Yeah. Thank you, Darwin, and good evening, everyone.

On behalf of Ambit Capital, I would like to thank the management of City Union Bank for allowing us the opportunity to host Q4 FY26 earnings call. We have along with us Dr.

N. Kamakodi, MD and CEO; Mr.

R. Vijay Anandh, Executive Director; Mr.

V. Ramesh, Executive Director; and Mr.

J. Sadagopan, CFO.

I will now hand over the call to Dr. N.

Kamakodi, MD and CEO of City Union Bank, for his opening remarks. Over to you, sir.

Dear all, hearty welcome to all of you for this investor call to discuss the audited results of fourth quarter and the financial year ending 31st March 2026. I hope all of you have received the results and the presentation.

As you all know, it has been 15 years since I was appointed as the MD and CEO of this prestigious institution with over 120 years of legacy. As you all know, as per the regulation in force, I am completing the maximum permissible tenure of 15 years on 30th April 2026, and I have to hand over the responsibilities of this great organization to my successor.

Hence, with this investor call, I am signing off and passing on the reign to my successor, Shri R. Vijay Anandh, who will take charge with effect from 1st May 2026.

This concall is my 60th call to the investor community, and I am happy to see and interact with some of them since my first concall. My thanks to all of you, and special thanks particularly to those with whom we have been traveling over 15 years.

At this juncture, when I look back my long journey spanning over 1.5 decades, I could relish many moments which are filling my joy and satisfaction. If I look back at the performance of the bank during my stint as the MD and CEO, I have done my best and feel satisfied with the level of progress the bank has achieved during this tenure.

Of course, many more things could have been done, but whatever that has happened in the 15 years is really satisfying. I would like to summarize few, let's say, points before I get into the progress of financial year 2026.

During this 15 years tenure, the bank has achieved many milestone. If you look into the paid-up capital between 2011 and 2026, increased from ₹41 crore to ₹74 crore, about just under two times growth, which we have achieved without diluting the capital, let's say, without burning the capital, without much increase in the overall paid-up capital, we have done that.

We have seen the deposits during the 15 years increasing by six times, advances increasing by seven times, total business increasing by about seven times, net profit increasing by about six times, the number of branches increasing by four times, the total number of staff members increasing by three times, market capitalization increasing by ₹1,815 crore to ₹19,450 crore, which is about 11 times or CAGR of 17% in this 15 years, and the net worth of the bank increased from ₹1,007 crore to ₹10,459 crore, which is almost 10 times increase with a CAGR of 17% during this period. I take this opportunity to offer my sincere thanks to various stakeholders, be it shareholders, customers, employees, regulators, and everyone who supported the bank and stood with us in this journey which has happened during these 15 years.

I also request you to offer this unwavering support to my successor, Shri Vijay Anandh, whom I am sure will take the bank to newer heights with your blessings and support, and I wish him good luck. Being the last quarter, since I am not going to get this opportunity again, I will go through the numbers, and I will hand over the mic to my successor for sharing the outlook of financial year '27 and beyond, and I will be discussing with you the progress which happened during the last year.

During this fourth quarter, two of our independent directors of the board, Shri V. N.

Shiva Shankar and Dr. Sridhar, IAS retired, had remitted their office on close of business hours of 6th February after completion of 8 years tenure.

On the board meeting held on 2nd February 2026, board of directors had approved the co-option of Shri K. Subramaniam as additional director of the board, in the capacity of the independent director, who is a chartered accountant and seasoned IT executive with expertise in various fields like information technology, including artificial intelligence, risk management and all, and shareholders have already given their approval for his appointment through the postal ballot.

In the board meeting held today, board had inducted Shri R. Mohan as additional director.

He is known face and he had served the board as the non-executive chairman earlier. They will be strengthening the board to take it to the, let's say, greater heights.

If we look into the earlier concalls, we had shared with you our expectations for the current financial year, that is financial year 2025-26, as follows. Like we said, we will end up with high teen growth for the financial year 2026, which will be over and above the industry-level growth, and the focus will continue to be in the areas of core MSME, gold loan, and secured retail.

We said our growth of deposits will be aligned with the credit growth, with the focus on CASA and granular term deposits. We said the effect of CRR cut will have some positive bias in the fourth quarter along with, let's say, NIM levels holding up.

We also said the RoA is expected to be, let's say, around the same level of 1.5% what we were having during the first three quarters, and our cost-to-income ratio will be in the range of about 48% to 50% and all. We also shared our slippage for the whole year will be about 700 to 750 compared to about ₹800 crore plus during the financial year 2025.

By and large, almost all the expectations, whatever we shared with you in the earlier concalls for the financial year 2026, were met in the same spirit whatever we had shared with you. During the fourth quarter and year ended 31st March 2026, we have registered highest business growth in the past decade, with growth level achieving about 24% in the total business in the year-on-year.

