Loan growth: Is consolidation on the lower yield segment done? Can we return to high teen loan growth in FY26? On deposits - is the year-end CASA strength sticky? On margins, where do you see the bottom of margins in FY26 given expected repo rate cuts?
On medium yield segment, the growth rates are fairly strong at 19% Y-o-Y, and quarter-on-quarter is also strong. We are confident we'll continue the growth. Cards has grown strongly through the year. Personal loan we believe we'll be able to revive growth this year. MFI we'll continue to be cautious for at least one more quarter. On corporate, mid-market acquisition will help build growth. Home loan we want a holistic approach. I'm reasonably confident we'll get reasonable growth in next year. On NIM, nobody knows that number - too many factors: policy rates, mix change, fix vs floating products, T+1 to T+90, savings rate cut. Our objective is to minimize impact but difficult to give guidance. On CASA, yes there is year-end effect in CA, but on average basis CA has shown close to 7% average growth rate. Retail CA acquisition is at least 50% higher than first 6 months.
Agri slippages have been inching up - anything to read into this? On loan growth outlook - are we saying it picks up from 12-14% level over next 2-3 quarters? Average CASA ratio for the quarter and prior quarter?
On agri - please read MFI in that. It is the MFI slippage that is causing the agri to be higher. Our MFI portfolio is small but yes there is slippage from there reflected in agri. We have not grown that portfolio. On growth guidance - yes we are guiding that growth should get better than 12% that we have seen, that is a broad guidance. On average CASA - we don't disclose that number. We've already disclosed CASA average. On the 25 bps February repo rate cut - yes it was passed through right from the day after. We are on T+1 and close to 50% of our book is repo. We are trying to migrate new and existing loans on renewals to T+90.
Yield on advances and cost of deposits moved different directions - number of days doesn't explain that. In last two quarters you reduced wholesale lower-yielding advances - should have been margin positive on yield side. What are we missing?
Sir I am saying only on the absolute NII drop, Mahesh is the 90 and 92 days, not on the NIM percentage. KVS Manian: The response on the 90 days was NII minus 2%, not on the NIM. Just clarifying that.
On ROA levers - with EBLR pressure, opex not coming off, similar credit cost, would fee income be the only lever? RWA going up because of mid-yielding focus - return on RWA seems lower. On EBLR daily reset - what proportion?
Multiple variables at play - we have to be agile. Difficult to say one thing we will do to get NIM management correct. Approach is to remain agile. We are one of the first few banks to cut interest rates on savings. We will remain agile. On EBLR question - I didn't exactly understand, we can take it offline.
Assuming no further rate cut from RBI and basis your savings account tweak, how should one look at margins in near term?
First, ghee sugar in your mouth. No rate cuts from RBI is not something I'm thinking about just now. That situation is quite hypothetical. I think there are going to be rate cuts and we have to remain agile and see how we manage our NIM. No rate cut is not even a base case scenario or extreme case scenario probably just now.
Reported margins are flat sequentially but loan yields down 8 bps and cost of fund up 5 bps - how is reported margin flat Q-o-Q? On T+1 to T+90 transition - applicable only for new disbursements or back book? Beyond INR5 million SA rate cuts, do you see other levers? Quantum of corporate recovery and where included? LTV on gold loans down 6 percentage points - what was being optimized? Why is branch expansion cost a one-off and how to think about opex growth?
On NIM, the increase in yield on investments and increase in other earning assets have helped ensure NIM is maintained, in fact 1 bps higher than last quarter at 3.12. On T+1 to T+90 - it is on new only. Corporate recovery is shown in the provision line, netted there. On corporate recovery quantum - 97 was one big account, with a few others, around 110 to 115. On opex - of the 85 branches opened in FY '25, nearly 50% was in Q4, that bunched up the cost. On cost income, we expect to be operating around the 53% level, range 52.5% to 53.5%. KVS Manian on SA: our actions remain agile to market. Harsh Dugar on LTV: banks are required to maintain LTV throughout the tenure, even accrued interest is factored. Gold prices have also increased significantly. Hence LTV does look attractive.
On the remittance market share that has been trending down - what's the strategy going forward?
Our remittance market share has normally remained in the range of between 18% to 20%. We see differences quarter-to-quarter but operate in that range. Over the last 6 to 9 months, we focused on profitability - we don't follow trends of giving unnecessary discounts on rates. Our profitability from a remittance engine has gone up 14% year-on-year. Second, to ensure volumes continue, we increased exchange house partnerships and stretched into non-GCC geographies like the U.S., U.K. We'll continue to invest in that business. We have a 3-pronged strategy including relationship management, operations and technology.
On corporate recovery - is any amount booked in NII line? On yield on investment - did we change portfolio allocation?
