National Development Bank PLC (NDBN0000) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, thank you for connecting to NDB Bank's Investor Webinar to discuss financial performance for quarter 3 2023. Today's webinar will follow the same format like our prior webinars. We have Bank's Director and Chief Executive Officer, Mr. Dimantha Seneviratne, who will take you through a prepared presentation. At the end of that, we will move to the floor for questions and answers. [Operator Instructions] On those notes, let me now hand over to the CEO. Thank you.

Good afternoon all. Welcome to the NDB investor webinar that we do every quarter after release of results. So this is to discuss about our 9 months performance ending 30 September 2023. So with me, I have senior leadership team, who will join me later as panelists. So we have Vinoj, Deputy CEO; Sanjaya, Vice President, Personal Banking; Suvendrini, CFO; Niran, who is Vice President, Treasury; Indika, who is the Vice President, Business Banking; Ishani, Vice President, Project Finance; and Zeyan, Vice President, Branch Network Management. So let me go into the details. We have the agenda, basically covering operating environment that we have been working on and also the financial performance for the 3 quarters and way forward and then we'll be having the question-and-answer session as usual. So the operating environment, of course, very volatile. But I think actually, we are improving from where it was last year, last year was very volatile but actually we are settling down. So as you can see, one key element is inflation, how the inflation has come down from very high level of about 73% in CPI to now [ 1% ], of course, at a higher base but with significant changes there. We had a modest recovery in economic activities as denoted by the leading economic data. Of course, these are supported by certain import restrictions. But more importantly, the inflation that is the key area that government has been targeting and that has seen an improvement, with that the interest rates, et cetera. And, with regard to the IMF relief package, we're expecting the second tranche, the staff level agreement had been reached and most likely [indiscernible] 6th of December, should get that. And that could also unlock some other lines that have been agreed with some of the bilateral lenders. So that could also come in, hopefully, [indiscernible] the foreign currency improvement in the country. As I mentioned, inflation has significantly reduced but there can be one-off increase in the coming months with the VAT rates going up to 18%. But in terms of external sector performance, the other areas that we need to share are the steady improvement in the work remittances side and also the tourism income. After October, we had $4.9 billion in terms of worker remittances. And even October, we had plus $5 billion and even the expectations for November is also, it's $5.50 billion. So that's a steady flow that is helping in terms of managing foreign currency inflows. And the tourism side also, the earnings up to October had been $1.6 billion and that is growing. That's the feedback that we get from our tourism sector-related customers as well. Gross official reserves have reached some healthy level. Officially it's $3.6 billion and we are seeing the exchange rate stable in the last quarter, managing between [ 325 to 330 ] level. Of course, this is about roughly about appreciation of 11% from the beginning of the 2023. In terms of policy rates, there had been a significant reduction during the year and, of course, including this month, actually earlier last week, the reduction in [indiscernible] policy rate by another 100 basis points. So all in all, we had seen, you see that the policy rates, how it has grown from September 2021, except during the 1 year period, it's grown from around 5% to -- I repeat that, by June this year, it'd be at 6.5%. So all in all, about a 10.5% increase in the policy rates, so we picked up to 16.5%. But since then, significant reduction, including the recent rate cut. It has now come down. So all in all, about 6.5% or 650-basis point reduction in the policy rates itself from that high peak of 16.5%. And that is reflected in the market rates in terms of the bills, which has pre-tax 29%, 1-year bills has now come down to 13%. And then AWPLR, that's where a significant reduction we saw from a high of 28.19% last year. It has come down to 13.94% earlier this year, previously it was 13.14%, again a significant reduction. So this itself shows show that AWPLR itself, at about 15% reduction of 1500-basis point reduction in AWPLR itself during this year. And that's one thing that our bank has set that scheme and also that is what regulator is also keen to see a reduction in the lending rates. Along AWPLR, they had been regulator-driven measures to ensure that overall interest rates are reduced significantly. So we have seen roughly about 150-basis point reduction in the last 2 months ending October and further reductions are expected. So that the benefit is passed on to the customers. Naturally, this will have some pressure on the NIM, our net interest margins of the bank but we need to ensure that the economy is revived, that benefit is passed on so that the credit growth can be basically improved based on those tools. Let me -- so that's the operating environment. And let me now go into the financial performance of NDB Bank and the group. Overall, we had gross income growing up by 38% year-on-year to LKR 102.9 billion, bank profit before tax, we had a significant improvement here overall 1,100% or actually tenfold increase in profit before tax to cross LKR 9.5 billion from the previous last year's 9 months. So that's