Axis Bank Limited (532215) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Axis Bank conference call to discuss the Q3 FY '22 financial results. Participation in 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 written 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.

Thank you, Janice. Wish you all a very happy new year and good health. Apart from me and Puneet, we also have on the call, Ravi Narayanan, Group Executive, Retail Liabilities and Products; Sumit Bali, Group Executive, Retail Lending; Ganesh Sankaran, Group Executive, Wholesale; and Amit Talgeri, Chief Risk Officer. Our battle against COVID is not over yet. We have to keep our guards up, but we are confident we'll take this wave in our stride. We saw strong growth in the economy in the past couple of quarters. We expect this to continue, aided in part by rising consumption, spending by the government and start of a CapEx cycle by the private sector. At Axis Bank, we look at the disruption brought about by the pandemic as an opportunity to redraw the baseline in multiple segments. We use this period to invest and gain market share in these areas. Our quarter 3 performance moves us forward on the trajectory we have been on in the past 2 years. Our asset quality, taken together, is best-in-class. We are demonstrating consistent growth across all segments, with specific identified areas leading the way, and we are consolidating on our operating profits and margins. There is confidence in accelerating our progress as we look ahead. I will take you through our business performance in quarter 3, and Puneet will go into the details of financial performance later. Like I mentioned earlier, the business momentum was strong in quarter 3. We delivered deposit growth of 22% year-on-year and 3% quarter-on-quarter on a quarterly average balance basis and added 2.15 million new customer accounts. Advances grew by 17% year-on-year and 7% quarter-on-quarter. The growth was strong across all 3 segments of Retail, Corporate and Commercial Bank. The impact of digitization and streamlined customer journeys is bearing results, and we find greater customer engagement and conversion. At 0.77 million, we achieved highest-ever credit cards acquisition in this quarter. We became the second-largest merchant-acquiring bank in the country, too. Our Burgundy franchise is one of the top brands in Wealth Management, with an AUM of INR 2.67 lakh crores. We saw a growth of 37% year-on-year and 3% quarter-on-quarter. Our mobile banking app is among the highest-rated banking apps on Apple Store, rating of 4.6, and Google Play Store, again, a rating of 4.6. We successfully executed the industry-first blockchain-enabled domestic trade transaction. We are also one of the first private banks who have gone live on the national portal of Indian Customs to collect custom duty payments. We also successfully concluded structured derivative transactions under the new RBI regulations. Our asset quality is top-notch. Slippages and trade costs further declined in quarter 3 on a year-on-year and quarter-on-quarter basis. The balance sheet buffers are at an all-time high. Margins improved 14 basis points quarter-on-quarter. And fee income grew 15% year-on-year and 3% quarter-on-quarter. The combined 9 months financial '22 PAT of our domestic subsidiaries stood at INR 872 crores, higher than full year financial and '21 earnings. Our operating profit grew by 17% year-on-year and 4% quarter-on-quarter. PAT was up 224% year-on-year and 15% quarter-on-quarter. We continue to make significant investments in building digital and tech capabilities, invest in new age talent and work on transformation projects across our businesses. Our near-term costs remain slightly inflated because of this. We are at the back end of this investment cycle now. We are seeing the returns on these investments flowing through gradually but surely. I'll take you through the business performance of key segments now. On the liability side, we continue to build granularity and focus on premiumization. CASA deposits on a QAB basis grew faster at 25% year-on-year and 7% quarter-on-quarter. The CASA ratio stands at 44%. Last year, it was 42%. Customer acquisition was strong on back of implementation of our key transformation projects. I have already mentioned 2.15 million new liabilities accounts opened in quarter 3, up 29% year-on-year. Total 6.2 million accounts have been opened so far in the 9 months, up 28% year-on-year. 1.76 lakhs savings accounts were opened via digital VCIP compared to 1.22 lakhs in quarter 2, up 44%; 37% year-on-year and 9% quarter-on-quarter growth in new current account customers. We continue to focus on deepening relationships across the government business. During the quarter, we signed MOUs with Indian Army, Indian Navy, Kolkata Police and Maharashtra Forest Department, among others. Our focus on optimization continues, with 67% year-on-year and 8% quarter-on-quarter growth in QAB balances for Burgundy and Burgundy Private accounts. The consolidated Wealth Management business has grown to be the fourth largest in India. This is in a reasonably short period of less than 3 years. The evolution of the Burgundy franchise is a great example of the strength of our One Axis approach to serve our customers by bringing the bank and its subsidies as a single unit to offer a range of solutions. Burgundy customers have grown at a compounded annual rate of 22%. As of December 21, we have 1.9 lakh Burgundy customers spread across India and other countries. The Burgundy AUM at 2.7 trillion has grown at a compounded rate in excess of 27% over the last 3 years. On credit cards and payments. I have already mentioned we added 0.77 [ lakh ] cards in the quarter 3. This is the highest ever for any quarter and up 174% year-on-year and 40% quarter-on-quarter. There are more strategic partnerships that we're entering into, and we see better risk and spend performance in this portfolio. Also, our organic growth has been strong on the back of new liability account growth that we have seen. A significant portion of this growth today is also driven by the advanced rule engines built by the analytics team. 40% of Credit cards were acquired through Known to Bank partnerships across Flipkart, Google Play, Freecharge and others, up from 21% in financial year '21 and 6% in financial year '20. We have 1.72 million Flipkart Axis Bank credit cards in force, making it one of the fastest-growing co-branded portfolio since its launch in July 2019. The credit card spends in quarter 3 were up 52% year-on-year and 22% quarter-on-quarter, faster than the industry and now trending well above pre-COVID levels. The card advances were up 10% quarter-on-quarter. We are also now the second-largest merchant-acquiring bank in the country, with an installed base of 8.42 lakh terminals. We have gained an incremental market share of 42% till November this fiscal. The merchant business is another example of the One Axis approach with innovative offerings to grow the business across deposits, lending and fees. We are the first bank to lead with a feature-rich and pocket version Android terminal for retailers. We are building a network of partners also to grow this business. On advances and disbursements. Loan growth was strong at 17% year-on-year and 7% quarter-on-quarter, led by strong all-round performance across the business segments. The overall loan book continued to trend upward sequentially for the sixth consecutive quarter. The risk parameters continue to trend down during this period. The Corporate loan book grew 13% year-on-year and 7% quarter-on-quarter as our domestic loans picked up 7% year-on-year and 8% quarter-on-quarter. Mid-Corporates, another area of focus, was up 44% year-on-year and 17% quarter-on-quarter. The growth in the Corporate segment is spread across different sectors, driven primarily by organized retail, engineering, petrochemical, industrials and real estate. The Retail and SME segments continued the strong sequential uptrend for second straight quarter, growing at 18% and 20% year-on-year and 6% to 9% quarter-on-quarter basis, respectively. The Bharat Banking focus is working well. Bharat Banking segment delivered a strong 56% year-on-year and 50% quarter-on-quarter growth in disbursements in quarter 3. We witnessed one of the best quarters in terms of gold loan disbursement also. Moving on to tech transformation and digital banking. I mentioned in the past calls about the transformation of our technology stack, our 1,500-plus tech and digital colleagues are working on 30-plus initiatives that are transforming the core and building future-ready capabilities. We now have go-live with 25-plus new tech or digital capabilities every quarter on the back of this initiative. On cloud, our leadership continues. We have established the largest VDI setup in Indian Banking with 2,300-plus virtual machines. We already have 55-plus of our critical applications on cloud and the migration is getting quicker every quarter. On API, the bank is committed to open -- to its open ecosystem proposition to build dedicated partnerships using our market-leading API strategy. We have deployed more than 300 APIs across Retail and Corporate channels. Especially on Retail business this quarter, in consumer loans, retail lending grew 33% quarter-on-quarter. It contributes upwards of 52% to key product lines such as personal loans. Axis was among the first banks to go live on the account aggregator framework. The first products to go live were auto loans and personal loans. With international travel reviving a bit in quarter 3, our digital ForEx cards issuance saw good growth. In quarter 3, digital contributed 40% to overall FX card sales. Digital investment and wealth journeys continued to see strong growth, with digital MFs in 9-month and financial year '22 growing nearly 2x year-on-year. We launched a new digital savings account aimed at millennials that offers digital-rich features and 10% to 15% cash back for purchases on the leading e-commerce platforms. Our D2C Savings Account acquisition saw a growth of 50% in this quarter as a direct result of this new digital savings account. We also witnessed best-ever monthly active users on our mobile app this quarter. On WhatsApp, we crossed 3 million registered users in quarter 3. Last quarter, I spoke about Project Neo that aims to build a world-class corporate digital bank. We have made strong progress, and we expect the first journeys to be in beta phase in quarter 4. On UPI, our market share stood at 15%, and we managed more than 22 million transactions daily with minimum rate of technical declines for remitter transactions. We now have 5.4 million non-Axis Bank customers using our Axis Mobile and Axis Pay apps. A few updates on our progress on ESG strategy that we outlined last quarter. During the quarter, we entered into a USD 300 million loan guarantee program with Guarantco towards accelerating the E-Mobility ecosystem in India. This program that was announced during COP26 events in Glasgow will also support our commitment of incremental financing INR 30,000 crores to sectors with positive social and environmental outcomes by financial year 2026. The bank also won the award for Best Sustainability-linked Bond Issued by a Financial Institution for its USD 600 million sustainable AT1 on bond issuance in September 2021 at the recently announced The Asset Triple A Country Awards 2021. In closing, we continue on steady upward movement on business and financial metrics across all the lines of businesses, along with the positive customer change within the bank. We have made significant investments in technology, digital and multiple business transformation initiatives. This has meant a near-term rise in cost, but has set us on the right trajectory to deliver on our GPS strategy. We are optimistic and confident about our future. I will now request Puneet to take over.

