Thanks, Renju. Thanks a lot.

Hi everyone. Good evening.

Thanks for joining the call. We have with us Mr.

V. Vaidyanathan, MD and CEO of our bank, and Sudhanshu Jain, our CFO.

We'll start with the brief financial update with Sudhanshu, and then we can have some words from Vaidya, and then we can open the forum for Q&A, okay? I'll hand over to Sudhanshu.

Sudhanshu? Yeah.

Thanks, Saptarshi. Good evening, everyone.

Thank you for participating on a Saturday evening. In terms of sequence, I'll start with maybe the business side and then eventually cover the profitability segment.

I would say that the business momentum was quite strong during the quarter. In fact, our customer business, which is your deposits plus your funded assets, that has crossed 6 lakh crores during the quarter, and we saw a YoY increase of almost about 20%, both put together.

Individually, if I now talk about loan book, there also we registered a strong growth of 20.6% on a YoY basis, and that book has now crossed 3 lakh crores to reach about 3.05 lakh crores. This incremental growth on the loan side was primarily driven by mortgage, vehicle, corporate loans, and consumer loans.

We have given a fairly detailed break up on slide 29 of the presentation. If I talk of the retail segment, retail, agri, and the MSME book, that was at 2.4 lakh crores, and the wholesale book was at 64,000 crores at June quarter.

The retail, agri, and MSME book grew by about 18% on a YoY basis, and in wholesale, we continue to power up and there the growth was even stronger at 30%. Just another data point, the MFI book was at 6,700 crores at June '26 end.

We saw marginal increase as against the previous quarter. Also another point which I want to put out is that 93% of the book is now covered in MFI through the CGFMU coverage.

With respect to credit cards, the cards in force have now reached 4.8 million during the quarter. The book grew by about 19% on a YoY basis and was about 9,600 crores.

The spends on the credit card grew at a healthy pace of 22% on a YoY basis. Moving on to the wealth management business, where the AUM has now reached almost about 64,000 crores, and it grew at 24% on a YoY basis.

In the same breath, if I now talk of the asset quality, then again, on the asset quality, we saw an improving trajectory both across GNPA, NNPA, SMA, and some of those ratios. Just to put out some numbers, the gross NPA ratio of the bank further improved by 10 basis points from 1.61% reported in Q4 to 1.51%.

Similarly, on net NPA, we saw an improvement of 4 basis points to 0.44% for the quarter. If I now give further details around the retail, rural, and MSME segment, there also sequentially the gross NPA improved by 7 basis points to 1.4%, and similarly, net NPA improved by 4 basis points to 0.52%.

Moving on gross slippages, happy to report that here we saw a 2% reduction on a QoQ basis, and on net slippages, we saw an improvement of about 4%. Gross slippages, if we have to compare on a YoY basis, then it's almost down by 30%, and net slippages was lower by about 44% on a YoY basis.

We know that last year initial quarters, we also had higher slippages coming from MFI, but even if we exclude MFI slippage for both the corresponding quarters, the decline in gross and net slippage was 14% and 28% respectively. In terms of translation to the overall slippage ratio, that further improved to 2.49% in the current quarter as compared to 2.68% which we saw in the previous quarter.

The collection efficiency of the bank continues to be quite stable now for many quarters. It was at 99.5% for the current quarter.

Moving on to SMA 1 and 2 numbers, there we continue to see an improving trend. The SMA was at 0.77% in Q1 FY '27 from 0.78% which we saw in the previous quarter and 1.10% in Q1 of last year.

We have given a fairly detailed break up across segments in terms of how SMA and NPA numbers have fared for us. Similarly, in microfinance, I would say things have largely got restored on the asset quality front.

Here the SMA 1 and 2 normalized to now only 0.71%. If I now talk of deposits, then happy to report again that customer deposits now is just shy of 3 lakh crores.

It grew by about 16.6% on a YoY basis and 5.3% on a QoQ basis. If I see a total deposits, which is customer deposits plus certificate of deposits, then the growth was about 17.7% on a YoY basis and 5.9% on a QoQ basis.

Within customer deposits, CASA deposits, I would say, grew the fastest. CASA ratio for the quarter as a result improved by 1% to 50.8%, and average CASA ratio was stood above the 50% mark at 50.1%.

The CASA deposits have now touched 1.58 lakh crores, I would say that another milestone crossed during the quarter was CASA going beyond 150,000 crores. Moving on to now the profitability section, happy to report that we have crossed profit of 1,000 crores for the first time, and the profit for the quarter stands at 1,075 crores, which is an improvement of about 132% on a YoY basis.

During the quarter, all operating metrics continued to demonstrate an improving growth trajectory. For example, NII grew by 21.1% on a YoY basis.

This, in fact, improved from 15.7% which we saw as a YoY increase in the previous quarter. As a result, the net interest margin on an AUM improved by 3 basis points to 5.96% from 5.93% in the previous quarter.

However, let me point out that the last quarter had a benefit of day count convention of about 8 basis points, and in this quarter, we had some benefit on account of interest on income tax refund, which contributed to 6 basis points. If I exclude these two line items from the individual quarters, then the NIM has shown an improvement of 5 basis points, and the adjusted number would look like 5.85% going up to 5.9%.

