Thank you, [Renju?] , and good afternoon, everyone, and welcome to AU Small Finance Bank's earnings call for the first quarter of the financial year 26-27.

We thank you all for joining the call this afternoon. On today's call from the management side, we have our founder, MD, and CEO, Mr.

Sanjay Agarwal; Executive Director and Chief Credit Officer, Mr. Vivek Tripathi; Deputy CEOs, Mr.

Uttam Tibrewal and Mr. Yogesh Jain; CFO, Mr.

Gaurav Jain; Chief Digital and AI Officer, Mr. Ankur Tripathi; and the IR team.

As we made the announcement today, Mr. Yogesh Jain has been elevated as the Deputy CEO of the bank, and I take this opportunity to congratulate Yogesh ji on his appointment.

We will start today's call with a 15 to 20 minutes opening remarks from Gaurav, highlighting the bank's performance, positioning, and outlook. We will follow the opening remarks with a 40 to 45 minutes of Q&A from all the participating analysts and investors.

For the benefit of all participants, so that we can take everyone's questions, we would humbly request everyone to keep the number of questions restricted to two per participant, and join back in the queue in case you have any further questions. For any data-keeping questions, you can kindly reach out to the IR team anytime post this call.

With that, I now request Gaurav to share his opening remarks.

Thank you, Prince. Good afternoon, everyone, and thank you for joining us for our Q1 earnings call.

As we step into the 10th financial year of our banking journey, we do so from a position of strength. Our franchise today is more diversified, resilient, and scalable, reflecting years of disciplined execution and clear strategic focus.

Over this period, we have strengthened our balance sheet, built multiple durable growth engines, and continued to invest in technology and talent, while maintaining a sharp and consistent focus on risk management and governance. These foundational strengths have enabled us to navigate evolving operating conditions with confidence and deliver strong, high-quality performance.

Let me now take you through the key highlights of the quarter. Q1 was marked by heightened geopolitical uncertainty arising from the ongoing West Asia crisis.

The Indian economy and the banking sector, however, continued to demonstrate resilience with healthy credit growth across segments. Liquidity conditions remain relatively tight with heightened competition for deposits and elevated interest rates.

While we remain watchful of evolving external risks, these developments have not had any material impact on our business momentum, and our operating performance continues to be strong across key metrics. Deposits growth remained robust at 24% year-on-year, significantly ahead of the estimated private sector banking deposit growth of 14%.

Loan portfolio grew by 23% year-on-year versus private sector banking growth of 17%, with secured assets growing by 25% year-on-year. Growth in unsecured businesses improved with 11% year-on-year growth and 5% quarter-on-quarter growth led by microfinance and personal loans.

Disbursement for the quarter was up 42% year-on-year, driven by continued strength in our core retail secured and commercial banking businesses. Asset quality remained robust with slippages declining by 22% year-on-year to 798 crores, driven by improvement in the unsecured portfolio.

Slippages in secured assets portfolio remained stable. Profit for the quarter grew by 37% year-on-year to 796 crores, driven by core PPOP growth of 41%.

Net interest margin increased by 47 basis points year-on-year to 5.9%. Core fee income grew by 33% year-on-year driven by higher business volumes.

Cost-to-assets ratio, excluding CGFMU premium, was 4% up marginally from 3.9% last year, driven by strong disbursement growth and investments made in distribution, manpower, and technology over the last 12 months. Operating leverage continues to play out on underlying basis, and we expect cost-to-assets ratio to improve on a full-year basis.

Credit cost, including CGFMU fee, declined by 54 basis points year-on-year to 0.8% compared with 1.4% a year ago. ROA for the quarter was 1.7% versus 1.5% in Q1 last year, and ROE was 15.6% versus 13.3% in Q1 last year.

PAT for the quarter included an additional one-time provision of 23 crores from further strengthening of NPA provisioning norms in selected products. We continue to further strengthen our leadership with elevation of Mr.

Yogesh Jain as Deputy CEO, and appointment of Chief Risk Officer designate and Head of Technology. These additions add to our domain expertise and reinforce our focus on enhancing risk management, strengthening technology capabilities, and building a high-quality, future-ready institution.

I will now talk about our tech initiatives. We have aligned our technology agenda around three priorities: run, build, and transform, with focus on protecting and scaling the core franchise, accelerating digital adoption, and building a future-ready institution powered by data and AI.

