Axis Bank Limited (532215) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Axis Bank conference call to discuss the bank's financial results for the quarter ended as on 30th September 2026. Participation in the conference call is by invitation only. As 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. Rajeev Mantri, Group Head and CFO. I now hand the conference over to Mr. Amitabh Chaudhry, MD and CEO. Thank you, and over to you, sir.

Thank you so much Sagar. Good evening, and welcome to Axis Bank's earnings call to discuss the bank's financial results for the quarter ended September 2026. Before we begin, I would like to warmly welcome Rajeev Mantri to the Axis Bank family. Also joining us on the call today are our [indiscernible] Niraj Gambir along with other members of the leadership team. The global bank economic environment continues to face headwinds from geo-vertical tensions and trade-related disruptions. The new tensions in West Asia have continued to disrupt global supply chains and fuel volatility in energy markets, while rising energy and food prices are adding to inflationary pressure across economies. Despite the overhang from elevated commodity prices, tariff-related disruptions and weather-related risks, the Indian economy has continued to demonstrate resilience with growth supported by a broad-based economic momentum. Economic activity was underpinned by robust investment activity and healthy private consumption aided by sustained distributary spending, noted by proactive regulatory measures, system liquidity improved significantly during the quarter, providing a felt-credit growth and deposit accretion across the banking system. In an environment characterized by resilient domestic growth and persistent global uncertainties. Axis Bank continued to build a differentiated and agile franchise through investments in digital trust payments, innovation, tilt capabilities network expansion and talent development. We sustained the momentum in our businesses while delivering sustainable and quality growth, further strengthening balance sheet resilience, enhancing productivity and deepening customer relationships across segments. Now let me talk briefly about the progress we have made on each pillar of our GPS strategy starting with growth. Our momentum of gaining market share across deposits and advances continued during the quarter driven by a broad-based growth and supported by incurring mobilization on FCNRB front. Our total advances grew 23% year-on-year and 9% quarter-on-quarter. And excluding the loans extended by our international branches for FCNRB deposits, the advances grew 19% year-on-year and 5% quarter-on-quarter. The growth in advances has been supported by continued healthy traction in rail disbursements across segments for the fourth straight quarter, translating to retail book growth of 16% year-on-year and 10% quarter-on-quarter. Even post excluding the facility extended for FCNRB deposits, retail book grew 10% year-on-year. Our SME franchise to deliver broad-based growth of 35% year-on-year and 9% quarter-on-quarter, driven by differentiated offerings, best-in-class tech and digital capabilities and a customer-centric approach to a to the evolving needs of India's MSME ecosystem. Our Wholesale Banking franchise, the weather strong quarter with growth of 34% year-on-year, driven by robust client activity across sectors supported by resilient economic momentum. Our relationship-centric approach characterized by greater engagement intensity, disciplined follow-through and a normally present client coverage model alongside deeper on access collaboration, continue to strengthen client relationships and franchise performance. Our growth has been through deepening the wallet share across our customers while maintaining our ARO thresholds. These relationships also provide us access to corporate salary accounts as well as potential for liability relationship and additional fee income going forward. Moving on to the deposits. through our strong NRI franchise and proactive outreach, we've gone out a meaningfully better market share of 8% on FCNRB deposits in this quarter, raising an aggregate amount of $108 billion of FCNRB deposits, year-on-year on QAP and NEVs. -- basis, our total deposits grew 23% and 21%. Term deposits grew 28% and 27%, CA grew 15% and 7%, SA 13% and 12%. Total cost of deposits grew 14%, 11%, respectively. Quarter-on-quarter, on QAB and NAV basis, our total deposits grew 7% and 6%, term deposits grew 10% and 8%. CA grew 3% and SA grew 2% and CASA of deposits grew 3% and 2%, respectively. Excluding the portion of FCNRB deposits backed by loans given by our international