This improvement was largely contributed by reduction in cost of fund, which further came down from 6% to 5.96%. Moving on to the fee and other income, here also we saw strong growth, I would say backed by disbursements which almost increased by 25% plus on a YoY basis in Q1.

As a result, the overall fee income increased by 22.9% on a YoY basis compared to 21.3% YoY which we saw in Q4. The other streams of fee income, which is your trade and FX, which is your commercial banking, and all these digital fees also continue to contribute strongly to the fee growth.

As a result of the increase in the NII and the fee, the total income for Q1 on a YoY basis was 21.5% higher and versus about 17.1% what we had reported for the previous quarter. During the quarter, we had a good run on the treasury front.

Of course, that was helped by softening of the G-sec yields to some extent, and hence, we were able to get a treasury gain of about 181 crores in Q1. Moving on to opex, the opex for the quarter stood at ₹5,729 crores.

This grew by 16.4% on a YoY basis, and the sequential increase in opex, if we exclude the impact of the one-off fraud incident in Q4, then it was 2.3%. This increase of 2% 2.3% on a sequential basis corresponds to an increase in core income by about 4.6% on a sequential basis.

As a result, the cost-to-income ratio, excluding trading gains, improved by 166 basis points on a sequential basis to 70.7% and by 310 basis points on a YoY basis. We have also mentioned in the presentation that the jaw, which is operating jaw between the total income and opex for Q1 now almost stands at about 500 basis points, which to some extent has also translated into improvement in the cost-to-income ratio.

As a result of all of this, the operating profit of the quarter, excluding trading gains, has increased by 36% on a YoY basis, and even sequentially, again, here I would exclude the impact of the fraud incident, the improvement was 10.9% on a sequential basis. For last two quarters in a row now, we are getting an operating profit increase of upwards of 30%.

Moving on to provisions, this reduced by 31.1% from ₹1,659 crores to ₹1,144 crores. On QoQ basis, if you see, it has remained at the same levels.

Last quarter, the actual credit cost was about 1,143 crores. During the quarter, we had received claim of ₹514.8 crores under the CGFMU scheme against MFI portfolio.

Here, I would just want to put a data point that we believe that we applied in this quarter and we got it in this quarter, which was quite fast in that sense. Another point to call with respect to provisions is that we have created a contingency provision of ₹515 crores.

This is purely, I would say, voluntary and on a prudent basis considering the evolving macroeconomic and the geopolitical uncertainties and the monsoon related factor. I would again reiterate that the bank's current asset quality performance remains quite healthy across key retail, rural, and SME portfolios with delinquency indicators largely stable or improving, and hence, this provision is purely, I would say, a forward-looking and more prudent in that sense.

In terms of credit cost percentage for the quarter, that further improved from 1.60% to 1.50% during the quarter. Moving on to the last section, which is capital adequacy and liquidity, the capital adequacy ratio stood at 15.05% at June with CET1 ratio of 13.33%.

We had an impact of about 30 basis points on account of ops risk RWA reset, which typically happens in Q1 on the CET1 ratio. On liquidity, I would say we continue to maintain LCR at stable levels.

In fact, average LCR ratio for the quarter was about 116%, and this broadly around our guided range as we have indicated in the earlier calls. With this, I have tried to cover the key numbers.

Maybe I'll hand over now to Vaidya for his opening remarks.

Good evening, everybody. Sudhanshu has covered the numbers, I'll skip the comments on that.

The thing is that beyond the numbers, what the bank is really building is what we think is a really or what we're trying to build is a really high-quality, customer-first bank. This goes core to the culture of the bank because when we say customer-first bank, then it's it's not just a slogan.

Every policy of the bank, every product of the bank, every way our employees interact with customers, how they give the customer benefit of doubt in the event of a complication or error of opinion or difference of opinion, everything has to reflect that. For example, we hate to put asterisks in our advertisements because we know asterisks, people don't don't don't see that, and they they they they just get jump into the advertisement and they start taking they consume the product.

This happens. For example, even after 4 or 5 or 7 years of talking about that, even now sometimes when I go out and meet any of our employees and see there's some some responses from our employees to some customers, I find it may not be customer-first.

They they'll be have disputed with the customer for some small amounts and negotiated unnecessarily. I do find such things, but, it's it's a long process, but every product we put, we we try to bring that in.

We try to see that we don't we don't write fees and charges in such ways that it's complicated language that customers don't understand. We don't charge charge fees just because the customer doesn't notice that, just because you don't notice I can't bill you.

We do if somebody's if you're selling a mutual fund, we don't just pick a mutual fund that gives the highest commission and sell it to customer. We go and do a deep deep analysis using AI and sell find such mutual funds which will give maximum return to the customer.

Whether we get 0.7% or 0.8% or 0.9%, 1%, this is all round-off numbers. We don't really look and, try to maximize that front.

This is what I mean by saying that we're trying to really build that, and that's one big part the bank is building. It will show in due course.

To an extent, it is showing, I think, that's it's reflecting the numbers somewhere. It will also show in due course.

I can't tell I can't surely tell that every part of this is helping the bank in terms of the P&L. It costs money to to to build a bank like this, but it this is this is this will create long-term franchises.

