Shriram Finance · tone and specificity signals across the available quarters.
Language signals
The reduction has come in in the later part of September. So as we guided in the last quarter the exit of fourth quarter the net interest margin will reach out to 8.5%. So on average it will be anywhere between 8.25 to 8.3 for the full year.
Our customers are retail customer and they have small businesses. So we will not have a full view of their cash flow but we do understand there is a cash flow improvement for each of our customer and by having access to them, reach to them, understanding their business we do help them in the better management of financial situation and therefore our recovery is based on the reach the customer.
If the prices go up then it is good for us because asset quality of a second-hand vehicle or the our LTV coverage will be higher. If the prices come down then also we are fine because the down payment has been higher from the customer.
Utilization level for vehicles are anywhere between 21 to 25 days. So that has been one of the highest. So I think this is very encouraging for all the vehicle owners and we are not seeing any kind of a default kind of a scenario.
We believe that the net interest margins will be maintained at the current levels if not slightly improving and the great quality improving the rate cost also should come down. So we expect the ROE and ROAS to improve.
As long as we are within 100 or 150 basis point of the bank offering, they would prefer to remain with us and since these people already are proven with their track record, the credit cost is likely to improve by 10 to 20 basis point on the total book.
April month is normal for us. We have not seen any challenges going forward. What is going to happen that we need to see but definitely after the first quarter we will relook at our budget then probably give guidance.
It will be definitely yes. The NIM will definitely expand but for the budget sake we have put a conservative budget and as we told in the beginning itself some benefit will be passed on to the customer and some benefit will accrue to the bottom line.
We are into extreme retail individual operator kind of a lending where there will be fluctuation in the incomes. Our business model itself recognizes this fact and the credit cost is factored in our lending rates. So we have nothing to really worry about it.