HDFC Bank Ltd (HDB) 2016 Q3 法說會逐字稿

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  • Operator

  • Ladies and gentlemen, good evening, and welcome to HDFC Bank Conference Call for the results of Q3 FY16, presented by Mr. Paresh Sukthankar, Deputy Managing Director, and Mr. Sashidhar Jagdishan, Chief Financial Officer. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes by the management. (Operator Instructions) Please note that this conference is being recorded.

  • I now hand the conference over to Mr. Paresh Sukthankar. Thank you, and over to you sir.

  • Paresh Sukthankar - Deputy Managing Director

  • Thank you. Good evening everyone. As usual, I'll walk you through some of the key financial parameters for this quarter and we'll jump into the questions thereafter.

  • So, for the quarter ended December 31, 2015, net revenues were INR9,940.7 crores, which was an increase of 20.7% over the corresponding quarter ended December 2014. In terms of the breakup up of that, 71% of net revenues was net interest income. That net interest income was INR7,068 crores, which grew by 24% on a year-on-year basis. That growth came from an average asset growth of 28% and a net interest margin of 4.29%. That NIM of roughly 4.3% was sequentially up about [70] basis points. It was 4.2% in the September quarter, but is lower year-on-year because the December quarter last year NIM was at 4.4%. Other income, which is the balance 29% of net revenues, grew to INR2,872 crores, which was a growth of 13.3%.

  • On the operating expense side, OpEx increase was 21.7% to INR4,204 crores and the core cost-to-income ratio was at 43.7% as against 43.4% in the corresponding quarter of last year. The core cost-to-income implies that I have excluded the bond gains in working out the cost-to-income, otherwise the ratio would have been slightly better.

  • Provisions for the quarter were INR653.9 crores, consisting of specific loan loss provisions of INR601.5 crores, general provisions of INR49.9 crores, and other provisions of INR2.5 crores. So that's roughly INR602 crores, INR50 crores and INR2.5 crores. And that is against INR560 crores in the corresponding quarter of last year, which consisted of specific loan loss provisions of INR487.6 crores, general provisions of INR62 crores and other provisions of INR10.6 crores, this was in the corresponding quarter ended December 2014.

  • Net profit, as I'm sure you're aware, was INR3,356.8 crores, which was an increase of 20.1% over the corresponding quarter of last year.

  • On the balance sheet side, the total balance sheet size was INR6,87,892 crores. This was up by a little over 28% from INR5,34,855 crores last year. Advances growth, loans and advances grew by 25.7%. Deposits grew by 26.5%. And of those deposits, the current account growth was 29.7% and the savings account deposit growth was 20.6%. The current account -- current accounts outstanding as of December 2015 had an element of one-off, because they were -- we were a banker to a tax-free bond issue, which was opened at that point of time. And therefore, there were some transient short-term current account balances, which boosted the current account growth. If you adjust for that one-off, then the current account growth was closer to 23%. Both these numbers, of course, compare fairly favorably vis-a-vis the system loan growth, which was at 10.6% and deposit growth in the system, which was about 10.2%. Of course, if you add the commercial paper growth in the system, perhaps the overall credit growth was probably somewhere between about 12.4% or so, somewhere between 12% and 13%. So we've clearly outpaced the system, both in terms of loan growth and deposit growth. Our fixed deposit growth, of course, outpaced our CASA growth and that was at 28.5% and the CASA ratio as at December 31 was at 40%.

  • We've added this year so far, till December, 267 branches. If you look at it on a year-on-year basis, in the last 12 months, we've added 628 branches and that takes the total branch network to 4,281 branches in 2,505 cities. Finally, on the asset quality front, we saw gross NPAs at 0.97%, which was as against 0.91% in September of 2015, that's the preceding quarter, and as against 0.99% in December of last year. So roughly flat on a year-on-year basis, roughly 2 basis points better on a year-on-year basis, and about 7 basis points higher on a sequential basis. Total restructured loans were flat at about 0.1%.

  • Finally, on capital adequacy, our cap ad was at -- total cap ad was at 15.9%, Tier 1 CAR was at 13.2%, again these are marginally better than the preceding quarter, in the September quarter. Those are some of the key financials. I think we will start taking your questions right away now.

  • Operator

  • (Operator Instructions) Mahrukh Adajania, IDFC.

  • Mahrukh Adajania - Analyst

  • My first question is on FCNR deposits for next year. So how would you manage liquidity there as in -- how would you arrange to redeem those and what would be the impact on balance sheet growth? And I will ask the second question later. I mean after this.

  • Paresh Sukthankar - Deputy Managing Director

  • So, as far as redeeming the FCNR piece is concerned, there are two elements. One is of course the overseas leg, where we have the asset, which is where the customers have borrowed and then place the FCNR piece. There is roughly match funding, which had been -- so we had borrowed in foreign currency to be able to lend to our customers. So that roughly [$1.9 billion] or so would be both on the borrowing and the lending to the customers, is more or less balanced, was more or less matched. Obviously, the amount which was then placed by our customers as FCNR deposits here, which was roughly [$3 billion] or so. That we would have to substitute with either other fixed deposits or other bond borrowings in terms of the infra bonds or other liquidity that we generate between now and October.

  • So this is something, which as part of our normal annual increase, whatever liquidity we budget for as an increase for the loan growth for next financial year, we will be taxing this in, given that this is something which would be due only sometime in towards the end of October.

  • Now, of course, whether in between there is any other plan which comes into -- at a system level to retain or to get some of the FCNR deposits back, that's something which we don't have visibility to right now. But that's really where we are in terms of planning for that expected outcome.

  • Mahrukh Adajania - Analyst

  • And my other question is on NPLs, I heard on TV that there was an increase in provisioning on one corporate account. So that was just an increase in provision, right, not an increase in NPLs, because probably that account is already NPL?

  • Paresh Sukthankar - Deputy Managing Director

  • Yes. This is actually completely a meaningless sort of data point. I think this was in response to a question whether, as you all aware, there was this asset quality review done by RBI. And the question was, whether we had any impact of that. And I clarified that there was no incremental or new NPA or no recognition issue at all and there was nothing which was pointed out to us which needed to be classified as NPAs, which we hadn't already classified. And that in one of the account that we had already classified, there was a requirement to make an extremely small, I mean single-digit crore incremental provision, which had to be made between now and 2017, which of course we've already made.

  • So, I mean, it's not even -- forget material, in many ways I would say it's negligible. So that is it. There wasn't -- even for the provision piece, it was negligible and there wasn't any new NPA recognition required.