After the financial year 2013, this is the highest growth rate whatever we had done. In between, we moderated the growth in a steady fashion, which helped us to, let's say, cross through so many currents which were in the banking industry in the last 15 years, like by not participating in the, let's say, corporate advances, unsecured retail and all.

In fact, one of the reasons, let's say, when we feel, let's say, satisfied with the way of progress in the last 15 years is not because I did something great or I did something innovative or I did something new; it is more because we had successfully avoided many pitfalls, be it the, let's say, corporate consortiums or infrastructure lending or unsecured retail and all, which had, in fact, dented the asset quality of the entire banking system, and most of the banks got affected, and we were very few banks which stayed clear of those risky sectors and not getting affected because of the many, let's say, cyclones which were happening in the industry, and we were fortunate to go through that. The growth is also continuing in the same, let's say, areas and composition, like be it gold loan, particularly focusing on the agricultural gold loan, and also through the secured retail or secured MSME and all.

We have not yet, let's say, as decided later, we have not ventured into, let's say, risky areas with a lot of fluctuations and all. We were able to achieve this 24% growth, whatever we had achieved last year, purely through just focusing on the, let's say, areas which we had done in the past, let's say, staying clear of, let's say, any pitfall.

That's one satisfying thing which had come. In fact, the secured MSME or secured retail like housing loan, loan against properties and all, the verticals which we had created and all has, in fact, increased the capacity, helped by the Newgen and other LOS software with the processes set, and perhaps giving the feeling that the best of CUB is yet to come, and probably we will be having many more milestone in the years to come under the leadership of my successor.

We had registered about 26% advance growth for the Q4 financial year '26, and it increased to ₹66,698 crore from the ₹53,066 crore compared to the same period last year. As explained earlier, this is the highest credit growth for our bank.

We achieved this 25% plus growth rate after almost 13 years. As we said in our last few concalls, the growth is consistent, starting from the Q1.

We had achieved double digit in fact, Q1 financial year '25, and we had achieved a double-digit growth over the last eight quarters up to the Q4 financial year '26. In Q1 alone, our advances had grown by over ₹5,800 crore.

For the full financial year, the incremental credit growth is ₹13,600 crore. As given earlier, our focus will be on core MSME, gold loan, and secured retail, and we will continue with the targeted growth of mid-teen to high teen, with about 2% to 3% over and above the systemic growth rate, as we had been consistently communicating to all of you.

On deposit front also, deposit growth matched with that of the credit growth. Our deposits had grown by 23% and stood at ₹78,308 crore for Q4 financial year '26, as compared to ₹63,526 crore in Q4 financial year at the end of the Q4 in the financial year '25.

In fact, if you had observed, the growth had been granular and through, let's say, both CASA and retail term deposits. We had, in fact, retired some of the certificate of deposits in the fourth quarter, getting substituted by the, let's say, retail term deposits.

Our average CD ratio for the financial year '26 stood at 85%. The CASA percentage to the total deposits stood at 28%, and the CASA growth is also matching with that of the growth, and, in fact, in average CASA growth is also very much favorable, let's say, giving us the confidence that, let's say, we can increase the growth by few percentage point more than what we had envisaged during the earlier period.

On asset quality front also supported us, which actually helped us to, let's say, with the confidence, maybe go for some incremental, let's say, higher growth rate compared to whatever we had communicated to you all in the earlier concalls. On asset quality front, the recovery is more than the slippage in the current quarter as well, which is the trend we have been seeing for the last several quarters.

For fourth quarter financial year '26, the total slippage is ₹199 crore, and while the total recoveries is ₹231 crore, consisting of ₹153 crore from live NPA accounts and ₹78 crore from the technically written-off accounts, resulting in reduced NPA figures. Our gross NPA percentage had reduced to 1.91% from 2.17% in the Q3 financial year '26.

The gross NPA has come below 2% mark after 11 years. It was 1.86% for the financial year 2015, and it has come to 1.91% in the financial year '26.

Both gross NPA and net NPA, both in percentage terms and absolute terms, is reducing every quarter for the last three years on a continuous basis. When compared to the Q4 financial year '25, the gross NPA had reduced from 3.09%, which is about 118 basis point reduction.

Similarly, net NPA percentage decreased to .68%, that is 68 basis point in Q4 financial year '26, compared to 1.25% or 125 basis point reduction, resulting in 57 basis point on year-on-year basis. Our last concall, we had stated that our overall SMA, including our SMA-0, 1, 2 put together, are in decreasing trend for the past few quarters.

