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Yes Bank Ltd
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Ladies and gentlemen, good day, and welcome to the YES Bank's Q1 FY '24 Earnings Conference Call. On the management panel, we have with us today, Mr. Prashant Kumar, MD and CEO; Mr. Rajan Pental, Executive Director; Mr. Niranjan Banodkar, Chief Financial Officer; Mr. Ravi Thota, Country Head, Large Corporates; and Mr. Sunil Parnami, Head of Investor Relations. Mr. Prashant Kumar will give an overview of the results, which will be followed by a Q&A session. [Operator Instructions]I now hand the conference over to Mr. Prashant Kumar, MD and CEO from YES Bank. Thank you, and over to you, sir.
Very good morning, and thank you for joining so early for YES Bank quarter 1 earnings call. Starting first with the headline view, at an overall level, quarter 1 was a steady quarter, where we have continued to demonstrate good progress on our strategic objectives. While there was a continued momentum in balance sheet regularity, we also delivered strong growth in our fee income, while containing our operating and credit costs. Having said that, as we undertake the journey of transforming the Bank, few areas remain as work in progress, and we look forward to continue our work on those in the coming quarters.A key highlight during the quarter was the launch of our refreshed brand identity. With a strong foundation firmly in place, we felt that it was an opportune time to have this strategic move of reimagining the YES Bank brand.As part of the refreshed brand identity, a vibrant new logo has been launched, which carries forward the visual DNA of the Bank and we build on it. This has been accompanied with an integrated 360-degree bank campaign with the positioning Life Ko Banao Rich, which resonates with our deep commitment to empower our customers to focus on their most renewable account called Life, while allowing us to take care of their banking needs. The initial feedback of the campaign has been extremely positive, and we believe that this will not only instill enthusiasm and confidence among our stakeholders, but will also enhance the pace of customer acquisition.Now moving over to the numbers. As we had already uploaded our investor presentation on Saturday, I will cover select financial highlights for the quarter. Advances growth, adjusting for the ARC transaction was 10% Y-o-Y. That regular segment continued to grow at a faster pace with Retail Advances growing at 31.3%, SME by 24.1% and Mid Corporate Segment growing 28.9%, while corporate advances further contracted during the quarter, the non-fund-based outstanding balances have grown by 12% Y-o-Y and 4% quarter-on-quarter. We expect this good momentum to continue over the coming quarters.Deposit growth, excluding CDs was 16.2% Y-o-Y. The credit to deposit ratio also improved marginally to 91.3% from 92% in the last quarter. Even within deposits, the Retail segment sustained the growth momentum with 23% Y-o-Y growth.Net interest margin at 2.5% was up 10 basis points Y-o-Y. However, on a sequential basis, and as guided earlier, there was a compression largely due to deposit repricing. The strong momentum in non-interest income, which grew 54% Y-o-Y and 13.7% quarter-on-quarter, backed by strong traction in third-party sales and trade and remittance fees. The cost-to-income ratio was at 73.9% compared to 71.4% in quarter 4. Despite retailization, the cost to assets at 2.6% has remained largely flattish over the last 6 quarters. Net profit at INR 343 crores has grown by 10.3% Y-o-Y and 69.2% quarter-on-quarter. Bank reported an ROA of 0.4% as compared to 0.2% in quarter 4.Coming to asset quality. In quarter 1, the gross slippage was INR 1,430 crores against INR 1,072 crores in quarter 1 last year and INR 1,196 crores in quarter 4 last year. However, slippages, net of recoveries and upgrades were at INR 764 crores, which is similar to last quarter of INR 740 crores. Within large corporates, where slippages were majorly due to one large account.Overdue book between 31 days to 90 days is reduced by almost INR 1,000 crores quarter-on-quarter basis.Resolution momentum continues to be strong with total recoveries and upgrades of INR 1,201 crores.Overall, gross NPA ratio reduced to 2% from 2.2%. Net NPA and net carrying value of security receipts remains flat at 2.4%. And the lastly, the CET ratio, including the warrant application proceeds is at 13.6% against 13.3% in the quarter 4.Now before taking your questions, I would also like to spend some time on Bank's medium-term transformation and ROA improvement roadmap. We believe the focus of the Bank is now firmly aligned towards improving the profitability and accelerating the momentum over the coming few quarters. Towards this, we continue to work on: number one, to drive improvement in our NIMs and CASA ratio, to reduce the drag of legacy PSL requirement, to intensify cross-sell and product penetration into our fast-expanding customer base and continuing