Tamilnad Mercantile Bank Limited ($TMB)

Ladies and gentlemen, good day, and welcome to the Q4 and FY '26 Earnings Conference Call hosted by Tamilnad Mercantile Bank Limited. This conference may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. Today on the call, we have with us the following management representatives: Mr. Salee S. Nair, Managing Director; Mr. Vincent Menachery Devassy, Executive Director; Mr. Sanjoy Kumar Goel, Chief Financial Officer. I would now like to hand the conference over to Mr. Salee S. Nair, the Managing Director from Tamilnad Mercantile Bank Limited. Thank you, and over to you, sir.

Yes. Thank you, and good evening to all of you. Today, we have come out with our yearly results for FY '26. And before I really get into that, I really -- I want to take you back to our con call after my quarter 3 results. That was in January of FY '27 (sic) [ '26 ], wherein we had given certain guidances, I would like you to look at those guidances that we have given. What we have stated in the con call in January after the Q3 results, Q3 FY '26 results is that what we have stated is we will grow that CASA by 15% in quarter 4. We have stated that the deposit growth will be in the 13% to 13.5%, advances growth will be in the 16% to 17%. Total business would grow 15% plus. Net interest margin will be 3.92% to 3.95%. ROA will be 1.85% plus and ROE will be 14% plus. And GNPA will be less than 1%. So that's the guidance we gave. In fact, we gave guidance for our quarter 2 and quarter 1 also. And you will recall that we have exceeded all the guidances, quarter 1 guidance, quarter 2 guidance. And I just stated the quarter 3 guidance. And we will look at where we stand in respect of those guidances shortly. So coming back to the FY '26, it has been a year of transformation for us, and it's something that I stated in FY '25, at the close of FY '25 itself that we have unleashed a lot of transformation journeys, automation, technology infusion, structural changes, et cetera, and that the impact of that will be felt in FY '26. And more specifically, I stated that it will be felt more in the quarter 2 of FY '26. And where do we stand in -- when we close the year. Very clearly, we have been able to raise the foundation for growth. CASA share decline has been arrested and revoked. The quarter also saw the highest deposit growth in past 39 quarters. That is 10 years. It's the highest at [indiscernible] was target in the past 40 quarters. Business growth, when we close year is 9.35% over the last 10-year CAGR, compound annual growth rate, that we achieved in the last 10 years. FY '26, we have closed 9.35% over that. So that the transformation that has been achieved. And this all comes from the current portfolio, but the quality continuously has improved. On book PCR is at 10 year high, credit cost is under control, lowest GNPA gain in the last 4 years. Why I'm saying 40 years is because of the -- quarters not years, sorry quarters. Why I'm saying is the 40 quarters number was really available, and we see that the lowest in the last 40 quarters, and the lowest ever SMA percentage. We take those numbers in the layout. With that, the presence footprint also expanded, 44 branches we opened, 15 of them outside Tamilnadu, 12 CMCs were set up. The liability RMs were introduced, digital transformation is nearing completion. All these are actions that happened in FY '26. So what is the impact on the market, the shareholder value delivered has gone up 50% in the last 12 months, market capitalization cost of INR 10,600 crores, the shareholder funds after the results is above INR 10,000 crores with a book value of INR 638, and the Board also has declared -- or rather recommended a dividend of 125% for FY '26. So now coming back to what I just stated earlier in my opening statement on the guidance, look at the guidance of CASA growth. We stated that we will grow 15% plus FY '26 and the growth eventually is 22.35%. CASA stands at INR 17,365 crores, that is of 22.35% year-on-year growth. Your total business is at 17.37%, and total business, [indiscernible] on 31st March '26 stood INR 1,15,091 crores, and against our guidance for the year of 15%. So 17.37% achievement against our guidance of 15%. The deposits, we stated, will be in the 13% to 13.5%. We ended up at 14.94%. The advances we said we would be in the 16% to 17%. We ended up at 20.32%. 20.32% is also after selling a INR 1,000 crores to the IBPC, inter-bank participation certificates. If you add that back, it is actually 22%-plus. So this -- the business -- the strong business growth has also resulted in strong profitability parameters. The net interest income is up 24.04%. It's at INR 704.45 crores. Operating profit for the quarter was 29.29% year-on-year. Net profit is INR 373.65 crores, which is 28.01% year-on-year. ROA, where we had given a guidance of 1.85% plus, is at actually 2.05%. And ROE, where we said will be 14% plus, we have actually [indiscernible] break the 15% mark, and it is at 15.03%. So all this growth that we have delivered in excess of the guidance we have given have come back on the strong business growth, particularly the advance of [indiscernible]. And all these are translating -- look at the CASA share that we have. CASA share had pushed 26.44% on 31st of March '25. It is up 1.7% now to 28.14%. For the quarter, the net interest margin 4.18%. The cost-to-income ratio is at 44.8%. Credit cost, I think, largely been met by resolutions or the provision write back stands at 1 basis point, 0.01%. GNPA as a consequence of the [indiscernible] efforts we have taken is at 0.73%, and net NPA is 0.18%. So -- and SMA, I'm including SMA-0, 1 and 2 is at 1.29%. So this is down 1.26% from last year. So what would it address 1 day is at 2.02%, which is SMA-0, 1, 2 and NPA together is only 2.2% of the advances portfolio. I think that -- I wonder if any other bank has been able to get to that kind of the number in India. So the PCR -- on-book PCR is 74.89%. That's a full 3.87% over last year, our 31st of March '25 number, and PCR with technical write-off is 96.14%. If I get into some of the granular details, deposits, current accounts I mentioned the total deposits grew at 14.94%. The breakup this year, current account has gone up 25.62%. We did have a lot of initiatives here. The TBG was brought in last year and that has now begun and 25.62% is the result. Savings