Total SMA numbers for the Q4 financial year '26 stood at 2.47%, compared to 3.68% in Q3 financial year '26 and 5.60% in Q2 financial year '26, showing sequential improvement, and that improvement is also quite substantial. Overall SMA-2 percentage to total advances had stood at .72% for Q4 financial 26, compared to .95% in the Q3 financial year '26, 1.34% in Q2 financial year '26, and 1.59% in Q1.

In other words, in Q1 it was 1.59%, in Q2 it was 1.34%, in Q3 it was .95%, and currently you are seeing it at .72%, and showing a sequential increase for the last, let's say, four quarters. We are seeing this, let's say, improved asset quality cycle, and perhaps I can even say this is perhaps the best asset quality point in terms of both SMA position also in my last 22 years of stint in the bank.

We are yet to see any impact of US-Iran conflict and things like that. We are keeping the fingers crossed and closely monitoring the situation.

Far, it has not yet started reflecting on the asset quality front in our portfolio. In fact, it is showing, let's say, continuous improvement even after the onset of the conflict is giving us confidence.

Anyway, we are keeping the fingers crossed and monitoring the situation closely. For the Q4 financial year '26, provision coverage ratio with technical write-off stood at 84%, which improved from 78% during the corresponding period last year.

As we said in our last concall, we are improving our provision coverage ratio without technical write-off every quarter, starting with Q1 financial year '25 to bring closer to the industry level. For the current quarter, PCR without technical write-off improved to 65%, compared to 60% during the corresponding period last financial year, that is financial year '25.

Our interest income had also grown by 21% in Q4 financial year '26 and improved to ₹1,856 crore from ₹1,533 crore in Q4 financial year '25. For the full year ended financial year '26, our interest income improved to ₹6,870 crore, as compared to ₹5,834 crore, that is 18% growth for the corresponding figure last year.

On yield front, our yield on advances stood at 9.80% in Q4 financial year '26, as compared to 9.73% in Q3 financial year '26, showing a marginal improvement by 7 basis point. For financial year '26, the same was 9.75% against 9.79% in the financial year '25.

On the cost side, the cost of deposits stood at 5.60% for the current year, compared to 5.57% for the Q3. As a result, our net interest margin stood at 3.87% in Q4, compared to 3.89% in Q3.

It is almost, let's say, hardly about 2 basis point plus or minus, and within the narrow band which we said last year during the earlier concalls. For the year ended 31st March 2026, the net interest margin is 3.74%, which is 14 basis point more than the 3.60% whatever we reported in the financial year 2025.

We expect the stable net interest margin for the current financial year '27 with almost, let's say, in the same narrow band of maybe 5 to 10 basis point this way or that way, but we hope to maintain that. What we have to now understand is that because of the changes in the calculations of the LCR, we are getting a lot of elbow room in, let's say, even having, let's say, even slightly increased credit-deposit ratio, which will be having some, let's say, positive contribution to the overall margin vis-a-vis whatever potential, let's say, increase in the cost or reduction in the yield which may result because of the changes in the economic condition, because of the US-Iran conflict or whatever it is.

Some amount of elbow room is available there in managing that. The total other income for the financial year '26 increased by 16% to ₹1,039 crore from ₹898 crore in the financial year '25.

With a limited opportunities in the treasury profit, it has happened because of the compensating contribution through the other means like the insurance commission, processing charges, and other fee income. Our operating profit had grown by about 20% in financial year '26 and increased to ₹2,014 crore, compared to ₹1,679 crore in financial year '25, which is aligned with the business growth.

The PAT growth in the current quarter is ₹360 crore with 25% growth, compared to ₹288 crore in the fourth quarter last financial year. Our current quarter PAT is highest in so far in the single quarter.

If you look back a decade ago in financial year '14, the annual PAT was ₹347 crore, and current PAT is more than that, let's say, it has happened over a period of time. For the year ended financial year '26, we had ₹1,326 crore against ₹1,124 crore last year, showing an 18% improvement in the profit after tax on year-on-year basis.

Our cost-to-income ratio for the fourth quarter improved to 46.15%, compared to 48.56% in the Q3 and 49.16% in the Q2 last year, showing, let's say, about couple of basis point decrease. For the year-ended financial year '26, the cost-to-income ratio is 47.93%, which is in line with our guidance of, let's say, 48% to 50% for the year as a whole.

Our return on assets for the Q4 financial year '26 for the full year is '26, financial year '26 is at 1.56%, which is on at par with our long-term average growth over the 15-year tenure. If you had a chance to look into the consistency number over the last 15 years, except during the 3 years of COVID for financial year 20, 21, and 22, we had always been, let's say, about 1.45% plus almost in all quarters.

At least for 10 quarters or so, it is above 1.5% is what we had demonstrated over the period of time. For your reference, the summary numbers are given to just to give you a look.

