IDFC First Bank Limited (NSE: IDFCFIRSTB) Q4 2025 Earnings Call dated Apr. 26, 2025
Corporate Participants:
Saptarshi Bapari — Head of Investor Relations
Sudhanshu Jain — Chief Financial Officer
V. Vaidyanathan — Managing Director & Chief Executive Officer
Analysts:
Rikin Shah — Analyst
Zhixuan Gao — Analyst
Kunal Shah — Analyst
Nitin Aggarwal — Analyst
Anand Swaminathan — Analyst
Piran Engineer — Analyst
Mahrukh Adajania — Analyst
Jai Mundhra — Analyst
Presentation:
Operator
Please wait while you are joined to the conference. The conference is now being good day, ladies and gentlemen, good day and welcome to IDFC First Bank’s Q4 FY ’25 Earnings Conference Call.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Saptarshi Bapari, Head, Investor Relations. Thank you, and over to you, sir.
Saptarshi Bapari — Head of Investor Relations
Thanks, Michelle. Thanks a lot. Thanks everyone for joining the call. Today we have with us Mr. V. Vaidyanathan, MD, CEO of the Bank; and Sudhanshu Jain, CFO and Head of Corporate Center with us. So we’ll start the call with the discussion on the financials with Sudhanshu first and then we’ll have a brief you know review by Mr. Vaidyanathan as well. So over to you, Sudhanshu.
Sudhanshu Jain — Chief Financial Officer
Yeah. Thanks, Saptarshi. First of all, good evening, everyone. Thank you for participating on us on a Saturday. Let me start with first by putting out such key financial numbers, I will try to keep it short. But nevertheless, let me call-out few key numbers for the year and for the quarter. The balance sheet size as on, 31 March 2025, that has — that stood at about INR3.4 lakh crores. It has grown at 16% on a Y-o-Y basis. If we go and see further components, then deposits continue to grow at a faster pace than advances.
Our customer deposits have increased by 25% on a Y-o-Y basis and is now at INR242 lakh crore — INR2.42 lakh crores, pardon me for that. Within this, the growth in retail deposits was higher at about 26% on a Y-o-Y basis. CASA ratio, if you see for us, it has been quite stable around the 47% mark and that CASA deposits have increased strongly by about 25% on a Y-o-Y basis. If you see average CASA deposits for Q4, the increase is 30% in fact, on a Y-o-Y basis.
Term deposits in the current financial year has grown by about 26% and here also the retail TD has grown at a faster pace at about 28%. I’m happy to report that our branch account has crossed the 1,000 mark. It was 1,002 at 31st of March. We opened about 31 branches during the current quarter also. We have repaid high-cost legacy borrowings to the extent of INR7,000 crores in this current financial year.
The residual book now is, I would say, small at about INR4,800 crores and about bulk of it, that is about INR4,500 crores will mature in the next year itself. We continue to bring down the credit to deposit ratio that is now down to 93.9%. This was 98.4% at March ’24. The — if we compute the incremental credit to deposit ratio during last one year, then it’s at about 76.1%.
If I talk about cost of funds, that was stable around 6.5% for the quarter. And similarly, deposit cost remained stable at 6.38% for Q4 ’25. If you see the trajectory for last four quarters, both cost of funds and cost of deposits has been quite range-bound or stable, I would say. If I quickly move on to the asset side, then on the funded assets, we have registered a strong growth of 20.4% on a Y-o-Y basis to reach INR2.42 lakh crores. Sequentially, the growth was about 4.7%.
If you go through the presentation and we have given more details on Slide 28, the growth was largely led by mortgage segment, which has grown by 19% on a Y-o-Y basis. The vehicle loan segment, which has grown at 26% on a Y-o-Y basis. The business banking, which is largely secured working capital that has grown at 32% on a Y-o-Y basis, then the wholesale business has grown by 29% on a Y-o-Y basis.
There are certain businesses which have also grown strongly, albeit coming from a small base like gold loan and credit cards. During the year, we also had a degrowth of 28.3% on the microfinance business because of the challenges going around that sector. Infrastructure book, happy to report is now sub 1% of the total funded assets. If I talk of credit cards, which is a relatively new product for us, the bank has now issued more than 3.5 million credit cards.
The book size has reached now INR7,500 odd crores at March. The gross spends on the credit cards grew strongly by about 40% in FY ’25. And again, happy to report that credit card as a business has turned operationally breakeven within four years of launch. If I now move on quickly to the asset quality, the gross NPA of the bank stood at 1.87% at March.
And similarly, net NPA is at 0.53%. If we exclude the microfinance book, then the GNPA in fact is at 1.63% and this has improved by 19 bps on a sequential basis. PCR for us excluding technical write-off was healthy at 72.3%. It has in fact improved by 347 basis points on a Y-o-Y basis. If I talk about GNPA in retail, rural and MSME segment per se, then the GNPA stood at 1.70% and the net NPA was at 0.62%.
Again, here if we disaggregate microfinance, then GHPA in fact has improved to 1.40% vis-a-vis 1.46% in the previous quarter. The standard restructured book continues to come down for us. That is now, I would say, very small at about 0.18% of the funded assets. If I talk about the SMA one in the SME 2 portfolio and again without microfinance book, that has been quite stable. The number for the quarter is at 0.87%. It’s marginally gone up from 0.82 bps in the previous quarter, but I would say the trend has been pretty stable over last few quarters.
We saw an increase in SME 1 and 2 of MFI book that has went up from 4.56% to 5.1%. This is albeit on a declining base. If we see in value terms on the microfinance, then the SMA-1 and 2 pool has declined by 3% on a Q-on-Q basis and the SMA zero has declined by 45% on a sequential basis, which in a way is indicating a lesser incremental buildup. We have also seen an improvement in connection efficiency during the quarter and it stood at 9.2% for March ’25 and ex-Karnataka actually it is at 99.4%.
If I talk about gross slippage now, that also has come down by about INR18 odd crores from the previous quarter. It is at INR275 crores for Q4. Here also we saw two mixed trends in microfinance business, in fact, it went up. The gross slippages have gone up from INR437 crores to INR572 crores. And if we strip out microfinance, the net slippage has in fact come down by about INR152 crores.
Similarly, net slippage for the quarter was at INR1,520 crores versus INR1,541 crores in the previous quarter. Recovery and upgrades was at INR655 crores for Q4 ’25 as against INR651 crores in the previous quarter. If I move on to profitability, to start with the NII for FY ’25 that has grown by 17% on a Y-o-Y basis. And for the quarter, it grew by 15% on a Y-o-Y basis. Excluding MFI, if we see NII, then the growth is about 17%. The net interest margin on AUM for the quarter is 5.95%. We saw a moderation of 9 basis-points vis-a-vis the previous quarter and this is greatly attributable to the microfinance business, where the book has further come down and hence the NIM has got impacted.
If I talk about fee, then the fee and other income for the year has increased by 15% and for the quarter, it grew at 6%. Yeah, the retail fee constitutes a bulk of it and that’s at 92% of the total fees. We continue to moderate on the operating expenses front. In fact, for, for the full-year, the growth has moderated to 16.5% and for Q4, the growth was at only 12.2% to — and it stood at INR491 crores.
Core operating profit, that is NII plus fees excluding trading gains, that has grown by 17% on a Y-o-Y basis. And we have also given data that if we take-out microfinance, then based on our internal reporting, this number has gone up by 31%. If I talk of core operating profit for the quarter, similarly excluding microfinance business, then it has increased by 20% on a Y-o-Y basis.
Provisions for the full-year stood at INR5515 crores as compared to INR2382 crores in the previous year. We — during the quarter, we have not utilized contingency provisions which had created in MFI in Q2 that stands at INR315 crores. And the sequential increase in provisions was also primarily due to MFI and this was in-line with the guidance which we had given in the previous earning call.
