Axis Bank Limited analyst Q&A

Thank you very much, sir. We will now begin the question-and-answer session. The first question is from the line of Chintan Joshi from Autonomous Research. Please go ahead.

Hi, good evening. Thank you for taking my questions. Can I start with some commentary around how to think about the rate cut cycle and the translation of that into your NIMs. Specifically, I am interested in how we should think about transmission on your borrowings and on your SLR investment portfolios, if you can help us think about those two, loans and deposits is kind of well understood, so I am curious about borrowings and investments here. And then the second question would be, on your growth, you flagged a 7% month -end balance growth, how much of that month-end balance has been retained to date, they tend to kind of flow away post quarter end, but sounds like things might have been a little bit more stickier, given that you're flagging that. Those two would be my questions, thank you.

Chintan, thank you for your question. Let me first start with your question on retention of the MEB growth into the subsequent quarter. I said this earlier as part of my opening comments and I will reiterate, we manage and track our performance on a quarterly average balance basis . Right through FY '25, our quarterly average balance numbers on a year-on-year basis has tracked our MEB balance growth. We have sequentially been a business that has had sequentially strong inflows in quarter 4, that trend has played through in the current quarter . We do not offer comment on how much of that money stays retained, you will see that visible in our quarter one reporting number as we stand, but I think two points for your consideration, we are very focused on QAB, that's how we manage our balance sheet. We are looking to drive up growth in deposits, that's visible through the deposit growth we are seeing in quar ter four. You will have to wait for us to report Q1 for you to get a colour of what was retained and what was not retained in quarter one of the current period. To your other question on rate transmission across our products, the way I would look to respond to that question to you would be - we manage our balance sheet on a duration basis, so please think of duration of our balance sheet as the key driver of rate transmission and rate impact . We have a tightly matched duration on assets and liabilities , and therefore , if you look at how the Bank performed through FY '23 and FY '24, we managed the up cycles and down cycles relatively well. On rate transmission across assets, we as a bank are policy led . We transmit rate increases or decreases in the quarter in which the policy rate changes and that policy will be effective both ways, on up cycle and down cycle. On liability repricing, you've seen some action across market participants including us . We've all done a savings account rate cut. There has also been a moderation on retail term deposit rates and those should be an offset to asset repricing as we see the repo cuts being passed through to customers.

Borrowings and investments or should we take that within your broader comments?

So investments on our bank balance sheet are largely fixed rate. So effectively, if you look at the largest component of investments on a bank's balance sheet, they will be government securities, they are fixed rate instruments , and obviously, when rates tend to decline, you will have MTM gains like you had MTM losses, but they don't flow through the margin line as such. If you want a break up of our portfolio, roughly a dominant part of our portfolio which is 66% of our portfolio is held to maturity, and that should give you a colour on how the fixed rate book will behave. Borrowing should typically follow the same route as….

So presumably they kind of rebalance every 3-4 years or something, that duration might be helpful.

So, Chintan, we do not publicly call out durations . You will see some duration disclosures in our annual report, but we do not provide you asset specific duration outcomes . Please rest assured or rely on the original comment I made . We run a tightly managed duration on a full balance sheet basis.

Thank you.

Thank you. Ladies and gentlemen, in order to ensure that the Management will be able to address questions from all the participants in the conference, kindly limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. Thank you. We will take the next question from the line of Mahrukh Adajania from Nuvama. Please go ahead.

Hi, so my first question is on asset quality. You said that you have tightened provisioning policy and that could impact FY '26. So could you just quantify whether it will be like an immaterial impact or a material impact and what has tightened, because you are already following a much tighter provisioning policy on unsecured, so what would have changed? And also, in terms of the security receipts, the write-back of provisions that you see on NARCL SR, so would you have reversed the complete provision that you had or you would have left something as buffer? So that's my question on asset quality. And my second is on deposit growth. So, if you see the period end year -on-year growth, then it's a bit below the sectors. Now that liquidity has improved and RBI has clarified even on its LCR stance, do you see deposit growth coming in line with the sectors in FY '26? So these are my two questions.