  • Mahrukh Adajania - Analyst

  • And any color on slippages this quarter, means whether there was any geographic bias or any segment as such?

  • Paresh Sukthankar - Deputy Managing Director

  • So, if I looked at the wholesale book first of all, this quarter held up very well. So actually slippages on the wholesale book were low. But on the rest of it, the segments which contributed, the largest contribution -- again, we are talking about within that base, I am not talking in absolute terms, it might not have been very large, but if I look at the various segments that Agri was a large contributor. After that business banking, we saw some slippages. And we also saw some increase in NPLs in the credit card portfolio, which was more to do with not increased slippages, but a difference in the way the count of NPAs is calculated from -- based on a change in regulatory prescription. So, these were the three contributors to the increased NPLs in this quarter.

  • Mahrukh Adajania - Analyst

  • And those aren't geographic bias or any such thing, right, it's just general all across?

  • Paresh Sukthankar - Deputy Managing Director

  • There were some pockets on the agri piece, but no major concentration. But there was some slippages there.

  • Operator

  • Prashant Kumar, Credit Suisse.

  • Prashant Kumar - Analyst

  • Sir, my question is related to the retail loan growth outlook for your Bank. So you have been growing at a very healthy pace over last couple of quarters now, growing at almost 30%, compared to system loan growth of 17%, 18%? So, basically that means that you have been gaining market share at a very healthy pace. And if I look at your market share, then it's already at close to 50% in cards, almost 40% in car segment as well. And a similar percentage in personal loans. So just wanted to understand that in this context, is it sustainable to gain market share at this pace and like if other banks are getting aggressive, then can some of these gains can reverse? So, sir, just your thoughts.

  • Paresh Sukthankar - Deputy Managing Director

  • So I would say that certainly the overall retail lending business, especially in the last three or four quarters has been increasingly competitive. The number of banks who are focusing on retail and increasing their focus on retail has been increasing. And the aggression shown by some of them, whether it's in terms of pricing or payouts has also been increasing.

  • So, despite that somewhat challenging environment, we've been able to either maintain or increase our share on the back of a number of initiatives that we've been taking, whether it was a whole range of the digital initiatives, which certainly increase our attractiveness and the convenience that you provide to our existing customers. The fact that we've added distribution over the last couple of years and have increased the distribution of all our retail asset products into each of those new branches. So, we change processes, our turnaround times have come down sharply. So, for a variety of reasons, we've been able to outpace the system in terms of most of the retail loan product disbursements.

  • As far as, whether this is sustainable in the light of increased competition, I think -- well, we are not targeting a certain increase in market share. All we're saying is that as market leaders in many of these products, we try and balance our growth with what we believe is reasonable pricing and a reasonable margin, therefore, within our credit appetite. At this point of time, we do believe we have the brand distribution, the relationships with intermediaries and the use of analytics to be able to do this effectively. And fortunately, I think the underlying demand in some of the retail loan products has also been slightly healthier this year than what it was last year or the year before. So we remain sort of optimistic or cautiously optimistic about the retail business.

  • Operator

  • Kaitav Shah, SBICAP Securities.

  • Kaitav Shah - Analyst

  • My question was related to the employee count. Essentially that's been increasing at a much faster pace than your branch increase. So, could you just give us a sense on that and the fact that still if you look at cost to assets income, that's not really improving too much?

  • Paresh Sukthankar - Deputy Managing Director

  • So you're right that in the last year or so, we have substantially increased the staff spend. Some of this was a bit of a catch-up from the previous year, where we had been virtually flat in terms of the staff increase. And some of it is that even after we've done that catch-up with some of our businesses, some of our distribution increases requiring and the volumes that have followed thereafter requiring incremental staffing, we've done that more. So, actually if you look at -- the total staff increase has been almost 8,000 employees, which is what -- about 11% or so.

  • So to your question, is this sort of something that we believe we will maintain at this pace, probably not. This little spike which we saw was a bit of a catch-up, but would we continue to see some increase in staffing, not just related to the branches, because remember the branches are just one part of our growth or our investment, which requires staffing. If you look at the rest of the balance sheet growth, you look at some of our transactional businesses which have grown, if you look at a lot of the digital initiatives, if you look at some of the specific rural initiatives that we have done, if you look at our sustainable livelihood initiatives, most of those have required additional staffing this year. And while, therefore, at this point of time, we don't expect to continue to add staffing at this pace, we will remain in a more, where we are investing both in terms of infrastructure and distribution, as well as people.

  • Kaitav Shah - Analyst

  • So, is it fair to assume that this is because more of [weird] deepening or penetration and as a result you're having more employees on the ground, or is it that you're facing increased competition and as a result maybe --?

  • Paresh Sukthankar - Deputy Managing Director

  • Either which way, since a lot of this is customer facing business sales kind of staffing, it's certainly reflecting in the higher growth that we've been able to achieve, whether it is just because we see that as a larger opportunity or whether this is responding to the competitive pressures. Certainly, in terms of the back-end, in terms of the processing and support functions, the staffing growth has been much, much lower than what it has been at the front end. So productivity improvements, the benefits of digital over a period of time, in terms of the back end, would also help us to maintain overall staffing.

  • Kaitav Shah - Analyst

  • Just one data keeping question. What would be your slippages during the quarter, sir?

  • Paresh Sukthankar - Deputy Managing Director

  • The net increases in the gross NPAs were [INR427 crores] for this quarter.

  • Kaitav Shah - Analyst

  • What were the gross additions?

  • Paresh Sukthankar - Deputy Managing Director

  • Gross additions were [1,551], reduction was [1,124], upgradations were [317]. and therefore, write-off were [434]. And therefore the recoveries [677] and the net additions were for [427].

  • Operator

  • Seshadri Sen, JP Morgan.

  • Seshadri Sen - Analyst

  • I have a couple. The first is on capital adequacy, and I see your Tier 1 CAR has moved up. If you could, A, give us the risk-weighted assets and what would explain this pickup and longer term, do you expect your capital consumption to be slower than it has been in the past, because of lower loan growth, higher profitability?

  • Sashidhar Jagdishan - CFO

  • So the risk-weighted assets as of December were INR5,00,340 crores. In terms of the Tier 1 increase, so Seshadri, one of the reasons why we've seen a bit of a pick-up in Tier 1 capital ratio for December quarter is, number 1, RBI had come out with revised guideline on the risk weights of home loans. So there is a bit of a respite there. And balance is because some securitization contracts expired, which had a fair amount of credit enhancements. So when you release the credit enhancements, you get a release in capital. So it's a one-off, both are one-off, in terms of whatever you have seen in terms of the Tier 1 increase by about 30 basis points to 40 basis points for this quarter.

