DCB Bank (NSE:DCBBANK) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to DCB Bank Limited Q2 and FY 'twenty seven Earnings Conference Call. Today, we have with us Mr. Praveen Kuti, Managing Director and Chief Executive Officer Mr. Shidar Shashadri, Hold Time Director and Mr. Ajith Kumar Singh, Chief Investor Relations Officer. As a reminder, all participant line will be in the listen only mode, and there will be an opportunity for you to ask question after the presentation conclude. I now hand the conference over to Mr. Praveen Kuti from DCB Bank Limited. Thank you, and over to you, sir. Thank you, and good evening, everybody. Welcome to the Q2 results call.

0:48 The bank continues its growth momentum with advances growing by 21% Y o Y and deposits growing by 19%. In keeping with the guidance, both advances and deposits have doubled over September 2022 over the last four years. Our net interest income grew by 17% Y o Y. Over the last one year, the yield and advances dropped by 38 basis points, while during the same period we reduced the cost of fund by 34 basis points. If you look at the last quarter, our yield on advances dropped by two basis points, while cost of funds dropped by eight basis points.

1:38 If you look at revenue, it grew by 21% Y o Y, core fee income continuing to be strong. And also the focus we have on our productivity and our technology adoption is helping us in keeping our cost to average assets under control. It continues to be below 2.5%, to be precise, at 2.47%. And our cost to income is at 59.64% at an eighteen quarter low. During the last two years, we have grown our employee strength by 1%, our balance sheet by 34% and our revenue by 33%. The fact that the revenue grew by 21% and cost grew by 18% Y o Y meant that operating profit grew by 26% Y o Y.

2:36 The portfolio quality continues to improve with our credit cost at 0.28%. Our GNPA is at 2.29% and NNPA is at 0.73%, both of which are at a twenty three quarter low. Our PCR is at 81.38%, a 7.23% improvement over the last year and PCR, excluding technical write off, is at 68.75%, a 9.6% improvement over the last year. As a consequence of all this, our net profit has risen by 29% over the year to crores, which is the highest ever in a quarter. This is the fifth consecutive quarter where the bank is clocking a highest ever quarterly net profit.

3:29 As a result, our ROA is at 1.03% for the quarter and 1% for the half year. Also, the ROE is 14.6% for the quarter and 14.12% for the half year. I just want to take you back one year into Q2 twenty twenty five, when we gave guidance of 18% to 20% growth of cost to average assets being less than 2.5%, of G and P also being less than 2.5%, net NPA being less than 1% and lastly on ROE of 13.5 for this year, 2026, 2027.

4:16 One year later, in each of these four quarters, each of these numbers speak the story of consistency and predictability. Finally, I'd like to share with you the trend line of ROE for the last four quarters. It is 12.73%, 13.53%, 13.61% and now 14.6%. Thank you for listening in. And operator, could you please open the lines for any questions from the audience? Thank you so much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Participants are request to use handsets while asking a question.

5:08 Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question comes from the line of Akshat Agarwal with Mineral Bank Institutional Equities. Congrats on a good set of numbers. So on the first question is on cost. Why the cost to income ratio and cost to average assets are tracking guidance? OpEx growth Q o Q and Y o Y looks a bit elevated.

5:57 So is it mostly on the staff addition, branches and a bit on technology? Is it that contributing to increase? Or are we I mean, is there some one off there? And are we on track to reach 13,000 employees by year end and adding 20 branches overall during this year? Thanks. So on the operating cost, the increase has been the people. We are now at 12,002 people, which is higher than what we started off the year with. So it's a people cost coming in. Otherwise, it's a normal cybersecurity cost. There is nothing exceptional on the OpEx side. And we should expect similar kind of trend lines to continue on the OpEx cost and also on the cost to average assets.

6:51 So I don't see us giving any change on that. As to your question whether we'll be 30,000 people by the end of the year, we want to be, but I don't think we'll be. So we'll be higher than 12,000, which we are currently, but I don't think we'll reach 13,000 by the end of the year. Probably we'll be around 12,800, 12,900. That's what we're seeing currently. Right, sir. And on the NIMs, but what's the reason for the declining Q o Q cost of funds seems to be declining, even advances declined by two bps. So if you can elaborate on the key drivers of the compression and outlook for the NIM in coming quarters, ideally with the rate hikes, we should see expansion going forward.

