ICICI Securities Ltd
NSE:ISEC
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
687.25
898.15
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
ICICI Securities Ltd
You don't have any saved screeners yet
Good evening, ladies and gentlemen. And welcome to the Earnings Conference Call of ICICI Securities Limited for the quarter ended March 31, 2021. We have with us today on the call Mr. Vijay Chandok, Managing Director and Chief Executive Officer; Mr. Ajay Saraf, Executive Director; Mr. Harvinder Jaspal, Chief Financial Officer; Mr. 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, Retail Distribution Business; and Mr. Prasannan Keshavan, Head, Operations. [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 call Mr. Chandok to take over the proceedings. Thank you, and over to you, sir.
Good evening to all of you, and welcome to the ICICI Securities Fourth Quarter Earnings Call for fiscal 2021. I trust that all of you, you're near and dear ones, are safe and healthy and I hope it remains that way. So as we have all experienced, FY '20 was indeed an unusual year, and at a time like this, I feel it is imperative that we just take a quick reassessment of the opportunity that ICICI Securities has been pursuing as a part of its strategy. So as we do this, we find that all the medium-term drivers of opportunity that we've been pursuing, which includes increase in financialization, preferences of investors towards equity, increasing formalization and growing affluence, all these trends remain intact. In fact, if at all, the pandemic seems to have frontloaded the digital aspects of this opportunity, which is clearly reflected in terms of growing participation from newcomers in the financial markets and increasing penetration of financial products in Tier 2 and Tier 3 cities. Having said that, now let us straight away shift the attention of -- to our quarterly performance. So I'm sure by now, all of you would have perused through our quarterly results, which has been placed on our website. Our company has continued progressing on its strategy. And we are very pleased to report that for the current quarter, our company revenue stood at about INR 7.4 billion, a growth of 53%, and profit after tax stood at INR 3.3 billion, a growth of 111%. We continue to focus on enhancing operating leverage, resulting in reduction in branch and employee count, consequently bringing down our cost-to-income ratio to about 40%. All this has helped us increase our ROE further which is now standing at about 81%. We are happy to report that following these results, our Board of Directors have approved a final dividend of INR 13.5 per share as compared to INR 6.75 per share last year, taking our total financial 2021 dividend to INR 21.5 per share, up from INR 11 per share last year. This is resulting in a dividend payout ratio of about 65%. So as we look back at FY '21, it is important to point out that we have further strengthened our franchise, and our client base has now increased well past 5 million mark, we are at about 5.4 million clients. And if you were to count the assets of these clients with us, this has now grown by about 85% during this year and stands at over INR 3.8 trillion. This is clearly driven by all around growth across businesses. Our asset-light model has held us in good stead during this period, and it has indeed inherent strength like virtually, there is no inventory or supply chain risk, low credit risk and receivable risk, strong liquidity position. All these factors of our business model are really desirable aspects, particularly in the current environment. Further, our business model, as you would all appreciate, is highly digital and highly scalable. This is because more than 96% of mutual fund transaction, and virtually, all of the equity transactions, are done digitally. In addition to this in the current year, our business has become more open architecture with the introduction of digital sourcing. Also became more open architecture with the addition of new health insurance partners, which was Max Bupa, we just added in first quarter 4. And we also added a new distribution partner for equity product in form of a 3-in-1 account, which is Federal Bank. This is in addition to ICICI Bank. So we now distribute more than 50 products and services through our platform. These aspects of our business model has helped us generate a high ROE, and has also helped us diversify more importantly, revenue stream from our clients. Our digital sourcing engines have also started adding customers at a faster pace and as a result of that, our -- it has helped us more than triple our monthly sourcing run rate as we're exiting this fiscal year. It's also interesting to note that 52% of our customers that we acquired in the current fiscal year actually were below the age group of 30 years, and more than 65% actually came from Tier 2 and Tier 3 cities. So all in all FY 2021, our franchise strengthened, our business became more open architecture, we added more products, more books to deal with customers. All this is helping us diversify our revenue across various retail product revenue stream. Let us now have a brief look at the market environment, along with some important update of our performance of the various business segment for this quarter. So as you are all aware, the equity market continued their strong run with benchmark index, NIFTY, increasing by 5% during the quarter. During this period, over 5.3 million new DMAT accounts were opened, and equity and derivative ADTOs increased by 70% and 120% Y-o-Y respectively. This buoyancy in equity market continues. And we saw 45 deals in the quarter, that happened as compared to 13 deals in the last quarter of last fiscal. On the regulatory front, the second phase of the new uniform margin norms was implemented across the industry from March 2021. Over the years, we have witnessed that regulatory changes have always led to an orderly growth of the market. What we have also experienced is in instances when these regulatory norms are implemented, their volume of business gets impacted in the industry. Typically, they resume growth after the transitory phase. In line with this trend, we find that equity ADTOs for the industry actually declined in the month of March 2021, when you compare it with February 2021. Whereas the ADTOs for derivative actually remained largely flat, it was largely uneffected. It is also interesting to note that equity ADTOs for March was in the same level or similar level to what ADTOs was in November 2020. And the derivative ADTO actually happened to be even higher than November 2020. And November 2020 was the time when the first phase of these norms were implemented. So this clearly reflects the resilience of the market and also it reflects the trend that I just spoke about. In the backdrop of this development in the industry during our quarter, our efforts to invest our resources and scale up digital sourcing has started to show results. We added about 3.5 lakh customers in the quarter. This is our highest ever addition. This was driven by our digital channel, which added about 2.25 lakh customers, which was up from 38,000 in the sequential previous quarter. We have diversified our sourcing mix with non-ICICI Bank sourcing channel, that is digital sourcing, business partners and our own RM network together contributing now more than 55% of the account source. Our persistent focus on quality has helped us achieve an activation ratio of 84% for the quarter ended March 31. This scale-up in our sourcing, coupled with healthy adoption of our product proposition, resulted in the NSE active customer base growing by 47% to 1.58 million as at March 31, 2021. We added actually 145,000 NSE active customers in the month of March alone, achieving an incremental market share of 16% for the month. And this was up from about 1.5% market share that we had for the month of April 2020. In our equity segment, as a business -- as a result of implementation of Phase II norms of the regulations of margin, we did see some de-growth in equity and derivative turnover. This was in the month of March as compared to February. Our market share in equity increased by 50% Y-o-Y. However, if you look at on a sequential basis, it was down by 90 basis points. Our market share in derivatives for the quarter sequentially fell by about 40 basis points from December 2020 levels. This reduction in market share is actually primarily on account of the new margin norm, which has impacted one of our key differentiators that we were offering in our marketplace. That is our ability to provide better leverage to our clients which we were able to do on the back of our robust technology and risk management system and also higher contribution of intraday in our product volume mix as compared to the market. We are focused on driving market share and have adopted a multipronged approach for this business segment. So what are we doing here? First, we have launched new and extremely competitive plan targeted at attracting this price-sensitive trading segments. Second, we have launched a plethora of tools and solutions like iTrack, iAlert, iLens and Payoff analyzer which are important enablers for growing business in the segment. Last but not the least, growth in number of active clients by acquiring new clients and activating existing clients is also important for growing volume in this segment. So we believe all these initiatives that we have taken and we continue to take is helping us position strongly in the segment. However, it is going to take a few quarters before the impact of all these measures start reflecting in volume market share gain. Initial signs are encouraging, particularly because we are seeing a gain in traction of customer acquisition. When we look at -- we looked at volume market share, now let's look at the revenue performance of this equity business. Our revenue in this business actually increased by 38% Y-o-Y, driven by higher ADTOs, which actually grew by 78% Y-o-Y. On a sequential basis, retail broking revenue increased by 7%. This is despite lesser number of trading days in the current quarter and also despite the decline in market share. Why did this happen? This happened because, number one, there was growth in number of customers that are trading with us. Number two, it is a better volume mix of segments, which were not impacted by margin norms like delivery volume. Number three, it was on account of lower revenue salience of these volumes, which have been impacted by margin norms.For example, if you look at the derivative revenue, which was impacted in the month of March, when you compare it with sequential February, the decline, despite this loss of market share, was only 1% of the total revenue of equity for the month on a month-on-month basis. So revenue salience of this market share loss -- volume or market share loss is quite small. And our focus on non-broking revenue streams that we have been talking to you about, like interest income from ESOP, MTF, all of which -- both of which doubled actually on a Y-o-Y basis. Various depository charges that we have charged the customer, the subscription fees that we charge for NEO as well as Prime. All this is helping us diversify our equity revenue. And these diversified sources of revenue, which we call the allied sources of revenue from equities are now on a combined basis contributing 20% of the total equity revenue, which used to be about 15% a year back.In order to augment this monetizing capability from our clients and to enhance the customer experience, we actually launched a slew of initiatives recently. Some notable ones was the global investing platform, which facilitates investors investing in the U.S. market. This has attracted about nearly 3,900-plus customers and remittances was $14 million, nearly INR 100 crores has already happened through the platform. Our one click investments are being appreciated by the customers and about 85,000 equity portfolios have been subscribed to till date. We are also expanding our portfolio by launching commodities, where we have already added 50,000 customers since the launch. Our partnership with Federal Bank for offering the 3-in-1 account, we expect will start adding momentum to the diversification of new revenue pools as we go forward. When we look at our institutional equity revenue, it grew by 30% Y-o-Y, aided by consolidating of our position amongst domestic institutions and also strengthening of the FII franchise. When it comes to our issuer and advisory services business, our revenue increase was for 441% on a Y-o-Y basis as we executed 15 investment banking deals in the current quarter as compared to just 2 in the last quarter of last fiscal. For FY 2021, we were ranked as the #1 player in the IPO, FPO, InvIT and REIT issuance market with a market share of about 78%. We were also ranked #2 amongst domestic financial advisers by a number of deals in M&A league table. Moving from equity to the distribution business, it's important to note that the gross flows for the industry to mutual fund actually remained subdued. Actually, it was down by 37% on a Y-o-Y basis. While there were net outflows in the industry, equity mutual funds witnessed net inflows after a gap of 7 months -- after a gap of 7 months in the month of February and the flows further increased in the month of March. Also SIP inflows finally -- it's a record of about INR 92 billion in the month of March 2021. Our mutual fund revenue grew by 22%, aided by our sustained focus on input parameters, and we've been focused very, very sharply on improving input parameters. Our market share on a gross flow basis increased from 0.18% to about 0.31%. And on SIP flows, our market share increased from 3.29% to 4.05%. We are pleased to also report that we disbursed a total of about INR 530 crores of loans, which is our highest ever quantum of loans in the quarter, and this was compared to INR 2.2 billion or INR 220 crores that we disbursed during the fourth quarter of last year. Our non-mutual fund revenue grew by 29% Y-o-Y, aided by strong growth across investment products like PMS, Sovereign Gold Bonds, AIF, life insurance and loan products. As a result, our growth in our mutual fund and non-mutual fund distribution, our overall distribution income registered a growth of 22% Y-o-Y. We are continuously working on improving customer experience and have launched various initiatives in this direction. Our one click investment aimed at simplifying the experience of mutual funds for our customers now contribute 16% of the new SIPs and is one of the key contributors for our growth in the SIP market share that I spoke about. We also launched our ICICIdirect Money app targeted mutual fund investors to simplify and decongest their investment journey. We are -- we went open architecture on health insurance, which has helped us scale up the number of policies that we sold in this domain by ForEx on a Y-o-Y basis. Our focus on micro-segmenting the client base and providing personalized experience using analytics, new age tools that we offer helped improving our Net Promoter Score and also cross-sell ratios. Our cross-sell ratio increased to actually 1.78 versus 1.64 in Q4 last year. During this quarter, customers with 2 or more products increased to more than 1 million, up by 10% on a Y-o-Y basis. This increased engagement was reflected by our overall active customer base, which went up by 29% on a Y-o-Y basis to 1.91 million. Coming to our wealth management business, this registered a growth of 82%, driven by an increase in total assets to about INR 1.7 trillion, a growth of 102% on a Y-o-Y basis. The yield in the wealth management business increased to 0.4% from 0.37% a year ago. We added a little more than 4,700 clients to our wealth segment, taking the total number of clients in the wealth segment where the individual AUM is more than INR 1 crore per customer is now at about 47,400 approximately. We also up our proprietary PMS now to about INR 220 crores, a growth of 100% Y-o-Y. We introduced a product branded premium portfolio, which is a curated research backed solution for HNI clients for investments into equity and onboarded over 500 HNI clients through this product. I think to sum up, we believe that the pandemic has front-loaded the digital narratives and has accelerated the market opportunity. Digital infrastructure, analytics and behavior shift that we are observing are coming together imaginatively, and we, at ISEC, are very pleased and very well positioned to take advantage of this opportunity with the help of our strategy articulated, which is digital and open architecture. So I would like to end our commentary and open the call for questions that you may have.
