PT Bank CIMB Niaga Tbk (BNGA) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to CIMB Niaga Third Quarter 2023 Earnings Conference Call. My name is Teguh Sunyoto from Investor Relations Division. I will be moderating the session. Before we begin, I would like to remind everyone that today's presentation material may include forward-looking statements that are based on current management estimates and are subject to uncertainties. The actual results may differ significantly due to a variety of factors. By this time, I believe you have received the materials for the call submitted by our Investor Relations team. If not, you can access the material on our Investor Relations website, investor.cimbniaga.co.id. With me this afternoon we have 5 BOD members here. We have Ibu Lani Darmawan, our President Director and CEO; we have Pak Lee Kai Kwong, or Pak KK, Strategy, Finance and SPAPM Director; we have Bapak Rusly Johannes, our Business Banking Director; we have Pak Henky Sulistyo, our Risk Management Director; and later we will also have Pak John Simon joining, our Treasury & Capital Markets Director. As usual, we will begin today's presentation with a presentation from Ibu Lani Darmawan, our CEO who will share some highlight on the company progress and also result, followed by more detailed analysis on our financial performance during the quarter by [indiscernible] KK. And also during the Q&A session, all participants of this call will have the opportunity to ask questions to our management directly. But you can register to ask question at any time during the call by sending your name to the [ host ] in the chat box. Okay, without further ado, I would like to hand over the session to Ibu Lani Darmawan for her presentation. Ibu Lani, [ time ] is yours.