7:44 Is that correct? Or is there some other component that could affect our margins? So if you look at Q4 and Q1, our advances growth was in the region of 18.5% to 18.7%, whereas deposit growth was between 2021%. So we are stockpiling liquidity post February 26, Israel Iran war, and it is a conscious strategy to have enough liquidity with it. Then what happened is in August, there was a window to garner NRI deposit, which comes at a much lower cost than our normal term deposits. So we got $194,000,000 through the CNRB window.

8:33 So this really increased the liquidity significantly, And that has a liquidity cost attached to it. Why you don't see a similar growth on deposit in Q2 is because usually most of the maturities come towards the last week of Q2 or last week of every quarter. So we really went aggressively and on maturity of the high cost bulk deposits, gave up those deposits, which is why deposit growth is at 18.6%. But you have to carry the excess liquidity for the whole practically the whole eighty eight, eighty seven days of this quarter. So that's a cost which you have to pay and that's the reason why there has been a reduction in the NIM in Q2.

9:22 Going forward, you've already seen the lead indicator where the deposit growth is less. So we're starting Q3 with less surplus liquidity. And obviously, in November, we will be passing on the increase in repo rate to a significant chunk of our asset customers who are on floating rate. So that will have an impact on NIM. We are confident of holding our credit cost to well below the guidance level, which will also have a positive impact on NIM. So on a go forward basis, we would see the NIM improving in Q3 and in Q4 as well, assuming even if assuming there are no further impacts going forward.

10:15 All right, sir. And if you could provide some quantitative guidance like five to seven bps or something like that, can we expect going forward per quarter? And is there a component for continued component from home loans to lap shift as well, which was incrementally 70% to 30% last quarter? So we are at 70%, 30%, slightly 71%, 29%, and we're comfortable with it. We'll be continuing with that. So but that's not just incremental, right? So over a period of time, the stock also changes its color. So you get the benefit of it over period of time. But the real story is not there. The real story is about the cost of deposit. The way the cost of deposit is coming down, it's not because of CASA, it is because of the conscious strategy of not being the highest rate provider and we managed to make 3,000 people in branch banking aware of it and still grow 18.6%, still keep the top 20 less than 7%.

11:13 And that is really helping in this run. Some of it also has helped in our long term deposit repricing, which is coming in. So it's a combination of this. So it's more a positive deposits improvement that is helping the NIM in the longer term, not necessarily the yield growth. Of course, the repo rate increase will have an immediate impact on the widening of the NIM. Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address all the questions from the participant, We request you to kindly limit your question to two questions per participant. If you have a follow-up question, please rejoin the queue.

12:00 Our next question comes from the line of Suraj Das with Sundram Mutual Fund. Please go ahead. Hello. Am I audible? Suraj, it's feebly, but we can hear you. Okay. Let me... Okay. I'll speak louder. So I I have more than actually two questions. But first of all, I think congrats on the board approval on your tenure, sir. And and secondly, I think on the good quarter after long, I think you have given 1% ROA... 1% plus ROA on a quarterly basis. But before coming to ROA, sir, on the core loan, think growth has been strong, but I don't know the slides where you give your disbursement and the loan, it looks like that the loan increase is more than the disbursement. Is this because of the core lending fees that you don't give the Yes. Let me go one by one. You can ask me multiple questions, but in a serial order. So on gold loan, it's a combination.

12:59 We have we kind of kept co lending flat and increased our DA because it provides you better compliance and gives you better pricing. So about 30% of our entire gold loan book is organic and 70% is inorganic, which is basically a mix of core lending and DA. So currently gold as a percentage of the total asset is 23%. The bank is comfortable taking it up all the way to 25%. I don't think we'll ever go beyond 25% for this particular category. But currently, we're at 23%. And the anomaly there's no anomaly between dispersal and growth because the dispersal that you see is for organic gold loan only and not for inorganic.

