LIC Housing Finance Limited (LICHSGFIN) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning, and welcome to the LIC Housing Finance Q3 FY '23 Earnings Conference Call, hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Praveen Agarwal from Axis Capital. Thank you, and over to you, sir.

Thank you, Lizan. Good morning, everyone, and welcome to this earnings call. We have with us Mr. Y. Viswanatha Gowd, MD and CEO; Mr. Ashwani Ghai, Chief Operating Officer; and Mr. Sudipto Sil, CFO. I would request Mr. Gowd to share his initial remarks on the results post which we'll open the floor for Q&A. Over to you, Mr. Gowd.

Okay. Thank you, Praveen. Thank you. Very good morning to all of you. I extend heartly welcome to everyone of you to the post earnings conference call of LIC Housing Finance Limited. As you are aware, LIC HFL declared its Q3 FY '23 results yesterday. Prior to detailing the operational aspects, I would like to highlight that the current fiscal year, RBI has increased the repo rate by 225 basis points in 5 consecutive MPC meetings, in line with the monetary policy there has been across the world due to inflationary pressure. Consequently, the company also raised its LHPLR by 210 basis points in the current fiscal year till date. The financial highlights of this quarter as follows: Total revenue from operations INR 5,871 crores as against INR 5,054 crores for the corresponding quarter of the previous year showing a growth of 16%. Outstanding loan portfolio stood at INR 268,444 crores as against INR 243,412 crores as on 31st December 2021, reflecting a growth of 10%. Out of which, the individual home loan portfolio reported a growth of 14% and now it is comprising of 83% of total portfolio, it is up from 80% 1 year ago. Then the total disbursements for the quarter were INR 16,100 crores as against INR 17,770 crores for Q3 of FY '22. Out of that, disbursements in the individual home loans were INR 13,580 crores as against INR 15,341 crores for Q3 of FY '22, whereas the project loans were INR 427 crores as compared to INR 293 crores for the same quarter in the previous year. It is up by 46%. On the net interest income front, the NII was INR 1,606 crores for the quarter as against INR 1,455 crores -- sorry, Q3 of FY '22, with a growth of 10%. The net interest margin for this quarter has been stable at 2.42% as against 2.42% for Q3 of FY '22. Profit before tax for the quarter stood at INR 593.01 crores as against INR 961.85 crores, a decline of 38%. Profit after tax for the quarter stood at INR 480.30 crores as against INR 767.33 crores for the same period previous year with a decline of 37%. In terms of asset quality, Stage 3 exposure at default stood at 4.75% as against 5.04% as on 31st December 2021 and 4.9% as at the end of September 2022. This quarter, our focus was on margin improvement and asset quality. As you would note, there is an increase quarter-over-quarter in NIM from 1.8% to 2.42%, bringing us back to the Q3 of FY '22 levels. This has come on the back of better liability management and passing on the increase of CLR by 115 basis points in Q2, which has taken effect from Q3. A further 35 basis point hike was affected in December '22, which is effective from January 1 of this quarter. The other focus area was on asset quality, wherein we are seeing stable numbers with a small quarter-over-quarter decline. The asset quality trend is looking positive and improving. We are very much positive on that. You would note that this quarter, we have made a higher provisioning to the tune of over INR 760 crores. This has been made to increase overall PCR substantially. The Phase III PCR now stands at 50.8%. It is up from 43.6% 1 quarter back and significantly higher than the December '21 where it stood at around 39.7%. It is in line with the company's objective of strengthening the balance sheet. Last few months, there have been successful repo rate hikes by the RBI due to which the home loan rates have also increased across the industry. Though this has a slight impact in slowing incremental business, our individual home loan would continue to show growth of 14% by and large in line with our expectations. The disbursement for the 9-month period registered a growth of 13% overall and also 13% in the retail category. On the funding side, we have witnessed an increase in the cost of funds which stood at 7.4% as compared to 7.1% in Q2 of FY '23 and 6.69% as on Q3 of FY '22. It is attributable mainly to a total cumulative repo rate hike of 225 basis points by RBI in the current fiscal and increase in other benchmark rates like [indiscernible] et cetera. Incremental cost of funds also inched up and it stood at 7.61% for Q3 of FY '23. The further interest rate trajectory will be largely governed by the ensuing RBI rate policy. With this great introduction, I would like to invite you for your queries. Thank you.