to maintain strict control over operating and credit costs. Some of this has already started to [ reflection ], for example, in quarter 1, the share of high-yielding product mix in retail advances improved from 31.5% to 32.5%.The current account balances have grown by 27% Y-o-Y, but declined 9.3% quarter-on-quarter. However, the average daily balance of current accounts for quarter 1 has grown by 20% Y-on-Y and 2% on quarter-on-quarter. While there has been a degrowth in service bank account on Y-o-Y basis, which is actually because of a decline in the higher value bucket. However, balances in the lower value bucket of INR 5 crore and below at account level has seen healthy Y-o-Y growth.The bank registered a strong [ 33% ] Y-o-Y growth in our rural advances. Our rural disbursement witnessed a strong growth of 34% over quarter 1 and 62% over quarter 4 of the last financial year.YTD, the Bank has bought PSL certificate amounting to INR 4,300 crores. For reducing RIDF debt, the Bank continues to actively engage with select BC partners for organic growth opportunities, while we simultaneously evaluate the target for potential acquisition as well.We continue to invest in our branch network and people. We have added 20 new branches and 1,000 new employees during the quarter 1. While we continue to invest in our physical distribution, in quarter 1, more than 90% of our saving account and 55% of our individual current account were opened digitally, showcasing our commitment to further improve our productivity and response time.All the above points demonstrate a strong momentum in the buildup of a good quality granular franchise.With this, I want to thank you, once again for taking the time out for joining this call and wish all of you and your families, a good health and prosperity.We can now open the floor for your questions. Thank you.
[Operator Instructions] We have the first question from the line of Avinash Kumar, an Individual Investor.
Good morning. Good morning, sir. I am Avinash. My first question is few months ago, as I have read somewhere that YES Bank is looking for a few micro finance -- acquiring micro finance, right, sir. So what is the timeline for that? And how that is from internal accrual or YES Bank will raise -- raise fund for this acquisition?
So Avinash, first, thank you so much for joining us. And related to this question, and I think we have given a guidance that we are looking for inorganic growth in the microfinance space. And fundamentally, this was for 2 purposes. One, we have a drag on our PSL almost 35 basis points. Second, we don't have any high yielding asset book, as of now. So I think we continue to evaluate some of the assets, which are available in the market. And we would be expecting like within this financial year, we should be in a position to close this acquisition.
Okay, sir. Okay, fine, sir. And second question, sir, is our ROA is 0.4%, right, this quarter and NIMs is slightly above from quarter-on-quarter -- I think quarter-on-quarter is declining and year-on-year is improvement by 8% [ Y-o-Y ]. So NIMs, if we look at other bank quarter-on-quarter -- year-on-year results, their NIMs are quite high, NII, sorry, NIMs -- not NIMs, NII. So when YES Bank NII year-on-year is improved, it is not understood -- NIMs is not -- NII is not improving that much comparing to other banks, large banks.
So Avinash, you would appreciate for us, this is a journey, and maybe this is not the right time for comparing with some of the large banks. But I think this is a journey, where we have already started moving on. And like what your first question in terms of MFI, I think they're in the drag because of the shortfall in the PSL, that is one part, and strategically, our corporate book has come down. But going forward, I think we would be able to have a better loan book, which would improve the net interest income for the Bank, and you must have seen like we are doing very well on the non-interest income.So I think with this -- some of those things and with the improvement in CASA ratio, solving the problem for the shortfall in the PSL and growing on the loan book, especially on the corporate side, we believe that in the coming time, both NIMs would also improve, and ROA would also improve.
We have the next question from the line of Sri Karthik Velamakanni from Investec.
Could you walk through the sequential capital movements in terms of how the CET1 has played out for you in this quarter?
Sure, Karthik. So I think one material update we wanted to also provide and that's actually part of the presentation is we've accreted about 35 basis points to 40 basis points on account of the warrant upfront money that we've received, which is about INR 948 crores, as a consequence, the CET1 has gone up. There has been a very marginal consumption of CT during the course of the quarter. So organic movement, marginal consumption, a few basis points, but largely accretion coming in on account of the warrant money, which is 25% of the total warrant consideration.
