IDFC First Bank Limited (NSE: IDFCFIRSTB) Q2 2025 Earnings Call dated Oct. 26, 2024
Corporate Participants:
V. Vaidyanathan — Chief Executive Officer
Sudhanshu Jain — Chief Financial Officer
Saptarshi Bapari — Management Consulting and Financial Services Professional
Analysts:
Jai Mundhra — Analyst
Shivam Gahoi — Analyst
Ishan Agarwal — Analyst
Piran Engineer — Analyst
Prakash Bajpai — Analyst
Aditya Shah — Analyst
Kunal Shah — Analyst
Hardik Shah — Analyst
Nitin Agarwal — Analyst
Gao Zhixuan — Analyst
Pritesh Bumb — Analyst
Rohit Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to IDFC FIRST Bank Q2 FY ’25 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Jai Mundhra from ICICI Securities. Thank you and over to you, sir.
Jai Mundhra — Analyst
Hi, Siddhant. Good evening, everyone, and thanks for joining the call. On behalf of ICICI Securities, we welcome you all to Q2 FY ’25 post earnings conference call of IDFC FIRST Bank. From the Management side, we have with us Mr. V. Vaidyanathan, MD & CEO; Mr. Sudhanshu Jain, CFO; and Mr. Saptarshi, Head, Investor Relations.
I would request MD, CEO sir to open the call with his opening remarks, post which we will have a Q&A session. Over to you, sir.
V. Vaidyanathan — Chief Executive Officer
Good evening, everyone. Pleasure to speak to all of you this evening. This is Vaidyanathan here. I got Sudhanshu with me. Sudhanshu?
Sudhanshu Jain — Chief Financial Officer
Good evening, everyone. Thank you for joining.
V. Vaidyanathan — Chief Executive Officer
Sapta?
Saptarshi Bapari — Management Consulting and Financial Services Professional
Hi, everyone. Thanks for joining.
V. Vaidyanathan — Chief Executive Officer
So thanks for joining and good evening again. This quarter, as you could see, was impacted by provisions by two significant items, which was basically the MFI business and one toll road. And we will definitely attend to that because that is the one sore sticking issue about this quarter’s results.
But before that, let me just share with you the key highlights, which are also significant positives for the bank. Lest we get drowned in the question of provisions, we should just notice the overall picture and then, of course, come to the key issue of provisions.
Now, one key issue for — strength for the bank actually, not issue, strength existing for the bank is the growth in deposits. Now this quarter, again, Y-o-Y growth in deposits is now 32% for the bank. Now, if you grow deposits, then it gives us license to grow the loans because you’ve got to keep credit deposit ratio.
In our bank, we like to keep it about 75% on an incremental basis. So, it gives the license to grow loans and that’s a very big thing. So, now our deposits have now got a significant traction, now touching INR2,18,000 crores. And like we said earlier, we don’t see any problem growing at 30%, frankly, for our bank.
Number two, retail deposits was up 37% year-on-year to now reach INR1,75,000 crores. And this is despite the fact that we dropped savings account rates to 3% last to last quarter. So our customers and markets have accepted it, obviously, and still deposits are growing very well. Third thing is that our CASA deposits have grown by 37.5% this quarter. It has now reached INR1,09,000 crores. Our CASA ratio is upwards of 48%. And our cost of funds this quarter was stable at 6.46%. But this 6.46% includes, let me say, the legacy cost that we’re sitting on, which is the pre-merger IDFC, what we carried into the bank. If you exclude that, our cost of funds is 6.37%, which is quite stable.
Now second thing is loans. Now on the loans front, we saw a strong growth. We grow — saw a growth of 21.5% year-on-year. If you remember, this is what we had kind of guided for earlier. And our total loan book has now got reasonable traction. I’d say we’re now INR2,22,000 crores.
Our retail loan book grew by 25% year-on-year. And later you will see that this 25% is also accompanied with good asset quality, which I will refer to later. Basically, just pull out my growth in net NPA for the retail book. So the retail gross NPA is 1.57% and the net NPA is 0.53%. Now for — so basically I’m trying to say that — what I’m mentioning is that retail has grown by 25%, but asset quality is still very good on this front. We’ll talk about collection efficiency a moment later.
Third item to call out is asset quality. On the — sorry, I want to add one more thing on loans. Basically, our corporate loans, which is the non-infrastructure, but the corporate loans grew 20%. Obviously, initially, when the bank was post merger, our fingers were scalded by the memories of what had happened in the past. So, we were slow on corporate loans, but now we’re getting more comfort having experienced it for five years. We’ve had no NPA. So, corporate loan book has grown by 20%.
Now fourth item is asset quality. On the asset quality, the bank level gross NPA is 1.92% and the net NPA is 0.48%. The PCR of the bank has now touched 75%. Now, many of you might want to know that if the NPA is holding up at 1.92% or 0.48%, then what is SMA because after all SMA is a feeder to the NPA. The SMA of the retail, rural and MSME book, but excluding MFI, I’ll talk about MFI separately, so please bear with me on that front because MFI we have a problem, and I want to talk about that later. But the SMA 1 and 2 of the retail book is 0.87%, actually reduced over last quarter. It’s come down by 8 basis points.
Now we also track bucket zero, that is early bucket collection efficiency in the urban retail book. It’s running at 99.5%. If you can — if you go to slide or page number 28 in the presentation, you will notice that we have given from Q1 FY ’23, that is April, May, June of FY ’22, till today, we have described our collection efficiency. It is stable at 99.5%. So, this is something important to note that our collection efficiency of this front is holding up pretty well.
Now the — so lastly, I’d say, not lastly, just a couple of more points. On the rating front, our rating continues to be AA+ stable. But on the fixed deposit program CRISIL has rated us AAA, which to us is a huge, huge, huge arrival moment because of AAA by CRISIL, even on the FD program, it’s a huge moment for us. Obviously, they reviewed our capital. They reviewed the way we manage our books, the way our trend lines are, our utilization of deposits, our liquidity, all that and we feel good about that.
Now I would like to come to provisions. Now provisions for Q2 was INR1,732 crore. Now this INR1,732 crore includes a INR568 crore extra provision we had to take this quarter and we’ll just describe both of them to you. Maybe Sudhanshu will tell you in detail, but I will just keep it very brief for you.
Now the MFI business as you know, we have been pointing maybe for three quarters now, there has been enhanced increased delinquency. So, the bank has taken a conservative contingency provision of INR315 crores. Basically, what we’ve done is that we already had quite a conservative provision policy for MFI and the 90 DPD basis. On 90 DPD, we have — 80% of the book on a 90 DPD basis is already provided.
Now, what we have done this quarter is because MFI is an issue and we cannot wish it away because the portfolio is — the MFI business is disturbing in many parts of India. So, what we have done is that in the SMA 1 and SMA 2, we have taken provisions and therefore, with this, almost all of SMA 1 plus SMA 2 has been provided for by the bank. Like almost 99% of SMA 1 plus SMA 2. That is 31 to 60 and 61 to 90 has been provided for by the bank fully. So, this is what gave us the INR315 crore.
There was a second item of provision this quarter, which was a legacy toll road. Now, we had called out to you like many years ago, like two, three years ago saying that, listen, we’ve seen the back of infrastructure. We — they were close to like — there were many, many accounts worth about INR12,000 crores or INR13,000 crores, which one by one by one, we all sorted. And we almost told you look, infrastructure is all broadly done.
But this quarter came a bit of a surprise to us. It was a shock to us. We were deeply disturbed ourselves when the government announced that — the state government announced that the toll doesn’t have to be paid by customers for vehicles. Now, our client — our client which was an entry point into Mumbai, we had an exposure of INR1,100 crore at the time of merger. Now, even though the client went into NPA, we were collecting from the client. So, our exposure came down to INR500 crores-something.
Now, suddenly — and we were happy about that because end of the day, we already collected some INR700 crores-odd — INR600 crores-odd and we thought even if NPA declines, we will keep paying and life was okay because toll was getting collected. But now because toll got stopped by this directive, then our client is going to struggle to pay. We thought that we don’t want to carry this problem on the books and keep troubling all of you. So, we’ve taken 100% provision against this Mumbai entry point account. Now with this, there is no more exposure left in the account. We believe that the end of the day, the government will pay for this because I don’t think anybody — any government will really cancel a contract like this and not pay. So, eventually, when the government will pay, we will recognize it back to our income.
So, this is the point that took away close to about INR250 crores this quarter. So, these two items did affect our provision item. And that is why this number was INR568 crore of extra provisions.
Finally, I must say that if you exclude these two accounts and then see the core, that is ex MFI, and this, of course, is toll account, our credit cost for this quarter was 1.8% which is very much in line with what we’ve been talking about. So, we want to mention that.
Now, lastly, in terms of profitability. In terms of the profitability, our NII was up 21%. Our net interest margin was 6.18%. Our core operating profit was up 28%. So, it is true that we have disappointed many by these provisions. And even we don’t feel very good about this Mumbai entry point suddenly coming and bothering us like this. But the important thing is the core operating profit. So, core operating profit is up 28% Y-o-Y. So, we feel that sooner or later, when we see the back of this MFI business, which we will, then you will get to see a normalized profit of this bank. Then the — so therefore, our capital adequacy, I think, including the benefit of the merger that just happened, it’d probably be CET-1 of 14% is quite so strong and CRAR will be 16.6%.
