The Federal Bank Limited (FEDERALBNK) Q2 FY23 Earnings Concall Transcript

The Federal Bank Limited (NSE: FEDERALBNK) Q2 FY23 earnings concall dated Oct. 14, 2022

Corporate Participants:

Souvik Roy — Head, Investor Relations

Shyam Srinivasan — Managing Director & CEO

Shalini Warrier — Executive Director

Harsh Dugar — Group President & Country Head, Wholesale Banking

Venkatraman Venkateswaran — Group President & Chief Financial Officer

Ashutosh Khajuria — Executive Director

Rajanarayanan N — Head, Loan Collection & Recovery

Analysts:

Mahrukh Adajania — Navama — Analyst

Kashyap Zaveri — Emkay Investment Managers — Analyst

Sagar Shah — PhillipCapital — Analyst

Simran — Omkara Capital — Analyst

Nitin Agarwal — Motilal Oswal — Analyst

Renish Bhuva — ICICI Securities — Analyst

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Lalitabh srivastava — Anvil — Analyst

Subrat Dwivedi — SBI Life — Analyst

Krishnan ASV — HDFC Securities — Analyst

Prashant Kumar — Sunidhi Securities — Analyst

Mahesh MB — Kotak Securities — Analyst

Saket Kapoor — Kapoor and Company — Analyst

Suraj Das — B&K Securities — Analyst

Manish Shukla — Axis Capital — Analyst

Darpin Shah — Haitong India — Analyst

Pankaj Agarwal — Ambit Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Q2 FY’23 Earnings Conference Call of the Federal Bank Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Souvik Roy, Head, Investor Relations, the Federal Bank Limited. Thank you, and over to you, sir.

Souvik Roy — Head, Investor Relations

Thank you so much, Aman. Good evening, everyone, and thanks for joining us on this call to discuss our Q2 numbers. I’m sure you all had a chance to go through our numbers and our investor deck for the quarter that went by. This has been a very good quarter for the bank. We continue to move forward with clarity and intent in a quarter where the external signals were sort of mixed. We saw strong momentum in credit growth, which was across business verticals. Our balance sheet crossed the milestone figure of INR3.5 lakh crore. We also clocked the highest ever operating profit, highest ever net profit, we saw better NIM, better asset quality and a multi-year high of ROE and ROE. We continued to grow faster and gain market share in our identified segments that provided us better risk adjusted returns.

On call today we have our MD, Mr. Shyam Srinivasan; our ED, Mr. Ashutosh Khajuria; and Ms. Shalini Warrier; along with our Group president, Mr. Harsh Dugar; and our CFO, Mr. Venkateswaran Venkatraman, along with other senior officials of the bank.

Without further ado, I would hand it over to our MD for his opening remarks, and we will follow it up with a question-and-answer session. Thank you so much, and over to you, sir.

Shyam Srinivasan — Managing Director & CEO

Thanks, Souvik, and good evening, everybody, for coming on the call. Like Souvik pointed out, we did have a good quarter. I’m sure you’ve all had a chance to look through the numbers. Our net profit at INR704 crores was clearly the highest ever in the history of the bank, and that’s something that we hope will become, I can say every — in every call that this quarter was the highest. That suggest the trend lines are encouraging, our underlying momentum is strong, it’s been broad-based and widely move between both wholesale and retail, we’ve been able to see traction across and market share gains are visible on the credit side.

It is — I’m not going to elaborate on the external environment and the world is going through turbulence. Most of you are smarter and have a better sense of it and have great analytical skills and knowledge of that. I’d only say that from our point of view, our efforts have been strong, will continue to be stronger and better in the quarters ahead. We are encouraged by the quarter that went by, or the quarters that have gone by. The team remains quite focused on what we should accomplish.

At the beginning of this financial year, we had said that our focus remains to ensure that our ROA expansion as well and truly on course, and the exit ROA we thought we would be around the 1.15 mark, and I’m happy that we are able to upfront that and therefore we are thinking that this year the 1.15 will be more like 1.2 for the full year with an exit rate closer to 1.25. And those improvements are driven broad-based across income expansion, material and well managed cost structure, and our strong area being credit portfolio management is playing out quite well.

So I think on this call, instead of me speaking for long, we’ll be happy to take questions. It’s suffice to say that it’s been a good quarter. We’re encouraged by the developments. We are mindful of the challenges in the environment, but it has been no different for very long. I think the bank is well equipped to deal with these challenges. We haven’t been very extravagant on underwriting credits that are dangerous. So I think we will have through tough phases and continue to grow. There are challenges in the environment on ensuring that the deposits — deposit growth is good enough to match the credit demand. We think we have good and well constructed models that will help us deliver on both credit and deposit growth.

So without much ado, let me just hand it over back to the operator and request questions to come in. And like Souvik mentioned, the entire senior team is with me on the call. We’ll be able to answer questions of any nature that comes through this call. So thank you very much and good luck.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Mahrukh Adajania from Navama [Phonetic] Please go ahead.

Mahrukh Adajania — Navama — Analyst

Yeah. Hello, sir. Congratulations.

Shyam Srinivasan — Managing Director & CEO

Thank you.

Mahrukh Adajania — Navama — Analyst

So my first question is on your outlook for margins, given that deposit growth for the whole sector is kind of lagging loan growth. So how do you see margins pan out in the next 2 to 3 quarters? And also given that some of the MCLR book will still not — will not yet be repriced. So that is my first question.

Shyam Srinivasan — Managing Director & CEO

I think, Mahrukh, the answer is, you saw Q2 the margin expansion play through. 65% of our book is either external benchmark and/or MCLR-linked and we pass through, particularly on the repo rate almost instantly as the MPC announces rate. This quarter we saw the benefit of it, the full — full — full, all the increases of the Q1 pay through. So, our margin expansion is driven by not just the rate increase but also by the average earning assets. It’s also influenced by lower slippages. So combination of that should help us deliver on the margin number which we have been guiding for and I — at the opening of the call I did mention that our ROA expansion is more visible and that’s driven by margin expansion. And margin expansion, we have been guiding for something for the full year around 325, and we believe that will be closer to 330 now.

Mahrukh Adajania — Navama — Analyst

Okay. That’s for the full year, which, but you’ve already hit that rate this quarter.

Shyam Srinivasan — Managing Director & CEO

Yeah. But we have a lot of the first quarter to catch up for the full year rate to be 325 plus.

Mahrukh Adajania — Navama — Analyst

Yes. got it, sir. Sir, my next question is if at all there could be any quantification in terms of contribution of your fintech partnerships to total deposits or liabilities or even assets, if at all any such number would be available?

