Karur Vysya Bank Ltd
NSE:KARURVYSYA
| 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 |
163.05
242.5
|
| 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.
Karur Vysya Bank Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Q1 FY '23-'24 Earnings Conference Call of The Karur Vysya Bank. We have with us today the management team of KVB represented by Mr. Ramesh Babu, MD and CEO; Mr. Natarajan, President and Chief Operating Officer; Mr. Ramshankar, CFO; Mr. Dolphy Jose, Group Head, Consumer Banking; and Mr. Srinivasa Rao, Company Secretary and Compliance Officer. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. B Ramesh Babu, MD and CEO, to take us through the highlights of the quarter gone by, after which we will open the floor for question and answers. Over to you, sir.
So good evening to all of you. On behalf of Karur Vysya Bank, I welcome you all to our bank's earnings call for the quarter 1 financial year '24. I am pleased to mention that bank continues to demonstrate its consistent performance in terms of growth, profitability and asset quality for the first quarter ended 30th June 2023. You will be glad to know that our performance in terms of asset expansion, margin, ROA, delinquency is in line with our guidance. I am sure you will not disagree if I say that the outcome is on account of our conscious efforts, which we were explaining to you in our earlier calls. All of you would have gone through our detailed presentation on our Q1 numbers.
I would like to share some of my thoughts on the performance of the bank during the quarter and our guidance for quarter 2. Our total business grew by 4.88% during the quarter and reached a level of INR 1,47,671 crores. Advances grew by 4.58% during the quarter, and it's an inclusive growth across business segments led by commercial and agriculture [indiscernible] each. Our continued focus on MSME in the metro and urban locations and gold -- jewel loans in rural and semi-urban locations supported the growth. Retail grew by 4% and the majority of the growth has come from mortgages, both residential as well as nonresidential.
Our focused efforts on the distribution and benchmarking of our products to market supported operating teams to garner more business under these segments. Though there were sizable disbursements under corporate as we consciously let off certain low-yielding borrower accounts, the growth looks to be lower at 2%. The overall growth is at above on our annual guided growth of [ 14% ] and the trend will continue, and we do not see any challenges. Our deposit growth was at 5.32% during the quarter, and term deposits and CASA deposits were growing at 6% and 4.32%, respectively.
Though accretion to some extent was aided by written of INR 2,000 notes, we are sanguine that the growth momentum would continue and support the asset expansion. We had highlighted about our liability acquisition team out of the plant resource of 1,300. We have onboarded 425 resources during the end of first quarter, aggregating 905 resources. The outcome from the acquisition team would be visible from the second half of the year. So in the con call, our colleague, so Mr. Dolphy Jose is there. Later -- so he will be also explaining what are the things happening in that particular wing.
Net interest margin reduced by 18 basis points on a sequential basis during the quarter at 4.19%. We had indicated in our last call about the expected compression in NIMs during the first 2 quarters and would be in the range of 4% in the next quarter 2, while cost of deposits has gone up by 35 basis points, yield on advances increased by 14 basis points during the quarter resulting in a compression of 21 basis points. Based on our historical pattern renewal of deposits and fresh deposit accretion, we expect that there will be a further increase in the cost of deposits to the extent of around 20 basis points in the second quarter, assuming no change in our deposit rates. Considering available market liquidity and fall in bulk deposit rates, we had reduced our interest rates on special deposits by 20 basis points in June '23.
Yield on investment has gone up by 8 basis points during the quarter, and it is estimated to go up by 10 basis points in the next quarter. We expect 10 basis points increase in the yield on advances during the second quarter because repricing of our loans on account of MCLR will be there. Considering all these factors and without taking into any policy rate changes, we expect to maintain NIM in the range of 4% for the second quarter.
We have achieved an ROA of 1.53% in this quarter. In spite of reduced margin, our business growth, fee income, lower trade costs and recoveries in written-off effects continue to support us to keep our ROA at 1.5 level. Our cost-to-income ratio was at 47.29% for the current quarter, which is well within our guidance and sequentially higher over March quarter. This is due to lower recovery in technically written-off accounts and lower write-back of depreciation on the income side and increase in employee cost on account of onetime performance incentives, which is annual payout of INR 46 crores. Last year, this was done in the month of July. That's why it has gone to the second quarter. This time, it has come to the first quarter. Otherwise, there is an annual phenomena. Our normalized employee cost would be in the range of INR 300 crores per quarter. As guided earlier, the ratio would be in the range of 45% to 50% for the year 2024.
Our slippage has continued to be under control, and our gross slippages for the quarter is less than 1%, which is as per our guidance. We continue to have negative net slippages taking into account recoveries from the written-off accounts this quarter also. So all of you would have seen that more than 7, 8 quarters, our net slippages are negative.
Our SMA 30+ of entire loan book at the end of the quarter continues to be at less than 1%. Though it has increased sequentially compared to last quarter, we do not foresee any alarm as it tends to be elevated during the first quarter of the year. We are confident that we will continue to keep the ratio below 1% as guided in our earlier calls. Our efforts on recovery of technically written off book is continuing to use results as we have recovered a sum of INR 58 crores during the quarter.
Due to lower slippages, recoveries and written-offs, our gross NPAs have moved to below 2%, and we expect that we will continue to maintain at below 2% levels. For the quarter under review, we have provided a sum of INR 137 crores towards NPA migration, standard assets and prudential provisions. We estimate that credit costs for the current year would be in the range of 75 basis points as guided. We also created a floating provision of INR 25 crores as a prudent measure. Our net NPA has come down to 0.59% and we will continue to maintain our net NPA at less than 1% of our loan book.
Our standard restructured loan book is further reduced to 1.33% of our loan book, and we hold a provision of 24% on a standard restructured book. Our CRAR continues to be robust at 17.67% providing us a comfortable headroom for growth. Our liquidity is well managed and the CD ratio is at 83%.
During the quarter, we opened 9 branches and opened 1 digital banking unit at Chennai and another 38 branches will be opened during the current year. Our new initiative of KVB Smart under commercial banking business has started functioning from Coimbatore, Chennai and Hyderabad locations during the quarter with a team size of 8 RMs. Our business performance highlights are given in our presentation, which you would have seen. We have been consistently improving our performance over a period of the last 2 years, and the trend has continued for the first quarter also.
Our team is mindful of the same to take it forward, and we have the confidence of taking it forward. Our endeavor would be to focus on sustaining ROA over 1.5% levels going forward and grateful to all our investors, analysts and stakeholders for the confidence and continued support, which we will reciprocate through our better performance in the days to come.
