IDFC First Bank Limited (NSE: IDFCFIRSTB) Q1 2026 Earnings Call dated Jul. 26, 2025
Corporate Participants:
Unidentified Speaker
Saptarshi Bapari — Head, Investor Relations
Sudhanshu Jain — Chief Financial Officer
V. Vaidyanathan — Managing Director and Chief Executive Officer
Analysts:
Unidentified Participant
Param Subramanian — Analyst
Anand Dama — Analyst
Rohan Mandora — Analyst
Himanshu Taluja — Analyst
Piran Engineer — Analyst
Vishal Biraia — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to IDFC First Bank’s Q1FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Saptarishi Papari, head Investor Relations. Thank you. And over to you sir.
Saptarshi Bapari — Head, Investor Relations
Thanks Avidath. Thanks everyone for joining this call on Saturday evening. Today we have with us Mr. Vaijanathan MD and CEO of the bank and Sudanshu Jain, our CFO. So we’ll have the brief from Sudanshu first on the results followed by comments from Vaidya. So now after that we will open the session for Q and A. So right now I’ll hand over the call to Sudanshu for his brief. Yeah.
Sudhanshu Jain — Chief Financial Officer
Thank you Saptarishi. First of all good evening everyone. I also again thank everyone for joining on MB8 evening on a Saturday. I’ll try to touch upon the key financial numbers for the quarter and maybe I’ll start with balance sheet components and then move to asset quality, P and L capital and liquidity in that order. I’ll try to keep it brief. And let me start with balance sheet size that stood at about 3.6 lakh crores at 6-30-2005. 25, sorry. And this grew at about 18% on a yoy basis. If we now see further components then we continue to see a strong growth on the deposit front.
Our customer deposit in fact crossed the 2.5 lakh crore milestone and was at 2.57 lakh crore in June. Similarly, retail deposits crossed 2 lakh crore mark. The growth in customer deposits was very strong at 26% on a yoy basis. If we talk about the CASA ratio that also improved sequentially and touched 48% at June. The CASA deposits in value terms grew strongly at about 30% on a yoy basis. Even on an average basis we saw similar growth for Q1. Term deposits on the other hand was also grew strongly at 21% on a buyable basis. If we see term deposits which is retail term deposits and CASA deposits put together they are now 85% of our customer deposits.
During the quarter we added 14 more branches and that takes the branch count to now 1016. We also repaid high cost legacy borrowings of rupees 2,600 odd crores in the current quarter. Happy to report that the residual stock is just now rupees 2,200 crores and maturity will mature in this year itself. We continue to bring down the credit to deposit ratio that is now down to 93.4% at June 25th. This was at 98.1% in June of last year. In fact incremental CD ratio for last one year is at 75.8%. As connected point the cost of funds for the quarter was at 6.42% and this declined by about 9bps during the quarter.
Similarly cost of deposits for the quarter was at 6.37% and this declined marginally by 1bps during the quarter. You would have noted that we have drastically reduced the peak TD rates in this quarter as compared to March quarter. This would reflect by way of lower cost of fund with some lag in the ensuing quarters. On the asset side the funded assets registered a strong growth of 21% on a YoY basis to reach 2.53 lakh crores. Sequentially the growth was about 4.7%. The growth in the asset segment was largely led by segments like Mortgage Vehicles, Business Banking, Working Capital Loans and Wholesale book.
If we go through the presentation we have given a detailed breakup in slide 40 of the presentation. Wholesale books grew at a faster pace at 39% on a Y o Y basis and the growth was about 34% on an average basis at June on a YOY basis. Non fund books similarly grew by 25% on a yoy basis. We have given some more color on the corporate funded and non funded books in slide 38 of the presentation. Very briefly, about 77% of the corporate book is rated A and above and and 19% is rated BBB. We continue to also scale up products like Credit Card, Gold Loan, Education loan which are increasing from a smaller base.
We have now issued 3.8 million credit cards. The stands on the credit cards were quite healthy and it grew by about 35% on a yoy basis during the quarter. We also had a degrowth of 37% yoy on the microfinance business because of the challenges which we have been seeing around this sector. MFI book is now at rupees 8354 crores and is at 3.3 funded asset book. I will talk about SMA collection efficiency and some of these parameters on MFI slightly later on if I talk about asset quality. Gross NP of the bank increased marginally from 1.87% to 1.97% in June.
Net NPA correspondingly increased from 0.53% in March to 0.55% for June quarter. Excluding the microfinance book, GNP ratio increase was from 1.63% in March to 1.7% in June. @ a bank level provision coverage for the bank continues to be quite healthy at about 72.3%. This has in fact improved by about 296 points basis points on a yoy basis. If I talk about GNP in the retail, rural and the MSME segment that stood at 1.82% and increased from 1.7% 1.70% in March quarter, net NPA similarly increased to 0.66% and was higher by about 4 basis points from the previous quarter.
Excluding microfinance, GMPA for retail, rural and MSME Segments stood at 1.48% in the June quarter. The standard restructured book continues to come down. It is a very small component at about 0.7% of the funded assets and we feel it’s adequately provided. If I talk about the SMA 1 and 2 pool of retail, rural and MSME book at June that improved from 1.07% in March to about 1.01%. The decline was largely because of reduction in SMA 1 and 2 of the MFI book that came down from 5.1% to 2.64% in June. In absolute terms MFI SMA pool was at rupees 315 crores of June 25 and this has declined by 60% post peaking out in December quarter.
We have also seen an improvement in collection efficiency for MFI during the quarter which stood at 99.0% and as against 98.1% in the previous quarter on a prudent basis we continue to hold the contingency provision of rupees 315 crores on the SMA book and hence no utilization was done during the current quarter. If I talk about gross slippages for the quarter that increased sequentially by 14% from Rupees 21.75crores in Q4 to 2486crores in current quarter we have called out that this included about 108 crores pertaining to one ATM service provider company which has been recognized as NPA during the current quarter we have also made 100% provision on this particular case.
The gross slippage for MFI business decreased from Rupees 572 crores in Q4 to Rupees 514 crores in Q1. The SMA Pool as it has come down significantly and that’s also reflected through lower SMA zero accretion which we are seeing. We expect provisions to significantly come down in Q2 on the MFI front, gross replace ratio during the quarter excluding microfinance stood at 3.54% which was marginally higher than 3.35% witnessed on an average in last four quarters put together. We expect this to improve from here on. Moving on to profitability, let me start with NI that grew at 5.1% on a yoy basis to rupees 4933 crores for Q1 excluding MFI.