Shyam Srinivasan — Managing Director & CEO

In the interest of the privacy of our partners, we don’t share those numbers. But you may have seen in the deck, the numbers we have shared in, sorry, indexed, and you will see a very rapid growth. But I can also point out, you would have seen in our deck the other income and particularly card fee income growing up quite substantially. The run rate, as you know, we have a very effective partnership on the credit side with one of the fintechs which is doing remarkably well. So that is kicking in on the fee other income and the fee income side. On the liability side, we are building up a large base of clients. Balances — on the incremental flow of deposits on savings, we are seeing about 10% to 12% of incremental deposit comes through the fintech partnerships.

Mahrukh Adajania — Navama — Analyst

Okay. So it’s 10% to 12% of the deposits.

Shyam Srinivasan — Managing Director & CEO

Of the incremental flow. We have have a large [Speech Overlap]

Mahrukh Adajania — Navama — Analyst

Incremental deposits. Yes, yes. Yes. Okay. And sir my last question is on your employee expenses. So obviously, your employee expenses have been — have seen a modest growth. Last quarter, there was a de-growth. This quarter, there’s not too much growth also because interest rates are rising. But just in terms of the retire benefits, so what percentage of your total employees would be unionized and receiving definite benefits?

Shyam Srinivasan — Managing Director & CEO

I think, Mahrukh, we have said that. All our workforce who joined us after April 1, 2010, which is about 7.5000 employees or more, are on NPS scheme. So that’s a defined contribution. Prior to that is defined benefit. That’s about 3.5000 employees — and 3.5000 to 4,000 employees.

Mahrukh Adajania — Navama — Analyst

Okay. So 3.5 to 4,000 employees. Okay got it.

Shyam Srinivasan — Managing Director & CEO

Maybe less, maybe 3,000.

Mahrukh Adajania — Navama — Analyst

Okay. Thank you, sir. Thank you so much.

Shyam Srinivasan — Managing Director & CEO

Welcome. It’s 3,900.

Mahrukh Adajania — Navama — Analyst

Thank you.

Operator

Thank you. The next question is from the line of Kashyap Zaveri from Emkay Investment Managers. Please go ahead.

Kashyap Zaveri — Emkay Investment Managers — Analyst

Yeah. Thank you very much for the opportunity. I have just one question. If I look at your margins this quarter, because of the increase in the yield on advances higher yield that the cost of deposit, we have seen a fair bit of margin expansion here. But next year when the deposit rate takes a lead over the yield in terms of probably increase, what are the levers available to maintain margins at the current level?

Shyam Srinivasan — Managing Director & CEO

So I think the answer to that is packed in the question, right? In the sense that the — as a rate increase increases happenes, the credit credit pass-throughs is higher and faster, so deposit will lag. So if you talk of the next 12 months and assuming there are two rate increases or whatever the rate increases, that will pass through, right? And average rate increases, yield increases, slippages have been well controlled. So the reversal of interest income will be lower, and it will accommodate whatever the increased deposit costs are. So the plan that makes and which is why we’re not going over the top and saying margin expansion is endless.

Kashyap Zaveri — Emkay Investment Managers — Analyst

But given the levers that you mentioned about, should we — would we be able to retain the margins where they are?

Shyam Srinivasan — Managing Director & CEO

When I have given a guidance, that’s what I’m saying no. I’ve said we are at around 330 this quarter and we think the full year number will be 327 to 330 suggests that we will, right? The mix of business — I think we have a slide on showing the mix of business also in the investor deck, how some of our newer higher margin businesses are beginning to take shape and traction is coming through, and what share of new business they are and what share of the income — new income there. There is a fine diagram.

Kashyap Zaveri — Emkay Investment Managers — Analyst

Yeah. And if I can just squeeze in one more question. I think your fee income this quarter has also seen strong growth. What would be the reason for, let’s say, something like loan processing fees and all jumping fairly high, and what’s the outlook for next year?

Shyam Srinivasan — Managing Director & CEO

Consistent, if you’ve seen our fee income, particularly since you mentioned loan processing fees, it’s been growing up and as volume of credit picks up, that is directly reflective of it. And as we do good business on the corporate side, they are able to generate fee income on the corporate side when — particularly when you’re lending to top corporates or very good corporates where pricing on the credit side is challenged where our teams are able to get constructive fee income from the customers on a blended basis.

Kashyap Zaveri — Emkay Investment Managers — Analyst

And just like the yield on advances on the fee side also the scale is tilted in our favor. It’s easy to pass on the fees. I mean, there is no competition or undercutting on side either.

Shyam Srinivasan — Managing Director & CEO

I’m sure you have been in the market long, long. There is nothing that is free or easy. Everything has a lot of our negotiation and client engagement, but it also ensures that relationship and the capability of the teams on the ground. I would believe that it can be easy.

Kashyap Zaveri — Emkay Investment Managers — Analyst

Sure. That’s it from my side, sir. Thank you so much.

Shyam Srinivasan — Managing Director & CEO

You’re welcome.

Operator

Thank you. The next question is from the line of Sagar Shah from PhillipCapital. Please go ahead.

Sagar Shah — PhillipCapital — Analyst

Yeah, good evening, sir. I have these couple of questions. My first question was related to our average cost on borrowings and deposits actually. It has gone up by around only 20 to around 4.4%, and in the last quarter you had guided that in spite of the 90 thing recoginized we had passed on the same, we had only passed around 25 due to the change in yields by the ALS committee. So going ahead, do you see the — our average cost on borrowings and deposits going up in the H2 FY’23.

And my second question was that if we compare our deposit growth actually, as compared to March ’22 and H1 FY’23, our our deposit growth has lagged actually the advances growth. So do you expect our deposit growth to be better in H2 FY’23 versus H1? These are my two questions.

Shyam Srinivasan — Managing Director & CEO

I think the deposit growth lagging H1, I mean the credit versus earlier industry phenomenon and we have to be balanced about pricing for deposits and calibrating the cost of resources, which we do constantly. The team continuously evaluates at what price point. And when we are at a CD ratio — the late 70s, early 80s, we have enough opportunity to grow. As we get closer to the mid 80s, we have to build for pricing for deposits to grow that and fund our credit growth. So as we look into the quarters three and four, we believe deposit growth will be in the teens, maybe early teens, and credit growth will be in the teens. So between a mix of borrowings, credit growth meeting the — to fund the credit growth, borrowings and deposits, we should be able to ensure that the book remains well taken care of.

Cost of deposits between Q1 and Q2, the pickup was — I think you also asked about the savings. We don’t visualize passing on all all the rate increase to the saving rate, it’s reasonably price elastic. Terms tend to be more price elastic. So we are pricing term appropriately. In certain tenures we remain attractive. But we don’t think we will be sort of leading the price war. We will be quite competitive but selective.

Sagar Shah — PhillipCapital — Analyst

Okay. How much our cost on borrowings and deposits on a blended level will go up?

