Ladies and gentlemen, good day, and welcome to the LIC Housing Finance Q3 FY 2022 earnings conference call, hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Praveen Agarwal from Axis Capital. Thank you, and over to you.
Thank you, Stanford. Good morning, everyone, and welcome to this earnings call of LIC Housing Finance. We have with us Mr. Y. Viswanatha Gowd, MD & CEO, and Mr. Sudipto Sil, CFO, to take us through the results. In the initial round, we request for Mr. Viswanatha to give us a understanding of the quarter gone by, and then we'll open the floor for Q&A. Over to you, Mr. Viswanatha.
Thank you. Thank you, Praveen Agarwal. Thank you. Very good morning to you all. Very, very good morning to all of you once again, and I also welcome you to the post-earnings call of our LIC Housing Finance Limited. As you are aware, LIC HFL declared its Q3 FY 2022 results yesterday. Before beginning, I wish you and your near and dear ones a very, very happy and healthy New Year, because we are meeting first time in the current New Year. This quarter under review witnessed a third wave of COVID-19 due to the Omicron variant, which resulted in intermittent restrictions in some parts of the country. However, the situation got normalized, and now with the expectation of the pandemic receding, it is expected that the business activities will strengthen further in the Q4. All key indicators have shown improvement during Q3 over the previous quarters.
The financial highlights of the quarter are as follows. Total revenue from operations, INR 5,054 crore as against INR 4,907 crore for the corresponding quarter of the previous year, with a growth rate of 3%. Outstanding loan portfolio stood at INR 2,43,412 crore against INR 22,197 crore as on December 31, 2020, reflecting a growth of 11%. Out of which individual home loan book reported a growth of 15%, and now it comprises 80% of the total portfolio. It is up from 77% one year ago. Total disbursements for this quarter were INR 17,770 crore as against INR 16,857 crore in Q3 FY 2021, with a growth rate of 5%.
Out of that, the disbursement in the individual home loan was INR 15,341 crore as against INR 14,511 for Q3 of FY 2021, with a growth rate of 6%. We have achieved 135% of the pre-COVID levels in terms of Q3 disbursements when we compare it with Q3 FY 2019-2020. On the net interest income front, NII was INR 1,455 crore for the quarter as against INR 1,281 crore in Q3 of FY 2021, showing a growth of 14%. Net interest margins for the quarter stood at 2.42% as against 2.36% in Q3 of FY 2021. Profit before tax for the quarter stood at INR 961.85 crore as against INR 969.64 crore.
Profit after tax for the quarter stood at INR 767.33 crore as against INR 727.04 crore for the same period previous year, reflecting a growth of 6%. During the quarter under review, disbursements continued its strong momentum, even on a sequential and year-on-year strong quarters. With the individual home loan segment, the disbursement growth is clocking 34% for the 9-month period. The growth has been across all geographies, especially in the southeastern, southern and western, and also supported by northern, central and eastern regions. The canvas of growth gives us lot of confidence of an overall pickup in economic activities, as well as a strong and sustained rebound in the consumer sentiments.
In terms of asset quality, the stage three exposure at default stood at 5.04% as against 5.14% as on September 30, 2021, reflecting a marginal sequential improvement in the same. Total provisions as on December 31, 2021 is INR 5,715.76 crore, reflecting a provisioning cover of about 40% on stage three. This includes 327.31 for COVID-19 related provisions. Assets recategorized as NPA as per RBI notification, dated November 12, 2021, are about INR 2,497 crore and are placed in stage one and stage two. ECL provisions for the same is INR 230.83 crore. OTR during this quarter stood at about INR 290.27 crore.
It is much lower than the Q2 figure of about INR 2,141 crore. We have continued to focus on collection efficiency, and the same has shown consistently, and then it has shown very good consistency, and it stands at 99% for all the regular accounts. The overall trend in the collections and recovery side has shown improvements, which gives us a confidence of reduction in coming months. On the funding side, we have witnessed a reduction in overall cost of funds by 7 basis points during Q3 FY 2022, despite hardening in the bond yields during the same period and 24 basis points during the current financial year. Incremental cost of funds stood at 5.27% for the quarter. Net interest margin for the quarter stood at 2.42% as against 2.36% for the Q3 of FY 2021.
For this quarter under review, the interest income increased by 2.55%, whereas the interest expenses declined by 1.37%, leading to margin expansion. Project RED under digital transformation is progressing significantly with the launch of new projects like KYC and AML solutions, deposit applications, and audit portal. More than 1 million downloads of our HOMY app have been made so far, and the company has approved more than INR 13,000 crore worth of loans received through this HOMY app. With this brief introduction, I would like to invite you for your queries. Thank you.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question- and- answer session. Anyone who wishes to ask a question may please press star then one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star then two. Participants are requested to use handsets while asking a question. Also, as a reminder, in order to ensure that the management is able to address questions from all participants in this conference call, please limit your questions to two per participant. For any further questions, you may come back for a follow-up. The first question is on the line of Rikin Shah from Credit Suisse.