Bank, again, is 21.4%. That's a good story that we have to say. CASA overall, is at 22.35%. Deposits per se is, like I said, has grown 14.94%. So it is a growth strengthened across the quarters, quarter after quarter, we have been growing. The CASA has been moving up. The deposits have been growing. Every quarter, we have bettered the previous quarter's growth. So that's the story that TMB is putting on the table today. On the advances side, Retail, Agri, MSME and have all grown. In fact, on a year-on-year basis, retail, which is largely driven by the gold loan portfolio is up 62.33%; agriculture, 8.03%; MSME is another story that we have. MSME, if you recall, has been degrowing until -- as late as the first quarter of FY '26. It has now turned around and has delivered a 14.88% growth Y-o-Y. So that's another story that we would like to see, and this story will get strengthened in FY '27 as well. So overall, the advances have grown 20.32%. As I said, this advance growth of 20.32% is coming after we have sold off INR 1,000 crores of our portfolio through the IBPC route in Q4 of FY '26. Now if we take that also into account, real advances growth is 22.57%. Again, the last 3, 4 quarters, that advances have been consistently moving up. The growth every quarter is bettering the previous quarter. For the first time, we have also showcased the profitability, the ROA of our advanced portfolio -- the retail advanced portfolio, the yield is at 9.98%. The NPA there is 0.13%, and the ROA is 2.21%. So this is a good portfolio with a very, very comfortable ROA at 2.21%. Agri advances, again, riding on the gold loan is at 2.04% ROA where the NPA, thanks to the gold prices, is 0.16%. MSME, another big story where we have a growth of 14.88%, yield is good at 10.52%, resulting an ROA of 2.58% on a portfolio basis. The gold loan portfolio is something that -- the gold prices are something that we watch 24/7. And the sensitivity, if you look at Slide #14 of what we have sort of uploaded into the exchanges, our ability to withstand gold price reduction is [indiscernible]. If there's a gold loan price reduction of up to 25% can easily be absorbed by our current portfolio. The portfolio LTV is just for 53.25% that competitor [indiscernible] portfolio yield is 10.11%, a good yield for a gold portfolio and the gold -- gold loan share in the overall advances is 46.44%. And again, here, let me also tell you that the LTV is calculated not on the gross rate of the portfolio, but on the net rate. And the gross rate to net rate difference is about 9.33%. So that also adds to the cushion which I mentioned earlier that our ability to withstand a gold price reduction to 25% without causing a stress is enhanced by this, the gross rate to net rate difference of 9.33%. We are also in the process of setting up asset resolution branches to manage the portfolio and the Agri portfolio apart from the MSME stress, also to manage the portfolio LTV/margin calls and auctions of gold loan if and when there is a need. Incidentally, any breach of LTV up to 90% will trigger a margin call and our counter action, including options, will kick in. And if you look at the portfolio of risk for gold, it is just 12.31%, which is just about 5 basis of the overall gold loan portfolio. So to summarize the gold loan portfolio that we have is literally gold standard. Unsecured portfolio, we have stated in the last quarter as well as the previous quarter, we are -- this is a bank that has been lending on a secured basis. We have not been on the unsecured space at all. And the unsecured space is just INR 64 crores, which is about 10 basis points of our overall advanced portfolio, practically negligible. On the export credit, I think West Asia crisis, we have our own exposure to the West Asian countries, it's just which is just 10 basis of our overall portfolio. So to that extent, it is limited, of course. If the war carries on, the impact on -- the indirect impact is something that we are making an assessment of. We certainly hope the government will step in with the [indiscernible] if the crisis continues. Finally, on the financial performance itself, as I said, the quarter performance, interest income has been riding on core business. I think the core business revival, the growth of advances and catching 20% or rather including IBPC at 22% has helped us give a net profit number of 28.01% growth. And that's riding on interest income of 15.55%, noninterest income of 20.67%, and containing the expenditure at 11.58%. Let me also add here that [indiscernible] normally, we give a performance-based incentive to our employees, and that is given for a year in the following year. For the first time -- so for FY '25, we gave it in FY '26 in quarter 1 of FY '26. For the first time, we have made a break with that practice and the PPA, the performance-based incentive for FY '26, which has been computed at 49.80%, we have accounted for it in quarter 4 itself, quarter 4 of FY '26 itself. So the net profit that you are seeing here, 38.01% is after accounting for the PBI 49.80%. So remember, quarter 1, we accounted for the PBI of FY '25 and quarter 4, we have accounted for the PBI of FY '26. So 2 terms of PBI accounted for 1 year and the net profit that we showcased today, 28.01%, is after accounting for the PBI of 49.80%, which, like I said, ordinary should have been taken in -- absorbed in FY '27. If you normalize for that, the cost income ratio is just about 39.54% for quarter 4. And the operating profit, you see has jumped to 41.62%. So all these are translating into higher shareholder value. Network of the capital and results have crossed INR 10,000 crores for the first. Book value per share is INR 638. Earnings per share is INR 23.60. And like I said earlier, [indiscernible] is all the facts impacted the ROA, which is cross 2% for quarter 4, and it's a 2.05%.And return on equity of course has broken the 15% marker and it is at 15.03%. And the balance sheet likewise has improved INR 275.9 -- and the point is this INR 75,299 crores of balance sheet is today consists of more than INR 10,000 crores of capital, which points out to the resilience of the balance sheet itself. The fact that we have 13% of our balance sheet is actually funded by capital gives us the ability to take in a higher CD ratio. Going on to the asset quality. I think we have been known for us maintaining a high level