As a result, the credit cost for the full-year stood at 2.46%. If we exclude MFI book and the one toll road hit which we had to take into Q2, the credit cost for the full-year was at 1.76%. In fact, for the current quarter, it improved to 1.73% vis-a-vis 1.82% in the previous quarter. We are — we have reported a profit-after-tax of INR15.50 crore INR25 crores. The profit — and for Q4, it is at INR304 crores. And the PAT for the quarter as we all — was largely impacted by the MFI business and I would say also to some extent because of normalization of credit cost.
If I talk about capital adequacy, the bank has maintained strong capital adequacy. That stands at 15.48% as on, 31 March 2025 with CET1 ratio at 13.17%. The Board in its meeting today has — they committed a dividend of 25 bps for FY ’25 and this will be subject to shareholder approval. So post the quarter-end, we had also — in the second week of April, we had also announced that the Board has approved issuance of CCTAs to two marquee investors.
These would eventually get converted into equity as to the extent of about INR7,500 crores. Considering post-conversion into equity, CREA that the total capital adequacy will be 18.2% if computed on March numbers and CET1 will be about 16%. The LCR for the quarter stood at 107% on an average basis vis-a-vis about 114% in the previous quarter. So these are essentially the key numbers which I wanted to bring out. Maybe I’ll hand over to Mr. Vaidya to sort of say a few words.
V. Vaidyanathan — Managing Director & Chief Executive Officer
Hello, everyone. Good evening, everybody. Nice speaking to all of you. Thank you for being with us on a Saturday evening. From our point-of-view, just want to share with you what are the agenda in front of us over the next few years. And before that, I must want to just share with you the fundraise that did recently, what is it that’s going on in the back of our mind, how are we planning for the future and why did we raise that kind of a large amount of capital? I must say that indeed we have seen some reports and reviews saying that, look, people have raised 15% or the bank by 15%, why was there need to raise that large amount of capital in the first-place.
Now it’s a very fair question. The thing is that if you go back and see large corporations of today, like say for example, ICICI Bank, which is really a wonderful institution, which is a shining example. If you go back and see what ICICI Bank was in 2000 or 2003, you will realize that the early stages of any bank is like that, specifically for a domestic financial institution converting to a bank. If it had been a normal NBFC, which is already profitable and then getting a bank license that it can have a temporary pair of turbulence based because of raising CRR, SLR, they’ll then they’ll go through it maybe in a couple of years.
But this was not that. This was a DFI, which really was not making any money. Its operating profit was 0.5%. So obviously, all of us know that with 0.5%, even if credit cost was 1%, you know that you’re not making money at the core. So from that situation, how do you take a bank out of a situation like that?
You know, if you spend money, you know you don’t have the operating profit to spend money, you can’t fix the CASA you can’t fix the — you can’t raise retail deposits, you can’t fix the structural issues of the bank of not having a diversified liability base. If you — if you don’t spend, you can’t fix the issue. This was really a you know, a hard to solve problem. And it was not the reason that all leading analysts at that point of time had really called it hard to solve or almost impossible to solve problem.
Now I must say that from that situation, how does a bank come out? So the main thing is that you start building a really phenomenal franchise, a franchise that makes it attractive for new shareholders to come in and bring the capital because why would new shareholders come in? They would see if they have a strong capital — sorry, if they have a — if there’s a strong business model.
So what we’ve built was a really, really good customer franchise. We have grown the deposits from INR38,000 crores to INR2.3 lakh crores between in this in this period or two point as of March, I think it is it is probably 2.5 lakh crores or so. So the CASA ratio now we’ve taken close to about 47%. Branches we’ve taken to about 1,000 branches. Loans and advances we’ve taken about INR2.4 lakh crores. So you get the drift. So by building such a really strong franchise, we got investors to be attracted to the bank enough to give us capital.
The second thing that people say is that, look, you’ve been diluting the bank every year for the last five years. It is true. We raised to INR2,000 crores in 2020, then we raised INR3,000 crores in next year in 2021, then we raised some INR2,000 crores, you know from after that, then we raised another INR3,000 crores in next year. Year and this year we are now raising INR7,500 crores. Now we just thank the market that markets found it attractive enough to give us the capital at a premium to the book.
But end-of-the day, my apology is the incoming call so this was the reason why the bank had raised capital because the bank was not making money so how do you — how — so we found the way to raise capital. And then with the capital, we built the bank. Now, now our job is to now sorry, I was talking about the franchise. I was talking about the CASA ratio at 47%. I totally loans are advanced just about INR2.4 lakh crores. LCR, retail LCR, I don’t mean the retail deposits as coming from retail branches. I mean LCR retail.
You know, we were 12% initially. Today, we are 63%. At 63%, I must share with you that we are now in-line with large private sector banks, large private sector banks, which gives tremendous stability. Our credit deposit ratio has come down from 137% to about 94%. So basically on all of these fundamental franchise, we made the bank strong enough to be able to make it attractive for long-term investors.
The second thing was that we kept the bank, we kept incremental economics very strong at the bank. I’m happy to share with you that incremental economics are so strong that our operating profit has now touched about 2.3% of the book. So even with a credit cost of 1.2% or so, bank is on the core of the bank profitable. It will not post a loss. So therefore, now the bank has become — so bank has come that way and we made the bank attractive enough for investors to come in. Then we made the bank attractive enough for customers.
So we have really good customer propositions. We have for depositors; we have good propositions. We have good system, good technology, a good franchise and that made the customer proposition strong, which also by the way, one of the reasons why institutional investors do come in. So having done that, now our task is that how do we start generating return on the capital because capital we raised because that was the — really the only way to grow a bank which is not making — it’s generating its own return-on-equity.
Now for a minute, I had digested to just talk to you about ICICI Bank, which is because we all agree that it’s — I hope all of us agree, it’s a great bank. Now if you go back and see in time, the number of shares issued by the bank was INR170 crores in 2005 or so. Just four or five years from then maybe 2009, became INR300 crores. Just think about it. And the bank raised $2 billion in 2005, $5 billion in 2007, that’s $7 billion raised.
And imagine that going back-in 2005 and 2007, so we raised $1 billion now, one, that was $7 billion. That’s how institutions are built because that was equally the same situation I’d imagine where the return-on-equity was low and the bank had to raise capital. But see today with when time has passed, look at the kind of institution that got built and generating its own return-on-equity of 16% 17%, 18% and it’s flying on its own, doesn’t really depend on capital to pay from time-to-time.
I must honestly tell you that this institution was almost pretty much the same situation, early-stage, have to raise capital. And now our job is walk the path and take the return-on-equity to about, 15%, 16%, then you become self-sustaining. Now returns. Now as far as returns are concerned and I say returns, I mean return-on-equity. Now we were like I said, zero, we come to about 7%.
If you actually strip out the drag cost by MFI, which we think is a — we are request is to request you to look-through it, you will actually see that we’re probably about 7-ish or so return in equity on the core. Our first stop is to actually move this from 7% to 15%. We really intend to do it. We’re serious about that. And then hopefully, the business model is that probably give us a return-on-equity even higher than that. So how do we do that? So we think the main thing is that we need to scale.
And so for scale, we got capital. So we are very happy about that and we feel comfortable about that. Now the key thing is the situation where if you see the profitability of the bank, there was a significant U-turn in the profit of the bank. Yes, so we started at a loss of INR1,944 crore in 2019, a INR2,864 crore in 2020, then INR400 crores positive in 2021, then INR145 crore in 2022, then INR2,400 crores in ’23, then INR2,900 crores in 2024.
This is just a solid U curve that happened or a J-curve that happened to profitability. I think it’s really very hard to turn companies like that. But after that, from INR29 crore INR57 crores, all of you expected us because the trajectory was like that, you expected us to go further up this year probably and go on from there. But it’s true that we have not delivered to your expectation or even what we thought we could.
So we — instead of the PAT going up from INR2,400 crores to INR2,900 crores upwards, we did a downturn this year. I do agree. So it’s down to about INR1,500 crores. So I want to share with you that this dip is not that there’s any fundamental issue with the bank or the model where it is going to go cutting down this way. No, no, no. The curve is not — you’re not heading down this way for next two years, three years, nothing like that.