During the quarter, we made meaningful progress in embedding AI and automation into core business processes. We successfully rolled out our AI-enabled gold loan origination platform in a controlled environment.

A mobile-native version is now live, and we will start extending this to branches in a calibrated manner. On the same agentic AI platform, build out of loan origination journey for mortgages will also be undertaken.

AI-led transformation initiatives are underway across vehicle finance, personal loans, credit cards, on the existing platforms, whereas commercial banking journey is being built on a new platform with a focus to improve turnaround times, customer experience, and productivity. We also launched a unified lead management platform for facilitating lead aggregation, filtering, and dissemination of leads.

This platform is integrated seamlessly with AU's native lead management system, and is expected to facilitate greater customer acquisition, increase cross-sell and upsell by improving lead conversion and channel efficiency. Our digital platforms continue to scale well.

With more than 90% of the bank's transactions and service requests now being processed through AU 0101, we also rolled out an enhanced UPI payment interface on this platform during the quarter. On the customer service side, we are leveraging AI voice bots to deliver faster and more consistent experience across 11 languages while enhancing workforce productivity.

We continue to deepen use of data and analytics to drive growth and efficiency. Key initiatives include deployment of analytics-led scorecards across secured and unsecured portfolios, scaling of propensity-based models that has increased pre-approved PL offers by more than 3x, and leveraging AI-driven risk assessment tools that now automatically resolve 70% of AML alerts.

We are also live with our Customer 360 initiative, building a single enterprise view of customers to enable more personalized engagement and better business outcomes. Overall, our technology investments remain focused on delivering measurable business outcomes today while creating a scalable foundation for sustainable growth and long-term differentiation.

Now let me give some color on each of our businesses. First on deposits.

Our deposit base now stands at 1.58 lakh crores, growing 24% year-on-year and 3.3% sequentially. CASA deposits grew 22% year-on-year and 4.7% quarter-on-quarter.

CASA ratio improved marginally on quarter-on-quarter basis to 29%. As mentioned last quarter, we have organized our liability franchise into four verticals: branch banking, which accounts for 60% of deposits; government and interbank deposits team, which account for 21%; commercial banking and wholesale deposits, which contributes 7%; and financial institutions group, which accounts for 8% of total deposits.

Branch banking focus is on garnering granular retail deposits, while the other three verticals are driving solution-led deposits growth, leveraging our capabilities in CMS, transaction banking, and FX. During the quarter, we added 16 new deposit branches, and remain on track to add another 100-plus branches this year.

New CASA account acquisition was strong with 80% year-on-year growth in premium accounts. We further expanded our remittance offerings, keeping in mind the convenience of our customers with international banking needs.

Retail customers can now send and receive money internationally at transparent exchange rates with zero forex margin and zero bank charges, a first-of-its-kind offering amongst private sector banks in India. Within bulk deposits, our focus remains on non-callable deposits to enhance stability of our deposit book.

Total stable deposits, which include CASA, retail TDs, and non-callable bulk TD, remain strong at 79% of total deposits. Overall, we remain highly focused on further strengthening our liability franchise with ongoing investments in products, distribution, and branding.

Now moving on to our assets franchise. Q1 saw continued strong growth in our asset franchise in a seasonally softer quarter.

We are seeing a steady increase in business contribution from the newer geographies where we have made significant investments in building capabilities over the last one to two years. Retail secured assets, which includes wheels, mortgages, and gold loan, forms 67% of our portfolio and grew 23% year-on-year and 4% quarter-on-quarter.

Within retail, our wheels book grew by 28% year-on-year and 5% quarter-on-quarter to reach 48,600 crores, driven by strong demand in the new vehicle segment and increasing traction across newer geographies. Gold loan business grew by 130% year-on-year and 15% quarter-on-quarter to reach 4,500 crores.

We initiated gold loan products across 400-plus existing branches during the quarter, taking total gold loan distribution to over 1,300 branches. Our mortgage business comprising micro business loans and affordable housing grew by 12% year-on-year and 2% quarter-on-quarter.

Disbursement in mortgages picked up with 28% growth year-on-year in this quarter. Moving on to commercial banking.

