This call is not for media representatives or Bank of America investment bankers or commercial bankers, including corporate and commercial FX. All such individuals are instructed to disconnect now. A replay will be available for Bank of America investment bankers and commercial bankers, including corporate and commercial FX. The replay is not available to the media. Good day, welcome to the Bajaj Finance Limited Q1 FY24 earnings conference call. This call will be recorded, the recording will be made public by the company pursuant to its regulatory obligations. Certain personal information, such as your name and organization, may be asked during the call. If you do not wish for it to be disclosed, please immediately discontinue this call.
As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Anuj Singla. Thank you. Over to you, sir.
Thank you very much, Neeraj. Good evening, everyone. This is Anuj Singla from Bank of America Securities. Thank you very much for joining us for the Bajaj Finance earnings call to discuss quarter one FY24 results. To discuss the results, I'm pleased to welcome Mr. Rajiv Jain, Managing Director, and Mr. Sandeep Jain, CFO, and other senior members of the management team. Thank you very much, and Sandeep, for giving us the opportunity to host you. I now invite Rajiv to take us thrth the key financial highlights for the quarter, post which we will open the floor for Q&A. With that, over to you, Rajiv.
Thank you, Bank of America. Thank you, Anuj. I have with me, two, three of my senior colleagues, Atul Jain, Managing Director, BHFL, Rakesh Bhatt, Executive Director, BFL, Anup Saha, Executive Director, BFL, CRO, Fakhari Sarjan, and Anurag Chottani, who is our CIO. I'll quickly take you through the investor deck that has been uploaded on the investor section of the website. Let's go through that. Jumping right to page four, quickly on executive summary. I would say reasonably very, very good quarter. Excellent quarter, as you can see, I've written there across all financial and portfolio metrics, delivered highest ever AUM growth of INR 22,718 crores, booked 9.94 million loans. The day is not far when we will be booking 10 million loans in a quarter.
Booked, you know, added 3.84 million new customers in Q1. overall, app itself now has 40 million customers in terms of net users. MAUs are now touching 20-23 million in a month. AUM came in at INR 270, growth of 32%. OPEX to NIM continued to slide down slowly, came in at 34%. PAT, growth of 32% at INR 3,437 crores. ROE, just a tad below 24.5% on an annualized basis. net NPA at 31 basis points. Very quickly, some 5, 6 points on panel 5, highest ever AUM growth.
Based on this, the way it looks from a full year standpoint, it looks like the growth will, on a full year basis, will be between 29% and 31% for FY24 versus 27%-29% that we had outlined in Q4. Our new loans booked up 34%. B2B disbursements overall were up 37% at INR 22,600 odd crores. Customer franchise, highest ever customer franchise addition. We foresee that we would add 12-13 million new customers in FY24 fully. Based on how things go in quarter three, number could be marginally higher as well, but we'll see how it plays out.
Customer franchise, we'll cover that how in terms of total customers to franchise, the gap is widening, which means the customer franchise is growing faster than customer acquisition. That's a good sign, that we're getting better customers through the door. I'll cover that in the panel as I come to it. Overall franchise stood at 73 million customers. Cross-sell franchise stood at 44.3 million. Added 95 locations, 12,500 distribution points, total 3,828 locations. Liquidity buffer continues to remain strong, at INR 12,700, keeps hovering between INR 12,000 and INR 15,000 in any quarter. That's really where it is. Cost of funds, which is slowly rising in the last two quarters, continues to rise.
It came in at 7.61%, an increase of 22 basis points. Overall, reasonably strong ALM, we have demonstrated over the last four quarters itself, and the diversified balance sheet profile. The net impact of NI, sequentially, if you look at it, was 11 basis points. Cost of funds was actually overall more in the last three quarters, Sandeep, by 60 basis points?
Yeah.
Uh, and-
Little more.
Little more than that. I mean, 60 plus 22, actually 82 basis points. The NI impact has been 35, 30 to 35 basis points. We continue to expect gradual moderation in this as the balance 3 quarters go by. Hopefully, sometime in FY25, we'll start to see a reversal as well. Panel 6, what I just want to cover is operating efficiency, NI grew by 26%. OPEX to NIM improved to 34%. Employee headcount, this is a new metric that we start to publish. Headcount, we were publishing last year as well. We added 3,420 employees in Q1. Annualized attrition in Q1. Full year annual attrition last year came in at 19% for BFL consolidated.
First quarter, annualized attrition is at 13.8%. Last year, same time, it was 14.5%. We took a decision last year. Actually, the year before you, if you look at it was 28%. We took a decision that we need far greater stability across all levels of management, and that's why a set of management decisions were taken, and they yielded a 19% annualized attrition last year. This year, the first quarter trajectory at this point in time is looking further down from last year. Credit cost came in at INR 995 crores. It included a further release of INR 120 crores. Total credit cost came in at INR 1,150-odd crores.
Sandeep will provide an explanation on that at the end of my update. GNPA, ever lowest at 87 basis points. NNPA, 31 basis points. Apple for apple comparison, lowest. Because there was a point in time when we used to be publishing 180 days, we used to be publishing 120 days based on RBI guidelines. Now you can't do retro. Without doing retro, even NNPA number is the lowest we are reasonably clear about. Stage three assets continued to see a decline, came in at INR 2,348 crores versus INR 2,539 crores.
