Ladies and gentlemen, good evening and welcome to HDFC Bank Limited Q4 FY 2021 Earnings Conference Call on the financial results presented by the management of HDFC Bank. 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 brief commentary by the management. Please note that this conference is being recorded. I now hand the conference over to Mr. Srinivasan Vaidyanathan, Chief Financial Officer, HDFC Bank.
Thank you and over to you, sir.
Okay. Thank you, Stephen. Appreciate All of you calling in today. Apologize there's 5 minutes delay. People are still getting in, but we will get going.
I do want to start use this time to start with some environmental context to how we operated in the recent quarter That gives you a good backdrop of what some of those results are. You know that in 4Q, The high frequency data remained robust, right. For most part, certainly for the early part, it was quite robust as we saw, Particularly the consumer durables production, good growth 6 odd percent, reflecting that the consumption demand was holding up. The PMI 57.5 in February, 57.7 in January, more or less similar kind of levels, right. While the tractor sales were slower in February, the overall auto sales recorded quite a good growth at 6% year on year.
Both the 2 wheeler and passenger vehicles contributed to that. Double digit exports and power generation August well. Record GST collection, INR1.2 trillion, that's also great. Those were all case for building a positive growth, right. So that's why our house view has been and is that the GDP growth In the quarter that ended with perhaps at 1.5% year on year growth, which will make the full year at about contract by 7.5% or so.
All right. Then getting to the RBA policy was more dovish than expected, Recognizing the risks associated with rising infection cases in the country and continuing to support the growth, several measures To keep the liquidity in surplus, extension measures like that untapped TLTRO, etcetera, those were supportive measures that While the pandemic situation and vaccination drive are expected to be critical factors for economic recovery, We do expect our house view that India will be one of the fastest growing economies in the world in FY 2022 and reach the pre pandemic level, which is 2019 levels by end of the current calendar year, right. Of course, we need to watch out for Anything to do with the pandemic and the vaccination how it progresses, but assuming they're all progressing that's where the growth is coming from. The resurgence of COVID cases across the country presents some uncertainty, but we'll talk more as we go along in selective micro segments more than broad based. Coming to the Q4 Equity Capital Markets, we saw trends driven by positive trends driven by global liquidity compared to the prior quarter private issuers raised approximately 20 mix of IPOs, rights and QIPs and approximately INR44,000 crores via block deals.
Retail participation in IPOs have been strong during this quarter. The equity fund rating pipeline both in public and private markets continues to be robust. During the quarter, we mandated 4 IPOs including 2 IPOs where we were appointed as left fleet merchant banker. On the debt capital market, Indian debt capital markets saw a slow start in Q4. The market took a breather after heavy issuance in the year till date.
Market yields showed some sign of hardening. Q4 saw a fund rate of about INR2.24 lakh crore, which is marginally lower than prior year and prior quarter, right, about 1% to 3% and 3% was lower. Our bank improved its ranking 2nd place among the ranges for INR bonds in FY 2021 from 3rd place in FY 2020. Our market share during Q4 was about 15.5% or so. Now talking about our partnership in the CSC in the semi urban and rural strategy.
As of March 31, we signed up approximately 1.67 lakhs village level entrepreneurs, of which 1,120 lakhs are onboarded as business facilitators and about 15,005 15,565 as business correspondence, expanding our distribution in some form, right, non branch form as business correspondence. The VCs are not only executing financial transactions through the use of other enabled payment system, which works on biometric authentication, but are also enabled to sell multiple products including Kartav fixed deposits, different type of loans. We have recently enabled our DCs with EMI collection facility in selected cases. On the healthcare initiative which we have talked over the last quarter and a half or so, we started reaching out to 500 larger hospitals in the country To provide patient finance from their counters including providing EMI facility on credit card and debit card. We have activated 37 hospitals and customers are appreciating access to funding at Hopklaas.
On the retail branch front, during the quarter we have opened about 2,000,000 new liability and about 7,000,000 liability relationships during the year FY 2021. The bank has successfully acquired to little more than 2,500,000 corporate salary customers during this year. Personalized link for account opening has been started for each corporate, which is yielding good results. Also unique bulk account opening process has been launched for large corporates, which make it very easy to open large number of accounts led by reducing manual intervention. A new approach towards customer engagement was put in place in Q4.
The concept is that before every customer engagement, the RM is checking about service led next best action for meaningful engagement and furtherance of business. On the digital to ensure seamless KYC process complementing the Digital Casa acquisition, The video KYC delivered good results. The highlight of this process is the seamless less than 5 minute journey for a customer to fulfill the entire KYC. The video KYC will serve both the library and asset acquisition of the bank. On the payment side, issuing spend Continued to show progress that we made in the previous quarter.
Previous quarter, as you remember, is a big fiscal quarter. Now coming to January to March, it continued to progress. There was some revival in the previously dormant merchant Like the air travel, etcetera, that was coming back, but that pushed some spends up. We are also seeing good spend growth in categories like business cards for SME where digitization has helped in other risk building and more spends on cards. We are working on summer treats, which is currently the program is on, which is our platform to bring consumers and merchants, for consumers and merchants together to motivate spends on key customer segments.
Spends such as electronics, Daily grocery needs, online spends will be the key focus in the Summit Read program. We're showing the trends in the acquiring business With increased digitalization prompting merchants to accept more spends across cards, UPI and wallets, bank strategy of offering 1 box Acquiring solution coupled with business value add such as customer marketing tools for merchants, the Casa facility, merchant loyalty, Digitization for home delivery etcetera have helped to target entire business of merchant coupled with current account balances. On the asset retail asset front, The momentum picked up during picked up what continued its stride in Q4 as well With disposals registering a 21% year on year growth and the 6% growth sequentially, we will as we go along, Arvind will give more color on what's happening on the ground on the retail assets front. Wholesale business across large, mid and SME performed as pre COVID level. Growth in midsize corporates and SME was particularly robust aided by new to bank customer acquisition, deeper geographical penetration and higher utilization.
Corporate banking saw a lower year on growth due to higher base effect, large prepayments as a result of surplus corporate cash flows, General deleveraging sentiment, reduction in corporate liquidity buffers that was built up in the first half, The bank continued its progress in gaining market share due to diligent adherence of sales process and we'll have Rahul give more color Exactly, a little more detail on what's going on, on those fronts, right. Collection, the bank continued to remain sensitive to customers' needs, Providing customers clarity on their options under the lease packages announced by RBI and supporting them through the processes to avail the same. The bank resolution rates both in the front end and mid buckets will be discussed in detail by Jimmy in a short while. On the society and community, the bank spent 2% of the average profits after tax for the past 3 years towards the various projects undertaken as part of our community initiatives under CSR. While we continue to support areas of financial literacy and inclusion, Health and sanitation, education and rural development, we plan to substantially increase our focus on livelihoods and skilling.
