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LIC Housing Finance Ltd
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Good morning, ladies and gentlemen. I'm Barthi, moderator for the conference call. Welcome to LIC Housing Finance Limited Q1 FY '22 Earnings Conference Call. [Operator Instructions] Please note, this conference is recorded. I would now like to hand the floor to Mr. Praveen Agarwal of Axis Capital Limited. Thank you, and over to you, sir.
Thank you, Bharti. Good morning, everyone, and welcome to this call. We have with us Mr. Y. Viswanatha Gowd, MD and CEO; and Mr. Sudipto Sil, CFO of LIC Housing Finance. I would request the management to share their initial remarks, post which we'll open the floor for Q&A. Over to you, Mr. Gowd.
Okay. Okay. So a very good morning to all of you. And thank you, Praveen. At the outset, I actually add the welcome to every one of you and invite for this post earnings investor call of LIC Housing Finance Limited. As you are aware, LICHFL declared Q1 FY '22 results yesterday. Before beginning, I wish you and your near and dear ones very good health and safety. Though the previous financial year closed on a note of improved economic activity, since April, however, the situation changed rapidly with the emergence of the second wave of the pandemic, with lockdown and restrictions being imposed across various parts of the country, plunging the economic recovery again into uncertainty and also affecting our own operations. Since June, there has been improvement in economic activities. However, the graph of recovery will continue to hinge on the pace of vaccination and containment or prevention of the future resurgence of the pandemic. The key highlights of the results for the quarter are as follows. Total revenue from operations, INR 4,857 crores against INR 5,004 crores for the corresponding quarter of the previous year, showing a decline of 3%. Outstanding loan portfolio stood at INR 2 lakhs 32,548 crores against INR 2 lakhs 9,817 crores as on 30th June 2020, reflecting growth of 11%, out of which individual loan portfolio -- Individual housing loan portfolio stood at INR 2 lakhs 16,947 crores against INR 1 lakh 95,176 crores, which is up by 11%. Individual Home Loan growth reported a growth of 13%, and now it comprises a little more than 78%, up from 76.6% a year ago. Total disbursements for the quarter were INR 8,652 crores. Out of that, disbursements in the Individual Home Loan was INR 7,650 crores as against INR 3,560 crores (sic) [ INR 3,034 crores ] in the last quarter, a growth of 152%. Disbursements in Project loans, that is Developer loans, were INR 237 crores. Net interest income for the quarter was INR 1,275 crores as against INR 1,200 crores, recording a growth of 4.5%. Net interest margin stood at 2.2% as against 2.32% for the Q1 FY '21. Profit before tax for the quarter stood at INR 192.93 crores as against INR 1,017.67 crores. Profit after tax for the quarter stood at INR 153.44 crores as against INR 817.48 crores during the same period in the previous year. Loan disbursements during the quarter remained positive, though they were impacted during April, May due to the resurgence of the second wave of COVID. Geographically, the growth remained evenly distributed across the various regions, Southeastern, Western, South and [indiscernible]. Our mobile platform HOMY got a very good pickup, accounting for more than INR 3,400 crores sanctioned during the quarter. On the portfolio front, the growth, the total portfolio recorded growth of 11% [ to ] INR 2 lakhs 32,548 crores. With increased focus on the home loan segment, the growth recorded in the home loan portfolio was 13%. In terms of asset quality, Stage 3 exposure at default as on 30 June 2021 stood at 5.93% as against 4.12% as on 31st of March 2021. Total provisions as on 30th June 2021 stood at INR 4,727.02 crores, reflecting a provisioning cover of 34%. The ECL provisions to the tune of INR 830 crores were done during the quarter towards the increase in the NPAs. Asset quality continues to be an area of high priority for us. There has been a sharp increase in the delinquencies mostly due to the economic activity being impacted in Q1 with lockdown and restriction in many states because of second wave of COVID-19. However, with the improvement in economic activities and our increased efforts on recovery, we are confident of controlling the same and believe that we should mark the peak. During the quarter under review, we have witnessed collections from accounts which were classified as NPA as of 31st March 2021. Though the amount may not be significant, it reflects some improvement in sentiments. Last week, a resolution had happened in account that was in NCLT, which resulted in recovery of more than INR 100 crores. OTR during the quarter stood at INR 2,350 crores. We have been very closely focusing on the collection efficiency, and it continues to be around 98% for the regular accounts in the 3 months of the quarter. On the funding side, we have witnessed a reduction in overall cost of funds by 5 basis points during Q1 FY '22 and year-on-year by 99 basis points. Incremental cost of funds has come down significantly and stood at 5.03% for the Q1 FY '22. Net interest margin for the quarter stood at 2.2% as against 2.32% over the same period previous year. Incremental spreads topped one of its high level and stood at 250 basis points during Q1 FY '21. The funding environment and liquidity conditions remain quite favorable for the company. The company is offering home loans now at 6.66% interest rates for a specific limited period. This is the lowest rate ever in the interest rate -- it's the lowest ever interest rate in our company. Project RED, that is Reimagining Excellence through Digital transformation in association with the BCG Group, has also been progressing quite rapidly. And some projects, especially CRM, video KYC, video PD have already been rolled out, which will take shape probably in this quarter and the next quarter to come. With this brief introduction, I would like to invite you for your queries. Thank you very much.
[Operator Instructions] First question comes from Mahrukh Adajania from Elara Capital.
Sir, can you give the breakdown of NPLs into core retail, LAP and developer? And if you can even break down developer into LRD and others.
I'll tell you this. These IHL loans, individual housing loans at the Stage 3, now actually only Stage 3 required for you, correct. So Stage 3 comes to around 2.6%.
Which was 1.9% in fourth quarter?
Which was around 1.9% in the fourth, yes, correct. You are correct.
Okay. Then, sir, the LAP?
Then the nonhousing commercial, if you see, that is hovering around 18%, 18.91%. Other thing is nonhousing individual, that is 10.99%. It's all in the retail segment. Total retail segment overall comes to 4.57%.