13:52 It neither has core lending, which is actually flat and nor does it have DA, which is growing. Sure. Understood. And sir, overall yield would be also, let us say, better on a quarter on quarter basis because on I mean, because of maybe mix shift between core lending to It is a we are talking about basis points, right? So it is better that sense. But overall, really wouldn't matter. It's not like as massively different as business loan and home loan, like lap and home loan. It's not that different. It is marginal. But look, we are the marginal business. We don't let anything like any we are constantly on the lookout for improving yield and reduction of cost of deposit.

14:41 Right. Sure. And sir, related question to that, your gold slippages is also increasing for last two quarters. While I understand that LGD would be hardly anything that I fully agree. But is this because of your DA and coal... I mean, is the slippage is coming from DA and coal lending or organic book? Because, also asking the context for asking this question is this quarter, few people on the side, are highlighting that there is some strain in the gold book, especially for the sort of 10 product. So I don't know what is your DA composition, your core lending in terms of, let us say, bullet loans or maybe EMI sort of ten year. So that is the context for asking this question. So it's a relevant question to ask. If you look at non gold, our slippage ratio is 1.55%.

15:31 It was 1.52% last quarter. Now it has gone up to 1.55%. That's a three bps increase. Are you worried about it? Honestly not. Your early bounce, your early months on board vintage performance, there is one doesn't lose sleep over it. On gold loan, what I said is right. The some of the core lending or DA partners, find that their the mindset is to collect before NPA happens rather than at a one DPD level. So we are dealing with multiple co lending partners and DA partners. So it's not exactly the rigor of one DPD doesn't apply to many partners. To some it does, but by and large, it really doesn't apply, which is the reason why this is happening.

16:28 From a gold loan, is there a worry perspective? I want you to look at our investor presentation, Page 22. One year back, our NPA was INR27 crore. One year later, it is INR26 crore. And in the last five quarters, the highest our NPA has ever been to INR29 crores and our book has been growing. We have talked about a INR14000 crore book with INR26 crore NPA. Just look at the perspective. Thank you. Our next question comes from the line of Varun with Bandhan Life Insurance. Please go ahead. Hi. Thanks for the opportunity and congrats on the big set of numbers.

17:17 Firstly, basically, I observed a sequential increase of four fifty employees, while the branch network has expanded by just about three branches. So could you help us understand the areas or functions that is driving the headcount increase? Yes. So we are putting more people in existing branches, both for assets and liabilities. The belief is that we can really sweat more from existing branches without having to increase footprint significantly. And that has been borne out. The space is already there. It's a sunk cost, already invested. The network is already there. We don't have to reinvest in it. But we still are a people dependent business. We still have digital. Customers expect some sort of assistance to happen.

18:09 So what we do is where our portfolio is getting bigger, both in assets and liabilities, we put more people in those branches. And that's why it's not a location game. I mean the big eight cities contribute to practically everything of deposits. So it's still driven by not top eight branches, but all branches in top eight to 10 cities contribute a lion's share of deposits and advances. So we continue to invest in those areas where our returns are much better. I still think that we can extract more juice from the existing branches. But does it mean that we'll not do incremental branches? Probably maybe 20 branches in a year, one doesn't see more of that happening and one doesn't see the need for more of that to happen. And even the 20 branches, we would like to put it in locations where we already have our branches.

19:10 Understood. And with respect to the cross sell of the bank transfer business, we have said that volumes will cover up for the loss that could come in form of drop in conditions. So just wanted to understand how well is there a way to capture the volume growth opportunity? And also, can you talk about some of the factors that are helping us drive higher bank customer business at the moment? Yes. So on cross sell, I wish I could tell you some good news. We are putting in a lot of effort. We putting in a lot of work. We're not seeing too much of results happening, but are we going to give up? Absolutely not. This is a slow burning fuse. The graph remains very close to the X axis for a long period of time and then suddenly harmonically will increase. We know that. We're going to be patient about this, like many other things in retail. So there's a lot of effort on both from people scaling, from technology, from business intelligence, but there's really no great input to tell you right now. But that doesn't mean that it will not happen in the future.

20:17 So there is effort happening, there is work happening, maybe we'll see the results over the next twelve to eighteen months. Okay. And just last question from my side. Do we look to source mortgage business through balance transfer from MBS, given that our ability to probably offer more competitive rates to the same customer? Is that integral part of our mortgage growth strategy? And any update on capital raise? Yes. Okay. That's quite okay. Fine. So on MBSE, it's a target segment for us. Balance transfer from NBFCs is very much a center of high activity for mortgage for our mortgage business, but not from a reduction of rate perspective.

