Aditya Birla Capital Ltd

NSE:ABCAPITAL

Q4-2025 Earnings Call

[Operator]

Ladies and gentlemen, good day, and welcome to the Q4 FY '25 Earnings Conference Call of Aditya Birla Capital Limited. [Operator Instructions] Please note that this call is being recorded.

I now hand the conference over to Ms. Vishakha Mulye, MD and CEO, Aditya Birla Capital. Thank you, and over to you.

[Vishakha Mulye, executive]

Good evening, everyone, and welcome to the earnings call of Aditya Birla Capital for Q4 of FY 2025.

Joining me today are senior members of my team, Bala, Rakesh, Pankaj, Kamlesh, Mayank, Pinky, Vijay, Ramesh and D. I will cover our strategy, financial and business performance, and Vijay will cover key financial and business highlights, followed by a discussion on performance of our key businesses by our business CEOs. The economic environment remains volatile due to recent tariff measures and geopolitical tensions in the region, which pose uncertainty for growth. During this turbulence, bond yields have softened and crude oil prices have fallen. CPI inflation has cooled significantly and RBI has reduced repo rate by 50 basis points, along with a change in the stance from neutral to accommodative and has also taken various measures to improve system liquidity and stimulate growth.

At Aditya Birla Capital, we continue to focus on driving quality and profitable growth by leveraging data, digital and technology. We follow a customer-centric approach to build deep understanding of the needs of our customers and provide them simple and holistic financial solutions in a seamless way. Prudent risk management practices form the bedrock of our approach, which has enabled us to protect capital and deliver risk-calibrated and sustainable returns across our businesses. We also continue to strengthen our omnichannel-based distribution network.

Before we talk about financial performance, I'm pleased to announce that we have successfully completed the amalgamation of Aditya Birla Finance with Aditya Birla Capital following all requisite approval. The appointed date for amalgamation is April 1, 2024, and effective date is April 1, 2025. Aditya Birla Capital now has 2 business segments: first, the NBFC lending business; and second, the investment business through which it will continue to hold investment in all its subsidiaries and associate businesses. This marks a significant step in our transformative growth journey, increasing our strength and agility as a unified larger operating entity. With a simplified corporate structure, we now have a better access to capital to drive operational synergies, long-term growth and enhanced value creation for all our stakeholders.

Coming to the financial and business performance. One, growth and profitability. During Q4 of FY '25, the consolidated profit after tax, excluding one-off items, grew by 24% sequentially and 6% year-on-year to INR 865 crores, and the total consolidated revenue grew by 29% sequentially and 13% year-on-year to INR 4,138 crores. For FY '25, the consolidated profit after tax, excluding one-off items, grew by 8% year-on-year to INR 3,142 crores and consolidated revenue grew by 20% to INR 47,369 crores. In our NBFC business, the disbursement increased by 28% sequentially to INR 19,523 crores in Q4 of FY '25. The NBFC portfolio grew by 20% year-on-year and 6% sequentially to about INR 1.26 trillion. The secured business loans to SMEs grew by 28% year-on-year and 7% sequentially. The corporate and mid-market portfolio grew by 27% year-on-year and 6% sequentially. The unsecured business loans to SME grew by 10% year-on-year and 8% sequentially.

We have highlighted in our previous quarter's earnings call that given the early warning signals and challenges in the operating and macro environment, we had calibrated our sourcing from certain digital partners and reduced our exposure to smaller ticket size personal, consumer and unsecured MSME loans. This approach has held us in good stead. Our portfolio quality continues to remain robust with credit costs improving by 22 basis points year-on-year and 15 basis points sequentially to 1.21% in Q4 of FY '25. Gross stage 2 and 3 loans declined by 71 basis points year-on-year and 47 basis points sequentially to 3.78% as of March end. Our gross stage 3 PCR was 45% at a similar level compared to the previous quarter.

We now believe that the operating environment has stabilized. In the personal loans and unsecured MSME segment, we are focusing on strengthening our internal sourcing channels and acquiring customers through our branches, ABCD app and ABG ecosystem. Our ABCD app continues to scale up well and contribute about 5% of the personal loans disbursement in March. We have seen the disbursement in the personal and consumer segment grew by 4% sequentially to more than INR 3,000 crores in Q4 of FY '25. Further, we are also looking at collaborating with few marquee digital platforms. In these arrangements, while the sourcing will be done by the partners, the underwriting fulfillment and collections lie with us. We have also strengthened our retail and SME products, underwriting, sales and distribution teams. We believe that these actions will help us to grow our personal and unsecured SME loans and gradually increase the mix going forward.

The profit after tax of NBFC segment grew by 11% year-on-year and 9% sequentially to INR 652 crores in Q4 FY '25. The ROA of the NBFC segment increased by 15 basis points sequentially to 2.25% in the current quarter. For FY '25, ROA of the NBFC business was 2.27%. Going forward, we remain confident of growing the overall portfolio by CAGR of 25% over the next 3 years. Further, we expect the ROE to expand gradually, mainly driven by expansions in margin, improvement in productivity and change in the product mix.

Coming to our HFC business, we have created a full stack franchise focused on both prime and affordable segments. In Q4 FY '25, we continue to deliver on the strong growth momentum and gained market share as seen in the previous quarter. I'm delighted to share that we have crossed the monthly disbursement rate of INR 2,200 crores in March. This has resulted in our HFC AUM growing by 69% year-on-year to more than INR 31,000 crores. The credit quality in HFC portfolio is among the best-in-class with stage 3 loans declining by 33 basis points sequentially to 0.66%. We have made significant investments in distribution, data, digital and emerging technologies to sustain the growth momentum in the future. The ROA of HFC business was 1.46% and the ROE was 11.3% in FY '25. Going forward, we expect the current growth momentum to continue and gain market share. As the portfolio scales up further, we expect the operating leverage to kick in and ROA to improve significantly. Our aim is to achieve an ROA of 2% to 2.2% in the next 8 to 10 quarters.

Moving on to asset management business. Our mutual fund average AUM grew by 15% year-on-year to about INR 3.81 trillion in Q4 of FY '25. We have seen a positive momentum in sales driven by improved investment performance and strong engagement of our sales teams. This has resulted in our market share improving by 6 basis points sequentially to 5.66% in the current quarter. We added about 27 lakh portfolios during the year, and our total investor portfolios crossed INR 1 crore as of March end. Our monthly SIP flows grew by 5% year-on-year in March to INR 1,316 crores, and we added more than 5.4 lakh SIP accounts in the current quarter. The profit after tax grew by 19% year-on-year to INR 931 crores in FY '25.

