Q4 20/21

Apr 26, 2021

Ladies and gentlemen, good day and welcome to SBI Cards and Payment Services Limited Q4 FY 'twenty one Earnings Conference Call. 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Rama Mohan Rao Amara, Managing Director and Chief Executive Officer of SBI Cards. Thank you and over to you, Mr. Rau. Good morning. On behalf of SBA Card, I extend a very warm welcome to you and thank you for joining us today for the earnings call for the Q4 FY 'twenty one and FY 'twenty one. My heartfelt gratitude to all of you for your continued support and confidence in SBA Card over all these years. I wish safety and best of health for all of you and your families. While year 2020 saw different stages of COVID-nineteen, The ongoing second wave is impacting the year 2021 also. The need of TAVRIS to remain safe and extremely cautious while diligently following the COVID-nineteen protocols like social distancing and observing hygiene. Among all these, Intensive vaccination drive that is well underway is the silver lining. Hence, we hope for a safer and a brighter future. As is well known, FY 'twenty one has been a year never imagined or experienced before. During Q1, that is April to June 2020, Economy and businesses were drastically impacted. Subsequently, of course, the economy and the consumer sentiment started picking up. Like other companies, SBA CAR II had to operate in an uncertain business environment. In my view, following 5 aspects Being an Agile organization, SBI is focused on business continuity from the very initial onset of COVID-nineteen and last fall. With a detailed scenario analysis of the unprecedented economic situation, we realigned and developed strategies to manage its business impact. Our investment in technology, which we calibrated over past few years, enabled smooth transition to a remote work environment from very first lockdown and across various stages. We provided laptops and remote login access to most of the employees. We have built a VPN infrastructure setter for over 5,000 users and can easily accommodate further expansion. We continuously scaled up our collection infrastructure under all channels, fees, tele and digital to effectively manage the entire collection process. Digital outreach augmented the conventional collection efforts. Our innovative products and services supported by a strong technological Ladies and gentlemen, thank you for your patience. We have the line for the management. We'll connect you to the call. Sir, you may go ahead. Yes. I was talking about the investment in technology. Our investment in technology, which we calibrated over past few years, enabled smooth transition to a remote work environment from very fast lockdown and across various stages. So we have built a VPN infrastructure set up for over 5,000 users can easily accommodate further expansion. Our digital outreach, augmented conventional collection efforts, our innovative products and service Supported by a strong technological backbone, advanced data analytics capabilities, customer centricity, values of trust and transparency and strong lineage working as a bedrock to support our continued business growth. 2nd aspect is enhancing and leveraging digitization. We focused on building a Proactive investment in creating a robust digital journey came to our rescue during the period. Our chatbot service, Ask Heelah, addressed around 4,700,000 queries monthly as of March 2021. The number of queries resolved by AskYLA increased by 40% in FY 'twenty one as compared to previous year. Our highly rated mobile app was used by over 4,880,000 unique customers in March 2021. Rollout of initiatives like VKYP enabled contactless customer onboarding. The third aspect is building and enhancing product mix. SBA Card focused on beefing up product portfolio in the premium segment. We launched BPCL SBA Card Octane, a premium version of the existing card. We also partnered with key players, including Paytm, Google Pay and Jio Pay to further the digital partnerships and portfolio. Auram got introduced for the super premium segment. This by invitation only card offers a value proposition that supports and complements the unique lifestyle of CXOs. Aurum has received encouraging response since its launch in Q4. The 4th aspect is harnessing the changing consumer trends. We leveraged data analytics, identified newer opportunities for customer engagement at different stages and accordingly rolled out Thank you, sir. Thank you, sir. Thank you, sir. Thank you, sir. Our first question comes from the line of the business. Thank you, sir. Our first question comes from the line of and sharpened our focus on categories such as OTT, utilities, online education, online health consultation and pharmacies. In Q3, to harness the positive consumer sentiment in fiscal season, we forged a partnership with the leading players across key categories To introduce pertinent offerings, the outcome reflects success of the approach, our average retail spends improved across most of the categories, Borrowing, Travel and Entertainment. Online spends especially showed a significant growth and its proportion of overall expense increased to 51.9% in FY compared to 44.2% for previous year. Our corporate spends during the quarter have reached Pre COVID level, that is Q4 FY 'twenty level, while the corporate travel continue to be impacted, the company has been able to build new use cases to generate corporate spends in current environment. For new accounts, we have started applying stricter documentation norms, which impacted our renew sourcing in January 21 February 21. But however, in March 'twenty one, our new accounts are back to average daily volume of 10,000 new accounts per day. We also initiated various digital brand campaigns To keep customers engaged, build an emotion of them and promote contactless payment as that was an era server. Lastly, the 5th aspect I'm talking about, managing the risk. We have kept a very sharp eye on potential risks and taken measures to manage them appropriately. For instance, we proactively provided for certain loan portfolio segments at a higher rate and kept it as a management overlay. While we continue to pursue sustainable growth, We closely track various customer categories, especially those at high risk like the self employed or those industries such as entertainment, travel and hospitality. The potentially high risk segments of portfolio, that is gross NPA plus RBA, As a composition, it came down from 13.62% as on December 20 to 10.06% as on March 21. With the lifting of the standstill, we can now recognize the actual NPS and in line actively bolster the recovery efforts. We have adopted a holistic cybersecurity framework with a comprehensive