Bajaj Finance Ltd

NSE:BAJFINANCE

Earnings Call Transcript 2023-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to Bajaj Finance Limited Q4 FY '23 Earnings Conference Call hosted by JM Financial. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sameer Bhise from JM Financial. Thank you, and over to you, sir.

[Sameer Bhise, analyst]

Thank you, Nirav. Good evening, everyone, and welcome to the 4Q FY '23 Earnings Conference Call of Bajaj Finance Limited. First of all, I would like to thank the management of Bajaj Finance for giving us the opportunity to host this call. From the management team, we have Mr. Rajeev Jain, Managing Director, Bajaj Finance; Mr. Sandeep Jain, Chief Financial Officer of Bajaj Finance; and the entire senior management team of Bajaj Finance and its subsidiaries.

Without much ado, I would want to hand over this floor to Mr. Rajeev Jain for his opening comments. Over to you, sir. Thank you.

[Rajeev Jain, executive]

Thank you Sameer. Thank you JM for hosting this. Very good evening to all of you. I have a set of my colleagues here. A good evening from them as well. I'll essentially be taking you through very quickly over the next 15 minutes through the investor deck, which we've uploaded on the Investor section of the website and also filed with BSE and NSE.

So let's just quickly jump over to the investor deck. Let's jump over to Panel #4 quickly. Quarterly, I would say, excellent quarter across all financial and portfolio metrics. We delivered INR 16,500 crores of core AUM growth.

We added a tad below 3.1 million new customers to the franchise in Q4. All products and services are now live on web and app platform, which is really what the work that we've been at over the last 2.5 years.

App platform alone has 35.5 million net users. We had gross installs of 54-odd million last year. And as of 31st March, the net installs are 35.5 million. We are amongst the largest -- global largest in the finance place on Google Play store among the top 4 organic downloads in the world. So I think that's been the effort that's been made by the company to fully go digital. In terms of financial metrics, core AUM grew 29% to INR 2,47,000 crores, OpEx to NIM last quarter came in at 34.1%, very close, again came in at 34.1. PAT, it's ever high PAT of INR 3,158 crores, growth of 30% in Q4.

ROE just a tad below 24% at 23.94%. Net -- Gross NPA, it's the lowest ever in the history of the company. I mean, for -- I mean -- and if you adjust this to 180 days past due and so on and so forth, I think these numbers are ever low numbers. Net NPA came in at 34 basis points ending March '23.

Very quickly on full year, given that it is the fourth quarter, excellent year overall across all financial and portfolio metrics. We delivered core AUM growth of INR 55,292 crores. We have guided for INR 52,000 crores to INR 53,000 crores of AUM growth in the beginning of the year. Now we disbursed 29.6 million loans. We added 11.6 million new customers to the franchise, the highest ever customer addition that we've actually done ever as a company.

As earlier mentioned, fully live on app and web, 35.5 million consumers on the app platform.

Overall, in general, given the exit momentum of AUM growth, robust portfolio metrics, as you will see, as I take you through and a highly scalable digital stack, we are pretty confident about growth and portfolio metrics for FY '24. On -- in terms of core AUM growth, full year, I talked about 29%. OpEx to NIM full year came in at 35.1%. PAT came in at INR 11,508 crores, a growth 64%. ROE full year came in at 23.46%; and net NPA, of course, as of March 31 is at 34 basis points.

Let's just quickly jump to some key points on Panel 5. Overall, B2B disbursements were up 21%. You're seeing data coming through on how mobile phones are degrowing by 20%, how shipments are going down and mind you out of B2B disbursements that we do anywhere between 40% and 45%, maybe a little more are essentially digital products or mobile phones.

In that environment, growing 21%, I would say, demonstrates strength of the franchise and the distribution. So far, as you look at having entered the year, so far, April, we are tracking reasonably strong. In terms of customer franchise, I talked about 3.09 million customers. We're reasonably confident we should be able to add 11 million to 12 million new customers in FY '24 as well.

Depending on how the first half goes, we'll see if there is an upside to that. Overall customer franchise stood at 69.14 million. Cross-sell franchise for the first time crossed 40 million at 40.56 million. We added 19 locations to -- and ended the year at 3,733 locations. Overall, in the year, we added 230 new locations. We are adding -- most of my location footprint is front loaded.

So we are adding 150-odd new locations and over -- over 300 stand-alone gold loan branches in Q1 alone as we traverse through Q1. The liquidity buffer pretty strong at just a tad below INR 12,000 crores. Important point on Panel 7, NII grew 28%. OpEx to NIM came in at 34.1%, Q4 was 34.5%. So continues its downward trajectory. We had articulated last quarter -- no, sorry, last year was 34.5%.

Anyway, we continue to invest, investing in social and rewards as 2 key platforms. Rewards will go live sometime between Q3 and Q4. Social will go live sometime in Q1 FY '25. Employee head count stood at 43,147. In terms of credit cost, fully normalized loan losses and provisions now in terms of -- came in at under INR 860 crores. We continue to hold management overlay of INR 960-odd crores. GNPA, as I said, came in at lowest ever at 94 basis points, net NPA 34 basis points.

