Axis Bank Limited (532215) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Axis Bank conference call to discuss the Q2 FY '22 financial results. [Operator Instructions] Participation on the conference call is by invitation only. Axis Bank reserves the right to block access to any person to whom an invitation has not been sent. Unauthorized dissemination of the contents or the proceedings of the call is strictly prohibited, and prior explicit permission and an approval of Axis Bank is imperative. [Operator Instructions] Please note that this conference is being recorded. On behalf of Axis Bank, I once again welcome all the participants to the conference call. On the call, we have Mr. Amitabh Chaudhry, MD and CEO; and Mr. Puneet Sharma, CFO. I would now like to hand the conference over to Mr. Amitabh Chaudhry, MD and CEO. Thank you, and over to you, sir.

Thanks a lot for opening the call. We welcome you all to a discussion on Axis Bank's financial results for the second quarter and half year ended September 2021. We also have on the call, Rajiv Anand, Executive Director and Head of Wholesale Banking; Ravi Narayan, Group Executive Branch Banking and Retail Liabilities; Sumit Bali, President and Head of Retail Lending and Payments and Amit Talgeri, Chief Risk Officer. The past 18 months were tough for the nation and the economy. The bank has emerged stronger out of this, thanks to our colleagues who kept their focus on serving our customers. The rapid pace of vaccination, continued support from the regulator and the government and the receding threat of a third wave give us confidence. We expect the strong pace of economic recovery to continue in second half of this year. We continue the disciplined execution on 3 GPS vectors of growth, profitability and sustainability. I will give an overview of the performance of the bank and elaborate for a few areas thereafter. The strong granular growth in the liability franchise continues. The engine is humming now. We opened 2.3 million new labilities accounts in the second quarter, highest ever in a quarter. In retail assets, too, the number of customers who chose us for [ LAP ] car loans and small business loans were the highest ever for any quarter. Retail disbursements are up 54% on both year-on-year and quarter-on-quarter basis. We added 5.5 lakh credit cards in this quarter, a growth of 132% quarter-on-quarter. The festive season has begun well, and we expect further momentum. Also, we took the Mastercard portfolio migration during this quarter in our stride. In Corporate Bank, we won multiple new mandates with strong performance in transaction banking. Wholesale banking fee income grew 15% year-on-year. We became the first private sector bank to do a secured overnight financing rate as we're funding the credit transactions for one of our market clients. On asset quality and earnings, we saw a sequential decline in retail slippages by 23%, resulting in lower provisions and credit costs. Net slippage trend is lower with better recoveries across all segments. Retail net shortages declined 81% quarter-on-quarter. Restructuring at 0.64% of gross customer assets is lower than larger private banking payers. 93% of retail restructuring is secured. Overall fee income growth of 70% year-on-year and 21% quarter-on-quarter remains healthy. Our quarter 2 earnings have grown by 86% year-on-year and 45% quarter-on-quarter. The One Axis approach is bearing fruits with our subsidiaries, sustaining their superlative performance. The combined first half PAT of our domestic subsidiaries stood at INR 513 crores, up 61% year-on-year. If I were to take a consolidated view of the past 18 months, we have put our legacy asset quality issues fully behind us, strengthened our balance sheet, invested deeply in digital and technology capabilities and we are now clocking strong growth in retail SME and transaction banking businesses. We have been careful about picking up business within Corporate Bank, opting for granularity and better-rated corporates and shorter tenure exposures. The 8 key transformation initiatives that are underway and offer investments in digital technology to people that were in need give us confidence that there is more headroom for growth. Increased granularity, continued loan mix change, low credit costs and market share gains will gradually lead to margin expansion we've been growing over the next 4 to 6 quarters. Puneet will take you through financial performance in detail -- greater detail later. Let me elaborate a little further on deposits. CASA deposit growth in recent quarters is trending above medium-term industry growth of 17%. The persistency of our deposits defined as average CASA deposits as percentage of period end balances improved 600 basis points from 86% to 92% in the last 10 quarters. In quarter 2, our average SA balances grew 23% year-on-year and 5% quarter-on-quarter, while the average CA balances were up 18% year-on-year and 3% quarter-on-quarter. The rigor and rhythm across distribution channels and key projects, [ times in autumn ] now show operating entity performance. 71% and 58% year -- quarter-on-quarter growth in new retail savings customers; 1.2 lakh [ AK ] accounts opened via video CIP in quarter 2 financial year '22, 36% year-on-year and 58% quarter-on-quarter growth in new current account customers. 150 basis points year-on-year improvement in the share of premium segments as a percentage of overall existing to the bank retail savings account balances. On premiumization, combined AUM in Wealth segment is in excess of INR 2 lakh 5,300 crores, up 52% year-on-year. Burgundy Private now manages nearly 2,790 HNI families, up from 1,225 families last year. The total AUM here is in excess of INR 75,950 crores, up from INR 34,591 crores last year. On retail assets, we have improved our sales to journeys and reduced cycle times to disburse into our customers. The business momentum has increased month-on-month, and we expect stronger second half growth. Demand for homes is back as interest rates continue to be low and real estate prices stable. Builders have reported reduction in inventory and a good demand for new projects. Our Axa loans portfolio, which is the affordable home loan segment crossed INR 10,000 crores in the quarter. Auto loans have dipped due to supply side disruptions, but we continue to onboard new dealers in our dealer financing portfolio. The passenger car sales industry de-grew by around 40% year-on-year, while we grew by 37% year-on-year in the month of September '21. Quarter 2 also with this growth in good loans, working capital, pharma funding and macro finance. Collection efficiency improved for this portfolio, too. On credit card and payments, the Axis Flipkart co-branded cards saw highest ever monthly acquisitions with Flipkart platform in September '21. We see growth continuing through both organic acquisitions and partnerships. On the back of increased card spends, the card's book was up 11% quarter-on-quarter. The Google Pay, Freecharge and other partnerships are also contributing to the growth in new card acquisition. Over 25% of cards growth sourced in the second quarter, going through to bank channels as compared to 21% in financial '21. We also have a few large partnerships in the pipeline that will add to this momentum. On Bharat Bank, our bank focused 265 branches saw a 45% growth in disbursements in Quarter 2 financial '22. The rural deposits also grew at 19% over previous year. We have added new partners to create multiple agri focused ecosystems. Our overall count of deals here is an approx 19,500. Bharat is the big opportunity of this decade as the farm sector reforms, infrastructure investments and digital inclusion story plays out in rural India. We have created a growth focused Bharat Bank unit to build for Bharat. During the quarter, Munish Sharda joined us as Group Executive for Bharat Banking. Munish has over 27 years of rich leadership experience in financial services and has managed a company and large distributor teams. On Wholesale Banking, over the past 2 years, we have demonstrated industry-leading underwriting standards, deepening our talent pool in products and data, and focused on transaction banking, mid corporate, government and inventory businesses. The corporate digital bank transformation program, Project Neo, that we initiated in April is starting to bear results. Our focus segments, Mid Corporate and Commercial Banking business grew 32% and 18% on a year-on-year basis. They were up 10% and 7% on quarter-on-quarter basis, respectively. The current account deposits from the Commercial Banking segment grew 10% year-on-year with 50% growth in average balances for new-to-the-bank customer accounts, reflecting the quality of strong relationship-led franchise we are building. The asset quality and risk metrics have been better than our expectations here. During the quarter, large corporates continue to deleverage and working capital utilization levels remained below prepandemic levels. The overall corporate loan book, therefore, stood nearly flat on a year-to-year basis. Like I said here before, we are investing in Project Neo to build a world-class digital corporate bank. There are over 70 colleagues working in 16 ports in an agile mode to deliver this. We saw strong digital adoption of corporate APIs with growth of 45% in this quarter. On digital, we witnessed best ever growth in our digital business this quarter. That number of customers acquired for the digital buy-now-pay-later product were up 14x quarter-on-quarter. Our V/KYC instant account product closed to be INR 1,000 crores and savings account balances is less than a year of launch. On WhatsApp Banking, we are now 1.9 million customers during 9 months of launch. We maintained our strong position in UPI with a market share of 15%, as payer PSP and 19% in UPI due to Macquarie. About 85% of customer service requests in branches are now digitally available and served through a proprietary cloud-based system. Our mobile banking app continues to have the highest rating from users among banks in India, and we have 5 million non-Axis Bank customers using our Axis Mobile and Axis pay apps. We upgraded our developer portal, which is now amongst the largest set of open banking APIs in the industry with over 250-plus APIs live. On track, transformation and capability, over 1,000-plus people are now dedicated to the digital bank with cross-functional squads and pods working on 30-plus key initiatives that are transforming the core and building future-ready capabilities. We had shared a detailed document on this, which has been rolled on the website. Our cloud -- on cloud, our leadership continues. We are the first bank to create 3 landing zones who support our multi-cloud strategy. We have 50 applications on cloud and the migration is getting quicker every quarter. We are leveraging our in-house product design and engineering teams to create proprietary digital products. We launched JARVIS, our in-house developed cloud-native, API-oriented lending platform that powers the BNPL platform for us. We are working on data architecture 3, where we are building alternate platforms to auto-underwrite the next 100 million customers. This will be critical when our account aggregator model picks up. We are also indicating unconventional and unstructured data for risk moderated business expansion. The impact of these initiatives is already visible. We won the Best in Future of Operations award, the first-ever International Data Corporation Future Enterprise Awards. On the ESG, in our segment, we became the first financial institution in India to set up an ESG committee of the Board, and we raised USD 600 million in India's first ESG compliance and sustainability bond in the overseas market. We have made a set of commitments under the Paris Agreement to achieve the sustainable development goals, which includes a target of incremental lending of INR 30,000 crores over 5 years to sectors with positive social and environmental outcomes; incremental disburses of at least INR 10,000 crores by financial in 2024 for affordable housing and increasing share of women borrowers; reaching 30% women representation in our workforce by financial 2027. The steps we have taken in diversity, equity and inclusion are widely recognized as pioneering in India. We won the Leadership in Social Impact and the Leadership in Transparency awards at the ESG India Leadership Award 2021. In closing, we believe consumer and business confidence will continue to trend upwards in the second half as the vaccination coverage rises and the economy opens up with pent-up demand and spring materializing. Pandemic notwithstanding, we continued our progress on our strategy in the past 18 months. We have started legacy commissions, underwriting has stood the COVID test, grew in multiple retail segments and quarter 2 was an all-time high and credit costs are [ most ] building fast. We have significant headroom for growth based on our distribution strength, continue based on leadership, create transformation policies are underway and the business we are choosing not to take. We are looking forward to the second half. Let me now hand over the call to Puneet.

