The Federal Bank Limited

Ladies and gentlemen, good day and welcome to the Q2 FY25 earnings conference call of the Federal Bank Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sawvik Roy, Head, Investor Relations, the Federal Bank Limited. Thank you, and over to you, sir.

Thank you, Sagar, and thank you, everyone. A warm welcome to all the participants. We really appreciate your taking the time to join us today. Now, as you're aware, there has been a recent transition in leadership with Mr. K.B.S. Mannion, assuming the role of MD and CEO from Mr. Shyam Srinivasan as of the 23rd of last month. On behalf of the entire bank, we extend a heartfelt welcome to Mr. Mannion, and we are confident that under his guidance, we will reach new heights of success. We have just uploaded the results and our presentation on the exchanges, and in case you could not review them prior to this call, please feel free to call me once this call is over. As always, I'm joined by the senior management and other members of our leadership team to address any questions you may have. I will begin by providing an overview of our progress on key broad-based parameters. Our total business has now reached 4,99,419 crores, with the last one lakh crore added in just over four quarters. This kind of demonstrates a strong foundation for sustained growth. We achieved the highest ever net profit of 1057 crores, reflecting a YY growth of 10.79%, alongside a record operating profit of 1565.36 crores. Our ROA for Q2 stands at 1.28%, with an ROE of 13.65%. In terms of asset quality, we made good strides by bringing down our GNPAs to 2.09%, and net NPAs to 0.57%. Our TCR has also reached a 16-quarter high. Additionally, our NII reached its highest ever level at 2367.23 crores, marking a YOY growth of 15.11%. Our deposit base also saw growth, with total deposits increasing by 15.56% YOY, while total net advances grew by 19.45%, reflecting our strong customer engagement and trust. CASA also showed some solid growth, rising by 11.5% YOY, including a 5% growth in Q1 and 4% in Q2. This positions us among the industry's leaders in CASA growth rate, with our CASA ratio increasing by 80 basis points QOQ. Now, let's move to NR. The inflow in NR accounts has been noteworthy, resulting in a 6.8% growth in NR savings during the first half of FY25, which is a significant turnaround from last year's decline of about a percent and a half. This positive trend spans across our portfolio with an 8.34% YOY increase in NR savings and a 14% YOY growth in FDNR deposits. Our branch banking business remains a strong contributor as always to our granular deposit growth, demonstrating improved attrition despite a challenging deposit environment. Notably, we have achieved this growth without significant concessions on deposit rates, diverging from the broader industry trend of elevated rates. Meanwhile, our wholesale banking business consistently generates stable profits through a diversified revenue base. This strategic breadth mitigates reliance on asset-led revenues alone, strengthening our overall financial resilience. With this, I'll hand it over to our NDN CEO, Mr. K.J. Smani. Over to you, sir.

Thank you, Sowit, and good evening, everyone. Welcome to this post-results call. As this is my first call in the current role, I'll be leaving the substantive part of the heavy-lifting discussion of the quarter's results and its analysis to our capable team. However, I would like to share a few thoughts on the transition. It has been a month since I stepped into this role and about seven weeks since I joined the bank. I had the opportunity of working with Shyam for three weeks during this period of three weeks of transition. and it was invaluable for a smooth transition. I would like to extend my heartfelt thanks to Shyam for his contributions over his 14 years tenure in the bank. I know Shyam will be logged into this call as an investor now, and thank you again, Shyam. I must say that the teams here have given me a very warm welcome, and I feel both optimistic and confident about the path ahead. Over the past weeks, I have embarked on what I call listening tours across the country, meeting with senior zonal teams, bright young managers in the firm, and holding open house forums with a very large cross-section of our employees. These sessions have given me deep insights into the team's aspirations and also the exciting opportunities to work with for the bank. In fact, the energy of our teams has been remarkable and I must admit that their enthusiasm has rubbed off on me and I feel younger. In addition, I have been conducting deep dive sessions with each business unit and functions to understand our current position and identifying growth opportunities. I have also met with customers and key stakeholders and partners and I expect to compete with this structured outreach program somewhere around mid-November to third week of November. These engagements are helping me shape my understanding of the company, businesses, and will be foundational to a strategy refresh that we as a team are working on, which we will present to our board somewhere in the month of December. And this, in turn, will guide our future discussions with all of you. On a lighter note, I have also encountered many people eager to set new targets for me. Jokes aside, I understand the external expectations around key metrics that are used to evaluate banks and the aspirations you hold for this bank's future. Of course, that's just the beginning, identifying the metrics. The key lies in the plan on the how side of it. I am pleased to say that our team is ready to push forward on this journey. We are aware of the broader challenges facing our sector and recognize that the path may not exactly be what we thought of it a year ago. Nevertheless, we remain confident in our direction. Together, we are constantly thinking about the next level, as we all call it, and we have already begun to implement new strategies. For example, we are placing renewed focus on CASA and deposit growth supported by our newly secured AAA rating on the deposit program. Our goal remains to be the most admired bank and we are committed to adding momentum to this vision. But of course more on this and details on this in the next meeting we have. We are grateful for the support of our board and the trust all of you shareholders place on us as we embark on this journey. I seek your continued patience and support as we work towards an exciting future from here. Thank you and we are now open for questions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone phone. Agar, can you mute all the people?

