Thank you, Sagar, and good evening, everyone, and warm welcome to AU Small Finance Bank's earnings call for the fourth quarter of financial year 2025-26. We thank you all for joining us this evening.

On today's call, from the management, we have our Founder, MD and CEO, Mr. Sanjay Agarwal; Deputy CEO, Mr.

Uttam Tibrewal; Executive Director and Chief Credit Officer, Mr. Vivek Tripathi; our COO, Mr.

Yogesh Jain; CIO, Mr. Ankur Jain; and our newly appointed CFO, Mr.

Gaurav Jain, and the IR team. As we made the announcement today, Mr.

Gaurav Jain has been appointed as the CFO of the bank, and I take this opportunity to congratulate Gaurav on his appointment. We'll start today's call with a 15 to 20 minute opening remarks from Gaurav, highlighting the bank's performance, positioning, and outlook.

We'll then follow it up with a open Q&A of 40 to 45 minutes from the participating analyst and investors. For the benefit of all participants, and so that we can take everyone's question, 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.

With that, I now request Gaurav to kindly take us through his opening remarks.

Thank you, Prince. Good evening, everyone, and thank you for joining the call.

It's a pleasure to welcome you all to our earnings call for the fourth quarter of FY26. On 19th April, we completed 9 years of our banking journey, and I would like to take this opportunity to thank all of our stakeholders for their continued trust and support.

As we enter the decadal year of our operations, we continue to focus on our core philosophy of sustainable growth and achieve our long-term objective of building a forever bank. Coming to the operational highlights for the quarter, let me start with the operating environment.

Geopolitical tensions in West Asia continue to weigh on global energy prices, currency markets, supply chains, elevating overall risk sentiment. Indian macroeconomic environment, whilst relatively on a better footing, did see volatility across currency, yields, and business sentiment towards the latter half of March.

As a retail-focused bank, we have no meaningful exposure to borrowers directly impacted by trade or supply chain disruptions. However, we remain watchful of the second-order effects, particularly fuel prices pass-through into inflation, consumption, and credit.

Amidst this environment, we delivered a strong quarterly performance, helping us to finish the year on a high note. Deposits growth remained strong at 10% quarter-on-quarter and 23% YoY versus estimated private sector banking growth of 13%.

Loan portfolio grew by 8% QoQ and 21% YoY versus estimated private sector banking growth of 13%. Secured assets grew by 7% quarter-on-quarter and 23% year-on-year.

Unsecured businesses also turned around with a 7% quarter-on-quarter growth, led by MFI and personal loans. On a YoY basis, unsecured portfolio declined by 1%.

Margins expanded by 24 basis points quarter-on-quarter to 5.96%, led by a decline of 12 basis points in cost of funds, 6 basis points benefit from lower gross slippages and higher NPA resolution, and around 7 basis points seasonal benefit from lower day count in February. Cost to assets ratio continues to improve despite ongoing investments in manpower, distribution, branding, and technology.

Excluding CGFMU premium, cost to assets ratio for full year declined by 19 basis points to 4.1% from 4.3% in FY25. Including CGFMU premium, cost to assets ratio was lower by 16 basis points to 4.2%.

Asset quality saw continued improvement, led by normalization in unsecured portfolio and seasonal improvement in secured assets. Slippages declined by 17% quarter-on-quarter to ₹659 crore, leading to GNPA ratio declining by 27 basis points to 2.03%.

Credit cost for Q4 declined to 0.6%, whereas credit cost for full year came at 96 basis points of average assets. Credit cost inclusive of CGFMU premium was around 1% of average assets for the full year.

Profit for the quarter grew by 25% quarter-on-quarter and 65% year-on-year to ₹832 crore, with RoA improving to 1.8% for the quarter. Profit after tax for the full year grew by 25% to ₹2,641 crore, with RoA improving to 1.6% and RoE at 14.2%.

Now, let me briefly update you on some of our strategic initiatives. First, on the universal banking license.

Pursuant to the bank's request, the RBI has amended the NOFHC requirement, which will now apply to the transitioned universal bank only if the bank or its promoter group proposes to establish any group entity in the future. Following this amendment, we filed the final license application in March '26 and await regulatory approvals.

Second, on the succession planning. The board and executive management continue to invest in increasing the leadership depth, and we had made certain announcements during last quarter in this regard.

To further update, RBI has approved the extension of our MD and CEO Sanjay ji's tenure for 3 years till April 2029. Our Deputy CEO Uttam ji completed his term as whole-time director in April.

He will continue in his capacity as Deputy CEO, leading the bank's retail business vertical and increase his focus on on-ground engagement to drive growth, strengthen customer relationships, and expand the bank's presence across newer geographies. Our Chief Credit Officer, Mr.

Vivek Tripathi, has assumed the role of Executive Director for a term of 3 years following RBI approval. Third, on operating efficiency.

