Growth and asset quality pressures persist although some signs of easing

Apr 10, 2015 | 05:04 PM IST

Retail credit of NBFCs stood at Rs. 4.0 trillion and registered a y-o-y growth of 11.1% as December 31, 2014 against a y-o-y growth of 9.1% as on March 31, 2014. Higher growth follows a revival in the gold loan segment, which grew on a y-o-y basis by 2.8% as on December 31, 2014 against a sharp y-o-y de-growth of 16% as on March 31, 2014. Credit to the Mortgage and microfinance segments also witness a pickup in growth, registering a y-o-y growth of 31% and 43% in December 2014 respectively. ICRA expects retail NBFC credit growth to improve to 14-17% in FY16 from 11-13% in FY14 and 9% in FY13. ICRA expects profitability to be impacted by RBI regulations requiring NBFCs to migrate to a minimum NPA recognition norm of 150+ days from 180+ days, which would increase gross NPA and credit provisions. ICRA estimates the one-time hit on earnings owing to this transition to be 20-30 bps, which could lower ROEs to below 10% in FY 16 Profitability of retail focused NBFCs are expected to remain under pressure in FY-16, as ROEs could drop to under 10% (from 10.8% in 9M-FY15 and 12.6% in FY14) on account of the one-time impact as NBFCs adopt a tighter minimum NPA recognition policy. Read More>>

 

ABOUT AUTHOR

Niveza Editorial Desk : We are a team of stock market nerds trying to stay ahead of the herd. We spend our grey cells everyday to pave a smooth road for our clients in the shaky world of stock market. While...
FULL BIO

LEAVE A COMMENT

RECOMMENDED READING

Gujarat Election Exit Polls Create A Bull Run

Market This Week: The market continued last week's optimism and started on a positive note. Investors were worried about Gujarat elections and were waiting for some positive news to enter the market again. Exit polls came in
Read More>>

Gujarat Election’s Exit Polls Pushes Sensex Over 195 Points

Share Market News – 14 December 2017 The market opened on a positive note and continued to trade in a mildly positive trend after the US Federal announced a rate hike by 25 bps. During the afternoon session, the
Read More>>

Sensex Loses Over 200 Points, Nifty Closes Below 10,250

Share Market News – 12 December 2017 The market opened on a negative note and continued to trade in negative due to selling pressure was seen on the upper level. During the afternoon session, selling pressure was seen. In
Read More>>

Market Bullish, Make Hay While The Sun Shines

Market This Week Market started on a negative note this week due to the panic caused by the Monetary policy. However, the RBI Governor kept rates unchanged and there weren’t
Read More>>

Free Research Report - Srikalahasthi Pipes Ltd

Srikalahasthi Pipes Ltd has a power generation capacity of 14.5MW, comprising of 12MW waste heat recovery of coke oven plant and 2.5MW captive power plant, which runs on blast gas furnace. Around 75% of the power requirement is internally met,
Read More>>