Commercial banking business grew 34% year-on-year and 6% quarter-on-quarter to reach 32,800 crores with broad-based growth across our verticals. Our focus continues to be on making commercial banking business progressively more self-funded through current accounts and increased penetration of transaction banking, CMS, trade, and other relationship-led offerings.

Transaction banking and forex business has started to gain momentum with income growing 46% YoY and 8% quarter-on-quarter. Now moving on to unsecured businesses.

Our inclusive banking franchise, which primarily includes MFI, grew by 15% year-on-year and 5% quarter-on-quarter. Collection efficiency continued to hold up well at 99.5%, and 96% of the book is now covered under the CGFMU guarantee scheme, which provides an additional layer of comfort.

Our digital unsecured portfolio grew by 3% YoY and 7% quarter-on-quarter. This was led by personal loan business, which grew 24% year-on-year and 19% quarter-on-quarter from a low base, driven by increased focus on cross-sell.

The credit card business also saw marginal growth with new card issuances crossing 1 lakh mark in Q1. Now moving on to P&L.

As mentioned earlier, our profit after tax for Q1 grew by 37% year-on-year to 796 crore. Net interest income increased by 32% year-on-year on the back of strong growth in loan portfolio and 47 bps YoY improvement in margins.

Sequentially, margins declined by 7 basis points to 5.9% due to reversal of certain seasonal benefits which aided margins in last quarter. Cost of funds remained broadly stable at 6.48%.

Increased cost on savings accounts and wholesale funding was offset by residual repricing of retail term deposits. Core other income grew 33% YoY, driven by strong business volumes and higher credit card issuance.

Forex and trade-related income continued to scale up from a low base. Operating expenses for Q1 increased by 26% year-on-year, driven by strong disbursement growth and investments made in distribution, manpower, and technology over last 12 months.

On a quarter-on-quarter basis, operating expenses declined by 1%. Our focus continues to be on driving tech-led operating efficiencies and overall overhead control.

Provisions decreased by 30% year-on-year on account of normalization in unsecured businesses. On a quarter-on-quarter basis, provisions increased by 38% due to seasonal trends.

Provisions for the quarter included an additional one-time impact of 23 crores from further tightening of provisioning norms in selected products. To conclude, despite the volatile external environment, momentum across our deposit and loan businesses remains strong, underpinned by the strength of our diversified franchise, distribution, and underwriting discipline.

As we progress on our growth journey, our priorities remain clear: accelerating deposit franchise expansion, strengthening core lending businesses, improving operating efficiency by leveraging technology and AI, and maintaining disciplined risk management. While we remain watchful of the macro environment, the investments we have made over the last few years in our people, processes, products, technology, and distribution provide a strong foundation to sustainably compound at two to two-and-a-half times of India's nominal GDP growth rate, delivering consistent, predictable, and long-term value to our shareholders.

I thank our teams for their dedication and all our stakeholders for their continued trust. With that, I'll now hand over to Prince for Q&A.

Thank you, Gaurav. Operator, we can open for Q&A.

Thank you for the opportunity and congrats on a great set of numbers. The first question is on the slippages, if you could give some color on this quarter slippages, and I see slight inch-up in commercial banking NPAs QoQ.

If you can call out what is the nature of the product over here. That is the first question, I'll follow up with the second one.

Hi Jayant, this is Vivek. See, Q1 is always, Q4 is always a very, very seasonally strong quarter for us.

I think right comparison would not be quarter-on-quarter, right comparison would be quarter-on year-on-year, the Q1 last year versus Q1 this year, and all asset classes, be it secured retail assets, be it the our credit card PL, be it microfinance. Obviously, we had a great recovery in both the unsecured product.

Even on the on the, if you compare year-on-year basis, commercial banking slippages are lesser. At a bank level, there is a almost improvement of 150 bps.

Understood, sir. If you could tell what was the product that seasonally QoQ moved in commercial banking?

It's typically SME book, right? Which is a business banking book, which will have a some bit of uptick in the Q1, and then it slows down, right?

Understood. Thank you, sir.

Sir, the second question is on the ECL framework. I believe our timeline on the application of universal license is around Feb-March, which means we will enter the next year on the new ECL framework, or we'll have to transition there.