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

Sir, my first question is on the provisioning figure. Does that include any write-off or it's all provisions only?

[Operator Instructions] Ladies and gentlemen, we seem to have lost the audio from the management's line. Please stay connected while we try to [ resend ] the audio.

It is okay now? Correct?

Hello?

Yes, sir. Are you able to hear us?

Yes, we are online only.

Okay, sir. Sir, please proceed.

Yes, madam. I think we answered her now. We told that there is no write-off.

I'm so sorry, sir. We were unable to hear you.

No, there are no write-offs, Mahrukh.

Okay. And just in terms of your gross -- was there any slippage from restructured loans this quarter?

No, the restructuring slippage, as we mentioned earlier also, which is in line with around 15%, which has been there. So that is consistent for the last 3 or 4 quarters. But overall, there has been a reduction -- slight reduction in there overall.

In the restructured slippage...

Yes.

We'll move on to the next question that is from the line of Abhijit Tibrewal from Motilal Oswal.

Sir, I mean coming back to this credit cost that we took during the quarter, I just wanted to understand within your opening remarks, you had suggested that this was in line with the company's objective of increasing the strength of balance sheet. So just trying to understand this a little better from what we've known all along is that the provisioning is usually driven by an ECL model. So I mean, has there been a significant increase in the risk that we foresee that has led to an increase in PCR by about 7 percentage points on a sequential basis? Or let's say, you are anticipating higher slippages from the restructured pool over the next 6 months when those moratoriums in your corporate book get over? That's my first question.

Okay. One thing, here, I would like to say that ECL and all, okay, we are having a policy, we follow it. And here also this happened, as I mentioned also, to strengthen the balance sheet, one thing. And actually, the management overlay -- what happened in another day also we actually -- last time also telling you what happened, the PCR ratio, we would like to actually bring it up compared to earlier years. Now it is around more than 50%. That is only intention. With that, we have increased the -- what we call our provisioning. And then PCR is now -- it is in line with the industry now.

Okay, sir. So if you at least can take that comfort that -- now that you have increased it to, let's say, 51%, your room to maintain at these levels and we will not see the kind of volatility in Stage 3 provisioning coverage, which...

[indiscernible]. Yes.

Okay. All right, sir. Sir, the second question I had was on prepayments. I mean at least your Slide 11 of the presentation says that the prepayment rate was about 9.3% for the 9 months, which is hopefully significantly lower than about 10.5% to 11% that we've seen in the past. So has there -- what we also said in the last quarter, has there been significant outreach in terms of retaining customers, giving out certain incentives to them to retain customers, which has kind of led to a lower prepayment number in this 9 months?

No, as far as the incentives, et cetera, there was no incentive or anything of the sort in this quarter. But overall, the prepayment rates have come down because of probably a tightening liquidity outside.

One more thing, the market, whatever rates are increasing, the increasing scenarios whichever normally what we call will not be that much in the market. Naturally, this is showing downward trend.

Got it, sir. Sir, I have one last data-keeping question. If you can just spell out for the [indiscernible] restructured book which is outstanding as of December '22, the third quarter and if you could also split that into corporate and retail and also tell us when will the moratoriums get over. And typically, what you shared in the earnings call, a split of your stake, this is the 4 product segments?

Figures, we'll give it to you.

Hope you wanted -- for December, outstanding is INR 1,420 crores. Out of which the project is around INR 250 crores, and the retail is INR 1,169 crores.

Okay, sir. And sir, when will moratorium set over in this INR 1,420 crores?

