HDFC Bank Limited (HDB) on Q1 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, good evening, and welcome to HDFC Bank Q1 FY '21 earnings conference call on the financial results presented by management of HDFC Bank. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Srinivasan Vaidyanathan, Chief Financial Officer, HDFC Bank. Thank you, and over to you, sir.
Srinivasan Vaidyanathan: Okay, thank you, Aman. Appreciate the participants calling in today. Mr. Aditya Puri is with us today. May I request Mr. Puri to give opening remarks, please?
Aditya Puri: Thanks, Srini. Good evening, all of you, and thanks for taking the time off to listen to us. I will cover the opening remarks in 3 portions. First, I want to get these Twitter messages out of the way. Then I will give you an idea as to what kind of work we've put in to get the results that we got during the COVID quarter. And last but not the least, I would like to clear all the uncertainty regarding our future in terms of succession, management planning, our business plan. And then our team, which is actually what has performed to give you the results, will cover individual aspects, whether it is about NPA, whether it's about our unsecured loans, whether it is about our credit risk, whether we will have a sudden jump with the moratorium going off or we've taken proactive measures to see what is happening, the fact that we have a clearly defined succession plan coupled with the team in place. So let me start first. So we've been getting these messages seeming to suggest that there is some turmoil in the employees based on transition. So let me cover that one by one. As far as Mr. Munish Mittal, our Chief Technology Officer, was concerned, he talked to me about me and the management about a year back, whereby he said he would like to go into more detailed and advanced studies in technology at Oxford. I told him, "No problem. You've been loyal and you've been -- we know you love the bank." So he was set milestones that he had to achieve before he moved on. He's achieved the milestones; and now he's sitting in Oxford in London, preparing for becoming an even better expert on technology. The second was Mr. Abhay Aima. Abhay was one of the founding people with the bank. He's been with us 25 years and loves the bank with his life. And he played a stellar role in achieving a lot in terms of private banking, in terms of product management, in terms of high net worth. And he also expressed alternative interest which I am aware of but I don't want to specify. He again was told by me that, as soon as he's trained his successors and I'm satisfied with their ability to cope, I would be happy if he pursued his active interest. Because you only live once. He did that, and he moved on. Then we've had this issue on the auto loan business, so let's -- let me clarify that very clearly. The bank has a robust policy and process to deal with complaints and allegations and take action as appropriate in the said instance as well. The bank has followed due process, suffice it to say, that as a bank we have always upheld the highest standards of governance and proprietary at all times and will continue to do so. We had received some whistleblowing complaints. Internal inquires carried out in the matter on the complaint received has not bought out any conflict-of-interest issue, nor does it have any bearing on our loan portfolio. The inquiry did bring out other aspects related to personal misconduct exhibited by a set of employees, for which appropriate disciplinary actions have been initiated or taken. Based on the internal inquiry timing, the appropriate action was taken against a set of employees of auto loan business segment for their active personal misconduct. Mr. Ashok Khanna, being head of the referred business segment, had also participated in the inquiry process. Subsequently, he superannuated on March 31, 2020, upon expiry of his tenure and as per the original term of employment. Based on further development in the inquiry process, appropriate action as necessary will be taken in the highest form of corporate governance. Lastly, we come to this alone. I don't want to take the name of the company, where we've been asked by RBI to refund some money. We had appropriated that money based on sound and very strong legal advice. However, as the regulator has advised us, we thought fit that we will return the money. This -- and we become pari passu with the other creditors, and whatever amount there has been provided for. So I think we have exhibited exemplary standards across 25 years. And I don't see any reason why the culture, the base of 200,000 people, will change. So that -- now that I put that aside, let me tell you how we got our results during COVID. It's been a superhuman effort, and I thank all our employees for that. The economy appears to have recovered sharply from April, the trough in response to unlocking, a whole range of high-frequency indicators ranging from oil consumption and electricity consumption, to e-way bill and toll collections and the purchase managers' index on marked improvement in May that sustained in June. Anecdotal evidence on capacity utilization of some of the companies like auto, steel, FMCG seems to corroborate this conclusion. The pickup in tractor 2-wheeler and small car sales as well as the nature of FMCG items that have shown robust growth point to a rural bias in the recovery and are consistent with 2 themes. First, the rural economy seems to have been relatively isolated from the virus. Second, the robust rabi or winter crop of the previous cycle and the satisfactory progress of this season's summer or kharif crop has manifested in a healthy income in the hands of the farm sector as well as expectations of income boost going forward as the summer crop is harvested. While this points to a potentially good recovery, there could be moderation going forward. A part of this demand is indeed pent-up demand from the lockdown phase that could lose steam. Second, the steady rise in infections and the greater dispersion across the country means that containment remains a policy challenge. And partial lockdowns that are being imposed in different pockets could hinder a full-grown recovery. [Indiscernible] has been recovering strong in the range of 5% to 6% year-on-year over last few fortnights. This could sustain as credit disposal to MSMEs backed by government guarantee gains momentum. The transmission of 150 basis point rate cuts in February and the presence of a large surplus liquidity of 6,50,000 crore currently has led to a sharp decline in yields and borrowing costs for other tenures. It also augurs well that the market would be able to absorb the additional borrowing of the government. However, duration risk and the large supply of central and state government paper have set a floor to longer-tenured loans and debt paper. In our internal review, we expect another 25 to 50 basis points cut in the policy rate over the near term and yield management operations such as twist and conventional open-market operation to pick up in the second half of '21. Now we come to employees. It is imperative to place on record our sincere appreciation to the thousands of our employees across the bank. We are proud to say that our bank is one of the few in the country which has given increments, bonuses, promotions as we have always done. This is no favor to anybody. The employees delivered, and since they have delivered, they were entitled to their share of the profits of the bank. Our bank has been well positioned to play a meaningful role in the changing work landscape. 