Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press “*” and “1” on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press “*” and “2”. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Hardik Shah from ICICI Securities. Please go ahead.

Hi, good evening and congratulations on your appointment and heading this Bank. I have a few questions. First, I think in your opening remarks you mentioned that secured share will rise from currently 49% to 55% plus. So, point well taken, sir. Just wanted to check how would you view the share of EE B? Because I think in your unsecured, you have some proportion of the retail unsecured also. So, just wanted to check by FY27 end or maybe FY26 end, how do you see the EEB share?

So, let me tell you as a strategy, we are now going secular on all the areas. So, our, I would say the focus will be equally on the other segmen ts, there is the housing loan segment, the retail segment, and especially on the gold loans, and also on the commercial loans and the MSMEs. So, EEB, one thing just I want to tell you, that EEB is always has been the asset of the Bank and will continue to be an asset. But if I grow say 1 x in EEB, I will grow 3x in the other segments. So, that is our very clear cut strategy and accordingly we have framed it and today if you look at our figures also, we have already increased our secured percentage from 42% in FY24 to 49% in Q3FY25. So, if we continue with this trend only, it's 55% + what we are focusing will be achieved by FY27.

Right. So, sir, I mean, 49% going to 55% plus, this is a straight away reduction in the EEB book, right? I mean, assuming the retail...

No, again I'm just making it clear. It is not a reduction in the EEB book quantum-wise. It is a percentage growth in the other segment is higher than the EEB growth. So, that's what I say, if I grow 100 in EEB, I will grow 300 in the other segments.

Just to supplement, what we have seeing is that EEB book will also grow, but at a more moderate pace and our secured book will grow at a much faster pace and as a result of which the mix will increase for the secured book.

Right, okay. And sir, secondly on MFI disbursement, so usually the fourth quarter continues to be very strong in terms of disbursement. And this year, of course, the situation is very different. How would you look at the disbursement for the current quarter, I mean, Q4? Should it be, I mean, how would you look at that?

No, so definitely it would not be as aggressive as we have done it in the past, it would be moderated. And we have already, because of the increase in the delinquencies, because of, I would say, the increase in the slippages, we have put in some guardrails. So, since the guardrails have already been implemented, this will obviously lead to some moderation. So, in the current year, the disbursements would be much more moderated, and definitely it would be not at the same level as we have done in the last year.

Just to add Hardik, having said that since EEB by and large quarter four is the largest quarter for us in terms of disbursement, we are expecting sizable amount of renewals. There also as we said, we will implement the guardrails, but the numbers will obviously be available for us on renewal for the good quality borrowers.

We will be very calibrated in the strategy on how to grow on the EEB considering the risk in the segment.

Right. But sir, it should still be better versus 3Q, right, wherein we have done some Rs. 12,000 crores.

Yes, definitely because as the MD sir has said, we are going for a balanced growth as compared to the EEB, the secured sector moves faster, so definitely we will disburse in the EEB book in this quarter. And we are expecting a little growth, but not as compared with the last year.

Right. Sir, on MFI slippages, right, EEB slippages, so we have seen some improvement in SMA- 0, but SMA-1 plus 2 is more or less stable. How should we look at the MFI slippages in Q4 and maybe Q1 when tighter guard rails come into picture? So, would it be fair to assume the, maybe the similar forward flow to SMA to NPA, until the time we get more comfortable in the external environment or you think we have reached to a level wherein SMA to NPA should start seeing some improvements?

So, let me tell you that slippage still a matter of concern. So, maybe the level of slippage could not be 1,196 in EEB book, what we have witnessed in Q3, but it will be substantial. So, the thing is that not much improvement in the slippages. May not be Rs. 1200 crores, maybe close to Rs. 1000 or maybe like that. But slippages, we are seeing the trend, but at the same time as you are witnessing, you see that our SMA-0 book is improving. So, towards delinquency that percentage is coming down. But those which have already slipped to SMA-2 likely chance that most of them would be actually be slipping. Likely chance is that. Because we have also put some guardrails whereby these borrowers may not get an additional finance, at least from us. So, there are chances. So, we are taking that calculated risk. But the trend is reversing. That trend is also we are witnessing. So, we are expecting Q1 of next financial year would be probably a much, much, we will have a much, much lower slippage.

I think just to supplement as MD sir mentioned the SMA-0 bucket we have seen slight improvement, having said that, I think the risk in the industry does continue , so that will have an impact like we have seen this quarter, so I think that impact could come through and we will be continuously monitoring how the DPD buckets actually move.