Thanks, Amitabh. Good evening, ladies and gentlemen. Thank you for joining us this evening. I will discuss the salient features of the financial performance of the bank for Q2 FY '22, focusing on our operating performance, capital and liquidity position, growth across deposit franchise and loan book, journey of becoming a more prudent and conservative franchise, asset quality restructuring and provisioning. During the current quarter, the RBI issued a direction that resulted in change in the classification and presentation of certain P&L items. These changes have adversely affected reporting revenue and profits and are marginally positive on credit costs. We request you to please see Slide 69 of our presentation to better understand the impact. Our operating performance is healthy reflected through continued buildup of granular fee and PAT growth. We continue to invest in the franchise to be able to capitalize on market opportunities once COVID stabilizes. Net interest income for Q2 FY '22 stood at INR 7,900 crores, representing a Y-o-Y growth of 8% and a sequential quarter-on-quarter growth of 2%. NIM for Q2 FY '22 stood at 3.39%, representing a decline of 19 basis points Y-o-Y and 7 basis points Q-on-Q. NIMs on a Y-o-Y and Q-on-Q basis are impacted by product mix. For example, growth in our overseas loan book, interest reversals have impacted NIM on a Y-o-Y basis. Increase in LCR from 3% and 5% on a Y-o-Y and Q-o-Q basis has contributed to the NIM. Timing impact of our Tier 1 capital, market pricing pressures in the wholesale segment and market business are key contributors. Improvement in NIMs over the medium term will be driven by loan mix changes, continued improvements in low-cost deposits and the quality of our deposit franchise and reduced share of RIDF bonds, which currently stand at 4% of our balance sheet size. We saw a strong growth in average CASA Y-o-Y and Q-o-Q, resulting in a decline in cost of deposits by 68 basis points and 9 basis points, respectively. There is no incremental allocation of RIDF due to PSL noncompliance in FY '21 through organic loan origination and PSLC purchases. Hence, we have moved on one of the structural drivers funding the throughput. The bank has been improving the risk profile of its loan book. We -- if we look at our NII as a percentage of average risk-weighted assets, it stands at 6.95%, improving 10% -- 10 basis points Y-o-Y. Our fee income stood at INR 3,231 crores, growing 17% Y-o-Y and 21% Q-on-Q. 63% of our fees is from our retail business. The balance coming from the wholesale franchise. Granular fee is 90% of our total fees. We continue to see good traction in our CMS, ForEx and trade finance businesses that have resulted in an 18% Y-o-Y and 15% Q-on-Q growth in Master's regulated fees in the wholesale segment. Commercial Banking fees grew by 6% on a Y-o-Y basis and 34% Q-on-Q. Fees on cards grew 19% Y-o-Y and 21% Q-on-Q. Fees from our digital channels grew 42% Y-o-Y and 39% Q-on-Q. Trading income stood at INR 473 crores, degrowing 36% Y-o-Y mainly on account of lower government security sales and consequent profits. Other income stood at INR 95 crores, grew 24% Y-o-Y basis post reclassification of recoveries from written off pool to credit costs. Core operating revenue grew 11% Y-o-Y and 6.5% Q-on-Q. Operating expenses for the quarter stood at INR 5,771 crores, growing 36% Y-o-Y and 17% Q-on-Q. Staff costs increased by 36% on a Y-o-Y basis. The increase in staff cost is not comparable as Q2 FY '22 has an impact of increments for 2 years. If you recall, we had offered increments last year effective 1st October. And this effect shall utilize itself from the third quarter reporting. We have added 10,322 people from the same period last year, mainly to our growth businesses and our technology teams. We have continued to top up the gratuity expense for the social security core, something that we have taken ahead of others. The bank has, in the current quarter, booked an ESOP cost of INR 72 crores on account of the change in the RPI guidance for accounting for INR 30 crores. Other operating expenses grew 37% Y-o-Y, mainly attributed to higher business volumes, higher collection expenses, IT expenses, statutory cost, catalyzing of PSLC certificate purchase and RBI, the basic payments. If I were to look at the sequential cost increase in rupee crore terms and break that up for you, the growth can be attributable to the following reasons. 30% of our cost growth sequentially is driven by volumes. The upfront loan origination costs as an expense, while income comes through the life of the loan. 20% of output of our cost increase sequentially is for future growth and technology. We are confident that the franchise can grow well and we're investing in it today. 30% of our cost growth is attributable towards the collection expenses, cover expenses and statutory expenses. Collective expenses have more than paid for themselves through the lower provisions that I will discuss later on the call. 20% is our [ BAD ] expense growth. On a holistic basis, about 7.5% of the sequential quarter growth is from one-off items that are not likely to repeat. Operating expenses to average assets stood at 2.12% for Q2 FY '22, higher by 15 basis points Y-o-Y and 7 basis points on a sequential quarter basis. The adverse impact of netting of the balance sheet that we commenced from Q1 of the current year is 2 basis points on that ratio. We continue to believe that we will fall back to our long-term target of 2% cost to assets in the next few quarters as growth accelerates. Operating profit for Q2 FY '22 was INR 5,456 crores. We grew 7% Y-o-Y and 3% Q-on-Q. The decline on a Y-o-Y basis is mainly on account of expenses growth, which I have discussed previously. The decline in core operating profit sequentially is entirely attributable to the reclassification. I would request you to see Slide 69 of our presentation. Provisions and contingencies for the quarter were INR 1,725 crores, declining 60% Y-o-Y and 47% Q-on-Q. The bank has not utilized any COVID banking provisions in the current quarter. The provisions and contingencies include an amount of INR 525 crores of additional non-NPA provisions made by the bank during the quarter. The annualized credit cost for Q2 FY '22 stands at 0.54%, declining 116 basis points Q-on-Q. Profit before tax stood at INR 4,193 crores, growing 81% Y-o-Y 45% Q-on-Q. PAT at INR 3,133 crores, growing 86% Y-o-Y for the 5% Q-on-Q. Annualized Q2 ROE stood at 12.72%, including 477 basis points on a Y-o-Y basis and 361 basis points Q-on-Q. The strength of our balance sheet is reflected through the cumulative non-NPA provisions as of 30th September, standing at INR 12,951 crores. The key components of these provisions are COVID-19-related provisions of INR 5,012 crores. We have not utilized the provision -- any provisions