We are seeing an increase of around 12 to 20 basis points on steady-state credit cost for banks. Given we've had some books or some products having some cycles in recent years, can we see a higher impact on our steady-state credit cost under the new framework?

Jayant, for us, it will be difficult to quantify this moment. We are refining our LGD and PD models.

We are working with external agencies. Given that the kind of provision we carry in Stage 3 assets, right, it gives us enough comfort.

However, the final outcome will depend on what kind of policies we adopt for accelerated provisioning or for write-off policies, because that's the moment we implement ECL, all those parameters changes. It'll be a board-approved policy.

Given as we speak, at this moment, there is a greater comfort from Stage 3, which should cover up Stage 1, Stage 2 incremental provisioning, right? Sir, but

that will be one-time, no?

Even on a ongoing basis, Jayant, Prince here. Our provisioning policy right now is pretty much tighter than what the regulatory requirement is.

To that extent, we feel comfortable given the current policy, right? In case there is a change in the policy, then obviously we'll come back and update you.

Jayant, our this retail secured assets, and even on the commercial side, it's largely secured. Our LGDs are pretty low compared to what the industry would look like.

We are very, very comfortable that way.

Definitely, sir. Secured book will definitely be helpful over here.

Sir, in this 23 crore, is regarding any product tightening or general buffering up of provisioning?

It was just a more of alignment of all unsecured product, be it credit card, MFI, and PL on the same lines. There was a differentiation, we just aligned them all.

That's it. In terms of the provisioning policy.

Great. Thank you and congrats on a great quarter, especially on the margins.

Thank you.

Thank you, Jayant.

Thank you.

Hi, sir. Congrats on a good set of numbers.

Sir, just two things. One, on this, I'm referring to slide number 30, in digital and secured book, it appears that our risk-adjusted yields are actually lower than retail secured assets.

Just wanted to understand how is the pricing policy works for specifically this product? If you also can share profitability in this product would be great.

Of course, I know you don't share product-wise profitability, but maybe directionally, if you can just give us some trends in this specific book would be helpful, sir.

Hey, hi, Renish. Prince here.

Both these businesses, as credit cards as well as the PL, is relatively newer businesses for us and still just coming up the curve, right? I don't think it's the right metrics right now to look at what's the risk-adjusted yield there, because credit card went through a cycle, we know that, and we've just started to regrow the PL business, as well as the credit card business.

I believe right now it's probably not a true reflection, if I would say that. Let this businesses get built out, because they are currently loss-making, right?

Credit card is, PL is obviously breakeven. Give us some time for these businesses to evolve before we can actually talk about either the product level ROA or the profitability in terms of risk-adjusted yields.

Okay. Got it.

Yeah. These are strong cross-sell businesses, right, for us, entire liability franchise.

Yeah. Correct.

Just to add, right. PL, as Prince said, is obviously profitable with good yield.

Specifically on the credit cards, because of the tightening of underwriting norms that we've taken sort of say 18 months back, the percentage of revolve book has come down, right. That's why the yield on credit card book is a bit subdued, and that's why you see the weighted average yields at those levels,

right.

Yeah. As Prince mentioned, right Okay.

Because

I was just looking at the broader yields, right. In retail secured assets, we are having 14%.

In digital unsecured also, we are having 14%, but the gross NPA in this book obviously unsecured in nature having higher gross NPA, and hence, I'm assuming there will be higher LGDs as well. I was just thinking on risk-adjusted basis, the yields are definitely lower than the secured book.

I was just wondering on that part,

but maybe I will Renish, credit card, as is a work in progress for us. We have taken a lot of actions over the last 12-18 months, right.

Give us some time, and you will see the underlying profit pools emerging in our unsecured businesses over time.

Got it. My next question is on the margin trajectory.

Obviously this quarter it has been moderated a bit, and in line with what we've guided in Q4 as well. How should one think about next two to three quarters trajectory on the NIM side?

Renish, as we've mentioned in the previous quarters as well, it's always difficult to predict margins, because of multiple moving parts. I don't want to give you any sort of directional guidance on that.

What we know is cost of funds has effectively bottomed out, as we mentioned last quarter as well. We've taken some increase in both savings account and deposits rates, right.

You will see that line being stable to maybe increasing a little bit, depending on how the rate environment evolves from here. On the asset side, our yield will continue to reflect the mix of assets as we go forward.