[Operator Instructions] The first question is from the line of [ Malar Hemant Manik ], an individual investor.
Firstly, congratulations on a great set of numbers, and thank you for this opportunity. I have a couple of queries. Sir, firstly, I have a fundamental question about our business model because we are both -- we are into both investment banking as well full service broking where we publish research report. So I believe there can be a conflict of interest because we will not initiate a sell report on your listed investment banking client irrespective of their business fundamentals or valuation just to maintain a good client relationship. So what are you thoughts on this conflict of interest?
This is Harvinder here. Thanks for your question. So as you know, we work across 4 or 5 different business segments. Investment banking is one of our business segments. We have a very independent research team which reports directly to the M.D. And therefore -- and we have very strong governance processes around Chinese walls and various regulatory as well as best practice related processes, which ensures that our research is completely independent and stand on its own feet. And it is based on merits of a particular deal, a transaction that the analysis could be done. And it is quite possible that we may have a sell recommendation even -- or a buy recommendation. That is completely a look out of the analysts who are independently assessed, who are independently monitored based on their ranking with individual investors. So that is what they are measured on and it's a completely independent process.
But in that case, don't you think it will impact our relationships with the investment banking clients?
No. So it -- that's what I'm saying that investment banking, we enjoy pretty dominant share over their investment banking based on our relationship with corporates and our capability to execute. On research side, the relationship are from the buy side, and there also we enjoy pretty decent ranking from our investors in our ability to be able to service them with a independent research coverage.
Okay.
In fact, it adds as a strength because now we are a full-service house, we are able to service a broad cross section of needs across products and business segments.
Right. My second question is that our corporate growth in the recent quarters has been largely on account of the increase in the retail investor participation post the COVID crash and the rally in the market. So to what extent do you think this growth is sustainable?
So just a correction over here -- so if you look at our revenue growth for the quarter, the 53% revenue growth that you are registering has been actually across all the business segments, and I'll just quote some number to refresh. The retail allied -- retail brokerage revenue that grew by about 48%. Allied Broking, which is our diversification initiative, things like interest income, et cetera and equity business, that grew by more than 100% actually. Our distribution income grew by 22%. Our wealth income grew by 82%. Our institutional equity grew by 38%. And our issuer management and advisory services income grew by more than 4x. So it has been all across business segments and not only driven by retail participation, but yes, we do acknowledge that retail participation has increased, and that has helped us in our retail equity business.
[Operator Instructions] Next question is from the line of Kashyap Jhaveri from Emkay Investment Managers.
Hello. Hello? Am I audible?
Yes. Yes. Please proceed.
Congratulations for such a great numbers for the quarter. My 2 questions are first, if I look at your market share in derivatives, the decline has seemingly is much, much sharper than probably what our commentary has been for last about 2 quarters, post those regulations were announced. Any strategy in place to recoup that market share? And consequent of that loss of market share, if I look at your revenue per client, at about INR 9,500 or let's say about INR 38, INR 40 per client per day, it's like a multi-quarter low. So what are the strategies that we are adopting to push that number up given that client addition has been very strong? And the second question is in terms of non-mutual fund distribution revenue. There would be some base effect in the same quarter last year because distribution was probably closed for about 15 days in March last year. So what's the steady-state run rate that one could expect in that particular business?
Yes. So thanks for that question. If you really look at our commentary and go back to our last Investor Meeting, we specifically actually gave out the market share of derivatives which usually we give on a quarter-to-quarter basis, we actually gave a month-on-month basis. So we shared with you the market share in the month of April -- sorry, in November, October and December separately. And we shown to you that our market share in December had come down to about 3.4%. So the commentary was very clearly reflected in our last quarter's result itself that the derivative has been impacted on volume market share, and we also explained that the decline in market share was offset by gain in revenue that took place on the nonderivative side. In line with that trend, we are -- we've seen that when round 2 happened and we have also said that the biggest impact had already been sort of factored in. And going forward, the impact would be not that high, which is what is actually paid up. So it has happened exactly as we have sort of felt at that point in time. We also said that the revenue salience is not much, which has played out both in December as well as in the quarter of this year. So I mean, that is what was our sort of narrative when it came to derivative market share. We also sort of had spelt out a series of initiatives that we are taking to recoup market share. And I'll just reiterate some of the points quickly. One is to win in this space, clearly, there have been historically 3 levers. One lever has been leverage, second lever has been pricing. And third lever has been a set of tools. Ideally, you should have all the 3 to be the best player in the market. Most players pick 2 out of the 3 and play the game. Our choice was on leverage because we had a great risk management system, and we had great balance sheet strength so that we were able to provide that. That was an area of strength. And that's what helps us in that particular segment. With the coming off these norms, actually, that lever has been -- that lever is no longer relevant to differentiate. So we very rapidly introduced the plan for the NEO plan, which is the most attractive trading plan that is there in the Indian market where the traders, we charge them INR 20 for an intraday equity, INR 20 for intraday F&O and options and INR 0 for futures. It is the most attractive plan that is there in the market. Apart from that, you need to improve experiences and provide tools. All of that has been sort of identified, and we started introducing them one by one. I gave a list of some of the tools when I was giving my -- the earnings call commentary. We still have a bunch of tools. They have just been launched and more tools are coming, including algo tools, et cetera, that are required to gain traction in this segment. So now that we have a good proposition, we have tools which have come/coming, and we have growth in customer base. This triumvirate has to come together in a meaningful manner to start showing volume growth. So as I have said that this is not going to happen in a short time, it is going to be a more multi-quarter sort of play out before we can start seeing the improvement and impact on market share. So that is how we are looking to address the market share issue there. Your second question was...
With respect to ARPU, Kashyap, I will comment. Harvinder here.
Yes.
So first of all, let me clarify our ARPU for retail equity and allied business that actually has gone up. So it was about INR 8,700 last year for FY '20, it is now at about INR 10,100. So it's a growth of about 15-odd percent. Again, this takes into account the entire active base. And we must recognize the fact that we are seeing a surge in client acquisition towards the last quarter. So these clients, although the number of clients -- huge number of clients have come in, in the last quarter, they have really not got a full opportunity to start giving a 12-month revenue. Despite that which obviously impacts mathematically the denominator. But despite that, we've seen a 15% growth in ARPU and not really a decline. So corrected for that, this is a growth. Even on an overall basis, the growth is about 15%. Did you have a follow-up question?
Sorry, just one clarification over here on the market share side. If I look at our cash market share also is now at -- it was about 11% plus, then went down to about 10.5%. Now it's about 9.5%. So the gains that we did over the first half of last year, say, FY '21, by the end of the year, we are back to where we were in March '20, plus about 50 basis points versus March '20. So in cash, what's happening? And the second question then was about non-mutual fund distribution income. Let's say, non-mutual fund as well as noninsurance, the distribution income, which is there in the presentation.
So on the intraday side, as you are -- that -- on the equity side, the cash equity side, you have intraday and deliveries. And while you said that the gains of -- market share gains of the earlier period has been sort of reduced consequent to this, the mix with where it has reduced are different. Actually, it is reduced in intraday and not really in the cash side. In fact, cash, we are probably big, although the data doesn't come out intuitively one can guess we would have gained. Given that reality, you would have seen growth in revenue. Otherwise, revenue growth could not have happened. So the areas where we have lost volume -- market share, see unlike this -- this volume is not an amorphous volume. It got different segments and different segments offer different needs. What we gained is the [ recurring ], what we lost is the [indiscernible].So headline numbers, you are right in saying that the market share gain is equal to whatever we gained, a good part of it got lost. That's right in the headline segment then, but the impact, the revenue impact of the 2 are not same. That said, I think we are on a far better wicket today with far more competitive capability than we were ever in the past when we were actually gaining, which gives us the platform on which we can build. Now that we have got competitive products as well, apart from the strengths of the past. It's just a few months into the launch. We are quite hopeful that these launches will help us gain in the time forward the market share that has declined, but we have to also factor in the point that there has got to be a settling down of the 2 more phases of norm, which are Phase 3 and Phase 4. And simultaneous growth that we are attempting, both these have to be sort of seen and played out to start seeing the full impact of market share -- growth assumption. On the second part, which is on the non-mutual fund.
Yes. So Kashyap, on the non-mutual fund, your questions were: one, was it a base effect because there was a lockdown therefore Q4 was lower? And second question was, how much of it is sustainable? So I'll try to address it in 2 parts. One is, if you look at the last year, by the time the lockdown started, the quarter was almost over. So we actually, for last year also registered a sequential growth in terms of premium income, et cetera, so in life insurance. The other aspect is on that base, we have grown both sequentially as well as on a Y-o-Y in a strong way in life insurance. We have also been able to improve our yield based on a better product mix. We have more protection, et cetera, which is offering us a yield improvement in insurance. Other than that, what we have also been able to do is grow some of the other lines. So for example, we have a very decent market share in SGB now. We have our run rate now crossing INR 500 crores of loan disbursal, which historically has been about INR 200 crores, INR 220 crores, INR 230 crores kind of a run rate. That is a more structural aspect, which has started giving results. We expect that we should be able to go from strength to strength and therefore, both non-mutual fund, overall distribution and cross-sell are a key area of focus for us to grow active clients and revenue as well as ARPU.
