ICICI Bank Limited (IBN) Q2 2014 Earnings Report, Transcript and Summary

N. S. Kannan - Chief Financial Officer, Executive Director, Member of Share Transfer & Shareholders/Investors Grievance Committee, Member of Committee of Executive Directors, Chairman of ICICI Securities Primary Dealership Limited, Chairman of ICICI Prudential Asset Management Company Limited, Chairman of ICICI Eurasia Limited Liability Company, Chairman of ICICI Prudential Life Insurance Company Limited, Chairman of ICICI Bank UK Plc and Chairman of ICICI Lombard General Insurance Company Limited Rakesh Jha - Deputy Chief Financial Officer and Senior General Manager

Mahrukh Adajania - Standard Chartered PLC, Research Division Vishal Goyal - UBS Investment Bank, Research Division Jignesh Shial - IDBI Capital Market Services Ltd., Research Division Manish J. Karwa - Deutsche Bank AG, Research Division Sachin Shah Suruchi Jain - Morningstar Inc., Research Division Jatinder Agarwal - RBS Research Ashwani Agarwalla Jatinder Agarwal - CIMB Research Rakesh Kumar - Elara Securities (India) Private Limited, Research Division Sapna Naik Nitin Kumar - Quant Broking Private Limited, Research Division Saikiran Pulavarthi - Espirito Santo Investment Bank, Research Division Nilanjan Karfa - Jefferies LLC, Research Division M. B. Mahesh - Kotak Securities Ltd., Research Division Kashyap Jhaveri - Emkay Global Financial Services Ltd., Research Division

Ladies and gentlemen, good day, and welcome to the ICICI Bank's Q2 FY '14 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. N. S. Kannan, executive Director of ICICI bank. Thank you, and over to you, sir.