Moving on to our insurance businesses. The growth in the life insurance business continues to remain strong. We are the fastest-growing player with an individual first-year premium growth of 34% year-on-year in FY '25. Growth was strong across banca and proprietary channels. We continue to be in the top quartile in the industry in terms of 13 at 61st month persistency. Post applicability of new surrender guidelines from October, we have taken steps to realign our commission structure, made changes in product pricing and increased rider attachments to mitigate the impact of the new surrender guidelines. We are happy to share that these changes, along with the high quality of business have helped us to achieve a healthy VNB margin of 18% in FY '25. In absolute terms, VNB grew by 17% year-on-year to INR 818 crores in FY '25. Going forward, we are confident to grow the individual FYP by CAGR of 20% to 25% over the next 3 years and expand the VNB margin to more than 18%.

In the health insurance business, we continue to be the fastest-growing stand-alone health insurer. Our gross written premium grew by 33% year-on-year and driven by a differentiated Health-First model and data-enabled approach towards customer acquisition. Excluding the impact of multiyear guidelines, the growth in GWP was 42%. Our market share amongst SAHIs has increased by about 140 basis points year-on-year to 12.6% in FY '25. Our combined ratio improved from 110% in FY '24 to 105% in FY '25. And I'm delighted to share that we have achieved a breakeven for the first time in FY '25. But for the change in the regulatory guidelines, we were on track to achieve a combined ratio of 100% in FY '26. However, our endeavor still remains to achieve a combined ratio of 100% at the earliest. Going forward, we will continue to grow our business, driven by our differentiated Health-First model and gain market share.

Two, omnichannel architecture for distribution. Our omnichannel architecture allows customers to choose the channel of their choice and interact with us seamlessly across digital platform, branches and VRMs, fostering engagement and loyalty. Our B2C platform, ABCD, went live about a year ago. It offers a comprehensive portfolio of more than 25 products and services such as payments, loans, insurance, investments and helps the customer to fulfill their financial need. ABCD has witnessed a robust response with about 5.5 million customer acquisitions till date. Our comprehensive B2B platform for MSMEs ecosystem, Udyog Plus, continues to scale up quite well with 2.3 million registrations. It has reached an AUM of more than INR 3,500 crores in less than 2 years of its launch. Udyog Plus now contributes about 21% of the disbursement in the unsecured business loan. ABG ecosystem now contributes about 50% of the disbursement on Udyog Plus.

We had around 1,623 branches across all businesses as of March end. We are focused on capturing white spaces and driving the penetration into Tier 3 and Tier 4 towns and new customer segments. About 60% of our branches are located across more than One ABC 250 locations. Going forward, we will continue with our approach of driving quality and profitable growth.

Now I request Vijay to briefly cover the financial performance of our key subsidiaries for the quarter. Over to you, Vijay.

[Vijay Deshwal, executive]

Thank you, Vishakha, and good evening, everyone.

Vishakha covered the consolidated highlights, and I'll cover the stand-alone financials of ABC and the key business highlights of each one of our businesses. During Q4 of FY '25, the stand-alone profit after tax of the merged entity, excluding one-off items, grew by 6% year-on-year to INR 654 crores. For FY '25, the stand-alone profit after tax, excluding one-off items, grew by 15% year-on-year to INR 2,714 crores. The Tier 1 Cat ratio of the merged entity is 15.93% and total CRR ratio is 18.22%. Stand-alone return on equity adjusted for investments in subsidiaries and associates and excluding one-off items is 14.2% in Q4 FY '25.

In our NBFC business, the portfolio grew by 20% year-on-year and 6% sequentially to about INR 1.26 trillion. NIM, including fee income, expanded by 7 basis points sequentially to 6.07% for the quarter. The credit quality of NBFC business segment continues to be healthy with a credit cost of 1.21% in Q4. Our housing finance business continues to see strong momentum. The loan portfolio grew by 69% year-on-year to INR 31,053 crores. During Q4 FY '25, we further infused equity capital amounting to INR 300 crores in our HFC subsidiary, taking the cumulative infusion during the year to INR 1,200 crores. This infusion was done to support the growth momentum and maximize our share of opportunities, which Vishakha mentioned earlier.

Coming to our AMC business, the average AUM increased by 15% year-on-year to INR 3.8 trillion in the current quarter, of which equity AUM was approximately 44%. Alternate AUM grew by 70% year-on-year to more than INR 23,900 crores in Q4 FY '25. In the life insurance business, our first year premium increased by 34% year-on-year and group new business premium grew by 23% year-on-year. The embedded value increased by 20% to INR 13,812 crores, and the return on embedded value was 19.2% in FY '25. In our health insurance business, our unique and differentiated Health-First model helped us to deliver a growth of 33% year-on-year in gross written premium during FY '25. Excluding the impact of multiyear guidelines, the growth in GWP was 42%.

Now I hand over to Rakesh to cover the NBFC business performance in detail. Over to you, Rakesh.

[Rakesh Singh, executive]

Thanks, Vijay, and good evening, everyone.

The NBFC business grew by 6% quarter-on-quarter, taking the AUM to INR 1,26,351 crores in quarter 4. Profit delivery was strong, registering a 9% sequential growth in quarterly PAT. Over the last 3 years, we have doubled on both AUM and profit growth, which translates to a 30% 3-year compound annual growth. This consistent and sustainable track record has been achieved by building a granular retail and MSME portfolio with strong customer focus and a disciplined approach towards improving asset quality. We aspire to be a top lender of choice for MSME. The AUM for business loans to MSMEs grew by 25% year-on-year, which is substantially higher than the industry growth rate for the year. This growth has come largely through scale-up of direct sourcing channels through our branches and building scalable digital sourcing platforms. The MSME segment comprised 56% of our overall AUM as of March '25.

We registered our highest ever disbursement of INR 19,523 crores in quarter 4, 49% of this was contributed by business loans to MSMEs and 87% of this disbursement was to MSMEs was secured in nature. We have continued to scale up sourcing through direct and digital channels, which now contribute 39% and 58% of unsecured and secured business loan disbursement, respectively. Udyog Plus, our B2B platform, which was launched 2 years back, has scaled up and contributes to nearly 30% of the unsecured business loan segment AUM. With over 23 lakh MSMEs registered and a comprehensive product offering available on the platform, Udyog Plus will be a significant sourcing engine for MSME segment going forward.

In the personal and consumer loan segment, FY '25 was a year when we exercised caution by tightening our sourcing from high-risk segments. Post all calibrations undertaken, this segment has now stabilized at an AUM of INR 15,532 crores and is poised to grow here on. In fact, we look at our disbursement in this segment in quarter 4, we registered a 26% year-on-year growth with the share of direct sourcing improving progressively. As Vishakha mentioned earlier, the ABCD app contributed nearly 5% of the overall sourcing in the personal and consumer segment in March '25. Our focus will be to improve this share progressively. Further, we are exploring new partnerships with marquee digital platform, where we will continue to have end-to-end control from underwriting to connections, ensuring complete customer ownership. Thus, with multiple growth levers in place, I'm confident that the personal and consumer loan segment will start registering calibrated growth going forward.

