HDFC Bank Limited

Q1 FY26 earnings conference call. As a reminder, all participant lines will be in the lesson only mode and there will be no opportunity for you to ask questions after the brief commentary by the management. She will need assistance during this conference call. Please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. And now at the conference, O. M. Srinivasan Vaidyanathan, Chief Financial Officer, HDFC Bank. Thank you and over to Mr. Vaidyanathan.

Thank you. Thank you, Neera. Good evening and welcome to all the participants today. We have Sachin Genish, our CEO and MD with us this evening. We'll hand it off to him for opening remarks, then we'll get back to you. Sachin, over to you for opening remarks, please.

Thank you, Srini, and thank you all on the call to join us on a Saturday evening. Let me just start off with a little bit of what we see on the macro. You all know this much better, but let me summarize. The global situation remains pretty volatile with a weakening growth outlook amid terrorist-related and geopolitical uncertainties. Within this context, India remains a relatively better place, supported by a stable macro environment. For this fiscal, we expect GDP growth to sustain, supported by pickup and improved performance of domestic factors. Normal monsoons, income tax cuts that you saw in the last budget, benign food inflation as you have been recently seeing the prints on inflation, all go very well for domestic demand, especially during the festive season. Concerned policy and impetus, which we have been seeing right from January, February of this year till until recently, support sustainable growth. Coming to our performance, let me just recap as to how we traversed this over the last 12-18 months. Last year, we have grown our average deposits at a healthy pace of 16% year-on-year. and continue to gain market share as we have done in the past. However, we slowed down our average advances or AUM assets under management growth to about 7% last year in alignment with our strategic objectives to bring down the CD credit deposit ratio from 110% at the time of merger to about 95% as we speak today. This rate of growth on the aquifer management has improved to 8% in the quarter just ended, which is the June quarter of FY26. Our growth engines are well geared to grow, and as we move forward, we expect our loan growth to continue to improve from here and remain confident of growing our advances as the system rotates in FY26 and higher than the system in FY27. The growth enablers, apart from balance sheet growth, remain customer-centricity, technology, and our people. Some of these aspects, I think, during the course of this quarter and probably the next half of the year, I think we shall be talking more about it as we unveil some of the initiatives that is underway in the bank. As mentioned in the previous earnings call, both the CFO and Bhavin did mention, and you can sort of recall some of the transcripts of the last earnings call, quality rate changes impact the loan side to external benchmarks, while deposit side takes longer to factor it in. You know, as they probably would have mentioned, a large part of our asset side of the balance sheet is floating in nature. It's somewhere around the 70%. It was the library side is more or less fixed in nature. So this would be a headwind in terms of when the rate cycle is on a downward trend. This impact depends on the pace and depth of the rate cut. You have seen that in the results just announced. While we may see quarterly fluctuations in margins due to this lead-in impact, We expect to stabilize it over a period of time. Our asset quality, one of our main USPs, remains healthy, positioning us well for growth in both assets and deposits as liquidity and demand improve. During the quarter, we carried out the HDB Financial Services listing process, wherein the bank also guided us with some stakes, and which eventually culminated in the stocks being listed on 2nd of July. We thank all the investors who participated in this Fed IPO. Earlier today, the board also announced an interim dividend of Rs. 5 per share, and they also recommended to shareholders the first ever bonus share issue in the ratio of 1 is to 1. Trini and team will probably give you more details as questions come about from all of you. So until then, I would like to express my gratitude to all our employees for their hard work and performance. in a very challenging environment. As he moved from a, from a, you know, they managed the slowing down of the engine last year. Now, to get back into its momentum as we have laid out as a strategic objective, it requires a lot of courage. I think they've done extremely well and we are proud of it. And a great gratitude to our shareholders who have supported us in all our time. And to the board for their leadership support and their strategic guidance. So thank you all. On the call for your support as well. Srinu, over to you.

Thank you, Sashi. If you don't mind, you can open it up and proceed. Nira, please open and get into the queue, please.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their custom telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use answers while asking a question. Participants, please respect the two questions per participant and kindly join the queue for a follow-up question. The first question is from Naras Maruka Janya from Nuwama. Please go ahead.

Yeah, hi. Good evening. So, I have a couple of questions. Firstly, on your margin. So, just wanted to recap on your method of repricing on EDLR. So, following a rate cut, in how many months does the book, the full EDLR book reprice or at least the repo book? And just wanted to make sure that the EPLR linkage is around 65-67%. So that's my first question. And my second question is on growth. Obviously, there's hope that it will recover, but it's only slowing in the interim. So, what will trigger growth from current levels, right? Because in the first quarter, even ADFC Bank's growth was subdued and so was everyone else's. So, what will trigger growth? Because it's been falling over the last two quarters for the sector. Okay.