Thank you, Teguh. Good afternoon, everyone. Welcome, and thank you for joining our third quarter of 2023 earnings CIMB Niaga today. Hopefully we are all healthy. So let me start with chatting with you on some updates on our presence, digital capabilities as well as the sustainability development. So CIMB Niaga is second largest private bank in Indonesia with a presence in 99 cities with 411 branches, 3,952 ATM machines, and a growing network of almost 500,000 EDCs and QR merchants or QRIS. So we are expanding our digital capabilities for continued better customer experience. Our digital users base is growing. We have around 2.9 million mobile banking users, 1.8 million internet banking users and 5.5 million OCTO Pay users. OCTO Pay is our e-wallet. This data is as of September 2023. On the sustainability front, I can report that as of the end of September 2023, our sustainability financing has reached IDR 52.6 trillion which represent 25.6% of our loan portfolio. The expansions of our sustainability finance portfolio reflects our commitment to create value for our customers, also our stakeholders by providing solutions to promote sustainable development. Let's move to the next page. Okay. On a macro side, as we all know, BI has just increased policy rates by 25 basis points to 6% recently in order to defend rupiah which has depreciated in recent months, especially in the light of strengthening U.S. dollars and rising global energy prices. So this is despite the fact that domestic inflations remains within the BI target range. The policy rate hike will almost probably keep the bank industrial costs of deposits on the rise in the short and medium term. And at CIMB Niaga, we will also continue our focus on expanding sticky, low cost CASA to minimize the impact of interest rate hike, while growing profitably in the consumer and SME fronts as 2 of our key segments without increasing the credit risk, while also maintaining a good asset quality indicators. The next page. On banking industry, banking industry loan growth are 9.1% year-on-year in August 2023. We don't have the September data yet, so this is an August 2023 data. Meanwhile, the customer industry deposit increased 6.2% year-on-year. So banking liquidity was still relatively ample and reflected on the LDR of industry of 83.4%. Industrial asset quality remains manageable. NPL ratios was reported 2.5%. In terms of interest rate, the rising trend in lending rates has paused with limited room to further reprice on the loan rates, eventually. However, deposit interest rates, particularly time deposits have continued to rise, putting pressure on overall industry profitability and NIM. Let's look at the next page, the [ next ] -- well, on the Page 7, on CIMB Niaga. Despite the ongoing global macroeconomic and geopolitical challenges, I am pleased to report that CIMB Niaga had a strong performance during the first 9 months in 2023. Our continuous focus on providing a superior customer experience resulted in solid organic profitability growth, as you can see here. Our customer base -- we start from the left side. Our customer base, the key driver of our future revenue growth is actually growing by 17.5% year-on-year during the third quarter 2023. And subsequently our OCTO Mobile user base has also grown by 15.3% year-to-date. And likewise, customer engagement through our applications OCTO Mobile continue to grow significantly and as the evidence by 97.3% growth year-on-year. Now [ this ] is the result of those combinations, including the discipline in account and portfolio management as well as asset quality management. NPL declined further to 2.4% in September 2023 from 3.6% on September last year. And finally, for net profit increased by 27.6% year-on-year resulting in an increase in ROE to 15.4% from 12.9% the previous corresponding period, while maintaining a good capital ratio and also liquidity. Next page. Now we continue to execute our strategy in order to generate sustainable financial return to our shareholders. As you're aware, our 5 strategic priorities are as follows. The first one, playing to our strengths. We'll continue to accelerate profitable growth, especially coming from SME consumer and those are allocating our capital to the areas with the highest RAROC including the income as well as the income from Treasury. The second is on CASA. A sustainable CASA growth will always be our top priorities and focus as we leverage both our digital partnerships as well as our physical network. This can be accomplished by growing our customer base, particularly our retail consumer base. In fact, we deliver 66.7% CASA ratio the third quarter and growing CASA. The third one is discipline in cost management. Our bankers prioritize cost containment and will continue to do so. We foresee more cost optimization opportunities in the future to further improve our cost efficiency, so resulting efficient CIR of below 45%. Number four, preservations of capital and balanced risk culture. Our focus on capital preservations and risk culture has resulted in stronger capital and improved risk indicators over time. Last one on number five, leverage information technology. We'll continue to use the cutting edge technology and innovations to enhance our customer experience and digitize our business model as well. On the next page on 5 pillars strategic results. We think that the 5 strategic pillars are still relevant and applicable, as well indicated by the improvement in a long-term key performance metrics shown in this slide as a journey from 2018 to now. We start from pillar 1. The loan contribution from the high RAROC retail segment, including consumer and MSME increased by 10% to 45.8% in September 2023 from only 35.9% in 2018. Second, [ under ] pillar number 2, CASA ratio expanded significantly by 14.1% during the past 5 years to 66.7% from 52.6% in 2018. [ Under ] pillar number 3, CIR declined steadily by 6% to 44.2% from 50.2% in 2018. [ Under ] Pillar number 4, our capital ratio has increased from 19.7% to 23.8% despite distributing 60% of profit to the shareholders. Meanwhile, our NPL has decreased from 3.1% to 2.4% Now under pillar number 5, we managed to increase digital penetrations from 93.6% to 97% by leveraging our industry- leading digital capabilities and innovations. So overall, improvement in key performance metrics resulted in increase of ROE to 15.4% in the first 3 quarters this year from only 9.5% back then in 2018. So the next page. In light with the recent macro development, we have revised part of our 2023 guidance. We continue to estimate loan growth between 6% to 8% by the end of this year, while NIM is expected to be in a range between 4.45% to 4.55%. This reflects the recent policy rate hikes as well. And as a result of our conservative provisioning and proactive asset quality management, we have upgraded our cost of credit, our CoC guidance to between 1.1% to 1.2%. And in the meantime, CIR is expected to remain below 45%. So overall, with all those adjustments, we believe our ROE will be between 14% to 16%, and will be achievable. Now I'll turn our presentation to Pak KK, our CFO, who will go over the financial results in further detail. So KK, go ahead. Thank you.