of asset quality and that gets reflected in the quarter 4 results as well. Your GNPA is at 0.73%, NNPA at 0.18%. So today, the net NPA that we hold is just about 97.41% -- INR 97.41 crores. Provision cover on book, like I said earlier, is 74.89% and overall is 96.14%. Asset quality, consistent improvement across quarters. I think that is something we are focused in the presentation that we have uploaded, Page #23, and it is, like I said, is at 97.41%. So this 97.41% of -- or the NPA number, which is INR 388.21 crores, which is the gross NPA number. If I look at the gross NPA number of INR 388.11 crores, which is 0.73%, which has a provision of INR 229.98 crores -- INR 229.98 crores, which is a PCR of 74.89% is covered by collateral -- average collateral of INR 127.52 crores. So when we resolve the NPA, we are on 88.21% where we have provided INR 229. Much of what we have provided INR 229.98 crores, we expect it to come back, thanks to the collateral cover that the GNPA currently has. [indiscernible] again is under control. I think -- and SMA, like I said earlier, is trending down. And today, 31st March '26, it is just INR 686 crores, SMA. We are talking about SMA1, SMA-0, SMA-1 and SMA-2. And all 3 combined is just 1.29%. This did mention earlier that the [indiscernible] portfolio 1 day is 2.02% for the bank including SMA and NPA together is just 2.02%. Stressed asset is also a downward trajectory, INR 218 crores is where we stand today. Along with the GNPA, the stressed number is just 1.14%. Let me also tell you standard restructured advances are also covered, which was contracted during the COVID period are also covered to an extent of INR 250 crores of provisions, right? And that INR 250 crores of provision, we have not returned back. We are maintaining it, and we hope to address it against the expected credit loss when that kicks in or kicked in the 1st of April '27. So our calculation shows that as of 31/3/'26, the change in not from current [indiscernible] to new ECL, which, like I said, will kick on 1st of April, should have a INR 279 crores impact. The INR 250 crores of provision that we hold in the book, COVID book, which stands to where 2018 and which we hope to taper down further by the 31st of March '27 to largely cushioned this impact of ECL -- additional ECL requirement. Of course, RBI has also come out with the LCR requirements. I think it is going to benefit us to the extent of about 4%. And on the ratio and the cost of deposits has quarter-on-quarter -- sequentially has moved down from 5.38% to 5.71%. So earlier higher price deposits that we have contracted is getting repriced and that is having a bit of a positive impact. It has come down, while the yield on advances is down on a [indiscernible] basis, which is holding on, and that is one of the reasons why the core business is actually kind of -- giving us the kind of profit that the bank has delivered for quarter 4. So the NIM is at 4.18% as a consequence. And it is up sequentially from 4.04%. And NIM for the overall year is at 3.98%. So the capital adequacy is 33.73%, again thanks to the fact that our risk-weighted assets are just about INR 20,000 crores, thanks to our large amount of gold loan portfolio, our capital adequacy is at 33.73%. Cost income ratio contained at 44.80% despite the fact that the entire CPI of INR 49.80 crores that we should have accounted for in FY '27, we accounted for in its entirety in quarter 4 of FY '26. The credit cost is under control -- and of course, during the year, we have also opened 44 branches. One thing we have not been able to deliver as per our commitment, we did promise to the investor community that we will open 50 branches in FY '26. We have been able to open only 44 branches, 15 of them have been opened outside the state of Tamilnadu, so 30% or 1/3 of the branches are outside the state of seminars. 7 branches are also in the process of being opened, but [indiscernible] beyond the -- I mean, it has gone beyond the 31st of March '26. So net impact is we have been able to open only 44 branches. And the other the structural changes that we have got in the branch openings, we are now deploying the branch managers in advance to drive local market penetration and business development. So the structural changes that we have got in there, they have also seen the business for new branches opened actually move up significantly. In FY '25, the new branch -- an annualized manner -- on annualized basis, the business of new branch was just about INR 19.57 crores in FY '25. We have, because of structure changes and posting branch managers, choosing the centers carefully, we have been able to deliver in FY '26, per branch business of 40.16% -- INR 40.16 crores. So new branches opened since this thing has now started contributing significantly in FY '26, which has contributed 15% of the incremental growth. At the digitization drive, I think I've spoken extensively on whatever we are trying to do on the digital front and some complete transformation we are trying to bring in and that's also having [indiscernible] impact in releasing bandwidth in the branches. And one of the parameters we have mentioned here, the transaction count. In FY '25, our branches across the counter did 2.64 crores, 26.3 million transactions across counter, FY '25. Even after increasing the number from 578 branches to 622 branches, that is 44 brands incremental -- opening 44 branches, this count -- the transaction, the manual transaction count across the counter and the branches have come down from 26.3 million to 24.10 million. So that's something that will eventually release -- is releasing bandwidth for further growth. So the modernization is also underway and we have taken a lot of HR incentives and during that -- it's all summarized -- it's all converging into business growth. And we are happy to say that FY '26 has been clearly a year of reckoning and we have -- we stand today facing FY '27 with much greater confidence as in April of '26, today, we are in a much, much stronger position and stronger to face the coming year. Yes. I think I'll stop here. And we will open ourselves to questions and answers. Like I said, my CFO is here, my Executive Director is here, my CFO is here, my Head of Resource Mobilization and Deposits here and also my Head of Credit is also here. And we now welcome the questions from you if any. Yes. Thank you.

