RBL Bank Ltd (NSE: RBLBANK) Q4 2025 Earnings Call dated Apr. 25, 2025
Corporate Participants:
R Subramaniakumar — Managing Director and Chief Executive Officer
Jaideep Iyer — Head of Strategy
Bikram Yadav — Business Head of Credit Cards
Analysts:
Jay Mundra — Analyst
Piran Engineer — Analyst
Anand Swaminathan — Analyst
Kunal Shah — Analyst
Rohan Mandora — Analyst
Shailesh Kanani — Analyst
Param Subramanian — Analyst
Krishnan ASV — Analyst
Anand Dama — Analyst
Aditi Naval — Analyst
Maitri Shah — Analyst
Hitaindra Pradhan — Analyst
Presentation:
Operator
Hello ladies and gentlemen, good day and welcome to RBL Bank Limited’s Q4 FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr R. Kumar, Managing Director and CEO of RBL Bank. Thank you, and over to you, Mr Kumar.
R Subramaniakumar — Managing Director and Chief Executive Officer
Thank you, ma’am. Good evening, ladies and gentlemen, and thank you for joining us for a discussion on our Bank’s financial results for the 4th-quarter and full-year of financial year 2025. We have uploaded the results along with the presentation on our website. And I hope you have had a chance to go through it in detail ahead of this call. I’m as always joined on this call by Mr Rajiv Akhuja and other members of our management team to address any questions that you may have. Before we get into the details of the results for the quarter, I want to briefly touch upon the progress of the bank in FY ’25. We began — we began the fiscal year-on a strong footing, supported by encouraging yearly momentum. However, as the year progressed, distinct development in our JLG and card businesses impacted the overall performance. In the card segment, we managed the critical transition in the portfolio collections associated with our co-brand partner BFL. At the same time, we witnessed an uptick in delinquencies driven by a mix of challenging macroeconomic conditions and the signs of over-leverage within certain pockets of consumer base. In the JIG segment, we, like the broader industry encountered headwinds stemming from the borrower over leverage, which notably impacted the collection efficiencies after mid last year. However, I’m pleased to share that the portfolio has since shown meaningful stabilization and is steadily trending towards normalization. Encouragingly, both the JLG and portfolios are now on a much firmer ground. We have also maintained a prudent and forward-looking provisioning strategy, ensuring the portfolio is comprehensively safeguarded as we enter fiscal 2026, positioned with the clarity, confidence and clean flat. I will walk you through a few key data points on this shortly. We commenced FY ’25 with a clear resolve to scale our secured retail businesses, and I’m pleased to report that we have made a meaningful stride both qualitatively and quantitatively. On the qualitative front, we have sharpened our focus on the quality of origination, the targeted mix of advances and the acquisition channels we prioritize, each of which I will elaborate on shortly. Quantitatively, we accelerated the growth in segments where we had already built momentum. Mortgages including home loan, working capital and tractors, while stabilizing scale-up in the newer lines such as gold loans. Our wholesale banking franchise continued to deliver quality growth and within that, the commercial banking segment has been scaling as per our plan. Together, these efforts have enabled us to navigate the challenging second-half of FY ’25 without any adverse impact on our capital position. Let us now delve into the specifics. At the beginning of the year, we laid out a clear strategy to drive the granularity of our balance sheet. I’m pleased to share the progress we have made on this front. The granular retail deposit as a percentage of total deposits as of FY ’25 are at 50%. The term deposit less than INR3 crore-plus CASA was at 65%. The secured retail advances are at 32% versus 25% in March ’24. Our mortgage portfolio comprising home loans and loan against property grew by 34% Y-o-Y. The commercial banking advances registered a growth of 29% Y-o-Y. The deposit quality has continued showing healthy trends. Our granular deposit growth has continued to see good growth in FY ’25 despite headwinds of higher competitive intensity and tighter liquidity conditions for most of the year. Retail deposits grew 16%, while the overall deposits grew 7%. Similarly, our average CASA balance grew 12% Y-o-Y. The retail secured segment was identified as a focused growth area and the Bank has begun achieving meaningful scale while maintaining disciplined underwriting and enhancing portfolio quality. In FY ’25, we saw growth in secured retail of 43% Y-o-Y. We remain confident that this portfolio will continue to perform well and is on-track to achieve the full profitability by FY ’26. Now coming to the unsecured segment. We have been cautious in this segment. We have seen a slower-growth in both JLG loan and credit cards in FY ’25. The JLG segment registered yet decline both year-on-year and sequentially. As many of you may recall, we proactively implemented enhanced credit guard rights, including Guard Rails 2 as early as November that is well-ahead of most of the players in the industry. In the credit card, including personal loan, growth was lower 3% Y-o-Y as well as sequentially. We are happy to say that the asset quality trends in both these segments is trending to normalized levels. Our strategy in credit card business is to build a strong franchise by acquiring a good-quality customers, those with the potential for deeper multi-product engagement with the bank. Even here, we are firmly prioritizing quality over quantity. As for the MFI portfolio, we have consciously reduced our exposure, shrinking the book by 23% over FY ’24. The portfolio now stands at INR5,752 crore, down from INR7,511 crores in FY ’24 with a stronger underwriting framework in-place and the signs of macro-level normalization, we expect a continued improvement in book quality. Moreover, the broader adoption of the god rights across the industry should meaningfully mitigate over-leveraging risk going-forward. We have started increasing the share of the book under CGFMU coverage, which will hold us in good stead during times of crisis, if any in the future. Over the past three years, including FY ’25, the bank has significantly improved its performance under priority sector lending, enabling us to meet the regulatory targets and avoid incremental RADF allocation. Our estwhile RADF investments made-for historical CSL shortfall continue to come off the balance sheet, freeing up the funding that can now be deployed towards regular lending activities naturally at a better yield. Let us also briefly touch on touch upon asset quality in these segments. I’m pleased to report that in credit cards, the net slippage in Q4 was INR44 crores as compared to INR533 crores last quarter. In JLG, as was informed earlier, the Q4 slippage was elevated but sequentially getting better with an improving trend on collection efficiencies. The next slippages were at INR439 crore in Q4 as against INR521 crore last quarter. This was expected given high SMA-1 and SMA-2 balances that we had seen as at, 31, 2024. Our collection efficiency and the recoveries have been better in Q4 over Q3. We saw a good improvement in the early bucket collection efficiency and ended March month at 99%, including Karnataka, up from 98.4% as of December ’24. We expect the slippages to decline meaningfully in Q1 with a return to pre-strust levels anticipated from Q2 FY ’26 onwards. Additionally, resolution rates from the delinquent buckets are expected to improve and we foresee recovery momentum from NPAs sustaining through FY ’26. Disbursals in JLG have also started seeing improvements in Q4 and with approximately INR350 crores of disbursals in the — for the month of March. As I said earlier, this is with the new which we implemented in Q3 itself. As a risk mitigation for the JSG loans, we continue to increase the coverage of CG FMU for incremental disbursals in this segment. This quarter, we have applied for the coverage of 90% of the disbursals in Q4 and we expect this trend to continue in FY ’26. Let me also spend a few minutes on the provisioning that we have taken in this quarter. As you are aware, in credit cards, we already have a fairly aggressive provisioning policy, wherein we take 70% provisioning at NPA stage and 100% provisioning on 120 days past-due. This ensures that we really don’t carry the baggage in the portfolio. In the JLG business, we normally take 25% provisioning each quarter on NPA, but we have now taken 100% provisioning on the NPA as at, 31st March 2025. This means we have a nil net NPA in the ALG business as at 31st March 2025. We have also taken 75% provision amounting to INR283 crores on SME 0, 1 and 2 as at, 31 March 2025 of INR378 crores. To enable this, we have reversed the contingent provisions that we were carrying on December ’24, which was built to meet these episodic situations. This provisioning really allows us to focus on profitable growth in our and segments with clarity. As I mentioned earlier, we remain comfortable with asset quality at the bank level, particularly in our secured retail and wholesale banking portfolios where the credit performance continues to be strong. Now how does this translate into our growth outlook for FY ’26? We are entering the year with a clear focus on building resilient balance sheet, one that supports sustainable growth while maintaining discipline in risk selection and capital efficiency. On the lending side, we expect the secured retail businesses to grow at a healthy 25% to 30%, driven by the continued improvement in execution, stronger sourcing and better cross-sell outcomes. What’s particularly encouraging is that the traction isn’t just in the loans. We are seeing meaningful gains in liabilities and other products as well, especially in the mortgages and BBG, where our branches have started playing a much more active role. The office opportunity for the branches is becoming real, supported by the pre-approved offers and