ICICI Bank Ltd (IBN) 2015 Q2 法說會逐字稿

Ladies and gentlemen, good day and welcome to the ICICI Bank Q2 FY15 Earnings Conference call. 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. (Operator Instructions) Please note that this conference is being recorded. I now hand the conference over to Mr. N. S. Kannan, Executive Director at ICICI Bank. Thank you and over to you, Sir.

Thank you. Good evening. Welcome to the conference call on the financial results of ICICI Bank for the quarter ended September 30, 2014, which was the second quarter of the financial year 2015. In my remarks this evening, I'll cover the following areas. First, the macroeconomic and monetary environment. Then we'll talk about our performance during the quarter, including our performance on Five-C strategy. We'll move on then to our consolidated results, and finally the outlook for the full financial year.

Let me start with the first part on the macroeconomic and monetary environment during the second quarter. On the global front, IMF revised the global growth forecast downwards on account of downside risk due to weak global demand and geopolitical tensions. The domestic economy recovery in real economic activity remained uneven. Industrial activity as measured by the Index of Industrial Production, IIP, moderated, recording a year-on-year growth of 0.4% in July and August, compared to a growth of 3.9% in June 2014. The manufacturing and services sector Purchasing Managers Index, PMI, also moderated from the peak levels in June and July 2014. However, the optimism due to the strong electoral mandate continued, as reflected by upward revisions in the growth forecast for India and the upgraded outlook for India by Standard & Poor's.

The government has also announced several measures recently, including complete deregulation of diesel prices, approval of the new gas pricing policy and re-launch of the direct benefit transfer scheme to provide subsidy on cooking gas. The government has also taken steps to address the de-allocation of coal mines by the Supreme Court by passing an ordinance, reverting these mines to the government and announcing e-auctions on coal blocks on end-use basis. The government has also announced that the policy would enable commercial mining in the future.

These developments are steps towards addressing issues in the infrastructure sector and undertaking reforms that will positively impact the investment and growth climate in the country over the long-term. Inflation, based on the headline Consumer Price Index, or CPI, moderated from 7.5% in June 2014 to 6.5% in September, driven partly by a favorable base effect and by a moderation in food inflation. Reserve Bank of India is focusing on the objective of achieving 6% CPI inflation by January 2016 and has reiterated that it will look through the transient effect on inflation while deciding on the policy rate changes.

Keeping in view the targeted inflation levels, RBI maintained stable policy rates during the quarter, however to ensure adequate credit flow to the productive sectors of the economy, the statutory liquidity ratio was reduced by 50 basis points to 22% in August. So ceiling on SLR securities under the held to maturity category was reduced from 24.5% of net demand and time liabilities, NDTL, to 24% of NDTL. RBI has decided to reduce it to 22% of NDTL in a gradual manner by September 2015. RBI has also allowed banks to include government securities up to 5% of NDTL within the SLR requirement as Level 1 High Quality Liquid Assets for the purpose of computation of the liquidity coverage ratio.

Moving on to the performance of financial markets, the BSE Sensex rose by 5% during the quarter. The yield on government securities was 8.5% at end-September 2014, compared to 8.4% at end-July when the new benchmark bond was issued. The exchange rate moved to INR61.6 per US dollar at the end of quarter two from INR60.1 per US dollar at the beginning of quarter. The Indian rupee remained amongst the best performing emerging market currencies during the quarter.

With respect to the banking sector, non-food credit growth moderated to 11.2% year-on-year as of end-September 2014. Growth in total deposits saw a slight pickup to about 13% on a year-on-year basis as of end-September 2014 from about 12% at end-June 2014. Demand deposit saw year-on-year growth of about 16% as of September end.

With this background let me now move on to our performance during the quarter, including our progress on our Five-C strategy.

First with the respect to the credit growth. The Bank's domestic loan portfolio grew by 15.1% on a year-on-year basis as of September 30, 2014, compared to 11.2% growth in non-food credit for the system as of October 3. Loan growth for the Bank continued to be driven by retail segment, which grew by 25.2% on a year-on-year basis as of September 30.

The growth in our retail portfolio continues to be driven by secured products with the outstanding mortgages and auto loan portfolios growing by 26% and 38% respectively on a year-on-year basis as of September 30. Growth in business banking was 18% and in rural lending segments it was 41%. Commercial business loans declined by 18% on a year-on-year basis, reflecting both a slowdown in the segment as well as rundown of our bought-out portfolio.

The unsecured credit card and personal loan portfolio at INR90.36 billion as of September 30 continued to remain a small portion, that is about 2.5% of the overall loan book, though the growth rate is high due to the low base.

In view of the operating environment, we continue to adopt a casual -- the Bank continued to adopt a cautious approach to growth in the corporate and SME segments. The domestic corporate portfolio growth was 4.5% on a year-on-year basis at September 30, 2014, compared to 7.7% growth as of June 30, 2014. The SME portfolio increased marginally on a sequential basis to INR160.88 billion as of September 30, 2014.

Going forward, we'll continue to calibrate the growth of corporate and SME portfolios with the trends in the economic environment.

Growth in net advances of the overseas branches in US dollar terms was 11.9% on a year-on-year basis as of September 30, 2014, reflecting primarily the lending against FCNR deposits during the third quarter of fiscal 2014. In rupee terms, the year-on-year growth in net advances of the overseas branches was lower at 10.3%, given the rupee had appreciated vis-a-vis US dollar between September 2013 and September of 2014. On a sequential basis, the overseas branches loan book grew marginally by about 2% in US dollars terms.

As a result of the above, total advances of the Bank increased by 13.8% on a year-on-year basis from INR3.18 trillion as of September 2013 to INR3.62 trillion as of September 2014.

Moving now to the second C on CASA deposits, the Bank continued to see a healthy momentum in the CASA deposit mobilization. On a period-end basis, we saw an addition of INR64.4 billion to our current account deposits. The savings account deposits increased by INR28.71 billion during the quarter. As a result of the above trends, the period-end CASA ratio improved to 43.7% at September 30, 2014, compared to 43% at June 30 of 2014. The daily average CASA ratio for the Bank for the quarter remained stable at 39.5%, the same level as we saw in the previous quarter.

On the third C on cost, the Bank maintained a healthy cost to income ratio of 36.5% in the second quarter of fiscal 2015, compared to 37.3% in the second quarter of fiscal 2014 and 38.4% in the previous quarter. So we saw a decline in cost to income ratio, both on a year-on-year basis as well as on a sequential basis.

