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ICICI Securities Ltd
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Good evening, ladies and gentlemen, and welcome to the earnings conference call of ICICI Securities Limited for the quarter ended September 30, 2021. We have with us on the call today, Mr. Vijay Chandok, Managing Director and Chief Executive Officer; Mr. Ajay Saraf, Executive Director; Mr. Harvinder Jaspal, Chief Financial Officer; Mr. Vijay Gulecha (sic) [ Vishal Gulecha ], Head, Retail Equities; Mr. Kedar Deshpande, Head, Retail Distribution, Product and Services Group; Mr. Anupam Guha, Head Private Wealth Management; Mr. Subhash Kelkar, Chief Technology and Digital Officer; Mr. Ketan Karkhanis, Head, Digital Client Acquisition and Co-head New Solutions Group; Mr. Prasannan Keshavan, Head, Operations; and Mr. Nilotpal Gupta, Head Data Science Unit.[Operator Instructions] Please note that this conference is being recorded. The business presentation can be found on the company's corporate website, icicisecurities.com under Investor Relations. I would now like to hand the conference over to Mr. Chandok to take over the proceedings. Over to you, sir. Thank you.
Thank you, Janice.Good evening to all of you, and welcome to the ICICI Securities Second Quarter Earnings Call for fiscal 2022. So I'm sure that by now you would have all perused through our quarter 2 results and also our investor presentation, which has been uploaded. We are happy to report that we have further strengthened our franchise by increasing our client base now to 6.3 million, and the assets of clients with us has increased to over INR 5 trillion. And this is driven by all-round growth across businesses that we operate in. Following our results, our Board of Directors have approved an interim dividend of INR 11.25 versus per share, this is versus INR 8 per share, which was declared as an interim dividend last year.The scale-up in our digital sourcing coupled with healthy adoption of our product proposition has actually resulted in our client acquisition becoming 5x in this quarter on a Y-o-Y basis. Subsequently, our NSE active client base grew by about 90% on a Y-o-Y basis. And the incremental market share for the month of September actually came in at about 12%. Here, I would say that we have always believed and we would once again reiterate that for our industry, NSE active, as a sole input variable of relative franchise strength and performance, may not be appropriate and a holistic assessment of the competitive strength of our -- and in our view, a competitive strength of our franchise is required to be assessed. In such a context, a broader set of parameters, including client assets, level and frequency of activities, average revenue per user or ARPUs, and volume share amongst others should be examined to assess franchise quality.In line with this belief, our focus would continue to be on acquiring customers with sustainable quality, even if it means that there would be some moderation of client acquisition numbers in the short term. We are also enriching the content section of our website and digital educational properties, which has resulted in an increased traffic to our platform, which has actually started helping us increase acquisition through organic channels, which is the highest quality of digital sourcing. Our retail equities business registered a revenue growth on a Y-o-Y basis as well as on a sequential basis. This is despite a decrease in ADTO, and this has been possible because of the texturization of our equity business, again, something that we've been talking about for a few quarters now. As a result of this, the allied equity revenue now contributes 30% of our total equity revenue. And this -- as a result of this, we registered a sequential increase in our total retail equity revenue and market share.However, we are yet to see, and here, I must say that we are yet to see, a similar trend in retail derivative market share. Although we don't share these numbers with you, we thought we will just share with you that on the retail equity, we have seen growth in market share, but a similar trend is yet to be visible on our retail derivative market share. So we are actually focused on a lot of initiatives to increase our derivative market share, and we believe that these initiatives will help us improve our market position. However, it may take a few quarters to witness the positive impact of these measures to gain volume market share.Our distribution business witnessed all-around growth across all our major products. In mutual fund, we gained market share in overall gross flows led by debt gross flows. We lost some market share in the equities gross flows, especially the HNI segment on account of growing traction of clients embracing direct plans. We are, at this point in time, piloting a direct plan offering to this HNI segment with an intention to attract customers to the platform and then monetize them by cross-selling other products. So this is another new initiative that we have launched for the HNI segment. We are working on several other initiatives in this area and are quite optimistic of achieving positive long-term outcomes.We are already witnessing small -- strong gains actually at a granular level, like increase in the SIP market share, which would be visible in our presentation. So as we think about our own future, we recently did an exercise where about 75 senior members of the company, the top leadership team, got together and looked at the market, the regulatory developments, technology trends to formulate a strategy for the next 2 to 3 years. And here we observed that India's demographic opportunity is clearly getting texturized. And the market is segmented and subsegmented, ranging from the young Gen Z and millennial investors to Gen X and baby boomers and the needs of each of these segments, each of the subsegments and micro segments are different. It is -- it was therefore important for us to recognize and harness this opportunity in a format that fits into the sensibilities and preferences of each of these segments through an ecosystem approach.And towards this, we have actually initiated and planning a differentiated offering for each of these ecosystems, as they have their own distinct behavior and unique needs. And therefore, we felt it's important to serve them differently in what one could call a hyperpersonalized environment and a hyperpersonalized manner. So we are making investments to revamp our channel stack, build a data-driven hyperpersonalized ecosystem approach, and best-in-class kind of an experience to evolve into what one would call a new financial services marketplace. We believe that the financialization of savings will get much stronger over the next few years. And our estimate is that close to 10 crore new broking accounts and mutual fund folios would be opened in the next few years, along with significant opportunities and other financial product categories like fixed income, insurance and so on.We also believe that our loan distribution business could get impetus from the emerging facilitative developments that are taking place, such as the account aggregator framework. While we remain committed to operating efficiencies in the long term, we will continue to invest in technology and digital marketing and talent to take advantage of the large market opportunity across businesses that we operate in, through our newly laid out strategy, which we shared with all of you in the ISEC day that we did some time back.So, I will end my commentary now and throw open the session for any questions that you may have. Thank you very much.
[Operator Instructions] The first question is from the line of Kashyap Jhaveri from Emkay Investments.
Hello, sir, am I audible?
Yes, please. Can you hear us?
Yes, I can hear you, sir. First question on -- again, on market share side, you made some comments over there about the ability of supply base. However, having said that, both in terms of market share as well as in terms of pricing, it seems that there is a significant pressure which is building up. And it's been almost about now 4 quarters that it continues to build up over there. So any comments on that side, how do we recoup this? It's been almost like 4 quarters, both on cash as well as F&O side.
Yes. So I don't know if you got it right. On the cash equity side, we have gained market share sequentially. I don't know if you got that, but you see our investor presentations as well. So there is an increase in market share that has happened on the retail side.
On the retail side, that's...
Yes. Yes. While we have not shared with you the total details between retail and institutional, the number that you see is a combi number. And when we look at it internally, we see that sequentially, we have gained market share on retail side. Whereas on the F&O side, while you see a flat number, actually, on the retail side, we have actually not yet gained market share. We are not seeing that kind of a trend that is visible on the retail cash equity. So your first point on cash equity side, we have started gaining market share sequentially. On the...
Sorry, I just wanted to make a bit of a point or 2 here. But if I look at the whole market because of the pricing, we have been on a flattish number, about INR 350 crores for almost about 5 quarters, whereas active client base has almost gone up now about 1 point -- yes, about 1.2 to almost about twice of that 2.3. The fact is that market -- then it seems like market itself is shrinking. Is that the number -- is that assumption correct?