information system security and standards based on industry best practices with compliance to regulatory guidelines. As can be guessed, with consistent efforts of our colleagues, partners and investors, backed by our robust business model and epics, We effectively navigated our business in previous quarters. In fact, our spends had reached pre COVID levels in October itself, well ahead of the industry. Let me now take you through our financial performance for Q4 FY 'twenty one. The first aspect I'm going to cover is profitability. The company has performed steadily and delivered profit after tax of INR 175 crores for Q4 FY 'twenty one, which is 110% higher than q4 FY 'twenty and for full year FY 'twenty one, profit after tax is INR 9.85 crores, which is 21% lower versus FY 'twenty. We have increased our market share during this year. As per the industry report available till February 'twenty one, our cost market share increased 18.3% in March 'twenty two, 19% in February 'twenty one. And our spend market share has increased from 17.9% in FY 'twenty to 19.5% for FY 'twenty one till February 'twenty one. Receivables have grown by 4% year on year to INR 25,114 crores From INR 24,141 crores in FY 'twenty, total income for Q4 FY 'twenty one is at INR 2,468 crores. And on full year basis, total income is flattish at INR9714 crores for FY 2021 versus INR 9,752 crores for the previous year. For Q4 FY 'twenty one, while our net revenues grew by 2%, The operating expenditure was slightly higher by 5%, which led to contraction of earnings before credit costs by 1%. However, for full year FY 'twenty one, our earnings before credit cost has grown by 10% and we have a positive operating leverage of 5%. The credit risk situation continues to be impacted by macroeconomic variables surrounding us. To cover our results for future credit risk, The overall management overlay stands at INR297 crores as on March 'twenty one. This is over and above the base provision of INR 1358 crores. Our GNPA is at 4.99% as compared to 4.51% previous quarter, that is Q3. This compares to 2.01% year before the Q4 FY 'twenty, but that was also due to moratorium impact where you cannot declare NPAs. Net NPE for the period is at 1.1%. Sequentially, it is lower as compared to 1.58% as of December 2020. This ratio was at 0.67 percent year on a year back due to moratorium impact. During Q4 FY 'twenty one, We sold off NPAs of INR242 crores with book value of INR80 crores as it was economically viable to realize the recoveries earlier. On RBRE book, as of March 21, 51% is less than 30 day delinquency, 13% is between 30 to 90 day delinquency and 36% is more than 90 days. On Stage 3 ECL level that is 65.6 percent. On the 36% of the RBRE book, which is more than 90 days, We have provided it 80%, which is higher than Stage 3 ECL rate. For the quarter ended March 21, The return on average asset is at 2.6%, higher by 128 basis points as compared to 1.3% for Q4 FY 'twenty. ROAE is at 11.2 percent higher by 4 65 basis points for Q4 FY 'twenty one as compared to 6.5% For Q4 FY 'twenty and for FY 'twenty one, ROAA is at 3.8% and ROAA is at 16.6%. 2nd aspect is liquidity and capital adequacy. Our liquidity position continues to be strong during Q4 FY 'twenty one. Our capital adequacy ratio for the period Under March 'twenty one is at 24.8% as compared to 22.4% at Q4 FY 'twenty. In Q4 FY 'twenty one, our Tier 1 ratio has moved to 20.9% from 17.7% at March 2020. Our credit ratings remain excellent with the A1 plus and the AAA ratings by Criseel and ICRA for both short term and long term borrowings. The strong credit ratings by the rating agencies reflect our robust business and financial fundamentals. With this, let's open the call for questions. Neeram, you may please open the call for questions. Thank you very much. We will now begin the question and answer Participants are requested to use handsets while asking a question. Ladies and gentlemen, We will wait for a moment while the question queue assembles. Participants are requested to restrict to 2 questions per participant. If time permits, you may come back in the question queue for a follow-up question. The first question is from the line of Nishant Shah from Macquarie. Please go ahead. Hi, sir. Thanks for the opportunity. A couple of questions from me. So spends growth Clearly has been a slight kind of disappointment sequentially. Could you at least qualitatively talk about where you are Seeing the spending declines happen, any kind of geographic color or any kind of like qualitative feedback here would be helpful? And a related question here is the activity, the 30 day active rates of the cards have also declined by about 1.5% sequentially. So any color on that? And the second question on the incremental card sourcing. So incrementally, we're sourcing about roughly around 24% This is an on book mix of about 16%. So you had mentioned safer carding, more internal Carding, so could you just like throw some color over here as well? And again, a related question, Would a large part of this be driven by the Paytm partnership or is that yet to begin? So yes, these are two questions from me. Hello? Yes. I will cover the new acquisition in self employed category 24%, whereas Michael, I Girish will cover the expense part. As you know, like last year, After seeing a bit of slightly higher delinquencies in self employed category, we tightened the risk filters in open market category, which used to actually contribute to A lot of new acquisitions from self employed category. But at the same time, in the under our partnership with the parent bank, Shikhar program, We were able to see a lot of opportunities going in a very safe way where delinquencies can be managed, where we had access to the operating account of the customer And still going for the self employed category. So this 24% actually came from the banker channel, not from not much from the open market. Understood. Yes. Girish, would you like to? Yes. So Nishant, on the spend speed sequentially, Typically what happens is every year if you look at the numbers, whether it stacks up, there is a seasonality trend which happens from Q3 Q4, because Q3 being all the festivals in that period, there is a seasonality which is built in there and you have average spend per customer going up as well as the active rate being higher or the highest EBITDA year in Q3. Q4, it comes down a bit, but it is still higher than it will remain higher than the average. So that's the usual normal seasonal trend. If you look at it from a sequential absolute perspective also, The number on the retail spend is around INR 30,000 crores for this quarter, whereas on the Earlier quarter, which was a festival season with lot of