[Operator Instructions] Our first question comes from the line of [indiscernible] from GreenEdge Wealth.

Congratulations, sir. It has been -- your underpromise and overdeliver continues even in this quarter, more strongly. So congratulations, sir. Three questions from my side. Sir, first is that if we -- you said we are on a very strong footing for FY '27. Would you like to guide anything in terms of the loan book growth for this year? Because I think the macros have turned a little bit sour because of the war in the Middle East.

Yes. Despite that [indiscernible] crisis, the U.S. tariffs still took completely [indiscernible] out. What we are stating for FY '26 -- FY '27. As you just mentioned, that we would like to understate and overperform or underguide and overperform. I think we'll continue that. But despite that, we are reaching out a tad higher. On the deposit trend, we are saying that in FY '27, we will grow at least 1% higher than what we did in FY '26.

Okay. Okay. So sir, you think credit growth will be at least as much as what we saw this year, like FY '26, what was the loan growth?

Yes, I'm coming to that. So I think that we should be in the 16% kind of number for deposit growth. And the advances that we did of 20% is something that we will defend in the current year as well.

Right, sir. So that's great to know. Sir, second question is that the gold loans was your Dhurandhar for last year, right? Gold on was something which helped us a lot. What will be the Dhurandhar for FY '27. Will it again be gold loans or you see some other segments also figure?

Now we are having our Dhurandhar 2 also coming up. I think that is where -- if you look at, I've also showcased that our MSME has also been giving us good ROA. I think we have put it up in this -- for the first time, we are looking at -- we will give more granular data on the profitability parameters of specific portfolios going forward in the next quarter onwards. But this time, we have made an attempt. And our MSME, like I said, grew 14.88% year-on-year. right? And the ROA there -- the yield is at 10.52%. So this is one portfolio we will be looking to cushion the impact of gold loan slowing down on the gold loan growth. And like I said initially that in the first quarter, we did -- there was actual degrowth. So it is -- from the quarter 2, it started picking up. The quarter 2, quarter 3 and now quarter 4, we ended up with 14.88%, and this is something that you will see. This is the story you need to watch for FY '27, the MSME space. We are putting our systems in place, your loan management system, CMCs, the credit management centers are in place. The loan management system went live. I think the Phase 1 has been done. And as we should be doing it in the first quarter, we should get the Phase 2 also that, which means -- to answer you, Dhurandhar 2 is going to be MSME.

Right. Very good to hear that. Sir, all the best. And last question is one data point that in the last quarter, in our retail, we had INR 6,700 crores of gold loans. What would that number be for this quarter?

You have the golden number?

Yes. Sir, I see, you've given very good disclosure on gold loan, but just this breakup between retail and agri gold loan.

We'll add that also next time. In fact, we wanted to tell the world that the gold on portfolio is, in fact, INR 6,500 crores, right?

Sir, it was great. You put on disclosure that you were setting up some auctioning centers in case there is a price fall and the overall LTV. So...

We are taking all the countermeasures in advance. So we want to be prepared because we did see a slight -- price coming down as a consequence of the initial state of the war. So we want to be fully prepared. We have put in place systems where margin calls can be had. We are -- a centralized call center. We are also putting -- we are looking at creating asset resolution branches, specifically in addition to the normal recovery that happens across -- also to tackle the gold loan delinquency. Let me also tell you on the gold loa -- we have -- the portfolio LTV, I think if you have seen it, I think I did mention as well is only 53.25%.

Yes, sir, it is there in the slide. I have seen it there.

And to answer you on the retail, it is INR 6,507 crores.

Yes. Sir, and housing was INR 4,000 crores last quarter, that would have also grown, right, this quarter?

No. Housing loan has not. In fact, our housing loan disbursements -- sorry, sanctions have crossed 22%. So there is always a lag between the sanctions and disbursements. While the sanctions have gone up, the housing loan portfolio itself has slightly degrown from last time.

Yes, sir. And I see, the retail gold loan portfolio has also degrown, right? It was INR 6,700 crores last quarter, it is INR 6,500 crores this quarter, right? So it has degrown by INR 200 crores.

