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MOSL: FINANCIALS-Retail loan growth moderates; Delinquencies inching up; A segmental snapshot across key retail segments

FINANCIALS: Retail loan growth moderates; Delinquencies inching up

We delved into the latest trends in retail lending segments to assess the growth trajectory, trends in 30/90 dpds across key segments and credit origination behaviour across lenders. Following are the key highlights:

** Consumer credit growth decelerated across major loan products in 2QFY20 to 13% YoY. However, growth in unsecured segments, such as credit cards/personal loans was robust at ~41% YoY/28% YoY.

** No significant shift was observed in credit card originations in the below prime segment. But, cards witnessed higher delinquencies, led by non-private card issuers.

** New personal loan origination volumes recorded significant growth of 134% YoY, primarily driven by NBFCs' focus on smaller value loans. However, loan originations grew in the below prime segment while asset quality remained stable.

** Growth moderated for Auto loans (~10% YoY), Home loans (10% YoY) and LAP (~11.6% YoY), with most of these products witnessing deterioration in asset quality.

** Further, segmental analysis of HDFCB's 20F filing report suggests that retail impairments are inching up in CV and CE financing, personal and credit cards (marginal increase) and other retail segments (includes agri portfolio). Overall gross impaired ratio for HDFCB stood at 1.7% v/s 1.5% for ICICIBC.

Unsecured segment robust; delinquencies inching up in credit cards
** Credit card loan growth remained robust at ~41% YoY (v/s ~36 YoY in 2QFY19). No significant shift was observed in credit card originations in the below prime segment. However, credit cards witnessed higher delinquencies – both in 30+dpd/90+dpd – led by non-private card issuers.

** Personal loans grew 28% YoY (v/s 33% YoY in 2QFY19). However, new personal loan origination volumes recorded significant growth of 134% YoY, primarily driven by NBFCs’ focus on acquiring smaller value personal loans (up to INR25k). Thus, almost 35% (v/s 26% in 2QFY19) of the new accounts originated were to borrowers considered below prime.