THE KARUR VYSYA BANK LIMITED (NSE: KARURVYSYA) Q2 2025 Earnings Call dated Oct. 17, 2024
Corporate Participants:
B Ramesh Babu — Managing Director and Chief Executive Officer
Ramshankar R — General Manager Chief Financial Officer
Analysts:
Jai Mundhra — Analyst
Roshan Chutkey — Analyst
Anand Dama — Analyst
Abhijith Vara — Analyst
Prabal Gandhi — Analyst
Rakesh Kumar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q2 FY ’25 Earnings Conference Call of the Karur Vysya Bank. We have with us today the management team of KVB, represented by Mr. Ramesh Babu, MD and CEO; Mr. Natarajan, Executive Director; and Mr. Ramshankar, CFO. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. B. Ramesh Babu, MD and CEO, to take us through the highlights of the quarter gone by, after which we will open the floor for questions. Over to you, sir.
B Ramesh Babu — Managing Director and Chief Executive Officer
Thank you. Thank you very much. So good evening to all of you. On behalf of Karur Vysya Bank, I welcome you all for our bank’s earnings call for the quarter two of the financial year 2025. So we trust that you, your colleagues and family members are keeping well and are in good health. So we have uploaded our financial results along with the presentation on our website and I hope you have had a chance to go through it in detail and ahead of this call.
I am pleased to mention that the bank continued to have another strong quarter of performance built on our guidance of three metrics growth, profitability and asset quality. Bank’s performance indicators are in line with our guidance and the bank is seeing consistent and steady growth. It is encouraging to note that our team was able to sustain the growth momentum witnessed in the first quarter. And I am confident that the same will continue in the ensuing quarters. The bank’s total business stands at INR176,138 crores as on 30th September 2024, we were able to sustain the growth impetus created during the first quarter as our total business registered a growth of 4%. The advances stand at INR80,299 crores and deposits grew to INR95,839 crores with a growth of 3% and 4%, respectively. We have been guiding in our earlier calls about our focus on inclusive growth from all verticals with respect to advances.
I am pleased to share that the same is being sustained in the RAM verticals with 5% quarter-on-quarter loan growth, commercial advances clocked 6% growth. Retail advance and agriculture advances grew by 4% each. Retail growth was predominantly driven by mortgages, which grew 10% during the quarter. Housing loans grew by 3% and GL loans by 7%. Our BNPL book remained flat during the quarter, agri jewel loan book grew by 4%, corporate book has de-grown by 4% during the quarter, mainly due to lower availments [Phonetic] in certain seasonal sectors, lower disbursements, repayments. And of course, as I always say, wherever the pricing was not conducive enough. So on our own, we have exited those accounts.
Deposit growth remains one of the key focus areas for the bank, and you are aware that the bank had initiated various strategies for deposit growth, including establishment of sales acquisition channel for both term deposits and CASA growth. Our total deposit growth was at 4% during the quarter. Depletion and balances in existing CASA book has resulted in growth of only 1% sequentially. Term deposits grew by 5% during the quarter. We had indicated in the last call that NIM would be above 4% levels till first half of the current year. I’m happy to say that the NIM for the quarter is at 4.11%, and for the half year, it is 4.12%. Our continued journey on shedding away low-yielding corporate advances on one side and focused more on battery yielding granular secured advances in RAM and prudent treasury operations have helped us to retain above 4.1% level of NIM during the quarter in spite of 8 basis points increase in the cost of deposits.
The cost of deposits increased by 8 basis points and the yield on advances reduced by 2 basis points sequentially. Yield on investments increased by 2 basis points during the quarter. Based on our historical pattern renewal of deposits and fresh deposit acquisition we expect moderated rise in the cost of deposits by 10 basis points in the next quarter. Yield on advances is expected to be flat, and yield on investments would be in the similar range for the second quarter — of the second quarter. Considering all these factors and without taking into any policy rate changes, we expect that NIM will be around 4% in the next quarter. We have achieved ROA of 1.72% in this quarter. We had guided that our effort would be to ensure ROA is above 1.65% levels and we are confident to maintain the same going forward also. Our gross slippages during the quarter continued to be under control at INR181 crores, which is 0.23% on an annualized basis comes to 0.9% of our loan book. With our continued close monitoring of accounts, we are confident that we’ll continue to keep the ratio below 1% as guided in our earlier call. Our efforts on recovery of technically written-off books is continuing to yield results as we have recovered a sum of INR180 crores during the quarter due to lower slippages, recoveries, upgrades and write-offs, our gross NPA has come down to 1.1%. We expect that we will continue to maintain at below 2% levels as advised earlier.
