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Yes Bank Ltd
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Ladies and gentlemen, good day, and welcome Yes Bank Limited's Q2 FY '22 Earnings Conference Call. This call is hosted by the Yes Bank management team, led by Mr. Prashant Kumar, MD and CEO; Mr. Niranjan Banodkar, Chief Financial Officer; Mr. Rajan Pental, Global Head, Branch and Retail Banking; Ms. Anita Pai, Chief Operating Officer. [Operator Instructions] This conference is being recorded.I now hand over the conference to Mr. Prashant Kumar. Thank you, and over to you, Mr. Kumar.
Yes, thanks. Very good evening, and thank you, everyone, for joining the Yes Bank earning call for quarter 2. The backdrop to this result has seen the normalization in the economic activity and significant pickup in the business momentum. This has further increased the momentum towards achieving the bank's strategic objective and FY '22 guidance, as mentioned in Slide 4 of our investor presentation. Some of the key takeaways, our CASA ratio of 29.4%, which is 200 basis points up since last quarter, and CASA growth rate at 2x of the overall deposit. C/D ratio at 97.8%. This is below 100% for the first time since December 2017. Loan growth at 6% quarter-on-quarter with retail MSME mix to corporate at 54%, 46%, and which has improved 100 basis points over the last quarter. Our momentum in recoveries and upgrades remain strong, recoveries to the extent of INR 987 crores and upgrades to the extent of INR 969 crores.ROA at 0.3%, and we remain on track to achieve 1% by FY '23. Our progress over the last 18 months has also been validated like CRISIL has upgraded the bank's infrastructure debt issuance by 1 notch to BBB+ and short-term rating to A1, which is just 1 notch short of the highest rating of A1+.CARE has also upgraded the outlook of the bank to positive. Additionally, the bank is among the 100 Best Emerging Market Performers as assessed by [ VE ], which is part of Moody's ESG, given the bank's focus on sustainable finance and development. The corporate net banking platform has won the bank has won the India Domestic Transaction Banking Initiative of the Year in the Asian Banking & Finance Wholesale Banking Awards 2021, in Singapore. As a testament to our customer engagement and outreach, the bank was ranked #4 on social media after SBI, ICICI and Axis as those who stand out in their use of social media to engage with customers by the Financial Brand, which is a leading digital publication monitoring 2,000 banks and credit unions on Facebook, Twitter, YouTube and Instagram. Let me now discuss the details of our quarter 2 results showcasing a strong resurgence in operating metrics, liabilities, advances, asset quality and fees. On the operating metrics, the bank has reported a net profit of INR 225 crores, which is 9% up quarter-on-quarter. The core operating profit is up 38% quarter-on-quarter and this is led by expanding NIM and continued traction in retail and transaction banking fees. The core fee income drivers have shown significant traction with highest ever retail banking fee at INR 444 crores and transactional banking fee rising 11% quarter-on-quarter. The operating expenses are up 5% quarter-on-quarter due to significant pickup in business volume with core JAWS at 8%. Provisions stands at INR 377 crores, which is lower by 17% quarter-on-quarter and which is aided by the bad debt recoveries and the lower slippage on quarter-on-quarter basis. NIM have also improved by 10 basis points to 2.2% on the back of lower cost of deposits. On the liability side, the total deposits stand at 1.76 -- 7 -- INR 600,000 crores, which is 8% higher quarter-on-quarter and 30% Y-o-Y. The granular growth of the deposit franchise continued with customer deposits rising by 34% Y-o-Y and 8% quarter-on-quarter to INR 172,000 crores. Our CASA ratio further improved to 29.4%, which is 200 basis points higher than last quarter, and CASA growth rate at 2x of the overall deposits. Savings balances have grown by 50% Y-o-Y and 14% quarter-on-quarter, while current account balances grew 60% Y-o-Y and 19% quarter-on-quarter. Average balances of current account as well as savings bank are also showing the similar trends.New customer acquisition rebounded strongly with 244,000 new CASA accounts opened in quarter 2. The growth in liabilities has also come and despite reduction in interest rate which is a reflection of improving stakeholder confidence in the bank and this further aided the credit rating upgrades. On the advances front, the retail advances stand at INR 54,821 crore mark, and the whole -- retail wholesale mix is at 54:46. New business formation continues with disbursement across retail, SME and wholesale. The disbursement in retail was INR 8,478 crores highest ever. On the SME, it was INR 4,576 crores and INR 3,736 crores on the wholesale banking side.I'm happy to also highlight that while our retail and medium enterprise loan book, have continued to grow over the last few quarters, this quarter we have also seen growth in our corporate and SME loan book, post several quarters of degrowth or the flattish trend. I think this augurs well for our growth aspiration as well as our guidance for FY '22 and beyond. There has been a significant improvement on the asset quality. We are seeing industry-level trends