Sir, this nonindividual of 10.99, that is LAP, is it?
Yes, correct, correct, [indiscernible].
Got it. Got it, sir. Sir, could you explain the rise in employee expenses?
Rise in employee expenses actually will be normal only because once in 4 years there will be wage revision. So with respect to retrofit effect of 2017, it is given. So now we have paid arrears to a tune of nearly INR 130 crores. So that is arrear amounts were paid. That's why they are being booked in this quarter.
Mahrukh, to that extent, then INR 124 crores to INR 130 crores, that is a one-off, which has appeared only in Q1 of this year, which is towards the arrear payments of last 4 years, almost you can say, from August from 2017.
Got it. So going ahead, could we continue to expect run rate in employee expenses of, say, INR 600 crore odd or...
No, no, no. See, actually, the INR 600 crores -- actually, you have to look at it from the point of view that after you remove that INR 125-odd crores, the number comes to INR 1,992 crores. So that generally will be a run rate. So year-on-year increase, you can take around 15%.
Now the quarterly amount is around INR 80 crores when you are looking in last -- but last year, the INR 80 crores was there.
It will improve by 15%.
And you know what will happen, it will go up by another 15%. That is the average we have given. Forward-looking this much only the figure, 80 plus another 15%, that's all, within INR 100 crores, what happened now, whereas for the quarter. This one-off, the amount is only the arrears which are paid for the past dues. It is our track record to give the wage revision once in 4 years [indiscernible].
Got it. Got it, sir. Sir, in terms of capital, would you have any alternate plan of raising in case this don't go through?
See, actually, on this matter, we would not like to make any comment because as you know, that we are working on the -- whatever instructions the stock exchanges have given and we would not like to comment on this matter. If by chance anything comes, obviously, it will be...
Yes. We have compared everything in full. We are in touch with the stock exchanges as per their -- we are waiting for their, what you call, further instructions.
Correct.
Fair enough. And just one last question. The COVID provision is there. So of the total provision that you made in the quarter, which is INR 830 crores, of that, how much has gone towards restructuring? How much has gone towards COVID provision?
See, as far as the restructuring...
Is it all put in the ECL?
Everything is in the ECL, yes. Everything is in the ECL. And for restructuring under the OTR, you have to create a reserve, not a provision.
It is not used for any other purpose.
The reserve is basically an appropriation, but it is not a provision.
Right. But all part of ECL?
Everything is there. Whatever provision has happened in the quarter has been reflected in the ECL provisioning in the P&L.
Next question comes from Abhijit Tibrewal from Motilal Oswal.
So first, I mean, I think the restructured pool that you have reported of about, I think, 53.5 million during the quarter, I think, is higher than what we had guided for during the last earnings call. And the other thing is if you could just comment on what has kind of led to the sharp asset quality deterioration during the quarter.
Abhijit, first of all, let me tell you that this number that you're talking about is not only for the quarter. It is very clear in the earlier -- in the disclosure, it is very clearly mentioned that this is the cumulative. It's not during the quarter.
Okay. And out of this, about 43 million is your builder loans.
Yes, correct. That is correct.
That is correct. That is correct.
So sir, I mean, if I look at our GNPA, which I think you suggested is 18.9% sometime back, and if we overlay this INR 4,700 crores of restructuring in the builder loans, I think compared to an overall size of about INR 11,000 crores, INR 12,000 crores, I think doesn't that seem a little too high? In other words, I would say, good 45%, 50% of the book is under stress now.
Here, one thing I'd like to tell you. What happened, people have taken -- I agree with what you call this OTR and all. But some of the clients with whom we have been touch, they may even what we call preempt the option also. Even they avail now, when the situation improves, certainly, there will be -- once again, they can -- anytime they can close the restructuring. So they are looking into that. All of our -- even the developer loan book size is very, very small for us. And wherever OTR is taken is all what we call -- they are in a capable position. That way, they are totally in the slipping of the NPAs like the tender. So that way, I think there will be forward-looking. We are very sure that further downside in this thing is almost all ruled out. Everything is.
Okay. And sir, for the developer book, if you could give what was your Stage 2 number actually in absolute terms?
Developer book, if you see, Stage 2 as far as the project is concerned, 2,490.
This is just Stage 2 in the developer book?
That's all. That's all.
Right, sir. And just one last question that I had. You have had -- about the 5% Q-o-Q increase in your interest expenses while your incremental cost of borrowings have actually come down, so what has led to this increase? I mean can that be explained by, I mean, CPs coming off in your book and being replaced by some of the borrowings?
Abhijit, actually, the cost of fund on a year-on-year has also come down. Sequentially also it has come down, both on the incremental as well as on the cumulative. If you see, there has been reduction in the interest expense year-on-year also by almost, I think, 5% -- 5.7%. Interest expense in the June quarter was -- previous year was 3,764. As against that, it is 3,549. They are the published numbers.
Okay. Okay. All right. All right. I'm talking about the Q2 increase. So that number was...
So Q-on-Q, sometimes it not comparable because year-end sometimes, there could be a drop because of some change in the liabilities. But year-on-year, there has been a reduction. On a full year basis also, there will be reduction.
Fair point. So which -- what you're trying to suggest is there is no point looking at the Q-o-Q number?
Correct.
Next question comes from Aditya Jain from Citigroup.
Could you tell us the amount of ECLGS disbursement that has happened?
Can you please speak a louder, please?
The ECLGS disbursement outstanding.
ECGLS. ECGLS portfolio actually is now under 1 and 2.
[ INR 400 crores ].
Yes, I'll tell you also because what happened now, almost all -- the ECLGS total retail disbursement actually sanctioned amount is INR 65 crores in this quarter, Q1. And then disbursement took place around INR 8 crores.
So you want exactly the total figure of ECLGS disbursement during the quarter?
So outstanding ECLGS or disbursements, whichever, to date.
Disbursement is INR 140 crores in total.
During the quarter.