Thank you. Good evening to all of you. Welcome to the conference call on the financial results of ICICI Bank for the quarter ended September 30, 2013, which is the second quarter of the current fiscal year 2014. As always, my remarks this evening would revolve around 4 key themes: First, on the macroeconomic and monetary environment; followed by our performance during the quarter, including performance on our 5Cs strategy; then, our consolidated results; and finally, we'll talk about the outlook for the full financial year 2014. Let me start with the first part on the macroeconomic and monetary environment during the second quarter. The operating environment in the second quarter was challenging, marked by significant volatility in the financial markets, several policy changes, and also continued weakness in economic growth. During July-August 2013, concerns on tapering of quantitative easing in the U.S., as well as India's high current account deficit resulted in significant capital outflows from India, particularly in the debt segment, resulting in sharp depreciation of the rupee vis-a-vis the U.S. dollar. With a view to managing this volatility in the exchange rate, RBI announced certain measures in mid-July including an increase in the Marginal Standing Facility rate of 8.25% to 10.25%, limiting bank borrowing under the Liquidity Adjustment Facility, or LAF, to 0.5% of the net demand and time liabilities of banks and increasing the minimum daily cash reserve ratio balance required to be maintained by banks to 99% from 70% earlier. These measures led to a sharp increase in the short-term market rates by about 200 basis points. In view of the impact of the above developments on bank's treasury positions, in August 2013, RBI announced certain dispensations, including increase in the held-to-maturity, or HTM, holding limit for government securities to 24.5% of the net demand and time liabilities, onetime transfer of government securities from available for sale, or AFS category, and from HFT category to HTM category up to 24.5% at July 15, 2013, prices, and also the amortization of mark-to-market losses on the fixed income AFS and HFT book in equal installments over the remaining part of the year. The RBI also announced to open market operations of INR 80 billion of long-dated government securities in order to ease the pressure on long-term yields. In September 2013, positive developments such as the deferral of quantitative easing in the U.S., as well as RBI measures to attract foreign currency inflows, the measures on FCNR (B) deposits and increasing bank's foreign currency borrowing limits resulted in stability and appreciation of the exchange rate. Consequently, in its mid-quarter monetary policy statement on September 20, 2013, RBI reversed some of the exceptional measures by reducing MSF rate to 9.5% and the minimum daily cash reserve ratio requirement to 95% of the fortnightly requirement. The MSF was further reduced to 9% on October 7, 2013. However, with the emergence of upside risk to inflation, in its monetary policy statement, RBI increased the repo rate by 25 basis points to 7.5%. RBI also indicated its intent of normalizing monetary policy, operations with a repo rate resuming at the effective policy rate. So overall, financial markets remained volatile during the quarter. The rupee depreciated from INR 59.7 per U.S. dollar on June 30, 2013, to a low of INR 68.36 per U.S. dollar on August 28, 2013, and thereafter appreciated to INR 62.8 per U.S. dollar by end-September. Similar swings were seen in equity and bond markets. The Sensex declined by 4% till end-August 2013 before recovering in September 2013. Yields on 10-year government securities reached 9.2% as on August 19, 2013, compared to 7.5% in end-June 2013 before subsequently easing to 8.8% by end-September. So the policy focus has been on managing the volatility in exchange rate, and this resulted in volatility across all the markets, specifically the money markets. Looking at real economic activity, growth continued to remain subdued during the quarter. The Index of Industrial Production remained weak recording a growth of 0.6% in August 2013. Growth during April to August 2013 was 0.1%, even on a low base of 0.2% increase year-on-year in April to August of 2012. At the same, inflationary concerns reemerged during Q2 of 2014, with the wholesale price index increasing from 5.2% in June 2013 to 6.5% in September '13. The increase was largely due to rise in food prices, which went up 18% year-on-year in August and September 2013. Retail inflation measured by consumer price index was also high at 9.8% in September 2013. Having said this, there were positive developments during the second quarter on the external front. Exports revived, recording an increase of 11.2% during the quarter, compared to a decline of 1.6% in Q1 of 2014. Imports declined by 8.6% during the second quarter, primarily due to a decline in gold imports. As a result, India's trade deficit reduced from around USD 50 billion during Q1 of 2014 to USD 30 billion during Q2, easing concerns on the current account deficit. With respect to trends in the banking sector, non-food credited [ph] growth actually improved over 18% by end September 2013 from 13.9% at June 2013 and 15.4% at September 2012. Some of this growth is likely to have been driven by a shift of borrowing from non-bank funding market to bank borrowing, following the sharp increase in short-term market industries during the quarter. Deposit growth continued to remain muted, with total deposits recording a growth of around 14%, with some marginal improvement towards the end of the quarter. Demand deposit's growth increased to about 18% during the quarter before reverting to 11% growth levels. With this background, I now move to part 2 on the performance of the bank during the quarter. Let me begin with the progress on our 5Cs strategy. First, with respect to credit growth. Total advances on the bank increased by 15.5% on a year-on-year basis from INR 2.75 trillion at September 30, 2012, to INR 3.15 trillion at September 30, 2013. The growth in the domestic loan portfolio was 14.4% on a year-on-year basis. The domestic loan growth was driven by retail loans, with the rate of corporate loan growth declining substantially. The retail loan portfolio grew by 19.6% year-on-year as of September 30, 2013, compared to 12.6% at June end 2013. The organic retail loan portfolio, that is excluding the bought-out portfolios, grew by 27.8% at September 30, 2013, compared to 26.6% at June 30, 2013. We continue to see strong traction in this business, with mortgages and auto loan disbursements increasing year-on-year by 35% and 45%, respectively, during the quarter. The outstanding mortgage and auto loan portfolios grew by 23% and 27%, respectively, on a year-on-year basis at September 30, 2013. Commercial business loans declined by 16% on a year-on-year basis at September 30, 2013, reflecting both a slowdown in the segment as well as a rundown of the bought-out portfolio in the segment. The unsecured credit card and personal loan portfolio at INR 54.45 billion at September 30, 2013, continue to remain a small portion, about 1.7% of the overall loan book, though the growth rate is high due to the low base. We have calibrated growth in the domestic corporate portfolio to 11% year-on-year at September 30, 2013, given the operating environment. Net advances of the overseas branches increased by 18.9% on a year-on-year basis in rupee terms, primarily due to the movement in the exchange rate. In dollar terms, the net advances of the overseas branches remained stable on a sequential, as well as on a year-on-year basis at September 30, 2013. Moving on now to the second C on CASA deposits. Reflecting our strong retail franchise, we saw an additional INR 46.82 billion to our savings deposits in the second quarter. Current account deposits also increased by INR 33.91 billion during the second quarter. As a result, we maintained our period in CASA ratio at 43.3% at September 30, 2013, similar to the level at June 30, 2013. The average CASA ratio of the bank improved from 39% in Q1 to 40.3% in the second quarter. Now on the third C on cost. For the second quarter, operating cost, including DMA expenses, were higher by 4.5% on a year-on-year basis. The bank's cost-to-income ratio declined to 37.3% in the second quarter of fiscal 2014, compared to 39.4% in the first quarter. This moderation in operating expenses was primarily due to a year-on-year decline in the variable employee expenses, such as the positive impact of the movement of government securities yields on the retiral benefits. Let me now move onto the fourth C on credit quality. During the second quarter, the bank saw a gross NPA additions of INR 11.45 billion, primarily driven by slippages in the SME and midsized corporate loan portfolios. Deletions in the second quarter were INR 5.66 billion. The bank had also written off INR 5.58 billion of NPAs. The net NPA ratios, as a result, was 73 basis points at September 30, 2013, compared to 69 basis points at June 30, 2013. During the quarter, we restructured INR 10.76 billion of loans. After taking into account deletions and the required specific provisioning, the net restructured loans for the bank increased to INR 68.26 billion at September 30, compared to INR 59.15 billion at June 2013. Provision for the second quarter were at INR 6.25 billion as compared to INR 5.08 billion in Q2 of 2013 and INR 5.93 billion in Q1 of 2014. As a result, credit cost as a percentage of average advances were at 81 basis points on an annualized basis for Q2 of 2014. The provisioning coverage ratio on nonperforming loans continues to remain healthy at 73.1% at September 30, 2013. Now to the fifth C on customer centricity. The bank continues to focus on enhancing its customer service capability and leveraging on its increased branch network to cater to its customer base. During the quarter, we added 157 branches and 196 ATMs to the network. With this, we have a branch network of 3,507 branches and 11,098 ATMs at September 30, 2013. We also continue to strengthen our technology channels for increasing customer convenience. During the quarter, we launched Pockets by ICICI Bank, a first of its kind app on Facebook which offers the bank customers the convenience of banking while they are on Facebook. Pockets by ICICI Bank offers a variety of unique features such as split n' share, which allows the customers to split and track group expenses and share that with friends on Facebook, and Pay a friend facility, which allows customers to transfer funds to their friends without knowing their bank account details. Pockets by ICICI Bank has been developed with robust security features. The bank's Facebook page continues to be appreciated by the customers with about 2.5 million fan base. ICICI Bank continues to be the largest fan base on Facebook among the Indian banks. Having talked about the progress on 5Cs, let me move on to the key financial performance highlights for the quarter. The net interest income increased by 20% on a year-on-year basis from INR 33.71 billion in Q2 of 2013 to INR 40.44 billion in Q2 of 2014. The net interest margin increased from 3% in Q2 of 2013 and 3.27% in Q1 of 2014 to 3.31% in the second quarter. On a sequential basis, the international margins increased from 1.6% in the previous quarter to 1.8% in the second quarter on account of higher yields on incremental lending and a reduction in cost of funds. The domestic net interest margin was stable at 3.65% in the second quarter compared to 3.63% in the first quarter, reflecting the bank's relatively lower reliance on wholesale deposits, as well as the 25 basis-point increase in the base rate. Moving to the noninterest income, it increased by 6% from INR 20.43 billion in Q2 of 2013 to INR 21.66 billion in Q2 of 2014. We have seen an improvement in fee income growth from over 3% for the full financial year 2013, and 8.9% in the previous quarter, that is, the first