Thank you, 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 Q3 FY '22, focusing on our operating performance, capital and liquidity position, growth across our deposit franchise and loan book, asset quality restructuring and provisioning. Our operating performance is robust. The improvements are reflected in NIM, continued buildup of granular fee and our PAT growth. Net interest income for Q3 FY '22 stood at INR 8,653 crores, representing a Y-o-Y growth of 17% and a Q-on-Q growth of 10%. NIMs For Q3 FY '22 stood at 3.53%, increasing sequentially by 14 basis points and declining 6 basis points Y-o-Y. The same quarter last year, we had interest on income tax refund aggregating to INR 153 crores, contributing 8 bps to the net interest margin. Adjusted for this, the Y-o-Y NIM grew by 2 basis points. The improvement in NIMs over the medium term will be driven by a balance sheet mix shift from investments to loans and within loans, the currency, segmental and product composition towards better-yielding assets; continued improvement on -- in the low-cost deposit base and quality of our deposit franchise; and reduced share of low-yielding RIDF bonds, currently standing at 3.8% of our assets. The improving liability franchise has resulted in cost of deposits declining by 49 basis points Y-o-Y and 9 basis points Q-on-Q. The bank has been improving the risk profile of its loan book. our NII as a percentage to average risk-weighted interest-earning assets stands at 7.25%, improving 39 basis points Y-o-Y. Net interest income for Q3 FY '22 stood at INR 3,840 crores, representing a Y-o-Y growth of 31% and a sequential Q-on-Q growth of 1%. Our fee income stood at INR 3,344 crores, growing 15% Y-o-Y and 3% Q-on-Q. 92% of the fee is granular. 65% of fees -- of our fees is from the retail business and the balance from the wholesale franchise. The fees for the quarter is after giving effect to some customer-focused actions taken by the bank, including reducing fees across many charge types, mainly in the retail liability area, the reduction in fee in the long term, but we do believe that it is the right thing to do as we build a sustainable franchise. Fee from cards grew 21% Y-o-Y and 8% Q-on-Q. Fees on third-party distribution grew 33% Y-o-Y and 13% Q-on-Q. Fees from our digital channels grew 20% Y-o-Y and 3% Q-on-Q. Our operating expenses for the quarter stood at INR [ 6,331 ] crores, growing 25% Y-o-Y and 10% on a sequential quarter basis. Staff costs increased by 16% Y-o-Y and remained stable Q-on-Q. We've added 9,250 people from the same period last year, mainly in our growth businesses and technology. We continue -- we have continued to maintain the social security code provisions. Other operating expenses grew 30% Y-o-Y and 15% quarter-on-quarter, mainly attributed to higher business volumes, higher collection expenses, IT expenses and statutory costs comprising PSLC and DICGC premium being higher. The Y-o-Y increase in rupee crore operating expenses can broadly be bucketed to the following reasons: 24% of the increase in expenses is volume linked; 41% is attributable to investing in the future growth of the franchise and technology; 21% is attributable to collection expenses, COVID expenses and statutory expenses; and the balance 14% is BAU growth. The sequential Q-on-Q increase in rupee crore expenses can be attributed on a very similar pattern: 21% to volume growth; 50% for future growth and technology expense; 8% is attributable to collection expenses, COVID expenses and statutory; and 21% for BAU expense growth. Operating expenses to average assets stood at 2.15% for Q3 FY '22, higher by 19 basis points Y-o-Y and 3 basis points on a sequential quarter basis. Operating profit for Q3 FY '22 is INR 6,162 crores, growing 17% Y-o-Y and 4% Q-on-Q. The bank has not utilized any of its COVID provisions in the current quarter. Provisions and contingencies for the quarter were INR 1,335 crores, declining 64% Y-o-Y and 23% Q-on-Q. 61% of the NPA provisions on loans for the quarter for are flow forward provisions towards aging of assets recognized in previous quarters. Annualized credit costs for Q3 FY '22 is 0.44%, declining by 258 basis points Y-o-Y and 10 basis points Q-on-Q. PAT stood at 3,614 crores, growing 224% Y-o-Y and 15% Q-on-Q. Annualized Q3 FY '22 ROE stood at 14.19%, improving 928 basis points Y-o-Y and 147 basis points Q-on-Q. 9 months annualized ROA and ROE stood at 1.12% and 12.01%, respectively. The strength of our balance sheet is reflected through the cumulative non-NPA provisions at 13,404 crores, comprising of COVID-19 provisions of INR 5,012 crores; restructuring provisions of INR 1,569 crores at first bucket NPA rates; weak assets and other provisions at INR 6,823 crores. The standard assets cover, defined as all non-NPA provisions by standard advances, stands at 2.03%. Our provision cover, defined as all-provisions NPA plus non-NPA divided by GNPA, stands at 130%, improving 1,406 basis points Y-o-Y and 576 basis points Q-on-Q. The bank is well capitalized and is carrying adequate liquidity buffers. Our total capital adequacy ratio, including 9 months profit, stood at 18.72% and our CET1 is 15.33%. The bank called back INR 3,500 crores of Tier 1 capital with requisite regulatory approvals during the quarter. The impact of this callback to Tier 1 capital is 50 basis points. The prudent COVID provision of INR 5,012 crores translates to a capital cushion of 63 basis points over and above the reported regulated capital adequacy ratio. Our average LCR for the quarter was 113%, and our excess SLR was INR 82,935 crores. The RWA of the bank as of 31st December 2021 stands at 63% compared to 66% as of December 2020. The improvement in RWA percentage is reflective of the quality of business being done by the bank. Growth across our liabilities and loan franchise. Amitabh discussed the strong progress made on the liabilities franchise in his opening remarks. I would request you to please refer to Slides 7 to 10 of our investor presentation for further details. Our overall loan book grew by 17% Y-o-Y and 7% sequentially. Our loan book continues to remain balanced, with retail advances constituting 55% of the overall advances, corporate loans at 35% and CBG portfolio at 10%. The retail book represents healthy characteristics, with 80% of the book being secured. Domestic retail loans grew 18%, led by secured products like home loans, 20% Y-o-Y growth; LAP, 28% Y-o-Y growth; and small business banking, 51% Y-o-Y growth. Retail disbursements grew 37% Y-o-Y and 19% sequentially. Disbursements to unsecured products continued to grow, with personal loan disbursements growing 39% Y-o-Y and 15% Q-on-Q. We are progressing well in our endeavor to build a profitable and sustainable Corporate