Axis Bank Ltd

NSE:AXISBANK

Earnings Call Analysis

Axis Bank reports solid growth and improved asset quality in Q2 FY '25

In Q2 FY '25, Axis Bank achieved a consolidated return on assets (ROA) of 1.92%, an increase of 9 basis points year-on-year, and a return on equity (ROE) of 18.08%, up 140 basis points sequentially. Operating profit rose by 24% year-on-year, driven by strong growth in net interest income, which increased 9% to INR 13,483 crores. The bank's net credit costs fell to 0.54%, with gross non-performing assets (NPA) declining to 1.44%. The bank expects advances to grow 300-400 basis points faster than the industry in the medium to long term, focusing on quality deposit growth.

Strong Performance in Q2 FY '25

In the second quarter of FY '25, Axis Bank showcased robust growth metrics, highlighted by a consolidated Return on Assets (ROA) of 1.92% and a Return on Equity (ROE) of 18.08%, which improved by 22 and 140 basis points quarter-on-quarter, respectively. The operating profit surged by 24% year-on-year, demonstrating effective business execution and operational efficiencies. Notably, the bank's net interest income (NII) reached INR 13,483 crores, marking a 9% growth compared to the previous year.

Resilient Asset Quality

Axis Bank displayed an admirable asset quality with a Gross Non-Performing Asset (NPA) ratio declining to 1.44%, down by 29 basis points year-on-year. Additionally, the Net NPA stood at 0.34%, reflecting prudent risk management practices. The increase in recoveries from written-off accounts for the quarter, which rose by 67% sequentially, further illustrates the bank’s focus on strengthening its asset quality amidst changing economic conditions.

Growth in Deposits and CASA Ratio

Deposits at Axis Bank grew by 14% year-on-year, significantly outperforming industry trends. The Customer Accounts Savings Accounts (CASA) ratio remained high, contributing positively to the bank's low-cost funding strategy. Moreover, the bank opened 150 new branches in just the last quarter, expanding its physical presence and enhancing customer acquisition capabilities, underlining a commitment to diversified customer engagement.

Operational Efficiency with Controlled Costs

Despite a 9% year-on-year growth in operating expenses, the bank managed to control cost-to-income ratios, which improved to 47.21%. This figure indicates that the bank is focusing on operational efficiency while continuing to invest in technology and expansion strategies. Operating expenses were notably segmented, with technology expenses rising by 31% year-on-year, indicating a transformation towards digital banking.

Strategic Focus on Quality Growth

Axis Bank’s management reiterated a commitment to risk-adjusted growth, emphasizing that while the asset mix may shift due to macroeconomic factors and market conditions, the bank aims for a medium-term loan growth forecast of 300-400 basis points above the industry rate. This cautious approach reflects a strategy to optimize returns while managing credit risks, particularly in unsecured lending segments which have shown some stress.

Subsidiary Performance and Future Plans

The performance of Axis Bank's subsidiaries was commendable, with domestic subsidiaries reporting a 35% year-on-year net profit growth. The bank aims to leverage this momentum to diversify its revenue streams. Projects such as 'Project Triumph' are being carried out to enhance productivity through tech-led solutions, bolstering the bank's overall franchise strength.

Future Guidance and Market Outlook

Looking ahead, Axis Bank remains focused on key priorities including sustaining deposit growth and capitalizing on lucrative lending opportunities. The management anticipates that the favorable macroeconomic backdrop will support the banking sector, with a continuous watch on geopolitical factors affecting liquidity and cost of funds. Overall, Axis Bank is poised for consistent growth, guided by prudent management and strategic planning.

Earnings Call Transcript 2025-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the Axis Bank Conference Call to discuss the bank's financial results for the quarter ended 30th September 2024. On the call, we have Mr. Amitabh Chaudhry, MD and CEO; and Mr. Puneet Sharma, CFO.

I now hand the conference over to Mr. Amitabh Chaudhry, MD and CEO. Thank you, and over to you, sir.

[Amitabh Chaudhry, executive]

Thank you, Michelle. We have on the call, Rajiv Anand, Deputy MD; Subrat and Munish, ED; and other members of the leadership team. .

This quarter, we delivered steady operating performance led by higher growth across our focus business segments and sequential improvement and key return ratios. We remain committed to build long-term competitive advantage with investments in technology, analytics, [ thought ] control, and cybersecurity. The bank continues to win various external awards and recognition across different businesses. Substantially the investment and progress made over the last few years, resulting in this winning mindset of the bank.

Let me summarize the quarter 2 operating performance. Consolidated ROA at 1.92%, improved 9 basis points year-on-year and 22 basis points quarter-on-quarter. Consolidated ROE at 18.08%, improved 140 basis points quarter-on-quarter. Operating profit was up 24% year-on-year and 6% quarter-on-quarter, driven by healthy operating income growth and further moderation in operating expenses growth.

Execution of the deposits is on track with 14% year-on-year growth in deposits and 24% year-on-year growth in new customer acquisitions. CASA ratio and fee to average assets continues to be among the best for private peer banks. Focused business segments delivered strong growth of 30% year-on-year and 4% quarter-on-quarter. The bank is well capitalized with a CET1 ratio of 14.12% with net accretion of 6 basis points in the second quarter and 38 basis points in the first half period.

We stay focused on three core areas of execution of our GPS strategy, namely becoming a resilient all-weather franchise, creating multiplicative forces to build competitive advantage and building for the future. I will now discuss each one of these areas, becoming a resilient all-weather franchise, the quality and strength of our deposit franchise continues to improve through Project Triumph.

The bank-wide deposit transformation program. The bank continues to deliver over 200 basis points higher than industry deposit growth. We have opened 150 new branches in the last three months and 200 in the first half of this fiscal. The new to bank acquisition engine for the savings account franchise has trended well. In this quarter, we saw SA new to bank deposits up 15% year-on-year with new accounts opened up 5% year-on-year and balances per account up 10% year-on-year. New corporate salary labels acquired in quarter 2 grew 11% year-on-year with 10% year-on-year growth in a number of accounts acquired.

Salary [indiscernible] in the new book acquired in the first half grew 27% year-on-year. Deposit mobilization remains a key focus area for the bank. The asset channels saw 106% year-on-year growth in deposit balances and 25% year-on-year growth in a number of accounts, leveraging their relationship and distribution strength. Project Triumph continues to focus on productivity enhancement through tech-led solutions. The SA new to bank [ limit ] productivity, our relationship managers continue to trend possibly with 40% year-on-year improvement as of September '24.