as the overall credit scenario is improving with companies deleveraging and seeing higher throughputs and cash flows. The industry upgrades have far outpaced downgrades during the quarter, even the bank's asset quality trends have significantly improved with lower delinquencies and a decline in the overdue book by INR 6,000 crores quarter-on-quarter. And these improvements have been seen across all segments, corporate, retail and SME. Particularly in the corporate segment, we have seen the slippage declining to INR 750 crores against INR 1,250 crores last quarter. We have also made a provision of INR 336 crores on a single telecom exposure, which is a standard advance. And on this exposure, we have aggregate coverage now of 10%. Retail slippage are higher as all COVID impacts have been escrowed during the quarter, and underlying trends indicate improving collection efficiency at 95%. We have summarized our asset quality metrics on Slide 6 of our presentation. The total gross standard restructured loans has increased to INR 6,184 crores against INR 4,976 crores last quarter. And this is largely on account of COVID 2 and MSME 2-related restructuring.The sustained momentum in recoveries and upgrades is also contributing towards the improvement in the asset quality parameters. The recovery during this quarter is INR 987 crores as compared to INR 602 crores last quarter. There had been upgrades of INR 969 crores against INR 1,723 crores of the last quarter.Overall, in the first 2 quarters, we have been able to recover and upgrade INR 3,351 crores against our annual target of INR 5,000 crores. So as of now, I think as we are very well in terms of exceeding our target -- annual target of INR 5,000 crores because our business is expanding, we are also hiring employees. And as of 30th September, there has been a net addition of 573 employees during the first half year. And some of the senior hirings like CIO and the Head of Large Corporate has also been made during this half year. With this, I want to once again thank you all for taking the time out for joining this call. And into this festive season, I wish all of you and your family good health and prosperity. Thank you. And we can now take the questions.
[Operator Instructions] The first question is from the line of Piyush Chawla, Individual Investor.
Am I audible?
Yes.
Sir, I have a question regarding the ARC that the bank is proposing to create. My question is that everyone says, including you in previous calls that the bad assets of the bank, they have a good security. Now when we transfer the bad assets to the ARC, how would the bank benefits from the upside in terms of, if we are having good security against those bad assets and those bad loans? How would the bank benefits from that? And my second question is that the employees of the bank were used to working in a particular manner. Like bank was taking a high risk and high reward doing a high risk, high reward business. So do you think that the employees have been able to transition from that state of mind to current state where they have to undertake a low margin, relatively low-margin business. So are there any attrition issues that the bank is facing. Sir, these are my 2 questions.
So I think on the first question, the valuation or the value at which the transaction would happen with the ARC is definitely a function of the security which you are having for each of the account, okay? So when the assets would be transferred to ARC? It would be at a fair market valuation. And since this would be the function of the security. So I think we are not going to have any negative effect out of it. That is one part. Second thing that bank would be free from the entire distressed asset portfolio. So today, bank is sitting with a GMP number of 15%, I think this does not go very well with the investors. The third part, that lot of management bandwidth is being spread in terms of recovery and the resolution. After transferred to ARC, that would be available for the business growth, which would be more critical for the bank. The fourth part that since we continue to be a investor or we would be part of the ARC, then any upside in the ARC would also be shared with the bank.
So any -- I mean, how much stake are we contemplating any idea on that?
So as per regulatory guidelines banks are not permitted to, say, invest more than 20%, right? But depending on the regulatory guidelines, we will be doing that. But I think that will be a huge positive in terms of, even this transaction would be capital accretive for the bank, okay. Yes because of like what you have mentioned in terms of the good securities which are available.Related to your second question in terms of whether the mindset of the employees in terms of taking those kind of exposure. So I think that there has been a huge change after the moratorium was lifted and after the reconstruction in the scheme of the bank, we have made a huge change in terms of the entire thought process in the bank, and the people are aligned in terms of understanding that we need to take a reasonable risk and nobody would be making any kind of a high-risk calls, okay, just to meet some of the short-term guidelines. So I think there has been a change, and this is being seen very, very clearly and our risk framework does not allow anybody to take those kind of cost.