In FY '25, we were agile in responding to changing credit environment and leverage the opportunity to scale up our secured business across segments. As a result, the overall secured AUM mix at the entity level has improved from 72% last year to 74% this year. The MSME segment contributes significantly towards the secured portfolio mix, where 83% of the overall MSME AUM was contributed by secured business loans, where the asset quality continues to be robust and amongst the best in the industry. We continue to operate at a very efficient cost/income ratio of 30.8%. Our OpEx to AUM ratio improved from 2.26% last year to 1.92% in quarter 4. And this has largely been driven by operating leverage as we continue to sweat new branches opened in the last 12 to 18 months.

Our continued endeavor is to improve our asset quality, reflects in the sequential and yearly reduction in GS2 and GS3 by 47 basis points quarter-on-quarter and 71 basis points year-on-year, respectively. The gross stage 3 loans are at 2.24%, which has declined 27 basis points year-on-year. As a result of our continued calibration in sourcing and improvement in asset quality, the credit cost has reduced by 15 basis points quarter-on-quarter to 1.21%. The credit cost for the year was at 1.31%, which is 19 basis points lower than the FY '25 number and is well within our stated guidance of 1.5%. As I mentioned earlier, that 74% of our loan book is secured, our stage 3 book is well provided with a PCR of 45%. In quarter 4, we delivered our highest ever profit after tax of INR 652 crores, registering a growth of 9% quarter-on-quarter. Full year PAT grew by 13% year-on-year and stood at INR 2,501 crores. The ROA for the quarter was at 2.25%, which improved by 15 basis points sequentially.

Moving forward, we expect all business segments to grow in FY '26 with share of retail and MSME segments to improve. We will continue to leverage our proprietary digital platform, which is ABCD app and Udyog Plus platform and invest in branches to further improve share of direct sourcing. We expect operating leverage to play out from our investment in emerging locations. As we scale up, strengthen our capabilities and invest in technology, our primary commitment remains to deliver sustainable returns in the upcoming quarters.

With that, I will now hand over to Pankaj Gadgil to take us through the housing finance business.

[Pankaj Gadgil, executive]

Thank you, Rakesh, and good evening, everyone.

I'm happy to share that we have continued to make consistent progress across all key aspects of book growth, asset quality and profitability for 11 consecutive quarters now. FY '25 has been a landmark year for us, underscoring the strength and momentum of our growth journey. We have crossed a significant milestone, achieving an AUM of over INR 30,000 crores. Asset quality has consistently improved over the last 10 quarters in a row. We have further strengthened our balance sheet by diversifying our liabilities and business origination from within the ABG ecosystem has remained steady, contributing 12% of our retail disbursements.

Key highlights for FY '25 are as follows: disbursements for the full year stood at INR 17,648 crores, an increase of 109% growth Y-o-Y. Q4 disbursements record highest ever quarterly disbursements of INR 5,820 crores, growing 98% Y-o-Y and 23% Q-o-Q. AUM as of 31st of March 2025 stood at INR 31,053 crores, reflecting a strong 69% Y-o-Y and 16% Q-o-Q growth. We achieved the highest ever PBT of INR 419 crores, marking an 11% increase Y-o-Y. Stage 2 and 3 assets reduced to 1.39%, an improvement of 152 basis points Y-o-Y and 38 basis Q-o-Q. ROA is at 1.46% and ROE at 11.03% for FY '25. This performance is underpinned by a strong foundation of governance, digital capabilities, data intelligence and technology.

I would now like to provide a brief update on a few pillars of our growth. First on portfolio quality. As noted earlier, gross NPA has improved both in absolute terms and as a percentage now at 0.66%, our lowest level since 2018. This reflects a reduction of 116 basis points Y-o-Y and 33 basis points Q-o-Q. The improvement in asset quality has enabled us to comfortably maintain a stage 3 PCR at 55%. And additionally, over 95% of our collections are now conducted via our FinCollect platform, supported by a robust collection propensity model.

Secondly, moving to distribution. Growth has been balanced across both prime and affordable segments, and we are now present in 18 states with 135 branches. The average retail ticket size stands at INR 29 lakhs, highlighting the granularity of our portfolio. Our active customer base reached approximately 91,200 as of March 2025, representing a 40% Y-o-Y increase.

Next, focusing on digital reinvention, data and analytics. We've achieved 100% adoption of our digital platforms and analytic models. This has led to a significant reduction in turnaround times across the customer life cycle. At the same time, we've seen a strong improvement in our Net Promoter Score, which now stands at 79. We've deployed copilots leveraging GenAI capabilities to enrich the experience for both our customers and channel partners. These tools help with transmission, real-time credit and technical support and query resolution, all in a more seamless and efficient way. As seen over the last 11 quarters, we've delivered consistent growth across segments alongside continued improvements in portfolio quality and customer advocacy. Our focus remains on strengthening all key areas from business expansion, digital reinvention to asset quality and customer experience, all while enhancing profitability in FY '26.

Thank you for your attention. And with that, I now hand over to Bala, MD and CEO of our Asset Management Company.

[A. Balasubramanian, executive]

Thank you, Pankaj, and good evening, everyone.

I'd like to share the highlights of the ABSL AMC performance as we present the AMC analyst call. At ABSL AMC, our overall assets under management on an average basis, including alternate assets stood at INR 4.03 lakh crores, representing a 17% year-on-year growth. Our mutual fund quarterly average AUM reached INR 3,82,000 crores, growing 15% year-on-year. The quarterly equity average assets under management stood at INR 1,69,000 crores, growing 11% year-on-year. Our SIP book for March '25 stood at INR 1,316 crores, and we added about 5.14 lakh new SIPs in Q4 FY '25. Our total investment portfolio crossed INR 1 crore to INR 1.06 crores by adding about 27 lakh new folios in the current year. I'm pleased to share that we have observed positive momentum in sales, driven by improved investment performance and strong on-the-ground engagement from our sales team. This also resulted in a quarter-on-quarter increase in our average AUM market share.

On the alternate business front, we are continuously enhancing our PMS and AIF offering across both equity and fixed income to better serve the evolving needs of the HNIs and family offices. Following the receipt of the ESIC mandate from Government of India, we commenced the management of debt portfolio and its AUM stood at [ INR 7,462 crores ] on an average basis for the March ending 2025. And consequently, our PMS and AIF assets witnessed year-on-year growth of 268%, rising from INR 3,075 crores to about INR 11,330 crores. Our offshore assets grew by 14% from INR 10,545 crores to INR 12,070 crores. On the GIFT City platform, we successfully completed the final closure of the ABSL Global Emerging Market Equity Fund under the LRS scheme with an average AUM of USD 65 million and fundraising is currently underway for our other offshore funds, which are launched under the GIFT City platform.

