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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to the Cholamandalam Investment and Finance Company Limited Q1 FY '23 Earnings Conference Call hosted by Kotak Securities Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Mahesh from Kotak Securities. Thank you, and over to you, sir.
Thank you, Andrew, and good morning to all who have joined in to the call today. We welcome you all to the earnings conference call of Cholamandalam Investment and Finance Company Limited. Your usual moderator, Nischint had to step out today, and I shall handle today's session to discuss the first quarter's performance of Chola and share industry and business updates. We have the senior management represented with us today. We have Mr. Vellayan Subbiah, the Chairman and Non-Executive Director; Mr. Ravindra Kundu, who is the Executive Director; Mr. Arul Selvan, the President and CFO. I would now like to hand over the call to Mr. Vellayan for his opening comments, after which we shall take the Q&A. Over to you, sir.
Thanks, Mahesh, and good morning, everybody. So just quickly jumping into quarter result. Disbursements for the quarter were at INR 13,329 crores, which is up obviously by 267% just because of the base effect from the last year. Total AUM is at INR 86,703 crores, up by 14%. Net income margin is up at INR 1,640 crores, which is up 19% year-on-year and the PAT is at INR 566 crores, which is up 73% year-on-year.
Overall, consumer confidence continued to improve with the Indian economy growing at 14% to 15% in spite of higher-than-expected inflation and tightening of monetary policy. And Chola delivered its best ever first quarter disbursals, collections and profitability with domestic auto sales resuming by 55% in the current quarter, albeit on a low base, and sustained growth momentum in residential unit sales as well. Like we said, disbursements are at INR 13,329 crores, and Q1 FY '22 was impacted by COVID, which is why it was lower in that quarter. But getting into the individual businesses, vehicle finance disbursements were at INR 8,562 crores as against INR 2,846 crores, which is a growth of 201%. Loan against property, including affordable, LAP in dispersed INR 2,169 crores as against INR 386 crores, which is a growth of 462%. The home loan business basically disbursed INR 478 crores as against INR 199 crores, which is a growth of 140%. SME dispersed INR 1,030 crores as against INR 204 crores. And our new businesses, which are Consumer and Small Enterprise and Secured Business and Personal Loans, registered disbursements of INR 1,055 crores and INR 36 crores respectively in Q1 FY '23. AUM stood at INR 86,703 crores as compared to INR 75,763 crores. PAT, like I mentioned, was at INR 566 crores compared to INR 327 crores. The PBT-ROA was at 3.7% as against 2.5% in the same period last year and ROE was at 18.9% as against 13.5%.
The company continues to hold a strong liquidity position with INR 5,113 crores as cash balance as of the end of June 2022, including INR 1,500 crores and INR 200 crores invested in GSEC and T-Bills which are shown under investments, and a total liquidity position of INR 11,324 crores which includes undrawn sanctioned lines.
The ALM is comfortable with no negative cumulative mismatches across all time buckets. Consolidated PAT for the quarter was at INR 562 crores as against INR 329 crores, which is a growth of 71%.
In terms of asset quality, the -- at the end of June 2022, Stage 3 assets stood at 4.16% with a provision coverage of 40.69% as against a comparable 4.37% at the end of March 2022, with a provision coverage of 39.67%.
Total provisions currently carried against the overall book is 2.92% as against the normal provision levels of 1.75% carried prior to the COVID-19 pandemic. Management overlay is now at INR 528 crores in terms of provisions carried in the books. As per the revised RBI norms, the November 12 circular of last year, the GNPA and NNPA percentage stood at the end of June 2022 stood at 6.31% and 4.35%, respectively. We carry INR 736 crores higher provisions under INDAS over IRAC. As per prevailing IRAC norms, the GNPA will be similar to the Stage 3 numbers given above.
The details of state-wise assets are available as part of the overall relief. The capital adequacy ratio for the company was at 19.15 as against regulatory requirement of 15%. And Tier 1 capital is at 16.3% as against the norm of 10%.
So Mahesh, I'll stop with that. We'll be happy to take questions from our friends.
Sure. We can open the floor for questions.
[Operator Instructions] The first question is from the line of Shreepal Doshi from Equirus.
Congratulations on the excellent numbers. So first, wanted to know what is the outstanding restructured book loan?
I mean, restructured book loan?
Yes. The outstanding book stands at around INR 3,500 crores, the restructured book, which was at around INR 5,800 crores earlier. When we did initially, [Indiscernible].
You're not audible, I'm sorry..
