Aadhar Housing Finance Ltd (NSE: AADHARHFC) Q3 2025 Earnings Call dated Feb. 06, 2025
Corporate Participants:
Kamal Mulchandani — Equity Research Associate
Rishi Anand — Managing Director & Chief Executive Officer
Rajesh Viswanathan — Chief Financial Officer
Analysts:
Abhishek Jain — Analyst
Nischint Chawathe — Analyst
Parth — Analyst
Chintan Shah — Analyst
Yash — Analyst
Sonal — Analyst
Shreya Shivani — Analyst
Rudransh Kalra — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Aadhaar Housing Finance Limited Q3FY25 earnings call hosted by Investec Capital Services. 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 this conference, please signal an operator by pressing star and then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kamal Mulchandani from Investec Capital Services. Thank you. And over to you sir.
Kamal Mulchandani — Equity Research Associate
Good evening everyone. Welcome to the earnings conference call of Aadhaar Housing Finance Ltd. We have with us the senior management of Aadhaar to discuss the financial performance. Let me welcome Mr. Devshankar Tripathi, Executive Vice Chairman Mr. Rishi Anand, M.D. and CEO Mr. Rajesh Vishwanathan, Chief Financial Officer and Mr. Sanjay Mulchandani, Head Financial Planning. I would now like to hand over the call to Rishi sir for his opening comments. After which we will take the question and answer session. Thank you. Over to you, sir.
Rishi Anand — Managing Director & Chief Executive Officer
Thank you so much, Kamal. Very good evening, ladies and gentlemen. On behalf of Aadhaar Housing Finance, I extend a very warm welcome to all of you to our Q3 FY25 earnings call. We have successfully concluded the first nine months of FY25 with a strong growth momentum. There has been consistent growth in our AUM which is evident in as we have reached a new level this quarter of approximately 24,000 crores AUM which is 21% growth y o y Our prudent and proactive strategies have ensured a sustainable and profitable growth. As a part of our branch expansion strategy we have opened 12 branches in quarter three and a total of 34 branches in the nine month period. The company continues to invest and develop its digital strategy with significant investment in the information technology and data analytics. As you would be aware, we had set a robust integrated technology platform developed by. In the year 2021 October and this has proved to be scalable and at the same time flexible to work with various fintech offerings through APIs. We have over the last couple of years moved from a paper based company to a digital lending company. For example, 100% of our onboarding today happens paperless. On Mobility solution we we have provided mobility solutions to our underwriters, technical managers, collection executives and customers. All these interventions have helped and will further help improve our efficiency and productivity. Our data analytics team is at the forefront to ensure various analytic projects like customer risk categorization, scorecards, early warning triggers on connections, customer balance transfer, early warning, new branch identification, etc. And is woven into company strategy and helps in overall risk mitigation and management. Turning to this quarter’s performance, we have achieved an AUM of 23,976 crore reflecting a 21% YoY growth. As a result, we retain our position as one of India’s leading low income housing finance company. Disbursement stood strong at INR2094 crore in Quarter 3 FY25, a significant growth of 20% on YoY basis. Despite exhibiting strong growth, we have not compromised on the loan quality book. We continue to have 100% focus on retail secured loans with no exposures to corporates or developers. Our GNPA witnessed a drop of 4 bips coming at 1.36 with a stable collection efficiency of 98 to 99%. Our average ticket size still stands at INR10 lakhs with an average loan to value ratio of 59% with salaried customer segment contributing 56% of the portfolio. At present, home loan represents a significant portion of our portfolio and in comparison to other mortgage loans contributing 74% and 26% respectively. Our deeper impact strategy is working well for us and yielding positive results. It has enabled us to target niche markets in the tier 4 cities and beyond catering to small Kalukas and districts. On a nine month basis we have a total of 140 plus deeper impact branches across 545 districts and 21 states. In quarter three FY25 we have added 12 branches which has helped us to serve more than 2.86 lakh live customer base across the country. None of the states is higher than 14% of AUM exposure. We continue to focus on geographical. Expansion and strengthen our market presence. We have further strengthened our senior management with the induction of Head of HR Mr. Vinod Nair who comes with 20 plus years of experience in the leading financial services companies. Happy to share that Aadhaar Housing Finance has been certified by Great Place to Work sixth time in a row. Moving on to the outlook going forward, the improving macroeconomic landscape is driving the housing finance industry towards A projected growth of 16 to 17% over FY25 and FY26. A significant portion of this growth is expected to come from the affordable housing segment which is estimated to achieve a robust 22 to 23% CAGR over the next two years. The affordable housing finance sector has witnessed strong growth momentum in the recent quarters attributed to urbanization and rising demand for housing loans along with significant push given by the Government. The recent budget announcements have been very positive for the affordable housing finance segment like the income tax exemption up to an income of 12 lakh per annum is set to boost the purchasing power of LMI and EWS driving increased demand for housing loans. Additionally, the government’s allocation of 15,000 crores to the Swami Fund 2.0 along with commitments to complete over 90,000 housing units will help resolve stall projects, restore buyer confidence and create new lending opportunities. Moreover, the budget allocation under PMAY will further enhance affordability initiatives benefiting affordable housing finance companies that primarily serve the low and middle income borrowers. The Mortgage Guarantee scheme has also been notified by the Central government specifically targeting the EWS LIE segment which will enable companies like us to look at those customers who fall out during the normal course of business. With these initiatives we are optimistic that the sector will see huge push and demand will increase significantly. We remain optimistic in the opportunities coming our way and are well poised to cater to the rising demand. I would now like to hand over to our CFO Rajesh Vishwanathan to take you through the financial performance of the quarter. Rajesh.