So, I must say that the key point to call out this quarter was really the provisions item. But I think, like I said, we will want to put this behind us. The other thing is really a number of employees who might be hearing the program, I want to say that because the profits are down and down to INR200 crores, maybe some of you will — maybe — might want to think how could this reduce so sharply. I want to just say to everyone of the employee that frankly, we are really very proud of you. All of you are working very, very hard and brought the bank to this position of strength from where it was. I really want to thank every one of you personally and — on this occasion, the bank’s deposits, growth, everything is looking very strong. All of you are experiencing what a fantastic technology stack you have. All of you are experiencing what — how our app is being experienced by our customers and they’re talking to you about it. All of you are experiencing the system we have given you, the products we have given you. So, all of you are experiencing that from within that we’re building a good bank. And as and when you will see these provisions through and this microfinance issue through, the core will continue to emerge strong.
And frankly, when you look ahead, I have no doubt in my mind, when we look ahead of — we talked of this INR6 lakh crore of deposits by FY ’29, frankly for us growing 25% is not an issue to grow the loan book to the numbers we talked about earlier, honestly I don’t see any those stories fundamentally change. And sooner or later, you will forget this quarter and this MEP and all these things.
That’s my quick comment to all of you. Thank you.
Do you have anything or –?
Sudhanshu Jain — Chief Financial Officer
So Sudhanshu here. I will touch upon a few other key numbers. There might be some repetitions, but I’ll try to sort of give some additional data points.
Yes, yes, yes. As Vaidya spoke about, that the customer deposit growth has been quite robust. It is at INR2.18 lakh crores now at September 30. The Y-o-Y growth was 37%. CASA deposits increased by 38% on a Y-o-Y basis. In fact, if you see on an average CASA basis, the growth was at 37%.
Term deposits also grew at about 27.5% on a Y-o-Y basis with retail term deposit growing at 38%, which means the growth in the wholesale deposits was only 8% on a Y-o-Y basis. Our branch count is now at 961 branches. During this half year, we have opened about 17 branches for the year.
As we mentioned on Slide 19 of the presentation, the high-cost legacy borrowings further reduced by INR2,400 crores during the current quarter. By the end of this year, there will be a few more repayments and we will be left with just about INR4,800 crores to be paid off. Credit deposit ratio improved on a sequential basis to 97.7%. The incremental CD ratio during last one year is at about 78%.
Moving on, if you see the cost of funds and the cost of deposits, both have remained quite stable during the quarter. The cost of deposit was at 6.38%, broadly the same number was in the previous quarter. And cost of funds for the quarter has reduced by 1 basis points to 6.46%.
On the asset side, if I have to tell, as you would have noted, the funded assets registered a strong growth of 21.5%. The funded asset book is now at INR2.22 lakh crores roughly. The sequential growth was at 6.3%. We have given a detailed product-wise cut in Slide 23 of the presentation. You may further note that retail has grown at 25% on a Y-o-Y basis. Within this, the secured book has grown at a faster pace at roughly about 30%, 31% on a Y-o-Y basis.
We have increased our growth in the corporate book. You can see that sequentially the book has grown by about 11%. And on a Y-o-Y basis, the growth is about 20%. The infrastructure book is now down to about 1.2% of the total funded assets.
Another point to note here is our outstanding to one telecom major that’s now almost reduced to zero. On the funded asset side, in fact, the outstanding is zero. And we have a very miniscule exposure to the non-funded exposure.
Talking of credit cards, we have now issued more than 3.1 million cards. The gross spend on credit cards increased by 46% on a Y-o-Y basis in Q2 and the book now stands at INR6,332 crores.
Moving on to asset quality, the GNPA increased marginally by about 2 basis points to about 1.92% and the net NPA stood at 0.48%. If we exclude the microfinance book, the GNPA in fact improved by 4% on a sequential basis. We have stepped up the provisioning during the current quarter and the PCR now stands at 75.27%. This was primarily contributed by the increase in provision on the Mumbai based toll account. GNPA in the retail rural and MSME book stood at 1.57% and the net NPA stood at 0.53%. If we exclude the microfinance book, then the GNPA stands reduced to 1.50%.
The overall standard restructured book continues to come down and has further reduced to 0.22% [Phonetic] of the funded assets. This was 0.26% in the previous quarter. About 95% of the restructured book is secured in nature and we hold about 19% provision on the same.
Moving on to SMA 1 and SMA 2, Vaidya already touched upon that we have seen a reduction of about 8 basis points from the previous quarter. The SMA 1 and the SMA 2 book, excluding microfinance, it was at 0.87%.
Gross slippages for Q2 were INR2,030 crores and net slippages were about INR1,392 crores for the quarter. Recoveries and upgrades were slightly higher at INR638 crores in this current quarter against INR526 crores in Q1 FY ’25. The net slippages in value terms increased by INR260 crores vis-a-vis the previous quarter and 40% of it came from microfinance. Balance, I would say, was spread across products. In percentage terms, ex-microfinance, the sequential increase in the net slippage ratio was about 20 basis points.
Moving on quickly to profitability., NII increased by 21% on a Y-o-Y basis to INR4,788 crores. NIM was broadly stable, I would say, at about 6.18%, which was lowered by about 4 bps on a sequential basis. Fee increased by 18% in Q2 on a Y-o-Y basis. Now 92% of the fee is contributed by the retail book. And the fee to total assets was at about 2.05% for the quarter.
We had a good decent quarter on the trading front. The trading gains for Q2 were at INR105 crores. Operating expenses increased by 18% on a Y-o-Y basis and cost to income was broadly stable at 71% for the current quarter vis-a-vis 70.5% in the previous quarter.
Core operating profit, including trading gains, increased by 30% on a Y-o-Y basis. And if we exclude trading gains, then the increase was about 28%. Provisions, I would skip, Vaidya has adequately covered. But just one point to add that if we exclude the provision which we have taken on the toll account and the additional provision on the MFI business, then for the balance book, ex MFI and toll account, the provision was at 180 basis points. This was roughly 170 basis points in the previous quarter, which is to further state that we have not seen a — we have not seen much of an increase in the rest of the book.
Profit after tax for the quarter was at INR201 crores. And if we adjust for these additional provisions, which we have taken, then the adjusted PAT would be INR626 crores. Capital adequacy, as Vaidya touched upon, including the benefit which is expected to come in from mergers of about 24 basis points. Our CET-1 would be 14.08%.
We have also taken an impact on the microfinance book where the risk weights have been increased from 75% to 125% during the quarter. This had an impact of about 21 basis points on RWA.
LCR was broadly stable at 116% and this is well within the range which we have been guiding over the quarters.
With this, I will end my opening remarks and we can open the floor for questions.
Questions and Answers:
Operator
Thank you very much, sir. [Operator Instructions] Our first question is from the line of Shivam Gahoi from Abu Dhabi Investments [Phonetic]. Please go ahead.
Shivam Gahoi
Hello, sir.
V. Vaidyanathan
Hi.
Shivam Gahoi
Sir, every quarter there some surprises are coming up in our bank. How should we model for the next three to four quarters? And how are you seeing the environment for the housing finance in the next few quarters?
V. Vaidyanathan
Housing finance is stable and growing. So I think it’s growing for everybody. For us, I think housing finance is growing at 20%. But — and that should be quite stable.
Now to your first question actually that we gave a surprise this quarter, frankly, we are sorry about this because we really believe that our issues on infrastructure were behind us. They were like, we haven’t put out the list, but we wanted to put it on a nameless basis. Next time, we’ll put it. We have INR14,000 crores of such loans which we identified and we have dealt with it — dealt with it over the last five years, INR14,000 crores. And that, of course, include Vodafone, it’s INR3,244 crores, which eventually did not default, but gave us all quite a scare and fright and bad news in news and media and all that stuff. So — but barring that, also, there were — including that there were INR14,000 crores, we dealt with all of them one by one.
I must tell you that many of them was very difficult. They were — some of them were in court, some of them were in the ARC. They were difficult calls [Phonetic] all over. So it — really, we took it out of great difficulty, and we finally thought we saw the back of it. This transaction by the state government to waive off fees for toll here was completely out of the blue. It was just nowhere in the picture. It’s just a wild thing. This is one of the reasons we don’t like project infrastructure financing because we are hostage to these kind of movements outside of our control. So this was an odd one that came through.
Shivam Gahoi
Okay. And the second question regarding the credit card business. So, are we on the breakeven? And what are the delinquency — because the RBI already saying like there is a discomfort in the unsecured lending. Yes, so what’s your thought on that?
V. Vaidyanathan
On credit card, this time, we have given a lot more disclosures. So, while my colleague pulls out the number of credit cards, we have actually shown on our presentation the credit cards SMA. SMA for credit cards this quarter was 1.69%. Last quarter was 1.88%. And the quarter prior to that was, the March ’24 quarter was 1.74%. So, let me [Indecipherable] the other order of simplicity. March ’24 was 1.74%, June ’24 was 1.88% and September ’24 is 1.69%. So, for us, the credit card is behaving well and really on expected lines on the credit portfolio.
And we are, of course, watching it very closely because we saw the numbers of the other credit card company which is — it’s a monoline in this business and we saw those numbers and we saw another bank’s numbers and credit cards. We will be very watchful. But as of now, we are transparently sharing our numbers with you. It’s quite stable.
And in fact, on page number 38 of the presentation, we have even put out data about the CIBIL TransUnion data of June ’24. In that, they are seeing that the 30 DPD for June ’24 for the industry is 4.6%. IDFC FIRST Bank 30 DPD for June ’24 is 3.6%. For March ’24, industry was at 4.3%, we are at 3.3%. Similarly, there is also 90 DPD data. In the 90 DPD data, the industry is at 1.9%, IDFC is at 1.4%. And for March, it was 1.7% for industry, we’re 1.4%. So, from these numbers, we conclude that we are doing well on credit card asset quality.
