Hdfc Bank Ltd (HDB) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to HDFC Bank Ltd. Q4 and full year FY2026 earnings conference call on the financial results presented by the management of HDFC Bank. As a reminder, all participant lines will be in the list and only more, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Srinivasan Vaidyanathan, Chief Financial Officer, HTFC Bank. Thank you and over to Mr. Vaidyanathan.

Thank you, thank you Nirav. Good evening and warm and welcome to all the participants. Today we have with us our chairman, Mr. Kiki Mistry, our CEO, Mr. Sashi Jagdishian, and our deputy managing director, Mr. Kaizad Barucha. I will hand off for opening remarks to Sashi. Over to you, Sashi, then we can get on to the other agenda.

Thank you, Srini, and thank you all. Good afternoon to you, and welcome to the full-year FI26 annual results call. Let me dive straight into the key aspects of FI26 performance. We had estimated the system credit growth to be around 10.5% to 11.5%. We did 12% up from 5.5% last year. As you can see, there is positive momentum as we had expected. Deposit growth rate at 14.4% continues to grow faster than the credit growth, which is what we've always been doing. The growth rate is better than the system growth rate yet again. Net income growth clocked at 11%, similar to the last financial year, whilst EPS growth of 10% versus 3% last year. The yield on assets had a faster transmission as against deposits on a full year basis leading to a NIM drop. Despite the drop in NIMs, the return on assets continued to be stable at 1.9% due to cost efficiencies with cost to income declining from 40.5% to 39.5% on a core basis and focus on quality growth reflecting in lower credit costs. I would like to remind the sizable investments we made over the last five to six years, which will bear fruit in the coming years. These investments were despite we witnessing significant events such as COVID, a complex and one of the largest mergers in corporate history. The distribution nearly doubled to 9,700 branches. The number of customers nearly doubled to 100 million customers. Our tech investments more than quadruple to around a billion dollars. The merger with mortgage company HDFC Limited 2 is an investment for the future. The banks navigated the same in a stable manner over the last three years, despite changing economic outlook and regulatory stance. The above is going to provide a huge operating leverage to the future. Sometimes all of us have short memories and forget the core business foundation, which remains our moat and strength. Customers at 100 million, we continue to acquire about 6 to 8 million customers a year. This will be the funnel for future growth. 22% of our customers are actually 30 years of age. 42% are less than 40 years of age. This enables us an opportunity to engage through their life cycle, which would be the future engine of growth. We continue to be market leaders in our core franchise offerings, such as cash management. In the capital market segment, we continue to hold about 35% to 40% of the account settlement. In the bankruptcy issue, we hold about 40% to 50% of the escrow settlement. In the trade part of the business, almost 18% to 20% of the country exports go through us. In the imports, 13% to 15% of the country's exports go through us. In the cards, merchant acquiring, almost about 35% to 36% of the acquiring comes through the bank. On the issuance of credit cards, 21% to 22% of the issuances of the system is from us. In the spends, almost 26% to 28% of the card spends in the market is through our cards. We are a dominant salary relationship bank in the private sector. We are among the top two MSME banks in the country, so as in the mortgages. We are among the top two mortgage banks in the country. In the wheels business, whether it's auto or transportation, we're the top wheels bank in the country. The above, despite intense competitive environment, reflects the excellence and execution capability of the bank. Our financial parameters reflect strength and resilience of the bank. We have a strong capital position at 19.7%. Our asset quality is extremely healthy at 1.15% growth NPAs. This has been tested across three decades of business cycles. The bank has created a large provisioning buffer of almost 125 basis points to absorb any shocks in the future, where this is obviously contingent upon any future events that may occur in the future, we don't have any stress in our portfolio as we speak. Our focus is on profitability while pursuing growth opportunities. The loan deposit ratio is not a constraint. The regulator has come out and talked about it. We have demonstrated our ability to gain market share on deposits every year, almost around 30 to 50 basis points over the last five years. Hence, it's no longer a binding constraint. We have been building granular and sustainable deposit franchise, which is reflected thus. In the less than three crore retail liabilities, we have moved up from 31 percent of the net total accretion to about 47 percent of the total net deposit accretion for the year. This reflects the