Summary from CreditAccess Grameen Ltd. Q3FY25 Concall

Summary from CreditAccess Grameen Ltd. Q3FY25 Concall

Company Overview

- CreditAccess Grameen is a leading microfinance institution focused on rural and semi-urban areas.

- Strong presence in India with diversified customer base and high-touch operating model.

- Focus on financial inclusion, customer-centric lending, and risk management.

Financial Performance (Q3 FY25)

- Revenue grew 7.4% YoY to ₹862 crore, supported by stable interest income.

- Net profit impacted by accelerated write-offs, expected to normalize in coming quarters.

- Credit cost stood at ₹750 crore due to provisions for delinquent accounts.

- Gross loan portfolio (GLP) at ₹24,810 crore, reflecting 7-8% YoY growth.

- Capital adequacy remains strong at 25.9%, ensuring financial stability.

Key Business Developments

- Retail finance division disbursements grew 51% QoQ, now contributing 5% to AUM.

- New customer additions increased, with 42% being New-to-Credit customers.

- Collection efficiency improving, with X bucket collection at 99.2% in December.

- Increased focus on employee retention, reducing operational disruptions.

- Strengthening digital platforms with new customer and employee apps.

Expansion Plans

- Targeting 18-20% AUM growth in FY26, supported by customer retention.

- Expanding digital lending and AI-based risk assessment models.

- Strengthening rural penetration with branch expansions in underserved areas.

- Enhancing underwriting models to reduce future delinquency risks.

- Exploring new lending segments for diversified revenue streams.

Growth Projections

- Retail finance to reach 10% of AUM in the next two years.

- ROA expected to improve to 4.2-4.5% in FY26 with stable credit costs.

- Net interest margin (NIM) guidance at 12.8-13.0% for FY26.

- Portfolio yield stable at 20.2%, supported by pricing discipline.

- Expecting credit cost to normalize at 3-3.5% in FY26.

Market Trends and Challenges

- Increasing regulatory oversight with new MFIN guardrails affecting lending practices.

- Microfinance industry experiencing normalization after a period of higher delinquencies.

- Competition from banks and fintechs in small-ticket lending.

- Rising borrowing costs impacting margins, though well-managed by strong capital position.

- External disruptions like weather events affecting short-term collection trends.

Future Outlook

- Q4 FY25 expected to show stable disbursement trends and continued recovery.

- Further improvement in asset quality with reduced delinquency additions.

- Strengthening liquidity position with ₹3,222 crore cash and equivalents.

- Long-term focus on financial inclusion and customer-centric digital transformation.

- Maintaining strong investor confidence through disciplined financial and risk management.