I mean, the profitability was quite strong. I mean, are there any one-offs or, I mean, because ROA and ROE metrics looked very good. I mean, is this the sustainable run rate or, I mean, are there any sort of one-offs.
Standalone, there is. On consolidated, is not but.
First is one.
Yeah, BHFL.
BHFL has grown reasonably well, even in terms of balance sheet. They have grown at 40%, versus last year. In the current quarter, they have done some assignment transactions, which results in upfront revenue recognition. On a consolidated basis, that is knocked off.
Okay.
There's a one-timer sitting in BHFL financials, but on a consolidated basis, there's none. Secondly, as the interest rate starts to go up, as you would have seen with other housing finance companies also, the spread for next two, three quarter may look elevated. That's also a benefit that's sitting in the quarter results.
Because of a better treasury management.
Yeah.
That pass-through on the liability side is slower, because of our long-term locking.
Sure. That's helpful. Congratulations, first of all, and all the best, Rajeev, for the very bold guidance you've given at the AGM. Thank you.
I thought INR 200,000 crore is a good time to give a guidance.
Absolutely. Absolutely.
I mean, we don't give guidance generally. I think INR 2 lakh crore is a right time to give a guidance. We'll give the next guidance when we achieve the guidance that we've given today.
Yeah. Great.
Thank you.
Thank you. Thank you, Rajeev.
Thank you. Next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.
Yeah. Hi, Rajeev, Sandeep, and team. Congratulations. Firstly, with respect to the housing finance business, in fact, the fee income, which is there, maybe what would have led to that? I don't know if you have explained it earlier, but I missed a part of the call. It seems like we are growing more of LRD and construction finance out there. Any particular proportion wherein we would actually want to take that. In fact, ticket size is also rising on the LRD side. How are we particularly seeing this segment?
Sorry. I'm sorry. We lost you in between.
No, I was just saying that, particularly with respect to.
I responded to second point that you're making.
No. Overall LRD and developer finance book. LRD also the ticket size is rising. Now developer finance is almost 7% of the book. All put together it is like LRD plus developer finance is 20% now. Any particular proportion wherein we would want to take that up to, okay, over a period, because I think that's growing at a much faster pace within the overall book.
The risk profile is structurally different. I think that's a fundamental point. I would like to grow LRD more. I mean, we've done that business for 12 years, even through pandemic. I mean, you know, we've all lived through the pandemic. LRD is a very different risk profile than DF. Read them. Don't read them as commercial exposures. They are commercial, of course they are, but they are. I would like to do more LRD than I would like to do, let's say, LAP. Or I would like to do more LRD than I would like to do home loan, let me make a point at a design level. Let me just make that point distinctly clear.
DF, we've been at it, as you can see, it's 4% now, come to DF. Okay. That's why I rightfully made the point. You look at the growth percentages in the context of the contribution of the balance sheet. We've been at DF for five years more. Five to six years, it's been 2%-3% of the balance sheet. We've seen no hits in any given manner. It is a good business. We built capability and a domain expertise after five to six years of business, and we feel comfortable growing the business. Our exposures are still a lot more granular. Our exposures in DF remain between INR 25 crore-INR 35 crore. We don't want to take chunky exposures.
Which is not the case, let me make a point, in LRD. We are a lot more comfortable. It's two layers of risk management that we naturally as a lender get taking. We're willing to take even INR 400 crore-INR 500 crore exposure in LRD. In DF want to remain on an average between INR 25 crore-INR 35 crore, maybe do a peak exposure of INR 100 crore-INR 120 crores. That's, I wouldn't club them together. Atul, anything you want to add?
No, as Rajeev has rightly called out, LRD is over the cycles also, it's not today. Even if you look at the industry cycle or over the cycles, the construct of LRD, if it is backed by the marquee leases, which is the construct what we follow, because there's no execution risk. Both risks are very different.
Yeah.
Developer finance, by definition, has a combination of execution risk and then consequently subsequent sale risk. None of this risk exists in LRD, and that is where we are focused on LRD. As an asset mix, you will keep on seeing that if you look at last two years mix, the home loans constitutes between 60%-64%, which is what it will remain, because that is the construct which is not changing. The balance portion between LAP, LRD and DF, with DF upper cap would be close to 10%-12% even when we mature as a business because we would not want to cross around 12% kind of a number in developer finance. Balance between LAP and LRD is a number where we will keep on moving around.
