Bandhan Bank Limited (BANDHANBNK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Bandhan Bank Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I will now hand the conference over to Mr. Vikash Mundhra, Head of Investor Relations, for opening remarks. Thank you, and over to you.

Thank you, [ Rayon ]. Good evening, everyone, and a warm welcome to all the participants. It's a pleasure to have you with us today as we discuss Bandhan Bank's business and financial performance for the quarter ending June 2026. We sincerely appreciate your time and participation. Today, we will take this opportunity to provide insights into our operational activities, achievements, challenges as well as offer perspective on market condition, strategic initiatives and any native changes in our business environment. To walk you through the details, we are joined by Mr. Partha Pratim Sengupta, Managing Director and CEO; Mr. Rajendra Kumar Babbar, Executive Director and Chief Business Officer; Mr. Ratan Kumar Kesh, Executive Director and Chief Operating Officer; Mr. Rajeev Mantri, Chief Financial Officer; myself, Vikash Mundhra, Head of Investor Relations; and our senior management team at Bandhan Bank. We are happy to answer any questions to provide additional clarity on the current quarter's performance and our outlook moving forward. Now I would like to invite our Managing Director and CEO, Mr. Partha Pratim Sengupta sir to brief you all on our bank performance. Over to you, sir.

Thank you, Vikash. Good evening, everyone. We are delighted to connect with you today to discuss our Q1 FY '27 performance. The quarter was marked by a continued focus on balance sheet quality, business resilience and execution. While seasonal and external factors remained at play, we made meaningful progress across several strategic priorities and strengthen the foundation for sustainable book. We will take you through the key highlights of the quarter and our outlook ahead. Traditionally, the first quarter has been the softest quarter for our business, characterized by seasonal moderation in growth and pressure on asset quality metrics. However, I am pleased to share that in Q1 FY '27, we demonstrated significantly better resilience compared to the previous year. Despite the seasonal headwinds that typically characterized the first quarter, our focused efforts over the last few years to strengthen the franchise and sharpened execution across business segments have helped materially reduce their impact this quarter. On the asset side, although the EV portfolio witnessed is the user seasonal decline. The moderation was considerably lower than what we have experienced in most of the prior first quarters. Most importantly, healthy growth in our secured non-EV portfolio enabled us to deliver overall robust advanced growth during the quarter, increasing diversification and enhancing the resilience of our loan book. On the liability side, reported growth was influenced by our [indiscernible] decision to sequentially reduce high-cost bulk deposits. This strategic recalibration is aimed at improving the quality and granularity of our deposit franchise and to reduce cost of funds. Encouragingly, growth in retail term deposits as well as CASA continued to remain strong, reinforcing our confidence in the underlying strength of our liability franchise. Our profitability performance also underscores the resilience of our business model despite several headwinds from elevated funding costs, margin performance remained broadly stable during the quarter compared to our earlier expectation of a modest improvement. From an asset quality standpoint, performance during the quarter was satisfactory, particularly when viewed in the context of the seasonal trends typically observed in Q1. Looking ahead, our focus continues on strengthening granular deposits, growing CASA, enhancing customer engagement and improving operational efficiency and asset quality. The quarter reflects the resilience of our franchise and the benefits of our disciplined execution. We remain confident in our ability to deliver sustainable, profitable growth while continuing to strengthen the balance sheet. While my colleague and CFO, Mr. Rajeev Mantri, will shortly walk you through the financials in detail, I would like to highlight a few key performance indicators from the first quarter of FY '27. Our balance sheet continued to grow steadily during the quarter. Gross advances stood at INR 1.56 lakh crores registering a healthy 16% Y-o-Y growth while deposits reached INR 1.65 lakh crores. The growth in deposits Y-o-Y was driven by strong momentum in retail deposits and CASA, reflecting our continued emphasis on improving the quality, granularity and sustainability of our liability portfolio. The strength of our deposit portfolio was particularly visible in the retail segment. Retail deposits grew by 15% Y-o-Y despite a challenging base underscoring customer confidence in the bank and the effectiveness of our distribution network. CASA