We have initiated a multi year project impacting the livelihoods of close to 3 lakh farmers. Additionally, we'll be creating over 42,000 skilled entrepreneurs, Promoting education, our intervention expansion is to include additional 25 lakh children in an endeavor to improve learning level outcomes, Now let's talk about certain balance sheet strength Before we dive into the P and L, franchise building continues as I mentioned in terms of bringing the customers in, Persistent focus on deposits bringing new customer relationship gained market share across the board. Liquidity is Consistently strong reflected in our average LCR ratio for the quarter at approximately 138%, little more than INR80,000 crores of surplus, Approximately $11,000,000,000 considering 110 percent LCR at the floor. Capital adequacy at 18.8%. We have 7.7 percentage point more capital than regulatory minimum of 11.075.
Our CET1 at 15.9 percentage points more than the regulatory minimum of 7.57. The balance sheet remains resilient. The floating and contingent provisions totaling to INR 7,300 crores built over a period of time helps in de risking the balance sheet. We continue to originate loans in conformity with our proven credit models. As I said, we'll cover more on credit as we go.
So I wouldn't cover here now. Now getting on to net revenues which grew by 16.4 percent to INR 24,714 crore driven by advances growth of 14% and deposit growth of 16%. Net interest income for the quarter was at INR17,120 crores, up 12.6% over previous year and grew by 4.9% over previous quarter. For the quarter, the core net interest margin was at 4.2%, Prior year was at 4.3% and prior quarter was also at 4.2%. As mentioned earlier, the bank's average Liquidity coverage ratio was 138%.
The excess liquidity portion of the bank impacts current NIM, call it, 10 to 15 basis points or so. This drag was offset by monetizing some of the investments in the form of trading gains, which we have described in the past quarters That's how it's part of the ALCO strategy we have managed that. Moving on to other income, total other income at INR 7,594 crores was up 25.9% versus prior year and 2% versus prior quarter. Fees and commission income constituting about 2 thirds of other income was at INR5,023 crores grew by 19.6% compared to prior year and 1% compared to prior quarter. Retail constitutes approximately 94% and wholesale constitutes 6% of the fees and commission income.
FX and derivatives income at INR879 crore was higher than prior year and prior quarter of INR501 INR506 INR506 INR562 respectively, reflecting pickup in activities both sequentially and year on year. Our trading income was at INR 6.55 crores for the quarter. Some of the gains from excess equity investments were monetized in line with our ALCO strategy. Other miscellaneous income includes recoveries and dividends from subsidiaries. On the operating expenses for the quarter, which is at 9,181 crores, an increase of 11% or so versus prior year.
During the year, we added 354 branches, which is approximately 1 branch per day and added 123 branches during the quarter. Since last year, we have added 11 ATMs cash deposit in Muthal Machine and 546 during the quarter. We have 15,556 business correspondence managed by common service centers including 2,054 opened during the quarter. During the financial year 2021, we added 10,177 business correspondents. The start count increased by 3,100 during the last 12 months and is at 1,200,093.
Our cost to income ratio for the quarter was at 37%. We anticipate the spend levels to increase driven by sales, promotional activities, As we have said in the past, the cost income ratio will be reverting to a recent trend of 38%, 39% in the short run As the activity volume picks up and we make some investments, well, our goal remains to bring it down in the medium term to longer term. Moving on to PPOP, the pre provision operating profit at 15,533 Close grew by 19.9% over prior year. Coming to asset quality, last quarter we mentioned about the Supreme Court passing an interim order stating that those accounts that are not been declared NPA till August 31 should not be declared as an NPA until further order. The interim order granted not to declare was vacated on March 23.
Further to that RBA on April 7 issued a circular in disconnection thereby directing the banks to continue With asset classification of borrower accounts as per extent RBI instructions and IRAC norms, the bank has completed the said directive of asset classification. The bank had estimated potential NPAs which were identified and reported during the previous two quarters on a pro form a basis. These pro form a basis NPAs have now been reported as NPAs. As we have mentioned, the bank had created contingent provisions of approximately INR3,600 towards those pro form a NPA that is now being utilized and specific against the specific provisions for these NPA. The bank holds provisions as of 31st March 21 against the potential impact of COVID-nineteen based on the information available at this point in time.
The core annualized slippage ratio for the current quarter is at 1.66 as against 1.86 on a pro form a basis in the prior quarter on 1.2 in the prior year. GNP ratio was at 1.32 of gross advances compared to 1.38 in the prior quarter and 1.26 in the prior year. G and P ratio excluding NPS in the agriculture segment was at 1.2, Prior quarter was also at 1.2 on a pro form a basis and prior year was at 1.1. Net NPA ratio at 0.4% of net advances Preceding quarter was also at 0.4 on a pro form a basis and prior year was at 0.36. Restructuring under the RBA Quarter were INR3,153 crores as against INR3,170 crores on a pro form a basis during the prior quarter and INR1918 crores for prior year.
The specific loan loss provisions reported were INR6,762 crores for the quarter. As mentioned earlier, this includes approximately INR 3,600 crores of pro form a specific provisions or prior quarters, which has no effect on P and L as a contingent provisions that were created against this pro form a was adjusted to that. Total provisions reported were INR 4, INR694 crores against INR3,414 crores during the prior quarter and INR3,784 crores for the prior year. Total provisions in the current quarter included additional contingent provisions of approximately INR1300 crores, included here is approximately As against 71% pro form a in the prior quarter and 72% in the prior year. There are no technical write offs that office branch books are integrated.
At the end of current quarter, contingent proration towards loans were approximately INR 5,900 crores. The bank's floating prorients remained at INR 1450 crores As of March end, general provisions were INR 5,300 crores. As on March quarter end, the total provisions comprising specific Floating contingents and general were 153 percent of gross non performing loans. This is in addition to the security held as collateral in several of the cases. Coming to the credit cost ratios, the core credit cost ratio that is the specific loss ratio is at 1.10 for the quarter as against 1.16 on a pro form a basis for prior quarter and 0.77 from the prior year.
As you are aware, recoveries are in miscellaneous income. The recoveries amounted to 25 basis points of growth of the advances for the quarter against 24 basis points that we recovered prior quarter and 21 basis points in the prior year. The total credit cost ratio for the quarter annualized including contingent provision created was at 1.64 as against 1.51 in prior year and 1.25 in prior quarter. The reported profit before tax at INR10,839 crores grew by 18.1% over prior year. Net profit for the quarter at INR8,187 crores grew by 18.2% over prior year.
Net profit for the year ended March 31, The full year was at INR 31,117 crores, up 18.5% over prior year. From balance sheet items, Total deposits amounted to INR 13,350,060 crores, an increase of 16.3% over prior year and up 5% over prior quarter, which is an addition of approximately INR 64,000 crores in the quarter and approximately INR 1,88,000 crores since prior year. Retail constituted about 80% of total deposits. Pasta deposits grew by 27% ending the quarter at INR 6,15,682 crores with savings account deposits at INR 4,3,500 crores and current account deposits at INR2,12,182 crores stemming from our enduring focus on granular deposits. Casa deposit also registered a robust sequential growth at about 12%.
