L&T Finance Holdings Ltd (L&TFH) Q2 FY23 Earnings Concall Transcript

L&T Finance Holdings Ltd (NSE:L&TFH) Q2 FY23 Earnings Concall dated Oct. 21, 2022

Corporate Participants:

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Analysts:

Rikin Shah — Credit Suisse — Analyst

Kunal Shah — ICICI Securities — Analyst

Nischint Chawathe — Kotak Securities — Analyst

Abhijit Tibrewal — Motilal Oswal — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the L&T Finance Holdings Q2 FY23 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] We have with us today Mr. Dinanath Dubhashi, Managing Director and CEO and other members of the senior management team. Before we proceed, as a standard disclaimer, some of the statements made on today’s call may be forward-looking in nature and a note to that effect is provided in the Q2 results presentation sent out to all of you earlier. I would now like to invite Mr. Dinanath Dubhashi to share his thoughts on the company’s performance and strategy of the company going forward. Thank you, and over to you, sir.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Thank you. A very good morning, ladies and gentlemen, and a warm welcome to everybody who is attending this call. Very special quarter for us. We have done extremely well across all business metrics and also well on our way of achieving the milestones which were outlined by us in our Lakshya ’26 strategy. In the annual meet that we held in May 2022, I had shared with you our strategic plan of Lakshya ’26 and its underlying goals. Post that the market scenario has changed considerably, in fact, if I can say even drastically, whether in the country or even globally and events happening as we speak.

We are witnessing new inflation highs in different parts of the world, tightening monetary policies, geopolitical conflicts, increasing interest rates, everything. Amidst all this, changing macro variables, I mean, there are some very positives also, like demand growth in India, for example, especially in the rural are very good. Amidst all these changes, I can proudly say that L&T Financial Services has emerged out quite strong in terms of not only its quarterly performance but also the direction it is taking towards Lakshya ’26.

Lakshya ’26 in short is about making LTFH a top-class digitally enabled retail finance company. Within this goal, we aim to pivot from a product-focused organization to a customer-focused approach by creating a Fintech @ scale. And I believe we are doing it quite well, starting with changing the organizational structure, which we spoke about in our last call, and that has actually brought a lot of focus on various segments and has worked very well. The last time we had met after — at the end of Q1 FY23, I had expressed confidence that as we traverse on the part of this strategic plan, we will show enhanced performance while continuing to improve our offering to our customers.

We demonstrated that in the first quarter and I believe that we have demonstrated it yet again now. What do we aspire in Lakshya ’26? In fact, what do we stand for? We want to become a top-notch NBFC, catering to rural, urban, mass affluent, and aspirer[Phonetic] segment and to the SME segment. We will do this by using digital and data analytics to the hilt for creating a creditworthy pool of customers who can be retained, farmed, cross-sold, up-sold various products with the ultimate goal of delivering top-class sustainable ROA. That’s the ultimate goal. An effective way to achieve this goal is to become Fintech @ Scale and quite a few slides in our investor presentation are dedicated to this. The foundation for the same has been laid and nurtured over the past six years.

LTFH has performed — transformed into a significant player and created a right to win in its product offerings. Importantly, this has been achieved on the backbone of digitization and tremendous use of data analytics across the product life cycle. We also supplemented it by streamlining on our servicing franchise. With the ensuring database that we have created, we initiated to cross-sell loans and created a digitally-native product consumer loans and in other products, we’re using this cross-selling for retaining our existing customers and upselling to them. Digitalization for us is not a one-time effort, but a constant effort towards process excellence.

This forms actually the Phase 1 of our Fintech @ Scale architecture that deals with product, process, and service excellence. As an indicator — small indicator, servicing handled through self-help channels. Last time, I had shared that 58% of the total servicing happens through self-help channels, the rest was through branch and call centers. Within a quarter that has increased to 71%, the rest being through branch and self-help channels. 71% is quite an industry benchmark, frankly.

Even the best in the industry are around the same level but we hope to improve even further from here as we go forward. Phase two, as it slowly unfolds, and we are making small beginning through our apps, we look forward to understanding the customers’ needs. It is our firm understanding and the firm belief that a customer does not come to us for availing the loan, the loan is a secondary product. He or she comes to purchase an asset or for a particular need, any need, asset or any other need, whether it be a tractor, two-wheeler, livestock, home, setting up a small business, anything.

We would want to view L&T finance loan offerings as a seamless proposition in this asset purchase or business process. This means that understanding the customer need is essential to etch ourselves firmly in their minds and we believe that this will enable us to create a suite of offerings by understanding the needs of the customer and thereby, creating what we call Fintech @ Scale. This is expected to be facilitated by a deep digital engagement ecosystem built on self-initiated customer journeys. Now we have captured it briefly in the presentation, the way we are going, we have captured Phase 1 and Phase 2.

Phase 1 is something that I would say, yes, it’s always work in process, but we are there. And Phase 2 is something which we are making small beginnings, it is in, right now, conceptualization stage where we are making some small beginnings in terms of app and using the IT knowledge available in the group we are developing something quite exciting and we will be in the — over the next year or so, we will be unfolding that slowly. Now, allow me to move on to the highlights of the quarter.

Our strong business momentum, and we have said — we had promised that we will maintain at least a 25% CAGR in the retail book and we will achieve 80% retailization in — by 2026. And you know that the same time last year we were around 43%, 44%. What have we done this quarter? We have achieved highest-ever quarterly retail disbursements. In fact, quarter after quarter, we have been achieving new highs, and for the first time, retail disbursements are above INR10,000 crores now, which is 15% QonQ growth and 84% Y-o-Y growth. Accepting that Q2 last year, though, was not in the middle of pandemic but still we were recovering from the pandemic, accepting that but still a 15% QonQ growth also we have achieved.

This is special as we have been successfully posting highest-ever quarterly retail disbursements quarter after quarter for the last three, four quarters. Another significant achievement is our retail book for the first time has crossed INR50,000 crores milestone, it now stands at INR52,000 crores around, which is 27% up Y-o-Y and more heartily, a 9% Q-on-Q growth which gives us tremendous confidence of achieving the growth targets of Lakshya while keeping the portfolio quality good. We are marching steadily in the direction of retailization with now retail portfolio mix at 58%, as I said, up from 47% last year same quarter and 54% last year.

