sloppysid/faiss_search huggingface dataset:
Tata Consultancy Services Q3 FY23 Earnings Conference Call January 9, 2023, 19:00 hrs IST (08:30 hrs US ET) So, as you may see, during this quarter, we announced a large deal win with the Chinatrust Banking Corporation, which is really the future core in terms of architecture, in a fashion that is cloud-native, and it is truly providing open banking APIs and so on so on. Such opportunities are opening up. At this moment we're working on three or four such opportunities where some of the large banks are looking at modernizing their core in favor of something which is completely open banking, open APIs. So are some of the market infrastructure institutions trying to create open payment system, and some of them typically say that whatever you guys have implemented in India, can you offer this whole instant digital payment infrastructure in our geography? So, these are the opportunities that are coming out of it, and there are a decent number of opportunities in the pipeline that we see in banking as well as capital markets. Ravi Menon: SG&A, travel costs have increased sharply. How close to normal, Samir do you think we are in business travel? I think we are still about 30 bps below what we used to clock pre-COVID. So, should we think of travel as a continued headwind or you think we'll stabilize at this level? Samir Seksaria: Yes, as normalcy continues to get through, we would expect travel costs to continue to increase. If you look at it more on the direct revenue side or the direct cost side, a lot of it is coming in. On SG&A, as things open up more on sales-related costs, as well as team building exercises and team meetings happening, that cost is increasing. We’re seeing it going back to what it was pre-pandemic. Moderator: Our next question is from the line of Abhishek Kumar from JM Financial. Please go ahead. Abhishek Kumar: I have a question on budgets. Rajesh, you mentioned in the US there is a wait and watch mode and therefore budget could take some time. Is there any possibility because of that there was probably a little bit of budget flush in 4Q which could have supported the growth? Rajesh Gopinathan: Sorry, budget flush due to what? Abhishek Kumar: See, there's possibly an indecision or wait and watch mode for CY'23 budget. So, to exhaust CY'22 budgets, any possibility that there is a budget flush to exhaust the previous year's budget? : Page 20 of 23
Tata Consultancy Services Q3 FY23 Earnings Conference Call January 9, 2023, 19:00 hrs IST (08:30 hrs US ET) Rajesh Gopinathan: No, I don't think so. CY'23 will be slightly delayed in a couple of months… but again, it's entirely in the realm of speculation. So, we'll have to just wait and see how it plays out in the next few months. Abhishek Kumar: Another related question to this is given this little bit of indecision in US, do you think the cost takeout projects in US probably would be low compared to other geographies, at the same time spending on discretionary would be cautious and that would probably keep the budgets little low? Rajesh Gopinathan: Yes, fair assumption. Even if you look at our US TCV, that is down both sequentially and on a year-on-year basis. So, TCV still reflects that decision- making lag in this quarter. Moderator: Our next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead. Gaurav Rateria: So, firstly, Rajesh, is it fair to believe that the ACV growth could be lower than TCV growth as mix of the deals are changing, and should that be even considered as a lead indicator for growth going forward or you think the deal win trajectory could actually shift upwards over the coming quarters? Rajesh Gopinathan: Gaurav, I don't have a direct answer to that, but there is not much of change in terms of the mix of deal structures between large or small or long dated or small dated. So, nothing that we can call out over the last two, three quarters that we can say that we're seeing. There is an elongation in decision making, which we had spoken about last quarter also and which has also played out this quarter. So, that the pipeline growth and the qualified pipeline growth is ahead of the actual TCV growth that we're seeing…in fact, we have seen a sequential decline in TCV while our qualified pipeline still continues to grow in absolute terms. So, beyond that, the specific mix of deals is not materially changing. Gaurav Rateria: Secondly, on the margins, as headwinds on attrition subside, would our immediate priority be to take margins back to our aspirational band of 26%, 28% or would we prefer to prioritize some investments, keeping margin stable after recovering it to 25%? Samir Seksaria: Gaurav, our margins or our industry-leading margins are on the back of the investments which we make, and most of our investments, whether it is in terms of talent, in terms of research and innovation, or branding, all are : Page 21 of 23
