Release Date: May 16, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CreditAccess Grameen Ltd (NSE:CREDITACC, Financial) demonstrated resilience by maintaining a strong employee retention rate of 30.5% amid high industry churn.
- The company expanded its branch network by opening 100 new branches, enhancing its geographical reach.
- Retail finance has shown significant growth, with its contribution to the AUM increasing from 2.7% to 5.9% year-over-year.
- The company successfully raised INR3,144 crore in Q4 FY25, including USD50 million from the International Finance Corporation, indicating strong financial backing.
- CreditAccess Grameen Ltd (NSE:CREDITACC) maintained a healthy net interest margin (NIM) of 12.7% for Q4 FY25, aligning with revised guidance.
Negative Points
- The company faced challenges in Karnataka due to operational ambiguities and political sensitivities, impacting growth and credit costs.
- Credit costs were higher than anticipated, primarily due to issues in Karnataka, with a total write-off of INR1,124 crore for FY25.
- Disbursement momentum was affected, with rates dropping to 57% in February and 65% in March compared to normal levels.
- The company experienced elevated delinquency rates in Karnataka, affecting overall asset quality.
- Despite efforts, the growth, credit cost, and profitability parameters did not align with the revised guidance due to external challenges.
Q & A Highlights
Q: Can you explain the changes in ECL coverage this quarter and how it affects credit cost guidance?
A: Udaya Hebbar Hebbar, Managing Director, explained that there was a minor change in ECL coverage for stage 3 borrowers who are paying more than 50% of their EMIs, resulting in a slight reduction in credit cost. Nilesh Dalvi, CFO, added that the ECL percentage in Stage 2 decreased due to a higher proportion of delinquencies from Karnataka, which historically has lower risk districts.
Q: What is the outlook for the retail finance segment, and how has its asset quality been during recent challenges?
A: An unidentified company representative stated that the average ticket size for unsecured business loans is around INR 1.7 lakh, and secured business loans are around INR 5.8 lakh. The asset quality has been stable, with PAR 30 at 1.97% for unsecured loans and 0.89% for secured loans. The retail finance segment is expected to remain range-bound in terms of ticket size.
Q: How is the company addressing the challenges in Bihar, and what is the impact of borrowers with over three lenders on PAR 15?
A: Udaya Hebbar Hebbar explained that the company took strong measures to protect the portfolio in Bihar, including higher management oversight and retention teams. The decline in GLP was due to write-offs. Nilesh Dalvi added that borrowers with more than three lenders account for 41% of PAR 15, primarily in newer markets like Bihar, where the overlap with other lenders is higher.
Q: What is the expected growth for the group lending business in FY26, and how does it compare to future growth expectations?
A: Nilesh Dalvi stated that the group lending business is expected to grow by 8% to 12% in FY26, with a flattish growth in the first half due to write-offs. The company anticipates a steady-state growth of 14% to 15% for microfinance, including retail finance, in the future.
Q: How is the company managing the potential impact of the Tamil Nadu bill and other state-specific challenges?
A: An unidentified company representative mentioned that there is currently no impact from the Tamil Nadu bill on the ground. The company is proactive in customer engagement and does not foresee any immediate challenges in other states.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
