DCB Bank Limited (DCBBANK) Q3 FY23 Earnings Concall Transcript

DCB Bank Limited (NSE:DCBBANK) Q3 FY23 Earnings Concall dated Jan. 28, 2023.

Corporate Participants:

Murali Natrajan — Chief Executive Officer

Praveen Kutty — Head Retail and SME Banking

Satish Gundewar — Chief Financial Officer

Analysts:

Darpin Shah — Haitong International — Analyst

Bajrang Bafna — Sunidhi Securities — Analyst

Anuj Sharma — M3 Investments — Analyst

Renish Bhuva — ICICI Securities — Analyst

Prakhar Agarwal — Elara Capital — Analyst

Saikiran Pulavarthi — Pulavarthi Advisors — Analyst

Suraj Das — Batlivala & Karani Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to DCB Bank Limited Q3 FY ’23 Earnings Conference Call. Joining us on the call today are Mr. Murali Natrajan, MD and CEO, DCB Bank Limited; and Mr. Bharat Sampat, CFO, DCB Bank Limited. [Operator Instructions]

I now hand the conference over to Mr. Murali Natrajan. Thank you, and over to you, sir.

Murali Natrajan — Chief Executive Officer

Good evening, all of you. Thank you for joining the call. Let me make a correction immediately. Bharat Sampat, CFO, retired in June 2022, and Satish Gundewar is our Chief Financial Officer, who is present in this meeting. We also have R. Venkatesh, HR, technology and Operations; we have Praveen Kutty, who heads our retail banking; we have Sridhar Seshadri, who’s the Chief Risk Officer; and other members of the management committee.

So I would make a few opening observations about the results of Q3 2022-’23, and then we’ll open up for questions. We are very close to INR50,000 crore balance sheet. Our intention is down the line in four to five years, reach INR100,000 crores kind of balance sheet level. The kind of investments that we are making in frontline, we are confident that barring any episodic issues that may happen in the environment, we should be able to aim for double the balance sheet between three to four years’ time.

Deposit growth has been 23%. CASA deposits crossed INR10,000 crores. and year-on-year growth has been very good. Growth advances at about INR33,000 crores, again, a growth of more than 20%. In line with our plan, our operating cost has increased, and that is because we are investing in frontline staff. In comparison to last year, you can see that we have grown our headcount and most of the headcounts are growing in businesses like home loans, mortgages, SME, MSME, agri inclusive banking and deposit business. So that is where we are investing our front line.

In terms of NPAs, once again, we had a very decent quarter in terms of recoveries and upgrades. The recoveries and upgrades are almost equal to the slippages. And if I look at our slippages for mortgage and commercial vehicle and SME put together, we are pretty close to pre-COVID levels and give it another quarter or two, we should be back to pre-COVID levels.

We are finding our collection efficiency to be strong — continuously strong. If you look at page, I hope you received the investor presentation, and you have had a chance to look at it. If you look at Page 28, the three big categories, which is business loans, home loans and CV, the nondelinquent portfolio as well as delinquent and restructured portfolio, the collection efficiency is pretty strong, and we expect it to be improving over time. Very little of unbilled portfolio is left for us, and even the unbilled portfolio when it does come into billing, within a month or so, we are able to stabilize those portfolios, and we are finding that our collection — investments in the collection frontline has been very useful for us.

In terms of gross NPA and net NPA, both have come down. Provision coverage is improving, both with technical write-off and without technical write-offs. We continue to be very efficient in use of capital. Our products, most of the products are below 100 in terms of use of capital. On an average, we are using about 54%, 55% risk-weighted assets.

We are moving steadily towards our goal of achieving 14% and 1%. We’re finding a lot of disbursal volume building up for us, because of the investment that we are doing in frontline. The only month that was a little weak this quarter was October because of Diwali, but November-December has been strong, and we expect the fourth quarter to be good as well.

So those are some of the highlights I wanted to point out to you. I’m happy to take questions.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Darpin Shah from Haitong. Please go-ahead.

Darpin Shah — Haitong International — Analyst

Hi, thanks. Thanks a lot for the opportunity. A couple of questions from my end. Last quarter, you had mentioned that we have not seen — or the frontline team has not seen any material challenges or pushbacks from the borrowers, even after the passing on of rates. Any further comment on this, how we have seen the quarter until December and incrementally in January as well?

