Ladies and gentlemen, good day and welcome to the Bajaj Finance conference call for 4Q FY 2020 business highlights and COVID assessment hosted by JM Financial Institutional Securities 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 call, please signal an operator by pressing star zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Singh from JM Financial. Thank you, and over to you, sir.
Thank you. Good evening, everybody, and welcome to Bajaj Finance's call to discuss fourth quarter FY 2020 key highlights and COVID-19 assessment. To discuss, we have on the call Mr. Rajeev Jain, who's the Managing Director, Mr. Sandeep Jain, who's Chief Financial Officer, and Mr. Sandeep Jain who's President, Risk and Collections. May I request Mr. Rajeev Jain to take us through the fourth quarter key highlights and his assessment of COVID-19, subsequent to which we can open the floor for Q&A session. Over to you, sir.
Thank you, Karan. Good evening to all of you. I hope you and your families are safe. For today's call, as Karan mentioned, I'll be assisted by Sandeep, our CFO, and Deepak, our CRO. Over the next 20 minutes, I'll briefly cover our assessment of COVID-19 on BFL. Thereafter, we'll open for questions. Please pardon me for my monologue for the next 20 minutes. The speed and ferocity of COVID-19 is unprecedented, to say the least. One third of world population, as you're all aware, at this point is in full or partial lockdown mode. Unimaginable less than 20 days ago. No continuity plans could have ever forecasted such a scenario. Nations, corporations, individuals are all faced with difficult choices on an everyday basis and have to make decisions using limited information or rely on common sense in absence of any empirical evidence of such a crisis.
At BFL, we are doing the same on an everyday basis. My articulation over the next 20 minutes will be sequenced by global impact, followed by India impact, followed by RBI actions, and finally followed by impact on BFL and various scenario plans that we have created at this juncture. Let me just quickly start with global impact. As you're all aware, COVID-19 is the single biggest healthcare since Spanish flu of 1918. We all experienced the last big crisis in 2008. It was a financial and economic crisis. As you are all aware, it had material impact on financial well-being of nations, corporations, and individuals. 12 years later, it's difficult to even remember fully that it happened. Since then, in general, economies, corporations, and individuals have all experienced vast improvement in their overall well-being. That's my brief point.
These are exceptionally tough times, but they too shall pass. In the last 20 days, given the sudden shock of COVID-19, at this juncture, global economy in 2020 is expected to contract by 100-300 basis points. These are, mind you, the likely estimates. This is against the growth forecast of 250 basis points prior to COVID-19. This is also, of course, subject to all major economies taking bold fiscal measures. Every past economic crisis has seen strong fiscal stimulus, which ensured that there was a quick and strong economic recovery. Let's get closer home to India. When the first three quarters of the economy were really slow, various fiscal stimulus measures implemented by the government, aided by a good monsoon, were beginning to result in revival of demand outlook by each passing month. Clearly, in our assessment and our experience, economy was on the mend.
COVID-19 has brought the entire economy to a grinding halt for both demand and supply. As a base case scenario, a 21-day lockdown, along with a restart lag, would result in one month of nation's GDP lost. For a $2.7 trillion economy, that means $200 billion-$250 billion of GDP lost as a base case scenario. As we read about it is possible that the lockdown could even last longer. The cascading impact of COVID-19 lockdown and the likely social distancing measures are expected to be material as well. If the measures are effective and there is no second round of large-scale lockdowns, we should see some demand revival by July and hopefully full normalization by September, October. Our assessment is that FY 2021 will be more like a 10-1 0.5 month fiscal as a base case scenario at this juncture.
Clearly, in our assessment, economy needs bold, innovative, and unprecedented fiscal support to navigate through this sudden shock. The fiscal measures could be short and need not be permanent. However, without bold fiscal support, revival process could take much longer. Let me just give you a jump to RBI actions and the sector's need. Prior to COVID-19, the overall systemic liquidity was already quite strong at nearly INR 300,000 crore. RBI, to provide confidence to financial sector and to ensure sufficient liquidity, did targeted LTRO, reduced CRR, and increased the limit under MSF, as you must be aware. Overall, creating additional liquidity of INR 374,000 crore. MPC maintained its accommodative stance and reduced policy rates to 4.4%, lowest ever repo rate. RBI also took the unprecedented measure of permitting moratorium for all loans, wholesale and retail, till May 31st.
We applaud them for the same. There are moral hazards and potential behavioral issues with borrowers that we need to be careful about. We also believe that given the severity of the shock, more such measures will be needed for the entire financial sector. In specific, for NBFCs, HFCs, a direct low-cost borrowing window from RBI for up to 12 months, across the board one-time restructuring options without classification change, and freezing of DPD or customer till the end of moratorium period. These additional measures would significantly reduce the possibility of any systemic contagion in the financial sector. Let me now jump to the home ground, which is BFL. BFL overall has had very strong three quarters of FY20 with balance sheet growth of 35%, profit growth of 53%, and stable growth in net NPA, despite a 16-year record low GDP growth in FY 2020.
Its return on assets and return on equity have remained quite strong due to operating leverage gains, efficient risk management, and tax cut. When I look back, company has faced what I would call three big challenging situations in the last four years. Demonetization in 2016, IL&FS failure in 2018, and a 16-year lowest GDP growth environment in 2019. Its entrepreneurial culture and distinctive business strategy ensured that company profitably grew its businesses as it navigated through these challenges. While COVID-19 crisis by far seems to be the most brutal in my assessment, I am confident that company's entrepreneurial culture and distinctive business strategy will help it navigate this once-in-a-lifetime, I hope, tough and challenging period. For the Q4, as you may have reviewed, we released to the stock exchange in the morning.
Despite a 10-day loss, the company continued to grow its assets, loans, and new customer acquisition in a steady manner. Customer franchise grew to 42.6 million. During the Q4, company acquired 1.9 million. It was a 80-day quarter only. If it was a full 90-day quarter, we would acquire 2.2 million customers. We lost around 350,000 customers as a result of the lockdown in last 10 days. New loans booked were 6 million versus 5.8 million. We lost about 1 million new accounts is what would have got booked in the last 10 days, given Gudi Padwa was in the offing on 25th, 26th. Assets under management grew to INR 147,500 crore. Company lost around INR 4,750 crore of AUM as a result of a 80-day quarter. Let me now jump to how we are approaching this crisis in the last two weeks since the lockdown.