Shyam Srinivasan — Managing Director & CEO

I think the answer would be the overall NIM number is where I mentioned [Technical Issues] increase in cost of the resources will be.

Sagar Shah — PhillipCapital — Analyst

Okay, okay. Thank you so much.

Shyam Srinivasan — Managing Director & CEO

I request you to go on mute, I think you’re in some public place, pease. Yeah, go ahead. Go ahead please operator.

Operator

Yes, sir. Thank you. The next question is from the line of Simran [Phonetic] from Omkara Capital. Please go ahead.

Simran — Omkara Capital — Analyst

Yeah. Thank you for giving me a chance, Sir, first of all, congratulations for a great set of numbers. There are two questions which I want to ask. First of all, in the gold loan segment, what’s the trend going there in this particular business segment, means, how the customers are giving back money to you? And I’m asking in terms of the NPAs in the gold loan segment. And secondly, how is the trend in the SME segment in the southern region of the country?

Shyam Srinivasan — Managing Director & CEO

Gold loan continues to be reasonably strong. NPAs, like you know is very negligible. And more than NPA, I think it’s really the fraud that we should worry about in gold loans, and that continues to be strong. And if your question is, did you say what is the growth in gold loan or I didn’t know what really was — othere than the NPA quality, was there a question on gold load?

Simran — Omkara Capital — Analyst

Yeah, yeah, I’m asking about the quality of the customers’ needs in terms of the repayments in the gold loan.

Shyam Srinivasan — Managing Director & CEO

ERffectively, that’s [Technical Issues] credit quality. Gold continues to be very robust and strong in terms of credit quality, except there is an odd instance of fraud or something like that, that we have to watch out for. That continues to be pretty okay. SME business — did you want to know about what?

Simran — Omkara Capital — Analyst

I want to understand more about your particular region because you are operating from Kerala and that is the main geographical thing. So I just want to understand how…

Shyam Srinivasan — Managing Director & CEO

I would encourage you not to view it. We are operating from Kerala and…

Simran — Omkara Capital — Analyst

No, no, I’m just asking from…

Shyam Srinivasan — Managing Director & CEO

I’m only sharing with you. I’m only sharing with you. The business growth in commercial banking and business banking is fairly widely spread and I don’t see any geographical behavioral difference, except in the past if there were some geographies that were affected either by some floods or local events. Thankfully, in the recent past there has been nothing unique that I could call out in any one geography to suggest that some geography is facing greater stress or otherwise. Thankfully, the COVID-related supports have worked well and we are not seeing any alarming trends, and even the restructured books are behaving reasonably well, along expected lines.

Simran — Omkara Capital — Analyst

Great, great. Nice to hear this. Thank you, sir. Thank you. Thank you.

Shyam Srinivasan — Managing Director & CEO

You are welcome.

Operator

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

Nitin Agarwal — Motilal Oswal — Analyst

[Indecipherable]

Operator

Nitin, request you to use the handset, please. You not clearly audible.

Nitin Agarwal — Motilal Oswal — Analyst

Hello, Am I audible now?

Operator

Better now.

Nitin Agarwal — Motilal Oswal — Analyst

Yeah. So, congratulations on a very strong quarter. Two questions. Firstly, is on the, like — personal loan segment has reported very sharp growth this quarter, it’s almost 75%. So how do you see this trending for the year.

Shyam Srinivasan — Managing Director & CEO

Shalini, would you want to take the personal loan, I think it includes the credit card fees also.

Shalini Warrier — Executive Director

Yes. That’s the particularly number that you are referring to and includes the credit card loans. Both personal loans and credit cards put together have shown a significant growth as you rightly indicated. Couple of things. One, obviously our credit card business is relatively more nascent. We started in mid of last year to about September of last year. And between us and our fintech partners, we are growing quite well on the credit card front.

Personal loans is something we’ve been conscious about and how do we kind of calibrate our personal loan growth from a risk appetite perspective. It’s only very, very recently in September that we started doing some new to bank personal loan bookings. So on a low base, you will see an increased growth. The higher focus for us is to make sure that credit card grows well, which will happen over the coming quarters. But, Nitin, if you remember that this is coming off a very low base. The percentages can be a little misleading actually.

Nitin Agarwal — Motilal Oswal — Analyst

Right. Of course, I understand. I mean, I was just trying to asses where can we be in next one or two years if [Speech Overlap]

Shyam Srinivasan — Managing Director & CEO

It’s growing well, Nithin. It’s growing well. It’s a focus for the bank and we think we will continue to give it high attention.

Nitin Agarwal — Motilal Oswal — Analyst

Sure sir. And, sir, secondly on the wholesale portfolio, wherein we have seen a pretty healthy pickup and growth until last year around 10% [Technical Issues] 20 plus. And, so we were earlier cautious on growing this portfolio owing to concerns on the pricing. So if you can suggest now which verticals are driving the growth in Corporate segment and how are the pricing trends now?

Shyam Srinivasan — Managing Director & CEO

Harsh, you want to go.

Harsh Dugar — Group President & Country Head, Wholesale Banking

The pricing is much same as today than it was about 6 months back. That’s partly because of the corrections of demand/supply situation with surplus liquidity in the system was upwards of INR8 lakh crores for a very long time, which come under INR1 lakh crore, plus interest rates have hardened. And third and most importantly, credit offtake has improved. So between these three factors, the pricing power and especially the pricing of the most finely-priced assets has actually been more than the repo hike, I mean just 225 basis points. So the sanity is coming back in the market. The correction which was long due has come in, thus the credit offtake has improved. So these are the two factors guiding in terms of a better growth and expansion in the NIM as well. Sure. And any select segments, verticals you want to highlight behind this growth. It has been. Okay. As of now, working capital has been the one which has been getting more demand on, but on the capex side, that very clear uptick and interest coming in over there as well. So we do see the rebounding robust and steady over the years. Sectorally, if you look at, I think it’s been across [Indecipherable] there are quite a few broad-based sectors which are coming over here. No particular sector which I would define. It’s pretty broad-based.

Nitin Agarwal — Motilal Oswal — Analyst

Okay. Sure. And last question is on the divergence between the credit and deposit growth. While you have talked about the focus on liabilities and the — like, you will participate in the rate sort of ware there. But how do you plan to mobilize deposits to support this growth momentum? And in context of the recent I&R depreciation, how are the trends on the NRE deposit growth side — NRE franchise side.

Shyam Srinivasan — Managing Director & CEO

On the NR we’re seeing remarkable inflow. I think we’ve shared that in the deck. Our remittance share has gone up even further to 22%. I think the last time we spoke was in the late 20. So almost every passing quarter we are gaining share, which is very significant development. But all of it does not translate into deposits. I think there is a revenge spending going on by the NRIs. So it could be seasonal. So we’ll have to see how that plays out.