The last question is on OPEX. So, if I adjust this ESOP adjustment, even then the OPEX growth will be around 22% roughly, which is clearly higher than the loan growth and maybe topline growth. Given the phase where we are in terms of capacity building and investment, this OPEX growth may continue to remain at maybe this adjusted level of 20 %-22% and higher than loan growth, will that be a fair assumption?

So, if you look at the OPEX growth, you'll find that already the growth on account of HR , that is the salary and other allowances on the account of employees, this is already almost stagnant, it's only a 12-15 crore growth compared to the previous quarter. Just if you remove that case of accounting. The main growth is due to that Rs. 166 crores one-time accounting. So, the growth is because you see one year back, we were creating the systems. So, we have to take new talents, take new people, and also we have to invest a lot on technology. So, these things will now give you the return. So, maybe say another two quarters or so, for that year you will get a much, much more return and then the percentage growth will be much, much lower. Investment with technology will continue to grow. So, that we cannot avoid because if we want to remain in the present banking scenario, we have to make a lot of investments in technology. That will continue to grow. In respect of other expenses, I think that will be moderated. That will definitely come in because productivity will also increase.

Hello, congratulations for your appointment. So, I wanted to know the average maturity of our EEB portfolio?

Maturity on?

Of EEB portfolio.

So, the product is mainly maximum is two years.

And average is around 18 months.

Product tenure varies from one year to two years

Okay and if we refer to the slide which is Bandhan plus two and three, so is it a percentage of borrowers or is it a percentage of our AUM?

Percentage of AUM.

Okay. And lastly on the yield side, so what is our yield on the EEB book I mean what yields do we operate at?

Disbursement yield is 22.95%.

Okay, and are we seeing any downward revisions in terms of the yield currently?

22.95 at the time of the disbursement. On an average the yield for the quarter was about 20.3%.

Okay, on a 2-3 year basis, so we are going to shift our portfolio from unsecured to secured. And along with that, the MFI yields also are going to get depressed due to the guardrail rule coming up. So, how are we looking at our NIMs shaping up in the next 2-3 years? Because most probably it will take a hit?

Yes, so you see, none of the universal banks give such a high NIM. I think Bandhan, the current quarter NIM 7.3 is not for Universal Bank. So, we have to accept that, number one. Number two is that, as we go more secular and we do more secured business, this NIM is definitely going to be moderated. So, that trend is also visible right now also, 7.3%, so it has come down to 6.9 % during the quarter. So, that will be a little bit more moderated in the coming quarters, no doubt on it. But again, having said so, our focus is to see that our ROA remains as close to 2%. That is our focus. So, that will be achieved through more quantum of business. So, we have to increase our liability size, and at the same time, we need to increase our asset size. So, that will only give us the, and also control the slippages. So, these three steps actually will g ive me an RO A of around 2%. So, that's what we are aiming. The NIM, if you look, I would say, as an individual item, yes, it is definitely going to be moderated in the future months.

Got it. That was helpful. Thank you.

Thank you. Next question is from the line of Roshni from CLSA. Please go ahead.

Hello, team. Good evening. Thank you so much for the opportunity to let me ask a question. I just wanted to understand that you mentioned putting in some guardrails. I just wanted to check if we are currently aligned with the 2 plus 1 member rule in MFI or is that something that's going to come in for us from April 1st onwards?

So, the industry is still doing 3 plus 1, but we are doing 2 plus 1. So, that is one. Ours is a little bit tougher than the industr y. Number two is that, the industry is giving a DPD of 60 days whereas we are taking it as a 30 -day. So, we are not giving any loan to a borrower who has a record of a 30-day DPD. So, these are some of the things. Apart from that, we are in-sync with the industry that the indebtedness of a borrower from all sources, including unsecured loans, should be 2 lakhs. So, the cap is kept at 2 lakhs. So, these are the guardrails already proposed, which will definitely moderate, and which will only give us good quality of advances. That much I can say.

And Roshni, if you look at page 21 of the investor deck, we have mentioned that based on the scrub of our portfolio, almost 92% of our portfolio of EEB is Bandhan Plus 2. Yes. As a policy, we always follow that, but after taking loan from us, some people can go to other lenders and take a loan, and that's what reflects what the other portion could be. But it is just less than about 8%, which is greater than Bandhan Plus 2.

Understood. Thank you so much. If you could just mention what the interest reversal for this quarter has been like. Interest reversal, do you have any data?

Roshni, will come back on that point.

So, the interest reversal for the quarter was around Rs. 69 crores.

Alright. Thank you so much.

Thank you. The next question is from the line of Vinayak Agrawal from Jefferies . Please go ahead.