Overall, the 15 years had been rewarding and to greater extent satisfying, though there were things could have been better but the challenge had been to ensure that we don't get into any pitfalls, and, let's say, we had, to greater extent, navigated through multiple cycles, be it, let's say, even during the 2008 global financial crisis, I was the executive director, I was part of the system. Then we had the AQRs, gold price crash of 2014, demonetization, and the introduction of the GST.

These things were affecting the core sector of MSME, which we were supporting, but we could manage that. The COVID was something which unexpected, in those period, we had to do that.

The digital transformation and all which had happened has started giving results. Far, good.

To thank you all in person, in fact, I'm coming to Bombay, and we have arranged for Thanksgiving dinner tomorrow, preceded by the analyst meet when I will be meeting all of you in person. I extend my hearty invitation to all of you to join in person tomorrow for the concall by 5:30 at Grand Hyatt BKC.

It will be followed by get-together and dinner, looking forward to meet you all. Before we get into the question-and-answer session, I request our ED and MD and CEO designate, R.

Vijay Anandh, to share his expectations for the financial year 2026-27. After that, we'll get into Q&A.

Thank you, sir. Am I audible, sir?

Thank you.

Yes, sir. Perfect.

In terms of vision for 26-27, with respect to advances, we should be 2% to 3% over and above the credit growth of the industry. However, our focus on MSME will remain same.

Gold loans and secured retail will be an additional enhancer. MSME proportion will continue to dominate with 55% to 60%, followed by GL with 30% to 35%, and remaining, we are planning to do this through secured retail.

We will focus more on branch-led business. Now that we have 1,000 distribution branch channels, our business through third party on a overall bank's book, we envisage to be only between 1% to 2%.

Hence, our focus on secured products will continue for the year. Our endeavor on CDR continues to be 85% to 87%, based on the credit growth.

We are launching segment-specific products for women and senior citizens, and we are also enhancing the product proposition in savings and current account. With respect to fee income to other income, we will be in the range of 55% to 60%, as like last year, contribution of fee income to other income.

The only thing what we see here is, normally we open the branches only on the third and fourth quarter of every year. Now in the first month, we have opened 70 branches in the first month itself.

We expect an elevated operating expenses for the current year in the range of 15% to 18% over the last year. This is about what we have planned for the year, sir.

I forgot to add this point of opening our 1,000th branch. I'm happy to announce that today morning, we completed the opening of the 1,000th branch near our headquarter, Kumbakonam.

We wanted to achieve this milestone before I lay down my office. What we have done is that every year, we open about 75 branches, and last year also, we opened 75.

We closed the year with about 950. For the 75 branches, the first half branches, about 50 branches we opened in the first month itself, in the April itself.

The remaining 25 will get opened towards the year-end. The point is that the same pace of 75 branches is what we expected to grow.

As Vijay Anandh said, normally, we will have branches getting opened in the fourth quarter, and majority of them, let's say, coming close to, let's say, breakeven in the first year, and some of them slipping into the second year. There will be some changes in that thing, but overall level at a macro level, they are going to add for our increased distribution capacity, which I forgot to tell.

With this, probably we can get into Q&A. For futuristic questions, Vijay Anandh will answer.

For the present and past, I would like to answer to that extent possible, and if I'm not able to do justice, Vijay Anandh will chip in.

Hi. Good evening, sir, and thanks for the opportunity.

Many congratulations for the meaningful career at City Union Bank and driving the bank to a very impressive height and creating shareholders' value. Sir, my first question is regarding gold loan.

Right? Far, the gold loan have grown at a much faster pace than overall loans, and I believe this is not an asset quality issue at all.

I just wanted to understand the risk practices here, in the sense that let's say in January, Feb from the peak of gold prices, gold prices have come down by 10% to 15%. How do we manage the risk management for those portfolio which have been originated at let us say ₹165 a gram of 10 g gold loan.

If a gold loan was originated at ₹165, whereas it has come down by 10% to 15%, while at the portfolio level, the LTV is very respectable, very manageable, but how do you manage the risk in those portfolio?

See, thankfully, we had the, let's say, experience of 2014 when you had a similar gold price crash, which gave us some sleepless nights, but ultimately, we ended up in not missing much, but had to book a loss of about ₹5 crore or something like that only. We had to go through a painful process of auctioning and things like that.

Keeping all those things into account, when the, let's say, gold price crossed beyond, say, ₹12,000 and things like that, we did not increase the per-gram rate beyond that. When it went to that 15,000, 16,000 and all, we had continued to give at the range of about around ₹10,000 per gram or not.

We had never crossed ₹10,300 or something like that. We have sufficient, like say, cushion built into that, let's say, gold loans which were issued when the share price was at that level, as we had higher, let's say, margin when we gave that loan.