Tata Consultancy Services Q3 FY23 Earnings Conference Call January 9, 2023, 19:00 hrs IST (08:30 hrs US ET) factored in into the P&L. Our aspirations for the margins are taking into account all these investments Moderator: Our next question is from the line of Ashwin Mehta from Ambit Capital. Please go ahead. Ashwin Mehta: Rajesh, we've seen pretty strong growth in regional market and others over the last two quarters; it's of the order of almost 6% sequentially. So, what is the nature of demand here and how sustainable is this going forward? Rajesh Gopinathan: The reason of calling the segment out is because it's volatile and difficult to predict. So, its sustainability is difficult to answer. From a nature perspective it's come both from the market side – India has done very well, in fact, APAC ex-Australia also have done well. So, markets have done well, as also the product side of the business that NGS spoke about on the FS and platform side also has done well. So, it's come from both sides, markets as well as from the products side. Ashwin Mehta: Second question was you mentioned in the press conference as well that manufacturing has been more resilient compared to your expectations. So, any trends that we can take from manufacturing given the fact that if we look at client financials, manufacturing growth over the next two years is expected to be actually better than what it was before? Rajesh Gopinathan: I didn't know that, but that correlates to what we are also seeing. But I'm still wary, because of all the global supply chain disruption and energy price disruption. Industries like process manufacturing are much more globally integrated, and not as isolated as, let's say, Retail. So, we are still cautious. Our operating approach is always the same; stay close to the customer, deal with the customer on an individual opportunity-to-opportunity basis and we will continue to participate on that basis. But on a zoomed-out way, talking to customers, it is an industry that's not completely out of the woods. Moderator: Our next question is from the line of Rahul Jain from Dolat Capital. Please go ahead. Rahul Jain: Basically, my question is related to TCV signing which is $7.8 billion is slightly lower by our recent average win. Despite the fact that we have been favorable situation on the vendor consolidation exercise. What explains this mismatch? : Page 22 of 23
Tata Consultancy Services Q3 FY23 Earnings Conference Call January 9, 2023, 19:00 hrs IST (08:30 hrs US ET) Is it because such deals are to do more for the same or it reflect weak demand in Europe as articulated earlier? Rajesh Gopinathan: I think it’s a combination of everything; delayed decision making, but TCV will not be as linear as revenue, which is why we have given a band of 7 billion to 9 billion where we think the TCV will remain during the course of this year and it has stayed well within that band throughout for the last three quarters. Rahul Jain: Just a clarification on this retail deal that we announced separately. Is it also reflecting the entire retail, CPG or it is only retail-specific? Rajesh Gopinathan: This includes CPG and TTH. Moderator: Ladies and gentlemen, that was the last question. I now hand the floor back to the management for closing comments. Over to you, sir. Rajesh Gopinathan: Thank you, operator. We are pleased with our performance in a seasonally weak December quarter, growing at 19.1% in INR terms and 13.5% in constant currency. Our order book was good, but softer than in the prior quarters, reflecting the cautious stance that many of our clients have taken. Our operating margin expanded sequentially to 24.5% and our net margin was at 18.6%. On the people front, LTM attrition in IT services fell slightly to 21.3% and should continue to taper down in the quarters ahead. With that, we wrap up our call. Thank you all for joining us on this call today. And I must say that you're a very mature and knowledgeable group for having resisted asking about the impact of Chat GPT on our industry. Enjoy the rest of your evening or day and stay safe. Moderator: Thank you members of the management. On behalf of TCS, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Note: This transcript has been edited for readability and does not purport to be a verbatim record of the proceedings : Page 23 of 23