So our deposit growth is sort of predicated on a bunch of stuff. One is, wherever required we’ll be competitive in pricing. It will continue to be as granular as possible. NR is beginning to show higher traction in terms of remittance and it only leads to deposit flow. Domestic deposits is growing quite nicely. We are expanding our footprint even further. Even in Q1, we are — first half we added about 25 or 35 branches. We believe we will add another 30, 40 branches this year. So between branch expansion, our fintech partnerships beginning to mature, our NR remittances are pricing appropriately on term and selectively borrowing, we will be able to meet our credit demands.

Nitin Agarwal — Motilal Oswal — Analyst

Sure sir. Thanks so much, and wish you all the best.

Shyam Srinivasan — Managing Director & CEO

Thanks, Nithin.

Operator

Thank you. The next question is from the line of Renish Bhuva from ICICI Securities. Please go ahead.

Renish Bhuva — ICICI Securities — Analyst

Yeah, hi, sir. Congrats on a great set of numbers. So sir, first question is on the sort of sustainability of this current loan growth momentum. So, of course, the recovery has been broad-based, and most of the segments are growing in 15% to 20% range. But if I were to look at, let’s say from next couple of years perspective, which segment do you feel will drive the growth?

Shyam Srinivasan — Managing Director & CEO

Renish. I think it would be inappropriate to talk two years in a very turbulent environment. I think our line of sight is two, three quarters. Not that we’re not looking beyond. But the business that we sowed our seeds sometime back have all started floating. That is way in our investor deck we have started calling that out, I think. Slide number 29 captures that. And therefore that is a promising new opportunity. We think that’s scalable. Those are segments that have growth potential. Where we have low penetration in the country, we have low share and we believe we — effort is to grow these segments. So I do think in the coming quarters and year ahead these will be on relatively higher margin businesses too, and not to suggest that they won’t get disintermediated, but I think this will remain higher margins. So our belief is that as we scale into these, credit growth of this kind of order or magnitude is possible. I always caveat it by saying the environment should not become counterproductive. As long as it is supportive, yes. We’ve demonstrated reasonable clarity around growing without trying to be too cowboyish.

Renish Bhuva — ICICI Securities — Analyst

Yes, yes. I mean, that has been the core strength of our franchise. So, sir, any broad — let’s say range do we have in mind that these CVC, MSME, credit card which is currently contributing 20% to the loan book, is there any numbers?

Shyam Srinivasan — Managing Director & CEO

Renish, that is the incremental flow. It’s not…

Renish Bhuva — ICICI Securities — Analyst

Okay. Okay. So, okay, got it. So that should remain in that range or quarter by quarter it should increase?

Shyam Srinivasan — Managing Director & CEO

On incremental flow it will increase, on the stock it will be reasonably small, but on the floor it will increase to about 25%.

Renish Bhuva — ICICI Securities — Analyst

Got it, got it, sir. And just, sir. Again, sorry to coming back to the NIM question. But if I look at the balance sheet mix over last, let’s say, 2, 3 quarters, our borrowing has gone up from around INR8,000 crore to INR20,000 crores now, which is essentially suggesting that we are funding the incremental growth via borrowing. So if you can just broadly highlight, is there any rate differentiation between cost of deposit and cost of borrowing?

Shyam Srinivasan — Managing Director & CEO

Yeah, I think we — the beginning of calendar ’22 and middle of calendar ’22, we did see the war on deposits and the pricing war for deposits. We identified some relatively lower cost borrowing opportunities, which are CRR SLR free, we borrowed. But that is a point in time that cannot be sustained because you won’t get the money at that kind of pricing sustained basis. So we did get three-year money, we locked in, and it enabled credit. As we see, that’s why I said we continuously calibrate deposit growth between paying top dollar versus these opportunities and we keep blending that.

Renish Bhuva — ICICI Securities — Analyst

Got it. And just a follow-up on that. So sir, we are already, let’s say, a big CD ratio of 85 and we might accelerate deposit mobilization in coming quarters. So of course, next couple of quarters you clearly said that margins will remain around 3.25 to 3.3. But on a sustainable basis keeping in mind the peak CD ratio, of course, as well as the high yielding products start contributing incremental growth. So on a sustainable basis, where do you see our settling down, sir?

Shyam Srinivasan — Managing Director & CEO

Somewhere in the 330s is where we are working on. Hopefully, improving by 330.

Renish Bhuva — ICICI Securities — Analyst

Got it. Okay, okay. Okay, fantastic.

Shyam Srinivasan — Managing Director & CEO

Which includes — is higher than what I have been guiding in the past quarters.

Renish Bhuva — ICICI Securities — Analyst

Absolutely. So that is why, sir I was just trying to reconfirm that next couple of quarters 330 will be, let’s say the benchmark and going ahead it should at least remain at that range is what the working view are as plan.

Shyam Srinivasan — Managing Director & CEO

Yes.

Renish Bhuva — ICICI Securities — Analyst

Okay, okay. Thank you, sir. Thank you, sir.

Operator

Thank you. The next question is from the line of Kaushik Poddar from KB Capital Markets Private Limited. Please go ahead.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Yeah. Hi, Shyam. You seem to have ticked all the boxes. Is there any other box which remain untapped? That’s question number one. And question number two is, in the results for the note number, just a minute — I think note number 8 or something that talks about the resolution, assets and you have given the breakup and all those things. So if you can explain that note?

Shyam Srinivasan — Managing Director & CEO

Venkat, you have the results document in front of you?

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Yeah, its note number 8, yes, on the resolution plan. But first first about the boxes that remain unticked.

Shyam Srinivasan — Managing Director & CEO

Yeah, I think –Kaushik, unfortunately, this is not a static list, right? It keeps changing and you as an investor will demand more, me as a leader will demand more. So it’s a continuous journey. But yeah, we’d would like to make sure that the 1.2 ROA becomes 1.25, the NIM improves. We’re pushing on all the buttons, and I think we are on course. At least, the team is marching to a rhythm and we believe we are doing the right things. As you may have observed over the years, we won’t do the wrong things, that I can assure.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Come again. I didn’t get that.

Shyam Srinivasan — Managing Director & CEO

I said you may have observed over the years we won’t do the wrong things and I assure you that I said. And certainly, yes, we are pushing on all the buttons.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Okay. And this cost to income ratio has improved massively. I mean, do you see that at the 48% level or improving from there?

Shyam Srinivasan — Managing Director & CEO

No, I think we had — basically we’ve upfronted one year of all our deliverables through this year. If you remember, we had said by FY’24 we will get closer to 48%. We will upfront it. But that’s also because income growth has been strong and we have now been extravagant in costs. But as branch expansion increases, some of the deliverables that we need to put on the system side, somewhere in the 48% is what we are guiding for, between 48%, 49%.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Yeah. And if you can explain that note number 8.