Okay. Sir, any attrition due to that change of management thought?
No. So attrition is a normal function in any of the bank, okay. So I would not be saying that attrition would be attributed to this change in the thought process. But definitely, attrition definitely happens, okay. And there is some attrition, which is induced from the employee side, there is some attrition, which is induced from the bank side. But overall, there is an attrition as a normal process, and we continue to have. And if you feel like there is a net addition in terms of number of employees as on 30th September.
Okay, sir. Can I ask one more question if you allow?
Yes, please.
Sir, till last quarter, there was issue on the telecom exposure, and we chose not to create any provision. Now when the things are looking much more brighter and we are choosing to create a provision now that is creating a doubt in my mind as to what is happening. So if you can maybe give some clarity on that.
So basically, if you see the last quarter, we have decided not to make any provision on this because at that point of time, I agree with you in terms of there are lower issues. But issues were not crystallized, I think issues were crystallized more after like our declaration of quarterly results, and then there was a clear cut communication. And there was a doubt whether there is an understanding whether the entire, say, ecosystem would be supporting 3 players or it would be 2 players. So I think that kind of confusion and the problem is tackled subsequently. And then there was a clear cut communication that promoters are not going to put any equity, noted. Now after the Government of India package and after even the government, company responding to this, I would not be saying there is any uncertainty about this exposure. But since still we are waiting for the clarity to come from the company.
Okay. So maybe in the next quarter, we'll reverse it if situation [indiscernible].
Absolutely. Absolutely. But at this point of time, we thought like it would be best.
The next question is from the line of Kunal Shah from ICIC Securities.
Yes. Sir firstly, in terms of the retail slippages, sir, in fact, sir, that has been quite high, it's like 6.5% run rate, no doubt it's offset by upgrades as well plus some write-offs. But how should we see it, sir, stabilizing now that the collection efficiency is also back to 95-odd-percent level as we have highlighted for the retail pool. So should we actually see the retail slippages trending down going forward because I think that has led to the overall slippage run rate in this particular quarter?
So Kunal there is slippage on the retail side in the second quarter is almost similar to the slippage which happened in the quarter 1, okay. But if you see the overdue book, so 61 to 90 days overdue book on the retail side has come down from INR 790 crores to INR 361 crores and 31 plus, 31 to 60 days has come down from 1,700 to 670 days. So there has been a significant reduction in the overdue book and that basically gives us a confidence that next quarter, the slippage would be significantly lower than the slippage, which we have seen in the quarter 1 and 2.
Okay, sure. And secondly, in terms of the DHFL recovery, so it was fully provided. But was there any kind of a write-back or as was towards the unsecured, and there was not, so maybe an insecure, maybe debt holders have still received 42, 43-odd-percent. So was there any recovery in write-backs until this quarter?
So for us, this was an unsecured exposure. And the recovery, the cash recovery was very small.
Okay, sure. And thirdly, in terms of fintech, and I think the overall fee income, when we look at it, it's largely being led by the interchange and general banking also within the retail component. So in this interchange, okay, what is the kind of a -- I think it's coming in largely because of, say, the partnerships, the cards and all. So how should we see the traction going forward? And what are the developments on the fintech side? And how do we assure when we are tying up with most of the fintechs in terms of the asset quality of the pool, okay, that comes and sits on Yes Bank's balance sheet while shares of the customers of some of these fintech partners. So in terms of this listening, in terms of any risk on the credit card cost, which we see it are coming over a period, how should we ensure that it doesn't lead to any major disruption from this particularly fintech originated book?
So I think we need to, say, clarify this, that is for -- when we are talking about partnership with the fintech, it is not about origination of loan by fintech, which is sitting on our balance sheet. This is more in terms of -- if you see our digital, say, expertise, which is actually supporting the major, say, share on the fintech player. So if you see whether this is on the payment side or whether they would be participating in a Sandbox by Reserve of India. Everybody is powered through Yes Bank, okay. So most of the fee structure is more in terms of transaction. But I think once we are -- we have reached to that stage where the fintechs and other major players in the ecosystem, are dependent on the support provided by Yes Bank, not only we would be, say, enhancing these capabilities. But going forward, we would be using those data which is available with us in terms of lead acquisition for our business growth. So I think the fee income side growth on the retail would continue, and we are not looking for any, say, business acquisition coming from the fintech.
