Q4 23/24

Apr 29, 2024

Summary

Q4 AUM grew 14% QoQ to ₹12,191 crore, while FY24 net profit rose 36% to ₹244.7 crore. Guidance calls for 25%+ advances growth, 80 bps sustainable impairment cost and lower cost to AUM.

Ladies and gentlemen, good day and welcome to Fedbank Financial Services Limited Q4 FY 2024 earnings conference call hosted by Equirus Securities. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shreepal Doshi from Equirus Securities. Thank you and over to you, sir. Thank you, Steve. Good afternoon, everyone. I welcome you all to the full FY 2024 earnings conference call of Fedbank Financial Services. Today, we have the management team of Fedbank Financial Services represented by Mr. Anil Kothuri, MD & CEO, Mr. C.V. Ganesh, CFO, and Mr. Amit Singh, the Investor Relations team lead. With this brief introduction, I will now hand over the call to Mr. Anil Kothuri and the management team for their opening remarks, post which we can open the floor for question and answer. Over to you, sir. Thanks, Shripal. Good evening, everybody and welcome. I hope you've had the opportunity to look at our results and our investor deck, which were uploaded about an hour and a half ago on our website as well as on the stock exchanges. This is a busy time of the year and we've completed an active quarter in what has been a busy year. I'll just take you through the highlights of the quarter. We saw strong AUM growth in the quarter, 14% increase over the quarter gone by. Our AUM closed at INR 12,191 crore. This is up from INR 10,748 crore at the end of Q3. This happened on the back of disbursements of INR 4,337 crore. These disbursements are split as gold loan disbursements of INR 2,849 crore and installment loan disbursements of INR 1,488 crore. This takes disbursements for the year to INR 13,579 crore, of which INR 4,202 crore are installment loan disbursements. This is the growth that we saw in Q4. I must particularly call out what happened to our gold loan business. The AUM there registered a 17% quarter-on-quarter increase. We closed our gold AUM at INR 3,969 crore. So that's 17% quarter-on-quarter and 33% year-on-year. The tonnage of our gold stands at upwards of 9.5 tons. The weight of gold that we have in our vault is about 9.5 tons at this point in time. On the back of all this, we recorded a net profit for the year of INR 244.7 crore, and for Q4 it is INR 67.7 crore. Our profit for the year is up 36% over the previous financial year, and our profit for the quarter is up 73% year-on-year and 3% quarter-on-quarter. Our asset quality also improved during the quarter. We ended Q3 rather at about 2.2% GNPA. And Q4 we closed at 1.66% GNPA. That's a reduction of 53 basis points over the quarter. Or in absolute term, we reduced by about INR 29.3 crores. This reduction of INR 29.3 crore was largely owing to the fact that we sold a large NPA account to an ARC that was worth INR 23.9 crores. So INR 6 crore is the reduction that we've seen over and above the ARC sale that we've done. The sale that we've done has been at whatever price that we've been carrying the asset at on our book. So there's been no gain or loss owing to that sale. It just deflated our GNPA and released our capital. The progress on our off-book strategy continues, and our off-book AUM went up from 17.4% the previous quarter to 18.7%. The kind of off-book that we did change in the quarter. This quarter's off-book was largely gold loan co-lending, and that went up from INR 176 crores at the end of Q3 to INR 522 crore at the end of Q4. So that's about INR 450ish crore that we've added to our co-lending book in INR 350 crores, beg your pardon, to the co-lending book in the quarter. We expanded our distribution further by adding 12 branches in this quarter, taking our total branch count to 621. While I did mention in the last call, since it's a Q4 event, I'll mention it again. We've received a rating upgrade. We are rated AA+ by CARE and India Ratings, and CRISIL has assigned us a long-term credit rating of AA with a positive outlook. Finally, the ROA for FY 2024 is 2.4%, ROE is 13.5%. The corresponding numbers for Q4 are 2.5% and 12.2% respectively. So with that brief preamble, I'll open up for questions now and we can discuss any aspect of the business you'd like me to answer now. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sneha Ganatra from Smart Life. Please go ahead. Hello. Just wanted to know, first question is, how do you see the growth going ahead and any internal target of the mix which you are focusing and regarding the gold loan also, considering the continuous uptick on the prices, how the momentum or the growth part you are seeing going ahead for the next fiscal year? Second question is, what is the branch expansion strategy and any internal target of the cost-to-income ratio which we are targeting and any operating leverage benefit which we expect that could be occurring in the upcoming years also. I would like to know what is your guidance on the impairment cost going ahead. All right. That is five different questions, and I will attempt to answer them in order. The impairment cost, we believe on a sustainable basis will be something like 80 basis points. That is what we are comfortable guiding. That is question one. Question two is that we believe that from where we are, we should be able to comfortably grow at a rate of 25% plus, and we will take advantage of any tailwind that the environment affords us from time to time. Like in the previous quarter, we saw that the gold loan business had some advantages going for it, including an increase in gold loan prices. That is something that we are comfortable guiding. Now with regard to the mix, we are a lender to small businessmen, and we are seeing a far greater traction in our small mortgage business. That also has the highest behavioral tenure of all our products. Which is why with the passage of time, it will continue to dominate our balance sheet. The other two installment loan products that we have, which is medium ticket mortgage and unsecured, we have less than 250 people deployed to both these businesses put together. Whatever we originate there, we will warehouse on our balance sheet for six months, which is the minimum period, and one or two months after that, we will sell it out. That is the strategy pertaining to the other two businesses. You would have seen evidence of this in our Investor Deck Slides 24 and 25. As a percentage of on books, the small mortgage business is up from 24% to 29% in the current year. That trajectory should continue in the foreseeable future. That is as far as the product mix is concerned. I hope I have answered all your questions, Neha. Okay. The current participant line has been disconnected. We will move on to the next question. The next question is from the line of Renish from ICICI. Please go ahead. Yeah. Hi, Anil. Congratulations on a good set of numbers. Just two questions from my side. One on the disbursement yield side. So, we have seen across the market disbursement yields fell by almost 40 to 50 basis points on sequential basis. So what is going on? Since we are growing our AUM at 14%, is this because of that or there is, let's say, increased competition is leading to the moderation in disbursement yield? The yields on a per product basis continue to hold, Renish. Whether it is gold loans or small mortgage or medium ticket mortgage or unsecured, the yields on a per product basis continue to hold. Any changes that we see are owing to the changes in the mix that we would have seen in the quarter. That's basically it. The second factor affecting yields as calculated would be the fact that we've embarked on co-lending for our gold loan business. So that is where we recognize interest income as the spread as opposed to the entire yield that we charge the customer. To give you an example, if the customer rate is 15% on the co-lent portion of the portfolio, we only recognize 15 minus 10, 6%. So that is the only difference. But otherwise, I can confirm that on a per product basis, the yields have held across the spectrum. Okay. And second question again on the loss on the debt instrument portfolio. Does it mean that the asset quality for already assigned portfolio has deteriorated, and we have to compensate for that? Or how one should read the loss on the net gain on asset portfolio versus INR 160 crore of net revenue last quarter? INR 16 crores actually last quarter. Yeah, sorry. INR 16 crore. Yeah. So this is a net gain. So the way this works, and I am sure you know this, is that on what you sell down in the current quarter, there is an upfront gain that you book. Correct. And if you sell down in previous quarters, there is a negative to the portfolio owing to the unwinding of the gain that you have booked. Right. Okay. Right. Now, in quarters 2 and 3, we had sold down a lot of our portfolio, especially because we were getting into an IPO and the date of the IPO was far from certain. In the month of September 2023, our debt equity had actually touched 5.8%. So we sold down quite aggressively in Q2 and Q3. In Q4, our appetite for off-book was met through the co-lending route. So which is why we only sold INR 284 crore. So as a consequence of that, the unwinding and the upfronting kind of canceled each other out. We had a negative of about INR 16 lakh or so in that quarter. Got it. Had we stuck to the same trajectory of sell down at Q3, we would have made, let us say, INR 16 crore more in the quarter. But from a commercial standpoint, it did not make sense doing it, especially because we were flush with funds for IPO and our co-lending arrangements had fructified. Got it. Just last question from my side on the cost of borrowing front. If you can throw some light on, let's say, the blended cost of borrowing for this quarter and the incremental cost of borrowing in current quarter. Sure. I'll let Ganesh answer that, our CFO. He will answer that. Yeah. Yeah. Hi, Ganesh. Thank you for the question. Hi, Ganesh. Hi. So, see, on an overall basis, as you would know, in Q3, RBI had increased risk weight on bank lending to NBFCs. As a result of that, there has been a small increase in our cost of about 10-12 basis in terms of the blended cost of funds. But that being said, post our credit rating upgrade- Able to tie up incremental commitments at rates reasonably lower than the blended cost of funds, which gives us confidence that slowly but surely, the cost of funds, we have seen the peak to start coming down from here. Okay. Would you like to give the numbers? It's not in the deck. I would be a little hesitant to do that, Dinesh. Okay. No worries. Okay. No, the direction comment is very helpful, Ganesh. Thank you. Thank you from my side. Yeah. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Mr. Shreepal Doshi from Equirus Securities. Please go ahead. Okay. Sorry. Ajay, thank you for giving me the opportunity. My question was pertaining to margins. As you highlighted to the earlier participant that yields are broadly sticking where they were and cost is likely to have peaked out. Is it fair to assume that we will be able to hold NIMs at current levels? If not, then what is the guidance that we have for FY 2025 and FY 2026? From where it looks right now, our customer yield should stay at the current levels. Yeah. The wisdom that we've received on the trajectory of interest rates is that the rate cut will be more back-ended than front-ended during the course of the year. Which is why we believe that our cost of borrowings will also stay sticky during the course of the year. Which is why we believe that our spread will stay constant. The only thing that will increase the spread is that if we do more co-lending for gold, which is what we are in the quest for, our spread might increase from hereon. That really is the way this will work in the course of the current year. Of course, if interest rates correct sooner than we expect, that's a benefit that we all have. The second factor I would like to overlay is that we have a large gold loan book, and our ALM is positive right from the first bucket itself. So we have the room to borrow short term. As of the end of March, we have zero commercial papers, zero short-term borrowings. I believe that before the long-term interest rates correct, there will be liquidity and the short-term interest rates will ease. That will give us a chance to borrow at the shorter end. Then that could depress our cost of borrowings, resulting in higher spreads. That's how I think it is playing out. Got it. I'll come with you. Thank you for answering that, sir. Can I just add to that? Sorry. Yeah, sure. In terms of new business originated, we have had a phenomenal Q4. In fact, we disbursed approximately INR 1,000 crores more than our best quarter to date. The only challenge was that much of that business was back ended towards the end of the quarter. This is why when you arrive at a mathematical yield, there is an optical illusion there which suggests a meaning which is not actually there. Okay. When you see the income coming out of that in Q1 of this year, it may lead to a positive surprise. Got it. Okay. Also, on the gold loan business, there are the twin tailwinds of the gold price rise as well as one of the peers possibly going slower, which also explains why we have had a phenomenal quarter for gold loans. I think the team has geared up to be much more aggressive in that product. So all of this gives us a lot of confidence entering the new fiscal. Got it, sir. Thank you so much, sir. Thank you. Thank you. The next question is from the line of Samir Bhise from JM Financial. Please go ahead. Yeah. Hi. Thanks for the opportunity. Hi, Anand. Hi, CVG. Just wanted to understand or hear your thoughts, especially in context of the greater regulatory scrutiny with respect to the gold business. How are you positioned, and your thoughts on the same with respect to how tighter have your processes been? Some details there would be helpful. Sure. Hi, Samir. Thanks for this question. Fedfina has been doing the gold loan business since 2011. We have been audited every year since then. It is also pertinent to note that we are audited by RBI Trivandrum as opposed to RBI Bombay, and the large gold loan companies are all audited by RBI Trivandrum. In audits year after year, our practices have got scrutinized, we have got feedback, and things have moved on. Recently there has been a lot of regulatory action and there has been information coming in about what the regulator has said and what practices exist and stuff. Internally, we have also gone and checked as to where we stand to all this. All these issues have got discussed and from our standpoint, got addressed several years ago, mostly pre-COVID and stuff. All of what the regulator said and which has been in the public domain in the months of Feb and March is really old hat for us. We are reasonably robust from our standpoint. Our understanding of the regulations, our adherence to those regulations, as well as our execution of the gold loan business where absolutely