So actually, if you look at the number that you have quoted is only the broking revenue, right? And we have been telling and guiding all of you for a long time now that we are not fixated on a single line item singularly. And as a conscious strategy, we have said that we will be looking at wider spectrum of revenues that we can earn through various other products. And when it comes to equities business, we have said that we are texturizing it, right? Because we believe that there is a migration of yields that are happening specifically within the broking. And we are also migrating southwards, right?So we've told that that's our strategy to do that, because it helps us gain market share. So in line with that, we have brought down the yields on broking. And we have actually texturized it. So when you -- by adding products like float revenue, MTF, the Prime fees, et cetera, which has got a little more sticky nature as opposed to just transactional linked broking. And if you look at the total equities revenue, equities revenue has not only grown Y-o-Y, it has also grown sequentially. So at least internally, we look at it as a total equity revenue and not broking as a singular line item. Because clearly, there are opportunities in Prime fees. There are opportunities on MTF. There are opportunities on some of the other charges that some of the plans like NEO has offered the company to earn. That's how we are looking at it.So I think overall, if you look at equities, cash equities, we are clearly feeling a lot more sort of sure footed about gains in market share as well as revenue. When it comes to derivative, I agree with you, and that's what even my commentary actually said that we still have a way to go. We believe it is going to take a few quarters before we can start seeing the results of gains on the derivative side. However, that said, we are seeing growth when it comes to our overall derivative revenue itself is growing. But obviously, we want to grow faster than market. Our aspiration is to grow faster than market.
And 1 last question. Should your NPS revenue not be in line with your retail brokerage, because that one -- that part is growing actually, whereas the brokerage is not. So is margin trading or margin funding, shouldn't that be linear with the retail brokerage?
So yes...
Harvinder here. Yes. So indeed, the book has been growing substantially MTF book. It's a combination of both on the product side, where we have launched it along with Prime after which we have seen traction. That also adds to brokerage. So this INR 350 crore run rate that you're talking about, if I were to take you slightly back -- 4, 5 quarters back, the study, there was a max of INR 220 crores to INR 250 crores. So from that level, definitely, even the brokerage has come up. And as Vijay explained, apart from that, many other lines have got added. Overall, brokerage is a function of a lot of these things the yield aspect, which Vijay spoke about, growing volume. And MTF is a function of what we have as a product and it's a unique proposition. We are gaining market share there as well.
Kashyap, I will just add 1 more point on derivatives. There are 2 ways of looking at the derivatives volume. As you know, and you would have observed that the volume in options have -- that's a new highs every week rather. There are other 5 variables and those are core operating influencers in terms of derivatives income. And we have an eye on each and every such variable. So you look at number of customers month-on-month, look at open interest or ADTOs, number of orders brokerage from derivatives, I think these are very, very important factors when we look at derivatives as a core product. And we see stability and growth in these factors month-on-month, even in Q2 after the fourth phase of the peak margin. The only thing where we have not participated is a very low premium option trading, which doesn't make economical sense for customer and we have seen of late lot of rise in those kind of trading patterns also.
The next question is from the line of Shreya Shivani from CLSA.
Piran here. I had a few questions. Firstly, what percentage of our revenue if you all have done this statistic and I'm sure you are good at, what percentage of our INR 350 crore revenue comes from customers acquired in the last 18 months since COVID hit? Any ballpark figure or maybe in the last 12 months, if that's the number you all track.
Piran, maybe I'll have to come back to you. But if you say, last 12 months, my sense would be that it'll be about -- no let me come back to you, Piran. I think it will not be fair for me to quote a number right now.
So point noted, we will revert to you. We don't have it.
And my next question, maybe a bit stupid, but we talk about activation rate going up to 70%, 75%. But if you could just give some color on, let's say, deactivation rate, like you acquire a client, he trades for 1 or 2 quarters and then he stops trading with you all or like how life insurers call persistency rate. Can you give some color on what sort of persistency rates you all see in this business, maybe on a Q-o-Q basis, Y-o-Y basis, some color at all? Because going back to Kashyap's question, wherein NSE active client acquisition has been strong, but it hasn't really translated into revenue growth. So just wanted to get a sense of that.
So Piran, 2 things to note over here. NSE active, if you look at it and if you look at the equation, a lot of these growth in NSE active is being driven by new clients that you're acquiring. So as Vijay also mentioned in his opening remarks, there has been a 5x growth on a Y-o-Y basis in terms of total clients acquired. 120,000 kind of a run rate for a quarter has become about 580,000 kind of a run rate. So a high majority of the NSE active is coming from new clients so it's yet not got seasoned, and they've not got opportunity to start giving revenue. What happens is and you quoted insurance and maybe I'll kind of dip into that parlance.If you look at the new customers in insurance versus a renewal customer, there is a stage where the renewal kind of customers start contributing much, much more, compared to the new customers. So that is 1 of the reasons which you have to juxtapose. NSE active and the source of growth of NSE active. If in this particular quarter, for example, 580,000 clients have got acquired, out of which 4.2 lakh clients have been active and so and so forth. They've got just maybe 45 days of transaction opportunity itself. That is not kind of comparable to, let's say, a client who has got 12 months. So that is 1 flavor that I would definitely want to give you.As regards to your question, persistency, definitely, some of these things on overall active customers, ARPU, et cetera, will give you a sense of persistency. One of the other things that you have to look at is that if a client is not -- if a client is attracting, you would not expect a growth in assets. Because a trading plan do not have demat assets, et cetera. So those are some of the parameters, which we also measure and track internally to look at the longevity. We do have clients which are more than 10 years, 15 years vintage with us. We have given some metrics out in public domain also, which says that about 2/3 of our revenue comes from clients which are 5-year-plus vintage. So some of those are important to consider when we talk about loyalty.
Okay. Fair enough. And how many customers have availed NPS right now, because our book has grown super strong in the last 2 years? So if you could just give a rough numerical value.
Yes. Sorry, can you just come again?
How many customers have availed the MTF and ESOP funding out of your 20 lakh odd active customers?
Yes. So I mean I can give you another number. We have not declared a number of customers availing NPS. We saw this much smaller universe, because a very handful of senior management and employees would get that. As far as MTF is concerned, we have registered growth year-on-year. Since 2017, this product is in existence. And every single year, we have seen a growth in number of customers and still growing very strong. As you know that this is also a product of slightly matured customers, who understand the market very well. So it would be unfair to compare it with the 2 million active customers. Relatively, this is a smaller segment, but this segment is -- in terms of ARPU, in terms of size, is very healthy, and they contribute substantially in the overall revenue of the company.
Okay. And my last question, why did we eye Asknbid innovation?