Attitudinally, as a company, we have an option to be optimistic, pessimistic, and cautiously optimistic. We as a company and management, along with shareholders, are choosing to be cautiously optimistic. We believe that financial institutions have to always remain open for business at all times. It's extremely important at this point in time for us to hold our nerve and make prudent decisions in the long-term interest of the company. Let me now jump to balance sheet and P&L view. Clearly protecting the balance sheet should be everybody's primary role at this juncture. There are four key aspects to balance sheet protection in current situation. Namely, liquidity, capital position, strong loss provisioning, and deposit franchise. On liquidity, company ended March 31st with consolidated cash position of INR 15,900 crore. Its CP borrowing is less than INR 2,000 crore.
Its maturities over the next three months are lower than the incremental flows expected over the same period. It has another set of undrawn lines to the tune of INR 2,500 crores. We are very sufficiently safeguarded from a liquidity standpoint. On capital, we are very well capitalized with a 25% capital adequacy ratio. At this point, we are amongst the most capitalized companies in financial sector among large companies. On loss provisioning, historically, company has continued to remain extremely prudent in making provisions for anticipated losses. Given the unprecedented and sudden shock of COVID-19, company is considering provisions against identified large accounts as well as a one-time provisioning for potential impact of COVID-19 in Q4. This will ensure that we create some degree of cushion in the balance sheet at this stage. On deposits, that's the last aspect of our balance sheet.
We ended with a deposit franchise of INR 21,400 crores, with only 28% contribution from bulk deposits. 72% of the deposits are retail deposits. That's on the balance sheet quickly. Let's now talk about P&L. Given the complexity of P&L, I thought what I will do is to deconstruct the same as demand, revenue, OpEx, and credit cost. Let's quickly talk about demand. As I mentioned earlier, prior to COVID-19 shock, the economy was already on the mend. It was very visible and evident in semi-urban and rural India. We are hopeful that if the lockdowns are not extended and we do not observe another national lockdown sometime over the next few months, we could see demand revival in our categories starting June, July, and restore hopefully to full normalcy by October, November.
I'll cover three different scenarios of how we are planning this in just a few minutes' time. Given the diversity of our businesses, I thought I'll just give you some texture on categories of our businesses the way we see it at this point in time. If you take our two-wheeler and B2B businesses, which are point-of-sale businesses, it's 19% of our balance sheet. All parts of this business are currently in lockdown, whether it's offline or e-com. Some portion of the lost sale could be recovered in this business in the balanced fiscal, is what our view at this point in time is. Retailers, in general, were well-stocked with a 30- 45 day inventory prior to lockdown.
It's strange that less than 30 days ago, our entire COVID-19 focus was on supply side issues, whether China would be able to supply goods to the air conditioners and so on and so forth. Will retailers be well-stocked or not? That's changed suddenly to a demand side environment. Q1 disruption, however, in our assessment will be more severe as it is a 60-day quarter. Demand outlook for balanced fiscal will be a function of length and intensity of lockdown. The B2B business of ours is highly granular, with presence in 2,300 cities and towns in India. Our 24,000 off-roll staff across 2,300 cities will be at stores within 48 hours of store opening, is really how our preparedness at this point of time is. Our B2C businesses is the second aspect of our business, which is 20% of our business.
In this business, we essentially lend only to existing customers with good repayment track record, with us and with the banking system. Subject to credit performance reverting to pre-COVID levels over the next four or five months, we can go back to growth mode in this business. Q1 loss of sale can be recovered, possibly, in the balanced fiscal. This business is as granular as B2B, and it's likely that smaller markets may recover lost sales faster than larger markets. MSME is the third line of our business. This business has been under severe strain since introduction of GST, which aggravated last year due to slower economy. We've continued to grow this business during this period as a result of our focus on professionals and geo expansion. COVID-19 is likely to have a very severe impact on all aspects of this business, including small businesses, professionals, and across geographies.
Demand will be high, on the other hand, in this business, as small businesses, once lockdown lifts, will want to kickstart their business. Lenders are not likely to be forthcoming. Credit guarantee support from government can really ensure that lenders come back to lend easily. Else, we believe that the growth recovery could take anywhere between 12- 15 months' time. Mortgages, which is 31% of our business. Fundamentally, sales process in mortgage is a 30- 45 day walk, and thus Q1 will be a 60-day quarter only. Some part of lost sales can be recovered in the balanced fiscal. The challenge in this business, however, is likely to be pricing pressure from banks. While the overall balance sheet would gain as a result of lower cost of funds, this business would struggle a lot more given where rates have gone to.
Risk in this business is not likely to be a challenge. The second-largest business of ours is rural. It's 9% of our balance sheet. Recovery in rural is likely to be fastest, as rural was already doing very well in Q4 due to strong monsoon and stimulus by the government. Rural B2B will revert to normalcy the fastest, and B2C will revert to normalcy in line with urban B2C. Commercial, which is 4% of the balance sheet, given the environment and potential impact on commercial clients, will work for the foreseeable period only with existing clients. Loan against securities is 5% of the balance sheet. Given the stock market volatility, this business has already seen a reduction of 25% in the last 30-45 days. The portfolio is currently at a margin of 50%, as required by RBI.
The recovery in this business will be a function of the markets clearly. We internally are focused on building a retail brokerage business at this point in time. That's from the demand environment. Let me quickly run through revenue. Let me just reiterate a point that the company, due to its very strong orientation to profit and our really disciplined retail nature of its business, fee orientation, and cross-sell focus, has significant margin of safety across its various revenue lines. Given its strong liquidity and distinctive credit standing in the market, we do believe that we'll be able to command premium, as given the liquidity that we have and the supply side is expected to be constrained. We expect we'll be able to get some amount of premium as things normalize.
However, we will continue to carry extra liquidity over a period of next six months, resulting in extra cost of carry in our cost of funds line as well. Let me just quickly jump to OpEx now. Clearly, operating expense is something over which we have greater control. Company has created a plan to prune 7%-8% of its total operating expenses as the lockdown lifts. As an immediate measure, we've decided to hold all our fixed costs at current levels till October. That would mean no incremental replacement hiring, no new branch expansion, no advertising and promotion, 80% reduction in travel, 80% calibrated approach in technology expenses, and a hawkish view on incremental CapEx. Apart from these actions, as we look further, there are suspensions in our OpEx lines due to our modular operating model.