For the quarter under review, we have provided INR155 crores towards NPA migrations and INR10 crores towards standard assets and reduction in restructured assets provision by INR9 crores on account of reduction in balances aggregating INR156 crores, which is 0.78% of our advances on an annualized basis. Apart from this, we have provided a prudential provision of INR25 crores as was done in the previous quarter. Our net NPA has come down to 0.28%, and we will continue to maintain net NPA at less than 1% of our loan book. Our standard restructured loan book is further reduced to 0.79% of our loan book, and we hold a provision of 39.85% of the standard restructured book. The BNPL book balance is at INR1,030 crores as at the end of September, that is which comes to 1.28% of our portfolio, and it is performing well. Our overall unsecured portfolio included the BNPL of the total advances comes to 2.04%. Our MFI portfolio, which we started just two years back, and we have started taking baby steps in that now stands at INR298 crores as at the end of 30th September ’24, we are taking a very cautious approach in this segment. We have tied up with three business correspondents who have sort of expertise in this as partners, and we’ll be mindful in growing selectively in states where position is relatively better.
Our establishment costs were INR357 crores during the quarter increased by 7% sequentially, mainly on account of AS 15 actuarial provisions, which were up by INR13 crores compared to previous quarter due to steep fall in the discount rates. Operating expenses were at INR358 crores, sequentially gone up by 7%. Our cost-to-income ratio is at 46.72%, and we will continue our efforts to peg it within 50%. Our CRAR, as per Basel III continues to be healthy and is at 16.27%, providing us comfortable headroom for growth. Our liquidity coverage ratio continues to be well above the regulatory requirement of 100%.
So bank added one branch during the quarter and the setting up of the light branches is the progress and the first set of such branches are expected to function on the third quarter of this current year. Our endeavor is to continue the current momentum in the next half of the year. As planned, we are mindful of the challenges, particularly on the liability side and are taking every step to increase the low cost funds, which would also help us to improve the margins.
I am grateful to all our investors, analysts, and stakeholders for the confidence and the continued support, which we will reciprocate to our better performance in the days to come.
Now I’ll be glad to respond to your questions.
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 Jai Mundhra from ICICI Securities. Please go ahead.
Jai Mundhra
Yeah, hi. Good evening sir, and congratulations on a great set of numbers. Sir, first question is on your loan growth, right, so we can see that you have been following a profitable loan growth approach. You have been growing 20% Y-o-Y in retail, agri, MSME, but the total growth is slightly constrained by de-growing corporate book. So — and from the last time when we had spoken from — to this quarter, there has been a little bit moderation in the systemic loan growth. What would be your assessment considering the approach that we have taken? And then would you still be comfortable growing 15% above or how should one look at it?
B Ramesh Babu
Yeah, thank you Jai. In fact, Jai, if you look at it, the question is the composition of the deposit growth. So still we find that the CASA book as we planned, it is not growing at the same pace what we planned. Till such time that composition comes up, so it will not make much sense to raise a deposit at 7.6% — suppose senior citizen is there at 8.1% also we are taking and many of the corporates if they expect between 9%, 9.25% and all so 8.1% CRR, SLR, credit costs, standard asset provision, operating cost with all these things it doesn’t make much sense rather than just bloating the book and top-line growth. So that’s why we would just want to wait and watch. Another point, I want to say. So it is interest rate sensitive that is elastic as far as corporate is concerned. Suppose the rest of them, why we are fueling the growth in rest of the RAM segment is, if you reduce the momentum there, getting back the momentum from the whole team will become absolutely difficult because it’s granular and many people on the ground, they are working on that. Whereas corporate is concerned, it is interest rate sensitive, the moment you are able to offer a better rate, so you will be able to come back. I will just give you an example. Our NBFC portfolio, which used to be 8.5% of the total book at a point of time, now it has come down to around 5% plus. 3% we have brought it down, many of the NBFC is there. Suppose tomorrow if you have a reasonable amount of money, the 3% of the INR80,000 crores itself comes to INR2,000 crores odd. So that way growing should not be a problem, but we want to be conservative seeing the position. The moment we get a hold on the CASA book, it is growing there and all. So we will release the pipe towards the CAG [Phonetic] also.
