The Karnataka Bank Limited (KTKBANK) Earnings Call Transcript & Summary

Good day, and welcome to Q1 FY 2024 Earnings Conference call hosted by Karnataka Bank. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to MD and CEO, Mr. Srikrishnan H. from Karnataka Bank. Thank you, and over to you, sir.

Thank you very much. Good afternoon, ladies and gentlemen. So this is on behalf of Karnataka Bank. I'm the MD, CEO Srikrishnan. And on behalf of the Board of Directors, I thank you for participating today. I'm joined with me here Sekhar Rao, the Executive Director; and the senior management team comprising of Balachandra, who is the Chief Operating Officer; Abhishek Bagchi, who is the CFO; Mr. Gokuldas Pai, who is the Chief Business Officer; and Sham, who is the Company Secretary. We have had a historic day today because the new management, which has come in, just to kind of give you the disclaimer, all of you, I have been in this bank about a less than -- little less than 2 months. And we also had a new executive director who has been here for about, let's say, 4 to 5 months now. So this is representative of the flavor that you would be hearing from Karnataka Bank as we go forward because this is one timeline that we want to really promote, which is banking with a legacy and embracing the future. Now the future for the bank is what we are going to be talking about based on the quarterly results that we have published today. So just a while ago, we have intimated the stock exchanges as well as released the press notice in this regard. I'm sure that most of you would have read through that by now. So the historic part is about the highest net profit for the quarter that we made today, which is a declaration of INR 370.7 crores as against INR 114 crores pertaining to the same quarter last year. And overall, there are 3 parameters that as a bank, anyone takes a look at. One is the growth, the growth in advances and the growth in the book. So the advances growth has been encouraging. So on a YTD basis, on an annualized basis, we have grown by about 10%, while on an absolute term, we are about [ 5.4% ] for this quarter. Now likewise, on the deposit side also, there has been a reasonable increase of close towards 8%. And here, the encouraging part is that we are still maintaining a very healthy CASA mix in our overall deposit constitution. And the CASA continues to be in the 32% to 33% range. Now this is also a historic because the CD ratio for the bank is higher so far, which is at 70%. Now that is the first parameter that we wanted to let you know today. The second is about the net NPA. And here, again, it has come down drastically by almost about 73 basis points. We are at 1.43% compared to the corresponding period last year. Even compared to the last quarter, there is a reduction of about 27 bps. This has been achieved through a lot of actions related to not just the recovery side but also the fact that there's a containment in the overall slippages and so on. So this is also something that I'd like to record to say that the slippages is about 0.5% as against 3.31% during the corresponding time last year. The other historic high is that our provisioning, which is the PCR, is actually at an all-time high of 83.47%, and this has grown from the 80.86% for the corresponding quarter last year. And the good news is also about the core provisions which stands at about 62% as against 55%. Now the NIM guidance that was given earlier, the last couple of quarters, we have always maintained that the NIM guidance would be about 3.5% to 3.71%. And I think we are well within that same range, and we do not expect anything. I'll also talk about the future growth of the bank as I read out the rest of the other metrics, and then I'll go to that. ROE, again, a historic high, which is at 17.7%. And ROA is at about 1.47%. Cost-to-income ratio, very comparable to other peer group in the banking segment. We are at around 47% there also. The last metric that I would like to call out is on the CRAR, where we are at 17% despite the growth that has happened in the assets. And this includes, of course, the Tier 2, which has been steadily there for a while. Overall, the asset quality has been healthy. And I think the bank is poised for the next level of growth. So what are we doing about that? So essentially, the bank is a very, very traditional legacy but very excellent in customer service. And there are a lot of the physical branches all over the country. And of course, the concentration has been in Karnataka, where the strength of the bank lies. And more than about 60% of the branches are in Karnataka out of the 900-odd branches that we have. Now however, from an economic zone perspective, we are located in 14 economic zones, and that includes about 8 in Karnataka and 6 outside of America. So the stated objective here is that we want to take this bank from being a regional story to a national story. Now how are we going to do this? One is that the existing bank that is the first category that I would call out to say that, run the bank. Now run the bank is essentially on making sure that all of the processes and all of the technologies and whatever the baseline issues that are there for the bank, we sort them all out, make them all more efficient, a lot of centralization of processes and making sure that there's optimal efficiencies that we deduct, not only on the cost but also the turnaround time as well as the customer journey is still concerned. Now that is to run the bank, but run the bank more efficiently, more organized. And this is something that existing management team who has been running are pretty aligned to this new vision that we are bringing in. And this would essentially create capacity. Now the capacity is in 2 parts. One is related to the operations side. The other is related to technology. Cost is something that we are definitely augmenting here as another new management. The second part is that, along with that, we need to grow the bank. Now when I talk about grow the bank, we need to change the culture of the bank. The culture of the bank has been not so outward-looking and there is not much of a sales culture, which is including deployment of sales teams outside of the branches. So, so far, they have been only looking at the channels of sale, which is the branch channel. We are introducing essentially the sales channel, both on the asset side as well as on the liability side for CASA as well. And these are themes that will be deployed in branch surrounding areas in and around the branch to get the new to bank acquisition. So the NPV number, which is currently at about 4,000-odd accounts per day, is going to move up, and that's the second piece of growth. The other part related to grow the bank is also to make sure that in addition to the DSA channel, there is a huge amount of digitization that we have already invested into. And we are just on the verge of launching many such journeys whereby the digital channel to the bank, which includes the mobile as well as our browser-based Internet banking channels, will be just not transformational, but also everything to do with transactional. So which means that we would actually be in a position to acquire clients end-to-end. And most of the journey's almost 100%. Some of the journey is near 100%, whereby all of the new customer acquisitions may not necessarily have to be physical and that's a new channel that we are building, that in addition to the existing channels, which is the branch channel, which we are activating fully. And this also now would be helped by the sales channel, which is the DSAs as well as the sales teams, the feet on street who are deployed on the ground. And the last one which I talked about is the digital. So this is essentially the grow the bank culture that we are bringing in. And here, there's a lot of reorganization that we need with all our existing workforce. And most of them I will get to. The last about 40 days that I've been going around the regions, visiting them, et cetera, I have a fair pulse of the bank of the ground level impressions as well. And the third piece is change the bank. Now this is a very, very transformational journey in the overall scene. What we are trying to do is that organically, while I was talking about the growing part related to the 3 channels of client acquisitions, new customers, et cetera, there is also an existing customer base of 1.3 crore customers that we have. And we need to make sure that there's a lot of upsell and cross-sell that is possible for this huge customer segment. Now what we are trying to do is that we have set up a few centers for 1 digital as well as 2 analytical center of excellence. Now all of the IT operations of the bank, which includes service delivery, operations, engineering talent, information security plus the digital center of excellence and the analytics central of excellence, basically, the digital factory and the analytics factory. Now we have housed them all in a 40,000 square feet new office in Bangalore. And here, talent acquisition is also possible currently, the very reason being that we are staying in the heart of the Silicon Valley of India that is Bangalore. Now given this change that we have instrumented over the last about 30, 40 days, we believe that this digital journey that we are undertaking will be far more easier because the investment not only in technology, but investment in the processes, and we have also taken some help from external consultant here, whereby the analytics related to our existing customers on their behavior, on what products they use, based on their transactions, what other products they could potentially use is being extracted. Those cuts are being given to the branches and to the state channel for them to actually go and acquire new customers, along with that, the existing customers for new products. So this is the upsell with whereby the share of the wallet is going to [indiscernible] increase. Now this is step number one as far as the change the bank is concerned. Step number two is all about innovations and collaborations. Now the bank will innovate. But obviously, we are not a fintech. So we are not like some of the technology companies which are innovating and creating breakthroughs and really looking at some kind of a new product which is like completely digitized, but they cannot scale up. So we have already launched this program called KBL [ Pin 1 ], which essentially is a fintech collaboration whereby we have identified 3 or 4 product areas, which include some of the asset side, which is related to co-lending as well as consumer loans and also a lot on the MSME side. Now this has the fintechs on some of the new age companies who are focused on certain segments and they will collaborate with the bank, and we will scale that up, whereby we acquire clients, we also give them a wider range of services, including other banking services, which we can offer. But on the other side, the fintech benefits a lot because scaling up is something that the bank is ready to do. So this is the other area of innovation and collaboration that we want to partner. So here, a lot of co-lending opportunities and a lot of related consumer loan opportunities, et cetera, are coming up, and we will be completing the pilot here. The last one is about the fact that while we can do all of this, now how do we make sure that the product or the sectoral focus comes into the bank? Where are the strengths of the bank? We want to work on the inherent strengths of this bank. The inherent strengths of this bank lies, one, in Karnataka, the geography, but we want to expand to other regions also. So whatever we do well in Karnataka, we want to make sure that we do it even better in the other states where we are the presence. And this is not a small presence because most of the states that even, typically, take Maharashtra or even take some of the other South Indian states, we have in excess of 50 branches each in each of those -- some of the states. Now what we are trying to do is to make sure that the geographical strength that we have acquired in Karnataka is something that we'll replicate. Now with other sectors, the bank is very good in MSME lending. There are a lot of relationships and a lot of products that have been developed. And if you package it well, along with some of the fintech collaborations, whereby the MSME portals which are there available through these partnerships, the engagement with the new MSMEs, the entire life cycle of MSME is taking care of the financial requirements, but also help them for value-added services which include a lot of payments that they need to make. So Karnataka Bank is well positioned there because we have already certified for customs duty, for GST, and shortly, we are being certified for [ ballots and ] indirect taxes, that is [ CVG ]. So we are the actual -- the Karnataka-based player who is going to be actually able to collect all the 3 types of government payments also. So we are in the process of creating online as well as portal base, which is the complete revamp of our website and also allow all of these third parties to come in and make sure that we are now working with a very open but very system and information security controlled portal. The last part is that we are very big in agri lending. As a percentage of our total loans, agri forms a very, very major part. Now between agri lending, retail and MSME, I think the growth in the 3 sector segments. Now we believe that we can help a lot in agri also. The reason being that here again, there are a lot of value additions that we can provide because the fact that access in terms of telecom access and connectivity has already been provided by a lot of service providers in the country. So thereby, we are able to actually get going with just adding more products towards and delivering them digitally. So this is the other piece which is related to change the bank. So in terms of the overall summary, ladies and gentlemen, what we're trying to do is to run the bank more efficiently and simplifying a lot of processes, grow the bank organically, and change the bank to introduce a lot of inorganic but not acquisition-based but collaboratively from other third-party players. The bank, in addition offers a complete suite of personal loan products that includes insurance, investment as well as growth. And these are, again, done through the third-party initiatives that we have already put in place. So the bank can help in protecting our customers for both life as well as non-life and health. And likewise, we can also help them to facilitate trading in case of their interest and so on. So this is basically a quick summary of what -- where we are and what we want to do. The results are very encouraging. The reason being that the bank on a financial positioning is also well placed. From the overall management team, yes, there could be potentially a lot of lateral hiring that we need to do for a lot of focus that we have talked about in the existing plan. But we do have a very, very good management team already. So we'll supplement them with a lot of specialists, 1, 2, 3, depends on whatever kind of specialists are required where we cannot fill up the gap from internal resources. And we believe that we are really creating a digital bank of the future. Now on that note, I think I have done my introductory talk, and I'll hand it over back to the moderator for the next steps here. Now Sekhar, is there anything else you want to add?

