Concall — clean across the call.

What led to the strong average CA (current account) growth this quarter? Is there any seasonality? Will it fall in 1Q?

We had focused on current account affluent segment where we could manage a good growth in the current account at the granular level month-on-month, which has resulted in the total growth, which has happened throughout the year. These are small SME customers who have opened the current accounts with us. There is no major seasonality linkage. Partha Pratim Sengupta added that the staff department has also continued to show deposits from various trusts.

Is there any particular target CA ratio that we have in mind?

So, we'll continue to improve. We have not yet crystallized the target to what percentage we'll come. But definitely, our focus is that we will continue to improve. Last year also, on CASA, we were at 31%. Rajeev Mantri added that overall CASA has gone up from 27.3% to 29.3%, and within that CA has improved further. We are also broad-basing and introducing more products within the table of current accounts and savings that will help us in terms of improving the CASA further.

How are we thinking about neutralizing our PSL shortfall and go back to that era of selling PSLC rather than purchasing PSLC?

So, a number of steps have been taken in this regard. This year, PSL cost has been definitely quite high. And in the Q4 also, we had to incur a cost of around INR 150 crores, INR 60 crores higher vs. last quarter. So, what we have done is that we have revamped our entire credit process in our EEB segment to quality more portfolio in the PSL and also incremental focus on our direct agriculture loans. The effect of these is going to come, as in this year, we are expecting that the PSL cost would come down by almost 50% to what we have incurred in FY26. Going forward, next year, it will be almost neutralized or coming to zero. And after that, we will continue to earn from this PSL portfolio.

What sort of EEB loans today do not classify for PSL and going forward, will they classify? What is the change?

No. It is more of a revamping of a process. So currently, what was there the agriculture of the allied agriculture loans that we're giving were not getting captured into our system. So, we have made that available and currently, a year ago, it was only 10% or 15% of the EEBs, which was coming under the PSL, qualifying for PSL. Now it has already increased to 40%. Going forward, it will increase to 60%, 65%. So, the revamping has already been done. The RBI circular clearly mandates that banks have to follow a certain process and procedures to get them qualified. Those steps have been taken, and we are now already seeing the green shoots.

Vehicle finance now has a book of INR 5,000 - INR 6,000 crores. Who is our typical customer? How much of cross-sell happens to own deposit customers versus open market and is this entirely car loans or 2-wheelers EV, etc., also? What is the mix between CV, PV, 2-wheelers?

The vehicle loans include 2-wheeler as well as car loans and the customer segment is salaried and self-employed mix, but majorly it is salaried segment. When it comes to other vehicle finance which we talked about is commercial vehicle and construction equipment, where our major focus currently is on a strategic and super strategic customer and some portions say about 9% - 10% of our customers in the CV/CE are retail who are holding the fleet of less than 10 vehicles. About 20% of our volume comes from our own customers (existing branch customer). Mix: about INR 3,000 crores is commercial vehicles, about INR 1,700 crores is construction equipment, about INR 1,800 crores is car loans and about INR 900 crores are 2-wheelers loans.

On the operating expenses, you mentioned there are one-off factors. Can you quantify those one-off factors and which were they?

Yes. So, during the quarter, we had a couple of items which do not appear to be recurring. So, one is the PSLC cost, the Priority Sector Lending Certificate cost. During the quarter, we had roughly around INR 60 crores of increase vs. last quarter that came through because of the PSLC costs. Apart from that, we had an increase in the IT expenses also, which was also amounting to a similar level of around INR 50 crores. Within this, there are a number of items which were more timing-related issues and therefore we don't expect that to get repeated immediately. These two, I think, are a couple of the non-recurring items, which came through during the quarter, roughly amounting to about INR 120 crores.

Assuming kind of relatively stable environment, how should we think about ROA for FY27?

ROA, we saw an improvement from 0.4% in Q3 to 1.1% in Q4 and the reason for this is one is we have seen improvement in the income as cost of deposits have come down and also other income has seen an improvement. Apart from this, we have seen a reduction in the slippages, which led to a reduction in the provisioning of the credit costs. And going forward, as we have been guiding the market, we will be working towards seeing how we can gradually keep on improving the ROA towards the guided level of between 1.6% to 1.7% ROA by the exit of FY27, give or take 10 basis points. Partha sir added: 2% credit cost, NIM increased to 6.2%, other income gone up, and despite increase in operating costs, the RoA trajectory of 1.1%+ has been maintained.