Thank you. Thank you, Mara. Good evening. Let's talk about the margin and you asked about the EBLR and the pricing and so on. You know that the February price change on EBLR and the April change, yes, both of that for the most part would be swimming in. The June change of 50 basis points will not be swimming in. In fact, the subtraction will not be in because it takes one month to three months, right, at least one to three months. for pricing in. Some are monthly resets, some are quarterly resets, and so on. So, we'll have to wait and get there. So, two of those are done, and the third one happened in June. We'll have to wait for that one. That one is for the past to play out. So, that's one of the margins from an EVLR yield impact. That's why you see the change in the yield on assets. is about 20 basis points or so. No, 20 is 13, but you have 7 basis points. The last quarter had that one timer, so it's about 22 basis points or so. There's a change in the quarter, and so it has to come through from there. That's one on the margin. Second, on the growth we touched upon, I'm sure Sashi will jump in to talk about it, I think we already talked about it in the preamble in terms of all the, both the monetary policy support in terms of the rates, reduction that puts more money in the hands of certain consumers with certain products and also the yield going down and also the fiscal policy which also provided relief in terms of tax benefits and the overall the market inflation both full inflation and the total inflation below that 4% target is 3.7 and some are even below. The food inflation is extremely low or nothing. All of that all goes well for consumption demand to pick up faster, both in the urban segment as well as in the rural segment. And with the onset of the festival season, we do expect that there will be a greater fillip in that area. Our approach is not only one segment, but while we will be So, we are seeing some amount of healthy demand from the rural side.

the segment which we are catering to is already factoring in better monsoon and so we are seeing some amount of positive inquiries coming in at our ground level there so there is an opportunity at that front in terms of potential growth in the recent past in the urban consumption obviously the premium side is growing there has been a little bit of a fatigue But we expect the festival season, which will start shortly, I mean, whether it is the Onam or the Ganesha Kutti, etc., a fair amount of festivals will start to kick in in the country from August onwards. or even earlier, I think that mood will have a reasonable amount of impetus and that could be a good trigger as well. As I mentioned, you know, the fact that interest rates have come down, the fact that people would have now started to see savings arising out of the fiscal larges that was given in the last budget, I think all that will play in with the convergence of the sentiments and the moods which normally the Indian festivities normally bring about. On the MSME side, I think the sectors that we normally cater to, as I said, despite the kind of uncertainties on the Paris front, I think we have seen a fair amount of up-fronting of of exports to sort of take advantage of this potential tariff rate and so we do see a reasonable amount of buoyancy in some of the good customers in the MSMEs segment as well which should continue even as we get into the second quarter or the second half of the year. As regards I think they have been enjoying in the last couple of months a reasonably benign interest rate and obviously the system, since being flush with liquidity, has the rates being offered to these W and above corporates are pretty attractive. we may be, you know, to some of the good corporates which we are comfortable with, we shall be participating in some of them for their working capital demand as well. We're not seeing anything great on the capital, private capital side as yet, but we shall surely participate in, as she needed mention, across all our segments, whether it's rural, whether it's retail, whether it is MSME and whether it's corporate as well. As regards to mortgages, that too has seen intense competition from the public sector enterprises. But having said that, I think some amount of... you know, participation considering the brand and considering the fact that we are also trying to see how to optimize our cost of processing on that. I think we should be able to pick up some of the volumes during the test period as well. So, we are, you know, we have a clear-cut round-up strategy in terms of how we will achieve our momentum from now on. As Rishini did mention, we are coming from a very low growth for the reasons that I just mentioned, that we had a compulsion to bring down our credit deposit ratio rather quickly, which we did successfully. reasonably well last year. But now from that low, we have already seen the momentum, although small, in the first quarter. I think it's playing out well and we should see this sequentially moving up over the next three quarters from now. Thank you.

Thank you. Thank you. Next question is from Manupadikenshah from IASL campus. Go ahead.

