Thank you so much, Sagar. Good evening, and welcome to Axis Bank's earnings call to discuss the bank's financial results for the quarter ended September 2026.

Before we begin, I would like to warmly welcome Rajeev Mantri to the Axis Bank family. Also joining us for the call today are our EDs, Subrat Mohanty, Munish Sharda, and Neeraj Gambhir, along with other members of the leadership team.

The global macroeconomic environment continues to face headwinds from geopolitical tensions and trade-related disruptions. Renewed tensions in West Asia have continued to disrupt global supply chains and fuel volatility in energy markets, while rising energy and food prices are adding to inflationary pressures across economies.

Despite the overhang from elevated commodity prices, tariff-related disruptions, and weather-related risks, the Indian economy has continued to demonstrate resilience, with growth supported by broad-based economic momentum. Economic activity was underpinned by robust investment activity and healthy private consumption, aided by sustained discretionary spending.

Supported by proactive regulatory measures, system liquidity improved significantly during the quarter, providing a fillip to credit growth and deposit accretion across the banking system. In an environment characterized by resilient domestic growth and persistent global uncertainties, Axis Bank continued to build a differentiated and agile franchise through investments in digital trust, payments innovation, AI-led capabilities, network expansion, and talent development.

We sustained the momentum in our businesses while delivering sustainable and quality growth, further strengthening balance sheet resilience, enhancing productivity, and deepening customer relationships across segments. Now, let me talk briefly about the progress we have made on each pillar of our GPS strategy.

Starting with growth, our momentum on gaining market share across deposits and advances has continued during the quarter, driven by broad-based growth and supported by encouraging mobilization on FCNR(B) front. Our total advances grew 23% year-on-year and 9% quarter-on-quarter, and excluding the loans extended by international branches for FCNR(B) deposits, the advances grew 19% year-on-year and 5% quarter-on-quarter.

The growth in advances has been supported by continued healthy traction in retail disbursements across segments for the fourth straight quarter, translating to retail book growth of 16% year-on-year and 10% quarter-on-quarter. Even post-excluding the leverage facility extended for FCNR(B) deposits, retail book grew 10% year-on-year.

Our SME franchise continues to deliver broad-based growth of 25% year-on-year and 9% quarter-on-quarter, driven by differentiated offerings, best-in-class tech and digital capabilities, and a customer-centric approach tailored to the evolving needs of India's MSME ecosystem. Our wholesale banking franchise delivered another strong strong quarter with growth of 34% year-on-year, driven by robust client activity across sectors, supported by resilient economic momentum.

Our relationship-centric approach characterized by greater engagement intensity, disciplined follow-through, and an omnipresent client coverage model, alongside deeper One Axis collaboration, continue to strengthen client relationships and franchise performance. Our growth has been through deepening the wallet share across our customers while maintaining our RAROC thresholds.

These relationships also provide us access to corporate salary accounts as well as potential for liability relationship and additional fee income going forward. Moving on to the deposits, through our strong NRI franchise and proactive outreach, we garnered a meaningfully better market share of 8% on FCNR(B) deposits in this quarter, raising an aggregate amount of 1.018 billion of FCNR(B) deposits.

Year-on-year on QAB and MEV basis, MEV basis, our total deposits grew 23% and 21%, term deposits grew 28% and 27%, CA grew 15% and 7%, SA grew 13% and 12%, and total CASA deposits grew 14% and 11% respectively. Quarter-on-quarter on QAB and MEV basis, our total deposits grew 7% and 6%, term deposits grew 10% and 8%, CA grew 3% and SA grew 2% and 2%, and total CASA deposits grew 3% and 2% respectively.

Excluding the portion of FCNR(B) deposits backed by loans given by our international branches, our total deposits grew 17% year-on-year and 3% QoQ, and term deposits grew 21% year-on-year and 3% Q-o-Q on MEV basis, post-accounting for the 8.6% QoQ decline in the non-retail term deposits, as we utilized part of the FCNR(B) deposits to optimize our balance sheet. Please refer to slide six for more details on the impact of FCNR(B) on various reporting metrics.

Our New-to-Bank franchise scaled further with an increasing mix of premium and relationship-led acquisition, resulting in 20% year-on-year growth in NTB average balances and reinforcing the quality of franchise growth. The corporate salary business continued to deliver robust performance, supported by deeper engagement from wholesale coverage team and a sustained focus on relationship deepening.

Average NTB salary balances grew by 40% year-on-year, while the existing-to-bank salary portfolio expanded by 16% year-on-year, reflecting strong customer primacy, improved engagement, and continued franchise deepening. Burgundy continues to anchor our premiumization journey, with assets under management up 27% year-on-year and 9% quarter-on-quarter, including AUM for Burgundy Private, which grew 12% year-on-year and 3% quarter-on-quarter.

On profitability, our focus has been on building a more sustainable earnings profile driven by disciplined execution, operating leverage, and improved efficiency. Our net interest income for the quarter grew 12% year-on-year and 5% QoQ.

NIM for Q2 FY27 was 3.36%, including accounting for the impact of FCNR(B) deposits. Excluding the imp- impact of FCNR(B), NIM for Q2 financial year 27 stood at 3.47%.