Now I'll be glad to respond to your questions. Thank you.
[Operator Instructions]
Our first question comes from the line of Prabal Gandhi with AMBIT Capital.
Am I audible?
Yes. Audible, Prabal, I think some more clarity that is there, that will be good. But please go ahead.
Is it better now, sir?
Absolutely better. Now you go ahead, please. Thank you.
And congratulations on a good quarter. So my first question is on growth. So can you update us on the performance of the nonbrand channels? How are they doing?
So non-branch channel, when you are talking about on the liability side or asset side?
On the asset side, meaning co-lending NEO, KVB Smart.
Yes, fine, absolutely. Now NEO is doing pretty well. Actually, if you can look at it. So last year, they grew by around INR 2,000 crores and this year also more or less they are -- INR 1,800 crores last year, and there is INR 150 crores something like that they have been growing and they are expanding to a few more geographies also. So that way, NEO why it is not an issue.
And we -- earlier last year, I was mentioning that we've made an experiment with the NEO by creating a new home loan branch at Hyderabad and subsequently, similar branch, home loan dedicated branch was opened at Bangalore, now at Chennai and later, they'll be opening at Bombay. So these branches started booking business that Hyderabad branch has already started working well and all more or less around INR 100 crores, INR 200 crores already outstanding they have got in the last 8 months. So other branches also they are in the pipeline, they'll work well.
In addition to that, there are other products, what are there like LAP. So they are doing well with the new geographies adding. So NEO will be on track.
Now coming to the co-lending, if you look at it, our co-lending arrangement is there with Chola and a few other players, which is in the pipeline. But the main flagship program is Chola, which is more or less around INR 700 crores, INR 750 crores is outstanding now. That's going on pretty well, not an issue at all. So other 2 to 3 smaller players also, we are working on that. Maybe in this quarter, we may be able to clinch few of them.
Now coming to the KVB Smart. So initially, we are taking the people and as in my inaugural method I told, so we are working with Coimbatore, Chennai and Hyderabad, the 3 centers. Already 8 relationship managers and a few more credit people we already taken them on board. Now these people they need to get adjusted. So we are reasonably confident with the new experience what we have. The KVB Smart initiative also will work well.
And the other thing is we can create a linkage between the NEO as well as the KVB Smart because NEO handles the LAP and other products and KVB Smart handles the working capital. If these same customers if other side working capital, we can handle this. So there will be much -- a lot of synergy will be both of them. So that way, all 3, what you mentioned, they are on track and doing well.
These all 3 put together, how much they would be contributing on the loan book right now?
Loan book, if I can say, NEO will be around [ INR 450 crores].
No, no, this quarter. This quarter, you are talking about total loan book you are telling?
Outstanding -- outstanding on the loan book?
Total loan book. NEO... [ INR 1000 crores ]...no, no NEO itself is [Foreign Language]
NEO, co-lending?
No, no, no. All 3 together he is asking. So all 3 together -- co-lending is INR 750 crores, NEO will be how much around...INR 4,500 crores and NEO this one, and the KVB Smart just started, it is in 2 digits.
Meaning all put together INR 5,500 crores.
Around that area, correct. You're right.
And just one question here. So how are you controlling risk here because NEO and KVB Smart and all these are done not from the branches. And -- So there would be some element of risk involved, right?
No. I understand, these are -- actually, the accounts are there in the branch finally. So -- next thing is the documents are also coming to the branches only. They will be placed in the branch. And we have a perfect system of the onboarding and checks and balances, audit and external audit, internal audit, all these things are there, not only that our risk management department also continuously, they review what is happening there. So that way, in all these cases, we have placed excellent balance. Co-lending is concerned -- is absolutely within the central office we are doing.
So KVB Smart just started. All the processes what are need to be done. So we have formulated here. Based on that, we are going ahead. NEO is more or less stabilized that way. And we are doing audits and all that the audit reports, we are getting a better control on that.
Yes. Prabal, in addition to that, as far as NEO is concerned, the credit policy for the NEO or the other branches are same, number one. And number 2 is they're also using the same loan origination system. Whatever the underwriting standards, which we have designed for the digital lending, same thing is applicable. In that way, there is no difference either in the underwriting or in any of the other processes. Only 4 thing is differentiated.
And sir, in previous calls, you also mentioned that your aim is to increase branch per loan per month to 2 versus what it used to be a quarter? Now what is the -- your aim is to have branch per month per -- number of 2 loans per branches per month versus it used to be a quarter ago, right? So what is the progress there?
I'm unable to recollect. When did not say that, 2 loans per branch?
No, no, meaning every -- every branch per quarter used to do 2 loans earlier and our aim was to increase this to 6 per quarter?
No, no. These are -- see, this is general focus which we are providing to the branches for the overall improvement.
But I never -- I can fairly recollect, Prabal. In any of the calls, I made this statement.
Okay, not a problem. [Foreign Language]. On the margin side, so can you guide us to what is the pricing trend in the SME segment right now?
SME segment majority is the commercial [indiscernible]. So it ranges between 9.5% to 10% average, yield itself is between 9.5% and 10% we are getting it, commercial. So our retail is concerned, that is also around 9% odd. And agriculture is also around 9%, we are getting it. It is slightly lower in the aspect of corporate. That is the reason in the inaugural when I was mentioning that, so I clearly mentioned that consciously, this quarter as well as last quarter, we allowed a few of the big accounts are where the low-yielding accounts are there. When the reset is due, we allowed them to prepay because by prepaying them, overall, our margins have improved otherwise -- so it's not adding anything to the margins. So overall, that way, we are focusing on that. You would have seen that, [ 9.6% ] 14 basis points, we could improve the margin over last quarter.
Our next question comes from the line of Pranav Tendolkar with Rare Enterprises.
Sir, can you just highlight factors that will actually set NIMs going forward? And what is the outlook for the [indiscernible]?
Pranav, that is [ not clear ]. Pranav, we are unable to hear you. Understand the issue.
Hello, can you hear me?
Yes, yes. Please, please tell me.
Yes. Sir, I'm just asking what are the various factors that you can visualize that will affect NIM going forward? And what is the guidance for the year?