Mahrukh, thank you for your question. There are multiple questions in your 2 questions, so let me try and answer them in parts. I think if I start with your first comment on security receipts. We basically called out two things. We have written back provisions of INR 801 crores on security receipts. We have INR 537 crores of interest which we have not written back and shall book on a when realised basis , or when clarification emerges in the regulations. So broadly, if you were to do it on a percentage basis, it's 60-40, give or take. So , INR 801 crores booked in the P&L, INR 537 crores potentially to be booked at a future date on a realisation basis. The second part of your question was what has changed? We have said that our provisioning policies remain the tightest in the industry. We've tweaked how we classify assets at the margin , and that tweak is incremental, and this relates to some very specific asset outcomes like one -time settlements, et cetera. So, we have tweaked those at the margin to make them more stringent. And we are transparently calling out that, that change is incremental to the change that we had in FY '25. So that's the second part of your question. On the third part of your question, which is around deposit growth, we don't offer guidance on how we will grow. Please appreciate we have worked very hard to strengthen the three legs of our deposit franchise, which is cost, quality and growth. Cost and quality we have delivered. Early signs of growth you've seen through, come through in Q4 of the current fiscal. We will continue to work hard on making sure that we grow our liabilities franchise with the right quality and quantity of liabilities.

Thank you.

Thank you. The next question is from the line of Anand Swaminathan from Bank of America. Please go ahead.

Thank you. I had a couple of questions. First is on the Cit i integration. It's been almost 2 years since the merger. Can you provide us some color or some quantification in terms of where all you have seen these benefits and where have been the most positive outcomes in terms of synergies? That is one. And second, just as a clarification on the write -back on SRs, the loan loss provisions, the 1,316 number would have been 2,100? Is that the right interpretation without this write-back this quarter? Those are my 2 questions. Thank you. Subrat Mohanty: Yes. Hi. This is Subrat. On your first question on Cit i integration, see last year, in July, we completed what we termed LD2, which is when Cit i customers moved on to the Axis Bank platforms, and we started managing the customers both from a relationship as well as in terms of owning them on our system. We had a very specific plan over six quarters in terms of the synergy benefits that we internally presented to the Board. At the end of six quarters, we came a bit ahead of the plan in terms of the synergy benefits. So, from a planned synergy perspective, it ticked all the boxes. Two additional benefits of the acquisition was improving the premium base of our franchise and having a good set of seasoned credit card customers coming in. Those customers have come in. We continue to now offer to them the whole bouquet of Axis Bank services, which is much wider and cuts across multiple products and services, and also is present in multiple cities. So that also is something that is happening. In terms of the people that we got in as part of the acquisition, we had almost 3,500 people come in, about 178 people were identified as key resources who came on board. And after about 2.5 years of people coming on board, we have had very limited attrition of these senior resources, these critical resources. In fact, a lot of them today hold bank-wide responsibilities, based on their past experience. So on an overall basis, that's the summary of the things. Since almost the year has passed after LD2, we no longer separate the Cit i and the Axis book and monitor their progress, because all of these customers now have been re-carded, they own Axis Bank accounts. So we continue to now look at them as part of the Axis base, and provide them both services and upselling opportunities as and when they come.

Thanks, Subrat. Anand to the second part of your question. Yes, I think you're reading the INR 1,369 crores number on Slide 48 of our presentation. If you add INR 801 crores , it's going to be INR 2170 crores. So that would have been the number. I would just request you to please also while noting that number, not e the fact that the INR 801 crores was routed through the P&L in the first place. So we debited the P&L when the provision was made. We are crediting the P&L and the provision is being reversed. So it's just a function of timing. Overall, on a time agnostic basis, this is a P&L neutral entry.

Sure. Thank you.

Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go ahead.

Yes. Thanks for taking the question. So firstly, your comment on personal loans and credit cards. If I heard it correctly, you mentioned that there is stabilization in the credit card portfolio, while personal loan might take slightly longer to stabilize? Was that the right comment? Did I hear it right?

Thank you, Kunal. Yes, you heard the comment correctly. We are seeing the credit cards… Yes, sorry, please continue.

No, no, you can continue.