Secretarial Department SD/ F 24/275 /2022-23 January 21, 2023 The Manager The Manager The National Stock Exchange of India Limited Department of Corporate Services Exchange Plaza, Bandra-Kurla Complex, BSE Limited, Phiroze Jeejeebhoy Towers, Bandra (E), Mumbai – 400 051. Floor 25, Dalal Street, Mumbai – 400 001 Re: Scrip Symbol: FEDERALBNK/Scrip Code: 500469 Dear Sir, Sub: Transcript of Earnings Call for the quarter ended on December 31, 2022 We wish to inform you that the transcript of the earnings call hosted by The Federal Bank Limited (“the Bank”) for the financial results of the quarter ended December 31, 2022, has been made available on the Bank’s website at the following link, as prescribed under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015: https://www.federalbank.co.in/documents/10180/326836680/FederalB-Earnings-16Jan- 2023.pdf/9fb736b4-1229-482c-be8c-4ad30858c850?t=1674308683751 We are also attaching the Transcript of the earnings call with this intimation. This is for your information and appropriate dissemination. Thanking you, Yours faithfully, For The Federal Bank Limited Digitally signed by SAMIR SAMIR PRAVINCHAN PRAVINCHANDRA RAJDEV DRA RAJDEV Date: 2023.01.21 19:52:22 +05'30' Samir P Rajdev Company Secretary The Federal Bank Ltd. Registered Office: Federal Towers, P O Box No.103, Aluva, Ernakulam, Kerala, India 683 101E-mail: secretarial@federalbank.co.in| Phone : 0484-2622263 fax:04842623119CIN: L65191KL1931PLC000368,www.federalbank.co.in
“The Federal Bank Limited Q3 FY '23 Earnings Conference Call” January 16, 2023 MANAGEMENT: MR. SHYAM SRINIVASAN – MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER – THE FEDERAL BANK LIMITED MR. ASHUTOSH KHAJURIA – EXECUTIVE DIRECTOR – THE FEDERAL BANK LIMITED MS. SHALINI WARRIER – EXECUTIVE DIRECTOR – THE FEDERAL BANK LIMITED MR. HARSH DUGAR – GROUP PRESIDENT – THE FEDERAL BANK LIMITED MR. VENKATRAMAN VENKATESWARAN – GROUP PRESIDENT AND CHIEF FINANCIAL OFFICER – THE FEDERAL BANK LIMITED MR. SOUVIK ROY – HEAD, INVESTOR RELATIONS – THE FEDERAL BANK LIMITED Page 1 of 22
The Federal Bank Limited January 16, 2023 Moderator: Ladies and gentlemen, good day and welcome to the Q3 FY '23 Earnings Conference Call of The Federal Bank Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Souvik Roy, Head, Investor Relations, The Federal Bank Limited. Thank you and over to you, Sir. Souvik Roy: Thank you so much, and good evening. Welcome to our earnings call for the third quarter. We are thrilled to report one of our best quarterly results ever. The quarter has been nothing short of outstanding with record-breaking revenue and profit. We saw better NIMs, better asset quality and multi-year highs of RoA and RoE. If you remember this is exactly what I said when I opened the call last quarter and would like to keep staying the same for every quarter here onward. Our diversified business model and focus on risk management has allowed us to drive growth while maintaining a pristine balance sheet. Our digital transformation initiatives have also played a key role in our success as they have enabled us to reach new customers, improve our efficiency and increase the adoption of our digital products. And for today, like always, we have our MD, Mr. Shyam Srinivasan, our EDs, Mr. Ashutosh Khajuria and Ms. Shalini Warrier, along with our Group President, Mr. Harsh Dugar, and our CFO and Group President, Mr. Venkatraman Venkateswaran, along with the other senior officials as well. But before I turn the call over to our MD and CEO, let me inform the house that this is our MD's 50th earnings call. So with that, over to you, Sir. Shyam Srinivasan: Thank you Souvik. Thank you everybody and firstly this is the first call of calendar '23. So my good wishes and happy 2023 to everybody. Souvik pointed out we had a good quarter. Yes, we were pleased with the outcomes of Q3 on every count. I don't want to call out anyone particular line, but the overall efforts of the bank across quarters, across years has helped shape the bank to this kind of an outcome and we believe this is something that we should seek to sustain or improve in quarters ahead which has been the endeavour at all points in time. I believe this financial year on each passing quarter looks more compelling and improving as the year rolls by. NII at an all-time high, operating profit at an all-time high, net profit at an all-time high, all suggest that we are on course. I want to go back and talk about what we said, some of you may have been part of a presentation we made in just before COVID in February '20, when we gave out a three-year road map and what we thought we'd exit FY '23 with and I'm pleased that we are ahead of those numbers despite two horrendous years in the middle. And that gives us the confidence that we have a business model that is reflective of the Page 2 of 22