Margins, in fact, at a time when cost of funds is going up, we have been able to not only maintain but actually increase our NIMs plus fees to 8.43% from 8.23% last year — now — last quarter. So, how has that happened certainly? Number one, the WAC increase. I have been always sharing that when the cost of funds was low, we kept the CPs low and kept locking into medium and long-term borrowings at that point of time, and that is working well. Our quarterly WAC is up by just 6 basis points from last quarter to 7.33%. And another thing, which is working well for us is the mix change. So, yes, we have been able to pass on some increases, no doubt, but more importantly, as retail products increase, which are higher margins, it is working well for the overall margins.

As we go ahead, interest cost will certainly increase, there is no doubt. Through our ALM strategy, we believe that our cost will increase less than proportionately when the market increases in interest rates, and by our product mix change and product strengths, we will be able to definitely maintain our NIMs plus fees at very healthy levels. As far as asset quality is concerned, GS3 remains just around 4%. It has reduced slightly from Q2 and quite substantially from — reduced from Q1 and quite substantially from last year. NS3 now starts at — stands at 1.85% and I would like to point out that our retail NS3 now is once again below 1%, at 0.88%. So that’s where we are moving, as you know, our Lakshya goal is below 1% NS3 total, and by 2026 most of the book will be retail anyway and this retail NS3 being at 0.88% works extremely well for us.

Now, last time I had indicated that by Q2 end, the impact of OTR will be largely over for us. So now just mathematics, just dates, other than housing which is a secured product, all other products were OTR was, the moratorium was six months. So six months after billing, or actually three months after the billing starts, everything either would be collected or will become NPA. That has happened in Q2. Accounts are largely either collected fully and closed or collected partly and they are — the customers are paying now well, or they have become NPAs and have fully provided or written off. So for us, I can confidently state that the impact of OTR on P&L now is largely over.

Accounts which have moved to 90-plus buckets, fully provided for. We have used about INR422 crores from our management overlays to provide for this, that is old. But more importantly, as an indicator to show that we believe that it is over, from our P&L we have created INR64 crores of management overlays once again. So it actually shows that we believe that the trough is over and credit costs are now firmly trending downwards. As on September 30, we carry now INR1,096 crores of management overlays, over and above GS3 ECL provisions and standard asset provisions.

With the planned growth in retail portfolio as a part of Lakshya ’26, we believe that we — as you remember that before COVID, we had this strategy of slowly creating and building good management overlays. We will continue with that as we go ahead. So big message here, large effect of Lakshya — of OTR is over and what you will see from next time onwards is a more steady state credit cost sort of trending downwards. Last update before I get into the details will be on mutual fund divestment. As you would all — would have known and read, we have received — we had entered into a definitive agreement to sell our mutual fund in December ’21 to HSBC AMC.

SEBI has recently given a NOC for the proposed change in control of LTI, L&T Investment Management and the merger of schemes. With this, we are on track of closing the transaction in quarter three FY23 itself. As I’ve always said, the capital gains received from the deal will be primarily used for strengthening the balance sheet. With all this, with excellent growth, with NIMs plus fees at very healthy and increasing level, credit costs reducing, PAT for the quarter at INR406 crores is up a healthy 81% Y-o-Y. A more satisfying number for me is retail, which is the future of the company.

The ROEs now are again close to touching 14% and on the way upwards, hopefully. With this, now we will deep-dive into the numbers and try and give some color to it. As far as retail businesses are concerned, I have mentioned earlier that we have now — we have registered highest-ever retail disbursements. Before I move to the performance of respective businesses, let me discuss with you the broader macro updates and especially rural outlook. As you already know, the business decisions we take at LTFH are greatly influenced by the inputs of our Chief Economist team. In fact, many of you receive detailed reports that our economics team brings out on all relevant variables that have a decisive influence on rural cash flows, variables like rainfall penetration, water reservoir status, existing irrigation cover, sowing status of Kharif and Rabi, Mandi prices, Mandi arrival, rural wages inflationary trends, et cetera.

I mean, there are lot of variables which go into it. It enables us — it enables us, what I call, to do pinpoint bombing. So we can actually take PIN code-wise, district-wise decisions on which product where to grow. And also it shows early warning signals for increasing maybe collection efforts somewhere, doing some special collection drive somewhere, and that works extremely well for us. The broader movement of macro variables in the rural economy, if they are to be talked about, the mood around rural outlook is now quite buoyant. And early signs show that demand has already popped up in rural India.

FMCG companies, for example, have been witnessing good growing demand across the board in Q2. But more importantly, as far as rural cash flows are concerned, elevated crop prices, robust Mandi arrivals have definitely contributed to strong rural cash flows, aided by higher export demand and wage growth across most of the regions. Going forward as well, rural cash flow prospects are expected to further brighten on back of several positive cues, such as, first, elevated crop prices and crop realization in upcoming quarters, especially for the Rabi crop. As you would already know, government has already declared increased MSPs for the Rabi crop.

Our overall water storage position across most major reservoirs is very good and the soil moisture has improved substantially. Overall area under Kharif has been good and bright prospects are already seen for Rabi sowing. And, of course, there has been an increase in the [Indecipherable] wage rates. At the same time, there are some downsides as well. Rainfall has been uneven and especially in some top states like UP, Bihar, Jharkhand, West Bengal, rainfall has been lower than normal, certainty, which would lead to lower-than-expected production of key Kharif crops, especially in these states and as I already said, our analytics takes that into account while looking at our disbursement and collection positions, but more importantly, these are states which are reasonably well covered by irrigation, and the water reservoir levels are quite good.