Just go back, sorry. All portfolios across 11 portfolios that we publish are all green, including our auto finance portfolio, which is -- despite not being an ever-high AUM, peak AUM was INR 15,500 crores. It's still a tad below INR 13,000 crore, 93.28% of the portfolio is current. I have not seen that number in the last 16 years. Peak number used to be 89%, 90% only.

In terms of profitability on Panel 8 very quickly, capital adequacy remains quite strong. I have already talked -- ROE I talked about. ROE in Q4 came in just 3 basis points, if I'm not mistaken, below Q3. So Q3 was 5.43%, Q4 has come in at 5.4%. Capital adequacy pretty strong, both BHFL and BFL remain very well capitalized from a Tier 1 capital standpoint.

Tier 1 capital was -- for BFL was 23.2%. BHFL had a very good quarter. Overall, AUM is up 30%, just at INR 69,228 crores. Home loans grew 24%. You're all watching how there is a slowing growth in the home loan industry, given the 2 years of rapid growth, the loan against property grew 4%, LRD grew 64% and developer finance grew by 92% albeit on a lower base. And as you see below, the DF book is essentially 9% of the book. DF book from a model standpoint in terms of portfolio composition as I've said in the past, when we model our business on leading companies, principally we'll anchor around between 12% and 14%. That's really where it will "get capped at" from a portfolio composition standpoint and 60% anyway has to be a home loan model as part of our principal business criteria as outlined management. Overall approvals in Q4 grew by 21% for BHFL.

Very quickly, operating efficiencies. Net interest income for BHFL grew 40%. OpEx to NII stood at 26.5% versus a year ago of 32.5%. GNPA/NNPA continues to -- they continue to play their role in ensuring from a sum of parts strategy standpoint that we continue to deliver rock-solid asset quality at 22 basis points at INR 70,000 crores, as you can see.

Actually, and 8 basis points is one of the lowest in the industry, if not the lowest in the industry.

Panel 10, just single point, for BHFL, profit before tax grew 52%, profit advertised grew by 53% to INR 302 crores in the quarter gone by.

Bajaj Financial Securities, not a material subsidiary at this point in time. We continue to invest in building out the HNI Broking business, continued building out, launching new app features, we added 42,000 customers and overall franchise crossed 0.5 million mark.

Let's quickly jump to -- on a full year basis very quickly given it is fourth quarter. I talked about on Panel 12, core AUM up 29%. New loans I talked about, on a full year basis, grew 20% to 29.6 million. Customer franchise also grew 20% to 69 million. Net interest income, I talked about, grew 32%. The Board of Directors at the meeting that just concluded today have recommended a dividend of INR 30 per equity share and 1,500% dividend for FY '23 amounts to 17.65% of stand-alone profit for FY '23 and is completely in line with the company's dividend distribution policy that's been outlined and improved.

So company -- the company has recommended -- Board of Directors have recommended a dividend of INR 30 per equity share of 1,500%. Very quickly on to Panel 15, an important point. I mean, we've gone -- this is some of the omnipresence strategy update.

App platform has fully gone digital across all products and services. It's going live in a staggered release manner. Some people may be able to see some of them, some will not be able to see. It's just going live on Android and based on the starter methodology should fully happen by 30th of April at 50%. 50% would be 30th of April and by 15th of May, should have gone live 100%. Web=App, we are on track at a design level, what is visible in app, will be visible in -- is visible in -- will be visible fully in web by 29th of April.

We published a set of metrics last year from App platform standpoint to demonstrate that how important and strategic it is for our business going digital is. The same thing from Q2 onwards, we will do for Web as well. We'll publish a set of Web metrics that we'll start to populate every quarter from Q2 onwards, we will just wait for the platform to stabilize in Q1 and start to publish the metrics from Q2.

Going forward, all features that go live on app will also go live on web. On the same day that it goes in app, that was really the original objective as we outlined in December '21, when we talked about App=Web strategy. Payments, lots of action in payments, scalable UPI infrastructure has gone live on consumer app platform. It's scaling pretty well.

Will improve -- will help improve performance significantly, I would say, new features like Contact Mapper capability, UPI Autopay functionality is going live. iOS will go live in end of April as well.

In Q1, lots of action continues to happen. We continue to invest in the payments business, a new payment CLP, refer and earn functionality, faster settlement for merchants is going live. Checkout page on PG providers will start to become visible. Bajaj Pay Wallet will start to become visible on checkout page of leading payment gateway providers. QR deployment, I think we went live with merchant QR in November. We started to accelerate QR deployment from December onwards. I think company has made massive strides on QR deployment.

In the last quarter alone, we deployed 413,000 merchant QR. We estimate based on various reports that India has 30 million -- 31 million, 32 million overall merchant QR. We principally think anywhere between 2.1 million to 2.5 million QR -- merchant QR, or Bajaj Pay we will deploy in FY '24. So we are accelerating the deployment of QR. That's really the goal of FY '24 for us as a company. We'll also go live. We'll start to complete the stack further. The Bajaj Pay EDC machines will also go live in Q1 FY '24 with features like merchant onboarding. These are benchmark metrics or features that will start to go live.