There is a great degree of focus on driving operating efficiency over the medium term through multiple structural interventions. One of the key levers is agentic AI, which provides an opportunity for us to completely reimagine our customer and employee-facing journeys, and we are systematically integrating agentic AI capabilities into our core operations to make it exciting and easier for our customers to bank with us and faster for us to service them.

We are also realigning our organizational structure by consolidating businesses, eliminating parallel hierarchies, and reducing redundancy. For example, agri business is now merged with business banking, and home loans and MBL businesses have started sharing backend teams.

We are also working to flatten our sales hierarchy, expand managerial span of control enabled by real-time data visibility. Whilst driving these interventions, we continue to invest in scaling our franchise by adding to the sales team, expanding our distribution, and investing in our brand.

Fourth, on our tech initiatives. We are embedding AI decisively into our core operating model.

This is not an incremental adoption. It requires us to fundamentally reimagine how we operate, scale, and serve our customers by delivering superior customer experience, higher productivity, and scalable growth without proportional increase in cost or headcount.

Our tech roadmap focuses on adopting an enterprise-wide agentic AI platform, developing AI use cases on our data platform, driving process automations, and lastly, keeping our core architecture modern. First, on the agentic AI platform.

We have implemented a deterministic, rule-driven agentic AI platform built for high speed, personalized customer engagement with full end-to-end traceability and auditability. By removing the friction of fixed digital workflows, this platform empowers our team to serve our customers' needs more effectively and expand product reach at lower cost.

Our first AI-native loan origination system built on this platform went live last week for our gold loan business. We are now actively expanding this agentic platform to mortgages, commercial banking, wheels, personal loan, and credit card LOS journeys.

In parallel, we are building a model-agnostic multilingual platform for customer service, enabling deeper customer understanding, end-to-end lead management, and enhanced cross-sell efficiency. To sustain and scale this transformation, we are establishing a Center of Excellence, bringing together internal talent, global partners, and cutting-edge capabilities to identify and implement AI use cases across the bank.

Second key initiative on the tech side is around data engineering and AI-based analytics use cases. The bank has built a unified data platform wherein most MIS and dashboards have migrated to this automated platform, and our internal meetings are increasingly being conducted leveraging this platform, improving timelines and decision-making.

Building on this foundation, we are deploying AI and ML across credit underwriting, fraud decisioning, collections, and customer service. Multiple credit underwriting scorecards for new-to-bank and existing-to-bank customers are live for credit cards and personal loans, enabling rapid decisioning.

Scorecards for personal cars, taxi, small CV, and vehicle refinance are under development. On AML monitoring, approximately 60% of alerts are reviewed and resolved through AI-based models, with the majority identified as false positives within acceptable risk thresholds.

Beyond dashboards and analytical models, a customer 360 view and customer-level profitability model covering both retail and commercial customers has been built to facilitate cross-sell and faster decisioning. Now, we are adding AI layer on top of this data platform, which can be used for querying any business KPI dynamically by just writing prompts in plain English.

Our AI-driven collections bot is live, improving engagement and resolution speed. On customer service, inbound calling was launched as the bank's first AI initiative across multiple languages.

Outbound AI-led campaigns are underway across businesses, with a target to scale up to 25% of total calls over the next two quarters. The third area of focus is technology transformation and automation.

On the customer-facing side, our 0101 retail app has been revamped with a more intuitive, customizable interface. Our website has also been refreshed this quarter.

On the asset side, our wheels business runs entirely on Salesforce LOS. Personal loans are now live on the same platform, and credit cards will follow shortly.

On liabilities, our branch banking account opening journeys are now fully STP with cross-sell embedded natively within onboarding process. On HR, we have migrated to Darwinbox, consolidating our HRMS, employee helpdesk, and internal communications on a single platform.

Across back-office functions, we are migrating to a workflow-based operating model, with over 10 workflows being built across audit, risk, IT, compliance, and secretarial functions, reducing email dependency and strengthening audit trail. Lastly, to update on our core architecture, migration of Fincare's core banking system was completed in April.

With this, the integration of Fincare into AU is complete. Now, let me give some color on each of our businesses.

Our deposit base now stands at ₹1.52 lakh crore, growing by 10% quarter-on-quarter and 23% YoY. CASA deposits grew by 9% quarter-on-quarter and 20% year-on-year, with CASA ratio broadly stable at 28%.

Our deposit strategy is anchored on three pillars: granularity, stability, and cost of funds. On granularity, we continue to grow our branch banking deposit book, which constitutes around 60% of the overall deposits.

New CASA account acquisition for FY26 grew by 62% year-on-year, crossing the milestone of 1 lakh monthly acquisitions in December, a run rate which we have since maintained. Strengthening and scaling our deposit franchise remains one of our top focus areas.

We are opening 80 to 100 newer branches every year, investing in our brand, and expect significant benefits to accrue over time from the anticipated transition to universal banking license. On stability, our focus within wholesale deposits has been on non-callable deposits in order to strengthen our resilience.

Total stable deposits, which includes CASA, retail, and non-callable wholesale term deposits, was stable at 79%. On cost of funds, we saw meaningful improvement.

