- Disbursements: INR 5,286 crores, at par with Q1 last year.
- Gross Loan Book: INR 30,069 crores, up 19% YoY and 1% QoQ.
- New Customers Acquired: 2.08 lakh group loan and individual loan customers.
- Branches: 752 branches across 326 districts in 26 states.
- Secured and Unsecured Book Mix: Improved to 31.3% as of June '24 from 30.2% as of March '24.
- Affordable Housing Disbursements: INR 445 crores in Q1 FY25.
- Affordable Housing Book Size: INR 5,199 crores, up 42% YoY and 6% QoQ.
- MSME Disbursements: INR 130 crores during the quarter.
- FIG Business Book: INR 1,800 crores, up 48% YoY and 4% QoQ.
- FIG Disbursements: INR 400 crores during the quarter, 25% higher than Q1 FY24.
- Gold Loan Disbursements: 1,779 loans amounting to INR 15.20 crores.
- Total Deposits: INR 32,514 crores, up 22% YoY and 3% QoQ.
- Retail Deposits: Improved to 74% as of June '24 from 70% as of March '24.
- CASA Ratio: INR 8,334 crores, contributing to 25.6% of total deposits for June '24.
- Asset Quality - PAR: Increased to 4.2% in June '24 from 3.5% in March '24.
- Credit Cost: INR 110 crores for Q1 FY25 versus INR 79 crores in Q4 FY24.
- GNPA: 2.3%.
- NNPA: 0.4%.
- Slippages: INR 192 crores for Q1 FY25 versus INR 175 crores in Q4 FY24.
- Bad Debt Recovery: INR 27 crores in Q1 FY25.
- NIMs: 9.3% for the quarter.
- Cost of Funds (COF): 7.5% for Q1 FY25.
- Cost-to-Income Ratio: 55% for the quarter.
- PAT: INR 301 crores.
- ROA: 2.9%.
- ROE: 20.9%.
Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross loan book increased by 19% YoY and 1% QoQ, reaching INR 30,069 crores.
- Affordable housing segment saw a 42% YoY growth in disbursements, achieving a book size of INR 5,199 crores.
- Total deposits grew by 22% YoY and 3% QoQ, reaching INR 32,514 crores.
- CASA ratio saw a healthy growth of 27% YoY, contributing to 25.6% of total deposits.
- PAT for the quarter was INR 301 crores, resulting in a healthy ROA and ROE of 2.9% and 20.9%, respectively.
Negative Points
- PAR increased to 4.2% in June '24 from 3.5% in March '24, indicating rising stress in asset quality.
- Credit cost rose to INR 110 crores for Q1 FY25 from INR 79 crores in Q4 FY24.
- Slippages increased to INR 192 crores in Q1 FY25 from INR 175 crores in Q4 FY24.
- Operating costs remain a key monitorable with a cost-to-income ratio of 55%.
- Disbursements in affordable housing declined by 40% QoQ due to regulatory changes.
Q & A Highlights
Q: Is the fresh PAR addition stabilizing in July? What is your outlook on rolling back the PAR in the early buckets and the assessment on slippages in the current quarter?
A: For July, we are looking at a 99.5% collection efficiency in our nondelinquent NDA pool, indicating a marginal increase in PAR. We have strengthened our collections in the 1 to 90 bucket and identified branches to reduce PAR. Slippages have been steady between 0.6% to 0.7% over the last four quarters, and we expect to maintain this rate in Q2.
Q: Why did affordable housing disbursements decline by 40% QoQ? Is there anything one-off in the non-employee OpEx decline?
A: The decline in affordable housing disbursements is due to the introduction of a new circular requiring different DD disbursement processes. This will correct over the months. The non-employee OpEx decline is related to business volume variations and tight control on expenses.
Q: Can you reiterate the credit cost guidance for FY '25 and provide an outlook for FY '26?
A: We guided a credit cost range of 1.7% for FY '25. Q1 annualized cost is about 1.42%, aligning with our full-year plan. We expect to stay within the 1.4% to 1.7% range for the first half and will update guidance for FY '26 as the year progresses.
Q: What gives you confidence to grow the micro individual loan book despite stress in the unsecured personal loans segment?
A: Individual loans are given to group loan customers with a significant tenure and good repayment history. Each loan undergoes a thorough credit process. Our individual loan portfolio has consistently performed better than the group loan portfolio, giving us confidence in its growth.
Q: What is the strategy for increasing disbursement yields in housing and business loans?
A: Our yields are competitive in Tier 3 markets. Any change in yield would require a shift in market or customer segment, which is not planned in the immediate term. The introduction of higher-yield micro mortgages also helps overall yield.
Q: What is the expected normalized NPA number by the end of the financial year?
A: We expect NPAs to peak at around 2.7% to 2.8% by the end of this financial year and then start showing a reducing trend.
Q: Will the strategy of 60-40 secured-unsecured book composition change if the micro finance landscape improves?
A: We will continue with the 60-40 strategy as we see good growth potential in secured assets like vehicle finance, gold loans, and micro mortgages. We aim to achieve this composition by FY26.
Q: What is the impact of the RBI comments on growth in Bihar and UP?
A: In Bihar, we have seen a 0.5% growth over March 24, with a 9% concentration in the state. In UP, we have slowed down in 4-5 districts due to higher delinquencies but continue business as usual in other districts.
Q: What gives you confidence in maintaining better asset quality than peers?
A: Our branch selection strategy, independent credit team, and specialized collection team contribute to better asset quality. Our branching strategy has helped us avoid overcrowded locations, and our independent credit team ensures logical decision-making.
Q: What is the outlook for the Universal Bank license application and its impact on ROE?
A: We plan to apply for the Universal Bank license within this financial year. The impact on ROE will depend on the portfolio mix and business strategy, which are still under internal discussion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