Okay. Understood. Yes, factors in the sense that you see when we did a ballpark working on the usual pattern of the deposit renewals in which bucket they are coming and all based on our historic experience, when we worked on that, we found out saying that, so around 20 basis points the cost of deposits may go up because one of our flagship product, which is a 444 scheme, 444 days, where a lot of inflows are coming. So there, consciously, when this INR 2,000 notes were going on at that time, when we saw an inflow, we have reduced the rate of interest by 20 basis points. But despite that, I know there is a small dip in the bucket. But overall, the flow is still there.
With these things, what we feel? The cost of deposits can go up by another 20 basis points. Likewise, when we look at our MCLR portfolio, so what all the portfolio, which is coming up for repricing during this quarter. So there also, we'll be getting another 10 basis points. So that way the net, we can expect that. We may be 4-plus something like that for the next quarter.
Now coming to the third and fourth quarter, it will be too difficult to estimate at this stage. Maybe next quarter when we come for the call, we will be able to have a fair view of the third and fourth quarter. So -- but our intention is to the extent possible to maintain these lists, as I told you clearly, the low-yielding, by getting out of those cases also our yields are improving, whichever way we need to produce our yields without losing on the quality. So we are working on that.
We will see next quarter 4, we will try to maintain and beyond that, how best we can maintain, we'll let you know.
[Operator Instructions] Our next question comes from the line of Sumit Bhalotia with MK Ventures.
Congratulations for an excellent set of numbers. Despite of a sharp compression, which was already guided, you've maintained very good arrays.
So sir, a few questions that I had, I think a few of them are already answered, but if you can give more insight on the consumer banking division that you're expanding and -- so you made a comment that the hiring that you have done, benefit of that will be visible from second half. So if you can quantify that. So one is on how -- what kind of benefit you're expecting in the second half on the deposit front? That is one. Second is more insights on the overall -- the NEO banking division and the hiring that you are doing, how that is going to benefit us, say, over the next couple of years? And also finally, on the cost to income, how do you see that panning out for this year and the next year?
Sumi, so in fact, all along, I have been sharing what are our development. Now that's the reason this time, we have included Mr. Dolphy Jose, our Head of Consumer Banking. So he will brief what is happening there and what is the manpower, which are the segments they have started and all, all these things. The cost-to-income ratio is concerned. Our CFO will respond for second question. Dolphy, over to you for the first part. Please briefly [indiscernible] on this, please.
Yes. Sumit, we will guide you. I will first take you through our plans for the liability fees. So broadly, we have classified our deposit mobilization into internal and external.
Let me cover the internal part. Our largest franchisee of the bank, which is our branch's network, we continue to acquire new with more focus on deepening and enhancing the customer RV and products per customer. And our existing business banking verticals now have targeted deliveries to acquire and deepen current accounts. We also plan to increase low-cost results light branch network simultaneously to increase footprint, especially in the semi-urban and the rural branches Also, apart from this, we are also opening digital banking units in tech parks and cyber cities.
External plans are the go-to-market plans [indiscernible] the internal covers mostly deepening announcement and ETB customers. External is the go-to-market plans where we have formed a sales deal where we have a [indiscernible] for household and general public account for CASA and [ TD ] acquisition. We have a vertical called [ salaried deal ], which focuses on salaried customers looking into salaried accounts, not specifically corporate, but mostly midsize corporates and large SMEs.
Then we have subverticals for NR and [indiscernible] accounts. We have a separate vertical for government and institutional business. These are primarily focused [indiscernible] plans.
The [indiscernible] vertical focuses on trade and [indiscernible]. We have an existing DC partnership with close to around 100 basis points, which we will take it to about 450 to 500 basis points, and our attempt is to have 90% plus active DC points. We are confident to grow our deposit rates consistently as per the deposit growth.
On the retail asset side, as I mentioned earlier, branch banking continues to be our largest franchisee for sourcing retail assets. Apart from that, we have 2 subverticals. One would be a vertical which will be aggregator for fulfillment of needs generated by the brand channel that is called the brand channel sales team, and one separate vertical for open market to primarily source from [indiscernible] and build the connects. These are 2 other verticals which are started under the retails asset segment.
Apart from this, we also relaunching the credit card, co-branded supply. And we also intend to launch the open market gold loan where we would go-to-market with our sales team who would go to market and acquire gold loans.. These are ballpark. These are our plans for [indiscernible]
Yes. Sumit, coming to -- any questions on this before we move to the cost to income for that, Sumit?
Sorry, just one thing on consumer banking. So I understand the division. But do we have internal targets of, say, what kind of growth you would be targeting for this retail segment? So as of if I look at it, we are going pretty higher than the overall system credit growth for the last -- [indiscernible]. Post this expansion that we're doing, what kind of growth we would be targeting vis-a-vis the industry once the team is fully in place and all these verticals are fully functional?
Yes. Sumit, in fact, I'll just share my point on this. Now you see, initially, we have focused on the liability side, particularly for the CASA so that it's going to help us in the low yielding -- low-cost deposits, though initially, we may be investing in some sort of investment on that, but they will be mobilizing the assets as well as the cross-sell also. So it will take 1 year process for stabilizing because these people they have come from different banks, their working is different. They need to get stabilized and they need to see different products and all, they need to get there. So our focus currently is on the CASA.
Simultaneously, as Mr. Dolphy was mentioning, rest of them -- a few of them are in the pipeline, a few of them, these direct selling agents and [ indiscernible] for the assets we started working. So it may take 3 to 6 months for stabilizing this entire thing for the working but earlier, if you can look at it, we were struggling at around 4%, 5%, 6% that way, 8% also in respect of the consumer banking asset side. So -- but if you can recollect, you'll see the numbers now, more or less, it has come up well. And this quarter also, quarter-on-quarter, it is around 4%. Even if you annualize, it comes to 16%, 18% minimum. So that way, we have more from 6%, 7% to 18% with the internal what all we have and some external what all we are taking and all.
So that's where we will see overall once it stabilizes, how we can do it between 18% and 20%, we can see that.
Because one more point I need to tell, Sumit. The easier way for growing in the consumer segment is to go for the unsecured. Unsecured, if we go on doing and all, then comfortably, we can provide 25%. But if you can look at our portfolio, unsecured that [indiscernible] also, if you see that INR 600 crores what all is there and all majority is coming from the BNPL program, that's why we have regrouped it, we have put it there.
So -- and not only that, within the bank, whoever are there unsecured, we have given, and this is our portfolio. We do not want to grow aggressively under the unsecured that too under current state where many banks are growing. Every day, much for space. So [Technical Difficulty] when we have kept it out. So we need to mellow down our expectations also on the growth around 18% to 20%. That's what we see.
Understood, sir.
