Satin Creditcare Network Ltd
NSE:SATIN
Satin Creditcare Network Ltd
NSE:SATIN
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Ladies and gentlemen, good day, and welcome to Satin Creditcare Network Limited Q3 and 9 Months FY 2023 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. H.P. Singh, Chairman, Managing Director of Satin Creditcare Network Limited. Thank you, and over to you, Mr. Singh.
Thank you. Good morning, everyone. Thank you all for taking the time to join us and discuss our financial results for Q3 and 9 months ending FY '23. I wish all of you a very Happy New Year and continued success now and in the years ahead. I hope that you would get a chance to go through our quarterly results and investor presentation. Those who have not seen them yet can access the same via our website and stock exchange.
It makes me happy to share with you that we have had a very good quarter. And looking at the business performance, it is fair to say that we are on a solid ground with growth and profitability back on track. We witnessed significant improvement in our financial and operational performance backed by sustained business momentum and consistent improvement in our asset quality, demonstrated the commitment and tenacity of our people towards the desire for excellence.
Before I move on to discuss the performance of the quarter, one thing which I would like to state is that whatever we have stated as guidance with all the stakeholders over the last 7 quarters, our performance is in line with the guidance as stated.
Coming to the operations front. We have had a healthy disbursement for the quarter at INR 1,725 crores on a stand-alone basis, up by 59% year-on-year and 10% quarter-on-quarter. This was our highest quarterly disbursement in the last 7 quarters.
We have started laying emphasis on acquiring new clients and in Q3 FY '23 first active clients accounted for 41% of stand-alone disbursement up from 17% in Q3 FY '22.
Significant pickup in the disbursement led to an 11% year-on-year growth of AUM, which now stands at INR 6,798 crores on a stand-alone basis. The consolidated AUM stood at INR 7,945 crores. This growth is despite the write-off done in 9 months FY '23. If we had not done the write-offs, the year-on-year growth would have been 20% on a stand-alone basis.
The positive traction on the business side, we are poised to deliver around 15% to 20% growth in this financial year, which is well within our guided range. The most important aspect of our business now is the buildup of the new portfolio which originated from July '21 afterwards. The performance is far excellence with a PAR 1 at 0.6% and PAR90 at 0.1% as on 31st December 2022. This portfolio quality of ours is way better than the industry standard has seen in the data of CRIF Highmark. This is a testimony to our robust underwriting process and learning from the past.
The share of this new portfolio in overall on-book MFI portfolio is 90% as on date. The on-book GNPA of the company stood at INR 188 crores, which is 3.92% of the on-book portfolio, down from 8.61% as on December 31. Assam constitutes 65% of on-book GNPA at INR 122 crores; excluding Assam GNPA as on 1st December '22, stood at 1.45% and in value terms, a mere INR 65 crores.
The company has sufficient on-book provisions amounting to INR 140 crores as of Q3 FY '23, which is 2.9% of on-book AUM. During 9 months FY '23, collection against write-offs was INR 30 crores, which is till date the highest collection done by us. This is a result of our persistent efforts to collect back our bond loans even after write-off.
The collection efficiency for Q3 FY '23 stood at 100%. We are gradually scaling our catalyst collection, which is INR 200 crores collected through digital mode in 9 months FY '23. If we include cash flow as part of cashless, the total share of cashless collection will be 26% vis–à–vis industry at about 21%, which is September '22 figure.
Now let me update all of you about our restructured book as on date. This has now reduced from INR 1,151 crores, which is INR 1,151 crores as on September '21 to INR 200 crores as on December '22. In percentage terms, it has reduced from 21.4% to 4.2% of the on-book portfolio. This reduction in restructured book is a result of INR 588 crores of collections. We also have written off INR 363 crores from this book. As on December '22, out of the restructured book of INR 200 crores now, 50% of the book amounting to INR 99 crores is 0 Dpd. We have created provisions of INR 82 crores on this book, thereby ending the pain of the restructured book.