Thank you for the opportunity. I have four questions. First one is on the margins. The margin seems to have normalized this quarter. I wanted to check if there were any write-backs or interest income reversals in this quarter. Also, how does the incremental asset yield look like versus your overall asset yield? I've also noted that the incremental funding costs have started inching up, so any outlook on the margins? That's one. Second one is on the asset quality. The stage three coverage has declined by almost 350 basis points to 40%. Is there a target level that you would like to intend to maintain? Third one is on the growth. The LAP, LRD, and developer loan books continue to contract.
From here onwards, would you intend to accelerate the disbursements and any outlook from here? Lastly, the data keeping question. I just want to request GNPA by different segments and also outstanding book for restructured loans and ECLGS. Thank you. That's it.
Four questions. Okay. Actually, as far as the questions are concerned, of course me and our CFO both will answer in part and all.
Sure.
As you are asking about, see the growth, of course, I'll tell about the what you call business front if you are looking at. The growth, what we are seeing now in the individual portfolio is really going on very well. Then of course I agree developer book size, ours is not very much. It's only around 6%-7%. There what happened, lot of scope is there for us to expand. In this quarter we are having some positive outlook on the expansion further on this developer and also LRD books also. Then as far as the, what do you call, asset quality is concerned, you are inquiring, that, really now after this, what do you call, last quarter especially momentum was good.
In the sense people were not like in the earlier year of Q3, where movements were not that much. Even this time, what happened, our teams also were in place to meet all the people and then recover the money. Second, what happened now, most of our loans are actually in the retail segment, mostly 80% of loans are in the retail segment. In that also more than 70% are in the salaried class. That's why what happened, the regular income levels of people has helped us a lot. That's our collection efficiency hovering around 99% regular and then more than 70%-80% in all cases. With these things, what happened, there was a very good recovery, especially in the Q3. That gave us a lot of comfort in what happened. The provisioning levels also were maintained to meet all these requirements. Margin.
Yeah. Good morning. Regarding the other query pertaining to margins, yes, there has been an improvement in margins year-on-year. If you look at sequentially also, if you see the loan asset growth has been around 11%, whereas the NIM growth has been around 13%, 13.5%. So that has translated to a higher net interest margin. There is no one-off here. In fact, there was a reversal which was there in Q2, which is not there now. This quarter margins are reflective of the true income from operations and cost of funds. There are no one-offs. As far as the-
Sorry, go ahead, sir.
Sorry?
On the asset yields, incremental asset yields also.
No, I'm coming. I have not finished. You have asked some five, six questions. I have noted down. I'm just coming.
Okay.
Yeah. Asset yield, there has been a decline in the asset yield in the initial part of the financial year, but now it is stabilizing, and from January we have also increased our lending rates. That should help stabilizing the asset yields for incremental business. Incremental cost of funds has been increasing, as you are aware that there has been an overall increase in the cost of funds and the, I would say, in the bond yields across the entire ecosystem. In fact, in the G-Sec also, there has been a very sharp increase. Till now, it has not fully translated into the higher cost of funds. If you look at the construct of our liabilities, you will find that about 65% of our liabilities are fixed rate in nature.
That certainly allows us some advantage in an increasing interest rate cycle. Regarding the stage three cover, that was another question that you had placed. If you now look, there has been substantial improvement in the coverage across including the stage one, stage two and stage three also. Stage one, stage two coverage has also increased, and stage three coverage is also around 41%, 40-odd%, which at this point in time it is quite improved as compared to earlier position. Other queries regarding the growth, MD sir has already responded. Two more queries we are asked regarding some data points. The GNPA, the outstanding. What was the query? It was the outstanding loan.
Restructured loan book and the total ECLGS outstanding book.
Restructuring this quarter is only INR 490 crore.
Correct. Correct.
Have I answered all your queries?
Sir, GNPA by different segments and outstanding.
GNPA in the individual home loan segment is 2.1%. In the project loan, it is 27%. In the non-housing commercial, it is 15.9%. In non-housing individual, it is 9%. Total coming to 5.04%.
Okay. Sir, on the ECLGS outstanding book.
What exactly you want, ECL outstanding book?
What is the total ECLGS disbursements we have made until now?
About, I think, INR 1,000 crore or so.
Okay, sir. Thank you very much. That answers all my questions.
Thank you. The next question is from the line of Kushan Parikh from HSBC Securities. Please go ahead.
Thanks for taking my question. Just harping again on the NII growth basically. If you could just give us some additional color in the sense that if you could let us know what the reversal was in Q2, as well as is there any improvement in yields that we are seeing in the individual housing side in Q3 or any mix change. If you could elaborate on if you've done more of affordable housing and at what yield does affordable housing loans come in at. Just wanted to better understand the yield improvement and NII improvement in Q3.
