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Ladies and gentlemen, good day, and welcome to the LIC Housing Finance Q4 FY '22 Earnings Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Praveen Agarwal from Axis Capital Limited. Thank you, and over to you, sir.
Thank you, Sandy. Good morning, everyone, and welcome to the earnings call of LIC Housing. We have with us Mr. Y. Viswanatha Gowd, MD and CEO; and Mr. Sudipto Sil, CFO, to discuss the results with us.
I would request the CEO to give us a brief on the results. Post which, we'll open the floor for Q&A. Over to you, sir.
Thank you. Thank you. Very good on to you all, and thank you, Praveen. Good morning, and welcome to the most -- our post earnings conference call of LIC Housing Finance Limited intake. As you are aware, LICHFL declared its results for Q4 '22 yesterday. Prior to detailing the operations aspects, I would like to highlight that this year began a note of uncertainty with the second wave of COVID-19 impacting business activities. However, during the year, the economic environment improved significantly, which is reflected in the turnaround in profitability for the company.
Asset quality marked a good improvement during the course of the year. The current year, that is FY '23, promises to be far, far better. And in spite of the hardening of interest rate scenario, the economic environment is much positive as compared to both FY '21 and FY '22. The financial highlights of the quarter are as follows: Total revenue from operations INR 5,300 crores as against INR 4,968 crores for the corresponding quarter of the previous year, showing a growth of 7%. We are happy in form that we have crossed INR 2,50,000 crore in our AUM this quarter.
Outstanding loan portfolio stood at grew at INR 2,51,120 crores against INR 2,32,003 as on 31 March 2021, reflecting a growth of 8%. The Individual Home Loan portfolio stood at INR 2,04,230 crores as against INR 1,80,665 crores as on 31st March 2021. It is also up by 13%. Total disbursements for the quarter were INR 19,315 crores as against INR 22,362 crores for Q4 of FY '21 and INR 7,770 crores in Q3 FY '22. Out of that, the disbursement in Individual Home Loans were INR 16,341 crores as against INR 19,010 crores for the Q4 of FY '21. For the full year, disbursements in Individual Home Loans, that is our core segment, crossed the growth of 14.35% from INR 46,927 crores to INR 53,662 crores.
On the net interest income front, NII was INR 1,637 crores for the quarter as against INR 1,505 crores for Q4 of FY '21, a growth of 9%. Net interest margins for the quarter stood at 2.65% as against 2.66% for Q4 FY '21. Prospect before tax for the quarter stood at INR 1,314.41 crores as against INR 352 crores, growth of 273%. Profit after tax for the quarter stood at INR 1,118.64 crores as against INR 398.92 crores for the same period previous year, reflecting a growth of 180%.
Dividend declared was 425%. That is INR 8.50 per share maintained at FY '21 levels. Growth momentum continues to be positive despite rate hikes in the system and is being witnessed across the country in the Individual Home Loan segment.
On Project loan side, FY '22 has been a cautious one. FY '23 looks to be more promising in view of higher economic activities, and share of disbursements is likely to increase from 5% to 10% in this year.
In terms of asset quality, the Stage 3 exposure at default stood at 4.64% as well as against 4.12% as on 31st March '21 and 5.04% as on 31 December '21, reflecting a sequential improvement in the same. Total provisions as on 31st March 22 is INR 5,839.10 crores, reflecting a provisioning covering up 43%. This includes INR 299.18 crores for COVID-related provisions. ECL provisions for assets re-categorized as NPA as per RBI notification dated 1st November '21 is INR 227.29 crores.
In our interaction post the Q1 earnings, we had indicated that the worst in terms of asset quality was behind us. It is heartening to note that there have been sequential improvements from Q2 onwards. This quarter, we have also been able to recover some NPAs in the builder and high-value loan segment, totaling around INR 350 crores in terms of actual recovery. Out of which, 1 recovery of approximately INR 70 crores was written off account.
On provisioning cover, there has been an increase from previous quarters. Overall credit cost for the quarter has also come down since a lot of provisions were front-ended during the earlier quarters of the year. Collection efficiency is being maintained and stood at 99% for the March '22. On the funding side. We have witnessed a reduction in overall cost of funds by 17 basis points during the Q4 FY '22 despite hardening in the bond yields during the same period on 41 basis points during the current financial year. Incremental cost of funds stood at 5.14% for the quarter. Net interest margin for the quarter stood at 2.65% as against 2.66% over the Q4 of FY '21.
Towards the course of the financial year, we witnessed hardening of the yields, which are further hardened in the first 2 months of FY '23. On the liabilities front, there is about 50% fixed rate liabilities in the book, which will provide some cushion in a rising rate scenario. Also, more than 90% of our assets are on floating rate side. As mentioned earlier, we are now in an increasing rate cycle. We have also increased our lending rates on fresh disbursements last week across all product categories. Project [ RED ], the digital transformation project is also nearing completion. With a refreshed digital footprint, the company is poised to emerge very, very stronger in this year.