branches. Our total deposits grew 17% year-on-year and 3% Q-o-Q and term deposits grew 21% year-on-year and 3% Q-on-Q on NBV basis, post accounting for the 8.6% Q-o-Q decline in the non-retail term deposits as we utilize part of the FCNRB deposits to optimize our balance sheet. Please refer to Slide 6 for more details on the impact of FCNRB on various reporting metrics. Our new to the bank franchise scale further with an increasing mix of premium and relationship-led acquisition, resulting in 20% year-on-year growth in NTP average balances and reinforcing the quality of franchise growth. The corporate salary business continued to deliver over performance supported by deeper engagement from wholesale coverage team and a sustained focus on relationship deepening. Average anti-B salary balances grew by 40% year-on-year, while the existing-to-bank salary portfolio expanded were 16% year-on-year reflecting strong customer privacy, improved engagement and continued franchise deeply. More continues to rank our optimization journey with assets under management up 27% year-on-year and 9% quarter-on-quarter, including Around private which grew 12% year-on-year and 3% quarter-on-quarter. On profitability, our focus has been on building a more sustainable earnings profile driven by disciplined execution, operating leverage and improved efficiency. Our net interest income for the quarter grew 12% year-on-year and 5% Q-o-Q. NIM for quarter 2 financial '27 was 3.36%, including accounting for the impact of the CRB deposits excluding the impact of FCNRB NIM for quarter 2 financial year '27 stood at 3.47%. Our cost to assets demand further to 2.14%, down 24 basis points year-on-year basis 6 basis points Q-o-Q. For the quarter, PAT grew 38% year-on-year, and our consolidated was 1.49% and ROEs were 13.96%. On sustainability, we stay focused on driving quality growth, strengthening balance sheet resilience, building future-ready technology platforms, advancing industry-first innovations and investing in people and capability to deliver sustainable outcomes at scale. Our GNPA was at 1.16% declining 13 points year-on-year and 12 basis points Q-o-Q, NNPA at 0.35%, declining 9 basis points year-on-year and 4 basis points while the net credit cost was at 0.45% or 28 basis points year-on-year and 18 basis points Q-o-Q. For the quarterly focus on our AI transformation journey, please refer to Slide 14 and 15 for details. We continue to make progress in our AI journey through X enterprise-wide AI operating model focused on embedding AI across customer journeys, operations and vision making, AI-driven solutions such as and Gen AI powered collections continue to enhance customer experience, improve operational efficiency and delivering better business outcomes with a strong focus on governance, talent division. We are accelerating our transition towards becoming an AI-native institution. We continue to strengthen our leadership in digital payments and secure banking through industry-first innovations. During the quarter, Axis Bank became the first and only Indian bank to enable Apple Pay for its credit card customers marking a significant milestone in the evolution of data payments. Building on our commitment to safe and intuitive Banking, we introduced industry-first UPI limit management feature in our mobile banking app that enables customers to set and manage transaction limits across different UPI payment categories. Beyond technology innovation, customer engagement and talent development remain key priorities. We strengthened our customer connect through the launch of Spurs week 2026 last month, our customer engagement initiative while continuing to invest in building a future and customer-centric workforce. Our continued focus on innovation, customer experience, talent development and execution excellence was realized through several procedures industry accolades including India's best digital bank at the Euromoney Awards for Excellence 2026, honors at the branded Hallowards, ICC Emerging Asia Awards, APF Retail and Wholesale Banking Awards in the Cybersouth Asia Awards. As we enter the second half of the year, we continue to remain watchful and are closely monitoring the evolving external environment. We remain confident in our agility, execution capabilities and ability to navigate evolving challenges while capitalizing on emerging opportunities. Backed by a strong capital position, the prudent risk culture and diversified growth drivers, we are well positioned to deliver sustainable and profitable growth while continuing to outperform the industry. With that, I'll now hand over to Rajeev to discuss the financial performance for the quarter.