bank. The Wholesale book grew 13% Y-o-Y and 7% Q-on-Q. Details of rating composition, incremental sanction quality is set out on Slide 28 of our presentation. We continue to have strong positioning in GST and RTGS payments with a market share of 8% each. The offshore assets grew 44% Y-o-Y. The growth in our overseas corporate loan book is primarily driven by our GIFT City branch exposures, 94% of the overseas standard corporate loan book in GIFT City branch is India-linked and 91% is through A-rated corporates and above. The Commercial Banking business grew 20% Y-o-Y and 9% Q-on-Q. The Commercial Banking card deposits on a quarterly average balance basis grew by 15%. The overall fees from CBG increased 14% Y-o-Y. CBG customers contributed to 19% of our Burgundy franchise. Each of these reflects the strong quality of the relationship-led franchise that we are building in this segment. Our ECGLS (sic) [ ECLGS ] share is low, dominated by ECLGS 1 and 2. Asset quality metrics in the CBG segment have held up very well, with net slippages of just INR 40 crores, negligible restructuring and substantially improved PCR in the segment at 74% as of December '21 versus 52% as of March '20. Coming to the performance of our subsidiaries. Detailed performance of our subsidiaries is set out on Slides 55 to 62 of the investor presentation. The One Axis strategy is playing out well. The domestic subsidiaries reported a net profit of INR 872 crores for the 9 months FY '22, up 61%. This translates into a return on investment of 64% on a stand-alone bank basis. The subsidiaries profit now accounts for 8% of the consolidated profits and increased 9 basis points to consolidated ROA and 84 basis points to the consolidated ROE. Axis Capital continues to maintain its leadership position in ECM, completed 43 transactions in the 9 months ended FY -- the 9 months FY '22. Axis Finance has built out -- the build-out of retail franchise is on track, with the retail book growing 3.6x Y-o-Y and now constituting 29% of the overall book as compared to 13% a year ago. Axis Finance's book quality continues to be strong, with near nil restructuring and net NPA of 0.9% and an ROE of 19.8%. Axis Mutual Fund overall quarterly average AUM grew 43% Y-o-Y in Q3 FY '22. Its overall average AUM market share in Q3 FY '22 stood at 6.6%, up from 6% in Q3 FY '21. Axis Securities during the quarter added 0.13 million customers, up 47% Y-o-Y. Its ROE for the 9 months FY '22 was 43%, up 90 basis points on a Y-o-Y basis. Asset quality, provisioning and restructuring. Overall asset quality has been improving sequentially for the bank. As we had indicated last quarter, the GNPA, NNPA PCR ratios for the bank and segmentally for Retail, SME and Corporate are provided on Slide 45 of our presentation. GNPA percentage was 3.17%, improved 138 basis points Y-o-Y and 36 basis points Q-on-Q. The net NPA was 91 basis points or 0.91%, improving 29 bps Y-o-Y and 17 basis points Q-on-Q. Our PCR result is healthy at 72%, improving 186 basis points Q-on-Q. The gross loan slippages for the quarter were INR 3,332 crores, lower than Q2 FY '22 by 38%. Retail gross slippages declined 44% Q-on-Q. Gross loan slippage ratio for the quarter stood at 2.08%, improving 304 basis points Y-o-Y and 131 basis points Q-on-Q. Net loans slippage for the quarter was an absolute INR 97 crores, down from INR 676 crores in Q2 FY '22 and a decline of 86% Q-on-Q and 98% Y-o-Y. Net loan slippage in Retail were negative in the quarter, for the Commercial Banking Group equals 40 crores and for the Wholesale Banking segment was at INR 151 crores. The net loan slippage ratio for the quarter annualized is 0.06%, improving 380 basis points Y-o-Y and 38 basis points Q-on-Q. In addition to loan slippages, the bank has classified during the quarter INR 812 crores of pass-through certificates rated AAA as at 31st December 2021 as NPI. The originators of the retail loon pools underlying the PTC has requested the bank for permission to grant moratorium to the underlying borrowers, to which the bank had consented in accordance with the PTC terms. Since the PTC is an investment and not a loan, our technical position has been taken that moratorium could not be granted, and hence, these PTCs have been classified. The bank has recovered in FY '22 an amount of INR 764 crores from these pools, and none of these pools are overdue after factoring for moratorium. We do not expect any loss from these tools. 21% of the outstanding will be further repaid in FY '22, 58% will be repaid in FY '23 and the last 21% will be repaid in FY '24. Provisions in the quarter against the slippage reached aggregates to INR 203 crores, and it translates to 11 basis points on credit cost, has been charged to the P&L for the quarter. Net slippage ratio at the bank level on an annualized basis is 0.55%, improving 346 basis points Y-o-Y. Incremental implemented COVID restructuring during the last reporting period was INR 287 crores. Total outstanding restructuring under COVID 1 and 2 in aggregate stands at INR [ 4,643 ] crores and is 0.63% of gross customer assets. Overall, provision cover on restructured loans stands at 24%, with 100% provision on unsecured retail loans. The BB and Below pool of the bank declined sequentially. More details on BB and Below pool and restructuring are provided on Slide 46 of the investor presentation. As I close, we summarize the bank's journey so far and the broad outlook on key performance drivers. Our balance sheet resilience is visible through strong capital adequacy, legacy NPA issues being behind us, with net NPA at 0.91%, limited COVID restructuring at 0.63% of GCA and provisions by GNPA at 130% and gross NPA ratio at 3.17%. Consistency and quality of granular liability growth is visible. The average CASA balance to average deposit ratio has improved to 44%. Growth is healthy in our granular businesses, both secured and unsecured. Focus growth segments in Wholesale, comprising SME, Mid Corporate with better RAROC, continue to grow faster at 20% and 44%, respectively. In the 9 months FY '22, domestic subsidiaries have exceeded full year profits for the last financial year. In Q3 FY '22, the delivered NIM is better than the guidance given last quarter. We maintain that Q4 FY '22 NIMs will be better than the NIMs reported in H1 and should be in the range of 3.45% to 3.5%. We will continue to invest in the franchise. We expect to exit FY '22 at a 2.20 cost-to-assets ratio, higher than our earlier estimate. We stay committed to our 2% cost-to-assets target on an FY '23 exit basis. The intensity and impact on lives and livelihoods, length of time of COVID wave 3 and resultant government policy actions remain a key monitorable. We would be glad to take your questions now. Thank you.