Coming to our Assam portfolio. We are optimistic of our turnaround in this geography and have disbursed loans amounting to INR 159 crores during 9 months FY '23. The delinquencies in this book have been negligible with PAR1 at only 0.07% as of 31 December 2022. The on-book AUM stood at INR 270 crores, which is 5.6% of the total on-book AUM.
To give you an update on AMFIRS, category 1 and 2 have been successfully completed. The groundwork for category 3 borrowers, the sampling of data by credit bureaus have started.
Further, the company is well capitalized with the CRAR of 27%, up from 22.6% in Q1 FY '23 and a balance sheet liquidity of INR 1,300 crores as on Q3 FY '23. During the quarter, the company received the second tranche of INR 25 crores against the conversion of fully convertible warrants from Florintree Ventures LLP. This investment sends a very positive signal and provide comfort to all our stakeholders. With this core capital, we are well poised to have a comfortable capital position.
Moving further, the managerial and leadership skills of the management team at Satin have earned us another feather in our cap. I'm happy to share that with all of you that Satin has been recognized as the top 50 companies with Great Managers 2022. Out of 500 companies, the Great Manager award, a platform that recognizes great managers and companies that nurture great managers.
At Satin, we reiterate our commitment to sustainability of the environment and support of our communities through our various initiatives and the efforts of our committed workforce. Our clean energy program continues to attract participants and recognition while benefiting our customers. The core objectives of our CSR activities are fostering women empowerment and encouraging education among the nation's youth and gives me immense pleasure to share that we have been awarded by the Indian Social Impact Award for Best Education Support Initiative of the Year 2022-'23, solidifying our results which cater to community use.
We have constantly grown by placing a strong emphasis on customer service over the year. The cornerstone of Satin technology integrated processes, robust underwriting, the main expertise driven workforce, our forward thinking leadership. Going ahead, we are confident of continuing the growth momentum with better cost efficiencies while maintaining the asset quality.
Now let me give you the financial and operational highlights of our company. Starting with the quarter to date operational highlights, our AUM as of 31st December stood at INR 7,945 crores. We have a customer base of 27 lakh as of 31 December '22. Our disbursal for the quarter stood at INR 1,880 crores as compared to INR 1,348 crores in Q3 FY '22. Our assigned portfolio stood at INR 1,985 crores. As of 31 December 2022, 100% of our disbursement is made through cashless mode while cashless collection stood at 6%. We have also adopted website payment option and UPI auto debit.
Stand-alone operational highlights -- standalone disbursements for the quarter stood at INR 1,735 crores as compared to INR 1,085 in Q3 FY '22. We observed a strong growth momentum in the disbursement as a result of cautious and calibrated approach taken time to time. Average ticket size of MFI Lending for the quarter stood at INR 43,000.
Talking about our collection efficiency, the trends are as follows: Q1 FY '23, 97%, Q2 FY '23, 100%, Q3 FY'23, 100%. The collection efficiency of Q1 FY '23, Q2 and Q3 FY '23 is excluded -- is excluding the restructured portfolio. The collection efficiency on restructured portfolio for Q3 FY '23 stood at 79.2%. We have a well-diversified customer base, a well-penetrated branch network across states and 77% rural exposure.
On-book GNPA reduced from 8.61% as on Q3 FY '22 to 3.92% as on Q3 FY '23. INR 452 crores to INR 188 crores. Out of which INR 122 crores pertains to Assam. Our restructured book now stands at INR 200 crores, which is approximately 4.2% of the on-book AUM.
As of 31st December 2022, our total branch network count stood at 1,260 branches, which is spread across 401 districts. We have a total State and UTs count of 23, which makes us a well-diversified pan India Micro-Finance player.