Yes. So as I told you that we have been looking at various fintechs to either, what we say, make partner or buy. And in such a context, we have partnered today with, I think, close to 20-plus fintechs through ICICI Direct. Some of which are visible as experience for a customer on the front end, some of it is powering the back end, which is not visible to the customer in terms of an experience, but experience as an ICICI Direct service. So we have about close to 20-plus such partnerships. Asknbid was in a very interesting space. We could completely resonate with what they are constructing.And keeping that sort of thing in view, we have taken a 16% approximately stake in the company. They are building, what we believe will connect quite well with the millennial and the Gen Z segment, which is one could say, a gamified method of experiencing participation in the markets. Because that would connect well with the millennial Gen Z segment. There is also an angle which is coming, which is social connectedness, which is also in line with our philosophy. And that investment would enable us to fast-forward some of the capabilities that this company has got into ICICI Direct itself. So we are working very closely with the tech team of Asknbid.
Okay. Great.
Piran, you had asked 1 question on the contribution of the 12-month kind of -- first 12 months kind of number. So roughly, I mean, it would be in the range of about 10% to 11%. That's what we have seen last year and this year. It would be an evolving number and will be a function of what kind of growth in clients, et cetera, we see, but just a ballpark-ish number. I'll just -- say it's a ballpark-ish number, about 10%.
And this is the pure -- revenues come from customers acquired in the last 12 months?
Yes. So customers who are acquired, let's say, in a particular financial year, giving revenue in that particular financial year is 12% of that year's total bookish revenue, ballpark-ish.
The next question is from the line of Aejas Lakhani from Unifi Capital.
Just a couple of follow-ups. The first is, could you explain what is driving the MTF growth?
Yes. Thanks. I'll request Vishal to step in.
Yes. So see, MTF, we have transformed this space completely in last 18 months or more so in last 2 years. So this is not a product. I mean we have created an entire ecosystem for this MTF customers. So it starts from the proposition, very attractive brokerage, the kind of journey which we have created for MTF, the kind of interest which we have -- we are offering to our customers, we have coupled it with our Prime and Prepaid okay? And a very, very balanced way to communicate with customers and also throwing opportunities to customers. So the entire product is very well supported by our research team.If I talk about Q2 itself, there were about 30 MTF related reserve recommendations, which were given by our research team. And the strike rate was as high as 96%, delivering about 10% return on each and every such call. So everything put together, has led to this kind of growth. So we have grown in terms of book size, we have grown in terms of number of customers and also the MTF market share. So I can't contribute the success of MTF to 1 single factor, but this is a contribution of the entire ecosystem, which the team has created here.
Fair enough. And sir, could you quantify that, can we expect such growth rates in the MTF book? What is the size of the opportunity with the existing clients that is there still to mine?
I think 2 things. One, we, of course, have to grow number of customers participating in this product. And secondly, all said and done, I mean, the market has also been very, very supportive for a product like this. Because when markets get into consolidation, really, people find it difficult to carry the positions for very long term, as we have seen in the last 2 years, market has been extremely helpful in leveraging whatever we have created. So our focus will be to build on market share, to add more number of customers, and then the market will also be 1 of the very, very important lending factor.
Okay. And sir, Mr. Chandok, you mentioned at the start of the conversation that ARPU revenues have actually grown and you mentioned you look at the total equity revenue. So could you explain us how that ARPU revenue is calculated, because the way we are looking at it, ARPUs have actually come down. So could you help us with the calculation and how you see it?
Yes. I don't know if you heard it as ARPU revenues. I talked about the total stack of revenues, not the ARPU revenue. You're absolutely right, ARPU has declined, because our growth, which has come in is yet to translate into the kind of growth in terms of ARPUs that these stock customers have. We believe that's going to take longer for getting to that levels of ARPU. So ARPU would be down, but total growth -- revenue pool has grown.
Got it. And sir, could you mention what is the total equity revenue? You mentioned that, that is the number you'll track internally.
Yes. So I think that number has also been shared. If you look at our Slide 16. It will talk about the total equity revenue.
Right. Okay. And sir, a follow-up is, would you expect the broker revenues for this part of the year to be sub-50%?
Currently, it has come in at about 48%. We have had strong growth in terms of the distribution revenue, which is an area of focus. We have been telling you also that we have redoubled our efforts on increasing our growth in all other nonequity revenues with as much rigor and vigor, as we've been pursuing equity in the past. That effort is only going to intensify. So input parameters say, I can tell you that our efforts will be loaded in the direction of non-equity. We do hope the markets behave in a way that the input parameters also translate into an output parameter, which is loaded in favor of nonequity even as we grow equity revenue.
Okay. Fair enough. And sir, I just want to get a sense that the recent acquisition -- the recent tie-up with HSBC, do you -- what kind of a client profile do you see there? And when do you expect that to go on stream?
Yes, Vishal.
Yes. So I mean we will take some more time before we can go live. We are creating that integration. We understand that HSBC client profile would be better than average, as we know them for years. So we hope to bring better quality customers with tie-up with HSBC.
[Operator Instructions] The next question is from the line of Sahej Mittal from HDFC Securities.
Congratulations on a great set of numbers. My first question was on the other distribution income. If you could just give a split of what is the income on distribution of loans, bonds, a ballpark number would help, to understand what sort of -- where it is and what will be the growth outlook for the loan book which we are having.The second question would be around to understand what is the quality of the customers which we are adding on from the digital sources? How different is the payback period for these customers? And what -- are these customers largely opting for a Plus Prime plan or a NEO plan? Yes, that would be helpful.
So I'll take your questions 1 by one. So first is the income from loan distribution, typically, we earned around 1% or 0.9% to 1% on the loan disbursed. If you look at our disclosure, this quarter, we disbursed about INR 700 crores, INR 690 crores to be precise, which is our ever highest disbursal till date. Prior to this highest was INR 5.3 billion. And earlier than that, average used to be about INR 2.5 billion. So INR 2.5 billion to about INR 5.3 billion last year Q4 to about INR 6.9 billion. So that has been the trajectory on disbursal and we earn about 0.9% to 1%. So that's the ballpark. That's the first question that you asked.Second question that you asked was about the quality of customers and the payback period in digital sourcing. So as we had articulated earlier also that digital sourcing as a group has about 5 to 7 different types of customer acquisition channels within it. Some of them are called organic, which have a higher -- I mean, almost 0 cost and pretty high quality. Some of them could be, let's say, advertisement led or [indiscernible], which could have a lesser quality as compared to this. So this mix is something that we are yet to fully optimize. That is something that we are working on.And therefore, it will be slightly misleading right now to quote an absolute number. What I can tell you is that every quarter/every month, we are seeing that the cost per acquired for digital is going down, and we are focused on getting the payback period up. The payback period at an overall portfolio level, which is digital, nondigital, everything put together, is roughly on the order of 12 to 14 months overall. And payback by payback fee that I need, whatever you spend and how many months you take in terms of revenue to get it back. Digital is obviously higher right now.
And are these customers opting for a Prime or NEO plan or are they opting for an I-Secure Plan?
So it will be a combination of that. There are people who opt for Prime and NEO as well. And a lot of people want to test out the platform. So there'll be a lot of sign-ups for I-Secure as well. So it's a combination. It's not only one of the plan, NEO has about 150,000 odd subscribers today. Prime, as you know, has about 800,000 subscribers. But on an incremental basis, it's a combination. It's not one of the larger mix.
Got it. And 1 last question, if I could squeeze in. What are the steps -- what are the expense line items, which we are trying to variabilize for us to better manage our expenses in times of downturns? So what would be the variable part of our staff expenses or other operating expenses? What are the expenses like in terms of which we are trying to variablize?