With this brief induction, I would like to invite you for queries. Thank you very much.
[Operator Instructions] The first question is from the line of Abhijit Tibrewal from Motilal Oswal.
Sir, congratulations on a good quarter. Sir, firstly, I mean, on disbursements and I would say, do you think, I mean, you could have done slightly better disbursements. Were there any particular reasons why you think, I mean, disbursements were at these levels? I mean anything to kind of read into? Or do you think, I mean, this is what you were expecting and this is what we have achieved in that end of the quarter?
One thing as a disbursement in Q4, you are asking, Q4?
Yes, sir.
Yes, yes, what happened actually, you also are aware, last year, financial year '21, Q4 is almost a clear quarter where all entities are available for good working and all activity was full swing. Whereas what happened in FY '22, the last quarter in the month of -- middle of January and part of February was lapsed across all geographies in the entire country due to third wave. Some of the office also could not function properly. That also resulted some sort of what we call downside as sort of things are concerned. But actually, if you look at now the promising this year, FY '23, already actually, what happened showed a very good positive note. And we are very sure that this year, that incremental growth of nearly 15%, certainly will be ensured.
Sir, talk about incremental growth of 15% in disbursements in FY '23?
Just a second.
Okay. Sir, the second question that I had was on the pipeline that you have in your developer and Project loans. So obviously, you suggested in your opening remarks that FY '22 was more a year where you were also cautious. But at least kind of when we listen to commentary from some of the other housing finance peers that you have, things are looking bright. I mean, they are talking about an improved pipeline. So what is your sense here? I mean would you become, I mean, slightly more constructive did your risk appetite kind of improve in the developer and Project loan segment in FY '23?
Yes, certainly. Actually, last year, we could not do very well. You are also aware that first half, most of the projects were actually activities were not in full swing. Only second half, they slightly took shape and even with our third wave here and there some hit was there. Now the sky is very clear. What I feel in the current year, even of existing projects also may drop some more money, number one. Number two, what happened all the pipeline, whatever they're having. I think more or less, it is more than around INR 1,000 to INR 1,500 crores is there with us. With other activities across all the regions this year, we would like to at least what we call take the share of this project finance across all our regions also put together, at least from the current level of 5% to 10% of our incremental business in the current year.
Got it, sir. And sir, my last question was on the asset quality. So I think, I mean, your credit cost guidance for FY '23, I think will be contingent on what kind of a provision cover that you would want to maintain on your standard loans, which is Stage 1 and Stage 2 loans. So that was the first part of the question. And the second part is if you can share, I mean, some of the data-seeking questions that we kind of keep asking you in every earnings call, things like, I mean, what is the total outstanding pool of restructured loans and if you can split it between retail and developer? And then a segmental split of your [ state free ] into Individual Home Loans, project developer, non-housing commercial and nonhousing individual.
Yes, Abhijit, so you can just quickly note down. You wanted the split of NPAs, right?
Yes, sir.
Great. Okay. So as far as the split of the NPAs is concerned, just on the Individual Home Loan, IHL, it is 1.7%, 1.74%. In the nonhousing commercial, it is, which is including the project loans. It is 31 -- it is 18.04%, and in the nonhousing individual, it is 8.4%. And if you look at project versus retail, then the retail segment, which is the IHL plus part of the nonhousing individual, that comes to around 3.16%. Balance is project loans.
So sir, I mean, project loans what can be the...
It's on a stand-alone basis, it is about INR 4,124 crores.
INR 4,124 crores. Right. So this is useful. And sir, what is the quantum of restructured loans outstanding and if you can split it into retail and project.
Around 3%.
3%. That continues to be in the same lanes, even last time also...
INR 78 billion. That is INR 7,800 crores approximately.
Right. Okay. And sir, lastly, the question that I asked, what is the outlook on the provision cover that you would want to maintain on your Stage 2 and Stage 1 loans?
See Stage 1, Stage 2, if you note that also this, partly the IRAC movements have been also maintained there, right? Hello?
Right, right. So I mean what you're trying to suggest is those loans which have not classified under Stage 3, but are categorized as NPA as per RBI circular?
So overall, PCR, if you look at on the Stage 3 right now, it is around 43%, it has moved up from around 40%. So we'll keep on gradually increasing it, but I would say that we are nearing the targeted PCR.
Yes. Now in the Stage 3 also, almost around 43% is maintained. And what happened now as Sudipto is telling correct now because of RBI circular, we are also what you call we are [indiscernible] fully.
Stage 1 and 2, yes. Yes, Stage 1 and 2 is also being provided for.