Got it. Okay.

That's it from my side, and thank you, team.

Thanks, Renish.

Thank you.

Thanks for opportunity, and congrats on good set of numbers. I have two questions.

One is on the asset quality, touching upon the unsecured business growth wherein you have started to see some recovery now, MFI growth of almost 5% QoQ. How are we looking at this to sustain over the year?

It's a strong start, it looks like. Also if you can comment around the vehicle business also, mainly around the CV, as to how is the credit environment shaping up on that side?

Hi, Nitin. This is Vivek here.

I think microfinance business had a lot of subdued quarter-on-quarter, industry-wide de-acceleration, I would say, and the overall de-growth in the book. I think post MFIN guardrails, industry has actually, reached to a stage where a lot of discipline have come in in the field, and that's the reason you would see more and more, player falling in line, and overall industry, there is a positive traction.

In fact, MFIN is also projecting about, 17-18% kind of a growth. We we are just, following that, and that's visible also on the field.

As far as on the asset quality is concerned, numbers are holding up. In fact, the Q1 collection efficiency typically, which has a seasonal dip, could sustain, to the tune of, 99.5%.

That the difference the difference is about 20 basis point from the Q4, but if you look at last year last year Q1 was very, very different, right? On top of it, 96% book is secured, it gives gives us a lot of comfort that the the even if there is some event and there is some some slippages happen, you have CGFMU coverage in in this book.

On the vehicle side, we have now strong distribution in south. We have a strong distribution in now in UP and the newer states in east.

That is now giving us the additional volume, and we are very very confident that the kind of customer segment we operate, we understand, there is a good trajectory. For us, the more on the asset quality side, more or less, it remained what it is typically in Q1.

There is no abnormality. It it, it there's no indication to suggest that in any of the part of this book book, there is a heightened stress or any slippages which is abnormal to a normal sequential I would say quarter which typically happens over the period, right?

Nothing unusual in the book. It gives us a lot of confidence to accelerate the growth on on wheel side.

Got it. On the CGFMU part wherein you said 96% is under that.

Do we plan to lodge any claim, or is something under process for all the losses that we have taken last year?

It's an annual process. Nitin, it's a pool-based coverage.

So 2025 book was covered in 2026, and then will also be covered in this year. The 2026 coverage whatever we have taken for last year, we can claim.

It's a six-month seasoning post-NPA, and post that, you can lodge the claim. That's a cycle, right?

Typically, by end of Q2, whatever crystallized NPAs you will have for FY 26 pool, you will lodge the claims. That would typically be realized by mid of December, by end of December, right?

Right. Any color on how much this number can be?

It will be part of the overall NPA only, Nitin. Nitin,

just to share some broad contours. As Vivek said, 96-odd percentage is covered, right, and then similar percentage of SME is covered, but some of our NPAs are coming from more vintage pool pre sort of CGFMU coverage, right.

Coverage of CGFMU on the GNPA portfolio would be slightly lower.

Got it. One small question around the CD ratio now.

I see that we have been giving two CD ratios for a long time ever since this metric came in focus. Which CD ratio will you look at to optimize the balance sheet, because if I adjust for refinance as reported, then there is a lot of liquidity that is still there, but the reported number may look high.

Which, internally, you look at to see to it that the balance sheet is fairly optimized?

Hi, Nitin. I think we are very comfortable with our number, right, because CD ratio ex-refinance is below 80%, and it's 88%.

We don't look this number to optimize anything, right? It is just which we look this number to for our sustenance, right, how much we should raise deposits, and how much we can do the loan.

We are very comfortable in this kind of number from last maybe not 3 to 4 years, actually. Not much to read around it, in my opinion.

Sure, sir. Thanks, Sanjay ji, and wish you all the best.

Thank you.

Thanks, Nitin.

Hi, sir. Thank you for the opportunity.

Sir, my first question is on the 1.8% ROA target. If I understand your comments from the call, you are practically guiding for stable-ish NIMs.

Is it fair to think that incremental ROA improvement will come only from say OpEx and your credit cost also seem to have bottomed out? Is it right to say that?

On this, right, on the NIMs, we haven't guided for stable, there's no guidance on NIM, right? What we're saying is we see scope for improvement both on the OpEx and credit cost lines vis-a-vis full FY 26, right?

