Aditya Birla Capital Ltd (NSE:ABCAPITAL) Q3 FY23 Earnings Concall dated Feb. 02, 2023.
Corporate Participants:
Vishakha Mulye — Chief Executive Officer
Vijay Deshwal — Chief Strategy Officer and Head of Investor Relations
Rakesh Singh — Managing Director and Chief Executive Officer
Pankaj Gadgil — Managing Director and Chief Executive Officer
A. Balasubramanian — Managing Director & Chief Executive Officer
Kamlesh Rao — Managing Director and Chief Executive Officer
Mayank Bathwal — Chief Executive Officer
Analysts:
Avinash Singh — Emkay Global — Analyst
Nidhesh Jain — Investec — Analyst
Sameer Dalal — Natverlal & Sons — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY ’23 Earnings Conference Call of Aditya Birla Capital Limited. [Operator Instructions]. Please note at this conference is being recorded. I now hand the conference over to Ms. Vishakha Mulye, CEO, Aditya Birla Capital. Thank you and over to you ma’am.
Vishakha Mulye — Chief Executive Officer
Thank you. Good evening, everyone, and welcome to the earnings call of Aditya Birla Capital for Q3 FY 2023. Joining me today are my senior members of the team, Bala, Rakesh, Tushar, Pankaj, Kamlesh, Mayank, Pinky, Vijay, Ramesh and Sanchita. Together we will present the business performance and financial results and take any questions that you might have.
I’d like to welcome and introduce two senior colleagues, Sanchita Mustauphy, Chief Risk Officer Designate and Ramesh Narayanaswamy, Chief Technology Officer, who joined us recently. Our current Chief Compliance and Risk Officer, Mr. Dhananjay, will be superannuating on March 31, 2023. Shanchita will work closely with Dhananjay and then take over as a Chief Risk Officer from April 1, 2023. She joins us from Tata Capital and has more than 27 years of experience in Risk Management, including Credit and Market and Liquidity Risk.
Ramesh will be leading technology transformation across Aditya Birla Capital and will strategize design and deliver a one technology organization with a key focus on building capabilities across core technology, digital, processive automation and data. He has above 25 years of experience in technology domain across financial services, e-commerce and logistics and payments product development. He has experience of working in various FinTechs and organizations such as Citi, Standard Chartered Bank, among others.
Let me now begin by giving a brief perspective on macroeconomic environment. We continue to see strong demand and improvement in industrial and service activity in the Indian economy. This is reflected in the lead indicators. Service PMI increased to 58.5, manufacturer PMI increased to 57.8 in December 2022. GST Collection crossed INR1.5 lakh crores in January 2023, however, we are currently experiencing volatility in the global economy and financial markets, geopolitical tension and high inflation, interest and exchange rates. Though concerns remain due to these headwinds, the Indian economy is expected to perform well in the current fiscal year, driven by sustained domestic demand.
At Aditya Birla Capital, we follow One ABC One P&L approach while continuing to focus on quality and profitable growth in order to maximize the share of opportunities in the financial service space. We have a strong presence across protecting, investing, financing and advising, that is PIFA offerings. We have adopted a customer-centric approach with an aim to provide holistic solution to our customers and their ecosystem to suit their lifestyle and business needs.
Our strong parentage and extended ABG and ABCL ecosystem provide us multiple opportunities to accelerate and have growth. We follow an Omni-Channel approach towards distribution. We believe in giving complete flexibility to our customers to choose the channel through which they wish to interact with us. Our endeavor is to provide a one experience across channels to enhance seamless delivery of our products. Based on the fast and dynamically evolving digital landscape and the consumer needs, we have embarked on all-inclusive platform strategy for customer, businesses and our channel partners to help bring the power of one to ABC to them.
I will cover on value presentation for each of these stakeholders in detail. First, customer. Our customers franchise continues to grow wealth. In the last quarter, we acquired 1.4 million customers, repeating our active customer base to about 43 million as of 10 December. We added 62 branches during the quarter, and our total branch count now stands at 1,220. Our branch had functioned as targeted at driving penetration into Tier 3 and Tier 4 towns. Our Board today approved the formation of wholly-owned subsidiary to develop an Omnichannel B2C platform.
The purpose of this platform will be to provide and to serve as existing customer and acquire new customers and act as a one-stop solution to deliver PIFA to all our customer. This platform will have various touch points such as app, web, branch and virtual engagement. As a first step, our customers at more than 400 branches across 130 locations will receive assistance to achieve their financial goals. They will also be integrating payment stack and value-added services through this platform, which will enhance customer experience and brand recall and enable us to become a full stack financial service provider.
Second. In businesses, we had mentioned in our previous quarter’s earning call that we would be launching a comprehensive B2B platform for our MSME ecosystem. We are happy to announce that we have launched the platform in a closed user group and it will go live in the next 20 to 30 days. It provides MSMEs ecosystem with lending and value-added services to manage and grow their business. The platform, will enable the cash flow in financing by using alternate data such as GST returns and transaction data in addition to the traditional data sources to unthorough the turnaround time and customer experience. It will also offer PIFA solutions and value-added services to cover the full ecosystem of all, which is promoter, owner, director and authorized signatory of our MSME customer.