[Operator Instructions] The first question is from the line of Mahrukh Adajania from Elara Capital.

Congratulations. My first question is on operating expenses. You shared a fair bit of detail. But on operating expenses for the quarter, could you share what percentage of OpEx is the expense?

Puneet?

Mahrukh, thank you for the question. The way to think about it is our technology expense to total OpEx will be in the range of 7.8% to 8% of total expenses for the bank.

Okay. My next question is on credit cost. Of course, asset quality has been very good, and your credit costs have declined substantially. What is the outlook from hereon? Has been that you, of course, have a normalized range of credit cost, but would we see credit cost lower than normal in the short term, given that you've already provided a lot in the earlier quarters?

Mahrukh, we don't provide a specific guidance on our credit costs. As I have previously said, the way to think about credit costs for Axis Bank is we have a long-term average credit cost that the bank has. There are pluses and minuses to that long-term average. The lumpiness of the wholesale business has disappeared. Therefore, from the long-term average, given the quality and the granularity of the wholesale business we have built out, the credit costs should move down. We have moved our PCR percentages, which is the provision cover on the rule engines, we now operate by 15% to 20% higher than where we used to previously operate. In the long-term average, we used to operate at a PCR of 50%, 55%. Our rule engines are now resulting in a PCR of 70% thereabouts. So you need to factor the incremental provisioning at least in the short term in terms of how you think about our credit costs. And lastly, we have articulated that we feel comfortable growing our retail unsecured book. It will give us better NIMs, but it will accrete to credit costs. On a risk-adjusted basis, that book will continue to be profitable and additive to the bank. And an amalgamation of these 4 factors is how I would request you to think about our credit cost outlook as we move forward. We don't have a specific guidance that we put out.

And I have one last question, which is slightly long term, that when you think of M&A, so what would be your actually medium-term ROE outlook? And when you think of M&A, which is kind of bigger, or which is kind of big for your balance sheet size, what will be the ROE, the maximum ROE dilution that you'd be comfortable with in the short term? So what would be your medium-term target? And how do your M&A plans fit into that?

So Mahrukh, I have previously called out the fact that our aspirational ROE target is 18%. And the VE has the visibility that I have called out in the past to 16%, 16.5%. So I stay true to those statements. In terms of our M&A strategy, I would simply say that the way we think about M&A is capability. And we will evaluate opportunities, individual opportunities as they present themselves. There is no framework that I can offer to you that a given structure on ROE is what will be acceptable or not. There are many aspects that go into an inorganic acquisition of an M&A activity, one of it is financial. We will be cognizant of [ ordinary base ] as we make choices in the future.

[Operator Instructions] The next question is from the line of Kunal Shah from ICICI Securities.

Congratulations. So two questions. So firstly, in terms of the OpEx, even though it was covered, but when we look at it maybe in terms of the future and related to digital agenda, what would be the nature of that? Because the sequential uptick also you mentioned like 40% is coming in from there. So is this more related to acquisition? What would be the nature of those incremental OpEx? So that is the first question. And second is in terms of the movement of BB and Below, if you can give -- if there are any slippages coming in from there? And what would be the upgrades in that entire movement, wherein BB and Below has actually come up? Yes.

Yes, Kunal, thank you for your questions. I think on the digital agenda, we have multiple unique digital properties that we continue to build. On accounting, at the opening comments, we spoke about open as an architecture and the integration that we are looking to do with all of our partners. We are working on end-to-end digital revenues, both on the Retail and the Corporate side. We have the new bank initiative that is running in parallel, last year incurring expenditure in a whole way now to core, moving a lot of our technology stack to the cloud. So the tech investment is built around ensuring that we have a resilient operating franchise and building for the future. And therefore, those investments are likely to continue in the foreseeable future, insofar as the bank is concerned. I hope that covers the first...