Rain — late rainfall has been good, and everywhere across the country, the prospects for Rabi crops are good. And early trends of the festival season are actually extremely good. The Pooja holidays were very, very good for some of the commodities we financed, like tractors, two-wheelers et cetera. And we are expecting a very good Diwali, touch wood. All in all, rural demand is expected to stay buoyant in the second half and definitely perhaps in — also in H1 FY ’24. And as far as we are concerned, I am sure that the resilient rural demand in different geographies and our strength presents a good opportunity to grow our retail businesses.

So let me talk about individual businesses now. First, Rural Business Finance, which was previously known as Micro Loans. Micro Loans actually subsumed in the Rural Business Finance. This business, which enables sustainable livelihoods at the grassroots level, has shown strong disbursement trend and has recorded its highest-ever quarterly disbursements at about INR4,400 crores. And the book has now crossed INR15,000 crores. This growth is aided by our focus on strategic initiatives, like repeat customer conversion for zero DPD customers; exclusive customer loans, like customers who are exclusive only with L&T Finance and don’t have any other lender. See, the new RBI guidelines and the ensuing reporting, has actually enabled us to take all these calls, have all this data.

Our deepening geo-presence, best-in-class turnaround time, and of course, completely database credit algorithms. As I’ve always said, we have been — always been the proponent of database credit algorithms in this business, which was traditionally people form groups, or people are judged on the ground. We have moved away from that completely. Some of you have toured with our Investor Relations department, has seen the app in work. It is WIP, getting better, but it enables us to take very credit-based — stringent credit decisions as we go ahead and that actually, with the growth, it gives us confidence of the credit quality as well. According to the new RBI guidelines, we have started the digital app, which measures income and the early indications are that just about one-sixth or so of the loans are — actually qualify as micro finance, being the family income being less than 3 lakhs, which means that around 85% of our loans or disbursement go to comparatively higher income groups where lending can happen using very advanced credit metrics and most importantly, opens up tremendous opportunity for cross-selling, more product selling at excellent credit cost.

As we go ahead, we’ll use that, also launch new products and sustain the momentum in this business as we go ahead. As far Farmer Finance is concerned, which admittedly right now remains as tractors and tractor implements finance, and we are slightly late in launching our other Agri inputs loans for various reasons, let me not get into that right now. We have a well-diversified footprint in farmer finance with a vintage of now more than 17 years and we are among the leading financers in this segment. With more than 200 branches across 21 states, we disbursed little more than INR1,300 crores in this quarter, which was 14% higher y-o-y and the strategy remains the same, focusing on preferred OEM dealer strategy, enhanced customer service, and improved customer retention and, of course, dominating counter share.

So as I’ve always said, market share, we believe is a derivative. We don’t aim for our market share, we choose dealers and aim for counter shares, and — based on data analytics, and that moves to this market share. We disbursed about — for customer retention, we have actually in this quarter disbursed more than 7,500 units for repeat customers during the quarter, and almost 97% of our total business was now done through our digital sourcing mode with best-in-class TAT of less than a day. That’s rural.

As far as urban finance is concerned, if we take all products together, that is two wheeler, consumer loans, home loans, LAP, we saw an 80% y-o-y growth in disbursements, resulting in a close to 30% increase in this book. Talking about two-wheelers, we have done our highest ever quarterly disbursement of INR1,700 crores, up 38% y-o-y. Market share has increased to about 12% against 11% last quarter and two products of our — which are very good products are actually taking increasing share of our disbursement, what we call Sabse Khaas loans and second is what we call VIP loans.

So Sabse Khaas loans is what we target towards cash customers. As you would know, two-wheelers is one vehicle segment where the finance penetration is little above 50%. Most other vehicle segments, it is about 80%, 85%, 90% also. Two-wheeler is about 50%, and as you would also remember, just about four years back it was in the ’30s. So various players, I think, we have been one of the pioneers, have launched products for converting cash customers to loan customers. Sabse Khaas loans is one of them.

VIP loan is ability to customers who are higher category of credit, which have proper income proofs, giving them loan at a better LTV and with much, much better credit. I mean, very simple, even just the bounce rates of this customer is less than one-third of normal customer. So these two products have worked well and along with deepening geography, it is helping our growth rate. We will continue to maintain a strong focus on customer value and building preferred dealer-OEM relationships, and very clearly use this to continue to increase our volumes in two wheeler segment and maintain our position among the top three, four all the time.

We have continued — as far as consumer loans is concerned, we have continued to grow this, which is our first digital native product. And you’re seeing the growth of this product. We have now achieved a monthly run rate of INR400-plus crores. During this quarter with total disbursements of around INR1,300 crores. We have increased our customer funnel. You would remember that this product was primarily cross-selling to our existing customers. Now out of the new disbursements, just about 50% comes from existing customers and loyalty.

The remaining is from new partnerships with e-aggregators, prospections, and getting — analyzing prospect list and going for those customers. Insta loans through our apps. So all this is now forming also increased funnel as we go ahead. So we are seeing this book growing very well and the book quality holding quite well. From having a book size of just around INR1,100 crores same time last year, now the book size is close to INR4,000 crores. The festive period is further anticipated to bring high demand in Q3 for this and bodes well for the growth of this business as well. Retail Housing, for a long time I have been talking little defensively about this segment. Though it still remains small, we are now growing quite well within this and also expanding our business just from salaried, to SENP, to again slowly increasing LAP.

We have an excellent team on place now and this business is now growing quite well. So we are building — witnessing excellent growth momentum. During the last couple of quarters, the focus has been on slowly moving from just salaried to other categories also, thus slowly increasing the profitability of this business. We believe that we are progressing steadily on this path with disbursements now reaching INR1,100 crores in the quarter. You would remember, just about 1.5 years back, we used to have 300, 350-odd in a quarter. This is up now almost 20% quarter-on-quarter.

We remain focused on enhancing our disbursement volumes through strategic measures like geographic presence, solid DSA partnerships, and increasing customer retention. I’m sure that with the current focus on increasing disbursements and improving asset quality, this business will grow bigger with time. SME, which is the latest baby, latest product offering whose pilot was launched in Q3 last year, about a year back, is now witnessing a steady uptick in Q2. So our total disbursements in this quarter reached now about INR200 crores, with the volumes for September itself touching around INR90 crores. So as we would see the next quarter can be even double of this and we can grow at a similar pace as we go ahead.