Jai Mundhra
Right. No, no, understood, sir. So yeah, so that is understood. Secondly, sir, is there any — there were media reports or — is there any — I mean you’ve not given the gold loan book, total gold loan book at least I could not figure out from the presentation.
B Ramesh Babu
No, we have given a slide on the gold loan. 26% you can see that we have mentioned saying that last four years how the gold loan is moving what is LTV, what is it SMA, everything is provided.
Ramshankar R
Slide number 15.
B Ramesh Babu
Slide number 15, if you look at it, so we have given jewel loan portfolio, SMA, LTV, everything is there in that.
Jai Mundhra
Right, right. So — okay sir. Is there any difference in the agri gold loan and non — retail gold loan growth? Are you seeing anything, any trend change there?
B Ramesh Babu
Yeah, yeah. We are able to see that particularly in the first quarter of this year, so we could see some sort of a non-agri jewel loans also coming up. But it got slightly reduced in the second quarter. So that first quarter was a good quarter for the jewel loan growth. So second thing also, we will grow in the jewel loan growth, I’m not disputing that, but our intention is to focus on the core, otherwise, once we totally move into non-agri growth there, set of complacency may come up and all we may not grow in the core products. So that’s why we wanted to grow in a balanced way. And one more thing also, two to three years back also, this question was coming up, how much is the amount of the gold loan of your total portfolio? So three years back itself we have given an indication that we would like to go up to around 30% because too much of concentration in a particular product also is risky. So now if you look at it, 25.1% has become 26% now. So because not only agri, other side also we are coming up and down. So we will grow in that, demand wise there is no problem because RBI has also issued a circular on 30th, so many of the compliances we are in line with that and all. So we will grow in a measured way as far as the gold loan is concerned.
Jai Mundhra
Sure, sir. And sir, I have some data keeping question. If you can highlight the LCR percentage for the quarter and the number of staff?
B Ramesh Babu
LCR is 128% now and number of staff now comes to more or less because we have taken many other feet on street and particularly for the liabilities, those who need to do at the lowest level, likewise in the counters also for the deepening the book also at the lowest level, so we have taken a set of people. It comes to around 9500, something like that we can think of now.
Jai Mundhra
Okay. Sir, the LCR 128% on reported basis right, there is a dip from last quarter, whatever, let’s say change in the methodology — I mean, was there any change in the methodology and if that was the case, is this now sorted that — or do you think there could be any other changes in that also.
Ramshankar R
Jai, Ramshankar here. It has been fully sorted out. It started in last week of June, the revised methodology. And this full quarter, it has been fully on the revised methodology only. And see it varies, for example, the 128% on an average business for 90 days, two days back if I say latest, it’s 135%. So it varies here and there. It’s not —.
B Ramesh Babu
Depending upon the composition —.
Ramshankar R
Composition of the HQLA, high-quality liquid assets it keeps on varying, But it is sorted out fully.
Jai Mundhra
And there should not be any constraint for your growth or margin, right? I mean, LCR optically falling from much higher level to 128%, could this have any bearing on the growth or margins?
B Ramesh Babu
Jai, that’s what, it is a tightrope walk for everyone. In fact, we need to keep in mind all these factors and all accordingly we need to go for our planning. That’s it. In fact, every vertical, including treasury we are aware of this, how we need to plan our [Indecipherable] is also on the job, accordingly, we are planning.
Ramshankar R
But Jai, the 128% is a sufficient cushion — headroom is available for growth.
Jai Mundhra
Right. No, of course, it is there. So, yeah. Thank you, sir. Thanks and all the very best, sir.
B Ramesh Babu
Thank you. Thank you, Jai. Thanks.
Operator
Thank you. The next question is from the line of Roshan Chutkey from ICICI Prudential Mutual Fund. Please go ahead.
Roshan Chutkey
Yeah, thanks for taking my question. I just want to understand, how is the situation in the — among the textile sector, MSME customers, if you can give any view around that.