Retail, project put together.
Total disbursement, INR 140 crores.
Yes, INR 140 crores on ECLGS in the quarter 1 2022. Total amount has come to INR 140 crores, is disbursement, ECGLS, yes.
And in the impairment reserve, which you created for restructuring, you explained it passes through the P&L. The amount of the reserve is -- so at the end of the last quarter, I think you had talked about the INR 285 crores or so size of impairment. So where is it now?
So at this time, I'll tell that for the -- first of all, the impairment reserve is not a provision. It is an appropriation. So please do not mix it up with the provision. It's a different thing. Altogether, it's an appropriation out of the P&L. That is the amount of reserve on which you cannot service dividends. Right. And that impairment appropriation will be done in the second quarter. That is in the September quarter where balance sheets are actually required to be published. It does not have any impact on the P&L. It is an appropriation. Once again, I'm clarifying it is an appropriation. It is not a provision.
Understood. Sir, as of now, the way I should look at it is INR 285 crores is the amount outstanding in that impairment result that will be changed in the September quarter in the balance sheet?
Yes, yes, yes.
Got it. Okay. And then just lastly, Individual Home Loan, the increase in NPA, if you could qualitatively tell us which sort of customers as a geography or whichever way, if you were to dissect that, where has the increase in NPA come from?
No. Normally, sir, this quarter, what happened in April and May, there are not much of movements outside, as you are knowing. So geographically, if you are speaking especially in Tier 2, Tier 3 cities and all, what happened where our footprints are very high. Last year also, we got more than 50% of business from there. So there, what happened was some delinquencies were there. May not be the high ticket size. In the individual housing loan, even the small ticket size here and there, there were some slip. But mostly, they are in the default also now. So what happened now in the month of June, there is a good recovery in the line, the second or end of June. So we are very confident that going forward, I think in individual housing loan segment, there will be sustainable and very durable recovery henceforth is what I do feel.
Next question comes from Miti Gupta from India Infoline.
Sir, what has caused the impairment for the financial instruments to rise so much if you compare on the quarter-on-quarter basis?
Yes. Can you please repeat your question? You're not very much clearly audible.
Sir, what has caused the impairment on financial instruments to rise from 56.45 on quarter 1 last year from to 830.41 in this year?
That is ECL provisioning. No. There has been an increase in the NPL.
Nonperforming assets.
So what has been the movement from Stage 2 to Stage 3 in this quarter?
Stage 2 to Stage 3. Stage 3 now currently will stand at 5.93 overall.
So how much the threshold has been moved from Stage 2 to Stage 3?
See, Stage 2 to Stage 3, if you now look at overall, there has been some improvement on the Stage 1 also. Stage 2 to Stage 3, there has been a movement of about 1.5% to 2%.
Sorry, sir, how much?
1.5% to 2%. There has been marginal improvement in Stage 1.
Next question comes from Srinivas Rao from HDFC Mutual Fund.
This is Amit Ganatra. I just had a couple of questions. One was that -- so last quarter, the restructured book was INR 2,970 crores, and now it is INR 5,353 crores. Is it correct?
Total is INR 5,350 crores. This quarter is [ INR 5,350 crores ].
Correct, correct. So incrementally it was INR 2,300 crores.
Yes, INR 2,350 crores.
Now this INR 5,353 crores, if you were to see in what stage is it categorized right now, Stage 2 or Stage 3?
Stage 1.
No. They are in force and all. They have to be eligible and still restructuring. Then only they could be...
So this book is largely...
Stage 1, Stage 2 put together. It is not in Stage 3.
Okay. But between Stage 1 and Stage 2, where it could be sitting majorly?
Majority will be in Stage 1 only. That's what the -- even last quarter also, we had the same experience. What happened now, OTR 2 and 3 now started. Under OTR 1, which ended in the month -- by end of June. So both put together, Stage 1 and Stage 3, came to INR 5,350 crores.
And then is there more restructuring expected? Because restructuring is still going on, right?
Yes, it is going on. The OTR 2 now, we do not know how many people may opt for it and all, but still it is open up to the end of September. It has been enabled and all, depends on the people who opt for that and all themselves.
Right now, OTR 2 optees are very little. But generally, it picks up towards the end of the year, near about the closing date.
And amount size also will be less than INR 50 crores.
Right now, OTR 2 is about INR 50 crores only.
And is there any interest reversals that you had to take during the quarter? Because your -- I mean interest income is also down 1% Q-o-Q. So this is normal repricing of the book. Or this is -- has an impact of higher NPAs also?
No. It will be obviously interest income. To some extent, it will also be impacted by the NPA increase. But it is also due to the effect of a reduction in the yields on the portfolio.
But is the interest reversal a very large number or something like that, something that you can highlight?
No, no, no, it is not. It is not.
Actually, under IndAS, you are allowed to accrue interest...
The IndAS reversals are not generally...
Yes, it is not there.
Next question comes from Amit Premchandani from UTI Mutual Fund.
I had a question. The INR 5,000-odd crores restructuring, how much has been the provision created on that?
Sorry, can you please repeat yourself?
The INR 5,000-odd crores restructured amount, what is the provision created on that?
But then it was Tier 1 and Tier 2 only.
Actually, under the -- once again, I tell you, under the OTR regime, as per the RBI circular, now what we have to provide is a blanket 10% on the outstanding amount, right? So that is something we just complied with. Now what happens to the difference between the ECL provisioning and the provisioning under this IRAC norms. This is under the IRAC norms and under the RBI prescription. So it is not under the ECL computation. The balance gets moved into an appropriation out of the P&L, which is called the impairment reserve, the balance. But to answer your question, fully, it has been provided as per the RBI norm that is 10%.
So is it -- so INR 5,000-odd crores require INR 500 crore provision. Is it safe to assume you have used ECL 1 and 2 provisions and appropriated for the restructured assets rather than creating a fresh 10% provision to the P&L above the line?