Right. But sir, my question was more around the cover that you want to maintain on Stage 1 and Stage 2 loans. So Stage 1, we are having a provision cover of 25 basis points and Stage 2, we have a provision cover of 3.1%.
Yes, I think that is fairly stable. It should remain at around those levels.
And moreover nowadays, you see the recovery, even our correction efficiency is almost 99% in March, and economic activity also improved. I think all our customers also nearly 70% plus salaried sector. So we see a very good upside there definitely in our collection efficiency. And also, the Stage 1 certainly will be taken care.
Yes.
[Operator Instructions] The next question is from the line of Mahrukh Adajania from Edelweiss.
My first question is on the back book repricing, so when does the...
Mahrukh, can you speak up a little loudly, please?
Yes, yes. My first question is on back book repricing...
Sorry to interrupt, ma'am. Actually, if you're wearing your phones or any external device, we request you to remove and speak from the handset. The volume is not very -- the audio is not very clear.
Okay. Can you hear me now?
Yes, please, tell, tell, we'll try to manage today.
Yes. So my question is in the back book repricing when does the back book reprice, the increased rates on fresh loans?
Yes. See, actually, the back book repricing happens every quarter. So the next review is due 1st of July. Hello?
Yes. Okay. And one more thing. One more question. On the cost of funds. So basically, what is the outlook on cost of funds from here onwards proportion of liabilities are repricing next year? How does it look like?
Yes. On cost of fund side, it is very clear that we are in an increasing interest rate cycle. And interest yields, interest rates have increased across tenors, mostly in the short end, but also across in long end also. In terms of our overall liabilities maturing in the next financial year, that is FY '23, around INR 25,000 crores is going to get redeemed.
Okay. But -- because we are ended with 2.65% margins, we exited 4Q with that margin. So where do you see that number settling in the next 2 to 3 quarters?
See it will be -- see, actually, if you look at it, always the exit margins are on the higher side every year, year after year. On a full year basis, if you see, FY '22, the margins was 2.29%. Previously, 2 years it was 2.38% to 2.4%. I will place the full year margins. I'm not looking into quarters, but full year margins, we'll be in the ballpark range of 2.4% to 2.5%.
The next question is from the line of Piran Engineer from CLSA.
Sir, I just first wanted to confirm whether I heard something correctly. Our loan NPLs are INR 4,124 crores. Is that correct?
Yes, it's correct.
So that translates into 31% NPL versus 27% last quarter.
Correct. Right.
So is that just because the book has shrunk? Is it a denominator effect or...?
It has actually shrunk, you're absolutely right, Piran, the book has actually shrunk year-on-year as well as between December and March.
Okay. So on an absolute basis, the NPL has come down?
Yes. As we mentioned in the opening remarks, our MD mentioned that we have actually been able to recover, [Foreign Language] cash recovery of INR 350 crores approximately in high-value Project loans, out of which, of course, one of them was a written off account.
Okay. Okay. Got it. And then just on the NIM question, if we were to reach 3-year bonds today after the GSEC yield has valued so much, what do you think it would be at ballpark?
See nobody is right now in the market, to be very honest, so because markets are very volatile. And I would believe that there is a little bit of panic reaction to the surprise rate hike by the RBI. Markets are likely a little down because right now, the entire yield curve is in a complete disarray. So I will not get you to do a 3-year money right now. But if I had to go, I think it should be upside of 6% certainly, even maybe closer to 7%.
For 3-year money?
3-year money. Certainly upside of 6.5%.
Wow. Okay. Okay. That is helpful. And then just secondly, in terms of our home loan book, what percentage of that would be towards builder subvention scheme?
No, we don't do builder subvention.
Subvention we don't do.
We don't do. Nil.
The next question is from the line of Rikin Shah from Crédit Suisse.
Just a couple of data keeping questions. Were there any incremental -- like, sorry, could you give an outstanding amount of ECLGS disbursement that we have done so far. That's the first one. The second one is the RBI circular impact was around INR 2,500 crores on the NPAs in the last quarter. What would that number be today? And third is the tax rate seems to be low. Is there any specific reason why the tax rate was lower in this quarter?
Your first question, ECLGS outstanding as of 31st March is INR 926 crores. Second query is regarding the -- second regarding the...
NPA. Project NPA.
Project NPA, right?
No, no, it was regarding RBI circular impacts. So last quarter even...
RBI circular, yes, RBI circular has been implemented. You will see the disclosures in the notes to accounts also and the provisioning that is required in terms of the IGAAP provisioning for the revised IRAC norms is around INR 227 crores.
Sure. So provisioning, you have included in Stage 1 and 2, but the resultant loans, are they included in Stage 1, 2 or they are classified as a Stage 3?