Our cost to assets declined further to 2.14%, down 24 basis points year-on-year and 6% six basis points QoQ. For the quarter, PAT grew 38% year-on-year, and our consolidated ROA was 1.49 and ROE is worth 13.96%.

On sustainability, we stay focused on driving quality growth, strengthening balance sheet resilience, building future-ready technology platforms, advancing industry-first innovations, and investing in people and capabilities to deliver sustainable outcomes at scale. Our GNPA was at 1.16%, declining 30 basis points year-on-year and 12 basis points QoQ, NNPA at 0.35%, declining nine basis points year-on-year and four basis points QoQ, while the net credit cost was at 0.45%, down 28 basis points year-on-year and 18 basis points QoQ.

For the quarterly progress on our AI transmission journey, please refer to slide 14 and 15 for details. We continue to make progress in our AI journey through Axiom, our enterprise-wide AI operating model focused on embedding AI across customer journeys, operations, and decision-making.

AI-driven solutions such as DocAI, VoiceAI, and GenAI-powered collections continue to enhance customer experience, improve operational efficiency, and delivering better business outcomes. With a strong focus on governance, talent, and innovation, we're accelerating our transition towards becoming an AI-native institution.

We continued to strengthen our leadership in digital payments and secure banking through industry-first innovations. During the quarter, Axis Bank became the first and only Indian bank to enable Apple Pay for its credit card customers, marking a significant milestone in the evolution of digital payments.

Building on our commitment to safe and intuitive banking, we introduced industry-first UPI limit management feature in our mobile banking app that enables customers to set and manage transaction limits across different UPI payment categories. Beyond technology and innovation, customer engagement and talent development remain key priorities.

We strengthened our customer connect through the launch of Sparsh Week 2026 last month, our flagship customer engagement initiative, while continuing to invest in building a future-ready and customer-centric workforce. Our continued focus on innovation, customer experience, talent development, and execution excellence was recognized through several prestigious industry accolades, including India's Best Digital Bank at the Euromoney Awards for Excellence 2026, honors at the Brandon Hall Awards, ICC Emerging Asia Awards, ABF Retail and Wholesale Banking Awards, and the Sabre South Asia Awards.

As we enter second half of the year, we continue to remain watchful and are closely monitoring the evolving external environment. We remain confident in our agility, execution capabilities, and ability to navigate evolving challenges while capitalizing on emerging opportunities.

Backed by strong capital position, a prudent risk culture, and diversified growth drivers, we are well positioned to deliver sustainable and profitable growth while continuing to outperform the industry. With that, I'll now hand over to Rajeev to discuss the financial performance for the quarter.

Thank you, Amitabh. Good evening, everyone, and thank you for joining us.

The salient features of the financial performance of the bank for H1 FY27 and Q2 FY27 across operating performance, capital and liquidity position, and asset quality, restructuring, and provisioning are as follows: For H1 FY27, we delivered healthy operating performance supported by strong NII growth and operational efficiency. Net interest income was at Rs 30,018 crores, which grew by 10% year-on-year.

Fees at 12,536 crores grew 6% year-on-year. Operating expenses at 20,541 crores grew 7% year-on-year, delivering a positive jaw on core operating revenue.

Core operating profit was at 22,120 crores, grew 11% year-on-year, and profit after tax at 14,117 crore increased by 30% on a year-on-year basis. Moving to the quarter, the key metrics for Q2 FY2027 are: Net interest income at 15,371 crore grew 12% year-on-year and 5% quarter-on-quarter.

Fee at 6,381 crores grew 6% year-on-year and 4% quarter-on-quarter. The granular fee was at 90% of the total fees.

Expenses at 10,819 crores grew 9% year-on-year and increased by 11% quarter-on-quarter. Cost to asset stood at 2.14%, improving by 24 basis points year-on-year and six basis points sequentially.

Operating profit was at 11,083 crores, up by 6% year-on-year. Core operating profit at 10,998 crores, 11% year-on-year.

Net credit cost of Rs 1,564 crores at 0.45%, which was lower by 28 basis points year-on-year and lower by 18 basis points quarter-on-quarter. Profit after tax was at 7,003 crores, up by 38% year-on-year perspective.

GNPA at 1.16%, declined 30 basis points year-on-year and 12 basis points quarter-on-quarter. NNPA was at 0.35%, declined nine basis points year-on-year and four basis points sequentially.

PCR was healthy at 70%. Standard asset coverage of 1.16% improved three basis points year-on-year.

All provisions by GNPA ratio is 164%, which improved by 17% year-on-year. Annualized consolidated return on assets was at 1.49%.

Annualized consolidated return on equity was at 13.96%. Subsidiaries contributed 11 basis points to the consolidated annualized ROA and 66 basis points to the consolidated annualized ROE this quarter.

Bank CET1, including H1 FY27 profits, stands at 14.61%. We net added 23 basis points of CET1 in the half year.

The bank has provisions aggregating to Rs 8,006 crores, including the standard asset provisions created in Q2 FY26 pursuant to regulatory guidance. These have not been reckoned for regulatory capital computation, and as a result, they represent an additional buffer over and above the reported capital ratios, translating into an incremental capital cushion of roughly 49 basis points.