ratio improved sequentially to 29.4%, taking the share of retail deposits including the CASA and retail term deposits to 74% of the overall deposits, further enhancing the stability of our funding profile. Portfolio optimization remains a key area of focus. We continue to increase the share of secured lending in the overall book, supported by strong growth across secured businesses over the past year. Our profitability performance reflected the resilience of the franchise despite significant headwinds from elevated funding costs, margins remained stable at 6.2% during the quarter compared with our earlier expectation of a modest improvement. At the same time, credit costs continued to trend downward, while asset quality remained healthy. Gross NPA at 3.1%, net NPA at 0.9% and provision coverage at 86%, including the technical write-off. The quarter also witnessed a healthy improvement in earnings. Net total income for Q1 FY '27 stood at INR 3,524 crores and operating profit at INR 1,358 crores. Profit after tax came in at INR 502 crores, representing a strong Y-o-Y growth of 35%. Our capital position continues to be a key strength. Capital adequacy ratio, including profits improved further to 18.2%, with Tier 1 capital at 17.5%, providing significant capacity to support future business growth while maintaining a prudent capital buffer. Let me briefly touch upon the operating environment and our outlook. While our internal execution remains firmly on track, the external environment has become increasingly uncertain over the last few months. Ongoing geopolitical developments, particularly in the Middle East, a less predictable monsoon pattern, elevated funding costs and rising technology-related costs are factors that warrant close monitoring. These developments have the potential to influence customer sentiment, operating costs and overall profitability across the sector. Among these factors, the impact of higher funding costs despite no increase in the reported is already visible [ and start it ] flowing. At the same time, technology-related expenditures have also risen due to supply chain constraints on account of the ongoing war in the Middle East. Further, given the uncertain environment, we are cautious to grow our high-yielding EEB book. We expect these pressures to persist for the next few quarters. The impact of the other factors is not yet evident in our operating performance, but the remain areas that we are monitoring closely, given the uncertainty around the eventual outcome. Against this backdrop, the journey towards our stated aspiration of delivering an ROA of 1.6% to 1.8% by exit of Q4 '27 has become more challenging than it appeared earlier. I would like to reiterate that this is because of the external factors that we are confronting now. While our medium-term strategic objective remains unchanged, and we continue to work towards achieving the guided level of ROA. The prevailing external environment may influence the pace at which we get there. Consequently, we think that the realization of this aspiration could extend beyond the time line we had originally envisaged. As far as our guidance of end of FY '27 is concerned, the eventual ROA outcome will be influenced to a meaningful extent by how these external factors evolve over the coming quarters. While some of these headwinds, particularly elevated funding costs and higher technology-related expenses have already started impacting the profitability, the impact of the other [ deliverables ] especially the energy envisage energy crisis that may be vulnerable to the -- many of the sectors of the economy is still evolving and remains difficult to assess at this stage. Based on these visibility available, we believe an ROA in the range of 1% to 2% to 1% to 4% of the exit of Q4 FY '27 would be probable. I again repeat that this is on account of the external factors that is affecting the economy of the country, mainly the factors are due to the energy crisis because of the continuous Middle East war and also the unpredictable monsoon. At the same time, we remain focused on improving this trajectory through disciplined execution across the business. As the operating environment evolves, we will continue to add up proactively and leverage all available levers within our control to enhance profitability. I think that the investors would also appreciate that we have addressed our internal [indiscernible] whatever is there in respect of the asset quality, the growth in advances to a large, large extent, and Q1 figures reflect that we are sequentially improving even in the EV segment from quarter-to-quarter. Our commitment remains unchanged to build a stronger and more resilient franchisees while creating sustainable long-term value for all stakeholders. With that, I would now like to hand over the call to our Chief Financial Officer, Sri Rajeev Mantri, who will take you through the financial performance in greater detail. After that, we will be happy to take your questions. Thank you.