Third, channel Partner. We have more than 2 lakh channel partners and we deeply value the vital role that they play in distributing our products. The next nine months, we will also be rolling out a B2B digital integrated platform for our channel partners, which will provide them opportunity to grow that business volumes and enable them to fulfill the lifecycle needs of our customer. It will help our channel partners to enhance the customer servicing and track status of their application, business volumes and payout. It will help us to increase our product penetration among existing customers and also provide us with an opportunity to expand our customer base.
The B2C platform that we are working on will build an interoperability stack which will be leveraged by both B2B and B2D platforms to provide PIFA solutions to our customer. This is a first approach that the core of our business strategy for product innovation, direct acquisition, seamless onboarding and best-in-class service delivery. We will let this data and analytics to maximize wallet share through cross-sell and upsell. 79% of our Digital lending business happens using machine-learning scorecards in life insurance cross-sell and upsell now contributes 35% of our individual first year premium.
In our Health Insurance business, 24% of our retail fresh premium originates from cross sell. About 78% of our life insurance renewal happens digitally and 88% of our life insurance customer request are serviced digitally. In our health Insurance business, all our distributors are now onboarded digitally and 85% of our business is delivered by auto underwriting. We will continue to ensure that our tech architecture is robust, flexible, scalable and resilient. We will build and nurture a culture which is agile and uses adaptive and collaborative approach to build digital products and journey for our customer.
Going-forward, we will continue to follow our One ABC One P&L approach to accelerate our growth trajectory and continue to build scale and drive market share in each of our businesses. We will leverage our digital capabilities, innovative products and have one team approach to drive cross-sell and deliver superior transaction experience for our customer.
Now, I will hand over to Vijay to give us a summary of the results for Q3 FY ’23.
Vijay Deshwal — Chief Strategy Officer and Head of Investor Relations
Thank you, Vishakha, and good evening, everyone. Our consolidated profit after tax for the Company grew by 27% year-on-year to INR530 crore in Q3 of FY ’23. This excludes gains from stake sale in ABSL AMC in Q3 of FY ’22 and fair value gains related to investments in Aditya Birla Health Insurance Company in Q3 of FY ’23. The consolidated revenue for the same period grew by 31% year-on-year to INR7,699 crore.
In our NBFC business, we continued with a strong momentum of disbursements and granularization of our book. Disbursements for the quarter grew by 98% year-on-year to INR13,099 crore. This helps our loan book to grow 47% year-on-year and 12% sequentially to INR72,994 crore. Loans to retail, MSME, SME and HNI segment now constitute 66% of our portfolio. NIM increased by 41 basis point sequentially and 77 basis points year-on-year to 7% in Q3 of FY ’23.
We continue to maintain strong focus on asset quality with Gross Stage 2 and 3 assets, reducing by 156 basis points sequentially and 491 basis points year-on-year to 6.49% at December end. The provision coverage ratio on Phase-III assets were 49.3% at December end. In our housing finance business, disbursements increased by 12% sequentially and 25% year-on-year to INR1,387 crores during Q2 of FY ’23.
The loan portfolio grew by 3% sequentially and 11% year-on-year to INR12,874 crores. NIM of the housing finance business increased by 22 basis points sequentially and 106 basis points year-on-year to 5.35% in Q3 of FY ’23. Coming to our AMC business, the average AUM was INR2,81,717 crores of which equity AUM was about 43% in the current quarter. We continued our focus on building retail customer franchise with addition of about 0.5 million folios in the nine months of FY ’23, the total active folios now stand at 8.0 million at December end.
With our continued focus of growing passive and alternative asset segment, passive AUM grew by 28% sequentially and was about INR21,620 crore at the end of December. The growth momentum in our Life Insurance business continued with 25% year-on-year growth in retail first year premium, which was significantly higher than the industry growth in the same period.
Group business premium grew by 41% year-on-year in nine months of FY ’23. Renewal premium grew 14% year-on-year to reach INR4,870 crore in nine months of FY ’23. Our VNB margin was 15.5% in the nine months of FY ’23, and we are well on track to deliver 18% net NVD margin in this financial year.
In our health insurance business, our unique and differentiated health first model helped us to deliver industry leading growth of over 59% year-on-year in nine months of FY ’23. ABHI expanded its market share by 220 basis points year-on-year to 10.4% among standalone has been sorted in nine month of FY ’23.
With that, I’ll now hand over the call to my colleague, Rakesh, to take us through NBFC business performance in detail.
Rakesh Singh — Managing Director and Chief Executive Officer
Hi, thanks, Vijay, thanks, Vishakha. Good evening, everyone. In our NBFC business, we saw strong momentum across all segments, contributing to an overall loan book growth of 12% quarter-on-quarter and 47% year-on-year, taking our loan book to nearly INR73,000 crores in quarter three. Our retail and SME segment book grew 59% year-on-year. We grew faster than competition and at a double the rate which we had guided for overall loan book growth for FY ’23.