As of 31st December 2022, 96% of our districts have less than 1% of portfolio exposure. We have seen a significant reduction in our portfolio risk in terms of exposure to top 4 states, which contributes 55% in Q3 FY '23 versus 77.3% in FY '22.
Our well-thought out diversification strategy has enabled us to sail through difficult situation and capitalize on our idea of enriching our clients' lives through financing of various products. We have disbursed around INR 35 crores during 9 months FY '23 under the product finance category, which includes loans for bicycles, solar products, home appliances and consumer durables.
An update on the subsidiary, Business Correspondent Services under Taraashna Financial Services has an AUM of INR 563 crores as of 31st December 2022. The company operates through 157 branches and has more than 3.2 lakh active loan clients. Satin Finserv Ltd, our MSME arm has an AUM of INR 200 crores with 3 consecutive profitable years. CRAR of 54.3% and gearing of 0.9x. Total net worth stands at INR 112 crores.
Satin Housing Finance Limited has now reached an AUM of INR 383 crores, including DA of INR 36 crores, having a presence across 4 states with 4,586 customers. SHFL has 100% retail book. The company has 18 active lenders, including NHB refinance, CRAR of 58.4% and gearing of 1.9x. Total networth stands at INR 122 crores. The quality of portfolio remains intact with GNPA of 0.5% as on December '22.
To update you on the amalgamation of the 2 wholly owned subsidies, the Taraashna Financial Services Limited and Satin Finserv Limited, second motion application was filed with the honorable NCLT on May 25, 2022. The said joint motion application was admitted by Honorable NCLT in its hearing dated July 8, 2022 and issued necessary direction of serving notices and newspaper advertisements. The company had served the notices to government authorities and completed publication in requisite newspaper as per order. The honorable NCLT in its hearing dated January 2, 2023 has reserved the order for second motion application. The pronunciation of order is awaited.
Lastly, as we are treading on the path of growth, we are prepared to the road of more profitability and cost efficiency.
With this, I would like to open the floor for questions.
[Operator Instructions]. The first question is from the line of Rajiv Mehta from Yes Securities.
Congratulations on a very healthy set of numbers. So sir, it's good to see that we are actively addressing the delinquencies and flows from the old portfolio. And at the same time, the delinquencies from the new portfolio are minimal. So the credit cost picture seems to be clear, if not, that it's going to go down from here onward. My question is on the income growth. Because in the last few quarters, the income growth has been coming from off-balance sheet funding and off-balance sheet direct assignments.
So the income growth from the on-balance sheet portfolio growth and on-balance sheet funding availability, how should one look at it in the coming quarters? Or would the direct assignment remain a significant part on a continuous basis? Or then we will move the portfolio more towards on-book basis, the availability of on-book funding?
So Rajiv, if you look at the past history and post the pandemic, there was a complete write down in terms of the assignments. It dropped down to levels where nobody was actually doing assignments across over there. Once the metrics for credit disbursements have started picking up, the lenders have started coming back again in terms of how we are looking at [indiscernible] Now this is one of the products which is available from majorly public sector banks.
In terms of what we look at is when we actually, during the last stages when the pandemic was about to happen, our off-balance sheet and [indiscernible] assignment was close to about 25% to 30%. We are reaching that level, and we will probably be within that range bound in terms of how we look across of them.
So for us, I think as this probably comes to a place where we are in the range bound analysis of about 25% to 30%, we will remain across over there. And once that comes up, which we are now closer to that across over there, I think the on-book portfolio will also start increasing across over there. And you have to probably look at from that perspective that this is also a product which is available, and a lot of lenders actually try to do this in terms of getting asset pools in their books across over there. So my sense is we are probably looking at the regime post the pandemic resource as comparable to what the previous was before the pandemic of about 25% to 30%, and that will remain for us.
And sir, can you comment on on-balance sheet funding availability because you spoke about 15%, 20% growth for the current year, and we are at 10% growth currently at the end of Q3. So we need to grow at a much rapid pace from here on. And also looking into FY '24, I mean you said on-balance sheet funding also coming through in the required amount as we would want to grow our on-balance sheet portfolio?