You think of this ’25 as a year that this has happened because of microfinance. You think of it that ’26, we will stage a smart recovery and ’27, ’28, ’29, we should be back to a winning. After all the winning base of 2019 to ’24 was not a fluke because we had built something fundamentally a strong model that can take us there because that’s how — that’s how strong institutions are built.
So think of 25 as a year that happened to us. It was a microfinance institution issue — sorry, business issue, it happened to every player in the industry who played microfinance. It was an industry issue, we too participated, we suffered, but that I would say part of growing up and part of learning the business and learning cycles. But I wouldn’t even say learning cycles. It’s not that we have to learn I’d say that we — these cycles are something that are part of life and we know this happen.
But in microfinance, it just tends to rear its head every four, five years and it’s — it’s something that happened. Now we were also doing it because it is giving us weaker section financial priority sector requirement. It helped us meet many other requirements as well. Now coming back to the point, therefore, how do we — how do we take the story from here forward. Now there are two things.
One is we want operating leverage that will come for those of you who are concerned that it may not happen or it’s not happening. Let me share with you that the last year, our book, the last year meaning in FY ’25, our business grew by 22.5%. Basically, loans grew by 20% and deposits grew by 25%. Blend, blend Call-IT business grew by 22.5%, but our opex grew only 16.3%. It’s a big, big, big gap between the two. And in fact, that should tell you that operating leverage is playing out.
Now, if you see the trend-line of opex for the last four quarters, you see the numbers. In Q1 FY ’25, our opex grew 21.1% Y-o-Y. In Q2 FY ’25, our opex grew 17.7% Y-o-Y. Q3, it grew by 16.1% Y-o-Y. In Q4, the quarter just ended, it came down to 12.2% Y-o-Y. So this is clearly telling you four or five quarters in a row that our opex Y-o-Y is dipping. So this is obviously a result of some serious work we’re doing on the opex front at the bank by using technology, by doing operating initiatives and so on and so forth. So in the next year, that is in FY ’26, we give or take, we’d like to grow the loan book by 20-odd percent, deposits by ’22, ’23, something like that. And let me Call-IT blend, blend somewhere around 22-odd percent. But now we want to grow or we are — we are targeting inside the bank to grow — allow opex to grow only by 12% to 13%.
So you can see that the — that the bank is putting brakes on opex, it is rather leveraging the same balance sheet — with the same level of opex, we’re growing the balance sheet by 20%, 20%. And then you can see that we play the story over the next two, three years, this has to naturally show operating leverage. To therefore, to sum it up, I’d like to say that given the bank was not making its own return-on-equity, you might say why they are you knew this when you merged with the bank, so with IDFC Bank.
So well, you should have known. Well, of course, I should have known and I knew it’s not that the fact that the bank was sitting on INR25,000 crores of infrastructure loans was not unknown to me, of course, it’s known to me. But then it is part of the story of the of the of the responsibilities we took because we thought there was an opportunity of converting to a bank and all that and I take full responsibility for that. But we were where we were.
From there, we have come really a long way. Our deposit franchise is really, very powerful. I can tell you that very rarely you would find a retail franchise that would have grown from INR10,000 crores to INR2 lakh crores, crores retail deposits in six years, it’s just really special. So there is something Specialty Bank, something not-so-good at the bank because our cost-income ratio is high. We are fixing it, but I told you that the — but the way we are reducing the opex Y-o-Y, I read-out the numbers to you. The way it’s coming and the way we are thinking it to play-out next year, you will see this story improving. And this is how institutions in my opinion are built because you got to raise the capital and then you got to generate return-on-equity.
And once the generative equity becomes self-sustaining, we believe we are on that path. We have — we are genuinely thankful to you that you allowed us to raise something like INR21,000 crores of capital in five years. Really, really to all institution — institutional investors to support us during this phase. We really want to thank you. But and we believe that we will put that capital to good use in the next four, five years and you will see progressively, you will see progress every year from here on for the next four, five years.
So — and then we should reach the returns on equity of what good respectable banks command. We don’t make it today, but we believe the path is we are on our way. So that’s all I have to say in a broad sense and we’ll take questions from here on either about the quarter or about what we felt about the overall story.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin with the question-and-answer session. Anyone who wishes to ask questions may press star and one on their touchstone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question is from the line of Rikin Shah from IIFL Securities. Please go-ahead.
Rikin Shah
Hi, good evening, sir, and thank you for the opportunity. Just had one question. Post the implementation of new microfinance guardrails, would you be able to provide some color on how the business trends have changed on-the-ground, either in terms of the approval rates, disbursements, collection efficiencies? That’s my only question. Thank you.
Sudhanshu Jain
Yeah. Hi, Rikin. Thanks for the question. So in terms of the MPIN guidelines, which have come in from April, we had implemented it slightly prior to that. So these guidelines we have made effective already from February. So to that extent, we also saw some impact on disbursements that came down to about INR760 crores in the current quarter. So since we have already implemented, we see no further impact as such to come on this front.
Rikin Shah
Got it. Thank you.
Operator
Thank you. We’ll take the next question from the line of Zhixuan Gao from Schonfeld. Please go-ahead.
Zhixuan Gao
Thank you so much for the opportunity and congratulations on a good set of numbers. My first question is on salaries. First of all, what’s our planned salary rate now? And also given we have built a very strong deposit franchise over the last couple of years and we are kind of price settle within the midsized banks at least. So how are we thinking about leveraging on that in a rate cost scenario? And do we expect a decent amount of salary cuts in the coming month or quarters?
V. Vaidyanathan
Yes. We are also planning to reduce our rates very soon, maybe in a day or two, you will see the numbers out there. We are planning to reduce, first of all, our fixed deposit interest rates. We are paying probably about 70 or 80 basis-points more than the large — large big four banks on the fixed deposit side. But we want to literally go down to their rates. So we might see a large cut from outside to go like the — like the peak rate. People have lots of deposit rate, but there are always a special, special, special slab, which people pay the maximum rate. You’ll see large banks paying around 720-ish or so. We were about 790 so. We want to come straight down to their rates now. So that will be a very big moment for our bank to go there. And then on the savings account front, also we want to reduce rates. So we will — first of all, trim off the accounts, we were paying up to INR100 crores. We were paying certain amounts, which will now will now pay only INR25 crores and onwards and then we’ll let go of the high-value, high deposits individual customers. And then even on the core SAR rate itself, we have plans to reduce it from thereon.
Sudhanshu Jain
And just to add sorry. Just to add, this is further to the change which we already did in February, where for INR5 lakh to IN 10 lakhs, which we have reduced the rate from 7.25% to 5%. So as Vedya mentioned, we are looking for some more cuts, primarily in slightly larger ticket sizes and we would announce these changes shortly.
V. Vaidyanathan
But mainly coming for a — I’d like to — I’d like to just give one clarification — not clarification or explanation so that it’s easy for you to understand. You know, banks are raising money from two sources. One is CASA, one is term deposit. So there’s a lot of eyes are all-around CASA right now at this point of time, saying when are you going to cut it. But I think not many questions are being asked about fixed deposit. People are not looking at that.
So we are cutting that very sharply. And that is going to be — we — as and when those equities come up for maturity, either they will come to us at the new rates or we are happy to let them go. Actually, I wouldn’t say happy to let them go. We prefer customers roll-over. But if they have to go, they’ve got to go. So this will also be a structural benefit for the bank because on an inner we will save interest cost and annuity. So I want to just clarify that to you.
Zhixuan Gao
Got you, sir. Thank you. Sorry. What’s the plan sorry for us right now?
V. Vaidyanathan
Can you repeat that question?
Sudhanshu Jain
Blended SA rate.
V. Vaidyanathan
Blended SA rate about 5.7%.
Zhixuan Gao
Blended SA rate.
V. Vaidyanathan
About 5.7%.
Sudhanshu Jain
It’s about — for the current quarter, it’s about 5.9%. As I said, we made some changes in February. The full impact of that would play-out into the next quarter. That coupled with certain other changes which we plan to do would further bring down the SAR rates. But currently for Q4, it’s about 5.9% on the book.