everything gets run out of the system, right from KYC to training people to auditing to managing the auctions, doing the auctions at Taluka level, district level, the periodicity of those auctions. The fact that we auction on a per customer basis. All of that is done and dusted for us and I am happy to confirm that. Great. This is comforting. Also, just wanted to understand in terms of seasonality, how would the business look? Say, given that we had a very strong Q4 in terms of growth, do you expect exceeding those in the near term in terms of disbursement? Or you think that there could be a meaningful dip in the near term given the way the business is shaped? Our gold loan business has a few different variables which drive growth. One of which is the price of gold, and we saw the price of gold increase in the previous quarter. We believe that impact will last till the middle of May, given that we take the 30-day average of price of gold. That is regulatory how your lending rate is calculated. The previous growth will trickle in to the middle of May or so. We are in a good place there. The second thing obviously is the progress of opening branches, okay? We did not open branches last year. We intend opening a few branches this year. That is the second thing that will take up our AUM. The third is obviously the productivity. Last year, our AUM per branch started at INR 6.3 crore per branch and we closed at INR 8.7 crore. We have had a ramp up in productivity. We have also had a ramp up in the amount of new gold that has come into our vault over the previous year. Okay? All of these factors contribute to the increase in gold AUM. I believe that for the current quarter, there seems to be an upward bias in the price of gold. That should contribute. That should counter, A, the fact that seasonally Q1 is a weak quarter. The second factor is that one large player is still not disbursing loans. Whether it is Fedfina or anybody else doing gold, they will see some overflow of demand coming there. Q1 will be a good quarter for gold based on all of this, but I do not think it will be comparable to Q4. In Q4, we saw an AUM increase of INR 556 crore, I think, for gold. We will not see that kind of increase this quarter, but it will be a very good quarter is my estimation. Great. This is helpful. Thank you, and all the best. Thank you so much, Samir. Thank you. The next question is from the line of Nirmal Bari from Nuvama Asset Management. Please go ahead. Yeah, thanks for the opportunity. My first question is if you can give the slippage and write-off numbers for the current quarter and the full year. We are just getting that. While we get that, do you have a second question? Yeah. Actually, I would like to understand a bit more on the net gains on direct assignments. I understand that an earlier participant had asked the same question, and you had said that unwinding of discount led to this. But an unwinding of discount should lead to a positive number P&L, right? Because we are discounting that till Q3 in this case, and then unwinding should add a positive number. Shouldn't that be the case? No. I will just explain giving you a numerical example. Let's say in a certain quarter, Q1, you sell INR 100 crore and you book a INR 10 crore gain on sale. That is essentially the discounted cash flow of the future receivables, assuming a certain prepayment rate and all of that. You discount at a certain rate, that is your gain on sale. At the end of Q1, you say that this is what it is and that's the gain you book. At the end of Q2, what will happen is there will be some repayments, prepayments and stuff. Let's say your INR 100 crore portfolio comes down to INR 95 crores. Then at the end of Q2, you again estimate what the present value of your discounted future cash flows is. That number will obviously be less than what you estimated at Q1 because your portfolio is lower. That difference you charge off to P&L, and that is the unwinding that I was alluding to. So while you have a gain on sale in the quarter that you book the transaction, in every subsequent quarter, you have an unwinding of that gain on sale, so that when the transaction gets nullified, you are done and dusted. So that's basically how it works. What happened in Q4 was that we did a lot of direct assignment transactions in Q2 and Q3 because, like I said, we didn't have visibility to the IPO and we wanted to secure our debt-equity ratio. That unwinding is what hit us in Q4. The gain on sale just about compensated for the unwinding that hit us, which is why it was a negative INR 15 lakh as opposed to a positive INR 16 crore in the previous quarter. What was the total quantum of direct assignment done in this quarter? 