Based on our assessment.
Based on our assessment. As of today, our assessment is if we have to do an honest assessment of the LAP rates, rate of interest in the market versus LRD rates and the risk profile.
LRD.
We are better off doing LRD rather than doing any LAP. Based on today's risk returns, on the pricing available in the market with the risk.
Yeah. Our rates and our yields on LRD would be competitive with respect to the markets, or we would be lower given the profile.
We are working with almost all the top market developers in the country. It is a very competitive industry because if a product has been absolutely considered to be safe in the industry, then the pricing is very fine and we compete with all the large players.
Super prime.
Super prime.
Super prime clients and super prime pricing.
Okay. Sure, sure. Thanks. The fee income would be related to that in terms of higher disbursements towards those segments.
Fee income, like, was a one-time income in terms of an assignment income of INR 109 crore. That's where the fee income is, income appearing in the quarter result. This is an assignment of a INR 950 crore LAP portfolio. That is the income generation because as per industry standards you have to book income upfront. That's the fee income which is reflected as.
Okay. Got it. Yeah. Thanks a lot and all the best. Yeah.
Thank you. Next question is from the line of Piran Engineer from CLSA. Please go ahead.
Hi. Congrats on the quarter. Just one question for Sandeep. Firstly, what percentage of your bank borrowings would be repo linked versus MCLR linked? Are you seeing banks now moving back towards MCLR linked loans as liquidity dries up?
Piran, we are not seeing significant shift happening in terms of mix of repo and MCLR incrementally just because rates are going up. In fact, in the last quarter as well, we have got lots of approvals from banks linked to MCLR. I think banks are taking time even today in terms of passing on the cost increase in MCLR because savings rates, interest rates have not gone up. That's the thing. In BHFL, we do have repo linked borrowing from banks because they also have a natural hedge in terms of home loan being linked to repo linked.
Repo and EBLR.
Repo and EBLR both.
In BHFL, we generally prefer to borrow in repo linked or EBLR linked rather than MCLR.
Yeah. In BFL, contribution of repo linked bank borrowing is lower.
Contribution of bank borrowing itself is lower.
Is lower. Okay.
In between bond market and deposits, which are all locked in.
Understood. If you could just give some color on, you know, your new to Bajaj customers. Our customer acquisition was very strong this quarter. Out of these 2.7 million, let's say, how many are new to credit? If they are not, then what is their average CIBIL score? Are you acquiring them through, you know, point of sale or through the app? Any color on, you know, the profile of the customers you're acquiring?
Sorry to interrupt you. Sir, can I request you to speak little louder, please?
No, I can hear him. That's fine. Principally, as you saw, 522,000 customers in the quarter came from the Insta EMI Card. Only 10% are customers that are in what I would call that we did not want. The rest we wanted them to become our customers. We stimulated using a web ecosystem or the app ecosystem, as you saw the numbers. We don't. If a client is coming for EMI Card only or at point of sale, you could be zero minues one1 or you're already 750. We don't do in between other than some of the design of experiments or DOEs as we call them that we may run. Otherwise very, very little.
It's 750. It could be zero or minus one, which is really where new to credit comes in. In general, 65% of the customers for many, many years have been bureau 750 and above. And balance are new to credit. 35% are new to credit. At a design level, 65% are bureau 750 and above. It's not changed materially over time.
Got it. Just to clarify one last thing. Your 37,000 employees, that is on roll plus off roll or?
No, it's only on roll.
Okay. You've added 6,000 employees this quarter, roughly.
Did we say 31,000?
31 is in your annual report.
Seven is consol. Are we doing apples to apples?
It's consol.
That's my question.
Yeah. 37,000 is consolidated. From consolidated to consolidated, I don't think the number is 6,000. There's something wrong. I mean, we could be wrong. Sandeep will clarify it to you. Because you would have published the number in annual report. We started to give this number. We've not added 6,000, that I can tell you. It could be a typo error because.
Sure.
We're publishing this data for the first time. It's possible.
Yeah.
I'm not saying it is, but it's possible.
Got it. That, that's all from my end. Thank you and all the best.
Thank you. Next question is from the line of Rahul from Goldman Sachs. Please go ahead.
Yeah, thanks. Hi, Rajeev and team. You know, congrats-
Rahul, you are genuinely feeble unlike the previous one.