pent up demand, it was close to INR 31,000 crores. So on an It is a more stability which we could see. Some flavor on the kind of spends, which I'll because you asked for the geographical part and the breakups also. A lot of Q4 spends was coming from point of sale. So point of sale actually recovered quite a lot In Q4 compared to Q3. Q3 was a lot of those Flipkart, Amazon sale offers, which built up the spend at one point of time, Whereas Q4 was a more sustainable point of sales spending, which was happening from a normalcy perspective. We actually saw online spending Kind of coming closer to 50% and point of sale going close to almost pre COVID levels. Understood. No, so I was hoping to get some color like because we've been adding a lot of these cards in Tier 3, Tier 4 kind of geographies. Is it just like the optical kind of stagnation in the spends per card? Is that more a function of just those new cards taking a little bit of time to ramp up their spends, having a J curve? Or is that not an appropriate kind of interpretation? Okay. So if you look at the Tier 3, Tier 4 numbers, I'll give you a flavor of how the movement is. Typically, a 30 day active rate in the Tier 1 is usually higher, Okay. When we look at Tier 2, Tier 3 and Tier 4, they are slightly down than Tier 1, but the rates are broadly Constant. And the reason for this is that today online spending has become a major part or more than 50% part of the overall customer spends. So the active rate, if you look at it from a tiering of cities, is broadly similar in Tier 2, Tier 3, Tier 4. What, however, is the area where we need to get more growth is the spends rate, the average spend or the absolute spend per customer That needs that takes time to build up because people as they start building more categories, they will first start online. BOSS has been had been closed. And even at this point of time, if you go through our presentation, it's at the travel and some of those categories, they are still down. So some of those category buildup is still yet to happen in these areas. Fair. And just like the one earlier question on the Paytm Copeland card, any comments out there? No. So that number is not very large. It does not have these numbers do not have any impact on the Paytm. Okay. Just sorry, one last data point I would request. Could you share the number for the outstanding EPP Restructured Portfolio Easy payments. Yes, that's it from me, the last question. Yes, Naidi. So Nishant will get back to you on that. We don't have we'll just give it back. Okay, perfect. Thanks. Thank you. Thank you. The next question is from the line of Anuj Singla from Bank of America. Please go ahead. Yes. Thank you very much for the opportunity, sir. I have a few questions. First on the you talked about the seasonality spend 4Q, okay, thank you, which is well understood. But excited about the market share as well. We our market share peaked out in the month of October. Since then we have lost around 300 basis points on market share, which is a pretty significant number over the last 4 Can you point us to the key reason for this and any action we are taking to address this segment? You are right. However, when you have to look at the market share, you have to look it for a period of time. But you're right that even if I take Q3 for the fully for 3 months together, There were a lot of offers. And at that point of time, we also did a lot of offers to get that market share. In the Q4 period, what we have We did an offer with Amazon in the 26 January period. There is travel which was Picking up during this period of time and our share of premium is what We want to increase the share of in the premium space, which is more in the case of where the spending is more in case of travel and lodging. Primarily, in those segments, we still have to cover up a lot of market share. So we saw some decline During the period of Q4 and even if and the results are available in RBI till for the month of January February, We believe that the March because we there was a lot of offers and a lot of programs that we did for our customers, we should See an increase in the market share in the month of March. So on an overall year basis, it is still from a 17 0.9% or so, 19.5% 17.9% to 19.5% is a good jump on a cumulative basis. So we hope to continue to keep our alpha over the market. Even during this period, whatever on a month on month basis, our growth rates I have been better than the market. Okay. So Birish, the key takeaway which I want to have is when we look at, Let's say FY22, FY23, and we have been since FY 2017, since we launched Shikhar, we have been gaining market share on a consistent basis every year year on year. So I can expect that trajectory to continue for the next year as well, right? Nothing based on Arjun Bhandari. Cannot comment on the future, but what we have always done in the past multiple years is that we have always kept our alpha over the market growth, Both in case of cards as well as in case of spreads. Okay. Understood. Understood. Okay. The second Question relates to the risk in the book. So if I look at the RJIRA book, 30 DPD plus, the book has increased to 49% versus 33% QoQ. Now if I understand in the last quarter call, we had shared that this seems to be a seasoned book. And 4Q, in my opinion, was a much better quarter in terms of economic activity, in terms of cash flows. So it's Pretty surprising to see that when the things are improving, we have seen a deterioration in this book on a Q2 basis. So Two questions there. 1, what are the key reasons for this? And secondly, when we look at the COVID-two wave, which is going to hit in the April to June period, Can this deterioration further accentuate during this call? I think Anuj, This RBRE, like we built a portfolio of around INR 2,700 crores kind of booking Over a period of starting from August 2 till December, there was no further booking after December. By December, I I think we declared when we came to the market, it was around INR 2344 crores. We had payments around roughly, if I can recall, around INR 3.77 crores or So broad expectation was the kind of repayments will continue, which was actually manifested even by the current Kind of repayments. We had almost INR436 crores of repayments or closure kind of accounts per day. So if you look at it in the context of Overall INR 2721 crores, we have received payments of INR 813 crores, which is around 30% of the portfolio. Current portfolio, Like a less than 30 day delinquency where at least I have received 2 installments minimum is around 36% And 30 plus delinquency kind of portfolio including some NPAs is around 34%. So overall, actually if you look at, mean this is a category which has who