Full year cost of funds declined by 32 basis points year-on-year to 6.75% versus 7.07% in FY25. Q4 cost of funds was at 6.49%, down by 12 basis points during the quarter.

Our average LCR for the quarter was stable at 119% versus 118% last quarter. Also, the bank carried 15% additional liquidity in the form of non-LCR investments.

Now, moving on to our assets franchise. Retail secured assets, which includes wheels, mortgages, and gold loan, forms 66% of our portfolio and grew robustly at 21% year-on-year.

Within retail, our wheels book grew by 27% year-on-year to reach approximately ₹46,400 crore, driven by improving affordability across segments. Gold loan business has doubled this year from a low base to reach approximately ₹4,000 crore.

Our mortgages business comprising micro business loan and affordable housing grew by 11% year-on-year to approximately ₹42,400 crore in a highly competitive market warranting disciplined pricing and underwriting. Increasing growth rate in this business remains a key focus area, and we're working to increase our productivity in newer geographies like Andhra, Karnataka, Telangana, Tamil Nadu, and UP.

It's important to note that in the last 2 years, we have nearly doubled our retail asset distribution to about 900 to 1,000 branches for each of our retail secured businesses. This expanded distribution is expected to support growth over the next few years.

Moving on to commercial banking, commercial banking forms 22% of our lending business and grew by 29% year-on-year and 12% quarter-on-quarter to reach around ₹31,000 crore, with an additional non-fund-based book of approximately ₹11,000 crore. We have carved out renewable energy as a dedicated segment within commercial banking, reflecting opportunity in this space.

A strategic priority for commercial banking is self-sufficiency on funding. Currently, commercial banking sources approximately 56% of their funding requirements.

Combined with transaction banking and CMS, our intent is to progressively run this as a fully self-funded business, a model that strengthens both margin resilience and customer stickiness. Now, moving on to unsecured businesses, our inclusive banking franchise, which primarily includes MFI, saw a strong sequential growth of 8%.

Non-overdue collection efficiency in MFI has normalized to 99.7% for the current quarter compared to 99.3% for the previous quarter. 92% of the MFI book is now covered under the CGFMU guarantee scheme.

Our digital unsecured portfolio comprising credit cards and personal loans grew by 4% quarter-on-quarter. Personal loans portfolio witnessed a resumption in growth this quarter with a healthy 19% sequential increase from a low base.

Credit card business broadly stabilized this quarter after nearly five quarters of degrowth and should start seeing gradual growth going forward. Moving on to P&L, our profit after tax for Q4 grew by 25% quarter-on-quarter and 65% year-on-year to ₹832 crore, with RoA of 1.8%.

For the full year, profit after tax increased by 25% year-on-year to ₹2,641 crore, with RoA of 1.6%. Net interest income increased by 10% quarter-on-quarter on the back of strong growth in loan portfolio, lower cost of funds, and seasonally strong margins in the quarter.

Full year NII growth was at 14%. Core other income saw 7% quarter-on-quarter growth driven by higher business volumes.

Full year core other income growth was at 13%. Operating expenses for Q4 increased by 6% quarter-on-quarter, primarily reflecting higher business volumes.

Provisions were down 19% quarter-on-quarter on account of normalization in unsecured businesses and seasonal recovery in secured assets. Full year provisions were also down 10%.

The Board of Directors has recommended a dividend of ₹1 per share for FY26, subject to requisite approvals. To conclude, FY26 has been a year of disciplined, consistent execution true to our long-term vision of building a forever bank.

Our priorities remain unchanged: growing our core asset franchises, scaling liabilities franchise, and driving structural efficiency through AI and technology. We enter the next phase as a stronger, more diversified, and more efficient institution with products, technology, distribution, and people all firmly in place.

We are inducting AI in our core operating model, which can lead to a complete reimagination of our customer journeys and provide a sustainable operating leverage over the coming years. We believe our franchise is capable of sustainably compounding at 2 to 2.5 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 will now hand over to Prince for Q&A.

Thanks, Gaurav. Sagar, we can open the call for Q&A.

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

Just two things. One on this contingency provision creation of ₹21 crore during Q4.

You have mentioned that we have built this towards some specific accounts. Can you share some more details around these accounts, it pertains to which segment, NBFC, real estate, commercial banking, or maybe what is the aggregate exposure at bank level?

That's my first question.

Renish, Vivek here. These are normal, these are not some high-value specific cases.

These are normal business banking OTP cases. We assess the risk, assuming that the risk assessment, what amount is covered through our security and other things.

There was a recommendation, hence we provided. There is nothing specific to it, right?

Okay.

Just this is the internal risk assessment.

That is.

Yeah.

Okay. There will be a number of accounts, not maybe two, three accounts.

Yeah. These

are a

standard account based on the risk assessment. We just provided additional problem with it.

Got it. My second question is on rational behind hiking interest rate in saving account and TD much ahead of the industry.