Second thing, I'd say that is governance. I can I can tell you that even during the most difficult times when we were starting the bank up 6 or 7 years ago when we were posting loss of 3 or 4 quarters in a row for those bad loans, we did not have any PPOP at all.

In fact, our PPOP was like 0.5%, 0.6%. Our credit cost used to be 1%.

Really that left us with no profit on the core. Even then we didn't find cute solutions around our situations.

We we we went through that boldly and dealt straight. Governance, you'll not find us lacking.

If something inadvertent happens, I don't know, but but no one that I know of in our bank, in our board, in among our colleagues, among senior management, anyone would ever talk anything or even suggest something that that can go bad on governance. You should rest assured.

That's been 7 7 years, and many of you who know me for 25, 30 years would know that we we we have lived lived that life like that and will not go go. That should definitely in good days and bad days should give you comfort that this bank will deal deal straight and deal right.

The third thing is then comes down to, is is technology. I can tell you that tech is a big thing, and our bank now for many, many years have been making the right moves on technology.

It's not really the cost. People think tech does cost money.

It's not about costing money. It is about building the right architecture, having the right quality of people, and building a a stack inside out, customer data platforms, our KYC platforms, digital onboarding, payment infrastructure, communications, and risk and decisioning engines, API, data streaming, machine learning, artificial intelligence, the whole stack, and UI/UX, and everything.

We really try to, let me say even customer customer intelligence, every every even customer data platforms. Everything is like, we we really put an effort in building that.

Customers are using the bank's services now, whether using our app, using our call center. They would have they would, I'm I'm quite sure they would have seen the experience.

In fact, when I often go to conferences if I have to speak panel, etc., I often ask people to put up their hands how many of them have are customers of the bank, and you'll be surprised. I do find quite a quite quite quite a few people.

The point is that, we we're trying our best to stay in the stay in the cutting edge of technology, and governance and customer service, I told you. The last thing is finally this has to, of course, translate to numbers end of the day because from the market's point of view, you you track numbers, and you should.

My sense is that whatever numbers we'll post, we we believe it's coming strong from the core. When it comes strong from the core, it is more sustainable.

On on that front, let me just say that, for the last many years, we've had we've been under the pump on this issue of cost-to-income ratio. I don't deny.

In fact, the first count, I got it wrong because we thought we will fix it in 5 years. It's been 7 years.

We're still dealing with it. Then I just realized that the that the the the issue was some amount of income got wiped off because we wrote off a lot of bad loans, and along with that, income also went away permanently.

Some amount of cost issues also came from the fact that we were really building, while we may have got the cost-to-income ratio wrong, which I I don't deny. I told you, I I I admit.

Then there were so many things we got right also, beyond the normal. For example, we said we'll be 1 lakh crore of retail loans at the end of, 5 years or 5 to 6 years.

We were sitting at like like like 1.7, 1.8 lakh crore at that period. Today, we are 2.5 lakh crore.

Like that's like 70,000, 80,000 crore more than what we talked about. We talked of CASA of 30%.

Now we're talking CASA of 50%. It was not planned.

There are many things that, NRI deposits. Now we're talking about 25,000 crores of NRI deposits in the bank.

We we didn't factor for maybe for so many loans that came this way or that way, we didn't. If we didn't factor for certain bad loans, fine, it's our mistake.

I don't deny. The fact is that, starting up a bank, there are just so many expenses on compliance, on on on setting up the ticketing systems, the CRM systems.

It's just it's just it's just an expensive proposition. I must thank you that while in the phase of building the bank, we we let me say that, the market has given us capital.

We have, again, our our book value per share has gone up from some 31 or 32 to maybe 20 56 or 57 now, Sudhanshu? 56 now.

I I agree that all of it has not come from raising internal profits. A lot of it has come by raising capital at a premium.

Even though our return on equity used to be relatively low low those days, 5% or 6% on average, but the investors have all of you have given us capital at about 1.5 price-to-book or 1.6 price-to-book, which has helped us build the net worth. I don't deny these things.

They've all but they've all come come, they've all come in helped us in good measure because the but end of the day, net worth is net worth, capital is capital, and the book value per share is book value per share. We have it now.

Now our job is to grow return on equity. We we we strengthened the bank for capital raise.

I agree. Now it's our job to, now that we got adequate scale, we believe that the cost-to-income ratio will get fixed definitely.

Actually, if you see our cost-to-income ratio over the last 2 or 3 years, it initially, it came down from 95.1%, which is on Q2 FY '19, it came down to 85 upon merger because Capital First came with 48%, and it came down to blend blend came to 85. From 85, it moved down to 72 right up to 72.8%.

In '25, in '26, 2 years in a row, it got stuck at 72.5 or 73.5%. Many people started worrying that look, maybe, the idea is just stuck and maybe there's no there's no scope for improvement anymore.

I I think that that that is not right. It got stuck because the even during those days of '25 and '26, productivity gains were coming.

The income was coming down because the microfinance book, we shrunk it and income went away. After all, what is cost to income?

It's cost divided by income. Income got stuck.

Got stuck means it got reduced because the microfinance book we reduced it. That is a let me say that is a mathematical thing.