And including the residual inflows, what would be the CET1 Niranjan?
So if we were to add the residual 75% of the warrant money, we should be accreting another 110 basis points to CET1.
Got it. And the second question is with respect to the general -- the PSP market share that you carry on the UPI front. Any thoughts on how you're looking to monetize that as things are evolving? We are seeing some of them making progress on digital lending and with regulatory clarity also emerging, is there any thought process, as to how you can monetize that particular market share?
So Karthik, is on the monetization of this particular, say, area, it is more in terms of where after using the [ analysis ], they would be able to acquire the customers through this channel. So I think last say, 12 months to 15 months, a lot of work has happened on -- in this area. And I think we are in a much better position, as of now for getting the business leads out of this area. But I think this is a journey, it would take another say, 3 quarters, 4 quarters, where we would be able to have a significant advantage of this data from a customer acquisition.
Karthik, if I can also add, when we look at, let's say, the UPI for that matter, the entire API banking solutioning, even on a stand-alone basis, it is profitable because what happens is we don't just look at the fee that we charge or we get as a consequence of this transaction. As a consequence of the solutioning that we provide, we also end up getting current account float that remains quite sticky in our balances.So if I were to just look at our current account balances, more than 50% of our corporate car actually comes in from accounts, where we are providing these API banking solutioning, right? So the point is what we will look at monetizing is only will further propel or -- the profitability for this particular solutioning that we are providing. But on a stand-alone, I mean, there is already the NII that we are benefiting from through the free float.
I see. Got it. And the breakup of corporate between mid and large suggests that the large segment is down 30% Y-o-Y and 8% Q-o-Q, that would continue just to ensure your PSL compliance? Or is there a floor to which you would take that from a mix perspective?
So Karthik, this is 30% down and 8% down on quarter-on-quarter to be very frank is not in terms of strategy to take it down further. But definitely, there were some high-risk assets, where there have been the prepayment, and there have been some prepayments in other assets, which were not expected. But definitely, as a strategy, we would not like to take it down further. But depending on the -- our ability to make the pricing in the market, we would be definitely growing on [ fund base ]. But if the pricing would be a challenge, we would take exposure on the non-fund side. And you have seen like on the non-fund side, already there is a traction. So I think overall on the exposure on the corporate side, we would not like to bring it down further.
[Operator Instructions] The next question is from the line of Yuvraj Choudhary from Anand Rathi.
Sir, firstly, how much of our deposits has already been repriced?
So Yuvraj, in terms of, I would say, pendency for cost of deposits, I would say, we should have about another 20 basis points of cost of term deposits should come through. Just from a margin perspective, we will have about anywhere between 5 basis points to 10 basis points. But that doesn't mean the margins will necessarily only get weighed down by this because as we are progressing, while all of it we were not able to express in Q1. On the retail assets, we are also beginning to see the incremental disbursements happening in products that on the margin is better from a margin perspective -- NIMs perspective. So just to respond, we will have about 20 basis points of cost of term deposits pendency from a repricing standpoint.
Sure. Secondly, sir, how much would be our total exposure towards ECLGS?
[indiscernible].
One second. One second. We just provided that. So Yuvraj, we will come back specifically on this number.
[Operator Instructions] We have the next question from the line of [ Badrish Makani from Beam Consultancy ].
Good morning to all the management people. I would like to know about 2 things. What are the plan of increasing number of branches and number of employees for this financial year?And the second question is, what is going to be the budget for the advertisement for this financial year. Is there any big way the advertisement are going to come in the market or not?
So Badrish for branch expansion, we have a plan to open 150 branches during the current financial year. 20 branches have already been opened in the quarter 1, and we would be opening the remaining 130 branches in the next 3 quarters. We have already added 1,000 employees in the quarter 1. And we would be increasing another say, 500 by the end of March '24.Regarding the advertisement budget, what we have done for our brand refreshed, we have integrated our normal advertisement and the marketing with the brand refreshed campaign. So overall, there would be a 25% increase in our existing marketing budget. But definitely, brand refreshed is something, which is critical, and you must have seen like we have already started doing advertisement around our brand. But overall, there would be an increase of 25% in our marketing budget.