I’m excluding MFI because that book has been coming down. Excluding MFI, NI grew by about 11.8% on a YoY basis. The net interest margin on AUM for the quarter moderated by 24 basis points to 5.71% and the decrease was I would say attributed to many components. Of course there was a pass through of repo which happened on the applicable book. There was. There has been a decline in the microfinance business at the same time we have scaled up wholesale business and also there was moderation in the investment yields as the rates came down. This was offset to some extent by the reduction in the cost of funds.
The decline in NIM which I mentioned earlier at 24 babs in fact would be 17 babes. If we simply analyze NIM based on months for both Q4 and Q1. Moving on to fee and other income for the quarter that increased by 8.5% on a yoy basis from 1595 crores to rupees 1735 crores in Q1 of this year. The retail fee constitutes most of it and that is 91% of the total fees. Again, if we exclude MFI business then NI fee and other income put together grew by about 12.2% for the quarter on a YOY basis.
We continue to moderate on the operating expenses front for the quarter the growth has moderated to 11% on a YoY basis. Sequentially opex declined by 1.4% in value terms, trading gains for the quarter was strong at rupees 4.95 crores. We also did some participation in OMO during the quarter and the rest of the gains came because of the decrease in the overall system yields. Operating profit including trading gains grew at 19% for us during this quarter from Rupees 1882 crores in Q1 to 2239 crores. In Q1 of 26. Core operating profit excluding trading gains improved by 7.8% sequentially to Rupees 1744 crores.
This was however lower by 6.2% as compared to Q1 of last year. Provisions for the quarter stood at 1659 crores as against Rupees 1450 crores in Q4 of 25. And this was impacted by higher slippages which I talked a moment ago. Credit cost for the quarter excluding microfinance marginally went up to about 2%. And this was 20 bit higher compared to about 1.8% which we saw for the full year of FY25. I would attribute some bit of increase to the seasonality factors which kicks in. In Q1 we have reported a profit after tax of rupees 463 crore.
This grew sequentially by 52%. On a Y over basis it decreased by 32%. I would say largely impacted by microfinance business and some increase in provisions in the other segments. Moving on quickly to capital adequacy. Capital adequacy including profits for Q1 26 was at 15.01%. And with a CET ratio of 12.80% including the announced capital raise of 7,500 crores, CRAR and Tier 1 would be 17.6% and 15.38% respectively if computed on June 30 financials. We expect this fund raise to conclude in Q2 and we expect all requisite approvals to come in by then. The LCR for the quarter was stable at 118%.
This was marginally higher than the previous quarter. With this I have broadly touched upon the numbers. Maybe I will hand over to Vaidya to give his opening remarks.
V. Vaidyanathan — Managing Director and Chief Executive Officer
Hello everyone. Good evening. Really nice speaking to all of you. Away from what Siddhanshi spoke about. I’ll just leave some key thoughts about how we think about how we’re building the bank. And that has a bearing of course in the long term, medium term and even short term. But more in the medium and the long. Let me just say that the way we think about it, capital is the foundation is the foundation block. And really without capital, even the best of business models, even with good returns, good margins, good, everything will go nowhere. So it’s foundational.
So in our bank we have a strong capital. We always capitalize ourselves ahead of time. We don’t want to go low on fuel or on foundation. And this time, as you know, we are with the 7501st that’s just around the corner. Our capital position very strong. Number two apart from capital then we see deposits as a raw material. If capital is foundation, this is a raw material. So good thing for IDFC bank is that the deposit continues to come very strong. There’s a slide somewhere in the presentation about how our cost of our margin we were paying the premium rather we were paying over the average cost of funds of the Indian banking system in 2020 and before was 280 basis points.
We were paying more under the banking system. You know in the last five years we have brought it down to just 60 basis points. So that’s like a 220 basis points, you know, reduction. So this, our ability to grow deposits even after dropping the interest rate I really think is a, is some sort of, you know, some sort of special capabilities we have developed on this front. And it is raw material. And this raw material is what is what we are counting upon or this capability is what we’re counting upon to be able to grow the bank which is currently say about 2.5 lakh crore some day to become 5 lakh crore, some day to become 10 lakh crore.
And all within our foreseeable future is within our lifetimes and within our working times is what we can achieve. And all that can happen only to a deposit. So that’s the second thing that we have. The third thing is about what are we focusing upon? What am I focusing upon on a regular basis really it’s not about what we’re going to post next quarter because if you build a fundamental model which has a good economics then the quarters and results will come. Well, it’s only a matter of time. Today our min is about like 5.6%, 5.7, 5.7% and our fees are about 2%.
So 5.7 plus 2 is 7.7. And our credit cost we are guiding always. We keep saying 212 formula meaning like 2% gross NPA, 1% net NPA and 2% credit cost. So 2% credit cost actually translates about 1.3% on the credit, you know, provisions as a percentage of assets. So you take 7.7 and then you subtract 1.3. You know, you’re sitting on a pretty good margin and it’s only. So as we’ll discuss later at our bank, you know, we don’t see except the microfinance issue that is there. Other than that things are broadly holding fine, you know, it’s quite good actually, I’d say.
So let Me say that therefore, if. You’Re making 7.7 having 1.3% as the credit cost as a percentage of assets, then broadly in a strong economic profitability. The only catch here, which you should be concerned about and which you are, which we will answer later is cost income. So because the moment cost income ratio comes right, then the whole stock is going to be very profitable. So this is core economics. Then what is what I am looking for at my end? You know the thing that is of bother to me is about what percentage of the book is retailer are we? What is that LCR retail percentage? What is our retail deposit coming from branches is about 80% now which you’re feeling good about.
What is the PCR which is now touched about 70 to 73% now we’re comfortable there. What is the credit deposit ratio? These are macro parameters. Credit deposit ratios now touch 94ish odd percent which I’m pretty sure will come down to the 80, you know, maybe early 90s by end of this year and certainly go into the 80s by next year. And then we as good as any other bank. It’s taken us maybe seven years to get there from 136% but we are definitely getting there. So CD ratio becomes the next item to look at then how really good our digitization is? Is a tech stack strong? Is a tech stack resilient? Is a tech stack contemporary? Are we having the latest architectures of being cloud native, microservices, API etc.
How good our UI UX is? I really focus a lot on that. How empowered our people are, how our team structures. Is our expense ratio coming down as in the growth of expense year on year? Is our liability losses coming down as a percentage of the book? Credit card losses are coming down. Is the bureaucracy creeping in? How to keep cleaning out bureaucracy? How to get rid of old thinking or outdated thinking? Some people may have been developed. These are kind of things and how structurally. So my mind is always an all structural thing and poor economics.
And then once you build this on these foundations, then the thing flies and then economics comes. And honestly this is how I think about it. I’ve always told you I think about the bank from the long run point of view and building a universal bank. So these are kind of things that is there on my mind. I must just tell you that I run the bank like that and pushing this in the right direction what I think the right direction. And because of this then economics will fall in place. And it is falling in place.