21:05 We want to give them a higher rate overdraft facility so that our yields are higher, but the customer has a flexibility of paying a lower rate of interest lower interest cost despite a higher rate of interest. So we want to give OD facilities to these customers and take a vote. We want them to transact with us. They want to engage with us, converse with us and which will provide us an opportunity to cross sell. And that is working reasonably well. Customers understand the concept of interest paid versus interest rate. So but are we looking at dilution of yield? I mean, it's a very, very high arbitrage opportunity, we would like to keep the interest rates.

21:55 Understood. And update on capital raise... Sorry to interrupt you, sir, but you can please rejoin the queue. Yes, quick one on capital raise. We should be hearing some good news before the next investor call. Thank you. Next question comes from the line of Nitin Agarwal with Motilal Loswell Financial Services. Please go ahead. Yes. Hi. Good evening, everyone. Am I audible? Yes. Very audible indeed. Okay. Praveen, a couple of questions. One is around the cost of fund. Like this quarter, we have seen a good decline. Some deposits have also shown some traction. So but the margins have declined. So can you share the lending yield and the margin ex of FCR deposits? So how much were the two numbers this quarter?

22:47 See, that will require a bit of calculation. What I know is that about $194,000,000 is coming with leverage deals with banks in Middle East and in Africa. And the first time ever the bank has done that with our rating, People were willing to access our SBLCs. The overall, what I'd like to tell you is that reduction of cost is a sixth continuous quarter trend line. So you're seeing that happening. Like I said in the opening, when asset yield dropped by 38 bps, we managed to drop the cost of deposit by 34.

23:37 So that's a long way to make one full year trend line movement. Last quarter, I will take you to pinch of salt, Nitin, because there are some NR customers have foreclosed their previous deposits to take advantage of the CNRB. So we got more than what we deserve in terms of foreclose what do you call prepayment penalty, etcetera, and lesser interest rate. So it is giving us more credit than we deserve. But even otherwise, it would have been on the downward trend. Got it. But you make a because you declined very marginally though, but the asset mix is getting better. So fair to say that the extra frictional yield should have also moved up?

24:27 Are you talking about the future? No, this quarter, the lending yield this quarter. Lending yield is a drop by two basis points. Two basis points. Yes. So ex of, would this have gone up because next quarter with the same trend in cost of funds and ease moving up supported by the rate hikes, the expansion would be like fairly decent. Absolutely. Absolutely. Absolutely. Right. Right. Got that. And second, on the PCR, now we have been making quite a stride on the PCR. We have covered up almost 10 percentage points over the last one year. So any number we are looking at? And any color around the easier transitioning impact and the steady state impact on credit cost? Yes. I mean, look, we are a secured lender.

25:16 We don't lend unless the collateral is much more than our exposure. And secondly, you've seen the recent trend lines happening across metrics. So except for SME one and two, I see that every other parameter is pointing to a positive direction as far as ECL is concerned. Having said that, we have appointed a big four. Our team is working very closely with them on ensuring that we get our assumptions right, we get our ECL model right. So work is underway on that. We're confident by March, we should be able to go up and running. But right now, what I can tell you is that all lead indicators and the profile of the banks seem to indicate that we are in a good frame as far as credit quality is concerned.

26:12 And that should reflect in the ECLS. Right. Not bad. And lastly, on the ROA and ROE guidance now, we have already reached what we indicated for FY 'twenty eight also. So will you like to revisit those guidances? Yes. I mean, as a bank, we have no intention of sitting on our laurels in no way. And one person is also only a milestone. That's not a destination. We are hungry, we are ambitious, we are determined. Two ways in order. It's just one more milestone in our journey, right? The reason why I don't want to put up another guidance is because there is a very big possibility that before the next investor meeting happens, we would have either a firm offer or we would have incremental capital coming in, which would change the ROE guidance going forward.