Thank you. Just had a couple of questions. The first one, notice that the CRB loan classification has been regrouped. So how are the portfolios now allocated to different business heads? Has there been any aging there as well? That's the first question. The second one is on the asset quality. Just wanted to clarify what is the NPA recognition policy for any one-time settlement offered to the standard customers. And thirdly, on the credit cost, while it's still very, very benign, it has moved up from 29 to 41 basis point on net credit cost basis. Where do you expect this to settle in the interim? Thank you. Okay, yeah. A few things. One, on the uses of the portfolio. You will see on page 11, you will see that there is a small and mid-market which is there as a separate category and the emerging corporates is part of corporate. That's one. Second, there is one other reporting that is there which product-wise advances which is part of the separate relief which is also financial metrics relief that is given, that is done. That also has got a similar break up for the three time periods which is last year, last quarter and this quarter. But that's where it has moved, right? And there are some agri-book and agriculture book and some SLI book which are part of retail which are for retail. This is mostly the retail line. That grouping you will see in the product-based advances list that we have provided. You will see that what has moved from the... But has the business location to different ads also been regained along with this? If you could highlight that. So, Abhishek, the respective product... Again, the respective product has, right? Like, for example, the SLI head is continuing to be the same SLI head. It is reporting into the retail franchise which is being headed by Argan. So, the respective businesses have remained the same.

They will report it to a different hierarchy who report it to Shashi Gujarati. That's the only change that will happen.

No ground level staff has changed in this. Got it. NPA. What is the second one? NPA. You do a settlement. Settlement. We do a settlement. One time settlement is not part of the NPA. We follow the norms. It's an NPA. There is RBI regulations around those which will be following that. In most cases, there will be some exceptions to it, but in most cases, it will be following any change of such will necessarily have a declassification downgrade. Whether that turns into an NPA or not will depend on each case by cases, but largely any change in that one-time settlement would lead to an NPA recognition. Got it. And lastly on the credit costs, mood up slightly. So how does that kind of behave in the next 12 to 24 months? Credit costs, normally you know that the June and December quarters are slightly elevated, which is what we agree, largely driven through the agricultural portfolio based on the crop season, it moves up between June and December. while I won't venture to give you one particular number but we have been trying to tell that over the last few quarters that the credit costs continue to be denied and there will be some point in time it will reverse to mean and what does that mean is a moot point and how long it takes is also a moot point but as of now it continues to be denied and healthy. Thank you.

Thank you. Next question is from Manav Pranav from Bonstein. Please go ahead. Hey, good evening.

Thanks for taking the question. Two questions. One on the Kata deposit. The bank hasn't really gained Kata market share or even lost some share in the last four to six quarters. up a stellar three or period from 22 to 23. So what's really changed and of course more importantly, what will reverse the trend? The second question is on your lending franchise. Can you share what percent of your 100 million customers would be loan customers? And I ask this in the context of HDB, right? Which claims almost a 20 million customer franchise and has low temperature. And I was wondering if there's a chance of a future conflict where both entities target the same customer, right?

Pranav, let me answer this and then Srini can sort of complement what I'm trying to tell you. So number one is on let's face it, when we merged with HTFC Limited in July 23, there was a day zero adjustment of about 3.5% from where we were. So a 41 to 38 is or 37 and a half 38 is where we settled down from that. If you look at the what we needed to do right from the day zero of the merger, we had a massive effort to reduce the credit deposit ratio. It was a combination of of trying to slow down the engine on the loan side and also try and step up the deposits to not only, you know, cater to some of the incremental reserve requirements that was necessitated because we took in more liabilities from the ERP-21HGLC limited balance sheet. but also provide that business-as-usual incremental reserve requirement as well, where we needed to keep that amount of its supposed convention. And mind you, we had a kind of an environment which was rather challenging, where the liquidity was very tight from the time we merged with HTSC Limited. When you have this scenario, you need to give clear directions in terms of what their priorities are. When you have branches and when you need to give clear directions, the direction that was given was you need to get deposits so that we can ultimately ensure that the primary objective of bringing down the CD ratio was comes down. So, we did not sort of provide any nuances to say that we also want good katha, etc., because, etc., It's not something that you can ask anyone to say get Kata. Kata is a resultant of multiple ground level strategies in terms of how you engage with customers, how you fulfill the financial needs of a customer, how you upsell multiple products and when you upsell, there is a lot of historical evidence and empirical evidence to say that with more and more products that you observe, you will get your capital balances. So, we were very clear that you will have, the priority is to get deposits and that is what the signal was given. So, whilst, which is reflected in the fact that we got in deposits, we got in good amount of market share, we got in at the prices, the market is staying amongst the large peer group entities and I think they have done extremely well and where we are at this juncture I think going forward with the liquidity environment being of the deny the fact is that now we have some amount of breather on the credit deposit ratio and the liquidity in the system and in the bank we probably will have and this year in FY26 we will Our directions to the frontline team is to now start to upsell more and more products, fulfill the needs of what a customer wants, step up engagement and use great customer experience which we will talk about now or even in the coming quarter in terms of how we are going to be creating a great delight. which will eventually lead to getting back some of the mojo on the low-cost deposit franchise as well. So, this is part one, and you will start to see this. Of course, for a large balance sheet, this will take a little bit of time, but I think we will cover it up, and you will see the needle moving slowly but surely on this particular front. The second part of this question was on the... HDB, you know, we have maintained this. I think the segment that they created too is about a notch or two below that of HDFC Bank for the kind of rates that they offer in the market for products. There is definitely, you know, why would a customer from HDFC Bank who has a much Lesser rack rates would even go to an HPV for their incremental requirements. Obviously, it has to be a notch below, and that is not a segment that we are catering to at this juncture. I think we have enough to penetrate our own existing custom base and also the kind of segment that we are comfortable with from a product program basis. So, even if one were to do a kind of a de-duplication between the customer sets, the overlap would be extremely minimal, etc. So, as he speaks, and Shini, if you want to add something, you know, the segmentation will continue to be distinct between the bank and HDB for a long period of time. There is... zero or very minimal overlap at this juncture, that will continue to stay for a long period of time.