Actually, what happens here, the treatment is different. So you have got -- the provisioning under the IndAS is a pool provision, right, on the entire assets or whether it's Stage 1, Stage 2 or Stage 3. Now under the RBI prescription, you have to also create 10% provisioning on the amount of restructured assets. So the INR 5,350 crores will lead to a INR 500 crores of provisioning requirement under the RBI IRAC norms. Okay. That is a separate treatment. This is a separate treatment. Ultimately, you have to report the numbers under ECL. This provisioning is also created, and the balance is reflected as an appropriation of reserve. Now if you look at as of March, the reserve was around INR 280 crores or something. So that reflects the difference in the provisioning, which is taken out of reserve.
So INR 280 crores has been taken out of the reserve for this...
I wouldn't say it is taken out of reserve, but is an appropriation on the P&L.
Yes. But this reserve is below the line after the...
Correct, correct, correct. This is a reserve, not a provision. It's a reserve, not a provision.
Okay. So that has not gone through the P&L. it is below the P&L.
Yes. To the extent of the difference, only to the extent of the difference between the RBI prescribed norms and this one. Otherwise, INR 4,700 crores is the provisioning which covers all the NPL accounts, including the ones which are under restructuring.
Right, sir. And the difference is INR 280 crores odd that you mentioned?
Yes.
Next question comes from Shashank Verma from Axis Mutual Fund.
Sir, I just wanted to take on one prior question. The ECLGS as on date, what is the outstanding number?
INR 400 crores.
Around INR 450 crores approximately.
Okay. One more thing. The top 10 developer accounts contribute how much on percentage?
Top 10?
Developer account would be how much on an absolute basis or as a percentage of our entire developer book today.
You're talking about top 10 developer accounts or top 10 NPA -- developers in the NPA segment?
No, no, sir, I'm talking about the standard accounts, top 10 standard account.
Yes, top 10 standard -- I mean top 10 in the portfolio, let us look at this way. Top 10 will be around, say, INR 2,000 crores.
Next question comes from Piran Engineer from CLSA.
I just have a couple of questions. Firstly, in the Individual segment, in the second phase of restructuring, we've done only INR 40 crores or so. Like why did we let it slip into NPL and not restructure them?
No, it is not allowing them to slip. The time is still there. They have to be eligible. There are certain eligibility criteria.
They have to satisfy that and all. They have to come under the rating required. And so you are asking...
Retail rating is not required, but there are certain eligibility criteria.
Correct, correct.
But those were just the ticket size based eligibility criteria, right?
They have to be a performing account, no.
No, no. So as of March, they would have been performing, okay? And then we have the option to restructure. But we didn't and then they slipped in this quarter. Are we using their slip in the month of April before the circular came out?
Exactly, exactly. That is what I'm saying. Basically, eligibility criteria of the accounting standard should have to be clarified. I mean it should have been achieved by the optees. That is number one. Number two is that not everybody is applying for OTR because many people are paying intermittently. It is not they're stuck in default completely. They are paying intermittently also.
Retail segment, around INR 1,550 crores. Numbers are accounted for, yes, on the OTR.
Okay. And sir, if you can just give us a broad picture. We've got almost INR 9,000 crores of loans under NPLs in the Individual segment. Now what percentage of the NPL would be customers who are paying but just that they are more than 90 days overdue? So they are paying but they're paying with a lag. And what percentage would be those who are not paying at all? If you can give some color on this, that would be really helpful because our collection efficiency always looks strong, but then quarter after quarter, our NPLs are rising even in the retail segment. And investors are just not able to understand how those 2 can coexist. So if you can give a sense of what percentage of your NPL book is paying, that would give a lot of clarity to investors. Would you happen to have that number offhand?
I'll just share some exact numbers. I'll try to share whatever numbers -- is the number. The regular up to date -- the regular collection efficiency on a month-on-month, which is -- that is on the regular accounts, that is more than 95%. That is around 98%, and that has consistently been there. In terms of total number of customers who have actually made some payments -- 1 minute.
No. I mean how many NPL customers are making payments?
Yes. NPL collection, people -- what happened in Tier 2, Tier 3 cities mostly April and May, their movement was restricted. But even over telephone, they will call and all, the NPA customers of nearly, what you call, 10% to 15% across the board have converted. That means they have regularized. That is happening. So in the month of June, especially in the second part of June, really, this has helped us a lot. So 15% we can take as it is a benchmark, it is happening now. Going forward, definitely, it will be more than even 30%, 35% going to come up now. That's what we are looking at.
No, no. Sir, you're not getting my question. These are accounts that have regularized, which means they have been upgraded back to standard. I'm asking -- there will be a lot of customers who are paying but they are still 90 days overdue. And therefore, they still remain as NPL and don't get regularized.
I got your query. I got your query. See, out of the customers who are NPLs on 31st of March, you want what has been the collections on those accounts, right?
Yes. That would be very helpful. Yes.
Approximately about 30% of the customers have been making some kind of payment number-wise. Some kind of payment, they have been making. But obviously, this is not, I mean, adequate enough to pull them out of...
Upgrade to the standard.
Got it. This gives a good clarity. Sir, my next question is out of the restructured book in corporate, which is almost INR 4,500-odd crores, how much of that is LRD? Or is it all builder loans?
Which one, out of which one?
OTR.
The restructured book in corporate, how much of that is lease rental discounting? Because there also we have 3%, 4% NPL if I recall correctly.
Also there is -- on the LRD also, there is a restructuring, which is there.
LRD, maybe around what you call...
LRD restructuring, yes. That is there. That is there. Out of -- for example, on the non-retail segment, non-retail total restructuring amount is, let's say, in Q2 -- Q4, it is -- it has been around, say, INR 1,700-odd crores and in Q1 around INR 2,000 crores. Some INR 700 crores, INR 800 crores restructuring requests have been received.
Over 2 quarters?
Yes.
Okay. Okay. And just at the risk of repetition, sir, if you could explain exactly now. Last quarter, our impairment reserve was INR 284 crores as of March 31. This INR 284 crores had been passed through the P&L of FY '21.