significant. And also profit after tax, we ended up with LKR 5.2 billion which is 129% growth year-on-year. Our group level profit before tax also crossed LKR 10 billion, which is about 763% growth and profit after tax LKR 5.4 billion. In terms of total assets on balance sheet, of course, we saw balance sheet shrinking by 5%. This is mainly due to the exchange improvement, actually, the appreciation of Sri Lankan rupee. So we closed the September balance sheet at LKR 789 billion. In terms of loans, there's again, 13% drop, mainly due to the exchange impact. We closed at LKR 473 billion and also deposits, again, a 7% reduction, again, driven by the dollar -- actually rupee appreciation because about 28% of our deposits are in foreign currency overall. So as a result, because of the appreciation, the overall deposits had seen 7% negative growth. Despite the balance sheet being reduced, of course, the profitability side, I am going to emphasize that is where we have been focusing on the interest margins and also the fee-based income. So all that has contributed to a significantly higher profit before tax and also profit after tax. In terms of net interest margin, we -- 9 months, it was 4%, a slight improvement from 3.8% last year. ROE, 9.75%. Cost-to-income ratio, one of the lowest in the industry, 30.2% and the impair Stage 3 ratio at 9.18%. In terms of the capital adequacy, Tier 1 is at 11% and the total capital at 14.46%. Going to the detailed financial performance, in terms of income, income statement, you would see the gross income had 38% growth year-on-year and even the interest income, 44% growth from LKR 65 billion to LKR 93 billion. However, the interest expenses the growth is 61%, naturally because of the initial high rates, the one I mentioned earlier, the significant increases in the interest rates or along with that, that increased our deposit interest rate. So as a result, the interest expenses had a higher growth than the interest income percentage growth. So we had 61% expenses growth purely due to the interest rate hikes that have been happening. But that is expected to come down with the rates coming down gradually. So we see that our repricing rate is very high. I think most of the deposits are short term. So that's one advantage that bank is having as and when the rates are coming down. The repricing rate is much faster. So as a result, the reduction in net interest expenses would be faster than what is expected. So all in all, the net interest income, we had 10% growth from LKR 22 billion to LKR 24 billion, 9 months ended September. In terms of nonfund-based income, there again, we had a significant improvement in the fee and commission income. That is something that we have been consciously driving in a low margin scenario of the fee-based income as one of the key area. So that has grown by over LKR 1 billion year-on-year from LKR 4.3 billion to LKR 5.4 billion. The other nonfund-based income, there's a drop in the exchange fluctuation from LKR 4.9 billion to LKR 3.7 billion. And the total nonfund-based income rather almost remained at [ 9.3 ] because of the exchange impact, there was no growth but the area that within the control of the bank, we had good growth in terms of fee-based income. So moving on to the impairment charge, I think we see there, we had a significant impact compared to last year that the overall reduction, 37% reduction in total impairment charges from last year 9 months, we had LKR 22 billion impairments taken. Now that has come down to LKR 13.9 billion or LKR 14 billion. So that's a significant reduction compared to last year. Last year, it was mainly driven by the impairments over the assets, especially the ISB investments, SLDB investments, et cetera. Now the SLDBs that are -- you see that in rupees and there have been a certain reversal of [indiscernible] provisions as well there. But more importantly that, overall, we have been consciously building up the impairments even by the loan book. But as a quantum, there's a significant reduction, about LKR 8 billion from last year 9 months, to this year 9 months. In terms of impairment-related ratio, the KPIs on the quality of the book, impaired loans ratio from last year, it was our sales ratio, was 6.2%, which has now gone up to 9.18%, basically reflecting the industry-wide credit concerns. We believe that the peak has reached, so that, hopefully, things should improve from now onwards. Of course, some of the sectors in the economy are performing, actually getting back to the normalcy. But still there are sectors, there is a lag effect. Naturally, when a country has gone to almost 10% plus negative growth rates over the last 1.5 years, of course, some industries are picking up, for example, the tourism but there are industries which have a lag effect. So the impact of those still would remains and that might get reflected in the impaired loan ratio. But all in all, we see, we hope that the peak has reached and things are improving from now onwards. We also have done things to work on the recovery side, the remedial management side to ensure that this acute challenge is managed well. Impairment cover, that remains almost the same, 36.57% and the total impairment cover on the loan book, that has actually improved from 5.8% to 8%. And then the net operating income, we had 112% growth, resulting LKR 19.7 billion for the 9 months. In terms of managing operating expenses, I think that's where our bank has done very well despite the high inflation rates that we talked of about, 65%, 70%. I think our overall operating expenses, the growth is only 20% from LKR 8.4 billion to LKR 10.1 billion. Personnel expenses, of course, 17% increase. However, we have managed to keep it