have availed moratorium before, who were slightly uncertain of their income sources. So they bargained and they negotiated with the bank for a kind of I wanted to avail that RBA scheme of settling the payments over a number of installments. So it was a kind of with that kind of approach, we did this. But in hindsight, we can say like it was a win win for the company as well as the customer. In the sense, it has given time for both of us to work this portfolio. Yes, sir. So my question relates to the risk in this portfolio, like you have provided 80% for the 90 liquidity, which again You don't expect a significant recovery in this portfolio. And so my question is, can the composition dilute further given the COVID-two impact? Is that a possibility? I mean, obviously, it's difficult to say what can happen, but is that a clear possibility given what the experience what we have seen over the last 6 months? I mean, I cannot comment, but what I can say is that whatever repayments are there from the portfolio, we expect more or less The lockdown which is there in a few states doesn't spread to all other states and simultaneously being imposed throughout the country. Barring that, I mean, we That kind of a runoff, 300 to 3.50 cro kind of runoff every quarter. And in as much as we have already provided it 80% for the RBRE NPA, We are presuming like we have provided and better positioned to absorb any loss for whatever happens in the next quarter. Understood. Understood. So lastly, if I may, the rising G and A is a bit surprising, 4.5 to 4.99 on a future basis, again, Given the economic recovery or the pace of economic activity picking up, if you can give us some pointers on that, the key reasons for that, that would be So Anuj, if you recollect, even in December, when we had To 4.5, we had mentioned that the RBI RE portfolio at that point in time because they have all been booked into the plan, they had not seasoned enough for them to be recognized as NPA. And we had mentioned that NPA on that portfolio will come in only in this quarter. So I think the way to look at it is that whatever has happened in this quarter, despite that RBI RE book becoming NPA, we actually went from 4.5 to 4.99 only. So I think that's the point we were trying to make that off the RBI RE book, we managed to collect more than INR400 crores and it's still we managed to keep the GNP Stable. I think that's the way to look at that number. So incremental GNPA deterioration pertains to only RBI RE book primarily? Primary. Understood. Thank you. Thank you, Bhag. Just before we move on, Nishant, the number that you were looking for in terms of TCV balance, that's approximately INR300. Thank you very much. The next question is from the line of Shweta Dapphardar from Baghweta Nilagar. Please go ahead. Thank you. So a couple of questions. One is, does the INR 6.85 crores, which is more than 90 DPT, does it include Is it included in NPA? Yes. That is included in NPA, correct. But the provision rate was higher than the normal Stage 3 ECL, where we provided at 80%, which have a normal rate of 65.6%. Okay. Okay. So secondly, just a few from the previous question. Apparently, it might sound repetitive because there are some network issues. So your write offs have doubled quarter on quarter. On the other hand, your provisioning has gone up way too higher visavis all the Previous quarterly levels, going forward in the light of second wave, how do you see this write off number panning out? And just last, of the least, if I may squeeze in one more question. So you mentioned that POS infrastructure led spend has moved up in Q4. But in the light of 2nd wave and where there are statewide curves and also the fact that currently Amazon and Flipkart shelves are running empty, How do you see even these retail spend spanning out in the next quarter? Thank you. Those are the two questions. So in terms of write off, there are 2 points that you should note. One is last quarter, the accounts were on SP standstill, if you recollect, And those were not getting aged or getting written off. So if you look at so some of the impact, majority of this is the Supreme Court standstill, which is now getting written off. So I guess the 2 quarters are not exactly comparable. Q3 is understated to that extent. And I think we'd mentioned that if we recollect in December, we said because the accounts have not aged, We have not managed to write them off. Majority of the write off in this quarter is the Supreme Court's extension. So going forward, that implies This number will come down. If any ballpark kind of number, can you just provide me? How would the next quarter pan out? I don't think we can give you a guidance about what next quarter is going to look like. But I think you made the point yourself That the economy and what's happening outside from a COVID itself is a little uncertain. We'll have to wait and see. I won't be able to give you any projection about what next quarter will look like. Sure. Madam, sir, on the spend next quarter visavis POS and retail side? I think in the month of April till 3rd week, I think it was comparable to the previous month in like March. But obviously, a couple of states, which are big states with a lockdown or a near lockdown kind of conditions are there, We could see some softening, particularly point of sale location spends have slightly come down. But we only hope like things will improve a period of time, and then there will be pent up demand, which will come back to us. Wherever online typically, we have seen a trend last year where Online was available, then obviously people switched over from point of sale to online. But as you pointed out, like some of the locations, even the e commerce place are not allowed to handle anything other than some Emergency kind of thing. So to that extent, perhaps the ongoing spend shift may not happen. But the moment it opens up, obviously, the pent up demand will be there. We are There's still 2 months away in this quarter. We hope we will be I mean, it may be normal, but we are it all depends upon how the external situation is standing Sure. That helps. Thank you. Thank you very much. The next question is from the line of Subramaniam Iyer from Morgan Stanley. Please go ahead. Yes, thanks for the opportunity. So Could you there was a sharp decline in loan yields this quarter. So could you point out the factors that led to that? And also, How should we think about loan yields going forward on a normalized basis? That was the first question. The second question is that If I did back up the analyst calculations, your bad loan formation this quarter was about the revenue increase, if I'm not wrong, Totally. So part of it would have come from the RBI, RE