Loan growth of 21% y-y in Q2FY19 driven by volumes; barring LAP segment, asset quality remains stable.

CIBIL’s recent publication on consumer loans provides one of the best insights into the current state of the retail lending business. Key takeaways for Q2FY19: there is a solid growth momentum in the industry at this point that is reflected in loan growth (21% y-o-y) led by volume growth (28% y-o-y) rather than average balances. Origination is still towards the prime segment giving comfort on asset quality barring LAP, where there has been marginal deterioration in NPL ratios.

Retail loans grew 21% y-o-y
The following are the key takeaways from the CIBIL report: (i) Retail loans grew 21% y-o-y led by 28% growth in live accounts, crossing 107 mn accounts. The drop in average ticket size is attributed to the change in loan mix towards short-duration consumer loans like credit cards, personal loans and consumer durable loans. (ii) Tier-1 cities account for 50% of outstanding loans. (iii) Average retail lending balance is Rs 0.7 mn. (iv) Delinquency rates have declined or remained stable across most products barring LAP where it has increased to 3% of loans (up 14 bps q-o-q, 73 bps y-o-y).

Mortgages growth driven by a combination of volume and value
As of Q2FY19, mortgages grew 18% y-o-y led by 11% y-o-y volume growth and 6% growth in average ticket size (at Rs 1.3 mn). The share of housing finance companies is at 50% and the average ticket sizes for PSU, NBFC and private banks were at Rs 1.8, Rs 2.4 and Rs 3.4 mn, respectively.
90+ DPD stands comfortable and stable at 1.7% of loans (20 bps y-o-y).

Auto loans mostly driven by volume growth; asset quality improves
Overall loans grew 18% y-o-y led by 14% y-o-y volume growth and 3% y-o-y growth in average ticket size (Rs 0.4 mn). The average ticket size for private banks is at Rs 0.6 mn and NBFCs was at Rs 0.3 mn. 90+ DPD is at 2.8% of loans but it reflects a fall of ~45 bps y-o-y.

Personal loans fastest-growing segment; NPLs lower than secured products

Overall loans grew 35% y-o-y led by 26% y-o-y volume growth and 6% y-o-y growth in average ticket size (Rs 0.2 mn). 90+ DPD is lower than secured products at 0.5% of loans (stable y-o-y).

Credit cards growth has a bit more skew towards volumes
Overall receivables grew 35% y-o-y led by 32% y-o-y volume growth and 3% y-o-y growth in average balances. Growth is focused primarily on prime and near prime (650-750). 90+ DPD is also lower than secured products at 1.8% of receivables and has marginally inched up by 30 bps y-o-y.

Courtesy by : Financial Express