Perfect. I think so you've kind of covered it all. I will just add a couple of comments in the closing remarks. Been a pretty good summary of where we are headed and where we are. Thank you.

So moderator, back to you, please.

[Operator Instructions] We'll take the first question from the line of Sushil Choksey from Indus Equity Advisors.

Congratulations on a great set of numbers and best wishes for all the aspiration which you've just highlighted. Question number one, sir, you had given a broad vision in one of your media interaction when you commenced for a journey to get to INR 100 lakh crore, which means 18%, 20% growth year-on-year. Can you highlight a bit on that?

Sure. Thank you, Mr. Sushil. Currently, our annualized growth on the advances book is closer to 10%. And on the liability side, it is closer to 8%. Now essentially, we need to kind of, by the end of about 3 to 3.5 years, really double it. Now what it means is that if we start looking at about 18% to 20% growth quarter-on-quarter on a compounded basis annually and then in about 3 to 3.5 years, definitely, we will be more than double of what we are. So the first stated objective was that in about 3 to 3.5 years, we crossed the INR 100,000 crores as well as the overall asset book is concerned. Now as I speak to you today, post the June results, I'm not making any forward-looking statements here. But the fact of the matter is that we actually have crossed INR 150,000 crore threshold on the overall growth in business as we speak, and we are actually in the first week of August. So that's a considerable jump even from the sales that we have declared today. And that reflects on the changes that are working as well as the front-end channel, which is currently only the branch channel is concerned. In the next quarter, we'll be actually deploying the channel #2 on sales, panel #3 on digitized acquisition. So if you are able to do this, we believe that we are well on the path to acquire as committed, and there is a good growth possible, which is on the asset as well as on the liability side. We need to control the rest of the parameters, the rest of the parameters, the metrics also on essential parameters which are critical for success. That is to make sure that our net NPAs and the growth NPAs remain within control and also making sure that the NIMs are in control. So obviously, there is a challenge on the cost of funds because the cost of deposits is going up. But what we have also figured out is that despite the increase that has happened globally, Fed had increased rates, et cetera. But more from our own perspective, we believe that our deposit rates in India have peaked out. And that means that there is a good chance that we will be able to kind of maintain the same NIM ranges by tweaking and making sure that our asset growth is done at the right pricing. So this is how we are looking at managing as we go forward, Mr. Sushil, and I hope that it answers the question that you have.