See, again, I'm telling you, again, it is not a provision. It is an appropriation. This is an appropriation on the P&L account. This is an appropriation. This is an appropriation.
Okay. My question is, what is that number as of June? And this is -- yes. As of June, what would it be?
As of June, it would have been around INR 350-odd crores.
Okay. And so then what happens to the...
Not a provision. Not a provision. Please don't mix it up. It's an appropriation.
Understood. So the difference between the INR 500 crores that we are required to make and the INR 350 crores that we have made, so the INR 150 crore difference is part of our ECL of INR 4,700 crores. Is that understanding correct?
Yes, that is right.
Next question comes from Subramanian Iyer from Morgan Stanley.
Sudipto, I just had a follow-up question on that. So when you say appropriation, so you mean that it's -- from an accounting perspective, it's part of the shareholders' equity? So I mean it's not like a...
Separate.
Yes. Yes. So it's still a part of Tier 1. It's not like a separate loan loss reserve on the balance sheet.
It cannot be used for servicing dividends.
Yes, it cannot be used for servicing dividends, yes. And just a question, sir. This quarter, you have INR 800 crores of provisions and your net change in the [ INR 250 crores ]. So this balance INR 250 crores, should I assume it as a write-off?
So I'm not getting your...
Somewhere there are some missing -- when you're talking -- once again, sir?
Yes. So this quarter, the provision through your P&L are about INR 800 crores. And the net increase in your total ECL, which is reported in your P&L and your [ PPD ] is about INR 550 crores. So the difference between the 2, that is of INR 250 crores. But ideally, your provisioning to the P&L should have added to a resale, right? So the difference between this 2, INR 250 crores, is that -- should I construe it as a write-off?
So this is not a write-off. It is not a write-off.
So I mean -- or is it sitting under some other heads?
Yes. This is not a write-off. There is no write-off in this quarter.
Okay. So under what head is that sitting then, that INR 250 crores, I mean, this quarter...
The INR 250 crores, you can get back when we will able to...
Which figure you are talking about? One is about the provision we made, INR 830 crores, okay? And then second figure of INR 250 crores, what you're telling, not INR 550 crores, from where it has come?
No, INR 550 crores. So I'm looking at the difference between the ECL, the total ECL that you have. So last quarter, it was...
There will be some errors. We'll reconnect later on. I think you are not able to connect the correct figures.
Next question comes from Rikin Shah from Credit Suisse.
My question is already answered.
Next question comes from Kunal Shah from ICICI Securities.
Yes. So the questions have been answered. There's a couple of them. So when we see in terms of the behavior of this restructuring pool, okay, which is maybe in terms of the provisioning that is added to the impairment allowance, suppose it's -- the restructuring fails and defaults, so when does it actually come and hit P&L? So maybe what is the nature of this restructuring? And maybe is it like a 1-year, 2-year moratorium? So just to understand the stress in this coming into P&L, what could be the time?
Again, Kunal, let me clarify, the provisioning is already done. It is only the difference between IGAAP the provisioning under the IRAC and the ECL provisioning, which is to be reflected to a reserve, which is to be created as an impairment reserve. So as I mentioned earlier...
Because before...
I'll tell you. I'll explain to you. What happens is that right now, the provisioning is made at the rate of 10% under the RBI circular. The moment it becomes an NPA, it will become 15%. So that will happen after the end of the restructuring period. Somewhere it is a 1-month moratorium. Somewhere it is a 1-year moratorium. Somewhere it is a 2-year moratorium. To answer your query, right now, the provisioning is made at the rate of 10% as per the Reserve Bank guidelines, but you know that generally in the required provisioning for an NPA account is 15%. So that balance 5%...
Here in terms of 10% made and 5%, just in terms of the nature of restructuring, is it 1 year, 2 years?
Depends, depends. Mostly, mostly what we have given is that we have not given principal and interest moratorium to a customer. Very rarely it has been given. In most of the 90% cases, we have given only principal moratorium. So the customer continues to service the interest. So that is one thing that we have tried to ensure so that there is some regularity in terms of the financial discipline. Now, I mean, coming to your point, what happens if at the end of the moratorium the customer is not able to service the principal or in the interim also he fails. So even in the interim, if he fails, then the moratorium covers it. Thereafter, after the close of the -- completion of the moratorium period, if the customer is not able to pay, he will be deemed to be an NPA from -- on that day. At that point in time, whatever is the provisioning requirement under the IRAC norms and also the ECL will be compared, and whichever is required -- whatever provisioning is required will be made.
The OTR now, whatever government says, that we are doing at 10% as well.
Yes.
Yes, yes. Got it. Yes. And overall GNPA in the developer book Stage 3 on the developer book is how much? Is it 19? Or it's a higher number?
Developer GNPA as per the Stage 3 account, we'll talk of the Stage 3, that is 24.4%.
That is 24.4%. So 18.9% is the individual nonhousing commercial?
Yes, correct, correct. That is nonhousing commercial.
Yes. That's individual nonhousing. So developer at 24.4%, which is round about INR 3,700, plus INR 4,300 crores of restructuring. And then you mentioned Stage 2 as well. So Stage 2 was how much, INR 2,400 crores in developer?
Our loan book size under the developer is very, very small, only INR 15,000 crores only, not very high.
Yes. No, that's true.
Okay. And finally, in terms of the restructuring on the retail side. So obviously, that's quite low and there will be in the pipeline. But any expectations in terms of what can we get through? Larger part of it is still developers, and we have window till September. So what is the kind of request we could get? And how much would -- to get restructured? Because in some of the players we had in retail restructuring also to be quite high because EMI component for housing loan is generally higher and people tend to restructure that. So any expectations in terms of how much can be retail restructuring?