Okay. Is it better, Rajeev?
Better now.
Great. I mean, great results. Congratulations. Just had, you know, two or three questions. You know, first, you know, just getting the usual stuff out. The liabilities management. You talked about gradual increase in cost of funds and the ALM table that you gave out is, I think, behavioral based. Fair to say that the margin should not really see any undue pressure because of, you know, increasing cost of funds from this level?
Yeah. Not for the next three odd quarters. You will see gradual movement. Yes. We are also incrementally passing through all new acquisition. As I said, we've raised rates by 25-40 basis points depending on the business. As rates keep rising, we'll gradually pass them ahead. Yes.
Okay. That's helpful, Rajeev. The second is, again on fee income, keeping this, you know, I mean, talking more at the consolidated level, can we understand, you know, what proportion would be more balance sheet or disbursal linked? What proportion will be from third party? And then given that, you know, some of these digital properties are going live, have you seen any material shift on the TPD side, which is driving the fee income?
Rahul, read it as quarter three 2019-2020. Look at these numbers as that. This is increasingly. The reason I'm making the point is even in Q2, Q3 last year, we still had let's say IPO financing income sitting there. Now, there's nothing sitting there. There's no lumpiness. This is all pure flow-based business. This is all pure flow. This is a normalized quarter from all lines. Actually, last two quarters have been.
Sure.
In Q4, because 15 odd days were lost to Omicron. There was still some noise, but now this is a fully normalized P&L frame, is what my point is. Sandeep can provide some color.
I think it's reasonably granular. We have multiple heads in which fees and commission is recognized and received. It's reasonably granular, and this is purely the fact, as Rajeev said, as we are coming out of pandemic and we are getting into normalcy, this number also now getting normalized.
Fair. Got it. Thanks, Sandeep. Rajeev, just going back to one of the statements that you made that, you know, the competition across different segment is inching up. You know, you are seeing that in the sales financing business or even credit card, et cetera. But when I look at, you know, our own numbers, excluding mortgages, the ROAs are now north of 6%, you know, versus 4.5 pre-COVID. Does it mean that the structural profitability has moved up in the businesses that we are doing? Therefore the competition, you know, even if that is inching up, there is more than enough for everyone to sort of grow and yet, you know, make enough profits.
I don't know about others. I mean, we are mining more and more of our customers. We are going deeper and deeper into India. We're just keeping our head down and hard at work. When I say competitive intensity is more intense, we've also done leverage analysis. Let me make a point. Interestingly, nobody's asked the question. When we looked at the retro data of 2019 franchise to today, we are actually not seeing material movement at all on our franchise. Not at all, actually. I mean, adjusted for 6%-7% inflation, we are not seeing movement across the unsecured portfolios, any material movement at all. You know. Whether there's space for all or not or so on and so forth, Rahul, you now have a point of view on.
We remain quite small. As I said, other than the sales financing part of the business where we're very dominant. I think there's tremendous opportunity in every line for us to make a difference.
Got it.
Now coming back to. Clearly, one of the structural changes, if you see and we provide the 10-year data, so it's there in our deck only where CoF used to be to where CoF is, so that we are all on the same page as to how has the. I think there is that line at play. I think that's an important point I must make so that have we done a good job of it in the last one and a half years to make sure that we'll bear the benefit of it now in the next three quarters and going even to some extent into next fiscal. Yes. That's why we are accelerating deposits while it puts pressure on OpEx.
Our average deposit 10 odd is now 33 months. We are now originating between INR 1,700 crores-INR 1,800 crores of retail deposits on a month-on-month basis. That's locking in for 33 months maturity is 7.1%. We are doing a few things on the liability side, which should then by the time I'm hoping, Rahul, that someday the operating leverage part, which is one of the earlier questions was asked and I responded, by the time we should have hopefully found magic or one in most of the products and services, and that should mitigate principally or theoretically the when normalized CoF happens, by the time I should get operating leverage or we should get operating leverage as a business on the OpEx side.
That's how we are looking at the business and the business model. We'll take quarter at a time.
Basically the underlying is 6% ROA. There are enough and more levers within the frame to sort of continue with this now.
We look at consolidated ROA. I think, you know, I won't look at standalone ROA. I would look at consolidated ROA. We used to be at 4.7% exiting. That was also an ever high in.
Okay.