Somebody's got some line open and I think there is a line call.

Can you just check this? That's from the management side. It was from Mr. Mahesh R's line. I've muted that line.

Please do. Please do mute the lines, yeah?

So we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Marug Adhijaniya from Nuama. Please go ahead.

Hi, good evening. Congratulations, Mani. Basically, I have three questions. My first question is on deposit growth. So the total deposit growth in the quarter was 1%. How do you plan to accelerate it in third and fourth quarters, given that competition is still high? Your deposit cost hasn't risen much quarter on quarter. So, that's of course positive, but from your own, how do you take it forward? That's my first question on deposit cost. Deposit growth, sorry.

Hi, this is Shalini here. Good evening. Hi. Hi. At this point in time, as you would have noticed, and you split it into two parts, if you look at the CASA growth, we've maintained the momentum that we've had on CASA growth between quarter one and quarter two. We are amongst probably the top three or four in the private sector banks that have announced results on a QONU CASA growth. So our focus remains on ensuring that we're able to get primary bank status with customers, both existing customers and new to customers, driving greater CASA growth through them. And this is true both for the wholesale banking side of things as well as for the retail side of things. On deposit growth, which is term deposits, and I'll call this really the hardcore term deposits, as you rightly pointed out, we've calibrated our cost in such a way that we don't really kind of pay abnormally high rates, we peg ourselves very clearly against a competitive set of banks that we want to peg ourselves against and make sure that we don't take in high-value deposits at a cost which is, to some extent, not sustainable in the long run. So keeping our cost of deposits in mind, keeping both the requirements of CD ratio and LCR in mind, but with a higher focus on the CASA growth, which is kind of core to the business, we do believe that we should be able to withstand any liquidity concerns that may potentially come up in quarter three and quarter four. We will continue to be competitive on certain tenors. If you look at some of our tenors on the website, you'll see that there are one or two tenors that we always remain competitive on from a rate perspective. And we direct our distribution capability to make sure that we get more new funds from customers in those. So there is no one single kind of strategy that will work, but it's a combination of Casa, both existing to bank, becoming primary bank partners, new to bank, more acquisition, keeping ourselves competitive on one or two tenors at the maximum on interest rates and calibrating our growth in that way. We remain confident that we will be able to, you know, demonstrate the success of this in the coming quarters, Marukh.

Okay, fine. And in terms of fees, there have been sharp movements in quite a few buckets, right? So, general service charges have gone up a lot. Parabanking has gone up a lot. Any special things you need to call out here? I mean, how has the traction been so strong in these buckets?

So I'll try and address that and maybe, you know, Harsh and Venkat may be able to add something. First, on the general service charges, as you know, from 1st of July, there has been a change in the fact that penal charges are now reflected in this rather than in the penal interest portion of it for primarily impacting or rather working through our business banking, small and medium enterprises, and commercial banking. So probably not a like-to-like comparison strictly on that note, Maruk, but you'll see this for every bank. That's the first point. Parabanking is core to our business, very, very clearly something that we're very, very close to, and we've been driving higher productivity. You may have recognized that I think it was in May and then in June, we announced two new corporate agency partnerships with Tata AIA, And with Bajaj Alley On's Life, two new corporate partners were added to our portfolio of life insurance. That has definitely given us a kind of more distribution capability, more products, and therefore more income. So we remain committed in ensuring that quarter on quarter, our core fee income shows an improving trend. There are still many opportunities out there, and we will continue to work on those. But these are the two main kind of highlights I would give you, Maruk. Yes.