As I mentioned, there has been reduction in the cost of funds also in the Q3 . Despite the fact that there has been overall increase in the bond yields in the system, there has been improvement in the cost of funds. That also has helped in improving the interest income collection. We have effected an increase in the lending rates also, so that also should give some support and some stability in the asset yields going forward. As far as the interest income reversal you are talking about, that actually was in the Q2, which had reduced the interest collection in the revenue from operations. There is no reversal in Q3.
So-
It's a quite normal condition, quarter.
What was the amount of reversal in Q2?
It was around INR 350 crore. You will get more reference on my Q2 call transcripts.
Oh, okay. There has been no change in individual housing yields for Q3, right? No change in mix as well in terms of within individual housing to affordable or something like that?
No. Affordable is different. Affordable is not this year.
This is entirely coming out of the writeback of interest reversal that had happened in Q2, and there are no changes in yields in Q3. We have high rates in January only, right? Is my understanding correct?
See, again, I think you are mixing it up. There is no reversal in Q3.
No. There was a reversal in Q2, which is not there in Q3, is what I'm saying.
Correct.
Okay. No change in individual home loan yield for Q3?
No.
Okay. Understood. If you could just help me with the outstanding restructured book number for Q3. We've done INR 419 crore in Q3. Just wanted to know what the outstanding number is now.
Slightly more than INR 7,000 crore put together.
Okay.
Yeah. Correct. That's correct.
That's all from my side. Thank you.
Okay. Thank you.
Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.
Yes. Thanks for taking the question.
Sure.
During your opening remarks, I think you have specified this. If you could just repeat this, the amount of loans we carry stage one and stage two but have been recategorized as NPA under the RBI circular.
Yes, we have already specified it in the opening remarks.
Yeah. We've disclosed whatever we have taken into the books.
Provision is also disclosed.
Yes.
Sir, I wanted to know the amount of business. The provisions you have already disclosed in the presentation. What was the quantum of loans?
Just repeat it. It is INR 2,497 crore.
Roughly INR 2,400 crore you can keep.
Right, sir. The second question I had is, what has prompted this change in provisioning policy during the quarter? What I'm trying to understand is, sir, until last quarter, we had something like a 3 basis points kind of a provisions over on your stage one and stage two loans. This quarter you have increased it to about, I think 38 basis points. Thirty-six basis points in Q3. What has prompted this change in provisioning policy during the quarter?
No, it is this RBI circular. If you see the RBI notification of November 12, 2021, we have implemented. Pertaining to that, whatever will be the notional provision that is required, we have created that, and we have kept it in stage one and stage two.
Okay. Is there such a significant increase in credit risk from just that RBI circular which has prompted this increase from 3 basis points to 32?
INR 230 crore. We have given the number also, INR 230 crore.
Yeah. INR 230 crore is a provision made for that exclusively. Additional.
Right, sir. Okay. Sir, lastly, if you could just help us understand, have there been some, let's say resolutions or prepayments in the developer or builder book? Because, I mean, the runoff in that book during the quarter looks pronounced. Any resolution.
Yes, there have been some closures, some repayments have happened.
What was the quantum in that, sir?
I think some INR 600 crore-INR 700 crore in totality. There have been some repayments.
Right, sir. Sir, lastly, you talked about increase in lending rates from January onwards. By how many basis points have you increased your lending rates during January?
It's about 10 basis points.
10 basis points. Thank you, sir. That's all from myself.
Thank you.
Thank you.
Thank you. The next question is from the line of Utsav Gogirwar from ICICI Prudential Life Insurance. Please go ahead.
Thanks for the opportunity, sir. Just to, you know, continue with the previous question. As per the website, the interest rate is 6.7%. Is this the latest one after increase of 10 basis points or the new rack rate is 6.8%?
No, no. It is the latest. Latest whatever you are seeing, yeah.
6.7% is latest.
6.7% is some category, but it is actually 6.75%.
Yeah, it is linked to the CIBIL. Lot of things are there, no, in that, quantum-wise and all that.
Product categories are also different. Yeah.
Sure. My second question is, if the rack rate for any, you know, particular kind of customer is, say, 6.7% or 6.75%, are we allowed to lend below this rack rate?
No.
No.
No, that is not permitted.
That is not permitted. Okay, perfect. That's it from my side, sir. Thank you.
Okay. All right.
Thank you.
Thank you.
The next question is on the line of Umang Shah from Kotak Mutual Fund. Please go ahead.
Yeah, hi. Thanks for the opportunity. Just a couple of questions on provision. INR 230 crore, which we have assigned to these assets which have been reclassified as NPAs as per RBI circular. Do you really think is there any need to increase provision cover on these loans or INR 230 crore will be sufficient enough?
No. As far as this particular RBI November circular is concerned, we have already applied that, and INR 230 crore is the number which has been provided for this.
