Two questions from my side. One is, as you mentioned about the deposit franchise being more now sustainable and can run on a two-engine side. So, will it be possible to outline that we should not incur the cost we were incurring earlier, given that branch Banking was a major cost center earlier? Can we see that inflection point from now on that the cost, the OPEX ratios will start going down?

Yes, of course, you should expect that from us.

So, any targets because our guidance does not include any, in next five years, any cost side type of guidance, but anything you can outline for next two, three years?

See, by end of this year, we expect the cost increase to be roughly flattish for the next two quarters and Q3 and Q4, we see meaningful reduction. So, like Q4, clearly we feel will be in a strong wicket. The reason is actually simple to understand . As all of you know, our credit card business will start moving to profitability by Q3, Q4, so the Bank on plan. If you remember, we had always said that the ‘25-ish end-ish, it will start moving and the ‘26 will make money. So, that’s a crucial inflection point coming towards Q4 of this year. So, for example, the credit card business, our cost income ratio in FY ‘22 was 240%. In FY ‘23, it’s 165%. In FY ‘24, it is 116%, a big drop. And by FY ‘25, we expect it almost sub-100%. It will come below 100%. So, this is one reason why we expect the Q4 to look very good. Similarly, our cost income ratio on retail, rural and SME business is running at 55% now for two years at a stretch. So, it could marginally come down, but it’s stable at 55%, should come down, of course, in due course. Our wholesale Banking is running stable at like 33%. So, therefore, the only drag was liabilities. So, coming to your, so therefore, just to conclude that point, we feel that with scale, our cost income ratio should start turning down, but material, let me say in Q3 & Q4.

Second question was on basically a lot of discussions around tech and how things are playing in the industry. Just a small question was that you have some of the products where you have leadership in, for example, FASTag, you have significant UPI volumes. How are we geared up to handle these kinds of volumes? Because these seems to be a niggling issue in the industry.

Actually, our Bank, let me just say that nobody can ever be too sure, first of all. Okay . This is an area we always watch for, and frankly, we can never be complacent. Let me say, we can never be too secure. Because we are conscious of the risks of the tech or not being invested in tech can play a role, we have been implementing, let me say, the latest technologies. Many of you call us a high-cost Bank and you call us names, but I can just say that if well spent. That I can assure you. So, we have invested in the best CRM system, in the best ticketing system, in the latest versions of the middleware. Our applications are, let me say, the best of what India has to offer because some of these things are they are industry standard. So, applications are applications. We have built a really good engineering team. We do performance testing literally all the time of our engineering teams. We are building fantastic, I hope, I don ’t know if you, Pritesh, yourself have used it or maybe anybody else who can speak on this forum and over 200-300 people are here. I can almost tell you that any one of you would have experienced the Bank, experienced us, not just known our brand name, experienced us. I would say that you would say really good things about our app. Our app is really becoming fantastic. I am scared to use the word fantastic for ourselves, but let me just say good. Let me just say that probably our app is really good and we are developing, its response time is really very good. Our uptime is fantastic really on almost all lines of business. So, let me just say, we invested wisely in technology. And as I said earlier, it ’s not about the money we spend. It’s about how we use them. So, we really spend a lot of time right at my level, my one down level . We try not to take any chances and if we find any issues, then we take it very seriously. If anyone else flags an issue to us, we really jump up and down to figure out how to solve it in the quickest possible time. Our board is very engaged . Our board also is, even at my level understand technology, the subordinates understand technology, my two down understands technology, our board has a specialist of understand technology. We all put an effort after that.

Thank you. The next question comes from the line of Gao Jaixuam with Schchontao. Please go ahead.

Just want to understand on the deposit front, I mean, we have been doing a fantastic job in terms of outgrowing everyone’s deposits, but when I look at the deposit per branch, that has shown a pretty good growth of 14% in the fourth quarter, which is similar to that dropped 13% in the fourth quarter last year. So, I just want to understand, how should we think about branch level deposit growth going forward? When do you think we will actually outgrow the industry, right, because the industry deposit growth is 13%, 14%? So, on the branch level, when do you think we will see ahead of industry deposit growth?