So, one other aspect of what you asked is also, Pranay, if I even share to say, in our customer base, cost is the maximum penetration from a customer base, almost call it 15-20%. car. We have 24 million cars. It is one of the highest penetration in that. So every other product, we can call it anywhere between 5 to 10 to 12% kind of. So it is a long runway in terms of penetrating into our own customer base for various cross-sell options. Okay, very clear on the RISC TV one. Just a quick follow-up on the CASA one. I was more wondering if any of your recent actions, I mean, if things have coincided with you slowing down password credit, for example, right? So, I was just wondering if there's something even more immediate or a side effect of what you have done, apart from all the other stuff that you talk about in the customer experience instead of driving the long road of CASA.

No, I don't think, if I've understood you right, are you saying that the slowdown in CASA is an impact of the slowdown in the corporate segment?

Yes, I was referring to that.

Not really. See, the thing is, corporate contributes to just a very smaller segment or proportion of our CASA. Yes, it is. It is volatile. It has significant variations in the fourth quarter of 2020. every fiscal and hence the outflows happen in the subsequent quarter. But is it something that has a significant impact because of that? I don't think so. Frankly, you know, our CASA emanates out of the kind of engagement that we do to the retail And that, you know, maybe let me add a slightly other nuance as well. The segment that we cater to on the retail side is the middle and upper middle income segment. This is something that we have always maintained over a long period of time. And, you know, and this is, I can see about 687 people on this call. And I have about a few people in this room. If I were to take this as a microcosm of how a retail of a middle and upper middle income segment will behave, all of us would like to maximize our returns or optimize our returns. So, you know, this segment is, you know, the propensity of all of us to move and manage our funds is going to be far higher than what you would do to probably in the mid to lower segments. And that will also have a nuance, have a slightly amount of impact in the near term for some of the institutions like us. But that's not something that, but I still am very optimistic that the medium to long term, if we get our customer experience and our upsell strategies you know well at the ground level I think we should be in a position to get back some of the gains that we lost on the low cost deposit.

Thank you.

Thank you. Next question is from the line of Kunal Shah from Citigroup. Please go ahead.

Hi. Thanks for taking the question. So in annual report also you have indicated that you have been taking singles in FY25 and now positioned to go for boundaries. So any particular segment, the priorities which have been set out apart from what we have indicated in general, the strategy which has been there, any key segments which we are looking at. And this quarter when we look at the number of employees, they have gone up by almost 4,000. So, is it like we have ranked up employee addition or it is to do with the lower appreciation rate in the first quarter? Otherwise, in the last full year, we have added hardly like 1,000 odd employees. And this quarter, we have added 4,000. So, is it like front-loading, lower appreciation? What is leading to that?

No. See, on the employee front, I think Srini and the team will give you greater color. But I think these are the impacts of the branches that we opened in the fourth quarter of... last year, so that is coming about now. At least a larger portion of that incremental hiring has come there. The balance, some portion will be in technology teams as well.