This reinforces the bank's balance sheet strength and enhances our ability to navigate uncertainty while continuing to support growth and shareholder value. We reiterate that we do not need equity capital for either the growth or protection pillars.

As mentioned during the previous quarter earnings call, we raised AT1 aggregating to US$600 million within first half FY27, which has been used to call back the earlier AT1 as per its contracted call date in September 2026. Additionally, in Q2, we raised US$600 million in senior notes.

NIM, moving to net interest income and margins, NIM for Q2 FY2027 was 3.36%, declined by 37 basis points year-on-year and 10 basis points quarter-on-quarter. Excluding the FCNR(B) impact, the NIM for the quarter was 3.47%, which shows an increase of 1% sequentially one basis points sequentially.

The quarter-on-quarter NIM decline of 10 basis points can be attributed to 11 basis points due to grossing up for self-leverage FCNR deposits, and also due to the liquidity carry associated with FCNR(B) deposits with surplus funds being parked in low-yielding securities prior to deployment in the appropriate avenues, slightly offset by one basis point benefit from lower interest reversals during the quarter. On a year-on-year basis, the NIM decline of 37 basis points can be attributed to 11 basis points due to the FCNR impact, as we just explained for quarter-on-quarter; 16 basis points due to the change in balance sheet mix; and 10 basis points due to full impact of the 125 basis points of repo rate cut in the current quarter versus 100 basis points rate cut in the same quarter last year, net of benefit in cost of funds due to liabilities repricing.

Cost of funds declined by eight basis points year-on-year and increased three basis points quarter-on-quarter. Moving to other income and operating expenses, our fee to asset ratio stood at 1.26%.

Wholesale fee grew by 10% year-on-year, and total retail fee grew by 4% year-on-year. Trading profit and other income was at 150 crores, declined by 74% quarter-on-quarter, mainly on account of MTM and some realized losses on investments.

Operating expenses for the quarter stood at Rs 10,819 crores, growing by 9% year-on-year and 11% sequentially. The year-on-year increase in operating expenses is Rs 862 crores.

This increase can be attributed to the following reasons: 48% of the increase is linked to volumes, 23% for investments in technology and digital, and the remaining due to staff cost and other operating expenses. For quarter-on-quarter increase in expenses, it needs to be noted that the bank had Rs 271 crores of one-time reversals in staff cost in the last quarter.

Further, there are some one-time expenses of Rs 254 crores in the current quarter, mainly relating to new labor code-related items and also certain expenses attributable to the FCNR(B) mobilization. Adjusted for these one-timers, the quarter-on-quarter increase in operating expenses was Rs 572 crores, which is about 6%, attributed to the following reasons: about 60% of this is due to volume, 13% is due to investment in technology and digital, and the remaining are other BAU costs.

Overall technology and digital expenses constituted 10% of total operating expenses for Q2 FY27. We opened net 119 new branches in the quarter and 139 new branches for the entire half year.

Our H1 period end headcount declined by 375 compared to 31st March 2026. Moving to the growth for liabilities and the loan franchise, Amitabh has already discussed the growth in loans and deposits, along with the impact of FCNR(B) on both.

We continue to gain market share on deposits and advances. We gained approximately 10 basis points on market share on the loan franchise and approximately 10 basis points market share on a year-on-year basis on the deposit franchise.

Our loan book is granular and well-balanced with retail advances constituting 54% of overall advances, corporate loans at 34%, and SME at 12%. Please refer slides 20 and 21 for details around the quality of our liability franchise and slides on our loan franchise.

72% of our loans are floating rate, of which 60% are linked to repo, 12% are linked to MCLR and other benchmarks. 44% of our fixed rate book matures in 12 months.

Breakup of the floating rate book by benchmark type and MCLR repricing frequency is set out on slide 10 of our investor presentation. In Q2 FY2027, retail disbursements grew 22% year-on-year.

Disbursement growth in home loans was 24%, vehicle loans was up 25%, and SBB was up 33% year-on-year. Retail agri was higher by 19% and consumer loans was up by 20% on a year-on-year basis.

Moving to asset quality and provisioning, slippages, GNPA, NNPA, and PCR ratios for the bank and segmentally for retail, CBG, and corporate are provided on slide 45 of our investor deck. Gross slippages in the quarter were Rs 4,762 crores, of which retail was 4,286 crores, CBG was 287 crores, and WBCG was 189 crores.

Our gross slippage ratio for the quarter declined 63 basis points year-on-year and 31 basis points quarter-on-quarter. For the quarter, 33% of the gross slippages are attributed to linked accounts of borrowers, which were standard when classified or have been upgraded in the same quarter.

Net slippages for the quarter were Rs 2,383 crores. Net slippages segmentally were 2,042 crores for retail, 210 crores for CBG, and 131 crores in WBCG.

Net slippage ratio for the quarter declined 30 basis points year-on-year and 37 basis points sequentially. Recoveries from written-off accounts for the quarter was Rs 971 crores, up by 51% year-on-year.

Net slippages in the quarter adjusted for recoveries from written-off pool were 1,412 crores. Segmentally, retail was 1,313 crores, CBG was 98 crores, and WBCG was Rs 1 crore.

