Q4 20/21

Apr 30, 2021

Good evening. Good morning to people in the U. S. First of all, my apologies for the delay in the call. This was due to the technical issues which we faced in uploading of the files to these changes. We had to have a press meet and then We are starting with the investor call, so my apologies for that. Thank you for joining this call. I will start with some macro commentary and then go into the bank specific details. At the macro level, as you all know, India is going through the 2nd wave of COVID-nineteen currently. The economy was showing a healthy recovery to pre COVID levels and to the sharp surge of cases in April. All three sectors of the economy, farm, manufacturing and services, showed good traction in quarter 4. The 2nd wave of COVID-nineteen is likely to impact the economic recovery in near term. However, considering the vaccination drive at large scale and strategy to focus on local and regional lockdown and micro containment zones as opposed to a natural level lockdown. The impact on economic activity is believed to be limited and less severe compared to 2020. That has been the international experience to the 2nd wave. In our assessment, the current restriction in our assessment of the current restriction, we now see Our full year GDP growth at 10.4% from 11% estimated earlier on a back of a slower quarter 1. Scaling up of the vaccination drive for quarter 1 would eventually help deal with pandemic. The measures announced by the government and continued accommodated policy by RBF will support the overall economic growth. Now coming back to bank specific commentary. I completed my 1st year as CEO in March. We faced some internal and external challenges during the year. I can proudly say that the bank has come out stronger from these challenges. If we look at some parameters indicating the health of our bank, We are at the best level in the last several years, if not the decade. We closed the year with capital adequacy ratio of 17.38 percent plus its liquidity of INR 40,000, credit deposit ratio below 85% and strong traction on retail deposits, PCR at 75% with significant buffer provisions outside PCR, operating profit margins at 6% of loans, all at the best levels in the last few years. Coming to quarter 4. And during the quarter, we focused on continued deposit mobilization. Our deposits saw handsome growth of 7% quarter on quarter 27% year on year. This was led by strong growth in CASA of 11% quarter on quarter. The growth was driven by retail segments, resulting in a retail as per LPL growth of INR9,900 during the quarter. This was in spite of 50 basis point reduction in the headline rates. Our cost of deposits fell by 31 basis points during the quarter and year to date, cumulated by 102 basis points. We continue to maintain comfortable excess liquidity with overall LCR at 145%. Asset growth, All three domains, vehicle, diamond and microfinance, saw strong disbursements during the quarter. Vehicle disbursement grew 30% year on year and 8% quarter on quarter driven by a pickup in commercial vehicle. Diamond demand globally saw good recovery resulting in working capital drawdown from us as well. Microfinance tool resumed a growth journey with 15% quarter on quarter growth. On the corporate book, we have been reducing our exposure in line with our strategy of granularizing the loan book. We have largely achieved our sell down objectives and the portfolio hereon to start showing growth. We remain cautious on unsecured loans. Overall loan growth for the quarter was 3% quarter on quarter and year on year. Asset quality. Our collection efficiency improved to 98% from 97% during the quarter. Of this, secured assets have higher collection efficiency, as unsecured have lower collections than average. Our EPS portfolios, including unsecured, saw reduction in slippages. Corporate saw technical slippages where restructuring was under implementation as of March, and some of them are already upgraded. Profit slippages adjusted for such technical cases were also down quarter on quarter. We have followed a conservative provisioning approach. We maintained our PCR at 75% despite technical NPAs and corporate. We have conservatively taken 100% provision on unsecured assets, including microfinance, even though we are already seeing recovery. We have also increased our surplus COVID provision outside the PCR from INR 9.66 crores to INR1600 or 0.8 percent of loans during the quarter. Overall, loans related provisions are 3.3 percent of the loan book. I will share further details later. Strong profitability of the franchise. Our NII grew 9% year on year and 4% quarter on quarter. Our NIM was stable at 4.13%. Our fee reached pre COVID levels in quarter 4 driven by strong retail fees. Retail fees crossed 1,000 crores per quarter for the first time ever. Our revenues were up 6% YOY by cost for us 2% YOY, driving operating profit growth of 10% year on year. Our revenues have now settled comfortably above INR 5,000 crores for the quarter. This has helped in improving our strong operating margin to 6% of loans despite lower corporate fees versus the past. Scaling up of new growth areas. We continued scaling up our affluent NRI and SMB segments. Affluent AUM crossed INR 50,000 crores, including deposits of INR 50,500 crores, growing 5% quarter on quarter and delivered a fee in the quarter of INR 100 crores. NII liabilities grew 9% quarter on quarter to INR 25,800 crores. We have also added 100,000 merchants by leveraging our financial network during the quarter. We have resumed our branch expansion, adding 100 bank branches and 40 BPO outlets during the quarter. We will Continue to invest in existing as well as new business to drive our growth. Capital adequacy. During the quarter, our capital Adequacy was augmented by promoter warrants conversion of INR 2,000 crores at INR 1709 per share, implying a significant premium to market price. This demonstrates promoters' Techlag's commitment to the bank and belief in the management team. The warrant subscription and lower risk intensity boosted our TRY out to 17.38%. Before I go into portfolio specific summary, broadly on splitages and restructuring book. During the quarter, we had business as usual and also technical slippage as detailed in the investor presentation. Our business as usual slippages were INR1930 crores during the quarter, which is lower than the pro form a slippages of INR2500 crores last quarter. The technical slippages were INR1899 crores. Out of this, INR 1602 is already reflected in deductions as they have become standard and the balance is happening also this quarter. The technical syringes occurred due