in the current quarter. The size of our provisions are not to be construed as our assessment of relative weakness of the quality of our loan book, but purely prudence-led provisions. Restructuring provisions of INR 1,455 crores are our first bucket NPL rates translating to 24% cover with 100% unsecured loans being fully provided for. These assets and other provisions stand at 4 -- stand at INR 6,484 crores. Our standard asset cover, which is defined as all non-NPA provisions by standard advances stands at 2.11%, improving 6 basis points sequentially. Our provision coverage, all provisions, NPA plus non-NPA divided by GNPA stands at 124%, improving 617 basis points on a sequential quarter basis. The bank is well capitalized. We carry adequate liquidity buffers. Our overall capital adequacy ratio, including H1 profit, is 20.04% and our CET1 ratio stands at 15.81%, improving 66 basis points and 43 basis points on a Y-o-Y basis, respectively. The prudent COVID provision that carried us as at September provide us with an additional capital cushion of 67 basis points over and above the reported capital adequacy as we spoke of. Our average LCR ratio for the quarter is at 120%. Our excesses in [ loans ] stand at INR 85,580 crores. The risk-weighted assets of the bank as at 30th September 2021 stand at 62% as compared to 68% on -- as at September 2020. This improvement in RWA is reflective of the quality of business being done by the bank. The bank has a call date on its Tier 1 capital falling due in the next quarter. If the call is made subject to current regulatory approvals, the Tier 1 capital will have an impact of 58 basis points. Moving on to growth across our granular deposits. We prefer to focus on quarterly average balances instead of month end balances. CASA grew 21% Y-o-Y and 5% Q-on-Q. CASA ratio stood at 42%, improving 201 basis to points Y-o-Y on an average balance basis. SA growth was strong with 23% Y-o-Y growth and 5% Q-on-Q; CA, 18% Y-o-Y, 3% Q-o-Q. Our term deposits on a quarterly average balance basis grew 15%, of which retail deposits grew 11% Y-o-Y and 3% sequentially. A large part of our incremental NRTD deposits over March '21 are LCR accretive and un-callable. Our focus on premiumization continues with 69% Y-o-Y and 9% Q-on-Q growth in quarterly average balances for our Burgundy and Burgundy Private accounts. The NRI segment also witnessed a 19% Y-o-Y growth. Our salary segment QAB balances grew 13% Y-o-Y and 4% Q-on-Q. Our structured cadence between the corporate and retail teams is already in progress. We continue to leverage the wholesale banking relations. We remain focused on increasing our share in top 100 marquee corporate names. Our focus segments comprising retail, assets, SME and mid-corporate segments have been our key loan growth drivers. Our overall loan book grew at 10% Y-o-Y and 1% on a sequential quarter basis. The composition of the loan book continues to remain balanced with 56% of the overall advances in retail, 34% as corporate and 10% as CBG. The book represents healthy characteristics with 80% of the retail book as secured, 86% of the corporate book being rated A and above and the CBG book being well diversified across geographies and industries, 96% secured and 70% of shorter term. Retail disbursement grew 54% on a Y-o-Y basis and sequentially. Our brand sourcing of rated loans was 51% in Q2 FY '22. The number of loan accounts opened in Q2 FY '22 across most retail secured assets like LAP, car loans, SBB accrual loans were the highest ever, while home loans Q2 was the second best quarter ever in disbursement terms. Home loan disbursements were 86% up Y-o-Y and 54% Q-on-Q, with SBB disbursements at 103% and 72% Y-o-Y, Q-on-Q, respectively. Domestic retail loans grew 15%, led by secured products and home loans growing 19% Y-o-Y, LAP 24% and small business banking, 43%. Over the last couple of quarters, we have become more comfortable in growing retail unsecured book on an incremental basis within our framework. Personal loan disbursements were up 72% Y-o-Y and 21% Q-on-Q. The credit card spend for Q2 FY '22 were up 64% Y-o-Y and 34% Q-on-Q and we're trending above 3 complete levels. We continue to drive growth in cards and unsecured lending via our loan-to-bank and existing-to-bank franchise with strong partnerships and huge KTB customer base of over 120 -- 140 million customers. We intend to grow our unsecured retail loan book faster over the next few years. We continue to remain -- maintain our strong positioning in the UPI space, with a market share of 15% on the PSP by volume and 9% in UPI P2M throughput. Our Deep Geo coverage stands at 2,065 branches, which Amitabh discussed earlier. Our progress on corporate banking is to build a profitable and sustainable corporate bank. Corporate disbursements were up 24% Q-on-Q and flat Y-o-Y. 93% of the incremental sanctions are A minus. We remain focused on delivering higher loan growth from our chosen segments. The Mid Corporate segment grew 32% Y-o-Y, 10% Q-on-Q. Our Commercial Banking segment grew 18% Y-o-Y, 7% Q-on-Q. These segments help us bring greater granularity to our books, reduce risks and meet our RAROC criteria. Our large corporate book -- sorry, our letter of credit book grew by 48% Y-o-Y, with a market share in foreign currency. LCs up 63 basis points on a Y-o-Y basis to 9.4%. We continue to have a strong position in GST and RTCs payments with a market share of 9% and 8.1%. The offshore assets grew by 42% Y-o-Y. The growth in our overseas corporate loan book is finally driven by [ Deep Geo ] branch exposures, 97% of our overseas standard book is India linked and 86% is rated A and above. Commercial Banking disbursements rebounded strongly with a 76% Q-on-Q growth, aiding a loan growth of 18% and 7% Y-o-Y and Q-on-Q respectively. Early results of our declared transformation on our Commercial Banking business is measurable through. CBG CAR deposits now contribute 24% of the overall CAR for the bank and grew 10% Y-o-Y, reflecting the quality of the commercial banking franchise we're building. Non-asset fees in Commercial Banking grew 17%. The depth of our CD relationships is demonstrated by the fact that our commercial banking group contributes 19% of our remaining private and the savings account acquisition. Our subsidies have delivered a strong performance. Overall, the H1 profit stands at INR 513 crores, 51% Y-o-Y growth, Axis capital continue to maintain its leadership position in DCM, H1 bank, up 72%. Axis Finance over the last 2.5 years has been investing in creating a customer-focused franchise. Its retail book grew 5x Y-o-Y and now constitutes 23% of the book compared to 8% last year. Active finance book quality continues to be strong with nearly -- restructuring and net NPAs at 1.3%. Its H1 tax grew 10% to INR 138 crores and ROE stands at 18.5%. Access