As a measure of prudence, however, we will be further increasing our investments in collections infrastructure is really what our stance is. We've also worked on a plan whereby if the demand scenario is weaker than the scenarios that I'm going to talk to you about, that we take a harsher view on operating expenses as the next level plan if the demand environment is weaker. Let me now come to one of the most important parts of P&L, namely credit cost. Before I come to credit cost, let me just reinforce that we are a risk-driven business. Except for our two-wheeler business, companies focus on mass affluent customers earning INR 5 lakh-INR 6 lakh per annum in urban markets and INR 3 lakh-INR 4 lakh per annum in rural markets. 65%-67% of our customers are salaried and 33%-35% are self-employed.
65% of our customers have bureau scores of 750 and above. Rest have no bureau score and mainly come from 75+ markets where bureau is low due to low penetration of financial products. The SMEs that we deal with or we target have annual turnovers from INR 5 crores-INR 16 crores. The commercial clients we lend to are in general BBB+ clients. The home loan clients are only salaried for the last two years with annual incomes of INR 11 lakhs-INR 13 lakhs. Loan against property portfolio of ours are given to self-employed with average exposures of INR 60 lakhs-INR 75 lakhs, so it's quite granular. The developer finance portfolio is 0.9% of the total portfolio. In LAS, the average exposure is INR 3 crores-INR 4 crores. Two-wheeler business of ours, which I said is the only business where we deal with a mass customer, is a captive business.
Given the customer segmentation in this business, this business is a lot more vulnerable to credit shocks as experienced in demonetization as well. On the credit cost, before I start, I must state that the situation at this juncture is very fluid. I'll outline the way we are observing it firsthand very clearly. Before I start, I must also make a point that the customer right now is in a state of shock. None of us has ever worked from home or has ever faced such a long and sudden lockdown. Nor has the economy ever been stalled for such a long period in such a sudden manner. The impact clearly is very brutal. Given the unprecedented and sudden shock, customers clearly focus on saving/hoarding cash. In my 25 years of experience, behavioral sciences has never been an area of attention from a risk management standpoint. It is for now.
It is our reasonable assessment that as customers and businesses get back to work, and faster they get back to work, faster situation will normalize, we should get back to normalcy in short period of time. I am confident that the economy has the resilience to navigate a 21-day lockdown. At the end of the day, we all locked down on 22nd. In 20 days, the structural nature of the direction of the economy cannot change. We did experience the same during demonetization. This, of course, seemed much bigger as a crisis and has a lot more uncertainties than in hindsight demonetization had.
What we are observing at this point in time from the banking that we have done so far is that the net bounce rates for us as a company are up 2- 2.5x across all customer segments, whether it is salaried, self-employed, doctors, professionals, SMEs. This is across nature of banks, whether it's public sector banks or private sector banks. No part of the economy, given the wide diversity of the customer that we touch and the sheer volume of customer that we touch, seems untouched by this unprecedented sudden shock. The commercial customers, despite their better rating, are proactively seeking moratorium requests. Only 1.1% of our retail and SME customers have so far proactively reached out for moratorium requests. This is also probably one of the reasons why we are seeing elevated level of defaults or bounce in retail and SME.
Based on our scenario planning, I'll share with you very briefly soon our estimates of credit cost in the next two to three minutes. The stance that we have taken as a company is to bank all customers who have not requested for moratorium. Historically, 27%-30% of our defaulting customers in general pay digitally. Rest, 73% of the defaulting customers walk into branches or are collected by field agents. Given the lockdown at this point in time, naturally, field and branch collections activity is halted and will resume once the lockdown is over. Customers who are unable to pay by month-end will be offered moratorium for that month on a suo moto basis till May 31st. While customers may be offered moratorium benefits, the company has decided to continue to make provisions as per its historical flow rates.
In addition, company will continue to make additional provisions based on emerging data. I now come to three key scenarios that we have fundamentally created at this juncture. I must, however, also hasten to add that this is subject to ongoing change. As we see data, as we experience what's emerging, as the country takes stands on how long and so on and so forth. As you would agree, there are many imponderables. The first scenario in our assessment is that lockdown opens on 14th of April. In this scenario, we foresee business in April to be only 20% of our planned volumes. We expect May to run at 60% capacity and gradually return to 100% of our planned volumes by September. The impact on demand is likely to be transient in this scenario.
The impact on credit cost is likely to be 40%-50% higher on a full year basis. The bounce rates and collection efficiencies should return to normal in this scenario by August. We may also have an opportunity to regain some of the lost volume in second half of the year, albeit marginally in my assessment. The second scenario is that lockdown opens on 30th of April. It would have been a 40-day lockdown in the process, and is likely to have a reasonable impact on customer psyche. In this scenario, we foresee business in April to be zero, of course. We expect May to run at 30% capacity, June at 70%, and return to 100% of our planned volumes by October. The impact on demand, however, is likely to be material.
The impact on credit cost is likely to be 50%-60% higher on a year-over-year basis, on a full year basis. The bounce rates and collection efficiencies may return to normalcy by October. We are not likely in this scenario to gain any of the lockdown lost sales volume. Third scenario is that lockdown goes all the way to 49 days, and opens only on 15th of May. In this scenario, we foresee business in April and May to be zero, of course. It is likely to have a structural impact on demand across all lines of businesses for the rest of the year. Business in April will be zero, May will be 20% of our planned volume, June at 50%, and return to normalcy of 100% of planned volumes only by sometime in Q4.
The company will be forced to take, in this scenario, a harsher view on OpEx and explore a 12%-15% cut versus the current OpEx cut that I talked to you about of 7%-8%. The impact on credit cost is likely to be 80%-90% higher credit cost on a full year basis. In this event, we expect RBI will have to necessarily provide one-time restructuring option to the financial sector. I've come to the end of my monologue. As I mentioned in the beginning, these are highly uncertain times, and we're all forced to make difficult choices and decisions on an everyday basis with limited information, and without any empirical evidence, unfortunately. At BFL, as I said, we're doing the same.
The strength of the business model, I believe, agile decision making, strong execution rigor, and long-term orientation, we believe is likely to be a differentiating factor. We have very patient shareholders and an exceptional management team. We are all hands on deck to tide through the biggest crisis that we have all experienced. Thank you for patient hearing. This transcript, given the long conversation or the long commentary that I have done, we will be posting on the investor section of our website by 16:00 today. Please do refer to it in case you missed noting down anything. With that, I open the call for Q&A. It would be my request that if point has been covered, repeating it may not be appropriate from an efficient utilization of time standpoint. I'll go by your judgment on that.