Yes, it is there. So Rajiv, as I have reiterated so many times is that but Q4 is always a very big quarter for in the entire year as such. And we are poised to have that same kind of growth pattern when you look at the last quarter, which happens across, we are well on close that. We had guided for a 15% to 20%. We are on close to do that. We've done 11%. I think we'll be within our guided range of 15% to 20%.
On-book raising of I think the money is not a problem at all. I said it's only a few public sector banks which look at this product mainly in terms of how the funding is done, and that is how it probably moves around in the complete MFI sector as such. But so raising funds for on-book and the availability is a lot across over there. And we have a very big basket. And if you look at our lenders, the basket contains of about 65 to 70 lenders, which are there. So no problem in terms of raising funds for on-book portfolios.
And sir, how should we look at your FY '24 profitability metrics ROA, ROE, because currently, we have high credit cost and we have a direct assignment income. But when we go into FY '24, the levels normalize for direct assignment and the levels normalize for credit costs. And when you have growth coming back, what could be the sustainable ROA, ROE level that you would look to in FY '24?
So I think overall, I'm not giving you a guidance, but the range is which I'm talking about, we're looking at a 20% growth. That is one we are looking at ROA of about 3. We are reaching there only basically. We're looking at a credit cost of about 1.5% to 2% on a stable basis across over there. Whatever pain had to happen is probably now on its last stages of finishing off. And this is how the overall metrics looks like. Growth, profitability, credit cost, I think this is where things stand across.
Next question is from the line of Ronak Sanghvi, retail investor.
Congratulations on a good set of numbers. A few questions because I see that we have seen that our customer acquisition has been broadly flat, and we have 27 lakh of customers. as of now. So can you help me as to how -- what proportion will be repeat customers which will be in multiple cycles? And what proportion is new to credit which we will be having?
So Ronak, if you look at our presentation, we have clearly mentioned that the L1 customers now are 41% as compared to our earlier customers. So it's been a gradual process of post the pandemic once things are stabilized to acquire, start acquiring new customers.
Our base is flattish basically because earlier for the last couple of years, we were just concentrating only on our repeat customers across over there. And now -- with now L1 customers probably coming to be fourfold. And we are also -- going forward, I think this probably will be a test. Now we will have a start of rise in terms of the numbers of clients which we address.
Sure. Also one question on the gross yield. This quarter, the gross yield has been very high at 22.8-odd percent. And so what is generally the reason or is this a sustainable gross yield which we are looking at? What will be sustainable gross yield targeted for FY '24?
So the yields are marginally improving, one that the portfolio quality is improving and we used to get [yield] because of high overdues as the overdues are coming back on track. So yield is going up. And in any case, the lending rates have also gone up corresponding. There's a little bit of increase in cost of funding, but cost of funding has not increased as much as the yields have improved. So it is there. So we can surely look at excluding the DA impact, close to about 11.5%, 30% of yields in the business.
Okay. Okay. So, do you think that you have taken a credit cost of around INR 49 crores.
Your voice is breaking.
Am I audible now?
We can hear you but your voice is not very clear. It's breaking.
We have provided a credit cost of [indiscernible].
We can't hear. It's all breaking up.
[Operator Instructions] Next question is from the line of [Uday] from Investec.
[indiscernible]
The line for the participant dropped. We move to the next participant. The next question is from the line of Varun Ghia from Dimensional Securities.
Just two questions. One is the provision increase during the quarter. So is it an area of concern? And secondly, what was the slippages during the quarter?
Now, you are saying the entire credit cost?
Yes, INR 55 crores. Yes.
Yes, this is our endeavor to clean the book. And as you say, we are coming -- like what he had said in the beginning of the call, we are cleaning the books, the legacy portfolio we are cleaning, so it's a part of that. It's not a point of concern because the 90% portfolio, we have already told that it is already [in such ability] and good asset quality.