I'll share with you whatever has been the restructuring quarter-wise under both OTR 1 and OTR 2 on the retail. So that will give some indication of what is coming up or what can be expected. So for example, in the fourth quarter, that is March ending quarter, that time there was no OTR 2. That time it was OTR 1. So under that OTR 1 in Q4, we have restructured INR 1,200 crores, approximately. INR 1,190 something. So INR 1,200 crores, you can roughly take. Whereas in the first quarter of this financial year, the number came down significantly. It came down to only INR 234 crores under OTR 1, and there were some around INR 45 crores or INR 40 crores under OTR 2. So that number has come down to INR 300 crores in Q1 of this year. Generally, what we have observe is that towards the end of the OTR window, the number of customers who come, that increases. Same thing happened in Q4 also. All through the initial months of OTR, there were hardly any applicants. Towards the close, the number of applicants increased significantly. So I think 1% is something we can take out on outside.
Yes. The most -- because what happened so far already we have restructured...
Already restructuring has happened. So it's very -- I mean at this point in time, to take a number also, it is not -- it will not be a correct guesstimate also.
And one more thing is that people who have already availed of this OTR, they are also interested to come out of that. They don't want to preempt that option. So there are also some -- we are seeing some green shoots there also. That is also an advantage for us.
And this is considering the fact that for the nonretail segment, there are also eligibility criteria regarding getting the RP4 rating from the rating agencies. That also -- in many cases, it is not, I mean, the objective to obtain that.
Sure. And lastly, in terms of growth, so sequential decline has been relatively higher. No doubt the base Q4 is higher. There is an impact of seasonality plus the disruption. But otherwise, housing has done relatively well in general because there was a momentum. So how should we look at the overall growth in the coming quarters? What we saw in H2 of FY '21, should we expect that in terms of our competitiveness? We will be somewhat similar and we will get back on to the growth and this is just a temporary kind of moderation which is there?
Yes, sure, sir. I'll tell you actually, as far as the growth is concerned, this Q1 really was a good one compared to earlier. Already, we have got more than 150% growth, and even activities are in full swing from June onwards. Then going forward now this Q2, we are expecting almost all the same turnaround of Q4 of last year. We're looking at that. So with that, what happened, there should be a good -- actually, even the current June, which have recently gone, one of the best in our -- of any quarter in recent past June month in terms of disbursement. So the next quarter and also even the 2, 3 also, we expect excellent business. Especially for Q2, we are aiming at repeating whatever we did in last year Q4. So that what happened, we can take a quantum jump with a great bounce back.
Next question comes from Nishant Shah from Macquarie.
This is Nishant. Question is in my individual capacity, not Macquarie. So just one question. Of all the home loans and the LAP loan NPLs that we have, I understand that the LTVs that you're standing at are very comfortable, right? Only question is of, say, either the individual loans or the LAP loans, what percentage of those NPLs would pertain to projects which are like still under construction? Like we would have valued the, say, flat at, say, INR 1 crore. But that is assuming that the property just completed, the project is stopped, then there is nothing -- no collateral really to sell. So what percentage of our like NPL cases would be such where the collateral probably is not currently in existence, it is stuck because the project is stuck or something like that? Because otherwise, would there really be a big worry in terms of write-offs or crystallized credit losses in the -- at least in the individual kind of portfolio? That's my question.
Yes. Nishant, the loan to value on the project -- entire project portfolio is around 38% or 39%. It's exact number is...
Sorry to interrupt, not on projects, on individuals, so what I mean -- yes.
Individual LTV 2, 3 different categories are there. I'm talking of, first of all, individual home loans. The LTV is around 44%. That is on the book, right? For the nonhousing individual, which is basically the LAP, there the LTV is around 33%. And in the nonhousing commercial, the LTV is 34%, I think, as far as the LTVs are concerned. Now for nonhousing individual and nonhousing commercial, there is no execution risk because these are normally readymade -- I mean readily available or income-earning properties. The question what you have raised is relevant only to the Individual Home Loan segment. And here in the Individual Home Loan segment, please understand that our disbursements will also be vis-a-vis stage of construction. When we are talking of an LTV, it is an LTV on the book. It means that if the construction is 60%, then my disbursement to the customer will also not exceed 60%.
Correct. That is the truth.
So the LTV will hold. It is not that -- I mean our exposure is more than the stage of construction. So if the stage of construction has not proceeded, then my disbursement would have also not proceeded. And whatever construction has happened, the example that you have taken that the value is considered at the time of selling, it is not so. The value is considered at the time and to the stage to which construction is proceeded.
And we have to value at every stage. Now as it is now, the total valuation and the book also is always between more than 1 to 1.5x, which will also be there like in project here also. So that is taken care of already, not a problem.
Understood. So just to get this side, so in a case where you say given a home loan where the LTV is, say, 50%, right, and the stage of construction has done about, say, 60-odd percent, the V, the value over there in this LTV ratio is not the final selling price. It is...
It is only the valuation that is done is only up to the stage of construction. That is stage of construction because my disbursements will depend upon the stage of construction and the valuation done at this particular stage.
Correct, correct.
Okay. No. So I'm just trying to -- okay. Fair enough. So just again, to just like understand this a little bit better. I put, say, a flat on the tenth floor, and the building is now completed only up to the fifth floor. In this case, how do you assign a value to the flat, which is not even in existence yet, in the case of a home loan?
There is -- any such apartments which are high-rise apartment, even if your property has not come, you have a claim on the undivided share of land.
Proportionate share of land will be there.
That is called undivided share of land. You have -- even as a customer, you can also stake a claim. Although my flat is on 15th floor and the construction is completed up to 5th floor, you still have a retail value in your investment. And in any case, the disbursement for that particular property will not have proceeded to that extent.
Correct, correct.
Understood. So in this case, when you disclose a value -- an LTV of 44%, in case of a home loan where the disbursement -- or sorry, where the project has not been completed, the value considered is the proportionate stake of land or whatever, it's not -- to the selling -- ultimate selling price.
Because the disbursement will also be done on that. But what happens if you have purchased the property on a 20-story apartment and your flat is on the 19th floor? It doesn't mean that you, as a customer, start making payment only when you reach 19 floors, you start making even at the fifth floor.