So a couple of things. I think one of the big ones is what Vijay mentioned that we are focusing on partnerships. We have 15, 20 different partnerships. So the way we structure these partnerships when we are getting clients or the revenue share or the remuneration is variable. Even in our investment banking business, there are variable share, in our sub-broker business, there are variable revenue shares. Some of these lines where the revenue is success linked, that helps us varibalized and we don't have to invest manpower and cost of acquiring these customers. That's part number 1.Part number 2, obviously, when you take a NIM kind of an approval for our loan books, the interest cost is obviously variable, because it's a NIM approach. Part 3, as you rightly said, is the fixed available component of the employee cost. So our idea is more of having growth linked to revenue and variable line items we are okay with and trying to control fixed costs in all areas other than, let's say, marketing and technology. These are the 2 areas that we have stated where we are making investments and the spend will go up. Apart from that, all the fixed costs we are trying to curtail. Variable costs, we don't mind. But on a per unit basis, we are trying to optimize that as well. One example is as we said cost per hire -- costs per acquired. So cost per acquired is also on a month-on-month basis, we are trying to optimize it's going down.
The next question is from the line of Madhukar Ladha from Elara Capital.
Congratulation on a good set of numbers. A few quick questions. First, what percentage of our derivative volumes would now be under the NEO plan? Could you sort of give some color on that? And whether our derivative revenues are sort of growing on a Q-o-Q basis? So that would be interesting to know.Second, just continuing on the earlier question. What is the activation rate in the digital channel? And can you sort of give us some numbers around what is the cost of acquisition that you're seeing or what is the trading behavior of the newly sourced digital customer?And lastly, I know this is hard to sort of judge, but do smaller Nifty contracts, right, I mean, from 75 to 50, the number of Nifty is sort of reduced. So do smaller contract sizes make any difference in terms of trading and then -- and hence, revenues, that would broadly be my 3 questions.
Yes. So I will address 2. One is what is the NEO's contribution in the overall derivatives volume. So it is talking about close to 40% of overall derivatives volume. And as Harvinder shared earlier, we had about 1.5 lakh customers opting for this plan. The daily run rate is also healthy from the existing set of customers, more so from our stock traders and non-traders, and also the set of customers which we identify, which can be ARPU beneficial to us.The second question is -- yes. So actually, as you see, the market is clocking very high volume in options and in options actually reducing the size from 75 to 50, we don't see that much of impact or the squeeze in -- or the additional liquidity availability with customers. So more or less that is a no event kind of a scenario. And we have not seen any significant impact of the reduced contract size on the overall volume or activity.
Okay, got it.
Madhukar, one of your questions was on digital acquisition and some flavor on trading activity, et cetera. So it's a mix experience, I'd say. One is, let's say, some of the channels are quite nice, for example, organic channels, et cetera, we are getting quite decent mix. In some of the other channels, what our experience is that you do get a pretty decent activation, but that is for that first transaction, the customer is trying to learn the platform, or we also help him to learn the platform by initiating the first transaction. But how far is the second, third, fourth transaction or the launch, subsequent transaction activity. That is something which we are still optimizing, learning on. So we are driving on various ways of engagement, learning the tricks of the trade.But -- therefore, it's a mix of these 2 elements. What Vijay also spoke about is that this is a kind of fine tuning that we are trying to do and isolating some of the sourcing channels, what are the characteristics that we are getting in, let's say, 8 months, 12-month period. and then trying to optimize that mix further investing behind the first set of channels and maybe optimizing the second set of channels. Cost per acquired definitely is going down. It's not yet stabilized. Bear with us for maybe a quarter or 2, we will give you more color and disclosures around that as well. But I think right now, it's a bit not yet the final stage. So I would rather maybe wait for a couple of -- 1 or 2 quarters to come back and share with you some of the analysis on that.
The next question is from the line of Nidhesh Jain from Investec.
A couple of questions. First is, there is a sharp improvement in yield on recurring in the private wealth management business. So what are the drivers for that?
Anupam, you want to comment?
Yes, yes, sure, Vijay. So for us, our focus both has been on recurring and transactional. Specific to your question on what's been the components of our recurring income. So essentially, anything that gives us consistent revenue. So it would mean mutual funds, it could mean our AIF and PMS -- AIF Cat II and PMS where we get sale income. And it also includes your ESOP funding and the MTF book as well. So combination of all of these products comprises of the recurring income. And there, our yields have improved given the enhanced focus on all of these products.
Understood. Understood. And sir, can you share monthly active users or daily active users on your app, how that is panning out? And any absolute number that you can say?
So again, we've yet to give these numbers out, but we can tell you that these numbers are increasing quite -- in an encouraging way compared to what we were last year, we would be double at the same time.
Sure. Sir, lastly, can you share the customer acquisition cost in this quarter? How much -- in P&L, how much costs you have incurred in acquiring new customers?
Yes. Can everyone else who is not speaking, kindly mute, there's a lot of background sound, please. Thank you.
So it of the order of about INR 25 crores to INR 30 crores.
INR 230 crores.
INR 25 crores, between INR 25 crores to INR 30 crores.
[Foreign Language]
The next question is from the line of Arash Arethna from IIFL.
Am I audible?
Yes, please.
I just had a couple of questions. One is on the insurance yield. So if I do your insurance income premium divided by the amount distributed, so the dealer insurance has increased this time. So what is driving that?And secondly is, what part of this insurance income is now could you give some split between ICICI and HDFC Life, which is the life insurance? And lastly, the Prime fee. You disclosed Prime and others combined. Could you share what is the Prime fee out of that?
Yes. I'll take the questions 1 by one, Arash. So first is the reason for inventories is higher proportion of premium, the new business premium. So as you know that new business premium has a higher yield, we have registered a strong growth in insurance, new business policies, both on a sequential and a Y-o-Y basis. So that has improved the mix of the premium towards the new business premium and therefore, the have gone up. That's point number one, I think you asked.Second, you asked that what is the breakup of Prime fees. So just as a ballpark-ish also I'm giving and I'll tell you the exact numbers as well. Ballpark-ish is that we have about 8.5 lakh Prime subscribers now. On an average, we earned about INR 900-odd on Prime subscription, and that gets amortized over 12 months. So there's a ballpark-ish formula. And the exact number is about INR 17 crores as compared to about INR 12 crores same quarter last year. This is the -- let me remind you, this is the amortized portion for this particular quarter. So if you have, let's say, INR 900 for 1 full year, you will take INR 900 divided by 4 in 1 quarter. So that portion is about INR 17 crores, and that keeps on growing as the quantum keeps on going. You also had 1 more question. I'm sorry, I missed the third question.
Yes, if I don't know if you all have shared, but any sense on how the HDFC Life sort of a tie-up is paying out? And what contribution of that is in your life insurance revenue?
It has been a quarter. So it's starting up. It's starting up where there's a lot of training sessions, et cetera, that have already happened. There is a lot of traction. The product basket has also got enhanced. But in terms of overall contribution, I think it will still be early. It is more in the pipeline building state than anything meaningful to the numbers.