quarter of the current fiscal year, to 16.7% on a year-on-year basis in that second quarter. This improvement in the fee income growth was primarily driven by growth in the retail banking fees, commercial banking fees and ForEx and derivatives income. The bank's retail fees, including remittances, contributed about 55% of the overall fees. Moving on to other income. It was INR 2.51 billion in Q2 of 2014 compared to INR 1.62 billion in Q2 of 2013 and INR 2.88 billion in the previous quarter. During the second quarter, treasury recorded a loss of INR 0.79 billion compared to a profit of INR 1.73 billion in Q2 of 2013 and a profit of INR 4.03 billion in the first quarter. As you are aware, this quarter saw significant volatility in market rates following the policy measures announced on curbing the volatility in the exchange rate. The bank has fully recognized the mark-to-market provisions of INR 2.79 billion, primarily on its investment portfolio and has not availed of the option permitted by RBI of recognizing it over the 3 quarters. Had the bank amortized the same over the 3 quarters, the treasury income for the second quarter would have been higher by INR 1.86 billion. During Q2 of 2014, the bank also transferred SLR securities with a face value of INR 23.11 billion from AFS and HFT categories to HTM category and has recognized a loss of INR 0.1 billion, resulting from the said transfer on account of the movement of yields till July 15, 2013. If the transfer had not been affected, the treasury income during the second quarter would have been lower by INR 0.71 billion. Going forward, the treasury performance would depend on market developments, including the impact of the policy measures. I have already spoken about the trends in operating expenses and provisions while speaking about the 5Cs strategy. As a result of the above metrics, the bank's operating profit, excluding treasury, increased by 31.3% from INR 30.22 billion in Q2 of 2013 to INR 39.67 billion in Q2 of 2014. The bank's standalone profit before tax increased by 21.5% from INR 26.86 billion in Q2 of 2013 to INR 32.63 billion in Q2 of 2014. The bank's standalone profit after tax increased by 20.2% from INR 19.56 billion in Q2 of 2013 to INR 23.52 billion in Q2 of 2014. This translates into an annualized return on average assets of 1.7% for Q2 of 2014, compared to 1.54% for Q2 of 2013. The bank's capital adequacy as per RBI's guidelines on Basel III norms continues to remain strong at 16.5% overall capital adequacy ratio and 11.33% Tier 1 ratio at September 30, 2013, giving us the ability to grow our business further. In line with the applicable guidelines, the Basel III capital ratios reported by the bank for the quarter ended September 30 do not include the profits for the half-year ended September 30. Including the profits for H1, the capital adequacy ratio for the bank, as per Basel III norms, would have been 17.21% and the Tier 1 ratio would have been 12.04%. I now move on to the consolidated results. The profit after tax for the life insurance company in the second quarter was INR 3.87 billion as compared to INR 3.96 billion in Q2 of 2013. This level of net profits reflects an annualized rate of about 30% on the bank's invested capital. The year-on-year decrease in profits was due to a decline in renewal premiums, coupled with higher new business strain in Q2 of 2014 compared to Q2 of 2013. The decline in total premium was mainly on account of de-growth in the renewal premiums given the slowdown in business growth following September 2010. However, the company had seen a healthy growth in new business premiums on a year-on-year basis. The new business annualized premium equivalent for ICICI Life was INR 9.54 billion in Q2 of this year compared to INR 7.81 billion in Q2 of last year. The new business margin for Q2 2014 was 14.1%. During the quarter, the company has made changes to its products with the intent of smoothening the transition to the new product regime. Accordingly, this led to higher sales of ULIP products, which have relatively lower margins, with the proportion of ULIPs in the business mix increasing to about 60% levels in Q2 compared to about 53% levels previously. The retail weighted received premium for ICICI Life increased by 10.9% on a year-on-year basis during April to September 2013. While IRDA numbers for the industry are not available, we understand that the company has retained its market leadership among the private players. The profit after tax for the general insurance company in Q2 2014 was INR 1.56 billion as compared to INR 1.01 billion in Q2 of 2013 and INR 2.03 billion in Q1 of 2014. The profits were lower on a sequential basis primarily on account of lower investment income following the volatility in the markets during the quarter. The company maintained its leadership position in the private sector with overall market share of 9.5% during April to August 2013. Let me now move on to the performance of our overseas banking subsidiaries. As per IFRS financial, ICICI Bank Canada's profit after tax for the second quarter was CAD 12.9 million as compared to CAD 12.2 million for Q2 of 2013. The total assets for ICICI Bank Canada were CAD 5.27 billion at September 30, 2013, compared to CAD 5.23 billion at June 30, 2013. ICICI Bank Canada will continue to work towards further optimization of capital and selective portfolio growth in order to improve its profitability and return ratios. The capital adequacy ratio was healthy at 31.2% at September 30, 2013, compared to 31% at June 30, 2013. ICICI Bank U.K.'s total assets was USD 4.21 billion at September 30, 2013, compared to USD 3.75 billion at June 30, 2013. ICICI Bank U.K. is focusing selectively on lending opportunities to highly rated entities, including trade and transaction banking products and short-term loans to multinational corporations and subsidiaries of Indian companies in U.K. and Europe. The profit after tax for ICICI Bank U.K. for Q2 2014 was USD 6.1 million compared to USD 4.3 million for Q2 2013. The capital adequacy ratio was comfortable at 26.1% at September 30, 2013, compared to 26.6% at June 30, 2013. Let me now talk about the overall consolidated profits. The consolidated profits for the second quarter for this year increased by 12.9% to INR 26.98 billion compared to INR 23.9 billion in Q2 of 2013. The consolidated profit growth was lower on account of the impact of market volatility, primarily on the banks primary dealership subsidiary. The annualized consolidated return -- return on average equity was 14.6% for Q2 of 2014. Let me now come to our outlook for the full financial year 2014. Given that half the year has elapsed, we thought it appropriate to take stock of actual trends vis-a-vis our expectations and targets at the beginning of the year. Looking at the environment, while the turbulence in financial markets that we saw in July-August has substantially abated, overall, the economic outlook is more challenging than envisaged at the beginning of the year. Full year GDP growth is likely to be lower as compared to the expectations of a pickup. And the anticipated easing of monetary policy and consequent reduction in market rates has been impacted by inflationary concerns. Coming to ICICI Bank. On the loan growth front, retail loan growth trends are very robust, and we have achieved a 20% year-on-year loan growth at the end of the first half, which was our full year target. We have calibrated corporate loan growth substantially, reflecting the environment and our cautious approach to incremental lending. We expect sustainable credit growth for the banking system to be around 15% and would target to grow 2% to 3% higher than that level for us. Growth will continue to be driven by retail at around 22% to 23%. Growth in the loan portfolio of overseas branches will continue to be calibrated to conditions in the overseas funding markets. On the deposit side, the trends have been very strong, and we would target an increase in average CASA ratio of 39% to 40% as against 38% to 39% estimated earlier. So we are very hopeful of getting to 39% to 40% on an average level basis on CASA. Trends in margins have also been better than our original expectations. Aided by better margins in the overseas branches book and stability in domestic margins given the retail deposit franchise. Against our initial target of 10 basis-point improvement in the full year NIM over 3.11% level in financial year 2013, we believe that we can target around 20 basis-point expansion in NIM on a full year basis compared to last year. Fee income growth trends have also been better than our original expectation, with a growth for the first half at 12.8%. We would target a fee growth of around 14% to 15% for the full year. Treasury income has been volatile, reflecting market conditions, contrary to the general initial expectations of profit opportunities in treasury from declining yields. However, based on the current market conditions, we expect to recoup a significant part of the mark-to-market provisions taken in Q2. Other noninterest income trends have been strong, aided by continuing dividends streams from the subsidiaries. We expect this trend to sustain. The trend in the cost-to-income ratio has also been positive with the ratio at 38.4% in the first half. We would continue to target to contain this ratio at a level below 40%. Thus, we expect to improve on the core trends seen in the first half in the operating profit, and subject to mark-to-market -- sorry, subject to market conditions, improve the treasury performance relative to the second quarter. Given the economic scenario I mentioned earlier and issues of profitability challenges, longer working capital cycles and liquidity constraints faced by companies, corporate asset quality continues to be impacted across the system, particularly among medium and smaller companies. We had estimated provisions as a percentage of average loans of about 75 to 80 basis points for the full year. The first half experience has been around 82 basis points. During the first half, we have gross additions to NPL of about INR 23 billion. We currently expect a similar trend in the second half. With respect to restructured assets, we have seen gross additions to restructured loans of about INR 20 billion, and also currently have loans aggregating to about INR 20 billion, referred to CDR mechanism. Given the environment, the CDR pipeline is expected to increase, and we would also see some restructuring outside CDR, resulting in a higher amount of restructuring in the second half. While given the operating environment and the provisioning cost for this year may be higher than our initial estimates, we do not expect them to exceed 90 to 100 basis points of the average loans. In summary, we are seeing strong core operating trends: Loan growth driven by retail, healthy deposit growth, improved CASA average -- average CASA ratio, improving fee income growth and sustained cost efficiency. These healthy core operating trends would give us the ability to absorb the higher level of provisioning arising out of the credit cycle. Our growth continues to be supported by a capital position that is well above the regulatory norms. Before I end, I'm happy to say that, as you would have seen in the press release, my colleague, Rakesh Jha, has been designated as Chief Financial Officer. I'm sure all of you know him well and will join me in wishing him all the best. Rakesh has been the Deputy CFO since 2007 and has played a critical role in finance, planning and strategy for much longer. He's well qualified and deserving of this position. Rakesh will continue to report to me, and I'll also continue with my other existing responsibilities for risk management, corporate communications and branding, markets and commercial banking and day-to-day oversight of the compliance and internal audit functions, which report to the CEO and the audit committee. With this opening comments, my team and I will be happy to take your questions. Thank you.