There were productivity gains that were coming at that time. It kind of got obscured.

Now that the microfinance issue is built in the base case, now we will start seeing improvement in cost-to-income ratio, quarter on quarter. Sorry, let me say year on year because quarter on quarter I can't say for sure, sometimes moving parts happen here or there.

Let me say year on year, we should expect to you should expect to see, and that phase that for 2 or 3 years we got stuck, we we believe you it will start materially moving down year on year now because it's all in the base case now. Just moving on from the tech thing and from there I talked about economics.

On the economics front, the last thing people often say is that, listen, even well-meaning investors, long-term, people who think long, they used to often say that, look, we we we like your model, everything's good, but still end of the day, until you're posting 1% ROA, really we can't look at you. That's a base case.

Let me just tell you that when we do our math, we we draw up a spreadsheet, we know the income we're making, we know our cost of funds, we know the margin, and we stretch this spreadsheet into the future. Let me just tell you that this is not going to stop at 1% ROA.

Even this time's ROA of 1% that we mentioned, there is got some time one, let me say some amount of income tax, some interest income into it. There is a treasury gain.

Treasury gain. Treasury gain, yeah.

Treasury gain is also there and some some benefit here and there. If you adjust for it, maybe it will come down to about 90 90 basis points.

90 basis points. It's not 106 as as it is looking.

Still 90 is 90. It's like touch and go.

I remember in a couple of interviews, even with CNBC during the depth of the crisis, I took an interview just to assure people that things are well. That is an interview with Latha Venkatesh, and I was telling her we'll be in kissing distance of 1% by end of the year.

I'm just happy to share with you that we're not taking end of the year, we're already touching kissing distance. We're touching like 0.9%, it's real real.

We think that it will move up from here, or definitely stabilize from here, probably go up from here, and it is by by this year, in fact, not just by the year ending, but hopefully for the year itself, we should be able to post 1% is is our is our belief as far as our eyes can see. That's a bit of an upgrade, and that's coming in our mind because credit cost is is, better than expected.

All I can say is that all of you have been very supportive for us. We are very sincerely thankful to you.

We want to thank all our employees who have worked very, very hard in bringing up this bank from the, from from the beginning. Every one of you shareholders who supported us with capital, I can assure you that things are looking up.

For those who have not yet for who for who think that probably this is a one-quarter thing, I'm pretty sure you wait for one more quarter, one more quarter, you'll get a confidence back. Thank you for that.

Thanks, Vaidya. Renju, we can open the forum for the Q&A session now.

Thank you, sir. Thank you for the opportunity, and congratulations on a good quarter.

Sir, my first question is on margins. If I look at cost of funds, that is still improving with additional tailwinds from star rate cuts if and when it comes.

That leaves us with asset mix shift. Is asset mix shift expected to be so severe that your clean margins of 5.9% this quarter will turn into 5.75% for full year?

That's my first question.

Thanks, Akshay, for the question.

Maybe

should I respond to this, or you want to continue with all your other set of questions?

Anything is fine, sir. Maybe you can respond.

Maybe I'll respond to the margin question first. I do agree in the previous earnings call, we had guided for a 5.75% margin, and we have come at 5.9% if we adjust for income tax refund.

Now for the year, our expectation is that we could hit margin closer to 5.8%. In that sense, we now feel that margin could improve from 5.75% to 5.8%.

If we see for this quarter, as I said, the margin was 5.9%. We still got some benefit because we ran a lower investment book.

From here on into the year, we see the margins could still slightly get impacted because of the asset mix change, which we have articulated in the previous call as well, because we have been growing some segments of business which could be NIM dilutive, but still makes sense from ROE sense, but still it could be a margin impacting factor. Second, we feel the cost of funds could stabilize, could stay very range-bound around the 6% mark.

That's the second factor, and some normalization of the investment book, which may happen during the course of the year. We feel that margins could broadly stay around the 5.8% handle now for the full year.

Sir. Any sensitivity have you done for how your margins will move in case of rate hikes?

Any numbers you have done?

I have not factored in any rate hike when we are giving these projections. We'll see as it comes by.

Okay. Second question is on credit costs.

Again, for 1Q, our credit costs have been around 153 basis points, and 1Q is typically the weakest quarter for the year. If you're beating your guidance of 180 basis points 190 basis points in 1Q itself, is there any scope for bringing down the credit cost guidance?

Number two is on the prudential provisions. Are you seeing any signs, early warning indicators turning negative because of the Middle East war or weaker monsoons?

On credit cost, yeah, to our surprise, Q1 is fared quite well. In fact, we spoke in the previous quarter Q4 typically tends to be the much better quarter, collection momentum is quite strong there.

From an asset quality front, we have seen all of that sort of flowing into Q1 as well. We have said that all the asset indicators which we have put out in the presentation, SMA, GNPA, NNPA, all sort of product-wise is tending well.

We have, of course, created a contingency provision, which I would say is more on a prudent basis. We all know the uncertainties which we are currently dealing with in terms of the geopolitical factors which could play out.

Monsoon, of course, rains have been improving, but still we felt that it would be prudent on our part to take into account some of these risks which could emerge over the later part of the year. I would say it's purely a prudent provision.