No. Actually, if you look at it, what the revised circular, there was one more circular which was issued on 15th of February 2022. This is as you -- for that revised IRAC norms does not have to be implied on the -- or implemented on the Ind AS numbers, so the Ind AS numbers are different. The IGAAP NPL numbers are different. The Ind AS Stage 3 numbers are different, also we had -- as a matter of prudence, we have increased the provisioning assuming those cases to be impacted. Those are all standard accounts, by the way.
And we have implemented a circular also, even though it is not now immediately required.
We have implemented it fully.
Still time in there up to September.
But we have fully implemented.
Sure. And just on the tax rate, any reason why the tax rate was...
The tax rate, I think there was some additional -- higher taxes paid in anticipation of a greater project loan income which was paid during the earlier part of the year, so that has been adjusted. So net tax rate, if you compare on a full year basis, it is by and large the same as compared to previous year.
Got it. And just one last one, because of the recoveries in the developer loan accounts from a return of account as well when interest income adjustments or no one-off in the NIM this quarter?
No, there are no one-offs in the NIM this quarter.
The next question is from the line of Shubhranshu Mishra from UBS.
A couple of questions, the first one is on the NPAs in the builder book, sir. What vintage of these NPAs would be from the refinancing that we did post IL&FS? We are at around 31% NP in the builder book today. Of this amount, how much is from the IL&FS refinancing book that we did after post IL&FS? That's the first. Second is sir, would you want to comment on the demand scenario today? Do you think that we've only peaked in individual housing loans across the geographies, sir, and not just metros, but across other cities as well? That's the second. And third is if you can tell us the PD/LGD assumptions if they have changed or what they are in this quarter versus a year ago, sir?
Demand synergy.
Yes, demand synergy, if you are looking at what happened yes, sorry, individual loans are concerned, when our present year disbursements are nearly 90% plus are only in the Individual Home Loan segment. Even though all geographies, we are covered now, and we see partial robust demand everywhere that are potentially seen across our segments and also what we call even in all areas of our operations even our channels are very strong, that we very feel, we are very certain that this year, we will be having very good at least minimum 15% growth over the last year. That's what we're expecting in the disbursement side.
Yes. Your second query was pertaining to the PD/LGD assumptions, right Shubhranshu?
Yes, sir. Yes, sir.
Yes. PD/LGD assumptions actually gets thrown up from the mark of model analysis, which is basically the study of the previous 20 quarters. So whatever has been the movement in accounts in the 20 quarters, that actually gets built into the PD and LGD assumptions for current quarter. So if there had been a higher NPL in -- during a period of 20 quarters, then obviously, the PD and LGD assumptions will be greater. Does that answer your question?
No, sir, what is the number? What is the LGD that...
So that is a model that's a different -- there's a very complex model. It goes into various product categories looking into various parameters. It's a very complex model.
Sure, sir.
And a one line answer to that. And your first question was regarding ILFS refinancing. We have not refinanced any of the ILFS loans.
Nothing is refinanced there.
We don't refinance any ILFS loans.
No, not ILFS loans, what I meant is post IL&FS crisis, we refinanced some amount of loans which came up in the market. So what is the overlap?
No, we have not done any of those loans which have been earlier financed by ILFS or any other...
They're not in our book, actually.
This is infrastructure. We don't do that.
Sure, sir, I'll take this off-line. No problem.
Yes.
The next question is from the line of Kunal Shah from Carnelian Capital.
My -- I have 2 questions. One basically on the competitive scenario. So in the last call, you did mention that we are doing -- we intend to do better than the industry growth as far as [indiscernible]. But we continue to see a lot of balance transfers that are happening from our company to banks and also the incremental demand move [indiscernible] banks. So twofold questions, right? One is basically what is your sense of the competitive intensity on the ground and how are we seeing our loan book growth as far as the individual segment specifically goes? And second question is, obviously, on the yields, right? So you've been guided for NIMs in the range of 2.4% kind of ballpark number on a yearly basis. But specifically on yields, how do we see that? And a question of growth versus yield. So how do we see that?
Good. Good. You have got a very good question actually. What happened regarding this, what do you call the market competition and other keys you have mentioned correctly. As I told you what happened in Q4, even though we were having very -- of course, we also earlier indicated that the growth will be better than that and all in our last earnings session with you. What happened in the Q4, actually, there was a hit because of the January and part of February last because of this COVID. That's why many of the offices are also closed across. It's right in that quarter, they got affected. But if you look at the overall for the entire year, there is a growth of around 13%. That is minimum. That's what happened. And apart from what happened earlier, quarter of '21 also had a lot of what you call incentive days that and all and that was a clear year also clear quarter that was there.
But now looking at the present scenario, we are very confident because the demand is the seen across, and more of what happened we upgrade our systems also there in our portals who have given some sort of what to call more publicity and also more visibility for the builders whom we have financed. So what I've note our customers can select across, which is a property they can look and buy. That's sort of what we call a facility will provide in the quarter for all of the, our Project loan borrowers so that gives a wide scope where we can now -- earlier it was not there. So we're expecting at least some 5% to 10% of our share from that itself, number one.