Got it. Perfect. So then in that case, the eventual crystallized losses from the home loan portfolio should be near 0, right, because an LTV of 44% is super comfortable. Then should we just share the provisioning as timing difference?
Yes. I will share some numbers. I will share some numbers which will give you some comfort. Write-off, that is ultimate loss in the 32 years cumulative. In the home loan segment, we have done less than INR 300 crores net. And the total amount of disbursement that we have done is more than INR 4 lakh crores. So that way, if you look at it, ultimate loan losses will be in single-digit basis points. But yes, there is a time which is required for recovery.
Okay. And when we do the recovery, the interest accumulated is also recovered, right? It's not just the principal amount?
Mostly, it is recovered. Somewhere it is required to be waived also. But overall, principal is not waived.
Yes. Additional interest and all will be taken care of. They have to be paid anyhow.
Some penal interest, et cetera, in certain cases, we have to take a practical call, looking at the IRR of the payout. Not be exact amount but the IRR.
Our own norms are there. We follow as per NHB.
We have to also look at the IRR.
Next question comes from [ Agnesh Chauhan ] from Reliance Nippon Life.
I wanted to understand that we have filed the appeal with the SAT on the capital raisings. What is the status of the -- status of that?
Please note it very clearly, we have not filed any appeals with the SAT. I repeat, we have not filed any appeal with the SAT.
We are only in touch with the exchanges for whatever...
We have also not received any instruction from SEBI. Only the stock exchanges have informed, and you can refer to the disclosures that we make on the stock exchange. I would feel that you should look at the disclosures that we have made to stock exchange. The stock exchange has asked us to withhold the results of the e-voting. And exactly that is what we have done.
We are waiting for the instruction further.
Further instruction is awaited. We have not filed any appeal with the SAT.
Okay, sir. But there are some media articles which we have...
No, no, no.
No. We cannot respond to media. But very clearly, I'm telling we have not filed any appeal with the SAT.
We are fully compliant with all the regulation and all. We're in touch with the concerned exchanges or who are corresponding with us. That much we can say.
Okay. So what is the exact concern from exchanges' side on that?
See, exchanges have actually asked us for certain queries.
In the disclosure, it is there also.
Disclosure, I would request you kindly go through. Disclosures, we have given very clear explanation, et cetera, has been placed with the stock exchange.
It is still available. They can look into that also. That helps you with more detail also.
Yes.
Next question comes from Vivek Ramakrishnan from DSP Mutual Fund.
My question is as follows. It comes from the earlier point that you made that you had only INR 300 crores of write-offs in the home loan portfolio. Could you -- would you also have an equal amount of how much have recovered -- how many -- what is the amount of property that they've sold and recovered money in the sense that at what point do you take a decision to sell the property and recover the money and -- because that always has a negative customer impact and so on. That's my only question, sir.
Normally, what we do when the people fail and all, there will be a lot of what we call a follow-up will be made to people once again regularize the account and all. In case it almost become default, NPAs and again pending for a long time, then people also try for all OTRs and all if not over. Then what happens on the surface of the proceeds? And after that, all -- we'll take physical position, conduct auction, all these things are done. Those are followed. That's all. That's the only normal procedure.
Sure, sir. Do you have any idea of quantum of sales of property that you have done to recover money? Is that INR 300 crores write-off? So you couldn't...
Even if it is the current year, so far like that. What do you want actually?
You could give like a 1-, 2-year history also. It would be very good, sir, because...
Because of the recent past, because of COVID and all, SARFAESI and all, we're not in the -- not in the -- actually on the expedited level. Or else, earlier and all, we used to have that one and then every year out of our NPAs, which have gone to NPAs, you could have seen at least some 50% certainly will be the achievement level as far as recoveries are concerned by selling the properties.
See, apart from selling properties also, just issuance of SARFAESI notice also in many cases evoke some action from the borrower.
Next question comes from Ankit Agrawal from Yellowstone Equity.
Sir, I just wanted clarity on the employee expenses, the arrears part. I understand it's about INR 125 crores and is onetime. But could you give some more qualitative or like what is it about?
That's the salary amount. You're asking wage arrears and all?
Yes, yes.
See, what happened in our company, we have got one policy, wage policy. We revised -- we don't revise salary every year here. Once in 4 years, we give escalation salary. So that was due from the year 2017 to 2021. It has been done now in the month of June. So the arrears are to be paid from 2017 onwards to 2021. That has come to INR 125 crores amount. That is the thing. So henceforth, what happened, only the regular salary will be paid. Compared to earlier quarters, there may be an increase of 15% overall as far as that is concerned for salaries. Every quarter, every month like that.
And sir, why don't we do a provision for this? Because on an accrual basis, given that we will do every 4 years, it's kind of given that there will be some expense on an accrual basis. Why do we take like a onetime hit? Why is this accounting policy?
What happened earlier, there is no -- what you call, what rate it will be approved or something and all, we have to go to Board for approval and all, so what rate and all was...
It is not quantifiable at that stage. But going forward, what we have decided is that next cycle, whenever it will be due, that is maybe in a couple of years from now, from that time onwards, every quarter, what small amount might be because if it comes every quarter, then the amount will be just maybe a few -- it will not even touch double-digit crores.
Yes, yes. Very small amount only.
Very small amount. Every quarter, it will be [indiscernible].
Some 10%, we can take and provide for. That's where we're looking.
Okay. Makes sense. And then just sorry to come again on the OTR question. You mentioned that it's mainly in Stage 1 and Stage 2. But on the other hand, whatever deficiency is there between the reserve and the provisioning amount, you said it's sitting in Stage 3 provisioning. So why is there a disconnect there?
No. Again, I'll tell you, again, kindly note it is 2 different accounting practices. One is under IndAS and the other one is as per IGAAP, right? The RBI provisioning, et cetera, has to be created as per the IGAAP, which is being done. Only the balance between IndAS and IGAAP has to be reflected through a creation of impairment reserve. So please do not confuse the creation of a reserve with an OTR. They are completely different things.