The next question is from the line of Digant Haria from GreenEdge Wealth.
My question is -- I think we discussed this that our strategy seems to be really working well in the cash equities, but F&O maybe we are still a little away. So just wanted to check if this new acquisition that we did, and I think it was mentioned that the new generation wants these whole Futures and Options in the gamification format, like -- is this 1 of the big way in which we can engage the new customers in this all Futures and Options part? Is this 1 of the areas where we were lacking and are we plugging it through this? So that's my only question, sir. Otherwise, congratulations on a good set of numbers.
Thank you, Digant. Thank you very much for your encouraging words. You're absolutely right. I think we still have a lot more effort and work to be done on the F&O side. We recognize that. And we are seeing basically 3 themes of expectations that a customer has got, if you really have to make a mark in the F&O space. One is, of course, the pricing, which has been important. I think we've sort of met that expectation pretty clearly. Then you need a bunch of propositions and tools to facilitate this trading. I think that is an area that we still have a way to move. We have identified a bundle of tools, which are getting integrated and created onto our platform one by one. I believe that we are probably 25%, 30% of maybe 40% at best of where we eventually want to get to.We believe this will take another couple of quarters because with every passing fortnite, we are adding more and more tools, more and more capabilities to facilitate trading based actions on our platform and site. And the third is access to platform in a very easy and simple and very new age time. So here also, our launch is very new. And many of the tools that are there on our website are yet to be actually integrated onto our market app. So if you ask me, it's at least 90 days to 180 days from today, when all these actions, and you can trust me, it's a very fierce focus within the company apart from cross-sell, which is -- I'm monitoring it on a weekly basis. And we are seeing that -- we are quite optimistic that once all these initiatives are taken, you will see an impact on market penetration. That said, I can assure you that derivatives we are growing. We are growing in revenues, we are growing in volumes, we are growing in customers all, but the idea is to grow faster than market. That is where we have work to do. Having said that, the new customer -- sorry, the new acquisition that you said is not nearly limited to, what should I say, derivative and F&O. It is a more wider spectrum, the way we see it, which is spanning cash equity, which is spanning surely F&O and which is also spanning engagement in a social connectedness type where you could follow, copy, blog, all of those. Those capabilities today don't exist in a platform like this in the country today.
That is such a crystal clear explanation that unless we get the other 2 levers fully on, which is the tools for helping the traders and the access to website in a new age way, I think comparing ourselves to other derivative-only brokers would actually be comparing apples to oranges. So that maybe 2 quarters or 3 quarters later, I'll just ask you again if now you are fully ready, and then maybe that comparison will be really logical to make. Is that correct?
Absolutely. And we don't have to wait for 2 quarters. We'll keep coming back even sooner than that.
The next question is from the line of Vijay Karpe from Bryanston Investments. Mr. Vijay Karpe, you may please go ahead with your question. As there's no response from the current participant...
My question pertains to the mutual fund business. The AUM has grown, I think the upward of 40% compared to the overall market growth of 80%. What has been the reason for the weak growth, has it been because our focus has been more on insurance and also because of the direct plans coming in for HNIs,as you mentioned.
No. Actually, the growth in mutual fund business is not on account of direct plan. Harvinder, why don't you...
Yes. So you have seen a growth in AUM. And even if you look at market shares around that, we have grown or been stable. I think 2 things. One, on the overall gross flows basis, there has been an increase in our share as well.
Yes, but that is purely nondirect, that gross flows market share improvement is nondirect. It's led by our market app.
Yes. So a couple of things that we are doing over here. If you look at the mutual fund business, it's getting more granular. There has been a good growth in SIP. That has gone up. There also, the market share has gone up from 3.4% to 4%. If you look at the number of sets, which are live at the quarter end, they have touched almost 9.2 lakhs, which is however, I guess we used to be about 6.5 lakhs to 7 lakhs sometime back. In terms of close also, there has been a growth of about 40% to 45%. So in terms of share, [indiscernible] we are increasing, although yes, direct plan is also 1 of the factors which is kind of having an impact in terms of flows and especially in the HNI segment, which is where, as Vijay mentioned, we are experimental of piloting with proposition, based on direct plan for HNI.
Yes. But much of that number is not visible in this. It will probably come in the future. It is a very recent introduction. So what you've seen is actually everything to do with nondirect.
And 1 more element I want to add is that our new Money app that is helping us acquire new to MF category customers. So there, the number of customers that we used to get for mutual fund on a monthly basis, that has registered a strong growth of about 30% to 40% from our earlier than Money app. So some of these factors are -- has been in growth. So shares actually have improved in the mutual funds business.
And the second reason, in addition to all these gross flows improvement and share improvement, we have also been benefited by the market improvement, the AUM because of market growth. So that also helps.
Got it. I have 1 more last question. Sir, you talked about the MTF book growth and that was also related to the call which we had given, somewhere close to 30 number of calls with a strike rate of 96%. So how does this work? And how do we give calls, which includes MTF inside them? And is this allowed? Yes, that is my question.
Yes. So I mean, 2 kind of calls, which are given by research team. So there were 30 such calls -- 30 such calls, which came under margin funding pack. So this is part of the research recommendation. So there is no kind of prohibition in giving such calls. They give individual stocks costs also and also MTF portfolio. So a set of thematic 4, 5 stocks portfolio will be recommended for customers to build. And we are productizing that also in the next couple of months when with a single click, customers will be able to execute set of 4, 5 stocks under MTF. So I mean, both individual calls as well as the portfolio calls are given by research team. And it has a very wide followership also now.
So Vijay, if I may just add what Vishal was also trying to explain that there's no 1 factor which has led to our growth and success of MTF. There are 3, 4 contributing things, which are additive with each other. They have come together and creating an ecosystem where an investor is choosing this product proposition with idirect. And 1 of them is -- the research is also enabling, the product is fully automated and productized. The interest rates are attractive. And all of these they are coming together to create a unique proposition, which is leading to acceptance and growth by our clients.
Congratulations again on the great set of numbers.
The next question is from the line of Kunal Shah from Carnelian.
Congratulations on good set of numbers and very heartening to see the client addition numbers as well. I've few questions. First question is, there has been a lot of chatter around the client addition member, which has been ranked across the industry, right? So just wanted to understand how do you look at the cost of acquisition for this new customers from Tier 2, Tier 3 cities or first-time customers and the cost of acquisition and the lifetime value of the customer or how does the economics work? And how you guys look at it when you focus on acquiring these new customers?
Harvinder, here. So 2 things over here. One is Tier 2, 3 or Tier 1 process is digital. What we're trying to reach us through digital media. We are not seeing a very meaningful difference in cost of reach out, because we don't rely on any physicalities in the further process in the marketing stage or the onboarding stage. So that's point number 1. Point number 2, definitely the equation of cash by LTV, that holds, holds for our industry, and that's what -- I mean it's a huge ratio, because if you have a longevity spanning many years, you don't have any further cost of carry and you have payback periods at the company level as a I said around the 12 to 13 months, at the company level.So that equation is definitely there. That is how the economics work, because it's after 12, 13 months, whatever revenue we get is completely the LTV, completely getting contributed to the bottom line. Coming specifically to the digital channel, as I explained in the last question as well, mix of channels which we are using, every channel has different economics, different customer personas. We are optimizing that, investing behind channels, which have sustainable quality and trend to optimize channels, which are less than sustainable quality. So that has been our approach. We are seeing -- even within the digital channels also, we have seen month-on-month the cost per acquisition coming down, and this is going to be our approach.
