SPANDANA SPHOORTY FINANCIAL (NSE: SPANDANA) Q3 2026 Earnings Call dated Jan. 27, 2026
Corporate Participants:
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
Analysts:
Unidentified Participant
Rajiv Mehta — Analyst
Sarvesh Gupta — Analyst
Vatsal Paraksha — Analyst
Abhijit Tibriwal — Analyst
Chintan Shah — Analyst
Sripal Doshi — Analyst
Presentation:
operator
Sa. Foreign. Ladies and gentlemen, good day and welcome to Spandanasporti Financial Limited Q3FY26 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 and then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Venkatesh Krishnan, MD and CEO Swandanas Purity Financial Limited for his opening remarks. Thank you and over to you sir.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
Good evening all. Thank you for taking time out to attend this call. This is my first earnings call at Spandana so we’ll take just a couple of minutes to introduce myself. My name is Venkatesh, people call me Venki. Been working for about 35 years. 31 out of those 35 years have been in the financial services across banks, both foreign as well as Indian Bank, NBFC Insurance Stockbroking and now of course NBFC MFI. I joined the company exactly two months ago, 27th of November from HDFC bank where I spent about close to seven and a half years handling both microfinance at the retail as well as the wholesale piece.
So back to the earnings call. So thanks once again for joining this call. The winds of change are quite visible both within the industry as well as Expandana. We’ve been having a struggle for the last couple of quarters which initially people thought it’s for a quarter or two but then got extended for a variety of reasons and now things are looking reasonably settled or at least improving. What we have realized that Spandana is the new book which is sourcing starting 1st of April 2025 after the introduction of the guardrails by the SRO. That book constitutes about 58% of the overall book which we expect it to be about 90% by end of this financial year.
This book has a collection efficiency of 99.8% as of December. We also have a separate team looking after the 90 plus collections since that’s a little larger pool there. The performance in the Q3 was much better than Q2. We did about 65 crores of collection in the 90 plus bucket. That team comprises about 800 odd exclusive people which we wish to take it up to about 1500 and retain it at that level for the next couple of quarters and then decide how are things moving before we maybe wind up that sort of a segment. The other good thing that happened during the quarter was lenders reposing faith in us and we managed to raise close to about 1700 crores in Q3.
Bulk of the money came in actually December. We also have a new Chief Transformation Officer joining us with nearly 30 years of experience and he joins us from Chaitanya where he spent close to 10 years both in business as well as audit. And we wish to take a relook at how we have been running this business. There are some minor tweaks to be done and which is what he’s going to do. We also expect the credit guarantee, the much spoken about credit guarantee scheme to be rolled out in due course of time. Whether it comes out in the budget or immediately after the budget one is waiting and watching and of course also trying to understand the contours of this guarantee which I’m told through sources that it might benefit the small and mid sized MFIs or it’s aimed for this segment of the microfinance companies.
So a couple of things that we are working at Spandana now that this quarter I’m sure my colleague will take you through the numbers. We’ve been positive first time in about 2 3/4 that we got into the red. So couple of changes that we are looking at. One of course is we are trying to merge some of the non productive branches. We have about 1500 odd branches trying to bring it down to about 1250, not shutting down branches but trying to merge some of the branches which have run into some sort of an issue or wherein the number of people are less.
And this 1250 branches is the number that we’re looking at which is safe enough to sail us through 12,500 crores over the next couple of years looking at 10 crores as a sort of a benchmark for branch Aum. We are also delaying, getting into sort of a delayering at the regions. We had a lot of layers keeping in mind that we wanted to grow to 15 and 20,000 crores. Now that that is some distance away. We are trying to delayer and bring it to the current book size that we have a little over 4000 crores or close to 4000 crores.
The other thing that we are proposing to do is merge our subsidiary which is the Chris Financial with the parent. Chris has been doing individual loans as also loans against property which is about a 650 crore book. But considering the fact that now with qualifying asset criteria having come down from 75 to 60% and even if you take about 10 15% of cash we have certain room to do any sort of a business other than the qualifying asset within Spandana itself. So rather than having a separate management with separate legalities and challenges and costs, we are trying to merge it which might take about six to nine months but hopefully that should get completed within the financial year considering that coming financial year considering that it’s 100% subsidiary of the parents Bandana.