The premiumization of our franchise continues to progress strongly, led by 36% year-on-year growth in Burgundy assets under management. During the quarter, we also expanded our coverage of Burgundy Private, the bank's private banking business to 15 new cities, increasing our presence to 42 locations across India. We believe that there's a tremendous growth potential in Tier 2 cities [ for our ] bespoke wealth management services, given our deep understanding of our customers in these evolving markets.

On the wholesale segment, refer to Slide 37 and 39, our industry-leading customized solutions across liquidity management, payments and collections continue to drive higher transactional banking flows leading to better current account balances. Our NEFT market share in terms of value has increased to 12.9% in first half of this year as compared to 10.4% in the first half last year. We are also seeing strong pickup in current account growth in our merchant acquiring business where we have a leadership position with 36% incremental share in new cost installations.

We have seen all-round growth across businesses and market-leading growth in our focus segments. Our better-yielding focus segments, including select retail, SME and mid-corporate segments together, grew by 20% year-on-year and now constitute 43% of the total advances up by 1,300 basis points in the last four years. We'll continue to focus on driving growth across our business segments while following the capital efficient RAROC model.

We also strengthened the core. We have made significant investments in core information technology, which we refer to as running the bank tech and further invested in architecture modernization, cybersecurity, fraud control, risk in collections management, et cetera. We have created future ready and scalable platforms to replace fragmented legacy systems, demonstrated to successful launch of NEO for corporates and integrated treasury management. NEO for business, our MSME proposition now has 1.3 lakh customers onboarded in the last one year.

During the quarter, we introduced two innovative industry-first digital solutions at the global fintech [indiscernible] the bank launched UPI ATM, and integrated Android cash recycler with UPI technology for cardless cash withdrawal and deposits. We also launched Bharat Connect [indiscernible] BBPS for business and partnership with NPCI is Bharat BillPay. This will provide businesses a comprehensive solution to efficiently manage their working capital needs at various stages of the supply chain and streamline, account receivables and payables.

We also leveraged our capabilities and leadership in payment space to launch UPISetu, a UPI focused payments platform for businesses and developers in partnership with Setu, a Pine Labs company. We now have a strong dedicated financial crime intelligence division that combines analytics, digital monitoring and fraud control capabilities to safeguard the bank and its customers.

We continue to garner several key [ external ] recognitions for the capabilities initiatives we've undertaken successfully in the last few years. The bank was featured in the Times, world's best companies of 2024 list and was ranked the highest on Indian financial peers. The bank also won several awards, including those for best performance and profitability, risk management and asset quality apart from [indiscernible] for excellent practices and adoption of ESG initiatives at the Indian Chamber of Commerce Emerging Asia Banking Awards 2024.

Our second pillar of creating multiple data forces to build company to advantage. We believe we are well placed to contribute and lead on the broader economic trends of the next decade in India. The multiplicative forces that we have built through One Axis, [ data capabilities ], partnerships and a prudent operating model differentiates us and gives us the right to win.

Axis Bank is the leading UPI payer payment service provider bank in India. According to data published by NPCI as of September 2024, Axis Bank holds a market-leading share of 30.87% in the UPI Payer PSP space. This achievement is a testament to the bank's unwavering commitment to innovation, customer-centric solutions and strategic partnerships.

Axis Bank collaborates with 15 prominent third-party application providers. Additionally, the UPI functionality is available through Axis Mobile Open, BHIM Axis Pay, and Freecharge subsidiary of the bank. The integration of erstwhile city consumer business that we had completed in July exemplifies the true power of One Axis. Consequently, erstwhile Citibank customers now use Axis [indiscernible] channels, including Open by Axis mobile app and internet banking. The migration was seamless with minimal disruptions to customers in terms of monthly active users.

Open is witnessing higher number of customers that were active on erstwhile Citibank platforms. Further, digital activity of these customers across product services such as funds transfer, fixed deposits, bill pay, et cetera, have gone up materially. Building for the future, our journey to be future-ready continues to progress led by our focus on [indiscernible] elements, namely digital, Bharat banking and customer obsession.

Digital Banking performance continues to remain strong. In this quarter, the bank made several enhancements to its products, including redesign of several journeys, new journeys and opening fixed deposits via money from other banks, continued roll out of NEO for corporates and NEO for businesses, which are digital channels aimed at corporate and small business customers, respectively. The bank was awarded the Best Digital Bank at Financial Express. In addition to the strong [ lab ] ratings, awards suggest this signify the bank's distinctiveness in data capabilities and platforms.

We continue to work on other bank-wide programs to build [indiscernible] Bharat is going from strength to strength. The rural advances grew 20% year-on-year and deposits from Bharat branches were up 9%, thereby adding the PSL and [indiscernible] metrics.

We have expanded our multiproduct distribution franchise, an architecture to over 2,500 branches complemented by 62,000 CSC VLE network across [indiscernible] and 80-plus partners across the industry. During the quarter, we embarked upon next phase of Sparsh, our distinctive customer obsession program. Sparsh 2 represents a strategic evolution from Sparsh 1 and is aimed towards linking Sparsh initiatives to enhance customer satisfaction, leading to improved NPS and better business outcomes. The program has been instrumental in driving higher NPS scores led by enhanced process automation, significant digitization.

Our retail bank NPS score has matured significantly, rising to 145 plus from a baseline of 100 in the past two years.

In closing, we find favorable macros backed by a strong and stable domestic policy environment, which bodes well for the banking sector. We are well placed in the current macro environment. We continue to closely monitor the geopolitical environment, inflation, liquidity, cost of funds and its impact on our business. We will continue to invest where necessary to remain differentiated and distinctive in our journey towards building an all-weather institution. I'll now request Puneet to take over.

[Puneet Sharma, executive]

Thank you, Amitabh. Good evening, and thank you for joining us. The salient features of the financial performance of the bank Q2 FY '25 and H1 FY '25 gross operating performance, capital and liquidity position and asset quality restructuring and provisions are as follows: The key financial parameters for H1 FY '25. Our consolidated ROA is at 1.8%, and our consolidated ROE is at 17.43%. Our operating profit was INR 20,819 crores, grew 19% year-on-year. Our cost to income at 47.21% declined 207 basis points year-on-year. PAT at INR 12,952 crores grew 11% year-on-year.