So basically, if I understand correctly, you're saying that basically, when your customer is acquired digitally, right, you have a breakeven, so to say, of about 12 to 15 months. Is that understanding correct?
So let me clarify, Kunal, each of our customers -- I mean our entire customer base right now is getting acquired digitally, and as a process, it is digital. Within that, there is digital marketing-related access and then the customers that are acquired through our own branches, through ICICI banks, who are partners and so on and so forth. So there are a multitude of distribution channels, which are helping us acquiring customers. If you take all of them together, we do have a breakeven period in the range of about 12 to 13 months. Digital would be higher. And for digital, I made this comment and within the digital acquisition channel as a sourcing channel there, the cost per acquisition is coming down month-on-month, and we are trying to optimize them. So that 12 to 13 months is at our overall portfolio level, that I wanted it to be very clear.
Okay. Okay. Fair enough. The second question was the MTF book that has grown for us. Any industry color as to how the book has grown for the industry or is it specific to us that we have been able to grow this MTF book. Any color on that would also be appreciated.
Yes. So as far as number...
Can I just request you to kindly mute, there's a little bit of a background.
Yes. So 2 important variables to which we always keep in mind how do we increase number of customers in MTF. And as I shared earlier, we have grown year-on-year as far as number of MTF customers are concerned. And second is our market share in MTF. So both -- I mean, as far as market share is concern as well as number of customers, we have grown significantly. And today, as far as funding is concerned, I mean the market share stands at about 21.8%. And a year back, this was just about 17%. So this has shown a significant growth. And that has happened because of the entire ecosystem and the wider participation coming from customers and also fueled by the support given by market.
Okay. So if I understand correctly, the market has also grown, whereas our market share has improved from 17% to 21% on a year-on-year basis.
That's right. That's right.
Right. Just 1 last question from my end. The client addition numbers have been very impressive and congratulations on that part, but even the industry for that matter has grown at a rapid pace. So if you see the market share, I'm referring to NSE Active client market share is still somewhere around 8.5% in that range for quite some time. So things have been working for us, if you could elaborate, what are new initiatives are we taking to kind of go to the next level now, right? So that would also help to kind of gain market share now?
So I'll comment here, and I'll go back to what I've been saying for a long time. Again, our request would be don't get too carried away with the NSE active number as the sole number determining the strength and quality of franchise. You are oversimplifying it, please don't do that. Having said that, we've reached the stage where on incremental market share, I think we are in the ballpark of around 12% in the month of September, when it comes to the new customer acquisition, right? Not -- so we find that as Harvinder has been explaining, there are multiple channels which are giving you addition to the new customers that we are acquiring, and not all channels have got the same quality. There are some channels where the quality is really nice, and the numbers are much lower. And then there are others where the quality would be questionable as to whether it will sustain, not sustain, but the numbers will be very large. We don't want to get into this whole number game without having any quality -- emphasis on quality of franchise.So while all of you, I understand, are very fixated on this number, internally, we look at it with a lot of interest. We track it, we monitor it, but we don't hang ourselves for achieving those numbers. We are more fixated on stuff that you've been asking, which is quality, which is ARPUs, which is longevity and factors like that. And today, I think we are yet to reach a stage where we have reached the stability on this. Given the fact that this whole journey is now about 6 quarters on the outer limit. -- actually realistically speaking, it is 4 quarters after the scale-up has started, we started effectively in the December quarter of last year.So give us some more time before we stabilize. Philosophically, I can tell you, we will be fixated on quality with growth, obviously. But if it comes to growth of numbers and headline items, which all of you are tracking, we would not get carried away with that headline number, please. We will still stick to quality and we'll give you quality, which will have a -- you will feel better with that quality over the more medium base, and I am sure to do that.
The next question is from the line of Sanketh Godha from Spark Capital.
Sir, the question is on MTF book again? Because if you look at the interest income growth, it has been 89 percentage, but the financing cost of the interest cost has grown by 104%. And if I do a back calculation, the margin on MTF book, which was upwards of 3.5 percentage, maybe a quarter -- maybe 4 quarters back, it has come down to 2.2%. So do you believe this MTF margins will further come down on me or they have bottomed at 2.2 percentage kind of a levels, just wanted to understand the thinking there.
Harvinder here. So let me just start off by giving a brief rundown of the balance sheet. The way you have to look at it is that on the liability side, you have borrowing. On the asset side, you have MTF as well as you have cash and cash equivalent, which is FDs which are created for the exteriors, for margins, right? So those are interest-earning assets, and these are -- this is the interest expense. So therefore, the 104% is not directly related to only MTF, point number one.Point number two, the NIMs are in the same range of about 4%, because in your computation, you would have probably taken the indirect expense costs, the interest expense and the interest income only of MTF. So I think the right way probably to do it would be MTF plus ESOP plus FD interest income minus the total interest expense. That would be appropriate. So there, if you do this calculation, and maybe I can take that offline also with you. It's about 4%, which is the range that we have always been guiding.
So in simple words there is no pressure on your margins with respect to MTF book debt.
Yes.
Again, Sanketh, I'll just step in. To clarify, we are not fixated on single product. If it means that I have to compromise on margins in future, you can feel -- you can be assured that we will do that. We will remain competitive. We will remain cutting-edge, and we will keep sharpening ourselves and innovative to remain relevant.
Got it. Got it. And the MTF...
MTF as a proposition, the way Vishal has explained at length is helping us acquire customers itself. So it is not -- this is not just a diversification, it is definitely doing a diversification job as well. But it is a unique proposition, which is helping us acquire customers as well. So it is playing that role, and that is a larger perspective. So that MTF customer might be giving me brokerage revenue, he might be giving playing in derivatives, he might be giving margins.So we look at ARPU kind of relationship value, not product related. That has been our approach, and this is only within the equity universe, which is the equity and equity alike. That customer, because there like a -- MTF customer quite high quality, he will dabble into MF, insurance, cross-sell, et cetera. So that is the approach that we look at. Assests, that's a new line. So as Vijay clearly mentioned that product yield is very narrow, if I do that focus. However, technically and numerically that NIM is right now at 4%, but we are not fixing it on that. That, I think, has an approach point what Vijay mentioned.
Good. Yes, great That's clear now. And second, my question is on more on OpEx. So sir, if I look at the other expenses, I see a very strong growth in second quarter. So -- and then I also wanted to understand the employee growth, employee cost trajectory going ahead because we -- if I look at cost-to-income ratio, it is now plateauing or settling around 45-odd percentage. So just wanted to understand, are there levers left over to substantially improve beyond 45%? Or -- and I just wanted to understand the other expense growth, what led to that kind of growth basically?