The next question is from the line of Aadesh Mehta from Motilal Oswal Asset Management.
Congratulations on great set of numbers. My questions have already been answered. I just -- beyond that, I just wanted to understand that the margin -- tighter over the next 2 quarters. Once this settles down, how do we plan to take up our market share in derivatives where we were, say, a year back or so?
Yes. Thanks, Aadesh, for this question. I thought I answered that question, right? I explained that there are 3 vectors of competition in the derivatives, which -- one is the ability to provide leverage. Second is the ability to provide tools and third is the ability to compete on pricing. Historically, we have been competing on leverage. We are now competing on a combination of pricing and bringing of tools and better experiences. It is going to take a few quarters of efforts before both these translate into a growth in customers and eventually growth in market share. It is not a one quarter fix when it comes to volume market share growth. The point I'll just reiterate here that the revenue salience of this market share loss is relatively lower, and that is what is reflected in the fact that despite market share loss, despite having lower operating days compared to the sequential previous quarter, we have seen an overall increase in broking revenue on a sequential quarter basis. So relatively -- the point is that relatively lower -- I would say, salience on revenue, more impact on headline volume share, the impact of that volume is becoming less and less. In fact, as we move forward, our basis of pricing is no longer volume because we are pricing on number of trades. So beyond the point, volume gain has no meaning in revenue. What is important is increasing customers. What is important is increasing getting more trades. That is what will give us revenue. So increasingly, we are becoming detached with volume market share. Not fully yet, but in the course of the future.
Got it. Got it, sir. And sir, in terms of our performance on client addition has been quite impressive this quarter. And I believe this would be mostly because of the revamp pricing you have done in terms of NEO and Prime. I just wanted to understand that how do you do the revenue recognition for the fees which you get on those kind of customers? This would be upfronted fees you would be taking from the customers, right?
No, Aadesh, it gets amortized over 12 months.
So first and foremost, let me just elaborate. One aspect that most of our growth has come not because of the growth in the -- on account of the NEO plan. Actually, most of our growth has come because of improvement in customer experiences and customer journey. We have, in fact, not even -- and it's come through digital. In fact, we have not even introduced our NEO plan on a digital journey in a -- seamlessly yet. We are integrating it and we are going to do that shortly. So this growth in business has happened simply because we eased up our journey and decongested the whole process. The real impact of this plan is in the future.
The next question is from the line of Sanketh Godha from Spark Capital.
My question is on the retail booking revenue -- total retail booking revenue. How much is delivery contributing to our total revenue? Because as I see, the realization per ADTO has significantly increased by 68% in the current quarter compared to what we've been reporting the last couple of quarters. So, delivery, which usually used to contribute closer to 51 percentage of our total revenue -- retail booking revenue, how much it has been? And I just wanted to know the sustainability? Because I believe bulk of that was because of the recent hyper IPO market activity where HNI, ultra-HNI customers would have taken the deliveries. So sir, I just wanted to understand the sustainability of this delivery-related income in our top line?
Yes. Sanketh, Harvinder here. So this delivery revenue contribution we have not put out the exact number. But as we have said in the past, it is more than 50%. So typically for the market, we understand that is quite equally divided. But for us, the segment for delivery is higher with more than 50%, we have not put out a number. Currently, yes, we have seen a higher traction in the delivery of the investing customer segment. If you look at all the parameters, like NPS. NPS is a product, which is more focused on delivery or investing kind of a client segment, delivery volumes, what you correctly coordinated, all those have shown good improvement. Right now, it is a higher level of activity. It may moderate in the future. But having said that, it is a substantial portion of the client shares. So for the market for us also, a lot of clients are delivery or investing kind of a clients. Our endeavor is to be able to service all of them. In fact, we were speaking about NEO in the last question, our Prime proposition is a very attractive proposition for an investing kind of a customer that is getting traction. We now have more than 6 -- 6.5 lakh customers in Prime. Incrementally also, almost half of the customers are subscribing to Prime. So that is an attraction of delivery, it's not only a market mix, but the proposition is also attracting its own customer, and we are building on that scale of investing customers. So we want to have a presence in the trading customer segment. We want to attract investing customer segment through our proposition.
I'll just add one point. I think never before in our history, we've had the best-in-class product when it comes to attracting the investor profile and the best-in-class products when it comes to attracting the traders. When it comes to traders, he is very conscious of stuff like costs. That's why our plan is the cheapest cost. When it comes to an investor, we give him liquidity research and investment guidance. It's very, very compelling. Nobody gives liquidity in the market, instant liquidity. So very unique provisioning on both ends of the pipe that is helping us. And certainly, we are growing every aspect of the -- or every segment or every micro-segment segment of the market by adding newer and newer proposition. For example, even to attract our investor set of customers, we have also got one of the most attractively priced NPS plan, right? So at 8.9% nobody offers anywhere else in the market. It's very, very attractive. So there are something unique, which we have put for the first time, which gives us the strength to keep attracting different segments of the market. We are ahead of the curve right now on the delivery side because we have started the efforts of the intraday only in the month of December, and we are accelerating that momentum there. It will take a few quarters before we become even stronger in the new regime of the margin norm. This proposition, which are attractive when large enough to offset the decline in volume, so that we become more balanced.See, our effort is always to balance -- to be balanced and be diversified. We don't want to be too much dependent on one side. That's why so much of emphasis on non-equity products as well, not just equity. We are texturizing equity revenue. We are also adding more non-equity revenue.
Got it. Got it. No -- because -- why I was asking this question is the realization was too good. So just the delivery probably is substantially higher than 50-odd percentage in the current quarter. So that's the reason I was probably asking that question. And therefore, the sustainability is there or not. Yes. But my second question is basically on the MTF book. Last time, you indicated that you had a market share of around 20-odd percentage. That number has gone up again in the current quarter from from INR 1,800 crores to INR 2,500-odd crores. So just wanted to check. If you can give that breakup of MTF broken down to MTF and ESOP because is it function of ESOP which has led to growth? Because generally, ESOP activity increases in the fourth quarter. Or is it led by typical MTF book? And what kind of market share we are enjoying right now?
Yes. So Sanketh, the breakup we have not given, but I will just guide you to the fact that NPS is a substantially larger portion of the NPS plus ESOP combined book. And our market share is at 20%. It was slightly lower than 20% last time, which is now above 20% at about 20% at this book level of 29%, which is exit.
So actually, we find, just on your comment on ESOP what we find is that apart from this quarter end, I think people also wait for prices to come down before they like to actually exercise. So people who are in the expiry date of their ESOP vesting period, they are the ones who go for the March bunching. But the people who are not in that expiry date typically take advantage of lower market. Actually, market, if you see in the last quarter was not low. It was on the quite high cost. So that segment, which is opportunistic segment was actually missing in the market.
Also, Sanketh, let me just clarify on the market share. So last quarter, the market share was more like 18.5%, which has now moved up slightly to 19.3%. So those are the actual numbers. So there is a growth in market share, but it is around that mark.
Okay. So if I can ask a couple of more questions, one more. What I had is that is -- if you look at the fee and commission cost for us has been substantially going up. It is almost like 250% growth in the fourth quarter and even from annual point of view, it is almost 200-plus growth. So I just want to understand that this revenue line, is it completely variable or it could potentially come [indiscernible] volumes due to some reason dip in next year, this line can also move along with that number? That's one question I had. And I also wanted to understand from cost point of view, employee cost trajectory because if I look at from a full year point of view, the employee cost grew just by 10% despite a very strong growth in the revenue. Just if you can give a sustainability of that particular number, how it will pan out going ahead?
Yes. All right. So Sanketh. So I'll try to address both of them. Your first question was on fee and commission. Yes, those are variable expenses. There are 3 businesses with us sitting over there and all of them have shown good growth. The first one is our corporate finance business, which is our issuer management and device service business. There, depending on the capital market activities, there could be subsidization fee, partner of [indiscernible], that goes up. So there, as Vijay had updated, we have seen almost a ForEx loan revenue. So that is one part of variable expenses goes up. The second part for variable expense is linked to our revenue schedule arrangement with [ ITSA Bank ]. So that also is here. This growth in revenue, and we have seen decent growth in revenue from customers. Last year, we have just started this arrangement. This year, the including broken revenues have also gone up and there is an annualization impact. So that has also, again, linked to completely linked to revenue. The third is we have seen good traction in our business partner channel. So there also, we have seen good growth in -- on a Y-o-Y basis, and that is a completely visible cost channel on a percentage of revenue generated. So these are the 3 factors which are leading to the growth.
Got it. Got it. And finally, on...
Mr. Godha. So sorry to interrupt, but for any follow-up, maybe request you to rejoin the queue, please.
No. I think he had one question. I'll just maybe take and answer that. Your second question was on employee cost trajectory. So if you look at for the full year, I would urge you not to look at quarter-on-quarter, as we explained in the last call, there was a more upfronted or backloaded variable cost in the first half of the year. But overall, we have seen about 23% of the cost-to-income ratio, employee cost income ratio for the year. I would say a sustainable number that we could target and have historically been at a 30% cost-to-income ratio in employee cost. I would say our sustainable guidance would be somewhere in the range of 25% to maybe 27% around that on a cost-to-income ratio could be a sustainable number as of now, as we look at in the midterm. Obviously, we are continuing to grow the scale digitally. And therefore, employee cost will become lesser and lesser of a factor. But as a guidance, maybe 23%, I will not go ahead and say that is a sustainable number. I would say maybe 25% to 27% around that can be a good benchmark.
The next question is from the line of SivaKumar K from Unifi Capital.
Sir, my first question is with regards to the market share in the NSA active customers, it was a very good growth as we got to see within the quarter, and we ended at 16% for March. I just wanted to know as to what is driving this digital sourcing? Is it some marketing spend, which you did -- is it some partnership, which you did, which is leading to this kind of growth? And is this sustainable in the sense are you seeing the same traction continuing in April?