Sure. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask questions may press star and one on their touch-tone 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 questions. Ladies and gentlemen, we will wait for a moment while the questions queue assembles. To ask questions, please press star and one. The first question is from the line of Sanket Chheda from B&K Securities. Please go ahead.
Yes, sir. Good evening. My question was mainly that apart from the measures that RBI have already announced, you spoke of a couple of more measures that you expect them to announce, one of which was dispensation for one-time restructuring. What were the other two, sir?
The other two was direct low-cost borrowing window from RBI for up to 12 months restructuring and freezing of DPD till end of the moratorium period. There is a little bit of anomaly that those clients who are in default can be given moratorium as of 29th of February, but their DPD is seasoning, which fundamentally means on 1st of June, they will land up moving to 90 DPD+ . We believe it's our assessment that this will get reviewed by RBI. These are the three things that we expect.
Okay. Sir, one more thing. There was a pledge on some media channels that PMO and FinMin has got in touch with RBI or banks and requested them to provide some relief on the compounding of interest on interest, and reduce some burden in terms of interest cost. Sir, have you received any such communication, and what is it exactly? It's pretty confusing. Can you throw some light on this?
Yeah. Eventually, we all have to follow the law of the land. We'll follow the law of the land as and when or if and when the notification appears. For long-term businesses like mortgages, it will have a material impact. For short-term businesses, the impact will not be material. Mainly, the impact of this will be on mortgages and on loans which are longer than 36 months.
Why it would be so, sir, for mortgages?
The tenure in case of mortgage business is very long. For example, if I've not paid interest for the three-month period, and let's say my rate of interest is 9%, I've effectively not paid about 2.5% of interest, which will get capitalized as my principal. As you would know, principal component repayment in case of mortgage business, which is let's say 120-180 months is less than 2%-3% of the overall principal. We'll take much longer in terms of from a term extension point of view for a customer to pay.
Okay. For that answer. Thank you.
Thank you.
Thank you. The next question is on the line is Dhananjay Sinha from Emkay Global. Please go ahead.
Thanks for the opportunity, sir, really a detailed one. Just two quick questions. If I see your scenario one, two, and three, you have given a brief guidance about the kind of credit cost that will be rising. One, are you doing a review of the 13 exposure during Q4? Number two, what would be a rough impact on the margin in all those three scenarios? Any major change that will happen on the margin? I definitely take care of it. There will be some change in the business which will impact it. Considering that, any rough margin estimate that you'll be having at the moment?
When you say margin, you mean?
So-
Let me give a response to the first question. First of all, we are in a closed period. Today morning we have outlined in our disclosure that we are evaluating. I cannot share specific numbers on Q4. On one of the identified large accounts that you named, we have made our intentions clear as part of our Q3 release.
The other account has been in NCLT proceedings for the last 18 months with no clarity in sight, is really what I would say on that. Can you make the one and second question?
Okay. We'll be having a two-way impact here. Obviously, there will be a growth slowdown, there will be a credit cost which will also be inching up. That is what credit cost you already added it in, scenario one, two, and three.
Yeah.
I just wanted to understand, have you built up, because the B2B is the most impacted in case the lockdown gets extended further. B2C and mortgages is something that even you also highlighted. You will be able to recover the ground probably in this financial year or related right in the B2B because the actual lockdowns are more impacting you. In these scenarios, are you seeing that there will be a major pressure coming up on your margins as well? You think that more or less on the operating level side, the slowdown will be more or less to do with the growth itself and less to do with your lending and borrowing rates? Am I making myself clear?
I understand. I've said, Dhananjay , that given our strong liquidity, and this note will be there for you to refer to, and I'll repeat the point that I made. That given our strong liquidity and distinctive credit standing, we believe we'll be able to command pricing premium as COVID-19 shock normalizes. It's mainly a demand-side view. We don't foresee revenue pressure other than the mortgage business. There we do foresee pricing pressure. In other businesses, we don't foresee pricing pressure. Probably, I guess an expansion.
Okay.
There are fewer people in the market. In mortgage, we will see pricing pressure.
Okay. Can I just reconfirm again? You said you lost roughly INR 3.5 lakh customers, 10 lakh new loan accounts, and fourth on term INR 50 crores of EOM because of the last 10 days.
Yes
additional damage. If I add a 4,750 anyhow to your existing skill level, growth numbers should be somewhere around 31%-32%.
Yeah.
Our previous nine months have been 35% roughly. Anything apart from this lockdown which has impacted us? That is my last question.
I would just say that, as I said earlier, economy was on the mend. Let me give you a sequential view. Clearly, the slower economic output, number one. Number two, given our credit costs had gone up, we pulled back on various businesses. If you take our Q1 growth was 41%, Q2 growth was 38%, Q3 was 35%, and Q4 would look like 32%-33%. We have pulled back, as I said, in Q1 and Q2, between 15%-20% of our growth we've pulled back on. It was gradually slowing down, and actually, I believe that if COVID-19 had not happened, sometime by Q2, we'd be back to a reasonably stronger growth momentum. That's probably history for a little while now.
Thank you.
Thank you.
Before we take the next question, we'd like to inform participants to please limit their questions to one per participant. Should you have follow-up questions, we request you to rejoin the queue. We take the next question from the line of Prashant Poddar from ADIA. Please go ahead.
Hi, Rajeev. Hi, guys. Thank you for the opportunity. Quickly on, Rajeev, the organization is a quite data-dependent organization. Given that data will not remain dependable in the post-COVID situation, given that there would be moratorium, there would be a reset, whatever. There will be relaxation to it. Another point is about the fact that government may take lockdown measures again after the first, let's say, relaxation of lockdown. We would not be able to interpret it right now. In that evolving situation, how would you be taking decisions in terms of incremental lending opportunity?
I think it's a very fair question. Let me just say that to begin with, we'll be very cautious as lockdown opens. At this point in time, while the risk folks in the company are working on the model, when I talked about the bounce rate, we are seeing it completely structural. 800 customer, 775 customer, salaried customer, existing customer, everybody is, it's got nothing to do with risk, it's very evident and clear. Our thoughts also at this point in time at a 10,000 feet level, Prashant, is that we will be very cautious, number one. In B2B business, in general, if a model is not working, go with a 30% margin requirement. You want to buy a television, do buy. We want to be open for business, pay a 30% margin. In general, that's the lowest risk outcome.