If you think in terms of vintage, we have just been five years, I reminded you earlier that our deposit in 2018 was Rs. 10,000 crores, which is, you think of it like a start. So, in that sense, we are new. But our deposit per branch is only running at Rs. 200 crores, just for information, Gao. Rs. 200 crores per branch today. So, there is something very strong about the way we have built the capabilities of our employees. Of course, a lot of it is got to do with the digital. Some is got to do with the culture. We are like crazy about customer service. We really get pretty we take that . So, I think we have culture, service, tech. All that is coming along. So, I say that we are now in terms of, we don ’t want to only depend on branches, because we feel that’s not efficient. In tech you invest once & multiply it many, we can give far better returns and invest in branches. So, our incremental going in thesis in the next five years is that we don’t need as many branches. We just don ’t need as many branches. We feel that our current tech is firing very well. So , as many branches meaning that , in other words, to grow to a current deposit base of Rs. 2 lakh crores, we needed say 950 branches. It doesn’t mean to take the business to say Rs. 4 lakh crores, we need 1,800 branches and to take to Rs. 6 lakh crores, we need 2,700 branches. It’s not like that. It’s not needed anymore. For example, when we take our book from say currently Rs. 2 lakh crores to Rs. 6 lakh crores, we don’t expect to add not more than just about maybe five or six maybe 700 branches more or 600 more. But it ’s not 2,700 more. So, the incremental throughput per branch for the Bank is very good. I mean what we are saying is that the deposits have grown disproportionately more than the number of branches we will add. That we are very clear about.

That’s good to hear and very clear. Do you mind giving out FY ‘25, sorry, your next five-year guidance? Do you mind sharing with us what kind of assumption we are assuming in terms of per branch deposit growth? Because I guess that affects our cost assumption as well , right. So, to understand a bit more on that.

To be very specific, we have said that currently we have 900. We said we will get 1,800 branches. That is 2x. That is 900 more for Rs. 4 lakh crores of deposits. Today we are Rs. 2 lakh crores. We are going to say, we are going to add Rs. 4 lakh crores of deposits by adding just 900 crores more. So, which means that our branch productivity is going to double on incremental branches. That’s briefly the way we are thinking about it. Frankly, internally we are feeling very confident about this. There is in our senior management, if you were a fly on the wall , if you just walk across any branch and talk to, I really invite you, please, any of the 200 or many of you on the branch, please walk across any of a branch, talk to any of our branches and staff, be friend with somebody whomever you want to know and talk to them how the Bank is doing. They will tell you how the Bank is doing. The feeling is very, very nice within the Bank.

And the last one is on the credit cost. How should we think about the credit cost going forward? Obviously, we are kind of normalizing back slowly, right , from a very depressed level, similar to the industry. So, do you think this process continues smoothly in the next year? How should we think about this?

See, credit cost is a direct benchmark of what happens, the input parameters that flow into, that become a credit cost, like how the check bounces or collection efficiency, etc., that lead to it. Now, we are finding very stable performance on our books. We feel that our credit cost for the next year could be, currently it is about 1.3%. As it normalizes, expected to be 1.65% or so next year. But it will be more, it’s likely to be more front-ended for a reason, I will describe it later if we have time. But we feel Q3, Q4 credit cost to be, we expect to be quite low. And think of it like almost like a flat line all through the next year. But think of it like 1.65% next year.

For the fourth quarter, what’s the credit cost as per your calculation? Per your definition, what’s the fourth quarter credit cost? For the full year, it’s 1.3%. Just wondering for the fourth quarter, what’s that?

It is 1.5% for the quarter. And next year, we are guiding for 1.65%. Actually, we feel internally more like 1.6%, but think of it like 1.65%. But I just want to just flag one second. What we feel very, at least good about us within this, is that it’s not that our yield the book is high or NIM is high. The fact that we are able to do that with low credit cost is a very unique capability. We really believe that. So but your specific question on guidance, I told you.

Thank you. The next question is from the line of Deepak Vohra from Premier Capital. Please go ahead.

My question is largely on the cost to income ratio, again. Although we have come down from the levels five years ago, I feel that we are still at a much higher level than the guidance shared during the merger, which was around 55%. Also, if you see the Financial Year ‘24 versus ‘23, on an annual basis, the cost to income has actually gone up rather than scaling down. And in the last year, we have made a significant investment for the BCCI sponsorship. So, I just wanted to get a better understanding on what drove the higher levels for the Financial Year ‘24.

Yes, cost to income has been, we agree that it has been stable during the current year. It has not improved that significantly. But if you see, in the previous year to that, we had an improvement about 500 basis points. As Vaidya said that we expect cost to income to meaningfully come down starting H2 because of legacy liabilities sort of coming off, because of credit card moving towards profitability and many other factors. So, we know this is a one key deliverable for us , and we expect to better on this front as we move along.