[Operator Instructions] The next question is from the line of [ Amit Kumar ], an Individual Investor. Mr. Kumar, I'm sorry, your audio is not clear sir. Mr. Kumar? As the current participant is not answering. [Operator Instructions]. We have the next question from the line of Debesh Agarwala from IDBI Capital.
Three questions from my end. What percentage of our restructured book are yet to come out of the moratorium?
[indiscernible] all the 3 questions. We will respond then.
Okay. No, no. Okay. I'm coming with all the 3 questions. So first is, what percentage of the restructured book are yet to come out of the moratorium? Second, what is the total slippage from the restructured book till now? And third is, what is the breakup of advances in terms of fixed rate and floating rate?
Repeat the third one, please?
What is the breakup of advance book in terms of fixed rated and floating rate in terms of MCLR repo link?
Okay. I can take the last question first. We have about 60% of our advances, which are floating in nature, about -- actually, the number -- the number is 57%. From the balance 43%, which is fixed, we have about 10%, which is actually short term in nature. So if you look at floating plus short term, we would be 2/3 and 1/3 is fixed rate book. That's on the -- on the entire fixed floating.I think the second question that you had was in terms of what has been the total slippages from the restructured book, so in fact, that number has been quite non-material or insignificant. In fact, we've seen a good performance of either upgrades or a continuing strong performance in our restructured book. So for example, even if I look at my current position of restructuring and let's say, DCCO related, we have about INR 1,500 crores. In fact, in almost all of the cases, we either have accounts, where there is a change in management or there are projects, which are almost near completion. So that portfolio is doing well.If you look at COVID restructured book out of the INR 2,400 crores that we have, I mean, I can very clearly say about INR 2,000 crores is where we see -- continue to see very strong improvement. There is, in fact, also been principal repayment that we've seen in those accounts as well. Very recently, there have been also rating upgrades, not internal, but also external rating upgrades that we've seen in that book. So we're quite, I would say, quite satisfied with the performance that we've seen out of our restructured book. And the balance, about INR 4,700 crores in our view is, will hold quite good in terms of performance in the [ real time ].
And Debesh to your first question, almost the entire book is out of the moratorium.
Okay. Sir, in terms of floating rated loans, can I get the breakup between MCLR and repo link -- what percentage of your book is linked to MCLR and repo?
So MCLR would be about 18%. We will have a repo at about 26%. The balance will be a mix of CDs and [indiscernible].
Sir, the entire MCLR loan book has been repriced or something is yet to be repriced?
See the pendency for repricing that will play out, which is typically sitting in the 6 months to 1 year time.
Okay. So it will be repriced over next 2 quarters or 3 quarters?
You can say 2 quarters.
[Operator Instructions] Ladies and gentlemen, we have some issue with the line of the management, kindly hold, while we try to reconnect the management. Thank you. [Technical Difficulty] Ladies and gentlemen, thank you for patiently holding, the management's line has been connected. We take the next question from the line of Mahrukh Adajania from Nuvama.
Sir, I -- my first question was where do you see margins bottom out? I mean, have margins bottomed out now because we have only 20 basis points more of term deposit cost correction or there'll be still some more correction in the quarters to come?
Good morning, Mahrukh. We don't see any further decline in the margins. I think they have been bottomed out.
Okay. And sir, any -- so how do we building recoveries from the ARC, right? So obviously, slippage -- in terms of recoveries, will that be smooth? Or will there be lumpy recoveries? How do we budget for that?
No, I think what we are looking at recoveries from the ARCs, there is always the issue of the timing, which is outside the control of anybody because there are so many resolutions, which happen through the legal process. But we are not looking for a, say, lumpy recovery. And in the past also after this transaction after December, I think, we are seeing a very consistent or persistent recoveries in the large accounts, as well as small accounts. So I think so far, there has been a very good traction, and we have a visibility that this momentum would continue. For the next 2 years, I think we are going to see very good results.
Got it. So basically, the net credit cost guidance would be how much?
No. So I think we continue to remain our earlier guidance of 40 basis points to 50 basis points of credit cost.
Okay.
Yes.