The outstanding book is at INR 3,400 crores now as against the INR 5,800 crores when we initially did the numbers.
Got it. And just the second question on the same line. So what would be the right target we would have taken from the restructured pool during this quarter?
The restructured book has shown no stress different from the normal pool. It is progressing in the same way. As you know that we have discussed this earlier also. The moratorium given in the restructured books are very small, ranging predominantly to 1 month to 3 months at most. So the -- all these assets have started being tracked as part of where our normal book itself. And so the Stage 3 numbers, which are already there corresponds with whatever is in the restructured book also.
Okay, okay. If you've been guided for less than 4% net NPA number for the year-end, so keeping that in mind, what will be the credit cost that we will be building per year?
The credit cost, which is currently, we are seeing that around 1.2% will be the level. So as I have told in today's morning call, we will range anywhere between 1% to 1.5% over the cycle and we should be at the pre-pandemic levels now.
Next question is from the line of Abhijit Tibrewal from Motilal Oswal.
My first question is to Ravi sir. I mean, if I kind of look at the texture of the vehicle finance disbursements. So basically, I'm looking at the different subsegments. So preowned vehicles, SUV, and construction equipment are the 3 segments, where you see a sequential decline? Again, I understand there is that seasonality expected not really fair to compare Q4 to Q1. But I mean having said that, I just wanted to understand that these 3 products, that is used vehicle, SUVs and construction equipment, are we seeing a lot of aggression from banks and some of the other listed NBFCs? And how should we kind of read this? That's the first question to you sir.
And the second question is, I mean, how is the demand in tractors right now? There are a few other your peer NBFCs who have satisfied the demand and [Indiscernible] is very, very strong when we talk to some of the auto guys, they don't kind of suggest the same thing. So if you can just kind of give some color on the tractor demand?
Heavy commercial vehicle and construction equipment. The strategy customer or group customer or top of the pyramid customer, or large fleet operator customers are always being funded by banks only. We were always financing the retail customer. And that the reason if you see that heavy commercial vehicle and construction equipment market share has been small as compared to the light commercial vehicle and used. So when the strategy customer or large fleet operator purchase the vehicle it is being funded by the banks only and at this tenure, the majority of the sale, which is happening is because of the replacement demand coming off from the strategy customer or large fleet operator. So the banks are operating. But after some time in the freight availability and capacity utilization of the retail customer improves, then the retail customer also will come, which will further drive the growth because initial drive of the commercial vehicle or construction equipment growth comes from the large fleet operator followed by the retail customer, and at that point in time, we also get into that. Having said that, we also see that our market share has gone up in heavy commercial vehicle and construction equipment because our customer segment also some parts of the country started actually participating in purchase. That is from SUV and construction equipment. In the case of used vehicle, the used vehicle business is actually growing much faster because even the strategy customer or large fleet operators who are actually buying the vehicle are not adding the fleet, but replacing the fleet. So they are continuously selling their existing vehicle, and it is going to be retail customer and retail customers are buying. And that the reason retail customers are not buying the new vehicle, so until such time you will see that used business is going to grow, and we are expecting that this year used business will continue to grow.
Now coming to the tractor, tractor -- monsoon has been good as overall average. It is higher than the 100%. But Bengal, Jharkhand, Bihar, and Uttar Pradesh are not having that kind of monsoon, it is slightly deficit. So we need to wait for that because these are the larger market for the tractor. Once that -- monsoon is actually completed by say August, September end, we will be in a position to say that how much demand strongness is there. However, as of now, last quarter, we saw 16% growth and is driven by Madhya Pradesh, Rajasthan, some of the markets there, monsoon has been very good. We are hoping that the rest of the 4 states where tractor sales have been good in the past or they are actually producing more kharif, will also have a better monsoon and that will further drive the tractor growth in this financial year.
This is good. Sir, my last question is for Arul, sir. Sir, I mean, if I kind of look at the runoff that we are seeing in the loan book, you have suggested kind of last quarter that it will be mainly elevated for the next 2 quarters, which is predominantly H1 of this fiscal year. And then it would revert back to the normalized levels. So how should we kind of -- we've already seen that normalize or kind of come down in this quarter. So how should we kind of think about it? I mean, that's how -- I mean, it will progress that -- it will remain slightly alleviated for the second quarter and then start normalizing in the second half of this fiscal year?
And sir, secondly, if I look at the write-offs, what was the quantum of write-offs and we calculate write-offs. I mean, it looks like slightly alleviated, nothing alarming, slightly alleviated compared to, let's say, pre-COVID levels. So how should we kind of think about? Those are 2 questions.