Thank you, Ibu Lani, and a very good afternoon, ladies and gentlemen. Today I'll take you through the 9 months 2023 results for PT Bank CIMB Niaga. As usual, I will begin with the financial position, the consolidated balance sheet. Look at total assets first. Flat quarter-on-quarter, while year-on-year and year-to-date, respectively was just over 7%. Quarter-on-quarter you will see that there was a shift from low yielding cash and short term investments to investment in government bonds and other marketable securities, while loan for the quarter remained flat when compared to the second quarter. Year-on-year investments in bonds were up 19.1%, while loans were higher by 5.2%. On the liability sides, on deposit we had greater success building our CASA in the third quarter, up 7.3%, very strong quarter from the wholesale side, and 9.8% year-to-date. While SA we were flattish, but for the year we still gain 7.6%. Now time deposit was much lower by over 7% in the quarter, resulting in an overall drop of a total deposit of 0.2% for the quarter. For the year deposits were up 3.6% Next to the P&L. Earnings continues its upward trajectory with PBT up 1.2% in the quarter and 25.8% up year-on-year. However, the earning dynamics changed or shifted towards improving asset quality that led to improving costs of credit. Interest income did improve 1.1% for the quarter and 19.2% year-on-year. By the same period we saw cost of funds, right? Especially cost of deposits increased 6.3% in the third quarter, and 61.2% year-on-year. This resulted to an NII contraction of 2.2% in the third quarter, and when compared to 1 year ago, year-on-year increase of just 2.1%. NoII was lower by 29.4% in the third quarter, largely due to dissipation of trading opportunity, weaker Treasury income and lower bad debt recoveries. Year-on-year [ NOI ] still gained 5.1%. As a result of this weaker NoII total operating income were lower by 10.9% in the quarter, even though year-on-year we continue to gain strength, improving 3%. Next to expenses. Sorry, the page before this? Yes. Operating expenses was well contained. We managed to keep expenses lower compared to quarter -- go down 2% versus the second quarter and up by just 2.6% year-on-year, creating a positive JAW again -- once again at 0.4%. Okay. Next page. Now here are some key ratios. Actually, I'd like to focus on a couple of things here. ROA, ROE remained strong even though it contracted slightly. NIMs became more challenging with rising deposit and funding cost, coupled with a decline in fee income contribution. We saw cost-income ratio increased to 46.3%. However, year-on-year cost-income ratio continued to improve with a positive jaw, now at 44.2%. Now a lot of positives of our P&L or our PBT really came from asset quality, right? The gross NPL, net NPL, LAR, impairment ratio, loan loss coverage, all improving quarter-on-quarter and year-on-year. This resulted in significant reduction in cost of credit, especially benefiting in the third quarter for us. Next page, please, I think 17. Yes, this one. Okay. You'll see here for the first time in 5 quarters we saw both operating income and [indiscernible] contracted. However, with much lower provisions driven by really the much improved asset quality [ third Q ] PBT contribution is at its highest when compared to -- in the last quarter, continued to derive us ROE of above 15%. And next page. Okay. Year-on-year NII was up 2.1% in spite of the NIM compression of 10 basis points. Our balance sheet actually expanded 7.1% during the same period. Now, compared to the same quarter last year, loans yield improved 99 basis points. So [ they ] managed to reprice some loans up, but costs of funds really is the one that is moving up much faster at 136 basis points. So these are the main reasons why when compared to the NIM that it's contracted 44 basis points compared to the same quarter from 1 year ago. Next page, please. Okay, this is NoII. NoII were lower after 2 very strong quarters. We really had a very strong first and second quarter. NoII it started at 29.4% largely due to weak Treasury and recovery income, while for the year we continued to improve by 5.1%. Next page. Sustainable cost management continues to help us drive costs at a manageable level quarter-on-quarter down 2.2%, year-on-year up 2.6%. In spite of personnel costs up 8.7%, rationalization in establishment, technology, [ gen ] and admin expenses continue to help us fund our activities to grow the business. So we continue to reshape our balance reshape our ATM and branch network for more structural cost savings, or permanent cost savings going forward. Next page, please. Now this is the loan performance, pretty flat in the third quarter with consumer and SME recorded growth of 1.2% and 3.3% respectively, while corporate banking and commercial banking declined slightly by 2.5% and 0.2% respectively. Year-on-year, all segments recorded improvement, contributing to 5.2% year-on-year loans growth with SME leading a way at 8.2% growth. Next, over to deposits. Our CASA franchise expanded, improving CASA ratio to 66.7%. This was a result of fairly strong quarter for the wholesale bank site for CA, up 7.3%. However, SA was flat as retail begins -- I believe that retail deposit begins -- competition [ for it ] begins and intensify already. So in spite of fairly flattish quarter, year-on-year deposit continue to expand at 6%. Next. Now this is getting interesting for us actually, loan at risk, right? If you look at the bar chart on the top left, you see the NPL ratio from 3.6%. Today we are 2.4%. Special mention, 5.9%, today we are 5.6%. Category 1, our [ COVID ] restructured loans a year ago was 7.8%, now we are 4.7%. So asset quality, loan at risk continue to trend downwards, exactly what we wanted to do or set-up to do post the pandemic. Cost of credit, as a consequence, you'll see that, that was a 1.5% to 1.8%. Now it's about 40 basis, a big drop. This may not be a steady state for us. We do foresee -- Ibu Lani did allude to that, that our guidance is still about 1.1%. So for this quarter, yes, the cost of credit was actually low. But in spite of low provisions, you see our provision coverage continued to increase. The coverage continues to increase because the NPL keeps coming down, right? 267% now is our NPL coverage, impairment coverage of 110% still, and coverage for loan at risk still about -- just over 50%. On liquidity and capital, again, way above the regulatory required liquidity capital with LCR at 250%, NSFR close to about 120% level. Loans to deposit ratio is about 86% right now. Capital adequacy, we continue to derive profits from our franchise. Now CA is up to 23.8% already with RWA consumption because of the loan contraction now down to 191% -- about -- 192%. That's it for a summary of that financials. Maybe I'll just pass it over back to Ibu Lani for final remarks.