The other important thing which thought of sharing with all of you is we are also planning to move to a new LOS platform. We have the current GIM solutions and we are planning to move to a platform which is being developed by Perfeus. It’s a known name in the financial services industry. Their LOS is running in couple of PSU banks across maybe hundreds of journeys. So we are going to be the first MFI using the platform of Perfios. We are seeing a lot of technological advancements that we’ve been talking to Perfios and in this segment when we are dealing with customers who are largely illiterate, bottom of the pyramid, they keep changing their mobile numbers at frequent intervals.
They may be moving away from one place to the other. There are certain technological advancements we see in Perfios which will help us be in touch with those customers at regular intervals, speak to them, reach out to them as and when it is required. We are also thinking of launching an individual loan product. We are not too sure that this is the right time or not, but yes, we have drawn the contours of the individual loan offering and once we have the Perfeos platform in place, which as I said could be anywhere between five to six months and if all goes well with the loan against product, we may launch the individual loan as a pilot in maybe one or two clusters of branches to see how is it working because on any given day that is also going to be unsecured, but there will be underwriting and there will be more checks and balances as compared to a GLD offering which is a vanilla product wherein you just meet a handful of women in a group and you lend to them after doing the bureau check and there is no further credit appraisal as such being done.
So on that note I will hand over the mic to my colleague Ashish Damani, the CFO who has been in the company for the last four years and I’m sure he will take you through the numbers post, which of course we will answer your queries. Thanks once again for joining us on this call and wish all of you a very happy new year. Though there are about 25 seven days have passed by but it’s still a new year so wish all of you and your near and dear ones a wonderful year ahead.
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
Thank you. Thank you Venky Good evening everyone. Yes, I’ll cover some of the numbers in details, business drivers and financials before we open the floor for question and answers. Let me start with giving you the important aspect that we observing on collection efficiencies. All the new book that we have sourced during the financial year has been trending very strong at 99.8% collection efficiency. This has definitely given us confidence to ramp up the disbursements during the quarter. So if you see the disbursements have jumped by 27% compared to the previous quarter that 1188 crores. This also actually on a gross basis has given us a 1.8% on a company level AUM increase before write off and also 2.5% when we look at microfinance book.
However post write off the AEM stood at 3948 crores for 31st of December. Our portfolio quality in the X bucket is something that we’ve been carefully monitoring across the states we have seen improving trend. We have detailed it out in our deck for the key states or monitorable states as well. But when we look at the Pan India we have moved to 99.3% for the December quarter compared to 98.7% when we looked at September quarter. So there has been a good improvement. We hope that as our book, the. New book or the book which is. Originated in the current BRE or the new BRE continues to increase to 90%. Like Venky explained, this number will be sustained over 99.5% across the set of loans flow forwards in the 1 to 90 book have seen some marginal improvements. About 2.5% of the EUM was between 1 to 90 DPD at the end of December compared to 5.5% which we have seen in September quarter. The consolidated GNPA is now down to 2.6%. This was at 4.2% the last quarter. Likewise the consolidated NNPA is at 0.97% while the standalone NNPA is now down to 0.5%. We continue to maintain our provisioning at 80% on overall balance sheet basis we have 5.4% that we carry as a provisioning across the buckets.
Borrowings and Liquidity I’d like to cover a little bit more detail. We have been maintaining sufficient liquidity on the balance sheet just to ensure all the external headwinds are addressed. 1684 is what we have raised during the quarter compared to 160 crores in the previous quarter. We are ensuring that the borrowings are in line with the business momentum and we continue to keep improving on the disbursement trend or maintain the disbursement trend. At the end of December we had 1626 crores of cash and bank balance which is very healthy. On the financial performance portfolio originated.
I have already explained that is at 58% of the AUM and is trending very strong. At 99.8% collection efficiency this is likely to go to 90%. As Venky alluded to earlier, portfolio quality is primarily also driven by this mix and has helping the yield as well. The yield reported yield for the quarter is 22.4% up from 19.6% in the previous quarter. We believe that this will continue to help us in the coming quarters and the yield should improve a little more from here on. Despite having an increase in cost of borrowings by 40 basis points, the NIM has expanded to 11.1% in comparison to 8.4% in the previous quarter.
We expect all these improvements in yield and NIM to continue like I said, as the stronger or the newer book replaces the older book in the coming quarters. Happy to explain the p pop of 8 crores during the quarter compared to the loss of 40 crores reported in the previous quarter. This includes the recoveries that we have done during the quarter and excludes the one off impact of the new labor code cost that we have seen for the quarter which is roughly about 8.4 crores on a console basis and 7.6 crores for standalone basis. So overall we have reported about a 95 crore loss for the quarter largely stemming from, you know, the write offs or the flows that slippages that we have seen largely from the old book and that one off impact of you know the new labor code that was implemented.