Okay, and what would be the impact of penal interest on NII this quarter in terms of how many basis points of margin?

It would be close to about 7 percent, Maru. Seven bits. Seven bits, sorry, seven bits. What we should understand is the NIM, if we had not moved to this new system, actually our NIM has moved up from 3.16 to 3.19. Whereas the reported NIM is now 3.1. That's the seven lists which I explained. If you are looking at like for like, our NIMS has actually improved.

Okay. Makes sense. Makes sense. And just the last one on LCR, sorry, what is the LCR during the quarter and how do you manage it when guidelines change?

During the quarter, the average LCR was 115, Haruq. And in terms of how do we manage it, there are multiple levers which we need to pull in terms of managing LCR. It's about the tenor of the loan, the profile of the loan, retail versus high value, the mixed change, the callable, non-callable. So there are several factors which we are working on. There's some disturbance in the line.

Operator Sagar, there's some disturbance coming on the line. Is it from our line?

No, that is from Maruk's line.

Okay, Maruk's line.

Okay, Maruk. So it's multiple levers which we are working on, and including what Shalini said earlier about increasing the CASA and the deposits, which will continue to be an area of trust. So a combination of all this is what we are confident about. of maintaining and improving the LCR level.

And, Maruk, you might notice that the average has gone up from 112 to 115 for the quarter, the LCR.

And if I may add one more thing, Maruk, the future guidelines, they're still draft guidelines. There's some feedback that has gone back to RBI through IBA and directly. Some amount of maybe, you know, we do think that the treatment of digitally enabled accounts may need a little bit of review at the RBI level. Not sure what will happen, but Happy to, you know, kind of look at the potential impact of that. But I think what Minkit said, calibrating the distribution to, you know, between callable, non-callable, short tenor, long tenor, many levers are being worked on.

Okay. Thank you. Thanks a lot.

Thanks, Maruk.

Thank you. Our next question is from Kunal Shah from Sati Group. Please go ahead.

Yeah. Hi. Congratulations for good set of numbers. So the first question is on the divergence between the loan growth and the deposit growth. So how should we... look at it going forward this quarter, it has widened a bit. So overall, would it be fair to assume that we might slow down a bit on the loan growth side, calibrate with respect to some of the high return focus areas, or maybe we are confident of pulling back the deposit growth? Yeah.

Yeah, hi, this is Harsh here. Two things. One is obviously we're pushing the deposit growth rather than putting down the loan growth. Loan growth will continue to pursue wherever we see growth opportunity without impacting asset quality. So that will be our focus here. That hasn't changed much. And we remain confident of continuing what we had earlier guided for. The focus will be more on increasing our deposit mobilization, CASA as well as total deposits.

Like Shalini clarified earlier, CASA has grown in the last two quarters reasonably healthily. And we'll continue that, and we'll put some more focus on the term deposit side to reduce the gap in which to get deposit tool.

Okay, okay. And secondly, with respect to FedBank financial services and the investment norms, So what would be our thoughts in terms of conducting that business? Because most of the lending can be done at the bank's end as well. And given being a group entity, any early thoughts or maybe any discussions out there on this?

I think it's too early. Just now it's in a draft stage that RBI is – it's a draft circular. And RBI has sought comments till 20th November. So we intend to make our representation as would most of the industry participants who are impacted by this. Let's see how it pans out. Depending on how it finally takes shape and form, we will decide our course of action. Just now, too early to comment on that.

Sure. And just last one with respect to asset quality. So quite a robust one with respect to the slippage run rate being low, credit cost is continuing at the lower levels. Any segments wherein we are seeing any kind of stress on a low base, we are still growing our MFI pool, some of the high-yielding products, but would we look at the recalibration of the proportion of the high-yielding given the operating environment currently?