slippages. But what explains the difference in the balance, it's slightly higher than the recent run rate? Yes, these are my 2 questions. So Subramaniam, in terms of yield, if you look at Our asset composition and this is one of the things that we've done in the last few months that we've been Very, very careful about the kind of business we are sourcing. So we've had a good amount of transactors in our Asset profile and that is what has led to a lower revolve rate and consequently a lower yield. On a full year basis, you will find that our yield is almost It's not that low. It is comparable to the previous year. On a NIM basis, we are actually 10 bps better than last year. So that's the way one would look at it. Going forward, we believe that as the spends We'll pick up in the subsequent quarters. The yield will also move accordingly. Subhan, can you repeat the second part of your question? Yes. The second part of the question was that Approximately, if I do a back of the envelope calculation, I get to about INR 1100 crores of bad loan formation this quarter. So while part of this could be driven by the IVR lease slipages, So what explains the rest? That's slightly above the recent run rate. So the RBI RE slippages we've given separately, if you read that, we've said greater than 90 dqdt RBI RE It's INR685 crores. That's there on the asset quality page. That's the extent of the RBI RE and play. And the balance is obviously coming from the BAU portfolio. Yes. So, I mean, that was the question that The BAU slippages seem to be slightly on the higher side. So what's driving that? And especially given that the That economic activity did improve in the 4th quarter and how do you expect this to trend going forward? So let me clarify that again, okay? So let's with your 1100 number, if you close it back, it's actually maybe slightly higher, a few crores here and there, but doesn't that, let's go with that. Well, there are 3 components of this bad debt, okay? Like I said, 685 is coming from the RBI RE portfolio. We still have some of the Supreme Court standstill that is not written off that will get written off in April. And if you recollect, that is the comment we had made Sir, it made in the opening speech that we've actually provided for it at 100%. And the balance is the BAU NPA. So actually, our BAU portfolio is running as well as it was in terms of collection efficiencies and all at pre COVID level. So whatever we are seeing as slippages into NPE is largely coming from the Okay. And how do you feel about Level of provisioning that you're carrying at the moment and do you think that if COVID is manageable, if the second wave is not so extreme, Can you get back to your normalized levels of provisioning around 700 basis points in the next year? So I think the way to look at it is to we made provisions in March when we didn't know much about what's going to happen this year. We went out and took a provision of 489. Over the whole of last year, every time we felt the need to make additional provision, we've made additional provision. Even currently for everything, See, the difference is that now we know clearly what's said, what are the stress segments. We have the behavior. We are able to have a lot more information, and We have provided adequately for them given the available information, okay? And that's why if you notice, we carry almost INR 300 crores of additional management reserve in that sense, Discretionary provisions are overlaid. Now what will happen over the next 3 months? We will watch just like we did last time if we see there is any need for additional provisions we will take it. I think the one piece is you've noticed that's something we've done consistently this whole year. Every time we felt the need for it, we've gone out and taken digital provision. Currently, we believe that all the segments and the behavior that we're seeing are adequately provided. So, Sumamam, just to give some numbers. RBI is provided at 80%. RBI, which is delinquent, which is 30% to 90% is provided as if it's NPA. Supreme Court's standstill portfolio is 100% reserve and BAU NPA is treated as an NPA reserve. So As far as NPAs and delinquent portfolio is concerned, we have quite a lot of reserve available with us. As far as What future holds? Let's wait and watch. But as of now, whatever book is there, we seem to have covered it adequately. Thank you. The next question is from the line of Mahesh Ambih from codec Securities. Please go ahead. Hi. Just two questions from my side. One is on the question which was asked previously. When do you see the extent of revolvers to come back as per your expectation? And between the revolvers, have you seen any material change in behavior out there that the tendency to evolve has come off from your existing customer pool? So on revolvers, there are 2 elements which are Blayne, the first element is on the in the existing book As the moratorium happened and a lot of customers were put into RBI RE and we are now seeing payments coming back From lot of these customers, as it goes, we will get to reinstate the good ones and get The revolver base of some of those customers back. So that is one part of it. At least the good customers, good revolvers We should get back. So that is one part. The second is, during this period, we have been as you have seen, we have been sourcing more customers from Banka. And the Tier 3, Tier 4 percentage is also there. So what we are getting at this point of time is that once these customers start to spend, it takes the portfolio 12 to 18 months to Mature. So work is we are doing work at both ends, getting the new customers to come, spend, mature, get into the Habit of spending on the card and on the existing portfolio recover as many revolvers as much as possible. The 3rd piece is working on the cross sell part because these days you know that a lot of good quality asset with transactors Can also be built on when people spend on their card and then convert into EMIs at the point of sale itself or later on. So that is the 3rd action. However, this it takes time to build that asset portfolio back given the kind of impact that it has had. Perfect. Girish, just one clarification. When you say there are, Let's say, good revolvers or bad, let's say, bad revolvers. Do you have some sense as to How has this book behaved in the past? Or is it something completely new for you guys as well? No, no. It is not. See, everybody is a good revolver till the time he doesn't pay you back. So you Pay you back. So you can't look at like that because end of the day, spender first becomes a revolver, Gives you income and then he flows into 13, 60, 90. So it is a customer life cycle that you have to look at. So there is