Rajesh Viswanathan — Chief Financial Officer
Thanks Rishi. Good evening everyone. I would like to take you all through the financial performance for this quarter and 9 months under December 2024. In 9 months FY25 our AUM has grown by 21%. Our overall borrowings as on 31st December 2024 stood at 15,135 crores compared to 13,128 crores as at 31st December 23rd this has grown by 15%. The borrowing mix at the end of 31st December 2024 is 51% from banks, the share of NHB is 25% and NCDs make up for the balance 24%. Our incremental borrowing for quarter 3 FY25 stood at 1178 crores which has come in at a cough of 8.28%. We have around 43 borrowing relationships working working with us. We have drawn 378 crores from NHP this quarter of which the Affordable Housing Finance fund is around 20 to 22% of this borrowing and this has come in at a blended rate of 7.8%. The cost of funds Q3FY25 stood at 8.1%. In terms of fixed and floating nature of the book, 79% of our borrowing is floating and 77% of our assets are floating. The undrawn sanctions as at 31st December 2024 is 1100 crores liquidity for the quarter and stood at 2100 crores which is around 10.5% of the loan asset book Portfolio yield for this quarter as we exited is 13.9%. In terms of spreads, the exit spreads which is the exit yield minus exit cost has come in at 5.8%. These are the exit spreads and as we had explained earlier in earlier calls, we expect to end the year in a range of around 5.7 to 5.75% levels. Our cost to income for this quarter stood at 34.8% as compared to 35.4% in quarter 3 FY24. This is an improvement of 60bps. We have mentioned in our earlier calls that we aim to drop our cost to income for the current financial year by at least 100bps and we are well in course for that. As Rishi has mentioned, our GNPA as at 31st December 2024 is 1.36% as compared to 1.4% in Q3 FY24 improvement of 4bps. Our provision coverage of stage 3 stands currently at around 36%. Capital adequacy ratio for quarter 3 FY25 stood at 45.5% and for Tire 1 and 0.6% for tier 2. And last but not the least for 9 months FY25 the profit after tax has come in at 667 crores compared to 548 crores in 9 months FY24 rendering of growth of 22% y on y quarter profits have come in at 239 crores versus 204 crores in quarter 3 FY24. We retain our focus on maintaining a healthy book and delivering consistent performance every quarter. With that, we can open up for questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask for question. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two Participants are requested to please use 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 Abhishek Jain from Alpha Accurate Advisors Private Limited. Please go ahead.
Abhishek Jain
Thanks for opportunity and congratulations for strong set of numbers. Sir, the credit cost has increased in this quarter. So what is the outlook for the credit cost for the coming quarters and the FY26?
Rajesh Viswanathan
So from a credit cost perspective if you look at our historical last two years also quarter four is always a very strong quarter for the industry and in our particular case if I tell you the numbers we were 1.4% NPA asset 31st March 23rd and in March 24th the NPA had dropped to 1.08%. So always quarter four is a very strong quarter not only for us but also for the entire industry. So we do expect good improvement from the credit cost from the overall NPA number of 1.36% we believe that overall credit cost in terms of BIPs would be in the range of about 25 to 27 BIPs is what we expect at the credit cost to come in at and as regards next financial year though difficult to give up but generally if you look at our overall credit cost it will be in the range of that number about 25 to 27 bips.
Abhishek Jain
So how is the current outlook especially on the delegates side Basically in the we have seen that a lot of the stage on the low ticket items. So how is the current outlook in terms of the asset quality in the housing?