A lot of people, we have added in the sales force.

that's part of the approach both other sales force as well as the branch sales force have added and getting those branches to demand yeah yeah that is as I said that's the thing I mean see the thing is I'm not sort of here to say that I want to lay off anybody and we are very clear about it because we are blessed to be in a sector and in a country where the demand of supply and we have a long runway Frankly, even with, you know, since you mentioned about the fact that what I've spoken about in the annual report, apart from the singles and heading into the boundaries, I've also mentioned that there are some exciting tech initiatives which are underway, which I may sort of spell it out, not now. I just gave a teaser in the annual report, but at the opportune time, which is just a few months away, we will sort of unveil as to what we're talking about. it will have ramifications in the capacity, but that's not our primary objective. Our primary objective is customer experience and we are quite excited about how that is going to do about it. But even then, even at that point in time, What we foresee or what I foresee is that we will have employees, we will grow our resources, but it will be more and more in the front end, more probably in technology, and less and less in the back end operations or back end enabling functions, whether it is operations, credit, other enabling functions of these banks. So the way I see it is that we will have, going into the future, more and more people at the customer facing and maybe revenue generating, and that is a vision that we have. So adding a 4,000 and quarter is just tactical in terms of, as Srinu just mentioned, because we've had the opening, I don't know how many guns we opened in the fourth quarter, and we're just manning it now completely. These are all low-end employees where, which is necessary from a branch operations and sales perspective. What was the second question?

The segment of growth, if any specific segment.

No, that I just mentioned, you know, a few questions ago, Kunal, I mentioned about the fact that where we see Pockets of opportunities in terms of some of the rural segments, the MSMEs, some of the MSME segments, even corporate, even though the rates are going to be very fine, but we still have, now that we have liquidity, I think we will sort of, you know, unlock some of it. And even retail, even urban consumption. I believe that with the festive season coming up, we should see the premium segments also and unsecured segments moving up as well. Mortgages, pricing has been, like the corporate side, the pricing has been rather fine. But we have our, we still believe that we can compete there. and there are some pockets of opportunities that we are sizing up as we speak.

Even in this quarter we did see approximately 1000 people migration from back office to front office to augment more part of the process of the migration.

And lastly with respect to margins, Maybe what would be the average duration of the deposits maybe in ALN, maybe because of the CASA classification doesn't make it very clear. But if we look at maybe the average duration of deposits, the way wholesale deposits proportion is also inching up, now it's closer to almost 80-odd percent. When do we see means of say Q4 level getting reached? Would it be by end of this fiscal or would it take time after the repricing is over and we see the benefit on deposits also flowing through? Plus maybe the borrowings also getting repaid over a period of time.

I will start on the deposits first. We have a significant portion of our deposits which are called SIPs. 20-18 months, call it mid-15-18 months, they are lost. So that's the kind of where you have it in the front and you have it in the back, but then the most of it is centered around that kind of a time period. So that's very important. So for the entire cost of funds to play out, it takes a few quarters. That means on renewal, on rolls, that's where it plays out there. That's one. From an overall margin you ask whether there is a delay here. It will take a few quarters. It depends on the how fast and how much the rate changes. So that we like to wait and see and there is always that June loss and something that one didn't expect that there will be a 50 basis point change in June. And so these kind of things play out. So I will urge you not to look at quarter to quarter at all because that is not how we can manage because There is a certain thing from the other side that will automatically reprice. And on the managed side, which is the deposits that we manage, there will be a lag effect both from managing the pricing of the policy change and the rolls that happen. There is a time frame to it. Yes, as we exit the year, there should be more stability. There is no more rate change. But then we will have to go through that process again. time goes by as to what is going to happen in the forthcoming policy meeting one of the agents will have.

Thank you. Next question is from line of Rahul Jain from Goldman Sachs. Please go ahead.

Thank you and good morning everyone. Our question is on the loan growth. So, can you give some qualitative color on how would have been the growth in this versus the new loan that you would have undertaken in this quarter? How's the pace picking up there? And of course, we always have, you know, time lapse between the dispersal growth and the loan growth. So, if we were to start looking out the next few quarters, how would that start looking out? Can you just share some color on that? Sure. There is no sense in mortgages if it is consciously down. The reason being that when there are certain institutions particularly on the public sector side which has a rate of anywhere 7.1, 7.3 or there about, they are not competing at those kind of rates. And we are both looking at rates which are 50-80 basis points more than that to provide there we provide better service and get a holistic relationship of the ability to have multiple products and we are okay to be sober there because that's what we want the full relationship not a product as such getting pushed up this kind of side and as it relates to non-mortgages the disclosures have been quite strong and we have seen that 9% or so in the retail assets year on year And there are some seasonality, agree season and so on, but overall those have been reasonably good. We are not at 9.6% rate of growth, there is far higher room to go up to our own standards of where we are used to growing on those roads. then that's on the loan's H&E ratio.

