Highlights:

The impact of second wave was severe than first wave, while the bank expects the economy to return to normalcy with accelerated vaccinations.

About 70% of the bank employees have been vaccinated with at least one covid dose, while the bank expects all employees to be vaccinated in next few months.

The bank focus is on granularisation, provisioning, reducing corporate book, rapid ramp up of retail deposits, capital raising, driving other income and reducing cost of funds.

The bank has witnessed impact on its asset quality due to decline in the collection efficiency in the MFI business.

The retail segment was impacted severely contributing about 97% of the slippages in Q1FY2022.

The microfinance segment collection efficiency moderated to 79% in May 2021 and improved to 82 in June and 88% in July 2021. The microfinance segment collection efficiency was 89% in July 2020.

The bank has substantially raised provision coverage ratio technically write off by 866 bps qoq to 60.94% end June 2021. The bank aims to improve provision coverage to 65% in next few quarter.

It has made 4% additional COVID provisions on the MFI portfolio.

The bank has created bad debt provisions of Rs 808 crore, additional provisions of Rs 365 crore and covid provisions of Rs 239 crore in Q1FY2022.

The bank expects profitability to return in Q2FY2022 and recover Q1FY2022 losses by March 2022.

The bank targets RoA of 1% by end March 2022.

The fresh slippages of loans was at Rs 1342 crore in Q1FY2022, while NPA reduction was Rs 1069 crore.

The segment wise slippages were contributed by credit cards at Rs 501 crore, microfinance Rs 445 crore, other retail secured assets at Rs 346 crore etc.

The bank expects to pull back some NPAs, as the collection efficiency has retuned pre-covid level.

The total restructured loan book stood at Rs 1150 crore end June 2021 up from Rs 930 crore end March 2021. The restructuring under RBI guidelines 1.0 and 2.0% amounted to Rs 718 crore. The wholesale loan restructuring was at Rs 435 crore and retail at Rs 715 crore.

The disbursements under ECLGS scheme stand at Rs 1478 crore, with Rs 880 crore in wholesale and Rs 560 crore in retail segment.

The bank expects slippage to remain elevated in Q2FY22, driven by micro banking book.

The microfinance segment is expected to exhibit pick up in next 2–3 months.

The normalized credit cost in microfinance segment is expected to around 2.5%.

The interest income reversal was Rs 80-100 crore in Q1FY2022.

The bank aims to improve the retail to wholesale mix to 65%:35% over the next four years.

The bank expects cost to income to remain slightly higher over the next few quarters driven by ramping up of technology infrastructure.

The credit cost for credit cards segment has increased to 10.5% from 5-5.25% pre-COVID level.

The ban on Mastercard adversely impacted the bank's new card issuance. However, the bank is confident of getting back to issuing the monthly average of 1 lakh new cards by mid-September. The bank expects to issue 12 to 14 lakh cards in FY22.