I'll share with you the time line. INR 600 crores will come out in the month of March. And again, another INR 600 crores will come out in the next quarter. And the residual will be in the last -- September, which is just a few hundred crores.

And so then the split of Stage 3, which is the core product covenants?

In the Stage 3, as far as the categories are concerned, the IHL Stage 3, this is all in data, right? So it is 1.62. For the nonhousing individual, it is 6.74. For the nonhousing corporate, it's 22.5. So the total retail is now 22.99, and the project is 45.6.

This is useful, sir. And just one last question sir...

Overall is 2.75.

2.75, got it, sir. And sir, one last thing here. In the presentation, you spell out what is the provisions that we are maintaining on those IRAC NPAs. Basically, things which are our NPAs per RBI circular but are classified under Stage 1 and Stage 2. So if you could also give what is the quantum or the pool on which you have maintained these provisions of about INR 110 crores?

Await offline, but I'll give it to you.

The next question is from the line of Vivek Ramakrishnan from DSP Mutual Fund.

My question was on the NPA coverage, which you just mentioned. In terms of loan-to-value of the NPAs, how much would you have, in a sense, is the disposable value -- will that 50% coverage take adequate care of it going forward? Or how do you see it going forward in terms of resolution? That's my only question, sir.

See -- so Vivek, can you just repeat the last part of your question?

Sir, what I wanted to know was you increased the provision coverage to 50%. Now is it enough to start resolving this NPA...

We have got your query. Yes. As far as the LTV is concerned, I will take you through some of the disclosures made in our presentation, you'll find that the LTV at the time of giving the loan itself is around 45% or around 50%.

Within that.

Within that. So that does not take into account the repayments which happen on that account and any improvement in the property prices. So after the assumed haircut or a presumed haircut, there is substantial headroom available for full recovery of principal.

Correct. That's correct.

The next question is from the line of Umang Shah from Kotak Mutual Fund. [Operator Instructions] As there is no response from the current participant, we move on to the next that is from the line of Nischint from Kotak.

Just 2 points. One is again on the large provisions that you made this quarter, is it something which is on any specific assets? Or is it something that we would have increased coverage at a similar ratio across all the -- all these loans?

No, it is not against any one specific, not like that. It is our general, what you called, philosophy of maintaining very good PCR. To be in that industry, we increased across all segments.

Sudipto, in the past, I think you have guided for around 50-odd sort of basis points of credit cost and suddenly it went up this quarter. So is it something that you would want to kind of accelerate a particular level and then take a pause? Why is it that you could have done it? And you could have probably started a bit maybe over a 3-quarter period or something. So just trying to understand what is the -- what was certainly the reason to do it in this quarter?

As far as the credit card is concerned, yes, that will be maintained at the same level in the sense what happened and whatever -- even earlier also I indicated to you, that it will be around 40, 45 -- 45 basis points, that's all, correct? Within that range mostly.

Out of this...

45 to 50 basis points mostly.

Yes. But this quarter was a higher number, right, so which is...

Yes, this was a higher number. Going forward -- what we've mentioned is that going forward, once we have achieved the, by and large, stable level of PCR -- by and large, after that, it will be in that range. This one is a specific if you see the actual provisioning required for the purpose of just maintaining the earlier ratio at -- just 1 quarter back, it was around 44%. So if you had to maintain it at around 44%, the provisioning required would have translated to a 45 basis point credit cost, then there is a specific objective to increase the PCR beyond that level. So from 43% or 44% PCR, which was earlier, it has now moved to upside of 50%. So the balance 6% or 6.5%, which has been created as an additional, say, provisioning cover, that has led to the increase in the overall credit cost. It is actually, if you just break down the numbers and see how much of credit costs would have translated if you have maintained the earlier PCR? Then it would have translated to the same 45 basis points. Please keep in mind that there has been no increase in NPAs.

Yes, NPA is maintained. NPA in fact is slightly reduced over last quarter. Small reduction.