Our passive business has grown with the total assets now reaching approximately INR 34,700 crores. We're also proud to serve an expanding customer base surpassing 11.6 lakh folios. Our diverse product suite consisting of distinct offering is strategically cap to cater the full spectrum of investment needs, ensuring we provide a tailor-made solution for every investors using the passive business.

Moving on to the financials for the quarter. For FY '25, we achieved a profit after tax of INR 931 crores, reflecting 19% year-on-year growth. Operating revenue is at INR 1,685 crores for the full year, 28% year-on-year and total revenue for the full year was INR 1,986 crores, including other income by 21%. The operating profit before tax was at INR 941 crores, up 31% year-on-year and profit before tax was INR 1,245 crores, up 23% year-on-year. For the Q4 FY '25, our operating revenue was at INR 429 crores, up 17% year-on-year and revenue was INR 501 crores, up 14% year-on-year. Our operating profit before tax for the quarter, INR 233 crores, up 21% year-on-year and profit before tax is INR 305 crores, up 14% year-on-year. We're also pleased to announce the Board had proposed a dividend of INR 24 per share for the full year as against 13% last year, which is reflecting INR 13 per share, which reflects about 17% of the overall stand-alone profit after tax.

With this, I'll hand it over to Kamlesh Rao, MD and CEO of Aditya Birla Sun Life Insurance.

[Kamlesh Rao, executive]

Thank you, Bala, and good evening to all of you.

Quick highlights of the life insurance business. The overall life insurance industry saw a balanced growth in financial year '25. The individual first-year premium grew for the overall industry by 10% and for the private players by 15%. ABSLI for the individual life insurance business grew at 34%, contributed by growth across its proprietary and partnership channels. Along with this, we also expanded our market share by 68 bps last year. Proprietary channels of agency and direct combined grew at 33% in financial year '25, driven by better productivity as well as by capacity added last year.

The partnership business grew at 34% with robust growth across all our existing partners as well as the new partnerships in Bank of Maharashtra, IDFC Bank and Axis Bank, where we managed respectable mind share in our first full year of operations. We now have 11 bank partnerships with a reasonable mix of large private sector banks as well as regional private sector banks and 2 PSU banks. We added 3 banks last year, I'm happy to share that we have recently entered into a new partnership with Equitas Small Finance Bank in financial year '25, which will begin business in Q1 of this year.

During the year, we opened 60 new branches and invested capacity in new tie-ups to fuel our growth. In the next year, we intend to capitalize on this and grow largely on the back of enhanced productivity. The year also saw a healthy growth of 24% in the number of new policies sourced. In the product mix of the individual business, traditional and term business contributed 65% and ULIP was 35%. We are seeing a healthy growth in the annuity segment with 7% of our business now coming from this growing segment. We launched 4 new products in the individual life insurance business and also launched a new product on our group platform, a specialized term plan for employees of our group term clients. The new products launched contributed to 12% of the individual business we did last year.

In the group life insurance segment, the private industry grew by 5%, the overall industry by 1% and ABSLI registered a growth of 23% and resulted in our market share expanding by 112 basis points. Better growth was contributed by superior performance, both in the fund as well as our credit life business. Our captive business attachments have grown significantly during the year. Our group AUM has now crossed INR 26,000 crores as on March '25 with 15% growth and contributes to 27% of the overall ABSLI AUM. Our total premium for the year crossed INR 20,000 crores at INR 20,639 crores, registering a growth rate of 20% over last year with a 2-year CAGR of 17%. This growth came from new business as well as our renewal premium growing at 14%. Our digital collections now account for 81% of our individual renewal premium. We continue to work on customer lifetime value, which is reflected in our upselling, which reached 28% and helped productivity growth in both our proprietary and partnership channels.

Our quality parameters have improved. Our 13-month persistency is at 88% and 61st month at 62%, placing us in the industry's top quartile. Our OpEx to premium ratio for last year was at 20.4%. Our assets under management now stands at INR 99,486 crores with a Y-o-Y growth of 15%. 24% of this AUM is in equity and balance 76% in debt. Happy to share that we crossed the INR 1 lakh crore AUM mark in April of 2025. More than half of this was added in the last 5 years alone. We continue to outperform in our investment performance in respective benchmarks across all 3 categories of equity or debt or even balanced funds, either from a 1-year or a 5-year perspective.

Our digital adoption across the various areas is demonstrated in Slide #47. 100% of our new business customers are onboarded digitally. 83% of all our services are now available digitally, which covers about 67% of our customer transactions and our customer self-service ratio has now increased to 94%. We have made significant investments in AI and analytics in areas of sales training as well as customer experience, keeping both our internal employees as well as our policyholders in mind. As we move ahead, we continue to be best-in-class in our digital infrastructure across prospecting and onboarding in sales, underwriting and customer service as well as claims.

In terms of value and guidance for the future, our solvency continues to remain at a healthy rate of 188%. Our net margins for the year as per our guidance is now -- was 18% last year. We observed significant margin expansion in H2 due to a controlled ULIP mix, increasing top line growth and rider attachments. The reduction in margins from financial year '24 was largely due to a higher ULIP mix and lower interest rates during the year. As mentioned in the last quarter, we will continue to focus on our proprietary business encompassing agency as well as direct channels with investments in value-accretive verticals and productivity increase across all cohorts. For our partnership business, we will continue to invest in our bank partners to increase our mind share and drive productivity across all partners.

Our guidance is to achieve a CAGR of 20% to 25% for the next 3 years in terms of business growth. Whilst achieving this growth, we intend expanding our current net VNB margins to 18% plus and in absolute numbers, double the value of our net VNB in the next 3 years' time frame.

With this, I hand over to Mayank, who will give details of the health insurance.

[Mayank Bathwal, executive]

Thanks, Kamlesh.

And let me now share an overview of the performance of our health insurance business. As I've shared in the past, ABHI has always been differentiated from other insurance players on account of its unique Health-First model. And this model has helped the company grow faster than the market and deliver superior unit economics as well. In line with that, we had a milestone year in '24-'25 in many regards, and it is my pleasure to state that the company has achieved its first full year of profit with INR 6 crores profit as per the new accounting regulation. As per the old accounting regulation, the profit for the year would have stood at INR 75 crores. This breakeven in our eighth full year operation is one of the fastest in the industry with 2x the GWP of the closest competition in the similar stage of their operation. The profit of INR 6 crores is in comparison to a reported loss of INR 182 crores in the previous financial year.

Our combined ratio for FY '25, thus as per old accounting regulation was 102% versus 105% as per the new regulation. And this is a marked improvement over 110% reported in FY '24. This improvement underscores our continued focus on performance optimization and disciplined execution even in a challenging regulatory environment. The recent IRDAI guidelines on revenue recognition for long-term policy present an important regulatory shift. Whilst the unit economics of the business remain unchanged, the new accounting regulations impact the accounting financials in the short- to medium-term until we migrate to IFRS.