27:15 But otherwise, look at the trend line, right? 13.5 is what we committed. It will definitely be higher than 13.5. And possibly, with the capital coming in also, we'll be better than 13.5%. That's what I can tell you right now. Assume the capital comes in on January 1, we still will be on a diluted base, we'll be better than 13.5 Thank you. Next question comes from the line of Jay Prakash Mundra with ICIC Securities. Please go ahead. Hi. Good evening, sir, and thanks for the opportunity. Hi, sir. And congratulations on your Board renewal.

28:00 Sir, most of the questions have been answered, but I just wanted to check again on ECL. You know, you would have done the dry run. Right? And, you know, what... I mean, while the... Everything looks okay in terms of LGD and the last few last few years actually of decent performance on LGD and etcetera, but the slippages are slightly higher, right, including gold, everything. Does that mean that you may have to provide more on a standard basis, standard assets because your SME may be slightly higher, that LGD may not change, but could that mean that you have to provide slightly higher on standard asset basis? So, Jay, we are sitting on close to INR $2.18 crore of provisions, okay, floating provisions, which we started making it somewhere around 115, never touched it despite whatever headwinds we had, including pandemic.

29:02 That an ECL kind of environment, that will really help the cost. Secondly, look at PCR. At 81% and it's a secured book, forget about 81%. Look at the 9.5% increase over the year, right? Right. So look at the okay, forget that also. Look at our cushion available. Look at our provision as a percentage of our operating profit or the other way around. We have a 5.93 times cover of operating profit on our provisions. So there is so much cushion available, which and the credit cost is 0.28%.

29:48 Just look at the triangulate these three numbers. Credit costs are 0.28%, provision coverage of 81%, a 10% increase in provision coverage over the last not 10, maybe 9.5% over the last one year, 200 crores of floating provision, so it is there. And from what I can tell you, the rest of the audience on ECLS, once the model kicks in, we what we are very much focused on is to reduce the SME one and two, which will help us gain benefit over the period of ECL before the next calibration of ECL model.

30:41 And is it going to be difficult? Look, if we can get 97% of upgrade and recovery from freshly pitch, right, and they can bring down the NPAs. Our NPA grew by INR 7 crores in the last quarter without any technical write off. So if you can bring down NPA, why can't we bring down the SMA one and two? It's an execution challenge, but I think the people are capable of doing that. So that's the next big gain in credit cost, ECL will come after the ECL implemented will come from production of SMA one and two. Right. Okay. And secondly, sir, on overall ROA, right, so we have around 20, 25 basis point ROA contribution from Banka fee.

31:34 And that was going to be materially impact, other banks are saying 50% decline in the fee that is possible assuming the draft guidelines come through. That would mean 10, 12 basis points of an ROA hit. And do you have any within fee line item or any other line item that can actually offset that kind of a hit? It would be really helpful if you can provide some color there. So see, the answers to the future actually remain in the past. So if you were to look back, let's look back two years, we had INR 120 crore plus hit on MFI, okay, and nothing came.

32:20 NPA equals loss, right? We took that in a stride and then we had a 100 crore plus onetime benefit we got from treasury, which disappeared this year. Are you seeing any impact to that? INR 100 crore plus in H1 of twenty twenty five has disappeared in H1 of twenty twenty six. So will it impact? Will bank assurance impact it? Certainly it will. But will we be passive observers waiting to take a punch and curl up and die? Obviously not. So there will be multiple areas where we will put together, which I let's wait for the draft guidelines to come in. Maybe the draft guidelines is the final guidelines.

33:13 And you look at us one quarter after the implementation of the bank insurance norms and see what the results are looking like, and then you will see the resilience of the bank. Right. That is very clear. And last question, sir, on gold loan. Yeah. There are a lot of bureau reports suggesting that, you know, the last part of the disbursement is going to people who have already been delinquent at other other banks or other lender or in other products. So when we disburse gold loan either organically or through partners or DA, I mean, is Civill's core being a standard? Is that a prerequisite or because it is gold loan, and the product itself is secured? If let us say, so what is the current practice? And maybe could that change the growth trajectory?

34:08 So our philosophy is absolutely clear. Gold loan is usually loans taken by people who really desperately need the money. Somebody could be in a hospital, they would need it for farming requirement. There are people who do not may not have access to formal source of credit and some of them could be delinquent customers. We are okay with that, okay? We take them on board fully knowing well that their SIBIL score in some cases may not be good enough. Why you do SIBIL is to establish the fact that the customer is of a particular profile that he or she may not be giving us from gold. So the profile of the customer is important to that extent. So it's about it's from that perspective that you'll be looking at the SIBIL.