Thank you, Mr. Sengupta. Let me begin with our lending franchise where the quarter's performance reflects the continued progress we are making in building a more diversified, resilient and sustainable loan book. For advances, as of 30th June 2026, the gross advances stood at INR 1.56 lakh crores, representing a healthy 16% growth year-on-year and a 1% sequential increase. This growth was driven primarily by non-EV businesses, which continue to see strong customer traction and provide greater balance to the overall portfolio. The EV portfolio stood at INR 52,641 crores, while the book witnessed the customary seasonal moderation typically seen in the first quarter, the extent of the decline was significantly lower than we have experienced in the most previous years. Our diversification strategy continues to deliver [indiscernible] results. The non-EV portfolio grew by [ 25% ] year-on-year and now contributes 2/3 of the overall loan book, underscoring the transformation of our business mix over the last few years. Growth within the secured businesses remained particularly strong. Retail assets recorded 45% year-on-year expansion led by products such as commercial vehicles, construction equipment, auto loans and gold loans. Wholesale Banking also maintained strong momentum, growing 38% year-on-year, supported by deeper customer relationships and disciplined portfolio expansion. As a result, the secured portfolio increased by 27% year-on-year and now constitutes 57% of total advances. Importantly, the advances portfolio today is significantly more diversified than it was a few years ago. EEB group lending accounts for 23% of advances, SBAL at 11%, wholesale banking at 33%, housing finance at 22% and retail and other loans at 11%. This diversified provides multiple growth engines while strengthening the overall quality and stability of the portfolio. Turning to the liability side of the balance sheet. Our focus continues to be on building a more granular, stable and cost-efficient fund franchise. As of 30 June 2026, the total deposit stood at [ INR 1.6 crores ], a growth of 7% year-on-year. While overall deposit growth was moderate during the quarter, this was largely a consequence of our deliberate strategy to reduce reliance on bulk products and improve the quality of our funding base. Product deposits declined by 13% year-on-year, resulting in their shares, reducing to 26% of total deposits compared to 32% a year ago. This represents a significant shift towards a more granular and sustainable liability profile. It is also worth noting that the quality of our bulk deposit book remains strong with nearly 86% of these bulk deposits being noncallable in nature. This provides greater predictability to our funding profile and reduces potential volatility for liquidity management purposes. More importantly, the underlying strength of the retail franchise continues to be encouraging. Retail deposits comprising CASA and retail term deposits grew by 16% year-on-year, significantly outpacing the overall deposit growth and demonstrating the increasing depth of our customer relationships. Within this, CASA balances rose to INR 48,479 crores, delivering a healthy 16% year-on-year growth, and this growth was broad-based across both savings and current accounts resulting in a sequential improvement in the CASA ratio to 29.4%. Let me now turn to collections and asset quality. At an overall bank level, the collection efficiency, excluding NPAs remained healthy at 98.9% in June 2026. Within the EV portfolio, collection performance was impacted by the usual seasonality associated with the first quarter, including a concentration of holidays during the month of April. Despite these temporary factors, the collection efficiency for EV for the month of June 2026 stood at 98.5%. This is collection efficiency ex-NPA. And this is largely comparable to 98.6% recorded in the month of March 2026, indicating stability in the underlying collection trend. Additional details on this are available on Slide 22 of the investor presentation. Moving to asset quality slows. The gross slippages for the quarter stood at INR 1,079 crores, broadly stable compared to INR 1,028 crores in the previous quarter. This is at the bank level. Encouraging the slippages within the EV portfolio improved sequentially to INR 604 crores, down from INR 690 crores in Q4 FY '26, reflecting the benefits of our continued focus on customer engagement, monitoring and connections. On early delinquency indicators, the 0 to 90 DPD pool in the EV segment increased to 3.5% from 3.1% in the previous quarter. This was driven primarily by a temporary increase in the SMA-0 bucket following holiday-related disruptions during the month of April. We view this movement largely a seasonal in nature, and we'll continue to monitor it closely. We have provided further details on Slide 23 of the investor deck. During the quarter, we also undertook proactive balance sheet actions to reduce our NPA book including the sale of INR 291 crore of housing NPA loans to an ARC and a technical write-off of INR 597 crores, further strengthening the quality of the reported portfolio. Consequently, our headline asset quality metrics improved further, gross NPE reduced to 3.1%, while net NPA remained contained at 0.9%. Provisioning coverage also remained robust. The reported PCR stood at 71.1%. And if we include the security receipts related provisions, the PCR stood at 74.3%. Let me now go through the financial performance for the quarter. Despite the challenging operating environment that Partha has talked about and the continued pressure from the elevated funding costs, the bank delivered a steady financial performance during the quarter. The benefit of balance sheet growth, portfolio diversification and improving asset quality are increasingly becoming visible across the various earning metrics. Starting with net interest income. The NII for Q1 FY '27 stood at INR 2,921 crores, registering a growth of 6% year-on-year and 5% sequentially. This performance was supported by healthy growth in advances and a stable margin profile at 6.2% despite the funding cost headwinds witnessed during the quarter. Moving to noninterest income. The performance needs to be viewed in context of a high base in the corresponding quarter last year, which included treasury gains of nearly INR 250 crores in Q1 FY '26 compared with a relatively modest contribution this quarter in Q1 FY '27. Adjusting for the treasury income, the growth in noninterest income would have been 22% year-on-year during this quarter. Encouragingly, the underlying trends across fee-based businesses remained strong. Third-party distribution income recorded a robust 47% year-on-year growth, reflecting improved customer penetration and stronger cross-sell capabilities across our branch network. The processing fee income also witnessed a healthy recovery aided by higher business volumes and improved disbursement activity across key lending segments, particularly notable within the EV portfolio. On the cost front, the operating expenses for the quarter of [ INR 2,165 crores ], higher than 19% year-on-year. This increase was largely attributable to increase in the IT costs as a result of the continued investment in technology that the bank is doing, and also annual employee-related expenses, including strategy revisions and performance-related payouts. In addition to this, there was a INR 61 crores of additional onetime gratuity provision due to the changes in the salary structure driven by the new wage code. This is a onetimer during this particular quarter, and we don't expect this to be recreated. As a result, the operating profit for the quarter stood at INR 1,358 crores. Importantly, the moderation in credit costs help support the overall profitability trajectory. Credit cost continued its downward trajectory and moderated to 1.8% in this quarter compared to 2.0% in the previous quarter, which is Q4 FY '26. And importantly, the credit cost of EV portfolio during Q1 FY '27 came down to 3.3%, which is very close to the guidance that we had provided. Consequently, profit after tax for Q1 FY '27 stood at INR 502 crores, registering a strong 35% growth over the corresponding quarter last year. Return metrics also remained healthy with return on assets at 1.0% and return on equity at 7.7%. To summarize, Q1 FY '27 was a quarter of steady progress, despite a challenging operating environment, we delivered healthy business growth, further improved the quality of both our asset and liability franchise, maintained stable margin despite funding cost pressures and continue to strengthen asset quality and capital adequacy. While certain external uncertainties remain, the underlying fundamentals of the business continue to move in the right direction, giving us confidence in the resilience of our franchise and ability to create long-term value. With that, I will now hand it back to the moderator, and we will be happy to take your questions.