So we will now like to open the floor for the questions. Just would like to highlight one aspect that we would continue with the pace of disbursement and continue to monitor the strong portfolio quality that is developing in the new book. Thank you very much and operator, if you can open the floor for the qa.
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star than one on their touchstone phone. If you wish to remove yourself from the question queue you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a Moment while the question queue assembles again. To register for a question, please press star then one. Our first question comes from the line of Rajiv Mehta from yes, securities. Please go ahead.
Rajiv Mehta — Analyst
Yeah. Hi, good evening. Congrats on much improved performance and congratulations to you sir on becoming the MDNC of Spandana. So I’ve got, you know, two, three questions. First, in January, how are you seeing the X bucket collection efficiency trending as. Well as how the disbursement are also playing out in January and in December. Collection efficiency of Andhra Pradesh we saw a little bit of dip. So has that kind of normalized and come back in January?
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
So I’ll see your first question. January thus far on disbursement and collection efficiency look better than December. And as far as Andhra Pradesh is concerned, if you look at the numbers, October was something like little over 97% which went up to 99 in November, came down to about 98.9 in December more or less it’s going to be a little around the 98.9 or 99% collection efficiency. So things are improving and should improve in the months to come.
Rajiv Mehta — Analyst
And sir, how do you look at. Your reimbursements scaling up? Because there are two comments that you made. One is that the new book will. Become 90% of EU by March. And then there is a statement in the PPT saying that your loan officer. Productivity will improve to about 250 customers for loan officer by March. This implies a significant scale up in disbursement in Q4. Maybe the number could be between 1600. 1700 crore kind of a disbursement in Q4. Would that be correct?
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
So we are looking at 1500 crores to begin with. It’s more important to do a sort of a sustainable business and we want to specialize, stabilize at about 500 crores a month and then take it to about 556, 600 crores as the months pass by.
Rajiv Mehta — Analyst
And just one last thing on you. Know, funding the growth, you know, what. Has been the traction in mobilization of. You know, bank loans since you have come in December and January and at what rates are the new bank loan coming and whether the kind of growth that we are wanting to achieve, say 500 crores or 550 crores per month. Would it get fully funded, largely funded. By bank loans coming at a more reasonable rate?
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
The bank loans currently contribute about 42% of our overall borrowings and should go up as the quarters pass by and the results keep improving. Especially considering that the PSU banks are still out of the fray. Currently we’ve been funded by private banks and foreign banks but should see again especially after the credit guarantee scheme is out. We need to see what are those contours but hope that the PSU banks come into the fray. Once that happens, our share of bank funding I think should go up from the current 42 odd percent to about 60%.
Rajiv Mehta — Analyst
Got it. Thank you. I’ll have more questions but I’ll come back.
operator
Thank you. Thank you. Before we take the next question, a reminder to all the participants. You may press star and then one to ask question. Our next question comes from the line of Sarvesh Gupta from Maximilian Capital. Please go ahead.
Sarvesh Gupta — Analyst
Good evening sir. Few questions. So first of all on. Not take. Cgsmu so what’s the, what’s the sort of plan there? Are you planning to take it or what’s the. You can throw some more light on that.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
CGFMU know the way the scheme is that in a normal environment, in a business as usual environment, if then your credit costs are going to be say sub 3%. It doesn’t make sense because of where it is in this plan and unfortunately since we went through the rough, you know there is no point in taking it now. But we are definitely trying to see if it could be studied well and try and take it in the new financial year.
Sarvesh Gupta — Analyst
Okay.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
And especially we also want to see the credit guarantee scheme and then take a call vis a vis. What are the kind of costs involved and what are the kind of benefits we anticipate?
Sarvesh Gupta — Analyst
Okay. And secondly if I look at your NPA numbers in the subsidiary it looks like you have hit 10% gross NPA. So if you can throw some light on what is the kind of, I mean assets over there and what is the stress and how do you see it resolved in the coming quarters.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
So that book CFL which is a Chris Financial has two lines. One is the individual loans which is about roughly 300 crores and another 300, 350 rather 350 crores is the individual loans and about 300 crores is the loans against property. There are two things which is causing this so called the losses that you spoke of in loans against property. We need to really bring down our cost and improve our productivity to a great extent. The cost will be taken care of when we do the merger and in the case of individual loans the impairment has been relatively high which again we are trying to now put a special team and try and ensure that couple of months the focus intensifies so that we can improve the collection efficiency and then look at increasing the disbursal.