That's true. On the disbursement side, in the individual segment, we have seen some decline. On a year-on-year basis, it was closer to around 10%, 9% and 11%. So how should we kind of think of it? Is it something that the best for you in terms of your listed growth is behind us? Or is it just a base effect? And what kind of a growth will you be able to see in individual disbursements going forward?

Actually, in the Q3, what happened, initial month of this October and November, there are small value here and there, some sort of reduction was there in some regions. That's why we could not score well in those 2 months. But December month, we have good [indiscernible] it was almost all part of a good state. So what happened now -- with that reduction also what happened because rate -- interest rate hikes also were there. Probably some temporary symptoms were there. Apart from that, because of this now, in the Q4 normally, an entire, what you call now, across all regions, a lot of, what you call now, momentum will be there and traction will be seen across all the regions at the highest speed. So with that, what happened, we're very sure that this Q4 will be far, far better. And we are still -- we are still, what you call, positive on our Q4 performance, and we'll show more than -- I think, 12% to 13% growth will be there in our volumes of disbursement in the quarter.

And annual -- on a year-on-year basis you have to say?

Yes, year-on-year basis exactly. Year-on-year basis also, the 13% will be maintained. We're highly positive about that.

Because [indiscernible] the third quarter is very high, sir.

Yes, already what happened because things are going on very well, and then good demand is there, even the recent budget announcement everything put in place, a very good, what we call, [ flip ] on all these things.

The next question is from the line of Dhaval from DSP.

Sir, just one question relating to the credit cost. So Sudipto, you mentioned that large part of the credit cost went into achieving a particular target provision coverage. Have we completed that journey or still there is a few percentage points of coverage increase expected post which it should normalize? If you could just clarify that point?

By and large, now, we are almost all nearing to that, right? Almost all what -- we do thought actually 51% -- more than 50%, we wanted to keep that rate, that PCR to be, what we call, to have a very good, even to be in line with the industry. That's the main thing. That's why we provide for that. As things stand now, I think we don't see any further increase required maybe in this one.

So sir, from 4Q '23 onwards, should we go back to the 40 to 50 basis point credit cost zone? Is that fairly clear? Or is there any other one-off or any such element that will come in the fourth quarter?

As MD sir mentioned, it is now normalized.

The next question is from the line of Bhavik Dave from Nippon India Mutual Fund.

My question was very similar to the previous participant. Just to -- just to clarify again, the provision that we set up on Stage 1 and Stage 2 is also adequate of what we think for the future, right? Like 5 basis points for Stage 1 and 6.4% that we have for Stage 2. The number should be in that range, we don't intend to increase that materially and keep the Stage 2 provisioning at around 51% -- like above 50%, is that the way to think about it?

By and large, it will be...

All right. And second question is on your employee trend, is there anything that is trending in the sense of wage provision or any cost that can come up in terms of employee expense that can surprise on the higher side?

No, no, no. As it is nothing -- what happened normally last time -- last year we probably would have been [indiscernible] but now we are making a provision for every quarter [indiscernible] which should normalize now, one of things that we're hearing.

Understood. And last question is, sir, as a very small observation in the sense that commercial paper borrowing for the quarter has increased on a quarter-on-quarter basis. I understand that used to be at 4.5%, 5%, even pre-COVID. This time around, we've increased it considering the kind of rates that are in the offering in terms on the shorter end, what led to -- for us to increase shorter end borrowing wherein the cost of 150, 200 basis point higher? Just a thought there.

See. Actually [indiscernible].

Sure. Understood. And last question is what is your incremental stage on...

[indiscernible].

Yes, I'm trying to understand what is your incremental spreads on home loans?

See, incremental spreads on home loans will be around 120, 125 basis points.

The next question is from the line of Harshvardhan Agrawal from IDFC AMC.

Sir, I just wanted to understand that our restructured book has come out by around INR 6,000 crores or INR 6,200 crores in the last 9 months. So how much of that has actually flipped into Stage 3?

