Core fee income grew 38% year-on-year. Can you explain
The core fee growth was pretty secular. Five or six segments contributed and whether it was trade and remittances or foreign exchange, all verticals grew. Even distribution fees, which last quarter had showed negative growth, grew 12% y-o-y. And the investment banking space, which in the previous two quarters had seen a slight decrease, has bounced back with a 74% y-o-y growth.
What is your view on asset quality on the overall loan book and the vehicle financing loan book
Clearly, I think the vehicle finance book did better than the industry as far as the stress in the portfolio is concerned, but certainly there were slippages. We were not coated with Teflon during that two-year period but it has bottomed out for sure. As far as the corporate book is concerned, the cost of credit is almost stable, save one odd account on the NPA side. So going forward, I think this would remain stable and we may see improvements in Q3 or Q4.
You said the loan book is being rebalanced. What kind of a ratio are we looking at, given corporate loans are at 57% and retail loans at 43%
Ideally, we want a 50-50% mix on the retail and corporate loan book. But that may not happen in six months or nine months time. But I think over the next 12-month period, the rebalancing will happen.
Can you explain the hit of R20 crore on provisions for unhedged foreign currency exposures
The actual charge was R10 crore, but we doubled that charge and made excess provisions. We expect a lot of it to be written back and as we get more detailed information from corporates from the self-certification process, some of it will be passed on to the corporates. I think the challenge going forward will be if banks pass on this charge. If you see the Reserve Banks circular, banks can pass on this charge in the form of interest through lending rates. So you may have to create more differentiated lending rates depending on how much unhedged exposure the customer has.