The Karur Vysya Bank Limited (KARURVYSYA) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Q1 FY '27 Earnings Conference Call of the Karur Vysya Bank. We have with us today the management team of KVB, represented by Mr. Ramesh Boddu, MD and CEO; Mr. Sankar Balabhadrapatruni, Executive Director; Mr. Chandrasekaran, Chief Operating Officer; and Mr. Ramshankar, CFO. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ramesh Boddu, MD and CEO, to take us through the highlights of the quarter gone by, after which we will open the floor for questions. Over to you, sir.

Thank you. Thank you, Sagar. Good evening to all of you. On behalf of Karur Vysya Bank, I extend a warm welcome to everyone joining our bank's quarter 1 earnings call for the financial year '26, '27. Our financial results and accompanying presentation have been made available on our website, and we trust that you would have had an opportunity to review them thoroughly in advance for this meeting. During our Q4 earnings call in May '26, we had indicated that the outlook for financial year '26, '27 would remain one of cautious and moderated growth. We also emphasized the need to navigate the evolving operating environment carefully while ensuring that growth is pursued without compromising portfolio quality. Excellence is not a destination. It is a discipline. This quarter's performance reflects the discipline embedded in our business model, risk management and customer engagement. We are pleased to report that our key performance indicators are broadly in line with the guidance shared earlier. During the first quarter, we successfully front-loaded our business growth consisted with our approach over the past few years. Importantly, this growth has been balanced and broad-based with sustained performance across our 3 key priorities: growth, profitability and asset quality. This reflects the continued strength and resilience of our operating performance from the beginning of this financial year. As of 30th June 2026, the bank's total business reached INR 227,267 crores, reflecting our sustained growth momentum in the first quarter with an overall business increase of 6% quarter-on-quarter and a year-on-year growth of 16%. Advances rose to INR 104,680 crores, representing growth of 6%, again quarter-on-quarter, while deposits increased to INR 1,22,587 crores, achieving a quarter-on-quarter growth at the rate of 6%. The composition of our advances portfolio remained broadly stable during the quarter with RAM segments continuing to account for 86% of the portfolio and the corporate segment contributed to the remaining 14%. The Commercial business segment demonstrated a 6% growth over the sixth -- over the previous quarter, driven by higher disbursements in both Small Business Group and Business Banking Group. So Business Banking Group, the quarter-on-quarter, the disbursements are up by 45%. The growth came predominantly in sectors like food processing, retail and wholesale trade, engineering, transport operators and CRE. Tailor-made products such as GST surrogate, for customers with limited financial data. And open term loan product started during the last quarter are slowly gaining traction in the current year. Small business group relationship model has been extended to branches now from the earlier 75 branches wherein the primary objective of a relationship manager is to acquire NTB customers new to bank customers. Retail advances increased by 6% quarter-on-quarter, primarily driven by growth in [indiscernible] loans and mortgage loans. Retail [indiscernible] loans registered a 12% growth during the quarter. Mortgage growth registered a growth of 9% over the previous quarter. Our BNPL book grew by 2% during the quarter, mortgage-focused branches have been increased from 144 branches to 175 branches this year. We have relaunched our credit card offering to our existing customers and plan to extend it to the new to bank customers in the second half of this year. Loan aggress mutual funds product is expected to be launched by the end of second quarter and the integration with the IT has been more or less completed. Overall, the retail assets grew by 23% on year-on-year basis. In line with the prevailing market scenario, gold prices have witnessed a decline over the last 3 months. Despite various challenges, the agricultural loan portfolio recorded a growth of 5% during the quarter. Although the monsoon onset has been delayed and supplemental irrigation programs are being implemented, the overall outlook remains neutral. Agree [indiscernible] loans constituted 92% of the portfolio and other agri loss cost [indiscernible] 8% of the portfolio. The overall LTV is maintained at 63.7% a for agriculture gold loans and 56.83% for the nonagricultural gold loans as at the end of June 2026. We closely monitor the LTV levels. Any bridge triggers an automated alert the branches. The corporate and institutional loan portfolio demonstrated, again, a growth of 6% during the quarter primarily driven by the new relationships in segments like commercial real estate, capital market participants and EPC and infrastructure sectors. Disbursement as well as the growth has been the highest in the last 5 quarters in this vertical depicting revival in this segment. We continue to focus on great substitutes and had a growth of INR 171 crores during the quarter, all of you can recollect a few quarters back. We have told our revised approach for the credit substitutes. So that's the reason we have grown again INR 171 crores during this quarter. We would persist our focus on ATB customers and accelerating A and above on this butler segment for the trade subscores. The bank's liability