30 January 2020 FB reported a sharp decline in net stressed loans to INR27b (~2.3% of loans v/s 4.0% in 3QFY18). It indicated that there is no residual stress in corporate accounts above INR1b. Also, retail/agri/ business banking are showing improving trends for the last two quarters. Overall, FB maintains a healthy coverage ratio of 66.2% (incl. TWO), which will facilitate controlled credit costs. credit cost of ~62bp over FY20-22. Loan growth moderated to 13% YoY, led by sluggish trends in corporate/commercial banking and repayments/write-offs in some large-value accounts. However, retail loans continued growing strongly at 23% YoY. Within retail, the housing and mortgage segments grew robustly by 21% and 28% YoY, respectively. Overall, we believe that FB is taking a cautious approach in building the loan mix toward high-rated corporate and secured retail loan portfolio. We thus estimate loan growth CAGR of 17% over FY20-22.