Icicibank vs Bajaj Finance Q3 FY24

ICICI Bank reported a strong Q3 FY24 with PAT growing 23.6% YoY to ₹102.72 billion, driven by robust loan growth of 18.5% YoY and stable asset quality. Core operating profit rose 10.3% YoY to ₹146.01 billion, while NIM compressed to 4.43% due to lagged deposit repricing. Management expects further NIM moderation in Q4 but at a slower pace. Retail and SME loans grew 21.4% and 27.5% YoY respectively, while personal loan growth moderated after tightening credit parameters. Contingency provisions remain high at ₹131 billion (1.1% of loans). Key risk: continued margin compression from deposit repricing and competitive intensity in lending.

Guidance read

Full-year NIM expected similar to last year: Management expects FY24 NIM to be similar to FY23, implying further compression in Q4 but at a lower pace than Q3. Headcount additions to moderate: Employee additions will not continue at the pace of previous 4-5 quarters; Q3 saw only 1,700 additions vs ~10,000 in H1. Personal loan growth to moderate further: Growth in personal loans may continue to moderate from current levels due to tighter credit parameters and pricing actions.

Risk read

Key risks include Margin compression from deposit repricing — NIM declined 22bps YoY to 4.43% and may compress further in Q4 as deposit costs continue to rise, albeit at a slower pace.; Unsecured loan delinquencies — Analyst raised concerns about rising delinquencies in unsecured loans; management acknowledged trimming higher-risk cohorts but did not quantify impact.; KCC portfolio NPA seasonality — Gross NPA additions from Kisan Credit Card portfolio were ₹6.17 billion in Q3, with higher additions typical in Q1 and Q3 each fiscal year..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.

Bajaj Finance reported a mixed Q3 FY24 with strong AUM growth of 35% to INR 311,000 crore and record new customer acquisitions of 3.85 million. PAT grew 22% to INR 3,639 crore, but was dampened by elevated loan losses of INR 1,248 crore (annualized 1.79% of AUM) and the impact of the RBI embargo on eCom and Insta EMI Card products. Management highlighted that rural B2C stress remains an inside-out problem, with growth deliberately slowed to 10%, while urban B2C delinquencies are seen as transient. The company raised interest rates by 20-30 bps from January to mitigate cost pressures. Long-range strategy targets 130-140 million customers by FY28. Key risk: credit costs may remain elevated if rural B2C stress persists or regulatory restrictions linger.

Guidance read

Credit cost guidance of 175-185 bps: Management expects annualized loan losses to average AUM to remain in the 175-185 basis points range, consistent with pre-COVID levels. Interest rate hike of 20-30 bps from January 1: Effective January 1, the company increased interest rates by 20-30 basis points across portfolios to mitigate higher cost of funds and risk weights. Rural B2C growth slowed to 10%: Rural B2C portfolio growth was deliberately reduced to 10% in Q3 from 26% in Q1, reflecting risk actions to control elevated delinquencies. KFS compliance for all products by March 2024: The company plans to implement Key Fact Statement (KFS) in vernacular languages and digital signatures for all products by March 2024.

Risk read

Key risks include Rural B2C credit stress persists — Rural B2C portfolio continues to show elevated delinquencies, with growth deliberately slowed to 10%. Management describes it as an 'inside-out problem' requiring ongoing risk actions.; RBI embargo on eCom and Insta EMI Card products — Regulatory restrictions on two key products have temporarily impacted loan volumes and digital metrics. Full compliance submission is pending digital signature and vernacular KFS.; Urban B2C delinquency uptick may not be transient — Analyst questioned whether rising delinquencies in urban B2C could persist. Management called it 'transient' but acknowledged preventive cuts of INR 450-500 crore quarterly.; Co-branded credit card renewal risk — RBI granted only a one-year renewal for the RBL Bank co-branded card partnership due to deficiencies. Management is engaging with RBI to resolve issues..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.