In Q2 FY '25, our operating performance was stable across NIM fee and operating expense lines. The key metrics for Q2 FY '25 are as follows: the consolidated ROA at 1.92%, improved 9 basis points Y-o-Y and 22 basis points Q-on-Q. Consolidated ROE at 18.08%, improved 140 basis points Q-on-Q. Our subsidiaries contributed 8 basis points to the consolidated annualized ROA and 50 basis points to the consolidated annualized ROE in the quarter. The bank's balance sheet crossed the [ 15 lakh ] mark at September 2024. Our net interest margin was 3.99%, our NII at INR 13,483 crores, grew Y-o-Y at 9%. Our fee at INR 5,508 crores, Y-o-Y growth of 11%, Q-o-Q growth of 6%, granular fees constitute 92% of our total fees.

Our operating expenses at INR 9,493 crores, the Y-o-Y growth of operating expenses moderated to 9%. Our operating profit at INR 10,712 crores, Y-o-Y growth of 24%, Q-on-Q growth of 6%. Cost to assets at 2.52% declined 2 basis points sequentially, delivering a positive job for the quarter.

Net credit cost at 0.54%, down 43 basis points Q-on-Q. Recoveries, including recoveries from written-off accounts and upgrades improved 46% Q-on-Q, in line with our Q1 FY '25 commentary.

PAT at INR 6,918 crores increased 18% year-on-year and 15% sequentially. Gross NPA at 1.44% declined 29 basis points Y-o-Y and 10 basis points sequentially. Net NPA at 0.34%, declined 2 basis points year-on-year and was flat sequentially.

Our PCR was at 77%, flat Q-on-Q broadly. Standard asset coverage ratio at 1.2%, stable Q-on-Q, all provisions by GNPA ratio at 153%, improving 258 basis points Q-on-Q.

In Q2 FY '25, the bank received favorable [indiscernible] orders for six assessment years commencing [indiscernible]. This has resulted in a write-back of excess tax provisions made in previous financial years aggregating to INR 550 crores.

In addition to specific loan loss provisions in the quarter, the bank made provisions aggregating to INR 520 crores under the Act provision for other contingencies. These are entirely prudent and are not for current or future NPAs and should not be construed in any manner as the bank's assessment of expected credit quality. I would reiterate, these are purely prudent, not for NPA assets and do not reflect the bank's own expectation of its asset quality. This was done to strengthen the balance sheet further.

Hence, on a net basis, the effect of reported results is marginal. Further, we are not expecting any further tax orders relating to similar matters in the remaining part of FY '25.

Bank CET1, including H1 profit, stands at 16.61% thereby accreting net of consumption 6 basis points of CET1 in Q2 and 38 basis points in first half of FY '25. In addition, the bank has a prudent other provision of INR 5,012 crores. This provision has not been reckoned for capital competition and translates to a capital cushion of 38 basis points over and above the reported capital adequacy ratio. The bank assesses its capital position on two pillars, i.e., growth and protection. We reiterate we do not need equity capital for either pillar. We may opportunistically evaluate issuing Tier 2 and AT1 instruments based on market conditions.

In the current quarter, we applied increased outflow rates to our operating deposits, and this increase has impacted our reported LCR percentage and LCR accretive deposit number. These changes help place us better for the implementation of the Draft Circular. Net interest margin at 3.99% declined 6 basis points Q-o-Q, largely attributable to the interest on income tax refund recorded in the previous quarter. Operating NIMs largely remained flat Q-on-Q, yield on interest-earning assets improved 9 basis points year-on-year. This was offset by a cost of funds increase on a Y-o-Y basis by 12 basis points, resulting in a NIM [indiscernible].

Our progress on structural NIM drivers continues. Please refer to Slide 10 with improvements across various variables on a Y-o-Y basis. Our balance sheet mix, loans and advances comprised 90% of total assets at September '24, improving 48 basis points Y-o-Y. Average advances comprised 66.9% of total assets at September '24, improving 40 basis points Y-o-Y. Retail and CBD advances comprised 71% of total advances, improving 243 basis points Y-o-Y. Low-yielding RIDF book declined by INR 10,448 crores year-on-year. RIDF comprised 1.21% of total assets at September '24 compared to 2.14% at September '23.

Quality of liability is measured by outflow rates. It remains best in the industry, but declined marginally year-on-year. Quarterly average CASA at 40%, flattish quarter-on-quarter decline year-on-year. Our fee performance was good, reflected in fee growth of 6% Q-on-Q and 11% Y-o-Y. Our fee to assets improved 5 basis points Q-on-Q. Total retail fees grew 5% Q-on-Q, supported by our third-party products business. Total wholesale fee grew 8% Q-on-Q, better than the growth in advances, reflecting improvement in the franchise across transaction banking, debt capital markets and our treasury activities.

Trading profit and other income at INR 1,214 crores, improved by INR 634 crores sequentially, mainly on account of MTM on investments. Please note that under the current RBI guidelines related to investment accounting and recognition norms applicable from April '24, MTM gains are recorded through the P&L, unlike the past where only MTM losses were recognized and gains were ignored.

Operating expenses for the quarter stood at INR 9,493 crores, growing 9% year-on-year and 4% sequentially. We opened 150 branches in the quarter and 200 branches in the first half of FY '25. The Y-o-Y increase in rupee crore expenses can be attributed to the following reasons: 19% volume linked, 20% technology and growth related and 74% to BAU expenses. This was offset by a reduction in our integration expenses. Technology and digital trends grew 31% Y-o-Y and constituted 10.2% of total operating expenses. Staff costs increased by 19% Y-o-Y. We have added 4091 people from the same period last year, mainly to our growth businesses and technology teams. Q-on-Q increase in operating expenses is largely attributable to our cards business, and BAU expenses across all business and functional lines.

Net credit cost provisions for NPA was INR 1,441 crores, declining 44% Q-on-Q. Provisions and contingencies for the quarter were INR 2,204 crores, higher sequentially due to the prudent provision for other contingencies discussed earlier. The cumulative non-NPA provisions at September 30, 2024, is INR 11,815 crores, comprising provisions for potential expected credit loss of INR 5,012 crores, restructuring provision of INR 466 crores, standard asset provision is higher than regulatory rates of INR 1,912 crores. Weak assets and other provisions of INR 4,425 crores.

Moving to the performance of our subsidiaries. Detailed performance of our subsidiaries is set out on Slide 62 to 69 of our investor presentation. In the H1 of FY '25, domestic subsidiaries reported a net profit of INR 927 crores, growing 35% Y-o-Y. The return on investment on domestic subsidiaries was 58%.

Overall assets for Axis Finance grew 30% Y-o-Y. Retail book constituted 37% of total loans. PAT grew 24% year-on-year to INR 327 crores. Strong asset quality with a net NPA of 0.25% and negligible restructuring represents the strength of the Axis Finance balance sheet.