[Operator Instructions] We take the first question from the line of Sameer Bhise from Diamond Asia.

My quick question is on the guidance that you have indicated. So broadly, we have done reasonably well in a difficult quarter, which was marked by, say, tight funding cost, you had elections in West Bengal, which is the largest state. When we look at this aspirational target, which was earlier 1.6%-plus ROA, what guide of conservatism is built here? Does it also involve some bit of risk on asset quality? Or it is purely due to tighter funding, which may result into the NIM improvement, which we were expecting that may not come. How should one think of this. And secondly, if liquidity were to improve RBI and generally, the sector is betting on FCNRB kind of improving the liquidity and funding rates. Could it probably offset some of these pressures. So just wanted your thoughts there. Yes, that's from my side.

So let me first answer your question that I have very clearly stated in my speech. But this is on account of the external factors and no internal factors as I said -- has any impact on revising the guidance because as you have seen that our credit cost is sequentially coming down, which is one of the worrying factors for us, we are gradually coming out. Even in this quarter also we have made further improved from 2% to 1.8%, and I am quite hopeful that going forward, also the credit cost would [ come ]. The 2 areas where we are a little bit concerned because of these [indiscernible] prices is definitely, as we have seen that the impact on the economy regarding energy crisis. And number 2 is that you see the resultantly, which is just leading to some durable liquidity in the intersystem and for which there is a pressure of interest in the market, although the repo rate has not gone up. And we are finding that banks have started increasing the rates on the deposits, and we cannot also go away from the competition. So the mean what we had expected earlier may get somewhat of impact because of the rising cost of funds for that deal. This is the major area. Apart from that, [indiscernible] we have seen that there is an impact on the technological costs. Most of the vendors and especially as you see that they are all multinational vendors [indiscernible] they have increased their costs. So whether it is the capital cost on the various infrastructure machines or otherwise, or on the operating cost, they have all increased. We all know that availability of cheap, et cetera, all these are impacting the Indian economy for that matter. And as we have seen that my tech cost has gone, I would say, high by 65%. While our focus remains on investment in technology, but as we remain focused in the investments, we also cannot at the same time, avoid the cost. So these are the, I would say, the 2 factors, mainly because of the external environment, we feel that it may impact our ROA. We want to be very transparent and clear to our investors. That is why we said that, okay, we take a call that whatever we are seeing in the economy because I can also see that the effect of the reduced cost of funds on account of the reduction in reported that has happened and the benefit of which we have got till Q1 may not be available for Q2 onwards because already the savings bank cost, cost of funds have increased by around 20, 25 basis points. So considering all the impact of these external factors, we thought that we need to be transferred into our investors. We have done well. This is the first quarter. I can say we started with an ROA of 1%. We are definitely working it on how to improve the ROA further and -- but we thought that we should be clear to our investors.