Time deposits at INR 7,198 crores grew by 8.5% over previous year and marginally declined minus 0.7% right over prior quarter. Qatar deposits comprised 46% of total deposits. Credit deposit ratio was at 85% for the current quarter against 87% in prior year. Now advances INR 1,132,837 crores, an increase of 14% over prior year and a sequential growth of 4.7%. This is an addition of approximately INR51,000 crores in the quarter and about INR1,000,000 crores since prior year.
Retail advances on a bottle basis grew by 6.8% year on year and sequentially grew by 4.5% And wholesale advances again on a Basel basis grew by 21% year on year and 5.2% sequentially. Getting on to capital ratios, capital adequacy, the total capital adequacy ratios per Basel III guidelines stood at 18.8% as against regulatory requirement of 11.075. Prior year was at 18.5%. Tier 1 capital adequacy was at 17.6% as compared to 17.2% in prior year. CET1 capital stood at 16.9% compared to 16.4% in prior year.
So now let's get on some highlights on HDB Financial Services under iGAAP, which are made for consolidation of the bank. The supply side shocks have impacted the livelihood of self employed segment that HDBFS caters to. Close the past year, HDB Financial Services has made provisions and taken elevated credit costs while ensuring the new business return was through tighter credit filters. The company has seen its business and collection reach free code level in Q4. Disbursements For Q4, we're up 15% over Q3 and 32% over Q4 of last year, which had an impact of first impact of the lockdown then.
All business lines continued their growth momentum with secured business of LAP and Vehicle segment, providing the largest contribution to sequential growth. HDB Financial Services will manage growth depending upon how environment plays going forward And they have large distribution footprint, 13 19 branches will allow to pick and accelerate growth according to opportunities. The AUM reached INR 611,358 crores, net interest income for the quarter at INR12 a growth of 15.4 percent for Q4 last year, while sequential growth was at 23.9% driven by favorable product mix, lower cost of funds. PPOP for Q4 was at INR989 crores growing 20% over previous year and 32% sequentially. Provisions for the current quarter were INR613 crores.
Core credit cost in Q4 has reached pre code levels and the credit reserves Going forward, where warranted, this is a good opportunity to build where warranty, particularly if the outlook remains uncertain then. For the quarter, HDBSS had profit of INR284 crores and for the full year profit was INR502 crores. As of March end, the gross NPS for the NBFC recognition methodology was at 3.9% as against 3.5% as of last year March and 5.9% on a pro form a basis prior quarter. HEBFS As adequate liquidity, LCR is at 265% and is able to borrow at attractive rates coupled with strong capital position of 19%, we are well positioned for market opportunity. Now coming back to the bank, At the outset, let me talk about the outage.
You have some details about the November 2018, December 2019, Now with 20 outage incidents, I will not go into detail again. However, a couple of minutes on our recent incident of March 30. It was an intermittent issue on net and mobile banking that occurred due to a server hardware component failure and had no correlation with any capacity issues. On Net Banking Mobile Banking, quite a few users closed their browsers or quit their app without logging out. The back end system monitors this Clear the inactive sessions periodically.
The hardware failure impacted the session clearance. However, the minute inactive sessions were cleared, First set of users were able to log in, substantial number of customers were able to carry out their transactions despite impairment on that particular day. We continue to make good progress on our plans short, medium, long term addressing various matters. Like many other things we set higher standards, It broadly covers the areas of security enhancements, disaster recovery resiliency, optimizing both the recovery time and the recovery point, Automation of orchestration, obsolescence management including consolidation of data centers, infrastructure scalability like the cloud strategy, Application network monitoring tools, right. These are some of the focus areas that we are working on, right.
The audit by independent third party is in the final stages and we'll update further as we get to know more from the regulators. In the meantime, we continue to focus on the design and development It's an ongoing process as you know working with various partners. We continue to build capabilities in the area of core systems to keep it stable, always on and scalable by partnering with OEMs like Oracle as an example and draw their expertise given our landscape of application. We are also working on migration to cloud for resiliency. Expose the functions and data services from core through APIs, microservices and data exchanges by partnering with major tech companies.
Building customer friendly experience on cloud native engagement platform, Leveraging data and AIML for personalization, underwriting, risk and fraud control and analytics. We are also building new muscle and infusing new talent to execute these strategies by establishing a digital factory. Now on another front, which is the cards front, right, all of you know that the cards lifecycle management to mature takes a couple of years. The stages on cost management, sourcing, onboarding, activation, engagement, deepening, etcetera. Investments are continuously made in increasing spend, debt and debt, evolve behaviors, product updates, line enhancements, loan on cards, etcetera.
The impact of the non issuance of card is on new employees in corporate, new corporates onboarding, etcetera. This loss of new customers can normally be made up within a few quarters of stoppage being lifted since the bank continues to source liability customers who will be pre approved. About 3 fourth of our sourcing comes from existing customers of the bank. In the meantime, the focus of all the channels on FIT On Street is on engaging with Existing card customers, which is dormant or inactive to resuscitate them, this way portfolio activations and card dynamics are up, improving portfolio quality and increasing downstream activity. In summary, we are proud of our staff who have intensely managed customer relationship in executing our strategy by delivering product and services despite complex environment, pandemic situation throughout the year.
Our results reflect robustness across various parameters, Deposit growth of 16%, advances growth 14%, operating profit growth 20%, profit after tax increased by 18%, delivering the return on asset of about 2%. With that, you want to give some color on some of those credit and market dynamics? Sure.
Hi, everyone. Good evening. I'll first just take up the wholesale and SME portfolios From the risk perspective, then I'll just hand over to Raul, who will take you through the forward looking Business decision on that front. And I'll come back a little later to talk on the retail before handing it over to Arjun for the same. So on the wholesale business is frankly Rather boring report from my side.
It's all pretty much the same and no changes in any way. So we once again, I think I've mentioned enough about our HDB rating scale, which we trust And has served us very well. It's a 1 to 10 scale, 1 is best, 10 is worst, 7 is the threshold for investment grade. So I'm just looking at the incremental portfolio initially and the average rating of the incremental Folio is 4.24. And we have I must say when I put all these in that there is I don't know if it sounds right thing at this point, but there is considerable scope for deterioration In this call before we even get below our AA kind of average portfolio rating.
So just to put that in perspective. The externally rated portfolio, and this will probably give all of you all a better idea. So from the incremental portfolio, the externally rated portion of it, 62% of that is rated AA and above and that is weighted much more in favor of AAA than AA. And if I move now into the static portfolio, the static portfolio has an average Rating of 4.33, if you look at the outstanding advances and a 4.22, if you look at the actual exposure sanctioned. But it's better to look at the outstanding advances because that's the real risk on the book at that point of time.
