Banking, Financial Services Q3 Results Review

NBFCs – Resilient business momentum; cautious on unsecured loan segment

Non-banking financial companies continued to report robust assets under management growth across all the segments, led by healthy demand momentum during the festive season. The AuM growth for the NBFCs was in line with our estimates. The average AUM growth for the quarter was 39.8% YoY/ 6.2% QoQ, led by Poonawalla Fincorp Ltd. with 56.9% YoY/ 8.1% QoQ growth. The micro finance players have been focusing on improving their geographical penetration by increasing their branches and delivering a differentiated product portfolio to their customers.

The optimism in the demand for the auto sector and the scale-up of new businesses have led to strong AUM growth at Cholamandalam Investment and Finance Company Ltd.

Consumer financing companies like Poonawalla and Baja Finance Ltd. continued to focus on customer additions. The management across the companies is confident of sustaining the growth till the year-end FY25E, led by a healthy product pipeline, a customer-centric focus, and the enhancement of digital initiatives.

Net interest margins in Q3 FY24 saw relatively stable margins QoQ despite higher cost of borrowings, led by a shift in the asset. Re-pricing of the asset has also been one of the drivers of stable NIMs during the quarter.