We want to fly one more point to you. Everything you are building in the Bank; I understand many of you are concerned about the cost at the Bank. The thing is that the trend line is good. Of course, this year, we didn’t do a good job in the sense it just flattened out. Interest rates went up and that kind of chewed a little into the margin. Otherwise, we could have done better. But still having said that, let me just say that everything I am building in the Bank are thinking long. And this is super important to note. For example, there was no pressure for us to have launched credit cards. Well, we could have lived without credit cards and life would have been okay. But then, we would have paid a price when we woke up in 2025, 26, 27, 28. When we started to launch a credit card business, we would have to come back and be defensive or the numbers would be going the other way round when it’s supposed to be improving. So, we just launched so many lines of businesses, whether it is gold loans, whether it was Kisan credit card. We launched the prime home loan, which is also by the way a drag on the Bank at this point of time, it’s not making any money. It is just because that’s the way that long -term nature of these products are. For example, if you take a home loan, you book all the DFA payouts and cost evaluation, everything upfront today. The money will come, and it comes over the life of the contract. But we are not holding back. We are building what we have to build because otherwise the future will be difficult for us. So, prime home loans we started. Credit cards I gave the example. Then education loans we started. These are commercial vehicles; we want to meet a PSL requirements. They are all negative , negative products today . They are not making any money . In fact, they are negative. We started cash management business. A lot of technology built it goes into it. These are a trade finance solutions. These are a lot of builds for that . Forex solutions we are building. Negative drag on that. Gold loans we started. Negative drag on that. Losing money as of today, but it will not lose money forever , but just a build-up stage. We have a thousand c rores. So, KCC I told you. Farmer loans, tractor loans, Wealth Management, FASTag, Forex card. You can name the list of products we are launching one after the other inside the Bank. They all lose money initially because everything needs a scale up time. So, that’s why we are confident that once they all start gaining momentum and they come out of the J-curve, then you wake up in 26, 27, 28, 29, they will all be throwing back cash.

Thank you. The next question is from the line of Prakhar Sharma from Jefferies. Please go ahead.

I just wanted to ask you a couple of things. One, could you give some sense of the loan growth expectation, let’s say how you are building up for the next year and as the operating efficiencies start to play out, maybe current costs start to normalize at a slightly higher level, in a three-year view, what should we think of ROA, ROE terms?

So, Prakhar, maybe I will answer that question. So, loan growth has been 25% in this quarter. If you see in fact on a quarter-on-quarter, the growth is 6% and within that also in certain segments, we have slowed down, like consumer loans have slightly come off. Even digital loans have not grown in that proportion. So, we feel that loan growth will be more around 22% to 23% into the next year. Moving on to the credit cost, as Vaidya guided, we should range around 1.65% and certainly our endeavor on ROA would be to touch more closer to, I would say, 1.45%, 1.5% the next two to three years.

Thank you. The next question is from the line of Nitin Agarwal from Motilal Oswal. Please go ahead.

Good evening and congratulations on our strong performance and really the deposit progression is nothing less than outstanding, sir. So, hearty congrats on that. So, I have two questions. First is on the LA P portfolio growth. So, after a gap of four, five quarters, we have seen a double - digit growth in the LA P portfolio. So, how are we looking at this as there has been an improvement in the credit environment, and this used to be one of the main businesses and now seeing this traction this quarter? So, anything more to read into this? And second is on the liquidity coverage ratio. Because while the deposit growth has been very strong, but since there has been a slight drop in the LCR on a sequential basis. So, what has really caused that?

Let’s take one by one. See LAP, frankly, whether it’s LAP or any other business, it’s just in our hands. We can book as much as we want. We are a small player . We have fantastic tech capabilities on being able to originate loans with good asset quality. So, well, if you need to do more, we don’t have to relax any credit norm . We just have to just open some more locations and we are in. So, currently LAP is growing 20%, but we are moderating more with the amount we want to grow, keeping the amount of capital in mind. We should be thinking of raising capital now. So, we want to make our capital run longer. So, we are more conscious about how much we want to grow the balance sheet in a given year , and that’s why we guide for this 22-odd percentage as Sudhanshu said. So, the short point is therefore that we don’t have any problem. You don’t have to worry about growth for our side. It’s in our hands in that sense. With quality, not to worry. Now LCR, frankly, it’s marginal. I don’t think there is any specific, if you keep growing the way we are growing deposits, we are very clear next year deposits also will grow. We will keep our LCR certainly no higher than 80%. Not LCR. I mean, the CD ratio.