V. Vaidyanathan
But we recently reduced rate for the IN5 lakh to IN 10 lakh bucket from 7.25 to 5%. So that should help reduce a few basis-points. But like I said, got this — we will — but we will further reduce it also from here.
Zhixuan Gao
Got it, sir. And my next question is on credit cost outlook for FY ’26. You have shown a quite a decent or material improvement quarter-on-quarter on the and then also on the non-MFI portfolio. So how should we think about credit cost for FY ’26? And also are we going to utilize or unwind some of that INR300 crores-odd of MFI provision in FY ’26 when it’s all over?
V. Vaidyanathan
We’ll wait for you know I mean until this quarter we didn’t feel like doing it because we are still, you know, the MFI thing is still playing out. Our experience is that we had already called out last quarter that we expect the peak of provision to come in Q4, which has already come. We expect provisions to come down next quarter and come down quarter-after that and so on and so forth.
We think the — think of it like a wave that came and went and this is a peak of the wave that we had this quarter. And you know, we are pretty much bang on whatever we roughly said — we said we are roughly on-track. So when this eases out a little more, then we’ll start — when we get full confidence that we’ve seen the end-of-the wave, then we’ll start leasing it.
Zhixuan Gao
And do you mind provide us around credit cost that you see as of now for FY ’26?
V. Vaidyanathan
Yes. If you take this number for this year, FY ’25, first of all, it was 2.46 — it is 2.46 for this year and the 2.46 included the extraordinary impact of — I shouldn’t say extraordinary, but the high-impact, so to say, a high-impact of MFI and the — that Mumbai entry point, the toll accounts that came because state government changed the rules, et-cetera. So all put together, it came to about 2.45, 2.46. If you exclude these two events, the MFI and this one, it was about 1.85%.
Sudhanshu Jain
1.76%.
V. Vaidyanathan
1.76% this year. So next year, you should expect us to be somewhere in the zone of about 1.85%, Sudhanshu?
Sudhanshu Jain
Yeah. So on an overall basis, you can expect about a 50 bps reduction in credit cost for next year.
V. Vaidyanathan
Over the numbers…
Sudhanshu Jain
Over 246, which we have come in for this period.
Zhixuan Gao
Got it sir. Sorry, just maybe squeezing question on margin. So how should we expect margin to behave from here? So when you also given your salary cup plan or TD Cup plan, should we expect margin to at least stabilize from here or how should we think about it?
V. Vaidyanathan
The way we think about it that the — this year, we are expecting the repo rate to — already two repos have come. We expect at least two more repos to come of, say, 25 each. So all put together, there is a certain reduction in the yield on the book, at least on the floating-rate side. But on the other hand, there is going to be an increase because — sorry, the reduction in our own cost because the cutting TD rates and also going to cut SAR rates to an extent. So all put together. So net-net, blend, blend, we are expecting the NIM to come down to about 10 basis-points, all things playing with each other. Over Q4 of over the NIM of Q4 of ’25.
Zhixuan Gao
Sorry. Got it. Thank you so much, sir. And all the best for the next quarter.
V. Vaidyanathan
Thank you.
Operator
Thank you. We’ll take the next question from the line of Kunal Shah from Citigroup. Please go-ahead.
Kunal Shah
Yeah. Hi, thanks for taking the question. So firstly, I think on the growth side, you said like the overall capital raise would be more towards the growth. So if you can suggest maybe with CD ratio of 94%, LCR at 107% and even like PSL requirements to be lat. Now maybe how are we looking at the overall growth, would we see some leg-up on the growth side or can it still continue to be in this high-teens to 20 odd percent kind of a range?
Sudhanshu Jain
Yeah. So, thanks for the question. So as we have guided, we would want to grow the 20% zone. It could be 1% here and there, but largely in that range going-forward as well.
Kunal Shah
Not — so not changing much post the capital raise. I think still in terms of the growth; I think earlier also we have been really getting 20 odd percent. We still continue to maintain that trajectory, yeah.
V. Vaidyanathan
Yes, that’s right. That’s right.
Kunal Shah
Okay. Okay. And secondly, anything to read into some rise in the 30 plus in consumer durables and the SMA pool and even some rise in 30 plus in business loans. So generally like Q4 is relatively stronger with respect to collections, but sequentially there is some rise out there. So anything to call-out for or it’s not too much of a worry? And if you can also highlight the provisioning coverage on the MFI portfolio, both GNPAs and SMA put together?
Sudhanshu Jain
Yeah. So that’s a marginal increase, Kunal. If you see, in fact four-quarter back number, it was 1.18% for consumer loans and that is still now at 1.07%, right? So I would — I would suggest not to read too much in this. It’s a marginal increase for Q3 was a festive period also, so some bit of impact has come because of that.
V. Vaidyanathan
But overall, if you see consumer loans down one — if you take a four-year — four-quarter trend down from 1.18 to 1.07, MSME was 1.19 even after four quarters, it is 1.07. I’m talking of SMA-1 and SMA-2. Vehicles was 1.05, even after four quarters, it’s still 0.94%. Credit cards is 1.8, it come down to 1.53 and mortgages was 0.3 and it’s gone up to 0.45%, that’s really like fractional. So if you see every product — category, we of course, as you know, disclose, SMA-1, SMA-2, by-product category by tenor by vintage and you can see they’re all behaving stable. The only problem that we had was MFI moved from 1.71 to 5.10. That’s the only one to call-out, but that’s been called out before.
Kunal Shah
Got it. And coverage on MFI, yeah.
Sudhanshu Jain
Yeah, coverage on MFI, so during the quarter, we have not released any provision out of that INR315 crores. So SMA-1, SME 2 put together an NPA, we would have a cover of about 72%.
Kunal Shah
Okay. And GLPAs and GNPAs, are they 100% provided the way most of the other banks have done on the MSI portfolio? Have we also provided 100-odd percent on MSI similar, yeah?
Sudhanshu Jain
So we have put out the numbers there on the stock what we are holding. It’s — so we have not provided 100%, but we are applying consistent provisioning policy over the quarters. As you know, we also have a relatively higher share of CGFMV coverage on the book. So we feel that we are holding adequate provision on that book.
Kunal Shah
Okay. Okay. And one last question on LCR, this new guideline, how much do we see the impact for us maybe compared to our average LCR today at 107%.
Sudhanshu Jain
The LCR actually is 117% for the current quarter and this was 114 previous quarter. So as we’ve guided earlier, we would — our endeavor would be to maintain LCR around this range about 115% and so on. As Veda mentioned earlier, we also have a relatively higher share of retail deposits, right, in the NCR — in the overall deposit composition, right, some runoff. There the runoff factor has gone up, right, by 2.5%. At the same time, we have got some benefit on account of the decrease in runoff on trust and so on. Cumulatively, however, we are seeing a small impact of maybe about 1% to 2%, but that’s not material in the scheme things.
Kunal Shah
Adverse impact of 1% to 2%.
Sudhanshu Jain
Yeah, yeah. And largely coming because as I said, because we have higher…
Kunal Shah
Yeah, higher retail period. Yeah. Okay. Got it. Yes. Okay. Thanks. Thanks and all the best.
V. Vaidyanathan
Yeah. Thanks so much. And Kunal, one question, one comment on the microfinance book. We said many things, so I want to call-out one particular one. Now in the microfinance, in SMA zero book, in March ’24, it was INR133 crores. In June ’24, it became 181. In September, it rose further to 267. In December, it rose further 275. So you can clearly see SMA zero was going up. But in March ’25, it has come down from INR275 crore to INR152 crore. This is a very big development. It just shows that this curve what we talked about that the microfinance is picking out in this quarter and coming down. So at least this is corroborated by this very useful information that the SMA zero has come down from INR275 crore to INR152 crore.