Yes. Sorry, just to interrupt. So as we mentioned, this will continue as well, but maybe the intensity would also be similar in terms of the increase. Or we are done with the larger part of it being front-ended and now it should come off a bit?

So Kunal, the way I would address this question is instead of speaking specifically on technology spend and how they will play out, I think technology is an evolving field. It will need continuous investments. I would rather leave you with an overall comment on costs. What we feel reasonably comfortable on is, on an FY '23 exit basis, we should revert to a 2% cost to assets number that we had previously demonstrated is reasonable for us. So the mix of the expense may continue to change, but you will see a moderation in overall cost to assets.

Sorry, Puneet. I'll just add, Kunal, Amitabh here. We have close to 18 large projects, which are being managed directly by our management committee members. And when you think about cost, as the benefits of these projects start flowing through, they obviously speak to your expenses, too, because then you can drive more volumes, hopefully, with better productivity and lower customer acquisition costs. So we get that benefit. But at the same time, it also gives you the leeway and headroom to continue to invest in digital technology, transformation, analytics and stuff like that. So we're trying to balance both. And based on whatever we see today is the kind of guidance which Puneet is giving to you. So I hope it gives you some better insight.

Sure, yes. And the second question? Yes.

And Kunal, to your second part of the question, the slippage from the BB pool was INR 800 crores. It includes 1 technical slippage of INR 150 crores, which is downgrade and upgrade in the same quarter, partially. The upgrades from NPA to BB pool is INR 355 crores. And all other downgrade plus balance reduction movement would be the balance, INR 190 crores.

The next question is from the line of Gaurav Kochar from Mirae Asset.

Congrats for a good quarter. Just wanted to build a little more on the other OpEx part. If I look at other OpEx to total income, it was at around 35% this quarter. If I look at [ One Axis ], it was at [ 30% ]. And if I look at other banks, the other large private banks, so their-- the other OpEx to total income has been in at around 24%, 25% mark. And if I look at Axis Bank's FY '17 to FY '21, other OpEx to total income, it is already at 28%, 29% on an average. So just wanted your thoughts that -- I mean, we have already been spending -- between FY '17 to FY '21, spending 400 bps higher than the peers, the large peers. What -- I mean in terms of now that the [ OpEx ] gap has increased from 400 basis points to almost 800, 900 basis points. So what has been the expense for -- given that historically, also, you've been spending more than peers on this per rupee earned. And when do we see the bank reaching at 25% mark, in line with the other large peers? That was the first question.

So Gaurav, thank you for the question. I think maybe I will dimension it differently for you and then answer your question directly. There are 2 variables that we can look at from an expense ratio perspective, one is cost to assets and the second is the cost to income, okay? The cost to assets number is being steady. And the growth that you have seen in our cost to assets, give or take what we see from the larger peer bank competition, we are in the same range, both on a relative shift as well as the absolute number that we are operating at. So yes, there's been a cost escalation for the large banks between 5 to 8 basis points. We are at 8 basis points, and other banks may be at 5. So we're not really seeing any divergent cost escalation with assets as the denominator or any asset as the denominator, whichever way we look at it. The metric that you are comparing is cost to income. Now there will be multiple impacts on the income of the bank and especially since you've looked at the time series. For example, we chose not to restructure. Therefore, we had the higher-interest reversal impact that came through on the income line. And we ourselves have called out the fact that there is a big improvement journey that we need to undertake. So there is an income effect that is playing out in the ratio that you're looking at. So while all franchises continue to invest, our ratio of other OpEx to income looks higher. As both OpEx moderates to 2% cost to assets and my earlier commentary on the call saying we have a NIM trajectory that we are working towards, you should see positive traction on that number, assuming that we are able to deliver both the statements that we have made in the course of this conversation. So my request is, please, for the moment, stay focused on cost to assets because after variable, we are focused on in [ trading ] our business.

Sure, sure. But even if I look at cost to assets, some of the peers have seen moderation in cost to assets -- the larger banks have seen cost to assets moderating further. So even if I compare the absolute delta maybe from a longer-term time, say, FY '18 to FY '21 or 9 months FY '22, the cost to assets for us hasn't gone down as much as for peers, if I were to look at it the way you are seeing. Even in that case, the point remains that the other OpEx seems to have been higher versus peers for a long period of time. So is it only expense that you would attribute it to for the last 3 to 4 years?

So Gaurav, again, I think maybe we probably need to look at the numbers in a little more detailing. But I mean, if I was just to offer you a comment, again, I will go to total cost rather than other OpEx to total assets. The reason I will go to total cost, very simply, the staffing mix of different entities could be different, okay? That could cause one differentiation, and you pick up only 1 element of the cost structure. So in-source versus outsource. In-source, we're taking stuff. Outsource, we're taking other OpEx. There have been certain conscious calls that we have made. For example, social security called debits that we have taken ahead of the test, which will be sitting as part of our expense number escalations. So I think there are nuances to it. At least our reading of the numbers is we are in a tight range on an incremental cost to assets of 5 to 8 basis points, with the exception of 1 large private bank. And we're not seeing a very large differentiation being called out in incremental expenses. That's how we see it. Like we said, we continue to remain focused on getting the cost to assets back to 2% on an exit basis in FY '23. And if you are able to achieve that, you will see moderation in the ratio that you have just called out.

Sure. That's helpful. And just next question on -- if I look at absolute borrowing, that is up around INR 20,000 crores sequentially. If I look at the CD ratio, that is up 200 basis points, but it is still down from pre-COVID levels of 90% that we used to have. If I look at LCR, it's still around 113%. And if I look at excess SLR that you have disclosed in the PPT, that stands at INR 82,000 crores. So any reason for this incremental borrowing? Is it locking fixed rate borrowings in anticipation of a rising rate environment? Is that how we should see it?

Gaurav, this a mix of three things. The first is we've raised long-term infra bonds, which has contributed to increase in borrowings. They are tactically a good instrument to have. They don't attract some of the regulatory descriptions, don't attract aid in the ANBC computation. Second will be a period impact, because what you're seeing is a point-in-time number, not the average number. And three is structurally, as the balance sheet grows, we could have these borrowings to balance out the balance sheet. The other reason on an overall basis is you will notice that our foreign currency trade book has gone up, and that is typically aided by offshore models. So as that book increases, which is short term in nature, you will see an impact play through to your models. So it's an amalgam of these four factors that have resulted in the borrowing increase. I think it is the normal course of business, nothing exceptional for me to call out for you.