Rishi Anand
So Abhishek we are on a broad basis we are very comfortable with the assets that we are holding and if you are referring to you know the current last I would say 2/4 discussion around the MFI etc. So I would want to highlight here one is that we are a 100% secure retail book. We have no exposures to personal loan unsecured loans. That is one second is if I were to and since we monitored this very very closely at least on a monthly basis our total exposures to MFI individual loans stands at less than 9,000 customers over the two 86,000 customers that we hold. So and out of which if I were to further you know give you a data split on how many are delinquent out of this 9,000 customers. To be precise, 8,780 customers only 700 customers. 770. When customers are delinquent, not npa, they’re delinquent. They will be in various buckets. So from an asset quality perspective, anything numbers that Rajesh just shared, you know, we should be in the range of 1.1% kind of NPA numbers as of March. The asset quality looks good. The momentum, as I indicated in my initial speech, momentum of growth also looks very healthy.
Abhishek Jain
So what is the region of increase in the credit cost in this quarter, sir?
Rajesh Viswanathan
So basically the one reason for the increase in the credit cost is the buckets of 30 to 60 and 60 to 90, which is basically our stage two. There is a slight movement in those buckets. And if you look at our stage three also if you look at it from quarter two end to quarter three end, it has moved up from I think 1.3% to 1.36%. So if that is the reason, primary reason for increase in the credit cost in the current quarter which is coming at around 18 to 19 crores. But we expect that this is more or less going to be evened out as we exit quarter four.
Abhishek Jain
Okay. And my last question on that housing sector growth, you mentioned that there will be a 15 to 16% growth in housing industry in FY26 and 20 to 22% growth in the affordable housing. So what is your growth, what growth you are targeting for your company?
Rishi Anand
See Abhishek, you know we’ve guided, while we can’t be giving you too many guidances, but you know, earlier also in the previous call, we’ve guided that from a two to three year perspective. From a disbursement perspective, we will grow at 18 to 20% which will, which will mean AUM growth of anywhere between 22, 20, 20 to 22% and we will maintain that trajectory.
Abhishek Jain
20 to 22% for the FY26.
Rishi Anand
That’s right.
Abhishek Jain
Okay,
Rishi Anand
Thank you Abhishek.
Operator
Thank you. Ladies and gentlemen, to ask a question, you may please press star. And one, we have the next question from the line of Nishin Chavate from Kotak Institutional Equities. Please go ahead.
Nischint Chawathe
Hi, thanks for, thanks for taking my questions. You know, just a little bit on the free income line, you know, there seems to be some weakness. I believe income is up or almost flat for the last nine months. How should we really think about this? You know, what are the drivers and how should we model this going forward?
Rajesh Viswanathan
So if you look at fee income, I think the best way of looking at it would be in the range of around 2% to 2.1% on a sustainable basis. This quarter we had specifically taken some one offs on processing fee and admin fee which we ran some contests as a result of which about 7 to 8 crores of fee income has come in lesser, which we do not expect to happen in quarter four. These were more of contests and competitions run to do some acquisition to acquire businesses. But to look at it on an ongoing basis, I think it is better to look at it at that 2 to 2.1% levels
Nischint Chawathe
And any increase because of any other avenues going forward.
Rajesh Viswanathan
As you would know Nishant, we are fair amount of insurance cover which is basically a credit shield insurance which is for the protection of the customer as well as property insurance, which is again from from a customer perspective a very important cover. So apart from housing and life insurance, I don’t think we intend to add any other. And in terms of fee income also on the processing fee and as well as the login fees are concerned, I think we are fairly about there. There may be some movements on the fee income line because in the fourth quarter if we aggressively collect some check bonds charges which are accounted on cash basis, you may get some leg up on the check bonds charges in the quarter. Four.
Nischint Chawathe
Got it. And just on the spread side, you know, you kind of did allude to the fact that there could be a small reduction in the fourth quarter. Just curious, I mean what is really happening? You see further increase in cost of funding. You know what. What is it that you’re looking at?
Rajesh Viswanathan
So I think the main driver over there will be will be the yields which will be driving it more than the. As we had explained in the previous calls, your book is sitting at yields in a range of about 13.9 to 14% whereas incremental business would be done at a ratio of upon 40, 45 bits lower than that which is true even now for a nine month period. So basically that will even out or add after a kill. So that is the reason where their yields will start dropping to a certain extent. We believe the spread movement downward will be sort of by 10 bips at the end of the quarter. So you will be probably looking at exit spreads in the range of about 5.7% primarily driven by new acquisitions which is happening in the field which is happening about 40 to 45 bips lower than the bookings. Right
Nischint Chawathe
Got it. And your cost of funding From NHB is 7.8 or is the cost of funding under the subvention scheme at 7.8?
