INSUBCONTINENT EXCLUSIVE:
Mumbai: Non-banking finance companies (NBFCs) recovering from a liquidity crisis will face some asset quality pressures, especially in the
auto financing and real estate with large, higher rated companies better prepared to ride the challenges in the quarter ended December
2019.
Analysts said companies like Housing Development Finance Corp Ltd (HDFC), Bajaj Finance and Cholamandalam Finance will continue to
remains high, though it is come down compared to last year, it still remains elevated as the mark-up above the benchmark bank lending rates
Real estate financing, micro finance loan and wholesale based NBFCs will see pressure on asset quality
The slowdown in the auto and real estate sectors will have an impact on NBFCs linked to these sectors as the risk of delinquencies remains
share consolidation to continue in favour of strong NBFCs
Moreover, we expect stress in real estate to continue
We expect most NBFCs/ public sector banks (PSBs) tocontinue to see soft business growth/profitability, but we expect stable NIMs for most
Paribas-owned Sharekhan, in a note.
Some NBFCs like Bajaj Finance continue to report healthy growth in their assets under management (AUM),
though it is lower than the peak
Earlier this month the consumer lender told stock exchanges its AUM had increased 35 per cent, which is much better than its peers, but its
lowest growth in the last two years.
However, a majority in the once buzzing NBFC sector will continue to reel under liquidity concerns with
the economic slowdown putting elevated pressure on asset quality.