Well, thank you, Pak KK. Before we begin with the Q&A, I'd like to make some few remarks about our results and as well as our future strategic priorities. So the first one is that, in the first 3 quarters this year, we generated a strong financial performance with an improved ROE to 15.4%, up from 12.9% in the same period last year. And we managed the business well throughout the quarter despite being conservative on loan growth due to anticipated economic headwinds as well as concentrated on asset quality, on liquidity, as well as on cost of deposit. The third one is, our cost control remained solid, resulting in positive JAWS and efficient CIR below 45%. In line with the proactive asset quality management, conservative provisioning was also maintained. So gross NPL declined to 2.4% from 3.6%, while NPL coverage increased to 267.1% from 208.8%. So our core focus areas moving forward are growing customer base and CASA, sustainable asset quality improvement and deeper digital engagement for better customer experience and as well as efficiency. And finally, we believe that our revised guidance is attainable. And going forward, we are confident that we will continue to deliver a sound financial result while successfully executing our strategy. That brings my presentation to the end. So let's get to the Q&A. Over to Teguh.

[Operator Instructions] I think we already have a few questions here. Probably I will read the question from the chat box first before I open the line for direct question. I think we have a question from [indiscernible] from Citi. So the question is, he want to ask what is the plan for the next phase of growth? We have the number one question. And then ROE turnaround is impressive, but do you see that gap with Big 4 banks to close further? Do you think it is time to look inorganically to accelerate growth? And would you be able to share OCTO number for 2024? I think that's all the questions.

Yes. Can you repeat from the first one? First the [ growth ] -- from [indiscernible]. What is the question?

He was asking about what is the plan for the next phase of growth?

Okay. Let me take that. Yes. Thank you for the questions, [indiscernible]. So as I explained earlier that the strategy still remains reasonable for us looking at the results as well. So we continue to grow and to push the business towards retail and SME. But of course, at the end of the day, the backbone CASA will be our focus. If you see, the loan growth is actually a little bit lower in Q3 because - which -- we know that, and then we deliberately -- looking at that, if we cannot get the reasonable pricing, we will not practically -- deploy the loan practically. So we will remain our focus in consumer and SME and several high RAROC businesses, and of course, CASA. So we will not change that.

Maybe I can take the next couple of questions. Yes. Is there a widening gap with the Big 4? I think asset-wise, definitely it will continue to widen. That is inevitable. I think the balance sheet is just getting massive. So we maybe perhaps not compete in terms of balance sheet growth, but I look at the profitability of our business, of our performance based on our ROA and ROE. Our ROE, I think we may be even at #4 already. ROA, I think we already [ rivaled ] the Big 4, except for that one, Blue Bank, right? So I think the gap in terms of ROA, ROE is not big as this is the asset size. [indiscernible] This is the -- profit numbers are quite different. So our shareholder value is really on the return on our equity. Whether we will be looking at growing inorganically, yes, we do look at opportunities, but it has to be the right price, right, because how much we will want to invest in the business or invest in any opportunity will depend on whether it's ROE accretive or not, whether it's over 1 year or over 5 years. So we will -- we do look at opportunities. For 2024, we continue to be very ambitious. I think Ibu Lani alluded to that, but we're not going to be silly and start just growing our balance sheet to become a bigger bank in 2024. We will look at ultimately what delivers us a better ROE. Ibu Lani, do you have anything else?

No. I think as explained earlier as well, 2024 will be a little bit extraordinary year for Indonesia as well as the election here. So when we talk to our clients, especially for corporate, there will be a little bit of a wait and see. So again, we will be focusing on -- more into the SME part. As you see that the result -- even we start -- this year, for example, the growth is actually there, and we are taking market share while internal asset quality is still manageable. So I think it's more relevant again for 2024 that we continue to focus on consumer as well as the retail SMEs. I think that would be for [indiscernible], right?

Yes. Let's move on to the next question still from the chat box. We have questions from Donny from Syailendra Capital. The question is, what is the reason behind the elevated share in the third quarter? And what is the expected [indiscernible]…

Pak KK, you want to take [ that ]?

in the next quarter?

We're still below 45% though. That's our guideline.