The reason I will you. The reason is that RBI has come out with the regulation saying that we have a sizable gold loan portfolio. If you look at -- if you look at the slide, INR 24,790 crores of gold loan portfolio. And I just mentioned that retail is INR 6,500 crores. So the rest -- remaining is about INR 18,000 plus crores is Agri gold loans, right. RBI came out with rather a directive that up to INR 2 lakhs, you have to -- cannot get collateral. So there was a shift from agri gold loans to retail loans in the third quarter. But subsequently, RBI came and clarified that if you are taking it on a voluntary basis, you can take it from farmers also for agri gold loan purposes, agri purposes, right? In quarter 3, we had an increase in the retail gold and that has been somewhat replaced by agri gold loan in quarter 4. So both are now in sort of -- with agri gold loan growing faster than your retail gold loan.

Yes. And sir, now we can grow along with everyone else, right, when the gold loan keeps growing. We have grown, but there is this reclassification which created some confusion.

As a portfolio, we don't -- I mean, from your perspective, investor perspective, the color of the loan doesn't matter, whether you call it an agri gold loan or whether we call it a retail gold loan. It is giving us -- the 10.11% is the combined yield.

The next question comes from the line of Varun from Shar India Securities.

And congratulations once again on your superb set of numbers, your company has been delivering quarter-on-quarter, and you have set a new benchmark, in fact, a benchmark for [indiscernible] itself. So can you throw some light on the pigs number, no doubt, is down on a year-on-year basis, around 31%. So I was just looking at the bifurcation there spicing portfolio has actually gone up -- so what is the reason for this, if you can just throw some light on this? And also you were highlighting that your home loan portfolio has degrown from last time. So can you just put a number? How much has it degrown.

What is the second question?

Home loan [indiscernible] portfolio has degrown, right

Coming back to the first one, you are slippage, right?

Yes, sir. Agri slippage [indiscernible].

Where is it going? This is your new one that was recognized, no. Do you want to say that?

In fact, the slippage in agree. This is processing unit. And there was a single account totaling INR 16 crores, and that [indiscernible] INR 19 crores. And let me also tell you, let's say, clear visibility from the recovery of that I call and I think more probably when we reassemble for the next quarter, this would have been recovered.

And -- let me also add to that, that from a -- the record of recovery angle, this is a standard asset. is actually -- is being serviced. But we -- as part of our enough because the activity has stopped, we have -- also checked the that we can move ahead with the resolution of it in the first quarter.

GST RBI is not asking us to go that the number, much more abundance portion, we have grown that far and also the glass.

What you expecting a reserve? I think you said next quarter when we meet, we'll expect some recovery, right?

are ongoing also -- we are talking about quarter 1 of FY '27.

Yes. So sir, what about the housing loan portfolio that has degrown?

Home loan is something that we are focusing back. I think we started the process back in quarter 4. And like I said, sanctions have actually moved up 22%, but for that to get translated into actual disbursement, I think you will see this going forward. Otherwise -- and gold loan, the other aspects of gold loan is -- from an ROA perspective, it was an 1.01% ROA. -- from a city at this has taken a little bit of a lower priority, but we are signaling the game to push this up.

Okay, sir. Okay. One last question, I just wanted to ask you, sir. I mean just as you said that you had an aim of 50 branches for FY '26, but you have open -- so what could be the branch addition number for FY '27 as we go ahead?

We are proposing 60 branches in hopefully, in FY '27, April sorry FY '27 April when I take this call again, hopefully, we should have met that. FY '26 is one of the only -- I have the only miss that we had is that we promised 50 branches to ourselves, and we were able to open only 44. But for FY '2, we are actually promising 50.

The next question comes from the line of Laxmi Naran from Tunga Investments.

A few questions. So there has been a write-off of close to INR 150 crores this year. I just want to know across how many accounts is this? And does this include the Andhra account, which was more than INR 125 crores, INR 130 crores in NPA. And second question is that in the other segment...

that is question -- just can you repeat we are seated right -- how many of. No, no, no. Sorry. I think the -- we had 2 rounds the write-offs, right? Okay? And I think first was in the quarter 2 and the second was in this quarter 4. Where is that, one, I give you that I'll just say that. And let me tell you the Andhra Bank -- sorry, not Andhra account that you are right from very Abaco, -- but let me tell you, Andhra account is not part of that write-off. Yes. Yes. I got it, yes. Yes. So we have -- in fact, if you look at it, we have written off INR 149.69 crores. It is not part of it, the one you are referring to. It is a series of accounts. It has been written off in 2 lots, like I said, INR 66 crores in quarter 2 and INR 83 crores in quarter 4. And of course, I must admit that, that write-off has helped us reduce it. It is part of the balance sheet management that we all, any bank does. But going beyond that, if you look at it, your cash recovery for upgradation is INR 103 crores. If I take it my Slide #22, INR 97 crores plus INR 6 crores, INR 103 crores against a fresh addition of INR 85 crores. So there is a natural reduction in absolute amount reduction in the NPA itself, despite the write-off that you mentioned of INR 149 crores. So come back that Andhra account is not there.

Sir, the GNPA of around INR 198 crores in the others, how is it concentrated? Is it that Andhra account is actually part of this. Okay. Can you just -- Yes. hence the concentration of this 19%, is it that 2 or 3 accounts are more than INR 150 crores and the balance itself?

No, I think it is one account INR 164 crores. And then a small residual amounts are still there in the failure resolutions that have happened, so which are undergoing resolutions now. So I think a couple of them are already in the NCLD also.