On the revenue front, the growth momentum witnessed in Q3 continued in Q4, and we clocked a very strong 34% Y-o-Y growth, solidifying our position as the fastest-growing SAHI player during the year. In FY '25, we crossed the coveted INR 5,000 crores benchmark and achieved a gross premium of INR 5,252 crores on the old regulatory mechanism, experiencing a strong 42% Y-o-Y growth. The GWP as per the new accounting norm stood at INR 4,940 crores, a Y-o-Y growth of 34%. Our market share in SAHI in FY '25 rose from 11.2% to 12.6%, an increase in market share by 138 basis points for the year. The high growth is driven by a very strong growth in our retail franchise, which registered an impressive growth of 44% for the year. The growth in retail is driven by all retail channels with the proprietary channel, which now has an adviser count of 1.4 lakh agents, experiencing a 38% Y-o-Y growth. All our major banks and digital alliance partnerships, including PolicyBazaar have also experienced impressive growth. We just added Bank of India to their -- into our fold.

The group business delivered an industry-leading COR of 99% with 40% Y-o-Y growth. This COR in group-based corporate business is driven by a sharp focus on profitability through careful customer selection and segmentation. We also lead the industry in the outpatient business -- outpatient department business in the corporate space. We have one of the most comprehensive suite of retail products and our flagship product, Activ One with 7 variants continues to be a big success for us. Our differentiated Health-First model has matured further through the year. In FY '25, 9% of our eligible customers earned good health-based incentives, which we call health return, up from 6% in the previous year, reflecting deeper engagement with our wellness ecosystem. The outcomes for some of the intervened cohorts are also now visible.

The percent of customers influenced by participating in healthy behavior has crossed 25% on an enlarged customer base. These customers continue to exhibit lower loss ratios and better persistency, which is shown in Slide 58. Overall, this has helped us manage our retail loss ratio better than what we see in the industry. We've invested in building deep capabilities in managing customers with higher health rates as well. And even here, we are seeing very positive improvement in the economics, including claims ratio and persistency. Our industry-leading claims settlement ratio of 96% and a customer NPS of 60 across 5 key engagement points reflects our commitment to prioritizing customer experience. To further enhance this and manage claims better, we have invested in state-of-the-art claims adjudication engine using AI and ML, and we're now processing more than 40% of our cashless claims using this engine.

We continue to invest in our industry-leading Activ Health app. The app now provides an opportunity for non-policyholders also to experience our comprehensive health and wellness ecosystem. The Y-o-Y app download has increased by 125% with the monthly active user base increasing by 48%. Looking ahead, we remain optimistic about the long-term growth prospects of the industry. Our differentiated model will help us in striving to continue to be the fastest-growing health insurer. As we have guided earlier, we continue to be optimistic about reaching less than 100% COR as per the old accounting regulation, and we will endeavor to achieve this as per the new standard also very shortly.

Thank you. And I'll now hand it back to Vishakha for closing remarks.

[Vishakha Mulye, executive]

Thank you, Mayank, and we are very happy to take if there are any questions.

[Operator]

[Operator Instructions] We'll take our first question from the line of Avinash Singh from Emkay Global Financial Services.

[Avinash Singh, analyst]

A few questions. The first one is on NBFC margins. So I mean, the fee income has seen a strong increase. But on the COR, if we see the interest -- net interest income or the margins are still kind of a weaker and that particularly in the backdrop of a December quarter that was already pretty low. So can you please help us understand what is sort of keeping these margins at a lower level, particularly, I mean, even when the Q4 growth has come up from your SME segment, I mean, that has grown in Q4. So is it something I mean, still the margins are under pressure? And going forward, given that, okay, your asset liability are pretty balanced as far as the fixed to floating are concerned, that means the rate cut benefit will not be material. So how the margin outlook appears at the moment? And what will sort of drive the going forward margin upward? So that's the question on margin.

And second is, if I look at the NPA in that business loan unsecured, you have some 45-odd percent guaranteed by central government. That's fine. But the spike or increase is Q-o-Q -- I mean, it continues for last 4 quarters. And if we were to kind of again go look down further, probably from the disclosure, it seems that the government guaranteed part has a 6.5% kind of GS3. So what is sort of driving this kind of a high NPA ratio in this -- the book that is guaranteed by government? So I mean, is some sort of the customer profile or some kind of underwriting filter what's driving that? So that's on the business on unsecured.

And thirdly, on the growth side, yes, I mean, on a 3-year basis, growth is very, very impressive. But if we look back this year, of course, one part was that, okay, on the personal and consumer side, there has been decline because of various issues. But the growth at 20%, but out of that 20%, the 5% is kind of portfolio buyout driven growth, close to INR 6,000-odd crores for the full year. INR 600-odd crores kind of -- disbursement probably 2%, 3%. So what is sort of -- I mean, because you have been taking various initiatives, I mean, within Aditya Birla Group, ABCD, direct and all, yet, I mean, what I would say that, self-originated growth has been kind of moderating. So again, looking forward, how will this growth will appear in FY '26?

[Vijay Deshwal, executive]

First question was on the yield and the margins. So if you look at our yields for quarter 3 and quarter 4 is quite stable at 12.9% and the margins expanding from 6% to 6.07%. And as we had mentioned to you in the last call as well, that this is on account of the change in the product mix. So our personal and consumer, which used to be almost 20% -- 19%, 20% of our overall loan book has come down to 12%, 13%, and that has impacted the yields. We were slightly ahead in terms of the market in terms of taking corrective actions. We strengthened and we tightened our underwriting, and that's the reason. But if you see quarter 4, it's almost now stabilized, and we are poised to grow in this segment. So going forward, you will see expansion as this segment grows, the expansion in terms of the yields and the margin. So that's the answer of your first question.

In the unsecured segment, where you mentioned that we have -- there is an increase in the NPA stage 3. So if you look at the unsecured segment, it comprises of 3 segments, in fact, in a way. There is 20%, which is supply chain business, 80%, which is the term loans, where we have business loans and small ticket unsecured loans. And looking at the stress in the industry, this we had tightened in terms of and we had slowed down our sourcing. We have seen some amount of -- over the last 2, 3 quarters. But if you see almost 50% of that portfolio is backed by the credit guarantee and strengthening of the scorecard. Now I think the recalibration, which has happened in that segment. Going forward, there will be improvement as we go along. And the reason why it looks elevated is because it does not get written off at 180 days, and that's the reason it keeps looking elevated. So that's because this is backed by a guarantee from the SIDBI. So that was your question number two.

The third question was on the growth. So if you look at not only the last 3 years, almost 32% compounded annual growth, which we have demonstrated. And this year, in spite of recalibrating our personal consumer and the unsecured business, we have achieved a 20% growth year-on-year. And as we have guided that in the next 3 years, we are looking at doubling our loan book. So clearly, that's the kind of momentum which we are looking at going forward as well.