Now referring to Page 16 of the presentation, let me call out a few key highlights. We added 1.35 million customers this quarter, taking our active customer base to 5.9 million, doubling the customer base from 2.3 million last year. In terms of absolute loan book growth, we added INR8,020 crores of loan book growth in quarter three, which is more than what we added in entire of H2 of last financial year.
Personal and consumer loans contributed significantly to this growth, comprising over 40% of this net addition in quarter three, making it the highest contributor across all product segments. 30% of the incremental book has come through digital channels. We continue to expand our physical footprint and added 51 new branches in quarter three, taking our footprint to 272 as of December ’22, and we have a target of 325 branches by March 23 of this year.
Our retail and SME segment mix is at 66%, which is ahead of the guidance provided for FY ’24 in quarter three of FY ’21 when we had given this guidance. As a result of this continued improvement in segment mix, we have achieved the highest ever quarterly NIM of 7%, which is 77 basis points higher than previous year and 41 basis points ahead of previous quarter, and this has led to our NII growing by 50% year-on-year and 20% quarter-on-quarter.
Quarter three was also a strong quarter in terms of profit delivery, with a profit before tax at an all-time high of INR540 crores, registering growth of 40% growth year-on-year and 11% quarter-on-quarter. The year till date profit-after-tax grew by 36% year-on-year. The ROE for the quarter was 16.2%, which expanded by 351 basis points year-on-year at 153 basis points quarter-on-quarter.
On page 18, we have shared our overall disbursements for the quarter. We disbursed INR13,099 crores in quarter three, which is by far the highest for a quarter, and we disbursed twice of what we did in quarter three of last year. While 73% of disbursement was to the retail and SME segment, all product verticals contributed to this momentum. Let me share further color on the disbursements.
We disbursed INR4,649 crores in the personal and consumer loan segment. This was up 4.7 times compared to last year, taking the segment book to INR12,812 crores. Here we focus largely on salaried professionals in the emerging income segment. 79% of this segment comprises of personal loans, which is nearly 56% have been sourced digitally. The balance 21% comprised of consumer loans which we financed various end uses such as lifestyle, Healthcare and Education. Nearly 36% growth in our digital portfolio was driven by personal loans cross sell compared to 32% last year. Last quarter, we did 36% of cross sell compared to 32% in quarter two.
Both unsecured and secured business flows vertical recorded a very strong growth as well. In unsecured business loan segment, we registered a loan book growth of 73% year-on-year taking the segment loan book to INR7,254 crores. In the secured business loan segment, which majorly comprises of loan against property and working capital solutions to self-employed and MSMEs, we disbursed a total of INR3,894 crores, an increase of 29% year-on-year. As a result, the segment book stood at INR29,186 crores in quarter three, clocking at 30% growth year-on-year.
I had mentioned in the last quarter earning calls that the next leg of growth in business loans vertical is going to be driven by a unique and differentiated unified platform we are building for MSME customers, to enable digital journeys for our products as well as value-added services for MSMEs to transact seamlessly. Vishakha covered it in detail, and we are looking at the quarter four launch for the platform.
Now, providing some details on asset quality on page 24. We have seen consistent improvement over last year with Stage 2 plus Stage 3 book coming down from 11.4% in quarter three of last year to 6.49% in quarter three of this financial year. This have been driven by a strong pullback in stage 2 book of INR1,279 crores.
Moving to superior collection and collection efficiency across product segments and better resolution, we have reduced our Stage 2 book. Gross Stage 3 book have reduced to 3.1% compared to 3.9% in quarter three of last year. We continue to maintain our Stage 3 provision cover at nearly 50%. Our overall collection efficiency is at 99.6% consistently better than pre-COVID levels, also 99.8% of the restructured book is already in bank as on 31st December ’22.
Further collection efficiency on the restructured pool is healthier than the last quarter. As part of the regular process, we reviewed our ECL policy due to which there is a one-time higher ECL provisioning during the quarter and majority of the ECL cost increase for the quarter has come from Stage 1 provisioning.
Now to conclude and reiterate the quarter three performance, not only did we have a strong quarter in terms of growth, but with progressive increase in retail and SME portfolio mix, we have tracked well ahead of our FY ’24 guidance on all parameters. We expect this strong growth momentum to continue for the rest of this financial year.
With this, now I hand it over to Pankaj for Housing update.
Pankaj Gadgil — Managing Director and Chief Executive Officer
Thank you, Rakesh, and good evening, everyone. I will cover the performance of ABHFL. In Q3, we experienced continued momentum in disbursals and book growth. Robust financial performance and focus on portfolio quality resulted in consistent improvement across all return metrices. Some of the key highlights are disbursements of INR1,387 crores in Q3. Which is our highest disbursement in the last 16 quarters, an increase of 12% q-o-q and 25% Y-o-Y.