Of course, you know this Micro finances disturbed the equation. We were going very strong, we were making loss. We moved to 2,900 crores a pat microfinance disturbed it. I take the responsibility for it. But just let me say that it came our way. But barring that the one incident otherwise like 14, 15 years now we’ve not given you shocks and I hope all of you who have been with us for a long period of time will agree with that. Now that’s how I think about it. The bank, universal bank, long term, long term, long term.
And that’s the bank. Now the next thing is about growth. So as far as growth is concerned if all of these things fall in place then how does growth come? I’ve said this before but I’ll just say this for context that India is a large market, we are a small player and from 2.5 lakh crore we can keep growing for a while. And let me just say that in 2010 if I just put back the history of two institutions put together and take it combined. Combined. You know our retail book in 2010 was as all of you know was like as good as zero.
Like 900 crores. Sorry 94 crores. It took us 10 years to get to 50,000 crore. It took us 3 years to get from 50,000 crore to 1 lakh crore. It took us 3 more years to get from 1 lakh to 2 lakh crore. And you see how things change. So that is when I say three years I mean now as in 2025 June. So I’m talking about the retail MSME every rural, that part of the machine now. And I’m not saying that again in three years going to double. I’m not making that statements to you and that you know, we’ll have to see the market and how it grows etc.
We have no market share numbers, we have no such targets. We just play according to the merit of the ball. But what I’m trying to say is that when played with discipline we know things can grow over a period of time. Now the good thing is that this whole book that has now come up for 2 lakh crores of the retail rural MSME. I agree that book now on that front the asset quality is holding quite well. I caveat the microfinance. I just want to just for a second digress to just share with you that some people have raised the question at us saying that hey guys, why do people keep taking on microfinance? You know you are as responsible for it and you built it.
Not that someone has built it for you and something I must say that, yes, it has happened, certainly under my leadership, to be very Precise, and I’m 100% responsible for it. So the reason why we flagged microfinance is not because of the fact that ASIC is someone else’s job, it is our job. The reason why we flag it is so that they can pinpoint where the issue is. So that’s what it is. So let me just say that we take full responsibility for the whole book, including this piece and certainly this piece. Now coming back to the point, coming back to the point about asset quality.
So we say that you can see that, look, it’s been like 15 years. We’ve not given any shock in asset quality. Our gross NP has always been 2 net MV has always been 1. Our credit cost, if you take a combined period for the whole period has always been around 2%. Even now around 2% and even now for this year also give or take guiding for two I think Sudanshu two or 2.25 or something like that. Yeah, something around that. Something around that number. And earlier of course we said, you know, as the year has been coming along, we’ve been, you know, touching it up here or there, but nothing fundamentally. It’s not like we moved it around by material amount of basis points. So what I’m trying to say is that it’s running at 2 12, that is gross 2 net 1 and credit cost 2 for like 14, 15 years now in between, our capital is higher also. It is like 2.3, 2.4 at some point of time. But you know, give or take that zone. So that is that Lastly I think probably second last because I want to cover P and L later but staying on asset quality.
One important thing that we are doing, if you see the presentation put out, you will find that we give really a lot of different disclosure on asset quality since a long, long time. For example, we also share what is the extent of what is underwriting norms with which we’re building the book. What is the basic fundamental philosophy of cash flow based lending and how we underwrite it. We are also sharing what is the check bonds percentage. Then the next part of the funnel is if checks are bouncing, what is the collection percentage out of the check bond.
We share that information. We share that trend for three years. At a stretch every quarter. Then we say okay, from collection percentage, whatever don’t collect becomes sma. So we share SMA percentage. Next we share SMA by product. Next we share SMA by product by quarter. Then we show After SMA comes npa. We share npa. Then we show NPA by product, then we show vintage graphs. The reason why we go to this level of debt is that there is complete clarity, there’s complete transparency about every product in terms of asset quality. And we show credit cost also, so we don’t hide our gross or net and asset quality by writing off loans.
We clearly show credit cost also. So all I’m trying to say is. That we keep it very clean, crystal clear to you. And if you have doubts, of course you can ask us even later in the call. Now finally I would say that what is a short term view and so on and what’s the. And if you say short term meaning like you know what is a 1/4, 2/4 view and what is as 1 year view and let me say what’s a bit longer view than that when you take shorter term view. So to say right now is probably it’s pinched from all sides because on one hand the repo rates have come down.
They passed it on to customers, you know, 50 basis points. That happened last quarter, we got to pass it on this quarter. So you can see that that is immediate hit to the income line. We have, you know, the microfinance book has shrunk, so it shrunk by a good 5000 crores. So that has shrunk the income line, that’s the other negative. The deposit rate we have dropped sharply. But that impact will come. Benefit will come longer term. But right now it’s not yet fully translated to the P and L. So that’s still a negative. So it’s all negative, negative, negative and on all these three fronts.
So but good thing is that all of these things will reverse because when you look one year ahead, you will have found that the entire fixed deposit of a bank would have got repriced materially. I think sudanshu shared some numbers with you and we dropped it quite sharply. And that will. So the cost of funds will come down naturally, structurally come down because of cutting fixed deposited so much. And then you know, MFI will find its bottom. Finally the repo rate cut is cut. I mean they already passed it on. So what amendment is. You’ll find a contrast all of these things playing out and what is looking.
When you wake up maybe three, four. Quarters or not things will look better obviously. So this is how structural it is playing out. So the way we think about it is that we’re building it for the long run. You know, 1/4, 2/4, you have to. I’m requesting you to look it through, you know even when we’re discussing with the other private equity investors who’s coming in who are coming in discussing with them five, six months ago I commented the same to you as to what I’m telling you same to them what I’m telling you I told them listen there is this is an issue coming up from 2, 3 quarter because of I told you, I told you please look through it, just look through it because if you’re investing for two years, three years, five years you can look through or you should look through one or two quarters but certainly I’m not promising anything better than that in the short run but you wake up 3/4, 4/4 now hopefully not hopefully I think reasonable confidence things will look better but one thing is there we’re not going to give you credit shocks we are not giving you of course we gave you one on Microsoft I do regret that but other than that very long we haven’t and we don’t give you growth wise is coming deposit is growing governance shocks we don’t give you, we don’t give you corporate governance shocks we.
Don’T give a disclosure shocks we don’t. Give any shock at all on all those fronts Just sit, you know you can sit peacefully through us and help us, you know help us build a good high quality customer friendly universal bank like the league of the other maybe three or four high quality banks out there and probably do, you know stand in the, you know stand among one of them as a good bank that you can be proud of. You can be proud of. So that’s what I’m thinking about so that’s about it. Thanks. I think we can now open the. Session for the Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session Anyone who wishes to ask a question may press Sharon 1 on the touchdown telephone if you wish to remove yourself from the question queue you may press chart and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles the first question is from the line of Si Zwan Gao from Schornfield Please go ahead.