Sudhanshu Jain
And Nikhil [Phonetic], just to add, we have not seen an increase in credit cost in Q2 vis-a-vis Q1.
Operator
Thank you, sir. Our next question is from the line of Ishan Agarwal from Erevna Capital. Please go ahead.
Ishan Agarwal
Hello. And thanks for the opportunity.
V. Vaidyanathan
Yes.
Ishan Agarwal
I’ll straightaway dive into my questions. Firstly, excluding the prudent extra provisions on microfinance, SMA book, and the toll account of MEP, you mentioned that the credit cost is 1.8% of the loan book, the average loan book. Whereas my calculated number comes to 2.15% of the average loan book. Is there something that I’m missing here?
Sudhanshu Jain
Yeah. So essentially, if you exclude the provisions of the entire MFI book —
Ishan Agarwal
Why would we do that because in the last quarter, when you’re comparing it with the last quarter of [Indecipherable]. So including at MFI, our provision is 2.15% and last quarter, we had reported a provision of 1.92% including MFI. So, the 30 bps is adding because of the MFI this time, the 30 bps provision for this quarter?
Sudhanshu Jain
Yeah. So as, I think, I had mentioned that we are seeing 1.8% excluding the MFI book and the additional provision which we have taken on toll, right? This number was 170 basis points in the previous quarter while the overall credit cost was 190 basis points. If we exclude similarly microfinance book in the previous quarter, then the number was 170 basis points, okay?
So, just to fill in the reconciliation for you, 180 basis points is ex-MFI. We have seen additional provision on account of this toll and the MFI additional provision which we have taken that has consumed about 105 basis points. And the rest is coming in the normal course on the MFI book.
Ishan Agarwal
Okay. So our provision on the rest of the book has increased from 170 bps to 180 bps this quarter, but our SMA movement has actually gone down. So, what is leading to this jump? Like which portfolio is actually contributing on the higher — for the higher provisions this quarter?
Sudhanshu Jain
See 10 bps is not a major increase, right? As I said credit cost —
Ishan Agarwal
Nothing to worry in the personal loan segment or any other segment as of now?
Sudhanshu Jain
Small bit of increase would have happened there, right, because as I said, that we can see the normalization or so. But it’s not worrisome. That’s why we have given a lot of data points.
V. Vaidyanathan
But you can break it up for them. Of the incremental steps that have happened this quarter, how much came from —
Sudhanshu Jain
These are credit costs [Indecipherable] for a moment. But the 10 bps increase is, I would say, is on the rest of the book, right? And some bit of increase would have come in the personal loan segment, but it’s not material. Another comfort which I sort of — I am again reiterating is the increase is also not ascribed to credit card. There we are seeing stable credit costs in Q2 vis-a-vis Q1.
Ishan Agarwal
Okay. So for the remaining two quarters, I think Mr. Vaidyanathan had mentioned at the end of Q4 that FLDG comes into play from Q3 and Q4. And given that we have provided the SMA microfinance book as on date, how do you see the credit cost number shaping up for Q3 and Q4?
Sudhanshu Jain
Yeah. So, while we continue to be cautious, right, because there’s a lot of moving parts, right? But our best estimate as on date is at — on this I’ll split into two or three parts, right? On the ex-toll account and the MFI book, we may come in at about 165 to 170 basis points, right, which you would notice that it’s a slight improvement, which we are sort of guiding vis-a-vis what we got in H1 because of some benefits coming from FLDG.
Ishan Agarwal
This includes the MFI book completely.
Sudhanshu Jain
No, no, no, no, no. I will again sort of clarify, we are seeing — I’m splitting this into, one, I would give you a data point on MFI, how do we see the credit cost for the year. Second is an impact, which we see on this toll account, right, for the year. And third would be the rest of the book, okay? So on the — let me start with the toll account. The annualized impact for the year could be about 10 basis points to 11 basis points for the year. For the JLT book or the MFI book, the impact would be about 45 basis points to 50 basis points for the year and — in terms of credit cost. And for the rest of the book, it could be about 170 basis points. So, if you sum it up, it could be somewhere around 225 basis points for the year.
Ishan Agarwal
225 basis points for the year?
Sudhanshu Jain
Yeah.
Ishan Agarwal
Okay. So the retail would be around 215 bps and 10 bps is the toll, now retail I’m including the MFI book.
Sudhanshu Jain
Yeah, that’s correct.
Ishan Agarwal
But this does not include the prudent provision of the MFI book or does it, the 225 bps that you’re talking about for the year?
Operator
Mr. Ishan, I request you to repeat your question.
Ishan Agarwal
Yeah. So my question was we are saying that the entire full year credit cost could be 225 bps, which includes the MFI book, the toll account and the normal retail provisions of around 165 bps to 170 bps. So, this 225 bps also includes the prudent provision that we’ve made today on the MFI book, right?
Sudhanshu Jain
Yeah, it subsumes that provision as well.
Ishan Agarwal
Okay. Okay. Thanks for that. Now, from FY ’26 onwards, the new ECL provisioning norms that come into effect, what could be the steady-state provisions we can expect under ECL norms for our bank?
Sudhanshu Jain
So, it’s difficult to comment on the timing on the ECL as far as concerned, right? While there have been indications that this might come in, but at the same time, the draft guidelines which came in also suggested the banks will be given a one-year window to prepare in terms of system to work on the models, recalibrate and all those stuff. So, my belief is that ECL impact could come in, certainly not in the next year, but could be earliest maybe ’26, ’27.
Ishan Agarwal
So, whenever that happens, that will lead to a credit cost impact of around, say, 10 bps, 20 bps or more?
Sudhanshu Jain
Could be around that, but I think it’s — I’m not guiding. [Speech Overlap]
Ishan Agarwal
Okay. Okay. Understood. Yeah.
Sudhanshu Jain
But it could be roughly that.
Ishan Agarwal
And [Speech Overlap]
Operator
Sorry to interrupt Mr. Ishan. We request you to return to the question queue for any follow-up questions.
V. Vaidyanathan
No, no, but one second on Ishan. Ishan, since you understood the numbers and the split, Sudhanshu split it for you properly, the thing is that even at 225 bps for other entities with similar business models, on the lending side, I know our cost to income ratio is higher, but on the lending lending side for similar models, similar yield, 225 bps considering the MFI has — given broken our back so hard, still to come back and be in that zone, this would actually count for really good credit in an overall sense, Ishan.
Operator
Thank you very much, sir. Our next question is from the line of Piran Engineer from CLSA. Please go ahead.
Piran Engineer
Yeah. Hi, team. Thanks for taking my question. Just a couple of clarifications. Firstly, the toll road account was a INR250 crore account or a INR500 crore account?
V. Vaidyanathan
It was a INR1,100 crore account initially, then along the way they paid back INR600 crores.
Piran Engineer
Okay.
V. Vaidyanathan
Principal. Paid back meaning, not one shot, but they kept paying along the way every quarter a little bit money. So, we collected a lot, we are left with INR500 crores. We already had a provision of about — we were already prudent on that account. We were keeping about like INR240 crores-odd crores of provisions or INR260 crores. So we’ve taken the balance of INR250 crore now.
Piran Engineer
Okay. Okay. Now I got it. Sir, it was 50% provided earlier, now it’s 100% provided.
Sudhanshu Jain
It was about 42% provided earlier, balance we have taken in this quarter, amounting to INR253 crores.
Piran Engineer
Understood. Okay, that explains it. Secondly, just on the microfinance business, could you give us what were the slippages this quarter versus last quarter?
Sudhanshu Jain
We are not calling out specifically that number. There has been a slight uptick in slippages during the quarter. But —
V. Vaidyanathan
Keep it as credit cost, no?
Sudhanshu Jain
Yeah, credit cost. [Speech Overlap]
Piran Engineer
[Speech Overlap] is fine.
Sudhanshu Jain
Yeah, credit cost for H1 on the microfinance book is about 6%-odd.
Piran Engineer
Okay. So, it’s fair to say that 1Q would have been a bit lower and 2Q would have been a bit higher than the 6%?
V. Vaidyanathan
Yes, of course.
Sudhanshu Jain
That’s correct.
V. Vaidyanathan
So what would have been Q2, for example?
Sudhanshu Jain
Q1 was roughly about 4.5% to 5%.
V. Vaidyanathan
And Q2 was?
Sudhanshu Jain
Q2 is about 7%, 7.5%. So, we have seen a slight uptick, yeah. And that’s why we have also on a prudent basis made that additional provision, which was equivalent to 2.5% of the overall microfinance.
V. Vaidyanathan
See, one of the reasons why our — see, we are observing the market. We’ve seen all of the numbers, we’ve spoken to peers in the industry. We were keeping a very high bar on provisioning policy, meaning that like close to about 80% of 90 DPD we were providing for. So, imagine anything slips, 80% gone straight to the P&L. So, we kept it like that all the while just to be well provided in this book. So, that is why our credit costs are what they are. And the way to think about it is that we recognize it early. And eventually, when a recovery comes, it comes, we will take it back as it comes if it comes.
Piran Engineer
Okay. That makes sense.
Sudhanshu Jain
Just to add, that’s an important point. Just intuitively, while these numbers on the MFI provisioning may look a bit high, that’s because we make a very higher provisioning on the recognition of the stress. That’s an important point to be kept in mind.