Venkatraman Venkateswaran — Group President & Chief Financial Officer

Yes, I can do that. This note is nothing but the RF1 and 2 in terms of the exposure and what has turned into NPA and which are the accounts which have paid us. So this is a format which has to be disclosed as per regulatory requirement. This is pertaining to RF1 and 2.

Shyam Srinivasan — Managing Director & CEO

Restructuring during COVID.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Okay. And do you see that — see, I think INR138 crores have fallen into NPA and do you see the similar kind of run rate every quarter or in that ballpark.

Venkatraman Venkateswaran — Group President & Chief Financial Officer

For the first half — half year is INR138 crores.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Yeah, yeah, I mean do you see that at 150 — around INR150 crores for the next half years also.

Shyam Srinivasan — Managing Director & CEO

See, it could be. It will be in our overall slippage number. In the first half, our overall slippages was about INR800 odd crores and in the second half this overall slippages could be around INR900 crores to INR1,000 crores, and this will be within that.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Okay. Okay. So this is part of that overall slippage, right?

Shyam Srinivasan — Managing Director & CEO

Yes, yes. And we have met excess provisions, and I didn’t thank you for pointing it out. We are carrying excess provisions on the restructured book. And also this quarter most of you would have observed, we have further increased our PCR by 250 basis points.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

So that includes that excess provision, right?

Shyam Srinivasan — Managing Director & CEO

No, no. That is separate. That is outside of it.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

That’s outside of it. Okay.

Venkatraman Venkateswaran — Group President & Chief Financial Officer

Standard asset is separate from the…

Shyam Srinivasan — Managing Director & CEO

Provision is on standard asset — restructured standard assets. And provision coverage ratio is on NPH.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Okay, okay. Thank you. Thank you. Thank you.

Operator

Thank you. The next question is from the line of Lalitabh srivastava from Anvil [Phonetic] Please go ahead. Lalitabh, your line is unmuted.

Lalitabh srivastava — Anvil — Analyst

Yeah. Thanks for the opportunity and congratulations for the great set of numbers. First of all, one thing I wanted to ask, if you can share the breakup of the provision expenses for this quarter?

Shyam Srinivasan — Managing Director & CEO

You want the breakup of provisions?

Lalitabh srivastava — Anvil — Analyst

Yes, sir.

Shyam Srinivasan — Managing Director & CEO

I think it’s there in the deck, right, Venkat.

Venkatraman Venkateswaran — Group President & Chief Financial Officer

Yes, yes. it’s there. I’m just looking at which page.

Lalitabh srivastava — Anvil — Analyst

I wanted to know this credit cost has gone up on a sequential basis. And so any comments you have on that?

Shyam Srinivasan — Managing Director & CEO

I mentioned just now that we have increased our provision coverage from INR65 crores to INR67.5 crores, that’s 100 crores extra. Every 100 basis point — every 100 basis points is about INR40 crores. Gross NPA 4,031. So every 1% would have a INR40 crores additional, you know, if you want to increase the coverage. We have increased by about 25%.

Operator

Thank you. The next question is from the line of Subrat Dwivedi from SBI Life. Please go ahead.

Subrat Dwivedi — SBI Life — Analyst

Yeah, thanks for taking my question, sir. Two questions. First is, just wanted to know in terms of the increase in your cost of lending, how much has it been for retail and how much has been for large corporate over this quarter?

Shyam Srinivasan — Managing Director & CEO

You mean the rate increase?

Subrat Dwivedi — SBI Life — Analyst

Yes.

Shyam Srinivasan — Managing Director & CEO

I think between the two businesses, both have been able to pass on the rate increase of the 140 basis points, between 110 to 115 basis points have been passed to on the lending side.

Subrat Dwivedi — SBI Life — Analyst

Between the Q-on-Q I was asking, sequentially.

Shyam Srinivasan — Managing Director & CEO

Sequential what, rate increase?

Subrat Dwivedi — SBI Life — Analyst

Yes.

Shyam Srinivasan — Managing Director & CEO

In the more about 35 basis point. Right, Venkat?

Venkatraman Venkateswaran — Group President & Chief Financial Officer

Yes, 36. Correct.

Subrat Dwivedi — SBI Life — Analyst

How much on the retail side and how much for large corporates?

Shyam Srinivasan — Managing Director & CEO

More or less — more or less equally weighted.

Subrat Dwivedi — SBI Life — Analyst

Okay, okay. And my second question is when you say that you have met some of the liability requirements through borrowing, opportunistic borrowings, what sort of borrowings were these?

Shyam Srinivasan — Managing Director & CEO

From financial institutions like SIDBI, NABARD.

Venkatraman Venkateswaran — Group President & Chief Financial Officer

Refinance, which is CRR SLR, no CRR SLR applicable.

Subrat Dwivedi — SBI Life — Analyst

Okay, that’s all from my side. Thanks.

Operator

Thank you. The next question is from the line of Krishnan ASV from HDFC Securities. Please go ahead.

Krishnan ASV — HDFC Securities — Analyst

Yeah, hi. Many thanks. So, Shyam, just wanted to understand your thoughts on the EBLR transmission a bit. You seem to have a lot of discretion on the deposit side in terms of not wanting to pass it on, and yet on the asset side there seems infinite elasticity there. I just wanted to understand does the RBI allow this? Could there be looking at this a lot more closely in terms of exercising discretion. And the second related question is, at some stage if it begins, kind of you are breaking the camel’s back. Do banks have discretion to typically not pass it on completely at all? So if there is a 50 basis points increase in the repo rate, do banks including federal have a choice to pass on these 20 basis points out of that?

Shyam Srinivasan — Managing Director & CEO

I think it’s a bunch of things, Krishnan. I don’t think I can give an answer saying yes or no. Every time an MPC and the rate change, we look at portfolio by portfolio, segment by segment spread and then take a call. In certain areas we may not be able to offer the entire increase. In certain areas we may have to offer the entire increase. So it’s — I don’t think I have an answer saying yes or no, or its very, very nuanced, very layered. And for some ticket sizes, we may have passed on the entire also.

Krishnan ASV — HDFC Securities — Analyst

And just between how this acts on the deposit side versus the loan side? On the deposit side when you don’t pass it on completely, it’s obviously not hurting us right now, right? I mean, it’s [Speech Overlap]

Shyam Srinivasan — Managing Director & CEO

It’s not like it’s not hurting. There is a transmission delay and there is a quantum that changes between credit and deposits.