business constitutes 54% of the total business of the bank. Our deposits grew by 6% during the quarter, driven by gains in both retail term deposits and CASA. CASA grew by 9% over the same period. Car portfolio -- current account portfolio grew by INR 1,753 crores, which is 19% over previous quarter. The SA portfolio, that is a savings account portfolio, grew by INR 901 crores, which is 4% on a quarter-on-quarter basis. Overall, CASA growth was supported by both ETB and NTB segments. With existing customers continuing to play an important role in driving balanced growth and strengthening primary banking relationships. So we feel that this momentum may continue to some extent here and there. On the CASA growth, NTB customers growth was 31%, and ETB customers accounted for 69%. Additionally, more than the anticipated end of the quarter inflows flowed into the current account they have further supported overall deposit growth. The CASA acquisition team has made significant progress in acquiring premium NTB customers. They contributed 12% for Q1 growth. Retail households continue to be the backbone of our deposit franchise, contributing to 72% of our total deposits. Going forward, our focus is on strengthening retail liabilities, while increasing share from nonfinancial corporates, SMEs and transactional relationships to drive sustainable growth. Retail deposits increased by 6% during the quarter. We had increased the rates for the special deposits. That is for the time deposits I'm talking by 40 basis points during the quarter. Our focus was to propel the retail term deposits to fund the advances growth, which we have front loaded. This has enabled us to have some sizable growth in retail TD as you see from our presentation. One of the priority areas of the bank is to improve our business with NRI. The RBA relaxation on FCNRB interest rate ceilings have enabled the bank to offer more competitive FCNR rates, improving our ability to attract NRI deposits and retain existing relationships, though leverage facility is not possible for our brand due to our non presence in the overseas or in Gift City. Our rate strategy continues to be dynamic and market responsive. While we will actively manage deposit costs, our focus remains on balancing TD growth with stronger CASA accretion to maintain a healthy and sustainable funding profile. Regarding margins, we had provided guidance in the range of 3.7% to 3.8% for the full year financial year '26, '27. I am pleased to report that we could successfully navigate the quarter and maintained our net interest margin at 4.26%. If we reckon one-off item, interest recovery of 8 basis points also will be there. With that, it would become 4.34. This 4.26 is 1 basis point higher than the NIM of the previous quarter. Despite the reported cut by 125 basis points since February '25, we could improve our NIM over pre-reduction time by effectively calibrating the asset mix and optimizing the leases. The cost of deposits increased slightly by 4 basis points on a sequential basis as rates of deposits were increased during the quarter. We expect 5 to 10 basis point increase in next quarter. The yield on advances increased by 8 basis points during the quarter and remained at 10.01%. The fixed rate loan book which was 29% at the end of March '26, increased to 34% of the total book at the end of June '26. During the same period, the MCLR linker book reduced from 14% to 9%, while the EBLR book link remained at 55%. The support from such mix may come down in the coming quarters. As said in the last call, competition and retention of customers may bring down the yields going forward, and we anticipate a reduction of 10 basis points in the yield on advances in the next quarter. So what I said is received at least not only getting the fresh business, even for the [indiscernible] existing customers, some where it's becoming necessity for us to compromise on the margins. Yield on investment remained stable at 6.83% in quarter 1, in line with quarter 4 despite the softening of the market rate during the quarter. Our aspiration is to improve the portfolio yield to around 7% by the exit quarter of '26, '27. This improvement is expected to be supported by maturity of lower-yielding securities and their reinvestment into higher-yielding securities, including SDLs which offer an attractive spread over central government securities. In addition, we are pursuing a calibrated buildup of NSLR investment portfolio, as I mentioned earlier. With the current visibility, NIM may remain at the levels of 4% plus the next quarter. However, we are not changing the full year guidance, which would be reviewed at the end of September. The operating profit for the quarter was INR 1,096 crores, reflecting a 36% increase compared to the same quarter in the previous year, but a 12% decline sequentially. Decline was attributed equally at net revenue level 2 due to one-off items like profit on sale of assets, SR recoveries higher in quarter 4 of last year and write-off recoveries higher OpEx level on account of AS15 in the quarter 1 of the current year. Net interest income has grown by 32% year-on-year, depicting highest growth in the last 5 years and 5% sequentially. The recalibrated asset mix and yield optimization have resulted in net interest income growth in spite of reduction in the repo rates over last 1 year. However, noninterest income for the period stood at INR 442 crores, down from INR 616 crores in the previous quarter. So by 28% sequentially, which is a reduction of INR 174 crores. Now let us look at the breakup of this INR 174 crores. So for that first thing is the core fee income was down by INR 38 crores as we had a