So I'd take the conservative number. The weighted average rating of the top 20 borrowers of the bank is 2.92. So the large exposure are definitely better rated than the average portfolio. The Unsecured exposure, because this is often a question that you ask, has an average rating of 3.36, If you compare that to the secured book which has an average rating of 4.57, This just reflects the extreme caution that we exercised before we take any unsecured exposure because we do Understand and recognize the incipient risk in such an exposure. So that's pretty much where we stand.
We had a pretty good quarter when it comes to the wholesale bank. NPAs were really small And a good chunk of the NPAs actually are being put right now because they are part of the COVID resolution, which as soon as the resolution is put into effect will be upgraded as standard requirements. If I move on to is there anything more for me to tell you here? No, except that The higher grades the HDBs 1 to 4 have seen better growth, but I think that is kind of obvious if you looked at the incremental and the stock book portfolios. So I'll just move into the SME book right now, which is of interest to many more.
In the December to March period, and let me add December into this because it's been a 4 months of The return of cash flows into our accounts, as you know, we run the book on a very holistic basis. We don't just give loans. We look at holistic With banking, we rely a lot on the cash flows of the companies and those cash flows are coming back in a reasonably good and healthy way. So that's something that we have seen across the account. The resumption in these cash flows has also been beneficial to the 30 plus Book of the bank which has come down, the bulk of the 30 plus reduction has been through repayments, a very small part has been through the COVID restructuring.
On the restructured accounts, the COVID restructures Very large, there was around 550 odd crores, but I must mention that of this 550 odd crores, a little Over 200, somewhere between 200,250 were actually in some form of delinquency at the time of restructuring.
So a lot of it was
The approach we had to the restructuring was given the circumstances in which we find ourselves In all of us in these circumstances. So when there was a requirement earlier on that someone had to demonstrate That he needed it and he was in distress etcetera. We were obviously following that, but as soon as it got opened up and it was allowed on request, We were much more forthcoming in permitting the restructuring and that's pretty much reflected in the fact that very large chunk of it is not delinquent at this point in time. I must also mention to the credit of a lot of our clients that several of them who we thought we might want to resubmit, but actually refused and assured us that they will be paying us back because they did So rather heartening in a way. Moving on to industry Granularity, again nothing to report, pretty mundane.
It's pretty much where we've always been. Apart from agriculture, which is directed lending, everyone is below 5%. By the time you hit the 10th odd industry, you're at around 3 point So the portfolio is genuinely very, very granular and it's always been that way, but remains that way. If I look on the delinquency trend, we are now either if you look at very early which is a 7 plus which we measure Or a 15%, 30%, 60%, all these levels are virtually back to where they were pre COVID. So the 7 plus is maybe around 10 to 15 basis points away from that level and The 60 plus is barely 5, it's less than 5 basis points away from that level.
So we're pretty much back to where we were in that front. Moving on to the I'm not getting into the numbers of non performing assets, but we have Frankly had a good quarter. I think Srini looked at the numbers on that front. So This has gone better for us than it was previously, if you look on our Y o Y position as well. On the 2, 3 metrics that I always mentioned to you, which we rely on as indicators, the self funding ratio of the promoters, which Again, I emphasize it's not security, but it is reflective of their wealth and liquidity that has held up now for well over a year.
The entire year of COVID we've not had any appreciable changes in a couple of percent this way, that way and Not much more to say on that front frankly, the wealth of the promoters is holding up and in this segment, In the SME segment, it is demonstrated and we always expect that they will bring their money into fund the business whenever the need arises. So that is a Comfort to us. The collateral coverage again at our portfolio level holding up very well where between 80% to 85% what percent covered with collateral. This is over and above the Current asset security that we anyway hold. The current asset covers the portfolio completely and we are talking of incremental real estate collateral, which is usually the office of the residents of Kramota in question.
This 86 is again on a conservative basis assuming full drawdowns. If you look at it versus the outstanding, the coverage is actually in excess of 100% at this point of time. Just to Put out bit of flows have come back. They actually started coming back in around October, which Actually, if you look at it as soon as the moratoriums, etcetera, got lifted, that's when they started coming back and they have been coming back in good measure since then. One more thing that we have done recently just to corroborate that our views on the flows are All right, Anja.
And even as we ran the increase or decrease in flows Along with the GST collections of the country and we found that there is a considerable correlation between the 2, Only I would say maybe in the quarter from Jan to now maybe our collections have a little bit bucked the trend in the Positive direction with DSP collections dipped a bit, but collections pretty much held up at the same level. But that's not much to talk about. I think the correlation is great comfort to us that the flows that are coming in are Genuine revenue generation by these people and there are some capital inflows or something like that. So I meant, I'm not off track. So all this is good.
While I'm saying all this, one has to now consider that We are into a second wave to look at some medical condition. Has not yet impacted the financial system the way one may expect. At least let us if you look at it, The medical condition versus the financial condition in the 1st wave and the 2nd wave, I think the gap is much wider in the The financial condition is not yet deteriorated to that extent. Lockdowns have been sporadic, localized, Most restrictions are in benign times for economic activity like weekends and nighttime. Manufacturing has been allowed to continue, logistics and transportation has been allowed to continue.
So it has been muted level of structure. After this point in time, this Wherever strictures have been imposed, the observance as well as the enforcement has not been as strict as it was the last time around. So I think we should Put this caveat out basis everything that we are saying at this moment in time. That said, at this point in time, our behavioral scores on our SME portfolio also show that we have a Higher level of the portfolio in the better scores than we previously had etcetera, etcetera. So with that one caveat, Thanks at this point in time, I'm moving around.
Quick thing on the ECLGS. ECLGS1, as all of you know, we were among the prominent banks to be disbursing this amount. I must emphasize once more because I think some confusion arose a couple of quarters back as to whether ECLGS Disbursements should be equated with stress. At least in ECLGS1, they should not because it was universally available to anybody who met Certain criteria of having a particular level of exposure being an SME and not being delinquent beyond a particular level prior to the February date. So in ECLGS 1, it does not count.
ECLGS 2 and 3, one might say that it was expressly for the Tamar Committee's test sector, TLG has 3 further for certain sectors, a bit of liberalization very recently, I think yesterday or day before allowing a higher level of DPD to avail BDC IGS But frankly, we have not done very much over there because we don't have very much in these sectors. So it's been quite low for us And will remain so. If you don't have the exposure in the state sectors, you won't be giving the CLGS for those sectors. So that's about it on the CLGS. And I think that's pretty much what I have to say.
So, Rahul, why don't you
Sure. Thank you, Dini.