2/3 of our employees outside of the branches are working from home. Certain branch staff come in to service customers on a rotational basis. We have improved productivity across the board. We have been extremely careful about the safety of our employees, from arranging for transport, from having them work from home, from disinfecting, from making doctor service available, from making insurance available, as employee safety is our prime concern as well. In quarter 1, the highlight was rolling out our "anywhere working" construct for the retail branch personnel through various initiatives in early April that enabled our people to engage with customers telephonically or through video conference, which is much appreciated by the customers. During the quarter, and this is what I want to get across, we have been working at an excellent capacity. During the quarter, on an average, we had customer interactions per month of approximately 225,000 per day, totaling to 68 lakh customer interactions in the month, almost double of what we saw in March, with higher salience towards telephone or video. During the quarter, we acquired 1.2 million liability customers, approximately 1,30,000 accounts, the -- no, sorry, approximately 13,000 accounts a day. This is about 80% of prior year quarter 1 levels. Despite the COVID-19 environment, this was driven through various strategies that we've adopted, including enhanced digital journeys. The enhancement to digitization of our processes such as InstaAccount journey, new account, online funding journey , fixed deposit renewal through voice bot, are some illustrative examples that help us to acquire new customers and have them onboarded digitally. It also enables the customers to access net banking and cash -- cardless cash withdrawal through ATM and so on. We are entering prime time to scale up our various digital journeys. The technology is in place. The people are in place. And as the lockdown moves, we will keep the -- digitizing our current account onboarding, video KYC and so on to supplement our existing digital offering. By and large, our branches remain open for customers. 95% of the branches are operational, and I'd like to thank -- and we as management would like to thank all our employees for their dedicated efforts. Approximately 13,000 ATMs across the country are operational, which is with an average uptime of 92%. Digital, a lot of people talk about digital. Our virtual relationship team continues to be enabled on our available technology solutions to ensure productivity of resources on WFH, which is work from home, i.e., CRM on mobile and customer engagement. We are seeing good traction on liabilities at this channel. Our launch of video KYC on a limited pilot basis through this channel has enabled 100% digital full KYC accounts for our customers. This capability has been scaled up in quarter 2. VRM has increased its relationship productivity to 22 call engagements per day versus 18 in April. On phone banking and telesales, 50% of our resources are unable to work from home. As far as marketing is concerned, a lot of you will have seen that A.R. Rahman, who is a customer of the bank and understands that we are a good citizen as well, agreed to do the concept along with his colleague for free. And I would like to take this opportunity to thank both Mr. Rahman and Mr. Prasoon Joshi personally. On phone banking and telesales, 50% resources are unable to work at home, that I've told you already. We also dispelled this doom and gloom corona aaya toh corona jayega bhi. Duniya chalegi, thoda beech me difficulty hoyega. Summer treats launched by us has shown good traction in participating merchants and consumers, where we have a plethora of merchant-funded offers, some national offers on electronics, for example, Apple, Samsung; and great deals on various products. This was launched to boost sales and send a confidence message to consumers, manufacturers and merchants that HDFC Bank is with you even in times of adversity. On the payment business. Payment business volumes, both acquiring and issuance, in June '20 saw a bounce back to about 70% of January '20 levels. Strong tractions are seen on the categories such as daily essentials, medical expenses, food home delivery. Since these are low-ticket spends with high frequency, it led to higher engagement levels with customers on payment instruments. While travel, hospitality and the like have been muted, many other high spends have increased, such as online education, subscription services, e-commerce, as a consequence, has grown faster than off-line payments. On the merchant acquiring business, the model has been to create a thriving and efficient HDFC Bank merchant payments and collections ecosystem, with value-added services helping drive merchant business. As far as corporate and wholesale banking is concerned, we actually went in for AAA corporates. On a total basis on our balance sheet, we improved the risk rating of our balance sheet by 30 basis points to 4.3. And we had also restricted consumer loans, which are good, but till we have a greater recovery, we have stopped them. And we are watching the recovery, which we hope we should be able to start by September. We have seen significantly higher activities by domestic companies and FIs during the quarter in the debt market. The debt raised was in excess of 22,155 crores. This amount was 60% higher on a year-on-year basis. In the corporates, also raised 102,665 crores from the equity markets through a mix of various instruments. We were actively involved in these fund raisings. SME assets were on a declining trend but received a partial offset Q-on-Q to the -- because of the guarantee scheme. Retail asset. Retail originations fell by 70% during the quarter, both as a combination of tightening of credit standards as well as some amount of pessimism in the borrowers. The personal loan book, not surprisingly, contributed to the brunt of the impact, a drop of 86% in origination, a reflection not just of the lockdown but also our own prudence as we tightened in an otherwise uncertain environment. Credit cards dropped by 87%, and spends fell by 40%, leading to a book contracting by 4.5% during the quarter. Loan originations in the vehicle segment fell. However, the recovery and this time, we are almost back and especially for the small cars and 2-wheelers, tractors is record, these are back to about 75% of pre-COVID level. Other products showed recovery as well. Then we come to collection. The good part is we gave everybody full salary. We gave the increment. We gave them the bonus, and we have not laid off a single person. We have also told our people that, given our expectation of delivery and the superhuman efforts they have put in -- which is the main strength of HDFC Bank, the training and the HDFC Bank team. So we moved our excess sales staff to collections. And Srini and Jimmy will cover this later, which will tell you how well we have been able to estimate our NPAs as well as what success we've had in our collection efforts. We've also contributed to society, which we normally do. We are a good bank, but we have a heart of gold. Besides our CSR activities, we also gave INR 70 crores to the Prime Minister's relief fund and have given in various states, improving hospital service, buying of kits, buying of ventilators, providing for umbrellas for the police, providing food, medical supplies, all of that. Now this gives you of some idea of the effort and how much we have changed to be able to produce this result. Now I come to the second part. The second part clearly is an understanding that did I train my successor. Do I have a management team that is in place to take care of the future? Did we put in the right technology? And what is going to happen? When I came back from Silicon Valley, after I had a lot of people tell me that, between the fintechs and the other developments that were taking place, we will be blown out the market, what I found there was that, with the secular shifts in telecommunication, computing, social mobility and artificial intelligence, the operating models for the companies will change completely. The people who understood this and changed their operating models, leading to a better product delivery to the customer, coupled with lower transaction costs and better customer service thrived. That's where you've got the Apples and the Googles and the Netflix. We came back and decided that we should -- we also wanted to try using this change that has come in the world. And we set ourselves the goal that we will provide frictionless service, benchmarking against an Amazon or a Google. We will provide frictionless service and enjoy the customer