profit on the sale of assets of INR 18 crores during last quarter. Recoveries from written-off accounts amounted to INR 103 crores compared to INR 216 crores in the prior quarter, a reduction of INR 113 crores. So all of you can recollect that. During my initial call itself, I have made it clear. So there cannot be any sort of a uniformity in the write-off recovery because many external factors are involved and legal issues are involved. But -- our efforts will continue in the whole process, a few quarters, it can be more few quarters, it can be low. We are aiming to have a recovery of INR 500 crores to INR 600 crores, that's what I have mentioned. So that way, first -- last quarter was good. This quarter is subdued that. Investment trading profit were lower at INR 38 crores during the quarter and previous quarter we had a one-off star recoveries of INR 55 crores, which we didn't have this time. All the above have resulted in decrease of net revenue by 6%. Our operating expenses for the quarter stood at INR 769 crores, representing a sequential increase of INR 41 crores. Out of this, establishment costs grew by INR 58 crores sequentially as provision requirements for return on benefits, AS-15 went up by INR 47 crores. So our OpEx increased sequentially INR 41 crores and AS-15 increase itself is INR 47 crores, as discount rates fell by more than 40 basis points during the quarter. Normal salary cost increase was INR 12 crores. However, reduction in other operating expenses by INR 17 crores sequentially compensated a higher establishment cost, resulting in 6% overall increase in OpEx during the quarter. The above factors had an effect on sequential decline in operating profit by 12%. Though there's a sequential drop in the operating profit. The additional gain of last year has more or less been taken care by additional provisioning of INR 163 crores, which we made during last quarter for war and thus, effect on the net result last quarter also was negated or neutralized or nullified. Net profit for the quarter -- this quarter was INR 756 crore, an increase of 4% quarter-on-quarter and 45% year-on-year. During the quarter under review, an allocation of INR 90 crores was made towards NPA migrations, standard assets and restructured assets, resulting in a credit cost of 0.33% annualized. To recall, we had made a provision of INR 163 crores to sectors affected during the ongoing geopolitical tension during last quarter, and we have retained the same as [indiscernible] still remain the same. With respect to ECL provisioning guidelines, the bank has maintained adequate provisions and buffers through floating and prudential provision over the past few years. The total provisions to advance is at 1.7%, which should take care of the transition ideally. The ROE for the quarter stands at 2.11%, marginally better than 1 basis points from previous quarter. Gross slippages for the quarter amounted to INR 138 crores, representing 0.13% if we annualize it comes to 0.53% of the loan book, sequentially lower from INR 187 crores slippages during last quarter. Though there is a spike in SMA 30 levels from 0.17% to 0.22% sequentially, we are confident in our ability to maintain the slippage ratio below 1% levels, as we have previously indicated, through ongoing diligent account monitoring. Owing to reduce slippages, improved recoveries and upgrades as well as write-offs, our gross NPA has declined marginally by 1% to 0.74%. Our net NPA remains steady at 0.19%, and we are committed to maintaining net NPA levels below 1% of our loan portfolio. The proportion of our standard restructured loan portfolio has further decreased to 0.37% of our total loans and continues to perform satisfactorily. Notably, a substantial portion secured by collateral and we maintain a provision of 41% for this portfolio. Our CRAR Basel III continues to be healthy and is at 18.61%, providing us comfortable headroom for growth. Our liquidity coverage ratio for the quarter is at 123.61%, and we would maintain this in the range of 150% to 120%. We opened 2 branches during the first quarter. So though we have planned for opening 50 branches during the first half of the year, so we will be completed 25 branches before the end of this quarter and the balance before the end, though our efforts are very serious, and the external factors like availability of proper premises and other logistics and agreement, these things is taking some time, but we are on the job. The first quarter of the current year has provided a strong start to the financial year, while we remain mindful of the evolving operating environment, our focus on prudent growth, operational efficiency, customer centricity and Disciplined risk management gives us confidence in delivering sustainable value to the stakeholders. I would like to express my sincere gratitude to all the investors, analysts and stakeholders for their continued confidence and ongoing support. We are committed to upholding this trust through continued strong performance in the future. To sum up, our guidance for credit growth of 1% or 2% over the industry growth continue -- will be continued for the rest of the quarter. NIM for the full year will be in the range of 3.7% to 3.8%. Our GNPA is expected to be less than 1.5% Net NPA will be less than 1%, and slippage is to be less than 1% of our loan book. Just as a word of caution, YTD growth, this first quarter growth should not be considered as an indicator for the full year growth at the tempo. So as I said, we plan to front load in the first quarter and to some extent of the second quarter, then we will take it forward. So now I'll be glad to respond to your questions. Thank you all.