The next question is from the line of Mahrukh Adajania from Elara Securities.
Sir, firstly, just on restructuring, if you see the slide on Page 14, then there is MSME COVID and other COVID. And between September and June, the increment is around INR 1,200 crores, whereas if you see your statutory release, the OCR 2 is around INR 860 crores. So how do you explain the difference?
Look, Mahrukh, there is -- I think there are Q2 disclosures that we have to look at because there is -- there were different regulations of COVID 2.0, and there was also an MSME 2.0. So to that extent, the net increase that we are looking at in our restructured pool is through the MSME 2.0 and the and the COVID 2.0, which is less approximately you'll find about INR 1,100 crores to INR 1,200 crores.
Got it. And the other question is that, our credit costs are negative, so what was the write-back amount? What kind of accounts have been was there one of the lumpy accounts? Or how many accounts did you see the impact of in credit costs term?
So I think there has been large number of such accounts to these recoveries are sitting across segments and across accounts. So there is no single lumpy account on this.
Mahrukh, also just to clarify, I'm not sure if this has got your attention, but we've also now started reporting the recovery from return of accounts as part of the provisioning line item. So this is what goes into the RBI circular. So we also have that which is now addressing the credit cost line item.
Okay. So that also kind of accelerate, [ see as I rerun ] that. Got it. Got it. Okay. And so by that amount, the noninterest income would be over?
That's right. And we've actually -- to that extent, also made the bigger comparable. You're absolutely right.
Got it. Got it. And sir, there are few reportings about Q2 to be lumpy recoveries for Yes Bank. So that is all included in the INR 5,000 crore figure for the year, that is -- which is our target, right?
Can you please repeat, Mahrukh?
So there are press reports mentioning Yes Bank or Yes Bank's exposure to a few accounts, which are in the process of being recovered.
So Mahrukh, the issue is whether which newspaper you read and which newspaper I read. So if I can -- if we can be very specific that would be better.
Yes, I don't know sir, there was this [indiscernible] recovery and then Delhi Metro and then there were 1 or 2 other accounts. So what I'm trying to ask is whether all that is included in the INR 5,000 crore recovery plus upgrades figure that you are looking at?
So any news which is related to recovery of our asset, okay, would definitely come to us, okay. And basically, the traction which we are seeing like I was sharing that against a target of INR 5,000 crores. In the first 2 quarters itself, we have made a recovery and the upgradation to the extent of INR 3,300 crores. So I think we will be exceeding by a good margins on the INR 5,000 crores. And such kind of new items which you are seeing, I think that would be, icing on the cake.
The next question is from the line of Jai Mundhra from B&K Securities. [Operator Instructions]
Sir, first question on your balance sheet. I mean, the investment number that we have, so this quarter, it has gone from like INR 46,000 crores to INR 56,000 crores. And at the same time, even the cash on the balance sheet is also a bit higher or it still remains elevated. So if you can elaborate sir, I mean, what is driving this rush towards investment?
So Jai, the investments actually -- one is the excess liquidity that was being carried in our, let's say, cash is also kind of deployed through the SLR investment. So I think some part of that has got moved into the SLR as we've seen some yield pick up and we are finding good opportunities to deploy that from an SLR maintenance. And the second is I think we've also had some good opportunities in -- from a corporate engagement standpoint on the non-SLR book. So we've had -- we've also access to the TLTRO market. So that is also sitting part of the HTM book. So it's a combination of the [ 2 ] why you've seen the increase in the non-SLR book. And some part of it can also be explained because of the excess liquidity that we were carrying in our IV was also passed in U.S. treasuries at the quarter end. So it's a combination of all the 3.
Understood, sir. And just a conjunction to this, sir, do you also have, let's say, term repo here. Because RBI, the master rule that you had said there in you have changed other income and provisioning, that also says that you have to include the advances, you have to include the term repo in the advances. So -- but I don't see that you have made any changes there. So do we have any term repo or that is subject to interpretation?
Jai, that's not material at all.