Now that elections are almost closing in, fair to say the collection trends would have held up through the events of April as well?

So let me tell you a clear picture that till now, there is no adverse effect on collection on account of either election or middle east war. The collection efficiency, what Rajeev has stated is continuing. But definitely a few basis point, it comes down in the month of April, but which is quite common for the days. But on the ground, no adverse effect is being seen. And we are hopeful and expecting that this trend will continue.

On the RBI ECL impact - given the final guidelines are exactly as the draft was, how would your steady state credit costs look like? And on your unsecured book, what is the standard asset provisioning that you currently do?

On the ECL, we do have the transition impact, which is based on the December 2025 portfolio based on the earlier draft circular. The latest circular came through yesterday. Based on the earlier draft circular in December 2025 portfolio, the transition that we expect is to be roughly around INR 1,250 crores, which as we are allowed to transition it or spread it over 5 years would translate to about INR 250 crores per year impact. Given the latest circular talks about this can be passed through the retained earnings or capital reserves, we expect roughly 16 to 17 basis points of impact on the CRAR every year for those 5 years. Partha sir added: INR 1,072 crores provisions on all standard assets including 0.75% additional and INR 136 crores additional provision. Rajeev: for EEB, the requirement is 0.25%. We maintained 1%, which is 75 basis points higher. On personal loans and on ABG, it's around 0.4%, in line with the added requirements.

Just to rehash everything, EEB, you're already maintaining 1%, non-EEB unsecured is the only portion where you have to go from 40 bps to 1%?

That's correct. That's right.

What proportion of your deposits would be government related? And how should one think of margin trajectory from here on?

Our government deposits on the CASA side will be around INR 6,000 crores out of the total CASA deposits that we have. Partha sir added the retail composition has improved from 69% to 74%, and bulk deposits used to come from government departments. Rajeev: CASA share works out to around 12% of CASA from government deposits.

TD repricing is largely done or we should see cost of funds benefit following through in the coming quarters as well?

Yes. We expected the cost of funds to continue to improve in Q4, Q1 and Q2. The term deposit repricing has happened. As a result, the margins have gone up from 5.9% to 6.2%, a 30 basis points increase, largely driven by the cost of funds, partly also due to the impact of lower slippages, resulting in lower interest reversals. As we go through the next 2 quarters, we do expect further improvement because there are further term deposits coming in for renewals. So, we do expect at least another 10 to 20 basis points of improvement over the next 2 to 3 quarters.

On the credit cost front, should we consider 4Q as our base? Do you see the slippage trend moderate from here or could see it slightly inch up in 1Q on the MFI business?

Our X bucket collection efficiency has improved to 99.6% for the quarter and in March months, it was 99.7%. If we are able to maintain these levels, we definitely expect these slippages to continue to remain at these levels. We of course need to be wary of the implications of the war that's happening. Based on the efforts that the team has taken and the improvement in the collection efficiency, we do expect these slippages to hold at these levels and maybe improve marginally as well. Partha sir added: EEB slippages reduced from INR 942 crores to INR 690 crores. EEB DPD pool has come down from 4.6% to 3.1% across SMA-0, SMA-1 and SMA-2.

Any growth outlook on the deposit and loan growth front? What could be outlook for FY27, FY28 for loan growth?

Our guidance remains the same here. We are particularly aiming a growth of around 14% - 15% in the credit. And the endeavour would be to have a better deposit growth rate. A challenging factor is that the entire industry has now reversed - from November onwards, incremental credit growth is more than incremental deposits growth. Rajeev added: whilst the overall number is around 13%, if we exclude EEB, the non-EEB book has gone to almost 25%. We have been able to reduce the EEB contraction to only about 5% year-on-year. Our numbers are not exactly comparable with the peer group because of larger micro finance portion. If we exclude the bulk deposit, our retail deposits have grown almost 17.8% or roughly 18%.