  • And in terms of consumption, the focus, we believe that there will be -- the range will be somewhere between 50 basis points to 60 basis points per annum in terms of consumption.

  • Seshadri Sen - Analyst

  • So, the risk weight density would be roughly around the 115% level that it is now, the earlier [117%, 120 %] is now the new -- would that be a correct assumption or other loan composition could also change going forward?

  • Paresh Sukthankar - Deputy Managing Director

  • I think the current growth rate if you look at, within retail -- one of course, retail being marginally ahead of wholesale. And then within retail, again, for instance, the home loan book on a year-on-year basis has grown at 42%, which is clearly one of the fastest growing segments within the retail piece. And that had a lower risk weightage obviously that helped the lower capital consumption. Going ahead, if you look at various components, is it going to change drastically from here? Probably not, but I would say, as Sashi said, maybe between 50 basis points and 75 basis points, depending on the pace and the composition of the growth.

  • Sashidhar Jagdishan - CFO

  • And all things remaining same from a regulatory perspective, thus assuming the same regulations prevail, because that is changing every quarter.

  • Seshadri Sen - Analyst

  • The second question I had was on your retail loan origination. I know you don't discuss these numbers, but if you could give some color as to what kind of numbers you're getting from internal loan origination through branches to existing customers, whether that is still on an up trend or that sort of played out and also discuss a little bit about what kind of origination you're seeing through digital channels? That would be very helpful.

  • Paresh Sukthankar - Deputy Managing Director

  • So the pace of growth on the internal customers still, I wouldn't say has stabilized, we actually still believe there is room for us to increase that component or that share even further. Some of it, of course, is on the back of the digital offerings that we have done. So if you look at, for instance, what was one of our flagship personal loans, these sort of 10-second personal loan, as we had positioned that, that's probably close to 10% of our personal loan origination. Now, of course, that doesn't mean that that would be entirely incremental. Some of the customers who were availing our personal loans from our internal database would now obviously opt for that loan through the digital platform [Suvidha]. But it's tough to try and attribute the higher internal customer growth rate on retail loans to only one or the other of these initiatives. But we do believe there is more to go.

  • Operator

  • Atul Mehra, Motilal Oswal Securities.

  • Atul Mehra - Analyst

  • My question was on the insurance front. So, with this open architecture now in place, how is HDFC Bank plays in terms of strategy for -- so would it in any way look at alternatives apart from HDFC Life or the insurance piece?

  • Paresh Sukthankar - Deputy Managing Director

  • That's a decision that has yet to be formerly taken by the Board. But conceptually as a bank, we have always looked at ourselves as in an open distribution platform. So, for instance, as you know, on the mutual fund side, we've been doing that for years. So while we do have very strong relationships and we certainly intend to protect those. we as a bank, I mean conceptually, we are always open to looking at an open platform and giving our customers a choice. But at this point of time, these are still very preliminary thoughts and a formal decision in this respect would have to be taken by the Board at some time in the future.

  • Atul Mehra - Analyst

  • Just one clarification, so what I get from some of the industry people is Jan 31 was the deadline for actually applying for FY17 basis. So if you want to add an insurer for FY17, then Jan 31 is when you have to actually make a representation to the regulators for the same?

  • Paresh Sukthankar - Deputy Managing Director

  • I think in terms of enabling these things, I mean obviously most banks will perhaps want to have the flexibility of doing what they would want to do. But taking a call like, as I said earlier, in terms of how many and [which], you know, if at all, it's something which you don't have to close out right now. All you're doing right now is taking the enabling resolutions and so on to be able to [decide] along the way.

  • Atul Mehra - Analyst

  • And in terms of growth on the insurance piece, so we've seen growth for most insurers come off especially in December. So how would you see that in this --?

  • Paresh Sukthankar - Deputy Managing Director

  • Yes, I think we had a similar experience.

  • Atul Mehra - Analyst

  • But do you see that trend sustaining and is it more market ULIP-related or are you seeing slowdown across the products front?

  • Paresh Sukthankar - Deputy Managing Director

  • I mean in the last three, four quarters, we've seen a couple of quarters where things looked up and couple of quarters where things looked down. So I think there really hasn't been a trend in any one direction. So, whether the slight sort of muting of growth rates is purely something which was in that quarter, and whether the March quarter sees a pickup, or whether it's relating to what's happening in the markets and returns that customers are seeing, this point of time, really very little visibility. I think the fact that there is a large penetration, unmet sort of penetration story, which is yet to sort of get rolled out, there is therefore a huge potential, but we've seen certainly some ups and downs in terms of growth rates in the distribution business.

  • Operator

  • Rahul Ranade, Goldman Sachs Asset Management.

  • Rahul Ranade - Analyst

  • I just wanted to know the figure for the floating provisions at the end of the quarter?

  • Paresh Sukthankar - Deputy Managing Director

  • Floating provisions haven't changed from the previous quarter. So there has been neither any addition nor any drawing down of the floating provisions. So the absolute number is at INR1,600-odd-crores, which was the same as it was in September.

  • Rahul Ranade - Analyst

  • And just one more clarification. Do we have anything under the SDR or 5/25 scheme?

  • Paresh Sukthankar - Deputy Managing Director

  • Not right now, no.

  • Operator

  • Jeetu Punjabi, EM Capital Advisors.

  • Jeetu Punjabi - Analyst

  • So a couple of questions, one, relative your current position or optimism on various parts of the business. Are there any areas where you intend to accelerate or slow down, depending on what you're seeing in the environment?

  • Paresh Sukthankar - Deputy Managing Director

  • So I wouldn't say on any business across the board, but in almost -- or in many of the businesses there would be some segment or some particular geography or some particular customer profiles where we have seen either higher delinquency or we've got concerns, because of the way the economy is playing out, or that particular business is playing out, or the commodity cycle is playing out. So I think those we are -- so it's simultaneous, it's not that we are growing A business and cutting back on B business. I think in almost every business, there are some parts that we are happy to continue to grow and there are some parts which we are, I would say, cutting back, but certainly being a lot more cautious about and therefore not growing at the same pace.