No. So I think you heard us correctly. We said that the card portfolio is stabilizing and the PL portfolio will take a few more quarters to show improvement. I think we need to give you full color. The reason we make that comment is we took underwriting actions on the portfolio. The early reads on those underwriting actions are positive, but the vintages have not matured enough for us to provide a constructive or concrete outlook on the personal loan portfolio. So, basis where we see the initial reads on a non-vintage portfolio, we have made a call out saying that it would take us a few more quarters for this book to stabilize.

Earlier that comment used to be like PL generally stabilizes and peaks out in 9 months, and credit card generally takes 15 months. So I think maybe that seems to be like slightly reversed, okay? So it's like credit card seems to be stabilizing earlier than the PL. So any particular reason for that, any particular cohort being that kind of a problem, yes?

So Kunal, thank you for that question. I think the way we would request you to think about it is underwriting is not an exact science. We make corrections and then we observe portfolios post that correction. I think the way to read our comment is the cards corrections have started playing through. We have consistently and continued to make corrections. As we see this corrections vintage, we will be able to provide an outlook. I don't think there is further color that we have at the moment to offer on the PL portfolio.

Sure. And second question is on overall growth side. So again, let's say deposit growth, no doubt the sequential improvement has been there, but still below the industry average. And similarly, on the loan growth side, in fact, home loan, auto loan, that's just stayed flat on a year -on-year basis. No doubt our focus is on SBB, SME and mid -corporate, but some of these segments are not contributing to the growth. So what would actually trigger maybe the overall loan growth as well? Will it be only led by deposit growth or maybe the stabilization of asset quality, or maybe some comfort on margins? When should we start even like loan growth, maybe following the indus try, as it is still lagging like 4-odd percentage points to industry average.

So, obviously, last year has been characterized by scenario where deposit growth has been a constraint. And so that has driven us to prioritize growth in certain asset classes and obviously control and constraint the growth in some of the asset classes. As we said earlier that we do believe that we have reached now a stage where if things play out the way we expect and given the externalities into account, one can't kind of give us everything that we know everything that is going to happen. But we do believe that now both growth and profitability should start moving in the right direction, subject to this increased liquidity and continuous increased liquidity playing through for this particular financial year. So assuming liquidity remains, flows into the deposit side, we do believe that the platform is there for both growth and profitability. And as that deposit growth opens up, you will see growth start coming back across various asset classes.

So assume by FY '27, it will be industry average, FY '26 or no? Not very confident about FY '26.

Kunal, we don't offer guidance. I think whichever way you ask us the question, we are not going to give you the outlook or guidance on what our FY '26 number would be. So I think Amitabh has said, how we see our business shape up and the confidence that we have in the franchise, we do not have guidance to offer for FY '26.

Okay. Thanks and all the best.

The next question is from the line of Abhishek from HSBC. Please go ahead.

Hi. Good evening. And thanks for taking my question. So my question one is, just a sort of data keeping, if you could share how much of cards deposits could you see the benefit of lower outflow rates on? So from next year when the LCR regulations come in? And the second part is on growth. So you will have a little bit of release of LCR. You will have excess SLR, which you called out. Your LDR is lower now. And there are 3 -4 segments where consolidation has happened over the last 3 -4 quarters already. So do you think your loan growth should now pick up ahead of deposit growth in the, let's say, foreseeable future? I don't want a number or a guidance, but just logically thinking through this. And also, particularly in your loan book, just wanted to know, LAP stands out as a segment where there's quite a bit of growth. So anything particular that's happening there? Or is it some reclassification benefit or you're seeing pockets where better pricing is there? So some insight on that would also help. So, thanks. Those were my questions.