Yes. The runoff will be there for 1 quarter for vehicle finance, and it will be actually not even visible in the last financial because they are -- the write-offs has been higher both in Q4, but in Q1, it has not been there for vehicle finance other than the repo sales related. So those are normal quarter-on-quarter levels. The 1.2% on the credit cost, we are conservatively saying that levels will be maintained over the quarter because you will see that in Q2 continuing, but Q3, Q4 should be better.
Got it. Got it. And sir, lastly, your Tier 1 is 16% now and the kind of growth that we are seeing now while you always have that room of raising Tier 2 capital, I mean, any thoughts out of primary equity rate over the next 12 to 18 months?
We have very clearly articulated that unless Tier 1 goes down below 13%, we will not be seeking capital. I think we stick to that stand.
[Operator Instructions] Next question is on the line of Bharat Shah from ASK Investment Managers Limited.
Given the kind of new lines of the business that we are attempting to build up, and given our traditional strength areas. What kind of a cycle sustainable ROE -- pretax ROE, we see it is a range which is part of our business model?
I think we should be there in the 3.5% to 4% level. We commit to that and stay committed there. But there is scope to improve, but right now, we do not want to take conservatively any call on that.
[Indiscernible] 3.5% to 4% range?
I'm talking pretax ROTA, yes.
Yes, yes, pretax, I'm talking of. And what kind of -- given the kind of potential growth that we see in our lines of activity plus the new lines, what kind of leveraging compared to our network we think will be a point for capital freeze? I mean, typically, what will be sustainable level of leveraging will prefer to keep before we go into new capital rates?
We are currently in the 6x debt equity levels. We will continue to be around the 6 to 7x levels because that would be the number. Actually, the 13% of the -- sub 13% level will take us to 8x, but we don't intend to go there. So we can comfortably be in the 6 to 7x band. That's the way we are wanting to look at. More importantly the new businesses churn more because they are shorter tenor. So I don't see the debt equity will be significantly impacted because of scaling up the new businesses.
So INR 1 net worth came about INR 6 borrowing, so INR 7 of total capital.
Up to 7. Right now 8, now it is around 5.9x, go up to 7, which means INR 8.
So potentially up to INR 8 of total capital and 3.5% to 4% range of ROE pretax, which means about close to 2.7% to 3% post tax return. And therefore, about sustainable ROE of about 20%.
Yes, sir. It's correct sir.
The next question is from the line of Siraj from Laburnum Capital.
My question was around the GNPA and the GST numbers, which were reported. So when the new norms coming from first of October, our GNPAs will be the [Indiscernible] numbers, right? If [Indiscernible] reporting right now is only for the numbers. It wouldn't be applicable. Will they?
We have given you both the numbers. The Stage 3 numbers right now, which is shown will be the 3 or the current prevailing levels of net NPA and deposit [Indiscernible]. The new norms if it comes through and we have put through the numbers, we will be at a net NPA of 4.43%. And at the overall level, we will be at 6.31% of the gross NPA as we closed June. The details are available on Page 26 of the investor presentation, kindly run through it.
My question was -- actually was you reported the new -- under norm GNPA as 6.3%, but as of first of October, when the new norms actually kick in, so the effect will start coming in post that, right? So the [Indiscernible] should be your gross NPA numbers as on that date? I mean, if they were to commence from today, your GNP around equity...
This is a debatable point. We are -- gross NPA as per RBI is different from the Stage 3 numbers, which is as per INDAS that is why we are giving it as Stage 2b and Stage 1b if you see. Those 2, if you add, they are really under INDAS Stage 2 level of asset because they are less than 90 days. 90 days in the whole shown as Stage 3, less than 90 days and more than 30 days is shown as Stage 2 and less than 30 days is shown as Stage 1. So those [Indiscernible] NPA and/or in these brackets will be shown in the Stage 2b and Stage 1b, respectively. And there will be -- if you add all 3, you will get the net NPA as per RBI. We intend to present it as such unless the regulators wants us to group everything under Stage 3.
Next question is from the line of Rikin Ketan Shah from Credit Suisse.
I had a couple of questions. First one was on the asset you have been in the vehicle finance business. If I look at the presentation, it seems to have come off by 50 basis points sequentially Q, Qs on. Any trend or color there or one-offs included there? That's first one.
Second one, the employee headcount is up sharply, right? So in last 1 year, we would have added around 8,000, but I understand that, that could be a mix of on and off payroll. So any split between that?