Perfect. Perfect. Just last question, if I can squeeze it in.

Sorry to interrupt, may I please request you to rejoin the queue for your follow-up as we have many people waiting for their turn. [Operator Instructions] The next question is from the line of Sumeet Kariwala from Morgan Stanley.

Congratulations on a great set of numbers. I have this question on LCR, which is moderated to 113% was 120% last quarter. Just wanted to understand what's driving this. So if I look at your deposit growth, that's quite decent. But I think -- so maybe it's to do with term deposits, where quite a bit of growth has come from the wholesale side. So that's one. And second is something that you're trying to do on the overseas loan book. Is that also weighing on LCR? And third is, even on CASA, is there some growth that is coming from the government side, and it has higher run-off rate and is why LCR is not accreting? So just some thoughts on that.

Yes, Sumeet, thank you for your question. We have discussed the quality of our liability and the journey that we are on the quality of our liability franchise buildout. Many parts to your question, let me address each part. In our investor presentation, we have called out the government side growth is at 49% Y-o-Y. It has -- it is off a smaller base than retail is at, but it has grown at a healthy pace. And it has an outflow profile that is essentially different from pure retail side. So yes, the other question that it will have an impact on LCR, does it [indiscernible]? Overall, that liability is profitable and deployable just given the cost of funds at which it comes through from a bank standpoint. So it is accretive to the business, may not be accretive to LCR from a long-term 8- to 12-quarter journey that we've spoken of in improving our LCR profile in terms of outflow. The second part of your question on the moderation of the LCR from 120% average to the 113% number, it is a function of both asset growth picking up, and therefore, the deployment from investments to assets. And that is primarily one of the causes for the LCR to moderate. You're also seeing the commensurate benefit come through on this. Overall, we continue to remain focused on getting the quality of our liabilities right. The journey is ongoing. I have previously said it is an 8-, 12-quarter journey, and we will see a progress thereon. So those are the reasons why the LCR has currently moderated. We remain focused on improving that number as we had before.

Second question is on corporate loan growth. So there's some leasing pickup this quarter. You've talked about SME, Mid-Corporate doing well, and those being your focus segments. Large Corporate also did well this quarter. Should we expect that to sustain? Any thoughts on that?

Ganesh, go ahead, yes.

This is Ganesh here. I think we -- as we said earlier, we are focused on growth only on the chosen segments. So our performance is a reflection of our staying on that journey, as already articulated by Amitabh and Puneet. I think we have seen good growth in Mid-Corporate, which has shown a handsome growth. CBG, which is our 1 segment below the Mid-Corporate, we are also seeing some pickup in working capital utilization. As economic activity is coming back, a small improvement over there. And across the board, we are seeing credit uptake across renewables, across roads, across industrials, chemicals, and disbursement coming back in NBFCs and the like. So we believe that when we say we'll stay this course, we are quite optimistic about sustaining the growth.

The next question is from the line of Nitin Aggarwal from Motilal Oswal Securities.

Congratulations on good results. So my question is on the provisions that we are having like almost 134 billion. So when do we really plan to utilize the COVID provision? Like COVID wave 1 and 2, we have seen the impact and that has been driven pretty fine. So when do you really plan to use the COVID provisions? And the outlook on the rule-based provision also that you did.

Nitin, thank you for the question. If you break up the INR 13,000 crore provision, the INR 5,020 crores is the COVID provision. The outlook that we have is it's purely prudent. It is not reflective of underlying risk on the book as we see it. To your question on utilization, our current assessment is that there is a risk model that we have. And as a consequence of this, this model that the prudent provision continues to stand. We do not expect it to utilize that provision based on the result of the risk model in FY '22. And on a longer-term basis, directionally, we believe that we would carry this provision structurally forward to lend strength to the balance sheet, then utilize it even post-COVID. The balance provision of the INR 8,000 crores that we have is entirely rule-based. And as the underlying asset quality improves our retail results, the provisions will get released or popped up on our financial statements. So that's the overall outlook on the INR 13,400-odd crores of provision that we have.

So can you -- just on that, like this quarter also, we have made rule-based provisions. Am I right? Because like the asset quality is pretty much, I think, very strong this quarter, what we have reported as such overall. And so you have made -- so when will -- clearly, with the scenario that you'll stop making or like draw down on these rule-based provision spend? What sort of slippages will that level be?

So in fact, that is the beauty of the rule-based position. And in fact, in my opening comments, I had specifically called out a number, which was a large part of my provisions for the current quarter are on account of flow forward provisions from prior periods, i.e., an NPA was recognized in the final period. And illustratively, under the rule, it got provided, let's say, at 50%. Because of elapsation of time, the provision moved from 50% to, let's say, 75% in the current quarter. So the 25% provision that we topped up by the rule engine has gone and hit the P&L. Like I said, if this asset was resolved, which is there is either a recovery or upgrade, the provision will automatically end up getting released into the P&L, which is the reason why you're seeing zero net slippages or near-zero net slippages but a provision come through on the P&L. It just continues to work better on PCR and continues to strengthen the balance sheet. So we feel very happy with the rules that we currently have.

All right. And 2 data points, if you can share like how much NPL aging provisions have been made this quarter, given higher slippages that we experienced a year back? And secondly, what are some of the largest ticket sizes in the BB envelope. In average, we have disclosed, but what are some of the larger sizes that we have there?

So effectively, from a BB pool absolute size, I have always said that there is -- with the exception of 1 [ noncovered ] facility, there is no 4-digit crore exposure left in the BB pool. The average is a fair reflection. There are no outliers in that pool as compared to the average number is what I would call out. And to your question on what part of the cumulative provisions for the quarter will flow forward, 61% of the NPA provisions were on account of flow forward. So if I was to dimension the number for you, we give the breakup of the provisions -- just give me a second. I'll tell you the slide number of the presentation. We give a breakup of our provision on Slide 47 of the investor presentation. Loan loss provisions of INR 790 crores, 61% of the that provision would have come from prior-period flow forwards.

The next question is from the line of Adarsh Parasrampuria from CLSA.

Just if you can give a walk-through that you gave for the quarterly increase. If you do the Y-o-Y increase in other OpEx anytime during the call, we believe the share of INR 5,000 crore number is up to INR 6,300 crores. So if you can walk through that -- walk around the quarterly, it will help. And just taking what you have guided to [ the 2.2% going to ] 2% in a year. Just kind of clarify, did you mention it's the exit number that you would target for FY '23?

Sorry, Adarsh, I seem to have lost you in the question. Would you be kind enough to repeat?

