INDUSIND BANK LTD (NSE:INDUSINDBK) Q3 FY22 Earnings Concall dated Jan. 29, 2022
Corporate Participants:
Sumant Kathpalia — Managing Director and Chief Executive Officer
Gobind Jain — Chief Financial Officer
Analysts:
Abhishek Murarka — HSBC — Analyst
Sameer Bhise — JM Financial Institutional Securities — Analyst
Kunal Shah — ICICI Securities — Analyst
Rahul — Goldman Sachs — Analyst
Navin Agarwal — Motilal Oswal — Analyst
Alpesh Mehta — IIFL Securities — Analyst
Gagan Agarwal — Edelweiss Financial Service — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to IndusInd Bank Limited Q3 FY’22 Earnings Conference Call. [Operator Instructions]
I now hand the conference over to Mr. Sumant Kathpalia, Managing Director and CEO, IndusInd Bank. Thank you and over to you, sir.
Sumant Kathpalia — Managing Director and Chief Executive Officer
Good evening, and thank you for joining this call on a Saturday evening. I will start with some macro commentary and then go into the bank specific details. We will upload this commentary on our website for ease of reference. Economic activity continues to gain strength helped by a release of pent up consumer demand during the festival season, pick-up in general government spending, strong public investments and record exports. This recovery was reflected in the highest quarterly GST collections and improving [Phonetic] bank credit growth. The recovery may see some impact due to COVID-19 pandemic resurgence. However, increasing coverage of fully vaccinated population and low hospitalization rates so far, have ensured limited restrictions.
On the global front, major global central banks have put forth guidance of faster-than-anticipated monetary tightening over 2022. While this can disrupt the easy financial condition exert upward pressure on rates, we expect that the domestic monetary policy to remain supportive to strengthen the nascent recovery of pursuing a gradual normalization. The budget for the next fiscal too would be — would be to look to reinforce a structural push for the economy, by channelizing a greater share of public resources towards investments and by further incentivizing a private capex cycle.
Coming to quarter three. This quarter our focus was on addressing the concerns on Microfinance. We ensured Bharat Financial operations remained smooth and without any impact on customer servicing or collections. We have completed the internal review. In addition, the Bank appointed external consulting firm to undertake an independent review which is underway. The updates of both the reviews including financial implications are broadly in line with management expectations. I will share further details subsequently.
Maintaining disbursement tractions on non-MFI portfolios. The overall loan book grew 4% quarter-on-quarter. Our vehicle finance disbursements were up 5% quarter-on-quarter. The strong disbursements ensured the vehicle book grew up by 2% quarter-on-quarter reversing decline in the previous two quarters. The consumer loan book other than the vehicle and MFI too grew by 2% quarter-on-quarter. The corporate loan book has maintained its growth trajectory after the last year’s consolidation with a quarter-on-quarter growth of 6% driven by SME and small corporates. We were cautious on microfinance disbursements pending reviews during the last quarter and they have already picked up for this quarter.
Continued Deposit Momentum. Our deposit growth was strongly at 19% year-on-year, and 3% quarter-on-quarter. We let go some expensive deposits given abundant liquidity. This helped us further reduce the cost of deposit to 4.66% from 4.85% last quarter.
Asset Quality: Slippages during the quarter net of upgrades and recoveries were at 0.9%. As expected, bulk of the slippages were from the microfinance at 4.4% of MFI book, whereas slippages from the balance 88% of the loan book was contained at 0.3%. Our GNPAs have reduced to 2.48% from 2.77% and the restructured book too reduced to 3.3% from 3.6% quarter-on-quarter. We have maintained our PCR at 72% and increased our contingent provisioning to INR3,328 crores or 1.5% of loans.
Maintaining profitability of the franchise: Our net interest margin improved to 4.1% helped by falling deposit rates — helped by falling deposit costs, sorry. The non-interest income continued to remain healthy growing at 14% year-on-year. Our cost to income increased marginally to 41.6%. This resulted in maintaining a healthy PPOP margins at 5.90% of loans.
Digital Launches: We launched Indus Easy Wheels during the quarter, a portal for used vehicle ecosystem. We scaled up our quarter two launches of Indus Merchant Solutions’ app, Indus Easy Credit stack for Business and Debit Card EMI on IndusInd Bank debit cards in quarter two. We went live with updated version of IndusMobile app and enhanced security features and improvements. The mobile app has seen good response with the user base increased by 36% year-on-year. Overall, we remain on track on digital along with new initiatives on individual and vehicle finance segment planned for launch in the coming quarters.
Now coming to individual business. Microfinance: I will start with an update on the reviews followed by business performance during the quarter. As informed earlier, the Board of the Bank conducted internal review on the anonymous allegations received in quarter three financial year ’22. We have completed the internal review. In addition, the Bank appointed external consulting firm to undertake an independent review which is underway.
Based on the findings of the internal review and the preliminary status update provided by the external consulting firm, key findings and actions initiated by the Bank are as follows: A microfinance product was offered to provide liquidity support for customers impacted by the COVID second wave after they clear existing dues, however it was observed cash disbursements and repayments of arrears took place on the same day, which is a procedural lapse. The product was discontinued in September ’21, and prior to the receipt of the anonymous complaint. The standard loans outstanding under this product were INR179 crores as of December 2021. The Bank has on a prudent basis fully provided for this exposure during the quarter.
All microfinance products required disbursement of loan with a biometric or an OTP consent from the customer. It is confirmed that the disbursement of loans without client consent getting recorded was as a result of a system issue. The standard loans outstanding for such customers were INR7 crores as of December ’21. Prior to receipt of the anonymous complaint, the Bank had changed the disbursements process wherein loans are disbursed only for biometric consent except for one state, which is Assam [Phonetic].
Few areas of scope for improvement in governance and oversight of the banking correspondent activities of the subsidiary are highlighted. Steps have already been undertaken including strengthening of process controls, integration of control functions and formation of an oversight committee et cetera. The management has evaluated the matter for possible impact on the asset classification, revenue recognition and provisioning. Further, evaluation also included factors which could lead to regulatory issues and they have been already addressed adequately. The Bank will constitute a committee to assess staff accountability, if any, arising out of the findings of the review.