Rajesh Viswanathan
No, this is a blended cost. It’s 7.8. The 25% came in at the figure of about 5.2 5.3%. 5.5% was at 25% and the balance came in at around 8.3 8.4%
Nischint Chawathe
Balance. You mean non NHP.
Rajesh Viswanathan
See out of the. To see what NHB is now doing is they are saying that out of the total allocation anywhere between 20 to 25% you can draw as AHF, and the balance you have to draw under the normal scheme. So 75% would have been drawn under the normal scheme, which has come in at about 8.3, 8.4%. The 25% which has come in and the AHF has come in at a rate of what, 5.5%. Hence, the blend is coming at 7.8% incremental.
Nischint Chawathe
Got it. And your overall overall income, sorry, in incremental cost of funds at a company level you mentioned was around 8.2.
Rajesh Viswanathan
That’s right. For the quarter is about 8.28.
Nischint Chawathe
Got it. So probably some part of the NHP fund is actually coming in at a higher rate than the incremental cost of funds for the company. That’s what I think we’re trying to.
Rajesh Viswanathan
That’s right. That’s right.
Nischint Chawathe
Sure. And just one last data point. You know, can you share the BTA out ratio for the quarter?
Rishi Anand
So annualized Nation BTout was 6.3%. And you know, I’m sure you remember last time we spoke about various initiatives that we’ve taken to reduce the BTA out. You know, from a 6.7, it’s dropped to 6.3 and therefore continue stable state. You know, 5.5 is the number that we would be looking at.
Nischint Chawathe
Got it. Got it. Thank you very much and all the best.
Rajesh Viswanathan
Thank you, Nishant.
Operator
Thank you. We have the next question from the line of Parth from Nomura. Please go ahead.
Parth
Thank you for taking my question, sir. And a great set of numbers. So sir, I’m seeing that the write off have been lower which is a great thing to see. But there has been some inch up in the stage two assets. So are you seeing some flows from the top buckets to the lower buckets incrementally coming going ahead. And sir, one more question. On the budget side, I understand that on PMMI allocation there have been some disperse that the issue is not always on the supply demand side but on the supply side too. So how do you see your growth panning out with the current budget calls in the PMMY scheme and the general ground view. Thank you.
Rishi Anand
Might have to repeat the PMI question. Sorry, it was not so clear.
Parth
Yeah. So on the PMMI side, post the recent budget announcements and also on the on ground checks we see that the issue is not always on the demand side of the houses but also on the supply side because it is not quite affordable for the builders to develop affordable housing houses. So how do you see things panning out on ground on the demand perspective in affordable housing segment.
Rishi Anand
So let me answer the PMI question on the credit cost. Rajesh will come in. See PMY traction. If you remember, PMY got launched couple of months back. PMY 2.0. The traction is still building up. We as an organization have done roadshows across over 500 branches where it was more of an education series to the customers. Close to about 6,700 customers have shown interest in the subsidy scheme and for applications for newer applications, which means there is quite a bit of traction. If you also would recall, in the PMAY one, we contributed close to about 88,000 customers of ours, which is almost 50% of our customer base. Had received the PMI subsidy so the traction looks nice. You know from a perspective of MAWA which is Ministry of Urban affairs, the systems are up and running. We have just last week started the process of uploading consumers who are eligible after 1st of September they have been uploaded started. The uploading process to the MOA website has started and anytime soon the disbursement tranche will start. So obviously the PMAY will play its own role. Now you also had a point on the supply side. You would have heard the FM speaking about the Swami scheme which enables construction of stalled projects for the allocation of 15,000 crores. These are typically targeting the affordable and LIG consumer segments. So there is more than even in the PMI four verticals. Pmi, you know the four verticals. One of the verticals targets construction of affordable housing. So there is little more than too much happening right now on the supply side as well. So we are quite bullish when it comes to the EWS LIG segment in terms of both supply side and the demand side as we move ahead in the year. Credit Cost parth
Rajesh Viswanathan
So you’re right there has been a slight slippage in stage two. We have seen about 1012 bip slippage in December. However, as I explained to the first caller, we expect that this should sort of get evened out as we exit March 25th. Hence we are quite confident that as we end the year our credit cost would typically come in the range of about 25bps. Just to give us some numbers, if you look at our credit cost line item in quarter four of last financial year, if I’m not mistaken it was very flat or it was a negative number. And if we are gunning for the NPA enclosure numbers which we just discussed by Rishi, I think our credit cost line item in quarter four will be a very benign type of a line item. So hence we are quite confident that this is more of a sort of a seasonal type of impact. We typically see it in quarter three which is a festival season where we see some slippages typically happening because of Diwali and Dasera which typically gets evened out in quarter four.