Murali Natrajan — Chief Executive Officer

So far, we have not seen much of a challenge that was raised [Phonetic] — getting passed on to the customer. We haven’t also seen [Indecipherable] of a challenge in terms of customers having pressure to repayment, because in most of the cases, their EMI has remained same. Some challenge in the customers who are coming out of the unbilled to billed, and then if you have increased their rate. So they have seen some increase in EMI. So we are working on that. But other than that, we haven’t seen much of a challenge on rate increases.

Darpin Shah — Haitong International — Analyst

Okay. And sir, the second question was, again, slippages still remain higher? I understand the recoveries are there. But when can we see a normalized kind of slippages on overall book?

Murali Natrajan — Chief Executive Officer

The normalized slippage has to be seen outside the gold book. If you include the gold book, it will look like 4%, 5% because gold is a very big item and I’ve explained even in my previous calls, what happens in the gold loan portfolio. It’s a small customer. There’s a lot of indiscipline. The November 12 circular still impacts part of the portfolio. As far as mortgages and CV and SME-MSME is concerned, I believe the monthly slippages that we are seeing, are steadily moving towards the pre-COVID level. So give it another one or two quarters, I think we should be there. But you should exclude gold out of this, because gold is something that we really don’t lose sleep over slippages.

Darpin Shah — Haitong International — Analyst

But in terms of gold slippages, will it continue for the next couple of quarters, or how could we see it?

Murali Natrajan — Chief Executive Officer

I think it will probably continue for even — maybe even three or four quarters, because much of the portfolio, we have been able to educate and some of the customers have repaid and have taken a term loan, as opposed to continuing on an OD product. So all that is helping. I really don’t think small customers are too much caring about this November 12 circular, so they slip into NPAs because of three days, five days, 10 days kind of delays. So steadily, we are encouraging them to move to installment loan product. So whenever they come up for renewal and we prepay the entire loan or something, we are asking them to go to installment loan. So that is also in process.

Darpin Shah — Haitong International — Analyst

Okay. And sir, one just last data keeping question, if we can have the breakup of provisions for the quarter?

Murali Natrajan — Chief Executive Officer

Yes. So NPA provision is about INR39 crores. Floating provision is INR4 crores. Standard asset provisioning about INR6 crores and restructuring provision, there is a release of INR9 crores, that adds up to about INR41 crores of provision.

Darpin Shah — Haitong International — Analyst

Thanks a lot. Thank you.

Operator

We’ll move on to the next question, that is from the line of Bajrang Bafna from Sunidhi Securities. Sorry to interrupt Mr. Bafna sir, we are not able to hear you clearly.

Bajrang Bafna — Sunidhi Securities — Analyst

Is it audible now?

Murali Natrajan — Chief Executive Officer

Yes.

Bajrang Bafna — Sunidhi Securities — Analyst

Yes. Congratulations for a good set of numbers, Murali sir and the team. Sir, my first question pertains to the operating leverage side. We are still not seeing the operating leverage to kick in because you have done a good amount of investment in the workforce. But on the NIM side, the things are playing out, but because of the cost, is still not playing out the cost-to-income ratio is still hovering around 64%. So when do we expect this number to come down to, let’s say, below 60% or maybe your guided level of 55%? So that is question number one.

Murali Natrajan — Chief Executive Officer

One of the major challenge that has been there for us this year, the full year, has been a substantial drop in the rate at which we were earning on PSLC, that is PSL Certificates. So in comparison to last year, there has been a substantial drop in the rate because of the market conditions. Now what you see in the previous year result, is a higher number of PSLC, whereas you see a much smaller number in PSLC, Therefore, you don’t necessarily see the overall income and then subsequently, the operating profit growth.

On the other side, we are doing quite well in terms of the interest income. And if you see the disbursal, it is playing out, the frontline investments are definitely yielding better results on disbursals, processing fee and cross-sell in terms of insurance products to our CASA customers, all that is playing out. So I expect that we should be able to deliver on our guidance. As of now, it doesn’t seem like a problem. But sometimes it can be a quarter here or there. But steadily, we expect our cost to income ratio to come down to 55%, like the way we have mentioned in our investor presentation, and that will help us to achieve our higher ROA that is more than 1% ROA and closer to 14% ROE.

Bajrang Bafna — Sunidhi Securities — Analyst

Okay. Okay. Got it. So hopefully, next year, this should be visible? The issue that PSLC has created?

