My first question is on the P&L. If I look at the net commissions and rewards as a percentage of total premiums, that is slightly up between FY '24 and '25. So what can it be attributed to? I mean, are you paying more to the agents? Or has some terms and conditions been changed with banca chan nels? And my second question is on any idea you can give us on the possible regulation, if anything can come up on banca channel? Are there any advanced talks with the regulator or with any government entity? Any idea over there would be useful.
Questions across 67 calls
Shreya Shivani
CLSA
SBI Life Insurance Company Limited
My question is on the protection segment. So, last quarter, we had mentioned about launching a new product on the YONO app and an HNI product from August. So, in spite of that, the growth is not ver y strong for the quarter. Is it purely a function of that digital transformation happening in the YONO side? Or if you could give some color on how has the uptick been on that product given that it ’s been around for two months to three months at least. And so my on the second question is on the topic of surrender value itself. So, you’d mentioned last time that if at all there’s whatever impact there is from surrender value maybe up to 50 bps for us, so is it fair to say that the 26.8% VNB margin that we are at right now will decline to a 26.3 % in the second half or keeping everything else constant that is, so some color on that will be useful. Thank you.
One just follow up on that bit. You spoke about you launched your products in September itself. So, any color you can give us around how has been the off take of the new surrender value products to the customers ? A re custom ers finding it more attractive? Are distributors finding this one easier to sell because it favors the customers? Something on that line.
Aavas Financiers Limited
Hi. Thank you for the opportunity and congratulations on a good set of numbers. My first question is, if you see at your Stage 3 provision coverage, incrementally it has been rising and this time, it was above 32%. So, how to look at it? Where should this number stabilize, or some maths, if you can help us to understand this number? My second question is, usually in your 4th quarter, you have a negative net slippage, either because your gross slippages are lower, or you have better recoveries which come through. This time, I know it's not a big positive number, but it's still an improvement QoQ, and it’s not a negative number. So, am I missing something over here? Or have some recoveries not come through, or has something happened on that front? These are my 2 questions. Thank you.
Correct. You had changed the ECL methodology in Q3. So, going ahead on it should be at 33%-34%, did you say level?
ICICI Lombard General Insurance Company Limited
Hi, thank you for this opportunity. I have one question that is on the expense ratio for the quarter. So the way I understood the impact of the 1/n accounting last time, the quarters are similar in terms of what happened in Q3 to Q4 in terms of the volume growth that you got or how much you have retained, then ideally, your expense ratio should have been similar to what it was in Q3. Even the absolute amount has declined in Q4, if I don't talk about the ratio, even the absolute amount has declined. So what has helped us in having much lesser net commissions, at least, if you can help me understand? This is just about the quarter.
Yes. The only thing I was getting confused that if the retention ratios are similar between Q3 and Q4, then your commission rates should have been similar, ideally, your net commission ratios. But I get the part that if you've written more Commercial lines in Q4, then obviously.
Power Finance Corporation Limited
Ma'am, I have 2 questions. First is on the transmission book. I know it's a relatively smaller portion, but it seems like your repayments over there were a little elevated this quarter. Any color on that? And also, while we are talking about the repayment tren d, would the repayments in fourth quarter be substantially lower because that could be one of the ways of you managing to achieve 13%, 14% loan growth. So I wanted a color on that. My second question is on gross Stage 3. See the absolute amount, there's some slight increase in the GS3 between 2Q to 3Q, INR133 billion to INR135 billion. Any color on that? Any understanding you can help us on that bit.
Okay. And this asset, which has slipped, this is from biomass waste energy project, is it?
I have two questions. First is on the d isbursement side. So while disbursements have picked up well after the glitch we saw in 1Q, I wanted to understand, have there been higher repayments in the renewable or the distribution sector because in spite of the disbursements picking up, the loan growth has been at 10% only. So that's my first question. And second, on the asset resolution, you mentioned about Lanco and two other companies -- two other loans forming up to INR313 crores. But one of your peers has reported that there were some cash recovery from KSK project approved by NCLT. And that -- doesn't that flow in -- didn't that come to you guys and wouldn't we see some negative credit costs from that as well? These are my two questions.