Now coming to the business of microfinance during the quarter. The increasingly broad-based recovery in economy was also reflected in the microfinance business during quarter three. The COVID third wave too did not affect Rural India as much as Urban locations.
Bharat Financial added 564,000 customers during the quarter. The member acquisition has picked up this month and as business activities are improving across India. The positive momentum in business activities was also reflected in improvement in collections. Collection efficiency in December ’21 was at 93% on overall book and 98% on standard book, excluding NPAs and restructured book.
West Bengal and Kerala continued to pull the overall collections down with collection efficiency of 95% and 91%, respectively on standard book. With quarter two incremental in NPA customers — within quarter three incremental in NPA customers, 70% of the customers paid some instalments during quarter three indicating potential for recoveries, even though we have made conservative provisioning. On overall NPA base, 40% customers paid some amount during quarter three. The restructured book was at INR1,003 crores against INR907 crores quarter-on-quarter.
Overall, for Bharat Financial, 86% of customers paid all weeks in December, 8% are intermittent payers in December and 6% are non-paying. Among standard portfolio, only 2% of clients are non-paying. This also reflects in terms of quality of portfolio outstanding wherein portfolio current on all instalment has improved quarter-on-quarter from 83% to 92% of standard portfolio. Our 0 to 90 DPD book has reduced quarter-on-quarter from INR4,446 [Phonetic] crores to INR2,153 crores of which 60 DPD book is INR643 crores.
The net slippage during the quarter was INR1,239 crores. The net slippages cumulatively for the nine months financial year ’22 was INR1,851 crores or 6.7% of the book.
Looking at the performance of the overdue book as of now and assuming coverage of 80% or 90% of the delinquent book, we remain confident of the credit cost from MFI book for the year to be broadly around 6% to 8% as stated earlier. We continue to scale up our non microfinance activity. The merchant acquisition business grew to 437,000 merchants from 320,000 merchants quarter-on-quarter. The loan book from these customers was at INR1,463 crores from borrowing customer base of 261,000 merchants with 98.2% collection efficiency. We have also further scaled Bharat Money Stores from 91,000 to 94,000 during the quarter.
Overall, we remain committed to the microfinance business. The Bharat Financial business model has delivered outperformance versus the industry not just in COVID, but also in disruptions pre-merger. Bharat Financial prides in being a process-driven organization. The focus for this quarter will continue to be on improving field discipline, process tightening and quality control without impacting customer acquisitions and collections.
Vehicle Finance: Our vehicle finance disbursements for the quarter were at INR8,800 crores reflecting 5% quarter-on-quarter and 14% year-on-year growth. Similar to the quarter two, the disbursements are also higher than the pre-COVID levels. Within vehicle categories, disbursements are now ahead of the pre-COVID levels for Commercial Vehicles, Cars, Utility Vehicles and Tractors. The three wheeler and two wheeler volumes will take a few quarters more for the COVID impact to pass.
Strong disbursements in the last two quarters have resulted in the vehicle book growing by 2% sequentially after being stagnant or declining for the past few quarters. We have maintained or gained market share in most of the vehicle categories except two wheelers. The vehicle finance restructured book remained stable at INR3,769 crores quarter-on-quarter with marginal fresh additions during the quarter. The collections from the restructured book too improved to 87%. Collection efficiency from the rest of the book is back to normalcy.
We see continued improvement in freight availability for existing vehicles along with stability in fuel prices. This has supported the portfolio quality and will also result in new vehicle demand for the coming year. This is also evident in the quarter four so far with disbursements improving further. We aim to maintain the growth trajectory, distribution reach and work towards improving to pre-pandemic levels in the last quarter as well.
On the vehicle finance management leadership front, Mr. Parthasarathy has identified A. G. Sriram as his successor. A. G. Sriram has been with the Bank for over three decades running large portfolios including Commercial Vehicles and Construction Equipment. A. G. Sriram is being groomed over the last several quarters to take on the leadership role. Mr. Parthasarathy has been instrumental in building the vehicle finance domain for the Bank and continue to be associated with the Bank post transition as a mentor to A. G. Sriram.
Other Retail Assets: This segment contributes 15% of the overall loan book and includes non-vehicle, non-MFI products. The loan book grew up 2% quarter-on-quarter driven by growth in both secured and unsecured products. Credit card spends continue to reach new highs every quarter with quarter three spends at INR14,256 crores growing 28% quarter-on-quarter. The secured assets disbursements were amongst the best in the last several years. The segment however is witnessing intense competition and we have let go customers where risk reward was not favorable. The collections from this consumer segment are back to pre-COVID levels with the net slippages well under 1%.
Corporate Bank: The Corporate Bank book maintained its growth trajectory with quarter-on-quarter growth of 6%, year-on-year growth was strong at 19%, albeit on a weaker base. We continue to focus on well rated corporates with average rating profile of the corporate book improved to 2.67% from 2.76% y-on-y, i.e. equivalent to “A” rating. The growth was driven by demand from NBFCs, small corporates and SME. The slippages from the corporate book remain well contained in quarter three slippages at INR56 crores. This would be one of the lowest quarterly slippages in the last several years.
A part of corporate book under restructuring will complete one-year of satisfactory performance and expected to be upgraded this quarter. We are however watchful about developments in one of the restructured accounts under litigation. Our exposure to stressed telco was at 30 billion as of December ’21 of which funded is 10 billion and balance non-funded. The consortium is evaluating a business plan and we will update you at an appropriate time.
During the quarter, we sold down one of the ILFS exposure to an ARC for INR240 crores cash recovery with an upside participation on final recovery. The exposure they are already been written-off and recovery is used to augment the contingent provisions. The Gems and Jewellery book reduced quarter-on-quarter due to repayments and is maintaining its asset quality with zero NPAs. Overall, the corporate franchise was seen a comfortable turnaround with focus on growth, compliant with the underwriting framework.
Now coming to Deposits: Deposits grew 19% year-on-year driven by 24% year-on-year growth in Current and Savings account and Retail Deposits as per LCR grew by 32% year-on-year. The growth is achieved along with reduction in cost of deposits. Our cost of deposits reduced to 4.66% from 4.85% showing a decline of 19 basis points during the quarter and 139 basis points cumulatively in seven quarters. We continue to remain surplus on liquidity and let go some of the expensive deposits during the quarter. The Certificates of Deposits reduced in absolute as well as proportion of deposits during the quarter. The CDs now form 2.2% of the overall deposits.