For the second quarter, operating expenses increased by 16.1% on a year-on-year basis. The increase in operating expenses is off a lower base in the second quarter of 2014, when the operating expenses reflected a positive impact of the increase in government securities yield on retiral benefit expenses. In addition to this, the year-on-year increase in employee expenses reflects the full impact of the increase in employee base in fiscal 2014 and the annual wage increases effected in April of 2014. Based on an assessment of staffing requirements and given the addition of about 14,000 employees in the previous two years, the Bank has not replaced attrition. Because of this the employee base has decreased by about 3,800 people during the second quarter.

The Bank continues to focus on further enhancing the productivity and efficiency of its employee base, as well as the expanded distribution network in order to drive growth. During the second quarter, the increase in the non-employee expenses is primarily on account of two reasons; one larger distribution network and two, higher retail lending volumes.

Let me now move on to the fourth C on credit quality. During the second quarter, we saw gross NPA additions of INR16.73 billion, including slippages of about INR8 billion from the standard restructured category to the non-performing asset category. As mentioned on our previous calls, given the prolonged economic slowdown and uneven economic recovery, Banks including us, have witnessed slippages from the restructured portfolios. Deletion from NPA during the quarter was INR4.4 billion and the Bank has also written off INR2.48 billion of NPAs. We sold NPAs aggregating INR2.91 billion to asset reconstruction companies during the quarter. The net NPA ratio as a result was 96 basis points as of September 30, 2014, compared to 87 basis points as of June 30, 2014.

During the quarter, we had gross additions of INR8.29 billion to the restructured loans. After taking into account deletions, including the slippages mentioned earlier, upgrades of some accounts and the required specific provisioning, the net restructured loans for the Bank were lower at INR110.2 billion as of September 30, 2014, compared to INR112.65 billion as of June 30, 2014. The current restructuring pipeline is about INR18 billion.

You will recall that the restructuring in Q2 was about INR8 billion compared to the pipeline of INR15 billion we had mentioned following our Q1 results. The current pipeline includes the cases expected to be restructured in Q2, where restructurings have not been completed and will spill over to the third quarter.

Provisions for second quarter were IRN8.5 billion compared to INR6.25 billion in Q2 of last year and INR7.26 billion in the current year first quarter. As a result, credit cost as a percentage of average advances was at 96 basis points on an annualized basis for Q2. Effective Q1, banks are required to make additional standard asset provisions in respect of borrowers having unhedged foreign currency exposures and are permitted to recognize these provisions over four quarters. Accordingly, we have made standard asset provisions of about INR300 million on account of exposure to clients having unhedged foreign currency exposure. This added about 3 basis points to our annualized provisions to average advances for quarter two. The provisioning coverage ratio on non-performing loans was 65.9% as of September 30, 2014.

Now to the fifth C on customer centricity. We continue to focus on enhancing our customer service capabilities and leveraging our increased branch network to cater to the customer base. During the quarter, we added 52 branches and 292 ATMs. So as of September 30, 2014, we had a network of 3,815 branches and 11,739 ATMs. We also continued to strengthen our technology channels for increasing customer convenience.

During the quarter, we launched six next generation mobile banking apps. The new apps include features using which customers can access loan account details, track status of dispatches, initiate transactions even before visiting a branch, connect with a service executive over video call and view transactions on their mobile phones. We have also launched ICICI Store app, which enables customers to easily view all the mobile apps introduced by ICICI Group in one place.

Our Facebook page continues to be appreciated by customers with over 3 million fans, the largest fan base on Facebook among Indian banks. The Bank has also seen healthy growth in transaction volumes through the mobile banking platform. With a market share of about 25%, based on the latest available data, the Bank is the market leader among the banks in India in terms of value of transactions through mobile banking.

Having talked about the progress on five Cs, let me now move on to the key financial performance highlights for the quarter.

Net interest income increased by 15.2% year-on-year from INR40.44 billion in Q2 of 2014 to INR46.57 billion in the second quarter. The net interest margin improved to 3.42% from 3.31% in the corresponding quarter last year. The domestic NIM was at 3.84% compared to 3.65% in the corresponding quarter last year and 3.8% in the previous quarter.

International margins were at 1.58% compared to 1.8% in the corresponding quarter last year and 1.63% in the previous quarter. The sequential decrease in international margins in the second quarter was on account of impact of bond issuance expenses during the quarter. Total non-interest income increased by 26.4% from INR21.66 billion in Q2 of 2014 to INR27.38 billion in Q2 of 2015.

If you look at the components of the non-interest income, fee income grew by 5.5% from INR19.94 billion in Q2 of 2014, to INR21.03 billion in Q2 of 2015. The lower growth is mainly due to subdued corporate activity and lower foreign exchange transaction volumes. Excluding ForEx and derivative fees, the year-on-year growth in overall fees was in low-double digits. Retail fees for the Bank continued to grow at a healthy rate of over 20% and contributed close to 60% of our overall fees.

Other income was INR4.98 billion compared to INR2.51 billion in Q2 of 2014 and INR5.26 billion in Q1 of 2014. On a year-on-year basis, the Bank received higher dividend income from ICICI Life, based on the increased payout levels approved by the Company's Board. While there may be some variation in dividend income on a quarterly basis, for the full year, we continue to expect healthy dividend income from subsidiaries.

During the quarter, based on the significant reserves and surplus position built up in the overseas branches and the muted growth outlook in the near term, we repatriated profit from our overseas branches, resulting in exchange rate gains of INR1.65 billion. Such a repatriation may not be a quarterly phenomenon. The Bank considers repatriation from overseas branches based on the outstanding position of retained earnings, long-term funding requirements of overseas branches and outlook on dollar-rupee exchange rate.

During the second quarter, treasury recorded a profit of INR1.37 billion compared to a loss of INR0.79 billion in the corresponding quarter last year and a profit of INR3.88 billion in the previous quarter. I've already spoken about the trends in operating expenses and provisions while speaking about the Five-C strategy.

As a result of these trends, the Bank standalone profit before tax increased by 17.9% from INR32.63 billion in Q2 of 2014 to INR38.48 billion in Q2 of 2015. The Bank standalone profit after tax increased by 15.2% from INR23.52 billion in Q2 of 2014 to INR27.09 billion in Q2 of 2015. In accordance with the RBI circular dated December 20, 2013, the Bank created deferred tax liability on special resource by charging it to the profit and loss account. Accordingly, a charge of INR0.88 billion was recognized in Q2 of 2015, while there was no such impact in the second quarter of last year.