Number two, channel-wise also what happened. Our channels are very strong. Our channel is our tied up channel of intermediaries or our own Financial Services Limited. Channel our direct marketing channel. All terms are fully strengthened now, which is there will be a very good vertical of growth across. So that's why competition, I think we did not have much worry, right? I think going ahead, many of 15% will be there in our actual growth will be there the books. So actually, our business.
Then secondly, the project finance also this year because the builders were already -- who were there with us earlier and then now we have put a very good system than a special task force is selected for that to reach out to max number of people in all areas. And we also identified some good number of our centers, which can process it faster. So with that and more adoption of the digital technology across, will help us to have record growth in the project finance also.
Sir, would digital help us have growth? I mean, we always understood that a yields is one of the biggest drivers for either part or the growth part, right? And digital only helps improve efficiencies in terms of costs. But you are saying that digital enhancement will help us have growth, is that understanding correct?
[Foreign Language]. Digital, what I mean to say now we see if the individual loan segment, if you see, we have got our own app. That app is almost what happened, 20% of business is coming through that. So that is taking care of most of the operations even in any place. That is one thing. Then after the project loans are concerned, also what happened in our own, what we call portals, we have given special access with the customers. They can see -- actually, they can also see through all the projects where we have financed. So what happens if they like the property and also have a very good idea about that. That definitely will become -- actually, it will help them to choose and he will become our customer immediately. That's not the digital transformation, number one. Number two, what happened the processing also what happened now is now more or less, it is seamless. So with our Project [ RED ] initiatives were taken across, there will be a substantial improvement in our operations also digitally.
Okay. And the easy part, I mean we have already reduced the rates on our offerings competitive in the market. So do you see that going forward in the coming years?
Can you please kindly repeat. I could not follow the last part of your query?
Sir, what I was saying is how look at yield on loans because we have reduced the interest rates on loans that we offer to our customers, right? So about 2.4% on the NIM part, but specifically more on the yield part, how should one look at that?
No, we have not reduced. We have actually increased.
Last year, we increased by 20 basis points across all the production categories.
Sorry, how much is the increase?
20 basis points. 20 to 25 basis points.
Okay. Okay. So how do we look at our yields?
Yields will be in line with the interest rate movement. If you see, for example, what we mentioned in the opening part, I do not know whether you were able to hear that. We had mentioned that 90% of our assets on the floating rate side. That provides good, I would say, avenue for us to transmit the rates as and when it impacts us in terms of higher input costs.
The next question is from the line of Shalini Vasanta from DSP Mutual Fund.
This is Vivek Ramakrishnan. I have 2 questions. One is in terms of competitive intensity, with credit growth being more broad based, are you seeing that the mortgage at these rates that are being offered are being reduced in the sense that the competitive intensity is being reduced, which is allowed to pass on prices? That's the first question. And the second question is on the builder book asset quality. Given that you're saying that the picture looks very good on the existing NPA also, do you expect even more recoveries in the coming quarters? And can you guide us in terms of how do you think that is going to shape up and is there a need chunky ones that are going to get repaid?
Yes. Second question, I think you are asking about the project, what we call the delinquencies, I agree. Going forward now, there will be good recovery already some systems already. Some resolutions are in process, so with that, we see some recovery will be there, certainly in that segment also. Then #1 question what is about that you were asking about?
Competitive intensity.
You were asking about the competitive intensity. That actually is the market I agree, now because rate costs are now under rising scenario, they're a little bit there will be definitely feeling will be there. But historically, if you look at our own, what you call, performance in the past, where the rates have gone up like the general -- our performance has very good until excellent growths are shown. And our teams are across actually, what we call fully strengthened in the sense there are fully what you call now equipped with all the input and other product features. So then what happened, we're having no doubt that the competitive intensity, certainly, we will manage, and we used the manuals earlier, and our people are more competitive. They are also totally competent to manage that.
Vivek, if I may just add, generally, it has been observed that competitive intensity, I mean, competition intensifies during days of easy liquidity. Now we are withdrawing from the days of easy liquidity. To that extent, I think there will be a little bit of easing in the competitive intensity, especially from lower-rated lenders, low-rated entities who are not, may not be able to fund themselves at attractive rates.
The next question is from the line of Ruhi Pabari from Reliance Nippon Life Insurance.
Congratulations on a good set of numbers. So my question is pertaining to I think continuing line of our developer book. So considering the rising construction cost by the input cost and everything, do you see any issue with respect to the of solvency of any of your borrowers in the developer book is 30%. What I understand is the 31% is the NPA and the part of the restructure book roughly around, as you can see, some 4,700 is also stress roughly about more than 50% is kind of a stress booked in the developer book. So do we see those kind of solvency issues in these developers going ahead considering the current situation?