Affluent segment total AUM stood at INR60,000 crores, showing a Y-o-Y growth of 25%. In the same period, total deposits in the segment grew by 21% and stood at INR35,000 crores. The growth in deposits is driven by CASA, which grew 37% year-on-year and 4% quarter-on-quarter. Deposits from the NR segment have been holding up well at INR27,000 crores. The NR market has seen a sharp fall in the fresh inflow of deposits this year. We have however gained market share this year till date and aim to maintain the trajectory. We have maintained our overall LCR at 137% and were running surplus cash balances and excess investments of over 60,000 crores.
Digital Traction: We have been executing our business strategy focused on a) improving efficiency of existing businesses, b) creating new digital business models c) building digital propositions with a wider ecosystem. Over the last nine months, we have built a comprehensive stack of digital platforms to serve the needs of Retail, Individual and SME clients. These include IndusSmart for investments, Indusforex and recently launched Indus Easy Credit for personal loans and credit cards as well as purchase financing on debit card spends.
In the MSME space, during the year, we launched easycredit for business and Indus Merchant Solutions to meet banking, payment and lending needs for small entrepreneurs. Consequently, our digital sourcing mix continued to increase during the quarter. Overall, 92% of the transactions happened digitally and 71% of overall service requests are now processed via digital channels up from 68% a year ago.
New developments during the quarter include: We opened up Indus Easy Credit stack for Credit Cards to various channel partners and employees and it is gaining traction with more than 120 offline channel partners. We also integrated two digital partners and several more in the pipeline. The platform is generating over 300,000 enquiries every month. With the platform launch, our cost of processing per application has come down by 80% as printing, dispatch, scanning, data entries are eliminated.
We launched an enhanced version of IndusMobile app with better user experience and security features. The mobile app continues to be rated 4.3 on playstore and IBL mobile & UPI transaction growth almost doubled Y-o-Y. We enhanced features on whatsapp banking including pdf statements, card balances and bill payments. We saw good engagement on whatsapp with 3.6 million user registered base and over 1 million conversations every month. WhatsApp banking user base had increased by 82% year-on-year and transaction are up 2.9 times year-on-year.
Indus Merchant Solutions, a one stop solution app for small merchants saw a good response in the initial months of launch and garnered an installed base of 10,000 plus organically with 60% of the new to bank users indicating wider acceptance of solutions offered by the app. As we start the media campaign from this quarter, we expect a momentum to build in coming quarters.
The Bank has launched Indus EasyWheels. The website hosts ancillary services like road side assistance, mechanic services, insurance which is the first of its kind in the market. The portal also hosts the repossessed vehicles of the Bank for auction and provides a smooth user experience for anyone looking for preowned vehicles. This is the first step in the journey of vehicle discovery and the future roadmap will include bringing in more inventory from aggregators, dealers, provide customer value-added services on such customer touch points. The vision is to create a wholesome customer journey to complete vehicle ownership cycle and give enhanced user experience, transparency and value. The channel is expected to bring in niche digital footprint and market recall for vehicle finance.
We also continue to build our open banking platform — open banking, platform banking strategy leveraging the Bank’s APIs live with 260 partners so that we can extend banking services by embedding ourselves on to partner platforms.
Now coming to the financial performance for the quarter: Net Interest Income grew for quarter three at INR3,794 crores grew 11% year-on-year and operating profits at INR3,312 crores was up by 12% year-on-year. Our operating profit margin remains healthy at 5.90% of loans. Net Interest Margin improved during the quarter from 4.07% to 4.10%. The improvement was driven by continued reduction in the cost of deposits from 4.85% to 4.66%. The yield on advances came off from 11.66% to 11.36% due to higher share of corporate loans and with better rating profile and slower MFI disbursements.
Other income grew 14% year-on-year. Retail fees contribute 58% of the total fee income. On the costs side, we resumed investments in our branch network adding 88 branches during the quarter taking a branch count to 2,103. We continue to invest on the digital initiatives as well. Our Cost to Income ratio was at 41.6% for the quarter.
On the asset quality and the provisioning front. Our provisions for the quarter were at INR1,652 [Phonetic] crores. Net slippages for the quarter were at 0.9% of loans. As expected, bulk of this came from microfinance at 4.4% of loans whereas net slippages from the rest of 88% of the book were contained at 0.3% of loans. Our coverage on microfinance NPA is at 95%. We also have standard provisions of INR368 crores towards full coverage on product with procedural lapse and 10% provisions on all 30 DPD to 90 DPD loans. We also additionally carry significant contingent provisions for restructured loans. We are thus well provided on the existing as well as potential NPAs in microfinance.
Overall, the GNPA for the bank has moved down to 2.48% from 2.77% quarter-on-quarter and net NPAs were down to 0.7% from 0.8% quarter-on-quarter with PCR at 72%. The restructured book reduced from 3.6% to 3.3% quarter-on-quarter. We have used recovery from an ILFS exposure to improve our contingent provision to INR3,328 crores amounting to 1.5% of loans. Total loan related provisions are at 3.7% of loans or 144% of gross NPAs. Our SMA1 and SMA2 book was at 25 basis points and 59 basis points, respectively. Net Security Receipts were at 85 basis points versus 71 basis points quarter-on-quarter.
Profits for the quarter were at INR1,242 crores growing at an 8% quarter-on-quarter and 50% year-on-year. Our CRAR including profits improved to 19.07% from 18.06% with CET 1 ratio at 16.14% [Phonetic]. The CRAR was also boosted by the Tier 2 issuance of INR2,800 crores during the quarter. Overall, I think quarter three was one of the toughest quarters since the first COVID wave and outcomes have been what we have been communicating.
We are thus well poised and pivoting to growth as reflected in: disbursements as well as collections in the 88% of the non-microfinance book have been stable. The book grew 4.3% quarter-on-quarter and with 30 basis points of net slippage. We expect these portfolios to maintain this trajectory. The microfinance portfolio has seen slippages broadly in line with our expectations. The updates from internal as well as external reviews also corroborate our views. The disbursements are now back on track and we expect loan book to grow hereon.