the sharper customer targeting. In the wholesale, we expect a steady and improved growth from the present 6% level in FY ’25 to 10% to 12% going-forward. Given our size and the market opportunity, we believe there is still a significant headroom and our teams are well-positioned to capture it. We will continue to be conscious of the risk-reward in this segment to ensure a profitable growth with cross-sell. On the unsecured side, credit cards will remain a key lever, not just for book growth, but for acquiring franchise customers, deepening engagement and improving profitability with a greater predictability in the credit outcomes. In JLG, we are taking a cautious approach. While we have seen improving collection efficiencies, certain states like Karnataka continue to be below average, though the trend is moving in the right direction. Our normalized disbursement run-rate of INR600 crores to INR800 crore per month is currently closer to INR350 crores and we expect this to improve progressively targeting a return to INR600 crores by second-half of the year. Accordingly, the JLG will grow slower than the bank average and we aim to keep its share in 6% to 7.5% zone. It stands at 6.2% as of FY ’25, down from 9% as of FY ’24. On the deposits front, we saw encouraging momentum in Q4 and we expect this to the first time to FY ’26 as system liquidity improves. Our strategy here is very deliberate. We are not just facing — chasing headline CASA numbers. Instead, we are focused on increasing granularity, expanding our customer-base and deepening the transaction intensity both in retail and wholesale. The idea is to build a stickier, more stable deposits and manage managed cost of funds efficiently relative to the market benchmarks. You would have noticed that we have taken deposit rate actions already. We have reduced the savings account and term deposit rates. Of course, while floating-rate loans will reprice downwards relatively quickly, the cost to benefit from lower deposit rates will come with a lag. This timing mismatch will create some pressure on the margins in the first-half of the year. However, we have already taken steps like lowering savings account rates to mitigate this impact and our relatively larger fixed-rate loan book will help cushion the effect. Our effective savings rate will come down from approximately 6.4% in March to approximately 5.6% in May when the rate cuts becomes effective. Lastly, we are conscious that our shift away from the certain high-yielding segment while deliberate and prudent will reflect in the margin profile for FY ’26, but we believe this is the right approach. It strengthens the core and sets us up for a long-term quality-led growth on capital. We entered the year with a total capital adequacy of 15.54% and CET of 14.06%. Based on the expected growth of 16% to 18%, we expect to remain above 13% on CET1 capital for FY ’26. In summary, we expect the slippages trend in unsecured segments to keep improving. Notably, we have already taken substantial provisions in the JLG SMA book, the positioning ourselves prudently. Our secured retail and wholesale portfolios continue to perform exceptionally well with eight consecutive quarters of near-zero credit cost. What is encouraging is that the growth in these segments is also picking-up steadily. Our cross-sell proposition is beginning to deliver. Branches are contributing meaningfully and we are reshaping our frontline approach to be a customer-first, not the product first. This shift is gradual but real and gaining momentum. At the same time, we remain grounded on our assessment of the macro-environment with the global uncertainty and elevated household leverage, we have been cautious in unsecured segments. Consumption may remain muted and we are aligning our growth strategy accordingly. The evolving monetary environment with improving liquidity and easing rates will offer some offset to the growth challenges and we intend to use that space wisely. On the cost side, we remain sharply focused on optimizing spends, consolidating themes where we see synergies and enhancing service delivery across customer touch points. Business-wise, our priority remains scale in secured segment, deepening customer engagement via branches and delivering breakeven in retail assets during FY ’26, unlocking operating leverage. During the quarter, we also took steps to strengthen our leadership with Mr Narendra Agarwal, Agarwal joining us as President to lead the branch banking and retail liability franchise and Mr Pari coming in as the Chief Operations Officer. These appointments reflect our commitment to building strong execution in-depth as we prepare to step into the next phase of growth. This year, we made a significant stride in technology, including migration to a new state-of-art data center to bolster scalability, security, resilience. This was further complemented by scaling our core systems to support future growth. In Q4, after rigorous testing, we also launched our all-new integrated mobile banking app with best-in-class features designed to deliver a seamless and intuitive experience to our customers.
Let me close this with what I have said even before. The growth matters, but only when it is profitable and comes from areas where the risk is acceptable and opportunities visible. We are staying disciplined and focused on the four Cs that will drive sustained lift, that is cost of deposit, cost of operations, cross-sell and cost of credit. I will request Mr to take you through the financial parameters in further details.
Jaideep Iyer — Head of Strategy
Thank you, Mr Kumar, and good afternoon, everyone. I’ll briefly touch upon some of the specific aspects of our financial performance. On advances, we grew net advances by 10% year-on-year and 2% sequentially to INR92,618 crores and retail advances grew 13% year-on-year to INR55,703 crores. The retail wholesale mix now stands at 60%. Business loans and housing loans, housing grew at 34% year-on-year and 9% sequentially. These are areas of focus of growth for us. Our total retail grew at 13% year-on-year, largely driven by a degrowth in unsecured segments of 8% year-on-year. Wholesale advances grew 6% in fiscal ’25 and 5% sequentially in Q4 FY ’25. Commercial banking within that grew at 29% year-on-year and 9% sequentially, again an area of focus within wholesale banking. Our total deposits grew 7% year-on-year and 4% sequentially to INR110,944 crores. CASA ratio stands at 34.1%. While the total deposits grew at 7% year-on-year, the granular deposits, which is where the focus is, grew at 16% year-on-year and 3% sequentially and now stands at INR55,213 crores, which is roughly 50% of our total deposits. Our branch banking-led deposits is around 62% of total deposits and we are trying to continuously improve the product holding ratio with our customers in the portfolio. The credit to deposit ratio was 83.5% and our NCR for the quarter on a daily average basis stood at 133%. Our NII was down 2% year-on-year and 1% sequentially to INR1,563 crores. NII growth was impacted on two counts, lower disbursals in the J&G portfolio as well as higher slippages causing interest-rate reversals. Our cost of deposits was 4% down sequentially to 6.53 and cost of funds was also lower 4 bps to 6.59% for the quarter. NIM was roughly flat sequentially at 4.9% for the quarter. Our total other income of INR1,000 crores for the quarter, 14% higher year-on-year. Happy to report that the core fee income grew 17% year-on-year and 11% sequentially to INR968 crores. Our total net income was up 4% year-on-year to INR2,563 crores. Despite pressure on margins, we’ve been able to offset some impact through better fee income performance. Total income for the year as a result grew at 13% for the year to INR10,270 crores. Our opex given cost-conscious controls that we’ve been exercising has grown at about 7% year-on-year and 2% sequentially to INR1,702 crores. Our cost-to-income stood at 66.4% this quarter as against 62.5% last quarter and 64.2% same time last year. Cost-to-income ratio for the full-year was 64.7% as against 66.6% for the full-year in FY ’24. Full-year OpEx growth was at 10%. We have consistently brought down our OpEx growth and this effort will continue. As a result, our pre-operating profit — pre-provisioning operating profit was INR861 crores for the quarter and for the full-year, it was INR3,617 crores, up at 19% year-on-year. Our total business for the first time crossed INR2 lakh crores, which is loans plus deposits and is now at INR2,562 crores. On a consolidated basis, our PAT for the quarter was at INR87 crores and full-year PAT was at INR717 crores. On cards, we have forged a few new co-brand partnerships, which is expected to diversify our offerings and strengthen the client profile. We remain focused on deepening customer relationships and increasing wallet share through meaningful engagement on this portfolio. On asset quality, we touched on the trend of slippages earlier. In terms of NPA, gross NPA was at 2.6% and net NPA was at 0.29%. Our net NPA is sequentially lower from 0.53% in December. Primarily because we have taken a significantly accelerated provisioning on the JLG book. The JLG book — the net NPA is actually niled as at March ’25. Consequently, the PCR also improved to 89% versus 82% last quarter. And the restructured book stood at 0.29% as we continue to see paydowns by our customers. Just a little bit flavor on provisioning. We had a total provisioning of INR815 crores for the quarter, of which cards accounted for INR375 crores, but this was offset by the INR206 crores of contingent provisioning which was lying on the card portfolio, which we have reversed and we have largely used that to take provisioning on our SMA book of microfinance. So we are now carrying 75% provisioning on our SMA 01 and 2 book on our JLG portfolio. Our net profit for the quarter was INR69 crores. Lastly on capital, our total capital was at 15.54% as Mr Kumar mentioned and CET1 was 14.06 crores as against 15.37 and 13.68%. This increase was largely driven by the lower-risk weight on microfinance portfolio.