Loan book as of Q3 is INR12,874 crores, an increase of 3% sequentially and 11% Y-o-Y. We have now witnessed growth for the last two consecutive quarters. This is encouraging especially considering muted growth in the period FY ’20 to FY ’22. More importantly, the quality of origination continues to be very healthy. Later in the conversation, I will share with you details on the parameters for quality of origination.
NIM has increased to 5.35%, 22 bps sequentially, and 106 bps growth Y-o-Y. Profit before tax for Q3 is INR78 crores, an increase of 4% sequentially and 16% Y-o-Y. Portfolio has improved but the gross Stage 3 loans have reduced to 3.5% at the end of December ’22 from 3.60% in September ’22. Stage 2 plus Stage 3 loans have reduced by 60 bps Q-o-Q and 158 bps Y-o-Y. You can see that they are improving on every front, whether it is book growth, asset quality, or core profitability.
Now let me take you through each one of these pillars in more detail. First pillar — Growth. The leveraging depth and width of our distribution network and enhancing digitalization throughout the customer lifecycle. As I had mentioned in the previous quarter, we have launched a digital index, that helped us to measure our digital penetration to provide a seamless onboarding experience to customers. I’m happy to inform you that the digital index has improved significantly from 19% in April ’22 to 37% in December ’22. We are very confident at a 50% level by March ’23.
We recorded accelerated growth in disbursements across both value and growth segment for the quarter. You can refer to page 31 of the investor presentation for the detailed segmental contribution. We continue to focus on granularity with average portfolio ticket size of INR23 lakhs. We’ve opened seven branches in Q3 and all these branches have been opened in Tier 2 and Tier 3 cities. Now we have 127 branches across 20 states and UTs with a truly pan-India presence and a well-diversified portfolio. The customer base is about 55,000 and has grown by 5% Q-o-Q and 35% Y-o-Y. We continue to build capacity and enhanced productivity through investment in talent, technology and analytics. The cost-to-income ratio is 41% as of Q3 FY ’23.
Pillar 2 — portfolio quality. The moratorium on all the COVID researcher cases have ended. All the numbers which you are seeing on Page 33 of the Investor presentation are including the performance of researcher cases, and 100% of the cases are now presented for collections. We have incorporated the RBI circular dated 12 November 2021 on NPA recognition from September ’22 onwards and our gross Stage 3 has reduced from 3.6% in September to 3.5%. We are maintaining stage 3 PCR of 33% and additionally carrying a management overlay of INR56 crores. With robust debt service framework and free delinquency management, the collection efficiency is consistently at 99% plus.
We continue to emphasize on quality of originations. The salaried and self-employed professional segment now contributes 55% of disbursal in Q3. 94% plus disbursement in Q3 are towards customers with 700 plus CIBIL, all due to credit. You can see the detail breakup of the same on page 32 of the investor presentation.
Now I’ll move to the third pillar, which is robust financial performance and liquidity management. We’re ALM positive across all the buckets and 22% positive on a frontline basis. You can refer to page 34 of the presentation for more details. We are rated AAA by ICRA and India Ratings and continue to focus on diversified long-term borrowings.
The contribution of NHB borrowings has increased to 17% in Q3 from 8% in Q3 FY ’22. We have a 25% liability book at a fixed rate which helps us to mitigate the cost and increasing rate cycles. We’re confident of maintaining comprehensive borrowing mix considering our growth trajectory and improving asset quality.
As you can see on page 35 of the presentation, we have been able to sustain NIM at 5.35%. Going forward, however, I think our NIM will be range-bound between 4.7% to 4.9% considering the lagged impact in borrowing cost and competitive intensity. The PPOP is highest ever at INR104 crores in Q3 FY ’23 with a growth of 8% Q-o-Q and 27% Y-o-Y. The PAT for Q3 FY ’23 is INR61 crores, an increase of 3% Q-o-Q and 15% Y-o-Y. The RoA is 1.9% for the quarter and RoE is at 13.7%.
To summarize, we continue to invest in long-term growth while maintaining robust profitability and a quality portfolio.
With that, I’ll now hand over to Bala, MD and CEO of our Asset Management Company.
A. Balasubramanian — Managing Director & Chief Executive Officer
Thank you, Pankaj. As I presented in the analyst call of the AMC a period back, I’ll just give a quick rundown on the performance of AMC for the quarter ending December. Overall quarterly average assets in the management for the quarter ending December 22 stood at INR2.92 lakh crores. Our Mutual fund, quarterly average AUM was about INR2,87,000 crore, with a market share about 7.9% excluding ETF.
Our equity mutual fund AUM for December ’22 were about INR1,00,027 crores with mix of about 42.6% lower asset mix. There witnessed an increase our monthly SIP book from INR892 crores in December ’21 to INR942 crore as of December ’22 from around 32.6 lakh live SIP accounts. Around 2.3 lakh new SIP was registered in December ’22 quarter.
Customer acquisition remains an internal part of our strategy, we added close to about 5 lakh new folios in Q3 of FY ’23. With this, the overall folio stood about 8.1 million. Coming to alternate business which has been one the focus area for us, the alternate business from overall growth point of view as well from profitable point of view. Our passive product offering has gone four times to INR21,619 crores as of December ’22.