Murali Natrajan — Chief Executive Officer

From all what we can see, we are seeing a clear path to that. We have done this before. We have done this very successfully between 2015 and ’18, and we are very confident about the same. Sometimes, if you say three quarters, maybe 3.5 or four quarters like that, but the direction seems to be quite all right.

Bajrang Bafna — Sunidhi Securities — Analyst

Okay. And sir, my second question pertains to the CASA deposits. The CAA is constantly for last two quarters, is coming down in overall CASA. Any particular reason for this? We were hovering at around 30%, and we have come down meaningfully in the last two quarters. Any specific reason for this?

Murali Natrajan — Chief Executive Officer

Our focus is purely on CAA [Phonetic]. Current account is — for example, the product that we have — for example, we have a product called DBSA, which is very good for current account. But customers, these days in current account, they have multiple options. So the team is fully concentrating on savings account. Now savings account also, because of the increase in term deposit rates, savings account interest rates and term deposit rates are almost looking similar. So customer has one more option because in the last three, four months, term deposit rates across the market has gone up.

So quarter-on-quarter, there will be some changes here and there. Directionally, where we are going is increase the CASA, increased our savings growth and have more retail deposits. That’s where directionally we are going.

Bajrang Bafna — Sunidhi Securities — Analyst

But sir, considering the employee base, which is now closer to almost 10,000 employees for us on a base of, let’s say, 420 branches now, 418 to be precise. So this should catapult into a good amount of growth in savings also, because in percentage terms, we are still offering far better rates as compared to competition. We are maybe one or two or maybe three banks which are offering slightly higher on the savings account as compared to competition. So when can we see this — the additional workforce that we have deployed over the last two years, could result into more mobilization on the deposit side. So that could…

Murali Natrajan — Chief Executive Officer

Our deposits have grown by 23%. Savings I think year-on-year has grown by almost 40%. To me, we are already seeing the impact of the investments that is happening both on the pricing that we are offering and the front line. Quarter-on-quarter, there are multiple things happen which are not possibly in our control, for example, term deposit rates were going haywire in the month of October and November. In December, hopefully, it was starting to stabilize and January is looking fairly all right at the moment.

So sometimes it’s not easy to explain quarter-on-quarter. You look at slightly more longish period, and we are moving directionally — our intention is to have retail deposits. If customers are finding that term deposit is better volume than savings while both are being offered, now that is the choice that they make in these periods. I do believe that many banks, some CASA deterioration has happened in this quarter, if I’m not mistaken.

Bajrang Bafna — Sunidhi Securities — Analyst

Yes, yes, yes. Definitely, it is there, sir. So just my last question, sir, on the restructured portfolio that is — we are seeing constantly coming down quarter-on-quarter. So any ballpark purposes on your side that, how this portfolio is performing or can we see some more slippages from this portfolio, if you could just highlight that?

Murali Natrajan — Chief Executive Officer

We have shown you the collection efficiency, including delinquent and restructured portfolio in Page #28. That will give you a decent indication, that despite a restructured portfolio and coming into billing, we are still able to have very close to a nondelinquent kind of customer collection, right? Slippages will be there and there are customers who are closing their loan straight from moratorium. There are customers who are closing their account in restructured book, because they have got the money now after COVID, so they are able to close that loan. So I don’t have much concern in restructured portfolio. We have seen this now for more than a year, this book we have seen for more than a year, and you’ll see that slippages and recovery and upgrades are all working quite well. And slippages are also going to come down, like I said, it’s already coming down. So I don’t have any major concern at this stage on our restructured portfolio.

Bajrang Bafna — Sunidhi Securities — Analyst

Great, thank you very much for elaborating, and certainly wish you all the best for your future performance.

Murali Natrajan — Chief Executive Officer

Thank you.

Operator

[Operator Instructions] The next question is from the line of Anuj from M3 Investments. Please go ahead.

Anuj Sharma — M3 Investments — Analyst

Yes. Congratulations for a good set of numbers. My question is regarding…

Murali Natrajan — Chief Executive Officer

Who is speaking?

Anuj Sharma — M3 Investments — Analyst

This is Anuj Sharma.

Murali Natrajan — Chief Executive Officer

Yeah, Anuj Sharma. Okay. Go ahead.