Yes. So 2 things. One is what is driving this. We have taken a lot of initiatives that we have been commenting about over the last 2, 3 quarters. It all started with, first of all, having a process, which helps the customer open his own account. That itself for the new thing for us vis-à-vis competition. So that is one thing that started in the month of April. After that, from April till now, there are lot of improvements that we have done to make this process very smooth, very easy for the client. And every month, we have kept on going. So that is one factor, which is helping this process. Secondly, as you rightly said, digital marketing is a new arena for us. We have started investing into digital marketing, our presence, our website traffic, our number of initiatives that we are taking, we are building new marketing properties on our website, we're trying to attract customers to come and visit our website. And then some bit of that start opening account. We are also doing a lot of partnerships and tie-ups. Every month, we are trying to explore newer partnership to start exploring tie-ups. And it's a very, very within digital, digital is one channel. But actually, that has a launch of maybe 8, 9 different micro channels. And every micro channel they are trying to push that [indiscernible]. So those are some of the initiatives, which are helping us, of course, the brand pull and the propositions like priming like NEO, what Vijay spoke about, those has been in attracting customers, specifically Prime, NEO or Prime we had to add into the digital journey. But those are some of the factors. Coming to sustainability, see, we have moved from a run rate of about 30,000 to let say a run rate of about 100,000. So I guess many hundred thousand is something that we have kind of touched, maybe not half-like, but at least in large sales, our tackling of capacity, definitely not going back to 30,000, 40,000 a month of our rated bond, I believe, going forward. In fact, our initiatives are to [indiscernible] 20% higher.
Got it. And any new partnerships in the pipeline, sir, like the one you did with Federal Bank?
We are in talks with about 4 or 5 more partners, various stages. As and when they get finalized, certified, integrated, we will keep announcing. It's an ongoing sort of story with us. We keep engaging, keep finding partners, and it's not got to be -- need not even only the banking partners. It could be even a digital partner. So that's an ongoing exercise. But only when it gets finalized and inked is when we will make the announcement.
Right. Sir, and again, harping back to the market share in derivatives segment, you have talked about it, but then when the migration happened from 25% to 50% the understanding was that the subsequent migration shouldn't impact your market share because the clients have already moved to the new regime. So why are we seeing this decline in market share in the subsequent migrations?
Yes. So actually, we told you that we should -- one should not expect -- if you see round one, what was the market share impact and round two, what is the market share impact, I think it is clearly in a different order, right? The reason why this sort of impacted there even in round two is simply because the mix of intra day to overnight that exists for us as a company is more in favor of intra day volumes, right, because that's the nature of the proposition. And that is why we are impacted a little more than market, albeit by a much, much lower margin in round two compared to round one. The only way to offset it is increased number of customers, increased number of tools to enable the customers and improve the experience. Increasingly, our focus is moving away from market share because I don't charge you on market share. What will I do by tracking market share? What is important is to track number of customers, a number of trades, because my pricing model itself is undergoing a change, right, with the launch of new. As the migration gets completed and as the growth comes more on that, I think the relevance of derivative market share in, let's say, 1 year from today will be not -- it won't make revenue impact. It will be an interesting number to track without having consequence on revenue. Or let me say, direct correlation with revenue.
Okay. Sir, and you Ron, Mr. SivaKumar. So sorry to interrupt, but for any follow-up, maybe request to the rejoin the queue.
If there is one question, we can finish it, SivaKumar.
Sir, I just to add on to that as to what is your own sense of round three and round four what can be the impact?
So again, I don't want to dabble yet going forward, what is going to happen. See, we are focused on input parameters here. We just continue to put our attention on input parameters, markets will come, markets will go 1 quarter, it will impact. We are here for the long haul. Market, we have seen only growth in the long term. 20 years, we have seen this market, it will keep growing, yes, it will have 1, 2, 3 quarters. I don't think we should get very nervous about it. We are here with a solid proposition, solid brand and solid commitment [indiscernible] model.
[Operator Instructions] The next question is from the line of Umang Shah from HSBC Securities.
And congratulations on a good quarter. I just have 1 question and 1 data point, which I need. One is, if you could just help us, how cost-effective is our digital ESOP channel vis-à-vis other channels? I mean is there a bigger arbitrage in terms of the acquisition cost that we spend, which over a period of time, given that we have seen a sharp shift in terms of the acquisition mix? Does it really impact materially or not? That's what I wanted to understand.
So Umang, I'll answer the question in 2 ways. One, it has not adversely impact. If at all, we expect it to be beneficial. And within that, I would want to tackle a it bit by saying that I would still say, it is early days. See, as I was just explaining on here, I think Siva asked this question, that within digital a loosely understood digital channel. There are about 7 to 8 different micro channels. And there are different tax systems of these micro channels, and we are trying to develop all the mix. So the mix needs to stay, right? So for example, I'll just give you one example to make a point. If a customer looks up on Google, ICICI [indiscernible] the website and opens an account. The cost is actually 0. Are we on that stage? Yes, right now. In the month of April? No. But we are going to get there. That is what our plan is that more and more but more and more digital presence, et cetera, where people can start opening accounts themselves. So I said a bit early, but still, I would say, at best, it would be positive and not all adverse in both instance.
In the more medium term, we will see that the impact of digital sourcing helps bringing down cost. For that to happen, however, we have to be very good in generating what once calls organic traffic. Organic traffic happens when you bump in a fair amount of data into the Internet space. And we are -- and it is not -- it does not happen overnight. It's a hard port effort, sustainable effort that you have to put in, and you will start seeing the impact of that. We are in very, very early days of seeing the impact of that. So as the channel mix shifts come in the 7 micro channels, more and more sourcing coming from organic sources, more and more sourcing coming digitally from partner sources where we are embedded. For example, we are right now working on embedding ourselves inside ICICI Bank digital. It doesn't exist today, right? Just think of ICICI Bank customer on its own starts opening a channel account with us. It doesn't happen today. He has to be reached out before the account opening happens. So as we work with our partners, as we grow our organic channel as we sort of input more data into the Internet space, improve our organic traffic flow the cost will keep coming down. We have virtually started converting our website into a television after 3 30. Our property works between 9 15 and 3 30 when the markets are active. We are making it work from 3 30 to 9 15, providing a huge amount of data. So we have started creating lots of digital property which are educated in nature. Our customers love it. If you go to our website, on the [indiscernible] section, you will see virtually every spotlight. You are getting upgraded in terms of content richness that is available, which is attracting customers. There has been a multiple increase in traffic to our website, and many of them will start opening accounts and then a word of mouth starts [indiscernible]. That is the best way to reduce your cost of acquisition rather than growing it up on digital advertisement, right? We are doing digital advertisement. There was a question asked around it. We are doing all of that but we are also focusing very, very hard on driving organic traffic, which is the cheapest way of driving organic traffic. Given our head start in some of the brand awareness, unlike start-up, I think we are -- we will probably make far lower time than any start-up to get the organic channels kicking for us. It is still [indiscernible].
Understood. Understood. That's quite helpful. And sir, my second question is our exit quarter cost-to-income is obviously the lowest that we have seen in many, many years. How should one look at the cost-to-income more on a steady state basis?
So Umang, we have given a direct guidance that 50% was our target cost income ratio for the next year. We are right now at substantially lower than that. See, I would say that we can budget for -- I mean, this 40% for the quarter should not be seen as a sustainable number. I was just telling this to Sanketh. Maybe a bit of our improvement, but we are thinking that it should be definitely lower than 50%. I mean that is our guidance that I can definitely give. I would not say because there's a sustainable cost-to-income ratio not right now as the scale and pickup builds up, that is what we are working towards, but maybe not like FY [ '22 ].
Mr. Shah, sorry to interrupt. For any follow-ups, I request you to rejoin the queue, please? The next question is from the line of Madhukar Ladha from Elara Capital.
And congratulations for a fantastic quarter and year. I think this year, you probably beat consistently all analyst expectations. So my questions are as follows. First, I think to an answer to a previous question, you mentioned that cash delivery is about 50% of booking revenues. Did that -- did I get that right? Or is it both delivery and intraday put together is 50% or closer to slightly more than 50% of revenues? I wanted that as a clarification. Second, what has been the adoption of NEO? I understand you've mentioned it a couple of times that we've not taken it digital as yet. My understanding was that NEO is getting offered to customers and the offtake has increased quite substantially even in January last time when we did the call, but it seems that the impact of NEO will be feed only in FY '22. And on a quarter-over-quarter basis, are we seeing an increase in derivative revenues? So given that some portion of our customers have adopted NEO what has been the experience so far in terms of pricing on a blended pricing basis for futures and options? If you could answer these 3 questions would be great.
First and foremost, thanks, Madhukar, for your comments, and you're -- coming from you, the complement means a lot. Happy to hear your words of complement. I'll just request Harvinder to come in and respond to your questions on the mix that you asked.
Yes. So Madhukar, I'll clarify. Out of the total, let's say, equity broken pool, you have equity segment, which the non-inflate would be delivery plus intraday and our derivative segment. So between these 2 segments are higher than 50%, so it's more than majority is centered towards equity segment. That is the first point. Within the equity segment, which includes delivery plus intraday, delivery is a higher than, again, substantially higher than 50% of the -- within the equity segment. So let me again reiterate it's not 50%, it's higher than 50% and on both comps. So between derivative as a cohort and equity delivery plus intraday so far, equity cost is higher than 50% within equity, the delivery segment is higher than the intraday segment, a bit higher than 50%, not 50% so that is the first clarification, the booking, which is [indiscernible] that you asked. Second, you said the traction on NEO?
Yes. So when I said that NEO is an offer to all clients. It's just that NEO is not seamlessly integrated into the dividend the way it should be. It is available once the client becomes a customer, it is then offered to him. So it is not ingrained as a part of the journey. The real traction we have seen will only happen in giving that whole product in a great experience form ingrained in the journey, which, as I said, is WIP. We have been seeing growth in NEO adoption. Month-on-month, the numbers have been going up. But it is still very early days. It is less than -- just about 90 days plus or so I think since we've launched NEO. It was launched in the first 10 days, first week or so of December. So it is still early days since we launched NEO. As we move forward, your question on how that will impact? I suppose you're including to yield as a specific question. To us, yield, we are beyond that yield point because if we become clear to yield, we will be able to do no action. We have gone beyond yield, and we have said, let us look at overall product and life cycle-based revenue. If Madhukar is my customer, I have to think of how much revenue I can earn of Madhukar over 15 years, not out of a derivative transaction that he does on 22nd of April. So the moment you start thinking of it like this, it doesn't matter so much, how much is the yield I'm getting on a per product, per revenue basis, it will be definitely lower than what we have charging. But the fact that I have the customer, the fact that I have 50 products to send him, the fact I have been happy, the fact that I have the ability to deliver more and more of these products is what our endeavor is and that will eventually need to increase in my overall ARPUs, which we're seeing quarter-on-quarter and quarter-on-quarter. We continue to put our focus around that. So we are not so much, first of all, about yield at a per product level. It will be an interesting exercise to do. I request Harvinder to come in.
Yes. And Madhukar, absolutely, so on derivatives also the question that you asked that sequentially how is that pending. So I would say, derivative from December, so December, January, February, March until today, that has been pretty stable.
Okay. So we are not seeing -- even after launching NEO, we are not seeing any sort of substantial. So the volume growth is being able to offset the pricing impact of NEO so far? And what would be the...