That is not giving us, let's say, any concern at this point of time. Even if another, let's say, 10%, 15% crash, which is unlikely, let's say, we will still be having, let's say, this is in addition to the RBI-given, let's say, LTV margins and all.

We have sufficient cushion at this point of time. That is not a concern at this point of time.

Okay. Even irrespective of gold loan prices, you would have kept per-gram gold lending at what you said, ₹1,000, ₹1,100 at max, right?

Yes. Not only us, almost the entire banking industry, it had that discipline and there was no undue competition in particularly rates.

The what goes up has to come down. That's something which we always, let's say, keep in mind.

When the increase in the price was too sharp, we all had a wait-and-watch policy, and I don't think any bank ever gave any, let's say, per-gram rate beyond 11,000 and all. Even 10,500 was something just maximum, even at the peak level of 15,000, 16,000, whatever that happened.

Okay. Great.

Glad to know, sir. Secondly, on cost of deposit and yield on advances, right, for this quarter, reported cost of deposit has increased by 3 basis points.

Does this mean that if there is no change in the rates in the card rates, the cost of deposit should start rising, or there is something which was unique to this quarter, and next quarter we should still see cost of deposits moderating, or how to look at cost of deposits incrementally? Have they bottomed, now seem to move up?

See,

let's say, there were, let's say, some amount of fine-tuning. When we saw the advance growth rate increasing at a much faster rate, some amount of 10, 15, 20, 25 basis points that we had to fine-tune the rates to ensure that we get retail term deposits as usual with the flow so that we are not stopping the credit growth for not having the deposits per se.

What I have to say is that it gave us a sufficient cushion so that we could even retire the high-cost, let's say, certificate of deposits and things like that. See, the one thing what you have to keep in mind is that the 3 basis points, 5 basis points difference and all could happen even because of the variations in the average CASA rates and all.

These are all too, let's say, finer things you can monitor and control. You have to just report whatever that comes into.

What I can say is that there was no significant changes that happened in between to show that, and, in fact, that's why we could almost have incremental CD ratio of 100%. We can, in fact, like say, for the still maintaining liquidity coverage ratio, we can go for another ₹3,000 crore of advances without increasing the deposits and all.

To that much elbow room is also available. These sort of tactical decisions we take depending upon the day-to-day ALM and the regulations which are prevailing, and don't read too much into 3 basis point thing.

What is available to you, it is very much on the table is that, on one side, you had seen the rates getting reduced by the central bank. At the same time, you saw the 10-year bond yields increasing.

There were dichotomous response with the, let's say, liquidity, market rate, bank rate, and rates given by the central banks and all. They are not, let's say, going in tandem, which they normally used to do during the normal, let's say, normal business environment because of so many changes due to the, let's say, Iran war when you saw a lot of fluctuations in the flight of capital from one place to other, there are so many factors which were happening.

Even though, let's say, we had terrifying, let's say, fluctuations and signals in the, let's say, TV panels, the operating level, there was absolutely smooth, and we did not have any issue. How long this calm will continue, whether it will continue like this or whether it is a calm before storm, yeah, all these things depend upon how long the conflict goes there, whether you will have, let's say, higher inflation because of the oil prices and things like that.

Other factors are that, but up to this, don't read too much into this 3, 4 basis points and all.

Right, sir. Sir, similarly, on yield on advances, there was a 25 basis point rate cut.

Even for the last 6 or maybe 12 months, the yield on advances, even on a YoY basis, is only down by 13 basis points. In the mix, we had higher proportion of gold, so that is what maybe helping.

I'm sure you have passed on the 25 basis point, and the MCLR book, has that also been repriced? Assuming no change in the RBI policy rate, how should one look at the yield on advances incrementally, sir?

See,

you may remember, I think, in the last concall, we said the passing of the rates was completed somewhere in the month of December, if I remember correct. We specifically gave that, and that part is through.

The incremental book, let's say, for example, it's a new contract, and incrementally the weighted average yield, let's say, is holding up, and as you rightly said, 30% of our book is in gold loan, which is in the fixed rate, and non-agri gold loans are having even double-digit yields. Even though you have only that mathematically speaking, only that whatever yield, it will be only to that, let's say, 65% of the portfolio or sort of.

Incrementally, the yields are holding up, and that's why we are able to see the margins holding to a greater extent.

Right. You did pass on the rates, but you may have tweaked the spreads, right?

Is that also helped, sir?

Pardon? Repeat the question.

I'm saying, sir, you would have passed on the rates, but the spreads, you would have managed better, right? That is why the yields did not drop as much, apart from the gold loan and mix change.

Exactly. That's why I said.