Taking all of this into account, I would say, of course, as I said, there could be still some bit of uncertainty here and there. On the credit cost guidance also, while we said 170 to 180 basis points in the previous earnings call, we feel now we could land up more with 150 to 160 basis points on credit cost.

That is coming on the back of an much-improved Q1 and how we see at least the current quarter and some of these things could play out.

Thank you, sir. On ECL, any numbers on one-time transition and steady-state credit costs?

On this again, I think we have discussed this question also quite a number of times in the previous calls, but the position continues to be the same. Of course, the final guidelines have come in.

We are fine-tuning some of the numbers. Our preliminary sense is that from a capital point of view on transition, there would be two impacts.

Of course, we will be required to keep more capital aside for ECL, but there would be also benefits which would come from an reduced RWA application both on credit risk and operational risk. In a combination of both, we feel that the impact on capital could be quite neutral at the time of transition.

That is our current sense as far as ECL is concerned.

Understood. The last question, if I may, on FCNRB.

If you can share some targets or what is the current mobilization, and how are FCNR costs compared to normal TD costs?

FCNR also we also see this as a very good opportunity, and we want to capitalize to the extent possible. If you would have noted, we have given our NRI deposit book, right, which is about 25,000 crores.

If you go and check, the system is about 1.65 trillion which means that our share is about 1.7% currently in the NRI deposit market. Of course, this is a book which we have started growing more so in last 2 to 3 years and growing in a much healthy space.

With respect to FCNR, we feel that through a combination of leverage and the SBLC structure, we are hopeful of garnering a share of about 2.5% or so. That is how we are looking at it.

You would have noted that on FCNR deposits, we have announced a rate of 6.75%, which is quite competitive, and we feel that is a very good opportunity which we want to capitalize.

Understood, sir. Thank you.

Those were my questions.

Thank you.

Hi. Good evening.

Thanks for taking my question, and congrats on the quarter. It's really a strong bounce back from the issues we had in February.

It's happened so quickly. Congrats to the entire team on that.

The first question is on the opex. Our guidance is 13% to 14% for the full year.

I understand business is coming back strongly. Are we still sticking to that sort of guidance, 13% to 14% opex growth through the year?

Param, thanks for the question. I would want to state here that the business momentum continues to be very strong as we've seen now.

Of course, we are cautious of the macro factors which could play out. Our endeavor would be to maintain that opex leverage, right, which is the 500 bps delta which we were able to achieve in Q1.

It all depends on the business momentum, what we see from here. We are quite hopeful of maintaining this jaw even into the rest of the quarters.

That's how we are seeing it. There could be, I would say, a change in both the income side as well as the opex side, but we would want to still maintain this 500 bps at the minimum.

Okay. Fair enough, Sudhanshu.

Okay. The main drivers of our, say, ROA improved guidance is the 20 basis point upgrade you gave on credit cost guidance and on NIM you said 5 basis points higher.

Those are the main positive drivers talking about.

Broadly.

Okay. Going into FY '28, I know it's very early days, and Vaidya sir mentioned 1% is not where we stop.

How to think about, say, how the ROA trajectory progresses going into next year?

Should increase naturally, you know. Should increase because next year next year will be more See, this thing what Sudhanshu pointed out, see, if you remember, we had talked about 13% to 14% increase in opex with a 18% to 18.5% increase in income, right, Param?

Yeah. Yes, sir.

Yeah. That's it.

If you see transcript of the last call also, you'll see that. Now if this 18.5% is not 18.5%, it's 20% or 20.5%, correspondingly, you can have some increase in opex also because see the market opportunities are growing and we don't want to be missing out on them and just stick to one line item.

The point is that it is this 450 to 500 basis point different jaw opening. If you cut paste it into next year also, which we believe it will happen, next year meaning '28 also, then straightaway it is a cost-income reduction of about 350 basis points straight just from these numbers.

That when you do the math of it, you'll find it's quite meaningful to the P&L.

Yes, absolutely, sir. I get that.

Yeah. Perfect.

Sir, one last question if I may. The fraud incident, are we beginning to see any recoveries from that?

If so, going ahead, where will we be booking that in the P&L if and when?

Param, there continues to be, I would say, a progress on this front. If you go by the public news and so on, few more arrests have been made, ED has been actively looking into the case, they've filed a charge sheet and so on, indicated some amount which could be a potential recovery.

All of this takes a long time, right? I'm saying there is a proper process which needs to be followed in terms of, for example, going to the PMLA court, filing our claim, then these claims will be assessed for whether it's due to us in the right sense and so on.

I'm saying a lot of work will have to be done. This is a totally, I would say, a legal process, court process.

Difficult to sort of put out a timeline for this. At least we are seeing movement on the ground, right?

It will be difficult for us to sort of commit to a timeline in terms of what recovery could finally emerge from here, but we continue to be quite engaged on this front.

Fair enough, Sudhanshu. Very clear.

Is there anything at all in the P&L in this quarter as a recovery or anything?

No, nothing as of now.

Okay. Perfectly clear.

Thank you so much, and congrats once again on the quarter to the entire team.

Thanks.

Hi. Good evening, everyone, and congrats on the quarter.

Most of my questions have been answered. I have a question on our tech investment priorities over the next 2 to 3 years.