No, no. I think actually this, we, when we analyzed our own books across the project finance, the existing portfolio, no further delinquency. They're almost there. Because what happened now out of these things even some may become regular. Even across the cities, if you see some cities like wherever you see like even in Bangalore, Chennai, Hyderabad, given some process in Mumbai, even some parts in Mumbai, even these -- actually some resolution is already in the process. So with that, we don't see any further downside as far as the delinquents are concerned homes Project loan front.
And if I may add, we are witnessing some signs of a turn in the real estate cycle. Demand has been quite sustained throughout the last 2 years and still continues to sustain. Sales are improving, and price points are also moving up. So if there is an indication of input costs increasing, then price points are also not staying at the same pace. They're also moving up. So that actually is the beginning of another real estate cycle as we see some early indications of.
Right. I'm just sure one with respect to the development book, like last quarter, it was 27%. Stage 3 assets in the developer book. So if I have to just convert this, it was some 3,800. And as on March '22, it was 4,100. So there's some slippage in the quarter, which had happened.
No, there has been no slippage of any major account. In fact, there has been recoveries as we've mentioned.
And overall, we are also following -- of course already now RBI settlers are applicable.
That could be the impact.
Okay. Okay. Understood. Got it. right. And sir, lastly, if you could just help with the write-off amount for the quarter and the year.
No, no write-offs.
No write-offs are there.
No write-offs in the quarter. None.
[Operator Instructions] The next question is from the line of Harshvardhan Agrawal from IDFC Asset Management.
Just had 1 query. Can you please give a breakup of the restructured book into individual developer and LRD book?
Yes, overall book was I think.
Yes, OTR is coming to around 3% in the project or entire loan book. In a breakup answer we'll give you.
The project outstanding OTR is around INR 3,900 crores and retail, which constitutes of Individual Home Loans another category is INR 3,940 crores. Roughly 50-50, out of INR 7,800, which is roughly around 3% in previous book.
The next question is from the line of Subramanian Iyer from Morgan Stanley.
Just I had 1 bookkeeping question actually. So in your exchange filing, you reported net-worth number, where the gap in FY '21 was the impairment reserve of about INR 205 crores versus the book value that you have. This time, it seems that the gap has widened to around INR 1,800 crores. So I'm not sure if I'm missing something. I just wanted to clarify that.
No, there is actually a certain formula which has been specified by NHB to exclude certain categories of reserves, special reserves, et cetera. So that has been affected.
Okay. Does that impact the Tier 1 as well?
No, no, no.
No. Okay.
The next question is from the line of Kayur Asher from PNB MetLife.
So I just wanted to understand your comment on what is driving the quarterly variation in NIMs where CFO sir also alluded to Q4 particularly being a better-performing quarter in the past as well. So what is driving this? Is this a function of some accounting policy we follow?
No, Kayur. Actually, there's not any accounting policy, which is in there. See, actually, if you look at, there are 2 things which happened. During the fourth quarter, we were able to get some repricing on our existing liabilities and big chunky accounts of bank loans, we have been able to reduce the rate significantly. So that is one reason. Second reason is on 5th of January, we've actually increased our lending rates much before market competition. We had increased our lending rates way back in January itself, across all product categories. So that also has resulted in certain increase in the income generation.
Understood, understood sir, and maybe just 1 quick follow-upon that..
And the first thing is that recoveries always help, so recoveries during the quarter will always add to some interest in [indiscernible].
Understood. Understood, sir. And just one thing on the funding from bank loans. So the share of funding from this revenue has increased in recent years, so from almost a 10% to 30% now. So I just wanted to understand what are typically the terms there so do you see fixed rate loans or they are floating? And also if you could talk about duration of these typically [indiscernible] longer tenor?
Yes, they are generally 5-year terms, and they are generally floating it either it's an external benchmark or with some MCLR or with some recourse.
The next question is from the Sanket Chheda from B&K Securities.
Congrats on a good set of numbers. So my question was also NCDs. So out of 15% NCD that we have under borrowings. Would it be possible to say how much is maturing in next 1 year? How much...
Yes, the next FY '23, the total maturities will be around INR 25,000 crores.
Okay. Okay. So related to that in last 1 year, maybe because we were high on NCDs, the drop in cost of funds was relatively less for us per se compared to other players. And now the NCDs, maybe 3-year NCD or 5-year NCDs which you would have taken 3, 4 [indiscernible] are coming for the maturity now in next 1, 1.5 years. Do you think that overall cost of funds will not move much in terms of going up over the next 12 months? On a relative basis, since we had relatively lower fall in cost of funds, the rise will also be relatively low. Do you see that per se given our borrowing mix?