Are we seeing any competition, intense competition there on deposit market? Or chance of TD rates rising across the banking sector?

I think the deposit competition is definitely intense, and we did see in the month of March itself, the deposit rates go up quite significantly being offered by the competition. And therefore, we have been focusing on improving the structural granular retail deposits, and that's where the focus has been, and we want to remain steady on that particular strategy. And therefore, we took a call to not grow the bulk deposit significantly during the Q4.

What was your average LCR for the quarter?

Our period end LCR was around 131%. Average LCR, I think would have been ranged from between 130% to 140%. It's a result of the bulk deposits coming down, which is helping us on the LCR also.

On your credit costs - should we expect a credit cost somewhere about 1.5%, 1.6% for FY27? Now that the EEB stress is easing out.

We are keeping our guidance unchanged. So, the credit costs have substantially improved, and we have ended up at 2% in Q4 and going by the current trends in the EEB, especially in the EEB segment the rate of recovery and the collection efficiency, I think there will be some improvement in the credit cost going forward. But yes, definitely, there are certain concerns like the impact of the middle east war. Rajeev added: our guidance was between 1.6% to 1.7% by the exit of FY27, which is by Q4FY27. And we will still endeavour to work towards that.

Are we largely done with the sale of NPAs pool now?

So, it is an option. See it is a part of the NPA management. Option is neither closed nor we are following up also. So, we have not yet crystallized anything. If there's some opportunities we will be looking. Rajeev added: The ARC sale that we did in Q3 prior to that we did 3 years ago. So, it's not something that will be done every quarter. There are no immediate plans as of now.

In FY27, with the credit cost coming down, should we expect an ROA above 1%?

We have started the trajectory that much we can say. From 0.2% in September, we improved to 0.4% in December and now 1.1%. The endeavour is there. We have not yet changed the guidance and going by whatever the green shoots, we are happy, we're seeing in the EEB segment, if that continues, and we are also focusing on the other income front, especially in the wholesale segment. Rajeev: Just to reiterate the guidance, we had said it was 1.6% to 1.8% of ROA by the exit FY27, which is Q4FY27, give or take 10 basis points.

On the NII growth itself - NII growth this quarter is at 4% QoQ growth. Why is this growth lacking the advances growth despite such a margin expansion?

The interest income last year was affected due to the repo rate cut. So almost 125 basis point cuts were there in the repo rates. We also rationalized our own MCLR. So that was almost 200 basis points effect. The advances have taken place mostly the incremental growth, 50% of the incremental yearly growth has taken place in the last quarter. So the effect of that was not given on that yet. Rajeev: One is the advances growth came but that growth was rear-ended, so we will see the benefit of that in the coming quarter. The second is this quarter had roughly two days less. Third is the repo rate reduction that happened in December of 25 basis points, which had an 11 basis points impact on our book, roughly 46% of the book got impacted.

On collection efficiency - has March deteriorated over the three months of this quarter? The gap between monthly and quarterly has widened.

We actually saw improvement in the collection efficiency started to come through the month of November last year. October was impacted quite heavily because the over-leveraging saga was still playing out. Vishal Wadhwa added: In our month of November onwards, we have been clocking current ex-bucket collection at 99.6% onwards and we did January and February month at 99.65% and 99.7%. March last day was a holiday which impacted as we have a holiday billing and that resulted into 98.9% number. Overall the quarter ended at 99.6%. Partha sir added: from 15th November onwards the collection efficiency has improved a lot and steadily being maintained.

On profitability - we are indicating 1.6% to 1.8% ROA by Q4FY27. How much is hinged around MFI and how much is from further expansion break-even and recovery in non-MFI businesses?

Three or four broad factors. One is the credit cost improvement as we mentioned from the current 2% level to 1.6%-1.7%. Second, we are focusing on generating higher other income and this will be the result of further capabilities which are coming in our secured asset businesses, especially wholesale banking. We do expect at least about 10 basis points to come through there in the other income. And operating expenses as we mentioned like PSLC cost itself, if that reduces, we should be able to get some delta. The good thing also is that as we had set up a target of around 58% secured mix by March '27, we are almost near that now itself. So, we met that target nearly a year in advance and therefore our growth rates across EEB and non-EEB can start to converge to some extent.