The way to look at it is that INR 230 crore would be incremental, so the total provision against these assets would be higher. Is that the right way of understanding?
Yes, certainly. Some provision will already have been done.
Okay. Understood. The second question was that on our stage three provision cover, so now I understand that obviously last four to six
quarters have been fairly uncertain for the industry as a whole. Our stage three provision cover has also been fairly volatile. Under the ECL model, how should we look at a more steady state sort of a stage three provision covers for us?
Yes. Certainly, yes. Now, because as you have very rightly said, because in the last two years there have been so much of events.
Uncertainty.
Much of uncertainty, so much of intervention by regulator requiring so much different types of treatment.
More.
Now you are looking at a much, much more stable provisioning, I would say, overview.
The current 40% PCR should be like a more sort of a steady state provision cover. Is that a fair understanding?
Yes, yes. It will be at least 40%.
At least 40%. Okay. Understood. Sir, the other question was that have you made any appropriations to the impairment reserve during the 9-month period in the current fiscal?
Current year, as of date, the total impairment reserve provisioning is INR 297 crore.
Okay.
Total. That is the total.
Okay. Which would be about INR 200-odd crore as on the previous fiscal.
Yeah. Correct.
Yeah.
Okay. Just the last question from my end. What proportion of our loans would be linked to any sort of a external benchmark, like a repo rate or something?
You are talking of the lending side or the borrowing side?
Lending side.
Lending side, it is an internal benchmark. Internal PLR benchmark. Now that PLR is also comprised of our internal cost of funds and other administrative costs. You can say that, obviously, if there is a movement in the external rates of interest, it will also impact our PLR.
Understood. Okay. All right. Perfect. Thank you so much, and wish you all the best for future quarters.
Thank you. Thank you.
Thank you, sir.
Thank you. The next question is on the line of Kunal Shah from Carnelian Capital. Please go ahead.
Hi. Thank you for the opportunity. I had two questions. One was pertaining to the growth. You know, in the current quarter, on a year-on-year basis in the individual housing loan segment, we had a good growth of 15% and on quarter-on-quarter basis, a good growth of 4%. However, still we see in comparison to other players who are present in the housing market, their growth was much aggressive on both a year-on-year basis and quarter-on-quarter basis. I mean, if I have to name some large private banks, they had growth of upwards of 20%. Right? Also now we have taken a further rise in the interest rates.
Just wanted to understand, is it the competitive intensity that is hampering our growth, or how should we look at growth from here on for LIC Housing Finance?
Yeah. As far as growth is concerned, really you have got a good question. I agree with you. What happened to, say, the market now, it is very competitive, because all our many players are there, even including banks and HFCs, all are playing in that. Of course, looking at the size of our company, what you call growth, if you look at from that parameters, I think it will be more clear. Last year also, what happened, Q3 was very heavy because there was a lot of pent-up demand in the Q1, Q2 of last year. The Q3 also was very, we did nearly more than 16, nearly 17,000 crore in that quarter itself. Over that, we have seen the growth of nearly 5% is a good thing in the current year.
Then if you look at the overall also, overall for the last three quarters put together, the growth is more than 30%-35% now. In the market, I agree there is a challenge, but now what happened, even though with increased rate of interest, even few basis points, it is up only. In the market actually we are having what you call now demand across in all areas. Actually geographically, Tier 2, Tier 3 metros, everywhere what haptierpened, our people are really on the field, and with that our numbers of even channels are doing very well. All regions are contributing this year. With that, we are very sure that I think the growth rates will be maintained or further may improve.
Just to add to what Viswanatha just mentioned, 15% growth on a INR 2 lakh crore portfolio also on the core home loans where the competition is the most intense. I think this 15% growth on this book we are seeing after many, many quarters, and despite the so-called competition that you referred to.
Even, sir
Hello?
We've lost the line for the current participant. We'll move to the next participant. We take the line, we take the question on the line of Asutosh Kumar Mishra from Ashika Stock Broking. Please go ahead.
Sir, my first question is to the developer loan segment. Like, now we have seen good recovery in this quarter, and in the initial comment you also mentioned that you are again start seeing, you know, growing this portfolio. Can you put some light on what is happening in this segment? We were a quite large player in this segment and, you know, was positively contributing towards the NIMs till few quarters back. How do you really want to take this portfolio again, seeing that, you know, our experience?
One thing actually, I think, our developer book size, you are aware that it is hovering around 6%-7%. Because what happened, of course, after COVID, there was a lot of what you call delay, and also somewhere the projects were not taking off very well and activities were slowed down almost over there. Now I think slightly there is a recovery. We also what you call now have focused a lot on this one, and already we've got a good number of proposals with us across some different towns, cities and all. Going ahead, I think there will be good expansion even in these projects in the developer loan book also with us in the last quarter of current year.
We also look for actually even other places, even other loans, like commercial LAP or even some LRDs and all, which can yield actually better margins for us.