And then I just -- a clarificatory question relating to the restructuring. Did I hear correctly that the book is currently around INR 3,400 crores now?
And one last question is for Kundu, sir. On the vehicle finance business side, while I understand the disbursements are strong, but the outlook seems to be a bit more cautious pertaining to lower freightablities, uneven rainfall, et cetera. So are we expecting slowdown in the disbursements in the quarters ahead?
So I will just start from the vehicle finance. In the vehicle finance, industry shown 115% growth in the commercial vehicle and passenger vehicle did 41% growth. And so did other product like two-wheeler 54% and three-wheeler to 24%, tractor 16% and construction equipment, 61%. So if the industry is growing in this state for this financial year, we might touch the previous peak in terms of commercial vehicle and passenger vehicle, and may be in 2 wheelers. So subject to that, we will definitely grow at the rate of 35%. If industry is growing at the rate of 35%, we have an opportunity to grow slightly higher than that because there will be a value growth in terms of inflation and cost of vehicle. And also little bit market share growth will be there.
So this is what is the industry. And now we have given you the sector's outlook where we have given product by product, what is expected in terms of good and bad in terms of tractors, suppose I'm just giving you the example, you can go through the total outlook of Chola given in the presentation.
So overall, monsoon has been very good. Actually, it is higher than the 100% last year. And then -- but there are 4 states which is actually selling more tractors, is now going through the deficit of monsoon. So unless that gets corrected in the next 2 to 3 months' time, we cannot say that for full year, tractor sales will be very good.
Secondly, the crude oil prices are at this level and it doesn't go up, and it goes down, then obviously the growth of the commercial vehicle projected will be achieved, and it might go up further.
Similarly, the consumption increases, rural demand actually improved because of the better monsoon, better agricultural growth. Then again, it will further improve the sale of two-wheeler, three-wheeler even car selling in the rural market. However, as of now, whatever industry is showing up, we can safely say that the industry is going to grow in this year in terms of number, 35% over last year, and we'll be doing better than that. But we need to also keep those things in the mind that which can actually create a problem for us. That's the reason we have given the mix type of outlook. That is from the vehicle finance side, and Rikin can you repeat...
Actually, Mahesh comment on 2 questions, you are trying to treat it like ramping 4 questions into 1 -- I think that loses the whole purpose of this Mahesh advise on question.
One is this straight forward action, [Indiscernible] is the right number?
[indiscernible].
Sir, one was on the employee headcount addition. So just wanted to get a flavor on the increase between the -- of payroll and on payroll? And what could be the salary differential between them?
Salary differentials and all, we cannot get into now, okay? The headcount details are given in the investor presentation. But that is -- yes, that's because our new business.
And housing finance is also expanding out of south, so they are also recruiting.
Got it. And on the -- anything on asset view sir, in the vehicle book, it come off -- it came up by 50 basis points?
It will go up now, slowly, slowly. Marginal book is growing. Overall...
Got it.
It is a lag of 6 months. So marginal book, we started doing. And there is a difference in the mix like -- at this juncture when all the new vehicles are getting sold more and more because that is the industry sales. We have to participate in that as well. So overall yield is depending on, one is the mix and second is the overall yield is also depending on the time when we take it to increase it.
Next question is from the line of Subramanian Iyer from Morgan Stanley.
I have 2 questions. The first one is what is your observation on loss given default vis-a-vis the 40% Stage 3 coverage you have, considering that most vehicle financial seem to be taking accelerated write-offs and there might be of large pool of repossessed vehicles for disposal in the market? That's my first question.
The second one is how much room do you have in your ALM in terms of moving the mix to CP to limit the rise in your portfolio cost of funds in the near term?
At the product level, how much margin compression do you expect through the cycle? Or can you pass on the entire cost of funds increase to customers?
The loss, given default in the case of repo vehicles is in the range of 32%. So sorry, the incurred loss in the case of sale of vehicles is around 32%. So our provision coverage is significantly higher and gives us enough headroom to cover any volatility there. The second deal is on -- sorry, on the CP headroom; CP headroom, we can go up to 15% of the borrowing book. We are right now at around 4% -- sorry...
I think it's 7%, yes?
Sorry, sorry, 4% was last quarter. Yes, 7%. So we have another 7% to 8% [indiscernible], but we may not go all the way up, but we've been the in the range of 10% to 12%.
And at the product level, do you think you can hold the -- I mean your margins by passing on entirely to the customers?
What is LAP and housing financials floating rate, which we are doing it.
So basically, like vehicle is a fixed book. But then the other 2 books is where we basically pass.