Axis AMC, overall quarterly assets under management grew 20% Y-o-Y to INR 3,12,338 crores. H1 PAT was INR 244 crores, growing 29% Y-o-Y. Axis Revenues for H1 FY '25 grew 98% Y-o-Y to INR 907 crores, and PAT grew 139% Y-o-Y to INR 272 crores. Axis Capital PAT grew 29% Y-o-Y to INR 87 crores. We executed 30 ECM transactions in the first half.

Moving to asset quality, provisioning and restructuring. Gross NPA in rupee and percentage terms declined Y-o-Y, slippage GNPA, NNPA and PCR ratios for the bank and segmentally for retail, CBG and corporate are provided on Slide 54 of our investor presentation. Gross slippages for the quarter were INR 4,443 crores declined sequentially. Our gross slippage ratio also declined by 19 basis points sequentially. Gross slippages segmentally were INR 4,073 crores in retail, INR 264 crores in our CBG business and INR 106 crores in our wholesale business. For the quarter, 33% of gross slippages are attributable to linked accounts of borrowers who were standard when classified or have been upgraded in the same quarter.

Net slippages for the quarter were INR 2,374 crores, declining 28% Q-on-Q. Net slippages segmentally were INR 2,607 crores for retail, INR 91 crores of CBG and negative INR 324 crores for our wholesale business.

Recoveries from written-off accounts for the quarter were INR 984 crores, improving 67% sequentially. Net slippage for the quarter adjusted for recoveries from written-off accounts were INR 1,390 crores, declining 49% Q-on-Q. Segmentally, retail was 2,164 crores, CBG was INR 31 crores, and our wholesale business was negative INR 805 crores.

To summarize, Axis Bank is progressing well to be a stronger, consistent and sustainable franchise. Consolidated ROA and ROE for Q2 were 1.92% and 18.08%, respectively, an outcome of our disciplined execution. The bank has ample and sufficient liquidity visible to the average LCR ratio of 115%. Given the increased regulatory focus on CD ratio as one among multiple measures to be tracked. Deposit growth will continue to be a key constraint for growth in advances in the short to medium term. In the medium to long term, we believe advances can grow 300 to 400 basis points faster than industry.

We are well placed in the current macro environment. We continue to closely monitor geopolitical environment, inflation, liquidity, cost of funds and its impact on our business. Thank you for your patience. We conclude our opening remarks, and we will be happy to take questions.

[Operator]

[Operator Instructions] The first question is from the line of Mahrukh Adajania from Nuvama.

[Mahrukh Adajania, analyst]

I had a couple of questions. Firstly, on deposit growth. You've done a good job in improving the quality of deposits. You've been working on it for a long time. But -- and I know you've given a medium-term forecast of growing faster than the sector. But like if you really look at the yearly deposit growth or early loan growth, even if you build a 3%, 4% Q-o-Q deposit growth for the next two quarters, it comes to best low single digit or maybe very high double -- low double-digit or very high single digit. And that's kind of lower compared to peers. So any plans to accelerate deposit growth from now on, given that the quality has been achieved like increasing rates -- that's my first question. And if you could call out the IT refund this quarter, like last quarter was INR 200 crores is what was called out?

[Puneet Sharma, executive]

Mahrukh, thank you for your question. I'll clarify all the data points that you raised. Last quarter, we had interested our income tax refund, which was recorded in the net interest income line. That was INR 220-odd crores. In the current quarter, we have favorable orders from the [indiscernible] for which we have been able to reverse tax provisions created in previous financial years. We received favorable orders for six financial years last assessment years. And the aggregated amount of tax provision reversed and this reversal is sitting in the provision for tax. So below the PBT line. That amount is INR 550 crores.

[Mahrukh Adajania, analyst]

There is no IT refund this quarter?

[Puneet Sharma, executive]

Nothing meaningful to speak of. This is a provisional reversal number.

[Mahrukh Adajania, analyst]

Okay. Good.

[Munish Sharda, executive]

Mahrukh, this is Munish. First of all, thank you for acknowledging our work on the quality of deposits. Indeed, we have seen a dramatic shift in our quality of deposits in the last few years. We've been at it as you just said, as signified as depicted by the improvement in the outflow rates, our CASA ratio, et cetera, which -- and the growth, which is better in the rest of the industry.

It is -- obviously, we are focused on increasing the momentum of growth in the business. We are growing at 200 basis points higher than the industry. There are a few levers of pillars that we are working on, which I was just going to bring to our notice. It is also mentioned on Page 18 of the investor deck. The first [ year ] we have been telling you that we are working on a multi-quarter deposit transformation project, improving the customer engagement and the operating rhythm in our branches. And we're seeing good outcomes as a result of that work that we've done over the past few quarters or NTB productivity, NTB growth rate and premiumization of deposits have indeed shown good momentum in the last few quarters.

We're also focusing on building a micro market strategy. We opened 500 branches last year, close to 500 branches last year. This year, again, we are looking at opening 500 more branches. We are working on premiumization of our total base. Our growth rates in our premium accounts in our markets is actually higher than the overall growth rates. But that number, we will continue to focus on our wealth franchise, which is presently private franchise on top is also growing at a very healthy pace and crossed INR 2 lakh crores of overall AUM.

We also -- we've also added 15 more cities and taking presently private number to over 42 cities in the country. Our Bharat banking strategy is also continuing to ensure that we get deposits in the deeper market as well through multiple channels of distribution, and our difficult partnerships, including our world's best app on the retail side and the new project on the wholesale side for the customer. We're also ensuring that we continue to deepen our engagement. If you look at our overall number, -- in the first half, we've grown deposits of 14% in the first half of the year, and this our endeavor to continue to push for higher, better and better quality growth from here.

[Mahrukh Adajania, analyst]

Okay. Perfect. And if at all, I can slip in a third question. If you could explain the vintage of write-offs, right? So it would be old NPLs, right? The write-offs that you do through the -- in the walk?

[Puneet Sharma, executive]

Yes, Mahrukh, thanks for the question. I'm presuming you're looking at the NPA walk slide that we published [indiscernible] Slide 56, and you are wanting details on the INR 3,119 crores, correct? .

[Mahrukh Adajania, analyst]

Yes.

[Puneet Sharma, executive]

So Mahrukh, as I have previously indicated, we are one of the few banks that write-offs loans on a rule basis. So for our retail portfolio as well as our commercial banking portfolio, we have an auto write-off rule after an account has been provided 100% for a certain number of quarters. So a dominant part of the write-off for the current period has come from our CBG and retail portfolio. I have also called out as in the earlier part of my opening comments that we've had strong recoveries on the wholesale side. In the INR 3,119 crores, there will be the residual period -- there will be the residual amount on wholesale accounts that would have been written-off as part of the settlement process.