As of 30th September 2026, the gross NPAs of the bank stood at Rs 16,778 crores, net NPAs stood at Rs 5,054 crores, and provision for NPAs stood at Rs 11,724 crores. The cumulative non-NPA provisions as at September 30th, 2026 stands at Rs 15,860 crores, comprising prudent provisions for standard assets of 6,775 crores, restructuring provisions of 173 crores, standard asset provision at higher than regulatory rates of 1,914 crores, additional one-time standard asset provision of 1,231 crores, and weak assets and other provisions of Rs 5,767 crores.

Moving to the performance of our subsidiaries, the detailed performance of the subsidiaries is set out in slides 52 to 59 of the investor deck. In H1 FY27, the domestic subsidiaries reported a net profit of Rs 1,210 crores, growing 29% year-on-year.

The return on investment in domestic subsidiaries was 45%. Axis Finance, the assets under management crossed 54,590 crores, growing 23% year-on-year.

Retail plus MSME book constitutes 71% of total loans. H1 FY27 PAT grew 42% year-on-year to Rs 546 crores, capital adequacy ratio at 22.15%, and strong asset quality with net NPA of 0.35%.

Moving to Axis AMC, overall, quarterly average AUM grew 9% year-on-year to Rs 3,82,956 crores. H1 PAT adjusted for the impact of PMS business transfer was at Rs 370 crores, growing by 36% year-on-year.

Axis Capital, profit after tax stood at Rs 149 crores, up by 61% year-on-year, and the team executed about 20 ECM and five non-ECM deals during the first half. Axis Securities, revenues for first half were at Rs 842 crores, and the H1 PAT adjusted for impact of the PMS business transfer stood at Rs 191 crores, higher by 9% year-on-year.

In summary, we continue to make progress towards building a stronger and more sustainable franchise. We remain vigilant in monitoring the macroeconomic and geopolitical environment, inflation, liquidity, and our cost of funds, along with their impact on our business.

This concludes our opening remarks, and we will be happy to take questions.

Hey, thank you for taking my questions and congrats and welcome, Rajeev. Can I start with the retail versus corporate debate?

I think a couple of quarters ago we had a fairly robust conversation on the call. At that stage, the indication was that retail will probably tap out at 55%.

It seems like the corporate opportunities continue to remain, and they remain strong because the double-A spreads are still quite wide. Is this a trend that we can still expect that, as long as these corporate opportunities are there, the percentage of retail in the loan mix could continue to fall?

That was question one. The second question was on understanding how NIMs might evolve in the next quarter.

Firstly, I should thank you for giving us very clear disclosures on the FCNR-adjusted NIMs. Your peers have not done that, appreciate that slide.

Just on next quarter, if you could throw light on what kind of movement we should expect there. That would be helpful.

Thank you.

I think on the question on the corporate opportunity, I'll request Vijay to talk about that. Then I'll take the question on the NIM outlook.

Hi. This is Subrat, sorry.

Since you asked the question on the overall mix, Chintan,

Yes.

We didn't guide for any particular topping out or bottoming out of the retail share of the total mix. If you look at our retail disbursement growth on a quarter-on-quarter basis, that's quite strong across all the categories.

We continue to push the pedal on retail growth in terms of disbursement. The book growth also has gone up.

Even ex-FCNR, it's now above 10%. It's been going up from 6% to 8% to 10% over the last few quarters.

On the corporate side, see there is good opportunity, good pipeline, very good companies with whom we are actually gaining wallet share. These are long-term relationships, and like we have mentioned, the downstream benefits of these relationships where we are actually substituting other banks cannot be in any sense undervalued.

We are continuing to make sure that the retail book growth starts to catch up once the disbursement growth continues to remain as robust over the next couple of quarters. It is doing that.

The book growth is starting to grow at a faster clip. Going forward, we're not putting a particular number, but we're very cognizant of our medium-term structural NIM guidance.

We know that we have to do this balancing act at a faster clip in terms of making sure that we do not further move away from the mix that we are right now, and we get back to the above 55% retail mix. That effort is on at this point in time.

On the second point

on NIM, as we have depicted in the investor deck, we have about 11 basis points of impact, which has come during the quarter due to the FCNR(B) deployment or due to the FCNR(B) mobilization. If we net out for that, the NIM for the quarter was at 3.47%, which was one basis points higher than the last quarter.

As these funds have come through, we are now looking at further deployment and optimization to be done using these funds. In the last quarter, we have utilized some portion of these funds to retire the more expensive NRTDs.

That was done towards the end of the quarter, we should be able to see some benefit of that come through in the next quarter in terms of NIM uplift. At the same time, like Subrat mentioned, we are working towards improving the loan mix, liability mix, as well as various aspects of product level mix that we can actually work on in terms of improving the NIM trajectory.

The FCNR-related deployment will take us the next couple of quarters in terms of fully seeing the benefit of the optimization, and then we will also see how exactly we are able to uplift the NIM. Overall structurally, the guidance that we've given on NIM remains unchanged.

However, as you can see, these are various factors which are playing out, and therefore, from a timelines perspective, we won't be able to specifically guide on how much time frame this will take in terms of moving forward on that trajectory, though structurally, we are working towards through the cycle guidance of 3.8% that we've mentioned earlier.

Rajeev, just to clarify, the 11 basis point FCNR optical impact on the NIMs, does that increase or decrease in the next quarter?