to delay in closing the restructuring by consortium and also temporary operational issue, which was rectified in the same quarter. Bulk of these technical slippages came from 2 groups highlighted in earlier calls: 1 in retail and the other in the construction industry where resolution is under judicial process. Further details are shared in the investor presentation, and we can discuss this in the Q and A. We also recognized performance slippages of INR2,598 crores of quarter 3 as the NPS hand held was lifted by the Honorable being put. On restructured book, our restructured book was at INR3727 and It's stable at 1.8% of loans as of March 2021. However, the mix of this book has improved towards long vintage vehicle finance customers. During this quarter, we saw a few corporates opting out of restructuring. However, due to COVID-nineteen second wave, Some additional retail customers out of caution opted for MSME Restructuring, which was available since 31st March. Segment wide contribution of this 1.8% would be vehicle, 65% non vehicle retail, 17% and the balance from Corporate Banking. Now coming to individual businesses. Vehicle Finance. Quarter four saw strong traction on disbursements across the vehicle category. Overall disbursements grew 30% YOY and 8% quarter on quarter. As expected, commercial vehicles bounced back nicely during the quarter. The disbursements grew up by 54% year on year and 44% quarter on quarter. This segment, too, now has crossed pre COVID level. Our other noticeable segments showing strong disbursement for TASK, up 24% year on year utility vehicle, up 29% year on year, tractors up 44% year on year and construction equipment 2x year on year. We remain cautious on 3 dealers due to low passenger freight and disbursements are much lower than historical coverage. This segment, however, forms small part of the book. The overall loan group grew by 7% year on year and 1% quarter on quarter. We had low disbursements in the first half of the year. As the disbursals have now reached pre COVID levels, they will start reflecting in the loan book growth from next quarter onwards and subject to how COVID plays out. Collections in the vehicle portfolio are slightly lower than the pre COVID level. The portfolio has consistently maintained its excellent track record and market leadership in all segments we operate in. In fact, almost 25% of the gross NPA Customers are today at less than 60 dpd, but they will remain in entry till all dues are clear. We have seen higher flows in 2 wheelers and 3 wheelers where livelihoods are impacted by COVID. These are typical service providers like auto, newspaper delivery, etcetera, who lost earnings. We allow these customers to strip into NPA and recovery should come out as COVID plays out. Restructions was invoked on INR2,446 crores of portfolio. This was maybe ahead by INR 200 crores against our earlier expectations. The MSME restructuring was available 31st March. And due to onset of COVID second wave, We saw some more customers awaiting this facility out of caution. We have long winded and strong collateral covers in this segment, and eventual losses should be raised long. While the lockdown poses a risk to freight transport, this segment has demonstrated to be the first one to bounce back as the economy reopens. Exceptions of strong GDP growth this year and budget announcements on scrappage policy and infrastructure expense when August went for the vehicle industry. Microfinance. This is another area of domain expertise and has proved its metal in yet another crisis. Incremental slippage during this quarter was INR298 crores or 1.2 percent of loans. Performance Flippages in the quarter were INR 4.72 crores or 2% of loans. So overall, the slippages of around 3% are lower than what we expected at the start of the year. We have also seen recovery from performance slippages of quarter 3, and this trend is continuing. Eventual credit losses, thus should be lower than expectations. We have conservatively provided fully provided for all these NPs. We remain watchful of any impact of COVID second wave and restrictions in some parts of the country. Overall collection efficiency in April It's lower by 1% compared to March. This should bounce back as the restrictions are relaxed. We have seen Similar trends in September last year when a few states have been post lockdown. Strong traction on collections also enabled our full year staff to align towards growth. We saw loan book growth of 9% year on year and 15% quarter on quarter. Loan book originated post initial lockdown now contributes 81% of total book and has normal collection efficiency of over 99%. This is a key metric to watch as the old book is running off and the traction on sales disbursements imply improvement in the overall quality of the book in the next few months. We are now fast tracking our synergy initiatives, which took a backseat due to COVID offset. We are driving savings account and that is reported penetration into Microfinance customer base. We have crossed 51,000 Bharatmany stores, and we've scaled this up further during the year. These financial transaction points across India will add meaningfully to the financial inclusion agenda that we are pursuing through Beeple and ensuring easy access of financial products to rural India. We are also leveraging our future presence in Tier 1 to Tier 3 cities for merchant acquisition. We have onboarded 170,000 merchants to assisted digital groups and are scaling this up to at 30,000 merchants per month. The product offers a seamless bank account, working capital and payment solutions. Overall, we are much more confident, comfortable on the micro finance then we were 6 to 12 months back. While like any other segment, COVID remains a key risk out there as well. Another good year expected for Mount Soods, rural spend by government adds to a comfort look. Other retail assets. This contributes 17% of the overall loan book and includes secured and unsecured retail assets. In quarter 3, We had seen secured assets showing wage bound slippages whereas credit card slippages slightly worse than expectation. In quarter 4, the secured assets have maintained the traction while collections improved in the unsecured assets. In credit cards, the resolution and rollover rates are better than pre COVID levels. We also saw credit card spend blocking 5% market share for the first time against our credit card market share of 2.4%. Collectively, these indicate good improvements in the quality of spend and cards. We are fortifying our retail origination asset origination team. There is, however, strong competition for secured retail assets in the