Unidentified Participant
Yes please. Just on slide 52. Thank you for giving the breakup of. The slippages Just wondering what is the. Nike for back number on the other. Than MFI slippage in first quarter of FY25.
V. Vaidyanathan
Other than MFI the slippage is a 1972 crore so it’s across the various product lines which we have we of course saw an increase of about 350 crores in the previous quarter. But I also mentioned that we had one corporate case, an ATM service provider company which slipped into NTPA during the current quarter. Rest of the slippage I also said is slightly attributable to seasonality which sort of comes in in Q1 and it’s across products. So it’s difficult to sort of single out any particular product where we have seen the increase.
Unidentified Participant
Okay, what’s the, what’s the number for first quarter 25.
Sudhanshu Jain
For the other MFI single pages that was 1603 CR.
Unidentified Participant
No, that’s fourth quarter 25. Right.
Sudhanshu Jain
Q1 of last year is what you are asking. We’ll just get back to last. But yeah, but since then I would say while we sort of retrieve that number. But since then I would say the economic environment has also changed. So that may not be the right comparison.
Unidentified Participant
But whatever it is, if you can get it.
Sudhanshu Jain
Yes.
Unidentified Participant
Thank you so much.
operator
Thank you. The next question is from the line of Param Subramaniam from Investec India. Please go ahead.
Param Subramanian
Yeah, hi. Thanks for the question. So firstly on asset quality again, right. So if we see across product segments in this quarter there is an increase in the NPA levels in also the SMA levels that you’ve called out. So anything specific you want to highlight, you know, a large peer of yours has called out, you know, stress in MSME segment. So anything you want to highlight because the delinquency levels seem to be up. No.
V. Vaidyanathan
So we have seen, as I said, we have seen a general increase. Of course we are watchful of certain segments. So essentially some part of stress could sort of be there in the rural segment in certain states we are watchful of that. But having said that we are also seeing collection efficiency improvement in some of those states. So there is nothing which as such which I want to sort of single out or call out. Yeah, Karnataka. But it’s a general increase. I have also said that the slippage ratio, if you see for the current quarter it’s only marginally up what we saw in last four quarters of FY25.
So we are personally not very concerned but we continue to be watchful.
Param Subramanian
Okay. Your thoughts on say unsecured msme because one of your peers has called out that there is rising delinquency here. And also in this quarter I see higher delinquency in the credit card portfolio. So anything there.
V. Vaidyanathan
Credit card of course it has been very range bound. Of course we saw some increase during the quarter but I would say that it has remained Quite stable over a period of time even credit costs have been quite range bound.
Param Subramanian
Credit card has moved to 1.76 actually.
V. Vaidyanathan
Yeah.
Param Subramanian
But sequentially marginal increase but it has come off from June of last year. So to that extent, as I said, it is quite range bound. To your other question of unsecured msme, of course there we have, we have seen credit cost which is broadly similar to the overall credit cost which we just quoted a while ago of about 2%. So we have seen some increase but.
V. Vaidyanathan
It’S not material the lines of whatever we’ve been guiding in terms of credit cost except for microfinance which of course you point out. Other side you can see the numbers of the. I mean like H2, H1 all put together like around 2% this year.
Param Subramanian
Yeah. So I’m saying at an overall level we should come at a credit cost about 2, 2.05%. This is broadly what we had guided earlier as well. And on unsecured msme, as I said, we are also seeing a similar kind of a credit cost in Q1.
V. Vaidyanathan
So think of it like a little more this quarter but coming down in Q3, Q4, stuff like that, I mean in the sense that we are not seeing anything for us to call out that oh my God, 2 is going to become 2.5 or something like that. I mean I know a few other calls you’ve heard elsewhere, people have raised issues to you and all that. We. haven’t seen anything material like that to call out.
Param Subramanian
Okay, thanks a lot, really helpful. Just one last question. So on margins there are a lot of moving parts from here. Right. So MFI is coming down there are actually taking on the funding cost side. So how to think about margins from this quarter onwards?
V. Vaidyanathan
So we would see definitely some more impact coming into Q2 because of the rate transmission which is yet to happen completely. But as Vaidya mentioned that down the line we would also see benefits from FD reduction coming in and that should reflect in cost of funds coming down more sharper in coming quarters. So we feel that by Q4 margins should broadly restore back to what we posted last quarter and but only caveat there is there could be still some rate cuts which could sort of kick in. So my comment is to that extent but we are broadly hopeful that margins would to a great extent sort of restore back.
Param Subramanian
That’s because we cut the fixed deposit rate quite sharply, you may have noticed it. So we were earlier paying 7 point.
V. Vaidyanathan
We were paying 7.9%. When the money. Was tight during March or something. Yes, and now we brought down to. 6.75% as the peak rate. Yeah. Which is almost a reduction of 115 basis points. And in the one year, one day bucket we brought it down to like almost like the big banks plus 15 basis points or something like that. So like think about it that we are just five years old, six years old and we brought our rates down to the big banks league. So these things will help the bank actually.
Param Subramanian
Okay, thanks a lot. Thanks for the answer. All the best. Thank you.
V. Vaidyanathan
Thank you.
operator
Thank you. The next question is from the line of Anand Dharma from MK Global. Please go ahead.
Anand Dama
Hi. Thank you for the opportunity. My first question is on your capital raising. So you’ve raised 7,500 crore. So the capital is yet to come. Any covenant changes which have happened in that. And is there any risk that basically this capital particularly from the investor side, not talking much about the regulator but is there any risk that you see from the investor side that possibilities capital might not come or there could be a delay in that? Is there any risk that you see?
V. Vaidyanathan
Well we are not seeing anything at this point of time. Not at all. Not at all. And secondly on your of credit cost, so where do you see your overall credit cost settling for the full year? Secondly your cost income ratio also has come down in this quarter to about 69%. Obviously business there will be some growth which will actually kick in basically during the year and because of the DFA cost and possibly might go up. So where do you see your cost income ratio settling over next three quarters? And also if you can give a guidance on the overall trade cost for FY26. I thought credit cost we discussed earlier, I mean discuss meaning I have side topics like 2 to 2.05. I think for this year we call it like 2.05. That’s the best guess as we can see today. And what are the first questions? Yeah, cost income, Cost income, the number of number you’re seeing, 6, 9 is actually it has treasury income also into it. So actually if you strip it out you’ll find the cost income has gone up this quarter. It has marginally come down from 75.4% in Q4 to 73.8%. But still it’s higher as we know that it’s still impacted largely by the top line impact which is sort of coming through. But of course on the operating expenses we have been able to contain OPEX. To a great extent. See once again if you see the cost to income ratio it has like two components, cost and income. So on the cost on the income front is where you know we are seeing as you can for the reasons we discussed, you know, the composition change, micro grants going away, that which is a good high yield book and you know, repo rate coming not passed on to customers, FDA not passed on, etc. That is their income which we believe will self correct over the next few quarters. But the cost as such. So in other words income has got impacted but the cost as such coming down for the bank and you can see y o y growth for the bank is only 11%.