  • Apart from that, given the overall credit environment, and this is probably a little more towards the mid-market and large corporates, there are clearly some industries and some segments where we are cautious, at least in terms of managing or holding back on float. And, obviously, there are players who are already delaying payments or who are in the SMA category, whether with us or with some other bank, and actually there is going to be that much of even more heightened cautiousness as far as our business growth with those names. But there really isn't any business, which we are sharply cutting back on, or which we have completely moved out of, none of that at least at this point of time. We don't see the need for such a stark reaction.

  • Jeetu Punjabi - Analyst

  • The second question is this whole [jumblum] thing, which happened over the last 18 months or whatever. Do you have a plan to start monetizing or making sure that there's profitability on those accounts over time or you at least get greater traction into business from these guys?

  • Paresh Sukthankar - Deputy Managing Director

  • So, to the extent that we have been -- you know, we had a certain number of villages or urban wards that were allocated to us and we had opened accounts in all of those, we have actually been getting, at least engaging with those customers. So I think while all of us do have a certain proportion of accounts, which are not active or which are zero balance and so on, I think we've done better, then I think we're somewhere in the -- roughly in the 60s in terms of the proportion of the accounts that we have been able to activate. And, therefore, we believe done a little better than perhaps the system, obviously off a smaller base, but in terms of some of the other operational parameters. But obviously, again, there is more to go in terms of getting higher and higher proportion of these accounts as active and getting them to become viable.

  • Jeetu Punjabi - Analyst

  • And one final quick question. So there's been a -- at least globally there seems to be risk withdrawal in risk appetite by some of the foreign banks, even in the region. Are you seeing similar trends in India, and are you kind of thinking that as an opportunity?

  • Paresh Sukthankar - Deputy Managing Director

  • So, there certainly have been in the last few -- last couple of quarters some foreign banks who trimmed their exposures or moved out of some relationships. And to that extent, there has been some opportunity for us to try and get some incremental market share. Obviously, some of these are great credits. So these foreign banks if they continue to have an operation here are not looking to completely exit those relationships. So it's a bit of rationalization of their balance sheet sizes, or their capital. But there is some incremental opportunity clearly flowing from [some touring] of exposures by the foreign banks. Again, I'm talking about their exposures in the domestic market. A lot of them had done a lot of foreign currency lending, where we are not quite as active or as competitive in that lane.

  • Operator

  • Amit Premchandani, UTI Mutual Fund.

  • Amit Premchandani - Analyst

  • Can you help us understand what is driving this INR2.1 trillion of credit growth, which we have seen in the last one and a half months, if you look at the RBI data on overall credit?

  • Paresh Sukthankar - Deputy Managing Director

  • So, you're talking about the systems, or talking about --

  • Amit Premchandani - Analyst

  • Systems.

  • Paresh Sukthankar - Deputy Managing Director

  • I mean I agree that there has been a bit of a spurt from where the loan growth was earlier and some of it may even be the fact that as the excess liquidity in the system has come off a little, the growth in commercial paper or market-related credit flow has come off and some of that might well be coming back into the banking system. Apart from that, I think we've seen some increased working capital demand. And, finally, most banks have been increasing their focus or increasing their growth on the retail side. So some amount of it is also the increased growth on the retail book for most players.

  • Amit Premchandani - Analyst

  • Just on the working capital side, given how commodity price have almost collapsed, is it not counter-intuitive that working capital demand is going up?

  • Paresh Sukthankar - Deputy Managing Director

  • No. So, I think having come off sharply to where it had, I mean the correction in working capital absolute amounts or the cycles which were driven by what has happened to commodities, that has already been playing itself out, or has had already played itself out. So, from that base now, as there is some recovery in volumes, there is clearly some -- again, better placed corporates have seen some increase in the topline growth even in the previous festive season. And as they gear up for their own year ends, you've seen from that corrected base, there is a little bit of pickup. Again, it's not huge. And I think the deflationary impact of low commodity prices on the total working capital demand I think is still there. But it's really coming off a corrected lower base.

  • Amit Premchandani - Analyst

  • Another final question from my side. What would be the impact of MCLR on the existing rates that (inaudible)? And based on our understanding of the MCLR guidelines, it appears that you can lend below the MCLR rate? And how does the MCLR rate, say, for one year change with respect to the current base rate, if you can share with us?

  • Paresh Sukthankar - Deputy Managing Director

  • What exactly is the impact, nobody doesn't knows still it's really announced, because you can have multiple rates based on tenures. You're absolutely right that the guidelines allow you to have fixed rate loans, which are not referenced to the MCLR as a floor. So, I think, we'll all go through that transition period when everybody will try and figure out how this whole thing plays out.

  • To the extent that banks are already lending to corporates through the commercial paper route, at a rate which is lower than their respective base rates, this lower fixed rate lending will be there and will just move perhaps from what is currently partly CP, into actual lending. How the tenure-wise MCLR piece will play out, I think we'll all sort of have to wait and watch for early April.

  • All I can say is that the transition for us is a little easier, simply because we -- our current base rate calculation is already factors in the marginal deposit rates. So it's on a transition from average to marginal for us. But within that, of course, there are some nuances which will make a difference. So, fair to say that this would probably increase the level of market competition. But until we really see everybody's range of MCLRs and how this plays out, we don't have too much visibility on the actual impact.

  • Amit Premchandani - Analyst

  • And sir, apparently this investment yields, based on the quarterly number that we see, have gone up this quarter, which may have driven the margin expansion. Is the reading right, and is there any one-off in that investment yield this quarter?

  • Paresh Sukthankar - Deputy Managing Director

  • Very marginal. I don't think we've seen much of an increase in the investment yields.

  • Operator

  • M.B. Mahesh, Kotak Securities.

  • M B Mahesh - Analyst

  • Couple of questions. One, see, we were given to understand that the market for AAA rated paper, or rather the highly rated papers have actually increased in the last few quarters. Just wanted to understand, is it the basic differential which is creating the biggest differentiating factor at this stage, or whether there is something else that we're missing at this point? And on the retail side, on the growth side, again just trying to understand, this growth that we're seeing is at a substantial premium to what the industry average is suggesting, the volume growth. Just trying to see how much of it is near price increases that we're seeing and how much of it could be coming in from other products, like dealer financing or used commercial -- used vehicle financing?

  • Paresh Sukthankar - Deputy Managing Director

  • So to your first point, as far as the base rate being a factor, it certainly would be one of the factors. There are two or three banks with competitive base rates amongst the Indian banks. And then most foreign banks have, I think, base rates which are even lower than these Indian banks. But I think it would be sort of naive to believe that it's only rate which is driving the shift. But that would certainly -- I mean being competitive on the rate would certainly be a factor which would further sort of tilt the balance for players, who otherwise are responding quickly enough, who have the relationships, who are able to provide a mix of funding with the transactional banking solution that you're providing, because if you look at some of the growth, it's come with -- at rates which are comparable to perhaps what the base rates are of some of the other banks.