market, and the rates offered We sometimes may not justify risks or mooded. As the interest rates are seen to be bottoming out, we expect pricing sanity to return. We have been selective in underwriting both for pricing as well as COVID concerns. We are maintaining, We are meanwhile growing our new growth driver. Affordable housing disbursement grew 10% quarter on quarter and loan book grew to INR1800 crores, up 36% year on year and 8% quarter on quarter. We have reactivated our gold loans business in 400 branches, and this will be scaled up in coming months. The 5 years on merchant growth through IBL as well as digital contribution is also showing promising results. Overall, we expect secured assets to resume growth, whereas unsecured to remain capped at 5% of the loan book. The asset quality trends are now at pre COVID level. Corporate Bank. I had outlined my approach of fine tuning the corporate underwriting towards granular, secured and annuity based exposure. We created an empowered intervention through independent portfolio management units. The transition to achieve this has been smooth and not disruptive. In line with our strategy, the sold out exposures were INR 3,500 crores during the quarter. Overall, in the year, we have reduced exposure of INR 9,000 crores beyond the scheduled repayments. These exposures didn't meet the concentration criteria, and there was no credit issue as such. We have broadly achieved our objectives, and this exercise should be completed in the current quarter. Another focus was granularizing the corporate fee. We focus more on annuity fees rather than 1 off transactional fees. Trade and FX fee now account for more than twothree of the corporate fee. Investment Banking fees were subdued due to weak market condition as well as selective focus. Overall, corporate fee adjustment, too, is complete, And hereon, they could broadly grow in proportion to their loan book contribution. We have disclosed A few additional data points in the investor presentation showcasing improvement in portfolio quality. This shows traction on aligning corporate book towards higher rated, shorter duration and granular portfolio. Average rating of Profiles has improved during the year. Our business as usual slippages was only INR336 crores during the quarter. As explained earlier, We also had accounts aggregating to INR900 crores, which were under interesting or had technical issues. 1 complete accounts are already standard with completion of formality. Restructuring trends in the corporate book was quite positive. In quarter 3 call, we had highlighted restructuring of 2,200 barrels, which was invoked and under implementation. We saw significant part of these clients withdrawing from restructuring as the business momentum picked up comfortably in quarter 4. This resulted in restructured book falling significantly to around INR654 crores as of March 21. This shows resilient portfolio performance even in the current stress time. None of the restructured books are in subinvestment rates. Portfolios in the sensitive segments such as real estate and BSE continue to behave well with no restructuring or SME2 account. A bulk of our real of the realignment of the corporate book is now complete. All the segments are geared to participate in the economic revival. Growth will, of course, follow the revised underwriting approach institutionalized by the bank. We are extending our philosophy of building domain to corporate banks as well. We have identified segments such as MNC, education, health care and VFC where we will build specialization. This would help us give better adjusted returns over long term. We have also tactically looked at co lending, are looking at co lending opportunities with lenders in secured retail space. Gems and Wealth. This segment is an example of specialization in Corporate Pending. We continue to see no NPS or even SMA2 customers here. There was no restructuring invoked. Global diamond demand has bounced back to the pre COVID level. We expect the momentum to continue for a while. This has resulted in strong demand for Indian diamond manufacturers. On diamond loan book, our diamond loan book had shrunk in the first half as the working capital utilization went down due to weak global demand. You saw utilization levels in quarter 4 improving in tandem with the global up cycle. This book grew 15% quarter on quarter and should show decent growth in the coming quarters. Overall, on the asset side, we saw strong growth in disbursement in the areas of domain expertise, vehicle, microfinance and guidance. These portfolios have better early delinquency profile versus the industry, and we have disclosed order wise trends in the investor presentation. We are positioned to participate in other retail assets provided we get good risk adjusted return. Corporate book adjustments are now behind us and should start showing growth every quarter. We are watchful of the COVID second wave and its impact on the overall economy. We are, however, as of now, comfortable with the PC-five growth in patients stated earlier. Now coming to liability. We saw acceleration in the deposit traction during the quarter. Deposits grew 7% quarter on quarter, driven by 11% quarter on quarter growth in current and savings accounts. Retail deposits as per LCR also grew by 8% and achieved over INR9,900 1st quarter run rate, therefore, despite the 50 basis point cut in the headline deposit rate. With strong deposits growth ahead of the loan growth, Our CV ratio further improved to 83% from 87% quarter on quarter. Our cost of deposits reduced further by 30 basis points during the quarter and 102 basis points cumulatively during the year. We will look for another round of rate cuts in the coming months and comfortable acquisition momentum despite the rate cut. Our retail fee crossed the pre COVID level. This was, in fact, the best ever quarter for retail fees in our history. We saw good momentum in the distribution fee along with loan processing fee on the back of strong disbursements. We have also resumed branch expansion, opening 100 branches during the quarter. We aim to add another 2 50 branches during the year. Our affluent business continued strong performance. Our deposits from this segment grew 8% quarter on quarter to INR 31,300 and AUM growth of 8% quarter on quarter to INR 50,900 crores. This business has also achieved a fee of INR 100 crores INR 100 crores of for quarter for the first time. Our NII business grew to INR 25,700 and INR6 crores, up 9% quarter on quarter or 32%. Our market share improved from 1.9% to 2.3% during the year. Market share was around 8% on incremental growth during