We are building good value proposition, good digital journeys here. We know we are competing against some very, very good competitors here, but then the market is quite big and we believe we can make good impact in SME segment as well. We have now opened up more locations, we have operationalized from 17 locations up from just two locations in the final draft. As far as wholesale business is concerned, in line with our Lakshya ’26 goals, we have followed a strategy of reducing capital allocation to wholesale lending. This led the wholesale book registering a de-growth of about 14% Y-o-Y.

Within that, in infra, we continue to follow an asset-light model, albeit with reduced capital allocation and focus primarily on excellent customers, only top-class customers. Real estate, we are obviously not doing any new sanctions and focus mainly on project completion and getting our returns. So after — I believe I know it is a little long, but I thought I should give you color, not only on the numbers, which you can read it from the presentation but how we are achieving it. As far as retail collection is concerned, we have witnessed best-in-class collections in Q2 FY23 across retail businesses, led by company’s concerted effort, field efforts, analytics-led prioritization and use of propensity-based data analytics to channelize our resources.

Overall collections are up and collection efficiencies across businesses have trended extremely well and are back to pre-pandemic levels, and we are now giving all those charts in our presentation. Even in our wholesale businesses, collections are as per plan and the wholesale — entire book has reduced by close to INR6,000 crore Y-o-Y. Higher real estate collections were registered during the counter — during the quarter on account of increase in project resolutions and we got something like INR850 crores as principal repayments and prepayments in the real estate segment. That brings us — that completes more or less the asset side.

Liability side, I have already talked about quite a bit in detail. So yes, interest rate is definitely going up but we have got an excellent franchise. Our strategy of locking in with medium and long-term funds, going for — aggressively for priority sector loans, and now the latest baby there is sustainability-linked loans. We raised further INR250 crores in this quarter, bringing that book to about INR450 crores, which admittedly is small, but that has great potential. With the strides we are doing in our ESG, we are quite confident of building that good franchise for raising sustainability-linked loans.

As far as asset quality, I will just summarize by saying asset quality is quite steady with GS3 at 4.02, NS3 at 1.85, retail NS3 at 0.88. With continuous improvement in collections and with the impact of OTR now largely behind us, credit costs have started showing a significantly downward trend from this quarter onwards. And we expect this trend of downward movement of credit cost to continue as we go ahead.

In summary, our established business strengths with highest quarterly disbursements, with higher NIMs, normalized collections, reducing credit cost bode well for us. Having spoken about the quarter, let me quickly summarize the four pillars of Lakshya ’26. The four pillars were sustained and — sustained profit and growth engine, demonstratable strength in risk management, Fintech @ Scale and future growth through ESG. I believe the numbers and the detailed explanation talk about the first two. Let me talk briefly about the third and the fourth.

Fintech @ Scale has helped us to continue on our path to become a customer-focused company from a product-focused one. A few initiatives that I would love to either talk that we have introduced or I would like to report progress. The first is Planet app. This is our customer-facing app, which was soft launched during the last quarter of FY22 and has had a steady pickup. We now have about 7 lakh downloads, which is up from 2 lakhs last quarter. While the application initially was limited to on-boarding and servicing customers till Q1 last year, we had opened it up now for disbursements of especially consumer loans, and we have achieved disbursement of about INR126 crores in Q2 exclusively through the app. So it’s a small number, but considering that the app is new, it encourages us, and while servicing more than 7.5 lakh customers through the app. So we want the headache of somebody calling up — customers headache of calling up call center, branch et cetera to go totally.

The application is available both on App Store and Play Store and the company expects to continue scaling it in the coming quarter to make it a full-fledged and re-imagined customer engagement engine. We launched our WhatsApp channel for customer servicing in Q1, and now that is now slowly moving to even business acquisition channel. So I demonstrated it to you who attended our annual meet, that time it was completely servicing. Now, slowly disbursements have started through that for consumer loans and so we have now WhatsApp-based disbursements, giving immediate credit decision.

While the disbursements remain very small since it is absolutely in pilot right now, we expect that it scales up quarter-on-quarter. Leveraging data analytics for customer retention being the third initiative. The company continued on its path of actively working towards leveraging its 7 crore-plus database developed over the course of its businesses across years. At present, 47% of company’s disbursement in rural business finance and 28% in farmer finance are driven by cross-sell offers generated by the company.

Our consumer loan book of close to INR4,000 crores is largely driven by loans through our retail loyalty customer base. In addition to this, based on our data analytics, the company is also working on identifying and addressing pockets of currently untapped potential across customer segments and we will be launching additional initiatives and products around the next quarters. Let me now speak about the fourth pillar, which is ESG. I am happy to share that during this quarter, we continue to move steadily on our path of achieving carbon neutrality. We had set a target of 10% reduction in carbon emissions for the whole year.

I’m happy to record that in the first half itself we have achieved that already. We have also demonstrated our commitment to human rights by signing the [Indecipherable] developed by the World Business Council for Sustainable Development. There are other first in this quarter as well as far as our ESG is concerned. We instituted an inclusion and diversity program in LTFH, which we want to establish as a strong indicator of our commitment towards inclusivity in the organization.

Furthermore, we also developed a sustainable loan framework, with us now raising INR225 crores in form of sustainability-linked goals in this quarter, in addition to INR200 crores raised in Q4 of last year. Lastly, I would also like to share with you that our commitments toward sustainable growth was recognized by the industry at large and we received prestigious awards, like the Mahatma Award for our ESG initiatives in the quarter under review, second quarter, which we believe is a testimony to our commitment.

With this, I would just like to say that the performance during this quarter with multiple consumer offerings in pipeline, with strategic steps taken on various fronts, we believe we are well in line for our objectives of Lakshya ’26 for — hopefully to achieve them even before ’26. The objectives being 80% retail book, more than 25% CAGR in retail book, NS3 of less than 1% and ROA between 2.8% to 3%. And we are now slowly showing a march towards that. I thank you all for patient listening. I wish you — I will open up with questions, but wishing you a very, very Happy Diwali to all of you, your families, colleagues, everybody. Thank you.