Thank you, Amitabh. Good evening, everyone, and thank you for joining us. The sale in features of the financial performance of the bank for H1 FY '27 and Q2 FY '27 across operating performance, capital and liquidity position and asset quality restructuring and provisioning are as port. For H1 FY '27, we delivered a healthy operating performance supported by strong NII growth and operational efficiency. Net interest income was at INR 30,018 crores, which grew by 10% year-on-year. Fees at INR 12,536 crores grew 6% year-on-year. Operating expenses of INR 20,541 crores, grew 7% year-on-year, delivering a positive jaw on core operating revenue. Core operating profit was at INR 22,120 crores, grew 11% year-on-year and profit after tax at INR 14,117 crore increased by 30% on a year-on-year basis. Moving to the quarter. The key metrics for Q2 FY 2027 are Net interest income at INR 15,371 grew 12% year-on-year and 5% quarter-on-quarter. Fee at INR 6,381 crores, grew 6% year-on-year and 4% quarter-on-quarter. The granular fee was at 90% of the total fees. Expenses at INR 10,819 crores grew 9% year-on-year and increased 11% quarter-on-quarter Cost to assets stood at 2.14%, improving by 24 basis points year-on-year and 6 basis points sequentially. Operating profit was at INR 1,083 crores, up by 6% year-on-year. Core operating profit at INR 10,998 crores, 11% year-on-year; net credit cost of INR 1,564 crores at 0.45% which was lower by 28 basis points year-on-year and lower by 18 basis points quarter-on-quarter. Profit after tax was at INR 7003 crores, up by 38% year-on-year perspective. GNP at 1.16% declined 30 basis points year-on-year and 12 basis points quarter-on-quarter. NPA was at 0.35%, declined 9 basis points year-on-year and 4 basis points sequentially. PCR was healthy at 70%, standard asset coverage of 1.16% improved 3 basis points year-on-year. All provisions by GNP ratio is 164%, which improved by 17% year-on-year. Annualized consolidated return on assets was at 1.49%. Annualized consolidated return on equity was at 13.96%, subsidiaries contributed 11 basis points to the consolidated annualized ROA and 56 basis points to the consolidated annualized ROE this quarter. Bank CET1, including H1 FY '27 profit stands at 14.61% and we net added 23 basis points of CET1 in the half year. The bank has provisions aggregating to INR 8006 crores, including the standard asset provisions created in Q2 FY '26 pursuant to regulatory guidance. These have not been recurred for regulatory capital competition. And as a result, they represent an additional buffer over and above the reported capital ratios, translating into an incremental capital cushion of roughly 49 basis points. This reinforces the bank's balance sheet strength and enhances our ability to navigate uncertainty while continuing to support growth and shareholder value. We reiterate that we do not need equity capital for either the growth of protection pillars. As mentioned during the previous quarter earnings call, we raised 81 aggregating to USD 600 million within first half FY '27, which has been used to call back the earlier AT1 as per its contracted call date in September 2026. Additionally, in Q2, we raised USD 600 million in senior notes. NIM, moving to net interest income and margins. NIM for Q2 FY 2027 was 3.36%, declined by 37 basis points year-on-year and 10 basis points quarter-on-quarter. Excluding the FCNRB impact, the NIM for the quarter was 3.47% which shows an increase of 1% sequentially -- 1 basis points sequentially. The quarter-on-quarter NIM decline of 10 basis points can be attributed to 11 basis points due to grossing up for self-leverage as FCNR deposits and also due to the liquidity carry associated with FCNRB deposits, with surplus fund parks in low-yielding securities prior to deployment in the appropriate avenues. Offset by 1 basis point benefit from lower interest reversals during the quarter. On a year-on-year basis, the NIM decline of 37 basis points can be attributed to 11 basis points due to the FCNR impact as we just explained for quarter-on-quarter, 16 basis points due to the change in balance sheet mix and 10 basis points to full impact of the 125 basis points of repo rate cut in the current quarter versus 100 basis points rate cut in the same quarter last year, net of benefit in cost of funds liabilities repricing. Cost of funds declined by 8 basis points year-on-year and increased 3 basis points quarter-on-quarter. Moving to other income and operating expenses. Our fee-to-asset ratio stood at 1.26% and wholesale fee grew by 10% year-on-year and total retail fees grew by 4% year-on-year. Trading profit and income was at INR 150 crores declined by 74% quarter-on-quarter, mainly on account of MTM and some realized losses on investments. Operating expenses for the quarter stood at INR 10,819 crores, growing by 9% year-on-year and 11% sequentially. The year-on-year increase in operating expenses is INR 862 crores. This increase can be attributed to the following reasons. 