- AUM Growth: 25% YoY and 14.2% QoQ to INR26,714 crores.
- Customer Base Growth: 15.3% YoY and 4.8% QoQ to 49.2 lakh.
- New Customers Added: 13.5 lakh during FY24 and 4.2 lakh in Q4 FY24.
- Branches Added: 86 in Q4 FY24 and 194 during FY24, totaling 1,967 branches.
- Disbursement: INR8,053 crores in Q4 FY24, a 12.3% YoY increase.
- Retail Finance Portfolio AUM: INR708 crores, a 320% YoY increase.
- Net Interest Income: 33.7% YoY growth to INR922 crores in Q4 FY24.
- Portfolio Yield: 21%.
- Cost of Borrowing: 9.8%.
- Interest Spread: 11.2%.
- NIM: 13.1%.
- Cost-to-Income Ratio: 30.1%, 10 bps lower YoY.
- PPOP: 35.8% YoY growth to INR683 crores in Q4 FY24.
- Credit Costs: INR153 crores in Q4 FY24.
- Collection Efficiency: 98.3% excluding arrears.
- GNPA: 1.18% at 60 DPD.
- PAR 90+: 0.94%.
- Net NPA: 0.35%.
- ECL Provisioning: 1.95%.
- PAT: 33.9% YoY and 12.4% QoQ growth to INR397 crores in Q4 FY24.
- ROA: 5.7%.
- ROE: 24.9%.
- Net Income: 45.9% YoY growth to INR3,260 crores for FY24.
- PPOP for FY24: 58.7% YoY growth to INR2,391 crores.
- Gross Credit Cost: 2.06% for FY24.
- Stage I Provisioning: Increased from 0.82% in March '23 to 0.92% in March '24.
- Net Credit Cost: 1.8% for FY24.
- PAT for FY24: 75% YoY growth to INR1,446 crores.
- Capital Adequacy: 23.1%.
- Dividend: Onetime final dividend of INR10 per share, totaling INR159 crores.
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CreditAccess Grameen Ltd (BOM:541770, Financial) achieved a significant milestone by surpassing the INR25,000 crores AUM mark in its Silver Jubilee year.
- The company reported a strong AUM growth of 25% YoY and 14.2% QoQ, reaching INR26,714 crores.
- Customer base grew by 15.3% YoY and 4.8% QoQ, with over 13.5 lakh new customers added during FY24.
- Net interest income in Q4 FY24 grew by 33.7% YoY to INR922 crores, maintaining a stable cost of borrowing at 9.8%.
- The company has a high customer retention rate of 88%, indicating strong customer loyalty and affiliation with the brand.
Negative Points
- Credit costs increased to 2.06% in FY24, with a guidance of 2.2% to 2.4% for FY25, indicating potential higher provisioning and risk in new markets.
- There was a slight increase in PAR portfolios across buckets, with a 20 bps rise attributed to flood impacts and other factors.
- The company faces higher credit costs in non-core markets due to higher provisioning for standard assets.
- The cost-to-income ratio, while healthy, is expected to remain range-bound at 30% to 31%, indicating limited scope for further reduction.
- The company anticipates maintaining a stable cost of borrowing, which may not decrease significantly unless there are major changes in RBI or FED policies.
Q & A Highlights
Q: Congrats on a good set of numbers. Sir, just two, three questions from my side. One on the clarification side. So on a sequential basis, our emergency loan proportion has spiked up significantly to INR1,000-plus crores. So can you please throw some light on what sort of emergency loans these are?
A: I think there are some data, we will look. It's less than 0.8% of our book, actually. I think there's some data that we'll look at it, Renish.
Nilesh Dalvi - CreditAccess Grameen Ltd - Head - Investor Relations: Renish, the emergency loans is INR5 crores.
Udaya Hebbar - CreditAccess Grameen Ltd - MD: INR5 crores only, total portfolio.
Nilesh Dalvi - CreditAccess Grameen Ltd - Head - Investor Relations: You can see it in the deck.