There's MVP1 going live in June and MVP2 going live in September. Between these two, we should have a reasonably well benchmarked products. It'll start with existing distribution partners and will go open architecture fully by September, October. And we're quite excited about taking the entire stack of payments having worked on this for the last 2 years to our merchant ecosystem of 133,000 merchants and also do open architecture.

Very quickly, these are some of the metrics on 17, 18, nothing -- I mean, we're largely green on most of the metrics over Panel 17, 18 that you can observe. Panel 19 is an important panel. This is a panel that we started to publish on customer franchise, key financial metrics because at the end of the day, the franchise is growing, is it leading to AUM per customer franchise is growing or not.

And is the PAT for franchise for cross-sell franchise growing or not. We've delivered a record number. As you can see, these are 7-year numbers right here from FY '17 to FY '23 from INR 1,670 per cross-sell franchise profit, we ended the year at INR 2,837.

As you can see, '17, '18, '19, they were normal years. Even '20 was a normal year, barring last end, even on those 4 years, since then, we are principally looking at just a 70%, 80% growth in profit per customer franchise. And AUM per customer franchise has remained pretty steady. We don't expect any change in this metric to happen. We should continue to deliver better outcomes as we go from here.

Let's quickly jump to Panel 37. This is financials, 29% core assets under management growth, total income grew 32%. Net interest income grew 28%. Operating expenses grew 27%. Loan losses grew 22% and profits grew 31%.

So you started to now largely look at a normalized frame of 28%, 27% -- loan losses growing 22% and profits growing 30%. On a full year basis, core assets grew 29%, total income grew 31%, NIM grew 32%, loan losses degrew 34%.

And as a result, profits grew 64%. The ratios are here below. I've talked about on a full year basis, ROE came in at 5.31%. And operating expenses to net interest income came in at 35.1%. ROE came in at 23.5%, as I mentioned earlier,.

Let's quickly jump to cross-sell franchise Panel 48. 40.5 million customers. You can see below -- we started Q1 with 2.73 million customers, went to 2.61 million, went to 3.14 million. And normally, Q1 and Q3 are peak quarters. That's really how we observed over many years now, at least in the last 4, 5 years. So in a way, we were just a tad below Q3, which is normally a peak quarter and came in at 3.1 million new customers added to the franchise in Q4.

So gives us reasonable confidence that we can maintain a 11 million to 12 million customer franchise growth in -- I mean, I do dream of a day when someday we'll have 100 million consumers -- customers for us as a company sometime in the near term. Let's quickly jump to Panel 52. This is the AUM mix. Identical, that's one word for it. Two wheeler, three wheeler 5% a year ago, 5%; urban sales finance, 8%, 7%; urban B2C, 20%, 20%; rural, 2%, 2%; 8%, 8%; 13%, 14%. And loan against securities is 7%, but that 2% as you -- that's where the difference between core and otherwise is, which had a residual number is at 6%.

Commercial lending is 7% and mortgages at 31%. We don't expect, as I've said multiple times, we don't expect these -- this product mix to change in any given manner. And we think we can continue to comfortably grow while maintaining this mix plus/minus 1%. 2% will be a big number given our size of the balance sheet, 1% plus/minus is possible.

Just last panel in terms of provisioning coverage, Panel 55, overall GNPA, two wheeler is now down to 4.79%. Rest of the numbers are all in -- SME lending, you see 1.24%. Rest are all below 1%. In terms of net NPA, two wheeler, three wheeler finance, 2.43%; and rest are sub-25 basis points, as you can see. And that's how we came in at 94 basis points and 34 basis points from a year ago, which was 1.6% and 68 basis points to 94 basis points and 34 basis points.

So overall, in a pretty strong position from a portfolio quality standpoint, just last panel on stage ECL. I mean, as you can see here, there's -- as of 31st of March, we are around 64% PCR on Stage 3, on Stage 2 at 31%, as you can see, and Stage 1 is at 80 basis points. So pretty well positioned and strongly placed. That is really the quarter. On portfolio metrics, nothing to talk about, they're all at what I would call ever-high numbers. So -- or ever-best numbers that I've seen in a long, long time. So that's the quarter gone by. Happy to take questions between me and the management team.

[Operator]

We will now begin the question-and-answer session. [Operator Instructions]. The first question is from the line of Kunal Shah from Citigroup.

[Kunal Shah, analyst]

So couple of questions. Firstly, with respect to the entire penal charges, digital document which came from RBI. So what is the kind of impact in terms of how we see capitalization of charges happening? And how much could be, like say, the proportion of penal interest versus penal charges for us.

[Sandeep Jain, executive]

Yes. So Kunal, first things first, we don't capitalize charges into the loan account of the customer. So we are largely unimpacted by the RBI regulation. Of course, it is in draft form at this point in time, we will await final guidelines from RBI. That's one. Second, I think the bigger consideration that is coming out in the guideline is that, is the charges being considered for profiteering. Very clearly, the penal and bounce charges that we get from the customers are lower than the commission or recovery costs that we incur for collecting the EMI. This is not for profiteering. The charges that we collect are basically to take care of the cost that we incur for collecting the installments.