Madhukar, [indiscernible] potentially NEO is young and fresh. Adoption is low as of now. So I would not straight away, right now, we have that strong tight, that full adoption of NEO has happen. But currently, we have not seen the revenue. The absolute revenue has been pretty stable, and it's almost like pretty stable for all these 4 months.
Got it. Can you say what is the adoption of NEO so far in your customer base? And what would be like full adoption? So if right now, adoption is 7%, 8%, do you see further adoption to be 25% or 30% of the customer base, if you have any thoughts on that? And the market intraday volumes is about 80%. Is that substantially different for us?
Yes. So Madhukar, currently, we have about 60,000 subscribers on NEO. So that's the current rate. Market adoption, 80% will not be very different. But my sense is that the market number of 80% might have got a bit moderated now. With slightly [indiscernible] in delivery. It's very difficult to say because retail contribution of delivery and intraday is not really available in the public domain. But our sense is that is might have slightly got moderated. But from there, we might be slightly higher on intraday, but yes, not very substantially different, substantially different.
The next question is from the line of Amit Shira from Carnelian Capital.
Actually, this is Kunal here. Again in the first place for a good set of numbers, I do need to reiterate that my only question was pertaining to the client addition that has happened in Q4. So you just alluded, there are a lot of partners and everything, which has kind of resulted in the superb number. I just wanted to understand, specifically Q4, right? I mean the digital sourcing has been in place for quite some time. So anything specific you would want to highlight that has kind of changed in this particular quarter, which you kind of sustained going ahead. And the second question was pertaining to our partnership with Federal Bank for the new [indiscernible]. Just wanted to understand how does the flow to us? Because if I understand correctly, earlier when you still have 3 more accounts with ICICI Bank share, there are [indiscernible] used to be with the ICICI Bank, and we used to not earn any income on the flows. So with this Federal Bank, how does that part work?
Okay. Let me take the second one first. Federal Bank arrangement of identical to ICICI Bank arrangement.
So noted, they really not going to be there with us in that cases?
Yes. Yes, it's identical to ICICI Bank arrangement every which way. We do all our arrangements with any partner on arm's length basis and market basis. So there is no difference between what we offer Federal Bank and what we offer ICICI Bank. So that's part 2 of your question. Part one, I didn't really get it. You wanted to know what was different in quarter 4? Or what was exactly the question? If you can paraphrase it.
Basically what I was trying to understand is that this digital sourcing has been there for quite some time now. But Q4 has seen a drastic jump in the digital sourcing. So is there anything specific you would want to highlight that has worked for us in Q4 and will continue going ahead as well?
Yes. So again, I mean, digital sourcing, as I told you, I think I've used the phrase that we are babies in this whole business. We are learning the ropes and in a short period of time, we realized that there are many improvements that we need to do if we have to scale up our digital journey, take players who are -- the fintech players rather, who are showing enormous growth have got 3, 4 years of [indiscernible], at least before we launched our digital process. So there is a learning curve that we have all gone through. We did not have time or we do not have time of 4 years to catch up in that sense because everyone takes 3, 4 years to really understand the tricks of the trade and then get going. We have a few quarters. I think we have crossed one big, what we call, hurdle rate. And actually, this we crossed around Christmas time last month or last quarter. And then we started seeing the traction picking up immediately after Christmas because we did one very big upgrade in terms of our process experience. And that has been continuing thereon. The real impact of all these plans that we offer will -- should start coming when we actually put it on offer. Right now, it is only a simple process that has been put in place, which is helping us. And all the digital attraction that we've started doing by building all the properties, as I said, on the -- of content, which has increased traffic to our site. So I would say it is not just one magical change that has happened, which has led to this traction. It has been an effort of I would say, 7, 8 months, starting from April onwards that we've been doing and we've been coming out with newer and newer and newer version. And even now we find that there are at least 50-odd improvement that we have to do. And these are very, very small improvements. It's an ongoing improvement. The whole team does not work in a traditional format. We work in a very agile manner. We come out with a campaign, for example, we come out with a campaign at about 8:00 in the morning. We test it out into the marketplace by 3:00, we realized that it is working in markets, not working in certain markets, we changed the campaign. The new device campaign goes out into the -- so that's the way it actually works. It's a lot of iterative abilities that we have created real-time understanding of customer sentiment, the impact of the way we are communicating with the customers, taking data, taking input and then working on it and improving. So it's a very, very iterative process that's come. It -- the whole way of working a very different path compared to how we were working in the past.
The next question is from the line of [ Anand Ladha ] from HDFC Mutual Fund.
Most of my question has been answered. Just one data keeping question, I wanted to understand, sir. Is it fair to assume that our subscription revenue now are approximately INR 60 crores to INR 70 crores per annum? And this is what is sustainable?
Yes, that is fair, Anand. The [indiscernible] about INR 60 crores per annum on an kind of revenue. So this is the amortized value. For the INR 60 crores of revenue. We have about 6.5 lakh Prime subscribers. The subscribers are actually growing, Anand. We would actually hope for an increase in this revenue. But 6.5 lakh clients is what we have for today, and they have been growing roughly at the rate of about 70,000 to 1 lakh clients in the quarter. So that has been the rate with growing digital sourcing. We are seeing that Prime adoption also is healthy. So hopefully, it should go up. But it's a sustainable new revenue stream that we have added. Along with this, we have a few other revenue stream in NEO new, but they are very small. So like Prime is an amortized income. No charges could be transaction rate. So for example, whatever, depending on various type of transactions, there could be income that we would be accruing in NEO. That is still to build up, but Prime is I think sustainable and growing.
Sir, it seems like we lost the connection for the current participant. We move to the next question from the line of [ Harshit Toshniwal from Primegene Invest ].
So one question. So I think we have done phenomenon on the digital customer acquisition in this quarter. So can you throw some color on the nature of these customers? Because so more in terms of the ticket size, age profile, trading maturity profile because if they are very high-value seeking customers, then our ability and our plants when delivery is chargeable might not attract them in that big way, but we have seen a substantial jump in the digital piece. So that's the first question. And I'll just put in the second one, that if I just broadly look at 3 elements of customers, active traders, passive H&I investors and maybe mass market use investors come trader profiles. So for all these three, can you throw some color on what is our strategy in terms of which product fits into which category? And how do we plan to grow these 3 pieces, where our strength lies and where do we need to work on?
Yes. So in terms of our customer, your question around customer profile. If you look at some of the data that we put out, I think, close to 70% of our customers are coming from the [indiscernible] category and below in that segment. We are also getting more than 55% -- 65% actually from Tier 2 and Tier 3 cities. In terms of ARPUs, interestingly, though it is a very short period of time, since the bulk of sourcing has happened, the initial trends are that ARPUs are very recent in relation to what we sold from ICICI Bank, which was a little bit of a positive surprise to us. However, I don't want to sort of conclude because it's still just about a quarter or 1.5 quarter of data. But it was looking certainly reflective of that kind of a rate. But I would say that this takes that as an interesting point and not really as a guidance because we need to watch and play out -- how this plays out in a more medium term.
Digital, if I'm not...
I'm talking about digital only. I'm talking about digital. Actually, just to make one point, today, 100% of our sourcing is digital. Even ICICI Bank sourcing is digital, but it is essentially digital. No longer that physical paper moves in our company anymore. So just to make that point. Everything is digital, the nature of -- and there are many micro channels are digital now actually.
Because -- the reason is that because that customer actually overlaps very prominently with many of the discount brokers. Those who can -- without any assistance, open an account, so there's a very big overlap, and that's why I was trying to understand that our strategy, which has worked very well in this quarter.
Yes. So we are -- market is very huge, really. The underpenetration in this market, the growth that is happening and needs to happen in this market is all, I think there is space for more than a few players there. So yes, so there could be overlap in the characteristics of these customers who are going there. See, what they really missed, the newcomers to the market, they want guidance, they want advice, they want to know where to invest, they need knowledge, they need information, they need assistance, they need portfolios. We give them all on our platform. They love it. We are seeing that a large number of people, we are getting, for example, on our 1-click investment product, which is basically research, which are key [indiscernible] portfolio. We have the best of the mid-cap portfolio. The best of the last-cap portfolio, the [indiscernible] portfolio who have sustained the test of ups and down. So these kind of branding and this kind of portfolio construct attracts a lot of the millennial kind of a crowd. So they -- we have seen very good and healthy adoption. And that is the way to see that it is differentiated. Some of them who want to trade, they get very attractive MTF charts. They don't get it anywhere. So there are very unique propositions that we offer. And our way of differentiating through what the regular investors, the 3 segments that you spoke about, the regular investors, we offer a [indiscernible] of, I would say, research pack portfolios that we offer. We offer, depending on the portfolio size and RM support/voice support and a person who gives them equity inputs, that support. So those are things, which really customers like. And that puts us uniquely in that market. When it comes to traders, they like cost to be low and they like tools to be very cool and easy and accessible on mobile. So that's what needs to be done there. We have the proposition. We are building many tools. We have launched -- the most tools are getting launched. A specific app for traders is also getting launched called Market WIP. So we are coming out with a [indiscernible] of interventions to attract that segment as well. And then what is probably [indiscernible], appreciate it about ICICI Bank is the fact that we have the largest -- one of the largest well -- platforms in the country. If you look at individuals having 1 crore of AUM and about that segment is now more than 47,000 customers, and the value of even about INR 1.7 crores. So that segment is a very sort of a fertile and risk segment for a combination of equity, nonequity and protection products, PMS products, some products and so on and so forth. So it's a -- I would say, a comprehensive coverage of the younger crowd through a different set of plans and products. The senior guides with a combination of multi-product approach with most attractive plans. In fact, for the wealth segment, we are very, very attractive. We are pretty flexible in the way we charge them on broking. These are customized plans made for them. So they like all this. That's what is helping us remain competitive in the market. The solid micro segmenting that we are doing.
The next question is from the line of Arash Arethna from IIFL.
Congratulation on the good set of numbers. I just had a question on how we're looking at volume growth going forward. So I think over the last 2 quarters with the margin norms coming into effect, the industry volume has continued to grow, but ISEC has seen a decline. So from these levels, how are you looking at volumes over the medium term?
Yes. So Arash, as we said, I mean, in terms of [indiscernible] exercise, you look at it, there are 2 or 3 factors. One, obviously, is predicated on growth and number of active customers and also the product mix. So on both of these, there are a set of initiatives, which we have targets in some results. For example, if you look at in the derivatives space, as Vijay also mentioned that we have seen on the volume, we have seen a bit of a decline but in terms of number of customers, the customer activity, [indiscernible], et cetera, those trends have been stable. I spoke about the revenue for derivatives, that has been stable. So going forward, as and when these initiatives start taking shape, and I'll just repeat the initiative one, obviously, NEO getting scale, activating existing clients newer tools and newer engagement interfaces. Those are some of the things which should enhance the volume growth. Incrementally, revenue would be more dependent on the vibrancy of the activity, the number of orders, et cetera, et cetera. So going forward, I think those would be also very, very important. And we are working towards that. And that is where you need all these advanced tools, a good pricing proposition and are very good mobile interface. Those are the ones [indiscernible].
