NBFCs' Q4 profit may surge 15% on strong loan growth, asset quality
The full impact of the Reserve Bank of India's (RBI) increase in risk weights on consumer credit for banks and NBFCs, which was announced in November last year, is also likely to be felt this quarter impacting profitability and growth for small-ticket loans for personal consumption.
«Overall the sector looks poised for solid growth with asset quality remaining stable. The rising cost of funds and higher capital costs due to RBI measures will hit margins, especially among mid-sized NBFCs. Overall credit quality remains stable though there could be some deterioration in some microfinance portfolios,» said Shreepal Doshi, vice president at Equirus Capital.
Yes Securities expects margins of housing finance companies to be impacted due to rising cost of funds.
«Credit demand across products from varied borrower segments remained strong during Q4 and stable cash flows/incomes and non-perturbing individual/household leverage supported loan eligibility/underwriting. With structural asset quality trends remaining firm (except for pockets personal loan, cards and microfinance)...we expect earnings growth momentum to continue in microfinance companies, housing finance and vehicle financiers,» Yes Securities said in a report.
Vehicle finance and gold financiers are expected to post strong numbers due to economic growth.
Elara Capital said cyclical tailwinds, improving operational efficiency and continued benign credit quality environment to support earnings. It expects diversified and gold finance companies to remain in