Got it. Sir, I think in previous calls, I mean, if I add heard right, you alluded that, that could be a write-back of some of these NPAs because that the collection would be strong. So is it on track? Or -- and how are you thinking about these large GNPAs? Is there a possibility of write?

[indiscernible],if you look at my credit cost, right? There is no credit cost -- my credit cost is practically not there, right? The reason that to? The reason for that is the credit cost, which I just mentioned that INR 85 crores of it has happened because that's the cost, the credit cost or the provision cost of that has been largely been met by the recoveries being happening. So that is the reason why credit cost is low. And right? And this large account that you have mentioned, hopefully, we are hoping that this gets resolved this year. What is the other question?

No, I was just asking it for the write-back, I mean do you expect any full recovery of is.

You will notice some interesting amount coming back is our net core, some of these items, you really need luck. Particularly when the legal system in the country takes the kind of time it does. So hopefully, we should be able to tackle it this year.

Got it. Sir, and 1 question on gold loan. So I just want to understand what is the LTV at origination because I see that there are different LTVs for different classes of loan seekers, right? So there are -- so I just want to understand what is the gold loan LTV at originations blended? And second, when you actually do it, do you actually include the interest accrued when you actually calculate the LTV because these are all bullet payments, I understand. So how does that work?

The LTV that you see in the slide is not the principal LTV. It is the principal -- the dues on that particular date, which is principal plus interest. Okay. That is the first clarification I want to give you. And the normal LTV is 75% that you give. And we have a certain different kind of calculation is not concerned -- it is actually not on market that's our only concern on -- and also, that is the reason -- our calculation of LTV is not strictly in comparison to what the market is because we have built in a certain system where cushions are available. I think if I -- if you go to slide numbers, there is a gold loan slide. Where is it? Yes, you'll see the gross weight. You see the net weight, 37.3 tonnes of gross rate portfolio, we have gold loan covered by 37.3 tonnes, right? And the net weight is 34.19 tonnes, which is 9.3% lower. The LTV is not on the gross weight that we calculate it is on the net weight. get it. That is one of the reasons why despite the gold price being where it is, our portfolio is able to sustain a 25% reduction.

Got it. And is it safe to assume that at origination, the same number is there? Like if somebody is taking gold loans today, is that number between around 54% to 56%.

No, no, no, no, no. That will be in the 75% to 75%, right? And it varies for example, some of the gold loan will be slightly higher. And the LTV is actually calculated on the maturity value, not on the rate -- not on the principal. We get it. No.

Including interest I miss it.

I hope I don't know whether I made my No, I think -- my question is that what Sir, my question is -- my question is, what is the LTV at origination now? Because this is as a blended book you're giving, what is the standard LTV because I understand we yes.

One, let me tell you what you are seeing here is a blended rate, which is in some sense, perhaps will not have much of a meaning when there is a reduction price. I'm not saying that I'm talking about the LTV that we say, it is 75% and 80% in some cases is not the LTV is not the principal LTV. It is the LTV at maturity. Let me give you an example. If you are talking in terms of 80% LTV, in some cases, we actually give 80% LTV also. And it is a 1-year goal. The 80% LTV is what is the amount here to pay after 1 year? And based on what is banter 1 year. For example, if it's 10%, your LTV -- the current LTV at which you give today the loan would be 72%. -- including interest, it become 80%. No. LTV is always cash closure on the maturity. If it is 6 months, we will be tightly higher. If it is 1 year, the LTV would be lower. -- is one of the reasons why we are available to sustain a 75% sensitivity. Maturity other banks, which is on the rate, the day is up -- and then the interest is added to that. We add the interest to our [indiscernible]. Let me put it that way.

Okay. Got it, sir. Sir. And the other part, it can mentioned maybe in the next time, you can actually give the retail loan split across segments and also gold loan split across various things like that --

We're trying to be more and more transparent, I think we'll continue to do that.

Sir, and do you actually track your market share growth across branches and across your regions. What has been your market share growth in terms of assets and liabilities?

We do track it now. In fact, not let tracker, it has now become a component of the performance-based incentive. I did mention earlier that we gave a partner growth performance-based incentive, which we have absorbed this year in quarter 4, which if we have not absorbed -- we have gone by earlier practice, it would have been higher for could have been higher. That PBI component that we calculate also has a component of the local group. Local market growth became my branch. So now we started tracking what is the growth in the branch versus what the growth the industry has in the same location.

Got it. Sir, on the technology side, can you just help me understand how much you have spent in technology last year and how much you intend to spend in this year? And how much you're capitalizing on how much your expansion?

My technology spend this year is 15.8% higher. You have that exact number. Let me also tell you that technology spend in the year will not give a proper reflection because many of these are milestone payments and these are happening. I can tell you that decide that I continue that 15.8%, we have -- our spend has been higher than last year. And -- I will give you the number.

The next question comes from the line of Dingat Haria.

Sir, this question was mainly again of gold loan that in our retail gold loans, we generally have 11% [indiscernible] , which are slightly better than agri gold loans, is that correct?

Retail loan, the rate of interest is better than the agri gold loans.

Right, right. Sir, in all the new branches, we are offering that, right? So if there is no branch where gold loan product is not offered, right? We are well spread across our grant.

Our intention is to offer it across all the branches. But some of the branches in a metro, et cetera, may not have much of a demand for it. But the product is an offer across.