So this is very good. If the bank balance sheet is growing at 20% and you know cost is going up at 10% you can see that the bank is really or 11% bank is doing some real work on cost front and operating leverage is more than coming in and a lot of transformation are helping the bank. So you can see that that is why the cost income is kind of elevated. But I mean of course lesser than last quarter but elevated. But it will come down. It will come down.
Sudhanshu Jain
And just to add Anand while we are seeing this top line impact where NI and fee has just grown by 6% on a YOY basis because OPEX has grown at these levels, our core P pop has improved sequentially by 7.8%. This was declining for last two quarters I would say but at least we feel that we have been able to arrest the decline and this would continue to sort of inch up from here on quarter on quarter. As far as treasury gain is concerned. Agree that they said it’s one off but I think that should continue during this year as well. Right. As a GSET is coming off and then once you are, I think treasury. We can never be sure of in life. No, no. Treasury we can never be sure of in life. Generally speaking, how can nobody can ever be sure of treasury. Right. It’s just like one of those things. That happens to a of lot then for school year. What’s the cost income ratio that I mean the core cost income ratio that you would look at in FY26. It’s difficult to guide because there are too many moving parts. But my Q4 definitely as things improve this should come down. But it’s sort of difficult to pencil out a number as such because by. That time, you know we discussed earlier, right. The income should. The margin should look better for the reasons we discussed and cost is anyway we kept it very tight. So naturally cost income ratio by Q4 should start coming down.
Anand Dama
That’s very helpful, thank you.
operator
Thank you. The next question is from the line of Rohan Mandora from EQVARE Securities. Please go ahead.
Rohan Mandora
Good evening sir. Thanks for the opportunity. So just want to understand on the slippages, the seasonality part, what would be the quantum of that? Just called it out. Right.
Sudhanshu Jain
It’s difficult to. Of course. Thanks Rohan. First of all it’s difficult to quantify that but that usually I would say some bit of seasonality comes in Q1 and then the collection efforts are slightly muted and so on. Right at the start of the year and so on. Typically Q4 is a strong quarter in that sense. So it’s difficult to quantify seasonality as such. But we of course expect slippages to sort of come off from here on.
Rohan Mandora
Sure. And while you alluded to the fact that the slippage is increased overall for the cross segments of products, but any customer cohort or any category of customers where we are seeing an increasing slippages or is it that a certain customer has left where there are multiple linked accounts any color around that.
V. Vaidyanathan
So nothing of that sort as such. But see if you take out that ATM service provider then the increase about 200 crores for the quarter. Right. I’m saying and sequentially if we take out that ATM services they increase about nine and a half percent. So while it has increased. But we feel that it’s not that kind of means large increase which has come through some bit of of course increase is there. But if you see from a slippage ratio point, right. Which I mentioned earlier. Right. That’s quite stable at about 3.5%. And that was a similar trend which we saw in last year.
Rohan Mandora
Sure. And nothing even on the vintage analysis perspective, it spread across the boards.
V. Vaidyanathan
No, nothing. Nothing. Assets to call out.
Rohan Mandora
Sure. And what was the outstanding EFS reserve?
Sudhanshu Jain
Outstanding EFS reserves. We just get that number.
Rohan Mandora
Sure. Thank you.
operator
Thank you. The next question is from the line of Himanshu Taluja from Aditya villa, Sun Life AMC Ltd. Please go ahead.
Himanshu Taluja
Yeah. Hi sir. Thanks for the opportunity. Just few questions at my end. Particularly on the OPEX run given this year, we see most of the banks are showing improvement on the operating expenses growth. Because this is a one lever where banks can play around. Can you help me understand over the medium term, not in FY26 but in FY27 28, how do you expect the operating expenses growth versus your advances growth and where you expect the cost income rate, cost income ratio to settle over the medium term. So that’s my first question.
Sudhanshu Jain
So Himanshu, thanks for the question. So operating expenses we will continue to sort of moderate and it should stay in the range of about 11 to 12% that kind of growth in the near term as well. And we have already guided on cost to income ratio of 65% which we are targeting for FY27. Our still hope and belief is that we should try to come in there. So we will try to ensure that we exercise diligence and proper controls around the operating expenses. But some of the events are also changed, changed since then. So just keep a word of caution because it’s microsana so many things have happened. Yeah, just keep an eye out on that all of you also. I mean keep an eye out on that. But we are, we are at least attempting to go in the direction the thing to but to your very specific question about what we expect the OPEX growth this year, next year, year after that at least internally the way we’re thinking about it. If you remember when we spoke about this last quarter or last quarter quarter before that also we’ve guided that we expect this year to this year meaning 26 to be around 13%.
Correct. Sudansha 12 to 13%. I know but it looks like we’re going to not go reach there also like looks like you know Q1 has been on 11 unlikely we’re going to so think of it like we’re doing slightly better. We must have got it before on the OPEX front. I don’t mean costing OPEX OPEX because like you rightly said it’s in our hands now 20, 27, 28 at least the way we are thinking about building the bank we think more like like 12% or so. So 13% probably there.
Himanshu Taluja
So you do you you expect around 600 to 800 basis point is there where you can have the OPEX growth lower than the advances growth. Is that the right understanding?
Sudhanshu Jain
That’s how we are thinking about it. Yes.
Himanshu Taluja
Yeah, sure. The second is on the MFI because. If you go the book by about 1818 and if OPEX grows by say 12% 12 is okay.
Sudhanshu Jain
Yeah. So that’s how we’re thinking about it. Yeah. And if you want to say if you can write 12, 13 that we’re trying to do 12 actually.
Himanshu Taluja
Thanks a lot sir. Second question is on the MFI business probably given this MFI, the proportion of the mix which is there probably has come down over the last one year and it may not go back to the earlier levels as well. What is the given the given this is an implication on your overall margins. How do you how much of the permanent damage you expect on the margin front, how one should see a. Because once the this pass through of the repo rate will happen and even on the deposit side as well, what is the pretty normalized margins would expect going ahead? Thanks.