On the LCR ratio - what really differentiates Bandhan Bank LCR versus the other large private bank?

One is that I would say the immediate answer is that our dependence on the bulk deposits have come down. So, the volatility has been contained or has been arrested to a large extent requiring less amount of LCR to be maintained. Rajeev added: the other factor is that we have a large portion of deposits coming from retail. So, our retail deposit share is much larger and that has a much lower run-off factor between a 5% to 10%. We have a lower share from corporate deposits which have a higher run-off factor of 40% or 75% or 100%. Partha sir: if you add the non-callable part of the bulk deposits, so retail plus non-callable has got to more than 95%.

On ECL shortfall - you mentioned INR 1,250 crores shortfall and credit cost guidance of 1.6%-1.7%. Given the transition can be adjusted through reserves, would you minimize the shortfall or adjust through reserves?

We are assessing. The latest circular came yesterday, so we are actually evaluating what the latest circular allows as we understand is to take it through the retained earnings and also allows a period of five years in which it could be spread out. The assessment we did of the number we shared was based on December balance sheet. We'll have to reassess based on the latest balance sheet. This will also depend upon the profitability appetite that comes through during the year. Of course, wherever there's opportunity existing, we will try to shore up our provisions. Partha sir added: INR 1,250 crores is an estimate roughly on the basis of Q3 FY26, so this is a December number. So, March number and going forward also it needs to be crystallized. Maybe that we actually may have a lesser effect.

On write-off and provisioning - if INR 100 slips out of EEB, is there any set provisioning policy? Do you follow 25%, 25% or is there any pattern?

We do have a provisioning policy but we just maintain the PCR. If you look at our PCR including the SRs we are maintained at 74.5%. So that is the crux we want to maintain it. The main theme is that we keep the PCR as the target point that need to be maintained and based on that, whatever the shortfall in provisions on account of write-offs are there. We take a more conservative position than what the IRAC requires. I think for us broadly at 180 DPD itself we take almost a 100% provision for the EEB portfolio.

The revised circular says that if there is any exposure which has government guaranteed linkages, it can have very small Stage 1, Stage 2 provisions. So any of your EEB portfolio, either through CGFMU or some other scheme, do they qualify?

So, for EEB portfolio currently we do not have any government-backed guarantee, but we are evaluating in terms of how do we want to progress it from here. As of now, there is nothing which is guaranteed backed by the government side currently. We don't have any CGFMU coverage for EEB. That option is open for us, so we'll be evaluating.

Vishal, since you are there on the call, if you can talk about your resignation. I thought everything is going on very well.

I'll take you offline on this one. There is nothing, it's a personal career advancement, nothing beyond. Partha sir added: Bank is now much more process-driven rather than person-driven. We have brought many changes in the EEB, rather we have transformed the model of the EEB business and lot of technology and other inputs have been made and Vishal has implemented it very meticulously. It is his personal career growth he has aspired for and we wish him all the best.

There were media reports on some activity going at promoter level. Anything you can add?

So, these are all rumors. I have already - we have already said that these are all rumors and nothing is going at the Holdco level, nothing is going to affect the shareholding pattern of the bank. If something is going at the CIC level, that is their call. It anyway is not going to affect the bank.

On the employee cost - if I exclude the base quarter number from 3Q (the Labor Code impact), I see a 14% increase in the employee cost QoQ. So what led to that?

INR 73 crores additional employee cost was there during this quarter. This has come on account number one is that yes, definitely this month there were large number of holidays and we have kept the bank open because to reduce for the collections and here we have kept the bank open for 2-3 days for which we have to pay some additional salaries to the employees as per the rules of the bank. So that has actually increased in the employee cost for the day. Rajeev added: Regarding the new Labor Code related impact we had already taken in Q3. In Q3, there was no incremental impact that came through in Q4.

If I look at the reported yields, they have increased in this quarter versus the 3Q despite the repo cut impact. So what drove that?