In B2C, we will restrain from doing sell from for the next three to four months. In SME, we will cut the bottom two to three deciles. In commercial, we'll work only with our existing customers. In some of the businesses, like a discretionary point of sale business which is retail EMI card, we may not do for a while. We've got a set of actions ready as we get to work. Is there a point that you're making that's a correct point that we are partially flying blind for the next definitely, 45 days away, between 15th of April to early June? That is a fact. Does that clarify my point?
Yeah. Good. Thank you.
Thank you.
Thank you. The next question is from the line of Dhaval Gada from DSP Investment Managers. Please go ahead.
Yeah. Hi, Rajeev. Couple of questions. First is on the bounce rate, this 2.5x increase is in April, I presume. Is that correct?
Yes.
Okay. The second related question is just on the credit cost delta that is given in all the three scenarios. Is that on the elevated base of FY 2020 or the normalized credit cost that we would have seen in any of the other years? Just a clarification on that credit cost impact that you had in the three scenarios.
It's a very valid question. It is on base of FY 2020. I must just say what I was saying to Prashant earlier. We are in an uncertain zone at this point in time. We will share when we do our investor release for Q4, we will actually share February 2020 data rather than March 2020 data because March 2020 data is marked by Su-Moto moratorium, right? We will share, and you would see in most of the businesses, we were actually seeing improvement. We were forecasting that by June, July, we would see reverting to 2018, 2019 credit costs. SME would have been the longest lag by September, October. Other than that, we were forecasting July, August back to 2018, 2019. At this point in time, Dhaval, to give you a clear view, it's on FY 2020.
Understood. Just lastly, on OpEx reduction, could you share the top three or four items that are driving this reduction? One would be obviously the business organization, but apart from that, what are the other major ones?
Yeah. No, I talked about it, and we'll put it up as well. You put all hiring on freeze, no branch expansion, no A&P, no travel. Significant calibration till October in technology. Very hawkish even on CapEx. I must just only make a point. All this is till October at this juncture. As situation moves, we want to remain a growth-oriented company. At this point, situation demands that we take some of these harsh measures, given that it's one of the few things in our control at this point in time.
Understood. Thanks, and all the best. Thank you.
Thank you.
Thank you. The next question is from the line of Suresh Ganapathy from Macquarie Capital Securities. Please go ahead.
Yeah. Hi. Thanks for taking my question. Just one question. Rajeev, how serious do you think this moral hazard issue is? Are the customers really well-informed that this is a moratorium and not a waiver? Do you really see this changing behavior or creating some kind of a structural issue? I know it's too early, but just wanted your initial thoughts on this.
Yeah. No, it's a very fair question, Suresh. That's the only thing that worries me. I've said this, that it is unprecedented. Somebody very senior was talking to the U.S. and said, he told me that this has never been tried anywhere in the world at this scale. Now, as I said, I applaud.
Sorry. The three-month moratorium.
Moratorium. Yeah. Just this kind of wholesale morat at a nation level. You think morats have been given, cyclone happens, Katrina happens, morat is given. This is a stall of the economy, and as a result, has to be offered for the broader economy only. It's an experiment, let me be honest with you. It seems to be an experiment. Clearly the only thing that worries me, Suresh, and I hope it's only a worry, that moratorium should not tip into a moral hazard. We will only know this to the point that you're making when we all bank June/July.
What is the initial feedback on the ground? Have the customers thought this is a waiver?
Okay. Yeah, no, it's a fair question. Yeah. Originally, people thought it's a waiver.
Okay.
I think various news channels, a few news channels also reported as a waiver in local vernacular mediums. As the dust settled, probably partially the damage had been done. It is now understood that it is not a waiver, but a moratorium. I think for financial institutions, the walk is going to be a little longer. It will increase our work a little bit. It's my assessment. It's a pure personal point of view at this point in time. We are all flying blind, Suresh. That's my view at this point in time.
Thanks. Thanks, Rajeev, for the input.
Thank you. The next question is from the line of Ashish Sharma from Enam Asset Management. Please go ahead.
Yeah. Hi, Rajeev. Thanks for the opportunity. Just one on the collection efficiency infrastructure. You mentioned that we would want to focus on that. Just on a short-term basis, is it possible for a company like Bajaj Finance to sort of raise the capacity? You already mentioned the bounce rates are two and a half times. By the time the lockdown is over, our collection efficiency or collection infrastructure is already up one and a half, two times. Just some color on that.
Yes. Two things, Ashish. Clearly, no capacity plans allow for two and a half times. Fundamentally, that is the reason we are giving an elevated view of the credit cost. If you connect the two dots, that's the purpose. If there is increased flow, there is increased flow. Whether it is secured, unsecured, increased flow is an increased flow at an experiential level. The only thing that is so are our collection folks working at this point in time on as the lockdown lifts, what is the plan? It's work in progress. That's point number one. Point number two, the only thing I would make. Given our granularity, outside of 50 markets, it's much easier for us to pull it off because the numbers are much smaller by market. On the 50% of the volume, it is much easier to pull it off.
The issue will be the first 25 markets. Unfortunately, however, 25 markets would be 40% of the business. That is really where the bigger challenge would be. We are increasing communication with the customer. We are increasing counseling with the customer to earlier questions that Suresh was also asking, given some damage has been done. We are increasing counseling. We are increasing communication with the customer. We are working on augmenting capacity at this point in time, Ashish, but it's work in progress, I must just say.
Okay. Just one clarification. You mentioned what percentage of retail customers have sought moratorium at this moment?
We gave to 900,000 customers a moratorium in the month of March.
Perfect. Thank you, Rajeev. All the best.
Sandeep was correcting me, 900,000 in non-AF and 300,000 in AF. Auto finance is 300,000.
Auto Finance.
Non-Auto Finance is INR 900,000.
Thank you.
Thank you. The next question is from the line of Shubhranshu Mishra from BOB Capital Markets. Please go ahead.
