Highlights:

The bank head earlier indicated fresh slippages would peak in Q2 and moderate later. The slippages have declined to Rs 766 crore in Q3FY2022 from Rs 1217 crore in Q2FY2022. The net slippages have also declined to Rs 313 crore from 747 crore in Q2FY2022.

The microfinance segment contributed fresh slippages of Rs 252 crore, credit cards Rs 248 crore and rest of the retail book contributed Rs 148 crore slippages. The wholesale book contributed slippages of Rs 117 crore of which Rs 85 crore of corporate slippages slipped and upgraded during the same quarter mostly on account of technical reason.

The slippages in the credit cards have normalized to pre-pandemic level. The slippages in the microfinance segment have declined but remains above the normal level. Microfinance slippages are expected to be lower in Q4FY2022.

The bank has continuously improved the quality of its corporate book and granularity during last 2 year with a focus on de-bulking and de-risking. The book has performed well during the pandemic and the bank has seen low slippages during last many quarters.

The provisions stood at Rs 484 crore in Q3FY2022 which were mainly on account of the credit card and microfinance loan book.

The bank has witnessed decline in the restructured loan book to Rs 1998 crore from Rs 2120 crore a quarter ago on account of repayment from the customers.

The bank is holding covid provisions of Rs 134 crore

In the corporate segment, the bank is seeing lot of activities and the bank has on-boarded 86 clients in the quarter ended December 2021.

The focus is all granularity of deposits.

The bank has exhibited pick up in loan growth and the momentum is likely to continue going forward.

In the retail segment, the credit card issuance is showing healthy trend. And the trend is expected to continue in the coming quarters. Six lakh cards were added in the quarter ended December 2021 Ban on MasterCard impacted cards addition in Q2.

In the microfinance segment the company is seeing pick up in the disbursement particularly in the customer and the geographies with stable collections.

Interest margin of the bank stood at 4.30% showing improvement on qoq as well as yoy basis. The bank expects further improvement in NIMs in the next few quarters. However, on a prudential basis the bank do not record interest income on restructured loan book, which impacted net interest margin by 9-10 bps.

The operating expenses increased mainly driven by the card business as the company has recorded strong growth in the new card issuance while the reward points expenses also contributed. Three-fourth of the cost increase was contributed by cards.

The bank will continue to invest in its digital and physical footprint.

The bank has added 96 branches in the last 2 year taking the branch counts to 500 branches. The bank aims to add another 80-100 branches in next one year to maximize its presence in the existing urban and metro markets.

The bank has reduced its cost of funds by 95 bps yoy and 25 bps qoq to 4.76%. The bank expects marginal uptick in the cost of funds in Q4 with the increase in interest rate environment.

The bank expects slippages to decline ahead, while GNPA and NNPA to continue to trend down.

The operating expenses are expected to remain stable for next quarters and then increase ahead.

The technology-related expenses constitute 10-12% of total operating expenses.