The bank continues to remain focused on balance sheet in terms of risk mitigation, capital conservation and maintaining surplus liquidity.

The quarter was satisfactory from a profitability perspective, while the bank has significantly increased PCR by over 6% to 70.5% and taken additional COVID-related provisions also.

Advances were flat yoy and declined 2% sequentially. The Retail-Wholesale advances mix is now 53%-47%. Wholesale business declined 18% yoy and 3% sequentially as the bank continue debulking, derisking and rightsizing portfolio. Non-Wholesale businesses grew 24% yoy.

Deposits grew 7% sequentially to Rs 61736 crore. Surplus liquidity stands at Rs 13600 crore.

LCR averaged 164% for the quarter. The bank expect this to gradually unwind as risk appetite on lending in Retail and Wholesale segments comes back in the next few quarters.

The bank is focused on reducing cost of deposits, increasing granularity and that leads to a reduction in cost of deposits by 13 bps to 6.27% in Q1FY2021. The bank has recently cut rates on both term and saving deposits further, and the bank expect the cost of deposits to come down in the coming quarters.

CASA deposits grew 18% yoy and 8% sequentially. CASA percentage crossed 30% for the first time and was at 30.1% end June 2020 against 25.8% in the same time last year.

NIMs continue to be strong at 4.85% for the quarter.

Other income declined 31% primarily because of lower credit offtake, conservative risk appetite and reduction in credit card income.

The bank has initiated a process of cost rationalization.

The overall book under moratorium is now at 13.7% end June 30 against 33% in last quarterly update. Wholesale is at 5% as compared to 22% as last reported. The moratorium at in non-wholesale business is approximately 30%.

In micro banking, collections improved to an almost 77% level.

In credit cards, approximately 11% of customers, constituting a little under approximately 21% of advances are under moratorium.

The bank has taken another Rs 240 crore of additional provisions on account of COVID, in addition to the Rs 110 crore provision in Q4FY2020. So a total of Rs 350 crore of COVID-related provisions translates to approximately 63 bps of advances book.

The bank is on track to remain within the credit cost guidance the bank had given earlier for FY21 and that too of remaining at or within the FY20 levels.

On capital position, the bank ended the quarter with a comfortable capital adequacy ratio of 16.35% and with a CET ratio of 15.2%.

In micro banking business, almost all branches are open with over 90% staff in attendance and client-centered meetings are happening regularly in areas where there are no restriction on movement. Over 95% of center meetings are now happening in person or on phone.

The bank has sanctioned around Rs 225 crore of loans and disbursed Rs 192 crore under the credit guarantee scheme of the government.

From July onwards, the bank has asked customers to apply specifically for moratorium. Only 38000 or 11% customers applied. However, payment has not been received from about 3.2 lakh customers.

The bank started new business in a very cautious manner only mid-June.

In micro banking, the bank did not disburse new loans as the bank wanted to see 1 full month of pure collections to judge the situation on the ground. Since July, the bank has started disbursing in centers where the bank is seeing regular collections. The bank expect normal disbursal run rates only by around December 2020.

Fee income was down 41% yoy for the non-Wholesale asset business. Cards accounted for dominant part of the reduction in fee income, largely on account of no late payment charges and reduced interchange income on account of lower spends. The fee income, especially in credit cards, is expected pick up from September onwards once the moratorium ends.

In credit cards, the total portfolio now stands at 2.7 million cards, flat to previous quarter. The bank took significant steps to bring down risk in portfolio through limit reductions and blocking cards. Spend drop was lower than the market average. Collection efficiencies have been increasing.

The bank focus would be to preserve and continue to fortify the balance sheet, asset quality in both wholesale and retail stay within guidance, granularity on both sides of the balance sheet and take the opportunity presented to become sharper on cost and efficiency of delivery.

The current capital position of the bank is more than adequate.

The credit cost should be within last year levels.