I'm going to talk about basically The commentary in terms of our performance and at least what is basically the big learning or
the big story for me that I came through saying this time around. Wholesale Banking between Large Mid and SME Corporates closed at approximately SEK 6 lakh growth in customer To clarify, customer assets include advances as well as investments. This was a 26.4% Y o Y and 5.8% Q o Q growth. I would like to thank our people who have worked very hard to serve customers during very difficult personal circumstances amidst the pandemic. In terms of averages, the Y o Y asset growth for the quarter was 31.1%, which is even higher than the EOP growth rate, which just points to the earnings momentum.
And in terms of the large corporates out of the wholesale bank, that number was 41.8%, providing a strong earnings momentum. Between the businesses, wholesale SME grew at approximately 10% quarter on quarter, the mid Corporates grew at 9.2% quarter on quarter, while the large corporates grew between 3.5% to 4%. Now we have to keep in context that this growth came in large corporates despite unscheduled prepayments and non draws in large corporates to the tune of 8% to 10% of our overall customer assets in that segment. Large corporates Also had a high base effect given borrowings by clients a year ago during end March to shore up liquidity as a safety measure. So the overall performance has been satisfactory.
Given that the book is high quality, yields did move with market. If it didn't, one would have to question the quality of the portfolio. However, NIMs expanded or was stable in different customer groups due to a reduction in funding cost, but also due to a careful yield management through a combination of asset tenors, loans versus bond opportunity and early as of December 31, 2020. Now this is why is this significant? Of course, when we released it, it is under the old MSME definition.
This size is about a 5th of the overall advances of the bank. The context of this is very simple. For every rupee of lending in wholesale SME, for example, the earnings is 2.2 times of equivalent lending to large operator, which is understandable given differing risk profiles. To the extent that OpEx and credit quality is managed well, this is a significant earnings stream And today, it is a very large critical mass for the bank. At the current rate of growth, the MSME book is poised to surpass The private sector large corporate book in 12 to 18 months timeframe, it adds a new 3rd solid earnings pillar for the bank in addition to just looking at it from the perspective of retail and wholesale.
In wholesale SME segment, the bank has seen very strong growth in terms of regions We saw credit demand in pockets like agriprocessors, ready to eat food processing units, tiles and ceramic exports, textile exporters, Pharma players, chemical players, auto ancillaries, paper industry who are looking for CapEx and additional funding. We have seen CapEx formation In exporters, agriprocessors, packaged products, packaging, consumer durable and some demand from the PLI identified segments also. Those clients who have formalized are in pretty good shape. For large corporates, economic activity has started gaining momentum across the country Given the budget announcement and prevailing economic environment, while all the sectors are likely to witness growth, some sectors stand out, For example, infrastructure, pharma, metals and commodities, cement and materials, food processing, auto, etcetera. Reported credit flow in the sector is a lower number, which is what a lot of people always ask me, but it is impacted due to corporate borrowing in the bonds and CP markets as well as a dramatic deleveraging trend that we have observed.
The bank has continued to extend credit flow across sectors. CapEx is largely from the PSU sector as corporates are working at 65% to 70% capacity utilization, which is much lower than 75 utilization. As we mentioned before, we expect private corporate CapEx picking up in second half. Of course, 2nd corona wave is something that is to be looked at. The big heartening point for me is that in the last 1 year we've gone through the pandemic.
We've gone through the state of the economy and as Srini mentioned outages. But the biggest thing is that the support of our Customers both old and new who continue to gravitate to us for our physical as well as digital platform. And so the pull of the brand continues to get stronger. Now let me just give you some data to say why I make the statement. Let's look at the large and mid corporates.
In the last three working days in March 2020, when the number of transactions had increased quite dramatically, We had executed certain fresh limit releases as well as limit announcements between large and mid corporate segments. This year, if I take the same last 3 days, Monday, Tuesday and Wednesday, and Monday was a holy and so it was a holiday in the north, it was working in the south, The number of transactions that we effected saw a 93% increase, reflecting a significantly strengthened market position. You would recollect that number of transactions had increased last year and which had come immediately post the lockdown. And for this, I would like to give a special call out and thank our operations people who have just been very diligent in terms of even in the difficult conditions going out and executing transactions. The second is just a cut up for Wholesale Banking, which was up 15.2% Y o Y and 30.8% Q o Q.
Customers come out and continue to use that transaction bank of choice and the Casa effectively what I shared with you the EOP growth rates Go out and reflect that. But flip it on an average basis for the quarter end, right? It was up 25.4 percent YOY, which was Even higher than the EOP growth rate. So that remains very strong. This came around the strength of the brand, our market share and also some initial impact of the current account circular.
Let's turn our attention to wholesale SME. In this particular quarter, we acquired Roughly about 2,500 new customers during the quarter and that is a 60% Y o Y increase, a large proportion of those in Suru, A lot of them preparing given the pandemic as well as the waves that are hitting them, Getting on to more digital platform and which is where clients continue to gravitate towards us. So despite a difficult customer acquisition In the first half of the year when nothing much happened, number of new clients acquired during the full year with 6% higher than prior year because the prior year, we had a significant addition of new client base. Let me move to an area where the wholesale intersects with retail, which is the corporate salary acquisition. In this quarter, The Jan to March number of new salary accounts that we acquired was 34% higher than comparable period last year, which again, I think, to my mind, is a very strong endorsement of just the client working with their feet and coming out and doing more business with us, for which we are very grateful and thank them.
ECLGS, Jimmy touched on it, by the 5th April to give you an overall position, We have dispersed across 1,000,000 20,311 cases under both 1.02.0, largely towards 1.0, An aggregate amount of INR 26,534 crores that puts us towards basically the top across all the banks. And we continue to go out and support the government's initiative to support a segment that needs support. So we are in sync with where the political and government leadership is taking the country and we continue to do our bit. Lastly, to round it up, we remain confident about continuing to gain market share at our historical trend line. And with that, I would stop and hand it back to Jimmy.
Thank you.
Thanks, So just to talk a little bit on the retail portfolio, I'll of course talk about the quality and Arvind will take over for the business. So The demand resolution since around October or so was improving steadily, continues to have improved steadily till the point in March. So where is it reached? I think across all products Barring 1 or 2 like SLI, which is not very big for us, but as you'll understand is a product where you won't be very hard hit by such circumstances. You are within a whisker of where you were pre COVID on the demand resolution.
Check bounces also looked at the same way. That said, while we are covering the March quarter and the year end, I should make a mention here that the Check bounces in April were like halfway through April, so I can't really comment on the demand dilution for April, but the check bounces in We'll have taken a bit of an upward blip, probably some panic due to the Medical condition worsening of late, etcetera. We don't know what it is. Can't say whether this is a blip or whether it is a Trend for check bounces in April have been slightly higher than they were in March, some sort of a trend reversal. How much if you want to know?
Probably As I said, from October till March, there was a clear improvement in the check bounces as well as the demand resolution across products. Maybe you're back to a January kind of level, deriving from product to product, but around that much. So it's not that the whole thing has being reversed only a little part of it. Whether it stays doesn't stay just remains to be seen. It's just too early.