But hopefully in the coming months we should address both these, both issues around LAP as also the individual loans.
Sarvesh Gupta — Analyst
Okay. And in your net worth, what part is DTA and you know what are the timelines to consume that DTA?
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
So total. Hi, this is Ashish Service. So total D8 is roughly about 700 crores. The timeline, I mean the tax authorities allow you to consume that in eight years. We see that, you know we’ll sufficiently cover that and that’s how it has been recognized.
Sarvesh Gupta — Analyst
Okay. And this, this quarter we have seen a good 2 recovery of 65 odd crores. So what’s the pool right now that we have from which we can recover and what is the expectation for fourth quarter and let’s say next year, how much are we expecting to get out of this?
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
The overall NPA pool is upwards of 2,500 crores. It’s about 2,700 crores. And we have kept three quarters for us between this quarter and another three quarters to collect as much as possible. So we are aiming for anywhere between 20 to 25 crores a month.
Sarvesh Gupta — Analyst
Okay. Okay sir. Okay, that’s all. Thank you.
operator
Thank you. Your next question comes from the line of Rajakumar Vedinathan from RK Invest. Please go ahead.
Unidentified Participant
Yeah, good evening, can you hear me?
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
Yeah.
Unidentified Participant
Hello.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
Very much. Carry on.
Unidentified Participant
Yeah, yeah, thanks for the opportunity. Just two, three questions. The first question is what is the medium term outlook you have for the next two to three years? Where do you want to take the AUM and what are the ROA levels that we are looking at.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
As well as the business is concerned. In recent times I’m sure you’ve been hearing the regulators saying they are not very enthused with institutions in this segment showing upwards of 25, 30% growth. So while storing to the low base I may end up growing at about 40%. But I’m also keeping my eyes and ears closer to what the regulator is guiding us. So I could see about 25 to 30% growth. Is there for sure anything more than that we need to wait and watch. Okay.
Unidentified Participant
Okay. And the second question is in the recent credit rating report the the agency has highlighted the frequent changes in the management as an, you know, kind of hurdle for normalization of populations. So would you like to comment on that?
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
I just missed you. If you could just repeat please.
Unidentified Participant
Now the recent credit rating given by Care for Spandana. They have highlighted that there have been significant changes in the senior and medium, I mean you know, mid level management as well, as significant addition at the ground level. And they are saying that that will come in the way of normalization of. Operations
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
as far as the ground level is concerned. Yes, there have been attrition and attrition has been relatively high. But given the fact that things are improving, as I said, both expandhan as well as in the industry, I’m sure people spending time on recoveries will come down, they will be able to do more business and it will be more positive. So that should also bring down the attrition. So I foresee the attrition coming down in the months to come as far as the senior level is concerned. Not too sure which of the many attritions you’re talking of.
There could be some attritions here and there, but otherwise, by and large, the team is intact. Okay. Okay.
Unidentified Participant
And the last question is to the CFO. This is on the DTA number of 700 crores that you just mentioned. So that means you are having a loss of almost 2,600 crores on which you have set up the DTA. So that loss is almost one and a half times the market cap of. And also if you see last 15 years, you have not made cumulatively that kind of profit. So looks like, you know, you guys are kind of bit aggressive in, you know, in booking the dta. I think you may have to probably look at that number when you do the march, you know, numbers.
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
Yeah. So amount gross profitability required to cover this will be roughly about 1800 crores and not 2000 odd crores. Yeah, we will keep evaluating. As I explained that we have eight years to, you know, cover this DTA amounts. And given the current projections, whatever we have lined up and reviewed, we see that we will, you know, absorb all of this dta. So, yeah, but yeah, this is something that we are monitoring very closely and we’ll take all as, as and when required.
Unidentified Participant
Okay, thank you.
operator
Thank you. Participants, if you wish to register for a question, please press star and then one. Our next question comes from the line of Vatsal Paraksha from Nightstone Capital Management. Please go ahead.
Vatsal Paraksha — Analyst
Yeah. Hi. Thanks for the opportunity. Just one question. Can you just quantify the slippages for this quarter?
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
This quarter?
Vatsal Paraksha — Analyst
This quarter.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
Total slippage for the quarter was about 152 crores during the quarter. I mean, however, the credit cost that we have taken is about 58 crores, which is after recoveries and, you know, whatever the proceeds we have received from the ERC transaction.