The next question is from the line of [ Dhanu Arora from Dhanu Roadlines ].
I just wanted to ask if YES Bank planning to distribute any dividends in near future to its shareholders?
No. I think, [ Dhanu ], if you see that we have already moved on this path of delivering on the profitability. But I think once we reach at a stage, okay, where we would be having a good return to our investors, definitely at that point of time, it would be considered for the dividend share.
The next question from the line of Chintan Shah from ICICI Securities.
Just one question on strategically from my answer, sir, considering our ROA of 0.4%, and also what would be our aspiration for FY '24 or FY '25? And so would it be sir, given that you have already mentioned that margins have bottomed out, so it would be largely driven from margins? Or is there also some scope for a reduction in OpEx, since we believe that credit cost is largely, where we are expecting and other interest income also has limited scope from [ year on ]? So your thoughts on the same, yes. Thanks.
So Chintan, like if you see for us the ROA of 1% in medium term would be a function of 3, 4 different things. One is definitely improving the CASA ratio. The second is also improving our loan growth and along with the improvement in the yield on the asset. The third part is definitely to solve the problem of the drag on our ROA because of a shortfall in the PSL, which is a very large one, almost 35 basis points, I think this is something, which we are working on. And the fourth is definitely our growth in the non-interest income and the recoveries and the resolutions from our [indiscernible].
Sure. Sure, sir. Got it. And sir, one more thing on our CET1 case, which has been pending. So is there any update on the same on the Tier 1 case, which is pending in the Supreme Court or any timelines for the same?
No. I think this is pending in the Supreme Court and the next date is 4th of August.
We have the next question from the line of Jai Mundhra from ICICI Securities.
A couple of questions only. One is sir, there seems to be some restatement of OpEx and other income in this quarter. What is that pertaining to?
So Jai, basically, what we did is we just reviewed the accounting for some of our interchange in digital banking products, and that has been basically -- so from -- we've removed it from the OpEx line, but we are talking about numbers, which are about INR 50 crores and INR 60 crores. I think the range is about INR 50 crores to INR 70 crores. That's the broad range we are talking about. And that we have actually netted from the income because these were basically OpEx, which was very incidental and part of the same transaction, where the revenue was coming from. So just from an accounting standpoint, we've actually netted that from the non-interest income.
Right.
But this is not -- it's not a material number. As I said, on a quarterly basis, we are looking at a range of anywhere between INR 40 crores to INR 70 crores that we adjusted in this quarter.
Okay. And Niranjan, on security receipts redemption, right, so do we also get AMC fee on managing such a large security receipts portfolio? Or we do not earn any management fee from this SR?
So Jai, pursuant to the sale, which we did in December, the entire management is now in the hands of the asset reconstruction company.
Right.
So in fact, as part of the structure, and this is quite common in the entire security receipts market that actually, we end up paying a certain management fee to the asset reconstruction company. So the Bank is now no longer part of the resolution of these assets. Of course, we are quite interested in knowing what's happening. But at the end of the day, it is for the asset reconstruction company to drive the resolutions. And whatever resolutions happen, we benefit through the redemption of security receipts.
Right. So this quarter, [ 442 ] have been redeemed, so the impact on our financial has been that security receipts, they will convert into cash, that is the -- that has been the broad implication model.
That's right. That's right. Jai. So any redemption results into receipt of cash?
Right. Okay. And in the last quarter, and I think in the opening remarks, I heard that we are -- something with [ effect to ] PSL that either they are coming down or we are doing something there. So I recall we had 8% of balance sheet in RIDF, as of last quarter. Has that changed materially? Or I had actually missed that comment on PSL?
No, Jai. So the RIDF of deposits to assets continues to be in the 8% to 9% range. In fact, in June, we did have some increase in those balances because there was a call that we received demand that came through in June quarter. So what Prashant was mentioning is clearly for us to be able to reduce that drag, there are 3 ways in which you can tackle it. One is from an immediate perspective, accelerate on 2 fronts, one is organic, organic creation of assets that satisfy the small and marginal farmer and the NCF and weaker section category, but there is a limitation that you will have from an organic attrition, right?The second is that you could buy PSLCs. So what Prashant was mentioning, is we have already -- in June quarter, purchased about INR 4,300 crores of worth of PSLCs to fulfill the PSL requirements in these specific categories.And the third is that we were -- we are also evaluating inorganic opportunities for us to be able to comply with this requirement. So it's a combination of the 3, which will ensure and that's really our priority focus is to ensure that from fiscal '24 onwards, we should not have incremental requirements of RIDF come to in subsequent years. Of course, there is a legacy deposit book, which is what we discussed 8% to 9%, which is sitting that will hopefully age and mature over time. But at least from an incremental perspective, our endeavor is that we don't add to this book or burden from hereon.