Okay. Sure. Okay. And I'll have a few other questions. First, on the stressed telecom exposure. So what we have mentioned is that at least INR 360 crores is now the 10% on the blended entire exposure, including bond and loan. So if you have this thing ready, sir, I mean, how much is the bond and how much is the loan exposure. And I understand that the blended, we have 10% provisioning, but if you have a small bifurcation there.
No. So we have a bifurcation, Jai, but as a policy, we don't talk about the [ deal ] exposures. But on this exposure, we have a overall coverage of 10%.
Understood, sir. And secondly, sir, on your slippages, right? So INR 7.5 billion corporate slippages. It is, again, a slight divergence from other banks because I think you don't have a material exposure to the large infrastructure account, which is invested and which will be recognized across banks. So if you can help us understand what is driving this still driving this INR 750 crores in corporate slippages?
So this is on account of the 2, 3 and the hotel exposure, okay, which were impacted because of the COVID and it slipped during the current quarter. And also 1 exposure was part of a retail chain.
Okay. Okay. But sir, these -- I mean, you could have -- I mean, these hotels, they were eligible for this ECLGS 4.0 or 5.0 whatever. You -- I mean, were they not viable or I mean, how should one look at it?
I think there were issues beyond that, okay, in terms of some promoter dispute or something like this, okay. So we thought like it is not good to make those kind of, say, further lending to this.
Understood. Sir. And on recovery, sir, so I think you have mentioned that this INR 5,000 crores recovery, which you will have in the entire year. Sir, so the question is, sir, you will definitely have recovery. And -- but is there any reasonably large account, which can help you reverse the provision. Because even if you have, let's say, 20%, 25% recovery, which may not drive any provision write-back. So any sector or any -- your estimate as to this INR 5,000 crores or even more recovery will help you realize some provisioning write-back. That would be very helpful, sir, because the understanding that I have is most of the account where there was a write-back possible, since most of them was already been done. And now these are the cases which will only fetch liquidation value. So your comments here, sir.
I think Jai, you underestimate our total portfolio, okay. So I think we have very good opportunities to recover significant amount in our existing portfolios, and that is exactly what is happening.
The next question is from the line of Aakriti Kakkar from Goldman Sachs.
This is Rahul here. A couple of questions. First is, just looking at the RWA density, which has been improving for the last few quarters, and as far our calculation it's now at about 79%. But despite reporting a profit, why CET1 ratio down 10 basis points quarter-on-quarter, trying to reconcile that?
Yes. I mean the RWA growth rate is higher than the ROE, Rahul, [indiscernible]
Okay. Okay. It's about 2% quarter-on-quarter and that consumed like 10 basis points.
Yes, broadly. That's correct.
Okay. Got it. The other question is this one lumpy telecom account that you talked about, is it -- which SMA bucket it would be sitting in?
So this is not SMA. They are servicing [indiscernible] on time. It's the 0 DPD, okay. Only thing is that we still need to understand the clarity from the entity, okay? And that's why we have made a [ prudential towards this ].
Understood. Understood. And this, sir, INR 6,000 crore reduction in the overdue buckets that you've flagged, is this because of any 1 or 2 large accounts which I think Mahrukh or someone else talked about, or this is across the board?
Across the board.
Across the board.
Yes.
Got it. Sir, the other question is the provisioning over the last 2 quarters have kind of dropped quite a bit like 1% or thereabouts of the loan book. Is this like a new normal that you're expecting throughout this year, second half and even the subsequent years, of course, depending on the macro, et cetera. But is this like a new normal that we are looking at 1%.
I think we would see the further improvement over this situation.
Even in this year, sir, in the second half?
Yes. Yes. Yes.
Okay. And then just one more small thing, sir, this ARC that you talked about, 2 questions there. One is you said in one of the questions that banks can invest up to 20%. So would you be the minority partner in the ARC and the majority of the money will have to be brought in by the other partners? Is this how the structure is going to be?
So I think there are regulatory guidelines where banks are not permitted to invest more than 20% in ARC, okay, and we need to work within this. And I think with 20% it becomes minority.
Yes. And do you think at the current PCR of, let's say, close to about 60% on the global stress, we don't need to make any extra provision even if we were to transfer these loans to the -- to this ARC even today. If you were to do this transfer of bad loans today, would you need any further provisioning or 58%, 60% of the total stress is sufficient?