The next question is from the line of Aditya Jain from Citigroup.
Most my questions are answered. Just want to clarify on 2 parts. One engagement where there's fee and commission expense in the BSE filing, which was at INR 47 crores versus INR 13 crores last year. And there's an operating expense, which is 41 versus 14 last year. So I just wanted to understand, what are the factors which drive this 2% extent?
Yes. So Aditya, fee and commission expenses, I kind of alluded to the 3 factors, which represents a growth over year, all are variable and all are linked to revenue. The number one is the growth in our corporate finance, which is what we call issuer management and pricing services business. There, you have variable fees in terms of sub-syndication products, et cetera. That has grown that revenue has grown by more than 4x. The second aspect is the revenue sharing with various partners. That has grown because the equity broking revenue has movement in that line. Both our business partner segment, and even for ICICI Bank, we have seen a substantial increase. So the entire hedge is actually linked to revenue growth and has grown in line with that. So this is similarly, if you come to operating expenses. So what are a couple of things. You have things which are in the nature of, let's say, transaction charges, custodial and depository, et cetera. Those charges, which are growing in line with, again, volume growth, then there are variable charges, which are meant to customer acquisition, like you have some documentation scanning, et cetera, those things are again growing over there in operating expenses. So both of them have a slightly variable nature. Over here, there is -- there are 1 or 2 elements. One is one-off in operating expenses, which pertains to customer loss that we had taken -- or we are kind of taken and on behalf of our customers, and we based a connectivity issue. There, as a gesture, we had taken some loss on our portfolio. So that is a one-off setting it up primarily, most of the heads are linked to some of these factors.
Yes. And the second thing convention fees is onetime, right not recurring just to confirm?
Yes. So new [indiscernible] about 6, 7 different types of fees. One is a onetime fee, which is about 299, which is our conversion charge. After that, there is, for example, an interest that is released on keeping shares of margin at the rate of above 9%. There are charges for transfer request for PON teaches for place retails, et cetera. So they are in a booking of charges. They are incurred on our chart -- I mean, on a transaction-by-transaction basis. The onetime fee is, I think, to an earlier question also, the difference between Prime and NEO that is trying, it's an annual subscription fee and therefore gets [indiscernible]. NEO is convergency and onetime. So therefore, it is upfront taken. The other piece in NEO is agile in the transaction, respective transactions as that. We also get a bit of a outflow in NEO because that's how the product or position work. So that's the booking of fees and [indiscernible].
The next question is from the line of Prateek Poddar from Nippon India Mutual Fund.
Just a couple of questions. One is, can you just help me understand the loan disbursement? What are our take rates? Or how does the business model work over here? And in relation to that, I see a 13% market share in ET distribution market -- ETF distribution margin. I didn't understand that ETF were exchange-traded, right? So how do you get market share over there?
Yes. So the big -- first of all, that loan disbursement portfolio. So we have -- the way -- the process all this is that we have reference from our clients who are intending to take any kind of a loan. We offer now 12 kind of loan products on our portfolio. It ranges from home loan, of course, car loan, vehicle loan, gold loan. Our -- so personal loan options are there. We have tie-up on some of the loan categories. We have tie-up with up to 8 different partners. So customers kind of have a referral, and then we kind of act as a bridge between the loan provider and the customer. And we earn somewhere in the range of about 0.75 to 1.25, 1.5, depending on the product. It could vary, but that's the kind of fee that we earn.
On the loan amount, right, sir?
On the loan amount. On the loan disbursed amount, that's the kind of distribution fee that we earn. ETF distribution market share, ETF is basically exchange-traded fund. This is something that we are promoting on our website as a faster trend because of -- so basically, on the market volume, we are on our product. Of course, the income that we earn is classified technically as brokerage but it's almost like a low-cost mutual fund equivalent. So that, as a concept, is what we are promoting to our clients. There on market volumes, we have about 13% market share.
So just to clarify, out of -- say, if there are 100 ETFs traded in a day on a particular ETF, you would be 13 of that, right? That is the way to understand. Your volumes contributed from ISEC platform would be 13.
Sorry, you are saying in terms -- is it in terms of counter value?
Yes. This is volumes, right? Or is it value?
No. This is value.
Okay. And lastly, sir, just -- I'm just going back to the question, which Sanketh asked. Honestly, on the equity side and in this quarter, was there any lumpiness because of these IPOs? Or it was business as usual on the delivery side? So I understand and I appreciate that the mix has changed and you have participated that very well in the last quarter as well as this quarter. But I just wanted to understand. Has there been some lumpy effect or one-offs, because of which there has been a sudden jump in delivery or it is just in line with the normal market?
No, it is largely in line with the market construct.
The next question is from the line of Aditya Singhania from Enam.
Congratulations on great results. I had 2 questions. One, on the ICICI relationship, could you talk about how that's progressing? We see a very steady increase in client additions as well as activation rates. Could you talk about how that's moving ahead and what we can expect in terms of revenues and operating leverage? And the second question was if you could give some flavor on the digital acquisition in terms of the clients, like in terms of revenues, in terms of activation rates. Any other metrics that could be different from your ICICI business?
Yes. So I'll comment with the ICICI relationship. I think it's, needless to say, ICICI is our parent, largest shareholder and the most important sort of business partner for us. Any partnership, in our view, for it to grow and sustain, has to be win-win for both the partners as well as it should offer together a proposition which is a win to the customer. The reason why we believe that this is a strong partnership and it has moved from strength to strength is because we're very careful in nurturing each other's interest as we are building this partnership. Now let me elaborate what I mean. Through the 3-in-1 account, we have to ensure that -- they don't do it because they just happen to have a shareholding in ICICI Securities. They do it because it feeds into their strategy and it adds value to their shareholders. That's why they want to distribute our products. So how does that do? Empirically, we have evidence to that, that whenever you attach a broking account to a savings account, the float for an active customer pre and post attachment and a passage of 6 months, T plus 6 months, actually increases on an average by 2.5x. And therefore, for ICICI Bank, increasing customer float, CASA is an important part of their core strategy. We have demonstrated to them and they are convinced that this is adding value to their core strategy. That is why it makes sense to ICICI Bank to distribute wholeheartedly ICICI Securities products because if they have to increase penetration, they have to increase float share. They have to increase stickiness of their customers. They need a proposition to do that. And ICICIdirect very squarely fits into that proposition. And they have realized that when they start segmenting it, particularly with the affluent segment and the wealthier segment and the NRI segment, it adds even more color, even more depth and even more dimension to the partnership. And that's what they started doing particularly of late. In addition to this, we have also incented them in form of a broking payout so that they are encouraged immediately to the revenue share that builds up on activating the client because there is effort in training the team. There is effort that the team has to take in getting the client active. By leveraging his relationship, he gets remunerated for the time that he spent. So we have taken care of the interest of our partner and the people within the partnership so that they are all motivated to drive it. For us, it makes immense sense because we find that this is a very sticky product. A large proportion of our customers have been around for several years. Once they get used to the platform and they draw comfort from the experience of the brand and the comfort of being backed by an institution, they tend to stick on. And they know they -- we will keep giving them value as we move along and help them in their journey for handling wealth. So for us, it makes a lot of sense because we are getting lifetime value from that customer. For the customers, obviously, he comes to us only because as a combo product, he sees that as something that he is comfortable with and it is adding to his risk -- meeting his risk appetite that he has, and it is also meeting his wealth journey. So that is how we have looked at -- and we look at the -- all partnerships very, very carefully. There's got to be win-win-win. Even the Federal Bank, it took us agonizing discussions on this to -- for putting this all together. And both the partners are very committed to it. So that's how I would say. So it's an important partnership, and we continue to see it go from strength to strength. Going forward, I think sharper focus is coming now on digitizing and embedding access into ICICI port. So far, we have seen relationship-manager-led acquisition, and we have digitized it through assisted digital, what one can call. But that's not truly giving you the power of technology that is possible today. In addition to that, it will make a lot of sense if we embed ourselves into their website, embed us into their mobile apps, and allow the customer to choose us on his own as he sort of visit their website, their -- what should I say, their app. And they have a fairly large traffic on their own. So that is still WIP, and that's something that we are investing on. So going forward, I think the investments are segment-specific and channel-specific while we continue to do what we are doing. So that's as far as ICICI Bank is concerned. You had a second part of the question, which is...
Growth in the customer traction of...
Yes.
I would say that is what we meant, right, growth in the customer traction -- or the second part of the question?
Yes. No. So the first question was on ICICI, if we see any material operating leverage given that this relationship has strengthened over the last 2 years that was relating to ICICI. The second question was on the digital acquisition, if you could give us some flavor on the customer base. Or like is the revenue -- if your average ARPU is INR 10,000, the new customers coming through digital, is it like substantially lower, higher? How should we see that, some color on recurring revenue, et cetera?
Yes. So like I told you, it is only 3, 4 months where some volumes of digital customers have come on to the company, while we have been posting for the last several months. So it is still early days. When we look at early ARPUs, I think annualized, the run rate of early ARPUs is actually reflective of what we are getting from an ICICI Bank ARPU. It was comparable. But again, I would say that this is very, very early trend. Therefore, don't -- I would not sort of leave you with that as a takeaway, but just as a piece of information which we are watching. And early trends indicate that. I think we are like a hawk here, watching quality and seeing proven activation trends. And we are very conscious of quality, and that's an integral part of our strategy. So early trends are all right, but as we are scaling up and the scale-up has been so fast in the last 2, 3 months, we have to give a little bit of seasoning. At least give them at least 2, 3 months of playing in the system before you start understanding the quality, the sustainability, the activation depth, et cetera. So I would say that we'll give you a little more -- I would say sharper clarity on this maybe in a quarter from now, where we would have had at least a little more experience of dealing with customers acquired digitally. Early trends are all right, but let's wait.
Sure. And if I may just ask an additional question on this. Would it be fair to assume that this is almost like the same business that is Zerodha or Upstox would be doing in terms of generating float, et cetera?
Yes. That's right. Digital business model is identical to the way it is structured in a discount broker. So the float actually gets captured in ICICI's account.
Okay. Any rough number you could share, like...
icicisecurities.com. Yes. It has crossed multi-hundred crores already. It's 3 months from the point...
INR 300 crores.
No, no. It has crossed multi-hundred crores as of now, and it is about 3, 4 months from the launch. From the scale-up, let me put it like that. Launched happened before that, but the scale-up happened in the last 4 months or so.
Right, right, right. And if I can just squeeze in one question. I know a lot has been spoken about the derivatives market share. I just wanted to understand. The market volumes have not really sort of fallen. In fact, they were at an all-time high in the fourth quarter. So obviously, your clients have moved elsewhere. It's not like they've stopped trading. So if you could just explain where have they moved. Why have they moved? Is it just pricing? Or has your product become inferior because of the sort of change in margin requirements?