B Ramesh Babu
Yeah. Now, again, so compared to two to three years back, because up to COVID, post-COVID, it was doing very well, spinning and all, later there was a lull because external factors were creating a problem. Now, if you look at it slowly, the position is improving. I will not say that the limits have been used sufficiently and all these things and all. So the fact that in few other locations, they are placing the boards that we require people these sort of a thing. And second thing is, absolutely everything is happening in-house without much outsourcing and they are able to manage. So their order quality and their margins are relatively much better compared to others. So spinning mills also, those with 25,000 spindles and above, so they are there and all, their order book is good, they are able to manage well. And below 25,000, they need to still wait for some more time. Otherwise, overall, if you look at it, the position which was there prevailing one year back has improved now and they are hopeful, saying that in next six months, the position will further improve. So, next thing is, as far as our accounts are concerned, you would have seen that the worst times also we have passed through more or less. So that way, the portfolio, what we have is reasonably well, that we are managing and all, we are continuously engaging with these customers to know what is happening on the ground.
Roshan Chutkey
Thank you, sir. That’s all from my side.
B Ramesh Babu
Yeah, thank you.
Operator
Thank you. The next question is from the line of Anand Dama from Emkay Global. Please go ahead.
Anand Dama
Sir, congratulations for a great set of results. Sir, one — the first question that I have is related to our other income. So what basically is the treasury gain during the current quarter recovery from [Indecipherable]?
Ramshankar R
Recovery written-off was INR181 crores.
Anand Dama
Okay. And how much was treasury gain?
Ramshankar R
[Speech Overlap] trading profit we had around INR23 [Phonetic] crores.
Anand Dama
Okay. Basically, it’s like, recovery from written-off account seems to be on a higher side for us during the current quarter. Do you see this sustaining over the next few quarters?
B Ramesh Babu
No, Anand, I’ll respond on that. You see, these are the efforts we have been making for the last two to three years, you must be knowing that. So there are external factors are also involved. So unlike a normal loan growth and deposit growth, we cannot give a dotted-line response saying that this is what we will be able to do. But our efforts are on. But on the whole, if you look at it year-on-year, the numbers are coming up, it can be one quarter it may be more, and second quarter it may be low. But overall, as far as the year is concerned, the ROA, what we have given a guidance, we will be able to do that. That is the first point.
Second point, we didn’t take much advantage of the traditional recovery of write-off what all has come up because if you look at it, the provisioning, what we made around 65 basis points for the Return On Assets, if you look at it, it has come to that and in the normal course, if you look at it, with our 0.28% of net NPA, that much of provisioning is not required. For a standard asset, if you had to make on an average INR10 crore to INR15 crores per year we had to make, and migration something we had to make, and these things are required. Restructured already, 40% is already provided. There also doesn’t require. So what we thought, when good times are there, when these sort of something comes up and all instead of taking that as a profit so we need to strengthen the balance sheet and all we have additionally provided there. So that way, additional what all we have got that has gone into the provision, we didn’t take much benefit of that additional write-off what we have got.
Anand Dama
That’s good to hear. Sir, secondly is there — the LAP book is actually growing at a much more faster pace. All these LAPs that you are basically mobilizing right now is the non-source [Phonetic] LAP or you have a tie-up [Indecipherable]?
B Ramesh Babu
No, no tie up. It’s all set, and feet on street, all people what all they are recovering that’s coming from that. No question of any outsourcing. These things are not there at all. Everything internal team what they are doing there is a growth.
Anand Dama
Okay. And sir, what is the typical ticket size of this LAP and what is the yield that you’re generating for this LAP?
B Ramesh Babu
Yield is more or less 9.5 plus we will be getting it. Ticket size I need to look at it. Our CFO will come back to you on that.
Anand Dama
Okay. And bulk of this LAP is being generated in Southern India or like –.
B Ramesh Babu
Majority in southern India, correct.
Anand Dama
[Indecipherable] in Tamil Nadu, also?
B Ramesh Babu
No, not only Tamil Nadu. Tamil Nadu, Andhra, Telangana, Karnataka all these are there. But one more thing, just to provide some more comfort to you, Anand, just, I’ll share some points with you. At a point of time, three, four years back, what we were doing, actually, we were relying on the legal someone expert outside of whoever legal is there, and panel lawyers and the values we were doing. So we thought we needed a third eye to look at. Tomorrow at the time of disposal of these properties, we should not be caught unaware. So we have internally created a technical evaluation team wherein a set of people who have experience they sat there and the divisional office levels also we have put engineers there and all. So what all we had to give for evaluation, so no one has a discretion on a round robin basis that goes to the valuer on a surprise basis and what all it comes, it will be vetted at the local level, at the divisional office level it will go to centralized cell also. They will also look at these things and all comparable valuation elsewhere what all is there, legally other things are okay. After seeing all these things, they will clear it. In the process, we are declining many cases. So we took a call saying that maybe it may not result in a business growth, but it will be safer now so that tomorrow if issues come up and all you are unable to dispose of the purpose will not be served. So that way we have strengthened this mechanism and different checks and balance at different levels to see that the enforcement is really will work.