Good evening. Thank you for the opportunity and congratulations on your appointment. I have two questions. So, the share of secured loans will continue to inch up from current levels of 49% to 55% and NIMs as a result will moderate, could you also comment on how this will impact credit cost in the FY25?

Credit cost has very little to do with secured or unsecured advances. Credit cost is more, depend on two factors. One is your total advances and the loan loss provision. So, we are very clear that we want a growth in the asset portfolio. So, maybe it may be in the form of secured assets. But we want a growth in the asset portfolio. And number two, we want a reduction in the slippages. So, if we can achieve a reduction in slippages, our provisions for loan loss will also come down. So, that will definitely improve our credit cost. So, we have an internal target of achieving a credit cost of 2%. That's where we are now working at it.

Secondly, sir, if you look at the collection efficiency, we have seen a dip for the month of December versus September. Could you please explain what is driving this and what's your outlook here? That would be my questions.

The collection dip that happened in Quarter 3 compared to quarter two was marginal, specifically in certain geographies of UP, Tamil Nadu, Maharashtra, and Gujarat for us. what we have seen is in the month of January, the collection efficiencies have been better in compari son to December month. So, and you will see that that SMA-0 also came down in the month of December, and that traction is also happening in the month of January is what we see. So, like we said, there is what we see in terms of the go forward, the elevatio ns will start slowly taping up and the bucket delinquencies will come down in due course of time.

Vinayak, just on your previous question, as we see the stabilizing of the microfinance industry, our credit cost expectation in the near future will be around 2% overall for the portfolio and by FY27 with the shift in secured, I think we expect it to be between 1.5% to 1.6%.

Thank you so much.

Thank you. The next question is from the line of Jayaprakash from L&T. Please go ahead.

Thank you so much. As per the current scenario, this Karnataka ordinance has to come out now. So, today and tomorrow, I think we will get the blueprint of that. But the scenario, what is happening is, so have you taken some precautions or have taken some steps towards that how to tackle this?

So, if you just look at it, our Karnataka portfolio is only Rs. 740 crores out of total EEB portfolio of Rs. 56,000 crores, so which is very small and ~13% of which is now delinquent. So, it is more or less as we have been telling that what is happening in the rest of India apart from Bengal and Assam, the trend is almost in line with that. So, we do not perceive any major risk on account of the legislation that may come. We will wait for the legislation which is coming. But as of now, because our portfolio is very little, it is only Rs. 740 crores out of Rs. 56,000, and also the delinquency trend is more in line with whatever is happening in the rest of the country, w e are not very much concerned about it. But nevertheless, we will definitely look what are the legislations, what are the terms of the legislations, what it is coming and how it is going to impact us.

To supplement what I can add, that the legislation is mainly towards unregulated REs. And what we have done for the regulated REs, obviously we will adopt that. Our portfolio is much smaller then, and what we have done as a proactive measure is to prioritize ensuring that we work towards protecting our portfolio and looking at stalling the growth if need be so, but look at ensuring the portfolio is protected. And out of the Rs. 740 crores, the group lending piece is only Rs. 400 crores. Microfinance by definition is only Rs. 400 crores.

Thank you. The next question is from the line of Puneet from Macquarie Capital. Please go ahead.

Thanks for taking my question. Just wanted to know how much slippages are there from the EEB book? Like if you could give comparison between Q2 and Q3?

1,196 is from the EEB book.

So, the slippages in the EEB which is Group plus SBAL (Small Business and Agri Loans) both is Rs. 1,196 crores in this quarter and in the last quarter, which is Q2 FY25 was Rs. 752 crores.

Okay, also sir your SMA-0 has declined but your SMA-1,2 has increased. So, just wanted to get some colors like do we expect more forward flows into the Stage 3 book ? Has the Stage 3 peaked? What are you seeing? The credit cost, I know you g uided for FY26 is 2%, but just for a Q4 guidance, do we see incremental slippage is declining, especially from the EEB book? Any color on that?

We are expecting decline in the incremental slippage, but as I've said that the greatest comfort is that the SMA-0 book is declining. That means the tendency towards delinquency is coming down. That is the greatest comfort. SMA-2 I think a majority of them would that we are already taken into account . But going forward again from Q1, we expect that the cycle would just be reversed, and the slippages would be much, much less.

Got it, sir. That's it from my side.

Thank you. There are no further questions from the participan ts. I would now like to hand the conference over to the management for closing comments.

Thank you. I'd like to thank all the investors and everyone to join this call and like MD sir to say something.

Thank you. On behalf of Bandhan Bank Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.