[Rajeev Jain, executive]

We also benchmark [indiscernible] charges with regard to the industry on an ongoing basis and adjust them suitably if you find any areas of improvement or opportunity.

[Kunal Shah, analyst]

Okay. And maybe it should not be [indiscernible] interest. So that definitely is not there -- as far as this is concerned.

[Rajeev Jain, executive]

That's correct.

[Kunal Shah, analyst]

Okay. And overall in terms of the business charges within the other income, what could be the overall proportion of it? If you can quantify that.

[Sandeep Jain, executive]

Yes, Kunal, we do disclose as part of the annual report, the breakup of fees and charges into service admin charges, distribution income, fees and value add [Indiscernible] the service admin charges or a decent contribution of service and admin fees is from penal and bounce charges.

[Kunal Shah, analyst]

Okay. So this service and admin, it should be largely the penal charges.

[Sandeep Jain, executive]

Yes. A large portion of that would be penal and bounce charges, that's correct.

[Rajeev Jain, executive]

But mind you [indiscernible] there is corresponding number and recovery commission that's sitting in the expenses line. That's the point he was earlier making and both are published.

[Kunal Shah, analyst]

Okay. And secondly, Rajeev, maybe compared to last time in terms of indicating with respect to competitive intensity as well as focus on margins vis-a-vis the growth we don't see that commentary this time added. So anything which you are seeing at the ground level? Or are we more confident in terms of say growth going forward? How should we look at that, yes.

[Rajeev Jain, executive]

India banking is now retail banking. So principally, then everybody is competing with everybody. So then what is there to talk about competitive intensity. That's why I removed it. So your observation is correct.

I mean, if wholesale is growing at 5%, then the only thing that's growing is retail. So I think -- so that's one part. Overall, in general, when I'm looking at the bureau data in terms of disbursements, overall consumer credit growth metrics are looking very, very strong. So as I said, India credit market is increasingly looking more and more retail. So those with the franchise, those who understand risk, should -- and those who have the products to sell to consumers. And those who can keep them engaged through various digital channels should win. I think that's principally the orientation.

The only point I would make, when I look at the overall unsecured AUM, overall engine, we think our market share is between 7% and 8%. The opportunity remains pretty large. But given the rapid growth of personal loan disbursement by a host of players who've not seen a cycle, I worry a little bit about it because I never want to forget that PL principally is a risk business, and it's not a balance sheet business. It is principally a risk business. So that's the only other additional observation point I would make.

So growth is strong. Momentum is good, strong across product lines, India is -- India banking is mostly retail and unsecured is growing probably the fastest. I'm not talking credit cards here.

I am talking unsecured PL here. So I would just worry about -- because those who've seen cycles are probably -- would be more mature about it than others. You won't see that sentence anymore until such time just on a lighter vein. And this is time India banking goes back to more balanced mix of retail and wholesale.

[Kunal Shah, analyst]

And margin resulting growth in terms of balancing that out? So we have [indiscernible]

[Rajeev Jain, executive]

So you can see Q4, I mean, rates have been going up, given our strong ALM that we've continued to manage as a company and the diversified balance sheet profile. Actually, if you look at full year, there was no impact of interest rate hikes on NIM in FY '23. I think that's a factual point now. Do we expect gradual moderation in margins in FY '24? The answer is yes. But it's -- it's -- if you assume one more rate hike, we expect NIM moderation of 40 to 50 basis points on a full year basis.

That's really what our -- and this is including one more rate hike. And mind you, part of it will get mitigated if I took an overall P&L view by peaking of OpEx metrics, best of our credit metrics will partially mitigate that frame as well. So it will -- it should overall have low impact on ROA and ROE profile as we get into FY '24 is really how we are seeing things to be.

[Operator]

The next question is from the line of Dhaval from DSP Mutual Fund.

[Dhaval Gada, analyst]

Congrats on strong performance. I just had a couple of questions. First was relating to customer acquisition.

So I observed that since third quarter, we've seen significant pick up, especially on physical acquisition because digital, by and large, has been steady around 600,000 mark.

So just wanted to understand if we've made any major changes on the [indiscernible] or any new product which is driving this acquisition engine. If you could just talk a little bit around that. And the outlook for next year, just -- I think you sort of concertedly revised the guidance on customer acquisition as you got confidence on the [indiscernible]. How do you think about the next couple of years in terms of new customer additions? So that's the first question.

[Rajeev Jain, executive]

No, it's a very fair question. See, in the last 120-odd days, we've looked at capacity planning a lot more closely. Of course, geographic expansion happens as it happens.

Because as we -- mind you, we've been running through pandemic it's been one action, go forward, one action going back.

I think at a design level, that's really how through last 3 years have been. In the last 120 days, as things started to look up and full normalization seemed to fully revert. I don't mean just in pandemic.