Ashutosh Khajuria — Executive Director

Further, is that that — I think on the loan side there is the mandatory linkage to external benchmark. So you have for a particular segment, like retail, MSME and all, you have to necessarily link your loan pricing to an external benchmark unless it is fixed rate, whereas on the deposit side presently there is no such a regulatory requirement of linking your deposit rate to any external benchmark or so. Therefore, savings bank any day, I mean like you — some banks who earlier had their savings bank linked to repo have delinked it. So that’s the difference here. You can delink, can decide based on how the competition is and how much you want to encourage the saver to put money with you, because that’s a very tough competition. And I would say almost similar rates has passed on the term deposit side. If you see the way the term deposits have moved from less than 5% or so to now nearly 7%. So with 190 basis points high, you have been almost 200 basis points hike on the term deposit side.

Krishnan ASV — HDFC Securities — Analyst

Okay. Okay. I guess that’s — what I was trying to understand, I guess Ashutosh is more around the fact that on the loan side at least there is obviously a spread, right? And that spread ideally does not change. So if a Krishnan was already back to repo plus, say 200, 300 whatever that number was, that spread of 300 stays constant no matter what the RBI does, right? Or do you have discretion to bring that down if you believe that the risk is going up.

Ashutosh Khajuria — Executive Director

The spread changes based on the risk profile of the customer. The customer risk profile deteriorates, then the spread changes. Spreads can change on in two ways. One, if in case the credit quality deteriorates, you can increase the spread and all, like internal rating change or external rating change or something like that or some being defaulted and all. On the other hand, on the deposit side there is nothing called — I mean you have an external benchmark to which it could be linked. On the loan side, again, you can reduce the spread when the renewal happens or reset happens. So it’s not that your account is performing very well the rate is there available with the bank to reduce the spread. So on both sides you can increase it as well as you can decrease it subject to certain requirements. Otherwise, normally spread is non-negotiable.

Krishnan ASV — HDFC Securities — Analyst

Got it. Just the other thing was about, it’s not hurting us now, is not on the P&L front that I meant. But the fact that because 90% plus of our — plus of the bank deposits are franchise deposits in a manner of speaking, they keep coming no matter. They are kind of rate in elastic, right?

Ashutosh Khajuria — Executive Director

[Speech Overlap] None of the deposits. I think a good chunk of deposits these days are not rate in elastic. People demand — I mean based on the competition that you’re facing.

Krishnan ASV — HDFC Securities — Analyst

Got it. This is extremely helpful. Thank you.

Operator

Thank you. The next question is from the line of Prashant Kumar from Sunidhi Securities. Please go ahead.

Prashant Kumar — Sunidhi Securities — Analyst

Thanks for the opportunity, sir, and congratulation for good set of number. And commentary most likely to continue further. I have couple of question. One is on the capital adequacy signed. Actually, in last quarter we have consumed around — roughly around 75 bps of CR. So just maintaining the current loan book growth, I already mentioned in last quarter that the bank is going to raise INR120 billion of fund, 40 and 80 of equity and debt. So if you could give some that — because I think that in this growth maybe or we have highly needed to raise in last of this financial year. So first one is that, and if some outlook.

And second is on asset quality side. The restructured book almost stable, I mean but not has come down even in the better picture of economy, MSME is doing better, but still it has remained at same level. But I mean it is not on the hurting level. I mean, it is on very controlled as per the other banks. But if you could give some of that when we will achieve the pre-COVID level on the, especially restructured book, otherwise asset quality I think so it is very good. Thank you, sir.

Shyam Srinivasan — Managing Director & CEO

The restructured book will — as the restructured — the demand on it increases, the bulk of it will be in Q3 and Q4. So we’ll see that performance and how it’s shaping up. And therefore by end of financial year you will see a better sort of consistency versus the pre-COVID period. And on the first question, I think you mentioned about capital consumption. Yes, we think this financial year when we put back our full year profits. As you know, the Q2 profits are not in the ratio. When they get back to a closing of financial year, we will get back to somewhere near 14% and that’s our model. But having said that, in early financial year 2024 if the situation is condusive, we can consider, but we are not in any — it’s not in our planning horizon just now. And the INR12,000 crore was an enabling resolution we took from shareholder should the need arise. I mentioned that in the last call also.

Ashutosh Khajuria — Executive Director

Yeah, thank you so much, sir. That’s it from my side.

Operator

Thank you. The next question is from the line of Mahesh MB from Kotak Securities. Please go ahead.

Mahesh MB — Kotak Securities — Analyst

Good evening, sir. First question is on the opex line, sir. Just wanted to understand the growth rate on the staff side, even if you adjust for the family pension has been on the lower side. Directionally, how are you seeing this number, especially with wage cost likely to be seeing a revision from the next wage settlement cycle. And also, correspondingly on the other opex line also has been quite high for the kind of loan growth that you’re showing.

Shyam Srinivasan — Managing Director & CEO

It will continue to be this kind of run rate. Neither of them will dramatically alter. There are no one-offs, one way or the other. This trend line will continue.

Mahesh MB — Kotak Securities — Analyst

There is no pension related lower provisions, higher provisions in this quarter, right? Or it’s just a normal run rate at which you are running now?

Shyam Srinivasan — Managing Director & CEO

No, nothing material. Venkat, would you want to answer that? Is there anything that’s uniquely different. I mean, of course, yield related some benefits are there.

Venkatraman Venkateswaran — Group President & Chief Financial Officer

Largely driven — there is no one-offs or any material pension related, it’s the normal run rate. And on the other opex, it’s largely driven by volume-related costs.

Mahesh MB — Kotak Securities — Analyst

Okay. Second question, sir. On the deposit side again, sorry. This question has been asked repeatedly, but just kind of taking it again a different way to look at it. Are there any segments within the deposit book that is seeing a slower growth, in the sense that when you look at your, let’s say, retail deposits or households, are they saving less, are they drawing down.

Shyam Srinivasan — Managing Director & CEO

For NR savings I mentioned is rate of saving — rate of remittances much higher, rate of savings is lower.

Mahesh MB — Kotak Securities — Analyst

That’s on the savings side, right? On the deposit side?.

Shyam Srinivasan — Managing Director & CEO

That’s what I’m saying, NR savings deposit.

Mahesh MB — Kotak Securities — Analyst

On the term deposit side, sorry.

Shyam Srinivasan — Managing Director & CEO

Term deposit, we are not seeing anything different. Its price elastic. And in segments that we are offering good pricing, we are seeing good traction.

Mahesh MB — Kotak Securities — Analyst

Okay, perfect. Thanks a lot.

Operator

Thank you. The next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead.

Saket Kapoor — Kapoor and Company — Analyst

Namaskar, sir, and thank you for this opportunity. Firs is just to [Indecipherable] We are looking for an ROE exit of closer to 1.3 for FY’23 and NIMs inching up to 3.30. This is what the [Indecipherable]

Shyam Srinivasan — Managing Director & CEO

No, I said ROA exit closer to 1.25, not 1.3. But, yeah, NIM of 3.3.