284 crore INR. 284 crore INR. My final question is on the, again, data de-inducement. On the credit cost, if you can give the split of current quarters and full year credit cost between standard asset provisioning, NPA-related provisioning, and write-offs. Sure. First, I will give it to you for the entire year then. For the entire year, we have had an ECL impact of 6.5 crore INR, write-offs of 73.6 crore INR, and a recovery of bad debts of 14.2 crore INR. So the net of all these numbers is 65.9 crore INR, which is the total credit cost that we have had over the course of the year. The corresponding numbers for Q4 are write-offs of 28.86 crore INR, recoveries of 3.3 crore INR, and an ECL of 17.83, giving us a net of 17.73 crore INR. This 28.86 would include the large account that we had sold to ARC? That is it. It includes the large account that we sold to ARC, yes. Okay. Yeah, thanks. Yeah. Thanks. The first question on slippage, if you can give that number as well. We'll just get that. Huh? We'll go through the request. We'll just get that. Okay, thanks. Yeah. Any other questions? Thank you. The next question is from the line of Pranav Gupta from Aionios Alpha Investment Advisor. Please go ahead. Hello. Yeah. Hi, Pranav. Yeah. Hi, Anil and team. Congratulations on a good set of numbers. A couple of questions on the cost side. We have seen overall OPEX remain sticky for this quarter and slightly, should we compare it on a QOQ basis. Could you talk about two things? One, where we are in the journey of transitioning into the Salesforce, and secondly, is this an indication of some of the operating leverage coming in, or is it just a function of the back-ended growth? That's the first question. I'll talk about Salesforce. Salesforce has gone live, and we did a pilot in 10 branches to start with. 20 branches, sorry, to start with. And we are observing how it works, and then we will expand it to the rest of the business. Okay, so that's where we are on our Salesforce journey. Again, that happened in the month of April. Okay? So that's as far as Salesforce is concerned. Now, otherwise, on our expense journey, we believe that our expenses will not increase significantly here on in proportion. 90% of our expenses are anyway directly linked to origination and underwriting. And the platform costs are much, much smaller. So whatever expenses we incur have to do with the origination. So the trajectory of these will ebb and flow with how much we originate. Now, for the year gone by, we were at a cost to income of about 58-ish percent or a cost to AUM of 5.2%. Now, that is down from, I think, 5.6 a year ago. We want to keep making progress on a cost as a proportion of AUM and improve that by maybe 30, 40 basis points during the course of the year. That is where we are. I will just add maybe a couple of numbers from a quarterly improvement in OpEx year. See, as of quarter 3, our OpEx as a percentage of average loan book has gone down in Q4 by 30 basis points, Q4 over Q3. So OpEx as a percentage of average AUM has improved 30 basis points, Q4 over Q3. Now, as Anil articulated, given that we have a program of selling off some part of what we originate, this improvement would be a little more material when you look at the OpEx to AUM. So there again, our OpEx to average AUM has shown an improvement of 40 basis points quarter-on-quarter, Q4 over Q3. Now that being said, typically in Q1, you have employee-related costs, which is a step up in salaries and all that, which come in. But the way these metrics are moving gives us confidence that we are on the right path and the trajectory is downward. Pranav, just wanted to understand two things. Mainly on the other expenses bit that has sort of remained flat-ish for the last three quarters or so if I look at it on an absolute basis. Is this an indication that from here on we might see that growth might not sort of match up to the AUM bit and that is the first bit. Second is obviously we understand that given the fact that we are transitioning from having likely a lower share of AUM off book to a higher share, cost to AUM will move down faster. But if you look at cost to assets as well, that seems improvement. Should one expect that improvement to continue through FY 2025 as well? That is what I was trying to figure out. I didn't get your first question, Pranav. The second bit I did, but I didn't get your first question. I'll just repeat it. If you look at other expenses, the line item has remained static over the last three quarters. From here on, should we expect that from the other expenses growth is in line with either expansion of branches or much lower than AUM growth? Or is this just something that stays here for a bit and then will start in line with AUM again? There are two large components of the other expense lines. One is what we invest on technology, and the second is the leases that we pay for our branches. This year, we opened 50 small mortgage branches, so the expenses have gone up in line with that. We've also done development of our new LOS, which is Salesforce-based. Those are the two items of expense that we've incurred. Next year we will open branches. Obviously these expenses for those will happen, but otherwise, I think they will stay reasonably range bound. There is no other head of expense that will increase. Our other