Risk metrics across the 11 lines that we published, were green, except for one line of business, which is rural B2C, that from a management assurance standpoint, we have shown as yellow. It also saw muted growth in the process. We've cut business on a monthly basis in that line of business by INR 200 crore-INR 250 crore a month. From a management while, and I, when I take you to the panel, you can see that the current balances in that portfolio are down only 10 basis points, but we have penciled that in as, at a management assurance level as yellow, because we have taken business decisions to cut business in that line of business. Move.
It'll remain that way, I suspect from here till November, December, but from there on, it should come back to a stronger growth again. Profitability, capital adequacy by panel 7, was strong at 24.61, Tier 1 capital, 22%. Bajaj Housing Finance, the numbers were released day before yesterday, because that's when its board meeting was. AUM up 29%, home loans grew 19%, loan against property grew 55%, by 5%, LRD made up for it, grew 83%, developer finance grew 76%, rural mortgages grew 16%. Portfolio composition remains at, is at 58, 9, 18, and as you can see that here. Approvals were up 18%.
Overall approvals were just a tad below INR 19,000 crore in Q1, against INR 16,000 crore in same period last year. BHFL operating efficiencies. NII grew 18%. OpEx to NIM continues to go down, came down from 26.8% a year ago to 24%. Headcount stood at 2,773. BHFL, GNPA, NNPA were industry's lowest, is what I suspect, at 23 basis points and 8 basis points. Stage three stood at on a INR 74,000 crore balance sheet at INR 152 odd crore. BHFL profitability, profit before tax grew 23%. After adjusting for reversal of deferred tax liability, PAT growth was 23, but otherwise it was 46, and we will provide one an explanation after my comments on that as well. Move.
Let's now jump quickly to Omni Presence. Clearly, you can see, that's panel 11. Numbers are moving well. Downloads were up at 15 million in the quarter. These are all organic downloads. Mind you, we spend very little or none on marketing. Clearly, it's just integration of the entire ecosystem, and net installs grew on a year-on-year basis of 75%. In-app programs grew 90%. We continue to hold our ranking at 5. Service requests, which used to be 15% of the app of overall requests, are now up at 34%. UPI handles added 15, you know, 329% growth. Bill pay transactions are running 64% growth. Merchant QR at POS crossed 1 million. We're now running at a run rate of 350,000 a month.
We foresee clear, very clearly to be between 3 to 3 and a half million merchant QRs, which would be 9% to 10% of total QRs installed in the marketplace. We remain on track. Rewards issued up to 77%. Move. EMI cards acquired. You can see the numbers here. We continue to make progress. Our so-called phase 3 for the app and web is ready. Planning process, you will start to see that we've stopped to publish that because, you know, it's a BAU frame from here on, but significant investments continue to remain committed to invest in the digital ecosystem, both on app and on web.
Numbers are supportive of that, and the talent that has been developed is able to take on more and more from a digital ecosystem standpoint. Let's quickly jump to panel 13. Numbers are moving well here. Average AUM per customer. As you can see, the point that I made, total franchise grew on row number 5, 4 by 21%, cross-sell franchise grew 28%. 44.3 million customers is what we classify as cross-sell franchise. Overall, AUM per customer was at INR 61,000, and PAT per customer franchise continues to move well in line. There's a good story there. Let's quickly jump to portfolio quality. That's on panel.
New car financing, in the meanwhile, just to make the point, has gone live. This is the second month of the business. We are quite excited about the business, and it's a business that we've launched in 80 cities across India, because we had a used car business, so the platform infrastructure was available. Even then, it's the largest big bang that we have ever done. We foresee that it could be an INR 200 crore-INR 250 crore per month new acquisition, as we exit March 2024. That's a completely new line that would get created as we exit the year. Just go back two panels to port...
In terms of portfolio mix, just in panel 45, remains steady on a year-on-year basis. 2- and 3-wheeler finance is 5%, 8, 21, 20, 2. 8, no change. Largely, as you can see, and as I said in the AGMs, just 2 hours ago, that one of the things that we're very happy about is that our... across these 9 lines of businesses, there's been no shift in the last 6 years in terms of mix. That has ensured that we've delivered scale, it's ensured we've delivered consistent profitability, it's ensured we've delivered stable risk metrics. I also said in AGM that I don't foresee this mix changing too significantly at all. Probably 1 or 2 percentage points here and there.
Largely, if I look at the last five, six years, the mix largely remains very same or similar. If you classify between, low risk to low risk and high risk to high risk, the mix has not changed at all, actually. That's just one point. On a year-on-year basis, mix remain pretty steady. Quickly to the panel 52, you can see all greens here. Consumer durable portfolio, 99.58%, similar to Q4, 35 basis points. Stage two, you can see two-wheeler, three-wheeler, even the non-captive business is added here now. At a point in time, when it scales, we'll now, that is some time away, but that's sitting here. It's at 94.5%, as you can see the numbers here.
All green here. The only yellow here that I do want to talk about is rural B2C. If I look at the current stage one assets were 98.13%, came in at 98.01%. 158 basis points, stage two is 170. There's no earth-shattering change here, given that we have tightened our credit standards and filtration criteria, we thought it prudent to just flag it that we've seen some level of risk here, and we have cut the business is the only principal point from a management assurance I wanted to make. Rest of the portfolios are in pristine health. That's from me. I just want to hand over to Sandip. Loans against securities, as you can see here, 100% current commercial lending.