As we started to have greater control over the P&L, we looked at the capacity planning across our businesses, more so in sales finance part of our business and have significantly ramped up our staffing both at the stores and in terms of people who manage them from all the way from 1 to 3,700 cities in India.

That's starting to in the last 60, 75 days yield significant results.

[Operator]

[Operator Instructions]

[Rajeev Jain, executive]

That's really almost well, Dhaval, we do see -- we should be able to dispense 35-odd million loans in FY '24.

That would be a reasonable metric for us to -- which will be a 20% growth.

So it's not like -- but we do see that number move.

[Dhaval Gada, analyst]

Got it. And the second question is around sort of income profitabilities.

[Rajeev Jain, executive]

I talked about it earlier, Dhaval, that we do see some level of moderation. I made that point, right? I mean, we want to protect profitability because at the end of the day, through COVID, that's one of the things that, that protected the company and all its constituents.

So we expect NIM moderation of 40, 50 basis points, as I said earlier.

But as I said, OpEx metrics have already peaked. OpEx to NIM is at 34.1%, should look anywhere between 33.7% to 34% on a full year basis next year.

That's really what we are looking at. Credit metrics hold. They are looking strong.

So net impact on ROA and ROE should be reasonably low.

[Operator]

The next question is from the line of [Indiscernible] from Nuvama.

[Unknown Analyst]

I just had 2 questions. The first one was that yesterday, Bajaj Auto announced that they had applied for an NBFC license. So any impact on your business from that? That's the first question.

[Rajeev Jain, executive]

It's 5% of our balance sheet today. That's -- which is essentially captive. You're aware, we've started open architecture two-wheeler financing. So this was announced not yesterday. This was actually announced a year odd ago. Bajaj Auto has also -- had also announced then that they are applying for an NBFC license. I think they have applied for one. So that's also in public domain. And as they get the license, they set it up, they'll decide how to go about, how much do they want to book the business here and so on and so forth. But it's in a 24-month horizon, I would say you should expect no change, but we'll see.

Second order, we're building our own open architecture two-wheeler financing business. We expect we'll launch that business in June, July. We expect that business to be 250,000 to 300,000 two-wheeler loans, non Bajaj Auto in the current fiscal. So we are now already clocking anywhere between 11,000 to 13,000 new accounts every month. And it's a staggered rollout. We, for the first 6 months, did not roll out in many cities. Having gained confidence, we are now accelerating the pace a little bit and foresee 250,000 to 300,000 open architecture accounts.

So that's really how we see.

[Sandeep Jain, executive]

So [Indiscernible], I think we move a significant volume for Bajaj Auto. I think we remain a large partner for them. We continue to work with them in that spirit.

Post the RBI license to run their own NBFC, they can decide what they deem appropriate for their company. We continue to run the business.

[Unknown Analyst]

My next question, you probably partly answered it Rajeev. But my next question is that most NBFCs and banks are bullish on demand for FY '24, whereas a lot of market participants are a little worried about the high base and a possible slowdown -- so what is your view?

[Rajeev Jain, executive]

So I mean I can -- one, I think India seems well placed to grow at 6% and above. I mean -- so I think that's point number one. As I said earlier, overall consumer credit growth seems quite strong.

I mean if you look at some of the bureau data that we're tracking on a 3-year pattern standpoint, the numbers look very, very strong.

As I said earlier, in some of those segments, it's my personal view, not -- when I see that level of growth, it worries me a little, but that's for each company to manage its own risk and play.

We do -- our view would be if we could -- given our exit momentum, we principally think given the -- based our portfolio metrics, strong customer acquisition engine, a strong AUM growth exit rate that were delivered and a scalable app and web digital stack, we should be able to grow anywhere between 28%, 29% on a consolidated basis with a equally sharp focus on profitability in FY '24 as well.

[Operator]

Next question is from the line of Umang Shah from Kotak Mutual Fund.

[Unknown Analyst]

Congratulation to Rajeev [Indiscernible]

[Operator]

Sorry. But we are losing your audio may I request to come in a better reception area, please?

[Unknown Analyst]

Am I audible now?

[Operator]

I can hear you but your voice is still breaking slightly.

[Unknown Analyst]

Yes. I'll just repeat. Two questions that I have. First is on the leadership transition. So with Anup and Rakesh on board with -- on the board in their new roles, is there any change in terms of roles and responsibilities between yourself and the senior leadership team, if at all?

[Rajeev Jain, executive]

The answer is no. I mean, look principally the reason for appointment of the 2 senior colleagues of mine on the board. As the company grows larger and works towards delivering its long-range strategy. We have to continue to -- we must, as a company, continue to augment the bench. And as a result, the company onboarded, both of them who are deputy CEOs of the company, doing very large roles as Board members. They bring vast business experience and which should really help the company as it continues to grow from here on.

So that was the objective of their moving as Board members, as Executive Director.