And now hopefully, we will see the back of it over the next few, four quarters as we said. Similarly, if you look at SMA-1 and 2, it was INR302 crore in March ’24, it had risen all the way to INR77 crores. But last quarter has come down, sorry, it had gone to INR500 crore, INR169 had gone to 501, just bear with me. My apologies for that. So INR169 crore had gone to INR501 crore in SMA-1 and 2. But now this quarter has come down to INR488 crore. So the point is that we are clearly seeing that the — that the SMA-0, 1, 2 of the MFA book is coming down in absolute terms and this should naturally translate into lower credit cost in subsequent quarters. So that’s what it is. So over to you Kunal. Back to anybody else.
Operator
Thank you, sir, for answering. The participant has left the queue. We will move on to your next question, which is from the line of Nitin Aggarwal from Motilal Oswal. Please go ahead.
Nitin Aggarwal
Yeah, hi. Good evening, everyone, and thanks for taking my questions. A few questions. One is on the credit card wherein we have achieved breakeven. If you can provide some color as to how is the revolve rate there and what ROA numbers are we looking at now over the next, say, two years?
V. Vaidyanathan
So you’re looking as a very forward-looking question, Dave. But we think if you ask us two years, let us say that even on a PAT basis post credit cost, you will see this solidly into profits. Today, the bank has achieved in four years, it has reached operational breakeven and you may not — I don’t know whether you know whether you’re aware of how quickly cards business breakeven, but if you speak to experts in the industry, they’ll tell you it takes quite a while, at least for a fast-growing book. But for us, we are very — it takes maybe six, seven years or so, but I’m very happy to share with you that within four years, our bank has achieved operational breakeven.
This was made possible because the bank went digital, we did not have DSAs and we had a very unique and fresh approach towards launching credit card business where we make the product so good that customers came in rather than we having to chase them through DSAs. So that proved to be a big success for us. So therefore, operating on our book — average book for FY ’25 is now touched INR6,000 crores and we have reached operative breakeven. Now two years to your question, even if — even after loading credit cost, this will be profitable. And we think by ’28, ’29, this should be really like if I use the word loosely, should be spinning cash.
Nitin Aggarwal
And sir, what is the…
Sudhanshu Jain
Sorry, Nitin, just to add, even on the credit cost front, in-line with our earlier comments in previous calls, we have seen a reduction even this quarter. And for the full-year, credit cost on credit card is lower than previous year and we expect it to further come down into the next year.
Nitin Aggarwal
And how much that number is now for FY ’25?
Sudhanshu Jain
So we are not calling out that number, but we had done timely policy interventions and some of those is reflected in the estimate numbers and the NPA numbers which we have been giving out, a slightly longer-term trend. I would say that it is broadly performing on an expected lines.
V. Vaidyanathan
Basically, it’s performing on performing expected lines. And when we call-out — see, once we start going on every individual product credit cost in here to then sigma it for the whole book, that’s why we put it all together and Call-IT 1.76 times of MFI. All right. Suffice to say that we are — we are on record in telling you that is perfectly playing on plan. It is a net of credit cost, think of it like 27, it should be like in-the-money and a launch year of ’22.
So you’d imagine that five years, including credit cost, this product is making money. And we, the way that this game works because we’ve done this business many times before in our lives, at least I have. Once you go through the difficult phase of setting up, incurring the reward points and credit costs and the technology and the scheme connections and the scale and the collections and the whole architecture, once you go through which you’ve already gone through the last five years.
Once it starts making money, then unless we do a — unless you know, unless we get it wrong on any new front, which we can’t think of today, this will be making like steady profits from next year onwards or maybe actually next to next year.
Sudhanshu Jain
Yeah.
Nitin Aggarwal
Right, got it. And second question is on the retail liabilities cost ratios there. So if I look Slide 66, there is a sharp decline in the operating profit as a percentage of average liabilities there. So…
V. Vaidyanathan
Even the loss is reducing.
Nitin Aggarwal
Yeah, yeah. The operating profit-loss is reducing, yes. So while, of course, the cost ratios are getting better, but what explains this sharp reduction in loss between ’24 to ’25 because otherwise the prior years, if I look last two, three years, they were more or less in a very narrow range. But this year it has come down drastically. And when I look this sharp fall, the guidance on your cost ratios around the liability side doesn’t really reflect that optimism because ’25 to ’27, we are just projecting a 30% decline from 170 to 140. But this year we have already covered such a big distance. So where-is the disconnect that I’m missing?
V. Vaidyanathan
Sometimes it can happen in one particular year that we got a — we got a solid improvement this year, but we don’t promise this kind of massive improvement every year. But the thing is that if you see the — from in FY ’20 to ’21, it dipped massively to 3%, then for a couple of years it is stagnant, it has improved this year. But think of it that the way we have planned a book out and it is a well-planned one, we feel that this 1.2% will keep on. This 4.2 has come down to 1.2 in over the five years. In the next five years, it should become zero. Okay. And hopefully we do hopefully little better, but at least that’s what we’d like to share.
Nitin Aggarwal
Right, right. And…
V. Vaidyanathan
One good thing, by the way, noted that whenever we say that liabilities makes losers money, it is very easy to compute how much we are losing also. All you have to do is multiply the 1.2 by the average retail liabilities for the — for that and you know it’s about INR2,000 crores. So the good news is that even though the book is growing by maybe like 25% per year, the — which means that the incremental business on this front is really very profitable, otherwise, you could not see such a sharp dip. So we are quite confident that direction is good.
The direction is definitely heading towards breakeven. And frankly, if 10 years from launch, liabilities is going to become profitable, just think about it, other banks have been around for 30-odd years when we will — when we will go past 10 years, this liabilities will be throwing back cash, which will help us reduce the cost of funds on the lending side. And when we do that, then we will start maybe getting to even lower-income as a higher income, lower yield customers. So the whole model will get more-and-more similar to other mainstream banks in that sense.
Nitin Aggarwal
Right, right. Understand. And a last question on the overall cost-income ratio at the overall bank level wherein you talked about that the cost growth is now — has moderated versus the revenue growth. So when you guide for a 65% cost-income by FY ’27, what kind of absolute cost growth are you looking at over the next two years? And which segments based on the pie-chart that you have given in the PPT, which segments will drive that decline?
V. Vaidyanathan
Well, you should expect from us about 12%, 13% opex growth.
Nitin Aggarwal
Okay.
V. Vaidyanathan
Yeah, that is all. That’s the main thing actually. While we want to grow the book by maybe 20-odd percent, give or take here there. So this is a very material two, three years coming in front of us.
Nitin Aggarwal
And within the segments, if I just look at the slide, which is slide number 63 with segments as something that you are more hopeful on this decline?
V. Vaidyanathan
It’s — see, frankly, every business has to start delivering more-and-more operating leverage, but more operating leverage will obviously come in credit cards and in retail liabilities. Because see the — let’s think — let’s see the cost-income ratios, the retail — the asset — see asset cost-income ratio is already running 56%, which is pretty good actually. I mean, if you — if and for a bank that puts out SLR, CRR, etc., on the core of it to have 56% is good and it will have its own operating leverage because book will grow and we’ll get some operating leverage on its way, maybe 55% will come down to the around 50% or so by that time. But to your question about where we’ll see the improvement, it is — it is credit cards. So credit cards has come down from one 65% in ’23 to 16% in ’24 to 100% in FY ’25. Yeah, it should dip steeply from here next two years to come down to about 75-odd percent. And liabilities should dip from 171% to 140%. Hopefully. I mean these were estimates we put together about nine months ago, we will keep monitoring these numbers.
Nitin Aggarwal
Sure. Thank you so much and wish you all the best.
V. Vaidyanathan
Thank you.
Operator
Thank you. We’ll take the next question from the line of Anand Swaminathan from Bank of America. Please go ahead.
Anand Swaminathan
Thank you. Vaidya, I had a couple of questions. First, on the capital side, can you just give us some color on what was the thought process behind using the CCPS route? But more importantly, are there any other riders or structured securities attached to this that investors should be aware of? That’s my first question.