OTR also what happened, people, they should be eligible first of all to be -- to what you call avail OTR. Then unless they're eligible...
Please don't confuse the provisioning. Whatever required is being done appropriately and correctly under the 2 different guidelines. That is the RBI guidelines of 10%. That also has been done.
Okay. And on the collection efficiency, it's 98% for the month of June or for the whole quarter?
We have been tracking for each month. Now year to year also, you have to note that whatever collection happens for that particular month, we considered for the regular accounts only that much of collection because if you add the collections of previous months, then sometimes the number might even exceed 100. So only for the accounts which are due for that particular month, the issue is taken. Whatever is the NPA account for them, there is a different calculation, which will, any which ways, get reflected to the NPA numbers. And this number has been consistent. Even in the March quarter also, you've seen it was around 97%, 98%.
Yes. Now because of online collection, ENet payment, all these things helped us a lot.
Okay. And just one last question. So you mentioned there was a recovery in one account. Is that related to builder loan?
No, that is not a builder loan.
It was a loan given to one, I think, corporate. Corporate, LAP, LAP, LAP corporate.
But sir, there were some accounts that were pending with [ LCFD ] like 4 accounts or something regarding developer loans. What's the progress on that?
There also, there is some progress, but...
No, no. Because of pandemic and all, we can't say what actually. It will take some time.
Only when resolution happens, we will share that. Like we have shared this news also. This has happened in July. So it is obviously not factored in the June numbers. It will come in the July -- in the September numbers. But it is a progress. So that's why we thought that it will shared with the shareholders.
Next question comes from Abhishek Murarka from HSBC.
So I just wanted to reconcile the NPA numbers because there's some confusion. And I really appreciate if you can help me with the numbers here. So as you said, the retail mortgage book, which is the INR 1.8 lakh crores, 78%, that has a 3.6%...
Abhishek, in the interest of time, I'll read out the numbers. You can note it down.
Okay. Okay.
You can just note it down. This is as per the IndAS. So we'll not talk of -- this is Stage 3 that we are telling you. And the total assets are also on IndAS basis, right? So I'll just tell you the numbers. We'll request you to kindly note down quickly, right? Individual Home Loans, the Stage 3 is 2.6%. If you want numbers, the number is INR 4,727 crores. Then in nonhousing commercial, the Stage 3 is 18.9% and the amount -- in terms of amount, it's INR 2,707 crores.
INR 2,707 crores?
INR 2,707 crores. In nonhousing individual, which is mostly the LAP, et cetera, there, the Stage 3 is 10.99%. You can say 11%. And the amount is INR 2,253 crores.
INR 2,253 crores.
And the project, the NPA number is 24.4%, and the amount is INR 3,889 crores.
INR 3,889 crores. Okay. So if I add up all these...
INR 13,577 crores.
INR 13,577 crores. Got it. And the LAP portfolio is in the -- sorry, the LRD portfolio is in the LAP book, right? So it's in...
No. LRD and LAP is different. I mean you're contradicting yourself only. The LRD...
No, no. For the whole...
No, no. I've given you so many bifurcations. Part of the LRD is sitting in the project, and part of the LRD is sitting in the nonhousing commercial.
Okay. Okay. Okay. What is that bifurcation, can you give?
See, total, put together, the LRD book will be around INR 9,000 crores.
And how much is in nonhousing commercial?
Those details, I will share separately.
Next question comes from [ Raghav Soni ] from Brand Capital.
Yes, sir, I was just -- can you please highlight the PCR, provision coverage ratio? I think in news articles it was referring -- it was 32%. Can you just give an overview of that? How is it 32%? Reason is that we'll be in a better position to understand about the future...
I don't have [indiscernible] 34%.
If we stands at 34% as at the end of Q2 -- sorry, Q1, Q1.
As of end of Q1, it is 34%.
Next question comes from Saurabh Kumar from JPMorgan. Next question comes from Mr. Parameswaran S. from Jefferies.
Sir, just reconciling some numbers. So if you look at Slide 20, you've said that ECL provision in Stage 1 and 2, total is about INR 113 crore, INR 114 crores. Now on the restructuring side, I guess, on a 10% basis, you need INR 550 crores. So if the balance INR 420 crores or INR 430 million, is that the impairment reserve as the INR 280 crores...
Again, let me tell you. Again, I think you are getting confused. Please understand which is done for the OTR that is under the RBI IRAC norms. What you are talking about is the provisioning under ECL. They are completely different thing. ECL is on the...
You said the difference is routed through impairment. INR 110 crores is Stage 1 and Stage 2, the total you quote.
This is different. This is different.
Whereas the requirement is INR 550 crores.
No, it is not. The requirement is not under IndAS. The requirement is under RBI IRAC norms. The numbers published are under IndAS. It may or may not contain. They're completely different thing. The provision is not on a pool basis.
So I wanted to understand if INR 280 crores has moved up in this quarter. INR 280 crores impairment reserve that you were holding as of last quarter, has it moved up this quarter?
Yes, it has. It has.
So what is that number outstanding now?
Around 350 odd.
350 is the relevant number.
Correct, correct.
Ladies and gentlemen, that would be the last question for the day. Now I hand the floor to the management for closing comments.
I thank you, everyone, for very good interaction with every one of us. Looking forward now, the next quarter, we -- there will be great bounce back. And we are also very much -- very confident that the disbursements especially will be in a higher scale across. Then once again, I would again reassure all our stakeholders that we're fully committed to address all their concerns. And I also thank you for your continued support. Looking forward for a very good and also more than expected growth in this quarter across all the regions with a very good rate of interest, what we're having. And with the involvement of all our team members, we are looking for repetition of what we did in the last year Q4 in this Q2 now. Thank you once again.
Thank you, sir. Thank you, everyone. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now. Thank you, and have a pleasant evening.