No, no, absolutely not. So I think if you see our recovery trajectory, I think the current provisions are more than the recovery progresses. So there will not be any need to make any additional provisions.
Got it. Got it. Sir, just one last question. You've been seeing some ratings upgrade. There is a sizable borrowings that are sitting on your balance sheet as well. When would you start reaping the benefits of these rating upgrades of your papers?
So I think the borrowing part, we also need to see there is, say, commitment towards it, okay. But I think it would be still some time away in terms of when the -- our ratings would be like equivalent to the ratings where you can command it's a good pricing, okay? So as of now, we don't see that kind of requirement. But I think still it would be some time away.
So you can't invest the call option and reprice these papers down on the rate side. That possibility does not exist.?
So Rahul, it's not that the borrowings for example, let's say, if you look at the split of borrowings, there are certain, let's say, foreign currency borrowings, which will be LIBOR linked. It's not in the spread materially went up when we went through, let's say, the last 18 months of period, right? So the spreads will remain as they are. Like we have fixed rate borrowings, if we would have borrowed 4 years back, they actually remain fixed. So I think what is going to materially change as we go along is, is really the -- I think the play is not so much on the borrowings to be honest. There will be some room of redemption and repricing. But I think the last part of it is in the way we will want to track our deposit rates lower. And that's really been our push to get the cost of funding lower and deposit rates have actually been more than 100 basis points lower, and there is some more room on that part. That's what we believe really where the rating upgrades will keep helping us like the recent one, especially in the short hand, which the is A2+ moving in A1. It really opens up more avenues from a deposit seeking. So I think that's really where our focus has been from a rating standpoint.
Sir, there's going to be gradual process in that case. I mean, we'll play out over the next few quarters, not immediately, yes.
From a rating linkage, yes, but just that if you're looking at it from a cost of funding standpoint, what we do have over the next couple of quarters is also that the loan actually in our book has been priced faster than the deposits. So the repricing of some of our deposits which we had accreted or acquired, let's say, in December and March of last year, some of the repricing. Because a large part of our rate cuts early actually began more in March '21, if you to kind of look through the trend. And therefore, there is room available for us to have those deposits repriced because if I just look at the incremental deposit rates today, there is a reasonable compression that we will see on cost of funding.
All right. Just one more last question, if I may squeeze in. You have a pretty sizable market share in the P2M on UPI rails. To what extent the current account deposits would be driven by that and how sticky would those be? Like what the duration of current account balances, if at all you get in sizable quantum stays with the bank?
So basically, quantum is that.
The quantum [ argument ]. So Rahul, the -- I mean, I don't think we have to look at just the P2M aspect and then look at, let's say, the float that we have had from a card perspective, right? I think there is a combination of fee revenues that we get from some of these relationships for providing the infrastructure and platform. But I think it's -- if I were to look at the current account or process, if I were to bifurcate and look at to what extent are we solutioning or providing solutions to our customers and then look at the card customers, almost like 2/3 of our current account effectively will be from such nature of customers, where we are providing some or the other solutioning either through API or through a payment interface. And I think that is what is really driving the card. Just from a stand-alone P2M, I mean, I don't have the specific number here. But really, I mean, it's not something that is our thinking or thought process is really bundling the solutioning not to only that particular partner, but the whole ecosystem is what is driving the - is driving the current account balances.
Got it. Actually, I was approaching it more from the fact that UPI balance have been growing at a fintech pace, 30%, 35% year-over-year on a monthly basis. So this becomes a larger pool, would you all have a sizable float crossings to the bank in the system and that kind of pulls down your cost of funds on a structural basis. That was how...
No. So, absolutely, if you see the current account growth, it's a 60% Y-o-Y growth, okay. So I think this is mainly because of these kind of relationships, and providing solutions to these customers while we are late. And we are also not seeing any significant impact on us after the implementation of RBI circular on the current account because of these kind of arrangements.
The next question is from the line of Manish Shukla from Citigroup.
For the last 2 quarters, we've had about INR 3,600 crores, INR 3,700 crores kind of a wholesale disbursement downgrade. Could you tell us the nature of this disbursement either in terms of rating profile or the industry where you're kind of disbursing this also in book now?
So these kind of disbursements are basically very granular. So we are not taking the project exposures or the long-term exposure from the term loan. It is more in terms of participation in the working capital limits on the trade finance. And today, we are very, very careful in terms of not taking a risky exposure, okay. So because we were not really large, say, corporate customer where these exposures are taken. But all other places, these ratings are quite good, okay, investment grade, but very granular exposure on the corporate. And this would be the strategy going forward also.