What is the current, you know, incremental yield on the developer and the LAP portfolio, if you can just put forward? You know, compared to the home loan where we are seeing the competition, what incremental yield we are getting in these two other portfolios you just mentioned?
In the builder loans?
Developer.
Developer loans, around, say, 12%. 12%-12%, maybe 13% max. In the loan against property, it will be ballpark around 9.5%-10.5%, depending upon the rating.
Okay. Sir, another question is, you just mentioned that we have seen the sharp improvement in NIMs and, you know, the OTR number. What was the OTR number in the last quarter, and what is the OTR number in this quarter? Because I think this is a large change, and that may have impacted the NIMs in the quarter.
Yes. September. You are asking for September and,
Yes, September. Yes.
In September, the figure was INR 2,141 crore.
Correct. Correct.
INR 2,141 crore in September quarter.
Okay.
This quarter that is, December quarter is 490.
That interest reversal of INR 350 crore was mainly toward that OTR, if I can assume.
In the Q2.
Yeah, in the Q2. Yes.
Yeah.
Okay, on a cost of funds side, how much increase do you anticipate, you know, in the next six months, given the way things are changing at this point of time?
The cost of funds, there is a very strong likelihood of Reserve Bank action on inverse repo. Part of it has already been priced into the markets, in the bond yields. It has not affected too much on the longer end of the curve. It is the medium and the shorter end of the curve which has been impacted most. Again, if you look at the construct of our liabilities, where about 60% + of the liabilities are fixed rate in nature.
Yeah.
that will certainly help us to cushion some of the initial increases.
Okay.
Again, if you place it in perspective, the cost of funds has been, I mean, the bond yields have been hardening since October. In the Q3 also, we have been able to get about a 7 basis point reduction in the cost of funds on more than INR 2 lakh crore of liability portfolio.
Got it. Okay. Sir, last question. Is any more of, you know, large recovery coming from the developer segment, in the Q4 or so? Are you expecting anything like that there?
Yeah. Few are there in pipeline. We are all working out. Let us see how it goes, because some are legal, some are even, you know, these things are there because developer books. Of course, may not be a very bigger size in volume, each single case like that. All put together, it is, it'll be somewhat actually the volume will be a good size.
Okay. Something like what we have done in this quarter?
It may be better than this quarter, so what we feel.
Okay. Got it. Thank you, sir.
Thank you. The next question is from the line of Nidhesh Jain from Investec. Please go ahead.
Thanks for the opportunity. Sir, on the LCR, was there any impact on our margins or profitability in this quarter, because of LCR norms?
No, actually not. We had buffered up for the LCR in advance, so there was not too much of an impact there. We have also disclosed it in the published numbers. You can see the LCR is more than 200%. I mean, we have been able to create adequate buffers. No problems on that count.
We are fully compliant with that.
Fully compliant, yeah.
Sure. Sir, can you share stage two number for both individual housing as well as individual non-housing portfolio?
Stage two numbers for individual housing loan is INR 5,662 crore. INR 5,600 crore.
600. Okay, sure.
INR 5,662 crore, no? Something. The total you already have, so you can just take it out.
Okay. Sure, sure.
Thank you, sir.
Thank you.
Thank you.
Thank you. The next question is from the line of Nischint Chawathe from Kotak Securities. Please go ahead.
Yeah, hi. This is Nischint Chawathe here. My questions are answered. Thank you.
Thank you.
Yeah.
Thank you.
Thank you. Thank you.
The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.
Yeah. Hi. Congratulations for good set of numbers. So, firstly, in terms of the corporate recovery, almost INR 1,500 crore of repayments have been there this quarter. Any impact of that in terms of maybe the recoveries were in interest would have also come back and we would have booked something out there which is reflecting in them? Or it is pure principal repayment, no one-off on the corporate side at all?
No, no. It is mostly interest. I mean, it's just a principal closure. Principal repayment, you can say.
Okay. Nothing in terms of either, maybe interest or something which could have nothing of that sort.
Nothing of that.
Corporate developer NPAs would have gone up by INR 130 crore or so during the quarter. I think 27% suggest that there is
There is actually denominator has come down. No.
Lower book.
No, no. Even on the denominator, maybe compared to 24% odd, so INR 3,650 goes up to INR 3,800 crore. Just want to check if there is any further slippage as well which has happened during the quarter because that seems to be INR 150 crore odd kind of an addition.
The total stage three and the project loan is INR 3,972 crore.
INR 3,972 crore. In September 2021, how much was it?
It was around INR 3,900 only.
Okay. No increase as such.
No, no.
Okay. Sure. Lastly, in terms of the overall apart from whatever was required under the RBI, there is further inching up which is there in terms of the provisioning under stage one and stage two put together is almost like now INR 830 odd crore. Would there be like a further increase we will keep on creating the buffer under stage one and stage two going forward as well, or we are more or less adequately covered now?