Saket Kapoor — Kapoor and Company — Analyst

Okay, sir. And for and for the fund raising exercise, you just earlier commented that there is no plan at least for H2 to raise capital. We would be — we would be looking for fund raising only post our financial accounts, full year numbers are there. And then looking at the environment, we would be contemplating whether a fund raising would be the need of the hour or not.

Shyam Srinivasan — Managing Director & CEO

That is a fair assessment, yes.

Saket Kapoor — Kapoor and Company — Analyst

Okay, sir. Now, sir, coming to the line item of treasury income, sir. If we look, the treasury income part, sir, how much — what is the contribution from G-Sec under this line item. How are the G-Sec portfolio performed and its contribution under the segment and what are the key parts of the treasury income of INR671 crores?

Shyam Srinivasan — Managing Director & CEO

Ashutosh, you want to go?

Ashutosh Khajuria — Executive Director

Yeah, sure. See G-Sec contribution, I think from the interest rate products the contribution in first and second quarters has not been considerable. In first quarter it was single digit, in second quarter also it has been hardly INR20 crores, INR25 crores or so. But, I mean, what is important is to, I mean, this is the time when it was required to protect the portfolio. So from mark-to-market point of view, there had not been — as I shared with all of you on the first quarter itself — after first quarter results, there had been a massive reduction in modified duration, which resulted in lower provisioning requirement in first quarter and this quarter the yields have actually been flat or rather they’ve come down a little bit because one sees only the benchmark. If you see other papers and all, I mean there has not been much of a change, barring very short and all that. And therefore our portfolio for second quarter again had some, little bit of, I mean a couple of crores of write back rather than providing. So that’s on the treasury front, but there had been good earnings on non-interest rate related products also, like equity and all that.

Shyam Srinivasan — Managing Director & CEO

And very strong progress on the FX.

Ashutosh Khajuria — Executive Director

FX had been very strong, but FX is in core fee income because that’s related to merchant transaction. Basically with corporate credit growth, there has been opportunities — more opportunities to provide the hedging and all that. And through that there had been a good growth there.

Saket Kapoor — Kapoor and Company — Analyst

Okay. So this, but sir in the fee income part, we have again put a net profit figure of forex transaction at INR94 crores.

Ashutosh Khajuria — Executive Director

That’s what I’m talking about. Yeah.

Saket Kapoor — Kapoor and Company — Analyst

Okay. And that is — that is on the — that is on account of the improved business transactions on the foreign exchange front.

Ashutosh Khajuria — Executive Director

We call it merchant for forex. This is the profit related to our relationships.

Shyam Srinivasan — Managing Director & CEO

This is not proprietary trading. This is client-based income.

Saket Kapoor — Kapoor and Company — Analyst

Okay, client-based income. Sir, just wanted to understand the nature of the transaction money. For what service are we offering that results in these kinds of profit and whether these are sustainable numbers. I think quarter on quarter it is…

Ashutosh Khajuria — Executive Director

We are offering the entire range of hedging products which are permitted by the Reserve Bank of India with all required, so called mitigants, like customer appropriateness and all. So based on that, this entire range whatever is permitted to be offered in India is being offered.

Saket Kapoor — Kapoor and Company — Analyst

And what should be the value of the transaction on which we have booked this INR94 crores of profit? how much is the business transacted on account of for this forex?

Ashutosh Khajuria — Executive Director

I need to check back because there been lot of volatility, and on that I think transactions have been quite high. I mean, as far as the remittance is concerned, there also you have your counterparties like exchange houses and all. So these are also, I mean covering their transactions and all. So there has been a mix of all that and because of volatility there were other arbitrage opportunities as well. So all put together, this comes to this number.

Saket Kapoor — Kapoor and Company — Analyst

So, sir, on the basis of the other income component or the fee income part, the line item of INR540 crores which we posted for this year. Taking into account the composition, how likely is that this could be a sustainable number going ahead, because it has various variables and parts to it. And how should one look going ahead because this is a content jump [Speech Overlap]

Shyam Srinivasan — Managing Director & CEO

It’s granular, it’s structural and it’s consistent. Variability in that can be 5%, this side, that side.

Saket Kapoor — Kapoor and Company — Analyst

Right, Sir. And the last line item on profit on sale of securities, that was INR70 crores. So that is a one-off item only, that wont appear…

Shyam Srinivasan — Managing Director & CEO

That could have had some recovery gains.

Ashutosh Khajuria — Executive Director

That’s not entirely on account of profit on sale of investment. Let me clarify that it has multiple things — that other income other than this core fee income, I think you are talking about the difference between 610 and 540 [Speech Overlap] and 610 being non-interest income. That includes dividend from associates and subsidiaries. That includes a recovery in return of assets that have partly some profit on sale of invest. All put together, that number is INR70 crores.

Saket Kapoor — Kapoor and Company — Analyst

Correct, sir. And anything you want to speak on the NPA front, sir. On the — where are we going to likely end the year on the gross and the net NPA front, the numbers which we are targeting?

Shyam Srinivasan — Managing Director & CEO

At the beginning of the financial year, we had said that the full year slippages. If you remember, first quarter was about INR450 crores. We said the full year slippages would be in that 450 times 4, around INR1,800 crores. Second quarter was exceptionally good. Within Q3, Q4, will be between INR900 to INR1,000 crores for the rest of the FY. A credit cost of around 50 to 55 basis points.

Saket Kapoor — Kapoor and Company — Analyst

On a percentage terms any ballpark which we are targeting to end the year or how does second half? We have a gross NPA of 2.46 and the net at 0.78.

Shyam Srinivasan — Managing Director & CEO

Yeah, I think I’ve mentioned credit cards 50 to 50 basis points, coverage ratio at 7.5%. We will seek to improve those. So it should only keep improving there or thereabouts.

Saket Kapoor — Kapoor and Company — Analyst

Okay, sir. To conclude, the trajectory is very strong and on the strong path. We are continuing to march ahead. The factors that has enabled us to post these numbers are gaining strength rather than being one off. This is be the sum and substance.

Shyam Srinivasan — Managing Director & CEO

I would like to believe that. That’s why I opened the call. It’s broad-based, it’s granular, it’s organic, it’s deep-rooted.

Saket Kapoor — Kapoor and Company — Analyst

Thank you for all the elaborate answers, sir. All the best to the team, sir, going ahead. Stay safe, sir.

Shyam Srinivasan — Managing Director & CEO

Thank you. Thank you so much. Thank you.

Operator

Thank you. The next question is from the line of Suraj Das from B&K Securities. Please go ahead.

Suraj Das — B&K Securities — Analyst

Yeah, hi, sir. Thanks for the opportunity. [Technical Issues]

Operator

Suraj, your voice is breaking. I request you to please use the handset and come in network, please.

Suraj Das — B&K Securities — Analyst

Yeah. Am I audible now, better?

Operator

Better now.