[Unknown Analyst]

Understood. Perfect. The second question that I have is on the asset mix. So FY '23, as you already spoke during your initial comments, the AUM mix hasn't really changed much. Our portfolio metrics are looking really great. And I think we also have closer to about INR 1,000-odd crores of management overlay, which is sitting on the balance sheet. Then in that case, given that you're talking about some NIM pressures, is it possible that we may see the tilt of the balance sheet shifting more in favor of riskier or unsecured assets? Or we are targeting for maintaining similar sort of asset mix?

[Rajeev Jain, executive]

So this is a mix. This is a mix, plus minus, as I said, 1%. It's also hard to change this mix. At INR 250,000 crores, I can't shift this mix unless and until -- and there's no unless and until. I can't see the mix. And we like this mix.

I think it delivers optimal outcomes from risk management and scalability standpoint. So plus/minus 1% is really how it's likely to change. It's been not only just 2 years. I mean if you go back even to 2020, the number was 32%, 33%, let's say, if we take mortgages as an example. So these numbers are largely have been in the corridor even '19, '20, if I look at it. So not like little change, Umang.

[Operator]

Next question is from the line of Saurabh Kumar from JPMorgan.

[Saurabh Kumar, analyst]

Two questions. One is, what would be -- how will your market share in subvention be heading right now, basically in the super finance business? And the second is in terms of credit filters, I mean, relative to your own history, where will you be? Will your credit filters now be below the 2018 level? Or if you can give some [indiscernible]?

[Rajeev Jain, executive]

No both are fair questions. I mean -- at a design level, we are a market leader by a wide margin. You know that. So I don't have to tell you, intend to remain so the earlier point that I made to one of the questions that we have augmented our B2B infrastructure significantly given we are seeing stability. So we are likely to see that market share growth is really what our view is given the investments in the last 90 days you made on staffing.

So the market share number, if you go by value would be upwards of 50% okay, by value. Volume, we make a set of choices because we have to deliver growth and profitability. We make a set of choices. And those choices were very clear about that they are made to ensure we make per unit economic profit. If you don't make per unit economic profit, which meets our threshold irrespective of whatever competition is doing, we would not do.

And I still said we would still -- we foresee that we should grow volume itself by 20% in the next fiscal. So that's what our view on point-of-sale business is for us. In terms of risk filters, at a design level, we are very, very, very tight over the last 3 years. As I said earlier, you know that I mean, we're all now looking at pandemic in hindsight, but benefit of hindsight is you're out of it also, right?

I mean we were very, very tight over the last 3 years, as we've seen data flow based on data, by market, by line of business, we take decisions. So there is no answer that I will lose stand and or I have a risky stance or so it's data determined, whatever the data says is how we run our business, and we intend to continue to do so.

Some people are just telling me that so that people don't mistake we used to say there is a subvention market share -- it used to be 67%, 68%, our reasonable estimate is between 60% to 65%.

And I would say it's very likely in FY '24, it will go back to that level -- definitely in terms of value.

[Sandeep Jain, executive]

So he's just saying so that the metric is not confused with. That was a value market share in terms of disbursement. The 50% number -- upwards of 50% number that I talked about.

The -- this is subvention market share.

[Operator]

The next question is from the line of [Indiscernible] from Investec Capital.

[Unknown Analyst]

Just a data keeping question. So sir, what would be the number of active customers as on March '23. Basically the customers who are currently having active loan and...

[Rajeev Jain, executive]

Banking 30 million customers currently. We're banking 30 million customers currently -- every month. We have 18 million, 19 million MAUs on the Digital App platform. But the real -- banking number is real and material.

[Operator]

The next question is from the line of Abhishek from HSBC. Please go ahead.

Abhishek, may I request to unmute your line from your side and go ahead with your question, please. Due to no response, we move on to the next participant.

The next question is from the line of Avinash Singh from Emkay Global.

[Avinash Singh, analyst]

A couple of questions. First again, you have explained in details, but now considering that your customer franchise has reached almost closer to 1/3 of the entire sort of bureau data discount. Now from here onwards, I mean, you are still expecting a kind of close to 60%, 70% growth in the franchise annually. I mean, do you expect -- I mean, you to continue to sort of increase the penetration in the current Bureau data with customers? Or you expect this -- the so-called loanable customer or the bureau database itself to grow [indiscernible] that's number one.

Second, just in terms of your experience, are you seeing some kind of a slowdown in mortgages in this kind of a high rate environment in the current going month? I mean, what are your sort of reading for early leading for FY '24 mortgage. So these are my 2 questions.

[Rajeev Jain, executive]

In general, our experience is for the new customers that we bring on board between 60% and 65% have a bureau score of 750 and rest 30%, 35% are new to credit. That's our in general multiyear track record. That's our experience. That's empirical experience over the last many, many years. That has not changed even in FY '23. So I think there remains a lot of room is the only point I would make.

On home loan demand, Atul is right person to opine, but I'll just say that I think clearly, higher interest rate and high inflation in general lead to slower mortgage demand. I think -- so there's no -- I'm only making a point that is known for the last many decades. It just flows through at a cascading level into the sector. So I think that's the only point I would make, we grew 24% in the quarter that went by, on a full year basis grew 30%. Our size remains small, Atul can add.