Those two line items will take us to our guided range.

I think this quarter, other income also has not up to the mark, right? I believe other income which should also come in next 6 to 9-month period, right?

Largely, we are 1.7 honestly. We are not at lower number, right.

We are just looking a 10 bps from here. Maybe everything can contribute.

Maybe a 2 bps from credit cost, 2 bps from in other income or whatever, right. It's not that big difference from our stated target and the performance, right.

Okay. That's why

That's why we don't want to comment much around our ROA tree, because it's not far away from our desired number, right.

Understood. Number two, coming back to the ECL question, we have most of the banks providing some estimate of the one-time transition impact, as well as the steady-state impact on the credit cost impact.

It will be nice if you can give something around this so that we can build something in our numbers.

Akshay, Vivek here. Won't be able to comment.

I'm sure that banks would be providing, but for us, working is at a little preliminary stage. One.

Second, as we speak, what I can tell you confidently that historical trend of our LGDs and PDs especially LGDs on our asset classes are very, very low. That gives us enough comfort to say that the impact would be neutral, right?

We don't expect much in terms of any additional hit on the balance sheet. However, I think closer to maybe end of Q3 or something, we would be in a better position to tell you, because by the time, we will have a more working models, because we've hired a dedicated team, there is a dedicated external agency which is helping us to build the ECL models.

I think it's too premature to comment on it. We'll definitely give you some colors by end of Q3.

Understood, sir. Thank you.

One more thing, I was reading one of your comments that you mentioned that disbursements have partially benefited from newer geographies. If you can shed some light on how newer geographies are contributing to incremental business, and which segments are they contributing to?

How should we expect growth from newer geographies incrementally? On the design,

I think it's difficult to give you the exact data. On a design principles, we are more of a north and a west franchise till maybe a year back or two year back.

Because of Fincare acquisition and then expanding to more into east also and going deeper into a states like UP, Bihar. We are largely now pan-India franchise.

We are focusing that our next 10-year growth should come from all part of the country, right? We are building up the south zone, west zone, north zone, east zone, central zone.

The idea is to build more distribution across country and for every product. The retail asset, we have wheels, we have mortgages, we have gold loan, MFI.

In commercial banking space also, we are running 4-5 kind of book. Then we have personal loan, consumer finance, credit card.

I think there is an I would say an huge opportunity for us in next 10 years that once we become a full-fledged India franchise, then I don't think that the growth which we are predicting that AU should grow at least 2 times or 2.25 2.5 times for nominal GDP for next 10 years is quite achievable. Every state here and there is now contributing, because if I want to have some data, right, wheels will show up in southern market now, because we are there from last 3 years.

Maybe from UP also, and microfinance that is a widely held book across country. Some of the part are coming back.

I think it's a mix product, mixed states, but we are seeing lot of traction from our newer geographies.

Thank you, sir. Just maybe if I may, a last question on NSFR.

While I don't see the latest quarter NSFR, but if I look at the history of NSFR, say pre-2024, it used to be in the range of 115 to 120-plus. However, for the past few quarters, I can see that it has dropped to 108-109 levels.

What's driving this?

Oh, that's the range we operate. Akshay, that's the range we operate That's the range we operate, Akshay.

LCR ranges around 115 to 120, and our NSFR typically is about 105 to 115. That's where we range.

Understood. Sir.

Thank you for all the answers. Thank you.

Thanks.

Hi, team. Good evening.

First question is on the renewable energy book that has grown quite well at some 120% plus YoY. Just want to know who are you lending to?

Is it the project developers or the component manufacturers in this supply chain?

Hi, Ashlesh. Vivek here.

The renewable energy book is largely concentrated around developers, and it is specifically KUSUM C component, KUSUM A component, these are the two areas. Typical project size is between 2 megawatt to 5 megawatt, and that's the kind of project these guys putting up, right?

We started 3 years back, started focusing on Rajasthan, and then at later stage, it grew from Rajasthan to Gujarat and Maharashtra, bit of MP, and couple of other states. It's a government-supported initiative where there is a incentive to developer as well as to the discoms.

We found out that the PPAs in this segments are much attractive as well as there is a capital subsidies to the developers, which makes the viability of projects more, it's focused on that.

Understood, sir. Thank you for the color.