No, it is done.
Whatever is required is everything.
Yeah. Yes. Yes.
Now, because our books are mostly in the retail segment, retail segment, what is happening now, recoveries are good.
It's always a trend, huh.
Now the even COVID impact, all these things are slightly now fading out. I think that will give the more or less same stability for us.
Sure. Okay. Yeah. Thank you.
Thank you. The next question is from the line of Rikin Shah from Credit Suisse. Please go ahead.
Okay. Just a clarification, sir. On the, have there been any restructured accounts that have come out of the restructured portfolio? Because as of last quarter, the outstanding books seemed to be around INR 7,300 crore, and in one of the earlier questions you mentioned it has, it's just slightly above INR 7,000 crore now. That's what
7,000. There has been no restructuring coming out.
if there was additional restructuring of 49-
One moment.
If there is additional restructuring and no portfolio, no account has come out, how would it be same sequentially?
No, sequentially it is not same. I'm not able to understand. Total put together will be around INR 7,500. That was th
e number I had taken. INR 7,100 plus INR 400 odd.
Okay. Understood. Last quarter you had also given-
If you want the exact number, 7,471. 7,000, something like that.
Okay. Okay. That is helpful. Last quarter you had also given some split on the breakdown of this restructure between some segments. Possible to furnish it this quarter?
I think it is given in the disclosures to the notes to accounts. There is a table which is appended below.
Okay. Will have a look, sir. Thank you.
Yeah. That gives all things. Yeah. Correct.
Thank you. The next question is from the line of Param Subramanian from Macquarie. Please go ahead.
Yeah. Hi. Thank you for the opportunity. I wanted to ask on the BT out this quarter, is there any uptick? Because the prepayment that you've mentioned in the presentation that has gone up, half year versus 9 months. So that's my first question. Secondly, on the loan book side, how regularly, as in how frequently does the loan book reprice since it's 99% floating? So, for example, if they are able to, you know, raise the repo rates by 25 basis points at the next meeting, how long before the entire loan book on the loan side reprices? Yeah, those were my two questions.
This will be a quarterly review which will happen.
On the loan book side, if the benchmark gets raised by, say, 25 basis points, including the outstanding loan book, everything will reprice. As in, how long before the entire loan book reprices?
As I told you, quarterly. Depends upon when the Reserve Bank is going to increase.
Okay. My other question on prepayment-
What will be the consequent impact of that on the cost of fund? That also is to be seen. Sometimes it might so happen that even without the repo or the reverse repo action, there could be an increase which might require us to review the PLR and revise it accordingly.
Got it. My other question on the prepayment, so there is an uptick.
Prepayment more or less remains stable on the individual side. In the non-individual project loan side, there has been slightly higher prepayments.
No. I'm looking at the presentation on the individual home loan slide. It's gone up. Prepayment 9 months is 10.8%, and if I look at it half year, it used to be 9.9%.
No, it is.
It is hovering around 10%.
Around 10%.
Around 10%.
±10%.
That is, even earlier quarters also were there. Even pre-COVID levels were more or less same.
Yeah. It was 10.8% only. On an annual basis, I think it was 10.5%.
It hovers around 10%.
On a full year basis, it will generally be between 10-11.
Correct.
On a full year basis.
Got it. There's nothing special in terms of BT out in this quarter.
If you see part of the first half, two months there was almost a stoppage of business activities.
Right.
Due to the second wave, there was almost a stoppage of business activities in the first two months. That is April and major part of May.
May. Correct.
that time the offices were also closed. In fact, there was no business activity. People even didn't prepay or things like that. To that extent, that particular six-month period might be skewed. Now if you look at the full year of last year, that will give you a much, much more stable and comparable base.
Got it. Fair enough. Thanks for those answers. All the best. Thank you.
Thank you.
Thank you. The next question is from the line of Vikram Subramanian from Spark Capital. Please go ahead.
Hi, sir. Congrats on the good set of numbers.
Thank you.
Thank you.
You had explained about the you know margin increase because of the reduction in the OTR trend rate. With restructuring still happening, how do you see restructuring as well as you know NPAs trending going forward? Like in individual home loans, last time we had 2.25%, and now it's 2.1%. Can we expect any sharp correction you know in the coming two quarters, both in the individual and any chunky resolutions or recoveries in the builder book? Is that possible? Any color on that?
Actually, what you have said is correct. Now what happened, actually recoveries are good, and with that, what happened in the individual book size, even people who took earlier, what you call either moratorium or OTR, now they are slowly coming out of that. We have got a special task force only for that, so what happened now people can come out of that also. That is giving good edge for us. That's why slowly there is an improvement in that as for the individual retail loans are concerned. In the developer book also what happened now because slowly there is now momentum, then projects are taking off, then sales are happening across. We see there will be some sort of reversal even in the developer book also. Those case and OTR slightly can be better off in this quarter.