December 2019 quarter. Our guidance is 4.4%-4.7%. The current year will look higher. It's looking reasonably clear. Will long-term guidance change? We will take a view end of FY 2023. At this point in time, we're holding the guidance. Also holding the guidance the next three quarters, there will not be material reduction.
All right. Just a small last question, Rajeev, if I may. On the mortgage business, you know, how much have you invested so far? What are the requirements, you know, in terms of capital infusion going forward? If at all we plan to monetize the investment in this business?
7.5 thousand crores is the total investment in the. That's just a tad above close to $1 billion. They are now well capitalized for INR 85,000 crores-90,000 crores.
INR 100,000 crores.
INR 100,000 crores. They're well capitalized for INR 100,000 crores. That gave them, in a way, as BFL provided two-year capital, so they don't even need capital for next two years. We'll take a view on unlocking and so on and so forth at an appropriate point in time. I mean, you know, if as consolidated, our design is consolidated, unless and until regulation require us to, is what I would say.
All right. Very helpful. Thank you and good luck to you and your team.
Yeah.
If I can cover the previous open point on employee headcount.
Yeah. Not yours, Rahul.
Yeah. Piranjani had a point on that. We had 35,400 employees as of 31st March.
As per annual report.
As per annual report. We are at 37,873 consolidated headcount as on 30th June. That's an addition of 2,400. Yeah.
Thank you. Next question is from the line of Saurav from JP Morgan. Please go ahead.
Following up on this competition point, you know,
Saurav, you're sounding a little distant. Can I request you to speak through the handset?
Sorry. Just following up on this competition point, I mean, are you facing some pressure on the sales finance business from likes of Flipkart or Paytm, you know, using BNPL financing to do EMI generation? I mean, and what's your view, and have you seen your market share kind of get affected because of that? Thank you, sir.
We remain, as I said, even in OEMs order between 65%-68% of manufacturer subvention pool in CD, 55%-57% manufacturer subvention pool in digital. Lifestyle only we play. We keep staying in the corridor. We are very clear that business is for two reasons. One is for customer acquisition, two, for margin profile. Actually, during this period, our margin profile has expanded. Let me make that point. As I keep saying, whether for that business or for any business, it's margin first, growth later. You know, because margin saved us through the last two years of close to fatal crisis, that we went through. I mean, we track them every month. No material change, as I said.
Also, we are very deep. Let me make that point. All this noise is in 20 cities, 30 cities. Farthest it goes is 40 cities. We offer this in 3,504 cities. And we'll add, as I said, 400 odd cities or towns this year, further. That's also one of the drivers for margin expansion, but it needs significant controllership orientation. You need to perfect the model of how to open branches and how to scale them and how to ensure controllership is not lost. Credit metrics are better. This whole conversation is about 30, 40 cities. But do they represent 50% of the business? The answer is yes. Do these 40 cities represent 50% of the business?
Do the balance 3504 minus or 3586 minus 40, which is 3543, represent the balance 50? The answer is yes. So we are making them up in different way. Does that answer your question?
Yeah, partly, sir. Just one more question, sir. This Bajaj Mall business, what is the sourcing you are getting at Bajaj Finance from Bajaj Mall yet?
We've provided data. Where is the PPT? If you see on that panel only where we've provided data, that. Sorry.
Slide 13.
Yeah, slide 13. Sorry. No. Bajaj Mall loans, 645,000 loans came through Bajaj Mall.
No, sir, in value terms, how much will it be?
Value doesn't change. You should assume this value to be INR 23000 crores . Take it from there.
Okay.
645,000 into 23,000. That's how you should read it as.
Okay. Got it, sir. Thank you very much.
Yeah.
Thank you.
INR 1,600-odd crores.
Thank you.
QOT.
The next question is from the line of Dhaval Gala from Aditya Birla Sun Life Asset Management. Please go ahead.
Hi, Rajeev, and team. Thanks for the opportunity. Am I audible?
Yes, you're audible. Little feeble, but audible.
Sorry. I just had a couple of questions. One being, if you could talk about the SME lending piece and also our B2C business. I just wanted to understand how are you seeing things or trends on the ground in terms of growth and what could we expect in these two segments?
Yeah. That is very. I'm happy at least somebody's interested in the boring businesses. They do generate reasonable profitability.
IRR businesses.