Around 15%.

Okay. So 15% is of that INR 6,200 crores and above?

Yes.

Okay. And this remaining book that has been graduated to Stage 1 or it still remains in Stage 2?

No, most probably it is in Stage 1.

The next question is from the line of Shweta Daptardar from Elara Capital.

Sir, a couple of questions. Did you mention...

Ma'am, your audio is not clear.

Is it better now?

It's only very choppy.

Yes. I'll try to be a little louder. So I just wanted -- sir, I wanted incremental cost of funds and earnings for the Q3 quarter?

Incremental...

Incremental cost of funds, 7.61 for the third quarter -- Q3.

And sir...

Hello?

Pardon, ma'am?

Hello. Sir, how about incremental yield?

Incremental yield?

Yes.

Yes. Incremental yield is approximately -- slightly more than around 9% -- slightly more than 9%.

Okay. Noted, sir. Sir, one last question. Have you seen balance transfer outpacing this particular quarter? How has been the competitive landscape?

Balance transfers have come down significantly. It has come down significantly.

The next question is from the line of Maneesh Jain from ValueFirst Digital Media Private Limited.

Yes, sir. I'm an individual retail investor. [indiscernible] Sir, my question is that although there's one good part about this quarter's results. Last quarter, we saw a significant dip in interest income. So if that has recovered? So last year, that was a big hit. But as a retail investor, my question in fact...

Mr. Jain, sir, your voice is sounding very muffled.

Okay. Is it okay now?

Yes, fine, fine. Okay.

Okay. So as a retail investor, my question is that a year back, Q3 returns were very good. We had a profit of INR 767 crores and EPS of about INR 15. But after that, every quarter, something or other happens and then we don't get a good result. Like last quarter, interest income was low. This quarter, impairment is high. So -- now this particular impairment, I was just doing my calculation that half the PBT -- more than half the PBT moved in impairment. While I was checking some other housing finance companies, much lower, okay? I'm talking of a public sector housing finance company, I don't want to name. So they have an interest income and their provisioning or impairment is less than 1% of their interest income. While in your case, it is 12% to 13% of your interest income. You had interest income of INR 5,800 crores and of INR 750-odd crores is provisioned on impairment. It completely falls to bottom line. So my question is, when do we see a consistent INR 15 to INR 16 EPS quarter after quarter? I think every quarter, something happens which [ affects ] the results. Are we going to see same impairment in the -- in Q4 also, the INR 700 crores, INR 800 crores is just written off. That gives a very bad name to the company and that is reflected in your multiples, in your valuation. And valuation, I'm not even comparing with, let's say, [indiscernible] HDFC or some private company [indiscernible] are much better. So what is inherently wrong with our company. I'm long-term investor in this company. So I would like to -- nobody is inherently wrong that we are not able to manage our assets well and provisioning is always very high?

So what exactly you're telling?

No, one thing, actually, what you're telling...

My query is very clear that why we have high provisioning compared to other housing finance companies with the same industry?

I agree. In the earlier parts, what happened the provisioning ratio, what we want to have on our -- what we call the NPA. So that was not on a higher side in the sense it is not at a level where the industry levels are required. That's why this quarter, we had to make extra provision only to come up to the level, number 1. Number two, last 3 years, 1 or 2 quarters, what happened, up to last quarter, income levels were less because what happened, the transmission also was taking time and RBI rates also were increasing. And we have got, as per our policy, what happened, we passed on the rate hikes at the end of the quarter. The effect will come on the first day of the quarter. That's the thing. That's why there are some sort of inconsistency as the income levels are concerned. Now we have come up to the industry levels of this, what we call, PCR. I think going forward, probably this may not be so acute [indiscernible] it is felt. And more or less, we're inching towards our conditions [indiscernible].

