NBFCs are projected to clock a 21 per cent YoY and 5 per cent QoQ rise in assets under management (AUM), led by strong momentum in vehicle financing and diversified lending.
Among diversified players, SBI Cards is expected to see growth in card-in-force and spending, with stable margins and steady asset quality. (Source: financialexpress)
Non-banking financial companies (NBFCs) are expected to report a fairly strong performance for the April–June quarter, outpacing banks in both growth and margin stability despite a softer credit environment and the impact of recent rate cuts, according to a report by Axis Securities.
NBFCs under coverage are projected to clock a 21 per cent year-on-year and 5 per cent quarter-on-quarter rise in assets under management (AUM), led by strong momentum in vehicle financing and diversified lending. Vehicle financiers are likely to post 19 per cent YoY AUM growth, while diversified NBFCs may report a robust 24 per cent rise, underscoring sustained demand across retail and small business segments.
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Unlike banks, which are dealing with net interest margin (NIM) compression, many NBFCs—particularly those in the vehicle and microfinance segments—are set to benefit from improving margins this quarter. The margin tailwind is driven by a reduction in interest reversals, easing surplus liquidity, and marginally lower cost of funds. Net interest income (NII) for the NBFC pack is expected to rise 16 per cent YoY and 4 per cent QoQ, reflecting stronger underlying profitability.
Housing and diversified financiers are likely to maintain stable margins, while gold loan companies may continue to face some pressure. Microfinance institutions (MFIs), though still dealing with localised stress in states like Karnataka and Tamil Nadu, are showing early signs of recovery. Easing collection challenges in other regions and improving cost dynamics are expected to support a margin uptick and moderate credit costs.
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Among diversified players, SBI Cards is expected to see growth in card-in-force and spending, with stable margins and steady asset quality. Asset management companies like Nippon Life India AMC are also poised for a better quarter, supported by market rally-driven other income and 10 per cent QoQ growth in average AUM.
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