Just to implement -- as Partha had mentioned earlier that for the medium term, our aspiration is continue to look at achieving the early guidance that we have given, it is the external factors impacting this particular financial year, and which is what we are monitoring.

So mainly on the OpEx side as well as margin. Just quickly, what kind of portfolio growth do we build as of today in the EV book. And secondly, if you could provide the slippages breakup across the [indiscernible]. I think that's all from my side.

So I think 1 question you asked on liquidity. So liquidity for the bank remains comfortable. I can see when [indiscernible] ratio of 94%, we maintain LCR of 140%, which is quite comfortable for the bank. Regarding FCNR, we have mobilized INR 30 crores. This is one information I just want to give you. And regarding your second question about the -- you have asked about the slippage. NIM outlook. So you see we -- this quarter also despite challenges, we could maintain the NIM at 6.20%. But as I told you that going forward, there may be some increase in the cost of the funds, cost of the deposits. So that may moderately affect our deal. But definitely, we are working on it. The portfolio quality, as I've told that the strategy remains the same. We are [indiscernible] go to 1/3, that is 33% to 35% of EEV book and 65% non-EV book. In this quarter also, we have seen that in the non-EV segment, we have grown by 27%. Our EB has marginally come down, but the moderation has been much, much lower compared to the previous quarters. So the strategy remains the same and same with the secured, unsecured, 40% unsecured, 60% secured.

I think your other question was on the breakup of the slippages. The slippages total for the bank were at INR 1,079 crores during the quarter, out of which for EV was INR 604 crores, and the remainder was for non-EV businesses.

We take the next question from the line of Piran Engineer from CLSA.

Congrats on the quarter in a turbulent quarter. My first question is have we started hiking yields in microfinance like our competitors? And if so, by how much?

So it is same as of the last year. We have not hiked anything during the quarter.

Okay. So in the last 2, 3 quarters, we have not hiked. It's same as last year? Are we planning to...

For Q4 [indiscernible] last year, Q4 because of the provisions [indiscernible] a little bit. But I know that there is no plans of hiking and we have not hiked after that.

And sir, how much was that?

It was 100 basis points.

And my last, you mean March '26 quarter, right, not March '25?

It is March '26. For February, we have hiked. We hiked in the month of February.

Sir, your voice was not audible.

February, we have liked. [indiscernible] February. [indiscernible]

Okay. Understood. Understood. Sir, secondly, just in this quarter, retail growth and even our mortgages slowed down, something to -- like retail was typically growing double digits Q-o-Q, and it's almost flat and even mortgage book has slightly declined. What is the reason for both? Are we just taking a cautious stance due to this whole macro geopolitical environment?

Somewhat, yes, I can say that a little bit cautious growth. In the housing segment, as you can see for the year, we have revamping -- completely revamping of our structure. We have segregated the 3 verticals. So definitely, there have been some taking problems, which we are addressing for the year. So it has affected the housing finance growth. And retail also, we have introduced -- while we have introduced some digital products. On the retail front, Piran, the -- there is 1 product which is the OD against the term deposits. That is the only product where there is some sort of a decline, which is anyway not part of the strategic focus. The rest of the book if we exclude that actually has grown sequentially by a healthy 5%. So again calling double digits to single digit growth. That's what is asking.

I think that momentum continues, especially in the products, secured products, such as CDC, auto loans and gold loans. I think that focus is there.

The growth has been reduced from double digits in the business.

Understood. And sir, just lastly, on -- so I understand we've got guidance on ROA due to macro headwinds. But today, our ROA is 1%. If I adjust for the INR 60 crores gratuity provision, which is one time, it will become 1.1%. Now 1.1% becoming 1.4%, what really is the trajectory because NIM is unlikely to improve, if I understood correctly. And credit costs also, we are at 1.8%, which was our guided range earlier, 1.7%, 1.8%. So then where does the improvement come from here? Like which segments or which line items will drive that?