Yes. That is where I was coming from. So if it's granular in nature, you would expect similar or better run rates to continue?
Yes, absolutely. Absolutely.
Okay. Moving to liabilities and deposits. On a Y-o-Y basis, September '21 over September '20, roughly INR 10,000 crores of addition we saw. How much of that is retail, sir? How much of that will be institution, sir?
Savings account about 80% to 85% would be the retail side.
But current account mostly it is coming from institution.
Yes. Current account will be institutional but saving accounts if that was a specific question...
Yes, savings accounts, yes.
85% will be -- in fact, I would -- sorry, I don't have the number right now, but in fact, between 85% and 90%. Sorry for that.
Yes, that's -- no, no, that's good enough. That's good enough. The other thing is retail TD, just to be sure, retail TD is INR 2 crore ticket size definition or it's the individual definition?
Basically, it's on a ticket size of INR 1 crores that we are looking at.
So it's INR 1 crores ticket size?
That's correct. That's INR 1 crore.
Okay. Okay, right. And really, the last question, the trajectory, let's say, I mean 1.5 year plus kind of trajectory that you have grown on ROA, from where we are on 30 basis points to 1% plus. What would be the biggest driver of that journey because credit costs have already come off quite meaningfully for you. So in terms of revenue from 30 basis points to 1% plus, where do you see that coming from?
So there will be 3 things. One would be loan growth across the different segments, and the second would be the fee income, and the third part is in terms of recoveries, okay. And all these things we are continuously doing while having a adequate control on the cost side.
Manish, if I can -- Manish, I also add to this point. If you look at our margins, we are sitting at about 2.2% today. And in fact, on the earlier question, I also alluded to the fact that there is a potential of the deposit repricing that is yet to play out, right? So if I just want to look at the stock of our balance sheet, I mean, we would actually be operating not at 2.2%, but upwards of 2.5% from a NIM standpoint. And just to give you a sense that when I look at the exit NIM for September, it's actually higher than 2.2%. So the progression of margins is actually very strong. The second is, again, improving CASA ratio. So we are at 29% that we continue to add to my cost -- lowering cost of funding. And the third, again, something that I alluded in my earlier response, is our continued journey to also keep compressing the spread that we offer on our deposit rates, right. I think we started this journey with almost like 200 basis points of our competition. It's below 100 basis points now, and I think that progression will continue. So I think the biggest driver, if I were to just summarize for our or let's say, on a [ 2 point cases ] is actually NIM, which will be a function of cost of funding reduction, not so much the inner advances, right? On the yield on advances, to the point that Prashant sir was also mentioning earlier, as we keep accelerating our recoveries you will find that the drag that we carry on our balance sheet will also keep compressing, right? So the moment I look at my net interest margin, excluding the NPAs, that itself also adds to the basket. So there is enough and more play on the net interest margin. On the fees, clearly, I think we are at 1% fees to asset but there is more that we can do, and that trajectory has been improving. And operating costs are -- we are operating at about 2.3% cost to assets. And there is -- for us, I think there is a good room for us to actually trend is a bit lower, closer towards 2%. So I think these are at least the core level, the driver for our core operating profits. And of course, as our recoveries keep giving us provisioning write-backs, that means that the prognosis on provisioning is also quite benign.
[Operator Instructions] Ladies and gentlemen, that was the last question today. I would now like to hand the conference over to Mr. Kumar for closing comments. Over to you, sir.
So thank you so much for joining this call. And in conclusion, I would like to you recap the key trends. Loan growth momentum has picked up, liability structure as well as quality continue to grew on quarter-to-quarter basis. The core earnings trajectory remains strong with various levers available for NIM expansion as well as higher fee income on back of increased growth trajectory. Incremental asset quality stress is trending lower, and we expect recoveries and the provisions write-back to meaningfully offset the credit costs. And at the end, there is a adequate capital in terms of CET at 11.5% and the overall capital ratio of 17.6%. So once again, I wish all of you and your family good health and the prosperity and best wishes for the festive season. Thank you.
Thank you. On behalf of Yes Bank, that this concludes today's conference. Thank you for joining. You may now disconnect your lines.