With this, we’ll now open the session for Q&A.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin with a question-and-answer session. Anyone who wishes to ask questions may press star and one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star in queue. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Jay Mundra from ICICI Securities. Please go-ahead.
Jay Mundra
Yeah, hi, good evening, sir, and thanks for the elaborate opening commentary. I have first a few, just to get the doubts clear, I just wanted to check. That you mentioned that you have utilized the contingent provisions that we were carrying against earlier in cards as well as we book. Yeah, that is right, right? I mean, so now we are left with the — sure. And secondly, you said that the savings rate cut effective 1st May, that would bring down your savings rate — blended saving rate from around 6.4% to 5.6%.
R Subramaniakumar
Yeah, that’s correct.
Jay Mundra
Sure. Now sir, coming to the question on this, so now we have — I mean we have taken a call to consume the contingent provision. Does this — does this signify that we are now looking at near normalized stress level formation in both JLG and credit card portfolio?
R Subramaniakumar
Yeah, we just — I saw the commentary last quarter also, we are expecting the normalization to come for the card at least in Q1 and Q2. And from what we have provided for the Q1 in JSG and we are trending towards normalization from Q2 onwards in JSG as well as for the cards. That’s what our initial observations and our belief in assessment is also.?
Jaideep Iyer
Yeah. No, Jay, I think I’ll caveat that by saying that we are still in a fairly complex macro-environment. And yes, while we are seeing clearly trending slippages down. But I think the larger reason for the contingency provisioning utilization also was that we’ve noticed that in cards, while it’s a relatively high credit cost business as compared to, let’s say, secured loans, but the volatility on credit cost is not as high as in microfinance. So during good times, card maybe operates at about 5% credit cost and bad times it goes to about 10% to 11%. And we have a fairly aggressive normal NPA provisioning in cards. So — and plus, we’ve also seen that despite high credit costing cards, we don’t consume capital. So the business does not make a lot because there is enough income wherewithal. Whereas in microfinance, the volatility has clearly been higher. We’ve seen 1% to 2% during good times in terms of credit costs and going as high as 14% to 15% during COVID and even in the last few quarters, we’ve been pretty high. So the thinking is that we should — you know, going-forward, of course, one will try and build continued provisioning again on microfinance, but starts, we are quite comfortable in terms of being able to absorb the volatility within the P&L. That’s the broad rationale.
R Subramaniakumar
One of the additional reasons to believing that the JLG is that we have already entered into CGFMU. If you just say that from the last quarter onwards, we have started covering our entire fresh incremental disbursement under CGFMU. Even for this quarter of Q4, we already made application for 90%. That along with the future plan of having the contingency provisions, which we have been building in the last two years will stand steadfast in that particular portfolio.
Jay Mundra
Sure, sure, sir. And did I hear it right that you mentioned that the loan growth and loan growth could be around 16% 17% at the blended level and hence you know the CET1 will still be above 13%. What is that the commentary right that I understood.
R Subramaniakumar
Yes, that’s correct.
Jay Mundra
Okay, sure. And lastly, sir, lastly, the — we have seen this quarter there is a very strong growth in the payment fee, payment fee — I mean within fee payment fee has grown reasonably well. While there is a bit of a you know, a slowdown in the credit card portfolio as well as acquisition. So was there any one-off or this is seasonality or even on Y-o-Y basis, the number looks very strong. So if there is any explanation there or this is something else.
Jaideep Iyer
Yeah, in certain categories, the network actually increased the interchange income and there was a little bit of a couple of months of catch-up that happened. So about INR15 crores to INR20 crores overstated in that sense, but a step-up on certain categories of interchange has gone up. So that’s the reason. Some of it will continue to be, you know, staying during the rest of the coming — going-forward as well.
Jay Mundra
Yeah. Right. And lastly, sir, how do you look at the OpEx growth for next FY ’26? We’ve manage it very well and of course, you know, a lot of — we would have concluded some of that investments also. Now how should one look at the overall opex for FY ’26? Thank you.
Jaideep Iyer
See, if you look at that opex, sir, we have been in the high range of around 27% 30%. At the time you said that is a focus area which is down around 10% range, which you have already achieved right now. So whatever, our continued effort will be to maintain in that range only.
Jay Mundra
Great. Thank you, sir. And all the best. Thank you.
Jaideep Iyer
Thanks.
Operator
Thank you. The next question is from the line of Piran Engineer from CLSA. Please go-ahead.
Piran Engineer
Yeah, hi, team. Congrats on the quarter in this environment. Sorry, just following-up on the previous question. What are we — what is our expectation on growth in unsecured PL and credit cards? So microfinance, you’ve said that disbursement normalization will happen in the 3rd-quarter. But what about the other unsecured businesses?
Jaideep Iyer
So cards should grow in mid-single digits and as we continue to kind of increase the bar on quality and look at customer franchise. So that’s where we would look at it.
R Subramaniakumar
The broad is doing more with the existing portfolio that is one of the major focus which we have been doing it in the car with 5 million customers, what more we can do, which will also provide us an enormous opportunities for expanding the depth with the relationship.
Piran Engineer
Got it. Got it. And also when you mentioned in unsecured PL and credit cards, we are trending towards normalized levels. And after that, I think you mentioned something — normalization in 1Q, 2Q during a year. Is that correct me?
Jaideep Iyer
So we would look at cards normalizing from Q2 onwards, Q2 and normalization also. I mean I think this is — we are continuing to be in a reasonable uncertain macro-environment still with all that going on. So we would be cautious on this and therefore, we are also continuing to improve filters on acquisition and portfolio actions. But yes, we would expect normalization from Q2 onwards.
Piran Engineer
Okay. And
Jaideep Iyer
That’s right. Same for MFI. That’s ask it.