So, thank you.

And so, I can assume that by the time we get into second and third quarter, the stock of loans should also start closing the gap in disbursement growth. And the disbursement growth has been stronger in non-mortgages. Shouldn't it also have had a stronger fee income? But this quarter, we didn't see fee income being that strong for some years.

Yes.

The fee income this quarter has been subdued to the third-party distribution fees, right? That's where it is lower. Typically, June quarter is lower than March quarter. But then even March, June versus June, the third-party distribution fees have been subdued. And again, we believe it is spanning through the year that this quarter industry-wide, we did not see much of that third-party distribution fees coming through or distribution fees coming through there by the fees. But the overall outlook for the full year in terms of the distribution remains quite optimistic and quite strong. Okay. So, social growth and loan growth in second and third quarter should start getting similar. Is that a fair assumption in non-mortgage ETFs? No, I don't want to give one particular outlook, but then certainly it depends. I think, as you alluded to, to say that as the onset of the sexual demand, we do expect a good amount of uptick there. and we are positioning ourselves to take advantage of that coming through in the next few quarters. Alright, just one last question and more additional question on cost to income. Of course, it has improved versus last year, despite the balance sheet reorg. But what's the sense we should get? Where would this number start to head towards in the next couple of quarters? Do we have a limit that goes down to below 40? Because we are adding employees, we are adding branches, etc. And what is the challenge? or you know so should there be a profile to improve and bring it down group below 40 i'm putting a number there i know i know you don't comment on the number but still just get some direction or that you know manager would want to prioritize growth so therefore cost income is not an immediate priority cost to income is always a priority uh even at the at the rate of growth that we aspire to do We are at a normalized rate of 39.6 or something. But having said that, I would say that quarter to quarter certainly is not something that we look at to manage because there will be times when there will be spend required to be supported. That is, let it be the card spend or let it be some of the festival spend and programs and marketing that needs to be supported. So, we will have to share of that where we need to do. we should look at an annual where we do but certainly we take it down and keep improving on that.

Thank you. Next question is from Abhishek Murata from HSBC. Please go ahead.

Hi, good evening and thanks for taking my question. Sashi, you said that there is a bit of a breather in CD ratio in the system and liquidity in response to one of the questions earlier. I just wanted to check from a CD ratio perspective, now where would the comfort zone lie? Earlier I believe it was somewhere between 85 and 90. But now in the new scheme of things, better liquidity, you know, since you're looking at growth revival, would you be comfortable with a relatively higher CD ratio? See, I'm going to take that shape from a P-D ratio. We are at 95, 96, our score was 96, we are at 95, we are about on P-D ratio. Right. While quarter to quarter, again, even for this year, it can be different. But in the medium term, we would envisage to get the P-D ratio to be at the level we were prior to the merger, which was about 87 UTAs. So that is why between 85 and 90 is the range that in the medium term is expected to be there. And that certainly comes in when you have the deposit growth, security to the loan growth and you keep moving on that, will come. And that is how that FY26 grow in line with the system and FY27 grow faster on the loan growth with the system. Gets you in the medium term to around the kind of level 9.5%. Yeah, I think the thought was that actually with now a little bit of leeway, if you target something a little higher than 8790, then you can actually grow a little faster as well and use all the deposits that are coming in because at the headline level, you are getting great deposit market share incrementally. So that's what I was thinking that is that an opportunity now.

Yeah, theoretically, I agree with you, Abhishek. But as I said, it will have a certain amount of gradient. That's a thought process. I think we are in that kind of, we are aligned to that kind of a thought process. But obviously, we need to also see appropriate demand at appropriate pricing and appropriate risk premium as well. So it's something that we have to manage all these aspects as we move along. But I think we are all geared up to ensure that we don't miss our opportunities. And yes, if we need to sort of, you know, have a direction downwards but not necessarily be tied down to a particular CD ratio number, we are going to be happy to do so. But I guess the clarity will come about as we move to the second half of the year because, as you know, whether in any year and more so in this particular fiscal year, I think the last part of your growth will come in from the second half and probably more veering towards the fourth quarter of this year. So at that point in time, I think there will be enough clarity for all of us. But in the meantime, we are ensuring that the engine is veering up towards a trajectory which is what we have stated up. And whether it is reverse hills, whether it is across multiple segments, whether it is whether it is re-examining the market opportunities or the competitive intensity and trying to see how we can, now that we have liquidity, how to sort of bat on the front foot. I think we will be doing that and that will be very visible to the world at large.