Okay. Yes, because in regards to -- on account of this initiative, our CFO will respond.
Yes, absolutely. Ramshankar here.
On the -- whether we should -- already it was mentioned in our opening remarks by our MD. See, one is that [ RL ] sales recognition, the other one is that KVB Smart and a little bit in RA. All this put together, we expect around 10 basis points increase on our cost to assets on an overall basis.
So [indiscernible] actually, if you take in the cost-to-income ratio, if you look at it, maybe initially one of the quarters, it may go but however the [indiscernible] of the these new channels will be -- there will be a time lag where we get the income from that. So to that point, there will be [indiscernible] however, we hope that to be compensated as done in the last 2 quarters, we were recovering from [indiscernible]. So overall, as we guided, to be in the range between 43% to 50% less.
So Sumit, in fact, this is a -- as I always say, cholesterol -- good cholesterol, bad cholesterol. This is a good cholesterol, which we need to spend this capital investment for future. So that is the reason, though there can be a lag between what we are spending and what we are going to get.
So that lag is quite useful because subsequently, what we are going to do -- going to get is perennial. So with that intention, we need to take the plunge and we took it.
Our next question comes from the line of Yuvraj Choudhary with Anand Rathi.
Congratulations on a good quarter. Sir, could you throw some color on how the demand scenario in Tamil Nadu for various industries, specifically, if you talk about textile industry?
Yes. I'll tell you. I agree. In fact, textile is one of our main space. And so we have -- so now if you look at it last 1, 1.5 years, textile is undergoing some sort of a trend because both cotton prices may be going up and yarn. All these issues and Europe issue, U.S. issue, China issue with all these things, the level of production in many of the plants has come down. So then because the demand is not there. But clearly, the apparel industry also if you see Siripur, so their order book was more or less come to a -- more or less minimal last year.
But when we are interacting with the players now, so the question is China started importing the yarn once again because our yarn is one of the cheapest and the quality is good. So that way, some sort of a demand started because for a few months, many months in China, there was a total lockdown, and the activity was not there. So this is one way yarn when it come back. Meanwhile the spinning bills, which are good and now they're able to slowly get back. I'm not saying full-fledged or full scale, they'll be able to do it.
Now coming to the other side, apparel industry and other things, if you look at it, so because the shelf in Europe as well as U.S., our clients are concerned, majority of the exports are going to U.S. So when we interact with the teams and all, what we understand is slowly the demand from the U.S. started coming up. And this apparel also started getting the orders now.
The good thing if you look at it, so though this process is going on for the last 1.5 years, none of our clients actually, they are able to face the stress because there are 2 reasons. One is they may be literally conservative initially unlike many of them when the lot of expansion was going on, these people didn't go for such sort of an expansion. And even if our clients have gone for expansion, they have gone for [indiscernible], which substitutes the [indiscernible] what all is there, which has saved them. So that's where the term loan component and the interest component burden is not there for them.
And second thing, because the orders are not there, many of them, the working capital limits have come down drastically, the utilization levels. So despite that, we are able to show a growth of 17%. Though the working capital utilization is not there. So we are happy literally though the working capital utilization is low because when the orders are not there, working capital utilization is full, we'll be terrified.
So that way, the quality of the clients, what we have for the textile, though the portfolio is high, till date 1.5 years, we didn't had any problem that way and all. So we feel that while interacting with them, so maybe another 6 months, this problem will be over, and they'll be able to back to normalcy because the cotton prices are stabilizing now, though on one side, people say, cotton production has come down and import duty, all these things are there. But whatever it is, price is getting stabilized at INR 50,000, INR 55,000. So that gives some such as a confidence to the people because earlier people are thinking prices may come down further. That is the reason they were not buying the cotton and stocking it.
Now that the stabilization is happening now, people started venturing buying the cotton that the utilization levels will go up. With this, the production also will start. Otherwise, what all orders are there on a just-in-time basis, they are buying the cotton and all, they are producing and they are exporting or selling. So that trend is going to change shortly. So this is broadly about the textile.
[Operator Instructions] Our next question comes from the line of Renish with ICICI Bank.
Just one question on the gold loan portfolio. It's 25% of our book. So if you can just throw some light in terms of what is the tenure? What is the yield? And if you can share what kind of ROE you will be making on the gold business?
Renish, in fact, if you can look at it, so 1.5 years back when I was asked what will be the gold loan portfolio of the total portfolio, I was indicating it can go up to 30%, but still we are maintaining at 25%, okay? Because other side also book is going up.
Second thing I'll tell you. So there are a few advantages what we are getting. And I will talk about the yield also. But before that, I want to talk about what the advantages, what we have. On one side, if you look at it so absolutely totally backed by security. And secondly, if you look at our presentation, the LTV is 68%, leaving 32% for any unforeseen eventuality. So that's where the chances of losing money is remote and next thing is there is no capital adequacy and charge required on this. So there is no capital cost on this.
And next thing is because majority of the portfolio is for the agriculture, it is covering from the priority sector. And that way, wherever shortage is there for other brands, if I can sell the priority sector certificate, we will be able to get the PSLC commission also on this. So these are the various advantages while going for the gold loan.
Now coming to the tenure, if you look at it, majority of the gold loans are for 1 year -- 1 year or 2 years maximum, and it depends, it is linked to the cropping pattern. So for the crop, what we are giving. It will be synchronized to that. And along with that, we will see some sort of time also for the repayment.
The pricing range is between 8.75% to 9%, that's how we will be getting it. So that way, it is no risk, no capital with 68% with priority sector and 8.75% to 9%. This field is a good yield. That is the reason we have gone into that.
Got it. And so let's say the ROA in this business would be at around the blended level of 1.5% or it should be higher than that because I believe that the there will be no credit cost of that?
It is slightly relatively higher than that because if -- a pure ROA, if you look at it, it will be 1.5-plus. But if I take into account the capital cost, what I'm saving and the [ PSS ] benefit what I'm going to get in times of sale. If I add it, it will be adding as a ticker for that.
Got it, sir. And do you -- let's say, since given these loans are shorter tenure loans and once -- I'm saying the gold loans are, let's say, they're shorter tenure loans and hence, the -- when the unwinding happens, do you foresee any these to the growth assumptions?
No. That is the reason if you look at it, the potential what all is there, our branches. It's a simple reason because there are many competitors are there. Despite that, if you look at it last Y-o-Y growth, it is around INR 2,500 crores growth has come. Maybe something to be aided by the pricing -- gold price has gone up. Otherwise, also a number of loans and this is going up because our people, they are good in giving a good turnaround time and as a service. So that is really helping us to have a better this thing.