journey across a wide product range and geographies in the most convenient manner to the customers. So we all sat down, the entire team, and prepared our plans to figure out what we're going to be doing going forward. This was the team effort for determining the strategy, for determining our action plan, for determining the changes required in process, the changes required in marketing, the changes required in technology and what could -- it could do to increase our distribution. The team worked and came out with a vision and an action plan. We appointed a change agent to make sure that -- most changes fail because there is not enough monitoring and commitment. Every man jack of the 200,000 people bought into the change. That's our strength. You can talk to anybody anywhere, and he will give you the same talk that I'm giving you here today. And we put our plans in place completely to see which businesses we will dominate, what we would do, what technology we will have. That has been in place, and where do we find ourselves today. We are the only brand -- and I'm not talking Indian brand and I'm not talking about a bank that comes in the top 100. We are #65 in the Millford brand recognition globally, among all global companies, which I think is a great achievement in our being able to get across our strengths to our customer base. We have approximately 18.9% capital adequacy, which is a result of our deciding the proper target market, the proper marketing, the proper technology, the proper costs, the probability of default and leave and monitoring that this is effectively monitored to give us enough return to take care of our delinquency, return on -- to equity shareholders, pay our employees and return their deposits. We have -- our base portfolio is not strained because in all cases we are in the middle and upper middle. And Jimmy will explain how even the cash flow-based lending, which all of you people call unsecured, is -- the quality of that lending, how it holds up even in the most tough circumstances. So that's not a cause of worry. It's a cause of strength, which I will let Jimmy and all explain as we go forward. We changed our technology from core banking to middleware, to enterprise and now service -- software as a service to be able to deliver across all channels and omnichannel experience. 2 clicks, and you're able to do your business. And using artificial intelligence to come down to customer segmentation of one. All this is almost complete. And among with us, we have some of the most advanced technology companies who are not fundamentally the old, the IBM and et cetera. These are the people that are looking at software as a service, and they have told us we are among the top 5 globally. You will be hearing shortly from us on the subject. We talked so 5 years back about semi-urban and rural India. And we are today almost an emerging market in terms of product, in terms of technology, in terms of distribution. We opened 50% of our branches in semi-urban and rural India. And we added already about 15,000 banking correspondents, which will increase further, giving us one of the largest distribution franchises in semi-urban and rural India. I can continue forever, but I've got a very competent team to talk from here onwards. And so regarding my successor, the main successors in respect of where the RBI finger points are -- have been with me. They understand the business. They were part of the transformation. They were part of the training. They are part, and the people love them, so there is no issue on who is the successor. And you would have seen in today’s AGM all the talk about there is difference here, difference there. I think it should have been very clear there is no difference anywhere, and we are very clear on we are going -- where we are going forward. The team itself will cover where -- how we've transformed our banking experience in the branches; what we are doing to dominate the payment business; where our digital will take us both for retail and corporate, retail in terms of our frictionless omnichannel experience, corporate in terms of either host-to-host integration or APIs; and further, how we've been able to take our products in vernacular to the semi-urban and rural areas. We are market leaders in retail lending. We -- and what we did in terms of what we did on corporate lending. How we have been able to maintain and sustain what we are doing on SME, what we're doing in agriculture, what -- we are one of the few people even on small lending. We are also a company with a heart of gold. And they will also cover what we've done in terms of adopting villages, completely transforming the village, what we've done in terms of sustainable livelihood, why we are on the Guinness book of world record on blood, what we've done about changing education, what we've done about in productivity. So with that, I hope I've covered for you where we're going, what we are doing, what are the rumors, the facts that we -- 25 years, we have been icon of corporate integrity and governance. I don't think anything changes there. The team that we have, the plan that we have, the execution capability we have, the training that we have, the succession planning and the equation between the intended successor and the team. So what I said in my annual report, the best of HDFC Bank is yet to come. Srini, can you take over on the financials? And then Rahul can talk on corporate, and Jimmy can talk on...
Sashidhar Jagdishan: Asset quality.
Aditya Puri: On asset quality, et cetera. And my brilliant change agent, Mr. Jagdishan, can answer all questions.
Srinivasan Vaidyanathan: Thank you, Mr. Puri. First, a few comments to provide the backdrop on the strength of the franchise across a few dimensions, liquidity, capital, provisions and credit quality and NIM. Let's do some highlights and then we'll jump into the quarter results. We carried on with the strategy to build on deposits and on bringing in new customer relationships, thereby maintaining strong liquidity position. The bank's average LCR for the quarter was at 140%. That is about INR 70,000 crores of surplus or approximately 9.5 billion, considering 110% as the floor. Capital adequacy is at 18.9%. We have 7.8 percentage points more capital than the regulatory minimum of 11.1%. Our CET1 at 16.7% is 9.1 percentage points more than the regulatory minimum of 7.6%. The floating and contingent provisions totaling INR 5,453 crore built over a period of time helps in derisking the balance sheet. We have also taken several steps to further tighten the credit. The provision coverage has been further augmented to make the balance sheet even more resilient for any shock. Provision coverage ratio, including all categories of reserves, stands at 149%. We'll cover more on credit as we go along in this call. The NIM has been in a stable range historically over the past 10 years between 4.1% and 4.5% and currently stands at 4.3%. Now we'll get to the results highlights for the quarter. COVID has had certain impacts on the financials, which we will call out as we go along. Let's start with net revenues. Net revenues grew to INR 19,741 crore, driven by an advances growth of 20.9% and deposits growth of 24.6%. Net interest income for the quarter was at INR 15,665 crore, up 17.8% over the previous year and grew 3% over the previous quarter. For the quarter, net interest margin at 4.3%, as I said before, compares similar levels prior year and prior quarter levels. Moving on to details of other income. Fees and commission income that constitutes 55% of other income was at INR 2,231 crore, lower by 37% compared to prior year and lower by 46% compared to prior quarter. Retail constitutes approximately 89% and wholesale constitutes 11% of fees and commission. The extended lockdown during the quarter following the COVID outbreak has impacted the business across the bank, which is loan originations, distribution of third-party products, payment product activities and so on. Moratorium relief is available to customers according to RBI notification. Waiving of certain fees for customers have also been implemented in accordance with RBI mandate. These