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 Rikin Shah from Credit Suisse. Please go ahead.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Hi, Rikin, happy Diwali to you.

Rikin Shah — Credit Suisse — Analyst

Hi. Good morning, sir. Happy Diwali to you and the entire team. Thanks for the opening remarks and fortunate to ask the question. I had three questions. First one, while your consumer loan is a completely digital native product, the SME loan product seems to be — the channels for them both seem to be traditional as well as via the digital app, and given that both these products are growing rapidly from a very small base, just wanted to get a better understanding of the target segment, ticket size and yields in these two segments. That’s the first one. Second one is on the fee income. While the NIMs have expanded, led by the retail growth and the mix change, the fee income has gone down sequentially. Given that the retail disbursements are picking up, is there more to — is there any further color on the weakness in the fee income and the outlook from here? And thirdly, the question is on the real estate. Out of the total loan book of INR9,000 crore-plus. Post — we have just INR2,100 crore of gain from the mutual fund, and if I recall correctly, INR300 crore of overlay provisions that we carry, what would be the total provision coverage on the real estate book? That’s all from my end, sir.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Okay. I will answer the first two. We are not giving product-wise provision coverages, and I think now disclosure norms are continuously being strengthened. So I’m not sure I can give out numbers, which are not there in the investor presentation on a call. So let me answer the first two, which are more descriptive in nature. So, first the route. So consumer loans, the credit algorithms on the entire product — entire consumer — customer segment, really, can be digital in a way, can be completely data-driven. And hence, not only credit, but the entire process, including documentation, KYC, everything, can be digital. And that’s why with that conviction, we kept — and it’s not as if there were not requests from the business to have it physical and all, but we kept that as a conviction.

SME, on the other hand, we have two segments. So one is SEP, that is self-employed professionals, where we are now targeting first, to start with, chartered accountants and doctors, and then there is SENP which are small businesses. So right now, to be very, very frank, the SEP, the chartered accountants and doctors is what we believe can be completely digital, it is centralized credit, digital, there is still an aspect of personal discretion in it. So in a way, even if it is completely digital — completely, I would say, non-paper, I don’t call it totally digital because there is a human intervention of — a personal discussion.

We have to get lot more confidence in our database, scale, et cetera to let go of personal discussions. Some competitors, especially, I would say the marquee NBFC is quite old in this and I am aware that they do certain segments without personal discussion, and hats off to them for the expertise they have built over the years for this. We are pretty new and hence my credit department still sees the need of a personal discussion for SEP. As far as SENP is concerned, while the onboarding is digital, it is completely assisted digital and the documentation required, as well as the credit appraisal, factory visit, legal, technical, all this are completely physical at this point of time. So this business being digital, totally, is in my belief about a two-year runway. We will keep making small moves toward that. But not a — I would say, hedonistic or a stupid push for — that somehow I wanted digital against where the market is. So we will not be, I would say, just unreasonably wanting to go digital in this.

The market is still quite physical in this. One-by-one items we are getting as far as digital is concerned. Like, for example, if the customer shares particular codes with us, we can access his tax records, GST records, we can access his bank records, many of these things. Even if his financial statements are physical, there are software, as you know very well to convert it to digital and analyze. So various aspects we will keep digitizing as we go, like for example PD, now — personal discussions, many cases we do video PD. Now, if I can call it digital, yes, but it is not truly a digital. Right. I mean it just replaces somebody going there and doing a PD. So it is more better for TAT, but it’s still a PD.

I can call it for — just for claiming digital, I can say digital, but it’s not truly digital. GeoTAX for example. Now every customer is GeoTAX, which is good, which is a good digital movement in that direction. But to answer your frankly, for SME, SENP SME, especially, to move to totally digital, I see for us, I don’t want to speak for the industry, it’s a two-year period. Perhaps what we will move for is lower ticket sizes, we will go first. And then what we try to do is keep it 100% paperless, scan the DSA and we process. So no paper flows in the company, that’s what we try to try to do. To answer your ticket size answer, the average ticket size for consumer loans is around — consumer loans [multiple speakers] INR1.4 lakhs for consumer loans, and for SME it is around INR25 lakhs. Does that answer your question, Rikin, first question?

Rikin Shah — Credit Suisse — Analyst

Yes, sir, it does, And just on this point, while I’m not sure whether you would be able to talk about the yields, but on qualitative basis, would the yields be largely in line or higher or lower than our retail loan book yield of 15%, 16%?

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Around that, around that, around that, largely in line with that, around that, both the products.

Rikin Shah — Credit Suisse — Analyst

Okay, that answers the first question. Thank you.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Fee income, fairly simple answer. Some part of the fee also comes from wholesale disbursements. So as wholesale disbursements have reduced significantly, the fee income-related to that has also reduced. So that absolute fee income has reduced. Number one. Secondly, as we have reduced our liquidity and — it is actually a negative carry. So the cost of funds has also gone down and other income has also gone down. So actually, PAT will go up because of that, because that income is negative carry, if you understand. So it is fee and other income which come. And that other income includes interest on liquid balances that we carry. So even if that has come down, the cost of funds — that interest cost has reduced more than that.

Rikin Shah — Credit Suisse — Analyst

Fair enough. That’s all from my end.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

I already said, your real estate question, I won’t be able to answer.

Rikin Shah — Credit Suisse — Analyst

Yes, fair enough. Thank you.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Next question please?

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, hi, sir. Happy Diwali.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Hey. Happy Diwali, Kunal.

Kunal Shah — ICICI Securities — Analyst

Yeah. So firstly in terms of the cost, okay, when we are rolling out the retail products and launching the new products, if you can just explain in terms of the cost of acquisition, how we are faring compared to that of the other players, and how would we ensure the retention, okay, because maybe you might acquire the customers but most of these segments are very competitive and then we tend to lose it out to, say, some of the other banks and NBFCs as well? So how do we try to balance, both in terms of the cost of acquisition, retention, and where do we see the overall opex to assets with the scaled-up retail product?