at 20% level. Total operating expense increased mainly due to the inflationary driven expenses, the fuel and energy costs, naturally, there were several price revisions that we all are aware of. So those are the main reasons why the cost has gone up. But still, in terms of cost-to-income ratio, 30.2%, I think compares very well with the peers. I think one of the best cost-to-income ratio that NDB has recorded even in this quarter. So all in all, the operating profit before tax, significant increase from LKR 790 million for the 9 months ended September last year, has gone up to LKR 9.5 billion. That's why I said it's more than 10 times growth. It's 1109% growth. Taxes, of course, again, naturally the subset of that, so LKR 2.4 billion taxes. So profit before tax, about LKR 7 billion. After income tax expenses, the profit for the period after tax was LKR 5.2 billion compared to LKR 561 million that we had in the first 9 months. So again, eight-fold increase in profit after tax. Of course, the total tax charge, substantial increase from LKR 228 million last year, 9 months to LKR 4.3 billion. So overall, the profit before taxes, at a group level, almost LKR 10 billion compared to LKR 1.1 billion last year. And profit for the whole 9 months, profit after tax at group level was LKR 5.4 billion. This, on the below that we have given the movement in the regulatory tax regime. So as you can see, a substantive increase in the tax rate. Of course, the interest rate remains at the NIM but the income tax level from 24% to 30% and SSCL, which was introduced at 2.5%. So total tax last year, the total tax rate was -- applicable tax rate was about 42%, which has not gone up, now gone up to 50.5%. So whatever the bank earned 50.5% basically is paid out as tax. So just to share that information on the tax rates. Now moving on to the balance sheet, as I mentioned, the balance sheet has had a negative growth rate of roughly 5% from LKR 833 billion in December last year to LKR 789 billion mainly due to the appreciation of the Sri Lankan rupee, against dollars because, as you can see, the below table, as you can see the currency wise, we're -- roughly about 23% of our loan book is in dollars and even 29% of our deposit book is in dollars. So in the balance sheet, our foreign currency, when I say dollars, it's the foreign currency exposures, it's a mix of currencies but it's -- foreign currency exposure is high. So when the rupee appreciates, naturally in the rupee terms the size of the balance sheet has come down. In terms of gross loans, again, it's LKR 580 billion versus it closed at LKR 514 billion. Apart from the rupee appreciation, we also are not consciously growing the book, especially in high interest rates, it was very challenging to grow the book. So in the first half we have been allowing the normal of attrition of the loan book without making any effort in terms of growing the book. Only a certain selected products we were concentrating but the things are now improving so that -- since the economy is also picking up, we expect the economic growth rate also to be positive next year. So as a result, we have been paying attention now from the second half onwards to consciously grow the asset book. But in the first half, it has been a conscious degrowth kind of a approach that we had given the high interest rate regime and also customers were also not sure about their future arrangement as well as that had little credit appetite, which was reflected in the banking sector overall, again, banking sector also an asset. On the loan book growth, there was a degrowth in the first half. Only in the last 3 months, we see a month-on-month increase and we see a similar trend in our loan book in the -- from the last month onwards. Deposits, again, about 7% drop. Main reason, again is, since 29% of our deposits are in foreign currency, the appreciation in the Sri Lankan rupee contributed to the drop in deposits. So that's about some summary on the balance sheet. These are some of the investor ratios. Of course, the share price has improved more than double from December level, December it was LKR 32, now as of September end, that has closed at LKR 68.7. Earnings per share has improved from LKR 7.65 to 16.2, more than double. ROE, again, more than doubled from 4.75% last year to 9.75%. And this should improve further, return on assets, pretax level from 0.26% to 1.5% and also the book value of the share from LKR 167 to almost LKR 180. In terms of price earning and all it remains the same, price-to-book value has improved from roughly 0.2x to 0.4x. So these are some of the investor ratios. In terms of capital adequacy, I think bank has performed well. These are all through internal generated capital and also conscious balance sheet management, moving on to a more capital-efficient assets. And in terms of our pricing also, we have used RORAC pricing, Return Risk on Risk Adjusted Capital base (sic) [ Return on Risk Adjusted Capital ], as a measure, so that whatever the exposure that we book we have been very conscious on capital efficiency management. So as a result, you will see the common equity ratio Tier 1 has improved from 9.34% to 11% by quarter 3. At the group level, we have 11.54% capital in terms of Tier 1. In terms of total capital ratio, again, more than 100-basis point increase in total capital. The minimum requirement is 12.5%. We are at 4.46% and at group level it is 14.87%. Statutory liquid asset ratios are at very high, very healthy level. Again, that has improved from 27% last year, while the minimum required is 20%. We are now around 38%. I think in terms of liquidity, almost all the banks have very high liquid ratios. Liquidity coverage ratio, again, 333% and quite