the year. This was despite no NRI homecoming and also falling remittances this year due to COVID. Borrowings have been selectively focused on longer tenure and attractive rates. An example of this would be recent funding from Profasco, a French Development Financial Institution supporting our microfinance business. This is a 7 year facility at a very competitive pricing. We have maintained our overall SDR at 145% and running surplus cash balance in excess investment of over INR 40,000 crores. Technology. IT in Indefilment Bank continues to be the backbone supporting business and growth ambitions. The bank has made several significant steps in improving client experiences, including an all in one store in its mobile app, video brand, video KYC, WhatsApp and Alexa based services supported by natural language processing. Indus has deployed a large scale work from home setup for about 15,000 staff, including e mail or cloud with video collaboration. Several other digital applications now run off the cloud. The bank has adopted the highest standard of client data and transaction security. With a range of modern software and sophisticated security tools, Bank has not faced security breaches, and it has been careful about controls and data protection supported by threat intelligence. Recently, the bank has successfully implemented an early warning signal, which is an AI based set of algorithms, which measures the impact or risk to accounts, assimilating various market data and internal bank data. Digital traction. Our registered user base on the mobile app increased by 39% during the year. We were ahead of the industry in terms of transaction growth. User base on emerging channels such as WhatsApp Banking increased 3x to 2,300,000 and is a par with last year private banks. Bank is steadily moving on its digitally active user base showed an improvement by 10% during the year on its percentage of mobile access user base. The digital platforms of the bank have started contributing into business during the year. Banc acquired nearly 2 lakh client account non assisted and completely digital via online journey undertaken by clients who visited the platform on the back of platform marketing, contributing 15% of the liability account acquisition. Bank is also launching a few new initiatives, including an end to end digital personal and SME loan and also a Unified Merchant Solutions Act. Overall, on the liability side, we have maintained traction across the board along with reducing cost of deposits. We will continue to calibrate our rate cut strategy going forward. Share of retail deposits as per LCR has improved to 38% from 31% during the year. Retailization of deposits remains a cornerstone of our PC-five strategy. Now coming to the financial performance of the quarter. Quarter 4 business, a steady operating performance with NII up 9% year on year and operating profits at INR3,129, which was up by 10% year on year. Our PPO fee by loans improved to 6%. Net interest margin was stable at 4.13%. Our yields on assets fell by 19 basis points and cost for deposit Funds fell by 20 basis points quarter on quarter. We carried INR 100,000 crores we carried INR 10,000 crores of higher liquidity during the quarter and also had an impact on NIM. Other income grew by 8% quarter on quarter and crossed pre COVID levels due to momentum in core fees of 9% quarter on quarter driven largely by retail fees. Retail fees at INR10.15 crores grew 24% quarter on quarter and cross pre COVID levels by 10% year on year growth. Operating costs were up by 2% year on year and by 10% 5% quarter on quarter. Our cost to income ratio improved slightly to 41%. Now coming to provisions. Our provisions for the quarter were INR1866 crores. We continue to follow conservative provisioning approach. We have fully provided for unsecured retail and microfinance loans. Our GLP has reduced to 2 point 7% from pro form a DNPAs of 2.93% last quarter, and net NPA was stable at 0.69%. We have maintained our PCR at 75% despite some technical NPAs in corporate. We have around INR 1600 crores or 0.8 of loans at circular COVID provisions not accounted for in the PCM. We sold out some delinquent portfolios during the quarter. They were already very well provided and resulted in increase of the net security received by 20 basis points quarter on quarter. Total loan related provisions are 3 3% of loans or 122 percent of the gross NPA. Our overall provision for the full year, 21 was at 3.7 percent of the loan book. Of this, almost half were either one off or prudent in nature, such as contingent buffer, Mid Cap, CCR ramp up from 63% to 75% and corporate NPA recognition in recognition in quarter 1. The remaining provisions of less than 200 basis points, both of business as usual as well as COVID suffrage and should normalize going forward. We will also see 25 to 40 basis points recovery as well as from the prior mitiges. Our SMA II book as well As of March 21, 31 basis points versus 39 basis points in December 2020. Our PAD continues profit after tax continues to show a strong upward momentum of growing 12% quarter on quarter even though we have made provisions conservatively. Profits for the quarter were at INR926 crores. Our TRAR improved to 17.38 percent due to promoter's warrant conversion and lower its risk intensity quarter on quarter. RWA to asset ratio has fallen from 84% to 75% during the year. Overall, I think we have navigated well in otherwise turbulence and came stronger than before. Couple of rating agencies too upgraded their outlook ahead of the scheduled review. We have given an update on the progress of all key initiatives of PC 5 in our investor presentation and can get into details in question and answer. We are now geared towards achieving our PC-five ambition while keeping an eye on the pandemic situation. Some of the focus areas for financial year 'twenty two are as follows: continued focus on collections. Our domains have outperformed the industry, and corporate privileges have been small post cleanup. We have we, however, remain focused on ensuring healthy collections in the wake of 2nd wave. Broad facing loan growth. We are seeing Small fractions are disbursed in our areas of strength. We are gaining market share in our domain, and these account for 45% of the loan growth. Growth will now be broad based into the corporate where the realignment is almost over and secured retail products. Maintaining traction on liability, Deposits should lead the asset growth and will be driven by granular flows. We are investing in both physical and digital infrastructure. We have already crossed 500 virtual RMs and will expand this