Just on loan loss, I just want Sandip to spend 2 minutes.
Hi, this is Sandeep Jain here. Just to begin with, I think, I'll normalize the numbers first. I think last quarter we had released overlay of INR 40 crore. In the current quarter, the overlay release has been INR 120 crore. The last quarter number, 860, that was reported, the actual gross number is INR 900 crore of flow forward loss that we have seen. The current quarter number, 995, with adding back INR 120 crore of release, comes in at INR 1,115 crore. That's a growth of about INR 225 crore. There are a couple of things in that. One is, because we are in the IND AS, wherein even the standard assets require a provisioning under stage one.
In the current quarter, we have seen balance sheet growth on a sequential quarter basis, being INR 6,000 crores higher than last quarter. Last quarter, we grew by INR 16,500 crores. In the current quarter, we grew roughly around INR 22,700 crores. That's INR 6,000 crores of additional asset. That created additional requirement of about INR 30-35 crore of ECL provisioning in Stage 1. That's point number one. Point number two is, all of us are aware about what's happening in Manipur. We have taken a call to offer moratorium to a set of customers in Manipur. In fact, the entire portfolio is put on moratorium. The amount is not large for us, but we have taken a provision for INR 15 crore for Manipur portfolio in the current quarter, which is a one-time provision.
That's second number. Third thing is, of course, if I normalize this, the gross loan loss to average year for Q4 came in at 1.54. Adjusted for some of the items that I called out, the number comes down, comes at 1.68% for quarter one current year. On a full year basis, we believe, this number could remain range bound between 155 basis points to 165 basis points. The last point, which is most important, we had also articulated in past saying that we would use overlay to further strengthen our ECL model. We have done redevelopment of the model in quarter four. We have taken certain amount of hits as part of redevelopment of model.
In the current quarter, again, because of the redevelopment, it's requiring us to make higher provisioning for stage two and stage three assets. An additional provision of INR 50 crores has been taken in the current quarter, which has been consumed out of overlay. The INR 120 crores of overlay also takes into consideration INR 50 crore rupees of additional provision that we have consumed towards redevelopment cost. That's point number one. Point number two is additional growth of INR 35 crores on account of higher balance sheet, money pool of INR 15 crores, and balance is a BA reconciliation that we have done. I hope that provides the explanation for loan loss number for the quarter and for full year expectations. We expect that because of the redevelopment, we do want to capture provisioning early.
The credit cost as a result of redevelopment could be anywhere between 6 to 8 basis points higher than normal run rate. That's the reason 155 to 165 basis points is the guidance. The other point was on INR 73 crores of release in the deferred tax liability. We used to create 20%. We used to transfer 20% of the profit of retail long-term housing finance business into reserve under the income tax Section 36(1)(viii), which is very clearly known to most of the investors. That also provides income tax shelter.
We were hoping and expecting that because of the COVID situation in the last three year, there may be a probability of we dipping into that reserve for making provisioning in the housing finance business. Having gone through the COVID period and not utilized the provisioning, the company has now resolved, saying that it will not ever probably touch the reserve that has created under Section 36(1)(viii). As a result, the temporary difference that existed, requiring us to create deferred tax liability, does not exist anymore. As a result, INR 73 crores has come back into the PNL. These were the two points.
That's how it will be going forward.
Incrementally, as we go along from here, you will find that the housing finance tax rate may probably be 2% lower than the national tax rate. That's the only update that I have on deferred tax.
Okay. Over to questions. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking your question. Ladies and gentlemen, we will 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 the line of Bharat Shah, from ASK Investment Managers. Please go.
Yeah. Hi, Rajiv. Remarkable quarter in every respect. In a quarter where the highest new loans book, highest acquisition of new customers.
Sir, sorry, but your voice is not coming clear. It's little muffled. It's clear. It's clear. It's clear. It's clear to me, at least.
Okay. I'm just saying that, remarkable performance in many, many respects, with highest, asset, book during the quarter, with the new customer acquisition as well as new loans booked. Despite the fact that interest rates have been firming up, which for an NBFCs, of your nature, a bit more difficult because, loans being relatively more of the fixed nature. Yet, we are seeing, among the most, efficient, expense management, lowest credit cost and highest ROE. In this very perfect-looking, more direct, kind of a 10 out of 10, kind of a picture, what are the trouble spots or the areas of concern?
I mean, Bharat, thank you so much. I agree, it's been a good quarter. I had outlined even in my fourth quarter call, that we are a little troubled about the level of leverage in the system. The amount of personal loan growth is troubling us. In fact, one of the objectives of us penciling in rural B2C, because we're seeing growth even there in terms of level of leverage. You know, that's an area I would flag. I flagged it even in Q4. I would flag it. We're taking a set of preemptive actions in looking at aggregate leverage of consumer, secured leverage, unsecured leverage.
It's a little new normal that the credit model must optimize for is the only point I would make. It's something that is come back from a competitiveness standpoint or for a level of, you know, supply side outlook, has not been experienced for a long, long time. That's the only thing we are, that we are watching for and acting on in a nuanced manner, I must say, to ensure we stay out of trouble, but remain in the game. That's what I would say, Bharat Bhai.
Okay. If I have to, you've already guided for credit costs during the year.
Yes.
You have already mentioned about, generally kind of expectation of the asset built up also for the year.