Vatsal Paraksha — Analyst
Got it. Okay, thank you.
operator
Thank you. Our next question comes from the Line of Abhijit Tibriwal from Motilal Oswal. Please go ahead.
Abhijit Tibriwal — Analyst
Yeah, good evening, sir. Thank you for taking the question. So, just trying to understand one thing. I mean, a lot of MFIs that we speak to, right, often tell us that if one were to adhere to the infant guardrails, the rejection rates are actually very high. And so today when we look at disbursements, right, there are two things which are kind of plaguing the MFI industry. One is obviously availability of capital, I mean, borrowings, liabilities. And the second thing is, I mean, the rejection rates are supposedly very, very high. So what are our rejection rates like? And when we say that we are looking at a 25 to 30% growth and possibly even higher this year, given our small base, how are we looking to address it? What, what part of the growth can actually come from your existing customer, right, basically giving them more loans? And what, what portion of that growth can actually come from newer customers? That is something I wanted to understand.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
The rejections currently hover at around 60%.
Abhijit Tibriwal — Analyst
It is indeed high and it may remain so for the next couple of months because of the impact of all that has happened over the last 6, 9 months or 12 months.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
That said, the ratio of new to credit plus new to Spadana on one side and existing customers is about 40, 60. And as we go along, there are still, when I travel, I keep meeting various money lenders and they’re all thriving. So we have not reached a saturation point to say that there are no new customers in the marketplace, but you got to find them.
So there are enough and more customers which are there at least for the next couple of years and you got to get them into the mainstream. So effort is required. But a 40, 60 or a 50, 50 share of existing customers versus new customers, whether to credit or to Spadana, is definitely.
Abhijit Tibriwal — Analyst
Got it, sir. And then one last question that I had was around the industry dynamics. Obviously the fourth quarter comes across as a seasonally strong quarter. We see very sharp momentum in disbursements in the fourth quarter across a lot of MFIs. Earlier during your opening remarks, I think you made one comment wherein you said that this quarter we will look at a monthly run rate of about 500 crores and then maybe take it up from there to 550, 600 crores, basically, rather than showing a sharp spike, right. We want to gradually build up the business momentum.
So to that end, I’m just trying to understand, when you look at the industry, do you see everyone? And on A no names basis, everyone remaining compliant, right to guardrails and there is no flow of money again to basically MFI borrowers. Or do you think the excesses in the industry have now started and maybe in the next, maybe three, six months we’ll again see everyone starting to disburse just like we did in the past.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
The last episode that happened of course all the incidents that have engulfed the microfinance industry along man made. Even Covid was man made. So people have realized that the float of funds into the industry is going to be difficult if you are not maintaining a proper books of accounts. So I don’t foresee people randomly giving money to customers in spite of if there are breach of guardrails. Secondly, the SRO has become far more active today. They are doing third party evaluations through consultants like Deloitte and others Crisil to name a few and they are throwing reports at the respective institutions in case they find a breach.
They are even writing to the board if they find continual breach and reporting to the regulator. So it was someone is trying to breach the guardrails. They are doing at their own risk and life is going to be short lived.
Abhijit Tibriwal — Analyst
This is useful. Thank you so much for patiently answering all my questions and I wish you your team the very best.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
Thank you.
operator
Thank you. Your next question comes from the line of Chintan Shah from ICICI Securities. Please go ahead.
Chintan Shah — Analyst
Yeah, thank you for the opportunity. And so congratulations on the improvement in the business momentum. So on the credit cost firstly. So I think on this quarter we have seen a steep decline, almost 80% sequential. But now going right now, given that we are already at, we have a provision of almost 80% on stage three and 45% on stage two. And incrementally in the book being offer much better quality with higher collections. How should we look at the credit cost for FY27? Yeah, so that’s the first question.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
So we expect about 220 odd crores of. These are all numbers, you know 227 crores or 225 crores of gross slippages and net of about 50 odd crores in FY27.
Chintan Shah — Analyst
So are 225 crores gross slippage and 50 crores net on net slippers. FY27.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
Right. Yeah.
Chintan Shah — Analyst
Okay. Okay, understood. And so what, what has been, what is the write off policy and what are the write off number for the current quarter? If you could say current quarter and for nine months.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
See you have detailed this on slide number. 214 for the quarter. So for the quarter we have 214 crores, the approach has been similar to what we followed earlier which is you know, 180 days plus and although this is not the policy, Policy stands at 455 days. However, we’ve been trying to look at how the engagement has been with the borrowers and accordingly we have taken these measures. Probably this will be the last quarter in which we take this approach. So yeah, 180 days plus and engagement during the quarter is what we have looked at.