Are we experiencing some challenges in raising incremental deposit, or it is that we anticipate better growth going ahead, and to maintain CD ratio, maybe we are hiking this rates to remain competitive?

Renish. Hi, Sanjay this side.

In terms of liability, we are not focusing on one one data point or one way of building it up, right? It is a combination of three, four variables like one is how much you want to raise the cost of money, how you want to play your CASA, how you want to play your retail versus wholesale, the overall CD ratio.

If you see our whole last year performance, our CASA remains stable. It is around 28%, 29%.

Our stable money is around 80%. Our cost of money, we were anticipating, maybe a drop of only 15 to 20 bps.

We actually dropped it by around 20 22

32%

32 bps, right? Our ALM is perfect match.

If you ask me, I think we want to play it like this only this year too, and it's in every month working. You can't predict.

You can't have a specific one rule for entire year, right? There is ALCO every end, and there is a 2-month RBI monetary, we need to play with the environment.

Focus will remain on two to three things. One, we want to build a very stable liability franchise.

The focus of bank is entirely on that, be it the quantity, the quality, and I'm very happy that, being an SFB, we don't have a right to win so much, but still the team is doing phenomenally good job. They are building it quality, quantity, overall cost of money.

We are not playing a perfect game, right? You need to build it somehow, somewhere, right?

I think I would say that our 9-year of journey has taught us that liability is a day-to-day business, right? We need to play every day.

Got it. Okay.

There is no, let's say, a structural trend one should assume based on this. It is maybe

on quarterly basis. No, Renish.

I believe we need to play it every day. We need to build it every day.

The more deeper we are going into a banking franchise, more stable

and

more predictable we are now.

Got it. Okay.

That's it, sir. Thank you, and best of luck.

Thank you.

Thanks, and congratulations for good set of numbers. Firstly, with respect to RoA, we are almost at 1.8% now on exit level.

What would be the focus? Maybe would we still try to drive it up further, or sustenance of that will be critical?

What would be the levers available to drive it? No doubt there would be some levers on opex, but would it get offset by the other measures, and we will just try to sustain it at 1.8%?

Kunal, obviously, we know that Q4 is always seasonally strong, right? That 1.8% also reflects that strong seasonality.

Our goal would be to maintain this RoA or achieve this RoA on a full year basis for next year. The levers on that clearly, as we mentioned earlier as well, we're doing a lot of work on our operating efficiency.

We should see continued improvements year-on-year on the opex to assets ratio. That's one.

Second is, we are coming out of somewhat of a

Any targeted level?

Sorry?

Any targeted level?

No, there's no target. I'm just giving you directionally what we're working on.

It's difficult to guide you on a line-by-line basis on the RoA tree. Second is, on the credit cost front, right, as we are coming out of somewhat of a crisis in MFI, and the credit cost has normalized.

Similarly, in the credit card business as well, the credit cost is normalizing. We expect on a full year basis next year these two things in particular to drive our credit cost lower than the full year in the current year, right?

I think these are the two levers to watch out for next year, and we'll see how we perform against these two.

Sure. On margins, you indicated some breakup with respect to what you mentioned, say, six 6 bps benefit because of the lower slippages and seven due to lower day count.

There is element of IT refund as well as some recoveries, which is indicated in that paragraph. How much, if you can quantify that, because there would be some pressure on yields as well?

I think on this side, right, there was some IT refund. I would not say that was material to the overall movement.

It helped by a tiny bit, but nothing specific to call out there. In terms of overall outlook on the margin, we've seen sort of strong improvement in our cost of funds continuing for the last two quarters.

With this rate increase we have taken, we think cost of funds may have bottomed, right? Some of the seasonal factors which I spoke about, which were there in this quarter, won't be there for the next quarter or two, right?

I think to that extent, there'll be an impact on margins.

Got it. Perfect.

Yeah. Thanks, and all the best.

Thanks, Kunal. Thank you.

Hello. Hi.

Good evening. Congratulations on a strong performance.

Thanks, Nitin.

I had two questions. One is on the technology leg.

You've spent a good time on technological progress that the bank is building, including the investments in GenAI, agentic AI. How do you see this translating into our business volumes?

What kind of cost ratios will you now target over the next 2 to 3 years as the bank transitions to universal bank?

Yeah. Nitin, second question?

Yeah. No, second is more on similar lines, because as an SFB, the range on cost ratios is generally very tight, and it's very narrow across the banks.

Most SFBs are operating around mid-50s to somewhere in 60s. As an universal bank, the range is very vast.

There are banks of below 40 also. Where AU, which generally has been best-in-class on many parameters as an SFB, how will you want to position yourself on cost ratios now as you undertake this transition?

No, Nitin, let me answer first. I think why we have given you the more elaborate description in our presentation and, of course, by our CFO Gaurav because we are investing a lot in our tech.

About that we have around seven, eight asset classes. We need to build our liability franchise.