Parth
Sure sir. This provides a lot of comfort on the growth and both the credit quality aspects. Just one more question sir, you mentioned that it is a good thing the btouts have reduced from 6.7 to 6.3 mentioned. Right. So you also mentioned that there was a one off on the fee income because of some schemes you ran. So is this a btout lower end because of all the schemes you ran which help you lower the fraction of customers going out and if so, and if you expect the btout to further improve, do we expect you to spend a bit more on such schemes to retain the customer?
Rajesh Viswanathan
No, these schemes were basically on fresh acquisitions btout. Is not BT out. Acquisition or retainment is not a part of this reduction. We would love to keep the BT out in the range of about 5.75% as we exit the year. It is at 6.2. We have seen that if you look at the industry set, it has sort of expanded for the industry set. Quarter four is always very busy quarter for btouts for the entire industry BT we hope to sort of get it down to a sub 6% level. I said that we would do a good job here. We have employed all of our various channels. One, we have a specified retention team which is working on btouts headed by a very senior person. We also have data analytics working very closely with the retention team giving a clear indication of expected customers who may BT out and even if a customer btouts what is the sort of rate which can be offered to retail that customer. So in that sense we do not give an irrational rate drop. Even the rate drop is more of a risk adjusted rate drop which is sort of taken out by data analytics and as a part of our digital initiative is given to the retention team to retain the customer. But having said that, btout has always been an issue. We have to work around it as an industry and as a company. If we end the year at sub 6% I think we would have done a fairly decent job there.
Parth
Thank you, that was helpful. On the last question, I won’t take too much time, sir, expecting the MPC meeting tomorrow and expectations of any potential rate cuts. How do you see your cost of funds panning out since let’s say you mentioned 77% of your book is floating in nature.
Rishi Anand
We also I think public news, everyone is expecting some sort of rate action. Hopefully there will be some drop downward. But our own assessment is that by the time it sort of comes from the banks to us would be a lag of at least three to six months. Then it depends on where my repricing or readjustment of the rates takes place. I’m on six months, three months of one year MCLR. For example, if you look at it today, one year MCLR is about 27% of my borrowing. Six month MCLR is 36%. So basically it will depend on which time it comes in and when is my repricing happening. It may take in our view tomorrow’s action may flow down in three to six months and our flow down to the customer may happen. Post that only. So I think I don’t see any immediate but having said that, once we get the benefit and once it becomes a meaningful pass back to the customer. We are obliged, and we will definitely pass it back to the customer.
Parth
Thank you. Thank you very much, sir, and congratulations on a great September. Thank you.
Rajesh Viswanathan
Thank you, Parth.
Operator
Thank you. The next question is from the line. Of Chintan Shah from ICICI Securities. Please go ahead.
Chintan Shah
Yeah, thank you for the opportunity. And sir, congratulations on a good set of numbers. So firstly on the margin, just to again come on the margin front. So what were the disbursement yield for the quarter? If you could just get that number and as compared to the previous quarter also.
Rajesh Viswanathan
So quarter three as a current quarter disbursement yield Chintan was 13.6%. And the further for the year YTD is 13.54%. You wanted the previous quarter also last year, right. Which was 13.52. Quarter two sequential quarter. Yeah, quarter two was about 13.53. We have improved by about 6 bips in quarter three and nine months. Disbursement is 13.54
Chintan Shah
54 shots. So basically our overall portfolio yield is 13.9. Incrementally we are at 13.59. So probably there is some chance of a slight in decline in the yield. And with the rate cut probably can be expected from further cut in the east.
Rishi Anand
No? So rate cut, incremental yields, whatever we are operating at, we might not want to reduce the incremental yields further rate cut will eventually impact the existing book. As Rajesh just explained in the previous previous discussion, you know, we will eventually have to pass on to the existing customers.
Chintan Shah
Sure. So sir, when we say floating, 77% of our assets are floating. Also could you just provide the breakup of which all benchmarks are there are linked to.
Rajesh Viswanathan
So on the asset side,
Chintan Shah
Both on the asset as well as the liabilities will be helpful.