34:57 But a low SIBIL score is not a bar for a gold loan customer and will continue not being a bar for the customer. For us, we see that as a mechanism to rebuild credit and to get back into the formal world. That's true for us and it's true for the inorganic partners that we do business with. So what is the big risk in this regard? The big risk in this regard is the fall in the gold prices. Currently, 909 gold goes at some 14,560, and it's been it's fairly stable at that count. If there is a deterioration of credit for those customers, they probably I can draw in on one analogy.

35:43 I'll take you back to Q1 of twenty twenty five when there has been a massive microfinance problem. We had gold loan customers who had microfinance exposure elsewhere from civil check, could figure it out. And despite the MFI going completely bust, gold loan did not have an impact. So the gold loan was with us, MFI loans with somebody else. We found out that those customers' behavior was very, very different. And I'm telling you this from the perspective that we didn't get the money entirely out of auction. Auction was less than 10%. So no customer is going to give up the collateral, which he or she has, which is worth much more than the loan that he or she currently has.

36:40 That's how we've seen the behavior, right? Thank you. When the collateral value comes down, then we will have a problem. Still we have a buffer, but we that's the real risk, not the income earning capability of the customer of the gold loan customer. Thank you so much, sir. Our next question comes from the line of Aditi with Securities Investment Management. Go ahead. Yeah. Hi, sir. Thanks for the opportunity. Sir, first question was on on AgriVook. So we have a good proportion of AgriVook.

37:28 So considering the gross situation prevalent in the country, how are you looking at the disbursement growth in this book and also on the asset quality for our existing book? So if you look at the tractor book, it's about 4%. If you look at the KCG book, it's about 4%. We have a 1% individual MFI loans that we provide. And what we have seen is that the factor in the KCB book and MFI book also is behaving pretty well. It has given us cover in terms of PSL and subcategories of PSL. So that is a very important engine of ours, which is running pretty well.

38:20 We are on the lookout for El Nino related pain coming from this particular segment. So far, we haven't seen it. Our book continues to behave very well. The bounce rates are low. It's really benevolent in terms of fresh vintage bounces and fresh vintage delinquencies. Also from a NPA and recoveries perspective as well. So we are on the lookout from a impact of climate risk on this particular segment, but we really haven't seen anything which should keep either us or the industry worried on discount.

39:08 Understood, sir. Got it. And sir, secondly on NIMs. So currently, we are at 3.3 against a guided range of 3.5, 3.6. I know we will get the benefit of a record rate, but that would be on a temporary basis because that would normalize once deposits start repricing. But on a structural basis, if you could just help us understand what would drive NIMs from the current levels for our guided rates? Keep the current cost under control, drive the cost of deposit down and work on product mix to improve the yield. Do not go into riskier segment within the product to achieve yield to create a problem later on.

39:59 So we want to play conservative by staying in a safe zone, but moving the product mix a bit. We will work on cost and deposit. So the way to look at cost and deposit is, and you rightly said this, when repo rate increases, eventually the cost and deposit will increase. No one is disputing that, it will happen. But what you have to look at is the divergence between the yield on assets and the cost of deposits and how does that play over the next three, four quarters going in. We want to keep that wide and we want to keep the provision impact low as low as what we currently have. Hello? Thank you.

40:51 Our next question comes from the line of MB Mahesh with Quota Securities. Sir, there's a qualitative comment from your side. In terms of these the stronger companies seen in segments like SLAP for U. S. As as for the industry as such. Just trying to understand how are the underlying trends on BT? And are you seeing dilution of underwriting standards coming through? Or is it still holding up? What's your sense of feedback? The reason I'm asking this question is that if you go back in the last decade between 2012, 'thirteen and all the way up to 2016, we did see this instance of very high growth in the period and we saw how it played out later on. Are we seeing a similar trend coming through again or you still think it's too early?