So dominantly CBG and retail rule based with a few wholesale accounts, which would have a [ tail ] amount that would have been written-off post recoveries.

[Operator]

The next question is from the line of Rikin Shah from IIFL Securities.

[Rikin Shah, analyst]

I have three questions. The first one is on the SLR investments. There was a marked jump sequentially in the SLR investments that we are holding. Is this a function of the higher runoff rates that we have applied on some retail deposits and to shore up the LCR.

The second question is on asset quality. While you've called out, Puneet, that the gross slippages are largely from retail. If you could provide some additional color as to whether it's coming only from the unsecured or there are other retail segments, which are contributing to that as well?

And a sub-question would be that the recoveries while they have improved sequentially. Would you say that there is still some more catch up of the lower recoveries that we saw in 1Q to come through in the second half? And the last question that I have is on the draft RBI norms, which were announced recently and specific to the subsidiaries are not allowed to do overlapping businesses. So some of your subsidiaries would be in the lending segment? And what is your preliminary assessment or understanding of this guideline?

[Puneet Sharma, executive]

Rikin, thank you for the questions. Multiple tasks, let me break them up and respond. Your first part was your observation on G-sec growth on balance sheet. My request to you is please and that number will reflect a 10% to 12% sequential growth. Please do not look at that number in isolation. We manage the balance sheet with an interest rate view. So please look at overnight placement plus SLR together. And if you look at the two numbers on a cumulative basis, there will be a net increase, if you add the two lines up by roughly about INR 3,800 crores to INR 3,900 crores, which is in line with the balance sheet growth. So it is just how we have deployed liquidity as at reporting date that shows you the anomaly between the two line items. Overnight placements get reflected in cash and balances with banks, whereas the SLR securities get reflected in the investment schedule. .

Yes, there is an increase in the SLR securities on account of the runoff comments. So yes, that does partially contribute to the increase, but it is not to the extent as visible on the face of the financial statements.

Your second question was the October 4th circular from RBI. I would simplistically state today that the bank is reviewing and evaluating the implications of the draft circular on our legal and operating model. We do intend to review and make representations to clarify our understanding of the draft circular as it stands today. We will wait for the final guidelines to determine our position on the October 4 circular outcomes. But the one principle philosophy that we will use as we assess October for implication, please we will do what's in the best interest of our shareholders. That's all that we are able to comment today. It's very nascent to give you a categoric outcome on what, when and how we would deal with the implication of the October circular today.

I think the third part of your question was retail slippages and [indiscernible] thereof. You fairly observed, as I had called out earlier, retail slippages are a large part of our slippages for the quarter. Directionally, they are coming from the unsecured product segments. We have never given you a product-specific details. So we would not like to start doing that now. But suffice to say that it is largely unsecured retail, where we have account slippages in the current quarter. I think that covers all the questions you have Rikin. I hope I have not missed anything.

[Rikin Shah, analyst]

Just one subpart one was on the recoveries, while it has improved sequentially, but the shortfall from the 1Q, would you say that there is any further catch-up remaining on that? Or this should be general normalized trends going ahead?

[Puneet Sharma, executive]

So, Rikin, I clearly said that our recovery from written-off accounts for the quarter are actually up 49% -- up 67% sequentially. And the other comment I made was we had very clearly called out that there were timing differences in quarter 1 performance. And I think we've borne fruit to our initial comments that we will find those recoveries come through. So if you add the two quarters together, you pretty much get what we had promised.

[Operator]

[Operator Instructions] We'll take the next question from the line of Kunal Shah from Citigroup. .

[Kunal Shah, analyst]

So first is with respect to the loan growth, and you alluded when you were answering with respect to the deposit growth. But even in terms of the breakup, if we look at it in a few of the segments like home loan, vehicle loans, corporate, we are still lagging significantly to the system average growth. So I think should we still assume that this might continue for a while? And the larger part of the growth will still be driven by higher-yielding focus segments more to manage deals?

[Amitabh Chaudhry, executive]

Kunal, thanks for your question. So if you look at Page 21, we've got a breakdown of the loan growth. Obviously, when we look at our balance sheet, we do so holistically, and we do so with two or three aspects in mind. Our primary driving factor is returns on different parts of the balance sheet. Now if you look at the way unsecured, which is traditionally a higher-yielding asset book has performed. The return will be affected by the credit stress, similarly on cards, similarly on others. At the same time, we also -- we are also acutely aware of the situation in the market, which affects some of the derived demand products, such as auto and home loans.

So we are expecting to see a pickup in the loan growth in this quarter and the next, but we will continue to calibrate the composition of the loan growth, particularly on the retail side in order to optimize the best return while keeping in mind what we will get as placement yield and also what we expect to see as credit losses.

[Kunal Shah, analyst]

Okay. So fair to assume maybe at least in terms of the traction on retail, we will still see the decline, particularly on the unsecured and some pickup on the secured side?

[Amitabh Chaudhry, executive]

I would not qualify it as a decline. We haven't even -- I mean, even here, we haven't seen a decline. [indiscernible] Q-o-Q on more Y-o-Y. But yes, it will be calibrated -- yes, it will be calibrated for those segments where we believe we see signs of stress. So we will take early action. And obviously, you will see the composition of that change on a fairly dynamic basis.

[Kunal Shah, analyst]

Okay. And second question is on cost of deposits. So that has still stayed flat this quarter. So how do we say maybe -- are we largely done with the repricing, there has not been much increase in the term deposit rates for us. So should we assume that it stays at the current level given the rates which we are offering today? .

[Puneet Sharma, executive]

Kunal, thank you for the question. I presume you're looking at data on Slide 9 of our presentation. Yes, we've been flattish on cost of funds. We put out cost of funds, not cost of deposits. Effectively, if you look at the way I would request you to think about...

[Kunal Shah, analyst]

Sorry, so on Slide 7, there is cost of deposits at 5.08%.

[Puneet Sharma, executive]

That's correct. So effectively, if you look at 5.08% flat, even cost of funds have remained flat. The 1 basis point change in cost of funds is principally led by borrowing cost increase. As long as the market remains disciplined about pricing for deposits, we would expect a reasonable part of the back book to be repriced. We'll have to look at how the forward book moves.

We, as a bank, have remained very disciplined on deposit pricing, and that is an operating model that we intend to continue to follow on a go-forward basis.

[Unknown Executive]

Kunal, I mean if you look at the [ Fed ] cut rates by 50 basis points, ECB is cut by 25 the third time today. And there is already a conversation on when the RBI will cut. Now one can argue on whether the cut is going to come in December or March. But in the environment like that, it is unlikely for deposit rates to go up. And so therefore, to that extent, the pressure to push deposit rates up seems unlikely.

