Notes from Presentation & concall:
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Opex increased 412 cr. Last quarter: 356cr. The opex would have been 443cr as there was a one time reversal of 31cr for some employee provision. The increased employee cost is due to wage inflation. Increase in other expenses is largely due to technology investment. Opex will not stabilize as we continue to invest but it will not substantially increase the cost to income.
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Credit cost is 140 cr against net advances 21.6k cr. Last quarter credit cost was 123cr.
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Restructured book size reduced from 1500 to 1200cr. Out of 1200cr:
- 271 cr of NPA.
- 61 to 90 DPD: 169 cr.
- 1 to 60 DPD: 340 cr. out of 340cr, 160cr has received 3 EMIs. 2 EMIs received for 140 cr.
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Fresh slippage for this quarter: 296cr. It was 408cr last quarter. Slippage from RL is ~ 156cr & non RL 140cr.
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High writeoff of 130cr. Last quarter was even higher ~200cr.
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NCLT ordered for a meeting with shareholders which is scheduled for 7th september. Merger process will be complete few months before the guided date of March 2023.
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Out of 286 cr of RL NPA from last quarter, 95 cr was written off.
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Credit cost guidance is less than 2%, target is 1.5% for the year which is possible as per the mgmt because q4 credit cost can be less than even 1% as there won’t be RL book. [I personally doubt this would be possible, but who knows…]
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Q2 provisioning should be less than q1 and lesser thereafter. Mainly because of one time increase in provisioning for RL book. Management also commented that the high provisioning is really not required because loss from recovery is less than 40% for CV & almost 0 for SBL as SBL is backed by property.
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CoF is not expected to rise despite the rate hike.
Equitas had a similar restructured book for 1 to 90 DPD last quarter. We can expect around the same amount of fresh NPA coming from the pending restructured loan book in the next quarter.
disc: invested. Will continue holding because I agree with the management that as the RL book going down we will see significant increase in ROA & ROE in the coming quarters.
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