So Jai basically, whatever we do this year would result into the lower demand for the next year. So whatever we do on the PSL side would actually give us the benefit from the next financial year onwards.
Right. Understood, sir. And lastly, Niranjan, if you have the RWA number for our Bank in absolute [ rupees crore ], that would be the last question?
That number is INR 2.46 lakh crores.
We have the next question from the line of Rakesh Kumar from B&K Securities.
Yes. Sir, firstly, is a question on credit yield number, so there is some volatility in the number in this quarter on the downward side. So sir, could you help us understand what is the reason for the same?
So just from an advances yield, actually, what also happens is there are certain recoveries that we also get in our NPA stock through the interest line item. One of the -- and that is also what causes some amount of volatility. But at a core performance level, the yield on advances actually has been broadly flattish sequentially.
So I think it has kind of fallen by around 10 bps. So is that in the corporate book repricing or there is some struggle that we are facing on the loan pricing side, especially on corporate book is that the reason or there is other reason?
So no, let me -- let me respond in different ways. I think if you're comparing on a sequential basis, like I said, there is also a noise that comes from interest recoveries in the -- from the NPAs, which also result into certain noise. So for example, June quarter, we actually had hardly any NPA interest recovery, right? Whereas in March quarter, we did have, right, which has resulted into some compression in the yield on advances.However, I think the point that you mentioned was on pricing pressures, I think that gets reflected in our -- in the loan spread. So for example, if we were lending at a certain -- a certain rate, even despite, let's say, increase in the cost of deposits, are we able to, let's say, price some of those out. I think there, yes, we do see pricing pressures in actually various businesses and products. But to be honest, from our vantage point, what we are very conscious about is we are calibrating our growth in products, especially on the retail side, which gives us better margin because we've now built the experience and volumes in those respective product lines.So just to give you an example, if I were to look at the entire vehicle, as a segment, our incremental disbursement in, let's say, used cars is actually higher than new auto cars, right? And it's not that by virtue of that, we are venturing into higher risk category is just that it's a product, where we are able to get a better risk return profile.Similarly, when we look at, let's say, areas like home loan and affordable home loans are incremental disbursements and affordable are actually trending higher, right? So we are conscious of the segments that we need to operate. We are conscious of the business that we need to operate, so as to help us maintain our loan spread.There is one element that has in addition to -- because there was a question earlier also on net interest margins. In addition to deposit repricing, there has been certain -- because there's also seasoning that's playing out in our retail book as well. So some of the old retail loans are also -- as they're redeeming, the redemption is because some of these were originated in 2018, '19. So we've seen some -- some reduction in loan spreads, as a consequence of that as well. But I think broadly, in Q2, we do believe we should have the bottoming out of net interest margins, and that to marginally, we are not going to see the magnitude of margin compression that we saw between June and March. Sorry, a little bit long-winded answer, but I just thought I'll give you the full perspectives.
Yes. That's quite helpful. And sir, the LDR number is like there is a scope to improve that number. So what is the kind of credit growth that we are anticipating for this fiscal year?
Sorry, what number are you referring?
LDR. Loan deposit...
[Technical Difficulty] LDR.
LDR, loan deposit ratio.
Yes. So there is a scope to further improve this -- further increase it. So what is the credit growth that we are looking at for this fiscal year?
No, I think if you see a balance between the loan deposit ratio from the perspective of liquidity and the profitability, we believe that around 90% is the right way, okay? So we are looking for a credit growth between 15% to 20% and deposit growth of more than 20%.
I was looking at actually -- sorry, I was looking at credit to deposit and borrowing numbers, so that I have 68%. Yes. Okay. Got it.
No, it is...