high liquidity. Net stable funding ratio also at 141.66% whereas the minimum is 100%. So banks are, the NDB is quite liquid here and the graphs depict how the capital adequacy ratios have moved and how that has improved from the December level from 13.35% to 14.46% at the Tier 1 from 9.34% to 11.06%. So we will see that the 11.06%, the Tier 1 level, is one of the highest that we had, Tier 1 level, we have been maintaining since 2020. So over a period of 3 years, one of the highest Tier 1 capital ratio, again, thanks to our balance sheet management and also the internal capital retention that we did. So over the last 3 years, I think we had average one of the best Tier 1 ratios. In terms of LCR, again, you will see that how the liquid level from 2020 level, 157% [indiscernible] or the LCR ratio, total currency, it has gone up to 270%. So again, quite liquid in terms of over a period of 3 years also. I think during times of trouble, the liquidity and capital are the key things that banks would concentrate and we have been concentrating on that to ensure that we come out with a very strong balance sheet and a highly liquid situation. So you would see that 3 years how the capital ratios have improved and also the liquidity ratios. So moving on the way forward. Responsive and agile. Yes, we through turbulent time but as a responsive and agile bank, how you meet the future? So some of our key strategic priorities for the next 2 years that we have internally discussed and some of them are the, one is managing the NIM, net interest margin, especially in a declining low interest rate environment that is coming, how do we manage our net interest margin. So we have been focusing on that to improve on our margins. Then the fee-based income, again, a area that we have seen quite a good result, as you saw, a LKR 1 billion increase year-on-year. And we would continue to focus on that on the fee-based income, so that, that will enhance our revenue mix. And also another key imperative is on the asset quality and continuous focus on ensuring that asset quality improves and also the impairments on those will be reduced and the Stage 3 position is addressed. So that's where a lot of efforts being made in terms of strengthening the recoverability, in terms of improving our legal capabilities in recovery, wherever needed and that's where some of the positive developments in the legal framework has also helped. So and apart from that, how we incentivize our recovery officers, all that have been looked at so that I think the -- in terms of future, the concentration on this, the focused approach to ensure that more efforts are made to ensure that our impairments are managed, on the recovery side the asset quality improves. We also have set up a remedial management unit, which is proactively looking at potential future Stage 3 accounts early, nurture them, taking intensive care of them and ensure that the bank's position and the customer is also looked after well by having some very experienced RMs managing that. So that has also helped us to improve on the asset quality. In terms of loan growth, growth going forward, it will be a cautious loan growth. With efficient lending, as I mentioned, based on the RORAC, we're converting this asset with return adjusted capital. How -- whatever we book, we always ensure that underwriting standards are high and also whatever we book is capitalization. The other area that we are concentrating is on the cost rationalization and especially getting the -- reaping the dividends on our digital investments. We went for a co-banking upgrade, which is now operating from January onwards this year. So there are a lot more that we can get in terms of efficiency through the digital investments that we have made. So cost rationalization. When I say that, it's basically how we can get the best optimum results from this digital investment. And we have seen quite a good growth there. The digital transactions have gone up about 85%. But there's lot more we can do, though, I mean, banks' number of transactions over the last 5 years more than tripled . We have not increased our head count by that much. Actually, that's thanks to the digital investment that we have made, workflow improvements, the investment in the robotic processes and all, all those automations have helped us to be one of the most cost-efficient bank in Sri Lanka. And we will continue to drive our digital focus, empowering -- remain market focused. That is one of the key areas that NDB has been focusing and the ESG-related initiatives. Those would continue to have a balanced approach in whatever we do, it's all sustainable. And in terms of preserving capital, especially on the Tier 2 side, we have already made announcements and so far, good positive response for our Basel III compliant Tier 2 listed unsecured subordinated debenture issue of LKR 5 billion. So we have made the announcement that book building process is happening and the issue is opening on 5th of December. And these are the features, the total AER at 15%. There are 2 types: one, giving annual returns, interest payment annually. So that's AER at 15% and the Type B is again 5-year tenor, quarterly interest is [indiscernible]. So AER at, again, interest rate quarterly is 14.22%, again, AER is 15%. So that would also improve our Tier 2 total capital ratio once that is finalized. So, that's basically the update and about the way forward. And we are quite happy to take on any Q&A. So please feel free to share your questions, put it in the portal here and we would read the question and also provide answers and that's myself and my team would come in to share whatever our thoughts on your questions. So over to you to raise your questions.