Hi, Rajeev. Thank you for the opportunity. This question is actually to Deepak. I just wanted to understand what in the pre-COVID levels, what was your collection and like? Given that we have the some certainty, but then we are seeing the 2.5% increase in the bounce rate. How are we going to increase the throughput? If we are going to increase the throughput, it's going to have an effect on the OpEx. How are we going to reduce the OpEx or at least manage the OpEx to maintain the level of gross NPA?
As I said, that's the only line in OpEx which will see investments in the short to medium term. It's likely to be medium term.
Can you explain what is the collection for the normal bounce rate and then get to OpEx?
Out of 22,000 people, 4,500 people in the company working collections. We essentially run, fortunately, a lot more modular model that we don't collect. It's an agency infrastructure that collects for us. Gives us greater flexibility, scalability to expand the infrastructure. Of course, as I said, not to the extent of, is there a scalability to the extent of 20%-30%? The answer is yes. Is there a scalability to the extent of 2x? The answer is no. That's the level one point. There are 30,000 field staff who work for the outsourced agencies at this point in time, and 3,500 callers. In all directions, we're working with our agency infrastructure that as we come back on stream, whether fully or in part as a country, how will we rapidly expand. I must just make one point.
Despite the fact that these are outsourced agency infrastructure, we've gone ahead and all our outsourced staff, whether it is a sales outsourced staff, which is 25,000, or another 30,000 of this staff, have all been paid fully. We want to remain open for business as we come back, both on the business side and on the collection side. I want to make the third order point that I made earlier, that 50+ markets pose much lower risk. It's the 1- 50 market that will pose a much higher risk. It's work in progress, as I said, Shubhranshu.
Right. How many agencies in the top 50 market and how many agencies in the.
Let me make a point. If I may make a point, that when we come for our Q4 results, we will provide greater color. I think that's what we can, at this point in time, commit.
Well, sure. Sure. Thanks. That was my only question.
Yeah.
Thank you. The next question is from the line of Piran Engineer from Motilal Oswal Financial Services. Please go ahead.
Yeah. Hi. Thanks for taking our question. I just have one or two questions. The base case scenario wherein the lockdown ends in the next 10 days, and we slowly, gradually pick up on disbursements, what would our revenue growth be like in FY 2021, given that actually now bulk of our book is past on?
Yeah. If it's scenario one, and we all hope and pray it is, the material impact on the growth and the P&L will not be significant. It'll probably be some growth loss, some profitability loss for a fiscal. The numbers, to be very fair, we've given you as clear a view as we have based on credit cost, based on volumes. It would be, if I may say so, hazardous at this point in time to give specific numbers. Give us time till our results. We should have hopefully greater clarity. If it opens up, while we are in completely in touch with our B2B ecosystem, we will have to just wait to see what is the response. I have seen in demon that the country got back to its feet very quickly given the young population.
I am amazed in hindsight about the speed of the response of the nation. I am banking that it works again. Doing a forecast, and I have already done reasonable forecast for you guys in terms of how we see impact on each line, specific numbers may be inappropriate at this point in time.
No, that's fine. Just secondly, a data point. What percentage of our SME loans is professional loans? Professional is mostly doctors, right?
Yes, only doctors. We have chartered accountants, but chartered accountants is much smaller component. For lots of you who are chartered accountants, it performs better than even doctors. Yeah. Out of 13%, 8.5% is business loans and 4.5% is doctors. As I said earlier, that's one of the reasons why we've been continuing to grow. The share used to be 80/20. In the last three years, it's moved to 60/40 virtually. In fact, I think the number is a little higher, if I'm not mistaken.
Fair enough. I'm guessing that 4% you would not be averse in or cautious in terms of resource control.
Sorry, I lost you.
For the doctors part of it will be business as usual. In your initial comments, you said that you'll be cautious on SME lending in FY 2021. I'm guessing it only for the business loans part of it, not for the doctors part of it.
So doctors are not doing-
Streets are closed.
OPD.
Streets are closed.
For the last two weeks. Look at the severity of the impact across the ecosystem. Hospitals are closed. You would think hospitals should be the place booming business. Hospitals are closed in India at this point in time, other than COVID-19. The severity of the impact, don't underestimate the breadth of it. India has 1.5 million doctors, all are at home, other than a few who are junior in general, manning the hospitals.
Okay. That's all from my end. Thank you and all the best.
Thank you.
Thank you. Next question is from the line of Prateek Agrawal from ASK Investment Managers. Please go ahead.
Yeah. Thank you. Hi, Rajeev. I just wanted to understand how your B2B accounting works. Does the moratorium apply on that client as well?
Yeah. There is a leak in this.
Yeah. When you say accounting, I'm assuming that you refer to how do we recognize revenue in case of B2B business.
Because my whole thought comes from that explicitly you say it is zero interest. If a moratorium applies there, then nothing accrues from the balance sheet to be future received while you continue to pay your banks whatever you have negotiated.
We account subvention or income that we get from manufacturer, retailers over the tenure of the loan, which is on the effective IRR. The effective IRRs work anywhere between 24%, 25% in case of B2B business. To your specific question in terms of moratorium, whether moratorium will be offered to consumer electronic or B2B customer, answer is yes. We don't sell the product as 0% installment business. We sell it as low-cost EMI. That benefit is available to the customer for the contractual tenure of eight to nine months. If the customer pays through that time period, absolutely he doesn't pay any cost. However, if the customer needs an extended tenure because of moratorium, he'll have to bear the cost of interest loss that otherwise will happen to Bajaj Finance.
Okay. In this case also, while it is regulatorily mandated, the client pays the interest cost?
Yes.
Yes.
Thanks.
Thank you. The next question is from the line of Pritesh Vora from Mission Holdings. Please go ahead.
Thank you for the opportunity. My question is not with the COVID, but just business in general in consumer business. What we have noticed recently, there are a couple of POS manufacturer have come and lended in the credit card business. They have raised the funds up to INR 300 million, and they tied up with 50, 60 banks to offer the credit on the credit card business. How deep threat it is with respect to that particular business model?
Credit card business, we look at it a different way. The competitive intensity in the B2B business over the last two and a half, three years has increased dramatically. Given our dominant share in the business, we are the defenders and rest are challengers. I look at it a very simple point. What is the share of subvention from manufacturers? In general, in the consumer electronics business, 70% of the subvention pool for the last 12 years, which includes the last three years, continues to come to us. In the digital products financing business, between 16%-17% of the share of manufacturer subvention from digital products manufacturers continue to come to us. That share has not moved. Rest, if the share of business is growing, as a result of a differentiated model, so be it. It really doesn't bother me.