So we are now -- as far as Q4 is concerned, half -- almost half the quarter is over. So can we expect that Q4 results, there will not be any hiccup which we will not -- I mean, we'll have a result which will have INR 15 or INR 16 EPS and interest income and to which the interest income will be good and provisions will be lower? Or again, we'll see something or other going wrong in our P&L account?

So we cannot give any debt guidance on what will be the profit number for Q4, that guidance we will not be giving. But yes, if you look at it qualitatively, certainly, the one-off provisioning that we have done is actually to strengthen the balance sheet. The money doesn't go out anyway, it is just to create an additional buffer. So that is, in a way, lending strength to the overall balance sheet and provisioning coverage ratio, which is actually a positive move by the company.

I mean, how come higher provisioning is a positive move? There is something wrong. That's why you have to provision it?

No, no, not like that. What happens, when the NPAs have -- will have to come up to one level, the provisioning covering ratio...

I mean over a longer period of time, it should get taken care of?

Sorry. No, that's why it's been done.

We will move on to the next question that is from the line of Sanket Chheda from DAM Capital.

Hello?

Mr. Sanket Chheda, we are not able to hear you. As there's no response from the current participant, we'll move on to the next participant, the line of Punit Bahlani from Nomura.

Two questions. Firstly, on the provisioning book, you have slowed up our buffers. And so since there is no write-offs and there is also a decline in NPS, is it safe to assume that as per the ECL model, the PD and LGD are increased? That is one. And on the second, even on your -- while you have guided and going ahead, the provisioning will be lower, your Stage 1 and Stage 2 cover is also quite low as compared to peers. So in -- according to the model, will you be needing to stop that in the future? And accordingly, can we expect some credit costs to cover for that risk?

No, just to clarify, there has been no write-offs and there has been no change in the PD and LGD expectation.

Okay. Okay. And on the second bit, sir, on the Stage 1 and Stage 2, do you expect from...

Stage 1 and Stage 2 is also adequate at this point in time.

Okay. Okay. So in the future also you will be expected to maintain these levels for Stage 1 and Stage 2 cover around these values?

PCR, we will be, by and large, in the range that we have indicated. There could be realignment depending upon where the -- which bucket moves to which place.

The next question is from the line of Shubhranshu Mishra from PhillipCapital.

I just wanted to clarify, you said that project terms have a gross Stage 3 of 45%, is that correct?

Yes.

So sir, how many accounts are there now? And what stage of resolution would they be? It will be very helpful if you can either put out a stock exchange notification or you can at least speak on the top 5 accounts on this call itself, sir, because that seems to be a very big number. And we can just start off with the number of accounts which are there and the exposure to each without naming as we can start?

Actually, we cannot take any specific names, et cetera. Overall number of accounts in the total project 1 portfolio is around 300 -- roughly around 300.

And even for many of them, it has -- on NPA, now the resolutions are also, what we call, coming very well. So probably in future, there will be a good resolution also we're expecting.

It is in different stages of resolution. It is difficult to put out a specific time line with dates and months because some of them are in the NCLT and various other legal matters. But one thing is clear that there has not been any further additions, number one. Number two is that we are seeing some small resolutions coming. They may not be meaningful at this point in time in terms of the number. But certainly, the trend is positive.

Right. And 300 is the total number of accounts and projects?

Total number of accounts.

How many are beyond 90 plus, sir?

Stage 3 is beyond 140 -- 80.

80. Roughly 80. Roughly 80.

80 accounts beyond 90 plus and how many will be 60 plus, sir?

60 plus maybe another 20, 30.

The next question is from the line of Rikin Shah from Credit Suisse.

Two questions. First one, I observed that the number of employees have been declining the last 3, 4 quarters. So any color if you could share with us? Second one was just to confirm the 35 basis point rate hike in December, have they been passed on to the borrowers or they will be effective from 1st January only?

The employee's part actually -- what are you asking employees?

Number of employees?

Employees, here and there, virtually, some people normally it happens who are joining, some people may leave also. Again, that is...