The return on average assets was 1.82%, about 10 basis points higher compared to Q2 of 2014. The Bank's capital adequacy ratio as per Reserve Bank India's guidelines on Basel III norms continued to remain strong at 16.64% overall capital adequacy ratio and 11.98% Tier 1 ratio. In accordance with the guidelines, the profits for the half-year ending September 30, 2014 are not considered in the reported capital adequacy ratio. Including the profit for the quarter, the Bank's overall capital adequacy ratio was 17.41% and the Tier 1 ratio was 12.75%.

I now move on to the consolidated results. The profit after tax for the Life Insurance Company was INR3.99 billion, as compared to INR3.87 billion in Q2 of 2014. The new business annualized premium equivalent increased from INR9.54 billion in Q2 of 2014 to INR11.97 billion in Q2 of 2015. The retail weighted received premium for ICICI Life grew by a healthy 28.9% on a year-on-year basis in H1 of 2015, compared to 1.7% decrease in FY14.

As we had mentioned earlier, the business mix of the Company is evolving post the changes in regulations. During the quarter, unit linked premiums constituted over 80% of the new business premiums, compared to about 65% in the last year and about 78% in Q1 of 2015. The new business margin for the Company was stable at 10.9% in Q2 of 2015. While the IRDA numbers for the industry are not available, we understand that the Company has seen an increase in market share to over 10% in H1 of 2015.

The profit after tax for ICICI General was INR1.58 billion in Q2 of 2015, compared to INR1.56 billion in Q2 of 2014 and INR0.72 billion in Q1 of 2015. While the profit before tax increased by 29% on a year-on-year basis in Q2 of 2015, the profit after tax was flat on a year-on-year basis, due to normalization of the tax rate. The tax rate was lower in the last financial year on account of the losses carried forward due to the impact of the third-party motor pool.

The gross premium income was stable on a year-on-year basis at INR16.38 billion in Q2 of 2015, as the Company adopted a calibrated approach to growth, given the pricing trends in the industry. The Company continues to retain its market leadership among the private players and while the IRDA numbers for the industry are not available, we understand that the Company had a market share of about 8.5% in H1 of 2015. ICICI Securities and ICICI AMC have continued to see improvement in their performance. The profit after tax for ICICI Securities increased from INR0.18 billion in Q2 of 2014 to INR0.68 billion in Q2 of 2015. The profit after-tax for ICICI AMC increased by 40.9% from INR0.44 billion in Q2 of 2014 to INR0.62 billion in Q2 of 2015.

Let me now move on to the performance of our overseas banking subsidiaries. As per IFRS financials, ICICI Bank Canada's total assets were CAD5.49 billion as of September 30, 2014, compared to CAD5.63 billion as of June 30, 2014. Loans and advances were CAD4.77 billion at September 30, 2014, compared to CAD4.65 billion at June 30, 2014. The profit after tax for Q2 of 2015 was CAD9.2 million, compared to CAD12.9 million for Q2 of 2014. The decrease in profits was on account of higher specific provisions on account of change in risk categorization of a mid-sized India linked account during the quarter. The capital adequacy ratio for ICICI Bank Canada was healthy at 34% as of September 30, 2014.

ICICI Bank UK's total assets were $4.16 billion as of September 30, 2014, compared to $4.12 billion as of June 30, 2014. Loans and advances were $2.71 billion at September 30, 2014, compared to $2.75 billion as of June 30, 2014. The profit after tax for ICICI Bank UK for Q2 of 2015 was $5.1 million, compared to $6.1 million in Q2 of 2014. The capital adequacy ratio was 23.1% as of September 30, 2014.

Let me now talk about the overall consolidated profits. The consolidated profit after tax for Q2 of 2015 was INR30.65 billion compared to INR26.98 billion in Q2 of 2014. The annualized consolidated return on average equity was at 15.1% in Q2 of 2015.

In summary, we believe our performance in Q2 of 2015 is a result of our continued focus on delivering against our stated objectives. In line with expectations, we have sustained the improvement in net interest margins, we have maintained healthy non-interest income, we have sustained the improvements in our operating efficiency, our deposit franchise has remained a key area of focus, and we have seen continued healthy trends in CASA mobilization in the quarter.

With respect to loan growth, we have continued to scale up growth in the retail segment, while calibrating our growth in the corporate and SME segments in view of the environment. While we would have liked the fee income growth to have been higher, it needs to be viewed in the context of the operating environment for corporate banking and ForEx and derivative volumes. Retail fees for us, however, continues to grow at a very healthy rate.

Moving on to the outlook for the financial year. On the loan growth trend, we expect our domestic loan growth to be 2% to 4% higher than the system, driven by more than 20% growth in the retail segment. Growth in the loan portfolios of overseas branches will continue to be calibrated to conditions in the funding markets. With respect to our deposit franchise, our focus would be on maintaining stable average CASA ratio in the range of 38% to 40%.

With respect to margins, we would target an overall margins of 3.3% to 3.4% in the financial year 2015. Fee income growth would depend on market conditions, particularly activity in the corporate sector, as well as regulatory measures with respect to various components of fee income. Our endeavor would be to continue to grow the retail fee streams, while capitalizing on opportunities that emerge in the corporate segment within our risk management criteria.

Operating efficiency continues to be a key area of focus for the Bank. Our endeavor would be to maintain the cost to income ratio at about the current levels during the quarter. With respect to asset quality, we expect that for financial year 2015 the aggregate flow of fresh loans into restructuring and NPA categories would be lower than FY14, excluding slippages of existing restructured loans to the non-performing category. Overall, credit costs as a percentage of advances are expected to be in the 90 basis points to 95 basis points range for the full year as well.

Further developments in segment-specific cases and coal and power sectors would need to be closely monitored. With respect to the coal block de-allocation, the Bank has exposure to power, metal and mine operating companies that would get impacted by the Supreme Court order. In respect of the same, more clarity is needed in the process of re-auction of the coal mines and availability of alternative sources of fuel for these projects.

Based on our assessment of the projects in our portfolio, we believe that while on the basis of alternative fuel sources, the DSCR of these projects reduces as compared to that based on the captive mines, most projects would still be able to service their debt obligations.

In this context, the recent ordinance passed by the government is an important step. While the e-auction mechanism details need to emerge, two measures, one, provision for compensation to be paid to prior allottees for land and mine infrastructure; and two, provision for new allottees to continue contracts with prior allottees will help in addressing some of the concerns emerging out of the de-allocation of the coal mines. We will continue to monitor the developments in this regard.