further. We will add 200 branches during the year. New boosters like affluent NII merchant acquisitions are on track to sail up as per 55 flat. Overall cost of deposits has been falling every quarter, and we will do further rate cuts in a calibrated manner. Improving profitability of the franchise. Our operating profit margins have been strong even in the past last year. The provisions were elevated due to the prudent approach, and almost half of these are non recurring in nature. As the provisions normalize going forward, it should start reflecting in earnings and ROE. These focus areas, Of course, will be subject to how COVID played out. We have seen collections only marginally lower in April so far. The disbursements who got impacted due to lockdown in few states. However, the spread of 2nd wave and policy response has been different compared to the 1st wave. The economy is operating at a higher level compared to the 1st logout even in the most affected area. Interest rate trade movement is also allowed. Vaccination drive is accelerating every month, and we will get for the boost from higher participation by private sectors. These factors coupled with Western balance sheet give us some comfort on executing our strategy of scaling up with sustainability. While we have lost a few weeks in this financial year due to COVID second wave, We remain committed to the PC5 growth ambition. We can now open this floor for question and answer. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. The first question is from the line of Abhishek Muraka from IIFL Capital. So just a few questions. The first one is regarding retail growth outlook. So of Of course, you said that because of the second wave, a few weeks have been lost, but the outlook still remains pretty strong. But just in the backdrop of relatively higher NPA, higher delinquencies and higher credit costs in retail, Do you think it is prudent to grow in this year? How are you approaching it? And specifically, if you can comment on the disbursement outlook in MFI, Whether that will continue or that has been reined in for now because of the second wave? That's the first question. So can I answer that first, Abhishek? Yes, sure. Thanks. We remain committed to our domain specialization. We've done that. And if you look at our business, I think in the microfinance business, I think we have outperformed the industry. And Our credit card, our gross and clear slippages are 3% of the book. We've just given that data. I think It's 100 districts are affected because of the interstate level lockdowns as of now. And then during This, these months, I think the accessibility is key on growth for microfinance business. So I think we will have to wait. And what, Having said that, I think we are reduced by digit sizes. We will see when the lockdown, If it gets opened and we are able to accept these villages, but there are other districts where we are able to do businesses right now, and we will continue to do that business. And it's happening As we talked, yes, the growth may be a little bit shed lower, but I think that's something which we are willing to live at. Having said that, also you must remember that the rural economy is doing fantastically well because of the good crop seasons, the summer as well as the winter crop season as well as there are good monsoons which are expected, which is also demonstrated by the traction growth which is happening in the country. And I think we will, we, I don't think that we will not be able to do disbursements in districts where there is a lockdown and we have no which may result in the lockdown, and we have no accessibility because the central meetings cannot happen. But in other areas, we continue to do business because We are comfortable that this lockdown is not as severe as what the first lockdown is, sir, and I said that in my previous remarks. On the Completion Finance business, I think if you look at our book, only 35% to 40% of our book is now commercial vehicle, And the rest are scooter loans, car loans, tractors. And I think the dealer showrooms are closed as of now. And during these lockdowns, it is difficult to get the dealer, to accept flights because of the dealer showrooms are closed. We are seeing, So we are waiting for, say, for the April month, maybe a very slow disbursement month. But I think Slowly and steadily during the quarter, we'll have to wait and watch as it comes back. In unsecured, we've made our intention very clear. The book has degrowth, and we continue to say that unsecured, while we will grow, we will be very cautious. And this is, this will remain less than 5 of our retail book and of the overall book and has remained less than 5% of our overall book. A quick question on un Secured in credit cards, can you share the proportion of corporate cards that you would have? We don't have, I think we do commercial card. And the commercial card is a very, very tiny business. I think it's very, very small for us because we've not pushed that business so much. In fact, we had 2.4% market share on personal cards of the business, and our spends are greater than 5% of the portfolio of the overall spend, and that is in the on the RBI side. Okay, okay. Great. And sir, the second question So much of that is a small business for us. Okay. Right. And the second question, sir, is basically on fees. So if we see the growth in retail fees, would that be roughly In line with the disbursement growth. So if retail fees have grown X, we can surmise that disbursement growth would also be X. No, not at all. That is the beauty about the retail piece. And of course, you can link that in the commercial business segment or in the microfinance segment. But you can't link it in the consumer bank segment. In the consumer bank, you will see trade effects. You will see General Banking, you will see distribution fees. They are not linked to any asset growth of the business. Okay. Sure. And just finally, just as squeezing in one more. In terms of yields, now the sequential increase in yields, is it just and outcome of asset mix change? Or is there something else over there which has led to the yields going up, both in corporate and retail? So Abhishek, last quarter, we had this reversal of INR 185 crores, as you recollect. So that's the main driver. Okay. Got it. Right. Thank you, thank you, and all the best for the quarter. Thank you. The next question is from the line of Jay Munja from B&K Securities. Please go ahead. Yes. Hi, sir. Thanks for the opportunity. Sir, if you on the retail slippages, so if I were to look at the last, this quarter and the previous quarter that is effectively most of the full