We We've only come across this as you will understand in the last 5 or 6 days because that's when the check So that's to be said, Three for states to point out. So Maharashtra, MP, Punjab and Telangana is what has little bit pulled us back on the demand resolutions or we probably would have crossed our pre COVID levels. So if we get these states tightened up a bit, We will probably pass it. Recoveries have been rather good, if I may We are around 30% over pre COVID levels on recovery. That said, I must point out that the Accounts on which the recoveries take place are obviously those who were delinquent, a large part of them at least would have been delinquent before COVID struck because the obviously late period collections.
When it comes to the restructured book, I think numbers Srinivasanee covered along with you. So and I think whether it is the retail products or the SME, I think are pretty much the same thing to How we handled it, the approach the bank took was the same whether it was SME or retail and we also here had several customers Tell us that they didn't want the tag and that they will definitely pay even if they are a little bit behind us now and they will not turn non performing and they just refuse to take it. The policy dispensation remains Cautious, we are optimistic on how things are, but we continue to remain very cautious on this. Disbursements in the last Water across many products have almost hit the COVID. I'll let Arvind talk about all this a little later on.
Good demand in the auto and 2 wheelers sector, etcetera. Credit card spends are up naturally, you'll understand because the e commerce world has We've taken a boost because of the physical world being slowed down. Just personal loans, I would The 0 inquiries are not up to scratch where they were before the so the sourcing for us has been Very high quality. As I had mentioned last time as well, the entire team is on the ground, the entire team is looking out, We never let anybody go. We never we kept the entire sales channel motivated.
There were no salary Anything of the sort in the bank, there was no action taken at all and people were the spirits are frankly Quite high credit to everyone. We have measured in terms of our Internal analytical metrics, the sourcing quality, the recent book obviously going to be much better than The historical book was because there was, if you remember the conversations I've had with you a few quarters ago, We had already started tightening before COVID hit and then we tightened even more after COVID hit. So the recent book is definitely going to be of high quality. And now in addition to that constitutes around 35% to 40% of Most product lines in retail assets, so it's now a significant part of the book that has this quality. For the salaried customers, we focused on the higher income, on the AAAs, on the government sector, all the usual ones, So obviously focused even more there.
And I must say that even if there is an economic impact of the second wave, We are not expecting in this segment at least to see salary cuts and double losses again this time around. On self employed, the policy liberalization has been even less than what it has been for the salary segment products and Now if we come little separate from the demand resolution, so what we managed to cure within 30 days of what bounces is actually back on track with the pre COVID levels across products. So that is again a little bit heartening. That said, The bounce in April has taken a bit of a blip and we're hopeful, but jury is out now whether The demand resolution will not be affected by this. If we look on I'll just take a minute on the Sale of assets because last time we had a couple of questions on that.
So this quarter as well, we sold assets approximately 1,000 odd crores. As we always said, this is going to continue. It's a policy now. We examine the portfolio and Wherever we believe that there is economic value in disposing the asset at this point of time versus the cost And effort and recovery that we would get through our own efforts over time, including present value, we take the decision to dispose the assets. So that's a continuing factor.
Let me just now Moving to anything else I need to put out for you. Yes, let me just get into the asset quality versus Yes, market. So if you look at and we've got this from the bureaus. So this data, I must say, will actually reflect around the 2, 3 month lag because of the data coming out. It always does.
But once again, the higher bureau scores, our shares as a proportion in every product either steady or increasing Versus the rest of the industry, our share in higher scores always more than the rest of the industry. Thanks to our marketing efforts. Thanks to our cost of funds as well. So we have a This is reflected both in the MTRO inquiries, which you might be able to see yourself as well as in the monthly Reversments are so across. So in both respects, this gets corroborated.
Further, if you look at how things have progressed, I think the delinquency differential between HDFC Bank and the rest of the industry pretty much remains. So the portfolio holding up on a comparative basis quite well despite of course our High market shares in several of these products, there are differential demands. In other cases, it is perhaps half the market and even lower than that. I think that's about all. I think there are not much to say on agri, It's held up pretty well.
The agricultural sector, unfortunately, was largely unaffected by this. We had a good harvest. We had a good crop. We had good plants. So we've done relatively well on the Agri front.
Nothing else to No, I think that's about it. Thanks, guys. Arvind, take over.
So should we start with the Q and A?
No, no, no.
Alvin Patel is on the line. He's going to
talk. Okay. Thanks, Jimmy. Okay, our retail assets, I think both are secured, Unsecured retail working capital, SLI, I think the industry assessment is getting back The pre COVID levels and in some cases actually exceeding it. I can clearly see that the resilience of the middle class is coming back And we see good growth opportunities if I were to look at a quarter 4 and even the 1st 2 weeks.
We are witnessing a healthy trend in auto housing segment. We also see robust growth in personal loan and business loan. We see that the ground level retail SME business Environment if I look at the quarter 4 is showing pretty robust and we are whether it's the hosiery, sports, wellness, bicycle, The trends that we keep at the ground level, the demand remains intact And keeping the quarter for in mind that even in the 1st 2 weeks, wheat arrival on the agri side, if you take a feel on the ground level, I think We derive a positive upward trend. If you look at the sewing itself is also an upward, the price is up. So that gives you a The global supply chains thereafter.
If you look at the pharmaceutical industry at the ground level and I'm talking more of the smaller retail businesses, They continue to show a good demand actually even if you really look at down south or up north you're seeing almost 25% to 30% growth. Chemical industry in places like Gujarat imports stopped right now and the certain demand is looking pretty intact. I think specific to our bank, if you look at the last 2021, a quick sense, every quarter We've had sequential growth whether it was quarter 2 to quarter 3, quarter 3 to quarter 4. And as we move into the quarter or the financial year As a new financial year, we are prepared. If you look at like I mentioned, If you look at the 1st 2 weeks and even if I were to compare with 2019, it's looking a very robust growth right now.
Yes. Having said that, we are closely watching the COVID situation, how it pans out And the plans are to beat our forces to ensure that this financial year stays on course for a solid growth. And I We're going to find our way through to make sure that this happens. Yes, one has to run these times with extra micromanagement and business plan. Whether it's going to be the internal customer franchise that we're going to leverage or it's going to be the external distribution strength where we have a first right of refusal in all touch points.
We are beefing ourselves up keeping the present external environment in mind. I think looking at the resilience that I see and the demand opportunity I see, I I think we're going to focus on expansion in couple of businesses and we're going to focus on segmental expansion for market share. That's going to be our strong strategy for robust growth this year. And we do expect solid robust growth this year. Thank you.
Okay. Steve, can you please open it up please for Q and A?
Thank you very much. We will now begin the question and answer session. If time permits, you may join the question queue for a follow-up. The first question is from the line of Maru Karjanya from Elara Capital. Please go ahead.