Since 30% plus is on the fixed rate, maybe about remaining 70, you can perhaps take apart from the other loans and all, about say 2/3 would have had that, let's say, passing on. That's why and incremental, whatever the 5,000-odd crore we booked in the second half, since we were able to, like say, book with the enhanced incremental yield, overall we were able to maintain the margin.

Right. Sir, second last question on RoA, right?

We have delivered very stable 1.5%, 1.55% kind of an RoA, maybe 1.56% this quarter. When do we achieve the next level, sir?

The growth is now come back very very strongly. Margins hopefully, as you said, should be more or less stable.

When do we go to the next level, let's say 1.7%, 1.8% RoA? What would be your sense for the next year RoA full year?

Technically speaking, it is a futuristic question for which Vijay Anandh should answer. Before handing over the mic, maybe I can say one thing.

You have started seeing in your DuPont analysis the operating profit margin has started holding up, and we had to go for extra provision for NPA because, honestly speaking, somewhere around, let's say, 2013-14, we decided to have our net NPA always above 1% because keeping it less than 1% was not giving us elbow room to maneuver things, and it was giving us extra mental pressure to, let's say, manage, and that was reasonably good compared to the, let's say, peers in the sector. That was the time when that AQR and all started, and things were much worse for the industry as a whole, and we wanted to use that phase to have a higher thing.

Now, since the industry environment has changed, stage by stage when we had to, as during the COVID period, the slippage ratio increased by about 1% more than normally we used to have two, which has come down substantially. That two, in fact, increased to 3% during the COVID period.

The data is already there with you, and the recoveries were also not happening because of the courts were not functioning. Because of that, last 2, 3 years, we had to make substantial provision to continuously reduce the gross NPA and net NPA percentage, and thankfully, because of the, let's say, recoveries more than the slippages and also making more provisions, we are able to have the coverage ratio also improved.

Since it has reduced, maybe after it reaches further down, maybe we will get some extra elbow room even after making provisions for your ECL provisions and all. There will be some cushion which can improve RoA.

It is not fair on my part to explain further. Over to Vijay Anandh, please.

Absolutely, sir. I think we should exit this year with that 15 to 20 bps more in RoA, we should be there between 1.65% to 1.66%, 1.67%.

That's the number probably we will plan basis the retail income deliverable and a little bit of cost-to-income coming down. That's our endeavor to get there.

Okay. Great.

Great, sir. Last question, sir, on your association,

after Yeah, 1 minute, Abhishek. As we are talking, looks like the ECL provision has come, a circular has come.

Looks like it has now asked the banks to adjust in the opening balance itself in the reserve so that no impact on the P&L. Since we have 20% plus Tier 1 equity, let's say, I don't think ECL provisioning requirement may not be there in the future, which is also a good news which we are receiving.

Go ahead, Abhishek.

Great, sir. Sir, the last question is, sir, on your association, of course, after remitting the executive role, what is the plan ahead?

Do you intend to be there as a non-executive director, or that is not confirmed as yet, or how do we see that transition, sir, if at all? Thank you.

See, I'm, let's say, honored by this question, and in fact, board also asked me to, let's say, ask for my comfort to join the board in the non-executive capacity, which, let's say, I said, I'm honored for that offer. It depends upon the regulatory comfort.

Looking into the comfort of the regulator, at appropriate time, a call will be taken in future, whatever time frame on getting the acceptance you have on the comfort of the regulator, we will be taking a call on this front. At the same time, post relinquishing the post, they have offered me an honorary position as the chairman of the City Union Bank Foundation, which is the CSR arm of the bank, to oversee the implementation of the CSR projects and all in recognizing the position.

The same was offered to my predecessor also, and he continued for my predecessor and guru, Shri Balasubramanian. He continued as MD and CEO.

When I took over in 2011 as MD and CEO, he was non-executive chairman of the board. After he had to retire after completing his 8-year tenure or whatever the regulatory thing the 70 years or whatever.

Regulatory, whatever 70 years or whatever 70 years at that point of time. After that, board offered him the position of City Union Bank Foundation, and he had, let's say, relinquished that position to me.

Post my, let's say, laying down the office as MD and CEO of the bank, I'm honored to take the position of chairman's City Union Bank Foundation, and any non-executive in the bank or the board and all, it depends upon the regulatory comfort. Once we get a positive feedback, we will take a call on that.

Board will take a call on that.

Right. Very clear, sir.

Thank you, and all the very best, sir. Thanks a lot, sir.

Kamakodi sir, thanks a lot. It's been amazing 15 years that you have given us trying to understand the bank and the sector in detail.

Just two questions from my side. One is, internally at the board level, do you have an upper limit on how much of gold loans can the bank take, and has there been any change recently?