48% of the increase is linked to volumes, 23% for investments in technology and digital and the remaining due to staff costs and other operating expenses. For quarter-on-quarter increase in expenses, it needs to be noted that the bank had INR 271 crores of onetime reversals in staff costs in the last quarter. Further, there are some onetime expenses of INR 254 crores in the current quarter, mainly relating to new labor court related items and also certain expenses attributable to the FCNRB mobilization. Adjusted for these onetimers, the quarter-on-quarter increase in operating expenses was INR 572 crores, which is about 6%. Attributed to the following reasons. About 60% of this is due to volume, 13% is due to investment in technology and digital and the remaining are other BAU costs. Overall, technology and digital expenses constituted 10% of total operating expenses for Q2 FY '27. We opened net 119 new branches in the quarter and won 39 new branches for the entire half year. Our H1 cleared headcount declined by 375% compared to 31st March '26. Moving to the growth for liabilities and the loan franchise. Amitabh has already discussed the growth in loan deposits, along with the impact of FCNRB on both. We continue to gain market share on deposits and advances we gained approximately 10 basis points on market share on the loan franchise and approximately 10 basis points market share on a year-on-year basis on the deposit franchise. Our loan book is granular and well balanced with retail advances constituting 54% of overall advances, corporate loans at 34% and SME at 12%. We -- please have Slides 20 and 21 for details around the quality of our liability franchise and slides on our loan franchise. 72% of our loans are floating rate of 60% are linked to REPO. 12% are linked to MCLR and other benchmarks, 44% of our fixed rate book matures in 12 months. Breakup of the floating-rate book by benchmark type and ancillarepricing frequency is set out on Slide 10 of our investor presentation. In Q2 FY 2027, retail disbursements grew 22% year-on-year. Disbursement growth in home loans was 24%, vehicle loans was up 25%, and SBV was up 33% year-on-year. Retail Agri was higher by 19% and consumer loans was up by 20% on a year-on-year basis. Moving to asset quality and provisioning, slippages, GNP and NPPR ratios for the bank and segmentally for retail, CPG and Corporate are provided on Slide 45 of our investor deck. Gross slippages in the quarter were INR 472 crores, of which retail was INR 4286 crores, CVG was INR 287 crores and WBCG was INR 189 crores. Our gross repaid ratio for the quarter declined 63 basis points year-on-year and 31 basis points quarter-on-quarter. For the quarter, 33% of the gross slippages are attributed to linked downs of borrowers, which were standard when classified or have been upgraded in the same quarter. Net slippages for the quarter were INR 2383 crores, net slippages segment were INR 2042 crores for retail, INR 210 crores for CPG and INR 131 crores in WBC. Net sales ratio for the quarter declined 30 basis points year-on-year and 37 basis points sequentially. Recoveries from written off account in the quarter was INR 971 crores, up by 51% year-on-year. Net slippage in the quarter adjusted for recoveries from written were INR 1,412 crores segmentary retail was INR 1,313 crores, CBC was INR 98 crores and WBCG was INR 1 crore. As of 30th September 2026, the gross NPAs of the bank stood at INR 16,778 crores, net NPA stood at INR 5,054 crores and provision for NPA stood at INR 11,724 crores. The cumulative non-NPA provisions as of September 30, 2026, stands at INR 15,860 crores, comprising prudent provisions for standard assets of INR 6775 crores restructuring provisions of INR 173 crores, standard asset provision at higher than regulatory rates of INR 1914 crores, additional onetime standard asset provision of INR 1231 crores and weak assets and other provisions of INR 577 crores. Moving to the performance of our subsidiaries. The detailed performance of the subsidiary set out in Slides 52 to 59 of the Investor Day, in H1 FY '27, the domestic subsidiaries reported a net profit of INR 1210 crores, growing 29% year-on-year. The return on investment in domestic subsidiaries was 45%. Access Finance, the assets under management crossed INR 54,590 crores, growing 23% year-on-year. Retail plus MSME book constitutes 71% of total loans. H1 FY '27 PAT grew 42% year-on-year to INR 546 crores. Capital adequacy ratio at 22.15% and strong asset quality with net NPA of 0.35%. Moving to Axis AMC overall quarterly average AUM grew 9% year-on-year to INR 3,82,966 crores and H1 PAT adjusted for the impact of AMS business transfer was at INR 370 crores, growing by 36% year-on-year. Excess capital profit after tax stood at INR 149 crores, up by 61% year-on-year. And the team executed about 20 ACM and 5 non-ECM deals during the first half. Access Securities revenues for first half were at INR 842 crores and the H1 PAT adjusted for impact of the PMS business transfer stood at INR 191 crores, higher by 9% year-on-year. In summary, we continue to make progress towards building a stronger and more sustainable franchise. We remain vigilant in monitoring the macroeconomic and geopolitical environment, inflation, liquidity and our cost of funds along with their impact on our business. This concludes our opening remarks, and we'll be happy to take questions.

