Q2 23/24

Dec 11, 2023

Summary

Q2 AUM rose 38% YoY to ~₹10,000 crore and PAT grew 25% to ₹67.8 crore. Guidance targets 25%–30% AUM growth, ROA above 2.5%, and rising off-book share, with operating leverage expected to improve.

Ladies and gentlemen, good day and welcome to the Q2 H1 FY 2024 conference call of Fedbank Financial Services hosted by Equirus Securities. As a reminder, all participant clients 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, please signal the operator by pressing star and then zero on your touch-tone 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, Darwin. Good afternoon, everyone. I welcome you all to the earnings conference call of Fedbank Financial Services to discuss the Q2 H1 FY 2024 performance of the company, business updates and industry trends. We have the senior management team with us, represented by Mr. Anil Kothuri, MD & CEO, Mr. C.V. Ganesh, CFO, Mr. Kuldip Deshmukh, Head IR, and Mr. Amit Singh. I would now like to hand over the call to Anil sir for his opening remarks, post which we can open the floor for question and answer. Over to you, sir. Thank you, Shripal. Good evening, everybody, and welcome. We got listed on the 30th of November. This is our first analyst call after that. Thank you all for attending. This is to discuss the results of the quarter ending September 30. The quarter has been a reasonable one for us. We crossed a landmark in terms of an AUM of INR 10,000 crore on the last day of the quarter. Our AUM is just about INR 10,000 crore. This represents a 38% growth over the same period a year ago. This is on the back of disbursals of INR 2,900 crore in the quarter. The INR 2,900 crore includes the disbursals for gold and non-gold. The non-gold loan businesses disbursed about INR 930 crore in Q2. This INR 930 crore is a 39% growth over the previous quarter. All these disbursements happened at a weighted average origination rate of 15.9%. All this led to financials as follows. Our profit after tax for Q2 was INR 67.8 crore. This is a 25% growth on a year-on-year basis. Our return on equity was 15.9% for the quarter, and our ROA or return on assets was 2.4%. Our small ticket mortgage remains a key focus area for the company, and we expect its mix as a percentage of AUM to keep improving year after year. In line with pursuing this strategy, we opened 23 new branches focusing on small ticket mortgages this quarter. We forayed into the state of Uttarakhand, which is our 17th state in India that we are present in. Our branch count is now up to 607. We added over 200 employees in the quarter, so our employee base at the end of the quarter had increased to 3,970 people. Our asset quality remains on track. Our gross stage 3 is 2.3%, so that's a worsening of 8 basis points quarter-on-quarter, while our net stage 3 stands at 1.8%. Our 30 plus for the non-gold loan portfolio has improved marginally to 4.5%. In the quarter, our portion of secured loans continue to stay at 84% of the AUM, even though on an on-book basis, that number is about 13.5%. With this, I'll stop here and open up the call for any questions that you may have. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press Star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have the first question from the line of Madhuchanda Dey from MC Pro. Please go ahead. Hi, gentlemen. Congratulations on the listing. I just have one question. Just a little broad-based question, not exactly pertaining to the Q2. Which is like you all are present in gold loan, small ticket housing, business installment loans, etcetera, with a significantly higher yield than what generally earned by your banking counterparts, including your parent. Now with this expansion in footprint, riding on FinTech, smaller NBFCs, etcetera, many of the banks, including your parent, is pursuing a strategy of improving their loan yields. In fact, to that extent, there is going to be significant competition from banks because banks now have a big fight with their low-cost deposits, term deposits in general. Everyone is eyeing this high-yielding segment. How do you differentiate yourself? That is my first question. Secondly, what could you do differently to counter this competition? Thank you. Thank you. Our mission statement is that we are in business to empower emerging India with easy access to loans. That means we are very focused on the small self-employed customer. The demand in this segment is quite vast, and it is estimated that only 20% of this demand is actually catered to, the remaining just goes a-begging. The first point is regardless of how many NBFCs and banks there are, there is a market much larger than the appetite of the existing players to feed this segment. That is point number 1. Point number 2 is that we use whatever information the customer has and whatever collateral he can provide, and we fashion a loan to him on that basis. Some customers have gold, we do a gold loan. Some customers