Basically, how is the bank leveraging AI and GenAI capabilities across functions, and how do you see technology investments increasing from here? If we look at IT expense as a percent of overall opex, it has come down a bit from 11% odd to 9% odd now.

Even the large banks are operating at these levels. Could you please elaborate on this?

Thank you.

Frankly, like I said before, it's not about how much you invest, it's where you invest them. I agree we are 9% or odd.

The thing is that we have built a really good architecture. A good stack, and modern stack, and cloud, and API-first integration, and cloud-native principles, and event-driven platforms, and microservices architecture, and we're hollowing out the core as much as possible.

We have real-time data streaming. It's all being built.

I can only tell you that, for example, what people can't see, I think, generally speaking, is that people can see ROA, ROE, but they can measure us today, but they don't know the quality that's been built, what your eyes can't see that's below the ground. On that front, I'm making my comment to you that it's truly really fantastic modern architecture is coming about in the bank.

Now what is our approach to that? This is a big enabler of many of our businesses that we are doing, many of the services we are providing to our customers, and then naturally there's a payback in terms of revenue and robustness at which the bank could be able to grow, which means that I don't think this bank will stop when even say 3 years or 4 years from now even we are 6 lakh crore so to say in deposits, 5 lakh crores in loans.

We can continue to grow on this platform. Platform is strong, foundation is strong.

We can grow 20%, 20% more. Who knows?

Of course, we'll put out the numbers at that point of time. As far as I can see, the platform strong means the bank can grow for a long, long time.

Sure. Just on the FCNR front, did we highlight we'll potentially capture 2.5% of the overall market share, right?

That was the target.

Yeah. On the FCNR, I know there are different numbers which are sort of floating around, but assuming say a $60 billion, $70 billion come in, we are hopeful of getting about 2.5% of that pool.

Okay. Until now, if you would like to give out any number how much we have mobilized?

It has just started, and since gaining steam,

V. Vaidyanathan (MD & CEO): Bit of excitement.

Yeah. Maybe we can give an update next time.

Great. Congrats on the quarters again, yeah.

Thanks. Thank you.

Thank you.

Thank you.

Yeah. Hi.

Good evening, and congratulations on a strong quarter, sir. First question on MFI slippages, right.

I believe we have not given separately, but if you can quantify how much was the MFI slippages and how much was the MFI disbursement in this quarter?

MFI slippages was quite low in this quarter, and same was actually the case in the previous quarter as well. Hence, as I said that all the SMA and all these numbers are indicating sort of back to normalcy.

Even collection efficiency continues to be around that 99.5% which we are seeing in the overall portfolio as well. That's on MFI.

Sorry, Jai, what was the second question?

MFI disbursement.

Yeah. Disbursements, if I sort of see the numbers from last year Q1, then we have seen almost doubling of disbursements as far as MFI is concerned.

We are hopeful while the book has not grown that very much in last 1 or 2 quarters, at least the decline has been arrested. Through the course of the year, we feel that now since disbursements are picking up and we're hopeful of a quarter-on-quarter increase here, we feel that we could end up or target a book increase of 15% on a YoY basis.

Sure. That's helpful.

Secondly, Sudhanshu, I see that 15 6 basis point of IT refund, this would translate to roughly around 60 crores. Where do you book it?

Because does it go to income, interest on advances, or does it come on interest on balances with RBI and others, sorry?

It would be the other line item. It certainly doesn't come in advances, but and it would be the NII line item.

Okay. Sure, because the other is only 76 crore or something, right, within which there is 60 crores of IT refund.

Number is slightly lower than, but round about that number.

Okay. Sure.

Secondly, on customer deposit or CASA, right? If I can get the numbers separately for CA and separately for SA, overall deposits has bounced back, and within which CASA has also rebounded by 7%, 8% QoQ.

If you can sort of give more color as to how we have got the traction in SA, specially maybe granular and maybe the high-ticket SA post that incident. Just wanted to try to understand, we have done reasonably well ahead of your guidance of 5% QoQ deposit growth, but within which if you can sort of highlight the granularity and maybe the high-ticket SA?

No.

Both have been growing quite well. If you see the average CA deposits, that has grown by about 30% on a YoY basis, and SA has grown about 25% or so.

Of course, SA is a major component in the CASA, right? The CASA deposit itself has grown about 8% on a sequential basis.

You can assume that bulk of the growth has come in SA, which has given this kind of a lift.

Correct. Safe to say that it would have been broadly similar to granular and maybe high-ticket, right?

The entire episode is now clearly, clearly past this, right? You have had increase in balance in both these buckets.

Yeah. Our deposits on the SA front also quite granular in that sense.

It's granular deposits which have sort of come in even during the current quarter.

Right. Sure.

Last question, sir, just on this ROA. Just to reconfirm, we are now saying that we have now accelerated that full year we should be able to achieve around 1% ROA, right?

That is the correct if I hear it correctly.

That's what we are gunning for. Right.

The reason why it is higher because of A, experience in credit cost, which is much lower and ideally it should stay that way, and then the NIM should incrementally be also stable, right? The opex thing anyway continues.

This is the right understanding, right?