So let me just elaborate a little bit with an example. Let me assume that you are a client trading with me, okay? First and foremost, be reminded that the clients moved away is incorrect because actually, the number of clients who are doing trading for is, month-on-month, hitting lifetime high. So what traded in November was lower than what traded in December. January is higher than November -- sorry, December. And February is higher than January. And March is higher than February. So every month, we are seeing a higher number of customers trading. We have not lost customers. And the reason why the volumes have got -- this idea that volumes have come down but customers have not lost is because of the following reasons. Let us assume that you're a customer trading with us. The extent of leverage that we provide to you, let's say, is INR 95. You put INR 5 from your side, and we have INR 100 trade counted in your name against -- as a volume. Now because of the norm, you continue to look for your INR 95. But because the norm says that, "Okay, if you're putting INR 5 on the table, I will give you only INR 70 from now onwards," because the norms have changed. So either to do INR 100, you have to make your INR 5, INR 8, so that you get INR 90 and then we have a INR 100 trade. Or you say, "No, no. I have only INR 5 available. So whatever I can get out of INR 5, give me that much." So you take INR 70 and do INR 75 per trade. So your trade in the pre-regime and the post-regime continues as a customer. Volume in the pre-regime was INR 100. Now it is INR 70. In the next regime, we say that it is -- now I give you INR 45 for INR 5. So you say, "Okay. Give me INR 45 for INR 5." So I'm doing a INR 50 trade. So volume has fallen in this example in the round 1 from INR 100 to INR 75, INR 75 to INR 50, right? But you, as a customer, continue. So the reason why have volume fallen is that the same customer who are doing INR 100 is now doing only INR 50. Simultaneously now, what we have done is we have started pricing our product on a per-trade basis and not on a volume basis. Earlier, we were charging ourselves on volume basis. If you've seen the new pricing strategy, it is on a trade basis. So it becomes -- I'm increasingly becoming immune to volume. If you do INR 1 lakh -- INR 1 crore with me, you will pay me INR 20. If you do INR 50,000, you'll pay me INR 20. In the first year, I would say I've got 80% market share. In the second case, I would say I've got 2% market share. But in both cases, my revenue is INR 20. So I'm increasingly becoming immune to -- not right now, but over a period of -- as the traction on new growth and embracement of new growth, it will be -- market activity is more important than market volume for me, increasingly.
The next question is from the line of Utsav Gogirwar from Investec.
I have a question on the wealth management. So if you look at FY '21, the yields on both recurring assets and transactional assets has increased...[Technical Difficulty]
It seems like we lost the connection...
We lost the connectivity, yes.
Yes, sir. We move to the next question from the line of [ Manish ] from [ Vallum Capital ].
Sir, I have one question. This is regarding the digital marketing. And you've spoken in length about it, but I have very specific questions. This is relative to how much is the influencer marketing in terms of your overall digital acquisition. And as I scratch the ground surge, where there is a 70% pass back to the influencers in terms of the revenues and I'm sure that will go to -- race to the bottom. So are you also getting into that game and how your game is different from what your other competitors are doing? Maybe someone is doing for a valuation but maybe not from the earnings perspective. And that is my first question. And what is your broader strategy? And my second question is if the revenues are coming from the digital marketing, which is -- per se, is spending on Google and everything, so do you think so that this makes a profitable acquisition? If so or not, maybe how would you respond to that?
Yes. No. I think great questions and very insightful questions. I must say that. So you're -- see, you're very right. You can buy market share and you're absolutely right. Short point, that's the reality of this. So there are a number of players who are doing it for the sake of getting numbers, but we are not here. We are here to do it for getting value. That is why we are very conscious about ensuring that we don't grow for the sake of growing. I want to get quality customers onto the table. And there are enough quality customers, and we will not get paid by numbers. Even if it means that my numbers story is not playing out in the course of time, I'm okay with that. I don't want to get unnecessary, poor quality on the table, and I don't want to land up playing too much of a high cost. So I think these are 2 very strong sentiment and boundary conditions with which we are operating and we are doing this business. That said, your very specific question on how much is the contribution of influencer marketing, almost nothing at this point in time. We are in discussions with some of them, but I don't think we have started engaging with any one of them with any serious impact on the revenue that has -- sorry, the sourcing that has happened so far. And our method of engagement is onetime. We are not here as a partnership. Our method is that there's a cost of acquisition. And we also -- unlike the other players, we do not pay out unless and until there is a proper, quality parameters that are met. And people really struggle to deal with us on quality parameters. It means that I cut partners who are of that nature or alliances of that nature. We cut alliances of that nature. We will do that, and we are doing that. The moment we find that there is any kind of weakness in terms of quality, we will cut out that partner because it is not number. It is quality that we have -- in this game, we have launched very, very [ unusual ] because we play this game in the other -- for a long period -- long-enough period of time. So that's one part of it. Your...
Digital cost of acquisition of...
Your digital cost of acquisition, I would say what is most important is that there is no -- the -- once you get a right customer, you keep them happy. There is a lifetime of monetization that you can do. And that monetization has -- I would say are operating -- I mean acquisition costs is inconsequential in the context of the revenue that you can earn from an active customer. So it's important to get the active customer and get the right customer, and it's okay to pay what we are paying just now, more than comfortable to pay. I'm happy to even increase my cost of acquisition because the quality of earnings that I can do in a period of time from that customer will more than offset the cost of acquisition. It is -- it makes a lot of sense. But to go -- the problem will come if you go and acquire a customer which is a bad customer. That is where it will start hurting us.
So what should be a breakeven of a digital customer? How would you model it today?
So it is [indiscernible] or incurred, and the mix is actually improving and becoming more efficient. And that's the short answer.
Yes. It is much less than a year.
Much less than a year.
Not even a year. A year is long, much less than a year.
So my last question is regarding the float income, which you said that maybe the float income accrues to the ICICI Bank. And in case of digital, it accrues to you. So I just wanted to understand that -- who gains the float -- interest on float income in terms of overall scheme of things from your consolidated business? Where does float income flows in?
No, no. So in the ICICI Bank partnership model, the float remains with ICICI Bank, right? So they are the beneficiaries of the float. The digital acquisition model or whatever float is there, it comes to the brokers' full account. So we are the beneficiary of the float.
And does ICICI pay you anything for the float income what they generate?
No, no. Why should ICICI pay me anything? It has nothing to do with that. I acquire the customer digitally and I -- the customer part float with current account. We use that account as a float, company float, and we are deployed in treasury instrument. And that's -- it is part of [ activity ] after that once it comes into my account.
So I thought maybe there can be some sharing of income from the float income from the ICICI Bank to you. So -- which is not the case, not a problem.
No, no, no. For ICICI customers, it's -- the float is with ICICI Bank.
The next question is from the line of Piran Engineer from Motilal Oswal Financial Services.
Congrats on the quarter. Most of my questions are answered. I just have a couple of ones. Firstly -- and not really related to the quarter. Firstly, do you foresee a risk over the next few years of the mutual fund distribution business going the retail broking way with continued pressure on yields, with Zerodha offering their coin platform, direct mutual funds and same thing with Paytm. And our yield has been stable at 60, 65 bps. So is there any risk of that over the medium term, according to you?
Yes. It's a great question, Piran. And basically, the way we are modeling in our head is we do believe that it is not an ignorable area, right? I would not ignore the impact that the direct funds are having in the marketplace. That is to counter -- and therefore, we have put in place an approach or a strategy to counter it. Let me quickly tell you how are we thinking of countering it. There are broadly 2 vectors to this -- to the strength. One vector revolves around differentiating vis-à-vis a direct plan offer in proposition we can offer. So first, we get into a model of offering him through a very cool app, which we have recently launched called the Money app. We've seen good download, good engagement of customers, and we started seeing traction of customers getting acquired to the Money app. Now we are adding an eATM service. Fundamentally, how it will differentiate vis-à-vis, let's say, a direct plan is that in the middle of the night, you have an emergency and you want INR 3 lakh, you can actually redeem your fund instantly and take INR 3 lakh off your ATM in the middle of the night and use it for whatever emergency you would have. That is not possible today in a direct plan. And that's a comfort that we want to offer to our customers at a price. Every time you use it, you pay. If you don't use it, don't pay. But the fact that you have an eATM service is a differentiator. The second is actually, increasingly, we are moving to creating a reserve market. Again, that's something that we find is not really there in direct plans. And the third element we are adding is an instant loan facility with the banking app [indiscernible] and the first basket [indiscernible] strategy. The second [ part of our ] strategy, when we are looking for [indiscernible] it is likely to [indiscernible]. So I think our strategy there is to promote that as an MF-style product and not really an equity-style product. And we set up with a combination of passive access combos, which is uniquely available. So basically, we are putting research to work. We are putting access and convenience to work. And we are putting liquidity to work to try and differentiate. Whether we will succeed, we will not succeed, I don't know, but this is the approach we are taking.
Okay. Got it. That's quite an elaborate answer. My second question is, I just wanted to understand bottoms up. What is the average DP holding amount a client has in his portfolio? And is it very different for a new customer versus their vintage customer? And what percentage of your customers also have a demat account with another broker? Is that something you can track? And if so...
Yes. So let me start with all your various points. First one, 100% of our customers have got demat accounts only with ICICI. We don't offer that...
Sorry, sorry. I meant trading account with another program.
Meaning demat account with me and a trading account with somebody else?
No, no, no. I mean you've got a trading account with you, and let's say Zerodha and product...
This is difficult to track out. I don't have that organized data to kind of transact. And obviously, that's quite intuitive, what -- the first question that's asked of what stage are of holding of our customers do go up, revenues go up. So -- and the wealth segment is -- also, the average holding is very different. So for example, if you look at the wealth segment, the average would be about INR 3.5 crores, INR 4 crores. We have about INR 1.7 trillion and we have about 42,000 -- 47,000 customers. For new guys, it will be low. It will get built up over the period with [ vintages and seasons ]. All your questions, the answer is yes. That is how it will happen.
No, but I -- what I wanted to understand is what is the quantum of deposits? And the reason I'm simply asking is that...
Quantum of deposits, you're saying?
The quantum of the holding. No, no. The quantum of the -- see, like, is it on an average INR 3 lakhs, INR 4 lakhs? Or is it on an average INR 20 lakhs, INR 25 lakhs. Because I'm just running some bottom-up last year. And for a young customer, a millennial to sort of generate the same ARPU of INR 10,000, he has to have about INR 10 lakhs, INR 5 lakhs in his account. And it's hard for me to imagine a 25-, 27-year old having such a large DP holding. So I just wanted to get from you on a bottom-up basis. Say a new customer joins you or has joined 1 or 2 years back, what's the average quantum of DP holding?
So you are talking about average quantum for a portfolio or of a segment which has just joined us?