On the PMS and AIF front, we have raised commitment of INR350 crore in India Equity Service Oriented Fund in Q3 FY ’23 and have both products in pipeline under the AIF product offering. On the offshore front, we have been granted approval by International Financial Services Centre which is GIFT city to access registered fund management entity for non-retail at the GIFT city Ahmedabad, and prospectus for ESG engagement fund has also been filed with GIFT city.
On the real estate front, our collaboration with BentallGreenOak have already started making some progress. Maybe we are starting the road show in the overseas market, and soon we will see some outcome on this. On the digital front, we continue to enhance our decision and build volume, an increase in the overall transaction through digital platform. In fact, we have onboarded 70% [Phonetic] new customers digitally, 80% overall transactions are digitally done today and the 18% of the customers are onboarded and serviced by the digital platform.
Moving on to financial numbers, as Vijay mentioned in Q3, revenue from operations is at INR714 crores [Phonetic] versus INR11 crores [Phonetic] in Q2 FY ’23. Operating profit before tax stood at INR173 crores, it was INR173 crores at Q2 of last year. And for the nine months ending December ’22 revenue from operation was at INR930 crores as compared INR916 crores for nine months ending December 2021, and operating profit before tax for nine months ending December ’22 is at INR518 crores as compared to INR562 crores for nine months ending December 2021. Our effort to build a scale and size continues to remain a focus area in the competitive AMC we are witnessing today.
With this, I’ll hand it over to Kamlesh Rao, MD and CEO of Aditya Birla Insurance Company.
Kamlesh Rao — Managing Director and Chief Executive Officer
Thank you, Bala, and good evening to all of you. I’ll cover the life insurance business. The consistent journey of ABSLI growth bettering the private industry continued for the nine months ending December 2022 in both the individual as well as the Group Life Insurance business. Individual life insurance grew at 25% against the private industry at 19%, you can see the slide number 49, and this business growth has come out of a combination of both increased productivity as well as the capacity that we invested last year.
New products launched were key to our success with the newly launched power product under the brand name Akshay collecting INR100 crore premium in less than a month. We also launched the industry first immediate income guarantee product under the Nischit brand which did first 5,000 policies in 17 days flat. Omni product success combined with our PASA contribution of 20% were hallmarks of the business done in Q3 of this year.
The individual business has come with a very healthy product mix, as you can see in slide number 51. Traditional business at 77% and the ULIP business at an all-time low of 21%, has augured well for the gross margins of the firm. This combined with the fact that 29% of our business comes from upsell to our existing customers has helped productivity growth in both the proprietary as well as the partnership channel.
The group life insurance for the private industry saw a growth of 16% in Q3 against which ABSLI registered a growth rate of 41%, as you can see in slide number 49. We continue gaining market-share in this business, we continue maintaining our second position in the profitable Group ULIP segment, and within the Group business, we continue our focus on credit line business, which is growing at more than 100% over last year.
Our total premium at INR10,114 crores as seen in slide number 47, has registered a growth rate of 25% over last year, and our two-year CAGR of 24% is evidence of the consistency of our business growth. This has come on the back of new business growth as well as renewal premium growing at 14%, the digital collection composition of our renewal premium is now at 78%, and we see growth across all persistency buckets from 13th month to the 61st month, with 13th month now at 86% and 61st at 54%. We continue maintaining upward bias in our forward guidance for these persistency numbers.
Our AUM under management as seen in slide 53, now stands close to INR68,000 crores with a Y-o-Y growth of 15%, and here again our two-year CAGR of 17% is demonstration of consistency of our growth. 24% of this AUM is in equity and balance 74% in debt. Investment performance seen either from a one year or from a five-year perspective, we’ll see ABSLI having done better than the respective benchmark across all three categories of equity debt or even balance fund.
Our digital adoption across various areas is demonstrated in slide number 54. 98% of new business is now sourced digitally. We continue our guidance of 60% of this sourcing being auto underwritten by year end. 83% of all our services are now available digitally which covers about 55% of our customer transaction, and our customer self-service ratio now stands at 88%.
We continue to manage the net margin story where, as you can see in slide number 55, last year same time, we managed net VNB of about 11.2% and closed for the year at 15% net VNB margin. We have shown a growth of 430 basis points in our net margins as compared to last year, we now have a 15.5% net VNB margin for the first nine months of this year, which gives us the confidence to closing the year at greater than 18% net VNB margin which once again will be ahead of our guidance provided for this year.
Our approach, as seen in slide 48, will continue the growth trajectory of this business ahead of the industry, backed by good productivity as well as capacity. Our forward guidance is that the quality of our book will get better across the 13th and the 61st month persistency from the current levels. Growth will come from a diversified mix of both proprietary as well as partnership channels, and we will continue to be best-in class in our digital infrastructure, cutting across prospecting and onboarding industry at the front-end, underwriting at the middle end, as well as all customer touch points in service as well as claims.
With this, now I hand over to Mayank who will give you details of the Health Insurance business.