Mutual Funds, quarterly AUMs were up 52% Y-o-Y driven by fund performance. Axis AMC's H1 PAT was up 60% Y-o-Y to INR 147 crores. Axis Securities added a 0.12 million customers in Q2, up 43% Y-o-Y, PAT up 59% with an ROE of 42.4% for the quarter. We have seen an improvement in our asset quality metrics, and we have well provided for those specs. The gross slippage for the quarter was INR 5,454 crores lower than Q1 FY '22 by 68%, Retail and CBG gross slippages declined 23% and 46%, respectively, Q-on-Q. At the bank level, 28% of the gross slippages on a same account basis were upgraded in the same quarter as compared to 22% for the last quarter. On a segmental basis, the same quarter slippages and upgrades in retail were 31%, corporate, 14% and CBG, 46%. Therefore, it's better to focus on net slippages in so far as we are concerned. Further, 23% of the gross slippages are attributed to linked accounts of borrowers that were standard and first classified. Net slippages for the quarter are INR 707 crores, down from INR 3,976 crores, an 82% sequential quarter decline. The net slippage ratio for the bank on an annualized basis stands at 0.46%, improving 214 basis points quarter-on-quarter. The asset quality on the wholesale business is holding up well with a net slippage of an absolute INR 26 crores on the size of books that we run. Net slippages for SME book are negative for the quarter. We have negligible restructuring here and that has not contributed toward the lower net slippages. Net slippages in retail stands at INR 697 crores, down 81% sequentially. The net slippage ratio on an annualized basis stands at 0.83%, declining 370 basis points quarter-on-quarter. On the collections front, [ check-downs ] has remained marginally elevated in Q2 FY '22 as compared to pre-COVID levels. Our concerted collection efforts and investments in collections has resulted in demand resolution for the retail portfolio in the month of September being 98.8%, which is better than levels we saw pre-COVID. This is a key trend we continue to remain focused on. Recoveries from written off retail accounts in Q2 FY '22 is 64% higher than Q1 and has been the best quarter in the last 18 months. We expect the second half of the year to have lower net NPA additions as compared to H1 FY '22, given the collection intensity and moderation of delinquency outcomes. The intensity, length and time and government policy action emanating from COVID wave 3, we remain to key monitor those. The bank has undertaken prudent limited and largely secured restructuring. The outstanding implemented fund-based restructuring 1 and 2 stand at INR 4,342 crores, represent 0.64% of our gross customer assets as of September 2021. Involved but pending implementation forward running towards restructuring stands at INR 118 crores or 0.02% of our [ SACA ]. Hence, in aggregate, COVID restructuring will not exceed 0.66% of our [ ICA ], which we believe is lower than larger private sector peer banks. 96% of loans restructured under COVID 1 and 2 as landed as at 30th September 2021, 93% of retail loans restructured under 1 and 2 are secured. The LTVs of secured loans range from 40% to 70%. On a segmental basis, COVID 1 and 2 restructuring on loan, 0.68% on the wholesale book, 0.8% on the retail book and 0.02%, which is near 0 for the commercial banking book or the SME book. We were able to upgrade INR 501 crores of restructured 2 -- 1 and 2 that was NPA-sensitive due to standard as at September 30. The linked nonfunded exposure on restructured loans is INR 1,002 crores. The net slippages from forward demand restructuring stands at 3%, cost away from book. Details of our BB and below book and restructuring are set out on Slide 48 of our presentation in detailed retail. The fund-based investment and investment BB book stood at INR 7,307 crores, declining to INR 1,370 crores on a quarter-on-quarter basis, which is a 16% Q-on-Q decline. So 79% of our focused slippages in the quarter were on the BB & below book. 21% of the fund-based BB and below book is rated better by at least 1 external rating agency. All accounts downgraded in the current quarter were individually less than INR 80 crores, and the average ticket size of accounts downgraded was INR 12 crores. The average ticket size of fund-based exposures in BBB+, BBB and BBB- is INR 40 crores with more individual exposure in 4-digit crores, showing the granularity of book that we have been focused on. We request you to see Slide 48 of the investor presentation to check out more detail. The GNPA of the bank was 3.53%, including 75 basis points Y-o-Y and 32 basis points Q-on-Q. The GNPA is the lowest INR 79.15% since Q2 FY '17. The net NPA stood at 1.08%, improving 12 basis points Q-on-Q. The net exposure of the bank to 2 NBFCs where RBI superseded the Board in Q2 FY '22 if it needs. The bank has a healthy PCR of 70%. Greater details are provided on Slide 47. As I close, we summarize the bank's, still, needs so far and broad outlook on key performance drivers. Our capital adequacy ratio at 20.04% is best we've had in years. Our balance sheet is resilient, visible through declining NPA ratio, stable provision cover, buildup of non-NPA provisions, prudent, limited and largely secured restructuring. The average CASA balances on a closing balance basis has improved to 92%, showing the improvement in the quality of the CASA franchise we're building. Annualized H1 FY '22 earnings for subsidiaries will cross INR 1,000 crores for the full year. Our return on investments from subsidiaries now stands at 58%. On ESG, access is now the first bank to establish a stand-alone ESG Committee of the Board and is moving forward on the ESG agenda. Our reported net interest margins have motivated, though when adjusted for risk-weighted intensity of our assets, we see an improvement overtime. We have clearly identified, discussed and are seeing traction on the building blocks for improving our reported margins in the medium to long term. We expect FY '22 net margins to remain at or marginally above H1 level, but will improve structurally over the medium- to long-term based on initiatives that are in place today. We will continue to invest in the franchise and have -- seeing a short-term cost escalation. The pace of growth in cost will moderate in the second half as basic corrections like salary costs take place. We -- while we stay committed to the cost to assets target of 2% in the medium term for FY '22, we will be between 8 to 12 basis points higher than the number. We believe our businesses are resilient, and we are well equipped to capitalize on opportunities, are investing in the franchise to deal with contingencies that the pandemic may impose. We reiterate our stance of stopping specific guidance. We thank you for your time and we will pause now, and we will be happy to take your questions.