Yes, CD.

But CD ratio next year, for example?

Yes, should be around 75 to 80.

So, we are so confident , Nitin, that on a deposit story that next year also , I mean, by the way, it’s been 5 years going, our incremental CD ratio is really very good, and we believe even next year we can keep it under 80%. On LCR, maybe anything you want to add.

So, Nitin, on LCR, we would continue to maintain around 115% levels and so we feel quite comfortable. We don’t see it as a challenge.

Yes. So, some liquidity was deployed during the current quarter, but we feel quite comfortable.

Nothing to worry.

Thank you. The next question is from the line of Rohan Mandora from Equirus Securities. Please go ahead.

Just continuing from the previous question on LCR, sir, on the previous four quarters if you look at, LCR has been more than 120%, but in this quarter for 4Q, annual average we are giving 114. So, is there some reclassification of deposits that have happened? That is what I wanted to understand. That is one. Second, sir, thank you for the elaborate discussion on the rural business that we are building. So, if you could just help us understand what will be the rural ROE that we are making right now. And second, if you look at the last 5 years, it has been good from our monsoon ’s perspective. So, in case the macro turns adverse in that, are we building in some safeguard of the first on that portfolio or what will be the consequences around that?

Why don’t you take the LCR question? I will come to the rest.

So, as I mentioned to Nitin that , of course, we were maintaining slightly higher LCR into the previous quarter. This quarter we have come down to about 114% on an average. One is we did not want it to play the rate game. It is quite intensive as you know, right, in the last quarter. So, we feel that even into the future quarters we should be able to maintain LCR comfortably around 115%. So, it’s more, I would say, a quarter phenomenon where slightly some normalization has happened. But we feel quite comfortable on that.

Like the answer to the previous speaker, Nitin, this is like business as usual. There is like lots of liquidity. In fact, if you do a smell check in the market and I really request you to do that, you find out will you ever find a Bank ever in any corporate fighting for deposits in a large corporate. And there are a lot of these names that go around during year end. Somebody wanted to pay Rs. 500 crores, Rs. 800 crores, Rs. 1,000 crores. We just genuinely say thank you to them saying that look, we are just not there in this. We just don’t need it. And that’s because our retail flow is so strong, that from the branches and everywhere so strong, we just don’t need it. So, I assure you, please check it. Nobody will ever tell you that our Bank is out in the market for the bulk deposits. It is not there. So, coming back to the point, therefore we are good.

Just a follow-up on that, because the investment has also gone up by almost 19% Q-on-Q. So, that should have typically prompted an uptick in LCR. The liquidity has actually increased. So, that’s why there was some confusion.

No, no, but we clarified that. Currently, it’s a lot of liquidity. Think of the 1-2% here or there. Let me just say it ’s not a material amount. Now let me come back to the rural question. Now, well, the rural economy, see it’s not about rural economy, urban economy. I think people just kind of give stamps and tags like these. We don’t like these kind of classifications. They are just not one homogenous rural market or homogenous urban market. So, the thing is that within rural market, there are just so many markets. For example, if you are giving a home loan or a loan against property or you are doing a good cash flow assessed models, then they perform well. And you have to treat them over cycles. And we have seen 14 years. Let me tell you what 14 years is so that you get to appreciate that better. Every loan, every month is a cohort to track over a life cycle. 14 years means just think about it. That ’s the number of cycles we have gone through. Not the 14-year cycle. Every year within that 14 years of the cycle. So, we have been through just so many cycles. We understand this economy very, very deeply. Whether it is rural housing or a rural home loan or urban home loan or urban rural market or micro enterprise loans , o ur JLG business was happening even before the merger happened. The merger happened in 2018. But my predecessor Dr. Rajiv Lall, thankfully, had acquired a JLG company called, I think, Grama Vidiyal. And that turned out to be phenomenal company for us. And I often thank him from my heart. Thank God, he gave me a good franchise there. So, we have been tracking this very, very closely. The main thing is systems and domain knowledge. Systems and domain knowledge. Systems are systems. There is no substitute for good systems. But good systems plus domain knowledge. Don’t worry. If there is anything to call out, we will call it out also. We will be totally honest and transparent. As you know, you have been with us for many years. Hopefully many of you are. We have never hidden problems. If there is an odd issue somewhere here, let us point it out. Nothing as of now.

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

So, this entire breakup in terms of the cost to income , if you can highlight in terms of the proportion, how much would be getting into the credit cards and the liability of the total cost of Rs. 16,000 odd crores? Just trying to see in terms of how much of leverage can it bring about in terms of the overall cost to income as and when it normalizes.