have been effective -- these have affected the fees and commission by approximately INR 1,700 crores. FX and derivatives income at INR 437 crore was lower by 24% compared to prior year of INR 577 crore. It is also lower by 12% versus the prior quarter, which was INR 501 crore. The reduced FX demand in both retail and the wholesale segment contributed to the decline. Trading income was at INR 1,087 crores for the quarter. This represents the ALCO strategy of monetizing some portion of the gains from excess liquidity investments. Other miscellaneous income of INR 321 crore includes recoveries and dividends from subsidiaries, but collections were impacted due to the extended lockdown during the quarter. This had an impact of approximately INR 300 crores on recoveries. Operating expenses for the quarter were INR 6,911 crores, a decrease of 2.9% over the previous year. Year-on-year, we added 336 branches, and we added 72 branches during [Technical Difficulty] Since previous year, we added 6,381 business correspondents, managed by Common Service Centres, including 1,002 opened during the quarter. In addition, approximately 200 branches are in various stages of readiness to open in a short time. If there were no disruptions, these would have been open during the quarter. Going forward, we will look for an opportune time to get these to be functional. The staff count increased by 11,668 during the last 12 months. Cost-to-income ratio was at 35% versus 38% to 39% in the recent past time periods. Lower costs in various sales channels, promotional activities and discretionary spends contributed to a better ratio than recent trends. We would expect these kinds of spends to resume in due course of time. Moving on to PPOP. The pre-provision operating profit grew by 15% to INR 12,829 crore from INR 11,147 crore in the prior year. Coming to asset quality. In accordance with the RBI guidelines relating to COVID-19 package, the moratorium granted as on June 30, 2020, is about 9% of our loan book. For all such accounts where the moratorium is granted, the asset classification shall remain standstill during the moratorium period, i.e., the number of days past due shall exclude the moratorium period for the purpose of asset classification under I Right norms. The bank holds provision, as on June 30, against the potential COVID impact based on the information available at this point in time, and the same are in excess of the RBI prescribed norms. During the quarter, we have accelerated the slippages. We have used analytical models in determining the slippages instead of waiting for purely on the roles since the usual certain-days past due recognition. This has resulted in an expedited NPA recognition. The annualized slippage in the quarter is 1.2% and which is predominantly due to the use of analytical models. GNPA ratio was at 1.36% of gross advances, as compared to 1.26% in prior quarter and 1.40% in prior year. The impact of the -- impact to the NPA ratio due to the use of analytical model in determining the NPA, as I mentioned earlier, is about 30 basis points. GNPA ratio excluding NPA in the agricultural segment was at 1.2%, as compared to 1.1% in prior quarter and 1.2% in prior year. Net NPA ratio was at 0.33% of net advances, as compared to 0.36% in the preceding quarter and 0.43% in the prior year. And now on to the provisions. Specific loan loss provisions were INR 2,740 crores, as against INR 2,248 crores for the prior year and INR 1,918 crores during the prior quarter. Of the INR 2,740 crores specific loan loss provisions for the quarter, approximately 2/3 of this is due to the accelerated recognition using analytical models. Total provisions were INR 3,892 crores, as against INR 3,784 crores during the prior quarter and INR 2,614 crores from the prior year. Total provisions in the current quarter included contingent provisions of approximately INR 1,000 crores. The provision coverage ratio was at 76%, as against 72% in the prior quarter and 70% in the prior year. Including contingent provisions, the coverage ratio is 105%. There are no technical write-offs. Our head office and branch books are fully integrated. Beginning of the quarter, we had contingent provisions of INR 2,996 crore. With a build of approximately INR 1,000 crore at the end of the quarter, contingent provision towards loans were INR 4,002 crores. The bank's floating provisions remained at INR 1,451 crore, and the general provisions were at INR 4,582 crore. Total provisions, comprising specific, floating, contingent and general, were 149% of gross nonperforming loans. This is in addition to the security held as collateral in several of the cases. Now coming to the credit cost ratios. The core credit cost ratio, i.e., the specific loan loss ratio, was at 1.08% of advances, as against 1.07% for the prior year and 0.77% for the prior quarter. As you are aware, recoveries are recorded as miscellaneous income. Therefore, the core credit cost ratio net of recoveries was at 0.99%, as compared to 0.88% in prior year and 0.55% in the prior quarter. After factoring in the accelerated provisions as previously mentioned, which was -- which has an impact of 73 basis points, and contingent provision, which has an impact of 40 basis points, total credit cost for the current quarter was at 1.54%, as against 1.51% in the prior quarter and 1.25% in the prior year. Now the reported PBT was at INR 8,938 crore. Net profit for the quarter grew by 19.6% to INR 6,659 crore. And some balance sheet items. The bank's balance sheet size as of June end was INR 1,545,103 crore, an increase of 22% over June of prior year. Total deposits amounting to INR 1,189,387 crore is an increase of 24.6% over prior year and up 3.7% over prior quarter, which is an -- this is an addition of approximately INR 42,000 crores in the quarter and 2 lakhs, 35,000 crores of addition since prior year. As a result of our focus on granular deposits, CASA deposits grew by 26%, ending the quarter at INR 477,435 crore, with savings account deposits at INR 327,358 crores and current account deposits at INR 150,077 crore. Time deposits at INR 711,952 crores grew by 23.7% over previous year. CASA deposits comprised 40.1% of total deposits as of June 2020. Current credit deposit ratio was at 84% for the current quarter, as against 87% in the prior year. Total advances were INR 1,003,299 crores, an increase of 20.9% over prior year and 1% over prior quarter, which is an addition of approximately INR 10,000 crores in the quarter and INR 1 lakh, 74,000 crores since prior year. Retail advances on a Basel basis grew by 7.3% year-on-year and sequentially had a de-growth of minus 3.9%. And wholesale advances on a Basel basis grew by 36% year-on-year and 6% sequentially. Moving on to CapEx. With regard to capital adequacy, total capital adequacy ratio as per Basel III guidelines stood at 18.9%, as against a regulatory requirement of 11.1%. This is an increase compared to the prior quarter of 18.5% and prior year of 16.9%. Tier 1 capital adequacy ratio was at 17.5% in the current quarter, as compared to 17.2% in the prior quarter. During the quarter, the bank generated slightly above 60 basis points of capital, mainly driven by earnings, while the consumption was about 3 basis points. Therefore, the net capital generated in the quarter is about 30 basis points, which is reflected in the increase in the total capital ratio of -- total capital ratio to 18.85%. It is also pertinent to note that, during the financial year '19/'20, the capital generation was 250 basis points, while the consumption was 110 basis points. This resulted in 140 basis points increase in total capital ratio in the financial year '19/'20. Based on our assessments, our internal generation of capital is adequate to sustain and support our business growth in the short term. In summary, we are proud of our people who have passionately managed customer relationships in executing our strategy despite a difficult environment. The results reflect deposits growth of 25%, advances growth of 21%, operating profit growth of 15%, profit after tax increase by 20%. With that, may I request Sashi to give a few words?