Sir, and lastly, on the margins, like we have had like a very good improvement, like first to quarter, the margins were flat or struggling because the whole interest rate cycle was against us. this quarter, especially has been very strong. Like is this quarter margin sustainable? Or you feel that it depends on macros and how the deposit.

It depends on the various factors. You did mention macro will have an impact on it. And this time because the loan growth was good. There has been a movement. We had some surplus cash, which was going at lower yield, that has moved into a higher yield or loan portfolio. So that has added. So the full-up has come from the growth in the advances portfolio. And also simultaneously, some of the high-priced deposits we have taken is getting repriced. So we have got the benefit of that. And if you ask me whether this will sustain -- this kind of level is going to be very difficult to sustain. But still, we believe we'll be able to defend a 3.9% to 4% NIM.

[Operator Instructions] The next question comes from the line of [indiscernible] from 361 Capital.

Sir, my first question is what proportion of your deposits are yet to reprice?

I think by the first quarter, our original high -- what we have taken is 8% in the ciliary. But having said that, deposit is a challenge for all the -- across the industry. So significant impact of that repricing may not accrue in the first quarter. that is not we anticipate because of resource because to keep the advanced machine running, we have to have to existingly focus on the resource mobilization. And given the challenges that the industry has, we don't expect that pricing benefit to really accrue to us in this quarter. which means that we may have to have to continue contracting term deposits.

Okay. Okay. Okay, it's fair enough. And my second question was, sir, when I look at your investments to NDTL ratio, it has come down from 32% to 25%. And still there is some scope to reduce that further. So are we thinking on that line that you can move from investment, some funds from investment to advances...

We will always like to keep a cushion for candidacies that is there. I think that is something that in terms of tools to tap and borrow against that. The fact that it has reduced from 32% to 25%, as we just mentioned, is one of the factors that has helped us drive their profits up. But no, we will certainly continue to have maintained a reasonably good cushion there. And that is where we focus is back on the deposits. And as I said, 16% deposit growth for the year is something that we are committed to.

The next question comes from the line of [indiscernible] from MyInvest Buddy.

Congratulations on the nice set of numbers. I wanted to ask you about the succession planning for the next this one, right? Like how are you taking care of that? And yes...

I didn't get that. Success planning, where -- are you talking in terms of HR succession planning or --

Like for like the next 3 years, right, like who will be the next CEO and things like that, do we have a plan in place for that there is a plan?

No, if you're talking in terms of a subscription plan is, we have a detailed sustain planning going to the next 4, 5 years.

Okay. That's right. And another thing is about like the cybersecurity, right? So like there is Claude coming up and there was an internal rating present. So is that covered like your alone? -- tenet. --

yes, I think I think cybersecurity as the investments in IT and automation goes up, we have to be vary cyber fraud, cyber attacks, et cetera. And that is something that this bank is investing in preventing and we have 24/7 war room looking at this aspect, and we have just got ourselves a call center, AI-based call center. And we have also contracted but 1 of the best names in the world. I mean larger things in the world in terms of supporting us from a cybersecurity angle. So we are on the job there. I think we are fully aligned to it. the ID. There is a repeated audit of our own system to see that are full proof. Apart from that 24/7 such frauds and attacks are being watched by washers.

The next question comes from the line of Parth from ICICI Direct.

Sir, I had one data-driven question. So I wanted to ask you, in your advances, what is the difference between EBLR, MCLR and [indiscernible]. Can I get the number?

MCR, PNR and Juha on a portfolio linked to MCLR and portfolio into repo, right? The product Yes. benchmark at and the internal. I think it is 50-50.

So basically, because I was seeing your advances yield. So it was -- it has declined by 10 basis points, right? And the rate cut was around 14 basis points. Just I want to know the reason and why it was so low?

You don't hold me to this, okay. I tell you -- the rate cut is actually passed on to the MSME segment. I think there I think we are happy to see the yield has come down. But where we have prevented from passing on or rather reprice the rate of interest or reduce the rate of interest in the consumption gold loans. So there, though it is linked to interest -- so thing to MCLR, we have strategically been looking at it, pricing it slightly better. So that's the overall yield remains at the appropriate band.

The next question comes from the line of Darshan Deora from Indvest Group.

Personally, congratulations on a great set of results. Secondly, also appreciate the higher disclosure that you all have started from this quarter. especially the segment-wise ROA. Firstly, I wanted to ask you, you had mentioned the R on gold loans? I missed that figure. Can you just repeat it?

I think it is 2-point whatever, one second, I'll give you the number. I thought this was there in the slide, but it's -- now I see it is missing. But I'll just give you that to growth of 2-point something. it's -- it is 2.05.

Okay. So now given that we're sort of stepping on the accelerator when it comes to MSME growth, which I see is at 2.6% ROA. What would you -- what should we assume as the ROA target for FY '27.

ROA target for FY '27. Incidently, MSME advances once you start expanding the use advances, you may have to cannibalize a bit of your ROA. I think that's something that we are prepared to do that because the 10.52% yield, as we expand the portfolio, it's going to be difficult to be defended. So ROA in MSME advances from 2.58% that we have showcased is going to come down. Certainly going to come down. And -- but from an overall perspective, I'm talking about in retail, once you start pushing the housing loan with where the ROA is sort of not mentioned here, we will give more details of that for the next quarter onwards, is at 1.01%. So if you start pushing various components of the advances. The ROA will slightly get moderated. And -- but we are still looking at a 1.9% to 2% kind of ROA for FY '27.