Piran Engineer
Okay.
R Subramaniakumar
So early data. Yeah, yeah, I’ll just hold the early data us to believe that we’ll get normalized. But there are some external macro factors on which you can’t make an investment. That is why this cautious approach is being said about.
Piran Engineer
Okay, sir. And just secondly, in terms of you highlighted how much you’ve cut the savings deposit, but what for term deposits, especially on the retail side?
Jaideep Iyer
Yeah, we’ve got term deposits as well. We got 25 bps on TD, term deposits as well.
R Subramaniakumar
Yes,
Piran Engineer
25 bps across all 10 years no
Jaideep Iyer
So the peak retail rate is down by 25 basis-points, the bulk rates in the in the market are already down by about 50 basis-points.
Piran Engineer
Okay, but the non-peak retail TV rates would be flat or have you all cut it across other buckets also the business?
Jaideep Iyer
There has been rationalization across, but if the vast majority of retail deposits come at the peak rate
Piran Engineer
Okay. So majority of them would get repriced 25 bps incrementally. I mean for the fresh.
Jaideep Iyer
That’s right.
R Subramaniakumar
Yes.
Piran Engineer
Got it, got it. Okay. That was it from my end. Thank you and all the best.
Jaideep Iyer
Thank you.
R Subramaniakumar
Thank you.
Operator
Thank you. The next question is from the line of Anand Swaminathan from Bank of America. Please go-ahead.
Anand Swaminathan
Thank you. I just want to understand the CGSMU mix you mentioned. If you can give some idea about how the ROA economics will work under the CGF just basically what will be your net margins and net credit costs and the overall ROA compared to what the book makes in a normalized environment.
Jaideep Iyer
So Anand, CGSMU, we pay 1% of the portfolio that is under coverage as insurance cost, so to say. And in terms of — post NPA, we kind of apply for you know, a credit refund, etc from the — and it takes about anywhere between 18 months-to two years for us to get the compensation for those NPAs.
R Subramaniakumar
It starts in the first application, we can do after 24 months. Okay. So happened in the October month, October last year. So we get our first claim on 27.
Jaideep Iyer
Yes. So two years later, if the first application. Yeah, all the document is fine, then we will get the claim.
R Subramaniakumar
We keep applying as and when there is an NPA. We keep applying those NBAs and they will accept those NPAs. Once they accept it, we can also reverse our provisions. So there is a provision available for that. So with that, I think bank will benefit. So 1% cost, we are — I think last two quarters, we’ve been covering 50% of our disbursement, which we have increased it to 90% in the current quarter, which we applied. So it will get covered.
Jaideep Iyer
So Anand, on the ROA — ROA tree, I think I would rather say that we will have to see how this pans out. Upfront, we are taking 1% cost and hopefully credit cost gets materially covered, but it will come with a significant lag.
R Subramaniakumar
But I think we can I think the maximum which we can do on a portfolio is up to 15%. That’s a very large — very stress which comes out. We would be covered to a large extent.
Anand Swaminathan
So 15% of what
R Subramaniakumar
15% of the portfolio for every year.
Anand Swaminathan
Hopefully.
R Subramaniakumar
Yeah, portfolio.
Anand Swaminathan
Thank you very much, sir.
Jaideep Iyer
So if we have a INR100 crore portfolio fully covered, we can — we can claim up to INR15 crores on that portfolio.
Anand Swaminathan
Yeah. So let’s say, for example, sir this cycle, the microfinance loss rate was 7%, 8%, let’s say. If a similar cycle plays out, let’s say, three, four years down the line, what will be your net loss under — after you have that CGS and you cover to that?
R Subramaniakumar
Yeah, it will be — so if it is a 8% average on a portfolio which we have secured, what we get is, let’s assume INR100 crores what JD told, 8% is the NPA. I can climb up to entire can come because only the first 3% of the 8%, INR8 crores, that is INR24 lakhs. That is the minus — remaining seven points provided all the claims gets accepted. Even if I take there may be some claim rejections, if we can get very minimum INR7 crore kind of cover. Yeah, covered over.
Jaideep Iyer
So practically, if you understand, if the — see, I can go up to the claim of 15% of the 100. That is the one. Suppose we move to 80, entire amount can be claimed. The settlement will not be less than 90% is what is being told about. From the past settlement has happened elsewhere.
Anand Swaminathan
Okay. Then what should be the true cycle I understand the delay in timing, but what should be the through-cycle credit cost if let’s say 100% of your book is under CGSMU going-forward?
R Subramaniakumar
That will take some time for us to go. But right now out of INR6,000
Jaideep Iyer
Theoretical answer to that is it should be close to nil. Yeah.
Anand Swaminathan
So then your ROA improved significantly. You just take 1% cost and your closely credit cost was like, let’s say 4% and you see a significant improvement in profitability or I’m missing something here. So
R Subramaniakumar
You are not missing, you measured correctly. Theoretically, it is fully discovered. But point what they did made is that. See, we want these things to fan-out because it is a new experience for us as also. So that is the reason we said that. But theoretically what we said is right. Yes, it’s fully taken care that will be ROA accretive is very-high.
Anand Swaminathan
Okay. So then why not just go and grow it aggressively? Why are you saying we want to keep it under thing like it seems a very good deal. Why not kind of go back to previous growth levels?
R Subramaniakumar
Yeah. See, the point is, we are already — see, I told you that we are going to capture the appetite to the extent of this 1.5. It is a balanced steady growth of the entire balance sheet. See, I’m not an MFIA book alone. No, we have multiple things to be grown. We wanted to balance it out where we get up the risk-reward, which is taken care. Here the risk was high. We are trying to protect it through multiple ways. And as far as the reward is concerned, there are multiple products. We are in bank, we need to offer all these products to all my liability customers also. See, imagine one of the best ways to protect the liability franchise is to have an asset — retail asset. In the absence of asset-led liability is the one which is one of the strategies which we have just adapted for the purpose of growth of the liability because nobody is going to come and put the deposit only for the case of deposit unless it is a rate-driven. When you wanted to make that rate-driven concept to go to the service-driven concept, you need to have all these products onward shelf.
Jaideep Iyer
Just one clarification, Anil. For example, our NPAs are INR8 crores. The claim that we will maximum get is about 72.8% of that amount. So maximum benefit for us on INR8 crores will be about INR5.8 crores as the maximum outlay that we can get back as insurance. The idea wouldn’t be to go out and build the book which is prone to stress that way, but that is how the insurance factor will work.
Anand Swaminathan
Okay, makes sense. So then basically your loss rates come down with 10%. That’s what it is a.
Jaideep Iyer
Imagine if I run a loss rate of 8%, the first two will be born by us and we are paying 1%.
Anand Swaminathan
Yeah. Okay. Then it makes a lot of sense. Thank you. You. And a similar question on the credit card book, sir. We have gone through like two cycles in the last four, five years. So let’s say you — I got your answer that you will grow 5%, 6% in this year. But on a normalized basis, where do you see this book growing, what is the right approach, let’s say, kind of two, three years down the line, will we go back to like high-teens or it will still grow in-line with overall book?
Jaideep Iyer
No, I think mean, again, I think it’s difficult to foresee these things so-far ahead, Anand. But we like the franchise, we like the business. We have a fairly large position in that business. We are somewhere in the fifth to sixth largest player in that segment and we are at least for the last few months or few quarters and the next few quarters, the focus is to make this portfolio a lot more into franchise customers for multiple products. And the more we see success there, the more confident we will be to grow this book even more. So I don’t think we are saying that we are perpetually going to grow this at 3% to 5%, no. But having achieved the kind of critical size we have, do we go back to 25% growth seen? Answer to that is also no
Anand Swaminathan
Sure. Thanks,.