Piran Engineer
Okay. Fair enough. And in MFI, have we moved it to 125% risk weights like some of the other banks have done? Or are we still at 75%?
V. Vaidyanathan
No, no, we are at 125%.
Piran Engineer
And this was done this quarter, is it?
V. Vaidyanathan
Yes.
Sudhanshu Jain
Yeah. And this had an impact of about 21 basis points on CET-1.
Piran Engineer
Okay. Okay. Fair enough. And just lastly, V.V, you mentioned that you had cut SA deposit rates to 3% a couple of quarters back. This is for what bucket, less than 1 lakh if you could say?
V. Vaidyanathan
No, no. We took it straight up to 5 lakhs.
Piran Engineer
And have you seen any negative impact of that? It’s fairly inelastic, the demand.
V. Vaidyanathan
Yes, not only — I mean the thing is that we want to raise only as much deposits as we need to have because as our legacy money keeps getting paid off, our need for money will reduce. So, therefore — but to answer your question more directly, I mean, our deposits continue to come very strong even after we cut it up to 5 lakhs. We are now realizing more and more that service is a very unbelievably powerful item and people who get used to service the relationship managers and the app and the internet and the ID and password and everything [Indecipherable].
Piran Engineer
Okay. Okay. That’s fair. Okay. That’s from my end. Thank you. And wish you all the best.
V. Vaidyanathan
Is there any question of your, which we did not answer just to be clear on?
Piran Engineer
No, I think the slippages number in MFI is what I wanted, but I think the credit cost also answers that.
V. Vaidyanathan
Credit cost is a good proxy for that. And I’ll tell you — one important point I’ll tell you about what provisioning policy we were following, we were following 75% at 90 DPD and 100% at 120 DPD. Now this is for MFI — actually for MFI. So, this is like — you will agree with me that this is — and it’s not now, we’ve been having this for many, many years now, like four, five years. So, this is the reason why our credit cost appears higher at this 6%-odd. Frankly, 6%-odd is not too high yet, but we’ll have to see the rest of the year coming through.
Now, a portion of a portfolio is secured by CGFMU, which is in January of this — like December of ’23, we started noting that the collection center meeting discipline was reducing. We were handing to send people to customers’ homes to collect, etc. And at that time, no one in the industry was talking about this MFI as an issue, but we did. So, in January of ’24, we started — we spotted this, and we started insuring our book. And we also tightened all the screws on the lending side. So, our disbursal started coming down. So, our disbursal came down from INR4,250 crores. It’s what we disbursed in Q2 FY ’24. In Q3 we brought it down to INR3,800 crores. In Q4, we disbursed INR2,800 crores. In Q1 FY ’25, we disbursed INR2,800 crores, and Q2 we disbursed INR2,000 crores. So, basically, we saw this, let me say, ahead and then we reduced our disbursal.
And we did one more thing. We started insuring the book with CGFMU. So, today, because incremental bookings in January ’24 has been insured, so today, 50% of our book is already insured. So, on this, coming to provision policy again, on this, we have a more relaxed provisioning because we know that end of the day this is backed by security of a guarantee by CGFMU. So, blend-blend, the 75 and 100 policy of earlier and the CGFMU policy, which is more relaxed, blend-blend, we have provided 80% of the 90 DPD.
Piran Engineer
But this CGFMU, how has your experience been in terms of recoveries now that it’s been almost three quarters because another bank has faced some trouble in getting back what they came for?
V. Vaidyanathan
No, another bank, may have their — they had their experiences for multiple reasons, and they’re out in public domain. They were — in our case, we have started it now. We — first of all, the way it works is that we pay them about 1.6% of the loan amount as, think of it like an insurance premium, if you think about it like that. We pay that and then every year on the principal outstanding of that, we pay them. Think of it like paying off — paying somebody on the whole book.
We do that. And then we give a window of — I think they have a window of one year or something in which there’s a lag after which they pay. So, the key benefit for us will come in FY ’27 because of full ageing of this book and that one-year lag will be conditionally met.
But at least we know for sure that — I mean, we know that when you wake up in FY ’27, for example — in fact, by end of this year itself, by March ’25 itself, 75% of our book will be insured. So, by March ’26, it could have lived a full one year. So, all of ’27, we will have very low credit cost in MFI because the whole book will be insured and ready to claim it back from them.
Piran Engineer
Got it. Got it. Okay. This is super useful. Thank you and wish you all the best.
V. Vaidyanathan
Thank you.
Operator
Thank you. Our next question is from the line of Prakash Bajpai from Blue Bull Stock Investor and Trader. Please go ahead.
Prakash Bajpai
Hello, Mr. Vaidyanathan.
V. Vaidyanathan
Hi, Prakash
Prakash Bajpai
I am basically not an analyst. I am a shareholder only. So, my comments or questions are from that perspective. So, first of all, I am worried about to, let’s say, this continuous provision. You have talked about it, good. But still, I remember last quarter you said that, okay, next quarter results will be subdued. But then onward, it will be pretty good. But when you said subdued, I mean we did not expect this will be a subdued. This is number one.
Number two, I mean, good that you have cleaned up the books. But if we get out of, say, microfinance, we get out of infrastructure, we get out of personal, where do you see these growth items coming next? Or do we just hang around like this only? We should forget about this as a shareholder. So, your comments, please?
V. Vaidyanathan
Yes. So if you see the — if you see the — first of all, we are not getting out of microfinance. It’s an important business for the bank because it is helping us meet many variants of priority sector. And it’s an important book because this was — so basically like small and marginal farmer, agriculture, it meets a weaker section and all that. So, we are not getting out of this, except that we have — except that we have, of course, tightened the norms get it insured — got it insured in a prudent basis and all that. So, what I described earlier.
Now with regard to which will be the areas for growth. Of course, infrastructure, we announced right at the beginning, five years ago, we won’t do it, and we are not doing it. So, even this MEP is — it’s a bit of an odd thing that came, like a curve ball that came towards the end, but that’s that.
Now — so what are we growing? We are growing — 25% is the retail finance book growth, 25%. In September ’23, our retail finance book was INR1,04,000 crores. Today it is INR1,30,000 crores. Our Q-o-Q growth is 4%. Annualized is 16%, but Y-o-Y is 25%.
Within that also, let me just share that the home loan business is growing by 20%, loan against property is growing by 20%, vehicle financing is going by 32%, the consumer business is growing by 21% and the gold loan business is growing by 1.85% [Phonetic], but that, of course, is coming from a very low base. So, these are all growth areas for the bank.
And now corporate credit is also growing. Corporate credit grew, ex-infrastructure, grew by 20%. So, let me just say that these are all lines of business that are growing and will grow. We don’t see any reason why we should not grow by 20% next year also.
Prakash Bajpai
When you say vehicle finance or property and such thing, you have to bear in mind that there is supposed to be a slowdown going on and maybe the demand for all these things are likely to come down.
V. Vaidyanathan
Well, we’ll watch it carefully and I respect your caution. But we are finding that this is — demand is quite strong. And we have — let me tell you that we have not relaxed any one of our credit criteria. This 20% growth in this business is coming with the current norms itself. We have not relaxed any credit score cutoffs or anything like that.
Prakash Bajpai
Mr. Vaidyanathan, a very simple question. In ’19 — not ’19 — in 2018, when the merger with Capital First was announced, our share price was rolling in the range of same about INR60, around INR58 to INR60. And most likely on Monday, we will hit that point again after six years of work.
So, how do you see the shareholders should take it? What do you have — any word of advice or any — how we should basically look at it? I know there is a lot of cost and there is a lot of [Indecipherable], but it’s still six years and we have done so much of capital raise, which has all gone, let’s say, I don’t know — so much provisions. How really you see it?
V. Vaidyanathan
Okay. Now for that — let me just correct the number for you so that we are quite clear about this. At the time of merger, if you were holding an IDFC Bank share, the fact is that your share price was INR37.6. You can please check your numbers, go and check your records on 11th of — maybe 12th of December of 2018. We know the numbers. We put it out in annual report also. It was so. Now that INR37 is now, say, the INR60s, mid-INR60s and what it will be on Monday or any day, we will see the numbers.
Now let me just say that in this window, the first four years, please note my comment very carefully and I understand your question because from your point of view, you’re right, your share price has not moved. Actually, it’s moved, let me say from INR37 to INR65, but still that’s what has grown.
Now let me tell you that banks, as you very well know, since you’re a seasoned shareholder, are valued price to book. Now on a price-to-book basis, the book value per share at the time of merger was INR38.43. Book value per share at merger was INR38.43.
Now, after that, who wrote the Dewan Housing Loan Book? I didn’t do it. Who wrote the Reliance Capital Loan Book of INR1,500 crores? I didn’t do it.
This management didn’t do it, which means that this management is not in this chair, and anybody who’s running it, anybody would have to provide for it. It’s not us. Who booked the Vodafone Loan? We didn’t do it. So, what I’m trying to say is that because of all these loans, the book value per share came down to INR31 by March ’21, from INR38 to INR31. And let me just tell you that had we not come with the chair and solved those accounts, God knows where would your stock should have been. And from there, from that INR31, now the book value per share has come to INR53.
And we have raised capital all right, but we have raised capital always at a premium to the book. And therefore, the book value per share is INR51. So when you lament upon the fact that our share price has not moved adequately, I request you to think what would have been the position of this bank with these INR14,000 crores of loans, of which so many thousands of crores were charged off, not by our mistake and there was no CASA of 8.5% and there was no books. So where do you think a share price should have been? So, when you point out, I agree that is your expectation, but let me tell you, this is an issue, the bank is in an early-stage bank. It goes through these troubles.