And what's the reason for -- I mean, I didn't understand, what's the reason for not accepting it?
Muthoot Finance Limited
Congratulations on a good set of numbers. Sir, I have two questions. First is on the borrowing profile. If you can give us a little bit of idea on the cost of fund rate movement that -- the trend in the cost of fund that we can expect in 4Q and the year to come by. I believe majority of our bank loans are MCLR linked. Is there some more colour you can give in terms of how much is 6 monthly MCLR or 1 year linked? And is any of our borrowing linked to repo rate? Sir, my second question is on the partnership. Your PPT talks about partnership with GPay and PhonePe. Can you help us understand how the business dynamics and the sharing of the economics of that partnership will take place? And how much -- I mean, yes, the e conomics, can you talk about the economics of this area?
Got it, sir. Sir, what would be the landing cost on your ECBs? And this 9% you mentioned, is this incremental cost of borrowing?
Aadhar Housing Finance Limited
I just have one question. You mentioned that usually in your third quarter, given that it's a festival quarter, you see some slippages that come in and they see balancing out by 4Q. Is there any way to quantify how much roll back do you see from 3Q to 4Q over the past so many years that -- is there a way to track that?
Got it. That's very useful. And one question that I wanted to ask that while you're giving us -- or while you've given us the geographical mix in terms of peers, does that peering account for the location of the customer property or for your branch? Becaus e your branch may cover -- may end up having customers outside of that geography, right?
Max Financial Services Limited
Yes, thank you for the opportunity. Good morning, everyone. I have two questions. First is on the VN B margins. I wanted a little bit more detail to understand how the VNB has moved from 9 months to 9 months. So, we were at 25.3 in 9 -month '24. What I heard was 300 b ps impact drag from mix change, 100 bps drag from surrender value. So , the delta, some 60 bps that positive that we are coming to, is that from the higher riders? Because if I reduce 4% points from 25.38, we come closer to 21.3. So , 21.9 in 9 months, you can help me understand on that bit. My second question is on the Banca channel. There is a bit of, I mean, a slight slowdown that sequentially probably that has picked up over there. If you can help us understand, is it just Axis Bank, all of the banks, are there any regulatory process changes going on at the banks? Any color on that would be helpful. And my last question is , sir, we are done with the rebranding exercise and congratulations on that. On the timelines on listing of Axis Max Life Insurance, What I understand that the Insurance Amendment Bill could probably facilitate it better because there is a clause for merger between insurance and non-insurance companies. So , if that comes through, do you think that timelines on listing could be much shorter than earlier envisaged of 1, 1.5, 2 years? Those are my three questions. Thank you.
Yes, thank you so much. That answers my questions. Thank you a lot.
Sir, just wanted to check on two things. First is on the surrender value regulation. We have heard your peers speak about that they are using a different combination of claw-back or progressive commissions and that's how the structures are currently under discussion with distributors. Where are you guys on this conversation? Are the deals sealed? Most of your peers have said that the industry will take another quarter for this entire dynamic to settle down. So, some commentary around that wo uld be useful. And second, sir, on this Axis, use of Axis Bank in the name, Axis in the name, what sort of regulatory approvals are required here? We are saying it can come through in the next quarter. Will RBI be included in approving this? Some color around that would be useful.
Niva Bupa Health Insurance Company Limited
I hope I'm audible. I wanted to understand from your distribution mix, I can see that maybe there has been a slight decline in the Ban ca channel mix, etc., but tha t's very marginal between 1H and nine months. But I wanted to understand how has the dynamics in the Ban ca channel been for you? We heard a lot of concern from that channel, though it was more on the life insurance side. But what has been your experience in this channel with your different bank partners? And is there any concern or change in processes that you are noting in that channel? Thank you.