Anuj Sharma — M3 Investments — Analyst

Yes. Sir, I think if I look at other income for the past four years, that doesn’t seem to have grown in line either in terms of growth or a percentage of assets. So two points out there. We should have some buoyancy, because of loan origination traction and some new revenues, which you would have thought about. So what has been the challenge out there, and how does it seem to flow in the next few years, actually, not immediately, but what’s the focus on other income?

Murali Natrajan — Chief Executive Officer

So don’t look at four years, look at from last year onwards. The reason I’m saying is that 2020-’21 and ’21-’22, our loan growth has been CAGR about 7%. This year, we are going at 21%-odd. And when I look at the fee income different lines, obviously, the processing fee is doing very well. PSLC income, like I explained as compared to last year, unfortunately, it has — there has been a crash in the rate at which we were selling those PSLCs. But we are not giving up hope, because coming year, we do 60%, 65% of our loans at PSL. So there will always be demand for this — in the market over time. So this year has not been very good.

We are doing quite well on insurance and investment. If I look at last year versus this year, we are at least seeing a 15% to 17% improvement in that. We are also seeing definite possibilities of improving our other fees and commissions, which has got various items. What has been a challenge is one PSLC next, of course, we didn’t have compared to last year, interest rate environment has not been favorable for treasury income. There has been much less income this year on IPOs. So many of those items which existed last year was not there, but we are making it up with other fee and still almost bridging the gap.

So I do believe that given the kind of number of customers that we are originating both in CASA and loan book, we are confident of meeting the fee target as well.

Anuj Sharma — M3 Investments — Analyst

All right. And if I may, just what is the contribution of PSLC in total income?

Murali Natrajan — Chief Executive Officer

Last year, we have declared it in our balance sheet. I think it is about INR80 crores, right? Share [Phonetic] is far less in that. That was a very good.

Anuj Sharma — M3 Investments — Analyst

This is [Indecipherable].

Murali Natrajan — Chief Executive Officer

So that’s been one of the unfortunate things. This was not expected, but we are making it up in terms of some of the other fees, not able to bridge all the gap, but we are making it up from other fees.

Anuj Sharma — M3 Investments — Analyst

Fine. And if I may, is 1% a good target for other income to assets, as a ratio?

Murali Natrajan — Chief Executive Officer

Yes, about 80 basis points. So we need to bridge about 20 to 25 basis points. Our target is 105, 110 basis points. So fourth quarter usually is very good in fee income. I mean we are keeping our fingers crossed, trajectory seems to be good. Let’s see how it…

Anuj Sharma — M3 Investments — Analyst

Okay. And you did mention on the productivity improvement in the [Indecipherable] start and you did allude to something, but what is the target right now and what is the benchmark we are taking for…

Murali Natrajan — Chief Executive Officer

Every product has a different, different targets. Tractors have a different target for the frontline. SME, MSME has a different target. Gold loan has a different target. Mortgages have different. Within mortgage, home loan has a different target, LAP has a different tracker. Within LAP, two different products have two different targets. So there are very finer scorecards in each of these areas. Similarly, for branch staff in terms of savings accounts and number of savings account, balance, term deposits, there are targets. So we are monitoring that at a very minute employee level and seeing how the productivity is panning out for us. So it’s a lot of everyday daily grind to get that done.

Anuj Sharma — M3 Investments — Analyst

All right. Thank you so much and wish you all the best.

Murali Natrajan — Chief Executive Officer

Thanks.

Operator

The next question is from the line of Renish from ICICI. Please go ahead.

Renish Bhuva — ICICI Securities — Analyst

Hi sir, and congratulations on a good set of numbers. Sir, two questions. So one is on the sort of strategy. So when we look at the nine month FY ’23 disbursement, the mortgage disbursement proposed at least only 30% versus the outstanding loan book of almost 42%, which is, of course, has been offsetted by the HME disbursement, which is at 20%. So strategically, I mean, what is maybe a two to three-year strategy? Are we focusing more on SME, which is cannibalizing the mortgage growth?

Murali Natrajan — Chief Executive Officer

No, no, no. Mortgage will be our — what is called a major product in times to come. Even the next three to five years, what we see as mortgage would be probably — right now, let’s say, it is at 50%, probably it will go to 55%-odd, right? So we are focusing on small ticket mortgages, average ticket size of INR25 lakhs, INR30 lakhs. And SME has got two components, one is the usual CCOD component, another is a TReDS component. And nothing is cannibalizing anything. There are separate sales teams and separate kind of channel.