If you really wanted a stock which has all problems solved, then go and buy a bank which is giving you 18% return on equity, which has already solved this problem for 25 years. This is an early-stage bank. Now, my comment is that this bank, with great difficulty with the work of 40,000 people of this bank, has now come to a position of strength. Our rating agencies have rated us AAA and AA+, whether it’s FD or for long-term rating. Now our CASA is 47%. Now our core operating profit is INR6,000 crores, growing at 25%.
So I’m saying that we have brought the bank to a good position of strength from where it was. So, now from your point of view, has it gone up or not? These are the markets, these are early-stage bank situations. So, I do believe bank has made big progress on technology, brand, people, CASA, loan growth, deposits, retailization.
Prakash Bajpai
I think everything is not correct because you are talking only the numbers from the point that the merger happened. You should take it from the point when the merger was announced. And you knew fully well what you are getting into. And from that point onward, if you will see that we have practically actually not made any progress. And INR58 to INR60, that share price, I remember because I have been shareholder from 2013, not today.
V. Vaidyanathan
Yes, please go and — I would definitely like request you to go and see the numbers. We’ll share the screenshot with you. The share price was INR37.5 in December 2018 when the time of merger has happened. Now I’m not saying, by the way, that movement of INR38 or INR37 to INR58 is a great job. But it’s also a fact that during this window, the banking system got — did not get re-rated. You can see the — there were many other banks who, if you check the banking index, banking index has not performed since then. Our bank, you please check the shareholder report, we’ll send you — if you leave your details behind with us, we will share with you exactly what the bank index has moved, how much our share price has moved, and how much our book value per share has moved.
Our book value per share has moved up only 20% in five years. That is after the initial collapse that happened upto INR31 and now up to INR53, it has now gone up by 20%. All other banks have gone up by 100%, meaning the book value per share.
Now if we have grown by percent, I’m not saying it’s a great job. It’s not that. But I’m just saying this was just an issue whether whoever is there in the chair, this would have been the situation, because it’s a past issue. So, for example, if one bank share price is quoting INR400, today it’s quoting INR25, then well, it is not because of this management. Someone else has gone and done whatever they’ve done. So we got to benchmark somebody from where they take over a position and then move the stock — measure benchmark from there.
Operator
Thank you, sir. Our next question is from the line of Aditya Shah from Vikram Advisory Services. Please go ahead.
Aditya Shah
First of all, I was —
V. Vaidyanathan
One more thing, just to the previous comment, just to tell you, just to finish that answer. Therefore, we have done our best. The bank has made tremendous progress. Otherwise, the book value of share could not have been INR51 today after the situation we were in. But let me just say that we’ve got to look ahead. I am not in the business of looking backwards. This was given for context since you raised a particular number. When we look ahead, we believe that this bank at this stage is posting a 10% return on equity on a more normalized basis. Now, 10% has to move to 12%, 12% has to move to 14%, 14% has to move to 16%. Let me tell you a bit of about what the underlying prospect of this bank is.
Now, I leave it to you as a shareholder for you to assess this and get the confidence and I request for your confidence. What is it? Now, end of the day, the bank is borrowing money at 6.3%. We have brought down the cost of funds from 7.8% to 6.3% in these five years. And we are raising INR55,000 crores of money with just 1,000 branches raising INR55,000 crores at 6.3%. I would request you to note that this is really good by any bank standards of the country today. Now we are raising money at 6.3%, we are lending, we’re getting a NIM of 6.3%.
Now this is a five-year-old bank. Now for a 6.3% NIM, even if you add about 1.5%, 1.6% as fees, so that makes it about 6.3%, 7.3%, about 7.8%. Now, this cost-to-income ratio is about 71% today. In due course, this is just a five-year bank, but in due course, when you take five years, six years, seven years forward, or maybe longer, this cost-to-income ratio will touch 50%. That’s the way end of the day, even Capital First is running at only 48%, and we have done that. So, it will come to 50%. And then you know that that would be the operating profit of the bank could be that 8% minus 50% like something like 4%. Even if a credit cost is 1.3% of assets, that would mean a pretty strong return on assets for the bank.
So, fundamentally, long run bank is structured superbly in terms of brand plus incremental economics. Now things do come — regulatory changes do come. Even now, we have given a guidance for five years, but we’re always watching out for market changes, guidance changes,
Regulation, etc. Please consider those risks also when you’re investing in the bank. But if you — this is the early stage, but I think the long term of the bank is really, really very, very good. Thank you, sir. I request Mr. Aditya to take your question.
Aditya Shah
Yeah. Yeah. So sir, first of all, congratulations on the last six years of the merger, where you were able to build the bank in terms of deposits and CASA and growth when changing the metrics of the bank from infra to retail and everything. It just sounds perfect, and it is a great job where — against all odds where people were doubting whether you would be able to do it or not and all of that. So, that’s a great start. But what I would like to point out to you, sir, right now is that — it has been a great journey in the last six years for the depositors, for the customers, for the — for every people in the bank, except for investors. I will tell you why.
I don’t care about the share price. But what I care for is the predictable nature of the results. So, in my opinion, sir, till 2018, ICICI Bank never got a great valuation, whatever the reason is, because of not predictable nature of the results. Whereas HDFC Bank always got good valuation because of the predictable nature. Now we understand our bank is an early-stage bank. But for how long can this early stage be counted as? Is it six years, 10 years, 15 years? That will help us take our valuation calculated.
Second point, I would like to point out is that, when — as a bank, we have — even if we have 6% or 6.5% of NIMs, 95% of our net interest income goes in our opex. So, what do we have left for provisions when such events come up? So — so sir, that is the problem. See, while we understand none of the past first four, five years was your fault or anybody else, banking industry things go up and down. But all I’m asking is, how can we predict the results of the bank going forward? Either we just provide everything in one shot, like INR10,000 crores, get it done with, raise capital as much as we want, because the arbitrary nature of raising capital is also something that you need to look at, sir. This is all what I want to understand. Thank you.
V. Vaidyanathan
No, both questions are fair and let me take them one by one. Okay. Now when we say predictability of results, first of all, I do agree that it is 100% our intent to make the bank more and more predictable in its results. If you see our operating profit, the operating profit of the bank has been moving up significantly. Why I call out on operating profit, that is core operating profit, that INR6,600 crores. Now this INR6,600 crores was INR1,100 crores in the — at the time of merger, post-merger by the way, I’m not referring to pre — post-merger annualized was INR1,100 crore. How does the bank become predictable? If you don’t [Indecipherable] treasury profits and all, it can never make it predictable. So it’s INR1100 crores. Now that INR1,100 crore of core operating profit, NII plus fees, minus opex has now touched INR6,030 crores in FY ’24. Now even for H1 ’24 to H1 ’25, it has grown up by 29%. So, this is core operating profit, very important so that we can get predictable income.
Number two, the — in terms of credit cost. Now in terms of credit cost, let me give you a clear picture. In terms of credit cost, this year is normalizing. But next year onwards, it would be normalized. For those of you who are tracking us on capital first time, you please tell me is that even one year in those eight years or in fact, till today in 14 years, have we ever given you in the retail side a shock and said, oh my god, we’re doing a onetime cleanup. There’s is no such word as onetime cleanup I have used for 14 years, which means that we have a very good, controlled credit underwriting process. It’s working. So then if — so, therefore, predictability will come only when all these kind of infrastructure loans and MEP and this, that, etc., we have taken out I told you INR14,000 crores of such loans, but now there is a last day left. The predictability appears after that.
Now — and therefore, the — we believe that it will be reasonably predictable from now on for the next five years, because there are no major shock. But I can tell you the one shock that you should even now be prepared for is that from the regulations change from time to time. Regulations do change from time to time. The signals that come from the regulator may change, about what may need to change or not, market situations may change. We may not want to do a particular line or line of business because we may consider risky. So, these kind of risks can be there. But broadly speaking, we should expect some predictability, but we do expect that maybe ’27 onwards for the next seven or eight years, we expect — that is FY ’27 and onwards, we do expect that by the time whatever had to come and go would have come and gone and then it becomes a reasonably stable machine.
And what was second question? Second question was on the opex. You are saying basically the margin is strong, but a lot of money is going in opex. Was there a second question?
Aditya Shah
No. So the second question was — so sorry, the third question on that was that, let’s say, if you consider this quarter results for ICICI Bank, though it is not comparable, but what I wanted to give you food for thought is that out of INR1,700 crores that we provided, let’s say, we remove this INR500 crore of buffer, we still have INR1,200 crores of provision on a net interest income of around INR9,000 crores — so INR8,900 crores. Whereas ICICI Bank has INR40,000 crores of net interest income and is providing for INR1,200 crores.
V. Vaidyanathan
No, no, no. I think just to be very clear — no, no, let’s be very clear about this. We are comparing two different models altogether. If you — because these are models built for 25, 30 years largely mortgage-based, you give us — and if you go back and see the same bank of between 2000 to 2005 or ’06 or maybe even earlier period of this, you could see that these banks were going through the period of ups and downs.
Finally, a model takes time to stabilize. But let me just tell you this much that our bank has made massive progress in five years. Now, at least we are in a position to predict INR6,000 crores of operating profit and we can expect about 24%, 25%, we can expect operating profit to increase this year also. So, the point therefore is that that early-stage banks do have the share of ups and downs. I’m am requesting you to please factor it in.