So firstly, since you talked about LCR, the LCR will kick in only effective April 1, 2026. And yes, obviously, all of us are facing the impact of the new circular. Obviously, we have to do more analysis. Right now, we believe that the impact will be neutral. What the construct of deposits will look like as of April 2026, difficult to predict at this stage. But if we were to look at the stock today, it definitely does not have a negative impact on us. And I kind of leave it there. I just mentioned in the answer to the previous question that if the liquidity in the system continues to be there for this particular financial year, and if it is there, it will hopefully flow through the growth in deposits. We do believe we have the franc hise, we’ll be able to grow the retail asset classes. And as I said, in a constrained deposit environment, we try to give the limited amount of money which we have to asset classes, which give us the highest RAROC. That's a strategy which we have followed. So between the mortgage and LAP, if LAP can give us a higher RAROC, we will obviously try to grow that faster in comparison to the others. We obviously have other ri sk guardrails also. It's not just one particular guardrail. So with all the way the guardrails operate with each other, there is a certain waterfall, which is created, and those targets are given to various businesses to run with. Hopefully, you get a sense for what this could mean for us if the deposit growth was to come back. If our deposit franchise on the NTB side is kicking quite well. We continue to maintain the momentum in the next couple of quarters, and how it will can flow through on the asset side of the balance sheet also.

So exactly on your point, Amitabh, if liquidity remains the way it is or improves, irrespective of that, you have other levers to grow your loan book a little faster than deposits. So that is what I was trying to figure, then will you be utilizing those le vers, let's say, in the next two years or liquidity is the primary lever that you are looking at?

So as the liquidity in the system improves, we should see better environment for us to raise borrowings through, for example, bonds. CD market rates have already come down. So these are all avenues which are available to a bank to actually grow its liability franchise. We continuously evaluate our options to raise funding from all of these markets and the relative pricing to the deposit market. And depending upon what looks attractive and what looks suitable at a given point in time, we access that market. And we try and ensure that all this is basically accretive from an LCR perspective and NSFR perspective. So I think it's a constant exercise that we do all the time.

Understood. And on the LAP part, basically, you're saying it's higher RAROC than home loans. So that's why you're doing it. There's no reclassification or any other benefit in that book? It's just pure RAROC-based growth?

Abhishek, there is no reclassification in the numbers across home loan and LAP.

Okay. Got it thanks.

Thank you. The next question is from the line of Harsh Wardhan Modi from JPMorgan. Please go ahead.

Hi. Thanks for taking my questions. Two questions. Foreign loans are small, about 4%. But any second order impact from trade and tariff on asset quality, not right away early days, but let's say, 3, 6, 12 months down the line. And second, the risk weighting is up from 70 to 72 in the course of the year. What drove that? And how do we think about that number over the next 12 months? Thank you.

This is Rajiv. Not just on the offshore book, but we have done a fairly elaborate bottom-up work on impact on tariffs across industry. And within those industries, companies where we have exposures. At this point in time, on everything that we know around tariffs, the impact on the portfolio is negligible. But t here are so many moving parts, both positive and negative. We continue to watch the space and evaluate the impact on the portfolio.

Thanks, Rajiv. Thanks, Harsh for the question. On risk weights, two simple responses. Advances, risk weights are equal or lower than the previous year. The change in risk weight is a function of balance sheet composition change and growth in our off -balance sheet liabilities. That's the principal reason why RWA intensity has moved up. It isn't because we are putting on riskier assets. And if you look at…

So is that the reason why fee income is better?

Look, I think you've got to read that comment across multiple slides. So Q-O-Q RWA intensity has dropped, but Q-O-Q fee income has increased. So there's no direct correlation between fee income and risk-weighted intensity. But yes, our non -fund-based business does contribute to our fee. We give you a breakup of our credit linked fee on our corporate fee breakup, and that has remained steady at about 20% of our total corporate fees. So that's the color on fee and RWA intensity.

Thank you.

Thank you. The next question is from the line of Rikin Shah from IIFL Securities. Please go ahead.

Yes. Thank you for the opportunity. Two questions. The first one, Puneet, could you clarify what are the tweaks that we are making in certain accounts, which would impact the asset quality next year? And did I hear correctly that the implications of this would be visible in upgrades and recoveries in FY '26? So that's first one. And second one, for your repo linked loans, the repricing happens once in the quarter, or that was a generic comment for the overall loans, right? So do you have a pattern of towards the end of the quarter, in 1 month, 2 months? If you could clarify that? Those are my questions.