V. Vaidyanathan
Yeah. Let me talk about the terms. CCPS was maybe a choice made among the few other choices available. It probably made the investors more comfortable to come to this route because the conversion was linked to the stock price prevailing in the in the exchange, meaning that the way the contract is done is that after you allot them, first you got to wait for regulatory approvals right now and shareholder approvals before we — before they subscribe to it.
So that’s when the money will come in and the subscription will happen. The terms of the contract are that if the stock stays above INR60 for a period of 45 working days, trading days, then it automatically stands converted. So to make it clear, therefore, we don’t have to really exactly wait for 18 months and all that stuff.
If all goes well, you know, within 45 days of allotment, it might just stand converted. And in the interim, they will get 8% return. This is what we could negotiate, what we could get best because we need — we were in the process of raising capital. I early descriptive why I needed that large amount of money and why we’re going for big stakes that explained earlier, but for raising that money, these are terms we could get. And we thought this was really good terms because it makes the bank bulletproof and you know, we don’t — there’s so many issues around going around the world off-late right now there is issue in India, Pakistan, all that. So it has — it has made us totally at peace in this environment.
Anand Swaminathan
Sure. That makes a lot of sense. And about some lock-in periods and other options or securities, just so that we are clear on anything else around this structure.
V. Vaidyanathan
There is no other — there are no other significant riders to call-out. It is 8% and stock stays VWAP of INR60 for a period of 45 days, it converts. That’s all there is to it mainly.
Anand Swaminathan
Okay. That’s very clear. Thank you. And, why not increase the growth target and why this 20% target, there is a lot of runway, still your scale is too small. Can you explain that also please?
V. Vaidyanathan
You could but you know it all comes with its own we just find 20 s a nice stable number to run go with feels comfortable, our engine can easily deliver it — comfortably deliver it. We don’t have to strain any credit norms. We don’t have to go — we don’t have to be aggressive at all. We don’t have to relax any credit criteria. We don’t have to play any fall shots. We don’t have to launch new — any major new businesses. It’s feel — it’s comfortable. And of course, we were — when we put out the number of 20 initially, we were always conscious of capital. Of course, now we are more comfortable, but we were always conscious capital. That’s when we took topped 202 but 20 is a nice number.
If you can see if you stay on the pitch and deliver consistently without any credit cost problem. Unfortunately, I hope all of you will agree. Including microfinance, including the toll, all put together in the most, let me say, difficult of years, it is still only 245. So I mean, only is very low. I’m just saying it’s a good number in the context. So the point I’m going to say is that if you want to come down, if you want to keep tight credit control — credit cost-control, then we thought playing a fall short, probably it’s a good percentage to go with.
Anand Swaminathan
Sure. Thank you for that. And on the second question around deposit competition. I just wanted to get your thoughts around like what is happening there because like even two, three months back, the assumption was that it’s a very, very tight market, very difficult to get share. But suddenly, we see all banks kind of racing against ECZ to cut SAR rates, TD rates, lot of things are happening. One-side, it could mean that the loan growth outlook is coming down or it’s just that people have figured out the elasticity on the customer side is not that much. And I just wanted to understand what you’re thinking on this front. And especially at this pace, will it continue for, let’s say, there is another 50 to 75 bps cut, what kind of deposit rate beta we should assume going-forward?
V. Vaidyanathan
See, the way we are playing this, we are playing this simply to our need. We are really not so first and are not exactly keeping a very close eye who’s cutting how much, etc. We — of course, we keep an eye because of the same market. But we are more particular about what we need. We are clear we want to grow this because if you want to grow loan book at INR0, 70% grow at INR20 for sure, minimum. Then if you want to fix a little bit of credit deposit ratio, we need to grow a little more than INR20, then we’ve got to pay-back some bonds.
We still have INR5,000 crores of old bonds, high-cost bonds and then we have about INR25,000 crores of bonds we raised after the merger. This is nothing to do with legacy, our own borrowing. They are not high-cost, but still they got to be paid. So we are focused about what we — what amount of funds we need to pay the bonds and to grow the book. And we pride ourselves keeping that picture in mind. And that’s one thing. And second thing is that we believe that the capabilities we’re building. It’s not only rates.
Of course, people talk about rates all-the-time, but one thing IDFC is built really good, which is I think among the harder things to build. Rates is an easy stroke of a pen. But the harder thing to build is building customer experiences. You trust me on one thing, you can go and check any branch, talk to people, talk to customers. The experience layer that bank has built for customers, the culture we built within the bank, the — in the technology layer that we built.
So that the experience layer at the call-center, our app, our branches, our VRM, that want to build, the UI UX, the design, the aesthetics of it, all this and the culture of not — of being soft with customers, it’s very hard to build such things. Our bank has built that. So I’m — I’m just connecting back to this earlier conversation we were doing, it’s very, very hard to build that. So our bank has achieved major success on those fronts and rates is one component. We’ll use them as a judicious mix of the two to just to take what we really need.
Anand Swaminathan
So that’s exactly what I wanted to understand. So based on your modeling and experience with your customers, you’re comfortable of defending the CASA ratio, so you don’t expect these rate cuts to impact CASA ratios.
V. Vaidyanathan
Yes, we think we’ll maintain it. That’s why we are not exactly going at cutting SAR rates immediately. We are cutting at FD rates because under the money is money, whether we cut FD rates and get the P&L or we cut SAR rates and get P&L. We are choosing the cut rates and get the P&L. Yeah. And also, we will touch, but we will do it, like I said, I earlier told you what are the actions we’ll take on SAR. For example, on savings account, it’s true, your earlier comment on elasticity, I didn’t answer that, but I will say it now. For example, zero to 5 lakhs, we were — we cut it straight to 3. I don’t think people expect us to go that far by cutting from seven to 3. We did one-shot. So we did that. So we do keep an eye on elasticity and we keep an eye on service.
Anand Swaminathan
Sure, that’s very clear. And lastly on LDRs from the current 93%, where do you expect to settle down and what do you think is your steady-state?
V. Vaidyanathan
Yeah, we should come down to the — our wish late 80s.
Anand Swaminathan
Okay. So 20% loan growth and 22% deposit growth, that should be the next two, three years generally in that range.
V. Vaidyanathan
If you notice how the bank’s funding has been done, borrowings, let’s take only borrowings, okay. Borrowings as a percentage of total liabilities was about 45%, 46% or maybe 48% at the time of merger. To date has come down only 11%, means we are reaping all the borrowings and coming — raising for running the bank for deposits. So it’s now come down to 11%.
Now 11% is good. It’s in — it’s meeting the bench of many other banks now, many good large banks also. But we know of one large bank, to the best of my knowledge, so it’s on record, so I should be careful, but we think ICICI Bank is something about 6.5% or so which means the borrowings is even lesser than us. We — our ambition is to go there.
So we keep an eye on these things at this point of time. Yeah. So when we will raise more deposits, we’ll keep retiring borrowings to become a more deposit-funded bank, not — we don’t want to be a bank that’s borrowing money. We be on the bank that funds loans by deposits, not by borrowings.
Anand Swaminathan
That’s very clear. Appreciate it. Thank you.
Operator
Thank you. The next question is from the line of Piran Engineer from CLSA. Please go ahead.
Piran Engineer
Yeah, hi, team. Congrats on the quarter. Most of my questions are answered. I just have a couple of small ones. Firstly, in MFI, what was the write-off we did this quarter versus last quarter?
Sudhanshu Jain
So Piran, I’ll take that question. So if you see — we have not specifically called out the number, but if you see slippages, right, MFI is about, 25% 26% of the total slippages for the quarter. And on the write-off also, it’s broadly around that range.
V. Vaidyanathan
But you can give a straight answer. The credit cost of the full-year, credit cost of the full-year for microfinance is about 10.5%, that’s the most straight answer to you.
Piran Engineer
Okay. Okay, fair enough. And secondly, our CASA ratio of 46 47. What’s the mix of CA and SA?
Sudhanshu Jain
Sorry, repeat your question. So the mix of CASA of…
Piran Engineer
Like how much is current account in that 46% and how much is savings account deposits?