  • At the margin, the fact that there is some growth which comes with the base rate is true, because for a month or so in the previous quarter, in the September quarter, when has it happened we were a few basis points lower than most of the other banks, we had seen some short-term spike in growth rates, but that ran off. And today, we are one amongst three or four banks with similar base rates.

  • As far as the retail growth is concerned, it's coming across almost all products, so it's not one or two products which have suddenly seen a huge spike. There are auto loans and business banking and some other products which are larger contributors to the total retail book, had been growing in the 22%, 23% range. Businesses like, for instance, commercial vehicle, or two wheelers which had seen much lower growth rates last year are seeing high-teen kind of growth this year. So it's been, I think, a pickup in slow growth products or low growth or negative growth products from last year to this year. And some of the larger products continue to grow at growth rates which are in the low 20s.

  • M B Mahesh - Analyst

  • Just specifically on the car side, what could be the rough contribution right now between new vehicles and other forms of financing?

  • Paresh Sukthankar - Deputy Managing Director

  • It's approximately an [80-20] mix.

  • M B Mahesh - Analyst

  • It was [15- 85] mix last year?

  • Paresh Sukthankar - Deputy Managing Director

  • Yes. It might have moved about 3%, 4% higher towards used cars is possible.

  • M B Mahesh - Analyst

  • My second question is on the cost of deposits. Is it possible for us to kind of give an indication as to what is the cost of deposits today and how has it changed in the last two quarters?

  • Paresh Sukthankar - Deputy Managing Director

  • We don't spin out the loan and investment yields and deposit costs.

  • M B Mahesh - Analyst

  • Or directionally how much would it have changed?

  • Paresh Sukthankar - Deputy Managing Director

  • Directionally, actually it's -- on a quarterly basis, we've had -- it's not very different. I mean it's been a few basis point movement coming off and then again flattening out. So I don't think there is a huge difference on a sequential quarter basis.

  • M B Mahesh - Analyst

  • And my last question is on the Kisan Gold Card. Any idea, is this one of the -- what would be the kind of yield and returns that you would broadly get on this product? That's it, thanks.

  • Sashidhar Jagdishan - CFO

  • Kisan Gold Card is just a nomenclature. It is actually the farmer credit, farm credit, which is both pre-harvest and post-harvest. The yields for a pure farm credit is roughly in the range of around 10% to 12%.

  • M B Mahesh - Analyst

  • And the credit profile would more or less match with the overall loan that we have?

  • Sashidhar Jagdishan - CFO

  • Yes. I think Paresh may have discussed this or mentioned this in multiple conference calls earlier. Whilst we have been to -- we are pretty large in rural in terms of distribution, we have not changed our customer segment profile at all in rural as well. The profile is very similar in terms of the middle and upper middle income. So obviously, we may not go down the risk ladder. But the profile is very similar to a middle and upper middle income equivalent in urban and metropolitan locations.

  • Paresh Sukthankar - Deputy Managing Director

  • Specifically, as far as agri is concerned, there are obviously different segments that we cater to. We would have lending to small and marginal farmers as well, which is now a sub-limit within the Agri PSL requirement. So there will be some profile which will be marginally different. But for the same product, say for instance, if you offer, say, car loans or light commercial vehicle loans or two-wheeler loans, there the credit criteria, or the credit parameters would not be very different, whether it's a customer who is in an semi-urban area or in an urban area.

  • Operator

  • Hamsini Amritha, Business Standard.

  • Hamsini Amritha - Analyst

  • Most of my questions have been answered. Just one, if you could give me some indication on what is your tentative non-performing assets? How do you see them ballooning in the next two, three quarters, if you could give me some sense on that?

  • Paresh Sukthankar - Deputy Managing Director

  • Well, we don't have really a guidance on either balance sheet growth or on non-performing loans. If you look at our NPA percentages over the last 12 months, we are virtually flat in terms of where we were in December last year, at roughly 1% and where we are right now at, again, 1%, all over again. In between, over the last four quarters, we've obviously had some declines and some increases. So given that it remains a challenging environment, there is always some degree of uncertainty or lack of visibility on what might happen on the wholesale side. You can always have some accounts slipping or the other once in a couple of quarters. But on the retail side, where one tends to have a high degree of visibility or there is a trend that one can tend to read into, the asset quality has been, by and large, fairly stable. So don't really have a number or a direction. But I think, overall, the asset quality has held up fairly well for us, especially given the environment we are operating in.

  • Hamsini Amritha - Analyst

  • One follow up question sir. This quarter you say none of your accounts have entered into SDR or 5/25. Do you foresee this condition to be prevailing even around the next two three quarters?

  • Paresh Sukthankar - Deputy Managing Director

  • I really can't say that, because many of these decisions are not a decision to be taken by an individual bank. So we may have some exposures, where we are a part of a group or part of a consortium. And if a decision is taken to be -- to go down the path of a 5/25 or an SDR and stuff like that, then that's a decision that we have to follow, if the rest of the rules of the game are followed. So I really wouldn't be able to make a statement or even a projection on that.

  • Operator

  • Manish Karwa, Deutsche Bank.

  • Manish Karwa - Analyst

  • My question is on operating cost. Now costs have been rising by about 20% plus for last many quarters. I understand you've been now investing into branches and lot of addition to people have also happened, but do you see similar kind of investments continuing as in, would you continue to open about 600-odd branches every year and similar addition to employees will continue?

  • Paresh Sukthankar - Deputy Managing Director

  • So I think we are seeing some moderation in the branch expansion. So, in fact, if you look at the kind of spike that we had seen in the last quarter of last year, where we had added a couple of hundred branches in just one quarter, we're certainly not looking at growing at that pace. So if you look at the number of branches for instance that we've added in this quarter, we've added about 57 branches, which takes -- 54 branches, which takes the total branches in the first nine months of this year to about 267.

  • So I think some moderation in the number of branches that we are adding is probably something that we've already been achieving in the last few months. Having said that, because probably a slightly higher proportion of these branches are urban, the costs which are involved in opening some of these branches in urban and metropolitan areas is probably a multiple of what it is for adding branches in rural or unbanked locations or areas. But in terms of the rest of the investment, whether it's in some of the technology related or digital initiatives, whether it's in terms of increasing the penetration of specific products into either particular markets or on a wider scale, some of those investments will certainly continue.