We want to build it pan-India, and there is a lot of challenge in terms of language, in terms of making everybody understand product, process, and making everybody aligned with one goal. When you want to become a pan-India franchise, something need to be stitching everybody, right?

We believe at AU that tech is that medium that can connect all our 60,000 people with all the diversity on the ground, be it product, be it distribution, channel, the processes, the policy. There is a lot of friction, honestly.

You might want to do a lot many things from top, but you can't do it on the ground because it's very very very highly I would say friction at every level. I think now tech is actually solving it.

Much has been solved over the years, but I think now AI is really helping us a lot into that. We are not saying that AI is only will be helping us in backend automation or backend processes or backend policies, all those things.

We want to take it to the front end. I'm so happy to say you all that we have launched our first AI-led LOS in gold loans, and we actually have given two, three loans on Saturday, today also, which is a 5, 10-minute journey, frictionless, right?

We believe that AI will allow us to connect with people internally and externally seamlessly, their own comfort, language. In my opinion, if there is even a 10th pass employee, they can also be given job, and with the help of AI tools in their hand, they can be as productive as anybody else on the ground because AI will be doing a lot much, as the main, I would say, communicating with the customer, and the boy will be only doing the necessary things.

We want to invest a lot on those things. I'm not able to imagine that what kind of cost reduction that AI will do us because it's in very early stage.

If you ask me, being I would say retail physical-oriented franchise where the cost would always be high, I think AI will help us in two two sense. One, our productivity will go up.

Our channel distribution can go up. Our scale management will be lesser in terms of risk and all those things.

Eventually, the cost will get addressed, right? To get to some number is difficult, Nitin, in this call.

Maybe down the line 1 year, we will able to figure out that how much it will help us. There is a clear-cut advantage to the franchise when we do AI-led acquisition or AI-led assistance in so many cases.

Then I'm seeing a clear-cut differentiation in times to come. I don't want to say that AU will be the first AI-native bank, but we want to be in that category, and we'll put a lot of focus, money, people to achieve that.

I'm sorry, it's not able to build it around cost. Overall, the focus on cost is huge, if you ask me.

We have gone from 4.3% to 4.1% in this year itself. I believe next year, this current financial year, we should be lower than 4%.

This will be done organically, right? If you want to disrupt it, I think it has to be tech-driven, and that we are on the course.

I believe, because once you get about the universal and other banks, the scale is very different. I can't compare myself to the level of 2.5% or 2% kind of the expense on the asset.

Rather, I would say that the first benchmark should be that can I do around 3.5%, and that too in 3 to 4 3 to 5 years, right? I think it's so difficult to reduce your cost somehow, but I think the tech is able to give us that hope that if you start building it more on tech, and allow people to work on tech, this can be achievable, faster than what we are projecting this call also.

You want to add on Gaurav something?

No, I think you've captured it all right.

Yes, sir. Yeah.

Yeah. Thank you, Sanjay ji, for such an detailed answer and very good clarity provided on it.

One more question that I have is around asset quality. It's very heartening to see that the bank has delivered 1.8% RoA, what it guided for FY27, right in the fourth quarter itself.

From here now, looking at how the asset quality is shipping up, this quarter was particularly very strong. Should we benchmark our estimates around credit cost basis this quarter number?

Because if I look back, we used to have a much lower credit cost versus what we have seen in this year. Now we are approaching closer to that number in 4Q now.

Nitin, two, three disclosures, I think Gaurav very well articulated that. This is a seasonal quarter.

Always quarter four remains very strong in every sense. I would advise anybody that you should actually build this quarter credit cost as an overall cost for next year, and if you ask me, you should build it around 90 bps or maybe in that range so that this allows franchise to have some kind of risk-taking capability.

If we want to drive too tight in terms of credit cost estimation and in the market which we operate, it is not good for the organization, right, because we need to take risk in our market, in our business. I would say, build it around 0.90.

If we save something, it's all of us to share. I don't think that 1.8% this quarter RoA should be also seen as the permanent RoA because there are external challenges which we all know about it.

I think at AU, Nitin, we are building it a foundation where we can build a long-term very solid franchise, be it people, be it distribution, channel, geographies, products. We are investing in every side of the business, and you've seen how we are building our tech stack also.

I can say you that AU will be very sustainable in their results, because we are working on a lot of inputs. I think this year is our 10th year of our working, and I already said you, maybe a couple of years back, that it takes around 10 years to build a very strong foundation.

There is a lot of learnings coming up, from last maybe a couple of years. We are taking every learning to really build AU in a sustainable franchise.

I'm very happy that the way the team is taking the ownership, team is learning and building it up so beautifully. I believe that you people should not judge us from our this quarter number.

I think, if you see the whole year number and last 2 years' number, I think we remain very strong in our performances.

Right. Got it, Sanjay ji.

Thank you so much, and wish you all the best.

Thank you.

Thanks, Nitin.

Thank you for the opportunity. Congratulations on a great set of numbers.

First thing was on the credit cost. We also have RBI ECL norms coming through as we speak.