[Operator Instructions] The first question is from the line of Abhishek Murarka from HSBC.

So 2 or 3 questions. One on growth. Sir, your commentary is pretty strong. And I'm looking at the corporate portfolio, which has declined about 4%, 5% on a Q-o-Q basis. So with this, can you guide -- rather, can you give some color on what led to this? Is it from end-of-period balance? Or is it something that you stayed away from? And what's the outlook on growth here? The retail and SE growth seems to be pretty good. So just some color on the corporate side.

So within the corporate side, SME, as you said, continues to grow strongly. Even on a Q-on-Q basis, growth is strong in the sectors that we have chosen Mid Corporate, MNC, growth continues to be strong. We've seen some deleveraging repayments, prepayments, et cetera. But the one point that I want to make, which is, I think, important. The way that corporates, particularly in the large corporate space are thinking about their capital structure and funding patterns. This really is diversity, which includes bank loans. And so therefore, what they are choosing to use is offshore loans, offshore bonds, local loans, local bonds. And Axis is participating on each of those opportunities. Not all of those opportunities may convert into loan growth at any point in time. But most important, it will ensure that we are engaged with the customer across the capital structure. And we'll obviously ensure that we are driving fee incomes, et cetera. Our preeminent position on the DCM side is well known. We've been around, for the last 13 years, on the debt capital side. They have a very, very strong loan syndication book. And we are now the only Indian bank that is focused on the offshore debt capital markets as well. And we've had a fair amount of success within this space. So the way to think about loan growth is -- I think one needs to look at it on a much wider basis, particularly in the large corporate space as if one wants to engage with a set of customers that we have chosen to engage with.

So incrementally, this book -- when does this book start expanding as in -- and what are the particular opportunities you see out there? Are there -- actually, private CapEx is still a bit far away from picking up?

So I think what happened in the first half of the year is I think what I'm fairly certain about is that the CapEx cycle has bottomed out. We would have probably seen a stronger CapEx cycle at this point in time, but two things have impacted that. Wave 2 and the probability of wave 1. I mean, there were various news reports that Wave 3 would hit us in October, November, December has probably held that back. As also, whether the festive season will bring the kind of demand that we expect were some of the reasons why perhaps the CapEx cycle has got postponed by anything between 6 to 12 months. But I think what one is certain is that the CapEx cycle has bottomed out, and we should certainly see that begin to kick in. There are various initiatives in the national monetization program, PLI schemes. We are seeing small levels of CapEx in chemicals, in steel, in cement and so on and so forth. Some of that is also being funded by internal accruals. Again, also seeing that corporate, at this point in time, are preferring to deleverage, use their own cash flows to support CapEx. But I think it's just a question of time before that begins to kick in. Two is you will hear commentary from Puneet and you've already heard some of that, is that the festive demand has been fairly strong. And what that means is that the working capital cycles, which either to where utilization of our working capital cycles where working capital lines were relatively weak. We think that, that will start to pick up in the second half of the year as well. There also, I think Puneet mentioned this point about the overseas book growing. I just want to reiterate that a few quarters ago, we mentioned that the overseas book will be only focused on India-linked names. So what we're really doing there is to follow the customer in terms of their client needs around transaction banking. So if you look at trade finance, which is where, predominantly, the overseas book has grown, we are now 2.5x in terms of the size of that book as compared to some of the foreign banks who dominate this business at this point in time. We are getting increased franchise breadth, depth of client conversations and cross-sell opportunities across transaction banking as a result of the growth in the -- in our overseas state finance book. The associated cross-sell revenues and balance arising is not factored into NIM, but is certainly showing up in strong fee growth that you're seeing in our transaction banking franchise.