Thank you, Rikin, for the question. On repo linked loans , we are policy led on repricing, both on the upside and downside. We repriced at the end of the quarter in which the rate cut has been announced, both on upside and downside. So that's the response to your repricing question. I think your first part of your question is tweaks to accounts. I don't think we intended to say tweaks to accounts. If we have conveyed that impression, I would like to correct that. We have said the way we are getting more stringent on how we classify accounts, not upgrade accounts. So how we are pushing down exposures rather than pushing up exposures. And an example of where we have gotten more stringent is how we deal with one -time settlements for, let's say, accounts that have been settled for a period less than 3 months. So on OTS accounts, we have gotten more stringent on recognition. The provisioning policies continue to remain conservative, which is 100% provision on unsecured loans once classified. And that's the color or the genesis behind the qualitative comment we offered, which is to say that this change in classification at the margin could impact FY '26 slippages over FY '25. I also take this opportunity to clarify , one of my colleagues pointed out that when I was making my opening remarks, I said FY '27. Please read this comment in the context of FY '26 being marginally higher than FY '25.

Got it. Thank you, Puneet.

Thank you. We will take the next question from the line of Piran Engineer from CLSA. Please go ahead.

Yes. Hi team. Thanks for taking my question, and c ongrats on the quarter in this tough environment. Just getting back to the question on deposits. Now on Slide 22, you've explained it well as to how we should look at this deposit journey. My question really is what will change your stance on growth? Will you compromise on, say, the cost differential versus peer 2? Or will you compromise on outflow rates to get growth? Or is the quality and cost of deposits sort of sacrosanct? Subrat Mohanty: Yes. Hi. This is Subrat. Like we have always said, quality cost and growth, all 3 vectors that we manage. If you've seen in Q4, we have done some amount of catching up and possibly done better on a Q-O-Q basis vis-a-vis the industry. Large part of it has not come because of either any change on cost or any letting go of quality metrics that we track on deposits. It's largely come because of the work that we continue to do, in terms, of being in front of customers, deepening the relationship with the customers. So those fundamentals which we had been running over the last 1.5 years as part of internal project called Triumph, they continue to guide our actions in terms of the work that we are doing in the field. So we will continue to be on that path. We have done a good job in the last 2 years in terms of both the quality and the cost of deposits. We don't want to be going back on that kind of work that has happened.

Okay. Okay. Fair enough. And just secondly, on your personal loans versus credit card comments on asset quality. So I get that you've improved incremental sort of sourcing, but it's still a small part of the book. But then why is that not true also for credit cards? And another sort of question to this is your personal loan customers would be a subset of your credit card customers, right, and a much more sort of stringent subset. So ideally, shouldn't personal loans recover first and credit cards recover later? What's the disconnect here? Thanks.

Okay. So, hi this is Arjun here. I will try and address both questions. So firstly, on credit cards, the asset buildup is actually much slower than on a personal loan , because in a loan, you do a disbursal ; on a card, you do an issuance and then the guy spends and then revolves and then pays back some. And therefore, there's a few months before the asset builds up. So obviously, those actions play out differently from a traditional term loan. We are actually seeing, as we mentioned earlier, we are seeing signs of stabilization and improvement in the new sourcing on both our portfolios, and that's an encouraging sign. But obviously, the proportion that the new portfolio represents of the total book tends to be different in both the businesses, because of the factor that I just mentioned. The second is I do want to clarify, it's not as if we have that the personal loan customers are all credit card holding customers. These are 2 separate groups of customers, and we also offer personal loans to our existing bank account customers. So yes, we do offer loan s on cards to cards customers. That's a part of the buildup there, and that's a part of the outstanding there. But it's also a stand-alone offering, which is offered both to new customers and those who don't have a credit card with us, may have a bank account or some other product.

Got it. Okay. That answers my questions. Thank you and wish you all the best.

The next question is from the line of Akshat Agrawal from SMIFS Institutional Research. Please go ahead.

Good evening, sir. Thanks for the opportunity. So my first question is on credit to deposit ratio. It has improved to below 90% at 88.7% versus 90% to 90% seen since 1Q '24. And this is all because of the deposit growth improvement. Should we see late 80s as your new operating level for the bank going forward? And was this just because of the deposit growth? Or was this because of any regulator nudge? Thank you.