I don’t know the number off-hand.

Yes, Kunal, we are not calling out that number. But Vaidya talked about credit cards . We certainly see the trajectory improving there. And on liabilities also, why we saw some uptick during the year ? Because we have put out more branches and so on. But we expect to sort of improve on these numbers. But incomes from insurance and selling of third -party goods are improving. We have still some ground to cover there. So, I feel that with a combination of fee, better cross-sell, distribution of asset products from branches, insurance products and so on, we should continue to get an uptick on the fee income as well as our costs should normalize on the liability front into the next year.

And Kunal, let me add one more point to you and frankly to everyone hearing this call. We talked of a long-term picture, like five, eight years. We said, look, India will grow like that. And we believe we will do well in that for the reasons I described earlier. But let me just give you a short-term view, like a one-year view so that you know what to expect from us. Now, what our view is that the next couple of quarters, we should expect, maybe next quarter, we should expect flattish kind of performance from us on earnings front or somewhere in th at zone. And maybe Q2 should see some improvement, but Q3 should see good improvement and Q4 should see strong improvement. So, it’s going to be very back-ended this year. I will describe that reason also to you. And if you understand the reason, then you feel comfortable. So, that’s why I mean to give you a short-term guidance. Now, it goes like this, that in the first quarter, of course, we will get salary increments and all that stuff, which of course happens to everybody , but it does cause a temporary, slight touchdown to the numbers. The second thing, but more important, I called out last time and I will say it again to you, about FLDG. So, we are good players in the digital market and there are certain partners with which do business. Now, we were earlier in a model whereby when we did a digital loan, the income, the full income, maybe 17%, 18% came to us and the full credit cost came to us because there is no FLDG. Now, recently, the FLDG is permitted. Now, what did we do? It is a good thing in the interest of the Bank in the longer run to move to a model where the partner absorbs the credit cost. But well, it works both ways so that the partner wants the income today. So, what we are doing is that this quarter onwards and that happened as well as the quarter that will come up in the next two quarters, you will see a payout to that partner. But therefore, our OPEX will go up in Q1. But what will happen is that when Q 3, Q4, these are the short -term loans, six-month loan kind of stuff. So, when Q3, Q4, when the credit cost will come on those loans, that credit cost will be incurred by the partner, not by us. Therefore, you will see that the credit cost in Q3, Q4 will be quite low and benign, and you will suddenly see a PAT going up in that time. And Q1 you will see cost because we are going to pay the partner, it’s going up. So, this is one reason this FLDG. The second thing liabilities. We will be paying off some Rs. 7,000 odd crores of liabilities at 9% in Q1, Q2. So, you will see by the time Q4 comes, you will see that benefit will come to us. Credit cards, of course, Sudhanshu said and all that. So, you should expect a moderate performance from us next quarter. And I mean, on the profitability front and then take off during the report. So, please factor this in your mind. And many people have put up research reports on us and we will hope not to disappoint you on that, on the overall number. I saw Prakhar’s report recently. We will try not to disappoint you. And we will be somewhere there hopefully. So, that’s on this front on how the FLDG and the story sort of plays out. The other thing is that, like I told you, we are not binding ourselves to exactly what the market is expecting, etc. I am just making it very plain to you. We are building for the long run. If something is important, we will invest. We will just go and just do it , and like we have been doing. And it’s important to be disciplined. We don’t waste one penny, but we are building for the long run. We will build what we have to build, but I can only tell you the long-term result of our approach will be very, very good because we will come on a very good platform.

This is very helpful. And secondly, in terms of the core PPOP, so you clearly articulated the trajectory over next four quarters, but looking at maybe what you are targeting 1.4% ROA with almost like say 1.65% credit cost, so ideally when we look at the PPOP from 2.25%, 2.3%, what are the levers which can take it up further, say, from here on? Will it be more cost to income or maybe still there is some, obviously some borrowing requirement will help in terms of the lean trajectory. But besides that, are any other levers available? Because fee income is also upwards of 2%, margins are also at this level. So, will it be largely cost to income?

Largely, let’s say, cost to income. But also, see, frankly, when people look at cost to income, they often miss a point that cost income is a derivative item. It’s not an input item.

Yes, cost to asset, broadly, if I were to look at cost to asset.

