Professional Documents
Culture Documents
Pawan Agrawal
Rupali Shanker
Manish Saraf
Director
Associate Director
CRISIL Ratings
CRISIL Ratings
CRISIL Ratings
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
July 1, 2015
Key messages
Non-banks (NBFCs and HFCs) will continue to grow faster than banks
Increasing appetite for higher loan-to-value (LTV), and bigger ticket-size loans
Lagged delinquencies reached 3.0% as on March 2015, from 1.9% two years ago
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
RoA of 3.2% for 2014-15; expected to hover at 2.5% over medium term
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
4.0
3.0
5.0
2.0
1.0
1.3
1.7
Mar-13
Mar-14
2.3
2.7
Mar-15
Mar-16 (P)
//
0.0
Mar-19 (P)
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
5.0
Increased loan amount and longer tenures are the primary benefits
~Rs.10 lakh crore of bank loans in the Rs.25 lakh - Rs.10 crore ticket size offers vast potential
Un-banked SMEs in Tier-II and Tier-III towns also offer good business potential
1.7
2.3
5.0
2.7
0.0
21
22
22
23
26
28
29
29
24
39
40
-10.0
80
%
44
45
100
60
50
10.0
35
-20.0
31
36
32
33
32
30
28
-30.0
40
25
20
52
50
49
45
//
Mar-13
Banks
49
NBFCs
Mar-14
HFCs
Mar-15
-50.0
-60.0
20
24
28
-40.0
25
24
23
15
2012-13
2013-14
NBFCs
2014-15
HFCs
2015-16 (P)
Banks
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
120
LAP will also remain a focus area for top private sector and foreign banks
Public-sector banks expected to grow at a slower pace
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
0.2
0.6
1.2
6 players
16 players
23 players
March 2010
March 2013
March 2015
100
10
25
35
75
40
30
50
60
70
50
75
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
50
90
50
75
65
25
25
0
0
Mar-10
Mar-13
Metro and Tier I cities
Mar-15
Tier II
2009-10
2012-13
Third party intermediaries
2014-15
In-House
100
20
~50-60
50
18
~60-70
~40-45
16-17%
15-16%
16
13-15%
14
25
12
10
2009-10
2012-13
2014-15
2009-10
100
1.2
75
0.9
(Rs crore)
1.5
1.2
0.9
0.3
0.5
50
15
20
30
85
80
70
2009-10
2012-13
2014-15
25
0
0.0
2009-10
2014-15
0.6
2012-13
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
75
2012-13
2014-15
Residential
Commercial
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
3.3
3.4
3.0
2.4
1.9
1.4
0.9
2.0
1.9
1.7
1.4
1.0
1.1
0.8
1.1
1.1
0.4
Mar-13
90+ dpd (LAP)
Mar-14
Mar-15
Mar-16 (P)
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
2.7
2.9
10
Home
loans
New-car
loans
LAP
LAS
Used CVs
Tractor
Twowheelers
Credit
cards
Gold
loans
High Risk
Used-car
loans
Medium Risk
New CV
SME
CE
Threewheelers
Consumer
durables
Personal
loans
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
Low Risk
11
Risk factor
Regulatory environment
High Risk
Implications
Medium Risk
Risk Zone
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
Low Risk
12
37
40
26
30
20
27
14
10
16
9
0
1
8
9
10
11
12
Months post securitisation
LAP pools
13
14
15
16
17
18
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
High Risk
Medium Risk
Low Risk
13
< 50%
50% - 65%
> 65%
<50 lakh
50 lakh 1 crore
~65%
~15%
~15%
~5%
1 crore 2 crore
> 2 crore
Around one-third of the portfolio is in large ticket size or high LTV categories
Source: CRISIL Estimates
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
Improper valuation potentially distorts LTV and ability to price risk appropriately
Challenges arise from:
Medium Risk
Low Risk
14
However, lower LTV compared with residential property provides greater comfort, for now
High Risk
Medium Risk
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
Low Risk
15
Portfolio diversification across cities and penetration in Tier II / III cities will reduce risks
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
High Risk
Medium Risk
Low Risk
16
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
17
2010-11
2014-15
NIM *
7.8%
6.3%
5.3% + 0.30%
Opex
1.5%
1.3%
1.1% + 0.10%
Credit cost
0.2%
0.4%
0.6% + 0.20%
Post-tax RoA
4.2%
3.2%
2.5% + 0.20%
Lenders targeting newer borrowers and geographies to partly mitigate pressure on yields
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
Any sharper increase in delinquencies (under stress case) will adversely impact profitability
18
8%
6%
1.1%
5%
3%
0.6%
1.1%
5.3%
2%
2.5%
2.5%
100%
99%
98%
97%
96%
95%
94%
93%
92%
91%
90%
89%
88%
87%
86%
85%
84%
83%
82%
81%
80%
79%
78%
77%
76%
75%
74%
73%
72%
71%
70%
69%
68%
67%
66%
65%
64%
63%
62%
61%
60%
59%
58%
57%
56%
55%
54%
53%
52%
51%
50%
49%
48%
47%
46%
45%
44%
43%
42%
41%
40%
39%
38%
37%
36%
35%
34%
33%
32%
31%
30%
29%
28%
27%
26%
25%
24%
23%
22%
21%
20%
19%
18%
17%
16%
15%
14%
13%
12%
11%
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
0%
9%
8%
Opex
Credit Cost
Tax
5%
1.0%
6.4%
1.0%
2.2%
0%
Opex
Credit Cost
Tax
Post-Tax
RoA
Post-Tax
RoMA
9%
9%
8%
3%
8%
6%
4.5%
6%
5%
3%
2%
2.2%
NIM
NIM
6%
2.2%
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
9%
2%
5%
0.5%
8.7%
1.1%
3%
2%
2.6%
2.59%
Opex
Credit Cost
Tax
0.2%
1%
0.7%
3.0%
2.4%
2.3%
1.6%
NIM
Opex
Credit Cost
Tax
1.6%
Post-Tax
RoA
RoA: Return on assets; RoMA: Return on managed assets; on a steady state basis through the cycle
3%
2%
0%
0%
0%
NIM
0.6%
Post Tax
RoA
19
Controlling LTVs
Key monitorables
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
Conclusion
20
CRISIL Limited
www.crisil.com
Stay Connected
|
Twitter |
LinkedIn |
YouTube |
Facebook
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
End-use of Funds
Non-banks
As term loan for business or
debt consolidation
Private/Foreign banks
Public-sector banks
Credit Assessment
Customised assessment
based on understanding of
borrower cash flows
Primarily based on
documented income of
borrower; some proportion
based on customised
assessment
LTV
60-70%
(upto 75% in some cases)
50%-60%
50%-60%
Yield on Current
Disbursements
13.0% - 15.0%
11.5% - 13.0%
12.0% - 13.0%
Turnaround Time
7 days 15 days
~15 days
Origination
Largely through
intermediaries
Largely branch-based
Distribution
Use Only
For Internal
Not
rights reserved.
AllExternal
Ltd.For
CRISIL
2014
Particulars
22