Anand Dama
Sure, sir. That’s great. Thank you.
Operator
Thank you. The next question is from the line of Abhijith Vara from Axis Mutual Fund. Please go ahead.
Abhijith Vara
Yeah, thank you for taking my question. Sir, I have a couple of questions. First one is in the other opex, the growth rate has been around 25% for the last couple of quarters. I know you have given guidance on cost to income. But specifically on this, do you think this growth rate will continue or it will moderate?
B Ramesh Babu
No. In fact, there are two aspects I need to share with you. There are few costs consciously we thought of spending. One is we are strengthening our IT and information security. So because we cannot take any sort of a risk on this, so more than what is required and all we started actually spending on that. Next thing is, we have gone for an ambitious plan for having 100 branches this year and last year also 35 branches we have opened, before last year we have opened. And the additional cost of these branches what all we have opened started kicking in and the next branches what all are there already the furniture and fixture, these all coming up. And so we have front loaded the staff members also for these branches. Once everything is ready, if you do not have the staff you will be paying the rent, you will be stuck. So those staff are also more or less ready that way. With all these things some sort of a cost is coming. The value of all these things you will be seeing over a period of time, but few more things also we look at it because when we are spending on these things naturally over a period of time depreciation also will kick in and DICGC all these things are there.
So with these things if you look at it overall, we are having a control on this, but we will still try to see which are the cases where expenses we can control further. And one more just point, no, it is not a justification, just for the sake of clarity I want to say, you see last year, more or less around INR1000 crores odd this corporate, we have brought it down the portfolio. And this year also, if you look at it INR600 crores to INR700 crores has been brought down. So INR1700 crores, INR1800 crores it has brought down. In addition to that, had we grown in the corporate in these two years another INR1300 crores would have come. INR1300 crores plus INR1700 crores, INR3000 crores of assets because of the constraint on the CASA we are forced to release and as and when the position improves we will be able to get them back. So that way it also had a bearing in the denominator. That base effect is at 7 basis points to 8 basis points that also is creating an issue. Overall, if you look at it, so we are focusing more on the rest of the ratios currently than on the cost of assets. So if you are able to earn on the spending what we are doing, okay, they may have to spend it, but your point is well taken. We will keep that particular point in mind how to have a decent positive effect.
Abhijith Vara
Right, sir. The second question is what is the total prudential provisions or floating provisions the bank holds? And do you include it in PCR calculation just for clarification?
B Ramesh Babu
Yeah. Last quarter, INR25 crore this quarter INR25 crore, that way it comes to INR50 crores. This is the floating provision — is the prudential provision we have. Floating provision is concerned last year what we have provided. Four quarters, INR25 crores each we have provided. So that INR100 crores is still there that way and whether for the PCR purpose it is there or not.
Ramshankar R
So floating provision we don’t take. Prudential provision we take.
B Ramesh Babu
Prudential will be taken and floating we are not taking it.
Abhijith Vara
Okay. And sir, in the retail portfolio, just one observation is this quarter the bulk of the write-offs have come in from retail portion itself, retail portfolio. So just wanted to understand what are these loans.
B Ramesh Babu
I’ll just tell you. No, no, it is deceptive. If you look at it now, what happens, if you look at our total gross NPA itself has come down to 886 [Phonetic] now. Earlier when we were having money, what we did, so first of all we focused on the corporate. Majority of the corporate book what all is there we have provided. That is the reason if you look at it, so the corporate is concerned not to be provided — yet to be provided is a very small amount. So next that way — we are going step by step with other verticals. So that way this quarter we would have taken few of the accounts in the retail that doesn’t mean saying that these are absolutely unrecoverable accounts. That is not an issue at all.
Abhijith Vara
Okay, sure. Last thing do you provide loan growth guidance and deposit growth?