have property, we do a loan against property. That is the way this thing works. The challenge is that we do not have ready-made P&L balance sheets that we have access to that we can put into a model and quickly make a decision. Our underwriting requires us to invest time with the customer, understand his business, estimate the size of his business, his income, and then fashion a loan amount that is a comfortable debt burden for him. So it is very intensive. Okay? The number of players doing this in the market is very small. The large banks most definitely do not do it because they prefer to have models which they can replicate over thousands of branches and they try to achieve uniformity in their underwriting practices. That is the other point. The difference in yields between what we get and what the banks get are quite vast. Since you mentioned our parent, our yield on the gold loan business for instance is upwards of 17.5%, whereas for our parent it is about 10.1%. So it is a different customer and a different value proposition that banks and NBFCs offer. The way we are approaching this in future is to cooperate with banks. There are co-lending arrangements that we put in place, especially for our gold loan business. What these arrangements do is to help broad base our business so that we are not anchored to customers who only give us 17.5%, but we cater to customers at different price points while preserving our returns on equity. We can make our equity go further. We can cater to a wider base of customers with superior cost absorption that results as a consequence. That really is the way forward for us. If I just may ask you another question. Who all have you partnered with for this co-lending? There is a large private bank and a foreign bank that we've already tied up with and have commenced co-lending with. Those two arrangements are already afoot. Just to understand from you correctly, you still believe that all this, the penetration of the FinTechs, etcetera, the turf that you cater to is going to be exclusive and not going to be serviced by the banks in the near future. Is that a correct understanding? The banks and FinTechs are different. The banks cater to a more established self-employed customer base or a salaried customer base. What FinTechs in the lending space do is to cater to customers who meet three characteristics. Their loans have three characteristics. It is short-term, it is unsecured, and it is low ticket. That seems to be the preserve of FinTechs. That's a segment that we are not present in. Short-term, small ticket, unsecured loans of 10, 15, INR 20,000. We are not present there at all. Got it. Thank you. Thank you. Thank you. The next question is from the line of Sneha from Star Union Dai-ichi. Please go ahead. Hello. Hello. Hi, Sneha. Hi. You have reached over the, we call the landmark of AUM of INR 10,000 crores. How do you see it going ahead critically? Any ballpark number you would like to share? Can we expect any mix changes and how the percentage share in the 10,000 and what is the thought of the disbursal process more on the gold loan or more on the non-gold loan? The second question is, there has been spike on the expenses on quarter-on-quarter. Anything to look into that? The third question is on the how there is a little bit spike on the asset quality, basically across stage 1 as well as stage 2 on quarter-on-quarter. Just wanted to know your thoughts. Regarding this co-lending model, how do you see that net digitization volume going ahead? When during the meeting you had mentioned that you would be like to follow your peers in some of the segments, specifically on the co-lending model. What are the features and the work streams we have? These are questions from my side. You asked four questions. I missed the second one, so let me just answer the remaining three, then we can get to the second. Your first question is on the mix and the AUM and what it may be in future. Our business is a business of two parts. There is the gold loan business and there is the non-gold business. In terms of the gold loan business, we are present in 437 branches. We started the year with an AUM per branch of something like 6.5. We crossed the 7.5 mark by September, October, and we are on track to increase our AUM per branch, especially with co-lending coming in. The other tailwind that we hope to get is an increase in gold prices. These are the two factors that we lay out in building our AUM per branch for gold loans. As far as the non-gold loan business is concerned, we have capacity that is already there, and our disbursals will keep increasing, and the AUM will keep increasing as a consequence. The bias of the AUM will be towards small ticket mortgage. That is because as we keep originating, this is the longest tenure product that we have. It has a behavioral tenure of something like 7-8 years. While the other products run off quicker, the portfolio will keep getting