Sure. Through the cycle, would you be able to pass?
Vehicle finance, product level marginal rate only will go up, as and when we do business that will go up. But in the vehicle finance, main important goal played by the product mix. So how much we do in the high-yield business versus low-yield is important for arriving at overall. And we are changing the product mix towards the high yield book to continuously, so that will help us to increase the yield in the next 6 to 9 month time because there is a lag between marginal book yield and the overall book yield. Housing finance and profitable housing and the last is instantaneous where we increase the rate as and when the prices of the market, cost of fund goes up.
Next question is from the line of Nidhesh Jain from Investec.
On the new businesses, what sort of specifically in consumer and SME in consumer, what percentage of origination that we are able to do through our own branches, our own business in India? And in SME, how much of disbursement are we able to do outside of the Murugappa Group?
Consumer business or SME business, all we are doing it from the branches only and with respect to the Murugappa Group versus open market group, only supply chain finance -- 50% of supply chain finance is actually related to the Murugappa Group based out of open market. In SME, we have a 3 product, supply chain finance, term loan and equipment finance. So supply chain finance is almost 30% of the overall book and out of 30%, 50% goes out of Murugappa that's the number.
In Consumer -- consumer loans 100% of position through our own branches now. Is that correct?
Our all existing infrastructure of vehicle finance, where in 126 branches we have opened up, those from 127 branches. From there, they are almost covering 500 towns of the vehicle finance. So you can say that 50% of the branches of vehicle finance being now covered by CIFCL from 127 hubs. And they have 3 models. One is the DSM model, GST model and then their partnership model. All 3 models, they are utilizing it to acquire the business.
Yes. If you can say what percentage of business coming up of partnership model that will be of helpful.
1/3 of the [indiscernible] coming from partnership.
Next question is from the line of Kaitav Shah from Anand Rathi.
Sir, if you can explain what are the number of new customers that have got originated in the new model under the new business?
Almost 100,000 -- 100,000 vehicle. In the first, 1.6 lakh customers from 1 business. And yes. So basically, let's just say kind of, let's say, about 2 lakhs across all the businesses.
And these are the new non-vehicle or non-lap customers?
These are customers that don't have -- we don't have any other loan with.
Okay, okay. Versus what would the run rate be say, last year? Just an offline number.
Last year, it was 50,000 vehicle finance only. New businesses are not there till quarter.
Yes. So this quarter had about 1.8 lakhs from vehicle finance and 1.8 lakhs or about 2 lakhs from all the other business.
Sir, second question was related to your partnership arrangements. So the customer ownership is with the partner? Or is it Chola? Just trying to understand the model here?
Chola.
[Operator Instructions] Next question is on the line of Shweta Daptardar from Elara Capital.
My first question is for Kundu sir. As far as the vehicle finance disbursement mix is concerned, why has been used vehicle financing loans quarter-on-quarter decline. I mean, is it the Q1 phenomenon or categorically we have chosen to sort of take a cautious step? If it's the latter and why so?
And my second question is on the LAP front. So what is the normalized loan loss provisions we are looking at because that's been quite erratic for a while and therefore, that's also weighing on the overall -- not only the overall profitability, but what would still then be ideal PBTR we are looking at?
Shweta, what was the first question? What is the mix you're talking about used?
Yes. So why has seen the decline in used vehicle financing disbursements quarter-on-quarter as against industry queues, which have been pretty buoyant.
Okay. Like you see that our product mix in terms of portfolio, Page number 51- it's in the Page number 40; 40 is the portfolio, right hand side is the product portfolio, and left hand side is the disbursement portfolio. Used vehicle, the product portfolio in terms of our asset under management, it's 27%. As against that, we have done 29%. So our disbursement is higher than the mix of the current mix. So disbursements are higher than that. If you see that tractor is 10% in terms of our portfolio, but in terms of disbursement is 8%. So that we can say that tractor, we are really cautious as against the portfolio mix in terms of disbursement. But in terms of used business, we are higher than the portfolio in terms of the disbursement that shows that we are quite aggressive in terms of used.
Okay. So maybe Q4 was -- always has been a stronger one. So maybe that base was pretty high.
Yes. You are right. In the Q4 to Q1, you can say that there has been a drop in used business. But -- that is because of the mix in the first quarter, we see that new vehicle sales have picked up significantly. And this has been a first time in April, May, June, it has been best quarter for the new vehicle sales. So when you participate in new vehicle sale, your overall disbursement mix actually gets split towards the new one. That is the difference, nothing else. Otherwise, if you see our portfolio versus our disbursement, our disbursements are higher than the portfolio.