Just a follow-up on the earlier discussion on PL also. The growth in that business is also recovered quite well.

If you can shed some light on what is the customer profile here in terms of NTC or salaried, what is the ticket size, and on the sourcing side, how much would be from let's say cross-sell to existing liability customers, asset customers, or open market?

Ashlesh, Vivek here again. This is this book is 100% as of now is towards the my existing bank customers.

Majority of them would be liability customers, some of them would be asset customers. It is it is basis the existing relationship, and we we basis the we run scorecard, we run the transaction card scorecards, and basis that, we derive the pre-eligible pools, and we run the PA offer basis our analytics on it.

Incrementally, yes, we do want to source new-to-business cu- new-to-bank customers, but that share is very, very small and will grow gradually. Far, if you look at existing book, 99% would be my ETB customers.

Understood, sir. Third one is on the appointment of Yogesh sir as Deputy CEO.

Now that this is done, how do you expect to share responsibilities at the very senior leadership level going forward? No,

the whole idea is also to build a very sustainable bank, right, and it's very much required to create a leadership at top. I'm leading this bank from last now 10 years, and I know that I'll not have a infinite years.

I think that process is already started, and the idea at a board level is not to rush at the last moment. Let's create a leaderships at a different zone, like Vivek is on the call, and of course, Yogesh is also on the call, Uttam is on the call.

All three gentlemans are having EDs and of course, Deputy CEOs positions. We'll keep building up leadership position, because bank is very wide, bank functions are very wide, are very complex, and there has to be a leaders who can handle those challenges and can drive bank through the whole cycles, right.

I'm very happy that AU's blessed that they have so many committed and ownership-attitude people, and they're long in the bank, long in the institution, right. Yogesh is 16-17 year old guy, Vivek is with us from last four 12-13 years, Uttam is last 20 years, and many more, many more, and you will see lot many names coming up in next 5 years, that's the way I personally is looking towards AU in that sense that it should be run by professional leadership in times to come and remain forever kind of banking mindset.

I think as of now, Yogesh will be taking care of tech and lot many other functions which board will assign him in times to come.

Understood, sir. If I can squeeze in one small one, if you can share the average cost of SA deposits and average cost of term deposits on the book.

Thank you. Those were all the questions I had.

SA is what? Less than 5.5?

5.5? 5.4,

5.5%. Okay.

It is about 5.5 on the savings account side, and TD is largely around seven seven-and-a-quarter, 7.25, something like that. Yeah.

Sir. Thank you.

Good evening, team. Thank you very much for the opportunity and congratulations for a strong set of numbers.

Three questions. The first is on the unsecured growth.

After a long time, we are starting to see revival there, and I think on a sequential basis, there has been a strong pickup. Can you talk about if there are any targets we have set for ourselves or given the momentum, where can this portfolio ramp up maybe over the next one to two years?

Look, on the MFI side, it's difficult to give you any guidance, because as right, the industry has just started to revive after almost 6 to 8 quarters of de-growth, right? We'll see how this sustains over a period of time, but we expect to continue growing this book, because it's important from a PSL perspective, right?

Overall, we just have 10%, right, of our book?

MFI?

Yes.

Overall, as a component, we have publicly announced that it could go up to as high as 10%.

10%. Yeah.

Because

our requirement of SFB is also now 10%. We don't have any other agri book as such, right?

We want to do our small, marginal farmer obligation through this book, but now the book shape is completely changed because of this guarantee coming in, well-diversified. Team is very capable, honestly, because I think the Fincare gave us this ability, ready hand that this team was available, very experienced team.

We are very comfortable as of now, but we are not seeing this book as which will increase our ROA and whatever, right. It is more about doing your obligation done and having that inclusion piece in place, and also have your own decent ROA on this book.

Okay. Got it.

The second one is on FCNR side. We understand that US leverage has become a constraint for many of the players.

Can you talk about what targets you're looking for in the FCNR side, and what kind of costing does it compare with what you're borrowing in the Indian market on the wholesale side? How does it impact the cost of funding, if you can talk?

Overall, I think you're spot on that we are not able to get the leverage for our customers, and so we have actually increased our FCNR rates to now 7.5, if I'm not wrong, 7.4?

7.4.