  • Manish Karwa - Analyst

  • And on the fee front, this quarter the fees have slowed down a little bit. You alluded a little bit towards insurance. Is there any other stream, which has also slowed down?

  • Paresh Sukthankar - Deputy Managing Director

  • Yes. So actually, even more than insurance, the third-party fee coming off has been also in mutual funds. Again, not so much on a year-on-year basis. Not so much because of the volumes, as much as a change in mix from equity towards debt and liquid funds. I mean, if you remember a year back, we were seeing huge demand for equity mutual funds and clearly that has -- that spurt in demand has waned. And linked to that is a fact that even the guidelines on the fees for distribution, there's also been some change in terms of the fees that can be paid upfront and the trail and so on.

  • So it's a combination of the change in mix, as well as the change in rules as far as the upfront fees, as well as third-party distribution is concerned. Two other factors, which have played out in this last quarter. One is that if you look at some of the fees that we earn on the retail assets business, given that this was a festive season and we had all sorts of competitive offerings, in most of those products, there were fee waivers, or there were fee reductions, which were being offered in the festive season. So that again meant for the kind of volumes that we were seeing that the fees were actually not there, or were lower. And a little bit of piece which was there also on the credit card related spends, because there were -- so some bit was there, which played out both on the fee and perhaps a little on the OpEx line with some of the cash tax and so on.

  • Manish Karwa - Analyst

  • And lastly on the corporate asset growth, would it be fair to assume that this would be largely working capital related?

  • Paresh Sukthankar - Deputy Managing Director

  • Yes, it would be largely working capital related. It may be some few cases of term lending as well, but largely would be working capital, short and medium term.

  • Operator

  • [Vikash Agarwal, Prokane].

  • Unidentified Participant

  • My question is related to your overseas operations. Can you just give us some idea, what are your plans and what is actually current activities in that area?

  • Paresh Sukthankar - Deputy Managing Director

  • Our international book actually has largely been a function of what happened about a year back when we did the FCNR linked lending. So it's really a one-off. Thereafter, the growth rates have been fairly muted. Even today, of our total advances, 92.5% is domestic, so 7.5% is overseas. And while it will continue to grow, it's certainly not going to grow at a pace that will change the proportion too much at all. And there really isn't too much of a change in strategy there. We will certainly have an international business which completes the product range for our customers. But it's not going move the needle in terms of the overall growth rates.

  • Unidentified Participant

  • One more small question. When I see your business banking part -- on the retail, how it is different from other wholesale business. So can you just give your product ideas over there?

  • Paresh Sukthankar - Deputy Managing Director

  • So one, of course, this is really the S part of the SME business. It's essentially branch-based in terms of originations. So these are either customers who are having a current account relationship with us and who are looking for building a borrowing relationship. So these are -- and the breakup of the business banking piece between retail and wholesale, from a segmental reporting point of view, is driven by the Basel classifications. So based on the size of exposures, where it's INR5 crores, less than INR5 crores or more than INR5 crores, it gets classified as retail or wholesale, in line with regulatory guidelines. But from the way it is managed in terms of, is it a relationship manager linked or relationship business, it is in some ways similar to wholesale. So the differences in terms of size, in terms of distribution, because it's a combination of RM and branch based, and also the product range which is slightly more limited than what we would offer a large corporate customer.

  • Operator

  • Nilanjan Karfa, Jefferies.

  • Nilanjan Karfa - Analyst

  • This is related to what we had already talked about, the kind of growth we have seen, as well as competition. So part A of the question, I mean as a headline level, would it be right to say that the competition is higher in the rural or the semi-urban part as compared to the urban part, would that be a fair statement today?

  • Paresh Sukthankar - Deputy Managing Director

  • No, I think the competition would certainly be much more intense in the urban and metropolitan markets. But certainly in the last few months, the pickup in demand has also been a little stronger in the urban and metropolitan markets.

  • Nilanjan Karfa - Analyst

  • But if you go down on the product basis, right, for example in cars or auto loans, if you look at the -- adjusted for credit cards, so just adjusted margins on those products, how does that compare between urban and rural and therefore, does it also mean the breakeven plans that we usually follow for the branches, or as we easily understand, it's about, let's say, two and a half to three and a half years. Is that something that's undergoing a change?

  • Paresh Sukthankar - Deputy Managing Director

  • No, actually, it still remains very much in that two and a half to three and a half year range in terms of the time that a rural branch or a semi-urban branch takes to break even. The costs tend to be slightly different in semi-urban and rural areas, again, because of the density of the market, the fact that you don't have the same economies of scale. But there are also benefits, because a higher proportion of some of these customers might qualify for private sector and so on.

  • So on an overall basis, between the yield cost and risk and the PSL classification. I think the businesses or the segments which are in urban and semi-urban rural, all play out reasonably well. Underlying demand conditions tend to fluctuate. So we certainly had a few years of stronger underlying demand in semi-urban and rural. That might have waned just a little. And that has been offset by slightly stronger growth in the urban markets. But competition clearly -- is certainly more intense in the urban markets.

  • Nilanjan Karfa - Analyst

  • So the competition is still not at the level where you think your business plan is, [to change] in terms of branch rollouts?

  • Paresh Sukthankar - Deputy Managing Director

  • No, it doesn't. And, fortunately, for us, the meaningful increase that we needed to achieve in the -- in our presence in semi-urban and rural markets is largely done. So, it's already -- [we're not going] to add more branches. We continue to add a few hundred branches a year. And again, roughly half of those will certainly be in semi-urban and rural. But there's been really no need for us to relook or recalibrate those plans at this point of time.

  • Nilanjan Karfa - Analyst

  • Sort of a data question. How much home loan did we buy this quarter, [INR800 crores, INR900 crores]?

  • Paresh Sukthankar - Deputy Managing Director

  • We bought INR1,200 crores, which is of course not our entire origination. So there will be some more, which I guess we will buy in this quarter.

  • Nilanjan Karfa - Analyst

  • So, if we look at the kind of rate in the last three quarters, how long can we continue to do so? I mean, obviously it depends on the pool of loans, which is available for you to buy. How long could we continuing growing at, let's say, 40% growth?

  • Paresh Sukthankar - Deputy Managing Director

  • The growth rate for home loans has spiked, because from earlier situation where we were buying only the PSL loans, therefore it was only about 50% of what we were originating. We're now buying almost 70% of what we are originating. So this higher growth rate will really play out for this one year, because the base is little different. After that, it will be in the base. So if we're already buying the roughly 70%, then the growth rate will again converge to what we are --.