Maybe over a period of time, it may happen that way. That is the reason what we are doing currently is we started slowly diversifying into other activities. So what we did in our presentation we have shown, so other types of loans, which are more or less with tie-ups and all. So we started growing more or less INR 100 crores, INR 150 crores we have grown. In this quarter, INR 100 crores, it has come up, we will grow for that. Likewise, to some extent that MFI loans also what we thought on a smaller we started, around INR 55 crores something is outstanding now. And there also the checks and balances we are growing.
Likewise if you are focusing on the food processing where there's a lot of scope is available. That -- and so to some extent, the poultry and dairy, these sort of things that too with the tie up. So these are the areas we are looking at it. Once we diversify and go into that one, then to some extent, our dependence on this gold loan should come down over a period of time. That is our plan of action.
Our next question comes from the line of [ Madhu Chanda ] with [ Metro ].
My question is on ROA. I mean, so far, it has seen a steady uptick, thanks to the expansion in margin and lower credit costs. Now that we are hitting a point where margins are going to head south, for sure, we have already seen that in the quarter, and you're guiding to that and the credit cost remains extremely benign. What are the kicker for ROA expansion? Or should we expect ROA to stagnate from here on?
Ma'am, in fact, agree. So margin expansion with all these things also still we are able to maintain. If you look at the credit cost, so it may look like this that way, but with INR 390 crore of net NPA on a [ INR 66,700 crore ] book. So even if tomorrow we need to provide a lot also, we'll not be able to provide for that. So that way naturally, what all they are earning will be flowing into the ROA only. So that is one.
And second thing is if you can look at it, the initiative, what Mr. Dolphy Jose has mentioned about, the liabilities, CASA vertical, what we are starting is that if the cost of funds come down, naturally, that will also help us to improve our margin. It will be a margin effect if we are able to go for that.
And next thing is regarding the other products under the personal banking. So where currently, our focus is all on the mortgages. Now we are trying to go for, to some extent, on the unsecured. For that, what our plan is, we have externally gone for the BNPL with the Amazon program. In the process, lakhs of customers we have acquired. So it is only a one liner under that, the BNPL only we are giving them.
So what we discussed with our partner and we started doing is, what the possibilities are there for co-lending these people for the personal loan because if a customer is there with us for 2 years, and continuously has been servicing this Amazon loan continuously and other CIBIL scores, if you look at it, so we'll have a fair view of these customers, where we can go further.
Under that, the other partner, whoever is there, last 6 to 8 months, we started the program for co-lending, directly lending under personal loans to them. And it started very well and all the recovery and repayments are pretty good. Now we are actively working with them either for the co-lending or for the pool purchase of the personal loan portfolio, which will help us -- which will add to the margins of the retail portfolio.
Likewise, our agriculture also if you look at it, currently, we have been doing only the majority of this gold loans. Now when we are moving into other areas of agriculture, where the margins are relatively better and we have tied up with one of the prime players in the MFI sector, a business correspondent who is well-versed with doing this one based out of Coimbatore and he is there in the field for the last 11 years and the MFI, and we started working there. There also the yields are relatively better.
So that way, we are looking at various options where we can go further. As it is, you know very well our commercial banking, where the yields are 9.5% to 10%. Our focus area today also is commercial banking. For that, what we're doing, we are trying to benchmark our products as well as the processes in the market and all. If we can improve our commercial portfolio further, that will help us in overall improving the yield.
So next thing is the focus is on the [indiscernible] assets. [indiscernible] currently, the non fund-based what all is there, we are seriously working on that and how to improve that so that we're able to get that. We have strengthened our cross-selling vertical. We have taken from the market a sample, and we have engaged many people. Now we are working on how to offer many more products to our customers, that way improving the cross-sell income. I can say that compared to last year, this year, our income under the cross-selling is more or less doubling. So we have a lot of scope further. So that way every lever, what all is available for us to improve the income side, both on the fee as well as the interest, we are working on that. With these things, our endeavor is to see that the 1.5% what we have reached, it has to be above that always and all. Whatever is possible, we will try to take it forward by pushing every lever.
Sir, you mentioned all the revenue income side. But you didn't mention anything on the cost side? So should we assume...
Okay. I'll share that also. In fact, if you look at the cost side, there are 2 main aspects are there. One is the establishment costs, second is other expenses. If I look at the other expenses, earlier numbers at this, the progression is more or less inflation linked. What all inflation is there, more or less the same way it is moving, nothing much.
Coming to the establishment part, if you look at it, you must be knowing that last 3, 4 years back, we started taking many people from the market. All of them are the CTC based who are linked to the performance as well as the variable pay that way. So that way, so we have a better stability, better productivity. We may be paying something more, but we'll be able to get the better productivity.
If you can look at the slide of the presentation, what you have, so last 2020, it was 3% profit employee. Now it is 17%. More or less, the set of staff numbers in the bank whoever are there, the same level of 8,000 number ballpark here and there, we are maintaining that. Whereas the profit per employee has moved from 3% to 17%. So that way, we are trying to control the cost. I agree our cost to assets is around 2.5%, 2.6% running. We will try to bring it down to -- 2.5% currently there. We will -- we are also planning to see which are the areas where we are bringing it down.
But let me be frank on one point. Suppose if I am a miser in respect of incurring a cost and tomorrow, I may be missing an opportunity for getting a great business in that. That is the reason we have invested a lot on the liability verticals in the Smart and other verticals also. It will look at cost now, but it is going to a money spinner tomorrow. So that is the reason keeping all these things in mind, our focus is majority on how to earn more on the income side rather than giving the total focus on the cost, though we will focus on that ratio.
So I mean, what is the 3-year aspiration as well as [indiscernible] is concerned?
The aspiration for the ROA or...I'm sorry, which one you are talking about here? Aspiration about ROA?
Yes, yes, in 3 years' time. 3 years down the line?
Three years is a very long period, at least now-a-days [indiscernible]
You are planning for it, right?
No, no. In fact, having -- I'll tell you, you must be seeing, you must be tracking this also. Three years back, we were at 0.33%, something like that. At that time, we never imagined that our ROA will reach this sort of a number. We have reached this.
