Fy19 core ppop was 1105 cr
In 3y it has become 2753 cr (36% cagr)
Our credit loss for last year was only 2.5% despite moratorium & covid 2
This year guidance is only 1.5%…can imagine what that does to RoA
Core ppop now 1000 cr / Q even if we take credit costs of 1.5% it takes us to a great profitability. It is our read that our bank will never post a loss in its life
RoA is 1% & trending upwards. A good number is 2%. Direction is to be taken note of.
Will get to double digit roe before q4. Advancing the guidance to getting there in Q2 or Q3.
Lumpy assets to deal with, couldn’t push it under the carpet.
Retail book is now 1 lakh cr. Mortgage is 33% of the retail & commercial loan book.
Credit card spends increased 20% sequentially
Infra book 6700 cr. 4.9% of total funded assets. Was 22% at merger.
Total customer deposits at 1 lakh cr
651 branches. 10 branches in current Q. 50 in last 1 year
High cost legacy borrowing of 2700 cr paid back in q1. Total now is 22k. Paid back 5700 in last year
Provision coverage ratio at 73% compared to 70% in last Q & 60% last year
Slippages: lower by 20% on sequential basis. Net of upgrades lower by 25%
Trending around long term sustainable targets
One large retail chain group slipped to gnpa that increased gnpa. Already 100% provided for. 550 cr.
Fee income increased 100% YoY. 899 cr. Covid base. Sequential basis increased 7%. Retail fees contributed 92%. Very granular. Fee income from toll & credit card at 68%
Had a treasury/trading loss of 44 cr. Bank proactively tightened limits, reduced treasury books, modified duration of the assft book at 0.84 years
Core operating income increased by 39% YoY. Operating expenses increased 31% YoY. Decline QoQ
C/I at 72.95%. Increased 325 bps QoQ
Annualized Credit costs in Q1 was 0.9%. Annualized RoA was 1%
Capital adequacy is at 15.77 %
Nii growth at 3% QoQ. Nim down QoQ. Lag in passing on rate increases. So we should be in upward trajectory in Q2
No one offs in provision. We see no reason why credit losses should go up in next 3Q. Could be in 1-1.1% range reasonably. Barring unforseen circumstances
Every Q opex will go up a little bit. Depending on disbursals. Could go up marginally every Q from here on. Normal collection expenses
Blended cost of funds in saving account is 5%.
Cost to income or cost to asset high due to vintage of branches. When these branches really scale up from here cost measures will measure up with other banks. Asset side opex should be a bit higher due to product mix but offset by the higher NIMs. Our cost to income in home loan might be 90% since we just started. Credit card cost to income is 130-150%. That’s how businesses are built.
We spend 2-2.5cr to maintain each branch. 650 branches.
As a bank we just started the cross selling journey
Throwing the best offer on the RM screen
If we bring down cost to income by 10% the RoE will jump by 5%. In long run want to be around 55%. In 2 years it should materially come down to 65%
High cost liability should give us 750 cr pbt
No plans to raise deposit rates right now.
We have not passed on the rate increases to customer yet. Comfortable to maintain NIMs around 6%
Tech costs to plateau from here. Tech costs are a bit higher due to vintage of bank. App, cash management, current account management we have been building
For our kind of bank 2% RoA is a bit of an under ball. (Can do better)
Unsecured vs secured is one dimension. Lending has to be cashflow based. Personal loan to infy etc does very well. No moratorium. 2W business is secured but does badly in economic downturns. Evaluate for cashflow. Cashflow is paying you back equity is not paying you back
Wealth management, cash management, toll collection will scale up
Blended costs is 5.2%
37% is linked to external bench marks. 63% is fixed rate book.
We don’t have a 0 balance product. Quality of customer is very very important. Minimum balance is 25k but customers typically bring in 1.8L etc
great questions from @ishanagarwal89 bhai in the concall. Looks like we might hit 10% RoE in q2 or Q3 & exit fy24 with 15% RoE headed to 18-20% RoE in fy26 end
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