[Operator Instructions] Our first question is from Mahrukh Adajania of Standard Chartered.

Just wanted to clarify a few things. Firstly, you said that the restructuring pipeline was INR 20 billion, is that correct?

Yes, our share of the restructuring cases report to CDR mechanism is currently INR 20 billion, yes.

And [indiscernible] for the second quarter, is it INR 10 billion or INR 11 billion?

The NPA additions was INR 11.45 billion. INR 11.45 billion of NPA addition gross.

Okay, got it. And so as you explained, lower employee expenses are largely due to retirement benefits. Or is there something else as well?

Largely it is because of the retirement benefits. Of course the yields have resulted in the treasure loss. But correspondingly, they have given us the benefit on valuation of retirement liabilities. But as I said, we are very confident on a full year basis to keep the cost-to-income ratio below 40%.

And that would -- I mean, what would drive that? Because this time the employee expenses look very, very low because of -- you're saying strength in operating income would help.

Yes, strength in operating income. Plus, generally, Mahrukh, the pressure on cost is not there so much. If you really look at the addition rates or the employee cost increase expectations, or if you look at any of the other operating expenses including the intel organizers [ph] and so on, generally the cost pressures are not much. And plus, of course, we always believe that we have something more to cut. So given this, we are quite confident of keeping it below 40%.

Okay. And just one last question in terms of your fee income, there's a very strong revival. So is there any lumpiness, any huge ForEx income which may not repeat next quarter or any such thing? Any lumpiness in any segment at all?

No lumpiness at all in any of the segments. And we do believe that our strategy of granularizing it has really helped. And when I look at the growth across segments, I've seen it -- seen the growth across all segments, whether it is transaction-based, Commercial Banking or ForEx or retail assets or on the corporate side. Generally, the fee income growth has been robust across all segments. So I don't expect any sort of blip because of any bulky income not coming through the quarter. That is not the case.

Your next question is from Vishal Goyal of UBS Securities.

My actually question is some color, if you can give, on the fresh [ph] and bill formation in terms of whether retail, wholesale and within in wholesale industry, you said so? [ph]

The retail, absolutely no concerns. And we continue to see very robust asset quality on the retail side. We are not expecting anything. On the corporate side, yes, given the operating environment that continues to be stressed. And we do see development of NPLs on the SME side also. So those are the type of thing. There is no certainly [ph] sectoral distribution or anything. And typically, wherever [ph] there are sales growth issues or there are gearing issues and working capital cycle getting extended inordinately. Those are the kind of cases where we are seeing slippages. I think it really depends on the company's finance structure and the sales growth rather than that being specific to any particular industry segment. So as I mentioned, and similar to the number we have seen in the first quarter -- sorry, first half, that is what we expect to see going forward as well.

And can you say the same for even restructuring or is that a little bit different for restructuring?

Restructuring, as I mentioned, the current pipeline of CDR cases, our share is INR 20 billion. And as I said, given the environment, the CDR pipeline is expected to increase as well. And we would also see some restructuring outside CDR, resulting in a higher amount of restructuring in the second half.

And all this is coming from [indiscernible] or something new...

Vishal, we are not seeing any development of NPL. This is, as I said earlier, all restructuring. As I said earlier, this is largely the mid-corporate kind of portfolios where we are seeing the restructuring developing. And that is also not a specific industry, as I mentioned. It will be company-specific issues, and we are very careful about restructuring what is capable of being revived as their restructuring happens. And we are quite comfortable with the kind of experience we have seen of our past restructuring as well.

Okay. And can I get a number for savings bank account opened in the quarter? New savings bank account.

We don't actually separately give on a quarterly basis the new accounts opened.

Okay. And on this retiral benefit, this thing can remain volatile, correct? Like with the monies -- I mean, any sense on what is the number, like the swing factor purely because of retiral benefit?

It is a function of the ease, because depending on what is the residual payment period, that is a discount rate which is used for computing the present obligation. So it will indeed be a volatile number. And normally in a quarter, the interest rate movement is not as sharp as it was in this quarter. So that it really never comes out as separate item for us to highlight. But given that this quarter the movement was pretty high, that's why the number is also on the higher side.

Yes, some volatility in that line item will be there. But that is why I also talked about if our top number, in terms of the operating expenses growth, and that is something which we can go by. And as I said earlier again, just to reiterate, we are very confident of keeping the cost-to-income ratio below 40%. That is something we are working towards.