Any impact on steady-state credit cost for us given the Fincare book experience in recent years since we are growing that book again? In regards to the 90 bps guidance, how should that look with the new ECL guidelines?

ECL guidelines has just came in, right, and we haven't

It's exactly the same as draft. No,

I'm so sorry to to give any any guidance around it. You have to take us give us some time, and I've been told that we, as a SFB, is not covered under that ECL program.

Is that right?

I know. I was talking after you transition to a universal.

Let us Let us become into that. I don't think, of course, Vivek is on the call, you know.

Vivek, can you comment on that?

No, so, Jayant, it's too early to comment on it. Let us understand that, right?

You need to understand just one underlying factor that 90% is our retail secured asset plus retail, I would say, secured commercial banking book. It has a very different connotation to it.

Any guideline or any credit cost calculation would eventually work on the loss given default and probability of default, right? For us, loss given default retail asset has always been low.

I would just want to give that guidance, right? MFI is 100% of my incremental book is covered in CGFMU, and 90, as we speak, 92 close to 92% book is covered.

To that extent, right, any guideline or even the draft guideline had this provision that any government coverage would continue to get benefited out of it, right? Yeah.

Thank you. Second question was in regards to the geographical liability expansion, to say.

Next 2 2 years as you transition to universal bank, I do understand on the asset side you have some focus areas in the south. If you can help us understand what would be your strategy on liability geographically.

I do see some higher contribution from markets like UP, Karnataka. Why would their asset side not match up equally?

Just trying to understand the strategy over here.

No, I think, if you ask me, the most important strategy which we work on daily basis or maybe in execution or any meeting or any reviews around liability franchise, and I think you would have seen that at this level also, without having an right to win in those markets, we are able to grow our liability franchise this year too by 23%, right? If you ask me, we have all the facets there.

It's retail bank, which is around 60% of overall deposit franchise, then we have a government business and the cooperative bank, then we have a commercial-led deposits, then we have a FIG, then we have a CDs, treasury-led deposits. All are, if you ask me internally, we know that all are building up very nicely, and the focus remain to build all four, five facets for the liability franchise so that we don't miss anything, right?

In retail franchise also, there is subsector like NRI, there is a trust, there is special markets, and we are building all product line, all channel. Now days, we are also focusing to cross-sell more as a franchise becoming more mature and mature.

As of now, our liability franchise is not talking to the asset franchise largely. We want that to happen from this year onwards so that when we acquire a liability customer, it's not only a one transaction, right, it is more relationship, right?

We want to become a pan-India franchise. We want to open around 80, 100 branches every year.

We want to build a brand around it. Once we become universal, then the whole, I would say, the value of franchise will go up.

The people will understand us more and more. Our visibility will move more and more.

I think this year or maybe the next year will have a double-down approach where we want to build it, more faster, more granular, more impactful. I can assure everybody here that we became bank to build a liability franchise, right?

We know that we have a strength in our assets, but our core expertise or core leadership or core acceptance of our as a individual is around our liability franchise. You will see us more and more visible in times to come pan-India, and I'm sure that, being so successful on SFB platform, if you'll on a better platform, our performance will be far, far better.

Safe to assume, sir, since you're building this franchise, we shouldn't be building rate cuts on the card TD side, at least in the near term?

Sorry?

Rate cut on the pricing of deposits. Since we are in the build-out phase, we should assume that we are comfortable here, or is there any more opportunities on the card TD cuts that you see in the next two, three quarters?

I can't tell you any guidance around it. As I already commented in my earlier answer, that liability franchise at our franchise is a daily business.

We have to take the cognizance of market, of reality on a day-to-day basis. We have ALCO every month, right, and there we take decision that how much we can go up, how much we can go down, which sector we want to build, how much we want to build it.

It's very operational, in my opinion. If you see the overall result this year too, our cost of money has gone down by 32 bps.

Our CASA is around 29%, 28%. Our retail and stable money is around 70%.

Our LCR is around 118%. We remain so well in all matrices, right?

Idea is to not to have one side or two side, to remain very holistic in our liability build-up.

Definitely, sir. Congrats once again on a great set of numbers, and all the best.

Thank you. Thanks, Jayant.

Hi. Good evening, team.

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

One is on the asset quality side. As we have now come out from the asset quality cycle, how are we looking to strengthen the residual asset quality metrics like PCR, contingency provisions, and ECL as we go along?

Pritesh, I think, if you look at our Q4 numbers, it will tell you the exact story. We've always been very, very strong on retail secured asset.

Commercial assets have been range-bound. Large part of that was coming from our unsecured piece, which was credit card and MFI.

Now, both businesses are settling down, right? I would say obviously, there was a seasonality impact, but overall, things looks very different, right, from the days where these two portfolio had a bit of stress, right?

PCR is not a defined number. It goes by the provisioning policy.

There is no change in the provisioning policy, right? The ECL guideline, as it would come and we need to follow from 1st April 2027, obviously, some of it will have a impact on Stage 1, Stage 2.