Akshat, t hanks for the question. No, there was no regulatory nudge. We have consistently maintained that there isn't a regulatory push on us managing the CD ratio at a certain level. The decline in CD ratio is a function of the deposit growth we have been able to deliver in the quarter. And we continue to manage the balance sheet on multiple variables. CD ratio is only one amongst the many variables that we will manage our balance sheet by. So it's not a constraining factor currently.

Right. Thanks for answering that. My second question is kind of answered, but while Y-O-Y loan growth at 8% remains below system, Q-O-Q momentum has actually improved to 2.6%, which is better than what we saw last few quarters. Is it just seasonal? Or should we see this momentum as a reinstatement of the bank's growth trajectory going forward?

I think the way you should look at our numbers is, look, we have always said that we will dial up growth when we are comfortable with getting growth back. I think the quarter is a function of that strategy or outlook that we have previously presented.

Right sir. Thank you.

Thank you.

Thank you. The next question is from the line of M.B. Mahesh from Kotak. Please go ahead.

Puneet, again, just coming back on that, it's provisioning that we are discussing for FY '26. Is it possible to quantify if you were to look at FY '25 as an example, what would that quantum look like? Just trying to understand the materiality of what is being discussed here?

Mahesh, it will be marginal. It won't be the exponential. But it was our duty to flag it off, so we flagged it off.

Okay. Second question is that given that you will have a few rate cuts during the course of this year as well, how are you looking at the margins that you have guided on a through-the-cycle basis. Any color on that?

Mahesh, thanks for the question. I think we are roughly about 18 basis points above our through- cycle margin on a full-year basis, 17 basis points for the last quarter. I think we will try and retain as much of the cushion as we can. We will look to manage margins on a dual principle basis. We look to manage margins by managing our balance sheet on the asset side better. So you could possibly see some legs on mix change left. While assets will reprice faster than liabilities , if you take the duration view of the balance sheet, we have a very tight duration between assets and liabilities. So consequently, if you're willing to take a full year or a slightly longer view, we think we are well placed to manage the repo rate down cycle. We will continue to… Sorry, please go ahead.

Puneet, just when you say this matched on duration, you match the duration on cash flows? Or is it matched on the interest rate side?

Matched duration on interest rates, so repricing duration.

Okay.

So liquidity may not be matched. The comment I am making is it's on interest rate reset duration. And I am not saying it is fully matched , I just want to be cautious. The term I used was tightly matched. So there will be some gap, but it's a manageable gap. The other variables that we have is you've seen the industry including us taking a savings rate cut. We've also repriced our deposits lower, so that's early action to offset some of the margin pressure that we discussed. So I think there's a mix and match on the asset side as well as the liability side for us to play with. The key message I would request you to please take away from the response is, there is a cushion over through cycle. We will try and retain as much of the cushion as we possibly can.

Thank you.

The next question is from the line of Krishnan ASV from HDFC Securities. Please go ahead.

Yes. Hi, very good evening. I just wanted to say on the savings rate cut that's happened across the system, and this is not just proactive plan. But just trying to understand, in a sense, once you have taken a price cut on the deposit side, is it not logical to assume that you'll also have to pass this benefit on to consumers? Wouldn't there be a regulatory expectation that this has passed through the MCLR line to the consumers? Why should a bank be able to retain the gains from the savings rate cut?