nothing called You would eventually want people to We're just trying to look whether there are some heavy revolvers, light revolvers, just trying to understand as to has that changed or it's No, no. So that has changed. In the absolute percentage, the number of revolvers has changed. It is as Nalen also mentioned, The revolve rate has also come down, okay. And so part of it is a conscious part because in the new acquisition, we have been very careful Of getting during this period of time good quality customers. So that is a very important element into this. In the existing book, There were people who were who had financial difficulties. Now they are paying back. And as they are coming back, we will looking at reinstating Some of those customers back whose credit bureau records are also good. So we are taking action on all fronts. Sure. Okay. Girish, just second question to you again. The EMI cards, the EMI book has been flat Q o Q. I think you made a brief comment about it. You think you can get that back at least in terms of growth rates in the next couple of quarters or do you think that will also take some more time? Yes, you are right. The EMI book typically, there are 3 kinds of EMIs, okay. Now we have not given a breakup, but Yes. We can do EMI. One is when you convert your spends into EMI at the point of sale itself or later on. And second is kind of we could also give a product called NCash, which is a kind of a product on top of your credit line, Okay. Which is the EMI. So both of them are different. 1 is on an average tenure of 30 plus months, the other is around 8 to 9 months average tenure, Which is the when you convert your spend into EMI, that is around 8 to 9 months average. So that is a that product is continuing to do well, But it is a seasonal thing. So for example, somebody will buy a mobile in the season for a 3 month EMI and will pay you back. So that Continues to will always continue to stay on a treadmill kind of thing. The other product, NCash, is a long term product. We are going cautious during the COVID period on that product. Now we will we are going to look at doing as the situation improves, we are going to do that far more. Okay. Thank you. Thank you very much. A request to all the participants. Please proceed to one question per participant. If time permits, please come back in the question queue for a follow-up question. The next participant is from the line of Pankaj Agarwal from Ahmed Capital. Please go ahead. Yes. Hello, sir. Am I audible? Yes. What percentage of your first line clients are on Techlift? And how they trended Contactless. Contactless has been growing very rapidly over last Period of year, yes. Instead of spends, actually what we what I'll give you is the transaction At point of sale, so more than one fourth of our transactions now are contactless. And as Abeyay has increased it from 2,000 to 5,000, It is continuing to grow. And what we have also seen is that people who do contactless transaction at point of sale are usually more engaged with the product. Okay. And this one fourth of your was the transaction, right? Yes. I'm not saying eligible transactions because transactions are less than 5,000 are only eligible. But still, out of POS, More than onefour, sir, Sorsak, yes. And all of these are through parts or some of it is coming through your tokenized parts Both. So majority is coming through physical plastic card where the customer is tapping on the machine. Some of it is also coming through the postcard emulation technology programs that we have on the mobile But have you seen any traction in these kind of comments through your assets? There is traction does come. It is preferred by younger segment, more early adopters. We see those people very active because they find it very easy. However, there is still a limitation in terms of Machines still not in the when I say Tier 2, Tier 3, the penetration of those machines is still not there. Tier 1, we still see a lot of those transactions. And one last question, lot of banks have started offering EMIs on ticket card So EMI on debit card actually started 3 years back. I remember at one point of time Flipkart also advertised it on television. However, the issue with debit Card EMI is that, a, it's not been able to scale up that much. We can't be watched that the kind of potential that it showed, it has not been able to scale up that much. We believe that the reason is that the customer always has to go back and check whether he is eligible for those offers or not. That would seem to be the only reason at this point of time. Whereas in case of credit card, he is always sure that Whatever is credit limit is available, that can be converted into EIM. Okay. Thanks a lot. Thank you. The next question is from the line of Anand Laddha from SBI Life. Please go ahead. Hello? Hello? Yes. How are you? Yes. Couple of data keeping questions from my side. Just want to understand on the RBI RE book, what could be the rate of interest we will be charging to the customer? Also On the floating provision we did this quarter of INR 400 crores, is this a part of the already provision coverage of 77% which you are having? Or is this pudding provision line idle, which will be there any slippages next year? And third, if you can disclose the movement of NPA for Q4 So the first two questions and third one you can repeat. The first one was relating To the RBRE yield, it will be somewhere around 15% to 16%. 2nd is about the floating provision that you mentioned. We had explained that how the provision has been built. The INR297 crores of management overlay is actually comprises of The higher provision on RBRE 90 plus book, which is provided at 80%. Supreme Court stands still provided at 100%. So The difference between the normal NPA and the 100%, that is the management overlay. And also the RBI RE book, Which is delinquent, which is between 30 to 90 days in providing at NPA. So all these together is the floating provision As you referred to it, is the management overlay as we're calling it. You can repeat the So your third question was on the GNPA walk, correct? Yes, ma'am. Yes, we don't give out the WAF. But like I mentioned earlier, the way to look at the current NPA, like I said, was That 685 is obviously on account of the RBI RE, which was not NPA, provided as NPA but not NPA. And we had the rest of it is made up between the Supreme Court standstill and the BAU. We do not so majority is coming from Supreme Court standstill and RBIRE, Okay. I mean, we were discussing that number about $1100,000,000 that I think somebody had raised earlier. So if you calculate the percentage, Majority is coming from here. We don't, however, give the specific walk. But the point to note, like