Sudhanshu Jain
In the average CASA ratio?
Piran Engineer
I’m okay with the average or year end.
Sudhanshu Jain
Yes. So car as a proportion of our customer deposits would be about 7% to 8%.
Piran Engineer
Okay. And almost 40% SA.
Sudhanshu Jain
Yeah, that’s correct.
V. Vaidyanathan
Okay. We are building a car franchise, no doubt about it, we’re building it. It’s coming well. But the thing is that our SAR is growing so fast, CAR is finding a tough time catching-up with it.
Piran Engineer
And what would be the — let’s say, roadmap out here to get it to say your larger banks average of 12, 13% 14%?
V. Vaidyanathan
See, the thing is that our SAR is growing so fast that you know really car is also a difficult franchise to build because you know as you know the whole ecosystem, you got to tie-up the whole flow of cash and all that. But in absolute terms, our car itself is growing by about last year car group at what percentage Sudhanshu?
Sudhanshu Jain
CA has grown at about 15-odd, 15% to 20%. I’ll just get back.
V. Vaidyanathan
As we speak, we’ll try to retrieve the number for you. But the short answer is that we are — we also are building a very good car franchise. We’ve developed a really good — it may not have caught attention; we keep talking of loans and all that. It may not have caught your attention. But in the current — in the cash management business, we built a really good franchise. We have current account deposits of something like about INR4,500 crores that we built. We are really tech ahead on that. People — any clients who are using our cash management services are now beginning to talk about it. And that — that’s that is a very good way of building our cash — our current account franchise. So we’re building that.
Piran Engineer
Got it, got it. Okay. That’s it from my end. And just one humble request would be if we could move our results from Saturdays to a weekday just you know, I mean most of the none of the large global banks anyway keep results on weekends and on weekdays, you also get a lot of foreign investors dialing-in.
V. Vaidyanathan
So I think how does it help actually just help us understand 10 seconds only. How does it help if you move into a working day?
Piran Engineer
No, I mean, firstly, most people are sell-side analysts, analyst, etc., aren’t working on weekend. The second thing is that I’m pretty sure most of the foreign clients based out of London, US, etc., would not be dialing-in and would rely on a third-party service like a sell-side note rather than a live — like dialing-in live, right? So I think just…
V. Vaidyanathan
Okay, we’ll try next time onwards. Maybe we can — I’ll talk to Sudan you may not try for Friday or something.
Piran Engineer
That would be really helpful. Yes, please.
V. Vaidyanathan
Yeah, we’ll try for Fridays because they like to have a non non-trading day so that we can be more confident about our data and all that stuff. But we’ll try for Fridays. Thanks for that.
Piran Engineer
Yeah, I — that’s true. That’s true. But I mean if you can, that will be great. I’m sure you’ll find a way to protect the data.
V. Vaidyanathan
No, it’s a good input. No, thanks. Very, very thank you for that.
Sudhanshu Jain
And this is in your data point. And if you can ask, has grown by about 21% 22% on a Y-o-Y basis. And as said, of course, our endeavor would be to take-up this growth or increase the car proportion in the total mix.
Piran Engineer
Okay. And the ballpark timeframe for this would be, let’s say 7%, 8% to what 10% in two, three years?
V. Vaidyanathan
We haven’t really thought that — I mean, since we think about all-the-time, but we haven’t put a number to it, but maybe we’ll have a better thought, we’ll give a more thought through answer next time.
Piran Engineer
Okay, sure, sure. That helps. That’s it from my end. Thank you and wish you all the best. Thank you.
V. Vaidyanathan
Thank you.
Operator
Thank you. We’ll take the next question from the line of Mahrukh Adajania from Nuvama. Please go-ahead.
Mahrukh Adajania
Good evening. Congratulations on your capital raise. I had a few questions. Firstly, what would be the maturity of our average duration of your term deposits? It’s 13 to 15 for most. So what would it be for you?
Sudhanshu Jain
Yeah, it would be a similar range for us, Mahrukh.
Mahrukh Adajania
So it may be 13 to 15. Okay. Okay. And then what would be — so what is the — would you be able to share any proportion between your low-value and high-value savings, so say like below INR10 lakhs, what would be the savings and then above how much roughly any proportion?
V. Vaidyanathan
Maybe we’ll keep some numbers out share for you something next time. We’re not prepared for that. We’re not prepared for the question or data for that question.
Mahrukh Adajania
Okay, perfect. Also, just on MFI, how has the April is collection efficiency turned out?
Sudhanshu Jain
I think March — as we have reported, we have seen much-improved numbers and that trajectory continues in April.
Mahrukh Adajania
Okay. So April also remains good.
Sudhanshu Jain
Yeah.
V. Vaidyanathan
We can share the numbers also, just give me a second. The…
Sudhanshu Jain
Yeah, so yeah, maybe I’ll talk it out. So collection efficiency, as you would have noted that it was 99.2% for March month and ex-Karnataka is at 99.4% and we have seen a good rebounds in last, I would say, a month or so. And the same trajectory is broadly holding up in April.
V. Vaidyanathan
So at 99.4%, it takes us back to how — what it was in Q4 of ’24. So it’s — let me say normalizing, it’s getting closer. But you know, after the scale, it has given us we never want to call the end-of-the problem till it’s behind. But I read-out the SMA numbers to you earlier. Yes. SMA zero number, SMA-1 and 2 numbers to you that in absolute terms, it is dipping.
Mahrukh Adajania
Got it. And then I have a broad question on opex. Of course, you gave many details on this and the last few calls, but opex now will be a key lever of ROA. So going ahead, so credit card will be the key driver, right? It’s not as if you would be cutting commissions or cutting other opex and other loan segments, right, because then that will be very volatile, right? You may have to increase it if competition rises in our loan product. So it will largely hinge on credit card, correct? Is that the correct takeaway?
V. Vaidyanathan
No, no, credit card is one of the business lines. We have — the way we are — if your question is how we’re going to cut this kind of cost is that your question because we are talking of aggressive.
Mahrukh Adajania
We’re talking about 12 and 12% to 13% growth in opex over the next two years Y-o-Y. So you know the problem is that you may be able to control it in the short-term, right? But if competition rises and you may have to incur more opex because of the segments you operate in. So how sustainable is this? And how confident are you that this is going to be achieved? Of course, you’ve shown a good reduction in opex growth over the last two quarters, no doubt. But going ahead, how confident are you of, 12, 13?
V. Vaidyanathan
See the breath proof — the best is the proof of delivery. So four quarters ago, five quarters ago, we told you in one of these calls, you meaning not to your question, but one of the analysts we had mentioned clearly that we will bring down costs because people are worried that our cost — that our cost was growing at 27% 28%. So that was a phase that was the bank was growing and all that. So the — so we — the best ruple delivery we brought down as I read of the numbers to you that how it’s come down from 20s to the 12 now.
Now next year, again, 12 13, we talked about it. We really are serious about it. We are working on it. And if your question is that, how will you deliver this kind of you know low opex growth and still grow the book, if that’s your question, let me just say how we’re going about it. So there are two-ways we’re going about it. One is that there is a — there is a set of operational cost cut that is going on.
Operational cost cut is something that Sudan should drive personally, meaning under his leadership, he has a dedicated team which is — which is meant for cutting costs. And they look at item after item in the organization with what the size of the SMS that’s going out, can we reduce it? It’s got two SMS and one, you know people can plan travel early plan four days in advance rather than booking on-the-fly, those kind of things. There are long list of opex for the bank, they keep cutting one-by-one by one and they keep — get some realization of benefits. We do get some INR150 crores of cost cuts through that process every year. The second way how we do this is buy a transformational project and at the bank. So the — I’ll give you an example of that, if that helps you, then the two of them put together make the full story.