Yes.
The rate seems to have been managed, in terms of, cost to the income ratio. Would we say that, ROE that we touched the highest in the history in this quarter, with all the moving parts, net-net ROE, would remain at similar or better levels?
Yeah. One of the things, BhaBharatBBhaBharatB, that we've done, as part of the Q1, because we don't want to be conservative, we don't want to be ultra aggressive. For many years, our guidance was a 19%-21% ROE. When I look at 19, 20, we were delivering 23%-24% ROE. When I look at 23, I look at 23 and a half % ROE. When I look at the Q1, the number is 24 and a half % ROE. Principally, we think that the business model is organized from a structural standpoint, from a 19%-21% to a 21%-23% ROE, is how, and when we have started to now share annually our long-range guidance.
Virtually, our strategic frame is out there in the, as an open book exam for people to execute on. That's the only difference. We think a 21%-23% ROE, given 19, 20, 23, 24, and mind you, last year, we had no one-timers, either as income or as great cost and given the Q1. We are penciling in that the long-term guidance, we are upping from 19%, 21% to 21%, 23%. I must concede that 5.3%, 4% or 5.6%, remains to be one of the, now, adjusted for, it's 5.4%, adjusted for the one-time deferred tax, it's 5.3%. We'll continue to work on adding value to shareholders.
I mean, you know, without compromising, Barba, if I may just say so, on the longer-term quality of the business. I must just make that point as well. ROE guidance, long term, is 4.6%-4.8%. We are here to create value for shareholders, and that's how I would outline. OpEx to NIM, we think will continue to, we mentioned in Q3, it's peaked out. While we continue to increase investment, I must say, in digital ecosystem, as I mentioned earlier, but just on, just on the absolute, nature of the cost penciled in, we have clearly peaked. We will start to see operating leverage come through every quarter as we move from here.
Fantastic. All the very best on so many business verticals with so many moving parts to achieve more than just the quantitative growth and the performance. I think qualitatively, it is remarkable, and really delighted to see that.
Thank you.
Congratulations.
Thank you. Work hard for shareholders.
Thank you. Next question is from the line of Piran Engineer from CLSA India. Please go.
Yeah, hi. Congrats on the quarter. A couple of questions. Firstly, sir, just I want to understand this fundamentally on panel 41.
Yeah.
where you give your customer franchise pyramid. Out there, let's say I look at the 1 QFY23 numbers, those customers who are part of the 16 million, but not part of the 35 million cross-sell franchise, can those customers be part of the 44 million cross-sell franchise today? Do they remain in that bucket forever?
The model is fixed, right? A customer can go in and come out, but it's very hard. Anybody who goes into 30 plus, mind you, it's only possible where a customer defaulted, paid money in 15 days, can be going in and out. Any customer who ever went into 30 plus, can never move bucket, the filter. I think just at a fundamental level, you should be clear. We don't deal with clients who ever go into 30 plus. We are okay to deal with a -1 customer, but not okay to deal with a client who, in general, goes into 30 plus. Just today, basic fundamental principles of risk management and underwriting. You bounced, you could be in one of those, paid in 15 days, you could move.
Mind you, Piran, we, since you asked the question technically, I'm answer you technically, we don't look at it, that way. We're interested in the aggregate growth rather than. You can see these numbers are in millions. It's possible in a month, 100,000 customers moved here and there. These things don't move structurally, in general.
Okay.
is the second point that I will make to you.
Okay.
Never 30+, and structurally, don't move.
Okay. Okay. You know, the reason I asked, and I don't want to be over analytical here, but, out of 3 million customers overall that we added, the addition to the cross-sell franchise is 3.7 million, which is virtually almost everyone. I'm just wondering, out of the old pool, if someone is now eligible. Simply put, someone who was not eligible for the cross-sell franchise earlier, today is becoming eligible because you've maybe loosened standards or whatever.
No.
That's what I was thinking.
No.
Okay, fair enough.
It's not.
secondly-
Piran, I must make a point. If you were to ever do, we would put a star mark here and pencil it in. Let me just make that point clear so that we are all on the same page. If we ever make a technical definition change in matters as important as this, I would pencil it in.
Got it. Got it. Fair enough. Second point on personal loans, and, you know, you've been calling this out for the last few quarters. Just wanted to understand for the industry, the strong growth we've seen more than 25% over the last 3, 4 years, how much of that would be driven by tenures versus, you know, core disbursement growth? Secondly, let's keep aside the fintechs, but the core top 3, 4 banks and you guys, is everyone essentially fighting for the top 4, 5 crore customers of the country, or are the lenders expanding the pie here in personal loans specifically?
Clearly, pie has expanded. That is very clear. It's INR 35,000 crore, October, November, December 2019, average volume has gone to INR 65,000 crore, October, November, December 2022. This is bureau data, so this is not my data, which means treat it as 99% accurate, plus minus 1%. When we look at this data, we are present in 3,828 cities in India. We see penetration of personal loans all the way there as well. When I look at even the 1,000 city, and we track market share by dispersal in each market, we see even in the 1,000 city, there is competitive activity. One, competitive activity across the board, from 20,000 to 50,000 to 100,000 to 200,000 to 8 lakh plus.