Operator
Thank you. We take the next question from the line of Kunal Shah from Citigroup. Please go-ahead.
Kunal Shah
Yeah. Hi. So firstly, just wanted to understand on the provisioning part. So this INR815-odd crores, that is after the 1% contingency provisioning release of, I would believe INR250 odd crores. So would that be right?
Jaideep Iyer
That’s correct. INR273 crores as of December end
Kunal Shah
INR73 crores exactly. Yeah. So when we look at it all put together, you mentioned like INR375 crores was the cards, okay, then we have created another INR248 crores of the additional provisioning to make like 100% provisioning on the GNPAs. And obviously like INR283 crores, which out of which INR273 crores was the contingency. So when I have to look at it like in INR815 crores, there was INR375 of card, then almost INR248 of additional provisioning, INR10 crores towards the SMA provisioning net of the utilization and balance would have been towards the MFI and the other secured portfolio.
Jaideep Iyer
Okay. So the other secured portfolio, Nil, I think we’ve also taken INR180 crores in MFI to move from 85% to 100%.
R Subramaniakumar
The two-parts of car, one is in card, we are a contingency provisions included in that 2700
Operator
Sir, I’m sorry to interfe your volume. I mean, your voice is too low, sir. Can you come closer to the mic and speak, please? Is this better? Yes, sir.
R Subramaniakumar
Thanks. Kunal, the point is, when you say cards is 375, if you remember, the current provision on both for cards and MSI, reverse the 1% cards is about INR200 crores. So cards actual result contingency is about INR575 crores of credit cost. That INR200 crores which we reversed, we took on the SMA book.
Kunal Shah
Yeah, that I agree. So if I have to look at it, 815, okay, plus almost INR273, which is the total contingency which has got utilized. Okay. So when we look at it, so all put together would have been almost INR1,100 crores, okay.
Jaideep Iyer
That’s correct.
Kunal Shah
And so now maybe just running through the mats of this INR1,100 crores, credit card would be INR375, I agree there was release, but otherwise credit card in this gross number should have been INR375, okay? Then there was additional provisioning of INR248 crores, which was done to make the — maybe the provisioning 100% on JLG book, okay. And then INR283 odd crores was the SMA book. And then balance would be, I would say, the other normalized GLG and retail. Retail, you said it’s almost zero. So then balance would have been towards the regular GLG provisioning
R Subramaniakumar
You explained that?
Jaideep Iyer
No, okay, let me just you have a breakup.
Kunal Shah
So I would say like broadly like maybe INR200 INR200 crores to INR250 odd crores would have been the regular JLG provisioning.
R Subramaniakumar
Just give a minute.
Jaideep Iyer
How will you define regular you living in Kunal? We’ve told you the slippage.
Kunal Shah
Yeah.
Jaideep Iyer
We are simply saying that it took 85% to 100% all the way, okay, on the entire book, the old book as well as the new slippages, okay. That is approximately INR180 crores, okay, which is the one.
Kunal Shah
INR248 crores. Okay.
Jaideep Iyer
Then we look at SMA 012 where we have taken INR283 crores on the JLG portfolio.
Kunal Shah
Yeah,
Jaideep Iyer
On an outstanding basis of about INR375 crores. Right?
Kunal Shah
Okay. Yeah.
Jaideep Iyer
And we have — our cards full provisioning for the quarter without the noise on contingent would be
Kunal Shah
375
Jaideep Iyer
INR375 crores you mentioned. Yeah, INR375 crores. And then there is a total contingency provisioning release of INR273 crores, which was standing as of December 31?
Kunal Shah
Got it. Got it. And now going-forward, if we have to look at it credit cost, how should it settle? Because now on SMA, we have largely provided 75% GNP, 100% is provided. So then would there be any number which we would be looking as maybe a normalized provisioning on the MFI portfolio? And credit card also it’s coming off. So now how should we look at the — maybe the credit cost in JLG in credit card and the other part of the portfolio.
Jaideep Iyer
So Kunal, I think we are in a fairly you know, generally uncertain environment. I would caveat my answer by saying that, yes, we have been proactive on JLG and taken a substantial part of the provisioning on the book that will probably slip in Q1, post which we will expect the slippages CETERIS to keep coming down Q2, Q3 onwards. And we will have to revert back to 25% per quarter provisioning that is our standard policy on the JLG book. Similarly on cards, we’ve seen slippages come down quite reasonably well between Q3 over Q2 and Q4 over Q3. However, the environment is still a little uncertain. I don’t think we will — the slippages will — will take some more time to come back to, let’s say, if our normalized ranges, let’s say, give or take INR425 crore INR430 crores. I think we are couple of quarters away before we get there. And in cards, the simple thing is to take, 90%, 95% of the slippage of that quarter as credit cost credit costs and then we recover — we recover. So simplistically, I would say credit cost clearly going down given the fact that we’ve had a very-high credit cost here. I think we will hesitate to give guidance, but there should be a sharp reduction in credit costs on this portfolio. And on the non-JLG, non cards book, retail plus wholesale, we again expect extremely benign outcome for next year.
Kunal Shah
Yeah. So that’s what. So maybe non-GLG, non-cards, not much GLG largely provided on incremental 25% and credit card incremental net slippage, almost 95% provisioning. So that’s the fair assumption of the credit cost.
Jaideep Iyer
That’s correct.
Kunal Shah
Okay. Got it. Perfect. And when we look at it, so what was the gross slippage in credit card and MFI this quarter.
Jaideep Iyer
Gross slippage in cards was INR479 crores for as compared to 569 last quarter. And microfinance was INR472 crores as compared to INR536 crores last quarter in terms of gross slippage.
Kunal Shah
Okay. Yeah. And one last question in terms of the growth. So GLG, you mentioned would still be in the range of 6% to 7% of the advances. Did I hear that correctly?
Jaideep Iyer
That’s correct. Yeah.
Kunal Shah
So when we look at it currently being at 6.2%, so now fair to say that JLG will also be growing in-line with the overall loan growth, which we have indicated of 16% to 17-odd percent or even higher than that just to be within that range.
Jaideep Iyer
Yeah. Yeah. I think again this will evolve. See, we are we are — if I look at the book, there is an argument that the industry will still continue to de-grow potentially. Yeah. Just been put in-place for everyone in April. We will have to see how ticket sizes change, what happens when there are three lenders. So again, we are coming out of a very environment which has been in a fair amount of flux. There are players who are possibly vacating space, we don’t know. What we are seeing currently is that this book has a fairly high amount of repayment that happens every month. And our ability to reach a disbursement rate which is more than repayment is probably two, three months away or three to four months away. So that’s where we are right now. Simple answer is, yes, this book should grow a little bit, but I don’t think this book is growing materially for — because the first three, four, five months has to be still watched in terms of how the industry behaves and what kind of impact all the guardrail has on this business?
Kunal Shah
Any initial comments on the guardrail implementation? What are you seeing on-the-ground? Is there any impact delays, deferments which are happening because of this shift moving from three lender — maybe more lenders to this than three lenders.
Jaideep Iyer
So we implemented guardrails in November. The industry is — I mean, many players did implement guardrails over varied periods of time before March. But the, if I can use that word, is really effective April 1st for everyone to follow. We are quite hopeful that everyone will follow the guardrail, which therefore is good for the industry. The leverage will not go up because there is a 2 lakh cap on leverage and the three lender cap, it becomes a lot more sensible.