Rajesh Viswanathan
Liability basically is one year. MCLR is about 30%, six months MCLR is about 36% and three months MCLR is 17% and balance is a combination of others. These are basically our bank term loans NCDS which we take from DFIs which will be again floating. For example, I think that is 80% floating what we take from ends. So inside the 24% NCDs, approximately half of that would be from DFIs and half of them would be floating. And on the asset side, basically mostly our non home loan book would be fixed. The incremental book that we do on non home loans for the last 12 to 18 months we have done more of fixed non home loans. The other portion which is fixed is because of nhb. When NHP gives us the AHF fund we have to fix the customer at 350 basis points more than G SEC rate. So it is a combination of NHB and the NHL loans that we do. Having said that, we believe that for the foreseeable near future we should be in that Tram line of 75 to 78% fixed to floating. 75% floating and 25% fixed to 75 to 78% in the next 12 to 18 months.
Chintan Shah
So Anu, so just I was trying to understand if there is a rate cut so how soon would be. Would we have to pass on the rate cut to the customers? Yeah, actually that I was trying to understand.
Rajesh Viswanathan
Yeah. Typically what happens is that as soon as I get a substantial rate benefit pass back to me. And we have a. We have alco determined RPLR formula. We have to apply the RPLR formula and if the RPLR formula throws that I have to pass on say 25 bips back to the customer. I am obliged to pass it on to the customer. So this is a complete very transparent ALCO mechanism which is even checked by National Housing bank in their, in their inspection. So the gap between pass back to me and pass back to the customer may be maximum of a quarter.
Chintan Shah
Sure. So so basically these are all linked to RRB internal benchmark and not to any external benchmark like the repo rate or the T bill etc.
Rajesh Viswanathan
All our assets are linked out to our own RPLR the base of which is predominantly the incremental cost of funds. And the cost of funds.
Chintan Shah
Sure. So logically we can think of largely we are immune to the record only. It could be a lead lakh of a quarter or so. Right.
Rajesh Viswanathan
One is a timing difference that it would be there which obviously the timing difference will not be from a profit strategy. It is more from a making this operational good operational activity and it making it a significant portion of passback back to the customer. 5 bips passback doesn’t make sense. Slightly 1012 bits makes sense. Second thing is as Rishi said, if the cost of funds, incremental cost of funds drop, hopefully my incremental yields will not drop that much. So you will make up some, some of the loss over there, some of the yield loss over there.
Chintan Shah
So that is very helpful. And just on the fee income part again also we sold around 7,8 crores. We had an impact of around 7,8 crores which we had to forego due to contest kind of discount to the customer processing. So is this a kind of an annual phenomenon like every year would be offering like near to the first day season, Diwali times or how is it?
Rajesh Viswanathan
Yes, I think it depends on company to company, the industry. Some companies run it in the fourth quarter. We thought it opportune to run it in quarter three. So we have done it majorly in quarter three and some very small residual impact you would see in quarter four, but majority of that has gone into quarter three. But this is an annual thing somewhere or the other. In the last year also we ran it probably we ran it more into quarter four last year, but this time we ran it. We thought it is better to run it in quarter three.
Chintan Shah
Sure. And just lastly from the branch expansion P so we have around 34 branches. We open in nine months. And so what is the target or branch opening in next year as well? If you can just get a number on that.
Rishi Anand
Next year.
Rajesh Viswanathan
Next year,
Rishi Anand
Next year.
Rajesh Viswanathan
Let me first complete the current year. We already had 34 branches in then and the way it looks, we should be closing the year at about 55 branches for the year and we will look at similar numbers in the coming year.
Chintan Shah
Sure. Yeah. That’s it from my side. Thank you and all the best team.
Rajesh Viswanathan
Thank you Chintan. Thank you.
Operator
Thank you. The next question is from the line of Yash from Citigroup. Please go ahead.
Yash
Hi sir, thanks for the opportunity. So just wanted to check on this collection efficiency being at 98, 99% and you know this 10 to 12 bip slippage which you saw in stage two assets. So is there any specific geography which is contributing to it or it’s more broad based and you see the recovery as well. More broad based?
Rishi Anand
I would say, you know, partially yes and partially no. It is broad based Yash, but you know, certain geographies like I would say East Kerala, etc. They’ve always been, you know, on the bottom of the pyramid when it comes to efficiencies. So they continue to be at the bottom of the pyramid. But broad based, the entire rest of the states that we are operating, which is 19 plus today, 21 states, minus Caroline and West and east will be at about 19 states. They are, I would say in the similar pattern. You can always sort out Rajasthan being the better one. And suppose even when you rate Rajasthan would top in terms of being on the right side but broad based, I would say you’re right.
Yash
Got it.