[Operator Instructions] Your first question comes from the line of Chintan with Autonomous.

Can I start with the retail versus corporate debate? I think a couple of quarters ago, we had a fairly robust conversation on the call. And at that stage, the indication was that retail will probably tap out at 55%. But it seems like the corporate opportunities continue to remain and they remain strong because the are still quite wide. So is this a trend that we can still expect that as long as these corporate opportunities are there, the percentage of retail in the loan mix could continue to fall. That was question one. And the second question was on understanding how NIMs might evolve in the next quarter. First, I mean, I should thank you for giving us very clear disclosures on the FCNR adjusted NIMs. Your peers have not done that. So I appreciate that that slide. But just on next quarter, if you can throw light on what kind of movement we should expect there? That would be helpful.

So I think on the question on the corporate opportunity, I'll request Vijay to talk about that. And then I'll take the question on the NIM outlook.

This is Subrat. I'll take the -- since you asked the question on the overall mix, Chintan, maybe not -- we didn't guide for any particular topping out of or bottoming out of the retail share of the total mix. If you look at our retail disbursement growth on a quarter-on-quarter basis, -- that's quite strong across all the categories. So we continue to push the pedal on retail growth in terms of disbursement. The book growth also has gone up even ex FCNR, -- it's now above 10% -- so it's been going up from 6% to 8% to 10% over the last few quarters. On the corporate side, see, there is good opportunity, good pipeline, very good companies with whom we are actually gaining wallet share. And these are long-term relationships. And like we have mentioned, the downstream benefits of these relationships where we are actually substituting other banks cannot be, in any sense, undervalued. So we are continuing to make sure that the retail book growth starts to catch up once the disbursement growth continues to remain as robust over the next couple of quarters. And it is doing that. It is growing the book growth is starting to grow at a faster clip. And going forward, we are not putting a particular number, but we are very cognizant of our medium-term structural NIM guidance. And we know that we have to do this balancing act at a faster clip in terms of making sure that we do not further move away from the mix that we are right now and we get back to the above 55% retail mix. So that effort is on at this point in time. On the second point, which was.