[Kunal Shah, analyst]

No, only question was on repricing, we are largely done with respect to the repricing on the back book?

[Unknown Executive]

See the -- I mean a very large percentage of the book is between, let's say, six months to one year. So you can do the math. I mean on what that number could be.

[Operator]

The next question is from the line of Nitin Aggarwal from Motilal Oswal.

[Nitin Aggarwal, analyst]

I have two questions. One is on the CD ratio and LCR, if you can indicate like what is the comfortable like number of threshold that you will want to maintain on this -- and specifically on LCR, what really driven the increase in outflow rate because we were like over the last few years, there is consistent decline in the entire [indiscernible] you have come through in this quarter. So how are you looking at this [indiscernible]?

[Puneet Sharma, executive]

Nitin, thank you for the question. I think let's start with the outflow rates. As I called out earlier in my conversation on this call, we have -- look, we have revisited the risk weights and operational deposits. And because we revisited the risk weight, the outflow rate has changed, which is the reflection of the number that you see on our investor presentation. The reason for the change is the rationale for the change is we think that's a better representation. It also places us well for the final ECL adoption in shape and form that it comes out in April. So that's the reason why you're seeing outflow rates move up. Otherwise, core retail outflow rates have remained steady for us on a [indiscernible] basis.

To your question on the CD ratio. You've seen us operate at a CD ratio level over the last three to four quarters. We will operate in a range. We are very cognizant and respectful of the regulators' outlook on this number, but it is one of the many variables that we look to manage our balance sheet side. It's not [indiscernible] very good. Our reported number for the current quarter is a number that we are comfortable with at the moment.

[Nitin Aggarwal, analyst]

Okay. And the second question is on the employee base. There is a very slight decline in [indiscernible] employee this quarter, why you added 150 branches. So how are you looking at the expansion going ahead in terms of [indiscernible]?

[Puneet Sharma, executive]

Thank you for the question. I think it's a function of -- it's a reflection maybe of some of the past questions that we may ask, that reduction is after the fact that we've added 200 branches, including 150 in the last quarter. Part of it is productivity gains playing through for some of our previous investments that we have made on the digital side.

[Nitin Aggarwal, analyst]

Okay. So we can expect this to continue either in the productivity gains result in lower employee base?

[Puneet Sharma, executive]

Nitin, I will not offer a comment on individual line items of my cost. I have very clearly stated in the past that for Axis Bank, you should see pace of growth of cost to moderate. We have delivered that in quarter 1 and quarter 2. We are down to 9% year-on-year cost growth. I think that's something that we would like to be measured by. We would not like to offer commentary on individual line items of our cost base, please .

[Operator]

The next question is from the line of Saurabh from JPMorgan. .

[Saurabh Kumar, analyst]

Just two questions. So one is on CASA. So it's about 5% on an average basis. What's your outlook for this number for the full year and if rates were to come down by 50 basis points, would you expect some improvement, especially on your savings account? And the second is on this loan mix, so we've seen corporate and mortgage still growing slowly. What would you think of all this group going on. Thank you.

[Puneet Sharma, executive]

My apologies, I couldn't hear you clearly, may I request you to please repeat your question.

[Saurabh Kumar, analyst]

So the first is on CASA -- So on CASA, sir, how would you think about this CASA growth going ahead, about 5% on a quarter basis, especially on savings account. And if rates were to come down by 50 basis points, would you expect the SA rate to -- the asset growth -- savings account growth to go up? And the second question is around the corporate and the mortgage growth. Basically, it's been pretty muttish this quarter. Should we expect a similar trend going ahead? .

[Puneet Sharma, executive]

So let me start with the asset growth piece. I think we monitor and manage our businesses on a risk-adjusted return on capital basis. Effectively, that's how we would manage our balance sheet. Mortgages, honestly, still doesn't give you at marginal cost an adequate risk-adjusted return. We like that segment for it secured, but growth there will continue to remain calibrated until we can find the right kind of outcomes for it. I pause there. I'll request Rajiv for his input on the wholesale business.

[Rajiv Anand, executive]

I'm not overly concerned about asset growth on the corporate side. And as I've mentioned this many times. On the contrary, we've actually had a pretty good quarter from a corporate perspective and how we've been engaging with customers. Axis Capital has had a fantastic run over the last three months, 60% to 70% of the business that they have taken to market are customers of ours. We have gained market share on foreign LCs, RTGS. We now have a 48% market share on NEFT transactions in this country.

GST payments that go through us, 7% of India GST goes through us, and they are about BBPS market shares of 18-odd percent. So you can clearly see that the transaction throughput that we are seeing is increasing on a day-on-day basis. Amitabh's commentary around NEO for corporates, NEO for business, NEO for treasury is gaining traction, and though that is showing up in numbers and is also showing up in current account balances.

Both Amitabh and Munish spoke about the fact that our salary franchise continues to grow quite strongly, obviously supported by the relationships that the corporates bring. And finally, things like because of the fact that we are the banker of choice, the transaction banker of choice, and corporate India is flushed with liquidity, we get our fair share of term deposits, non-retail term deposits as well as liquidity into our mutual fund, et cetera.

So therefore, the way that we transact with the bank -- with corporates, has diversified quite significantly adding to PPOP. We've also had a very good quarter in terms of DCM activity. We have something like a 50% market share on the loan syndication market as well. And we may not necessarily use our balance sheet to support our clients, but we are able to deepen relationships and improve thereof for ourselves.

[Saurabh Kumar, analyst]

Just on CASA sir?

[Unknown Executive]

On CASA growth, as I said earlier, and even Amitabh also mentioned, we are focused on ensuring the granularity of our deposits, and deepening in multiple customer segments within the bank. And we expect to continue to push this number. Difficult to give a forecast for next quarter, which is -- which we don't give. But in general, all the actions that we're taking across multiple pillars of delivery and deposits, should continue to ensure that we are able to deliver to our objective.

If we look at our number, we have grown H1 deposit by 14% over previous year, which is about 200 basis points better than the industry.

[Puneet Sharma, executive]

And I think you mentioned a 2 basis point rate cut, I think that's a bit out into the future. So we'll worry about it when it actually begins [indiscernible].

[Operator]

The next question is from the line of Chintan Joshi from Autonomous.