Sure. And just one question there related. Are we #2 in terms of market share on the used side? Am I getting it right?
Yes.
Yes. Perfect. So my next question is on LAP front.
Yes. Loan against property. What was the question?
It was, what is the normalized loan loss provision.
Yes.
So the last 2 years, if you look at it in the invest presentation, it's showing about 0.7 to 1 point considering the COVID situation. But at a normalized situation, it could be about 0.4 to 0.5 at portfolio level.
Do you have any targets in mind for PBT ROTA for LAP?
ROTA. Yes, it is -- we're expecting Suresh to deliver at least 3.5%.
3.5 is expected ROTA. Currently, for the current quarter, we are at 4.7%. That is because of the [indiscernible]. On a steady state, we are expecting at a 3.5% -- 3.5% to 4%.
Next question is from the line of Param Subramanian from Macquarie.
I want to ask firstly on the restructured book. So you've classified, I think it's largely in Stage 2. And I think it's largely repaying based on the commentary that you've provided. So how long will we continue classifying this in Stage 2? And do we plan to classify this back to Stage 1 and reverse the 11% sort of provision cover that you have here? That's question one. Question 2 is, again, on the vehicle finance yield declined quarter-on-quarter. Could you explain again what was the reason for the vehicle finance yield declines. I didn't get the part on the marginal book. Are you saying the marginal book yield is lower than the existing book yield. So I just wanted to understand that.
And thirdly, I also wanted to understand on the credit cost. What was the reason for the spike in the quarter? And if you could quantify the write-offs in the quarter?
We started moving those restructured books, which have -- which have repaid more than 30% of the original pause. So during the quarter, we have moved around INR 50 crores of restructured book to Stage 1 because it completed repaying more than 30% of the cost outstanding on the data free structure. We will do that every quarter as they repay more than 30% level, which is what is given by RBI as a guidance. The rest of the book is shown in Stage 2. And some had moved into Stage 3. So this is [indiscernible] and of course, there are a lot of -- also, around INR 1,500 odd crores have got repaid or settled out.
The spike in credit cost, this time is also because for the first time, we have also started providing on the macro factors. So far during the COVID period, but we started measuring the macro impact. Macro impact had been negative. That is -- it was resulting in a reversal of provisions, though we did not take reversals and kept them, we did not provide anything additional. This quarter, what has happened is because of the cost hike and then there are uncertainties, the macro model threw a provisioning requirement of around INR 50 crores, which we have provided additionally as part of the ECL, and that's the reason you see the spike happening.
As far as the book yield is concerned of vehicle finance, before it was 13.99%, and Q1, it is 13.91%. These are in the same level. Before that, in Q3, it was 14.26. So from Q3 -- from Q4 onwards, we started seeing that the new vehicle sales has picked up. So when new vehicle sales pick up [Indiscernible] actually reduces slightly price. Otherwise, it is almost same level. It has not gone down.
Kundu sir, if I could just interject, sir. So the income yield you provided in vehicle finance in the slide, so it is down 50 basis points Q-o-Q. So that's the number I'm looking at. So the income yield that you provided in the slide on vehicle finance.
Which slide you're saying? Referring to?
So 15.4% has gone to 14.9% on vehicle finance income yield.
Quarter-on-quarter versus... This is not Q4 versus Q1, you are talking I think the Q1 versus Q1. The mix was completely different, and that was a very small book -- that was the [Indiscernible] that was influenced by the large quantum of tractors in the book at the point in time, it will keep changing based on the mix of the book. Of course, there have also been some small reductions in the yield, but now we will be pushing of the marginal yield, as we see the interest rate slightly coming up. In a downturn, when interest rates are dropping, you will see that progressively, the book will show the impact over the next few quarters of the drop because the book has to change its...
Okay. Got it. Sir, just one last part. On the macro provisioning, is this something that will recur quarter-on-quarter? Or is this -- you're looking at more as a one-off for this quarter? That was my last question.
No, the macro, there is a model we have built, factoring in various macro measures like GDP and consumption and industrial growth, et cetera. And influence on each of the portfolios that they have, basis that the model throws up -- and it takes into consideration the impact of the change over another 1 quarter or 2 quarters or 3 quarters down the road. And that's how the model throws out what is the macro provision required for each of the subsegments. And that's how we measure it, and when it comes that it can -- there will be reversals, we don't consider reversals, but when it throws up that there is a requirement, we provide for it.
We will continue using the model as we go because it's an integral part of the INDAS model of provisioning.