It is a slide on restructured portfolio, we have written off close to about INR 25 crores out of the restructured book, et cetera. So we are cleaning up the book simultaneously, so that there's no pain left out, which is we are broadly GNPA about 65%, 70% of the GNPAs are only from Assam. So we are cleaning up the book simultaneously. So 90% of the book is clean and balanced, most of it is from Assam, wherever there's a little bit of stress left out.
Okay. And what will be slippages during the quarter?
Around INR 85 crores. All in total, but then there are whatever write-off, they are after that.
[Operator Instructions] The next question is from the line of Uday Pai of Investec.
Sir, what is the interest rate that you are offering on micro finance currently? And my second question is, what is the growth outlook on micro finance system?
Sorry, if I can -- it's not very clearly audible. If you're talking about interest rates, which we are charging from the borrowers.
Yes, yes.
It's about 24%.
24%. And what will be the growth outlook for Q4, competition calibration from [indiscernible].
So our guided ranges are close to about 20%.
20%. And do you see the competition increasing, given that you are a bit slower on competition and how it is affecting you or something like that?
So I don't know if you've read the latest reports, which are coming in, the MFI sector is going to be close to about INR 12 lakh crores. Right now, it's about INR 3 lakh crores. That is where the growth and the demand stands like in today's volume. So competition all the more pieces and then we have more competition, in fact it's set up for us.
[Operator Instructions] Next question is from the line of Rishikesh from RoboCapital.
Sir, I have only one question. This quarter, our operating expenses lower compared to last year and also last quarter. So is this like a sustainable level of OpEx you're going to see? Or what can be the OpEx going ahead, please? Can you guide on the same?
See, we are constantly trying quarter-by-quarter to bring our OpEx down, and this has probably yielded result as you can see this quarter.
Our endeavor is as the portfolio in terms of when we look at recovery, we've got separate recovery teams -- sorry, that's not the right word to use -- separate teams which are looking at write-off collections as such. So -- and as we said, we've had the highest ever in these 9 months that we've been able to net about 30 quarters.
Once this starts taking the backseat across over there, I think we'll have more operating efficiency coming up. Similarly, acquisition of more customer center size that we are trying to increase once things stabilize, I think the operating efficiencies will also start kicking in. And we are looking at maybe a sub-6, somewhere where we are able to bring it down. So we are right now at about 6.63%. Our endeavor in the next few quarters is also to bring it down to about [ 6% ] and 30%.
Cost efficiency and the basics which will help us have a desirable OpEx number.
Yes.
The next question is from the line of [Suraj Navandar] from [indiscernible] Investments.
The asset quality on the new portfolio as well in [indiscernible]. And is it questionable at this level sort of where we see the asset quality 12 months, I think, 12 months down the line?
See, this is -- I won't say early days as yet, but I think what we built up in the last, how it's been for about 1.5 years now. My sense is that it might probably be in the same range as is. So definitely, yes, but when I talk about that we got a 90-plus NPA of about 0.1%. We have not said that, it would probably be continue forever. But definitely, yes. The way we are looking at our underwriting process, the way we have actually -- and this is what we've remained flat for the last few years as such, just to make sure that our credit quality does not suffer when we actually get into the mode where growths are taking place, and that has not been shown.
It's sustainable, yes, definitely, yes. And that's why I said my guided range is that we would have a credit cost on a stable here at about 1.5% to 2%. Internally, our team has taken a much better target than that, but that's internal for us, but this is the overall thing which we are trying to guide everybody that it will be in this range found across.
Okay. And sir, how do you see your loan mix changing going forward? Are you focusing more on housing loans or MSME loans or are loan [indiscernible] driven by micro finance?