Okay. So there's one question. I'll take that and maybe the second one Niran on the quarterly interest rates area in '24. But I'll take the first one that is, can you explain the proposed changes to the single borrower limit? And how that will impact the smaller banks? What is NDBs' strategy with the changes? So I think this is yet to come but Central Bank has shared a paper with the banks for our views and most likely that would be effective from mid of next year. We have a single borrower limit, which was earlier linked to the total capital and went up to about 30%, 32% based on either group borrowings or the single borrowing limit. Now that is getting reduced to the Tier 1 capital and also at 25%. So that's a significant reduction in overall bank's single borrower exposure. And where the groups are also defined there are more consultative kind of approach. So therefore, yes, there will be exposures over the current single borrower limit. So some of the groups might get affected. So there is a time frame of almost 3 years. That's what has been indicated, have been agreed, to ensure this is implemented. However, yes, there will be a impact, especially for the smaller banks. And on the other hand, there may be single borrower exposures on the larger banks, still are getting affected today. Everybody is getting affected, it doesn't matter that they are a smaller bank or a larger bank. But that also create an opportunity for some of those who are not banking with larger groups, when some banks' exposure caps are reached, an opportunity to basically be part of that by getting into that group but it's up to conglomerate or a group to see whether rationalizing the number of banks. I'm sure some of them, we don't want to bank with several banks. So any corporate would also like to be vetting with about 3, 4 optimum level of banks. So that's something that one has to manage. But yes, that would create some impact going forward to the industry. So we have shared our views with Central Bank. Niran, will you take this question about, comment a bit about how you see the rates behaving in 2024?

