Highlights:

The bank has continued to show steady improvement in the performance.

The retail deposit is showing strong traction and every quarter the share of retail deposits is rising by 100 bps.

The operating expenses growth is also stabilizing, while supporting growth in the operating profit.

Microfinance disbursements were impacted due to transition to the new system which led to loss of business for 6-7 weeks.

The loan book of the bank has improved 15% yoy and 6% on sequential basis.

The retail deposit growth is 13% yoy and 7% on qoq basis.

The wholesale loans have increased 16% yoy and 5% qoq.

The cards business also expanded 17% yoy and 6% on a sequential basis.

The microfinance loan book increased 4% yoy and 10% on sequential basis.

Within the retail book, housing and tractors segments have shown very strong growth. The disbursements in the retail segment excluding cards stood at Rs 2800 crore in Q3FY2023.

The company has consolidated its microfinance business and the monthly disbursements have picked up to Rs 800 crore and the bank expects substantially higher disbursements in Q4FY2023.

The bank has shown monthly disbursements of Rs 200 crore in housing and Rs 100 crore in rural vehicles. The business loan disbursements picked up to Rs 200 crore on monthly basis.

The bank has issued 5.8 lakh new credit cards and spends increased 31% yoy and 12% sequentially in Q3FY2023

The ratio of retail to wholesale loan mix is at 52-48.

The deposits of the bank have increased 11% yoy and 3% on sequential basis. The Casa deposits increased 18% yoy and 4% sequentially. The Casa and retail deposit together increased 25% yoy and 5% qoq.

The liquidity coverage ratio stands at 144%. The bank expects to reduce LCR going forward and support net interest margins.

The net interest margins have increased to 4.74% up 40 bps yoy and 20 bps qoq.

About 35 to 40% of the loan book is a fixed rate, MCLR is 17% and EBLR is 35%.

 The yield improvement is driven by EBLR rising, lag in deposit repricing, reduction in excess liquidity etc.

The reset for the EBLR loans is on quarterly basis

The bank expects rising deposit rate as a headwind for NIMs, but the tailwind would come from reduction in excess liquidity, better pricing of loans etc. The change in loan mix from reduction in wholesale loans and deploying in high yielding retail loans would support margins.

Thus, the bank expects the NIM to be flat in q4 and improve higher going forward over next six months.

The yield home loan stands at 8.5% to 9%. The yield on tractor business stands at 12 to 15%.

The bank expects RoA to improve to 1% by Q4FY2023 driven by reduction in provisioning and improvement in the operating profit with higher net interest income.

The cost income ratio of the bank has been impacted due to cost on new product launches, diversification of cards business, addition of new branches and technology expenses.

The bank aims to add 20 branches every quarter.