So for the example, second one is supposing we are getting calls to the call-center. So we were getting 11 lakh calls. Now when we said that listen, the customer-base is going on by 20%, now 11 lakh cost has become 13, become 15%, become 18, this the bank will become forever keep expanding. So we ran some transformation projects saying that looking at every reason why customers are calling us, then messaging them that information upfront so that you don’t call us or figuring out some cultural, etc., etc. So that we brought on calls from calls to INR8 lakh calls and customer-base went up by 20%. So this is — so when you cut calls by 3 lakh calls a month, straight away that number of lesser employees, less number of space, less number of premises, it’s are transformation.
Similarly, if you centralize an interactivity, if you introduce robotic process automations, if you introduce bots that customers rather than human beings calling customers, call centers calling collection agents, calling customers, so we are in many cases, bots are calling customers and collecting money by just using sending a UPI link. So these are transformational expenses projects. So we do both of these to cut cost. But they’re not doing something that is cutting the muscle of the bank and we’re going to suffer in the long-run. We don’t do those kind of things. We’re building a bank for the long-run. We never do things which are unhealthy for the bank.
Mahrukh Adajania
Got it. Thanks a lot. And I have just two data keeping questions in case you can share the full-year MFI switch or that would be great.
Sudhanshu Jain
Yes. The full-year MFI on Mark, sorry, the MFI.
Mahrukh Adajania
Slippage, sorry.
V. Vaidyanathan
Find out if you can.
Sudhanshu Jain
Will give you that number offline.
Mahrukh Adajania
Okay. Thank you.
V. Vaidyanathan
Thank you. But we told — we called out the credit cost end-of-the year, just think of securities…
Mahrukh Adajania
It’s 10.5%, yes.
V. Vaidyanathan
So we call that to you. So that’s the most straightforward number you can call-out to you. And we think next year it will come down. I mean, not think we reasonably certainly come down.
Mahrukh Adajania
Okay, perfect. Thank you.
V. Vaidyanathan
Thank you.
Operator
Ladies and gentlemen, we’ll take this as a last question for today, which is from the line of Jay Mundhra from ICICI Securities. Please go-ahead.
Jai Mundhra
Yeah. Hi, good evening, sir. And thanks for the opportunity. I have few questions, sir. First is on the MFI proportion, where do you think it should settle? I mean, of course, it has been reducing, but at the same time, we have also increased the proportion of. Where do you think it should be settling as a percentage of overall loans?
Sudhanshu Jain
So we expect it to further come down because overall loan growth we are talking of 20% and given that the industry is still going through, I would say, some are still settling down, we are — we feel that the MFI proportion may come down to about 3% to 3.5% into the next year. And we are very cautiously monitoring this portfolio.
Jai Mundhra
Sure. And, if you would have the proportion of fixed-rate book and floating-rate loan book, just Ballpark number will also do?
Sudhanshu Jain
So we have about 61% of the book which is fixed-rate and which means 39% is floating. And within that 39%, about 30% is linked to repo and rest is linked to MCLR, T-bills and so on.
Jai Mundhra
Sure. And sir, in your opening — I mean one of the questions you answered that consumer loan, the uptick in 30 DPD plus is marginal is only 8 basis-point points and anyway, the broader trend is improving. But if you combine this with the loan growth in this segment, the loan growth has been moderating and the Q-o-Q growth has come down even sharper. Is there anything to read? I mean, do you have tightened the underwriting here, that is why the growth is low and the uptick is more visible or you know, even it is also — I mean, how to think on this?
V. Vaidyanathan
It’s marginal. I mean, if you see the trend-line some 4, 5 basis-points every quarter will go up-and-down, but they’re all marginal things. The important thing is to see the trend, you know, every product, if you take mortgage like about 40 45 basis-points you see is the SMA-1 and 2. Every other product vehicles, MSME, consumer, credit cards, okay, let me take credit cards separately in the vehicles, MSME consumer, they’re all like 1% stable quarter-after-quarter after quarter. So we’re feeling comfortable about all these things.
Jai Mundhra
Right. Okay.
V. Vaidyanathan
And just — we should watch up more-and-more carefully for the environment, what happened to Karnataka, whether it should happen to any other state, what is an impact — impact of that on the book how should our strategy be with regard to lending to that state at all if it becomes more difficult to lend to those markets. So these are things we have to constantly watch out for and we’ll play as it comes. But excluding MFI, other businesses of the bank are all doing very well. We — I mean, they were always well to be honest, like we said, 14, 15 years, it never bothered us. It’s still not bothering us.
Jai Mundhra
Right. And sir, the fee growth, if I look at fee growth also, that slightly high-single-digit, 6%, 7%. And the reason for that?
Operator
I’m sorry, sir, your voice broke. Can you please repeat your question or maybe use your handset?
Jai Mundhra
So sir, we had said that we put together will be growing at and tracking that line combined is also tracking that line. But within that, the 4C growth seems to be lagging in single-digit. I mean any reason be this 14% 14.5% trajectory is — there is no change in that.
Sudhanshu Jain
Sorry, we couldn’t hear you there clearly. Yeah. But if you see fee to total assets for the full-year, if, that’s at 2.09%, right? So it’s quite healthy in that sense. A quarter-on-quarter movement could be a function of the disbursements in a particular quarter and so on. But we feel that we should be able to grow fees at around 14% to 15% even into the next year.
Jai Mundhra
Sure. And lastly, just an observation, sir. I mean, I maybe I tried to calculate the runoff rate for the non-operational deposit for the bank. It is straight 40% for the last multiple quarters. I — I mean, it looks — would you gain anything on — based on this revised guidelines only because of there is a change in the non-operational deposit runoff, I mean cool-off or that benefit is not there in the sense because the already runoff rate seems like 40% only.
Sudhanshu Jain
As I said, we have — we have a small benefit which is coming off, like for example, on trust trusts and so on because runoff has been reduced from 100% to 40%. But on the contra, we also have an impact because of the runoff increasing on retail deposits where we have a higher proportion. There is some also impact coming on because of valuation of, I would say, government securities and so on. Combination of all of this, we have — we are — we would have a small impact about 1% to 2% in the LCR ratio. But it’s — in value terms, it’s quite manageable.
Jai Mundhra
Sure. And last question, sir, you had mentioned about 15% ROE as maybe first milestone. Would you have any timeline for maybe 1% ROA for that. Thank you.
V. Vaidyanathan
Well, we should be very careful with this, but yeah, at least we’re trying to enter this year, right, Sudhanshu?
Sudhanshu Jain
Yes, it’s about to get there.
V. Vaidyanathan
Yeah. Try to get the end of this year 4th-quarter, but I use the word try to because we looks like we’ll get there, but we will always watch out carefully. But it looks like, looks like that’s what we’re shooting for. So can we conclude, friends, it’s been a while. So moderator, can I close the conversation?
Operator
Sure, sir. Thank you very much. Ladies and gentlemen…
V. Vaidyanathan
Wait, wait, wait. Let me just give a closing comment. So thanks very much, everybody for being with us on the Saturday evening. I have to just say that I’ll conclude by saying that we are truly building a long-term institution. The reason I say that is that we do request you to look-through one or two quarters of this microfinance issue more because, of course, credit costs will come down quarter-on-quarter, but still the PAT impact, you should — we do not expect a Y-o-Y growth on PAT, at least not in Q1. And then for Q2 onwards, hopefully, we should start delivering Y-o-Y growth meaningfully.
Secondly, I must say that — but do look-through one or two quarters. This is what exactly what we requested even the investors who are incoming to tell — told them that look-through one or two quarters, we’re building a long-term bank and that’s one. Two is that in-building the long-term bank, while all of us are focused on ROA, ROE, which we are, but our true — big focus is building a quality franchise, customer experience, customer friendliness, culture, brand, technology system, those things are under the radar, you can’t see them, but they are actually contributing to building a long-term franchise. So that’s the way we think about it. We request you to just stay with us while we build this out. Surely it is coming out. It’s coming — coming about and coming up-and-coming about. Yeah, thanks very much. Good night, everybody.
Sudhanshu Jain
Thank you, everyone.
Operator
Thank you very much, sir. Thank you. Ladies and gentlemen, on behalf of IDFC Bank, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.