enriched by the presence of a greater proportion of small ticket mortgage loans. So that is the way the mix will trend. You have seen our quarter-on-quarter or YOY trends in terms of AUM growth, and it will be our endeavor to try and preserve them. You had a question on the co-lending model. How does that work? We commenced co-lending for gold loans. Let us say the other bank takes over the loan at 9% and we do a loan at 12%. Thus far, we will not offer the customer a loan. But now what we do is that we offer the customer a loan and offload 80% to the other bank. So we make 3% on 80% of the loan, and on the remaining 20%, we make, let us say, a little more than 3%. Our cost of borrowing is, let us say, 8.6, 8.7. So even if you round it off to 9, we end up making around 15% on the loan. That takes up the ROE quite significantly. That is how co-lending works for us. We are able to occupy the wide space that currently exists in our portfolio between, let's say, 17.5% all the way down to maybe even 10.5%. That becomes ROE accretive for us. That is how co-lending will work. The third question was with respect to asset quality. Asset quality has stayed largely flat over the previous quarter. There has been a worsening of 8 basis points. That is because there has been some increase in delinquency in the medium-ticket mortgage business. This is as of September 30. Post September 30, that has come back under control. I will have more to say in this in probably the next analyst call. That is the reason why the Stage 3 has bloated by 8 basis points. Your second question I did not get, Sneha, if you can just repeat. Yeah, I was just checking on the expenses side that has been rise on quarter-on-quarter. Is this due to the IT expenses or any further expenses would be the reason for the rise in expenses basically? Our expenses have broadly four components, which have contributed to increase. One part of the expense increase has to do with the number of branches we open and the people we hire. Also in our existing branches, we have hired more people. It is not as if our growth only happens with new branches. Even existing branches have room for adding one or two people. We have added people. Some bit of that is capacity building. That is number one. The second thing is that we are in the midst of a transformative IT implementation in our installment loan businesses. That is the second thing that is happening. The third is some bit of our expenses have to do with the quantum of origination that we do. As origination increases, there are expense increases that we do. Not everything can be amortized. There is some bit that we take in upfront. That is the other component of the expense that is there. When can we expect that operating leverages can start bearing the fruit of it considering the implementation of the IT and whatever the branch expansion and origination has been done. But still some of them has been pending on your end. So when can we expect the full basically on the operating leverage that can play out? The investment phase is largely behind us, whether it is in terms of the transformative change in our branch landscape or in terms of IT implementation or hiring people. So the platform now is reasonably in place and any expenses we incur will be largely ad valorem linked with origination. The operating leverage should start right now, if you ask me, and every quarter we hope to demonstrate some bit of this happening. Okay, got it, sir. All the best for the future delivery of the numbers then. Thank you. Thank you very much. Thank you. We have the next question from the line of Harshvardhan Agrawal from Bandhan Asset Management. Please go ahead. Sir, hi sir. Thanks for the opportunity. Sir, two broad issues. One is around the AUM growth. I understand that even the last participant asked about AUM growth and is that try to understand that the current growth of around 38% is that we would maintain for the affected fiscal, many times? 38% is a large number. Our endeavor is to ensure that we grow at something between 25% and 30%. That's what I am happy and comfortable guiding even though we have several engines firing in terms of product and geographical presence. Fair. Fair. Fair point, sir. Second is largely on the recent RBI norm changes which have happened. So two parts here. One is any impact on our capital adequacy due to increased risk weights and secondly because it's been almost a month, obviously we would have had some discussions with the banking partners. So any impact we would see on our partner front? On the first part, we have separated which of our loans have to do with working capital and which of them have to do with consumption. Okay? We have identified these loans and they amount to something like maybe 250 or so crore INR. I forget the exact number and the impact on our capital adequacy is something like 20 basis points. Okay, so that is the data point. Given that we got IPO-ed