I'll just add to the reply you gave. So where do you see your cost of deposit of 5.1% currently to the year-end and cost of funds, which we had 4.7 by the year -- 5.2% at the year-end time?

So our cost of funds, in fact, were in the region of about 4.7% to about 5.5%. This has been the status of [ VIK too ]. And I think we'll very much be sticking to the range. Depending on the quarter, there is also a seasonality to this. Just as an example I'm giving you, but there are much more factors to consider on the seasonality part. But we deal with a lot of contractors. We deal with a lot of agri farmers. Now when they are sowing the seeds and making sure that the crop is coming up, they withdraw a lot from the CASA. But then once the harvesting season is done, and it has been our trend in this bank, we find that in end of Q2 and Q3 onwards, actually, we see that the CASA improves. Because of the money that they make out of harvesting and selling the crops, actually it comes back into the bank. So that way, this bank has got a tradition of stickiness on the CASA side. Likewise, on the contractor also, there are a lot of payments which are in pipeline from the government and from various contracts. And because of that, there could be some withdrawal that happened from CASA. But sooner or later, actually, they can come back to the bank because they do maintain some very healthy deposits. So these are all some just examples of how we'll be able to not only maintain but improve on the overall. And the last part is that we have not kicked off our government business. And the government business, the floor part is actually going to reduce the overall cost of funds by at least a few basis points for sure in the beginning and then as we grow that business further. And which means that we have other avenues to make sure that the cost of funds is within the control.

My next question is, your vision is more about co-lending, growing retail. And you -- the bank already on technology, but I think the current management team brings a lot of bandwidth with the vision to empower that digital technology transformation to a next level. And the next support which will be required for that is human resource. So how are we planning that, our attack, which was brilliant in the first half of last year. I don't know the reason we slackened a bit. But all these measures are going to bring in a fantastic change as it's visualized in the stock price, too. So what kind of spend are we going to do annually for this year or next 3 years to enable all these growth parts and the vision which you are carrying today?

So that's an interesting point that you are making with those, Choksey. So essentially, what has happened is that the investments in the technology have been made, which is the core solution, which has been running for more than 23 years on Finacle and then a lot of ancillary systems that have been added on top of that, the investments that are required for the digitization, which is digitizing customer journeys for onboarding, and also the analytics part related to massaging the data and making sure that various cuts are provided for branches and sales channels to actually cross-sell. Now the investments have been made, but the products have not been released. So the focus will be essentially on new product development, product launch. And then finally, obviously, we need the new age technology and the new age business processes, people to come in. So that's where I said that there are a lot of this lateral hiring that we will be doing. But having said that, the cost-to-income ratio for the bank has been at about 47%, even with some increase that we have to provide for related to certain statutory actual valuations on the superannuation and especially related to something on the bipartite settlement, which is not something we are signed up, but yet, we want to provide for it. So increased -- increased salary and various cost plus this lateral hiring, but we still believe that we could be in the 48 to 50 range initially, which would come down as the revenues increase. And this is just the investment that we'll make for the future. So yes, we need specialists, but the kind of pedigree that we come from, both me and the Executive Director, we believe that we'll be able to attract good talent and we have the right story to rally for them in terms of their professional carrier growth aspirations.

See, our transformation journey moved from Mangalore to Bangalore. Bangalore, as you easily highlighted, the Silicon Valley of India. How is the bank enabling -- I understand we have dominant share in the...

We would require to kindly rejoin the queue as well as several participants are waiting for their chance. We'll take the next question from the line of Sarvesh Gupta from Maximal Capital.

Congratulations on a good set of numbers. Sir, what would be your guidance for the growth rate in terms of both credit and deposit as well as CASA? Where would you want to reach by end of the exit quarter of this financial year?

So Mr. Sarvesh, thank you for the question. So from an exit for end of the year, I think whatever that we talk about on the advances, the current rate that we are at about 10% on an annual basis. So our total advances figure is about close to INR 63,000 crores right now. And so give or take whichever way, I think reaching about INR 73,000 crores to INR 75,000 crores is what could be an exit number as far as this end of financial year is concerned. Now the CASA, our CD ratio is at about 68%, 70% right now. Now obviously, we want to improve that, which means that the improvement in assets will be faster than improvement in the liability. But having said that, liabilities will not lag behind. But on the liability side, we would definitely believe that there will be from where we are about closer to 10% to 12% growth there, and that would hit a INR 100,000 crore target as far as the bank is concerned. So that would actually make the turnover of the bank look much healthy, where we would actually cross the INR 175,000 crore mark, whereas as we speak today, we are at the INR 150,000 crore mark. So that give you an overall sense on the size of the book, Mr. Sarvesh.

Understood. And one problem which I think most of the small and midsized banks have been facing is the troubling gathering for CASA. So I mean you did talk about making it more sales oriented and all. But if you can throw some more light on your part towards sort of doing a better job on gathering of CASA, which was this has been sort of ailing most of the banks in your -- at your size and scale. That is one. And secondly, you talked about a lot of transformation-related hiring as well as technology. So will that affect materially any of your cost-to-income ratio in this financial year, or you feel that you have enough cushion or the investments have already been done?

So as I was telling you, there are -- and the earlier question also I had answered this, that we will look for new talent, but specifically specialists who are not really available within our existing fields. So that's the fundamental route. The second part is that, yes, there could be an immediate blip as far as the cost to income is concerned. That's where I qualified also to pay that, [ I'll call ], for current 47 can become probably even 49 or even 50. But then what happens is that we will definitely reduce that automatically in the following quarters because one, that capital will also be taken care of. And secondly, we would also be in a position to reduce it because the revenue side also is going to increase. So the NIM is something that we will not give up on. Whatever has happened, has happened. So I don't know whether we could have been more effective. Other banks were effective but other banks in the same midsized segment were not effective, et cetera. I agree with you. But as far as our path is concerned, I think we've got a lot more clarity and focus right now.