We break personal loans from, let's say, INR 50,000, INR 25,000 to INR 8 lakh plus. There is expansion of pie, but that expansion of pie, I just only want to make one point, is not driven only by a select players. It's an industry-wide phenomena, straddles across public, private, non-bank, everybody. It's not a. Because this level of phenomena of a 89% growth on a 3-year basis, when nominal GDP grow only 26%, cannot happen by a few players. It is a, the earlier point that I'm making, Kiran, on supply side, that's really what I meant. The supply is all pervasive in a reasonable manner across all asset classes.
Got it. Got it. Just a last one for Sandeep. You know, what % of our console borrowings would be repo link? I mean, console, bank borrowing.
I don't have it handy, Kiran. I'll probably connect with you separately.
Okay. Sure, sure.
Given that, we do largely fixed businesses, incrementally banks have started offering MCLR and repo-linked both borrowing. I think, the proportion will be significantly higher for BHFL in terms of repo. For BSL, we may have decent mix of repo to MCLR and other benchmarks. Atul is here. Atul is clarifying that, even BHFL is largely linked to T-bills rather than-
Repo is around INR 10,000. For BHFL, out of INR 69,000, INR 74,000 borrowing, I mean, balance sheet.
10,000 totally repo links.
INR 10,000. Okay. Okay, that's good enough. Thank you, and all the best.
It's a fair question. Sandeep can provide you details.
Sure. I'll talk to you soon.
Yes.
Thank you. Next question is from the line of Gaurav Singhal from Aspex Management. Please go ahead.
Hi, thank you for taking my question. You mentioned that NIM is expected to contract for the balance of this year. Assuming the rates stay where they are, can you give us some sense of is it more of like? Because I think this quarter is not that much. It's, I think, like 10 basis points of contraction. Going forward, is it more like 30 basis points or thereabout, remaining for the next three quarters, and we still stay at 10% plus kind of NIM for the year? If you can give some thoughts on that, assuming repo rates stay where they are, that'd be very helpful. Thank you.
Gaurav, if you look at the numbers for the current quarter, the interest cost has gone up by 55% versus last year, versus 37% growth in interest income. On a year-over-year comparison, definitely, the cost of fund has gone up significantly, of course, on the back of 250 basis point increase in the repo rate. I think, we did provide some guidance around NIM compression for the current year. The Q1 came in, to our surprise, we were estimating the number to be about 15 to 17 basis point, came in at 11 basis point. The treasury team did a great job in terms of managing the cost of fund for the current quarter.
As we look at the full year, on account of majorly the repricing of old borrowing at higher rate as they come for replacement, and our ability to not being able to incrementally pass on the cost of improvement to the customer because the pricing is almost at pre-COVID level. We expect about 10 to 15 basis point compression for at least 2 quarters. Then, of course, depending on where the interest rates... Yeah, 2 quarters each, which is quarter 2 and quarter 3. Depending on where the environment is for the next 2 quarter, I think we can provide further guidance on quarter 4.
11 basis points in Q1, another 15.
10 to 15.
10 to 15 basis points each in Q2 and Q3, hopefully things settle there on.
Yeah.
Got it. I guess I have a follow-up. One lever to offset the impact of NIM in this quarter has been the operating leverage.
Yes.
It is something that, would it be fair to assume that this continues going for the rest of the year as well, going forward as well?
I guess, Gaurav, you'll see it coming, I think throughout the year. It'll be slow but steady, is what I can tell you.
Yeah, I agree.
Absolutely. Thank you.
Thank you. Next question is from the line of Kuntal Shah from Oaklane Capital. Please go ahead.
Hi, Rajeev and Sandeep. Thanks for taking my call. My first question is, can you share with us some metrics which can give us some indicator of how we are tracking the digital journey of the users, or DAU, MAU, North Star metrics, abandoned screen visits, whatever you can? What exactly do you mean by social and rewards, which is there in the presentation? Second question would be, I went to Gift City recently, and there's no space, and we have towers of IL&FS and all. Any way to monetize or any way to recover money? Because I think that we had a provision on IL&FS account.
Rewards, principally, when we look at, the only way you could become a customer and buy rewards is to go to Times Reward. This is not a reward platform. Rest are all... I think there's an op-- We landed up building rewards as part of, if Kuntal, if you go to, just go to panel, omnipresent panel. We landed up building rewards for closed up, closed-loop architecture, as a company, as a result of our digital transformation. As you can see, 18 million rewards were given just in Q1. If you see just on this panel, a year ago, we were issuing 5 million rewards. Scratch a card to the entire voucher infrastructure, got created over 24 months.
When we look at the external landscape, we realize that there's tremendous opportunity for customer to buy, become a member or a customer, like payments infrastructure, to not be a customer, but a rewards customer. You know, he just paid for a reward membership. It's a membership program, allows you a set of discounts, allows you a set of offers and so on and so forth. That's a funnel being further opened to form a new customer gathering standpoint. That's really our view on rewards. Mind you, I tell people that in these nine point, 3.84 million new customers, we still don't publish payments customer who we bring on board, who are even full KYC, leave min-KYC. We still don't publish because we want a panel ten.
We don't want that number to get panel 10, panel 11, AUM per customer to not get compromised. When we realize that what value can he generate, that's when we call a customer a customer. Going back to the one earlier point to Kiran, that who do we call as a cross-sell franchise or a franchise? So rewards will be another funnel, Kuntal, that we are investing in. So if you don't want to be a lending customer, don't want to be a deposit customer, don't want to be a broking customer, become a rewards customer and experience the digital asset, engagement rates go up, and we get a higher probability of you doing business with us when you are ready sometime in the future. That's one part.