But the good news is that the — when you look ahead, let me say FY ’29, I am quite confident that by the time all of these things — you ask me how long, five years, 10 years, 15 years. I am telling you that by ’27, ’28, ’29, I am definitely expecting our bank to become very stable in terms of predictability. That’s your first question, predictability.
On second question, on opex. Now — on the opex front. Now if you see the — I mean, it’s well known, I don’t want to spend too much time expanding on it in the interest of time. But our — in the last five years, we have grown our branch network. We have launched — if you see this in investor presentation, the number of products launched by the bank, the bank has launched not less than 20 products.
The bank has launched a prime home loan, tractor loan, education loan, new car loan, gold loan, commercial vehicle, farmer loan, Kisan Credit Card, micro credit loan, wealth management business, FASTag, Forex Solutions, credit card. I mean every product has its cost to start with. So — and branch network, there’s a huge branch network coming up here. So — and people and technology. So, all this has happened in the last five years. So, therefore, early stage — early stage has to go through the opex. The next generation of people running this bank between, say, 2030 to 2035, will find all of these things to be amortized. When the other bank I was running between 2000 and 2009, we were struggling with all these kind of things. But today, it’s on an amortized book and each of the branches are having INR300 crores of deposits and all amortized and look the money, how the bank is printing money.
So, everything has a life stage and the people who go through the initial stage of building a bank are karmayogis [Phonetic]. And you have to go through a karmayogi, someone has to do the job of karamyogi for the future generation to print money.
Operator
Thank you, sir. Our next question is from the line of Kunal Shah from Citigroup. Please go ahead.
Kunal Shah
Yeah. Hi. So, just to get into a few specific numbers for the quarter and maybe it would be great if you can get the absolute numbers. So firstly on MFI, is it correct to assume that we would have done the provisioning in total of INR500 crores, including INR350 crores-odd of contingency? And the last quarter, it would have been INR120 cores-odd, INR150 crores-odd, Just want to reconfirm those numbers.
Sudhanshu Jain
No. So, Kunal, as I mentioned for half year, the credit cost on this book is about 6%-odd, right?
Kunal Shah
Sir, absolute number if you can just say how much is —
Sudhanshu Jain
Coming to that, right? And I further sort of gave a breakup that in Q1 the credit cost was about 4.5%, 5% and in Q2, that has inched up to about 7%, okay? If you — and average MFI book is about INR12,000 crores-odd, right? So if you apply these percentages, you would realize that the credit cost, which has come through is about INR400 crores. On top of that, we have made this additional provision of INR315 crores, right?
So, those are the numbers in the MFI front. Of course, we have done some, I would say, advanced provisioning and hence, I said, while in the full year guidance credit cost, this additional provision is also subsumed.
Kunal Shah
Okay. Sir, 7.5% on INR13,000 crores or maybe 7% to 8% on INR13,000 crores or INR20,000 crores, that would be like INR250 crores-odd on a quarterly basis. 7.5% is the annualized number.
Sudhanshu Jain
Yes, broadly.
Kunal Shah
Okay. So, INR250 crores plus almost INR315-odd crores. So that’s the broader number. And when we look at it in terms of the last quarter, if I take the same as the 4% number, that would have been closer to like INR130 crores-odd.
Sudhanshu Jain
No, that would be higher. So, on a INR12,000 crores, right, if we apply 4.5%, 5% right, then —
Kunal Shah
Yeah, that is again an annualized number. Yeah.
Sudhanshu Jain
Yeah, it comes to about INR150-odd crores. You are right.
Kunal Shah
Yeah, yeah. That’s what.
V. Vaidyanathan
Basically, think of it that this quarter we have taken provision of this INR320 crores on the SMA 1 and 2 portfolio.
Kunal Shah
Yeah. Yeah. Yeah. Yeah. Clearly, yeah.
V. Vaidyanathan
As and when this portfolio — some of this money obviously would slip to 90 DPD and what is 90 DPD will slip to 120 DPD in normal course. So, when the slippage will happen, this time since it’s pre-provided, the impact in Q3, Q4, at least on the JLT line will not be that much.
Kunal Shah
Yeah. Got it. And when we were guiding for the full year number, 40 basis points, 50 basis points of impact on MFI, so that comes to broadly like INR1,100 crores-odd, INR1,200 crores-odd. So particularly coming from MFI for entire year FY ’25. So considering what has been provided, there is still maybe something more which can come in, okay? And that’s to the extent of INR300 crores-odd.
Sudhanshu Jain
Yeah. So number for the year matches broadly correct, it could be about INR1,000 crores to INR1,100 crores, right? But Kunal again to note, right, provisioning policy is very stringent, right? Vaidya said that we end up providing 75% in 90 days and 100% in 120 days, right? For other institutions, the provisioning policies could be very different, right? So while for us, it looks high, I think that picture also needs to be kept in mind that we are doing a lot of early recognition.
V. Vaidyanathan
We do early recognition. We don’t touch the books. We don’t give the extra benefits to pay us back. We just keep the books clean. It’s just the way we work. That is the way we dealt with our prior issues at the time of merger. We did what we did. We are dealing with the same way. I can tell you investors that nobody can ever pick up a finger on our bank in terms of how we run our books, how we manage our accounts. We keep it super clean and our practices are clean. So, we do that.
And to an earlier question, we were talking about our — this one, our SMA, we have actually given out the data of SMA for every product. If you go to Page 32, it’s a very important slide we introduced this time. We have — as you know, banks do disclose NPA. We disclose SMA. But this time we carried transparency to another level. We have disclosed SMA by product. Then we have disclosed SMA by product for three quarters at a stretch.
So, you can see that you don’t have to take our word for numbers can talk. If you see the first column of mortgages, it is 0.4%, 0.39%, 0.39%. So, we know that mortgages are stable. We don’t have to expect a problem next year I mean at these numbers. So, see vehicles, 0.96%, 1.22%, 1.07%, it is stable. Similarly, MSME is stable. You’re at 1.26%. Consumer durables are stable at 1%.
Kunal Shah
Yeah, most of the product segments are stable, yes.
V. Vaidyanathan
We are clearly calling up, only one product is bothering us. Other than that every product is fine.
Sudhanshu Jain
And Kunal, another disclosure, which we have made in terms of our exposure to top five states and vis-a-vis some of performance vis-a-vis with the industry. [Indecipherable] that we are broadly there except Kerala, where we are slightly higher. There also we reduced the book in last one year or so by 30%.
V. Vaidyanathan
But let me tell you one more thing for shareholders and a few shareholders spoke before as well as analysts, let me just keep it simple for everybody. I feel that people who would be looking — would be looking at this quarter’s results and just look at one MFI book and thinking that there is a problem, etc., that data we have disclosed [Phonetic] in page number 32. But let me just say that looking at one data point of one MEP or this one, people who take — come to conclusions the bank will make a mistake because you cannot — you cannot underestimate the power of a bank that is borrowing money at 6.3% and lending it out to get a NIM of 6.3% with controlled credit cost, controlled credit cost. It’s like even now, if you compare it to other banks with similar models, this credit cost, including MFI, including that, is still quite low.
So, the power of a bank running at 47% CASA, clean governance, good incremental return on equity at the bank, incremental return on equity of the bank which is the — you can compute it and a growth model running at 25% is something that you will make a huge mistake if you — in my opinion, [Indecipherable] call, but I think people who would bet against this call would be — I would say that this is a really great bank in the making, really great bank. After five years, you would have forgotten this quarter, but you would have seen a INR11,00,000 crore business bank which will be INR6,00,000 crores of deposits and maybe INR5,00,000 crores of loans. I think it’s a really good bank coming up even at a 2% ROA or 1.8% ROA, 1.7% ROA, that would still be a lot of money.
Sudhanshu Jain
And Kunal, on this MFI, just to add, see this all along, this book was not giving us that kind of a pain, right? Credit cost was range-bound except COVID if you take out, right? It was about 1.5% to 2% right? We know — all know that some overleveraging has happened, right? While we also — I can confirm we also gave only one loan to a borrower at the time, right? It’s only — and our problem started with Tamil Nadu where unfortunately, we had a slightly higher concentration. We had an impact coming out of floods and then we know the heat wave and all those. So, it accentuated the problem, right? But we were proactive enough to slow down the book, right? And we have kept stringent provisioning policy. We are allowing the loss to sort of come through. So as a management, we have been quite proactive in recognition of this.
While credit costs are high in this year, and could — we expect it to sort of cool off into Q1, Q2 and so on. And next year, it may be still higher than the normalized levels of 2% which we’re seeing earlier, but we feel that the provision, which is about 225 basis points guided for this year, that would come off to a normalized level into the next year, right?
We have also done a lot of policy interventions. That’s why you were seeing that apart from JLG, we are not seeing that kind of an increase, whether it’s SMA 1 and 2. So, what I can comfort the shareholders and investors is that we have done a lot of policy interventions. That is why you are seeing some of these numbers.
I spoke of that in credit cards, we have been very cautious. The stress is not increasing, similarly in other product classes. So, there have been one or two topical things which have come in and that needs to be taken into account.
V. Vaidyanathan
I like to give one important clarification — not clarification, a way to think about our credit cost, okay? Now as to how could you — what is the credit cost for next year? For example, if this is a question in your mind. Let me help you think this through. We think that every business has its own nature, like home loans, they hardly give you any credit cost. Loan against property gives very low, maybe call it 25 basis points, 30 basis points.