We have conservatively chosen to take the microfinance credit cost through the P&L or along with augmenting contingent provisions. The contingent provisions position us well to mitigate future credit cost cycles. The liability franchise continues to scale up with reduction in cost of deposits. We are well positioned for the upward rate cycle as well. We are well on our track on executing our digital strategy. We have so far launched three out of the planned five initiative: indus easy credit, merchant acquiring and vehicle finance portal. These are being scaled up. The other two millennial and SME offerings are planned for the launch in the couple of quarters.
The profitability of the franchise remains healthy at 5.90% PPOP margin. RoA and RoE continued the journey towards normalization and should see further improvement as microfinance costs have peaked. While the COVID remains a risk to watch out for, the implication of the recent wave on our businesses have been limited. We are thus committed to executing our strategy quarter-on-quarter.
With this we can open for question-and-answers.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Abhishek Murarka from HSBC. Please go ahead.
Abhishek Murarka — HSBC — Analyst
Yeah. Good evening, everyone. And thanks for taking my question. So two, three questions. The first is this audit report by when can we expect it? And has any of the slippage or write-off been precipitated as a result of any finding of the report?
Sumant Kathpalia — Managing Director and Chief Executive Officer
So the internal audit report has been presented to the Board already and the committee of that Board of Directors who were reviewing the — overviewing the — overseeing the audit, we are all had presented it to the Board. I think the external consulting firms, preliminary findings have also been review — a status update has been given to the committee of directors, and it has been [Phonetic]. So I think the external consulting firm board report should be available very soon. I think they are internally evaluating the report as well as presenting the report to the management for their comments before they presented it to the committee of directors. So I think it should take a couple of weeks, two weeks to three weeks before it is out. So that’s what it. I think what we have done, it’s not precipitated it. I think we were always in my first call itself, I have said that we had this provision and we have taken the full provision of this portfolio, which was INR1.79 crores on a particular product.
Abhishek Murarka — HSBC — Analyst
Okay. And the INR368 crores, I think you mentioned that you’re carrying separately for MFI. This is outside of any [Speech Overlap] provisions for MFI.
Sumant Kathpalia — Managing Director and Chief Executive Officer
No. These are core MFI. What I’ve done is, I’ve taken — we’ve taken 10% on 30-plus as an extra provision. And we have taken to the current, the current book, which was on current INR179 crores, which was current on the — this particular product has been taken as 100%. So INR179 crores, plus INR120 crores or INR130 crores on the 30-plus bucket is what we’ve taken as provision.
Abhishek Murarka — HSBC — Analyst
Okay. Okay, understood. The second question really is on growth. Now at the current rate of growth we may undershoot our guidance of 16%, 17% [Phonetic] growth of this year. What is your view for the following year? You’re saying disbursements are picking back up. So what is your view for ’23?
Sumant Kathpalia — Managing Director and Chief Executive Officer
If you look at this quarter too, I think if you would have just seen our growth outside the microfinance was 4.6%. So we are back to 18% to 20% growth year-on-year. It’s not that. If we get our Microfinance growth that, which will be 5% quarter-on-quarter, or 6% quarter-on-quarter, at any cost we will be delivering 5%, 5.5% quarter. In my view, our growth is in the early ’20s, and we’ll continue to believe — we have to make up for the lost time, which we have done. I think our growth will be in the range of 12% to 13% this year and will go to early 20s in the next year, to make up to 16% to 18% CAGR in the planning cycle side on the two-year period.
Abhishek Murarka — HSBC — Analyst
Okay. And finally on MFI, just a few questions. So you’re seeing disbursements are back up. But what are — what was the disbursement last quarter? And what have you done in January, so far? Just to get a sense of the kind of –?
Sumant Kathpalia — Managing Director and Chief Executive Officer
[Speech Overlap] do the January number, I think it’s incorrect when we do. The December results were INR7,300 crores, approximately. We do an average of INR8,500 crores to INR9,500 crores of disburse.
Abhishek Murarka — HSBC — Analyst
And we should be back up to those levels in this quarter, let’s say.
Sumant Kathpalia — Managing Director and Chief Executive Officer
Yes.
Abhishek Murarka — HSBC — Analyst
And it’s just —
Sumant Kathpalia — Managing Director and Chief Executive Officer
I’m talking only about the — I’m talking about the member visit [Phonetic]. There will be another INR300 crores to INR400 crores of disbursal, which will happen in the merchant acquiring business.
Abhishek Murarka — HSBC — Analyst
Okay. Sure, sure. Yeah, yeah. And this average ticket size that you have shared this is on AUM, right. What would it be on disbursements?
Sumant Kathpalia — Managing Director and Chief Executive Officer
It’s exactly — the disbursement will be slightly higher, I think INR30,000 crores, INR32,000 crores.
Gobind Jain — Chief Financial Officer
INR32,000 crores, not much of a difference.
Sumant Kathpalia — Managing Director and Chief Executive Officer
It’s a one-year book, it runs down and —
Abhishek Murarka — HSBC — Analyst
Okay. Just you know you’re giving any way quite a bit of data on MFI on paying, non-paying disbursements et cetera. Just a request if you can put it in a slide, it just helps us compare because a lot of others give that data. And would it be useful to have you know at least the basic data about MFI, separately? So just a request there.
Sumant Kathpalia — Managing Director and Chief Executive Officer
Okay.
Abhishek Murarka — HSBC — Analyst
Thanks. Those are my questions.
Sumant Kathpalia — Managing Director and Chief Executive Officer
Thank you, Abhishek.
Abhishek Murarka — HSBC — Analyst
Thank you, sir.
Operator
Thank you. The next question is from the line of Sameer Bhise from JM Financial Services. Please go ahead.
Sameer Bhise — JM Financial Institutional Securities — Analyst
Yeah, hi. Just one question on how does one target the number of sale to ARC in the space INR740 crores in the presentation and around INR2,480 crores in the BSE release?