Sure, that sounds good, Kashi. And the second question is on this contingent provision of 17-year growth. This was a little, you know, over and above the, you know, whatever you used to win for games for. So is this specific to some account or is this some policy that drives you to make or that drove you to make this additional provision? What was the reason to make the additional 70,000 crore provision? Okay. I would say we should look at what is contingent provision, right? As the name suggests, it's contingent on occurrence or non-occurrence of certain events, right? And this does not represent any uniquely observed event. changes in the portfolio. These provisions run through models on various pools of assets under certain probability scenarios setting various factors. It is intended to provide resiliency and essentially strong reserving position now and for the future. I think there are 51 basis points prior to this. Now, the contingent portion is about 57 basis points of the loans portfolio. So, it is done at kind of various levels. Pools of assets runs through various probability models and then that's a reserve in that region. Perfect. And finally, can you give some color on, you know, asset quality and, you know, also about asset quality in PLCC and secured retailers?

uh just sort of an update compared to you know last quarter now what do you see and how that is while she may probably give some numbers if at all he does but i can tell you that that continues to be our greatest uh uh what shall i say our usp i really i think that um X Agri, because X Agri is more cyclical in Asia, which you see a little bit of a blip in the first quarter of the third quarter. It continues to be extremely benign, whether it's growth NPA level or even in terms of the credit card. I mean, look at the credit card X Agri also. It's sequentially been pretty much stable. So, we are extremely happy and even the outlook, as we just mentioned, is pretty much benign and so even the so-called counterfeiters with the buffer all the contingent provisions has no correlation to any pain points that we are likely to have virtually there is none it is just building resilience into the future and that's been a philosophy that we have been patronizing for a long period of time and I think this is something that we have thought of.

On the particular number, if you look at the NPA on the retail segment excluding Agri, it's at about 82 basis points. Last year, same time, it was 82 basis points. So, it's been pretty steady at that level. So, over a year, 82 basis points. That's the GNPA on this retail segment which contains cards, peel and all of those types of products other than heavy. Right, so essentially you are saying there is no real stress and it's stable. The asset quality there is stable. Exactly. Thank you so much. Thanks and all the best. Thank you.

Thank you. Next question is from Manav Jintan from Autonomous. Please go ahead.

Hi, good evening. Can I ask you a couple of detailed questions from your 20 years of The first one is last quarter you had said that you have about 500 billion of expensive trial limited deposit debt that will mature in 2026. In your 20 years your long term debt maturity for 2026 is about 1.5 trillion. I wanted to understand what that other 20 years cost duration and what the opportunity is there in that trillion for excluding So that's the first one and within that also, you know, how do hedges play a role in helping you offset the name pressures? The second question I have is on PSL. If I look at the achievement rates, it has come down year on year probably because of the one-third basing added from HDFC Limited. If I think about another third coming next year, You know, there is some kind of rolling shortfall building up in certain areas. How should investors think about this? You know, would RBI make a call on this at some point and then it is what it is? You know, or can we rudently put something in our expectations or names? on that call, how should we think about it? Thank you. So, since the NTS is a consolidation of all the subsidiaries, so it's not really, if you look at any numbers there and try and look at that from a standalone, it's not going to really make sense. I would encourage that you don't try to find data points from a bank perspective in there, you're not going to be able to match it and it's a completely different accounting standard as well. We'll pick it up offline to see where we can, how can we get there on that. All the subsidiaries are added in that In summer one kind of non-e-limited the borrowings you know any opportunities there to do any liability management exercises or something that can help you reduce your cost of concept? If you see the borrowing that we do give a break up. We constantly have something which comes up for maturity which we have done. Last year we did have some opportunity to prepay or try and advance some maturities which we have taken through. And we'll keep looking for this as and when they are available, we'll do that. But even the rates where they are in the market, these opportunities may not necessarily be as much in this current year is the way we think about.

And there are two bits on this concept. Even if there are opportunities, you have to take a fair value hit. if at all there are any early redemptions of some of these long-term debt as well. So that is something that you need to factor in. But if I were an investor, I would, you know, why would I even want to do that if I'm holding a very attractive coupon on the other side? I mean, that's the reality, and that's what some of the investors have been saying. I'm happy not to keep holding it to astrology. This is so... Sometimes, you know, while on paper, I would love to do that, but in practice and in reality, there are very few takers on such early redemptions, in fact.

