We would have liked retail to do 50% more, 80% more than where we did. But it is the wholesale, if you see not just a lack of growth, it’s a degrowth in the nonretail on the deposit side. That is where it is very price sensitive. We chose not to participate in that price as much as possible. We have avoided that so that we can consume some liquidity that we have and at the same time, make progress on the asset side. But that can’t continue for long, as you know. LDR ratio is at 110-something. So we do need deposits to be kicking in for the loans to be operating. That also answers what Mahrukh was asking, very similar thing that you’re asking. Yes, we do need the deposits to be coming in.
Operator: Next question is from Suresh Ganapathy from Macquarie Research.
Suresh Ganapathy: Srini, so just want to understand what is going to drive the margins in the future. Because if I look at it this quarter, you sold of INR 50,000 crores, your LCR is at 110%, you can’t go below that. There is no excess liquidity assets at 110% LCR, right, and funding costs may remain elevated. So when you are saying I want to go from 3.4% to 3.7%, incremental CASA mobilization is getting to be a challenge. . Term deposit growth is high. Your HDFC Limited borrowings are sitting there at 7.5%. So deposit growth is finding difficult to meet your own loan growth requirements. When are you going to replace the HDFC Limited liabilities. So amidst all these challenges, what will drive your margins, say, from 3.4% to 3.7%, say, over the course of next 18 to 24 months?
Will it be yield on loans? Because it doesn’t look like it can go through cost of funds? That’s the first question. If you can elaborate the movement in margins. Some indication as to what will be the components and how are you going to manage the HDFC Limited liability replacement with deposits, point number one? And the second thing is, 1,500 branches doesn’t look like it’s happening this year because we have only opened 290 branches — sorry, 270 this year. You’re going to fall short of your 1,500 branches target by a wide margin. What is the thought process there? Over to you, Srini.
Srinivasan Vaidyanathan: Okay. Yes, thank you. I’ll take the second one first. From a branches point of view, yes, there are a little more than 500, 550 branches in the pipeline as we closed the quarter. And we are targeting somewhere maybe 800 to 1,000 branches or so, right? If we do 1,000 branches, it would be good. A little more than 500, 550 branches are in the pipeline. So that’s something on the branches. 1,500 is not something that will happen by March, right? 1,000 is something that is possible. But at this time, we are having about 500 plus in the pipeline, that’s 570 more precise in the pipeline. The second aspect of it is in terms of your levers for margin and the deposits as such at total level. If you look at the mix of products that we are having, the mix of products, one of the important lever is the retail mix to be enhanced, right?
Retail mix has been continuously coming down. And that is something that will help us to go. And of late, in the recent times, if you see, we haven’t had that kind of a market rate of growth on the unsecured as such. Our personal loan has been growing 2% to 3% over the last 2 quarters. So we do have opportunity space there. That’s part of our credit kind of process, where periodically, they calibrate up and down. And now we believe that the overall credit both from an NPA point of view and credit cost point of view are at a benign state. And so whatever testing and other things may do, we are positioned to have a good growth there. That’s one. Retail asset growth, particularly the nonmortgage retail asset, where there is a yield, needs to come up.
And the mortgage is another big opportunity that we have, both existing customers, where we have almost 4.8 million preapproved, prequalified database to go through, which we have done in our existing base who are eligible that we are making offers and talking about it. And also 5.6 million customers who already have somewhere we are targeting that. So that’s — in terms of the retail mix needs to go up, that is an enhancer for the margin. And to some extent, it picks up on the ROA too, right? So that’s an important mix. That’s not what we have seen in recent times. The recent times, the wholesale growth has been overwhelming the retail loan growth. We do need to reverse that. That’s part of the process in terms of what we are going through.
Now getting to what are the other levers, which you also mentioned, but there are headwinds on that, right, CASA ratio. We are at 37.7%. Even before merger, we were 42%. Over a long period of time, we were 42%, 43% thereabouts. We are confident of getting the CASA ratio back up. There are 2 aspects to the CASA ratio. One is the customer spending will abate at some point in time. And the second thing is that we are getting new customers. That is why it is important to get new customers, 2.2 million new customer liability relationships were brought in, in this quarter, 7.4 million over the 9-month period. It is important to bring new customers and get them to a maturity. So that is an important thing that we are working on to get that from a CASA ratio to go back up.
And also we’re at the rate cycle — the rates haven’t moved for several quarters now. And by all accounts, we are at the peak of the rate cycle. And the deposit repricing that needs to happen in a quarter or so should be done because the rate cycle started in May ’22, and then the CASA should be back to its normal growth, right? So that’s something on the CASA ratio. We do — we are waiting and vehemently pursuing that to come. The other aspect that you said, borrowings, whether the borrowings can — how do you replace the borrowings with deposits? Yes, 8% of our balance sheet was borrowing, now it is 21% is borrowings. We do need to change that from — to deposit funding. But one other aspect that we have started to pursue even in this quarter is that the borrowings are — can continue as borrowing.
So we got INR 7,500 crores of long-term affordable housing bonds that we have, infrastructure bonds that we issued in this quarter. The economics of that are like a deposit, not like a CASA deposit but like a time deposit, right, slightly better than a time deposit because you obviate the PSLC cost and you — because the affordable housing is tagged against it. We do have almost INR 1 trillion of affordable housing in our assets table that we can stack to. The deposit insurance cost is obviated. And so there are some benefits that come. So it equates to slightly better than our time deposits at an overall level. But that doesn’t mean we do need CASA, but there are other opportunities on the borrowings, too.
Suresh Ganapathy: Okay. And just one final question on cost saving. You guys have said you will bring down from 40% to 35% over the course of next 5 years. I know it’s a long journey, the fact that you’re opening lower number of branches. Can we get to see some benefits, not quantifying, but some benefits in that reduction next year FY ’25? At least there has to be a journey in that 500 basis point reduction, right? So we were at 40 point, I don’t know, 4 last quarter, and we are at 40.2 or something like thereabout, I mean, around the same range. Do you think it can really come down in the next 1 year or so?