Yeah, you know, principally, look, the SME lending business, the denominator itself has expanded. What we call it, we are not an SME, we are an MSME. I mean, I must clarify that. Sometime we'll change that. SME itself is MSME. People with turnovers between INR 2 crore-INR 15 crore. That's really plus or minus, give or take. Our segment is 65%-70% of them are traders, balance are manufacturers. Clearly, inflation has helped traders, number one. The denominator is itself, with lot more people are now doing this business, the denominator itself has expanded. That's one part. The denominator in this business always existed. People were not willing to serve. I am still not sure they will be able to serve for long, but we'll let.
Because we've seen too many people come into the business and gone away after six months, nine months, 12 months, 15 months. We and one of the other leading lenders are the ones who stayed on for the last 12-13 years. That's one point I must make. Or second point. Denominator expanded. A lot more people are providing services. Inflation is requiring greater working capital for MSMEs. Our segment is INR 2 crore-INR 15 crore. Given very strong domain that we've created over the last 15 years, the business is growing quite well. Having said that, its contribution, as you can see on aggregate basis, 13% has remained 13%. We remain very deep in this business. We don't do this in top 30-40 cities.
We do it in 1,200
1,800.
1,800 cities in India. This is very deep. We built a degree of competence and capability in this business, which is quite strong. I would say after B2B business, this is one business where we built a tremendous domain competence, and that's why we have survived through cycles in this business. Growing denominator eventually will help us as well, because more people are sharing the burden of growing. I just hope it's not a false dawn for competitors because this business can provide false dawn. B2C, mostly cross-sell. We stay with top of the funnel. We stay with top of the funnel, mind the franchise, run campaigns, keep going along. I mean, I think it's a boring business, and.
needs high level of efficiency and high level of risk management capabilities, high level of data management capabilities, campaign orchestration capabilities, and we do this for a living, so we are at it.
Sure. Also one question on EMI Card business. Basically, we now have more than 32 million EMI Card already been given. What could be potential here? Also any metrics you would suggest that if at all there are two loans on the same EMI Card for the same customer?
Sorry, EMI Card? EMI Card, 32 million. Sorry. I'm sorry, Dhaval.
Sorry. What I'm asking is, the EMI Card, one is the potential, how much, how many more customers you think can get, take the EMI Card? Because I think looking at your cross-sellable franchise where customers you want to do business. Second is, how many customers or EMI cardholders have more than two loans or more than one loan running right now?
Our loans or in-market loans?
Yeah, our loans. No, no, only Bajaj.
Our loans would be 10%-12% of the franchise. I mean, which means at a point in time, one customer running two loans, he could be running a CD or a personal loan or a home loan, 10%-12% of the franchise. 80% of the franchise would possibly be running one product at a point in time. Okay, credit card, if you add it, maybe number will be 15%-18%. On 34 million, it will be 20%-22%. On 34.66 million, number will be 22%-25%.
INR 22 million.
Yeah, exactly.
This will be having loan balance.
25% would be running multiple products. 23 million are running one product today.
Of the 33 million
Yeah.
22 million will be having
He's asking two products. Of the 34.66. To the point Kurush is making, let me make the point so that it's clear. We have 35 million best customers, as you call it. 60 million total customers, best customers, 34.66. We are banking today 23 million customers. If I take a unique customer view, it'll probably be 18.5, 19 million customers would be unique. That, I mean, plus, minus, give and take, between 18.5 million would be.
Banking.
Unique banking.
Just to reconfirm, today we have 34.66 million cross-sellable franchise, as we classify, and we have close to 32.8 million EMI Card holders as well. Largely the penetration level is done in this piece, means the EMI Card. The now new franchise additions will only be the potential EMI Card holders. Is that the right understanding?
Yeah, the understanding is correct. Dhaval, most of the customers who purchase electronics do opt for EMI Card. We do have reasonably decent penetration of customers taking loan from us, also buying EMI Card. The number that we report is net of those which have been blocked or closed. This will represent in a way cross-sell franchise.
Yeah. No, because I see a very strong growth versus our last couple of years in the people who already have EMI Card, and also if I tally that number with the cross-sellable franchise which we have.
Correct.
Thank you.
Thank you.
Thank you. Next question is from the line of Param Subramanian from Macquarie Group. Please go ahead.
Hi, Rajeev and team. Thank you for the opportunity and congrats on strong numbers. Rajeev, if I could ask this, you've given this data on disbursements in the B2B segment. What would it be for a pre-pandemic base, FY 2021 to FY 2020 perhaps? What would this run rate have been then?