We think that there is still room for the interest market interest rates to come down, because if you look at the policy rates and with the recent reduction also in the last policy meeting, I think the market rates have not yet adjusted to that level even to the previous rate cuts. So what we feel is that as CEO mentioned earlier, it -- once the IMF's Board approval is received on the 6th of December, it's very likely and also the committed funds from the ADB and the World Bank, which will also, which will actually wipeout the shortfall in the market. So that will also signals the government and the Central Bank also to be more restrictive in their market borrowings. So that instant pressure will be somewhat ease of to the markets and we feel that the rates will get adjusted down much more, much faster, than we saw it in 2023.

Thanks, Niran. There's another question, how has the dollar liquidity been in the recent months? You can add on, Niran. Of course, we have seen quite a good liquidity level. I think for that matter, almost all the banks, I believe, are highly liquid in terms of dollars. One reason is that, okay, the appetite for lending is also low but moving forward the import controls that are in place as well, all in all, I think dollar liquidity wise, I think the entire banking sector is quite positive and so are NDB. I think, Niran, you want to add anything?

I think, as you said is, I think the markets are quite surplus in U.S. dollars. One of the main reasons we see the low credit appetite. And at the same time, I think all our correspondent banks and the other respective foreign banks also have extended their bank limits, interbank limits to all the local banks right now. So those limits are also available. So because of the market activity also has come to almost to a normal levels compared to the pre-economic crisis situation. So because of that the dollar liquidity is fairly strong in the local market right now.

There's a question on what is the expectation on NIM, net interest margin moving forward? I think anyone want to -- you can go ahead.

I think overall, banks, all the banks in the market have shown a very high interest rate NIMs recorded. There are banks which are at very, very high levels also, that is to be expected because of the, #1 is the high-yielding assets in the early part of the year and also the -- and now it's actually with the high cost of funds also easing off, many banks have shown some high interest rates yields. But we expect it to come, I mean, like to gradually come down but some of the banks who have recorded relatively lower interest rates might move marginally up. But overall, we see that in the range of around 4% to 5% yields could be a level which we expect it to be in the market.

Next question, can you comment a bit about what is happening in relation to debt optimization negotiations, especially in relation to the potential time lines? I wish I have a proper answer for that. I think the negotiations are ongoing. I think the banking sector also has presented our proposal to the government-appointed debt structuring agent. So there are discussions happening. I think everybody is -- expectation is good to get this finalized soon rather than get dragging on. We saw [indiscernible] structuring proposal, I think at last moment got delayed again. So we don't want that kind of a situation for Sri Lanka. So, again, the important expectation is to get that sorted soon. And then, there's a question, Niran, probably you can take this. Has the Central Bank [indiscernible] activity in both the foreign exchange and government securities market, is there more volatility as a result?

Considering the foreign exchange market, I think mainly they are a net buyer because they do the correcting buying where -- whenever there is a market surplus they buy and then to build up their reserves. Because I think there has been little bit -- some sales happened in the October, to mainly to manage the, some of the banks, SLDB positions, especially the State Banks around that. But right now, I think they are in the correct part, again, by buying dollars. However given in the last couple of weeks, obviously they're in the market. But obviously, they don't sell, they want to safeguard the reserves, I think. But it has not brought in any, any volatility as such because the, what happens is that actually if there is -- they see a surplus in the market, then they come and absorb it, so that rightfully is correct thing to do. Regarding the interest rate surplus, I think we haven't seen any kind of a intervention or any kind of a buying or selling from their side. It's basically the demand and supply in the market.