Yes, that’s where we look at it. The way to look at it is that, are the incremental unit economics strong? If you look at how our PPOP has grown and over the last five years . You see our loan book has grown at a compounded rate of 13% over the last five years. So, for a normal Bank, usually, the PPOP grows at the rate of a book growth. But you know what is unique about our Bank? Our loan book is growing by 13%, but PPOP is growing by 40%. How is magic possible? Possible because only incremental book is more profitable in the past.

Yes, it’s more retail, yes, retail driving the overall.

It’s profitable. It must be throwing more money to the P&L. Otherwise, how would book grow by, even this year, the latest quarter that went by, the latest year that went by, even in the period when interest rates went up, everything happened, our PPOP has grown up by 31%. Loan book grew by 25%. How did this magic happen? Think about it. 25% was the loan book growth this year. Operating cost is under 31%. So, this kind of a story is clearly telling you, this is I am telling the latest quarter. So, this is something that ’s telling you that the fundamentals of a Bank are really very strong. We have to be just patient, not get in a hurry and not become a please all people, stick to discipline and build this book patiently over the next two, three years. And this is how this magic happens. If you are stable about it, one or two years, we will find our ROA will probably be stable, 1.1% probably still be 1.1% next year, because it still is a form we will build it. But when maybe you play the same stroke over and over again and this joy of the fact that PPOP grows 30% and the book grows 25% or 22% or 23%, then that jaw continues to open . You do that year after year into 25 , into 26, into 27, and 28. Suddenly you say wow , this Bank is now this is just fantastic and the numbers will look very good . But I am really requesting all of you to be calm about this and patient about this because we are building to a plan . We are sharing our plan and you can read any incrementa l economics. You can talk to our people. You can do all your research. I am quite confident that this will smell right to you.

Thank you. The next question is from the line of Vikram Subramanian from Marshall Wace. Please go ahead.

Just wanted to check on the growth guidance . So, you had mentioned 22 % to 23% advances growth with incremental LDR of somewhere close to 80%. So, should we assume 28% to 30% deposit growth for FY ‘25 and do you think that is internally achievable ? Just some comments on that, please.

Yes, easily achievable.

Grow deposits by slightly above 30% and achieve those numbers.

See one key thing, Vikram, to note and it’s a good question by the way, is that our Bank is doing two jobs today. Okay, this is a very important note. We are funding our own growth, and second is we are also repaying the legacy liabilities, I mean the bonds and all that. So, Rs. 29,000 crores we paid off. How did we get Rs. 29,000 crores plus grow our loan books? So, we are having to do two jobs today. So, after the end of this year in ‘25, most of the legacy liabilities will be paid off. So, when you wake up in FY 25-26, at that time we will only need to fund our growth. We don’t even need a deposit growth going at this pace. So, this is a very important point actually. So, therefore, the pressure on the Bank to raise deposits also come down, let me say certainly after ‘27, ‘28, ‘28, ‘29, we have only one job, just fund our growth. We don’t have to pay any past dues. So, in fact, Bank may be, depending on the environment at that time, may even bring down rates. We give it a good probability that we will do that and that ’s how we will play it. So, that could actually add to the margins at that point of time or profitability and all that.

So, that was clear and good to know. Just another question . Sorry to harp on this liquidity coverage ratio. I guess a couple of other participants asked as well. Just not able to reconcile this almost 7 percentage point fall in LCR, despite deposits increasing 9%, 10%, Q-o-Q and liquidity on the balance sheet has also increased. So, are there any change in the buckets? Not able to understand that.

Two-three people to ask this question, why don ’t we just come back to you on this, but Sudhanshu has answered it a couple of times, I tried to answer it a couple of times. So, maybe we are not able to add through this one, but is there anything else you want to add, Sudhanshu?

No, I am saying 115% itself is a very strong number and there could be some short-term, because LCR is generally repayments within one month, right? So, there were some borrowings which sort of came up for repayment. As I said, I didn ’t know, we didn’t want to play the rate game. We could have mobilized some more funding to sort of keep the LCR at higher levels, but we chose to maintain LCR at around 115%. And we feel that we will be comfortably able to maintain it even going forward. So, the RBI requirement is 100%. So, I am saying we also have to optimize our liquidity. So, I feel that if you are maintaining around 115%, that should be broadly okay. And believe me that our deposits are granular. If you go and see the LCR disclosure, deposits from retail, customers from small businesses, those ratios are quite steady while the overall customer deposits have grown by 41%. These segments have also grown I would say at least slightly better. So, you should not get too much worried on the LCR side.