Social is all about if you use Instagram, you won't find any content there. It's all about videos and photos. Whereas if you look at even an Amazon app or our app or any app, principally looks to be all content. Social, the fundamental difference from an engagement standpoint, will be photos and videos. Behind it will sit the same digital ecosystem. When you want to buy a loan, it will show you view shop. When you click on that view shop, it will take you to our app, it will take you to our web, and that's our app is equal to web. It's become a reasonably large channel, especially for large consumer-facing businesses, it is beginning to be an important driver.
it's distinct from marketing, so it's a separate business unit that's being created in the company, distinct from marketing, which is building this out. When you see it, you will get a much more clearer differentiation. Targeting the same product, but very differently, is really how I would... Gift City, I don't have an update, Kuntal, at this point in time. Surya, sorry.
Kuntal, GIFT City, while we have the property, but the issue had been that because it was put under NCLT guidelines, since they treated the original equity holder, because that was a step-down subsidiary, it was a second layer subsidiary. In COC, the holder or the original, the lenders to the parent company also became members. We have a very small stake in a voting right while having the exclusive property through NCLT order. We are just a recipient and waiting for the bidding process of... The bids were called by the administrator earlier, which have not resulted the bids to be in line with what the expectation was. Later on, I think they are going to do the second round of a bidding.
Given our now percentage, and with the accumulation, even if the successful bidding happens, our recovery would be very low.
INR 18 crores.
Our recovery would be very low.
Expectation is INR 18, 19 crores.
I have to say escrow maybe INR 55 crore.
Exactly. The escrow itself has a 50... Forget it. Okay. that's update, Kuntal, on Gift City.
Just a follow-up question. Will the rewards have some subvention angle, attached to it because there's a full traceability that you are stimulating a customer?
Independent business units, Insta EMI Card runs as independent business units from B2B in a way. They originate customers can convert, but will you see things come together in some form and in many forms and manner on the app from the consumer? The answer is yes. It'll be propositions would differ, and so on and so forth.
Thanks. Thanks for excellent disclosure and all the best. Thank you.
Thank you. Next question is from the line of Shweta Daptardar from Elara Capital. Please go ahead.
Thank you, sir, for the opportunity. Congratulations on good set of numbers. I have a couple of questions. One is, we have actually doubled or over more than doubled the gold loan branches quarter on quarter. Also, going by your annual report disclosures, the portfolio is 1.53% overall. How do you perceive this business going forward? That's question number 1.
No, it's a fair question. It's INR 3,200 odd crore balance sheet at this point in time. Foresee ending balance sheet could be anywhere between INR 5,000-INR 5,500 crore. We have doubled down on the business, we have cleared our head on it, and it's doing quite well now. If the first half goes well, we may further accelerate branch expansion. We now have 564 branches.
640, we'll end up.
We'll end with July 31st, with 640 odd branches. Standalone gold loan branches, if first half goes well for the business, and they're doing as well in terms of their financial metrics, we may take a view on accelerating that expansion.
Noted. Second question is, are we okay disclosing captive versus non-captive portfolio on two-wheeler, three-wheeler side, or is it little too early?
Very early. Very early. I mean, you know, just today, when we reach INR 5,000 crore, just connecting this point to the gold loan, we would start to disclose gold loan also separately. Today, it's sitting in rural B2C, because that's where the business was born. Out of INR 18,000 crore of assets, you see INR 3,200 crore is that. Doesn't change the number at all. 98% is what gold loan is current. This is also 98%, it does not change in any given manner. In fact, change is one thing that, as we said, rural B2C grew 21%. Actual rural B2C PNL grew only 19%.
Just to clarify, just an added point, we think INR 5,000 crores is a rightful number to us to create a separate quadrant in terms of portfolio quality disclosure. Otherwise, it. That's the number you should look for. Whenever we separate it, we should know that assets have reached INR 5,000 crores, otherwise they're clustered together, for convenience rather than anything else.
Understood. Sir, I'll squeeze in one last question.
Yes, please.
As per the annual report disclosures, the unsecured portfolio ECL coverage has gone to 75%. It used to be around 77 odd during COVID. Could you provide some color around that?
Shweta Datar, as you're saying, the number has remained range bound only, right? It's 75, 77, nothing has changed materially. The composition of balance sheet between off stage 3, between, say, 3 months overdue to 4 months overdue to 5 months overdue, require different levels of provisioning. It's because of that. Otherwise, nothing has changed. In fact, as I called out earlier, as part of the opening remarks, we have strengthened the provisioning coverage ratio across businesses. That is costing us about INR 50 odd crores. That's costing us about INR 50 odd crores in the quarter one. We estimate the overall impact of the redevelopment cost that we have done in the last quarter to be about 6, 7 basis points on a full year basis.
Noted. That is satisfactory. Thank you so much.
Thank you.
Thank you. Next question is from the line of Prashant from SBI Mutual Fund. Please go ahead.
Hi, am I audible?
Yeah, you're audible.
Sorry. Thanks for taking my question. Since we're talking about customer leverage, back in March 2020, you had generated these slides on, you know, leverage risk assessment of unsecured portfolios. It would be helpful if you could tell us how those graphs are looking like today, or if you could disclose them in future investor presentation. Just an empirical evidence, how many customers would you have ended up rejecting this quarter, both existing and new, simply because of this over-leverage issue?