So on the CASA side, I mean what's the sort of aspiration in the next 1, 2, 3 years? Can it be reached?

So as I told you that 3.5 years, we want to -- so then automatically, if I have to maintain a simple math there, which is to make sure that our CD ratio is also about, let's say, closer to the 80% and from the current about 70%. So that means that our CASA and the whole funding part has to cater to at least that number, which is 100,000 plus other on the math that you can do. So this is where I think we are heading. But of course, this is a larger vision. We need to execute this granularly and which is what the new management has kind of really got into. So we are all on an execution path right now. The whole team is supporting us on this.

We'll take the next question from the line of Suraj Das from B&K Securities.

Congratulations on your appointment. A couple of questions. You laid the reason for next couple of years in a...

Mr. Das, can you please use your handset to ask a question. Your voice is muffled, sir.

Okay. Is it better now?

Yes, sir. Please continue.

Yes. Yes. So sir, I was asking, you laid the foundation reason for what you were going to do in the next couple of years in terms of growing the bank or a couple of changes that you have highlighted. I just wanted to know, let us say slightly from a longer-term next 3 to 5 years, what kind of latest products or segments will be in your focus. So in terms of loan mix, what kind of loan mix we'll see, let us say, by [indiscernible] when you build that one less or of asset size book. So that would be my question number one.

Okay. So as normally, everyone says this, Mr. Suraj, we'll have to play one game and one session at a time. Now this is something that we have realized, both in -- actually, any format of cricket that you have noticed, that there is always different ways to play. But then to forecast something which is the 3 to 5 years is something that we really have to think through on the basis of how we are executing right now. I think on a 3-year outlook is what I would be comfortable in telling you, and that's what I have told during the other questions also. And the real trick here is that if we look at current focus, which is MSME, agri and retail, if these are the 3 that we really want to focus on and grow those, but then the growth path is on through 3 different ways. One is the physical branch channel, the second is the sales channel and the third the digital channel and collaborations. So then what happens is that from 1 engine, there are 3 -- we are firing from #3 different engines. And I believe that all of them in due course would be firing at the same level, whereby the business would also kind of get distributed easily. But then on the growth path, this is very essential that we actually create more engines on growth. So that, I think, is the way that we are contemplating right now, Mr. Suraj.

Okay. Okay. So currently, the share of retail [indiscernible] like 50%, 51%. So over the next couple of years, is it fair to assume that this share will increase to something like 60%, 65% or so?

So on advances, about 50%, 51% is our current version on retail. The growth path there is obviously that we are growing a lot on the gold loans. We are growing a lot as far as home loans and a couple of other areas. Now what happens is that this will grow. But then the focus, if we actually dedicate a lot on the MSMEs and the midsized corporates, which this bank has not done as much, now I think that pillar will also grow. So it is not that I can attribute a percentage of that retail will only go up. It is actually going to be all the 3 segments that I called out which is MSMEs, retail and agri. All the 3 will grow. And so how the percentages look like, I think let's wait for a couple of quarters for actually the trends to emerge and then we'll be in a better position to align our goals to that.

Okay. Understood. The second question is, sir, on the underwriting side, I mean have you done any changes or let's say you see any gap where you can fill in or any kind of action you have taken? Just wanted to know. You have said many things about many changes on the product side, on the sales side, on the marketing side. However, on the underwriting asset quality side, have you done any changes or you are setting any [indiscernible] there?

Sure. I'm glad that you asked this. One of the things that I noticed after coming into this bank is, contrary to all my past experiences, at a branch level, the branch manager and the assistant branch manager, they, even the smallest of branches in a rural or even a semi-urban locations, they have got the skill on writing credit proposals and credit evaluation and monitoring. So that is a very big strength as far as the bank is concerned. The second strength is that we have over 100 agricultural field officers in the bank who are in different parts of the bank. And I'm trying to consolidate all of them into being back in the field. Now what it means is that suddenly from -- one, this is a real challenge for many other peer group banks where they will not be able to gather 100 people skilled who know about agriculture because they have been academically trained, and also in the bank, they've been trained on the skill to actually pursue that opportunity, which is the agri loans as well as the agri business, which is a supply chain. So what we have done is that the underwriting capability is being enhanced from the current 5 regional processing centers to 8 centers that is going to turn around the loans and the approval processes much faster. The second is we are actually investing a lot into technology, which is basically workflow processes and document management processes, which are already there, but we are trying to kind of get this journey is also included in that, whereby the transfer of information rather than transfer of papers would actually facilitate much efficient processing. The third is that if you scale up digital origination, then we have to develop a lot of credit scoring models for the digital side because we need to get a very quick approval on the loans, and this has to be done digitally subject to certain parameters and scores at the core. And this is what is the change that is being effected on the digital side. So this is, again, an all-around effort based on the data that we have analytically, actually work on that and make sure that we are able to deliver the scoring models and actually create more and more surrogates based on the behavior.

Okay. All right. And last question from my side, sir. In terms of your return to ROA and ROE whatever kind of reason that you are having and kind of transformational journey you are on, so upon completion of this journey, let us say, next 2 to 3 years, what kind of ROA, ROE on a steady-state basis the bank can generate? I mean have you given any thought on that? Or have you made any projection to that, that's the kind of business model that you are developing, what kind of ROE on a steady-state basis you want the bank to deliver?

So, Mr. Suraj, I think the ROE, ROA is a derivative of how well we do on the other parameters. So what happens there is that if you do all of this right, then the outcome of that will be the ROE and ROA. Currently, what we are doing is that we do have a current healthy ROE of almost like 17-plus percent, right? Now that is a very good kind of a sign. The other is that the ROE currently is at 1.4% -- and 1.47% rather. But we would definitely be hovering in the same region of about 1.2% to 1.4%. And that is, I think, a stated objective again. So this would bring in a lot more value back to the stakeholders on a long-term basis, and that's something that we are quite confident about.

Okay, okay. And one more last data [ leaning ] question if I...

Sir, I would request you to kindly rejoin the queue. There are some participants who are waiting. [Operator Instructions] We'll take the next question from the line of Chintan Shah from ICICI Securities.

Sir, just 2 data keeping questions from my end. Sir, firstly, if you could just provide the breakup of GMP movement into slippages write-off recovery and update for the quarter.

Okay. Then?

Yes. Okay. And secondly, sir, also, could you just provide the breakup of loan book into fixed and floating and how much would be linked to a reported and MCLR? And lastly, sir, on the CASA breakup, if we could just have -- help us with the number of current CASA [indiscernible]. And lastly, as on the income part, other income breakup.