Sashidhar Jagdishan: Okay, thank you, Srini. Considering the fact that the main driver of our growth during the quarter has been the corporate banking unit, let me hand it over to Rahul Shukla to tell us more about where the growth is coming from and what is the outlook on corporate banking assets.
Rahul Shukla: Thank you, Sashi. Thank you all. Corporate banking had a satisfactory performance during the quarter. Strong growth performance was helped by the desire of corporates to migrate to the bank and also from more firm than widely believed economic activity. So first is on asset growth. The bank remains focused very sharply in serving businesses that have strong liquidity access through public markets or otherwise, through government holdings or government procurement; those that are part of very large business groups; and too, epidemic-resistant businesses. Entities include public sector corporations, private sector and MNC corporates. The bank also participated in TLTRO 1.0 to support corporates where it was constrained by GBL limits. It also provided liquidity to the mutual funds segment through purchase of assets under RBI scheme. We saw broad-based growth in the public sector in subsectors such as power, transportation; as well as financing arms of the government and nodal agencies. The bank also extended credit to material, energy, discretionary consumer sectors. Customer assets increased Y-o-Y by approximately 1 lakh and 25,000 crores. So how did this growth come when the economic activity is widely seen to be tepid? Given a lot of commentary and data points on the economy, we dug deep into our data to analyze trends and look at how the actual trends were versus what we read in the newspapers. As a very large transaction bank, we looked at the value of corporate collections that pass through our cash management system. During April 2020, which was the strictest lockdown period, and we believe that there was simply no activity, corporate collections were 45% compared with April 2019. You can say that activity was down for 55%, but you can also say that 45% of the economy was running in the month of April. Collections in May 2020 increased 47% over April 2020, and June collections were higher over May by 38%. In fact, the June collections were 94% of June 2019 collections. Normally, anecdotally people talk about June being 75%, 70%, 80%, but that 94% is what we actually saw. During the quarter, collections in specific sectors such as telecoms, agri and fertilizers showed significant strength over the year ago period. Pharma segment also showed positive growth. On sectoral trends. For June 2020, when the economy had opened up widely, over May 2020, pretty much all industry segments showed a positive trend. To give you certain key sectors that everybody is normally wary about: NDSPs showed a 66% increase in collections in June over May, oil and gas 36%. Cement and steel sector was up plus 36%. Utilities were up 50% and so on. Auto and auto ancillary segment showed a plus 100% increase. To give you a sense of the disbursement analysis. Almost all of the quarter-on-quarter attrition in the book came from top half of a 10-point internal rating scale, which has served the bank well over the years. The same is true when the data is analyzed for year-over-year attrition in the asset book. The bank continued to diversify its book and reduce concentration. Its next 100 programs contributed to approximately 1/3 of the Y-o-Y asset book attrition. Approximately 70 -- 78% of the Q-o-Q and the Y-o-Y gross disbursements, including rollovers, were assets with less than 1-year tenure maturity. Now what was the end use towards which these assets were disbursed? An analysis of top 25 disbursements by value during the quarter showed that 46.5% was ultimately towards CapEx. 30.2% was towards working capital requirements. 9.5% was for supporting other banks and market participants with liquidity through participatory certificates and secondary purchases. 7.5% comprised of other reasons, including availing existing lines for building liquidity buffer. And the balance 6.3% was towards on lending for PSL purposes. As we continue to gain market share, what is it that led to the gain in market share? There are 2 reasons. One is our digital backbone, and the second is brand. In terms of just the digitization trends, the bank saw a significant increase in electronic straight-through processing transactions in its collections and payments businesses. From 86% in June 2019, the percentage increased to 94% in June 2020, which was a significant increase. While payments have always had a strong straight-through processing percentage, the collections jumped from 82% in June 2019 to 92% in June 2020 in terms of electronic straight-through processing. The bank remains poised to gain share on the back of its digital back-end systems. In terms of the brand image of safety, that was reflected in the corporate liabilities. Corporate CASAs Y-O-Y growth was 25% on an end-of-period basis, but for the full quarter, 37% average Y-o-Y growth was shown for the quarter compared to year ago quarter. Corporate fixed deposits Y-o-Y growth was 14%, 31% average Y-o-Y quarterly growth. We also have the salary initiatives for our corporates. In corporate salary for corporate banking customers, the amount accreted in excess of 10,000 crores during the quarter from March 31. The bank did not see any material reduction in numbers of its corporate salaries segment receiving monthly salary credit. It actually witnessed an increase in the average salary credit per corporate salary account during the quarter. Thank you.
Sashidhar Jagdishan: Thank you, Rahul. Thank you for that. Jimmy, on the corporate side, can you sort of give some insights into the asset quality trends fully on the corporate banking portfolio, both on the incremental side and also on a stock basis?
Jimmy Tata: Sure, Sashi. Thanks. Good evening, everyone. So a little bit to take off from when we all last spoke in April. So as we mentioned at that point in time, we were very, very early to react to the COVID phenomenon even before it became a global phenomenon. We had several rounds of studies and stress tests done across the portfolio. There was an extremely detailed name-by-name evaluation carried out by us in terms of what impact would be to each and every entity; where they were placed, not just by what industry they were placed; how they were placed there; what their future plans were; what their immediate situation was; what their financial situation was. The result of this entire exercise was that there was a paring down of exposures in several names. There was further requirement, and this was put in place with the credit administration department, that even amongst approved facilities a transaction beyond a particular cutoff will be reevaluated prior to it being disbursed from the bank in a prospective manner. This is a process that carries on even till this day. So there is extreme caution in any new advance that is put out, whether the lines are fresh sanctions or whether they were prior sanctions as well, and that's a very important point to note. As you also do know, we have pretty good early warning systems. We've been evaluating flows. We've kept our ears to the ground. I think Rahul already threw a color on where the flows are and how they have been moving and improving month-on-month. That reinforces confidence on the customer selection being of a very high order and reinforces some level of sales, and you'll take heart in that. To just add a little bit to what he said in terms of where the new business came from because, as all of you do know, the bulk of the growth has come in the wholesale and the corporate book. So these were advances made to large, highly rated Indian corporate conglomerates; larger corporates with high-quality, pedigreed international parentage in several cases; and of course, in large measure, to very, very good public sector companies. It's a kind of term coined internally by us of [indiscernible] quality. So I presume that will give everyone a feel of what we're talking about. So we looked at strategically important public sector companies with this kind of quality, as I mentioned, the large, highly rated, reputed domestic conglomerates; and internationally supported and promoted companies, again with high repute in the promoters. To put some color on where the portfolio lies in 2 ways. The first way, I'll just cover very briefly because that gives an external reference, but it's not really what we reference ourselves to. Around 86% of the externally rated portfolio is either AAA or AA. That's just to put it in a bit of perspective, but I think in my last interaction with all of you I did refer to the bank's internal rating system. This is a system that we place great emphasis on and rely on much, much more than external ratings. The historical performance and portfolio quality does bring out that it is a system that has proven to be very reliable and time tested. It has served us well. It is essentially a 10-grade rating scale, 1 being the best and lowest risk and 10 being the worst. The quality and caliber of our portfolio, just to bring out, despite the high level of growth in this portfolio in recent times, the quarter ending December, we had average -- weighted average portfolio [Technical Difficulty] Quality -- yes?