In terms of your question on the portfolio buyout, that's a very small part of our over. We are both on the selling side and the buying side. So we look at whatever the opportunity which is there in the market, we evaluate that, we assess that. And that's how -- so net-net, between sale and buyout, I think the net book is very, very small. And it's -- if you look at around 5%, 6% of the overall disbursement of INR 67,000 crores of annual disbursement, which we have achieved last year.

[Operator]

We'll take our next question from the line of Chintan Shah from ICICI Securities.

[Chintan Shah, analyst]

So firstly, on the NBFC, so there is some 60 bps rise in the unsecured business stage 3. So what would explain this from 4.1% to 4.7%?

[Vijay Deshwal, executive]

I just answered that question, Chintan. Just answered that 4.1% to 4.7%. This is clearly, if you look at the segment, which is supply chain, 20% is the short-term supply chain business, where the credit quality is pretty good. Then we have a business loan and the small ticket unsecured loans, where we had looking at the stress in the industry and also we saw some bit of on the backdrop of leverage. We have tightened the underwriting, the scorecards and the policies. And this looks elevated because it does not get written off at 180 days, the way we do our other unsecured segment because this is guaranteed by the government and the SIDBI. So that's the reason why it looks elevated. As we go along, I think this should get corrected. And it should come in the -- yes, it should get normalized.

[Chintan Shah, analyst]

Sure. Sorry for the repetition. And 2, 3 questions on the HFC business. So HFC, I think this quarter, the capital adequacy ratio is around 14.3%. So what is the minimum threshold there? Or will we be infusing further capital? So firstly, on there. And so the developer book in the HFC business, so that has more than doubled on a Y-o-Y basis. So what are the typical yields here and the average ticket size? And what kind of developers are we dealing with? Because the growth looks quite robust and the yields have declined. So just wanted to get some sense on that, yes.

[Rakesh Singh, executive]

So I think the first question, Chintan, will have to repeat. I'll first answer the second question. The second question was towards the developers that you say.

[Chintan Shah, analyst]

Yes, developer base.

[Rakesh Singh, executive]

Yes. So growth in disbursements has been quite uniform. If you see retail also, retail has grown by 94% actually and developer has increased by 106%. So on both the sides, the growth is quite significant, and that is where the 109% growth Y-o-Y. That's the first part of the question. The type of developers that we typically source. So it is a fairly granular portfolio between 280 to 300 developers that are there in the book. So the average exposure that we'll have on developers will be in the range -- the ticket size will be in the range of about INR 25 crores to INR 30 crores. That's the ticket size. So typical projects where the cost of construction will be anywhere between INR 200 crores to INR 250 crores will be the typical developers that we'll be financing. So that's how it is.

And I think last time I had also spoken about this that in this business, like you rightly said, I think monitoring is very critical. And we do this with a platform that we have launched. It is actually -- I'm not seeing many companies using it, but we have created one, which is called FinCF. And that platform allows our developers to undertake many of the activities on their side digitally. And most importantly, for our teams, who also monitor the portfolio both event wise and also frequency wise. So I think this is how we are monitoring the portfolio and monitoring the growth.

Could you repeat the first question? I think you said something of 14.3%, if you could.

[Chintan Shah, analyst]

Sure. Yes. So I will -- and on the yields also, I think if you would just help us with what would be the typical yields in the developer book?

[Rakesh Singh, executive]

So developer book, the yields are anywhere between 13% to 13.25%. That's the yield that is there.

[Chintan Shah, analyst]

13% to 13.25%.

[Rakesh Singh, executive]

That's right.

[Chintan Shah, analyst]

Sure. And so on the retail portfolio, what will be the yield, the blended yield?

[Rakesh Singh, executive]

It will be about 10.25%

[Chintan Shah, analyst]

10.25%. Sure. And so firstly, I had mentioned on the capital adequacy ratio, that is around 14.3%. So what is the minimum threshold of the regulatory requirement? And so how much capital are we looking to infuse in FY '26?

[Rakesh Singh, executive]

So total CRAR requirement is 15%. On that, we have 16.54%. And we've infused INR 1,200 crores. And internally, while the regulatory guidance is 15%, I think we are comfortable in that range of between 16.5% to 17%. That is the internal guideline that we have.

[Vijay Deshwal, executive]

If you look at the Tier 1 Cat is 14.3%, and we have sufficient headroom to raise even sub debt from the market. And whatever growth capital in the HFC will be required during the next year, we'll also support from ABC from the operating and the holding company. So no worries on the capital requirement of the HFC for meeting the group requirements.

[Chintan Shah, analyst]

Okay. And just lastly, on the ROA front, we have mentioned that ROA will inch up to 200 to 220 for the next 8 to 10 quarters from 146 currently. So what would be the key drivers? Would it be OpEx or yields or credit costs? Just could you throw some light on that, yes? That's it from my side.

[Vijay Deshwal, executive]

If you see the financials, which have been provided, you will see that the NII is 5.07%. The OpEx to average loan book is 2.94%. The credit cost is 24 basis points. That is how the ROA today is 1.46%. So the improvement in ROA will essentially come with operating leverage. So what is OpEx to average loan book, which is 2.94%. The endeavor in the next 8 to 10 quarters is to reduce that by between 100 to 130 basis points. And this will naturally come with the book building and the plan of the growth, which is there. Credit costs will be range bound. Anyway, it is at 24 basis points. So in my assessment, they will be in a similar range. In fact, the NIMs from 5.07% may come down by 30 basis points. So the net would be 100 basis points difference, 130 less 30, and that's 100 basis points. So post tax, we should be able to get about 60 to 70 basis points additionally over where we are. So that's the broad calculation of our ROA that Vishakha mentioned in opening.

[Chintan Shah, analyst]

Sure. So just a follow-up on this. So basically, the OpEx has almost increased by around 50%, 47-odd percent in this year for the HFC business in FY '25. So it means a large front-loading of the expense or the initial CapEx has been done and the productivity and efficiency should follow, right? Is that a fair assumption?

[Vijay Deshwal, executive]

That's right. That's correct.

[Operator]

We'll take our next question from the line of Abhijit Tibrewal from Motilal Oswal.

[Abhijit Tibrewal, analyst]

Firstly on NBFCs, just trying to understand, you explained earlier that as the mix of P&C personal and consumer in the loan mix improves, we will see yields improve and margins improve. So just trying to understand over the next maybe 1 to 2 years in a declining rate environment, while one tailwind will be improving proportion of P&C in the loan mix. How are we placed on the liability side? And how will that impact margins is one thing I wanted to understand.

The other thing is on NBFCs, I think we've guided for again this year doubling the loan book over the next 3 years. So just trying to understand will the existing product suite suffice? Or are there any new products that you would look to pilot to double this AUM guide -- doubling of the AUM over the next 3 years?