No, my question was, in respect to the recent offering. They were offering credit card business, but now they are offering on debit card also.
What they have tied up with the various banks. Earlier that tied up was not there. Being a third-party POS machine provider for an end customer, it's a very easier thing because any of the business card, credit card he has, if the third party is a neutral guy, he can avail this facility on credit card. He does not have to pay the processing fee to Bajaj.
Very fair. Fundamentally, look, the key nuance, and you should try it. That's the important point I'm making, that we offer across various SKUs. We offer schemes by SKUs. The POS machine infrastructure, number one, credit card offerings in general are vanilla three to four product offering you get. That's the key difference versus 12,000 SKUs across which we offer customized solutions versus four vanilla offerings. That's the key difference.
Sorry to persist on this question, what I understand is they are increasingly raising the fund with the international investors, and they are expanding their subvention scheme and tying up with manufacturers. I get your point that you still command 60%-70% market share. This threat of independent POS provider is real, because earlier, if any one bank has a POS machine, the credit card of other bank does not work. In case of a neutral guy coming and taking over POS infrastructure, he can tie up with all the banks.
That's very fair. Yeah. Fundamentally, look, the point is not, one, I said in terms of offering. Second, it's about risk management. Third, as we are discussing over the call, it's about collections infrastructure. Somebody can do all three, there is no reason why that this market needs to be constrained of competition. More people should do it. We have faced threat from banks over the last two and a half years. We'll face a threat from a technology services provider, that's fine, who's essentially aggregating on behalf of various institutions. That's absolutely fine. It's a new competition. Does that answer?
Only thing you mentioned about the collection.
Sorry?
You mentioned about the collection infrastructure, that's a unique asset to us. In this model, the collection depends upon the credit card provider. They don't have to replicate or invest into any of the collection infrastructure because that falls on a credit card supplier.
Yeah, that's very fair. Yes. Now let me make that point where the country continues to have only 34 million-35 million credit cards. As you would observe from the loans that you've done, we did last year 29 million loans. The presence of cards, credit cards mainly, because it doesn't exist for debit cards, exists only in top 8 cities in India. From the 15th city, fundamentally, the degree of the presence is extremely low. If I may just request you, just in interest of time, if you can circle offline with Sandeep, he should be able to give you greater clarity.
Thank you very much.
Thank you.
I'll talk to him.
Before we take the next question, a reminder to participants to please limit your questions to one per participant. Should you have a follow-up question, we request you to rejoin the queue. The next question is from the line of Reena Verma from Burgundy Asset Management. Please go ahead. Ms. Reena Verma from Burgundy Asset Management, you may go ahead with your question.
Hello, can you hear me?
Yes.
Thank you for the call. I have just two small questions. One is with regard to the difference between scenario three and the other two scenarios. It seems like you expect a big pushback in the recovery in scenario three. Is that because supply-side disruptions take over, or is it because of particular geographical exposure? If you can please give us some insight there.
A small add-on question is that given the reliance of your business model on the salaried employees or the salaried professionals, could it be that you'll have significant back-ended pain? Because most people will not fire for the next three months, but you're likely to see a lot of restructuring later in the year.
I would just say that, as I said, as part of our three scenarios, that if we can, in general, scenario one is the most preferred scenario. COVID will be part of our lives, but at least will not convert into an economic catastrophe as much as it's a health catastrophe. The preference is scenario one, but it really doesn't matter what my preference is. The lagged impact. If I just articulate your question, one is you're saying is it likely that there's a lagged impact, right? That's the first question. What is the second question, Reena, if I may?
I have two questions, Rajeev. One is that in scenario three.
Yes.
Recovery to 100% of planned volumes takes much longer, almost double the time it takes in scenario one and two. What are those variables that change between, say, scenario one and two versus scenario three?
My second question is that the salaried, since they will perhaps have some form of kind of at least optical protection for the next few months, do you think there could be back-ended shock in terms of demand?
Yeah. No, I think it's our assessment, Reena, at this point in time, what I said earlier, that behavioral science is going to play a big role from a risk management standpoint. The longer it takes, longer the impact on demand coming back, and risk management back to order. So in a way, longer the period of lockdown, the impact is more like a. It's very similar. It is a geometric progression rather than arithmetic progression.
Because?
It will be geometric progression, yeah, as the longer it takes. From a psyche standpoint, customer is going to be, what they say, customer will lose it. Clearly, some degree of breather is expected. Parts of India, most parts of India, phased lifting of lockdown will be very essential, is what our assessment is at this point in time. Behavioral sciences is going to start to play a very meaningful role, if I respond to your point, as time passes. That's one point. On lagged impact, shorter the period, less likely the impact is expected to be on jobs, and so on and so forth. You're right at one level that people will pay salaries for April, May, June. If it persists beyond May or middle of May, companies will go into high gear by end of April on working on cuts.
As I mentioned, Reena, that this is all good till May 31. If we are going into longer lockdown, then clearly a 7%-8% cut probably goes to 15%-20% cut. As I said, this is all dynamic, it's fluid, and let's all hope that given the huge self-imposed lockdown that the country has experienced, we are out of trouble quickly.
Rajeev, thank you very much. In the interest of time, I'll just ask you just one small follow-up, which is, if everything goes as per schedule, which is a lockdown is lifted immediately after 21 days, overall to your business model, because of the reliance on salaried class, is there a significant risk? In your Q3 commentary, prior to this event or this situation, you had mentioned that you were already kind of being very cautious with your demand commentary.
That's correct.
I'm just worried whether this may have pushed back or kind of changed your demand outlook very significantly, even if it's just a 21-day shutdown.
We will never know, Reena. I believe a 21-day, the economy is more resilient than that. That a 21-day lockdown should not eventually have a material impact, but longer lockdowns, it's very hard to tell. Now that's our point of view. It need not be correct.
No, definitely better than our point of view. Thank you very much for the call.
Thank you.
Thank you. The next question is from the line of Deepak Agrawal from Axis Mutual Fund. Please go ahead.
Yeah. Hello, sir. Sir, just wanted to understand if we have to look at the portfolio, say, sector-wise, so like, say, the tour and travels or hotels, which are very deeply affected and the recovery would be back ended in these sectors. What percentage of borrowers or, say, the AUM would be related to these riskier sectors?