Yes. Hi, congratulations. My first question is on the movement of NPS during the quarter. So slippages are around RMB47 1,000,000,000. Could you give us the breakdown of upgrades and write off recovery?
Okay. You got that 1.66% annualized. That's how you got the 4.6 Something like that. The write off of INR3.5 that means INR3,500 crores or so approximately. The balance is upgrades and recoveries.
Okay. Thank you. And my question on slippage is that This RMB47 billion or 1.66 percent would include pro form a of the previous quarters, right? So what would be the quarter slippage for the quarter, Excluding pro form a of the previous quarter?
No, we reported pro form a in the prior quarter, we gave you 1.86.
Correct.
That included pro form a slippage?
Correct. So this is the slippage for the quarter?
This is the pro form a slippage for the quarter on similar basis in the sense that it will not include certain things that we included in the last quarter in 1.86.
Okay. Got it. My last question is on technology. So to address All issues that RBI would have weighed, how long do you think will it take you? I mean, obviously, you would have already started work, But how long will the total upgrades take you?
How many months? And would RBI's removal of the bank The contingent on completion of the upgrades or will it happen in the interim only?
So I can answer the first part. The second part is for the discussion of the regulator, right. So I can't talk on this now.
But I'll tell
you In terms of the plans or what we are doing, I tried to describe some of those action plans that we had. We have demarcated the actions between certain things that are short term, certain things that are medium and long term. Long term, Keep it to the side, it could be 12, 18 months. Cloud strategy as an example is one such thing, right? That's the long term.
In the short term, It is about the DR Receivancy, where we've tuned the recovery time and the recovery point and so on. And some enhancements in security, some kind of in the medium term, some more security enhancements or in terms of Automation of the whole process in terms of orchestration and both in the short term and medium term we'll have application network monitoring tools coming through. So this is how we address it as short, medium and long. And some of these are frankly items that are New standards, which means that's why I gave a preamble saying that we set some higher standards in some of these processes that we are implementing. I do not have visibility what are contingent upon regulatory discussion, but that's our conversation with the regulator more than here.
Got it. And medium term would mean 6 months from now?
Medium term would be about 6 months or so.
From now. Okay. Okay. Thank you so much.
Thank you. Next question is from the line of Manish Shukla from Citigroup. Please go ahead.
Yes. Good evening and thank you for the opportunity. At one point of time, Rahul mentioned about Need management on the corporate book, just wanted to get more color on that because considering that you lend more to the larger corporates, they would borrowing more via bonds than loans, which would probably be lower in. So how does the overall corporate book work?
So Manish, when I talk about You can go out and give 3 months money, which goes even 12 months money in large public sector at sub-four We don't need to do that. Secondly, you basically do a 10 hour with a foot call, you might as well get a slightly better position. So we have to pick our spots and we have to execute early. The transactions that were executed early, maybe in January or maybe In October, November, those the yields are better compared to anything else. I understand that the bond yields have gone down Quite significantly, but we don't need to participate in all of those.
So we did what made Thanks for us, given our ALCO RVP framework, what was not palatable, that was something that we were not looking to go out and do. And as I said, on the alternate side, the MSME was a pretty good progress that we continue to make, where we don't have these sort of issues.
Sure. On the MSME, did I get the number right that it's now roughly about 20% The overall balance sheet?
So if you go back last quarter, we went out and disclosed the advances number. I don't have that. I think it was INR 10,000 crores or so. Out of that, I think when we said MSME book that was 2 lakh an odd crore, roughly about 18% is what it was as of December 31.
Sure. And on the wholesale book, what would be the approximate split between, let's say, less than 1 year and more than 1 year kind of loans, overall wholesale book?
Manish, we don't share that detail.
Or working capital down finance, if you want to cut it back.
We don't even do that, but I think in a large book, if I continue to basically keep 100% working capital, that would be running a lot of risk on the earnings momentum of the bank because you could get paid down. So we normally like to basically say that about a 3rd in term and the rest in short term, but this keeps changing from environment to environment.
Sure. A question to Jimmy, I know the situation is evolving, but you rightly mentioned that at the moment, The financial or economic impact of this second wave seems to be less than what we had gone through last year as a country. But based on the current situation, do you think this impacts between growth and asset quality, what would you be more worried about depending upon the evolving situation right now.
So based on the current situation, Should our financial impact manifest, we are currently in the process of finalizing various test tests, which we have already completed, but I don't want to put those results out just now because they might be unnecessarily overly conservative as were When we did it the last time around, if you remember, we had to actually revise our stress test numbers because we were excessively conservative. So Don't want to do that now, but I think there is a lot of learning between last time and this time. The reason perhaps for our initial conservatism last Time was that we didn't know what the government and the Reserve Bank was going to do and as everyone knows now they did a hell of a lot. So We would expect that if there is the medical condition which is quite grave manifesting into an economic condition, we would expect That there will be similar levels of assistance coming in from the government. And then if you look at Our portfolio and client selection, the way it stands and the way it took the first wave, we would hope not to have Any very serious consequences ourselves?
Sure. Those were my questions. Thank you.
Thank you. The next question is from the line of Suresh from Macquarie. Please go ahead.
Yes. Shree, just two questions. One is on
the The contingent provisions which have been dipped into,
there is some reconciliation of INR 400 crores in the sense that You had 8,600 crores of contingent outstanding. You made 13 100, so it is 9,900 and you dipped to 3,600, Right. But the account the eventual number you have got is INR5800. So there is some INR300 INR400 INR400 INR400 INR400 INR400 INR400 INR400 INR difference. What is
That is the interest on interest that we have set aside. But when I gave you the 5.8 or 5.9, I didn't use that number.
Okay. So the interest and interest, it was a totally funded close, right, roughly?
Correct. Correct.
Yeah. Okay. And just from a better understanding perspective, we can assume that these INR 3,600 crores are INR10,000 crores of pro form a slippages that you reported in the previous two quarters. So that's how we look at it, right? Yes.
Correct. Correct. Okay. That's one thing. Second thing is, you know, I want to deliberate a bit more on technology for the benefit of everybody else in the call.
I mean, how much of
this has got to do with your scale? Because you are 40%, 45% of payments, market share and stuff. So clearly, Your loan market share is 10%. So there is clearly an issue with respect to something or the other which is hampering, right? So it could be volume 2, 3 years ago, now it is some server issue, disaster recovery.
So do you really think this has got to do with the fact that you cannot digest more because of the fact that the volumes are really plenty or has there been an underinvestment in technology, underinvestment in some of the other things Because the constant feedback that we're getting from the ground is that some of your peers have a better app, better user interface, better experience. Have you benchmark against those and then come out with any report, something that you can add for the benefit of everybody in
the call, please? Thanks, Srini.