Kunal Shah
Maybe any maybe a deterioration in collection efficiency, which we are seeing because of this guardrail implementation in the initial months in the — maybe since it’s implemented from 1st of April. So in this three weeks, any kind of deterioration we had seen?
Jaideep Iyer
No, no, no impact on guardrails on collection at all.
R Subramaniakumar
Could all this guardrail has to be seen from a different angle. The guardrail is going to change the behavior of my loan officers from what they have been doing it earlier to what they proposed to do. So naturally that is the only impact the guardrail is going to cost because previously that the ease of getting a loan sanction would have been definitely could be tightened from today because that requires a behavioral change for them to understand that what sort of borrowers you have to identify and then reach them out. That is the only transition delay. That’s why you saw that I just made a statement that we are doing somewhere around INR300 crores is what we saw it. It is much below a couple of months before. And we feel that we may reach back to the INR650 crores. If you ask me, will you do that INR850 crores and INR900 crores what we have been doing earlier that may not happen. It will be slightly lesser than that. In H2, we anticipate that we may go back to the near normal position.
Kunal Shah
Okay. Thanks. Thanks and all the best, yeah.
Operator
Thank you. The next question is from the line of Rohan Mandora from Equirus Securities. Please go-ahead.
Rohan Mandora
Good evening, sir. Thanks for the opportunity. Sir, this is on cards. As per the slide, the revolve rate has gone up around 25% versus 20% to 23% in earlier quarter. So just want to check if there’s any trend change here or at such a one-off time.
R Subramaniakumar
Vikram. Yes.
Bikram Yadav
Yeah. Still usually in this quarter, the last quarter because of tax filing and all, we see at times about 100 basis-point to 300 basis-points of change in that. So there is no permanent trend change. This is just range-bound fluctuation which we see seasonally.
Rohan Mandora
Sure, sir. Second was, sir, on the home loan vehicle finance disbursement in 4Q compared to 3Q, they were lower and even if you look at quarterly average for the nine months, it’s lower. So is it due to some specific strategy or is it competitive behavior or lack of demand? How should everyone into that? Because I think vehicle disbursement for other lenders has been pretty good.
Jaideep Iyer
So tractors. Everything we do. Yeah, tractor financing, we do see seasonality. And typically the Q2, Q3 numbers are always higher than Q4 because that’s the season for tractors. On housing, we have basically tightened our inflow from an interest-rate standpoint. So we are — two things we are putting as some kind of a constraint. One is on lease and second is on the fact that we need more business from branches. So we are trying to see how the mix is — is favorable from a standpoint and a cost standpoint.
Rohan Mandora
Sure. And sir, thirdly, on the business loans, we have seen a healthy growth in that during the year. So one is how is the origination mix in that right now? Is it primarily branch driven? And also if you can touch on 30 days, 90 days levels in that portfolio right now?
Jaideep Iyer
So on business loans, branches are continuously doing more-and-more and we are now around somewhere in the 33% 35% zone of origination from branches. And we are continuously working on how this materially improve and we are quite hopeful by the time we exit the next fiscal, we should be closer to 50%, if not more. That’s on the origination front. Sorry, you had the SMA book on this — honestly, I’m saying that we don’t expect any material credit cost at all. So even if there is — there is no buildup of any SMA-1 to above-normal at all. And as I said in the earlier question, we don’t expect any material credit cost in the mortgage business in the foreseeable future?
Rohan Mandora
Sure. And sir, lastly, on your opex guidance of 10% year-on-year growth for ’26, see currently still if you look at in many businesses, co-branding or maybe non-branch-led sourcing would still be a meaningful part. So with business growth, these costs will grow. So where are we trying to curtail costs incrementally to be able to contain opex growth at 10%?
Jaideep Iyer
So we are — I mean, there are many levers here. I think on, let’s say, secured businesses, we have yet to reach optimal productivity. So with similar sales and credit teams, we should be doing much more business. So that’s one. There are efficiencies in operational efficiencies in technology that we still have to fully implement. So it is not that when we are saying there is a 10% cost growth, we are saying that the business is going to grow at that rate. We are talking about efficiencies coming, which is why we are saying we should hope to control cost rate in that range, cost growth in that range.
R Subramaniakumar
The combination of productivity increases and efficiency improvement plus moving away towards the more sourcing from branches, which is going to be the driver for this?
Rohan Mandora
Sure, sir, sure. Thanks, sir. That’s from my friends.
Operator
Thank you. The next question is from the line of Shailesh Kanani from Centrum Broking. Please go-ahead
Shailesh Kanani
Thank you. Good evening and thanks for the opportunity. A couple of data keeping questions. On the wholesale book front, if you can give the rating breakup, a better B and B, BP and below?
Jaideep Iyer
You’re not carrying that handy, I’ll give it to you offline.
R Subramaniakumar
80-odd percent would be A and above
Jaideep Iyer
Yeah 80% is A and above. There is no material change in raw materials.
Shailesh Kanani
Okay. Second question on the contribution with respect to opex. We earlier has been alluding that our business acquisition cost would kind of come down as we kind of increase the productivity on the branch front. I understand that also includes the collection in the line-item disclosure, but have you seen any material change in business cost or any decline we have seen in the recent times?
Jaideep Iyer
Sure. So, we are continuously working on improving this and we see a lot more scope even including collections actually. Thanks for bringing that out. In terms of cost of collections coming down for largely the cards business because rest of the businesses, that’s not a material number.
R Subramaniakumar
Thanks for bringing up the collection point. I’ll tell you, when you cross NPAs, the retail segment is going to keep on reducing it. By design, the recovery cost is also going to come down in that partly sector. That is also additional factor which will help us out.
Shailesh Kanani
So just to continue on that, but we would have some written-off pool where we would continue to do our efforts for collection, right, because we have been excessively writing-off. So how would that work then in that case?
R Subramaniakumar
That will add-up to our profit. Suppose you are — see, in NFI, if you take a very simple aspect, when your efficiency in the collection goes up, the people are just freed up for doing the collection from the technical rate of the NPA. So it is a question of only diverting the manpower from collection to the recovery. When you are — the problem will come and the cost will go up only as opposed to the collection efficiency is down. That as indications are little passed.
Jaideep Iyer
And Shailesh, given what has happened in Q3, Q4, we’ve already deployed a collection manpower increase and that’s already there in the numbers in Q4. So I don’t think from here on that is going up.
R Subramaniakumar
No fresh investment.
Shailesh Kanani
Okay. And last question from my side. In your opening remarks, you have said that we are PSL compliant, but we have not bought any PSL certificate, right? So it is organic compliance, right?
Jaideep Iyer
Yeah. No, no, no, no. We have got PSLC, but the cost associated with that purchase is not material, it’s about INR20 crore INR30 crores.
R Subramaniakumar
There is also not so much. We buy — we have actually — we buy generally micro in general, which is very minimal, nominal cost.
Shailesh Kanani
Okay. That’s all from my side. Thanks a lot and best of luck.
Operator
Thank you. The next question is from the line of Param Subramanian from Investec. Please go-ahead.
Param Subramanian
Yeah, hi. Thanks for taking my question. Firstly, on the draft, you know LCR guidelines that have come through. Have we done any initial assessment on that, the impact for us?
R Subramaniakumar
If we have done it, we have positive impact.
Param Subramanian
How much would that be?
Jaideep Iyer
We should be positive by about 3% to 4%.
Param Subramanian
Yeah. Okay, got that. And also on capital, so you made that initial comment that even by the end of FY ’26, we should be north of 13% CET1. But structurally, how are we looking about, say, capital for the company, where we are comfortable operating? Yeah.
Jaideep Iyer
So we should be quite comfortable with a threshold of 12.8% to 13% on CET1. So we will not, therefore need capital for at least the current financial year.