We used to provide sometimes, I don't know the number off the block. Two things have happened, Param. The value share has grown much faster. That's part of it is inflation, manufactured prices input. The value share
Sir, sorry to interrupt you.
Value growth and volume growth. Sorry.
Param, we are requesting you mute your lines from your side, please.
I don't have it offhand at this point in time. We'll be happy to share. Sandeep can provide that data.
Sure, Rajeev. Continuing on another question from a participant. On the cross-sell fee, now, if I look at the number of loans being booked, roughly 7.5 million loans being booked on a 60 million franchise in this quarter. Now, if I go back to, say, a pre-pandemic day, say, Q1 FY 2020 or three years ago, you were booking at a similar run rate. Of course, the wallet, you know, loans also add to that, but you were booking 7.5 million loans even then on a 35-36 million customer base. Just trying to understand if repeat customer transactions have come down or is that, is that something that you're worried about from a kind of franchise basis?
Param, I think while your point is correct, it can be seen with respect to the cross-sell franchise as well. The fact of the matter is that the sales in the market is not necessarily driven by customer franchise. The sales is driven by the number of customers walking into the store and buying product. The penetration level, as Rajeev explained earlier, has continued to remain range bound within 68%-70% for us. These are the customers who are going in the market and buying, and whenever they are buying, we are getting a 70% market share of those customers.
Got it. Just one last question on the omni-channel data that you provided on slide 13. You're saying that, you know, roughly, on the digital EMI card base, you're booking about 227,000 loans per quarter. Now, the digital EMI card base itself has almost doubled. If I'm looking at the number of loans being booked, it's a bit flat-ish over there. You know, is this something that you think is going to pick up and, you know, it's because it's taking off this product now and gonna pick up or is this something you're concerned?
Read it like, look at it like a credit card, right? Credit card, you should understand credit card activation. In fact, our activation rates on EMI Card on a twelve-month basis are much higher than credit card activation rates. Whatever is public domain, no? I'm talking in public domain. If you have to look at it that way that customers buy. In this case, 522,000, we used to provide the data until last quarter. 60% of the customers pay INR 550 and buy the product. Anybody who pays for it and buys the product, their activation rates are distinctly higher. Twelve-month vintage, we see anywhere between 45%-50% activation rates.
We are also seeing that more customers coming onto our app, more he is a fee-paying customer. Because his confidence is much higher that given whatever has happened in the payments industry over the last two years and customers have got based on vishing, phishing, so on and so forth. Their confidence is much higher as they come onto the Bajaj Finserv app. These activation rates are much, much higher than what a traditional payment product would offer. We continue to stimulate them. There is a level of seasonality in it. 60% paying for it itself should give very high degree of confidence because he's more accretive to me.
He's not taken an asset, and he is 60% of them, our 520,000, have paid INR 550. We make money on every account on day zero. We are very comfortable with the conversion rate.
Got it.
Thanks, Rajeev, and all the best.
Thank you.
Thank you. The next question is from the line of Subhranshu Mishra from UBS Group. Please go ahead.
Hi, Rajeev. Good evening. Thank you for this opportunity. The first question is from the annual report. This would be the first year where we have seen a lot of board members going out, almost like, you know, three or four, which is for the first time in the last 13, 14 years. Is this like a precursor to any further management changes? And if there are, do we see you getting into a non-executive role? That's the first part or first question. Second is that, thanks, that we've diversified into non-captive two-wheelers. For a long period, we have been talking about data analytics and pre-approved offers. Why can't we, you know, have pre-approved offers for utility ve-
For utility vehicles?
Subhranshu, we lost you.
Hello.
We are unable to hear you.
Subhranshu, can I request you to speak through the handset, please?
Hello. Can you hear me now?
No, I think your question on utilities, commercial vehicles, right?
What I was asking is that, why haven't we diversified into other vehicle formats? For example, we can do a cross-sell and a pre-approved offer for our rural customers who can buy utility vehicles. Car loans for our urban customers, again, we can use data analytics and cross-sell. That's the second question I have.