Yes. On the second point on NIM, as we have depicted in the investor deck, we have about 11 basis points of impact, which has come during the quarter due to the FCB deployment. -- or due to the FCNR mobilization. If we net out for that, the NIM for the quarter was at 3.47%, which was 1 basis point higher than the last quarter. As these funds have come through, we are now looking at further deployment and optimization to be done using these funds. In the last quarter, we have utilized some portion of these funds to retire the more expensive NRTD. That was done towards the end of the quarter. So we should be able to see some benefit of that come through in the next quarter in terms of NIM uplift. At the same time, like Subrat mentioned, we are working towards improving the loan mix, mix as well as various aspects of product level mix that we can actually work on in terms of improving the NIM trajectory. The FCNR related deployment will take us the next couple of quarters in terms of fully seeing the benefit of the optimization. And then we'll also see how exactly we are able to uplift the NIM. So overall, structurally, the guidance that we had given on NIM remains unchanged. However, as you can see, these are various factors which are playing out. And therefore, from a time line perspective, we won't be able to specifically guide on how much time frame this will take in terms of moving forward on that trajectory, though structurally, we are work birds through the cycle guidance of 3.8% that we mentioned earlier.

Rajeev, just to clarify, the 11 basis point FCNR impact on the NIMs optical impact on the NIM, does that increase or decrease in the next quarter?

So 11 basis points had broadly 2 components. One was the impact due to the grossing up of the balance sheet. And the second was the fact that. It took some time for these funds to be deployed of, let's say, for returning of the RTDs, a portion of that. Initially, these have been sort of parked in low-yielding investments. So as we look at the deployment of this into the advances growth as well as further optimization of the balance sheet, I think we should be able to see an uplift. So this impact was this particular quarter, I think in Q3 and Q4, you should be able to see some sort of a benefit coming through due to the optimization exercise that we've been doing.

Your next comes pquestion from the line of Mahrukh Adajania with Tata Capital.

I had a couple of questions. Just again, on the corporate retail mix. So a lot of banks that have raised FCNR private banks, they are growing corporates quite corporate loans quite rapidly. Is it a shift in demand? I mean, do you see the industry shifting to a higher corporate loan growth given inflation possibly the wall and I mean, is that the correct way of looking at it? Because even for you, your retail has grown quite impressively, the growth has picked up -- but the corporate loan growth has also increased. So that's really my first question. And my second question is on credit cost. So you would have had made standard provisions on FCNR loans and you would have also -- I mean you've drawn down some provisions you had already described when you meet those provisions, you've drawn those down. So where does credit costs settle? Are there any benefits to be seen on any segment or the normalized back to Q1 levels? How do we view credit costs? So these are my questions.

Vijay, I'll talk about corporate growth. See, did over the last few quarters, we now have a boringly consistent and repeatable playbook. As we have said in the past, we are not chasing assets. We originate selectively. We apply our internal filters on transpricing Lara and RWA. And we're little of several assets. In spite of that, we are able to see growth because the growth is pretty broad-based across several sectors, and across segments. And we're also seeing growth across CapEx, project finance, refinancing as well as working capital. So we don't have any dependence on any single sector or a client segment or financing category. So the growth is sustainable as we have over the last few quarters. I also want to add that taking the balance sheet to the market. Obviously, wherever we are taking balance sheet, we take the full franchise. We have spoken about 1 axis in the past. And that's not no longer a pilot. It's actually embedded in how we operate. We take our NEO platform, which is best-in-class digital stack. -- for both flow business, for fee business. We're also taking our on-axis approach to get cross-sell across corporate salary as well as Burgundy. So corporate growth is sustainable because it's well diversified across sector, segments and financing categories. And we don't want to lose the opportunity because -- we are seeing, as Subrata said earlier, there are several downstream benefits that we're realizing. Thank you.