Got it. And just a follow -up on the channel strategy. So of the 1 ,72,000 individual agents that we've disclosed, how many of them would be the ones we've made them give examination, what you call IC, the ones you've helped them give examination rather than just onboarding from the life insurance agent? How many would be that?
Star Health and Allied Insurance Company Limited
I have two questions. First, I wanted a clarification. You mentioned that your GWP growth without "1 / n" is 16%. However, in your sub-notes in the P&L, you have given the exact amount of premiums that have been deferred because of this "1 / N" accounting. If I adjust for that, which is about 30 lakhs or so, the growth looked more like 13.5% to 14%. I just wanted a clarification if what I heard was correct. Second, what I wanted to understand was on the commissions and how it may have played out in this quarter. So, clearly, your reinsurance also got deferred along with the 1/N long -term policies, which means that the income that you were earning from the reinsurance commission has become smaller. Ideally your commission absolute amount should have picked up in the quarter or should have at least been larger than the last quarter. I mean, that was the rough math I was arriving at, but that's not the trend that has come up. Can you help me understand why that hasn't played out? Also the way the expense ratios have become elevated, it's fair to say that this is going to be the standard going ahead. Are we looking at a fourth quarter where with the reserves being added, our PAT can be much lower? In fact, could it be a very weak f ourth quarter? Those are my questions.
The Reinsurance Treaty itself has changed this time. There is no change because of the way the accounting is done. Is my understanding correct?
Sir . I wanted to understand if you can share the loss ratio or the combined ratio trend for the retail industry? I believe that data is available for you because we tend to get this data on the motor side from some of your peers. At least that will help us understand how the whole industry and the retail book is moving. If that data is available, it will be very useful.
Yes. The loss ratio or the combined ratio for the retail health industry, if that data is available on 1Q versus 1Q, 1H versus 1Hand could be shared, it would be an interesting data point.
CREDITACCESS GRAMEEN LIMITED
Sir, my question is more around the business operations on the field. We had heard about loan officer attrition being high across MFI players and probably that number is north of 50% for the industry. Where would we stand? Can you help us understand what are the key concerns the loan officers have currently, and we had also picked up from some industry interaction that there is a peculiar case in the M FI industry that many of the loan officers who quit their jobs in the past couple of months, they actually quit and did not join any other formal sector. So, can you help us understand what is exactly going on at the branch level among the loan officers and at the operational level, not so much to do with what is happening with the customers over here?
Sir, is there attrition rate higher than 50% or lower than 50%? Is there some number you can?
Nippon Life India Asset Management Limited
Thank you for the opportunity. I have -- my question is on the offshore business. So just wanted to understand if you could help us understand this book usually is not volatile, usually picks up pace and continues. I mean maybe here and there; I can see a decline. This time sequentially there's been a decline. So just trying to understand what exactly plays out in terms of book declining at this pace? I get that you've given the mix between managed and advisory, but even there, there can be -- there is a slight bit of decline. I just want to understand what happens in this business that it can change directions at this stage?
Okay. So this may not be reflective of lack of -- like not reflective of redemptions, more to do with mark-to-markets?
So just wanted to check on the tax that has come in. So whatever was the excess that we would have incurred because of the change from March '23 till now, we've taken all of it 2Q, and we should not expect anything higher than this coming up in the coming quarters. I'm just asking because this tax rate was a big question mark for this quarter and your tax rate and what probably your peer has reported is very different. And I understand the mix is very different and so many things could be different for the calculation of it, but I just wanted a clarification on that. Second, I wanted to check that on the employee addition, you mentioned -- you had mentioned 55 management trainees had joined in July. And had you also mentioned about 45 new employees’ addition in this financial year? So is it like there are 90 people added in FY '25? This is my second question. And my third question is just something that I was wondering that on your small and mid-cap fund, so I understand that if I take Nippon small and mid - cap fund as a market share of the total small and mid-cap industry, it's been -- it dipped a little back t o about 13% or so. Do we internally keep any market share limits over here or any market share limits in the non -- in the other large caps, et cetera, because there, you've significantly gained market share in the small and mid-cap equity portfolio. So d o we internally keep any limits, any ranges that we want to be in? Those are my 3 questions.