Aditya Puri: No, no. I was just coming back, yes.
Jimmy Tata: Sorry. So that shows that the quality has been maintained despite this growth, reflected in the fact that our old internal rating model, which as I said has served us very well for 25 years, reflects that there is not an increase in the incipient risk in that portfolio. To just dwell for a moment on the unsecured portion of this portfolio. Once again, as you know, all wholesale exposures are individually deliberated upon. All these portfolios carry multi-level approval grades that goes as per our policies. Won't dwell into the details of that, but the model is stringent. And we have average -- weighted average rating on the unsecured book at a 3.45, opposed to the portfolio average of 4.43 and the secured portfolio average of 4.81. So as you can see, since all these are individually assessed cases, there is obviously a far greater level of caution that gets injected into the unsecured advances. If one looks into the historical trends of delinquency, there is a 55% lower probability of default in the unsecured wholesale book than there is in the secured wholesale book. And this is taking our own historical through-the-door cycle probability of default. So that's where we honestly stand, Sashi, on this. So if I can hand it back.
Sashidhar Jagdishan: Yes, yes. Thanks, Jimmy, for that. Rahul, your -- the other hat that you wear is on the SME portion. Can you tell us more about the outlook -- the business trends and outlook on the SME side, please?
Rahul Shukla: Sure. Thank you, Sashi. So business banking, our wholesale SME business. We had a satisfactory performance during the quarter. The bank continued to pursue business on the basis of granularity; geographical spread; sound credit profile; and risk mitigation through self-funding, high collateral value and strong documentation. The first point, on self-funding. We've often mentioned that we were on the threshold of achieving 100% self-funding for the BBG portfolio. We actually achieved this 100% in May, and we closed in June at 103%. This was because of strong flows of funds into CASA as well as deposits, the business [EOP] Y-o-Y increase of 79% in CASA and 38% in FDs. The self-funding for customers -- because we have customers who don't borrow. So if we just take out all the customers who don't borrow and look at only the borrowing customers, even for that subset of the customer segment, at end June, the self-funding level was 75%, which is very strong. Second, assets. The asset book increased in mid-teens on a Y-o-Y basis, low single digits on a Q-o-Q basis. The asset book was actually, Sashi, on course to decline 10% from mid-March to end June. Our client segment were reducing their operating and financial costs. It was comforting to us because, when the rubber hit the road, we -- it actually tested the quality of our client selection and client base, but with the introduction of the Emergency Credit Line Guarantee Scheme, the bank picked up very smartly. We will discuss that later, but as of June 30, we had reached out to 100% of our customers within wholesale SME. And disbursed -- or in the process of being disbursed, where documentation were executed, on June 30 was in excess of 5,000 crores. 68% of the new-to-bank disbursements had a ticket size less than INR 1 crore, and that goes back to our push towards granularity. The third is new client acquisitions. New client acquisitions, even in that quarter, we did about 533 customers in quarter 1. If you recall, we had done about 1,500 customers in the Jan-to-March quarter. Largely, these names came from North and South India. The movement in West and Eastern territories were slightly slower. Collateral cover, which is the second level that we test ourselves, for the new-to-bank disbursements for 89% of the cases was greater than 100%. Now if I go back to the Y-o-Y period, collateral cover in excess of 100% of the new-to-bank additions was -- it formed only 77% of my clients acquired. So from 77% to 89% was a deep jump. Digitization, essentially we again saw very encouraging trends over here. From 68% in June 2019, where we had electronic straight-through processing transactions, this percentage increased to 79%, so something is dramatically changing in terms of digitized payments and collections in the economy. Now if you look at just collections as a subset, that jumped from 56% straight-through electronic in June 2019 to 74% STP in June 2020. So the bank remains poised to gain share on the back of its digital back-end systems. We also took certain special initiatives. We increased our agri processing presence with our pledge finance offering. We added new features on the product to make it more robust and improved turnaround times with digital processes, and we had specific webinars across the country that were done to reach out to customers. We continue to remain very positive about the growth and the outlook of this business, supported very strongly by the government's resolve to preserve the sector. So the business continues to demonstrate the hunger of a start-up. It is managed with the processes of a global corporation and it employs intelligence of the Indian mind, so that is what is leading to our success in this business.
Sashidhar Jagdishan: Thanks, Rahul. Since you mentioned about the government support, you may as well sort of cover the how the reversals of the emergency credit line of the government has played out for us as a bank, not just in business banking.
Rahul Shukla: Sure. So Sashi, I gave you data not as of June 30 but as of day before yesterday, in the night. So we had eligible customers on record which is preapproved because they passed through all the tests and everything, and that was in excess of about 300,000 customers across the bank. And the total value of the disbursement was in excess of -- I mean the value that they were eligible was in excess of 20,000 crores. The disbursements that were done as of day before yesterday, in the night, was to about 57,574 customers. And the total amount that was disbursed was over 10,000 crores, 10,169 crore. There is still a certain amount pending because this goes through a process that you sign the documentation. You upload basically the details in the guarantee website. You get the guarantee, confirmed it when you go out and make a disbursement. So we still have about 1,076 crores in pipeline. So at this point of time, in the preapproved cases we basically have about 11,000, 11,500 covered.