And I would say one more thing to go back to the previous question that you asked to one prior participant. The thing is that why is it growing deposit at 40%? I told you we are having the growth need as well as past liabilities. So, we have right now about maybe Rs. 12000 crores of legacy liabilities. And a lso, there are some more liabilities like bonds , etc., which were not legacy but we borrowed after the merger happened. That ’s like close to Rs. 15,000 crores. So, this is because it is available at a very low rate during COVID, so we took it. Now during the next couple of years, we plan to even pay that off by deposits, not the borrowing. So, therefore, you will see us grow deposits strongly over the next two years and for paying off both the legacy borrowings, I mean, the bonds and loans. So, we will pay that off with deposits. Next year also we will do that, both the legacy as well as this one. So, we will pay off everything and then we will be Deposit Funded Bank. So, this is the reason why for the next couple of years we will see us raising it. After that, like I said earlier, we will slow down the growth of deposits. And then life will be relatively easy. By the time engine 1 will also be firing, engine 2 will be firing because existing stock of deposits will be like something Rs. 4 lakh crores. Well, Rs. 4 lakh crores will give us probably about Rs. 40,000 crores just like that from existing. Maybe if not Rs. 40,000 crore, maybe Rs. 30,000 crores will become existing stock itself. So, you should see us may be dropping the rates like I said earlier.

Sir, again great set of numbers on the deposit side. I think that has been the standout trend for the last 4-5 years. And thanks for including disclosures on the NPA side as well segment wise. I just had an observation on the same slide number 42. Our slippages have been in the range of 2.75% on an annualized basis of 3%. And the NPAs as we see are between 1.5 % to 2%. So, I just wanted to understand subjectively which segments are we slipping more? Are we putting some speed breakers among these segments specifically mentioned in slide number 42? Anything subjective commentary on that would be really helpful.

I don’t have the specific slide on hand right now that we are listening to. But let me just take your question generically.

The question is where are we slipping more? I think that’s where.

No, that’s fine. So, see, there are some businesses. See, first of all, the blend of our slippage on a net basis used to be about 2% , on a net basis. We always have gross . We always have recoveries. We always have a net. So, that’s like 2% odd.

Yes, 1.8%.

1.8% right now, but maybe 2 %. We are quite comfortable with 2 % also. And since you know you provide for about 70% of that 1.8%. 1.8% becomes like ~1.4%, we guide for 1.6%. So, you think of it like that. But usually obviously needless to say, your home loans are probably slipped the least because just the nature of that cash flow assessment and customer profiles obviously are of a higher income profile. The more you go down the pyramid in the customer income profile, like your two-wheeler financing or let me say consumer durables, etc., you will have higher slippages, higher credit cost. But we think of it in a very disciplined manner. We just don ’t want to run any business that really outstripped the whole book. Or we are not so greedy about income to post , etc. So, we want to be disciplined. We have a particular mix we play to. That mix has been very stable for long periods of time. And as a combination, we are quite confident that this number will cover gross NPA 1.38%, net NPA 0.44%. Think of it. We will maintain it. And if it goes up, nothing ever stays stable forever. 1.30% can become 1.40%, can become 1.45%. But it’s never going to become 2% or 2.5%. We will not give you those kind of shocks. It won’t happen. I mean, it will be like in that zone. Because it’s not going to come down forever because it’s come down sharply. But think of it like stabilizing from here on, on those fronts.

And just to add, you would have seen that slippages have slightly come off. But in terms of credit costs, there is also a function of recovery, right? So, while you may not have slippages, right, which sort of increase , but we are seeing that we had slightly higher recoveries in last couple of years, including the current year, which came from a COVID book, right?

COVID book meaning the book that got charged up during COVID does not mean the provision taking of COVID which we were reversing. That’s not that. Just the book that gets charged up for the COVID policy, we were getting recovery from that, not now.

So, as some of this is tapering, you are seeing some normalization of credit cost.

Yes, I understand that. And just a request. You have been brilliant in your disclosures in your deck as well. Typically, like good Banks, like I have seen in their decks, they have a code opening, closing schedule of NPAs, where you add back slippages, where you have technical write-offs, you have provisions, all of that in a single slide. I understand you started, I think, reporting the gross slippages as a footnote. It’s just a schedule of the NPA at the opening closing level, which is like, I think, pretty standard for a good Bank . If you could include that in the deck, that would be great. That’s a small thing from my side actually.