So 11 basis points had broadly two components. One was the impact due to the grossing up of the balance sheet.

The second was the fact that it took some time for these funds to be deployed, let's say, for retiring of the NRTDs, a portion of that. Initially, these have been sort of parked in low-yielding investments.

As we look at the deployment of this into the advances growth, as well as further optimization of the balance sheet, I think we should be able to see an uplift. This impact was for this particular quarter.

I think in Q3 and Q4, you should be able to see some sort of a benefit coming through due to the optimization exercise that we'll be doing.

Thank you. That helps.

Thank you.

Hi. Good evening.

I had a couple of questions. Just again on the corporate-retail mix.

A lot of banks that have raised FCNR, private banks, they are growing the corporate loans quite rapidly. Is it a shift in demand?

Do you see the industry shifting to a higher corporate loan growth given inflation, possibly the war, and is that the correct way of looking at it? Because even for you, your retail has grown quite impressively.

The growth has picked up, but the corporate loan growth has also increased. That's really my first question.

My second question is on credit cost. You'd have had made standard provisions on FCNR loans, and you've drawn down some provisions.

You had already discussed that when you'd made those provisions, you've drawn those down. Where does credit cost settle?

Are there any benefits to be seen on any segment or they normalize back to Q1 levels? How do we view credit costs?

These are my questions. This is

Vijay. I'll talk about corporate growth.

See, what we've done over the last few quarters, we now have a boringly consistent and repeatable playbook. See, as we have said in the past, we're not chasing assets.

We originate selectively, we apply our internal filters on transfer pricing, RAROC, and RWA. We're letting go of several assets.

In spite of that, we're able to see growth because the growth is fairly broad-based across several sectors and across segments. We're also seeing growth across capex, project finance, refinancing, as well as working capital.

We don't have any dependence on any single sector or a client segment or financing category. The growth is sustainable as we've shown over the last few quarters.

I also want to add that we're taking the balance sheet to the market. Obviously, wherever we're taking balance sheet, we take the full franchise.

We've spoken about One Axis in the past, and that's no longer a pilot. It's actually embedded in how we operate.

We take our Neo platform, which is best-in-class digital stack, for both flow business, for fee business. We're also taking our One Axis approach to get cross-sell across corporate salary as well as Burgundy.

Corporate growth is sustainable because it's well diversified across sectors, segments, and financing categories. We don't want to lose the opportunity because we're seeing, as Subrat had said earlier, there are several downstream benefits that we're realizing.

Thank you.

I think on your second part of the question, Mahrukh, on the credit cost, we have definitely seen an improvement trajectory on a quarter-on-quarter as well as on a year-on-year perspective. We have seen the improvement come through.

We don't give a specific guidance on what exactly is our credit cost going to be, but directionally, what I can confirm is that we are on the trajectory towards improvement. I think there is some further improvement that also we can expect.

Though some portion of this improvement that has come through is also because of the mix, but in individual portfolios as well, we are seeing definite improvement coming through as reflected by the overall slippage ratios as well as the recoveries improvements. I think the trajectory of improvement continues, and we can expect some further improvement as well, but we won't be able to give a specific guidance.

Okay. Just one last question on ECLGS disbursements.

How much of ECLGS loans have you disbursed?

We have sanctioned around 12,000, 12,500 loans worth around 10,700 crores, and 80% of those approximately have already been disbursed.

Sorry?

We sanctioned around 12,500 loans worth around 10,700 crores, and around 80% of these have been disbursed till now.

Thanks a lot. Thank you.

Thank you.

A set of few questions. The first one on a clarification on the labor code impact in that one-off item of 254 crore.

Would the large part of that 250 crore be associated with the labor code, or would that also include FCNR? Any split if at all you could provide.

This labor code impact was already recognized last year, curious to understand why did it come up again, and how do we think of it incrementally? Should we expect more of this in the coming quarters?

That's my first question.

Yeah. Hi, Rikin.

Rikin here. Broadly, if we were to look at the one-offs during this particular quarter of 254 crores, I think slightly more than half of this was really relating to the labor code-related impact.

Broadly, I think certain clarifications that we have recently received as regards couple of components pertaining to some of the outsourced employees and the provisioning that we have taken around that as well as some clarifications relating to the ESIC. Those have been the key items on which we have actually taken some one-time expenses.

The slightly less than half is pertaining to the FCNR-related mobilization, as we have called out.

We shouldn't expect any further labor code-related opex in the coming quarters, right?

This is an evolving area. We are continuously looking at the various guidelines and the circulars coming our way, and as and when if anything comes through, we immediately highlight across.

Far based on what we have been aware of, we have already taken those into account. This is an area where some new guidelines, et cetera, whenever they come, we will have to deal with that.

As of now, based on what we're aware, we've already factored that in.

Got it. The second question is on fee income-related.

The fee income growth overall has been a bit weakish in the last two, three quarters, largely led by cards and payments. Some of your peers have seen some benefit on fee income due to FCNR.

Did you not receive that? How should we think of it going ahead excluding bancassurance?

If you could also offer some comment on bancassurance, what could be the potential impact following the draft IRDA guidelines? I have one more question after this.

Thanks.