I will respond this way. [Foreign Language] FY '21, the reduction in weighted average cost of fund was 115 basis points. There was also a 115 basis points reduction in the repo FY '22, there was no reduction in repo, but we still achieved 41 basis point decline in cost of funds on an INR 2 lakh crore liability. So put together, it's almost INR 3,000 crore benefit to the I mean, savings in the interest expense, of course, partly aided by movements in the interest rates. Now coming to your specific query regarding the movement now, it is very obvious that when you have a larger share of fixed rate liabilities as compared to assets in any book in a rising rate scenario, it always gives a cushion.
Correct. So my question was particularly for FY '22 and FY '23 and the almost [indiscernible]. And I was -- because our incremental cost [indiscernible] as the weighted average cost of [indiscernible] still relative [indiscernible] among [indiscernible].
Correct.
So that one ever that the next one would not be -- would be less.
Correct.
The next thing is the go [ HDFC ] in the...
Sir, your voice is breaking up.
You are breaking up.
Is it clear?
Now it's clear.
So yes, for the second question was that HDFC may move under banking structure limited in next say, 3, 4 quarters, and they have about LCD so about 1.2, 1.3 [indiscernible]. So once they move out of banking structure, do you see that much supply would be available wherein the cost for you to remain [indiscernible] for the long term maybe next 2 years also.
Yes, there will be some marginal benefit could be there. It is very difficult to specify right now because only when the events actually get too low, the outcome of it.
How the situation will be.
How the situation.
Correct.
Sure, sir [indiscernible]...
Sorry to interrupt again, sir, your voice is breaking up, actually. We are not able to hear you clearly.
[indiscernible] Sir, the next question was on [indiscernible] since we are saying that the project loans are picking up. So do we see about, say, making kind of growth in FY '23 on AUM level? [indiscernible].
No, no, in the project finance, we were asking about now because last year, we could not do very well. This time in our vertical out total disbursement for the current year of FY '23, we would like to have at least something like the share will be around 10% from that is what are expecting?
So retail is particularly strong. Retails about [indiscernible] now you are seeing that retail will also pick up. So just wanted to have a total on what would be the AUM growth are going to be. How [indiscernible]?
AUM growth in which segment?
Overall. Overall.
Overall will be double digits.
Yes, it certainly at double digits because this year, we could show around 8%, but next year, suddenly, it will be more than double that. It will be certainly in the double digits.
Okay. And you first disbursement...
Come back in the queue, please.
Last thing [indiscernible] the capital adequacy. So we are still reporting in would it be possible to give making the -- it's subject to approval because all the other alternatives have been reporting on a real time basis.
We are not able to -- we are not able to hear you clearly.
You are voice is breaking up, you were speaking about capital adequacy or something.
The next question is from the line of Vikram Subramanian from Spark Capital.
Just one question on the PPT based on the script, sir, you have mentioned about the book value, which in 2022 is [ INR 414 crores ]. This doesn't reconcile with my number. So I check both on the stand-alone consol basis. The book value should be closer to [ INR 445 crores, INR 450 crores, INR 448 crores ] actually. So is this to do with the impairment reason? Or is there some other impairment we are taking on the next one?
There is no impairment. There is no impairment. We'll just check off-line, but there is no implement. Whatever is the total book value divided by the number of shares increased because number of shares have also increased.
No, no. So even accounting to that, so all the previous year calculation, sums the tally. It just '22 doesn't tally.
We will just check. We will just revert.
It has more dividend. Okay?
Sure.
The next question is from the line of Bhuvnesh Garg from Investec Capital.
Just want to know that, what percentage of your restructuring book has started payment? And secondly that we see within your restructuring book, about 13% of the book has already flipped into NPA in Q4. So in that context, how do you see potential asset quality challenges in this book going forward?
If you look at the restructure book, which is around 3%. Last quarter, also, it was there more or less, whatever the quantum remains same. But within that, what happened, if you look at some of the high ticket size cases, even in the, what you call, retail segment also, we could recover. That is also there. And going forward, we are very sure that even -- actually, we have put a special task people across all the areas, identified some numbers, which can be regularized at the earliest. So this quarter, we're expecting a good turnaround there also. So with that, there will certainly improvement in this OTR category in all categories, in all the vertical segments, maybe individual or even commercial or some part of projects source.
The next question is from the line of Aditya Jain from Citigroup.
The accounting for a cash recovery, the INR 350 crores, how much -- so what is the benefit to the interest income from cash recovery?
Can you please be clear or something? I didn't catch what you are asking about? Which cash?
In the interest income, what is the benefit from the cash recoveries which we did in this quarter?
Mostly the cash recovery is in terms of principal.
Okay. So it will be...
A small amount of interest was mostly principal, principal recovery.