41:43 Okay. Right now, if you look at any early trends and across products, I'm not seeing that there is any cause for concern. But in an inflationary economy, the rates going up, it is but natural that there is a thing in the day. What the house view is that it's important to go up the ladder in terms of ticket size. Marginal it may seem, but even a slight increase in ticket size is going to give a better impact in the future. It is the extension of the K shape recovery coming through. That's how we see across product segments. The slightly better segment, even if it means slight compromise on the yield is good enough for in a scenario where rates are going up.

42:43 That's how we see it. But is there any indication of that? No. Is the demand good? Absolutely. Is the early trends encouraging? Totally benevolent. When you said demand is good, is it because the cash flows of the borrowers are better or the income is going up? Or are they simply kind of leveraging much more than before? What's the sense of the book that is building right So we have fully I mean, why these fees secured, etcetera. We are a cash flow based business. We just nothing else matters. Like this whole collateral is it is just thing in the mind, right? I mean, honestly, everything is unsecured, right? So it's about the cash flow. And what we see from an estimate of cash flow is that there is a requirement people still believe that productive use of the money will cover for the interest rate and give him or her an ID sum.

43:48 Some of the lab that we do, like I was telling another person who asked a question earlier, is an interest arbitrage or a movement to a better product. So roughly speaking, about onethree are coming to you for an interest arbitrage. Onethree is coming in for a better product, no, maybe onesix is coming for a better product, which is term loan to OD. And but a significant chunk still is coming for higher exposure. They need more money. It is not for arbitrage at all. It is for they believe that not really, our underwriting team also believes that, that money will give customers better returns after paying our interest rate.

44:35 All right. Last question, when you say bounce rates have not gone up and when you do look at the bounce rates that are coming right now, however benign it is, it is not like these borrowers are strong signs of being stretched out? No. The mortgage rates are it's the same as what it was in January. We haven't seen any change. In our mortgage book, it is slightly better than what the beginning of the year response rates were. And our rejection rates are also similar. That's the more important thing. Are we rejecting more customers than we usually reject in the beginning of the year? No. It's about the same quantity. So demand is higher, rejection rates are and early trends are looking decent.

45:29 Thank you. Our next question comes from the line of Kushagra Gwal with Investec. Please go ahead. Hi, sir. Thank you for taking my question. Most of my questions are answered, but just a few data keeping questions. Could you please give us your loan mix on EPLR, MCLR and fixed rate? We don't publish that. But I mean, you can take an educated guess on how much it is. I mean, you'll get a note in the next NIM, which we published three months later, you'll get to know I mean, you can back calculate how it is. Or the ratios have been same three years back also when the repo rate cut happened.

46:14 Frankly, it's exactly the similar way. So we have a hybrid book, we have a fixed rate loan book and we have a floating rate book. And even the fixed rate loan book, remember this, 23% of our book is gold loan, which is fixed rate. But they reprice practically every month because they're all shortener. One follow-up on the mortgage fee. So I know you have not specifically called the account, but could you tell us how... Right now, your mortgage book, how is it split between fixed and floating? So I know your hybrid keeps on shifting, but if you could give some indication for the number around it. Don't publish that for specifically product wise, don't publish neither do we publish for the entire bank.

47:03 So we have hybrids fixed and But directionally, that's increasing the floating part? No. Like I said, when the repo rate cut happened, we had the ratio of these three. On a larger book now, the ratio remains remarkably the same, maybe a one percentage point one percentage movement either way. The big change over the last three years has been that the gold loan book has increased significantly. So the fixed rate book has increased, but that's really fixed only in May because these are typically six to eight month duration gold loans. So it keeps on getting repriced, as you can imagine. Otherwise, the ratios remain exactly the All right. If there are no further questions, thank you very much.

48:21 So we have a question. Our next question comes from the line of Jay Prakash Mundra with ICIC Securities. Please go ahead. Yes, sir. Thanks for the opportunity again. Sorry, sir. Just to just to... We have a decent exposure in Maharashtra, and we have a, you know, good growing AIG book. So it would be really helpful, sir, if you can share your thoughts, any repercussions, early signs, or what is the bank doing to to to mitigate the drought related impact in the AID book? That is the only question. Aditi, it's a... It is, you know, not material enough that this even come to my attention.