No. So we want to separate subsidiaries, which do their independent business of MSME financing and housing finance, and they are growing at their own pace across. If we say that, I think they're growing at about 50%, 60% year-on-year, and they will continue to do that. So they are separate from the micro finance holding up [indiscernible] actually.
Okay. And sir, what is your cost-to-income ratio for this quarter?
47%.
47%?
Yes.
Okay. And sir, any plans to open new branches?
Well, that happens across in terms of our operations across but we normally open about 50 to 20 branches on a quarter-by-quarter, that's how...
We opened 22 branches this quarter too. There are a very high branch opening options other than where we want to slightly deep dive more.
That's why I said about 50 to 20 branches quarter on quarter, that's what we try and do that.
Okay. Okay. And sir, cost to income ratio will remain in this range with new branch openings or if you go up.
No, it won't go up, 15-20 on a denominator of about 1,000 branches, I think it's hardly anything. So it doesn't affect the cost to income ratio.
[Operator Instructions] Next question is from the line of Rahul Mishra, Individual Investor.
So just on this guided credit cost of 1.5% to 2% on steady state, would you say that steady state has now begun? And I'm saying this on a full books,so not differentiating between pre-July, post-July, Assam, or do you think that is couple of quarters away?
So when I say steady state, steady state is because if I tell you right now, I don't think I'll be doing justice to my statement. And I say steady state starts from the steady state of in terms of affairs both in collection as well as disbursement. And steady-state starts from FY 2024. So it happens from 1st of April, if I tell you a steady state, the way growth, the way disbursement, the way collection and the way I said the new disbursements which are taking place. So that's why the guidance I've said is 1.5% to 2%. Internally, our target is much better than that, but this is what the steady state of affairs talks about.
And this would be the whole book as it includes, pre-July, post-July?
Exactly. Exactly. And Assam is an outlier. And if you get category 3, that will be an outlier in terms of whenever if that happens across and we are confident it might happen before the end of this quarter.
Next question is from the line of Himanshu from Aditya Birla Sun Life Asset Management.
Just one question for me, probably it is little late [indiscernible].
Sorry to interrupt you. Your voice is not clear. May I request you to speak through the handset?
Hello. Yes. So just one question is how many would have joined the policy meet and would have already answered, probably -- sorry for that. I have one question. So if you can give me this since you have already given the post-July onwards, you have already given in terms of the PAR1 to PAR90 Dpd. Can I get a similar trend for the 10% of the portfolio which is prior to July '21? How is the nature of this basically in terms of the forward flows in the PAR90 Dpd?
Himanshu, I think we haven't got that analysis, but just to give you a brief say. Out of this 10% -- about INR 200 crores will be restructured book. So that is there.
And that trend is shared.
And that trend is shared basically because in that we've got about INR 100 crores, which is due to Dpd, rest probably, I don't have a bifurcation of to 1 to 90 and 90-plus.
It is true. And 70, 80 is in PAR90 and what we shared is that.
So 70, 80 is PAR90, and we've got a provision of about INR 82 crores. So that is balance of, I think, about INR 200 crores, INR 300 crores, which is probably the balance which was left out of our own book of about [indiscernible]
4,000 and some.
So balance is about INR 200 crores. And you can do the analysis of about 10% probably of even the 10% book which is there is in terms of the more restructured book, and that is where the numbers are.
Okay. Sir, secondly -- okay, probably if you wrote up these numbers. Probably you can give me some color around it in terms of the collection efficiency because collection efficiency as a restructured you have already stated 79. On the overall efficiency rate 100% probably of this remaining portfolio of 10%, which is outside the restructure, but still the prior to the July, can we get the collection efficiency number?
So Himanshu, on 96% of the book, the collection efficiency is 100%. On 4% of the book, which is restructured, the collection efficiency is [ 79.3% ]. This is all inclusive. Even the other book, which is pre-July '21, but not restructured, the performance was not that bad.