Yes, hi. This is Neeraj here. If you look at the structure of Indian banks, most of them have a very large component of the assets in the form of repo -linked loans now, and this has happened over the last 4, 5 years. So the moment a rate cut is done, and because these are repo-linked loans, within a quarter, these loans repriced down. So effectively, the benefit is passed to these customers within a quarter. But if you look at liabilities, since the liabilities are fixed rate liabilities mostly, which is deposits, they take time to reprice. So there is a repricing lag between the assets and liabilities in a downward moving cycle. When you reprice your savings bank book, you are actually doing a stock reprice of the entire book, unlike in the case of deposits, where the reprice will flow in over a period of time. So effectively, what you're doing is the asset price benefit has alrea dy passed largely through the EBLR or repo-linked book. Now you're basically repricing on the liability side. So effectively, it matches more closely than it would have been if we have not done the savings rate cut. I think that's the key logic for most of the banks to first start with a savings rate cut. But that doesn't mean that's the end of the story. You are continuing to see reprice on the deposit side as well. Most of the banks have actually reduced their retail deposit rates by roughly 15 to 20 basis points. We have seen a much bigger reprice on the bulk deposit side where the rates have actually come down roughly 60 to 70 basis points. So as the interest rate cycle plays out , as the policy rates are being cut, we will continue to see this dynamic play out. As far as MCLR is concerned, MCLR is a calculated benchmark. This is a fixed formula in which the calculation happens. As the various components of the liabilities reprice, the MCLR reprice will also happen and it will be passed on to the customers.

Understood. I could understand the fact that the term deposits repricing does take through incrementally versus the savings went through the stock. But I was just trying to understand, doesn't the savings rate cut feed into MCLR, even if it's just 20%, 30% of your portfolio. I understand the bulk of your portfolio and for the banking system at large is now 50% plus with the repo-linked. But there's still an MCLR linked book. That will have to see transmission at some stage, right? It's not a free lunch for banks. Is that a fair assumption?

We recalculate MCLR every month. For example, this month, when we recalculated the MCLR, the calculated MCLR was about 10 basis points lower, and we have repriced it. This is due to the fact that part of our savings book has repriced, and partly our deposit book has repriced. So this is going to be a continuous affair as we go forward. As I mentioned, as MCLR is a calculated way of doing benchmark, it is a preset calculation, so as the various components reprice, MCLR will also reprice.

Got it. Understood. Thanks. My second question was to do with continued changes in terms of recalibrating and tightening our provisioning norms. I've been covering the bank for a while, and I understand that Axis Bank has been trying to stay ahead of the curve for about 5, 6 years now at the very least. I just want to know how long can this journey continue? It seems you set out on this journey to catch up with your peers in terms of provisioning practices, impairment recognition practices and so on. But it doesn't seem to end. At what point do you call out that we are now in line with the best practices across the system?

Thanks for the question and the observation. I would like to clarify your observation. I don't think we have chased peers on these practices. Our belief clearly and will be established with data. We've led market practice of the best asset quality, provisioning policies that the bank runs. We had others follow us, rather than we follow others. I think with this change to answer your question directly, I think this is the last set of changes that we are likely to see post this, we are largely done. Yes, just to add one more color. I do think the changes we are making basis our market study , some of the peer banks do not follow this practice.

That's helpful. Thanks Puneet. Thanks for the clarification.

Thank you. Ladies and gentlemen, we will take the last question for today, which is from the line of Ankit Bihani from Nomura. Please go ahead.

Yes. Hi. Thank you for the opportunity. I just wanted to ask when the NIMs have improved 4 bps Q-O-Q and you highlighted the factors in your slides that have contributed to the improvement. I just wanted to know if there is any impact of the lower number of days in the quarter towards the reported NIMs. That's my question. Thank you.

Thank you for the question. Look, I think the day impact is negligible to non-existent in our book. The 4 basis points improvement is improvement in asset quality, 2 basis points ; improvement in spreads 2 basis points. Of the spread improvement to 2 basis points, roughly 1 plus is coming from interest on income tax refund. That's the bridge to the margin improvement sequentially. We do not see a meaningful takeout impact for us to call out.

Okay. Thank you.

Thank you. As that was the last question for today. I would now like to hand the conference over to Mr. Puneet Sharma for closing comments. Thank you, and over to you, sir.

Thank you, Michelle. Thank you, everyone, for taking the time to speak with us this evening. If there are any questions that remain unanswered or any clarifications we can offer, please feel free to reach out to Abhijit and our IR team. We'd be very happy to engage and clarify. Thank you once again for your time. Have a good evening.

Thank you, members of the Management. On behalf of Axis Bank, thank you for joining us, and you may now disconnect your lines. Thank you.