[Operator Instructions] Your first question comes from the line of Jai Mundhra with ICICI Securities.

Congratulations on a great quarter, sir. Happy to hear from you on maintaining or slightly revising at least Q2 NIM guidance. So good to hear that. Sir, I just wanted to check on growth guidance, you maintain 100 to 200 basis points above system level growth. Just that the system level growth itself has moved from last quarter to now around 18% types. So that is I wanted to check it. And fair to say if system remains here, we will still be higher than system. That is I wanted to check.

Thank you for the compliment. So Jai agree because our intention is 1% to 2% we thought, but system has [ mold ] much early. Now we need to look at the texture of the growth of the system. Suppose the system is growing more in the corporate because earlier, corporates were moving towards the fixed income, that is treasury and CDs and all. Now that the bank's interest rates have been good, and they are moving towards that. So as you know, earlier, our corporate used to be 45%, we have brought it to 14%. So that way, going back to again, corporate for the purpose of our system growth will defeat the purpose of the whole excess we have done in the last few years. So that way, we will look at this, if under the Ram, if the system is growing, we will try to be 1% above that. If the system is growing well in the corporate, then we have to be more cautious in looking at that, not to come at our earlier mistake.

That is very clear, sir. That is very clear. So thanks for that. Secondly, sir, on SME loan growth, right? So this quarter Q-o-Q loan growth has been healthy. But if I look at Y-o-Y loan growth, as earlier, we were around 20%, then we move to 18%, and now it has come down to 12%, 13%. You have sort of made -- seems to have made a course correction when we last quarter, you said that we may possibly look to grow more versus looking too much into rates. So are you seeing any, let us say disturbance, which is constraining the loan growth in SME segment? Or it should again come back to usual 18% types loan growth.

Good question, Jai. In fact, you see, last quarter, you would have observed, our growth was flat in our commercial segment. The reasons for many because we didn't want to grow in the last quarter -- last few days. And second thing, there was a pricing competition also there. We didn't want to be there in that race. So now that, that is over first quarter is, again, the normal that way, we have gone for that. So other than looking at some [indiscernible] praising competition here and there. We look at it as it is demand is there. If you look at the NTB and ETB together, the disbursement growth over last year, it has come to 45% in this commercial segment. So with these few other accounts where we are not comfortable either quality-wise, asset quality-wise or pricing-wise, we were liberal in loving them to go. But despite that, we are able to get a growth of 6%. With that, we are reasonably okay that we'll be able to grow at 18% for this year. It should not be a problem. Last year, last quarter was an aberration. If you take out the Q4 of last year, and overall, our growth will be against 16% to 17% last year also.