Sudhanshu Jain
See I thought, I’m not sure if you discussed earlier in the call or not but like 5.8 ish or so is what we expect Q4 to be. Yes, slightly higher. But only caveat which I said is also contingent on repo any more repo rate cuts which may sort of come through. So but for now let us say Q4. We’re thinking like the site point now. You know, next year will be next year. We’ll have to see how it plays out. There’s so many moving parts. But that’s how we think about our business model. That’s why in the earlier example right at the opening part of the call when I said, when I was trying to drop the roa tree for the bank, I told you about 5.7. Actually I said 5.7 and then I said 2% for fees, I said 7.7 and I said 1.3 credit cost. That was a stack.
I was speaking to you saying that that’s how we are thinking about the bank now. It all comes down to cost and ratio. But that we answered earlier that as the events play out we think that Q4 should look better.
V. Vaidyanathan
And just to add MFI, we expect the pace of decline to sort of reduce because the book has already come off significantly to that extent. The impact on NIM because of MFI should be slightly low coming down there.
Himanshu Taluja
Yeah, yeah. But once this segment will normalize, will you, will you start growing this piece again? What? This piece again in fy.
V. Vaidyanathan
It’s an important question. Let me answer that. So yes, now let me answer that. So the answer is yes, we want to grow it. So you know, this business, of course after every eight years, seven years, years. It has its own cycle. We agree with that. But you know, with every cycle, every learning the next part of the cycle stresses out longer because people learn. In this case, our own thinking is that probably, probably will bottom out, bottom out at about 7,500 odd crores. It’s currently about 8,500 crores. Yes, yeah. Like there. And then from there on, wherever industry grows, we’ll keep, we, you know, we’ll probably keep in line with industry because see, let me make it simple to you that this is a really good franchise we have built. It’s a really, really good franchise. It’s not just because this major incident happened in mind. I have no intention of shutting it down or closing it until that it’s a really good business. You know, we have people on the ground, we have built fantastic relationships, processes, technology, systems, reaching out a bottom of pyramid weaker section financing weaker section psl.
You know, SMS psl. There are so many benefits. So you got. The way we think about it is that we got to do two things so that we protect ourselves. There are many benefits. I already told you what we need is protection. So protection is we take a CGSMU cover and then you know, maybe have and watch it very carefully.
Himanshu Taluja
Yeah, sure, sure. Thanks a lot. So just a suggestion. The way you have put in the disclosures around the asset quality earlier in the earlier presentations in the previous quarter you also used to disclose a lot on the cost side. Also say some of the segmental wise as well if you can incorporate some of those. Because I think if I have glances carefully you have not put this the such disclosure this time on the OPEX front you can put it. That would be very helpful.
V. Vaidyanathan
No, in fact it is there we have given cost income segment wise in the presentation. Maybe I’ll just. It’s on slide 64 of the presentation.
Himanshu Taluja
Okay, sure. Maybe my images.
V. Vaidyanathan
Yeah, that’s what segment wise what is.
operator
Thank you. The next question is from the line of Peran engineers from clsa. Please go ahead.
Piran Engineer
Yeah. Hi team, thanks for taking my question. And comments on the quarter. I just had one question on repo pass through. So let’s say the repo rate was cut on the 7th or 8th June. When does that pass through happen on your EBLR book?
V. Vaidyanathan
So that pass through to a great extent will happen in Q2 on the June card. And I would say some bit of repo transmission for the earlier cuts would also have an impact in Q2.
Piran Engineer
No, no. Okay, but does it happen say after. Three months or gradually within three months?
V. Vaidyanathan
No, no. So I’m saying. Let me further clarify. So I’m saying generally say a report changed on a particular month. There is a cycle. So if a customer loan will get reset once in three months. So if depends on when his last change happened. So that’s how the transmission will happen through the quarter. So hence we saw some bit of repo transmission of the February and april cut in Q1 and as I said because of the three month criteria some bit of spillover could happen into Q2 but June would essentially come largely in Q2. So that’s how the report transmission will happen.
Piran Engineer
Okay. Okay, so even the April transition transmission. Has not fully happened then because someone’s due date could have come let’s say on 15. So for that guy it’s only for. Half the quarter is my understanding correct?
V. Vaidyanathan
Yeah. So I’m saying someone whose last reset was in March would have completely got reset in Q1 somebody where last reset was in say April alone was taken in April. For him the transmission will happen into the next quarter. So it depends on the cycle when you have sort of availed the loan and that’s as far as the existing loans are concerned. For the new loans of course that transmission would be immediate and depends from bank to bank in terms of how you want to sort of price the loans in terms of lending.
Piran Engineer
So Sudanshu then my question is now we are 5.7% NIM we want to. Go in the next 3 quarters to 5.8. Obviously 2Q will be lower. How much more do we need to. Cut our TD by to reach that?
Sudhanshu Jain
No, no, we assume where we are currently. So that alone is enough to. Go back to 5.8. Just the reprieve, the deposit maturity pattern. Is enough to take us to 5.8. That’s what we think because capital is also coming. No?
Piran Engineer
Oh, so your that the deposit call. Okay, okay, fair enough. Yeah. Okay. Yeah that was it from mine. Thank you.
operator
Thank you. The next question is from the line of check from Access Capital. Please go ahead.
Unidentified Participant
This is a more qualitative question on credit growth. Very few of the banks have been able to manage this growth in one queue. So wanted to understand June July trends and if there are any segments that you want to call out that can drive the recovery from 2Q onwards and also general credit environment. Are you seeing any stress build up in any segment which Wasn’t there in 4Q?
V. Vaidyanathan
So you know we actually put out how this growth is coming. So if you take a full one year yoy you could see that 22,000 crores has come from business finance which is basically wholesale banking loans, business banking, working capital, CVC etc etc. So that’s 22,000 crores. Then 5200 crores is coming from vehicle loans growth and 8400 crores is coming from mortgages growth, mortgage basically home loans and loan property. So these are the three levers that have materially contributed to the growth because the total growth is 44,000 crores out of 44 we are explaining 23 plus 5200 plus 8400.
I think that’s together it will come to 82% if you do the math. So that’s what it is. Now in terms of credit, I think Sulansha answered it earlier, but I’ll say it again that broadly, if you see SMA data of almost all products, they’re all similar like what it was in the prior quarter and you can see that also. So inter, say one family of products, let me say within every product family, say msme, there may be seven or eight products. Within that one product may be higher, one product may be low. You know, for example, in consumer loans there is also vehicle loan, consumer loan, education loan, credit cards, gold loan, everything is there out of this, something may go up, something will come down.
But broadly, broadly all put together like the zone we talked about, like the 2 ish or 2.05 which is not any material different than what we said before. So you know, it’s 10 basis.0 there. So that’s what it is actually. So I mean there could be interest rates come up and down, but we are not calling out anything specific to say that there’s a concern or any of that.