[Vijay Deshwal, executive]

So I think I'll take your second question first because I think doubling of the loan book, the way we have the entire range of product on the personal consumer side and also in the MSME side. We might look at 1 or 2 more products, but the way we are looking at, we want to sweat our existing branches, the branches which we have set up in the last 12 to 18 months and also branches which we will open in the next 6 to 12 months. So that's -- and also the digital assets, which we have created both on the personal and consumer side and for MSME side, the Udyog Plus, which we have set up.

So we want to sweat up these -- the channels, the platforms which we have created and also the productivity as we -- if you look at these branches, a lot of branches have been opened in the last 12 to 18 months. I think the productivity should get improved. And so that's how we are looking at doubling. See, and that's the reason the guidance is for 3 years in terms of doubling. There might be a slowdown looking at the environment the way we did it in the last year, looking at the environment and the leverage going up, we really recalibrated our strategy for unsecured loans. But going forward, in the next 3 years, we are quite confident that we should be able to deliver the numbers within the range of products which we have with addition of few products and just setting out the infrastructure or the platforms which we have created.

What was the first question? Cost of funds, if you look at our liability, our borrowing is 65% is floating and asset is 71% floating. So in a way, it's very, very balanced. In terms of as we grow personal and consumer segment, short-term unsecured loans, primarily they are secured in nature. And as we get -- these are fixed in nature, fixed in nature, as we keep getting the benefit on the cost of funds and it will get locked in for 2, 3 years, our margins should expand. And also the product mix, more than -- I think the product mix only should help us improve our yields and margins. So that's how we are looking at margins going forward.

[Abhijit Tibrewal, analyst]

And just a related question, while we are at around 12% personal and consumer loans in the mix, and like you said earlier, at the peak, we were at around 20%, 21%. Is the idea, I mean, go in a calibrated manner, the intent will be that over a course of time, take it back to 20% and then, I mean, how would the interplay be on the ROAs on the HFC I think we guided for 2% to 2.2% over the next 8 to 10 quarters? How should we look at ROAs in the NBFC business?

[Vijay Deshwal, executive]

So the stated, I think, guideline or whatever which we have in terms of the product mix is 75% of our loan book has to be retail and SME and 25% is on the corporate side. That's how we -- that should help. Within that, if you look at retail and SME, as you rightly mentioned, personal and consumer can go to around close to 20% and unsecured business will again grow. So both these segments are growing and the margins improving, that will expand our ROAs. In terms of guidance on the ROA, we will, I think, wait and see how the next couple of quarters goes, and then we should be able to -- but we are looking at expanding the ROAs from here on.

[Abhijit Tibrewal, analyst]

Got it. And then the last question that I had was on our HFC business. So I mean, just trying to understand this principal business criteria, which says that 60% of the company's total assets should be dedicated to providing finance for housing. Where are we placed in the PBT in our housing business? And just trying to understand in terms of mix, we have seen, I mean, over the last 1 year, very good traction on the CF side, the construction finance side. So maybe over the next 2 to 3 years, how are you looking at this mix evolving, particularly the CF side and the affordable businesses that we have?

[Rakesh Singh, executive]

Right now, on the PBT, we have 2 criteria, one is [indiscernible] there we have placed -- you have to be at 60% at 61.1%. When it comes to senior housing loans, it has to be higher than 50%. We are 52.4% on that side. So the idea is that, of course, even in the developer financing, if the financing is for residential projects, it gets classified as HL on that side. On the mix, right now, we are at a mix of 14.3% for the CF business and prime is at about 47% and 38% is affordable. The mix is going to be in that similar range only. It will be that range of 45% to 47% of prime, 30% to 40% of affordable and between 14% to 15% of developers. That is the percentage. And the objective, obviously, is to leverage the opportunities which are coming in on both the housing and on the LAP side and ensuring that we are ahead of the regulatory percentages on PBT.

[Abhijit Tibrewal, analyst]

Got it. This is useful. And if I can just squeeze in just one last question. We've done exceedingly well, almost a 70% kind of a Y-o-Y growth in our housing business. Just trying to understand, I mean, are we a little aggressive in the market, especially when it comes to housing loans and particularly in those projects where we had given construction finance? What I'm trying to understand is usually kind of when we look at other housing finance companies, more often than not, the LTVs are in that range of 75% to 80%. For us, are those LTVs higher than our peer set? Is that also something which is helping us get faster growth?

[Vijay Deshwal, executive]

So I think the first question is that we've been always talking about in the last almost 6 to 8 quarters that we have built capacity in the housing finance. So building capacity and the platforms that we have earlier spoken have improved the productivity of teams. So significant increase in capacity, and that also shows in the OpEx, which was earlier put out by one of the other questions that I answered. So it's a function of capacity and productivity that has helped us in growing this business.

On the LTVs, there are, of course, clearly, there are regulatory guidelines around LTV. So there is not too much of a play which is available on the story. We have seen the last 2 years on the way LTVs have progressed. And I can give you comfort that our overall LTV, if I say all cohorts put together, is in between 50% to 60% in '24 and '25. So we have not seen a change. The growth is coming on the back of capacity, productivity and 12% of our disbursements, we have been saying we've been able to leverage the ABG ecosystem as well, that gives us an opportunity also to improve our growth versus the competition in the marketplace.

[Operator]

We'll take our next question from the line of Sameer Bhise from Dymon Asia.

[Sameer Bhise, analyst]

Congrats on a good set of numbers. Just wanted to ask on the flow rates on the unsecured business loans. Rakesh, could you comment it while we understand that headline GS3 is slightly higher, but some understanding on flow rates would be helpful.

[Rakesh Singh, executive]

So can I just come back on this flow rate for business loan, which you are talking about?

[Sameer Bhise, analyst]

Yes, the unsecured...

[Rakesh Singh, executive]

I can come back to you on this.

[Sameer Bhise, analyst]

Sure. And secondly, how should one think on credit cost incrementally? I mean you have mentioned that the environment has improved and you are more confident to grow on the unsecured piece. Would that mean -- obviously, it means a lower credit cost for next year. So how should one think about it? That's all from my side.

[Vijay Deshwal, executive]

So on the business loan, the earlier question, the flow rate is 0.8%. So that's how it's stacking up quite well, and we should see some improvement there. In terms of your question in credit cost. Credit cost, if you see in a difficult environment also last year when the unsecured stress was seen in the industry, we have reduced our credit cost from 1.5% to 1.31%, yes. So we have clearly demonstrated that we had the agility to move away from low ticket, unsecured where the customers were leveraged to move away from that and build our secured business. So we have clearly demonstrated that. We have strengthened our underwriting.