[Chintan Joshi, analyst]

I've got two, one on asset quality and one on NII. On asset quality, can we get a sense of how vintages are performing in unsecured credit, and would you kind of -- looking at the various data points, you can see, would you say that fresh slippages have peaked at kind of what we've seen in the last quarter? And on the NII line, I wanted to kind of dig a little bit more into rate sensitivity. We haven't really seen monetary policy transmission fully on the loan book compared to the liabilities over the last three cycles. If you think about rate cuts coming over the next nine months, say we get 50 basis points, -- how do you think the pass-through will be in terms of various products? Any color you could give us on those pass-throughs could be interesting?

[Unknown Executive]

Thank for the question. I'll cover the first part, which is about the vintages. We don't actually give out that level of granular data in the provision. But suffice it to say that we do see a general trend, particularly in unsecured, where there is stress across multiple segments. That stress is being driven by indebtedness. It is being driven by higher degrees of loans, which aren't necessarily being able to be serviced by those customers. Most of those loans have actually come through after we disburse our loan or our card.

So what we've done in response to that is we have actually taken a very granular look at our own portfolio and try to see what are those -- and we found a multiple set of variables, which are actually the drivers for all the terms of credit cost. Vintage, of course, is one of them, but there are many other things such as obligation to income ratios, degree of indebtedness, the number of inquiries, the nature of the loan, the nature of the geographies, the nature of the occupation, multiple things. So it's not just the vintages, but we do see stress across the board, and we continue to calibrate both our acquisitions and our existing stock of loans and cards in line with what we see.

[Chintan Joshi, analyst]

So would you say fresh slippages have peaked? Or there is still some more cleanup to be done?

[Unknown Executive]

No, it's too early into the cycle to take a call either way. And I think the way to look at this is that every lender's vintage distribution will be different. So it depends on the proportion of new vintages which they have in their books. So I don't think we would be -- we would call out a peak or a trough either way.

[Puneet Sharma, executive]

Thank you, Arjun. I'd just like to supplement, I think Arjun said that he's seeing stress across the board. Please read and contextualize that comment what he meant to say was stress across the board -- across for unsecured products across different types of customers. So it's not a broad-based credit comment. That comment has to be contextualized to the unsecured portfolio. And within the unsecured portfolio, the comment is to be construed as there isn't an identified pocket of stress that we are in a position to call out today .

To your question -- to your question on transmission effectively, look, we do present to you on Slide 9 of our investor presentation, the rate composition of our loan book. The way this will work is on a repo rate cut, our assessment is assets will reprice faster than liabilities. That is the nature of the business. We think that we hold true for the system, but I can comment more specifically for us. It will hold true for us.

My request to all of you would be please review margins not on a quarter-by-quarter basis. Please look at the duration of our assets and liabilities that we disclosed in our annual report. Over a fiscal year, we've been able to manage peak center reasonably effectively. An example would be in FY '23 when we saw rates moving up. Our margins increased from 3.6% to 4.22% with average margins of [ 4.02, 4.03 ]. FY '24, where liabilities repriced, but assets remained flat.

We still managed to close the year with [ 4.07 ]. So my request is contextualize this discussion or argument on rate cuts impacting margins. We agree and acknowledge first quarter, there will be a negative impact, but we don't manage margins on a quarter-by-quarter basis. Over the duration, we do expect that the structural improvements of our balance sheet to hold us in good state.

[Operator]

The next question is from the line of M.B. Mahesh from Kotak Securities.

[M. B. Mahesh, analyst]

I just had one question. In the moment of this contingent buffer, it was INR 11,700-odd crores last quarter, it's gone to INR 11,800 crores this quarter, whereas you have indicated that you had an additional provision of INR 520 crores, which will move through the P&L. Can you reconcile these numbers, please? .

[Puneet Sharma, executive]

So broadly, what we have through the P&L is the INR 520 crores that I call out. But on the cumulative provisions, if we are making provisions against a non-balance sheet business, that number is not depicted on Slide 2 as cumulative businesses, that is provisioned over and above the cumulative provision.

I made provisions for on-balance sheet exposure, that on balance sheet exposure of cumulative provision comes in the cumulative disclosure of INR 11,700 crores moving to INR 11,800 crores. I make provisions for off-balance sheet, which gets routed through the P&L. But because it's off balance sheet, and I use the INR 11,800 crores to reference to our standard asset cover number, since the denominator does not include off balance sheet, the numerator also does not count that. That will explain the reconciliation gap for you.

[Operator]

The next question is from the line of Pranav Gundlapalle from Bernstein.

[Pranav Gundlapalle, analyst]

I have one question on loan growth. If you look at our loan growth this year -- I mean, this quarter, at about 11% to almost 2 to 3 percentage points below the system growth. So what are we really doing differently versus the system? Is it more conservative given the asset quality trends? Or is the bar much higher in terms of the yield? Or is it constraints because of the various liquidity requirements, a bit stronger for us versus the system. Just trying to get what is being different for us in the system?

[Unknown Executive]

Yes. Thank you for the question. On Page 21, you've given a breakdown of the loan growth, particularly for our retail book. The way I'd like you to look at that and sort of internalize it is we will -- we've talked about the fact that as a sector, the unsecured segments of our book, do show some signs of stress, and those are industry-wide.

Those represent indebtedness. We, therefore, will continue to observe and calibrate our book on the basis of essentially three factors. One is where do we see the placement is being the best. Also in this environment of a slightly stretched unsecured lending book, we will also then need to optimize it for returns and where do we see the predictive losses coming in on our book. So if you translate that down, we will continue to calibrate this book. However, the growth per se, if you look at it at a total retail level, it's not very low. It's at 15% Y-o-Y.

And while the composition of the book will change going forward based on these three factors, which I mentioned, we will continue to strive for growth, but we will be very careful and very cautious about the segments in which we will get that growth. That's where you see some of the changes coming, but we will continue to strive for growth in those segments where we would like to operate and where we believe the returns will be supported.

[Pranav Gundlapalle, analyst]

Understood. So would it be fair to say that the choice segments are more on the retail side. Therefore, if the system sees a slowdown there, that outperformance that you referred is 4% to 6% of system growth, would probably be at lower going forward? .

[Unknown Executive]

No, we wouldn't give a forward guidance on that nature. And also, as I said, the situation with respect to the stressing environment is also fairly dynamic. So we will -- and some of these loans are also demand based, for example, auto, for example, home loans. So there are a multiple set of factors that will go into determining the growth for the forward quarter. It will be difficult to give you a number for the future quarters at this juncture. But we will observe it on the basis of those factors, which I already mentioned.