So, you assume if you have a INR25,000 crore book, you multiply that by 10 basis points in home loans, maybe INR25,000 crores of LAP into 30 basis points or 35 basis points for loan against property. Then you take consumer durable book and then you multiply that. The numbers are there in the book. So, I don’t want to expand on it. But let me say this, say, INR7,000 crore book into, say, 400 basis points. And then you take a credit card book, you multiply by 500 basis points, just to pick a number and then you take a — and so on. You apply, let me say to used car, say, 250 basis points, maybe personal loans, 250 basis points. What you do is that simply take the book, multiply that by well-known industry numbers, you through sigma [Phonetic], do a sum product of that, you will get a number of about 1.85% for our bank.
So, in one quarter, one month, something may be up, something may be down. But blend-blend, our bank is heading for about 1.85%. And for this yield that we are getting, 1.85% is a good number, stable number coming for 15 years. So, we don’t doubt our model because it’s working. So, if you do this, you’ll get a fair number, you can predict the number for many, many years to come.
Now, if an odd thing like JLG happened or toll happened, then odd things change. But in general, we are running a stable credit book. We are running a stable yield as you know 6% plus. We don’t expect credit with this one. And then only cost-to-income ratio has to come down, that is it. We don’t have a problem fundamentally on numbers in credit quality. We don’t have a problem in the yield. We have — our cost-to-income is an issue and that’s not an issue, that is not an issue as in we are running a bad bank. It is just that it is a new age bank, and we’re building all the expenses and I told you of all the products we launched. It will come off in due course. And once the cost income comes off, this bank will be making a like 16%, 17%, 18% ROE comfortably without skipping a beat.
Kunal Shah
Yes. And — hello?
V. Vaidyanathan
Yeah.
Kunal Shah
Yeah. And — sorry, the second question is on cost of funds. So when we look at it, we indicated that cost of funds should see the benefit of 12 basis points to 13 basis points as and when there is a rundown in delinquency borrowing. But maybe this quarter there was almost like INR3,000 crores run down. Now we still have like INR6,000 crores-odd left, but still cost of funds staying put. So, should we assume that maybe broadly that benefit could be lower as the repricing is also continuing? How should we look at the overall cost of funds because that benefit is still not getting reflected with the repayments having been done?
V. Vaidyanathan
Little bit, little bit. Like if you think of it like, if not 6.3%, think of like 6.38%, somewhere in that zone.
Kunal Shah
Okay. Okay. Got it.
Sudhanshu Jain
Kunal, if you see cost of deposits has been quite stable, right? That’s not going up for us, right? And of course, we do certain borrowings and so on. There is an impact which is coming as this book has come down significantly, right? Now still there is 10 bps of gap which could be still filled in. But at least the cost is not going up for us and into the coming quarters into the next year, we expect this to come down further, right? So, directionally we feel that cost of funds for the bank would reduce from the current levels.
V. Vaidyanathan
See, we feel quite — to one of the earlier shareholder’s question, we feel that — honestly, we feel that like ’27, ’28, ’29, ’30 should be a reasonably upward trend of operating profit. Credit costs should stabilize about 1.85% for the math I told you. You can do the math for yourself on a spreadsheet. If you do some product of the book into that, the known behavior of this product, you’ll get through that number. If you — so we feel that with that kind of yield and this kind of credit cost and cost to income ratio coming down, we do expect that our ’27, ’28, ’29, ’30 should be reasonably strong upfront.
You take this comment with the usual caveats about market, industry, regulatory, etc., if you have to adjust anything there might be a price — there might be share of its own little bit of issues that can happen to any bank at any stage, but that is how to think about it. But on a long-term basis, we feel quite confident where the bank is headed.
Kunal Shah
Sure. Okay. Okay. Yeah.
Operator
Thank you. [Operator Instructions] Our next question is from the line of Hardik Shah from Goldman Sachs. Please go ahead.
Hardik Shah
Thank you for the opportunity, sir. My first question is a data keeping one. Can you tell us what is the total contingency provisions on the book? And what is the restructured book that you have right now?
Sudhanshu Jain
Yeah. So, the contingency provision is the one which we have created during the quarter of about INR315 crores. And the restructured book, as I said, that book is now only 0.23% in value terms that it’s about INR500 crores of restructured book which we have and the predominant part of it is the mortgage book which is sitting there. On this, we are carrying a provision of about 19%-odd.
Hardik Shah
Okay. That is clear. And the second question is on the write-off policy, sir. What would be your write-off policy for microfinance and other unsecured products?
Sudhanshu Jain
We cannot give a specific product-wise policy or a number out there, but we follow, I would say, a faster write-off on the pool, right? I am saying we go product by product, see the nature of the product and so on. And that is how we sort of define a policy at the bank.
Operator
Thank you, sir. Our next question is from the line of Nitin Agarwal from Motilal Oswal Financial Services. Please go ahead.
Nitin Agarwal
Yeah. Hi. Good evening, everyone. Sir, I’ll say that while the journey over the past five years wasn’t smooth, as one would have liked it to be, but there were many bright spots, which we appreciate. And deposit growth, which has been impressive. The technology stack that the bank has built, RBI approval more recently and the CRISIL also upgrading the deposit program rating to AAA are all like highlighting the progress that the bank has made. But the investors would also like to see the improvement in profitability, which is one metric where the bank still has to catch up even when compared to guidance 1.0. So, my questions now are more in that context versus the profitability outlook better.
And so the first, if you look at the earlier guidance was like 1.4% to 1.6% ROA by FY ’25. And now reaching this number may take us like another two, three years, if things like go on well from here. So do you think that further expansion in ROA to 1.9% to 2% ROA by FY ’29 is a doable after you reach this initial milestone? Or will you want to revisit it at some point?
V. Vaidyanathan
See, we’ll have to — as of now, we are — when we drew up this model at that point of time, see, basically, what we did we do to come to the guidance? We assumed a certain continuation of the lending yield and lending income and the cost of funds being continuing to where it was and then we modeled it. And then we came to the numbers, and we shared it. Now along the way, so our model directionally is very much valid. Now, the important caveat to note on this is that along the way we are seeing changes. For example, there is a message, let me say, in the system to reduce the yield on microfinance business. And because of the issues going on with the industry and also maybe there’s a more vulnerable segment of the society and so on.
Now, if you touch that, yes, there is an impact on the income line. Similarly, if there’s any other situational change that come at us, for example, we are told that in insurance industry now there is a message to say that the insurance — the commissions that a bank gets will have to be amortized over the contract. Now you might find that next year, the number that we were expecting to post, we might not be able to post it because we’ll have to amortize it into ’27 ’27 or what we would have normally booked in ’26. So these kind of things do change along the way, but we have to be very focused on building a long-term bank which has fundamentals in place.
So, once the fundamentals are in place, then it could be a year, this side of year or that side. But I think that I have no doubt in my mind that if you borrow money at 6.5% and you get a book yield where which gives a NIM of 6.3%, it just has to make a lot of money. It is just plain mathematics.
I mean, whether it comes in 2029 or 2030, I am not saying that I’m stretching it because it’s too early for me to look at the numbers again. But I’m trying to tell you that directionally, the bank has to get there. There is no doubt in my mind.
Operator
Thank you, sir. Our next question is from the line of Gao Zhixuan from Schonfeld. Please go ahead.
Gao Zhixuan
Hey, sir. Thank you for the opportunity. So, just on the excluding MFI and total credit cost of 180 basis points, just want to understand as you kindly provided SMA data, other segment data seems to be stable. But back in March ’24, we are guiding for FY ’25 credit cost of 165 basis points. But even excluding MFI, we are running at 180 basis points. So — what’s the — which segments that is kind of deviating from your earlier expectation? And how should we think about it going forward because our guidance for now is in the second-half for the ex-MFI book should be better than the 180 basis points. Just want to understand how confident are we on this guidance in this very challenging kind of evolving macro environment situation?
V. Vaidyanathan
I think Sudhanshu pointed out our expectation for the credit cost for microfinance business. And he also pointed out and he started it up to going to 225 basis points, no?
Sudhanshu Jain
Yeah.
V. Vaidyanathan
225 basis points. Now it has three components, like Sudhanshu pointed out. One is the microfinance, but that we discussed before, and we have factored it in. Number two is this one account of this INR250 crores we had to take for that toll that we talked about. So that’s is also factored.
Now, for the rest of the business, like we have shown in the numbers, our data is saying that it’s reasonably under control. Not reasonably, it is quite under control. You can see the numbers out there. Even now, if you exclude these two, 180 basis points is not a bad number. You can see the numbers in the market. So, we feel that this is reasonably under control. And the — basically the way to think about it compared to last year to this year, our credit cost is going up because of normalization, but it looks like accentuated because of the MFI and the toll and all that. But short answer is that we feel reasonably — for the 225 basis points reasonably in control of this. We understand that industry, the numbers have gone up. Personal loans, we saw some data of other banks and credit cards. We have not seen it in our books as of now.
We have seen data on personal loans and other banks. We’ve not seen it in our books as of now. And home loans is like absolutely spick and span. There is absolutely no credit cost at all there. It’s like as good as nil and the loan against property is behaving very well. So, net-net, other products are doing well. The numbers are out there. SMA product-wise, NPA product-wise, everything is out there in the presentation.
Gao Zhixuan
Got it, sir. Just a quick one on the thinking on the next capital raise, because the industry challenges is kind of hitting profitability and the capital consumption, if we continue to grow at 20% seems to be a bit higher than expected. So how should we think about the timing of the capital raise and also the CET-1 level that we’re comfortable holding?
V. Vaidyanathan
See, we are a growth bank. We are a growth bank. And because of growth only our ROA, ROE also started getting addressed and it gets fixed. Now the — but at this point of time, since our core CET-1 is also at 14%, including the benefit of the merger and otherwise, it’s 16.8%?