Mayank Bathwal — Chief Executive Officer
Thank you, Kamlesh. And I’m now happy to present the performance of our health insurance business. We had another strong quarter in terms of revenue growth enabled by what I’ve shared in the past, a very strong foundation of a differentiated health first module. And as we have said this part of this proposition which is more inclusive than in quarter three relevant, continues to find a lot of acceptance by our consumers and intermediaries both.
We continued our growth leadership this year, and we are pleased to inform that with 59% Y-o-Y growth in the first nine months of this financial year, we are the fastest-growing health insurer in the country, well-ahead of the industry growth at 20% and SAHI growth rate at 26%. The growth was powered by our retail franchise, which grew at 30% Y-o-Y, and this has helped us take our SAHI market share to 10.4%, a 220 basis points increase Y-o-Y.
Overall, we have acquired 6 million net new customers during the nine months, taking our customers to 25 million, a 33% Y-o-Y growth. Our corporate business continues to do very well for us and has grown at a staggering 151% powered by a huge focus on cross-sell and up-sell, and also opening up new categories like corporate OPD. Our corporate business is modeled on right risks designed to capture market opportunity targeting new-age company, and has delivered in less than 100% combined ratios.
We believe we have set-up one of the most profitable corporate businesses in the industry. On the overall profitability front, our combined ratio has come down to 114% for the nine months, a reduction from 136% on the same period last year. The nine-month loss has reduced to INR217 crores from INR283 crores same period.
On the claim Sun we saw continued increase in the retail claim which started early this fiscal, this experience is in-line with the industry experience and is attributed to final treatment of delayed medical intervention due to COVID, and also some impact of long COVID linked diseases and some impact of the wider inflationary pressures. To manage this impact, we’re monitoring this extremely closely and take suitable steps including further review of our [Indecipherable] guidelines, engagement providers and increasing price for most of our flagship products.
We will continue to closely monitor the situation including collaborating with the industry where required. Overall, the high scale will continue to create operating efficiencies as we move ahead. We have been the most — we have the most diverse distribution footprint in the industry, and we’re happy to announce our partnership with two PSU banks, namely UCO Bank and Punjab & Sind Bank last quarter.
We were chosen by these banks as their HI partner over all our [Indecipherable] players demonstrating the superiority of our business model, and this takes our total bank partnerships to 18 and strongly supplements our growth aspirations. Additionally in the distribution mix, being diversified, now with the agency being the single largest channel at 21% in our retail business, and we are continuing to grow our agency franchise with more than 80,000 advisors plus today across 200 plus branches, leveraging the One ABC branch strategy completely.
On the digital front, our digital business has now through a life partners grew 80% Y-o-Y, becoming a sizable 15% of our retail mix. To take our differentiated model first, we continue to launch new range of offerings, yet launched active industry first products mainly for millennials early this quarter, and this is already constituting a very good proportion of our new sales in less than a quarter.
We continue to invest extensively in our tech and digital capabilities with a clear focus on superior customer experience and scale high personalized engagement given our model. At 96%, we have one of the highest claim settlement ratio in the industry, a testament to our focus on the moment of truth for our consumer. Our latest brand campaign on the theme of [Foreign Speech] showcases our business model a nice impact through the lens of the experiences of our actual customers that they have had with our proposition, an industry-first yet again.
To further know our customers and then then help, we are the first SAHI company to integrating into be Ayushman Bharat Digital Health platform, providing the opportunity to our customers for creating their ABHA health ID. We will continue to enhance our digital health and wellness ecosystem and it has now got more than 60 plus partner. We have just in the previous quarter released our premium version of our meeting consumer app, Active Health, to further increase the engagement levels with our consumers.
Looking ahead, we will continue to grow on the franchise aggressively with a clear tailwind that the category have, especially powered by the enablement that the regulator is providing. But we keep a very close eye on the best-in class unit economics. We are now confident of surpassing our guidance of the 40% growth acceleration that we had for the year, and we will continue to work on opening new white spaces for the industry.
Thank you, and I’ll now like to pass it back to Vishakha for a closing comment.
Vishakha Mulye — Chief Executive Officer
Thank you, Mayank. And this concludes our comments on Q3 FY 2023 performance. And now we will be happy to take any questions.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions]. The first question is from the line of Avinash Singh from Emkay Global. Please go ahead.
Avinash Singh — Emkay Global — Analyst
Yeah, hi. Good evening. A couple of questions. The first one on your NBFC business. I mean FY ’23 growth is into a different trajectory, particularly because you are sort of finding new source of growth, particularly in the consumer and SME segment. Now, by the end of FY ’23, all of these new growth engines will be sizable enough. Now, if we look beyond FY ’23, I mean like FY ’24 particularly, what kind of a growth rate considering that took in some of these segments would have matured. I mean a reasonable size. So, what kind of growth trajectory you are going to follow on an overall basis maybe in FY ’24. So that is — and what sort of a credit cost trajectory you see, considering that your business mix has been changing meaningfully towards more like a smaller ticket and consumer loans. So that’s on NBFC. And the second would be on life insurance, but whatever has happened in yesterday’s budget and its impact. So, I mean, what sort of impact do you see on your growth and if at all if I can extrapolate it to say that okay, if you want to maintain certain growth in that high-ticket segment by making maybe your product more competitive by sacrificing margin, so where that’s sort of the yesterday changes you, with the gross and margin trajectory, so that’s my question. Thank you.