Sumant Kathpalia — Managing Director and Chief Executive Officer
So, if you look at it, Sameer, INR7,487 cores is the gross amount, which is sold to the ARC during the quarter. Within that INR750 crores is the CNPL [Phonetic] ILFS exposure, which was already written off and the balance is the loans which are sold during the quarter, which are the retail and other assets. The INR750 crores, as you know is the fully provided and written-off exposure. Of the balance INR1,737 crores there were already provisions sitting on the books. So the net amount is INR1,213, as disclosed in the SEBI disclosure. And again that INR1,213 crores, we received a consideration of INR740 crores. So that INR740 crores is in the investor presentation. And then INR740 crores is further the usual whatever the cash and SR book split that you receive against that. So that’s how the INR2,487 crores flows [Phonetic] into the SR book and investor presentation notes.
Sameer Bhise — JM Financial Institutional Securities — Analyst
Okay. I finally just runs it down once again offline.
Sumant Kathpalia — Managing Director and Chief Executive Officer
Yeah, yeah.
Sameer Bhise — JM Financial Institutional Securities — Analyst
And second, just wanted to get a sense on the corporate book, how will be the growth shaping up and from what kind of sectors?
Sumant Kathpalia — Managing Director and Chief Executive Officer
So our corporate book grew by 6%, I think on the large corporates, we are seeing growth in the NBFC segment, which has done very well for us and we continue to believe that that’s we have about 4.5% of our book there, and we believe that that’s a very good business which we are in. I think we’ve also added to the real estate sector, two deals were done. And we did that smaller amounts, but very good deals which we did. On the mid corporates and in the smaller corporate, we saw growth and we saw the growth in the — specifically in the smaller corporate at about 10% to 12%.
Sameer Bhise — JM Financial Institutional Securities — Analyst
Okay. You expect these —
Sumant Kathpalia — Managing Director and Chief Executive Officer
The RE loan disbursements were for existing projects which were for existing projects. So there were not new entrants into the new customers, which require. They are disbursed over a period of time.
Sameer Bhise — JM Financial Institutional Securities — Analyst
Okay. And do you expect kind of high teens number to sustain on the corporate side?
Sumant Kathpalia — Managing Director and Chief Executive Officer
I believe so. I think the budget will grow up very good opportunities in the corporate. I think the capex cycle is reviving. And I believe that we will continue to grow on the corporate side. Like I said our mix will be 45-55, or, and I think we are in that range on the corporate and retail side. I think we will also see the retail [Phonetic] by shaping up.
On the retail side, the vehicle is coming from a very low you know cyclical downturn, and I think the vehicle side of the business will do very well. Microfinance there is always a demand. And you will see us growing that microfinance. And on non-vehicle asset business, you will see the growth momentum picking up. And I think all the three businesses are well positioned for growth now.
Sameer Bhise — JM Financial Institutional Securities — Analyst
Okay. Thank you and all the best.
Operator
Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.
Kunal Shah — ICICI Securities — Analyst
Yeah. So firstly, with respect to the opex. So, overall, the opex has been quite content, but we have seen a increase across the board. So do we see maybe investing further and we catch up on the opex, or we still see like cost to income being managed [Phonetic] at this level quite comfortably?
Sumant Kathpalia — Managing Director and Chief Executive Officer
No, no. I think what you will see is, we will continue to invest in opex. So, I think opex is a very important component specifically on technology and people we are investing. Our branches we are growing the distribution, we are investing in technology, and we will invest in people. So I think opex is settled. But please understand, the revenues will also grow. The app, the nature of our business is as such that we will control, continue to grow the revenue. I’ve always said our opex will be in the range of 41% to 43%, and it is contained within that, that percentage. So to say that the opex will not go, absolute numbers of opex will grow. But I think the revenue will also grow to take care of the opex.
Kunal Shah — ICICI Securities — Analyst
Sure. Okay. So now maybe the way there has been some price all across that we are not seeing particularly for IndusInd. Maybe I think credit card could be one component of it. But apart from that I don’t think that —
Sumant Kathpalia — Managing Director and Chief Executive Officer
We have a very small card base of 1.6 million clients. So people have invested a lot during the festival season, because of the large base. I think if our investment will be INR8 crores to INR10 crores, it doesn’t move the needle.
Kunal Shah — ICICI Securities — Analyst
Sure. And sorry, I don’t know, if you got it earlier, but the write-offs primarily were pertaining to the MFI is almost at 1,000 [Speech Overlap]
Sumant Kathpalia — Managing Director and Chief Executive Officer
I think let me give you the number. I think we did a write-off of INR1,662 crores. INR281 crores from — were from vehicle finance. Secured retail were INR41 crores, unsecured retail was INR217 crores, MFI was INR928 crores, corporate was INR194 crores.
Kunal Shah — ICICI Securities — Analyst
Sorry, MFI was 9–
Sumant Kathpalia — Managing Director and Chief Executive Officer
INR928 crores.
Kunal Shah — ICICI Securities — Analyst
INR928 crores. So almost like 4% of the book is something, which would have been written-off.
Sumant Kathpalia — Managing Director and Chief Executive Officer
Yes.
Kunal Shah — ICICI Securities — Analyst
Okay. So overall what was the paying? If we have to look at it made in terms of the entire restructuring plus slippages over past several quarters and the write-offs, which have happened, finally on that book, what is the kind of pain which we had seen over last four to five-odd quarters?
Sumant Kathpalia — Managing Director and Chief Executive Officer
On the MFI side?
Kunal Shah — ICICI Securities — Analyst
Yeah. On MFI in particular.
Sumant Kathpalia — Managing Director and Chief Executive Officer
INR1,850 crores is the overall slippages for the — over the year on the book. And if you look at it, I think we are at the — I think we’ve trust the peak [Phonetic], and I think you will only see improvements. And I think by quarter one, we will be on BAU. There may be an elevated provisioning in this quarter of about INR400 crores to INR500 crores. But I see that going down to about INR250 crores to INR300 crores. And that is the normal course of the business, which will happen in that business. So it will actually gone down dramatically and that is reflected in the X-plus book or the — that’s what I’ve given you the data and it will read my commentary. I disclosed, it’s almost 50% down.
Kunal Shah — ICICI Securities — Analyst
Yeah, yeah. So next quarter we’ll see INR200 crores [Phonetic], then thereafter getting settled at INR250-odd crores normal incentive?