expenses are linked to, you can say, branch expansion, and that's the only thing that will impact this over the coming year. Your second question was about cost as a percentage of assets. The trajectory of costs will not change and will not increase as quickly as the trajectory of assets. We should see this coming down also. That's the way cost as a proportion of AUM will come down. Perfect. Thank you so much. Just one last bit. Could you give the breakup of other income? The breakup of other income. I will just tell you what this other income includes. Broadly, it is income that we get for distribution of Federal Bank products and marketing activities that we do. Profit on sale of G-Sec, net gain on sale of fair value charges. All of that is what our other income is composed of. Sure. Okay, thank you so much. Yeah, thanks. I have the breakup of our credit cost. We started the year with a stage 3 of INR 164.5 crore. We added INR 116.9 crore during the course of the year. We reduced INR 89 crore and wrote off INR 26 crore and giving us a closing balance of INR 165.28 crore during the course of the year. Okay? Between last year and this year, we have added less than INR 1 crore to our stage 3. Okay, thank you. The next question is from the line of Kunal Khudania from BHP Asset Managers. Please go ahead. Hi, this is Vivek here. My question is on the cost to income. I joined the call a little late, so sorry if you had already answered it before. Is there a cost to income ratio that you are guiding us to? Another tricky way of asking the same question is, for a mature branch, what would be the cost to income or the cost to AUM? Okay. For the year gone by, we had a cost to AUM of 5.2%. Okay? We believe that in the coming year, it should be better by between 30 and 40 basis points. Okay? That is the answer to part one of your question. Part two of your question, we do have metrics depending on the kind of branch that we have, but the metrics are not cost to income. Okay? They are more about the absolute cost that we want to incur in each branch in relation to the AUM of that branch. These are different for different kinds of branches. There are gold loan branches, non-gold loan branches. There are historical branches in South India which were architectured to be of a certain size, and rest of India branches are a little bigger because the AUM per branch in rest of India is a lot bigger. Okay, there are different dynamics pertaining to this. To abstract this at a slightly higher level, I think how you should look at us is that we are at 5.2% on our cost to AUM, and that should improve by 30, 40 basis points during the course of the year. Okay, thank you very much. Thank you. Thank you. The next question is from the line of Harshvardhan Agrawal from Bandhan AMC. Please go ahead. Hi, sir. Thanks for the opportunity. Just wanted to understand the amount of sell-downs that you have done in Q2 and Q3. This is just to understand the negative DA income that you have got. Just to understand that flow, if you can help with that. Yeah. You will find this on slide 40 of our investor deck. Okay. In Q2, we sold down INR 527 crores. In Q3, we sold down INR 467 crores. In Q4, we sold down INR 284 crores. Okay. So basically this INR 1,000 crore roughly that you sold down was yielding a INR 15 crore income on a quarterly basis. Is that correct? No, that is not. Well, each quarter there is a gain. We disclose the net gain on sale that we get, which is up fronting minus unwinding. For Q4, those numbers exactly cancel themselves out. Okay. This INR 284 crore would have given a 15% CR of this. Sorry, if you could repeat that. I was not very clear, Harsh. Sorry. What I am trying to ask is, this INR 285 crore that you sold in Q4, would have yielded somewhere around INR 15 crore-INR 16 crore and the unwinding of that INR 1,000 crore of the previous year was around INR 15 crore-INR 16 crore. Okay, one sec. Okay. The up fronting during the fourth quarter was INR 16.5 crore. The unwinding was about INR 18 crore. That is how we got a negative INR 1.5 crore. Oh, okay. Sorry. Harshvardhan, does that answer your question? Yes. Sure. Thank you. Thank you. The next question is from the line of Mayank Mistry from JM Financial. Please go ahead. Yeah. Hi, sir. My question is on the average ticket size of medium ticket loans, which you have mentioned on slide number 18 as INR 67 lakhs. Basically, last quarter it was at around INR 49 lakhs, which have increased significantly to INR 67 lakhs. What explains this significant growth? Is there a major sell-down or is it only on the fresh disbursal? Can you please explain on this? We previously used to restrict this business up to a ticket size of about INR 1 crore. We now let them go up to INR 2 crore. That is what explains this inflation in ticket size between the last two quarters. This is the on-book average ticket size of medium ticket, right? That's right. Okay, fine. Thank you. Mayank, can I just come in here? The point is when you originate, it is always on