Yes, but basically I think what it means is that it is a valuation of the liabilities which led to such a sharp decline, correct? So you won't expect similar experiences, for example, if it remains at, let's say, 8.5.

So it's a quarterly [indiscernible]. So if the yield remains at the same level as it was in September 30, then there should not be any incremental impact because of the yield movement. Separately, because of an actual evaluation, there would always be some impact which is there in the nominal run rate which is there. This is only because of the yield [ph] movement the impact which came in.

Then you go back to the normal run rate salary cost, correct? Like your figure remains here [indiscernible] particular quarter number.

Yes. That's why if you look at the H1 [indiscernible] somewhat sorted out.

[Operator Instructions] We'll take our next question from Jignesh Shial of IDBI capital.

Just wanted to check, have we sold any portfolios to [indiscernible] during this quarter?

We have sold some of our NPLs to [indiscernible], which is basically, if you look at the number that we gave in the presentation. There has been about INR 500 million of increase in the SRs [ph]. That is what reflects in the sale that we would have done in terms of the quarter.

The delta securities has been around INR 500 million.

That is the amount. I mean, that would be the recoveries, I mean, what you have received, right? Or that could be an amount that you sold.

That will be subscription [ph] to security received.

And any portfolio that we bought out this time or nothing has been bought?

In terms of portfolio that we buy, from a priority sector lending perspective, we do buy on a quarterly basis. But stop-gap purchases are in the form of PTCs that shows up in the investment portfolio. A much smaller amount is there on the loan portfolio side. So if you look at the overall buyout portfolio within the retail segment, between June and September, that would still have declined somewhat.

Secondly, what would be the quantum of wholesale deposit right now? I mean, any ad hoc [ph] numbers or something?

It will be just under 30% of the total deposits.

3-0, right?

Yes, That's right.

And just reconfirming, our additions during the quarter have been INR 11.45 billion, right?

Of NPL.

NPLs, yes. And the write-offs have been INR 5.58 billion.

That's correct.

Our next question is from Manish Karwa of Deutsche Bank.

I just wanted to take the outlook on margins, especially on the overseas margins. Do you think this trend can sustain for some time?

Yes. See, 1.8% is just about the highest level we have achieved. So I would say that the issued budget falls about on 1.7%, 1.8%, around that range. Increasing it from hereon looks to be difficult, but we are working towards sustaining it around this level. So that is the way we would like to operate there.

And what's the reason for this 1.8%? Is it you're getting better spreads on your lending side on the international front?

That's correct. Plus also, some liquidity we had -- we continue the deployment of the excess liquidity is happening over the period. And there is no real yield pressures, or any competitive pressures on the asset yield. So we will be able to get that thing, and then costs have also been down on the -- so it's a combination of all the 3 factors.

Okay. And on your U.K. subsidiary, your total assets have actually gone up pretty sharply on a sequential basis. Is it a one-off thing as a quarter-end number? Or is it reasonably good business that you're writing there?

Right now, you would not have seen an increase in the loan book, which was there as much, so that the balance sheet in terms of the deposit base has increased. And so going forward, we do expect some amount of loan growth to be there. So it's more of a quarterly kind of a thing which is there -- so somewhat more liquidity which is there currently would get deployed in [indiscernible] opportunities in the second half of the year.

Okay. And lastly on your PD business. The loss is largely because of the way interest rates have moved. And over year, also, all the losses have been taken to the P&L, right? There is no deferment of any loss.

Yes, on PD business there was no option...

On PD business, there was no option available to them. This option was given only to the banks.

Okay. So over year, everything has been accounted for as of 30th September?

That's correct. That's correct.

Our next question is from Sachin Shah of Emkay.

My question was more on the broader side on the corporate loan book. When we see the corporate world today, we are broadly seeing 2 sides of it. One is where a lot of corporates are extremely well leveraged, and on the other side, we see most -- quite a few corporates almost 0 debt balance sheet. So obviously, your exposure is to companies having extremely well leveraged. So does that really worry you with the overall environment right now? And going ahead, do you see the environment is getting much more tougher for them and on more on the slippages slide for the NPLs?

Yes. First of all, it will be incorrect to say that our exposure is only to corporates having over-leverage. That's absolutely untrue. We do have the other broader corporate banks, and then we will have exposure, too, across the corporate sector of the Indian economy. Second, this issue of corporate leverage has been talked about for about 18 months now, and we continue to monitor the portfolio. And in our case, it has indeed got reflected in the incremental additions to these structured loans. And our experience of -- in mostly stages [ph] from the structural NPLs has been quite satisfactory. Yes, the environment is tough. And obviously, corporates with a higher leverage, it will have an impact. But we do believe that given our ability to select our projects and corporates at the first instance in terms of giving loans and subsequent monitoring should hold us in good stand across the cycle. So the numbers I'm saying in terms of the provisions or the restructuring or NPL slippages pretty much reflect the work we have done around this. And should the economy revive, things can only get much better from here.

Right. But just in case if economy remains where it is for, say, another few quarters, do you see that, because you're all [ph] legacy book, do you see this getting more worse? Or we are now kind of bottoming out as far as the intense pressure is concerned on that kind of scenario?

Yes. In this kind of environment, it is indeed very difficult to predict too much into the future. But if you look at the kind of numbers I talked about for the second quarter, we're clearly saying that our operating performance has been far better than what we expected at the beginning of the year. The extended variable to increase outlook on the NIM expansion from 10 basis points to 20 basis points. The cost-to-income ratio, we are now saying that we will reduce it below 40%. And we are also saying that in terms of fee income growth, which we thought will be a growth of just about double-digit growth, we are saying that it's going to be 14% to 15% growth. And of course, we have talked about the provisions. And this is really not the core operating performance. A better core operating performance than what was thought at the beginning of the year will come to help us in terms of managing whatever little increase can be there in the provision. So we are quite cognizant of it and we are quite comfortable of all the year as a whole outlook. This is what happens when I learn [ph] to wait and see, and I'm sure that we will have enough calibration and management intervention to manage the situation.

The next question is from Suruchi Jain of MorningStar.

My first question is about the insurance business. You mentioned that the profits were lower on account of lower renewal. Could you give us some sense of what's the breakup of renewal plans versus its new plans? And also, could you also comment on the fact that your premiums have actually risen, but the profits have fallen?