  • Nilanjan Karfa - Analyst

  • Origination rate, which was there, let's say, two years back.

  • Paresh Sukthankar - Deputy Managing Director

  • Absolutely.

  • Operator

  • (Operator Instructions) Nitin Mukhi, BW Holdings.

  • Nitin Mukhi - Analyst

  • So I just want to understand whether it's possible to aggressively get back into our digital capabilities marketing, so as to increase our market share in saving accounts, because I thought that other banks sort of been aggressive in terms of advertising, especially in mass media, their payment capabilities. And when I physically visit the branch, the branch manager is very much excited about explaining their products. We also have banners for [seller] outside the branch. But on television, as such we're not that aggressive in terms of advertising our payment capabilities. We understand there are ways, we have to still control 78% of the market and most of that saving bank accounts are located in the top 100 centers across India, which are expected to be Internet savvy. So can we get aggressive on television advertising of payment capabilities and try to secure more market share in [savings] accounts?

  • Paresh Sukthankar - Deputy Managing Director

  • Thanks for your input. We absolutely agree with you that there is a large potential for us to add customers who would want to move to a digital environment or a range of facilities which are more convenient and which are much quicker and clearly offered on a digital platform. The question is, is TV media, print media, banners, what is the best way to get the message across. I think our marketing team had a slightly different approach, where we have certainly been less on the TV or electronic media. Again, there are different views, given the clutter that one sees in terms of the multiplicity of channels, of TV channels, and the kind of spends that are involved there.

  • So I think if you look at our getting customers to adopt and embrace digital channels, for our existing customers, I think that's really been a huge focus area, because those are customers who are already interacting with the bank and where the benefits of digitization are even more, because they can also access loan products that much quicker and perhaps at more competitive rates.

  • As far as new customer acquisition on the back of the digital message, we'll certainly evaluate everything, including whether we need to step up on ad. But at this point of time, we've had a slightly different marketing mix.

  • Nitin Mukhi - Analyst

  • Yes. I mean I had that feeling, the branch manager even told me that they have targets in terms of getting those [chillers] uploaded on clients smart phones. So it gave me a feeling that as far as the internal customers are concerned, we're very aggressive, but going out and getting new customers -- in fact, the amount of information in the Annual Report is much more than the amount of information in television. So that was one thought I can share. Secondly was in terms of --

  • Paresh Sukthankar - Deputy Managing Director

  • Let me first complete that. I think even if you look at globally, the trends are, with all the clutter as I said, different across electronic, social and all other media that marketing is also moving a little more below the line, customized, personalized. So while I take your point on what you're suggesting on the electronic media, it's not necessarily something that we have ignored, but there is a certain amount that we would be looking to do and not more than that.

  • Nitin Mukhi - Analyst

  • Secondly on the -- recently HDFC Corporation came out with a structure at capital raising, wherein they raised both debt and equity, and in that structure still they were able to raise debt at a very negligible cost. So I was just thinking, going forward, can HDFC Bank also look at similar proposition, because we incur the same reputation in the market. This will reduce our cost of debt and basically we can go on and then further reduce our base rate and basically impact the competition on the asset size. Is that something that can be looked into for our future capital raising requirements?

  • Paresh Sukthankar - Deputy Managing Director

  • It's something which is completely premature for us to look at, because, as you're aware, right now we're very comfortably capitalized. So, if and when in the future, we are looking at any capital raising, which we certainly are not at this point of time, you know, we would consider all the options which are available at that point of time, but certainly no plans at this point of time.

  • Operator

  • Sameer Bhise, Macquarie.

  • Sameer Bhise - Analyst

  • Just one question. The steel exposures, if you look at the Basel III disclosures, that has particularly gone up for the last three quarters. So is there something opportunistic there? I mean, the numbers are small, but just --

  • Paresh Sukthankar - Deputy Managing Director

  • No, nothing really, in particular -- we've got a collection of names, some which we are very comfortable with, some which are not sort of most comfortable, but we are doing fine. But nothing specific in terms of opportunistic.

  • Sameer Bhise - Analyst

  • Yes, I mean, the rise is a bit stark, say, roughly [$80 billion to $120 billion]?

  • Paresh Sukthankar - Deputy Managing Director

  • I mean I really don't have individual names right now with me. These would certainly be -- what are within our appetite. So that's really where it would be.

  • Operator

  • (inaudible), Motilal Oswal.

  • Unidentified Participant

  • My question is on the two wheeler loan growth. You've explained that -- for that we've added front-end staff and added more distributors. But does that explain the whole story, because the segment -- the entire two-wheeler segment has not seen good growth. So, is it more a premiumization or if you could help me understand that? And the second is, the specific loan loss provisions have increased quite a bit. So would you attribute that to standard asset provisioning, because PCR has fallen?

  • Paresh Sukthankar - Deputy Managing Director

  • So, as far as the two-wheeler piece is concerned, it does come off a very low base, because we've had a couple of years of very muted growth or even degrowth. So we're really talking about the growth rate from some [4,800 to 6,100]. So the absolute increases still are very small, off a small base. And therefore the growth rates look higher. Obviously, we are gaining some market share there. And that may be partly on the back of our increased distribution as well.

  • Unidentified Participant

  • Would you say that there is more scope for penetration in terms of financing within the segment?

  • Paresh Sukthankar - Deputy Managing Director

  • Yes, absolutely. I mean, I think if you compare it with other segments in the auto industry, two-wheeler the penetration of financing has been lower. Obviously, it's also a function of the creditworthiness of different customer segments who buy the two-wheeler in the first place. But there is certainly room for increased penetration of organized financing in that business. But again, if you look at our total retail loan book, it's probably one of the smallest pieces of the total pie, low single-digit proportion of our total retail book. So our growth rate which is slightly lower or higher will not really move the needle too much.

  • On your other question on specific provisioning, well, the increase in specific provisions is really a function of whatever has been the increase in the gross NPAs during the quarter. When we have slippages and they are sub-standard assets, the total provisioning that is made is really a function of the number of days past due and the fact that it is sub-standard. So the coverage ratio moves by a couple of percent here or there, because of the proportion of sub-standard in the total NPLs. So, for instance, the proportion now is about, say, 55%, it was closer to about 50% a few months back, or in the last quarter. So whenever you have some increase in gross NPAs and those new NPAs are obviously going to start off as sub-standard, the coverage ratio for that is going to be lower, and therefore the weighted average total coverage comes off. That then, over a period of time, the increased provisions on those existing NPLs takes the coverage ratio a little higher.