Sashidhar Jagdishan: Thank you. Jimmy, one of the segments that a lot of people have been worried about is on the SME side, especially when you consider the impacts of COVID on SMEs as a segment. Can you sort of give some insights on how your portfolio on the SME side has been behaving? And if you can also specifically cover the -- in the last conference call, we did mention that you did a lot of stress tests. Can you do the back testing of the same?
Jimmy Tata: Yes, yes. Sure, Sashi. In fact, I'd like to take that last bit first. So if you recall, the last time we covered, which was in April, it was earlier times and there was obviously a greater level of uncertainty and a lower level of control. So we had stress tested the portfolio in 3 different levels in a low, medium and high level of stress. And what we had put out was there was a possibility that 9% to 11% of the customers would find or perhaps face difficulty in servicing their obligation based on the high and the very high level of stress testing that was done. And so I have to say that this was, happily, not correct. It was an extremely conservative estimate that was made. We have the hindsight now of the actual flows that have taken place. The vindication of our historical policies and customer selection has clearly manifested. And I would say that, at this point of time and perhaps with even a more encouraging trend coming forward, those estimates should be down by more than half. So it was clearly an extremely conservative estimate made and we should be correcting the -- that record. Based on current flows, we do believe that the impact could be less than half of what we had originally estimated. The current flows also are increasing month-on-month for us. If we look at it on an average basis, April over March, we actually saw 47% reduction in cash flows. And we have very good cash flows in this business because many -- very often, we are a sole lender and it is mandated sole banking. So we actually have very good visibility, control and early warning insights over this portfolio. So with 47% down, the cash flows, April over March, improved a little bit in May. We saw only a 20% reduction in May. And then there has been in June a 13% increase and improvement over the previous -- over March, I'm sorry, not the previous months, on an average. So we do see encouraging trends coming over here. We would hope that they continue. It does obviously give us hint that the customer selection has been rather good, and I'll come to a few more points that leads me to believe that at this moment in time. If you try to split this cash flow analysis into the not so highly impacted and the impacted industries, you will see that there is not very much difference in recent times. I think the early months created a very high impact for the highly impacted industries, but the recent months have actually shown that the recovery is pretty much on par with all. There's not very much to choose from. It's like 12%, 13%. So it's a couple of percentage points between them in terms of the improvement in cash flow. So that once again, is interesting, but that said, I must say it doesn't benefit us so much because our concentration, portfolio concentration, in the highly impacted industries itself is not very high. It's, I think I would say, single digit, if I'm not wrong. So not that we're going to reap great benefits from that, but we weren't very impacted, to start with. To move into a couple of other aspects that have come. Rahul touched upon the CLGS in that and how they benefit. And I must say that in our mind, when we have looked at and we have spoken to many of the customers, the fact that this kind of relief has been provided by the government actually does allow them to kick-start businesses. Receivables that was stuck do not need to be realized before the business rejuvenates. They can actually start a new working capital cycle with this money; and this should once again augment the cash flows that flow in, in the coming months. So another good sign for us. And I think, as Rahul mentioned, our bank has been one of the largest participants in this scheme and has tried to bring the benefits to as many MSME customers as possible across the country. It's a win-win all around, for that to happen. I had mentioned last time about the self-funding ratio that we talk about in this particular portfolio. It's something that we used to monitor for several years. We were watching it like a hawk. We wanted to see that it would not move away in hard times. Repeating just once more, as I did last time: This is not collateral. It is not lien marked. It is the personal wealth and savings of the -- of customers and their families in our bank, but it is definitely a reflection of the liquidity and wealth of the SME customers we have onboarded. Very happy to report actually that, as per our last calculation, the self-funding ratio has actually gone up over this period. We are very pleasantly surprised. We tried to go into the depth of it. The smaller reason for this is that, due to the slowdown, the working capital itself to some level has attrited, but the larger reason is that these savings in these customers and in these accounts therefore have actually gone up. It's a point I'll touch upon a little later when we come to the retail as well, but that coupled with the fact that the collateral that we have in this portfolio is on a portfolio level around 80% of the portfolio. So the wealth of the borrowers is intact. The collateral remains intact. We are seeing the cash flows coming back in a reasonably steady and encouraging manner, so at this point of time, no allotment.
Sashidhar Jagdishan: Thanks a lot, Jimmy. I know, Srini, Mr. Puri alluded to the -- that on the retail side, where they would be -- discretionary spends and consumption have been reasonably hit during this quarter, but can you touch upon the recent or the latest trends; and maybe product-wise, some changes or some interesting insights that you're seeing on that?
Srinivasan Vaidyanathan: Yes. I'll give a context on the retail asset side. Retail loan originations fell by 70% during the quarter, so the overall originations came down significantly. The personal loan book contributed to the biggest of impact, a drop of 86% in origination, both a combination of our own credit policy tightening actions that we took early on in the prior quarter itself. And also otherwise, the uncertain environment also contributed, that people weren't coming along. Card sourcing, again one other item that significantly showed a drop, 87%. Card sourcing dropped. And spends fell by 44%, right? And the card book is down 4.5%. It is lower June versus March. Among all this, loan originations in the vehicle segment fell -- at the aggregate vehicle segment level fell by 66%, but within that segment the 2-wheelers and tractors showed greater resilience. Demand -- with the demand being driven by deeper geographies, mostly coming as you see, the products, 2-wheelers and tractors, more deeper geography-related products. The fall in 2-wheelers was restricted to 50%, and the average was 66% at the total level. It was down by 50%. And tractor segment actually grew 26%, but we have a smaller book on that but grew by 26% at a lower base. Gold. Loan against gold jewelry, again a large rural footprint type of product, originations fell 15%, but still it gave us growth to the book of about 3% or so. So that's mostly I will say from a retail segment thoughts...
Sashidhar Jagdishan: Jimmy, on the -- retail is one of the most -- a lot of people are looking at it. So start on with the asset quality trends of retail, and then we'll cover section by section on that one because we need a bit more detail on that.