focus on granular and sustainable deposits. Having said that, the bank will continue to improve its quality of deposit franchise over the years to come. The bank witnessed an unprecedented event recently, but its strength and resilience was seen with stable and strong deposit flows. I would like to take this opportunity to thank the Government of India, the Reserve Bank of India, and SEBI for their unequivocal support during that period. However, the most important strength will be our leadership in the technology space. Over the past few years, we have focused on strengthening the bank's long-term competitive position anchored heavily in our technology architecture to operate as a technology-first institution. A large share of our investment has gone towards improving the digital front-end customer experience. We have been upgrading our interfaces, simplifying acquisition and service journey, and modernizing our digital platform. We launched in the year our new net banking, mobile banking platforms, and also our payment platform, which we probably did it about a couple of years ago. All of them are at a population scale. Today, our mobile app serves over 60 million registered customer offerings. The features, the USP of our build focuses on security. We have an OTP-less authentication. We have a lock, which is for non-security. And we have a full-stack UPI-enabled wallet, which we call the ZAP account. A combination of the above will make it extremely secure and probably one of the most secure offerings in the country today. The efforts have increased digital adoption to 97% for payments and service transactions at 92% for acquisition journeys. Our goal remains simple, offer customers a seamless, reliable, friction-free presence call across all touch points. The next layer after the customer layer is the intelligence layer. This is principally to build an AI-ready engine. We have built a strong intelligence layer that brings automation and analytics to the core of our operations. By decoupling our front-end and back-end through a modern API gateway and orchestration layer, we now have a strong foundation for the emerging agent-driven AI model. Strengthening, AI is only as strong as its data. We have built a robust data foundation anchored by a customer-level, enterprise-level, single source of throat from a customer perspective. We went live with our lake house architecture a centralized, scalable data lake, reusable, enriched data maps. While not always visible externally, this work is essential to our long-term scalability and AI aspiration. But the big story is how we created in-house the unified AI platform, which is going to be the center that spans across the entire organization. It allows us to deploy AI agents quickly without building custom interfaces, bidding systems. The platform brings together enterprise search, document extraction, voice-based agents, a full AI development lifecycle. It supports multi-foundational and open models and includes a unified evaluation model for strong governance, compliance, and security. We have an independent unit in the RISC team that adds a second-line safeguard. The key components include the model context protocol or the agentic studio and agentic mesh. These are – this will enable us to deploy AI agents to scale, placing us amongst a small group of Indian and global banks with such advanced in-out capabilities. We already have five use cases in production and 14 more in development, improving turnaround times, first-time ride outcomes, and freeing mid-office and back-office capacity for customer-facing roles. The above leadership position will enable us to harness efficiencies across organizations and will be a key driver to enhance return on asset over the next one, two, three years. The guiding principle is return on assets, loan growth, and deposit growth, and quality of the balance sheet from a risk standpoint. All of it should culminate in a consistent EPS growth. Let me also take on the subject matter relating to some of the matters that we witnessed during the quarter, including the resignation of the former part-time chairman and the Dubai branch-related matter. I and the members of the board did provide statements post the 18th March 2026 event. The Government of India, the Reserve Bank of India, and SEBI came out with statements in favor of the bank. The legal review, which is what we had committed at the time when we went to the press, is in process. As and when this happens, we shall provide a summary of the statement. The audited financial statements of the bank for the year ended March 26 carry notes, which are self-explanatory. On the Dubai branch-related matter, the same has been covered in the notes to accounts as well. There is also an NCDRC order, which came out on the 23rd of March, which highlights that the complainants are not retail in nature or are not uninformed investors and they had a clear intent to pursue high-yield, high-risk investment products. So we do not have anything incremental other than the above. So we would like to pause out here and probably take on questions from here. Thank you.