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Excellent question. I will answer this two ways. One is cost of opex and second is acquisition cost, specifically. So overall opex. So if you see overall opex, yes, it is higher than what it used to be maybe two years back. Right now, very, very important thing is the investments that we are doing in new branches, in digital and growing. And in our calculation, close to around 4% of cost to income is investment. Okay? And the rest is steady state cost. This will continue, even perhaps large part of next year, as we grow branches, as we put more people in growing, especially SME and home loans. So SME and home loans right now are in growth phase. So naturally, every product won’t be at a nice steady state, making a lot of money for the company.

This is how every company will have to grow that there are cash cows and then there are stars, which will be hopefully tomorrow’s cash cows. So investment is going into these products. A lot of investment is going into IT, digital. Our commitment is by 2026, majority of our products should be IT enabled. I think if I’m not mistaken, you traveled with our team everywhere and you saw some of the apps that are working. And that will continue, Kunal. That will continue as we go ahead. So we’re not too worried about the overall cost now. This we believe will bring more than its stead in terms of income as we go ahead.

But all the time, right, when we launch new products, new businesses, there will be a phase of investment in those products in the world. So most of the branches that these new businesses happen at the same location, no doubt, but it will also mean investment in people, then the branches will not be enough, then you are seeing some of the micro finance branches, obviously, you can’t do home loans from there. So those kind of investments will happen. So we are in that phase right now.

Overall, the plan for the next three years shows operating costs trending well, as more and more products get into more mature stage. So that is number one. Number two is acquisition. Generally speaking, we keep our acquisition cost within the range of the processing fee that we earn from the customer. So we try to see that, that doesn’t become negative. Now, why are we saying try to see, is there will be various periods, various seasons, where we will invest. We will maybe reduce the processing fee a little bit. So we will be little bit negative there, or in new products that we launch, like in home loans, SMEs. Maybe initially we have to part a little bit more for DSAs. And as more and more of these products we move, two things will happen.

As volumes grow, those fees will come down. Number one. Number two, as we slowly have our own channels, because initially — any business, initially it will be DSA-led, and then as you put your — get your own sourcing mechanism, the percentage of DSA and own sourcing will change. And last but not the least, when cross selling and top-up kicks in, this third item, proximity-based selling, that cross-selling, top-up et cetera, will also come. Now every product moves in this direction, where the DSA portion, or even though two-wheeler or a tractor doesn’t have a DSA, they have dealers. So only micro loans actually is a business where we don’t have to pass on acquisition costs. But in all other businesses, we have to pass on the acquisition costs. So it works on these three principles.

First, try and keep the acquisition costs lower than processing fee, and use your speed, your servicing to make sure that the customer sees value in paying that processing fee. So that is number one. But acknowledging that in certain new products, that won’t be possible, but that also consider it as an investment. And then as we go ahead, reduce that, pass on, and also increase the percentage of own sourcing. And then lastly, increase the percentage of cross-sell and up-sell — top-ups. So that is how the business will grow and keep getting more and more profitable. Does that answer your question?

Kunal Shah — ICICI Securities — Analyst

Yeah. And if we have to put out a number in terms of opex to assets, particularly on the retail side, so where do you see it eventually? Maybe currently it’s around about 4.4 and it’s been in that range, but maybe DSAs also there is a lot of competitive pressure, given dealer payouts and we are still at the lower end. So do we see that this might inch up closer towards 5 or 4.75 or so, as we try to scale up?

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

No, I mean, going up is out of question. No, no, no, no. So this is also perhaps more because of our SME and housing. So two things will happen in the next two, three quarters. As volumes of SME and housing increase that portion will move up, and with micro loans farm increasing, it will move down. So, the weighted average actually, I see, remaining steady for the next, let’s say, four quarters because of this. And as and when these other two products also grow, it will start trending down from there.

Kunal Shah — ICICI Securities — Analyst

Sure. And secondly, in terms of core NIMs, so even though maybe we are highlighting that it’s largely because of retail, but if we look at the core NIMs in retail, that’s been down. Maybe when we look at it it’s — including the fee income, it’s down almost like, say, 24-odd basis points. And wholesale is something maybe wherein NIMs plus fee has actually gone up by 17 basis points. So how much do we see it sustainable, because, see, when we look at it on the retail, there is hardly like 10 bps kind of an improvement in margins and most of it are also fixed rate products, so there wouldn’t have been entire repricing, and there is benefit of deployment of liquidity as well? So where do we see this NIMs plus fees sustaining?

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Okay. Kunal, frankly, if you’re commenting at 10 basis points, 15 basis points, I won’t be able to give you answer, because every quarter it can certainly move 10, 15 basis points. I mean, it will depend so much on product mix and things like that. The statement I made was by the way, I don’t know which number you said has come down because our retail NIMs have actually gone — just NIMs, core NIMs have gone up both Y-o-Y as well as QonQ, at least the numbers that I see, from 9.85 to 9.95, it has.

Kunal Shah — ICICI Securities — Analyst

No, I was referring to NIMs plus fees. So that is still down from 11.57 to 11.33.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

We have been conservative in recognizing some cross-selling income at this point of time. Some developments in the industry regarding insurance companies, et cetera, we have been very conservative in recognizing that. I will be able to say only that. But NIMs, for example, 10, 15 basis points here and there, every quarter I may not be able to comment on. What we believe is two, three things will work, right? That micro loan is growing well, so which is a high NIM product. SME and consumer loans should grow up from now. So — and then home loan is growing, but yes, hopefully the higher NIM products are growing more. That is the first aspect of that.

Credit costs — I mean, not credit costs, the interest cost increasing, yes, increasing but not increasing like the 50 basis points of repo rate et cetera, it’s increasing less than that. And most importantly, even the fixed-rate products, most of our fixed-rate products are two years loans with a duration of just above one year. So, they also cycle down quickly, right. So the only thing which we will have to consider is competition that whether competition will allow us to pass on in each of every product, or whether we choose to pass on or keep interest rates same and grow volumes. Those calls will be taken strategically. So, frankly, with the NIMs that we have, the strong NIMs, say, 9.5%, for example.