One more point also for the benefit of the entire audience, I'll share. We started looking at our last 13 years numbers, the annual growth, barring 2 years where in 2011 and '12, we were aggressively growing in the corporate those years, the annual growth was INR 12,000 crores. Otherwise, the rest of the year, the total business growth was around INR 7,000 crores, INR 8000 crores. If you can look at our first quarter growth, annual growth for the 8 years, 9 years, what we were getting it, we are able to get it in 1 quarter this year, [ INR 6,786 crores ] is the growth in the first quarter.
So with the tempo that we have brought, though ROA we will drive for between 1.5%, 1.75%, whatever it is because we did not stop our efforts there. The growth in the business, what we are bringing and that too the difference between the earlier portfolio and current portfolio is now it's a granular portfolio. If you can look at it the at the corporate consciously, we have brought it down, number of below 1.25% and majority of the portfolio is secured. If we look at the unsecured portfolio of the bank, it is 1.85%, which is below 2%. With all these things, we feel, so we will not be below 1.5% and whichever we will take it forward and all, our endeavour will be there to take it forward enough.
Our next question comes from the line of Jai Mundhra with ICICI Securities.
I wanted to check on employee count. Last time we had said that we want to step on employee. I mean, we were hiring a few employees after launch. So how has been the employee count as of 1Q end? And is the majority of the hiring has already been done or it should continue for the next 9 months as well?
Jai, actually, the count as of 30th June is 7,900 but as far as the liability business is concerned, still, we are on the job. And already, our MD has indicated how many numbers were -- or we have done. For example, we planned 1,300 resources. So of each 905 resources already onboarded. And during this quarter, we have onboarded 425.
Right. Okay. Sure, sir. And on SAAR savings account balances, right? So we are doing a lot of efforts on savings account on the institutional side. But the total SAAR growth has been very soft, right? So it is an industry-wide phenomena also that across banks, the SAAR growth has been much muted? But any -- I mean, 2 questions, how do you see SAAR growth panning out? And b, do you envisage any tweak in the SAAR rate also to assure the savings around balances?
Second question, I'll respond and first question, I'll give it to Dolphy, Jai. So Jai, in fact, earlier also when we looked at it, the change or hike in the interest rate didn't materially brought many inflows into the book. But the downside is, this rate would be going for the existing base also and that overall, the cost is going up, the costs we are going to incur and the benefit we are going to get it is not commensurate. That is the reason we held it. But whatever it is, we will also look into that one because a sector people from the market, they are there continuously studying the pulse of the market, what we need to do. If at all, that situation comes, we'll gauge the cost benefit and we will do that.
Coming to the first question, Dolphy, can you take the question, please?
Yes. Jai, Dolphy here. So whatever I mentioned on the go-to-market plan or from sales team as well, these are all exclusive teams taking specifically to SAAR acquisition. When I [indiscernible] team, when I say [indiscernible] institutional business, [indiscernible], et cetera, all are specifically towards SAAR. Now all these activities, I mean, as our President mentioned that already about 900-odd people are onboarded, and they're active. All this is going to be incremental SAAR activation. So I agree at industry level, SAAR has been muted. So being a part of the industry, we also had to face that. But our go-to-market strategy is what we discussed, and that [indiscernible].
One more point also, Jai, if you can see that, so SAAR would have gone up agree. But consciously, our own staff also, they discussed with the customers and wherever, to some extent, customers are [ risk covers ] and where they are susceptible to move to other banks for a time deposit. So we just converted them into time deposits so that we can retain the deposit with us and relationship with us. So that way, to some extent, the growth in the time deposit 20% we have come. It is something is organic, something is actually driven by our own teams. So we thought relationship and retaining is important. And otherwise, some of other bank will take them out and all, and we will be missing that relationship. There is another reason also for reduction in the SAAR and the growth in the time deposits.
Also can I just tell you -- for our SAAR customers, specifically, we are coming with an array of products as in form of third-party products. For example, if we aggressively start marketing SIP, where we ensure that the SAAR balances are maintained in terms of [indiscernible] and SIP. So these are things which you're looking at and trying to ensure that the deepening happens. And from bulk SAAR point of view, where we are looking at government business and institutional business, where we are looking at getting SAAR benefits from autonomous consults like corporations and [indiscernible]. That's the broad plan for SAAR bulk as well as retail.
Yes. So my limited point is, sir, the institutional balances, they are supposed to be interest sensitive, right, rate sensitive. So how do you intend to change or attract those deposits when we are, let's say, not in the top quartile when it comes to offering the rates?
Our rates are relatively better. In fact, they're quite competitive, Jai, but -- Dolphy, you can respond on that, please.
Yes. So when I say bulk, I mean, there is a segment where we can actually operate at slightly higher rates. There it is not retail and still get a decent impact on our overall SAAR cost. So that's our plan. And so there are some slabs where at a very -- example, INR 100 crores [indiscernible] where we can get into our [indiscernible], and we will probably proceed in that direction.
And on the retail side, if you look at the smaller SAAR accounts, again, ranging from INR 10 crores to INR 25 crores, it's mostly institution, especially government institution. It is a relationship and it is [indiscernible] driven business, where the relationship is quite intense and engaged. And there, we intend to integrate these -- not departments, these autonomous consults on a solution base and offer solutions to make sure that the SAAR balances remained with us. So that's the plan.
Right. Okay. And sir, on your term deposits, right, so if you can briefly comment that how much proportion of the term deposits would have repriced? I hear you saying that next quarter also, cost of deposit is going to go up. But a rough calculation that at least what proportion of the term deposit would have repriced?
I have seen the numbers, Jai. On an average around INR 2,000 crores [indiscernible] repriced. So that is the usual run rate for the time deposits to reprice.
Sorry, INR 2,000 crores, you said?
Yes, yes, yes. A few months, INR 1,800 crores, a few months, INR 2,400 crores. That range, they are getting repriced. So this is the range our people have taken into account also. They've also seen earlier the repricing what all is happening. They are going into which bucket. Luckily, now we have reduced the rate of interest also. So that [indiscernible] there. With all these things, now to be frank enough last -- in the month of this April, when we did some sort of a homework how the prices move, so what all we thought is [ 30%, 35% ]. So we thought by July end, it will come, but it has come in June. So that way, what all we have planned more or less on track, this movement of the cost is going on. So with that only, we thought that it may go up by 20 basis points, that's what we thought.
Right. Okay. Sure. And lastly, sir, you have created a INR 25 crores routing provisions. Any thought process as to -- of course, the credit cycle has been very good. But if any thought process on -- is this some policy driven you want to achieve a certain percentage of standard assets in terms of floating? Or this is just could be one-off kind of a thing?