Okay. Thanks, Niran. There's one question, about the expected impairment percentage for next year. Again, very difficult to provide, I mean, direct answer. But again, the ways things are improving and also the way that the banks have built up our impairments, our impairments also 2 types. One impairment related to the investment portfolio and the impairment related to the lending portfolio. So in terms of impairment related to investments, the investment in SLDBs, I think that has been taken care of now. We -- has been building functions on that but that got reversed also with the assets being replaced with the rupee bonds. So that's the Day 1 impact, again. But in terms of the sovereign bonds, we have been building up our impairments and all in line with the market. We have been providing quite a substantial figure on that and all in line with the market. So in case the debt optimization happens soon, based on the way that these are treated, there can be impairment reversals as well. So -- but very difficult to comment without knowing what the debt optimization, what's the debt structuring program will be. So that is why as a conservative bank, I mean the entire industry has been building adequate provisions in line with the industry standards and also in line with the consultation with the CA Sri Lanka. So we have been building. So it's a very conservative impairment building that has been happening. So at the moment, the structuring is announced, I think then that we know that what could be the positive or further impact, unlikely a further impact but we would know about that. In terms of loan impairments, I think bank have been building quite a substantial impairments here. And there is a point of a impairment revenue buildup. But once you start, already, we have started in terms of the recovery and that's where that pool can be used, the impairment can be used as a means of negotiating solutions to the customers. And that's where the point, I mentioned early in terms of legal framework was there, there have been some landmark cases also which recently concluded on how the third party mortgages are all are, now can be used for the recovery effort. So these are some positive developments. So as a result, in terms of loan impairments, I would say, since we have seen probably the highest level, maybe a little bit of addition. But I think the downside in terms of release of provisions going forward, probably from next year when the economy picks up and once it's related to the right sectors, where the credit is, if not, I think we can see some reductions in the associated impairments. There's a question about, is there a possibility of cash dividend payment in next year? Or still regulator restrictions apply? Suvendrini, do you want to comment? Regulator restrictions are...

Yes, regulator restrictions remain and, of course, we will evaluate and based on industry and based on our profitability, we will take the necessary decisions with the relevant Board approvals.

There is a question on, do you believe economic growth in 2024 with result in trade balance of payments [indiscernible] and where we want the exchange rate as of end 2024? Lot of pressure-related questions, so I'll pass it on to Niran.

I feel that, I think this trade gap, I mean, it will get narrowed, I think. It should continue even though the, almost all the import restrictions have been taken off but still, we haven't seen a huge demand from that side. But at the same time, we have seen a slight decline in the export sector, mainly driven from the garments side. But other sides, we have seen some growth and also the work remittances and the tourism is picking up. So with that what we feel is that the balance of payments, I think we might even post a surplus but trade and at the same time, then the trade gap should narrow over the next over the next -- over 2024 as well. So which can lead to a exchange rate, I mean, like for a stable level, we, of course, still hope that the exchange rate can appreciate a bit, because I think that will really benefit the country and the people also. So we don't expect much of a depreciation and probably a very stable level as of the current levels should maintain over the year.

Thanks, Niran. Last question on -- probably Sanjaya can take this. How is credit card spending and personal loan applications in recent months?

Yes. The credit card spending has slightly increased, especially during the season, of course, taking advantage of the discounts and expecting -- consumers expecting the bonuses to come in and then settle them. We've seen the seasonal increase, the spikes on and off. In terms of the personal loan applications, there is no huge demand. Of course, from the bank side, also there are more stringent underwriting status with the net tax increase, as well as I think the net take home pay has come down. Therefore, other than, the applications are also coming down due to that restriction.

Thanks. There's a question, probably Vinoj can take this. What explains the growth in fee and commission income by such a large amount?

So I will narrow that down to the improving economic activities and that's been one of our focus areas. I think that we have seen in the last 9 months improving economic activities is driving the imports also in a way, I think if you compare to the last previous year. And also NDB always been a very strong, it's a trade bank, which is very strong in trade and that's one of our focus areas. So that -- I would narrow it down to those 2 reasons, for the improving trade and commission.

So actually these other questions? Do you have any other questions? So these are the questions that we have received. I think we have provided all the clarifications. So with I'll that conclude the webinar. Thank you very much for taking part and for the opportunity to share our numbers as well. And of course, we had closed the year well. So we have ensured that -- there is another, 1 more month to go, so that we will close the year well and paving the foundation for a good growth going forward from next year onwards. So with that, thank you very much for taking part in our investor update. And thank you for your questions. And we that we'll conclude the investor update. Thank you.