In general, if I would take a funnel view, those customers to whom I give B2B don't default at all. Of that, I land up offering a personal loan only to 60%. Eventually, I land up giving only to 40. That's the funnel view all the way from B2B to a conversion to a B2C. You know, all pristine, right? Did not default. Went through, went through the filtration for B2B. Mind you, that's really how our underwriting models are organized. 1 is an 8-month loan, product driven, it's end-use based versus longer tenure, non-end-use based, high value, and so on and so forth. Installment doesn't change, mind you. Installment, the models are organized only around 30%, 35%.
That's the maximum that we allow from a B2B to a B2C from a underwriting model standpoint. That's really how the funnel moves. Loosening and tightening keeps happening based on the stance or the incoming data. It's a pure data-dependent conversation. Loosening and tightening happens by early warning systems, either by location, by type of, in personal loan, there are various types and so on and so forth, Prashant. What you see as one B2C, we see it as 18, 19.
Different segments.
Different segments. You know, what you see as rural B2C, we see 8, 9 of them. That's really how we look at those portfolios that we cluster there in urban B2C and rural B2C, B2B. Some may be tightening at a point in time, some may be loosening at a point in time. On coming back to leverage analysis, that work is right now on full speed. We promise to share an update in October and start to publish in annually.
Sure. I think, you know, we're all seeing reports where, you know, there's some sort of alerts on unsecured loans, right? I think what we're trying to find out is, to what extent is this today and to what extent it can get, maybe at the system level as well, especially?
Yeah. No, no, it's a fair question. I'll tell you where at a system level we know. The question is, at a nuance level, at N is equal to one. That, see, that whether should I give money to Rajiv? Should I give money to Sandeep? Both are good, mind you. Both are right now pristine, they're good. But how is there... The difficulty is in such mass data, is you to cut this into, is the leverage building up? What is the tenure of leverage buildup? Is buildup in the right products or wrong products? So on and so forth. That's the work that is currently on. Eventually, as an operating manager, we have to do it at N is equal to one.
In those 44.37 million customers, which are the bottom 10%, 15% that I am not comfortable doing business with for personal loan, let's say for a moment, despite the fact that they are all good today at 7, 8, and above. That's the point I want to make.
Sure. Thank you so much.
We'll share in, October, positively.
Sure. Thank you.
Thank you. Next question is from the line of Saurabh from JP Morgan. Please go ahead.
Sir, just two questions. One is just a follow-up from before. The approval rates in your urban personal loans, will this be back to 2017-2018 levels? I mean, how would have the credit filters changed here? That's the first one. The second one is essentially on the attrition rate. what would be the attrition rate at your, you know, sales staff or at the junior management level at Bajaj Finance, and how has it been trending?
The approval rates would look closer to 19, 20, you know. We had 1 significant retention till, I would say, October 2022, because we're still suffering from pandemic experience. Since October 2022, we started to slowly release. Today, they would be back to 19, 20 for urban. They are much tighter than even 19, 20 for rural, at this point in time. As I earlier said, you ask me this question again in December, my view may have changed. It could have swapped as well. That urban B2C may be much tighter and rural may be. It's all data dependent, is the only point I want to assure you on a not on a coincidental basis, just 1 point I want to add.
On a lagged basis, on a vintage basis, is really where the effort is. That 12-month vintage, where were they, and 12-months vintage, where are they? By month is the important point. Second point, we started to publish now the annualized attrition. We took a view last year, this is that attrition is not about junior and middle and senior. I mean, you know, attrition is attrition. Voluntary, involuntary, all kinds of attrition is attrition. The definition is very simple: came in or left? Simple. Are in the company or out of the company. Reasons are, I hired the person, I can't say I fired the person. Why did I hire the person? The definition is very simple and consistent.
All those who left the company are in the numerator, and those who are in the company are in the denominator. We were very clear since last year that we got to senior management, we have very little stroke in attrition. Middle management, we have very little or no attrition. Most of the attrition is all junior, but junior are the people who are facing the customer. Fundamentally, that's really where we took the view. I think significant work happened. Let me make a point. People talk about compensation and engagement and so on and so forth. We came, we became very clear that the entire effort is in process simplification, which takes more time for an employee to be at work.
That's really where line by line, we worked over the last 15 months, business by business, and that's how the number came down from 28% to 19%, and first quarter is looking at 13.8%. The work continues. We are now taking this forward to extended staff. Any employee, any no, you know, outsourced staff, that's a metric also we are watching now to make sure we are, because he is or she is the last person who's actually meeting their customer. You know, it's not even my sales people who are meeting the customer most of the time or debt management people. It's the last person who's meeting. That's an attrition number that we are now beginning to watch and take action on as well.
Okay. That is very comprehensive, sir. Thank you.
Thank you.
Thank you. Next question is from the line of Sameer Bhise from JM Financial. Please go ahead.
Yeah, hi. Thanks for the opportunity. Just one quick question on BHFL. The fees and commission line shows a sizable decline year-over-year.
Sorry.
This is the fees, so there is a change in the cross-sell product, what we were doing earlier last year, which was.
In BHFL?
BHFL.
Yeah. Okay, sorry.