and have capital far in excess of the regulatory minimum we can take this in our stride. Sure. That is number 1. The second question is in terms of the banks. A few banks have come back to us and said that they want to take up their rates. Conversations are underway, but the impact is marginal. The impact is definitely there, but our efforts are to ensure that it is not significant and my estimate is that it could be something like, God knows, between 25 and 50 basis points maybe. This 25 to 50 basis point broad impact that would be there on the entire bank funding book, right? Because even the existing loans will be retained. So look, we need to see how this plays out. Currently it is just about three banks who have written to us and we are parleying and the increase does not seem to be substantial. So it is just an estimate that I have at this point in time. But yes, in terms of impact the entire bank loan, bank funding should get impacted less what we borrowed specifically for PSL. Fair. Perfect. Sure. Great. Thanks a lot, sir. All the best. Thank you. Thank you. The next question is from the line of Gao Zhixuan from Schonfeld. Please go ahead. Hi, sir. Am I audible? Oh, yes you are. Yeah. Thank you so much for the opportunity and congratulations on the good set of numbers. Just a follow-up on the previous participant's question on the borrowing cost. 75% of our borrowings are bank borrowings, right? Out of that, how many percent is PSL compliant and thus excluded from the risk weight increase on the banking side? Virtually all the loans that we do are PSL in that we lend to the small self-employed customers. However, there are some specific requirements of documentation that we need to collect to demonstrate that they qualify for priority sector lending. Okay? Therefore, only those loans are earmarked for PSL borrowing. I'm just trying to credit the number for you, just give me a minute. Sure, sir. It is under 10%, yeah. Under 10% of our bank borrowings are PSL. 90% of our bank borrowings or lenders were subject to the risk weight increase. That is right. Got it, sir. Just on the margins of the spread, this quarter we saw a pretty sharp jump in the yield, at the same time we saw a pretty big decline in the cost of funds. Is there any one-off there? How should we look at the spread going forward, excluding the potential impact of this RBI directive? All right. In terms of the spread, I think a fair way of looking at it would be to average it across Q1 and Q2. Our spreads are around the 8% mark. That would be a fair way to look at it. Across the two quarters, there has been one-off. In Q1, we have repaid some loans, in the end of the quarter. When you average it on an opening plus closing quarter by two basis, your borrowing cost looks a little high. That was the impact in Q1. In Q2, we sold some portfolio down to securitize because we wanted to ensure that we had adequate capital in hand in case the IPO timelines get delayed. Which is why we've had a larger gain in terms of securitization, which adds to the interest income. Got it, sir. On the co-mandate and the securitization, the spread and the ROA of this off-book AUM, how is that compared to our on-book AUM? I think I quite get your question, if you can just elaborate some. Yeah, I am just wondering because since now we are doing more co-lending/securitization. I am just wondering the spread that we earn on those off-book AUM and also the ROA that we earn on those off-book AUM, how is it comparing to, let us say, our on-book AUM? All right. I get it. Our cost of borrowing for the last quarter was, say, 8.6%. The co-lending book we offload to other banks at, say, 9.5%. The spread then will be about 1% lower. So 17.5% minus 8.5% would have been 9% on the whole loan book. Instead, we will get 8%. That is roughly the way to understand it. But there will be no deployment of capital on this, so therefore the ROE on the off-book component of the portfolio will be much higher. Okay, sir. So 1% lower- Yes spread on the off- Another way to look at it is we earn 1% less, but we will deploy only 20% of the capital that we would have otherwise deployed on the book. Got it, sir. My last question is on the overall ROA trajectory, sir. We are looking at somewhere about 2.4-ish kind of ROA. How should we think about ROA for this full year and also next year? Any guidance that we should look forward to, sir? You look at us, we have been consistently at 2.3, 2.4 for about three quarters. Okay? Henceforth, we will have the benefit of the IPO money, which is about what? INR 6 billion. Okay, so that should take our ROA up in the short term. If that is coupled with some expense absorption should mean that we should touch or cross the 2.5 mark comfortably. 