Sorry, I was asking you -- sorry, I was asking, firstly, if you can give a walk-through for the other OpEx on a more Y-o-Y basis rather than Q-o-Q at any time during the call, if possible? And the second thing was that you mentioned the 2.2% number on cost going to 2%, was there a guidance for an exit FY '23?

Yes, FY '23 exit was 2%. That is the directional comment I made. And to your Y-o-Y number, if I look at the Y-o-Y cost increase, 24% of the Y-o-Y cost increase is volume linked. 41% of the Y-o-Y cost increase is related to investing in future growth of the franchise and technology. And 21% is attributable to collection expenses, COVID expenses and statutory expenses. Statutory expenses comprised CSR, PSLC and the DICGC premium and 14% is organically is the expense growth on a Y-o-Y basis.

The next question is from the line of Rahul Maheshwary from Ambit Asset Management.

My 2 questions are then, first, as in the opening remarks, you have mentioned about the 30 new -- 30 digital initiatives that has been chartered by the Axis Bank. Can you give some insights into the -- what are the metrics that is helping you to chart out the -- what is the output that is coming, whether in terms of the market share or whether in terms of cross-sell stickiness, volume growth? And second question was more about that, no doubt, every segment is firing for you. But can we expect that going forward, as the project finance and the target CapEx starts taking place, the growth rate into the Corporates will mirror the kind of growth rate that would be panning -- that has been seen into the Retail segment also.

So as far as the digital part is concerned, we are working on our data bank across three things. One is, we are trying to see what kind of customer propositions we can take to our customer. Second is what we can do about digitizing the bank itself. And third is what we can do about digitizing all the customer journeys for every product and service I take to the customer. So when we talk about 30-plus initiatives, it is across all these 3 businesses. So for example, New to Bank might be working and leading the project on Project Neo. This is a project that I mentioned as part of my remarks. And obviously, IT will also be involved. Business also will be involved. But it was the digital bank, which is driving the project from the front. And on the other side, New to Bank might be -- banking might be involved in completely revamping our [ bank ] side, particularly when we're going to launch a newer version of our mobile app in the -- during this quarter. And we will be working on that, too. We might be coming out with some very specific new product offering or we might be working on some specific APIs, which will allow us to embrace a completely new partnership. So it varies across. The focus is on these three areas. We have a certain principle on the basis of which we decide how we're going to engage and manage these projects. And that's why the number of these projects has gone from very few to now close to 30 such initiatives. On the loan growth, you mentioned that the private CapEx picks up. Where, as I said, that if the opportunities are there for us at the right price within our overall risk framework, we are going to be aggressive and we are going to grab those opportunities that come our way. And it's not just for loan growth. It is for bringing the entire wholesale bank and Axis group to those companies. So we're not going to stop at loan. We're going to go for all the wholesale banking products. We're going to go for capital raising. We will try to see if we can do some business on the active finance side, in promoters and so on and so forth.

Amitabh, to just to follow up on this thing. Amitabh, I'd like -- definitely, we have seen quarter-on-quarter improvement. But the kind of quality of delivery that has started to take in place, how confident -- or can we expect such kind of consistency or sustainability to maintain? I'm not asking for numbers, but a directional view would be very helpful.

If there are no disruptions in the economy and if it continues at the current pace, you should expect something similar from Axis.

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

Is it possible for you to give some granular [ themes ] in terms of FX? And how much basically goes for maintenance? How much is for the new expect? And how much do we also capitalize our [indiscernible]. I think beyond P&L, there is a lot of thing that we'll be doing on the [indiscernible] the likes. So if you can give some granular details on that, that would be great.

Anand, we don't really break out that expense with that level of granularity. I think we can put out 2 sets of numbers. One is that our tax spend as a percentage of our total expenditure is about 8%. That's one variable that we put -- that we specifically call out on tax expense. And when we complete this variable, we factor in depreciation on CapEx that has been incurred for technology. So the 8% is all subsumed number. CapEx is the cash flow. The OpEx is reflected in depreciation, which is absolute [ in the quarter ].

And how much is -- so you said 8%, but how much would be last year? [ If you can break it down ].

So I gave a range to a question I answered earlier that, for the current year, it's in the 7.8% to 8% range. It was lower last year. We have effectively said that expense has grown by 40% on a year-on-year basis. So the proportion of the percentage will be lower [ in the past year ].

Sure. And one more thing about -- even in the real world, you have seen very strong growth. So what is happening over there? [indiscernible]

So Puneet , let Ganesh answer it. Sorry, I forgot to introduce Ganesh. Ganesh, please?

So in the real world, we had an excellent quarter in the rural book this -- in quarter 3 FY '22. Across all product lines, we saw growth in disbursements and balance sheet. This was one of our strongest quarters. Serially, year-on-year, we grew about 56%. And this growth came across all our segments, including pharma, finance and gold loans [indiscernible] and micro finance. We also saw growth coming through in the enterprise lending, which is a rural enterprise, and the MSME lending in the rural markets. There also, we saw substantial growth. There's 1 group we want to grow, and we want to also grow other revenue in this line of business. We expect the growth to continue in the coming quarter as well.

And the next question is from the line of Sameer Bhise from JM Financial.

Congrats on a good quarter. Just wanted to understand the growth on the SBB as well as the MSME book. Some of your larger peers also have reported strong numbers there. How is the market share shifting? Or what is driving this -- like secular growth towards some of the larger private names? Your sense there? Is it just newer geographies or also material change in terms of the way these guys are being looked at by you?

So on the small business banking, we are seeing newer clients also come through and the existing clients looking at a full suite of solutions from the bank. The growth in this segment has been strong, and we are seeing utilization pick up. This quarter, we've also seen the business installment loan portfolio also pick up. And we are now spread across 145 locations. And most of the customers, almost 85% have prime scores as per our internal score cards.