So I think what we said was -- so first of all, if you look at it on a year-on-year basis, the profit is INR 387 crores versus INR 395 crores. So it's essentially flat. A difference of INR 7 crores on a INR 400 crore approaching number is not material in that sense. And secondly, the point that we made was that if you look at the way the industry has evolved post the changes in ULIP guidelines in September 2010, following that, there was a fairly extended period of very low growth, which -- or actually big [ph] growth, which obviously means that the book which can come up for renewals now is lower. So the lower level of renewal premiums today reflects the lower new business done in 2010-'11, 2011-'12 and on. And obviously, at the same time, we continue to maintain some cost base to run the new business. So these economics will kind of adjust over time as the new business streams pick up. To your second question on the premiums going up, but the profits coming down. That, in a way does happen to some extent in the insurance business, because costs are expensed upfront. So whenever you have sort of a robust growth in new business premiums, you do see what is called a new business stream as well. So those are really the factors impacting profit. But I think for the -- if you look at it for the quarter on a year-on-year basis, the profits are essentially flat for the first half as well, and we expect that kind of profitability to be maintained.

And just a quick follow-up on that before I ask my second question. Was the lower renewal the same for, like, all participants, industry participants? And do you see -- what do you see as a 5-year growth horizon for your insurance business?

So, I would say, to varying degrees, the lower renewals is seen as across the industry. Some companies may be doing a little better, some may be doing a little worse. Part of it is also to do with the recency of the book in the sense that, as you know, the policy that's surrender-able after a certain period of certain minimum period. So as more of your book becomes eligible for surrender, the possibility of renewals being lower is higher. To your second question on the 5-year growth horizon. So I mean, given the under-penetration of insurance in India, whether you look at it in terms of premiums per capita, or some are short per capita, et cetera, or the number of people who have taken out insurance and the adequacy of that insurance, we believe that a sustainable growth rate for this business should be around 15%.

Okay. Moving to my next question. It's just a follow up from what Mahrukh asked earlier. What is really driving down your cost? I understand you have the largest branch network amongst the private sector banks in the country. But at an operational level, apart from the onetime changes in pension or liabilities, what are you doing to bring down your cost? Because the way I look at it, the costs are pretty high compared to a lot of other banks.

I'm not sure how one would say that the costs are high compared to other banks. I think on both on a cost-to-income basis and on a cost-to-asset basis, we would be among the most, if not the most efficient, among Indian banks. And we have been operating at between, I would say, 38% and 42%, 43% cost-to-income on a sustained basis for the last several quarters. So as Kannan mentioned, while we are not really seeing any cost pressure in terms of wage costs -- the fixed wage costs rising or anything of that sort, we are -- we continue to control and optimize and tighten all other forms of cost, be it travel or any of the other line items. And at the same time, we continue also to invest in our franchise in terms of branches and so on and so forth, because we create the room for that by sort of optimizing the recurring costs. So to answer -- to give a short answer, I think we have been operating at, as I said, late -- high 30s to low 40s kind of cost-to-income ratio for a sustained period of time, and that is what we expect to sustain. Also, when you look at that ratio, one, of course, is the numerator. The other thing that is helping that ratio is the fact that the denominator is also -- whether -- when we look at the improvement in margins and the improvement in the levels of the income growth, the denominator also kind of helps that ratio.

[Operator Instructions] Our next question is from Umang Shah of CIMB.

So this is Jatinder. Just one question. On your cost of funds, can we have a broad sense how they have behaved year-on-year? And if you could break that into domestic and overseas or sequentially also, actually better?

Sequentially, my sense [ph] of cost to -- cost of deposits have come down.

6.13.

6.13% was the cost of deposit as of -- for the quarter.

And the previous quarter?

If you look at overall cost of funds for the total, that is 6.13% for the quarter. And the previous quarter was about 6.3%, meaning that Q1 was 6.3%.

Okay. And can we get some broad sense as to how is it behaving differently between domestic and overseas?

Actually, the trend -- the numbers are different, but the trend line is pretty much similar. So domestic also would have come down by about 13 basis points during the quarter, and overseas have come down by about 15 basis points or so, in terms of the cost of funds. The level, of course, is different. So the domestic cost will be closer to 6.8%, overseas will be closer to about 3.1%.

And can we have some more granular mix of the account deposits? What is leading to it other than the CASA, at least on the domestic side?

Just the pickup of term deposits.

So you want in terms of the cost, between Q1 and Q2, the average -- daily average CASA balance has gone up. That has also helped in terms of the overall deposit cost coming down.

Okay. And can we have the term deposit mix in terms of how much is retail and how much is corporate and what do you really define as wholesale?

About 60% of the term deposits will be retail and 40% would be wholesale.

Our next question is from Ashwani Agarwalla of BOB Pioneer Mutual Fund.

Just some -- a broader question. The last 3 years, if you see, you have lent around about INR 1.1 trillion to the corporate sector. And out of that, only about 40% constitutes the infra construction, metals and mining. Can you tell me how much would be terminal and how much would be working capital loan?

Sorry, in terms of what we have lent incrementally over last 3 years?

Yes.

We would not readily have that immediately available with us.

Okay. And how of projects would be coming on, I'm assuming, next 2 years?

If you look at the next 2 years, I think, substantially, all of the projects -- if you look at the power side and so on, would get -- our main project, and the implementation exposure is in power. Within most of those, over them -- I think all of that over the next 2 years would get them -- would start obviously.

Okay. And do you see any problems coming those sectors? Because power, construction, those are the main areas which can create problems in the next 2 years.

If you look at construction, I think the problem is already evident. And I think you have seen right from last year, the construction. And by construction, I mean the EPC type of companies getting into CDR, because their top line is challenged and they also have liquidity issues, because payments to them, particularly from the public sector entities, are delayed. And you have seen more than one construction company going into restructuring. And when we see that going forward as well, and that is kind of factored into some of the outlook that Kannan spoke of. As far as power is concerned, of our total power exposure, which is about a little over 6% of our total exposure, half is in any case to operating companies, and the balance, half is to projects and implementation. Within that, we do not have, under the -- in the projects and implementation, we don't have any of the gas-base plants or the UMPPs. So we have mainly thermal exposure. And I think that given the current sort of regulatory framework around restructuring, we don't see too much of a challenge in that sector. In any case, these are all 10- to 12-year loans funding 25-year assets. So there would be sufficient tail in the cash flow to take care of any repayment elongations. So we don't -- as we've always said, see ourselves taking any significant economic loss on these projects.

Okay. What about metal sector? Because even in metal, we see a substantial exposure. And iron, steel and metals together stand about INR 20,000 crore plus.