[Puneet Sharma, executive]

On our focus sectors, as we've been calling out, which is basically the MSME sectors, it is all the way from small to mid-corporate space. That book continues to grow strongly. It's grown strongly this quarter as well. You'll see that on Page 44. And I think that is quite -- that -- to me, it's quite an exciting space. It's -- we are seeing a lot of possibilities of growth. We've seen strong growth in this book for the last five years. And I see no reason why this book should not continue to grow strongly over the next many years. I do believe that MSME will be what retail was or MSME will be over the next decade, what retail was in the previous decade.

[Pranav Gundlapalle, analyst]

My question more was just like at an aggregate level, if you were to pick the three factors I mentioned, where do you see the biggest differentiation versus system? It's -- I'm guessing you're hinting that you have a higher bar on yield versus the broader system?

[Unknown Executive]

I think the point that, I just want to reiterate the same point that Puneet made. Ultimately, lending is our dharma, as long as it meets our underwriting standards and as long as it meets our pricing standards we will lend.

[Pranav Gundlapalle, analyst]

Yes, just to [indiscernible] the point. Just your growth is slightly slow. I'm just trying to understand which of those constraints are for you a bit stronger or higher versus the broader system, because you have that 2, 3 basis point growth gap that exists today?

[Unknown Executive]

See, I don't think at any stage, any of us have ever mentioned that this 3% outperformance that we've spoken about is something that we will deliver on a quarter-on-quarter basis. I think it is a medium-term outlook. And I don't want to get too overly focused around this. So for example, just to meet these expectations, I can easily put on growth on the credit side. The credit is -- will be super strong, but may not necessarily meet our pricing standards. That's not the way we want to run our business. We are very confident that into the medium term, we will find ample opportunities for us to grow such that we are able to meet the expectations that we are building.

[Operator]

The next question is from the line of Param Subramanian from Nomura.

[Parameswaran Subramanian, analyst]

My first question is on the contingent provisions made in the quarter, INR 520 crores. I just wanted to ask again what is the need for making the provisions in this quarter if we think there are no pressing asset quality issues, why are we making these provisions because provisions like these depress the profitability and the book value. And we also have significant buffers already, and no real visibility of when this will get written back. So yes, just on that, firstly yes.

[Puneet Sharma, executive]

Param, thanks for the question. Please appreciate that -- we did have a onetime write-back of INR 550 crores. We have indicated to you that we want to build a strong and prudent balance sheet, which withstands cycles on a go-forward basis. There was INR 550 crores of tax write-back. And we thought it was a fair and opportune time to create a balance sheet strength for which we created the INR 520 crores prudent provision.

So there isn't -- so it's a one-off offset by a one-off. On a net basis, they broadly equalized. So that's the rationale of the prudent provision.

[Parameswaran Subramanian, analyst]

Okay. Yes, that helps. Secondly, my question is on the LCR and again on the outflow rate. So the outflow rates, like you discussed, is down quarter-on-quarter. Just wanted to check if is this regulatory driven because we had this news flow a few months ago about RBI doing LCR audit. If it is related to that because for some of the smaller banks, we've seen a shift between the stable and the less stable deposits. And secondly, on the LCR again, how do we plan to -- with the new draft norms coming in because we're at 115% now, which will probably take us closer to 100% when the new draft norms kick in. So how -- what are the tools we have at our disposal to navigate the new loans, yes?

[Puneet Sharma, executive]

Thanks again for the question. I think -- I don't want to offer forward-looking comments on what we would or can do. This is the equal implementation. It's still drafted, so we want to wait for what the final contours of our deal is. I think all of us understand multiple representations have been made. So we really don't know what shape and form the final guidelines would come. But yes, we'd like to prepare and be ready for those guidelines if and when they are issued.

The operational deposit reclassification, it's simplistic. If you -- we have a practice of benchmarking ourselves to best practices across the industry. This was one place where we had a divergent practice, and we've gone ahead and realigned ourselves. That's the change that you see in the current quarter.

[Operator]

Ladies and gentlemen, this will be the last question for today, which is from the line of Jai Mundhra from ICICI Securities.

[Jai Prakash Mundhra, analyst]

Sir I have only one question. On the retail slippages, right, if I were to calculate the retail slippages as a percentage of loans, it could come out let's say, 2.7%, 2.9% in the last two quarters. Considering the way you said that you keep focusing on the risk adjusted growth and risk adjusted return and there have been a little bit rising the slippages in this -- in the retail portfolio, driven by maybe unsecured. Fair to say that this 2.7%, 2.8% slippages may sustained in the near term, even if it does not go on because the loan mix is still in favoring of the unsecured book at the moment, just want to get some sense there.

[Puneet Sharma, executive]

Thanks for the question. We don't offer guidance on what our slippage numbers would be. Therefore, I'm not going to provide an indication of what the gross slippage ratio for retail would look like in the coming quarters. I would just leave two comments for your consideration. One, Q2 FY '24, since you've done the competition for yourself, the change in cost slippages on retail has been about 40 to 45 basis points from same quarter last year. So it is an exponential increase in that context. We've clearly called out as part of our responses to earlier questions that it is coming from the unsecured business. Our risk and business teams have taken corrective action on segments and products. We do expect those corrective actions to deliver. But we are not calling out a point in time where we think this will peak out because portfolio has run their course.

I reiterate what I have said on the previous quarter commentary, portfolios are behaving within the internal risk [indiscernible] we have set out for ourselves. So we have priced for this risk that we are seeing manifest today. Yes, that's where we would like to leave our response on this. We don't know for guidance. So unfortunately, I can't give you a direct answer to your question.

[Operator]

That was the last question for today. I would now like to hand the conference over to Mr. Puneet Sharma for closing comments. Over to you, sir.

[Puneet Sharma, executive]

Thank you, Michelle. Before I conclude, I think I want to make -- I want to make two clarifications with these questions asked on the call. I think there was a question asked by one of the participants, which indicated our guidance or outlook on loan growth to be 400 to 600 basis points. I just want to reiterate that we are -- the management guidance is 300 to 400 basis points in medium to long term. So I just want to make sure that we register that with all participants.

I also want to register one data correction. As part of our opening comments, we have said outflow rate is 22.2%, it's 25.7% as set out on the investor presentation. So that number should be read in line with the investor presentation that has been published and not as stated on the call.

With that, thank you, everyone, for taking the time to speak with us this evening. Wishing -- if there are questions that remain unanswered, we'd be happy to take them and respond to them. Please reach out to Abhijit and the IR team. Wishing you and your families the very best for the upcoming festive season. Thank you very much.

[Operator]

Thank you, members of the management. Ladies and gentlemen, on behalf of Axis Bank, we thank you for joining us, and you may now disconnect your lines. Thank you.