That's right. Mainly it's credit cost

because

on the NII front, I know all of you as analysts track that closely by the basis points. Roughly we'll be in zone.

Sure. Thank you, and all the very best, sir.

Thank you.

Thank you for the opportunity, and congrats on a great set sir results. First question, sir, is on ECL.

Or maybe I missed this, sorry about this. Have you quantified the impact of steady-state credit cost after the ECL transition?

Jayant, thanks for the question. Of course, to the previous participant, we did talk about the impact which could come on transition as far as ECL impact is concerned, where we said we would require to maintain more amount for ECL, but at the same time, we may get some RWA benefits through the operational risk RWA reduction and credit risk, and hence, in combination of both of this, the impact on capital on transition could be broadly neutral.

With respect to the run-rate impact, there would definitely be some more requirement for provision, but at the same time, we could get benefit because of the EIR implementation because both the sourcing opex as the processing fees will be amortized when the ECL is implemented. We feel net of these two, which is your slightly higher provision requirement minus the EIR benefits which could come in, the impact could be quite manageable.

Since the guidelines have come in, we're still fine-tuning the numbers. I don't want to put out a specific number here currently, but this is the broad sense.

You don't feel the ROA expansion journey should be sort of prolonged because of this transition?

Not as such.

Great. Secondly, sorry to harp on the margin question again.

Given that our corporate book is growing very healthily and, again, at this size, it makes sense, it's also bringing a lot of discipline to the credit cost band, but then again looking out next 2, 3 years, how does this play into our NIMs and our ROA ambitions? Actually,

the NIM of the corporate banking is a little lower than retail. The more we book corporate, it will have its share of impact on the overall NIM.

That's why Sudhanshu said that as a bank it'll have some impact. Really, you should see it in totality because the quality of the franchise and because credit cost should come down over the years anyway, when we wake up in '28 or '29 or '30 or '31, we don't frankly, don't take it like a guidance, but we don't think of a bank as wanting to be running a 1.5% credit cost at that point of time.

That's not our vision statement. Because becoming a larger and larger bank, we cannot be sitting at 2% credit cost even if it's very attractive and NIM attractive and all that.

By that, we are planning to move in a direction where the bank's ROA, again, don't take it like a guidance like for a specific date or something, but we think that our bank is structurally built for a ROE of more like 1.7%, 1.8% as it builds out. That kind of a number can be achieved even at a lower credit cost even we book more of corporate loans.

I can tell you it's 7 years now. It's been 7 years.

There has been no mishap in the corporate loans. 7 is a long time to prove out our governance and our underwriting capabilities and the amount of diligence we do on corporate loans and our ability to get the business, get the kind of proposals.

We're quite happy with that, the way it's coming.

Great, sir. That's very reassuring.

Again, congrats for a great, great set of quarter. Thanks.

Thank you very much.

Thanks,

Jayant.

Hey. Hi, guys.

Congratulations for a great set of numbers.

Hi, Anand.

Hi. Hey, one, is it possible for you to share how has our institutional deposits moved past the episode that we had?

Were there any more withdrawals from any of the government or basically it is holding up well and it is growing? That's really good to know about that, because that will give a better comfort.

Deposits coming very, very strong. Frankly, the way deposits came back into the bank, not just came back, I'd say frankly we didn't lose deposits in the first place in any material way.

Frankly, we had a flat quarter. We didn't lose money.

The way it's come back very strong. Let me just directly at my level, let me assure you there is absolutely no problem on deposits.

In fact, we are flying, actually.

Institutional deposits also quite stable.

That's very comforting. Secondly, now we had one-off Though

our

intent

frankly in due course will be to continue to do more of the retail deposits than the institutional deposits. That's been our strategy anyway.

It's not a new strategy. It's been 7 years of practicing the strategy.

That'll be our intent, and we will get there. I can tell you everyone hearing this call that money is coming thick and fast into IDFC.

It's coming very strong, and relationships are strong, and the way customers responded to us for so much of bad news all over Twitter and YouTube and all over the place, even then money just stayed. It's really we're happy about the way customers believed us during the crisis.

Of course we came out in the open, we took our interviews, we spoke publicly about it, and public thankfully supported us on that.

Sure. Secondly, I think during the call, you said the margins are around 5.8% or 5.9%, I couldn't hear that clearly, because this quarter, if you look at our core margins are somewhere about 5.9% if you take out the interest on IT refund.

It should remain stable around these levels or where should it settle maybe by over next 2, 3 quarters?

Yeah. Margin as you rightly said, if you strip out that interest on income, it was more around 5.9%.

I also alluded to that we also continued to get some benefit from a lower investment book during the current quarter. Some of it could normalize as we sort of move into the ensuing quarters.

We feel that margins, which we had earlier guided for 5.75% for the full year, now could more look like 5.8%. The change I would say from say 5.9% adjusted for the investment book, the asset mix changes which continue to happen, we need to see how this FCNR plays out as far as the margin is concerned.

All of this in combination, we feel the margins could still be around 5.8% for the year.

Okay. Which means that on a quarter-on-quarter basis, there could be some contraction that we should see from 5.9%.

Yeah. Yeah.

Okay. Then I think you talked about the operating jaw opening up.