The first part related to the gross and the net NPA and the additions and reduction. That's what you wanted, right?

Yes, yes, yes.

So I think what we have is that more from an overall gross NPA, the additions have been, for this quarter, in the region of INR 292 crores. And then the upgradations have been another about INR 90 crores. Recoveries have been about INR 167 crores. And the technical write-offs, if I take it away, that's a very small number and other write-off included, it's about INR 10 crores. The total that has happened in this quarter is INR 259 crores. The gross NPA as a percentage is something that I had called out earlier. Now this is actually very healthy compared to the previous quarter last year as well as the previous quarter this year also. And that is where I think we are headed towards doing this. Now your second was related to the EBLR rates, right -- the percentage to the overall gross credit. Now I think somewhere, this is about what, 20% -- 20.31% on the MCLR, and EBLR linked to GC grade has been about 6.54%. And then to the T-bill has been about 46.94%. That's the overall percentage share related to the gross credit. Now the last one that you wanted is something on the CASA. Can you repeat that question, please?

It is on CASA, the breakup.

So I think -- just give me a minute. So INR 23,077 crores is on savings and INR 4,658 crores is on the current account. And we do have some amount of float, which will be hardly some less than INR 250 crores to INR 260 crores float on [ orly ] accounts, float on [ orly ] and other floats.

Sir, this is very helpful. And sir, just lastly, on the other income part that are INR 324 crores. So other income, could we -- you help us with the breakup at least in the treasury and on no- treasury and or fee income.

For the quarter, the total trading income has been only about INR 8 crores. And the depreciation on investment has been about INR 43 crores. And the other, which is...

INR 273 crores.

INR 273 crores. That constitutes third-party, ATMs, all our fees and commissions. So the fees and commissions is about INR 273 crores. So we have a breakup on that. I think we can even give that to you offline. That includes all the survey charges, guarantee commissions, insurance commissions, ATM, interchange and the locker rental and so on.

[Operator Instructions] The next question is from the line of Anand Dama from Emkay Global.

Congratulations for your appointment. So first, in your presentation, you talked about retail share. I think that is a [ land ] share, right? Because retail, as such, it is very misleading. So that is number one, if you can change that in your presentation going forward. Sir, secondly is that if you look at Karnataka Bank, we've been tracking it for a long, long time. Is that of the asset quality and particularly the MSB book forward has been an issue in the bank, particularly whenever basically, there are bad asset quality? How are you trying contain this? You said that in the -- I mean JCP Bank has a branch-led credit processing system right now. So first, you would want to change that, you would want to change the underwriting the way basically has been happening in the past across the legacy business that they have? And second is that what are the new business lines that you would actually look at, because banks already into mortgages, they are doing gold loans? Any other new products that you will want to introduce going forward? So these are the 2 questions that I have.

So essentially, Anand, what we're trying to do is not to kind of reinvent much as far as the product and underwriting is concerned because the bank has, with great difficulty, come to a level whereby it is limited, everything related to slippages, related to NPAs and related to the overall coverage and recovery. So given that fact, obviously, there are some parts of the bank which are working very well. And there are new parts of the bank which we need to start making it work. Now we need to rely on the experiences. We also need to rely on a lot of digital data. So this part on the digital data, whereby we are able to kind of actually predict on the basis of the behavior which will be related to the data that they do with the bank, for instance. So if there is a consumer having a normal savings account and if he or she actually is in a position we are able to take data from their operational account that they are paying x amount of rental and then there's x amount of bills that they are paying on a regular basis which pertains to electricity and consumer, et cetera, now then what happens is that we know the purchasing power of that consumer. And based on the data, we'll be able to throw a loan, a consumer loan, which is a pre-approved loan on an automatic basis. And this is something that we are developing. I'm just giving you a flavor of where the new product development will happen. Now in addition to that, there's some flexibility that we'll be giving on the liability side because what happens is that a lot of our liability customers who have been with the bank and again, including our staff and customers having their [ goal and meet ] are there for 23 years and 30 years at a minimum. So that means that there's a lot of stickiness, both from a consumer as well as employee perspective here. So the relationships that we develop but the flexibility that we don't offer is something that we want to give. Example that if there are some customers who are holding a lot in savings in a current account, then short-term liquidity, they are not in dire need, then we'll give them kind of a sweep-out option, which will be called the Flexi current account or Flexi [ Kata ]. Now all this could be done by the customer through the net banking or mobile banking platform. Now these are all things that we are doing. We are also going to enhance the activity from each of those customers because with customs, GST and CBDT, then 3 more very good powerful use cases are being brought by our bank into the customers' hands. And again, they did not even come to the branch to do all of this. This is all done. So one thing that I didn't talk about earlier is that in addition to these 3 government-led kind of businesses, where it is on the payment side, but we will also be working a lot on creating a new government business vertical. And that is yet another new area of growth that we will be looking at because the presence in Karnataka and the fact that we've been banking for a number of institutions which are prevalent in Karnataka, this might include even some religious institutions, charitable institutions, colleges and schools and so on. So I think we have the ability to offer this to a couple of government departments also where we need to get [ impacts ]. So all of those are the efforts that we are taking from an overall product definition, product redevelopment and vertical kind of, let's say, new vertical targets.

But sir, you talked about again the new initiatives as you take, but how do you fix the past?

The past is something growing which is the cross-sell part that I talked about earlier, that we have the analytics related to each of those existing customers. So we'll be offering more products on a very focused manner, based on their behavior and transactions to the existing customer base also. And that is what is the analytics factory going to do. They are actually turning out so much of data and supplying it to the branches to say that these are the kind of people you can offer this product based on certain values that we can derive, even if it is not directly, but on a mass basis, related to those customers. So that is what the power of data can enable for us.

Sir, [indiscernible] your NPA is still higher than as compared to some of the other peer banks. But if you look at the specific feature, it's still somewhere in the mid of 60s as such, if we take out the technical write-off. So any plans basically to improve that in the near term, consuming the profit that you actually in at this point of time, which is very, very well high. So you run down your [ NNG ] book first. And then basically look at taking it past 70% and try and contain the credit cost that will actually going in the future. So any thoughts on that?