Great. My second question is on NIM. So you've mentioned in your PBT that there's an adverse mix impact of 13 basis points. But if I look at the broad mix, retail SME has gone up, corporate has come down. So what exactly -- why exactly is this mix impacting NIM unfavorably?

Abhishek, thanks for the question. The way I requested to think about that number is the liability franchise has grown exceptionally well. The asset is now growing on an incremental basis. Given the fact that you have originated liabilities in advance of assets, the surplus money, which I called out earlier in the presentation, about INR 85,000 crores past in excess that's set out. The mix in -- the mix between investments and advances, which is a material contributor to backlog.

Understand. So how should we look at or think about NIM going forward? On just a loan basis, are your spreads improving? And how do you -- just how do we think about it going forward?

Actually, Abhishek, to think about NIMs are there 3 structural drivers to our NIM. One is the loan mix change. So one part of the mix change will come from the fact that as advanced growth comes back, which you will see given the dispersion momentum. You will see the recalibration between advances and investments. So that should aid NIM coming back. The second bit is we have improved the quality and the percentage of our low-cost deposits. But as the quality of our deposits improves further, we should see a release of available liquidity to NIM and that's for the [ bear ] driver. The third element that I would like to call out is 4% of our balance sheet is RIDF front. These are negative spread as we stand today. For the last year, we've incurred OpEx and purchased PSLC, which is why you also see an OpEx cost increase. But what we are doing is we're solving for the RIDF problem, no incremental allocation. They should run off between 3 to 4 years, which is on a consolidated basis. And this earn off should be able to give us anywhere between 10 to 12 basis points uplift only. And I'm not saying a full runoff. I'm saying a runoff to the next 2 to 3 years' time. So as we work through each of these, you've heard us speak on where our loan growth is going to come from. You'll see the NIM improved structurally over the coming quarters.

Sure, sure. And finally, just a question on slippages. So looking at the gross number. And I know you said we should focus on the net, but just if I were to talk about the gross numbers, still, and this is high rated, say, about 20.9% annualized. So just where does this slippage really coming from? And given the pickup in the economy, do you see this normalizing in 2 quarters or 4 quarters? What is the outlook there?

So Abhishek, we can annualize the slippages number and come to a percentage that you've computed. So first, the way I would request you to look at that number is -- I specifically called out in Axis' context. We report on a gross cross basis. So 28% of the gross slippages all in the same quarter and recovered in the same quarter. So effectively 1/3 of your computed number will just a pure basis. The same quarter upgrade on grade reference point. And I had also called out, for your consideration, this across product segment, so that plays through. Adjusted for the same quarter upgrade/downgrade, the inventory that got built up because of these 2 is playing out. Just to give you context, in the retail business, our net slippage for the month of September was 0. So we will continue to track asset quality and see how one slippages move ahead. But just -- we are reasonably positive that asset quality should improve in the second half of the year on this slippage.

Abhishek, I also request you to give us some credit for a lower level of restructuring. If I do a lot of restructuring, I will not see these business. So if I've taken the rate upfront, give us some credit. And I think it is coming through very clearly in the second quarter, where we took the hit. We are taking them through -- they're going through NPL, but they're recovering also. I think you need to take into consideration that fact, too.

Sure. Amitabh, that part is very well appreciated actually. The only thing I was trying to figure is this inventory buildup, and I understand 1/3 of it gets resolved quickly. This is happening from which sector? Is it secure? Is it unsecured? Is it retail or should be mostly retail SME? I'm just trying to figure out where it's coming from.

So next slippage is on the wholesale and SME segment is near 0. So also INR 707 crores next slippage that I spoke of. If I net down CBG and wholesale, that number is 0. So largely coming from retail. Like I said, in retail, for the month of September, the net slippage is 0. So the INR 707 is a buildup for July and August numbers.

Yes. I mean it has the flow-through coming from COVID-to-COVID,right? So...

The next question is from the line of Gautam [ Jet ] from GCG Financial.

My question pertains to your one-off OpEx. You mentioned it, a one-off in other expenses. Can you just elaborate in an absolute number, what was that?

So I said the one-off OpEx -- Gautam, thank you for the question. What I called out was 7.5% of the sequential quarter OpEx growth was on account of one-off items. The one-off items are in the nature of catch-up on ESOP cost. Near to miss the Tier 1 bonds in the current quarter where expenses on fund raising are charged to our P&L. We do not amortize it over the life of the bond. So those would be one-off items that are not likely to repeat, and that constitutes about 7.5% of rupee crore expense growth in the quarter.

Okay. And my second question pertains to the credit cost. You did mention that credit costs in the second half could well continue to fall. But can you just give us some qualitative comment on credit cost going forward on a sustainable basis? Or would it be 1% or around 1%? Your comment would be appreciated.

So Gautam, we don't specifically guide our credit cost on what it should be. So where we have structurally driven our balance sheet and created prudent provisions and provided foreseen risks. We believe that we have come to the end of our wholesale credit cycle, so they should be a moderation from our long-term average. We don't offer a specific guidance on what that number would be for the next quarter or the next.

But I look at your contingent probable compared to your PL bank. We have the highest provision to our loan book. So if we don't see slippage going forward in next 2, 3 quarters, will there be a case of some reverse in the provision, what we provided already?

So our coverage provisions are rule-based and the release thereof is also rule-based. The way the we ran our COVID prudent provision is we determine a risk threshold that the pandemic wave will throw at us. If that risk threshold is breached, we utilize the COVID provision. If the risk threshold is not breached, we continue to provide, through the P&L basis, data points that we have today. We do not believe COVID wave 2 thresholds are likely to be breached. Therefore, these provisions will be carried forward on the balance sheet. Then COVID wave 3 -- if and when COVID wave 3 were to hit us, we will make a similar assessment in pricing. What I simply want to say is it is structured and rule based. We do not release or create provisions on a quarterly basis on a...