If you notice, growth in the high-margin products has always been cautious, including in the MFI piece. While I must say that in the MFI piece, we do see heightened slippages, But to us, we have been kind of protected because the states we operate in, more than two-thirds of our portfolio are the southern states. So to that extent, we have selected geographies which have been quite favorable. Secondly, quite a few steps taken in terms of how we go ahead in terms of some of the suggestions made by MPIN were something which we had implemented quite some time back. And that is the reason why, while the slippages in the MFI sector has increased, it is well below the levels which we see in the industry, significantly below.

And Kunal, just to add to what Harsh said, you would have seen that our total slippage ratio is even below what we had in the year before. It's around 0.73% of assets, which goes to show that the asset quality continues to be 15, and credit cost is well within the 29, 30 bits. And for the full year guidance, we are not making any change to it.

Okay. Oh, yeah. Yeah. Thank you.

Thank you. The next question comes from Param Subramanian from Nomura. Please go ahead.

Yeah. Hi. Thanks for taking my question and congratulations on the quarter. Firstly, again, question on asset quality. So, in the MFI portfolio, are we seeing any of the FLDGs being invoked and how do we account for it? And also, if you can speak about the asset quality in the credit cards portfolio that we have.

Just again, on the first point, you said FLDG and MFI.

Yeah.

No, no, it's not. Our GNP numbers are what our actual numbers are, what we have reported. There's no impact of that on account of any FLDGs because that's not permitted, and we don't have that either. So GNP numbers that I was talking about, which has marginally increased for us also, is at the gross level itself.

If I can add, Param, to CC and PL. First of all, I think all of us recognize the fact that both credit cards and personal loans are a fairly small percentage of our overall portfolio, extremely secured, and they've been secured for a very long time, and they've pivoted towards unsecured only recently. Having said that, within that ambit, yes, we've seen a slight uptick in our slippage rates for both credit cards and personal loans. both the organic one and the ones that we do through some of our partners. It's not material enough to call out because in the overall scheme of things, you know, it's still a very small percentage of the overall portfolio. We've been also benefited by the fact that we've had better than expected slippages on our home loans, car loans, and legal loans. Having said that, given the fact that we've always had a cautious approach to these assets, we have calibrated it. As an example, I can tell you that sometime in May or June, we introduced a new scorecard for our entire personal loan booking, and the new scorecard is much more discriminating and differentiating, and therefore it slowed down some of our disbursements, but we believe that's a good thing to do in PLA. Credit cards, we continue to remain confident that our portfolio is under control. We do believe there are still growth opportunities over there because it's a product that you can easily control much more effectively through effective line management. Summary of it is, yes, flight uptake too small in the overall scheme of things. We do believe we have effective control in place. As an example, we continually do interventions on PL through, as an example, the recent SCOCA that we've done, CC credit line management. So that's what I would say, Param, for CC and PL. In all cases, there are no FLDGs. There are no FLDGs or any other kind of criteria.

Perfect. Shalini, thanks. That's really helpful. If I heard correctly, so our asset quality in MFI is tracking better than the industry, and we expect that to continue.

That is how we are looking at it. Just to give you some insights, against the industry approval rate of 45%, our approval rates are 33%. So we have been quite conservative right from throughout, whether it's multiple lenders, overall indebtedness, or we do not lend at all to delinquent customers. And we have a single loan to every single customer, so there's no top-up loan. So those things have actually helped us out in terms of maintaining asset quality.

Okay, that's really helpful. My second question is on the credit card embargo. So where are we in that process currently?

Parama, I'll take that question. So you're aware of the fact that our co-brand credit cards through FinTech Partners, RBI has come back and said that we should pause issuance. Since then, we've been working internally, obviously, also with our partners and with RBI to make sure that we are completely, you know, the framework is completely compliant in all respects. While we do believe we were quite compliant. There were areas that RBI had requested us to review. We have done that entire review, but we are taking it in steps. The first thing we want to do is we have one model, which is the model we have with an entity called Scapia, which runs on a third-party service provider, M2P. That, we believe, is closest to the model that RBI had in mind, and this is based on conversations we've had with RBI. We're very close to crossing the T's, dotting the I's on every aspect of what RBI has requested us to look at, In the imminent couple of weeks, we should be able to approach RBI with the confirmation that we've done all that is required to be done on this model and post that release will be for RBI to review and come back. But our conversations with RBI have indicated that we are on the right path. A couple of other modules that we have, in particular the OneCard FPL, may take a little longer because there are some more changes that we need to do to the configuration to ensure that it is completely secure. in line with RBI's directions to us. That may take a little longer. I'm not able to tell you the timeline because we're still working through some elements. But we do believe that, you know, the model that we have should be the first one that I said should be in RBI's hands very shortly. Thereafter, Param, I'll have to really wait for RBI to come back. But the conversations and discussions with RBI so far have been quite productive.