No, the recovery is booked in the provision line. Lakshmanan V: There is no significant change on the investment strategy on the bank. Overall, the mix, duration etcetera has remained the same. It is a marginal move, but nothing significantly on the approach.
NII is down quarter-on-quarter about 2.2% with loan growth - how can margins be flat if interest earning advances are down on average? On Slide 35 you've brought down concentration of top 20 - but bulk rates have gone down sharply, will you be more nimble going ahead? Any number for medium-term balance sheet growth?
Average loan growth vs EOP loan growth - that's what causes drop in NII. Plus it's a 90-day quarter instead of 91-day quarter. Plus REPO rate cut. All 3 put together. There is no inflation of one and deflation of other. On wholesale deposits - we have been nimble. Q2 to Q3 wholesale deposits dropped, in last quarter they have actually risen. Top 20 is about concentration not overall book. Earlier wholesale deposits used to come from financial entities, we reduced dependence and got from more LCR friendly and DICGC friendly sources. Cash retention limits in branches halved last quarter, that adds almost 1 bps to NIM. On medium-term growth - we will lay in 1.2x to 1.5x the industry growth rate or nominal GDP growth rate, that guidance continues. We've grown mid-yield segment at average of 19%.
When will you press the accelerator on unsecured credit? Of the INR4,000 crores profit, how much from credit cards? Are we above breakeven on cards? On fixed interest rate loan book - in next 6-7 quarters from 30%, what growth are you aiming? On expanding CA book and corporate banking - what is major focus for current financial year? Can we achieve 40% CASA in 6-7 quarters?
On credit cards we have already started growing much faster - both organic and inorganic growth balanced. On personal loans, slippages have come off and we are getting more comfortable - this is one area we are about to start pushing. On MFI, we will wait a quarter or 2. Cards profit is still very small - card business is about scale. We don't lose money but we don't make money. On fixed vs floating - it's not that we prefer fixed rate book. There are products better done on fixed rates. We don't want to overplay the fixed rate game. We need a reasonable mix. CV/CE we want to grow fast which are fixed rate, car loans fixed-rate. So it will inch upwards but I haven't done the math. On CA - it is a corporate and retail strategy. The big gap CASA ratio is on current account side - 24% SA plus 6% CA. We saw opportunity in CA. On CASA at 40% in 6-7 quarters - look at our strategy document, we have guided 36% over 3 years. Maybe in 5 years.
We are seeing stagnation in home loan book - you're focusing on better yield home loan product. What kind of customer profile or portfolio are you building?
We are not saying we want to build a different customer profile. We want a more holistic relationship customers while doing home loan business. Home loan customers should give us multiproduct relationship rather than just home loan because home loan per se is not profitable enough for ROE accretive product. The idea is to have a relationship which is more holistic and look for growth in that segment. He can be a saving account customer, can have our card, can have wealth management business, insurance, many things.
Fee income growth was very healthy - do you expect it to continue? Based on asset liability duration, when can we return to normal NIM if repo rates are cut by 50 bps more?
That is what our desire and intention will be. We will do our best to keep that momentum on fee income. On NIM duration - about a year, the broad principle wise about a year.
On Slide 17 - mix moving towards mid-yielding businesses visible '24 over '25. Is the economics of these businesses also trending given focus on doing more with same customers? What did ROA used to be 2 years back vs aspiration?
Fundamental choice of mid-yielding assets was that they will be more ROA accretive than low-yielding products. Low-yielding products like corporate need other means like fees for ROA accretion. CV/CE products on standalone basis have ability to deliver reasonable ROA - any cross-sell is bonus. CV/CE is a relatively new business, 4-year-old, gone through learning phase. Now team is more confident pressing accelerator. We will get into businesses like tractor, business loans. Immense potential in mid-yielding segment for products with stand alone better ROA.
Cost-income ratio is around 56-57% - where do you see it in another 2 years?
In our strategy document, we have given guidance on cost-to-income ratio. We have essentially guided a flattish cost-to-income number over the next 2 to 3 years. So 53 handles - that handle is what you should expect in the medium term. We will invest - we have several elements of investments which we will calibrate along with outcomes on revenue. Annual cost to income this year is 54.
Has there been any change in fintech relationships, product changes, change in approach?
On credit card side - we had regulatory issue. We have resumed business with one fintech, Scapia. The other is still under scrutiny in RBI. On personal loan side, we are enhancing relationships with more fintechs as distribution partners. On savings account, 2 partners we had, we continue to engage but reduced focus on numbers and focus more on quality of acquisition and cross-sell. On personal loan account decline - through last year we remained conservative on personal loan. We are looking at relaxing some of that given portfolio performance.