Unidentified Participant
I mean, do you see increased competition? I mean right now the competition levels would be lower in unsecured credit, for example. Do you see that returning in Q2 and Q3, should that have any effect or basically I’m trying to understand what is not. Is it a demand issue, is it supply issue or is it just everybody waiting till the bureau scores point to a better macro number? No, let’s get a question clearer if you don’t mind. So are you trying to understand, are we going about growth, asset quality? Because I need to answer more precisely.
V. Vaidyanathan
Yes, actually I’m trying to understand for unsecured credit there are two players who have reported decent growth at scale, but most of the system still doesn’t seem to be there. So we are trying to understand if it’s still that asset quality comfort at a system level, not specific to idfc, but more from a system level because you would be seeing it in the competition levels that you face on the street.
Sudhanshu Jain
Yes, yes. So the, if you, of course we know that some, some members have talked about higher credit, credit cost and something here or there. But you know, I’ll answer this question maybe a few times that we are not seeing a material call out for us to call out on the credit quality fund because asset quality is holding good. You know, gross NPA is still 1.95 net is still I think 0.56 or something. And then the credit costs are already publicly announced, already said the Number is going to be 2, 2.05 or something like that.
And maybe let’s call it 2 or 5 just to be, you know, that is a close estimate at this point of time. So nothing material to call out now in terms of how we expect the, how we expect we are seeing in the market and so on and so forth. You know, sometimes we should be careful when we see the market and therefore we should double and triple check our numbers. For example, the credit cards for many quarters now some institutions have been pointing out some credit issue, but we are not seeing anything in credit cards.
And we’ve been reporting our numbers publicly for the last many, many quarters. In fact, we specifically call out credit cards as a product and we call out what is the gross net expense. So we watch, but we should be confident about what we’re doing also.
Unidentified Participant
Understood. Thank you, sir.
operator
Thank you. The next question is from the line of JAI from ICICI securities. Please go ahead.
Unidentified Participant
Yeah, hi, good evening, sir. I mean the KASA number together, which is like 30% y o y group, if you would have the number separate just to get a car and car separately.
V. Vaidyanathan
Jay, thanks for the question. So we are broadly getting a similar growth in car as well, but the car as a proportion is still smaller for us. Right. And that’s about 15% of the total CASA. Other of course endeavor is to increase this car proportion as we sort of go along. If you see for players who have been there for long, this ratio is typically higher at about 20, 25% of CASA or car as a percentage of total deposits, the ratio is more around 13 14% for us that ratio is around the 7.58% mark currently.
So we have work to do basically on the current. And actually like we are, we are lower, let me say on the car front as compared to the what it should be. But you know, in the, in the industry, generally speaking, building car is a harder task. But we certainly have feel that we should because we bank tech is good, reach is good, and so on so forth. We believe that we should be able to get, we’re at least trying to get to industry numbers.
Unidentified Participant
Sir, I was trying to understand the Saab we made in the last, let’s say one or two quarters. A lot of banks have cut SA drastically. Right. And we now have a significant advantage over PF in terms of at least the card rates. Has that flown in dramatically in the balances because that was not visible just by looking at the KATA number in total. So that was the idea to understand, you know, of course if we are, let us say sacrificing a bit on cost, are we getting the throughput, the desired throughput?
V. Vaidyanathan
I think so. I mean I do think because enterprise growth is very strong. So see in as in management and anything it’s very difficult to see what is hitting right for somebody. That’s a combination, it’s a brand, it’s a tech, the UI ux, it’s a very, very good mobile app. If you don’t have the bank account you should really test out a mobile app. You know our tech stack is very good. So our public, you know. Presence is. You know, defense is good. So there are so many things that are going where our culture is good, service levels are good, service rate is also good. So we, it’s very difficult for us to pick what is working for the bank but something is working, the combo is working somewhere. So in fact we’ve cut FD rates. The reason why, you know, why we cut FD rates more like sharply and meaningfully is that as and when we cut, you know, let’s say that one year goes forward, goes ahead and our entire fixed deposits balances of say about a lakh of crores gets repriced downwards.
Okay, let’s call it like 90, 100 basis points. Can you imagine what a material benefit will be for the bank in the subsequent years? In 27, 28, 29, 30. I mean assuming we can maintain this kind of rate. So because you had a structural advantage. So that’s how we think about cutting FD rates. Because we will see the benefit of it in subsequent years because it’s a structurally come down sign is in our hands. We can cut it anytime you want. We just want to make sure that there is enough money in the bank that you pay off all our bonds.
You still have to pay 30,000 crores of bonds. Not high cost but you have refinance and everything. So we pay off everything with this money and it’s still cheaper than our many of the other borrowings.
Unidentified Participant
Right? No, so I was just looking at the timing of if you want to cut sa then maybe this is the time, right? I mean by the peer banks have come down to historical low levels but.
V. Vaidyanathan
Many of the peer banks have not. Cut the FD rates to our rate. See a C hour rate if you take one year like in the zone of the big banks, other banks cut it that way. So people have chosen to cut one or the other or moderately cut both. We have sharply cut the six deposits. I mean it all comes back to the same thing. Everything contributes to cost of funds. But cutting FD structurally cuts it.
Unidentified Participant
Right. And then just on margins, right. So this quarter, let’s say we have a decent 60, 65% fixed rate book where the impact would have been very smaller except for the mix change. And you know, let’s say 50 basis point yield compression has actually resulted in 25 basis point yield NIM reduction.
V. Vaidyanathan
Right. Because there’s not too much change in the cost of funding at all. Right. Similar things could happen in Q2, right. The remaining 50 basis point yield impact comes and then there is no material change in the cost of deposit and maybe the similar NIM outcomes. Is that decent mathematics?
Sudhanshu Jain
Yes, yes, of course. I think you got it right. That’s why we pointed out that next, you know, you could have a situation where the, you know, if you don’t remember at the beginning I pointed out that your Q1, Q2 will go through this phase where income will come down and cost funds will not have come down proportionately. But we are mentally factored in because we’re building looking ahead and when we look Q3 or Q4 things will even outer. That’s why we said this earlier like 2.8, 5.8% he expects to claw back. But Q2, we expect our NIM to come down.
Unidentified Participant
Right. Last question, sir. We are now a large bank, right. In one of the past, one of the fastest growing. On the board side, just a small observation that we have one executive director which resembles, you know, some of the small private banks. Whereas the large private banks, they have, you know, multiple leadings. So when do you think we would hit that? We would. That that time would come when, you know, we may have more than one.
V. Vaidyanathan
Thank you. Thank you. We’ll think about it. We do think about these things at the board. So we’ll think about this one also.
operator
Thank you. The next question is from the line of Harsh Modi from JP Morgan. Please go ahead.