Sumant Kathpalia — Managing Director and Chief Executive Officer
I’m saying that you will have to see the numbers. I’m just giving you. I think it’s on its way down. And I think the normalization should happen from next. I think it may be elevated then the BAU next quarter, but overall from quarter one, it will be BAU. And we have — and this is because I’m not taking any hit to the P&L — to the contingent provisioning and I’m taking it to the P&L. I could have reduced the cost by reducing it to the contingent provision. And I could have reduced my P&L costs imply on them. So I’m not using my contingent provisioning right now. And even the exact which I received from the sale of an asset or a recovery, I made a contingent provisioning. So I’m not using that provisioning at all.
Kunal Shah — ICICI Securities — Analyst
Okay. Okay, thanks. Thanks, and all the best, yeah.
Operator
Thank you. The next question is from the line of Shagun Verma from Goldman Sachs. Please go ahead.
Rahul — Goldman Sachs — Analyst
Yeah, hi. Sumant and team, this is Rahul [Phonetic] here.
Sumant Kathpalia — Managing Director and Chief Executive Officer
Hi.
Rahul — Goldman Sachs — Analyst
Just couple of questions. Hi. Just on — just wanted to understand the behavior on the GECL [Phonetic] portfolio. So we understand and correct me if my numbers are wrong, but INR4,500 crores was for the [Indecipherable]. How has that behavior been? And do we have the microfinance sitting in there. I mean [Technical Issues]?
Sumant Kathpalia — Managing Director and Chief Executive Officer
So let me tell you what is our GECL portfolio. So, I think our total overall portfolio is INR5,878 crores as of now. And how is the portfolio for [Indecipherable].
Gobind Jain — Chief Financial Officer
We’ve had very marginal — very small slippages and loan against property and others that gains have been made. It’s not been anything material as of date. And the repayments have started because the 12-month moratorium has ended for some of the early loans that would have given in 2020, but second half of the year. Also we continue to monitor it, nothing material or any slides which have come up on this portfolio. And we haven’t seen much traction on disbursement at recent times.
Sumant Kathpalia — Managing Director and Chief Executive Officer
And on the MFI portfolio which you asked on the product in which we have booked GECL, there is an 88% to 89% — 89% collection efficiency.
Rahul — Goldman Sachs — Analyst
Sorry, this 89% collection efficiency is on the MFI book –?
Sumant Kathpalia — Managing Director and Chief Executive Officer
All on the GECL portfolio.
Gobind Jain — Chief Financial Officer
Yeah. We have a GECL program for MFI clients. So as I think about — it’s about 89%.
Sumant Kathpalia — Managing Director and Chief Executive Officer
Yeah, 89% of the collection.
Gobind Jain — Chief Financial Officer
Yeah.
Rahul — Goldman Sachs — Analyst
Okay. And the full repayment of this, this possible will happen in which quarter, the fourth quarter?
Gobind Jain — Chief Financial Officer
It goes on for three years and four years, right. The term of the proposal is one-year moratorium.
Rahul — Goldman Sachs — Analyst
[Speech Overlap] moratorium. Yeah, when does the moratorium for the entire book ends?
Gobind Jain — Chief Financial Officer
We will see — some of it will end by early next year, yeah, [Speech Overlap] because you were disbursed up to last December, right. So because of GECL3 [Phonetic] also came in.
Sumant Kathpalia — Managing Director and Chief Executive Officer
MFI ends in March [Speech Overlap]. MFI ends in March and the others may end up by — end of —
Gobind Jain — Chief Financial Officer
Three months later.
Sumant Kathpalia — Managing Director and Chief Executive Officer
Another three months or six months later.
Gobind Jain — Chief Financial Officer
The bulk of our disbursemoents happened last year, so many of them have already ended.
Sumant Kathpalia — Managing Director and Chief Executive Officer
We can give you the data. We don’t have that real data with us. So I will send you that we have uploaded into the investor presentation.
Rahul — Goldman Sachs — Analyst
Thank you. Thank you, Sumant. Helpful. The other question was on the two wheeler in last portfolio, over the last two quarters, three quarters that book is running down. So when do we see that run down sort of to start to slumping or if it is close to start picking up in those portfolios.
Sumant Kathpalia — Managing Director and Chief Executive Officer
Rahul —
Rahul — Goldman Sachs — Analyst
[Speech Overlap] conscious decision.
Sumant Kathpalia — Managing Director and Chief Executive Officer
No. Rahul, the issue is, there is a decline in the two-wheeler industry. We have to accept it. 30% to 40% decline. And that’s why — while we are maintaining our market share or increasing our market share, the issue is the number of quota [Phonetic] sold is decreasing. And that is why the book is running down. However, we’ve seen that turn in cycle now, and I think we for the — for the first time we saw a little bit increase. But yes, you’re right, the book is running down. And we should start seeing an increase this quarter, but it will be a marginal increase of INR30 crores to INR50 crores because the runoff is also very high. On Latin, we’ll start being a progressively upgrade disbursement happening. We did INR260 crores of disbursement last month, but the issue is that the runoff is also high. We have to touch to INR350 crores to INR400 crores and you will see the growth happening from this quarter onwards.
Rahul — Goldman Sachs — Analyst
Got it, got it. Thanks. And just last question on this employee expenses. In the last two quarters, the run rate has gone up to INR860-odd [Phonetic] crores from INR600-odd crores thereabouts. So is it how the run rate is going to be now or there is any one off sitting in there?
Sumant Kathpalia — Managing Director and Chief Executive Officer
It will be similar. We’ve added new people in Bharat Financial. I think we are adding resources indeed the cost of our resources when technology and digital had gone up. We made a bonus provision, which is a little bit higher, as of the retention of people. We’ve also given an increment in January to our people at the lower level. So I think all around we’ve done that. But I don’t think it will — it is going to be at that level for some time because it’s all the cost which has been added up to that level. But we continue to believe we will be between 41% and 43% efficiency of our business.
Rahul — Goldman Sachs — Analyst
Got it, got it. Thanks, Sumant and wish you and your team a very good luck for the future.
Operator
Thank you. The next question is from the line of Navin Agarwal [Phonetic] from Motilal Oswal. Please go ahead.