Thank you, Sashi. Niro, with that, we can open it up for questions, please.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on the attached on telephone if you wish to remove yourself from the question queue you may press star and 2 participants are requested to use assets while asking a question ladies and gentlemen we will wait for a moment while the question is the first question is from the land of maruka janya from tara capital partners please go ahead.

Yeah, hi. I just have a few questions. Firstly, that in terms of growth next year, right, what would be the key driver? So, first of all, where do you see your growth? You'd said possibly above sector. So, what could that be? What range could that be? And then corporate growth has been a good driver, I guess, for everyone for the fourth quarter. And that's partly to do with yields as well. Do you see corporate growth sustaining or do you see retail growth picking up from these levels? So that's my question.

So Marukhai Kaiza there, if I got your question as to, you know, what would be the growth drivers? First on the corporate side, I think you would have seen in our release the increase that, you know, we have done over the previous year. We do see this sustaining as there has been demand. Of course, we will have to temper it given the fallout of what we see in the geopolitical area, which hopefully should not be more than a couple of months going into this financial year. But we do see an opportunity in corporate across sectors in electronics, food processing, auto, auto ancillaries, you know, the renewable sector, and the semiconductors. Also, it opens up, as you well know and are aware, of the, you know, different opportunities which are now available from an acquisition financing point of view, including what was already there for more project finance and supply chain. So we see the corporate sector, the emerging corporates and corporates holding up in the year ahead. Coming to your point on retail growth, Maruk, if you really see our retail growth has certainly stepped up from where we were last year. And we have seen a better step up if you followed our results in the last three quarters. And this step up has been there across our wheels business as well as on the personal loan business loan side to add to that we've also seen consistent holding of demand on the mortgage book and that has also performed well so we've seen a growth overall if you look at it or if you look at the balance sheet we've been about 53 54 percent in the retail and the balance coming out of wholesale.

Got it. So what kind of growth trajectory should we look at for FY27? Because I guess the earlier guidance was of our sector growth but the sector growth has also moved up substantially.

Yeah, so Marup, you know, if you really see our loan growth last year was 5% and our loan growth this year is 12%, right? So I think, you know, we will continue to have a good momentum and trajectory in our growth, but you have to keep in mind, you know, what the geopolitical situation and that fallout is going to be. but we are confident that you know we see the positivity continuing we've not seen any alarm bells go up as yet and therefore you know we will continue to focus on on all these areas that I covered earlier thank you Maru can I request to come back for a follow-up question thank you I request all the participants kindly limit yourself to two questions for

participant and we joined the queue for a follow-up question next question is some man of Nathan Agarwal from Mootilal Oswald please go ahead yeah hi good evening an audible yes hi an audible yes yes go ahead yeah yes Nathan your audible please go ahead okay so firstly congrats on a good quarter in a very challenging environment and my question is like two questions firstly on the deposits so how do you look at the deposit market share we have done very well in this quarter, but if I look at it in context to how the system itself is done, we have seen a very sharp pickup in the deposit accretion for the system overall. So how do you kind of look at the market share that HDFC Bank has been able to garner this quarter in context of system number, and any color if you can also share on what has driven this huge surge in the business numbers over the last fortnight? Okay, let me take that if that's okay. see if you look at the quarter the 2.45 lakh crores of deposits that came in typically you see that the market is pretty active and accretes maximum almost more than half close to half or slightly above half of what the year accretes in the last quarter in this year it's no exception if anything it has been more squeed towards the last month of the quarter rather than the full quarter because January was still tight all across somewhere from later part of February to March it has been quite easy and liquid and possibility of deposit gathering is there if you look at the composition so that's one the market is the market there's a market tailwind that is there I think the system growth As we saw somewhere, reported a couple of days ago was about an aggregate level, 11.5%. Now, when you look at the composition of the deposits between retail and wholesale, there is some level of wholesale deposits that come in March quarter naturally because of relationships as well as how the corporate manage their balance sheets towards the end of their financial And you'll see that the average of the retail versus wholesale is about a percentage point of two different in this quarter which in our earnings check you notice that there is there is a 82 against 84 so retail continues to power and stays ahead the 80 percent mark and within that when we look at the composition of the of the deposits between the core region when you sell when i see core retail right and should you like also the other part of the question is like any color if you can share on the what has driven this huge surge in the business numbers over the last fortnight of the year I mean this is the time the pickup is exceptionally strong across the system yeah look yes if you look at it here they could eat you look at the system what what kind of funds that have been available in the system I think the last time we did of quite a significant volume was like 1,75 or one like 80,000 crores or something like that and this year given that we have added much more customers and much more distribution strength and more uh stronger corporate relationships because we've been lending this year remember that we have grown corporate loans for 13 percent so we get we get a higher