Our focus in financial year 2015 would be to sustain the return on assets. We believe that our strong and diversified franchise and large distribution network give us the ability to leverage opportunities for profitable growth. We are well placed with regard to the capital required to support the growth and given our current capital position, we believe that we do not need to raise capital for the next three years.

With these opening comments, my team and I will be happy to take your questions. Thank you.

(Operator Instructions) Mahrukh Adajania, Standard Chartered Securities.

Just wanted to clarify that the slippage from restructured was from a single account only. Is that correct?

There was one mid-sized corporate exposure was there. There were a couple of other smaller accounts [to diverse].

Predominantly one account.

And the guidance for the restructuring pipeline at 18 billion, that would not include anything from the recent coal issue, right?

We do not -- as Kannan was mentioning, we do not expect any of that to kind of get impacted, especially in the near term, because nothing really has changed in the immediate term out there. And over time, we would expect a solution to be there for almost all those companies. So that is -- we are really not considering any of that in this pipeline.

And your excess SLR would be how much?

About 5% to 6% is where we are.

Suruchi Jain, Morningstar.

Just wanted to confirm that the wholesale loan growth is about 7% when you break up retail and wholesale?

About 5%.

5%.

And also 60% of your fee income is from retail, right?

That's right.

Which grew at what percent, sorry I missed that?

20%.

20%. So then the stronger growth is coming from which -- what's causing the very strong growth; 26%, fee income.

No, fee income overall growth is 5.5% for the Bank. Within that the retail is growing at over 20% and within retail, both retail assets and retail liabilities have contributed. So obviously there is -- on the corporate side, there is a decline in fee income.

But as I can see, your non-interest income has grown at about 26%?

Yes, apart from fee income, we also have the treasury and other income as a part of non-interest income and also dividend from the subsidiaries.

Okay, got it.

Treasury income for the second quarter of last year was a negative number. So that's why the percentages on treasury income, there's a huge increase in treasury income, because we had about INR1.3 billion of treasury income during the current quarter. So that has increased the percentage of overall basis.

And from -- what I understood from this, there was mainly the ForEx, right, the FCNR inflows?

No. Treasury income, it's a combination of foreign exchange income and normal fixed income and equity-related businesses.

Anish Tawakley, Barclays.

The question is really on the restructured assets, how they're performing and how would you assess the outlook now. If I see, you started with INR112 billion, you added INR8.2 billion, so that would take you to -- whatever, INR120.4 billion, right? Now, if I look at the reduction, the two moving parts that have reduced, you've got INR8 billion going into NPAs?

Yes.

And you've got INR2.6 billion of other reductions basically. So looks like everything that's coming -- a lot of what's coming out of the restructured bucket, right, at the end of the moratorium period is going into restructured assets. Is that too negative a way to read it? What does it mean for the outlook for the rest of the restructured assets as they come out of the moratorium periods?

So what have done is, we have always talked about the movement of restructured loans and the slippages from there. As I mentioned earlier, this time the slippage has been due to one mid-sized account, predominantly that one account has accounted for bulk of what slipped from the restructured loans. So if I look at the long-term average of slippages from restructured loans to NPL category, long term average continues to be around 15%. But of course, the quarter-to-quarter number could get disturbed if there is a one medium size to large size account slips that percentage gets disturbed. So that is what has happened during the quarter.

Kannan, actually I understand the long-term average, but a lot of -- the concern I have is that a lot of the -- in the long-term average in the denominator, right, lot of the accounts are still in the moratorium period, so they can't potentially slip.

Yes of course. One has to keep on looking at each of the cases individually on how they operate and this time one large account really slipped into NPA.

If we look at the stuff that's going to come out of moratoriums over the next two or three quarters, right, is that -- because the economy has remained weaker for longer and some of the restructuring I worry might not have been done on such pessimistic assumptions of the economy. So like what would you expect the pattern to be over the next two to three quarters? How much stuff comes out of the restructuring bucket in the next two or three quarters is the first question? And what would you expect that to look like?

So, Anish. a few things. One is that as the -- if loans come out of moratorium period, it's not that they will get anyway immediately upgraded or downgraded, because anyway there is a time period for an upgrade and a downgrade happens if it becomes 90 days overdue. I think as Kannan mentioned in the initial part of -- in his opening remarks that given the prolonged economic slowdown and the uneven economic recovery, which as your rightly saying, would not have been fully factored in while undertaking these restructurings. Banks have seen increased slippages on the restructured portfolio.

So over the next few quarters, one of course it's very difficult to give any specific estimate of what could or could not slip from this portfolio, but it's a portfolio from where it's possible that there could be more slippages happening over the next few quarters from the restructured portfolio.

Yeah. So, when we made the assessment, apart from this we also looked at on account of those slippages if there is incremental provisions required as NPAs. We made an assessment as of now that for the year as a whole, the credit cost as a percentage of advances would be in the range of 90 basis points to 95 basis points, including the additional provision which is required on account of unhedged foreign currency exposure of the borrower corporates. So, that should give you a sense of how we expect things to pan out during the rest of the year.

Nicholas Yap, CreditSights.

So I just have a question. Would you be able to give me a breakdown of your NPA slippages this quarter, like, is it predominantly from which sector?

If you really see the incremental additions to NPAs in the quarter, we had a total number of about [INR16.7 billion]. Out of that we said about [INR8 billion] is really a slippage from the standard restructured category to a non-performing asset category, which -- within that it is largely contributed by one mid-sized corporate. So, the fresh additions, apart from this to NPAs, has been quite contained at about [INR8.5 billion], and that's would be across corporate SME and retail segments, but there is no specific sectoral pattern, it's really a company-to-company and a case-to-case basis and [INR8.5 billion] is not very big in the overall scheme of things.

Just another question. So, based on your presentation, it seems that your security receipts has actually declined from June to September, so how exactly should I read this? Are they being valued lower or how should I read this?

We had some redemptions that happened on that portfolio. So, as you know, some of these assets are something that we have sold quite some time back on the corporate side and also the retail side. So, on the retail side, we get regular redemptions every quarter and we've also got some other redemptions on the corporate side as well, that is mostly because of redemptions that the SRs have come down during the quarter.

And just another one, can you just also give me a breakdown of your provisions, like how much is loan losses, standard assets?