The overall visibility is much, much stronger today as compared to six months back, that is for sure.
Okay. Got it, sir. Can you please share how much of, you know, quantum of loans that came out of OTR during the quarter? You said INR 490 crore during the quarter OTR is being made, but how much would have come off normalized?
Nothing is not normalized because most of them are still within the OTR, the framework of the moratorium. It has not come out.
Okay.
It will start coming out maybe most of the people who had taken the OTR had taken it between, say, one and a half to two years, maybe one to two years. That period will start maybe about six months from now.
Got it. One to two years.
Months to 12 months from now.
Six months to 12 months from now. Got it. One final question. Now most of our loans are floating rate basis. As you know, if and when the benchmark rate starts increasing, when do we see first set of resetting? How often is the reset?
See, it is difficult to give an exact date because obviously the central bank is yet to come out with their policy announcement. My guess is that it will not be very long, maybe anywhere between, say, maybe couple of months, we can say. It is likely to happen across the industry. It is not the first time it is happening. It has happened earlier also several times in the past. Two, three years back in the past also it has happened. This is a regular phenomenon, and it will happen.
I meant in our portfolio, when does the reset happen? Rates go up.
Every quarter.
Every quarter. The reset happens every quarter. It reflects for the customers every quarter. Is that?
Every quarter.
Okay. Got it. Thank you.
Thank you. The next question is from the line of Piran Engineer from CLSA. Please go ahead.
Hi, good afternoon. My first question is basically on SARFAESI in the last one to two years. SARFAESI has been pretty slow. Just want to know how it has picked up now and how much of our resolutions in home loan and LAP in the past two quarters have been due to SARFAESI?
Due to?
SARFAESI.
Oh, yeah, SARFAESI and all. Okay. Now, SARFAESI actions, of course, you are aware last year what happened because of COVID, of course, that was, there was some sort of no take off in the sense activities were not that much enforceable, no, almost all. So that what happened now in this quarter, slowly it has picked up. Now it is coming to one actually almost, 70%-80% of our earlier, what you call, pre-COVID levels in SARFAESI activities also. I think going ahead, once you restore the full, I think there will be good success like in the past.
Okay. Typically what percentage of our individual NPLs would we invoke SARFAESI in? Like out of 100 NPL accounts
Individual side.
In the individual side, yeah.
Yeah. All, of course, depends on because now people can come for OTRs, they can also come out of that. Even they can repay. All these things are involved. I think it may not be very heavy. What I feel, I think pre-COVID levels also we used to have maybe around 15%-16% range it will be there.
Okay.
See the very in the SARFAESI, especially in the retail customer segment, the issuance of a notice under Section 13(2) itself brings forth action on the part of the borrower. Many times you may not actually even have to take it to the level of an auction.
Okay. Got it. Sir, my next question is on yield. I just want to understand this properly. We've increased it from January 1. Firstly, is it increased only for the incremental disbursement post January 1? Secondly, has competition also done it? Thirdly, just before Dussehra, we had a sort of an interest, you know, festival offer of 6.6%. That was till December 31. Is it just that that festival offer has gone and optically the yields look higher? Have you just withdrawn that?
No, no. Before the offer, the rates were different. The offer, the rate was 6.66%. After the offer we have increased the lending rates for the new loans from first week of January. It is not a removal of an offer.
Okay, the old book has also
Other changes also internally in different segments, in different loan slabs also, product categories also, there have been changes made. It is not a removal of an offer.
Got it. Is it all? Has the old book also been repriced by 10 basis points?
No, no. No, not yet.
Okay. Are we seeing competition start to do that?
We have taken an independent view depending upon our own perception of the market and our own growth trajectory. We have taken an independent decision. It is possible that some players might have taken or may not have taken.
Okay. Got it. That's all from my end. Thank you, sir, and all the best.
Thank you.
The next question is from the line of Prakhar Sharma from Jefferies. Please go ahead.
Good afternoon, sir. This is Prakhar. Just a couple of questions. First, just if I could clarify that, you know, of this credit cost during the quarter of about INR 350-odd crore, you know, is it possible to help break it up between what is any of the one-time here, because let's say if the INR 490-odd crore of restructuring done this quarter may have attracted a 10% provision, any of the reclassification cost of INR 230 crore if it was done through the P&L this quarter. So, what is basically the business-as-usual part of the INR 355 crore, and what is the one-time part of the INR 355 crore?
You can say that the INR 230 crore that has been created because of the RBI provisioning requirement or the RBI circular, that is something which is for the first time, it is obviously not done earlier. This is the first time that the circular has also been implemented. Apart from that, everything will be normal.
Even the restructuring wasn't done this time, that INR 49 odd crore in case you have to make a 10% provision on INR 490 crore.
That has been done earlier also, no?
No, no.
Provisioning related to restructuring had been done in previous quarters also.