Yes. So Sanketh, I'll take the second question first. If you refer to the presentation that we made at the digital day, we have taken a guidance of about trying to reach 40% or less than 40% in the next couple of years. So we do believe that there is operating leverage scope. I would not qualify to say whether it is by reduction of expenses or improvement of top line. We are definitely investing. The growth in -- and it's linked to your first question, the growth in other expenses is only due to 2 elements, which we have called out as investment areas. One is the tech expense and second is a marketing expense. Both these areas, we are investing. These 2, you should see an expansion.So overall OpEx, more variable that is a direction, number one. Number two, other than marketing, technology and control of the fixed cost or at least optimization of fixed costs. Number three, ratio, 45%, tending to 40% over a couple of years.
I will add that we are in the investment mode right now, right? We are adding -- we are adding customers, which will -- which is front-loading costs. We are adding technology. We are adding people with specific skills, which will help, again, get amplification effect in the times forward. So we are not shying away from making these investments, where there could be front loading. So while Harvinder mentioned the guidance of about 40% more in the medium term, in the short term, again, there could be an expansion of these margins, before the gains start floating in. We are pretty optimistic that the revenue flows, which will come from some of the products like loans, like insurance are still in a very, very early stage. So that can -- you could probably all of this can make a big difference to the, I would say, breakeven dynamics in the next few quarters.
Got it. Got it. And then finally, if you can break down the mutual fund AUM growth broken down into price movement and the net fresh money, not the gross money, the net fresh money. So 37% growth, what you are seeing year-on-year or 10% sequential growth, I just wanted to understand, this is completely driven by the current market growth or market performance? Or we are seeing net new money also substantially flowing to our distribution in this thing?
It's a combination, Sanketh, of both market growth as well as the net new money, definitely higher proportion would be the market-related growth. One more thing that has happened is that yields have improved a bit, because of a better mix of equity and debt for our mutual fund income. So on a gross growth basis, as we have already said that actually, our market share has gone up on an overall basis. On a net sales basis, also roughly, I would say, if you ask me or push me for a number, I'll say maybe 75-30 -- or 75-25 could be the attribution, factor at mark-to-market and -- ballpark-ish I'm saying from it. Maybe I can come back to you with a more exact number, but it's about, let's say, 75-25 or...
Can I just add 1 more thing. We are quite encouraged with the fabric of this growth because the growth has come through granular means. See the net growth is not as good as the gross growth, because we are seeing a little bit of lumpy migration, which we described, the HNI lumpy migration towards direct plans. So I think, obviously, the granularity takes more difficult to grow, which is fortunately showing good growth, and you've seen a 60 basis point improvement in SIP market share, which others may from a slightly medium-term perspective. And clearly, the gains that will come through granular growth comes with little passage of time, which will offset the HNI lumpy decline, which, in any case, we have absorbed it and we have -- we'll continue to absorb it through a direct plan and get revenues through non-mutual fund sources for which we described that the pilot is on.
The next question is from the line of Prayesh Jain from Motilal Oswal.
Congrats on a great set of numbers. Just a couple -- firstly, a clarification on the MTF book again. So when you mentioned that in wealth business also, there is an MTF that is completely separate from the MTF numbers that you mentioned from the retail book, right? Just a clarification here.
No, Prayesh. I'll clarify. The wealth revenue, wealth asset is the subset of the respective product lines. So it is subsumed in that. It is for those 60,000-odd clients that we have individually, who have assets of more than INR 1 crore, which we call as a belt franchise. Whatever activity that we do -- that these clients do we aggregate that, and that is the revenue that you see under the wealth franchise. If they are doing MTF that will be under belt and aggregated under the overall MTF. So it's a part of that.
Okay. All right. Got that.
Customer facing cut of our business, of our top 61,000 clients.
Okay. So when you mentioned the MTF book, it's a combined of all the customers.
Yes, yes. So it's a company level MTF book.
Okay. Got that. And second, just a view on the institutional business. Are we losing market share there? And what's the outlook there?
Come again, Prayesh, which business you mentioned?
Institutional brokerage business.
Institutional brokerage business, the market share has been flattish. There was -- in fact, for the month of September, it has grown handsomely. For July and August, yes, there was a bit of a decline on account of certain rebalancing that happened over global index rebalancing, which is an event where we lost some market share. But overall, for the quarter, it has been flattish.
Okay. And lastly, on the employee cost front, do you see the employee cost to income ratio rising from the current level in the next couple of quarters? And then possibly the benefit of operating leverage coming in?
It's possible, Prayesh. So right now, you're looking at 20%. If you refer our earlier conversations, I have guided for maybe a 2 or 3 percentage point expansion, which is possible. We are investing some of the areas in technology, data analytics, digital marketing, these are some places where we are making people-based -- skill-based investments. It is possible. It is possible. Although for the last 2, 3 quarters, it has been in this range of 20%, 21%. But as a guidance, I would still consider maybe 200 basis point expansion possible.
The next question is from the line of Aditya Jain from Citigroup.
One on the direct mutual funds for HNIs. Could you talk about how it will work? Will it be part of some subscription that will be offered to them or on their platform when they log in they will automatically get direct mutual funds?
Yes. Anupam, you want to just comment? Okay, so Anupam has dropped out. You're right. It is being piloted with a select set of customers. So it is preidentified list. And it is being made available only to the preidentified list in 2 ways. One is on logins and on access through [ RM ]. And there is no subscription fee. It is free.
Correct.
So the idea -- Aditya, if I may just add a line, the idea is that these HNI clients have a preference towards direct plan which they are anyways doing themselves. Those AUMs or assets are not coming to us anyway.
Yes. So actually, most of these are targeted customers who are residually left with very, very small exposure and they are sitting with multi-crore, multi-tens of crores of rupees outside us. We are trying to win them back.
Got it.
So these are not small numbers, like the customers we are targeting are sitting on portfolios of north of tens of crores.
Yes. Got it. Understood. Then on the increase in Neo subs, it's been fairly gradual of 100,000 you mentioned the last timing call to 145,000 now. So how can we see this change going forward? Is the uptake low because just less demand for that product? Or is it still not a full quarter of clean onboarding journey?
Yes. So I mean on the contrary, we are encouraged by the consistent run rate. See, Neo is a product basically for traders. So mainly derivatives traders and also equity intraday traders. Whereas for cash customers, we have Prime. And Prime is multiple times of Neo. And this ratio will always be there, because even in market, number of cash customers are much higher than the trading customers. We -- of course, we are focusing a lot on the new acquisition, and we want to increase the contribution -- NEO contribution coming from this set of customers. We have seen some amount of success also in Q2. So out of the monthly enablement, almost 30% of the NEO customers are coming from the NC, the newly acquired customers. And we want to augment this contribution going forward also.At the same time, we remain very focused on the activation, activating our dormant set of customers and also customers which we acquired in earlier years. So every such new proposition launch gives us an opportunity to reach back to those set of customers and activating them. So this is how the NEO strategy will unfold in coming months.
Got it. Understood. And then on Slide 14. So you commented earlier that cash market share is improving, but derivative is yet to see traction. But if I see Slide 14, in September, we've had Phase 4 come in and yet I see market share improve in both equity and derivatives. So just trying to reconcile that with your statement earlier, it sounds like market share is improving even despite new norms fully going in. Is that the right reading?