49:10 And I don't think it is see, one good thing for the bank is that we don't have a single state where asset exposure is more than 20%. And I'm talking about asset exposure. So if you look at agri exposure, pretty marginal in that sense. But like I said in the beginning, we haven't seen any statewide beginning of an endemic problem or a pandemic problem. We haven't seen that yet. Even in Agri, our collections remains robust. And balance ratios are standing up to the beginning of the year numbers. Sure. And some mortgage growth, we should think that it shall... I mean, far, it's still a little bit muted only.

50:04 So we we we... It should accelerate, right, towards the overall loan growth basis by over the next two quarters. Is that a fair assessment? It's a fair assessment for two reasons. One is that we will not allow a whole loan book to be more than 25%. And we are very clear that we will grow overall by like we kept on saying 18% to 20%. So if both these are constants, then what will change is the contribution from mortgages. Next question comes from the line of Kartik Gupta with three sixty one Capital. Please go ahead. Yeah. Hi. Thanks a lot for the question. Good morning, Kartr. Just one question. Just one question. We have... On a q o q basis, you know, the corporate loan growth is a bit on a higher side.

50:56 So just trying to understand, wasn't there enough opportunity on the retail side where the yields would have been better and we could have done better on margins? If we look at our corporate exposure, it's lion's share of it is from NBFCs. The kind of rate that we're able to command is very good with very low sting in the tail. The ROE that we get from that book is pretty good. And I wouldn't be surprised if we raise it up to 10% of the overall asset book. Currently, it's about 8% or slightly less than 8%.

51:43 But in this particular segment, we have the expertise. Just look at this. We do core lending. We do DA. We understand these particular segments. We interact with particular companies. And therefore, we also have the ability to assess NBFCs, and we are very comfortable with that particular segment. And the yields are decent and historical NPAs are very low, That's reflecting even now. From an ROE perspective, it's good book to have. And like I said, gold should be 25%. I think corporate, we should be at around 10%. So we should be seeing an increase happening. We are not being Q3, but in an ideal state, it would go up it should go up to 10%.

52:28 It's a good book to grow. Thank you. Our next question comes from the line of Prem Patel, an individual investor. Please go ahead. Hello, sir. Hello, sir. I have been an investor from last three years. I hold around 20 lakhs head, and I am very much happy with the performance you have delivered. Just one question. With us? No. No. I I don't have. You should have a bank account. You should have experience experience... You should have experience of having a DCB Bank account. I will send somebody to your place and on a firsthand basis, see how banking with DCB Bank is like. So apart from being an investor, we wanted to be a customer as well.

53:18 Yes. 100%. Sir, I had just one question. At what price to book valuation are we thinking of diluting the equity? Good question. So look, we are very near closure on the capital. So and we've got three components. I'm sorry, I'm not able to give a straight answer. But from a timing perspective, before the next investor call, we will have a firm commitment on the capital. Maybe the capital also will come in by the time. The quantum rate is getting closed. So if that is closed, firm offer will also come in. So it's a question of a few more weeks or maybe maximum a month before we will be able to close it out.

54:18 Look, bank has not raised capital from 2017 onwards. It's waiting for a right time. So and the right time is not based on time. It is based on valuation. That's the reason we haven't raised it so far. So we are conscious about at what rate would we dilute incrementally. The bank's capital position is strong. Our capital adequacy ratio in September 30 is better than our capital adequacy ratio in March after having growth. So it is not as if we are desperate for capital. So we are holding out. We are ensuring that the capital which we require and which we definitely do require comes at a price, which is fair to everybody, existing shareholders as well as to the new incumbent or new entrant or entrants who would come in over the next few months.

55:23 I had this one concern that I am pretty sure that just now our sale price is very much undervalued. So... And today, just we closed at the... Our book value around $20.03 or something like that. Okay. So below the book value, we will raise the capital or not? Below the book value, we will not raise capital. That much I can tell you. At what price to book will we raise capital? That's under negotiation, but below book value, will not raise capital. As there are no further questions from the participant, I now hand the conference over to Mr. Kuti for closing remarks. Thank you, and over to you, sir.

56:11 Thank you very much. Look forward to the meeting three months later. Bye bye. Thank you, sir. Ladies and gentlemen, on behalf of DCBB Bank Limited, that concludes today's call. Thank you for joining us, and you may now disconnect your line.