And so I think you if you take from that, it's not the intent to provide every quarter, but it depends on what the actual kind of variables indicate for the future outlook.
[Operator Instructions] Next question is from the line of Jignesh Shial from InCred Capital.
Yes, am I audible?
Yes.
So congrats on good set of numbers. Just one data point. Sorry, I missed out -- joined too late, but are you giving slippage recovery in write off number for the quarter and for the last quarter? As a total of the business...
We could not hear your question clearly.
Can you hear me now?
Yes.
Can I get the slippage recovery and write-off number for the quarter and for the last quarter, if it is available or you are giving it?
Okay. We can tell you now. Normally, we don't give it. It's around INR 148 crores this quarter and last quarter it was around INR 200 crores.
This is net, right? This is net slippage you're saying? Or this is... Yes, this is the slippage number you're saying, right?
Write off.
Write off. Okay.
Slippage is -- See, there are only 2 components. One is write-off, the other one is the provision accretion or reduction that moves with the model and the NPA number. It move up if the provision is more, NPA move down... but that's more a notional number, write-off is the crystalized loss [Indiscernible].
Understood. Understood. And second question had been, you acquired Payswiff last year. So how that particular business is -- how is the cumulative to us, and how we are basically using it up. If you can give some color on it, that this fintech part, how it is helping us out on what we are doing with this business, if you can give some color on it, if possible, that would be really useful.
I think broadly, it's still early days for Payswiff. The intent and that still continues to be our focus, is that they deal with a particular profile of SME customer. And they have a fairly large distribution capability into those customers, using both a combination of direct sales model and a partnership model. In some of the partnerships, we do have access to that customer base and some we don't. And the intent is to basically, once we get some history with those customers to start a lending book on top of that. So like we said, this will take some -- a little more time because we need to first develop the capability we have enough data on those customers that we can start lending book. And once we have that, then the intent is to basically see how a combination of payments product and a lending product can be driven to expand our penetration in the SME segment.
Understood. If I can squeeze in just one more thing. So these customers will be more capped through your new business line, right? Rather than a vehicle and housing and LAP. This is more towards the new business lines that you will be getting to this customer? Is that understanding correct?
Absolutely. That is correct. And that's what we've articulated as well that the intent is to really focus on how we expand both the consumer and SME ecosystem, which is why you can see the partnership model that we have talked about for both our consumer and small enterprise loans business. And in some cases, a structure like this is what we're going to focus on to improve our penetration in those segments.
So considering the kind of growth we are seeing in the new business, gradually the overall portion would be tilting towards new business as well. So the mix would gradually will be changing over the next 2 or 3 years. This would be a fair assumption to make, right? So right now, the dominance, which is there in vehicle will gradually will -- will be more granular in nature for Chola as a whole.
I don't think the mix shift will be so different in 2 to 3 years, but the intent is to move it over a period of time. So we'd like to take the longer-term horizon.
[Operator Instructions] Next question is from the line of Bunty Chawla from IDBI.
Firstly, if you can share your thought processes on the AUM growth...
Can you speak a bit louder?
Yes. Can you throw the guidance on the AUM growth part because last year, there was a pressure on the prepayment repayment. This year should be the normalization for that year, and disbursement growth are picking up. So if you can share your thought process on that.
Secondly, sorry for the repetition. I missed the write-off number, if you can repeat that number for me?
If you'll just see like we mentioned that in retail finance with industry delivered 34% growth over the last year. Obviously, retail finance will grow much better than that. And in that case, we will get opportunity to grow more than 20% because 70% growth -- 70% book is vehicle finance. In any case, LAP and housing finance, they are growing over 20% as of now. So only thing is at the moment, vehicle finance starts growing at the rate of 20%, it will actually improve the overall growth. We have done well in the Q1, if you have seen that as compared to the last quarter. So I'm expecting that the industry will support this year, and will come out of the higher rundown obviously, in the second quarter. So both put together, we're likely to go to safely 20%.
And like we said, there's one more quarter of runoff that we have. So early in the second half, we will start seeing significant movement.
And sir, write-off number, if you can repeat for me?
INR 200 crores we have, 148 is in Q1.
Next question is from the line of Alpesh from IIFL Securities.
Just 2 questions. What's average duration of this new portfolio that we are adding into our balance sheet. That's first.
Secondly, in the home loan business, I see the new purchases portfolio being stable between INR 1,300 crores to INR 1,400 crores in last few quarters. So -- and the cell construction is increasing. So any specific reason on that? And lastly, the one more question is...