Chintan Shah — Analyst
Okay, so going ahead probably that you will again be writing it off at 450. So we won’t be seeing much elevated right out going rate. Is that a fair assumption? Yeah, that’s not fair. I think. Yes.
Chintan Shah — Analyst
Understood. Understood. Yes sir. And on margins front actually a margins have seen a sharp. I think this largely the yield rise is largely on account of lower interest reversal. So if you could also quantify the interest reversal number for Q2 and Q3 that could be helpful.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
So for the current quarter Q3 it is 14 crores. For the last quarter it was 33. Okay for Q50.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
Yeah Q3 it was sorry, 141 4. 1414 versus 33 crores. Q OQ
Chintan Shah — Analyst
yeah, so and I think our loop went margins will see further uptake now going ahead this will be largely driven by decline in the borrowing cost. Right. As a borrowing cost like looks relatively higher compared to our peers. So pro the credit guarantee scheme, how much are we seeing some reduction in the borrowing cost? Any ballpark number or next level? Should it settle around?
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
No. So the, the reason why I said there will be expansion in the name further is largely because the top line has been if you look at our lending rates, we are blended lending rate on a new book is about 25.3%. However the yield is stacking up at 22.4 right now. So there is a gap which will be built over a period of time with you know, the new book or you know, the stronger performing book, you know, becomes a larger percentage of the balance sheet. So your yield will move from 22.4 to very likely closer to 25 over time.
And accordingly what we believe is, you know will help us have a better nim going forward. The cost of borrowings is at 12.6. In fact there has been an increase of 40 basis points. We see that, you know, it will hover between you know, 12.5 to 13% in terms of, you know, cost of borrowing. So we don’t see much immediate improvement there because our reliance has been on both capital markets as well. As bank funding which is more or less 50. 50 like Venki was explaining earlier.
Chintan Shah — Analyst
Sure. And this gross leverage which you mentioned for FY27, that would be on the console book as we might be also looking. We are looking for a merger only before the end of the year. So that will be on the console basis, right?
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
Yeah, that’s right. That’s right.
Chintan Shah — Analyst
Yeah. That’s it for myself. Come back in between. Thank you.
operator
Thank you. The next question comes from the line of Ankur Kumar from Alpha Capital. Please go ahead.
Unidentified Participant
Hello sir. Thank you for taking my question. Sir, just on previous participant question on this technical write off of Toolbourne in this quarter, how much we expect this number to continue going forward? Or like is it like. Most of it is already done.
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
So yeah, most of it looks like is done. We have to now look at the business from a more BAU standpoint. Like he was explaining, you know, we are likely to have a two and a half to three percent kind of a, you know, credit cost is what we are assuming, you know, in future.
Unidentified Participant
Two and half to 3% next year is what our estimate is.
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
Yes,
Unidentified Participant
but you also said that there. Is 20, 25 crore per month which we expect to come back. So this is including that or that is excluding that that will come.
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
That is, that is recovery. I’m. I’m saying on a business as usual basis. If one has to look at what kind of credit cost we have built into the pricing and what do we expect then it’s two and a half, 3%.
Unidentified Participant
But given we have such a large pool next year credit goals could be quite lower than this. This business as well on a net basis.
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
I think we also give the number. It should be 50 or 50 crores or around a number like that.
Unidentified Participant
So only 50 crore of net shippage we expect in, in the next year.
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
Yeah, got it.
Unidentified Participant
And sir, in terms of book reduction as in from peak, our AUM has reduced to like 1/3 from 12,000 crore at the time of peak to now around 4,000 crores. So how soon we expect things to as in business to improve or grow fast.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
So as I said, you know, we have to be watchful in how we grow. We want to grow sustainably. So whilst we grow, I need to ensure that my cost and my collection efficiency remains steadfast. So if you ask for a ballpark figure, we are expecting about, roughly about somewhere close to between 9,000 to 10,000 crores of AUM by FY28.
Unidentified Participant
And any ground level changes.
operator
Sorry to interrupt, Ankur. Sir, may we request to return to the queue for questions. Thank you. Our next question comes from the line of Sagar Shah from Spark pwm. Please go ahead.