I think on the second part of the question, Mark, on the credit cost, we have definitely seen an improvement trajectory on a quarter-on-quarter as well as on a year-on-year perspective. You've seen the improvement come through. We don't give a specific guidance on what exactly the credit cost is going to be. But directionally, what I can confirm is that we are on the trajectory towards increment. I think there is some further improvement that also we can expect -- though some portion of this improvement that has come through is also because of the mix. But in individual portfolios as well. We are seeing a definite improvement coming through as reflected by the overall slippage ratios as well as the recoveries improvements. So I think the trajectory of improvement continues. -- and we can expect some further improvement as well, but we won't be able to give a specific guidance.

Okay. And just one last question on ECLGS disbursements. How much of ECL loans have ECLGS loans have you disbursed.

Yes, we have sanctioned around loans worth around INR 10,300 crores and 80% of those profit have all been disbursed. We sanctioned around 12,500 loans worth around INR 10,700 crores. About 80% of these have been disbursed till now.

Your next question comes from the line of Rikin Shah with IIF Capital.

Sir, a few questions. The first 1 on clarification on the labor code impact of -- in that one-off item of INR 254 crores. Would the large part of that INR 250 crores be associated with the labor code? Or would that also include FCNR, I mean, any split, if at all you could provide? And this neighborhood impact was already recognized last year. So curious to understand why did it up again? And how do we think of it incrementally? Should we expect more of this in the coming quarters? That's my first question.

Yes, Rajeev here. So broadly, if we were to look at the one-offs during this particular quarter of INR 254 crores, I think slightly more than half of this was really relating to the labor for related impact. Broadly, I think certain clarification that we have recently received as regards a couple of components. -- pertaining to some of the outsourced employees and the provisioning that we have taken around that as well as some clarifications relating to the ASIC. So those have been the key items on which we have actually taken some onetime expenses. And the slightly less than half is pertaining to the FCNR related mobilization, as we have called out.

And we shouldn't expect any further labor code-related OpEx in the coming quarters, right?

So this is an evolving area. We are continuously looking at the various guidelines and the circulars coming our way. And as and when if anything comes through, we immediately highlight across. So so far, based on what we have been aware of, we have already taken those accounts. But this is an area where some new guidelines, et cetera, whenever they come, we will have to deal with that. So as of now, based on what we are aware, we've already factored that in.

Got it. The second question is on fee income related -- so the fee income growth overall has been a bit weakish in the last 2, 3 quarters, largely led by cards and payments. Some of your peers have seen some benefit on fee income due to FCNR. Did you not receive that. How should we think of it going ahead, excluding Banca? And if you could also offer some comment on bancassurance. -- what could be the potential impact following the draft ID guidelines? And I have 1 more question after this lines.

So on fee income, Reckon, this is Sabre. There is the growth in corporate book means that some of the asset linked fee doesn't -- I mean, it's on a ratio basis is lower. Also some of the non-asset linked fees come a bit later. So that trend continues. So that's a bit of a challenge. The other one is on credit cards, fee income has been a bit weak. -- the spend numbers have not been strong. And also last year, September was in the festive month that started this year that has shifted to October. So there is a bit of a temporal difference on account of that. So we -- I mean, we continue to work on it. If you see quarter-on-quarter, the growth was was quite okay. But on a year-on-year basis, the growth is not as strong as we used to see fee income growth in the past. So we are continuing to work on it. On the insurance part, I mean the consultation paper is out, I still think it's early days. There are various points of views being expressed by various industry players. They have been sent to the regulator -- they're also in a listening mode at this point in time. We've done some assessment of how things are based on the consultation paper. We believe there will be some time before they actually come through -- we also possibly believe there might be a few areas where there might be a specific amount of time given or a glide path given for us to -- for the insurance players to actually manage the change. So some of those things will happen. I don't think there is anything right now that we can give with more specificity in terms of how they will play out. We've done some of the work on our -- from our side in terms of what potential impact could be and how we could mitigate through a combination of volume, product mix, et cetera. We'll try and manage it, and the remaining will try and see if there are other sources of fee income that we could crack in the meantime. So I think we might get about 6 to 9 months before that comes through. So we'll try and mitigate the impact during that period of time.