At 9.5% NIM, if I get a choice of increasing volume and sacrificing NIM by 20 basis points or increasing volume less and keeping NIM same, I will take the first choice, anytime, because the absolute NIMs are so high. So I will grow volumes more and maybe NIMs — reduce NIMs a little bit. So the strategic direction I would like to give is we are confident of maintaining good levels of NIMs plus fees. Whether it will trend 5, 10 basis points up, down, in the current interest rate scenario I will be not only daring but foolish to predict over the next couple of quarters.

Kunal Shah — ICICI Securities — Analyst

Yeah, sure. Got that. Okay. Yeah, thanks. Thanks a lot. And once again wish you a happy Diwali to you and your team.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Wish you the same, Kunal.

Operator

Thank you. The next question is from the line of Nischint Chawathe from Kotak. Please go ahead.

Nischint Chawathe — Kotak Securities — Analyst

Yeah, hi. Good afternoon.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Hi, Nischint. Happy Diwali to you.

Nischint Chawathe — Kotak Securities — Analyst

Happy Diwali to you. Just one question is, while everything looks good on the macro and we clearly see collections improving et cetera, why did you have almost a INR500 crore kind of a write-off in the quarter?

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

That’s easy. See, it’s like this. The entire OTR book — not entire — whatever moves, we have two choices that either to show GS3 and 100% provision, or to write it off. So only the GS3 number changes, right, because the provision is 100%, the NS3 number will not change. So let me at least write off and get a tax advantage. So it’s a financial decision.

Nischint Chawathe — Kotak Securities — Analyst

And this would be.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

100% provided. Even business — for business, it is neutral and write-off doesn’t mean we give up the effort to collect. So either we keep at 100% provision and collect, or we write off and collect. So business-wise, it means the same. It is a financial — very simple. If, say, 100 — this INR550 crores, if you wouldn’t have written off, the GS3 would have been higher by INR550 crores, the PCR would have been higher because they were 100% provided, and NS3, this will be the same.

Nischint Chawathe — Kotak Securities — Analyst

Sir, the point I was trying to make is that there is almost a INR556 crore kind of credit cost for the quarter. Now if your overall provisions on the balance sheet have been stable, then this is a write-off that has hit the P&L, right?

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

No, no. Don’t look it like that. The overall credit cost, actually, without taking– let’s just take a step back and gross up this INR422 crores that we took from the overlays, right. Then it comes to close to INR1,000 crores, which you can say that INR1,000 crores is same as last quarter. [Foreign speech] But this INR1,000 crores includes INR422 crores of roll from OTR which is now over. So it is not going to come next quarter, you understand? So without OTR flow, this INR1,000 crores will be around INR550 crores — around INR570 crores. And this OTR flow is not going to be there for next quarter, it is over, because everything has flown now, simply by debts, 90-plus [Foreign speech]. Everything — whatever had to be flown, flowed and finished. So that is the way to look at this. So whichever way, right, this pocket that pocket, the way is very simple. INR550 crores is credit cost this quarter, which is only going to trend down going ahead. That’s the conclusion.

Nischint Chawathe — Kotak Securities — Analyst

So this is basically one-time OTR thing which is.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Exactly. That’s what we have said — I mean, committed.

Nischint Chawathe — Kotak Securities — Analyst

Okay. And what would have been the standard of [Indecipherable] on balance sheet?

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Okay. That is Stage 1, Stage 2, total, plus OTR, we have given that number, no. We have given that number in the presentation.

Nischint Chawathe — Kotak Securities — Analyst

Okay. Because [Indecipherable]

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Consol is 2.1%. For retail it is 2.4%, Stage 1, plus Stage 2, plus OTR, standard[Phonetic].

Nischint Chawathe — Kotak Securities — Analyst

Got it. Sure. Thanks. That was my question. Thank you.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Thanks Nischint and Happy Diwali again.

Nischint Chawathe — Kotak Securities — Analyst

Yes. Same to you sir.

Operator

Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Hi Abhijit. Happy Diwali to you.

Abhijit Tibrewal — Motilal Oswal — Analyst

Hi sir. Happy Diwali and good afternoon. Sir, I joined the call a little late, so in case if it’s a repetition, please let me know, so I can look up the transcript. Sir, first question is around these capital gains that you are expecting from the sale of your AMC business, wanted to understand — though we have given a brief commentary in the presentation, wanted to understand what proportion — I mean, firstly, what is the capital gains that you are expecting from this transaction and what proportion out of this will be utilized for macro-prudential provisions? And will the remaining be kind of kept on the balance sheet for growth capital? That’s the first thing I wanted to understand.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

The approximate capital gains, the pricing we have already told how much it is. The total is about — we have sold it for 425 million and — plus cash. And the surplus cash should be another 100 million, around that area. Now it depends on many things. We were initially expecting the transaction to close in October end. So we have taken a cover up to that, we are now revising the cover. So what will be the rate of cover, exactly when will be the date, rupee-dollar. So — I mean at least the rupee-dollar is depreciating. So, at least we are happy. I don’t know what happens to the rest of the world. But we will finalize the — first of all, amount. I mean this is the consideration in dollars. The exact amount in rupees I’ll be happy if somebody can predict the dollar-rupee rate, especially because we have to renew the cover at the end of this month. Otherwise I would have told you the exact rate at what we have covered and all those things. So that’s that. And exact proportion of that, what I will use for various — if I had to disclose it now, I would have disclosed it in the presentation. So very clearly it is something that we will — the Board will take a decision once they hatch and then we will immediately communicate.

Abhijit Tibrewal — Motilal Oswal — Analyst

Got it. Sir, the second question that I had.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Primarily, it will be used for strengthening the balance sheet.