Sorry, Rakesh can you please just, I think if you can go through the numbers again because we don't want a gap in understanding. What did you mean by 68?
No sir. No, I was saying credit -- credit as a denominator, deposit and borrowing. So that is the way I was looking at, which is 68% number as per our calculation?
Okay.
Credit as a proportion of deposit and borrowing. So that number was...
Understand.
....68%. So I was...
So -- so Rakesh, I think the more relevant metric from our vantage point is actually the CD ratio, which is just loans and deposits. As you see, we were at about -- slightly over 92% for March. That's marginally improved to about 91.6% for June. Our endeavor is, as we go through this financial year to get the LDR below 90%. That's really our endeavor.
The next question is from the line of Prabal from Ambit Capital.
Yes. Sir, my first question is on the retail slippages, that continues to be at 3% plus for us.
I'm sorry to interrupt, Mr. Prabal, your audio is not clear, sir. May we request to use your handset, please?
Is it better now?
Please continue.
Yes. Sir, my first question is on the retail slippages, so that continues to be 3% plus for us. So first, are these the normalized levels that we should expect going ahead? Or is there a scope for improvement here?
So I think we will be able to continue at a current level with some improvement coming in. So one is that we are also going in for some high-yield assets, and anyway, April has its impact with lesser number of days available. So more or less, we'll be able to maintain at the same levels.
Okay. And in addition to that, can you highlight your retail strategy, maybe in terms of distribution across various products, how much is done in-house, how much is via [ DFA ] or other channels? And what are the approval rates that we have typically across [ DFA ]?
Yes. So approval rates will actually vary from product to product, but just to reflect on the distribution, our approximately 23% of the business is coming from the branch network. And all put together, approximately 37% to 38% is coming from internal channels, including the phone banking and all relevant channels included. In our overall distribution strategy, we are largely focused on one on the internal business, which is moving very well. And with the increase in the database, and also the branch network now more equipped to handle multiple products is moving well, and we can actually move towards upwards of around 25%.On the other channels, other than internal are basically the dealers and the corporate [ DSS ], which is approximately around 60%, which is going in. We are -- we work on the partnership with the fintechs, but that is not to the extent of approving it online. It's more in terms of a synergetic relationship, which is hardly -- which is less than 5%, as of today.
Okay. Approval rate is less than [ 5% ] only.
Sorry.
You're saying approval rate is less than 5%.
So no, no, approval rate would actually vary from product to product, but let us say, the product, where you would be most interested to know around personal loans would be around 60% to 62%.
60% to 65%.
Yes.
So I just -- I just wanted to, sorry, I wanted to also call out for the retail slippages because you had a question on -- and Rajan did mention that we broadly see the trends. I think what I also wanted to call out is, if you look at slippages net of recoveries and upgrades, that number continues to be trending in the ballpark range of about 40 basis points on a non-annualized basis. So I think that, that trend will continue. So while there might have been some increase in the, let's say, slippage for June quarter for the reasons that Rajan alluded, but we also did see a good quantum of upgrades and resolution that played out -- and I'm not talking about write-offs here, just upgrades and recoveries, the core resolutions. Thank you.
And sir, last question would be, what is the desired level of provision coverage ratio that you would want to add?
Desired ratio of...
PCR.
Of provision coverage ratio [ connecting to that ] 48%-odd?
No. I think this is somewhere around 60% would be the desired level.
Okay. And after building this, you expect that we can continue to have credit cost of 40 basis points to 50 basis points?
No. I think the credit cost, when we are talking about 40 basis points to 50 basis points, I think that is taking into account the aging provision, as well as the recoveries and the resolution. So I think we would be in this range. Just to also clarify, when we talk about credit costs, this is non-tax provisions effectively to total assets.
Ladies and gentlemen, as there are no further questions from the participants, I would now like to hand the conference over to Mr. Prashant Kumar for closing comments. Over to you, sir.
Thank you, and thank you, everyone, for joining the call so early in the morning. But I think we would like to reassure all our stakeholders that transformation of the Bank on the desirable, say, direction has already started, and we are seeing the results in the quarter gone. And I think in the coming time, we would be seeing much better execution on our desired strategy. Thank you so much.
Thank you, sir. Thank you, members of the management. Ladies and gentlemen, on behalf of YES Bank, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.