No, no, I know, but so that INR 49 crore would be part of the INR 355 crore, right? Is that fair to understand?
Correct. Yes.
Understood. On the project loan repayments that you mentioned INR 600 crore-INR 700 crore, fair to assume that they were all stage one type of loans, right? Because the stage three within project loans has been declined and just practically paid just the principal. They were probably good quality loans only.
Mostly stage one, but could be stage two also.
Okay, understood. Perfect. Last thing is, you know, just a little bit forward-looking, you know, historically, Q4 for LIC tends to be a stronger quarter in terms of, you know, even NII recognition, partly because some of the overdue accounts, et cetera, you know, come and pay back. Would it be fair to assume that pattern is likely to continue or would things have normalized?
No, it is difficult to actually give you any number. To be very honest, you are asking for a number, so I cannot give a number. It is forward-looking. Yes, certainly we can say that margin stability will be there for sure. Typically fourth quarter is the best quarter in terms of business. It is the best quarter for recoveries as well.
Perfect. Thank you, Sudipto, sir. Thank you, sir.
Thank you.
Thank you. Thank you.
Thank you. The next question is from the line of Akhil Hazari from RoboCapital. Please go ahead.
Hello. Good afternoon. Am I audible?
Yeah, audible. Good afternoon.
I just want to know what is the normalized credit cost for the company?
The normalized credit cost in the last two years, I can just share with you, FY 2020 was 48 basis points. FY 2021 was sixty basis points. Currently, if you see in the first part of the year, first half of the year, it was very high, more than 100 basis points. Q3 credit cost has come back to 60 basis points.
Okay. Going ahead, are you planning on keeping it below 1% then?
Yeah, certainly. Certainly.
Oh, okay. Okay, thank you. That's it from me.
Thank you. The next question is from the line of Mayank Gulgulia from SUD Life. Please go ahead.
Yeah. Hi, sir. Our loan book is linked to.
Hello. Sorry, there was some disturbance. Yeah, please tell again, sir.
Our loan book, which is linked to BPLR. Whether BPLR is linked to marginal cost of fund or average cost of fund.
Now what he says LHPLR.
No, that is, LHPLR is linked with the marginal cost of fund also has got a weightage. I will put it this way. It is not purely on the marginal cost of funds, but marginal cost of fund has got a replacement cost impact.
Okay. Greater weightage is for marginal cost of fund or average cost of fund?
No, no, it is marginal.
Okay, understood. 30% of our borrowing is from banks and NHB, so is it fair to assume that this portion of borrowing would be linked to repo rate?
Some of them are with the external benchmark like T-bill also.
Okay. Most of it would be like either T-bill or repo rate.
Yes.
Okay. Thanks a lot. Thank you.
Welcome.
Thank you.
Thank you.
Thank you. Ladies and gentlemen, we take the last question from the line of Kunal Shah from ICICI Securities. Please go ahead.
Yeah. Thanks for taking the question again. On restructuring, you said there are no reversals, but I assume we are not accruing interest on the restructuring the way we have reversed it in the previous two quarters. INR 500 crore interest would also have got reversed in this quarter as well, maybe for the entire-
No, no. It's not there. It's not there.
It is not there?
Whatever happened in Q2 itself is done and finished.
Okay. Incremental restructuring which was there, that is, there is no reversals which have happened in this one.
There is no further restructuring. Circular or instruction from Government of India, it has stopped, you know that. From RBI also.
Yes. No, no. The pending which was there, okay, which would have got implemented. Yeah.
Even that implementation period is over.
Yeah. Okay. Lastly, in terms of the outstanding restructured pool, so INR 5,000 is corporate and balance is individual. But within individual, can you give how much would be home loans and how much would be left?
I don't have the full details right now. I can just-
Majority will be as far as restructuring is concerned. Because our loan book, if you see, 80% is individual only into that.
Yeah, yeah. No, if there is any difference in terms of maybe LAP, or maybe individual non-home loans are there. So just wanted to get that sense, yeah.
No, no.
No worries. Okay, okay, I'll take it from you separately. Okay. Yeah.
Yeah, separately.
Yeah. Thank you. Yeah, yeah.
Thank you.
Thank you, Kunal.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.
Thank you.
Yeah, yeah. I thank every one of you for giving this opportunity once again. Friends, actually, we look forward for a what you call very, very positive and then very strong Q4. The company is fully geared up. What do you call, all my team members across the country are fully working in tandem with all our goals. All the recovery people are also putting their best. Going forward, we look forward for a very good double-digit growth as far as things are concerned then at least. Again, recovery also will be very strong enough to bring down the what you call our NPA levels far, far than the expected levels. With all these things, the company will be in a position to close the financial year on a very sound footing.
On behalf of entire team here, I also thank you for giving this chance to meet every one of you. Thank you. Wish you all the best.
Thank you very much, sir.
Thank you. Thank you.
Ladies and gentlemen, on behalf of Axis Capital Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.