I think 2 factors, Piran. One is we do expect further uptake in the other income to come through. So we do expect 10 to 20 basis points improvement to come through other income. And the second is we expect further continued improvement to come through, albeit marginally on the credit cost further. The secured mix is improving slightly further through the year. At the same time, I think the improvement that we have seen in the portfolio quality should continue. And as the book rises, we should be able to see the improvement on that front as well. So I think both the credit cost and the other income would be the key delta. In the earlier guidance, we were expecting some further improvement in NIMs to come through. That is what is definitely getting challenged now because of the external factors. As Partha Sir had talked about. And therefore, over there, we are not building any further upside. I think it will be a great achievement for the bank to hold on to the NIMs that we have achieved during this particular quarter. So I think those are the 3 key factors to follow up.

Other income, yes, definitely. So almost 20 versus from there. And also, as Rajeev has rightly said, that we are working still on the credit cost, it may actually take a bit proven.

Got it, sir. But even though the high car microfinance yields, we are still not confident NIM can expand? [indiscernible] 30%, 35% of portfolio, so?

Yes. So the focus, unlike last year was on the quality rather than go we only with the top line numbers and then have a large number of NPAs. So we have actually done a lot of revamping in our microfinance segment. Completely, I can say our new model has been put into place with a lot of guardrails and also new underwriting system. So that is actually enhancing our quality of the books for the day, I can say. But yes, the growth will gradually come. We have whatever we -- I can say that we have returned the deceleration. So we have stopped the distillation that was technical. Now hence, going forward, the growth will come. But definitely, as I've told you that we have our strategy that we will keep the book maximum at 35%. We -- from our experience, what we have gathered, we will not just run after this particularly book because it is giving a very high yield. So we need to be very well calibrated that the quality of assets, rather focusing more on the health of the book than going, I would say aggressively. So a very modest growth is [indiscernible],which maximum can go up to 33%, 34%. What we are aiming for it. Definitely, we'll try to grow in that segment.

[indiscernible] rate has gone up, the volume impact is not coming through because the EV book, as we've mentioned, we are still cautious in terms of growth based on the external factors and the risk that continues in the operating environment. As that risk comes down and our operating environment improves, I think definitely, we can look at that at the growth there.

Got it. Got it. And if I may just squeeze in 1 last question. Sorry, I'm taking too much of the time here. But on PSLC, I think last time, 40% of our MFI book was PSL compliant, if I remember correctly. How much has that number inched up to?

It is also today, it is 40% only. I think, [indiscernible], our new EV head can give a guideline.

[indiscernible] continue to be 40%. However, we intend to dial that up. And I think we hold this quarter [indiscernible] place in terms of [indiscernible].

[Operator Instructions] We take the next question from the line of Jai Mundhra from ICICI Securities.

I have a couple of questions. First, sir, SMA-0 has increased a little bit. Of course, there are holiday things which will impact our collection in SMA-0. But apart from that, was there any other reason? And what -- how should 1 look at the SMA-0 trajectory?

Again, you are rightly predicted. It is mostly in the month of April. There were 2 effects, I can say. One is definitely the election effect of West Bengal. And number two, the holidays and consecutively, 3 businesses where holidays. So that has impacted our SMA-0 book. While some of them has, I would say, have been repaid also. But the thing is that the total quantum is yet to be repaid, so even those are -- repayment has happened, the book continued to remain in SMA-0. It has not slip to SMA-1. If you can look at it at my SMA-1, actually, there is a less repaid, but clearly indicates that from SMA-0 forward rolling has been addressed, but it remained into the SMA-0 book. So there is no other reason for this May and June, as Rajeev has already said. The collection efficiency has been quite robust. It is almost 99% already, and it continues to be at that trend.

Right. But -- and sir, what is the outlook going ahead because the vintage chart shows clear improvement in the newer vintage, right? I mean the older vintage are doing reasonably well, right? So apart from the holiday thing, is there any other things which is creating a little bit, let's say, delay in collections or?

Yes. [indiscernible] you can answer, yes.

No, I can take that question. If [indiscernible] mentioned, if you look at the stable book in SMA-0, that's holding. So what happens because of holiday price [indiscernible], however, it continues to start paying. And we are also focusing on very strong delinquency management measures. So that is not sort of [indiscernible] not happening. So now we are working on making it back. So to answer your question, we are very confident that the slippage will not go further, and it will stay very good. Moreover, we will try to recover from there. So it is only about holding beyond that.