About INR1 billion is the standard asset provision, which includes the provision made against unhedged foreign currency exposures and the balance would largely be provision against NPAs.

Manish Ostwal, KR Choksey.

Yes, my question on the money slippages other than this one account, mid-corporate, so other slippages, what is the color in terms of whether it is linked to the large corporate or it's SME or retail. So what is the color of other slippages during this quarter?

So the slippage -- the trend continues to be extremely stable on the retail side, across each of the portfolios on retail it's extremely stable. Commercial vehicles is also -- we've been pretty cautious in terms of growth there. So, overall, the increase that is coming is still higher than normalized levels is on the corporate and the SME side. Then as Kannan mentioned, excluding the slippage from restructured, actually the rest of the increase is really not much.

And secondly, sir, we have seen a pickup in the corporate fee, some of the other corporate lenders during this quarter. So when we will see some pickup in our corporate and international fees, given the slow recovery in the economy and the improving sentiment in the corporate space? So, when we will see this (inaudible)?

Yes, we'll have to -- on the corporate side, especially lending-related kind of fee incomes we'll have to really wait and see. But we have seen some kind of growth coming in on the commercial banking side of the fee income stream. ForEx had tended to be a bit volatile, because ForEx and derivative, given the lesser volatility in the currency, there has not been much of income on the ForEx and derivative side from a growth perspective.

So my answer to your question is that we'll have to wait for some time before that part of the fee picks up. On the international side, things have been quite okay, they have been growing. On the corporate, we'll have to wait for some more time to see. It depends on the revival in the economic environment as well. As of today, we don't see many of the projects coming up for financing, the pipeline is quite dry.

And lastly, sir, could you give your views on the CV and the construction equipment space in terms of asset quality trend and the growth outlook there? That's it from my side.

On a year-on-year basis, if you see the portfolio on the commercial equipment and CVs, the portfolio has really declined. We are seeing some pickup in the segment in terms of the incremental growth. And in our case, the bought out portfolio has also sort of gone away. So a growth outlook with the revival in the economy that should grow going forward. On the asset quality side, on that segment, we've absolutely no concerns and asset quality was holding up quite well.

So we'll have to really wait and see in terms of economic recovery in terms of fresh CV sales. The growth would really depend on that, but we don't have any asset quality concerns as of now on that book.

[Adarsh], Nomura.

This question is more related to core fees, wanted a bit of outlook there as to how do you see the corporate book fee growth outlook, especially split between both parts of FX and the other corporate fees, because I think this quarter versus last year on a Y-o-Y basis would have been a little weaker on FX as well. So, has the other part improved a bit from 1Q, or you're just kind of seeing a status quo there?

No, see, if I take it into three components, one is the ForEx fees. If you look at some of the results of the Bank so far and the analysis, generally it has been weaker on a year-on-year basis and there has been -- depending on the banks, the decline has been quite sharp in some cases, in some cases, still there is a decline, may not be as sharp. So that again depends on the remittance fees -- sorry, remittance volumes we've seen and the kind of hedging activity which is going on in the economy, which I think there was not much of an opportunity this time around, compared to the same quarter last year, because of the extreme volatility in the base quarter and almost no volatility in the current quarter. So that I think, we'll have to wait and see. It will get rebased now. So hopefully from here on, things should improve.

On the second component, which is the transaction banking, commercial banking kind of a segment, in some of the activities like the bank guarantees and so on, there have been slowdown. So that is something which is impacting, which I think again will depend on the economic recovery. And the last part, which is a lending-related fee, I think it is still some time away in terms of a year-on-year pickup.

So I think if you look at it in the context of core fees of the Bank, I would say that the immediate term drivers would continue to be the retail side and within that retail liabilities have been a driver in the -- it has been driving the fee income in the forefront. Rest of it in terms of corporate banking, while the granular fee income in the corporate banking can potentially grow from here, the rest of the incomes we'll have to wait for some more time to see as and when the economy revives.

So from a near term corporate fee perspective, you would still think that the contraction can continue?

Yes. At some point in time, the base will start working for us, so things should pick up, but overall basis, I would say that we would rather focus on the areas which are growing and then try and get a higher market share on those incomes, because in ForEx over a period of time, we have improved our market share of fee income. So those we would focus on in the immediate term and wait for the corporate activity to pick up, rather than be anxious about expanding our fee income there.

And what's the split of the fee now between corporate and [SME], it used to be like 50-50, then became 45-55, so?

Retail has become 60% of our fee income and corporate and SME would be about 40%.

Manish Karwa, Deutsche Bank.

My question is again on fees. Now, if you look at your breakup, it seems that your corporate fees have actually declined by about 15% to 20% on a Y-o-Y basis. While you've explained some part of it, but if you just look at your competition, everyone has grown fees in a range of like 5% to 20% -- 5% to 30% on corporate, where do you think you are losing on -- and in which product? Is it largely to do -- and you also said international is okay. So it's something to do with the domestic -- some segment in the domestic where you seem to be missing out or losing versus competition. How do you read that?

So in terms of the fees, if you look at, from last year Q2 onwards, the overall fees at the Bank level was pretty much flat for the last three or four quarters. This quarter we have seen increase in the absolute number from about INR19.5 billion to INR21 billion, which is coming mainly from retail as Kannan was saying. On corporate and other fees, I think, fees have broadly stabilized. So we are not seeing any decline over what we would have earned in, say, a Q1 or a Q4, but yes, vis-a-vis Q2 of last year, we have seen a decline which has come in.

This quarter, of course on the FX and derivative side also there has been decline, which is there on the corporate and international side which is there, but if I look at a trailing-quarter basis, fees has stabilized and as Kannan was saying, at some stage as the [company recovery] kind of happens, you will start seeing the fee levels growing. We would not expect the current level of fees to decline from there.

So during the quarter, we have really been writing a bit of a base effect on corporate related ForEx and derivative fees, that is one area. But the positive areas for me have been the expansion of fee sequentially, as well as the fee to income ratio improving from 26.4% in the previous quarter to 28.4% during the current quarter. So things seem to be looking up, but why we have been cautious in terms of our outlook is really that we'll have to wait for the corporate activity to emerge to see much better fee income growth from here on.

And if you look at excluding the FX and derivative part of fee income, the rest of the fees would have grown at close to 10% on a year-on-year basis.

And just on this salary cost, this quarter, again on a sequential basis it has declined. Is it again due to lower pension provisioning?

Yes, a part of that has come from a lower provision for overall retirals, pension and other retirals, which is there.