Then, your accelerated provisioning at Stage 3 might get released. That working is yet to be done, right?

I'm saying that what are the final guideline, the underline, that's very difficult to comment at this point in time. We need to go through it.

We need to put it in our model, and we need to perfect our model first, right? Then only, we will be able to comment on it.

To add on Vivek, we have the provision policy, but at every quarter, the risk committee meets and assess any more provision they require. This time also, if you really see our PCR, which if you take the credit guarantee book out of it, then we are around 70%, right?

I believe you should see us there only, and I can assure everybody on the call that our focus always remain to secure any kind of probable loss through this PCR. That is there.

What was your other number?

PCR.

PCR

only. PCR.

Yeah.

Okay.

The second question was, Sanjay, just wanted to understand the philosophy for the approach on home loans from here. It's been mostly flat for some time now.

Will we focus on asset duration than yields in the next few years? Anything on that?

Home loan. Home loan, honestly, we are doing more affordable, right?

There, I would say, again, I think last call also or a call before, I highlighted that that market has become too competitive, and every new NBFC or HFC is coming and building their book there only. I don't think that now there is a risk reward left there, right?

We are not going irrationally, and we don't want to just do it to build up our growth there, because we have not much on table to really grow. Let's not look one data point, because we actually said that we want to grow around two times or maybe 2.25 or 2.5 to the nominal GDP, and which we really delivered, right?

It will be always like this, some book will be growing, some book won't be, but overall, we know that we are very diversified ourselves in asset classes, and we want to play our risk reward game every year. Wherever we feel that it is better to grow this book, we want to double down there.

We feel that this is not a right time to push this book, we don't want to do that, right? I think you have to see us that overall our growth is protected, which we are promising, right?

We'll play around wherever the risk reward is there.

Sure. That was clear.

The last question

Sorry to interrupt, Pritesh,

sir.

May we request you to return to the queue for follow-up questions, please? Thank you.

Sure. Thanks.

Hi. Good evening.

Thanks for taking my question, and congrats on a great quarter. Firstly, I just wanted to understand again how we should think about margins going into next year.

I heard you call out that there's a day count benefit this quarter and reversals as well, benefit of lower reversals. Benefit of lower reversals should stay, right, because slippages are say moderating year-on-year?

Basically, how to think about that going ahead? Yeah.

I think on margins, right, I'll repeat what I said earlier, right? On cost of funds, I think we've said that, this quarter, cost of funds may have bottomed out with the rate increases we have taken, right?

Then on your point around the seasonality in Q4, so that six bps for lower slippages, so that had two elements: one is your lower gross slippages, so that's a quarter-on-quarter improvement from Q3 to Q4, and second is your higher NPA reversals, right, within that number. Now, to the extent that Q4 is strong seasonally and Q1 is weaker, you won't see this benefit in the next quarter.

Okay. Basically, these one-offs will not be there, and cost of funds have more or less bottomed out and could increase from here.

Yeah. Your asset yield will reflect whatever the asset mix is, right?

That line is a bit difficult to call out. It depends on what is the mix of growth within the asset verticals, right, where your unsecured, even with the recovery, will probably grow at a pace slower than the rest of the book, right?

On a net-net basis, you may have some asset-mix-related pressure on yield.

Got it. Thanks, Gaurav.

Secondly, on fees, right, generally, in fourth quarter, there is a sharper seasonal uptick. I think it's in the loan assets and in the general banking fee that you call out in your slide.

Is there something that is not there this time that was generally there earlier?

No, I think there's nothing specific to call out there on that line.

This is normal then. Okay.

Yeah. Okay.

Lastly, if you could just call out So, your provision coverage is up. I think last call you had talked about something about how you provide for CGFMU, which is that you assume the recoveries will come through on the covered portfolio.

This quarter, we are seeing PCR has gone up again. Has anything changed there, or we are completely status quo on this as the PCR is clean?

Param, as Vivek mentioned, right, PCR is a function of accounting policy, right?

That and

where is your NPA coming from, right, which asset class, and what is the provisioning policy for that particular asset class determines what your PCR is. It's an outcome rather than an input, if you will.

Perfect. Thank you so much, and congrats on the great quarter again.

Thank you.

Thanks, Param.

Thank you, sir. Thank you for the opportunity.

I have one question on loan book in the southern geographies. How should you look at incremental growth coming from southern geographies, and what proportion of your total AUM should come from southern geographies, say, next 3 to 5 years?

Which segment

Akshay, your voice is a bit muffled. I think your voice is not coming very clear to us, if you could just speak clearly or

Is it better now?

A bit better, yeah.

Yeah. My question was how should you look at growth, AUM growth, from the southern geographies, and what proportion of your incremental growth should come from south in, say, 3 to 5 years, and which segments will be driving this growth?

Second related question is that it's been 2 years since the merger. The performance of the non-MFI segments often gets clouded due to the MFI weakness.

How has been the early-stage delinquency trends in the non-MFI segments in the southern geographies now that 2 years of growth data is there?

