Bajaj Housing Finance FY26 Annual Earnings Summary

Home loan attrition rose to 21-22% annualized from 15-16% last year, driven by aggressive pricing from PSU banks, which could pressure AUM growth.

BT out on home loan portfolio is ~20%, with 60-70% of prepayments attributed to balance transfers. This pressure is expected to persist until interest rates stabilize.

If money market rates remain high and the RBI does not hike policy rates, the company's ability to pass on higher funding costs to customers will be limited, compressing spreads.

Management guided for 15-20 bps NIM compression in FY26, with further pressure from expected December rate cut and competitive pricing, especially in home loans.

While management is scaling affordable housing cautiously, the segment inherently carries higher credit risk, which could increase credit costs if not managed well.

RBI's consolidated circular removed an illustration allowing capital relief on undisbursed tranches of under-construction home loans and construction finance, leading to a sharper Tier 1 decline. Clarity is awaited.

Competitive intensity from PSU banks on pricing remains high in prime and super-prime segments, pressuring spreads and acquisition costs.

If home loan growth remains subdued relative to non-HL growth, higher assignment may be needed to manage PBC, which could compress NIMs further.

Aggressive pricing by banks, especially PSU banks, kept BT-out rates elevated in Q4 FY26, and if this persists, home loan growth and margins could be pressured.

The IHL ratio (regulatory definition of home loans as % of total assets) has been contracting and stood at 50.45%, close to the 50% minimum, requiring careful management to avoid regulatory breach.

Bajaj Finance holds 88% stake; regulatory requirement to reduce to 75% by September 2029 may lead to equity dilution, but management provided no clear timeline or plan.