Jimmy Tata: Sure. So I must start off saying we were rather fortunate when this crisis started because we entered the crisis with an improving book. As everyone will recall, there was a slowdown in the economy for a good 18, 24 months preceding the COVID crisis. And in our usual manner, we would react to such changes in the economic scenario. And we would have had -- depending on which product it was in retail, we would have had at least 2 or sometimes 3 rounds of policy tightening during those preceding 18 months or so. The result of that policy filtering was effectively that we had a new book coming with lower delinquency, and there were very encouraging trends on that particular book. So it was rather fortunate, when the COVID prices hit us, that we entered with this kind of a portfolio. And we did not, therefore, have very heavy baggage to carry. That said, I must say that, once the crisis hit, we again looked at the portfolios. We once again decided to have some level of filtering. And more than the demand, I would say it is the policy changes that resulted in a lower business flow for us. We have always stated in all our interactions with you that the bank sticks by its credit policy. The bank is extremely steadfast in this, extremely dogmatic about it, would not change based on business exigencies. The risk comes first. And this perhaps is the biggest and most obvious manifestation of this policy actually being put into practice, during this COVID crisis. We did allow business to attrite. We will not and did not compromise [Technical Difficulty] So I'll continue. So we have had a reasonably good run. Delinquencies have not gone up of those customers who have entered moratorium. And I'll get into that a little later, but the portfolio has held up well. The early trends are good. The early delinquencies all hold up. The signals at this point in time are good. Of course, the business volumes have suffered, but the portfolio quality has not.
Sashidhar Jagdishan: And what about the check bounce trends or the real check bounce?
Jimmy Tata: So what we have done in order to look at this, we've actually looked at 3 things that come into the portfolio quality. So when we look at the 0 DPD -- because we need to compare it to the non-moratorium because whoever is in moratorium does not need to pay. So when we look at the pre-crisis and post-crisis 0 DPD check bounce trends, there has actually been an improvement over the last 2 or 3 months. It may be small, but there has been an improvement but has definitely held up. Our moratorium portfolio, as Srini mentioned to you a little while ago, is barely 9% of the portfolio at a bank-wide level. So the bulk of the customers do continue to pay, and we have actually seen an improvement in the check bounce trends.
Sashidhar Jagdishan: What about the resolution, collection resolutions?
Jimmy Tata: So collection resolution. We had to change a lot in collections. Let me just take a moment to tell you about collections at this juncture. If you look at the -- we used the first couple of months during the lockdown to actually revamp, reorganize and ensure that the collection infrastructure remains intact. We obviously have a very large team internally. That team, of course, as Aditya mentioned earlier, is just like every other employee, very well taken care of and working on the job, but we also did augment this team with teams from the sales force, teams from the credit underwriting itself because, if the business doesn't come in, even they would have a lower load. So there was effectively a deployment of 20,000 additional staff into the collections activity. We revamped and changed all systems very rapidly into a work-from-home environment because of the lockdown. Whether it comes to dialogues, recorders, the collection systems themselves, everything was enabled for a work-from-home environment. Contactability was a great benefit to us because, during the lockdown, it was much more likely to be able to contact the customers than otherwise. So all these things benefited us. The agencies we use, of course, had part of -- the migration of population that took place impacted them to some extent but impact HDFC Bank much less because of the presence that we have in the semi-urban and rural environments themselves. That said, we have long and old relationships with these agencies. We partner them. We reassured them that we continued. We provided advances so that they could retain their staff. We had temporary incentives put out so that they could once again engage the staff. And as soon as the lockdown was lifted wherever it has been listed, we were ready to go. We did not lose a moment. And the result of that is that the resolution rates -- today, despite significant areas of large concentration like Mumbai, Delhi, Tamil Nadu, et cetera, still being under lockdown, the resolution rates have moved to around 65%, 70% of what the historical rates were. When the lockdowns get lifted in these areas, they would only improve.
Sashidhar Jagdishan: Right. Thanks, Jimmy. Can you just touch upon 3 specific portfolios which I think a lot of investors may be very keen to look at? One is the unsecured portfolio, as there are a lot of [indiscernible] have been very proud about that. The second one is the agri portfolio, and the third one is the commercial, the [indiscernible].
Jimmy Tata: Okay. So our unsecured portfolio, as you know, primarily consists of the personal loan, the business loan and the credit card. The personal loan, as we mentioned, is entirely salaried individuals. And the bulk of that comes from private enterprises that are very highly rated and of a high quality themselves. The advantage of that is that there is a very low volatility of income. It's something we have always said, and I'll come to it in just a second because it has been proven at this point in time. And of course, there is a good concentration in government enterprises. Once again, as one would understand, the volatility of income for a government employee is also extremely low. When we look at the portfolio that came in for our personal loans, we did, as I mentioned last time, a very quick survey of customers who had chosen to take moratorium. And we had realized that the bulk of them had done it out of caution and not so much out of stress. When we have looked at customers even today in our moratorium portfolio, 98% of them continue to receive salary credits. Around 97% of the customers in our moratorium portfolio today are 0 DPD customers. So the fact that they had elected to take a moratorium after so many months of observation and now that we do have hindsight and a learning curve behind us definitely seems to be more out of caution than out of anything else.
Sashidhar Jagdishan: Can you talk about the check bounce rates in unsecured portfolio?
Jimmy Tata: The check bounce rate for the unsecured...
Sashidhar Jagdishan: [indiscernible] COVID levels.
Jimmy Tata: They have -- yes. They have also shown an improvement over the historical levels, a small but improvement over what the pre-COVID levels for these check bounce rates were. That has been the case actually across all products and also in the unsecured products.
Sashidhar Jagdishan: Good. You did mention about the salary trends for the moratorium. I think that overall in the unsecured portfolio, since we have a large portion of our -- one of the fears that we had is that other companies which are dropping their salaries or the average salaries or probably a lot of attrition that is there. Do we have enough -- large portions of concentration in companies where the drop in salary is more than 20%, 25%? So what's the...
Jimmy Tata: I think, firstly, that fear is not so well founded, fortunately. What we noticed is the reduction in salary credits over those initial months of the COVID crisis, March, April, et cetera, was around 2%. And this could well be more of a banking and a cash flow matter than actual haircuts in salaries. When we'll try to split this up by companies, we do realize that barely 5% of our personal loan portfolio is in companies where the drop in salary cuts has been 20% or more. And the bulk of the personal loan portfolio is where there has been no impact or a minimal impact in terms of salary cuts or even delays. That said, I would want to say one more thing: We are extremely -- even before we entered this crisis, we have extremely conservative leverage policies for unsecured personal loans. Our fixed income obligation ratios are maybe 20 percentage points lower than industry averages. So a 20% dip in the salary, even should it manifest, even for this 5% of the portfolio, there is enough headroom in the leverage to absorb this kind of cash flow attrition, not to mention once again that throughout th