The Federal Bank Limited January 16, 2023 opportunity. More importantly, the language of the bank is consistent with the presentation we put out and even more importantly the team capability to constantly readjust to development and yet deliver or not lose sight of the larger objective is intact and growing. So, I would say that the quarter that went by, reflected many of those objectives and we are actively carving out what our plans for the period ahead would be. Minimally this will be the new baseline on which we would keep operating. Yes, there have been some tailwinds in terms of margin expansion, because of the timing mismatch between asset re-pricing and deposit re-pricing. Some part of it will have challenges but we are constructing our business plans to reflect those changes that may happen yet deliver on the RoA, RoE expansion plans that we have. I had mentioned that we would exit FY '23 at about 1.25% RoA. I'm pleased that we've beaten that and the full year number will probably be 1.25 or better and certainly that sets the tone for what we would like the year and years ahead to be. And the promised 10 basis point plus or minus improvement every year is what we will seek out to do. And that's the design of everything we do, business mix, the mix between retail and wholesale and within retail, secured, unsecured, all the new businesses we spoke of whether it's credit cards, microfinance, personal loans, business banking, gold, commercial vehicles. All the elements of those businesses are in place. Each business leader is looking to scale up. On a smaller basis, they are reflecting 70%, 80% growth. We believe that can scale into even a three-digit number as we go into calendar as we step up into '23 and '24. So, momentum is quite strong. We are aware of the headwinds and -- there are narrative around India may not see this kind of credit growth on a sustained basis. I believe our machinery is in place to support growth. And we will, of course, pull back where we see some pain, but most importantly, our share gain will continue and the momentum that we have in some of our businesses are structural, and we think the year ahead should reflect all these efforts. So without going into any specific numbers, but I'm sure in the course of the call, all of you will want to know more about each of those numbers or pass those numbers better. So between me and the entire senior team will response to that. The headline numbers are there for all of you to see a net profit at INR 804 crores is certainly very encouraging and so are the other metrics. So let me pause here. We will have questions and we'll have the entire senior team who are on the line try and answer and in case there's any data that you need, and we can share, we will share offline. Thank you very much. And operator, you may open it up for questions with everybody. Moderator: The first questionis from the line of Mahrukh Adajania from Nuvama. Mahrukh Adajania: Sir, my first question is on margins, so there has been a fair bit of re-pricing of corporate loans as well, right? So, do you think most of the corporate re-pricing is done assuming Page 3 of 22
The Federal Bank Limited January 16, 2023 there's no EBLR hike pending? And what is the outlook for margins? I heard you on TV saying that 335 is what you still maintain for the full year, which could mean that for the fourth quarter also margins will be 3.35%, 3.36%, which actually means a 13, 14 basis points Q-o-Q decline? So, what's your outlook on margins that's my first question and then I have two more questions? Shyam Srinivasan: Yes. I think, Mahrukh, the margin expansion that we saw this quarter had an effect of the timing. Our full year blended 3.35%, 3.40% is indicative of the fact that Q4 may not see these higher margins. Certainly, it will be higher than that number. So I think the re-pricing that is happening, the cost cuts have happened, but the deposit re-pricing will start showing this year. This quarter, you saw yields expand