So, yields have been a bit stable to slightly going up. Plus the other retiral, in terms of pension expenses and other things, the growth has been lower than what it was originally anticipated. So because of that it has been quite muted. And also if you look at the number of employees I talked about, the number of employees has come down sequentially. That also has got a small impact in terms of our salary costs.

Nilanjan Karfa, Jefferies.

The question on this employee reduction, so I probably missed it, you talked about it in the early part. What was the rational, is it more strategic?

This is something we had talked about earlier itself, but some of the initiatives could not play out fully in the first quarter, so which has started playing out now. What we had talked about at the beginning of the year is really to say that the employee productivity has to really go up, because the way we looked at it is that we had introduced so many technology initiatives over the last 18 months or so, like tab banking and various mobile-based applications, etcetera, so we said that it has to translate in terms of people productivity. And as I mentioned during the opening remarks, we had recruited about 14,000 employees, and we had to get productivity out of those employees.

So we believe that given the scale of operations and given the kind of employee additions we've done and given our aspirations in terms of growth and productivity, we can do with lesser number of employees. The way we have executed that strategy is to carefully look at manpower in each of the functions and wherever in functions we believe that the productivity can be enhanced, we have not replaced the attrition. So that is how we have managed it. So I think this will continue. So we are quite okay with -- staying with a lesser employee base than what it is currently.

If I read it rightly, you have roughly about 69,000 employees on rolls today, is that right?

That's right.

And even some of your computers, which are having an asset base much lower than yours are having employee base much higher than yours, so --

See, if I look at it from the asset perspective, if you look at the composition of our assets, we are currently about 40% retail. I'll call that 40% retail as employee-intensive business in terms of the manpower requirement. Then after that, if you look at the second piece, about 30% of the assets would be domestic corporates. And there really it doesn't consume too much of manpower. And if you look at about 25% of our asset base is actually overseas branches, where the bulk of the funding side is really wholesale funding and on the lending side, these are all corporate lending, it's not really manpower intensive.

So I guess, when we you are doing a comparison across banks, one has to adjust for the asset composition in looking at the number. That is really from our perspective also, we really looked at it in that context and said that, yes, we can do a lot in terms of overall employee productivity. That is how we're looking at it. So I don't think when you just for this kind of asset composition, we would not be under-staffed really.

Okay, point taken. I think there's another question. You talked about the security receipts, that went down about what, INR2 billion roughly and you also added INR2.9 billion, which is the assets that you sold to ARCs. So you would have pretty significant amount of redemption, is that a right conclusion.?

No, the [INR2.9 billion] was basically NPAs which were pretty old and they were substantially provided for. So the SRs that we would have got against that would be a much smaller amount. It's not that we would got INR2.9 billion, it's a much smaller amount, it was already significantly provided. These are pretty old assets which were there.

So you essentially sold NPAs and not --

Yes. INR2.9 billion is from the gross NPAs.

Gross NPAs, which were substantially provided. So net number was a much smaller number and SR that would have come in because of this is a very small number.

And probably a last question. When you look at the insurance piece and you said the incremental business is coming from ULIPs, if you can help me understand, is ULIP a better margin product and therefore, why is the margin not improving on a sequential or Y-o-Y basis?

No. It is not a better margin product, but it is -- from the customer perspective now, fairly -- much more cost efficient and transparent product than it used to be. So from the customer perspective, it is a better product.

The markets have done well.

Markets have done well. So there is appetite for it and it's also easier to sell in that sense to the branch network. And, of course, as you are aware, post the change in the traditional -- non-link product guidelines, late last year and earlier this year, there was some shift back towards ULIPs in terms of the composition. So it's not really a better margin product at that.

So the challenge is that to increase the margin from 10.9% level currently to 12%, 13% over the next few quarters, that is what the Company is really pursuing. So if the ULIP happens to be the most popular product, given the customer preference perspective, I don't think we can fight it. So the Company is looking at selling high margin products like a term product and so on, either on a standalone basis or if you can't fight the market, find a way of up-selling it or using a topup and those kind of base in which they want to sell more of high margin products. So that will sort of take them. So Company is focused on that and we will also track it from our side and that is the path we have asked them to pursue.

And sorry, you just also mentioned that the dividends have again increased from the ICICI Life. So what kind of -- I think, if I look at the full year FY14, I think the total dividend from the three large subsidies was about what, INR12.44 billion, the top four subsidiaries, essentially. What kind of number are you looking like, a jump off of another 15%, 20% over that? Does this number essentially moved from something like INR7-odd-billion the year before.

Yes, yes. You are right. We have been --

ICICI Life started paying out higher dividends last year, but now for the last three or four -- three quarters or so, on a sequential basis, the dividend has been pretty stable.

So what kind of numbers, would do you have any guidance for this?

Our endeavor would be to increase this number, but we've not sort of looked at any specific target articulated on this.

Ashish Sharma, ENAM Asset Management.

Good evening, sir, and congratulations on a good set of numbers. Just from a margin perspective, could you just give a split between domestic and international NIMs? And also from a guidance perspective, do you see some sort of -- any lever to sort of increase the domestic margins, where do you see it from a medium term perspective?

The domestic margin during the quarter was 3.84% and the international margin was 1.58%. The domestic margins expansion we've seen has been because of a healthy CASA accretion and the CASA percentages which have stabilized even on an expanding deposit base. So that has helped us on the domestic margins. On the international margin, specifically we saw decline because of about 4 basis point decline on account of the bond issue expenses of $500 million bond issue we had in the last quarter. So our own approach to margins is that as I have mentioned, even during the last call, is that we would like to look at 3.3% to 3.4% as a number for net interest margin for this year? So that is what really we are tracking.

But from a domestic margin perspective, do you see any levers which sort of can pull this 3.8% to 4%, I mean what's the sense on that?

Yes, of course, long-term that is going to be the objective. However, in the short-term, one has to look at how the interest rates span in the environment. We have seen some moderation of wholesale deposit costs already. So we'll have to wait and see what the RBI action is, as well as how the liquidity situation develops, because if we have a sustained decrease in deposit cost, than at some point in time banks will look at passing it on to the borrowers in terms of lower lending rates. So there are moving parts, so we'll have to wait and see. But endeavor during the long-term would be, yes, of course get it [2%, 4%] type of levels.

And second would be on ICICI Life, the margin perspective from Q2. I mean the Q2 numbers reflect a margin of around 10.9%. Do you think this sort of can inch upwards, I mean just some color on that?