Yes, so we have see lack [ph] crore loan books. So in that sense, it is 6%, 7% of the loan book to give one kind of sense of perspective. And I think in metals, if you look at iron and steel, our exposure is mainly to the larger players. And we have not seen any sort of NPL or restructuring issues in those exposures, and we don't anticipate any either.

Okay. Coming back to power, of the INR 10,000 crore exposure, which is to the thermal category, which is nonoperating, how many of them would be having backward linkages?

So I think at the time of financing, about 40% to 50% of the exposure would have been financed based on captive minds, and the balance would have largely been based on linkages. Given the way the whole sector has evolved since these loans were approved, which was probably more like 2010, that mix may change a little bit. But based on our sensitivities or what is the breakeven PLF, et cetera, we don't see that as a big issue.

Our next question is from Rakesh Kumar of Elara Capital. Rakesh Kumar - Elara Securities (India) Private Limited, Research Division: Just coming back to this employee expenses thing. Like, if supposing, like, from March '13 to March '14 there is no change in the air [ph], so what would have been the, like, our internal estimate on the increase in the employee expenses?

So there are many variables which are [ph] also there. So as Kannan mentioned, I think if you take the first half numbers in aggregate as the base and kind of ignore that Q2 was clearly somewhat lower than the trend line because of this impact, then that would give you appropriate sense of going forward, the numbers. Rakesh Kumar - Elara Securities (India) Private Limited, Research Division: I'm seeing the previous-year numbers, like, we had an employee increase of around 8%, 2.3% and 8% in '12 and '13, and employee cost increased by hours around 25% and 11%. So just coming from that, how much -- how employees you are adding, and what is the increase in the cost for the employee expenses we are going to have? So that number was not falling in line.

So broadly, for example, we would have an annual increase in salaries that we have every April that will typically be in the region of about 8% to 10%. And then in terms of the increase in employees, you can assume that would be a further 10% or 12% that would happen for the years. Of course, that will happen through the years, so that the impact on the salaries will not be at the full impact. But through the year, there will be increase of -- in the number of employees as well. That is what would give you an estimate of the number. And then further, we have the impact of the retirers [ph] where it's going to be a function of interest rate. And then the other available expenses which are there. Rakesh Kumar - Elara Securities (India) Private Limited, Research Division: Just one last question. Looking at the change in the total capital adequacy for the Basel II and Basel III on the sequential versus for Q2, the change in Basel II number is relatively larger. So anything we can understand from it? Any insight we can get from here?

So which number, if you can tell me which number you're referring to? Rakesh Kumar - Elara Securities (India) Private Limited, Research Division: Like the CAR for the Basel II. On the Basel II, it is 17.63%. Like which is come down from 18.35%. And if you compare the same number on the Basel III, so that has not fallen so much. So I'm just trying to understand that, what is the reason is for the larger fall under the Basel II?

It's the same, actually.

So if you look at under Basel II, the CAR has come down from by about 18.97% to 18.33%, which is about 60 basis points. And Basel III is 17.63% to 17.15%, which is a little bit lower. So I don't think it's a very significant difference. Rakesh Kumar - Elara Securities (India) Private Limited, Research Division: No, from June to September number, if you look at for Basel III, their drop is around 50 bps. But if you look at Basel II number, the decrease is much larger. It is around 70, 80 bps. So the decrease in the Basel II number is slightly higher than the Basel III number for the CAR.

Basel II is about... Rakesh Kumar - Elara Securities (India) Private Limited, Research Division: So anything, any change or like, any...

Because I think the difference is about maybe 10 or 15 basis points, through to that. That kind of a difference will maybe kind of come in, because the methodology of computation is really different between the 2. So that kind of difference will indeed come in on a quarter-on-quarter basis.

Our next question is from Sapna Naik of Bajaj Finserv.

Can you quantify the amount of variable property regards on the employee? The employee expenses, were those the benefit you have received this quarter due to the change in it?

No, we have talked about the employee expenses being lower on a year-on-year basis. I know it's the reason -- the main primary reason for that is the fact that the retiral benefits have to be valued on a quarterly basis, and the valuation moves. And therefore, the provisioning requirement moves down or up based upon whether interest rates go up or down.

Yes. So I just want to know what was the benefit you have received.

[indiscernible] because it is based on a actuarial report where all the variables come in. So in fact it would be very difficult to even just point out because of the interest rate what is the movement. Because it's actually based on various inputs.

And Kannan explained, if one wants to look at how this will trend, one should look at the first half number for employee expenses to kind of smoothen out this impact. And if one were to look at a cost-to-income type of metric, then one could also adjust the denominator for the fact that you had a sort of onetime treasury loss this time, which will again get reversed if the years is reversed and the OpEx is higher.

So I want to clarify one thing, that you have shifted to INR 200 crores, INR 300 crores from SLR to SLR portfolio, on which you have recorded a loss of INR 10 crores. So if that portfolio was not shifted, the treasury income would have been lower by how much you said?

INR 70 crores.

INR 70 crores, okay.

And that's -- a bulk of that would have got recouped in the current quarter.

Our next version is from Nitin Kumar of Quant Capital.

Sir, how was the margin trajectory in the domestic business between the retail and the corporate verticals? And I mean, did one segment do much better over the other?

No, not really.

Okay. So you were able to pass on the cost equally, like, there are...

Because on the increase in base rate, which is applicable both on the corporate side and on the retail side, it is mainly on the mortgage book where you see the impact.

And overall average cost of funds did not increase.

Okay, okay. And secondly, like the overseas borrowings have shown good growth this quarter. So to what extent have you [indiscernible] with RBI? And is there any more to come?

Overseas borrowing growth in dollar terms is not there. It was simply because of the exchange rate.

Okay. So given the award, the relaxation RBI has given, are you looking to raise more over there?

We will look at -- we are looking at raising, both in terms of the FCNR (B) deposits, as well as on the Tier 1 limit, which is there. So I guess some of those numbers will reflect more in the December quarter.

Okay. And lastly, sir, the growth in the personal loans have been quite choppy this quarter. So like, what is the outlook there?

No, it -- that's because of the base effect, because we have not been very heavy on that segment. The outlook continues to be that, yes, the growth percentages may be high, but our overall business, it will be around 2% of the loan book. So I don't think that we will exit that by much. But the percentage growth can be high because of the very low base. And we are practically shut out [ph] of that segment in the past. And we have increasingly started doing such loans for our own customers.

Our next question is from Saikiran Pulavarthi of Espiritu Santo.

Just a quick bookkeeping question, what is the dividend income this quarter and then corresponding quarter last year?