Sudhanshu Jain
16.6%, including —
V. Vaidyanathan
16.6% including CET-2. So as of now we are comfortable. We are not thinking of — we’re not talking — even internally, we’re not talking capital at this point of time.
Operator
Thank you, sir. Our next question is from the line of Pritesh Bumb from DAM Capital Advisors. Please go ahead.
Pritesh Bumb
Hi, sir. Good evening. Just one question from my side, on the credit card business. So just wanted to check, basically, when you scrub the data and do data analytics and see what kind of a customer profile is, if you can highlight two, three issues, what is happening suddenly in the industry for last, say, one, one and a half quarters, two quarters in terms of what has changed? And if you can also highlight how we have been immune in terms of any one or two reasons where we have been cautious for in terms of the credit card business?
V. Vaidyanathan
See in the credit card business, we have been very, very cautious right from the beginning. Frankly in every business, we are cautious. That’s why our credit costs are low, low meaning except the microfinance where we had the issue. But other than that, in our other business, our credit cost is quite low and you can compare that with the market and hope you’ll agree.
Now, in the credit card business, the way we did it is that largely initially, we started giving only to our own savings account customers and built a big part of the book like that. We have no DSAs. I don’t know if you’re aware or not, but we do only direct sourcing broadly, most of it — most of it, actually all of it, we do direct sourcing. And therefore, we built a unique model without having to pay DSA fees and so on.
So therefore, in our segment that we have lent to with initially like we said our own customers and later we also started taking direct customers from direct origination like direct acquisition customers in the open market as well.
So we are — I shared the numbers earlier, so I would not like to repeat it, but I just told you that please go to Page 38. We have put out CIBIL TransUnion data of the industry for 30 DPD and for us. And at every point, June ’23, September ’23, December ’23, March ’24, June ’24 and September ’24, we are distinctly 60 basis points or 70 basis points below the industry 30 DPD. Similarly, 90 DPD, we are below. So, I think our scorecards are working and so on.
Sudhanshu Jain
And just to add, even in H2, I am saying given the interventions which we have done for us, at least we feel that credit cost could marginally come down.
V. Vaidyanathan
Come down. So we are — honestly, we are not going to give you any surprise or shocks on credit cards because the book is behaving well. Our issue was one product. We have called it out frankly. Other than one product, I think all are behaving well, and the numbers are out there for you.
Operator
Thank you, sir. Our next question is from the line of Rohit Jain from Tara Capital Partners. Please go ahead.
Rohit Jain
Yeah. Hi. Am I audible?
V. Vaidyanathan
Yes, yes. Hi, Rohit.
Rohit Jain
Yeah. Hi. So, sorry, my question is a continuation of the last question. Now, in general, in the credit card segment, we have seen stress across players, whether it’s NBFC players, marquee NBFC players, whether it’s the likes of Kotak also or I am not even talking about SBI Card, the monoline player. And in your case, I see that credit card, which is a business that has grown recently, there the SMAs are going down and you are saying that the credit costs are going to be lower. I mean, I understand that you have your own filters and your own sources of confidence. But when there is so much issue in an industry that even the best of the breed are sort of showing stress, it sort of beggars belief. So I just wanted to understand how is it that we are going to escape unscathed from this turmoil in the credit card segment, when almost every single player has highlighted stress there?
V. Vaidyanathan
The — first of all, the question is very fair saying that how is it that our credit costs can be so low when the market is not — market is higher. Frankly, you could ask this question of us in the other businesses as well because frankly, except microfinance in every business, our credit cost is behaving well as compared to similar banks, similar players with similar industry. So credit cards is just one more of such products.
Now in credit card, one reason could be that if you again go by the CIBIL data that we put out in Page 38, the — in the prime segment and above, the industry data — I am just reading out the CIBIL TransUnion data, okay, so the correctness of it is for that you have to check with CIBIL. But I’m just reading out the exact data. We put it out on Page 38. The prime and above for the industry is 74%. For IDFC, it is 92.1%. It is probably just the way we have acquired our customers.
Even on the liability side, for some reason, the way the brand is built, and it is according to me a strategic source of how we built the bank. On the liabilities also, our bank is getting a customer base which is slightly premiumish customer base with higher balances with us. Our average balances when we are opening our household savings account etc., is something like about INR3.5 lakhs. I don’t think any bank is getting INR3.5 lakhs in the household accounts in their opening.
So, our bank is just attracting, let me say, customer base which has slightly higher income on the liability side. And when we lend credit cards to them, by definition we end up slightly — maybe we’re getting a slightly better credit — credit profile. I can guess that from the data that is coming from CIBIL, it’s there on Page 38. So, this can be a really good reason in my opinion as I speak.
But really, on the other products, let me say, home loan, we just hardly have a credit cost. So that’s true for the industry, I’d assume. For every business of credit cost is at 1.85% also, I’d imagine that ex-JLG and ex-toll account, I hope you’ll agree with me that 1.85% is good in these conditions, probably better than other institutions in similar lines of business. I mean, I’m sure of that actually.
Operator
Thank you, sir. Our next question is from the line of Jai Mundra from ICICI Securities. Please go ahead.
Jai Mundhra
Sir, just two data points. Sir, one, if you can share the movement of NPA, so I think the slippages you mentioned that INR260 crores is the addition, but if you can just say absolute amount of slippages and write-off for this quarter?
Sudhanshu Jain
Yeah. So slippages — gross slippages were about INR2,030 crores in the current quarter vis-a-vis INR1,647 crores in the previous quarter. And the net slippages went up from INR1,132 crores to INR1,392 crores in Q2, right, which means that delta of INR260 crores, which I talked off, right? Out of that, about 40% was contributed by microfinance which would be about INR100 crores-odd. That leaves about INR160 crores as the balance, right? And which I said is broad-based across products, right? And in terms of percentage, the net slippage increase if you exclude the microfinance is about 20-odd basis points. So, yes, sure, things have slightly inched up, but it’s primarily, I would say, because of microfinance.
Jai Mundhra
Sure. And secondly, and lastly, sir, we have affected the merger effective October first week. What is the — I mean, what is the change in the net worth, not on the number of shares that are visible, but have we accreted some cash? Or is there any impact on the net worth of the bank?
Sudhanshu Jain
Yeah. Net worth accretion would be about INR618 crores at September end, and this benefit would flow into Q3. And in terms of capital adequacy benefit, this would give us about 24 bps of relief, right, which will come in Q3.
Jai Mundhra
So, this INR618 crore is the cash that you would have received or this is something else that comes to net worth?
Sudhanshu Jain
Yes, it will be a combination of cash, certain investments and so on. So net worth accretion would be INR618 crores.
Jai Mundhra
Sure. Sure. Thank you, sir.
Sudhanshu Jain
Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to Mr. Jai Mundhra from ICICI Securities for closing comments.
Jai Mundhra
Hi. No, sir, thanks. Thanks a lot, everyone, for joining the call. Vaidyanathan, sir, if you would like to give any closing remarks?
V. Vaidyanathan
Yes. First of all, I want to thank every one of you for being with us for this long. You spent over an hour and a half with us. Thank you for your interest and your confidence in us and for supporting us for the last four, five years. The bank had its share of — had its issues in terms of its core profitability. Many people think that there were bad loans that we had to charge off and that’s the problem, but that’s a bit of a naive view. I have known institutions, which have had strong operating profit. And if they have a credit cost, they charge it off and next quarter they can smile again. But in our case, our issue was low operating profit.
We were — just 0.32% of assets was our operating profit. So, that means that we have to fundamentally change the business model where operating profit comes to 2.5%. That was very, very, very hard for us to build the core operating profit.
So, let me just say that the hard work of doing that has been a good part of it put behind and now our core operating profit is 2.5%. So this — 2.5% of assets. Now, if our credit cost is 1.3% of assets, I want to just clarify, when we said 1.85%, 1.85% was in loans, but when you take it of assets, it is 1.3%. So you have 2.5% and then you have credit cost of 1.3%, then you know you’re at least looking at about 1.3% of PBT and post-tax maybe 1%. So, therefore, our bank on a stable-state basis, ROA has — is reaching about 1%-ish, which literally zero base. So, I say the bank has made big progress on profit to the shareholder who spoke earlier, if I came across explaining the past numbers, and I want to just clarify that I didn’t mean to be — I didn’t mean to be a rough or anything like that. It is just that I just want to explain.
So, coming back to the point, so like we’re coming to 1%-ish. Now we have no doubt in our mind that a model that has brought us from 0 to 1 in five and a half years can also take us from 1 to 2 because you have got to pull the model through in this spreadsheet and pull it for long, you will get there. So, this is the long-term model of the bank is definitely looking good. And we feel that we should have the patience, we meaning we as management. I shouldn’t hurry things, build it in a stable way with good foundation, with good products, then good products, good governance, not cutting corners, not taking — doing cheap tricks to manage the profit of the quarter, say things as they are, present the numbers as they are and build a core model. Then in the long run, we can expect to build a really fantastic bank. If I do shortcuts, then wrong things will happen, and no one will be happy with that.
So, we are building a bank for the long run, and we request you to — and we’re building it strong. Just see the numbers and it will play out in the times to come. Thank you, everybody.
Sudhanshu Jain
Thank you, everyone, and best wishes for the festival.
V. Vaidyanathan
Best wishes for the festival to every one of you and Happy Diwali to every one of you.
Operator
[Operator Closing Remarks]