We didn't understand your home loan question. I'm sorry, I don't know if it's a volume problem at our end, but you might have to just speak up a bit for the home loan question.
Okay, sure. The home loan portfolio mix when I see, the share of self-construction over the last 7, 8 quarters, is increasing, whereas the new purchase share is coming down. And in the absolute value, that number delays between INR 1,300 crores, INR 1,400 crores for the last few quarters, so any specific shift in the business focus there?
And lastly, I just wanted to check now with all this moratorium et cetera, being over, can we see the repayment and the prepayment rates across businesses being pre-COVID levels in interest of FY '23 now?
Housing, affordable housing, self-construction has been the focus area, and we have further actually improved that. And in housing -- affordable housing, we are mainly working in south zone, and we started in the rest of the country. In rest of the country, mix was slightly lower, which we have now changed it to self-construction. That is what it is affordable housing.
Sir, what would be the average ticket size for that self-construction portfolio for us?
INR 14 lakhs.
INR 15 lakhs?
INR 14 lakhs. 1, 4.
In consumer and small enterprises, we have -- we mentioned that there are 3 verticals -- the 3 channels. One is the partnership channel, [indiscernible] the channel. In the partnership, we are doing 33%. In whatever we do in the partnership, mainly is a consumer loan or personal loan, which is a short-term and small ticket size, which is hardly 3 to 6 months tenure. But in the case of balance, 60%, which is a traditional loan, it goes up to 5 years. we have both the products in the consumer side. So 33% is a small ticket, small tenor. Balance 66% is the normal ticket and 3 years is average.
Okay. And the last question related to that prepayment repayment rate, are we formally back to the pre-COVID levels and during the COVID whatever the disruptions related to the -- changes into the payment schedule are those being addressed now? Completely?
Yes, in fact -- the collection has been back. We have been doing 114% of our billing collection, and [Indiscernible] is going on very well. That is the reason if you have seen [Indiscernible] is coming down. So further improvement in first quarter 1 and quarter 2 are always the really [Indiscernible]. Collection picks up after the festival. In spite of that this year, we have done collection in the June quarter and expecting that September quarter also will be good. Next quarter, collection will happen in December and March quarter.
Next question is from the line of Mahesh.
Just 2 questions from my side. One is, we see some pretty healthy new vehicle sales of commercial vehicles in the market and yet at a system -- at the industry level, we still see overdue still not reach pre-COVID? If you could just kind of tell us some qualitative answers as to what could explain this that lenders are taking some time out to clear out the inventory of overdue loans in the market?
Talking about new vehicles, sales picked up, but the overdues of the customer has not come down. That's what you're saying?
Yes.
It's obvious who have actually missed out during the COVID period gone in 2, 6 or 9 bucket, they are continuously paying 1 or 2 EMI. It will take at least 6 to 9 more months to come back to the normal level. However, the new requirement from the market, mainly driven by the large fleet operator from the heavy commercial vehicle and construction equipment part of this have gone up and that's the reason they are driving the number. But this particular drive of growth cannot be sustained unless the retail customers start coming up. So we are expecting that the retail customers who have who only purchased the used vehicle will start coming back to the market after the second half, maybe after the festival, subject to the monsoon has been good and agriculture growth is there, supported by GDP growth. So current number is driven by the large fleet operators in commercial vehicle and subsequently, it will be driven by the retail customer.
And one last question from my side. There is a really stark difference between the way market is seeing the macro backdrop for next year. Yet, lenders are reasonably optimistic of the situation on the ground. How would you reconcile the two when you are building your business for this year? And how can the portfolio be protected for next year in case there is a slowdown out there?
Yes, I think it's very difficult to -- I mean to actually say what is going to happen, right? In terms of -- I think too many people are trying to predict, and we don't know how to predict. So we are basically not trying to formulate this view. And so that's why even Ravi said, listen, if the market grows at X, this is what we will end up growing at, which will be slightly more than the market. But what's actually going to happen. I don't think anybody can say at this stage, okay? I mean it looks like basically kind of everybody who looks too much at the West, has got kind of a view that recession is coming around. But it also looks like it won't be as pronounced in India as it is kind of globally and that might be causing some of the bullishness. But that's not how we are driving internally. It's kind of actually driven by what we are seeing on the ground, and that's what's kind of driving most of what's happening for us.
Andrew, you can close the call.
Thank you. Due to time constraints, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.
Nothing specific from our side. Thanks a lot for joining, and we look forward to seeing you next quarter.
On behalf of Kotak Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.