Yes. What happens is that if you focus on NPA and management of NPAs, then a lot of growth focus will be lost. Obviously, we are looking at a lot related to how to grow the book but contain NPA, and that is something which is there. So if you are asking that is there an objective or a targeted rate of NPA, compared to the last year and last quarter, we have only been coming down. So the trend is looking good as far as gross and net is concerned. The second part is that you talked about the PCR and the actual net of technical write-offs, which is correct, you're right, about 62-odd percent of that we have. But if you really look at the coverage, even on the gross NPA, which is secured by land and building, that's almost like 76.5%. Now so what happens is that, actually speaking, we are secure, but there could be a process which will take a little longer. But on the other side, I think the bank is well protected. So I think that I would rather focus on growth and making the book size larger. That does not mean that the NPA comes as a percentage lower because of the increase in the book side. But on an actual number basis, we tackle -- actual account basis, we will tackle it with the strategy. So I don't want to confuse the old bank and the new bank. So the new bank is the focus that we are talking about. The old bank will continue to do all of whatever they are doing and in a much more efficient way. So we are not going to give up on any of those 2 fronts.

[Operator Instructions] We'll take the next question from the line of [ Ketan Ajavli ] from [ Ruvo Capital ].

I just wanted to know, what is the expected credit cost for FY '24 and '25 in percentage terms?

Okay. Give me a second. So the credit cost right now is about 0.28%. And as we go forward, I think there is a good chance that we'll be making this more or less and now maintaining at the same level. So end of the year, exit also, I think it would be more or less the same level, Ketan.

Same for '25 also?

So '25, we should see a little kind of a reduction because, I'll tell you why, because it is start acquiring digitally. And if we are able to kind of create a book which is all salary loans and flexi loans and everything related to, let's say, combining it with some payroll processing companies where we'll be able to kind of get the repayment guarantees because the next payroll automatically will be coming through the bank and so on, now that is one area that will actually reduce it. So both the digital side as well as a couple of these products will actually help us in reducing. But that's something that we will have to really focus on.

The next question is from the line of Manish Dhariwal from Fiducia Capital Advisers. As the participant is not answering, we'll move on to the next question, which is from the line of Aalok from MNCL.

Congratulations on a great set of numbers. [indiscernible] is being put out clearly applying the vision which the management is looking forward. So this is really commendable. Sir, I had 2 questions, probably, to understand from you. One is more on the asset quality. What is that we're looking in terms of the slippages run rate maybe in FY '24 as a whole, including any element of restructuring portfolio that might come out in the coming periods? So that's my first question.

Okay. So let me answer that straightaway, Aalok. So as far as the slippage is concerned, we are currently at about 0.5% or so. And going forward, I think compared to what we were last quarter, it has reduced substantially; last year, reduced even more substantially. I think this is the best performance on the slippages so far. And we want to continue the same way at least at a minimum, to continue at the same level for the rest of the year. And that would bring us to a very healthy outlook as far as the end of the year is concerned because we would have actually crossed 2 more quarters where even some other stress in the portfolio would have gone through that life cycle at that point of time. And if you are able to maintain at the same level, as management, we'll be happy.

So would you like to keep -- give some numbers on T&P and NPA at the end of FY '24?

See, the market for our kind of midsized banks, on the net NPA, okay, we definitely want to aspire to come down by at least about 20 to 30 basis points from where we are. And so currently about, let's say, 1.43%. If you are getting it down to about 1.20% by the exit of the financial year, we would be happy. Why, I'll tell you, is that our book size is low. And in terms of absolute recoveries, absolute new additions, et cetera, we'll have to minimize to make sure that we are achieving this. The second part is that we are pretty much covered on the PCR. And we actually have the ability to negotiate. And even if there are some slippages to -- even if we were to take a haircut and make sure that we are settling it, we are actually adequately covered. And that is the other part. So we have actually gradually got into a reasonable position, I would not say comfortable position, a reasonable position on the overall NPA. Now barring any surprises that I can't predict. And on the gross, if you are able to manage and the credit monitoring department actually does the work the same way that they have been doing, I think the renewed focus on this overall management of the NPA, I think gross slippages PCR and the net, I think we should be definitely getting to the comfortable range, as I told you, about 1.20%. But we still work on it in the next financial year to reduce it to a lower level because some of the most successful banks in this country actually are at 1% or less.

Sir, would you like to leave us with some number on SMA2 portfolio, how is that looking like?

I think I'll ask my colleague, Bala, to answer that question, SMA2.

Just give us a minute. Yes. SMA2 as of 30th of June is around INR 1,197 crores, you can take it as INR 1,200 crores. Yes. And of course, if you compare, you see it has slightly gone up because of some specific reasons, some of the sectors facing some realization problems on account of some other dispensations taking place in the particular state.

Sir, a question to you. So would it be safe to say that now all of the efforts that like more towards growth and not at asset quality also because if I look at the way our P&L is positioned, there are drivers for margin expansion from here onward as well you are at LDR of 70%. So that gives you a question maybe more on the lending side versus [ government ] side. And OpEx like that might see some increase. With the kind of thought process on lending side, I believe it's got to something more around growth. So what -- how are you looking at that number in these ops?

Yes. I think overall, let's say, on a blended basis, that monitoring is done at a level which is between me and Sekhar, who is the ED here, right? Now at respect to vertical head level, they have a growth which is like very focused. And that focus is -- there's one side which is managing the liability, there's one side which is managing assets. Obviously, between the two, they have to manage the growth as well as the quality. Now the quality does not apply to the asset side alone. So asset side, credit quality is very important. But even on the liability, we do not want to kind of increase transactions and then not really derive the benefit in terms of balances because then the branch -- the banks become conduced for just unproductive volume. So obviously, we are going in for quality on both sides. That is something which has been the guidance given to the management team. But of course, we need to get into a lot of governance mechanisms and the monitoring systems to make sure that the quality is maintained. But on a broad, let's say, high-level basis, the answer to your question is that, yes, we will definitely insist on good quality health as far asset is concerned, good -- and product to kind of CASA relationships that we bring so that we do not have, for instance, customers who just keep on depositing cash. I mean that is really something like we want to convert them into the digital like that. So we will work on such migration projects also.

Mr. Aalok, we request can you rejoin the queue. The next question is from the line of Manish Dhariwal from Fiducia Capital Advisors Private Limited.

Yes. My apology for previously unable to connect. It was a problem at my side, on the way side. So at the outset, congratulations and compliments to you too, especially the new CEO, Mr. Srikrishnan. So we wish you all the best as our fortunes are also too much kind of limit how the margin performs. Sir, my question [ BCE ] is related to this playbook. It's kind of -- it's a playbook that is across the older bank where they already have a huge chunk of customers who have who been banking with them for the last so many years. But to these customers, these new products are more for in the line of, say, personal loans, a variety of other products like car loan, customer, whatever, whatever, whatever. My question is that these customers typically are they new to these products or they have experienced these products not from other originator?