Total noninterest income was INR 258 crores and INR 288 crores in Q1. I mean, that's INR 252 crores in Q2 and INR 288 crores in Q1 and INR 161 crores in Q2 of last year. And dividends would be the primary contributor to that.

Our next question is from Nilanjan Karfa of Jefferies.

Quickly, I know we have -- understandably the environment is challenged [ph], say, focused on FY '14. Would you have an early guess or some kind of guidance for FY '15?

Too early really, Nilanjan, to talk about that. So I would rather confine it to this year and then take it as it comes. From our perspective, as I said earlier, the franchise is going strong and operating metrics are doing well. The thing that -- as and when these situations arise, they should be in a better position to take advantage of the situation. The general sense we get talking to people, and our own belief is that things may be bottoming out and things should be better in FY '15. But one has to calibrate it, depending on what happens in the general economic scenario. We'll have to wait for that.

Okay. But if I get it right, you upped your credit cost guidance to 90 to 100 this year from 75 to 80, is that right?

Yes. We said that we would not expect it to exceed that number, that is what we mentioned, because we are seeing a little bit of a upward movement. Because if you remember, at the beginning of the year, we said 75 basis points. The number we have achieved for the first half is more like 82 basis points. And there's continued addition to NPLs restructured will warrant additional provisions. And as you know, the certain [ph] provision requirements have been increased by RBI. Given [ph] all that, generally that directionally it has been -- there is an upward pressure on that number. That's why we said that we will have a goal of not exceeding 90 to 100 basis points. But again, the good news is that on all -- almost all of the other metrics, we're predicting something which is better than what we predicted at the beginning of the year. So that should provide a decent amount of cushion against this. So we just wanted to make sure that we are -- we recognize the reality and plan accordingly. That is why I made that statement.

Sure, sure. And maybe a last question. On the international book, what is the rough, the ALM structure like? If you can specify on the interest rate basis that has given us this kind of [indiscernible] improvement.

Interest rate basis, actually, the book is -- we maintained on the assets and liabilities both on a floating rate basis into LIBOR. So even if we raise fixed-rate bonds or asset borrowings, which are longer than 1 year maturity, they would swap that into LIBOR-linked funding. So interest rate mismatch is really not much.

Okay. Now because -- clearly now, if you look at the U.S. treasury between 6 months to 1 year, the movement has been pretty negligible. The movement has essentially come in the 2 to 3 years maturities. And hence, this question. How -- I understand you mentioned earlier that you had excess liquidity, but was it just the excess liquidity which got deployed or...

As we said -- so you know, it was bulk of it was excess liquidity, and we also saw about a 10 basis point reduction in the funding cost which was there. But the bulk of the improvement that's seen on the overseas margin in the last, I would say, 3 quarters, it is more of the excess liquidity which has come down. So if you go back last year, September, December quarter is where we were at the peak in terms of the liquidity that we are carrying. We had a large bond repayment in October 2012, because of which we are carrying a large amount of liquidity, and that was there through December. So this is more of a benefit in terms of the liquidity getting deployed. And we also get the benefit that in overall, the balance sheet has not really increased in dollar terms. So that gives you ability, to some extent, to optimize costs as well if you're not growing the balance sheet.

And -- but as the last question, sorry for this. Any guidance on your overseas? The ROEs of the overseas subsidies are obviously in low single digits. What is the target plan for those subsidiaries maybe this year, next year?

We have said that in the medium term. The first target is to kind of get into a double-digit ROE. But given the kind of excess capital, which is still there, especially in Canada, where the total capital adequacy continues to be 30% less and U.K. is still close to 20%. So it will take us 2 to 3 years to kind of -- to get that kind of a level. And we would also look at some more capital getting repatriated from Canada during this period. We're kind of not rushing into a ROE expansion model. And see -- and it'll take some time to get there.

Our next question is from M. B. Mahesh of Kotak Securities.

So my first question is on the cost of deposits again. You have indicated initially that the cost of deposits is down on a q-on-q basis. Now if -- in terms of experience it were to remain as where it is today, do you see cost of deposits increasing in your portfolio? And correspondingly, given the fact that you've seen a fairly large repricing already on the advances side, that should lead to a downward pressure on margins? One. Second one is, as your assets is increasingly shifting towards retail, is there a fair chance that, incrementally, you'll start seeing pressure because of the shift in loan book between retail and corporate in your underlying book?

So in terms of cost of deposit, because we have been doing fairly well on the CASA front, and in terms of the wholesale deposit, our reliance is not now that much lesser. So we are not really expecting to see the cost of fund increase substantially going into the third quarter. Of course, there'll be some impact which will come in because of the higher deposit cost which was there in the month of August. But things have kind of cooled down and the rates have come off quite a bit. And even from a planning perspective, when the rates were high, we kind of kept away from the market or tried to borrow on the shorter range, so which will not really impact the cost through the second half. So that gives us some comfort that, in overall, on the margin basis, we should be able to broadly remain at the level where we are in this quarter.

And the impact of the shift in the loan portfolio. Is it a fair assumption to make that, today, the corporate margins are probably a lot higher than what the average domestic margin has made, by the way?

Not really, no. Because if you look at the mortgage yield are still from the past book, which is there, is relatively high. So overall, yes, the corporate book will have somewhat higher yield, but it will not be a substantial difference which will be there.

Okay. Is it possible for you to also say what is the outstanding loans in the mortgage book? The mortgage, not the housing loan portfolio.

So it's -- no, we give actually the bill in loans separately. So for the portfolio that we give in to retail is indeed a...

But there would be a difference between housing and mortgage. Like housing -- the new housing loans which you give and also the loans against mortgage.

So we use housing and mortgage interchangeably. What you're asking is what is that basically, that is included in the housing loan portfolio? That will be between 15% to 20% of the loan book.

Okay. And my second question is there has been a drop in general insurance business in terms of profitability. Any specific reasons attributed to it?

[indiscernible] investment income sequentially has just come down. By the year-on-year, if you look at the profitability, the growth makes 55%.

Our next question is from Kashyap Jhaveri of Emkay Global.

Actually, all my questions have been answered. Just congratulations for that set of numbers.

Ladies and gentlemen, due to time constraints, that was the last question. I would now like to hand the floor back to Mr. N. S. Kannan for closing comments.

Thank you. If there are those of you who want any clarifications, any questions to ask my team and I, we are there to take your questions. Thank you so much, and thank you for participating in the call. Bye-bye.

Thank you very much. Ladies and gentlemen, on behalf of ICICI Bank, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.