I would say that it's too operational now. We have become one bank, and it's not about southern market or north market.

Certain branches perform, certain branches doesn't perform. That is why our overall growth estimation, which we have linked to our nominal GDP, which makes you two times or 2.25 or whatever, right, in the range, we want to be on that guidance.

In that, some product will work, some won't. Some geographies will work, some geographies won't.

That's the reality of the situation. I think the way we have build ourselves overall as a franchise where we have build, I think, 10, 12 product line in asset classes around 2,500 touchpoints, we want to grow our distribution, we want to grow our team, we want to grow more and more into the market, right?

There would be also a change in our customer segment once we want to cross-sell more to our existing base. I think it's not relevant because you want to judge our overall growth rather than some market growth.

I think I would say that, from here onwards, we really want to focus an overall growth matrix, overall NIM, overall other income, the credit cost so that we remain solid in terms of overall performance, because if you start picking one market, one product, one things at the call level, then I think I would say the fragrance of franchise get lost. As I already communicated that I'm so happy that the way we are building ourselves, the next big thing in the banking franchise where we want to become a pan-India franchise with lot of product offering in liability and asset, with the physical distribution and with the tech-led capabilities, with one data matrices which overall looks very good.

I think that's the approach, and I think and there is no perfect world, honestly, and we have learned that in last 9 years that there won't be any perfect day. You have to go every day and build yourself in this whole imperfection.

The way we have understood the market that, in the end, it all becomes good. I would rather say that this year remain one of the, again, more of a learning year for us, and let's see how the next year goes into it.

I think, after 10 years, I would say that we'll become more predictable in every sense.

Understood, sir. Just on the RoA target of 1.8%, so, from what I can get from the call is that your margins might stay flat to maybe a slightly down because of mix shift, credit cost, you are asking us to build around 90 basis points versus 60 basis points in the current quarter.

Should we assume that a large portion of the 1.8% RoA should come from cost?

Akshay, I think Gaurav said you that we want to work on our cost. We really want to work on our credit cost.

One is your own model where we want to say that project us for 0.90, but our performance should be better than that, but it's an outcome, right? Again, it's difficult to comment in this kind of time where, last year when we were there, it was so difficult environment, but in the end, we have performed well.

I believe that once the external environment becomes I would say more predictable or that vulnerability goes out, I think internally India looks very bright. Internally India looks very sharp, and we believe that we are building this bank for Indian or India, and we will perform.

Understood, sir. Thank you.

Thank you for the answers.

Thank you. Thanks, Akshay.

Hi, team. Good evening.

First question is on deposits. There is good progress on CASA deposits, especially on CA in FY26.

The question is on cost of funds. I understand that there will be intermittent pushes and pulls from the rate cycle and competition.

More through the cycle, do you have an internal target of where this cost of funds should be, let's say, relative to the banks with the lowest cost of funds after you get the universal bank license? That is one.

Along with that, if you can also share the amount of retail deposits on the balance sheet as on March '26.

I think the way we are pushing internally that our cost of money should be around the repo rate prevalent at that time. If you ask me, at this time, the repo rates are 5.25%, and my costs remain around 6.75%.

If you see the mid-sized bank, they are around 6.25%, and old three, four banks are around 5.25%, right? Ideally, once we become very mature in our universal banking avatar, then my cost should be around the repo rate at that time.

That's a long-term dream and target, but can't comment that when will we reach there. Because you're asking me, so that I'm giving you that the view of us internally.

Second question, you're around is Retail TD? Sorry, what's your second question?

Amount of retail term deposits, sir, as on March.

Ashlesh, I think we've covered that in our commentary, right, in terms of how we are looking at the deposits. Maybe I'll just add a bit more color around this.

We have created four sort of focused segments for our deposits business. One of them is branch banking, which is primarily targeting retail deposits.

Branch banking's contribution to the overall deposits is about 60%, right? That's one.

Then the other segments are wholesale, government, and FIG. Right, second data point we have disclosed is on the stability of our deposit base, where when you look at CASA, retail TD, and your non-callable wholesale, that ratio we've disclosed is 79%, which is, sort of stable versus the last year, right?

Those are the two data points we've disclosed in our presentation.

Sir. Sir, and secondly, on the growth outlook, given the uncertainty on the macro, when do you expect to take any action on, let's say, curtailing risk or pulling back credit, yeah, or do you intend to do that?

It will happen automatically. It will remain because we want to remain very risk-averse, and wherever we'll find the indicators, which is as of now is not there, but we believe that and we already have said in our opening remarks that wherever we felt that this market, this product, this customer base might get affected because of this challenge, we don't want to onboard them.

It will happen automatically because we have built our credit underwriting model around this.

Understood, sir. Thank you.

Yep.

Thank you, Sagar, and thank you, everyone, for joining the call and your questions and for all your support. In case you have any further questions, kindly do reach out to the IR team.

Good evening, and good night.

Thank you so much. Have a good time.