7.4. We believe that because of our brand, because of our acceptance, we will raise some sort of money, but we are not targeting now a specific one, because if you don't have a leverage, it's difficult to convince the customer.

I think overall, it's been very good for the banking if Indian banks get 70, 80 billion dollars in this bucket. Then overall, I believe the liquidity should improve, and if liquidity improve, then the cost of money will come down, right.

Overall, I believe we may not be directly benefited out of it, but we might have the overall benefit because of industry initiative. Second, I think we will be raising some money because of

OFC

and all those other route, right.

Got it. Sir, one last data-keeping question.

What will be technology expenditure as part of our total OpEx?

It's close to 1,000 crore.

Sorry?

Makes you around

12 12-13%.

Great. Thank you.

Thanks again. Have a good

Thanks.

Hi, sir. Good evening.

Congrats on a great set of numbers. Just few questions.

The employee base has declined after a long, long time. Is that a outcome of any efficiencies like AI, capacity building is now paused, or is it after Fincare reorientation, we've paused hiring?

Any thoughts on that?

Yeah. You're absolutely right.

You're saying about the employee count?

Yes.

I think in the May month May month was the first month when we actually decreased our manpower from the April one. That is one-off, honestly, because I would say the backhand people, we are we are not growing at all, because we believe operation, accounts, finance, these things are being taken care by AI more.

As we're expanding in newer markets, newer geographies, newer products, you might want to hire people for front-ending, right. I think there is a clear-cut benefit because of AI in terms of count of people, and of course, to manage the risk also, you know.

To build the scale and to manage this scale, and you to you really see the risk through that, and AI is helping us a lot there. Is a very, I would say, amazing development in banking where and there is a second benefit is that you can allow people to work from now home or anywhere, which was not so easily done in banking.

I think that's the second advantage we are seeing it. Overall, I'm very happy that way we are adopting AI, understanding AI, adopting AI, and using it.

Sure, sir. Second question was on the MFI side.

I think few years back we had a thought process that the MFI business will now structurally be a 3% credit cost business. Any change to that thought as we are going into a virtuous cycle, or are we still building the credit cost of 3% despite support?

I think, 3% when we said you, it was 3 years back when we acquired Fincare. I think after that, this guarantee came in, the entire business model has gone through a change.

Now we are building up cost around guarantee, every month. Every year.

I don't think now 3% is the right optics. It's it's it may be the the credit cost around the the guarantee and, of course, whatever we left out, right?

So 2.5?

Yeah.

I think overall, it's on the same rate, but the the contour has changed, the shape has changed, the form has changed. Instead of building up the buffers, we are securing protection on that book, right?

That's the way. That's the similar thing.

Yeah.

You pay credit cost now, right? Guarantee cost now, right.

Yeah. Sure.

Last question was on the gold loan business. Can you just give out some mean data points like LTV, yield?

We have seen that the market is not adding that much of tonnage or customers, but how is that business for us in terms of any new incremental customer coming in or not?

Apart from microfinance business, Pritesh, when we acquired Fincare, the gold loan business also came as their expertise, right. The Fincare had a lot of rural distribution because of microfinance branches, and it had capability to do gold loan business in these southern geographies.

What we did that we scaled up that across northwest region where the AU had a strong distribution, right. Overall, if you look at, for us, it's scaling up from a low base, and that's the reason number looks very attractive in terms of when you look at percentage of growth.

The distribution is already in place. There is a whole ecosystem, which is there a valuer, there is a operations team, there is a origination team, right.

All that is playing out, right. It's a, I would say, very simple business that way that you have to manage the fraud risk.

The rest of the risk is itself the product itself manages. Ours is not a high-ticket business volume.

Majority of book is less than 5 lakhs, right, and the average ticket size is somewhere around 2.5 lakh of the whole book. Most of it, it's today more than 80% is a rural book, 20%, the book portfolio IRR is about 15.5%.

You can just assume it's more of a rural book with a lower ticket size. It's very granular, very granular book.

Understood.

Thank you so much, and all the best, sir. Thanks.

Thanks, Pritesh.

Thank you, [Renju?] , and thank you, everyone, for joining the call and for asking your questions, and for all your support.

In case anyone has any further questions, you can kindly reach out to the IR team. This is Prince Tiwari on behalf of AU management signing off.

Thank you so much.

Thank you.