In general, we don't lend to hotels, restaurant, aviation. We, in general, are also very cautious in lending to their employees as well. The impact of some of the sectors that you talked about, like hotels, restaurants, aviation, is likely to be very low. I must just only articulate and reiterate that no sector is untouched by this event. These are in the front lines. As SMEs, we don't lend to them through our SME business. Even to the employees of these companies, we are very cautious. That's the best way to respond.
Got it. Just another question. Now if you mention INR 1 lakh is the number of borrowers who have taken the moratorium on the non-AF side and INR 3 lakh is roughly on the AF side. Roughly 1.2 million borrowers. If you have to look as a percentage of billers who were supposed to pay in this month, what percentage would be that, sir?
Percentage of customers banked, that's what you mean, right?
Yeah, just to understand how many actually, say 10% of the people took the moratorium or 20% or 30%? How should we keep at it?
The banking is INR 20.
INR 20.5 million.
INR 20.5 million. Banking was INR 20.5 million.
Okay. Got it. Thank you.
I'm done. Yes, thank you.
Thank you.
Thank you.
The next question is from the line of Shweta Daptardar from Prabhudas Lilladher. Please go ahead.
Hello, sir. Thank you for the opportunity. Just two questions from my side. You mentioned the customer franchise today stands around 43 million. Given the current headwinds and in light of the scenarios you presented, especially in the base case scenario where we are estimating lifting of the lockdown in next 21 days. How do you see the customer addition run rate panning out there? Like we moved from 1.1 to almost 2.2 in last one and a half years.
Yeah. Clearly, as I said earlier, to begin with, we will have a very cautious view. As I said earlier, that we will in general for the next two, three months clearly do lending, which is in the B2B business, which is really what acquired most number of customers for us, a 30% minimum margin requirement. It will be reasonably slow or it will be severe, as I said earlier, in Q1, and hopefully should get back to some degree of normalcy fully by fourth quarter, and if we are lucky in Q3.
Okay. Sir, next, just a request. In light of you mentioning higher prudential provisioning, would you also provide during your Q4 investor release the LGD and other assumptions so that we could articulate and reconcile?
We do provide stage-wise breakup of the loans. You can very clearly see the kind of provisioning that we make depending on the stages of the customer. We will keep providing it.
Yeah, because the assumptions would undergo severe change now, right? In light of that. Sir, just one last thing I would like to squeeze. What about on the cost of funds as on today?
Let me just complete the previous question. What we report so far is stage-wise provisioning and the provisioning coverage ratio. Your question of LGD needs to be forecasted as part of macro environment framework. A larger set of provisioning will be required in stage one. The LGD factor may still not change on the customer which are already in NPA. That's where you actually see the LGD. We'll see over the next three to six months time as to how the numbers are. Now, accordingly take more provisions if required in future.
Sure.
Fundamentally, so far, to add to what Sandeep is saying, we used to run our ECL model once a year. We were anyway as part of our internal process, we decided to run it twice a year. We will run once in August every year, and we'll run once in March. That will be our process going forward. Along with Q2 results, you will see a re-run ECL model, and along with March quarter you will see based on the latest data. Because if the economy or like in this situation, things change too rapidly, we need minimum time to run the ECL model. That's the only limited point I would make.
Right. Fair enough. What is our on the cost of funds as on today?
Ma'am, we are in close period. I won't give you that number at this point in time. As Rajeev mentioned, the focus at this point in time is maintaining abundant liquidity in the balance sheet. We have given that number INR 15,800 crores as on 31st March, provisional number of course. We keep focusing at this point in time to remain as much liquid as possible. In the process, of course, as Rajeev mentioned as part of opening remark, we don't have a material exposure given the CP market at this point in time. We are nearly INR 2,000. We have good runway from liquidity as well as from maintaining cost of funds.
Sure. Thank you. Thanks for the call, sir.
Thank you.
Thank you. The next question is from the line of Sandeep Chandak from Hillhouse Capital. Please go ahead.
Yeah. Hi. Thanks for the call. On the three scenarios, the credit costs that you articulated, any further commentary on how you sort of thought about those credit costs would be helpful. Any assumptions that you made or any commentary on that would be helpful.
Sandeep, it is premature. The scenario plans, this model will go through continuous run and rerun because in general, let's go to step one, right? As we already talked about the bounce rate is high. If the digital payments are higher than 27%-30%, the equation changes. If they lower, the equation changes. We will have to just be data dependent at this point in time. As I said earlier, we will increase engagement with the customers given lots of them understood it to be waiver and so on and so forth. We may see lots of customers come back and pay digitally. We'll have to wait, Sandeep, for a while.
Understand. Just to follow up on that, the percentage that you gave 50, 60, 80, 90, that's on basis points or that's an absolute number in terms of increase in credit cost?
In absolute increase in credit cost.
Not in terms of percentage, it's absolute number.
If you see the nine months, the run rate is around 175 basis points. Okay. Do you mean that it's 80 basis points? No. It'll end up being even that.
No, what I mean is if it's 80% higher, it's like 175 multiplied by 1.8.
That's correct.
Okay. Understood. Thanks.
As I said, it's right now based on the risk models that we're developing. Number could be-
Understood.
Yeah.
Understood. Just in terms of AUM, I know you said that it's too early to say. In the first and second scenarios, the AUM would increase year on year, or you think that it's just hard to say, too early?
In scenario one, clearly it will grow. Should grow reasonably. I won't say well, but should grow reasonably. In scenario two also it will grow, but slower. Scenario three is really where the bigger challenge would be, both on the demand side and on the credit cost side.
Understood. Just one last follow-up. I know nobody really knows, but based on whatever you see on the ground, which scenario you think is Scenario 2, or even Scenario 3 is possible?
Sandeep, I'm not reading WhatsApp at all. We are all working from home, so you guys know it better than I do. We are continuing to work from home 9:30 A.M. to 7:30 P.M. with no WhatsApp.
Okay, great. Thanks.
Your guess will be better than mine probably.
Okay, thanks.
Thank you very much. We'll take that as the last question. I would now like to hand the conference back to Mr. Karan Singh for closing comments.
Yeah. From JM Financial, I would like to thank Rajeev Jain and the senior management team of Bajaj Finance for joining us on the call today. Thank you all and stay safe.
Thank you. Thank you all for patient hearing. Thank you.
Thank you very much. On behalf of JM Financial, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.