We will definitely do that. But on slippage, things are pretty good. So, just one point I want to explain to you, for example. So, if you see one of our slides, we have disclosed now for 24 months in a row, we have given our collection percentage. Now, you see number 99.5 % there. Now, frankly, that number is a very important number, because if you keep 99.5 %, you are only going to have 0.5 % slipover to be 1 to 30, 31 to 60. And the next bucket. So, 99.5% is very important. But if you see the 99.5%, it is a composition of many products, which is coming as a composite one item. You could go to two -wheeler financing; you will see the 99%. If you see the consumables, you will probably see the 99 point something. If you see that the home loan probably will be 99.7%. So, the composite comes to 99.5%. So, the products which are running 99% and not 99.5%, they will have a credit cost of maybe 3%, while home loan will have credit cost of probably 0.1% or something. So, the blend eventually becomes the credit cost, and that we told you 1.65%. We are quite comfortable with it. Don’t worry about it. Except I am saying this now so that you all can expect it from us properly. I wanted to be aware and comfortable with it, that Q1, Q2, because of the way the flow plays out, because I don’t know if you remember or not, a couple of quarters ago, we pointed out that we moved over to a 90 -day NPA recognition. We were earlier 91 days, because of some technicality. And therefore, the cycle works out in such a way that in Q1 and Q2, and also because of the FLDG matter I talked about, you will see a relatively higher credit cost, nothing like out of the ordinary, but just to tell you relative. And Q3, Q4, you will actually see it flattening it out. So, by Q3 & Q4, Income also will grow up, because the book would have grown ; The credit card liabilities will happen; in Q3 & Q4 credit cost will come down. So, that’s why we are pointing out the fact that expect moderate performance from us, on a PAT front, next couple of quarters ; for Q3 & Q4, expect better from us. And also, let me also point out to you that the core fundamentals, the core fundamentals meaning the liability growth, deposit growth, NPA, asset quality, all that are the core . Those are input parameters. That will be very strong, every quarter from now on for four quarters.

Sir, we have one question from the line of Mr. Ja i Mundra from ICICI Securities. Please go ahead.

Just a small clarification. You also I think clarified in part, but I think for the benefit of all, if you can suggest that this quarter we had a credit cost of 1.5%. Now we are saying that for the next two quarters it may go a little up, maybe 1.65% for the full year FY ‘25. But in the second half FY ‘25, it should decline, right? So, mathematically it looks like that first half FY ‘25 would have slightly higher slippages. Of course , a part of this could be normalization, but is that the understanding right that the credit cost may go up, but then it will come down in the second half? Just a small clarification.

No, first of all , it is not like any slippage issues or nothing like that. First of all , just be aware that, I just want to take you back a little in time. If you notice any Bank has to disclose gross NPA and net NPA. We take it five steps back. We are showing the credit underwriting norms, then we are showing collection cheque bounce. Then we are showing a full trend of 24 months of collection percentage. Then we are showing our SMA. Then basically we are showing the full feeder that is coming into the NPA . Then we are showing product wise NPA. So, you can see the full chain transparently end -to-end at our Bank. You just don’t have to see the NPA . That was number one. Now in this flow therefore, to your question, so Q1 and Q2, the reason I told you , right, the technicality of the 9 0, 91 day etc. , and also Chennai , there was this floods. So, on the JLG portfolio, the flow was relatively higher, but that ’s already started normalizing. But to some extent you will see, let me say a portion of that coming through in Q1. But these are like normal cycles that happen . Flood can happen somewhere, and people can pay and they can pay later. So, some of these are the reasons that you will find some technicality. But so therefore, by Q3 & Q4, anyway like we said, if the fundamentals are strong and flows are strong, strong meaning the collection percentage continues to be like this, nothing will happen. By Q3 & Q4, you will see some normalization and you will see FL DG being absorbed by the FLDG partner. So, therefore, Q3, Q4 will look good and Q3, Q4 will not look like horrible anything like that, just be a little more elevated. But nothing that will disturb you so much , anything like that.

Sir, that is very, very helpful. We will close this call. If you have any closing remarks to make, please.

Thank you very much and this is a full five years. The merger happened in December of ‘18. So, March 31, 2019, was the first financial closing. So, this is exactly five years. You have been very patient with us. I must say very, very patient. I don’t know, we enjoy a lot of your goodwill, and we want to , even when numbers are like really bad, not just the bad loans, our operating profits very bad initially for the first two years, you supported us even then. We thank you for that and we feel that next two, three years, four years, if you stay steady, we will live up to your goodwill and trust.

Thank you.

Thank you. Thanks, everybody. Bye.

Thank you.

On behalf of ICICI Securities, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.