2.5 exiting this year? Yes, that's a reasonable estimate. Got it, sir. That's all from me, sir. Thank you so much. Thank you very much. Thank you. Ladies and gentlemen, if you wish to ask a question, you may please press star and one. The next question is from the line of Pratik from Citigroup. Please go ahead. Hi. Good evening, gentlemen. Congratulations on listing. I have a slightly technical question. I am looking at your FY 2023 annual report, and under the disclosure of your asset quality, there is certain proportion of loans which are classified under stage 2 around roughly INR 7 billion or 708 crore, but they are also classified as substandard. I have two questions. First, why are they classified as substandard despite being a stage 2? Secondly, if you can help us understand what is the proportion of such loans as of September 2023. Thanks. Those loans are gold loans which are completely standard, okay? But they have been re-pledged. There is a technical reason. The Reserve Bank's regulation say that any loan that has got restructured needs to be classified as substandard. Now, we took a view, and there are many views possible, that these loans, which have not got repaid but instead the borrower has re-pledged the loan, which means he has got to renew it, okay? Is called a restructured loan. That bit is about INR 708 crore out of our total gold loan portfolio at that point in time, I think INR 2,800 crore or so. We just disclosed this that these loans are good performing and completely regular, but there is an argument to call them substandard, which is why we have made that disclosure. If I am understanding this correctly, these are the loans where borrowers have actually defaulted on their payments, right? And there is some kind of restructuring which has been done for such loans, right? No, it is not restructuring. What happens is that the gold loan borrowers are habitual borrowers. They are perennial borrowers. The way they tend to treat this borrowing is that they come, they close this loan, they open another loan. Okay? And that is the nature of the business for all gold loan borrowers of NBFC. Now these borrowers, what they have done is that they have not come and repaid their loan entirely, but they have sought to renew their loan. That is what this is. As of September? As of September, third year, it is INR 129 crore. Okay? Which number was 700 and something is now about INR 129 crore. You see this stage 2 of gold loans. Okay. And they are still classified as stage 2 and substandard? Correct. Okay. All right. Thanks. Yeah. Thank you. The next question is from the line of Bhavik Dave from Nippon Mutual Fund. Please go ahead. Yeah. Hi. Sir, a couple of questions. One is on the, which one of the previous participants mentioned you answered, only 10% of our bank borrowings will get like 10% of our borrowings will be PSL compliant, right? Did I get that number right? It's a guesstimate about 10%, but the exact number I can get back to you on, Bhavik. Yeah, sure. But that number seems to be low considering we have a large part of our business gold loans and fixed mortgage home loans. Generally, most of them classify as PSL compliant. So I'm just a little surprised with the 10% number, but really happy to understand the exact number. If at all later in the call you can mention. Second question, sir, is on the operating cost. When we see our operating cost even this quarter it's grown to 34% YOY. Just want to understand how are we thinking about operating leverage, right? Because, like you mentioned, 25%-30% kind of AUM growth. I'm assuming similar kind of NII growth is what we've penciled in. What will be the kind of operating cost growth that we'll be comfortable with? What is the kind of cost to income or cost to asset ratio maybe 1 year out is what our aim would be? The first target is to ensure that we have our income growth ahead of our expense growth. Okay? Sure. Our expenses are largely discretionary in that we have people cost and premises cost, but everything else in terms of hiring new people or opening new branches or paying ex gratia for business that we originate is discretionary. We will exercise that discretion. That is number 1. The second thing is in terms of cost to income from here on it should moderate. Like I said, we have branches in different cohorts of vintage. Year 1, year 2, year 3, Right latest year 3. There is a cost to income for each cohort that we track. Obviously, our year 1 cohorts have the worst cost to income ratio. That is what we will seek to moderate and improve our cost to income from here on. This year we are at 60 for the quarter gone by, and I think this is as high as it can get. From here on, it should keep getting better is my guidance. Regarding your first question, I have Ganesh as CFO here who will provide some color and clarification. Sure. Okay. Thanks for your question. I will try to answer both. First, so far there was no visible cost advantage or prominent cost advantage for a PSL borrowing versus the non-PSL. We have been able to get equivalent rates on both. Correct. We do see the opportunity given now the starker