book. Right? But typically, I think we have a stated policy or strategy that we keep the higher-yielding assets on books, and the lower-yielding assets, we originate higher ticket sizes where we see appetite for an onward sale, and we optimize on that. So obviously, after a seasoning period, as required by the directions and controls, these would be available for sale and which opportunities we would capitalize on based on the wide array of partnerships we have who have the appetite to buy these. Okay, got it. Thank you. The next question is from the line of Aravind R from Sundaram Alternates. Please go ahead. Hello. Thank you, sir. Thank you so much for the opportunity. I hope you can hear me. The ECL provision as a percentage of assets across stage 1, stage 2, and stage 3, which I can see that it has declined a bit. I just want to understand, are we comfortable with the current levels, or do we want to fortify it to the FY 2023 or above levels? That's my first question. My second question is on what would be a branch addition and employee addition plan for gold and non-gold branches, non-gold businesses. My third question is on the other income. What are the potential opportunities we are seeing in terms of other income, like, say, cross-selling an insurance product or any other third-party products? Is there anything addition to whatever we are doing now? Do you see any different opportunities in the coming years? Thank you. Yeah. Hi, Aravind. We have applied for a corporate agency. We will get our license hopefully in the month of May or June. At that point in time, we will use our distribution network of gold and non-gold branches to also sell insurance. We currently don't embed insurance with our gold loan customers, and health insurance, life insurance are products that we can cross-sell to these customers. So that's an opportunity right there. Now, number 2, with regard to the ECL provision that we have. On stage 1, stage 2, and stage 3, each of our products, we continue to maintain the same provisions that we used to previously. Any changes that you see is owing to the mix. It's also owing to the fact that our gold loan has had a stronger growth than the other products in terms of AUM and the ECL provision required on gold loan, especially for stage 1 is negligible. Okay. Also on stage 3, what has happened is that we sold one large account to the ARC that was provided to the extent of 53% or 4%. Okay? Given that we sold it off, their provision also has corrected itself. On stage 2 accounts, we used to have a restructured book at a point in time where we used to provide as per stage 3 kind of levels. Now, that book also has more or less gone, which is why the quantum, the provisioning for stage 2 has come down. So these are the different variables that impact provisioning. But otherwise, on a product-by-product basis, they continue to be provided as they used to be. You may recall that at the end of Q3, we actually took up our provisioning for mortgage loans from 19.5% to 23%. That's for our stage 3 loans. Okay? That is the migration in stage 3. Finally, you spoke about our plans to grow and expand. In the coming year, we want to open about 50 gold loan branches and 30 small mortgage locations. That is the plan for the year, and we will execute it, try and front-end that during the course of the year. That is the intent. Sure, sir. Any color you can give on which region it would be, these branches? Or is it distributed throughout the country? The approach that we followed is to try and grow efficiently this year, which means that we are not opening any new regions. Okay? Okay. Because a new region is overheads in terms of regional leadership and all that. The branches that we have identified will add up as 4, 5, 6 branches in each of our existing regions for gold loans and ditto for our non-gold businesses. We already have leadership built out. The branches, these are only production-related expenses that we will incur in terms of people and premises, and that is the more efficient way of growing in the current year. That is our thinking. Sure, sir. Just one last question, if I can squeeze in. I am sorry if I have this question. No, please. Yeah. What would be the credit growth of guidance, either segment-wise or the overall? Is there any guidance on that? Cost of credit, you should assume 80 basis. No, credit growth, sir. Credit growth. Advances. Yeah, advances growth. Oh, that I have already guided 25% growth, and we should try and top that if there are tailwinds like there were in the previous quarter. Sure. Thank you, sir. Thanks. Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Shreepal Doshi for closing comments. Thank you, Steve. I would like to thank the management of Fedbank Financial Services for giving us the opportunity to host the call, and thank you to all the participants for being part of the call. Thank you all, and have a good day. Thank you. Ladies and gentlemen, on behalf of Equirus Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.