Right. That is correct. And sir, on this commercial, if you can specify how much would be ECGS disbursement and how much that we have done so far and how much could be the sanctions?

ECGS is concerned, we are receiving many requests, but we are just looking at it in such a way. Suppose if a unit is already struggling. And if they want to take an ECGS and all, because not on account of the war and other things and all, then there is no point in further [indiscernible] the money may not come back. So we are looking at those sort of aspects. We have got a number of applications we have got it. But currently, if you look at it, INR 75 crores has already been disbursed, and there are many applications in the pending. So this growth what you have seen in the quarter 4 is nothing much on account of ECGS, and that will come in the next quarter. So coming to this disbursement also, as we were mentioning, so 2,232 customers have applied. Our ED will respond on the ECGS.

Yes. Jai, under ECLGS, in commercial segment, 2,232 customers have applied till now. Now we are screening the applications. And until now during Q2, INR 140 crores has been disbursed. Now under corporate similarly, we found that 176 units are eligible and we have disbursed till now 6 only, but towards to the tune of INR 80 crores everything in Q2. So out of this 176, maybe 100 may be eligibility has to be seen as to the real requirement as prescribed by the RBI.

Right. And I have some last 2 questions. One is, sir, on gold loan. So if you can specify the, let's say, blended yield for gold loan portfolio, including retail and agri put together and I just wanted yes. So that is one.

I'll tell you, majority of the portfolio is under [indiscernible] only and retail is a smaller portion. So overall, if you can look at it, you can think of between 11% to 12%, we can think that can be the yield we can get it. That's what we can think. But one more thing you need to keep in mind. I agree, we'll also have the benefit of PSL also sometimes it may go to 11.25% also, which we are not factored in what I have told.

Right. And last question is, sir, last time, you had mentioned that cost of funds will go up and yields you will also look at customer requests, et cetera. Cost of funds have gone up, but yields have also gone up, right? So it looks like while delivering 6% growth on a Q-o-Q basis, front-loading business you still have managed to get higher yields, right? So either -- I mean the environment seems a little bit more supportive, right, that you must have thought at the beginning in the last quarter. So is that broad understanding correct that you can still charge maybe slightly, I mean, remunerative yield while still delivering growth. That is the -- that was understand.

I fully agree with you, but it is slowly becoming a tightrope walk in the sense that to retain them, the main talking about the relationship, how long we are there. All these things will work to some extent. And they may give an 11th of 0.5% or something like that. And beyond that, if the market is coming down actually others are offering. So it becomes difficult for us, you have to offer a lower yield. So that way, if you come down from the ticket size. Suppose, if it comes down to INR 50 lakhs, INR 40 lakhs, INR 50 lakhs and all your yields will be good, but then you require a lot of labor, running, maintenance, monitoring, all these are also required. Over a period of time, what we try to do when our average ticket size used to be around 40 lakhs, slowly, we have brought it to INR 65 lakhs, INR 70 lakhs. So what we thought is instead of adding so many smaller accounts, at least it is higher, bigger ticket size is there, number of accounts will be handful and all, we'll be able to manage. So now we are trying to balance these 2 and accordingly, as I said, few accounts, we may have to leave or we may have to consider reducing the yield. This quarter, we will see, based on that next quarter, this con call is there, we'll be able to give you clarity on where we are and what we want to do.

Your next question comes from the line of Pritesh Bumb with DAM Capital Advisors.

Just a couple of questions. One is on this recovery interest which you have mentioned or similar interest was in last quarter, but we had also reported a high recovery from return of asset or recovery NPA, but this time it is not there. So anything I am missing -- because there seems to be not that much of large recovery reported.

So it depends on the account. It's not something -- there may be some cases where municipal recovery will be more interest recovery may be less okay? Sometimes it will be more. So it's not something like it will be a common meeting of the cases. But for our decision purpose, we are excluding that even the name of quarter 4, which you have mentioned is excluding the interest.

Right. That is clear yes. But just wanted to check that if anything anywhere included in that -- that's really clear. Second...

Pritesh, what you said is correct as it been there reflected in the write-off recovery. So that is a factor which is the difference between the last quarter and this quarter. True -- it has come in interest and not in the right of record amount. True.