So Manish, [indiscernible], one of the findings at least for my own personal interactions that I've had with customers when I started visiting branches in the last 40 days, I would have listed at least about 4 or 5 regions and at least about 8 branches in every region that make it about almost close toward 40, 45 branches out of the overall branches that we have. I also have talked to a couple of customers who are there present or we have invited them for just some discussions. One of the key findings that I've had is that these customers are very, very happy with the personal relationship that they have with the branch manager or the branch staff. So they will not move at all from the bank. But having said that, when it comes to some new products, digital products and so on, since they didn't find it in Karnataka Bank, they have gone to and gone and used somewhere else. Now so they are digitally savvy, and they want to actually also find out if Karnataka Bank can offer. In fact, so many of them have asked me particularly that you bring me this product, and we will use it in Karnataka Bank. So that way, I think there's a lot of promise in this bank. And it's just that in the past, it has not been utilized. And I intend, along with this new management team, to capitalize on this opportunity because nothing like offering more products to the same set of customers who are already very, very brand loyal.

Absolutely. Absolutely, that has to be the [indiscernible] area. I -- I realize that. And which is why I was trying to understand whether these are like new to these products or you were saying that you were kind of...

Pretty much aware. And in fact, in Karnataka, the advent of, let's say, technology platforms and the opportunities here are actually -- they are all very digitally savvy, let me tell you.

Wonderful, wonderful, wonderful. So try now, what is lastly like a very nice focus plan has been shared in fact, shared that with us as well. Now what would be your thoughts on the equity dilution? Because if you're going to be growing fast, then maybe there will be a requirement of fresh capital.

See, I really can't take any questions which are like forward-looking statements. But having said that, I don't have to tell you, you are an expert in this field when you analyze banks. The raw material and the fact that if a bank has to grow, we need to kind of raise capital, which is a given, right? But at this stage, we are still at a 17% on the overall. And we do have a Tier 2 structure also in place. Now if there's something that we need to do to, let's say, turn the Tier 2 or make some changes, et cetera, of course, that's when there is some opportunity, the bank Tier 2. And this is a continuous process for such banks. So just to let you know if you are on the growth part, we definitely have to look at growth capital. So that is what we are aspiring -- but at this stage, I can't really tell you anything related to our fund raise level or anything because I don't think that the bank has crystallized anything to that level. Also, it is a second month as far as I'm concerned here. And whether assessing the overall situation, is there a desperate need to do it, of course, we would have done that first. But right now, actually, we are in a comfortable position now.

Yes. I mean that's what I was trying to understand. Yes, that -- there is no plan in the immediate term. At a personal level, what you gave are the personal milestones that you are setting for yourself, when you've taken up this very, very interesting opportunity of helming [indiscernible] bank, but then infusing it with new ideas, new technology, new way of doing things, of waking up a very old organization. So how are you making your personal milestones as you...

Thank you for asking this, Manish. I think it's a very interesting opportunity. In fact, having done many of the start-up kind of organizations in my past life, which is all -- at least 3 new banks, this was a very interesting opportunity as I walked into the bank on 100th year. So on 100th year, I actually have declared that this bank will be a startup bank. And that is actually the story that we are creating and revolving all our efforts around that, please.

The next question is from the line of Jai Mundhra from ICICI Securities.

I wanted to understand a bit on the verticalization in the noncorporate products, right? So retail MSME, we agree to what level these products have been verticalized. And I think you had said that the branch managers or the select branch managers, they also have a good understanding of the underwriting practices. So I also wanted to check that some of the banks of your size, they have a business and risk responsibility line with the same individual. Is this the same process here? Or the business and risks are entirely separate functions?

So thanks for asking that, Jai. So this is actually how do we kind of work on the strength of the bank. The bank has certain strengths and, obviously, we need to use it in the right direction. So verticalization-wise, we have already taken some steps. So we now have, in the last about a month or so, we have MSME national heads. We have MS [ standary ] national heads. We have very clearly, within retail, some are only focusing on branch banking, some focusing on assets. And then we have a great marketing team which takes care. And there, again, there is a bifurcation between digital credits and midsized corporate credit and MSME credit and so on. Obviously, this starts all the way from the top. I do not think that we are in any way making a compromise and having a conflict related to business and risk approvals of business and, let's say, credit monitoring, et cetera, because we have clear segregation both at the regional level as well as at the head office level, where depending on the size of the loan, there is a [ slab way ] structure that we have. Whereas I said earlier in my commentary that we have 5 hubs, which are the 5 regional processing hub on credit sanction, which we are making into [ 3 ]. So that means that all of this which happen at the branch level region-to-region, if it is not within the power for the region, it reaches the national head or the national head office level. And where there, again, we do have segregation in terms of category quite, so there's a retail part where the turnaround banks are much faster. Then, of course, there are the larger credits where the turnaround times are a little more slower than immediate approvals and all that. So we have all those segregations in place, and we will improve on that based on some process improvements that we are taking into consideration as we go forward.

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

Yes, sir. Sir, I missed your initial commentary. So pardon me for repeating. For exit of FY '24, what should be our net NPA level? And as the NPA as a provision of book, what percentage are behind, sir?

Yes. That's fine, Saket. I have stated this to the earlier caller. So exit target for us that the net NPA, we are targeting to be around 1.2% from the current 1.4%. And that's an improvement which will depend on a lot related to the LD monitoring that we are going to do. And then, of course, no surprises that we see. But as of now, we believe that all the regions and all the accounts have been reviewed, and we believe that we are on the right track.

And provision book, sir? [indiscernible] book, what would be the provision book percentage?

The PCR is 83%, as I told you. And for the core book, it is about 62% for right now.

Core provisions?

Core provisions.

Okay, sir. And for the NIM statistic, I think you were explaining that at the point of funds will go up going ahead. So taking that into [ processing that ], what would be our NIM trajectory for the exit of the financial year and also going ahead? What's the net...

I think the team has mentioned this in the past, about 3.5% to 3.7% as our overall NIM target. And we are not changing that stance at all. And the reason being that there is a pressure on cost of deposits, which you are aware. But on the other side, there are some loans and new acquisitions of -- on the loan book, which are taking care of a couple of this. But I think that we will still stay with the same guidance on this, 3.5% to 3.7% NIM.

The next question is from the line of [ Yashwant Kumaraswami ], a retail investor.

Congratulations on the results. And I had a couple of questions with respect to asset quality and the growth. I think you have already addressed that, so I will not repeat that question. So yes, the question that I have now is with respect to the retail advances. So last quarter, I remember Mr. Sekhar had identified advances which were yielding less than a government security. So I mean having said this, there was some retiring of advances. So similarly, I would want fewer inputs. Have you focused anything of that sort? And at the same time, can we expect the retail advances to improve [ cover ] your own?