  • Unidentified Participant

  • So, INR1 crore is only for NPAs?

  • Paresh Sukthankar - Deputy Managing Director

  • Specific provisions are always only for NPAs.

  • Unidentified Participant

  • So, that has increased. So if you're saying that as more and more slippages get added, I mean, initially [you just provide 15%]. So the hit on P&L should also be lower?

  • Paresh Sukthankar - Deputy Managing Director

  • No. We don't go by the RBI piece of the minimum 15%. We have -- depending on the product, whether it's secured, unsecured, the number of days past due, whether it's agri, SME, wholesale, we have a framework for provisioning, which is more conservative than the RBI minimum that is specified.

  • Operator

  • (Operator Instructions) [Gaurav Jani], JHP Securities.

  • Unidentified Participant

  • I was just looking at your CASA franchise, so a couple of quarters back, that is prior to Q1 FY16, our average CASA was 43% to 44%, and since the past three quarters, it's about 40%. So anything over there, I mean, because we are growing fairly well on the application side and on the retail front. So just if I can have a color on that please?

  • Paresh Sukthankar - Deputy Managing Director

  • I think I have explained this before that the CASA percentage is a little lower, simply because the fixed deposit growth has been even higher than what it has been in the past. So, if you look at December, the fixed deposit growth was at about 28% -- 28.5% and that of course includes the FCNR piece, which is essentially an FD. Separately, the CASA growth in itself has been extremely strong. In fact, even the core current account growth, which has been around 23%, the core savings account growth, which has been about 20%, 21% is the market leading. I mean, we've certainly gained market share in both those. So we believe that the CASA franchise still remains very strong, both in terms of CASA deposit growth and the profile of the customer that we are taking on board and can then cross-sell other products to.

  • Operator

  • Pankaj Agarwal, Ambit Capital.

  • Pankaj Agarwal - Analyst

  • Sir, my question is related to your margins. So if I look at your net interest income growth over the last nine months, and if I adjust it for your capital raise, it's averaging around 20% to 21%, versus asset growth of around 27% to 28%. So, excluding the impact of this capital raise, the compression of margins is looking higher than what you have reported these are suggesting. Would that be a fair assessment, and if yes, what's causing this margin compression?

  • Paresh Sukthankar - Deputy Managing Director

  • The fact that there would have been a few basis points of lift in margin because of the capital is probably right. But that would've been near about maybe 5 basis points, 6 basis points. So if you look at the margin right now, which is let's say at 4.3% and you adjust for that, we would still be well within our range of margins, which has typically been about 4% to 4.2%, 4.3%. Other factors which impact the margins have been many. You know, if you look at the change in mix of our retail loan book, for instance, the proportion of home loans is significantly higher than what it was a year back or two years back. Within our Corporate book, again, in the last one year, as you can imagine, lot of the increase has been much more short-term, which again comes at a lower yield. So there would be -- and equally there would be some factors which might have helped improve the margin.

  • So your perception of what is the margin, adjusted for capital or just for anything else is entirely your calculation. We do not have a specific number that we believe we are guiding to. All we're saying is that our range of margins have been somewhere between 4% and 4.3% or thereabouts and that broadly there is no trend to take margins out of that range at either end.

  • Pankaj Agarwal - Analyst

  • One more question, how much spread you pay to HDFC Limited on this home loan?

  • Paresh Sukthankar - Deputy Managing Director

  • It's about 95 basis points.

  • Operator

  • Rakesh Kumar, Elara Capital.

  • Rakesh Kumar - Analyst

  • Just one question on this RBI balances interest income. So there is some volatility in that number. So is that there is something which is happening in the industry we are not aware of or something which is specific to the Bank?

  • Sashidhar Jagdishan - CFO

  • Rakesh, the balances is a function of the liquidity position of the Bank at various points in time. So, sometimes the Bank holds government securities or T-bills or keeps it in overnight deposits with banks. So it's a combination of all. So obviously that will be volatile, depending on what kind of liquidity position or liquidity situation the Bank faces and how the treasury believes, which is the most optimum instrument that they can invest in, depending on the situation, the liquidity coverage or the yields. So these are -- this will have a bit of a fluctuation, depending on the situation.

  • Paresh Sukthankar - Deputy Managing Director

  • But the total amount is minuscule. So I think, I mean since it is low-single-digit proportions of the total interest income, the volatility tends to mean very little.

  • Rakesh Kumar - Analyst

  • Just one more question if you may allow, like, there are so any project clearances, which have been happening, if you see the PMG Group website. So, in the wholesale loan thing, which asset we would like to grow and is there any scope that in the coming time, maybe in the six months, nine months, one year time frame, there would be a credit demand coming just because of project clearances, which was happening?

  • Paresh Sukthankar - Deputy Managing Director

  • Well, I think so. I think as the investment cycle translates from intent to actual projects being approved, to then actually money being put to work on the ground, I think there will be some lending opportunities relating to new projects or greenfield CapEx. Whether it is three months, six months, nine months down the line, that I think for all of you to try and predict as well, but we would certainly be willing to cap into some of those lending opportunities within our credit appetite.

  • Operator

  • Thank you. Ladies and gentlemen, that was the last question. I now hand the floor back to Mr. Paresh Sukthankar for closing comments.

  • Paresh Sukthankar - Deputy Managing Director

  • Well, thank you once again for patiently listening to all those answers and for all of you who we sort of didn't allow a second or a third or a fourth question. My apologies. But, I guess, we still exceeded the one hour that we have kept aside. Overall, I'll just conclude by saying it remains a fairly challenging environment, as we all know, given the growth rates in the real economy, given what's happening to the commodity cycle, given what's happening to global markets in terms of trades. So within that, we've been trying to maintain our growth rates, because we have a diversified book between retail and wholesale and trying to manage asset quality by -- on the retail side, taken to the segments that we've been in. And on the wholesale side, of course, there is a lower degree of predictability, in fact, at least trying to stick to what we believe are bankable proposals. And that's really what this quarter has been all about, reasonably well balanced growth on the topline, steady cost to income ratios, and a bottom line, which has been roughly 20%. Once again thanks for being on the call. Bye.

  • Operator

  • Thank you members of the management. Ladies and gentlemen, on behalf of HDFC Bank that concludes this conference. Thank you for joining us. And you may now disconnect your lines.