Number one. The second question, when you look at the demand for SME loans that you're seeing on the ground, if you could just kind of give us some color as to, is this just simply working capital utilization that is going up, taking advantage of raw material prices, cash flow mismatches, what is the nature of the demand that you're seeing on the ground?

Or are you doing much higher balance transfers as compared to what you did earlier? These are my two questions.

Thank you,

sir. Sir, yeah, yes.

Thank you, Mahesh. When you said you are trying to understand the bank, maybe at least I think in 15 years is a long time to understand.

I think, I hope you have, let's say, that part is through because we have been interacting for quite some time, and thanks for all the support and interaction whatever we had. See, on gold loan, basically, the 30% to 31%, 32% itself is, let's say, we are almost at the upper band.

Even if it is a what is that? A sweet kheer, you will not be able to take beyond couple of cups or so.

You need a limit for everything. Maybe there could be that 1% or 2% here and there, like say, increase, like say, it's not that don't ask you said you have upper limit at 30.

Why are you at 31, 32 and all? That the 1% or 2% fluctuations could be there, but when it crosses 30, at least we have to take it with a pinch of salt is the approach which we keep for the gold loan, and this is something which we have to, let's say, accept.

On the MSME front, the growth is because of the combination of all the factors which you mentioned. In fact, you may recall when the RBI policy statement was given out, it, in fact, talks about the capacity utilization of the economy has, in fact, increased.

Which went to about 70% post COVID, you will normally see capacity expansions happening in the, let's say, when it crosses, let's say, 84%, 85% and all. You are able to see things reaching there.

We could see, let's say, many of these units are, let's say, reaching their near capacity level. They are going for expansion, the utilization of the CC limit, and also balance transfer.

All these things are happening, and, in fact, when you compare that with the lowest SMA level which you are seeing, particularly in this geography where we are having our significant portion of our exposure, it's a combination of all the factors which you mentioned.

Just one clarification. When will you start tightening the filters on underwriting?

As in, what will it take for you to decide saying that things on the ground is starting to get a little bit more riskier than before? Given that we know where the fuel prices are and we know that there will be some impact on demand, what will it take for you to tighten the belt on that front?

See, one numerical number will be your SMA numbers, first part. Second thing will be the anecdotal feedbacks which you get from the customers.

See, day in and day out, let's say, even when I am at a central office, at least every day, let's say, we will be having not less than, let's say, 4, 5 customer interactions when people who meet us will be of reasonably maybe not a very small one, there will be medium-level thing and all. Whether we sit in our office or we go visit the branches and all, and during the reviews, the feedbacks from the anecdotes which we get from our branch managers, from the customers we meet day in and day out, coupled with the SMA numbers what we are seeing, we will get a feel.

That's how over the last 15 years, to greater extent, whatever I had felt during this interaction, I have shared with you all during the concall. The common sense says that you have to enter into the tougher period because of, let's say, your inflation or global crisis or things like that, and we are closely monitoring the situation, keeping our eyes and ears on the ground to get the feedback.

Basically, but one thing which you have to see very clear is particularly the business loans whatever we are giving, they, let's say, for example, there could be finer, let's say, changes in the filters and all. Whenever the filters what we are trying to fit is every borrower we give, at least we should be convinced that they have sufficient, let's say, resilience to run over through multiple business cycles.

Maybe that incremental slippage risk of maybe 1% or 2% extra may come because of this economic cycles and all. The filters what we keep is basically the, let's say, they are what is that?

Business cycle agnostic, because when we give loan, maybe it looks the figures are rosy. Maybe 6 months down the line, if the economic cycle downturn if at all it happens, it is going to affect all the existing customers also.

We go with some extra caution. That is one thing.

At the same time, we have to be very clear that unless and until something like COVID happens and all, in other business cycles and all, the underwriting and all, we normally look into multiple business cycles and not just for one or two downturns through which you are passing through.

Sir. One last question.

What proportion of your loans would now be covered under the CGTMSE scheme or any other scheme of the government?

It's very minuscule. Jayaraman, do you have the data with you?

I don't think it is going to be more than 3%, 4%.

You think it's not useful to take a cover today?

No. See, there are multiple things.

One, like say, most of the customers when you deal with, they are happy with giving extra collateral and taking loans with the lesser rate rather than paying the CGTMSE premium.

Okay. Sorry, Jayaraman sir was saying a number.

I just wanted to take a note of that, sir.

That number

is mostly around 2% to 3%, that's all.

2%

to 3%. 2% to 3%.

Perfect, sir.

Okay. Thank you, sir.

Hi, sir. Am I audible?

Hi. Thanks for taking my question, sir.