year. So it shows that the $16,000,000,000 and around the €21,000,000,000 So roughly around €35,000,000,000 $36,000,000,000 is the retail messages. If you can break it up break that up into various products. Yes. So let me give you the sector wide slippages, and I think it is very important. I think on the vehicle finance business, we had a pro form a of INR502 crores, and we have incremental slippageants of INR 6 INR187 crores during the quarter. I think, and I must give this clarification. I think what has happened, The Honorable Supreme Court lifted its stay on the classifications of accounts on NPA on March 24. Some of these clients did feel that they would get classified as NPA post that only or the DPD counter will start post that. And I think We actually followed the Irek norms, and we classified them as an NPA. And as a consequence, they moved into NPA. 25% of this portfolio Is it 30 or 60 DPD, less than 60 DPD today? And I think that, that is the reason. The second thing which we did is on the personal vehicle portfolio, personal vehicle type, which is scooter car loan. We did not offer any restructuring. As a van, we were convinced that the restructuring is not required in this segment. And we rather take a hit. And if a client comes back, and I think we will go through the recovery process. And That is the way we wanted to do that. And that is one of the reasons why the flows are a little higher. On the secured retail side, I think there was Incremental in quarter 4 of INR 226 crores, this came from Business Banking as well as the LAS portfolio. And that Unsecured retail was INR383 crores, which came from cards, PL, business loans, and I think that was the portfolio which came. And MFI, which is the Micah, is INR 298 crores, which was there in quarter 4. So that's the incremental slippage on quarter 4. Is it? Yes. And the second question is, sir, how this portfolio, as you have said that Maybe you had said that the things are improving and the situation is mainly impacted in some 100 districts. But out of these 4, 5 key drivers of slippages, where would you be more confident in terms of the slippages having peaked And where you would be slightly more watchful? So I think we have to be watchful because we don't know how COVID-two will play out. So I don't have a crystal ball to say how COVID-two will play out and how it will affect the business. Having said that, I continue I remain very confident about my domain specialization business, whether it's diamond, whether it's vehicle finance or whether it's of microfinance. I also am very, very comfortable on my large corporate business and the corporate side because I think we see The actual slipping on the corporate side incremental for the quarter is only INR 336 crores. If you go and see the data and you would have seen the gross NPA data, you will see the whole accelerator. It's only INR 336 crores. And our corporate book has started performing very, very well. All right. And sir, on Slide 14, we have this chart which shows the rating breakup. But somehow, I mean, it would have been even more Useful if you can tell the absolute amount in whichever form because it is very difficult to compute the number that how much is BBB and below or maybe BBB, how much is sitting? We have qualified that Now we are setting down on BBB. But what is the number as of now if you have that, maybe ballpark number will also help with that sort of amount? So I can only tell you that our A rated book and above has improved by 500 basis points during last year. So that's the number which I can tell you that we are focusing and our business disbursements are moving towards in that direction, which we said. Of course, we will do BBB rated book because our diamond business continues to do on the BBB rated book. And so I think On the double B, I can tell you either we've improved or remained stable. It has slightly come down from 6% to 5.8%. And if you look at the more chunky exposures, we have given a disclosure in the investor presentation, Wherein the BBB exposures have come down by 13%, it's an index number. Our top wealthy exposures, funded and nonfunded put together, has come down by 16%, and the duration of the book greater than 3 years has come down by 24%. And the composition of the fees. I think we mentioned it in the opening remarks as well. It is largely composed of trade and FX. And the proportion of Investment Banking and the episodic type of fees has substantially come down. So all the vectors are moving in the right direction. I'm sure we will continue that momentum. And just to give you a sense of the disbursements. In the large corporate book, In the full year, the A and above rated clients, we had 81% of disbursements were A and above. And in the last quarter, 95% were AM above. Right. And this clarity, this is 8.8% is a percentage of corporate loan or this is a percentage of exposure, meaning fund, non fund, everything put together? Yes. I said, so I was just asking, Sanjay, sir, this 5.8% is, I mean, what is the denominator? Is this the corporate advances Or this is moderate exposure or the entire guidance? Yes. This is 5.8 is of the corporate exposure, funded plus nonfunded. And therefore, it would be a much smaller part of the bank. And I think as you are well aware, there is, Of that 5.8%, there would be approximately a little over onethree, which is accounted for by 1 telecom account. And I think when we see some progress, this number is going to dramatically come down. Right. And the last question from my side is the clarification. I think on the restructuring book, in the opening remarks, I had mentioned that 50% is vehicle and 17% is non vehicle retail. But I think the I mean, just to confirm, how does that tie up with the slippages and the consequent restructuring and upgrade. So this 1600 must be sitting in the restructuring as well, right? Part of that, yes, you're right. Part of the one slipped has also got upgraded restructuring, Right. So what is the corporate restructured number then? We just told you the corporate restructured number is about INR654 crores. Yes. So that is the contribution. So I think this number should be Around 1100 or There is another number of INR 300 crores which is awaiting the OTR resolution because it's going through the process. And I think the OTR approval has already come And it will get upgraded this quarter from the LPA. Okay. Thank you so much in all of this. Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead. Kunal Shah from ICICI Securities, please unmute your line from your side. Kunal Shah from ICICI Securities, your line is unmuted. As there's no response, we take the next question from the line of Nishant Shah from Macquarie. Please go ahead. Yes, sir. I had a couple of questions on the card. So earlier in the call, you mentioned that the share of corporate or commercial This cost is very little. Could this just like explain like some of these conflicting data points? If I look at the RBI data, the monthly data which comes in, the average spend per transaction for you, that was something, let's say, 100 to 8 Sorry. This is like I can't hear you clearly. I think your voice is breaking. It is better now? Hello? Yes. Yes. So just on the recharge business, If I look at the RPI data, like the trends or like the transaction size for each of the credit card twins, It works out to something like INR 7000 to INR8000, right, versus the industry average being somewhere between INR 2,000 to INR3000. So what explains like the significantly Higher kind of spend per card, spend per transaction rather. I would have assumed this would have been a function of the corporate cards business in a larger share. Corporate task contribution to friends is not more than INR150 to INR 200 crores. So you can back that out if you want to. I think the real value for us is if we have 3 paying cards, we don't have any free cards. Not more than 3% of the book is free cards. That is number 1. Number 2, if you look at our portfolio towards of premium cards. I think it will be higher than the industry on the premium card. And that is the reason why we are different on the industry, Of course. And the third reason is 75% to 78% of our portfolio is self employed business. And And that is a differentiator. Of course, there are risks associated with it, but it's also a differentiator because our spreads are higher. Our evolve rates are around 54% to 56% up. And I think our ROI on this business, in spite of these losses, last year was about 3% to 3.5%. And I think in good time, it can even get 6% to 7%. Understood, sir. And what would be the proportion of like travel within the total expense? Yes, I don't have that much of data. I can put you through my card I will, I don't have, category wise spend on the data, but I can put you to my card expert and it will, he can help you because I don't have that data right now. If I give you something, it will be GAAP estimated. Perfect. Okay. And just one last related question. Would you be open to any inorganic opportunity in the current business? I've always said that we've always acquired businesses which are complementary to our businesses and ROIC features. We are not, we are very keen to evaluate opportunities which add value and are accretive to our businesses in this. As we said, unsecured business is less than 5% of our business. But if we get salvage customers and Category A class customers, As a consequence, we will be open to an acquisition provided it meets all the criteria which we have laid out, which is accretive to our ROI, accretive to are customer base, and that's where we will, the right customer base, and that's where we will evaluate the options. And of course, the right pricing. Perfect, sir. Thank you. That's it from me. Thank you. The next question is from the line of Anand Bhavanani from White Oak. My question pertains to the microfinance book. I just wanted to double check. You said the slippages in the microfinanced book for the full year was 3%. Did I hear you correct? Yes? Okay. Absolutely right. Yes. So 3% as of The denominator would be FY 'twenty closing book, right? And just to say, it would be It's It's about INR25,000 crores, and it's available in the investor presentation. Overall, loans were INR473 crores plus INR298 crores. Quarter 4 is 298,000,000 and quarter 3 with the pro form a was 473,000,000. Okay. Wonderful. And sir, you also mentioned that 81% of our microfinance book is post in the lockdown. So we have run down a significant part of the book, and a lot of fresh loans have been issued. And that happens in every microfinance business. The tenants are short. So what happens, and we've already done the 12 months. So what has to come has come. Of course, there will be something which will keep on coming. I can't say that how the COVID, but it runs out in 12 months. Every microfinance book actually runs off, so the runoff factor is very high in microfinance. If I can add one more Yes. I can add one more follow-up question on that. Am I audible? Yes. 2 are. Yes. Sir, What percentage of our microfinance customers would have opted for a top up or net off load? So we have a program for top up or but I think it is very selective, and we don't do it. We first make sure that the client has repaid a book and there is a gap before we do any fresh disbursement. We follow that as a process. We don't because it can be evergreening of the book. We are very careful about evergreening. And that is why Bharat Financial stands out against the others. We do not go and start giving tougher. We want the client to fully pay the loans and then wait for our cooling period before we start to refinance this work. This is again our strategy. This has been the philosophy of Bharat Finance. Great, sir. So, sir, do you have a figure handy as to what percentage of clients would have been given this top of our net of Loan auction? I don't know. I can check it up with Bharat. I don't think that it will be too much. Maybe INR 600 crores of booked is less INR500 crores, there is nothing else. And that too, it has been given to clients, We are who have an ability to pay issue. That's the book which we have. 1% or 2% of the book. But It's not evergreen. That's all I want to tell you. So that's very helpful. 1%, 2% kind of figure is very The next question is from the line of Mahesh MB from Kotak Securities. Congratulations on a great set of results. Just a couple of questions from my side. One is, given the situation of the loan book from an asset quality perspective, How are you now positioned for next year in terms of growth? That's number 1. 