Yes, okay. Thanks Suresh for asking that. See on the technology front, the 3 Previous ones or even the latest ones, that's why it took some time to describe, had nothing to do with capacity as such, Right. They were very disparate events. We learned from these events what these are.
Continuously, And they are not repeating. So it's nothing to do with from that sense of capacity. Certainly, there are inconveniences which for which we have apologized that customer experience predominates in whatever you do, right. We have to be humble and modest And how we approach and that is why we take this as something is trying to set new standards in what we do and I described some of those actions that we are trying to say That how these will set new standards, right. From a transaction point of view, from a customer preference point of view, we gave you a few details to See what customers think, right?
For example, we added 2,000,000 liability relationships in this quarter, log through digital approach, Video KYC approach, right. And we did add to and for the year we added 7,000,000 customers The last 12 months, 6.5 in the previous year and the year before that was 3,500,000 customers. So we've added customers, I must prefer it for a reason, right, I'll leave it at that. And the second thing is that Rahul Shikla spoke to you about Why SME or corporates prefer and what sort of transactions they put through? Capacity wasn't a constraint, they were all quoted 93 Higher transaction volumes in the last 3 days of the year compared to prior year.
There is no capacity constraint when 93% increase in the throughput that came through, right. If you think about the card, for example, right, the customers prefer us In terms of the spend, right, if you think about the spend market share on the issuance, last year February, we have data for February 2020 2021 as an example. The issuance spend share was 29%, now 30%. Our customers do prefer us And they use us more and they have spent more on our costs, right. Same with the receivables, right, a little bit of the market share last year Thank you, Suri.
We were at 53%. Now we have a market share of 56%. Again, there is a reason why customer prefer us. And it is our digital approach, it is our technology they prefer us. Let's look at the acquiring spend, right, the cars acquiring, merchant acquiring.
Last year, we have January to January data. I don't have February of March yet, but January last January 2020, Pre COVID, we had a market share of 47% and the current January 2021 market share is 50%, right? So there is a reason why merchants prefer us. There is a reason why customers prefer us. And definitely they like Our digital, they like our approach, they like our product, they like to use our stuff, right.
And in terms of That is the first part of what you asked in terms of the capacity or what. And I try to describe what they have. In terms of whether we benchmark with the rest of the players in the industry, we do, right? And each one that is why the 5 fingers Their hands are slightly different and each one has got a purpose to serve and that is how we approach it. There are certain applications we have which serve some purpose.
There are some other applications and features somebody else have itself there for me. And whether we could look at it to improve, that The continuous process we do and that's part of various versions and upgrades that we do, that is part of that. And there is always That is why I prefer to
say that we have to
be humble and modest in our approach because we do learn and we want to learn. We'll continuously take it. Copying from others is not something that we should be shy. I take the good things and we'll take we'll put it in. And that is a continuous process.
It's not a Not an event that happens periodically, it continuously happens.
Okay. Thanks. And what is the backup option if there is a delay in RBI approval? What are the contingent plans you have in mind to ensure that the business is good?
I described that nearly 3 fourths of our card So Singh is our existing customers of the bank, 3 fourths almost, right. That is how it comes. And they all have debit cards. They used and we offer the installment loan on debit cards, right. And at some possible time, we may also have revolving facility on debit Got revolving facility on salary account.
There are several choices which are there, but then we always look optimistic and kind of a positive in terms of how we approach it. And we feel confident that some of our work that we are putting through
Thank you. The next question is from the line of Kunal Shah from ICICI Securities, please go ahead.
Yes. Thanks for taking my question. So on this second wave, when the contingency buffer, if you look at it of The incremental GBP 800,000,000 which we would have created outside of interest on interest reversal. So this would also be outcome of the Initial results of this stress test which we are doing or maybe stress test is still outside of it and there will be more kind of a contingency buffer given the environment that will continue even in the first half. What is our sense looking at the cumulative buffer which we have currently?
Yes. As you know, we built a large every quarter in the at least last 4, 5 quarters, we have given how much we have built and we haven't utilized other than the pro form a, Because that was a quote directed, so we couldn't declare it and put it directly. So that is the only usage we have done, otherwise we build. Again, part of the whole thing is that we want to keep the balance sheet resilient quite strong and for any kind of A shock that it can take and that is purely the strength, right? And at any point in time, if there is a justification, we will continue to build.
It warrants the situation warrants, we will take. But as of now, the assessments that we have done Seth, yes, there is something that we could build, we have built.
Nothing to add there. As we always said, our contingent provisions are precautionary, not anticipated. They remain precautionary at this point in time. There is not enough information on the economic impact of the second wave right now to sit and dimension exactly what we have. But in a sense, we do think over the last several quarters, we have developed more than adequate buffer.
And of course, given the learnings of the first wave itself, one would feel a little more reassured of that.
Sure. And second question is on cost side. So we have highlighted that we would get towards 38%, 39%, but when we look at in terms of cost to asset, we are back to where we were almost So is there any line item wherein maybe with this COVID, the efficiency would have set in and we would have completely shaved it off from our cost to asset and we could see it stabilizing at a lower level because that was not visible in Q4. Not sure if it was because of the branch additions which were there of 123. So is that the reason or Maybe there is not much to look into the cost efficiency during the COVID side.
Cost, the COVID side, what The COVID data, there are some kind of retail asset origination type of costs that are lower That would come back as we build more assets on books it would come, right. If you look at the on a DuPont basis, if you look at the not the efficiency, but on a DuPont basis, when you look at the Expenses operating expenses, 2.25, right. When you look at it pre COVID, almost 2 point 4 or so. That is why we said and then it went all the way to 1.8 something in Q1 when hardly there were any Activities happening out in the field from a sales and promotion point of view. And we have gradually drawn up, right, then it was 2 and 2.1 and something now 2.2 and something, right, in terms of cost on the due point analysis cost that you see.
That is why we say that we will make investments. We will not shy that there is a market opportunity. We will not be shy to run programs, promotions or bring in more sales force activated to bring in. So that is why we said in the short run That the cost, the efficiency can go up to 38% or 39%. And then but our medium term commitment, long term commitment Remains that how do we bring it back down to 35, 1 scale to the reengineering process and straight through a digital approach should bring the cost back down, Right.
Naturally when we have a job, revenue growing more than cost, that there is a natural process of scale that brings it down. Then there are other kind of an additive action that also works on to bring the cost down. So that is over a medium term long term.
Sure. Sure. Thanks a lot.
Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I now hand over the conference to Mr. Srinivasan Vaidyanathan for closing comments.
Okay. Thank you, Steven, for orchestrating and taking us through this. I want to thank the participants and We missed anybody. I know we ran by 10 minutes late. If we missed anybody, feel free to call, get in touch with our Investor Relations, Ajit Shetty.
We'll do our best to clarify anything that you have on our results. Thank you again.
Thank you. Ladies and gentlemen, on behalf of HDFC Bank Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.