On the SME side, we are seeing something similar. So it's all about being in the market. We have been growing this. We talked about, again, the transformation project. We are fully a couple of quarters back, and we are seeing the impact of that come through. We obviously, again, want to be very sure that we continue to operate with the risk guidelines we have laid for ourselves but [indiscernible] And yes, I think the recent proportion of this business could be coming from public sector banks, but let's also not run away from the fact that some of this business also comes from friendly competitor banks, too. Sometimes the customers are not happy with the facilities or the services they're receiving from the existing banks. And the positives do come every banks, it's not just us. And if you are in front of the customer with the right solution, you do get an opportunity to take over the facilities and limits of those customers also across both SME and business banking. So that's pretty much a part of the way we're blocking and tackling with having [indiscernible]

Sure. And I think there's also a statement which says that it is one of the most profitable segments of the bank. So I mean, any quants you would want to mention like in terms of degree versus the typical retail business not impacting [indiscernible]

I don't see -- no, they are higher around the [indiscernible], and we like them to grow -- these are higher around businesses, as we call them, and we would like them to grow faster than the growth rate of the overall business. But it's easy to make that statement, but we need to do that within the risk guidelines. See, please, we have worked very hard to get where we are in terms of overall asset quality. We don't want to just give it away because we have to grow for growth's sake. So yes, opportunities are there. Our market share in advances is not large enough for us to really worry about that, whether it is possible to grow or not. I think those policies exist. But as long as there is guideline to maintain, we will go after every possible business that comes our way. And yes, the [indiscernible] of the business is high. So we will try to grow it at a faster pace.

Sure. That's right.

The fact that there are PSL businesses make it significantly attractive for the bank to pursue.

The next question is from the line of Alpesh Mehta from IIFL Securities.

Congrats on the good set of numbers. So I may have missed this, but I just wanted to check. On a Y-o-Y basis, there has been some restatement on the balance sheet as well as the reported gross NPL. So what is it regarding?

On a Y-o-Y basis, the restatement of the balance sheet would have been leaning on netting down of the leverage ex P&L, the deposits and loans. It is an accounting position we changed in quarter 1 of the year, and therefore, we would have carried forward. I do not think we have restated anything on the GNPA. So the balance sheet has been grossed down on the asset and liability side for the leverage deposit product that the bank is [indiscernible] Before we take the next question, I just want to address Nitin's question on what proportion does go forward. Nitin, I guided you to Slide 47. The INR 790 crores is a number net of recoveries. So you should apply 61% to about INR 1,400 crores to get the flow forward number. So effectively, the entire loan loss charge to the P&L and some more would be on account of flow forward. So I just want to make sure that I register the correct denominator to multiply 61% with -- to your question. Thank you.

The next question is from the line of Nilanjan Karfa from Nomura.

Just one question. Puneet, I heard that you mentioned we did some deduction in fee income across some products. Would you clarify which products we incorporated this? Any long-term and short-term view that the management has which necessitated this step? And for these specific products, do you now believe we are similar to, comparable than or lower? Yes.

Nilanjan, thank you for your question. The -- you will recollect that we are driving a franchise that is getting off to the customer and getting to be more customer-centric. What I called out earlier in my opening comments is that we periodically review charges. And as part of our charge scheduled review, we have optimized charges in favor of customers in order to build brand [ stable ] and customer centricity. We think it's the right thing to do. It is principally across our retail liability products. And like I said, it is a onetime correction that we think we are done with. A review process does internally take place for the management team periodically, but that has been the normal course.

Okay. Just from a clarity perspective, assuming the volume growth remained whatever it is, how much did we sacrifice roughly because of these changes?

Nilanjan, we're not calling out that specific number. We're just saying that, that effect already sits in, in the base fee number for the current quarter. And therefore, from here on, the volume effect should be positive if the transaction volumes improve from a customer's [ net worth ].

The next question is from the line of Abhishek Murarka from HSBC.

Congratulations for the quarter. So a couple of questions. The first one, I'm just looking at Slide 12, where you have given this advances mix by rate type. Now just clarifying a few things. So that covers the entire loan book, right, the 100% of the loan book.

Yes, Abhishek, that's correct.

And then 34%, which is you are pooling, that would not have repriced upwards because the repo has not moved.

Abhishek, I need to draw that conclusion. But yes, the repo rate actually has not moved in the quarter.

Yes. So I'm just -- the [indiscernible] more than anything else that you can change in those loans? Or contractually, they are absolutely linked together there? That's what I wanted to check.

So Abhishek, the way the product works, which is also within the RPA guideline is, there is a marketing trait, which could be reported. You have marketing benchmark and then there is a credit spread. And the regulator as well as the market practices, if there is a material change in the underlying credit of the customer, banks do have a right to change the credit spreads. That's how the product is designed, and that's how the product is contracted and priced for.

Okay. Okay. Because what I'm really driving towards is, when I calculate the e-loan advances, there is a 13 bps Q-o-Q increase. And given that almost 1/3 of your book might be linked to the repo, and hence, wouldn't have repriced. Also, incremental book, if I look at -- there's more amount of corporate this quarter than last quarter. So I'm just finding it difficult to reconcile an increase in yield on advances sequentially. That's what I was just trying to get my head around.

The rate on advances sequentially would have improved for -- could have -- or actually have improved for the exchange effect, has improved for currency change effect are -- those are really the 2 drivers apart from the drivers that we are looking at from a yearly improvement perspective.

Okay. Okay. And my -- I'll take it offline perhaps.

Sure.

My second question is basically on rural. Now a lot of NBFCs have actually called out a bit of softness in rural demand and maybe -- well, some commentary by other industry players also there. Where are you finding this growth? Is it simply a base effect? Or do you have some -- I mean there are some pockets of demand where some other competitors are needed to tap. Just one thing.

So our growth is coming on the back of 3, 4 things. One is on the back of farming our existing set of customers a bit better in the Bharat market. We have -- as you know, we have called out our strategy on Bharat banking separately. So we are bringing on more inordinate amount of focus in going deeper into these markets and working with our existing set of customers with focused teams. So that's one. Secondly, we have come out with -- we are doing some new products and some new focus strategy on the enterprise side in these markets with the MSME and agri enterprises. That's where we're seeing growth. And third, it is -- I won't say it's a base -- low base effect, but there is a large opportunity in this market. And we need to do a bit of a catch-up in this segment as a percentage of our overall asset strategy. So as we move forward, on the back of new products, processes, our branch distribution expansion, working with agritech and fintech companies and working on some digital models, we think that we'll be able to play at a much higher scale in this market.

And Abhishek, to your question, since you referred to Slide 12, part of the explanation for the yield expansion sits at the bottom right-hand table of Slide 12. The 5 basis points of interest, though, are still lower, will also play through the gate.

Yes. But when I tried to calculate that, it's actually -- so that's why I said I'll take it offline. It's coming to 1 basis point for me. So I'll probably check with you after the call.

Sure. Understood. So happy to work that with you. Thank you.

Thank you very much. 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, Janice, for being such a gracious host. Thank you, ladies and gentlemen, for joining us this evening. It's been a pleasure. We hope we've been able to clarify questions that you had of us. We'd be very happy to engage with you if there are any follow-on questions that you would have. Wishing your families and you a safe season and all the very best. Thank you. Good evening.

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