So Sekhar is here to answer the question, but let me also tell you that more from my own perspective, as I have come into this bank, one of the first exercises that I did was in terms of tenor wise percentage yield on the asset book and visit the complete review. And obviously, there were some actions that we had to take to exit some and improve the rates on some, et cetera. So repricing and so on, which is a continuous process that is happening. But if you want anything specific related to what Sekhar said, Sekhar is right here. So Sekhar, if you can take on that last part, what we are, which is related to what was stated by you earlier and how it has improved?

So good to connect with you again. So these are some tactical calls that we take from time to time. So at that time, clearly, we find an arbitrage opportunity where we had advances that were yielding less than what was available through the investment options. So clearly, took those costs to retire those low-ending advances. Having said it, like Sri mentioned, we'll continuously monitor the opportunities where we can rationalize costs, exit buckets, which are buckets and tenors which are not profitable. That's a continuous process -- all right. I think -- and this clearly is reflecting on our corporate -- corporate loan book has moved from mid-7% to slightly above 8.29%.

We'll take the next question from the line of Rakesh Kumar from B&K Securities.

Sir, I have a couple of questions. So just I will read out my question, and you can respond to that. So we have a couple of low-hanging fruits currently in terms of the LDR number, LCR number. And we're in a scenario when the credit quality may remain fine for some time. And so you have that much time to ramp up your business in that time. So the question is that we would like to first take a proof of the -- some opportunities that we have in terms of asset mix, LDR number being low, number being very high. So is that the first thing that you are going to do? Or like what is the plan that you have on the branch expansion side because of vertical hedge that we are going to build up, which are a loan segment where we are going to increase the market share? So these 3 things that you can highlight and the first question also.

Sure, sure. So you're right that there are certain strengths in the bank. And obviously, we do not want to move away from those strengths. We'll work on those strengths to extract the maximum. So we are not going to kind of desert that journey for sure. So that is point number one. Point number two is that all the branches and all the regions have been given this target clearly to increase CD ratio. Now that means that, let's say, that when we walk them into this between me and Sekhar and new management in the bank, the CD ratio was definitely at the 60 to start with from the 50 because of the push that has happened. It's not that it happened in the last 2 months or 3 months. But this is a continuous push that the bank has been trying, but I think we did little tweaks on certain processes to make sure that the whole turnaround time is faster. So we see a lot of traction and whereby the CD ratio is currently at 70%. But are we happy about 70%? The answer is no, which is why we want to kind of move to the 75% as an intermediate target. So that is the second part. Now the third part is you asked about the branches expansion. This financial year, we do have plans to open about [ 50 ] branches, and we'll continue our efforts to do that. But on the other side, I think early part of the commentary, I said that the digital expansion actually has no boundaries. So you are aware that we have already invested a lot on the digital side. So all the back-end systems and the front-end access, et cetera, has been provided for. It's just that we need to add a lot of product journeys, which is what currently is being done. There are certain approvals on the loan side where the digital approval is actually 100%. There are many which are at the 70% to 80% approval, but there is a manual repair or manual intervention of about up to 20% to 30%. So obviously, we want to get to all that. And thereby, what happens is, is the cost of acquisition and also the fact that our reach is going to be not just limited to our branch presence, it's something that we are really going to benefit from if we extract the maximum from these technology investments that have been made.

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

Yes, sir. Sir, the point I was asking earlier on the ROA trajectory, also what should be the [indiscernible]. And for the detection of NPAs, how are we using technology, especially AI and the system processes, wherein we will have early detection of NPAs going ahead. Since I think you -- and what portion of the loan book is attributed towards partner loans and that too on the unsecured part?

Okay. So first question is on ROA. ROA is about 1.47%, as I had mentioned earlier, and that continues. And here again, as I was mentioning to an earlier caller, that ROA is a derivative. And this is something that I have to grow the business. It will keep changing. But on the other side, we will definitely not be working towards the target, but not giving away the rate also. So it will definitely be almost hovering around the same region. The second part is that the investment we have done in technology. You were asking about the NPA monitoring and automation related to that. All NPAs are declared from the system, and we do have an application which is called [ Versasoft ], which actually monitors, delivers, including early warning signals, EWS, as well as everything related to, even sending out notices automatically in case of delays in a probable kind of event foresight of some delay. So there's a lot of automation which has been done in this, and this is a big requirement also because we do not want to -- [indiscernible] does not want anything to actually monitor and declare NPAs on the basis of the manual system because, obviously, they could be prone to errors. So this is something which is already in play. And we will continue to enhance this because, obviously, there are lots of internal engages when it comes into the NPA bucket. And then the whole legal and recovery actions, et cetera, also needs to be added, and that is what we are trying to integrate now. And we have multiple systems which we will all integrate by getting the handoff from one and the other system takes over. So this is something which will be a seamless interface that we are building right now. I've answered all your questions, sir.

Ladies and gentlemen, we'll take that as the last question for today. I would now like to hand the conference over to MD sir, Mr. Srikrishnan H. and ED sir, Mr. Sekhar R. for closing comments. Over to you, sir.

So thank you so much for your participation. From my side, as the first time that I have met with analysts. We have uploaded our investor presentation on our website. This is, again, very clearly articulating all of whatever is required. And as Sekhar is here and he's been in the bank earlier than me by a couple of months, I'll hand over to Sekhar for him to do the concluding remarks of today's conference.

Good evening. Thank you, everyone, for the overwhelming response. On last count, we have around 285 participants. I thank everyone for taking the time out. As we articulated, this is an exciting time for the bank. We've declared a record profit. But the template sets for the future is very clear. We are a bank with a legacy bigger to embrace the future. And there are clearly identified segments and businesses which we will leverage. That also we shared, primarily focusing on MSME, agri and retail. We'll also leverage our extensive presence in geographies that we are already there for growth in liabilities. All of this while focusing on asset quality. We have the necessary teams and structures in place. In my last call, I articulated how we have created those vertical structures, focusing on retail and retail, wholesale, asset quality, credit underwriting being separated from business. All those best practices are now in place. And we believe that we are fairly well engineered for growth along the lines that we have projected. We'll keep in touch with you and keep reaching out to all of you at regular intervals. This is a mandate that myself and Sri have taken up on ourselves. We look forward to having these conversations on a regular basis. Thank you, and thank you to the moderator for hosting us.

Thank you very much, sir. Ladies and gentlemen, on behalf of Karnataka Bank, that concludes this conference. We thank you for joining us, and you may now disconnect your lines.

Thank you, moderator, for handling us well. Thank you so much for participating.