We have put all the criteria in terms of looking at the leverage, how many -- I think those are the inputs which has gone into the scorecard. So clearly, we are looking at sustained credit costs over the next year or so. We have been tracking the portfolio not only on the bounce rate, but the first EMI bounce, second EMI bounce and tracking each and every cohort very, very closely. We have strengthened our collections infrastructure, preemptive telecalling for customers on collections. So I think a lot of actions which have been taken, and we are quite confident that post calibration. And also, we have cut out the higher risk segments from our underwriting and sourcing. So we have cut that out. And so we should be able to sustain the credit cost next year as well.

[Sameer Bhise, analyst]

Okay. Fair enough. And the flow rates that you mentioned, is it fair to assume that they have been largely stable?

[Vijay Deshwal, executive]

They have been largely stable, yes.

[Operator]

We'll take our next question from the line of Gaurav Kochar from Mirae Asset.

[Gaurav Kochar, analyst]

And I just wanted to understand a little bit about the unsecured personal loan. You mentioned that last 1 year has been -- you've been a little cautious on this portfolio and the share has come down from 17% to 12%. So going forward, while you've indicated 20% over the next 3 years. But just wanted to understand its dynamics on yield. Let's say, if we improve the share by 200 or 300 basis points in the coming year, what kind of yield this portfolio runs at, just to understand how much can it benefit on margins?

[Vijay Deshwal, executive]

This portfolio runs at closer to 18%, 19%. And this should -- I think 200 basis point improvement in the product mix should help us expand our margins. And that's what I stated earlier. In terms of absolute margin expansion, I think we can just simulate that.

[Gaurav Kochar, analyst]

Sure. On the -- coming to the funding mix, if I look at almost half of your borrowing is from bank. And if I include working capital, that's about 57%. So what percentage of this liability would be linked to repo? And what would be the other piece, let's say, MCLR? Is it 1-year MCLR or 6-month MCLR? If you can give some split of the borrowing?

[Vijay Deshwal, executive]

Primarily, most of our borrowing from the banks is 3 months MCLR and 1-month MCLR and not 1-year MCLR. So that's repo would be, I think, quite low in terms of closer to around 10% or so.

[Gaurav Kochar, analyst]

Sure. So coming to -- let's say, today, we've seen a 50 basis point rate cut. Let's say, this may take for banks to reprice, it may take about 6 months to 9 months on the MCLR front. So as and when it happens, so can we expect, let's say, this half of it at least flowing through in this year, your cost of funds, at least from the bank borrowing side, half of the rate cut benefit flowing through in FY '26? Is that a fair assumption?

[Vijay Deshwal, executive]

As the rate comes down, yes, the benefit should come to us. But apart from the bank loans, I think we have -- I think the NCDs, the money market, which we borrow from, I think that is at a slightly lower cost. So that's another short-term borrowing because we also have short-term assets on the supply chain and on the consumer loan side. So there are many avenues to improve our borrowing mix and reduce our borrowing costs.

[Gaurav Kochar, analyst]

Understood. And just final question, the merger with the holding company, is there any sort of benefit on either funding cost or maybe some operating synergies that you can speak about that can benefit us over the next 2, 3 years?

[Vijay Deshwal, executive]

Gaurav, on the part of the merger we had explained earlier also that funding because we are anyways ABFL was also AAA rated and from CRISIL, ICRA, all the rating agencies and ABCL is also AAA rated. So there won't be any benefit as such going out of the rating or something, but what definitely we have -- it's a large unified NBFC now and the operating company with a better access to capital. Also, the larger benefit of the merger was on account of release of capital. So close to about INR 3,000 crores to INR 3,500 crores worth of capital got released, which was collected. And that has helped us to take care of at least 1 to 1.5 years of growth requirement. I think that was the major benefit other than that we've always operated on a lean model at the holdco. So synergies will, of course, be there in terms of the horizontals that we carry at holdco. But largely, the benefit will be of being a large unified operating NBFC or direct access to capital and also the capital release that we explained.

[Operator]

We'll take our next question from the line of Nidhesh Jain from Investec.

[Nidhesh Jain, analyst]

First question is on the ABCD app. Can you share some data around customer engagement? What is our monthly active users? And some business data as well, what is the quantum of disbursements that we have done? What is the quantum of mutual fund AUM or life insurance premium, health insurance premium that we have generated in FY '25 from the app?

[Rakesh Singh, executive]

So currently, we are tracking the number of customers that we've onboarded. And of course, we've also spoken about the number of VPAs that we've had on the customers who have experienced the app. As we've just completed a year of the launch. Last year, we launched it on 16th of April. I think in the subsequent quarters, we'll come up with the GMV numbers and also the questions that you are asking.

[Vijay Deshwal, executive]

Just to give some clarity here, Nidhesh, for now, you can say that the origination on the personal loan on the NBFC side and having created the journeys for the personal loan, a large contribution to the housing loan and also to the asset management business in that order. And we are also looking at growing the insurance and the rest of the businesses also on the app. And as Pankaj said, the numbers we'll be able to share in the subsequent quarters.

[Nidhesh Jain, analyst]

Sure. So you mentioned 5% of personal and consumer loans have come from this app. Can you quantify in rupees crore?

[Vijay Deshwal, executive]

It's INR 100 crores run rate per month, Nidhesh. I think we'll get there.

[Nidhesh Jain, analyst]

Sure. Secondly, can you share stage 1 and stage 2 PCR movement from FY '24 to FY '25 for NBFC and housing finance business? In percentage terms, what was the stage 1 and stage 2 PCR?

[Vijay Deshwal, executive]

Nidhesh, we'll come back to you on this.

[Nidhesh Jain, analyst]

Sure. And lastly, in the life insurance business, can you share the reason for positive operating variance and positive assumption change variance for FY '25?

[Vijay Deshwal, executive]

So positive operating variance is largely on account of better experience in lapses and contribution of group business profit. So that's largely the contribution coming on the operating variance side. On the assumption variance, basically persistency, lapse in some of our products, specifically in non-par. And also on portfolio, our mortality experience has been better. So typically, what we do is we look at consistency of that variance that we see over a year or 2 before actually taking the benefit of that. So we've got some higher on account of assumption variance, but operating variance for us has always been positive over the last few years. So a combination of both of this is the explanation of your operating variance as well as the assumption variance difference.

[Nidhesh Jain, analyst]

Sure. So what will be the margin expansion because of the assumption changes for FY -- for the current year?

[Vijay Deshwal, executive]

So basically, if you look at the large contributor still comes from the net VNB of the portfolio. If you're asking me in the bridge, then I'm saying we would have got roughly about 100 basis points extra on account of the assumption change.

[Operator]

Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to Ms. Vishakha Mulye for closing comments. Over to you, ma'am.

[Vishakha Mulye, executive]

Thank you so much for joining us. And if there are any more questions, all of us are available. We will get in touch and you can contact any of us. Thank you.

[Operator]

Thank you. On behalf of Aditya Birla Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.