Yes. Thank you for the question, Lani. Yes. So share has 2 components, right? So it's cost as well as the income. The cost side, not an issue. Cost actually, we are down 2%. I think the big driver for the increase in the ratio is the income. So we saw NIM compression in the third quarter largely due to the higher cost of fundings, right? Bank Indonesia has not increased interest rates since January, right, and all the way to October. Last week was the first time we saw an increase. So we have not been also repricing up the loans too aggressively. Now with the rate hike, perhaps we can do that. So we saw deposit rates keep continuing to go up. We thought we turned the corner in the third quarter -- in the early part of the third quarter, but come end of third quarter there was so much competition for deposits. So overall, deposit costs continue to go up. So on the NoII side, right, a lot more recoveries in the second quarter. Third quarter trading income as well as Treasury restacking income kind of disappeared with the interest rate hikes. We did very, very well in the first 2 quarters to our Treasury and Markets business. So that was the main reason why the cost-income ratio went up. So not so much of the cost, but really the income was a little challenging.

The next question is from [ Samuel Hu ] from [indiscernible]. Question is, do you think loan yields have picked in the quarter? Or are we expecting any further benefit?

Yes, let me take that. Well, thank you for the questions, Samuel. So I think it is not a big -- in terms of the loan rate, definitely, especially with the hike -- interest hike from Bank Indonesia. And it seems that cost of fund will still be on the right side. So we can see -- we can start to see in the market as well, banks start to increase the loan pricing.

Yes, I think with the rate hike also, right, in October, potentially maybe other hikes as well, so loan yields have not peaked yet. I think we -- I would say that we were very much a follower in loan pricing, right? And if there's opportunity for us to increase rate, I think the loan yields will move up. But at the same time, we do believe also we have not turned the corner yet on deposit costs, and I think deposits is going to be very, very competitive, especially coming in the third quarter and also -- fourth quarter and going into the first quarter next year.

Now let's take a question live here. We have Kresna Hutabarat from Mandiri Sekuritas.

A couple of questions from me. [Indiscernible] first and -- yes, I'd like to ask 2, 3 questions. My first question is actually on the -- a bit more color on the loan growth trends in the third quarter? So just how much of that quarter-on-quarter trend in corporate and commercial was driven by external factors such as pricing competition and maybe utilization levels by customers? And how much is actually driven by internal factors such as write-off or risk management? That's my first question. Second question is actually on liquidity. What would be your expectations on benchmark rate for the remainder of full year 2023 and for full year 2024? And more importantly, what is your view on the new SRBI instrument? Do you see opportunity actually including a secondary market for SRBI? Or do you reckon there is a higher risk cost of fund from SRBI? And my final question is a bit of housekeeping. Could you remind us again what will be the medium-term NPL coverage appetite for CIMB Niaga? And how long do you reckon the bank will take to get to that level?

Well, that's -- I think I'll ask Pak KK for the -- sorry, Pak Rusly for the loan growth trend on corporate and commercial. So the second one, I'll ask Pak John for liquidity and Pak Henky for the NPL.

Let me touch first on the loan growth between commercial and also corporate bank. I think we've seen a strong growth in corporate rate in the first 2 quarters. I think I believe it was like year-on-year in the low teens, 12% or 13%. So -- but we see some trading off on the third quarter mainly because there's a one-off big repayment in the acquisitions of particular [indiscernible] right? [ ANI ]. That's a quite significant amount. That's the main reason, I guess, in terms of the lower growth year-on-year for corporate bank because of the one-off transaction. I think we -- in terms of commercial bank, we continue to remain growing that quarter-on-quarter. I think -- year-on-year, I think it's a bit flat, but I think we continue to rebuild our asset quality in commercial bank. And we remain -- focused growth remains on the FMCG, TMT and logistic area. This is the highly resilient sector. I think going forward, we continue to grow. Also looking at our asset quality, if you see, as what alluded earlier by Ibu Lani and Pak KK, the CoC improvement and the asset quality improvement, both in commercial and corporate bank is remarkable. So we'll continue to do that. Obviously, that comes with being prudent in terms of onboarding the right customer, the right transaction into the bank. And we hope we continue to grow. I think the forecast for the fourth quarter remains strong.

Liquidity and…

Liquidity and SRBI?