Rajesh Viswanathan
The recovery also, as Rishi said, would be again, broad based. So. So we don’t see any laggards to the slippages. We believe that the recovery also will be broad based.
Yash
Got it. And sir, on the yields part, again, sorry to harp on that but could you share the differential between the home loan and non home loan yields if possible
Rajesh Viswanathan
For the current quarter?
Yash
Yeah, I mean just in general and like, does the non home loan yields also like lag
Rishi Anand
YTD number for the year? Home loan is at 12 point, almost 12.3, 12.36% non home loan standard 16.5%, 13.55.
Yash
Right, got it. And these are the YTD numbers, right?
Rishi Anand
These are YTD nine months. Nine months.
Yash
And even on the non home loan side of the book, the disbursement yields would be, say, 40 to 50 bps lower.
Rishi Anand
Non home loan I just told you 16.5%.
Yash
I meant the disbursement, like the incremental yields. Even those would be like, lower than the balance book or.
Rishi Anand
Okay. Okay. So what I gave you right now is incremental disbursement for the for the year. If I give you AUM, the AUM non housing loan stands at 16.8% and my incremental number that they gave you was 16.5%.
Rajesh Viswanathan
So again the 40bps that you are seeing is more is evident both in home loan as well as non home loan differentials.
Yash
Got it? Got it sir. And so on the spreads front. So 5.7% is what you’re guiding but on a more sustainable basis in absence of rate cut say not factoring in anything, would that be the most sustainable number or should see more compression in there?
Rishi Anand
I would say yes as a more sustainable number or spread to be in the range of 5.6, 5.7% the current year exit as well as the next financial year.
Rajesh Viswanathan
So on a sustainable basis if you look two, three years down the line, I think this will be trending. We have guided in the past also that this would be the 23 year basis would be around 5.5%. Because on a growth engine method where we will be growing our book also and to grow a 22,000, 25,000 crore book there will be sections where we will have to play the the yield again. But having said that we will ensure that the drop in spreads is not very sudden and the drop in spread is a much smoother one. As Rishi said 5.7 hopefully dropping by 1015 bips every year. Sustainable looks in the range of about 5.4 to 5.5 in the long run. It’s the long run which we want to retain as sustainable.
Yash
Got it. And just last on the growth outlook it continues to be around 25% like
Rishi Anand
Not 25. Yes, we provided always 20 to 24% AUM which will effectively mean 18 to 20% that is worse than growth.
Yash
Got it. Got it. So thank you. That’s it from my side.
Rajesh Viswanathan
Thank you. Yes,
Operator
Thank you. The next question is from the line of Sonal from Asian Market Securities. Please go ahead.
Sonal
Congrats on the quarter, sir. So I had two questions. So can you please give out details on the type of property finance, construction plot plus construction, apartments, commercial if any if you’re doing. And the second question was on the details on the AUM mix in terms of tier of cities. So what would be the contribution coming from Tier 1, Tier 2, City, Tier 3, Tier 4 and maybe more deeper, you know, cities.
Rishi Anand
Okay. Hi Sonal. Let me first give you the split between the type of loads that we do so purchase of house and flat that is ready built property is about 42%. Standalone construction which is self construction is about 25%. Plot plus construction which is combo loans purchase a plot and construction thereon is about 60% and LAP is about 24%. So that is the mix of type of loans that we do in terms of tier. While I don’t have the tier data available as we speak, but I can give you indicative. So close to about 64% will come from tier one. That’s how we classify our main branches. Tier two would be about 23, 24% and the balance will come from tier three and below.
Sonal
And so what is the employee count at the end of the quarter?
Rishi Anand
Employee count.
Rajesh Viswanathan
We’ll just come back on that. Just give us a minute. Yeah, the on call employee count is 4450.
Sonal
Okay. If I look quarter on quarter, there is not much increase in employee cost despite our disbursement being very strong. So just wanted to get some sense. How should we look at employee benefit expenses and what would be the proportion of fixed and variable for your employees?
Rajesh Viswanathan
To be very honest, if you look at it on a slightly broader answer I’m giving, if you look at overall employee cost, we should look at growth of employee cost in the range of about 17 to 18%. Is what we would like to look at the employee cost going back fixed to variable. Depends. For example, for people who are not on incentives, who are on bonus, typically the variable would be in the range of 20 to 25%. And if you look at people who are on frontline sales, employees, this will be in the range of 50% to 55% of their incentives which they will be getting as compared to the fixed, fixed middle level branch people will be again the range of about 25 to 30% of their fixed CTC they will be getting as variable. So middle level management, senior management in office, everyone will be in the range of about 20 to 30% variable. Frontline sales would be in the range of what, 50 to 55% variable?