No. I [ do ] agree this is a policy-driven. Board has approved a policy also for this purpose. So we thought of going for this. Now, Jai, understand that when good times are there, we need to have some sort of a buffer for any bad times somewhere comes, which we cannot visualize. That is the reason we thought that let us do this.
Now if you look at it, on one side, RBI, they have released a [ repo rate ] for the expected credit loss [ PCL ] and now maybe 1 year or whatever it is, which they come up and all. So we do not know unknown unknowns are there, how it pans out at all, how much we may have to do it. All these things are not known. So that is the reason what we thought instead of having a sudden shock at a material time. So if we can start creating some sort of a buffer from this stage, at that time, we can utilize that by taking the approval from Reserve Bank of India which will not alter the equilibrium what we are continuing for the normal trend. So this is a basic intention.
Otherwise, also, if you can look at it, so this is not going to get wasted. It will be a part of the Tier-2 capital. So Tier-2 capital when it is going there, it is indirectly supporting us for our growth also.
Right. But sir, if I look at your SMA 1 plus 2, right, they're very benign, and it looks like they are the industry lowest. So when KVB has to shift from, let's say, Indian GAAP to [indiscernible] that impact should not be material, right? Because you have the SMA 1, 2 is -- actually, a few basis points only, right? It's less than [indiscernible]
Jai, your question is what you think is SMA 1 and I think the NPAs currently, and I may think the [ LG ] what all is there on account of PD, but only these things will play around. And finally, the ECL guidelines will come. Something else will come, we do not had this day. Once we have an absolute clarity, then absolutely we can -- we need not place it out. Until such time we have a clarity, we thought of doing this one. So we are reasonably assured of our position on a continuity in future. That's it.
Right. Understood. Sir, and last data keeping question, sir, what is the recovery from PWO account in this quarter?
INR 58 crores, we have got it. So last year, first quarter is not there. Now from first quarter onward, we started getting, INR 58 crores we have got it.
Last call, [ Mahesh ] was asking saying that whether we'll be able to get that much of amount what we have got for the last year. But more or less, we are working on the [indiscernible] last year, recovery what we have got under recovery.
Right. I mean, see your PCR is 93%, 94%, right, on including PWO?
Correct, correct.
So ideally that should help. Congratulations also on the reappointments.
Our next question comes from the line of [ Akshay Gupta ] with [ Investec Capital ].
Can you hear me?
Akshay, agree, but some sort of an echo is there. If something else you can do it, I think great, otherwise, you continue.
Yes. Sir, I have 2 questions regarding. So what's your NII growth guidance for FY '24, right? We've already given the guidance for [indiscernible] deposits? So what's your view on the NII growth?
You are talking about net interest income?
Yes, yes, for FY '24 guidance.
Agreed. FY '24, Akshay, we may not be able to give at this stage. You see, we are at 3.8-something like that we were running. So we -- 3.84%, currently for the quarter ending, if you look at it, so that way -- overall, ROA, we are planning for 1.5%. If suppose NII, some issue is there, we may be trying to make it up in the fee to assets or the cost or the credit cost, whichever way, the overall math what all is there, we will work on that. And we will be above 1.5%, that is our retention. So because we do not know how these cost of deposit pans out and the yield because yield, if you can see that, last year, our MCLR has changed. And after that, though we started doing this, after October, you'll get the benefit. And last MCLR changed was in February. So upto this February, we will be getting some sort of tickle, some sort of a growth in the fee income, interest income will be there.
So what I have told earlier for the fee income, what we are working, that also should help us even if there is some amount of shortfall here and there in the net interest income. So we may be able to make it up in the fee to income. That way, overall, we will try to balance it. But I can say that the ROA is a key factor where we are monitoring overall how to deliver. Then internal what all is here and there, some adjustments will be there, where we will be able to manage.
Okay. And so second question I have, like in the current quarter, why we have reset historical balance sheet?
Sorry? [ historical balance]
Yes, my question...
[indiscernible] the interest accrued but not due as per the RBI disclosure announced, we have reclassified it because they are in March, so according to this to 1 year, these adjustments will be there because the [indiscernible] figures also we have to realize it. So that's why this there's [indiscernible]
Our next question comes from the line of Rakesh Kumar with B&K Securities.
Yes. So very good set of numbers in this quarter. So quite a splendid performance. Sir, based on the -- like we had a quite good discussion on deposit side. But just to slightly understand, the key cost increase has been there in the system and for us also. So like any specific reason that TD cost upward driven on a calculated basis, and of course, of the average balances, that number has been slightly on a higher side. So how do you see it going ahead?
As we already mentioned, see the TD cost because of the special deposits which we had launched in February, March had a little impact. Now in fact, we've already taken steps to the surplus liquidity what we find in the system, we have reduced the special deposits rates by 20 basis points already in the -- for existing products. So we don't think the major -- similar lines it will go on for the next 2, 3 quarters.
Okay. So out of the total TD, like as per the ALM that we have, like what percentage would be like would be remaining to reprice. I joined late, actually, there was another call going on. So...
I had to clarify. In fact, we have seen our data. So on an average, if you look at it in the next quarter, around 25% or 23% of the TD will be maturing. I was telling at the time around INR 2,000 crores on an average. So it is ranging between INR 4,000 crore to INR 4,500 crores and subsequently third quarter onwards, it is coming to INR 2,000 crores. So that way around 23% will be repriced in the next quarter, September quarter. And after that, it will come down to around 12%, 13%.
Rakesh, one more point here, the [indiscernible] when the deposit rate was higher, there was a lot of pre-closures were there. So what we are noticing is that an almost it's all stopped now. So that is why we are indicating in the coming quarters, the increase will be slightly lower than whatever we have done in this quarter and the earlier quarter.
Okay. Got it, sir. And sir, credit in movement, like -- so because right now, there is no change taking place on the EBLR side, so whatever change that we have on the MCLR side. So how do we manage the increase in the credit because TD cost is rising. So how do you manage that? So what are the tools that we have in mind for that?
Yes, yes, there are 2 to 3 tools which we can think of. One is, as we said, because our MCLR is around 47%, though 10% it has moved, EBLR and this way. So that way up to February, we'll be able to get some benefit on account of the MCLR pricing.
And second thing, I also told you about few of the products which we are working on that. So where actually our yields will be relatively better.
And third thing the CASA vertical where we are working, that may overall reduce the cost of deposits. The TD may be there, the CASA [indiscernible] other side goes up, it may reduce.