Yes. That's useful. One more question, if I can add is on your managed account. That book -- okay, I'm not very sure of this, but that includes your AIF business, right, the INR825 billion?
ICICI Prudential Life Insurance Company Limited
I have two questions. So, I wanted to understand the agency channel for most of the year done quite well in terms of the growth that's been coming through, in the third quarter or if I look at the nine months, that channel has been doing quite well in terms of matching up with how the banca channel has been going. How many agents have we added in the quarter or in the nine months? What are some of the key changes are we making over here? As this channel becomes open architecture, which is proposed in the insurance amendment bill, how will we manage with those changes that come through? Second is on banca channel. There was a lot of noise around the mis-selling bit. Have you seen any change in the way our banca partners were behaving, were the re anything mis-selling that were going on, any color that you can give to us on that would be useful?
On the open architecture, do you see that as net positive or more disruption would come in the agency channel once they're open?
I have two questions. So, first is on the net commission that I can see from the P&L. Either you look at H 1 and you look at Q 2, there's a very sharp jump and we thought there was a sharp jump which already happened last year. So, even on that there is a very sharp jump over there. So, we wanted to understand what product segments, what channels, what is driving that. And second on the VNB margins, now we closed first half at 23.7 % and assuming we continue the same run rate of 20% to 25% APE growth. Where do you see the second half margins landing up? Should we expect 50 basis points or 70 basis points cut from the current H 1 margins in the H 2? Or how should we look at the margins? Or you can just give us an outline on how to look at the margins for the full year FY2025?
Yes, but I was asking more from the point of view, when, what timeline do you think we will get clarity about the margins from the new surrender value product? I know that it's only 20% of the mix right now, but even on that product segment, are we any time close to getting a clarity about how the commission structures will be finalised, and how the margins for those products will look like?
HDFC Life Insurance Company Limited
Ma'am, I just wanted to understand how the negotiations with the distributors usually pan out? So, for example, you guys have launched a majori ty of your 40 new products from 1 st October onwards. So , all of your distribution partners have agreed to certain terms and conditions? And they can come back and renegotiate with you after wh at time period? How does this usually pan out? That's my first question. And my second question, again, on the new products that have been launched. How much cut have we taken? I know that we did not reprice our non-par product in the second quarter. So how much repricing or how much cut in IRRs did we do when we launched the surrender value version of these products? Those are my two questions. Thank you.
Okay. So there has been no repricing since whenever the last was done, nothing in 1Q, nothing in 2Q in spite of the new surrender value regulations getting launched?
REC Limited
Congratulations on a good set of numbers. Two questions. First is on the liability cost of funding side. So your cost of fund has inched up. Can you give some outlook for how it's going to be in the future? And which bonds I'm assuming one of those -- which bonds are the one which has caused the spike and how much price hike have we done for borrowers? And whic h segment, renewable, etcetera, in which segment did we hike the prices? Second question is on some of these media articles had these news items about lending to some of these groups like say, Vadhavan Port was mentioned a couple of weeks back in the media articles. Sir, can you help us understand given Vadhavan Port is owned by JNPA. Will our loan have a government guarantee over there from an explicit government guarantee as a collateral over there? And also, there was a news article about lending to company called Azure in the renewable sector. I wanted to understand the thought process behind lending to that company, given that there have been whistleblower issues with them. The CEO changed within 2 years -- 2 months or so, stuff like that has happened in the past? And yes, those are my two questions.
Got it, sir. Very useful. Can you help us understand in the commission project of Azure? What would be the EBITDA cover?