No, endeavor would be to clearly inch it up, as you say. So that we have to do, but in the immediate term, the most popular product has become ULIP, given the market conditions. That's why while we would have liked to sell more of other products, 80% happened to be ULIP during the quarter. So which is not necessarily a very good product from a margin perspective, but customer preference is towards that.

So as I mentioned earlier, how to push the margin up has to be by selling -- by moving the product mix towards higher margin products, such as term insurance. It'll be done either on a standalone basis or as a topup or a rider over the existing products, which are selling well. So that is the path the Company is pursuing and we are hopeful that over the medium term, the margin should go up from here.

Abhishek Kothari, Quant Capital.

Just one question on your employee base. Looking at retail growth that you are targeting about 20%, would you be hiring in large numbers?

No, we'll not be hiring in large numbers and wherever required we'll hire. But if you -- over a period of time, if you look at the strategic shift, it is been towards doing more loans from the branches. So I think when it get added to the overall branch activity, then we can manage it through the existing staff as well by doing it through more branches and so on.

So I mean, this 2,400 kind of reduction that we've seen, mainly, do you have any breakup as such as to which segment did you reduce majorly from?

If you look at the overall basis, it will be across segments. I mean since retail continues to be the highest manpower absorbing unit, obviously it will be a bit more on the retail side. But across the businesses we had seen the manpower reductions.

And just one data point, what are total NPA from restructured book?

We have said during the quarter about INR8 billion.

I'm asking about the total, not during the quarter.

Total?

Accumulated NPAs from the restructured book?

As Kannan mentioned earlier, of all the restructurings that we have done over the last several years, about 15% has slipped into NPAs.

Nilesh Parikh, Edelweiss.

This is [Kunal] over here. I just wanted to understand in terms of this overall advances what we have seen in case of, say, the other banks, they have given some correction on the corporate side. So I just wanted, maybe today our loan is still driven by the retail. So what is our stance on that and where do we see the corporate loan growth to be?

So on the corporate side, if you look at -- for us, the retail we believe will continue to grow at a higher pace, it should be closer to 25% for the year. And even for the next couple of years, the growth there should be strong for us. As you know, we are coming off from a overall lower proportion of retail loans compared to where we used to be earlier.

On the corporate side, as things start improving in the economy, we will also start seeing growth there. So right now, in the current quarter the growth on domestic corporate is about 5%, SME was about 10% or so on a year-on-year basis. That we expect should improve going forward, but it will be a function of what opportunities we see, given the current lower loan growth across the system, the pricing is also extremely competitive. So we will see how the pricing is, what the risks are and then grow in calibrated [fashion].

And in terms of the overall provisioning, what we look at it, suppose if there is a restructuring which is -- the slippage which is coming from the restructured pool, is it actually impacting the overall provisioning, so, say, when we look at it maybe as compared to that of, say, INR7.2 crores, this time it is INR8.5 crores, so since you mentioned like INR800 crores is getting slipped from the restructured, we would have already made some provisioning over there. So was there a major need of any additional provisioning on this book, apart from the RBI requirement?

So whenever a restructuring or any loan slips into NPL, there is RBI guidelines in terms of the provision requirement which is there. And those requirements for a loan slipping from a standard category or a restructured category would be similar. So for the loans that have slipped from restructure, we would have made additional provisions for that.

Whatever is required as per --

Whatever is required. And additionally what happens in a restructuring is that the date of NPA has to be taken from when the restructuring happened. So actually the level of provision required is normally higher than (inaudible).

So, on this INR800 crores, maybe it would have been slightly higher which is --

Yes, yes, yes, because aging provisions corresponding to that age is much, much sharp provisions.

Pritesh Bumb, Prabhudas Lilladher.

Just one question on the home loan side. Any industry, especially in the private sector banks, we have seen home loan growth more -- home loan growth more or less flattish over quarter-on-quarter. I mean there has not been a lot of traction, but we have seen the continuous uptake in our home loan. So what different we are doing in our home loan side for such kind of a growth?

So if I look at the industry numbers, our home loan is still growing reasonably well. So it's not that Y-o-Y growth -- system loan growth for mortgage is still above 15%. And as you know lot of --

[16.5%].

And a lot of that growth is with the private sector banks and the housing finance companies. So the growth is still there and the reason why we are growing faster than that, both in case of, say, home loans and passenger car loans is, one, that we have over the last 18 months or so kind of got back into locations where we were earlier not present, and that has helped us grow the volumes, and we believe that we should be able to sustain this growth. Of course, as we get into next financial year, as our base growth increases, the level of growth would come down somewhat from the current level of 25%.

And second question on the branch expansion side, what kind of a branch expansion we want to see in the next two quarters and for FY16?

I think this year we would be looking at about 400 branches or so overall. And similar pace of addition should continue next year, though we have not finalized our plans.

So incremental branches will be more into metro and urban areas than in the rural areas?

It will be a mix. It will be across metro, urban, as well as rural.

And the last question is on the gross retail NPAs. They have been scaling down a little bit over some quarters now. So what kind of level should one see now it coming down -- should it come down more or should there be more improvement in that side or how we should see there?

I think there will still be some more improvement, partly because of recoveries and partly also we have been making some write-offs of NPLs. So because of that, it should still improve --

From the current levels.

Amit Premchandani, UTI Mutual Fund.

On the ICICI Life profit front --

Sorry to interrupt Mr. Premchandani. We are unable to here you clearly.

On the ICICI Life front, of the INR400-odd-crores of profit, can you just give us some sense of how much would from the surrender charges?

I don't think that is a relevant number now. I mean that would have been some number three years ago. Today it's not a relevant number.

And this quarter, the home finance division had seen a growth, especially this quarter. So are you again re-thinking on the strategy of booking the mortgages on the home finance or the parent book?

No, they have a location-based strategy. Beyond a certain locations which are being done, the banks in the smaller locations they do it. But we will continue to book it predominantly in the Bank going forward, as well.

No change in that?

No change in the strategy.

Rajeev Varma, Bank of America.

Most of my questions have been answered, but just wanted to get a color from -- I guess, on our volume growth, you're obviously seeing -- you're still holding on. Just one thing on the unsecured piece, the credit cards and the personal loans etcetera, I mean, can we expect that could be sustained at the high levels of 30%, 40%, since it's obviously coming off a very low base?

Yes, base is low and it will be sustained at [40 still], yes.