differentiation in risk weight to get a little more documentation because as you know most of our lending, on lending is MSME. Right. With a little beefing up of documentation for the newer loans we take, we do see as the situation evolves, we see an opportunity to evaluate a PSL kind of rate on these loans. I think the limited point Anil was trying to make is so far given that there was no rate differential or major rate differential, we did not have that segregation. Sure. That being said, clearly right now with the rules being laid as they are, I think we are better placed than most other players to take advantage of the PSL route and possibly mitigate some or most of the impact which may occur at on a sectoral level. Okay? Now the second question, I will just maybe give a minor clarification. The OPEX increase you see has been to build muscle and not fat. We have stopped hiring. As I said, I think we are adequately staffed in all the mid and back-office functions. Right. Most of the employee cost increases you will see would be towards increasing the teeth to tail ratio only. Right? Okay. This quarter, for example, we added 23 branches on the small ticket LAP side to deepen our presence and penetration in geographies where we saw a larger opportunity from a risk-reward ratio. Also, we have added 238 odd people on the ground, all front-end sales and credit staff to avail of this opportunity. Also, as Anil mentioned, we are in the midst of a technology transformation exercise. All of these consciously, we are aware that while we have been now post-listing into a quarter-by-quarter cycle. Right. There is an investment play which is also there. Right. That being said, I think much of the platform is built out. We see the drags on account of these coming down, material in the most pronounced way, and you will see the results of these in the forthcoming quarters. Perfect. That's helpful. Last question is on just system and what we are seeing in our books. We have a reasonable amount of unsecured business that we built over the last couple of years. Just wanted to understand and also the small ticket home loans and other products. Just wanted to understand on the asset quality bit, are we seeing any signs of stress building up in terms of our unsecured business loans or anything that you want to call out considering RBI has been talking about the consumption bit of unsecured. Any thoughts on how our book is panning out? Any early warning indicators or anything that we are tightening just to be a little more conservative versus how the market is playing out? Just any thoughts on that? So, it's two questions you asked, small mortgage and unsecured. Our small mortgage customers continue on an even keel. For them, the stressful event was COVID, and they couldn't keep their businesses open, and there was loss of demand. All that has bounced back. If anything, they're seeing better timings than they did in the past few years. Post-COVID, that has continued to get better quarter after quarter. The portfolio performance will continue to get better quarter after quarter. In terms of unsecured, the Reserve Bank's directions were regarding loans for consumption. Correct. The loans that we do are exclusively for working capital. Okay? This is colloquially called business installment loans or UBL, unsecured business loans in the market, and these have been in existence for about 25 years. Correct. Okay. So it's a very established method of lending based on the borrower's documented income, okay, and followed by personal discussion and all that. We do this like anybody else. That's about 13% of our AUM. Those loans again are performing better than they used to. There was a COVID-related kind of shock, but after that they've been continuing to get better. We are not doing consumption, so we are not impacted here. It is fair to assume that the bounce rate in this 30 DPD, 60 DPD are broadly stable, right? Like what we are penciling in for. Is that a fair assumption? Yes, it is. In percentage terms, our 30-plus is exactly what it was a year ago, yeah. Okay. Perfect. All right. Thank you, sir. Thank you very much. Thank you. Thank you. The next question is from the line of Samir PC from JM Financial Limited. Please go ahead. Yeah, hi. Thanks for giving me the opportunity and congrats on a fantastic set of numbers. Just wanted to get product-wise yields on an incremental basis versus what were they, say, six months or a year back? Sorry, product what? Product-wise lending rates or yields. Oh, yields. Okay. Sure, we go. On gold loans, we are onboarding at 16% versus 15.75% a year ago. So that has improved. Our large ticket loan against property, we are onboarding at 12.52% versus 11.42% a year ago. Small loan against property, we are onboarding at 17.5% versus 17.1% a year ago. Business lending, 17.5% versus 16.9% a year ago. Okay. Yeah. That's useful. Certainly the bump up on the yields this quarter is mainly due