Unidentified Participant: Got it. Got it. I think -- so there is a misprint between home improvement and emergency, I guess.
Udaya Hebbar - CreditAccess Grameen Ltd - MD: There seems to some error, we will rectify that.
Q: Sir, secondly, on the margin side, of course, this year has been fantastic for us, but now going ahead, when we say that we'll be maintaining this 12.7% to 12.8% NIM and the way sort of regulator is commenting on the yields, do we foresee any risk to sustain these margins going ahead?
A: So now, if you look at our financials, our interest spread is only 11.2% currently. It's quite reasonable when compared to the regulatory direction also. As well as we are the lowest price to customer. And the NIM is coming from the efficiency of managing capital and managing operations. We don't see a reason where this is seen negatively. I think this is -- this will be seen positive.
Q: Got it. And sir, just last question, maybe a bit lengthy one on the credit cost side. So we were guiding for 2.1% of credit cost for '24. Of course, we ended very close to that. But then when we look at the increase in guidance from 1.6% to 1.8% to 2.1%, and now 2.2% to 2.5%. So sir, what has changed fundamentally which is sort of leading to this increasing guidance for credit cost maybe every six months?
A: Yeah. There are two things are happening. One is actually grow more in the noncore market. Our provisioning is higher because we provide them at a high-risk rate. For standard provisioning -- the impact of increased credit cost is basically almost 35 bps coming from the higher provisioning, what we're creating for a standard asset, as I explained earlier, also numbers available in our deck. So our actual credit cost is actually 1.7%. So as we grow more in the loan market, there will be some impact on the credit cost.
And two, we also observing a slight stable credit cost, slightly higher than what it was compared to Q1 and Q2, so which we also explained in the last quarter. So the stable credit cost will remain around this. And that's why the actual write-off, I said, maybe less than 2%, but credit costs may hover between 2.2% to 2.4%, considering early recognition of risks and higher provision on certain assets.
Q: Okay. So basically, you're saying, let's say, incrementally between '25 to '28, our growth will be coming largely from the non-southern market or in a sense non-core markets. And given our ECL model is, the Stage I provisioning will be always higher vis-a-vis the historical trend? Is that the current understanding, sir?
A: Correct. If you see our Stage I provisioning, which was less 80 bps, moved to more than 90 bps right now. So the difference between last one year, 35 bps of increase in Stage I only because of this change. So basically, there's a cushion being built by recognizing early and then having sufficient cushion from the -- against the risks, potential risks.
Q: Got it. Got it. And again, a follow-up on that is, let's say, so basically, you are trying to highlight that the credit behavior of the customer has changed post-COVID, and which might lead to the little higher statistic credit cost than what we have seen pre-COVID?
A: Correct. It's a combination of two things, as we said. There will be a little higher credit cost and a little higher provisioning itself. The combination of that will up on credit cost.
Q: So does this reflect in the center attendance as well, sir? I mean, what are the parameters to strike this? I mean, a change in customer behavior?
A: So there's not too much change in customers behavior, the core markets and non-core markets are selling actually. So non-core markets have a little different tendency. Therefore, it will potentially go up a bit as a statistic.
Q: Okay. And what explains the sequential increase in the PAR portfolios across the buckets, sir?
A: There is only 20 bps increase in our portfolio. If you observe, almost 10 bps is coming from the flood, the situation still continuing because it is staying on and off, most of them are paying still in the PAR bucket. So other 10% of it just a simple movement here and there.
Q: Okay. Okay. Got it. But nothing -- let's say, any stress building up in the sector you see? Right?
A: At least we are not seeing that in any of our markets. There will be a small variation between differences, but not significant changes.
Q: Congrats on strong performance. Just to harp on credit costs, just two clarifications on the guidance that you've given of 2.2% and 2.4% for FY25. Is it gross or is it net of bad debt recoveries? That's first.
A: Gross, gross.
Rajiv Mehta - YES Securities(India)Limited.-Analyst: It is gross, okay.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