Got it. That helps. And then on the RBI circular and IRAC norms, you mentioned that the assets which would have been NPA are in Stage 1 and Stage 2 and higher provision has been made on them. So we've made 15% provision on them, and so nothing more is required to meet IRAC norms, is that right?
Right. Right. Right.
And the last thing on the builder book decline Q-o-Q, that is because of repayments? Or is there any other driver there?
Repayments. Actually, repayments.
Okay. No sale of account. It's...
No, there has been no sales of any account.
No sales. No write-up most.
Some recoveries happen and some repayments also happened.
The next question is from the line of Krishnendu Saha from Quantum AMC.
Just one from a little bit of understanding. The liquidity coverage ratio increased from INR 238 to 549. So just on that to increase? And how do we take the gearing is leaking 10, so how do we see that in the future?
See, as far as the LCR is concerned, you will be, you will appreciate that the LCR is maintained on a day-to-day for the next 30 days. Now what happens is that April typically is a month that committed disbursements are very low because majority of the pipeline of disbursement is exhausted by March. Secondly, during April, there are no major repayments of liabilities like N series is CDs. To that extent, it might appear as an aberration. But on an overall quarterly basis, if you see on a daily average of 90 days between 1st of January and 31st of March, it is much lower. It is around 70%. And if you take it, for example, in the month of May, any day in the month of May, again, it will be in the range of 120%, 130%.
The point estimate, that is why that you have.
It is all a particular date.
Yes, point estimate. And secondly...
And your other query was?
What do we look at the gearing?
Gearing, we had done a presidential allotment in the last year. You're aware from the promoters. So to that extent, the gearing has been addressed. Gearing matter has been addressed, and we are within the regulatory norm comfortably in terms of overall limits of gearing, which is number of times of the capital which we can lend.
But where do we see at the end of the year, what will be the growth in the book at the mid-teens and everything. So like where do we -- and recovery is coming and what do we -- where do we aspire to be? Let's put it that way.
Even on an as-is-where-is basis, it should improve because last 2 years, there have been significant erosion from the Tier 1 because of the provisions made. That is unlikely to replicate in the next 1 year or 2 years. To that extent, we can say that even on as-is-where-is basis, it should improve.
The next question is from the line of Prashant Kumar from Sunidhi Securities.
Just one question on liability side, you have mentioned that INR 25,000 crores in FY '22 -- '23 is going to mature. So I just wanted to understand that our current ratio on the borrowing mix, 30% holding from banks and NCD is 53%. So where will be the more incremental borrowing that this mix will be going forward, the picture -- what will be the picture on this? Because the banks and NCD, there is a huge difference in weighted average cost. So I think so the bank will be your preferable are, but I want your outlook, sir..
Banks, all 3 options will be kept open because the wholesale debt market is also a very dynamic market. And with positive news flows, you can certainly get good deals. So nothing is ruled out. But having said that, focus this year will be on retail liabilities, about 20% of incremental borrowing is likely to come through retail liabilities incrementally.
Okay. Okay. And on restructured book, INR 78 billion currently, around 3%, so where on asset class and where is it exactly in Stage 1 or 2 -- Stage 1 or 2?
Which one, OTR?
The total restructuring book, INR 78 billion.
Yes, generally OTR condition is that the account has to be standard at the time of applying the OTR. So by definition itself, it will sit in the either Stage 1 or 2.
So sir, just on back calculation on this one. the total Stage 1 and 2 provisioning is around INR 800 crores. And so on the prudent manner, even on the restructured book, if I calculate -- if I take 10%, it should be around INR 780 crores. So on Stage 1 and 2, there is a very minimum, I mean, around INR 20 crores like you have the total after restructure book of provisions. So it is very low.
So there is no option, 10% provision has to be made on restructured book. So there is no option of not doing it.
Yes. Yes, sir. So -- okay. And one on fee income side, there is continuously the growth on fee, so is there any upside you'll look at on this one?
Yes, definitely, you will get to see upside. You will certainly get to see upside.
In the interest of time, that was the last question for today. I would now like to hand the conference over to management for closing comments.
Thank you all. I thank every one of you for active participation, then again, very good interaction with all of us. Finally, I would like to say a few words. We have gone through 2 different years, very, very difficult years also due to pandemic. With the improvement in economic activity and normalcy now being restored, I think FY '23 it is expected to be very, very buoyant and positive on all sides. And our company is all set and fully geared up to scale greater heights, but I think the recent past were not seen that high we'd like to reach in the -- when the sky is clear with very, very certain map is in a sense, the ground is very clear and the road is very certain that they would like to reach. The goal also very clear. And with all the people in our offices and the committed field force everywhere and the company is tied to scale new heights substantially this year, so FY '23 will be very, very memorable year. Thank you. I wish you all the best.
Thank you very much. On behalf of Axis Limited, that concludes this conference.
Thank you.
Thank you for joining us, and you may now disconnect your lines.