Unidentified Participant
Yeah. Thank you so much for the opportunity for. Congratulations sir, for showing good set of results. My first question was the figure that you told about the disbursements of 1500 crores by Q4FY26. So I wanted to understand RV eyeing weekly or monthly. Monthly. Monthly payment model in that disbursement model. And secondly in state or which are the states actually are we eyeing for. For an. For a growth of almost 30% quarter on quarter in this person. Which states are we eyeing? That is. That is. That. That is part of the first question.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
So let me take your second question first. No. Our top six states contribute about 60% of our AUM which is Odisha, Madhya Pradesh, Bihar, Karnataka, West Bengal and one more state. So we will continue to grow in these states. And there are states like Tamil Nadu wherein our presence is very limited. We are planning to grow there. Kerala, we want to be little watchful. We are present in Jharkhand and Chhattisgarh. So typically if you look at the microfinance industry, the top 10 states contribute about 80% of the business. Now in our case the top 10 states don’t feature in the industry doesn’t feature Jharkhand and Chhattisgarh.
So we will also try and grow in those eight or nine top states wherein our presence is. There is scope for us to grow. And our presence is also limited to a certain extent.
Unidentified Participant
Okay.
Ashish Damani — Interim Chief Executive Officer, President and Chief Financial Officer
Disbursement presently is roughly 20% in weekly business. I think that is in line with the number of branches we have in the weekly format. And it just continues that way.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
We will neither change the monthly branches to weekly nor the weekly to monthly. So the 80, 20 ratio 85, 15 will continue to remain.
Unidentified Participant
Okay, so the 80% will be monthly and 20% will be weekly going ahead as well. That we can safely assume. And my next question was on the loan officer count and the employee count. On the loan officer count we saw almost a reduction of almost 900, 900 officers in this quarter as well. So where do we see this number stabilizing? Sir, because we are eyeing a very aggressive AUM outlook in FY27 and 28 and as well as for exit Q4 FY26. So where do we see this number stabilizing?
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
So on the loan officer count we are looking at somewhere between 4800 to 5500 as a stable factor. And in the interim there could be some officers who may move into the so called 90 plus collections pool. Once that stabilizes, they may come back. So they’re all fungible. These are all frontliners who can either do collections or business or both. But 4800 to 5500 is a number we are aiming for on a steady.
Unidentified Participant
State basis and that is that will be visible in the next quarter. The number that is just stating in.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
The coming one or two quarters. Yes.
Unidentified Participant
Okay. So basically we can expect some healthy productivity from at least from the remaining remainder of the loan officers count, the productivity will almost double as per the metric that you are just I’ve just stated.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
So since we are taking away the 90 plus collections from our regular offices, we expect the business productivity to improve.
Unidentified Participant
Okay, got your point sir. Thank you. Thank you so much and all the best for features.
operator
Thank you. Participants, you may press Star and one to ask a question. Our next question comes from the line of Sripal Doshi from Equerious. Please go ahead.
Sripal Doshi — Analyst
Hi sir, thank you for giving me the opportunity. I was looking at one of the slides wherein We’ve highlighted that 86% of our customers had less than 1 lakh of household outstanding. And I mean apparently we’ve seen significant rundown in terms of customer base of course given the kind of industry stress as well as the write off that we have seen. But with this number of 86% of the customers below 1 lakh household credit, doesn’t it give us an opportunity to sort of scale up our size or our share in their pocket and grow? So is that how we are trying to strategize and give more disbursements to the existing customers than to go and acquire customers from the open market?
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
It’s a combination of both. As I said a little while ago, these are all customers that you’re referring to. The slide is outstanding loan of less than 1 lakh. So definitely of course you can give a top up loan or a higher loan to these women. At the same time you have to keep identifying new customers because your new customers become your existing customers over time. So it is not either or, it has to be both.
Sripal Doshi — Analyst
So to take it other way, what is the disbursement ticket size that we have for our let’s say peers and new customers? Currently
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
the new customers would get a bought of 50,000 rupees whereas existing customers depending upon their vintage can even go up to 1 lakh 10,000 if they have been with us for about 5 years plus.
Sripal Doshi — Analyst
Got it, got it. And then the second question was pertaining to the pricing. So I mean have we taken any price hike in the last six months and if yes, what is the sort of a range that we have taken.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
Currently hours between 23 and 26%. 26% being in the first cycle keeps coming down.
Sripal Doshi — Analyst
Okay, so with vintage it will keep coming down. The third question, the last question was on the so while we are looking at acquiring, I mean rather merging our subsidiary but what is the kind of mix that we plan to sort of achieve in the by FY28 in terms of loan book mix? I’m sorry if you’ve answered this question because I joined the call a little late.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
The qualifying assets has to be always at 60% and if you believe that 15, 20% will be in cash. So you will have a leave it to the extent of 10, 15% being in non qualifying assets. And as the JLP book grows, your ability to do more of non qualifying associates also improves.