Vijay Deshwal — Chief Strategy Officer and Head of Investor Relations
Let me just take the question on the NBFC on the growth. If you look at the last four, five quarters, the growth has been very strong across our segment which is consumer personal loans and the MSME. We are building our capabilities across the retail and MSME. I also mentioned in my opening remarks, as we are building a portal for B2B, so that we can really reach out to our micro SMEs and all, so that will be another lever of growth which we are looking at in the next 12 to 18 months, that should play out. We have built our digital assets over the last two three years, and that’s been playing out quite well. We see there is opportunity across these segments, especially the personal consumer and MSME segment, there are opportunities for a player like us to grow and consolidate. Given the track record, given the opportunity, which will be available in the market, we will continue to grow. What will be that range will be, I think, we will try and calibrate that, but yeah, we see a good growth momentum going forward as well.
Rakesh Singh — Managing Director and Chief Executive Officer
As your question, on the credit cost, your second question on the credit cost, yes, as we go more into the retail and the MSME, the credit cost will go up in-line with the margins. And if you see our margins have opened up by 77 basis point year-on-year and 42 basis points, this is on account of the product mix change, so that will have a slightly higher credit cost. But the way we look at it is the risk adjusted return. So, if the margins are higher, the credit cost it should be able to absorb, but once I think the quarter three we did the ECL revision, we think in the near term, our credit costs should be in the range of 1.5, 1.6 level.
Kamlesh Rao — Managing Director and Chief Executive Officer
On your question on life insurance, you must refer to the fact that something happened that this last year, where a similar thing happened on the ULIP for greater that INR2.5 lakhs, and I think the industry and both our [Indecipherable] modulated our product suite to make sure that nothing of that is factored, the growth during this quarter front, but I think that has now come in the area of traditional products, I think the ticket size right now stated is about INR5 lakh. We do about 15% 16% of our business in this area. But you have to remember that last part of this proposition is on account of the fact that you will have the offering which generally what you will get for the next 30 years, 40 years and monitoring fees are guaranteed for us. So large percentage of them buy for the fact that we know that they can do for 30, 40 years, obviously there will be some people who would be interested in the tax benefit also. We will get an impact of this over a period of time, but like I said, the way we manage the portfolio during this year to take care of no growth, nothing impacted us with the ULIP change, the thinking process right now is we continue maintaining our aspiration on the growth levels that we want to have, irrespective of the change that we got in the budget system.
Avinash Singh — Emkay Global — Analyst
Let me just sort of a follow-up on this. I mean in ULIP, I mean, the good part was that, okay, the tax applicable on the accrual was capital gain, so I mean, particularly it’s a maturity amount, 10% in case of equity and the benefit of indexes in case of debt-related funds. So, net-net the tax impact was lower, that’s for number one customer side, and for insurance company also, ULIPs share in profit. I mean, the VNB would be much lower, so even if there is some kind of slowdown. Now here this goes kind of very, very extreme, again I’m repeating that if it goes to extreme, that all the deals will be clubbed income from other sources and marginal tax-rate to be applied. I mean that leaves you in a situation where I mean, it’s very difficult to keep your product competitive because the tax is marginal tax-rate, so that is going to, and then the contribution of profit from these guaranteed product particularly because these are profitable product in short as well, so in VNB just not you, I mean for the industry, it is very high. So SME, I mean I would say a marginally different vis-a-vis the ULIP scenario, and that is why the question was.
Operator
Management members, we’re not able to hear you.
Kamlesh Rao — Managing Director and Chief Executive Officer
You can hear now? So, your question is absolutely fair like, I said, because the difference in the margin between the ULIP and the products that we are talking about on guarantee is different. But like I said, the cap is on greater than INR5 lakhs. There is a sizable business that happens actually below INR5 lakhs too. And therefore, the industry and us will specifically ensure if you have a larger concentration of that. And see, finally, you have to make do with the loss of opportunity is about 10%, 12% of our business. Also remember that, during the same point of time, protection over the last 12 months to 18 months’ time has been on a low call or has been lesser for the industry, per se. A part of it, if you make up through higher protection, this is what the industry will look like, and we are looking at specifically it is a fact that we’ve already launched two new products of protection in the month of January, and the margins of that are significantly higher. So, I think if you can — if you put a strategy in place to be able to recover a part of that through selling more in that segment and bring your product mix to protection, there is a possible product mix structure, then margins will get protected for sure.