On fee income, Rikin, this is Subrat. There is the growth in corporate book means that some of the asset-linked fee doesn't it's on a on a ratio basis is lower.

Also, some of the non-asset-linked fees come a bit later. That trend continues, so that's a bit of a challenge.

The other one is on credit cards, the fee income has been a bit weak. The spends numbers have not been strong, and also last year September was when the festive month had started.

This year that has shifted to October, there is a bit of a temporal difference on account of that. We we continue to work on it.

If you see quarter-on-quarter, the growth was was quite okay, but on a on a year-on-year basis, the growth is not as strong as as we used to see fee income growth in the past, we are continuing to work on it. On the insurance part, the consultation paper is out.

I still think it's early days. There are various points of view being expressed by various industry players.

They have been sent to the regulator. They're also in a listening mode at this point in time.

We've done some assessment of how things are based on the consultation paper. We believe there will be some time before they actually come through.

We also possibly believe there might be a few areas where there might be, specific amount of time given, or a glide path given for us to or for the insurance players to actually, manage the change. Some of those things will happen.

I don't think there is anything right now that we can give with more specificity in terms of how they will play out. We've done some of the work on our, from our side in terms of what potential impact could be and how we could mitigate, through a combination of volume, product mix, et cetera.

We'll try and manage it, and the remaining will try and see if there are other sources of fee income that we could crank up in the meantime. I think we might get about six to nine months before that comes through.

We'll try and mitigate the impact during that point in time during that period of time.

Got it. My last question is a clarification on margin.

Of course, Rajeev, you did offer some comments on how to think about it, but just to make it completely unambiguous. While there could be some drag on FCNR full quarter for the next quarter, can we say that this quarter, including the FCNR hit, is this the bottom, and directionally it can stabilize to move up in the 3Q and onwards?

Yeah. I think on the NIM trajectory, as I'd explained in the previous question that came through, we have seen the significant impact of FCNR(B) come through in this quarter.

The net of that, we have seen a one basis points improvement. We had said that Q1 is where we are seeing sort of the bottom of that, and then we will see an improvement.

We've clearly shown, net of the FCNR impact, that improvement come through. Going forward as well, based on the various levers that the bank is working on, specially around the advances, assets, as well as liability mix, we are trying to work through that improvement.

Some of that will also be aided through the rate hikes that will come through, but there are also certain headwinds that we need to work on. Across the various factors, our endeavor is to make sure that the NIM trajectory continues to move up.

I think that's what we had mentioned earlier, and would like to reiterate the same. As I'd mentioned, I think we are just working through the various levers.

The time frame of this is difficult to sort of ascertain, but sequentially, we should be able to show an improvement going forward. That's what we are working on.

Got it. Okay.

Rikin,

you had that additional point on whether we have collected FCNR fees as we have mobilized these deposits, and does the 6% year-on-year growth include that fees also? No, it doesn't include that fee.

We didn't collect the fees. We didn't specifically charge fees for raising deposits.

Okay. That's clear.

Thank you, Subrat.

Yeah. Hi, good evening, and thanks for taking my question.

Back to IRDAI, I think you said qualitatively you've made some assessment of the impact and the offsets available. I would actually be interested to know if you can expand a little bit on what you could change to offset the impact.

Obviously, numbers will come through later on, but just a broad qualitative understanding would help. In your overall insurance sales, what percentage comes from credit life versus the rest?

Can you sort of split that up in broad terms again, so that would also help in our overall understanding? That's my first question, and I'll just come back for a second after this.

Thank you for the question. See, we don't give the break up of fee income and within that, sub break up in terms of how much comes from various product categories.

That's not something we offer. On your first point, see there are multiple levers.

I think it's still premature to go into some of those levers even on a qualitative basis. If you look at how the industry has navigated previous changes in regulations as late as last year when we had a GST rate cut change, there was an expectation that the volumes would go up, and the volumes went up.

In that sense, on a net basis, the industry managed to have higher volumes of the product that actually had the maximum GST impact in terms of price reduction, and on an overall basis, the industry still came out positive. I think some of those levers will try and work on, but like I said, till we get a final picture of how various products look in terms of the change in their commission structures, it would be a bit premature to talk about more qualitatively the subcategories through which we'll be able to mitigate.

Got it. Okay.

On the other hand, due to this MDR on UPI, would you have some broader numbers about how much revenues you hope to gain, because that could be a offset also available for whatever you lose out on the insurance side. An order of magnitude there also would help.

On UPI, this is Arnika, on UPI MDR, as you're aware, we play across all the three spectrum as the issuing bank, PSP bank, as well as the acquiring bank. At this stage, we can't give any specific guidance because the MDR implementation has been postponed, and as and when it comes, I think the bank is committed to ensure that we also use some of the revenue we have to actually grow the ecosystem, by increasing our merchant footprint, as well as, the infra costs that we incur on maintaining the UPI.

No specific break up there.

Do you think most of the gains that you would get actually go in developing the channel?

Reinvest.

Reinvest, yeah.

End of the day end of the day Amitabh here, a lot of people will be jostling for this for the share of this pie. As Arnika said, we have a decent share across various parts of this value chain.

Finally, where we end up will all depend on obviously what leverage we have over each other. To say that, oh, we'll have to spend money to, right now it is not profitable, now suddenly there's a revenue pool available, what ends where is difficult to predict at this stage.