There are two things. One is as we had done the ARC sale in Q3, a large chunk of the NPA portfolio had gone away and therefore you get the immediate benefit on the yield on the overall portfolio in the next quarter. Because the NPA book was actually suppressing the yield. So that was one of the key reasons. Apart from that, there was improvement in the EEB disbursement as well. And as the EEB book increased by almost 8% on a quarter-on-quarter basis, total advances increased by 6% on a quarter-on-quarter basis, which meant that overall mix perspective there was some further benefit that came through on the yield.

On the slippages front - even though ex-bucket collection efficiency has improved QoQ, you were guiding slippages will be similar to Q4. Is there something on the ground which is different versus what you expect to be worsening in this quarter?

We mentioned that slippages will basically hold to improve. We would expect to have some gradual further improvement as well come through. But we are also wary as we mentioned of some of the external risks which are coming through, especially we don't know fully if the war-related impact will come through in what shape and form. So, we are keeping some bit of conservatism there. But based on the collection efficiency improvement, we are fairly confident on the level of slippages that we have achieved as well as what further we can improve.

Just to reconfirm, MFI slippages were INR 690 crores this quarter?

Yes. Gross slippages INR 690 crores and recoveries were INR 142 crores, so net slippages is INR 548 crores.

When you say the margins can improve by another 15 to 20 basis points, that is on the 4Q number or that is on the full-year number? And if your loans are growing at 14%-15%, NII growth next year should be ahead of that. Is that a fair assumption?

NIM improvement that I mentioned was sequentially on quarter numbers. So, our quarter numbers are 6.2% and on that we expect 10 to 20 basis points improvement spread over the next two to three quarters. The guidance as we had been mentioning is by the exit of FY27, we expect NIMs to be around 6% on total assets, which means on earning assets basis it will be around 6.5%. We do have a line of sight of the next 10 to 20 basis points, we need to find another 10 basis points. So that's the aim that we're working on, of course on a best effort basis.

Just if I do the math, 10 to 15 or even 20 basis points on NIMs, 10 on fees, another 20 on credit cost, is there something I'm missing because we need 70 bps post-tax which is almost 90 pre-tax. So is there something I'm missing for the ROA waterfall?

ROA as we said we already touched 1.1% and our aim is to reach 1.6% to 1.8% give or take 10 basis points by Q4FY27. So say there's a journey of about 50 to 60 basis points further that we need to climb. Some of these components that we mentioned are the ones which will help us. The timing of which will depend upon every quarter to quarter how exactly we make a progress. But we have to also be aware of any kind of external shocks or risks etcetera that could come through or any headwinds that could come through.

As far as my knowledge goes, you are trying to increase your share of secured book. By the end of FY27, are you targeting increased share of secured books? What would be the effect on your NIMs? Is it going to come down from 6.2?

First of all, we had a target of doing a secured-unsecured business of 58%-42%. So that's what our goal at FY27. We have already achieved that or near to achieving that. As if you see my Q4 results, we are already at 56% and another 44% is unsecured for the day. The second part is that 56% to 58% will not have much impact on the NIM. Our EEB will continue to be one-third of our total portfolio. In both ways, the unsecured book, the EEB book will also grow and the secured books will also grow. If we can continue even with this 35% share and maintain the present NPA level or the SMA book and the delinquency level, it will not have any much impact on the NIM. If there is any shortfall in the NIM on account of the growth of the secured book, it will get compensated on the other income. Overall NIM plus other income what we have projected is around 6.0% and 1.5% on assets - total of 7.5% on assets.

For going forward, say within 5 years, do you continue to stick with that proportion of 58%, 42% or there would be some long-term goal that you are continuously pursuing?

Currently that ratio remains. It is again the experience that we will see, we will have to strategize or we have to change our strategy at that point of time. The reason for going to secular growth as we have told that there were two-three reasons. The first one was that we were too much on the unsecured books and we are a universal bank. The depositors' confidence is very important. Number two, because now my portfolio is also becoming much, much stronger than what we had been a year or two years before. So currently, definitely, we have not thought, but again, it will all depend on our experience. We want to remain a leader in the EEB segment and we continue to do that. EEB segment is definitely a focus area, so we have seen an 8% growth QoQ, but definitely our secured book has grown at 25%. The focus this year is on the other income part from the secured book.