Avinash Singh — Emkay Global — Analyst
Okay. Okay. And is industry looking to sort of communicate with the Ministry or Department, I mean, to give you some kind of a indexation or something to put a sort of parity with other products because index is [Indecipherable]
Kamlesh Rao — Managing Director and Chief Executive Officer
So our house view or the view of the council covers all the life insurance companies, of course, making a representation, because if it gets taxable and technically it should have indexation. The spirit of the thing is HNI should not have the benefit of 10(10D), the INR5 lakh price or something more than that is appropriate. So, you will keep in mind that these products also offer 10 times of your premium at cover. There is also a mortality element that is built in, which is not available in any other product. I’d say, based on that, of course, we will make a representation for sure, but that time will tell you what’s the answer of that.
Avinash Singh — Emkay Global — Analyst
Okay Thank you. Thank you.
Operator
Thank you. [Operator Instructions]. The next question is from the line of Nidhesh Jain from Investec. Please go ahead.
Nidhesh Jain — Investec — Analyst
Thanks for the opportunity and congratulations for a good performance for the quarter. In the lending business, can you quantify the ECN, onetime ECN impact for the quarter?
Pankaj Gadgil — Managing Director and Chief Executive Officer
It’s 42 basis points on Stage 1, Nidhesh.
Nidhesh Jain — Investec — Analyst
Okay. Sure. So current Stage 1 provisioning has increased to 42 basis point or it is a change in — 42 basis point is additional provisioning that we did in this quarter?
Pankaj Gadgil — Managing Director and Chief Executive Officer
If compared to quarter 2, it’s 22 basis points and Stage 1 is higher for this segment.
Nidhesh Jain — Investec — Analyst
Okay. Secondly, in the personal and consumer loans, how much of business are the — what percentage of our disbursement are AUM is coming from Paytm, partnership with Paytm?
Pankaj Gadgil — Managing Director and Chief Executive Officer
We have multiple partnerships and there is no one large partnership which we have. So, there is nothing which is a concentration risk, which we are talking about here. So, we have multiple partners. And we also have direct business which we have on these digital assets. So, it’s — and post the DSG guidelines, if you see, I think all the businesses are now, which is as good as our own business which we used to do. So, everything has gone back to the way we used to do personal and consumer loans. There is no difference. So, yes, these partners can be digital partners.
Nidhesh Jain — Investec — Analyst
Sure. And lastly, in this segment, how the collection infrastructure will stack up, because this ticket size of 52,000 unsecured is a difficult segment historically? So what gives us confidence on the sustainability of credit costs and how are the collection infrastructure in this spectrum?
Pankaj Gadgil — Managing Director and Chief Executive Officer
We have a collection infrastructure across our geographies where we are present. And before we launch a new branch, we have a collection infrastructure. If you look at majority of the collections we’ve done by tele-calling via our automated dialing and all, and wherever it goes to the field collection, we have a field collection team, our in-house collections team, in-house tele-calling team. So, we have quite an elaborate collections infrastructure, which we have built over the last 3 years, 4 years, which will take care of the growth in this segment, and we continue to invest in the collections infrastructure.
Nidhesh Jain — Investec — Analyst
Sure, thank you sir. Thank you. That’s it from my side.
Operator
Thank you. [Operator Instructions]. Next question is from the line of Sameer Dalal from Natverlal and Sons. Please go ahead.
Sameer Dalal — Natverlal & Sons — Analyst
Yeah, I missed this one number, you said the business that the government has put a cap of INR5 lakhs, what percentage of the overall business is that? And can you also give us some indication of what was that business as a percentage of new business that was going on in the — at the current times?
Kamlesh Rao — Managing Director and Chief Executive Officer
So a better number is, when you conclude the year of last year like I said, if you take the number of INR5 lakh plus premium, it would roughly be in the range of 17% to 18% of the new business segment. I mean this year not having ended, it would not be appropriate percentage because numbers change in January, February and March. But like I said, like-for-like for the full financial year of last year, it would be about 17%, 18%.
Sameer Dalal — Natverlal & Sons — Analyst
And of the overall insurance business of yours, how much is that as a percentage as of today?
Kamlesh Rao — Managing Director and Chief Executive Officer
That’s what I said. If you take the overall individual…
Sameer Dalal — Natverlal & Sons — Analyst
No, I’m asking two questions. One is the overall percentage, which you’re saying that is 17%, 18%. I’m saying, last year what was the percentage of sales of the new sales that happened in FY ’21, ’22?
Kamlesh Rao — Managing Director and Chief Executive Officer
Of the new business premium that we did in ’21, ’22, on the individual life insurance side, that’s greater than INR5 lakh is 17% 18%. Obviously, if the — if I take the entire business, then the number will be insignificantly small. But on pure individual life insurance business, new business that you do is called a new business premium, adjusted APE business that is already published for ’21-’22, if you take that and INR5 lakhs plus if we take as the numerator, that number will be 17% to 18%.
Sameer Dalal — Natverlal & Sons — Analyst
Okay, okay, thanks.
Operator
Thank you. [Operator Instructions]. Thank you. I would now like to hand the conference over to Ms. Vishakha Mulye for closing comments.
Vishakha Mulye — Chief Executive Officer
So, thank you all for joining us today evening. Look forward to keep in touch. Thank you.
Operator
[Operator Closing Remarks]