For example, in SME, MSME, lot of contribution reference comes from branches. Whereas in mortgages, there’s a separate sales team, which has its own origination, plus in the metros referrals from connectors or DSAs. So there is no cannibalization. And we are pretty confident, the amount of frontline investments we are doing, we are monitoring the investments in terms of how many people have completed, six months, what are they contributing six to 12 months, what are they contributing, all that sophistication we are bringing, and we are confident that these volumes will build up. Compared to last year, if you see whatever number of people we have put, our disbursal is pretty strong.

Renish Bhuva — ICICI Securities — Analyst

Yes, yes. Sir, the overall disbursement is surely strong, but I was just looking at the segment-wise disbursement. And I thought let me just clarify this?

Murali Natrajan — Chief Executive Officer

Mortgage will be our key product for at least the long-term player planning that we have done for the next four years. Mortgage is our key product, and we are pretty good at it. We understand the business. The delinquencies have been very much in control. The slippages and recoveries are almost equal, which tells you that how is the quality of portfolio. The quality of portfolio — the portfolio that we sold to Essar, has performed very well for us. So from all aspects, we quite like that business and we understand that business.

Renish Bhuva — ICICI Securities — Analyst

Got it sir. This is very helpful, sir. Sir, second question is on the NIM trajectory. So even in your opening remarks…

Murali Natrajan — Chief Executive Officer

I was hoping that you will not ask me any question on NIM. My team was like, what are you going to answer. I hope they don’t ask me what I wanted to say…

Renish Bhuva — ICICI Securities — Analyst

Sir, that is a trend of this quarter so…

Murali Natrajan — Chief Executive Officer

For everyone. So thankfully, I don’t have to answer, the company would have answered that question already for you.

Renish Bhuva — ICICI Securities — Analyst

So sir, so of course, last nine months has been really good for DCB in terms of the margin trajectory. And considering in your opening remarks, you did highlighted right, we are not facing any challenge or passing on the rate hike. So we just want to sort of clarify that, would you like to revise NIM guidance upwards?

Murali Natrajan — Chief Executive Officer

I’ll tell you what is not being read by the — probably other banks are different, but I can tell you. It all is — what is your portfolio for MCLR and what is your portfolio on EBLR. In MCLR, you pass on the rate — the rate actually that gets transmitted, it goes through a — what you call as a guideline given by RBI in terms of how you can compute it and pass it on to customers, okay, which is audited by RBI. In EBLR, as soon as the rate is changed by RBI, we effect it in the customer and then in the — as per the sanction terms, it gets passed on to the customer. I would say that there is a timing difference, because EBLR, we have passed on how much so far now? 190 basis points we have passed on. But term deposit rates that we have increased recently, in the last couple of months, hasn’t yet played out in the cost of funds.

Now with the cost of funds, I can’t again pass on that EBLR thing, because we have already passed on what the government has — I mean what RBI has changed. To that extent, there is a timing difference, okay? That is one point.

Second point I would like to mention is, there is so many moving parts in the NIM calculation. For example, we are doing quite all right on, say, G-SEC. The mix of products in a particular month makes a lot of difference. If you do lot more home loans, we would probably have a lower yield. If you do a lot more LAP or tractors, maybe our yields will be bit better. So, so many things go into it. So I don’t want to change my guidance at this point in time. But for three, four quarters, if we are doing better than that, then I don’t have to change the guidance, whatever you see, what is the NIM.

Renish Bhuva — ICICI Securities — Analyst

Absolutely correct. Thank you so much sir for this answer. Thank you, sir.

Operator

Thank you. The next question is from the line of Prakhar Agarwal from Elara Capital. Please go ahead.

Prakhar Agarwal — Elara Capital — Analyst

Yeah hi. Thanks for the opportunity. Just three, four questions from my side. First, can you please give me — a data keeping question, can you please give me EBLR-MCLR composition…

Murali Natrajan — Chief Executive Officer

We don’t present that information to — in our this [Phonetic]. We don’t do that. All I can tell you is that a lot of our portfolio is variable. That is why we are able to pass on the increase. And it works other way because as soon as RBI decreases the EBLR, we have to immediately pass it on to customers. So except for tractors, gold loans, what else? Tractors and gold loans and short-term corporate loans and TReDS. Other portfolio is all variable.