B Ramesh Babu
Deposit growth earlier we have given the stand to be that. So 14% we have told them saying that annual growth but if you look at it the complexion of that, so overall it may come to 14%. But if you look at it the RAM portfolio is concerned more or less 18% to 20% we are growing because that is an engine which has to propel the bank to take forward. So that Indian stock, it will become difficult for us. So with these constraints on the liabilities also, we are more or less managing to take the ramp book at that 18% to 20%. So that continues. If at all we have a big leeway and we are able to get a reasonable cost of deposit, then we will revise our guidance and all we will be able to take it forward. Particularly, as I said earlier, growing in CIG, it requires relatively lower effort compared to the ramp book. So that is the reason once the lower cost funds are there, we will reopen the tap of corporate.
Abhijith Vara
Sure. Appreciate your response, sir. Thank you.
B Ramesh Babu
Thank you.
Operator
Thank you. The next question is from the line of Prabal Gandhi from Ambit Capital. Please go ahead.
Prabal Gandhi
Hello. Am I audible?
Operator
Yes, sir.
B Ramesh Babu
Audible, audible. Please go ahead.
Prabal Gandhi
Congratulations, sir. Sir, my first question was we have been shifting away from the corporate segment. But on the loadings are not reflecting that, they have been stagnant from last three, four quarters. Why is that?
B Ramesh Babu
First point is we need to revise the statement. We are not getting away from corporate. Okay? It is lying low at this stage/ As and when the composition of the liabilities comes back to the normal stage, it may go back to the corporate. That is not an issue that way. And yields, if you look at it that way, you see more or less the RBI rates, what all are there, they are more or less stagnant now. So under these circumstances, when there is no change, MCLR is concerned, the cost of deposit, what all is there will be automatically passed on. So EBLR is concerned because when there is no change in the repo rate, you will not be able to increase that one. So that’s the reason there is a limitation beyond which you will not be able to do that. So overall, if you look at it, if you are able to maintain these yields at this level, so I can give a part of the credit to the reduction in the corporate also. Otherwise, the yields would have come down. One more thing I will tell you, when we are in a competitive market, getting every loan at 10% odd may not be possible. There can be a mix of loans in different — suppose agriculture is there, it can be 9.5% only, there can be agriculture 9.25%. But I cannot take it in isolation. The agriculture will be reckoned for the purpose of my PSL. If I go and buy the PSL, I have to pay 2% there. So, indirectly, I’m getting 2% plus 9.5%, 11.5% I’m getting. So the compositional advantage, whichever bucket it grows, depends on that. So despite that growth in lower yielding, wherever something is there, because corporate to some extent we have lost, overall we are able to maintain our yields.
Prabal Gandhi
Got it. And sir, what are we doing to improve our key income? That also has sort of remained there despite we increasing the share of retail loans.
B Ramesh Babu
I agree, the fee income, there are different components are there. Now earlier corporate, we were doing the fund based. Now the focus what we are trying to do is, so we have reoriented our focus and our corporate banking unit started focusing on the non-fund based business. So overnight, if you have to shift the gear, it will take some time. Otherwise, [Indecipherable] is there on the job first thing. And second thing, there are third party income. Third party income, which used to be pretty low in the bank, but overnight, again, you cannot press the accelerator button, it may lead to miss-selling and all. So lot of effort we are making on that. So that way we are trying to double that income every year which is coming up. And third thing is there is a hit to some extent, because corporate, if you grow aggressively, the processing charges, what you get will be pretty good. Because you are not going in the corporate at the rate at which you have to do it and all. So you have to make it up in the retail segment, that is why if you look at it overall compared to last quarter also, the overall fee is up despite not getting relatively the same amount of processing charges from the corporate which you are getting. Our focus is on that. So various sets, what all are there, it can be guarantees, third party income, LCs, all these things we are working on that. We will see what best can be done and all, how to maximize.
Prabal Gandhi
Sir, and how do we improve — how are you measuring productivity at a branch level and employee level because that seems to be — how we’ll explain that there are some costs involved which are — which will come down. But how do you measure the productivity at the employee and the branch level?