levels of share from each one of them thank you nathan i'd like us to come back for a follow-up question next question is from nanof kunal shah from city group please go ahead uh hi thanks for picking the question uh so firstly again uh touching upon on the growth side uh so we indicated like we will try to grow at uh in line with the industry average but we are seeing industry average being upwards of 15 we are still at 12. uh so we have been below it and next year would we retain the guidance of growing above the industry average or would we say like we will still grow in line with the industry average because industry average itself is uh picked up to a very large extent and on the deposits how much of this is the transitory nature and how much of this would it can sustain because last year we indicated that we will more focus on the sustainable deposits even during the period end so just want to get the sense because the difference between the end of period and average deposit is quite high during this quarter okay let me take one by one.

The first one is on the growth in the system. You know, at least if you see through large part of FI26, the nominal GDP growth was expected was somewhere around the nine, nine and a half percent. So one consensus until a large part of the year was a system credit growth of around 10.5% to 11.5%. This is what we had expected, and we calibrated our strategies and our growth in line with that, and that is why we grew at 12%. The system, you have said 16% or 15%, but actually when you compare the period in numbers as of 31st March, which is published by the Reserve Bank of India, and you sort of make the math, it comes to somewhere around the 13.5 to 13.9 percent. That's a system growth. Obviously, it has been faster. It is something that we have to navigate, but it's not too far away from the momentum we have seen from a 5.4 percent growth and a 5.25 to a 12 percent growth. So I think we, as Kaizad was mentioning, we're very well positioned to continue that kind of a momentum in a manner that we do responsible growth, and we don't want to overstretch beyond what could potentially have some landmines in the future. So that's the reason why we're not sort of, because of this dichotomy in terms of the growth being slightly more than what one expected in relation to the nominal GDP growth, I think we would like to sort of just leave it at that to say that our trajectory is in the right direction and we will do what is appropriate from our risk and reward perspective. That's part one. Part two on the, what was the second question on the deposits, let me first take the granularity of deposits. The retail has always been, as a proportion of total deposits has been about 80 to 85 percent of the total bank's deposits. You have three significant verticals where we have a lot of close relationship being even whether it's corporate banking or whether it is the capital market segment as well. Now, let's talk about the 80-85 percent, which is the retail segment. You know, within that, there is definitely a focus on trying to see how we can garner more granular time deposits. If you see, as I mentioned in my opening remarks, the granularity of the deposits has stepped up significantly. In fact, the less than 3 crore deposits have grown, which has been mobilized in 2026 on a net basis, has grown up almost about 74% over the net incremental deposits for FI25 on that less than 3 crore bucket. So what constituted 31% of the total net accretion in FI25 now constitutes 47%. It's a very significant number because these are all very less volatile and very sustainable and that is something that we are emphasizing as we move ahead. And this particular number should go up even in the future.

47% is less than 3 crores. 47% is less than 3 crores.