[Atul Jain, executive]

So as far as Home loan is concerned, what we have seen in last 2 quarters towards in the affordable segment, affordable segment, when we say, I don't mean affordable as per EWS definition, but let's say, 50 lakhs kind of a unit.

We have seen a slowness in uptick because as the higher interest rates and the inflation, I think it's breaking into some part. But overall demand still remains strong. Overall home sales remains strong. Inventory at an industry level, I think, is all-time low. In few markets, it is even less than 12 months, which is there and the luxury demand in the upper premium segment, demand remains very strong.

That's what -- so in FY '24, as of now, we don't see a major demand compression, if I have to say, my view or the way we are looking at the market.

[Rajeev Jain, executive]

And I'll just add to what Atul said, our overall size remains small. Aggregate balance sheet is INR 77,000 crores. Aggregate [Indiscernible] there and another [indiscernible] residual values there. 78,000 crores, so we have a lot of headroom to grow even if the growth is slowing down.

[Operator]

The next question is from the line of Prakhar Sharma from Jefferies India.

[Prakhar Sharma, analyst]

Rajeev, just 2 questions, one from a slightly longer term -- so just wanted to check on 2 things. One is on the upcoming announcements around one of the large corporates Reliance Group trying to foray into this company into the segment. I know hardly anything is known, but from your perspective, Rajeev, how do you prepare Bajaj Finance for something which can be intense. We don't know, but things -- how do you prepare within the information that you have? That is the first thing. And I'll have a small data question after that.

[Rajeev Jain, executive]

Yes. I wouldn't like to comment on competition. That's point number one, I would make. India you know, represents very large opportunity for long-term growth in financial services. What is in my control is that I would work -- instead work towards realizing our ambition of 100 million consumers, which is really the ambition that we have outlined and take a disproportionate share of these 100 million consumers, payments and financial services, products and services. With a laser sharp focus, I would say, on frictionless experience. That's really what I would do. Opportunity remains very large, and we compete. We compete today with those who've been in this business for decades and decades, and it's a highly competitive industry. So that's really what I would say, Prakhar, to you.

[Prakhar Sharma, analyst]

And just one small clarification, if you can make on this margin trajectory and cost and maybe it's neutral at an aggregate level.

But just to understand the margin lever more, so this 30, 40 basis point readjustment that we could see between FY '23 and '24 -- is it contingent upon another rate hike?

Or it would nevertheless happen and we would probably still have only a little bit impact on ROA, nothing more than that.

So if you can clarify that part.

[Sandeep Jain, executive]

So Prakhar, 40 to 50 basis point compression that Rajeev referred to, does factor in potential one increase by RBI. So it does take into that consideration. That's point number one. Point number 2 is, again, Rajeev had clarified that we don't expect a significant impact on the ROA and ROE for the company. I think OpEx to NIM which is currently at over 35% for the current year, we are expecting it to be below 34% in the next FY '24. That should give us some savings.

Overall impact to ROA could be 5, 10, 15 basis points and mix.

[Operator]

The next question is from the line of Abhijit Tibrewal from Motilal Oswal.

[Abhijit Tibrewal, analyst]

My first question is on the last quarter when we articulated our long-range strategy, a few segments that we are kind of looking to enter NFI vehicle financing. I just wanted to understand, are these all going to be organic capabilities that we are going to build Bajaj Finance or there could be some acquisitions along the way.

[Rajeev Jain, executive]

So all organic, no inorganic. That's the answer. We like to build businesses rather than buy businesses. So -- and we've already outlined our ambition towards our ambition products that of our customers' wallet that we don't offer, which we got to cover.

I also said however in the last quarter's call that the new product launches contribution to AUM will not be a material number for next 3 years. Let me make that point -- let me reinforce actually that point. It will -- the next 3-year AUM is essentially going to come from the current set of products. If you take a 5-year view, which is really why we published a 5-year strategy, the answer is yes. In a 3-year horizon, we are not like to see material change in the product mix stack and the contribution of these products to the overall AUM. So -- and next 3-year AUM will come from existing set of products essentially.

[Abhijit Tibrewal, analyst]

My last question is again on this personal loans or the unsecured personal loans, you did briefly touch upon that earlier where you also highlighted that given that we have a whole host of NBFCs who have entered this segment, NBFCs who have not seen many cycles in the past who have entered this segment.

How asset quality could really pan out for this product? My question here is, Rajeev, I mean, from what I understand, we were at least among NBFCs the clear leader in this product segment and probably we still are. But given that we have -- I mean I can think of so many NBFCs today who have entered this personal loans [indiscernible] product segment started offering all these plexiloans, which we had campaigned in the past.

Are you seeing -- I mean, the pie sell going up? Or are they some of these NBFCs gaining market share from [Indiscernible]?

[Rajeev Jain, executive]

When I was making -- talking unsecured personal loan, I was not meaning NBFCs, let me clarify. I was meaning the overall banking system. Because NBFCs are only 20% of the system, the 80% is banking system. I think that's -- so I was meaning the entire banking system -- banking being or the financial system, including PSU private, public and NBFCs. And the order is -- this is not the order. I mean all. And as I said, when I look at the numbers. I hope people have modeled their models to know these are fixed interest rate products have a cycle.