I said earlier, is that our PAU book, Whether in terms of collection effectiveness or all of our flow rates, we are running it pre COVID level. Okay. And then lastly, I see a lot of ad from my CI card saying that you can convert your transaction into Normal simple EMI at a lower rate of interest of 13%. Is this a flat 13% or reducing 13% interest? It is 14%. And that is from SBI card, it is 14%. It is a reducing balance, 14%. Okay. Perfect. Thank you. That's all. Thank you. The next question is from the line of Jai Min Shah from RWC Partners. Please go ahead. Yes. My question was more on the RBI book. You talk a bit on the geographical coverage of this book, both paying and non paying, given the lockdowns this time around is More concentrated in Mumbai, Delhi and University. Okay. So I think we've mentioned that even earlier, the RVA RE book is Fairly equally distributed in terms of our portfolio. I think the one piece that is different this time and I think your question is in terms of How we are handling this 2nd wave of lockdown? Last time around in March, there was a lot of it and I think sir had covered it in his opening speech. We were trying to put in place a lot of things, whether it was about our full time staff, our collection people being able to work from home, call from home and all of that. Most of those things are already available with us. So this time around, we are not really having to set it up first time around. So the minute the lockdown happens, our ability dynamically move people from field to tele calling or even to start moving them to just sending SMSs and doing a lot of other things, that ability is there a lot more. Our infrastructure is in place. The other big difference is our digital collections capability. Last time In March April, we were still in the process of setting it up. Today, especially on the RBI and RE book, we have a very robust Digital collection capability, we leveraged SMS, we leveraged WhatsApp. There are close to 40 to 50 interactions we do on each of these customers On a regular basis, so whether lockdown or not, it's not like we are relying just on fees. So there are advantages and disadvantages in this Lockdown, what actually happens is that earlier the whole country was in a lockdown. Today, since there are partial lockdown, if one location is locked down, We have the ability to make that effort from some other locations. So in a way, this partial thing helps us manage the load much better. Right. That's okay. That's helpful. And the other question was just on the online spends. Right now, it's 51%. This so for this year, we do not have travel included in that one, right? So if travel does come back and the large part of travel is online, this number could be well in excess of 51% on a normalized basis? You are right. That would be a tailwind. However, what happens is as more point of sale opens up, you get Departmental Stores and Grocery also and some of those categories also getting picked up from point of sale also. So there will be plus and minus, but On an overall basis, what you're saying is right. Okay, great. Good luck. Thank you. Thank you. The next question is from the line of Bhavik Dave from Nippon Indian Mutual Fund. Please go ahead. Yes. Hi, good evening, ma'am. And sir, most of my questions have been answered. Just one point that I wanted to dwell upon and one of your thoughts are. Are we talking more and more about the safety of credit card from a customer perspective and not Sharing or storing data on the online website that creates a bit of inconvenience from a customer angle, right? So and especially when The online journey is where we are focusing on 50% of the spend coming from there. If you could just talk about it, are we thinking something out of the box to help the customer Have a better convenient journey, so that the 16 digit that we might have to remember this will be a transaction, If we're not allowed to share storage data on the website, are we doing anything on that? Have we seen any impact of that coming through or is it too early days? You are right. This particular RBI guideline is applicable from December onwards. What we see here is that there are some solutions which are already available, which Both secure and save the card in terms of in a tokenized format. So both Visa as well as Mastercard, all the both these networks provide a kind of a wallet in which you can store your card and that can be used At all merchants. So it's called Visa Checkout or Mastercard, Masterpass. So there are a lot of these solutions which are already available. They were not popular with large merchants because the customer would store the card number directly there and would pay. But otherwise, These solutions are already there. And as the I think with passage of time now that we know that this is going to happen and online spend is a large portion, It would people would move in that direction. In a way, it is a good step because not all merchants are PCI, DSS And some customers are storing the numbers, card numbers at various places, and you have heard of various data leakages. So it should put stop to That particular thing ensures safety of customers. Sure. And sir, one more related question is, these days, when you look at RBI, they're coming hard on A lot of card players, right, on the banning of incremental addition of card. Honestly, we don't understand what exactly is going wrong On the audit front where RBI is not very satisfied with the kind of operations that are getting run at the rest of the bank. From our end, when we when Arya looks at us, are we reasonably confident that Arya is happy with the way operationally Things are run at SDI card when we have interactions with them, any flavor that you could give us? We have a very strong IT setup. And of course, information security setup is also there, where They constantly look at the performance of these vendors because obviously the data centers etcetera are always there. The performance is monitored real time. So far there are no concerns from regulators. Sure. And last question is, if you could just give some data on the Aurum card that we've launched a quarter back. Anything to share any data that you can share on that? Like how many cards? What are the kind of spend? Anything on that? Or it's too early? It's too early. It was a kind of pilot testing or beta testing has already been done. Now obviously, We have to chop out strategy once the things open up. So I think the initial proposition whatever we had It will give higher expense, etcetera. I think they are to some extent they are validated. So but it's too early to comment. Sure, sir. Thank you so much. Thank you. The next question is from the line of