But the company also has got a continuous recruitment exercise, which happens at certain periods of time -- certain points of time in the year. So maybe in the next couple of quarters, you will see the improvement in numbers. So that is an ongoing process.

And it is an annual base...

So some campus driven recruitment happens at specific times of the year.

Already we've recruited people also.

And as far as the -- what was the other query, sorry?

The 35 basis point...

That has already been passed on and it is effective from 1st of January, it is not factored in the Q3 numbers. It will come in the Q4 numbers.

The next question is from the line of Shreepal Doshi from Equirus.

Just wanted to ask what is the provision that we are carrying on the INR 1,400 crores of moratorium that we have?

See, as far as the RBI requirement of provisioning is concerned, it is 10% of all accounts which are under OTR.

So we are carrying INR 140 crores?

Yes.

Okay. And I just wanted to understand how much of the original restructured book is already out of moratorium?

See, the total restructuring of INR 7,000 -- slightly more than INR 7,000 crores -- INR 7,100 crores, which was around 3% of the bank portfolio. Out of that, INR 5,264 crores has already come out. Around INR 750 crores of loan accounts have been repaid fully, that is closed and balance, which is yet to come out of moratorium is INR 1,420 crores.

Pending is INR 1,400 crores.

And then like how have we adjusted the industry provision that we were carrying on those accounts? So -- because now we are only having INR 140 crores for the existing list of our moratorium accounts. So how are we dealing the remaining INR 5,000 crores provision [indiscernible] that we were carrying?

Can you please repeat? Your voice was a bit unclear.

So, sir, as you said, INR 7,200 crores was broadly with [indiscernible] and restructured books. So we will be carrying INR 720 crores of provisions on that. Broadly, I was going by that assumption. Now that will be down to INR 1,400 crores, so the provision initially will be down to INR 140 crores, how have you utilized this INR 600-odd crore number?

See, actually, whatever provisioning was created, that has to remain on the book for 1 year. And whatever is loan closed that can be written back. Provision on the loan closed, that can be written back.

Closed only INR 700 crores, no?

Yes.

The next question is from the line of Bajrang Bafna from Sunidhi Securities.

Sir, my question pertains to again on the provisioning side. The only issue that we are facing while modeling your business is we don't have any predictability that what sort of provision that you will do? Do you need to tell us very clearly that what is the guidelines that you are following? Because as per my understanding, last 3 quarters, if we see the Stage 1, Stage 2, Stage 3 numbers, we are constantly seeing either stable number in Stage 3 or an improving number in the Stage 1 side. Despite that, we have gone with ECL provisioning on Stage 3 from 40% to 44% last quarter and now close to 51% on Stage 3 in Q3. So what is that something that we should be considering for our model building and what sort of ROEs those are sustainable in this business? Because as per my knowledge, you will never lose 50% in the property, which is 100%, has been given as collateral. So the expected credit loss even in Stage 3 can't be 50%. So what is that number based on which you are deriving this? Not -- 40% is not the right number, 50% is the right number. So some sense on that, which you could guide us clearly, we will be able to predict your company's performance clearly in terms of provisions also and in terms of building the ROE number right and so forth, the valuation. It is just an extension of the question which was asked by a participant some time back. So we made some predictability of your numbers, which would help us to model the numbers better? That's all.

As you have very rightly identified, I mean, in a real estate business with the underlying real estate asset, there is a very little chance of using more than 50%. But during the period, you have to create some buffer because -- though the realization will come, it will come with a delay -- with a [indiscernible]. So in the interim, if the provisioning cover is specifically retailer increased or maintained at a particular level to the comfort to the balance sheet for the interim period till the time it is realized. So one has to keep that in mind. But as on coming back to your first observation, it is correct that 50% plus after even the administration is very rare. That does not generally happen.

And moreover as a prudence -- as a matter of prudence also we will take on these concepts...