Anyway, this implementation has been delayed. Our endeavor, obviously, would be to get some revenue out.

Given the fact there are so many variables and one of them, you added one more to the equation, it's very difficult to predict at this stage as to where, kinda the penny will drop. We do believe we are much better placed than a lot of the others.

Exactly, which is why I was asking you the question. Anyway, thanks for the response, and all the best for future quarters.

Hi. The first question on the operating jaws overall.

Even adjusting for this labor code as well as one-time impact, which is there in the overhead cost, still in terms of cost to assets, it seems to have inched up on a quarter-on-quarter basis. You indicated adjusting for all of this, 60% is volume linked.

As we still keep on growing the retail portfolio and the disbursements out there, would we see limited opex to asset benefit now kicking in from 2.1-odd percent wherein we are currently, or there are still some jaws available?

Yeah. Hi, Kunal.

Rajeev here. I think we definitely have seen the jaws being positive on a core operating revenue perspective.

With sort of some noise in one-timers, et cetera, if you remove that, then I think clearly, we see that story come out. The cost to asset ratio have been coming down steadily quarter-on-quarter over the last 1.5 years or so, and I think we do expect that journey to continue.

The bank is actually taking a lot of steps in terms of the efficiency agenda and the productivity improvement as well. I think as had been mentioned earlier, we are looking at deploying AI and various sort of efficiencies that could come on the basis of that, at the same time looking at how do we actually create efficiencies across the entire spectrum.

I think that journey is continuously on, and we see the benefits of that come through. Essential investments are being done in cost, but the trajectory that we see in opex to assets has been very encouraging, and I think that momentum will be kept on going forward.

Sorry, Kunal, this is Subrat. You mentioned that cost to assets has gone up.

If you just look at slide 13, the quarter-on-quarter drop on cost to asset is from 2.20 to 2.14. It's a six

basis point drop. No, that's because we take that 12 years average.

If I purely look at on a quarterly basis, it's moving up, yeah. We take 12 months in this cost to asset formula, I think we take 12 months period, yeah.

You're pairing like-to-like in any case when we compare with the previous quarter, but I appreciate your point. Understood.

I think this is primarily due to the one-timers that you've seen the cost for this quarter. That's why I think adjusted for that, you will see the ratio coming down even further.

Okay. Lastly, in terms of credit cost, if I hear you right, maybe this 50 basis points doesn't have any unusual recoveries out there, and still maybe there is scope to further optimize and improve it given the kind of slippage run rate which we are seeing?

There is no unusual recovery which is there in the recovery numbers, and I think we have definitely seen the improvement come through on the net slippage ratio. What we can say is that there was a recovery from the written-off accounts also during the quarter, which I had mentioned as part of my opening commentary, around 971 crores, which was about 50% higher year-on-year.

That's been the recovery trend that we have seen as well.

Okay. Got it.

Yeah. Thanks, and all the best, yeah.

Thank you.

Hi, team. Congratulations on the quarter.

I'm just sorry to belabor this point on NIM, but somehow it matters to investors. Now, just to be very clear, your month of September NIM or exit NIM for the quarter would be meaningfully lower than your quarterly average NIM of 3.36, correct?

Piran, hi. Rajeev here.

I think we don't give month-wise NIMs, but I think broadly as I've explained, I think the way the NIMs came about due to the FCNR impact and how exactly we're seeing the improvement come through, or we will see the improvement come through as we optimize it further. I think that will give you some color.

We won't have a specific number for the month of September.

Theek hai. Fine.

Then hear out my argument and tell me if I'm wrong here. You raised about a trillion rupees of deposits, and net-net, your deposits have grown 80,000 crores.

You've probably would have paid down some TDs, whatever. Versus 80,000 crores of deposit growth, your loan growth ex of the self-leverage portion is 68,000 crores.

Mota-moti, you have deployed all the money that you've raised, right? That also reflects in your LCR not increasing, which brings me back to my question that there isn't a lot left to redeploy from excess liquidity into loans.

Is my argument correct or wrong?

If you just look at, sorry, this is Neeraj here. If you just look at from a balance sheet computation perspective, you're right.

The money has to find its way into some place, and it has found its

place. Into the

different places where we have deployed it, deployed could mean we've repaid some high-cost liabilities, deployed could mean we've also created assets out of it. If you think it from a growth perspective, we have not used the full FCNR(B) liquidity to grow our assets.

Right? To that extent, there is runway for the balance sheet to grow, given the fact that this is an incremental liability that we have raised.

Whichever way you want to look at it, it's up to you, but reality is that this has given us an ability to grow as well as optimize the balance sheet.

No, but sorry, Neeraj, the ability to grow depends on your LCR, right? If your LCR had gone up to 130, I would have said, yeah, there's enough room to redeploy excess liquidity.

It remains flat at 119, what am I missing?

LCR is not an automatic increase. LCR needs to be managed, and we manage our LCR very actively.

If my LCR is going beyond a certain threshold because I have excess liquidity because of higher deposit growth, we will do something with it. We will basically bring down some other lines of liability to make sure that our LCR stays within the band that we have been talking about, which is 115% to 120%.