on the credit side, almost 49 basis points and deposit costs go up about 21 basis points. Some part of the residual increase will happen in Q4 and maybe in early part of Q1. To that extent, the 3.49% may be a little diminished. Mahrukh Adajania: And outlook for margins in the next year, I mean longer term? Shyam Srinivasan: Maybe in 3.35% to 3.40%. We are upgrading our guidance from 3.25% to more like mid- 3.35% and plus/minus. Mahrukh Adajania: So long term as well. And sir, just in terms of loan growth outlook for '24 for your bank. And if at all, you had any further sector? Shyam Srinivasan: Hard to call. There are a lot of moving parts. We've always maintained we will grow much higher than the industry, which we have been. Our outlook at this point in time certainly is in the high teens. We will have to re-calibrate it if things materially slowdown, which I don't see signs of. I think bank demand, bank credit growth opportunities continue our share gain in most areas. So, I think in the high teens is what we're guiding for at this point in time. Mahrukh Adajania: For yourselves, right? Shyam Srinivasan: Yes, for the bank. Mahrukh Adajania: And sir, just on employee expenses, because you have somewhat higher proportion of unionized employees, do you follow the wage agreement? And if so, what is the hike in employee expenses or provisions that you are likely to make till the wage agreement for the PSU sector is finalized? Shyam Srinivasan: I think we mentioned it. We've increased our wage provisions in Q3 itself. For November and December, we have assumed a particular rate increase, and we've applied that. So that's reflecting that will be the new run rate, too. Mahrukh Adajania: So, is it possible to quantify? Sorry, if you have, I missed it? Shyam Srinivasan: We've taken, Mahrukh, what the average has been for many negotiations in the past and taken the higher end of that. Page 4 of 22
The Federal Bank Limited January 16, 2023 Mahrukh Adajania: So, it's already reflected in the base for two months, and that is what it will continue? Shyam Srinivasan: In Q3, November and December, we've already taken the higher cost. Mahrukh Adajania: And sir, I just wanted to squeeze in one last question, that your deposit growth was higher than your loan growth this quarter. And last quarter, that is second quarter, you did a fair bit of borrowings as well. So why are liabilities expanding faster? And the deposit growth that came last quarter, was it refinanced or? Shyam Srinivasan: No, we didn't have any refinance in Q3. Mahrukh Adajania: In Q2 borrowings, no? Q2? Shyam Srinivasan: Q2, we had some refinance and borrowings. Q3 no. Q3 is customer deposits. Mahrukh Adajania: And why are deposits growing faster than loans. Is there anything to read into, or it's just an outcome? Shyam Srinivasan: So, like our CD ratio in the 84%, 85% space. Moderator: The next question is from the line of Mona Khetan from Dolat Capital. Mona Khetan: Congratulations on a good set of numbers. Sir, firstly, on the margin expansion, you've had 20 bps this quarter. So just wanted to understand how much of this would be driven by the asset re-pricing? And how much could also be driven by higher share of better-yielding assets? Shyam Srinivasan: See, better-yielding assets, Mona, is a part of the overall portfolio. If you assume commercial vehicle, credit cards, gold, business banking -- sorry, not business banking, commercial vehicles, gold, microfinance, as the better-yielding, that's still a small part of the entire franchise. The credit book of the bank is about INR 170,000 crores. The cumulative of these businesses is INR 5,000 crores, INR 6,000 crores. So even if we are growing at a rapid pace, which they are, they're not able to materially alter the core NIM. But to that extent, it's more dominated by the margin – asset re-pricing, kicking in quite well. Mona Khetan: And what would be the incremental yields on corporate loans? Shyam Srinivasan: What will be incremental? Mona Khetan: The yields on corporate loans on an incremental basis. And just wanted to understand if the pricing has become more rational because this quarter, even a higher share of growth came from corporate booking also. Shyam Srinivasan: I think corporate, we see it as not just pricing. We certainly are getting better pricing than we did in the past period. Our corporate team has done a remarkable job of passing through rate increase. We saw a 225 basis point rate increase and the pass-through is close to 200 Page 5 of 22