We had a fee component. We changed the product mix of a cross-sell, which is not having a higher upfront fee. The core business fee or the core business metric, it remains stable at the fee metric. Whereas in home loan, typically, there is hardly a upfront fee, so it's a mix. It's a change of the cross-sell product, which has resulted.
the other piece-
Yeah. The other piece, Samir, is I think last quarter, in last year Q1, we had done large assignment, buyer from BHFL. There was service income that got recognized on account of that. We don't have that significant quantum in the current quarter.
Okay. Okay. Just quickly, one last question from my side. The share of LRD and the DF portfolio is on the rise. Where do you think this stabilizes in the BHFL mix?
What happens is that in BHFL, which is a regulated HFC, we have to have 60% assets as a home loan assets, home loan plus, CRE, RH, residential, finance assets. The rest of the product, rest of the percentage, we define this is, you know, our appetite as well as the opportunity to maximize return. Between LAP and LRD, where we want our portfolio to be in range of around 22%-25% roughly is the computed answer there. Currently, in our assessment, LAP is not fully priced for risk in the market, because the ongoing price or ongoing ROIs for LAP is, in our assessment, not fully factoring in the risk there.
That is where you see the LAP growth being comparatively lower and the LRD growth comparatively higher, because we prefer LRD over LAP. Between mix of LRD and LAP, you will see 22%-25% portfolio mix on a steady-state basis.
60% home loan, with 20%-25% LAP cum LRD. By design, we stated many times that between 13%-12%, 14%-12%, 13%, 15%, maximum 15% would be the developer finance.
Yeah, that's the mix.
rural, 4%, 5%, 3%, 4%.
Rural is going to-
Exactly. That's really how the four blocks are expected to be remaining range bounding.
Yeah.
Fair enough. That was from my side. Thank you and all the best.
There was 1 question from Piran on repo linked borrowing. My president has shared the data with me. 25% of our bank borrowings are repo linked. About 30% is MCLR linked, and the balance borrowing, about 55% or so, are linked to TBL and T-bills, external benchmark rates, and GSEC linked. That's a breakup of borrowings that we have from banks.
Total bank consol basis. Total bank contribution.
Yeah. Overall basis, on a consol basis, we have INR 74,000 crores of borrowing from banks, of which INR 23,000 crores is repo linked.
Somebody was asking something?
Samir, do you have any follow-up question?
No, that's all from my side. Thank you and all the best.
Thank you.
Thank you. Ladies and gentlemen, we'll take the last question from the line of Subanshu Mishra from PhillipCapital. Please go ahead.
Hi, good evening. Thanks for this opportunity. First one is on the attrition, again, hopping on attrition. What is the secret pill behind very low senior management attrition? Till date, we've only seen Ashish Sapra going out and Devang Mody going out and again coming back. What is the secret sauce behind the senior management attrition, especially when we have such a large player, JIO, willing to hire from anywhere else, and we are seeing so much of attrition across levels in banks? Second is on the collection infrastructure. If you can spell out how many people we have in collections, on role, off role, and how they have split business-wise? Thanks.
I think, we all have a common goal or a purpose. We do want to create a legacy in financial services. That's really what our trip is. That doesn't mean it's insular. I mean, Anup is here. He's with the company only 6 and a half years. I think all those who land up sharing that goal, land up just sticking together. That we just want to. We think there's a tremendous opportunity to create a long-term, sustainable business, which is seen as a legacy 10 years down the line, is what keeps the management team together, I think, and we don't intend for that to change because India has tremendous opportunity. Financial services is tremendous opportunity.
We are only 1.7% of despite being a INR 2.7 lakh crore, we are still only 170 basis points of total credit in India. There is tremendous opportunity. We just keep at it. The only difficult part with us is we are hardworking company, but only those people who like to work hard anyway, stick on with us. That's the other side. Legacies are not built without working hard, so they all go together. It's the only point I would make. We are privileged that we have a management team of this quality and which has stayed on for so long. I intend to keep it that way, is the last point I would make. You had a second question, did you?
Yes. if you can spell out the collection infrastructure, how many people you deploy on role, off role, and business wise, if you can spell that?
Out of 43,000 people, debt management is 12,000 people.
INR 14,000, INR 15,000.
12, 13, between 13 and 14,000. They manage agencies. Nobody collects directly. It's all a managing agency infrastructure.
How many agencies do we have?
It'll be in excess of 47,000 agencies that we would manage across 3,800 cities and towns.
How is it split business-wise?
The largest component, because it's all about average receipt, right? You know, it's all about if you take a capacity planning view, which is really what a debt management infrastructure is all about, that how many receipts can you cut? That differs by business. Largest top of the funnel would be B2B, followed by B2C. Commercial does not have any debt management people. It's from top of the pie to the bottom of the pie, you know. These are highly reasonably evolved capacity planning models. On the back of everything else, they eventually go by deep capacity planning models, which are being constantly iterated depending on the environment.
Understood. Thank you.
Thank you. Thank you, all. Yeah, sorry.
Thank you very much.
Yes.
I now hand the conference over to Mr. Anuj Singla for closing comments. Yeah. Thank you, Nirav. Rajiv, sir, any closing comments before we conclude?
No. Thank you. We'll keep going. Thank you. Thank you so much.
Thank you very much. Thank you, sir.
Thank you.
Over to you, Nirav. Thank you. We conclude this conference. Thank you for joining us, and you may now disconnect your lines. Thank you. Bye.