Sir, second was on credit cost. We've seen another quarter being a good credit cost. How do you think about broad cost given that we -- our asset quality is quite good. But we are going to face some disruption in terms of ECL. So if you tie a both, how do you see this ongoing credit cost from here on?

Agreed, if we split this issue into 2 parts, ECL. ECL still working is going on. But as you know, 2 years back itself, we have provided INR 25 crores each quarter, INR 100 crores we have provided -- so that way, we have a safety net as far as that is concerned. If at all something balanced here and there with the numbers what we have, we'll be able to manage, ECL should not majorly hit us for 2 reasons. One is our SMA numbers are good, more or less, not only now for the last few years, 4, 5 years, 3, 4 years, if you can look at it, we had a focus on the quality of the book and all. So that way we feel it should not hit us too much. Now coming to other credit cost, what you said is correct. Our focus is on the recovery, not only recovery [indiscernible] level and above our slippages. All these things, when we look at it, credit cost, though, we indicate 1% I somehow feel it can be much lower than that.

Correct. Sir, another question was on right of pool. What we've seen in last few years that we used to do a decent write-off. But if you look at last year versus FY '25 and this year's run rate, which is from Q1. Every year, the pool of write-off is shrinking by about 20%. The active ride of pool, which I'm talking about. So eventually, we'll see a lesser write-off pool going ahead in the U.S. which actually contributed to about 15% to 20% of profitability. How do you think in that perspective, if I look at the next 2, 3 years, what will replace that 15%, 20% in other income levels.

Correct. So there are 2 aspects here. Suppose if the write-off poll may come down. But the NPA [indiscernible] is there. If that is recovered, any upgrade will support us though not up to PPOP. It will be coming up below PPOP and the provisioning will be released. And even if provisioning is released, the need for further provisioning may not be there and it will go in to create -- so that way, it may reflect either above PPOP or below PPOP. And finally, it will reflect in the ROA thing. And second thing, all along, people may have certain apprehension saying that write-off -- with the write-off only we'll be able to cross 1.6%. If -- this quarter, the difference between last quarter and this quarter is INR 113 crores on account of write-off lower. But despite that, we are able to get an ROA of 2% plus. So which gives us some sort of confidence to us. Even if write-off recovery is not there over a period of time this much. In a due point, if you look at it, even at 25 basis points, it comes rather than 40, 45 basis points, then your ROA will not come down by 1.8%, 1.9%. That is one part. Second part, if you look at it, there are a few levers which are available to us. One is we have been mentioning that our non-fund business -- so we have been trying for the last 1 year. If you can look at it, the numbers for the nonfund business, the income started showing first quarter also compared to last year quarter, the guarantee business income is up. So though the first quarter, this time, the TPP income is not as expected, we need to work on that. If the TPP income also works and this nonfund also works. These can slowly take over this quarter, we are going to have a reduction in the write-off. In addition to that, if you look at it, we are trying to work on the CASA also. CASA, if you had to seriously work on that, there at least 10, 15 basis points if they get the benefit in the cost of deposits, basis points there and 10 basis points in the other income, these 20 basis points will offset this reduction in the write-off recovery. So that way, on a steady-state basis, that plus provisions what all are going to be released after the PPOP altogether, there should not be much shocks on the ROA is concerned.

Sure. And very last question. I think last quarter, you had announced or desire to step down with a 2-year period. Any discussions on the board for next -- I mean, too early, but a lot of banks have also been danishedin management. So any discussions on that point?

Yes, yes, absolutely. What is already abreast of this. They are looking at it. At the appropriate time, call will be taken, and there will be sufficient time for the transition and for the handholding and for growing also a worry on that count. Board is equally aware they are serious about this.

[Operator Instructions] Your next question comes from the line of Suraj Das with Sundaram Mutual Fund.

I have 4 questions. First, on the car growth, I think car growth has picked up pace over the last couple of quarters to double digit. And this quarter, it was 15%, 16%. Just wanted to check if there is anything lumpy here, which is probably driving this incremental growth and hence may not be sustainable going ahead? Or do you think that the car share can continue to go up. That is question 1.