Navin Agarwal — Motilal Oswal — Analyst
Yeah, hi. Thanks for the opportunity. Sum, like when you guide for a loan growth of 20% plus next year to make up on those slightly [Phonetic] this year, how confident you are to grow the liabilities at a commensurate pace? Because the mix of retail deposits have been stickier on 40 [Phonetic]. So would you not focus to grow this mix of retail deposits in a calibrated manner?
Sumant Kathpalia — Managing Director and Chief Executive Officer
See, we continue to believe that we can press the accelerator on deposits at any point of time. They shew off and this is because of the excess liquidity which we add. We actually run off a little bit of our mature term deposits also. So, and I think it is only a matter of time that you will see this coming back. We did lose certain deposits because of the IRR rates getting dropped, not to say that we did not drop the rate, we dropped the rate on savings account, we dropped the rate on this. So I think it will come back. I’ve always said our liability growth will be higher than our asset growth and we are continue — going to continue to maintain that. We have given a 48% to 52% SBC plus LCR, and we will continue to stick to that plan.
Navin Agarwal — Motilal Oswal — Analyst
Okay. And secondly we have reported strong treasury gains during the quarter. So if you can provide some color on it. And how do you see this bearing the wake of tightening rate environment?
Sumant Kathpalia — Managing Director and Chief Executive Officer
No, no. So there are two things in that. If you look at the other income, there are two things, one is the extent guidelines which have been modified and INR240 crores of income which came in into the other income and then there is a treasury income, which come in. So the treasury income is around INR250 crores. And then the other income is about INR130 crores or INR140 crores, which has come in there.
Navin Agarwal — Motilal Oswal — Analyst
Okay. And lastly like on the corporately, while we have talked about the improvement in rating is driven this decline any, but it’s still pretty sharp and over the last [Speech Overlap]
Sumant Kathpalia — Managing Director and Chief Executive Officer
What has happened. See the MCLR, we’ve been dropping at — MCLR. A) The MCLR impact had to come in at some point and it has come in. Number two, please understand that a lot of repricing happened because we were losing clients. The market rate on corporate banking is any of that with 5.5% to 6%. So what do you — how do you manage your clients? So we had to give a little bit of a reflection on the yield, otherwise you would have lost a very good loan book, specifically in the SME side and in the BBG side.
Navin Agarwal — Motilal Oswal — Analyst
I mean, you’ve got higher rated clients.
Sumant Kathpalia — Managing Director and Chief Executive Officer
And of course there is a higher rated paper which has come in. Most of our disbursements happening in the higher rated paper and we are moving towards working capital also in a large way.
Navin Agarwal — Motilal Oswal — Analyst
Okay. Sure. Thanks so much, Sumant, and wish you all the best.
Operator
Thank you. The next question is from the line of Anand Dama from Emkay Global Financial Services. Please go ahead. Anand Dama, may I request you to unmute your line from your side and go ahead with your question, please. He didn’t response. We move on to the next participant. The next question is from the line of Alpesh Mehta from IIFL Securities. Please go ahead.
Alpesh Mehta — IIFL Securities — Analyst
Yeah, hi. Just first question is again going back to the showed [Phonetic] ARPC. So what I can see is the gross value is around, first and foremost, if this is a nine-month number, if this is what our third quarter?
Sumant Kathpalia — Managing Director and Chief Executive Officer
This is our third quarter number.
Alpesh Mehta — IIFL Securities — Analyst
This is the third quarter number. Okay. So the gross value of the loans that we sold is around INR2,500 crores. The net value is around INR1,200 crores, it’s going to be provisions that you had made on this book is INR1,275 crores, that is the consideration. So how is this entire provision consideration received under shortfall is being accounted in the reporting?
Sumant Kathpalia — Managing Director and Chief Executive Officer
So I repeat the numbers. So out of the INR2,487 crores of sale to ARC, INR1,737 crores is the sale related to retail MFI on the books and INR750 crores is regarding the IRFS exposure. Within this INR750 crore was fully provided and this — the provisions include provisions till date, not just in the last quarter. So the net value of CNTL [Phonetic] is zero. The net value after provisions of other loans is around INR1,213 crores, that is the number reflected in the disclosure. Again these INR1,213 crores of net exposure that we have sold. The consideration for that was INR980 crores. Within that INR980 crores, INR240 crores is for the ILFS assets and INR740 crores is for the rest of the book. Because if the IFLS exposure was written off already, that INR740 crores is a recovery and that does not get reflected in the GNPA movement. The INR740 crores is the number that we — that is seen in the NPA movement, and that INR740 crore number then goes into the SR book for which we are carrying provisions.
Alpesh Mehta — IIFL Securities — Analyst
So this INR240 crores would be a part of the recovery from written-off accounts?
Sumant Kathpalia — Managing Director and Chief Executive Officer
Yes, it’s a recovery from return of accounts.
Alpesh Mehta — IIFL Securities — Analyst
Amidst [Phonetic] a part of other income.
Sumant Kathpalia — Managing Director and Chief Executive Officer
Yeah.
Alpesh Mehta — IIFL Securities — Analyst
Okay. And the shortfall between the INR740 crores and INR1,213 crores, INR500 crores. So that is adjusted against the security this is that you would have done, right?
Sumant Kathpalia — Managing Director and Chief Executive Officer
No, no. That goes with the P&L. Whatever is the loss on the sale to ARC closed on the P&L in the credit cost for the quarter.
Alpesh Mehta — IIFL Securities — Analyst
Okay. Now the second question is on the — what is the outstanding quantum of security receipts on the balance sheet?
Sumant Kathpalia — Managing Director and Chief Executive Officer
Yeah. So net security receipts as covered in the opening remark was 0.85% for the quarter against 0.71% last quarter.
Alpesh Mehta — IIFL Securities — Analyst
Okay. And last question is on the margins front. While obviously the small system that being — the growth is picking up and some of the larger corporates are trying to look at me especially in the current quarter. And is it likely be the case at least for next one quarter or two quarters. So what’s your outlook on margins or your view on volume was at the margins, how are you looking at this situation?
Sumant Kathpalia — Managing Director and Chief Executive Officer
Which margins are you talking about?
Alpesh Mehta — IIFL Securities — Analyst
The overall net interest margin, I’m talking about.