And the other thing is just wanted to understand on the retail piece, as you are expanding the -- as you expanded, how much of your branch network have you penetrated for the growth? I mean, like, in terms of your retail assets, especially on your cards and the other parts, are you already into like 60%, 70% of you branches, are you getting that or do you still have some scope there?

No, we will still have some scope there. It has expanded a lot compared to what it was a couple of years back, but we still have scope to expand from more branches. And some of the growth has been driven by that phenomenon playing out.

Anand Laddha, HDFC Mutual Fund.

You just mentioned that you will be focusing on increasing operating efficiencies. Could you just throw some light, what sort of OpEx one can expect?

As I had mentioned, we would look at sustaining the cost to income ratio at around the current levels. So that is what we are expecting. Even at this level, it will be one of the most efficient banks in terms of cost to income ratio. And as I said earlier, we constantly look at not just manpower expenses, as well as all the other expenses and look at efficiencies in all areas. I think that will continue.

So this quarter cost to income ratio was at 36%.

36.5% yes.

That is what -- is this sustainable?

No, internally we want to bring it down from the current levels. But I'm suggesting that at least at this level, we should be able to hold, that's what I am saying. Internally, of course, we would endeavor to even bring it down further.

Jignesh Shial, IDBI Capital.

First just wanted to confirm, what had been this addition to restructured book during this quarter?

It is about INR8 billion.

INR8 billion has been added during this quarter?

That's correct.

And just further on the restructuring part, now since the restructuring wont' be allowed from the next fiscal onwards, do you see some more [B-shares] might be coming up for the restructuring in the second half of this fiscal and even the probability of slippage from the restructuring would be higher, even in the second half as well. Do you see that kind of probability happening?

So first part, in terms of further restructuring will happen and we have talked about the pipeline today of [INR18 billion] which is there that will get done predominantly in Q3 and depending on when actually it gets done it could be Q3 and Q4. So that addition is likely to be there. And as I mentioned earlier, while our endeavor would be to follow up with the companies and ensure that they perform, so that they don't slip, but it will also depend on the economic environment going forward. So I won't think I will be able to predict exactly how much will really slip. But you will have to wait and watch the economic environment to make an assessment. But whereas the addition to restructuring will continue in the next couple of quarters.

And what is the quantum, I mean approximate quantum you'd be having on the lending front to this holding in your power related companies, which might be affected because of this regulation change and all. Any approximate quantum that if you can share?

As we said, we don't expect any impact in the near term on account of this, because it doesn't materially change the status quo as it was between three months back with regard to fuel supply and when we do the -- analyze the project, as Kannan mentioned, when we analyze the projects based on alternate sources of fuel, while the DSCRs do come down, we feel in most of the cases, there would be ability to service debt. So as of now, we have not really identified any particular projects that will need to be sort of restructured etc on account of the coal de-allocation.

That I agree. I mean I just wanted to know the total quantum or total exposure that you will be having towards this. I'm not saying which are looking stressed out or something, that -- I agree that it looks pretty okay right now, but still if you can give me just the total exposure to this --

We have really not shared any such numbers. (multiple speakers) Our exposure to sectors like power and metals and so on is of course, you know, published, but we've not given any coal (multiple speakers) kind of exposure.

M. B. Mahesh, Kotak Securities.

Just a couple of questions. One, you had initially mentioned the average CASA being one of the critical drivers for margin expansion, but if you look at margins in the domestic book, the average CASA in the last four quarters has been more or less constant, at about [13% to 13.5%]. So just trying to understand how the margin expansion came, especially given the fact that the loan book -- I've asked this question previously as well. if the loan book is moving a lot more retail, isn't it inherently a yield-dilutive process? And two, you've seen reasonably a large amount of slippage from the restructured book. So inherently, you would have seen margin or rather interest income reversals right from the day the asset initially fell into the moratorium period. So just trying to understand what is driving the margin expansion in the domestic side?

Apart from CASA being stable, we have also, over a period of time, last several quarters increased the proportion of the retail deposits in the total deposits. So that has also been positive. And if you look at last -- immediate term, if you look at the wholesale deposits, rates have been really coming down. So it is a combination of factors which has pushed the -- so overall basis, if you look at it, the cost of funds has surely come down over the last two, three quarters, the cost of funds as a result has come down on the domestic side, which has resulted in the margin expansion. Yields have been stable. We do have a mix of a portfolio which includes automobile loans, CVs and all the other side, unsecured retail also, so yields have been quite stable. So that is the reason for the margin -- sorry, yes, restructuring slippages have not really impacted the margins really.

Is it possible for you to say that retail yields and corporate yields are at similar levels? Or if I can say retail and non-retail?

They may not -- similar meaning if -- we have not given that separately, but they have been different across each of the product. It is quite different actually.

Second question is, in response to an earlier question, is it possible for you to tell us how much of the retail assets are now being generated in-house? And two, has it resulted in a higher cost, because the DMA expenses are running at fairly high levels today, that the ROEs in the retail business are inherently equivalent to what you could eventually achieve if you run a corporate business? Because the long-term aim is to get it to above 16% levels, will retail achieve that or not, given the current sourcing pattern and the current yields that is happening in that particular book -- current risk adjusted yield that is happening in that book?

Currently, in terms of the sourcing pattern across various products, like on the secured side, about close to 30% would be happening through branches. So we, of course you know, have targets to improve that further from this level. In terms of ROE, again, it varies across individual products in the retail business. So something like passenger car loans will be at the lower end of the ROE that we would be targeting. Mortgages, if I look at, including the essential mortgages, plus the loan against property, on an aggregate basis, that would be doing pretty well in terms of ROE. Unsecured, of course, the ROEs are better. So in terms of the ROE that we are targeting for the Bank, I think over time, we should be able to get the retail ROEs also to that level. And earlier what we talked about on the operating efficiencies that will also be a critical driver for us to get to the ROEs that we desire on the retail business as well as the overall --

And regulatorily, retail will get more and more capital efficient in terms of the ---

But that is from a risk weighted asset perspective, just asking from an ROE perspective, can we still do a 15% to 16% levels in the current format?

So the lower capital requirement will mean higher ROEs.

Because risk weighted assets will be lower, so capital will be lower, so ROE will be higher.

Thank you. I now hand the floor back to Mr. N.S. Kannan for closing comments. Thank you, and over to you, sir.

Thank you. My team and I are available for any questions you have. Thank you for joining the call. Bye-bye.

Thank you sir. Ladies and gentlemen, on behalf of ICICI Bank that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.