Abhijit Tibrewal — Motilal Oswal — Analyst

Okay, alright. Got it. Sir the second question that I had was that multiple times during the opening remarks and many of the participants earlier asked, you have emphasized the pain from the — at least the unsecured OTR book is now behind. When we kind of look at your ROA tree, I think the biggest line item which kind of keeps moving or is the most volatile is credit costs. So given that you also suggested in the last — to the last participant that credit cost will now start to moderate, I mean, what could be a steady state kind of a credit cost for, I mean the kind of franchise that we have now, from, let’s say in the next year onwards?

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

About 3.5% for this quarter. We expect it to start coming down and go below 3%, hopefully, by the end of this year itself, around 3%, maybe not below, but close to 3% by the end of this year.

Abhijit Tibrewal — Motilal Oswal — Analyst

And then from next fiscal year onwards, should be more in the range of 2.5% for the full year?

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Let’s hope. Let’s hope. The business has the capacity of reducing it further. Let’s hope.

Abhijit Tibrewal — Motilal Oswal — Analyst

Got it. Sir, my last question is, I mean that while we guide under the Lakshya plan that we would endeavor or target a 30% kind of a loan CAGR in retail, can you also help us think through how should we look at the wholesale book? I mean because time and again there have been various media articles, and we have also suggested in some earnings calls that we plan to do something on the real estate business and the infrastructure segment. So how should we think about what are you trying to do in these two particular wholesale segments; real estate and infrastructure?

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Okay. Real estate segment, very clearly, we have stopped doing any new sanctions. We are concentrating on two things, one is completion of projects and getting the repayments. And various presentations that we’ve done before shows the progress that we have done over the last one year. And even this quarter, we collected about INR850 crores. Simultaneously, we are also looking at various partners who can come with us with a priority structure for getting into — for new projects, because even though we are not doing any new sanctions, for completion of projects we have to put out money, right. So we are actually looking at partners’ funds, especially, who will come, hopefully, on a portfolio, or at least asset by asset, come in with a priority structure.

We will not disburse any further, they will disburse priority loan, complete the project. Then as the cash flows come, they will take their money first and then we will get our money. So our structure is like that, obviously, with our loan remaining current all the time. So that’s obvious. And so that’s the structure we are looking at in real estate, and that we have been very, very clear. Infra is — we were — actually we are looking, that we are saying, for a partner because we believe that the business has good potential to grow. It doesn’t perhaps — putting more capital into it doesn’t fit in our overall ROA promise that we have given and hence we are limiting capital. So one ideal way is to get a partner into this business, preferably a majority partner for this business.

Efforts are on that. And as some people come and discuss with us, at various times there will be media reporting, so that can’t be helped. We can’t control that, that will happen. If that happens, and why I’m saying, if in a rising interest scenario, obviously, people’s interest will vary naturally. If interest rates were steady or coming down, by now there would have been tremendous interest. But as interest rate is going up, it is very natural that people will be wary to take up a large book, especially. So that efforts are on, and when we see a fruit we will obviously come to you. In the meanwhile, as you know, we have a very strong sell-down engine, and as we become more selective in further underwriting and start selling down more aggressively, the capital towards this business will reduce.

We will reduce capital towards this business while protecting the franchise, which hopefully can be sold soon. So that’s the overall strategy. And that is why I’m not talking about the overall book et cetera, because book, I don’t want to give a trend, it will trend down, by how much, how fast, we will see in the next two, three quarters. I want to only talk about the retail book, the way it will grow. Either way, we have not promised 30%, we have promised 25%. But we have shown a 9% QonQ, so probably this year it may be 30%.

Abhijit Tibrewal — Motilal Oswal — Analyst

Understood, sir. Thank you. And if I can squeeze in just one last data-keeping question, or you can let me know if you’ve already published this in the presentation. What is the quantum of the OTR’s pool that we have it now? And you used to give out a slide where you used to publish the absolute quantum of standard asset provisions on Stage 1 and Stage 2. So if you could please share that with us.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

So it is at — Stage 1 and Stage 2 is about 2.1%. Absolute quantum — absolute quantum is what, about INR1,800 crores, total? [Foreign speech] provisioning. Okay? So around INR1,800 crores. So that comes to around 2.1%, Stage 1, plus Stage 2 class, plus OTR. So that’s the number. And I already published it on the call. That is number one. Number two, largely the OTR remaining now is housing, that’s about it. Total housing, yeah, around INR650 crores-odd. of housing. That’s the — largely one remaining. Large part of it will open up actually next year and that — sorry? Sorry, housing is INR884 crores — INR900 crores and a large part of it, around INR600 crores will open up next year. However, it is fully secured. We have tested security of everything and there we are quite confident that big costs will not come, it will be in steady state, same cost.

Abhijit Tibrewal — Motilal Oswal — Analyst

Thank you so much for patiently answering my questions sir.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Sure. No problem.

Abhijit Tibrewal — Motilal Oswal — Analyst

Wish you the very best.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

You know, specific numbers I just don’t have them by heart, so I have to refer to that. Thank you.

Abhijit Tibrewal — Motilal Oswal — Analyst

Sure sir. Thank you.

Operator

Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Dinanath Dubhashi for closing comments.

Dinanath Dubhashi — Chief Executive Officer Dinanath Dubhashi, Managing Director

Thank you. Thank you, once again, ladies and gentlemen. Excellent questions. I would only like to once again express the confidence that not only the quarter is good in all aspects; growth, margins, cost, credit costs, excellent growth in ROA, NS3 for retail, reduction in wholesale, it is all happening according to plan. But various measures we are taking, various tools we are using, launching, various initiatives we are taking; products, digital, makes us tremendously confident that we will be able to follow up on this act and improve it quarter-on-quarter as we go ahead. And the Lakshya ’26 objectives, I’m beginning to get confident that we will be able to actually prepone achievement of these objectives as we go ahead. So on that note, thank you. Thank you for being patient. Thank you for your continued support. We will, of course, be available for any investor meets, et cetera that you guys arrange. My IR will be available, myself will be available as we go ahead. And before we end, wish you all a very, very Happy Diwali. This Diwali is perhaps the first Diwali which comes without any shadow of the pandemic. So wish you all a very happy, healthy Diwali. God bless all of you. Thank you.

Operator

[Operator Closing Remarks]