Suraj Das — B&K Securities — Analyst

Yeah. Sir, the first question is on the restructured book. If you can explain, I mean how much of the book would be out of moratorium and has resumed billing and how much percentage of the book is still under moratorium? And also you mentioned some excess provision on the restructured book, if you can quantify what would be the excess provisioning on the restructured book? Yeah, that is the first question.

Shyam Srinivasan — Managing Director & CEO

Yeah, I think Venkat mentioned, INR138 crores is the excess provision, more than the mandatory provision. So we’re holding close to INR650 crores on the restructured book.

Suraj Das — B&K Securities — Analyst

Okay. And sir, how much percentage of the book would be out of moratorium and has resumed billing? And what kind of [Speech Overlap]

Shyam Srinivasan — Managing Director & CEO

Raj, if you’re there on the line, I think in the coming two quarters about — between this quarter and the next close to INR1,000 crores would come. Right, raj.

Rajanarayanan N — Head, Loan Collection & Recovery

INR300 crores plus INR300 crores, sir.

Shyam Srinivasan — Managing Director & CEO

That’s INR600 crores.

Rajanarayanan N — Head, Loan Collection & Recovery

INR600 crores and 70% of the book has already come out for demand. as on 30th September. So we got only 30% of the book left to come out from moratorium.

Suraj Das — B&K Securities — Analyst

Okay. Okay, understood. And sir, the second question is more of [Indecipherable] So if you can, you have mentioned some during this call that around 65% of the loans are floating rate linked. If you can bifurcate that, how much would be like percent and how much would be the MCLR fixed and others.

Shyam Srinivasan — Managing Director & CEO

50% is repo, 15% is MCLR, 25% is fixed, 0% is employee and FX and so on and so forth. And advances against deposits.

Suraj Das — B&K Securities — Analyst

Understood, sir. That’s it from my side. Thank you, sir.

Operator

Thank you. The next question is from the line of Manish Shukla from Axis Capital. Please go ahead.

Manish Shukla — Axis Capital — Analyst

Good evening and thank you for the opportunity. First question is that over the last few months we have seen RBI make lot of changes to regulations around fintechs. Has that made you revisit how [Indecipherable]

Shyam Srinivasan — Managing Director & CEO

I think it’s encouraged us because our model has been very, I’ve said this in every call. We believe very fully in the fintechs partnership model. We have created capabilities that are very fintech sort of enhancing, and which is why through all this process we didn’t see either a partner getting nervous or we getting now, and we are quite confident that this momentum will continue. We looked at fintechs for liabilities differently from assets, and all our top four, five fintech partners, we have many, but the top four, five are continuing to storm ahead, and we think that model works for us. We haven’t seen — been nervous by any of the changes. Some tweaking in relationship and pricing has been done. And we’re quite pleased with that. Shalini, you want to add, please?

Shalini Warrier — Executive Director

Yes, Shyam. Just to kind of expand that further. If you look at just the digital lending guidelines is one of the areas which has come up. Clearly, we believe that it has helped in terms of transparency from a customer standpoint and clarity on what — how the the relationship should work and we’d use that as a basis to kind of structure some of our fintech partnerships. You’ve seen the investor deck, for example. One of the ones we launched towards the end of September, fully compliant with all the digital lending guidelines, is the one with Paisabazaa. So the broader point is — these regulations are actually quite useful in making sure we understand how the collaboration works and how the linkages work. We do believe that they are in the right direction and they really reinforce our continued emphasis and strategy of fintechs.

Manish Shukla — Axis Capital — Analyst

Sure. Thank you. Thanks for that. Second question, Shyam is that, everything that you have discussed on the call so far, right? Points towards a very benign environment, loan growth, margin. What is it that what you see at this stage?

Shyam Srinivasan — Managing Director & CEO

I think I’ve said this in every call. I am a worrier. So we worry about everything that can go wrong. And certainly the things that have looked robust need not look robust, there can be some stress in the environment building. But I think structurally we have — we believe that the COVID has thought both the bank and the customers to navigate very tough periods. Those who have withstood the last two years, I think can withstand any of the forthcoming stresses. So that gives us the confident. Yes, the war for deposits will intensify, but so will our abilities. So am I worrying about everything? I think, yes. But I think structurally we are better off than we ever were.

Manish Shukla — Axis Capital — Analyst

That’s very helpful. Thank you.

Operator

Thank you. Our next question is from the line of Darpin Shah from Haitong India. Please go ahead.

Darpin Shah — Haitong India — Analyst

Thanks. All my questions have been answered.

Shyam Srinivasan — Managing Director & CEO

Souvik, I think we should bring it to a close. Maybe one last question, please.

Souvik Roy — Head, Investor Relations

Sure, sir.

Operator

Sure. We’ll take the next question as the last question from the line of Pankaj Agarwal from Ambit Capital. Please go ahead.

Pankaj Agarwal — Ambit Capital — Analyst

Good evening, Sir. Am I audible?

Shyam Srinivasan — Managing Director & CEO

Yes, Pankaj. Go ahead.

Pankaj Agarwal — Ambit Capital — Analyst

Sir, how much extra maturity we carry at [Indecipherable] versus the regulatory side?

Shyam Srinivasan — Managing Director & CEO

Meaningful.

Pankaj Agarwal — Ambit Capital — Analyst

So reason I’m asking is that for some — for how much more you can grow your loans without growing your deposits. I think the mechanics [Speech Overlap]

Shyam Srinivasan — Managing Director & CEO

I got a question, I said meaningful. We can grow credit, like I’ve said at the beginning of the call between a mix of deposit, borrowings are on resources. I think credit growth of high teens is possible.

Pankaj Agarwal — Ambit Capital — Analyst

Okay. And that can last for another couple of quarters. I mean my broader correction was that the gap between deposit growth and loan growth, I mean, can it sustain for another two quarters.

Shyam Srinivasan — Managing Director & CEO

Yes. So we have a plan and we have the ability.

Pankaj Agarwal — Ambit Capital — Analyst

Okay, okay, thank you. Thank you.

Operator

Thank you. Ladies and gentlemen, that would be our last question for today. I would now like to hand the conference over to Mr. Souvik Roy for closing comments. Thank you, and over to you.

Souvik Roy — Head, Investor Relations

Thank you so much, Aman, and thanks again to all the participants who dialed in today on a Friday evening. If we have left any questions unanswered, we would be very happy to engage with you offline. With this, we close the call. Happy Diwali in advance and see you all on the other side of Q3. Thank you so much.

Shyam Srinivasan — Managing Director & CEO

Thanks everybody. All the best. Happy Diwali.

Shalini Warrier — Executive Director

Thank you, everybody. Happy Diwali in advance.

Ashutosh Khajuria — Executive Director

Happy Diwali to everyone. Thank you.

Operator

[Operator Closing Remarks]