Okay. With regard to liquidity, actually, we were just invited by Bank Indonesia, APERI and the Group [ ANI ] yesterday night, the Minister of Finance, to just give a brief touch of the recent development. Overall, we don't see a liquidity tightening in the market. SRBI, yes, it is issued, but the main reason for SRBI to be issued is to -- I think, in anticipation of the interest rate hike as opposed to increasing the 7-days Reverse Repo which is the benchmark, right? BI would like to create this term structure by creating a bridge between the 7-days and shorter - the short-term government bonds and hence, the SRBI effectively not having to change the benchmark rate at 5.75%. And hence, we see a very attractive SRBI offering being put to the market. With regard to secondary market, it is something that needs time because -- this is something that we are just doing it for a short while, right? BI also mentioned, they need to also make sure that they have enough inventory to be able to -- I guess, at the beginning, a new instrument, BI would be the one that need to be the market maker -- the main market maker, and they need to make sure that they have enough in circulation first before they can -- before secondary market can be created. Maybe one thing that we also have mentioned to BI is that if you want to create a secondary market -- robust secondary market, the auction frequency need to be reduced from twice a week to less than that. So it's still work in progress. Liquidity tightening by interest rate hike. Of course, we're not saying that to control the -- but the main reason for the increase of interest rate is to defend rupiah, right? The way Lani mentioned it is this is a mixture of a sweet tasting medicine and the bitter tasting medicine, right? So the bitter testing medicine is the higher interest rate that needs to be accepted by the market. But then BI also has come up with all these more loosening measures such as the reserve requirement incentive, provided we give our funding to the so-called targeted areas.

Yes. So overall, I think on the benchmark, our liquidity is still quite expensive.

Yes. We just need to -

Yes.

Yes, Lani. We need to pay more, right? Because that's -- because interest rate in the U.S. is also higher for longer. That's the theme of the [ day ] now, right? That's the flavor of the day, flavor of the month maybe. So -- and hence, we need to make sure the interest rate differential between rupiah and dollar need to maintain. And hence, the feedback from us also with regard to the pricing, we -- most likely, we'll see an upward adjustment of both funding and lending.

So I think in overall, the cost of fund will still be high, but you're also asking for 2024. So I think we need to restrategize the balance sheet and our liquidity as well to be more on deposit side next year, to be able to manage the overall cost of funds for the bank. That will be the plan for next year. On medium-term NPL, probably Henky can cover?

Thank you, Lani. Thank you, Kresna, for the question. Your question is about whether we have any target for NPL coverage ratio. We don't have exact target for NPL coverage ratio, or rather we don't look at NPL on isolation because we look at NPL, GIL, special mention, and on account-by-account basis, the collateral coverage and including on retail on a portfolio basis. So the NPL -- so we make sure the provisioning is adequate on all of this. So the NPL coverage ratio hence become the outcome or the result. But I guess, for the near future with the post-COVID, and we can see at the moment, and historically, above 200% for NPL coverage ratio is like the norm for the new [ vision ].

The next question comes from Ben Lim from Macquarie.

Can you hear me?

Yes.

Yes, we can hear you, Ben.

My first question, just around your deposits. I can see there's a big drop in your time deposits, right? Was that a technical release? Or perhaps is that tied to the big repayment on the wholesale side, just trying to manage your cost of funds? And should we expect that to reverse into the fourth quarter? Or is there room for you to manage liquidity and your cost of funds from that perspective?

Yes. You're right. The deposit itself -- the whole deposit is actually increasing, but the time deposit is actually dropping quite significantly. That's by design, of course. And the objective is that [indiscernible] to manage the cost of funds. But of course, we also are aware and manage the liquidity within the bank as well. So we can see the LDR and SFR and et cetera is actually within a very ample ratios.

And is there room for you to allow the LDR to go higher? Or are you more comfortable at these levels?

Yes, I think that's quite unavoidable currently. Just what John explaining that the government is actually absorbing some of the fund in the market and is expensive and then the [ rate ] hike and et cetera. So I think we still expect a little bit more hike in terms of deposit rate. So that's why our focus is actually more on CASA. So we continue to keep increasing the CASA especially, but drop a little bit on time deposits.

Yes. So on LD, I think we are comfortable at the 85%, 86% level at this juncture. So we just need to ensure that for any loans growth, we get the deposits to come in. Basically, the loans has to be supported by deposit growth. So you can also see that we have -- we are investing a little bit more in bonds. So it's better for us to keep an LDR ratio at about 86% right now.

And I don't think it came across clearly, but what is your NIM sensitivity to rate hikes? And perhaps even if the rate cuts next year, what would your NIM sensitivity be?

John, you have the PVBP, no -- sensitivity number?

I don't have it off hand, but we do [Technical Difficulty] sensitivity of our portfolio.

Can we come back to you later, so John can try to find out?

Yes, sure. No problem.