Okay. And how soon can we reach to our tier level NIM around 4%?

I don't want to comment on what the level of NIM we will get to. Like I said, structurally, we think we have the right drivers to deliver gaining expansion in the medium to long term. The 3 drivers specifically discussed was loan mix change, our RIDF reduction and improvement in cost and quality of our deposits. On CASA, you've seen improvement happening on a sequential quarter basis. RIDF incremental allocations have stopped, given our compliance with PSL requirements for the last year. Asset mix should play out as low growth comes back in a meaningful way. And therefore, we would say, structurally, all drivers in place. NIM journeys are multi-quarter earnings, but you will see us making the right directional improvements in the coming quarters.

Okay. And finally, credit to the team for the management of the quality [ Fortune ] account, and we [ remain full of ] hope.

The next question is from the line of Mahrukh Adajania from Elara Securities. [Operator Instructions]

So my first question is on credit cost. So of course, there was a fair bit of discussion earlier on this. But the specific credit cost is down to 60 basis points, which is lower than the long-term average as well. And at some point in time, we'll be drawing down COVID provisions, maybe next year, may not be this year. So are we likely to see quarters of negative credit costs? And is this, I mean, have credit costs bottomed out? Are they in specific credit cost? Has it bottomed out now? Or is it going to remain volatile because it has corrected more sharply than other banks, which is why I'm asking.

So Mahrukh, thank you for your question. Again, the way I'd like you to think about credit cost in our context is we consciously took the decision to recognize pain early. And therefore, we believe that, that should get us out of an adverse credit cycle early, where we have restructured these insured provisions, cover us for first bucket NPA provision. To your point, our observation on COVID provision release over the next few quarters, I will reiterate the comment I made earlier. The COVID provision is rule-based, basis the risk outcomes. We do not see a release of that provision, at least for COVID wave 2, where data points are visible to us today. We will continue to watch if there is a Phase 3 or an impact thereof. The way I would request you to think about our credit cost is in a 3-pronged banner. One is, let's start with our long-term average credit cost. We have moved to a provisioning level that is about 15% to 20% higher than historical provision covers that we ran. So you should see a marginal uptick from the long-term as is credit cost, because just the prudence that we built around our provisioning grew. You will see an improvement from the long-term credit costs on account of the fact that our wholesale lumpy book is now granular and the underwriting quality is much better. Structurally, as we do a little bit of more unsecured business price for risk, the income comes above the line and the risk comes below the line. But adjusted for risk, this business will be profitable, but you will see an uptick as we recalibrate from the 87% secured to 13% unsecured disbursement mix structurally as we move forward to a range of 80/20, 70/25 -- 75/25. So very difficult to give you a precise number on where the credit cost will be. But I think the improvement, both in underwriting and portfolio quality are visible on our balance sheet.

Sure. Could you please quantify the mandate? So of those provisions of INR 129 billion, what would be the mandatory general provision? Because I can't tell you the amount.

The standard at -- RBI provision numbers, if you can just any a couple of minutes, I'll come back to you and give you that response. We could move to the next question, but Mahrukh, I will answer that question in the course of the call.

Sure. I have just one more question, and again loan growth that you explained before, but the loan growth has lagged most of the private banks. And of course, there has been a change of loan base. There has been a change of approach for you. But what is sure is see that you're seeing that other banks are not seeing especially in the corporate segment? Because that is one area where probably loan growth is lower and even in some other segments. So what really explains the consistent difference in loan growth between you and the private bank, say, for the last 3 to 4 quarters?

So Mahrukh, I'm not worried about that difference. If I want to bridge that gap between us and the peers at a price, it is very easy to do. So therefore, as long as we're meeting our underwriting standards and pricing standards, we will certainly put on those loans. Maybe they're not risky, but maybe the pricing doesn't work for us, which is why, some of the stuff, we've walked away from. But like I said, what is important to us is the depth of the franchise, right? I mean there is so much more that we are doing with our customers. We are adding new customers within the wholesale and CBG franchise. We think that some of the pricing that we are seeing at this point in time is not pricing for risk. So we're willing to wait it out. I mean, you've seen, for example, on our CBG book, we were pretty much flat for a couple of years. We are now much more comfortable with that book, and we're seeing growth. You've seen what, about 7% growth even on a Q-on-Q basis. So I'm not getting too worried about that there is a gap between us and the peers.

Mahrukh, to answer your question on standard asset provisioning, you can assume that roughly INR 3,000-odd crores of the INR 2,900 crores that we call out is taking a risk-added asset provision.

The next question is from the line of Kunal Shah from ICICI Securities.

Yes. Sorry, if I have missed out, but in terms of the moment of BB and below, if you can highlight in terms of the downgrades from the upgrades, downgrades and how we are getting it lower by almost like INR 1,300-odd crores.

So I think, Kunal, the way you should look at that number is of the INR 1,300 crores, 50% plus will be recoveries and upgrades. And the balance, INR 680-odd crores. Kunal, sorry, did you get my response so or was there not...

No, sorry, I missed the last part. So in absolute terms, if you can just suggest in terms of this movement from INR 8,000 to INR 6,700, yes, now on the fund base side of BB and below.

Kunal, roughly, like I said, the difference is about INR 685 crores of the produced and the balance recoveries are enough.

And balance will recover. Okay. Okay.

The next question is from the line of Anand Dama from Emkay Global.

Yes. Sir, basically, on your cost. So staff cost has again gone up during the quarter and so has been our other expenses. So what really explains that? Are we doing ease of expensing in the staff cost, number one? And in the other expenses, can you really highlight basically, apart from the collection expenses, what other expenses would have gone up that we have seen further jump up in the expenses on a quarter-on-quarter basis?

Anand, thank you for your questions. Yes, we account for these costs as part of our staff expenses and therefore, that expenses is sitting in the staff cost line items. The overall increase in staff cost, as I said, is we feel confident of emerging stronger towards the pandemic. So we've added close to 10,000 people to our 4 growth businesses September '20 to September '21. So that's about 10,000 people added to the franchise for our gross businesses across lines and assets. In terms of the sequential quarter growth and expenses, 30% of the expense growth is volume led. You have seen our disbursements are higher as business momentum comes back. The expense loan origination cost upfront, so that causes an expense escalation. 20% of the increase in expenses attributable to future growth and technology. We really have a large technology tender that we are driving and 30% of the growth is attributable to collections over the statutory costs. So the balance, 20% is the cost increase, given the franchise that we've got. I hope that gives you a breakup of where expenses will be coming from.