Rishi Anand
Yeah, because the front line typically sonal works on a concept of lower fixed and higher variable.
Sonal
Okay, thank you. Thank you so much.
Rishi Anand
Thank you so much.
Operator
Thank you. The next question is from the line of Shreya Shivani from clsa. Please go ahead.
Shreya Shivani
Hi. Thank you for the opportunity. I just have one question. You mentioned that usually in your third quarter, given that it’s a festival quarter, you see some slippages that come in and you see it balancing out by 4Q. Is there, I’m sorry, is there any way to quantify how much rollback do you see from 3Q to 4Q over the past so many years? That is there a way to track that?
Rajesh Viswanathan
See on a broader basis on if you look at NPA. Typically last year we were about 1.4%. We moved back to 1.08%, and on OnePlus I think we exited the overall in OnePlus we exited at 5.45%. So we were at the end of. Last year in, sorry, in December we would be around similar levels. 6.3% if I’m not mistaken, was our, was our one plus and we ended the year at about 5.45%. So there was almost a 90 pips improvement in. This is quite common both in the company and industry. So Both on the one plus and a 90 plus level. 90 plus, you would see anywhere between around a 30bps improvement and OnePlus, hopefully will see a 90bps 200bps improvement.
Shreya Shivani
Got it. That’s very useful. And one question that I wanted to ask that while you’re giving us our, while you’ve given us the geographical mix in terms of tiers, does that, does that tiering account for the location of the customer property or for your branch? Because your branch may cover, may end up having customers outside of that geography. Right? That’s, that’s a possibility.
Rishi Anand
The way you know, we have structured our branches, the geo limits from any branch is about 60 kilometers.
Shreya Shivani
Yeah, correct.
Rishi Anand
The consumer and the property, it would be more or less, I would say 95% match.
Shreya Shivani
Yes, correct.
Rishi Anand
Consumers who would be wanting to construct houses in their, in their, you know, hometown, etc. That will hardly be about 5, 4, 5%.
Shreya Shivani
Correct. Correct. So mostly there’s a big overlap between your branches and customers because people taking loan from a particular branch and going 300km away and building something,
Rishi Anand
If that happens here, then we would direct the customer to the closest branch of.
Shreya Shivani
Got it. Got it. Okay. Okay. That is, that’s very useful. Thank you. And all the best.
Rishi Anand
Thank you, Shreya.
Operator
Thank you. The next question is from the line of Rudransh Kalra from MB Investments. Please go ahead.
Rudransh Kalra
Evening. To be honest, Aadhaar is generally seen as a high growth company. I personally am not. I was expecting some better numbers. Do you think in the coming quarters the growth is going to be higher? And then the other question is what do you think going forward are going to be challenges and triggers positive figures for your company?
Rishi Anand
Hi branch. So thank you for the compliment of us being a high growth company. But that brings challenges on the table too because when you are in a higher base, the percentage growth, you know, might not gel with the kind of expectation the market would have. Having said that, I’ve already indicated, as I already indicated on the call twice, we would continue to grow our AUM at about 22, 24%. So that’s the growth number we are looking at. And quarter on quarter the numbers can move a couple of percentages here and there. But overall. On a yearly basis that these are the kind of AUM number growth that we are looking at in terms of challenges. We actually don’t foresee too many challenges coming in from the budget. We had expectation pre budget. We got things like mortgage guarantee scheme coming in. PMAY is already there. Swami Fund got announced in the budget. So all this is going to boost both the supply side and the demand side at the company level. Internally the only challenge we see and which worries us a little bit is getting down the balance transfer out, which is an industry problem, not only a problem at Aadhaar, to get down this number from a 6.3 to a 5.5, 5.7 which is the comfort level and we are aggressively working towards it. So that’s the only challenge that I see. Otherwise things are looking good and shiny.
Rudransh Kalra
All right, thank you so much. Have wish you the very best for future.
Operator
Thank you ladies and gentlemen. We will take that as our last question for today. I would now like to hand the conference over to the management for closing comments. Over to you sir.
Rajesh Viswanathan
Thanks a lot for for all of you for joining this, this analyst conference late in the evening at 6:30. Thanks a lot and I hope we have been in a position to answer most of the questions and we look forward to hosting you all again at the end of the financial year. Thank you and good night.
Rishi Anand
Good night all of you. Thank you so much.
Operator
Thank you. On behalf of Investec Capital Services. That concludes this conference. Thank you all for joining us. You may now disconnect your lines.