Prakhar Agarwal — Elara Capital — Analyst

In the fixed-rate book that you probably have — don’t have a part direct pass-through. When your system rates have gone up by around 25 basis points, how much have you been able to pass through? So when you say that you have been able to…

Murali Natrajan — Chief Executive Officer

In gold loan alone, some amount of rate we have been able to pass through. But we really don’t worry about that too much, because it’s a quick like — within six months, anyway, the repayment comes on gold loans. Some of the interest rates there, like, for example, the MFI, that is where we are lending to NBFC MFI or we have lent to other NBFCs or some corporates, we have been able to pass on the rate in the next cycle. In the sense that if it is a fixed rate loan, three months, they came and repaid the next three months when we are giving them, we have been able to increase the rate.

Prakhar Agarwal — Elara Capital — Analyst

Got it. Just second question is essentially on demand side. So in your mortgage portfolio because of the interest rate hikes that we have seen in the system, has there been an impact of demand or probably you’re not seeing that as you speak?

Murali Natrajan — Chief Executive Officer

Not yet. Not yet. We have not seen the demand. I don’t know, Praveen, you can answer what is the — Praveen, Head of Retail Banking can give us some…

Praveen Kutty — Head Retail and SME Banking

So we are seeing the inquiry is continuing to be high as usual. Plus, the conversion rates are also normal. So we don’t see that the higher rates creating a deficit in the market. So this is true both for LAP and for home loans as well. And you can see that from the incremental disbursals, which the bank has done over quarter two and quarter three, right, on mortgage — on Page number.

Murali Natrajan — Chief Executive Officer

23.

Praveen Kutty — Head Retail and SME Banking

23. So we’re not seeing an impact yet. And during this period, we have seen about 1.9% — 2.4% increase on EBLR coming through.

Prakhar Agarwal — Elara Capital — Analyst

Got it. Just one last question. So in terms of — most of the banks have been submitting IndAS format to RBI on a six month basis. Any indications on your side as to — if at all we were to transition today, is there any impact on earnings or probably we are godly there and not much impact, even if we transition to that accounting again [Phonetic]?

Murali Natrajan — Chief Executive Officer

Satish?

Satish Gundewar — Chief Financial Officer

So we have also been preparing our pro forma financials as per IndAS. And basis that also, we don’t see any significant changes in terms of the provisions and all that. So that is at a little lag, but we have been doing that in the past also. So we don’t find that there’ll be any significant change into the financials on that, especially on provisioning loans [Indecipherable].

Murali Natrajan — Chief Executive Officer

See, much of our portfolio is retail portfolio. Okay. Supposing you have a — I’m just giving you an example, like supposing one has a INR50 crore kind of slippage of corporates. Now to estimate the loss, the net present value and all would be quite a challenge on that. That’s not the kind of challenge we see in any of our portfolios. We know rough and ready, what is the kind of loss given default we are likely to have, because we have enough data. So on that basis, they have been preparing. Of course, all that has to be finetuned, once RBI kind of mandates the bank.

You see Page #30 on performing advances, we have 1.74% provision we are carrying, right? And then you also don’t forget that, when the IndAS come, we may be allowed to — the HTM book also if it is in the money, there will be some benefit there. So there are a lot of moving parts. It’s too early to say. But ballpark, I think we are in a decent position.

Prakhar Agarwal — Elara Capital — Analyst

Just from a fundamental perspective, the thought process of asking this is, when you look at the recent few quarters, the gross slippage has been on a higher side. So while I understand we have a very strong recovery and upgrade, which has led to the numbers that we are seeing. But from a gross slippage perspective, our PD should ideally increase when we look at it from a historical trend perspective? So maybe…

Murali Natrajan — Chief Executive Officer

LGD will be very low. PD may be higher, but LGD will be low.

Prakhar Agarwal — Elara Capital — Analyst

But on a gross cyclical basis, any which ways, your LGD would not have changed, but if your PD changes, on a runaway basis, you probably may have to make higher provisions on IndAS basis.

Murali Natrajan — Chief Executive Officer

You have to get both PD and LGD, in a say, personal loan kind of theme [Phonetic], the PD may be lower, but the LGD may be very high. I’ve done this in my previous job in Standard Chartered, the computation has got both PD and LGD.