2nd one is how have you now progressed on the deposit rates and how do you see the convergence happening with the frontline banks out there? Can you, Mahesh, repeat the second question? I just missed it. Sorry. Yes. On the deposit rates that you have right now. You can see a pretty good flow both coming on current account, same account as well as term deposits. Do you think you have now you can take a slightly more aggressive stance on cutting deposit rates further? So what's the space, Mahesh? That's all I can tell you. I committed last quarter that we dropped the rate. We dropped it. Now watch the space. I concur with you right now Then I think we can look at easing of deposit rates in certain segments because I think We've already dropped 50 basis points. I think the time for transaction account dropping specifically in the savings account side have come up. And I think you will see some dropping in rates. And I've always said, Mahesh, one thing that we will be about 3 to 75 basis points higher than the best in class in the industry. That you must have it in your mind because we are still growing retail. So that's going to happen. So that's one. On the growth financial expenditure. See, as of now, I'm not going to change my TC5 ambition because I feel that the country will, This fear psychosis or the saying that everything is going wrong, I don't agree. I think, yes, we have issues, and I think the country will get out of it. And in my opinion, what we did when the COVID-1.0 was out, I think, yes, there are delays, but we came out of it very fast, and there was a pent up demand which got the solid movement in the book. I think, in my view, I think we have to wait and watch. I don't have a crystal ball to give you the right figure. But I think there is an opportunity in this market, specifically in our domain specialization, specifically in the large corporate book. And I think you add in the SME side. And I think we will capitalize on the opportunities at the end. And we will not let go of our market share in the domain specialization, and we will not let go of our strategy on the large corporate towards working capital and A rated paper. We will not lose these at any cost. Of course, the Investment Banking business will suffer, and we have, and you've seen the results, then we have slowed down that business. And I think that's going to happen during these times. So just one clarification. In this adjustment That you're doing on the corporate side, do you think there is further room for the reduction in your loan book yields on the corporate side? See, if you the only thing I can say, Mahesh, when you get into working capital and what we've grown also, See, when you see the book, you are seeing net of sell offs which we've done 9,000 crores. It's not that we've not grown. So that is part of the run rate. And the working capital loans were going at a very competitive pricing. And it will continue to go at competitive pricing. What you are seeing is you've got to see the corporate in a different space because the fee business of the corporate and the trade effects as well as The transaction banking fees have suddenly started showing up on the corporate banking. And I think our ability To structure it well have led also, I believe the way we are playing the game, I don't think we will see the way which we've seen earlier. These are granular disbursements. We are not, 1 fee disbursements, we are not giving it at Higher tenure, so we, like Sanjay said, our tenure has reduced dramatically. And I think you will continue to see that book. Of course, We may lose a bit of yield and that's driven out of what the pricing is in the market. But I can tell you a cost of deposits will also pass. Secondly, If the movement is happening, and I've said always, we're already at 55% to 57% retail. And I think we have very good interest yielding business, And we will continue to be, and I've always said, we will continue to be at a NIM of 4.15 to 4.25. If I just grow my Yield on the consumer, we can be 4.5%, 4.75%. The corporate debt is where I want to balance the book and get the franchise. Having said that, I must also say that I'm evaluating mortgage business because I think I want to balance my secured book more and more in the retail side. So we will evaluate the market business also by 2nd or Q3 of this year. Thank you. Ladies and gentlemen, we take the last question from the line of Arun Bhanani from WhiteHawk Capital. Please go ahead. Thank you for the opportunity. And sir, with respect to microfinance, what would be the top three states for us? And what would be the percentage of book coming from Netna from those debts? I don't have the answer. Emma, can you answer this question? Yes. So, hi, good evening. The top 3 states are Bihar, Odisha and Risbonwar. All put together, the 3 states, I think that was the question, right? Yes. So what will be the individual facility exported after the 26,000 crore book in each of these states? Yes. All put together. We don't give some granular data on the book at all. I think we told you the stakes. We don't give granular data on each of these stakes as of now. Yes. Sumant, we are not giving the details. All together combined, all three. At a very broad level, we have a state wise cap, district wise cap, even branch wise cap on The amount that we can get. And in all, can you Can you give me the top 3 states? Together as a whole, how much do they contribute? I think it will be about, Okay. Can you give that detail? Can you give that detail, Sohwan? Yes, please. Go ahead. About 33%, 32%. Okay. That's quite helpful. And when we speak about our product, Our key product will be a 2 year product. Is that right understanding the microfinance space? No, no. It's a 1 year product. Most of the people 1 year product and we did weekly, we have weekly installments, so 30 week installments. We do have 18 month product and 24 month That we offer to people who are taking higher loan amounts, greater than 30,000 and stuff like that. But anybody who's taking a loan than 30,000 If given a 1 year. So what percentage of our book would be 1 year, 18 months 24 months, approximate split? I don't think we can give that number. I think we don't give those number. I just told you that we have, About 81% of our book has got churned during this year, and we have a selection percentage of about 99% in that churn book. Sure. Yes. Sure, sir. Thank you very much. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Kartpalia for closing comments. First of all, my apologies again to have kept you waiting. This was not elevated. This was a technical issue at our end, and it took time to resolve it. Having said that, I think we are committed towards, we have become more resilient, much more stronger in our business. And I think that's the message which I wanted to give. I think if the COVID-two plays out, We are committed towards pivoting towards growth. We still are committed towards our PC 5 strategy and growth plans, and We believe that India will come out of this sooner or later. Having said that, if you have any further questions, Whether you need more details on microfinance, I think we can do a 1 on 1 and get into details to each of these questions. And Sanjay, me or Indrajeet are available at any point of time to answer any of your issues. Thank you so much for your time.