So actually, if you recollect, when we had the new margin norms taken last December, we had a big impact in the first phase. And thereafter, we said that with every passing phase, the impact will be less and eventually, we expected that by the third, we would have no impact logically, which is what has happened. So first phase, we had the maximum impact, because we provided the highest level of leverage through our platform, given our risk management capabilities. The salience of the platform enabled us to take larger risk positions with customers. And that is something that got impacted, because of the new margin norms. By the end of the second, the differential advantage that we had enjoyed got completely nullified. It was Even Stevens as we use that word at that point. And therefore, from third and fourth, it was business as usual, because everyone was impacted identically. There was no differential impact, negative or positive. And that is what is getting reflected in gains in market share, as far as our retail equity is concerned. The numbers that you see on Slide 14, I will remind you, once again, it's a combined number and not only retail. So if you dissect it, retail has shown a growth in equity and when you dissect derivative, we've not seen a similar trend in the derivative side. So as I explained in 1 of the earlier questions that was asked, derivative is still a lot of work to do.
Yes, definitely. And then on the HSBC federal partnerships. Is it like ICICI in the sense we don't get free access to free float? Or does it work differently?
Absolutely, the same, I would say.
The next question is from the line of Manish Poddar from Nippon India.
Sir, just 1 question then. Just on this loan dispersed, the INR 690-odd crores, so what all other products can we launch under our ambit, or is there a plan, let's say, in the next 12, 18 months to launch other products alongside?
Yes, yes. We have a fairly, I would say, a detailed action plan on the loan side. So the biggest flagship product is, of course, home loan. Apart from that, there are about 11 other loans that we are introducing, which includes personal, which includes credit cards and which includes some of the other car loans and so on and so forth. It is coming on through our app called the Money app. We should be beta testing it shortly and coming out with that completely integrated. And we have also done a detailed segmentation of our total base of 63 lakh customers. We have done it sometime back, which was about 55 lakh customers in those days. And we have mapped with CIBIL scores of these customers. What is the loans that has been taken through our company and what are the loans which are taken outside our company. So there is a massive opportunity to reach out to the customers for balance transfers and so on and so forth. So we'll be doing all of that. The opportunity is not small.
And just to understand it, so you would be reaching out, let's say, the mode of acquisition will largely be digital or will you have, let's say, a sales force lead, which will go across to probably push across these products?
We already have a sales force lead, which we are actually digitizing right now. Right now, it is more physical. The INR 690 crores you saw has actually got a fair amount of physicality to it. In a quarter or so from today, you'll see a lot more phygitality rather than physicality. And over a period of time, you see a lot more digitality, because even today, as we speak, loans is still a physical phygital process at best. There are only loans like personal loans, which have got a complete physical capability, maybe credit cards as well. But apart from that, when it comes to car loans, home loans, various other loans, loans against property, et cetera, that you provide to self-employed businesses. there is at best phygitality to it. So from a physicality, we will be moving in a quarter to a phygitality and eventually to digital in the products which are digitalizable.
The next question is from the line of Kashyap Jhaveri from Emkay Investment.
One question more on the industry point of view. If I look at us today, we have about INR 5.1 trillion of assets within client accounts. And which would -- on active client basis we're equivalent to about 20 or [indiscernible] per client. On the broking side, if I look at our ADTO per client is significantly even lower than what we used to do earlier might be to do with the margin norms or the new norms which have kicked in. If I look at some of our competitors, their clients are not so wealthy and yet we see ADTO rising quarter-after-quarter. From the industry point of view being an insider, do you see this as one of the key risk over which -- that it's probably that the clients who are not so comfortable in terms of the net worth are getting into something that they don't probably understand properly.
Yes. So Kashyap, 2 broad comments on this observation of yours. So 1 is see ADTO, the structure of ADTO of industry, let me just maybe give you a low down. One is that out of the entire ADTO, roughly about 95%, 96% of that ADTO belongs to the F&O segment. About 3% to 4% of the ADTO belongs to the cash or equity segment.
Which in a way is worse, right? And I understand what you are saying, but in a way, this is worse than what it used to be. At 95%, this would be worse than probably derivatives being at probably 50%.
No, no. So this I'm talking about last 3, 4 quarters. I'm making a slightly different point. And let me just come to that. 95%, 96%, again, 85% of the volume is by options. And in options what happens is that the notional value is called turnover. So the ADTO growth can just be the optional turnover. So it may not be really reflective of the underlying growth of the number of transactions activity. That is point number one. Point number two, these new margin norms at least that field has become level. So now for the same exposure a customer might have to bring in his own network or own contribution, which could be depending on which broker, et cetera, the customer is from 4x to 5x of what we used to do earlier.So to a minor extent, the risk that you are highlighting that is it all fluff and are there so many people who do not understand and don't have networks and still they are trading. I think that with these regulatory norms to a lot of extent it has become harmonized across bookers. And yes, that is the reason why we say that, holistically, if you look at a couple of things, total assets, total trading activity, revenues, ARPU, you will get a fair idea. But not only, let's say, you are talking ADTO as a single metric or somebody is talking about NSE active as a single metric. I think single metric in isolation has some of these pitfalls.
But sir, at the end of the day, if I'm writing an option, it's as good as a leverage ratio, right? It doesn't matter if it's only the contract that I'm including or the contract value that I'm including.
Yes. So I mean, when we look at the retail space, the large contribution and derivatives is coming in form of a buying option. So of course, the selling is also there. But once this peak margin norms kicked in, we see that retail customers are more buyers than sellers. Sellers, of course, is more HNIs and having demat assets, et cetera, who can contribute significantly for margin. I mean they are the people who are seller. But I would say that retail largely is in buying option spree other than selling. So selling on the other side there are operators, the institutional, there are affluent big HNIs, et cetera. So this is how the market construct is.
Okay. And 1 last clarification. In your wealth management revenue the transactional and ARR, any part of it is included in the other line items like brokerage and distribution and other?
Yes, yes. All the parts are included, Kashyap. So for example, brokerage or wealth client plus mutual fund income of a wealth client plus a loan distribution comes from a wealth client. All that put together is this number of INR 249 crores that we have shown, okay? The same brokerage will also be brokerage as a product line item. So what I was trying to explain earlier in a question is that we have tried to give you a sense of how our wealth franchise -- wealth customer franchise, which are 61,000 customers out of the 2.5 million customers that are active for us, 61,000 customers, each of them having assets more than INR 1 crore, what level of activity and what level of assets they have done with us. So at the top end of the pyramid, how we have been able to engage this disclosure is about that. All this revenue is also in the respective line items which are fund loan, et cetera.
Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Chandok for closing comments.
Yes. Thank you so much for a very engaging discussion. Yes. Thank you so much for all your questions. Yes, I think there's a little bit of a distortion in the voice. I'll repeat again. I just wanted to thank you all for an engaging discussion and all the questions that you've asked. In case there are a few of the listeners, who had some questions which have not yet completed, please feel free to reach out to us separately, and we will do our best to answer and respond to all your queries and questions. Thank you very much. Take care, and have a good evening and a wonderful rest of the week. Thank you so much.
Thank you. On behalf of ICICI Securities Limited, we conclude today's conference. Thank you all for joining. You may now disconnect your lines.