Param Subramanian
Okay, fair. Just one last question. So you know, in the P&L going into next year, there are lot of moving parts with the rate cut, you said there is a EBLR repricing pressure, there are the rate cuts and there is some operating leverage. So some in substance, I just want to understand how one should be thinking about operating profit, right, going into next year and maybe beyond since credit cost has been discussed in detail, but maybe on operating profit, yeah.
Jaideep Iyer
So Palam, we also had some one-offs in operating profits in the current fiscal. We — in Q3, we had some investments which unlocked some value. We had some tax benefits, which resulted in some interest income from tax authorities. So broadly, if I kind of exclude that, we should be flat to improving on operating profit. And the reason I’m being conservative here is that we will have — if I just take the full-year of fiscal ’26 versus the full-year of fiscal ’25, we will have a reasonable reduction of the contribution from cards and microfinance from a book standpoint, which of course, therefore put some amount of pressure on-net interest income. And some of that we claw-back through efficiency on cost and of course, provisioning has been discussed that should be definitely lower as compared to current year. So in a nutshell, we should be — we’ll be happy with the flattish PPOP on the fiscal ’25 outlook.
Param Subramanian
Okay. Fair. You’re talking about the absolute number, right? Right?
Jaideep Iyer
Yeah. Yeah.
Param Subramanian
Yeah. Okay. Okay. Okay. Thanks. That’s helpful. Thank you for this. Thank you.
Jaideep Iyer
Thank you.
Operator
Thank you. We’ll take the next question from the line of Krishnan ASV from HDFC Securities. Please go-ahead.
Krishnan ASV
Yeah, hi. This is on my hand. So I have two questions. One on the JLG portfolio with the new guardways. Could you just sorry, sir.
Operator
I’m sorry to interrupt you. Your audio is not clear, sir. May I request you to use your handset, please?
Krishnan ASV
Is this better?
Operator
Yes, sir, much better. Please continue.
Jaideep Iyer
So my first question was about these new guardrails and just the bank’s approach to these new guardrails. How does your customer selection change on-the-ground now when there are — when you — when you face up with borrowers who have more than three vendors. Could you just talk us through that a little bit? Number-one. Number two from from the cards portfolio, right, on the cards portfolio, there is a certain potential profitability that you would assess for the cards business as we stand today, right? That would be the potential and where we are you are aware of at the end of FY ’25. How long would you — would you think it would take us to get to potential profitability on the cards business?
R Subramaniakumar
Yeah, I’ll ask to talk about the microfinance, then Card will come back. Yeah.
Krishnan ASV
As far as the new guardrails are concerned, your first question, the first thing that happens is that the approval rate slightly takes a dip because of the guardrail. So till now in the last financial year before the guardrails were implemented, that you could go beyond 3 lenders as well. So today it will get restricted to three lenders and a gap of INR2 lakh of rupees. So both of these parameters were not there previously. And hence we take a dip on — dip on the approval rate. So as Mr Kumar had previously also mentioned in the same call-back, what happens is that the selection process or the ease of doing business slightly goes down and hence identifying a customer who would possibly be meeting both the criterias is the new norm for the way forward. So other than taking a little bit of a dip on the approval rate, materially it is not — nothing as much has really changed in the ground. So the effort to get a customer whose approval would come through has gone up a little bit. Yeah. No, what I mean is if you now encounter a customer who is supposing with four lenders, right, how do you decide whether you need to withdraw from this customer? I mean, what are you looking at that borrower level?
Jaideep Iyer
So Krishnan, I think existing set of borrowers, I can’t do anything. When I’m acquiring a new borrower, we will check. We will check if the existing set of lenders is already three, we cannot lend. As simple as that what
R Subramaniakumar
Ongoing monitoring is what is asking.
Jaideep Iyer
Yeah, are you talking about ongoing monitoring?
Krishnan ASV
Yeah. I mean I mean you either become a lender who then withdraws from that borrower so that the borrower goes back to three lenders or you remain one of the three and somebody else has to withdraw. So I’m saying how do you take that decision is all that I’m trying to.
R Subramaniakumar
Let me make it one thing clear. He has already borrowed from me. And subsequently before this implemented by all the players in the market. He has just borrowed from somebody else. That’s the real situation, right? We’ll continue to make effort and recover from him and put all the efforts which we have been taking it till now, the same efforts that we put in there. Going-forward, any new percent wound we are onboarding on ours, be it renewal, be it our same customer comes to the renewal, possibly my system will not approve it and you will reject it. If a new customer comes with all these guardrails for not fulfilling, you will reject it. The existing customers is paying currently, then it is good, we’ll continue to collect it. The existing customer is not collecting it, we’ll do all the recovery measures if you are doing it in respectory in any default. So it clear
Jaideep Iyer
Yeah, Krishnan, there is — we didn’t understand your withdrawal because once you’ve given a loan, you have to collect the MIs. There is no other option.
R Subramaniakumar
This is — as I explained a four difference scenario. Like if I had to withdraw, it becomes an NPA, then I have to do the recovery. It is like a recall the advance. And then the moment I recall it, as soon as they realized, it becomes an NPA. The non-standard accounts, whatever we do, it’s saying there. I don’t think that any borrower has a very large heart to say that I’m proceeding elsewhere, you come and collect it. I mean, if it happens, it will be good one. It’s a nice one. I hope you would have understood that.
Krishnan ASV
Understood. I think probably I didn’t explain my question too well, but it’s okay. We can take this offline. Thank you. Yeah. The other one on cards business, how far are we from potential peak profitability?
Jaideep Iyer
So, Krishn, I think the cards business overall has undergone a lot of change over the last few years. Regulatory changes have happened. One can therefore say that what was an optimal profitability three years back is now no more the optimal profitability, probably a notch lower. We would want to go back to some kind of normalization by the time we exit the current financial year. But more importantly, instead of looking at, again, focusing on what’s the card profitability, I think we are trying very hard to kind of change the mindset to look at that as a customer franchise and see what we can do with that customer. So the way we approach the portfolio as well as new customer acquisition is changing. And I think that is what is making it — making us more excited than just looking at improvement in profitability of that business.
Krishnan ASV
Okay. So just related to this, if you don’t mind, Jadeep, I mean, I mean I understand this. Obviously, you’re trying to now make sure that you are able to sweat this customer through other segments as well through other products as well. So just on that journey, could you just talk us through where we are in terms of what percentage of our customers are relatively more mature in that journey in terms of more products per customer? On the asset side.
Jaideep Iyer
It’s very, very early days, less than — less than 2%, 3% of the customers have been sweated in that sense. So we have a long way to go.
Krishnan ASV
Understood. This is very helpful. Thank you. Thanks. Thanks.
Jaideep Iyer
Thanks. Thanks.
Operator
Thank you. We’ll take the next question from the line of Anand Dhama from Emkay Global. Please go-ahead.
Anand Dama
Hey, hi. Thank you, Jadeep, and thank you, sir for the opportunity. No good results compared to what I think was the expectation after the 3rd-quarter. So number-one is that you’ve been saying that microfinance is where there would be a contraction or basically the pickup will take some time. Card is where I think you are expecting a normalization to happen. But if we future forward ourselves into next two to three years, what will be the share of microfinance and cards as a percentage of our overall portfolio?