What kind of cost-to-income ratio should we look at in FY '27 given that this quarter we have got some benefit on the other opexes front? I think that was sequentially primarily because of the IPL expenses being not there, right, in this quarter?

Which expenses, sorry, not being

Is that a right reading? Quarter on quarter, if you look at the other opex actually has come down.

Is it more to do with the business seasonality or were there some lumpy expenses in fourth quarter which were not there in this quarter?

No, in fourth quarter, we had this incident on fraud, right, where we had taken it to the opex line item. Right?

If you take out that, then the opex increased by about 2.3% sequentially. In terms of cost-to-income translation, even on a sequential basis, C to I has improved by about 166 basis points, and on a YoY, that's more around 310 basis points.

We feel that Q1 cost-to-income, which has come at 70.7%, our endeavor would be to take into below 70 during the course of the year. That is what it could look like.

Okay. Okay.

Then what kind of ROA that we're looking at for the full year in FY '27, should we get closer to 1%?

That's what we sort of answered on the previous call that we are gunning for reaching an ROA of about 1% for the year.

Looks like it for now. Last time, of course, like I said, we used to say fourth quarter, we used to say kissing distance, but looks like full year will get there.

That's great to hear. Any more CGFMU recovery should we expect during the year, any more claims that we have put out, or this is for all now?

No, procedurally, it comes only once in a year, for the year, it's done, actually. We could get some similarly into the next year.

Next year, we will get it. That's very helpful.

Thanks a lot.

Not of this amount.

Not of this amount. The amounts could be much smaller.

Sure. Sure.

Hi, sir. Good evening, and good set of numbers.

Just two questions. One is on channel sourcing.

You give the break up of opex. We've seen it going down.

What is the thought on that in the sense are we insourcing more? The outsourcing is slightly lower than what it was, and that is also one of the elements of opex being getting down, right?

Anything on that?

Channel sourcing expense is about 20-odd percent, right, and it has been quite range-bound if you see the few quarters. Of course, it also depends on, I would say, the seasonality aspect of it.

Q4 typically, we see is a much stronger quarter in terms of disbursements and so on. However, Q1 has also remained quite strong.

To your question on capabilities, yeah, we continue to work on these capabilities of insourcing and product by product wherever it's applicable. We feel that that benefit also bit by bit is translating somewhere into these ratios.

To great extent, you can assume this would generally grow in line with the volume growth.

Sir, just to follow up on that, I think, a year some years back or, few quarters back, we were mentioning that to generate a lot of loans, we also incurred a lot of expenses in and around the customer. With AI, do you see that the expenses which were required for a customer origination, and then, of course, a lot of customer rejection also happened, is that changed for us in terms of opex?

See, there are two AIs, okay? Just to clarify.

One is the AI that was classical AI, which was happening even before the arrival of generative AI, and that is a big one. For example, all our consumer durables and two-wheelers and small-ticket loans and frankly loans that we give to kiranas and chemists and salons and we have developed scorecards for all of that, and these are all machine learning models, and that is also AI.

That has been going on for maybe 7 or 8 years for now. We started this journey of using scorecards like 15 years ago, and it's been evolving on newer and newer technologies since then.

We've been using AI in that sense. That in that way, yeah, of course, it will continue to improve.

In terms of how much the generative AI is going to use, everybody knows that every part of the bank, every part of every organization is get affected. We are also putting our efforts in that front.

End of the day, from your point of view as investors, the reason why it's not figured prominently in any of our notes, etc., is from you investors' point of view, whatever we say in terms of AI, it has to show in the numbers. We're focusing more on the outcomes in that sense.

At the bank level, we're putting our efforts in that. Right.

Right.

Right. Last question from my side is on PSLC.

The annual report is now out, but what will have been done in terms of the agri PSL norms and how much PSLCs we will have bought in for last year and this quarter?

We bought, and we lost some money. It's still a negative drag for us.

We're still not a bank which is originating its entire PSL on its own organically. As we started from a DFI, and we've not yet fully caught up with the requirement.

Because we started from zero base on building a PSL franchise. We are still buying PSL.

We are short. Last year was 250-odd crore, Sudhanshu?

Yeah.

I'm saying even the rates had shot up in the market and

Overall, last year, we lost how much?

About 250 to 300.

Last year, we lost about 250-odd probably. Depends on how the rates will be for this year.

We'll take the numbers as it comes. We're going to be short, we're going to buy.

Our attempt is to start build more and more of this organically. We made good headway.

Imagine we have 1 lakh crores of PSL in the bank today, probably a little more than about one yeah, close to 1 lakh crore, 40 1.2 lakh crore of PSL, okay, didn't exist a few years ago. We're making good headway, but we're still short.

Sure.

Net-net, we're losing money on PSLC purchase. Yeah.

Sure.

Sure. Got it.

Thank you, sir. All the best.

Thank you.

Thank you.

Thank you. Thank you very much.

Thanks, Sudhanshu and Saptarshi, everybody, and to everybody who took this call. We look forward to continuing our work like this, and certainly after 2 or 3 quarters, even those of you who are on the fence will get confidence in us.

Thank you.

Thank you, everyone, for joining.

Thanks, everyone, for joining. Have a nice weekend.

Thanks.