Perfect. Perfect, Shandy. Really helpful. If I can just please in one question. So, on the NR deposit, right, over the last two years, we've been seeing softer growth for you as well as, you know, at an industry level. Now, going ahead, you know, when you expect global rates, say, to come down maybe faster than in India, do you think this sort of number picks up going ahead, say, and give support to your deposit growth going ahead? How do you look at it based on your experience?

In fact, it's something that was always troubling me personally as well as a lot of the people. A couple of years, we've been seeing a lot of slowdown, as you rightly said, in NR, primarily driven by the opportunities they've had for overseas investments, other consumption requirements in the Middle East and other things. But as Shobik said in his introductory remarks, happy to note that our remittance volumes have gone up and our, you know, in our particularly non-resident savings bank account has gone up quarter on quarter. Come out of marriage things, one, We've increased the pace at which and the number of accounts that we open in the Middle East. We've deployed a few more capabilities like online account opening, including with attestation processes that are more robust. We've increased the number of relationship managers we have. In fact, I looked at some data recently, and we've seen at least a 15% to 20% uptake in the number of accounts opened itself. Thank you. So we've also looked at opportunities outside the GCC Kerala corridor because we have now branches in other geographies in the north of India where there is a non-resident population. That, you know, we've re-designated branches as NR branches. We've increased our ketone street, et cetera. That's giving us something which reduces to some extent our dependence on the GCC Kerala corridor. So that's a second. The third intervention we've done is our existing customers, we've, you know, revamped some of our products. For example, we have a fairly – good product called NRI EVE, which we launched last year, and that has started picking up good momentum. So several actions, and we're seeing, you know, the mojo is coming back, as I say, in NR savings. We do believe, in fact, just as we speak, we've looked at some data on market share. On normal NR savings accounts, NRE accounts, which is both savings and term, our market share has actually been going up quarter on quarter, month on month. So, yes, Param, a long answer to a short question, but thanks. The part that we don't participate in is FCNR. We are very conscious of our strategy on FCNR. We don't, you know, kind of pay high rates and take FCNRs. We don't believe that's the right thing. That's a more opportunistic thing. Our focus has always been how well can we do our NRE savings account and NRE term deposits. The other point I'd just like to last point that I'd like to add is, When there is a declining rupee, much as I think that's not an appropriate, that, you know, overall there may be other implications of it, but the NR customer tends to react positively to a weak rupee and increases its remittances to India. So, to some extent, that may be a topical or a tactical advantage, but we take advantage of that also.

Yeah, perfect, perfect, Shalini. Thanks really, and full congratulations to the entire team on a great quarter. Thank you so much.

Thanks, Param. Thank you.

Thank you. The next question comes from MB Mahesh from Kotak Securities.

Please go ahead. Good evening. My name is just one question for you. Given that you have not seen the bank, one area where we kind of constantly found it difficult for federal has been on the margin side. If you look at most of the large private sector banks and even regional banks, margins are much higher as compared to what federal has delivered. Some initial thoughts on how are you seeing this part of the P&L at least?

Yeah, Mahesh. Yeah, like I said, of course, I am aware of this as a parameter. But there are several levers, right? I think to improve net interest margins, there are several levers on the asset side and liability side. And I think we will deploy a mix of these strategies. Like I said, a detailed strategy discussion we will have maybe the next quarter. But I'm quite clear even improving CASA mix is an effort in that direction, right? So, I think there are multiple levers. We will make sure that we are using all the levers and I am fully aware that this needs to get better. So, you know, of course, the first thing everybody thinks of is doing the high yield unsecured loans. But, you know, given the environment, we have to be cautious about that. So, we have to use A mix of levers, not necessarily only high yield assets as a strategy to get better. But let's talk more about it in quarters to come.