A few minutes ago, you said that with the new ECL regulations coming in, the banks would have to adjust through the opening balance itself and not through reserves, and hence not much incremental provisions will be required on the ECL front. However, the floor rates have been unchanged.

I was wondering if at this point, you would be more comfortable sharing your view on what would be the impact on the steady-state credit costs. That's all.

See, at least fortunately, this what do you call? This difficult question, I have to pass and Vijay Anandh has to answer.

What I have to say is that if you had a chance to look into that 15 years figure, what we have given in our presentation, you can say, in fact, it is there in terms of like say credit cost post What is that? The credit cost is there after accounting for the recoveries from the return of assets, the net provision in 2010-11, it was .41.15.25.5.4.5.

It was .09 in '24-25 and .04 in '25-26 and all. The average works out to about .6 or so over the period of last 15 years.

Now with the, let's say, improved underwriting based on the AI and the improved, let's say, LOS and all, my expectation is that at least there has to be 50% reduction in this number in the next average of the next 15 years or so. Individual years, there could be aberrations as you move forward.

Hi. Thank you.

Congratulations, Dr. Kamakodi, for a very eventful stint at City Union Bank for the past 15 years, and best wishes for all your future endeavors, sir.

It's been a pleasure knowing you and interacting with you. My question is to Mr.

Vijay Anandh, the new CEO. Sir, what made you take this decision to join this bank?

You've been with RBL for a long period of time. You have worked in ICICI and other institutions.

How do you see City Union Bank's culture here? How is it different from other organizations?

Because you are, of course, stepping into big shoes now. We just wanted to know your perspective and your take, having spent now almost couple of years with the bank.

It's been wonderful, sir. I've completed 2 years, and it's almost 25 months.

I think, first of all, I hail from this town, and I come with 28 years of experience, and last 15 years, I think I was in Bombay. From Bombay, I have moved to Kumbakonam.

The major reason why I took up is when I was interacting with Dr. Kamakodi and the board, I fully got convinced why should I be here.

I think my wavelength, my passion of what I wanted to do was absolutely matching with where Doctor wants to take this bank to the next level, how he wants to take the bank to the next level.

I felt that getting into this 120-year-old legacy institute, which has an impeccable track record, and with the beautiful board, I didn't even think twice for sure. Culturally, I know that I will fit because I hail from this part of the town, and my mother tongue is, of course, same what I speak here.

Combination of factors, I think, made me to move here for sure.

Suresh, just adding to what thing, I think this question you should have reserved for the get-together tomorrow.

It's a busy result season, sir, I'm not sure whether I can make it. For whatever it is, we just thought it would be great to take his perspective and yeah, sweet.

His family and everybody is relocated to Kumbakonam. How is he handled those dynamics, because these things are also at times important from fitting to the organization perspective, right, moving from Mumbai to Kumbakonam?

Yeah.

My parents stays in this part of the town, Suresh Ganapathy:

Okay. and

we moved.

Perfect. Cool.

Okay. That's very clear.

Thank you, sir. Yeah.

Yeah. Thanks.

Yeah. Thank you all for attending this call, and special thanks to Suresh, Mahesh, and all because Suresh and all perhaps we have been in touch more than 15 years.

I think even I remember the, let's say, interaction we had in one of my, let's say, travel to, let's say, airport in the car itself. You all had been, I think, almost, I think, Abhishek, everyone, you had been supportive of us over the period of time, and because of you all, let's say, I had a satisfying, let's say, experience with the bank, and I thank you all for all the support you have given.

I am sure you will be continuing with the same support to, let's say, R Vijay Anandh. I look forward to meet you all tomorrow in person where we can discuss some more numbers, and more than that, it's a get-together time when we meet and, let's say, exchange the good memories whatever we had over a period of time.

I thank Ambit for, let's say, organizing this for over many years now, and I once again looking forward to meet you all tomorrow in Grand Hyatt, Mumbai by 5:30. Anybody, let's say, who had not received the invitation or, let's say, given RSVP, kindly get in touch with Mr.

Jayaraman, whose number is given in the presentation, or with Raghu, whose number is given in the presentation, and so that to confirm your presence, which will help us to organize things better. With this, I think I have completed, big responsibility, like say, and it had been, like say, monkey is off my back.

It's a moment of relief, and because over the period of time handling, let's say, things, let's say, I was, in fact, like say, telling, had I known it is going to be having so much weight, probably I would have thought multiple times before taking charge. At that point of time, I was not aware that it is going to be so challenging and all.

Your support and the God showered extraordinary blessings so that all the efforts whatever we took, we were able to see results. Now and then, few times we had, let's say, minor accidents and bruises, but there was no fracture or bigger injury.

It had been a very satisfying tenure, and with that satisfaction, I once again thank you all and looking forward to meet you all tomorrow. Thank you.