Jaideep Iyer
Okay. So honestly, Anand, we are — you know, this is probably not the best time for us to start crystal ball raising over the next two to three years. I think we will take one year at a time. The focus is really over the next year to consolidate these businesses and extract more at least out-of-the cards business and consolidate on the JSG business. As I mentioned earlier, again, that industry is materially changing. There are new guardrails. We are, you know — it’s going to shrink. The industry has shrank materially from March over, let’s say, June last year. So I don’t think this is the best time to talk about two, three-year timeframe. But broadly speaking, I would clearly say that I don’t think we are going back to the 35%, 37% mix that we had in these two businesses, it should be materially settling down materially lower.
Anand Dama
Yeah, exactly. I expect that to be lower, but what could be that? Like could it be around 10 odd percent 10% to 15% in next two to three years. That’s a fair assumption.
Jaideep Iyer
Again, I think, Anand, I would — as I said, we are wanting to take this one-step at a time.
Bikram Yadav
Anand, the direction of travel is very clear. We have enough confidence in our other businesses to be able to take this call and I think the macro-environment is very important. So it will continue trending down. I don’t think we can give you a — even a range which is today in our mind, three years out. One year, I think we’ve already said it will be 6% to 7% of our total business of microfinance. And I think that’s why we’ll — let’s see what happens in the next three, six months and then we’ll be able to revise it.
Anand Dama
And any guidance in terms of margins, how it will shape up over next first-half and then second-half and so will be the ROAs. So you may not give the hard numbers, but it is direction.
Jaideep Iyer
So Anand, margins, there are too many factors at play. I think we should — we have — we will probably see flattish to lower before it starts moving up, trending up on margins. I don’t think we have I mean I think we would — I mean, directionally, we are saying PPOP flattish, again dip and then going up consequently margins as a consequence of margins. Provisioning should be lower. So uncomfortable giving specifics on this, but yes, we should obviously start improving by definition given where we are.
Anand Dama
Okay, so directionally for next year, I mean FY ’26, we should be better-off versus FY ’25, right, because you have done the heavy-lifting in terms of credit cost at least where
R Subramaniakumar
We will be better
Jaideep Iyer
That’s definitely yes. Okay. Okay. Thanks. Thanks a lot.
Operator
Thank you. We’ll take the next question from the line of Adity Naval from RSP Ventures. Please go-ahead
Aditi Naval
Yeah, hi, am I audible?
Operator
Yes, ma’am. Ma’am, it’s not clearly audible. I would request you to use your handset if possibly.
Aditi Naval
Yeah, hello,
Operator
Please continue.
Aditi Naval
Yeah. So most of my questions are answered. I just had one question on the Karnataka exposure. So first is, can you just give a number on what is our share in Karnataka? And also how do we plan to you know like what is the status right now and how do we plan to — like what is the strategy going-forward, especially in the Karnataka area?
Bikram Yadav
So, our portfolio percentage is slightly lower than 10%. And currently in the last two months, we have some improvement in the Karnataka portfolio and election. Month-on-month, we are improving by almost about 2% to 3% per month. So if you really ask us Karnataka to come back to its normal collection efficiency, which would be crossing 99%. I think we would — we should see that by the end of this — end of this quarter. As a strategy, we have kept our disbursals muted in Karnataka. We have been not doing any disbursals in the last two months. This month, we have started doing a little bit of a disbursal as far as our existing borrowers are concerned. So whoever is taking a second cycle loan and we’ve been very cautious about the ruling win as well. So I think quarter two onwards, we should see coming back to its normal shape.
Aditi Naval
Got it. Got it. Thank you so much.
Operator
Thank you. The next question is from the line of Maitri Shah from Sapphire Capital. Please go-ahead.
Maitri Shah
Hello. Hello.
Operator
Please proceed.
Maitri Shah
Yeah. I just had two questions. Previously in the opening comments, you stated that our secured retail book will grow by like 25% to 30%. Is that correct?
R Subramaniakumar
Yeah. Secured retail we are talking about? Yes. Yes.
Maitri Shah
And our — and the wholesale book will grow like from 10% to 12%, right?
R Subramaniakumar
Fine. That’s right.
Maitri Shah
And our lended loan book will have like a 16% to 17% growth.
R Subramaniakumar
Correct.
Maitri Shah
So how do we see our ROAs after all these initiatives and provisioning and with a flattish PPOP, how do we see ROA shaping up for FY ’26?
R Subramaniakumar
See, as I mentioned earlier, ROA will be trending upward and we don’t wish to give any specific numbers there, but it is going to trend upward. And if you ask a very simple question comparison to ’25 will way away. I mean far better.
Maitri Shah
And advances growth, how do you see the advances growing?
R Subramaniakumar
Advances we just now, you just reiterated the number with our renewed focus on retail secured, which will be in the range of around 20% 25%, which you said. And in respect of wholesale, we said around 12% and overall, it will be in 16%, 17% range.
Maitri Shah
And the NIM, is there a guidance on the NIM?
R Subramaniakumar
I think it was also told you earlier that the NIM is will be flattish and it will start trending up as we move forward in the rest of the year.
Maitri Shah
Okay. Thank you.
Operator
Thank you. The next question is from the line of Pradhan from Aximal Capital. Please go-ahead.
Hitaindra Pradhan
Good evening, sir, all the questions have been answered. Just on the NIM part, are we guiding for a flattish in the coming quarters or is it expected to come down because our secured case is rapidly increased margins.
Jaideep Iyer
Yeah. So I mean I honestly,, I said there are many moving parts on margins. It is very difficult to guide in the short-term. I would expect margins to be coming down a bit before clawing back up and we hope to be in the current range by the time we exit the current year — coming year. But there are just too many factors on margins. We don’t know-how many repo cuts will happen with what frequency. I can just say that the repo cut does result in a faster asset repricing and the deposit repricing follows. We do have levers on savings account rates, which we will exercise judiciously. But again, there will be leads and lags on margins, which will be very difficult to predict given that this is the first rapid down-cycle on rates that we will see where the bank books are externally benchmarked.
Hitaindra Pradhan
So what is your breakup of external benchmark and NCLR and fixed-rate book.
Jaideep Iyer
About 45% to 47% is floating between largely externally benchmark and about small percentage to NCLR.
R Subramaniakumar
Fixed-rate is around 45%.
Jaideep Iyer
Yeah, fixed-rate is about 45%, 47%.
Hitaindra Pradhan
Okay. And on MFI, I understand your commentary is that in this particular month-in April card rail has been implemented. The way I see the comment is basically you are seeing some dip in terms of how you would be able to disburse and find the creditworthy the borrowers. So there can be a dip in disbursement and growth from an otherwise normalized perspective. But on the credit cost per se, you are not finding any sort of difference. So the trend which was happening from February to March of increasing collection efficiency and lowering of even the forward floors, etc. So that is continuing in April for you as well as for industry as well. Is that the sort of the right in understanding
R Subramaniakumar
As far as we are concerned, we have implemented the from November onwards. That’s number-one. We expect the industry to fall in-line from April. That is an expectation because we do not know-how it is going to pan-out, that is beyond our room of assessment. As far as with the revised MPN, we said that, yes, we saw some disbursement down and which we are very cautious in Q3 and Q4 also. And that is likely to ramp-up and then catch-up to three-fourth of what we normally peak did before the MPN guard rains are done from H2 onwards.
Jaideep Iyer
And of course, yes. Collection, of course, we saw some positive trends in this month and the indications and the belief as far as that will continue to be in that same range.
Hitaindra Pradhan
Understood, sir. Thank you and all the best.
Operator
Thank you. Ladies and gentlemen, we now conclude the Q&A session. If you have any further questions, please contact RBL Bank Limited via email at ir@blbank.com. I repeat ir@blbank.com. On behalf of RBL Bank Limited, we thank you for joining us and you may now disconnect your lines. Thank you.
R Subramaniakumar
Thank you, Mr thank you.