And tenors have only been going longer across the industry, what we can see. So that's really what I was meaning. But I was not meaning fintechs. I must reinforce the point. I was not meaning fintechs. I was not meaning small loans. I was referring to 3 lakh plus average personal loan, which is -- so that's really what I was principally referring to because the small ticket personal loans deliver volumes, they don't deliver disbursements.

They don't deliver value. So -- and as I said, as Anup is saying that is it risk adjusted or not? That's the point Anup is making. It's a fixed interest rate, long-tenor, cycle not accounted for frame is the only point I'm flagging, if I may say so.

I would just say only 1 point. I mean, the rightful thing to do would be to seek, if I may say so, as investor community so that I'm not -- is to look at bureau data. I'm not speaking from personal assessment, I'm speaking from bureau data on a formal structure basis is the reason I'm making the point so that it's -- and I would encourage you guys to engage them and seek information, whatever they are able to provide.

[Operator]

The next question is from the line of Piran Engineer for CLSA India.

[Piran Engineer, analyst]

So firstly, if I may just start off, given that you all are meaningful players in the credit card market and revolver shares across the industry are down. Just what are your thoughts on what will it take to improve? What are the levers to offset that as a credit card player?

[Rajeev Jain, executive]

I mean, we are -- we essentially distribute on behalf of RBL and DBS. I see the RBI data on spends and revolve and so on and so forth. It clearly does seem that structurally revolve rate is down. And nobody has answer to spends are not down that much, spends are up, but revolve is down. There's something at work and nobody seems to have the answer. And we essentially are mere distributors.

So we have only that much insight into the profile. But I -- whatever I hear, I do clearly hear the revolve rates are down anywhere between 8%, 10%, 11%. Nobody knows the answer.

[Piran Engineer, analyst]

Nothing to offset that, like...

[Rajeev Jain, executive]

You can't offset that, right? I mean it's -- it will build up. Having said that, I would just say to you, that principally the only logical reasoning that everybody is able to come to is that a lot of customers who would revolve and over long periods of time, and these cycles have been seen in the Western market when a crisis happens, the revolve rate drops dramatically.

And over time, the new customers come in, whose revolve rates are high and it builds as part of the overall balance sheet to reflect a high revolve rate. That's really a cycle play. Yes. So sometime, it's time that you have to wait for -- it won't happen quickly, but would it sometime go back? The answer is yes. When, one will have to watch monthly data, so far is not demonstrating is what it seems to me in general, that revolve rates are up in any given manner, from whatever I can read in public domain.

[Piran Engineer, analyst]

Okay. Fair enough. And my next question, basically in the last con call, we discussed what sort of yield hikes have been taken in fixed rate products. And in the last 9 months, it was about 50 to 70 bps. Have we seen further rate hikes in fourth quarter? And are we expecting in FY '24 -- the basic reason of asking this is that in the last 1 year, home loan players have passed on the entire cost of funds to their borrowers whereas auto loans, personal loans, these guys who you would have thought would have been able to pass on have not been able to pass on the entire increase in cost of funds, which is pretty counterintuitive. So just wanted to get your thoughts on that.

[Rajeev Jain, executive]

No, no, your point is absolutely correct. Logically, it should have happened. Anyway, it goes back to the point on competitive intensity, right?

People are gathering assets. Are they mispricing asset gathering is a question that will have to be answered someday. Is this conclusion that one would reach is what I would say, Piran. So it's for each company to determine.

[Piran Engineer, analyst]

Have we hiked after December?

[Rajeev Jain, executive]

No, we've not.

[Piran Engineer, analyst]

Till December, it was 60, 70 bps.

[Rajeev Jain, executive]

Yes. We've not hiked. We've not hiked.

[Piran Engineer, analyst]

Okay. Okay. And if I just may squeeze in a yes or no question.

Now with this removal of commission caps for insurers, any meaningfully higher distribution income possibility for you all?

[Sandeep Jain, executive]

Piran, difficult to answer, I think IRDAI has come out with regulation at this point in time. And the insurance companies are expected to review it, see the performance of the intermediary, see how propense -- how penetration is going up.

And based on that, probably take a call in terms of what is rightful commission that they deem appropriate, I would say depending on the high scale, and the unique feature that a corporate agent can bring to the insurance company.

[Rajeev Jain, executive]

And performance of the portfolio.

[Sandeep Jain, executive]

I think IRDAI has reasonably liberalized it. They have given caps. And within that, the insurance company is expected to form a policy. So we'll await that.

[Operator]

Ladies and gentlemen, that will be the last question for today. I now hand the conference over to Mr. Sameer Bhise for closing comments.

[Sameer Bhise, analyst]

Thank you, Nirav. Thank you, everyone, for joining this call today. Thank you to Rajeev, thank you for giving me the opportinity.

[Operator]

On behalf of JM Financial, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.