Sumant Kathpalia — Managing Director and Chief Executive Officer
So our net interest margin guidance has always been between 4.15% to 4.25%. We are not in line right now. We are lower the high basis point at 4.10%. But I think as the Microfinance business picks up, we should be there.
Alpesh Mehta — IIFL Securities — Analyst
Okay. So even though you are planning, you may grow the large corporate book, but your margins should remain intact within that one — 4.15% [Phonetic]?
Sumant Kathpalia — Managing Director and Chief Executive Officer
Of course, the mix of the book is will under — also undergo a change at certain point of time. And if that is where the mix effect moves towards a little bit towards Microfinance and credit card business picks up. You will create more margins.
Alpesh Mehta — IIFL Securities — Analyst
Okay. And the last question out of the total slippage is what are the slippages related to the NFI for this process in that?
Sumant Kathpalia — Managing Director and Chief Executive Officer
So our total slippages in the quarter three was INR2,598 crores, INR1,341 crores is one BMFI book.
Alpesh Mehta — IIFL Securities — Analyst
And the first two quarters would be?
Sumant Kathpalia — Managing Director and Chief Executive Officer
Quarter two was about INR1,070 crores, gross slippages. Net slippages. Net slippages was about INR1,239 crores in the quarter three.
Gobind Jain — Chief Financial Officer
Quarter one, if I remember, it was around INR150 crores.
Alpesh Mehta — IIFL Securities — Analyst
Okay. So in case during the call, if you’ve guide this number handy, what is the gross number of MFI slippage and the net number of MFI slippage, that would be very useful? [Speech Overlap] I’m talking about.
Sumant Kathpalia — Managing Director and Chief Executive Officer
We’ll try and collect [Phonetic] before the call ends.
Alpesh Mehta — IIFL Securities — Analyst
Thank you so much and all the best.
Operator
Thank you. The next question is from the line of Gagan Agarwal from Edelweiss Financial Service. Please go ahead.
Gagan Agarwal — Edelweiss Financial Service — Analyst
Yeah, hi, sir. Just a follow-up on that as well. So at this time around you said INR980 crores is the write-off from MFI. What would be that cumulative number for nine months? How much have we written off cumulatively from an [Speech Overlap]?
Sumant Kathpalia — Managing Director and Chief Executive Officer
Gave you that number INR1,800 crores something, not write-off. Write-off would be very less.
Gagan Agarwal — Edelweiss Financial Service — Analyst
Write-off last quarter it was INR430 crores?
Sumant Kathpalia — Managing Director and Chief Executive Officer
No no. Write-off INR430 crores. [Speech Overlap] We’ll get you that number. Nine month number is not entered. I think we’re disclosed every quarter. What is our write-offs. So we can give you quarter two and quarter three, but we don’t have the quarter one number.
Gagan Agarwal — Edelweiss Financial Service — Analyst
Sure, sir. Sir, if during the call — call, if you could provide that number?
Sumant Kathpalia — Managing Director and Chief Executive Officer
Yeah.
Gagan Agarwal — Edelweiss Financial Service — Analyst
Second is in terms of that — in terms of telecom exposure has there been any change in that telecom exposure has some thing being repaid or something of that?
Sumant Kathpalia — Managing Director and Chief Executive Officer
Yeah. INR258 crores of guarantees were repaid. We expecting another INR300 crores to go up. And then we are expecting another INR300 crores to go off in quarter one or so. So that’s something which we expect. Then the — I think the ARPU guarantees the decision has to be taken by the government and we expect that decision to come through. So it should be another INR500 crores to INR800 crores going off.
Gagan Agarwal — Edelweiss Financial Service — Analyst
But nothing on 2020 [Phonetic] base side that’s probably get reduced this quarter?
Sumant Kathpalia — Managing Director and Chief Executive Officer
So we’ve already reduced to 58 [Phonetic] like I told and we should only get another INR250 crores to INR300 crores reversed this quarter.
Gagan Agarwal — Edelweiss Financial Service — Analyst
Perfect. And just last thing on this provision, continuing before that you’re carrying. What is the plan to utilize that, how we are thinking about it?
Sumant Kathpalia — Managing Director and Chief Executive Officer
We will — see there was an opportunity to utilize. I was tempted to do it this quarter. But I think — we think that we should keep it, and that’s why we added to it also. And I think you should keep it and use it at an appropriate time. We will evaluate it next quarter because we want to come at a credit cost of one. Today, if you look at it, my credit guidance was 190 [Phonetic] basis of credit cost and 50 basis point to 60 basis point on the Vodafone. We are already at 190 today, and 40 basis point on the Vodafone. If I have to maintain the guidance of 190 basis points to 200 basis points, I will see whether I have to use the contingent provision. I may not have to use as much, but I have — may have to use INR200 crores, INR300 crores. So we will see whether we have to use it, or we will mark [Phonetic] our credit to cost guidance. So we will evaluate at a certain point of time at appropriate time.
Gagan Agarwal — Edelweiss Financial Service — Analyst
And what would you be our credit cost guidance for FY ’23?
Sumant Kathpalia — Managing Director and Chief Executive Officer
Not right now. We will come to it later, because we’ve always said that our credit cost should now go down between 125 basis point to 150 basis point, but I’m not giving a guidance. I want to see how COVID plays out.
Gagan Agarwal — Edelweiss Financial Service — Analyst
Sure. That is it from my side. Thank you so much.
Operator
Thank you very much. Ladies and gentlemen, I now hand the conference over to Mr. Sumant Kathpalia for closing comments.
Sumant Kathpalia — Managing Director and Chief Executive Officer
So, thank you for being on the call on a Saturday evening. I just want to tell you, thank you for being patient with us. The whistleblowing [Phonetic] was not an easy for people who had confidence in us and lost confidence. I think I want to tell you that the Bank continues to remain strong. And we are very, very confident of the recovery phase. And we don’t see any issue in what we said our micro finance business is strong, and I continue to believe that we will continue to grow the business. And we’ll continue to have a growth, which we were anticipated. We would have achieved a growth target this quarter also except for the Microfinance. So we are well on our way to achieving our growth targets. Thank you so much for your meal and release are available for any clarification, any doubt we have. We’ve not answered certain questions. We will make sure that that’s uploaded in the investor deck. Thank you so much.
Operator
[Operator Closing Remarks]