On the time deposits. On incremental. Of the incremental. So if we have mobilized 3.9 lakh crores for the full year, 47% is that. Now, in terms of the volatile or the high frequency deposits, it's quite natural when you have corporate as a significant part of corporate and capital markets, which contribute 55% or 53% of the balance sheet, you will have large relationship which you need to patronize. And that aspect of the 15% of the total deposits will be volatile in nature. you will see that moving out and probably coming back during every month ends or quarter ends as well but the endeavor is to try and see how on a full year basis we try and inch upwards the net incremental mobilization and that is what we are all working towards so that gives the confidence on lcr at 114 odd percent because now we are below 115 so how would we look at lcr because now ldr is not in focus but obviously we would want to manage lcr so what how what range we

would want to sustain the lcr zero in the past we have mentioned that our endeavor for lcr is to be between 110 and 120 we are somewhere in the middle uh last quarter i think we were about 116 now we are 114 so thereabouts that's the kind of range at which we intend to operate to be in the middle sometimes it goes higher sometimes it comes below but somewhere in the middle is where we got it thank you yeah thank you next question is from the line of panel from Bernstein please go ahead hi thanks for taking my questions my first

question session team is more on guidance I think I heard you right you said LDR is no longer kind of relevant or a constraint and I also heard you saying that loan growth, you would rather focus on improving momentum rather than benchmarking the system. So is there one metric that you use internally to assess performance, which kind of captures some of these pushes and pulls you have on the different metrics that would also be helpful for I guess performance? That's the first question. And second question is on your NIMS. The borrowings have come off almost 11% year on year, but the NIM trajectory is broadly similar with what some of your peers have reported. So if that's something you expected a year back, meaning borrowings comes off, but NIM doesn't really get impacted, or has something changed in their current? And more importantly, will a reduction in borrowings have a meaningful impact on NIM going forward?

Or is that even a lever that you are thinking about? those are my questions thank you so let me let me talk about the what you ascribe to the borrowings mix changing but yes changing of the borrowings mix is a favorable item where costs that are higher essentially the spreads that you pay you can you can save on that and get to the bottom however if you see what has happened the rate cycle when you look go back about a year when you when were in March April of last year the rate hiking cycle had just started in February and there was no kind of an indication that it would end up 125 basis point in the cycle so far the reduction cycle 125 basis point was not something that was anticipated last March last April and when that happens and little about 70% of the loads are floating rate and immediately the transmission takes place deposit as you know is managed and so within the deposit when there is a higher propensity for time deposit which we have seen the time deposit rate of growth was 15 and a half percent year-on-year when you see now in the total deposit rate of growth was 14.4 the time deposit and so so this is a higher propensity towards the time deposit which is again on a relative basis higher price and so that is where it is sitting and it needs to unlock itself both from how the rate cycle plays out as well as how the borrowings remaining same that means no no other no other factors more on returns rather than this name keep up the metric that would be appropriate so what would be the best metric then roa is what we should focus on uh people is an intermediate intermediate rate i mean you take higher risk and and give and top line you give it away and the credit cost below the people determine what returns you can get so we focus on the returns on return on asset okay but that doesn't capture growth right i mean yeah at the growth rate for profit growth and returns top-line growth and returns and EPS that's what you are looking to understood thank you thank you thank you thank you thank you thank you next question is from the landlord Sheshadri Sein from MNK Global please go ahead Sheshadri can I request on me to align and proceed with your question

Can you hear me? Can you hear me?

Yes.