Perfect. Just one additional question. At the leadership level, is there a need for further strengthening or you think that you are quite comfortable with what you have today?

There will be areas of talent gap and in areas that we want to focus in the future. I am in the process of accessing that. And we may add people in specific areas where talent is necessary. On a broad basis at the senior level, I don't think there is a significant infusion required of any magnitude. Okay.

Question to Harsh. If you look at the, while you answer the question on MSI, is it at this point of time sitting in the SMA book that we could potentially be surprised in the next quarter, or the overall book of the portfolio, including the SMA book, looks fairly comfortable across the bank right now?

If you look at the SMA book as well, apart from the slippages which we have seen, there is definitely a mild uptick, but definitely far lower, like I've guided in the industry, we are far, far lower. Like I said, we are not in a state like a Jharkhand, Jharkhand, but in six regions, no state. Two-thirds of our portfolio resides in the southern areas, geography, and our credit filters, not now, but all along has been a little conservative, which is what is helping us. We do see this MSI issue, hopefully, kind of being sorted or getting stabilizing in the next two quarters, hopefully I don't see in this period any significant uptick in the subsequent quarters on this time.

So just to clarify, in your assessment, the current run rate of slippages should fall?

Yes. There will be a marginal uptick, but nothing more than that. Perfect.

Thank you. Thank you.

Thank you. Thank you. The next question comes from Piren Engineer from CLSA. Please go ahead.

Yeah, hi, Tim, from the quarter. Just had one question on gold loans. You know, what percentage of your book comes through FinTech Partners, and how are you thinking about RBI circular last month on irregular gold loan practices? Are we making any operational or process changes in that regard? So just some qualitative and maybe quantitative commentary would be good.

The share of our partners' share is largely organic. About 90-odd percent would be organic for us. So that's not a challenge. That's number one. So while there are certain guidelines which have been issued, both in terms of how we view our partnerships, but it's not something which will be disruptive for us. Coming to the RBI... letter to all the banks on this one. We also, every bank has to kind of confirm and get back to RBI on all these points which they have highlighted, confirming whether it's on end use, whether it's on renewal and all those things. We don't see an issue in terms of not being able to comply with it. The good part is that industry has to align to that part and this will ensure a level playing field and that places banks and other players who are kind of doing this and have been doing this in a better position to leverage on this. So there is something which we are doing at this point in time, and as directed by Arvi, I have to do this by end of quarter.

Okay.

Just to clarify, the fintech gold is honestly extremely low in our overall. Yeah, it's up 10% as, you know, Harsh said. So for us, a very large percentage of it is actually originated by our branches.

Okay, fair enough. But just even then, given that let's say it's only the credit appraised in valuation when the fintech guy goes to the borrower's house, the fintech does the valuation of the gold and therefore this person can... We are not doing doorstep. Oh, you're not doing doorstep?

No, we are not doing doorstep. So the fintech model is what exactly? Sorry?

If the fintech model is in doorstep,

No, it's not.

Operator, can you just check the line quality?

Yes, ma'am. So, when the management is answering the question, could you please help me with the line? There is background noise coming from your side.

Does it answer your question? Do you have any more queries? No, my question really was what is the FinTech model if it's not a doorstep, you know, delivery model?

Sourcing. Sourcing a distribution model that has valuation is done in front of the customer at the branch itself.

Okay, got it, got it. I'll take it offline. Thank you so much and wish you all the best.

Thank you. Thank you. The next question comes from Rekin Shah from IIFL. Please go ahead.

Thank you for the opportunity, and Mani and sir, wishing you the best for your tenure ahead. I will look forward to you outlining the strategy next quarter. Just a few basic questions. The first one, if you look at the wholesale banking self-funding level, is there a further scope of optimizing it from current 33% level? And if we do the peer benchmarking, is there a possibility to improve that? That's number one. Number two, wanted to clarify that yield on advances have further decelerated sequentially. Is it only due to the change in the penal charge regulation or anything more than that? Thirdly, it is pertaining to the one-off gain from the sale of stake in ECPL. If you could quantify the gain coming from that. That's all from my end.