Okay. So we will -- would like to hear that this 50% is an ideal, you will not go to, let's say, 60%. So that is what something that I want to get a predictability from you so that we can model it better, sir?

I think in a year's time, the way we have increased from 39-odd percent to 50%, that itself says that we are trying to reach a particular level, which gives us adequate comfort and it actually insulates the balance sheet from any kind of -- any type of losses, which might happen due to delayed realization of the most assets.

Beyond these limits, of course, there [indiscernible] at this moment.

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

Sir, in the, say, last 6 months or maybe in the last quarter, so say 3 to 6 months, this quarter and the previous quarter, did you have any NCLT-related recoveries? And what were the resolution rates? And is there any near-term recovery expected from NCLT?

Actually, madam, in the NCLT, I think the 3 cases -- 3 cases are there in the resolution, which is moving on.

We have received some positive orders. It is in the stage of realization or implementation you can say.

So there is no -- there was nothing resolved in the last 3 to 6 months, it's only ongoing just now?

These 3 orders for implementation.

Okay. And what is the resolution rate there, roughly?

Resolution rate means?

As in that of your loan, how much would you have recovered or of your outstanding, how much would you -- the order, say, how much will be recovered?

You mean to say the percentage of terms, no?

Yes, yes.

Normally, it depends on the resolution because what happened...

The exact -- it is difficult to give a number, but there is -- about INR 150 crores work which is coming -- I mean, which is likely.

Got it. And on an exposure, how much?

That exposure, right now, I'm not able to give you, but it's -- the realization -- the amount is around INR 120 crores to INR 150 crores.

See, in some case, it may be even more than -- it goes to the full amount [indiscernible] also the average.

Different account, it's not one account, several accounts.

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

Sir, sorry to just press on the provisioning part. So considering that you have made now 50% of provisioning and [indiscernible] portfolio is entirely out of the restructuring and post the 1-year passage. So can we also expect any provision write-back from the same? Or how would we be treating those provisions?

Now I think INR 700 crores got closed, no?

Normally, INR 50 crores have been [indiscernible] closed.

Closed.

So that has already been written now, correct?

50% done.

Okay. And sir, just one more part, sir, on the provisioning part. Now I can -- we can now assume already you have 50% of PCR, now probably you want to start with the [indiscernible] and now the focus will largely be on the growth part. And no [indiscernible] of any older provisioning would come in future, right? This is what we can expect?

Yes.

Yes, yes, yes. It has been stand out. No problem. It is online.

The next question is from the line of [indiscernible].

So I just wanted to know how the future prospects would be [indiscernible] interested being rising since quite a while, and we don't expect any decrease in that. So are we expecting the same demand or are we expecting a better quarter as of now and Q4 quarter we're expecting good results or as a good demand with regard to loan?

Yes, loan -- actually, disbursements, definitely, we are very highly positive. Even in the past, also in the interest rate cycles who are doing very well. This quarter, actually already with all the things in place and good support, we are very much positive that the 13% growth will be showing in our overall, what you call, disbursements, year-on-year that is...

To just to add to what you just shared, just a few months before COVID, we were still selling home loans at around 9%. Today despite a 225 basis point increase by Reserve Bank on the repo, we are selling at a rate, which is less than that rate which was prevalent in 2019 or late 2018. And at that point in time, also the book do -- it's only because the rate of interest has gone up very sharply in a very short period of time between May and December, that is around 7 months or so. That is probably what is creating some kind of a temporary dampener.

Yes. But now Q4 we are highly positive. We'll be, again, definitely crossing that our already committed 13% growth rate.

[Operator Instructions] As there are no further questions, I now hand the conference over to the management for the closing comments.

Thank you all. Really, it was a good interaction. At the end, I would like to once again thank you for your continued support. And I also assure that the company is in a very good consistent growth part. Thank you. Wish you all the best.

Thank you. Ladies and gentlemen, on behalf of Axis Capital, that concludes this conference call. Thanks for joining us, and you may now disconnect your lines. Thank you.