I mean, there's not at a board composition and management composition are not connected. Board composition is changing. I would say a generational shift is happening is how you should look at it. That's the response to the first question. On CV, we so far have a retail consumer view rather than a productive asset view. We do it only in our captive business where we do three-wheeler financing. That's for captive reasons and for legacy reasons. Otherwise, so far we don't have a commercial vehicle view. Do we have a new auto loans view? Answer is yes. We've just kicked off the non-captive two-wheeler business. Sometime in FY 2024 we will launch even the new auto loans business.
That is the last product, quote unquote, or the final product that we'll launch on the retail side. Our customer used car we already do. To the point Anup is making, last four years we are doing used car. As used car scales to a hopefully half a billion dollars of balance sheet by end of the year, we should. That makes money. New autos take much longer to make money. And then we'll venture into what takes longer to make money. That's really how we are. New autos is part of the plan sometime in 2024. CV is not part of the plan.
One question still remains unanswered. What happens when you move, if you move into a non-executive role to the entire board?
I think my shareholders got reappointed for five years as managing director, so I'm here at least, based on the approval of the shareholders. I am very much here.
Sure. Thank you so much, Rajeev.
Thank you. We have a deep management bench, and we have a comprehensive succession planning process.
Thanks.
Thank you. Next question is from the line of Manjari from SBI Life Insurance. Please go ahead.
Hello. Good evening, sir. Congratulations on your result.
Sorry. Not able to hear you, Manjari.
Hello. Yeah, good evening.
Yeah, clear. It's clear.
Yeah. Congratulations to Bajaj Finance on the result. I have just two, three questions. One regarding the composition of your AUM. Could you take us through your perception of the risk profile and mitigation on the auto finance, which Q on Q there is a degrowth. Is there a conscious degrowth or a slowdown? And loans against securities, there is a jump of 72% June on June. So any
Yeah.
I mean, if you can give some flavor on that. Regarding deposits, what is the percentage of public deposits in it?
Deposits. Public deposits is 70% and corporate deposit is 30%, ±1 or 2%. That's one. Loans against securities. There's normally some degree of lumpiness. It's related to markets. It's volatile at times. I've seen this portfolio go to in 2018 to INR 8,000 crore, went down to INR 3,000 crore in March 2020, went to. We are among the largest lenders in India. It's a good business, profitable business. We are dovetailed into the HNI broking business that we're building and so on and so forth. It's just volatile based on market volatility rather than anything else. We would like it to not be volatile.
We would like it to be one way, but doesn't work that way. Management assessment or assurance on risk portfolio quality, as you can see in the portfolio quality panels, which is panel 40. Next. Just go to next. 47. Yeah. Panel 53 and 54 and 55. And we provided nine, 10 quarter data. That should two-wheeler and three-wheeler we would. As I said, 10 are green. This is the only one which is yellow. It would get green at 90% because while based on February 2020 it should be green, but that's not how it was. It was not in the best of health even in February 2020. So
Okay. Thank you.
At 90 it will get green.
Okay. Another question regarding the rural segment. Is the growth more like growth due to the ticket size of the borrowers? Are they borrowing more per individual or it is growth more on the number of centers added?
Um
One last question on the LCR.
Sorry. Go ahead.
Just last question on the LCR, that it has grown from 134% in March quarter to 196% in June. Any reasons for that? Is it a conscious uptick taken? If you can elaborate on that please.
Manjari, on LCR, we have consciously been keeping much higher liquidity in the balance sheet, and that is the reason why you're seeing this number increase in the current quarter. It's by design than anything else. We have been able to raise decent amount of long-term monies from money market as well as from banks in the current quarter. The surpluses that we have raised during the quarter has also got deployed for LCR purpose.
Thank you, sir. Regarding the rural segment, you're seeing growth for the number of centers. That is propelling the growth or the ticket size is increasing?
We don't look at it ticket size that way. Ticket size adjusted by inflation largely remain flat. It's mainly locations and deepening the locations that we are in, you know.
Okay.
In general, allocation kicks in from a maturity standpoint at 21-24 months.
Okay.
You know, that's all.
Okay. Thank you. Thank you, sir, and all the best.
Thank you.
Thank you. I now hand the conference over to Mr. Sameer Bhise for closing comments.
Thank you everyone, for joining this call today, and thank you to the leadership team of Bajaj Finance Limited, for giving us this opportunity. That ends the call. Thank you so much.
Thank you. Thank you all. Good night.
Thank you very much. On behalf of JM Financial Services Ltd., that concludes this conference. Thank you for joining us. You may now