And another way to look at it is when we say our on-book GNPAs near INR 65 crores, INR 66 crores barring Assam, that includes the whole of the book. So what is another way to look at it.
Clear. Clear. And my last question is around disbursement, you have already given a couple of guidance in terms of the ROE, ROA, credit cost, AUM growth. If you can give me around what sort of a disbursement trend that we should target for year, you are targeting for the next year that you should set, what sort of a disbursement and how probably this state [indiscernible] very comfortable probably [indiscernible] most states are very comfortable in terms of lending and probably once [indiscernible] in which states where you are still cautious.
See, I think overall, what we're looking at is when I said the 15% to 20% growth for the next year means that average, it will probably come out to about INR 600 crores, INR 650 crores month on month basis. That is what the disbursement plan looks like, but the 20% growth is what we are targeting. And this year also it will be 20%.
And in terms of geography, I think we are probably looking at each and everything. We don't want to open up any more geographical structure merely because I think we've covered 23 states. We don't want to now get into maybe any other state but have a deep diving into whichever state we're probably working in.
And for us, UP, Bihar, I think are our mainstay states, and we will continue to have a deep dive into those states. But I think overall, it's normally a percent. There's no cautious stand to be taken across anywhere. And I just gave you an indicator in terms of my speech, I think maybe you were not there. At the time we've disbursed now and our -- the new portfolio over there, the NPAs...
All pertinent 0.07%.
Yes, 0.07%.
Okay, sir. And can I ask you, can you give asset quality color of the non-MFI portfolio -- non-MFI portfolio?
We have given for both the company...
Growth rate obviously given.
0.5% for the housing company and around 4-point something for SHFL and GNPA and net NPA around -- we've shared on their respective slides. Happy to guide to that again.
The next question is from the line of [Darshit Shah] from ThinkWise Wealth Management.
My question is around the employee count. So when we look at the FY'22 employee count, it's come off substantially as on today. But when I look at the employee cost, the cost for 9 months FY '22 and 9 months FY '23, there's not much difference in the cost. So if you could help us understand this? And do we say that your loan growth target is 20% for the next year, did we see a substantial increase in the employee cost as well as employee count?
So I think if you look at the yearly display, I think you will have to look at the growth in terms of how the increment and appraisal happen, that's also one of the factors which you have to take into account. It doesn't remain a steady state in terms of whenever we have a drop in the terms of employees.
And also, we are taking maybe slightly experienced guys when we are looking at right of collections to be done. These are not employees who would -- as we do within the loan officer category where we employ them as technically graduates or maybe 12th standard pass. So our loan officers are based on that.
And so that is where probably you might look at maybe the slight difference in terms of that. And the second question was for you in terms of loan growth.
Yes. So when we say that we're going to do a 20% loan growth next year, so with this, the number of employees, specifically the low [indiscernible]...
No. No. That won't happen. Our current optimum efficiency for every loan officer looking at borrowers is close to about 450-odd. In fact, for us, internally, we've set up H1 that we would like to go to about 500 to 550 , so we will not have any practical rise in terms of our employee cost or personnel cost based on that because the optimum efficiency has started setting in post the pandemic when new clients are also getting acquired, and we are deep diving into every branch in terms of increasing our number of loan clients per branch.
Thank you very much. As there are no further questions, I would now like to hand the conference over to Ms. Aditi Singh, Head Strategy for closing comments.
Yes. So I just want to say thank you for -- to all of you for coming this morning and attending our call. And I sincerely hope we have addressed all your queries, we try to be thorough here as much information be transparent. If you feel that you want to understand something more deeper or have a detailed discussion, you can always get in touch with me or my team. My name is Aditi Singh, Head of Strategy. You can also get in touch with my colleague, Shweta Bansal, DGM-IR, and we shall be happy to take you through any details you want to understand. Thank you so much. Have a good day.
Thank you.
Thank you very much. On behalf of Satin Creditcare Network Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.