This is Harsh here. I'll take the point. The first one about being self-funding. you are at 33% of self-funding right now, and there's definitely scope for more. And if you will see that in the last eight or nine time quarters, we have been trending upwards. So we are confident that there's enough and more scope left to move that much further, and more so given the focus on deposit mobilization. On your second point, the NIM has actually increased.

cannot decrease as what the impact of the yield is, like you said, Rinkin, is only because of the penal interest rate. And the last point was on the equivalence quantity, approximately around 9 crores utilized in Q2.

Perfect. Thank you very much.

Thank you.

Operator, I think the line problem is not just necessarily the speaker's problem, is it? Coming from our line?

Yes, ma'am. Now I can see there is a static which is coming from your line. You want me to reconnect your line?

Where is the static coming from?

Yeah, go ahead.

Okay, go ahead.

So I'll just disconnect this line and I'll reconnect your line.

No, no, no. It's okay. It's okay. Some laptops and stuff from vicinity.

Right. So see, now it's not coming that much. So we'll move on to the next question. The next question comes from Jai Mundra from ICICI Securities. Please go ahead.

Hi, good evening, and thanks for the opportunity. So, first question on deposits. So, is there any specific reason why, you know, deposit growth, especially PD growth was, you know, flat earlier versus earlier trend and also seen in conjunction with the high low growth?

Sorry, I think I'd, yeah, so thanks. I'll add, I mean, I covered some of it when Maruk was saying, but I'll just repeat some key aspects of it. I think the line is giving me some trouble, but thanks. So to your question, Jay, if you split it into two parts, insofar as the core CASA is concerned, you would have seen that Q1Q growth has been pretty good. In fact, we've, you know, cross-market players who have announced the results amongst various private sector banks. We rank somewhere quite good on the Q and Q growth. A part of it has been driven by the fact that we have been focusing a lot more right now to make sure we have core transaction banking to our corporate banking customers, for primary bank to our retail banking customers, as well as driving more productivity through our branches to get more accounts and get more accounts funded with a larger amount. We've also added a couple of new products in the previous quarters, the benefits of which we're getting in this quarter, like the NRIE product that I spoke about, the Stellar that I spoke about. NR Savings has also shown an improvement. So to If I split it, CASA is definitely something that we've improved and we will continue to improve. Term deposits, we've never been a player who's kind of, you know, looked at price as a weapon to get more funds. If you see our cost of deposits, we've kept it quite moderate and controlled over the quarters. And the data is there on the investor pack. Yes, there are one or two tenors where we remain competitive. We try and drive more productivity and more funds into those tenors because ultimately term deposits is a pricing play. So we want to make sure that we calibrate it and really do it from a customer retention and acquisition perspective. Do we need to do more? Absolutely. I'm sure we all agree that we need to do more. I'd like to make sure that we focus more and more on getting a good growth on CASA, both current and savings accounts, both resident and non-resident. Some deposits will continue to be tactical interventions that we do based on rates. So, yeah, especially the higher-end purchased kind of deposits is honestly tactical. If we believe there is a need, we can always do that. But we'll do it more on an opportunistic basis.

Sure. Thanks. I mean, in line with that, the CD ratio, the LDR is now, you know, the way we calculate it is now above 85%. So incrementally, should one look at it that now the CD ratio has peaked and incrementally deposits, I mean loan growth and deposits should grow more or less hand in hand?

Yes. Yes, that has been our strategy and that has been the plan. The gap we will ensure is narrowed or eliminated completely. But that, you know, as Harsh mentioned in response to, I think Kunal or one of the earlier questions, the intention is not to you know, necessarily slow down our loan growth. We do believe there are opportunities, good quality opportunities. So it's a question of making sure that these two keep pace with each other, Jai.

On last clarification, you said that we are maintaining our guidance on growth. Just to clarify, the guidance was 20% or 18 to 20% growth?

Just wanted to know. 16. Around 18%, Jai.

Sure. Thank you and all the best.

Thank you.

Thank you. The next question comes from Nitin Agarwal from Motilal Oswal. Please go ahead.

Yeah, hi. Good evening, everyone. Hi. We are excited to have you lead the bank to drive the next phase of growth and profitability expansion. And best wishes for the future. Thank you. I have two questions. One is if I look at the margins, again, the two banks that you have worked with are at the two extremes when you compare amongst the top private banks. So while there has been a very strong growth in high margin lending products over the years, but that has not reflected in lending ease over the last