Right. So sir, if I [indiscernible].

Yes, I think the vintage chart you refer to is on Page 24 of the investor deck. And I think you're right, it clearly shows the improvement coming to in the recent [indiscernible]. And even the older winters are getting plateaued, right? So these things are not simply [indiscernible].

Okay. So sir, in that sense, the credit cost, we have a decent, let us say, scope, right, in the sense that if the slippages were to plateau here on maybe?

That's what Rajeev has just told for the day that we are expecting an improvement in the credit cost.

Then I am a little bit confused sir on the guidance cut that is the stable or EEB mix of the business is more or less stable, and EV growth more or less in line with the overall loan growth, that actually should support the NIM, right? Even if it is coming at a higher funding cost of 6%, 7%?

So let me just tell you for the day. The mean, our non-EV book has grown by 27% if you can look at it. And our -- internally, the strategy is that our EV book will be maximum 33% of these total growth. So if I can say that even if we grow at whatever that take rate for the deal, the EV book will be contained at 33% of that. And here is the major challenge that we are facing is again the cost of funds because we have arrived at this means with the expectation that the last year, the reduction in the reported. It was not immediately we could not get the benefit because as you know that the term deposits were getting matured at a net debt. We got a benefit in Q4 of last year. We got a benefit in Q1 of this year. But what we are seeing is that already the competition is increasing the interest rates, even bigger, stable banks are also increasing the interest rates in the fixed deposits for the day. And we also need to -- or rather we had increased in some segments also, and probably we need to increase further that. We have to just look into it whatever the credit demand is there. So the mean is definitely the advantage of getting the full benefit will not be available for the full financial year, what we had envisaged earlier. We have said yes, and the EV book, there will be a calibrated growth. So definitely, what growth that will happen in Q4 of the financial year when the EB book grows the most, we will not get the benefit of interest for the inter-financial year for the year. So considering all these factors and apart from what Rajeev has said, for the day that escalation in the OpEx cost. So OpEx cost, we had envisaged that it should be 4%. But already, we have reached 4.3% in Q1. And this is going to happen, and this is going to continue because all the winter, if you look even on the other consumer items also the cost has increased and especially the fixed cost, the cost of the hardware, the cost of the server, so everything is increasing. Even the operational cost, whether it is cloud or AMC charges or other also have increased substantially. So the effect of all these factors. And we have to invest in technology, and we have decided that we would continue to invest our technology [indiscernible]. So these are the 2 areas where we feel that we may get an impact while our strategy is very clear that we are working on it. In this external environment of these external factors do not -- I would say that this do get addressed in quicker towns and I can say that, yes, probably our guidance what we have given earlier may hold good. But this is, again, I've told you that we wanted to be very clear and transferred into our investors.

I think just to break out, we had mentioned the [indiscernible].

[Operator Instructions] We take the next question from the line of Anand Dama from Nuvama Asset Management.

So what kind of trade growth that we are expecting for the full year should be 15% to 16%. Because if we are seeing a margin even if you're expecting some margin pressure, should we sacrifice a bit on the growth front, if yes? And what kind of tech costs that we have. So there are some banks who have talked about tech costs as a percentage of overall OpEx. If you can talk about that, what is that for us now? And what is that we expect going forward, which is what you've been talking about that, that possibly could go up and could lead to some kind of pressures on the ROA?

Yes. So I'll take that on the credit growth, what we had guided was for the full year FY '27, we were looking at a 14% growth rate, within which EV, we were looking at between a 5% to 10% growth and non-EV would be 20% plus. As you've seen in the first quarter, we have seen non-EV growing at 27%. Overall growth at 16%. So we are definitely in line with the guidance, in fact, doing slightly better. The challenge that we see right now is EV, which for first quarter has remained flat compared to the last year. And this is where we will try and see how exactly we can step up the growth as the external environment improves further and our growth, which continues to happen in a calibrated manner. So I think that's on the credit growth. On the IT costs, I think we have now gone up to roughly around 8%...

Right now, it is including the [indiscernible] is around 9.5%. So I mean, I guess [indiscernible] total OpEx. The industry benchmark for the mature banks, they remain in the range of 10%, given that we still have a lot of IT investment to make, we will try and remain within the range of 10%. But as it starts delivering well, we will slowly bring it down to 8%.