Understood. Is it fair to say that with improved asset quality, y'all will be able to earn lower bounce charges, late payment fees, et cetera, and that's impacting your fee income growth, or is that too minuscule to matter?

No,

no, Piran, I think there are larger areas that we need to work on. That might contribute a bit, but not really making a big dent on that number.

Understood. That's it from my end.

Thanks, and wishing you all the best.

Hi. Good evening, and thanks for the opportunity.

Rajeev, just sorry to on NIM again, but my question is a little bit different. I heard that there are some moving parts and basis your efforts or your endeavor would be to increase the NIM incrementally.

The question is, have you changed the transmission? Because if I remember correctly, earlier we were passing on only at the last day of the quarter.

If that is unchanged, then most of the majority of the NIM delta would come from liability and maybe the mix change. Is that understanding correct, or that has changed?

Hi, Jai. Yes, I think we continue to have the same date.

It's the last week of the quarter where the repricing happens. The latest repo rate increase from a book stock perspective, the benefit we will actually see in Q4, as opposed to in Q3.

Of course, any new loans which get written will obviously apply the new rate if it's repo-linked.

Right, sure. Secondly, related to personal loans, I see and we have been maintaining very useful information on PL that all actually 100% of the PL is salaried, right?

At industry level, we see banks' PL growth has been at industry level has been only 10, 12, 13%, whereas some of the other non-banks lenders, they have been having a very strong PL growth. I suspect that would be because they are lending maybe to non-salaried segment.

Basis your experience on asset quality so far and maybe the interest rate favoring, would there be any change in the PL strategy to offer it to non-salaried also, or you would sort of continue with the same construct?

Hi, this is Munish Sharda. Our PL strategy has been centered around building a healthy unsecured portfolio, focused on giving loans to salaried customers only.

In our case, PL is only for salaried customers. Other non-salaried customers, self-employed customers loans are covered under the business loan segment, which is a separate segment.

We are focused on building that book, as we've been telling you in the past few quarters. We have done a lot of work in improving the health of the portfolio, invested in collections, technology, et cetera, also sharpened our underwriting standards and filters.

We are seeing the disbursement grow quite sharply in that business, as we've mentioned in the notes, and Amitabh also mentioned, and Rajeev also mentioned. We've started seeing the book grow on the back of the increasing growth in disbursements, and the portfolio quality remains quite healthy.

Right, that is clear. Secondly, on quality of liability, right?

This quarter, we raised FCNR(B), which I believe is purely retail, and would have much run-off rates. We replace some of the bulk deposits, possibly 100% run-off rates, but still the blended run-off rate that we show has actually gone up a little bit.

Any more detail here possible?

There's a bit of technicality here, Neeraj again. The FCNR(B) deposits that we have raised have a lock-in period of one year.

They are basically treated similar to non-callable deposits, which basically means that they will not show up in the LCR calculation. There's no sort of HQLA required to be maintained on these deposits.

Within non-retail term deposits, we have seen some swing between callable to non-callable deposits, which has partially led to a slight increase in the rest of the book's outflow rate, but it doesn't have the full impact of FCNR in that sense.

Understood. Last question, sir, Rajeev, on credit cost, right?

We appreciate that the portfolio, individual portfolio, has been behaving well, and hopefully, they will continue. From FY28 perspective, including ECL and some bump up in the standard assets provisioning, would you believe that credit cost would still have a ROA improvement lever including the standard assets provisioning going into FY28?

Jai, I think on the ECL transition and the impact, look, as we have maintained in the past, we don't expect any material impact to come through on the transition itself. This is also supported because we have existing contingent provisions of almost close to 8,000 crores that continue, which will help us in terms of moving towards the transition in a smooth manner.

From a flow perspective, how exactly that will play out based on the flow rates that are there for Stage 1, Stage 2, etc, I think that's what we will work through. Overall for both the transition and the flow, I don't think we expect any material implications on the portfolio that we have.

We're working through this, and of course, as we come closer to the date, we'll have greater clarity on that.

Understood. Sure.

Thank you, Rajeev. Thank you, and all the very best.

Thank you.

Hello, am I audible?

Thanks for the opportunity. Given NIM is more optical, which has been explained, I just wanted to ask about NII momentum.

As say NII sequentially improved to 5% from low single-digit last couple of quarters. Should we expect that momentum to be improved going forward, given that there's rate hike and also deployment of FCNR?

Is that a good assumption to make?

Hi, I think look, NII is ultimately a function of how the book is growing, as well as what we expect on the NIM trajectory. I think our book growth trajectory is on.

We have guided for 300 basis points higher than the industry average over the medium term. Even the current year, we are seeing good trajectory on the asset flow.

I think that is one key factor. Second, the narrative that you've heard from us on the NIM, where we expect sequential improvement to come through, based on the FCNR sort of optimization, at the same time the mix improvements that we'll have to work through.

These are the levers that we'll be working upon. There's no specific guidance we will give on the NII uplift sequentially or on a year-on-year perspective, but those are the broad factors that will play out to make sure that we continue working on improving this trajectory.

Got it. Thank you.

I would like to thank everyone for dialing in to the call and for placing the trust with the bank, and would also like to wish everyone a happy Dussehra and festive greetings. Thank you.