Hi. Thank you for the opportunity. Two questions. One is I was hearing Shashi with interest in terms of the investments that is being made in the last five years. Are we now entering a cycle where the cost income ratio has peaked and we can expect significant benefits to come through? I know part of it will come from revenue growth itself because loan growth is bouncing back. this should be a better year for margins etc but on the opex side is it could is there a possibility that the overall opex could slow down from here uh because a large part of these investments that you made uh are done or do you think this is an ongoing you know process and then and there's not too many divers yeah so shall be yes the if you look at the cost growth that we have we have seen that at a level almost like they call it the six and a half seven percent or so is the full year right quarter to quarter variations

happen but full year call it six and a half seven percent rate of growth it is lower than the top-line growth and you're seeing that benefit coming in Having said that, the cost to income is a relative ratio, as you know, as you also just alluded to, even the top line moves faster, you get that relative ratio, but more important is also to look at cost to assets. Cost to assets is at about 1.9 or so. We do think that the cost to assets at 1.9 is best in class, but however, we do see that there is an opportunity space, even in that aspect of it, due to various technology implementations.

Which is what I mentioned, Seshadri, that if we just focus on the investments that we made in technology and, you know, implement them across the organization, you should see operating leverage kicking in and enhancing your ROAs. Thanks.

The second question is on retail loan growth. You've done well in terms of recovering the overall loan growth, but retail still, I think it's in the in the single digits uh i i think has some upside before a franchise like yours going forward what would be the levers to accelerate retail long growth which products which channels uh more harvesting of of cross-selling within your existing customer base should we expect some forward momentum in in that uh part of the business in the coming uh FI 27 early in the year and would it be back-ended or front-ended so I think you know I did cover it in my opening response tomorrow we have seen you know

good traction across our products in wheels personal loans as well as in the mortgages space over the last three quarters sequentially and in terms of leavers today you know if i just take mortgages you know we were doing mortgages earlier out of about 6800 locations we are now covering mortgages uh you know for more than uh 7800 locations closer to 8000 so one is we are using distribution two is we've got our digital channels working very well and we have seen a higher utilization of our 10-second loans both in our express loans in auto loans and personal loans. We've also seen more addition to the customer acquisition base that is what Shashi referred to earlier as well as the foray that we have done in the salary accounts. And these salary accounts create the base for us for better cross-sell and penetration of our retail products. And we are the leading bank in salary accounts and the quality of the franchise we have out over there. So if you look at our physical distribution of branches, if you look at the better penetration and utilization of our digital channels, as well as you look at the increasing acquisition that we have in what we call a pre-approved base because we have the history of the client because of the salary relationship has obviously created the momentum without going down the asset quality ladder. yeah and okay i'm being prompted by shashi on a very important matrix we have seen our dispersals go up a quarter on quarter which is another parameter on the retail space and you do know that on the mortgages side i do believe that you know we would be amongst the top two with hardly a gap in terms of the quarterly disbursements that we have been doing. In the auto loan space, we have grown well. We continue to be market leaders and we have the largest engagement with all the OEMs as well as the dealer base, which acts as the real feeder for the retail loans so between the physical channels between the digital channels between the customer acquisitions and across the set of all retail products we do see that growing well we also see ourselves doing well in a product that we have launched over the last year and has come up very well has been our whole loan business we've built a good quality book out over there and I do see that also continuing to contribute. The last lever I may touch upon to give you a sense has been on our SME business. We have been market leaders in our SME business and today we are number one in the country on the entire SME space or MSME space. To give you some granularity, we are number one in 15 out of 28 states and we are number in the top two in the 25 out of the 28 states in MSME. If you also see the pack which my colleagues have put out, we've grown our business banking, which is mainly representative of our MSME, we've grown at about 20% year on year. And that will continue to also be in that range of 18 to 20, 21%, depending upon obviously some of the developments in the economy. So that should give you, I hope, a good sense of what will be the levers on a consumer bank and the channels to which we will get it.

Can you talk about the merger synergies as well? Well, that wasn't the question, but I'm happy to cover it.