Prakhar Agarwal — Elara Capital — Analyst

Got it. And just one more clarification, any hint in terms of the number of years of data that probably be considered by looking at PDs, LGDs? Any broad sense of that or probably 10 years will…

Murali Natrajan — Chief Executive Officer

Those are all — I mean that this is a very detailed slide, and I was explaining to one of the Board members, that if you look at our mortgage portfolio, as an example, which is approximately 50%. Within mortgage portfolio itself, there are at least eight or nine different portfolios, with different products, different characteristics and so on. And may have different PD and different LGD. So it’s a very complicated exercise, and we are still at early stage on that. But prima facie, we don’t see a challenge in our financials.

Prakhar Agarwal — Elara Capital — Analyst

Got it. Thank you so much for this clarification sir. Thank you.

Operator

The next question is from the line of Saikiran Pulavarthi from Pulavarthi Advisors. Please go ahead.

Saikiran Pulavarthi — Pulavarthi Advisors — Analyst

Hi sir. Thank you for the opportunity. Fantastic set of numbers. Just on the cost side, sir, if I look at on absolute basis, the cost prices are still increasing, and it is above — in terms of your guidance of 2.4%. And absolute employee additions are still continuing. Just want to understand that, are we behind in terms of adding further employees going forward and the next year will be more like…

Murali Natrajan — Chief Executive Officer

We want to reach INR100,000 crore balance sheet, why would we stop hiring employees. Our business is all about hiring frontline employees, making them productive, getting business. That’s our model. We are a small ticket retail outfit. So that would continue. But the fact of matter is that, the pace at which we add that, versus the pace at which our income will be growing, would start to — like the income would outpace the growth of expenses. And most likely next year, we would see a much different kind of trajectory on both.

So employee adding, we have to do, and we are doing installment loans. So installment loans means, customers are repaying the loan. As we start a particular year, almost 15%, 20% of my loan book will come back, right, from our installments. Then if I have to grow it at 20%, 22%, then I have had more people for getting that disbursal volume. Third thing which I mentioned in my last call also, if I had headroom in my cost/income ratio, I don’t — I won’t hesitate to add 10,000 more people. That’s an opportunity we see, because we are good at mortgages, we are good at the small ticket SME-MSME. There is an opportunity in the market, it is big. And we want to make sure that we make a substantive balance sheet and size of the bank. Of course, we will pace it such that we deliver the profitability — expected profitability as well on an ongoing basis.

So employee addition will continue. Not at this pace, but will continue.

Saikiran Pulavarthi — Pulavarthi Advisors — Analyst

Got it, sir. So do you believe that in the next two years, you might get to the 2.4% cost [Indecipherable] sir?

Murali Natrajan — Chief Executive Officer

That is the intention. We want to do it sooner. And our — we are very firmly fixed on these targets of cost income — sorry, cost to average assets, ROA, ROE and the doubling of our balance sheet. And at the distance, we are also keeping our view on that INR100,000 crore balance sheet size that we want to do, we are at halfway stage right now.

Saikiran Pulavarthi — Pulavarthi Advisors — Analyst

Got it, sir. Sir, just two couple of data keeping questions. Will you be in a position to disclose what will be your average savings bank deposit rate if you are paying on the current savings bank deposits? And the second question is, out of the standard restructuring, you mentioned that by March, less than INR400 crores will be under moratorium. Will you be in a position to disclose now, as of December, what is that number?

Murali Natrajan — Chief Executive Officer

So we have disclosed to you the March number, right? And that means we’ve given you one month ahead as to what is likely to happen. And we said the same number of some 700 or something — 700 or something we said last — right? So we have hardly got any moratorium left. And most of the moratorium is just home loans and LAP fully secured book. We never gave a moratorium to unsecured portfolio.

Regarding the average price, I wouldn’t like to disclose that. That’s our advantage. So I don’t want to be disclosing that. But we have already given you the NIMs and cost of funds and so on.

Saikiran Pulavarthi — Pulavarthi Advisors — Analyst

Thanks a lot sir. All the best. Thank you.

Operator

The next question is from the line of Suraj Das from B&K Securities. Please go ahead.

Suraj Das — Batlivala & Karani Securities — Analyst

Thanks for the opportunity, and congratulations on a good set of numbers. Sir, you published the disbursement number on a quarterly basis. So if I calculate the repayment number from the disbursement and loans movement, then I see that the repayment as a percentage of last quarter loans is coming down for the last two, three, four quarters. So I just wanted your thoughts here, because I think ideally, the repayment should go up because as your restructured loans are also coming out of the moratorium and all that thing. So the cost index should go up. So I mean I just wanted to hear your thoughts there sir?