And the fourth thing what we are saying is we are critically looking at our portfolio depending upon the rating of and other weaknesses, what all are there. Have we correctly priced it or not, it needs to be repriced, we are engaging with the borrower to modify and revise the pricing so that the use will improve.
All these what all I have said simultaneously, we are working on that to see that what best we can get out of the yields.
Rakesh, in addition to that, if we noticed our yield on investments, continuously for the past 6 or 7 quarters, it is increasing because when the yields are bottomed out, we went for a short data. Now we're converting everything into the long digital security. So that is also giving a support. We have given the guidance of 10 more basis points increase in the coming quarters on the yield.
Our next question comes from the line of [indiscernible] with [ Tunga Investment ].
Two questions I have. First, in terms of your attrition at clerical and about clerical, what is it approximately?
I think exact -- perfectly, I will not be able to tell you. But one thing I'll tell you, compared to last year, the last 6 months, 8 months that attrition has come down. The reasonably simple. Last year, a few of the public sector banks. So they offered a local posting where the nearer to the native place, something like that. That is the reason some sort of an attrition is there. But compared to that, the attrition levels have come down this year. I think the exact number, I may not be able to tell you, Mr. Lakshmi Narayan, now.
It is actually for a clerical normally, we don't -- there is no much attrition. Only in the officers level, it is a 5% to 7% is the average.
The second question is regarding the commercial advances. I believe you mentioned that everything is secured advances. Now within commercial, what is the split between the micro, small and medium because you have mentioned that 69% of your advances is less than INR 5 crores. So if you can just expand that a bit and say how much is the micro, how much is small and how much is medium? And I mean, what kind of stress level you are seeing, whether the stress is actually now it's [indiscernible] ? Because we hear that -- there is still some strength in that MSME space. So if you can just elaborate a little bit helpful.
Before that, Lakshmi Narayan, I have got the number of the attrition rate. From April to June, it is 1.22%.
Okay. Okay. Okay.
So Ramshankar, anything you can tell about the MSME? Otherwise, Lakshmi Narayan, in fact, we'll do one thing. Our CFO will engage with you and he'll provide you separately.
We have provided our SMA 1 and 2 30-plus data. So including all sectors, it is less than 1%. So we don't see any...
No, no. My question is slightly different, sir. It's about the micro enterprises, medium enterprises and small enterprises. Do you see stress in that thing? And how do you split -- because you gave a single number on commercial. They want to do a little bit granular. And is that -- do you find strength in the micro enterprises or smaller enterprises or for medium as well?
We'll keep in touch. Yes. Yes. So yes, please forward that.
Okay. Sir, just one another question. So do you see any risk of balance transfer in or transfer out? Do you see in your commercial book?
It will be there in every vertical. Okay. Retail as well as commercial, balance of will be there. Likewise, we also have many inward balance transfers are also there for us.
Are you seeing spike or...
No, no, no. Spike is not there, I tell you. This was peak during COVID and post COVID to some extent. At the time, few banks, what they were doing, they were either cutting the pricing what all is there or they were reducing the collateral drastically or they were revising the value of the collateral, what all is there, and they were taking -- giving a higher exposure. We didn't resort to all those things at the time. If anyone we're coming in all, if the risk reward, pricing is not there for us, we were leaving it.
Now the position has come under absolute control. If at all we are leaving the account, something like that and all, consciously instigated by us where the quality is not good, we are told. Otherwise, the earlier set of coaching, it has come down now and all absolutely, they are [indiscernible] in the market now.
One last question, sir, in terms of your advances growth in -- particularly in commercial retail, how much of your incremental advances are coming from existing borrowers and how much is coming from new borrowers? Is it like 2/3, 1/3? Or is it like half-half?
No, I'll tell you, ETB is concerned. Agreed, maybe around 60% is coming from NTB, I can say. The reason is you see if the capital expansion is not there and the utilizations are not there. And many times, even the textile what we have, the utilizations are coming down day by day. So that way, the working cap limits are coming down and the existing players are not using, the customers are not taking any fresh term loans also for the expansion. So that way, majority of the growth is coming, NTB is from the NTB only, and it is more or less 60% you can think of.
Our next question comes from the line of [indiscernible] with [indiscernible] Investments.
First of all, very congratulations for the good set of numbers. I just want to understand on our co-lending model, like if you can share some granular details, like what is the structure, what role we play and what role they play. It will be very helpful?
So [ Meeth ], actually, as far as the co-lending is concerned, currently, our bank has a relationship with 3 NBFCs. And number one is the Cholamandalam. For Cholamandalam, we do co-lending business for the construction equipment and commercial vehicles. So this arrangement is there for the past 2 years and working well.
And number two is there is another NBFC called Axio, where we are doing a BNPL program for the Amazon checkout finance. But also, we have been doing this business for the past 2.5 years and it's so far, our performance is well.
And third is to the IIFL, where we are doing for the gold loan -- gold loan business. We just started doing the last quarter. It is progressing well. In addition to that, another couple of NBFCs where we are creating the technical support and all. Probably in the next quarter, we will give some news about it.
So in this, they basically acquired the customer and give to us, and we just let them...
Yes. In this case, the co-lending model normally is 80-20 where 80% is bank's book and 20% is with NBFC. The end-to-end, what is done by the NBFC, starting with the sourcing, operations, collections, everything is done by them.
But Mr. [ Meeth ], we need to understand one point. They cannot pour something they [indiscernible] what are going on the road and all, they cannot push it to us. Both the partners initially itself will seek to [indiscernible], they'll finalize the criteria and parameters on which the borrower has to be sourced. If that borrower is meeting those standards, then only they can originate. Once it comes from their system, our system also does -- checks and balances looks at it. If it is meeting their criteria, then only it allows our system to enter into that one and to release our amount. If it is not fitting into those criteria, it'll be rejected straight at that particular point of time is not even [indiscernible], this is one point.
And second thing is, periodically, we'll be checking the portfolio, how it is running and all, that also we'll have a check and balance on that.
As there are no further questions from the participants, I now hand the conference over to Mr. B Ramesh Babu, MD and CEO, for closing comments.
So I once again thank each one of you for your patience and the interest you have in Karur Vysya Bank, and the questions what all you have are very informative. I once again thank and I seek the support of every one of you for taking the bank forward.
Thank you very much, once again, and good day to all of you. Thank you.
Thank you. On behalf of The Karur Vysya Bank, that concludes this conference. Thank you for joining us. You may now disconnect your lines.