Yeah, in the moment. So another aspect, just to leave on the consumer side and the mortgages business, as well as some of the benefits that we have accrued over the last couple of years from this business that we acquired. So let me touch on a few of the levers, and I'm sure separately we could give you more color otherwise. So from the book we inherited, we had roughly a penetration on the liability side, which was about 36% share. So 36% of the people who had home loans with EHDFC had their liabilities with us. Net of attrition, net of acquisitions over this journey, this 36% has come as high as 50% within the last two and a half years. And that tells you the liability franchise that we've got. As we mentioned in our calls earlier in October and January, happy to update you that we continue to have 98% of all home loans that we disperse are customers opening a liability account with us. And therefore, you've seen this shift move from 36% to 49, 50% of stock as we sit on today. More importantly, more than the 50% stock that we sit on, today, approximately a little over 60 to 65% of that stock pays their EMI through my own account, and which tells you the synergy which a home loan and a liability bring from a value accretion perspective as well as from a risk perspective. The second thing out over there would be apart from the actual CASA balances that have grown. And at that point in time, we roughly had about 50,000 crores value of the CASA balances, we have today grown that to 86,000 crores. So that's been the growth in the two and a half years, not only in the numbers, in terms of the engagement of the CASA accounts, mainly SA, but also of the value accretion that has happened. A thing I had mentioned in the past, which had come up, and that continues to hold good as the book matures, as the engagement matures, that the average balances that we see of customers that keep their liability with us who have their home loan goes up 2 to 2.25x compared to the standard average balances that will otherwise be witnessed in the banks. Apart from that, finally, there is what we call the cross-sell thali internally, which consists of a host of products, which was not limited to, indicatively, or the cross-sell that we do on the credit cards business to this portfolio, the insurance policies that they take to ensure their homes, the wealth accounts that we open, as well as engagement on our digital properties, including the smart wealth and the PaysApp accounts or the PaysApp gateway of our wallet that they use. So the engagement is all around. And today, nearly 23% of our home loan customers on stock have our credit cards which are active. So I hope that rounds up, Shashi, as you were mentioning, the flavor of how this has grown and in the manner it has grown and the way it will continue. Thank you, Kaisa. Thank you.

That was extremely important as to what we are looking at from a mortgage book perspective. It's not just the book, but the kind of primary relationship that we are all focusing on, and that's going to really be a large, sustainable franchise over a long run. we have the lowest lowest uh npa percentages as we understand in the industry on a book of our size on the home loan book thank you next question is from the line of rick and shah from ifl capital please go ahead um good evening um so i had three questions the first one is on

the yield on investments. So this number is down about 60 basis points in the last two quarters when the overall yields have gone up. So why is the interest income on investment yields going down? So that's one. Second, if you could just, you know, highlight what's the cost of deposit and what is the residual repricing, if any, remaining from the current levels. And thirdly, it's on the treasury gains.

So seemingly that seems to be no impact on the treasury gains or effects despite the yield movements and the RBI move so how should we think about it as we move into the next year on this particular two points thank you okay if one thing that you touched upon is about the investments in investments yield have been coming down as you know until until the geopolitical risk started to increase right at which time it started to go up So it's an effect of what some of the maturing book that goes out and what the new book comes in is one aspect of it. And the second one is in terms of how the yield spike is now, and you will not see that because given the size of the book, when you pick up a new security at this new yield, it's a drop in the ocean, right? It will take time to bring it in. So all you are seeing is the effect of the previous rate cycle moving in. yeah shooting if i can geopolitics uh the yields the 10-year g sex were decisively moving up right in the last six nine six months specifically but the book yields have kept going down so just wondering uh what's the missing part here see rikin i do want to realize that uh you should appreciate that there is something called duration and in the rate cycle up or down treasury manages is the book they want to do. There are certain duration aspects, which is previously five plus years of a duration goes to four plus something. So you come on the curve, different parts and different cycles. That's one. And second thing is that you don't instantly see, if you look at what the last two quarters of rate that has changed, and if you look at the two quarters of accretion of investments, you will not see that it's going to be a fraction of the total book that you're seeing and then the way you need to look at it is a movement what is this what is the security that is moving out that means maturing or participating in the way most that moves out and what is the security that is coming in and so that's the in and out different different equation it's not a simple equation of what you see on the screen of the current field that you're seeing yeah fair enough and on the other two questions the other one you talked about the cost of funds I think we published the cost of funds which is about 4.4 or so marginally come down and then from last year to this year I think so far has come down by 50 basis points or so and cost of deposits is part of a component of that and very similarly moves down in line with that but the residual repricing if any any comments on that or are we already at the bottom in terms of the cost of funds? Residual repricing, if everything else remains the same, there will be further reduction coming on the residual because the time deposit takes five, six quarters or so to go and so some residual again remains to be seen in terms of the preferences for what type of the prices come in. Yes, all else remaining same, there is a tendency for the repricing to factor anymore got it sir answer the last question on the treasury and fx any comments if any there seems to be no negative impact in this quarter so how do we think about uh it going ahead there is there is some negative impact if you see that the rate of growth on the treasury uh income is modest uh and the reason for that modest is that uh i'm talking about the effects component of the Treasury is modest because there is the volume impact so due to various risks on the foreign exchange trade there have been lower volumes and the lower spreads to and also in terms of the there is some