Murali Natrajan — Chief Executive Officer

No. If I’m originating loans at a faster rate in mortgage, especially installment loans. For the first couple of years, the repayment will look smaller because the customer is only paying interest, right? Principal is not coming back. So we are growing — we are disbursing much higher numbers than what we were doing last year is the same on a month-on-month basis or even a quarter-on-quarter basis, right? The catch-up of this — I mean, repayments will happen over the next 1 to 1.5 years. But if we continue to build the disbursal, you may not see that as well, right? You see any new company which starts booking loans as — just for argument sake, they book start doing installment loans. They won’t see too much of repayment in the first year or two years. So that is the impact you are seeing now, because we are building the mortgage portfolio, I think our mortgage has grown by at least 23% as compared to last year.

Suraj Das — Batlivala & Karani Securities — Analyst

Understood sir, Understood. And sir, just to confirm, I mean, the disbursement numbers for — I mean three years to two, three quarters, used to include the co-lending as a separate line item. However, I believe you have stopped, disclosing that number. So I think the co-lending part is also included in your presentation across segments, right?

Murali Natrajan — Chief Executive Officer

No, co-lending is not in the disbursement. This is without co-lending. This is all originated by us. So these are the — it will be even much higher, the disbursals. But co-lending, in no period, we have added that. We have just shown you our disbursals. It is like-to-like.

Suraj Das — Batlivala & Karani Securities — Analyst

Okay. Understood, sir. And sir, one question on the segment-wise growth. So I mean, as you said that the mortgage, MSME, SME, all these disbursements have been pretty good and that we can see also. But if I see the segment-wise growth, the SME and MSME segment, that growth has been slower than the overall growth for the last couple of quarters despite good strong disbursement. And I see the CRO MSME and SME overall loan book has also come down for 10%, a couple of quarters back to around 9%, 9.1% as of now. So just wanted your view here, because in SME, I think — in SME plus, SME is one of the key focus areas for you?

Murali Natrajan — Chief Executive Officer

No. The mortgage book is also 85% to 90% MSME-SME. Okay? Our target market is MSME-SME, okay? So as far as the SME book is concerned, we have made some frontline investments in the last three, four months. We have revamped some products. We have also changed some of the segment offering, because we wanted to focus on some key segments in SME-MSME retail rather than go all over trying to attract customers. Also, we want to reduce the focus on CCOD as much as possible, for the simple reason that — two actually reasons; one is that CCOD utilization is very erratic, so it’s very difficult to predict your balance sheet, although you can see the flow of customer transaction. The second problem is small customers, SME customers are not very disciplined on CCOD, so they end up having this NPA because of November 12 circular. So we are trying to kind of do some adjustments there. I believe that next year, our SME-MSME growth will be far better than what we have been able to do this year.

Suraj Das — Batlivala & Karani Securities — Analyst

Okay. That’s understood. And sir, just last question, I mean two data keeping points, if you can disclose the other income breakup for this quarter, one? And the second is if you can disclose that gold loan slippages in absolute terms?

Murali Natrajan — Chief Executive Officer

I don’t know whether we are presenting those numbers. We don’t give that kind of detail on fee income do we? Satish? No. We don’t give that detail. And gold, I think some slippage is there, no? it’s not there?

Satish Gundewar — Chief Financial Officer

Product-wise NPA.

Murali Natrajan — Chief Executive Officer

Product-wise NPA is given. So that is what we present. We are not showing gold separately. Page # 26. And I think this is pretty enough information.

Suraj Das — Batlivala & Karani Securities — Analyst

Understood sir. The other income actually, you used to give — I mean, you stopped from — let’s say this FY ’23 alone [Phonetic]?

Murali Natrajan — Chief Executive Officer

We will come back to you on that.

Suraj Das — Batlivala & Karani Securities — Analyst

Okay, okay. Thank you so much.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments.

Murali Natrajan — Chief Executive Officer

Sincerely, I appreciate every one of you attending late evening, Saturday. Thank you very much on behalf of the entire management team. I thank you for your support and look forward to talking to you again next quarter. Thank you.

Operator

[Operator Closing Remarks]