Sripal Doshi — Analyst
So are we targeting that sort of a percentage in the loan book mix or I mean I understand from the opportunity point of view or from the regulation point of view, but are we strategizing our loan book mix to reach. That level
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
we are looking at today? My loans against Property is about 300 crores. Trying to see if I can take it to 1000 crores in the next couple of years.
Sripal Doshi — Analyst
Got it, got it, got it. So that is like 10% by FY28 sort of a number or is this what we are looking at? Is that fair assumption?
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
Absolutely.
Sripal Doshi — Analyst
Thank you sir. I’ll come in the queue for more questions. Thank you for answering my question and good luck for the next quarter.
operator
Thank you. Participants, if you wish to register for a question, please press star and then one. Now our next question comes from the line of Rajiv Mehta from yes securities. Please go ahead.
Rajiv Mehta — Analyst
Thank you for allowing me a follow up. Firstly, sir, just want to check on a few things. Can our absolute opex fall, you know. Further for the next few quarters given. The fact that we have kind of. Calibrated employee count and loan officer count? That’s one check. Second is, I mean should we break even or can we break even on a consolidated basis by second quarter of FY27? Is that also a possibility on the. Table given the way our disbursement and credit costs could play out? And third is in Chris. Has the credit cost peaked out? Because when I look at the credit cost of Chris in the last two quarters, it’s very high on a relatively small book. So are we behind in terms of. The peak of the cycle of recognition. There or would more credit costs come from that book?
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
So to answer your query, we should try and break even next quarter. That’s our immediate objective considering that this quarter or the last quarter was pipa positive as far as Chris Financial is concerned. As I said little while ago, our focus on individual loans to focus more on collections over the next one or two quarters, try to get the book back on track before we start disbursing all over again or going about a little aggressively. The lab book is behaving very well with a GNP of one little over 1%. So no worries on that. We are trying to see how to grow that book more as I said, from the current 300 crores to about 1000 crores.
I think you had a third question as well.
Rajiv Mehta — Analyst
No, it was on the opex. So when you are, when you’re talking about breaking even, did you mean that you will break even in the current. Quarter which is fourth quarter? And would it also imply that the absolute OPEX will fall given the fact that the adjustments you have done in. Employee base and loan officer base.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
So OPEX has been coming down 884 crores two years ago to came down to about 790 crores last year to about 720 crores this year. Trying to bring it down further, there is scope. So it’s a combination of increasing your revenue and bringing down your cost and your credit cost. That’s how you bring in profitability.
Rajiv Mehta — Analyst
Got it. Sir, best of luck and thank you so much. Thank you.
operator
Thank you. Your next question comes from the line of Chintan Shah from ICICI Securities. Please go ahead.
Chintan Shah — Analyst
Yeah, thank you for the follow up. So sir, just on the AUM growth. So I think this quarter if we exclude the write off then we have seen a sequential uptick in the aum. So but now the payments were relatively elevated in the past, but given now the AUM is 4000 crores are the equivalents also would be less. So going ahead, can we expect a sequential growth in disbursements and to continue a sequential growth in AUM to continue in the coming quarters as well given that write off also would be lower.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
Very much pretty much with the kind of dispersals we are expecting with the kind of write offs which we are expecting to bring it down. There should be growth.
Chintan Shah — Analyst
Okay. And our repayments. So what sort of steady set repayments could we assume on the AUM on the closing, opening AUM? Any ballpark number there?
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
900 crores.
Chintan Shah — Analyst
900 crores. Okay. Okay. Thank you, sir. Thank you. Yeah. Okay.
operator
Thank you, ladies and gentlemen. We will take that as our last question for today. I would now like to hand the conference over to the management for closing comments.
Mr. Venkatesh Krishnan — MD & Chief Executive Officer
Thanks a lot all for participating and asking those relevant questions. And we at stand committed to delivering the results. Yes, there have been a couple of quarters, but back on track, as I said, both on the revenue as well as on the cost as well as on the credit cost front. So with that, I want to thank all of you once again from all of us out here at Spandana, and see you in three months from now. Thank you.
operator
Thank you. On behalf of Spandanaspurthi Financial limited. That concludes this conference. Thank you all for joining us. And you may now disconnect your lines. Thank you.