Okay. Now I agree. So in my inaugural address, also, I have mentioned clearly. Agreed, there are different types of these things have come up. But this quarter end flows have also supported there in that. And every quarter, whether that will be coming or not, we will not be knowing. That is the reason, as I said that on a steady-state basis, what we have planned, it will come up. There can be few flows, which have come into the account, which may go out also. But overall, our focus will be there on the car to maintain this CASA ratio. So at least what all we have over and above that.

Okay. Okay. So you would like to maintain this double-digit kind of a growth in CASA in car specifically? Do you think...

Our aim is to be that only because then only we will be able to reduce our cost of deposits by 5 to 10 basis points. Our intention is to do something on the car as well as CASA both. We are absolutely serious, as far as deposits are concerned, now that we have front-loaded the time deposits after getting some certain higher pricing and FCNR also when we are working on this. Now the serious focus for us, all of us in the bank is CA and SA. We'll work on that this year.

Sure. Sir, last quarter, also tweaked some of the TD rates, specifically, I think, greater than INR 3 crore bucket. And also there is stat you are highlighting. So can this lead to let us say, higher cost of deposit in coming quarters? Because this quarter, there is some Q-o-Q uptick in cost of deposit. So what is your view...

That is the reason I have mentioned that some [indiscernible] hike will be there in the cost of deposits because the further repricing what all are happening in the next few quarters also. Few of them are lower buckets also are there. They also get repriced. But what we thought, so either a SAR or TV. Overall, if you are able to make money, intention is to get into clients. Our priority is next. But if we are unable to get cans or to the extent possible, declining TD and distributing the growth of TD is suicided. The reason is if we are able to make money out of that also, we should not with the opportunity. You would have seen our overall yield on advances has come to 10%. With this 3D growth also, we are able to maintain 4% plus on the NIM front. That's why we thought saying that. So we [indiscernible] a TD and we'll focus still on CA and SA. This surprising what you said that we have some certain bearing for the next few quarters. And we need to live with that. That is the reason still I mentioned that in second quarter, I cannot give any sort of a commitment on the Finally, the ROA -- sorry, NIM, 3.7%, 3.8%, what I have mentioned. Once this quarter, we will see we'll have a clarity, then we will take a call on that.

Sir, third question is on MCL 2 that you were doing. I wanted to know, is it applicable for the -- only for the incremental loans? Or is it also applicable on the existing loans as well?

Okay. Understood. Yes.

That you were doing on the card rate basis side...

Correct, correct. But at the time of repricing only that gets affected, whereas in respect of EBLR, which are linked to repo. So our tax rate further loans get immediately cash credit loans next day, it will be implemented in whereas term loans will be implemented at the time of repricing, whereas MCLR, when the interest reset date is there. At that time, the revised rate will come up not immediately.

The last question on the retail loan growth side. I think after many quarters, at least there is some positive traction on the BNPL segment this quarter. So I think -- I mean, are you now comfortable with the overall environment in the BNPL side? Will the growth now catch up with the overall group?

I understand. For the last 6 to 8 months are 1 year also, we are comfortable. The reason is simple. At any point of time, the cohort laws when we see with the partner, though they have given a FLDG of 5%, the cohort loss has not crossed 3.5 at any point of time. So how we are mindful of the fact that the risk and guardrails and all, our partner, Axio is also equally interested in maintaining these things. Then there was a small organizational change in Axio, Axio was taken over by Amazon. Amazon was taking having a small share in the Axio then they found value in opposing all these arrangements, what they have. Now Amazon has fully taken over Axial. Now that it's 100% old, those sort of internal adjustments are happening once all these things are over, then we will be back to business. We have not reduced this business on account of any discomfort -- it is because the organization structure is undergoing in Axio. That's why we light low. Any time with the season [indiscernible] coming up and all, we can be back to the normal.

Your next question comes from the line of M.B. Mahesh with Kotak Securities.

Just 2 questions. One, on the provision line, can you help break of that number? Will we get the answer for that. Just wondered what your feedback on the decision to increase the fixed rate portfolio in your book? If you were seeing cost of funds kind of rising, just trying to understand why are you pushing for a higher fixed rate.