B Ramesh Babu
Yeah. We have a very structured way of matrix is there, which covers for each branch around 40 parameters. So we will give the target and based on that target, the score will be given there and all, the consolidated position of this for a 100 marks score it comes and each branch will be rated based on the century score of hundred marks. Now, many of the allowances, what they get, they are linked to the score, what they get. If someone is not getting the minimum score what they are supposed to get, they will not get. And this will be reckoned for the purpose of their rating also, year ending, what the rating, they get it, half-yearly they get it and all and it will be useful for the promotions, it will be useful for the transfers, all these will be reckoned. So likewise at the year-end, if you are paying ex gratia to those who are overperforming, these metrics what we have created, it works well and absolutely it has been stabilized, this is dynamic and every quarter we will be changing depending upon the priorities, what bank has and all those corporate priorities, which board fields or management fields that will be dovetailed into this century score model and all and everyone in the branch will be knowing on these lines. So that way, we have a robust laid down and tested mechanism for testing the productivity of the branches.
Prabal Gandhi
Thank you, sir. All the best.
B Ramesh Babu
Thank you.
Operator
Thank you. The next question is from the line of Rakesh Kumar from B&K Securities. Please go ahead.
Rakesh Kumar
Yeah. Hi, sir, good evening. Quite good set of numbers this quarter. Sir just had a couple of questions, sir. So firstly, sir, one, this risk profile of the corporate banking book in this slide number 17, [Indecipherable] BB book from September ’23 to June ’24 and coming to September ’24. So volatility for the time being or how we read this BB composition coming to 28% approximately. If you can help us there, please.
B Ramesh Babu
Yeah, absolutely. You see, there are different circulars which have come from Reserve Bank of India particularly, NBFC for different risk weights on the capital risk weights. So we looked at all those things and what we thought, actually, if you are confining to AAA accounts, the yields what you get and the capital risk what you are maintaining, all these things are not commensurate. And second thing, the deposit cost at which it is growing, the margins are getting squeezed day by day. And many of these corporates with AAA, so they ask for the finest trade, otherwise they can raise the money elsewhere in the market. So that is why we took a call earlier when actually we had a big problem with the corporate, so when the retail engine was not efficiently functioning at that time, so we parked majority of our resources in the AAA, AA, and all. So later, what we thought, when we have strengthened our internal monitoring mechanism, relationship managers, service managers, credit analysts, with all these things, we thought now we are better placed to — because we have further granularized the portfolio also the same slide what you are quoting. Other side if you look at it, the percentage of above 150 also has come down to 2.2 and the average ticket price is INR36 crore. We thought we’ll be able to take relatively better that is a risk where the pricing and yields are better. So that is the reason we were selectively moved to few of the BB-rated accounts also. Overall, so that the margins can be maintained. But with all these things also, if you can look at it, our risk-weighted assets movement more or less it is at 56, 54 that way only running and all. It didn’t cross the roof and all it has not gone to 65 and 70. So within the overall profile, what all is there, we are managing total risk and this is only a tactical shift what we have made to see that the yields improve and where we can manage the risk, those sort of exposures we have taken.
Rakesh Kumar
Very nice, sir. Thank you. Sir just one question if I could ask. This question is pertaining to this gold loan, jewel loan book. So in the non-agri segment, we approximately have INR900 crores in MSME. If I’m correct, can you correct me if I’m wrong, sir? So how that book is growing sir, the non-agri, jewel loan, in the MSME segment?
B Ramesh Babu
No, let me be frank with you, that is not a focus area for us because it is someone comes, an MSME customer, he wants a gold loan, so we cannot deny that one. Our focus still continues on the core MSME only. If you open the tap on that account, this growth in MSME only will come over a period of time will forget the core original MSME. So that is the reason we may be focusing on the retail side and on the agriculture side, MSME is just like that someone requirement is there, he has come. Being the banker, you need to honor, you’ve honored it. One second.
Ramshankar R
Just one correction I just wanted to make. One question was asked on the PCR whether prudential provisions and floating provisions are considered. I had mentioned that prudential holdings. Just want to correct myself, we don’t take either of them. We don’t take prudential provisions. We don’t take floating provisions also. Only NPA provisions are considered for PCR. I just want to clarify.
B Ramesh Babu
Okay, good. Yeah.
Operator
Thank you. Ladies and gentlemen, we will take that as the last question. I now hand the conference over to Mr. B. Ramesh Babu, MD and CEO for closing comments.
B Ramesh Babu
Thank you all for the compliments what you have given, and the encouraging words, is the guidance and encouraging words have brought us to this stage. We will try to meet your expectations. And once again thanks for taking out time and showing interest in the investor call and asking these questions. So from the entire team KVB, seasons greetings to all of you and happy Diwali in advance. Thank you all.
Operator
[Operator Closing Remarks]