So I just want to add to what Puneet said. I think as a bank, from a strategic perspective, we believe that as Rajiv talked about the fact that as unit economy starts growing, it will provide opportunity to the large banks to gain market share. And it is very, very important for us to ensure that from an overall platform perspective, we invest today and are ready for capitalizing the growth opportunity as we move forward. I've shared with you, Puneet had shared with you, some of the things which we have created. Like, we have that, in the API, we have 250 APIs now. So as we expand various parts of the bank in terms of investments in technology, analytics and generally, the people, trading the franchise, investing in private banking and some of the other stuff, I think money spent today will give good returns in the future as the economy start expanding. Yes, it means that our expense ratios are looking a bit higher today, but we believe they will moderate in the future. And hopefully, the returns will also come through in the revenue line quickly. So that's how we are driving it. And that's why when you kind of break it down, as Puneet has shown. You will see that some of it is obviously BAU, but some of it is related to obviously, investment for the future and some of it has gone off or more a base effect impact.

But is it possible for you to share the technology expenses that typically we have in the P&L as a percentage of our revenue? And how, basically, this is really going to convert into higher growth, particularly into the non-mortgage? Because, mortgage, certainly, I mean that will only run full year, off our branch model. But the non-mortgage retail business, particularly consumer finance and all, will need a lot of technology spend. So how that is really going to convert into growth also that you can expect? That would be great.

We are running a number of multiyear transformation programs to almost every business of ours. I, in our opening remarks, shared how we're doing around the wholesale side. We ran a similar a project on the CBD side. We're running a couple of those projects on the retail and largely in the asset side. And it does not stop there. We're looking at architecture. We're looking at how the employees can be able -- so there are many, many transformation programs going on in the bank. And they are multiyear. They're not 6 months, 9 months. It will take 3 years for us to land those programs completely. So as we do that, technology, obviously, is a very, very important component of it. The question we're asking ourselves is not only to be best-in-class but look at things globally and see what is the platform we create, which can take on some of the global practices. Now we cannot say anything beyond that at this point because it does not make any sense. We have to show you the revenues coming through and then we will talk about it as to what exactly we have done. But I just want to assure you that the bank is working on -- and we have shared some of those transformations, possibly, with you. Working on many transformation projects across other businesses. Our technology spend, we shared with you, was up 78% over the last 2 years. And that should give you a sense that the spend on technology has gone up significantly. I shared with you that 1,000 people are working on data banking. So obviously, this needs expenses to reach people and obviously, leads to higher cost-to-asset ratio, whatever -- whichever way you want to look at it. But we believe that given how we are catching up in some areas going ahead of the others, it will start reflecting in our business and our revenues and our numbers.

Yes, hope that happens certainly. The last question is that we had one of [ leads ] retiring. Any replacement that we have worked out about that?

We are not planning a reinvestment at this stage. The portfolio will be distributed amongst various senior leaders of ours. As again, I've been sharing that we have, not only at the ED level where one of them is going. We have very, very smart, young and senior leaders that are at a particular level. I was sharing with someone that at that particular level, we have 3 people who are ex-CEOs of pretty large organization. There was someone who was an ED of a large midsized bank. So we have very, very strong units at the level that the next level from ED, was at the group level and all these people are part of [ Mancon ]. Over a period of time, obviously, we expect some of them to move up. But at this stage, we are redistributing the portfolio. By the way, those have already been announced.

Okay. So we will operate with 1 ED at this point of time.

Yes.

The next question is from the line of Rakesh Kumar from Systematix Group.

Can you hear, sir?

Yes, please go ahead.

Yes. So my 1 question is related to the loans priced on external benchmark. So, like, among the large fee banks, we are on the lowest side. And the progression also if we see, like, from the March end to September end, the progression is also quite slow. So is it that just to protect margin, we are not progressing very fast on that front? What is the reason there?

Just give us a minute. What the regulator has said is that incrementally, all retail loans and some of the SME nodes need to be external benchmarked, so that's done. And obviously, we are in compliance with that. If the question is there is still some stuff that is at base rate or MCLR as the case, may be, why is that not moving? There is a concerted conversation that is on with the consumer, with the customer. And some of these customers have made the choice of staying either with base rate or MCLR as the case may be. Because remember that external benchmark rates are good on when rates are going down. But when rates are going up, it is -- it will go up as fast because market rates typically will move very, very quickly. And in that sort of an environment, EMIs will get repriced, will increase quite sharply as well. So therefore, some of the customers have chosen to be either at base rate or MCLR as the case may be. So not sure what exactly the point that you're making.

So the first point is that, like, if you see the case of, say, ICICI Bank or some other large bank, they have got close to 50% of loans already linked to repo and we have not close to around 31%. So is that a lower loan growth for us? That is the reason that in those segments, where it is mandatory to price at EBLR. There, we are not witnessing the growth that is -- is that the reason? Or that we are not asking customers to switch from MCLR to reported. So that is 1 question. And second question is coming from your answer itself, that we're at the bottom of the kind of interest cycle. So when the rates are going up, by having a lesser proportion of loans on repo, it will hit margin for us on a relative basis as compared to other banks.

Rakesh, thank you for your question. Maybe I can respond to it in 2 different ways. First and foremost, I think if you look at the composition, let's start at the headline level of fixed versus floating. About 32% of our book is fixed and 68% of our book is floating, which is the disclosure we made on Slide 12 of our presentation. Why is that? And within floating, we have compositions of repo-based stake, MCLR and foreign currency floating. The reason that you see our repo at 81% is that's the number you picked up, effectively will be a function of the product mix and the segment mix that we run our book at. As far as we look at the interest rate cycle, all floating rate and SPAC should be accretive. It is just the pace of change of the floating rate benchmark that one will have to observe. As I stand today, I'm not sure repo will reprice faster than the other benchmarks on an up cycle. So I think it's a wait-and-watch. We are very focused on ensuring that our balance sheet on a fixed floating basis is fully balanced. And we fundamentally believe that the interest rate up cycle should benefit us no less than what it should benefit our peers.

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Puneet Sharma for closing comments. Thank you, and over to you, sir.

Thank you, Janet, for assisting us with this call. Thank you to the participants for having spent the evening with us. It's festival season. Wishing your families a very happy Diwali. We hope that you and your family stay safe and enjoy the festivals. Thank you very much, and we'll be happy to answer any questions you may have. Please do reach out to us. We'll be happy to take it. Thank you. Have a good evening.

Thank you. On behalf of Axis Bank, we thank you for joining us. You may now disconnect your lines.