And from an ROE point of view, I mean assuming that our leverage goes up a little bit...

It is going -- good to go up profit also hopefully should move up -- but 15% -- 15.03% is what we did for this quarter, but I think we should be looking at defending 14% to 15% for FY '27.

say about 15%, right?

14% to 15% in that or back -- and better what we say.

Okay. No, that is understood. In terms of your CASA, again, great progress there. I see it's gone from 26% in FY '25 to 28%. Do we have a target internally that we are trying to hit in terms of CASA, CASA ratio?

We do have a target, but that's a slightly longest target, and I don't think I should be looking at. But let me also tell you this number that we have given in 28.14%. 28.14% is something that you will see moving up.

Okay. So that's a great step. And last question, cost to income, I understand that you have preponed sale expenses that you would typically book in Q1, but what can we assume? I'm not asking for FY '27. I'm just saying long term, like I say, 2 or 3 years down the road as the initiatives you've taken in terms of the state to processing the central processing units, et cetera. What do you see -- what do you see our cost to income trending towards?

I've repeatedly said that we have committed because we have only taken part of your expenses in IT expenses, right? And we also are looking at opening more branches and refurbishing some of the branches. But despite all that, even after all that, what we have stated is that the cost-to-income ratio will remain below 50% I think that's what we have committed to my Board and I'm asking for refurbish of the branches, which will entail and make it some of the branches so that it gets focused on resource mobilization. So there will be some cost coming up and will be spread maybe 27 and '28. But like I said, we are committed to keep it below 50% and should be in the...

I think right now it's around that 44% to 46% 45%. So you're saying in that slightly higher than the current...

50%. That's our commitment

The next question comes from the line of Saket Kapoor from Kapoor Company.

Congrats to the team with the one-off which you have earlier explained, our numbers are much higher, our operating profits are much higher than what has been reported. But as per the -- if I may conclude to what our earlier speaker and your answer being, we are looking at moderation in both ROA and NIM going forward for FY '26, '27. So this INR 500 crore plus operating profit on a quarterly basis, do we have the set of levers that we can defend this paring...

INR 500 crores of operating profit, I think we did at INR 522 crores, right?

Yes, sir.

And are you suggesting that this will be lower?

Sir, I'm only asking you that since you are mentioning that our NIM and ROA will be slightly lower, the averages will be lower than what we have posted for the current quarter. So in that trajectory, how confident are we that this is a new benchmark on a quarterly basis on the operating profit number, if I'm correct...

INR 500 crores of operating profit will certainly be dependent.

This number will be depend for Q1 under can be taken -- and sir, if you could just give us some understanding how the nature of the pipe you have, especially I think you are putting the MSMEh.ollrees do you think, sir, currently the higher the banking spffedh...

Seems to be hard in the yield up...

The next question comes from the line of Sarvesh Gupta from Maximal Capital.

Congratulations on a good set of numbers. Sir, first question is on your advances growth guidance. So if you look at the past in T&D, we have had many years of 8% to 10% sort of a growth. This year, of course, we have done a very good job on that. But if I look at the overall advances growth, roughly around 72% has come from gold loans. Now this also has been a year where gold loan prices have gone up so much. So assuming, let's say, gold prices don't increase from here on, then what kind of growth rate can we assume because then we will have to only grow by tonnage. So what can be the realistic growth in such a scenario where gold prices don't go up as much as like in FY '26, they went so much higher?

You are right that FY '26 the advance growth has been to a very large extent driven by the gold loan. I think that -- if you look at carefully, the MSME space, which was -- which actually degrew in quarter 1, we ended up with almost 15% growth in MSME I can tell you that the MSME the machine that we have put in place is beginning to fire. So whatever gold loan degrowth or the moderation in the -- I don't expect a degrowth, but the moderation in the growth that will happen once the gold loan prices stabilize will be -- we are confident that can be made up through improvement in the MSME growth. And we are also looking at other aspects, particularly the car loan, which is beginning to make some headway. The housing loan is beginning to climb back. There are other elements that is also beginning to fire, which should help us in sort of moderating, which should take over some of the moderation that the gold loan might bring...

Sir, this net of 34 tonnes, so how has that grown in the last 1 year?

I think how much of it...

We have not done a year, we just quickly a snapshot of it. I think we'll have to look at how it is moving. the first time we have actually got the numbers out. Now we'll start tracking on a net basis also.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Salee S. Nair, the Managing Director from Tamilnad Mercantile Bank for their closing remarks.

Yes. Thank you, and thank you all for joining this call. I said recently tried to deliver much more than what we promised and that's something that we are aiming to do in FY '27. FY '27, we are facing much more as a much more, I would say, confident because many of the initiatives that we have taken quite a bit of initiatives that we have taken the initiative complete transform from a legacy Ib,C83.Blyv. -- performance incentive is today looking at growth as the driver for the gaming IT.ultwY2ivid to FY '27. And 9 months, we hope some of the initiatives -- rather the initiiatv.Y27, we expect overall to be a better year than FY '26. Thank you once again for joining us in this call. Thank you.

Thank you, sir. Ladies and gentlemen, on behalf of Tamilnad Mercantile Bank Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.