And my last question is a clarification on margins. So of course, Radio did offer some comments on how to think about it. But just to get it make it completely unambiguous. While there could be some drag on FC full quarter for the next quarter, can we say that this quarter, including the FCNR it, is this the bottom? And directionally, it can stabilized to move up in the 3Q and onwards?

Yes. So I think on the NIM trajectory, as I explained in the previous question that came through, we have -- we have seen the significant impact of FCNRB come through in the quarter. And net of that, we have seen a 1 basis point improvement. We had said that Q1 is where we are seeing sort of the bottom of that. And then we will see an improvement. We've clearly shown net of the FCNR impact that improvement come through. Going forward as well based on the various levers that the bank is working on, especially around the advances, assets as well as liability mix. We are trying to work through that improvement -- some of that will also be added through the rate hikes that will come through, but there are also certain headwinds that we need to work on. So across the various factors, our endeavor is to make sure that the NIM trajectory continues to move up. So I think that's what I had mentioned earlier and would like to reiterate the same. But as I mentioned, I think we are just working through the various levers. The time frame of this is difficult to sort of ascertain -- but sequentially, we should be able to show an improvement going forward. That's what we're working on. you had had that additional point on whether we have collected a fee as we have mobilized these deposits. And does the 6% year-on-year growth include that fees also. No, it doesn't include that. We didn't specifically charge these for the -- for raising deposits.

Your next question comes from the line of Abhishek Murarka with HSBC.

So back to I think you said qualitatively, you've made some assessment of the impact and the offsets available. I would actually be interested to know if you can expand a little bit on what you could change to offset the impact. Obviously, numbers will come through later on. But just a broad qualitative understanding would help. And in your sales overall insurance sales, what comes what percentage comes from credit life versus the rest? Can you sort of split that up in broad terms again? So that would also help in our overall understanding. That's my first question. I'll just come back for a second after this.

Yes. Thank you for the question. So we don't give the breakup of fee income and within that sub breakup in terms of how much comes from various product categories. So that's not something we offer. On your point, see, there are multiple levers. I think it's still premature to go into some of those levers, even on a qualitative basis, look at how the industry has navigated previous changes in regulations as late as last year when we had a GST rate cut change. There was an expectation that the volumes would go up and the volumes went up. And in that sense, -- on a net basis, the industry managed to have higher volumes of the product that actually had the maximum DST impact in terms of base reduction. And on an overall basis, the industry still came out positive. I think some of those levers will try and work on. But like I said, till we get a final picture of how various products look in terms of the change in their commission structure we are a bit premature to talk about more qualitatively the subcategory through which we'll be able to mitigate.

And on the other hand, due to this MDR on UPI would you have a broader numbers about how much revenues you hope to gain because that could be an offset also available for whatever you lose out on the insurance side. So an order of magnitude there also would help.

As you are aware, we play across all the 3 spectrum as ensuing land, PSP Bank as well as the acquiring bank. At this stage, we can't give any specific guidance because the MDR implementation has been postponed. And as and when it comes, I think the bank is committed to ensure that -- we also use some of the revenue we have to actually grow the ecosystem by increasing our merchant footprint as well as the intra costs that we incur on maintaining the no specific breakup there.

Do you think most of the gains that you would be actually do in developing the channel invest.

End of the day with a lot of people will be jostling for this for the share of the spine. And as Annika said, we have a decent deal across various parts of this land chain. Finally, where we end up will all depend on obviously what leverage we have over each other to say that we'll have to spend money to write down was not profitable. Now certainly, there's a revenue pool level what ends where is devil to predict at this stage anyway, the implementation has been delayed. Our endeavor obviously would be to get some revenue out. But given the fact there are so many variables, and one of them you added one more to the equation, it's very difficult to press to where a penny will drop. But we do believe we have a much better place in all the...

Yes, exactly, which is why I was asking you the question. But anyway, thanks for response and all the best for future quarters.