Unidentified Participant
Hi everybody, thanks for the call. Definitely it seems like your asset quality is holding much better than peers on the delivered numbers. But is there any, are there any early warning signs, let’s say three or six months from now if we do end up getting some sort of weakness, what may be the possible areas which could lead to slightly higher NPL on your. Thank you. So what would be a material number harsh that you would. That you would worry about? I’ll answer the question accordingly. Would you say five basis points would bother you? Would you say 10 or 20? At what stage would you say that we should have called out how much. Delta 50 bits, Delta 5 0.
V. Vaidyanathan
No, no, we don’t think there’s anything that’s moving the bottom like that for us. Had you said 5 beeps or 10 bps, maybe some products can, you know, for example, if you think of a rural market and you find that okay, you got the MFI business. Now are there, you know, are there any other business that can give you a little more higher credit cost than the other. Yeah, like I told you that 20 products, something will give more, something give you less. So would you say can, can the Numbers Change of 5 basis points, 10 basis points? Yeah, of course. We are running a bank. Anything can happen but 50 basis points? No, no, no, we don’t think like that at all. I mean we don’t think we’ll give you that kind of a surprise.
Unidentified Participant
Right. So incremental is very limited by 10 basis point because there is a bit of a dagotrony here. We have multiple banks, nbfc, big and small saying there are some degrees of risk. They’re watching certain segments, some cv, some micro finance is an ongoing issue. But your commentary seems to be reasonably sanguine and definitely a lot of it has to do with your underwriting and your standards. But I’m just trying to figure if there is a risk three or six months down the line which may be growing by as a market we are not fully aware of.
V. Vaidyanathan
No, I think, no, I genuinely believe your concern is a valid concern. Because if we give you a 50 day shock like tomorrow, if you came back to you by end of the year and said oh my God, it’s now going to be 2% or 205 and now it’s going to be 255. Right. And thankful to you that you gave me a number so that now I know what is your benchmark of material moment. It was 50. Now do we think any product of the bank has taken head zone? The answer is no. Do we expect our H2 to be, you know, in a credit cost average book? In fact we think it is better than H1.
We think it’s too, you know like Q2 could be like problem zone or probably, you know, Q1, Q2 could be probably similar I’d say in terms of give or take take. But Q3 is actually we feel at this point of time that you know, frankly we’ve not gone very wrong with our numbers, you know, for the last many, many years. We model this all the time and keep projecting it forward. We’ve not gone down in the past our own benchmarks say that Q3, Q4 should only be better. We don’t expect it to like go the other way around.
Your concern is can 210 go to 205 become 255? No, we don’t think so. We’ll watch. Since I see that you are concerned. So you’re seeing other people’s numbers. Other people. Commentary. We don’t have those commentaries to give because we are not seeing data to suggest anything like that.
Unidentified Participant
Great. Thank you so much for that.
operator
Thank you. The next question is from the line of Vishal Brayan from Bandhan emc. Please go ahead.
Vishal Biraia
Hi, just a small thing that GMPAS on the home loan as well as lab on a frequency basis has increased by about 1415 bps. Could you raise a question as to why is this happening?
Sudhanshu Jain
You can see the numbers. You can talk after that. 10 seconds through the numbers.
Vishal Biraia
Okay.
V. Vaidyanathan
We’Ll text the numbers in a minute. It’s a marginal increase.
Vishal Biraia
Home loan. I’d like to. Let’s point to page 47. We want to see how it has gone up. Where has it gone up? Actually, actually. So 0.84 is the gross NPA and the 0.52 is the net NPA for home loans, correct?
V. Vaidyanathan
Yeah. Yes.
Vishal Biraia
Yes, exactly. So my question is from 70 bips to 84 bips on a sequence.
V. Vaidyanathan
Okay. Okay. The last quarter to 70 bs. Okay. It’s not a nice sheet, so I’m not able to compare. But really there’s nothing to call out. Also, maybe the book is probably slowing down. You know, it’s not. We’re not growing it that much. So think of it like that. But nothing like, you know, when you see nothing that should materially bother you in home loans. And anyway, home loads, as you know, is a very stable thing. It does not. It doesn’t. It doesn’t disturb us. Home is anywhere stable, right? No, neither for us nor anybody in the whole system.
Home has given any trouble, but don’t bother about it.
Vishal Biraia
Fair enough. And the second question is on the MSME side, is there a change in the pace of disbursement on the MSME front? I mean, I mean, LAP would also largely indirectly be MSME financing. So if you combine the both, is there a change in pace of disbursement or anything that you can write? Because a lot of banks and lot of NBCs have been highlighting some sort of stress or potential stress on.
V. Vaidyanathan
I know we said this many times, this call has come about that other people are saying this and pointing out some concerns. Well, we also want to be very, very. We are not seeing any material slowdown or anything like that. But you see for our numbers as I speak, Satishi points out to me that the overall business finance book, you know, which has wholesale loans, wholesale loans has grown but the rest of the book is muted only anyway it’s not growing dramatically as you can see if you take a quarter, if you take a quarter.
So you see March 25th, the business financing book is you know, 9,700 crores. The CBC is 7,500 crores and other, other MSME long tail is $14,000. You know you can do the maths offline but basically you can take these three numbers together. Then in June 25th it’s 8300. Sorry, 10,000, 8,000 and 14,000. If you add them up, they give or take. Flat. Is it flat?
Vishal Biraia
Fair enough. Thank you. Thank you very. Yeah, yeah.
operator
Thank you ladies and gentlemen. Due to time constraints, that was the last question of the day. I now hand the conference over to Mr. Vaidyanathan MD and CEO for closing comments.
V. Vaidyanathan
Yeah, thank you very much for staying up this long and sitting with us. I want to just assure you that we’ll be careful. Except microfinance, we don’t have anything to particularly call out. Like I said, you know There are some 25 product lines. Some something will go up, something will come down. But broadly, give or take, we are in zone. We are in zone of where we said, we discussed it many times. Many callers ask this question. So I wanted to say that I want to still say still something. We’re in zone. One of the callers specifically mentioned Harsh, I think mentioned clearly what is a material moment in the 50 basis points.
I want to assure you we are not thinking anything that line. If you heard it from anywhere else, maybe you can. But we don’t have anything to call out like that at all. You know, 10, 15 basis points can always happen. We are running a business, can happen always. But nothing metric talked about. We are like I said at the beginning, we are very focused on building a quality brand, quality bank. Good journeys, good systems, good technology. All these things will eventually play out in the way the bank will come out. So that’s all it is.
So look forward to seeing you next quarter and but look for material, you know, improvement from our Q4. Basically that’s when the whole, I mean the Q3, Q4, that’s when the, you know, the economics change because of the funding cost changes by that time. Yes, thank you everyone. Thanks very much. Bye thanks. Thanks, everyone, for joining.
Sudhanshu Jain
Thanks.
operator
Thanks. Thank you. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. It.