On the PSL, you touched upon the PSL. Yes, the PSL is an actual management book in terms of how we react. At the aggregate level, the target is 40 and if we have more than 40, we try to see how to get it to 40. There is always a buy and sell on the CSLC that happens for actually managing. And again, with market availability, after 80 years, it provides an opportunity. But yes, I think they are referring to the annual report of the CSL status of the F525 status. Yes, there were sales policies which exceeded the buy in the year. So, we were at the aggregate level.

We always... Even as we speak, I think we are reasonably comfortable at an overall price. Despite adding one third or a portion of the earth's value to your feelings.

The only thing we always look for to get is the small and marginal farmer and the micro segment. which is much more data, even availability is limited in the market, but we are not aware of any regulation change that provides leave or an opportunity space, we don't know. But yes, those two segments are there all the time, and even the last year that you referred to, we were about a percentage point or so in the bank or cover. Okay, and can I slip in one more? Will 2Q be the draft of names for the bank? given that a lot of the asset repricing will come through by tomorrow. It will depend on if there is another rate cut coming or not during the year. Assuming no more rate cuts. And we should expect that to happen subject to repricing on the lab. It should come through. So logically, yes. But there are a lot of other people on the call. We don't want to give guidance of any form or manner because there will be a lot of moving parts in there. The deposit cost is a massive deposit cost. And the deposit costs do not reflect yet fully pricing in of the policy rate change. And you know that the deposit pricing, particularly I am talking about the time deposit, savings also is the same, but for good amount the time deposit pricing is more or less maintained parity. across various peer players in the system. So it is not just about one moving. You will have to see whether the co-hosts are moving.

Having said that, I sort of mentioned in the past, libraries are more fixed in nature. So even incrementally, if our incremental libraries come in at a lesser price in the stock, It takes a long time for the stock to run off. I mean, the modified duration will be about a year or 1.3 years. So, you have to wait for that. And that is the reason why you will, and rightfully, that's what even you have alluded to. You will have a little bit of a trough. All things remain the same, assuming no incremental changes. A little bit of a trough in the coming months before it starts to pick up and stabilize to the where the liability benefit folks will catch up with the transmission that has already happened on the asset side.

Sir, I urge to look at these things annually. I'm supporting it even in our last one call.

Thank you.

Thank you. Next question is from Manav Piran, engineer from CLS India. Please go ahead.

Yeah, hi team. Congrats on the strong results. Most of my questions are answered with a couple of follow-ups. Firstly, Sridhar, when you mentioned that credit costs will normalize, it's a matter of when and not if. I'm just thinking which segment will result in this normalization because corporate isn't likely to worsen, secured retail is fine and unsecured will only get better. So why should we assume that credit costs rise in future? Again, it's a question of overall credit costs in the industry or at the bank remains pretty low. When I say reversion to mean, It is simply a statistical model. That is why I do not know when and I do not know how much. But if you ask a credit expert like our chief credit officer, which I think he is alluded to a couple of quarters ago in one of his investor calls, that yes, across all the segments, it has been pretty good and benign. It started maybe a year ago in the lower segment like the microfinance. I am talking about the industry. It started around that. And then it did not find its way into the other segments like retail segment, SME segment, wholesale segment and so on. So again that is a question of rent, right? It's not something that just moved from one on a quarterly basis or a two-quarter basis it didn't start to move across. It depends on when it does and but across all segments there will be some kind of a diversion to be made. there's nothing on the horizon at least in the foreseeable future that we see no no no okay okay that's good and then secondly um in terms of fixed lending products like car loans personal loans etc how much have we and our competitors cut incremental disbursement interest rates back It's very difficult to gauge that because there's a large segment there and different players play in a different way. So it's very difficult to gauge what if everybody has cut and not. First quarter is a bit slower. If anything, you'll find some of these competitions playing out as the festive season picks up in the next quarter. Okay, okay. Fair enough. That's it from my end. Thank you, Harshi. All the best. Thank you. Thank you all.

Thank you very much.

Thank you very much. Participants, we have come to an end of the time allotted for the call. I would now like to hand the conference over to Mr. Vaidyanathan for closing comments.

Okay. Thank you all for participating today. If you have any more questions, queries, comments or whatever you need to talk, please reach out to our investor relations team which are anyway used to reaching out if required. We will be happy to engage them as well. Thank you. Bye-bye.

Thank you all. Thank you very much.