Ravi Singh from Moti Logoswala. Please go ahead. Yes, thanks. My question again on SCI Cars approach towards premium segment, what is your current positioning maybe pre COVID in terms of And how are you going to approach it? There could be some cyclical and structural headwinds on the Revolver and EMI side, so to raise the prospectively because of the transaction business, what can you aspire and when you benchmark the other players in the market, Where has been the key cash? And how are you approaching that entire market segment? So on the Premium side, we are moving in that direction now. The highest value product that we were Offering in the market was INR5,000, as sir mentioned. Now Auram is our new offering in that space in INR10,000 Key point. We have, at this point of time, now launched it only for CXOs. It is by invitation only. And the early benchmarks and results are very, very positive and very strong. Portfolio to portfolio, it or segment to segment, when you look at mass affluent, affluent and premium, you see the Number of people revolving can vary. However, customers using offers of Flexi Pay or the EMI at the point of sale are broadly similar. So It is if I have a capacity to buy INR 10,000 product, I will buy a INR 15,000 product at the in the mass segment on EMI. In the super affluent space, we one will buy a 75 inches television On EMI, because both of them are available and the capacity to pay each individually is there. So the asset building It happens in both segments, so that is not an issue at all. We have been focusing towards getting more premiumized. So in last 1 year, as was mentioned in sir's opening We did our BPCL Octane premium card. We have come out with a premium version of IR CTC card, we have also come out with Aurum in the Q1. So we are we look at premiumizing our portfolio on a continuous basis because it Goes well with the customer lifecycle also. Okay. But from strategy point of view, do you have to do anything Currently, I mean, creating a separate setup to basically really the service standards for meeting expectation of their customer segment. How have you past experiencing in the launches of products for the same segment? Typically, I mean, even for our elite customers, VIP customers, we have a separate servicing channel, What we call premium servicing kind of channel. So definitely, Aram card kind of segment will demand that. And as and when we ramp up Thank you. Ladies and gentlemen, We'll take the last question from the line of Zhijuan from Point72. Please go ahead. Hello. Thanks for taking my question. I have 3 quick questions. First one is on total So for Revolver, our good customers are getting back and then it takes some time for the new customers to ramp up. So what kind of ballpark range are we expecting for FY 'twenty two total receivable growth? So you are asking for a timeframe in which they will mature? No, no. I'm asking what's the What kind of total loan growth or receivable growth are we expecting for FY 'twenty two? So we have not given forecasts for the future from our receivable growth or even spends perspective. So We've never given the future outlook. However, as you can see that receivables Have been growing even in this difficult year. So we believe that it is going to continue to grow. So the growth is going to be there. It is The quantum of growth which we will have to, we won't be able to give a comment around. Got it. Understand that. And my second question is on credit cost. So if the second wave Our FY 2022 gross credit cost to somewhat go back to our normalized level, let's say While we cannot commit to a particular number, We can say like we are better prepared to handle the current situation. As my colleague has said, we are able to leverage the digital channels, are able to redeploy the manpower. When field visits are not possible, we are able to switch over to tele, etcetera. So we are better prepared. And another thing is as RBRE portfolio contribution of overall assets comes down, to that extent it is reasonable to expect Moderation in the credit cost, but it happens over a period of time. You have seen the run rate run off kind of thing in the portfolio. If the lockdown doesn't continue, if the COVID doesn't become kind of external environment doesn't become too complicated, We are expecting the runoff to continue. Got it. Understand. And my last question just to clarify, I think you were mentioning that the collection efficiency was at pre COVID level. Is that as of end of March Or you're referring to my current mid to end of April? Is your question on the comment that we made about our business as usual NPE? Hi, Ara. Business as usual, you were saying that if I hear it correctly, you're saying that connection efficiency is Back to pre COVID level, just want to clarify the time that you are referring to. Is it as of 31st March or As of right now? March. Okay. Are you able to provide some color on the connection efficiency April so far? So like I mentioned, we are obviously, April, we are not We will not be in a position to give you any data about what's in April, but I think it just goes back to the comment that I made earlier that we are much better prepared this And also, it is no longer a national lockdown. It is happening in location by location. We have the ability to leverage other Locations should be able to handle even if one is Semarastra is under lockdown. We have the ability to leverage other locations to collect from there. And we have digital collection capability. We are able to leverage WhatsApp. So in general, even from an infrastructure and ability capability point of view, we are in a much better shape this year than last year's Thank you very much. Ladies and gentlemen, that will be the last question for today. I will now hand the conference over to Mr. Rao for closing comments. Thank you. I think let me take this Opportunity to reiterate some key facts about SBA Card, its business and the environment. Business fundamentals continue to be robust. We follow healthy financial and corporate governance principles, which form our core strength. While the external environment continues be volatile and uncertain, we are closely monitoring it to manage challenges and leverage opportunities. So on the personal front, all of us must Thank you, sir. We will take necessary precautions, including social distancing, wearing masks, frequent hand sanitization, etcetera. On business front, we continue to closely monitor the situation and will take all possible measures to minimize the risk and ensuring sustainable growth. Thank you and stay safe. Thank you very much. On behalf of SBI Cards and Payment Services Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.