Which have just joined you.
No. What -- just joined us is 3, 4 months, 5 months old. They're...
That would be difficult, Piran, because...
We'll have to wait for some time. But if you look at on an average, you can divide that INR 2 lakh, INR 3 lakh, INR 80,000. You take out INR 1 lakh, INR 70,000, which is in about 30, 40 years, let's say INR 50,000. So that leaves you with about -- INR 2 lakhs -- or for INR 2,00,000 crores divided by the entire demat balances, which is approximately INR 3 million out of that INR 5 million. So you divide INR 3 million or INR 2.9 million...
INR 2.9 million.
INR 2.9 million with the INR 2,00,000 crores, then you will get an average number.
Okay. Got it.
Actually, the DP holding has very -- it will not be 1:1 related with revenue. So I'll give you an example. If he's a heavy trader, it is quite possible that we have a very high trading volume but even on the DP asset. Or a long-term investor may have a lot of DP asset but [indiscernible] only once in 3 years. So that's a combination of all that. I think what is more important is that our customers -- our customer is giving the assets to us and over a period of time, consistently, there is some sort of revenue that we are able to generate or not. So if you look at and we put all the disclosure, over the last 4, 5 years, our -- the way our assets have grown, if you take all the retail revenue that we have and divide it by asset, broadly in the range of 50, 60, 70 basis points. That is the kind of earning we are able to get from that because sometimes, the customer will go into mutual funds. Sometimes, he may choose to have an equity churn portfolio. Sometimes, he may take NPS and so on, so forth. So -- but [indiscernible] that is more important to us.
Okay. Got it. Got it. That's also my -- just one suggestion, if you don't mind. If you can keep the gap between declaring results and the control of maybe 2, 2.5 hours, that would really help so we can sort of putting down the numbers in our model, analyzing and then just preparing for the conf call. That...
No, no. I think today -- yes. We normally won't do this. This was more one-off, I think, considering today was a market holiday. But otherwise, we will be obviously faster than -- this was the first time we did -- do this actually.
The next question is from the line of Ritika Dua from Ocean Dial.
Congratulations on the quarter and the year. So more clarifications and really questions. One is that how do we account for the revenue sharing arrangement which we'll have at ICICI Bank? And what is the revenue share agreement with Federal? I'm sorry. I think somebody asked but I didn't hear the answer. And the second bit is trying to understand that having any mitigating strategies that we thought at the start of the margin when it was to be applicable about the pledging or maybe in terms of the DP holdings or some other strategies. How have they fared? So these are my 2 questions.
Yes. So just to tell you, the sharing, you wanted to understand the sharing model of Federal Bank and ICICI Bank?
Model for Federal and the accounting for ICICI Bank.
Yes. It is identical. There is no difference between Federal Bank and the ICICI Bank model. It's identical, 35%, year 1; 25%, year 2; of all the booking revenue.
Ritika, from the accounting perspective, it is as and when the revenue gets accrued. There's a brokerage revenue for a particular month. 35% of that is what we'll account and cash to the expense.
It is on an accrual basis. It is a charge-off to the expense.
Sure.
And your second point is with respect to...
Mitigating strategies.
Mitigating strategies. For that, I think the mitigants are playing out. Obviously, it is not compensating for the volume decline. But those mitigants have been put in place, what we spoke. And it is going to -- if you want volume growth, volume growth is not going to happen rapidly. It is going to be a more sort of effort-led investment approach to regaining volume. And while we are doing that, increasingly, volumes are becoming less revenue-connected. It is more activity but base revenue connection.
The next question is from the line of Darshan Engineer from Karma Capital Advisors.
Can you hear me?
Yes, yes. Please go ahead. Thank you.
Yes. So first of all, a suggestion, sir, I mean, you've come out a detailed presentation and you also come out with detailed results, and it would be great if you can cut down on your opening remarks and directly jump to the Q&A. That will save a lot of time for you as well as everyone else.
Thank you. We'll do that. Next time, no narrative. Only straight Q&A.
Yes. Because everything is given out in the presentation anyway. So most of the questions have been answered by [indiscernible] across the industry. So I would come to one interesting observation, which was seen recently. I mean you saw there was a data security breach in case of a prominent digital broker recently. And I mean despite that -- I mean you continued to see robust addition in terms of client additions, and I mean they are doing a lot of heavy advertising. So I mean, where are we placed in terms of security architecture? And what can we try to -- and what can we try to do to ensure that we do not face any such thing? I mean maybe it will not have an immediate impact, but I think such kind of security incident can be leveraged positively by us to gain further market share and new client additions and other areas.
Absolutely, it's a great point, great question and great suggestions, I must say. I think we will certainly take many opportunities, take on board. But the point on cyber risk side, we see this as a #1 risk for our business. I mean business continuity, business stability and risks associated with cybersecurity, I think these are massive areas of investment for us. Here, we work very, very closely with ICICI Bank because for us, in addition to SEBI, we also, in a way, are connected with the Reserve Bank of India through the ICICI Bank for connectivity. And we are so integrated in the form of having a 3-in-1 account, et cetera, that the standards of cyber risks are actually matching with what we have in a bank. And it is not now the historical. We sort of, therefore, invest heavily and take this subject very, very seriously. And whenever there is an incident of this nature, anywhere in the world, there is a discussion that we do in our committee to understand what went wrong, what is the learning, what is the correction that we need to take as a company. So that is how we treat issues of cyber risk. We certainly believe this is a game of trust, and cyber breaches are big trust breakers. So wherever it happens -- so that said, one needs to also recognize that no one in the -- operating in today's world can be -- can say that they have completely mitigated the risks associated with cyber -- the best of the people have -- are getting impacted by cyber breaches. So to that extent, it is as good as yesterday. That's how we look at it. And we have to be on our toes all the time and vigilant all the time. We have to invest in tools, say, cutting-edge and employ a bunch of people who do cyber -- the ethical stuff around cybersecurity, which we do. So that -- it's an area of importance. It's an area that virtually matches what we do at ICICI Bank, which is -- got to meet the RBI expectation. And the fact that we have -- we do continuous reviews to see whether any learnings are done out of any incident anywhere in the world is the way we look at it. That said, I would say that -- I mean we haven't made any frontal, what should I say, approach whenever there has been such an incident. It happened more than once. You've seen one incident, which happened a few quarters back and that eventually got sold out through the regulatory process, and then the recent incident that happened in the industry. I think these are very unfortunate incidents. It doesn't -- for the industry, it is not good specifically, not just for the individual player. But for the industry, it is not good. And we -- our approach is not to do any frontal sort of -- we believe that we remain safe. We remain good and grow customers in an ethical and a fair manner, which is what we are endeavoring to do.
Sure. And one last question from my side. I mean you have improved on your monthly client addition but you are also seeing that the industry has also ramped up. For example, one more recently listed entity has done very good client addition, and you know whom I'm referring to. So I mean where would we feel that -- I mean obviously, we are also looking at the angle of quality of customer while doing our addition. We are not just trying to play the numbers game. But nevertheless, I mean where do you think you can go towards? Any aspirational number that you have? But I mean I am clearly sure that considering your [ silent skill ], INR 1.45 lakhs, say, in March is not the run rate that you would be satisfied with. I'm sure it can be much more. But -- so what would be your ideal range if at all -- I may put it that way?
See, I think to begin with, right now, we are waiting for things to sort of stabilize. So we are constantly juggling with the micro channel mix that we spoke about in the earlier part of the call. So we -- the moment we find that somebody is gaining us on quality, we actually mute that micro channel. So it could -- we have taken that call of let's mute that micro channel and grow and work the harder way and get the right segment of customers. So I think we are getting that configuration stabilized to begin with and then press the pedal from there. In terms of numbers, I think we'll be happy if we lead industry growth rather than really talking about a specific number. I think as an aspiration, if the industry is growing at 10%, we should be growing at a faster rate than 10%. That is what I'm trying to say, on a month-on-month basis.
Next question is from the line of Harshvardhan Agrawal from Infina Finance.
The first, on the wealth management part, so I just had a couple of queries there. So one was I wanted to understand this AUM that we talked about of INR 1.7 trillion. Is there some overlap with the wealth management AUM for the bank? And secondly, the income that we get on -- from the wealth management, which is that INR 160 crores per quarter, where is that accounted in our P&L?
Yes. So I'll take the second one first. So the revenue of wealth management get accounted in the respective line items in the P&L. So P&L is a very product or income-type like representation. So brokerage income from our wealth clients will go and sit in the brokerage income line. Income from services will carry distribution income of our wealth management clients. Interest income will again carry the NPS, ESOP with recurring interest that they are generating from the wealth management. So wealth management is a segment. It's a customer segment representation of our business. So these 47,000 customers, they give us INR 158 crores -- they have given us INR 158 crores of revenue. And what has been the traction, that is what we want to show that we manage it very, very differently. So that is the second question. On the first question, whether the assets that we have, INR 1.7 trillion, whether there will be an overlap with bank, see, these assets are of our customers who have an Idirect account and they have given us demand assessment, bought, which are -- so for example, if -- the same customer, it is quite possible that the same customer could have changed mutual fund through ICICI Bank as well. That will reflect in the ICICI Bank DP, the distribution products, all the -- all areas, DP or loans, whatever we have taken. And whatever they've got distributed to us will appear in our JV. The DP is technically the basis of [ actually ] service provider. But it is ICICI Securities product, which is attractive. So the engagement, the relationship, the portfolio is on -- with ICICI Securities. So to that extent, it would be different.
All right. And sir, just one last thing on this part is -- what is classified as recurring asset? And what is the transaction asset [ as well ]?
So recurring asset would be anything which by having that asset with us, we will keep on earning revenue. So mutual fund would be a classic example or PMS or MTF. So anything where -- if our assets are lying with you, you will keep on earning income, but no transaction is required for you to earn income. Transactional assets, on the other side, would be an example could be demat asset. So in demat asset, you may have DP holdings, but if you're not transacting, I will not get any revenue. So the revenue basis is a transaction. In recurring income, the revenue basis is asset being with us.
So sir, are any income that we get from MTF or ESOP would be under transactional revenue? Is that understanding correct?
So -- no, no. That will be recurring because MTF and ESOP, till the time the loan is outstanding, we will keep on generating the interest income. So just to understand an MTF transaction, our customer will take, let's say, a INR 10 lakh position as an MTF. So he will pay a brokerage from the INR 10 lakh position. He will pay interest rate for -- let's say, for 1 month that he's keeping it. And then if he's playing off a position, he'll again play brokerage. So the 2 brokerages will be transactional income, but the interest income is recurring because as long as the INR 10 lakh position is open, it will keep on adding revenue.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.
Yes. Thank you so much. Thanks a lot for supporting us, and thanks a lot for coming in, in large numbers and asking various questions. We really appreciate the time you spent with us. Good day. Good night.
Thank you. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.