to some of the gains on gold loans? That's right. We sold down some bit of our portfolio, so there's a gain on sale which adds to the interest income line. Okay, great. That's all from my side. Thank you, and all the best. Thank you so much. Thank you. We have the next question from the line of Pratik from Citigroup. Please go ahead. Sorry, apologies. This is just a follow-up from my previous question with regards to the gold loans which were classified as Stage 2 and substandard. Could you just tell me, are there any provisions created against those? There are provisions created in line with any Stage 2 gold loans that there is, yeah. Okay, so no additional provision is being created apart from as per the regulation. That's right. A Stage 2 gold loan, whatever provision is required, is created. Okay. Paul, just a follow-up from the previous question. With regard to the business loan, you said, what is the new yield for new originations? 17.5, I think, is what I said. Yeah, 17.5. versus 15.9 previously. That's right. Correct. Thank you. Yeah. Thanks. Thanks, Pradeep. Thank you. Participants, you may press star and 1 if you wish to ask a question. The next question is from the line of Aakash Jain from Vijit Global Securities Private Limited. Please go ahead. Congratulations, sir, on a good set of numbers. My question is regarding the guidance for ROA. As you said that operating leverage is kicking in and cost to income ratio is likely to improve further. So what kind of guidance would you like to give us? We discussed ROA in response to a previous question. I said that we are at a consistent 2.3, 2.4 over the past few quarters. And with the addition of new capital and operating leverage kicking in, we should definitely cross a 2.5% mark and should improve from here on. Okay. My second question is concerning the growth. What kind of capital adequacy do you foresee by FY 2025 and would you require additional capital? The landscape is changing quite rapidly. What we are doing is to try and make our capital last as long as possible. To this end, we are entering into co-lending arrangements and we also sell down a bit of our portfolio every quarter. This is to ensure that our off-book AUM comprises a reasonable part of our overall AUM so that the capital required supports a smaller proportion of the AUM than otherwise. By doing all this, we hope to make the capital last as long as possible. What is your expectation in terms of off-book AUM as a percentage of total AUM? For the quarter ended September, we were at about 14% in terms of off-book AUM. We have commenced co-lending only after the September quarter. That, coupled with our normal sell-down program, should take this number up rather than down, is what I would guide. I see. Thank you. Thank you, sir. Thank you. Thank you so much. Thank you. The next question is from the line of Shreepal Doshi from Equirus Securities. Please go ahead. Hi, sir. Thank you. I just have a couple of questions. Firstly, since we have done a capital raise, would we still continue with our strategy to have a decent size of off-book in the overall scheme of things? Yes. We haven't raised an inordinately large amount of capital. When you look at the landscape, there are companies with a capital to AUM of 30%, 40%, 50%, or even 60%. Our Tier I post the fund raise is about 21%, I think. Okay? Our endeavor is to try and make this capital last as long as possible. You cannot start the off-book strategy and do it one shot when your capital is lower. We will attempt to do it consistently. That's how we will make the capital last as long as possible. Got it, sir. What percentage will you be trying to maintain as a strategy off-book AUM book? We are at 14% right now, okay, and we will try and take it up from here on. Okay, so we will try and get to maybe 4 to 5 percentage points higher than this. Got it. Sir, one last question on the loan growth guidance. For FY 2024, FY 2025, what is the guidance that we are heading or what is the target that we're keeping in mind? FY 2025. Our endeavor will be to ensure an AUM growth of between 25% and 30%. 25% I am comfortably guiding. Like I said, we have 4,000 people coming to work every day and we have over 3 lakh customers who can be cross-sold to. There is a lot of work happening and we will try and solve that. Got it, sir. Thank you so much, sir. That is it from me. Thank you. Thank you. Ladies and gentlemen, we have no further questions at this time. I would now like to hand the conference over to Mr. Shripal Doshi for closing comments. Over to you, sir. Thank you, Arvind, once again. Thank you all for participating in the call, and we would like to thank the management of Fedbank Financial Services for giving us the opportunity to host this call. Thank you, everybody, and have a good evening. Thanks, everybody, for joining the call. Thank you. On behalf of Equirus Securities, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.