impact of the unwinding that is also there yeah thank you sir thank you thank you next question is from line of abhishek maraka from hsbc please go ahead hi good evening uh thanks for taking my question so i had a question on the third party distribution fee uh actually if i look at it on a full portfolio basis the growth has been hardly three and a half percent and this is uh lagging your overall customer growth uh this is also you know when you compare it to the retail asset retail liability fee growth this is lagging quite a bit uh so what is really uh leading to this um is it just a slowdown or cross sell has become more difficult or you're refocusing on some product what's really leading to this uh you know lower growth in this line so that's point number one question number one sorry uh the other one is on margin so you said that there's some repricing of TDs left, which should be positive, but on the other side, the loan mix is gradually changing more towards corporate. How should we look at margins from here for, let's say, the next year? Does it trend down or does it flatten out?

Again, I'll first take the third-party products. Yes, the third-party products' revenue growth has been modest both of those components which is the volume growth has also been modest is positive but modest given that whatever preferences the customers I have I think last year was somewhat there was a good amount of spike that we saw as we entered into the fourth quarter if it would be five and so that that was part of there is some volume kind of stupidness that we have seen the second thing is in terms of spread that is the mix of products that determine the spreads has also impacted so we have seen that the earnings that means the our earnings on product on the third party Commission is also subject to mix of products that get taken and so there's a mix also had a unfavorable impact so that means lower realization of cheating on on on the mix so lower life sales is it and uh is that like temporary or uh is some change in process or something which has led to it or is it just you know coincidental or nothing really to read into it how do we look at it nothing very easy to read it it's just a question of uh our arms and are engaged as much as they are engaged today versus they were engaged last year uh it's a function of what the preference And that is why you saw even the product preferences somewhat different. So it's a question of how we get on more customers, and we still have only a question This happened on the assets, and the mix of assets can impact depending on what it is. The cost of funds, while time deposit repricing can continue to be there, again, it depends on the rate cycle, what happens. You see that there's a stiffness in the rates across, right, from the last, I think, at least four months we have not seen our time deposit rate change in the market right and we are fairly priced with the competition and you're not seeing four months of any kind of a change that has happened which again as one would one would give some time for change you've seen that of March harden the rates again so it remains to be seen but there's a range bond is what I would say but focus more on the returns because they if this becomes kind of a way where it is continues to be within a small range bar then we work towards

getting returns to be stable to going up to other levers got it okay okay thank you for that thank you thank you and all the best thank you next question is from none of per an engineer from CLSA India please go ahead yeah hi team Congress in your audio so we have lost the line for the participant ladies and gentlemen we will take that as a last question as we have come to the end of the time I love it for the call I would now like to hand the constants for terms to weather nothing for closing comments oh thank Thank you.

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